Exhibit 10.11

                               FINANCING AGREEMENT



                       The CIT Group/Business Credit, Inc.
                                   (as Lender)

                                       And

                        DIAMOND TRIUMPH AUTO GLASS, INC.
                                  (as Borrower)

                              Dated: March 27, 2000

<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
SECTION 1       Definitions..................................................1
SECTION 2.      Conditions Precedent........................................10
SECTION 3.      Revolving Loans.............................................13
SECTION 4.      Intentionally Omitted.......................................15
SECTION 5.      Letters of Credit...........................................15
SECTION 6.      Collateral..................................................18
SECTION 7.      Representations, Warranties and Covenants...................20
SECTION 8.      Interest, Fees and Expenses.................................25
SECTION 9.      Powers......................................................27
SECTION 10.     Events of Default and Remedies..............................28
SECTION 11.     Termination.................................................31
SECTION 12.     Miscellaneous...............................................31

Schedules

Schedule 1 - Existing Liens
Schedule 2 - Collateral Locations, Chief Executive Office, Jurisdiction of
             Organization

                                       i

<PAGE>

         THE  CIT   GROUP/BUSINESS   CREDIT,   INC.,  a  New  York  corporation,
(hereinafter  "CITBC")  with offices  located at 300 South Grand  Avenue,  Third
Floor,  Los  Angeles,  California  90071,  is pleased  to confirm  the terms and
conditions  under which CITBC shall make  revolving  loans,  advances  and other
financial  accommodations  to DIAMOND  TRIUMPH  AUTO  GLASS,  INC.  (herein  the
"Company"),  a Delaware  corporation  with a principal  place of business at 220
Division Street, Kingston, Pennsylvania 18704.

SECTION 1.  Definitions

         Accounts  shall mean all of the Company's now existing and future:  (a)
accounts receivable,  (whether or not specifically listed on schedules furnished
to CITBC),  and any and all instruments,  documents,  contract  rights,  chattel
paper, general intangibles,  including, without limitation, all accounts created
by or arising from all of the Company's  sales of goods or rendition of services
to its customers,  and all accounts  arising from sales or rendition of services
made under any of the  Company's  trade  names or styles,  or through any of the
Company's divisions; (b) unpaid seller's rights (including rescission, replevin,
reclamation  and  stoppage in  transit)  relating  to the  foregoing  or arising
therefrom;  (c)  rights  to any  goods  represented  by  any  of the  foregoing,
including  rights to returned or  repossessed  goods;  (d)  reserves  and credit
balances  arising  hereunder;  (e)  guarantees  or  collateral  for  any  of the
foregoing;  (f) insurance  policies or rights  relating to any of the foregoing;
and (g) cash and non-cash proceeds of any and all the foregoing.

         Anniversary  Date shall mean the date  occurring  one (1) year from the
date hereof and the same date in every year thereafter.

         Availability  shall  mean at any time the  lesser  of:  (I) the Line of
Credit,  or (II)  the  excess  of the sum of a)  eighty-five  percent  (85%)  of
Eligible  Accounts  Receivable  and b)  eighty-five  percent  (85%) of  Eligible
Inventory,  valued at the  lower of cost or  market,  or (III) one and  one-half
(1.5) multiplied by EBITDA of the Company for the prior rolling 12-month period,
over the sum, without duplication, of x) the outstanding aggregate amount of all
Obligations of the Company, and y) the Availability Reserve.

         Availability Reserve shall mean, at any time of determination,  the sum
of the then outstanding  amount of all Letters of Credit,  plus the sum of three
(3) months rental payments with respect to all of Company's leased  distribution
centers for which it has not delivered to CITBC a landlord's waiver (in form and
substance  satisfactory  to CITBC in the  exercise  of its  reasonable  business
judgment),  as such amounts may be adjusted from time to time hereafter upon (i)
delivery to CITBC of any such acceptable waiver,  (ii) the opening or closing of
a distribution center and/or (iii) any change in rental payment.

         Business  Day  shall  mean any day on which  both  CITBC  and The Chase
Manhattan Bank are open for business.

         Blocked  Account  shall mean each  Concentration  Account  owned by the
Company  which is governed  by a blocked  account or similar  agreement  in form
substantially  similar to Exhibit A attached hereto and which account is subject
to written  instructions only from the Company unless and until CITBC shall give
the institution holding such Concentration  Account written

                                       1

<PAGE>

instructions  to the  contrary in  accordance  with the terms of  paragraph 4 of
Section 3 of this Financing Agreement.

         Capital  Expenditures  for any period  shall mean the  aggregate of all
expenditures  of the Company during such period that in conformity with GAAP are
required to be included in or reflected by the  property,  plant or equipment or
similar fixed asset account reflected in the balance sheet of the Company.

         Capital Lease shall mean any lease of property (whether real,  personal
or mixed) which, in conformity with GAAP, is accounted for as a capital lease or
a Capital Expenditure on the balance sheet of the Company.

         Chase Bank Rate shall mean the rate of interest per annum  announced by
The Chase  Manhattan  Bank from time to time as its prime  rate in effect at its
principal  office in the City of New York. (The prime rate is not intended to be
the  lowest  rate  of  interest  charged  by The  Chase  Manhattan  Bank  to its
borrowers).

         Chase Bank Rate Margin shall mean the amounts  corresponding to EBITDA,
calculated quarterly, for the prior rolling four-quarter period:

         EBITDA                           Chase Bank Rate Margin
         ------                           ----------------------

         In excess of $17 million         0.25 percentage points
         $13 million - $17 million        0.50 percentage points
         Less than $13 million            0.75 percentage points

         Collateral  shall  mean all  present  and future  Accounts,  Equipment,
Inventory,  Documents  of  Title,  General  Intangibles  and Real  Estate of the
Company.  In addition,  the Collateral shall include, to the extent not included
in the  foregoing,  the  following  property  of  the  Company:  (a)  investment
property,  documents,  instruments,  deposit accounts,  letter-of-credit rights,
accounts,  chattel paper,  commercial tort claims, goods,  equipment,  fixtures,
inventory  and general  intangibles  as such terms are defined under the Uniform
Commercial  Code;  and (b)  all  cash  and  other  monies  and  property  in the
possession or control of CITBC,  all books,  records,  ledger  cards,  disks and
related  data   processing   software  at  any  time  evidencing  or  containing
information  relating to any of the  Collateral  described  herein or  otherwise
necessary or helpful in the collection thereof or realization  thereon,  and all
cash and non-cash proceeds of any of the foregoing.

         Collateral  Management Fee shall mean the sum of $50,000 which shall be
paid to CITBC in accordance  with  paragraph 8 of Section 8 hereof to offset the
expenses  and  costs  of CITBC  in  connection  with  record  keeping,  periodic
examinations, analyzing and evaluating the Collateral.

         Concentration Account shall mean any account owned by the Company which
receives funds from (i) the Depository Accounts,  (ii) the credit card companies
and/or (iii) another Concentration Account.

                                       2
<PAGE>

         Consolidated  Financial  Statement  shall mean a  consolidated  balance
sheet,  income  statement,  cash flow  statement and statement of  stockholders'
equity  for  the  Company,  and  its  subsidiaries,   if  any,  eliminating  all
inter-company  transactions  and prepared in accordance  with GAAP,  except that
monthly and quarterly financial statements need not have footnotes.

         Consolidating  Financial Statement shall mean a Consolidated  Financial
Statement plus, if the Company has any subsidiaries,  individual balance sheets,
income statements,  cash flow statements and statements of stockholders'  equity
for the Company each showing all elimination of  inter-company  transactions and
prepared in  accordance  with GAAP and including a balance sheet for the Company
exclusively,  except that monthly and quarterly  financial  statements  need not
have footnotes.

         Credit Card  Agreement  shall mean the Credit Card  Agreements  entered
into  among  the  Company,   CITBC,   and  the  credit  card  payment   clearing
organizations, respecting payments made to the Company by credit card charges.

         Customarily Permitted Liens shall mean

        (a) liens of local or state  authorities  for  franchise  or other  like
taxes provided the aggregate  amounts of such liens shall not exceed $250,000 in
the aggregate at any one time;

        (b) statutory  liens of landlords  and liens of carriers,  warehousemen,
mechanics,  materialmen  and other  like liens  imposed  by law,  created in the
ordinary  course of  business  and for  amounts  not yet due (or which are being
contested in good faith by appropriate  proceedings or other appropriate actions
which are  sufficient to prevent  imminent  foreclosure  of such liens) and with
respect to which  adequate  reserves or other  appropriate  provisions are being
maintained in accordance with GAAP; and

        (c)  deposits  made (and the liens  thereon) in the  ordinary  course of
business consistent with past practices (including, without limitation, security
deposits for leases, surety bonds and appeal bonds), deposits in connection with
utilities,  workers'  compensation,  unemployment  insurance  and other types of
social  security  benefits  or to  secure  the  performance  of  tenders,  bids,
contracts  (other than for the  repayment  or  guarantee  of  borrowed  money or
purchase   money   obligations),   statutory   obligations   and  other  similar
obligations.

         Default shall mean any event specified in Section 10 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act, has been satisfied.

         Default Rate of Interest  shall mean a rate of interest per annum equal
to the sum of: a) two percent (2%) and b) the applicable  Chase Bank Rate, which
CITBC shall be entitled  to charge the Company on all  Obligations  due CITBC by
the  Company  to the  extent  provided  in  paragraph  2 of  Section  10 of this
Financing Agreement.

         Depository   Accounts  shall  mean  those  accounts   (other  than  the
Concentration Accounts) designated for the deposit of proceeds of Collateral.

                                       3
<PAGE>

         Documentation  Fee shall mean  CITBC's  standard  and  reasonable  fees
relating  to  any  and  all  modifications,  waivers,  releases,  amendments  or
additional  collateral with respect to this Financing Agreement,  the Collateral
and/or the Obligations.

         Documents  of  Title  shall  mean  all  present  and  future  warehouse
receipts,  bills of lading, shipping documents,  chattel paper,  instruments and
similar  documents,  all whether  negotiable  or not and all goods and inventory
relating thereto and all cash and non-cash proceeds of the foregoing.

         Early  Termination  Date  shall  mean  the date on  which  the  Company
terminates this Financing Agreement or the Line of Credit which date is prior to
the third Anniversary Date.

         Early  Termination  Fee  shall:  i) mean the fee CITBC is  entitled  to
charge the Company in the event the Line of Credit or this  Financing  Agreement
is terminated by the Company on a date prior to the third  Anniversary Date; and
ii) be determined by  multiplying  the Line of Credit by (x) one percent (1%) if
the Early  Termination Date occurs on or prior to the first Anniversary Date, or
(y) one-half percent (1/2%) if the Early Termination Date occurs after the first
Anniversary Date but prior to the third Anniversary Date.

         EBITDA shall mean, in any period,  all earnings before all (i) interest
and tax obligations, (ii) depreciation,  (iii) amortization for said period, all
determined in accordance with GAAP on a basis consistent with the latest audited
financial  statements of the Company,  and calculated based upon the most recent
financial  statements,  and (iv) LGP  Management  Fees accrued and unpaid during
such period.

         Event(s) of Default  shall have the meaning  provided for in Section 10
of this Financing Agreement.

         Eligible  Accounts  Receivable  shall  mean  the  gross  amount  of the
Company's  Trade Accounts  Receivable  that conform to the warranties  contained
herein,  less,  without  duplication,  the sum of (a)  allowances  for  doubtful
accounts  and other  reserves as  required by GAAP,  and (b) the sum of reserves
for: i) sales in excess of ten percent  (10%) to the United States of America or
to any agency,  department or division  thereof;  ii) foreign sales in excess of
ten  percent  (10%) other than sales  secured by stand-by  letters of credit (in
form and  substance  satisfactory  to CITBC) issued or confirmed by, and payable
at, banks having a place of business in the United States of America and payable
in United  States  currency,  and which  sales  otherwise  comply with all other
criteria  for  eligibility  hereunder;  iii) Trade  Accounts  Receivable  of any
customer  to the extent in excess of  twenty-five  percent  (25%) or more of all
outstanding  Trade  Accounts  Receivable;  iv) Trade Accounts  Receivable  which
remain  unpaid  more  than 180 days from  invoice  date;  and v) Trade  Accounts
Receivable  arising from sales to any company affiliated with the Company in any
way.

         Eligible  Inventory  shall  mean  the  gross  amount  of the  Company's
inventory that conform to the warranties contained herein less reserves required
by GAAP, any work-in-process and goods (other than goods in transit) not present
in the United States of America.

         Equipment  shall mean all present  and  hereafter  acquired  machinery,
equipment,  furnishings  and  fixtures,  and all  additions,  substitutions  and
replacements   thereof,   wherever

                                       4
<PAGE>

located,  together  with  all  attachments,  components,  parts,  equipment  and
accessories  installed  thereon or affixed  thereto and all proceeds of whatever
sort.

