<PAGE>   1
                                                                   exhibit 10.16


                                 LOAN AGREEMENT

                                BANK OF SCOTLAND

                                    LOAN TO

                        J-HAWK INTERNATIONAL CORPORATION


                               September 25, 1997

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                               TABLE OF CONTENTS
<TABLE>
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1.       DEFINITIONS AND TERMS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.       LOANS - GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

         2.1.   REVOLVING LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

         2.2.   MAXIMUM PRINCIPAL AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

         2.3.   MATURITY DATE; TERMINATION OF LOANS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

         2.4.   AUTHORIZED DISBURSEMENT OF PROCEEDS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

         2.5.   ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

         2.6.   BORROWING PROCEDURE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

         2.7.   INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

         2.8.   FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

         2.9.   USURY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

3.       PAYMENT TERMS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

         3.1.   LOAN ACCOUNT; METHOD OF MAKING PAYMENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

         3.2.   PAYMENT TERMS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

         3.3.   PLACE OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

         3.4.   PAYMENT ON MATURITY AND PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

         3.5.   ADVANCES TO CONSTITUTE ONE LOAN  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

         3.6.   APPLICATION OF PAYMENTS AND COLLECTIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

         3.7.   MONTHLY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15


4.      ANCILLARY AGREEMENTS  . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

         4.1.   GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

         4.2.   REFINANCE OF FACILITY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

         4.3.   LOAN PARTY INDEBTEDNESS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
</TABLE>
<PAGE>   3
                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
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5.       GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
         5.1.   GENERAL REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
         5.2.   BUSINESS PURPOSE; MARGIN STOCK; SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
         5.3.   REAFFIRMATION OF WARRANTIES AND REPRESENTATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
         5.4.   SURVIVAL OF WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
6.       COVENANTS AND CONTINUING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
         6.1.   FINANCIAL COVENANTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
         6.2.   AFFIRMATIVE COVENANTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
         6.3.   NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  27
         6.4.   REQUIRED NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
         6.5.   INSPECTIONS AND AUDIT OF RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30
         6.6.   LOCATION OF RECORDS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
         6.7.   AUDIT RECORDS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
         6.8.   COSTS OF AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
         6.9.   PAYMENT OF CLAIMS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
7.       DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
         7.1.   EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
         7.2.   REMEDIES CUMULATIVE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
         7.3.   ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
         7.4.   REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
         7.5.   INJUNCTIVE RELIEF  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
         7.6.   ADVANCES DURING UNMATURED DEFAULT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         7.7.   ENFORCEMENT DURING UNMATURED DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         7.8.   CONSENT DOES NOT CREATE CUSTOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
</TABLE>

                                      ii
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                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
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         7.8.   DEFENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
8.       CONDITIONS PRECEDENT TO DISBURSEMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         8.1.   CHECKLIST ITEMS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         8.2.   NECESSARY ACTIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
         8.3.   CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
9.       GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
         9.1.   COMPLIANCE WITH ERISA  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
         9.2.   COSTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
         9.3.   STATEMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
         9.4.   NOTICES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42
         9.5.   MODIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
         9.6.   NO WAIVER  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
         9.7.   SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
         9.8.   SUCCESSORS OR ASSIGNS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
         9.9.   INCORPORATION OF OTHER AGREEMENTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
         9.10.  WAIVER OF TRIAL BY JURY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
         9.11.  DESIGNATED PERSON  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
         9.12.  ACCEPTANCE   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
         9.13.  KNOWLEDGE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
         9.14.  WAIVER BY BORROWER   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
         9.15.  GOVERNING LAW  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
         9.16.  SERVICE OF PROCESS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
         9.17.  REPRESENTATION BY COUNSEL  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
         9.18.  RELEASE OF BANK  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
         9.19.  INVALIDATED PAYMENTS   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
</TABLE>

                                     iii

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                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
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         9.20.  HEADINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
         9.21.  COUNTERPARTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
         9.22.  FAX EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
         9.23.  NO THIRD PARTY BENEFICIARIES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
         9.24.  TEXAS LANGUAGE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
         9.25.  DOMICILE OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48
</TABLE>


                                      iv
<PAGE>   6


                              Schedule of Exhibits

<TABLE>
<S>                               <C>
Exhibit "A"                       Permitted Liens
Exhibit "B"                       Cargill Indebtedness
Exhibit "C"                       Loan Party Indebtedness
Exhibit "D"                       Fictitious Names
Exhibit "E"                       Schedule of Affiliates
Exhibit "F"                       Schedule of Leases, Options
Exhibit "G"                       Agreements with Affiliates
Exhibit "H"                       Location of Records
Exhibit "I"                       ERISA Matters
Schedule 5.1(s)                   Other Indebtedness
Schedule 5.2                      Owned Securities
</TABLE>


                                      v
<PAGE>   7
                                 LOAN AGREEMENT

         THIS LOAN AGREEMENT (this "AGREEMENT"), dated for reference purposes
only as of September 25, 1997 by and between Bank of Scotland, acting through
its branch in New York, New York ("BANK"), a foreign banking corporation
incorporated under the laws of Scotland with its principal place of business at
565 Fifth Avenue, New York, NY 10017, and J-Hawk International Corporation, a
Texas corporation ("BORROWER"), with its principal place of business at c/o
FirstCity Financial Corporation, 6400 Imperial Drive, P.O. Box 8216, Waco,
Texas 76714.

                                   RECITALS:

         A.      Borrower has requested and Bank has agreed to provide Borrower
with a revolving credit facility to be funded in French Francs.

         B.      Borrower is a wholly owned subsidiary of J-Hawk Corporation, a
Texas corporation and J-Hawk Corporation is a wholly owned subsidiary of
FirstCity Financial Corporation, a Delaware corporation.

         C.      J-Hawk Corporation and FirstCity Financial Corporation have
agreed to guaranty the liabilities and obligations of Borrower to Bank arising
under the terms of this Agreement and the other Loan Documents (hereinafter
defined).

         NOW THEREFORE, in consideration of any loan, advance, extension of
credit and/or other financial accommodation at any time made by Bank to or for
the benefit of Borrower, and of the promises set forth herein, the parties
hereto agree as follows:

1        DEFINITIONS AND TERMS

         1.1     The following words, terms and/or phrases shall have the
meanings set forth thereafter and such meanings shall be applicable to the
singular and plural form thereof, giving effect to the numerical difference.

                 (a)      "ADVANCE":  any loan of monies made by Bank to
         Borrower upon Borrower's request pursuant to Section 2.1.

                 (b)      "ADVANCE DATE":  with respect to each Advance, the
         Business Day upon which the proceeds of such Advance are to made
         available to the Borrower.

                 (c)      "AFFILIATE":  any Person (i) in which Borrower, one
         or more equity interest holders owning five percent (5%) or more of
         the total equity interest of Borrower, any Subsidiary, and/or any
         Parent, individually, jointly and/or severally, now or at any time or
         times hereafter, has or have an equity or other ownership





                                       1
<PAGE>   8



         interest equal to or in excess of five percent (5%) of the total
         equity of or other ownership interest in such Person; and/or (ii)
         which directly or indirectly through one or more intermediaries
         controls or is controlled by, or is under common control with
         Borrower.  For purposes of this definition, "CONTROL" shall mean the
         possession, directly or indirectly, of the power to direct or cause
         the direction of the management and policies of a Person, whether
         through the ownership of Stock, by contract or otherwise.

                 (d)      "AGREEMENT":  this Loan Agreement, together with all
         amendments, modifications, extensions, supplements, restatements
         replacements and extensions hereto or hereof.

                 (e)      "AGREEMENTS WITH AFFILIATES":  shall have the meaning
         set forth in Section 6.3(j).

                 (f)      "AND/OR":  one or the other or both, or any one or
         more or all, of the things or Persons in connection with which the
         conjunction is used.

                 (g)      "ASSETS":  any and all real, personal and intangible
         property of a Person, including, without limitation, accounts, chattel
         paper, contract rights, letters of credit, instruments and documents,
         equipment, general intangibles, inventory, leases, options, licenses,
         and real property, whether now existing or hereafter acquired or
         arising.

                 (h)      "BANK":  Bank of Scotland, a foreign banking
         corporation incorporated under the laws of Scotland.

                 (i)      "BANK DAY": any day, other than a Saturday, Sunday or
         any other day on which Lending institutions located in London, England
         or Paris, France are authorized or required by law or other
         governmental action to close and which is also a day for trading by
         and between Banks in French Franc deposits in the London InterBank
         Eurodollar market.

                 (j)      "BORROWER":  J-Hawk International, Inc., a Texas
         corporation, and its permitted successors and assigns.

                 (k)      "BORROWER'S LIABILITIES":  all obligations and
         liabilities of Borrower to Bank (including, without limitation, all
         principal, interest, charges, fees, expenses, debts, claims and
         indebtedness) whether primary, secondary, direct, contingent, fixed or
         otherwise, heretofore, now and/or from time to time hereafter owing,
         due or payable, however evidenced, created, incurred, acquired or
         owing and whether now contemplated or hereafter arising, whether under
         this Agreement or the other Loan Documents.

                 (l)      "BORROWER'S OBLIGATIONS":  all terms, conditions,
         warranties, representations, agreements, undertakings, covenants and
         provisions (other than





                                       2
<PAGE>   9
         Borrower's Liabilities) to be performed, discharged, kept, observed or
         complied with by Borrower to or for the benefit of Bank, whether
         primary, secondary, direct, contingent, fixed or otherwise,
         heretofore, now and/or from time to time hereafter arising, evidenced,
         created, incurred, acquired or owing, whether not contemplated or
         hereafter arising, whether under this Agreement or the other Loan
         Documents.

                 (m)      "BORROWING REQUEST":  a request for an Advance in the
         form set forth in Section 2.6(a).

                 (n)      "BUSINESS DAY": any day, other than a Saturday,
         Sunday, a day that is a legal holiday under the laws of the State of
         Illinois or Texas or any other day on which Lending institutions
         located in London, England, New York, New York, Chicago, Illinois,
         Waco, Texas or Paris, France are authorized or required by law or
         other governmental action to close and which is also a day for trading
         by and between Banks in French Franc deposits in the London InterBank
         Eurodollar market.

                 (o)      "CARGILL":  Cargill Financial Services Corporation, a
         Delaware corporation, or a wholly owned subsidiary thereof if such
         subsidiary is a lender to FirstCity.

                 (p)      "CHARGES":  all national, Federal, state, county,
         city, municipal and/or other governmental (or any instrumentality,
         division, agency, body or department thereof, including without
         limitation the Pension Benefit Guaranty Corporation) taxes, levies,
         assessments, charges, liens, claims or encumbrances upon and/or
         relating to the Assets, Borrower's Liabilities, Borrower's
         Obligations, Borrower's business, Borrower's ownership and/or use of
         any of its assets, Borrower's income and/or gross receipts and/or
         Borrower's ownership and/or use of any of its material assets.

                 (q)      "COSTS":  any and all reasonable costs and expenses
         (including, without limitation, the reasonable fees and expenses of
         any counsel, accountants, appraisers or other professionals) incurred
         by Bank at any time, in connection with:  (a) the preparation,
         negotiation and execution of this Agreement and all other Loan
         Documents; (b) the preparation, negotiation and execution of any
         amendment or modification of this Agreement or the other Loan
         Documents; (c) any litigation, contest, dispute, suit, proceeding or
         action (whether instituted by Bank, Borrower or any other Person) in
         any way relating to this Agreement, the other Loan Documents,
         Borrower's Obligations, Borrower's affairs or any Guarantor's affairs;
         (d) any attempt to enforce any rights of Bank against Borrower or any
         other Person which may be obligated to Bank by virtue of this
         Agreement or the other Loan Documents; and (g) performing any of the
         obligations relating to or payment of any of Borrower's Obligations
         hereunder in accordance with the terms hereof.

                 (r)      "DEFAULT RATE":  interest at the rate of two percent
         (2%) per annum plus the Interest Rate.





                                       3
<PAGE>   10
                 (s)      "DESIGNATED PERSON":  any Person identified as a
         "DESIGNATED PERSON" on Borrower's Secretary's Certificate dated of
         even date herewith, as amended or superseded from time to time.

                 (t)      "DOLLARS": the lawful currency of the United States
         of America.

                 (u)      "DOLLAR EQUIVALENT":  shall mean, with respect to an
         amount of French Francs on any date, the amount of Dollars that may be
         purchased with such amount of French Francs at the Spot Exchange Rate
         as of the day which is three Bank Days prior to such date.

                 (v)      "ENVIRONMENTAL LAWS":  any Federal, state or local
         law, rule, regulation, ordinance, order, code or statute applicable to
         Borrower or its property, in each case as amended (whether now
         existing or hereafter enacted or promulgated), controlling, governing
         or relating to the pollution or contamination of the air, water or
         land or concerning hazardous, special or toxic materials, wastes or
         substances, or any judicial or administrative interpretation of such
         laws, rules or regulations, including, without limitation, the Water
         Pollution Control Act (33 U.S.C. Section  1251 et seq.), Resource
         Conservation and Recovery Act (42 U.S.C.  Section  6901 et seq.), Safe
         Drinking Water Act (42 U.S.C. Section  3000(f) et seq.), Toxic
         Substances Control Act (15 U.S.C. Section  2601 et seq.), Clean Air
         Act (42 U.S.C. Section  7401 et seq.), and Comprehensive Environmental
         Response, Compensation and Liability Act (42 U.S.C. Section  9601 et
         seq.).

                 (w)      "EQUIPMENT LEASES":  all leases or similar agreements
         pursuant to which Borrower leases equipment.

                 (x)      "EVENT OF DEFAULT":  the definition ascribed to this
         term in Section 7.1.

                 (y)      "FRENCH FRANCS":  the lawful currency of France.

                 (z)      "FINANCIALS":  those financial statements of Borrower
         and/or any other Loan Party, heretofore, concurrently herewith or
         hereafter delivered by or on behalf of Borrower and/or any other Loan
         Party to Bank, including but not limited to those financial statements
         and reports delivered by Borrower to Bank pursuant to Section 6.2.

                 (aa)     "FIRSTCITY":  FirstCity Financial Corporation, a
         Delaware corporation.

                 (bb)     "GAAP":  generally accepted accounting principles
         applied in the preparation of the financial statements of a Person
         with such changes thereto as:  (i) shall be consistent with the
         then-effective principles promulgated or adopted by the Financial
         Accounting Standards Board and its predecessors and successors and
         (ii) shall be concurred in by the independent certified public
         accountants of recognized standing acceptable to Bank reviewing such
         financial statements of Borrower.





                                       4
<PAGE>   11
                 (cc)     "GUARANTOR": J-Hawk Corp. and FirstCity.

                 (dd)     "INDEBTEDNESS":  with respect to any Person, at a
         particular time: (i) indebtedness for borrowed money or for the
         deferred purchase price of property or services in respect of which
         such Person is liable, contingently or otherwise, as obligor,
         guarantor or otherwise or any commitment by which such Person assures
         a creditor against loss; (ii) obligations under leases which shall
         have been or should be, in accordance with GAAP, recorded as capital
         leases in respect of which obligations such Person is liable,
         contingently or otherwise, as obligor, guarantor or otherwise, or in
         respect of which obligations such Person assures a creditor against
         loss; (iii) all obligations and liabilities with respect to unfunded
         vested benefits under any "EMPLOYEE BENEFIT PLAN" or with respect to
         withdrawal liabilities incurred under ERISA by Borrower or any ERISA
         Affiliate to a "MULTIEMPLOYER PLAN", as such terms are defined under
         the Employee Retirement Income Security Act of 1974; and (iv) any and
         all accounts payable, accruals and other items characterized as
         Indebtedness in accordance with GAAP.

