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

                            QUESTRON TECHNOLOGY, INC.

                              and its Subsidiaries

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






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

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



                           LOAN AND SECURITY AGREEMENT



                         Dated as of September 24, 1998



                                   $45,000,000




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

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





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

        CONGRESS FINANCIAL CORPORATION (FLORIDA), AS ADMINISTRATIVE AGENT
                      MADELEINE L.L.C., AS COLLATERAL AGENT

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



<PAGE>


                                TABLE OF CONTENTS



<TABLE>
<S>                  <C>                                                                                         <C>
SECTION 1.            CREDIT FACILITY.............................................................................1
                      1.1      Revolving Credit Loans.............................................................1
                      1.2      Term Loans.........................................................................2
                      1.3      Discretionary Additional Term Loan.................................................3

SECTION 2.            INTEREST, FEES AND CHARGES..................................................................3
                      2.1      Interest...........................................................................3
                      2.2      Computation of Interest and Fees...................................................4
                      2.3      Rate Elections.....................................................................5
                      2.4      LIBOR Option.......................................................................5
                      2.5      Fee Letter Fees....................................................................7
                      2.6      Administrative Agency Fee..........................................................7
                      2.7      [Intentionally Omitted]............................................................7
                      2.8      Unused Line Fee....................................................................7
                      2.9      [Intentionally Omitted]............................................................7
                      2.10     Audit and Appraisal Fees...........................................................7
                      2.11     Reimbursement of Expenses..........................................................7
                      2.12     Bank Charges.......................................................................8

SECTION 3.            LOAN ADMINISTRATION.........................................................................8
                      3.1      Manner of Borrowing Revolving Credit Loans.........................................8
                      3.2      Payments..........................................................................11
                      3.3      Mandatory Prepayments.............................................................15
                      3.4      Application of Payments and Collections...........................................16
                      3.5      All Loans to Constitute One Obligation............................................16
                      3.6      Loan Account......................................................................16
                      3.7      Statements of Account.............................................................17
                      3.8      General Provisions................................................................17
                      3.9      Pro Rata Treatment................................................................17
                      3.10     Sharing of Payments, Etc..........................................................18

SECTION 4.            TERM AND TERMINATION.......................................................................18
                      4.1      Term of Agreement.................................................................18
                      4.2      Termination.......................................................................19

SECTION 5.            SECURITY INTERESTS.........................................................................19
                      5.1      Interest in Collateral............................................................19
                      5.2      Lien Perfection, Further Assurances...............................................20
                      5.3      [Intentionally Omitted]...........................................................20

SECTION 6.            COLLATERAL ADMINISTRATION..................................................................20
                      6.1      General...........................................................................20
</TABLE>

                                      -i-


<PAGE>

<TABLE>
<S>                  <C>                                                                                         <C>
                      6.2      Administration of Accounts........................................................21
                      6.3      Administration of Inventory.......................................................23
                      6.4      Administration of Equipment.......................................................23
                      6.5      Payment of Charges................................................................24

SECTION 7.            REPRESENTATIONS AND WARRANTIES.............................................................24
                      7.1      General Representations and Warranties............................................24
                      7.2      [Intentionally Omitted]...........................................................31
                      7.3      Survival of Representations and Warranties........................................31

SECTION 8.            COVENANTS AND CONTINUING AGREEMENTS........................................................31
                      8.1      Affirmative Covenants.............................................................31
                      8.2      Negative Covenants................................................................34
                      8.3      Specific Financial Covenants......................................................37

SECTION 9.            CONDITIONS PRECEDENT TO INITIAL CREDITS....................................................38
                      9.1      Documentation.....................................................................39
                      9.2      Other Loan Documents..............................................................39
                      9.3      Certificates of Title.............................................................39
                      9.4      Approvals and Consents............................................................40
                      9.5      Certified Documents of Borrower...................................................40
                      9.6      Confirmation Searches.............................................................40
                      9.7      Opinion of Counsel................................................................40
                      9.8      Pay-Off Letter and UCC Termination Statements, Etc................................40
                      9.9      Projections.......................................................................41
                      9.10     Closing Date......................................................................41
                      9.11     Availability......................................................................41
                      9.12     No Litigation.....................................................................41
                      9.13     Acquisitions......................................................................41
                      9.14     [Intentionally Omitted]...........................................................41
                      9.15     Appraisals........................................................................41
                      9.16     Reference Checks..................................................................41
                      9.17     Pro Forma Balance Sheet...........................................................42

SECTION 9A.           CONDITIONS PRECEDENT TO ALL CREDITS........................................................42
                      9A.1     No Default........................................................................42
                      9A.2     Representations and Warranties....................................................42
                      9A.3     Adverse Changes...................................................................42
                      9A.4     Injunctions.......................................................................42

SECTION 10.           EVENTS OF DEFAULT, RIGHTS AND REMEDIES ON DEFAULT..........................................42
                      10.1     Events of Default.................................................................42
                      10.2     Acceleration of the Obligations...................................................45
                      10.3     Other Remedies....................................................................45
                      10.4     Remedies Cumulative, No Waiver....................................................46

SECTION 11.           THE AGENTS.................................................................................47
</TABLE>


                                      -ii-

<PAGE>

<TABLE>
<S>                  <C>                                                                                         <C>
                      11.1     Appointment Powers and Immunities; Delegation of Duties; Liability of
                               Agents............................................................................47
                      11.2     Reliance by Agent.................................................................49
                      11.3     Defaults..........................................................................49
                      11.4     Rights as a Lender................................................................50
                      11.5     Costs and Expenses; Indemnification...............................................50
                      11.6     Nonreliance on Agent and Other Lenders............................................51
                      11.7     Failure to Act....................................................................51
                      11.8     Resignation of Agent..............................................................52
                      11.9     Collateral Sub-Agents.............................................................52
                      11.10    Communications by Borrower........................................................52
                      11.11    Collateral Matters................................................................53
                      11.12    Restrictions on Actions by Administrative Agent and the Lenders; Sharing
                               of Payments.......................................................................54
                      11.13    Withholding Tax...................................................................54
                      11.14    Several Obligations; No Liability.................................................55

SECTION 12.           MISCELLANEOUS..............................................................................56
                      12.1     Power of Attorney.................................................................56
                      12.2     Indemnity.........................................................................57
                      12.3     Amendments, Etc...................................................................57
                      12.4     Successors; Assignments and Participations........................................59
                      12.5     Concerning the Collateral and Related Loan Documents..............................62
                      12.6     Field Audits and Examination Reports; Confidentiality; Disclaimers by
                               Lenders; Other Reports and Information............................................62
                      12.7     Severability......................................................................63
                      12.8     Successors and Assigns............................................................63
                      12.9     Cumulative Effect, Conflict of Terms..............................................63
                      12.10    Execution in Counterparts.........................................................64
                      12.11    Notice............................................................................64
                      12.12    Lender Group's Consent............................................................65
                      12.13    Credit Inquiries..................................................................65
                      12.14    Certain Matters of Construction...................................................66
                      12.15    Entire Agreement..................................................................66
                      12.16    Interpretation....................................................................66
                      12.17    GOVERNING LAW; CONSENT TO FORUM...................................................66
                      12.18    WAIVERS BY BORROWER...............................................................67
</TABLE>
                                     -iii-

<PAGE>



                           LOAN AND SECURITY AGREEMENT



                  THIS LOAN AND SECURITY  AGREEMENT is made as of September  24,
1998, by and among QUESTRON  TECHNOLOGY,  INC., a Delaware  corporation ("QTI"),
with its chief executive office and principal place of business at 6400 Congress
Avenue, Suite 200A, Boca Raton, Florida 33487, QUESTRON DISTRIBUTION  LOGISTICS,
INC.,  a Delaware  corporation  ("QDLI"),  with its chief  executive  office and
principal  place of business at 6400 Congress  Avenue,  Suite 200A,  Boca Raton,
Florida  33487,  INTEGRATED  MATERIAL  SYSTEMS,  INC.,  an  Arizona  corporation
("IMSI"),  with its chief  executive  office and principal  place of business at
6400 Congress Avenue,  Suite 200A, Boca Raton,  Florida 33487, POWER COMPONENTS,
INC., a Pennsylvania  corporation  ("PCI"),  with its chief executive office and
principal  place of business at 6400 Congress  Avenue,  Suite 200A,  Boca Raton,
Florida 33487,  CALIFORNIA  FASTENERS,  INC., a California  corporation ("CFI"),
with its chief executive office and principal place of business at 6400 Congress
Avenue,  Suite 200A,  Boca Raton,  Florida  33487,  COMP WARE,  INC., a Delaware
corporation  doing  business  as  Webb  Distribution  ("CWI"),  with  its  chief
executive office and principal place of business at 6400 Congress Avenue,  Suite
200A, Boca Raton, Florida 33487, FAS-TRONICS, INC., a Texas corporation ("FTI"),
with its chief executive office and principal place of business at 6400 Congress
Avenue, Suite 200A, Boca Raton, Florida 33487, FORTUNE INDUSTRIES, INC., a Texas
corporation  ("FII"),  with its chief  executive  office and principal  place of
business at 6400 Congress  Avenue,  Suite 200A, Boca Raton,  Florida 33487 (QTI,
QDLI,  IMSI, PCI, CFI, CWI, FTI, and FII,  individually  and  collectively,  and
jointly  and  severally,  are  referred  in this  Agreement  and the other  Loan
Documents  as  "Borrower"),  each of the  lenders  that is a  signatory  to this
Agreement  (together with its successors  and permitted  assigns,  individually,
"Lender"  and,   collectively,   "Lenders"),   CONGRESS  FINANCIAL   CORPORATION
(FLORIDA),  a Florida  corporation,  as administrative agent for the Lenders (in
such  capacity,  together  with  its  successors,  if  any,  in  such  capacity,
"Administrative  Agent"),  with an office at 777  Brickell  Avenue,  Suite  808,
Miami,  Florida  33131,  and  MADELEINE  L.L.C.,  a New York  limited  liability
company,  as collateral  agent for the Lender Group (in such capacity,  together
with its  successors,  if any, in such capacity,  "Collateral  Agent"),  with an
office at 450 Park Avenue,  28th Floor,  New York,  New York 10022.  Capitalized
terms used in this  Agreement  have the meanings  assigned to them in Appendix A
attached  hereto.  Accounting  terms not otherwise  specifically  defined herein
shall be construed in accordance with GAAP, consistently applied.

      CREDIT FACILITY

                  Subject to the terms and  conditions  of, and in reliance upon
the  representations  and warranties  made in, this Agreement and the other Loan
Documents,  the  Lenders  agree to make a Total  Credit  Facility of (subject to
Section 1.3) up to $45,000,000  available upon Borrower's  request therefor,  as
follows:

                  1.1 Revolving Credit Loans.

                       1.1.1 Loans and Reserves.  Each  Revolving  Credit Lender
agrees,  ratably in accordance with its respective  Revolving Credit Commitment,
and subject to the satisfaction

                                      -1-

<PAGE>



of the applicable conditions precedent set forth in Sections 9 and 9A hereof, to
make  Revolving  Credit  Loans to Borrower  from time to time,  as  requested by
Borrower  in the  manner  set forth in  Section  3.1.1  hereof,  up to a maximum
principal  amount at any time  outstanding  not to exceed such Lender's Pro Rata
Share (in accordance with its Revolving Credit Commitment) of an amount equal to
the lesser of (a) the Maximum  Amount,  or (b) the  Borrowing  Base at such time
minus the amount of reserves, if any, established by Administrative Agent as set
forth below.  Administrative Agent shall have the right to establish reserves in
such amounts,  and with respect to such matters, as Administrative Agent deem in
good faith  necessary or  appropriate,  against the amount of  Revolving  Credit
Loans which Borrower may otherwise request under this Section 1.1.1,  including,
without  limitation,  with respect to (i) price adjustments,  damages,  unearned
discounts,  returned  products or other  matters for which credit  memoranda are
issued in the ordinary course of Borrower's business, (ii) shrinkage,  spoilage,
and obsolescence of Inventory, (iii) slow moving Inventory, (iv) sums chargeable
against  Borrower's Loan Account as Revolving  Credit Loans under any section of
this  Agreement,  (v)  amounts  owing by  Borrower  to any  Person to the extent
secured by a Lien on, or trust over,  any  Property of  Borrower,  and (vi) such
other matters, events,  conditions,  or contingencies as to which Administrative
Agent,  in its good faith sole credit  judgment,  determines  reserves should be
established  from time to time  hereunder.  The Revolving  Credit Loans shall be
evidenced  hereby  and by the  Revolving  Notes,  shall be secured by all of the
Collateral, and shall constitute Obligations.

                       1.1.2 Use of Proceeds.  The Revolving  Credit Loans shall
be used  solely (a) on the Closing  Date,  for (i) the  satisfaction  in full of
existing   Indebtedness  of  Borrower  to  Existing  Lender,   (ii)  payment  of
transactional  costs,  expenses,  and fees  incurred  in  connection  with  this
Agreement  and the other Loan  Documents,  and (iii) funding the cash portion of
the  purchase  price of each of the  Acquisitions,  and (b) from and  after  the
Closing Date, for Borrower's  general corporate  purposes in a manner consistent
with the provisions of this Agreement  (including  funding (i) cash payments for
deferred   purchase  price  adjustments   pursuant  to  acquisition   agreements
(irrespective  of  whether  related  to  acquisitions  consummated  prior to the
Closing Date, the Acquisition  Documents,  or acquisition  agreements related to
Permitted  Acquisitions  consummated after the Closing Date), and (ii) such cash
portion of the purchase price of Permitted  Acquisitions as the Required Lenders
may permit in their sole and absolute discretion) and all applicable laws.

                  1.2 Term Loans.

                       1.2.1 Term Loan A. Lenders  agree,  ratably in accordance
with their  respective Term Loan A Commitments,  and subject to the satisfaction
of the applicable conditions precedent set forth in Sections 9 and 9A hereof, to
make term loans (collectively, "Term Loan A") to Borrower on the Closing Date in
an  aggregate  principal  amount  of  $25,000,000,  which  Term  Loan A shall be
repayable in  accordance  with the terms of Term Note A, shall be secured by all
of the Collateral, and shall constitute Obligations. The proceeds of Term Loan A
shall be used solely for the purposes set forth in Section 1.1.2 above.

                       1.2.2 Term Loan B. Lenders  agree,  ratably in accordance
with their  respective Term Loan B Commitments,  and subject to the satisfaction
of the applicable conditions precedent set forth in Sections 9 and 9A hereof, to
make term loans (collectively, "Term Loan B") to Borrower on the Closing Date in
an aggregate principal amount of

                                      -2-

<PAGE>

$5,000,000, which Term Loan B shall be repayable in accordance with the terms of
Term Note B,  shall be secured by all of the  Collateral,  and shall  constitute
Obligations.  The  proceeds of Term Loan B shall be used solely for the purposes
set forth in Section 1.1.2 above.

                  1.3  Discretionary  Additional  Term  Loan.  Upon the  written
request  therefor by Borrower  and the written  approval by all  Lenders,  which
approval may be withheld or conditioned  in the sole and absolute  discretion of
any Lender,  the Term Loan  Lenders (or a subset of such Term Loan  Lenders) may
make  additional  term  loans to  Borrower  in an  aggregate  amount of up to an
additional $15,000,000 after the Closing Date, which additional term loans would
be repayable in accordance with terms and conditions  satisfactory to all of the
Term Loan Lenders in their sole and  absolute  discretion  (it being  understood
that, in no event,  would the repayment of such  additional term loans following
an Event of Default be prior to the  repayment of the Revolving  Credit  Loans),
shall be secured by Collateral Agent's Liens on all of the Collateral, and shall
constitute Obligations. The proceeds of such additional term loans shall be used
solely to fund the cash portions of such additional acquisitions by Borrower (if
any) as all of the Term Loan Lenders, Administrative Agent, and Collateral Agent
in their  sole and  absolute  discretion  may permit in  writing.  If and to the
extent that the Term Loan Lenders  agree to make such  additional  term loans on
the conditions set forth above (including the  non-impairment of the priority of
repayment of the  Revolving  Credit  Loans),  the Revolving  Credit  Lenders and
Administrative  Agent  agree  to  execute  and  deliver  any  amendment  to this
Agreement,  approved by Borrower, each of the Term Loan Lenders,  Administrative
Agent, and Collateral  Agent,  that provides for the incurrence,  securing,  and
repayment of such  additional  term loans and permits the  consummation  of such
additional  acquisitions  as are to be  consummated  with the  proceeds  of such
additional term loans.

SECTION 2.      INTEREST, FEES AND CHARGES

                  2.1 Interest.

                       2.1.1 Rates of Interest.

                              (a)   Term Loan A and Term Loan B. Interest  shall
                  accrue on Term Loan A and be  payable in  accordance  with the
                  terms of Term Note A. Interest shall accrue on Term Loan B and
                  be payable in accordance with the terms of Term Note B.

                              (b)      Revolving Loans.

                                            (i)  During  all  times  that a Base
                            Rate Election is in effect, interest shall accrue on
                            the  principal  amount  of the Base  Rate  Revolving
                            Credit Portion outstanding at the end of each day at
                            the  greater  of  (y)  9%  per  annum,   and  (z)  a
                            fluctuating  rate per  annum  equal to the Base Rate
                            plus  1%.  The  rate of  interest  set  forth in the
                            foregoing  clause (z) shall  increase or decrease by
                            an amount  equal to any  increase or decrease in the
                            Base Rate,  effective  as of the opening of business
                            on the day  that any such  change  in the Base  Rate
                            occurs.

                                      -3-

<PAGE>

                                            (ii)  During  all times that a LIBOR
                            Rate Election is in effect, interest shall accrue on
                            the principal  amount of the LIBOR Revolving  Credit
                            Portions  outstanding  at the end of each day at the
                            greater  of (y) 9% per  annum,  and  (z) a rate  per
                            annum  equal to the  LIBOR  Rate  applicable  to the
                            relevant  LIBOR  Revolving  Credit  Portion  for the
                            corresponding  LIBOR Period plus the LIBOR Revolving
                            Credit Margin. 

                       2.1.2  Default  Rate of  Interest.  Upon  and  after  the
occurrence  of an Event of Default,  and during the  continuation  thereof,  the
principal  amount of all Loans shall bear  interest at a rate per annum equal to
3% above the interest rate otherwise applicable thereto (the "Default Rate").

                       2.1.3 Maximum Interest.  In no event whatsoever shall the
aggregate of all amounts deemed  interest  hereunder or under any Revolving Note
or Term Note and charged or collected pursuant to the terms of this Agreement or
pursuant to any Revolving Note or Term Note exceed the highest rate  permissible
under  any  law  which a  court  of  competent  jurisdiction  shall,  in a final
determination,  deem applicable  hereto.  If any provisions of this Agreement or
any  Revolving  Note or Term Note are in  contravention  of any such  law,  such
provisions shall be deemed amended to conform thereto.

                  2.2 Computation of Interest and Fees. Interest and unused line
fees  hereunder  shall be  calculated  daily and shall be computed on the actual
number of days  elapsed  over a year of 360 days.  For the purpose of  computing
interest  hereunder,  all items of payment received by Administrative  Agent for
the account of the Lender Group shall be deemed applied by Administrative  Agent
on account of the  Obligations  (subject to final  payment of such items) on the
Business Day of receipt by  Administrative  Agent of such items (in  immediately
available funds) in Administrative Agent's Account.

                  2.3 Rate Elections. Unless one or more LIBOR Rate Elections by
Borrower are in effect,  Borrower shall be deemed to have made an effective Base
Rate  Election as to all of the Revolving  Credit  Loans,  Term Loan A, and Term
Loan B. If one or more LIBOR Rate  Elections  have been made by Borrower and are
in effect,  then Borrower  shall be deemed to have made a LIBOR Rate Election as
to the Revolving Credit Loans, Term Loan A, or Term Loan B, as applicable,  that
are the subject  thereof and Borrower  shall be deemed to have made an effective
Base Rate Election as to the balance of the Revolving Credit Loans, Term Loan A,
and Term Loan B that are not the subject thereof.

                  2.4 LIBOR Option.

                                     (a)   Upon   the   conditions   that:   (i)
                  Administrative  Agent shall have received a LIBOR Request from
                  Borrower  at least 3  Business  Days prior to the first day of
                  the LIBOR Period requested,  (ii) there shall have occurred no
                  change in  applicable  law which  would make it  unlawful  for
                  Administrative  Agent  or any  Revolving  Credit  Lender  with
                  respect to Revolving  Credit Loans or Collateral  Agent or any
                  Term Loan Lender with respect to Term Loans to obtain deposits
                  of U.S.  dollars  in the  London  interbank  foreign  currency
                  deposits market, (iii) as of the date of the LIBOR Request and
                  the  first  day of the  LIBOR  Period,  there  shall  

                                      -4-

<PAGE>

                  exist no  Default  or Event of  Default,  (iv)  Administrative
                  Agent with  respect to Revolving  Credit  Loans or  Collateral
                  Agent  with  respect to Term  Loans is able to  determine  the
                  LIBOR  Rate in  respect  of the  requested  LIBOR  Period,  or
                  Administrative Agent with respect to Revolving Credit Loans or
                  Collateral  Agent with respect to Term Loans is able to obtain
                  deposits  of U.S.  dollars  in the  London  interbank  foreign
                  currency deposits market in the applicable amounts and for the
                  requested LIBOR Period,  (v) as of the first date of the LIBOR
                  Period,  there are no more than 4 outstanding  LIBOR Portions,
                  including  the LIBOR Portion  being  requested,  and (vi) each
                  such  election  is in respect  of a LIBOR  Portion of not less
                  than $2,500,000 or an integral multiple thereof, then interest
                  on  the  LIBOR  Portion  requested  during  the  LIBOR  Period
                  requested will be based on the applicable LIBOR Rate.

                                     (b) Each LIBOR Request shall be irrevocable
                  and binding on Borrower.  Borrower shall  indemnify the Lender
                  Group for any loss,  penalty,  or expense  incurred by Lenders
                  due to  failure  on the part of  Borrower  to  fulfill,  on or
                  before the date specified in any LIBOR Request, the applicable
                  conditions   set  forth  in  this  Agreement  or  due  to  the
                  prepayment of the  applicable  LIBOR Portion prior to the last
                  day  of  the  applicable  LIBOR  Period,  including,   without
                  limitation,  any loss (including loss of anticipated  profits)
                  or  expense   incurred  by  reason  of  the   liquidation   or
                  redeployment of deposits or other funds acquired by the Lender
                  Group to fund or maintain the requested LIBOR Portion.  

                                     (c) If any Legal Requirement shall (i) make
                  it unlawful for  Administrative  Agent or any Revolving Credit
                  Lender with respect to Revolving  Credit Loans,  or Collateral
                  Agent or any Term Loan Lender with  respect to Term Loans,  to
                  fund  through the purchase of U.S.  dollar  deposits any LIBOR
                  Portion,  or  otherwise  give  effect  to its  obligations  as
                  contemplated  under  this  Section  2.4,  or  (ii)  impose  on
                  Administrative  Agent  or any  Revolving  Credit  Lender  with
                  respect to Revolving  Credit Loans, or Collateral Agent or any
                  Term Loan Lender with respect to Term Loans any costs based on
                  or  measured  by the  excess  above a  specified  level of the
                  amount of a category of deposits or other  liabilities of such
                  member  of  the  Lender  Group  which  includes   deposits  by
                  reference  to which the LIBOR Rate is  determined  as provided
                  herein or a category of  extensions  of credit or other assets
                  of such member of the Lender  Group which  includes  any LIBOR
                  Portion,  or  (iii)  impose  on  Administrative  Agent  or any
                  Revolving  Credit  Lender  with  respect to  Revolving  Credit
                  Loans,  or  Collateral  Agent or any  Term  Loan  Lender  with
                  respect to Term Loans any restrictions on the amount of such a
                  category  of  liabilities  or assets  which such member of the
                  Lender Group may hold, then, in each such case, Administrative
                  Agent with  respect to Revolving  Credit  Loans or  Collateral
                  Agent with  respect to Term  Loans may,  by notice  thereof to
                  Borrower, terminate the LIBOR Rate Election. Any LIBOR Portion
                  subject thereto shall immediately bear interest  thereafter at
                  the rate and in the  manner  provided  for Base Rate  Portions
                  pursuant  hereto.  Borrower  shall  indemnify the Lender Group
                  against any loss,  penalty,  or expense incurred by the Lender
                  Group due to liquidation or  redeployment of deposits or other
                  funds

                                      -5-

<PAGE>

                  acquired  by the Lender  Group to fund or  maintain  any LIBOR
                  Portion that is prepaid by Borrower or terminated hereunder.


                                     (d)  Lenders  shall  receive   payments  of
                  amounts of principal of and interest on the Loans with respect
                  to the LIBOR Portions free and clear of, and without deduction
                  for, any Taxes.  If (i) Lenders shall be subject to any Tax in
                  respect of any LIBOR  Portion,  or any part thereof,  or, (ii)
                  Borrower  shall be required to withhold or deduct any Tax from
                  any such  amount,  the LIBOR  Rate  applicable  to such  LIBOR
                  Portion shall be adjusted by Administrative Agent on behalf of
                  the Lender Group to reflect all  additional  costs incurred by
                  the Lender Group in connection  with the payment by the Lender
                  Group or the  withholding by Borrower of such Tax and Borrower
                  shall  provide  Administrative  Agent on behalf of the  Lender
                  Group with a  statement  detailing  the amount of any such Tax
                  actually  paid by Borrower.  Determination  by  Administrative
                  Agent on  behalf  of the  Lender  Group of the  amount of such
                  costs shall,  in the absence of manifest error, be conclusive.
                  If after any such  adjustment  any part of any Tax paid by the
                  Lender Group is  subsequently  recovered by the Lender  Group,
                  the  applicable  members of the Lender  Group shall  reimburse
                  Borrower  to  the  extent  of  the  amount  so  recovered.   A
                  certificate  of an officer  of  Administrative  Agent  setting
                  forth the  amount  of such  recovery  and the  basis  therefor
                  shall, in the absence of manifest  error,  be conclusive.  

                  2.5 Fee Letter  Fees.  Borrower  shall pay to the  Collateral
Agent the fees set forth in the Fee Letter in accordance  with the terms thereof
and such fees are Obligations hereunder.

                  2.6   Administrative   Agency  Fee.   Borrower  shall  pay  to
Administrative  Agent (for its sole and separate  account),  on the Closing Date
and on first day of each  month  thereafter,  an  administrative  agency  fee of
$2,000 per month. Such fee, once paid, shall be fully earned and nonrefundable.

                  2.7 [Intentionally Omitted]

                  2.8 Unused  Line Fee.  Borrower  shall pay to  Administrative
Agent (for its sole and separate account), a fee equal to 0.25% per annum of the
average monthly amount by which (a) the Maximum Amount exceeds (b) the Revolving
Facility Usage.

                  2.9 [Intentionally Omitted]

                  2.10  Audit  and  Appraisal   Fees.   Borrower  shall  pay  to
Administrative  Agent: (a) for the sole and separate  account of  Administrative
Agent, all out-of-pocket costs and expenses incurred by Administrative  Agent in
connection  with  audits  of  Borrower's   books  and  records  related  to  the
Collateral;  and (b) for the  benefit  of  Collateral  Agent  for the  sole  and
separate  account of  Collateral  Agent,  all  out-of-pocket  costs and expenses
incurred  by  Collateral  Agent  in  connection  with (i) so long as no Event of
Default has occurred and is continuing,  confirmations  of Borrower's  financial
and  Collateral  reporting,   and  (ii)  upon  the  occurrence  and  during  the
continuation of an Event of Default,  confirmations of Borrower's  financial and

                                      -6-

<PAGE>


Collateral reporting and appraisals of the Collateral,  plus,  in each case, all
fees and  expenses  incurred by  Collateral  Agent in  connection  with any such
confirmations  or appraisals of the Collateral  commissioned by Collateral Agent
and performed by third party confirming  parties and appraisers.  All such fees,
costs, and expenses shall be payable pursuant to Section 3.1.3.

                  2.11  Reimbursement  of  Expenses.  If,  at any  time or times
regardless  of whether an Event of Default  then exists,  Administrative  Agent,
Collateral Agent, or any Lender incurs legal or accounting expenses or any other
costs or  out-of-pocket  expenses in  connection  with (a) the  negotiation  and
preparation  of  this  Agreement  or any of the  other  Loan  Documents,  or any
amendment  of or  modification  of  this  Agreement  or any of  the  other  Loan
Documents,  (b) the  administration  of this  Agreement or any of the other Loan
Documents  and  the  transactions  contemplated  hereby  and  thereby,  (c)  any
litigation,  contest, dispute, suit, proceeding or action (whether instituted by
the Lender  Group,  Borrower,  or any other  Person) in any way  relating to the
Collateral,  this  Agreement or any of the other Loan  Documents  or  Borrower's
affairs,  (d) any  attempt to enforce  any  rights of the Lender  Group  against
Borrower  or any other  Person  which may be  obligated  to the Lender  Group by
virtue of this Agreement or any of the other Loan Documents,  or (e) any attempt
to inspect,  verify,  protect,  preserve,  restore,  collect, sell, liquidate or
otherwise  dispose of or realize upon the  Collateral,  then all such reasonable
legal and accounting  expenses,  other costs and  out-of-pocket  expenses of the
Lender Group shall be charged to Borrower.  All amounts  chargeable  to Borrower
under this Section 2.11 shall be Obligations  secured by all of the  Collateral,
shall be  payable  on demand to  Administrative  Agent  for the  benefit  of the
applicable  members of the Lender  Group,  and shall bear interest from the date
such  demand is made  until  paid in full at the rate  applicable  to  Revolving
Credit Loans from time to time.  Borrower also shall reimburse  Collateral Agent
for  expenses  incurred  by  Collateral  Agent  in  its  administration  of  the
Collateral to the extent and in the manner provided in Section 6 hereof.

                  2.12 Bank Charges.  Borrower  shall pay to the Lender Group in
accordance with Section  3.1.1(b) any and all fees,  costs, or expenses that the
Lender Group pays to a bank or other  similar  institution  arising out of or in
connection  with (a) the forwarding to Borrower or any other Person on behalf of
Borrower,  by the Lender Group, of proceeds of Loans made by the Lender Group to
Borrower  pursuant to this  Agreement,  and (b) the depositing for collection by
the Lender  Group,  of any check or item of payment  received by or delivered to
the Lender Group on account of the Obligations.

SECTION 3.   LOAN ADMINISTRATION

                  3.1 Manner of Borrowing  Revolving  Credit  Loans.  Borrowings
under the credit facility established pursuant to Section 1.1 hereof shall be as
follows:

                       3.1.1 Loan  Requests.  A request for a  Revolving  Credit
Loan shall be made, or shall be deemed to be made, in the following manner:  (a)
Borrower may give  Administrative  Agent notice of its  intention to borrow,  in
which notice Borrower shall specify the amount of the proposed borrowing and the
proposed  borrowing  date,  no later  than  11:00  a.m.  (New York  time) on the
proposed borrowing date (which also shall be a Business Day); provided, however,
that no such  request may be made at a time when the  conditions  precedent  set
forth in Section 9A hereof are not  satisfied,  and (b) the  becoming due of any
amount required 

                                      -7-

<PAGE>

to be paid under this  Agreement,  the Fee Letter,  any  Revolving  Note or Term
Note,  or any other Loan  Document,  whether of principal or interest or for any
other  Obligation,  shall be deemed  irrevocably to be a request for a Revolving
Credit  Loan on the due  date in the  amount  required  to pay  such  principal,
interest, or other Obligation.  As an accommodation to Borrower,  Administrative
Agent may permit  telephonic  requests for Revolving Credit Loans and electronic
transmittal  of  instructions,   authorizations,   agreements,   or  reports  to
Administrative   Agent  by  Borrower.   Unless  Borrower   specifically  directs
Administrative  Agent  in  writing  not to  accept  or act  upon  telephonic  or
electronic  communications from Borrower,  neither Agent nor any other member of
the Lender  Group shall have any  liability  to Borrower  for any loss or damage
suffered  by  Borrower  as a result of  Administrative  Agent's  honoring of any
requests,  execution of any  instructions,  authorizations,  or  agreements,  or
reliance on any reports  communicated to it telephonically or electronically and
purporting  to  have  been  sent  to  Administrative  Agent  by  Borrower,   and
Administrative  Agent  shall  have no duty to  verify  the  origin  of any  such
communication or the authority of the person sending it.