         ERISA shall mean the Employee  Retirement  Income Security Act or 1974,
as  amended  from  time  to time  and  the  rules  and  regulations  promulgated
thereunder from time to time.

         GAAP shall mean generally accepted accounting  principles in the United
States of America as in effect  from time to time and for the period as to which
such accounting principles are to apply.

         General  Intangibles  shall have the  meaning  set forth in the Uniform
Commercial  Code as in effect in the State of  Pennsylvania  and shall  include,
without  limitation,  all present and future right, title and interest in and to
all tradenames,  trademarks  (together with the goodwill associated  therewith),
patents,  licenses,  customer lists, distribution agreements,  supply agreements
and tax refunds, together with all monies and claims for monies now or hereafter
due and payable in connection  with any of the  foregoing or otherwise,  and all
cash and non-cash proceeds thereof.

         Indebtedness   shall  mean,  without   duplication,   all  liabilities,
contingent or otherwise,  which are any of the  following:  (a)  obligations  in
respect  of  borrowed  money or for the  deferred  purchase  price of  property,
services or assets,  other than Inventory,  or (b) lease  obligations  which, in
accordance with GAAP, have been, or which should be capitalized.

         Intellectual   Property  Security   Agreement  shall  mean  a  security
agreement executed by Company,  in form and substance  reasonably  acceptable to
CITBC,  by which the Company  grants a security  interest and lien in all of its
patents, trademarks, and copyrights to CITBC.

         Inventory  shall  mean  all  of the  Company's  present  and  hereafter
acquired  merchandise  and  inventory,  and  all  additions,  substitutions  and
replacements  thereof,  wherever located,  together with all goods and materials
used or usable in manufacturing,  processing,  packaging,  selling, promoting or
shipping  same;  in  all  stages  of  production-  from  raw  materials  through
work-in-process to finished goods - and all proceeds thereof of whatever sort.

         Issuing  Bank  shall  mean any bank  issuing  Letters of Credit for the
Company.

         Letters of Credit  shall mean all  letters  of credit  issued  with the
assistance of CITBC by the Issuing Bank for or on behalf of the Company.

         Letter of Credit Guaranty shall mean any guaranty delivered by CITBC to
the Issuing Bank of the  Company's  reimbursement  obligation  under the Issuing
Bank's reimbursement  agreement,  application for Letter of Credit or other like
document.

         Letter of Credit  Guaranty  Fee shall mean the fee CITBC may charge the
Company  under  paragraph  3 of Section 8 of this  Financing  Agreement  for: i)
issuing  the Letter of Credit  Guaranty or ii)  otherwise  aiding the Company in
obtaining Letters of Credit pursuant to Section 5.

                                       5
<PAGE>

         LGP  Management  Fees shall  mean the  management  fees  payable by the
Company to Leonard Green & Partners,  L.P.  pursuant to that certain  Management
Services Agreement, dated March 31, 1998, as in effect as of the date hereof.

         Libor  shall  mean  at  any  time  of  determination,  and  subject  to
availability,  for each  interest  period  the higher of the  applicable  London
Interbank Offered rate paid in London on dollar deposits from other banks as (x)
quoted by The Chase  Manhattan Bank or (y) published  under "Money Rates" in the
New  York  City  edition  of the  Wall  Street  Journal  or if  there is no such
publication or statement therein as to Libor then in any publication used in the
New York City financial community.

         Libor Loan shall mean those  Revolving  Loans for which the Company has
elected to use Libor for interest rate computations.

         Libor  Period  shall mean the Libor for one  month,  two month or three
month U.S. dollar deposits, as selected by the Company.

         Libor Margin shall mean the amounts corresponding to EBITDA, determined
quarterly, for the prior rolling four-quarter period:

             EBITDA                            Libor Margin
             ------                            ------------

             In excess of $17 million          2.00 percentage points
             $13 million - $17 million         2.25 percentage  points
             Less than $13 million             2.50 percentage points

         Line of Credit  shall  mean the  commitment  of CITBC to make loans and
advances  pursuant to Section 3 of this  Financing  Agreement  and to assist the
Company  in  obtaining  Letters  of Credit  under  Section  4 of this  Financing
Agreement in the aggregate amount equal to $25,000,000;  provided, however, that
the  amount of the Line of Credit may from time to time be  permanently  reduced
under paragraph 9 of Section 3.

         Line of Credit Fee shall:  i) mean the fee due CITBC at the end of each
month  for the  Line  of  Credit,  and  ii) be  determined  by  multiplying  the
difference between the Line of Credit, and the average daily Revolving Loans and
outstanding  Letters of Credit of the Company for said month by  one-quarter  of
one  percent  (1/4 of 1%) per annum for the number of days in said month  during
which this Financing Agreement was in effect.

         Loan  Facility  Fee shall mean the fee  payable to CITBC in  accordance
with,  and  pursuant  to, the  provisions  of  paragraph  7 of Section 8 of this
Financing Agreement.

         Obligations  shall  mean all loans and  advances  made or to be made by
CITBC  to the  Company  or to  others  for the  Company's  account;  any and all
indebtedness  and  obligations  which may at any time be owing by the Company to
CITBC  howsoever  arising,  whether now in  existence or incurred by the Company
from time to time hereafter;  whether  secured by pledge,  lien upon or security
interest in any of the Company's assets or property or the assets or property of
any other person,  firm,  entity or  corporation;  whether such  indebtedness is
absolute  or  contingent,  joint or  several,  matured or  unmatured,  direct or
indirect  and whether the  Company is

                                       6
<PAGE>

liable to CITBC for such indebtedness as principal,  surety, endorser, guarantor
or otherwise.  Obligations shall also include indebtedness owing to CITBC by the
Company  under  this  Financing  Agreement  or  under  any  other  agreement  or
arrangement  now or  hereafter  entered  into  between  the  Company  and CITBC;
indebtedness  or  obligations  incurred  by, or imposed on, CITBC as a result of
environmental claims arising out of the Company's  operation,  premises or waste
disposal  practices  or  sites;  the  Company's  liability  to CITBC as maker or
endorser on any  promissory  note or other  instrument for the payment of money;
the Company's  liability to CITBC under any instrument of guaranty or indemnity,
or arising under any guaranty,  endorsement or undertaking  which CITBC may make
or issue to  others  for the  Company's  account,  including  any  accommodation
extended with respect to applications for Letters of Credit,  CITBC's acceptance
of drafts or CITBC's endorsement of notes or other instruments for the Company's
account and benefit.

         Out-of-Pocket  Expenses  shall mean all of CITBC's  present  and future
reasonable  and  documented   expenses   incurred  relative  to  this  Financing
Agreement,  whether  incurred  heretofore or  hereafter,  which  expenses  shall
include,  without being limited to, the cost of record  searches,  all costs and
expenses  incurred  by  CITBC  in  opening  bank  accounts,  depositing  checks,
receiving  and  transferring  funds,  and any  charges  imposed  on CITBC due to
"insufficient  funds" of deposited  checks and CITBC's  standard  fees  relating
thereto,  any amounts  paid by,  incurred by or charged to, CITBC by the Issuing
Bank  under  the  Letter  of  Credit  Guaranty  or the  Company's  reimbursement
agreement, application for Letter of Credit or other like document which pertain
either  directly or indirectly to such Letters of Credit,  and CITBC's  standard
fees relating to the Letters of Credit and any drafts thereunder,  local counsel
fees, if any, and taxes relative to the filing of financing statements,  and all
expenses,  costs  and  fees set  forth  in  paragraph  3 of  Section  10 of this
Financing  Agreement;  provided that  Out-of-Pocket  Expenses  shall not include
internal,  administrative, or overhead costs of CITBC (other than allocated fees
of internal legal counsel), or items covered by the Collateral Management Fee.

         Permitted Affiliate Transactions shall mean: (i) transactions, expenses
and  payments  pursuant to the terms of or  contemplated  by (a) the  Employment
Agreements  and  Non-Competition  Agreements  between  the  Company  and each of
Kenneth Levine and Richard Rutta,  each dated as of March 31, 1998, as in effect
on the date hereof;  (b) the Employment  Agreements between the Company and each
of Norman  Harris and Michael A. Sumsky,  each dated as of March 31, 1998, as in
effect on the date hereof; (c) the Management Services Agreement between Leonard
Green & Partners,  L.P. and the Company dated as of March 31, 1998, as in effect
on the date hereof; (d) the Stockholders  Agreement among Green Equity Investors
II, L.P.,  Kenneth  Levine,  Richard Rutta and the Company dated as of March 31,
1998,  as in effect on the date  hereof;  (e) the  Management  Subscription  and
Stockholders  Agreements among the Company,  Green Equity Investors II, L.P. and
each of Norman Harris and Michael A. Sumsky, each dated as of March 31, 1998, as
in effect on the date  hereof;  (f) the leases  between  the Company and Richard
Rutta and Kenneth Levine,  General  Partnership as in effect on the date hereof,
and as any such  leases  may be  extended  or  amended  from  time to time if on
substantially  identical  terms;  and  (g)  indemnification  and  other  similar
obligations  under the Stock Purchase  Agreement (as such term is defined in the
Indenture governing the Senior Unsecured Debt), as in effect on the date hereof;
(ii) compensation, indemnification and other benefits paid or made available for
or in  connection  with  services  actually  rendered  and  comparable  to those
generally  paid or made available in the same or similar  businesses  (including
stock options and related

                                       7
<PAGE>

stock option  agreements,  reimbursement of reasonable  out-of-pocket  expenses,
loans to officers,  directors and  employees in the ordinary  course of business
consistent with past practice and directors' and officers' liability  insurance)
as  determined  in good  faith by the  Company's  Board of  Directors  or senior
management;  and (iii) other transactions on terms that are no less favorable to
the  Company  than those that could  reasonably  be expected to be obtained in a
comparable  transaction  entered  into on an arm's length basis from a person or
entity that is not an affiliate of the Company.

         Permitted  Encumbrances  shall mean: i) liens expressly  permitted,  or
consented  to, by CITBC and listed on such  Schedule  1, if any,  as is attached
hereto  or as may be  consented  to, in  writing,  by CITBC in the  future;  ii)
Purchase Money Liens; iii) Customarily  Permitted Liens; iv) liens granted CITBC
by the  Company;  v) liens of  judgment  creditors  provided  such  liens do not
exceed,  in the aggregate,  at any time,  $150,000.00  (other than liens stayed,
satisfied, bonded or insured to the reasonable satisfaction of CITBC); vi) liens
for  taxes,  levies or  assessments  not yet due and  payable or which are being
diligently contested in good faith by the Company by appropriate proceedings and
which liens are not for taxes due the United  States of America;  vii) liens and
other  encumbrances  in existence on the date hereof and disclosed in writing to
CITBC and  accepted  in  writing  by  CITBC;  viii) any  extension,  renewal  or
replacement  of any of the foregoing,  provided that any  extension,  renewal or
replacement  lien shall be limited to the property or assets covered by the lien
extended,  renewed or replaced  and the  obligation  secured by such  extension,
renewal  or  replacement  lien  shall  be in an  amount  not  greater  than  the
obligations secured by the lien extended, renewed or replaced plus the amount of
all  expenses,  fees,  premiums  and  penalties  paid in  connection  with  such
extension,  renewal or  replacement;  (ix) easements,  licenses,  rights-of-way,
restrictions,  encroachments,  minor defects or irregularities in title, charges
or other encumbrances, in each case not interfering in any material respect with
the ordinary conduct of the business of the Company or any of its  subsidiaries;
(x) any (a)  interest  or title of a lessor  or  sublessor  under  any lease not
prohibited by this Financing Agreement,  (b) restriction or encumbrance that the
interest  or title  of such  lessor  or  sublessor  may be  subject  to,  or (c)
subordination of the interest of the lessee or sublessee under such lease to any
restriction  or  encumbrance  referred to in the preceding  clause (b); (xi) any
zoning or similar law or right reserved to or vested in any governmental  office
or agency to control or regulate  use of any real  property  and (xii) leases or
subleases in the ordinary course of business,  not involving  Inventory or Trade
Accounts  Receivable,  and granted to third parties not otherwise  prohibited by
this Financing  Agreement and not  interfering in any material  respect with the
ordinary conduct of the business of the Company or any of its subsidiaries.

