EXHIBIT 10.22
                                  -------------

                           LOAN AND SECURITY AGREEMENT
                           ---------------------------


      THIS LOAN AND SECURITY AGREEMENT  ("Agreement"),  dated as of the 29th day
of  October,  1999,  is made  and  entered  into  on the  terms  and  conditions
hereinafter  set forth,  by and among AMERICAN MICRO  COMPUTER  CENTER,  INC., a
Florida  corporation  with principal  offices at 6073 N.W.  167th Street,  Unite
C-25, Miami, Florida 33015 ("Borrower"), EUROPEAN MICRO HOLDINGS, INC., a Nevada
corporation  ("European  Micro"),  NOR'EASTER MICRO,  INC., a Nevada corporation
("Nor'easter";   European  Micro  and   Nor'easter  are  sometimes   hereinafter
collectively  referred  to  as  "Guarantors"),  and  SOUTHTRUST  BANK,  NATIONAL
ASSOCIATION, a national banking association with offices in Nashville, Tennessee
("Lender").

      WHEREAS,  Borrower has requested  that Lender make available to Borrower a
line of credit in the original  principal  amount not exceeding  $1,500,000 (the
"Loan")  on the  terms  and  conditions  hereinafter  set  forth,  and  for  the
purpose(s) hereinafter set forth; and

      WHEREAS, in order to induce Lender to make the Loan to Borrower,  Borrower
and Guarantors have made certain representations to Lender; and

      WHEREAS,  Lender, in reliance upon the  representations and inducements of
Borrower  and  Guarantors,  has  agreed  to make the Loan  upon  the  terms  and
conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and  agreements   hereinafter  set  forth,  and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Borrower, Guarantors and Lender hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

      As used in this  Agreement,  the following  terms shall have the indicated
meanings:

      "Base  Rate"  shall  mean  per  annum  the rate of  interest  periodically
designated by Lender as its Base Rate. Base Rate does not necessarily  represent
the lowest rate  charged by Lender.  Any rate of interest  calculated  using the
Base Rate as a reference shall change to reflect any change in the Base Rate, as
and when the Base Rate changes.

      "Borrowing  Base" shall mean an  aggregate  amount equal to the sum of (a)
eighty-five percent (85%) of Eligible Receivables,  plus (b) fifty percent (50%)
of Eligible Inventory.

      "Compliance  Certificate"  shall have the meaning assigned to such term in
SUBSECTION 5.4(A) of this Agreement.

      "Eligible  Receivables" shall mean Receivables  arising out of the sale or
other  disposition  of  Borrower's  Inventory  or the  rendering  of services to


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Borrower's  customers,  excluding (a) all Receivables that have been outstanding
for more than  ninety (90) days after the dates of the  corresponding  invoices,
(b) all  Receivables  owing  from any  account  debtor  if more  than 50% of the
Receivables  owed to Borrower by such account debtor have been  outstanding  for
more than ninety (90) days after the dates of the  corresponding  invoices,  (c)
the amount by which  Receivables  from any  account  debtor (or its  affiliates)
exceed  twenty-five  percent  (25%) of  Borrower's  total  Receivables,  (d) all
returns,  allowances,  discounts, credits and contra items, (e) all amounts owed
from  employees,  officers,  shareholders,   directors  or  affiliates  and  all
intra-company  items,  (f) any  Receivables  evidenced by instruments or chattel
paper that have not been endorsed and  delivered to Lender by Borrower,  and (g)
all other items which Lender in its sole discretion determines to be ineligible.

      "Eligible Inventory" shall mean Borrower's Inventory, valued at the lesser
of cost  or  market,  with  such  adjustments  thereto  as  Lender  in its  sole
discretion determines to be appropriate.

      "Event of Default" shall have the meaning assigned to such term in SECTION
7.1 of this Agreement.

      "Guaranties" shall mean,  collectively,  one or more Continuing Guaranties
of even date herewith, executed in favor of Lender by Guarantors.

      "Inventory"  shall have the  meaning  assigned to such term in the Uniform
Commercial Code.

      "Line of Credit Borrowing Limit" shall mean $1,500,000.

      "Line of Credit  Interest  Rate"  shall  mean an annual  rate equal to the
lesser of (a) the  maximum  contract  rate of interest  permitted  to be charged
under applicable law or (b) the Base Rate plus one-half percentage point (1/2%),
computed on the basis of a 360-day year, actual number of days elapsed, adjusted
daily as the Base Rate changes.

      "Line of Credit Termination Date" shall mean October __, 2000.

      "Loan  Documents"  shall mean,  collectively,  the  Security  Instruments,
together with the Note and any other  instruments and documents now or hereafter
evidencing,  securing or in any way related to the  indebtednesses  evidenced by
the Note.

      "Note" shall mean that certain Master Secured Promissory Note of even date
herewith,  in the principal  amount not  exceeding the Line of Credit  Borrowing
Limit, made and executed by Borrower, payable to the order of Lender, evidencing
the  indebtedness  of Borrower to Lender in connection  with the Loan,  together
with  any and  all  extensions,  modifications,  renewals,  restatements  and/or
replacements thereof.

      "Pledge  Agreements"  shall mean those two (2) certain Pledge and Security
Agreements  of even date  herewith,  executed by John B.  Gallagher and Harry D.
Shields, in favor of Lender.

      "Receivables" shall mean accounts,  general  intangibles,  instruments and
chattel paper, as such terms are defined in the Uniform Commercial Code.


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      "Secured Obligations" shall have the meaning assigned such term in SECTION
3.2 of this Agreement.

      "Security  Instruments"  shall mean,  collectively,  this  Agreement,  the
Guaranties, and any other instruments,  documents or agreements now or hereafter
securing the Secured Obligations, whether by specific or general reference.

      "Uniform  Commercial Code" means the Uniform  Commercial Code as in effect
in the State of Tennessee from time to time.


                                   ARTICLE II

                                    THE LOAN
                                    --------

      II.1 ADVANCES. Prior to the Line of Credit Termination Date and so long as
no Event of Default  (or event that with the giving of notice or the  passage of
time or both  would  constitute  an Event of  Default)  has  occurred  and is in
existence  hereunder,  Lender shall advance  proceeds under the Loan to Borrower
upon Borrower's  request in an aggregate amount  outstanding at any one time not
to exceed the lesser of (a) the  Borrowing  Base in effect from time to time, or
(b) the Line of Credit  Borrowing  Limit,  although  Lender  may in its sole and
absolute  discretion  permit  advances  to exceed such  amount.  Any such excess
advances  shall be secured by, and subject to the terms and  conditions of, this
Agreement.  In the  absence  of an Event of  Default,  Borrower  may  repay  and
reborrow  amounts under the Loan in accordance  with the terms,  conditions  and
provisions of this Agreement.

      II.2 REPAYMENT.  The indebtedness of Borrower to Lender in connection with
the Loan shall be evidenced by, and payable in accordance with the terms of, the
Note.  Amounts  outstanding  under the Loan shall bear  interest  at the Line of
Credit  Interest  Rate. In addition,  Borrower  covenants and agrees to maintain
Eligible Receivables and Eligible Inventory in an aggregate amount sufficient to
keep the aggregate outstanding principal balance of the advances made in respect
of the Loan within the limits specified in SECTION 2.1 of this Agreement.  If at
any time such limits are exceeded,  Borrower shall  immediately pay to Lender an
amount sufficient to reduce the aggregate  outstanding  principal balance of the
Loan to an amount that is within such limits.

      II.3  LETTERS OF CREDIT.  If and to the extent  that  Lender has issued or
from time to time  hereafter  shall  issue  letters of credit for the account of
Borrower  pursuant  to  applications  submitted  to  Lender by  Borrower,  it is
understood and agreed that:

                  (a) the credit availability under the Loan shall be reduced by
            the  aggregate  undrawn  amount  from time to time  available  under
            outstanding letters of credit,

                  (b) any  amounts  paid by  Lender  under any such  letters  of
            credit  shall be deemed to be  advances  against  the Note,  and the
            indebtedness  of Borrower to Lender in  connection  therewith  shall
            constitute a part of the Secured Obligations and shall be secured as
            hereinafter  set forth in the same manner as all other advances made
            by Lender against the Note.


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Borrower  acknowledges and agrees that Lender has made no commitment to Borrower
with respect to the issuance of any such letters of credit.

      II.4  COMMITMENT FEE.  Upon execution of this Agreement, Borrower shall
pay to Lender a non-refundable commitment fee in the amount of $3,750.00.

      II.5 PURPOSE.  The purpose of the Loan shall be to provide working capital
to Borrower on a revolving basis.

