CREDIT AGREEMENT


         This Agreement is made by and between  Photomatrix,  Inc.  ("Borrower")
and Imperial Bank, a California banking corporation ("Bank").

         Subject to the terms and  conditions  of this  Agreement,  any security
agreement(s)  executed  by Borrower  in favor of Bank,  any note(s)  executed by
Borrower  in  favor  Bank,  or any  other  agreements  executed  in  conjunction
therewith (collectively,  the "Loan Documents"),  Bank shall make a term loan to
Borrower in an amount not to exceed  $600,000.00,  maturing on June 29, 2002. To
induce Bank to make loans to Borrower and in  consideration of any loan or loans
Bank may make to Borrower, Borrower warrants and agrees as follows:

1.       REPRESENTATIONS OF BORROWER

         Borrower represents and warrants that:

         1.01 Existence and Rights. Borrower is a corporation duly organized and
existing and in good standing under the laws of California,  without limit as to
the  duration of its  existence  and is  authorized  and in good  standing to do
business in the State of California;  Borrower has corporate powers and adequate
authority,  rights  and  franchises  to own its  property  and to  carry  on its
business as now  conducted,  and is duly  qualified and in good standing in each
State in which  the  character  of the  properties  owned by it  therein  or the
conduct of its business makes such qualification necessary; and Borrower has the
power and adequate authority to make and carry out this Agreement.

         1.02 Agreement Authorized.  The execution,  delivery and performance of
this Agreement are duly authorized and do not require the consent or approval of
any governmental body or other regulatory authority; are not in contravention of
or in conflict with any law or regulation or any term or provision of Borrower's
articles of  incorporation,  by-laws,  as the case may be, and this Agreement is
the valid, binding and legally enforceable  obligation of Borrower in accordance
with its terms; subject only to bankruptcy, insolvency or similar laws affecting
creditors rights generally.

         1.03 No  Conflict.  The  execution,  delivery and  performance  of this
Agreement  are  not in  contravention  of or in  conflict  with  any  agreement,
indenture or  undertaking  to which Borrower is a party or by which it or any of
its  property  may be bound or  affected,  and do not cause any lien,  charge or
other  encumbrance  to be created or imposed  upon any such  property  by reason
thereof.

         1.04 Litigation.  There is no litigation or other proceeding pending or
threatened  against or  affecting  Borrower  which if  determined  adversely  to
Borrower or its interest  would have a material  adverse effect on the financial
condition of Borrower, and Borrower is not in default with respect to any order,
writ,  injunction,  decree  or  demand  of any  court or other  governmental  or
regulatory authority.

         1.05 Financial Condition. The balance sheet of Borrower as of March 31,
1998, a copy of which has heretofore been delivered to Bank by Borrower, and all
other statements and data submitted in writing by Borrower to Bank in connection
with this request for credit are true and correct,  and said balance sheet truly
presents the  financial  condition of Borrower as of the date  thereof,  and has
been prepared in accordance with generally accepted  accounting  principles on a
basis  consistently  maintained.  Since such date,  there have been no  material
adverse changes in the financial condition or business of Borrower. Borrower has
no knowledge  of any  liabilities,  contingent  or  otherwise,  at such date not
reflected in said balance  sheet,  and Borrower has not entered into any special
commitments  or  substantial  contracts  which are not reflected in said balance
sheet,  other than in the ordinary and normal course of its business,  which may
have a materially  adverse  effect upon its financial  condition,  operations or
business as now conducted.

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         1.06 Title to Assets.  Borrower  has good title to its assets,  and the
same are not subject to any liens or encumbrances  other than those permitted by
Section 3.03 hereof.

         1.07 Tax Status.  Borrower has no liability for any  delinquent  state,
local or federal  taxes,  and, if Borrower has  contracted  with any  government
agency, Borrower has no liability for renegotiation of profits.

         1.08 Trademarks,  Patents.  Borrower, as of the date hereof,  possesses
all necessary trademarks,  trade names, copyrights,  patents, patent rights, and
licenses to conduct its  business as now  operated,  without any known  conflict
with the valid trademarks,  trade names, copyrights,  patents and license rights
of others.