                       3.1.2 Funding by Lenders. Administrative Agent shall from
time to time, but no less frequently than weekly,  notify each Revolving  Credit
Lender of the date such  Lender is to fund its  Revolving  Credit  Loans and the
amount to be made available by it. If and to the extent that a Revolving  Credit
Lender and Administrative Agent so agree, at Administrative  Agent's discretion,
the amount to be made available by such Revolving  Credit Lender on any date may
be netted  against  any amount  owing to such  Lender and  otherwise  payable by
Administrative Agent on account of payments received by it from Borrower on such
date.  The amount to be made  available by each  Revolving  Credit Lender on any
date  shall be made  available  by it on such  date to  Administrative  Agent at
Administrative  Agent's Account, in immediately  available funds, not later than
1:00  p.m.  (New York  time) on any day in the case of  fundings  of which  such
Lenders have  received  notice not later than 11:00 a.m. (New York time) on such
day (or, if notice is received  after such time,  not later than 12:00 p.m. (New
York  time)  on the  next  succeeding  Business  Day).  The  obligation  of each
Revolving Credit Lender to Administrative Agent (as opposed to Borrower) to fund
its  Revolving  Credit Loans on the date  specified by  Administrative  Agent is
absolute  and  unconditional  and  shall  not be  affected  by any  circumstance
whatsoever, including (a) any set off counterclaim, recoupment, defense or other
right which such Lender may have against  Administrative  Agent, Borrower or any
other Person for any reason whatsoever, (b) the financial condition or prospects
of Borrower, (c) the failure of any other such Lender to make funds available to
Agent  with  respect  to its  Revolving  Credit  Loans,  (d) the  occurrence  or
continuation  of an Event of Default,  whether  the same shall  occur  before or
after  Administrative  Agent shall have made the Revolving  Credit Loans, or (e)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.

                       3.1.3 Disbursement by Administrative  Agent. Borrower and
the Lender Group hereby irrevocably  authorize  Administrative Agent to disburse
the proceeds of each Revolving Credit Loan requested, or deemed to be requested,
pursuant  to this  Section 3.1 as follows:  (a) the  proceeds of each  Revolving
Credit Loan requested under Section 3.1.1(a) hereof shall (subject to receipt by
Administrative Agent of funds from the Revolving Credit Lenders) be disbursed by
Administrative  Agent in  lawful  money  of the  United  States  of  America  in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of a written  disbursement letter from Borrower,  and in the case
of each  subsequent  borrowing,  by 

                                      -8-

<PAGE>


wire  transfer  to such bank  account  as may be  agreed  upon by  Borrower  and
Administrative  Agent from time to time or  elsewhere  if  pursuant to a written
direction  from  Borrower,  and (b) the proceeds of each  Revolving  Credit Loan
requested under Section 3.1.1(b) hereof shall be charged to the Loan Account and
disbursed  by  Administrative  Agent by way of direct  payment  of the  relevant
interest or other Obligation.

                       3.1.4 [Intentionally Omitted]

                       3.1.5 Authorization. Borrower and the Lender Group hereby
irrevocably  authorizes and directs Administrative Agent to charge to Borrower's
Loan Account  hereunder,  as a Revolving Credit Loan deemed made to Borrower,  a
sum  sufficient to pay all principal of Term Loans due and all interest  accrued
on the Obligations during the immediately  preceding month and to pay all costs,
fees, and expenses at any time owed by Borrower to the Lender Group hereunder or
under any of the Loan Documents (including the Fee Letter);  provided,  however,
that  Administrative  Agent  may,  but  shall  not be  required  to,  so  charge
Borrower's Loan Account during the existence of an Event of Default or if and to
the extent such charge would result in an Overadvance. Amounts advanced pursuant
to this Section shall be deemed to have been  requested by Borrower  pursuant to
Section  3.1.1(b),  and the  provisions  of  Sections  3.1.2 and 3.1.3  shall be
applicable to each such advance.

                       3.1.6 Settlements.

                                    (a) Revolving Credit Loans and payments will
                  be settled among Administrative Agent and the Revolving Credit
                  Lenders according to such procedures as  Administrative  Agent
                  and such Lenders may agree in writing from time to time. These
                  procedures  notwithstanding,  each such Lender's obligation to
                  fund  its  portion  of the  Revolving  Credit  Loans  made  by
                  Administrative  Agent to Borrower  shall  commence on the date
                  such Revolving Credit Loans are made by Administrative  Agent.
                  Such  payments  to  Administrative  Agent will be made by such
                  Lenders  without  set-off,  counterclaim  or  reduction of any
                  kind.

                                    (b)  Administrative  Agent may  require  the
                  Revolving  Credit Lenders to settle Revolving Credit Loans and
                  payments  on a  daily  basis  (or  such  lesser  frequency  as
                  Administrative  Agent may  determine)  (each day of settlement
                  being a "Settlement Date").  Administrative  Agent will advise
                  each  Revolving  Credit Lender by telephone or telecopy of the
                  amount of each such  Lender's  Pro Rata  Share (in  accordance
                  with  its  Revolving  Credit   Commitment)  of  the  Revolving
                  Facility Usage as of the close of business of the Business Day
                  immediately  preceding the Settlement  Date. In the event that
                  payments are necessary to adjust such Lender's actual Pro Rata
                  Share (in accordance with its Revolving Credit  Commitment) of
                  the  Revolving  Facility  Usage as of any  Settlement  Date to
                  equal the amount of such Lender's  required Pro Rata Share (in
                  accordance  with  its  Revolving  Credit  Commitment)  of  the
                  Revolving Facility Usage, the party from which such payment is
                  due will pay the other, in same day funds, by wire transfer to
                  the  other's  account not later than the  applicable  time set
                  forth on Section 3.1.2. 

                                      -9-

<PAGE>

                                    (c) If any  such  payment  is  not  made  to
                  Administrative Agent by any such Lender on the Settlement Date
                  applicable thereto to the extent required by the terms hereof,
                  such Lender  shall be a Defaulting  Lender and  Administrative
                  Agent shall be entitled to recover for its account such amount
                  on demand from such Lender  together with interest  thereon at
                  the Defaulting Lenders Rate. Administrative Agent shall not be
                  obligated to transfer to a Defaulting Lender any payments made
                  by  Borrower  to  Administrative   Agent  for  the  Defaulting
                  Lender's benefit on account of its Revolving Credit Loans. Any
                  such amounts  payable to a Defaulting  Lender shall instead be
                  paid to or retained by  Administrative  Agent.  Administrative
                  Agent may hold and, in its discretion,  re-lend to Borrower as
                  Revolving  Credit  Loans  the  amount  of  all  such  payments
                  received or retained by it for the account of such  Defaulting
                  Lender.  Solely for the  purposes of voting or  consenting  to
                  matters  with  Defaulting  Lender  shall be deemed not to be a
                  "Lender"  (in  respect  of  its  Revolving  Credit  Loans  and
                  Revolving  Credit  Commitment)  and such  Defaulting  Lender's
                  Revolving  Credit  Commitment  with  respect to the  Revolving
                  Credit  Loans shall be deemed to be zero (-0-).  This  section
                  shall remain  effective  with respect to such Lender until (x)
                  the Obligations  under this Agreement shall have been declared
                  or shall have  become  immediately  due and payable or (y) the
                  Revolving Credit Lenders that are  non-Defaulting  Lenders and
                  Administrative  Agent shall have waived such Lender's  default
                  in  writing.  The  operation  of  this  section  shall  not be
                  construed to increase or otherwise  affect the  Commitments of
                  any Lender other than such  Defaulting  Lender,  or relieve or
                  excuse  the   performance   by  Borrower  of  its  duties  and
                  obligations hereunder. 

                  3.2  Payments.  Except  where  evidenced  by  notes  or other
instruments (including the Revolving Notes and the Term Notes) issued or made by
Borrower to the Lender  specifically  containing payment provisions which are in
conflict  with this Section 3.2 (in which event the  conflicting  provisions  of
said notes or other instruments shall govern and control), the Obligations shall
be  payable  as  follows:  

                       3.2.1   Principal.   Principal  payable  on  account  of
Revolving Credit Loans shall be repayable in full by Borrower to  Administrative
Agent for the  account of the  Revolving  Credit  Lenders  immediately  upon the
earliest of (a) the receipt by Administrative  Agent or Borrower of any net cash
proceeds  of  any  of  the  Collateral   (other  than  proceeds   consisting  of
Non-Ordinary Course Proceeds unless and until all of the Obligations have become
due and payable or as  otherwise  provided in Section  3.2.6),  to the extent of
said proceeds, except that, so long as no Default or Event of Default exists, if
all Revolving Credit Loans outstanding at the time of receipt by Borrower of any
such proceeds are LIBOR Portions, then Borrower may direct that such proceeds be
held by Administrative  Agent in a non-interest  bearing cash collateral account
maintained by Administrative  Agent on its books and records (which funds may be
commingled  with  other  funds of  Administrative  Agent) to be  applied  to the
payment of  principal  on the last day of the LIBOR  Period  applicable  to each
LIBOR  Portion  in the  order of  maturity,  (b) the  occurrence  of an Event of
Default in consequence of which  Administrative  Agent or Required Lenders elect
to accelerate the maturity and payment of the Obligations, or (c) termination of
this  Agreement  pursuant  to Section 4 hereof;  provided,  however,  that if an
Overadvance  shall exist,  Borrower  shall,  on demand in writing by any Lender,
repay the

                                      -10-

<PAGE>


Overadvance.  Principal payable on account of the Term Loans shall be payable in
accordance with the terms of the respective Term Notes.

                       3.2.2 Interest.

                                    (a) Base Rate Portion.  Interest  accrued on
                  Base Rate  Portions  shall be due on the  earliest  of (i) the
                  first  calendar  day  of  each  month  (for  the   immediately
                  preceding  month),  computed  through the last calendar day of
                  the  preceding  month,  (ii)  the  occurrence  of an  Event of
                  Default  in  consequence  of  which  Administrative  Agent  or
                  Required  Lenders elect to accelerate the maturity and payment
                  of the  Obligations,  or (iii)  termination  of this Agreement
                  pursuant to Section 4 hereof.

                                    (b) LIBOR Portion.  Interest accrued on each
                  LIBOR  Portion shall be due and payable on the earliest of (i)
                  the first  calendar  day of each  month  (for the  immediately
                  preceding  month),  computed  through the last calendar day of
                  the preceding month,  (ii) the last day of the Interest Period
                  applicable to such LIBOR  Portion,  (iii) the occurrence of an
                  Event of Default in consequence of which  Administrative Agent
                  or Required  Lenders  elect to  accelerate  the  maturity  and
                  payment  of the  Obligations,  or  (iv)  termination  of  this
                  Agreement pursuant to Section 4 hereof.

                       3.2.3 Costs, Fees, and Charges.  Costs, fees, and charges
payable  pursuant  to this  Agreement  (or the other  Loan  Documents)  shall be
payable  by  Borrower  as and when  provided  in the Loan  Documents  (including
Section 2 hereof) to  Administrative  Agent,  to any other  member of the Lender
Group  (including  Collateral  Agent) to the extent  expressly  provided in this
Agreement,  the Fee Letter, or the other Loan Documents,  or to any other Person
designated by them in writing.

                       3.2.4 Other  Obligations.  The balance of the Obligations
requiring  the  payment  of money,  if any,  shall be  payable  by  Borrower  to
Administrative  Agent,  for the account of the Lender Group as and when provided
in this  Agreement or the other Loan  Documents or, if no time is specified,  on
demand therefor by Administrative Agent.

                       3.2.5 Return of  Payments.  Unless  Administrative  Agent
receives  notice from Borrower  prior to the date on which any payment is due to
the Lender  Group that  Borrower  will not make such payment in full as and when
required, Administrative Agent may assume that Borrower has made such payment in
full to  Administrative  Agent on such date in immediately  available  funds and
Administrative  Agent may (but shall not be so required),  in reliance upon such
assumption, distribute to the applicable members of the Lender Group on such due
date an amount equal to the amount then due such member of the Lender Group.  If
and to the extent  Borrower has not made such payment in full to  Administrative
Agent,  each member of the Lender Group shall repay to  Administrative  Agent on
demand such amount distributed to such member of the Lender Group, together with
interest  thereon  at the Base  Rate for each day from the date  such  amount is
distributed  to such  member of the Lender  Group  until the date repaid by such
member of the Lender Group.

                                      -11-

<PAGE>

                       3.2.6  Apportionment and Application of Payments.  Except
as otherwise provided with respect to Defaulting  Lenders,  aggregate  principal
payments and interest  payments shall be  apportioned  ratably among the Lenders
(according to their  applicable Pro Rata Shares) and payments of the fees (other
than fees designated for Administrative  Agent's sole and separate account, fees
designated for Collateral Agent's sole and separate account, and fees payable in
accordance  with the Fee Letter) shall,  as applicable,  be apportioned  ratably
among the Lenders.  All payments shall be remitted to  Administrative  Agent and
all such  payments  (but,  so long as no Event of Default  has  occurred  and is
continuing,   except  for  payments   designated   in  writing  by  Borrower  to
Administrative  Agent and  Collateral  Agent as a  prepayment  of the Term Loans
hereunder,  which may be so applied)  and all  Collections  and all  proceeds of
Collateral received by any Agent, shall be applied as follows:

         (a) unless all of the Obligations  have become or been declared due and
payable:

                  (i)  all  Non-Ordinary  Course  Proceeds  consisting  of  cash
                  proceeds  of sales or other  issuances  of the  Securities  or
                  Subordinated   Debt  of  Borrower  (to  the  extent  permitted
                  hereunder) shall be applied in the following order:

                           first,  to pay any fees,  or  expense  reimbursements
                           then due to Administrative  Agent or Collateral Agent
                           from Borrower until paid in full;

                           second,  to pay any  fees or  expense  reimbursements
                           then due to the Lenders from  Borrower  until paid in
                           full;

                           third,  to pay  interest  due in respect of all Loans
                           until paid in full (if such proceeds are insufficient
                           to pay all such  interest  in full,  then such amount
                           shall be applied  pro rata to  interest  accrued  and
                           unpaid with respect to each of the Loans);

                           fourth,  to  repay  the  principal  of the  Revolving
                           Credit Loans until paid in full;

                           fifth, to pay any other Obligations due to the Lender
                           Group (but exclusive of principal of the Term Loans);

                           sixth,  if and  to  the  extent  Borrower  elects  in
                           writing   to  do  so   pursuant   to  a   notice   to
                           Administrative  Agent and Collateral Agent, to pay or
                           prepay  principal of Term Loan A, in inverse order of
                           maturity of the installments  thereof,  until paid in
                           full; and

                           seventh,  if and to the  extent  Borrower  elects  in
                           writing   to  do  so   pursuant   to  a   notice   to
                           Administrative  Agent and Collateral Agent, to pay or
                           prepay  principal of Term Loan B, in inverse order of
                           maturity of the installments  thereof,  until paid in
                           full.

                  (ii) all other  Non-Ordinary  Course Proceeds shall be applied
                  in the following order:

                                      -12-

<PAGE>

                           first,  to pay any fees,  or  expense  reimbursements
                           then due to Administrative  Agent or Collateral Agent
                           from Borrower until paid in full;

                           second,  to pay any  fees or  expense  reimbursements
                           then due to the Lenders from  Borrower  until paid in
                           full;

                           third,  to pay  interest  due in respect of all Loans
                           until paid in full (if such proceeds are insufficient
                           to pay all such  interest  in full,  then such amount
                           shall be applied  pro rata to  interest  accrued  and
                           unpaid with respect to each of the Loans);

                           fourth, to pay or prepay principal of Term Loan A, in
                           inverse   order  of  maturity  of  the   installments
                           thereof, until paid in full;

                           fifth, to pay or prepay  principal of Term Loan B, in
                           inverse   order  of  maturity  of  the   installments
                           thereof, until paid in full;

                           sixth, to repay the principal of the Revolving Credit
                           Loans until paid in full; and

                           seventh,  to pay  any  other  Obligations  due to the
                           Lender Group.

                  (iii)  all  other   Collections  and  all  other  proceeds  of
                  Collateral shall be applied in the following order:

                           first,  to pay any fees,  or  expense  reimbursements
                           then due to Administrative  Agent or Collateral Agent
                           from Borrower until paid in full;

                           second,  to pay any  fees or  expense  reimbursements
                           then due to the Lenders from  Borrower  until paid in
                           full;

                           third,  to pay  interest  due in respect of all Loans
                           until paid in full (if such proceeds are insufficient
                           to pay all such  interest  in full,  then such amount
                           shall be applied  pro rata to  interest  accrued  and
                           unpaid with respect to each of the Loans);

                           fourth,  to  repay  the  principal  of the  Revolving
                           Credit Loans until paid in full; and

                           fifth, to pay any other Obligations due to the Lender
                           Group.

                           (b) from and after the date that all Obligations have
         become,  or been declared by the Lender Group,  due and payable or that
         all  Obligations  and Collateral  have become,  or been declared by the
         Lender Group, in liquidation, all Collections and all other proceeds of
         Collateral  (irrespective of whether  constituting  Non-Ordinary Course
         Proceeds) shall be applied in the following order:

                                      -13-

<PAGE>

                           first,  to pay any fees,  or  expense  reimbursements
                           then due to Administrative  Agent or Collateral Agent
                           from Borrower until paid in full;

                           second,  to pay any  fees or  expense  reimbursements
                           then due to the Lenders from  Borrower  until paid in
                           full;

                           third,  to pay  interest  due in respect of all Loans
                           (other than  accrued but unpaid  interest on the Term
                           Loans  previously  deferred  by the  Lender  Group in
                           writing or  permitted  by the Lender Group to be paid
                           by being added to the  principal  balance of the Term
                           Loans in  excess  of an  amount  equal to 5 months of
                           such  interest  on the Term  Loans at the  applicable
                           rates  under  this  Agreement  or the  Term  Notes in
                           effect  on the date  hereof)  until  paid in full (if
                           such  proceeds  are  insufficient  to  pay  all  such
                           interest in full,  then such amount  shall be applied
                           pro rata to interest  accrued and unpaid with respect
                           to each of the Loans);

                           fourth,  to  repay  the  principal  of the  Revolving
                           Credit Loans until paid in full;

                           fifth,  to pay all  interest  due in  respect  of all
                           Loans to the extent not paid under clause  "third" of
                           this Section 3.2.6(b) until paid in full;

                           sixth, to pay or prepay  principal of the Term Loans,
                           ratably until paid in full; and

                           seventh,  to pay  any  other  Obligations  due to the
                           Lender Group.

                  3.3 Mandatory Prepayments.

                       3.3.1   Non-Ordinary   Course   Proceeds.    Unless   all
Obligations  have become,  or been declared by the Lender Group in writing,  due
and payable or all Obligations  and Collateral have become,  or been declared in
writing by the Lender Group, to be in liquidation, and except as provided for in
Section  6.4.2,  Borrower  shall pay to  Administrative  Agent all  Non-Ordinary
Course  Proceeds and each such payment shall be applied in  accordance  with the
provisions of Section 3.2.6(a)(i) or (ii), as applicable.

                       3.3.2 Excess Cash Flow  Recapture.  Borrower shall prepay
the Term Loans in amounts  equal to the Excess Cash Flow  Recapture  Amount with
respect to each fiscal year of Borrower during the Term hereof, such prepayments
to be made  within 5 days  following  the due date for  delivery  by Borrower to
Administrative  Agent of the annual  financial  statements  required  by Section
8.1.3(a) hereof; provided, however, that if an Event of Default has occurred and
is continuing at the time of such required prepayment, such prepayment shall not
be made until such Event of Default no longer exists.  Each such prepayment made
pursuant  to this  Section  3.3.2  shall  be  applied  in  accordance  with  the
provisions of Section  3.2.6(a)(ii) or Section 3.2.6(b) hereof,  as the case may
be.

                  3.4 Application of Payments and  Collections.  For purposes of
calculating Availability,  all items of payment received by Administrative Agent
by 1:00 p.m.  (New York

                                      -14-

<PAGE>

time) on any Business  Day shall be deemed  received on that  Business  Day. All
items of payment  received in immediately  available  funds after 1:00 p.m. (New
York  time) on any  Business  Day  shall be  deemed  received  on the  following
Business Day. Borrower irrevocably waives the right to direct the application of
any and all payments and collections at any time or times hereafter  received by
Administrative  Agent or any other  member of the Lender Group from or on behalf
of Borrower, and Borrower does hereby irrevocably agree that, subject to Section
3.2 hereof,  Administrative  Agent shall have the continuing  exclusive right to
apply and reapply any and all such payments and collections received at any time
or times  hereafter by  Administrative  Agent or the other members of the Lender
Group (or their respective  agents) against the  Obligations,  in such manner as
Administrative   Agent  may  deem  advisable,   notwithstanding   any  entry  by
Administrative  Agent  upon any of its books and  records.  If as the  result of
collections  of Accounts as authorized by Section 6.2.6 hereof a credit  balance
exists in the Loan Account,  such credit  balance  shall not accrue  interest in
favor of  Borrower,  but shall be available to Borrower at any time or times for
so long as no Default or Event of Default exists.  Such credit balance shall not
be applied or be deemed to have been applied as a prepayment  of the Term Loans,
except that  Administrative  Agent (on the  written  direction  by the  Required
Lenders) may offset such credit balance against the  Obligations  upon and after
the occurrence of an Event of Default.

                  3.5 All Loans to Constitute  One  Obligation.  The Loans shall
constitute  one  general  Obligation  of  Borrower,  and  shall  be  secured  by
Collateral  Agent's  Lien upon all of the  Collateral,  for the  benefit  of the
Lender Group.

                  3.6 Loan Account.  Administrative  Agent shall enter all Loans
as debits to the Loan  Account  and also shall  record in the Loan  Account  all
payments  made by Borrower on any  Obligations  and all  proceeds of  Collateral
which  are  finally  paid to the  Lender  Group,  and  may  record  therein,  in
accordance  with its customary  practices,  other debits and credits,  including
interest and all charges and expenses properly chargeable to Borrower.

                  3.7 Statements of Account.  Administrative  Agent will account
to Borrower  monthly  with a statement  of Loans,  charges,  and  payments  made
pursuant to this Agreement, and such accounting rendered by Administrative Agent
shall  be  deemed  final,   binding  and   conclusive   upon   Borrower   unless
Administrative  Agent is notified by Borrower in writing to the contrary  within
30 days of the date each  accounting  is mailed to  Borrower.  Such  notice only
shall be deemed an objection to those items specifically objected to therein.

                  3.8 General Provisions.

                       3.8.1  Except to the extent  otherwise  provided  in this
Agreement or any other Loan Document,  all payments of any Obligations  shall be
made in U.S. dollars, in immediately available funds, without deduction, set-off
or counterclaim,  to Administrative Agent at Administrative Agent's Account, not
later than 1:00 p.m.  (New York time) on the date on which  such  payment  shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day).

                       3.8.2 Each payment received by Administrative Agent under
this  Agreement  of any  Obligation  for the account of any member of the Lender
Group shall  (subject 

                                      -15-

<PAGE>


to Section 3.1.2 hereof) be paid by Administrative Agent promptly to such member
of the Lender Group,  in  immediately  available  funds,  to the account of such
member of the Lender Group as specified  from time to time by such member of the
Lender Group in a written notice to Administrative Agent. 

                       3.8.3 If the due date of any  payment  of any  Obligation
would  otherwise  fall on a day that is not a Business  Day,  such date shall be
extended to the next succeeding  Business Day, and interest shall be payable for
any  principal  so  extended  for the  period of such  extension.  

                  3.9  Pro  Rata  Treatment.  Except  to  the  extent  otherwise
provided  in this  Agreement:  (a) (i) the making and  conversion  of  Revolving
Credit Loans shall be made pro rata among the Revolving Credit Lenders according
to the  amounts  of  their  respective  Revolving  Credit  Commitments  or their
respective  Revolving  Credit Loans,  and (ii) the making and conversion of Term
Loans  shall be made pro rata  among  the Term  Loan  Lenders  according  to the
amounts of their  respective Term Loan A Commitments and Term Loan B Commitments
or  their  respective  Term  Loans;  and (b)  each  payment  on  account  of any
Obligations  to or for the account of one or more members of the Lender Group in
respect of any  Obligations due on a particular day shall be allocated among the
members of the Lender Group  entitled to such  payments  pro rata in  accordance
with the respective  amounts due and payable to such members of the Lender Group
on such day and shall be distributed accordingly.

                  3.10 Sharing of Payments, Etc.

                       3.10.1  Borrower agrees that, in addition to (and without
limitation of) any right of set-off,  banker's lien, or counterclaim  any Lender
may otherwise have, each Lender shall be entitled during the  continuation of an
Event of Default,  at its option but only with the prior written  consent of all
Lenders, to offset balances held by it for the account of Borrower at any of its
offices,  in U.S.  dollars or in any other currency,  against any Obligations of
Borrower to such Lender that are not paid when due  (regardless  of whether such
balances are then due to Borrower). Any Lender so entitled shall promptly notify
Borrower,  Collateral Agent, and Administrative  Agent of any offset effected by
it; provided,  however, that such Lender's failure to give such notice shall not
affect the validity of such offset.

                       3.10.2 If any Lender shall obtain from  Borrower  payment
of any Obligation  through the exercise of any right of set-off,  banker's lien,
or  counterclaim or similar right or otherwise  (other than from  Administrative
Agent as provided in this  Agreement),  and, as a result of such  payment,  such
Lender shall have received a greater amount of the  Obligations  than the amount
allocable to such Lender hereunder,  Administrative  Agent and the other members
of the Lender Group (including such Lender) shall promptly make such adjustments
from time to time as shall be equitable,  to the end that the Lender Group shall
share the  benefit  of such  excess  payment  (net of any  expenses  that may be
incurred by such  Lender in  obtaining  or  preserving  such excess  payment) in
accordance  with  Section  3.2.6.  To  such  end the  Lender  Group  shall  make
appropriate  adjustments  among  themselves if such payment is rescinded or must
otherwise be restored.  

                       3.10.3 [intentionally omitted]

                                      -16-

<PAGE>


                       3.10.4  Nothing  contained  in this  Section  3.10  shall
require any Lender to exercise  any such right or shall  affect the right of any
Lender to exercise,  and retain the benefits of exercising,  any such right with
respect to any other  indebtedness  or  obligation  of  Borrower.  If, under any
applicable  bankruptcy,  insolvency or other similar law, any Lender  receives a
secured  claim in lieu of a set-off to which this  Section  3.10  applies,  such
Lender shall, to the extent practicable,  exercise its rights in respect of such
secured claim in a manner  consistent with the rights of Lenders  entitled under
this  Section  3.10 to share in the  benefits of any  recovery  on such  secured
claim. 

SECTION 4.  TERM AND TERMINATION

                  4.1 Term of  Agreement.  Subject  to the  right of the  Lender
Group to cease  making  Loans to Borrower  upon or after the  occurrence  of any
Default or Event of Default, this Agreement shall be in effect for a period of 5
years from the date  hereof,  through  and  including  September  24,  2003 (the
"Term"), unless sooner terminated as provided in Section 4.2 hereof.

                  4.2 Termination.

                       4.2.1 Termination by Agent.  Administrative Agent (acting
on the written instructions of the Required Lenders) or Collateral Agent (acting
on the  written  instructions  of  the  Required  Lenders)  may  terminate  this
Agreement at any time without notice upon or after the occurrence of an Event of
Default.

                       4.2.2  Termination  by  Borrower.  Upon at  least 60 days
prior  written  notice to  Administrative  Agent,  Borrower  may, at its option,
terminate  this  Agreement  without  penalty  or premium  (other  than as may be
required by the  provisions of Section  2.4);  provided,  however,  that no such
termination shall be effective until Borrower has paid all of the Obligations in
immediately  available funds. Any notice of termination  given by Borrower shall
be irrevocable  unless the Required Lenders otherwise agree in writing,  and the
Lender  Group  shall  have no  obligation  to make any  Loans  on or  after  the
termination  date stated in such notice.  Borrower  may elect to terminate  this
Agreement in its  entirety  only.  No section of this  Agreement or type of Loan
available hereunder may be terminated singly.  

                       4.2.3   [Intentionally   Omitted].   

                       4.2.4 Effect of Termination. All of the Obligations shall
be immediately due and payable upon the termination date stated in any notice of
termination  of  this  Agreement.  All  undertakings,   agreements,   covenants,
warranties,  and  representations  of Borrower  contained in the Loan  Documents
shall  survive any such  termination,  and,  notwithstanding  such  termination,
Collateral Agent shall retain its Liens in the Collateral for the benefit of the
Lender  Group,  and the Lender Group shall retain all of its rights and remedies
under the Loan Documents,  until Borrower has paid to Administrative  Agent, for
the account of the Lender  Group,  all of Borrower's  Obligations  to the Lender
Group,  in full, in immediately  available  funds,  together with the applicable
termination  charge,  if  any.  Notwithstanding  the  payment  in  full  of  the
Obligations,  Collateral  Agent shall not be required to terminate  its security
interests  in the  Collateral  unless,  with  respect  to any loss or damage the
Lender  Group  may  incur as a result of  dishonored  checks  or other  items of
payment  received by the Lender  Group from  Borrower or 

                                      -17-

<PAGE>


any Account Debtor and applied to the Obligations,  Administrative  Agent shall,
at its option, (a) have received a written  agreement,  executed by Borrower and
by any Person whose loans or other  advances to Borrower are used in whole or in
part to satisfy the  Obligations,  indemnifying  the Lender  Group from any such
loss or damage,  or (b) have  retained such monetary  reserves,  and  Collateral
Agent shall have retained such Liens on the Collateral,  for such period of time
as such Agents,  in their reasonable  discretion,  may deem necessary to protect
the Lender Group from any such loss or damage. 

SECTION 5. SECURITY INTERESTS

                  5.1 Interest in  Collateral.  To secure the prompt payment and
performance to the Lender Group of the Obligations,  each Borrower hereby grants
to Collateral Agent, for the benefit of the Lender Group, a continuing Lien upon
all right, title, and interest of such Borrower in and to all currently existing
and  hereafter  acquired or arising  Collateral  (excluding,  however,  any real
Property or estates or interests therein).  Collateral Agent's Liens on all such
Collateral  shall attach thereto  without  further act on the part of the Lender
Group or Borrower.

                  5.2  Lien  Perfection,  Further  Assurances.   Borrower  shall
execute  such UCC-1  financing  statements  as are required by the Code and such
other  instruments,  assignments,  or  documents  as are  necessary  to  perfect
Collateral  Agent's  Lien upon any of the  Collateral  and shall take such other
action as may be required to perfect or to continue the perfection of Collateral
Agent's Lien upon the Collateral.  Unless prohibited by applicable law, Borrower
hereby  authorizes  Collateral  Agent to  execute  and  file any such  financing
statement on Borrower's behalf.  The parties agree that a carbon,  photographic,
or other  reproduction  of this  Agreement  shall be  sufficient  as a financing
statement  and may be  filed  in any  appropriate  office  in lieu  thereof.  At
Collateral Agent's request,  Borrower also shall promptly execute or cause to be
executed  and  shall  deliver  to  Collateral   Agent  any  and  all  documents,
instruments,  and agreements deemed necessary by Collateral Agent to give effect
to or carry out the terms or intent of the Loan Documents.

                  5.3 [Intentionally Omitted]

SECTION 6.   COLLATERAL ADMINISTRATION

                  6.1 General.

                       6.1.1 Location of Collateral. All Collateral,  other than
Inventory in transit and motor  vehicles,  will at all times be kept by Borrower
and its  Subsidiaries  at one or more of the  business  locations  set  forth in
Schedule 6.1.1 attached hereto and shall not, without the prior written approval
of Collateral Agent, be moved therefrom except, prior to an Event of Default and
the  Lender  Group's   acceleration  of  the  maturity  of  the  Obligations  in
consequence  thereof,  for (a)  sales of  Inventory  in the  ordinary  course of
business, and (b) removals in connection with dispositions of Equipment that are
authorized by Section 6.4.2 hereof;  provided,  however, that Borrower may amend
Schedule  6.1.1 to identify a new location so long as such  amendment  occurs by
written notice to  Administrative  Agent and  Collateral  Agent not less than 30
days prior to the date that such  Collateral is moved to such new  location,  so
long as such new location is within the continental  United States,  and so long
as, at the time of such written 

                                      -18-

<PAGE>


notification,  Borrower  executes and delivers to Collateral Agent any financing
statements  or fixture  filings  necessary  to perfect  and  continue  perfected
Collateral  Agent's  Liens on such  Collateral  and also  provides to Collateral
Agent a  fully  executed  Collateral  Access  Agreement  relative  to  such  new
location.

