8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported): January 24, 2008

TECHNOLOGY RESEARCH CORPORATION

(Exact name of registrant as specified in its charter)

Florida	0-13763	59-2095002
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)	Identification No.)

5250-140th Avenue North, Clearwater, Florida	33760
(Address of principal executive officers)	(Zip Code)

Registrant's telephone number, including area code: (727) 535-0572

Item 1.01                                 Entry into a Material Definitive Agreement.

On January 24, 2008, Technology Research Corporation (the “Company”) was notified that its Amended and Restated Loan Agreement (“Loan Agreement”), entered into by and between the Company and Wachovia Bank, National Association (“Wachovia”), had been approved by Wachovia.  The Loan Agreement extends the maturity date of its Amended and Restated Loan Agreement that was entered into as of December 22, 2005 and thereafter extended in 2006.  The current extension is until September 30, 2009.  The Loan Agreement maintains the Company’s existing $6,000,000 credit facility and eliminates the Company’s wholly-owned subsidiary, Technology Research Corporation Honduras/S.A. de C.V. (“TRC Honduras”), as a co-borrower under the Loan Agreement.

The revolving line of credit can be used for working capital and general corporate purposes.  Revolving loans may be borrowed, repaid and re-borrowed until September 30, 2009, at which time all amounts borrowed must be repaid.  The Loan Agreement obligates the Company to pay a customary unused facility fee for a credit facility of this size.

The revolving loans under the Loan Agreement are secured by a continuing security interest in most of the Company’s key assets including accounts and notes receivable, inventory, investments, demand deposit accounts maintained with the Company’s lender and 65% of the voting stock of TRC Honduras that is owned by the Company.  

The Loan Agreement requires the Company to maintain on a consolidated basis a total liabilities to tangible net worth ratio of not more than 1.0 to 1.0, measured quarterly, a fixed charge coverage ratio of 1.50 to 1.00 measured quarterly on a rolling four-quarter basis and contains customary affirmative and negative covenants of the Company for a credit facility of this size and type.

The Loan Agreement includes customary events of default that include, among other things, non-payment of principal, interest or obligations under the note, violations of covenants, the occurrence of a material adverse change in the business of the Company, bankruptcy and insolvency events, defaults under material agreements and inaccuracy of representations and warranties.  This description of the Loan Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

As of the date of this filing, the Company is not indebted to Wachovia for any borrowings under the Loan Agreement.

Item 2.03                                 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01, “Entry into a Material Definitive Agreement”, is incorporated herein by reference.

Item 9.01                                 Financial Statements and Exhibits.

(d)            Exhibits:

Exhibit 10.1— Amended and Restated Loan Agreement by and between Technology Research Corporation and Wachovia Bank, N.A.

Exhibit 10.2— Promissory Note payable by Technology Research Corporation to Wachovia Bank, N.A.

Exhibit 10.3— Security Agreement by and between Technology Research Corporation and Wachovia Bank, N.A.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 TECHNOLOGY RESEARCH CORPORATION

Date: January 30, 2008                                                 By: /s/ Barry H. Black

 Barry H. Black, VP of Finance, CFO

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED LOAN AGREEMENT

This Amended and Restated Loan Agreement ("Agreement") is made and entered into as of December ___, 2007, by and between WACHOVIA BANK, NATIONAL ASSOCIATION, ("LENDER") and TECHNOLOGY RESEARCH CORPORATION ("BORROWER"), and amends and restates that certain Amended and Restated Loan Agreement dated December 22, 2005, as modified.

BORROWER requested LENDER to modify the $6,000,000.00 credit facility originally extended to Borrower and to TECHNOLOGY RESEARCH CORPORATION/HONDURAS, S.A. DE C.V. ("Honduras") and to eliminate Honduras as a co-borrower on the Loan (the "Loan").  LENDER agreed to so modify the Loan provided that the parties enter into this Agreement.

This Agreement shall govern the Loan which is now evidenced by a Promissory Note dated as of even date herewith from BORROWER in favor of LENDER in the stated principal amount of $6,000,000.00 ("Note").

Relying upon the representations, warranties, agreements, and covenants herein contained, LENDER is willing to modify the Loan upon the terms and subject to the conditions hereinbefore and hereinafter set forth:

1.REPRESENTATIONS AND WARRANTIES: Each BORROWER represents and warrants that:

a.Financial Condition:  All financial statements and all other information heretofore furnished to LENDER are true and correct in all material respects, and fairly reflect the financial condition of BORROWER as of the dates thereof.  The financial statements disclose all contingent liabilities of each and every type and nature of BORROWER.  The financial condition as stated in said financial statements has not changed materially or adversely since the dates of the financial statements.

b.Capacity and Standing:  The execution of this Agreement and Loan Documents, as that term is defined in the Note when executed, shall constitute the valid and binding obligations of BORROWER.

c.Violation of Other Agreements:  The execution of the Loan Documents and the performance by BORROWER of its obligations thereunder, do not and will not violate any provision of law, or any agreement, indenture, note or other instrument binding upon BORROWER or give cause for the acceleration of any obligations of BORROWER.

d.Insurance:  BORROWER shall maintain adequate insurance coverage on its businesses and properties.

e.Authority:  BORROWER has received all required consents, authorizations, and approvals from and by any and all governmental bodies, commissions or agencies, state or federal, necessary to the making, validity, and enforceability of the Loan Documents.

f.Asset Ownership:  BORROWER has good title to all of the assets reflected on its financial statements. All such assets are free and clear of mortgages, security deeds, pledges, liens, charges, and all other encumbrances, except as otherwise disclosed by the balance sheets and financial statements or in any title work provided to LENDER.

g.Discharge of Liens and Taxes:  BORROWER has duly filed all tax returns required to be filed and has paid and discharged all taxes and assessments payable which have become due except to the extent that:  (i) such items are being appropriately contested in good faith and an adequate reserve for the payment thereof is being maintained; and (ii) such items are not yet due and payable.

h.Regulation U:  None of the proceeds of the Loan shall be used directly or indirectly for the purpose of purchasing or carrying any stock in violation of any of the provisions of Regulation U of the Board of Governors of the Federal Reserve System.

i.ERISA:  Each employee benefit plan, as defined in the Employee Retirement Income Security Act of 1974 ("ERISA"), maintained by BORROWER, if any, meets, as of the date hereof, the minimum funding standards of Section 302 of ERISA, all applicable requirements of ERISA and of the Internal Revenue Code of 1986, as amended, and no "Reportable Event" (as defined by ERISA) has occurred with respect to any such plan.

2.AFFIRMATIVE COVENANTS:  Unless LENDER shall otherwise consent in writing, BORROWER covenants and agrees that from the date hereof and until satisfaction in full of each and every one of its obligations under the Loan Documents, that it shall:

a.Deposit Relationship:  Maintain its primary deposit relationship with LENDER.

b.Business Continuity:  Conduct its business in substantially the same manner and in substantially the same lines of business as such business is now and has heretofore been carried on and conducted.

c.Regulations and Properties:  Materially comply with all applicable statutes, laws and regulations, maintain its existence in good standing and maintain, preserve and keep its properties and assets in good repair, working order and condition.

d.Access to Books and Records:  After reasonable notice by LENDER, allow LENDER, or its agents, during normal business hours, to have access to books, records and such other documents as LENDER shall reasonably require, and allow LENDER to make copies thereof at LENDER'S expense.

e.Compliance with Other Agreements:  Comply with all covenants, terms and conditions contained in the Loan Documents.

3.NEGATIVE COVENANTS:  Unless LENDER shall otherwise consent in writing, BORROWER covenants and agrees that from the date hereof and until satisfaction in full of each and every one of its obligations under the Loan Documents, that it shall not:

a.Change in Fiscal Year End:  Change its fiscal year end.

b.Encumbrances/Debt:  Create, assume, or permit to exist any mortgage, security deed, deed of trust, pledge, lien, charge or other encumbrance on any of its assets other than:  (i) security interests required by the Loan Documents; (ii) liens for taxes contested in good faith; (iii) liens accruing by law for employee benefits; (iv) or liens otherwise permitted by LENDER in writing or incur any additional debt.

c.Guarantees:  Guarantee or otherwise become responsible for the obligations of any other person or entity who is not a guarantor of the Loan.

d.Judgment Entered:  Permit the entry of any monetary judgment or the assessment against, the filing or any tax lien against, or the issuance of any writ of garnishment or attachment against any property of or debts due.

e.Investments:  Shall not purchase any stock, securities, or evidence of indebtedness of any other person or entity except investments in direct obligations of the United States Government and certificates of deposit of United States commercial banks having a tier 1 capital ratio of not less than 6% and then in an amount not exceeding 10% of the issuing bank's unimpaired capital and surplus.

f.Loans and Advances:  During any fiscal year, make loans or advances to any related person or related entity.

g.Limitation on Debt:  Directly or indirectly, create, assume or become liable for any debt, contingent or direct, other than obligations to LENDER or approved seller financing, other than purchase money debt.