                                   ARTICLE III

                                    SECURITY
                                    --------

      III.1  SECURITY.  The  Secured  Obligations  are and shall  continue to be
secured by the following:

             (a) PERSONAL PROPERTY.  Borrower hereby grants to Lender a security
      interest in the  following  described  property and interests in property,
      together  with  all  proceeds  (including  but not  limited  to  insurance
      proceeds) and products thereof and all accessions thereto, as applicable:

                 (i)    EQUIPMENT.  All equipment of  Borrower of every kind and
            description,  whether now owned or  hereafter  acquired and wherever
            located,  together with all parts,  accessories  and attachments and
            all replacements thereof and additions thereto;



                 (ii)   INVENTORY, ACCOUNTS, LP  CHATTEL   PAPER,   INSTRUMENTS,
            DOCUMENTS  AND GENERAL  INTANGIBLES.  All of  Borrower's  inventory,
            whether held for lease,  sale or for furnishing  under  contracts of
            service, all agreements for lease of same and rentals therefrom, and
            all of Borrower's  accounts,  accounts  receivable,  chattel  paper,
            instruments,  documents and general  intangibles  (including but not
            limited to trade  marks,  copyrights  and  patents),  whether now in
            existence or owned or hereafter  acquired,  entered into, created or
            arising, and wherever located; and

                  (iii) BOOKS AND RECORDS.  All of Borrower's  right,  title and
            interest to all of the books, records,  files and all other data and
            documents  of  Borrower  of all  kinds  in  whatever  form,  whether
            computerized  or otherwise and including but not limited to computer
            disks,  tapes  and  printouts,   relating  to  the   above-described
            collateral.

            (b)   OTHER SECURITY INSTRUMENTS.  The Guaranties, the Pledge
      Agreements and the other Security Instruments.

      III.2 SECURED OBLIGATIONs.  Without limiting any of the provisions
thereof, the Security Instruments shall secure:


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            (a) The full and timely payment of the  indebtednesses  evidenced by
      the  Note,   together  with   interest   thereon,   and  any   extensions,
      modifications  and/or  renewals  thereof  and any notes  given in  payment
      thereof,

            (b) The full and prompt  performance  of all of the  obligations  of
      Borrower to Lender under the Loan Documents,

            (c) The  full  and  prompt  payment  of all  expenses  and  costs of
      whatever kind incident to the collection of the  indebtednesses  evidenced
      by the Note,  the  perfection,  enforcement  or protection of the security
      interests  of the  Security  Instruments  or the exercise by Lender of any
      rights or remedies of Lender with respect to the indebtednesses  evidenced
      by the Note,  including but not limited to reasonable  attorney's fees and
      expenses incurred by Lender, all of which Borrower agrees to pay to Lender
      upon demand,

            (d)  The  full  and  prompt  payment  of  the   indebtednesses   and
      obligations of Guarantors to Lender  evidenced  and/or secured by (i) that
      certain  Loan  Agreement  of even  date  herewith,  by and  among  Lender,
      Borrower and Guarantors, entered into in connection with that certain term
      loan from Lender to European  Micro in the  original  principal  amount of
      $1,500,000, and (ii) that certain Loan and Security Agreement of even date
      herewith,  by and among Lender,  Borrower and Guarantors,  entered into in
      connection with that certain line of credit from Lender to Nor'easter,  in
      the maximum  principal  amount of  $1,500,000,  together  with any and all
      renewals, amendments and modifications thereof; and

            (e) The full and prompt payment and performance of any and all other
      indebtednesses  and other  obligations of Borrower or either  Guarantor to
      Lender,  direct or contingent  (including  but not limited to  obligations
      incurred  as  indorser,   guarantor  or  surety),   however  evidenced  or
      denominated,  and however and whenever incurred, including but not limited
      to indebtednesses incurred pursuant to any present or future commitment of
      Lender to Borrower or either  Guarantor,  together with interest  thereon,
      and any extensions,  modifications  and/or renewals  thereof and any notes
      given in payment thereof.

All of the foregoing  indebtedness and other obligations are herein collectively
referred to as the "Secured Obligations".


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

      Borrower and Guarantors hereby represent and warrant to Lender as follows:

      IV.1 CORPORATE STATUS.  Borrower is a corporation duly organized,  validly
existing  and in good  standing  under  the laws of the State of  Florida.  Each
Guarantor is a corporation duly organized, validly existing and in good standing
under the laws of the  State of  Nevada.  Borrower  and each  Guarantor  has the
corporate power to own and operate its  properties,  to carry on its business as
now  conducted  and to enter  into and to  perform  its  obligations  under this
Agreement and the other Loan Documents to which it is a party. Borrower and each


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Guarantor is duly qualified to do business and in good standing in each state in
which a failure to be so qualified  would have a material  adverse effect on its
financial  position  or its  ability to conduct  its  business in the manner now
conducted.

      IV.2  AUTHORIZATION.  Borrower  and each  Guarantor  has full legal right,
power  and  authority  to  conduct  its  business  and  affairs  in  the  manner
contemplated  by  the  Loan  Documents,  and  to  enter  into  and  perform  its
obligations  thereunder,  without the  consent or approval of any other  person,
firm,  governmental  agency or other legal entity. The execution and delivery of
this Agreement, the borrowing hereunder, the execution and delivery of each Loan
Document to which Borrower or either  Guarantor is a party,  and the performance
by Borrower and each  Guarantor  of its  obligations  thereunder  are within the
corporate  powers of  Borrower  or  Guarantors  and have been duly and  properly
authorized  by all  necessary  corporate  action,  have  received all  necessary
governmental approvals, if any were required, and do not and will not contravene
or conflict  with any  provision of law,  any  applicable  judgment,  ordinance,
regulation or order of any court or governmental agency, the charters or by-laws
of Borrower or Guarantors, or any agreement binding upon Borrower, Guarantors or
their properties.  The officer(s)  executing this Agreement and all of the other
Loan Documents to which Borrower and Guarantors are a party are duly  authorized
to act on behalf of Borrower and Guarantors.

      IV.3  VALIDITY  AND  BINDING  EFFECT.  This  Agreement  and the other Loan
Documents are the legal,  valid and binding  obligations of the parties thereto,
enforceable in accordance with their respective terms.

      IV.4  OTHER  TRANSACTIONS.  Except  as  specifically  set  forth  in  this
Agreement  and the  other  Loan  Documents,  there  are no prior  loans,  liens,
security  interests,  agreements  or other  financings  upon which  Borrower  is
obligated  or by which  Borrower  is bound that will in any way permit any third
person  to  have  or  obtain  priority  over  Lender  as to any of the  security
interests or liens  granted to Lender  pursuant to this  Agreement and the other
Security  Instruments.  Consummation of the transactions hereby contemplated and
the  performance  of the  obligations  of Borrower and  Guarantors  under and by
virtue of the Loan  Documents  will not result in any breach of, or constitute a
default under, any mortgage,  security deed or agreement,  deed of trust, lease,
bank loan or credit  agreement,  corporate  charter  or  by-laws,  agreement  or
certificate of limited partnership, partnership agreement, license, franchise or
any other  instrument  or agreement to which  Borrower or either  Guarantor is a
party or by which  Borrower,  Guarantors  or  their  properties  may be bound or
affected.


      IV.5  PLACES OF  BUSINESS.  The  records  with  respect to all  intangible
personal property constituting a part of the collateral security for the Secured
Obligations  are  maintained  at  Borrower's  chief place of business  and chief
executive office,  which has the address of 6073 N.W. 167th Street,  Unite C-25,
Miami, Florida 33015. All tangible personal property  constituting a part of the
collateral  security  for the  Secured  Obligations  is or will  be  located  at
Borrower's  chief place of business  and chief  executive  office  and/or at any
specific locations set forth in attached SCHEDULE 4.5.

      IV.6  LITIGATION.  There are no actions, suits or proceedings pending, or,
to the  knowledge  of  Borrower  or either  Guarantor,  threatened,  against  or
affecting   Borrower  or  either   Guarantor  or   involving   the  validity  or
enforceability  of any of the  Loan  Documents  or  the  priority  of the  liens
thereof,  at law or in equity,  or before  any  governmental  or  administrative
agency,  except  actions,  suits  and  proceedings  that are  fully  covered  by


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insurance  and that,  if adversely  determined,  would not impair the ability of
Borrower  or  Guarantors  to  perform  each and  every  one of their  respective
obligations  under and by virtue of the Loan Documents;  and to the knowledge of
Borrower and  Guarantors,  neither  Borrower nor either  Guarantor is in default
with respect to any order,  writ,  injunction,  decree or demand of any court or
any governmental authority.

      IV.7  FINANCIAL  STATEMENTS.  The financial  statement(s)  of Borrower and
Guarantors  heretofore delivered to Lender are true and correct in all respects,
have been prepared in accordance with generally accepted  accounting  principles
consistently applied, and fairly present the financial condition of the subjects
thereof as of the date(s)  thereof.  No material  adverse change has occurred in
the  financial  condition  of  Borrower  or either  Guarantor  since the date(s)
thereof,  and no  additional  borrowings  have been made by  Borrower  or either
Guarantor since the date(s) thereof.

      IV.8 NO DEFAULTS. No default or event of default by Borrower or Guarantors
exists  under this  Agreement or any of the other Loan  Documents,  or under any
other  instrument or agreement to which Borrower or either  Guarantor is a party
or by which Borrower,  Guarantors or their  properties may be bound or affected,
and no event has  occurred  and is  existing  that with notice or the passage of
time or both would constitute a default or event of default thereunder.

      IV.9  COMPLIANCE  WITH LAW.  Borrower  and  Guarantors  have  obtained all
necessary  licenses,  permits  and  governmental  approvals  and  authorizations
necessary or proper in order to conduct their business and affairs as heretofore
conducted  and as  intended  to be  conducted  hereafter.  To the  knowledge  of
Borrower and  Guarantors,  Borrower and  Guarantors  are in compliance  with all
laws,  regulations,  decrees and orders  applicable to them  (including  but not
limited to laws,  regulations,  decrees and orders relating to occupational  and
health standards and controls, antitrust, monopoly, restraint of trade or unfair
competition). Neither Borrower nor either Guarantor has received, nor expects to
receive,  any order or notice of any violation or claim of violation of any law,
regulation,  decree,  rule,  judgment or order of any governmental  authority or
agency relating to the ownership and/or operation of its properties, as to which
the  cost  of  compliance  is or  might  be  material  and the  consequences  of
noncompliance would or might be materially adverse to its business,  operations,
property or financial  condition,  or which would or might impair its ability to
perform its obligations under the Loan Documents to which it is a party.

