AMENDED AND RESTATED LOAN AGREEMENT

                          Dated as of November 21, 2000

AMERICAN MEDICAL ALERT CORP., a New York corporation, having its principal place
of business at 3265 Lawson Blvd.,  Oceanside,  New York 11572 (the  "Borrower"),
HCI  ACQUISITION  CORP., a New York  corporation,  having its principal place of
business  at  3265  Lawson  Blvd.,  Oceanside,   New  York  11572  ("HCI"  or  a
"Guarantor") and EUROPEAN AMERICAN BANK, a New York banking corporation,  having
an office at 1 EAB Plaza, Uniondale, New York 11555 (the "Bank") hereby agree as
follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         SECTION 1.01.  Certain Defined Terms.  As used in this  Agreement,  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

         "Accounts"  shall mean those accounts  arising out of the sale or lease
of goods or the rendition of services by the Borrower.

         "Account  Debtor" shall mean the Person who is obligated on or under an
Account.

         "Affiliate"  means,  as to any Person (i) a Person  which  directly  or
indirectly controls,  or is controlled by, or is under common control with, such
Person;  (ii) a Person which directly or indirectly  beneficially  owns or holds
five (5%)  percent or more of any class of voting stock of, or five (5%) percent
or more of the equity  interest  in,  such  Person;  or (iii) a Person five (5%)
percent or more of the voting stock of which, or five (5%) or more of the equity
interest of which, is directly or indirectly  beneficially owned or held by such
Person.  The term control means the possession,  directly or indirectly,  of the
power to direct or cause the  direction  of the  management  and  policies  of a
Person,  whether  through the ownership of voting  securities,  by contract,  or
otherwise.

         "Agreement" means this Amended and Restated Loan Agreement, as amended,
supplemented or modified from time to time.

                                      -1-

<PAGE>

         "Board  of  Governors"  means  the Board of  Governors  of the  Federal
Reserve System of the United States of America.

         "Borrowing  Base" means the sum of seventy five (75%) of the Borrower's
Eligible Accounts Receivable, plus (ii) the lesser of (x) fifty (50%) percent of
the Borrower's Eligible Inventory or (y) $800,000.00.

         "Business  Day" means (i) a day other than a Saturday,  Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close and (ii) if the relevant day relates to a Eurodollar  Loan, an Interest
Period,  or notice with respect to a Eurodollar Loan, a day on which dealings in
Dollar deposits are carried on in the London interbank market.

         "Capital Base" means the Borrower's (i) shareholder's  equity plus (ii)
Subordinated  Debt minus (iii)  intangible  assets  (including  amounts due from
officers or Affiliates of the Borrower).

         "Capital  Lease"  means  a  lease  which  has  been or  should  be,  in
accordance with GAAP, capitalized on the books of the lessee.

         "Collateral" means all property which is subject or is to be subject to
the Lien granted by the Security Agreement.

         "Commitment" means the Bank's obligation to make Revolving Credit Loans
and Term Loans to the  Borrower  pursuant  to the terms and  conditions  of this
Agreement.

         "Current  Assets" means,  as to any Person,  at any date, the aggregate
amount of all  assets of such  Person  which  would be  properly  classified  as
current  assets at such date,  but excluding  deferred  assets,  all computed in
accordance with GAAP.

         "Current  Liabilities" means, as to any Person, the aggregate amount of
all liabilities of such Person  (including tax and other proper  accruals) which
would be properly classified as current  liabilities,  including the outstanding
principal amount of the Notes, all computed in accordance with GAAP.

                                      -2-
<PAGE>


         "Debt" means,  as to any Person,  (i) all  indebtedness or liability of
such  Person  for  borrowed  money;  (ii)  indebtedness  of such  Person for the
deferred purchase price of property or services  (including trade  obligations);
(iii) obligations of such Person as a lessee under Capital Leases;  (iv) current
liabilities  of such Person in respect of  unfunded  vested  benefits  under any
Plan;  (v)  obligations  of such Person under  letters of credit  issued for the
account of such Person; (vi) obligations of such Person arising under acceptance
facilities;  (vii) all  guaranties,  endorsements  (other than for collection or
deposit in the ordinary course of business) and other contingent  obligations to
purchase,  to provide funds for payment,  to supply funds to invest in any other
Person,  or  otherwise to assure a creditor  against  loss;  (viii)  obligations
secured  by any  Lien on  property  owned  by  such  Person  whether  or not the
obligations have been assumed;  and (ix) all other liabilities recorded as such,
or which should be recorded as such,  on such Person's  financial  statements in
accordance with GAAP.

         "Default"  means any of the events  specified  in Section  6.01 of this
Agreement,  whether  or not any  requirement  for notice or lapse of time or any
other condition has been satisfied.

         "Dollars"  and the sign "$" mean lawful  money of the United  States of
America.

         "Eligible Accounts Receivable" means Accounts which are due and payable
within  ninety (90) days (120 days in the case of  Accounts  which are due under
the  Borrower's  contract with NYCHRA) from the original date of invoice and are
satisfactory  to the  Bank in its  sole,  reasonable  credit  judgment  based on
information available to the Bank. References to percentages of all Accounts are
based on dollar amount of Accounts, and not number of Accounts.

         "Eligible Inventory" shall mean all unencumbered  inventory of finished
goods (which shall include  medical devices held for lease) from time to time on
hand satisfactory to the Bank in its sole, reasonable discretion,  valued at the
lower of (a) cost, (b) market value,  or (c) the valuation  consistent with that
employed in the preparation of the financial statements of the Borrower referred
to in Section 5.01(b) hereof.  The total amount of Eligible  Inventory shall not
at any time exceed $800,000.00.

                                      -3-
<PAGE>

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended  from  time to time,  the  regulations  promulgated  thereunder  and the
published interpretations thereof as in effect from time to time.

         "ERISA   Affiliate"  means  any  trade  or  business  (whether  or  not
incorporated)  which together with any other Person would be treated,  with such
Person, as a single employer under Section 4001 of ERISA.

         "Eurocurrency Reserve Requirement means, with respect to the LIBOR Rate
for an Interest Period, the aggregate (without duplication) daily average of the
rates  (expressed as a decimal  fraction) of reserve  requirements  in effect on
such day  (including,  without  limitation,  basic,  marginal,  supplemental  or
emergency  reserves) under any regulation  (including,  but without  limitation,
Regulation D) promulgated by the Board of Governors (or any successor thereto or
other  governmental  authority  having  jurisdiction  over the Bank) by the Bank
against  "Eurocurrency  liabilities" (as such term is used in Regulation D), but
without  benefit  or credit for  proration,  exemptions  or  offsets  that might
otherwise be available to the Bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by the Bank against (1) any
category of liabilities  that includes  deposits by reference to which the LIBOR
Rate is to be  determined;  or (2) any  category of extension of credit or other
assets that include loans bearing a LIBOR Rate. As of the date of this Agreement
there are no Eurocurrency Reserve Requirements in effect.

         "Eurodollar  Loan" means a Loan  bearing  interest at an interest  rate
determined with reference to the LIBOR Rate in accordance with the provisions of
Article II hereof.

         "Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.

         "Fixed Rate" means an annual rate of interest  equal to 1.75% in excess
of the Bank's cost of funds  (determined by the Bank in its sole discretion) for
a period  equal to the  period of a Term Loan,  determined  by the Bank to be in
effect two (2) days prior to the date of such Term Loan.

                                      -4-
<PAGE>


         "Fixed Rate Loan" means a Term Loan bearing interest at a Fixed Rate in
accordance with the provisions of Article II hereof.

         "GAAP" means Generally Accepted Accounting Principles.

         "Generally  Accepted  Accounting   Principles"  means  those  generally
accepted accounting principles and practices which are recognized as such by the
American  Institute of Certified Public Accountants acting through the Financial
Accounting  Standards  Board  ("FASB") or through  other  appropriate  boards or
committees  thereof and which are consistently  applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting  principle or practice  required to be changed by the
FASB (or other  appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting  principle or practice may be so changed. Any
dispute or  disagreement  between  the  Borrower  and the Bank  relating  to the
determination of Generally Accepted Accounting  Principles shall, in the absence
of manifest  error,  be  conclusively  resolved for all  purposes  hereof by the
written opinion with respect thereto,  delivered to the Bank, of the independent
accountants selected by the Borrower and approved by the Bank for the purpose of
auditing the periodic financial statements of the Borrower.

         "Guarantor" or  "Guarantors"  means each of, or both of, as the context
requires, those Guarantors named in the preamble to this Agreement and any other
Person  required to guarantee the obligations of the Borrower in accordance with
Section 5.01(l) of this Agreement.

         "Guaranty" or  "Guaranties"  means the guaranty or guaranties  executed
and delivered by the Guarantors  pursuant to Section 3.01(h) and 5.01(l) of this
Agreement.

         "Hazardous   Materials"   includes,   without   limit,   any  flammable
explosives,   radioactive  materials,  hazardous  materials,  hazardous  wastes,
hazardous or toxic substances, or related materials defined in the Comprehensive
Environmental Response,  Compensation, and Liability Act of 1980, as amended (42

                                      -5-
<PAGE>


U.S.C.  Sections 9601, et seq.), the Hazardous Materials  Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, as amended  (42 U.S.C.  Sections  9601 et.  seq.),  and in the  regulations
adopted and publications  promulgated  pursuant  thereto,  or any other federal,
state or local environmental law, ordinance, rule or regulation.

         "Interest Determination Date" means the date on which a Prime Rate Loan
is  converted to a Eurodollar  Loan and, in the case of a Eurodollar  Loan,  the
last day of the applicable Interest Period.

         "Interest Payment Date" means (i) as to each Eurodollar Loan, the first
Business Day of each month during the  applicable  Interest  Period and the last
day of each Interest Period, (ii) as to each Prime Rate Loan, the first Business
Day of each month,  and (iii) as to each Fixed Rate Loan, the first Business Day
of each month.

         "Interest   Period"  means  as  to  any  Eurodollar  Loan,  the  period
commencing  on the date of such  Eurodollar  Loan and ending on the  numerically
corresponding  day in the  calendar  month  that is  one,  two or  three  months
thereafter,  as  the  Borrower  may  elect  (or,  if  there  is  no  numerically
corresponding day, on the last Business Day of such month);  provided,  however,
(i) that no Interest  Period shall end later than the Maturity Date, (ii) if any
Interest  Period  would end on a day which  shall not be a  Business  Day,  such
Interest  Period  shall be extended to the next  succeeding  Business Day unless
such next  succeeding  Business Day would fall in the next  calendar  month,  in
which case such Interest  Period shall end on the next  preceding  Business Day,
(iii)  interest  shall accrue from and  including the first day of such Interest
Period  to but  excluding  the date of  payment  of such  interest,  and (iv) no
Interest  Period of  particular  duration may be selected by the Borrower if the
Bank determines, in its sole, good faith discretion,  that Eurodollar Loans with
such maturities are not generally available.