4.FINANCIAL COVENANTS:

a.Annual Financial Statements:  Deliver to LENDER within 120 days after the close of each fiscal year, audited financial statements reflecting its operations during such fiscal year, including without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules, all in reasonable detail.  The statements shall be audited by a certified public accountant selected by BORROWER and acceptable to LENDER.  Any qualification placed upon the audit may render the financial statement unacceptable to LENDER.

b.Periodic Financial Statements.  Deliver to LENDER within 45 days after the close of each fiscal quarter, management prepared financial statements reflecting its operations during such fiscal quarter, including without limitation, a balance sheet, profit and loss statement and statement of cash flows, with supporting schedules, all in reasonable detail.  Said statements shall be certified to LENDER in writing as being true, correct, and complete by the chief financial officer of BORROWER.

c.Total Liabilities to Tangible Net Worth Ratio:  Shall at all times maintain an a consolidated basis a Total Liabilities to Tangible Net Worth Ratio, of not more that 1.00 to 1.00, measured quarterly.  For purposes of this computation, "Total Liabilities" shall mean all liabilities of Borrower including capitalized leases and all reserves for deferred taxes and other deferred sums appearing on the liabilities side of a balance sheet of Borrower, in accordance with generally accepted accounting principles applied on a consistent basis.  "Tangible Net Worth" shall mean total assets minus total liabilities.  For purposes of this computation, the aggregate amount of any intangible assets including, without limitation, goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service marks, and brand names, and any loans or advances to affiliates, officers or shareholders shall be subtracted from total assets, and total liabilities shall include debt fully subordinated to LENDER on terms and conditions acceptable to Bank.

d.Fixed Charge Coverage Ratio:  Maintain on a consolidated basis, a minimum Fixed Charge Coverage Ratio of 1.50 to 1.00, measured quarterly, on a rolling four-quarter basis.  For purposes of this computation, "Fixed Charge Coverage Ratio" means the sum of after-tax income plus depreciation and amortization plus lease expense plus interest expense less dividends and non-cash income, divided by the sum of lease expense plus interest expense plus current maturities of long-term debt.

e.Accounts Receivable Aging:  Shall furnish to LENDER, within 120 days after the end of each fiscal year, a detailed and accurate listing and aging of all of BORROWER'S accounts receivable by total, as of the last day of the year, and a summary aging of accounts by customer and customer address, and a reconciliation statement.  Said aging shall also include the original date of invoice.

f.Inventory Reports:  Shall furnish to LENDER within 120 days after the end of each fiscal year, an inventory report showing individual values for raw materials, work-in-progress, goods, and finished products and any inventory obsolescence.

g.SEC Filing:  Shall furnish to LENDER within 10 days of filing, copies of all filings with the Securities and Exchange Commission, including but not limited to 10-Q and 10-K reports, in the same manner and time frame as required by the Securities and Exchange Commission.

h.Other Financial Information:  Deliver, promptly, such other information regarding its operation and business affairs and its financial condition which LENDER may reasonably request.  BORROWER shall at all times maintain books and records reflecting its financial condition including, but not limited to the operation of its businesses.

5.LETTERS OF CREDIT.  Upon the request of BORROWER, LENDER shall issue commercial Letters of Credit and standby Letters of Credit, provided, the aggregate amount available to be drawn under all commercial Letters of Credit plus the aggregate amount of unreimbursed drawings under all commercial Letters of Credit at any one time does not exceed $6,000,000.00, and the aggregate amount available to be drawn under all standby Letter of Credit plus the aggregate amount of unreimbursed drawings under all standby Letters of Credit at any one time does not exceed $6,000,000.00, and further provided, no commercial Letter of Credit shall expire more than 180 days after the date it is issued and no standby Letter of Credit shall expire more than 365 days after the date it is issued.  Notwithstanding anything to the contrary contained herein, the aggregate outstanding principal balance of Advances (as defined in the line of credit Promissory Note in the amount of $6,000,000.00, dated as of even date herewith) plus the aggregate amount available to be drawn under all Letters of Credit plus the aggregate amount of unreimbursed drawings under all Letters of Credit at any one time shall note exceed $6,000,000.00.  LENDER'S obligation to issue Letters of Credit shall terminate if Borrower is in default (however denominated) under the Note or the other Loan Documents, or in any case, if not sooner terminated, on September 30, 2008 unless renewed or extended by LENDER in writing upon such terms then satisfactory to LENDER.

6.LETTER OF CREDIT FEES.  BORROWER shall pay to LENDER, at such times as LENDER shall require, LENDER'S standard fees in connection with Letters of Credit, as in effect from time to time, and with respect to standby Letters of Credit, an additional fee equal to 1.00% per annum on the face amount of each standby Letter of Credit, payable annually, in advance, for so long as such Letter of Credit is outstanding.

7.CONDITIONS PRECEDENT:  The obligations of LENDER to make the Loan and advances pursuant to this Agreement are subject to the following conditions precedent (unless the documents required have been previously privileged) as well as those set forth in any commitment letter or term sheet governing the Loans:

a.Resolution:  Certified copies of resolutions of BORROWERauthorizing the execution, delivery and performance of the Loan Documents.

b.Charter Documents:  Receipt of a copy of the organizational documents of BORROWER.

c.Additional Documents:  Receipt by LENDER of such additional supporting documents as LENDER or its counsel may reasonably request.

d.Non-Default:  At the time of any borrowings hereunder, BORROWER shall be in compliance with the Loan Documents, and no event of default as specified in the Loan Documents or any event which upon notice or lapse of time or both would constitute such an event of default shall have occurred and be continuing at the time of such borrowing.

8.SECURITY:  The obligations of BORROWER pursuant to the Loan Documents are secured by all business (non-real estate) assets of BORROWER, including but not limited to 100% of the non-voting stock and 65% of the voting stock of TECHNOLOGY RESEARCH CORPORATION / HONDURAS, S.A. DE C.V.

a.Perfection:  LENDER'S security interest as above described must be properly perfected, and BORROWER agrees to execute all documents necessary to effectuate such perfection, including but not limited to financing statements and to reimburse LENDER for all expenses incurred in the perfection of such security interest.

9.EVENTS OF DEFAULT:  The occurrence of any breach of any representation, warranty or covenant contained herein shall, in addition to the events of default in the Note, and all of the other Loan Documents, constitute an event of default hereunder.

10.REMEDIES UPON DEFAULT:  In the event of the occurrence of any events of default, then LENDER may at any time thereafter, at its option, shall have all the remedies afforded to it pursuant to the Note and all of the other Loan Documents.

11.MISCELLANEOUS PROVISIONS:

a.Indirect Means:  Any act which BORROWER is prohibited from doing shall not be done indirectly through a subsidiary or by any other indirect means.

b.Non-Impairment:  If any one or more provisions contained in the Loan Documents shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in the Loan Documents, shall not in any way be affected or impaired thereby and the Loan Documents shall otherwise remain in full force and effect.

c.Applicable Law:  The Loan Documents shall be construed in accordance with and governed by the laws of the State of Florida.

d.Waiver:  Neither the failure nor any delay on the part of LENDER in exercising any right, power, or privilege granted pursuant to the Loan Documents, shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.

e.Modification:  No modification, amendment, or waiver of any provision of the Loan Documents shall be effective unless in writing and signed by LENDER, it being acknowledged by the parties hereto that all terms, conditions and covenants therein and herein contained are deemed to be material and relied upon by LENDER.

f.Stamps and Fees:  BORROWER shall pay all federal or state stamps or taxes, or other fees and charges, if any, payable or determined to be payable by reason of the execution, delivery or issuance of the Loan Documents; whether they be payable upon execution or recurring from time to time, and BORROWER agrees to indemnify and hold LENDER harmless against any and all liability in respect therefor.

g.Attorney's Fees:  In connection with any litigation or arbitration pertaining to this Agreement the prevailing party shall be entitled to recover from the non-prevailing party all of the prevailing party's reasonable fees and costs, including without limitation, reasonable arbitration, paralegals', attorneys' and experts' fees and expenses, whether incurred without the commencement of a suit, in any suit, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

h.Interest:  Notwithstanding anything contained in the Loan Documents to the contrary, if for any reason the effective rate of interest on any advances shall exceed the maximum lawful rate of interest, the effective rate of interest shall be deemed reduced to and shall be such maximum lawful rate, and any sums of interest which have been collected in excess of such maximum lawful rate shall be applied by LENDER as a credit against the unpaid principal amount due thereunder.

i.Assignment:  This Agreement shall be binding upon the parties and their respective successors and assigns however, nothing contained herein shall be construed as allowing BORROWER the right to assign its obligations under the Loan Documents.  LENDER'S interest in the Loan Documents, the Loan, and Property, and its rights hereunder are freely assignable, in whole or in part.

j.Notices:  Any notices or other communications required or permitted to be given hereunder must be given in writing and personally delivered or mailed by prepaid certified or registered mail to the addresses first set forth above.  Any such notice or other communication shall be deemed to have been given (whether actually received or not) on the third business day after it has been put into the United States Mail with appropriate postage affixed thereon or on the day it is personally delivered as aforesaid, or, if transmitted by telecopier, on the day that such notice is transmitted as aforesaid; provided, however, that any notice sent by telecopier after 5:00 p.m. shall be deemed received on the next succeeding day.  Any party may change its address for purposes of this Agreement by giving notice of such change in writing to the other party pursuant to this provision.

BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER'S ACCEPTANCE OF THIS AGREEMENT FROM BORROWERS.

BORROWER and LENDER agree that they shall not have a remedy of punitive or exemplary damages against the other and hereby waive any right or claim to punitive or exemplary damages they have now or which may arise in the future.

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

WACHOVIA BANK, NATIONAL ASSOCIATION By:______________________________ Mark Dawson,      As a Senior Vice President TECHNOLOGY RESEARCH CORPORATION, A Florida Corporation By: _______________________________       Owen Farren,       As its President

EX-10.2

Exhibit 10.2

THIS PROMISSORY NOTE WAS EXECUTED, DELIVERED, AND ACCEPTED OUTSIDE OF THE STATE OF FLORIDA AND IS NOT SECURED BY REAL PROPERTY SITUATED IN THE STATE OF FLORIDA.  THIS PROMISSORY NOTE IS EXEMPT FROM DOCUMENTARY STAMP TAXATION.

THIS PROMISSORY NOTE SUPERSEDES AND REPLACES IN ITS ENTIRETY THAT CERTAIN PROMISSORY NOTE DATED AS OF OCTOBER 17, 2006 FROM BORROWER AND TECHNOLOGY RESEARCH CORPORATION / HONDURAS, S.A. DE C.V. PAYABLE TO BANK IN THE STATED PRINCIPAL AMOUNT OF $6,000,000.00.

PROMISSORY NOTE

$6,000,000.00                                                                                                     December ____, 2007

TECHNOLOGY RESEARCH CORPORATION

5250 140th Avenue North

Clearwater, Florida  34620

("Borrower")

WACHOVIA BANK, NATIONAL ASSOCIATION

225 Water Street

Jacksonville, Florida  32202

(“Bank")

Borrower promises to pay to the order of Bank, in lawful money of the United States of America, at its office indicated above or wherever else Bank may specify, the sum of SIX MILLION AND NO/100 DOLLARS ($6,000,000.00) or such sum as may be advanced and outstanding from time to time, with interest on the unpaid principal balance at the rate and on the terms provided in this Promissory Note (including all renewals, extensions or modifications hereof, this "Note").

LOAN AGREEMENT.  This Note is subject to the provisions of that certain Amended and Restated Loan Agreement between Bank and Borrower dated as of even date herewith, as modified from time to time.

LINE OF CREDIT.  Borrower may borrow, repay and reborrow, and, upon the request of Borrower, Bank shall advance and readvance under this Note from time to time until the maturity hereof (each an "Advance" and together the "Advances"), so long as the total principal balance outstandingunder thisNote at any one time does not exceed the principal amount stated on the face of thisNote, subject to the limitations described in any loan agreement to which this Note is subject.  Bank's obligation to make Advances under thisNote shall terminate if Borrower is in Default. As of the date of each proposed Advance, Borrower shall be deemed to represent that each representation made in the Loan Documents is true as of such date.

If Borrower subscribes to Bank's cash management services and such services are applicable to this line of credit, the terms of such service shall control the manner in which funds are transferred between the applicable demand deposit account and the line of credit for credit or debit to the line of credit.

USE OF PROCEEDS.  Borrower shall use the proceeds of the loan evidenced by this Note for the commercial purposes of Borrower, as follows:  for working capital and for general corporate purposes.

INTEREST RATE DEFINITIONS.

LIBOR-Based Rate.  “LIBOR-Based Rate” means each of 1-month LIBOR plus 1.6%, 2-month LIBOR plus 1.6% and 3-month LIBOR plus 1.6%.

LIBOR.  "LIBOR" means, with respect to each Interest Period, the rate for U.S. dollar deposits with a maturity equal to the number of months specified above, as reported on Telerate page 3750 as of 11:00 a.m., London time, on the second London business day before such Interest Period begins(or if not so reported, then as determined by Bank from another recognized source or interbank quotation).

Prime-Based Rate.  “Prime-Based Rate” means Bank's Prime Rate minus 1.0%, as that rate may change from time to time with changes to occur on the date Bank's Prime Rate changes.

Bank’s Prime Rate.  "Bank's Prime Rate" means that rate announced by Bank from time to time as its prime rate and is one of several interest rate bases used by Bank.  Bank lends at rates both above and below Bank's Prime Rate, and Borrower acknowledges that Bank's Prime Rate is not represented or intended to be the lowest or most favorable rate of interest offered by Bank.

Interest Period.  “Interest Period” means, in respect of each LIBOR-Based Rate Advance, each period commencing on the last day of the immediately preceding Interest Period and ending on the same day of the month that interest in respect of such Advance is due 1 month, 2 months or 3 months thereafter, as appropriate for the then applicable interest rate; provided (i) the first Interest Period shall commence on the date of such Advance and end on the first day thereafter that interest in respect of such Advance is due, (ii) any Interest Period that ends in a month for which there is no day which numerically corresponds to the last day of the immediately preceding Interest Period shall end on the last day of the month and (iii) any Interest Period that would otherwise extend past the maturity date of this Note shall end on the maturity date of this Note.

INTEREST RATE SELECTION AND ADJUSTMENT.

Interest Rate Options.  Interest shall accrue on the unpaid principal balance of each Advance from the date of such Advanceat a rate per annum equal to a LIBOR-Based Rate or the Prime-Based Rate, as selected by Borrower in accordance herewith (each, an "Interest Rate").  Interest for each Interest Period shall accrue each day during such Interest Period, commencing on and including the first day to but excluding the last day.  There shall be no more than one Interest Rate for an Advancein effect at any time.

When the Prime-Based Rate is selected for an Advance, it shall be adjustedfrom time to time, effective as of the date of each change in Bank's Prime Rate and the Prime-BasedRate shall continue to applyuntil another Interest Rate option is selectedfor that Advance pursuant to the subsectionentitled "Notice and Manner of Borrowing and Rate Conversion”. When a LIBOR-Based Rate is selected for an Advance, such rate shall be fixed for each Interest Period for which it is determined and shall apply for that Advance until another Interest Rate option is selected for that Advance pursuant to the subsection entitled "Notice and Manner of Borrowing and Rate Conversion."

Indemnification.  Borrower shall indemnify Bank against Bank's loss or expense as a consequence of (a) Borrower's failure to make any payment when due on a loan or Advance bearing interest at a LIBOR-Based Rate, (b) any payment, prepayment or conversion of any loan or Advance bearing interest at a LIBOR-Based Rate on a day other than the last day of the Interest Period, or (c) any failure to make a borrowing or conversion after giving notice thereof ("Indemnified Loss or Expense").  The amount of such Indemnified Loss or Expense shall be determined by Bank based upon the assumption that Bank funded 100% of that portion of the loan in the London interbank market.

Default Rate.  In addition to all other rights contained in this Note, if a Default occurs, and as long as a Default continues,(a) Borrower shall no longer have the option to request a LIBOR-Based Rate or the Prime-Based Rate and (b)all outstanding Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank or its affiliates, shall bear interest at the Interest Rate (as in effect on the date of Default) plus 3% ("Default Rate").  The Default Rate shall also apply fromacceleration until the Obligations or any judgment thereon is paid in full.

