# FLEET NATIONAL BANK

# 2001 (Second) Amended and RestatedCommercial Loan Agreement

THIS 2001  (SECOND)  AMENDED AND RESTATED  COMMERCIAL  LOAN
AGREEMENT  (Agreement),  dated as of September  28, 2001,  between  FLEET NATIONAL  BANK (the 
Bank),  having an office at 157 Church  Street,  New Haven,  Connecticut  06510 and SWISS ARMY BRANDS,  INC. (the
Borrower), having its chief executive office at One Research Drive, Shelton, Connecticut 06484.

This Agreement  constitutes the
amendment and restatement of that certain 2001 Amended and Restated  Commercial Loan Agreement between the Borrower and the Lender
dated as of May 25, 2001 (the 2001 Loan Agreement).

# W I T N E S S E T H:

# Section 1.
Definitions

Unless  otherwise  defined or
specified  herein,  all accounting  terms shall be construed and all  accounting  determinations shall be made in accordance with
GAAP.

2000 Term Loan means the
2000 Term Loan as defined in Section 2B.1 hereof.

2000 Term Note means the
2000 Commercial Promissory Note attached as Exhibit 4 hereto.

Account means  accounts,
chattel paper and instruments as those terms are defined in the Code, whether now owned or hereafter acquired by the Borrower.

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

Advance  means an
advance of funds to the  Borrower  by the Bank  pursuant  to this  Agreement  under the Line of Credit or a reborrowing  by the
Borrower of an outstanding  amount under the Line of Credit,  which shall bear interest at the Base Rate, the LIBOR Rate or the Cost
of Funds Rate.

Affiliate  means any
person or  corporation  which  directly or indirectly  controls,  or is controlled by, or is under common control with the Borrower.

Agreement means this
2001 (Second) Amended and Restated Commercial Loan Agreement.

Applicable Interest Periodmeans the Interest Period selected by the Borrower pursuant to this Agreement.

Base Rate Advance means
an Advance that bears interest at a rate per annum equal to the Base Rate.

Base Ratemeans the
variable  per annum rate of interest so  designated  by the Bank from time to time as its Base Rate.  The Base Rate is a reference
rate and does not  necessarily  represent the lowest or best rate being  charged to any customer.  Changes in the rate of interest
resulting from changes in the Base Rate shall take place immediately without notice or demand of any kind.

Borrowing Base means
seventy-five  percent (75%) of the face value of the Eligible Accounts plus twenty five percent (25%) of the value of the  Eligible
Inventory  (determined  according  to the lower of market value or cost on a last in first out basis) minus the aggregate of the
then currently outstanding balances under the Term Loan and the 2000 Term Loan.

Borrowing Base  Certificate means a form for reporting the Borrowing Base, a specimen of which is attached hereto as Exhibit 1, or such other form
as the Bank may require from time to time.

Borrowing Datemeans the
date on which the Bank shall make an Advance pursuant to the terms of this Agreement.

Business  Daymeans in
respect of any date that is specified in this  Agreement  or the Notes to be subject to  adjustment  in accordance  with the
Following  Business Day Convention (as described and defined in Section 10.19 hereof),  a day on which  commercial banks settle
payments in (i) London,  England if the payment  obligation is calculated by reference to LIBOR, or (ii) New York, if the payment
obligation is calculated by reference to any Base Rate or Cost of Funds Rate.

Capital  Assets means
assets that in  accordance  with GAAP are  required or  permitted  to be  depreciated  or amortized on Borrower's balance sheet.

Capital  Leasesmeans
capital  leases,  conditional  sales  contracts  and other title  retention  agreements  relating to the purchase or acquisition of
Capital Assets.

Codemeans the Uniform
Commercial Code in effect in Connecticut.

Control shall be deemed
to exist if any Person  shall have  possession,  directly or  indirectly,  of the power to direct the management  or policies of the
Borrower or any Person  deemed to be an Affiliate  of the  Borrower,  and shall be deemed to include any holder of 10% or more of
any stock or other  interest  in the  Borrower or in any Person  deemed to be an  Affiliate  of the  Borrower, whether such holding
is direct or indirect.

Cost of Fundsmeans the
per annum rate of interest  which Bank is  required  to pay,  or is  offering  to pay,  for  wholesale liabilities of like tenor,
adjusted for reserve requirements and such other requirements as may be imposed by federal,  state or local government and
regulatory agencies, as determined by Bank.

Cost of Funds Advance
means an Advance that bears interest at a rate per annum equal to the Cost of Funds Rate.

Cost of Funds Rate Loan
shall mean a Cost of Funds  Advance or the Term Loan  bearing  interest at the Term Loan Cost of Funds Rate or the 2000 Term Loan
bearing interest at the Term Loan Cost of Funds Rate.

Cost of Funds Rate means
an interest  rate per annum  equal at all times  during an Interest  Period to the  aggregate  of (i) Cost of Funds and (ii) the
Interest Rate Margin.

Current  Maturity of
Long-Term  Debt ("CMLTD")  means the current  maturities of long-term  Indebtedness  during the next four quarterly periods,
including, but not limited to, amounts required to be paid during such periods under Capital Leases.

Current Ratio means the
ratio of Total Current Assets to Total Current Liabilities.

Dividends means, for the
applicable  period,  the  aggregate of all amounts paid or payable as  dividends,  with respect to Borrower's shares of stock,
whether now or hereafter outstanding.

Earnings Before Interest,
Taxes,  Depreciation and Amortization ("EBITDA") means, for the applicable period, operating income plus,  for the  applicable
period during the second half of 2001 only,  the Hancock Stock  Proceeds (as defined in section 4.1 of this Agreement),  excluding
the effect of any non-cash  reductions in the value of investments on the Borrower's  balance sheet,  before the payment of interest
and taxes plus depreciation and amortization, all as determined in accordance with GAAP.

Eligible  Accountsshall
be determined by the Bank, upon delivery to Bank of a Borrowing Base  Certificate,  in the reasonable exercise  of its  discretion,
as to which  Accounts  listed  thereon  shall be  deemed  to be  "Eligible  Accounts".  In  making  this determination, Bank will
consider, but shall not be limited to, the following criteria:

1. The goods or services  giving rise to such Account  have been  shipped or delivered to or performed
for an Account Debtor (i) on an absolute sale basis and not on consignment,  on approval or on a sale-or-return  basis or subject to
any other repurchase  or return  agreement,  (ii) on an open  account  basis,  (iii) no material  part of the subject  goods or
services has been returned,  rejected,  lost or damaged,  (iv) the Account is not evidenced by chattel  paper or an  instrument of
any kind,  and (v) the Account Debtor is not insolvent or the subject of any bankruptcy or insolvency proceeding of any kind;
2. If the Account Debtor is located  outside the United  States,  (i) the subject goods shall have
been shipped or the services  rendered after receipt,  by Borrower from the Account  Debtor,  of an  irrevocable  letter of credit,
which letter of credit shall have been confirmed by a financial  institution  acceptable to Bank and shall be in form and substance
acceptable to Bank and shall be transferred,  assigned or otherwise made payable to Bank in form and substance satisfactory to Bank,
and (ii) the Account shall be payable in the full amount of the face value of the Account in United States dollars;
3. The Account is a valid,  legally enforceable  obligation of the Account Debtor thereunder and is not
subject to any  offset  or other  defense  on the part of such  Account  Debtor  or to any  claim on the part of such  Account
Debtor  denying liability thereunder;  provided,  however,  that, if it is subject to any such offset, defense or claim, it shall be
ineligible only to the extent of such offset, defense or claim;
4. The Account is subject to a duly perfected first priority security interest in favor of the Bank;
5. The Account is subject to no lien or security interest whatsoever,  except for the security interest
of Bank under the Related  Agreements and liens or security  interests which have been expressly  subordinated to the security
interest of Bank in form and substance satisfactory to Bank;
6. The Account is evidenced by an invoice or other proof of delivery in form acceptable to Bank;
7. The Account has not remained unpaid for a period exceeding ninety (90) days after the due date;
8. The Account is not owing from an Account  Debtor which is located in the State of New Jersey or the
State of Minnesota unless Borrower has filed a Notice of Business  Activities  Report with the New Jersey Division of Taxation or
the applicable Minnesota agency, as appropriate, for the then current year;
9. The Account does not arise out of transactions  with an employee,  officer,  agent,  director,
stockholder, Affiliate, or Subsidiary of Borrower;
10. The Account does not arise out of a transaction  with the United States or any department or agency
thereof, unless assignment of which to Bank has been properly filed in accordance with the Federal Assignment of Claims Act; and
11. The Account is not an Account which is, or may become, a contra account.

Eligible  Inventory
shall be determined by the Bank, upon delivery to Bank of a Borrowing Base Certificate,  in the reasonable exercise  of its
discretion,  as to what  Inventory  listed  thereon  shall be  deemed to be  "Eligible  Inventory."  In  making  this determination,
Bank will consider, but shall not be limited to, the following criteria:

1. The  Inventory  consists of finished  goods that are useable and saleable by the  Borrower or Bear
Cutlery, Inc. in the ordinary course of business;
2. The Inventory complies with all applicable laws, regulations and rules;
3. The Inventory is located in the United States or the province of Ontario, Canada;
4. The Inventory is subject to a duly perfected first priority security interest in favor of the Bank;
and
5. The Inventory is subject to no lien or security  interest  whatsoever,  except for the security
interest of Bank hereunder and liens or security  interests  which have been expressly  subordinated  to the security  interest of
Bank in form and substance satisfactory to Bank.

Events of Defaultshall
have the meaning given such term in Section 8 of this Agreement.

Eurocurrency  Liabilities  shall have the  meaning  assigned to that term in  Regulation  D of the Board of  Governors  of the Federal Reserve System, as
in effect from time to time.

Fixed Rate Advancemeans
a LIBOR Advance or a Cost of Funds Advance.

Funded Debt means (i)
Indebtedness on account of borrowed money and (ii) obligations under Capital Leases.

GAAP  means  generally
accepted  accounting  principles  in the  United  States of  America,  as from time to time in effect; provided,  however,  that for
purposes of  compliance  with Section 7 of this  Agreement and the related  definitions,  GAAP means such principles as in effect on
the date of the preparation and delivery of the financial  statements described in Section 3.3 and Schedule  Ahereto and
consistently  followed,  without giving effect to any subsequent changes other than changes consented to in writing by the Bank.

Guarantor means,
individually  and  collectively,  Excelsior  Advertising,  Inc.,  Swiss Army Brand,  Ltd., Swiss Army Brands (Suisse) S.A., Bear
Cutlery, Inc., Swiss Army Brands CH, Inc., and Swiss Retail LLC.

Hancock Stock means all
of the shares of stock in the John Hancock Life Insurance Company owned by Borrower.

Indebtedness  means all
obligations that in accordance with GAAP should be classified as liabilities  upon Borrower's  balance sheet or to which reference
should be made by footnotes thereto.

Intangible Assets means
assets that in accordance with GAAP are properly  classifiable as intangible  assets,  including,  but not limited to, goodwill,
franchises, licenses, patents, trademarks, tradenames and copyrights.

Interest  means, for the
applicable  period,  all interest paid or payable,  including,  but not limited to, interest paid or payable on Indebtedness and on
Capital Leases, determined in accordance with GAAP.

Interest Period means,
respectively, with respect to the Term Loan, the 2000 Term Loan and each Fixed Rate Advance:

(i) initially the period (A)
commencing,  respectively,  on the Borrowing  Date of the Term Loan,  the 2000 Term Loan or such Fixed Rate  Advance,  and (B)
ending at the end of the  Applicable  Interest  Period,  to be  elected  by the  Borrower:  (a) for LIBOR Advances and the Term Loan
bearing  interest at a Term Loan LIBOR Rate B 7, 30, 60 or 90 days  thereafter,  and (b) for the 2000 Term Loan bearing interest at
a Term Loan LIBOR Rate -- 30, 60, 90 or 180 days  thereafter,  and (c) for Cost of Funds Rate Loans, 7, 14, or 21 days  thereafter,
as the case may be, as selected by the Borrower,  and (ii)  thereafter,  such subsequent  Interest Period for the Term Loan,  the
2000 Term Loan or such Fixed Rate Advance  shall begin on the last day of the  preceding  Interest  Period for the Term Loan,  the
2000 Term Loan or such Fixed Rate  Advance and shall end at the end of the  Applicable  Interest  Period as the Borrower may select
pursuant to this  Agreement;  provided that (A) any Interest Period for a LIBOR Loan which would otherwise end on a day which is not
a Business Day shall end and the next Interest  Period shall commence on the next  preceding or the next  succeeding day which is a
Business Day as determined  conclusively  by the Bank in accordance  with the then current bank practices in London,  England,  (B)
any Interest  Period for a Cost of Funds Rate Loan which would  otherwise  end on a day which is not a Business  Day shall end and
the next Interest Period shall commence on the next preceding or the next  succeeding day which is a Business Day as determined
conclusively by the Bank; and (C) no Interest Period shall end after the Termination Date.

Interest Rate Margin
means,  with regard to the Term Loan, the 2000 Term Loan, and the Line of Credit,  the percentage rate by which LIBOR and Cost of
Funds is increased as determined by referring to the Performance Pricing Grid attached hereto as Schedule B.

Changes in the Interest  Rate
Margin  resulting  from changes in the Funded Debt to EBITDA Ratio,  as  determined  pursuant to Section 7.2 hereof,  shall become
effective on the date on which the financial  statements and compliance  certificate are received by the Bank pursuant to Section
5.1 hereof (but in any event not earlier than the first day of the first month  following the  forty-fifth (45th) day after the end
of the quarterly  period of each fiscal year to which such financial  statements  and  compliance  certificate relate) and shall
remain in effect until the next change to be effected  pursuant to this  paragraph.  If the  financial  statements or the compliance
certificates  referred to above are not delivered within the time periods  specified above,  then, until such financial statements
and  compliance  certificate  are  delivered,  the Funded Debt to EBITDA Ratio as of the end of the fiscal period that would have
been covered thereby shall, for the purposes of this definition,  be deemed to be greater than 3.0 to 1.0, provided however,  that
this shall not constitute a waiver of any Event of Default by the Bank.