         "Investment" means any stock, evidence of Debt or other security of any
Person,  any loan,  advance,  contribution  of capital,  extension  of credit or
commitment therefor,  including without limitation the guaranty of loans made to
others (except for current trade and customer  accounts  receivable for services

                                      -6-
<PAGE>


rendered in the  ordinary  course of business  and  payable in  accordance  with
customary  trade terms in the ordinary  course of business)  and any purchase of
(i) any security of another  Person or (ii) any business or  undertaking  of any
Person  or any  commitment  or option  to make any such  purchase,  or any other
investment.

         "LIBOR Rate" means the rate per annum  identified as the LIBOR Rate for
a requested  Interest Period as published on page 3750 of the Dow Jones Telerate
service.

         "Lien" means any mortgage,  deed of trust,  pledge,  security interest,
hypothecation,  assignment, deposit arrangement, encumbrance, lien (statutory or
other),  or preference,  priority,  or other security  agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing,  and  the  filing  of  any  financing  statement  under  the  Uniform
Commercial  Code or comparable  law of any  jurisdiction  to evidence any of the
foregoing.

         "Loan" or Loans" means the Term Loans and the Revolving Credit Loans or
any or all of the same as the context may require and includes  Prime Rate Loans
and Eurodollar Loans, as the context may require.

         "Loan Documents" means this Agreement,  the Notes, the Guaranties,  the
Security  Agreements  and any other document  executed or delivered  pursuant to
this Agreement.

         "Material  Adverse  Change"  means,  as to any  Person,  (i) a material
adverse change in the financial condition, business,  operations,  properties or
results of operations of such Person or (ii) any event or occurrence which could
have a material  adverse  effect on the  ability of such  Person to perform  its
obligations under the Loan Documents.

         "Maturity Date" means May 31, 2002.

         "Multiemployer  Plan" means a Plan  described in Section  4001(a)(3) of
ERISA which covers employees of the Borrower or any ERISA Affiliate.

                                      -7-
<PAGE>


         "Note" or "Notes" means the Term Loan Notes,  the Revolving Credit Note
or any or all of the same as the context may require.

         "PBGC" means the Pension  Benefit  Guaranty  Corporation  or any entity
succeeding to any or all of its functions under ERISA.

         "Permitted  Investments"  means,  (i) direct  obligations of the United
States of America or any governmental agency thereof, or obligations  guaranteed
by the United States of America,  provided that such  obligations  mature within
one year from the date of acquisition thereof; (ii) time certificates of deposit
having a maturity of one year or less issued by any  commercial  bank  organized
and existing under the laws of the United States or any state thereof and having
aggregate capital and surplus in excess of $1,000,000,000.00; (iii) money market
mutual funds having assets in excess of  $2,500,000,000;  (iv) commercial  paper
rated not less than P-1 or A-1 or their equivalent by Moody's Investor Services,
Inc.  or  Standard  &  Poor's  Corporation,  respectively;  or  (v)  tax  exempt
securities rated Prime 2 or better by Moody's Investor Services,  Inc. or A-1 or
better by Standard & Poor's Corporation.

         "Person" means an  individual,  partnership,  corporation  (including a
business trust), joint stock company, trust, unincorporated  association,  joint
venture or other entity or a federal, state or local government,  or a political
subdivision thereof or any agency of such government or subdivision.

         "Plan" means any employee benefit plan established,  maintained,  or to
which contributions have been made by the Borrower or any ERISA Affiliate.

         "Prime Rate" means the fluctuating  rate per annum equal to the rate of
interest  publicly  announced by the Bank at its  principal  office from time to
time as its Prime  Rate,  each change in the Prime Rate to be  effective  on the
date such change is announced to be effective.

         "Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Internal  Revenue Code of 1986,  as amended from
time to time.

                                      -8-
<PAGE>


         "Regulation  D" means  Regulation D of the Board of  Governors,  as the
same may be amended and in effect from time to time.

         "Regulation  G" means  Regulation G of the Board of  Governors,  as the
same may be amended and in effect from time to time.

         "Regulation  T" means  Regulation T of the Board of  Governors,  as the
same may be amended and in effect from time to time.

         "Regulation  U" means  Regulation U of the Board of  Governors,  as the
same may be amended and in effect from time to time.

         "Regulation  X" means  Regulation X of the Board of  Governors,  as the
         same may be amended and in effect from time to time. "Reportable Event"
         means any of the events set forth in Section 4043 of ERISA.

         "Revolving  Credit Loans" shall have the meaning  assigned to such term
in Section 2.01 of this Agreement.

         "Revolving Credit Note" means a promissory note of the Borrower payable
to the order of the Bank, in substantially the form of Exhibit A annexed hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank resulting from
Revolving  Credit  Loans  made by the  Bank  to the  Borrower  pursuant  to this
Agreement.

         "Safe Com" means,  Safe Com,  Inc.,  a wholly owned  Subsidiary  of the
Borrower.

         "Security  Agreement"  means the security  agreement to be executed and
delivered pursuant to Section 3.01(e) of this Agreement.

         "Subordinated  Debt" means Debt of any Person,  the  repayment of which
the obligee has agreed in writing, on terms which have been approved by the Bank
in advance in writing, shall be subordinate and junior to the rights of the Bank
with respect to Debt owing from such Person to the Bank.

                                      -9-
<PAGE>


         "Subsidiary"  means, as to any Person, any corporation,  partnership or
joint venture whether now existing or hereafter organized or acquired (i) in the
case of a  corporation,  of which a majority of the securities  having  ordinary
voting power for the election of directors  (other than  securities  having such
power only by reason of the happening of a contingency) are at the time owned by
such Person and/or one or more  Subsidiaries  of such Person or (ii) in the case
of a partnership  or joint  venture,  of which a majority of the  partnership or
other  ownership  interests  are at the time owned by such Person  and/or one or
more Subsidiaries of such Person.

         "Term Loan" shall have the meaning assigned in Section 2.08 hereof.

         "Term Loan  Maturity  Date" shall have the meaning  assigned in Section
2.07 hereof.

         "Term Loan Note" means a promissory note of the Borrower payable to the
order of the Bank,  in  substantially  the form of  Exhibit  B  annexed  hereto,
evidencing the  indebtedness of the Borrower to the Bank resulting from the Term
Loan made by the Bank to the Borrower pursuant to the Agreement.

         "Total  Liabilities" means, as to any Person, all of the liabilities of
such  Person,  including  all items  which,  in  accordance  with GAAP  would be
included on the liability  side of the balance sheet (other than capital  stock,
treasury stock,  capital surplus and retained  earnings)  computed in accordance
with GAAP.

         "Total Unsubordinated  Liabilities" means, as to any Person, the excess
of (i) such Person's  Total  Liabilities  over (ii) such  Person's  Subordinated
Debt.

         SECTION 1.02.  Computation  of Time Periods.  In this  Agreement in the
computation of periods of time from a specified date to a later  specified date,
the word "from" means "from and  including"  and the words "to" and "until" each
means "to and including".

                                      -10-
<PAGE>


         SECTION 1.03. Accounting Terms. Except as otherwise herein specifically
provided,  each  accounting  term used herein shall have the meaning given to it
under GAAP.

                                   ARTICLE II

                          AMOUNT AND TERMS OF THE LOANS

         SECTION 2.01. The Revolving Credit Loans. The Bank agrees,  on the date
of this Agreement, on the terms and conditions of this Agreement and in reliance
upon the representations and warranties set forth in this Agreement,  to lend to
the Borrower prior to the Maturity Date such amounts as the Borrower may request
from time to time (individually,  a "Revolving Credit Loan" or collectively, the
"Revolving Credit Loans"), which amounts may be borrowed, repaid and reborrowed,
provided,  however,  that the aggregate  amount of such  Revolving  Credit Loans
outstanding  at any one time shall not exceed the lesser of (i) Two Million Five
Hundred  Thousand  ($2,500,000.00)  Dollars,  or (ii) the  Borrowing  Base  (the
"Commitment"),  or  such  lesser  amount  of the  Commitment  as may be  reduced
pursuant to Section 2.19 hereof.

         Each  Revolving  Credit Loan shall be a Prime Rate Loan or a Eurodollar
Loan as the Borrower may request subject to and in accordance with Section 2.02.
The Bank may at its option make any Eurodollar  Loan by causing a foreign branch
or affiliate to make such Loan,  provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance  with
the terms of the Revolving Credit Note.  Subject to the other provisions of this
Agreement,  Revolving  Credit Loans of more than one type may be  outstanding at
the same time.

         SECTION 2.02.  Notice of Revolving Credit Loans. (a) The Borrower shall
give the Bank irrevocable written,  telex,  telephonic (immediately confirmed in
writing) or facsimile  notice (i) at least two (2)  Business  Days prior to each
Revolving  Credit Loan  comprised in whole or in part of one or more  Eurodollar
Loans  (subject to Section  2.21 hereof) and (ii) prior to 11:00 a.m. on the day
of each  Revolving  Credit  Loan  consisting  solely of a Prime Rate Loan.  If a
notice of borrowing is received by the Bank after 11:00 a.m. on a Business  Day,
such notice shall be deemed to have been given on the next  succeeding  Business
Day.

                                      -11-
<PAGE>

         (b) Each notice given  pursuant to this Section 2.02 shall  specify the
date of such  borrowing,  the amount  thereof and  whether  such Loan is to be a
Prime Rate Loan or a Eurodollar Loan and, if such Loan or any portion thereof is
to consist of one or more Eurodollar  Loans,  the principal  amounts thereof and
Interest Period or Interest Periods with respect thereto. If no election as to a
type of Loan is specified in such  notice,  such Loan (or portion  thereof as to
which no election is specified) shall be a Prime Rate Loan. If no election as to
the Interest  Period is specified in such notice with respect to any  Eurodollar
Loan,  the Borrower  shall be deemed to have selected an Interest  Period of one
month's  duration and if a Eurodollar  Loan is requested when such Loans are not
available, the Borrower shall be deemed to have requested a Prime Rate Loan.