                 (ee)     "INTEREST PERIOD":  with respect to any Advance, (a)
         initially, the period commencing on the Advance Date and ending on the
         next succeeding tenth day of the current month or the next calendar
         month, as the case may be, and (b) thereafter, if the Advance is
         continued, each succeeding monthly period commencing on the tenth day
         of the calendar month and ending on the tenth day of the following
         calendar month; provided that any Interest Period which would
         otherwise end on a day which is not a Business Day shall be extended
         to the next succeeding Business Day and further provided that any
         Interest Period that would otherwise extend beyond the Maturity Date
         shall end on the Maturity Date.

                 (ff)     "INTEREST RATE":  the variable rate equal to the sum
         of four percent (4%) per annum plus the LIBOR Rate.

                 (gg)     "J-HAWK CORP.":  J-Hawk Corporation, a Texas
         corporation.

                 (hh)     "LIBOR BREAKAGE FEE":  shall mean a fee equal to all
         losses (excluding loss of anticipated profits) or expense incurred by
         reason of the liquidation or reemployment of deposits or other funds
         acquired by Bank to fund or maintain the requested LIBOR tranche,
         when, as a result of such failure on the part of Borrower or
         prepayment by Borrower (including, without limitation, any prepayment
         resulting from the liabilities being declared in due and payable in
         accordance with their terms hereof), interest on such LIBOR tranche is
         not based on the applicable LIBOR Rate for the requested LIBOR period.

                 (ii)     "LIBOR RATE":  the London InterBank Offered Rate
         relating to French Francs as quoted on page No. 3740 of the Telerate
         Data Information Service, on the date which is two (2) Bank Days prior
         to the first day of the Interest Period.  In the event the Telerate
         System page or the LIBOR Rate for the Interest Period requested is
         unavailable on the date which is two (2) Bank Days prior to the first
         day of the





                                       5
<PAGE>   12
         Interest Period for any reason, the LIBOR Rate used shall be
         determined by Bank to be the arithmetic mean (rounded upwards to the
         nearest whole multiple of 1/16th of 1%) of the offered rates quoted in
         London, England though other verifiable sources, for deposits in
         French Francs in amounts substantially equal to the principal amount
         of the Loan having a maturity equal to the Borrower's selection by
         major banks in the London inter-bank market at 11:00 a.m. London time,
         on the date which is two (2) Bank Days prior to the first day of the
         Interest Period.

                 (jj)     "LOAN":  any and all loans, advances, extensions of
         credit and/or other financial accommodations of any kind or nature
         made by Bank at any time to, for the benefit or at the request of
         Borrower pursuant to this Agreement and/or any of the other Loan
         Documents.

                 (kk)     "LOAN DOCUMENTS":  this Agreement and the Other 
         Agreements.

                 (ll)     "LOAN PARTY":  Borrower, FirstCity or J-Hawk Corp.

                 (mm)     "MATURITY DATE":  March 31, 1998, or such earlier
         date as all of Borrower's Obligations shall be due and payable by
         acceleration or otherwise.

                 (nn)     "MAXIMUM PRINCIPAL AMOUNT":  the meaning set forth in
         Section 2.2.

                 (oo)     "MONTHLY REPORT":  those reports delivered to Bank in
         accordance with Section 6.2(c)(iv).

                 (pp)     "NOTE":  that certain revolving promissory note dated
         even date herewith in the original principal amount of $10,000,000
         made by Borrower payable to the order of Bank, as said note may
         hereafter be amended, restated, modified, supplemented, extended or
         replaced.

                 (qq)     "OTHER AGREEMENTS":  the Note, together with all
         agreements, instruments and documents evidencing or securing the Loans
         or the transactions contemplated herein, including, without
         limitation, bond agreements, loan agreements, security agreements,
         guaranties, mortgages, deeds of trust, notes, applications and
         agreements for letters of credit, letters of credit, advances of
         credit, bankers acceptances, pledges, powers of attorney, consents,
         assignments, collateral assignments, contracts, notices, leases,
         financing statements and all other written matter heretofore, now
         and/or from time to time hereafter executed by and/or on behalf of
         Borrower, any other Loan Party or any other Person and delivered to
         Bank, or issued by Bank upon the application and/or other request of,
         and on behalf of, Borrower.

                 (rr)     "PARENT":  any Person, now or at any time or times
         hereafter, owning or controlling (alone or with Borrower, any
         Subsidiary and/or any other Person) at least a majority of the issued
         and outstanding Stock or other ownership interest of





                                       6
<PAGE>   13
         Borrower or any Subsidiary (hereinafter defined).  For purposes of
         this definition, "CONTROL" shall have the same meaning ascribed to
         this term in Section 1.1(b).

                 (ss)     "PAYMENT DATE":  the tenth day of each month during
         the term; provided that, if such day is not a Business Day, the
         Payment Date shall be extended to the next succeeding Business Day.

                 (tt)     "PERMITTED LIENS":  (i) any liens created in favor of
         Bank; (ii) liens for Charges which are not yet due and payable or
         which are expressly permitted pursuant to the terms hereof, or claims
         and unfunded liabilities under ERISA not yet due and payable or which
         are being contested in good faith; (iii) liens arising in connection
         with worker's compensation, unemployment insurance, old age pensions
         and social security benefits which are not overdue or are being
         contested in good faith by appropriate proceedings diligently pursued,
         provided that in the case of any such contest any proceedings
         commenced for the enforcement of such liens shall have been duly
         suspended and such provision for the payment of such liens has been
         made on the books of Borrower as may be required by GAAP; (iv) liens
         incurred in the ordinary course of business to secure the performance
         of statutory obligations arising in connection with progress payments
         or advance payments due under contracts with the United States
         Government or any agency thereof entered into in the ordinary course
         of business; (v) additional liens expressly permitted from time to
         time in writing by Bank; (vi) those liens in favor of Cargill
         disclosed to Bank by Borrower in writing; (vii) any liens securing
         indebtedness of Borrower to any Persons in an aggregate amount less
         than $200,000; and (viii) those liens disclosed on Exhibit A.

                 (uu)     "PERSON":  any individual, sole proprietorship,
         partnership, limited liability company, joint venture, trust,
         unincorporated organization, association, corporation, institution,
         entity, party or government (whether national, Federal, state, county,
         city, municipal or otherwise, including without limitation any
         instrumentality, division, agency, body or department thereof).

                 (vv)     "RECORDS": all books, records, computer records,
         computer software, ledger cards, programs and other computer
         materials, customer and supplier lists, invoices, orders and other
         property and general intangibles at any time evidencing or relating to
         the Assets.

                 (ww)     "SECURITIES":  shall have the meaning ascribed to
         that term in the Securities Act of 1934.

                 (xx)     "SECURITIES LAWS": all applicable Federal and state
         securities laws and regulations promulgated pursuant thereto.

                 (yy)     "SPOT EXCHANGE RATE":  shall mean, on any day, (a)
         with respect to any French Francs , the spot rate at which Dollars are
         offered on such day by Bank of Scotland in London for such French
         Francs at approximately 11:00 a.m. (London





                                       7
<PAGE>   14
         time), and (b) with respect to Dollars in relation to French Francs,
         the spot rate at which French Francs are offered on such day by Bank
         of Scotland in London for Dollars at approximately 11:00 a.m. (London
         time).

                 (zz)     "STOCK":  all shares, interests, participations or
         other equivalents (however designated) of or in a corporation, whether
         voting or non-voting, including, but not limited to, common stock,
         warrants, preferred stock, convertible debentures and all agreements,
         instruments and documents convertible, in whole or in part, into any
         one or more or all of the foregoing.

                 (aaa)     "SUBSIDIARY":  any Person at least a majority of
         whose issued and outstanding Stock or other ownership interests now or
         at any time hereafter is owned by any Guarantor or Borrower, as
         applicable.

                 (bbb)     "TANGIBLE NET WORTH":  as determined at any time, the
         total of shareholders' equity (including capital stock, additional
         paid-in capital and retained earnings after deducting treasury stock
         and subordinated indebtedness approved in writing by Bank) of a
         Person, as applicable, less the sum of the total amount of any
         intangible assets, which, for purposes of this definition, shall
         include, without limitation, General Intangibles and, if applicable,
         all accounts receivable from any Loan Party or any shareholders or
         officers of any Loan Party, all prepaid expenses, any unamortized
         debt, discount and expense, unamortized deferred charges and good
         will, all as determined in accordance with GAAP.

                 (ccc)     "UNMATURED DEFAULT":  any event or condition which,
         with the passage of time or the giving of notice or both, would
         constitute an Event of Default hereunder.

                 (ddd)     "UK TRUST" that certain Receivables Trust formed
         pursuant to a Trust Deed dated December 24, 1996 by and among
         Borrower, Fairmile Portfolio Management Limited, a company registered
         in England and Wales, Defimo, a company registered in France, and
         Credit Finance Corporation Limited, a company registered in England
         and Wales.

         1.2     GAAP.     Except as otherwise defined in this Agreement or the
other Loan Documents,  all accounting terms used herein shall have the meaning
ascribed to that term in accordance with GAAP.

         1.3     Borrower.  Whenever the context so requires, the use of "IT"
in reference to Borrower shall mean Borrower as defined above.

         1.4     Rules of Construction. In this Agreement, unless a clear
contrary intention appears:

                 (a)      the singular number includes the plural number and
         vice versa; reference to any gender includes each other gender;





                                       8
<PAGE>   15
                 (b)      the words "herein," "hereof" and "hereunder" and
         other words of similar import refer to this Agreement as a whole and
         not to any particular Article, Section or other subdivision;

                 (c)      reference to any Person includes such Person's
         successors and assigns but, if applicable, only if such successors and
         assigns are permitted by this Agreement, and reference to a Person in
         a particular capacity excludes such Person in any other capacity or
         individually; provided that nothing in this clause is intended to
         authorize any assignment not otherwise permitted by this Agreement;

                 (d)      reference to any agreement, document or instrument
         means such agreement, document or instrument as amended, supplemented
         or modified and in effect from time to time in accordance with the
         terms thereof and, if applicable, the terms hereof, and reference to
         any note includes any note issued pursuant to any Loan Document in
         extension or renewal thereof and in substitution or replacement
         therefor;

                 (e)      unless the context indicates otherwise, reference to
         any Article, Section, Schedule or Exhibit means such Article or
         Section hereof or such Schedule or Exhibit hereto:

                 (f)      the words "INCLUDING" (and with correlative meaning
         "INCLUDE") means including, without limiting the generality of any
         description preceding such term:

                 (g)      with respect to the determination of any period of
         time, the word "from" means "from and including" and the word "to"
         means "to but excluding;" and

                 (h)      reference to any law means such as amended, modified,
         codified or reenacted, in whole or in part, and in effect from time to
         time.

                 (i)      The Article and Section headings herein are for
         convenience only and shall not affect the construction hereof.


2        LOANS - GENERAL TERMS

         2.1     Revolving Loan.  Subject to the terms and conditions hereof,
Bank shall make available to Borrower revolving Loans from time to time in an
aggregate principal amount not to exceed at any time outstanding 60,000,000
French Francs.  The Loans shall be further evidenced by the Note.  The Loan
shall be funded and interest shall accrue and be paid thereon in accordance
with this Article 2.  The entire unpaid principal balance plus accrued but
unpaid interest on the Loans is due and payable on the Maturity Date.  The





                                       9
<PAGE>   16
Maturity Date of the Note may be extended by the parties by execution of an
amended and restated revolving promissory note, without further amendment of
this Agreement; provided that, said amended and restated note shall
specifically provide that it amends and restates the Note and evidences Loans
to be made in accordance with this Section 2.1.  Said amended and restated
revolving promissory note shall be deemed to be the Note as defined herein.
Nothing contained in this Section 2.1 shall be deemed to be an agreement by
Bank to extend the Maturity Date under the terms set forth herein, the terms
set forth in Section 4.2, or any other terms.

         2.2     Maximum Principal Amount.  Notwithstanding anything to the
contrary contained herein or in any other Loan Document, the principal portion
of Borrower's Liabilities outstanding at any one time during the term hereof
shall not exceed 60,000,000 French Francs ("MAXIMUM PRINCIPAL AMOUNT");
provided that, if at any time, the Dollar Equivalent of the Maximum Principal
Amount exceeds $10,500,000, the Maximum Principal Amount shall be reduced on
and as of the date that such excess occurs and thereafter the Maximum Principal
Amount shall be equal to that number of French Francs having a Dollar
Equivalent equal to $10,000,000.  In the event that the outstanding principal
balance of the Loan exceeds the Maximum Principal Amount, Borrower shall pay
the amount of such excess to Bank, without notice or demand, and any amount not
so paid shall bear interest at the Default Rate until paid.  This is an
absolute obligation to pay to Bank the amount of the unpaid principal balance
of the Loan in excess of said Maximum Principal Amount, regardless of the cause
of such excess.

         2.3     Maturity Date; Termination of Loans.  The Bank's obligation to
make any Advance to Borrower pursuant to the provisions hereof shall be in
effect until the Maturity Date, unless sooner terminated by Bank upon the
occurrence of an Event of Default, an Unmatured Default (in accordance with
Section 7.7), or pursuant to the terms hereof.

         2.4     Authorized Disbursement of Proceeds.  Borrower hereby
authorizes and directs Bank to disburse, for and on behalf of Borrower and for
Borrower's account, the proceeds of any Loan to such Person as Borrower or any
Designated Person shall direct, whether in writing or orally.  In addition to
Advances of Loan proceeds made pursuant to requests for such Advances made by
Borrower from time to time, Borrower hereby irrevocably authorizes Bank to
disburse proceeds of the Loan to pay:  (a) principal and interest which is
accrued but unpaid and which is due and payable pursuant to the terms hereof
and of the Note until the Loan is paid in full; and (b) for any and all Costs.
The execution of this Agreement by Borrower shall, and hereby does, constitute
an irrevocable direction and authorization to Bank so to disburse such funds
described in this Section and to treat such Advances as money loaned pursuant
to this Agreement and as indebtedness evidenced by the Note.  No further
direction or authorization from Borrower shall be necessary for Bank to make
such Advances, and all such Advances shall satisfy, to the extent so disbursed,
the obligations of Borrower hereunder and shall be evidenced by the Note.
Notwithstanding anything to the contrary contained herein, Bank is under no
duty or obligation to make such Advances and failure to make such Advances
shall not be deemed to be a default by Bank or impair any of Bank's rights or
remedies hereunder.





                                       10
<PAGE>   17
         2.5     Advances.