         Permitted  Indebtedness shall mean: i) current indebtedness maturing in
less  than one  year  and  incurred  in the  ordinary  course  of  business  for
Inventory,  supplies, equipment, services, or taxes and indebtedness incurred in
the ordinary course of business for labor; ii) the  indebtedness  secured by the
Purchase  Money  Liens;  iii)  future   Subordinated  Debt,  if  any,  which  is
subordinated to the prior payment and satisfaction of the Company's  Obligations
to  CITBC  by  means  of  a  subordination   agreement  in  form  and  substance
satisfactory to CITBC; iv) indebtedness  arising under or in connection with the
Letters of Credit and this  Financing  Agreement;  v)  deferred  taxes and other
expenses  incurred in the ordinary course of business;  vi) the Senior Unsecured
Debt and other indebtedness  existing on the date of execution of this Financing
Agreement and listed in the most recent financial  statement  delivered to CITBC
or otherwise  disclosed to CITBC in writing;  (vii) Capital Leases provided that
the Indebtedness

                                       8
<PAGE>

incurred under such Capital Leases shall not exceed $250,000 in any fiscal year;
(viii)  other  unsecured  Indebtedness  in an  aggregate  principal  amount  not
exceeding $5,000,000 at any time outstanding; and (ix) any extension, renewal or
replacement  of any of the foregoing,  provided that any  extension,  renewal or
replacement  shall (a) be in an amount  not  greater  than the  Indebtedness  so
extended, renewed or replaced (plus the amount of expenses, fees and any premium
or penalty paid in connection with such extension, renewal or replacement),  and
(b) in the case of Subordinated  Debt,  shall (1) have an amortization  schedule
that  results  in  the  same  or  longer  average  life  to  maturity  than  the
Subordinated   Debt  and  (2)  contain   subordination   provisions   which  are
substantially  similar to those in the  documents  evidencing  the  Subordinated
Debt.

         Permitted  Investments  shall mean (i)  commercial  paper and municipal
bonds,  in each case  issued  or  guaranteed  by a party  rated P-1 or better by
Moody's  Investors  Service,  Inc.  ("Moody's")  or A-1 or  MIG-1 or  better  by
Standard & Poor's Rating Services ("S & P"), (ii) certificates of deposit,  time
deposits, Eurodollar deposits or bankers' acceptances maturing not more than one
year  after the date of issue,  issued by any  commercial  banking  institution,
which is a member of the Federal  Reserve System and has a combined  capital and
surplus and undivided  profits of not less than  $100,000,000,  (iii) repurchase
agreements  having maturities of not more than one year and which are secured by
readily  marketable direct obligations of the Government of the United States of
America  or any agency  thereof,  (iv)  readily  marketable  obligations  of the
Government  of the United States of America or any agency  thereof;  (v) readily
marketable obligations issued by any state of the United States or any political
subdivision thereof having a rating by Moody's or S & P of "A" or its equivalent
or better;  (vi) mutual funds which are regularly traded in the United States of
America whose  investments are limited to those described in clauses (i) through
(v) above or the Evergreen Money Market Fund; (vii) investments  received by the
Company  in  settlement  of or other  resolution  of  claims or  disputes  or in
connection  with a plan of  reorganization  in  connection  with a bankruptcy or
insolvency of an entity  indebted to the Company and, in each case,  extensions,
modifications  and  renewals  thereof;  (viii)  loans and  advances to officers,
directors  and  employees  of the Company in an  aggregate  amount not to exceed
$200,000 outstanding at any time; and (ix) other loans, advances and investments
in an aggregate amount not to exceed $500,000 at any time outstanding.

         Purchase  Money  Liens  shall  mean  liens on any  items  of  Equipment
acquired after the date of this Financing  Agreement  provided that i) each such
lien shall attach only to the property to be acquired,  ii) a description of the
property  so  acquired  is  furnished  to CITBC,  and iii) the debt  incurred in
connection with such acquisitions  shall not exceed in the aggregate $500,000 in
any fiscal year.

         Real Estate shall mean the Company's fee and/or leasehold  interests in
the real property which has been, or will be, encumbered,  mortgaged, pledged or
assigned to CITBC or its designee.

         Retained  Cash shall mean an amount of cash  sufficient  to provide the
Company with cash in an amount  necessary to stock the Company's  cash registers
at its retail  locations  and  consistent  with the  business  practices  of the
Company as of the date hereof.


                                       9
<PAGE>

         Revolving  Loans shall mean the loans and advances  made,  from time to
time,  to or for the  account of the  Company by CITBC  pursuant to Section 3 of
this Financing Agreement.

         Senior   Unsecured   Debt  shall  mean  that   unsecured   Indebtedness
outstanding  from time to time under that certain  Indenture,  dated as of March
31,  1998,  between  the  Company,  as issuer,  and State  Street Bank and Trust
Company, as trustee.

         Subordinated  Debt  shall  mean any  future  debt  due a  Subordinating
Creditor  (and the note  evidencing  such)  which will be  subordinated,  by the
Subordination   Agreement,   to  the  prior  payment  and  satisfaction  of  the
Obligations of the Company to CITBC.

         Subordinating   Creditor   shall  mean  any  future  holder  of  future
Subordinated Debt.

         Subordination  Agreement shall mean any future agreement respecting any
future Subordinated Debt among the Company, the Subordinating Creditor and CITBC
pursuant  to which  the  Subordinated  Debt  will be  subordinated  to the prior
payment and satisfaction of the Company's Obligations to CITBC.

         Trade Accounts Receivable shall mean, at any time of determination, the
amounts  due the  Company by (i) any credit  card  issuer and (ii) any  customer
obligated on an invoice, in each instance due as a result of a sale of inventory
and/or the rendition of services by the Company.

         Uniform  Commercial  Code shall mean the Uniform  Commercial  Code,  as
amended  and  supplemented  from time to time,  as in  effect in the  applicable
jurisdiction.

SECTION 2.  Conditions Precedent

         The  obligation  of CITBC to make  loans  hereunder  is  subject to the
satisfaction  of, or waiver of,  immediately  prior to or concurrently  with the
making of such loans,  the  following  conditions  precedent  (or as  conditions
subsequent if so expressly indicated):

        (a) Lien Searches - CITBC shall have received tax,  judgment and Uniform
Commercial  Code  searches  satisfactory  to CITBC for all  locations  presently
occupied or used by the Company.

        (b)  Casualty  Insurance - The  Company  shall have  delivered  to CITBC
evidence satisfactory to CITBC that casualty insurance policies listing CITBC as
loss payee or mortgagee,  as the case may be, are in full force and effect,  all
as set forth in Section 7, paragraph 5 of this Financing Agreement.

        (c) Financial  Projections - CITBC shall have received,  reviewed and be
satisfied  with a two years Company  financial  projections,  including  monthly
detail and projected borrowing  availability for the first year, together with a
balance  sheet,  profit  and  loss  statement,  and  statement  of  cash  flows,
accompanied  by a  management  discussion  and  analysis  as well as  detail  of
material assumptions, all in form an substance satisfactory to CITBC.

        (d) UCC Filings - Any documents (including without limitation, financing
statements)  required to be filed in order to create, in favor of CITBC, a first
and exclusive

                                       10
<PAGE>

perfected  security  interest in the Collateral with respect to which a security
interest may be perfected  by a filing under the Uniform  Commercial  Code shall
have been properly filed in each office in each  jurisdiction  required in order
to create in favor of CITBC a perfected lien on the Collateral under the Uniform
Commercial Code in effect as of the date hereof and as would be in effect if the
revisions  to Uniform  Commercial  Code  Article 9 are  adopted in any  relevant
jurisdiction as adopted in California  effective July 1, 2001.  CITBC shall have
received  acknowledgement copies of all such filings (or, in lieu thereof, CITBC
shall have received other evidence  satisfactory  to CITBC that all such filings
have been  made);  and CITBC shall have  received  evidence  that all  necessary
filing fees and all taxes or other  expenses  related to such  filings have been
paid in full.

        (e) Blocked  Account  Agreements - CITBC shall have received the Blocked
Account Agreements, duly executed by all parties thereto.

        (f) Credit Card  Agreements - CITBC shall have  received the Credit Card
Agreements,  duly executed by all parties thereto; provided that the Credit Card
Agreements  may be  delivered  within 21 days after the date hereof (and Company
covenants to do the same).

        (g)  Examination  &  Verification  - CITBC shall have  completed  to the
satisfaction  of CITBC an  examination  and  verification  of the Trade Accounts
Receivable, Inventory, books and records of the Company, which examination shall
indicate  that,  after giving  effect to all loans,  advances and  extensions of
credit to be made at  closing,  the  Company  shall have an  opening  additional
aggregate  Availability  of at least  $5,000,000.  It is  understood  that  such
requirement contemplates that all debts, obligations and payables are current in
accordance  with the  Company's  usual  business  practices.  The Company  shall
deliver  all  agreements  in  effect as of the  Closing  Date  with  respect  to
Permitted  Affiliate  Transactions  with 21 days following the Closing Date (and
Company covenants to do the same).

        (h)  Opinions - Counsel for the Company  shall have  delivered  to CITBC
opinions  satisfactory  to CITBC opining,  inter alia,  that,  subject to the i)
filing, priority and remedies provisions of the Uniform Commercial Code, ii) the
provisions of the Bankruptcy Code,  insolvency statutes or other like laws, iii)
the equity  powers of a court of law and iv) such other matters as may be agreed
upon  with  CITBC:  a)  this  Financing  Agreement  x)  is  valid,  binding  and
enforceable  according  to its  terms,  y) is duly  authorized  and z) does  not
violate any terms,  provisions,  representations  or covenants in the charter or
by-laws of the Company or, to the best  knowledge of such  counsel,  of any loan
agreement,  mortgage,  deed of trust,  note,  security  or pledge  agreement  or
indenture,  identified by the Company to such counsel as material,  to which the
Company is a signatory or by which the Company or its assets are bound.

        (i) Additional Documents - The Company shall have executed and delivered
to CITBC all loan  documents  necessary to  consummate  the lending  arrangement
contemplated  between  the  Company and CITBC;  provided  that the  Intellectual
Property  Security  Agreement  may be  delivered  within 21 days  after the date
hereof (and the Company covenants to do the same).

        (j)  Board  Resolution  -  CITBC  shall  have  received  a  copy  of the
resolutions of the Board of Directors of the Company  authorizing the execution,
delivery and performance

                                       11
<PAGE>

of (i) this Financing Agreement,  and (ii) any related agreements,  in each case
certified by the Secretary or Assistant  Secretary of the Company as of the date
hereof,  together with a certificate of the Secretary or Assistant  Secretary of
the Company as to the  incumbency  and  signature of the officers of the Company
executing this Financing  Agreement and any certificate or other documents to be
delivered by it pursuant  hereto,  together with  evidence of the  incumbency of
such Secretary or Assistant Secretary.

        (k) Corporate Organization - CITBC shall have received (i) a copy of the
Certificate of Incorporation of the Company  certified by the Secretary of State
of its  incorporation,  and (ii) a copy of the By-Laws  (as amended  through the
date  hereof)  of the  Company  and  certified  by the  Secretary  or  Assistant
Secretary of the Company.

        (l)  Officer's  Certificate  - CITBC  shall have  received  an  executed
Officer's  Certificate  of the Company,  satisfactory  in form and  substance to
CITBC,  certifying that (i) the representations and warranties  contained herein
are true and correct in all material respects on and as of the date hereof; (ii)
the  Company is in  compliance  with all of the terms and  provisions  set forth
herein; and (iii) no Event of Default or Default has occurred.

        (m)  Absence of  Default - No  Default,  Event of  Default  or  material
adverse  change  in  the  financial  condition,  business,  prospects,  profits,
operations or assets of the Company shall have occurred since January 31, 2000.

        (n) Existing Revolving Credit Agreement -- The Company's existing credit
agreement  with the  syndicate of financial  institutions  lead by Deutsche Bank
shall be (x) terminated, (y) all loans and obligations of the Company thereunder
shall  be paid or  satisfied  in full  utilizing  the  proceeds  of the  initial
Revolving Loans to be made under this Financing Agreement and (z) all liens upon
or security  interest in favor of such  lending  syndicate  shall be  terminated
and/or released upon such payment.

        (o)  Legal  Restraints/Litigation  - At the  date of  execution  of this
Financing  Agreement,  there  shall  be  no  x)  litigation,   investigation  or
proceeding  (judicial  or  administrative)  pending or  threatened  against  the
Company or its assets by any agency, division or department of any county, city,
state or federal government arising out this Financing Agreement, y) injunction,
writ or restraining  order  restraining or prohibiting  the  consummation of the
financing  arrangements  contemplated under this Financing Agreement or z) suit,
action,  investigation  or proceeding  (judicial or  administrative)  pending or
threatened  against  the Company or its assets,  which is  reasonably  likely to
result  in a  material  adverse  effect  on  the  business,  operation,  assets,
financial condition or Collateral of the Company.

        (p)  Disbursement  Authorization  - The Company shall have  delivered to
CITBC all information necessary for CITBC to issue wire transfer instructions on
behalf of the Company for the initial and subsequent loans and/or advances to be
made  under  this  Agreement   including,   but  not  limited  to,  disbursement
authorizations in form acceptable to CITBC.

         Upon  the  execution  of  this  Financing  Agreement  and  the  initial
disbursement of loans  hereunder,  all of the above  Conditions  Precedent shall
have been deemed satisfied except as the Company and CITBC shall otherwise agree
herein or in a separate writing.