         (c) The Borrower shall have the right, on such notice to the Bank as is
required  pursuant to (a) above,  (x) to  continue  any  Eurodollar  Loan into a
subsequent  Interest Period (subject to availability) and (y) to convert a Prime
Rate Loan into a  Eurodollar  Loan  (subject  to  availability)  subject  to the
following:

                           (i) if a Default  or an Event of  Default  shall have
                  occurred  and be  continuing  at  the  time  of  any  proposed
                  conversion  or  continuation  only Prime  Rate Loans  shall be
                  available;

                           (ii) in the case of a  continuation  or conversion of
                  fewer than all Loans,  the aggregate  principal amount of each
                  Eurodollar  Loan  continued  or into which a Loan is converted
                  shall be in the minimum  principal amount of $10,000.00 and in
                  increased integral multiples of $10,000.00;

                           (iii)  each   continuation  or  conversion  shall  be
                  effected by each Bank applying the proceeds of the new Loan to
                  the Loan (or portion thereof) being continued or converted;

                           (iv)  if  the  new  Loan   made  as  a  result  of  a
                  continuation  or conversion  shall be a Eurodollar  Loan,  the
                  first Interest  Period with respect  thereto shall commence on
                  the date of continuation or conversion;

                                      -12-
<PAGE>


                           (v) each  request for a  Eurodollar  Loan which shall
                  fail to state an applicable Interest Period shall be deemed to
                  be a request  for an Interest  Period of one month's  duration
                  and each  request for a  Eurodollar  Loan made when such Loans
                  are not available  shall be deemed to be a request for a Prime
                  Rate Loan;

                           (vi) in the event  that the  Borrower  shall not give
                  notice to continue a Eurodollar Loan as provided  above,  such
                  Loan shall  automatically  be converted into a Prime Rate Loan
                  at the expiration of the then current Interest Period.

         SECTION 2.03.  Revolving  Credit Note. Each Revolving Credit Loan shall
be in the  minimum  principal  amount of  $10,000.00,  and in minimum  multiples
$10,000.00 thereafter.  The Revolving Credit Note shall be dated the date hereof
and be in the principal  amount of Two Million Five Hundred  Thousand and 00/100
($2,500,000.00)  Dollars,  and shall mature on the Maturity  Date, at which time
the entire  outstanding  principal balance and all interest thereon shall be due
and  payable.  The  Revolving  Credit Note shall be entitled to the benefits and
subject to the provisions of this Agreement.

         At the time of the making of each Revolving Credit Loan and at the time
of each payment of principal thereon, the holder of the Revolving Credit Note is
hereby  authorized by the Borrower to make a notation on the schedule annexed to
the  Revolving  Credit  Note of the date and amount,  and the type and  Interest
Period of the Revolving  Credit Loan or payment,  as the case may be. Failure to
make a notation  with  respect to any  Revolving  Credit Loan shall not limit or
otherwise affect the obligation of the Borrower hereunder or under the Revolving
Credit  Note with  respect to such  Revolving  Credit  Loan,  and any payment of
principal on the Revolving  Credit Note by the Borrower shall not be affected by
the failure to make a notation thereof on said schedule.

         SECTION 2.04.  Payment of Interest on the Revolving Credit Note. (a) In
the case of a Prime  Rate  Loan,  interest  shall be payable at a rate per annum
equal to the Prime Rate. Such interest shall be payable on each Interest Payment
Date,  commencing  with the first  Interest  Payment Date after the date of such

                                      -13-
<PAGE>

Prime Rate Loan and on the Revolving  Credit  Maturity  Date.  Any change in the
rate of interest on the Revolving Credit Notes due to a change in the Prime Rate
shall take effect as of the date of such change in the Prime Rate.

         (b) In the case of a Eurodollar  Loan,  interest  shall be payable at a
rate per annum  equal to the LIBOR Rate plus two and one half (2 1/2%)  percent.
Such interest shall be payable on each Interest  Payment Date,  commencing  with
the first Interest  Payment Date after the date of such  Eurodollar  Loan and on
the Maturity Date. In the event Eurodollar  Loans are available,  the Bank shall
determine the rate of interest applicable to each requested  Eurodollar Loan for
each  Interest  Period  at  11:00  a.m.,  New  York  City  time,  or as  soon as
practicable thereafter,  two (2) Business Days prior to the commencement of such
Interest  Period and shall use its best  efforts to notify the  Borrower  of the
rate of interest so determined.  Such  determination  shall be conclusive absent
manifest error.

         SECTION  2.05.  The Term  Loans.  The Bank  agrees,  on the  terms  and
conditions  of this  Agreement  and in  reliance  upon the  representations  and
warranties  set forth in this  Agreement,  to make Term Loans to the Borrower in
the aggregate principal amount of up to Two Million ($2,000,000.00) Dollars, and
the  Borrower  agrees to  borrow  such  amount  from the Bank by  executing  and
delivering to the Bank the Term Loan Notes. The Term Loans, or portions thereof,
shall be Prime  Rate  Loans or Fixed  Rate  Loans as the  Borrower  may  request
subject to and in accordance with Section 2.06 hereof.

         SECTION 2.06. Notice of Term Loan Designations.  (a) The Borrower shall
give the Bank irrevocable written,  telex,  telephonic (immediately confirmed in
writing) or facsimile  notice (i) at least two (2)  Business  Days prior to each
Term Loan  bearing  interest at the Fixed Rate,  and (ii) prior to 11:00 a.m. on
the day of each Term Loan consisting solely of a Prime Rate Loan. If a notice of
borrowing  is  received by the Bank after  11:00 a.m.  on a Business  Day,  such
notice shall be deemed to have been given on the next succeeding Business Day.

         (b) Each notice given  pursuant to this Section 2.06 shall  specify the
date of such  borrowing and the amount  thereof and whether such Loan is to be a
Prime  Rate Loan or a Fixed Rate Loan.  If no  election  as to a type of Loan is
specified in such notice,  such Loan (or portion thereof as to which no election
is specified) shall be a Prime Rate Loan.

                                      -14-
<PAGE>


         SECTION 2.07.  Term Loan Notes.  Each Term Loan shall be evidenced by a
Term Loan Note of the  Borrower.  Each Term Loan Note shall be dated the date of
each Term Loan and shall  mature  sixty (60)  months  from the date of such Term
Loan (each,  a "Term Loan  Maturity  Date").  At the end of such term the entire
outstanding  principal  balance of such Term Loan Note and all interest  thereon
shall be due and payable.  Each Term Loan Note shall be entitled to the benefits
and subject to the provisions of this Agreement.

         SECTION  2.08.  Repayment  of Term Loan Notes.  (a) In the event that a
Term Loan is bearing  interest at the Prime Rate, the principal  balance thereof
shall be payable in sixty (60) equal monthly installments of principal, each due
on the first  Business  Day of each month  beginning on the first such day after
the date of such Term Loan and  continuing  on the  first  Business  Day of each
calendar month thereafter, calculated on a straight line amortization basis. The
final such monthly principal installment shall be in an amount equal to the then
outstanding principal balance of such Term Loan Note.

                  (b) In the event that a Term Loan is bearing  interest  at the
Fixed Rate,  the balance  thereof  shall be payable in sixty (60) equal  monthly
installments  of principal and interest,  each due on the first  Business Day of
each month  beginning on the first such day after the date of such Term Loan and
continuing  on  the  first  Business  Day of  each  calendar  month  thereafter,
calculated on a the basis of a 5 year, mortgage style amortization schedule. The
final such monthly principal installment shall be in an amount equal to the then
outstanding principal balance of such Term Loan Note.

         SECTION 2.09.  Payment of Interest on the Term Loan Notes.

                  (a) In the  case of a  Prime  Rate  Loan,  interest  shall  be
payable at a rate per annum  (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Prime Rate. Such interest shall be
payable  on each  Interest  Payment  Date,  commencing  with the first  Interest
Payment  Date  after  the date of such  Prime  Rate  Loan and on each  Term Loan
Maturity  Date. Any change in the rate of interest on each Term Loan Note due to
a change in the Prime Rate shall  take  effect as of the date of such  change in
the Prime Rate.

                                      -15-
<PAGE>

                  (b) In the  case of a  Fixed  Rate  Loan,  interest  shall  be
payable at a rate per annum  (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Fixed Rate. Such interest shall be
payable  on each  Interest  Payment  Date,  commencing  with the first  Interest
Payment  Date  after  the date of such  Fixed  Rate  Loan and on each  Term Loan
Maturity Date.

         SECTION 2.10.  Intentionally Omitted.

         SECTION 2.11.  Use of Proceeds.  The proceeds of the  Revolving  Credit
Loans  shall be used by the  Borrower  for  working  capital  and to finance the
purchase of certain  assets of Harriet  Campbell,  Inc., and the proceeds of the
Term Loans shall be used by the  Borrower  exclusively  to finance up to seventy
five (75%) percent of the cost of equipment placed into service.  No part of the
proceeds of any Loan may be used for any  purpose  that  directly or  indirectly
violates or is inconsistent with, the provisions of Regulations G, T, U or X.

         SECTION 2.12.  Facility Fee.  The Borrower agrees to pay to the Bank:

                  (a) a Facility Fee for the Term Loan equal to  $10,000.00,  of
which  $5,000.00  shall be payable on the date hereof,  and  $5,000.00  shall be
payable on the first anniversary of the date hereof; and

                  (b) a Facility  Fee for the  Revolving  Credit  Loans equal to
$6,250.00, which shall be payable on the date hereof.

         SECTION 2.13. Reduction of Commitment. Upon at least three (3) Business
Days'  written  notice,  the Borrower may  irrevocably  elect to have the unused
Commitment  terminated in whole or reduced in part provided,  however,  that any
such  partial  reduction  shall be in a minimum  amount of One Hundred  Thousand
($100,000.00)  Dollars,  or  whole  multiples  thereof.  The  Commitment,   once
terminated  or reduced,  shall not be  reinstated  without  the express  written
approval of the Bank.

                                      -16-
<PAGE>


         SECTION 2.14. Prepayment.  (a) The Borrower shall have the right at any
time and from time to time to prepay any Prime  Rate Loan,  in whole or in part,
without premium or penalty on the same day on which  telephonic  notice is given
to the Bank  (immediately  confirmed  in writing) of such  prepayment  provided,
however, that each such prepayment shall be on a Business Day and shall be in an
aggregate principal amount which is an integral multiple of $10,000.00.

         (b) The  Borrower  shall  have the  right at any time and from  time to
time,  subject to the  provisions of this  Agreement,  to prepay any  Eurodollar
Loan, in whole or in part, on three (3) Business Days' prior irrevocable written
notice to the Bank, provided,  however, that such prepayment may only be made on
an Interest Determination Date.

         (c) The  Borrower  shall  have the  right at any time and from  time to
time, subject to the provisions of this Agreement, to prepay any Fixed Rate Loan
in whole or in part at any time in a minimum amount of Ten Thousand ($10,000.00)
Dollars and whole  multiples  thereof,  in each case upon at least ten (10) days
notice.  Any such written  notice shall be  irrevocable  and shall  obligate the
Borrower  to make  such  prepayment  on the date  noticed  for  prepayment.  All
prepayments  shall be  accompanied  by  interest  accrued on the amount  prepaid
through the date of prepayment (the  "Prepayment  Date").  If prepayment  occurs
during the 90 day period  preceding  the Term Loan  Maturity Date of a Term Loan
Note, such Term Loan may be prepaid without penalty. If prepayment occurs at any
other time, the Borrower shall pay to the Bank as a condition to such prepayment
a prepayment premium,  as liquidated damages and not as a penalty,  equal to the
present value (using the Treasury Rate, as hereinafter  defined, for purposes of
discounting) of: (i) the difference,  if positive,  between the interest rate on
the Term Loan Note being  prepaid and the yield on the  Prepayment  Date on U.S.
Treasury  Securities  (the  "Treasury  Rate") as  published  in the Wall  Street
Journal with the closest  matching  maturity to the Term Loan  Maturity  Date of
such Note, multiplied by (ii) the total amount of principal prepaid,  divided by
(iii) 360 and multiplied by (iv) the actual number of days remaining  until such
Term Loan Maturity Date. In addition,  all  prepayments  shall be accompanied by
any and all additional  administrative costs incurred by the Bank (as determined
by the  Bank  in its  sole  discretion)  as a  result  of such  prepayment.  All
prepayments shall be applied in inverse order of maturity.