                 (a)      Advances shall be in an aggregate principal amount
         which shall not be less than 1,000,000 French Francs or the remaining
         available balance of the Loan, whichever is less.  All Advances shall
         be made in French Francs in an amount specified in the applicable
         Borrowing Request or as deemed elected by Borrower pursuant to Section
         2.6(b).  Borrower may refinance all or any part of an Advance with
         another Advance, subject to the conditions and limitations set forth
         in this Agreement, including the provisions of Section 2.2.  Any
         Advance or part thereof so financed shall be deemed to be repaid or
         prepaid in accordance with the applicable provisions of this Agreement
         with the proceeds of the new Advance.

                 (b)      Bank may, at its option, make any Advance by causing
         any domestic or foreign branch or affiliate of Bank to make such
         Advance: provided that, any exercise of such option shall not affect
         the obligation of Borrower to repay such Loan in accordance with the
         terms of this Agreement.  Advances with more than one Interest Period
         may be outstanding at the same time; provided, however, that Borrower
         shall not be entitled to request any Advance which, if made, would
         result in more than seven (7) separate Advances outstanding hereunder
         at any time.

                 (c)      Subject to the provisions of Section 2.6, Bank shall
         make each Advance to be made by it hereunder on the proposed date
         thereof by wire transfer to such account as Borrower may designate in
         immediately available funds as may then be customary for the
         settlement of international transactions in French Francs not later
         than noon, local time, Paris time.  The account designated by Borrower
         shall be in the name of Borrower and shall be located in France.

                 (d)      Notwithstanding any other provision of this
         Agreement, Borrower shall not be entitled to request any Advance if
         the Interest Period requested with respect thereto would end after the
         Maturity Date.

         2.6     Borrowing Procedure.

                 (a)      In order to request an Advance, Borrower shall hand
         deliver or telecopy to Bank a duly completed Borrowing Request not
         later than 11:00 a.m. New York time, three (3) Business Days before a
         proposed Advance.  Each Borrowing Request shall be irrevocable and
         shall specify (i) the number and location of the account to which
         funds are to be disbursed (which shall be an account that complies
         with the requirements of Section 2.5; (ii) the date such Advance is to
         be made (which shall be a Business Day); and (iii) the amount of such
         Advance (which shall be expressed in French Francs; provided that,
         notwithstanding any contrary specification in any Borrowing Request,
         each requested Advance shall comply with the requirements set forth in
         Section 2.5.

                 (b)      If Borrower in respect of an outstanding Advance
         shall not have delivered a Borrowing Request in accordance with
         Section 2.6(a) on or before three





                                       11
<PAGE>   18
         (3) Business Days prior to the end of the Interest Period then in
         effect for such Advance and requesting that such Advance be
         refinanced, then Borrower shall (unless Borrower has notified the Bank
         not fewer than three (3) Business Days prior to the end of such
         Interest Period, that such Advance is to be repaid at the end of such
         Interest Period) be deemed to have delivered a Borrowing Request
         requesting that such Advance be refinanced with a new Advance of
         equivalent amount, and such new Advance shall be deemed to have a one
         month's duration Interest Period.

         2.7     Interest.  The unpaid principal balance of each Advance shall
bear interest at the Interest Rate applicable thereto, determined by Bank in
accordance with the provisions hereof, which determination shall be binding
upon Borrower, absent manifest error.  All interest and fees chargeable
hereunder shall be computed on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed.  After the occurrence of an Event
of Default and during the continuation thereof, all Loans hereunder shall bear
interest at the Default Rate.

         2.8     Fees.

                 (a)      Facility Fee.  A maximum facility fee of $100,000
         shall be payable by Borrower to Bank as follows:

                          (i)     Concurrently with the execution hereof,
                 Borrower shall pay to Bank a fee equal to $50,000.

                          (ii)    Ninety (90) days after the date hereof,
                 Borrower shall pay to Bank a fee equal to $25,000.

                          (iii)   If any Borrower's Obligations remain
                 outstanding on April 1, 1998, Borrower shall pay to Bank a fee
                 equal to $25,000.

                 (b)      Usage Fee.  Borrower shall pay an unused commitment
         fee in an amount equal to .25% (on annual basis) of the difference
         between 60,000,000 French Francs and the daily outstanding principal
         balance of the Loan.  Such fee shall be payable quarterly in arrears
         on the last Business Day of each calendar quarter.

                 (c)      LIBOR Breakage Fee. In the event of any prepayment of
         an Advance prior to the end of the then applicable Interest Period (by
         acceleration or otherwise) or in the event any Advance is not made
         after delivery of a Borrowing Request in accordance with the terms
         hereof, for any reason whatsoever, Borrower shall pay to Lender an
         amount equal to the LIBOR Breakage Fee.

Any fee payable under Sections 2.8(b) and (c) not paid when due shall bear
interest at the Default Rate. Any fee payable under Sections 2.8(a) not paid
when due shall bear interest at ten percent (10%).





                                       12
<PAGE>   19
         2.9     Usury.  The provisions of this Section shall govern and
control over any irreconcilably inconsistent provision contained in this
Agreement or in any other document evidencing or securing the Loan.  Bank shall
never be entitled to receive, collect, or apply as interest hereon (for
purposes of this Section, the word "INTEREST" shall be deemed to include any
sums treated as interest under applicable law governing matters of usury and
unlawful interest), any amount in excess of the Highest Lawful Rate
(hereinafter defined) and, in the event Bank ever receives, collects, or
applies as interest any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and shall be treated
hereunder as such; and, if the principal of this Agreement is paid in full, any
remaining excess shall forthwith be paid to Borrower.  In determining whether
or not the interest paid or payable, under any specific contingency, exceeds
the Highest Lawful Rate, Borrower and Bank shall, to the maximum extent
permitted under applicable law, (i) characterize any non-principal payment as
an expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) spread the total amount of
interest throughout the entire contemplated term of this Agreement, provided,
that if this Agreement is paid and performed in full prior to the end of the
full contemplated term hereof, and if the interest received for the actual
period of existence hereof exceeds the Highest Lawful Rate, Bank shall refund
to Borrower the amount of such excess and, in such event, Bank shall not be
subject to any penalties provided by any laws for contracting for, charging or
receiving interest in excess of the Highest Lawful Rate.  "HIGHEST LAWFUL RATE"
shall mean the maximum rate of interest which Bank is allowed to contract for,
charge, take, reserve or receive under applicable law after taking into
account, to the extent required by applicable law, any and all relevant
payments or charges hereunder.

3        PAYMENT TERMS

         3.1     Loan Account; Method of Making Payments.  Bank shall maintain
a Loan Account on its books in which shall be recorded:  (i) all Loans made by
Bank to Borrower pursuant to this Agreement, (ii) all payments made by Borrower
on all Loans, and (iii) all other appropriate debits and credits as provided in
this Agreement, including, without limitation, all fees, charges, expenses and
interest.  All entries in the Loan Account shall be made in accordance with
Bank's customary accounting practices, in effect from time to time.  The
failure of Bank to record any of the foregoing shall not in any way limit
Borrower's obligations under this Agreement.

         3.2     Payment Terms.  Accrued interest on each Advance shall be
payable in arrears commencing October 10, 1997 and on each Payment Date
thereafter until the Maturity Date.

         3.3     Place of Payment.  All payments in French Francs to Bank
hereunder and under the Other Agreements shall be payable in immediately
available funds at noon Paris time at such place or places as Bank may
designate in writing to Borrower. All payments in U.S. Dollars to Bank
hereunder and under the Other Agreements shall be payable in





                                       13
<PAGE>   20
immediately available funds at noon New York time at such place or places as
Bank may designate in writing to Borrower.  All of such payments to Persons
other than Bank shall be payable at such place or places as Bank may designate
in writing to Borrower.  Borrower's Liabilities will be payable as set forth in
the Note, this Agreement, and the Other Agreements.

         3.4     Payment on Maturity and Prepayment.  On the Maturity Date,
whether by acceleration or otherwise, Borrower shall pay to Bank, in full, in
cash or other immediately available funds, the outstanding amount of the Loan.
Each Advance may be prepaid on the last day of the Interest Period applicable
thereto.  Prepayment of any Advance during an Interest Period is expressly
prohibited.  In the event of an attempted prepayment of any Advance during any
Interest Period, Bank, at Borrower's option, shall either: (i) hold such funds
in a non-interest bearing cash collateral account to secure Borrower's
Obligations and to apply such funds to Borrower's Obligations on the last day
of the Interest Period, or (ii) apply such funds to Borrower's Obligations, in
which event Borrower shall pay to Bank a LIBOR Breakage Fee immediately upon
demand thereof, and any amount not so paid shall bear interest at the Default
Rate.

         3.5     Advances to Constitute One Loan.  All Advances, loans and any
other financial accommodations provided pursuant to the terms hereof by Bank to
Borrower shall constitute one loan and all indebtedness and obligations of
Borrower to Bank under this Agreement, the Other Agreements or otherwise shall
constitute one general obligation.

         3.6     Application of Payments and Collections.

                 (a)      Application of Payments.  Bank shall have the right
         unilaterally (and without notice to or the consent of any Person) to
         allocate any and all payments which may be received by or tendered to
         Bank made by the Borrower or any other Person at any time or from time
         to time and which relate in any way to the Loan or any other of
         Borrower's Obligations then due and payable in any order of priority
         as Bank in its reasonable discretion shall elect, as follows:  (i) to
         the payment of any Costs; (ii) to accrued but unpaid interest,
         penalties and late payment fees; and (iii) to principal; provided that
         Bank shall not allocate payments in a manner which would create a
         LIBOR Breakage Fee or other fee or penalty payable by Borrower which
         would not otherwise be imposed.  Borrower (y) irrevocably waives the
         right to direct the application of payments and collections received
         by Bank from or on behalf of Borrower, and (z) agrees that Bank shall
         have the continuing exclusive right to apply and reapply any and all
         such payments and collections against the Loan or any other Borrower's
         Liabilities or Borrower's Obligations then due and payable in such
         manner as Bank may deem appropriate, notwithstanding any entry by Bank
         upon any of its books and records.

                 (b)      Reapplication of Payments.  To the extent that Bank
         receives any payment on account of the Borrower's Liabilities or
         Borrower's Obligations, and any such payment(s) and/or proceeds or any
         part thereof are subsequently





                                       14
<PAGE>   21
         invalidated, declared to be fraudulent or preferential, set aside,
         subordinated and/or required to be repaid to a trustee, receiver or
         any other Person under any bankruptcy act, state or federal law,
         common law or equitable cause, then, to the extent of such payment(s)
         or proceeds received, the Borrower's Liabilities or Borrower's
         Obligations or part thereof intended to be satisfied shall be revived
         and continue in full force and effect, as if such payment(s) and/or
         proceeds had not been received by Bank and applied on account of the
         Borrower's Liabilities or Borrower's Obligations.

         3.7     Monthly Statements.  All Advances to Borrower and all other
debits and credits provided for in this Agreement shall be evidenced by entries
made by Bank in its internal data control systems showing the date, amount and
reason for each such debit or credit.  Until such time as Bank shall have
rendered to Borrower written statements of account as provided herein, the
balance in the Loan Account, as set forth on Bank's most recent statement,
shall be rebuttably presumptive evidence of the amounts due and owing to Bank
by Borrower.  At Bank's option, Bank shall render a monthly statement to
Borrower setting forth the balance of the Loan Account, including principal,
interest, costs, penalties, charges and other fees.  Each such statement shall
be subject to subsequent adjustment by Bank and Bank's right to reapply
payments in accordance with Section 3.6(b), but shall, as to statements of
principal and interest then due or having been paid, absent manifest errors or
omissions, be presumed correct and binding upon Borrower and shall constitute
an account stated unless, within thirty (30) days after receipt of any
statement from Bank, Borrower shall deliver to Bank written objection thereto,
specifying the error or errors, if any, contained in such statement.

4        ANCILLARY AGREEMENTS

         4.1     Guaranties.  Concurrently herewith, Borrower shall cause
J-Hawk Corp. and FirstCity to execute and deliver to Bank a guaranty of payment
and performance of all of Borrower's Obligations (the "GUARANTEES").

         4.2     Refinance of Facility. Borrower and Bank hereby acknowledge
that the credit facility made available to Borrower pursuant to the terms
hereof is a short-term facility which Borrower and Bank contemplate will be
refinanced with a different credit facility at the Maturity Date.
Notwithstanding the foregoing, Borrower hereby acknowledges that in the event
Borrower requests Bank to extend the credit facility evidenced hereby and Bank
elects, in its sole discretion to do so, at such time, Bank shall require that
such credit facility be secured by a pledge of and security interest in all
Assets of Borrower, FirstCity and J-Hawk Corp. Without limiting the generality
of the forgoing sentence, concurrently with any extension of the Maturity Date
hereof, to secure payment and performance of all Borrower's Liabilities and
Borrower's Obligations, Borrower shall:

                 (a)      cause Cargill to enter into an inter-creditor
         agreement, in form and substance acceptable to Bank, in Bank's sole
         discretion relating to the relative priority of any liens granted to
         Bank and to Cargill by Borrower or any Guarantor.





                                       15
<PAGE>   22
         Bank hereby acknowledges that Borrower and/or the Guarantors have
         heretofore entered into financing transactions with Cargill. Attached
         hereto as Exhibit B is a true, accurate and complete schedule of all
         Indebtedness of Borrower and/or any Guarantor to Cargill as of the
         date hereof, including a detailed description of all notes and all
         security agreements evidencing or securing such Indebtedness. Bank and
         Borrower hereby agree that the relative priority of the liens granted
         by Borrower and/or Guarantor to Bank and Cargill shall be governed by
         such inter-creditor agreement.

                 (b)      subject to Section 4.2(a), cause each Guarantor to
         grant to Bank a security interest in all of such Guarantor's Assets
         (real, personal and intangible), including all partnership interests,
         stock, shares or other equity interests owned by such Guarantor in all
         other Persons and all after-acquired property of Guarantor.

                 (c)      subject to Section 4.2(a), grant to Bank a security
         interest in all of Borrower's Assets (real, personal and intangible),
         including all interest in the UK Trust, all partnership interests,
         stock, shares or other equity interests owned by Borrower in all other
         Persons, and all after-acquired property of Borrower.

         4.3     Loan Party Indebtedness. Attached hereto as  Exhibit C is a
true, accurate, and complete schedule of all Indebtedness pursuant to which
Borrower or any other Loan Party has an obligation or liability to any other
Loan Party as of the date hereof, including a detailed description of all notes
and all security agreements evidencing or securing such Indebtedness.

5        GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS

         5.1     General Representations and Warranties.  Except as disclosed
in writing to Bank concurrently herewith, Borrower warrants and represents to
and covenants with Bank that:

                 (a)      Organization.

                          (i)     Borrower is and at all times hereafter shall
                 be a corporation, duly organized and existing and in good
                 standing under the laws of the State of Texas and qualified or
                 licensed to do business and in good standing in all states in
                 which the laws thereof require Borrower to be so qualified
                 and/or licensed, including without limitation the State of
                 Texas;

                          (ii)    J-Hawk Corp. is and at all times hereafter
                 shall be a corporation, duly organized and existing and in
                 good standing under the laws of the State of Texas and
                 qualified or licensed to do business and in good standing in
                 all states in which the laws thereof require J-Hawk Corp. to
                 be so qualified and/or licensed, including without limitation
                 the State of Texas;





                                       16
<PAGE>   23
                          (iii)   FirstCity is and at all times hereafter shall
                 be a corporation, duly organized and existing and in good
                 standing under the laws of the State of Delaware and qualified
                 or licensed to do business and in good standing in all states
                 in which the laws thereof require FirstCity to be so qualified
                 and/or licensed, including without limitation the State of
                 Texas;

                 (b)      Corporate Power.