                       6.1.2  Insurance of  Collateral.  Borrower shall maintain
and pay for insurance upon all Collateral  wherever  located and with respect to
Borrower's business, covering casualty, hazard, public liability, and such other
risks in such  amounts  and with  such  insurance  companies  as are  reasonably
satisfactory to Collateral  Agent.  Borrower shall deliver the originals of such
policies to Collateral Agent with 438 BFU lender's loss payable  endorsements or
other satisfactory lender's loss payable  endorsements,  naming Collateral Agent
(on behalf of the Lender  Group) as sole loss  payee,  assignee,  or  additional
insured, as appropriate. Each policy of insurance or endorsement shall contain a
clause  requiring the insurer to give not less than 30 days prior written notice
to Collateral  Agent in the event of  cancellation  of the policy for any reason
whatsoever and a clause  specifying that the interest of Collateral  Agent shall
not be impaired or invalidated by any act or neglect of Borrower or the owner of
the Property or by the  occupation of the premises for purposes  more  hazardous
than are permitted by said policy. If Borrower fails to provide and pay for such
insurance,  Collateral  Agent may, at its option,  but shall not be required to,
procure the same and charge  Borrower  therefor.  Borrower  agrees to deliver to
Collateral Agent,  promptly as rendered,  true copies of all reports made in any
reporting forms to insurance  companies.  

                       6.1.3   Protection   of   Collateral.   All  expenses  of
protecting, storing, warehousing,  insuring, handling, maintaining, and shipping
the Collateral,  any and all excise,  property,  sales, and use taxes imposed by
any state, federal, or local authority on any of the Collateral or in respect of
the sale  thereof  shall be borne and paid by  Borrower.  If  Borrower  fails to
promptly pay any portion thereof when due,  Collateral Agent may, at its option,
but  shall  not be  required  to,  pay the same and  charge  Borrower  therefor.
Collateral  Agent  shall  not be  liable  or  responsible  in any  way  for  the
safekeeping of any of the  Collateral or for any loss or damage thereto  (except
for reasonable care in the custody thereof while any Collateral is in Collateral
Agent's actual  possession) or for any diminution in the value thereof,  but the
same shall be at Borrower's sole risk. 

                  6.2 Administration of Accounts.

                       6.2.1 Records,  Schedules,  and  Assignments of Accounts.
Borrower  shall keep accurate and complete  records of its Accounts that compose
the Collateral  and all payments and  collections  thereon,  and shall submit to
Administrative  Agent on such  periodic  basis  as  Administrative  Agent  shall
request  a sales  and  collections  report  for the  preceding  period,  in form
satisfactory to Administrative  Agent. On or before 9:00 a.m. (New York time) on
the 2nd Business Day of each week from and after the date hereof, Borrower shall
deliver a Borrowing Base Certificate to Administrative Agent; provided, however,
that,  so  long  as   Availability   is  less  than  or  equal  to   $1,500,000,
Administrative  Agent  may  require  that  Borrower  deliver  a  Borrowing  Base
Certificate  on such  frequency  (including on a daily basis) as  Administrative
Agent may  require.  No later than 9:00 a.m.  (New York time) on the 20th day of
each  month  from  and  after  the  date  hereof,   Borrower  shall  deliver  to
Administrative  Agent,  in form and  substance  satisfactory  to  Administrative
Agent,  a detailed  aged trial  balance of all Accounts  

                                      -19-

<PAGE>


existing  as of  the  last  Business  Day  of the  immediately  preceding  week,
specifying the names,  addresses,  face value, dates of invoices,  and due dates
for each  Account  Debtor  obligated  on an  Account  so  listed  ("Schedule  of
Accounts"),  and, upon Administrative Agent's request therefor,  copies of proof
of  delivery  and  the  original  copy  of  all  documents,  including,  without
limitation,  repayment  histories  and present  status  reports  relating to the
Accounts so scheduled,  and such other matters and  information  relating to the
status of then  existing  Accounts  as  Administrative  Agent  shall  reasonably
request.  In  addition,  if an  aggregate  face amount of more than  $250,000 of
Accounts  owed by any  Account  Debtor  (together  with its  Affiliates)  become
ineligible  because  they  fall  within  one  of  the  specified  categories  of
ineligibility  set forth in the  definition  of Eligible  Accounts or  otherwise
established by Administrative  Agent, Borrower shall notify Administrative Agent
of such occurrence on the first Business Day following such occurrence,  and the
Borrowing  Base shall  thereupon  be adjusted  to reflect  such  occurrence.  If
requested  by  Administrative  Agent,  Borrower  shall  execute  and  deliver to
Administrative  Agent formal written assignments in favor of Collateral Agent of
all of  Borrower's  Accounts  weekly or daily,  which shall include all Accounts
that have been  created  since the date of the last  assignment,  together  with
copies of invoices or invoice registers related thereto.

                       6.2.2 Discounts Allowances,  Disputes. If Borrower grants
any  discounts,  allowances,  or  credits  that are not shown on the face of the
invoice  for  the  Account  involved,  Borrower  shall  report  such  discounts,
allowances,  or credits, as the case may be, to Administrative  Agent as part of
the next required  Schedule of Accounts.  If any amounts due and owing in excess
of $100,000 are in dispute  between  Borrower and any Account  Debtor,  Borrower
shall provide  Administrative  Agent with written  notice thereof at the time of
submission of the next Schedule of Accounts, explaining in detail the reason for
the dispute, all claims related thereto, and the amount in controversy. Upon and
after the occurrence of an Event of Default, Administrative Agent shall have the
right to (a) settle or adjust all disputes and claims  directly with the Account
Debtor, (b) compromise the amount or extend the time for payment of the Accounts
upon such terms and conditions as Administrative  Agent may deem advisable,  and
(c) charge the deficiencies,  costs and expenses thereof,  including  attorneys'
fees,  to Borrower.  

                       6.2.3 Taxes. If an Account  includes a charge for any tax
payable  to  any  governmental   taxing  authority,   Administrative   Agent  is
authorized,  in its sole  discretion,  to pay the  amount  thereof to the proper
taxing  authority for the account of Borrower and to charge  Borrower  therefor;
provided,  however,  that Administrative Agent shall not be liable for any taxes
to any governmental taxing authority that may be due by Borrower. 

                       6.2.4 Account  Verification.  Whether or not a Default or
an Event of  Default  has  occurred,  any of  Administrative  Agent's  officers,
employees or agents shall have the right, at any time or times hereafter, in the
name of  Administrative  Agent,  any Lender,  any  designee  of any of them,  or
Borrower,  to verify the validity,  amount,  or any other matter relating to any
Accounts by mail,  telephone,  telegraph or otherwise.  Borrower shall cooperate
fully with Administrative Agent in an effort to facilitate and promptly conclude
any such verification process.

                       6.2.5  Maintenance  of Dominion  Account.  Borrower shall
maintain a Dominion Account pursuant to one or more dominion account  agreements
(each, a "Dominion  Account  Agreement") in form and substance  satisfactory  to
Administrative Agent with such

                                      -20-

<PAGE>


banks as may be selected by Borrower and be acceptable to  Administrative  Agent
(including  Wells  Fargo  Bank).  Borrower  shall  issue  to any  such  banks an
irrevocable  letter of instruction  directing such banks to deposit all payments
or other  remittances  received  in the  lockbox  to the  Dominion  Account  for
application on account of the  Obligations.  All funds deposited in the Dominion
Account shall immediately  become the property of Administrative  Agent, for the
benefit of the Lender  Group,  and Borrower  shall obtain the  agreement by such
banks in favor of Agent for the benefit of the Lender  Group to waive any offset
rights against the funds so deposited. The Lender Group and Administrative Agent
on  behalf  thereof  assume  no  responsibility  for such  lockbox  arrangement,
including,  without limitation,  any claim of accord and satisfaction or release
with respect to deposits  accepted by any bank thereunder.  

                       6.2.6 Collection of Accounts,  Proceeds of Collateral. To
expedite  collection,  Borrower  shall  endeavor  in the first  instance to make
collection of its Accounts for the Lender  Group.  All  remittances  received by
Borrower  on  account  of  Accounts,  together  with the  proceeds  of any other
Collateral,  shall be held as the Lender Group's property by Borrower as trustee
of an  express  trust  for  the  Lender  Group's  benefit,  and  Borrower  shall
immediately deposit same in kind in the Dominion Account.  Administrative  Agent
retains the right at all times after the  occurrence of a Default or an Event of
Default, and Borrower hereby irrevocably  designates,  makes,  constitutes,  and
appoints  Administrative  Agent (and all Persons  designated  by  Administrative
Agent) as Borrower's  true and lawful  attorney (and  agent-in-fact),  to notify
Account  Debtors that Accounts  have been  assigned to  Collateral  Agent and to
collect  Accounts  directly  in the name of the  Lender  Group and to charge the
collection  costs and expenses,  including  attorneys  fees,  to Borrower.  

                  6.3 Administration of Inventory.

                       6.3.1  Records and Reports of Inventory.  Borrower  shall
keep  accurate  and  complete  records  of  its  Inventories  that  compose  the
Collateral.  Borrower shall furnish  Administrative  Agent Inventory  reports in
form  and  detail  satisfactory  to  Administrative   Agent  at  such  times  as
Administrative  Agent may request,  but at least once each month, not later than
the twentieth day of such month. Borrower shall conduct a physical inventory, no
less  frequently  than annually,  of not less than such portion of the Inventory
sufficient  to  permit  Borrower  to  produce   unqualified   audited  financial
statements  prepared in  accordance  with GAAP (and Borrower may so conduct such
physical  inventory,  from and after the date Borrower  gives written  notice to
Administrative Agent of Borrower's election to do so, on a cycle count basis, of
not less than such portion of the  Inventory  sufficient  to permit  Borrower to
produce  unqualified  audited financial  statements  prepared in accordance with
GAAP ), and shall  provide to  Administrative  Agent a report based on each such
physical   inventory   promptly   thereafter,   together  with  such  supporting
information as Administrative Agent reasonably shall request.

                       6.3.2  Returns  of  Inventory.  If,  at any time or times
hereafter,  any Account Debtor returns any Inventory to Borrower the shipment of
which  generated an Account on which such Account  Debtor is obligated in excess
of $25,000,  Borrower shall immediately notify Administrative Agent of the same,
specifying  the reason for such return and the location,  condition and intended
disposition of the returned Inventory. 

                                      -21-

<PAGE>


                  6.4 Administration of Equipment.

                       6.4.1 Records and Schedules of Equipment.  Borrower shall
keep  accurate  records  itemizing  and  describing  the  kind,  type,  quality,
quantity,  and value of its  Equipment  that  composes  the  Collateral  and all
dispositions  made in accordance  with Section  6.4.2 hereof,  and shall furnish
Administrative  Agent and  Collateral  Agent with  copies of a current  schedule
containing the foregoing  information on at least an annual basis and more often
if requested by Administrative Agent or Collateral Agent. Immediately on request
therefor by Administrative Agent or Collateral Agent,  Borrower shall deliver to
Collateral  Agent any and all certificates of title with respect to that portion
of  the  Equipment   that  composes  the  Collateral  and  that  is  subject  to
certificates of title.

                       6.4.2 Dispositions of Equipment.  Borrower will not sell,
lease or  otherwise  dispose of or  transfer  any of the  Equipment  or any part
thereof  without the prior written consent of (a) in the case of dispositions of
Equipment which, in the aggregate with all other dispositions of Equipment,  has
a fair  market  value or book  value,  whichever  is less,  of $500,000 or less,
Collateral  Agent,  or (b) in all other cases,  Collateral  Agent (acting on the
written  instructions  of all of  the  Lenders);  provided,  however,  that  the
foregoing  restriction  shall not  apply,  for so long as no Default or Event of
Default exists,  to (i) dispositions of Equipment which, in the aggregate during
any  consecutive  twelve-month  period,  has a fair market  value or book value,
whichever is less, of $10,000 or less,  provided  that all proceeds  thereof are
remitted  to  Administrative   Agent  for  application  to  the  Obligations  in
accordance  herewith,  or (ii)  replacements of Equipment that is  substantially
worn,  damaged or obsolete  with  Equipment  of like kind,  function  and value,
provided  that  the  replacement   Equipment  shall  be  acquired  prior  to  or
concurrently  with any disposition of the Equipment that is to be replaced,  the
replacement  Equipment  shall be free and clear of Liens  other  than  Permitted
Liens  that  are not  Purchase  Money  Liens,  and  Borrower  shall  have  given
Collateral Agent at least 5 days prior written notice of such disposition.  

                  6.5 Payment of Charges.  All amounts  chargeable  to Borrower
under Section 6 hereof shall be  Obligations  secured by all of the  Collateral,
shall be payable on demand,  and shall bear  interest from the date such advance
was made until paid in full at the rate  applicable  to  Revolving  Credit Loans
from time to time.

SECTION 7.   REPRESENTATIONS AND WARRANTIES

                  7.1 General Representations and Warranties. In order to induce
the Lender Group to enter into this  Agreement and to extend  credit  hereunder,
each Borrower  hereby  jointly and severally  with each other Borrower makes the
following  representations  and  warranties  which shall be true,  correct,  and
complete in all  material  respects as of the date hereof,  and,  subject to the
ability of Borrower to modify certain  provisions  thereof pursuant to the terms
of Section 7.3 hereof,  shall be true,  correct,  and  complete in all  material
respects as of the Closing Date, and at and as of the date of the making of each
Loan made  hereafter,  as though made on and as of the date of such Loan (except
to the extent  that such  representations  and  warranties  relate  solely to an
earlier  date)  and  such  representations  and  warranties  shall  survive  the
execution and delivery of this Agreement:

                                      -22-

<PAGE>


                       7.1.1 Organization and  Qualification.  Each Borrower and
each of its Subsidiaries is a corporation duly organized,  validly existing, and
in good standing under the laws of the jurisdiction of its  incorporation.  Each
Borrower and each of its  Subsidiaries is duly qualified and is authorized to do
business and is in good standing as a foreign  corporation in each  jurisdiction
listed on Schedule  7.1.1 attached  hereto and,  except as set forth on Schedule
7.1.1,  in all  other  states  and  jurisdictions  where  the  character  of its
Properties or the nature of its activities make such qualification necessary.

                       7.1.2  Corporate  Power and Authority.  Each Borrower and
each of its  Subsidiaries is duly authorized and empowered to execute,  deliver,
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (a) require any consent or approval of the  shareholders
of any  Borrower or any of its  Subsidiaries  (except for any such  approvals or
consents that have been, or on or prior to the Closing Date shall be, obtained),
(b) contravene any Borrower's or any of its Subsidiaries'  charter,  articles or
certificate of incorporation or by-laws,  (c) violate,  or cause any Borrower or
any of its  Subsidiaries to be in default under, any provision of any law, rule,
regulation, order, writ, judgment, injunction,  decree, determination,  or award
in effect having  applicability to any Borrower or any of its Subsidiaries,  (d)
result in a  material  breach of or  constitute  a  material  default  under any
indenture or loan or credit agreement or any other material agreement, lease, or
instrument  to which any  Borrower or any of its  Subsidiaries  is a parry or by
which it or its  Properties  may be bound or  affected,  or (e)  result  in,  or
require,  the creation or  imposition of any Lien (other than  Permitted  Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
any Borrower or any of its Subsidiaries.  

                       7.1.3  Legally   Enforceable   Agreement.   As  to  each
Borrower, this Agreement is, and each of the other Loan Documents to which it is
a party,  when delivered  under this  Agreement,  will be, a legal,  valid,  and
binding obligation of such Borrower,  enforceable  against it in accordance with
its respective terms.

                       7.1.4 Capital Structure.  Schedule 7.1.4 attached hereto
states  (a)  the  correct  name of each of the  Subsidiaries  of  Borrower,  its
jurisdiction of  incorporation,  and the percentage of its Voting Stock owned by
Borrower,  (b) the  name  of  each of  Borrower's  corporate  or  joint  venture
Affiliates,  and the nature of the  affiliation,  (c) the  number,  nature,  and
holder  of all  outstanding  Securities  of  Borrower  and  each  Subsidiary  of
Borrower,  and (d) the  number of  authorized,  issued  and  treasury  shares of
Borrower and each Subsidiary of Borrower.  Borrower has good title to all of the
shares it  purports  to own of the stock of each of its  Subsidiaries,  free and
clear in each case of any Lien other than Permitted  Liens. All such shares have
been duly issued and are fully paid and  non-assessable.  Except as set forth on
Schedule 7.1.4, there are no outstanding  options to purchase,  or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any  Securities  or  obligations  convertible  into,  or any powers of  attorney
relating to, shares of the capital stock of Borrower or any of its Subsidiaries.
There  are  no  outstanding  agreements  or  instruments  binding  upon  any  of
Borrower's  shareholders  relating  to the  ownership  of its  shares of capital
stock. 

                                      -23-

<PAGE>


                       7.1.5 Corporate  Names.  Neither any Borrower nor any of
its Subsidiaries has been known as or used any corporate,  fictitious,  or trade
names except those listed on Schedule 7.1.5 attached hereto. Except as set forth
on  Schedule  7.1.5  attached  hereto,  neither  any  Borrower  nor  any  of its
Subsidiaries has been the surviving  corporation of a merger or consolidation or
acquired all or substantially  all of the assets of any Person.  

                       7.1.6  Business  Locations,   Agent  for  Process.  Each
Borrower's and each of its Subsidiaries' chief executive office and other places
of  business  are as  listed on  Schedule  6.1.1  attached  hereto.  During  the
preceding  1-year period,  neither any Borrower nor any of its  Subsidiaries has
had an office, place of business,  or agent for service of process other than as
listed on Schedule  6.1.1  attached  hereto.  Except as shown on Schedule  6.1.1
attached hereto,  no Inventory is stored with a bailee,  warehouseman or similar
party, nor is any Inventory consigned to any Person. 

                       7.1.7  Title to  Properties,  Priority  of  Liens.  Each
Borrower and each of its  Subsidiaries has good and marketable title to, and fee
simple ownership of or valid and subsisting  leasehold  interests in, all of its
real Property  (except for minor defects in title thereto that  individually and
in the aggregate do not materially interfere with the ability of any Borrower or
any Subsidiary thereof to conduct its business as now conducted), and good title
to all of the Collateral and all of its other  Property,  in each case, free and
clear  of  all  Liens  except  Permitted  Liens.   Subject  to  the  Acquisition
Qualification,  each Borrower has paid or discharged all lawful claims which, if
unpaid,  might become a Lien against any of Borrower's  Properties that is not a
Permitted Lien. The Liens granted to Collateral Agent under Section 5 hereof are
first  priority  Liens,  subject  only  to  Permitted  Liens.  

                       7.1.8  Accounts.   Administrative  Agent  may  rely,  in
determining  which  Accounts  are  Eligible  Accounts,  on  all  statements  and
representations made by Borrower with respect to any Account or Accounts. Unless
otherwise  indicated in writing to  Administrative  Agent,  with respect to each
Account: 


                                    (a) It is genuine and in all  respects  what
                  it purports to be, and it is not evidenced by a judgment;

                                    (b) It arises out of a completed,  bona fide
                  sale and  delivery  of  goods  or  rendition  of  services  by
                  Borrower  in  the  ordinary  course  of its  business,  and in
                  accordance  with the  terms  and  conditions  of all  purchase
                  orders,  contracts  or other  documents  relating  thereto and
                  forming  a part  of the  contract  between  Borrower  and  the
                  Account Debtor;

                                    (c) it is for a liquidated  amount  maturing
                  as  stated  in the  duplicate  invoice  covering  such sale or
                  rendition of services,  a copy of which has been  furnished or
                  is available to Administrative Agent;

                                    (d) Such  Account,  and the  Lender  Group's
                  security interest therein,  is not, and will not (by voluntary
                  act or omission of Borrower) be in the future,  subject to any
                  offset, Lien, deduction,  defense, dispute,  counterclaim,  or
                  any other adverse  condition except for disputes  resulting in
                  returned  goods where 

                                      -24-

<PAGE>


                  the amount in controversy is deemed by Administrative Agent to
                  be  immaterial,  and each such Account is absolutely  owing to
                  the relevant Borrower, and is not contingent in any respect or
                  for any reason;  

                                    (e) No Borrower has made any agreement  with
                  any Account Debtor  thereunder for any extension,  compromise,
                  settlement,  or  modification  of  any  such  Account  or  any
                  deduction therefrom,  except discounts or allowances which are
                  granted by the relevant Borrower in the ordinary course of its
                  business for prompt  payment,  and which are  reflected in the
                  calculation  of the  net  amount  of each  respective  invoice
                  related  thereto,  and which are reflected in the Schedules of
                  Accounts submitted to Agent pursuant to Section 6.2.1 hereof;

                                    (f)     Subject    to    the     Acquisition
                  Qualification, there are no facts, events or occurrences which
                  in any way impair in any  material  respect  the  validity  or
                  enforceability  of any  Accounts,  or which  would  reduce the
                  amount payable  thereunder from the face amount of the invoice
                  and statements  delivered to Administrative Agent with respect
                  thereto;

                                    (g) To the best of Borrower's knowledge, the
                  Account Debtor  thereunder (i) had the capacity to contract at
                  the time any  contract  or other  document  giving rise to the
                  Account was executed, and (ii) such Account Debtor is Solvent;
                  and

                                    (h) To the  best  of  Borrower's  knowledge,
                  there are no  proceedings  or actions which are  threatened or
                  pending  against any  Account  Debtor  thereunder  which might
                  result in any material adverse change in such Account Debtor's
                  financial  condition or the  collectibility  of such  Account.
     
                       7.1.9    Equipment.    Subject    to   the    Acquisition
Qualification, the Equipment is in good operating condition and repair.

                       7.1.10   Financial    Statements,    Fiscal   Year.   The
Consolidated   balance  sheets  of  Borrower  (including  the  accounts  of  all
Subsidiaries  of Borrower for the period during which a Subsidiary  relationship
existed) as of June 30, 1998, and the related  statements of income,  changes in
stockholder's  equity, and changes in financial position for the period ended on
such date,  have been prepared in accordance  with GAAP,  and present fairly the
financial  positions  of  Borrower  at such date and the  results of  Borrower's
operations  for such  period.  Since June 30,  1998,  there has been no material
adverse change in the condition, financial or otherwise, of Borrower as shown on
the  Consolidated  balance  sheet as of such date and no change in the aggregate
value of Equipment and real Property  owned by Borrower,  except  changes in the
ordinary course of business,  none of which individually or in the aggregate has
been  materially  adverse.   The  fiscal  year  of  Borrower  and  each  of  its
Subsidiaries  ends on December 31 of each year.  

                       7.1.11 Full Disclosure. The financial statements referred
to in Section 7.1.10 hereof do not, nor does this Agreement or any other written
statement of any Borrower to the Lender Group, contain any untrue statement of a
material fact or omit a material 

                                      -25-

<PAGE>


fact  necessary  to  make  the  statements   contained  therein  or  herein  not
misleading.  There is no fact which any  Borrower  has failed to  disclose to in
writing  that  results in, or, so far as each  Borrower  can now  foresee,  will
result in, a Material  Adverse  Change.  

                       7.1.12 Solvent Financial Condition. Borrower, and each of
its Subsidiaries,  taken as a whole, is and, after giving effect to the Loans to
be made hereunder,  will be, Solvent. 

                       7.1.13  Surety  Obligations.   Except  as  set  forth  on
Schedule  7.1.13,  neither any Borrower nor any of its Subsidiaries is obligated
as surety or  indemnitor  under any  surety or  similar  bond or other  contract
issued  or  entered  into any  agreement  to  assure  payment,  performance,  or
completion  of  performance  of any  undertaking  or  obligation  of any Person.

                       7.1.14 FEIN; Taxes. The federal tax identification number
of each  Borrower  and each of its  Subsidiaries  is shown  on  Schedule  7.1.14
attached  hereto.  Each Borrower and each of its  Subsidiaries (a) has filed all
federal, state, and local tax returns and other reports it is required by law to
file  (other  than tax  returns in respect of taxes that (i) are not  franchise,
capital,  income, or payroll taxes, (ii) are not material individually or in the
aggregate,  and (iii) if unpaid,  would not result in the imposition of any Lien
on any Property of any Borrower or any Subsidiary thereof), and (b) has paid, or
made provision for the payment of, all taxes,  assessments,  fees,  levies,  and
other  governmental  charges upon it, its income and Properties as and when such
taxes,  assessments,  fees, levies, and charges that are due and payable, unless
and to the  extent  any  such  taxes,  assessments,  fees,  levies,  or  charges
(exclusive  of  federal  income  taxes and  payroll  taxes)  are being  actively
contested in good faith and by appropriate  proceedings,  and Borrower maintains
reasonable reserves on its books therefor.  The provision for taxes on the books
of each  Borrower  and each of its  Subsidiaries  are adequate for all years not
closed by applicable  statutes and for its current fiscal year. 

                       7.1.15 Brokers.  Except as set forth in Schedule 7.1.15,
there are no claims for  brokerage  commissions,  finder's  fees,  or investment
banking fees in connection with the transactions contemplated by this Agreement.

                       7.1.16  Patents,  Trademarks,  Copyrights,  and Licenses.
Each  Borrower and each of its  Subsidiaries  owns or possesses all the patents,
trademarks,  service marks, trade names, copyrights,  and licenses necessary for
the  present  and  planned  future  conduct of its  business  without  any known
conflict with the rights of others. All such patents, trademarks, service marks,
trade  names,  copyrights,  licenses,  and other  similar  rights  are listed on
Schedule 7.1.16 attached hereto.  

                       7.1.17 Governmental  Consents.  Each Borrower and each of
its Subsidiaries  has, and is in good standing with respect to, all governmental
consents,   approvals,   licenses,   authorizations,    permits,   certificates,
inspections,  and franchises (collectively,  "Permits") necessary to continue to
conduct its business as now  conducted by it and to own or lease and operate its
Properties  as now owned or leased by it, other than  Permits that  individually
and in the aggregate are immaterial. 

                                      -26-

<PAGE>


                       7.1.18  Compliance  with Laws.  Each Borrower and each of
its Subsidiaries has duly complied with, and its Properties, business operations
and leaseholds  are in compliance in all material  respects with, the provisions
of all federal, state, and local laws, rules, and regulations applicable to such
Borrower or such Subsidiary, as applicable, its Properties or the conduct of its
business, and. There have been no citations, notices, or orders of noncompliance
issued to any Borrower or any of its  Subsidiaries  under any such law, rule, or
regulation,  except  as to  such  non-compliance  that  individually  and in the
aggregate  is  immaterial.  Each  Borrower  and  each  of its  Subsidiaries  has
established  and  maintains  an  adequate  monitoring  system to insure  that it
remains in  compliance  with all  federal,  state,  and local laws,  rules,  and
regulations applicable to it. No Inventory has been produced in violation of the
Fair Labor  Standards  Act (29  U.S.C.  ss. 201 et seq.),  as  amended.

                       7.1.19 Restrictions.  Neither any Borrower nor any of its
Subsidiaries  is a party or subject to any  contract,  agreement,  or charter or
other corporate restriction, which materially and adversely affects its business
or the use or ownership of any of its  Properties.  Neither any Borrower nor any
of its  Subsidiaries  is a party or subject to any contract or  agreement  which
restricts its right or ability to incur Indebtedness, other than as set forth on
Schedule  7.1.19  attached  hereto,  none of which  prohibit the execution of or
compliance  with this  Agreement or the other Loan  Documents by any Borrower or
any of its Subsidiaries, as applicable.  

                       7.1.20  Litigation.  Except  as set  forth  on  Schedule
7.1.20  attached  hereto,  there  are  no  actions,   suits,   proceedings,   or
investigations  pending,  or to the  knowledge  of  each  Borrower,  threatened,
against or affecting any Borrower or any of its  Subsidiaries,  or the business,
operations,  Properties,  prospects, profits, or condition of Borrower or any of
its Subsidiaries. Neither any Borrower nor any of its Subsidiaries is in default
with respect to any order, writ,  injunction,  judgment,  decree, or rule of any
court,  governmental  authority or arbitration  board,  or tribunal.  

                       7.1.21  No  Defaults.  No  event  has  occurred  and  no
condition  exists which would,  upon or after the execution and delivery of this
Agreement  or any  Borrower's  performance  hereunder,  constitute  an  Event of
Default or, to the best of Borrower's knowledge, a Default. Neither any Borrower
nor any of its  Subsidiaries  is in  default,  and,  to the  best of  Borrower's
knowledge,  no event has occurred and no condition exists which constitutes,  or
which with the passage of time or the giving of notice or both would constitute,
a default in the payment of any  Indebtedness  to any Person for Money Borrowed.

                       7.1.22  Leases.   Schedule   7.1.22(A)  attached  hereto
identifies  all  capitalized  leases of each Borrower and its  Subsidiaries  and
Schedule  7.1.22(B)  attached  hereto  identifies  all operating  leases of each
Borrower and its Subsidiaries.  Each Borrower and each of its Subsidiaries is in
compliance with all of its obligations under the terms of each of its respective
capitalized  and  operating   leases,   except  for  such   noncompliance   that
individually and in the aggregate is immaterial.  

                       7.1.23  Pension  Plans.  Except as disclosed on Schedule
7.1.23 attached hereto, neither any Borrower nor any of its Subsidiaries has any
Plan.  Subject to the Acquisition  Qualification,  each Borrower and each of its
Subsidiaries is in compliance in all material  respects 

                                      -27-
<PAGE>

with the requirements of ERISA and the regulations  promulgated  thereunder with
respect to each Plan (other than the failure by FTI to file on a timely  basis a
so-called IRS Form 5500 for the fiscal year ended December 31, 1996). No fact or
situation  that could result in a Material  Adverse  Change exists in connection
with  any  Plan.  Neither  any  Borrower  nor  any of its  Subsidiaries  has any
withdrawal  liability in connection  with a  Multiemployer  Plan.  

                       7.1.24  Trade  Relations.   There  exists  no  actual  or
threatened  (in writing)  termination,  cancellation,  or limitation  of, or any
modification or change in, the business relationship between any Borrower or any
of its  Subsidiaries  and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of any Borrower or
any of its  Subsidiaries,  or with any  material  supplier,  and there exists no
present  condition  or state of facts or  circumstances  which would result in a
Material Adverse Change or prevent any Borrower or any of its Subsidiaries  from
conducting such business after the consummation of the transaction  contemplated
by this  Agreement in  substantially  the same manner in which it has heretofore
been conducted.  

                       7.1.25 Labor  Relations.  Except as described on Schedule
7.1.25 attached  hereto,  neither any Borrower nor any of its  Subsidiaries is a
party to any collective bargaining  agreement.  There are no material grievances
disputes or controversies with any union or any other organization of Borrower's
or any of its Subsidiaries' employees, or threats of strikes, work stoppages, or
any  asserted  pending  demands  for  collective  bargaining  by  any  union  or
organization. 

                       7.1.26 Eligible  Inventory.  All Inventory  identified on
any  Borrowing  Base  Certificate  as  Eligible  Inventory  is  (subject  to the
Acquisition  Qualification)  of good and  merchantable  quality  and  free  from
defects  (except to the extent that a reserve has been taken with respect to any
such defects).

                       7.1.27 Acquisitions. No default has occurred under any of
the  Acquisition  Documents.  Each  of the  Acquisitions  has  been  consummated
substantially  in  accordance  with  the  terms  of the  applicable  Acquisition
Documents and with all applicable laws,  including laws respecting bulk transfer
of assets and the  Hart-Scott-Rodino  Anti-Trust  Improvements  Act of 1976,  as
amended.

                       7.1.28 No Violation of Federal Reserve Board Regulations.
The making by the Lender Group of the Loans, and the use by each Borrower of the
proceeds of any and all Loans, do not and will not violate any of Regulations T,
U, and X of the Federal Reserve Board.  

                       7.1.29  Collateral  Agent's  Liens.  The Liens granted by
Borrower  to  Collateral  Agent  for the  benefit  of the  Lender  Group  on the
Collateral  pursuant to this  Agreement and the other Loan Documents are validly
created,  perfected,  and first priority Liens. 