Notice and Manner of Borrowing and Rate Conversion.  Borrower shall give Bank irrevocable telephonic notice of each proposed Advanceor rate conversion not later than 11:00 a.m. local time at the office of Bank first shown above (a) on the same business day as each proposed Advance ator rate conversion to the Prime-Based Rate and (b) at least 2 business days before each proposed Advance at or rate conversion to a LIBOR-Based Rate.  Each such notice shall specify (i) the date of such Advance or rate conversion, which shall be a business dayand, in the case of a conversion from a LIBOR-Based Rate Advance, shall be the last day of an Interest Period, (ii) the amount of each Advance or the amount to beconverted, (iii) the Interest Rate selected by Borrower, and (iv) except for the Prime-Based Rate, the Interest Period applicable thereto, which period must correspond to one of the Interest Rate options.  Notices received after 11:00 a.m. local time at the office of Bank first shown above shall be deemed received on the next business day.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360).  Interest and fees, if any, shall be computed on the basis of a 360-day year for the actual number of days in the applicable period ("Actual/360 Computation").  The Actual/360 Computation determines the annual effective yield by taking the stated (nominal) rate for a year's period and then dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the applicable period.  Application of the Actual/360 Computation produces an annualized effective rate exceeding the nominal rate.

REPAYMENT TERMS.  This Note shall be due and payable in consecutive monthly payments of accrued interest only, commencing on January 14, 2008, and continuing on the same day of each month thereafter until fully paid.  In any event, all principal and accrued interest shall be due and payable on September 30, 2009.

AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT.  Borrower authorizes Bank to debit demand deposit account number2174468035790or any other account with Bank(routing number 063107513) designated in writing by Borrower for any payments due under this Note.  Borrower further certifies that Borrower holds legitimate ownership of this account and preauthorizes this periodic debit as part of its right under said ownership.

AVAILABILITY FEE.  Borrower shall pay to Bank quarterly an availability fee equal to .125% per annum on the difference between (i) the face amount of this Note and (ii) the outstanding principal balance of this Note, for each day during the preceding calendar quarter or portion thereof, commencing on December 31, 2007 and continuing on the same day of each quarter thereafter, with a final payment due and payable on the date that all principal and accrued interest is paid in full. 

APPLICATION OF PAYMENTS.  Monies received by Bank from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal.  If a Default occurs, monies may be applied to the Obligations in any manner or order deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is rescinded, avoided or for any reason returned by Bank because of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note or other Loan Documents as though such payment had not been made.

DEFINITIONS.  Loan Documents.  The term "Loan Documents", as used in this Note and the other Loan Documents, refers to all documents executed in connection with or related to the loan evidenced by this Note and any prior notes which evidence all or any portion of the loan evidenced by this Note, and any letters of credit issued pursuant to any loan agreement to which this Note is subject, any applications for such letters of credit and any other documents executed in connection therewith or related thereto,and may include, without limitation, a commitment letter that survives closing, a loan agreement, this Note, guaranty agreements, security agreements, security instruments, financing statements, mortgage instruments, any renewals or modifications, whenever any of the foregoing are executed, but does not include swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time).  Obligations.  The term "Obligations", as used in this Note and the other Loan Documents, refers to any and all indebtedness and other obligations under this Note, all other obligations under any other Loan Document(s), and all obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank, or its affiliates, whenever executed.  Certain Other Terms.  All terms that are used but not otherwise defined in any of the Loan Documents shall have the definitions provided in the Uniform Commercial Code.

LATE CHARGE.  If any payments are not timely made, Borrower shall also pay to Bank a late charge equal to 5% of each payment past due for 10 or more days.  This late charge shall not apply to payments due at maturity or by acceleration hereof, unless such late payment is in an amount not greater than the highest periodic payment due hereunder.

Acceptance by Bank of any late payment without an accompanying late charge shall not be deemed a waiver of Bank's right to collect such late charge or to collect a late charge for any subsequent late payment received.

ATTORNEYS' FEES AND OTHER COLLECTION COSTS.  Borrower shall pay all of Bank's reasonable expenses actually incurred to enforce or collect any of the Obligations including, without limitation, reasonable arbitration, paralegals', attorneys' and experts' fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

USURY.  If at any time the effective interest rate under this Note would, but for this paragraph, exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum lawful rate, and any amount received by Bank in excess of such rate shall be applied to principal and then to fees and expenses, or, if no such amounts are owing, returned to Borrower.

DEFAULT.  If any of the following occurs, a default ("Default") under this Note shall exist:  Nonpayment; Nonperformance.  The failure of timely payment or performance of the Obligations or Default under this Note or any other Loan Documents.  False Warranty.  A warranty or representation made or deemed made in the Loan Documents or furnished Bank in connection with the loan evidenced by this Note proves materially false, or if of a continuing nature, becomes materially false.  Cross Default.  At Bank's option, any default in payment or performance of any obligation under any other loans, contracts or agreements of Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the holder(s) of the majority ownership interests of Borrower with Bank or its affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C. § 101, as in effect from time to time, except that the term "Borrower" shall be substituted for the term "Debtor" therein; "Subsidiary" shall mean any business in which Borrower holds, directly or indirectly, a controlling interest).  Cessation; Bankruptcy.  The death of, appointment of a guardian for, dissolution of, termination of existence of, loss of good standing status by, appointment of a receiver for, assignment for the benefit of creditors of, or commencement of any bankruptcy or insolvency proceeding by or against Borrower, its Subsidiaries or Affiliates, if any, or any general partner of or the holder(s) of the majority ownership interests of Borrower, or any party to the Loan Documents.  Material Capital Structure or Business Alteration.  Without prior written consent of Bank, (i) a material alteration in the kind or type of Borrower's business or that of Borrower's Subsidiaries or Affiliates, if any; (ii) the sale of substantially all of the business or assets of Borrower, any of Borrower's Subsidiaries or Affiliates or any guarantor, or a material portion (10% or more) of such business or assets if such a sale is outside the ordinary course of business of Borrower, or any of Borrower's Subsidiaries or Affiliates or any guarantor, or more than 50% of the outstanding stock or voting power of or in any such entity in a single transaction or a series of transactions; (iii) the acquisition of substantially all of the business or assets or more than 50% of the outstanding stock or voting power of any other entity; or (iv) should any Borrower or any of Borrower's Subsidiaries or Affiliates or any guarantor enter into any merger or consolidation.  Material Adverse Change.  Bank determines in good faith, in its sole discretion, that the prospects for payment or performance of the Obligations are impaired or there has occurred a material adverse change in the business or prospects of Borrower, financial or otherwise.

REMEDIES UPON DEFAULT.  If a Default occurs under this Note or any Loan Documents, Bank may at any time thereafter, take the following actions:  Bank Lien.  Foreclose its security interest or lien against Borrower's accounts without notice.  Acceleration Upon Default.  Accelerate the maturity of this Note and, at Bank’s option, any or all other Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank, or its affiliates, which shall be due in accordance with and governed by the provisions of said swap agreements;whereupon this Note and the accelerated Obligations shall be immediately due and payable; provided, however, if the Default is based upon a bankruptcy or insolvency proceeding commenced by or against Borrower or any guarantor or endorser of this Note, all Obligations (other than Obligations under any swap agreement as referenced above) shall automatically and immediately be due and payable.  Cumulative.  Exercise any rights and remedies as provided under the Note and other Loan Documents, or as provided by law or equity.

FINANCIAL AND OTHER INFORMATION.  Borrower shall deliver to Bank such information as Bank may reasonably request from time to time, including without limitation, financial statements and information pertaining to Borrower's financial condition.  Such information shall be true, complete, and accurate.

WAIVERS AND AMENDMENTS.  No waivers, amendments or modifications of this Note and other Loan Documents shall be valid unless in writing and signed by an officer of Bank.  No waiver by Bank of any Defaultshall operate as a waiver of any other Default or the same Default on a future occasion.  Neither the failure nor any delay on the part of Bank in exercising any right, power, or remedy under this Note and other Loan Documents shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

Except to the extent otherwise provided by the Loan Documents or prohibited by law, each Borrower and each other person liable under this Note waives presentment, protest, notice of dishonor, demand for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and all other notices of any kind.  Further, each agrees that Bank may (i) extend, modify or renew this Note or make a novation of the loan evidenced by this Note, and/or (ii) grant releases, compromises or indulgences with respect to any collateral securing this Note, or with respect to any Borrower or other person liable under this Note or any other Loan Documents, all without notice to or consent of each Borrower and other such person, and without affecting the liability of each Borrower and other such person; provided, Bank may not extend, modify or renew this Note or make a novation of the loan evidenced by this Note without the consent of the Borrower, or if there is more than one Borrower, without the consent of at least one Borrower; and further provided, if there is more than one Borrower, Bank may not enter into a modification of this Note which increases the burdens of a Borrower without the consent of that Borrower.