      IV.10 ENVIRONMENTAL MATTERS.

            (a) As used in this SECTION  4.10 and in SECTION  5.12  hereof,  the
      following terms shall have the indicated meanings:

            "BUSINESS" means all of Borrower's and Guarantors' assets, both real
      and personal,  tangible and intangible, now existing or hereafter acquired
      and wherever  located,  and all of Borrower's and Guarantors'  current and
      future business operations at all locations and in all jurisdictions.

            "ENVIRONMENTAL  AUTHORITIES"  means  all  federal,  state  and local
      governmental  bodies,  authorities or agencies and all public corporations
      created   and/or   empowered  to  administer,   regulate   and/or  enforce
      Environmental Laws, including without limitation the U.S.
      Environmental Protection Agency.

            "ENVIRONMENTAL  LAWS" means any and all  federal,  state,  regional,
      county or local laws, statutes,  rules, regulations or ordinances relating


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      to  the  generation,  recycling,  use,  reuse,  sale,  storage,  handling,
      transport, treatment or disposal of Hazardous Materials, including without
      limitation the Comprehensive Environmental Response Compensation Liability
      Act of 1980, as amended by the Superfund  Amendments  and  Reauthorization
      Act of  1986,  42  U.S.C.  ss.ss.9601  ET seq.  ("CERCLA"),  the  Resource
      Conservation  and  Recovery  Act of 1976,  as  amended  by the  Solid  and
      Hazardous Waste Amendments of 1984, 42 U.S.C. ss.ss.6901 ET seq. ("RCRA"),
      the Tennessee  Hazardous Waste Management Act, T.C.A.  ss.ss.68-46-101  ET
      seq., and any rules,  regulations  and guidance  documents  promulgated or
      published thereunder,  and any state,  regional,  county or local statute,
      law, rule,  regulation or ordinance  relating to public health,  safety or
      the  discharge,  emission or disposal of Hazardous  Materials or Hazardous
      Wastes in or to air, water, land or groundwater,  to the withdrawal or use
      of   groundwater,   to  the  use,   handling  or  disposal  of   asbestos,
      polychlorinated   biphenyls,    petroleum,    petroleum   derivatives   or
      by-products,  other hydrocarbons or urea  formaldehyde,  to the treatment,
      storage,  disposal or  management of Hazardous  Materials,  to exposure to
      Hazardous Materials, to the transportation,  storage, disposal, management
      or release of gaseous or liquid  substances,  and any  regulation,  order,
      injunction, judgment, declaration, notice or demand issued thereunder.

            "HAZARDOUS  MATERIALS"  means  any  hazardous,  toxic  or  dangerous
      materials,  substances,  chemicals,  waste or pollutants that from time to
      time  are  defined  by  or  pursuant  to  or  are   regulated   under  any
      Environmental Laws, including without limitation asbestos, polychlorinated
      biphenyls,   petroleum,   petroleum  derivatives  or  by-products,   other
      hydrocarbons,  urea formaldehyde and any material, substance, pollutant or
      waste  that is  defined as a  hazardous  waste  under RCRA or defined as a
      hazardous substance under CERCLA.

            "HAZARDOUS  WASTES"  means  Hazardous  Materials  that are or become
      "wastes" or "solid wastes" as such terms are used in RCRA.

            "PROPERTY"  means all real property now or hereafter  constituting a
      part of, or  otherwise  used or  operated by  Borrower  or  Guarantors  in
      connection with, the Business.

            (b)  Borrower  and  Guarantors  represent  and  warrant to Lender as
      follows:

                 (i)  The Property is being  operated by Borrower and Guarantors
            in  full  compliance  with  Environmental  Laws,  and  Borrower  and
            Guarantors  have obtained,  maintained and is in good standing under
            all approvals, consents, certificates, licenses and permits required
            by Environmental Laws with respect to the Property.

                 (ii)  To the knowledge of Borrower and Guarantors, the Property
            is  free  of all  Hazardous  Wastes  and is  free  of all  Hazardous
            Materials  other  than those  maintained  therein or thereon in full
            compliance with Environmental Laws. Borrower and Guarantors have not
            caused  or   permitted   the   Property  to  be  used  to  generate,
            manufacture,  refine,  transport,  treat,  store,  handle,  dispose,
            transfer,  produce or  process  Hazardous  Materials  except in full
            compliance with Environmental Laws.


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                  (iii)  Neither  Borrower  nor either  Guarantor  has  received
            notice, nor has knowledge, of any noncompliance with or violation of
            any Environmental Laws with respect to the Property or the Business.
      IV.11 NO BURDENSOME RESTRICTIONS. No instrument,  document or agreement to
which  Borrower or either  Guarantor is a party or by which it or its properties
may be bound or affected  materially  adversely  affects,  or may  reasonably be
expected  so  to  affect,  its  business,  operations,   property  or  financial
condition.

      IV.12 TAXES.  Borrower and each  Guarantor has filed or caused to be filed
all tax returns  that to its  knowledge  are  required  to be filed  (except for
returns  that  are not yet  due),  and has paid  all  taxes  shown to be due and
payable on said returns and all other taxes, impositions,  assessments,  fees or
other  charges  imposed  on  it  by  any  governmental   authority,   agency  or
instrumentality,  prior to any  delinquency  with  respect  thereto  (other than
taxes, impositions,  assessments,  fees and charges currently being contested in
good faith by appropriate  proceedings,  for which appropriate amounts have been
reserved).  No tax liens have been filed against Borrower,  Guarantors or any of
their property.

      IV.13 EQUIPMENT.  The equipment  constituting a part of the collateral for
the Secured  Obligations  is owned  solely by  Borrower,  and  Borrower has full
right,  power and authority to grant to Lender a valid and enforceable  security
interest therein.  Lender's  security  interest in such equipment  constitutes a
first and prior lien upon and security interest in such equipment,  and no other
person or entity has any right,  title,  interest,  security interest,  claim or
lien with respect thereto.

      IV.14 INVENTORY.  The Inventory  constituting a part of the collateral for
the Secured  Obligations  is owned  solely by  Borrower,  and  Borrower  has all
necessary right,  power and authority to grant to Lender a valid and enforceable
security  interest  therein.   Lender's  security  interest  in  such  Inventory
constitutes a first and prior lien upon and security interest in such Inventory,
and no other person or entity has any right, title, interest, security interest,
claim or lien with respect thereto.

      IV.15 RECEIVABLES,  ETC.   With  respect  to  the  Receivables,  (a)  each
Receivable  is a valid and bona fide existing  obligation  created by or arising
out of the sale and delivery or other disposition of Borrower's Inventory or the
rendition by Borrower of services to Borrower's customers in the ordinary course
of business,  (b) the  Receivables are owned solely by Borrower and Borrower has
all  necessary  right,  power  and  authority  to  grant to  Lender a valid  and
enforceable  security interest  therein,  (c) Lender's security interest in such
Receivables  constitutes  a first and prior lien upon and  security  interest in
such Receivables,  and no other person or entity has any right, title, interest,
security  interest,  claim or lien with  respect  thereto;  (d) each  Receivable
constituting an Eligible Receivable will at all times be unconditionally owed to
Borrower and  enforceable  against the obligor(s)  with respect  thereto without
dispute of any kind, and (e) each Receivable constituting an Eligible Receivable
is an "account" as defined in the Uniform  Commercial  Code and is not evidenced
by any instrument or document  (except as  specifically  disclosed to Lender and
accepted  by Lender as an Eligible  Receivable)  that would in any way change or
alter its character as an account.

      IV.16 EFFECT OF REQUEST FOR  ADVANCE.   Each  request by  Borrower  for an
advance of proceeds of the Loan shall  constitute an affirmation by Borrower and
Guarantors  that the  representations  and  warranties of this ARTICLE IV remain
true and correct on and as of the date of such request.


                                       9
<PAGE>


                                    ARTICLE V

                            COVENANTS AND AGREEMENTS
                            ------------------------

      Borrower  and  Guarantors  covenant and agree that during the term of this
Agreement:

      V.1 PAYMENT OF SECURED OBLIGATIONS.  Borrower shall pay the indebtednesses
evidenced by the Note  according to the terms  thereof,  and shall timely pay or
perform, as the case may be, all of the other Secured Obligations.

      V.2  SALES OF AND  ENCUMBRANCES  ON  COLLATERAL.  Borrower  will not sell,
exchange, lease, negotiate,  pledge, assign or grant any security interest in or
otherwise  dispose of the  collateral  described in the Security  Instruments to
anyone  other  than  Lender,  nor  permit  any other  lien of any kind to attach
thereto,  nor permit same to be attached  to or  commingled  with other goods or
property, without Lender's prior written consent; provided,  however, that prior
to the  occurrence  of an Event of Default  hereunder,  Borrower  shall have the
right to process and sell its  Inventory in the  ordinary  course of business as
herein provided.