                          (i)     Borrower has the right, power and capacity
                 and is duly authorized and empowered to enter into, execute,
                 deliver and perform this Agreement and the Other Agreements,
                 to which it is a party;

                          (ii)    J-Hawk Corp. has the right, power and
                 capacity and is duly authorized and empowered to enter into,
                 execute, deliver and perform those Loan Documents  to which it
                 is a party;

                          (iii)   FirstCity has the right, power and capacity
                 and is duly authorized and empowered to enter into, execute,
                 deliver and perform those Loan Documents  to which it is a
                 party;

                 (c)      Violation of Organizational Documents.

                          (i)     The execution, delivery and/or performance by
                 Borrower, of this Agreement and the Other Agreements, to which
                 it is a party, shall not, by the lapse of time, the giving of
                 notice or otherwise, constitute a violation of any applicable
                 law or a breach of any provision contained in the articles of
                 incorporation or by-laws of Borrower, or contained in any
                 agreement, instrument or document to which Borrower, is now or
                 hereafter a party or by which it or any of its assets is or
                 may become bound;

                          (ii)    The execution, delivery and/or performance by
                 J-Hawk Corp. of those Loan Documents to which it is a party,
                 shall not, by the lapse of time, the giving of notice or
                 otherwise, constitute a violation of any applicable law or a
                 breach of any provision contained in the articles of
                 incorporation or by-laws of J-Hawk Corp. or contained in any
                 agreement, instrument or document to which J-Hawk Corp., is
                 now or hereafter a party or by which it or any of its assets
                 is or may become bound;

                          (iii)   The execution, delivery and/or performance by
                 FirstCity, of those Loan Documents to which it is a party,
                 shall not, by the lapse of time, the giving of notice or
                 otherwise, constitute a violation of any applicable law or a
                 breach of any provision contained in the articles of
                 incorporation or by-laws of FirstCity, or contained in any
                 agreement, instrument or document to which FirstCity is now or
                 hereafter a party or by which it or any of its assets is or
                 may become bound;





                                       17
<PAGE>   24
                 (d)      Enforceability.

                          (i)     This Agreement and the Other Agreements, to
                 which Borrower is a party, are and will be the legal, valid
                 and binding agreements of Borrower, enforceable in accordance
                 with their terms, except as enforcement thereof may be subject
                 to the effect of applicable bankruptcy, insolvency,
                 reorganization, moratorium or similar laws affecting
                 creditors' rights generally, and to general principles of
                 equity (regardless of whether such enforcement is sought in a
                 proceeding in equity or at law);

                          (ii)    Those Loan Documents to which J-Hawk Corp. is
                 a party  are and will be the legal, valid and binding
                 agreements of J-Hawk Corp., enforceable in accordance with
                 their terms, except as enforcement thereof may be subject to
                 the effect of applicable bankruptcy, insolvency,
                 reorganization, moratorium or similar laws affecting
                 creditors' rights generally, and to general principles of
                 equity (regardless of whether such enforcement is sought in a
                 proceeding in equity or at law);

                          (iii)   Those Loan Documents to which FirstCity is a
                 party are and will be the legal, valid and binding agreements
                 of FirstCity, enforceable in accordance with their terms,
                 except as enforcement thereof may be subject to the effect of
                 applicable bankruptcy, insolvency, reorganization, moratorium
                 or similar laws affecting creditors' rights generally, and to
                 general principles of equity (regardless of whether such
                 enforcement is sought in a proceeding in equity or at law);

                 (e)      Subsidiary.

                          (i)     Borrower is, and at all times during the term
                 hereof shall be, a wholly-owned Subsidiary of J-Hawk Corp.
                 There are, and at all times during the term hereof shall be,
                 200 shares of issued and outstanding common stock of Borrower;

                          (ii)    J-Hawk Corp. is, and at all times during the
                 term hereof shall be, a wholly-owned Subsidiary of FirstCity.
                 There are, and at all times during the term hereof shall be,
                 1,000 shares of issued and outstanding common stock of
                 FirstCity;

                 (f)      Fictitious Names.

                          (i)     Each of the fictitious names, if any, used by
                 Borrower during the five (5) year period preceding the date of
                 this Agreement is set forth on Exhibit D; Part 1 attached
                 hereto and none of such fictitious names are registered
                 trademarks or tradenames with the U.S. Patent and Trademark
                 Office;





                                       18
<PAGE>   25
                          (ii)    Each of the fictitious names, if any, used by
                 FirstCity during the five (5) year period preceding the date
                 of this Agreement is set forth on Exhibit D; Part 2 attached
                 hereto, and none of such fictitious names are registered
                 trademarks or tradenames with the U.S. Patent and Trademark
                 Office;

                          (iii)   Each of the fictitious names, if any, used by
                 J-Hawk Corp. during the five (5) year period preceding the
                 date of this Agreement is set forth on Exhibit D; Part 3
                 attached hereto and none of such fictitious names are
                 registered trademarks or tradenames with the U.S. Patent and
                 Trademark Office;

                 (g)      Title.  At all times following acquisition thereof,
         Borrower, FirstCity and/or J-Hawk Corp., as applicable,  shall have
         good, indefeasible and merchantable title to and ownership of all of
         its Assets, free and clear of all liens, claims, security interests
         and encumbrances, except the Permitted Liens.

                 (h)      Solvency.  Each of Borrower, FirstCity and J-Hawk
         Corp. is now, and at all times hereafter shall be, solvent and
         generally paying its debts as they mature and Borrower now owns, and
         shall at all times hereafter own, property which, at a fair valuation,
         is greater than the sum of its debt.  Each of Borrower, FirstCity and
         J-Hawk Corp.  now has, and shall have at all times hereafter, capital
         sufficient to carry on its business and transactions and all
         businesses and transactions in which it is about to engage;

                 (i)      Proceedings.  There are no actions or proceedings
         which are pending or threatened against Borrower, FirstCity or J-Hawk
         Corp. which might result in any material and adverse change in its
         financial condition or materially adversely affect its Assets or its
         ability to fully pay and perform its respective obligations and
         liabilities under the Loan Documents to which it is a party;

                 (j)      Government Contracts.  None of Borrower, FirstCity
         nor J-Hawk Corp. have any government contracts;

                 (k)      Adequate Licenses.  Each of Borrower, FirstCity and
         J-Hawk Corp. possesses adequate assets, licenses, patents, copyrights,
         trademarks and tradenames to continue to conduct its business as
         previously conducted by it and as contemplated in the foreseeable
         future;

                 (l)      Government Permits.  Each of Borrower, FirstCity and
         J-Hawk Corp.  has and is in good standing with respect to all
         governmental permits, certificates, consents and franchises necessary
         to continue to conduct its business as previously conducted prior to
         the date hereof and to own or lease and operate its properties as now
         owned or leased by it.  None of said permits, certificates, consents
         or franchises contain any term, provision, condition or limitation
         more burdensome





                                       19
<PAGE>   26
         than such as are generally applicable to Persons engaged in the same
         or similar business as Borrower, FirstCity or J-Hawk Corp., as
         applicable;

                 (m)      Charge; Restrictions.  None of Borrower, FirstCity
         nor J-Hawk Corp. is a party to (nor are any of its Assets otherwise
         subject to) any contract or agreement or subject to any Charge,
         restriction, judgment, decree or order materially and adversely
         affecting its business, property, assets, operations or condition,
         financial or otherwise other than ad valorem taxes not yet due and
         payable;

                 (n)      Compliance with Laws.  None of Borrower, FirstCity
         nor J-Hawk Corp., is, or will be during the term hereof, in violation
         of any applicable statute, regulation, order or ordinance of the
         United States of America, of any state, city, town, municipality,
         county or of any other jurisdiction, or of any agency thereof,
         including the Federal Reserve Board, in any respect materially and
         adversely affecting its business, property, Assets, operations or
         condition, financial or otherwise;

                 (o)      Compliance with Agreements.  None of Borrower,
         FirstCity, nor J-Hawk Corp. is in default with respect to any
         indenture, loan agreement, mortgage, deed or other similar agreement
         relating to the borrowing of monies to which it is a party or by which
         it is bound;

                 (p)      Financials.  The Financials heretofore delivered by
         Borrower, FirstCity, J-Hawk Corp. or any other Affiliate to Bank,
         fairly and accurately present the assets, liabilities and financial
         conditions and results of operations of Borrower, FirstCity, J-Hawk
         Corp. and such other Persons described therein as of and for the
         periods ending on such dates and have been prepared in accordance with
         generally accepted accounting principles and such principles have been
         applied on a basis consistently followed in all material respects
         throughout the periods involved;

                 (q)      Tax Returns.  Each of Borrower, FirstCity and J-Hawk
         Corp. has filed or caused to be filed all tax returns which are
         required to be filed, and has paid all Charges shown to be due and
         payable on said returns or on any assessments made against it or any
         of its property, and all other Charges imposed on it or any of its
         properties by any governmental authority except for ad valorem taxes
         not yet due and payable;

                 (r)      No Adverse Change.  There has been no material and
         adverse change in the assets, liabilities or financial condition of
         Borrower, FirstCity or J-Hawk Corp. since the date of the Financials.

                 (s)      No Indebtedness. Except as disclosed in the most
         recent Financials heretofore delivered by Borrower, FirstCity and
         J-Hawk Corp. to Bank and in Schedule 5.1(s) or otherwise disclosed in
         writing to Bank, none of Borrower, FirstCity nor J-Hawk Corp. has any
         Indebtedness (except for Indebtedness arising in the ordinary course
         of its business since the dates reflected in the Financials that is





                                       20
<PAGE>   27
         not Indebtedness for borrowed money), has guaranteed (other than as a
         result of the endorsement of any instrument of items of payment for
         deposit or collection in the ordinary course of business or as
         otherwise expressly permitted pursuant to the terms hereof) the
         obligations of any Person, and there are no actions or proceedings
         which are pending or, to the best of Borrower's, FirstCity's or J-Hawk
         Corp.'s knowledge, threatened against Borrower, FirstCity or J-Hawk
         Corp. which, in any of the foregoing cases, are reasonably likely to
         result in any material adverse change in its financial condition or
         materially adversely affect its assets or its ability to fully perform
         and satisfy its obligations under the Loan Documents;

                 (t)      No Liability on Bank.  The execution, delivery and
         performance by Borrower of this Agreement and/or the Other Agreements
         will not, except to the extent caused by independent actions of Bank,
         impose on or subject Bank to any liability, whether fixed or
         contingent, in respect of any Environmental Law relating to the
         operation of Borrower's business.  Bank's exercise of any of the
         rights or remedies described in this Agreement or in any of the Other
         Agreements shall not constitute a breach of any provision contained in
         any agreement, instrument or document concerning the assignment or
         license of, or the payment of royalties for, any patents, patent
         rights, tradenames, trademarks, trade secrets, know-how, copyrights or
         any other form of intellectual property now or at any time or times
         hereafter protected as such by any applicable law;

                 (u)      Affiliates.  Borrower has no wholly owned
         Subsidiaries.  Exhibit E attached hereto is a true, accurate and
         complete schedule of Borrower's Affiliates, together with a
         description of Borrower's relationship to each such Affiliate.

                 (v)      Real Estate; Environmental Issues.  Borrower does not
         now own and at no time in the last five (5) years has owned, any Real
         Property.  Borrower has not received a summons, citation, notice, or
         directive from the Environmental Protection Agency or any other
         federal or state governmental agency concerning any action or omission
         resulting in the releasing, or otherwise disposing of hazardous waste
         or hazardous substances into the environment with respect to any of
         such Real Property collateral.  Concurrently herewith Borrower will
         execute an Environmental Indemnity Agreement.

                 (w)      Leases.  Attached hereto as Exhibit F is a true,
         accurate and complete schedule of all Leases and Options to which
         Borrower is a party.

                 (x)      Investment Company Act and Public Utility Holding
         Company Act.  Neither the Borrower nor FirstCity nor J-Hawk Corp. nor
         any Affiliate nor the entering into of the Loan Documents nor the
         issuance of the Notes is subject to any of the provisions of the
         Investment Company Act of 1940, as amended.  Neither the Borrower nor
         FirstCity nor J-Hawk Corp. nor any Affiliate is a "holding company" as
         defined in the Public Utility Holding Company Act of 1935, as amended,
         or subject





                                       21
<PAGE>   28
         to any other federal or state statute or regulation limiting its
         ability to insure Indebtedness for money borrowed.

                 (y)      Disclosure.  Neither this Agreement nor any Loan
         Document nor any statement, list, certificate or other document or
         information, nor any schedules to this Agreement or any other Loan
         Document, delivered or to be delivered to Bank, contains or will
         contain any untrue statement of a material fact or omits or will omit
         to state a material fact necessary to make statements contained herein
         or therein, in light of the circumstances in which they are made, not
         misleading.

                 (z)      Qualification.

                          (i)     Solely by reason of (and without regard to
                 any other activities of Bank in any state in which Assets are
                 located) the entering into, performance and enforcement of
                 this Agreement, the Notes and the other Loan Documents by Bank
                 will not constitute doing business by Bank in any of such
                 states or result in any liability of Bank for taxes or other
                 governmental charges; and qualification by Bank to do business
                 in such jurisdiction is not necessary in connection with, and
                 the failure to so qualify will not affect, the enforcement of,
                 or exercise of any rights or remedies under, any of such
                 documents.

                          (ii)    No "business activity," "doing business" or
                 similar report or notice is required to be filed by the Bank
                 in any such jurisdiction in connection with the Loans or the
                 transactions contemplated by this Agreement, and the failure
                 to file any such report or notice will not affect the
                 enforcement of, or the exercise of any rights or remedies
                 under, this Agreement or any of the other Loan Documents.

         5.2     Business Purpose; Margin Stock; Securities.  Borrower warrants
and represents to Bank that Borrower shall use the proceeds of all Loans solely
for general corporate purposes, consistently with all applicable laws and
statutes.  Borrower's use of the proceeds of any Advances made by Bank are
legal and proper uses (duly authorized by all requisite action of the board of
directors of Borrower), in accordance with applicable laws, rules and
regulations, as in effect from time to time.  Borrower further warrants and
represents to Bank and covenants with Bank that Borrower is not in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System). Borrower's execution and delivery of this Agreement or
any of the Other Agreements does not directly or indirectly violate or result
in a violation of the Securities Exchange Act of 1934, as amended, and
Regulations U, G, T and X of the Board of Governors of the Federal Reserve
System (12 CFR 221, 207, 220 and 224, respectively), and Borrower does not own
or intend to purchase or carry any "MARGIN SECURITY," as defined in such
Regulations.  As of the date hereof, Borrower does not own the securities of
any Person except as set forth in Schedule 5.2.





                                       22
<PAGE>   29
         5.3     Reaffirmation of Warranties and Representations.  Each request
for an Advance made by Borrower pursuant to this Agreement or the Other
Agreements shall constitute (i) an automatic warranty and representation by
Borrower to Bank that there does not then exist an Event of Default or an
Unmatured Default, and (ii) a reaffirmation as of the date of said Borrowing
Request that each and every warranty and representation of Borrower contained
in this Article 5 and other sections of this Agreement and in the Other
Agreements is true and correct in all material respects, except where such
representation or warranty specifically relates to an earlier date.