Inventory means
inventory,  as the term is defined in the Code, whether now owned or hereafter acquired by the Borrower,  and, including,  without
limitation,  any and all goods, merchandise and other personal property,  wheresoever located and whether or not in transit,  now
owned or hereafter  acquired by the Borrower,  which is or may at any time be held for sale or lease,  or furnished or to be
furnished  under any contract of service or held as raw  materials,  work in process,  supplies or materials used or consumed in the
Borrower's  businesses,  and all such property the sale or other  disposition of which has given rise to Accounts or Documents (as
that term is defined in the Code) and which has been returned to or repossessed or stopped in transit by the Borrower.

LIBOR Advance means an
Advance that bears interest at a rate per annum equal to the LIBOR Interest Rate.

LIBOR shall mean,  as
applicable to any Term Loan LIBOR Rate or LIBOR Advance  (collectively,  a LIBOR  Loan),  the rate per annum as
determined on the basis of the offered  rates for deposits in U.S.  Dollars,  for a period of time  comparable to such LIBOR Loan
which  appears on the Telerate  page 3750 as of 11:00 a.m.  London time on the day that is two Business  Days  preceding the first
day of such LIBOR Loan;  provided,  however,  if the rate described above does not appear on the Telerate System on any such
applicable interest  determination date, the LIBOR rate shall be the rate (rounded upward, if necessary,  to the nearest one
hundred-thousandth of a percentage  point),  determined  on the basis of the offered  rates for deposits in U.S.  dollars for a
period of time  comparable to such LIBOR Loan which are offered by four major banks in the London interbank  market at approximately
11:00 a.m. London time, on the day that is two Business Days  preceding the first day of such LIBOR Loan as selected by Bank.  The
principal  London office of each of the four major London banks will be requested to provide a quotation of its U.S.  Dollar deposit
offered  rate.  If at least two such quotations  are provided,  the rate for that date will be the  arithmetic  mean of the
quotations.  If fewer than two  quotations  are provided  as  requested,  the rate for that date will be  determined  on the basis
of the rates  quoted  for loans in U.S.  dollars  to leading  European  banks for a period of time  comparable  to such LIBOR Loan
offered by major banks in New York City at  approximately 11:00 a.m.  New York City time,  on the day that is two Business  Days
preceding  the first day of such LIBOR Loan.  In the event that Bank is unable to obtain any such  quotation  as  provided  above,
it will be deemed  that LIBOR  pursuant  to a LIBOR Loan  cannot be determined.  In the event that the Board of Governors of the
Federal  Reserve System shall impose a Reserve  Percentage with respect to LIBOR  deposits of Bank,  then for any period  during
which such  Reserve  Percentage  shall apply,  LIBOR shall be equal to the amount determined above divided by an amount equal to 1
minus the Reserve Percentage.

LIBOR  Interest Rate
means an interest  rate per annum equal at all times during an Interest  Period to the  aggregate of (i) LIBOR and (ii) the Interest
Rate Margin.

LIBOR Loan shall mean a
LIBOR  Advance,  the Term Loan  bearing  interest at the Term Loan LIBOR  Rate,  or the 2000 Term Loan bearing interest at the Term
Loan LIBOR Rate.

Line of Credit  means
the  revolving  line of credit set forth in Section 2.1 of this  Agreement  that the Bank may advance to the Borrower and the
Borrower may borrow from the Bank.

Line of Credit Note
means the 2001 Substituted  Commercial  Revolving Promissory Note dated as of May 25, 2001, as modified by the Allonge to 2001
Substituted  Commercial Revolving Promissory Note, of even date with the Agreement,  each executed and delivered by the Borrower in
substantially the form of Exhibit 2hereto and which collectively evidence the Line of Credit.

Net Income (Net Loss)
means the net income (or net loss,  expressed  as a negative  number)  for any period,  after all taxes actually paid or accrued and
all expenses and other charges determined in accordance with GAAP.

Notes means the Line of
Credit Note, the Term Note and the 2000 Term Note.

Performance Pricing Grid
means that chart  outlining the applicable  adjustment to the interest rate payable under the Notes, which chart is attached hereto
asSchedule B.

Person  means  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).

Related Agreements means
the various agreements and documents  described under the heading "Related  Agreements" in Schedule A to this Agreement and
such other documents, delivered or caused to be delivered, by the Borrower to the Bank.

Reserve  Percentagemeans
the maximum aggregate reserve  requirement  (including all basic,  supplemental,  marginal and other reserves) which is imposed on
member banks of the Federal Reserve System against Euro-currency Liabilities.

Retail means Swiss
Retail LLC.

Subsidiary means any
corporation,  a majority of whose  outstanding  stock having ordinary voting powers for the election of directors, shall at any time
be owned or controlled by the Borrower or one or more of its subsidiaries.

Stockholder Equity means
total  stockholders'  equity determined in accordance with GAAP but excluding from such determination all non-cash charges and
credits resulting from the application of Financial Accounting Standard 133.

Tangible Net Worth means
Stockholder Equity minus Intangible Assets.

Termination Date shall
have the meaning given such term in Section 2.1 of this Agreement.

Term Loan means the Term
Loan as defined in Section 2A hereof.

Term Loan Base Rate
means the variable per annum rate of interest equal at all times to the Base Rate.

Term Loan Cost of Funds Rate means an interest  rate per annum equal at all times during an Interest  Period to the  aggregate of (i) Cost of Funds and (ii)
the Interest Rate Margin.

Term Loan Fixed Rate
means the Term Loan LIBOR Rate or the Term Loan Cost of Funds Rate.

Term Loan LIBOR Rate
means an interest  rate per annum equal at all times  during an Interest  Period to the  aggregate of (i) LIBOR and (ii) the
Interest Rate Margin.

Term Note means the 1999
Commercial Promissory Term Note attached as Exhibit 3 hereto.

Total Current Assets
means total current assets determined in accordance with GAAP.

Total Current Liabilities means total current Indebtedness determined in accordance with GAAP.

Total Liabilities means
total Indebtedness determined in accordance with GAAP.

Victorinox  Letter Agreement means the letter  agreement,  an executed copy of which is attached  hereto as Exhibit 5,  among Borrower, Victorinox,
A.G. ("Victorinox") and Victorinox-Swiss Army Brands, A.G. ("VISA") and dated July 30, 2001.

Working Capital means
Total Current Assets less Total Current Liabilities.

Xantia Agreement shall
mean the Share Purchase  Agreement,  dated June 23, 2000, among Swiss Army Brands CH, Inc.,  Victorinox AG and Michel and Irene
Theivent,  as amended as of July 11,  2000 and as further  amended  through  the  closing  date  thereof,  and providing for the
purchase of all of the  outstanding  shares of stock in Xantia SA, with Swiss Army Brands CH, Inc. and Victorinox AG each purchasing
one-half of the shares of stock in Xantia SA.

Xantia  Note shall mean
the  payment  obligation  of Swiss Army  Brands CH,  Inc.  as set forth in Section  3(b) of the Xantia Agreement.

# Section 2. The
Line of Credit

2.1 The Line of  Credit.Pursuant  to the terms of this  Agreement  and upon the  satisfaction  of the  conditions  precedent referred to in Section 4
hereof,  the Bank will lend to the  Borrower,  and the Borrower may, in its sole  discretion,  borrow from the Bank,  Advances not
to exceed the aggregate  principal amount to be outstanding at any time of the lesser of:  (a) Sixteen  Million and No/100 DOLLARS
($16,000,000.00),  provided,  however, that Advances may not exceed $1,000,000 on account of investments in, loans to or any other
transfers  made to or on account of Retail (the "Retail  Sublimit");  or (b) the  amount of the Borrowing Base (the "Line of
Credit") as  evidenced  by the Line of Credit  Note.  Unless an Event of Default  occurs and is  continuing,  the  Borrower may
borrow, repay and  reborrow  Advances  under this  Agreement  during the period from the date hereof  until June 30,  2003(as  such
date may be extended in writing from time to time in the Bank's sole and absolute discretion,  the "Termination  Date");  provided,
however,  that all outstanding principal plus accrued and unpaid interest shall be paid in full on the Termination Date.

2.2  Advances.(a) The
Borrower may, in writing,  request that the Bank make an Advance  under the Line of Credit.  Each such written  request shall be
accompanied by a certificate by the president or chief  financial  officer of the Borrower  stating that: (i) the Borrower is
current with its  obligation to submit  Borrowing  Base  Certificates  to the Bank  pursuant to Section  5.1(f) of this Agreement;
and (ii) the aggregate  outstanding  Advances are not in excess of the lesser of the Borrowing Base and the Line of Credit; (iii)
the  making of the  requested  Advance will not cause the Retail  Sublimit to be exceeded;  and (iv) the making of the  requested
Advance will not increase the aggregate  outstanding  Advances to an amount  greater than the lesser of the Borrowing Base and the
Line of Credit.  If any Advance is made, the Advance shall be made by a deposit to any of Borrower's  accounts with the Bank.
Advances will be payable as provided  in the Line of Credit  Note.  In the event the  Borrower  fails to provide  notice of the type
of Advance to be effected by a new  borrowing,  Borrower  shall be deemed to have elected a Base Rate Advance.  If any Advance is
made, the Bank may, at its option,  record on the books and records of the Bank or endorse on a schedule  attached to the Line of
Credit Note, an  appropriate notation  evidencing any Advance,  each repayment on account of the principal thereof and the amount of
interest paid; and the Borrower authorizes  the Bank to maintain  such records or make such  notations  and agrees that the amount
shown on the books and records or on said  schedule,  as  applicable,  as  outstanding  from time to time shall  constitute  the
amount  owing to the Bank  pursuant to this Agreement,  absent  manifest  error.  In the event the amount shown on the schedule
conflicts with the amount noted as due pursuant to the books and records of the Bank, the books and records of the Bank shall
control the disposition of the conflict.

1. Whenever  Borrower  desires
that the Bank make an Advance which is to be a Base Rate Advance,  it shall give the Bank notice of such request. The Borrowing Date
relating to such Advance shall be a Business Day.
2. When Borrower  desires that
Bank make an Advance which is to be a LIBOR Advance or a Cost of Funds Advance,  it shall give Bank not less than two (2)  Business
Days  notice of such  request.  The  Borrowing  Date  relating  to such  Advance  shall be a Business  Day. No LIBOR  Advance  will
be made in an amount less than  $100,000  and no more than eight(8) Fixed Rate  Advances may be outstanding under the Line of Credit
at any time.
3. Each request for an Advance
shall specify whether such Advance is to be a Base Rate Advance,  or a LIBOR Advance or a Cost of Funds  Advance and, once so
specified,  such  specification  may not be changed  except with prior approval of the Bank.  Each such request shall further
specify the Interest Period to be applicable to such Advance as follows:

1. for Base Rate Advances no
Interest Period need be specified; and
2. for LIBOR Advances,  the
Interest Period, at the Borrower's  option, may be of a duration of 7, 30, 60 or 90 days; and
3. for Cost of Funds Advances,
the Interest Period, at the Borrower's option, may be of a duration of 7, 14 or 21 days.

2.2.A  Letters of Credit;
Reduction in Availability. (a)     Within  the  limits  set  forth  in 2.1 of  this  Agreement  and subject to the provisions of
this Section 2.2.A, the Borrower may, from time to time,  request the Bank to issue commercial  letters of credit and standby
letters of credit  ("Letters of Credit").  The aggregate  outstanding  available  undrawn amount of all outstanding Letters of
Credit shall not exceed $500,000.

1. The amount of Advances  which
would  otherwise be available to the Borrower under the Line of Credit shall be reduced by the aggregate outstanding available
undrawn amount of outstanding Letters of Credit.
2. A draw under a Letter of
Credit shall be deemed to be a request for an Advance under the Line of Credit.
3. No Letters of Credit shall be
issued with an expiration date later than 365 days after the Termination Date.
4. Borrower  shall  execute any
additional  documentation  as the Bank may request in  connection  with the issuance of Letters of Credit including, without
limitation, reimbursement agreements.
5. The Bank's obligation to issue
Letters of Credit is  contingent  upon the payment by the Borrower of the  applicable fees from the Bank's then current fee schedule
for  commercial  letters of credit,  and a fee of 1.5% of the face amount for standby letters of credit.

2.3 Interest; Principal.
LIBOR  Advances,  Base Rate  Advances and Cost of Funds  Advances will bear interest at a per annum rate as provided in the Line of
Credit Note.  Such interest shall be payable as specified in the Line of Credit Note.  Principal  shall also be repaid in accordance
with the terms of the Line of Credit  Note.  Upon the  occurrence  of and during the  continuance  of an Event of Default or after
maturity or after judgment has been rendered on the Line of Credit Note,  Borrower's  right to select pricing options  shall,  at
the option of the Bank,  cease and the unpaid  principal of all  advances  shall,  at the option of the Bank,  bear interest at a
rate which is two (2) percentage points per annum greater than that which would otherwise be applicable.

All agreements  between
Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever,  whether by reason of acceleration of
maturity of the  indebtedness  evidenced  hereby or otherwise,  shall the amount paid or agreed to be paid to Bank for the use or
the  forbearance  of the  indebtedness  evidenced  hereby  and by the Line of Credit  Note  exceed  the  maximum permissible  under
applicable  law.  As used  herein,  the term  "applicable  law" shall mean the law in effect as of the date  hereof provided,
however,  that in the event there is a change in the law which results in a higher  permissible  rate of interest,  then the Line of
Credit Note shall be governed by such new law as of its  effective  date.  In this regard,  it is  expressly  agreed that it is the
intent of Borrower and Bank in the execution,  delivery and acceptance of the Line of Credit to contract in strict  compliance with
the laws of the State of Connecticut from time to time in effect.  If, under or from any circumstances  whatsoever,  fulfillment of
any provision  hereof,  the Line of Credit Note or of any of the Related  Agreements at the time of performance of such provision
shall be due, shall involve  transcending  the limit of such validity  prescribed by applicable  law, then the obligation to be
fulfilled  shall automatically  be reduced to the limits of such validity,  and if under or from any  circumstances  whatsoever Bank
should ever receive as interest an amount which would exceed the highest  lawful rate,  such amount which would be excessive
interest  shall be applied to the reduction of the principal  balance  evidenced hereby and not to the payment of interest.  This
provision shall control every other provision of all agreements between Borrower and Bank.