      V.3 FURTHER ASSURANCES. Borrower will take all actions requested by Lender
to create and maintain in Lender's  favor valid liens upon,  security  titles to
and/or perfected security interests in any collateral  described in the Security
Instruments  and  all  other  collateral  for  the  Secured  Obligations  now or
hereafter held by or for Lender. Without limiting the foregoing, Borrower agrees
to  execute  such  further  instruments   (including  financing  statements  and
continuation  statements) as may be required or permitted by any law relating to
notices  of, or  affidavits  in  connection  with,  the  perfection  of Lender's
security interests or liens, to cooperate with Lender in the filing or recording
and renewal thereof,  and, upon Lender's request, to immediately place notations
upon its  books  of  account  to  disclose  Lender's  security  interest  in all
Receivables granted in this Agreement.

      V.4 FINANCIAL  STATEMENTS  AND  REPORTS.   Borrower and  Guarantors  shall
furnish to Lender such financial data as Lender may reasonably request.  Without
limiting the  foregoing,  Borrower and  Guarantors  shall  furnish to Lender (or
cause to be furnished to Lender) the following:

          (a) as   soon as practicable  and in any event within ninety (90) days
      after the end of each fiscal year of Borrower and Guarantors, consolidated
      and  consolidating  balance  sheets of Borrower and  Guarantors  as of the
      close of such fiscal year,  consolidated and  consolidating  statements of
      earnings and retained  earnings of Borrower and Guarantors as of the close
      of such fiscal year, and consolidated and consolidating statements of cash
      flows for Borrower and  Guarantors for such fiscal year, all in reasonable
      detail,   prepared  in  accordance  with  generally  accepted   accounting
      principles  consistently  applied,  audited in accordance  with  generally
      accepted auditing  standards by independent  certified public  accountants
      satisfactory to Lender in its reasonable judgment,  and accompanied by the
      unqualified favorable opinion of such accountants and a certificate of the
      chief  executive or chief  financial  officers of Borrower and Guarantors,
      stating that, to the best of the knowledge of such officers,  Borrower and


                                      10
<PAGE>


      Guarantors  have kept,  observed,  performed and fulfilled  each covenant,
      term and condition of this Agreement and the other Loan  Documents  during
      such fiscal year and that no Event of Default  hereunder  has occurred and
      is continuing  (or if an Event of Default has occurred and is  continuing,
      specifying  the nature of same,  the period of  existence  of same and the
      action Borrower and Guarantors  propose to take in connection  therewith),
      and setting forth  calculations  of the  financial  covenants set forth in
      ARTICLE VI of this Agreement (a "Compliance Certificate");

          (b)  within  forty-five  (45) days  of the end of the first  three (3)
      quarters of each fiscal year of Borrower and Guarantors,  consolidated and
      consolidating balance sheets of Borrower and Guarantors as of the close of
      such quarter and consolidated and consolidating statements of earnings and
      retained  earnings  of  Borrower  and  Guarantors  as of the close of such
      quarter,   all  in  reasonable  detail,  and  prepared   substantially  in
      accordance  with generally  accepted  accounting  principles  consistently
      applied,  certified by the chief executive or chief financial  officers of
      Borrower and  Guarantors as being true and correct,  and  accompanied by a
      Compliance Certificate;

          (c)   within   thirty  (30)  days of the end of each  calendar  month,
      non-consolidated  balance  sheets of Borrower and each Guarantor as of the
      close of such month,  and  non-consolidated  statements  of  earnings  and
      retained  earnings of Borrower and each  Guarantor as of the close of such
      month, all in reasonable detail, and prepared  substantially in accordance
      with  generally  accepted  accounting  principles   consistently  applied,
      certified by the chief executive or chief  financial  officers of Borrower
      and Guarantors as being true and correct,  and accompanied by a Compliance
      Certificate;

          (d)    within  fifteen  (15) days of the end of each  calendar  month,
      accounts  receivable  and  accounts  payable  listings of  Borrower,  with
      agings, and a certification of inventory of Borrower,  all as of the close
      of such month and all in form satisfactory to Lender, and accompanied by a
      certificate in form  satisfactory to Lender setting forth a calculation of
      the Borrowing Base as of the close of such month; and

          (e)    promptly  upon  receipt  thereof,  copies  of all  accountants'
      reports and accompanying financial reports submitted to Borrower or either
      Guarantor  by  independent  accountants  in  connection  with each  annual
      examination of Borrower and Guarantors.

      V.5 MAINTENANCE OF BOOKS AND RECORDS; INSPECTION.  Borrower and Guarantors
shall  maintain their books,  accounts and records in accordance  with generally
accepted  accounting  principles  consistently  applied,  and permit Lender, its
officers and employees and any professionals designated by Lender in writing, at
any time to visit and inspect any of their properties (including but not limited
to the collateral  security  described in the Security  Instruments),  corporate
books and financial records, and to discuss their accounts, affairs and finances
with any employee, officer or director thereof.

      V.6 INSURANCE.   Without  limiting any of the  requirements  of any of the
other Loan Documents, Borrower shall maintain, in amounts satisfactory to Lender
(a) public liability insurance, (b) worker's compensation insurance (or maintain
a legally  sufficient  amount of self insurance  against  worker's  compensation
liabilities,  with adequate reserves, under a plan approved by Lender), (c) fire
and "all risk" casualty  insurance on its properties  (including but not limited
to the collateral  security now or hereafter securing payment and performance of
the Secured  Obligations),  against such hazards and in at least such amounts as
are customary in the type of business in which Borrower is engaged, and (d) rent
or business interruption  insurance against loss of income arising out of damage


                                       11
<PAGE>


or  destruction by such hazards as presently are included in so called "all risk
coverage".  At  the  request  of  Lender,  Borrower  will  deliver  forthwith  a
certificate,  executed by a duly  authorized  representative  of the insurer(s),
specifying the details of such insurance in effect.

      All  policies of insurance  shall  provide that at least thirty (30) days'
prior written  notice of  cancellation  or  modification  of the policy shall be
given to Lender by the insurer,  and all policies of casualty insurance covering
any tangible  security for the Secured  Obligations shall be payable to Borrower
and Lender as their respective interests may appear.  Borrower agrees that there
shall be no recourse  against  Lender for the payment of premiums,  commissions,
assessments or advances in respect of any such policy,  and at Lender's  request
shall provide Lender with the agreement of the insurer(s) to this effect.

      At the request of Lender,  all policies of casualty insurance covering any
tangible security for the Secured  Obligations shall be delivered to and held by
Lender.  Borrower  shall act  expeditiously  in the adjustment and settlement of
claims  under such  policies in order to preserve the  greatest  possible  value
reasonably obtainable in respect of such claims.  Following the occurrence of an
Event of  Default,  Lender  may,  at its  option,  act as  attorney  in fact for
Borrower in adjusting and settling claims under such insurance and endorsing any
drafts with respect  thereto,  and this power,  being  coupled with an interest,
shall be irrevocable prior to payment in full of the indebtednesses evidenced by
the Note and  performance  of all of the  obligations  of  Borrower to Lender in
connection therewith, and any insurer is hereby instructed to rely upon Lender's
representation  that an Event of Default has occurred  hereunder without further
inquiry or investigation.

      V.7 TAXES AND  ASSESSMENTS;  TAX  INDEMNITY.  Borrower and each  Guarantor
shall  (a) file all tax  returns  and  appropriate  schedules  thereto  that are
required to be filed under applicable law, prior to the date of delinquency, (b)
pay and  discharge all taxes,  assessments  and  governmental  charges or levies
imposed upon Borrower or either  Guarantor,  upon its income and profits or upon
any  properties  belonging  to it, prior to the date on which  penalties  attach
thereto,  and (c) pay all taxes,  assessments and governmental charges or levies
that,  if  unpaid,  might  become a lien or charge  upon any of its  properties;
provided,  however,  that Borrower and  Guarantors in good faith may contest any
such tax,  assessment,  governmental  charge or levy  described in the foregoing
clauses (b) and (c) so long as appropriate  reserves are maintained with respect
thereto.  If any tax is or may be imposed by any governmental  entity in respect
of sales of Borrower's  Inventory or the merchandise that is the subject of such
sales, or as a result of any other transaction of Borrower,  which tax Lender is
or may be required to withhold or pay,  Borrower  agrees to  indemnify  and hold
harmless  Lender  in  connection  with  such  taxes  (including   penalties  and
interest),  and Borrower shall immediately reimburse Lender for any such amounts
paid by  Lender,  and such  amounts  shall be added to the  Secured  Obligations
pursuant to the terms hereof.

      V.8 CORPORATE  EXISTENCE.  Borrower and each Guarantor  shall maintain its
corporate existence and good standing in the state of its incorporation, and its
qualification and good standing as a foreign corporation in each jurisdiction in
which such qualification is necessary pursuant to applicable law.

      V.9 COMPLIANCE WITH LAW AND OTHER AGREEMENTS.  Borrower and each Guarantor
shall maintain its business  operations and property owned or used in connection
therewith in compliance with (a) all applicable  federal,  state and local laws,
regulations  and ordinances  governing such business  operations and the use and
ownership  of  such  property,  and (b) all  agreements,  licenses,  franchises,


                                       12
<PAGE>


indentures and mortgages to which Borrower or either  Guarantor is a party or by
which Borrower,  either Guarantor or any of their  properties is bound.  Without
limiting  the  foregoing,  Borrower  and  each  Guarantor  shall  pay all of its
indebtedness promptly in accordance with the terms thereof.