                                       -17-
<PAGE>


         (d) The notice of  prepayment  under this  Section 2.14 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be  irrevocable  and shall commit the Borrower to prepay such Loan by the amount
and on the date stated therein.  All prepayments shall be accompanied by accrued
interest on the principal  amount being prepaid to the date of prepayment.  Each
prepayment  under  this  Section  2.14  shall be applied  first  towards  unpaid
interest on the amount being  prepaid and then towards the principal in whole or
partial  prepayment  of Loans by the Borrower.  Eurodollar  Loans may be prepaid
only in accordance with the provisions of paragraph (b) above.  Fixed Rate Loans
may be prepaid only in accordance with the provisions of paragraph (c) above.

         SECTION 2.15.  Reimbursement by Borrower.  The Borrower shall reimburse
the Bank upon the Bank's demand for any loss, cost or expense  incurred or to be
incurred by it (in the Bank's sole, reasonable determination) as a result of any
prepayment  or  conversion  (whether  voluntarily  or by  acceleration)  of  any
Eurodollar Loan other than on the last day of the Interest Period for such Loan,
or if the Borrower fails to borrow the Eurodollar Loan (or is not able to borrow
because of an Event of Default or for any other reason  hereunder)  after having
given the  irrevocable  notice of  borrowing  required by this  Agreement.  Such
reimbursement  shall include,  but not be limited to, any loss,  cost or expense
incurred by the Bank in obtaining,  liquidating or redeploying any funds used or
to be used in making or maintaining the Eurodollar Loan.

         SECTION 2.16.  Eurocurrency Reserve Requirement.  It is understood that
the cost to the Bank of making or maintaining  Eurodollar Loans may fluctuate as
a result of the  applicability  of,  or  change  in,  the  Eurocurrency  Reserve
Requirement.  The  Borrower  agrees  to pay to the Bank  from  time to time,  as
provided in Section 2.17 below, such amounts as shall be necessary to compensate
the Bank for the cost of making or maintaining  any Eurodollar  Loans made by it
resulting  from any change in the  Eurocurrency  Reserve  Requirement,  it being
understood that the rates of interest  applicable to Eurodollar  Loans hereunder
have been  determined on the basis of the  Eurocurrency  Reserve  Requirement in
effect at the time of determination of the LIBOR Rate and that such rates do not
reflect  costs  imposed  on the  Bank  in  connection  with  any  change  to the



                                      -18-
<PAGE>

Eurocurrency  Reserve  Requirement.  It is  agreed  that  for  purposes  of this
paragraph  the  Eurodollar  Loans made  hereunder  shall be deemed to constitute
Eurocurrency  Liabilities  as defined in  Regulation  D and to be subject to the
reserve  requirements  of  Regulation D without  benefit or credit of proration,
exemptions or offsets  which might  otherwise be available to the Bank from time
to time under Regulation D.

         SECTION 2.17.  Increased  Costs.  If, after the date of this Agreement,
the  adoption  of, or any change in, any  applicable  law,  regulation,  rule or
directive,  or any  interpretation  thereof by any  authority  charged  with the
administration or interpretation thereof:

                  (i)  subjects  the  Bank  to  any  tax  with  respect  to  its
Commitment,  the Loans,  the Notes or on any amount  paid or to be paid under or
pursuant to this Agreement,  the Loans or the Notes (other than any tax measured
by or based upon the overall net income of the Bank);

                  (ii)  changes the basis of taxation of payments to the Bank of
any amounts payable  hereunder (other than any tax measured by or based upon the
overall net income of the Bank);

                  (iii)  imposes,  modifies  or deems  applicable  any  reserve,
capital  adequacy or deposit  requirements  against any assets held by, deposits
with or for the account of, or loans made by, the Bank; or

                  (iv)  imposes on the Bank any other  condition  affecting  its
Commitment, the Loans, the Notes or this Agreement; and the result of any of the
foregoing is to increase the cost to the Bank of  maintaining  this Agreement or
the  Commitment  or making  the Loans,  or to reduce  the amount of any  payment
(whether of  principal,  interest  or  otherwise)  receivable  by the Bank or to
require the Bank to make any payment on or  calculated by reference to the gross
amount of any sum  received  by it, in each case by an amount  which the Bank in
its reasonable judgment deems material, then and in any such case:

                  (a) the Bank shall promptly advise the Borrower of such event,
         together with the date thereof,  the amount of such  increased  cost or
         reduction  or  payment  and the  way in  which  such  amount  has  been
         calculated; and


                                      -19-
<PAGE>


                  (b) the Borrower  shall pay to the Bank,  within ten (10) days
         after the advice  referred to in subsection  (a)  hereinabove,  such an
         amount or amounts as will compensate the Bank for such additional cost,
         reduction or payment for so long as the same shall remain in effect.

                  The determination of the Bank as to additional amounts payable
pursuant to this  Section  2.17 shall be  conclusive  evidence  of such  amounts
absent manifest error.

         SECTION 2.18. Capital Adequacy.  If the Bank shall have determined that
the  applicability  of any law, rule,  regulation or guideline,  or the adoption
after the date hereof of any other law, rule,  regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the interpretation
or administration of any of the foregoing by any governmental authority, central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof,  or compliance  by the Bank (or any lending  office of the Bank) or the
Bank's holding company with any request or directive  regarding capital adequacy
(whether or not having the force of law) of any such authority,  central bank or
comparable  agency,  has or would have the effect of reducing the rate of return
on the Bank's capital or on the capital of the Bank's holding  company,  if any,
as a consequence  of its  obligations  hereunder to a level below that which the
Bank or the Bank's  holding  company could have achieved but for such  adoption,
change or  compliance  (taking into  consideration  the Bank's  policies and the
policies of the Bank's holding  company with respect to capital  adequacy) by an
amount  deemed by the Bank to be  material,  then from time to time the Borrower
shall pay to the Bank such  additional  amount or amounts as will compensate the
Bank or the Bank's holding company for any such reduction suffered.

         SECTION 2.19. Change in Legality.  (a) Notwithstanding  anything to the
contrary  contained  elsewhere in this  Agreement,  if any change after the date
hereof in law, rule,  regulation,  guideline or order, or in the  interpretation
thereof by any governmental  authority charged with the administration  thereof,
shall make it unlawful for the Bank to make or maintain any  Eurodollar  Loan or

                                      -20-
<PAGE>

to give effect to its  obligations  as  contemplated  hereby  with  respect to a
Eurodollar Loan, then, by written notice to the Borrower, the Bank may:

                  (i) declare that Eurodollar  Loans will not thereafter be made
         hereunder,  whereupon the Borrower shall be prohibited  from requesting
         such Eurodollar Loans hereunder unless such declaration is subsequently
         withdrawn; and

                (ii) require  that,  subject to the  provisions of Section 2.15,
         all  outstanding  Eurodollar  Loans made by it be  converted to a Prime
         Rate  Loan,   whereupon   all  of  such   Eurodollar   Loans  shall  be
         automatically  converted to a Prime Rate Loan as of the effective  date
         of such notice as provided in paragraph (b) below.

                  (b) For  purposes  of  this  Section  2.19,  a  notice  to the
Borrower by the Bank pursuant to paragraph (a) above shall be effective, for the
purposes of paragraph (a) above,  if lawful,  and if any Eurodollar  Loans shall
then be  outstanding,  on the  last  day of the then  current  Interest  Period;
otherwise,  such  notice  shall  be  effective  on the  date of  receipt  by the
Borrower.

         SECTION 2.20.  Indemnity.  The Borrower will indemnify the Bank against
any loss or expense which the Bank may sustain or incur as a consequence  of any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or  interest  accrued  thereon,  as and when due and payable (at the due
date thereof,  by notice of prepayment or  otherwise),  or the occurrence of any
Event of Default,  including but not limited to any loss or expense sustained or
incurred in  liquidating  or employing  deposits from third parties  acquired to
affect or  maintain  such Loan or any part  thereof.  When  claiming  under this
Section 2.20,  the Bank shall provide to the Borrower a statement,  signed by an
officer  of the  Bank,  explaining  the  amount  of any  such  loss  or  expense
(including  the  calculation  of such amount),  which  statement  shall,  in the
absence of manifest error, be conclusive with respect to the parties hereto.

         SECTION 2.21. Change in LIBOR; Availability of Rates. In the event, and
on each occasion,  that, on the day the interest rate for any Eurodollar Loan is
to be  determined,  for  a  requested  Eurodollar  Loan,  the  Bank  shall  have
determined (which determination,  absent manifest error, shall be conclusive and
binding upon the Borrower)  that dollar  deposits in the amount of the principal

                                      -21-
<PAGE>

amount of the  requested  Eurodollar  Loan are not  generally  available  in the
London  Interbank  Market,  or that the rate at which such dollar  deposits  are
being  offered will not  adequately  and fairly  reflect the cost to the Bank of
making or maintaining  the principal  amount of such Eurodollar Loan during such
Interest Period, such Eurodollar Loan shall be unavailable,  Loans based on such
rate shall be unavailable.  The Bank shall,  as soon as practicable  thereafter,
given   written,   telex  or  telephonic   notice  of  such   determination   of
unavailability  to the Borrower.  Any request by the Borrower for an unavailable
Eurodollar  Loan  shall be deemed to have been a request  for a Prime Rate Loan.
After such notice  shall have been given and until the Bank shall have  notified
the Borrower that the circumstances  giving rise to such notice no longer exist,
each subsequent request for an unavailable Eurodollar Loan shall be deemed to be
a request for a Prime Rate Loan.

         SECTION 2.22.  Authorization to Debit Borrower's  Account.  The Bank is
hereby authorized to debit the Borrower's  account  maintained with the Bank for
(i) all scheduled  payments of principal  and/or  interest under the Notes,  and
(ii) the commitment fee and all other amounts due hereunder;  all such debits to
be made on the days such payments are due in accordance with the terms hereof.