2.4 Computation of Interest.  All  computations  of interest on the Line of Credit Note shall be made on the basis of a three hundred sixty (360) day year
and the actual number of days elapsed.

2.5 Payment of  Principal
and  Interest.  All payments  shall be made by Borrower to Bank at  157 Church  Street,  New Haven, Connecticut  06510 or such
other  place as Bank may from time to time  specify in writing in lawful  currency  of the United  States of America  in immediately
available  funds,  without  counterclaim  or setoff  and free and clear of,  and  without  any  deduction  or withholding  for, any
taxes or other  payments.  The Bank is  authorized  (but not  required) to charge  principal and interest and all other amounts due
hereunder and under the Line of Credit Note to any account of the Borrower when and as it becomes due.

2.6 Prepayments. (a) The
Borrower may prepay Base Rate Advances,  LIBOR Advances or Cost of Funds Advances in accordance with the terms of the Line of Credit
Note. If at any time,  the  aggregate  principal  amount of all Advances  under the Line of Credit Note shall  exceed  the  lesser
of the  Borrowing  Base and the Line of  Credit,  the  Borrower  shall  immediately  prepay  so much of the outstanding  principal
balance,  together with accrued  interest on the portion of principal so prepaid as shall be necessary in order that the unpaid
principal balance,  after giving effect to such prepayments,  shall not exceed the lesser of the Borrowing Base and the Line of
Credit.  Any such  prepayment  will,  at the  option of the Bank,  be applied  first to the  payment of all costs and  expenses
incurred by the Bank and arising out of this  Agreement,  the Notes or any Related  Agreement and which has not been paid or
reimbursed to the Bank, then to accrued interest to the date of the prepayment and the remainder to the outstanding principal.

1. Notwithstanding any other
provision of this Agreement,  (i) if, after the date of this Agreement, the introduction of or any change in any law or regulation
(or change in the  interpretation  thereof by regulatory  authorities) applicable to the Bank, shall make it, or (ii) if any central
bank or other governmental  authority having  jurisdiction over the Bank shall assert that it is, unlawful for the Bank to perform
its  obligations  hereunder to make LIBOR  Advances to the Borrower or to continue to fund or maintain LIBOR Advances to the
Borrower  hereunder,  then, on notice thereof by the Bank to the Borrower, (A) the obligation of the Bank to the Borrower to make
LIBOR  Advances  shall  terminate,  and  (B) within  five (5) Business Days after the Bank gives notice,  the Borrower shall prepay
in full all such LIBOR Advances then  outstanding,  which the Bank is prohibited from maintaining or continuing,  together with
interest  accrued  thereon,  provided,  however,  the Borrower may elect to convert all  outstanding  LIBOR  Advances to Base Rate
Advances.
2. The Borrower may, at its
option,  prepay any Base Rate  Advances,  in whole or in part,  at any time,  without fee or premium.
3. If at any time (i) the
interest  rate on the Line of Credit is a fixed  rate,  and (ii) Bank in its sole  discretion should  determine that current market
conditions can accommodate a prepayment  request,  Borrower shall have the right at any time and from time to time to prepay the
Line of Credit in whole or in part,  in minimum  increments  of  $100,000,  and  Borrower  shall pay to Bank a make whole  premium
in an amount  computed as follows:  The  current  rate for United  States Treasury  securities  (bills on a discounted  basis shall
be  converted  to a bond  equivalent)  with a maturity  date  closest to the  maturity  date of the term chosen pursuant to the
Fixed Rate Election as to which the prepayment is made,  shall be subtracted from the "cost of funds"  component of the fixed rate
in effect at the time of  prepayment.  If the result is zero or a negative number,  there  shall be no make whole  premium. If the
result is a positive  number,  then the resulting  percentage  shall be multiplied by the amount of the principal  balance being
prepaid.  The resulting  amount shall be divided by 360 and multiplied by the number of days  remaining in the term chosen  pursuant
to the Fixed Rate  Election as to which the  prepayment  is made.  Said amount shall be reduced to present  value  calculated by
using the above-referenced  United States  Treasury  security rate and the number of days remaining in the term chosen pursuant to
the Fixed Rate Election as to which the  prepayment is made. The resulting amount shall be the make whole premium due to Bank upon
prepayment of the fixed rate loan.  Each reference in this paragraph to "Fixed Rate Election" shall mean the effective  election by
Borrower  pursuant to paragraph 2.2 of this Agreement and the Line of Credit Note of a Fixed Rate Advance.

If by reason of the  occurrence
and  continuance  of an Event of  Default  Bank  elects to  declare the Line of Credit to be immediately  due and payable,  then any
make whole  premium with respect to the Line of Credit shall become due and payable in the same manner as though Borrower had
exercised such right of prepayment.

2.7 Intentionally
Omitted.

2.8 Late Charge.  If the
entire amount of any required  installment  of principal  and/or  interest is not paid in full within ten (10) days after the same
is due,  Borrower  shall,  at the discretion of the Bank, pay to the Bank a late fee equal to five percent (5%) of the required
payment.  The minimum late charge shall be $25.00.  The assessment and collection of a late fee by the Bank shall not waive any
Event of Default or preclude the exercise of the other rights and remedies available to the Bank hereunder.

2.9 Additional  Payments.  (a) If the Bank shall deem applicable to this Agreement or the Line of Credit Note  (including,  in each case, any borrowed
and any unused portion  thereof),  any requirement of any law of the United States of America,  any regulation, order,
interpretation,  ruling,  official directive or guideline (whether or not having the force of law) of the Board of Governors of the
Federal  Reserve  System,  the  Comptroller  of the  Currency,  the Federal  Deposit  Insurance  Corporation  or any other board or
governmental or administrative agency of the United States of America which shall impose,  increase,  modify or make applicable to
this Agreement  or the Line of Credit  Note or cause this  Agreement  or the Line of Credit  Note to be  included  in any  reserve,
special deposit,  calculation used in the computation of regulatory  capital  standards,  assessment or other  requirement which
imposes on the Bank any cost that is  attributable  to the  maintenance  thereof,  then,  and in each such event,  the Borrower
shall promptly pay the Bank, upon its demand,  such amount as will  compensate the Bank for any such cost,  which  determination
may be based upon the Bank's reasonable  allocation of the aggregate of such costs  resulting from such events.  In the event any
such cost is a continuing  cost, a fee payable to the Bank may be imposed upon the Borrower  periodically  for so long as any such
cost is deemed  applicable by the Bank, in an amount  determined by the Bank to be necessary to compensate the Bank for any such
cost,  which  determination  may be based upon the Bank's  reasonable  allocation of the aggregate of such costs  resulting  from
such events.  The  determination  by the Bank of the existence and amount of any such costs shall, in the absence of manifest error,
be conclusive.

1. In the event the Bank  shall
determine  that,  by reason of  circumstances  affecting  the London inter-bank  Eurodollar market,  adequate and reasonable methods
do not exist for  ascertaining  the LIBOR  Interest Rate which would  otherwise be applicable during any Interest Period,  the Bank
shall forthwith give notice of such  determination  (which shall be conclusive and binding on the Borrower)  to the  Borrower at
least one  Business Day before the first day of such  Interest Period.  In such event:  (i) any pending notice of borrowing  which
specified a LIBOR  Advance  shall be of no effect;  and (ii) the  obligation  of the Bank to make the LIBOR Advance shall be
suspended until the Bank determines that the circumstances  giving rise to such suspension no longer exist,  whereupon the Bank
shall notify the Borrower.
2. If,  after  the date of this
Agreement,  there  shall be any  increase  in the  cost to the  Bank due to  either  (i) the introduction  of or any change in any
law or regulation (or the  interpretation  thereof by regulatory authorities) or (ii) compliance with any written  guideline or
written request from any central bank or other  governmental authority  having  jurisdiction  over Bank (whether or not such
guideline or request has the force of law), of agreeing to make or making,  funding or maintaining  LIBOR Advances to the  Borrower,
then the  Borrower  shall,  from time to time,  upon such  notice by the Bank,  pay to the Bank  additional  amounts sufficient to
reimburse the Bank for such increased cost.

# Section 2A.
The Term Loan

2A.1 The Term Loan.
Pursuant to the terms of this Agreement and upon the  satisfaction of the conditions  precedent  referred to in Section 4 hereof,
the Bank will lend to the  Borrower  the  aggregate  principal  amount  of Seven  Million  and No/100  DOLLARS ($7,000,000.00)
(the "Term Loan") as evidenced by the Term Note. All  outstanding  principal plus accrued and unpaid interest shall be paid in full
on the  Termination  Date (as the  Termination  Date may be extended from time to time) or November 1, 2004 (the Maturity
Date) should the Termination Date be extended beyond the Maturity Date.

2A.2 Interest  Rate.
(a) The  outstanding  principal  balance of the Term Loan shall bear interest  equal to a Term Loan Base Rate, a Term Loan LIBOR
Rate, or a Term Loan Cost of Funds Rate.

1. Whenever  Borrower  desires
that the Term Loan bear  interest at a Term Loan Base Rate, it shall give the Bank notice of such request. The effective date of a
Term Loan Base Rate request shall be a Business Day.
2. Whenever  Borrower  desires
that the Term Loan bear  interest at a Term Loan LIBOR Rate or a Term Loan Cost of Funds Rate: it shall give Bank not less than two
(2) Business Days notice of such request;  and the effective  date of a Term Loan LIBOR Rate request or a Term Loan Cost of Funds
Rate shall be a Business Day.
3. Each request  regarding the
interest rate  applicable to the Term Loan shall specify  whether the interest rate is to be a Term Loan Base Rate, a Term Loan
LIBOR Rate,  or a Term Loan Cost of Funds Rate and,  once so specified, such  specification  may not be changed except with prior
approval of the Bank.  Each such request shall further  specify the Interest  Period to be applicable to such request as follows:

1. for Term Loan Base Rate no
Interest Period need be specified;
2. for Term Loan LIBOR Rate, the
Interest Period,  at the Borrower's  option,  may be of a duration of 7, 30, 60 or 90 days; and
3. for Term Loan Cost of Funds
Rate, the Interest Period, at the Borrower's  option, may be of a duration of 7, 14 or 21 days.

2A.3  Interest;  Principal.  The Term Loan will bear interest at a per annum rate as provided in the Term Note.  Such interest shall be payable as
specified in the Term Note.  Principal  shall also be repaid in  accordance  with the terms of the Term Note.  Upon the  occurrence
of and during the  continuance of an Event of Default or after maturity or after judgment has been rendered on the Term Note,
Borrower's  right to select pricing  options shall, at the option of the Bank,  cease and the unpaid  principal of the Term Loan
shall,  at the option of the Bank,  bear interest at a rate which is two (2) percentage  points per annum greater than that which
would otherwise be applicable.

All agreements  between
Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever,  whether by reason of acceleration of
maturity of the  indebtedness  evidenced  hereby or otherwise,  shall the amount paid or agreed to be paid to Bank for the use or
the forbearance of the indebtedness  evidenced hereby and by the Term Note exceed the maximum  permissible under applicable law. As
used herein,  the term applicable law shall mean the law in effect as of the date hereof provided,  however,  that in
the event  there is a change  in the law  which  results  in a higher  permissible  rate of  interest,  then the Term Note  shall be
governed by such new law as of its effective  date. In this regard,  it is expressly  agreed that it is the intent of Borrower and
Bank in the execution,  delivery and acceptance of the Term Note to contract in strict  compliance with the laws of the State of
Connecticut from time to time in effect.  If, under or from any circumstances  whatsoever,  fulfillment of any provision  hereof,
the Term Note or of any of the Related  Agreements at the time of performance of such provision  shall be due, shall involve
transcending  the limit of such validity  prescribed by applicable law, then the obligation to be fulfilled shall  automatically  be
reduced to the limits of such validity,  and if under or from any  circumstances  whatsoever  Bank should ever  receive as interest
an amount  which would exceed the highest  lawful  rate,  such amount which would be  excessive  interest  shall be applied to the
reduction  of the  principal  balance evidenced  hereby and not to the payment of interest.  This provision  shall control every
other  provision of all  agreements  between Borrower and Bank.

2A.4 Computation of
Interest.  All  computations  of interest on the Term Note shall be made on the basis of a three hundred sixty (360) day year
and the actual number of days elapsed.

2A.5 Payment of Principal
and  Interest.All payments  shall be made by Borrower to Bank at  157 Church  Street, New Haven, Connecticut 06510 or such other
place as Bank may from time to time  specify in writing in lawful  currency  of the United  States of America  in  immediately
available  funds,  without  counterclaim  or setoff  and free and clear of,  and  without  any  deduction  or withholding  for, any
taxes or other  payments.  The Bank is  authorized  (but not  required) to charge  principal and interest and all other amounts due
hereunder and under the Term Note to any account of the Borrower when and as it becomes due.

2A.6  Prepayments. (a)
The  Borrower  may  prepay  the Term  Loan in  accordance  with the terms of the Term  Note.  Any such prepayment  will,  at the
option of the Bank,  be applied  first to the  payment of all costs and  expenses  incurred  by the Bank and arising out of this
Agreement,  the Term Note or any Related  Agreement and which have not been paid or reimbursed to the Bank, then to accrued interest
to the date of the prepayment and the remainder to the outstanding principal.