      V.10 NOTICE OF DEFAULT.  Borrower and Guarantors shall give written notice
to Lender of the occurrence of any default, event of default or Event of Default
under this  Agreement or any other Loan Document  promptly  upon the  occurrence
thereof.

      V.11 NOTICE OF LITIGATION.  Borrower and Guarantors shall give notice,  in
writing,  to Lender of (a) any actions,  suits or proceedings wherein the amount
at issue is in excess of $250,000, instituted by any persons against Borrower or
either  Guarantor,  or  affecting  any of  the  assets  of  Borrower  or  either
Guarantor,  and (b) any  dispute,  not  resolved  within  sixty (60) days of the
commencement  thereof,  between Borrower or either Guarantor on the one hand and
any governmental or regulatory body on the other hand, which might reasonably be
expected  to have a  material  adverse  effect  on the  business  operations  or
financial condition or Borrower or either Guarantor.

      V.12  ENVIRONMENTAL MATTERS.

            (a) Borrower and  Guarantors  will cause the Property to remain free
      of all Hazardous  Wastes,  and to remain free of all  Hazardous  Materials
      other than those  maintained  therein or thereon in full  compliance  with
      Environmental  Laws.  Neither  Borrower nor either Guarantor will cause or
      permit  the  Property  to  be  used  to  generate,  manufacture,   refine,
      transport,  treat, store, handle,  dispose,  transfer,  produce or process
      Hazardous Materials except in full compliance with Environmental Laws.

            (b) Borrower and Guarantors  will notify Lender  immediately if they
      receive  any  notice  or obtain  knowledge  of any  noncompliance  with or
      violation  of any  Environmental  Laws with respect to the Property or the
      Business.


            (c) In the event that Hazardous Materials unrelated to the Business,
      or Hazardous  Wastes,  are discovered on or are brought onto the Property,
      Borrower and Guarantors  will cause such Hazardous  Materials or Hazardous
      Wastes to be removed and disposed of promptly and in full  compliance with
      Environmental  Laws.  Borrower and  Guarantors  will provide  Lender prior
      written notice of such removal and disposal actions.

            (d) Borrower and Guarantors will comply with all Environmental  Laws
      in all jurisdictions in which Borrower or either Guarantor  operates,  now
      or in the future,  and will comply with all Environmental Laws that in the
      future become applicable to the Property or the Business.

      V.13 MERGERS,  CONSOLIDATIONS,  ACQUISITIONS AND SALES.  Without the prior
express written consent of Lender,  neither  Borrower nor either Guarantor shall
(a) be a party to any merger,  consolidation  or corporate  reorganization,  (b)
purchase or otherwise  acquire all or  substantially  all of the assets or stock
of, or any partnership or joint venture  interest in, any other person,  firm or
entity, (c) sell, transfer, convey, grant a security interest in or lease all or
any substantial  part of its assets,  nor (d) create any subsidiaries nor convey
any of its  assets to any  subsidiary;  provided,  however,  Borrower  or either


                                       13
<PAGE>


Guarantor  may make  acquisitions  of all or  substantially  all of the stock or
assets of other entities,  so long as (i) no Event of Default exists  hereunder,
(ii) the  purchase  price  payable  in  connection  with each such  acquisition,
including the fair market value of any non-cash  consideration,  does not exceed
$5,000,000,  and (iii) any subsidiary of Borrower or either Corporate  Guarantor
created or acquired in connection with any such acquisition  shall guarantee the
indebtedness  of Borrower to Lender and grant Lender a security  interest in all
of its assets to secure its  obligations  and the  obligations  of  Borrower  to
Lender,  all pursuant to  documentation  in form and substance  satisfactory  to
Lender in all respects.


      V.14  MANAGEMENT,  OWNERSHIP.  Neither Borrower nor either Guarantor shall
permit any  significant  change in its ownership,  executive staff or management
without the prior written consent of Lender. The ownership,  executive staff and
management  of  Borrower  and  Guarantors  are  material   factors  in  Lender's
willingness to institute and maintain a lending relationship with Borrower.

      V.15  DIVIDENDS, ETC.  Neither Borrower nor either Guarantor shall declare
or pay any  dividend of any kind,  in cash or in  property,  on any class of its
capital stock, nor purchase,  redeem,  retire or otherwise acquire for value any
shares of such stock,  nor make any distribution of any kind in respect thereof,
nor make any return of capital to shareholders, nor make any payments in respect
of any pension, profit sharing, retirement, stock option, stock bonus, incentive
compensation  or similar  plan  (except as  required  or  permitted  hereunder),
without the prior written consent of Lender. Without limiting the foregoing, not
less than seventy-five  percent (75%) of the net proceeds of any equity offering
by Borrower or either  Guarantor  shall be retained and shall not be paid out as
dividends or otherwise distributed to shareholders.

      V.16  GUARANTIES;  LOANS.  Neither  Borrower  nor either  Guarantor  shall
guarantee nor be liable in any manner, whether directly or indirectly, or become
contingently  liable  after the date of this  Agreement in  connection  with the
obligations or indebtedness of any person or persons, except for the indorsement
of  negotiable  instruments  payable to  Borrower or  Guarantors  for deposit or
collection  in the  ordinary  course of  business.  Neither  Borrower nor either
Guarantor  shall  make any loan,  advance or  extension  of credit to any person
other than in the normal course of its business.

      V.17  DEBT.  Neither Borrower nor either  Guarantor  shall create,  incur,
assume or suffer  to exist  indebtedness  of any  description  whatsoever  in an
aggregate amount in excess of $250,000 (excluding the indebtedness  evidenced by
the Note, trade accounts  payable and accrued expenses  incurred in the ordinary
course of business and the  indorsement  of  negotiable  instruments  payable to
Borrower or  Guarantors  for deposit or  collection  in the  ordinary  course of
business).

      V.18  CONDUCT OF BUSINESS.  Borrower   and   Guarantors   will continue to
engage, in an efficient and economical manner, in a business of the same general
type as conducted by them on the date of this Agreement.

      V.19  MAINTENANCE  OF  COLLATERAL.  Borrower  will  maintain  all tangible
personal  property  constituting  any part of the  collateral  described  in the
Security  Instruments  in good  condition  and repair and will pay all costs and
expenses  incurred in the  maintenance  of same,  and will not permit any act or
occurrence  that may impair the value  thereof.  Prior to the  occurrence  of an
Event of Default,  Borrower  shall be entitled to  possession  of such  tangible
collateral and to use same in any lawful manner  permitted  hereunder,  provided
that such use does not cause  excessive  wear and tear to such  collateral,  nor
cause it to decline in value at an excessive  rate, nor violate the terms of any
policy of insurance thereon.


                                       14
<PAGE>


      V.20  SALE OF  INVENTORY.  Borrower  will not  sell,  lease,  exchange  or
otherwise  dispose of any of that  portion of the  collateral  that  consists of
Inventory,  nor remove  the same from its  place(s)  of  business  as  described
herein,  without the prior  written  consent of Lender,  except in the  ordinary
course of business for cash or on open account or on terms of payment ordinarily
extended to its customers.  Upon the sale, exchange or other disposition of said
Inventory,  the  security  interest  and lien  created and  provided for herein,
without break in continuity and without further formality or act, shall continue
in and attach to any proceeds  thereof,  including  but not limited to accounts,
chattel paper, contract rights, shipping documents,  documents of title and cash
or non-cash  proceeds,  and in the event of any  unauthorized  sale,  shall also
continue in said  Inventory  itself.  All chattel  paper shall be  delivered  to
Lender promptly upon receipt.

      V.21  SPECIAL  AGREEMENTS  OF BORROWER WITH RESPECT TO RECEIVABLES AND
INVENTORY.

            (a)  By  the  execution  of  this  Agreement,  Lender  shall  not be
      obligated  to do or  perform  any of the  acts  or  things  to be  done or
      performed  by Borrower  pursuant to any  contracts  in which  Lender has a
      security interest, but Lender may, at its election, perform some or all of
      the  obligations  provided in said  contracts to be performed by Borrower,
      and if Lender  incurs any  liability or expenses by reason  thereof,  same
      shall be payable by Borrower upon demand and same shall also be secured by
      this Agreement and the other Loan Documents. Lender shall be subrogated to
      all guaranties  and security now or hereafter in Borrower's  possession or
      favor.