MISCELLANEOUS PROVISIONS.  Assignment.  This Note and the other Loan Documents shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns.  Bank's interests in and rights under this Note and the other Loan Documents are freely assignable, in whole or in part, by Bank.  In addition, nothing in this Note or any of the other Loan Documents shall prohibit Bank from pledging or assigning this Note or any of the other Loan Documents or any interest therein to any Federal Reserve Bank.  Borrower shall not assign its rights and interest hereunder without the prior written consent of Bank, and any attempt by Borrower to assign without Bank's prior written consent is null and void.  Any assignment shall not release Borrower from the Obligations.Applicable Law; Conflict Between Documents.  This Note and, unless otherwise provided in any other Loan Document, the other Loan Documents shall be governed by and construedunder the laws of the state named in Bank's address on the first page hereof without regard to that state's conflict of laws principles.  If the terms of this Note should conflict with the terms of any loan agreement or the terms of this Note shall control.  Borrower's Accounts.  Except as prohibited by law, Borrower grants Bank a security interest in all of Borrower's accounts with Bank and any of its affiliates.Swap Agreements.  All swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time), if any, between Borrower and Bank or its affiliates are independent agreements governed by the written provisions of said swap agreements, which will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of this Note, except as otherwise expressly provided in said written swap agreements, and any payoff statement from Bank relating to this Note shall not apply to said swap agreements except as otherwise expressly provided in such payoff statement.  Jurisdiction.  Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state named in Bank's address on the first page hereof.  Severability.  If any provision of this Note or of the other Loan Documents shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or other such document.  Notices.  Any notices to Borrower shall be sufficiently given, if in writing and mailed or delivered to the Borrower's address shown above or such other address as provided hereunder, and to Bank, if in writing and mailed or delivered to Wachovia Bank, National Association, Mail Code VA7628, P. O. Box 13327, Roanoke, VA  24040 or Wachovia Bank, National Association, Mail Code VA7628, 10 South Jefferson Street, Roanoke, VA  24011 or such other address as Bank may specify in writing from time to time.  Notices to Bank must include the mail code.  In the event that Borrower changes Borrower's address at any time prior to the date the Obligations are paid in full, Borrower agrees to promptly give written notice of said change of address by registered or certified mail, return receipt requested, all charges prepaid.  Plural; Captions.  All references in the Loan Documents to Borrower, guarantor, person, document or other nouns of reference mean both the singular and plural form, as the case may be, and the term "person" shall mean any individual, person or entity.  The captions contained in the Loan Documents are inserted for convenience only and shall not affect the meaning or interpretation of the Loan Documents.  Advances.  Bank may, in its sole discretion, make other advances which shall be deemed to be advancesunder this Note, even though the stated principal amount of this Note may be exceeded as a result thereof.  Posting of Payments.  All payments received during normal banking hours after 2:00 p.m. local time at the office of Bank first shown above shall be deemed received at the opening of the next banking day.  Joint and Several Obligations.If there is more than one Borrower, each is jointly and severally obligated.  Fees and Taxes.  Borrower shall promptly pay all documentary, intangible recordation and/or similar taxes on this transaction whether assessed at closing or arising from time to time.  LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES.   EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.  Patriot Act Notice.  To help fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.  For purposes of this section, account shall be understood to include loan accounts.  FINAL AGREEMENT.  This Note and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements between the parties.

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

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has caused this Note to be executed under seal.

TECHNOLOGY RESEARCH CORPORATION,

A Florida Corporation

By: ________________________________

      Owen Farren,

      As its President

EX-10.3

Exhibit 10.3

SECURITY AGREEMENT

December ___, 2007

TECHNOLOGY RESEARCH CORPORATION

5250 140th Avenue North

Clearwater, Florida  34620

("Debtor")

WACHOVIA BANK, NATIONAL ASSOCIATION

225 Water Street

Jacksonville, Florida  32202

("Bank")

For value received and to secure payment and performance of the Promissory Note executed by Debtor (also referred to herein as “Borrower”) dated as of even date herewith, in the original principal amount of $6,000,000.00, payable to Bank, and any extensions, renewals, modifications or novations thereof (the “Note”), this Security Agreement, the other Loan Documents, swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) executed in connection with or related to the Loan Documents, future advances, and all costs and expenses incurred by Bank to obtain, preserve, perfect and enforce the security interest granted herein and to maintain, preserve and collect the property subject to the security interest (collectively, "Secured Obligations"), Debtor hereby grants to Bank a continuing security interest in and lien upon the following described property, whether now owned or hereafter acquired, and any additions, replacements, accessions, or substitutions thereof and all cash and non-cash proceeds and products thereof (collectively, "Collateral"):

All accounts, together with all chattel paper and instruments, and all credit insurance, guaranties, letters of credit, and other security for any of the foregoing.

All instruments, documents, chattel paper, goods, moneys, securities, drafts, and other property of Debtor now in possession of and at any time and from time to time hereafter delivered to Bank, its agents or affiliates, whether for safekeeping, pledge, custody, transmission, collection, or otherwise, and all of the Debtor's deposits, balances, sums, proceeds, and credits with, and any of its claims against Bank and affiliates of Bank, at any time existing, together with the increases and profits received therefrom and the proceeds thereof, including insurance payable because of loss or damage thereto.

All of Debtor's demand deposit accounts, checking accounts, time savings accounts, certificates of deposit or other accounts of any nature maintained in or with Bank and affiliates of Bank.

All inventory, including all raw materials and work in process to be processed into such inventory, and all accessions, attachments and other additions to, substitutes for, replacements for, improvements to and returns of such inventory, all accounts arising from the disposition of inventory.

All products and proceeds (including investment property and security entitlements) of any of the property described above in any form, and all proceeds of such products.

The securities referenced on Schedule "1" attached hereto and by this reference incorporated herein.

Debtor hereby represents and agrees that:

OWNERSHIP.  Debtor owns the Collateral.  The Collateral is free and clear of all liens, security interests, and claims except those previously reported in writing to and approved by Bank, and Debtor will keep the Collateral free and clear from all liens, security interests and claims, other than those granted to or approved by Bank.  Debtor will not borrow on margin or other credit secured by the Account or property in the Account from any party other than Bank.  All securities and security entitlements pledged as Collateral are fully paid and non-assessable and if certificated, have been delivered to Bank with unrestricted endorsements.  All income, dividends, earnings and profits with respect to the Collateral shall be reported for state and federal income tax purposes as attributable to the Debtor and not Bank, and Bank or any other person authorized to report income distributions, is authorized to issue IRS Forms 1099 indicating Debtor as the recipient of such income, earnings and profits.

NAME AND OFFICES; JURISDICTION OF ORGANIZATION.  The name and address of Debtor appearing at the beginning of this Agreement are Debtor’s exact legal name and the address of its chief executive office.  There has been no change in the name of Debtor, or the name under which Debtor conducts business, within the five years preceding the date hereof.  Debtor has not moved its chief executive office within the five years preceding the date hereof except as previously reported in writing to Bank.  Debtor is organized under the laws of the State of Florida and has not changed the jurisdiction of its organization within the five years preceding the date hereof except as previously reported in writing to Bank.

TITLE/TAXES.  Debtor has good and marketable title to the Collateral and will warrant and defend same against all claims.  Debtor will not transfer, sell, or lease Collateral (except as permitted herein).  Debtor agrees to pay promptly all taxes and assessments upon or for the use of Collateral and on this Security Agreement.  At its option, Bank may discharge taxes, liens, security interests or other encumbrances at any time levied or placed on Collateral.  Debtor agrees to reimburse Bank, on demand, for any such payment made by Bank.  Any amounts so paid shall be added to the Secured Obligations.

WAIVERS.  Debtor agrees not to assert against Bank as a defense (legal or equitable), as a set-off, as a counterclaim, or otherwise, any claims Debtor may have against any seller or lessor that provided personal property or services relating to any part of the Collateral or against any other party liable to Bank for all or any part of the Secured Obligations.  Debtor waives all exemptions and homestead rights with regard to the Collateral.  Debtor waives any and all rights to any bond or security which might be required by applicable law prior to the exercise of any of Bank's remedies against any Collateral.  All rights of Bank and security interests hereunder, and all obligations of Debtor hereunder, shall be absolute and unconditional, not discharged or impaired irrespective of (and regardless of whether Debtor receives any notice of):  (i) any lack of validity or enforceability of any Loan Document; (ii) any change in the time, manner or place of payment or performance, or in any term, of all or any of the Secured Obligations or the Loan Documents or any other amendment or waiver of or any consent to any departure from any Loan Document; or (iii) any exchange, insufficiency, unenforceability, enforcement, release, impairment or non-perfection of any collateral, or any release of or modifications to or insufficiency, unenforceability or enforcement of the obligations of any guarantor or other obligor.  To the extent permitted by law, Debtor hereby waives any rights under any valuation, stay, appraisement, extension or redemption laws now existing or which may hereafter exist and which, but for this provision, might be applicable to any sale or disposition of the Collateral by Bank; and any other circumstance which might otherwise constitute a defense available to, or a discharge of any party with respect to the Secured Obligations.