         5.4     Survival of Warranties and Representations.  Borrower
covenants, warrants and represents to Bank that all representations and
warranties of Borrower contained in this Agreement and the Other Agreements
shall be true on the date hereof, and shall survive the execution, delivery and
acceptance hereof and thereof by the parties thereto and the closing of the
transactions described herein and therein or related hereto or thereto.  Unless
expressly limited by the terms of this Article 5, each representation and
warranty shall be deemed to be remade concurrently with each Advance hereunder.

6        COVENANTS AND CONTINUING AGREEMENTS.

         6.1     Financial Covenants. Borrower and Guarantors, on a
consolidated basis, shall, at all times during the term hereof, measured
quarterly.

                 (a)      maintain a ratio of Indebtedness to Tangible Net
         Worth equal to or less than 8 to 1;

                 (b)      maintain a ratio of EBITDA to interest expense equal
         to 1.5 to 1; and

                 (c)      maintain Tangible Net Worth equal to or greater than
         $75,000,000.
 
All covenants set forth herein shall be measured quarterly, upon receipt of the
statements delivered to Bank pursuant to Section 6.2(c)(ii) or the annual
consolidated financial statements delivered in accordance with Section
6.2(c)(i), if available.

         6.2     Affirmative Covenants.  Borrower warrants and represents to
and covenants with Bank that Borrower shall, unless Bank otherwise consents
thereto in writing, do all of the following during the term hereof:

                 (a)      Representation and Warranties.  To the extent any
         representation or warranty contained herein refers to an event or
         state of facts which exists on the date hereof and shall exist during
         the term hereof or at the time of each Advance hereunder, said
         representation or warranty shall be deemed to be an affirmative
         covenant by Borrower to take all actions, omit to take such actions or
         cause such actions to be taken which shall be necessary or desirable
         to cause such representation or warranty to be true and accurate at
         all times during the term hereof.





                                       23
<PAGE>   30
                 (b)      Corporate Existence.  Borrower shall preserve and
         maintain its corporate existence, rights, privileges and franchises in
         the jurisdiction of its incorporation or organization, and qualify and
         remain qualified to do business in each other jurisdiction in which
         such qualification is necessary in view of its business or operations.

                 (c)      Records; Reports.  Borrower covenants with Bank that
         Borrower shall keep Records and prepare financial statements and shall
         cause to be furnished to Bank the following (all of the foregoing and
         following which comprise financial statements are to be kept and
         prepared in accordance with generally accepted accounting principles
         applied on a basis consistent with the Financials unless FirstCity's
         certified public accountants concur in any changes therein and such
         changes are consistent with then applicable GAAP).

                          (i)     As soon as available but not later than
                 ninety (90) days after the close of each fiscal year of
                 FirstCity, a consolidated and consolidating balance sheet of
                 Borrower, J-Hawk Corp. and FirstCity as at the end of, and the
                 related statement of operations, including income statement,
                 for, such year and a reconciliation of capital for such year,
                 all certified on an unqualified basis by a firm of independent
                 certified public accountants selected by FirstCity and
                 acceptable to Bank, in Bank's sole and absolute discretion.

                          (ii)    Concurrently with the delivery of the
                 financial statements described in Section (i) above for fiscal
                 years ending after December 31, 1996:  (A) a certificate of
                 the aforesaid certified public accountants certifying to Bank
                 that based upon their examination of the affairs of FirstCity,
                 Borrower and J-Hawk Corp., performed in connection with the
                 preparation of said financial statements, they are not aware
                 of the occurrence or existence of any condition or event which
                 constitutes an Event of Default or Unmatured Default, or, if
                 they are aware thereof, the nature thereof, and (B) a reliance
                 letter executed by an authorized partner of the aforesaid
                 certified public accountants, in form and substance reasonably
                 acceptable to Bank, and acknowledging that Bank may rely on
                 such financial statements in connection with this Agreement
                 notwithstanding that Bank is not in privity with such
                 certified public accountants in connection with such financial
                 statements.

                          (iii)   As soon as available, but not later than
                 thirty (30) days after the end of each calendar year,
                 financial statements of the UK Trust (which shall be prepared
                 in accordance with accounting principles generally accepted in
                 the United Kingdom), in form and substance reasonably
                 acceptable to Bank, including income statements and balance
                 sheets.





                                       24
<PAGE>   31
                          (iv)    As soon as available but not later than
                 thirty (30) days after the end of each calendar month
                 hereafter, a consolidated balance sheet of Borrower, J-Hawk
                 and FirstCity as at the end of, and the related statement of
                 operations for, the portion of such Person's fiscal year then
                 elapsed, all certified by the chief financial officer of such
                 Person's to be prepared in accordance with generally accepted
                 accounting principles and to present fairly the financial
                 position and results of operations of such Person for such
                 period.

                          (v)     Concurrently with delivery to its
                 shareholders or any other equity owners or Affiliates of
                 Borrower by FirstCity, copies of all financial and other
                 information delivered by FirstCity to such Persons, including
                 without limitation, its proxy statements and annual reports to
                 stockholders.  Concurrently with delivery to the Securities
                 Exchange Commission ("SEC") by FirstCity, copies of all
                 reports filed by FirstCity with the SEC, including without
                 limitation, all reports on Forms 10K, 10Q or 8K promulgated
                 under the Securities Exchange Act of 1934, as amended.

                          (vi)    Such other data and information (financial
                 and otherwise) as Bank, from time to time, reasonably may
                 request bearing upon or related to the Borrower's or any
                 Guarantor's financial condition and/or results of operations.

                          (vii)   Concurrently with delivery of the Financials
                 required pursuant to Sections 6.2(c)(i) and (iv) hereof, a
                 certificate executed by the President or Chief Financial
                 Officer of Borrower that no Event of Default or Unmatured
                 Default has occurred and is continuing (including but not
                 limited to compliance with the covenants set forth in Section
                 6.1) or if an Event of Default or Unmatured Default has
                 occurred, setting forth the details of such event and the
                 action which Borrower proposes to take with respect thereto.

                 (d)      Insurance.  Borrower, at its sole cost and expense,
         shall keep and maintain: (i) policies of insurance against all hazards
         and risks ordinarily insured against by other owners or users of
         properties in similar business or as reasonably requested in writing
         by Bank; and (ii) public liability insurance relating to Borrower's
         ownership and use of its assets.  All such policies of insurance shall
         be in form, with insurers and in such amounts as may be satisfactory
         to Bank.  Borrower shall deliver to Bank the original (or certified)
         copy of each policy of insurance, and evidence of payment of all
         premiums for each such policy.  Such policies of insurance (except
         those of public liability) shall contain an endorsement, in form and
         substance acceptable to Bank, showing loss payable to Bank.  Such
         endorsement or an independent instrument furnished to Bank, shall
         provide that all insurance companies will give Bank at least thirty
         (30) days prior written notice before any such policy or policies of
         insurance shall be altered or canceled and that no act or default of
         Borrower or any other Person shall affect the right of Bank to





                                       25
<PAGE>   32
         recover under such policy or policies of insurance in case of loss or
         damage.  Borrower hereby directs all insurers under such policies of
         insurance (except those of public liability) to pay all proceeds
         payable thereunder directly to Bank.  Borrower, irrevocably, appoints
         Bank (and all officers, employees or agents designated by Bank) as
         Borrower's true and lawful agent and attorney-in-fact for the purpose
         of making, settling and adjusting claims under such policies of
         insurance, endorsing the name of Borrower on any check, draft,
         instrument or other item of payment for the proceeds of such policies
         of insurance and for making all determinations and decisions with
         respect to such policies of insurance.  In the event Borrower at any
         time or times hereafter shall fail to obtain or maintain any of the
         policies of insurance required above or to pay any premium in whole or
         in part relating thereto, then Bank, without waiving or releasing any
         of Borrower's Obligations or any Event of Default or Unmatured Default
         hereunder, may at any time or times thereafter (but shall be under no
         obligation to do so) obtain and maintain such policies of insurance
         and pay such premium and take any other action with respect thereto
         which Bank deems advisable.  All sums so disbursed by Bank, including
         reasonable attorneys' fees, court costs, expenses and other charges
         relating thereto, shall be part of Borrower's Liabilities, payable by
         Borrower to Bank on demand.  The Bank shall also have been named as
         additional insureds with respect to Borrower's liability insurance.

                 (e)      Payment of Charges.  Borrower shall pay promptly,
         when due, all Charges and Borrower shall not permit the Charges to
         arise or to remain unpaid, and will promptly discharge the same.  In
         the event Borrower, at any time or times hereafter, shall fail to pay
         the Charges or to obtain such discharges as required herein, Borrower
         shall so advise Bank thereof in writing.  Bank may, without waiving or
         releasing any of Borrower's Obligations or any Event of Default or
         Unmatured Default hereunder, in its sole and absolute discretion, at
         any time or times thereafter, make such payment, or any part thereof,
         or obtain such discharge and take any other action with respect
         thereto which Bank deems advisable.  All sums so paid by Bank and any
         expenses, including reasonable attorneys' fees, court costs, expenses
         and other charges relating thereto, shall be part of Borrower's
         Liabilities, payable by Borrower to Bank on demand.  Notwithstanding
         the foregoing, Borrower may permit or suffer the Charges to attach to
         Borrower's assets and may dispute, without prior payment thereof, the
         Charges, on the conditions that (i) Borrower, in good faith, shall be
         contesting the same in an appropriate proceeding diligently pursued,
         (ii) enforcement thereof against any assets of Borrower shall be
         stayed and (iii) appropriate reserves therefor shall have been
         established on the Records of Borrower in accordance with GAAP.  In
         the event Borrower, at any time or times hereafter, shall fail to pay
         the Charges required herein, Borrower shall so advise Bank thereof in
         writing; Bank may, without waiving or releasing any of Borrower's
         Obligations or any Event of Default or Unmatured Default hereunder, in
         its sole and absolute discretion, at any time or times thereafter,
         make such payment, or any part thereof, and take any other action with
         respect thereto which Bank deems, in its sole and absolute discretion,





                                       26
<PAGE>   33
         advisable.  All sums so paid by Bank and any expenses, including
         reasonable attorneys' fees, court costs, expenses and other charges
         relating thereto, shall be part of Borrower's Obligations, payable by
         Borrower to Bank on demand.

                 (f)      Pay Debts.  Borrower shall pay or discharge or
         otherwise satisfy all Indebtedness at or before maturity or before the
         same becomes delinquent, provided that Borrower shall not be required
         to pay any Indebtedness while the same is being contested by it in
         good faith and by appropriate proceedings so long as Borrower shall
         have set aside on its books reserves in accordance with generally
         accepted accounting principles with respect thereto and title to any
         property of Borrower is not jeopardized.

                 (g)      Compliance with Laws.  Borrower shall comply with all
         laws, rules, regulations and governmental orders (federal, state and
         local), including all Environmental Laws, having applicability to it
         or to the business or businesses at any time conducted by it, where
         the failure to so comply would have a material adverse effect, either
         individually or in the aggregate, on the business, condition
         (financial or otherwise) and assets, operations or prospects of
         Borrower.

                 (h)      Perform Obligations.  Borrower shall duly and
         punctually pay and perform each of its obligations under this
         Agreement and the Other Agreements in accordance with the terms
         thereof.

                 (i)      Management.  As of the date hereof and at all times
         during the term hereof either (i) both of James Hawkins and James
         Sartain, or (ii) either James Hawkins or James Sartain and either of
         Matthew Landry or Rick R. Hagelstein  shall be employed full-time with
         FirstCity and shall be responsible for the day to day management of
         FirstCity.

         6.3     Negative Covenants.  Borrower warrants and represents to and
covenants with Bank that Borrower, FirstCity or J-Hawk Corp., as the case may
be, shall not, without Bank's prior written consent, which Bank may or may not
give in its sole and absolute discretion, concurrently or hereafter do any of
the following:

                 (a)      Sell or Encumber Assets. Borrower shall not grant a
         security interest in, assign, sell or transfer any of its assets to
         any Person nor permit, grant, or suffer a lien, claim or encumbrance
         upon any of its assets, except the Permitted Liens.

                 (b)      Attachment. Neither Borrower nor FirstCity nor J-Hawk
         Corp. shall permit or suffer any levy, attachment or restraint to be
         made affecting any of its assets;

                 (c)      Receiver. Neither Borrower nor FirstCity nor J-Hawk
         Corp. shall permit or suffer any receiver, trustee or assignee for the
         benefit of creditors, or any other custodian to be appointed to take
         possession of all or any of its assets other





                                       27
<PAGE>   34
         than a custodian pursuant to a voluntary custodial agreement entered
         into to perfect a security interest;

                 (d)      Amend Organizational Documents; Business Objectives.
         Borrower shall not make any change: (i) in its articles of
         incorporation, by-laws or capital structure, (ii) in any of its
         business objectives, purposes and operations, including by undertaking
         additional business activities.  The Borrower, FirstCity and J-Hawk
         Corp. will not engage in any business not of the same general type as
         those conducted by them on the date hereof;

                 (e)      Merge.  Borrower shall not merge or consolidate with,
         acquire (or sell Borrower to) any Person, whether by sale of assets or
         sale or exchange of stock or purchase, lease, or otherwise (except in
         the ordinary course of business), acquire all or any substantial part
         of the property or assets of any Person, or purchase, lease or
         otherwise acquire property or net assets in excess of $500,000 in any
         Fiscal Year.

                 (f)      Redeem Stock.  Borrower shall not redeem, retire,
         purchase or otherwise acquire, directly or indirectly, any of its
         Stock or other evidence of ownership interest or any other corporation
         or partnership or any subordinated debt of any Loan Party;

                 (g)      Adverse Transactions.  Borrower shall not enter into
         any transaction which materially and adversely affects Borrower's
         ability to repay Borrower's Liabilities or any other Indebtedness.
         Neither FirstCity nor J-Hawk Corp. shall enter into any transaction
         which materially and adversely affects its ability to satisfy its
         obligations under any Loan Document;

                 (h)      Investments.  Borrower shall not make any investment
         in the Stock or obligations of any Person, except in the ordinary
         course of its business .

                 (i)      Dividends; Payment of Fees, etc.  At any time during
         the term hereof, without Bank's prior written consent which may be
         withheld in Bank's sole and absolute discretion, Borrower shall not:
         (i) make any distributions or pay any dividends or make any
         distributions of property or assets with respect to its stock; (ii)
         pay any director's fees or any salaries to any director or shareholder
         unless such shareholder or director is directly and actively employed
         by Borrower, FirstCity or J-Hawk Corp.; or (iii) make any loans,
         advances and/or extensions of credit to any Affiliate.