         SECTION 2.23. Late Charges, Default Interest. (a) If the Borrower shall
default in the payment of any principal  installment  of or interest on any Loan
or any other amount becoming due hereunder,  the Borrower shall pay interest, to
the extent  permitted by law, on such defaulted  amount up to the date of actual
payment (after as well as before  judgment) at a rate per annum (computed on the
basis of the actual  number of days  elapsed  over a year of 360 days)  equal to
three (3%)  percent in excess of the  interest  rate  otherwise  in effect  with
respect to the type of Loan in connection with which the required  payments have
not been made.

         (b) Upon the  occurrence  and  during the  continuation  of an Event of
Default,  the Borrower  shall pay interest on all amounts  owing under the Notes
and this  Agreement  (after  as well as  before  judgment)  at a rate per  annum
(computed  on the basis of the actual  number of days elapsed over a year of 360
days) equal to three (3%)  percent in excess of the interest  rate  otherwise in
effect hereunder.

                                      -22-
<PAGE>

         SECTION 2.24. Payments. All payments by the Borrower hereunder or under
the Notes shall be made in Dollars in immediately  available funds at the office
of the Bank by 12:00 noon,  New York City time on the date on which such payment
shall be due.  Interest on the Notes shall accrue from and including the date of
each  Loan to but  excluding  the  date on  which  such  Loan is paid in full or
refinanced with a Loan of a different type.

         SECTION  2.25.  Interest  Adjustments.  (a) If the  provisions  of this
Agreement  or the  Notes  would at any time  otherwise  require  payment  by the
Borrower to the Bank of any amount of  interest in excess of the maximum  amount
then permitted by applicable  law the interest  payments shall be reduced to the
extent  necessary so that the Bank shall not receive  interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank
shall receive interest  payments  hereunder or under the Notes in an amount less
than the  amount  otherwise  provided,  such  deficit  (hereinafter  called  the
"Interest Deficit") will cumulate and will be carried forward (without interest)
until the termination of this Agreement.  Interest otherwise payable to the Bank
hereunder  and under the Notes for any  subsequent  period shall be increased by
such maximum amount of the Interest Deficit that may be so added without causing
the Bank to receive  interest in excess of the maximum  amount then permitted by
applicable law.

         (b) The amount of the Interest Deficit shall be treated as a prepayment
penalty and paid in full at the time of any optional  prepayment by the Borrower
to the  Bank of all  outstanding  Loans.  The  amount  of the  Interest  Deficit
relating to the Notes at the time of any  complete  payment of the Notes at that
time outstanding (other than an optional  prepayment thereof) shall be cancelled
and not paid.

         SECTION 2.26. Participations, Etc. The Bank shall have the right at any
time,  with or without  notice to the  Borrower,  to sell,  assign,  transfer or
negotiate all or any part of the Term Loan Notes or the Revolving Credit Note or
the Commitment or grant participations  therein to one or more banks (foreign or
domestic,  including  an affiliate  of the Bank),  insurance  companies or other
financial  institutions,  pension  funds or mutual  funds.  The Borrower and the
Guarantors  agree  and  consent  to  the  Bank  providing  financial  and  other

                                      -23-
<PAGE>

information regarding their business and operations to prospective purchasers or
participants  and further  agree that to the extent  that the Bank should  sell,
assign,  transfer or negotiate  all or any part of the Notes or the  Commitment,
the Bank shall be forever released and discharged from its obligations under the
Notes,  the Commitment and this Agreement to the extent same is sold,  assigned,
transferred  or  negotiated.  Nothing  herein  shall  be  read or  construed  as
prohibiting or otherwise limiting the ability or right of the Bank to pledge any
Note to a Federal Reserve Bank.

                                   ARTICLE III

                              CONDITIONS OF LENDING

         SECTION  3.01.  Conditions  Precedent  to the  Making  of  the  Initial
Revolving  Credit Loan and the Initial Term Loan.  The obligation of the Bank to
make the initial Revolving Credit Loan and the initial Term Loan contemplated by
this  Agreement is subject to the condition  precedent  that the Bank shall have
received  from  the  Borrower  and the  Guarantors  the  following,  in form and
substance satisfactory to the Bank and its counsel:

         (a) The  Revolving  Credit Note and the initial Term Loan Note, in each
case duly executed and payable to the order of the Bank.

         (b)  Certified  (as  of the  date  of  this  Agreement)  copies  of the
resolutions of the Board of Directors of the Borrower  authorizing the Loans and
authorizing  and approving  this  Agreement and the other Loan Documents and the
execution,  delivery  and  performance  thereof  and  certified  copies  of  all
documents   evidencing   other  necessary   corporate  action  and  governmental
approvals, if any, with respect to this Agreement and the other Loan Documents.

         (c)  Certified  (as  of the  date  of  this  Agreement)  copies  of the
resolutions  of the  Boards of  Directors  and the  shareholders  of each of the
Guarantors,  authorizing and approving this Agreement,  their Guaranties and any
other Loan Document  applicable to the Guarantors,  and the execution,  delivery
and performance  thereof and certified copies of all documents  evidencing other

                                      -24-
<PAGE>

necessary corporate action and governmental  approvals,  if any, with respect to
this Agreement, their Guaranties and the other Loan Documents.

         (d) A certificate of the Secretary or an Assistant  Secretary (attested
to by another officer) of the Borrower certifying: the names and true signatures
of the officer or officers of the Borrower  authorized  to sign this  Agreement,
the Term Loan Notes,  the Revolving  Credit Note and the other Loan Documents to
be delivered hereunder on behalf of the Borrower.

         (e) A Certificate of the Secretary or an Assistant  Secretary (attested
to by another  officer) of each of the  Guarantors  certifying (i) the names and
true signatures of the officer or officers of the Guarantors  authorized to sign
this  Agreement,  their  Guaranties and any other Loan Documents to be delivered
hereunder on behalf of the  Guarantors;  (ii) a copy of each of the  Guarantors'
by-laws as  complete  and correct on the date of this  Agreement;  and (iii) the
stock ownership of each Guarantor.

         (f) Copies of the  certificates  of  incorporation  and all  amendments
thereto of the  Borrower and each of the  Guarantors,  certified in each case by
the Secretary of State (or equivalent  officer) of the state of incorporation of
the Borrower and each Guarantor and a certificate of existence and good standing
with respect to the Borrower and each  Guarantor from the Secretary of State (or
equivalent  officer)  of the state of  incorporation  of the  Borrower  and each
Guarantor and from the Secretary of State (or  equivalent  officer) of any state
in which the Borrower and each Guarantor is authorized to do business.

         (g) An opinion of Parker  Chapin LLP,  counsel for the Borrower and the
Guarantors in the form annexed hereto as Schedule 3.01(g).

         (h) From each of the Guarantors, an executed Guaranty.

         (i) From the Borrower,  an executed  Security  Agreement  giving to the
Bank a first priority security interest in all assets of the Borrower including,
but not limited  to, all  personal  property,  equipment,  fixtures,  inventory,
accounts,  chattel  paper  and  general  intangibles  all  whether  now owned or
hereafter acquired (the "Collateral").

                                      -25-
<PAGE>

         (j) From the Borrower,  UCC-1 filings  perfecting  the Bank's  security
interests in the Collateral.

         (k) A property damage insurance policy for the Collateral in the amount
of the  greater  of (1)  the  replacement  value  of the  Collateral  or (2) the
principal amount outstanding under the Loans, naming the Bank as loss payee with
an insurance company acceptable to the Bank. The policy shall provide for thirty
(30) days notice to the Bank of cancellation or change.

         (l) From the Borrower,  receipt and satisfactory  review by the Bank of
the Borrower's  audited  financial  statement for the fiscal year ended December
31, 1999.

         (m) From the  Borrower,  a Borrowing  Base  certificate  dated the date
hereof.

         (n)  All  schedules,  documents,  certificates  and  other  information
provided to the Bank pursuant to or in connection  with this Agreement  shall be
satisfactory to the Bank and its counsel in all respects.

         (o) The  following  statements  shall be true and the Bank  shall  have
received a certificate signed by the President or Chief Financial Officer of the
Borrower dated the date hereof, stating that:

                  (i) The representations and warranties contained in Article IV
of this Agreement and in the Loan Documents are true and correct in all material
respects on and as of such date; and

                  (ii) No  Default  or  Event of  Default  has  occurred  and is
continuing,  or would  result  from the making of the  initial  Term Loan or the
initial Revolving Credit Loan.

         (p) Receipt by the Bank of such other  approvals  or  documents  as the
Bank or its counsel may reasonably request.

         (q) Receipt by the Bank of its  facility  fee set forth in Section 2.12
hereof,  and  payment of the  reasonable  legal fees and  expenses of the Bank's
counsel.

                                      -26-
<PAGE>

         SECTION 3.02.  Conditions  Precedent to All Revolving  Credit Loans and
All Term Loans.  The obligations of the Bank to make each Revolving  Credit Loan
(including the initial  Revolving Credit Loan) and each Term Loan (including the
initial Term Loan) shall be subject to the further  condition  precedent that on
the date of such Revolving Credit Loan or Term Loan, as the case may be:

         (a) The  following  statements  shall be true and  each  request  for a
Revolving  Credit Loan or a Term Loan shall be deemed to be a  certification  by
the Borrower and the Guarantors that:

                (i) The representations  and warranties  contained in Article IV
of this  Agreement  and in the Loan  Documents are true and correct on and as of
such date as though made on and as of such date; and

                (ii)  No  Default  or  Event  of  Default  has  occurred  and is
continuing, or would result from such Revolving Credit Loan or Term Loan.

         (b) The Bank shall have  received,  in the case of a Term Loan,  a Term
Loan Note duly executed and payable to the order of the Bank.

         (c) The Bank shall have  received  such other  approvals,  opinions  or
documents as the Bank may reasonably request.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         SECTION 4.01. Representations and Warranties. On the date hereof and on
each date that the Borrower requests a Revolving Credit Loan or a Term Loan, the
Borrower and each of the Guarantors represent and warrant as follows:

         (a)  Subsidiaries.  On the date hereof,  the only  Subsidiaries  of the
Borrower  and the  Guarantors  are those set forth on Schedule  4.01(a)  annexed
hereto,  which  Schedule  accurately  sets  forth  with  respect  to  each  such
Subsidiary,  its name and  address,  any other  addresses  at which it  conducts
business,  its state of incorporation and each other jurisdiction in which it is
qualified  to  do  business   and  the  identity  and  share   holdings  of  its
stockholders.  Except as set forth on  Schedule  4.01(a),  all of the issued and

                                      -27-

<PAGE>

outstanding  shares of each  Subsidiary  which are  owned by the  Borrower  or a
Guarantor are owned by the Borrower or such Guarantor,  as the case may be, free
and clear of any mortgage,  pledge, lien or encumbrance.  Except as set forth on
Schedule 4.01(a), there are not outstanding any warrants,  options, contracts or
commitments  of any kind  entitling any Person to purchase or otherwise  acquire
any shares of common or capital stock or other equity  interest of the Borrower,
Guarantor or any Subsidiary,  nor are there outstanding any securities which are
convertible  into or exchangeable  for any shares of the common or capital stock
of the Borrower, any Guarantor or any Subsidiary of the Borrower or a Guarantor.