NOTIFICATIONS; LOCATION OF COLLATERAL.  Debtor will notify Bank in writing at least 30 days prior to any change in:  (i) Debtor's chief place of business; (ii) Debtor's name; (iii) Debtor's corporate/organizational structure; or (iv) the jurisdiction in which Debtor is organized.  In addition, Debtor shall promptly notify Bank of any claims or alleged claims of any other person or entity to the Collateral or the institution of any litigation, arbitration, governmental investigation or administrative proceedings against or affecting the Collateral.  Debtor will keep Collateral at the location(s) previously provided to Bank until such time as Bank provides written advance consent to a change of location.  Debtor will bear the cost of preparing and filing any documents necessary to protect Bank's liens.

COLLATERAL CONDITION AND LAWFUL USE.  Debtor represents that the Collateral is in good repair and condition and that Debtor shall use reasonable care to prevent Collateral from being damaged or depreciating, normal wear and tear excepted.  Debtor shall immediately notify Bank of any material loss or damage to Collateral.  Debtor shall not permit any item of Collateral to become an accession to other property unless such property is also Collateral hereunder.  Debtor represents it is in compliance in all respects with all laws, rules and regulations applicable to the Collateral and its properties, operations, business, and finances.

RISK OF LOSS AND INSURANCE.  Debtor shall bear all risk of loss with respect to the Collateral.  The injury to or loss of Collateral, either partial or total, shall not release Debtor from payment or other performance hereof.  Debtor agrees to obtain and keep in force property insurance on the Collateral with a Lender’s Loss Payable Endorsement in favor of Bank and commercial general liability insurance naming Bank as Additional Insured and such other insurance as Bank may require from time to time.  Such insurance is to be in form and amounts satisfactory to Bank and issued by reputable insurance carriers satisfactory to Bank with a Best Insurance Report Key Rating of at least “A-“.  All such policies shall provide to Bank a minimum of 30 days written notice of cancellation.  Debtor shall furnish to Bank such policies, or other evidence of such policies satisfactory to Bank.  If Debtor fails to obtain or maintain in force such insurance or fails to furnish such evidence, Bank is authorized, but not obligated, to purchase any or all insurance or "Single Interest Insurance" protecting such interest as Bank deems appropriate against such risks and for such coverage and for such amounts, including either the loan amount or value of the Collateral, all at its discretion, and at Debtor's expense.  In such event, Debtor agrees to reimburse Bank for the cost of such insurance and Bank may add such cost to the Secured Obligations.  Debtor shall bear the risk of loss to the extent of any deficiency in the effective insurance coverage with respect to loss or damage to any of the Collateral.  Debtor hereby assigns to Bank the proceeds of all property insurance covering the Collateral up to the amount of the Secured Obligations and directs any insurer to make payments directly to Bank.  Debtor hereby appoints Bank its attorney-in-fact, which appointment shall be irrevocable and coupled with an interest for so long as Secured Obligations are unpaid, to file proof of loss and/or any other forms required to collect from any insurer any amount due from any damage or destruction of Collateral, to agree to and bind Debtor as to the amount of said recovery, to designate payee(s) of such recovery, to grant releases to insurer, to grant subrogation rights to any insurer, and to endorse any settlement check or draft.  Debtor agrees not to exercise any of the foregoing powers granted to Bank without Bank's prior written consent.

FINANCING STATEMENTS, CERTIFICATES OF TITLE, POWER OF ATTORNEY.  No financing statement (other than any filed or approved by Bank) covering any Collateral is on file in any public filing office.  Debtor authorizes the filing of one or more financing statements covering the Collateral in form satisfactory to Bank, and without Debtor’s signature where authorized by law, agrees to deliver certificates of title on which Bank’s lien has been indicated covering any Collateral subject to a certificate of title statute, and will pay all costs and expenses of filing or applying for the same or of filing this Security Agreement in all public filing offices, where filing is deemed by Bank to be desirable.  Upon the occurrence and continuance of a Default, Debtor hereby constitutes and appoints Bank the true and lawful attorney of Debtor with full power of substitution to take any and all appropriate action and to execute any and all documents, instruments or applications that may be necessary or desirable to accomplish the purpose and carry out the terms of this Security Agreement, including, without limitation, endorsements desirable for transfer or delivery of any Collateral, registration of any Collateral under applicable laws, retitling any Collateral, receipt, endorsement and/or collection of all checks and other orders for payment of money payable to Debtor with respect to Collateral.  The foregoing power of attorney is coupled with an interest and shall be irrevocable until all of the Secured Obligations have been paid in full.  Neither Bank nor anyone acting on its behalf shall be liable for acts, omissions, errors in judgment, or mistakes in fact in such capacity as attorney-in-fact.  Debtor ratifies all acts of Bank as attorney-in-fact.  Debtor agrees to take such other actions, at Debtor’s expense, as might be requested for the perfection, continuation and assignment, in whole or in part, of the security interests granted herein and to assure and preserve Bank’s intended priority position.  If certificates, passbooks, or other documentation or evidence is/are issued or outstanding as to any of the Collateral, Debtor will cause the security interests of Bank to be properly protected, including perfection by notation thereon or delivery thereof to Bank.  Upon Bank's request, Debtor will, at its own expense:  (i) do all things determined by Bank to be desirable to register such Collateral or qualify for an exemption from registration, under the provisions of all applicable securities laws, and (ii) otherwise do or cause to be done all other acts and things as may be necessary to make the sale of the Collateral valid, binding and in compliance with applicable law.

LANDLORD/MORTGAGEE WAIVERS.  Debtor shall use its best efforts to cause each mortgagee of real property owned by Debtor and each landlord of real property leased by Debtor to execute and deliver instruments satisfactory in form and substance to Bank by which such mortgagee or landlord subordinates its rights, if any, in the Collateral.

STOCK, DIVIDENDS.  If, with respect to any securities pledged hereunder, a stock dividend is declared, any stock split made or right to subscribe is issued, all the certificates for the shares representing such stock dividend, stock split or right to subscribe will be immediately delivered, duly endorsed, to the Bank as additional Collateral, and any cash or non-cash proceeds and products thereof, including investment property and security entitlements will be immediately delivered to Bank.  Debtor acknowledges that such grant includes all investment property and security entitlements, now existing or hereafter arising, relating to such securities.  In addition, Debtor agrees to execute such notices and instructions to securities intermediaries as Bank may reasonably request.  Notwithstanding anything herein to the contrary, the Bank shall have no right to receive and the Debtor shall be under no obligation to deliver any shares or other evidences of an equity interest in any controlled foreign corporation (as defined in Section 957 of the Internal Revenue Code of 1986, as amended) as additional Collateral, to the extent that more than 65% of the total combined voting power of all classes of stock of such controlled foreign corporation entitled to vote will constitute Collateral hereunder, or be otherwise pledged to the Bank.

NO TRADING OF COLLATERAL.  Until a Default occurs, Debtor shall have the right to vote the securities pledged hereunder and to collect and receive all cash dividends and interest distributed periodically in the ordinary course by the obligor or issuer of such Collateral or part thereof; provided, however, Debtor may not sell, transfer, exchange for other property or cash (“Trade”) or otherwise exercise rights with respect to such Collateral or receive any distributions or proceeds from Trades of such Collateral without the prior written consent of Bank, and any such distributions or proceeds received by Debtor shall be held in trust for, and immediately delivered to, Bank.  Any consent pursuant to this paragraph shall be in Bank's sole discretion.

CONTROL.  Debtor will cooperate with Bank in obtaining control with respect to Collateral consisting of electronic chattel paper.Debtor authorizes and directs Third Party to comply with the terms of this Security Agreement, to enter into a Control Agreement, to mark its records to show the security interest of and/or the transfer to Bank of the property pledged hereunder and to mail monthly statements to the Bank, in addition to Debtor, to the address provided herein.

CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES.  Debtor warrants that Collateral consisting of chattel paper, accounts, or general intangibles is (i) genuine and enforceable in accordance with its terms; (ii) not subject to any defense, set-off, claim or counterclaim of a material nature against Debtor except as to which Debtor has notified Bank in writing; and (iii) not subject to any other circumstances that would impair the validity, enforceability, value, or amount of such Collateral except as to which Debtor has notified Bank in writing.  Debtor shall not amend, modify or supplement any lease, contract or agreement contained in Collateral or waive any provision therein, without prior written consent of Bank.  Debtor will not create any tangible chattel paper without placing a legend on the chattel paper acceptable to Bank indicating that Bank has a security interest in the chattel paper.  Debtor will not create any electronic chattel paper without taking all steps deemed necessary by Bank to confer control of the electronic chattel paper upon Bank in accordance with the UCC.

ACCOUNT INFORMATION.  From time to time, at Bank's request, Debtor shall provide Bank with schedules describing all accounts, including customers' addresses, created or acquired by Debtor and at Bank's request shall execute and deliver written assignments of contracts and other documents evidencing such accounts to Bank.  Together with each schedule, Debtor shall, if requested by Bank, furnish Bank with copies of Debtor's sales journals, invoices, customer purchase orders or the equivalent, and original shipping or delivery receipts for all goods sold, and Debtor warrants the genuineness thereof.

ACCOUNT DEBTORS.  If a Default should occur, Bank shall have the right to notify the account debtors obligated on any or all of the Collateral to make payment thereof directly to Bank and Bank may take control of all proceeds of any such Collateral, which rights Bank may exercise at any time.  The cost of such collection and enforcement, including attorneys' fees and expenses, shall be borne solely by Debtor whether the same is incurred by Bank or Debtor.  If a Default should occur or upon demand of Bank, Debtor will, upon receipt of all checks, drafts, cash and other remittances in payment on Collateral, deposit the same in a special bank account maintained with Bank, over which Bank also has the power of withdrawal.

If a Default should occur, no discount, credit, or allowance shall be granted by Debtor to any account debtor and no return of merchandise shall be accepted by Debtor without Bank's consent.  Bank may, after Default, settle or adjust disputes and claims directly with account debtors for amounts and upon terms that Bank considers advisable, and in such cases Bank will credit the Secured Obligations with the net amounts received by Bank, after deducting all of the expenses incurred by Bank.  Debtor agrees to indemnify and defend Bank and hold it harmless with respect to any claim or proceeding arising out of any matter related to collection of Collateral.

GOVERNMENT CONTRACTS.  If any Collateral covered hereby arises from obligations due to Debtor from any governmental unit or organization, Debtor shall immediately notify Bank in writing and execute all documents and take all actions deemed necessary by Bank to ensure recognition by such governmental unit or organization of the rights of Bank in the Collateral.

INVENTORY.  So long as no Default has occurred, Debtor shall have the right in the regular course of business, to process and sell Debtor's inventory.  If a Default should occur or upon demand of Bank, Debtor will, upon receipt of all checks, drafts, cash and other remittances, in payment of Collateral sold, deposit the same in a special bank account maintained with Bank over which Bank also has the power of withdrawal.  Debtor agrees to notify Bank immediately in the event that any inventory purchased by or delivered to Debtor is evidenced by a bill of lading, dock warrant, dock receipt, warehouse receipt or other document of title and to deliver such document to Bank upon request.

INSTRUMENTS, CHATTEL PAPER, DOCUMENTS.  Any Collateral that is, or is evidenced by, instruments, chattel paper or negotiable documents will be properly assigned to and the originals of any such Collateral in tangible form deposited with and held by Bank, unless Bank shall hereafter otherwise direct or consent in writing.  Bank may, without notice, before or after maturity of the Secured Obligations, exercise any or all rights of collection, conversion, or exchange and other similar rights, privileges and options pertaining to such Collateral, but shall have no duty to do so.

COLLATERAL DUTIES.  Bank shall have no custodial or ministerial duties to perform with respect to Collateral pledged except as set forth herein; and by way of explanation and not by way of limitation, Bank shall incur no liability for any of the following:  (i) loss or depreciation of Collateral (unless caused by its willful misconduct or gross negligence), (ii) failure to present any paper for payment or protest, to protest or give notice of nonpayment, or any other notice with respect to any paper or Collateral, (iii) failure to ascertain, notify Debtor of, or take any action in connection with any conversion, call, redemption, retirement or any other event relating to any of the Collateral, or failure to notify any party hereto that Collateral should be presented or surrendered for any such reason.  Debtor acknowledges that Bank is not an investment advisor or insurer with respect to the Collateral; and Bank has no duty to advise Debtor of any actual or anticipated changes in the value of the Collateral.

TRANSFER OF COLLATERAL.  Bank may assign its rights in Collateral or any part thereof to any assignee who shall thereupon become vested with all the powers and rights herein given to Bank with respect to the property so transferred and delivered, and Bank shall thereafter be forever relieved and fully discharged from any liability with respect to such property so transferred, but with respect to any property not so transferred, Bank shall retain all rights and powers hereby given.

INSPECTION, BOOKS AND RECORDS.  Debtor will at all times keep accurate and complete records covering each item of Collateral, including the proceeds therefrom.  Bank, or any of its agents, shall have the right, at intervals to be determined by Bank and without hindrance or delay, at Debtor’s expense, to inspect, audit, and examine the Collateral during normal business hours and to make copies of and extracts from the books, records, journals, orders, receipts, correspondence and other data relating to Collateral, Debtor's business or any other transaction between the parties hereto.  Debtor will at its expense furnish Bank copies thereof upon request.  For the further security of Bank, it is agreed that Bank has and is hereby granted a security interest in all books and records of Debtor pertaining to the Collateral.

COMPLIANCE WITH LAW.  Debtor will comply with all federal, state and local laws and regulations, applicable to it, including without limitation, laws and regulations relating to the environment, labor or economic sanctions, in the creation, use, operation, manufacture and storage of the Collateral and the conduct of its business.

REGULATION U. None of the proceeds of the credit secured hereby shall be used directly or indirectly for the purpose of purchasing or carrying any margin stock in violation of any of the provisions of Regulation U of the Board of Governors of the Federal Reserve System ("Regulation U"), or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry margin stock or for any other purchase which might render the Loan a "Purpose Credit" within the meaning of Regulation U.

CROSS COLLATERALIZATION LIMITATION.  As to any other existing or future consumer purpose loan made by Bank to Debtor, within the meaning of the Federal Consumer Credit Protection Act, Bank expressly waives any security interest granted herein in Collateral that Debtor uses as a principal dwelling and household goods.

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION.  Debtor shall pay all of Bank's reasonable expenses actually incurred in enforcing this Security Agreement and in preserving and liquidating Collateral, including but not limited to, reasonable arbitration, paralegals', attorneys' and experts' fees and expenses, whether incurred with or without the commencement of a suit, trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

DEFAULT.  If any of the following occurs, a default ("Default") under this Security Agreement shall exist:  Loan Document Default.  A default under any Loan Document which is not cured within any applicable cure period.  Collateral Loss or Destruction.  Any loss, theft, substantial damage, or destruction of Collateral not fully covered by insurance, or as to which insurance proceeds are not remitted to Bank within 30 days of the loss.  Collateral Sale, Lease or Encumbrance.  Any sale, lease, or encumbrance of any Collateral not specifically permitted herein without prior written consent of Bank.  Levy, Seizure or Attachment.  The making of any levy, seizure, or attachment on or of Collateral which is not removed within 10 days.  Unauthorized Collection of Collateral.  Any attempt to collect, cash in or otherwise recover deposits that are Collateral.  Third Party Breach.  Any default or breach by a Third Party of any provision contained in any Control Agreement executed in connection with any of the Collateral.  Unauthorized Termination.  Any attempt to terminate, revoke, rescind, modify, or violate the terms of this Security Agreement or any Control Agreement without the prior written consent of Bank.

REMEDIES ON DEFAULT (INCLUDING POWER OF SALE).  If a Default occurs Bank shall have all the rights and remedies of a secured party under the Uniform Commercial Code.  Without limitation thereto, Bank shall have the following rights and remedies:  (i) to take immediate possession of Collateral, without notice or resort to legal process, and for such purpose, to enter upon any premises on which Collateral or any part thereof may be situated and to remove the same therefrom, or, at its option, to render Collateral unusable or dispose of said Collateral on Debtor's premises; (ii) to require Debtor to assemble the Collateral and make it available to Bank at a place to be designated by Bank; (iii) to exercise its or its affiliate’s right of set-off or Bank lien as to any monies of Debtor deposited in deposit accounts and investment accounts of any nature maintained by Debtor with Bank or affiliates of Bank, without advance notice, regardless of whether such accounts are general or special; (iv) to dispose of Collateral, as a unit or in parcels, separately or with any real property interests also securing the Secured Obligations, in any county or place to be selected by Bank, at either private or public sale (at which public sale Bank may be the purchaser) with or without having the Collateral physically present at said sale.  In addition to the foregoing, Bank shall be authorized to:  transfer into Bank's name or the name of its nominee, all or any part of the Collateral; receive all interest, dividends, and other proceeds of the Collateral; notify any person obligated on any Collateral of the security interest of Bank therein and require such person to make payment directly to Bank; demand, sue for, collect or receive the Collateral and any proceeds thereof, and/or make any settlement or compromise as Bank deems desirable with respect to any Collateral; and exercise any voting, conversion, registration, purchase or other rights of an owner, holder or entitlement holder of the Collateral.  Debtor agrees that Bank may exercise its rights under this Security Agreement without regard for the actual or potential tax consequences to Debtor under federal or state law and without regard to any instructions or directives given Bank by Debtor.