         1.09   Regulation   U.  The   proceeds  of  any  loan  (the  "Loan"  or
collectively,  if more than one,  the  "Loans")  extended  pursuant  to the Loan
Documents shall not be used to purchase or carry margin stock (as defined within
Regulation U of the Board of Governors of the Federal Reserve system).

2.       AFFIRMATIVE COVENANTS OF BORROWER

         Borrower  agrees  that  so  long  as  it is  indebted  to  Bank,  under
borrowings,  or other  indebtedness,  or so long as Bank has any  obligation  to
extend  credit to  Borrower,  it will,  unless Bank shall  otherwise  consent in
writing:

         2.01  Rights  and   Facilities.   Maintain  and  preserve  all  rights,
franchises  and  other  authority  adequate  for the  conduct  of its  business;
maintain its  properties,  equipment  and  facilities  in good order and repair;
conduct its business in an orderly manner without voluntary interruption and, if
a corporation or partnership, maintain and preserve its existence.

         2.02 Insurance. Maintain public liability, property damage and workers'
compensation  insurance and insurance on all its insurable property against fire
and other  hazards with  responsible  insurance  carriers to the extent  usually
maintained  by  similar  businesses  and/or  in the  exercise  of good  business
judgment  and as to  property  insurance  have  Bank  named as loss  payee in an
Lenders "Loss Payable" Endorsement Form 438BFU or equivalent.

         2.03 Taxes and Other  Liabilities.  Pay and discharge,  before the same
become  delinquent and before penalties accrue thereon,  all taxes,  assessments
and  governmental  charges upon or against it or any of its properties,  and all
its other liabilities at any time existing, except to the extent and so long as:

         a.  The same are  being  contested  in good  faith  and by  appropriate
         proceedings  in such  manner  as not to cause  any  materially  adverse
         effect  upon  its  financial  condition  or the  loss of any  right  to
         redemption from any sale thereunder; and

         b. It shall  have set aside on its books  reserves  (segregated  to the
         extent required by generally accepted accounting practice) deemed by it
         adequate with respect thereto.

         2.04 Financial Covenants.

         a. Minimum Tangible Net Worth.  Have and maintain Tangible Net Worth of
         no  less  than  $2,400,000.00  as  of  June  30,  1998,  increasing  to
         $2,600,000.00  as of September 30, 1998,  $3,200,000.00  as of December
         31,  1998,  and  $3,500,000.00  thereafter.  Tangible  Net  Work  shall
         increase at each fiscal  year-end  following  fiscal 1999 by the sum of
         50% of net income  during the year (no  reduction for losses) plus 100%
         of any additional  contributed equity.  "Tangible Net Worth" is defined
         as  the  excess  of all  assets  (excluding  any  value  for  goodwill,
         trademarks, patents, copyrights, organization expense and other similar
         intangible items), over all liabilities.

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<PAGE>

         b.  Maximum  Leverage.  Have and  maintain  Leverage  of not more  than
         2.75:1.  "Leverage" is defined as the sum of all liabilities divided by
         Tangible Net Worth.

         c. Minimum Debt Service  Coverage.  Debt Service  Coverage  shall be no
         less than 1.25:1.  "Debt Service  Coverage" is defined as the following
         ratio: [EBITDA less cash taxes] divided by the sum of [CPLTD at the end
         of the period plus  interest  expense  incurred  during the most recent
         quarter annualized].  The ratio will be calculated  commencing with the
         first full fiscal quarter after closing of Borrower's merger with I-PAC
         Manufacturing,  Inc., with EBITDA annualized during that first quarter,
         the six-month period annualized  following the second quarter,  and the
         nine-month  period  annualized  following  the  third  quarter,  with a
         rolling four-quarter period calculated quarterly thereafter.