         (b) Organization. The Borrower and each Guarantor is a corporation duly
incorporated,  validly existing and in good standing under the laws of the state
of its formation  and has the corporate  power to own its assets and to transact
the business in which it is presently  engaged and is duly  qualified  and is in
good  standing in all other  jurisdictions  where the character or nature of its
business requires such qualification.

         (c) Due Execution, etc. The execution,  delivery and performance by the
Borrower and each  Guarantor of this  Agreement and the other Loan  Documents to
which it is a party are within the  Borrower's  and each  Guarantor's  corporate
power and have been duly authorized by all necessary corporate action and do not
and will not (i) require any  consent or  approval  of the  stockholders  of the
Borrower  or  any  Guarantor;  (ii)  do not  contravene  the  Borrower's  or any
Guarantor's certificate of incorporation or by-laws; (iii) violate any provision
of or any law, rule, regulation, contractual restriction, order, writ, judgment,
injunction,  or  decree,  determination  or award  binding on or  affecting  the
Borrower or any  Guarantor;  (iv) result in a breach of or  constitute a default
under any indenture or loan or credit agreement,  or any other agreement,  lease
or  instrument  to which the Borrower or any Guarantor is a party or by which it
or its properties may be bound or affected;  and (v) result in, or require,  the
creation or imposition  of any Lien (other than the Lien of the Loan  Documents)
upon or with respect to any of the properties now owned or hereafter acquired by
the Borrower or any Guarantor.

         (d) No Authorization, etc. No authorization or approval or other action
by, and no notice to or filing with,  any  governmental  authority or regulatory
body is required for the due execution, delivery and performance by the Borrower

                                      -28-
<PAGE>

or  any  Guarantor  of  any  Loan  Document  to  which  it  is a  party,  except
authorizations, approvals, actions, notices or filings which have been obtained,
taken or made, as the case may be.

         (e)  Validity of Loan  Documents.  The Loan  Documents  when  delivered
hereunder  will have been duly  executed and delivered on behalf of the Borrower
and each  Guarantor  and will be legal,  valid and  binding  obligations  of the
Borrower and each Guarantor, enforceable against the Borrower and each Guarantor
in accordance with their respective terms.

         (f) Financial Statements.  The financial statements of the Borrower for
the fiscal year ended December 31, 1999,  copies of which have been furnished to
the Bank, fairly present in all material respects the financial condition of the
Borrower and  Guarantors  as at such date and the results of  operations  of the
Borrower and  Guarantors  for the period ended on such date,  all in  accordance
with GAAP,  and since such date there has been (i) no  material  increase in the
liabilities of the Borrower and Guarantors (except as herein provided), and (ii)
no Material Adverse Change in the Borrower or any Guarantor.

         (g) No Litigation. There is no pending or threatened action, proceeding
or  investigation  affecting  the  Borrower or any  Guarantor  before any court,
governmental  agency  or  arbitrator,  which  may  either  in one case or in the
aggregate, result in a Material Adverse Change in the Borrower or any Guarantor.

         (h) Tax Returns.  Except as set forth on Schedule  4.01(h) hereto,  the
Borrower and each  Guarantor has filed all federal,  state and local tax returns
required to be filed  (subject to  extensions  granted)  and has paid all taxes,
assessments  and  governmental  charges and levies thereon to be due,  including
interest and penalties.

         (i)  Licenses,  etc.  The  Borrower and each  Guarantor  possesses  all
licenses, permits, franchises, patents, copyrights,  trademarks and trade names,
or rights thereto, to conduct its business substantially as now conducted and as
presently  proposed to be conducted,  and neither the Borrower nor any Guarantor
is in violation of any similar rights of others.

                                      -29-
<PAGE>

         (j) No Burdensome Agreements. Neither the Borrower nor any Guarantor is
a party to any indenture, loan or credit agreement or any other agreement, lease
or  instrument  or subject to any charter or corporate  restriction  which could
result in a Material Adverse Change in the Borrower or any Guarantor.

         (k) Margin Credit. Neither the Borrower nor any Guarantor is engaged in
the  business  of  extending  credit for the purpose of  purchasing  or carrying
margin stock (within the meaning of Regulation G, T, U or X), and no proceeds of
any Loan will be used to purchase or carry any margin stock or to extend  credit
to others for the purpose of  purchasing  or carrying any margin stock or in any
other  way which  will  cause the  Borrower  or any  Guarantor  to  violate  the
provisions of Regulations G, T, U or X.

         (l)  Securities  Exchange  Act. No proceeds of any Loan will be used to
acquire any security in any transaction which is subject to Sections 13 or 14 of
the Securities Exchange Act of 1934.

         (m)  Compliance  With  Laws.  Except as set forth on  Schedule  4.01(m)
hereto,  the Borrower,  each  Guarantor and each  Subsidiary are in all material
respects in compliance  with all federal and state laws and  regulations  in all
jurisdictions  where the failure to comply with such laws or  regulations  could
result in a Material  Adverse  Change in the  Borrower,  a Guarantor or any such
Subsidiary.

         (n) ERISA. The Borrower, each Guarantor and each ERISA Affiliate of the
Borrower or a Guarantor  are in  compliance  in all material  respects  with all
applicable  provisions  of ERISA.  Neither a  Reportable  Event nor a Prohibited
Transaction  has occurred and is continuing  with respect to any Plan; no notice
of intent to  terminate a Plan has been filed nor has any Plan been  terminated;
no  circumstances  exist which  constitute  grounds  under Section 4042 of ERISA
entitling the PBGC to institute  proceedings to terminate,  or appoint a trustee
to  administrate,  a Plan,  nor has the PBGC  instituted  any such  proceedings;
neither the Borrower, any Guarantor nor any ERISA Affiliate of the Borrower or a
Guarantor has completely or partially  withdrawn  under Sections 4201 or 4204 of
ERISA from a  Multiemployer  Plan;  the Borrower,  each Guarantor and each ERISA
Affiliate  of the  Borrower  or a  Guarantor  have  met  their  minimum  funding

                                      -30-
<PAGE>

requirements under ERISA with respect to all of their Plans and the present fair
market value of all Plan assets exceeds the present value of all vested benefits
under each Plan, as determined on the most recent  valuation date of the Plan in
accordance with the provisions of ERISA for calculating the potential  liability
of the  Borrower,  any  Guarantor  or any ERISA  Affiliate  of the Borrower or a
Guarantor to PBGC or the Plan under Title IV of ERISA; and neither the Borrower,
any  Guarantor  nor any ERISA  Affiliate  of the  Borrower  or a  Guarantor  has
incurred any liability to the PBGC under ERISA.

         (o)  Hazardous  Material.   The  Borrower  and  each  Guarantor  is  in
compliance with all federal, state or local laws, ordinances, rules, regulations
or policies  governing  Hazardous  Materials  and neither the  Borrower  nor any
Guarantor has used  Hazardous  Materials on, from, or affecting any property now
owned  or  occupied  or  hereafter  owned or  occupied  by the  Borrower  or any
Guarantor in any manner which violates federal, state or local laws, ordinances,
rules,   regulations  or  policies   governing  the  use,  storage,   treatment,
transportation,  manufacture,  refinement,  handling,  production or disposal of
Hazardous Materials, and that to the best of the Borrower's and each Guarantor's
knowledge, no prior owner of any such property or any tenant,  subtenant,  prior
tenant or prior  subtenant have used  Hazardous  Materials on, from or affecting
such  property  in any  manner  which  violates  federal,  state or local  laws,
ordinances,   rules,  regulations,  or  policies  governing  the  use,  storage,
treatment,  transportation,  manufacture,  refinement,  handling,  production or
disposal of Hazardous Materials.

         (p) Use of Proceeds.  The proceeds of the Term Loans and the  Revolving
Credit  Loans shall be used  exclusively  for the  purposes set forth in Section
2.11 hereof.

         (q) Title to  Assets.  The  Borrower  and each  Guarantor  has good and
marketable title to all of its properties and assets.  The properties and assets
of the Borrower and each  Guarantor are not subject to any Lien other than those
described in Section 5.02(a) hereof.

         (r) Casualty.  Neither the business nor the  properties of the Borrower
or any Guarantor are affected by any fire,  explosion,  accident,  strike, hail,
earthquake,  embargo,  act of God or of the  public  enemy,  or  other  casualty
(whether or not covered by insurance),  which could result in a Material Adverse
Change in the Borrower or any Guarantor.

                                      -31-
<PAGE>

         (s) Lien Priority.  The Lien on the Collateral  created by the Security
Agreements constitute valid first priority perfected security interests in favor
of the Bank upon the filing of appropriate UCC financing statements.

         (t) Safe Com. Safe Com, a Subsidiary  of the Borrower,  does not, as of
the date hereof, conduct business and owns no assets.


                                    ARTICLE V

                            COVENANTS OF THE BORROWER

         SECTION 5.01. Affirmative Covenants. So long as any amount shall remain
outstanding under any Term Loan Note or the Revolving Credit Note, or so long as
the Commitment  shall remain in effect,  the Borrower and the  Guarantors  will,
unless the Bank shall otherwise consent in writing:

         (a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of the
Borrower to comply,  in all material  respects with all applicable laws,  rules,
regulations  and  orders,  where  the  failure  to so comply  could  result in a
Material Adverse Change in the Borrower or any such Subsidiary.

         (b) Reporting Requirements.  Furnish to the Bank:

                (i) Annual Financial Statements. (1) As soon as available and in
any event  within  ninety  (90) days  after the end of each  fiscal  year of the
Borrower,  a copy of the audited  financial  statements of the Borrower for such
year,  including  balance sheets with related  statements of income and retained
earnings and  statements  of cash flows,  all in  reasonable  detail and setting
forth in  comparative  form the figures for the previous  fiscal year,  together
with  an  unqualified   opinion,   prepared  by  independent   certified  public
accountants  selected by the Borrower  and  satisfactory  to the Bank,  all such
financial  statements to be prepared in accordance with GAAP, and (2) As soon as
available and in any event within five (5) Business Days after filing, a copy of
the Borrower's 10-K report filed with the United States  Securities and Exchange
Commission.

                                      -32-

<PAGE>

                (ii) Quarterly  Financial  Statements.  (1) As soon as available
and in any event  within  five (5)  Business  Days after  filing,  a copy of the
Borrower's  10-Q report  filed with the United  States  Securities  and Exchange
Commission.