Any notice of sale, disposition or other action by Bank required by law and sent to Debtor at Debtor's address shown above, or at such other address of Debtor as may from time to time be shown on the records of Bank, at least 5 days prior to such action, shall constitute reasonable notice to Debtor.  Notice shall be deemed given or sent when mailed postage prepaid to Debtor's address as provided herein.  Bank shall be entitled to apply the proceeds of any sale or other disposition of the Collateral, and the payments received by Bank with respect to any of the Collateral, to Secured Obligations in such order and manner as Bank may determine.  Collateral that is subject to rapid declines in value and is customarily sold in recognized markets may be disposed of by Bank in a recognized market for such collateral without providing notice of sale.  Debtor waives any and all requirements that the Bank sell or dispose of all or any part of the Collateral at any particular time, regardless of whether Debtor has requested such sale or disposition.

REMEDIES ARE CUMULATIVE.  No failure on the part of Bank to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by Bank or any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any right, power or remedy.  The remedies herein provided are cumulative and are not exclusive of any remedies provided by law, in equity, or in other Loan Documents.

INDEMNIFICATION.  Debtor shall protect, indemnify and save harmless Bank from and against all losses, liabilities, obligations, claims, damages, penalties, fines, causes of action, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Damages”) imposed upon, incurred by or asserted or assessed against Bank on account of or in connection with (i) the Loan Documents or any failure or alleged failure of Debtor to comply with any of the terms of, or the inaccuracy or breach of any representation in, the Loan Documents, (ii) the Collateral or any claim of loss or damage to the Collateral or any injury or claim of injury to, or death of, any person or property that may be occasioned by any cause whatsoever pertaining to the Collateral or the use, occupancy or operation thereof, (iii) any failure or alleged failure of Debtor to comply with any law, rule or regulation applicable to it or to the Collateral or the use, occupancy or operation of the Collateral (including, without limitation, the failure to pay any taxes, fees or other charges), (iv) any Damages whatsoever by reason of any alleged action, obligation or undertaking of Bank relating in any way to or any matter contemplated by the Loan Documents, or (v) any claim for brokerage fees or such other commissions relating to the Collateral or the Secured Obligations.  Nothing contained herein shall require Debtor to indemnify Bank for any Damages resulting from Bank’s gross negligence or its willful misconduct, and such indemnity shall be effective only to the extent of any Damages that may be sustained by Bank in excess of any net proceeds received by it from any insurance of Debtor (other than self-insurance) with respect to such Damages.  The indemnity provided for herein shall survive payment of the Secured Obligations and shall extend to the officers, directors, employees and duly authorized agents of Bank.  In the event Bank incurs any Damages arising out of or in any way relating to the transaction contemplated by the Loan Documents (including any of the matters referred to in this section), the amounts of such Damages shall be added to the Secured Obligations, shall bear interest, to the extent permitted by law, at the interest rate borne by the Secured Obligations from the date incurred until paid and shall be payable on demand.

MISCELLANEOUS.  (i) Amendments and Waivers.  No waiver, amendment or modification of any provision of this Security Agreement shall be valid unless in writing and signed by Debtor and an officer of Bank.  No waiver by Bank of any Default shall operate as a waiver of any other Default or of the same Default on a future occasion.  (ii) Assignment.  All rights of Bank hereunder are freely assignable, in whole or in part, and shall inure to the benefit of and be enforceable by Bank, its successors, assigns and affiliates.  Debtor shall not assign its rights and interest hereunder without the prior written consent of Bank, and any attempt by Debtor to assign without Bank's prior written consent is null and void.  Any assignment shall not release Debtor from the Secured Obligations.  This Security Agreement shall be binding upon Debtor, and the heirs, personal representatives, successors, and assigns of Debtor.  (iii) Applicable Law; Conflict Between Documents.  This Security Agreement shall be governed by and interpreted in accordance with federal law and, except as preempted by federal law, the laws of the state named in Bank's address on the first page hereof without regard to that state's conflict of laws principles, except to the extent that the UCC requires the application of the law of a different jurisdiction.  If any terms of this Security Agreement conflict with the terms of any commitment letter or loan proposal, the terms of this Security Agreement shall control.  (iv) Jurisdiction.  Debtor irrevocably agrees to non-exclusive personal jurisdiction in the state named in the Bank’s address on the first page hereof.  (v) Severability.  If any provision of this Security Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement.  (vi) Payments.  All payments shall be mailed to Commercial Loan Services, P. O. Box 740502, Atlanta, GA  30374-0502; or such other address as provided by Bank in writing.  (vii) Notices.  Any notices to Debtor shall be sufficiently given, if in writing and mailed or delivered to the address of Debtor shown above or such other address as provided hereunder; and to Bank, if in writing and mailed or delivered to Wachovia Bank, National Association, Mail Code VA7628, P. O. Box 13327, Roanoke, VA  24040 or Wachovia Bank, National Association, Mail Code VA7628, 10 South Jefferson Street, Roanoke, VA  24011 or such other address as Bank may specify in writing from time to time.  Notices to Bank must include the mail code.  In the event that Debtor changes Debtor's mailing address at any time prior to the date the Secured Obligations are paid in full, Debtor agrees to promptly give written notice of said change of address by registered or certified mail, return receipt requested, all charges prepaid.  (viii) Captions.  The captions contained herein are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provision hereof.  The use of the plural shall also mean the singular, and vice versa.  (ix) Joint and Several Liability.  If more than one party has signed this Security Agreement, such parties are jointly and severally obligated hereunder.  (x) Binding Contract.  Debtor by execution and Bank by acceptance of this Security Agreement, agree that each party is bound by all terms and provisions of this Security Agreement.  (xi) Final Agreement.  This Agreement and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent agreements of the parties.  There are no unwritten agreements between the parties.

DEFINITIONS.  Loan Documents.  The term "Loan Documents" refers to all documents, including this Agreement, whether now or hereafter existing, executed in connection with or related to the Secured Obligations, and may include, without limitation and whether executed by Debtor or others, commitment letters that survive closing, loan agreements, promissory notes, guaranty agreements, deposit or other similar agreements, other security agreements, letters of credit and applications for letters of credit, security instruments, financing statements, mortgage instruments, any renewals or modifications, whenever any of the foregoing are executed, but does not include swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time).  Third Party.  The term “Third Party” means any Broker, Collateral Agent, Securities Intermediary and/or bank which from time to time maintains a securities account, and is acting in such capacity, for Debtor or maintains a deposit account for Debtor with respect to any part of the Collateral.  UCC.  “UCC” means the Uniform Commercial Code as presently and hereafter enacted in the Jurisdiction.  Terms defined in the UCC.  Any term used in this Agreement and in any financing statement filed in connection herewith which is defined in the UCC and not otherwise defined in this Agreement or any other Loan Document has the meaning given to the term in the UCC.

 IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused this Security Agreement to be duly executed under seal.

 DEBTOR:

TECHNOLOGY RESEARCH CORPORATION,

A Florida Corporation

By: ________________________________

      Owen Farren,

      As its President

STATE OF PENNSYLVANIA                                                                            )

COUNTY OF ____________                                                                           )

The foregoing instrument was acknowledged before me on _____________, 2007, by Owen Farren,as President of TECHNOLOGY RESEARCH CORPORATION, a Florida corporation on behalf of the corporation, ___ who is personally known to me, or ___ who has produced a driver's license as identification.

Notary Public

Print Name:                                                                

Commission No.:                                                                           

My Commission expires:

SCHEDULE "1"

TO SECURITY AGREEMENT

100% of the Non-Voting stock of TECHNOLOGY RESEARCH CORPORATION / HONDURAS, S.A. DE C.V. which constitutes ____________ shares, Certificate Numbers _______________.

65% of the Voting stock of TECHNOLOGY RESEARCH CORPORATION / HONDURAS, S.A. DE C.V. which constitutes ____________ shares, Certificate Numbers _______________.