                                       12
<PAGE>

SECTION 3.  Revolving Loans

        1. CITBC agrees,  subject to the terms and  conditions of this Financing
Agreement from time to time, and within the Availability, but subject to CITBC's
right to make  "overadvances",  to make loans and  advances  to the Company on a
revolving basis (i.e.  subject to the limitations set forth herein,  the Company
may borrow,  repay and re-borrow  Revolving  Loans).  All requests for loans and
advances  must be received  by an officer of CITBC no later than 1:00 p.m.,  New
York time,  of the Business  Day on which such loans and advances are  required.
Should  CITBC  for any  reason  honor  requests  for  advances  in excess of the
limitations set forth herein,  such advances shall be considered  "overadvances"
and shall be made in CITBC's sole  discretion,  subject to any additional  terms
CITBC deems necessary.

        2. In furtherance of the continuing  collateral  assignment and security
interest in the Company's Trade Accounts  Receivable and Inventory,  the Company
shall  deliver to CITBC not later  than:  (1) twenty  (20) days after the end of
each month an aging of the Company's Trade Accounts  Receivable in such form and
manner as CITBC may reasonably require but consistent with the current practices
of the Company  and (2) twenty (20) days after the end of each month,  a monthly
inventory  confirmation  statement  stating  the  aggregate  amount of  Eligible
Inventory  of the Company.  In addition,  the Company will provide to CITBC such
additional   information  and  material  with  respect  to  the  Trade  Accounts
Receivable  and  Inventory,  in such form and  detail,  as CITBC may  reasonably
request  to  effectively   evaluate  the  Trade  Accounts   Receivable  and  the
collectibility  thereof and the mix of the Inventory and such other  information
as CITBC may  reasonably  require  to  evaluate  the  Company's  Trade  Accounts
Receivable  and  Inventory,  such as returns,  claims,  credits,  allowances and
information identifying and describing the Trade Accounts Receivable. Failure to
provide CITBC with the foregoing  information  will in no way affect,  diminish,
modify or limit the security  interest  granted  herein.  Such reports are to be
executed by an  authorized  officer of the Company.  The Company  shall  deliver
monthly (by the last Business Day of the month) reports respecting the preceding
month with respect to the borrowing base.

        3. The Company hereby  represents and warrants that: each Trade Accounts
Receivable  is based on an actual  and bona fide sale and  delivery  of goods or
rendition of services to customers,  made by the Company in the ordinary  course
of its business; the Inventory being sold and/or supplied and the Trade Accounts
Receivable  created  are the  exclusive  property of the Company and are not and
shall not be subject to any lien, consignment arrangement, encumbrance, security
interest  or  financing   statement   whatsoever,   other  than  the   Permitted
Encumbrances;  the invoices  evidencing such Trade Accounts Receivable or credit
card receipts  evidencing credit card sales are in the name of the Company;  and
except for  disputes,  offsets,  defenses,  counterclaims,  contras,  returns or
credits, all arising in the normal course of the Company's business or except as
may be promptly  disclosed to the CITBC,  the  Company's  customers  owe and are
obligated to pay the amount stated in the invoices or credit card receipts.  The
Company  confirms  to CITBC  that  any and all  taxes  or fees  relating  to its
business,  its sales, the Trade Accounts  Receivable or goods relating  thereto,
are its sole responsibility and that same will be paid by the Company (except as
otherwise permitted by this Financing  Agreement) and that none of said taxes or
fees  represent a lien on or claim against the Trade  Accounts  Receivable.  The
Company also  warrants  and  represents  that it is a duly and validly  existing
corporation and is qualified in all states where the failure to so qualify would
have a material

                                       13
<PAGE>

adverse  effect on the  business of the Company or the ability of the Company to
enforce  collection of Trade Accounts  Receivable due from customers residing in
that state.  The Company  agrees to  maintain  such books and records  regarding
Trade Accounts Receivable as CITBC may reasonably  require,  consistent with the
Company's current recordkeeping practices, and agrees that the books and records
of the Company will reflect CITBC's interest in the Trade Accounts Receivable as
CITBC may reasonably  request.  All of the books and records of the Company will
be available to CITBC at normal business hours, including any records handled or
maintained for the Company by any other company or entity.

        4. During the term of this  Financing  Agreement,  the  Company may and
will, at its expense, consistent with the Company's existing practices, enforce,
collect and receive all amounts owing on the Trade Accounts  Receivable.  Except
for the  Retained  Cash,  checks  or cash  from  the  sale of  Inventory  or the
rendering of services must be deposited  promptly to a Blocked Account or to the
Depository  Accounts,  and  promptly  thereafter  and  therefrom,  to a  Blocked
Account.  The Company shall require that all amounts due under credit card sales
be remitted  by the credit  card  companies  to a Blocked  Account.  The Company
agrees that it will only direct the flow of funds from the  Depository  Accounts
and the credit card remitters to the Blocked Accounts.  The institutions holding
such Blocked  Accounts  will be instructed  that when it is satisfied  that such
funds on deposit are "good funds", such institution will remit such "good funds"
to the Company's operating account. Notwithstanding anything herein contained to
the contrary,  if there is then an Event of Default,  CITBC may advise the banks
holding the Blocked  Accounts to remit all proceeds of  Collateral  to CITBC for
its account.  CITBC will immediately  rescind those instructions upon the waiver
of the  Event  of  Default  or upon  the  cure  thereof  to  CITBC's  reasonable
satisfaction.  All amounts received by CITBC will be credited to the Obligations
upon CITBC's  receipt of "good funds" at its bank account in New York,  New York
on the Business Day of receipt if received no later than 2 p.m. New York time or
on the next  succeeding  Business Day if received after 2 p.m. New York time. No
checks,  drafts or other  instruments  received by CITBC will  constitute  final
payment unless and until such instruments  have actually been collected.  If the
loan account  reflects a zero  Revolving Loan balance and there is then no Event
of Default,  then CITBC shall  promptly  remit to the  operating  account of the
Company any credit balances in the loan account.

        5. The Company agrees to notify CITBC promptly of any matters materially
affecting the value,  enforceability  or  collectability  of the Trade  Accounts
Receivable  and  of  all  material   customer   disputes,   offsets,   defenses,
counterclaims,  returns,  rejections  and all material  reclaimed or repossessed
merchandise or goods.

        6. CITBC shall maintain a separate account on its books in the Company's
name in which the Company will be charged with loans and advances  made by CITBC
to it or for its account, and with any other Obligations,  including any and all
reasonable  and  documented  costs,   expenses  and  reasonable  and  documented
attorney's  fees which CITBC may incur in connection with the exercise by or for
CITBC of any of the rights or powers  herein  conferred  upon  CITBC,  or in the
prosecution  or defense of any action or  proceeding  to enforce or protect  any
rights of CITBC in connection  with this  Financing  Agreement or the Collateral
assigned  hereunder,  or any  Obligations  owing to CITBC  by the  Company.  The
Company will be credited with all amounts  received by CITBC from the Company or
from  others for the  Company's  account,  including,  as above set  forth,  all
amounts received by CITBC in payment of assigned  Accounts and such

                                       14
<PAGE>

amounts will be applied to payment of the  Obligations.  In no event shall prior
recourse  to any  Accounts or other  security  granted to or by the Company be a
prerequisite to CITBC's right to demand payment of any Obligation.  Further,  it
is understood  that CITBC shall have no obligation  whatsoever to perform in any
respect any of the Company's contracts or obligations relating to the Accounts.

        7. After the end of each month,  CITBC shall promptly send the Company a
statement  showing the  accounting  for the charges,  loans,  advances and other
transactions  occurring  between  CITBC and the Company  during that month.  The
monthly  statements  shall be deemed  correct and  binding  upon the Company and
shall  constitute an account  stated  between the Company and CITBC unless CITBC
receives a written  statement of the  exceptions  within thirty (30) days of the
date of the monthly statement.

        8. In the event that the sum of (i) the outstanding balance of Revolving
Loans and (ii) outstanding  balance of Letters of Credit exceeds (x) the maximum
amount thereof  available under Section 3 and 5 hereof or (y) the Line of Credit
(herein the amount of any such excess shall be referred to as the "Excess") such
Excess  shall  be due and  payable  to CITBC  immediately  upon  CITBC's  demand
therefor.

        9. The Company may at any time,  on five (5) Business Days prior written
notice to CITBC,  reduce the Line of Credit  provided  that:  (i) any  reduction
shall  be  permanent  and  irrevocable;  (ii) a  reduction  must be for at least
$2,500,000.00 or whole multiples  thereof;  (iii) the Company shall  immediately
repay CITBC the amount by which the Obligations  exceed  Availability;  (iv) the
Company may not reduce the Line of Credit to less than  $15,000,000;  and (v) if
the  Company  shall  reduce  the  amount of the Line of Credit  pursuant  to the
proviso in the  preceding  sentence  prior to the third  Anniversary  Date,  the
Company shall  immediately  pay CITBC a fee determined by multiplying the amount
of the  reduction by (x) one percent (1%) if the  reduction  occurs prior to the
first Anniversary Date or (y) one-half percent (1/2%) if the reduction occurs on
or after the first Anniversary Date but prior to the third Anniversary Date.

SECTION 4.  Intentionally Omitted

SECTION 5.  Letters of Credit

         In order to assist the Company in  establishing  or opening  Letters of
Credit  with an  Issuing  Bank to cover  the  purchase  of  imported  Inventory,
Equipment or otherwise  (including  standby Letters of Credit),  the Company has
requested CITBC to join in the applications  for such Letters of Credit,  and/or
guarantee  payment or  performance  of such  Letters of Credit and any drafts or
acceptances  thereunder  through the issuance of the Letters of Credit Guaranty,
thereby  lending  CITBC's  credit to the  Company and CITBC has agreed to do so.
These arrangements shall be handled by CITBC subject to the terms and conditions
set forth below.

        1. Within the Line of Credit and  Availability,  CITBC shall  assist the
Company in obtaining  Letter(s) of Credit in an amount not to exceed  $3,000,000
in the aggregate  outstanding at any one time. CITBC's assistance for amounts in
excess of the limitation set forth herein shall at all times and in all respects
be in CITBC's sole  discretion.  It is  understood  that the form and purpose of
each Letter of Credit must be  acceptable  to CITBC in its  reasonable  business


                                       15
<PAGE>

judgment.  Any and all  outstanding  Letters  of Credit  shall be  treated  as a
Revolving Loan for Availability purposes. Notwithstanding anything herein to the
contrary,  upon the  occurrence  of a Default  and/or Event of Default,  CITBC's
assistance in connection  with the Letter of Credit Guaranty shall be in CITBC's
sole discretion  unless such Default and/or Event of Default is cured to CITBC's
reasonable  satisfaction or waived by CITBC in writing. The amount,  purpose and
extent of the  Letters of Credit and  changes  or  modifications  thereof by the
Company and/or the Issuing Bank of the terms and conditions thereof shall in all
respects  be  subject  to the prior  approval  of CITBC in the  exercise  of its
reasonable  discretion,  and the  Letter  of  Credit  and all  documentation  in
connection therewith shall be in form and substance satisfactory to the Company,
CITBC and the Issuing Bank.

        2. CITBC shall have the right,  without notice to the Company, to charge
the  Company's  account  on  CITBC's  books  with  the  amount  of any  and  all
indebtedness,  liability or  obligation  of any kind incurred by CITBC under the
Letters of Credit  Guaranty  at the  earlier  of a)  payment by CITBC  under the
Letters  of  Credit  Guaranty,  or b) upon  the  termination  of this  Financing
Agreement.  Any  amount  charged to  Company's  loan  account  shall be deemed a
Revolving  Loan  hereunder  and shall  incur  interest  at the rate  provided in
Section 8, paragraph 1 of this Financing Agreement.

        3.  The  Company  unconditionally  indemnifies  CITBC  and  holds  CITBC
harmless  from any and all loss,  claim or liability  incurred by CITBC  arising
from any transactions or occurrences  relating to Letters of Credit  established
or opened for the Company's  account,  the collateral  relating  thereto and any
drafts or acceptances thereunder, and all Obligations thereunder,  including any
such  loss or claim  due to any  action  taken  by,  or any  errors,  omissions,
negligence  or misconduct  by, any Issuing  Bank,  other than for any such loss,
claim or liability arising out of the gross negligence or willful  misconduct by
CITBC.  The Company's  unconditional  obligation to CITBC hereunder shall not be
modified or diminished for any reason or in any manner whatsoever, other than as
a result of CITBC's gross negligence or willful  misconduct.  The Company agrees
that any charges incurred by CITBC for the Company's account by the Issuing Bank
shall be conclusive on CITBC and may be charged to the Company's account.