                       7.1.30 Environmental Condition. None of the Properties or
assets  of any  Borrower  or any  Subsidiary  thereof  has ever been used by any
Borrower or any Subsidiary thereof or, to the best of Borrower's  knowledge,  by
previous owners or operators in the disposal of, or to produce,  store,  handle,
treat, release, or transport, any Hazardous Materials. None of the 

                                      -28-

<PAGE>


Properties or assets of any Borrower or any Subsidiary has ever been  designated
or identified in any manner pursuant to any environmental  protection statute as
a Hazardous  Materials disposal site, or a candidate for closure pursuant to any
environmental  protection  statute.  No Lien  arising  under  any  environmental
protection  statute  has  attached  to any  revenues  or to any real or personal
property  owned or operated by any Borrower or any Subsidiary  thereof.  Neither
any  Borrower  nor any  Subsidiary  thereof  has  received a summons,  citation,
notice,  or  directive  from the  Environmental  Protection  Agency or any other
federal or state  governmental  agency  concerning any action or omission by any
Borrower or any  Subsidiary  thereof  resulting in the releasing or disposing of
Hazardous Materials into the environment. 

                  7.2 [Intentionally Omitted]

                  7.3  Survival  of   Representations   and   Warranties.    All
representations and warranties of Borrower contained in this Agreement or any of
the other Loan Documents shall survive the execution,  delivery,  and acceptance
thereof by Agent and  Lenders  and the  parties  thereto  and the closing of the
transactions  described therein or related thereto.  To the extent that Borrower
timely complies with the notice  provision set forth in Section 8.1.2 in respect
of events or facts after the Closing Date that would render the  representations
and warranties set forth in any of Section 7.1.5, Section 7.1.6, Section 7.1.13,
Section 7.1.16,  Section 7.1.22 (exclusive of the second sentence thereof),  and
Section 7.1.23  inaccurate,  incomplete,  or misleading and the fact or event so
disclosed by Borrower is not otherwise prohibited by this Agreement or any other
Loan Document,  then the applicable Schedule referenced in that Section shall be
deemed to be amended to include and reflect such disclosed event or fact.

SECTION 8.   COVENANTS AND CONTINUING AGREEMENTS

                  8.1 Affirmative Covenants.  During the term of this Agreement,
and  thereafter  for so long as there are any  Obligations  to the Lender Group,
Borrower covenants that, unless otherwise  consented to by Administrative  Agent
and Collateral Agent (each acting upon the instruction of the Required  Lenders)
in writing, it shall:

                       8.1.1 Visits and Inspections.  Permit  representatives of
Administrative Agent, Collateral Agent, or any Lender:

         (a) so long as no Event of Default has occurred and is continuing, from
         time to time, as often as may be reasonably requested,  but only during
         normal business hours;  provided,  however, that, under this clause (a)
         (as opposed to under clause (b)),  Borrower  only shall be obligated to
         reimburse  Administrative  Agent,  Collateral Agent, and any Lender for
         the costs and expenses of one such visit and  inspection in any 3 month
         period, and

         (b) upon the  occurrence  and  during the  continuation  of an Event of
         Default,  from time to time without  prior  notification  or request to
         Borrower and at any time or times determined by  Administrative  Agent,
         Collateral  Agent,  or such  Lender,  as the case  may be,  in its sole
         discretion;  it being  understood  that Borrower  shall be obligated to
         reimburse  Administrative  Agent,  Collateral Agent, and any Lender for
         the costs and  expenses  of all such visits and  inspections  performed
         under this clause (b),

                                      -29-

<PAGE>

to visit and inspect the  Properties  of Borrower and each of its  Subsidiaries,
inspect,  audit, and make extracts from its books and records,  and discuss with
its officers,  its employees,  and its independent  accountants,  Borrower's and
each of its Subsidiaries' business,  assets,  liabilities,  financial condition,
business prospects, and results of operations.

                       8.1.2 Notices. Promptly, but in any event no later than 5
days after the date on which  Borrower is aware thereof,  notify  Administrative
Agent (with sufficient copies for each member of the Lender Group) in writing of
the  occurrence  of any event or the  existence  of any fact which  renders  any
representation  or warranty in this Agreement or any of the other Loan Documents
inaccurate, incomplete, or misleading.

                       8.1.3   Financial   Statements.   Keep,  and  cause  each
Subsidiary  to keep,  adequate  records and books of account with respect to its
business  activities in which proper  entries are made in  accordance  with GAAP
reflecting  all  its  financial  transactions,  and  cause  to be  prepared  and
furnished to Administrative Agent (with sufficient copies for each member of the
Lender Group) the following (all to be prepared in accordance  with GAAP applied
on a consistent basis, unless Borrower's  certified public accountants concur in
any change therein and such change is disclosed to  Administrative  Agent and is
consistent with GAAP):  

                                    (a) promptly upon Borrower's receipt thereof
                  and in any event not  later  than 105 days  after the close of
                  each fiscal year of Borrower,  unqualified  audited  financial
                  statements of Borrower and its  Subsidiaries  as of the end of
                  such year,  on a  Consolidated  basis,  certified by a firm of
                  independent   certified   public   accountants  of  recognized
                  standing selected by Borrower but acceptable to Administrative
                  Agent (except for a  qualification  for a change in accounting
                  principles with which the accountant concurs);

                                    (b) not later  than 30 days after the end of
                  each month  hereafter,  including the last month of Borrower's
                  fiscal  year,   unaudited  interim  financial   statements  of
                  Borrower and its  Subsidiaries as of the end of such month and
                  of the portion of Borrower's financial year then elapsed, on a
                  Consolidated  basis,  certified  by a  Responsible  Officer of
                  Borrower  as  prepared  in  accordance  with  GAAP and  fairly
                  presenting the Consolidated  financial position and results of
                  operations of Borrower and its Subsidiaries for such month and
                  period  subject  only  to  changes  from  audit  and  year-end
                  adjustments  and except that such  statements need not contain
                  notes;

                                    (c)  promptly  after the  sending  or filing
                  thereof,  as the case may be, copies of any proxy  statements,
                  financial  statements,  or  reports  which  Borrower  has made
                  available  to its  shareholders  and  copies  of any  regular,
                  periodic, and special reports or registration statements which
                  Borrower files with the Securities and Exchange  Commission or
                  any governmental  authority which may be substituted therefor,
                  or any national securities exchange;

                                    (d)  promptly  after  the  filing   thereof,
                  copies of any annual  report  required by ERISA to be filed in
                  connection  with  each  Plan;  and 

                                      -30-

<PAGE>

                                    (e)  such   other   data   and   information
                  (financial   and   otherwise)  as   Administrative   Agent  or
                  Collateral Agent,  from time to time,  reasonably may request,
                  bearing upon or related to the  Collateral or  Borrower's  and
                  each of its  Subsidiaries'  financial  condition or results of
                  operations.  

                  As promptly as practicable and in no event later than 180 days
after the close of each  fiscal  year of  Borrower,  Borrower  shall  forward to
Administrative Agent a copy of the accountants' letter to Borrower's  management
that is prepared in connection with the financial statements described in clause
(a) of this  Section  8.1.3.  Concurrently  with the  delivery of the  financial
statements  described in clause (a) of this Section 8.1.3,  Borrower shall cause
to be prepared and shall furnish to  Administrative  Agent a certificate  of the
aforesaid certified public accountants  certifying to Administrative Agent that,
based upon their  examination  of the  financial  statements of Borrower and its
Subsidiaries  performed in connection  with their  examination of said financial
statements,  they are not aware of any Default or Event of Default,  or, if they
are aware of such Default or Event of Default,  specifying  the nature  thereof,
and acknowledging,  in a manner satisfactory to Administrative  Agent, that they
are aware that the  Lender  Group is relying  on such  financial  statements  in
making its decisions with respect to the Loans.  Concurrently  with the delivery
of the  financial  statements  described  in clauses (a) and (b) of this Section
8.1.3, or more frequently if requested by Administrative  Agent,  Borrower shall
cause  to be  prepared  and  furnished  to  Administrative  Agent  a  Compliance
Certificate  in  the  form  of  Exhibit  8.1.3  attached  hereto  executed  by a
Responsible Officer.

                       8.1.4 Landlord and Storage Agreements. Provide Collateral
Agent with copies of all agreements  between Borrower or any of its Subsidiaries
and any landlord or warehouseman  which owns any premises at which any Inventory
may, from time to time, be kept.

                       8.1.5 Year 2000 Compliance.  Take all action necessary to
assure that at all times the  computer-based  systems  utilized by Borrower  and
each  of its  Subsidiaries  are  able  to  effectively  interpret,  process  and
manipulate data, including dates before, on and after June 30, 1999. At Lender's
request,  Borrower shall provide to Lender assurance reasonably  satisfactory to
Lender that the  computer-based  systems  utilized  by Borrower  and each of its
Subsidiaries are able to recognize and perform without error functions involving
dates before, on and after June 30, 1999. 

                       8.1.6 Projections.  No later than the end of each fiscal
year of Borrower  deliver to the Lender  Group  Projections  of Borrower for the
forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by
month. 

                       8.1.7 Equipment.  Make all necessary  replacements of and
repairs to the  Equipment  so that the value and  operating  efficiency  thereof
shall be maintained and preserved, ordinary depreciation and reasonable wear and
tear excepted.  

                       8.1.8  Taxes.  (a) File on a timely  basis  all  federal,
state,  and local tax  returns  and other  reports it is required by law to file
(other than tax returns in respect of taxes that (i) are not franchise, capital,
income,  or  payroll  taxes,  (ii)  are  not  material  individually  or in  the
aggregate,  and (iii) if unpaid,  would not result in the imposition of any Lien
on any Property

                                      -31-

<PAGE>

of any Borrower or any Subsidiary  thereof),  and (b) pay, or make provision for
the payment of, all taxes,  assessments,  fees,  levies,  and other governmental
charges upon it, its income and Properties as and when such taxes,  assessments,
fees, levies,  and charges become are due and payable,  unless and to the extent
any such taxes,  assessments,  fees,  levies,  or charges  (exclusive of federal
income taxes and payroll taxes) are being  actively  contested in good faith and
by appropriate  proceedings,  and Borrower maintains  reasonable reserves on its
books therefor.

                       8.1.9 Compliance with Laws.  Comply with the requirements
of all  applicable  laws,  rules,  regulations,  and orders of any  governmental
authority,   including  the  Fair  Labor   Standards  Act,  the  Americans  With
Disabilities Act, and all laws relative to Hazardous Materials, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the  aggregate,  would not result in and  reasonably  could not be  expected  to
result in a Material Adverse Change. 

                  8.2 Negative Covenants. During the term of this Agreement, and
thereafter  for so long  as  there  are any  Obligations  to the  Lender  Group,
Borrower  covenants  that,  unless  Administrative  Agent and  Collateral  Agent
(acting  upon the  written  instructions  of the  Required  Lenders)  has  first
consented thereto in writing, it will not:

                       8.2.1 Mergers, Consolidations,  Acquisitions.  Except for
Permitted  Acquisitions,  merge or  consolidate,  or permit  any  Subsidiary  of
Borrower to merge or consolidate,  with any Person, nor acquire,  nor permit any
of its Subsidiaries to acquire, all or any substantial part of the Properties of
any Person.

                       8.2.2 Loans.  Make, or permit any  Subsidiary of Borrower
to make,  any loans or other  advances of money  (other than for salary,  travel
advances,  advances  against  commissions,  and other  similar  advances  in the
ordinary  course  of  business)  to any  Person in  excess  of  $150,000  in the
aggregate  for all such loans and other  advances to all  Persons.  

                       8.3.3  Total  Indebtedness.  Create,  incur,  assume,  or
suffer to exist,  or permit any  Subsidiary  of  Borrower to create,  incur,  or
suffer to exist, any Indebtedness,  except:  

                                    (a) Obligations owing to the Lender Group;

                                    (b)  Indebtedness   identified  on  Schedule
                  8.2.3;

                                    (c)   Indebtedness   of  any  Subsidiary  of
                  Borrower to Borrower;  

                                    (d) accounts  payable to trade creditors and
                  current  operating  expenses  (other than for Money  Borrowed)
                  which are not aged more  than 120 days  from  billing  date or
                  more than 30 days from the due date, in each case, incurred in
                  the  ordinary  course of  business  and paid  within such time
                  period,  unless the same are being actively  contested in good
                  faith and by appropriate and lawful proceedings,  and Borrower
                  or such Subsidiary shall have set aside such reserves, if any,
                  with  respect  thereto  as are  required  by GAAP  and  deemed
                  adequate by Borrower or such  Subsidiary  and its  independent
                  accountants;  

                                    (e) Obligations to pay Rentals  permitted by
                  Section   8.2.13   hereof;   

                                      -32-

<PAGE>



                                    (f) Permitted Purchase Money Indebtedness;

                                    (g)  Subordinated  Debt  in  amounts  and on
                  terms acceptable to the Required Lenders;

                                    (h)  Indebtedness   evidenced  by  Permitted
                  Interest Rate or Currency Protection Agreements of Borrower;

                                    (i)  contingent  liabilities  arising out of
                  endorsements  of checks and other  negotiable  instruments for
                  deposit or collection in the ordinary course of business; and

                                    (j)  Indebtedness not included in paragraphs
                  (a) through  (g) above  which does not exceed at any time,  in
                  the  aggregate,   the  sum  of  $100,000.   

                       8.2.4 Affiliate  Transactions.  Enter into, or be a party
to, or permit any  Subsidiary  of  Borrower  to enter into or be a party to, any
transaction  with any Affiliate of Borrower or stockholder,  except as set forth
on  Schedule  8.2.4 and except in the  ordinary  course of and  pursuant  to the
reasonable  requirements  of Borrower's or such  Subsidiary's  business and upon
fair and reasonable terms that are fully disclosed to  Administrative  Agent and
Collateral  Agent and are no less  favorable to Borrower  than would obtain in a
comparable  arm's  length   transaction  with  a  Person  not  an  Affiliate  or
stockholder of Borrower or such Subsidiary.

                       8.2.5 Limitation on Liens.  Create or suffer to exist, or
permit any  Subsidiary  of Borrower to create or suffer to exist,  any Lien upon
any of its  Property,  income,  or  profits,  whether  now  owned  or  hereafter
acquired, except: 

                                    (a)  Liens at any time  granted  in favor of
                  Collateral Agent for the benefit of the Lender Group;

                                    (b)  Liens  for  taxes  (excluding  any Lien
                  imposed  pursuant to any of the  provisions  of ERISA) not yet
                  due, or being  contested  in the manner  described  in Section
                  7.1.14 hereof, but only if in Collateral Agent's judgment such
                  Lien does not adversely  affect the Lender  Group's  rights or
                  the priority of Collateral Agent's Lien in the Collateral;

                                    (c) Liens arising in the ordinary  course of
                  Borrower's  business by  operation of law or  regulation,  but
                  only if payment in respect of any such Lien is not at the time
                  required and such Liens do not, in the  aggregate,  materially
                  detract  from  the  value  of  the  Property  of  Borrower  or
                  materially   impair  the  use  thereof  in  the  operation  of
                  Borrower's business;

                                    (d) Purchase Money Liens securing  Permitted
                  Purchase Money Indebtedness;

                                    (e) Liens  securing  Indebtedness  of one of
                  Borrower's   Subsidiaries   to   Borrower   or  another   such
                  Subsidiary;

                                      -33-

<PAGE>


                                    (f) such other  Liens as appear on  Schedule
                  8.2.5 attached hereto; and

                                    (g)  such  other  Liens  as both  Collateral
                  Agent and Administrative Agent may hereafter approve (in their
                  sole discretion) in writing (including as so approved relative
                  to Permitted Acquisitions).

                       8.2.6  Suspension,  etc.;  Nature of Business;  Change of
Name, etc. (a) Cause,  suffer, or permit any Borrower or any Subsidiary  thereof
to be  suspended  or go  out of  business  or to be  liquidated,  wound  up,  or
dissolved;  (b) make any change in the principal nature of Borrower's  business;
and (c)  change the name,  FEIN,  corporate  structure  (within  the  meaning of
Section  9-402(7) of the Code), or identity,  or add any new fictitious name, of
any Borrower or any Subsidiary thereof.

                       8.2.7  Distributions.  Declare  or make,  or  permit  any
Subsidiary  of Borrower  (other than a  Subsidiary  that  composes  Borrower) to
declare or make, any Distributions.

                       8.2.8  Capital  Expenditures.  Make Capital  Expenditures
(including,  without  limitation,  by way of capitalized  leases) which,  in the
aggregate,  as to Borrower  and its  Subsidiaries,  exceed  $500,000  during any
fiscal year of Borrower.

                       8.2.9  Disposition of Assets.  Sell,  lease, or otherwise
dispose of any of, or permit any  Subsidiary  of  Borrower  to sell,  lease,  or
otherwise dispose any of, its Properties,  including any disposition of Property
as part of a sale and  leaseback  transaction,  to or in  favor  of any  Person,
except (a) sales of Inventory in the ordinary  course of business for so long as
no Event of Default exists hereunder,  (b) a transfer of Property to Borrower by
a Subsidiary  of Borrower,  or (c)  dispositions  expressly  authorized  by this
Agreement. 

                       8.2.10   Stock  of   Subsidiaries.   Permit  any  of  its
Subsidiaries  to (a) issue any  additional  shares of its capital  stock  except
director's  qualifying  shares or (b) form or capitalize  any new  Subsidiary of
Borrower  (other  than  in  connection  with  Permitted  Acquisitions).  

                       8.2.11  Bill-and-Hold  Sales, Etc. Except as set forth on
Schedule  8.2.11,  make a sale to any  customer on a  bill-and-hold,  guaranteed
sale, sale and return,  sale on approval or consignment  basis, or any sale on a
repurchase  or return basis.  

                       8.2.12 Restricted Investment. Make or have, or permit any
Subsidiary  of  Borrower to make or have,  any  Restricted  Investment.  

                       8.2.13 Leases.  Become, or permit any of its Subsidiaries
to become,  a lessee under any  operating  lease (other than a lease under which
Borrower or any of its  Subsidiaries  is lessor) of  Property  if the  aggregate
Rentals  payable  during any current or future period of 12  consecutive  months
under the lease in question and all other leases under which  Borrower or any of
its  Subsidiaries is then lessee would exceed  $1,250,000 (or such higher amount
as both Collateral Agent and Administrative  Agent may agree in writing in their
sole

                                      -34-

<PAGE>


discretion as a result of a Permitted Acquisition). The term "Rentals" means, as
of the date of determination,  all payments which the lessee is required to make
by the terms of any lease.  

                       8.2.14 Tax  Consolidation.  File or consent to the filing
of any  consolidated  income  tax return  with any  Person  other than any other
Borrower or a Subsidiary of any Borrower.

                       8.2.15  Equipment.  Cause,  suffer,  or permit any of the
Equipment to become  affixed to any real Property  leased to Borrower so that an
interest   arises   therein  under  the  real  estate  laws  of  the  applicable
jurisdiction  unless the landlord of such real  Property has executed a landlord
waiver or leasehold  mortgage in favor of and in form  acceptable  to Collateral
Agent,  and Borrower will not permit any of the Equipment to become an accession
to any personal  Property other than Equipment that is subject to first priority
Liens in favor of Collateral Agent.

                       8.2.16  Prepayments.  Prepay any Indebtedness of Borrower
owing to any Person (other than the Lender Group).

                       8.2.17 Preferred  Stock.  Issue any Preferred Stock other
than Permitted Preferred Stock.

                       8.2.18  Guarantees.  Guarantee or otherwise become in any
way  liable  with  respect  to the  obligations  of any third  Person  except by
endorsement  of  instruments  or items of payment  for deposit to the account of
Borrower or which are transmitted or turned over to Administrative Agent for the
benefit of the Lender Group.

                  8.3  Specific  Financial  Covenants.  During  the term of this
Agreement, and thereafter for so long as there are any Obligations to the Lender
Group,  Borrower covenants that, unless otherwise consented to by Administrative
Agent and Collateral Agent (acting upon the written instructions of the Required
Lenders) in writing, it shall:

                       8.3.1 Net  Worth.  From and  after  September  30,  1998,
maintain,  at all times, Net Worth of not less than an amount equal to (a) QTI's
Net Worth as of  September  30, 1998 (which  shall be in an amount not less than
$25,000,000),  plus (b) with respect to any fiscal quarter ended after September
30, 1998, as of the last day of such fiscal quarter then ended,  an amount equal
to the sum of (i) 75% of QTI's  Consolidated  net  income  (if and to the extent
such net income is a positive  number) for such fiscal quarter then ended,  plus
(ii) 75% of QTI's  Consolidated  net income for each other fiscal  quarter ended
after September 30, 1998 (calculated, for each such other fiscal quarter, if and
to the extent  that,  for each such other fiscal  quarter,  such net income is a
positive number).

                       8.3.2  Minimum  EBITDA.  Maintain  EBITDA for each of the
following  fiscal periods of not less than the amount shown below for the period
corresponding thereto:

                                      -35-

<PAGE>



Fiscal Period                                         Minimum EBITDA


fiscal quarter ended 9/30/98                              $2,500,000


fiscal quarter ended 12/31/98                             $2,500,000

fiscal quarter ended 3/31/99                              $3,200,000

fiscal quarter ended 6/30/99                              $3,200,000

fiscal quarter ended 9/30/99                              $3,200,000

fiscal quarter ended 12/31/99                             $3,200,000

fiscal quarter ended 3/31/00                              $3,800,000

fiscal quarter ended 6/30/00                              $3,800,000

fiscal quarter ended 9/30/00                              $3,800,000

fiscal quarter ended 12/31/00                             $3,800,000

fiscal quarter ended 3/31/01                              $4,400,000

fiscal quarter ended 6/30/01                              $4,400,000

fiscal quarter ended 9/30/01                              $4,400,000

fiscal quarter ended 12/31/01                             $4,400,000

fiscal   quarter   ended  3/31/02  and  each              $5,100,000
fiscal quarter ended thereafter



                       8.3.3 Senior Debt Coverage Ratio.  Maintain a Senior Debt
Coverage  Ratio not greater than  4.0:1.0  with  respect to each fiscal  quarter
ending on or after December 31, 1998.

                       8.3.4 Fixed Charge Coverage Ratio. Maintain at the end of
each of the following fiscal periods,  a Fixed Charge Coverage Ratio of not less
than the ratio shown below for the period corresponding thereto:

Fiscal Period                                         Minimum  Ratio

fiscal quarter ended 12/31/98                                      2.5:1.0

fiscal quarter ended 3/31/99                                       2.5:1.0

fiscal quarter ended 6/30/99                                       2.5:1.0

fiscal quarter ended 9/30/99                                       2.0:1.0

fiscal quarter ended 12/31/99                                      2.0:1.0

fiscal quarter ended 3/31/00                                       2.5:1.0

fiscal quarter ended 6/30/00                                       2.5:1.0

fiscal   quarter   ended  9/30/00  and  each                       2.5:1.0
quarter thereafter



SECTION 9.    CONDITIONS PRECEDENT TO INITIAL CREDITS

                  Any other provision of this Agreement or any of the other Loan
Documents  notwithstanding,  and without  affecting  in any manner the rights of
Agent or the Lenders under 

                                      -36-

<PAGE>


the  other  sections  of this  Agreement,  Agent  and the  Lenders  shall not be
required to make the initial Loan under this Agreement  unless and until each of
the following conditions has been and continues to be satisfied:

                  9.1 Documentation.  Administrative  Agent and Collateral Agent
shall have received each of the following Loan Documents,  in form and substance
satisfactory to  Administrative  Agent and Collateral Agent and their respective
counsel,  duly  executed,  and each  such  document  shall be in full  force and
effect:

                       (a) the Revolving Notes;

                       (b) the Term Notes A and the Term Notes B;

                       (c) the Suretyship Agreement;

                       (d) the Dominion Account Agreements;

                       (e) the Stock Pledge Agreement,  together with the shares
of capital stock of each Subsidiary of QTI, as well as stock powers with respect
thereto endorsed in blank;

                       (f) such Collateral  Access  Agreements as Administrative
Agent or Collateral Agent may require in its discretion;

                       (g) the Fee Letter, the Lender Group Side Letter, and the
Post-Closing Letter;

                       (h) the Trademark Security Agreement;

                       (i) the Subordination Agreement; and

                       (j) a letter agreement between  Administrative Agent (for
and on  behalf  of the  Revolving  Credit  Lenders)  and  Borrower,  in form and
substance  satisfactory to  Administrative  Agent,  relative to Revolving Credit
Loans based on the Inventory portion of the Borrowing Base.

                  9.2 Other Loan Documents. Each of the conditions precedent set
forth in the other Loan Documents shall have been satisfied.

                  9.3  Certificates  of  Title.   Collateral  Agent  shall  have
received duly executed certificates of title with respect to that portion of the
Collateral that is subject to certificates of title.

                  9.4 Approvals and Consents.  Borrower  shall have received all
governmental   consents,   approvals,   licenses,    authorizations,    permits,
certificates,  inspections, and franchises necessary for the consummation of the
transactions contemplated by the Loan Documents.

                                      -37-

<PAGE>



                  9.5 Certified Documents of Borrower.  On or before the Closing
Date, each Borrower shall have delivered to  Administrative  Agent copies of the
following  documents,   duly  certified,  or  the  following  certificates,   as
applicable:

                  (a)  Resolutions  of the Board of Directors  of such  Borrower
authorizing (i) the execution, deliver, and performance of the Loan Documents to
which  such  Borrower  is a party,  (ii) the  consummation  of the  transactions
contemplated by the Loan Documents to which such Borrower is a party,  and (iii)
all other  actions  to be taken by such  Borrower  in  connection  with the Loan
Documents to which Borrower is a party;

                  (b) A  certificate,  signed by the  Secretary  or an Assistant
Secretary  of  such  Borrower,  dated  as of the  Closing  Date,  as to (i)  the
incumbency,  and containing the specimen signature or signatures,  of the Person
or Persons  authorized to execute the Loan Documents to which such Borrower is a
party on behalf of such  Borrower,  together with evidence of the  incumbency of
such  Secretary  or  Assistant   Secretary,   and  (ii)  the   authenticity  and
completeness of the certificate or articles of incorporation and by-laws of such
Borrower;  and 

                  (c)  Certificates  of status or good standing of such Borrower
from the  Secretary  of State of its  organization,  dated within 10 days of the
Closing Date, and of each state or other  jurisdiction in which such Borrower is
qualified  to do  business,  dated  within  15 days of the  Closing  Date.  

                  9.6  Confirmation   Searches.   Collateral  Agent  shall  have
received  searches  reflecting  the filing of its  financing  statements  and/or
fixture filings with respect to Borrower.

                  9.7 Opinion of Counsel.  The Lender Group shall have  received
from counsel for Borrower a legal opinion in form and substance  satisfactory to
Collateral Agent and its counsel.

                  9.8 Pay-Off Letter and UCC Termination  Statements,  Etc. Each
Existing Lender shall have executed and delivered a Pay-Off Letter,  which shall
be  in  full  force  and  effect,  together  with  original  share  certificates
evidencing  the capital  stock of the relevant  Borrowers,  and UCC  termination
statements,   mortgage  releases,   and  other   documentation   evidencing  the
termination of its Liens on the Properties or capital stock, as the case may be,
of Borrower.

                  9.9   Projections.   The  Lender  Group  shall  have  received
Projections of Borrower for the  forthcoming 3 years,  year by year, and for the
current fiscal year,  month by month in form and substance  satisfactory  to the
Lender Group.

                  9.10 Closing  Date.  The Closing Date shall occur on or before
September 30, 1998.

                  9.11 Availability.  Administrative Agent shall have determined
that  immediately  after the Lender Group have made the initial  Loans,  and all
closing fees,  costs, and expenses  incurred in connection with the transactions
contemplated  hereby  and the Fee  Letter,  

                                      -38-

<PAGE>


Availability shall not be less than $10,000,000,  provided that Borrower's trade
payables are at a level and are aged consistent with the historical practices of
Borrower (inclusive of FTI and FII).

                  9.12  No  Litigation.  No  action  proceeding,  investigation,
regulation or  legislation  shall have been  instituted,  threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit,  or to obtain  damages in respect of, or which is related to or arises
out of this  Agreement  or the  consummation  of the  transactions  contemplated
hereby.

                  9.14 Acquisitions.  Administrative  Agent and Collateral Agent
shall have  received  and  reviewed  copies,  certified  as true,  correct,  and
complete  by an  appropriate  officer of  Borrower,  of each of the  Acquisition
Documents,  the form and substance of which shall be reasonably  satisfactory to
Administrative  Agent and Collateral Agent. Each of the Acquisitions  shall have
been  consummated  substantially  in accordance with the terms of the applicable
Acquisition  Documents.  Administrative  Agent and  Collateral  Agent shall have
received  evidence,  satisfactory to Administrative  Agent and Collateral Agent,
that each  Acquisition  has been  consummated in accordance  with all applicable
laws,   including   laws   respecting   bulk   transfer   of   assets   and  the
Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended.

                  9.14 [Intentionally Omitted].

                  9.15   Appraisals.   Collateral   Agent  shall  have  received
appraisals and valuations of the tangible and intangible  Property and assets of
Borrower,  and the results  shall be  acceptable to the Lender Group in its sole
discretion.

                  9.16  Reference  Checks.  The Lender Group shall have received
satisfactory reference checks relative to key officers or directors of Borrower.

                  9.17 Pro Forma  Balance  Sheet.  The Lender  Group  shall have
received  Borrower's Pro Forma Balance Sheet, which shall be satisfactory to the
Lender Group in its sole discretion.

SECTION 9A.    CONDITIONS PRECEDENT TO ALL CREDITS

                  Any other provision of this Agreement or any of the other Loan
Documents notwithstanding, and without affecting in any manner the rights of the
Lender Group under the other sections of this Agreement,  the Lender Group shall
not be required to make any Loans under this Agreement  unless and until each of
the following conditions has been and continues to be satisfied:

                  9A.1 No Default.  No Default or Event of Default shall exist.

                  9A.2  Representations and Warranties.  The representations and
warranties  contained in this  Agreement and the other Loan  Documents  shall be
true and correct in all  respects on and as of the date of such Loan  (except to
the extent that such  representations and warranties relate solely to an earlier
date).

                                      -39-

<PAGE>


                  9A.3 Adverse  Changes.  No material  adverse change shall have
occurred with respect to Borrower.

                  9A.4 Injunctions.  No injunction,  writ, restraining order, or
other order of any nature prohibiting,  directly or indirectly, the extension of
such  credit  shall have been  issued  and  remain in force by any  governmental
authority against Borrower, the Lender Group, or any of their Affiliates.

SECTION 10.   EVENTS OF DEFAULT, RIGHTS AND REMEDIES ON DEFAULT

                  10.1 Events of Default.  The  occurrence of one or more of the
following events shall constitute an "Event of Default":

                       10.1.1 [Intentionally Omitted]

                       10.1.2 Payment of Obligations. Borrower shall fail to pay
any of the Obligations on or before the due date thereof  (whether due at stated
maturity,    on   demand,    upon    acceleration,    or   otherwise).    

                       10.1.3 Misrepresentations.  Any representation, warranty,
or other  statement  made or furnished to Agent or any Lender by or on behalf of
Borrower in this Agreement,  any of the other Loan Documents, or any instrument,
certificate, or financial statement furnished in compliance with or in reference
thereto  proves to have been false or  misleading  in any material  respect when
made or  furnished  or when  reaffirmed  pursuant to Section 7.2 hereof.  

                       10.1.4 Breach of Specific Covenants.  Borrower shall fail
or neglect to perform,  keep, or observe any covenant contained in Sections 5.2,
6.1.1,  6.2,  8.1.1,  8.1.3,  8.2 or 8.3  hereof  on the date that  Borrower  is
required to perform, keep or observe such covenant;  provided, however, that, so
long as Availability exceeds $1,500,000,  with respect to Borrower's  obligation
under  Section  6.2.1  to  deliver  to  Administrative  Agent a  Borrowing  Base
Certificate  not later than 9:00 a.m. (New York time) on the 2nd Business Day of
each week,  Borrower  shall be permitted with respect to not more than 1 week in
any  consecutive  3  month  period  to  deliver  the  relevant   Borrowing  Base
Certificate as late as 9:00 a.m. (New York time) on the 4th Business Day of such
week  without such late  delivery  constituting  an Event of Default  under this
Section 10.1.4. 

                       10.1.5 Breach of Other Covenants.  Borrower shall fail or
neglect to perform,  keep, or observe any covenant  contained in this  Agreement
(other than a covenant that is dealt with specifically elsewhere in Section 10.1
hereof)  and the  breach of such  other  covenant  is not cured to the  Required
Lenders'  satisfaction  within 20 days after the  sooner to occur of  Borrower's
receipt of notice of such breach from Agent or the date on which such failure or
neglect  first becomes  known to any officer of Borrower.  