            (b) If requested by Lender  following the  occurrence of an Event of
      Default,  Borrower shall immediately  notify all account debtors to direct
      payments to Lender or to a lockbox in  accordance  with a Lockbox  Service
      Agreement  to be entered  into  between  Borrower  and Lender at  Lender's
      request.  Borrower will forthwith on receipt of all checks,  drafts,  cash
      and other  remittances  in payment  of  inventory  sold,  or in payment on
      account of  Borrower's  Receivables,  deposit  the same in a special  bank
      account  maintained  with  Lender  over  which  Lender  alone has power of
      withdrawal.  Said  proceeds  shall  be  deposited  in  precisely  the form
      received, except for the indorsement of Borrower where necessary to permit
      collection of items, which indorsement  Borrower agrees to make, and which
      Lender is also hereby  authorized  to make on Borrower's  behalf.  Pending
      such deposit,  Borrower agrees that it will not commingle any such checks,
      drafts,  cash or other  remittances  with any of Borrower's other funds or
      property, but will hold them separate and apart therefrom and in trust for
      Lender until deposit thereof is made in the special account.  The funds in
      said account and any funds  collected  by Lender  under a Lockbox  Service
      Agreement  shall be held by Lender as additional  security for the Secured
      Obligations.  Lender may on a daily  basis  apply the whole or any part of
      the collected funds on deposit in the special account and from the lockbox
      against the Secured Obligations,  and the amount, order and method of such
      application shall be in the discretion of Lender; provided,  however, that
      so long as no Event of Default (or event that with the giving of notice or
      the  passage of time or both would  constitute  an Event of  Default)  has
      occurred and is existing,  said  collected  funds will be applied first to
      the outstanding  principal balance of, and accrued and unpaid interest on,
      the Loan, in such order of priority as Lender shall determine. Any portion
      of said funds on deposit in the special  account and from the lockbox that
      Lender elects not to so apply may be paid over by Lender to Borrower.

            (c) Without  limiting the provisions of SUBSECTION  5.21(B)  hereof,
      Borrower acknowledges and agrees that, upon the occurrences of an Event of


                                       15
<PAGE>


      Default,  Lender  shall  have the  right to  notify  the  account  debtors
      obligated on any or all of Borrower's  Receivables to make payment thereof
      direct  to  Lender,  and to  take  control  of all  proceeds  of any  such
      Receivables,  and charge the  collection  costs and  expenses to Borrower.
      Until Lender gives Borrower other instructions, Borrower shall continue to
      make collections of all Receivables for Lender. All payments on account of
      Receivables,  or as proceeds of any collateral,  whether such payments are
      made by check,  draft,  cash,  money order,  wire transfer,  or otherwise,
      shall be the  specific  property of Lender.  Borrower  shall  receive such
      payments  as  trustee  for Lender and shall  immediately  deliver  them to
      Lender in their original form as received.

            (d) Lender shall be  privileged to enjoy all the rights and remedies
      of Borrower as to the  Receivables  and shall be and become  subrogated to
      all guaranties  and  securities  possessed by Borrower or due to come into
      Borrower's  hands,  but  Lender  shall  not be liable  in any  manner  for
      exercising or refusing to exercise any rights thereby bestowed.

            (e)  Borrower  shall  notify  Lender  promptly  of all  returns  and
      recoveries of merchandise  and of all disputes and claims where the amount
      at issue exceeds  $25,000 in the  aggregate,  and Borrower shall settle or
      adjust  disputes and claims  directly with  customers for amounts and upon
      terms it considers advisable and dispose of merchandise returns as it sees
      fit, unless Lender directs Borrower to make such settlements,  adjustments
      and  disposals  subject to  Lender's  approval.  In all cases  Lender will
      credit the Loan with only the net amounts  received by Borrower in payment
      of Receivables.

            (f) Borrower hereby appoints the officers of Lender and/or any other
      person whom Lender may  designate as Borrower's  attorney(s)-in-fact  with
      full power to endorse Borrower's name on any checks,  notes,  acceptances,
      money  orders,  drafts or other forms of payment or security that may come
      in Lender's possession;  to sign Borrower's name on any invoice or bill of
      lading  relating  to any  Receivable,  on  drafts  against  customers,  on
      schedules of assignments  of  Receivables,  on notices of  assignment,  on
      financing statements,  applications for noting of liens on certificates of
      title and other  public  records or  documents of any kind as necessary or
      desirable to insure  perfection  or  enforceability  of Lender's  security
      interests  in or  liens on  property  of  Borrower  granted  hereunder  or
      otherwise,  on  verification  of accounts and on notices to customers;  to
      notify the post office  authorities  to change the address for delivery of
      Borrower's mail to an address  designated by Lender; to receive,  open and
      dispose  of  all  mail  addressed  to  Borrower;   to  send  requests  for
      verifications of accounts to customers;  and to do all other things Lender
      deems necessary to carry out this Agreement.  Borrower hereby ratifies and
      approves  all  acts  of  the   attorney(s)  and  neither  Lender  nor  the
      attorney(s)  for  Lender  will be  liable  for any acts of  commission  or
      omission,  nor for any error of judgment  or mistake of fact or law.  This
      power, being coupled with an interest, is irrevocable so long as any money
      remains owing to Lender from Borrower.

            (g) Lender will be entitled to hold all sums at any time standing to
      Borrower's credit on Lender's books and all of Borrower's  property at any
      time in Lender's possession,  or upon or in which Lender at any time has a
      lien or security interest,  as security for all of Borrower's  obligations
      at  any  time  owing  to  Lender,  its  parent  corporation,   subsidiary,
      co-subsidiary  or  affiliate,  whether  such  obligations  are  direct  or
      indirect, absolute or contingent,  under this Agreement or otherwise. Such
      obligations shall include, without limitation, all loans, advances, debts,


                                       16
<PAGE>


      liabilities, obligations for purchases made by Borrower from other clients
      factored  or  financed  by  Lender  or from any such  parent,  subsidiary,
      co-subsidiary  or  affiliate,  whether  such  obligations  are absolute or
      contingent,  or under this  Agreement or otherwise,  no matter how or when
      arising  and  whether due or to become  due,  and  further  including  all
      interest,  fees,  charges,  expenses and  attorney's  fees  chargeable  to
      Borrower's  loan account or incurred in connection  with  Borrower's  loan
      account  whether  provided  for herein or in any other  agreement  between
      Borrower  and  Lender,  and  Lender  shall  have the  right to  charge  to
      Borrower's  loan account the amounts of all such  obligations and pay over
      such amounts to such parent, subsidiary, co-subsidiary or affiliate.

      V.22  PLACES OF  BUSINESS;  MOBILE  GOODS.  Borrower  will not  change the
location of its chief place of business,  chief executive office or any place of
business  disclosed to Lender pursuant to SECTION 4.5 hereof,  nor will Borrower
move any of the tangible personal property constituting a part of the collateral
for the Secured  Obligations to any other  location(s)  (except during temporary
periods in the normal and customary use thereof),  nor will Borrower  change the
location at which it maintains its records concerning the intangible  collateral
for the Secured  Obligations,  without thirty (30) days' prior written notice to
Lender in each  instance.  If any of the  tangible  collateral  for the  Secured
Obligations  constitutes  goods of a type  normally  used in more than one state
(whether or not  actually so used),  Borrower  will  contemporaneously  with the
execution  hereof furnish to Lender a list of all states in which such goods are
or will be used,  and  hereafter  will  notify  Lender in  writing  of any other
state(s) in which such goods are or will be so used.

      V.23 ERISA PLAN. If Borrower has in effect, or hereafter  institutes (with
Lender's consent,  as hereinafter  provided),  a pension plan that is subject to
the requirements of Title IV of the Employee  Retirement  Income Security Act of
1974, Pub. L. No. 93 406, September 2, 1974, 88 Stat. 829, 29 U.S.C.A.  ss. 1001
ET Seq.  (1975),  as amended  from time to time  ("ERISA"),  then the  following
warranty and covenants  shall be applicable  during such period as any such plan
(the "Plan") shall be in effect:  (a) Borrower hereby warrants that no fact that
might constitute grounds for the involuntary termination of the Plan, or for the
appointment  by the  appropriate  United States  District  Court of a trustee to
administer  the Plan,  exists at the time of  execution of this  Agreement,  (b)
Borrower hereby covenants that throughout the existence of the Plan,  Borrower's
contributions under the Plan will meet the minimum funding standards required by
ERISA and Borrower will not institute a distress  termination  of the Plan,  (c)
Borrower  hereby  covenants  that the  Plan's  annual  financial  and  actuarial
statements and the Plan's annual Form 5500 information return will be filed with
Lender  within  thirty (30) days of the  preparation  thereof,  and (d) Borrower
covenants that it will send to Lender a copy of any notice of a reportable event
(as defined in ERISA) required by ERISA to be filed with the Labor Department or
the Pension  Benefit  Guaranty  Corporation,  at the time that such notice is so
filed.

      No Plan shall be instituted by Borrower unless Lender shall have given its
written consent thereto.


                                   ARTICLE VI

                               FINANCIAL COVENANTS
                               -------------------

      VI.1 NET WORTH  REQUIREMENTS.  Borrower and Guarantors  shall at all times
maintain  a  minimum  tangible  net  worth  of  $12,000,000,   calculated  on  a
consolidated  basis.  For purposes of this covenant,  "tangible net worth" shall


                                       17
<PAGE>


refer to the excess of Borrower's and Guarantors'  total assets above the sum of
their  intangible  assets  plus  total   liabilities   (exclusive  of  any  debt
subordinated  to  indebtedness  of  Borrower  or  Guarantors  to  Lender),   all
determined  in  accordance  with  generally   accepted   accounting   principles
consistently applied.

      VI.2  DEBT TO WORTH  RATIO.  Borrower  and  Guarantors  shall at all times
maintain a ratio of total  liabilities  (exclusive of any debt  subordinated  to
indebtedness  of Borrower or  Guarantors to Lender) to tangible net worth of not
more than 2.0 to 1.0,  calculated on a consolidated  basis. For purposes of this
covenant,  "tangible  net worth" shall have the meaning set forth in SECTION 6.1
hereof.

