RENEWAL AND FUTURE ADVANCE REVOLVING LINE OF CREDIT PROMISSORY NOTE

RENEWAL AND FUTURE ADVANCE
REVOLVING LINE OF CREDIT PROMISSORY NOTE

     1.  Agreement to Pay . FOR VALUE RECEIVED , SUN HYDRAULICS CORPORATION, a Florida corporation (“ Borrower ”), hereby promises to pay to the order of FIFTH THIRD BANK, a Michigan banking corporation, its successors and assigns (“ Lender ”), the principal sum of Thirty-Five Million Dollars ($35,000,000.00) (“ Loan ”), or so much thereof as may be advanced pursuant to that certain Credit and Security Agreement dated on or about even date herewith, between Borrower and Lender (“ Loan Agreement ”) at the place and in the manner hereinafter provided, together with interest thereon at the rate or rates described below, and any and all other amounts which may be due and payable hereunder from time to time. The outstanding principal balance plus all accrued interest thereon shall be due and payable, if not sooner paid, on August 1, 2011 (the “Maturity Date ”).

     2.  Interest Rate.

2.1 Interest Prior to Default .

     (a) Interest shall accrue on the outstanding principal balance of this Note advanced from time to time to Borrower’s operating account maintained with Lender (the “ Operating Account Advances ”), at an annual interest rate (the “ Operating Account Rate ”) equal to the Base Rate (as hereafter defined), adjusted daily.

     (b) Interest shall accrue on the outstanding principal balance of this Loan other than the amounts advanced from time to time to Borrower’s operating account maintained with Lender (the “ Balance of the Loan ”), at an annual interest rate (the “ Balance Rate ”) equal to the Base Rate. Borrower may request, upon not less than one business day’s prior written notice to Lender, a conversion of the Balance Rate to the 30-day LIBOR Rate (as hereafter defined) plus the applicable LIBOR Margin set forth in the following pricing matrix.

Pricing Matrix

     Notwithstanding the foregoing, from the date hereof through August 11, 2006, interest shall accrue on the Balance of the Loan at a rate equal to the 30-day LIBOR Rate plus one and one-half percent (1.50%).

     (c) Provided no Event of Default (as hereafter defined) exists, Borrower shall have the option at any time after August 11, 2006, and upon not

less than fifteen (15) days’ prior written notice to Lender and payment of any applicable fees and costs, to convert the Balance Rate, applicable to all or a portion of the Balance of the Loan, in increments of $1,000,000.00, to a fixed rate of interest (the “ Fixed Rate Option ”) (to be determined at the time of such conversion in Lender’s discretion based upon such factors, including but not limited to Bank’s then current underwriting standards, as may then be applicable) under an interest rate swap agreement.

     (d) “ Base Rate ” means the rate of interest most recently announced by Lender as its prime or base rate. A certificate made by an officer of Lender stating the Base Rate in effect on any given day, for the purposes hereof, shall be conclusive evidence of the Base Rate in effect on such day. The “Base Rate” is a base reference rate of interest adopted by Lender as a general benchmark from which Lender determines the floating interest rates chargeable on various loans to borrowers with varying degrees of creditworthiness and Borrower acknowledges and agrees that Lender has made no representations whatsoever that the “Base Rate” is the interest rate actually offered by Lender to borrowers of any particular creditworthiness. Changes in the rate of interest to be charged hereunder based on the Base Rate shall take effect immediately upon the occurrence of any change in the Base Rate.

     (e) “ 30-day LIBOR Rate ” means the variable rate of interest per annum equal to interest rate per annum published by The Wall Street Journal as “London Interbank Offered Rates” for U.S. Dollar deposits having a maturity of 30 days, as of the 11 ^th day of August, 2005, and as of the first business day of each and every calendar month thereafter through the Maturity Date. Changes in the rate of interest to be charged hereunder based on the 30-day LIBOR Rate shall take effect immediately upon the occurrence of any change in the 30-day LIBOR Rate.

     In the event that: (i) the Lender shall have determined (which determination shall be conclusive and binding upon the Borrower absent demonstrable error) that adequate and reasonable means do not exist for ascertaining the 30-day LIBOR Rate, or (ii) any law, regulation, treaty or directive or any change therein or the interpretation thereof shall make it unlawful for Lender to maintain the Loan at a rate based on the 30-day LIBOR Rate, and, in either situation, Lender is generally refusing to make loans bearing interest at rates based upon the 30-day LIBOR Rate as a result of such circumstances, Lender shall forthwith give written notice of such determination to Borrower and as long as the circumstances described in clauses (i) or (ii) shall continue, the Loan shall bear interest during such period at a rate equal to a rate of interest selected by Lender based on comparable information. Lender shall forthwith notify Borrower in writing when the circumstances described in clauses (i) or (ii), as applicable, shall cease.