        4.  In  connection  with  any  Letter  of  Credit,  CITBC  shall  not be
responsible  for:  the  existence,   character,  quality,  quantity,  condition,
packing,  value or delivery of the goods  purporting  to be  represented  by any
documents;  any  difference or variation in the  character,  quality,  quantity,
condition,  packing,  value or delivery of the goods from that  expressed in the
documents;  the validity,  sufficiency or genuineness of any documents or of any
endorsements  thereon,  even if such documents should in fact prove to be in any
or all respects  invalid,  insufficient,  fraudulent or forged,  other than as a
result of the gross negligence or willful  misconduct of CITBC; the time, place,
manner or order in which shipment is made;  partial or incomplete  shipment,  or
failure or omission  to ship any or all of the goods  referred to in the Letters
of Credit or documents;  any deviation from  instructions;  delay,  default,  or
fraud by the shipper  and/or anyone else in connection  with the goods which are
the subject of any Letter of Credit or the  shipping  thereof;  or any breach of
contract  between the shipper or vendors and the Company.  Furthermore,  without
being limited by the foregoing,  CITBC shall not be  responsible  for any act or
omission with respect to or in connection with any good which are the subject of
any Letter of Credit.

                                       16
<PAGE>

        5. In connection with any Letter of Credit,  the Company agrees that any
action  taken by  CITBC,  if taken in good  faith,  or any  action  taken by any
Issuing Bank, under or in connection with the Letters of Credit, the guarantees,
the drafts or  acceptances,  or the goods which are the subject of any Letter of
Credit,  shall, as between CITBC and the Company,  be binding on the Company and
shall not put CITBC in any  resulting  liability to the Company  other than as a
result of the gross  negligence  or  willful  misconduct  of CITBC.  During  the
continuance  of an Event of  Default,  CITBC  shall  have  the  full  right  and
authority to clear and resolve any questions of non-compliance of documents;  to
give any  instructions  as to acceptance or rejection of any documents or goods;
to  execute  any and all  steamship  or  airways  guaranties  (and  applications
therefor),  indemnities  or  delivery  orders;  to grant any  extensions  of the
maturity  of,  time of payment  for,  or time of  presentation  of, any  drafts,
acceptances, or documents; and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications,  Letters of Credit,  drafts or acceptances;  all in CITBC's
sole name,  and the Issuing  Bank shall be entitled to comply with and honor any
and all such documents or instruments executed by or received solely from CITBC,
all without any notice to or any consent from the Company.

        6. In connection with any Letter of Credit,  the Company agrees that any
necessary  import,  export or other licenses or  certificates  for the import or
handling  of the goods  which are the  subject of any Letter of Credit will have
been  promptly  procured  and all foreign  and  domestic  governmental  laws and
regulations  in regard to the shipment  and  importation  of such goods,  or the
financing  thereof will have been promptly and full complied with, except to the
extent  that any such  non-procurement  or  non-compliance  will not  materially
adversely  effect the  Collateral by $250,000 or more; and any  certificates  in
that  regard  that CITBC may at any time  reasonably  request  will be  promptly
furnished.  In this  connection,  the Company  warrants and represents  that all
shipments made under any such Letters of Credit are in accordance  with the laws
and regulations of the countries in which the shipments originate and terminate,
and are not  prohibited by any such laws and  regulations,  except to the extent
that  any  failure  to so  comply  will  not  materially  adversely  effect  the
Collateral  by $250,000 or more.  The Company  assumes all risk,  liability  and
responsibility  for,  and agrees to pay and  discharge,  all  present and future
local, state, federal or foreign taxes, duties, or levies in connection with any
goods  purchased,  imported or acquired  under a Letter of Credit.  Any embargo,
restriction,  laws, customs or regulations of any country, state, city, or other
political  subdivision,  where the  Collateral is or may be located,  or wherein
payments are to be made, or wherein drafts may be drawn,  negotiated,  accepted,
or paid, shall be solely the Company's risk, liability and responsibility.

        7. Upon any payments made to the Issuing Bank under the Letter of Credit
Guaranty, CITBC shall acquire by subrogation,  any rights,  remedies,  duties or
obligations  granted or  undertaken  by the Company to the  Issuing  Bank in any
application for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise,  all of which shall be deemed to have been granted to CITBC
and  apply in all  respects  to CITBC and shall be in  addition  to any  rights,
remedies, duties or obligations contained herein.

        8.  Nothing in this  Financing  Agreement  is  intended  to relieve  any
Issuing Bank from any liability to any person or entity.

                                       17
<PAGE>

SECTION 6.  Collateral

         1. As security for the prompt payment in full of all loans and advances
made and to be made to the Company from time to time by CITBC  pursuant  hereto,
as well as to secure the payment in full of the other  Obligations,  the Company
hereby  pledges and grants to CITBC a continuing  general lien upon and security
interest in all of its:

            (a) present and hereafter acquired Inventory;

            (b) present and hereafter acquired Equipment;

            (c) present and future Accounts;

            (d) present and future Documents of Title;

            (e) present and future General Intangibles;

            (f) Real Estate; and

            (g) all other present and future Collateral.

         2. The security  interests granted hereunder shall extend and attach to
the following property of the Company:

            (a) All  Collateral  which is presently  in  existence  and which is
owned by the  Company or in which the  Company  has any  interest  including  as
lessee (but only to the extent of such interest), whether held by the Company or
others for its  account,  and,  if any  Collateral  is  Equipment,  whether  the
Company's interest in such Equipment is as owner or conditional vendee;

            (b) All Equipment whether the same constitutes  personal property or
fixtures,  including,  but without limiting the generality of the foregoing, all
dies, jigs,  tools,  benches,  tables,  accretions,  component parts thereof and
additions  thereto,  as well as all accessories,  motors,  engines and auxiliary
parts used in connection with or attached to the Equipment; and

            (c) All  Inventory  and any portion  thereof  which may be returned,
rejected,  reclaimed  or  repossessed  by either  CITBC or the Company  from the
Company's customers.

Anything  in this  Financing  Agreement  to the  contrary  notwithstanding,  the
Collateral shall not include,  and no security  interest granted hereunder shall
extend or attach to, the Company's  rights (other than rights to payment)  under
any license  agreements or lease agreements  existing as of the date hereof,  or
any  leases  of real  property  or leases of motor  vehicles  or other  personal
property  now or  hereafter  existing  that  prohibit  the  grant of a  security
interest or lien therein to the extent,  and only to the extent,  that the terms
prohibiting the grant of such security  interest or lien have not been waived or
consented to by the licensor,  lessor or other necessary  person or entity under
such agreement.

                                       18
<PAGE>

         3. The Company agrees to take reasonable steps, consistent with current
business  practices,  to  safeguard,  protect and hold all Inventory and make no
disposition thereof except in the regular course of the business of the Company.
Inventory  sold to customers  may only be sold and shipped by the Company to its
customers in the ordinary  course of the Company's  business,  for cash,  credit
card sales or on open account on terms customary in the industry,  provided that
all  proceeds  of all  sales  (but  excluding  the  Retained  Cash and  accounts
receivable)  are deposited in accordance  with  paragraph 4 of Section 3 of this
Financing Agreement. Upon the sale, exchange, or other disposition of Inventory,
as herein provided,  the security interest in the Company's  Inventory  provided
for herein shall,  without break in continuity and without further  formality or
act, continue in, and attach to, all proceeds, including any instruments for the
payment of money,  accounts  receivable,  contract  rights,  documents of title,
shipping  documents,  chattel paper and all other cash and non-cash  proceeds of
such sale,  exchange  or  disposition.  As to any such sale,  exchange  or other
disposition,  CITBC  shall have a security  interest in all of the rights of the
Company as an unpaid seller, including stoppage in transit, replevin, rescission
and reclamation.

         4. The Company  agrees at its own cost and  expense to take  reasonable
steps,  consistent with current business  practices,  to safeguard,  protect and
hold all Equipment and to make no  dispositions  thereof  except in the ordinary
course of business,  provided that all proceeds of all dispositions of Equipment
in the form of cash,  checks,  notes,  instruments  for the payment of money and
similar  proceeds  shall be  deposited  in the  Depository  Accounts  and/or the
Concentration  Accounts or otherwise paid over or delivered to CITBC;  provided,
that in no event  shall the  aggregate  amount of all such  dispositions  exceed
$500,000  per  year.  Upon  the  sale,  exchange,  or other  disposition  of the
Equipment,  as herein provided, the security interest provided for herein shall,
without break in continuity and without further  formality or act,  continue in,
and attach to, all proceeds, including any instruments for the payment of money,
accounts receivable,  contract rights,  documents of title,  shipping documents,
chattel paper and all other cash and non-cash  proceeds of such sales,  exchange
or disposition. As to any such sale, exchange or other disposition,  CITBC shall
have a  security  interest  in all of the  rights  of the  Company  as an unpaid
seller, including stoppage in transit, replevin, rescission and reclamation.

         5. The rights and security  interests granted to CITBC hereunder are to
continue  in full force and  effect,  notwithstanding  the  termination  of this
Financing  Agreement or the fact that the account  maintained  in the  Company's
name on the  books of CITBC  may from  time to time be  temporarily  in a credit
position,  until the satisfaction in full of all Obligations and the termination
of this  Financing  Agreement.  Any delay,  or omission by CITBC to exercise any
right hereunder,  shall not be deemed a waiver thereof, or be deemed a waiver of
any other right,  unless such waiver be in writing and signed by CITBC. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy  on any  future  occasion.  Upon the  final  satisfaction  in full of all
Obligations and the termination of this Financing Agreement, CITBC will take, at
the  Company's  request and  expense,  all actions and do all things  reasonably
necessary to release the rights and security interests in the Collateral. Upon a
disposition of Collateral permitted hereunder, CITBC will take, at the Company's
request  and  expense,  all actions and do all things  reasonably  necessary  to
release the rights and security  interests in the Collateral that is the subject
of such partial release.

                                       19
<PAGE>

         6. To the extent that the Obligations  are now or hereafter  secured by
any  assets  or  property  other  than  the  Collateral  or  by  the  guarantee,
endorsement,  assets or property of any other person,  then CITBC shall have the
right in its  sole  discretion  to  determine  which  rights,  security,  liens,
security  interests or remedies CITBC shall at any time pursue,  foreclose upon,
relinquish,  subordinate,  modify  or take any other  action  with  respect  to,
without in any way modifying or affecting any of them, or any of CITBC's  rights
hereunder.

         7. Any  reserves or balances to the credit of the Company and any other
property  or assets of the  Company  in the  possession  of CITBC may be held by
CITBC  as  security  for  any  Obligations  and  applied  in  whole  or  partial
satisfaction  of such  Obligations  when due. The liens and  security  interests
granted  herein and any other lien or  security  interest  CITBC may have in any
other assets of the Company,  shall secure  payment and  performance  of all now
existing and future  Obligations.  CITBC may in its discretion charge any or all
of the Obligations to the account of the Company when due.

         8. The  Company  shall give to CITBC  from time to time such  pledge or
security  agreements with respect to General Intangibles and capital stock owned
by the Company as CITBC shall require to obtain valid first liens thereon.

SECTION 7.  Representations, Warranties and Covenants

         1. The Company hereby warrants and represents and/or covenants that: i)
the fair value of the Company's  assets  exceeds the book value of the Company's
liabilities;  ii) the Company is generally  able to pay its debts as they become
due and payable;  and iii) the Company does not have unreasonably  small capital
to carry on its business as it is currently  conducted absent  extraordinary and
unforeseen  circumstances.  The Company  further  warrants and  represents  that
except for the Permitted  Encumbrances,  the security  interests  granted herein
constitute  and shall at all times  constitute  the first and only  liens on the
Collateral; that, except for the Permitted Encumbrances,  the Company is or will
be at the time  additional  Collateral is acquired by it, the absolute  owner of
the Collateral with full right to pledge,  sell, consign,  transfer and create a
security  interest  therein,  free and  clear of any and all  claims or liens in
favor of others;  that the Company  will at its expense  warrant and, at CITBC's
request, defend the same from any and all claims and demands of any other person
other than the Permitted  Encumbrances;  that the Company will not grant, create
or permit to exist, any lien upon or security interest in the Collateral, or any
proceeds  thereof,  in favor of any other  person  other than the holders of the
Permitted  Encumbrances;  and that the Equipment does not comprise a part of the
Inventory of the Company and that the  Equipment is and will only be used by the
Company  in its  business  and will not be held for sale or lease,  or  removed,
except in the  ordinary  course of  business,  from its  premises,  or otherwise
disposed of by the Company without the prior written approval of CITBC except as
otherwise  permitted  in paragraph 4 of Section 6 of this  Financing  Agreement.
Company  further  warrants and represents  that Schedule 2 hereto  correctly and
completely sets forth its chief executive office,  jurisdiction of organization,
and all of its Collateral locations.