                       10.1.6    Default   Under   Loan    Documents/Acquisition
Documents.  Any event of default shall occur under, or Borrower shall default in
the  performance or observance of any term,  covenant,  condition,  or agreement
contained in, any of the other Loan Documents or the  Acquisition  Documents and
such default shall  continue  beyond any applicable  grace period.  

                                      -40-

<PAGE>

                       10.1.7 Other  Defaults.  There shall occur any default or
event of default  on the part of  Borrower  under any  agreement,  document,  or
instrument  to which  Borrower  is a party or by  which  Borrower  or any of its
Property is bound,  creating or  relating  to any  Indebtedness  (other than the
Obligations)  if the payment or maturity of such  Indebtedness is accelerated in
consequence of such event of default or demand for payment of such  Indebtedness
is made. 

                       10.1.8 Uninsured  Losses.  Any loss,  theft,  damage,  or
destruction  of any  of the  Collateral  not  fully  covered  (subject  to  such
deductibles as Collateral  Agent shall have permitted) by insurance in excess of
$500,000.  

                       10.1.9  Adverse  Changes.  There shall occur any Material
Adverse  Change  with  respect  to  Borrower.  

                       10.1.10 Insolvency and Related Proceedings.  Any Borrower
shall  cease to be  Solvent  or shall  suffer  the  appointment  of a  receiver,
trustee,  custodian,  or similar fiduciary,  or shall make an assignment for the
benefit of creditors,  or any petition for an order for relief shall be filed by
or against any Borrower or under the  Bankruptcy  Code (if against any Borrower,
the  continuation  of such  proceeding  for more than 45 days),  or any Borrower
shall  make  any  offer  of  settlement,  extension,  or  composition  to  their
respective   unsecured  creditors   generally.   

                       10.1.11 Business  Disruption,  Condemnation.  There shall
occur a cessation of a  substantial  part of the business of any Borrower or any
Subsidiary thereof for a period which  significantly  affects such Borrower's or
such Subsidiary's  capacity to continue its business,  on a profitable basis, or
any Borrower or any  Subsidiary  thereof  shall suffer the loss or revocation of
any  material  Permit now held or  hereafter  acquired by such  Borrower or such
Subsidiary  that is  necessary  to the  continued  or  lawful  operation  of its
business,  or  any  Borrower  or  any  Subsidiary  thereof  shall  be  enjoined,
restrained  or in any way  prevented by court,  governmental  or  administrative
order from conducting all or any material part of its business  affairs,  or any
material  lease or agreement  pursuant to which any  Borrower or any  Subsidiary
thereof  leases,  uses or occupies any Property  shall be canceled or terminated
prior  to the  expiration  of its  stated  term,  or any  material  part  of the
Collateral  shall be taken  through  condemnation  or the value of such Property
shall be materially impaired through condemnation.  

                       10.1.12 Change of Control or Ownership. (a) a "person" or
"group"  (within the meaning of Sections  13(d) and  14(d)(2) of the  Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  other than the Permitted
Holders,  becomes  the  "beneficial  owner" (as  defined in Rule 13d-3 under the
Exchange  Act),  directly or  indirectly,  of more than 20% of the total  voting
power of all classes of Voting Stock then outstanding of QTI entitled to vote in
the  election  of  directors;  or (b) a majority  of the members of the board of
directors of QTI shall not be Continuing Directors;  or (c) Borrower shall cease
to own and control,  directly or indirectly,  100% of the issued and outstanding
Voting Stock of each Borrower other than QTI; or (d) the Polimeni  Parties shall
cease to own and control,  directly and of record,  at least 5% (calculated on a
fully diluted basis) of the issued and outstanding  capital Stock of QTI; or (e)
Mr.  Dominic A.  Polimeni  shall cease to be the  Chairman  and Chief  Executive
Officer of QTI (other than by reason of death or disability); provided, however,
that the  cessation  of such Person to be 

                                      -41-

<PAGE>


so employed shall not constitute a "Change of Control" if, within a period of 90
days after the first date of such cessation,  the Board of Directors of Borrower
appoints  a  successor  to  such  Person  and  such   successor  is   reasonably
satisfactory  to the Required  Lenders and such successor  agrees to so serve in
that   position.   

                       10.1.13  ERISA.  A  Reportable  Event  shall  occur which
Administrative  Agent  and  Collateral  Agent  determine  in  good  faith  to be
reasonably  likely to  constitute  grounds  for the  termination  by the Pension
Benefit  Guaranty  Corporation  of  any  Plan  or  for  the  appointment  by the
appropriate  United States  district  court of a trustee for any Plan, or if any
Plan shall be terminated or any such trustee shall be requested or appointed, or
if  Borrower,  or any  Subsidiary  of Borrower,  is in "default"  (as defined in
Section  4219(c)(5) of ERISA) with respect to payments to a  Multiemployer  Plan
resulting from Borrower's, or such Subsidiary's,  complete or partial withdrawal
from such Plan. 

                       10.1.14   Challenge  to  Agreement.   Borrower,   or  any
Subsidiary  of Borrower,  or any  Affiliate of any of them,  shall  challenge or
contest in any action,  suit, or proceeding  the validity or  enforceability  of
this  Agreement,   or  any  of  the  other  Loan  Documents,   the  legality  or
enforceability  of any of the  Obligations  or the perfection or priority of any
Lien granted to Agent.


                       10.1.15 [intentionally omitted].

                       10.1.16 Criminal Forfeiture.  Borrower, or any Subsidiary
of Borrower,  shall be criminally indicted or convicted under any law that could
lead to a forfeiture of any Property of Borrower, or any Subsidiary of Borrower.

                       10.1.17  Judgments.  If one or more  judgments  or  other
claims involving an aggregate amount of $500,000, or more, and not fully covered
by insurance,  becomes a Lien or  encumbrance  upon any material  portion of the
Properties of any Borrower and its Subsidiaries,  taken as a whole, and the Lien
or encumbrance is not released, discharged, or bonded against before the earlier
of 30 days of the date it first arises or 5 days of the date when such  property
or asset is subject to being  forfeited;  provided,  however,  that  during such
period  Administrative  Agent  shall be  entitled  to create and  maintain  (and
Collateral Agent shall be entitled to cause  Administrative  Agent to create and
maintain)  a reserve  against  the  Borrowing  Base in an amount  sufficient  to
discharge such Lien or encumbrance and any and all penalties or interest payable
in connection therewith. 

                  10.2  Acceleration  of the  Obligations.  Without  in any  way
limiting the right of  Administrative  Agent (acting on the  instructions of the
Required Lenders) to demand payment of any portion of the Obligations payable on
demand in  accordance  with  Section 3.2  hereof,  upon or at any time after the
occurrence of an Event of Default,  all or any portion of the Obligations shall,
at the option of  Administrative  Agent  (acting  upon the  instructions  of the
Required Lenders) and without presentment, demand, protest, or further notice by
the Lender Group,  become at once due and payable,  and Borrower forthwith shall
pay to Administrative  Agent for the benefit of the Lender Group the full amount
of such  Obligations;  provided that upon the  occurrence of an Event of Default
specified  in  Section  10.1.10  hereof,  all of the  Obligations  shall  

                                      -42-

<PAGE>


become automatically due and payable without  declaration,  notice, or demand by
the Lender Group.

                  10.3 Other Remedies. Upon and after the occurrence of an Event
of Default,  the Lender Group shall have and Collateral  Agent,  as the case may
be, may exercise from time to time the following rights and remedies:

                       10.3.1 All of the rights and remedies of a secured  party
under the Code or under other  applicable law, and all other legal and equitable
rights to which  the  Lender  Group may be  entitled,  all of which  rights  and
remedies  shall be  cumulative  and shall be in addition to any other  rights or
remedies  contained in this  Agreement or any of the other Loan  Documents,  and
none of which shall be exclusive.

                       10.3.2  The  right to take  immediate  possession  of the
Collateral,  and  to  (a)  require  Borrower  to  assemble  the  Collateral,  at
Borrower's  expense,  and  make it  available  to  Collateral  Agent  at a place
designated by Collateral  Agent which is reasonably  convenient to both parties,
and (b) enter any premises where any of the  Collateral  shall be located and to
keep and store the  Collateral on said premises until sold (and if said premises
be the Property of Borrower,  Borrower agrees not to charge the Lender Group for
storage  thereof).  

                       10.3.3 The right to sell or  otherwise  dispose of all or
any  Collateral in its then  condition,  or after any further  manufacturing  or
processing  thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Collateral
Agent, in its sole discretion, may deem advisable.  Borrower agrees that 10 days
written notice to Borrower of any public or private sale or other disposition of
Collateral  shall be reasonable  notice thereof,  and such sale shall be at such
locations as  Collateral  Agent may designate in said notice.  Collateral  Agent
shall  have the right to  conduct  such sales on  Borrower's  premises,  without
charge therefor, and such sales may be adjourned from time to time in accordance
with applicable law.  Collateral  Agent shall have the right to sell,  lease, or
otherwise dispose of the Collateral,  or any part thereof,  for cash, credit, or
any combination  thereof, and Collateral Agent on behalf of the Lender Group may
purchase  all or any part of the  Collateral  at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price,  may set off
the amount of such price against the Obligations. The proceeds realized from the
sale of any Collateral may be applied, after allowing 5 days for collection, (a)
first,  to the costs,  expenses,  and attorneys  fees incurred by the Collateral
Agent in collecting the Obligations, in enforcing the rights of the Lender Group
under the Loan Documents, and in collecting,  retaking, completing,  protecting,
removing, storing, advertising for sale, selling, and delivering any Collateral,
(b) second,  in  accordance  with the  provisions  of Section  3.2.6(b).  If any
deficiency  shall arise,  Borrower shall remain jointly and severally  liable to
the Lender Group therefor.  

                       10.3.4  Collateral  Agent is hereby  granted a license or
other right to use,  without charge,  Borrower's  labels,  patents,  copyrights,
rights  of use  of  any  name,  trade  secrets,  trade  names,  trademarks,  and
advertising  matter,  or any Property of a similar  nature as it pertains to the
Collateral,  in  advertising  for sale and selling any Collateral and Borrower's
rights under all licenses and all franchise agreements shall inure to Collateral
Agent's benefit.  
                                      -43-

<PAGE>


                       10.3.5 [intentionally  omitted] 

                  10.4   Remedies   Cumulative,   No  Waiver.   All   covenants,
conditions,   provisions,   warranties,   guaranties,   indemnities,  and  other
undertakings  of  Borrower  contained  in  this  Agreement  and the  other  Loan
Documents,  or in any document  referred to herein or contained in any agreement
supplementary  hereto or in any  schedule or  contained  in any other  agreement
between the Lender Group and Borrower,  heretofore,  concurrently,  or hereafter
entered  into,  shall  be  deemed   cumulative  to  and  not  in  derogation  or
substitution  of any of the  terms,  covenants,  conditions,  or  agreements  of
Borrower  contained herein.  The failure or delay of the Lender Group to require
strict performance by Borrower of any provision of this Agreement or to exercise
or enforce any rights,  Liens, powers, or remedies hereunder or under any of the
aforesaid  agreements  or other  documents or security or  Collateral  shall not
operate as a waiver of such performance,  Liens,  rights,  powers, and remedies,
but all such requirements, Liens, rights, powers, and remedies shall continue in
full  force and  effect  until all Loans and all other  Obligations  owing or to
become owing from Borrower to Lenders shall have been fully  satisfied.  None of
the undertakings,  agreements,  warranties,  covenants,  and  representations of
Borrower contained in this Agreement or any of the other Loan Documents,  and no
Event of Default by Borrower  under this  Agreement or any other Loan  Documents
shall be deemed to have been  suspended  or waived by the Lender  Group,  unless
such  suspension  or waiver  is by an  instrument  in  writing  specifying  such
suspension  or  waiver  and is  signed  by  duly  authorized  representative  of
Administrative  Agent and  Collateral  Agent (in each  case,  acting on  written
instructions of the Required Lenders) and directed to Borrower.

SECTION 11.    THE AGENTS

                  11.1 Appointment Powers and Immunities;  Delegation of Duties;
Liability of Agents
                
                       11.1.1 Each member of the Lender Group hereby  designates
and  appoints  Administrative  Agent  as its  administrative  agent  under  this
Agreement and the other Loan  Documents and  Collateral  Agent as its collateral
agent  under this  Agreement  and the other Loan  Documents.  Each member of the
Lender Group hereby  irrevocably  authorizes each such Agent to take such action
on its  behalf  under the  provisions  of this  Agreement  and each  other  Loan
Document and to exercise  such powers and perform  such duties as are  expressly
delegated  to it by the  terms of this  Agreement  or any other  Loan  Document,
together with such powers as are reasonably  incidental thereto. Each such Agent
agrees to act as such on the express  conditions  contained  in this Article 11.
The   provisions  of  this  Article  11  are  solely  for  the  benefit  of  the
Administrative Agent, Collateral Agent, and the Lenders.  Borrower shall have no
rights as a third party  beneficiary of any of the provisions  contained herein;
provided,  however,  that certain of the provisions of Section 11.13 hereof also
shall be for the benefit of Borrower.  Any  provision to the contrary  contained
elsewhere in this Agreement or in any other Loan Document notwithstanding,  each
such Agent shall not have any duties or responsibilities, except those expressly
set forth  herein,  nor  shall  each  such  Agent  have or be deemed to have any
fiduciary relationship with any other member of the Lender Group, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this  Agreement  or any other  Loan  Document  or  otherwise  exist
against each such Agent; it being  expressly  understood and agreed that the use
of the word "Agent" is for  convenience  only and that each 

                                      -44-

<PAGE>


such  Agent is merely  the  representative  of the other  members  of the Lender
Group,  and has only the contractual  duties set forth in this Agreement and the
other Loan Documents.  Except as expressly otherwise provided in this Agreement,
each such  Agent  shall  have and may use its sole  discretion  with  respect to
exercising or refraining from exercising any  discretionary  rights or taking or
refraining  from taking any actions  which such Agent is  expressly  entitled to
take or assert under or pursuant to this Agreement and the other Loan Documents.
No member of the Lender Group shall have any right of action whatsoever  against
each such  Agent as a result of such  Agent  acting or  refraining  from  acting
hereunder  pursuant to such  discretion  and any action  taken or failure to act
pursuant  to such  discretion  shall be  binding on the  Lender  Group.  Without
limiting the generality of the foregoing,  or of any other provision of the Loan
Documents that provides rights or powers to  Administrative  Agent or Collateral
Agent,  each of the  members of the Lender  Group  agree  that,  as long as this
Agreement remains in effect: (a) (i)  Administrative  Agent shall have the right
to maintain,  in accordance with its customary business  practices,  ledgers and
records  reflecting the status of the  Obligations,  the Revolving Credit Loans,
the Term Loans, the Collections,  and related matters, and (ii) Collateral Agent
shall have the right to maintain,  in  accordance  with its  customary  business
practices,  ledgers  and records  reflecting  the status of the  Collateral  and
related  matters;  (b) Collateral  Agent shall have the right to execute or file
any and all financing or similar  statements or notices,  amendments,  renewals,
supplements,  documents, instruments, proofs of claim, notices and other written
agreements with respect to the Loan Documents;  (c)  Administrative  Agent shall
have the right to make the Revolving  Credit  Loans,  for itself or on behalf of
the applicable  Lenders as provided in the Loan  Documents;  (d)  Administrative
Agent shall have the right to  exclusively  receive,  apply,  and distribute the
Collections as provided in the Loan Documents;  (e)  Administrative  Agent shall
have  the  right to open and  maintain  such  bank  accounts  and lock  boxes as
Administrative Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing  purposes  with respect to the  Collections  and, on
behalf of Collateral Agent, the Collateral;  (f) (i) Administrative  Agent shall
have the right to perform,  exercise,  and enforce any and all other  rights and
remedies of the Lender  Group with  respect to Borrower,  the  Obligations,  the
Collections,  or  otherwise  related  to any of same  as  provided  in the  Loan
Documents, and (ii) Collateral Agent shall have the right to perform,  exercise,
and  enforce  any and all other  rights and  remedies  of the Lender  Group with
respect to Borrower,  the Obligations,  the Collateral,  or otherwise related to
any of same as provided in the Loan Documents;  and (g) Administrative Agent and
Collateral Agent each shall have the right to incur and pay such fees,  charges,
and  expenses  under  the  Loan  Documents  as such  Agent  reasonably  may deem
necessary or appropriate  for the  performance  and fulfillment of its functions
and powers  pursuant to the Loan  Documents.  Administrative  Agent may deem and
treat the payee of any  Obligation as the holder thereof for all purposes of the
Loan  Documents  unless and until a notice of the assignment or transfer of such
Obligation shall have been filed with  Administrative  Agent. Each member of the
Lender Group further consents to (y) the execution, delivery, and performance by
Administrative  Agent or Collateral  Agent of each Loan Document entered into by
such Agent on behalf of the Lender Group as contemplated by this Agreement,  and
(z) the terms of such Loan Documents.

                       11.1.2 Except as otherwise provided in this section, each
of Administrative Agent and Collateral Agent may execute any of its duties under
this  Agreement or any other Loan  Document by or through  agents,  employees or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters pertaining to such duties.  Each of Administrative  Agent and Collateral
Agent shall not be responsible  for the negligence or 

                                      -45-

<PAGE>

misconduct  of any agent or  attorney-in-fact  that it  selects  as long as such
selection was made in compliance with this section and without gross  negligence
or willful misconduct.

                       11.1.3  None of the  Agent-Related  Persons  shall (i) be
liable  for any  action  taken or omitted to be taken by any of them under or in
connection  with this  Agreement or any other Loan Document or the  transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be  responsible in any manner to any members of the Lender Group for any
recital,  statement,   representation  or  warranty  made  by  Borrower  or  any
Subsidiary  or  Affiliate  of  Borrower,  or any  officer or  director  thereof,
contained  in  this  Agreement  or  in  any  other  Loan  Document,  or  in  any
certificate, report, statement or other document referred to or provided for in,
or received by  Administrative  Agent or Collateral Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness,  enforceability  or sufficiency of this Agreement or any other Loan
Document, or for any failure of Borrower or any other party to any Loan Document
to perform its  obligations  hereunder or thereunder.  No  Agent-Related  Person
shall be under any  obligation to any member of the Lender Group to ascertain or
to  inquire  as to the  observance  or  performance  of  any  of the  agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect  the  properties,  books or records  of  Borrower  or any of  Borrower's
Subsidiaries or Affiliates.

                  11.2 Reliance by Agent.  Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing,  resolution,  notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message,  statement  or other  document  or  conversation  believed  by it to be
genuine and correct and to have been signed, sent, or made by the proper Person,
and upon advice and statements of legal counsel  (including  counsel to Borrower
or counsel to any member of the Lender Group), independent accountants and other
experts  selected by such Agent.  Each Agent shall be fully justified in failing
or refusing to take any action under this  Agreement or any other Loan  Document
unless it first shall  receive such advice or  concurrence  of the Lenders as it
deems  appropriate and until such  instructions  are received,  such Agent shall
act, or refrain from acting, as it deems advisable. If any Agent so requests, it
first shall be indemnified to its  reasonable  satisfaction  by the Lender Group
against any and all  liability  and expense that may be incurred by it by reason
of taking or continuing  to take any such action.  Each Agent in all cases shall
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the Lender
Group and such request and any action  taken or failure to act pursuant  thereto
shall be binding upon all members of the Lender Group.

                  11.3  Defaults.  Administrative  Agent  shall not be deemed to
have  knowledge or notice of the  occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses  required  to be paid to  Administrative  Agent for the  account of the
Lender Group,  except with respect to Events of Default of which  Administrative
Agent has actual knowledge,  and unless Administrative Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such  Default or Event of Default,  and stating that such notice is a "Notice of
Default."  Administrative  Agent  promptly  will notify the Lender  Group of its
receipt of any such  notice or of any Event of  Default of which  Administrative
Agent has actual knowledge.  If any Lender obtains actual knowledge of any Event
of Default,  such Lender  promptly shall notify the other Lenders and 

                                      -46-

<PAGE>


each Agent of such Event of Default. Each Lender shall be solely responsible for
giving any notices to its  Participants,  if any.  Subject to Sections  11.2 and
11.7, each Agent shall take such action with respect to such Default or Event of
Default as may be requested by the Required  Lenders in accordance  with Section
10;  provided,  however,  that unless and until such Agent has received any such
request,  such Agent may (but shall not be obligated  to) take such  action,  or
refrain  from  taking  such  action,  with  respect to such  Default or Event of
Default as it shall deem advisable.

                  11.4 Rights as a Lender.  (a) With respect to its  Commitments
and the Loans made by it,  Congress  Financial  Corporation  (Southern) (and any
successor  acting as  Administrative  Agent,  if any,  as  permitted  by Section
11.8(a)  hereof) in its capacity as a Lender under the Loan Documents shall have
the same rights,  privileges  and powers  under the Loan  Documents as any other
Lender and may exercise the same as though it were not acting as  Administrative
Agent,  and the term "Lender" or "Lenders" shall,  unless the context  otherwise
indicates,  include  Administrative Agent in its individual  capacity.  Congress
Financial  Corporation  (Southern) (and any successor  acting as  Administrative
Agent) and its  affiliates  may  (without  having to account for the same to any
member  of  the  Lender  Group)  accept  deposits  from,  lend  money  to,  make
investments  in and  generally  engage  in any kind of  banking,  trust or other
business with Borrower (and any of its Subsidiaries or Affiliates) as if it were
not  acting  as  Administrative   Agent,  and  Congress  Financial   Corporation
(Southern)  (and its  successors)  and its  affiliates may accept fees and other
consideration  from Borrower for services in connection  with this  Agreement or
otherwise without having to account for the same to the Lender Group.

                  (b) With respect to its  Commitments and the Loans made by it,
Madeleine  L.L.C.  (and any  successor  acting as Collateral  Agent,  if any, as
permitted by Section  11.8(b) hereof) in its capacity as a Lender under the Loan
Documents  shall have the same  rights,  privileges  and  powers  under the Loan
Documents  as any other  Lender and may  exercise the same as though it were not
acting as Collateral Agent, and the term "Lender" or "Lenders" shall, unless the
context  otherwise  indicates,   include  Collateral  Agent  in  its  individual
capacity.  Madeleine L.L.C.  (and any successor acting as Collateral  Agent) and
its affiliates may (without  having to account for the same to any member of the
Lender Group)  accept  deposits  from,  lend money to, make  investments  in and
generally  engage in any kind of banking,  trust or other business with Borrower
(and  any of its  Subsidiaries  or  Affiliates)  as if it  were  not  acting  as
Collateral  Agent,  and Madeleine  L.L.C. and its affiliates may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to the Lender Group.

                  11.5 Costs and Expenses; Indemnification. Each Agent may incur
and pay fees,  costs,  and expenses  under the Loan Documents to the extent such
Agent  deems  reasonably  necessary  or  appropriate  for  the  performance  and
fulfillment  of its  functions,  powers,  and  obligations  pursuant to the Loan
Documents,  including  without  limiting the generality of the foregoing,  court
costs,  reasonable  attorneys fees and expenses,  costs of collection by outside
collection  agencies  and  auctioneer  fees and  costs  of  security  guards  or
insurance  premiums paid to maintain the Collateral,  whether or not Borrower is
obligated to reimburse the Lender Group for such  expenses  pursuant to the Loan
Agreement  or  otherwise.  Each  Lender  hereby  agrees  that it is and shall be
obligated to pay to or reimburse  Agent for the amount of such Lender's Pro Rata
Share thereof (in  accordance  with its Total  Commitments).  Whether or not the
transactions
                                      -47-

<PAGE>


contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related  Persons  (without  limiting the obligation of Borrower to do so),
according to their Pro Rata Shares (in accordance  with their  respective  Total
Commitments),  from and against any and all Indemnified  Liabilities  (including
without limitation  Indemnified  Liabilities arising under any Environmental Law
as provided in Section 12.2); provided,  however, that no Lender shall be liable
for the payment to the Agent-Related  Persons of any portion of such Indemnified
Liabilities  resulting  solely from such  Person's  gross  negligence or willful
misconduct.  Without  limitation of the foregoing,  each Lender shall  reimburse
Administrative  Agent or Collateral  Agent,  as the case may be, upon demand for
such Lender's  ratable share of any costs or out-of-pocket  expenses  (including
attorneys  fees and  expenses)  incurred  by such Agent in  connection  with the
preparation,  execution, delivery,  administration,  modification,  amendment or
enforcement (whether through  negotiations,  legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities  under, this Agreement,
any other Loan Document, or any document contemplated by or referred to  herein.
The  undertaking  in this section shall  survive the payment of all  Obligations
hereunder and the resignation or replacement of any Agent.

                  11.6  Nonreliance  on Agent and  Other  Lenders.  Each  Lender
acknowledges that none of the Agent-Related  Persons has made any representation
or warranty to it, and that no act by any Agent hereinafter taken, including any
review  of  the  affairs  or  Property  of  Borrower  and  its  Subsidiaries  or
Affiliates,  shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender. Each Lender represents to each Agent that it
has,  independently and without reliance upon any Agent-Related Person and based
on such  documents and  information as it has deemed  appropriate,  made its own
appraisal  of  and  investigation  into  the  business,  prospects,  operations,
Property, financial and other condition and creditworthiness of Borrower and any
other Person  (other than the Lender  Group) party to a Loan  Document,  and all
applicable  bank  regulatory  laws  relating  to the  transactions  contemplated
hereby,  and made its own  decision to enter into this  Agreement  and to extend
credit to Borrower. Each Lender also represents that it will,  independently and
without reliance upon any  Agent-Related  Person and based on such documents and
information as it shall deem  appropriate at the time,  continue to make its own
credit  analysis,  appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents,  and to make such investigations as
it deems necessary to inform itself as to the business,  prospects,  operations,
property, financial and other condition and creditworthiness of Borrower and any
other Person (other than the Lender Group) party to a Loan Document.  Except for
notices,  reports and other documents  expressly herein required to be furnished
to the Lender Group by Agent, no Agent shall have any duty or  responsibility to
provide  any  member of the Lender  Group  with any credit or other  information
concerning the business,  prospects,  operations,  Property, financial and other
condition or  creditworthiness  of Borrower and any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.

                  11.7 Failure to Act. Except for action  expressly  required of
any  Agent  under the Loan  Documents,  such  Agent  shall in all cases be fully
justified in failing or refusing to act under any Loan Document  unless it shall
receive  further  assurances  to its  satisfaction  from  the  Lenders  of their
indemnification obligations under Section 11.5 against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action.
                                      -48-

<PAGE>

                  11.8  Resignation of Agent. (a) Subject to the appointment and
acceptance of a successor Administrative Agent as provided below, Administrative
Agent may resign at any time by notice to the Lender  Group and  Borrower.  Upon
any such  resignation,  Required  Lenders  shall  have the  right to  appoint  a
successor  Administrative Agent. If no successor Administrative Agent shall have
been appointed by Required Lenders and have accepted such appointment  within 30
days after the retiring  Administrative Agent's giving of notice of resignation,
then the  retiring  Administrative  Agent may, on behalf of  Lenders,  appoint a
successor  Administrative  Agent.  Upon the  acceptance  of any  appointment  as
Administrative  Agent  by  a  successor  Administrative  Agent,  such  successor
Administrative  Agent shall thereupon  succeed to and become vested with all the
rights,  remedies,  powers,  privileges,  duties and obligations of the retiring
Administrative Agent, and the retiring  Administrative Agent shall be discharged
from its duties and  obligations,  under the Loan Documents.  After any retiring
Administrative  Agent's  resignation as Administrative  Agent, the provisions of
this  Section  11 shall  continue  in effect  for its  benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Administrative
Agent.

                  (b) Subject to the  appointment  and acceptance of a successor
Collateral  Agent as provided below,  Collateral Agent may resign at any time by
notice to the Lender Group and  Borrower.  Upon any such  resignation,  Required
Lenders  shall have the right to appoint a  successor  Collateral  Agent.  If no
successor  Collateral  Agent shall have been  appointed by Required  Lenders and
have  accepted  such  appointment  within 30 days after the retiring  Collateral
Agent's giving of notice of resignation, then the retiring Collateral Agent may,
on behalf of Lenders,  appoint a successor Collateral Agent. Upon the acceptance
of any appointment as Collateral  Agent by a successor  Collateral  Agent,  such
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, remedies, powers, privileges, duties and obligations of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations,  under the Loan Documents. After any retiring Collateral
Agent's resignation as Collateral Agent, the provisions of this Section 11 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Collateral Agent.

                  11.9 Collateral Sub-Agents. Each member of the Lender Group by
its execution and delivery of this Agreement  agrees that, in the event it shall
hold any monies or other  investments  on account of  Borrower,  such  monies or
other investments shall be held in the name and under the control of such member
of the Lender Group,  and such member of the Lender Group shall hold such monies
or other  investments as a collateral  sub-agent for Collateral Agent under this
Agreement and the other Loan  Documents.  Borrower by its execution and delivery
of this Agreement hereby consents to the foregoing.

                  11.10 Communications by Borrower. Except as otherwise provided
in this Agreement,  Borrower's communications with respect to the Loan Documents
shall be with Administrative  Agent or Collateral Agent, as the case may be, and
Borrower  shall not be under any  obligation  to  communicate  directly with the
Lenders.

                  11.11 Collateral Matters.

                                      -49-

<PAGE>


                  (a) The Lenders hereby irrevocably authorize Collateral Agent,
at its option and in its sole discretion,  to release any Lien on any Collateral
(i) upon the termination of the Commitments and payment and satisfaction in full
by  Borrower  of all  Obligations;  (ii)  constituting  property  being  sold or
disposed of if a release is required or desirable in connection therewith and if
Borrower  certifies in writing to Collateral  Agent that the sale or disposition
is permitted  under this Agreement or the other Loan  Documents (and  Collateral
Agent may rely conclusively on any such  certificate,  without further inquiry);
(iii) constituting  property in which Borrower owned no interest at the time the
security  interest  was  granted or at any time  thereafter;  (iv)  constituting
property leased to Borrower under a lease that has expired or is terminated in a
transaction permitted under this Agreement,  or (v) which, in the aggregate with
all other  dispositions  of  Equipment,  has a fair market  value or book value,
whichever is less,  of $500,000 or less.  Except as provided  above or expressly
provided  in any other Loan  Document,  Collateral  Agent will not  execute  and
deliver a  release  of any Lien on any  Collateral  without  the  prior  written
authorization  of all of the  Lenders.  Upon  request  by  Collateral  Agent  or
Borrower  at any time,  Administrative  Agent and the  Lenders  will  confirm in
writing  Collateral  Agent's  authority to release any such Liens on  particular
types or items of Collateral pursuant to this Section 11.11; provided,  however,
that (1)  Collateral  Agent  shall  not be  required  to  execute  any  document
necessary to evidence such release on terms that, in Collateral Agent's opinion,
would expose  Collateral  Agent to liability or create any  obligation or entail
any  consequence   other  than  the  release  of  such  Lien  without  recourse,
representation,  or  warranty,  and (2) such  release  shall  not in any  manner
discharge,  affect,  or impair the  Obligations  or any Liens  (other than those
expressly  being  released) upon (or  obligations of Borrower in respect of) all
interests  retained by Borrower,  including,  the  proceeds of any sale,  all of
which shall continue to constitute part of the Collateral.

                  (b)  Collateral  Agent shall have no obligation  whatsoever to
any other member of the Lender Group to assure that the Collateral  exists or is
owned by Borrower or is cared for, protected, or insured or has been encumbered,
or that the  Collateral  Agent's  Liens have been  properly or  sufficiently  or
lawfully  created,  perfected,  protected,  or enforced  or are  entitled to any
particular priority,  or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising,  any of the
rights, authorities and powers granted or available to Collateral Agent pursuant
to any of the Loan Documents,  it being understood and agreed that in respect of
the Collateral,  or any act,  omission or event related thereto,  subject to the
terms and conditions contained herein, Collateral Agent may act in any manner it
may deem  appropriate,  in its sole  discretion  given  Collateral  Agent's  own
interest  in the  Collateral  in its  capacity  as one of the  Lenders  and that
Collateral  Agent shall have no other duty or liability  whatsoever to any other
member of the  Lender  Group as to any of the  foregoing,  except  as  otherwise
provided herein.  