1. Notwithstanding any other
provision of this Agreement,  (i) if, after the date of this Agreement, the introduction of or any change in any law or regulation
(or change in the  interpretation  thereof by regulatory  authorities)  applicable to the Bank, shall make it, or (ii) if any
central bank or other governmental  authority having  jurisdiction over the Bank shall assert that it is, unlawful  for the Bank to
perform its  obligations  hereunder  to continue to offer or maintain a Term Loan LIBOR Rate for the Borrower hereunder,  then, on
notice thereof by the Bank to the Borrower,  (A) the obligation of the Bank to the Borrower to offer or maintain a Term Loan LIBOR
Rate shall  terminate,  and (B) within  five (5) Business Days after the Bank gives notice,  the Borrower shall convert the
outstanding principal balance of the Term Loan to the Term Loan Base Rate.
2. The Borrower may, at its
option,  prepay any Base Rate  Advances,  in whole or in part, at any time,  subject only to the prepayment premium, if applicable,
as set forth in the Term Note.
3. If at any time (i) the
interest rate on the Term Loan is a fixed rate,  and (ii) Bank in its sole  discretion  should determine  that current  market
conditions can  accommodate a prepayment  request,  Borrower shall have the right at any time and from time to time to prepay the
Term Loan in whole or in part,  in minimum  increments  of $100,000,  and Borrower  shall pay to Bank a make whole premium in an
amount computed as follows:  The current rate for United States Treasury  securities  (bills on a discounted  basis shall be
converted to a bond  equivalent)  with a maturity date closest to the maturity  date of the term chosen  pursuant to the Fixed Rate
Election as to which the prepayment is made,  shall be subtracted  from the "cost of funds"  component of the fixed rate in effect
at the time of  prepayment.  If the result is zero or a negative  number,  there  shall be no make  whole  premium.  If the result
is a positive  number,  then the  resulting  percentage  shall be  multiplied by the amount of the  principal  balance  being
prepaid.  The resulting  amount shall be divided by 360 and multiplied by the number of days remaining in the term chosen  pursuant
to the Fixed Rate Election as to which the  prepayment is made.  Said amount shall be reduced to present value  calculated by using
the  above-referenced United  States  Treasury  security rate and the number of days  remaining in the term chosen  pursuant to the
Fixed Rate Election as to which the  prepayment  is made.  The  resulting  amount shall be the make whole  premium due to Bank upon
prepayment of the fixed rate loan.  Each reference in this paragraph to "Fixed Rate Election"  shall mean the effective  election by
Borrower  pursuant to paragraph 2A.2 of this Agreement and the Term Note of a Term Loan LIBOR Rate or a Term Loan Cost of Funds
Rate.

If by reason of the  occurrence
and  continuance of an Event of Default Bank elects to declare the loan to be immediately  due and  payable,  then any make whole
premium  with  respect to the Term Loan shall  become due and  payable in the same manner as though Borrower had exercised such
right of prepayment.

2A.7 Intentionally
omitted.

2A.8 Late Charge.  If
the entire amount of any required  installment of principal  and/or  interest is not paid in full within ten (10) days after the
same is due,  Borrower  shall,  at the discretion of the Bank, pay to the Bank a late fee equal to five percent (5%) of the required
payment.  The minimum late charge shall be $25.00.  The assessment and collection of a late fee by the Bank shall not waive any
Event of Default or preclude the exercise of the other rights and remedies available to the Bank hereunder.

2A.9 Additional Payments.  (a) If the Bank shall deem applicable to this Agreement or the Term Note (including,  in each case, any borrowed and any
unused portion  thereof),  any  requirement  of any law of the United States of America,  any  regulation,  order, interpretation,
ruling,  official  directive  or  guideline  (whether or not having the force of law) of the Board of Governors of the Federal
Reserve System, the Comptroller of the Currency,  the Federal Deposit Insurance  Corporation or any other board or governmental or
administrative agency of the United States of America which shall impose,  increase,  modify or make applicable to this Agreement or
the Term Note or cause this  Agreement  or the Term Note to be  included  in any  reserve,  special  deposit,  calculation  used in
the computation of regulatory  capital  standards,  assessment or other requirement which imposes on the Bank any cost that is
attributable to the maintenance  thereof,  then, and in each such event,  the Borrower shall promptly pay the Bank, upon its demand,
such amount as will compensate the Bank for any such cost, which  determination  may be based upon the Bank's  reasonable allocation
of the aggregate of such costs  resulting  from such events.  In the event any such cost is a continuing  cost, a fee payable to the
Bank may be imposed upon the Borrower  periodically for so long as any such cost is deemed  applicable by the Bank, in an amount
determined by the Bank to be necessary to compensate the Bank for any such cost, which  determination may be based upon the Bank's
reasonable  allocation of the aggregate of such costs  resulting  from such  events.  The  determination  by the Bank of the
existence  and amount of any such costs shall, in the absence of manifest error, be conclusive.

1. In the event the Bank  shall
determine  that,  by reason of  circumstances  affecting  the London  inter-bank  Eurodollar market, adequate and reasonable methods
do not exist for  ascertaining  the LIBOR  Interest Rate which would  otherwise be applicable during any Interest Period,  the Bank
shall forthwith give notice of such  determination  (which shall be conclusive and binding on the Borrower)  to the  Borrower at
least one  Business Day before the first day of such  Interest  Period.  In such event:  (i) any pending request  for a Term Loan
LIBOR Rate shall be of no effect;  and (ii) the  obligation  of the Bank to  maintain or offer Term Loan LIBOR Rates shall be
suspended  until the Bank determines that the  circumstances  giving rise to such suspension no longer exist,  whereupon the Bank
shall notify the Borrower.
2. If,  after  the date of this
Agreement,  there  shall be any  increase  in the  cost to the  Bank due to  either  (i) the introduction  of or any change in any
law or regulation (or the  interpretation  thereof by regulatory  authorities) or (ii) compliance with any written  guideline or
written request from any central bank or other  governmental  authority  having  jurisdiction  over Bank (whether or not such
guideline  or request has the force of law),  of agreeing  to make or making,  funding or  maintaining  Term Loan LIBOR Rates to the
Borrower,  then the Borrower  shall,  from time to time,  upon such notice by the Bank,  pay to the Bank  additional amounts
sufficient to reimburse the Bank for such increased cost.

# Section 2B.
The 2000 Term Loan

2B.1 The 2000 Term Loan.
Pursuant  to the terms of this  Agreement  and upon the  satisfaction  of the  conditions  precedent referred  to in Section 4
hereof,  the Bank will lend to the  Borrower  the  aggregate  principal  amount of One  Million  Six  Hundred Thousand and No/100
DOLLARS  ($1,600,000)  (the "2000 Term Loan") as evidenced by the 2000 Term Note. All  outstanding  principal plus accrued and
unpaid interest shall be paid in full on the Termination  Date (as the Termination  Date may be extended from time to time) or July
1, 2006,  subject to the  Following  Business  Day  Convention,  (the "2000  Maturity  Date")  should the  Termination  Date be
extended beyond the 2000 Maturity Date.

2B.2 Interest  Rate.
(a) The  outstanding  principal  balance of the 2000 Term Loan shall bear interest  equal to a Term Loan Base Rate, a Term Loan
LIBOR Rate, or a Term Loan Cost of Funds Rate.

1. Whenever  Borrower  desires
that the 2000 Term Loan bear  interest at a Term Loan Base Rate,  it shall give the Bank notice of such request. The effective date
of a Term Loan Base Rate request shall be a Business Day.
2. Whenever  Borrower  desires
that the 2000 Term Loan bear  interest  at a Term Loan LIBOR Rate or a Term Loan Cost of Funds Rate:  it shall give Bank not less
than two (2)  Business  Days notice of such  request;  and the  effective  date of a Term Loan LIBOR Rate request or a Term Loan
Cost of Funds Rate shall be a Business Day.
3. Each request  regarding the
interest rate applicable to the 2000 Term Loan shall specify whether the interest rate is to be a Term Loan Base Rate, a Term Loan
LIBOR Rate, or a Term Loan Cost of Funds Rate and, once so specified,  such  specification may not be changed except with prior
approval of the Bank.  Each such request shall further  specify the Interest  Period to be applicable to such request as follows:

1. for Term Loan Base Rate no
Interest Period need be specified;
2. for Term Loan LIBOR Rate, the
Interest Period,  at the Borrower's  option,  may be of a duration of 30, 60, 90 or 180 days; and
3. for Term Loan Cost of Funds
Rate, the Interest Period, at the Borrower's  option, may be of a duration of 7, 14 or 21 days.

2B.3  Interest;  Principal.  The 2000 Term Loan will bear  interest  at a per annum  rate as  provided  in the 2000 Term Note. Such interest shall be
payable as specified in the 2000 Term Note.  Principal  shall also be repaid in accordance with the terms of the 2000 Term Note.
Upon the  occurrence  of and during the  continuance  of an Event of Default or after  maturity or after  judgment has been
rendered on the 2000 Term Note,  Borrower's  right to select  pricing  options  shall,  at the option of the Bank,  cease and the
unpaid  principal of the 2000 Term Loan shall,  at the option of the Bank,  bear interest at a rate which is two (2) percentage
points per annum greater than that which would otherwise be applicable.

All agreements  between
Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever,  whether by reason of acceleration of
maturity of the  indebtedness  evidenced  hereby or otherwise,  shall the amount paid or agreed to be paid to Bank for the use or
the forbearance of the indebtedness  evidenced  hereby and by the 2000 Term Note exceed the maximum  permissible under  applicable
law.  As used  herein,  the term  applicable  law shall  mean the law in effect as of the date  hereof  provided,
however,  that in the event there is a change in the law which  results in a higher  permissible  rate of interest,  then the 2000
Term Note shall be governed by such new law as of its  effective  date.  In this  regard,  it is  expressly  agreed that it is the
intent of Borrower and Bank in the  execution,  delivery and acceptance of the 2000 Term Note to contract in strict  compliance
with the laws of the State of Connecticut  from time to time in effect.  If, under or from any  circumstances  whatsoever,
fulfillment of any provision hereof,  the 2000 Term Note or of any of the Related  Agreements  at the time of  performance  of such
provision  shall be due,  shall involve  transcending the limit of such validity  prescribed by applicable law, then the obligation
to be fulfilled shall automatically be reduced to the limits of such validity,  and if under or from any  circumstances  whatsoever
Bank should ever receive as interest an amount which would exceed the highest lawful rate,  such amount which would be excessive
interest shall be applied to the reduction of the principal  balance  evidenced hereby and not to the payment of interest.  This
provision shall control every other provision of all agreements between Borrower and Bank.

2B.4  Computation  of
Interest.  All computations of interest on the 2000 Term Note shall be made on the basis of a three hundred sixty (360) day year
and the actual number of days elapsed.

2B.5 Payment of  Principal
and  Interest.All payments  shall be made in lawful  money of the United  States in  immediately available  funds.  The Bank is
authorized  (but not required) to charge  principal and interest and all other amounts due hereunder and under the 2000 Term Note to
any account of the Borrower when and as it becomes due.

2B.6 Prepayments.(a) The
Borrower may prepay the 2000 Term Loan in accordance  with the terms of the 2000 Term Note. Any such  prepayment  will, at the
option of the Bank,  be applied first to the payment of all costs and expenses  incurred by the Bank and arising out of this
Agreement,  the 2000 Term Note or any Related  Agreement  and which have not been paid or  reimbursed to the Bank, then to accrued
interest to the date of the prepayment and the remainder to the outstanding principal.

1. Notwithstanding any other
provision of this Agreement,  (i) if, after the date of this Agreement, the introduction of or any change in any law or regulation
(or change in the  interpretation  thereof by regulatory  authorities)  applicable to the Bank, shall make it, or (ii) if any
central bank or other governmental  authority having  jurisdiction over the Bank shall assert that it is, unlawful  for the Bank to
perform its  obligations  hereunder  to continue to offer or maintain a Term Loan LIBOR Rate for the Borrower hereunder,  then, on
notice thereof by the Bank to the Borrower,  (A) the obligation of the Bank to the Borrower to offer or maintain a Term Loan LIBOR
Rate shall  terminate,  and (B) within  five (5) Business Days after the Bank gives notice,  the Borrower shall convert the
outstanding principal balance of the 2000 Term Loan to the Term Loan Base Rate.
2. The Borrower may, at its
option,  prepay any Base Rate  Advances,  in whole or in part, at any time,  subject only to the prepayment premium, if applicable,
as set forth in the 2000 Term Note.
3. If at any time (i) the
interest  rate on the 2000 Term Loan is a fixed  rate,  and (ii) Bank in its sole  discretion should  determine that current market
conditions can accommodate a prepayment  request,  Borrower shall have the right at any time and from time to time to prepay the
2000 Term Loan in whole or in part, in minimum  increments of $100,000,  and Borrower shall pay to Bank a make whole premium in an
amount computed as follows:  The current rate for United States Treasury  securities  (bills on a discounted basis shall be
converted to a bond  equivalent)  with a maturity date closest to the maturity  date of the term chosen  pursuant to the Fixed Rate
Election as to which the  prepayment is made,  shall be subtracted  from the "cost of funds"  component of the fixed rate in effect
at the time of  prepayment.  If the result is zero or a negative  number,  there shall be no make whole  premium.  If the result is
a positive  number,  then the resulting  percentage  shall be multiplied by the amount of the principal  balance being prepaid.  The
resulting  amount shall be divided by 360 and multiplied by the number of days remaining in the term chosen  pursuant to the Fixed
Rate Election as to which the  prepayment is made.  Said amount shall be reduced to present value  calculated by using the
above-referenced United  States  Treasury  security rate and the number of days  remaining in the term chosen  pursuant to the Fixed
Rate Election as to which the  prepayment  is made.  The  resulting  amount shall be the make whole  premium due to Bank upon
prepayment of the fixed rate loan.  Each reference in this paragraph to "Fixed Rate Election"  shall mean the effective  election by
Borrower  pursuant to paragraph 2B.2 of this Agreement and the 2000 Term Note of a Term Loan LIBOR Rate or a Term Loan Cost of Funds
Rate.