                (iii) Management Letters.  Promptly upon receipt thereof, copies
of any  reports  submitted  to the  Borrower  by  independent  certified  public
accountants in connection  with the  examination of the financial  statements of
the Borrower made by such accountants;

                (iv) Certificate of No Default. Simultaneously with the delivery
of the  financial  statements  referred  to in Section  5.01(b)(i)  and (ii),  a
certificate of the President or the Chief Financial  Officer of the Borrower (1)
certifying  that no Default or Event of Default has occurred and is  continuing,
or if a Default or Event of Default has occurred and is continuing,  a statement
as to the nature  thereof  and the  action  which is  proposed  to be taken with
respect thereto;  and (2) with  computations  demonstrating  compliance with the
covenants contained in Section 5.03.

                (v) Accountants' Report. Simultaneously with the delivery of the
annual financial statements referred to in Section 5.01(b)(i),  a certificate of
the independent  certified public accountants who audited such statements to the
effect that, in making the examination necessary for the audit or review of such
statements,  they have  obtained no  knowledge  of any  condition or event which
constitutes  a Default or Event of Default,  or if such  accountants  shall have
obtained  knowledge of any such condition or event,  specify in such certificate
each such  condition  or event of which they have  knowledge  and the nature and
status thereof.

                (vi)  Notice of  Litigation.  Promptly  after  the  commencement
thereof,  notice of all  actions,  suits  and  proceedings  before  any court or
governmental department,  commission, board, bureau, agency, or instrumentality,
domestic or foreign,  affecting  the Borrower or any  Subsidiary of the Borrower
which,  if  determined  adversely to the Borrower or any such  Subsidiary  could
result in a Material Adverse Change in the Borrower or any such Subsidiary.

                                      -33-
<PAGE>

                (vii)  Notice of  Defaults  and  Events of  Default.  As soon as
possible and in any event within five (5) Business Days after the  occurrence of
each Default or Event of Default,  a written notice setting forth the details of
such Default or Event of Default and the action which is proposed to be taken by
the Borrower with respect thereto.

                (viii)  ERISA  Reports.  Promptly  after the filing or receiving
thereof, copies of all reports,  including annual reports, and notices which the
Borrower or any Subsidiary of the Borrower files with or receives from the PBGC,
the Internal Revenue Service or the U.S. Department of Labor under ERISA; and as
soon as possible after the Borrower or any such  Subsidiary  knows or has reason
to know that any Reportable  Event or Prohibited  Transaction  has occurred with
respect to any Plan or that the PBGC or the Borrower or any such  Subsidiary has
instituted or will  institute  proceedings  under Title IV of ERISA to terminate
any Plan,  the Borrower will deliver to the Bank a certificate  of the President
or the Chief Financial  Officer of the Borrower setting forth details as to such
Reportable  Event or Prohibited  Transaction or Plan  termination and the action
the Borrower proposes to take with respect thereto;

                (ix) Reports to Other  Creditors.  Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party pursuant
to the terms of any  indenture,  loan,  or credit or similar  agreement  and not
otherwise  required to be furnished to the Bank  pursuant to any other clause of
this Section 5.01(b).

                (x) Proxy  Statements,  Etc. Within five (5) Business Days after
the  sending  or  filing  thereof,  copies of all  proxy  statements,  financial
statements and reports which the Borrower sends to its stockholders,  and copies
of all regular,  periodic, and special reports, and all registration  statements
which the Borrower  files with the  Securities  and Exchange  Commission  or any
governmental  authority which may be substituted  therefor, or with any national
securities  exchange,  including  but not  limited to  Securities  and  Exchange
Commission Form 8-K.

                (xi) Notice of Affiliates.  Promptly after any Person becomes an
Affiliate of the Borrower, notice to the Bank of such Affiliate.

                                      -34-
<PAGE>

                (xii)  Borrowing Base  Certificate.  As soon as available and in
any event  within  twenty  (20) days  after the end of each  calendar  month,  a
Borrowing Base certificate in form and substance satisfactory to the Bank.

                (xiii)  Accounts  Receivable  Aging. As soon as available and in
any event  within  twenty  (20) days after the end of each  calendar  month,  an
accounts receivable aging in form and substance satisfactory to the Bank.

                (xiv)  Change in  Management.  As soon as  available  and in any
event within one (1) Business  Day of any change in the  Borrower's  officers or
executive management, a notice setting forth such changes.

                (xv) Medical Alert Units Report. As soon as available and in any
event  within  twenty (20) days after the end of each  calendar  month,  medical
alert units report, in form and substance reasonably satisfactory to the Bank.

                (xvi) General Information. Such other information respecting the
condition or operations,  financial or otherwise, of the Borrower, any Guarantor
or any  Subsidiary of the Borrower as the Bank may from time to time  reasonably
request.

         (c) Taxes.  Pay and discharge,  and cause its  Subsidiaries  to pay and
discharge,  all taxes, assessments and governmental charges upon it or them, its
or  their  income  and its or  their  properties  prior  to the  dates  on which
penalties  are  attached  thereto,  unless and only to the extent  that (i) such
taxes shall be contested  in good faith and by  appropriate  proceedings  by the
Borrower,  any Guarantor or any such Subsidiary,  as the case may be; (ii) there
be adequate  reserves  therefor in accordance  with GAAP entered on the books of
the Borrower,  any Guarantor or any such  Subsidiary;  and (iii) no  enforcement
proceedings against the Borrower, any Guarantor or any such Subsidiary have been
commenced.

         (d)  Corporate  Existence.   Preserve  and  maintain,   and  cause  its
Subsidiaries  to preserve  and  maintain,  their  corporate  existence  and good
standing in the jurisdiction of their  incorporation and the rights,  privileges
and  franchises  of the  Borrower  and each such  Subsidiary  in each case where
failure to so preserve or maintain could result in a Material  Adverse Change in
the Borrower or such Subsidiary.

                                      -35-
<PAGE>

         (e)  Maintenance of Properties  and Insurance.  (i) Keep, and cause any
Subsidiaries  to  keep,  the  respective  properties  and  assets  (tangible  or
intangible) that are useful and necessary in its business, in good working order
and condition,  reasonable wear and tear excepted;  (ii) maintain, and cause any
Subsidiaries  to  maintain,  insurance  with  financially  sound  and  reputable
insurance  companies or  associations in such amounts and covering such risks as
are  usually  carried by  companies  engaged in  similar  businesses  and owning
properties  doing business in the same general areas in which the Borrower,  any
Guarantors  and any such  Subsidiaries  operate;  and (iii) cause the Bank to be
named as loss payee on any such insurance policies.

         (f) Books of Record and Account.  Keep, and cause any  Subsidiaries  to
keep,  adequate records and proper books of record and account in which complete
entries  will be  made in a  manner  to  enable  the  preparation  of  financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrower, the Guarantors, and any such Subsidiaries.

         (g) Visitation.  At any reasonable time and upon reasonable notice, and
from time to time, permit the Bank or any agents or representatives  thereof, to
examine  and make  copies of and  abstracts  from the books and  records of, and
visit the  properties  of, the  Borrower  or any  Guarantor  and to discuss  the
affairs,  finances and accounts of the Borrower or any Guarantor with any of the
respective  officers  or  directors  of the  Borrower or such  Guarantor  or the
Borrower's or such Guarantor's independent accountants.

         (h)  Performance  and  Compliance  with Other  Agreements.  Perform and
comply,  and cause any  Subsidiaries  to perform  and  comply,  with each of the
provisions  of each and every  agreement  the  failure to perform or comply with
which could result in a Material  Adverse Change in the Borrower,  any Guarantor
or any Subsidiary.

         (i) Continued Perfection of Liens and Security Interest. Record or file
or rerecord or refile the Loan  Documents or a financing  statement or any other
filing or  recording or refiling or  rerecording  in each and every office where
and when  necessary to preserve  and perfect the security  interests of the Loan
Documents.

                                      -36-
<PAGE>

         (j) Pension  Funding.  Comply with the  following  and cause each ERISA
Affiliate of the Borrower or any  Subsidiary  of the Borrower to comply with the
following:

                (i) engage solely in transactions which would not subject any of
         such  entities to either a civil penalty  assessed  pursuant to Section
         502(i)  of ERISA  or a tax  imposed  by  Section  4975 of the  Internal
         Revenue Code in either case in an amount in excess of $25,000.00;

                  (ii) make full  payment when due of all amounts  which,  under
         the provisions of any Plan or ERISA, the Borrower,  any such Subsidiary
         or  any  ERISA  Affiliate  of  any  of  same  is  required  to  pay  as
         contributions thereto;

                  (iii) all applicable  provisions of the Internal  Revenue Code
         and the regulations promulgated  thereunder,  including but not limited
         to Section 412  thereof,  and all  applicable  rules,  regulations  and
         interpretations  of the Accounting  Principles  Board and the Financial
         Accounting Standards Board;

                  (iv) not  fail to make any  payments  in an  aggregate  amount
         greater than  $25,000.00 to any  Multiemployer  Plan that the Borrower,
         any such  Subsidiary  or any ERISA  Affiliate  may be  required to make
         under any  agreement  relating to such  Multiemployer  Plan, or any law
         pertaining thereto; or

                  (v) not take any action  regarding any Plan which could result
         in the occurrence of a Prohibited Transaction.

         (k)  Licenses.  Maintain  at all times,  and cause each  Subsidiary  to
maintain at all times,  all licenses or permits  necessary to the conduct of its
business  or as may be required by any  governmental  agency or  instrumentality
thereof.

         (l) New  Subsidiaries;  Safe  Com.  (i)  Cause  any  Subsidiary  of the
Borrower  or a Guarantor  formed  after the date of this  Agreement  to become a
Guarantor of all obligations of the Borrower to the Bank, whether incurred under
this Agreement or otherwise.

                                      -37-
<PAGE>

                (ii) In the event that, at any time after the date hereof,  Safe
Com owns any  assets  or  conducts  any  business,  cause  Safe Com to  become a
Guarantor of all obligations of the Borrower to the Bank, whether incurred under
this Agreement or otherwise.

         (m) Banking  Relationship.  Maintain its primary banking and depository
relationship with the Bank.


         (n) Pledge  Agreement.  In the event that the Borrower  makes a loan or
loans to ________________,  the principal of Harriet Campbell,  Inc., deliver to
the Bank as additional Collateral, the original note(s) evidencing such loan(s),
together  with a  pledge  agreement  applicable  to such  note(s)  in  form  and
substance  reasonably  satisfactory  to  the  Bank,  together  with  such  other
instruments,  documents  and  agreements as the Bank may  reasonably  request in
connection with such loan(s).