                  11.12 Restrictions on Actions by  Administrative Agent and the
Lenders;  Sharing of Payments.  (a) Administrative Agent and each of the Lenders
agrees that it shall not,  without the express consent of Collateral  Agent, and
that it shall, to the extent it is lawfully  entitled to do so, upon the request
of  Administrative  Agent and Collateral Agent, set off against the Obligations,
any amounts owing by such member of the Lender Group to Borrower or any accounts
of Borrower now or hereafter  maintained  with such member of the Lender  Group.
Administrative  Agent and each of the Lenders  further agrees that it shall not,
unless specifically requested to do so by Collateral Agent, take or cause to be
taken  any  action,  
                                      -50-

<PAGE>


including, the commencement of any legal or equitable proceedings,  to foreclose
any  Lien  on,  or  otherwise  enforce  any  security  interest  in,  any of the
Collateral  the  purpose  of which is,  or could be, to give such  member of the
Lender group any preference or priority  against the other members of the Lender
group with respect to the Collateral.

                  (b)  Subject  to  Section  11.4,  if, at any time or times any
Lender  shall  receive (i) by payment,  foreclosure,  setoff or  otherwise,  any
proceeds of Collateral or any payments with respect to the  Obligations  arising
under,  or relating to, this Agreement or the other Loan  Documents,  except for
any such proceeds or payments received by such Lender from Administrative  Agent
pursuant to the terms of this  Agreement,  or (ii) payments from  Administrative
Agent in excess of such Lender's  ratable portion of all such  distributions  by
Administrative  Agent,  such  Lender  promptly  shall  turn  the  same  over  to
Administrative  Agent, in kind, and with such endorsements as may be required to
negotiate the same to Administrative Agent, or in same day funds, as applicable,
for the account of the Lender Group and for apportionment and application to the
Obligations in accordance with Section 3.2.6 hereof.

                  11.13  Withholding  Tax.  (a)  If  any  Lender  is a  "foreign
corporation, partnership or trust" within the meaning of the IRC and such Lender
claims  exemption  from, or a reduction of, U.S.  withholding tax under Sections
1441 or 1442 of the IRC, such Lender agrees with and in favor of  Administrative
Agent and Borrower, to deliver to Administrative Agent and Borrower.

                       (i)  if  such  Lender  claims  an  exemption  from,  or a
reduction  of,  withholding  tax  under a United  States  tax  treaty,  properly
completed IRS Forms 1001 and W-8 before the payment of any interest in the first
calendar  year and before the payment of any  interest in each third  succeeding
calendar year during which interest may be paid under this Agreement;

                       (ii) if such Lender  claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected  with a United  States trade or business of such Lender,  two properly
completed  and  executed  copies  of IRS Form 4224  before  the  payment  of any
interest is due in the first taxable year of such Lender and in each  succeeding
taxable  year of such  Lender  during  which  interest  may be paid  under  this
Agreement, and IRS Form W-9; and

                       (iii) such other form or forms as may be  required  under
the IRC or other laws of the United States as a condition to exemption  from, or
reduction of, United States withholding tax.

Such Lender agrees promptly to notify  Administrative  Agent and Borrower of any
change  in  circumstances  which  would  modify or render  invalid  any  claimed
exemption or reduction.

                  (b) If any Lender  claims  exemption  from,  or reduction  of,
withholding  tax under a United States tax treaty by providing IRS Form 1001 and
such Lender sells,  assigns,  grants a participation in, or otherwise  transfers
all or part of the Obligations of Borrower to such Lender, such Lender agrees to
notify  Administrative  Agent of the percentage  amount in which it is no longer
the beneficial owner of Obligations of Borrower to such Lender. To the extent of

                                      -51-

<PAGE>


such percentage amount,  Administrative  Agent will treat such Lender's IRS Form
1001 as no longer valid.

                  (c)  If any  Lender  claiming  exemption  from  United  States
withholding  tax by  filing  IRS Form  4224  with  Administrative  Agent  sells,
assigns,  grants a participation  in, or otherwise  transfers all or part of the
Obligations  of Borrower to such Lender,  such Lender  agrees to undertake  sole
responsibility  for complying with the withholding tax  requirements  imposed by
Sections 1441 and 1442 of the IRC.

                  (d) If any Lender is entitled to a reduction in the applicable
withholding tax,  Administrative Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable  withholding tax after taking
into account such  reduction.  If the forms or other  documentation  required by
clause (a) of this  Section are not  delivered  to  Administrative  Agent,  then
Administrative  Agent may withhold from any interest  payment to such Lender not
providing  such  forms  or  other  documentation  an  amount  equivalent  to the
applicable withholding tax.

                  (e) If the  IRS or any  other  Governmental  Authority  of the
United States or other jurisdiction  asserts a claim that  Administrative  Agent
did not  properly  withhold  tax from  amounts paid to or for the account of any
Lender  (because  the  appropriate  form  was not  delivered,  was not  properly
executed,  or because  such Lender  failed to notify  Administrative  Agent of a
change in  circumstances  which  rendered the  exemption  from, or reduction of,
withholding  tax  ineffective,  or for  any  other  reason)  such  Lender  shall
indemnify   Administrative  Agent  fully  for  all  amounts  paid,  directly  or
indirectly, by Administrative Agent as tax or otherwise, including penalties and
interest,  and including any taxes  imposed by any  jurisdiction  on the amounts
payable to Administrative Agent under this Section,  together with all costs and
expenses (including attorneys fees and expenses).  The obligation of the Lenders
under  this  Section  shall  survive  the  payment  of all  Obligations  and the
resignation or replacement of Administrative Agent.

                  11.14 Several Obligations; No Liability.  Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of an Agent in its capacity as such,  and not by or in favor
of the Lenders,  any and all obligations on the part of Administrative Agent (if
any) to make any credit  available  hereunder shall  constitute the several (and
not joint) obligations of the respective  Lenders on a ratable basis,  according
to their respective Commitments, to make an amount of such credit not to exceed,
in principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any member of the Lender
Group any  interest  in,  or  subject  any  member  of the  Lender  Group to any
liability  for, or in respect of, the  business,  assets,  profits,  losses,  or
liabilities of any other member of the Lender Group. Each Lender shall be solely
responsible for notifying its  Participants of any matters  relating to the Loan
Documents  to the extent any such notice may be  required,  and no member of the
Lender Group shall have any obligation, duty, or liability to any Participant of
any other  Lender.  Except as provided in Section  11.5,  no Agent or any Lender
shall have any liability for the acts of the other Agent or any other Lender. No
Lender shall be  responsible  to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available  hereunder,
nor to advance for it or on its behalf

                                      -52-

<PAGE>


in connection  with its  Commitment,  nor to take any other action on its behalf
hereunder or in connection with the financing contemplated herein.

SECTION 12.    MISCELLANEOUS

                  12.1   Power  of   Attorney.   Borrower   hereby   irrevocably
designates,  makes, constitutes,  and appoints Collateral Agent (and all Persons
designated by  Collateral  Agent) as  Borrower's  true and lawful  attorney (and
agent-in-fact),  and Collateral Agent, or Collateral Agent's agent, may, without
notice to Borrower and in either  Borrower's or Collateral  Agent's name, but at
the cost and expense of Borrower:

                       12.1.1 At such time or times upon or after the occurrence
of a Default or an Event of Default as Collateral Agent or said agent (including
Administrative Agent), in its sole discretion, may determine, endorse Borrower's
name on any checks,  notes,  acceptances,  drafts,  money  orders,  or any other
evidence of payment or proceeds of the Collateral which come into the possession
of the Lender Group or under the Lender  Group's  control and shall deposit such
item of payment  into the  Dominion  Account or credit  the amount  thereof  (in
accordance with the provisions of this Agreement) to the Obligations.

                       12.1.2 At such time or times upon or after the occurrence
of an Event of Default as Collateral Agent or its agent, in its sole discretion,
may  determine:  (a) demand  payment of the Accounts  from the Account  Debtors,
enforce payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of Borrower's rights and remedies with respect to the collection of
the Accounts, (b) settle, adjust,  compromise,  discharge, or release any of the
Accounts or other Collateral or any legal proceedings  brought to collect any of
the  Accounts or other  Collateral,  (c) sell or assign any of the  Accounts and
other Collateral upon such terms, for such amounts, and at such time or times as
Collateral Agent deems advisable,  (d) take control,  in any manner, of any item
of payment or proceeds relating to any Collateral,  (e) prepare,  file, and sign
Borrower's  name to a proof of claim in bankruptcy or similar  document  against
any Account  Debtor,  or to any notice of lien,  assignment,  or satisfaction of
lien or similar document in connection with any of the Collateral,  (f) receive,
open  and  dispose  of  all  mail  addressed  to  Borrower,  and  notify  postal
authorities  to change the  address  for  delivery  thereof  to such  address as
Collateral Agent may designate, (g) endorse the name of Borrower upon any of the
items of payment or proceeds relating to any Collateral, and deposit the same to
the account of Collateral Agent on account of the  Obligations,  (h) endorse the
name of Borrower upon any chattel paper, document, instrument,  invoice, freight
bill, bill of lading or similar document, or agreement relating to the Accounts,
Inventory and any other Collateral,  (i) use Borrower's  stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to Account
Debtors, (j) use the information recorded on or contained in any data processing
equipment,  computer hardware, and software relating to the Accounts, Inventory,
Equipment,  and any other Collateral,  (k) make and adjust claims under policies
of  insurance,  and (l) do all other acts and things  necessary,  in  Collateral
Agent's  determination,  to fulfill Borrower's obligations under this Agreement.

                  12.2  Indemnity.  Borrower  hereby  agrees to pay,  indemnify,
defend (with  counsel  selected by Borrower  and  reasonably  acceptable  to the
Indemnified  Person),  and hold the Agent-Related  Persons,  the  Lender-Related
Persons  with  respect  to each  Lender,  each  

                                      -53-

<PAGE>


Participant,  and  each of  their  respective  officers,  directors,  employees,
counsel,  agents, and attorneys-in-fact (each, an "Indemnified Person") harmless
(to the fullest  extent  permitted  by law) from and against any and all claims,
demands,  suits,  actions,  investigations,  proceedings,  and damages,  and all
reasonable  attorneys  fees and  disbursements  and  other  costs  and  expenses
actually  incurred in  connection  therewith  (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against,  imposed
upon, or incurred by any of them in connection with or as a result of or related
to the this Agreement and any other Loan Documents  (including the  enforcement,
performance, and administration thereof, or any consents or waivers hereunder or
thereunder  or  any  amendment  or  modifications  hereof  or  thereof)  or  the
transactions  contemplated  herein,  and  with  respect  to  any  investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the  proceeds  of the  credit  provided  hereunder  (irrespective  of
whether any Indemnified Person is a party thereto), or any act, omission,  event
or circumstance in any manner related thereto (all the foregoing,  collectively,
the  "Indemnified  Liabilities").  Borrower  shall  have  no  obligation  to any
Indemnified  Person  under this  Section  12.2 with  respect to any  Indemnified
Liability  that a court of competent  jurisdiction  finally  determines  to have
resulted  from the gross  negligence or willful  misconduct of such  Indemnified
Person.  Without  limiting the  generality of the foregoing,  these  indemnities
shall extend to any claims  asserted  against  Agent or any Lender by any Person
under any  Environmental  Laws or similar  laws by reason of  Borrower's  or any
other  Person's  failure to comply with laws  applicable  to solid or  hazardous
waste  materials  or other toxic  substances.  Any  contrary  provision  in this
Agreement notwithstanding,  (a) the foregoing shall not be deemed to be a waiver
of Agent's  obligations,  if any,  under Section 9-207 of the Code,  and (b) the
obligation of Borrower under this Section 12.2 shall survive the payment in full
of the Obligations and the termination of this Agreement.

                  12.3 Amendments, Etc.

                       12.3.1 Amendments and Waivers.  No amendment or waiver of
any provision of this Agreement or any other Loan Document,  and no consent with
respect to any departure by Borrower  therefrom,  shall be effective  unless the
same  shall  be  in  writing  and  signed  by  the   Required   Lenders  (or  by
Administrative  Agent and Collateral Agent, in each case, at the written request
of the Required  Lenders) and Borrower and then any such waiver or consent shall
be  effective  only in the specific  instance  and for the specific  purpose for
which  given;  provided,  however,  that no such waiver,  amendment,  or consent
shall, unless in writing and signed by Borrower, all the Lenders, Administrative
Agent, and Collateral Agent, do any of the following:

                  (a) increase or extend the Commitment of any Lender;

                  (b) postpone or delay any date fixed by this  Agreement or any
other Loan  Document  for any  payment  of  principal,  interest,  fees or other
amounts due to the Lenders  (or any of them)  hereunder  or under any other Loan
Document;  

                  (c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable  hereunder or under any
other Loan Document, or forgive,  compromise,  or cancel any of the Obligations;
provided,  however,  that no consent of the Term Loan Lenders  shall be required
for the compromise of any Obligation  

                                      -54-

<PAGE>

relating solely to Revolving Credit Loans and no consent of the Revolving Credit
Lenders shall be required for the compromise of any Obligation  relating  solely
to Term Loans;

                  (d) change the percentage of the Commitments  that is required
for the  Lenders  or any of them to take any  action  hereunder;  

                  (e) amend  this  Section  or any  provision  of the  Agreement
providing for consent or other action by all Lenders;

                  (f)  release  Collateral  other than as  permitted  by Section
11.11,  or subordinate any security  interests or liens of Collateral  Agent for
the benefit of the Lender Group;

                  (g) change the definition of "Required Lenders";

                  (h) release  Borrower from any  Obligation  for the payment of
money, or agree to subordinate any of the Obligations in right of payment to any
other Indebtedness;

                  (i) amend the provisions of Section 3.2.6;

                  (j)  increase  the advance  rate with  respect to the Eligible
Accounts or Eligible  Inventory or any sublimit in the Borrowing Base applicable
thereto;

                  (k) permit the sale of all or substantially all of the capital
stock of any Borrower or any of its Subsidiaries;

                  (l) amend any of the provisions of Section 11;

and, provided further, however, that (1) no amendment,  waiver or consent shall,
unless in  writing  and  signed by  Administrative  Agent,  affect the rights or
duties of Administrative  Agent under this Agreement or any other Loan Document,
and (2) no amendment,  waiver or consent shall,  unless in writing and signed by
Collateral  Agent,  affect the rights or duties of  Collateral  Agent under this
Agreement  or any  other  Loan  Document.  The  foregoing  notwithstanding,  any
amendment,  modification,  waiver, consent,  termination,  or release of or with
respect to any  provision  of this  Agreement  or any other Loan  Document  that
relates only to the relationship of the Lender Group among themselves,  and that
does not affect the rights or obligations of Borrower, shall not require consent
by or the agreement of Borrower.

                       12.3.2 No Waivers; Cumulative Remedies. No failure by the
Lender Group to exercise any right, remedy, or option under this Agreement,  any
other Loan Document,  or any present or future supplement hereto or thereto,  or
in any other agreement  between or among Borrower and the Lender Group, or delay
by the Lender Group in exercising the same, will operate as a waiver thereof. No
waiver by the Lender Group will be effective  unless it is in writing,  and then
only to the extent  specifically  stated.  No waiver by the Lender  Group on any
occasion  shall  affect or diminish  the Lender  Group's  rights  thereafter  to
require strict  performance by Borrower of any provision of this Agreement.  The
Lender  Group's rights under 

                                      -55-

<PAGE>


this Agreement and the other Loan Documents will be cumulative and not exclusive
of any other right or remedy which the Lender Group may have.

                  12.4 Successors; Assignments and Participations.

                       12.4.1 This Agreement shall bind and inure to the benefit
of the  respective  successors  and  assigns of each of the  parties;  provided,
however,  that  Borrower  may not assign this  Agreement or any rights or duties
hereunder without the prior written consent of Administrative Agent,  Collateral
Agent,  and  each  of the  Lenders,  and  any  prohibited  assignment  shall  be
absolutely  void ab initio.  No consent to  assignment by the Lender Group shall
release  Borrower from its  Obligations.  A Lender may assign this Agreement and
the other Loan  Documents  and its rights and duties  hereunder  and  thereunder
pursuant to Section 12.4.2 hereof and, except as expressly  required pursuant to
Section  12.4.2  hereof,  no consent or  approval  by  Borrower  is  required in
connection with any such assignment.

                       12.4.2 (a) Any Lender may,  with the  written  consent of
Collateral Agent (which consent shall not be unreasonably  withheld nor shall it
be required in respect to an assignment of the Term Loans),  assign and delegate
to one or more assignees  (provided that no written consent of Collateral  Agent
shall be required in connection  with any  assignment and delegation by a Lender
to an Eligible  Transferee) (each an "Assignee") all, or any part of all, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of $5,000,000;
provided, however, that Borrower, Collateral Agent, and Administrative Agent may
continue to deal solely and  directly  with such Lender in  connection  with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together  with payment  instructions,  addresses  and related  information  with
respect to the Assignee,  shall have been given to Borrower,  Collateral  Agent,
and Administrative  Agent by such Lender and the Assignee;  (ii) such Lender and
its  Assignee  shall  have  delivered  to  Borrower,   Collateral   Agent,   and
Administrative  Agent an  Assignment  and  Acceptance in the form of Exhibit A-1
("Assignment and  Acceptance") in form and substance  satisfactory to Collateral
Agent;  and (iii) the assignor  Lender or Assignee has paid to Collateral  Agent
for Collateral  Agent's sole and separate account a processing fee in the amount
of  $2,500.  Anything  contained  herein to the  contrary  notwithstanding,  the
consent of  Collateral  Agent  shall not be required  if such  assignment  is in
connection with any merger, consolidation,  sale, transfer, or other disposition
of all or any  substantial  portion of the  business or loan  portfolio  of such
Lender.  

                  (b) From and after the date that Collateral Agent notifies the
assignor  Lender that it has received an executed  Assignment and Acceptance and
payment of the  above-referenced  processing  fee, (i) the  Assignee  thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance,  shall have
the rights and  obligations of a Lender under the Loan  Documents,  and (ii) the
assignor Lender shall,  to the extent that rights and obligations  hereunder and
under  the other  Loan  Documents  have been  assigned  by it  pursuant  to such
Assignment and Acceptance, relinquish its rights (except with respect to Section
12.2 hereof) and be released from its obligations  under this Agreement  (except
with  respect to Section  11.5  hereof)  (and in the case of an  Assignment  and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations  under this Agreement and the other Loan Documents,  such Lender
shall 
                                      -56-

<PAGE>


cease to be a party hereto and thereto),  and such assignment shall effect
a novation among Borrower, the assignor Lender, and the Assignee.

                  (c) By executing and delivering an Assignment and  Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each  other and the other  parties  hereto as  follows:  (1) other  than as
provided in such  Assignment  and  Acceptance,  such  assigning  Lender makes no
representation  or warranty  and assumes no  responsibility  with respect to any
statements,  warranties or  representations  made in or in connection  with this
Agreement or the execution,  legality,  validity,  enforceability,  genuineness,
sufficiency  or value of this  Agreement  or any other Loan  Document  furnished
pursuant hereto;  (2) such assigning Lender makes no  representation or warranty
and  assumes no  responsibility  with  respect  to the  financial  condition  of
Borrower or the  performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document  furnished  pursuant hereto; (3)
such Assignee  confirms that it has received a copy of this Agreement,  together
with such other documents and  information as it has deemed  appropriate to make
its own  credit  analysis  and  decision  to  enter  into  such  Assignment  and
Acceptance;  (4) such Assignee  will,  independently  and without  reliance upon
Administrative  Agent,  Collateral  Agent,  such assigning  Lender, or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time,  continue to make its own credit  decisions in taking or not taking
action under this Agreement;  (5) such Assignee  appoints and authorizes each of
Administrative  Agent and Collateral Agent to take such action as Administrative
Agent or  Collateral  Agent (as the case may be) on its behalf  and to  exercise
such powers under this  Agreement as are  delegated to  Administrative  Agent or
Collateral  Agent (as the case may be) by the terms  hereof,  together with such
powers as are reasonably  incidental thereto;  and (6) such Assignee agrees that
it will perform in accordance with their terms all of the  obligations  which by
the terms of this Agreement are required to be performed by it as a Lender.

                  (d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and  Acceptance,  this Agreement shall be deemed to
be amended to the  extent,  but only to the  extent,  necessary  to reflect  the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom.  The  Commitments  allocated  to  each  Assignee  shall  reduce  such
Commitments of the assigning Lender pro tanto.

                  (e) Any Lender may at any time,  with the  written  consent of
Collateral Agent, sell to one or more commercial banks, financial  institutions,
or other Persons not Affiliates of such Lender (a  "Participant")  participating
interests  in the  Obligations,  the  Commitments,  and  the  other  rights  and
interests  of that Lender (the  "originating  Lender")  hereunder  and under the
other Loan Documents (provided that no written consent of Collateral Agent shall
be required in connection with any sale of any such participating interests by a
Lender to an Eligible Transferee);  provided,  however, that (i) the originating
Lender's  obligations  under this  Agreement  shall remain  unchanged,  (ii) the
originating  Lender shall remain solely  responsible for the performance of such
obligations,  (iii) Borrower,  Collateral Agent, and Administrative  Agent shall
continue to deal solely and directly with the  originating  Lender in connection
with the originating  Lender's  rights and obligations  under this Agreement and
the  other  Loan  Documents,   (iv)  no  Lender  shall  transfer  or  grant  any
participating  interest under which the  Participant  has the sole and exclusive
right to approve any  amendment  to, or any  consent or waiver with  respect to,
this Agreement or any other Loan  Document,  except to the extent such

                                      -57-

<PAGE>


amendment  to, or consent or waiver with  respect to, this  Agreement  or of any
other Loan Document would (A) extend the final maturity date of the  Obligations
hereunder in which such  Participant is  participating;  (B) reduce the interest
rate  applicable  to the  Obligations  hereunder  in which such  Participant  is
participating;  (C)  release  all or a  material  portion of the  Collateral  or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents)  supporting the  Obligations  hereunder in which such  Participant is
participating;  (D)  postpone  the  payment  of, or reduce  the  amount  of, the
interest or fees payable to such Participant  through such Lender; or (E) change
the amount or due dates of scheduled  principal  repayments  or  prepayments  or
premiums;  (v) all amounts payable by Borrower  hereunder shall be determined as
if such Lender had not sold such  participation and (vi) any such  participation
shall be in a minimum amount of $5,000,000.  The rights of any Participant  only
shall be derivative  through the originating  Lender with whom such  Participant
participates  and no  Participant  shall have any direct  rights as to the other
Lenders,  Administrative Agent, Collateral Agent, Borrower, the Collections, the
Collateral,  or otherwise in respect of the  Obligations.  No Participant  shall
have the right to participate  directly in the making of decisions by the Lender
Group among themselves.

                  (f) In connection with any such assignment or participation or
proposed  assignment or  participation,  a Lender may disclose all documents and
information  which  it now  or  hereafter  may  have  relating  to  Borrower  or
Borrower's business; provided in each case that such assignee or participant (or
prospective assignee or participant) shall agree to maintain the confidentiality
of such information in accordance with its normal business practices.

                  (g) Any other provision in this Agreement notwithstanding, any
Lender may at any time  create a  security  interest  in, or pledge,  all or any
portion of its  rights  under and  interest  in this  Agreement  in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14,  and such Federal Reserve Bank may
enforce  such  pledge  or  security  interest  in  any  manner  permitted  under
applicable law.

                       12.4.3  Notwithstanding  anything in this Section 12.4 to
the  contrary,  no Lender may assign or  participate  to  Borrower or any of its
Affiliates or Subsidiaries, if any, any interest in any Obligation or Commitment
(or any  related  rights,  remedies,  powers or  privileges)  without  the prior
written consent of each Lender, Collateral Agent, and Administrative Agent.

                  12.5  Concerning the  Collateral  and Related Loan  Documents.
Each Lender authorizes and directs Collateral Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral,  for the benefit of the
Lenders.  Each  Lender  agrees  that any  action  taken by  Collateral  Agent or
Required Lenders, as applicable,  in accordance with the terms of this Agreement
or the other Loan  Documents  relating  to the  Collateral  and the  exercise by
Collateral Agent or Required Lenders, as applicable,  of their respective powers
set forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

                  12.6 Field Audits and  Examination  Reports;  Confidentiality;
Disclaimers  by  Lenders;  Other  Reports  and  Information.   By  signing  this
Agreement, each Lender:
                                      -58-

<PAGE>


                  (a) is deemed to have requested that  Administrative  Agent or
Collateral  Agent,  as the case may be,  furnish such Lender,  promptly after it
becomes  available,  a copy of each field audit or  examination  report  (each a
"Report" and  collectively,  "Reports")  prepared by such Agent,  and such Agent
shall so furnish each Lender with such Reports;

                  (b) expressly  agrees and  acknowledges  that neither Congress
Financial  Corporation  (Southern) and Administrative Agent nor Madeleine L.L.C.
and Collateral Agent (i) makes any representation or warranty as to the accuracy
of any  Report,  or (ii) shall be liable for any  information  contained  in any
Report;  

                  (c) expressly agrees and acknowledges that the Reports are not
comprehensive  audits or examinations,  that the applicable Agent or other party
performing  any audit or  examination  will  inspect only  specific  information
regarding  Borrower  and will  rely  significantly  upon  Borrower's  books  and
records,  as well as on representations of Borrower's  personnel;  

                  (d) agrees to keep all Reports and other material,  non-public
information  regarding  Borrower  and its  Subsidiaries  and  their  operations,
assets, and existing and contemplated  business plans in a confidential  manner;
it being  understood  and agreed by  Borrower  that in any event such Lender may
make  disclosures  (a) to  counsel  for and  other  advisors,  accountants,  and
auditors to such Lender,  (b) reasonably  required by any bona fide potential or
actual Assignee,  transferee, or Participant in connection with any contemplated
or actual  assignment  or transfer  by such Lender of an interest  herein or any
participation  interest in such Lender's  rights  hereunder,  (c) of information
that has become  public by  disclosures  made by Persons other than such Lender,
its Affiliates,  assignees,  transferees, or participants,  or (d) to the extent
required by any court,  governmental or administrative  agency,  pursuant to any
subpoena or other legal process,  or by any law, statute,  regulation,  or court
order;  provided,  however,  that, unless prohibited by applicable law, statute,
regulation,  or court order, such Lender shall notify Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public  material  information
concurrent with, or where practicable,  prior to the disclosure thereof; and 

                  (e)   without   limiting   the   generality   of   any   other
indemnification  provision contained in this Agreement,  agrees: (i) to hold any
Agent and any such other Lender  preparing a Report harmless from any action the
indemnifying  Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that  the  indemnifying  Lender  has  made  or  may  make  to  Borrower,  or the
indemnifying  Lender's  participation in, or the indemnifying  Lender's purchase
of, a loan or loans of  Borrower;  and (ii) to pay and protect,  and  indemnify,
defend and hold any Agent and any such other Lender  preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including  reasonable  attorneys fees) incurred by any such Agent
and any such other Lender preparing a Report as the direct or indirect result of
any third  parties  who  might  obtain  all or part of any  Report  through  the
indemnifying Lender. 
                                      -59-

<PAGE>


In addition to the  foregoing:  (x) Any Lender may from time to time  request of
any Agent in writing that such Agent provide to such Lender a copy of any report
or   document   provided   by   Borrower   to  such  Agent  that  has  not  been
contemporaneously provided by Borrower to such Lender, and, upon receipt of such
request,  such Agent shall  provide a copy of same to such Lender  promptly upon
receipt  thereof  from  Borrower;  (y) To the extent that any Agent is entitled,
under any  provision of the Loan  Documents,  to request  additional  reports or
information from Borrower, any Lender may, from time to time, reasonably request
such Agent to exercise such right as specified in such  Lender's  notice to such
Agent,  whereupon  such Agent  promptly shall request of Borrower the additional
reports or information  specified by such Lender, and, upon receipt thereof from
Borrower,  such Agent promptly shall provide a copy of same to such Lender;  and
(z) Any time that Administrative Agent renders to Borrower a statement regarding
the Loan Account,  Administrative  Agent shall send a copy of such  statement to
each Lender and Collateral Agent.

                  12.7 Severability.  Wherever possible,  each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law but if any provision of this Agreement  shall be prohibited by or
invalid under  applicable law, such provision  shall be ineffective  only to the
extent of such prohibition or invalidity,  without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

                  12.8 Successors and Assigns. This Agreement and the other Loan
Documents  shall be binding upon and inure to the benefit of the  successors and
assigns of Borrower,  Administrative  Agent,  Collateral  Agent, and each of the
Lenders permitted under Section 11.3 hereof.

                  12.9 Cumulative  Effect,  Conflict of Terms. The provisions of
the other Loan Documents are hereby made  cumulative with the provisions of this
Agreement.  Except as  otherwise  provided  in Section  3.2 hereof and except as
otherwise  provided in any of the other Loan Documents by specific  reference to
the applicable  provision of this Agreement,  if any provision contained in this
Agreement is in direct conflict with, or inconsistent with, any provision in any
of the other Loan  Documents,  the provision  contained in this Agreement  shall
govern and control;  provided,  however,  that the  inclusion in such other Loan
Documents of  additional  duties and  obligations  of Borrower or of  additional
rights,  powers,  and remedies in favor of the Lender Group shall not constitute
such a conflict.

                  12.10  Execution  in  Counterparts.   This  Agreement  may  be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed to be an original  and all of which  counterparts  taken  together  shall
constitute but one and the same instrument.

                  12.11  Notice.   Except  as  otherwise  provided  herein,  all
notices, requests and demands to or upon a party hereto, to be effective,  shall
be in writing and shall be sent by certified or registered mail,  return receipt
requested,  by personal  delivery  against receipt,  by overnight  courier or by
facsimile and, unless otherwise  expressly  provided herein,  shall be deemed to
have been validly served, given, or delivered immediately when delivered against
receipt, 1 Business Day after deposit in the mail,  postage prepaid,  or with an
overnight courier or, in the case of facsimile notice,  when sent,  addressed as
follows:
                                      -60-

<PAGE>



 If  to  Collateral  Agent
 or Madeleine L.L.C.:
                            MADELEINE L.L.C.
                            450 Park Avenue
                            New York, New York 11556
                            Attention: Dan Wolf, Managing Director
                            Facsimile No.: 212.755.3009


 With a copy to:            BROBECK, PHLEGER & HARRISON LLP
                            550 South Hope Street
                            Los Angeles, California 90071
                            Attention: John Francis Hilson, Esq.
                            Facsimile No.: 213.239.1324


 If    to    Administrative
 Agent     or      Congress
 Financial Corporation:      CONGRESS FINANCIAL CORPORATION (SOUTHERN)
                             777 Brickell Avenue, Suite 808
                             Miami, Florida 33131
                             Attention: Steven Harnick
                             Facsimile No.: 305.371.9456


 With a copy to:             OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C.
                             230 Park Avenue
                             New York, New York 10169
                             Attention: David Morse, Esq.
                             Facsimile No.: 212.682.6104


 If to any Borrower:         c/o QUESTRON TECHNOLOGY, INC.
                             6400 Congress Avenue, Suite 200A
                             Boca Raton, Florida 33487
                             Attention: Mr. Dominic A. Polimeni, 
                             Chief Executive Officer
                             Facsimile No.: 561.241.2866


 With a copy to:             BATTLE FOWLER LLP
                             75 East 55th Street
                             New York, New York 10022
                             Attention: Gregory M. Weston, Esq.



                                      -61-

<PAGE>

                             Facsimile No.: 212.856.7822

or to such other  address as each party may designate for itself by notice given
in  accordance  with this  Section  11.8;  provided,  however,  that any notice,
request, or demand to or upon Administrative Agent pursuant to Sections 3.1.1 or
4.2.2 hereof shall not be effective until received by Administrative Agent.

                  12.12 Lender Group's Consent. Whenever Administrative Agent's,
Collateral Agent's, or a Lender's consent or approval is required to be obtained
under this  Agreement  or any other Loan  Document as a condition to any action,
inaction,  condition, or event, such Agent or such Lender shall be authorized to
give or withhold  such consent or approval in its sole and absolute  discretion,
and to  condition  its  consent  or  approval  upon  the  giving  of  additional
collateral  security  for the  Obligations,  the payment of money,  or any other
matter.

                  12.13 Credit Inquiries. Borrower hereby authorizes and permits
Administrative  Agent or  Collateral  Agent to  respond  to usual and  customary
credit  inquiries  from  third  parties  concerning   Borrower  or  any  of  its
Subsidiaries.

                  12.14 Certain  Matters of  Construction.  The terms  "herein,"
"hereof,"  and  "hereunder,"  and other  words of similar  import  refer to this
Agreement as a whole and not to any particular section,  Section,  paragraph, or
subdivision.  Any pronoun used herein shall be deemed to cover all genders.  The
section  titles,  table of contents,  and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of this Agreement.  All
references to statutes and related  regulations  shall include any amendments of
same and any successor  statutes and  regulations.  All references to any of the
Loan Documents shall include any and all modifications  and supplements  thereto
and any and all  extensions  or renewals  thereof.  All terms  contained in this
Agreement  shall have the  meanings  provided  for by the Code to the extent the
same are used or defined therein.