         2.05  Records and  Reports.  Maintain a standard  and modern  system of
accounting in accordance  with  generally  accepted  accounting  principles on a
basis consistently maintained;  permit Bank's representatives to have access to,
and to examine its  properties,  books and records at all  reasonable  times and
upon reasonable notice during normal business hours; and furnish Bank:

         a. Monthly Financial Statement. Within thirty (30) days after the close
         of each month of each  fiscal  year of  Borrower,  commencing  with the
         month next ending,  a balance  sheet,  profit and loss  statement,  and
         reconciliation of Borrower's capital accounts,  as of the close of such
         period and covering  operations  for the portion of  Borrower's  fiscal
         year ending on the last day of such period,  all in reasonable  detail,
         prepared in accordance with generally accepted accounting principles on
         a  basis  consistently  maintained  by  Borrower  and  certified  by an
         appropriate officer of Borrower;

         b. Annual Financial Statement.  As soon as available,  and in any event
         within one  hundred  twenty  (120) days after the close of each  fiscal
         year of  Borrower,  a report of Company as of the close of and for each
         fiscal year, all in reasonable detail,  prepared on an audited basis by
         an independent  certified  public  accountant  selected by Borrower and
         reasonably  acceptable to Bank, in accordance  with generally  accepted
         accounting  principles on a basis  consistently  maintained by Borrower
         and certified by an appropriate officer of Borrower;

         c. Other Information. Such other information relating to the affairs of
         Borrower as the Bank reasonably may request from time to time;

         d. Management Letter. In connection with each fiscal year end financial
         statement  furnished  to  Bank  hereunder,  any  management  letter  of
         Borrower's independent certified public accountant.

         2.06  Notice  of  Default.  Promptly  notify  Bank  in  writing  of the
occurrence of any Event of Default  hereunder or any event which upon notice and
lapse of time would be an Event of Default.

         2.07  Operating  Accounts.  Maintain  all primary  accounts and banking
relationship  with  Bank  during  the term of any loans  from Bank to  Borrower.
Borrower shall  maintain,  or cause to be  maintained,  on deposit with Imperial
Bank, non-interest bearing demand deposit balances sufficient to compensate Bank
for all services provided by Bank.  Balances shall be calculated after reduction
for the reserve  requirement of the Federal Reserve Board and uncollected funds.
Any deficiencies shall be charged directly to the Borrower on a monthly basis.



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         2.08 Attorneys' Fees. Pay promptly to Bank without demand after notice,
with interest thereon from the date of expenditure at the rate applicable to any
loans  from  Bank to  Borrower,  reasonable  attorneys'  fees and all  costs and
expenses paid or incurred by Bank in collecting  or  compromising  any such loan
after the  occurrence of an Event of Default,  whether or not suit is filed.  If
suit is brought to enforce any provision of this Agreement, the prevailing party
shall be entitled to recover its reasonable  attorneys'  fees and court costs in
addition to any other remedy or recovery awarded by the court.

         2.09 Documentation Fee. Pay to the Bank a $250.00  documentation fee on
the new term loan Bank facility.

3.       NEGATIVE COVENANTS OF BORROWER

         Borrower  agrees that so long as it is indebted to Bank,  or so long as
Bank has any  obligation  to extend  credit to  Borrower,  it will not,  without
Bank's written consent:

         3.01 Type of Business;  Management.  Make any substantial change in the
character  of its  business;  or make any  change  in its  executive  management
(Chairman of the Board, Chief Executive Officer,  President, and Chief Financial
Officer).

         3.02  Outside  Indebtedness.  Other  than  in the  ordinary  course  of
business and consistent with past practices,  create, incur, assume or permit to
exist any  indebtedness  for  borrowed  moneys,  other than loans from the Bank,
except obligations now existing as shown in the financial  statement dated March
31, 1998, excluding those obligations being refinanced by Bank.

         3.03  Liens and  Encumbrances.  Other  than in the  ordinary  course of
business  and  consistent  with past  practices,  create,  incur,  or assume any
mortgage,  pledge,  encumbrance,  lien or  charge of any kind upon any asset now
owned,  other than  liens for taxes not  delinquent  and liens in Bank's  favor,
except for those already existing as of March 31, 1998.