If by reason of the  occurrence
and  continuance of an Event of Default Bank elects to declare the loan to be immediately  due and payable,  then any make whole
premium with respect to the 2000 Term Loan shall become due and payable in the same manner as though Borrower had exercised such
right of prepayment

2B.7 Mandatory  Prepayments.  To the extent that  Borrower's  EBITDA to Interest  Expense plus CMLTD Ratio exceeds the minimum applicable ratio set forth in
Section 7.4  hereof, the Borrower shall prepay the 2000 Term Loan to the extent that Borrower's  earnings are in excess of the
earnings  necessary for the Borrower to meet the applicable  minimum ratio.  These mandatory  prepayments shall be capped at the
lesser of:  (i) $150,000  on account of each 12 month period  commencing  on July 1 of each year and ending on June 30 of the
following year, and (ii) the amount that the Borrower could prepay without  otherwise causing an Event of Default  hereunder.  Such
mandatory  prepayments  shall be payable,  when  applicable,  simultaneously  with the  submission  by the  Borrower to the Bank of
the financial  reports pursuant to Section 5.1  hereof,  and shall be applied to payments due under the 2000 Term Loan in the
inverse order of maturity.

2B.8 Late Charge.  If
the entire amount of any required  installment of principal  and/or  interest is not paid in full within ten (10) days after the
same is due,  Borrower  shall,  at the discretion of the Bank, pay to the Bank a late fee equal to five percent (5%) of the required
payment.  The minimum late charge shall be $25.00.  The assessment and collection of a late fee by the Bank shall not waive any
Event of Default or preclude the exercise of the other rights and remedies available to the Bank hereunder.

2B.9 Additional  Payments.  (a) If the Bank shall deem applicable to this Agreement or the 2000 Term Note (including,  in each case,  any borrowed and any
unused  portion  thereof),  any  requirement  of any law of the United States of America,  any  regulation, order,  interpretation,
ruling,  official directive or guideline (whether or not having the force of law) of the Board of Governors of the Federal  Reserve
System,  the  Comptroller  of the  Currency,  the Federal  Deposit  Insurance  Corporation  or any other board or governmental or
administrative agency of the United States of America which shall impose,  increase,  modify or make applicable to this Agreement or
the 2000  Term Note or cause  this  Agreement  or the 2000 Term Note to be  included  in any  reserve,  special  deposit,
calculation used in the computation of regulatory  capital  standards,  assessment or other  requirement  which imposes on the Bank
any cost that is  attributable  to the maintenance  thereof,  then, and in each such event,  the Borrower shall promptly pay the
Bank, upon its demand,  such amount as will compensate the Bank for any such cost,  which  determination  may be based upon the
Bank's  reasonable allocation of the aggregate of such costs  resulting from such events.  In the event any such cost is a
continuing  cost, a fee payable to the Bank may be imposed upon the Borrower  periodically for so long as any such cost is deemed
applicable by the Bank, in an amount determined  by the Bank to be necessary to  compensate  the Bank for any such cost,  which
determination  may be based upon the Bank's reasonable  allocation of the aggregate of such costs resulting from such events.  The
determination  by the Bank of the existence and amount of any such costs shall, in the absence of manifest error, be conclusive.

1. In the event the Bank  shall
determine  that,  by reason of  circumstances  affecting  the London  inter-bank  Eurodollar market,  adequate and reasonable
methods do not exist for  ascertaining  the LIBOR  Interest Rate which would  otherwise be applicable during any Interest Period,
the Bank shall forthwith give notice of such  determination  (which shall be conclusive and binding on the Borrower)  to the
Borrower at least one  Business Day before the first day of such  Interest  Period.  In such event:  (i) any pending request  for a
Term Loan LIBOR Rate shall be of no effect;  and (ii) the  obligation  of the Bank to  maintain or offer Term Loan LIBOR Rates shall
be suspended  until the Bank determines that the  circumstances  giving rise to such suspension no longer exist,  whereupon the Bank
shall notify the Borrower.
2. If,  after  the date of this
Agreement,  there  shall be any  increase  in the  cost to the  Bank due to  either  (i) the introduction  of or any change in any
law or regulation (or the  interpretation  thereof by regulatory  authorities) or (ii) compliance with any written  guideline or
written request from any central bank or other  governmental  authority  having  jurisdiction  over Bank (whether or not such
guideline  or request has the force of law),  of agreeing  to make or making,  funding or  maintaining  Term Loan LIBOR Rates to the
Borrower,  then the Borrower  shall,  from time to time,  upon such notice by the Bank,  pay to the Bank  additional amounts
sufficient to reimburse the Bank for such increased cost.

# Section 3.
Representations and Warranties

The Borrower  hereby represents
and warrants to the Bank (which  representations  and warranties will survive the delivery of the Notes and this  Agreement  and the
making of any Advances and shall be deemed to be  continuing  until the Notes are fully paid and this Agreement is terminated) that:

3.1 Existence  and Power.(a) The Borrower is a  corporation  which is and will  continue to be, duly  organized and validly existing;  the Borrower is in
good  standing  under the laws of its state of  organization;  (b) the Borrower is qualified  and in good standing  to do  business
in all other  jurisdictions  in which the  property  owned,  leased or  operated  by it or the nature of the business  conducted by
it makes such  qualification  necessary;  (c) the Borrower has the power to execute and deliver this  Agreement, the Notes,  the
Related  Agreements  and to borrow  hereunder,  and (d) the  Borrower  has all permits,  authorizations  and  licenses, without
unusual  restrictions  or  limitations,  to own,  operate and lease its  properties and to conduct the business in which it is
presently engaged, all of which are in full force and effect.

3.2 Authority.  The
making and  performance by the Borrower of this Agreement and the Related  Agreements have been authorized by all necessary action.
The execution and delivery of this Agreement,  the Notes and the Related  Agreements,  the consummation of the transactions herein
and therein  contemplated,  the fulfillment of or compliance with the terms and provisions hereof and thereof,  (a) are within its
powers,  (b) will not violate any provision of law or, of its  certificate of  incorporation  or by-laws or (c) will not result in
the breach  of, or  constitute  a default  under,  or result in the  creation  of any lien,  charge or  encumbrance  upon any
property or assets of the Borrower  pursuant to any indenture or bank loan or credit  agreement (other than pursuant to this
Agreement) or other material  agreement or instrument to which the Borrower is a party. No approval,  authorization,  consent or
other order of or registration or filing with any  governmental  body is required in connection  with the making and  performance of
this Agreement,  the Notes or the Related Agreements.

3.3  Financial  Condition.  The  financial  statements  described  inSchedule A hereto  under the  heading "Description of Financial  Statements,"
heretofore  delivered  to the Bank,  were  prepared in  conformity  with GAAP and are correct and complete and fairly  present the
financial  condition and the results of operations of the Borrower for the period(s) and as of the date(s)  thereof with the
exception of all interim  statements.  The Borrower has no direct or contingent  liabilities  not disclosed in such statements or in
Schedule A hereto under the heading  "Liabilities Not Disclosed in Financial  Statements." Since the date of the latest
financial statement  delivered  to the  Bank,  except as  disclosed  to the Bank in  writing,  there has been no  adverse  change in
the assets, liabilities, financial condition or business of the Borrower and, no Dividends have been declared or made to
stockholders.

3.4 Information  Complete.  Subject to any limitations stated therein or in connection  therewith,  all information  furnished or to be  furnished  by the
Borrower  pursuant  to the terms  hereof is, or will be at the time the same is  furnished,  accurate  and complete in all respects
necessary in order to make the  information  furnished,  in the light of the  circumstances  under which such information is
furnished, not misleading.

3.5 Statutory  Compliance.  The Borrower is in compliance  with all federal,  state,  county and municipal  laws,  ordinances, rules or regulations
applicable to it, its property or the conduct of its business,  including,  without limitation,  those pertaining to or concerning
the employment of labor, employee benefits, public health, safety and the environment.

3.6 Litigation.  No
proceedings by or before any private,  public or governmental  body, agency or authority and no litigation is pending,  or, so far
as is known to the  Borrower or, any of its  officers,  threatened  against it except such as are  disclosed in Schedule A
hereto under the heading "Litigation Pending or Threatened."

3.7  Subsidiaries,
Affiliates.  The Borrower has no Subsidiaries or Affiliates  other than those shown on Schedule Aattached hereto  under
the heading  "Subsidiaries,  Affiliates  and Trade  Names" and the  Borrower  has not  invested  in the stock,  common or preferred,
of any other  corporation and there are no fixed,  contingent or other obligations on the part of the Borrower to issue any
additional shares of its capital stock.

3.8 Events of Default.
Other than the  violations of Sections 8.2, 7.2 and 7.4 of this  Agreement  (which  defaults are being waived by the Bank  pursuant
to a letter  agreement and certain  amendments  to and/or  replacements  of certain Loan  Documents)  (the "Waived  Defaults") no
Event of Default has occurred and no event has occurred or is continuing  which,  pursuant to the  provisions of Section 8, with the
lapse of time and/or the giving of a notice specified therein, would constitute such an Event of Default.

3.9 Validity.  This
Agreement,  the Notes and all Related Agreements,  upon the execution and delivery thereof, will be legal, valid,  binding and
enforceable  obligations of the Borrower or the person  executing the same, as the case may be, in accordance with the terms of
each.

3.10 Title to Property.
The Borrower  has good and  marketable  title to its  properties  and assets  subject to no mortgage, pledge,  lien,  security
interest, encumbrance or other material charge (a) not set forth inSchedule A hereto under the heading "Encumbrances Not
Otherwise Disclosed" or (b) unless validly incurred and permitted to exist pursuant to Section 6.1 hereof.

3.11 Taxes.  The
Borrower has filed all tax returns and reports  required to be filed by it with all federal,  state or local authorities  and has
paid in full or made  adequate  provision  for the  payment  of all taxes,  interest,  penalties,  assessments  or deficiencies
shown to be due or claimed to be due on or in respect of such tax returns and reports.

3.12 Business Name and
Locations.The Borrower  conducts its business  solely in its own name without the use of a trade name or the  intervention of or
through  any  other  entity  of any  kind,  other  than as  disclosed  onSchedule  A under  the  heading "Subsidiaries,
Affiliates and Trade Names." All books and records  relating to Borrower's  assets are located at the Borrower's  chief executive
office as set forth above and its other places and locations,  where its assets are located,  are as set forth on Schedule A
hereto under the heading "Places of Business."

3.13  Notices of
Environmental  Problems.  The Borrower  and any tenants  have not given nor have they  received,  any notice that:  (a) there
has been a release,  or there is a threat of release,  of toxic  substances or hazardous wastes from any real property owned or
operated by the  Borrower,  (b) the Borrower or any tenants may be or are liable for the costs of cleaning up or responding to a
release of any toxic  substances  or  hazardous  wastes;  or (c) any of such real  property  is  subject to a lien for any liability
arising from costs incurred in response to a release of toxic substances or hazardous wastes.

3.14   ERISA Compliance.
The  Borrower has  received no notice to the effect that it is not in full  compliance  with any of the  requirements  of the
Employee  Retirement  Income  Security Act of 1974,  as amended,  ("ERISA") and the  regulations  promulgated thereunder  and,  to
the best of its  knowledge  there  exists no event  described  in  Section  4043 of ERISA,  excluding  subsections 4043(b)(2) and
4043(b)(3) thereof.

3.15 VISA and Victorinox
Letter  Agreement.  Pursuant to the  Victorinox  Letter  Agreement the Borrower and Victorinox  have contributed or are
contributing an equivalent  amount of cash,  inventory and their entire watch businesses  outside the United States, Canada and the
Caribbean to VISA.  The Borrower and Victorinox will each have and maintain a continuing 50% equity interest in VISA.

# Section 4.
Conditions Precedent

4.1 General. Advances
under the Line of Credit shall be subject to the following conditions precedent:

1. Approval of Bank  Counsel.  All legal  matters  incident to the  transactions  hereby  contemplated  shall be  reasonably satisfactory to counsel for the
Bank.
2. Proof of Action.  The
Bank shall have received  such  documents  evidencing  the  Borrower's  power to execute and deliver this Agreement, the Notes and
the Related Agreements as the Bank or its counsel shall reasonably request.
3. The Notes,  Related
Agreements  and Documents.  The Borrower  shall have delivered to the Bank the Notes,  this Agreement and the Related Agreements
and such other documents as the Bank may reasonably request.
4. The Sale of and Proceeds of
the Hancock  Stock.  The Borrower  shall have sold the Hancock  Stock for its then fair market value and shall have used all of
the net proceeds of the sale of the Hancock Stock (the "Hancock Stock  Proceeds") to repay  $3,000,000 of the  principal  balances
outstanding  pursuant  to the Term Loan and the 2000 Term Loan and shall have used any  remaining  Hancock Stock Proceeds to repay
Advances outstanding pursuant to the Line of Credit.

4.2 Every Advance under
the Line of Credit shall be subject to the following conditions precedent that:

1. No Event of Default.
Other than the Waived  Defaults,  no Event of Default has  occurred and is  continuing  and no event has occurred or is continuing
which,  pursuant to the provisions of Section 8, with the lapse of time and/or the giving of a notice as specified therein, would
constitute an Event of Default.
2. No Material Adverse Change.  There has been no material  adverse change in the assets,  liabilities,  financial  condition or business of the  Borrower or
any  Guarantor  since the date of any  financial  statements  delivered to the Bank before or after the date of this Agreement.
3. Representations and
Warranties.  That the representations and warranties  contained in Sections 3.1 through 3.14 are true and correct,  and that the
Borrower  shall have so certified to the Bank. Any request for a borrowing  shall be deemed a  certification by the Borrower as to
the truth and accuracy of the  representations  and  warranties  contained in Sections 3.1 through 3.14 as of the date of such
request.