     2.2 Interest After Default. From and after the Maturity Date or upon the occurrence and during the continuance of an Event of Default, interest shall accrue on the

balance of principal remaining unpaid during any such period at an annual rate (“ Default Rate ”) equal to five percent (5%) plus the Base Rate; provided, however, in no event shall the Default Rate exceed the maximum rate permitted by law. The interest accruing under this paragraph shall be immediately due and payable by Borrower to the holder of this Note upon demand and shall be additional indebtedness evidenced by this Note.

     2.3 Interest Calculation. Interest on this Note shall be calculated on the basis of a 360-day year and the actual number of days elapsed in any portion of a month in which interest is due.

     3.  Payment Terms.

     3.1 Principal and Interest. Payments of principal and interest due under this Note, if not sooner declared to be due in accordance with the provisions hereof, shall be made as follows:

     (a) Commencing on August 11, 2005, and on each Business Day thereafter through and including the Maturity Date, interest accrued on the Operating Account Advances shall be due and payable.

     (b) Commencing on September 1, 2005 and on the first Business Day of each month thereafter through and including the month in which the Maturity Date occurs, interest accrued on the Balance of the Loan shall be due and payable.

     (c) The unpaid principal balance of this Note, if not sooner paid or declared to be due in accordance with the terms hereof, together with all accrued and unpaid interest thereon and any other amounts due and payable hereunder or under any other Loan Document (as hereinafter defined), shall be due and payable in full on the Maturity Date.

     (d) Provided no Event of Default exists, any portion of the principal balance of this Note which is repaid may be reborrowed by Borrower prior to the Maturity Date provided that in no event shall the outstanding principal balance of this Note at any time exceed Thirty-Five Million Dollars ($35,000,000.00).

     3.2 Application of Payments . Prior to the occurrence of an Event of Default, all payments and prepayments on account of the indebtedness evidenced by this Note shall be applied as follows: (a) first, to fees, expenses, costs and other similar amounts then due and payable to Lender, including, without limitation any prepayment premium, exit fee or late charges due hereunder, (b) second, to accrued and unpaid interest on the principal balance of this Note, (c) third, to the payment of principal due in the month in which the payment or prepayment is made, (d) fourth, to any escrows, impounds or other amounts which may then be due and payable under the Loan Documents (as hereinafter defined), (e) fifth, to any other amounts then due Lender hereunder or under any of the Loan Documents, and (f) last, to the unpaid principal balance of this Note in the inverse order of maturity. Any prepayment on account of the indebtedness evidenced by this Note shall not extend or postpone the due date or reduce the amount of any subsequent monthly payment of principal and interest due hereunder. After an Event of Default has

occurred and is continuing, payments may be applied by Lender to amounts owed hereunder and under the Loan Documents in such order as Lender shall determine, in its sole discretion.

     3.3 Method of Payments . All payments of principal and interest hereunder shall be paid by automatic debit, wire transfer, check or in coin or currency which, at the time or times of payment, is the legal tender for public and private debts in the United States of America and shall be made at such place as Lender or the legal holder or holders of this Note may from time to time appoint in the payment invoice or otherwise in writing, and in the absence of such appointment, then at the offices of Lender at 4401 W. Kennedy Blvd., Suite 300, Tampa, Florida 33609. Payment made by check shall be deemed paid on the date Lender receives such check; provided, however, that if such check is subsequently returned to Lender unpaid due to insufficient funds or otherwise, the payment shall not be deemed to have been made and shall continue to bear interest until collected. Notwithstanding the foregoing, the final payment due under this Note must be made by wire transfer or other final funds. Interest, principal payments and any fees and expenses owed Lender from time to time will be deducted by Lender automatically on the due date from Borrower’s account with Lender, as designated in writing by Borrower. Borrower will maintain sufficient funds in the account on the dates Lender enters debits authorized by this Note. If there are insufficient funds in the account on the date Lender enters any debit authorized by this Note, the debit will be reversed. Borrower may terminate this direct debt arrangement at any time by sending written notice to Lender at the address specified above.

     3.4 Late Charge . If any payment of interest or principal due hereunder is not made within five days after such payment is due in accordance with the terms hereof, then, in addition to the payment of the amount so due, Borrower shall pay to Lender a “late charge” of five cents for each whole dollar so overdue to defray part of the cost of collection and handling such late payment. Borrower agrees that the damages to be sustained by the holder hereof for the detriment caused by