         3.04  Loans,  Investments,  Secondary  Liabilities.  Make any  loans or
advances to any person or other  entity  other than in the  ordinary  and normal
course of its business and consistent with past practices or make any investment
in the  securities  of any person or other entity  other than the United  States
Government;  or guarantee or otherwise  become liable upon the obligation of any
person or other entity,  except by  endorsement  of negotiable  instruments  for
deposit or  collection  in the  ordinary  and normal  course of its business and
consistent with past practices.

         3.05 Acquisition or Sale of Business;  Merger or Consolidation.  Except
in the ordinary course of business, purchaser or otherwise acquire the assets or
business  of any  person  or  other  entity;  or  liquidate,  dissolve  merge or
consolidate,  or commence any proceedings therefor; or sell any assets except in
the ordinary course of its business consistent with past practices; or except in
the ordinary course of business,  sell, lease assign or transfer any substantial
part of its business or fixed assets,  or any property or other assets necessary
for  the  continuance  of its  business  as  now  conducted,  including  without
limitation, the selling of any dividends, property or other asset accompanied by
the leasing back of the same.

         3.06  Capital  Expenditures.  Make or  incur  obligations  for  capital
expenditures,  which  includes  purchase  money  indebtedness  or capital  lease
obligations, in excess of $100,000 in any one fiscal year.

         3.07 Lease Liability.  Make or incur additional  liability for payments
of rent under leases of real property in excess of $100,000 or personal property
in excess of $50,000 in any one fiscal year.

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<PAGE>

4.       EVENTS OF DEFAULT

         The  occurrence  of any of the  following  events  (each an  "Event  of
Default") shall, at Bank's option,  terminate Bank's commitment to lend and make
all sums of  principal  and interest  then  remaining  unpaid on all  Borrower's
indebtedness  to  Bank   immediately  due  and  payable,   all  without  demand,
presentment or notice, all of which are hereby expressly waived:

         4.01  Failure to Pay.  Failure to pay any  installment  of principal or
interest on any indebtedness of Borrower to Bank.

         4.02 Breach of Covenant.  Failure of Borrower to perform any other term
or condition of this Agreement binding upon Borrower.

         4.03  Breach  of  Warranty.   Any  of  Borrower's   representations  or
warranties  made herein or any  statement  or  certificate  at any time given in
writing  pursuant hereto or in connection  herewith shall be false or misleading
in any respect.

         4.04 Insolvency;  Receiver or Trustee. Borrower shall become insolvent;
or admit its  inability to pay its debts as they mature;  or make an  assignment
for the benefit of creditors;  or apply for or consent to the  appointment  of a
receiver  or  trustee  for it or for a  substantial  part  of  its  property  or
business.

         4.05 Judgments,  Attachments.  Any money  judgment,  writ or warrant of
attachment, or similar process shall be entered or filed against Borrower or any
of its assets and shall  remain  unvacated,  unbonded or  unstayed  for a period
later than five days prior to the date of any proposed sale thereunder.

         4.06 Bankruptcy. Bankruptcy, insolvency,  reorganization or liquidation
proceedings or other  proceedings for relief under any bankruptcy law or any law
for the relief of debtors  shall be  instituted  by or against  Borrower and, if
instituted against it, shall be consented to.

5.       MISCELLANEOUS PROVISIONS

         5.01 Failure or Indulgence Not Waiver.  No failure or delay on the part
of Bank or any holder of any note issued by Borrower to Bank, in the exercise of
any power, right or privilege  hereunder shall operate as a waiver thereof,  nor
shall any single or  partial  exercise  of any such  power,  right or  privilege
preclude  other or  further  exercise  thereof or of any other  right,  power or
privilege.  All rights and remedies  existing  under this  Agreement or any note
issued in connection  with a loan that Bank may make  hereunder,  are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

         5.02 Additional Remedies. The rights, powers and remedies given to Bank
hereunder  shall be cumulative and not  alternative  and shall be in addition to
all rights,  power and  remedies  given to Bank by law  against  Borrower or any
other  person,  including but not limited to Bank's rights of setoff or banker's
lien.

         5.03  Inurement.  The  benefits  of this  Agreement  shall inure to the
successors  and  assigns of Bank and the  permitted  successors  and  assigns of
Borrower.