      VI.3 INTEREST  COVERAGE  RATIO.  Borrower and Guarantors  shall maintain a
ratio of earnings before interest and taxes to interest expense,  all determined
in  accordance  with  generally  accepted  accounting  principles   consistently
applied,  calculated  on a  consolidated  basis  as of  the  last  day  of  each
September,  December, March and June, for the then-previous  twelve-month period
(beginning September 30, 1999), of not less than 4.0 to 1.0.


                                   ARTICLE VII

                              DEFAULT AND REMEDIES
                              --------------------

      VII.1 EVENTS OF DEFAULT.  The  occurrence  of any of the  following  shall
constitute an Event of Default hereunder:

            (a) Failure to make  payment of the  principal of or interest on the
      indebtedness evidenced by the Note within five (5) days of when due;

            (b) Any  misrepresentation by Borrower or either Guarantor as to any
      material  matter  hereunder or under any of the other Loan  Documents,  or
      delivery by  Borrower  or either  Guarantor  of any  schedule,  statement,
      resolution,  report,  certificate,  notice or  writing  to Lender  that is
      untrue in any material respect on the date as of which the facts set forth
      therein are stated or certified;

            (c) Failure  of  Borrower  or any  Guarantor  to perform  any of its
      obligations  under  SECTIONS  5.7,  5.9 or 5.12 of this  Agreement  within
      fifteen  (15) days after the earlier of (i) written  notice from Lender to
      Borrower of such  failure to perform,  or (ii) the date  Borrower  becomes
      aware of such failure to perform;

            (d) Failure of Borrower or either  Guarantor to perform any other of
      its  obligations  under  this  Agreement,  the Note,  any of the  Security
      Instruments or any of the other Loan Documents;

            (e)  Borrower or either  Guarantor  (i) shall  generally  not pay or
      shall be unable to pay its debts as such debts  become  due; or (ii) shall
      make an  assignment  for the benefit of  creditors or petition or apply to
      any court or tribunal  for the  appointment  of a  custodian,  receiver or
      trustee  for it or a  substantial  part  of its  assets;  or  (iii)  shall
      commence  any  proceeding  or case under any  bankruptcy,  reorganization,
      arrangement,  readjustment  of debt,  dissolution  or  liquidation  law or
      statute of any  jurisdiction,  whether now or hereafter in effect; or (iv)


                                       18
<PAGE>


      shall  have  had any  such  petition  or  application  filed  or any  such
      proceeding  or case  commenced  against it in which an order for relief is
      entered or an  adjudication or appointment is made; or (v) shall indicate,
      by any act or omission, its consent to, approval of or acquiescence in any
      such petition,  application,  case,  proceeding or order for relief or the
      appointment  of a custodian,  receiver or trustee for it or a  substantial
      part  of  its  assets;  or  (vi)  shall  suffer  any  such  custodianship,
      receivership  or  trusteeship  to  continue  undischarged  for a period of
      thirty (30) days or more;

            (f) Borrower or either  Guarantor  shall be  liquidated,  dissolved,
      partitioned  or  terminated,  or the charter or  certificate  of authority
      thereof shall expire or be revoked;

            (g) A default or event of default shall occur under any of the other
      Loan Documents;

            (h) Borrower or either Guarantor shall default in the timely payment
      or  performance  of any  obligation  now or  hereafter  owed to  Lender in
      connection with any other indebtedness of Borrower or either Guarantor now
      or hereafter owed to Lender;

            (i) Lender shall reasonably suspect the occurrence of one or more of
      the aforesaid events of default and Borrower,  upon the written request of
      Lender,  shall fail to provide evidence reasonably  satisfactory to Lender
      that such event or events of default have not in fact occurred; or

            (j) Lender in good faith shall deem itself insecure.

      VII.2 ACCELERATION OF MATURITY; REMEDIES. Upon the occurrence of any Event
of Default described in SUBSECTION 7.1(D) hereof as it relates to Borrower,  the
indebtednesses  evidenced by the Note as well as any and all other  indebtedness
of Borrower to Lender shall be immediately due and payable in full; and upon the
occurrence  of any other Event of Default  described  above  (including  but not
limited to SUBSECTION  7.1(D) hereof as it relates to any Guarantor),  Lender at
any  time  thereafter  may  at  its  option   accelerate  the  maturity  of  the
indebtednesses  evidenced by the Note as well as any and all other  indebtedness
of Borrower to Lender;  all without  notice of any kind.  Upon the occurrence of
any  such  Event  of  Default  and  the  acceleration  of  the  maturity  of the
indebtednesses evidenced by the Note:

            (a) any  obligation of Lender to advance any proceeds under the Loan
      shall immediately cease and be of no further force nor effect,  and Lender
      shall be immediately  entitled to exercise any and all rights and remedies
      possessed by Lender pursuant to the terms of the Security  Instruments and
      all of the other Loan Documents;

            (b) Lender  shall have all of the rights and  remedies  of a secured
      party under the Uniform Commercial Code; and

            (c) Lender  shall have any and all other  rights and  remedies  that
      Lender may now or hereafter possess at law, in equity or by statute.

      VII.3  RIGHT OF SETOFF.  Without  limitation  of the  foregoing,  upon the
occurrence and during the continuance of any Event of Default,  Lender is hereby
authorized  at any time and from time to time,  without  notice to  Borrower  or
Guarantors (any such notice being expressly  waived by Borrower and Guarantors),
to set off and apply any and all deposits  (general or special,  time or demand,
provisional or final) at any time held by Lender or any of its  affiliates,  and


                                       19
<PAGE>


any other  indebtedness  at any time owing by Lender or its affiliates to or for
the credit or the account of Borrower or Guarantors,  against any and all of the
Secured  Obligations,  irrespective of whether Lender shall have made any demand
under this  Agreement or the Note or any other Loan  Document and although  such
obligations may be unmatured. Lender agrees to notify Borrower or Guarantors (as
applicable)  within a  reasonable  time after any such  setoff and  application;
provided  that the failure to give such notice  shall not affect the validity of
such setoff and application.  The rights of Lender under this SECTION 7.3 are in
addition to any other rights and remedies (including,  without limitation, other
rights of setoff) that Lender may have.

      VII.4  REMEDIES CUMULATIVE; NO WAIVER. No right, power or remedy conferred
upon or reserved to Lender by this  Agreement or any of the other Loan Documents
is intended to be exclusive of any other  right,  power or remedy,  but each and
every such right,  power and remedy shall be cumulative and concurrent and shall
be in addition to any other right,  power and remedy given hereunder,  under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute.  No delay or omission by Lender to exercise any right,  power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such  right,  power or remedy or shall be  construed  to be a waiver of any such
Event of Default or an acquiescence  therein,  and every right, power and remedy
given by this  Agreement and the other Loan Documents to Lender may be exercised
from time to time and as often as may be deemed necessary by Lender.

      VII.5  PROCEEDS  OF  REMEDIES.  Any or all  proceeds  resulting  from  the
exercise of any or all of the foregoing  remedies  shall be applied as set forth
in the Loan Document(s)  providing the remedy or remedies exercised;  if none is
specified, or if the remedy is provided by this Agreement, then as follows:

            First, to the costs and expenses,  including  reasonable  attorney's
      fees and expenses,  incurred by Lender in connection  with the exercise of
      its remedies;

            Second, to the expenses of curing the default that has occurred,  in
      the event that Lender elects, in its sole discretion,  to cure the default
      that has occurred;

            Third, to the payment of the Secured Obligations,  including but not
      limited  to  the  payment  of  the   principal  of  and  interest  on  the
      indebtednesses  evidenced by the Note, in such order of priority as Lender
      shall determine in its sole discretion; and

            Fourth,  the  remainder,  if any, to Borrower or to any other person
      lawfully thereunto entitled.


                                  ARTICLE VIII

                                  MISCELLANEOUS
                                  -------------

      VIII.1  INDEPENDENCE OF COVENANTS.  All covenants hereunder shall be given
independent  effect so that if a particular action or condition is not permitted
by any of such  covenants,  the fact that it would be  permitted by an exception
to, or otherwise would be within the limitations of, another  covenant shall not
avoid the occurrence of an Event of Default if such action is taken or condition
exists.

      VIII.2  PERFORMANCE BY LENDER.


                                       20
<PAGE>


            (a)  Lender  may file one or more  financing  statements  disclosing
      Lender's  security  interests  under  this  Agreement  and the other  Loan
      Documents  without  the  signature  of  Borrower  appearing  thereon,  and
      Borrower shall pay the costs of, or incidental to, any recording or filing
      of any financing  statements  concerning the collateral security described
      in the Security Instruments.  Borrower agrees that a carbon, photographic,
      photostatic or other  reproduction of this Agreement or any other Security
      Instrument  or of a  financing  statement  is  sufficient  as a  financing
      statement.

            (b)  If  Borrower  or  Guarantors  shall  default  in  the  payment,
      performance  or  observance  of any  covenant,  term or  condition of this
      Agreement,  Lender may, at its option,  pay,  perform or observe the same,
      and all  payments  made  or  costs  or  expenses  incurred  by  Lender  in
      connection therewith  (including but not limited to reasonable  attorney's
      fees and expenses),  with interest thereon at the default rate provided in
      the Note (if none,  then at the maximum  rate from time to time allowed by
      applicable  law),  shall be  immediately  repaid to Lender by Borrower and
      Guarantors and shall  constitute a part of the Secured  Obligations and be
      secured  hereby until fully  repaid.  Lender  shall  determine at its sole
      discretion  the  necessity  for any such  actions and of the amounts to be
      paid.