                  12.15  Entire  Agreement.  This  Agreement  and the other Loan
Documents,  together with all other  instruments,  agreements,  and certificates
executed by the  parties in  connection  therewith  or with  reference  thereto,
embody the entire  understanding  and agreement  between the parties  hereto and
thereto with respect to the subject  matter hereof and thereof and supersede all
prior agreements,  understandings,  and inducements, whether express or implied,
oral or written.

                  12.16 Interpretation. No provision of this Agreement or any of
the other  Loan  Documents  shall be  construed  against or  interpreted  to the
disadvantage of any party hereto by any court or other  governmental or judicial
authority by reason of such party having or being deemed to have  structured  or
dictated such provision.

                  12.17 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED,  EXECUTED, AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
NEW YORK,  NEW YORK.  THIS  AGREEMENT  SHALL BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK;  PROVIDED,  HOWEVER,  THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION  

                                      -62-

<PAGE>


OTHER THAN NEW YORK,  THE LAWS OF SUCH  JURISDICTION  SHALL  GOVERN THE  METHOD,
MANNER,  AND PROCEDURE  FOR  FORECLOSURE  OF  COLLATERAL  AGENT'S LIEN UPON SUCH
COLLATERAL  AND THE  ENFORCEMENT OF THE LENDER GROUP'S OTHER REMEDIES IN RESPECT
OF SUCH  COLLATERAL  TO THE  EXTENT  THAT  THE  LAWS OF  SUCH  JURISDICTION  ARE
DIFFERENT  FROM  OR  INCONSISTENT  WITH  THE  LAWS OF NEW  YORK.  AS PART OF THE
CONSIDERATION  FOR NEW VALUE  RECEIVED,  AND REGARDLESS OF ANY PRESENT OR FUTURE
DOMICILE  OR  PRINCIPAL  PLACE OF  BUSINESS  OF  BORROWER  OR THE LENDER  GROUP,
BORROWER  HEREBY  CONSENTS  AND AGREES THAT THE SUPREME  COURT OF NEW YORK,  NEW
YORK, OR, AT AGENT'S  OPTION,  THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK,  SHALL HAVE EXCLUSIVE  JURISDICTION  TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES  BETWEEN BORROWER AND THE LENDER GROUP PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER
EXPRESSLY  SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT,  AND BORROWER HEREBY WAIVES ANY OBJECTION THAT
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL  JURISDICTION,  IMPROPER VENUE, OR
FORUM NON CONVENIENS,  HEREBY CONSENTS TO THE EXERCISE OF PERSONAL  JURISDICTION
OF SUCH COURT,  AND HEREBY  CONSENTS TO THE  GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED  APPROPRIATE BY SUCH COURT.  BORROWER HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS,  COMPLAINT,  AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH  SUMMONS,  COMPLAINT,  AND OTHER PROCESS
MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS
SET FORTH IN THIS  AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED  COMPLETED
UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN
THE U.S. MAIL, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO AFFECT THE RIGHT OF THE LENDER GROUP TO SERVE LEGAL PROCESS IN ANY
OTHER  MANNER  PERMITTED BY LAW, OR TO PRECLUDE  THE  ENFORCEMENT  BY THE LENDER
GROUP OF ANY  JUDGMENT  OR ORDER  OBTAINED  IN SUCH  FORUM OR THE  TAKING OF ANY
ACTION UNDER THIS  AGREEMENT TO ENFORCE SAME IN ANY OTHER  APPROPRIATE  FORUM OR
JURISDICTION.

                  12.18  WAIVERS BY BORROWER.  BORROWER  WAIVES (A) THE RIGHT TO
TRIAL BY JURY (WHICH THE LENDER GROUP  HEREBY ALSO WAIVES) IN ANY ACTION,  SUIT,
PROCEEDING,  OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS, OR THE COLLATERAL, (B) PRESENTMENT, DEMAND, AND
PROTEST AND NOTICE OF  PRESENTMENT,  PROTEST,  DEFAULT,  NON PAYMENT,  MATURITY,
RELEASE, COMPROMISE,  SETTLEMENT, EXTENSION, OR RENEWAL OF ANY OR ALL COMMERCIAL
PAPER, ACCOUNTS,  CONTRACT RIGHTS,  DOCUMENTS,  INSTRUMENTS,  CHATTEL PAPER, AND
GUARANTIES AT 
                                      -63-

<PAGE>


ANY TIME HELD BY AGENT OR ANY LENDER ON WHICH  BORROWER MAY IN ANY WAY BE LIABLE
AND HEREBY  RATIFIES AND CONFIRMS  WHATEVER  AGENT OR SUCH LENDER MAY DO IN THIS
REGARD,  (C) NOTICE PRIOR TO TAKING  POSSESSION OR CONTROL OF THE  COLLATERAL OR
ANY BOND OR  SECURITY  WHICH  MIGHT BE  REQUIRED  BY ANY COURT PRIOR TO ALLOWING
AGENT TO EXERCISE  ANY OF THE LENDER  GROUP'S  REMEDIES,  (D) THE BENEFIT OF ALL
VALUATION,  APPRAISEMENT,  AND  EXEMPTION  LAWS,  AND (E)  NOTICE OF  ACCEPTANCE
HEREOF.  BORROWER  ACKNOWLEDGES  THAT  THE  FOREGOING  WAIVERS  ARE  A  MATERIAL
INDUCEMENT  TO THE LENDER  GROUP'S  ENTERING  INTO THIS  AGREEMENT  AND THAT THE
LENDER GROUP IS RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH
BORROWER.  BORROWER  WARRANTS AND REPRESENTS  THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY
TRIAL  RIGHTS  FOLLOWING  CONSULTATION  WITH  LEGAL  COUNSEL.  IN THE  EVENT  OF
LITIGATION,  THIS AGREEMENT MAY BE FILED AS A WRITTEN  CONSENT TO A TRIAL BY THE
COURT.

                                      -64-

<PAGE>
                   
                  IN WITNESS WHEREOF,  this Agreement has been duly executed and
delivered on the day and the year specified at the beginning of this Agreement.

                    QUESTRON TECHNOLOGY, INC.,
                    a Delaware corporation


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman, President and Chief Executive Officer


                    QUESTRON DISTRIBUTION LOGISTICS, INC.,
                    a Delaware corporation


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman, Chief Executive Officer and Chief Financial
                           Officer



                    INTEGRATED MATERIAL SYSTEMS, INC.,
                    an Arizona corporation


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman, Chief Executive Officer and Chief Financial
                           Officer


                    POWER COMPONENTS, INC.,
                    a Pennsylvania corporation


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman, Chief Executive Officer and Chief Financial
                           Officer



                    CALIFORNIA FASTENERS, INC.,
                    a California corporation


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman, Chief Executive Officer and Chief Financial
                           Officer


                                      S-1

<PAGE>



                    COMP WARE, INC.,
                    a Delaware corporation doing business as Webb Distribution


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman, Chief Executive Officer and Chief Financial
                           Officer



                    FAS-TRONICS, INC.,
                    a Texas corporation


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman of the Board, Chief Executive Officer and
                           Chief Financial Officer


                    FORTUNE INDUSTRIES, INC.,
                    a Texas corporation


                    By:/s/ Dominic A. Polimeni
                       ----------------------
                    Title: Chairman of the Board, Chief Executive Officer and
                           Chief Financial Officer










                   CONGRESS FINANCIAL CORPORATION (FLORIDA),
                   a Florida corporation, as Administrative Agent and a
                   Lender


                   By: /s/ Daniel Cott
                       ---------------
                   Title: Vice President



                                      S-2

<PAGE>



                   MADELEINE, L.L.C.,
                   a New York limited liability company, as Collateral Agent
                   and a Lender


                   By: /s/ Daniel Wolf
                       ---------------
                   Title: Authorized Signatory









                                      S-3

<PAGE>

                                   APPENDIX A

                               GENERAL DEFINITIONS


                  When  used in the Loan  and  Security  Agreement,  dated as of
September  24,  1998,  by  and  among  QUESTRON  TECHNOLOGY,  INC.,  a  Delaware
corporation,  QUESTRON  DISTRIBUTION  LOGISTICS,  INC., a Delaware  corporation,
INTEGRATED  MATERIAL SYSTEMS,  INC., an Arizona  corporation,  POWER COMPONENTS,
INC.,  a  Pennsylvania  corporation,  CALIFORNIA  FASTENERS,  INC., a California
corporation,  COMP WARE,  INC., a Delaware  corporation  doing  business as Webb
Distribution,  FAS-TRONICS,  INC., a Texas corporation,  and FORTUNE INDUSTRIES,
INC.,  a Texas  corporation  (individually  and  collectively,  and  jointly and
severally,  "Borrower"),  each  of  the  lenders  that  is a  signatory  thereto
(together with its successors and permitted assigns, individually, "Lender" and,
collectively,  "Lenders"),  CONGRESS FINANCIAL CORPORATION  (FLORIDA), a Florida
corporation, as administrative agent for the Lenders (in such capacity, together
with its  successors,  if any, in such capacity,  "Administrative  Agent"),  and
MADELEINE L.L.C., a New York limited liability company,  as collateral agent for
the Lender Group (in such  capacity,  together with its  successors,  if any, in
such capacity, "Collateral Agent"), the following terms shall have the following
meanings  (terms  defined in the  singular to have the same meaning when used in
the plural and vice versa):

                  Account  Debtor - any Person  who is or may  become  obligated
under or on account of an Account.

                  Accounts  - all  accounts,  contract  rights,  chattel  paper,
         instruments  and documents,  whether now owned or hereafter  created or
         acquired by Borrower or in which Borrower now has or hereafter acquires
         any interest.

                  Acquisitions - individually and collectively,  the purchase by
         QTI of the stock of FII pursuant to the Acquisition  Documents relative
         thereto  and the  purchase  by QTI of the stock of FTI  pursuant to the
         Acquisition Documents relative thereto.

                  Acquisition Documents - individually and collectively, (a) the
         Stock Purchase  Agreement,  dated as of June 12, 1998 (as amended),  by
         and among QTI, FII, and the  stockholders of FII identified on Schedule
         1.1  thereto,  and all  documents  and  instruments  to be  executed or
         delivered  in  connection   therewith,   and  (b)  the  Stock  Purchase
         Agreement,  dated as of June 12, 1998 (as  amended),  by and among QTI,
         Gregory Fitzgerald,  Valerie Fitzgerald, and FTI, and all documents and
         instruments to be executed or delivered in connection therewith.

                  Acquisition Qualification - with respect to any representation
         or  warranty  hereunder  that  is  expressly  qualified  by the  phrase
         "subject  to the  Acquisition  Qualification"  and solely to the extent
         such  representation or warranty relates to (a) FII or FTI (as the case
         may be) as of the Closing  Date,  or (b) Property of FII or FTI (as the
         case may be) in  existence  and owned by such  Borrower  on the Closing
         Date, a qualification  that such  representation or warranty is made to
         the best of Borrower's  knowledge;  it being  expressly  understood and
         agreed  that the  Acquisition  Qualification  shall  not  apply 


                                       

<PAGE>



         to such representation or warranty relative to (1) FII or FTI after the
         Closing  Date,  or (2) any  Property of FII or FTI  acquired or arising
         after the Closing Date.

                  Administrative   Agent  -   Congress   Financial   Corporation
         (Southern),   a  Florida   corporation,   solely  in  its  capacity  as
         administrative  agent for the Lenders,  and shall include any successor
         administrative agent.

                  Administrative Agent's Account - account number 322-020565 (or
         such other  account as  Administrative  Agent shall have  designated in
         writing  to the  Lender  Group,  as  applicable,  from  time  to  time)
         maintained by Administrative Agent with The Chase Manhattan Bank, 4 New
         York Plaza, New York, New York.

                  Affiliate  - a Person  (other  than a  Subsidiary):  (a) which
         directly or indirectly through one or more intermediaries  controls, or
         is controlled by, or is under common control with, a Person,  (b) which
         beneficially  owns or holds 5% or more of any class of the Voting Stock
         of a Person, or (c) 5% or more of the Voting Stock (or in the case of a
         Person which is not a corporation,  5% or more of the equity  interest)
         of which is beneficially owned or held by a Person or a Subsidiary of a
         Person,  or (d) which, in the case of any Lender,  (i) is an investment
         fund or  managed  account  managed by such  Lender or any other  Person
         referred to in clause (a) above in respect of such  Lender,  or (ii) is
         an investment manager of such investment fund or managed account.

                  Agent -  Administrative  Agent  or  Collateral  Agent,  as the
         context requires.

                  Agent-Related Persons - Administrative Agent and any successor
         agents thereto,  and Collateral Agent and any successor agents thereto,
         together with their respective Affiliates, and the officers, directors,
         employees,  counsel,  agents, and attorneys-in-fact of such Persons and
         their Affiliates.

                  Agreement - the Loan and Security Agreement referred to in the
         first  sentence  of this  Appendix  A,  all  Schedules,  Exhibits,  and
         Appendices thereto, including this Appendix A.

                  Assignment and Acceptance - as defined in Section 12.4.2(a) of
         this Agreement.

                  Availability  - the amount of money that  Borrower is entitled
         to borrow  from time to time as  Revolving  Credit  Loans,  such amount
         being the  difference  derived when (a) the  Revolving  Facility  Usage
         (including  any amounts  that Agent or any of the Lenders may have paid
         for the account of Borrower  pursuant to any of the Loan  Documents and
         that have not been  reimbursed by Borrower) is subtracted  from (b) the
         lesser of (i) the Borrowing  Base, or (ii) the Maximum  Amount.  If the
         amount  outstanding  is equal to or greater than the Borrowing  Base or
         the Maximum Amount, Availability is 0.

                  Bank - First Union National Bank.

                  Base Rate - the rate of interest  announced  or quoted by Bank
         from time to time as its prime rate for commercial loans,  whether such
         rate  is  the  lowest  rate  charged  by  Bank  to its  most  preferred
         borrowers, and, if such prime rate for commercial loans is 

                                       2.

<PAGE>


         discontinued  by  Bank  as a  standard,  a  comparable  reference  rate
         designated by Bank as a substitute therefor shall be the Base Rate.

                  Base Rate  Portion - a Base Rate Term  Portion  or a Base Rate
         Revolving Credit Portion.

                  Base  Rate  Election  - the  election  deemed  to be  made  by
         Borrower and in effect under Section 2.3 to have interest  based on the
         Base Rate apply to all or the balance of the Revolving  Credit Loans or
         the Term Loans not subject to an effective LIBOR Rate Election.

                  Base  Rate  Revolving  Credit  Portion - that  portion  of the
         Revolving  Credit Loans that is not subject to an effective  LIBOR Rate
         Election.

                  Base Rate Term Portion - that portion of the Term Loan that is
         not subject to an effective LIBOR Rate Election.

                  Borrower  -has the meaning  set forth in the  preamble to this
         Agreement.

                  Borrowing  Base - as at any date of  determination,  an amount
         equal to:

                                    (a)  85%  of  the  net  amount  of  Eligible
                            Accounts outstanding at such date, PLUS

                                    (b) the lesser of (1) $7,500,000 or (2) 50%,
                           of the  value  of  Eligible  Inventory  at such  date
                           calculated  on the  basis  of the  lower  of  cost or
                           market with the cost of finished goods  calculated on
                           a first-in, first-out basis.

                  For purposes  hereof,  the net amount of Eligible  Accounts at
any time shall be the face  amount of such  Eligible  Accounts  less any and all
returns,  rebates,  discounts (which may, at  Administrative  Agent's option, be
calculated on shortest terms), credits, allowances or excise taxes of any nature
at any time issued, owing, claimed by Account Debtors,  granted,  outstanding or
payable in connection with such Accounts at such time.

                  Borrowing Base  Certificate - a borrowing base  certificate in
         the form of Exhibit B-1 attached hereto.

                  Business  Day - (a) when used with  respect  to the LIBOR Rate
         Election,  shall  mean a day on  which  dealings  may  be  effected  in
         deposits  of United  States  Dollars  in the London  interbank  foreign
         currency  deposits  market  and on which  Agent or its  affiliates  are
         conducting and other banks may conduct business in London,  England, or
         in the State of New York,  and (b) when used with  respect to any other
         provision of the Agreement, any day excluding Saturday, Sunday, and any
         day which is a legal holiday under the laws of the State of New York or
         is a day on  which  banking  institutions  located  in such  state  are
         closed.
                                       3.

<PAGE>

                  Capital   Expenditures  -  expenditures  made  or  liabilities
         incurred  for the  acquisition  of any fixed  assets  or  improvements,
         replacements,  substitutions,  or additions  thereto that have a useful
         life of more than 1 year,  including  the total  principal  portion  of
         Capitalized Lease Obligations.

                  Capitalized Lease Obligation - any Indebtedness represented by
         obligations  under  a lease  that is  required  to be  capitalized  for
         financial reporting purposes in accordance with GAAP.

                  CFI - has  the  meaning  set  forth  in the  preamble  to this
         Agreement.

                  Closing  Date - the date on  which  the  initial  Loan is made
         under the Agreement.

                  Code - the Uniform  Commercial Code as adopted and in force in
         the State of New York as from time to time in  effect,  except  that in
         those  circumstances  where the New York  Commercial  Code requires the
         application of the Uniform Commercial Code of another jurisdiction, the
         term Code shall refer to the Uniform Commercial Code as enacted in such
         jurisdiction.

                  Collateral - all of the Property and  interests in Property of
         Borrower, whether now owned or existing or hereafter created, acquired,
         or arising and wheresoever located, including:

                                    (a) Accounts;

                                    (b) Inventory;

                                    (c) Equipment;

                                    (d) General Intangibles;

                                    (e) Investment Property;

                                    (f) All  monies  and other  Property  of any
                           kind  now or at any time or  times  hereafter  in the
                           possession or under the control of  Collateral  Agent
                           or any  member of the  Lender  Group or any bailee or
                           any  Affiliate of  Collateral  Agent or any member of
                           the Lender Group;

                                    (g) All accessions to, substitutions for and
                           all  replacements,  products  and cash  and  non-cash
                           proceeds of (a) through (f) above, including, without
                           limitation,  proceeds of and unearned  premiums  with
                           respect to  insurance  policies  insuring  any of the
                           Collateral; and

                                    (h)  All  books  and   records   (including,
                           without  limitation,  customer  lists,  credit files,
                           computer  programs,  print-outs,  and other  computer
                           materials and records) of Borrower  pertaining to any
                           of (a) through (g) above.

                                       4.

<PAGE>



                  Collateral  Agent  -  Madeleine  L.L.C.,  a New  York  limited
         liability  company,  solely in its capacity as collateral agent for the
         Lender Group, and shall include any successor collateral agent.

                  Collateral  Access  Agreement - a landlord  waiver or consent,
         mortgagee  waiver or consent,  Equipment  lessor or  Equipment  secured
         financier   waiver   or   consent,   bailee   letter,   or  a   similar
         acknowledgement agreement of any warehouseman, processor, consignee, or
         other Person in possession  of, having a Lien upon, or having rights or
         interests  in the  Collateral  consisting  of goods,  or of  lessors or
         secured financiers of Equipment to Borrower,  in each case, in form and
         substance satisfactory to Collateral Agent.

                  Collections - all cash, checks, notes, instruments,  and other
         items of payment (including insurance and condemnation  proceeds,  cash
         proceeds of sales and other  voluntary or involuntary  dispositions  of
         Property, rental proceeds, and tax refunds).

                  Commitment   -   Revolving   Credit   Commitment,   Term  Loan
         Commitment, or Total Commitment, as the context requires.

                  Commitment  Percentage  - with respect to any Lender the ratio
         of (i) the  amount  of the  Commitment  of  such  Lender  to  (ii)  the
         aggregate amount of the Commitments of all of the Lenders.

                  Consolidated - the  consolidation  in accordance  with GAAP of
         the accounts or other items as to which such term applies.

                  Continuing  Director  - as of any  date  of  determination,  a
         member  of the  board of  directors  of QTI who (a) was a member of the
         board of directors of QTI on the Closing  Date, or (b) was nominated to
         be a member  of the  board of  directors  of QTI by a  majority  of the
         Continuing  Directors  then in  office  to fill a  vacancy  left by the
         death,  expiration of term, permanent  disability,  or resignation of a
         Continuing Director.

                  CWI - has  the  meaning  set  forth  in the  preamble  to this
         Agreement.

                  Default - an event or condition the occurrence of which would,
         with the lapse of time or the  giving  of  notice,  or both,  become an
         Event of Default.

                  Default Rate - as defined in Section 2.1.2 of the Agreement.

                  Defaulting  Lender  -  any  Lender  with  a  Rendering  Credit
         Commitment that fails to make any payment to Administrative  Agent that
         it is required to make  hereunder on any  Settlement  Date and that has
         not cured such  failure by making such  payment  within 1 Business  Day
         after written demand upon it by Administrative Agent to do so.

                  Defaulting  Lenders  Rate - the Base Rate for the first 3 days
         from and after the date the relevant payment is due and, thereafter, at
         the interest  rate then  applicable  to the relevant  Revolving  Credit
         Loan.
                                       5.

<PAGE>



                  Distribution  -  in  respect  of  any  corporation  means  and
         includes:  (a) the payment of any dividends or other  distributions  on
         capital stock of the corporation (except distributions in such stock or
         rights to acquire such stock), and (b) the redemption or acquisition of
         Securities,  unless made contemporaneously from the net proceeds of the
         sale of Securities.

                  Dominion Account - a special account of  Administrative  Agent
         established by Borrower pursuant to the Agreement at a bank selected by
         Borrower,  but  acceptable to  Administrative  Agent in its  reasonable
         discretion,  and over which  Administrative  Agent  shall have sole and
         exclusive access and control for withdrawal purposes.

                  Dominion  Account  Agreements - as defined in Section 6.2.5 of
         the Agreement.

                  EBIT  -  with  respect  to  any  fiscal  period,  the  sum  of
         Borrower's  Consolidated net earnings (or loss) before interest expense
         and taxes for said  period  as  determined  in  accordance  with  GAAP,
         excluding any extraordinary gains or losses.

                  EBITDA  - with  respect  to any  fiscal  period,  the sum of a
         Person's  (a)  EBIT,  plus  (b)  depreciation  and   amortization,   as
         determined on a Consolidated basis in accordance with GAAP.

                  Eligible  Account - an Account  arising in the ordinary course
         of Borrower's  business from the sale of goods or rendition of services
         which  Administrative  Agent, in its sole credit judgment,  deems to be
         and Eligible Account. Without limiting the generality of the foregoing,
         no Account shall be an Eligible Account if:

                           (a) it  arises  out of a sale made by  Borrower  to a
         Subsidiary or an Affiliate of Borrower, or to a Person controlled by an
         Affiliate of Borrower; or

                           (b) it is  unpaid  for more  than 60 days  after  the
         original  due date shown on the  invoice,  or it is due or unpaid  more
         than 90 days after the original invoice date; or

                           (c) 50% or  more of the  Accounts  from  the  Account
         Debtor owing such Account are not deemed Eligible  Accounts  hereunder,
         or

                           (d) the total unpaid  Accounts of the Account  Debtor
         exceed 10% of the net amount of all Eligible Accounts, to the extent of
         such excess;  provided,  however, that, in the case of Steelcase,  Inc.
         and such other  Account  Debtors as to which  Administrative  Agent and
         Collateral  Agent  have  agreed  in  writing  from  time to  time,  the
         foregoing   percentage  may,  in  the  reasonable  credit  judgment  of
         Administrative  Agent and Collateral  Agent,  be increased to up to 25%
         before the excess would be deemed ineligible; or

                           (e)  any   covenant,   representation,   or  warranty
         contained  in the  Agreement  with  respect  to such  Account  has been
         breached; or
                                       6.
<PAGE>


                           (f)  it  arises  from  a sale  to an  Account  Debtor
         outside  the  United  States,  unless  the sale is on letter of credit,
         guaranty or acceptance  terms,  in each case acceptable to Agent in its
         sole discretion; or

                           (g) the  Account  is  subject  to a Lien other than a
         Permitted Lien.

                  Eligible  Inventory - such  Inventory of Borrower  (other than
         packaging  materials and supplies) which  Administrative  Agent, in its
         sole credit judgment, deems to be Eligible inventory.  Without limiting
         the  generality  of the  foregoing,  no  Inventory  shall  be  Eligible
         Inventory if:

                           (a)  it  is  not   finished   goods   that   is,   in
         Administrative Agent's opinion, readily marketable in its current form,
         or

                           (b) it is not in good,  new, and saleable  condition,
         or

                           (c) it is slow-moving, obsolete (i.e., it has been in
         Borrower's inventory for more than 365 days), or unmerchantable, or

                           (d) it does  not meet all  standards  imposed  by any
         governmental agency or authority, or

                           (e)  it  does  not  conform  in all  respects  to the
         warranties and representations set forth in the Agreement,

                           (f)  it is not at all  times  subject  to  Collateral
         Agent's duly perfected  first priority  security  interest,  and is not
         subject to any other Lien except a Permitted Lien, or

                           (g) it is not  situated at a location  in  compliance
         with the  Agreement  (including  any location  that is neither owned by
         Borrower nor the subject of a Collateral Access Agreement in full force
         and effect) or is in transit.

                  Eligible  Transferee - means (a) a commercial  bank  organized
         under the laws of the United States,  or any state thereof,  and having
         total assets in excess of $100,000,000; (b) a commercial bank organized
         under  the  laws  of  any  other  country  which  is a  member  of  the
         Organization  for Economic  Cooperation  and Development or a political
         subdivision  of any such country,  and having total assets in excess of
         $100,000,000;  provided  that such  bank is acting  through a branch or
         agency located in the United States;  (c) a finance company,  insurance
         company  or other  financial  institution  or fund that is  engaged  in
         making,  purchasing or otherwise  investing in commercial  loans in the
         ordinary  course of its  business  and having total assets in excess of
         $100,000,000;   (d)  any  Affiliate  (other  than   individuals)  of  a
         pre-existing  Lender;  (e) so long as no Event of Default has  occurred
         and is continuing, any other Person approved by Agent and Borrower; and
         (f) during the  continuation  of an Event of Default,  any other Person
         approved by Agent.
                                       7.

<PAGE>



                  Environmental  Laws - all  federal,  state,  and  local  laws,
         rules, regulations,  ordinances,  programs, permits, guidances, orders,
         and consent  decrees  relating  to health,  safety,  and  environmental
         matters.

                  Equipment - all  machinery,  apparatus,  equipment,  fittings,
         furniture,  fixtures,  motor  vehicles,  and  other  tangible  personal
         Property (other than  Inventory) of every kind and description  used in
         Borrower's  operations or owned by Borrower or in which Borrower has an
         interest,  whether now owned or  hereafter  acquired  by  Borrower  and
         wherever located,  and all parts,  accessories,  and special tools, and
         all increases and accessions thereto and substitutions and replacements
         therefor.

                  ERISA - the Employee  Retirement  Income Security Act of 1974,
         as amended, and all rules and regulations from time to time promulgated
         thereunder.

                  Event  of  Default  -  as  defined  in  Section  10.1  of  the
         Agreement.

                  Excess  Cash  Flow - with  respect  to any  fiscal  period  of
         Borrower,  the amount  derived by adding to EBIT for such fiscal period
         depreciation  and  amortization  for such fiscal period and subtracting
         from such sum:  (a)  regularly  scheduled  payments of principal on the
         Term Loans and Capital Expenditures which are not financed; (b)(i) cash
         payments  for  deferred   purchase   price   adjustments   pursuant  to
         acquisition   agreements  in  effect  as  of  the  Closing  Date,   the
         Acquisition  Documents,  and acquisition  agreements in connection with
         Permitted Acquisitions consummated after the Closing Date, and (ii) the
         cash portion of the purchase price relative to Permitted Acquisitions);
         (c) taxes; and (d) interest; in each case, for such fiscal period.

                  Excess  Cash  Flow  Recapture  Amount - 50% of the  amount  of
         Borrower's Excess Cash Flow for the applicable period.

                  Existing  Lenders - (a) Silicon Valley Bank, (b) Landmark Bank
         - Mid  Cities,  as  assignee  of Bank of West,  and (c) Mr. Noel Edmond
         Hutchins and Mrs. Betty Hutchins.

                  Family  Member - with  respect  to any  individual,  any other
         individual  having a  relationship  by blood (to the  second  degree of
         consanguinity), marriage, or adoption to such individual.

                  Family Trust - with respect to any individual, trusts or other
         estate planning vehicles  established for the benefit of Family Members
         of such  individual and in respect of which such  individual  serves as
         trustee or in a similar capacity.

                  Fee  Letter  - that  certain  letter  agreement,  dated  as of
         September 24, 1998, among Borrower and Collateral Agent,  setting forth
         certain fees payable to Collateral Agent.

                  FII - has  the  meaning  set  forth  in the  preamble  to this
         Agreement.

                  Fixed  Charges  - for any  accounting  period,  the  scheduled
         principal and interest  payments  (including any imputed  principal and
         interest  payments  due  under or in  respect  

                                       8.

<PAGE>


         of any  capital  leases)  required  to be made  during  such  period in
         respect of Money Borrowed, determined in accordance with GAAP.

                  Fixed Charge Coverage Ratio - with respect to any period,  the
         ratio  of  (a)   Borrower's   EBITDA  for  such  period  minus  Capital
         Expenditures,  to (b) Borrower's Fixed Charges for such period,  all as
         determined  on a  Consolidated  basis  in  accordance  with  GAAP.  For
         purposes of this definition,  "EBITDA" shall be calculated after giving
         effect to  adjustments  to eliminate  expense items that would not have
         been incurred and include income items that would have been recognized,
         in each case,  if each  Permitted  Acquisition  consummated  during the
         applicable  period  had  been  accomplished  on  the  first  day of the
         applicable  period;  such  eliminations  and  inclusions to be mutually
         agreed upon by Borrower, Administrative Agent, and Collateral Agent.

                  FTI - has  the  meaning  set  forth  in the  preamble  to this
         Agreement.

                  GAAP - as of any  date of  determination,  generally  accepted
         accounting  principles  in the United States of America then in effect;
         provided,  however,  that,  for purposes of  calculating  the financial
         covenants   contained   in  Section   8.3  hereof   (and  the   related
         definitions),  GAAP shall mean generally accepted accounting principles
         in effect in the United  States as of the Closing Date and, if there is
         any changes in GAAP after the Closing Date, the financial  reporting of
         Borrower  shall be produced  both under GAAP as then in effect and also
         under GAAP as in effect on the Closing Date.

                  General  Intangibles  -  all  personal  property  of  Borrower
         (including things in action) other than goods, Accounts, chattel paper,
         documents,  instruments,  and  money,  whether  now owned or  hereafter
         created or acquired by Borrower.

                  Hazardous  Materials  - (a)  substances  that are  defined  or
         listed in, or otherwise  classified pursuant to, any applicable laws or
         regulations   as   "hazardous   substances,"   "hazardous   materials,"
         "hazardous  wastes,"  "toxic  substances,"  or  any  other  formulation
         intended  to  define,   list,  or  classify  substances  by  reason  of
         deleterious properties such as ignitability,  corrosivity,  reactivity,
         carcinogenicity,  reproductive  toxicity,  or "EP  toxicity",  (b) oil,
         petroleum,  or petroleum derived  substances,  natural gas, natural gas
         liquids,  synthetic gas,  drilling fluids,  produced waters,  and other
         wastes associated with the exploration,  development,  or production of
         crude oil,  natural gas, or  geothermal  resources,  (c) any  flammable
         substances or explosives or any radioactive materials, and (d) asbestos
         in any form or electrical equipment that contains any oil or dielectric
         fluid containing  levels of  polychlorinated  biphenyls in excess of 50
         parts per million.

                  Indebtedness   -  as  applied  to  a  Person  means,   without
         duplication;

                           (a) all items which in accordance  with GAAP would be
         included in  determining  total  liabilities  as shown on the liability
         side of a  balance  sheet  of such  Person  as at the  date as of which
         Indebtedness  is  to  be  determined,  including,  without  limitation,
         Capitalized Lease Obligations,

                                       9.

<PAGE>


                           (b) all  obligations  of  other  Persons  which  such
         Person has guaranteed,

                           (c) all reimbursement  obligations in connection with
         letters of credit or letter of credit guaranties issued for the account
         of such Person, and

                           (d) in the case of  Borrower  (without  duplication),
         the Obligations.