         5.04  Applicable  Law.  This  Agreement  and all other  agreements  and
instruments  required by Bank in connection  therewith  shall be governed by and
construed according to the laws of the State of California,  to the jurisdiction
of whose courts the parties hereby agree to submit.

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<PAGE>

         5.05  Offset.  In  addition to and not in  limitation  of all rights of
offset that Bank or other holder of any note issued by Borrower in favor of Bank
may have under  applicable  law, Bank or other holder of such notes shall,  upon
the  occurrence  of any Event or Default or any event  which with the passage of
time or notice  would  constitute  such an Event of  Default,  have the right to
appropriate and apply to the payment of the outstanding  under any such note any
and all  balances,  credits,  deposits,  accounts or monies of Borrower then and
thereafter  with Bank or other  holder,  within ten (10) days after the Event of
Default,  and  notice  of the  occurrence  of any  Event of  Default  by Bank to
Borrower.

         5.06  Severability.  Should any one or more provisions of the Agreement
be determined to be illegal or unenforceable,  all other provisions nevertheless
shall be effective.

         5.07 Time of the Essence.  Time is hereby declared to be of the essence
of this Agreement and of every part hereof.

         5.08 Integration Clauses. Except for the Loan Documents,  the Agreement
constitutes the entire agreement between Bank and Borrower regarding any loan or
loans  from Bank to  Borrower,  and all prior  communications  verbal or written
between Borrower and Bank shall be of no further effect or evidentiary value. In
the  event  of a  conflict  or  inconsistency  among  any  other  documents  and
instruments and this Agreement, the provisions of this Agreement shall prevail.

         5.09  Accounting.  All accounting terms shall have the meanings applied
under generally accepted accounting principles unless otherwise specified.

         5.10  Modification.  This  Agreement  may be modified only by a writing
signed by both parties hereto.

6.       GOVERNING LAW; JUDICIAL REFERENCE.

         6.01 Governing Law. This Agreement shall be deemed to have been made in
the State of California  and the  validity,  construction,  interpretation,  and
enforcement  hereof,  and the rights of the parties hereto,  shall be determined
under,  governed by, and construed in  accordance  with the internal laws of the
State of California, without regard to principles of conflicts of law.

         6.02 Judicial Reference.

         a. Other than (i) nonjudicial foreclosure and all matters in connection
         therewith regarding security interests in real or personal property; or
         (ii)  the  appointment  of  a  receiver,   or  the  exercise  of  other
         provisional remedies (any and all of which may be initiated pursuant to
         applicable law), each controversy, dispute or claim between the parties
         arising out of or relating to the Loan  Documents,  which  controversy,
         dispute  or claim is not  settled in writing  within  thirty  (30) days
         after the "Claim Date" (defined as the date on which a party subject to
         the Loan  Documents  gives  written  notice to all other parties that a
         controversy,  dispute or claim exists),  will be settled by a reference
         proceeding in California in accordance  with the  provisions of Section
         638 et  seq.  of the  California  Code of  Civil  Procedure,  or  their
         successor section ("CCP"),  which shall constitute the exclusive remedy
         for the settlement of any controversy,  dispute or claim concerning the
         Loan Documents, including whether such controversy, dispute or claim is
         subject to the reference  proceeding and except as set forth above, the
         parties  waive their rights to initiate any legal  proceedings  against
         each other in any court or jurisdiction other than the Superior Court