         2. The Company is also to advise CITBC promptly,  in sufficient detail,
of any material adverse change relating to the type,  quantity or quality of the
Collateral or on the security  interests  granted to CITBC therein.  The Company
agrees to maintain  accurate  books and

                                       20

<PAGE>

records pertaining to the Collateral consistent with past practices. If an Event
of Default  does not  exist,  CITBC or its  agents  may,  from time to time upon
reasonable  notice,  enter upon the Company's premises at any time during normal
business  hours, or at such other times as CITBC and the Company may agree upon,
for the purpose of inspecting the Collateral and any and all records  pertaining
thereto, all at CITBC's expense.  During the continuance of an Event of Default,
CITBC or its agents may, at the Company's expense, enter the Company's premises,
upon  reasonable  notice and during normal  business  hours,  and as often as it
deems reasonably necessary,  to inspect the Collateral and the books and records
of the Company.  The Company  agrees to afford CITBC prior written notice of any
change in the location of any  Collateral  (other than motor  vehicles and other
than Collateral  that is in transit),  other than to locations that are known to
CITBC and at which CITBC has filed  financing  statements  and  otherwise  fully
perfected its liens thereon.

         3. The Company  agrees to:  execute and deliver to CITBC,  from time to
time, solely for CITBC's  convenience in maintaining a record of the Collateral,
such  written  statements,  and  schedules  as  CITBC  may  reasonably  require,
designating,   identifying  or  describing  the  Collateral   pledged  to  CITBC
hereunder.  The  Company's  failure,   however,  to  promptly  give  CITBC  such
statements,  or schedules shall not affect, diminish,  modify or otherwise limit
CITBC's security interests in the Collateral.

         4. The Company agrees, to the extent reasonably  requested by CITBC, to
comply with the  requirements of all state and federal laws in order to grant to
CITBC valid and perfected first security  interests in the  Collateral,  subject
only to the Permitted  Encumbrances,  provided,  however,  that perfection as to
leasehold  interests in Real Estate shall not be required,  and further provided
that (except in the case of distribution  centers)  fixture filings shall not be
required. CITBC is hereby authorized, to the extent permitted by applicable law,
by the Company to file any financing  statements covering the Collateral whether
or not the  Company's  signature  appears  thereon.  The  Company  agrees  to do
whatever  CITBC may  reasonably  request,  from time to time,  by way of: filing
notices of liens, financing statements,  amendments,  renewals and continuations
thereof;  cooperating  with CITBC's  agents and  employees;  keeping  Collateral
records; transferring proceeds of Collateral to CITBC's possession in accordance
with the terms of this Financing Agreement;  and performing such further acts as
CITBC may  reasonably  require in order to effect the purposes of this Financing
Agreement.

         5. The  Company  agrees to  maintain  insurance  on the  Equipment  and
Inventory in amounts and on terms no less favorable than the insurance  coverage
on Equipment and Inventory in place as of the date hereof. All policies covering
the  Equipment  and  Inventory  are,  subject  to the  rights of any  holders of
Permitted  Encumbrances  holding  claims senior to CITBC,  to be made payable to
CITBC, in case of loss, under a standard non-contributory "mortgagee",  "lender"
or "secured party" clause and are to contain such other  provisions as CITBC may
reasonably  require to fully  protect  CITBC's  interest  in the  Inventory  and
Equipment and to any payments to be made under such policies with respect to the
Inventory and the  Equipment.  All original  policies or true copies  thereof or
certificates  thereof are to be delivered to CITBC,  with all premiums  current,
with the loss payable  endorsement in CITBC's  favor,  and shall provide for not
less than thirty (30) days prior written  notice to CITBC of the exercise of any
right of  cancellation.  At the  Company's  request,  or if the Company fails to
maintain  such  insurance,  CITBC may  arrange  for such  insurance,  but at the
Company's expense and without any

                                       21
<PAGE>

responsibility on CITBC's part for: obtaining the insurance, the solvency of the
insurance companies,  the adequacy of the coverage, or the collection of claims.
During the continuance of an Event of Default which is not waived,  CITBC shall,
subject to the rights of any holders of Permitted  Encumbrances  holding  claims
senior to CITBC,  have the sole right,  in the name of CITBC or the Company,  to
file claims under any  insurance  policies with respect to the Inventory and the
Equipment, to receive, receipt and give acquittance for any payments that may be
payable  thereunder  with respect to the  Inventory  and the  Equipment,  and to
execute any and all endorsements, receipts, releases, assignments, reassignments
or other documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.  In the event of any
loss or  damage  by fire or  other  casualty,  insurance  proceeds  relating  to
Collateral  shall be deposited in the Depository  Accounts or the  Concentration
Accounts  in  accordance  with  paragraph  4  of  Section  3 of  this  Financing
Agreement.

         6. The Company agrees to pay, when due, all taxes, assessments,  claims
and other charges (herein "taxes")  lawfully levied or assessed upon the Company
or the  Collateral;  provided,  however,  that such taxes need not be paid on or
before the due date thereof if: (i) such taxes are being diligently contested by
the  Company  in good faith and by  appropriate  proceedings;  (ii) the  Company
establishes  such  reserves as may be required by GAAP;  (iii) such taxes (if in
excess of  $100,000)  are not  secured by a filed lien  which  CITBC  reasonably
determines  could be or become  senior to the liens of CITBC on the  Collateral,
and (iv) such taxes  secured by a filed lien are not due to the United States of
America.  To prevent the imminent  foreclosure  of any tax liens  (whether  such
liens are  senior  or  junior  to the  liens of CITBC) or in the event  CITBC is
exercising its remedies as a secured creditor on Collateral,  then CITBC may, on
the  Company's  behalf,  pay any  taxes  then due and  secured  by a lien on the
Collateral and the amount thereof shall be an Obligation secured hereby.

         7. Subject to the provisions of the preceding  paragraph,  the Company:
(a)  agrees  to comply  with all  acts,  rules,  regulations  and  orders of any
legislative,  administrative or judicial body or official,  which the failure to
comply with would have a material and adverse impact on the  Collateral,  or any
material part thereof, or on the operation of the Company's  business,  provided
that the Company may contest any acts, rules, regulations, orders and directions
of such bodies or officials in any  reasonable  manner which will not materially
and adversely effect CITBC's rights or priority in the Collateral; (b) agrees to
comply with all environmental  statutes,  acts, rules,  regulations or orders as
presently  existing  or as adopted or amended in the future,  applicable  to the
ownership  and/or use of its real property and operation of its business,  which
the  failure to comply  with would have a  material  and  adverse  impact on the
Collateral, or any material part thereof, or on the operation of the business of
the Company.  The Company hereby indemnifies CITBC and agrees to defend and hold
CITBC  harmless  from and against any and all loss,  damage,  claim,  liability,
injury or expense which CITBC may sustain or incur in connection with: any claim
or expense  asserted against CITBC as a result of any  environmental  pollution,
hazardous material or environmental  clean-up of the Company's real property; or
any claim or expense which results from the Company's operations (including, but
not limited  to, the  Company's  off-site  disposal  practices)  and the Company
further  agrees that this  indemnification  shall  survive  termination  of this
Financing Agreement as well as the payment of all Obligations or amounts payable
hereunder;  and (c) shall not be deemed to have  breached any  provision of this
paragraph 7 if (i) the failure to comply with the requirements of this paragraph
7 resulted

                                       22
<PAGE>

from good faith error or innocent omission,  (ii) the Company promptly commences
and diligently pursues a cure of such breach and such cure is eventually, within
a reasonably time frame, but not to exceed 45 days, based upon the circumstances
and the amount work required,  completed and (iii) such failure has not resulted
in a materially  adverse effect on any material portion of the Collateral or the
business, financial condition or operations of the Company.

         8. Until  termination  of this  Financing  Agreement  and  payment  and
satisfaction of all Obligations due hereunder,  the Company agrees that,  unless
CITBC shall have  otherwise  consented  in writing,  the Company will furnish to
CITBC, within ninety (90) days after the end of each fiscal year of the Company,
a Consolidated Financial Statement and a Consolidating Financial Statement as at
the  close of and for such  year,  audited  by  independent  public  accountants
selected by the Company and satisfactory to CITBC (CITBC hereby agrees that KPMG
Peat Marwick or any other "big 5" accounting firm is satisfactory CITBC); within
forty-five  (45)  days  after  the end of each  fiscal  quarter  a  Consolidated
Financial Statement and Consolidating  Financial Statement as at the end of such
period,  certified  by an  authorized  financial  or  accounting  officer of the
Company;  and within thirty (30) days after the end of each month a Consolidated
Financial  Statement  as at the  end of and for  such  period,  certified  by an
authorized  financial or  accounting  officer of the  Company;  and from time to
time,  such further  information  regarding  the business  affairs and financial
condition  of the Company as CITBC may  reasonably  request,  including  without
limitation  annual cash flow  projections  in form  reasonably  satisfactory  to
CITBC.  Each  financial  statement  which  the  Company  is  required  to submit
hereunder  must  be  accompanied  by an  officer's  certificate,  signed  by the
President, Vice President,  Controller, or Treasurer,  pursuant to which any one
such officer must certify that: (i) the financial  statement(s)  in all material
respects fairly and accurately represent(s) the Company's financial condition at
the end of the particular  accounting period, as well as the Company's operating
results during such  accounting  period,  subject to year-end audit  adjustments
and, in the case of monthly and quarterly financial  statements,  the absence of
footnotes;  (ii) during the particular  accounting period: (x) there has been no
Default or Event of Default under this Financing Agreement,  provided,  however,
that if any  such  officer  has  knowledge  that any  such  Default  or Event of
Default,  has  occurred  during such  period,  the  existence  of and a detailed
description  of same shall be set forth in such officer's  certificate;  and (y)
the Company has not  received  any notice of  cancellation  with  respect to its
property insurance  policies or certifying as to replacement  policies therefor;
and  (iii) the  exhibits  attached  to such  financial  statement(s)  constitute
detailed  calculations showing compliance with all financial covenants contained
in this Financing Agreement.

         9. The Company shall  maintain  EBITDA,  calculated  monthly,  for each
rolling 12-month period of at least $10,500,000.

         10.  Until  termination  of the  Financing  Agreement  and  payment and
satisfaction of all Obligations due hereunder,  the Company agrees that, without
the prior written consent of CITBC,  except as otherwise  herein  provided,  the
Company will not:

         A.  Mortgage,  pledge, or otherwise permit any lien,  charge,  security
             interest,  encumbrance  or  judgment,  (whether  as a  result  of a
             purchase money or title  retention  transaction,  or other security
             interest,  or  otherwise)  to exist on any of its

                                       23
<PAGE>

             assets or goods, whether real, personal or mixed, whether now owned
             or hereafter acquired, except for the Permitted Encumbrances;

         B.  Incur  or  create  any   Indebtedness   other  than  the  Permitted
             Indebtedness;

         C.  Except   for   Permitted    Indebtedness   secured   by   Permitted
             Encumbrances,  borrow any money on the  security  of the  Company's
             Collateral from sources other than CITBC;

         D.  Sell, lease, assign, transfer or otherwise dispose of i) Collateral
             consisting of cash, Trade Accounts Receivable, Inventory, Equipment
             or Permitted  Investments,  except as  otherwise  permitted by this
             Financing Agreement,  ii) or any other Collateral having a value in
             excess of $250,000  per year,  or iii) either all or  substantially
             all of the Company's assets, which do not constitute Collateral;

         E.  Merge, consolidate,  reincorporate or otherwise alter or modify its
             corporate  name,  principal  place  of  business,  jurisdiction  of
             incorporation  and  organization,  its  structure,  corporate  good
             standing  status  or  existence,  or enter  into or  engage  in any
             business  other than  businesses  engaged in by the  Company on the
             date  hereof  and  similar  or  related  businesses  or  businesses
             incidental  thereto;  provided,  however,  that on thirty (30) days
             prior  notice to CITBC,  the Company  may,  without  obtaining  the
             consent of CITBC,  alter or modify its corporate  name or principal
             place of business;

         F.  Assume,  guarantee,  endorse,  or otherwise  become liable upon the
             obligations  of any other  person,  firm,  entity  or  corporation,
             except (i) by the endorsement of negotiable instruments for deposit
             or collection  or similar  transactions  in the ordinary  course of
             business,  (ii) in  connection  with  subleases or  assignments  of
             leases or (iii) in the ordinary  course of the  Company's  business
             consistent  with current  practices  provided that the  outstanding
             obligations  under this  clause  (iii) shall not at any time exceed
             $500,000;

         G.  Declare or pay any dividend of any kind on, or  purchase,  acquire,
             redeem or retire,  any of its capital stock or equity interest,  of
             any class  whatsoever,  whether now or hereafter  outstanding other
             than (i) dividends payable solely in shares of capital stock of the
             Company and (ii) dividends on the Company's  Preferred Stock to the
             extent  paid  by  increasing  the  liquidation  preference  of such
             Preferred Stock; or

         H.  Make any  advance  or loan to,  or any  investment  in,  any  firm,
             entity, person or corporation other than Permitted Investments.

         11.  Without the prior written  consent of CITBC,  the Company will not
make Capital Expenditures  (whether subject to a security interest or otherwise)
during any fiscal year in the aggregate amount in excess of $3,000,000.