                 (j)      Agreements with Affiliates.  Attached hereto as
         Exhibit G ("AGREEMENTS WITH AFFILIATES"), is a true, accurate and
         complete schedule of all service agreements or other agreements
         between Borrower and its Affiliates.  Bank hereby expressly consents
         to the performance by Borrower of said agreements as in effect on the
         date hereof.  Except in the ordinary course of business, Borrower
         shall not enter into any other transactions with any Affiliate,
         including, without limitation, agreements for the purchase, sale or
         exchange of property or the rendering of any





                                       28
<PAGE>   35
         services to or by any Affiliate, or enter into, assume or suffer to
         exist any employment, management, administration, advisory or
         consulting contract with any Affiliate or, in each of the foregoing
         cases, with any officer, director or partner of any Affiliate (or a
         spouse or other relative of any of them).

                 (k)      Indebtedness.  Borrower shall not contract, create,
         incur, assume or suffer to exist any Indebtedness; except for (x) the
         Loans, (y) Indebtedness existing on the date hereof and reflected on
         the Financials of the Borrower delivered on such date and (z)
         unsecured trade payables to parties other than Affiliates incurred in
         the ordinary course of business that do not exceed, in the aggregate
         at any time outstanding, $100,000.

                 (l)      Guaranty Debt.  Except as contemplated herein,
         Borrower shall not guaranty or otherwise, in any way, become liable
         with respect to the obligations or liabilities of any other Person
         except in the ordinary course of its business, including, without
         limitation, by agreement to (i) maintain net worth or working capital,
         (ii) purchase the obligations or property of any such Person, or to
         furnish funds to any such Person, directly or indirectly, through the
         purchase of goods, supplies or services, in any such case with the
         intent to provide such a guaranty or otherwise become so liable, or
         (iii) obtain upon its credit the issuance of any letter or letters of
         credit for the obligations of any such Person, provided that the
         foregoing limitations shall not apply to endorsement of instruments or
         items of payment for deposit or collection in the ordinary course of
         business.

                 (m)      Pay Indebtedness.  Except in the ordinary course of
         business, Borrower shall not defease, prepay, repay, purchase, redeem
         or otherwise acquire any of its Indebtedness for borrowed money, other
         than (i) payments to Cargill or (ii) payments of Indebtedness to
         Affiliates expressly permitted pursuant to a subordination agreement
         applicable thereto.

                 (n)      Issue Power of Attorney. Except pursuant to this
         Agreement, the Other Agreements and the agreements, documents and
         instruments evidencing the loans from Cargill to Borrower, J-Hawk
         Corp. and FirstCity, Borrower shall not issue any power of attorney or
         other contract or agreement giving any Person power or control over
         the day-to-day operations of Borrower's business.

                 (o)      Amendment of Credit Agreements. Except in the
         ordinary course of business, neither Borrower, the UK Trust nor any of
         their respective subsidiaries, shall amend, modify or extend any note,
         credit agreement, security agreement or other document, instrument of
         agreement evidencing or securing Indebtedness of such entity, without
         in each case Bank's prior written consent.

         6.4     Required Notices.  In addition to those notices required
elsewhere in this Agreement, Borrower shall notify Bank promptly after
obtaining knowledge of:





                                       29
<PAGE>   36
                 (a)      except as otherwise previously disclosed, any event
         or occurrence which Borrower has determined has caused a material loss
         or decline in value of the Assets due to casualty or any other adverse
         occurrence and the estimated (or actual, if available) amount of such
         loss or decline;

                 (b)      the institution of any suit or administrative
         proceeding which, if determined adversely to Borrower, is reasonably
         likely to adversely affect the operations, financial condition or
         business of Borrower;

                 (c)      Borrower's becoming subject to any Charge,
         restriction, judgment, decree or order which materially and adversely
         affects it business operations, property, assets or financial
         condition;

                 (d)      the commencement of any lockout, strike or walkout
         relating to any labor contract to which Borrower is a party;

                 (e)      as soon as possible and in any event within five (5)
         days after Borrower shall have obtained knowledge of the occurrence of
         an Event of Default or Unmatured Default, the written statement of the
         chief financial officer of Borrower setting forth the details of such
         event and the action which Borrower proposes to take with respect
         thereto.

         6.5     Inspections and Audit of Records.  Bank (by any of its
officers, accountants, employees and/or agents) shall have the right, at any
time or times during normal business hours, after not less than two (2)
Business Days prior notice (unless an Unmatured Default or Event of Default
then exists, in which event no notice shall be required) to inspect the Records
and other Assets of Borrower (and the premises upon which it is located) and to
verify the amount and condition of or any other matter relating to the Records
and other Assets.  In addition to the foregoing right, Bank (by any of its
officers, employees or agents) shall have the right, at any time or times
during normal business hours, after at least two (2) Business Days prior notice
(unless an Event of Default or Unmatured Default has occurred and is continuing
in which event no prior notice shall be required) to perform field audits of
Borrower's books and records, at Borrower's sole cost and expense.





                                       30
<PAGE>   37
         6.6     Location of Records.  Borrower hereby warrants and represents
to and covenants with Bank that the offices and/or locations where Borrower
keeps the Records are at the locations specified on Exhibit H hereto.  Borrower
has no other offices or locations and Borrower shall not remove such Records
therefrom and shall not keep any such Records at any other office or location
unless Borrower gives Bank notice thereof at least thirty (30) days prior
thereto and the same is within the continental United States of America.
Borrower, by written notice delivered to Bank at least thirty (30) days prior
thereto, shall advise Bank of Borrower's opening or acquisition of any new
office, place of business or place where any of the Records are to be stored or
kept, or its closing of any then existing office, place of business or place
where any of the Records are to be stored or kept and any new office or place
of business shall be within the continental United States of America.

         6.7     Audit Records.  In addition to the right to inspect set forth
herein, Bank (by any of its officers, accountants, employees and/or agents)
shall have the right to audit the books and Records of Borrower.  Borrower will
allow Bank and its officers, directors and agents to discuss with Borrower's
outside auditors Borrower's Financials and financial condition.

         6.8     Costs of Audit.  All reasonable costs, fees and expenses
incurred by Bank, or for which Bank becomes obligated, in connection with any
inspection, verification or audit shall constitute part of Borrower's
Liabilities, payable by Borrower to Bank on demand therefor and any amount not
paid on demand shall bear interest at the Default Rate.

         6.9     Payment of Claims.  Bank, in its sole and absolute discretion,
without waiving or releasing any of the Borrower's Liabilities or Borrower's
Obligations or any Event of Default, may at any time or times hereafter, but
shall be under no obligation to, pay, acquire and/or accept an assignment of
any security interest, lien, encumbrance or claim asserted by any Person
against the Assets of Borrower.  All sums paid by Bank in respect thereof and
all reasonable Costs relating thereto incurred by Bank or for which Bank
becomes obligated on account thereof shall be part of the Borrower's
Liabilities payable by Borrower to Bank on demand and any amount not paid on
demand shall bear interest at the Default Rate.

7        DEFAULT

         7.1     Events of Default.  The occurrence of any one of the following
events shall constitute a default ("EVENT OF DEFAULT") under this Agreement:

                 (a)      If Borrower fails or neglects to perform, keep or
         observe any of Borrower's Obligations and the same is not cured within
         thirty (30) days after Lender gives Borrower notice of such Default;
         provided, however, that a breach of any of the provisions, terms,
         conditions or covenants contained in Sections 6.2(d), 6.2(i), 6.3 and
         6.4 shall automatically be an Event of Default without any notice or
         cure period.

                 (b)      If any representation, warranty or material
         statement, report or certificate made or delivered by any Loan Party,
         or any of its directors, officers, authorized employees or agents, to
         Bank is not true and correct;

                 (c)      If Borrower fails to pay any of Borrower's
         Liabilities, when due and payable or declared due and payable and the
         same is not cured within five (5) days after Lender gives Borrower
         notice of such default provided however, that Interest shall accrue at
         the Default Rate commencing immediately after non-payment;

                 (d)      If any of Borrower's Assets or the assets of any Loan
         Party, or any portion thereof are attached, seized, subjected to a
         writ of distress warrant, or are levied upon, or come within the
         possession of any receiver, trustee, custodian or





                                       31
<PAGE>   38
         assignee for the benefit of creditors and the same is not terminated
         or dismissed within sixty (60) days thereafter;

                 (e)      If a petition under any section or chapter of the
         United States Bankruptcy Code or any similar law or regulation shall
         be filed by any Loan Party or if any Loan Party shall make an
         assignment for the benefit of its creditors or if any case or
         proceeding is filed by any Loan Party for its dissolution or
         liquidation;

                 (f)      If any Loan Party is enjoined, restrained or in any
         way prevented by court order from conducting all or any material part
         of its business affairs or if a petition under any section or chapter
         of the United States Bankruptcy Code or any similar law or regulation
         is filed against any Loan Party or if any case or proceeding is filed
         against any Loan Party for its dissolution or liquidation and such
         injunction, restraint or petition is not dismissed or stayed within
         sixty (60) days after the entry or filing thereof;

                 (g)      If an application is made by any Loan Party for the
         appointment of a receiver, trustee or custodian for any of its assets
         other than a custodian pursuant to a voluntary custodial agreement
         entered into to perfect a security interest;

                 (h)      If an application is made by any Person other than a
         Loan Party for the  appointment of a receiver, trustee, or custodian
         for any of its Assets and the same is not dismissed within sixty (60)
         days after the application therefor;

                 (i)      If a notice of any Charge is filed of record with
         respect to all or any of any Loan Party's assets, or if (except as
         permitted in Section 6.2 (e) above) any Charge becomes a lien or
         encumbrance upon any of its assets and the same is not released within
         sixty (60) days after the same becomes a lien or encumbrance;

                 (j)      If any Loan Party is in default in the payment of any
         Indebtedness (other than Borrower's Liabilities) and such default is
         not cured within the time, if any, specified therefor in any agreement
         governing the same and such default permits any holder or holders of
         such Indebtedness (or a trustee, agent or other representative on
         behalf of such holder or holders) to cause any of such Indebtedness
         evidenced thereby to become due prior to its stated maturity or if any
         of such Indebtedness so becomes due prior to its stated maturity;

                 (k)      The occurrence of a default or Event of Default or
         Unmatured Default under any agreement, instrument and/or document
         executed and delivered by any Guarantor to Bank, which is not cured
         within the time, if any, specified therefor in such agreement,
         instrument or document or any of the Loan Documents shall fail to
         grant to Bank on behalf of the Bank the lien or other security
         interest (if any) intended to be created thereby or any Loan Party
         thereto shall assert that it is not liable with respect thereto; or
         any Guarantor shall assert that it is not liable as a guarantor or
         otherwise under its guarantee agreement executed in connection
         herewith;





                                       32
<PAGE>   39
                 (l)      The occurrence of an Event of Default under any of
         the Other Agreements, which is not cured within the time, if any,
         specified therefor in such Other Agreement;

                 (m)      If Borrower issues to or transfers to any Person, any
         stock of Borrower, or any Person other than J-Hawk Corp. is a
         shareholder of the Borrower, or any Person other than FirstCity is a
         shareholder of J- Hawk Corp.;

                 (n)      If any final non-appealable judgment for the payment
         of money in excess of $250,000 (after giving effect to any amount
         covered by insurance as to which the insurer shall not have defied or
         questioned its obligation to pay) shall be rendered against the
         Borrower or Guarantors; or final judgment for the payment of money in
         excess of $250,000 shall be rendered against any Loan Party and the
         same shall remain undischarged for a period of thirty (30) days during
         which execution shall not be effectively stayed or diligently
         contested in good faith by appropriate proceedings;

                 (o)      If Borrower or any ERISA Affiliate (1) shall effect a
         complete or partial withdrawal (as defined in ERISA Sections 4203 or
         4205) from a Multiemployer Plan, if such withdrawal could subject
         either the Borrower or any ERISA Affiliate to liability; (2) shall
         fail to pay when due an amount that is payable by it to the PBGC or to
         an Employee Benefit Plan; (3) has instituted against it by a fiduciary
         of any Multiemployer Plan an action to enforce ERISA Section 515 and
         such proceedings shall not have been dismissed within thirty (30) days
         thereafter; (4) has imposed against it any tax under Code Section
         4980B(a); (5) has assessed against it by the Secretary of Labor a
         civil penalty with respect to any Employee Benefit Plan under ERISA
         Section 502(c) or 502(l); (6) shall apply for a waiver of the minimum
         funding standards of the Code; or (7) shall permit any other event or
         condition to occur or exist with respect to an Employee Benefit Plan
         that could subject either the Borrower or any ERISA Affiliate to
         liability;

                 (p)      A default by Borrower shall occur under any
         agreement, document or instrument (other than this Agreement or any of
         the other Loan Documents) now or hereafter existing, to which Borrower
         is a party and the effect of such default is reasonably likely to have
         a material adverse effect on the financial conditions or business
         operations of Borrower;

                 (q)      If any Loan Party is in default in the payment of any
         Indebtedness for borrowed money in an aggregate principal amount
         outstanding in excess of $25,000 under any agreement (other than the
         Loan Documents), or is in breach of any agreement evidencing such
         Indebtedness (other than any Loan Document) and the effect of such
         default or breach, as the case may be, is to enable the holder thereof
         then to accelerate the maturity of such Indebtedness, unless the same
         is waived or otherwise ceases to exist; or





                                       33
<PAGE>   40
                 (r)      If any Loan Party dissolves, liquidates, or fails to
         maintain its corporate existence.

         7.2     Remedies Cumulative.  All of Bank's rights and remedies under
this Agreement and the Other Agreements are cumulative and non-exclusive.

         7.3     Acceleration.  Upon the occurrence an Event of Default and the
continuation thereof, without notice by Bank to or demand by Bank to Borrower,
Bank shall have no further obligation to and may then forthwith cease advancing
monies, extending credit or issuing letters of credit to or for the benefit of
Borrower under this Agreement and the Other Agreements.  Upon an Event of
Default, without notice by Bank to or demand by Bank to Borrower, Borrower's
Liabilities shall be due and payable, forthwith.

         7.4     Remedies.  Upon the occurrence of an Event of Default and the
continuation thereof, Bank, in its sole and absolute discretion, may exercise
any and all rights and remedies that it may have under the other Loan
Documents, at law or in equity.

         7.5     Injunctive Relief. Borrower recognizes that in the event
Borrower fails to perform, observe or discharge any of Borrower's Obligations,
no remedy of law will provide adequate relief to Bank, and agrees that Bank
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.

         7.6     Advances During Unmatured Default.  Upon the occurrence of any
Unmatured Default or Event of Default, Bank shall not be obligated to make any
Advances; provided that, nothing contained herein shall prohibit Bank from
making any Advances.

         7.7     Enforcement During Unmatured Default.  Upon the occurrence and
during the existence of any Unmatured Default, notwithstanding that the Loan
has not yet been accelerated, Bank, if it determines that the payment of
Borrower's Liabilities is jeopardized, may enforce such of its rights and
remedies under this Article as Bank deems necessary or proper.

         7.8     Consent Does Not Create Custom.  No authorization given by
Bank pursuant to this Agreement or the Other Agreements to sell any specified
portion of a Loan Party's assets or any items thereof, and no waiver by Bank in
connection therewith shall establish a custom or constitute a waiver of the
prohibition contained in this Agreement against such sales, with respect to any
portion of such Loan Party's assets or any item thereof not covered by said
authorization.

         7.9     Defenses.  Pursuant to the terms hereof Borrower has
covenanted and agreed to cause FirstCity, J-Hawk Corp. and other Persons to
take or to refrain from taking some action.  It shall not be a defense to
Borrower's default under the terms hereof that Borrower did not have the legal
authority or capacity to cause or permit such action or occurrence.