# Section 5.
Affirmative Covenants

The  Borrower  covenants  and
agrees that from the date hereof  until  payment in full of the Notes,  the  performance  of all Borrower's  obligations  hereunder
and under any Related  Agreement is complete and the termination of this Agreement,  unless the Bank otherwise consents in writing,
the Borrower shall:

5.1  Financial  Statements;
Notice of  Default.  Deliver to the Bank (a) within  forty-five  (45) days after close of each of the quarters of each fiscal
year of the Borrower,  consolidated and consolidating  financial  statements that are internally  prepared, consisting  of a balance
sheet and  statement  of income and  retained  earnings and cash flows for that portion of the fiscal year to date then ended, which
statements shall be prepared in accordance with GAAP  consistently  applied;  (b) within ninety (90) days after the close of each
fiscal year of the Borrower,  consolidated and  consolidating  financial  statements  including a balance sheet as of the close of
such year and  statements of income and retained  earnings and cash flows for the year then ended,  prepared in conformity with GAAP
and audited by a firm of independent  certified public  accountants  selected by the Borrower and acceptable to the Bank; (c) within
ninety (90) days after the close of each fiscal year,  a copy of the  Borrower's  annual  report on Form 10-K as filed with the
Securities  and Exchange  Commission  together  with all  schedules,  exhibits and  attachments  thereto;  (d) promptly upon the
Bank's written request,  such other information about the financial  condition,  business and operations of the Borrower or any
Guarantor,  as the Bank may, from time to time,  reasonably  request;  (e) promptly upon becoming aware of any  occurrence  that but
for the giving of notice or the  passage of time,  would  constitute  an Event of  Default,  notice  thereof in  writing;  and (f)
as of the date of this Agreement and thereafter as of the first Business Day of each calendar month, a Borrowing Base  Certificate.
Together with any and all financial  statements  to be delivered to the Bank pursuant to Section 5.1, the Borrower  shall submit a
certificate  of compliance by the president or chief  financial  officer of the Borrower,  certifying  that the Borrower is in
compliance  with all  affirmative  and negative covenants of this Agreement.

The Borrower  shall also
deliver to the Bank,  promptly  upon  receipt  thereof,  any  management  audit letter  issued to the Borrower by its firm of
certified public accountants.

5.2  Insurance. (a) Keep
its  properties  insured  against fire and other hazards (so called "All Risk"  coverage) in amounts and with  companies  reasonably
satisfactory  to the Bank to the same extent and covering  such risks as is customary in the same or a similar business,  (b)
maintain public liability  coverage against claims for personal injuries or death, and (c) maintain all worker's compensation,
employment  or similar  insurance as may be required by  applicable  law.  Such  policies of insurance  shall contain an
endorsement,  in form and substance  satisfactory to Bank, showing loss payable to Bank. Such endorsement or an independent
instrument furnished to Bank,  shall provide that the  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,  default or misrepresentation
of Borrower or any other  person  shall  affect the right of Bank to recover  under such policy or policies  of  insurance  in case
of loss or damage. Borrower  hereby  directs all  insurers  under such  policies of insurance to pay all  proceeds  payable
thereunder  directly to Bank. Borrower agrees to deliver certificates and evidence of insurance to the Bank upon request.

5.3  Compliance  with Laws;
Payment of Taxes and Other Liens.  Comply in all respects  with all  federal,  state,  county and municipal  laws,  rules,
ordinances  and  regulations  applicable  to Borrower,  Borrower's  business or property,  including  without limitation,  those
pertaining to or concerning the employment of labor,  employee benefits,  public health, safety and the environment. The  Borrower
shall pay all  taxes,  assessments,  governmental  charges or levies,  or claims  for  labor,  supplies,  rent and other obligations
made against  Borrower or Borrower's  property  which,  if unpaid,  might become a lien or charge  against the Borrower or
Borrower's  property,  except liabilities being contested in good faith and against which, if requested by the Bank, the Borrower
shall maintain reasonable reserves.

5.4 Chief  Executive  Office
and Places of  Business.  Keep its chief  executive  office,  principal  places of  business  and locations of assets at the
locations set forth in this  Agreement and maintain its principal  places of business,  its chief  executive office and  locations
of assets at said  locations  or, in the event that the Borrower  changes any of such  locations or adds any new locations, Borrower
shall  promptly  give Bank  written  notice of any change in any of such  addresses  or such new  locations.  All business  records
of the Borrower,  including  those  pertaining to all accounts and contract  rights,  shall be kept at the said chief executive
office of the Borrower unless prior written notice is given to the Bank with respect to a change of location.

5.5 Inspection.  Allow
the Bank by or through any of its officers,  agents,  attorneys,  or accountants  designated by it, for the  purpose of ascertaining
whether or not the  provisions  hereof and of any  Related  Agreement,  instrument  or document is being performed  and for the
purpose of examining  the assets of the Borrower and the records  relating  thereto,  to enter the offices,  and plants of the
Borrower  to examine or inspect  any of the  properties,  books and  records or  extracts  therefrom  and to discuss the affairs,
finances and accounts  thereof with the Borrower with prior  notification  and consent;  such consent not to be  unreasonably
withheld, all at reasonable times and as often as the Bank may reasonably request.

5.6  Litigation.Promptly
advise the Bank of the  commencement  of litigation,  including  arbitration  proceedings  and any proceedings  before any
governmental  agency,  which might have a material  adverse  effect upon the  assets,  liabilities,  financial condition or business
of the Borrower, or where the amount involved is $100,000.00 or more.

5.7  Notices of
Environmental  and Labor  Actions  and Claims.  Promptly  notify the Bank in writing of (a) any  enforcement, clean-up,  removal
or other action  instituted by any federal,  state,  county or municipal  authority or agency pursuant to any public health,  safety
or  environmental  laws,  rules,  ordinances  and  regulations,  (b) any and all claims made by any third party against Borrower or
any real property  owned or operated by Borrower  relating to the  existence  of, or damage,  loss or injury from any toxic
substances or hazardous wastes or any other conditions  constituting actual or potential violations of such laws, rules,  ordinances
or regulations and (c) any enforcement or compliance  action,  instituted or claim made by any federal or state authority  relating
to the employment of labor or employee benefits.

5.8  Maintenance of
Existence.  Continue to conduct its business as presently  conducted,  maintain its existence and maintain its  properties  in
good repair,  working order and  operating  condition.  The Borrower  shall  promptly  notify the Bank of any event causing material
loss or unusual depreciation in the value of its business assets and the amount of same.

5.9  Performance. Comply
with all terms and conditions of this  Agreement,  the Related  Agreements and the Notes and pay all debts of the Borrower before
the same shall become delinquent.

5.10 Covenant to Secure
Equally and Ratably.  Secure the Notes or cause the Notes to be secured  equally and ratably with any and all  Indebtedness
secured by any lien or encumbrance  created after the date hereof by the Borrower or any Subsidiary  upon any of its property or
assets,  whether  owned or  hereafter  acquired,  other than liens or  encumbrances  permitted  pursuant to Section 6.1 hereof.

5.11  Deposits. Maintain
the Bank as its principal  bank of deposit and account and maintain its primary  operating  accounts with the Bank.

5.12 Use of Proceeds.

1. Advances  Under the Line of
Credit.  The Borrower  shall use the  proceeds of each  Advance  under the Line of Credit for general  commercial  purposes,
provided  that no part of such  proceeds  will be used,  in whole or in part,  for the  purpose  of (i) purchasing  or carrying any
"margin  stock" as such term is defined in  Regulation  U of the Board of Governors of the Federal  Reserve System,  or  (ii)
acquiring  all or  substantially  all of the  assets or stock of, or  otherwise  investing  in, any  person,  firm or corporation.
2. Advances  under the Term
Loan.  The  Borrower has used the  proceeds of the Term Loan to pay down  existing  indebtedness owing to the Bank.
3. Advances  under the 2000
Term Loan.  The Borrower has used the proceeds of the 2000 Term Loan to fund the  acquisition of one-half of the outstanding
shares of stock Xantia SA by Swiss Army Brands CH, Inc. pursuant to the Xantia Agreement.

5.13  Victorinox  Contract.  The Borrower  shall maintain in full force and effect the exclusive  distribution  agreement with Victorinox  Cutlery Company,
dated December 12, 1983, as amended and modified from time to time (the "Victorinox  Cutlery  Contract"). The  Borrower  will not
modify or amend the  Victorinox  Cutlery  Contract  so as to disturb  its status as the  exclusive  distributor thereunder without
the prior express written consent of the Bank.

5.14 Field  Examination.
Pay fees for,  and  cooperate  with the Bank in the conduct of, an annual field  examination to be conducted by the Bank.

# Section 6.
Negative Covenants

The  Borrower  covenants  and
agrees  that  until (i)  payment  is made in full on the  Notes,  (ii) the  performance  of all Borrower's  obligations  hereunder
and under any Related  Agreement is complete,  and (iii) this  Agreement has been  terminated,  the Borrower  shall not nor shall
the  Borrower  suffer or permit any  Guarantor  or  Subsidiary  to take the  actions  described  below in Sections 6.1 through 6.16,
unless such actions are (x) disclosed onSchedule A hereto and approved by the Bank,  (y)  contemplated  by the Xantia
Agreement, or (z) unless the Bank otherwise consents in writing, which consent shall not be unreasonably withheld.

6.1  Encumbrances.
Incur or permit to exist  any lien,  mortgage,  security  interest,  pledge,  charge or other  encumbrance against  any of its
property  or assets  (including,  without  limitation,  the  Victorinox  Cutlery  Contract),  whether now owned or hereafter
acquired (including,  without limitation,  any lien or encumbrance relating to any response, removal or clean-up of any toxic
substances  or  hazardous  wastes),  except:  (a)  pledges or  deposits  in  connection  with or to secure  workers'  compensation
and unemployment  insurance;  (b) tax liens which are being contested in good faith and in compliance  with Section 5.3 hereof;  (c)
liens, mortgages,  security interests,  pledges,  charges or other encumbrances in favor of the Bank or specifically permitted, in
writing, by the Bank;  and (d) purchase  money security  interests  provided such purchase  money security  interests do not attach
to any property other than the property being acquired with the proceeds of purchase money security interest  indebtedness permitted
under Section 6.2 hereof.

6.2 Limitation on
Indebtedness.  Create or incur any  Indebtedness  for borrowed  money,  become liable,  either  actually or contingently,  in
respect of letters  of credit or  banker's  acceptances  or issue or sell any  obligations  of the  Borrower,  or any Subsidiary  or
authorize the issuance or sale of any  obligations  of any  Guarantor,  excluding,  however,  from the operation of this covenant:
(a) the Line of Credit,  the Term Loan and the 2000 Term Loan  hereunder and all other  Indebtedness  of the Borrower to the Bank;
(b)  Indebtedness  subordinated  in payment and priority to all  Indebtedness  of the Borrower to the Bank in writing and in form
and  substance  reasonably  satisfactory  to the Bank;  (c) trade debt  incurred in the ordinary  course of business;  (d)
Indebtedness secured by a purchase money  security  interest,  provided such  Indebtedness  does not exceed the lesser of (i) the
purchase price or (ii) the value of the property  acquired with the proceeds  thereof;  (e) obligations  in connection with
performance  bonds which the Borrower is required to provide in the ordinary course of its business;  (f) Indebtedness to financial
institutions  under or pursuant to foreign currency exchange  facilities;  (g) Indebtedness  to 130 Prince LLC, as landlord (the
"NYC Landlord") pursuant to a guaranty (the "Retail  Guaranty") of a retail store lease between Retail and the NYC Landlord,  which
lease is for 3,500 square feet at $240 per square foot  (escalating  3.5% per annum) for ten years (the "NYC Lease");  and
(h) Indebtedness  disclosed on  Schedule A  hereto and approved by the Bank.

6.3 Disposition of Assets.  Sell, lease,  pledge,  transfer or otherwise dispose of all or any of its assets whether now owned or hereafter acquired
except for liens or encumbrances  required or permitted hereby or by any Related  Agreement,  except (a) sales of inventory in the
ordinary  course of business;  (b) sales of machinery,  equipment and  inventory  which has become  obsolete and is no longer used
or useful;  (c) sales of  machinery or equipment in the  ordinary  course of business if such  machinery  and  equipment is replaced
with other  similar  equipment  or  machinery;  (d) sales of any assets not  described in (a),  (b), or (c) above,  having an
aggregate value not in the excess of $100,000 in any year calculated on a consolidated  basis;  (e) a lien on the currency or
contracts which are the subject of any foreign  exchange  transaction;  and (f) the sale of the Hancock  Stock  provided that the
net proceeds of the sale of the Hancock Stock are paid directly to the Bank.

6.4  Contingent Liabilities.Without  prior notice to the Bank (Bank  consent not required)  assume,  guarantee,  endorse or otherwise  become liable for the
obligations  of any Person  except by the  endorsement  of  negotiable  instruments  for  deposit or collection or similar
transactions in the ordinary course of business and entering into the Retail Guaranty.

6.5 Consolidation or Merger.  Merge or consolidate  with, or acquire all or  substantially  all of the assets of, or make any investment in the  securities
of, any other Person or other entity,  except that (a) the Borrower may merge or consolidate  with one or more of its Subsidiaries,
provided that the Borrower is the surviving  corporation,  or, if it is not the surviving  corporation,  the surviving  corporation
assumes all of the Borrower's  liabilities  hereunder and under the Notes and the Security  Agreement;  (b) the Borrower's
Subsidiaries may merge or consolidate with one another so long as the surviving  corporation is a Guarantor hereunder;  (c) Borrower
may issue shares of its stock,  without dollar limitation;  and (d) the Borrower may consummate the transactions  contemplated by
the Victorinox Letter Agreement.

6.6 Loans,  Advances,
Investments.  Purchase or  otherwise  acquire any shares of stock or  obligations  of, or make loans or advances to, or
investments in, any Person;  provided,  however: (1) the Borrower, any Subsidiary or any Guarantor may extend credit to any of its
customers who is also a stockholder of such Borrower,  Subsidiary or Guarantor,  provided such extension of credit meets the
standards  set forth in Section 6.8 below;  (2) the Borrower,  any  Subsidiary or any Guarantor may make loans or advances to any
other Person,  provided that the aggregate amount of all such loans and advances  outstanding at any time does not exceed  $150,000;
(3) the Borrower,  any  Subsidiary or any Guarantor may make  investments  in, loans to or transfers to or on account of Retail,
provided that the aggregate  amount of all such  investments,  original  principal  amount of loans and transfers  shall not exceed
$1,000,000;  and (4) the  Borrower,  any Subsidiary or any Guarantor may make  investments in, loans to or transfers to or on
account of VISA,  provided that the aggregate amount of all such investments, original principal amount of loans and transfers shall
not exceed $500,000.