      VIII.3 COSTS AND EXPENSES.  Borrower  agrees to pay all costs and expenses
incurred by Lender in connection with the making of the Loan,  including but not
limited to filing  fees,  recording  taxes and  reasonable  attorney's  fees and
expenses,  promptly upon demand of Lender.  Borrower  further  agrees to pay all
premiums for insurance  required to be  maintained  pursuant to the terms of the
Loan  Documents  and all of the  out-of-pocket  costs and  expenses  incurred by
Lender in connection with the administration, servicing and/or collection of the
Loan,  including  but not limited to  reasonable  attorney's  fees and expenses,
promptly upon demand of Lender.

      VIII.4  ASSIGNMENT.  The Note, this Agreement and the other Loan Documents
may be endorsed,  assigned and/or transferred in whole or in part by Lender, and
any such holder and/or assignee of the same shall succeed to and be possessed of
the rights and powers of Lender under all of the same to the extent  transferred
and  assigned.  Lender  may grant  participations  in all or any  portion of its
interest in the indebtednesses  evidenced by the Note. Borrower shall not assign
any of its rights nor delegate  any of its duties  hereunder or under any of the
other Loan Documents without the prior express written consent of Lender.

      VIII.5  SUCCESSORS  AND  ASSIGNS  INCLUDED  IN  PARTIES.  Subject  to  the
provisions of SECTION 8.4 hereof,  whenever in this Agreement one of the parties
hereto is named or referred to, the heirs,  legal  representatives,  successors,
successors-in-title  and  assigns of such  parties  shall be  included,  and all
covenants and agreements contained in this Agreement by or on behalf of Borrower
or by or on behalf  of  Lender  shall  bind and  inure to the  benefit  of their
respective  heirs,  legal  representatives,   successors-in-title  and  assigns,
whether so expressed or not.

      VIII.6  THIRD  PARTY  BENEFICIARIES.  This  Agreement  and the other  Loan
Documents are intended for the sole and exclusive  benefit of the parties hereto
and their respective  successors and permitted  assigns,  and shall not serve to
confer any rights or  benefits  in favor of any  person not a party  hereto.  No
other  person  shall have any right to rely on this  Agreement or the other Loan
Documents, or to derive any benefit herefrom.


                                       21
<PAGE>


      VIII.7 TIME OF THE  ESSENCE.  Time is of the essence  with respect to each
and  every  covenant,  agreement  and  obligation  of  Borrower  and  Guarantors
hereunder and under all of the other Loan Documents.

      VIII.8  SEVERABILITY.  If  any  provision(s)  of  this  Agreement  or  the
application   thereof  to  any  person  or  circumstance  shall  be  invalid  or
unenforceable to any extent, the remainder of this Agreement and the application
of such  provisions  to other  persons or  circumstances  shall not be  affected
thereby and shall be enforced to the greatest extent permitted by law.

      VIII.9  INTEREST  AND LOAN CHARGES NOT TO EXCEED  MAXIMUM  ALLOWED BY LAW.
Anything in this  Agreement,  the Note,  the Security  Instruments or any of the
other Loan Documents to the contrary  notwithstanding,  in no event  whatsoever,
whether by reason of  advancement of proceeds of the Loan,  acceleration  of the
maturity of the unpaid balance of the Loan or otherwise,  shall the interest and
loan charges agreed to be paid to Lender for the use of the money advanced or to
be advanced  hereunder exceed the maximum amounts  collectible  under applicable
laws in effect  from time to time.  It is  understood  and agreed by the parties
that,  if for  any  reason  whatsoever  the  interest  or loan  charges  paid or
contracted to be paid by Borrower in respect of the indebtednesses  evidenced by
the Note shall exceed the maximum amounts  collectible  under applicable laws in
effect from time to time,  then IPSO facto,  the obligation to pay such interest
and/or loan charges shall be reduced to the maximum  amounts  collectible  under
applicable laws in effect from time to time, and any amounts collected by Lender
that  exceed  such  maximum  amounts  shall be applied to the  reduction  of the
principal balance(s) of the indebtednesses evidenced by the Note and/or refunded
to  Borrower  so that at no time  shall the  interest  or loan  charges  paid or
payable  in  respect  of the  indebtednesses  evidenced  by the Note  exceed the
maximum amounts permitted from time to time by applicable law.

      VIII.10 ARTICLE AND SECTION HEADINGS;  DEFINED TERMS.  Numbered and titled
article and section  headings  and defined  terms are for  convenience  only and
shall not be construed as amplifying  or limiting any of the  provisions of this
Agreement.

      VIII.11 NOTICES.  Any and all notices,  elections or demands  permitted or
required  to be made  under  this  Agreement  shall be in  writing  and shall be
delivered  personally,  telecopied  or sent  by  certified  mail  or  nationally
recognized courier service (such as Federal Express),  to the other party at the
address set forth below,  or at such other address as may be supplied in writing
by the party  whose  address  is being  changed  and of which  receipt  has been
acknowledged in writing.  The date of personal  delivery or telecopy or the date
of mailing (or delivery to such courier  service),  as the case may be, shall be
the date of such notice, election or demand. For the purposes of this Agreement:

            The address of Lender is:

                  SouthTrust Bank, National Association
                  230 Fourth Avenue North
                  8th Floor
                  Nashville, Tennessee  37219
                  Attention: Marci Osesek
                  Telecopy Number: 615/880-4004

            with a copy to:


                                       22
<PAGE>


                  Bass, Berry & Sims PLC
                  2700 First American Center
                  Nashville, Tennessee  37238
                  Attention: Felix R. Dowsley, III
                  Telecopy Number:  615/742-2728

            The address of Borrower is:

                  American Micro Computer Center, Inc.
                  6073 N.W. 167th Street, Unit C-25
                  Miami, Florida 33015
                  Attention: Frank Cruz
                  Telecopy Number: 305/825-7774

            with a copy to:

                  Kirkpatrick & Lockhart LLP
                  Miami Center, 20th Floor
                  201 South Biscayne Boulevard
                  Miami, Florida 33131-2399
                  Attention: Clayton R. Parker, Esq.
                  Telecopy Number: 305/358-7095

            The addresses of Guarantors are:

                  European Micro Holdings, Inc.
                  6073 N.W. 167th Street, Unit C-25
                  Miami, Florida 33015
                  Attention: Frank Cruz
                  Telecopy Number: 305/825-7774

                  Nor'easter Micro, Inc.
                  803 Third Avenue North
                  Nashville, TN 37210
                  Attention: Jay Nash
                  Telecopy Number: 615/254-9318

      VIII.12  INTEGRATION.  This Agreement and the Loan  Documents  contain the
entire  agreement  between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto.

      VIII.13  INDEMNITY.  Borrower  and  Guarantors  hereby  agree  to  defend,
indemnify,  and hold  Lender  harmless  from  and  against  any and all  claims,
damages,   judgments,   penalties,  costs  and  expenses  (including  reasonable
attorney's  fees and expenses and court costs now or hereafter  arising from the
aforesaid  enforcement of this clause)  arising  directly or indirectly from the
activities of Borrower or Guarantors,  their predecessors in interests, or third
parties with whom they have a contractual  relationship,  or arising directly or
indirectly  from the  violation of any law,  whether such claims are asserted by
any  governmental  agency or any other person.  This indemnity shall survive the
termination of this Agreement.


                                       23
<PAGE>


      VIII.14 JURY TRIAL WAIVER.  BORROWER,  GUARANTORS  AND LENDER HEREBY WAIVE
TRIAL BY JURY IN ANY  ACTION,  PROCEEDING,  CLAIM OR  COUNTER-CLAIM,  WHETHER IN
CONTRACT IN TORT,  AT LAW OR IN EQUITY,  ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT OR THE LOAN DOCUMENTS.

      VIII.15  VENUE.  All actions or  proceedings in any way, manner or respect
arising out of or from or related to this Agreement shall be litigated in courts
having  situs within the City of  Nashville,  State of  Tennessee.  Borrower and
Guarantors hereby consent and submit to the jurisdiction of any local,  state or
federal courts located within said city and state.

      VIII.16  MISCELLANEOUS.  This  Agreement  shall be construed  and enforced
under  the  laws  of  the  State  of  Tennessee.  No  amendment,   modification,
termination or waiver of any provision of any Loan Document to which Borrower or
either  Guarantor is a party, nor consent to any departure by Borrower or either
Guarantor from  compliance  with the terms of any Loan Document to which it is a
party,  shall be  effective  unless the same  shall be in writing  and signed on
behalf of Lender by a duly authorized officer of Lender, and then such waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which given.

      IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement,  or
have caused this Agreement to be executed by their duly authorized officers,  as
of the day and year first above written.

                                     LENDER:

                                    SOUTHTRUST BANK, NATIONAL ASSOCIATION

                                    By:_____________________________
                                       Title:_______________________


                                    BORROWER:

                                    AMERICAN MICRO COMPUTER CENTER, INC.

                                    By:_____________________________
                                       Title:_______________________

                                   GUARANTORS:

                                    EUROPEAN MICRO HOLDINGS, INC.

                                    By:_____________________________
                                       Title:_______________________


                                    NOR'EASTER MICRO, INC.

                                    By:_____________________________
                                       Title:_______________________


                                       24