                                       34
<PAGE>   41


8        CONDITIONS PRECEDENT TO DISBURSEMENT

         8.1     Checklist Items. The obligation of Bank to make the Loan to
Borrower is subject to the condition precedent that, in addition to
satisfaction of the conditions set forth in Sections 8.2 and 8.3, Bank shall
have received, prior to the first disbursement of the proceeds of any of the
Loan hereunder all documents, instruments, agreements, notes, evidences of
Borrower's authority, and all other instruments as Bank may reasonably request,
including but not limited to all items on the Documentation Checklist,
delivered by Bank to Borrower prior to the date hereof.

         8.2     Necessary Actions.  The obligation of Bank to make the Loan to
Borrower is subject to the further condition precedent that all proceedings
taken in connection with the transactions contemplated by this Agreement, and
all instruments, authorizations and other documents applicable thereto, shall
be reasonably satisfactory in form and substance to Bank and its counsel.

         8.3     Conditions Precedent.  In addition to the foregoing, prior to
Bank making of any and all Loans hereunder, all of the following shall have
been satisfied in a manner satisfactory to Bank:

                 (a)      no change in the condition or operations, financial
         or otherwise, of Borrower or any Guarantor or the UK Trust shall have
         occurred which change, in the sole credit judgment of Bank, may have a
         material adverse effect on Borrower or any Guarantor;

                 (b)      no litigation shall be outstanding or have been
         instituted or threatened which Bank determines to be material against
         Borrower or any Guarantor;

                 (c)      all of the representations and warranties of Borrower
         set forth in this Agreement and each of the Other Agreements to which
         Borrower or any Guarantor as a party shall be true and correct on the
         date of the contemplated Loan to the same extent as originally made on
         such date; and

                 (d)      no Event of Default or Unmatured Default shall exist 
         or be continuing.

9        GENERAL

         9.1     Compliance with ERISA.

                 (a)      Representations and Warranties.  Borrower hereby
         represents and warrants that:

                          (i)     Exhibit I hereto describes the Employee
                 Benefit Plans to which Borrower or any of its ERISA Affiliates
                 may have obligations;





                                       35
<PAGE>   42
                          (ii)    each Employee Benefit Plan of Borrower or any
                 of its ERISA Affiliates is in compliance in all material
                 respects with its terms and with the applicable provisions of
                 ERISA, the Code and all other statutes and regulations
                 applicable thereto and each such Employee Benefit Plan that is
                 intended to be qualified under Section 401(a) of the Code has
                 been determined by the Internal Revenue Service to be so
                 qualified, and each trust related to any such Employee Benefit
                 Plan has been determined to be exempt from federal income tax
                 under Section 501(a) of the Code;

                          (iii)   neither Borrower nor any of its ERISA
                 Affiliates maintains or contributes to any Employee Benefit
                 Plan with an actuarial present value of projected benefit
                 obligations that exceeds the fair market value of net assets
                 available for such benefits, calculated on the basis of the
                 actuarial assumptions specified in the most recent actuarial
                 valuation for such Employee Benefit Plan, and no such Employee
                 Benefit Plan provides for subsidized early retirement benefits
                 that could materially adversely affect the funded status of
                 such Employee Benefit Plan or Employee Benefit Plans in the
                 event of a reduction in force or plant closing;

                          (iv)    with respect to each Employee Benefit Plan
                 that is a "defined benefit plan," as defined in Section 3(35)
                 of ERISA, the assets of each such Employee Benefit Plan are
                 equal to or greater than the accrued benefits of the
                 participants and beneficiaries thereunder, as determined
                 pursuant to the actuarial methods and assumptions utilized by
                 the PBGC in the event of a plan termination;

                          (v)     neither Borrower nor any of its ERISA
                 Affiliates sponsors, maintains, participates in or contributes
                 to any employee welfare benefit plan within the meaning of
                 Section 3(1) of ERISA that provides benefits to employees
                 after termination of employment other than as required by
                 Section 601 of ERISA; as such, neither Borrower nor any of its
                 ERISA Affiliates are currently or will in the future be
                 subject to the accounting recognition and disclosure standards
                 of Statement of Financial Accounting Standards No. 106 (FASB
                 106);

                          (vi)    neither Borrower nor any of its ERISA
                 Affiliates has breached any of the responsibilities,
                 obligations, or duties imposed on them by ERISA or the
                 regulations promulgated thereunder with respect to any
                 Employee Benefit Plan;

                          (vii)   neither Borrower nor any ERISA Affiliate has
                 (i) failed to make a required contribution or payment to a
                 Multiemployer Plan or (ii) made or expects to make a complete
                 or partial withdrawal under Sections 4203 or 4205 of ERISA
                 from a Multiemployer Plan;





                                       36
<PAGE>   43
                          (viii)  at the date hereof, the aggregate potential
                 withdrawal liability payment, as determined in accordance with
                 Title IV of ERISA, of the Borrower and any ERISA Affiliates
                 with respect to all Employee Benefit Plans that are
                 Multiemployer Plans does not exceed $50,000 and, to the best
                 of Borrower's and its ERISA Affiliate's knowledge, no
                 Multiemployer Plan is in reorganization or insolvent within
                 the meaning of Sections 4241 or 4245 of ERISA.

                          (ix)    neither Borrower nor any ERISA Affiliate has
                 failed to make a required installment or any other required
                 payment under Section 412 of the Code on or before the due
                 date for such installment or other payment;

                          (x)     neither Borrower nor any ERISA Affiliate is
                 required to provide security to an Employee Benefit Plan under
                 Section 401(a)(29) of the Code due to an Employee Benefit Plan
                 amendment that results in an increase in current liability for
                 the plan year;

                          (xi)    no liability to the PBGC has been, or is
                 expected by Borrower or any ERISA Affiliate to be, incurred by
                 Borrower or any ERISA Affiliate, other than the payment of
                 premiums, and there are no premium payments that have became
                 due and which are unpaid;

                          (xii)   no events have occurred in connection with
                 any Employee Benefit Plan that might constitute grounds for
                 the termination of any such Employee Benefit Plan by the PBGC
                 or for the appointment by any United States District Court of
                 a trustee to administer any such Employee Benefit Plan;

                          (xiii)  no Reportable Event has, in the case of any
                 Employee Benefit Plan maintained by Borrower or an ERISA
                 Affiliate other than a Multiemployer Plan, occurred and is
                 continuing, or to the best of Borrower's knowledge, has
                 occurred and is continuing in the case of any such Employee
                 Benefit Plan that is a Multiemployer Plan;

                          (xiv)   no Employee Benefit Plan maintained by the
                 Borrower or an ERISA Affiliate had an Accumulated Funding
                 Deficiency, whether or not waived, as of the last day of the
                 most recent fiscal year of such Employee Benefit Plan or, in
                 the case of any Multiemployer Plan, as of the most recent
                 fiscal year of such Multiemployer Plan for which the annual
                 reports of such Multiemployer Plan's actuaries and auditors
                 have been received; and

                          (xv)    neither Borrower nor any ERISA Affiliate has
                 engaged in a Prohibited Transaction prior to the date hereof,
                 and the execution, delivery, and carrying out of this
                 Agreement will not involve any non-exempt Prohibited
                 Transactions (within the meaning of Part 4 of Subtitle B of
                 Title I





                                       37
<PAGE>   44
                 of ERISA) or any transaction in connection with which a tax
                 could be imposed pursuant to Section 4975 of the Code.

                 (b)      ERISA Reports.  Borrower shall:

                          (i)     as soon as possible, and in any event within
                 fifteen (15) Business Days, after Borrower or an ERISA
                 Affiliate knows or has reason to know that, regarding any
                 Employee Benefit Plan with respect to the Borrower or an ERISA
                 Affiliate, a Prohibited Transaction or a Reportable Event has
                 occurred (whether or not the requirement for notice, if
                 applicable, of such Reportable Event has been waived by the
                 PBGC), deliver to the Bank a certificate of a responsible
                 officer of the Borrower setting forth the details of such
                 Prohibited Transaction or Reportable Event, the action that
                 the Borrower proposes to take with respect thereto, and, when
                 known, any action taken or threatened by the Internal Revenue
                 Service, Department of Labor, or PBGC;

                          (ii)    upon request of the Bank made from time to
                 time, deliver to the Bank a copy of the most recent actuarial
                 report, funding waiver request, and annual report filed with
                 respect to any Employee Benefit Plan maintained by Borrower or
                 an ERISA Affiliate;

                          (iii)   upon request of the Bank made from time to
                 time, deliver to the Bank a copy of any Employee Benefit Plan
                 sponsored, contributed to, participated in or maintained by
                 the Borrower or any ERISA Affiliate; and

                          (iv)    as soon as possible, and in any event within
                 ten (10) Business Days, after it knows or has reason to know
                 that any of the following have occurred with respect to any
                 Employee Benefit Plan maintained, or contributed to, by
                 Borrower or an ERISA Affiliate, deliver to the Bank a
                 certificate of a responsible officer of Borrower setting forth
                 the details of the events described in (a) through (l) and the
                 action that the Borrower or any ERISA Affiliate proposes to
                 take with respect thereto, together with a copy of any notice
                 or filing from the PBGC or other agency of the United States
                 government with respect to such of the events described in (a)
                 through (l):  (a) any Employee Benefit Plan has been
                 terminated; (b) the Plan Sponsor intends to terminate any
                 Employee Benefit Plan; (c) the PBGC has instituted or will
                 institute proceedings under Section 4042 of ERISA to terminate
                 any such Employee Benefit Plan or to appoint a trustee to
                 administer such Employee Benefit Plan, or the Borrower or any
                 ERISA Affiliate receives a notice from a Multiemployer Plan
                 that such action has been taken by the PBGC with respect to
                 such Multiemployer Plan; (d) Borrower or any ERISA Affiliate
                 withdraws from any Employee Benefit Plan, or notice of any
                 withdrawal liability is received by Borrower or any ERISA
                 Affiliate; (e) any Employee Benefit Plan has received an
                 unfavorable determination letter from





                                       38
<PAGE>   45
                 the Internal Revenue Service regarding the qualification of
                 the Employee Benefit Plan under Section 401(a) of the Code;
                 (f) the Borrower or any ERISA Affiliate fails to make a
                 required installment or any other required payment under
                 Section 412 of the Code on or before the due date for such
                 installment or payment or has applied for a waiver of the
                 minimum funding standard under Section 412 of the Code; (g)
                 the imposition of any tax under Code Section 4980B(a) or the
                 assessment by the Secretary of Labor of a civil penalty under
                 Sections 502(c) or 502(l) of ERISA; (h) there is a partial or
                 complete withdrawal (as described in ERISA Section 4203 or
                 4205) by the Borrower or any ERISA Affiliate from a
                 Multiemployer Plan; (i) the Borrower or any ERISA Affiliate is
                 in "DEFAULT" as defined in ERISA Section 4219(c)(5)) with
                 respect to payments to a Multiemployer Plan required by reason
                 of its complete or partial withdrawal from such Employee
                 Benefit Plan; (j) a Multiemployer Plan is in "REORGANIZATION"
                 or is "INSOLVENT" (as described in Title IV of ERISA) or such
                 Multiemployer Plan intends to terminate or has terminated
                 under Section 4041A of ERISA; (k) the institution of a
                 proceeding by a fiduciary of a Multiemployer Plan against the
                 Borrower or any ERISA Affiliate to enforce Section 515 of
                 ERISA; or (1) the Borrower or any ERISA Affiliate has
                 increased benefits under any existing Employee Benefit Plan or
                 commenced contributions to an Employee Benefit Plan to which
                 Borrower or any ERISA Affiliate was not previously
                 contributing.  For purposes of this Section, the Borrower
                 shall be deemed to have knowledge of all facts known by the
                 Plan Administrator of any Employee Benefit Plan of which
                 Borrower or any ERISA Affiliate is the Plan Sponsor.

                 (c)      Compliance with ERISA.  Borrower and its ERISA
         Affiliates will not (i) establish, maintain, or operate any Employee
         Benefit Plan that is not in compliance in all material respects with
         the provisions of ERISA, the Code, and all other applicable laws, and
         the regulations and interpretations thereunder; (ii) allow to exist
         any Accumulated Funding Deficiency with respect to any Employee
         Benefit Plan, whether or not waived; (iii) terminate any Employee
         Benefit Plan or withdraw or effect a partial or complete withdrawal
         (as described in ERISA Section 4203 or 4205) from any Multiemployer
         Plan, if such termination or withdrawal could subject the Borrower or
         any ERISA Affiliate to liability; (iv) fail to make any required
         installment or any other payment required under Section 412 of the
         Code on or before the due date for such installment or other payment;
         (v) amend any Employee Benefit Plan so as to result in an increase in
         current liability for the plan year such that Borrower or any ERISA
         Affiliate is required to provide security to such Employee Benefit
         Plan under Section 401(a)(29) of the Code; (vi) fail to make any
         contribution or payment to any Multiemployer Plan which Borrower or
         any ERISA Affiliate may be required to make under any agreement
         relating to such Multiemployer Plan; (vii) enter into any Prohibited
         Transaction for which a class exemption is not available or a private
         exemption previously has not been obtained from the Department of
         Labor; (viii) permit the occurrence of any Reportable Event, or any
         other event or condition, which could subject either the Borrower or
         any





                                       39
<PAGE>   46
         ERISA Affiliate to liability; or (ix) allow or permit to exist any
         other event or condition known or that reasonably should be known to
         Borrower which event or condition could subject either the Borrower or
         any ERISA Affiliate to liability.

                 (d)      Definitions.  For purposes of this Section 9.1, the
         following definitions shall apply:

                          (i)     "ACCUMULATED FUNDING DEFICIENCY" shall have
                 the meaning assigned to that term in Section 302 of ERISA.

                          (ii)    "CODE" shall mean the Internal Revenue Code 
                 of 1986, as amended.

                          (iii)   "EMPLOYEE BENEFIT PLAN" shall mean an
                 employee benefit plan within the meaning of Section 3(3) of
                 ERISA that is maintained, sponsored, participated in or
                 contributed to by the Borrower or any ERISA Affiliate.

                          (iv)    "ERISA" shall mean the Employee Retirement
                 Income Security Act of 1974, as amended from time to time, or
                 any successor thereto.

                          (v)     "ERISA AFFILIATE" shall mean any corporation,
                 trade or Business that is, along with Borrower, a member of a
                 controlled group of trades or businesses, or a member of any
                 group of organizations, within the meaning of Sections 414(b),
                 (c), (m) or (o) of the Code, and any regulations thereunder.

                          (vi)    "MULTIEMPLOYER PLAN" shall mean any plan
                 described in Section 3(37) or 4001(a)(3) of ERISA to which
                 contributions are or have been made by the Borrower or any
                 ERISA Affiliate.

                          (vii)   "PBGC" shall mean the Pension Benefit
                 Guaranty Corporation or any governmental body succeeding to
                 its functions.

                          (viii)  "PLAN Administrator" shall have the meaning
                 assigned to it in Section 3(16)(A) of ERISA.

                          (ix)    "PLAN SPONSOR" shall have the meaning 
                 assigned to it in Section 3(16)(B) of ERISA.