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<PAGE>

         in the  County  where the Real  Property,  if any,  is  located  or Los
         Angeles  County if none (the  "Court").  The referee shall be a retired
         Judge of the Court selected by mutual agreement of the parties,  and if
         they cannot so agree within  forty-five (45) days after the Claim Date,
         the referee shall be promptly  selected by the  Presiding  Judge of the
         Court (or his representative). The referee shall be appointed to sit as
         a temporary  judge,  with all of the powers for a temporary  judge,  as
         authorized by law, and upon selection  should take and subscribe to the
         oath of office as provided for in Rule 244 of the  California  Rules of
         Court (or any  subsequently  enacted  Rule).  Each party sahll have one
         peremptory  challenge  pursuant to CCP ss. 170.6. The referee shall (a)
         be requested to set the matter of hearing  within sixty (60) days after
         the date of  selection of the referee and (b) try any and all issues of
         law or fact and report a statement of decision  upon them, if possible,
         within ninety (90) days of the Claim Date. Any decision rendered by the
         referee will be final,  binding and  conclusive  and judgment  shall be
         entered pursuant to CCP ss. 644 in any court in the State of California
         having jurisdiction.  Any party may apply for a reference proceeding at
         any time after thirty (30) days following  notice to any other party of
         the nature of the  controversy,  dispute or claim, by filing a petition
         for a hearing and/or trial.  All discovery  permitted by this Agreement
         shall be  completed  not later than  fifteen (15) days before the first
         hearing date  established  by the referee.  The referee may extend such
         period in the event of a party's refusal to provide requested discovery
         for  any  reason  whatsoever,   including,  without  limitation,  legal
         objections  raised to such discovery or unavailability of a witness due
         to absence or illness.  No party shall be  entitled  to  "priority"  in
         conducting  discovery.  Depositions  may be taken by either  party upon
         seven (7) days written notice, and request for production or inspection
         of documents  shall be responded to within ten (10) days after service.
         All  disputes  relating to  discovery  which  cannot be resolved by the
         parties shall be submitted to the referee whose decision shall be final
         and binding upon the  parties.  Pending  appointment  of the referee as
         provided  herein,  the Superior  Court is empowered to issue  temporary
         and/or provisional remedies, as appropriate.

         b. Except as expressly set forth in this  Agreement,  the referee shall
         determine  the manner in which the  reference  proceeding  is conducted
         including the time and place of all hearings, the order of presentation
         of  evidence,  and all other  questions  that arise with respect to the
         course  of the  reference  proceeding.  All  proceedings  and  hearings
         conducted  before the  referee,  except for trial,  shall be  conducted
         without a court  reporter  except  that when any party so  requests,  a
         court  reporter  will be  used  at any  hearing  conducted  before  the
         referee.  The party making such a request shall have the  obligation to
         arrange  for and pay for the  court  reporter.  The  costs of the court
         reporter at the trial shall be borne equally by the parties.

         c. The referee  shall be required to determine all issues in accordance
         with  existing  case  law  and  the  statutory  laws  of the  State  of
         California.  The rules of evidence  applicable to proceedings at law in
         the State of California will be applicable to the reference proceeding.
         The referee  shall be  empowered  to enter  equitable  as well as legal
         relief,  to provide all temporary  and/or  provisional  remedies and to
         enter  equitable  orders  that will be binding  upon the  parties.  The
         referee  shall issue a single  judgment  at the close oft he  reference
         proceeding which shall dispose of all of the claims of the parties that
         are the subject of the reference.  The parties hereto expressly reserve
         the  right  to  contest  or  appeal  from  the  final  judgment  or any
         appealable  order or appealable  judgment  entered by the referee.  The
         parties  hereto  expressly  reserve  the  right  to  findings  of fact,
         conclusions of laws, a written statement of decision,  and the right to
         move for a new  trial or a  different  judgment,  which new  trial,  if
         granted, is also to be a reference proceeding under this provision.

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<PAGE>

         d. In the  event  that the  enabling  legislation  which  provides  for
         appointment  of a referee  is  repealed  (and no  successor  statute is
         enacted),  any  dispute  between the parties  that would  otherwise  be
         determined by the reference procedure herein described will be resolved
         and determined by arbitration.  The arbitration  will be conducted by a
         retired  judge  of  the  Court,   in  accordance  with  the  California
         Arbitration Act, ss. 1280 through ss. 1294.2 of the CCP as amended from
         time to time.  The  limitations  with respect to discovery as set forth
         hereinabove shall apply to any such arbitration proceeding.

         This Agreement is executed on behalf of the parties by duly  authorized
representatives as of June 11, 1998.

                                    IMPERIAL BANK ("Bank")



                                    By:________________________________________
                                        Mike Berrier, Vice President

                                    Date:______________________________________



                                    PHOTOMATRIX, INC. ("Borrower")


                                    By:________________________________________


                                    Date:______________________________________



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