         12. Intentionally Omitted

                                       24
<PAGE>

         13. Intentionally Omitted

         14.  The  Company  agrees  to  advise  CITBC  in  writing  of:  a)  all
expenditures  (actual or anticipated) in excess of $50,000.00 in any fiscal year
for x) environmental  clean-up, y) environmental  compliance or z) environmental
testing and the impact of said expenses on the Company's working capital; and b)
any notices  the Company  receives  from any local,  state or federal  authority
advising the Company of any environmental liability (real or potential) stemming
from the Company's operations,  its premises,  its waste disposal practices,  or
waste disposal sites used by the Company and to provide CITBC with copies of all
such notices if so required.

         15.  Except for  Permitted  Affiliate  Transactions,  without the prior
written  consent of CITBC,  the  Company  agrees that it will not enter into any
transaction,  including,  without limitation, any purchase, sale, lease, loan or
exchange of property with any subsidiary or affiliate of the Company.

SECTION 8.  Interest, Fees and Expenses

         1. (a) Interest on the Revolving  Loans shall be payable  monthly as of
the end of each month and shall be an amount equal to (a) the  applicable  Chase
Bank Rate Margin plus the Chase Bank Rate, per annum,  on the average of the net
balances owing by the Company to CITBC in the Company's  account at the close of
each day during  such  month on  balances  other  than  Libor  Loans and (b) the
applicable  Libor Margin plus the applicable  Libor on each Libor Loan, on a per
annum basis, on the average of the net balances owing by the Company to CITBC in
the  Company's  account  in  respect of such Libor Loan at the close of each day
during such month.  In the event of any change in said Chase Bank Rate, the rate
under clause (a) above shall change,  as of the first of the month following any
change,  so as to remain  equal to the new Chase  Bank Rate plus the  applicable
Chase Bank Rate Margin. In addition, the rate applicable under clause (a) or (b)
above  shall  change  based  upon any change of the  applicable  Chase Bank Rate
Margin or the Libor Margin;  provided that any such change in such a margin such
be effective on the first Business Day of the month following the month in which
the Company shall have delivered, at least five (5) Business Days before the end
of the month,  to CITBC the  financial  statements  demonstrating  the change in
EBITDA  giving rise to such  change in the  margin,  and any change in the Libor
Margin  shall  affect only Libor Loans not yet funded as of that date.  The rate
hereunder shall be calculated  based on a 360-day year.  CITBC shall be entitled
to charge the  Company's  account at the rate provided for herein when due until
all Obligations have been paid in full.

         (b) During the continuance of an Event of Default,  after the giving of
any  required  notice by CITBC,  and the  satisfaction  of any other  applicable
conditions, in accordance with the provisions of Section 10, Paragraph 2, clause
ii) hereof, all Obligations shall bear interest at the Default Rate of Interest.

         2. The Company may elect to use Libor as to any new or then outstanding
Revolving Loans provided A) there is then no Default or Event of Default, B) the
Company has so advised  CITBC of its  election to use Libor and the Libor Period
selected  no later than three (3)  Business  Days  preceding  the first day of a
Libor Period and C) the election and Libor shall be

                                       25
<PAGE>

effective, provided, there is then no Default or Event of Default, on the fourth
Business Day following said notice.  The Libor elections must be for $500,000 or
whole  multiples  thereof  and there  shall be no more than five (5) Libor Loans
outstanding  at one time.  If no such election is timely made or can be made, or
if the Libor rate can not be  determined,  then  CITBC  shall use the Chase Bank
Rate to compute interest. In addition,  the Company shall pay to CITBC, upon the
request of CITBC such amount or amounts as shall  compensate CITBC for any loss,
costs or expenses  incurred by CITBC (as  reasonably  determined  by CITBC) as a
result of: (i) any payment or  prepayment on a date other than the last day of a
Libor Period for such Libor Loan, or (ii) any failure of the Company to borrow a
Libor Loan on the date for such borrowing specified in the relevant notice; such
compensation  to include,  without  limitation,  an amount  equal to any loss or
expense  suffered  by CITBC  during the period  from the date of receipt of such
payment or  prepayment  or the date of such failure to borrow to the last day of
such  Libor  Period  if  the  rate  of  interest  obtained  by  CITBC  upon  the
reemployment  of an  amount  of  funds  equal  to the  amount  of such  payment,
prepayment or failure to borrow is less than the rate of interest  applicable to
such Libor Loan for such Libor Period.  The determination by CITBC of the amount
of any such loss or expense,  when set forth in a written notice to the Company,
containing CITBC calculations  thereof in reasonable detail, shall be conclusive
on the Company,  in the absence of manifest  error.  Calculation  of all amounts
payable to the CITBC  under this  paragraph  with regard to Libor Loans shall be
made as though CITBC had actually funded the Libor Loans through the purchase of
deposits  in the  relevant  market  and  currency,  as the case may be,  bearing
interest at the rate  applicable  to such Libor Loans in an amount  equal to the
amount of the Libor  Loans and  having a  maturity  comparable  to the  relevant
interest period provided,  however,  that CITBC may fund each of the Libor Loans
in any manner the CITBC see fit and the foregoing  assumption shall be used only
for  calculation  of  amounts   payable  under  this  paragraph.   In  addition,
notwithstanding anything to the contrary contained herein, CITBC shall apply all
proceeds of Collateral,  including the Accounts,  and all other amounts received
by it from or on behalf of the  Company  (i)  initially  to the Chase  Bank Rate
loans and (ii)  subsequently  to Libor  Loans;  provided,  however,  during  the
continuance  of an Event of Default or y) in the event the  aggregate  amount of
outstanding  Libor Rate Loans exceeds  Availability  or the  applicable  maximum
levels set forth  therefor,  CITBC may apply all such amounts  received by it to
the payment of  Obligations  in such manner and in such order as CITBC may elect
in its  reasonable  business  judgment.  In the event that any such  amounts are
applied to Revolving  Loans which are Libor  Loans,  such  application  shall be
treated  as  a  prepayment  of  such  loans  and  CITBC  shall  be  entitled  to
indemnification hereunder.

         3. In  consideration  of the Letter of Credit  Guaranty  of CITBC,  the
Company  shall pay CITBC the  Letter of Credit  Guaranty  Fee which  shall be an
amount equal to one and one-half percent per annum, payable monthly, on the face
amount  of each  outstanding  Letter of  Credit  less the  amount of any and all
amounts previously drawn under such Letters of Credit.

         4. Any charges, fees, commissions,  costs and expenses charged to CITBC
for the Company's  account by any Issuing Bank in connection with or arising out
of Letters of Credit  issued  pursuant  to this  Financing  Agreement  or out of
transactions  relating thereto will be charged to the Company's  account in full
when charged to or paid by CITBC and when made by any such Issuing Bank shall be
conclusive on CITBC.

                                       26
<PAGE>

         5. The Company shall  reimburse or pay CITBC,  as the case may be, for:
i) all Out-of-Pocket Expenses of CITBC and b) any applicable Documentation Fee.

         6. Upon the last  Business  Day of each month,  commencing  with April,
2000, so long as this  Financing  Agreement is in effect,  the Company shall pay
CITBC the Line of Credit Fee.

         7. To induce CITBC to enter into this Financing Agreement and to extend
to the  Company  the  Revolving  Loans,  the  Company  shall pay to CITBC a Loan
Facility Fee in the amount of $220,000  payable upon execution of this Financing
Agreement.

         8. Upon the execution of this Agreement and annually thereafter on each
Anniversary Date, so long as this Financing  Agreement is in effect, the Company
shall pay to CITBC the Collateral Management Fee.

         9. The Company hereby authorizes CITBC to charge the Company's accounts
with CITBC with the amount of all payments due hereunder as such payments become
due. In the event CITBC is unable or unwilling to charge any such payment to the
Company's  account,  then CITBC  shall so notify the  Company in writing and the
amount of such payment shall be immediately due and payable.

SECTION 9.  Powers

         The Company hereby  constitutes  CITBC or any person or agent CITBC may
designate  as its  attorney-in-fact,  at the  Company's  cost  and  expense,  to
exercise  all of the  following  powers,  which being  coupled with an interest,
shall be irrevocable  until all of the Company's  Obligations to CITBC have been
paid in full:

            (a) To receive,  take, endorse, sign, assign and deliver, all in the
name of CITBC or the  Company,  any and all  checks,  notes,  drafts,  and other
documents or instruments relating to the Collateral for (i) deposit to a Blocked
Account (consistent with the terms of paragraph 4 of Section 3 of this Financing
Agreement)  or (ii)  after the  acceleration  by CITBC of the  Obligations,  for
application to  satisfaction  of the  Obligations  consistent  with the terms of
Paragraph 3 of Section 10 hereof;

            (b) To  receive,  open  and  dispose  of all mail  addressed  to the
Company and to notify  postal  authorities  to change the  address for  delivery
thereof to such address as CITBC may designate;

            (c) To request from  customers  indebted on Accounts at any time, in
the  name of CITBC  or the  Company  or that of  CITBC's  designee,  information
concerning the amounts owing on the Accounts;

            (d) To transmit to customers  indebted on Trade Accounts  Receivable
notice of CITBC's  interest  therein and to notify  customers  indebted on Trade
Accounts Receivable to make payment directly to CITBC for the Company's account;
and

                                       27
<PAGE>

            (e) To take or  bring,  in the  name of CITBC  or the  Company,  all
steps,  actions,  suits or proceedings  reasonably  deemed by CITBC necessary or
desirable to enforce or effect collection of the Accounts.

         Notwithstanding  anything  hereinabove  contained to the contrary,  the
powers set forth in (a), (b), (d) and (e) above may only be exercised  after the
occurrence  of an Event of Default  and until such time as such Event of Default
is waived.

SECTION 10.  Events of Default and Remedies

         1.  Notwithstanding  anything  hereinabove  to the contrary,  CITBC may
terminate this Financing Agreement immediately upon the occurrence of any of the
following (herein "Events of Default"):

             (a)  cessation  of the  business of the Company or the calling of a
general meeting of the creditors of the Company for purposes of compromising the
debts and obligations of the Company;

             (b) the Company  admits in writing its  inability to generally  pay
its debts as they mature;

             (c) the commencement by the Company of any bankruptcy,  insolvency,
arrangement,  reorganization,  receivership  or  similar  proceedings  under any
federal or state law;

             (d)  the  commencement  against  the  Company  of  any  bankruptcy,
insolvency,  arrangement,  reorganization,  receivership or similar  proceedings
under any federal or state law, provided,  however,  that such Default shall not
be deemed an Event of Default if the proceeding,  petition,  case or arrangement
is commenced or supported by creditors by creditors  holding  $2,500,000 or less
of  indebtedness  and is  dismissed  within  60 days of the  filing  of,  or the
commencement of, such petition, case, proceeding or arrangement;

             (e) material breach by the Company of any warranty,  representation
or covenant  contained  herein (other than those referred to in  sub-paragraph f
below) or in any other written  agreement  between the Company or CITBC relating
to this Financing Agreement, provided that such Default by the Company of any of
the warranties, representations or covenants referred in this clause e shall not
be deemed to be an Event of Default  unless and until such Default  shall remain
unremedied  to CITBC's  satisfaction  for a period of fifteen (15) Business Days
from the date of such Default;

             (f)  breach  by the  Company  of any  warranty,  representation  or
covenant of Section 3,  Paragraphs 3 (other than the third sentence of paragraph
3) and 4;  Section  6,  Paragraphs  3 and 4 (other  than the first  sentence  of
paragraph 4); Section 7, Paragraphs  1,5,6,  and 9 through 11 (other than 10E as
it relates to corporate good standing status);

             (g)  failure of the  Company to pay any of the  Obligations  within
five (5) Business Days of the due date thereof,  provided that nothing contained
herein shall prohibit CITBC from charging such amounts to the Company's  account
on the due date thereof;

                                       28
<PAGE>

             (h)  Company  shall i) engage in any  "prohibited  transaction"  as
defined in ERISA,  ii) have any "accumulated  funding  deficiency" as defined in
ERISA,  iii) have any  Reportable  Event as defined in ERISA,  iv) terminate any
Plan,  as  defined  in ERISA or v) be  engaged  in any  proceeding  in which the
Pension Benefit Guaranty Corporation shall seek appointment, or is appointed, as
trustee or  administrator  of any Plan, as defined in ERISA, and with respect to
this  sub-paragraph h such event or condition x) remains uncured for a period of
60 days from date of occurrence  and y) could  reasonably be expected to subject
the Company to any tax,  penalty or other  liability  materially  adverse to the
business, operations or financial condition of the Company;

             (i) without the prior written  consent of CITBC,  the Company shall
x) amend or modify the Senior Unsecured Debt, any Subordinated  Debt, or y) make
any  payment on account of any  Subordinated  Debt  except as  permitted  in the
applicable  Subordination  Agreement or on account of the Senior  Unsecured Debt
except for regularly  scheduled  payments (but no  prepayments  or  redemptions,
including optional redemptions or those arising due to a Change of Control under
and as defined in the Senior Unsecured Debt) as contemplated under the Indenture
evidencing the Senior Unsecured Debt as in effect as of the date hereof; or

             (j) the occurrence of any default or event of default (after giving
effect  to any  applicable  grace  or cure  periods)  under  any  instrument  or
agreement  evidencing (x)  Subordinated  Debt, (y) the Senior Unsecured Debt, or
(z) any other Indebtedness of the Company having a principal amount in excess of
$1,000,000  if the  effect of such  default or event of default is to permit the
holder or holders of such  Subordinated  Debt,  Senior  Unsecured  Debt or other
Indebtedness, as the case may be, to cause the same to become or be declared due
and  payable  prior to its stated  maturity or (except in the case of the Senior
Unsecured  Debt relating to the March 2000 SEC filing)  charge an increased rate
of interest.