                          (x)     "PROHIBITED TRANSACTION" shall mean a
                 transaction that is prohibited under Code Section 4975 or
                 ERISA Section 406 and not exempt under Code Section 4975 or
                 ERISA Section 408.

                          (xi)    "REPORTABLE EVENT" shall mean (a) an event
                 described in Section 4043(c), 4068(a), or 4063(a) of ERISA or
                 in the regulations thereunder, (b) receipt of a notice of
                 withdrawal liability with respect to a Multiemployer Plan
                 pursuant to Section 4202 of ERISA, (c) an event





                                       40
<PAGE>   47
                 requiring the Borrower or any ERISA Affiliate to provide
                 security for an Employee Benefit Plan under Code Section
                 401(a)(29), (d) any failure to make payments required by Code
                 Section 412(m), (e) the withdrawal of the Borrower or any
                 ERISA Affiliate from an Employee Benefit Plan in which it is a
                 "SUBSTANTIAL EMPLOYER" as defined in Section 4001(a)(2) of
                 ERISA, (f) the institution of proceedings to terminate an
                 Employee Benefit Plan by the PBGC, or (g) the filing of a
                 notice to terminate an Employee Benefit Plan or the treatment
                 of an amendment of an Employee Benefit Plan as a termination
                 under Section 4041 of ERISA.

         9.2     Costs.  Borrower hereby agrees that it shall reimburse Bank on
demand, as part of Borrower's Obligations, for any and all Costs and any amount
not paid on demand shall bear interest at the Default Rate.

         9.3     Statement.  Each statement of account by Bank delivered to
Borrower relating to Borrower's Liabilities shall be presumed correct and
accurate and shall constitute an account stated between Borrower and Bank
unless Bank subsequently corrects such statement of its own volition or, within
thirty (30) days after Borrower's receipt of said statement, Borrower delivers
to Bank, by registered or certified mail addressed to Bank at the address
specified in Section 9.4, written objection thereto specifying the error or
errors, if any, which Borrower asserts are contained in any such statement.

         9.4     Notices.  Any and all notices given in connection with this
Agreement shall be deemed adequately given only if in writing (which term, for
all purposes of this Agreement and the other Loan Documents, shall include
telecopy) and addressed to the party for whom such notices are intended at the
address set forth below.  All notices shall be sent by personal delivery,
Federal Express or other over-night messenger service, first class registered
or certified mail, postage prepaid, return receipt requested or by other means
at least as fast and reliable as first class mail.  A written notice shall be
deemed to have been given to the recipient party on the earlier of (a) the date
it shall be delivered to the address required by this Agreement; (b) the date
delivery shall have been refused at the address required by this Agreement; or
(c) with respect to notices sent by mail, the date as of which the postal
service shall have indicated such notice to be undeliverable at the address
required by this Agreement.  Any and all notices referred to in this Agreement,
or which either party desires to give to the other, shall be addressed as
follows:

         IF TO BORROWER:              J-Hawk International Corporation
                                      6400 Imperial Drive
                                      P.O. Box 8216
                                      Waco, Texas  76714
                                      Attn:  James Holmes
                                      Telecopy:  254-751-7648





                                       41
<PAGE>   48

         WITH A COPY TO:              Vander Woude & Istre, P.C.
                                      510 N. Valley Mills Drive
                                      Suite 308
                                      Waco, Texas  76710
                                      Attn:  Richard Vander Woude, Esq.
                                      Telecopy:  254-751-7725

         IF TO BANK:                  Bank of Scotland
                                      565 Fifth Avenue
                                      New York, New York 10017
                                      Attn:  Loans Administration
                                      Telecopy:  212-557-9460

         WITH A COPY TO:              Sachnoff & Weaver, Ltd.
                                      Suite 2900
                                      30 South Wacker Drive
                                      Chicago, Illinois 60606
                                      Attn:  Frank Ballantine, Esq.
                                      Telecopy:  312-207-6400

                                             and to

                                      Bank of Scotland
                                      Chicago Representative Office
                                      181 West Madison Street
                                      Suite 3525
                                      Chicago, Illinois 60602
                                      Attn:  James Halley
                                      Telecopy:  312-263-1143

The above addresses may be changed by notice of such change, mailed as provided
herein, to the last address designated.

         9.5     Modification.  This Agreement and the other Loan Documents may
not be modified, altered or amended except by an agreement in writing signed by
Borrower and Bank.  Borrower may not sell, assign or transfer this Agreement or
the Other Agreements or any portion thereof, including, without limitation,
Borrower's rights,  titles, interests, remedies, powers and/or duties hereunder
or thereunder.  Borrower hereby consents to Bank's sale, assignment, transfer
or other disposition, at any time and from time to time hereafter, of this
Agreement or the Other Agreements, or of any portion thereof or participation
therein, including, without limitation, Bank's rights, titles, interests,
remedies, powers and/or duties.

         9.6     No Waiver.  Bank's failure at any time or times hereafter to
require strict performance by Borrower of any provision of this Agreement or
any other Loan Document shall not waive, affect or diminish any right of Bank
thereafter to demand strict compliance





                                       42
<PAGE>   49
and performance therewith.  Any suspension or waiver by Bank of an Event of
Default or an Unmatured Default by Borrower or any other Loan Party under this
Agreement or the Other Agreements shall not suspend, waive or affect any other
Event of Default or Unmatured Default by Borrower or any other Loan Party under
this Agreement or the Other Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different type.  None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or the Other Agreements and no Event of Default or
Unmatured Default by Borrower or any other Loan Party under this Agreement or
the Other Agreements shall be deemed to have been suspended or waived by Bank
unless such suspension or waiver is by an instrument in writing signed by an
officer of Bank and directed to Borrower or such applicable other Loan Party
specifying such suspension or waiver.

         9.7     Severability.  If any provision (in whole or in part) of this
Agreement or the other Loan Documents or the application thereof to any person
or circumstance is held invalid or unenforceable, then such provision shall be
deemed modified, restricted, or reformulated to the extend and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement or the other Loan Document, as the case may require, and
this Agreement and such other Loan Document shall be construed and enforced to
the maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified, restricted, or reformulated or as if such
provision had not been originally incorporated herein or therein, as the case
may be.  The parties further agree to seek a lawful substitute for any
provision found to be unlawful.  If such modification, restriction or
reformulation is not reasonably possible, the remainder of this Agreement and
the other Loan Documents and the application of such provision to other persons
or circumstances will not be affected thereby and the provisions of this
Agreement and the other Loan Documents shall be severable in any such instance.

         9.8     Successors or Assigns.  This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the successors and
assigns of Borrower and Bank.

         9.9     Incorporation of Other Agreements.  The provisions of the
Other Agreements are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in this Agreement and except as otherwise provided
in the Other Agreements by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in conflict
with, or inconsistent with, any provision in the Other Agreements or the other
Loan Documents, Bank shall have the right to elect, in its sole and absolute
discretion, which provision shall govern and control.  Except to the extent
provided to the contrary in this Agreement and in the other Loan Documents, no
termination or cancellation (regardless of cause or procedure) of this
Agreement or the Other Agreements shall in any way affect or impair the powers,
obligations, duties, rights and liabilities of Borrower or Bank in any way or
respect relating to (a) any transaction or event occurring prior to such
termination or cancellation, and/or (b) any of the undertakings, agreements,
covenants, warranties and representations of Borrower contained in this
Agreement or the





                                       43
<PAGE>   50
Other Agreements.  All such undertakings, agreements, covenants, warranties and
representations shall survive such termination or cancellation.

         9.10    Waiver of Trial by Jury.  TO THE EXTENT PERMITTED BY LAW,
BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER AGREEMENTS OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION HEREWITH.  BORROWER HEREBY
EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR BANK TO
MAKE THE LOAN.

         9.11    Designated Person.  Until Bank is notified by Borrower to the
contrary in accordance with Section 9.4, the signature upon this Agreement or
upon any of the Other Agreements of any officer, employee or agent of Borrower,
or of any other Person designated in writing to Bank by any of the foregoing,
or of a "DESIGNATED PERSON" (as that term is defined in Borrower's Secretary's
Certificate of even date herewith, constituting one of the Other Agreements)
shall bind Borrower and be deemed to be the duly authorized act of Borrower.

         9.12    Acceptance.  This Agreement and the other Loan Documents are
submitted by Borrower to Bank (for Bank's acceptance or rejection thereof) at
Bank's principal place of business as an offer by Borrower to borrow monies
from Bank now and from time to time hereafter and shall not be binding upon
Bank or become effective until and unless accepted by Bank, in writing, at said
place of business.  If so accepted by Bank, this Agreement and the other Loan
Documents and the other Loan Documents shall be deemed to have been made at
said place of business.  This Agreement and the other Loan Documents and the
other Loan Documents shall be governed and controlled by the laws of the State
of Illinois as to interpretation, enforcement, validity, construction, effect
and in all other respects including, but not limited to, the legality of the
interest rate and other charges, but excluding choice of law provisions and
perfection of security interests which shall be governed and controlled by the
laws of the relevant jurisdiction.

         9.13    Knowledge.  As used herein the phrase "TO THE BEST OF
BORROWER'S KNOWLEDGE" or words of such import shall mean all knowledge,
including, actual knowledge and knowledge of matters which any reasonable
person in such position knew or should have known, of the respective officers,
directors and managers of Borrower.

         9.14    Waiver by Borrower.  EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (A) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND





                                       44
<PAGE>   51
GUARANTIES AT ANY TIME HELD BY BANK ON WHICH BORROWER MAY IN ANY WAY BE LIABLE;
(B) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO BANK'S TAKING POSSESSION OR
CONTROL OF, OR TO BANK REPLEVY, ATTACHMENT OR LEVY UPON THE COLLATERAL OR ANY
BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING BANK TO
EXERCISE ANY OF BANK'S REMEDIES; AND (C) THE BENEFIT OF ALL VALUATION,
APPRAISEMENT, EXTENSION AND EXEMPTION LAWS.

         9.15    Governing Law.  THIS AGREEMENT HAS BEEN DELIVERED FOR
ACCEPTANCE BY BANK IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS.  TO THE EXTENT PERMITTED BY APPLICABLE
LAW BORROWER HEREBY (a) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS OVER ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (b)
IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (c) AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN
ANY OTHER MANNER PROVIDED BY LAW; AND (d) AGREES NOT TO INSTITUTE ANY LEGAL
ACTION OR PROCEEDING AGAINST BANK OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF
OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED IN COOK
COUNTY, ILLINOIS.  NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR BANK'S RIGHT
TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR BANK'S RIGHT TO BRING
ANY ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.

         9.16    Service of Process.  Borrower hereby irrevocably appoints and
designates CT Corporation System, Inc., 208 S. LaSalle Street, Chicago, IL
60604 as its true and lawful attorney-in-fact and duly authorized agent for
service of legal process and agrees that service of such process upon such
agent and attorney-in- fact shall constitute personal service of such process
upon Borrower.

         9.17    Representation by Counsel.  Borrower hereby represents that it
has been represented by competent counsel of its choice in the negotiation and
execution of this Agreement and the other Loan Documents; that it has read and
fully understood the terms hereof; Borrower and its counsel have been afforded
an opportunity to review, negotiate and modify the terms of this Agreement, and
that it intends to be bound hereby.  In accordance with the foregoing, the
general rule of construction to the effect that any ambiguities in a contract
are to be resolved against the party drafting the contract shall not be
employed in the construction and interpretation of this Agreement.





                                       45
<PAGE>   52
         9.18    Release of Bank.  Borrower releases Bank from any and all
causes of action or claims which Borrower may now or hereafter have for any
asserted loss or damage to Borrower claimed to be caused by or arising from any
act or omission to act on the part of Bank, its officers, agents or employees,
except for willful misconduct.

         9.19    Invalidated Payments. To the extent that either Bank receives
any payment on account of Borrower's Liabilities, and any such payment(s)
and/or proceeds or any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside, subordinated and/or required to be
repaid to a trustee, receiver or any other Person under any bankruptcy act,
state or federal law, common law or equitable cause, then, to the extent of
such payment(s) or proceeds received, Borrower's Liabilities or part thereof
intended to be satisfied shall be revived and continue in full force and
effect, as if such payment(s) and/or proceeds had not been received by Bank and
applied on account of Borrower's Liabilities.

         9.20    Headings.  The descriptive headings of the various provisions
of this Agreement and the other Loan Documents are inserted for convenience of
reference only and shall not be deemed to affect the meaning or construction of
any of the provisions hereof.

         9.21    Counterparts.  This Agreement and the other Loan Documents may
be executed in any number of counterparts, and by the different parties hereto
and thereto on the same or separate counterparts, each of which when so
executed and delivered shall be deemed to be an original; all the counterparts
for each such Loan Document shall together constitute one and the same
agreement.

         9.22    Fax Execution.  For purposes of negotiating and finalizing
this Agreement (including any subsequent amendments thereto), any signed
document transmitted by facsimile machine ("FAX") shall be treated in all
manner and respects as an original document.  The signature of any party by FAX
shall be considered for these purposes as an original signature.  Any such FAX
document shall be considered to have the same binding legal effect as an
original document, provided that an original of the faxed document was mailed
by first class U.S. Mail or personally delivered to the recipient, on the date
of its transmission with proof of the fax transmission.  At the request of
either party, any FAX document subject to this Agreement shall be re-executed
by both parties in an original form.  The undersigned parties hereby agree that
neither shall raise the use of the FAX or the fact that any signature or
document was transmitted or communicated through the use of a FAX as a defense
to the formation of this Agreement.

         9.23    No Third Party Beneficiaries.  This Agreement is solely for
the benefit of the Bank, Borrower and their respective successors and assigns
(except as otherwise expressly provided herein) and nothing contained herein
shall be deemed to confer upon any Person other than Borrower and its
successors and assigns any right to insist on or to enforce the performance or
observance of any of the obligations contained herein.  All conditions to the
obligations of the Bank to make the Loans hereunder are imposed solely and





                                       46
<PAGE>   53
exclusively for the benefit of the Bank and its respective successors and
assigns and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms and no other Persons shall under any
circumstances be deemed to be a beneficiary of such conditions.

         9.24    Texas Language.

                 (a)      THIS WRITTEN AGREEMENT (TOGETHER WITH THE OTHER LOAN
DOCUMENTS ) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE MATTERS COVERED HEREBY AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

                 (b)      THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES HERETO.

         9.25    Domicile of Loans.  Bank may make, maintain or transfer any of
its Loans hereunder to, or for the account of, any branch office, subsidiary or
affiliate of Bank.

                                 *  *  *  *  *





                                       47
<PAGE>   54

         IN WITNESS WHEREOF, this Loan Agreement has been duly executed as
of the day and year specified at the beginning hereof.

                                  BORROWER:
                                  
                                  J-HAWK INTERNATIONAL CORPORATION
                                  a Texas corporation
                                  
                                  By: /s/ JAMES C. HOLMES   
                                      ------------------------------------
                                  Title: Senior Vice President  
                                         ---------------------------------
                                                                              
                                  BANK:   
                                                                          
                                  BANK OF SCOTLAND            
                                                                          
                                  By: /s/ ANNIE CHIN TAT       
                                      ------------------------------------
                                  Title: Vice President  
                                         ---------------------------------