                  IMSI - has the meaning  set forth in the  preamble to
         this Agreement.

                  Interest Rate or Currency  Protection  Agreement - any forward
         contract,   futures   contract,   swap,   option,  or  other  financial
         arrangement (including caps, floors, collars, and similar arrangements)
         relating to, or the value of which is dependent upon, interest rates or
         currency exchange rates or indices.

                  Inventory - all of Borrower's inventory,  whether now owned or
         hereafter acquired,  including,  but not limited to, all goods intended
         for sale or lease by  Borrower,  or for display or  demonstration,  all
         work in process,  all raw materials and other materials and supplies of
         every nature and description  used or which might be used in connection
         with  the  manufacture,   printing,  packing,  shipping,   advertising,
         selling,  leasing  or  furnishing  of such goods or  otherwise  used or
         consumed in  Borrower's  business,  and all  documents  evidencing  and
         General Intangibles relating to any of the foregoing, whether now owned
         or hereafter acquired by Borrower.

                  Investment  Property - means all of  Borrower's  now owned and
         hereafter  acquired  "investment  property"  as that term is defined in
         Section 9-115 of the Code.

                  Legal Requirement - any requirement imposed upon any Lender by
         any law of the United States of America or the United Kingdom or by any
         regulation,  order,  interpretation,   ruling,  or  official  directive
         (whether or not having the force of law) of the Federal  Reserve Board,
         the Bank of England, or any other board,  central bank or  governmental
         or  administrative  agency,  institution  or authority of in the United
         States of America, the United Kingdom, or any political  subdivision of
         either thereof.

                  Lender and Lenders - have the respective meanings set forth in
         the preamble to this Agreement, and shall include any other Person made
         a party  to  this  Agreement  as a  "Lender"  in  accordance  with  the
         provisions hereof.

                  Lender  Group -  individually  and  collectively,  each of the
         individual Lenders, Administrative Agent, and Collateral Agent.

                  Lender  Group Side  Letter - that  certain  letter  agreement,
         dated as of September 24, 1998, among Administrative Agent,  Collateral
         Agent, and the Lenders.

                  Lender-Related  Persons - with  respect  to any  Lender,  such
         Lender,  together  with such  Lender's  Affiliates,  and the  officers,
         directors,  employees,  counsel,  agents, and attorneys-in-fact of such
         Lender and such Lender's Affiliates.

                                      10.

<PAGE>


                  LIBOR  Interest  Payment  Date -  with  respect  to any  LIBOR
         Revolving  Credit  Portion or any LIBOR Term Portion,  the first day of
         each calendar month during the applicable LIBOR Period.

                  LIBOR  Period - any period of 1 month,  2 months,  or 3 months
         commencing  on a Business  Day,  selected as provided in Section 2.4 of
         the  Agreement;  provided,  however,  that no LIBOR Period shall extend
         beyond the last day of the Term unless  Borrower  and the Lender  Group
         have agreed to an  extension of the Term beyond the  expiration  of the
         LIBOR  Period in  question  and that,  with  respect  to any LIBOR Term
         Portion,  no applicable  LIBOR Period shall extend beyond the scheduled
         installment  payment  date for such  LIBOR Term  Portion.  If any LIBOR
         Period so selected shall end on a date that is not a Business Day, such
         LIBOR Period  shall  instead end on the next  preceding  or  succeeding
         Business Day as determined by  Administrative  Agent in accordance with
         the then current  banking  practice in London;  provided  that Borrower
         shall not be required to pay double interest, even though the preceding
         LIBOR Period ends and the new LIBOR Period begins on the same day. Each
         determination by Administrative Agent of the LIBOR Period shall, in the
         absence of manifest error, be conclusive.

                  LIBOR Portion - a LIBOR  Revolving  Credit  Portion or a LIBOR
         Term Portion, as applicable.

                  LIBOR Rate - with respect to any LIBOR Portion for the related
         LIBOR  Period,  an  interest  rate  per  annum  (rounded  upwards,   if
         necessary, to the next higher 1/8 of 1% equal to the product of (a) the
         Base LIBOR Rate (as  hereinafter  defined)  multiplied by (b) Statutory
         Reserves.  For purposes of this definition,  the term "Base LIBOR Rate"
         shall mean the rate  (rounded  to the nearest 1/8 of 1% or, if there is
         not nearest 1/8 of 1%, the next higher 1/8 of 1%) at which  deposits of
         U.S.  dollars  approximately  equal in  principal  amount  to the LIBOR
         Portion  specified  in the  applicable  LIBOR  Request  are  offered to
         Lenders  by  prime  banks  in the  London  interbank  foreign  currency
         deposits market at  approximately  11:00 a.m.,  London time, 2 Business
         Days prior to the  commencement  of such LIBOR Period,  for delivery on
         the  first  day  of  such   LIBOR   Period.   Each   determination   by
         Administrative  Agent  of any  LIBOR  Rate  shall,  in the  absence  of
         manifest error, be conclusive.

                  LIBOR Rate Election - the option  granted  pursuant to Section
         2.4 to have the interest on all or any portion of the principal  amount
         of the Revolving Credit Loans or the Term Loans based on a LIBOR Rate.

                  LIBOR Request - a notice in writing (or by telephone confirmed
         by telex, telecopy or other facsimile  transmission on the same, day as
         the telephone request) from Borrower to Administrative Agent requesting
         that interest on a Revolving Credit Loan or a Term Loan be based on the
         LIBOR Rate, specifying:  (a) the first day of the LIBOR Period, (b) the
         length of the LIBOR Period consistent with the definition of that term,
         and (c) the dollar  amount of the LIBOR  Portion,  consistent  with the
         definition of such terms.

                  LIBOR  Revolving  Credit Margin - at all times,  the result of
         (a) the Base Rate plus 1% minus (ii) the LIBOR Rate  applicable  to the
         relevant LIBOR Portion;  it being  

                                      11.

<PAGE>


         understood  that the LIBOR  Revolving  Credit Margin shall  increase or
         decrease  by an amount  equal to any  increase  or decrease in the Base
         Rate,  effective  as of the  opening  of  business  on the day that any
         change in the Base Rate occurs.

                  LIBOR Revolving Credit Portion - that portion of the Revolving
         Credit Loans  specified in a LIBOR  Request  (including  any portion of
         Revolving Credit Loans that is being borrowed by Borrower  concurrently
         with  such  LIBOR  Request)  that is not  less  than  $2,500,000  or an
         integral multiple thereof, that does not exceed the outstanding balance
         of  Revolving  Credit Loans not already  subject to an effective  LIBOR
         Rate Election and, that, as of the date of the LIBOR Request specifying
         such LIBOR Revolving Credit Portion,  has met the conditions for basing
         interest on the LIBOR Rate in Section  2.1.1(b) of the  Agreement,  and
         the LIBOR Period of which was commenced and not terminated.

                  LIBOR Term Loan A Margin - at all times, the result of (a) the
         Base  Rate plus  1.5%  minus  (ii) the  LIBOR  Rate  applicable  to the
         relevant LIBOR Term Portion;  it being  understood  that the LIBOR Term
         Loan A Margin  shall  increase or  decrease  by an amount  equal to any
         increase or decrease in the Base Rate,  effective  as of the opening of
         business on the day that any change in the Base Rate occurs.

                  LIBOR Term Loan B Margin - at all times, the result of (a) the
         Base  Rate plus  3.0%  minus  (ii) the  LIBOR  Rate  applicable  to the
         relevant LIBOR Term Portion;  it being  understood  that the LIBOR Term
         Loan B Margin  shall  increase or  decrease  by an amount  equal to any
         increase or decrease in the Base Rate,  effective  as of the opening of
         business on the day that any change in the Base Rate occurs.

                  LIBOR Term Portion - that  portion of the Term Loan  specified
         in a LIBOR  Request  that is not less than  $2,500,000  and an integral
         multiple thereof,  that does not exceed the outstanding  balance of the
         applicable  Term Loan not already  subject to an  effective  LIBOR Rate
         Election and, that, as of the date of the LIBOR Request specifying such
         LIBOR Term Portion,  has met the conditions for basing  interest on the
         LIBOR Rate in Section  2.1.1(b) of the Agreement,  and the LIBOR Period
         of which was  commenced  and not  terminated.  Each LIBOR Term  Portion
         shall be allocated  among Lenders in accordance  with their  respective
         Pro Rata Share of the applicable Term Loan.

                  Lien - any interest in Property  securing an  obligation  owed
         to,  or a claim  by, a Person  other  than the  owner of the  Property,
         whether such interest is based on common law, statute, or contract. The
         term "Lien" also shall include reservations, exceptions, encroachments,
         easements, rights-of-way,  covenants, conditions,  restrictions, leases
         and other title exceptions and encumbrances affecting Property. For the
         purpose of the  Agreement,  a Person shall be deemed to be the owner of
         any  Property  that it has acquired or holds  subject to a  conditional
         sale  agreement  or other  arrangement  pursuant  to which title to the
         Property  has been  retained  by or vested  in some  other  Person  for
         security purposes.

                  Loan  Account - the loan account  established  on the books of
         Agent pursuant to Section 3.6 of the Agreement.

                                      12.

<PAGE>

                  Loan Documents - the Agreement, the Other Agreements,  and the
         Security Documents.

                  Loans - all  Revolving  Credit  Loans,  Term Loans,  and other
         loans and advances of any kind made by the Lender Group pursuant to the
         Agreement.

                  Material Adverse Change - (a) a material adverse change in the
         business,  prospects,   operations,   results  of  operations,  assets,
         liabilities or condition (financial or otherwise) of Borrower (taken as
         a whole), (b) the material  impairment of Borrower's (taken as a whole)
         ability to perform its obligations under the Loan Documents to which it
         is a party or of the Lender Group to enforce the Obligations or realize
         upon the Collateral,  (c) a material adverse effect on the value of the
         Collateral  or the  amount  that the  Lender  Group  would be likely to
         receive (after giving  consideration  to delays in payment and costs of
         enforcement) in the liquidation of such  Collateral,  or (d) a material
         impairment of the priority of the Lender  Group's Liens with respect to
         the Collateral.

                  Maximum Amount - $15,000,000.

                  Money  Borrowed  - means  (a)  Indebtedness  arising  from the
         lending of money by any Person to Borrower,  (b) Indebtedness,  whether
         or not in any such case arising from the lending by any Person of money
         to  Borrower,  (i)  which is  represented  by notes  payable  or drafts
         accepted that evidence  extensions  of credit,  (ii) which  constitutes
         obligations   evidenced   by  bonds,   debentures,   notes  or  similar
         instruments,  or (iii) upon which interest charges are customarily paid
         (other than accounts  payable) or that was issued or assumed as full or
         partial  payment for  Property,  (c)  Indebtedness  that  constitutes a
         Capitalized  Lease  Obligation,   (d)  reimbursement  obligations  with
         respect to letters of credit or  guaranties  of letters of credit,  and
         (e)  Indebtedness  of Borrower under any guaranty of  obligations  that
         would  constitute  Indebtedness  for Money  Borrowed  under clauses (a)
         through (c) hereof, if owed directly by Borrower.

                  Multiemployer  Plan - has the  meaning  set  forth in  Section
         4001(a)(3) of ERISA.

                  Net  Worth - as of any  date  of  determination,  QTI's  total
         stockholder's  equity calculated on a Consolidated  basis in accordance
         with GAAP.

                  Non-Ordinary  Course  Proceeds - (a) tax refunds of  Borrower,
         (b) net  cash  proceeds  of sales or  other  voluntary  or  involuntary
         dispositions  of Equipment or real  Property of Borrower,  (c) net cash
         proceeds of sales or other issuances of Securities or Subordinated Debt
         of  Borrower,  (d)  cash  proceeds  of  sales  or  other  voluntary  or
         involuntary dispositions of other Property (other than cash proceeds of
         sales or other  voluntary or involuntary  dispositions  of Accounts and
         Inventory) of Borrower not in the ordinary course of business,  and (e)
         net cash  proceeds  of  transactions  (other  than  any  sales or other
         dispositions  of Property)  by Borrower  not in the ordinary  course of
         business.

                  Obligations  -  all  Loans  and  all  other  advances,  debts,
         liabilities,  obligations,  covenants,  and duties,  together  with all
         interest,  fees, and other charges owing,  arising, due or payable from
         Borrower  to any  Lender  of any kind or  nature,  present  or  future,

                                      13.

<PAGE>



         whether or not evidenced by any note,  guaranty,  or other  instrument,
         whether  arising under the Agreement or any of the other Loan Documents
         or otherwise  whether direct or indirect  (including  those acquired by
         assignment),  absolute or contingent,  primary or secondary,  due or to
         become due, now existing or hereafter arising, and however acquired.

                  Other Agreements - the Fee Letter,  the Suretyship  Agreement,
         the Revolving Notes, the Term Notes, the Subordination  Agreement,  the
         Post-Closing  Letter, the Dominion Account Agreements,  and any and all
         other agreements, instruments, and documents (other than this Agreement
         and the Security Documents),  heretofore, now, or hereafter executed by
         Borrower,  any  Subsidiary  of  Borrower,  or any other third party and
         delivered  to  the  Lender   Group  in  respect  of  the   transactions
         contemplated by the Agreement.

                  Overadvance  - the  amount,  if any,  by which  the  Revolving
         Facility  Usage exceeds the lesser of (a) the Borrowing Base or (b) the
         Maximum Amount.

                  Participant   -  as  defined  in  Section   12.4.2(e)  of  the
         Agreement.

                  Pay-Off Letter - a letter, in form and substance  satisfactory
         to Agent,  from each Existing Lender respecting the amount necessary to
         repay in full all of the obligations of Borrower owing to such Existing
         Lender  and to  obtain a  termination  or  release  of all of the Liens
         existing in favor of such Existing  Lender on the Properties or capital
         stock, as the case may be, of Borrower.

                  Permits - as defined in Section 7.1.17 of the Agreement.

                  Permitted  Acquisitions - any purchase or other acquisition by
         Borrower of all or  substantially  all of the assets or Voting Stock of
         any other Person that is approved in writing by the  Required  Lenders,
         which  approval  may be given or  withheld  in their sole and  absolute
         discretion.

                  Permitted Holders - each of the Persons identified on Schedule
         P-1, and the  respective  Family Members (if any) and Family Trusts (if
         any) of each such Person.

                  Permitted  Interest  Rate or Currency  Protection  Agreement -
         with respect to any Person,  any Interest  Rate or Currency  Protection
         Agreement  of such  Person  entered  into with Bank (in its  individual
         capacity  and not as a member  of the  Lender  Group)  in the  ordinary
         course of  business  that is designed  to protect  such Person  against
         fluctuations in interest rates or currency  exchange rates with respect
         to  Indebtedness  of such Person and which shall have a notional amount
         not greater  than the  payments  due with  respect to the  Indebtedness
         hedged thereby and not for purposes of speculation.

                  Permitted  Preferred Stock - any Preferred Stock issued by QTI
         that is not Prohibited Preferred Stock.

                  Permitted  Liens - any  Lien of a kind  specified  in  Section
         8.2.5 of the Agreement.
                                      14.

<PAGE>



                  Permitted   Purchase  Money   Indebtedness  -  Purchase  Money
         Indebtedness  of  Borrower  incurred  after  the date  hereof  which is
         secured  by a  Purchase  Money Lien and  which,  when  aggregated  with
         Capitalized  Lease  Obligations of Borrower  incurred after the Closing
         Date, does not exceed $500,000.

                  Person  - an  individual,  partnership,  corporation,  limited
         liability company,  joint stock company, land trust, business trust, or
         unincorporated  organization,  or a  government  or agency or political
         subdivision thereof.

                  Plan - an employee  benefit plan now or  hereafter  maintained
         for employees of Borrower that is covered by Title IV of ERISA.

                  PCI - has  the  meaning  set  forth  in the  preamble  to this
         Agreement.

                  Polimeni  Parties  -  Mr.  Dominic  A.  Polimeni,  his  Family
         Members, and his Family Trusts.

                  Post-Closing Letter - that certain letter agreement,  dated as
         of September 24, 1998, among Borrower, Administrative Agent, Collateral
         Agent,  and  the  Lenders,  in  form  and  substance   satisfactory  to
         Collateral Agent and Administrative  Agent,  relative to the completion
         of certain matters following the Closing Date.

                  Preferred  Stock - with  respect to any  Person,  any class or
         series of equity  Securities  of such  Person  that is  entitled,  upon
         distribution  of  assets  of  such  Person,   whether  by  dividend  or
         liquidation,  to a preference  over  another  class or series of equity
         Securities of such Person.

                  Pro  Forma  Balance  Sheet  - a pro  forma  balance  sheet  of
         Borrower,  dated as of the  Closing  Date and based upon the  financial
         statements of Borrower (other than FTI and FII) as of June 30, 1998, of
         FTI as of June 30, 1998, and of FII as of June 30, 1998,  which balance
         sheet shall (a) reflect the effect of the transactions  contemplated by
         the  Acquisition  Documents and the Loan  Documents,  and (b) contain a
         Certificate  of a Responsible  Officer to the effect that the pro forma
         balance sheet  reflects such  officer's  good faith best estimate as to
         the financial  position of Borrower as of the Closing  Document,  after
         giving effect to such transactions.

                  Prohibited  Preferred  Stock - any Preferred Stock of Borrower
         the terms and conditions of issuance,  and rights and  preferences,  of
         which are not approved in writing by the Required Lenders in their sole
         and absolute discretion, including any Preferred Stock of Borrower that
         by its terms is mandatorily  redeemable or subject to any other payment
         obligation  (including  any  obligation  to pay  dividends,  other than
         dividends  of Preferred  Stock of the same class and series  payable in
         kind or dividends of common Stock) on or before a date not earlier than
         2 years  after the end of the Term or, on or before a date not  earlier
         than 2 years after the end of the Term,  is redeemable at the option of
         the  holder  thereof  for cash (or  assets  or  securities  other  than
         distributions  in kind of Preferred  Stock of the same class and series
         or of common Stock).
                                      15.

<PAGE>



                  Projections  -  Borrower's  forecasted   Consolidated  (giving
         effect to the  Acquisitions)  (a) balance  sheets,  (b) profit and loss
         statements,   (c)  cash  flow   statements,   and  (d)   capitalization
         statements,   all  prepared  on  a  consistent  basis  with  Borrower's
         historical financial statements,  together with appropriate  supporting
         details and a statement of underlying assumptions.

                  Property  - any  interest  in any kind of  property  or asset,
         whether real, personal or mixed, or tangible or intangible.

                  Pro Rata Share - (a) with respect to a Lender's  obligation to
         make Revolving Credit Loans and receive payments relative thereto,  the
         percentage  obtained by dividing  (i) such  Lender's  Revolving  Credit
         Commitment,  as set  forth  on  Schedule  C-1,  by (ii)  the  aggregate
         Revolving Credit  Commitments of all Lenders,  as set forth on Schedule
         C-1;

                  (b) with respect to a Lender's  obligation to make Term Loan A
         and receive  payments  relative  thereto,  the  percentage  obtained by
         dividing  (i) such  Lender's  Term Loan A  Commitment,  as set forth on
         Schedule  C-1, by (ii) the  aggregate  Term Loan A  Commitments  of all
         Lenders, as set forth on Schedule C-1.

                  (c) with respect to a Lender's  obligation to make Term Loan B
         and receive  payments  relative  thereto,  the  percentage  obtained by
         dividing  (i) such  Lender's  Term Loan B  Commitment,  as set forth on
         Schedule  C-1, by (ii) the  aggregate  Term Loan B  Commitments  of all
         Lenders, as set forth on Schedule C-1; and

                  (d)  with  respect  to  all  other  matters   (including   the
         indemnification obligations arising under Section 11.5), the percentage
         obtained by dividing (i) such Lender's Total Commitments to make Loans,
         as set forth on Schedule C-1, by (ii) the aggregate  Total  Commitments
         of all Lenders, as set forth on Schedule C-1.

                  Purchase   Money   Indebtedness   -  means  and  includes  (a)
         Indebtedness (other than the Obligations) for the payment of all or any
         part of the purchase  price of any fixed assets,  (b) any  Indebtedness
         (other than the Obligations)  incurred at the time of or within 10 days
         prior to or after the  acquisition  of any fixed assets for the purpose
         of financing all or any part of the purchase price thereof, and (c) any
         renewals, extensions, or refinancings thereof, but not any increases in
         the principal amounts thereof outstanding at the time.

                  Purchase  Money Lien - a Lien upon fixed  assets that  secures
         Purchase Money  Indebtedness,  but only if such Lien shall at all times
         be confined  solely to the fixed assets the purchase price of which was
         financed  through the  incurrence  of the Purchase  Money  Indebtedness
         secured by such Lien.

                  QDLI - has the  meaning  set  forth  in the  preamble  to this
         Agreement.

                  QTI - has  the  meaning  set  forth  in the  preamble  to this
         Agreement.

                  Rentals - as defined in Section 8.2.13 of the Agreement.

                                      16.

<PAGE>


                  Reportable  Event - any of the  events  set  forth in  Section
         4043(c) of ERISA.

                  Required Lenders - at any time,  Lenders whose Pro Rata Shares
         aggregate at least 66-2/3% of the  Commitments  or, if the  Commitments
         shall  have  been  terminated  irrevocably,  Lenders  holding  at least
         66-2/3% of the Obligations then outstanding.

                  Responsible  Officer - any of the duly  appointed  or  elected
         Chief Executive Officer,  Chief Financial Officer,  or Chief Accounting
         Officer of QTI.

                  Restricted  Investment  - any  investment  made  in cash or by
         delivery of Property to any Person,  whether by  acquisition  of stock,
         Indebtedness or other  obligation or Security,  or by loan,  advance or
         capital  contribution,  or  otherwise,  or in any  Property  except the
         following:

                           (a)  investments  in  one  or  more  Subsidiaries  of
         Borrower to the extent existing on the Closing Date;

                           (b)  Property  to be used in the  ordinary  course of
         business;

                           (c) Current Assets arising from the sale of goods and
         services  in the  ordinary  course  of  business  of  Borrower  and its
         Subsidiaries;

                           (d)  investments in direct  obligations of the United
         States of America,  or any agency thereof or obligations  guaranteed by
         the United  States of America,  provided that such  obligations  mature
         within 1 year from the date of acquisition thereof;

                           (e) investments in  certificates of deposit  maturing
         within 1 year  from the date of  acquisition  issued by a bank or trust
         company  organized  under  the laws of the  United  States or any state
         thereof having  capital  surplus and undivided  profits  aggregating at
         least $100,000,000;

                           (f) investments in commercial paper given the highest
         rating by a national  credit  rating  agency and maturing not more than
         270 days from the date of creation thereof; and

                           (g)  investments  in  Permitted   Interest  Rate  and
         Currency Protection Agreements.

                  Revolving Credit Commitment - for each Lender,  the obligation
         of such Lender to fund Revolving  Credit Loans, in an aggregate  amount
         at one time  outstanding with respect to each such Lender up to but not
         exceeding  the amount set forth  opposite the name of such Lender under
         Revolving Credit Commitment on Schedule C-1.

                  Revolving Credit Lenders - individually and collectively,  the
         Lenders with a Revolving Credit Commitment greater than zero.

                  Revolving  Credit Loan - a Loan made by Lenders as provided in
         Section 2.1 of the Agreement.

                                      17.

<PAGE>



                  Revolving  Facility  Usage - as of any date of  determination,
         the sum of the aggregate amount of Revolving Credit Loans outstanding.

                  Revolving Note - individually  and  collectively,  the Secured
         Promissory  Notes  executed and  delivered by Borrower on or before the
         Closing Date in favor of each  Revolving  Credit Lender to evidence the
         Revolving  Credit  Loans,  each  in  the  form  of  Exhibit  R-1 to the
         Agreement.

                  Schedule  of  Accounts - as  defined  in Section  6.4.1 of the
         Agreement.

                  Security - shall have the same  meaning as in Section  2(1) of
         the Securities Act of 1933, as amended.

                  Security Documents - the Stock Pledge Agreement, the Trademark
         Security Agreement, and all other instruments and agreements,  securing
         the whole or any part of the Obligations.

                  Senior Debt - as of any date of determination, all outstanding
         obligations  of Borrower with respect to Money  Borrowed  (exclusive of
         Borrower's obligations in respect of Subordinated Debt).

                  Senior Debt Coverage  Ratio - with respect to any period,  the
         ratio of (a) Borrower's  Senior Debt as of the last day of such period,
         to (b) Borrower's EBITDA for the 12 month period ended as of the end of
         such period  (except  that in the case of periods  ended on or prior to
         June 30,  1999,  the  calculation  shall be made using  FII's and FTI's
         EBITDA for the applicable 12 month period  irrespective of whether they
         were Subsidiaries of QTI during the relevant period), all as determined
         on a Consolidated  basis in accordance with GAAP.. For purposes of this
         definition,  "EBITDA"  shall  be  calculated  after  giving  effect  to
         adjustments  to  eliminate  expense  items  that  would  not have  been
         incurred and include income items that would have been  recognized,  in
         each  case,  if  each  Permitted  Acquisition  consummated  during  the
         applicable  period  had  been  accomplished  on  the  first  day of the
         applicable  period;  such  eliminations  and  inclusions to be mutually
         agreed upon by Borrower, Administrative Agent, and Collateral Agent.

                  Solvent - as to any  Person,  such  Person  (a) owns  Property
         whose fair  saleable  value is greater than the amount  required to pay
         all of such Person's Indebtedness  (including contingent debts), (b) is
         able to pay all of its Indebtedness as such Indebtedness  matures,  and
         (c) has capital  sufficient  to carry on its business and  transactions
         and all business and transactions in which it is about to engage.

                  Statutory  Reserves - a fraction  (expressed as a decimal) the
         numerator of which is the number 1, and the denominator of which is the
         number  1  minus  the  aggregate  of the  maximum  reserve  percentages
         (including,  without limitation, any marginal,  special,  emergency, or
         supplemental  reserves),  expressed  as a decimal,  established  by the
         Board of Governors of the Federal  Reserve System and any other banking
         authority  to which  Bank or any  Lender is  subject  for  Eurocurrency
         Liabilities  (as defined in  Regulation  D of 

                                      18.

<PAGE>


         the Board of Governors of the Federal  Reserve  System or any successor
         thereto).  Such reserve percentages shall include,  without limitation,
         those imposed under such  Regulation D. LIBOR  Portions shall be deemed
         to constitute  Eurocurrency  Liabilities and as such shall be deemed to
         be subject to such reserve  requirements  without  benefit of or credit
         for proration,  exceptions, or offsets which may be available from time
         to time to  Bank or any  Lender  under  such  Regulation  D.  Statutory
         Reserves  shall be adjusted  automatically  on and as of the  effective
         date of any change in any reserve percentages.

                  Stock  Pledge  Agreement - a Stock  Pledge  Agreement  between
         Collateral  Agent  and each  Person  composing  Borrower  that owns any
         interest in any other Person composing Borrower,  in form and substance
         satisfactory to Collateral Agent.

                  Subordinated   Debt  -   Indebtedness   of  Borrower  that  is
         subordinated  to  the  Obligations  in a  manner  satisfactory  to  the
         Required Lenders.

                  Subordination  Agreement - a Subordination  Agreement  between
         Borrower and the Lender Group,  in form and substance  satisfactory  to
         Collateral Agent.

                  Subsidiary - any corporation of which a Person owns,  directly
         or indirectly through one or more intermediaries,  more than 50% of the
         Voting Stock at the time of determination.

                  Suretyship  Agreement - a suretyship  agreement by each of the
         Borrowers  in favor of  Collateral  Agent for the benefit of the Lender
         Group, in form and substance satisfactory to Collateral Agent.

                  Tax - in  relation  to any LIBOR  Portion  and the  applicable
         LIBOR Rate,  any tax, levy,  impost,  duty,  deduction,  withholding or
         charges of whatever nature required by any Legal  Requirement (a) to be
         paid by a Lender and/or (b) to be withheld or deducted from any payment
         otherwise required hereby to be made by Borrower to a Lender; provided,
         that the term "Tax" shall not include  any taxes  imposed  upon the net
         income of a Lender by the United States of America,  United Kingdom, or
         any political subdivision thereof.

                  Term - as defined in Section 4.1 of the Agreement.

                  Term  Loan A - the  Loan  described  in  Section  1.2.1 of the
         Agreement.  

                  Term Loan A Commitment - for each Lender,  the  obligation  of
         such Lender to fund Term Loan A, in an aggregate amount with respect to
         each such  Lender  equal to the amount set forth  opposite  the name of
         such Lender under Term Loan A Commitment on Schedule C-1.

                  Term  Loan B - the  Loan  described  in  Section  1.2.2 of the
         Agreement.

                  Term Loan B Commitment - for each Lender,  the  obligation  of
         such Lender to fund Term Loan B, in an aggregate amount with respect to
         each such  Lender  equal to the amount set forth  opposite  the name of
         such Lender under Term Loan B Commitment on Schedule C-1.

                                      19.

<PAGE>



                  Term Loan Lenders - individually and collectively, the Lenders
         with a Term  Loan A  Commitment  greater  than  zero  or a Term  Loan B
         Commitment greater than zero.

                  Term Loans - individually  and  collectively,  Term Loan A and
         Term Loan B.

                  Term  Note A -  individually  and  collectively,  the  Secured
         Promissory  Notes  executed and  delivered by Borrower on or before the
         Closing Date in favor of each Lender with a Term Loan A  Commitment  to
         evidence Term Loan A, each in the form of Exhibit T-1 to the Agreement.

                  Term  Note B -  individually  and  collectively,  the  Secured
         Promissory  Notes  executed and  delivered by Borrower on or before the
         Closing Date in favor of each Lender with a Term Loan B  Commitment  to
         evidence Term Loan B, each in the form of Exhibit T-2 to the Agreement.

                  Term Notes - individually  and  collectively,  Term Note A and
         Term Note B.

                  Total  Commitment - for each Lender,  the  obligation  of such
         Lender to fund Loans,  with  respect to each type of Loan in the amount
         set  forth  opposite  the  name of such  Lender  under  the  Commitment
         relative to such Loan type on Schedule C-1, and in an aggregate  amount
         will respect to such Lender equal to the amount set forth  opposite the
         name of such Lender under Total Commitment on Schedule C-1.

                  Total Credit Facility - subject to Section 1.3, $45,000,000.

                  Trademark  Security Agreement - a Trademark Security Agreement
         between   Collateral   Agent  and  Borrower,   in  form  and  substance
         satisfactory to Collateral Agent.

                  Voting  Stock  -  Securities  of any  class  or  classes  of a
         corporation  the  holders of which are  ordinarily,  in the  absence of
         contingencies,  entitled to elect a majority of the corporate directors
         (or Persons performing similar functions).

                  Other Terms.  All other terms contained in the Agreement shall
         have, when the context so indicates,  the meanings  provided for by the
         Code to the extent the same are used or defined therein.

                                      20.

<PAGE>




                         LIST OF SCHEDULES AND EXHIBITS


Schedule C-1       Commitments
Schedule P-1       Permitted Holders
Schedule 6.1.1     Borrower's and each Subsidiary's Business Locations
Schedule 7.1.1     Jurisdictions in which Borrower and each Subsidiary is 
                   Authorized to do Business  
Schedule  7.1.4    Capital  Structure of Borrower  
Schedule  7.1.5    Corporate  Names  
Schedule  7.1.13   Surety   Obligations   
Schedule  7.1.14   Tax Identification  Numbers of Subsidiaries  
Schedule 7.1.15    Brokers 
Schedule 7.1.16    Patents,   Trademarks,   Copyrights  and  Licenses   
Schedule  7.1.19   Contracts Restricting  Borrower's Right to Incur Debts 
Schedule 7.1.20    Litigation 
Schedule 7.1.22(A) Capitalized Leases 
Schedule 7.1.22(B) Operating Leases 
Schedule 7.1.23    Pension  Plans  
Schedule  7.1.25   Labor   Contracts   
Schedule  8.2.3    Permitted Indebtedness  
Schedule 8.2.4     Affiliate  Transactions  
Schedule 8.2.5     Permitted Liens 
Schedule 8.2.11    Consignments

Exhibit A-1        Form of Assignment and Acceptance
Exhibit B-1        Form of Borrowing Base Certificate
Exhibit R-1        Form of Revolving Note
Exhibit T-1        Form of Term A Note
Exhibit T-2        Form of Term B Note
Exhibit 8.1.3      Form of Compliance Certificate

                                      21.