6.7  Dividends.  Declare
or pay  dividends or make any  distributions  of its property or assets upon any of its stock or make any loans,  advances,  or
extension of credit to any of its  stockholders  unless no Event of Default,  or any event or condition which with the passage of
time, the giving of notice or both would  constitute an Event of Default,  is existing  hereunder at the time of or immediately
following such transaction;  provided,  however,  that,  notwithstanding  this Section,  any Subsidiaries or Guarantor may declare
or pay  dividends  or make  distributions  of its  property  or assets  upon any of its stock to the  Borrower  or make  loans,
advances or extensions of credit to the Borrower.

6.8 Transactions with
Subsidiaries and Affiliates.  Other than as permitted in  Section 6.6(3)  and (4) above,  enter into, or be a party to, any
transaction with any Subsidiary,  Guarantor or Affiliate (including, without limitation,  transactions involving the purchase,  sale
or exchange of  property,  the  rendering of services or the sale of stock)  except in the ordinary  course of business pursuant to
the  reasonable  requirements  of the Borrower and upon fair and  reasonable  terms no less  favorable to the Borrower than Borrower
would  obtain in a  comparable  arm's-length  transaction  with a person other than a  Subsidiary,  Affiliate  or  Guarantor.
Notwithstanding  the  foregoing,  none of the  Borrower,  Guarantors,  Subsidiaries  or  Affiliates  shall,  in any  way,  directly
or indirectly:  (a) transfer  assets or anything of value to; (b) provide  credit or financing for the benefit of; (c) make
distributions to; (d) invest in; (e) provide services to; (d) or purchase securities or notes issued by, Xantia SA.

6.9 Change of Name or
Location.  Without at least 30 days prior  notice to the Bank,  change its name or conduct its business under any trade name or
style  other than as set forth above or on Schedule A hereto or change its chief  executive  office,  places of business or
the present  locations  of its assets or  records  relating  thereto  from  those  addresses  set forth on page 1 of this Agreement
or onSchedule A hereto.

6.10  Subsidiaries,
Affiliates.  Other than the  formation of Xantia SA, VISA and Retail,  directly or  indirectly,  acquire, form or dispose of any
Subsidiary  or  Affiliate  or acquire  all or  substantially  all or any  portion of the stock or assets of any other person, firm
or corporation.

6.11 Management,  Capital
Structure,  Accounting  Methods.  Make or consent to a change in the ownership or capital structure of the Borrower,  or make a
change in the  executive  management of the Borrower or in the manner in which the business of the Borrower is conducted or in its
method of accounting.

6.12 Use of  Property.
Allow any business or activity to be conducted  on real  property  owned or occupied by the  Borrower, any  Subsidiary or any
Guarantor  that uses,  manufacturers,  treats,  stores or disposes of any toxic  substances or hazardous  wastes which are
prohibited or regulated under any public health,  safety or environmental  law, rule,  ordinance or regulation or contrary to the
provisions of any insurance policy.

6.13 Grant of Negative
Pledge.  Enter into any agreement  with any Person  (other than the Bank) in which the  Borrower,  any Subsidiary  or any
Guarantor  agrees not to create or suffer to exist any liens or  encumbrances  of any kind on any  property  of the Borrower or such
Subsidiary or Guarantor,  except that the Borrower may enter into such an agreement  with respect to assets which are subject to
liens permitted under Section 6.1.

6.14  Acquisition of Stock
of Borrower.  Purchase,  acquire,  redeem or retire,  or make any commitment to purchase,  acquire, redeem or retire any of the
capital stock of the Borrower, whether now or hereafter outstanding.

6.15  Transactions  with
Victorinox  Cutlery  Company.  Make any  distributions  of its  assets  or any  loans,  advances  or extensions of credit to
Victorinox  Cutlery  Company,  except in the ordinary  course of business as  reasonable  payment for goods or services actually
received.

6.16 The Xantia  Note and
Stock.  Borrower  will not  suffer or  consent to any act or effort by Swiss Army  Brands CH,  Inc.: (a) to furnish  collateral
security for the Xantia Note; (b) to amend the Xantia Note to insert any affirmative or negative  covenants or cross  defaults to
the  Indebtedness  of the Borrower and the  Guarantors  to the Bank;  (c) to allow or require  prepayment  of the Xantia Note;
(d) to eliminate or amend the provision  subordinating  the Xantia Note to payment of the obligations of the Borrower and the
Guarantors to the Bank; or (e) to transfer,  sell,  pledge,  hypothecate,  assign  (whether as collateral  security or absolutely),
encumber,  cancel or enter into any other  negative  pledge or any other  agreement in favor of any other entity not to encumber any
of the shares of stock in Xantia SA now owned or hereafter  acquired by Swiss Army Brands CH, Inc. (or any other  Affiliate or
Subsidiary) and constituting its interest in Xantia SA.

# Section 7.
Financial Covenants

The Borrower  covenants and
agrees that until payment is made in full of the Notes, the performance of Borrower's  obligations hereunder and under any Related
Agreement is complete and the  termination of this  Agreement,  unless the Bank otherwise  consents in writing:

7.1 Calculation of Financial
Covenants.  The  calculation  of the financial  covenants set forth in this Section 7 shall be measured  against the Borrower's
financial  statements  required to be delivered to the Bank pursuant to Section 5.1 of this Agreement on a consolidated basis unless
otherwise noted.

All financial covenants set
forth below are to be tested quarterly.

7.2 Funded Debt to EBITDA
Ratio.  On a rolling  four  quarter  basis,  Borrower  shall not permit its ratio of Funded Debt to EBITDA to be greater than:

4.0 to 1.0 as of September 30, 2001 through March 30, 2002; and
             
   3.0 to 1.0 as of March 31, 2001 and thereafter.

7.3 Current Ratio.
Borrower shall not permit its Current Ratio to be less than:

2.0 to 1.0 through March 30, 2001; and
             
   2.5 to 1.0 as of March 31, 2001 and thereafter.

7.4 EBITDA to Interest
Expense plus CMLTD Ratio.  On a rolling four  quarter  basis,  Borrower  shall not permit its ratio of EBITDA to Interest
Expense plus CMLTD to be less than:

1.5 to 1.0 through March 30, 2002; and
             
   2.0 to 1.0 as of March 31, 2001 and thereafter.

7.5 Tangible Net Worth:
Borrower shall  not permit Tangible Net Worth to be less than:

$62,000,000 through December 30, 2000; and
             
   $65,000,000 as of December 31, 2000 and thereafter.

# Section 8.
Events of Default

If any one or more of the
following "Events of Default" shall occur and be continuing:

8.1 Failure to make due
payment of the  principal  of the Notes,  or in the payment of interest on the Notes or in the payment of any other  liability
owing by the  Borrower  to the Bank within 10 days of the due date,  now  existing  or  hereinafter  incurred, whether direct or
contingent; or

8.2 Failure by the
Borrower to observe or perform any  covenant contained in Sections 5, 6 or 7 hereof; or

8.3 Failure by the
Borrower to perform any act,  duty,  obligation  or other  agreement  contained  herein and not  otherwise constituting  an Event of
Default  hereunder,  or  failure  by the  Borrower  to  perform  any of its  obligations  under any  Related Agreement,  which shall
occur and continue  without  correction  for thirty (30) days  following  the Bank giving the  Borrower  notice thereof; or

8.4 Any representation
or warranty made by the Borrower herein or in any Related Agreement,  or any statement,  certificate or other data furnished by the
Borrower in connection  herewith or with any Related Agreement,  proves to have been incorrect when made in any material respect; or

8.5 A judgment or
judgments  for the payment of money shall be rendered  against the  Borrower,  and any such  judgment  shall remain unsatisfied and
in effect for any period of thirty (30) consecutive days without a stay of execution; or

8.6 Any levy,  seizure,
attachment,  execution or similar process shall be issued or levied on any of the Borrower's property in excess of $100,000 and
Borrower shall not in good faith be contesting such situation; or

8.7 The Borrower shall
(a) apply for or consent to the  appointment of a receiver,  conservator,  trustee or liquidator of all or a substantial  part of
any of its assets;  (b) be unable,  or admit in writing its inability,  to pay its debts as they mature;  (c) file or permit the
filing of any petition,  case, arrangement,  reorganization,  or the like under any insolvency or bankruptcy law, or the
adjudication  of it as a bankrupt,  or the making of an assignment  for the benefit of creditors or the  consenting to any form of
arrangement  for the  satisfaction  settlement or delay of debt or the appointment of a receiver for all or any part of its
properties; or (d) take any action for the purpose of effecting any of the foregoing; or

8.8 An order,  judgment
or decree  shall be  entered,  or a case  shall be  commenced,  against  the  Borrower,  without  the application,  approval or
consent of the  Borrower by or in any court of  competent  jurisdiction,  approving a petition or  permitting
the  commencement of a case seeking  reorganization  or liquidation of the Borrower or appointing a receiver,  trustee,  conservator
or liquidator of the Borrower or of all or a  substantial  part of its assets and Borrower,  by any act,  indicates its approval
thereof, consent  thereto,  or  acquiescence  therein,  or such order,  judgment,  decree or case shall continue  unstayed and in
effect for any period of one hundred twenty (120) consecutive days; or

8.9 The Borrower shall
dissolve or liquidate, or be dissolved or liquidated, or cease to legally exist; or

8.10 A default by the
Borrower or Swiss Army Brands CH, Inc. of the payment obligations under the Xantia Note.

8.11  Failure  by the
Borrower  to pay any other  Indebtedness  in an amount in excess of  $250,000,  whether  contingent  or otherwise  upon  maturity or
the  acceleration  thereof;  unless  such other  Indebtedness  is subject to a bona fide  dispute and the Borrower maintains on its
books an adequate reserve with respect to such Indebtedness; or

8.12 Any material
adverse change in the assets,  liabilities,  financial  condition or business of the Borrower has occurred since the date of any
financial statements  delivered to the Bank before or after the date of this  Agreement  which  condition  shall remain in effect
for thirty (30) days after notice and an opportunity to cure;

then, and in such event,  the
Bank may declare the then  outstanding  principal  balance and all interest  accrued on the Notes and all applicable  late charges
and surcharges and all other  liabilities  and obligations of the Borrower to the Bank to be forthwith due and payable,  whereupon
the same shall become  forthwith  due and payable,  the  availability  of the Line of Credit shall be deemed to be automatically
terminated,  Borrower's  right to select  pricing  options for Advances shall  terminate,  and the Bank may exercise its rights and
remedies under this Agreement and the Related  Agreements;  all of the foregoing without  presentment or demand for payment, notice
of  non-payment,  protest or any other notice or demand of any kind, all of which are expressly  waived by the Borrower and each
Guarantor.

# Section 9.
Intentionally Omitted

# Section 10.
Miscellaneous

10.1 Waivers.

1. Borrower hereby waives
presentment,  demand, notice, protest, notice of acceptance of this Agreement,  notices of advances made, credit extended,
collateral  received or delivered or other action taken in reliance hereon and all other demands and notices of any description.
With respect to this Agreement,  the Related  Agreements,  the Notes and any collateral now or hereafter securing the Notes,
Borrower assents to any extension or postponement of the time of payment or any other indulgence,  to any substitution,  to the
addition or release of any party or person  primarily or  secondarily  liable,  to the acceptance of partial  payments  thereon and
the settlement,  compromising  or adjusting of any  thereof,  all in such manner and at such time or times as the Bank may deem
advisable. The Bank shall not be deemed to have waived any of its rights upon or under any document or agreement  relating to the
liabilities  of the Borrower,  unless such waiver be in writing and signed by the Bank. No delay or omission on the part of the Bank
in exercising  any right shall  operate as a waiver of such right or any other right.  A waiver on any one occasion  shall not be
construed as a bar to or waiver of any right on any  future  occasion.  The Bank may  revoke any  permission  or waiver  previously
granted  to  Borrower  such revocation  shall be  effective  whether  given  orally or in  writing.  All  rights  and  remedies  of
the Bank with  respect  to this Agreement,  the Related  Agreements or the Notes whether evidenced hereby or by any other instrument
or document,  shall be cumulative and may be exercised singularly or concurrently.
2. BORROWER AND BANK MUTUALLY
HEREBY KNOWINGLY,  VOLUNTARILY AND  INTENTIONALLY  WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON,  ARISING
OUT OF, UNDER OR IN CONNECTION  WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS  CONTEMPLATED TO BE EXECUTED IN CONNECTION  HEREWITH
OR ANY COURSE OF CONDUCT,  COURSE OF DEALINGS,  STATEMENTS  (WHETHER  VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY,  INCLUDING,
WITHOUT LIMITATION,  ANY COURSE OF CONDUCT,  COURSE OF DEALINGS,  STATEMENTS OR ACTIONS OF BANK RELATING TO THE ADMINISTRATION  OF
THE LOAN OR  ENFORCEMENT  OF THE LOAN  DOCUMENTS,  AND AGREE THAT NEITHER  PARTY WILL SEEK TO  CONSOLIDATE  ANY SUCH ACTION WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN  WAIVED.  EXCEPT AS  PROHIBITED  BY LAW,  BORROWER  HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,  EXEMPLARY,  PUNITIVE OR  CONSEQUENTIAL  DAMAGES OR ANY DAMAGES
OTHER THAN,  OR IN ADDITION TO, ACTUAL  DAMAGES.  BORROWER  CERTIFIES  THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF BANK HAS
REPRESENTED,  EXPRESSLY OR  OTHERWISE,  THAT BANK WOULD NOT, IN THE EVENT OF  LITIGATION,  SEEK TO ENFORCE THE FOREGOING  WAIVER.
THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO ACCEPT THE NOTES AND MAKE THE LOANS DESCRIBED HEREIN.
3. BORROWER (i) ACKNOWLEDGES
THAT THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL  TRANSACTION AND (ii) TO THE EXTENT  PERMITTED BY ANY STATE
OR FEDERAL  LAW,  WAIVES ANY RIGHT IT MAY HAVE TO PRIOR NOTICE OF AND A HEARING AND THE POSTING OF A BOND ON THE RIGHT OF ANY HOLDER
OF THE NOTES TO ANY REMEDY OR  COMBINATION  OF REMEDIES THAT ENABLES SAID HOLDER BY WAY OF  ATTACHMENT, FOREIGN  ATTACHMENT,
GARNISHMENT OR REPLEVIN,  TO DEPRIVE  BORROWER OR ANY GUARANTOR OF ANY OF THEIR PROPERTY,  AT ANY TIME,  PRIOR TO FINAL JUDGMENT IN
ANY LITIGATION INSTITUTED IN CONNECTION WITH THIS AGREEMENT.