         2. Upon the occurrence of a Default and/or an Event of Default,  at the
option of CITBC, all loans and advances provided for in Sections 3 and 5 of this
Financing  Agreement  shall be  thereafter  in CITBC's sole  discretion  and the
obligation of CITBC to make revolving  loans and/or open Letters of Credit shall
cease unless such Default is cured to CITBC's reasonable satisfaction within the
applicable grace period or Event of Default is waived by CITBC and at the option
of CITBC upon the occurrence of an Event of Default:  i) all  Obligations  shall
upon notice (provided,  however, that no such notice is required if the Event of
Default is the Event of Default listed in paragraph 1(c) or 1(d) of this Section
10) become  immediately  due and  payable;  ii) CITBC may charge the Company the
Default  Rate  of  Interest  on all  then  outstanding  or  thereafter  incurred
Obligations in lieu of the interest  provided for in Section 8 of this Financing
Agreement;  provided  (a) the CITBC has given  notice of the  imposition  of the
Default Rate of Interest,  provided,  however, that no notice is required if the
Event of Default is the Event listed in  paragraph  1(c) or 1(d) of this Section
10 and b) the  Company  has failed to cure the Event of Default  within ten (10)
Business Days after x) CITBC  deposited such notice in the United States mail or
y) the  occurrence of the Event of Default  listed in paragraph  1(c) or 1(d) of
this  Section  10;  and iii)  CITBC may  immediately  terminate  this  Financing
Agreement  upon  notice to the  Company,  provided,  however,  that no notice of
termination is required if the Event of Default is the Event listed in paragraph
1(c) or 1(d) of this Section 10.  Notwithstanding  anything herein  contained to
the contrary,  if CITBC waives all Events of Default,  then by written notice to
the Company,  the  acceleration  of the  Obligations

                                       29

<PAGE>

will be rescinded  and all  remedies  and actions then being  exercised by CITBC
shall  cease.  The  exercise of any option is not  exclusive of any other option
which may be exercised at any time by CITBC.

         3. Immediately  upon the occurrence of any Event of Default,  CITBC may
to the extent  permitted by law: (a) remove from any premises  where same may be
located any and all documents,  instruments,  files and records  relating to the
Accounts,  or CITBC may use, at the  Company's  expense,  such of the  Company's
personnel,  supplies or space at the Company's  places of business or otherwise,
as may be  necessary  to properly  administer  and  control the  Accounts or the
handling of collections and realizations thereon; (b) bring suit, in the name of
the Company or CITBC, and generally shall have all other rights  respecting said
Accounts,  including  without  limitation the right to: accelerate or extend the
time of  payment,  settle,  compromise,  release in whole or in part any amounts
owing on any Accounts and issue credits in the name of the Company or CITBC; (c)
sell,  assign  and  deliver  the  Collateral  and  any  returned,  reclaimed  or
repossessed  merchandise,  with or without  advertisement,  at public or private
sale, for cash, on credit or otherwise,  at CITBC's sole option and  discretion,
and,  to the  extent  permitted  by  applicable  law,  CITBC may bid or become a
purchaser at any such sale,  free from any right of  redemption,  which right is
hereby  expressly  waived by the Company;  (d) foreclose the security  interests
created herein by any available judicial procedure, or to take possession of any
or all of the Inventory and Equipment without judicial process, and to enter any
premises  where any  Inventory  and  Equipment may be located for the purpose of
taking possession of or removing the same; and (e) exercise any other rights and
remedies  provided in law, in equity,  by contract or  otherwise,  to the extent
permitted  by  applicable  law.  CITBC shall have the right,  without  notice or
advertisement,  to sell,  lease, or otherwise  dispose of all or any part of the
Collateral  whether  in its then  condition  or  after  further  preparation  or
processing,  in the name of the  Company or CITBC,  or in the name of such other
party as CITBC  may  designate,  either  at  public  or  private  sale or at any
broker's  board,  in lots or in bulk,  for cash or for  credit,  with or without
warranties or representations, and upon such other terms and conditions as CITBC
in its sole  discretion  may deem  advisable,  and CITBC shall have the right to
purchase  at any  such  sale.  If any  Inventory  and  Equipment  shall  require
rebuilding,  repairing,  maintenance or preparation, CITBC shall have the right,
at its option,  to do such of the aforesaid as is necessary,  for the purpose of
putting the  Inventory  and  Equipment in such saleable form as CITBC shall deem
appropriate.  The  Company  agrees,  at the request of CITBC,  to  assemble  the
Inventory  and  Equipment  and to make it  available to CITBC at premises of the
Company  or such  other  location  reasonably  designated  by CITBC  and to make
available to CITBC the premises and facilities of the Company for the purpose of
CITBC's taking possession of, removing or putting the Inventory and Equipment in
saleable form. However,  if notice of intended  disposition of any Collateral is
required  by law,  it is  agreed  that  ten  (10)  Business  Days  notice  shall
constitute  reasonable  notification  and full  compliance with the law. The net
cash proceeds  resulting from CITBC's  exercise of any of the foregoing  rights,
(after  deducting  all  charges,   costs  and  expenses,   including  reasonable
attorneys'  fees)  shall be  applied by CITBC to the  payment  of the  Company's
Obligations, whether due or to become due, in such order as CITBC may elect, and
the Company shall remain liable to CITBC for any deficiencies, and CITBC in turn
agrees  to remit to the  Company  or its  successors  or  assigns,  any  surplus
resulting therefrom.  The enumeration of the foregoing rights is not intended to
be  exhaustive  and the exercise of any right shall not preclude the exercise of
any other rights, all of which shall be cumulative.

                                       30

<PAGE>

SECTION 11.  Termination

         Except  as  otherwise  permitted  herein,   CITBC  may  terminate  this
Financing  Agreement  and  the  Line of  Credit  only  as of the  fourth  or any
subsequent  Anniversary  Date and then only by giving the Company at least sixty
(60) days prior written  notice of  termination.  Notwithstanding  the foregoing
CITBC may terminate the Financing  Agreement  immediately upon the occurrence of
an Event of Default upon notice to the Company,  provided,  however, that if the
Event of Default is an event listed in  paragraph  1(c) or 1(d) of Section 10 of
this Financing Agreement, CITBC may regard the Financing Agreement as terminated
and notice to that effect is not  required.  This  Financing  Agreement,  unless
terminated as herein  provided,  shall  automatically  continue from Anniversary
Date to Anniversary Date. The Company may terminate this Financing Agreement and
the Line of Credit at any time upon at least  sixty  (60)  days'  prior  written
notice to CITBC.  If the  Financing  Agreement is terminated by the Company on a
date  earlier than the third  Anniversary  Date,  then the Company  shall pay to
CITBC  immediately on demand,  an Early  Termination Fee. All Obligations  shall
become  due and  payable as of any  termination  hereunder  or under  Section 10
hereof and, pending final payment in full of all Obligations, CITBC may withhold
any  balances  in the  Company's  account  (unless  supplied  with an  indemnity
satisfactory  to  CITBC)  to cover  all of the  Company's  Obligations,  whether
absolute  or  contingent  provided,   however,  that  if  the  remaining  unpaid
Obligations  arise solely out of the  outstanding  amounts of Letters of Credit,
CITBC  will,  at the  Company's  request,  retain,  solely as  collateral,  cash
collateral in an amount equal to one hundred and five percent (105%) of the then
outstanding  amounts of Letters of Credit unless the Company provides CITBC with
back-to-back  letters  of  credit  from  a  financial   institution   reasonably
acceptable to CITBC on terms reasonably  acceptable to CITBC, in an amount equal
to one  hundred  and five  percent  (105%) of the then  outstanding  amounts  of
Letters of Credit. When the outstanding amount of Letters of Credit have been so
secured by cash or by the back-to-back  letter of credit, in either event, in an
amount  equal to one hundred  and five  percent  (105%) of the then  outstanding
amounts of Letters of Credit  pursuant  to a fully  executed  agreement  between
CITBC and the Company and  pursuant  to which the  Company  agrees to  reimburse
CITBC for any Letter of Credit  claims  that exceed the cash  collateral  or the
back-to-back  letter  of  credit,  then  for  all  purposes  of  this  Financing
Agreement,  this Financing  Agreement shall be treated by the parties thereto as
terminated and all other  Collateral  will be released.  All of CITBC's  rights,
liens and security  interests  shall  continue after any  termination  until all
Obligations have been paid and satisfied in full.

SECTION 12.  Miscellaneous

         1. Except as otherwise expressly provided in this Financing  Agreement,
the Company hereby waives  diligence,  demand,  presentment  and protest and any
notices  thereof as well as notice of nonpayment.  No delay or omission of CITBC
or the  Company to exercise  any right or remedy  hereunder,  whether  before or
after the  happening  of any Event of  Default,  shall  impair any such right or
shall  operate as a waiver  thereof or as a waiver of any such Event of Default.
No single or  partial  exercise  by CITBC of any right or remedy  precludes  any
other or further exercise thereof, or precludes any other right or remedy.

         2. This Financing Agreement and the documents executed and delivered in
connection  therewith  constitute the entire  agreement  between the Company and
CITBC;

                                       31
<PAGE>

supersede any prior agreements;  can be changed only by a writing signed by both
the  Company  and CITBC;  and shall bind and  benefit  the Company and CITBC and
their respective successors and assigns.

         3. In no event shall the  Company,  upon demand by CITBC for payment of
any indebtedness  relating hereto, by acceleration of the maturity  thereof,  or
otherwise,  be  obligated  to pay  interest  and fees in  excess  of the  amount
permitted by law. Regardless of any provision herein or in any agreement made in
connection herewith,  CITBC shall never be entitled to receive, charge or apply,
as interest on any  indebtedness  relating  hereto,  any amount in excess of the
maximum  amount of  interest  permissible  under  applicable  law. If CITBC ever
receives,  collects  or applies  any such  excess,  it shall be deemed a partial
repayment  of principal  and treated as such;  and if principal is paid in full,
any  remaining  excess shall be refunded to the Company.  This  paragraph  shall
control  every  other  provision  hereof  and of any  other  agreement  made  in
connection herewith.

         4. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or  unenforceable,  such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in full  force  and  effect  and  shall  not be  affected  by  such  provision's
severance.  Furthermore,  in lieu of any such  provision,  there  shall be added
automatically  as a part of the  applicable  agreement  a legal and  enforceable
provision as similar in terms to the severed provision as may be possible.

         5. THE COMPANY AND CITBC EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. THE COMPANY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.

         6.  Except  as  otherwise   herein   provided,   any  notice  or  other
communication  required  hereunder  shall be in writing,  and shall be deemed to
have been  validly  served,  given or delivered  when hand  delivered or sent by
facsimile,  or three Business Days after deposit in the United State mails, with
proper first class postage  prepaid and addressed to the party to be notified as
follows:

(A)      if to CITBC, at:

         The CIT Group/Business Credit, Inc.
         300 South Grand Avenue, Third Floor
         Los Angeles, California  90071
         Attn: Regional Manager
         Facsimile Number: (213) 346-3361

                                       32
<PAGE>

(B)      if to the Company at:

         Diamond Triumph Auto Glass, Inc.
         220 Division Street
         Kingston, Pennsylvania  18704
         Attn: Chief Financial Officer
         Facsimile Number: (570) 287-2149

         with a copy to:

         Green Equity Investors II, L.P.
         11111 Santa Monica Boulevard
         Los Angeles, California 90025
         Attention:  Gregory J. Annick
         Facsimile Number: (310) 954-0404

or to such other address as any party may designate for itself by like notice.

         7. THE  VALIDITY,  INTERPRETATION  AND  ENFORCEMENT  OF THIS  FINANCING
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.

         IN WITNESS  WHEREOF,  the parties  hereto  have  caused this  Financing
Agreement to be  executed,  agreed to,  accepted  and  delivered in Los Angeles,
California by their proper and duly authorized officers as of the date set forth
above.

                                          THE CIT GROUP/BUSINESS CREDIT, INC.


                                          By: /s/ Frank Brown
                                             ---------------------------------
                                               Vice President


DIAMOND TRIUMPH AUTO GLASS, INC.


By: /s/ Michael A. Sumsky
   -----------------------------
Title:  Executive Vice President

                                       33