10.2 Notices.  All
notices,  consents,  waivers and other  communications  required or permitted by this Agreement shall be in writing  and shall be
deemed  given to a party  when (a)  delivered  to the  appropriate  address by hand or by  nationally  recognized overnight courier
service (costs prepaid),  (b) sent by facsimile with confirmation of transmission by the transmitting  equipment;  or (c)  received
or rejected by the  addressee,  if sent by  certified  mail,  return  receipt  requested,  in each case to the  following addresses,
or  facsimile  numbers  and marked to the  attention  of the person (by name or title)  designated  below (or to such other address,
facsimile number, or person as a party may designated by notice to the other parties:

If to the Bank:

FLEET NATIONAL BANK
             
 157 Church Street
             
 New Haven, Connecticut 06510
             
 Facsimile No. (203) 821.7311
             
 Attention:  Kevin Burke
             
 Vice President

with a copy to:

TYLER COOPER&ALCORN, LLP. 
             
 205 Church Street
             
 P.O. Box 1936
             
 New Haven, Connecticut 06510
             
 Facsimile No. (203) 777.1181
             
 Attention:  Joseph C. Lee, Esquire

If to the Borrower:

SWISS ARMY BRANDS, INC.
             
 One Research Drive
             
 Shelton, Connecticut 06484
             
 Facsimile No. (203) 925.2933
             
 Attention:  Thomas M. Lupinski
             
 Chief Financial Officer

with a copy to:

MORRISON&FOERSTER LLP
             
 1290 Avenue of the Americas
             
 New York, New York 10104-0050
             
 Facsimile No. (212) 468.7900
             
 Attention: Charles B. Friedman, Esquire

10.3  Expenses;  Additional
Documents.  The Borrower  will pay all taxes  levied or assessed  upon the  principal  sum of the Advances  made against the
Bank.  Borrower  shall pay on demand all  reasonable  expenses of Bank in connection with the  preparation, administration, default,
collection,  waiver or amendment of this Agreement, the Notes, and the Related Agreements,  or in connection with Bank's exercise,
preservation or enforcement of any of its rights, remedies or options hereunder,  including, without limitation, reasonable fees of
outside legal counsel or the allocated costs of in-house legal counsel, accounting,  consulting,  brokerage or other similar
professional  fees or expenses in reasonable  amounts,  and any reasonable  fees or expenses  associated  with travel or other costs
relating to any appraisals or examinations  conducted in connection with the loan or any collateral  therefor, and the amount of all
such  expenses  shall,  until paid,  be an  obligation  secured by any  collateral.  The Borrower  will,  from time to time, at its
expense, execute and deliver to the Bank all such other and further instruments and documents as the Bank shall reasonably request.

10.4 Lien,  Security
Interest and Set Off.  Borrower hereby grants to Bank, a lien,  security interest and right of setoff as security for all
liabilities  and obligations to Bank,  whether now existing or hereafter  arising,  upon and against all deposits and credits,
collateral and property now or hereafter in the possession,  custody, safekeeping or control of Bank or any entity under the control
of  FleetBoston  Financial  Corporation or in transit to any of them. At any time,  without demand or notice,  Bank may set off the
same or any part thereof and apply the same to any  liability or obligation  of Borrower  even though  unmatured and  regardless of
the adequacy of any other collateral securing this Agreement, the Notes or the Related Agreements.

ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE  ITS RIGHTS OR  REMEDIES
WITH  RESPECT TO ANY OTHER  COLLATERAL  WHICH  SECURES THE INDEBTEDNESS OF THE BORROWER TO THE BANK,  INCLUDING THE LOANS EVIDENCED
HEREBY AND THE NOTES,  PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

10.5 Indemnification.The
Borrower agrees to defend,  indemnify and hold harmless the Bank and any participants,  successors or assigns of the Bank and the
officers,  directors,  employees and agents of each of them from and against any and all losses, claims, liabilities,  asserted
liabilities,  reasonable costs and expenses,  including, without limitation,  reasonable costs of litigation and reasonable
attorneys' fees (both the allocated costs of internal counsel and outside counsel)  incurred in connection with any and all claims
or proceedings for bodily injury,  property damage,  abatement or remediation,  environmental  damage or impairment or any other
injury or damage  (including  all  foreseeable  damage) or any  diminution  in value of any real property  resulting  from or
relating, directly or indirectly,  to (a) a release into the environment of any toxic  substances or hazardous  wastes (a "Release")
a threatened Release,  the  existence or removal of any toxic  substances  or hazardous  wastes on, into,  from,  through or under
any real property owned or operated by the Borrower or any Guarantor (whether or not such Release is caused by Borrower,  or
Borrower Affiliate,  tenant, subtenant,  prior owner or prior tenant or any other Person and whether or not the alleged  liability
is  attributable to the handling, storage,  generation,  transportation or disposal of toxic substances or hazardous wastes or the
mere presence of such toxic substances or  hazardous  wastes) or (b) the breach or alleged  breach by Borrower of any  federal,
state or local law or  regulation  concerning public  health,  safety or the  environment  with respect to any real  property  owned
or operated by the Borrower  and/or any business conducted thereon.

10.6 Stamp Tax. The
Borrower will pay any stamp or other tax which  becomes  payable in respect of the Notes,  this Agreement or the Related Agreements.

10.7 Schedules.Schedule A and Schedule B, which are attached hereto, are and shall constitute a part of this Agreement.

10.8  Connecticut  Law;
Jurisdiction  of  Connecticut  Courts.  This  Agreement,  the Related  Agreements  and the rights and obligations of the parties
hereunder and thereunder  shall be construed and  interpreted in accordance  with the laws of  Connecticut. BORROWER  AGREES THAT
ANY SUIT FOR THE  ENFORCEMENT  OF THIS  AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CONNECTICUT  OR ANY FEDERAL  COURT SITTING  THEREIN AND CONSENTS TO THE  NONEXCLUSIVE  JURISDICTION  OF SUCH COURT AND SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON  BORROWER  BY MAIL AT THE  ADDRESS  SET FORTH IN THIS  AGREEMENT.  BORROWER  HEREBY WAIVES
ANY  OBJECTION  THAT IT MAY NOW OR  HEREAFTER  HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT FORUM.

10.9 Usury.  This
Agreement is hereby expressly  limited so that in no contingency or event  whatsoever,  whether by reason of acceleration  of
maturity of the  indebtedness  evidenced  hereby or otherwise,  shall the amount paid or agreed to be paid to Bank for the use or
the forebearance of the indebtedness  evidenced hereby exceed the maximum  permissible  under applicable law. As used herein 
applicable law shall mean the law in effect as of the date hereof provided,  however,  that in the event there is a change in
the law which  results in a higher  permissible  rate of interest,  then this  Agreement  shall be governed by such new law as of
its effective date.  It is the intent of Borrower  and Lender in the  execution,  delivery  and  acceptance  of this  Agreement to
contract in strict compliance  with the laws of the State of  Connecticut  from time to time in effect.  If, under or from any
circumstances  whatsoever, fulfillment of any provision  hereof or of any of the Related  Documents at the time of  performance  of
such  provision  shall be due, shall involve  transcending  the limit of such validity as prescribed  by  applicable  law, then the
obligation to be fulfilled  shall automatically  be reduced to the limits of such validity,  and if under or from any  circumstances
whatsoever Bank should ever receive as interest an amount which would exceed the highest  lawful rate,  such amount which would be
excessive  interest  shall be applied to the reduction of the principal  balance  evidenced  hereby and not the payment of interest.
This  provision  shall control every other provision of all agreements between Borrower and Bank.

10.10 Survival of
Representations.  All  representations,  warranties,  covenants and agreements herein contained or made in writing in connection
with this  Agreement  shall survive the  execution and delivery of the Notes,  shall  continue in full force and effect until all
amounts  payable on account of the Notes,  the Related Agreements and this Agreement shall have been paid in full and this Agreement
has been terminated.

10.11  Severability.  If
any provision of this Agreement shall to any extent be held invalid or unenforceable,  then only such provision shall be deemed
ineffective and the remainder of this Agreement shall not be affected.

10.12 Integration;
Modifications.  This Agreement is intended by the parties as the final,  complete and exclusive  statement of the transactions
evidenced by this Agreement.  All prior or contemporaneous  promises,  agreements and understandings,  whether oral or written, are
deemed to be superceded by this Agreement,  and no party is relying on any promise, agreement or understanding not set forth in this
Agreement.  This Agreement may not be amended or modified  except by a written  instrument  describing such amendment or
modification executed by Borrower and Bank

10.13  Successors and
Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the Borrower,  the Bank and their respective
successors and assigns.

10.14 Pledge by Bank to
Federal  Reserve.  Bank may at any time pledge all or any portion of its rights  under this  Agreement or the Notes  including
any portion of the Notes to any of the twelve (12) Federal  Reserve  Banks  organized  under  Section 4 of the Federal Reserve Act,
12 U.S.C.  Section 341. No such pledge or enforcement  thereof shall release Bank from its obligations  under this Agreement or any
of the Related Agreements.

10.15 Lost,  Stolen,
Destroyed  or  Mutilated  Documents.  Upon receipt of an affidavit of an officer of Bank as to the loss, theft,  destruction  or
mutilation of the Notes or any other security  document which is not of public record,  and, in the case of any such loss, theft,
destruction or mutilation,  upon surrender and cancellation of such Notes or other security document,  Borrower will issue,  in lieu
thereof,  a replacement  Notes or other security  document in the same  principal  amount thereof and otherwise of like tenor.

10.16  Assignment of Bank's
Interest.  Bank shall have the  unrestricted  right at any time or from time to time, and with the consent of the Borrower
(which  consent  shall not be  unreasonably  withheld and which  consent  shall not be required if there is an existing  Event of
Default),  to assign  all or any  portion of its rights  and  obligations  hereunder  to one or more banks or other financial
institutions  (each, an "assignee"),  and Borrower and each Guarantor agrees that it shall execute, or cause to be executed, such
documents,  including  without  limitation,  amendments to this Agreement and to any other  documents,  instruments and agreements
executed in  connection  herewith as Bank shall deem  necessary to effect the  foregoing.  In addition,  at the request of Bank and
any such Assignee,  Borrower shall issue one or more new promissory notes, as applicable,  to any such Assignee,  and, if Bank has
retained any of its rights and  obligations  hereunder  following  such  assignment,  to Bank,  which new  promissory  notes  shall
be issued in replacement  of, but not in discharge of, the liability  evidenced by the  promissory  note held by Bank prior to such
assignment  and shall  reflect  the  amount of the  respective  commitments  and loans  held by such  Assignee  and Bank  after
giving  effect to such assignment.  Upon the execution and delivery of appropriate assignment  documentation,  amendments and any
other documentation required by Bank in connection  with such  assignment,  and the payment by Assignee of the purchase price agreed
to by Bank, and such Assignees, such Assignee  shall be a party to this  Agreement and shall have all of the rights and  obligations
of Bank  hereunder (and under any and all other guaranties,  documents,  instruments and agreements  executed in connection
herewith) to the extent that such rights and obligations  have been assigned by Bank pursuant to the  assignment  documentation
between Bank and such  Assignee,  and Bank shall be released from its obligations hereunder and thereunder to a corresponding
extent.

10.17  Participations.
Bank  shall have the  unrestricted  right at any time and from time to time,  and with the  consent of the Borrower  (which consent
shall not be  unreasonably  withheld and which consent shall not be required if there is an existing Event of Default) to grant to
one or more banks or other  financial  institutions  (each a  "Participant")  participating  interest in Bank's obligation  to lend
hereunder  and/or  any or all of the loans  held by Bank  hereunder.  In the event of any such  grant by Bank of a participating
interest to a Participant,  whether or not upon notice to Borrower,  Bank shall remain responsible for the performance of its
obligations  hereunder and Borrower  shall  continue to deal solely and directly  with Bank in  connection  with Bank's rights and
obligations hereunder.

10.18 Bank May Furnish
Information.  Bank may furnish any information  concerning Borrower in its possession from time to time to prospective
Assignees and Participants,  provided that Bank shall require any such prospective  Assignee or Participant to agree in writing to
maintain the confidentiality of such information.

10.19 Following Business Day
Convention.  The Following  Business Day Convention shall be used to adjust any relevant date if that date  would  otherwise
fall on a day that is not a Business  Day.  For the  purposes  herein,  the term  Following  Business  Day Convention  shall mean
that an adjustment  will be made if any relevant date would  otherwise  fall on a day that is not a Business Day so that the date
will be the first  following  day that is a Business  Day.  All  payments  under this  Agreement or the Notes shall be adjusted in
accordance with the Following Business Day Convention.

IN WITNESS  WHEREOF, the
parties hereto have caused this  Agreement to be duly executed as a sealed  instrument as of the day and year first above written.

FLEET NATIONAL BANK

Witness:

By

Name:
                      
                      
                      
                      
                      
                    Its:



SWISS ARMY BRANDS, INC.

Witness:

By

Name:
                      
                      
                      
                      
                      
                    Its:



Schedule B      -           
       Pricing Grid

Exhibit 1      -           
       Borrowing Base Certificate
            
                      
Exhibit 2      -           
       Revolving Note
            
                      
Exhibit 3      -           
       Term Note
            
                      
Exhibit 4      -           
       2000 Term Note
            
                      
Exhibit 5      -           
       Victorinox Letter Agreement