         SECTION 5.02.  Negative  Covenants.  So long as any amount shall remain
outstanding under any Term Loan Note or the Revolving Credit Note, or so long as
the  Commitment  shall remain in effect,  neither the Borrower nor any Guarantor
will, without the written consent of the Bank:

         (a) Liens,  Etc.  Create,  incur,  assume or suffer to exist, any Lien,
upon or with respect to any of its properties,  now owned or hereafter acquired,
except:

                  (i) Liens in favor of the Bank;

                  (ii)  Liens  for  taxes or  assessments  or  other  government
charges or levies if not yet due and  payable or if due and  payable if they are
being  contested  in  good  faith  by  appropriate  proceedings  and  for  which
appropriate reserves are maintained;

                  (iii) Liens imposed by law, such as mechanics', materialmen's,
landlords',  warehousemen's,  and  carriers'  Liens,  and other  similar  Liens,
securing  obligations  incurred in the ordinary course of business which are not
past due or which are being  contested in good faith by appropriate  proceedings
and for which appropriate reserves have been established;

                                      -38-
<PAGE>

                  (iv)   Liens   under   workers'   compensation,   unemployment
insurance, Social Security, or similar legislation;

                  (v) Liens,  deposits,  or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement),  public or statutory obligations,
surety,  stay, appeal,  indemnity,  performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;

                  (vi) Liens  described in Schedule  5.02(a),  provided  that no
such Liens shall be renewed, extended or refinanced;

                  (vii)  Judgment and other  similar Liens arising in connection
with court proceedings (other than those described in Section 6.01(g)), provided
the execution or other  enforcement of such Liens is effectively  stayed and the
claims  secured  thereby  are  being  actively  contested  in good  faith and by
appropriate proceedings;

                  (viii)  Easements,  rights-of-way,   restrictions,  and  other
similar  encumbrances which, in the aggregate,  do not materially interfere with
the  Borrower's  occupation,  use  and  enjoyment  of  the  property  or  assets
encumbered thereby in the normal course of its business or materially impair the
value of the property subject thereto;

                  (ix) Purchase money Liens on any property  hereafter  acquired
or the  assumption  of any  Lien  on  property  existing  at the  time  of  such
acquisition, or a Lien incurred in connection with any conditional sale or other
title retention agreement or a Capital Lease, provided that:


                    (1) Any property subject to any of the foregoing is acquired
by the Borrower in the ordinary  course of its respective  business and the Lien
on any such property is created contemporaneously with such acquisition;

                    (2) The obligation secured by any Lien so created,  assumed,
or  existing  shall not exceed one hundred  (100%)  percent of lesser of cost or
fair  market  value of the  property  acquired  as of the  time of the  Borrower
acquiring the same;

                                      -39-
<PAGE>

                    (3) Each such Lien  shall  attach  only to the  property  so
acquired and fixed improvements thereon;

                    (4) The Debt  secured  by all such  Liens  shall not  exceed
$100,000.00 at any time outstanding in the aggregate; and

                    (5) The obligation  secured by such Lien is permitted by the
provisions of Section  5.02(b) and the related  expenditure  is permitted by the
provisions of Section 5.03(c).

         (b) Debt.  Create, incur, assume, or suffer to exist, any Debt, except:

                (i) Debt of the  Borrower  under this  Agreement or the Notes or
any other Debt of the Borrower or the Guarantors owing to the Bank;

                (ii) Debt described in Schedule  5.02(b),  provided that no such
Debt shall be renewed, extended or refinanced;

                (iii) Subordinated Debt;

                (iv) Accounts  payable to trade  creditors for goods or services
which are not aged more than  ninety  (90) days from  billing  date and  current
operating  liabilities  (other than for borrowed  money) which are not more than
ninety  (90) days past due,  in each case  incurred  in the  ordinary  course of
business and paid within the specified time,  unless contested in good faith and
by appropriate proceedings;

                (v)  Debt  of the  Borrower  secured  by  purchase  money  Liens
permitted by Section 5.02(a)(ix).

         (c) Lease Obligations.  Create,  incur,  assume, or suffer to exist any
obligation  as lessee for the rental or hire of any real or  personal  property,
except (i) Capital Leases permitted by Section 5.02(a),  or (ii) leases existing
on the date of this Agreement and any  extensions or renewals  thereof and other
leases entered into after the date of this Agreement (other than Capital Leases)
which do not in the aggregate  require the Borrower to make payments  (including

                                      -40-
<PAGE>

taxes,  insurance,  maintenance,  and  similar  expenses  which the  Borrower is
required to pay under the terms of any lease) in any fiscal year of the Borrower
in excess of $250,000.00.

         (d) Merger.  Merge into,  or  consolidate  with or into, or have merged
into  it,  any  Person;  and,  for the  purpose  of  this  subsection  (d),  the
acquisition or sale by the Borrower by lease, purchase or otherwise,  of all, or
substantially  all,  of the  common  stock or the  assets of any Person or of it
shall be deemed a merger of such Person with the Borrower.  Notwithstanding  the
foregoing,  (i) the Borrower and/or HCI shall be permitted to acquire the assets
of Harriet  Campbell,  Inc,  and (ii) the Borrower  and any  Guarantor  shall be
permitted to merge with each other.

         (e) Sale of Assets,  Etc. Sell,  assign,  transfer,  lease or otherwise
dispose of any of its assets,  (including a saleleaseback  transaction)  with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business;  and (ii) the sale or other  disposition  of assets no longer  used or
useful in the conduct of its business.

         (f)  Investments,   Etc.  Make  any  Investment  other  than  Permitted
Investments and the acquisitions set forth on Schedule 5.02(f) hereof.

         (g)  Transactions  With  Affiliates.  Except in the ordinary  course of
business and pursuant to the  reasonable  requirements  of the  Borrower's  or a
Subsidiary's  business and upon fair and  reasonable  terms no less favorable to
the  Borrower or the  Subsidiary  than would be obtained in a  comparable  arm's
length  transaction with a Person not an Affiliate,  enter into any transaction,
including,  without limitation,  the purchase,  sale, or exchange of property or
the rendering of any service, with any Affiliate.

         (h) Intentionally omitted.

         (i)  Guarantees.  Guaranty,  or in any other  way  become  directly  or
contingently  obligated  for  any  Debt  of  any  other  Person  (including  any
agreements  relating to working  capital  maintenance,  take or pay contracts or
similar  arrangements) other than (i) the endorsement of negotiable  instruments
for deposit in the ordinary course of business;  or (ii) guarantees  existing on
the date hereof and set forth in Schedule 5.02(i) annexed hereto.

                                      -41-
<PAGE>

         (j) Change of  Business.  Materially  alter the nature of its  business
except as provided in Schedule 5.02(j) hereof.


         (k)  Fiscal  Year.  Change  the  ending  date of its  fiscal  year from
December 31.


         (l) Intentionally Omitted.

         (m)  Accounting  Policies.  Change any accounting  policies,  except as
permitted by GAAP.

         (n)  Change  of Tax  Status.  Change  its  tax  reporting  status  as a
sub-chapter C corporation.

         (o) Dividends,  Etc.  Declare or pay any dividends,  purchase,  redeem,
retire or otherwise  acquire for value any of its capital stock now or hereafter
outstanding,  or make any  distribution  of assets to its  stockholders as such,
whether in cash,  assets,  or in  obligations  of the  Borrower;  or allocate or
otherwise set apart any sum for the payment of any dividend or distribution  on,
or for the  purchase,  redemption  or  retirement  of any shares of its  capital
stock;  or make any other  distribution  by reduction of capital or otherwise in
respect of any share of its capital stock.  Notwithstanding  the foregoing,  (i)
the Borrower  shall be permitted to pay  dividends on its capital stock for each
fiscal year in an amount not  exceeding  the lesser of (x)  $300,000.00,  or (y)
five ($.05) cents per share,  and (ii) for any fiscal year during which Borrower
is an electing S corporation for federal income tax purposes, it may declare and
pay cash  dividends  out of its net income for the current or  preceding  fiscal
year,  provided  however that no such dividend may be paid which would result in
the Borrower failing to meet the requirements of Section 5.03 hereof.

         (p)  Hazardous  Material.   The  Borrower,   each  Guarantor  and  each
Subsidiary  of the  Borrower  shall not cause or permit  any  property  owned or
occupied by the  Borrower,  any  Guarantor or any such  Subsidiary to be used to
generate,  manufacture,   refine,  transport,  treat,  store,  handle,  dispose,
transfer, produce or process Hazardous Materials,  except in compliance with all
applicable federal,  state and local laws or regulations nor shall the Borrower,

                                      -42-
<PAGE>

any  Guarantor  or any such  Subsidiary  cause  or  permit,  as a result  of any
intentional or  unintentional  act or omission on the part of the Borrower,  any
Guarantor  or any such  Subsidiary  or any  tenant or  subtenant,  a release  of
Hazardous  Materials  onto any property  owned or occupied by the Borrower,  any
Guarantor or any such Subsidiary or onto any other property. The Borrower,  each
Guarantor and each such Subsidiary  shall not fail to comply with all applicable
federal, state and local laws, ordinances,  rules and regulations,  whenever and
by whomever triggered, and shall not fail to obtain and comply with, any and all
approvals,  registrations or permits required  thereunder.  The Borrower and the
Guarantors  shall execute any  documentation  required by the Bank in connection
with the  representations,  warranties and covenants contained in this paragraph
and Section 4.01 of this Agreement.

         (q) Treasury Stock Purchases.  Purchase  treasury stock of the Borrower
in the aggregate amount of greater than $250,000.00 during any fiscal year.

         (r) Loans or Advances to Employees. Make loans or other advances to the
Borrower's  employees,  officers or  management  in excess of  $25,000.00 in the
aggregate during any fiscal year.

         (s)  Loans to  ______________.  Make  loans to  _________________,  the
principal of Harriet Campbell, Inc. in excess of $175,000.00 in the aggregate in
connection with said acquisition.

         SECTION  5.03.  Financial  Requirements.  So long as any  amount  shall
remain  outstanding  under any Term Loan Note or the Revolving Credit Note or so
long as the Commitment shall remain in effect:

         (a) Leverage Ratio.  The Borrower will maintain at all times a ratio of
Total  Unsubordinated  Liabilities  to Capital  Base of not greater than 0.75 to
1.0, to be tested quarterly as of the last day of each fiscal quarter.

         (b) Capital Base.  The Borrower  shall  maintain at all times a minimum
Capital Base of at least  $9,000,000.00,  to be tested  quarterly as of the last
day of each fiscal quarter.

                                      -43-
<PAGE>

         (c) Debt Service  Coverage  Ratio.  The Borrower  shall maintain at all
times a minimum Debt Service  Coverage Ratio, the ratio of (i) for the 12 months
then ended, net income plus depreciation and amortization  expense plus interest
expense to (ii) the current portion of long term Debt plus interest  expense for
the 12 months then ended (each  calculated in accordance  with GAAP) of at least
1.20 to 1.0, to be tested quarterly as of the last day of each fiscal quarter.

         (d) Current Ratio.  The Borrower shall maintain at all times a ratio of
Current Assets to Current Liabilities of at least 1.40 to 1.0.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

         SECTION  6.01.  Events  of  Default.  If any of  the  following  events
("Events of Default") shall occur and be continuing:

         (a) The Borrower shall fail to pay any  installment of principal of, or
interest  on, any Term Loan Note or the  Revolving  Credit  Note when due or any
fees or other amounts owed in connection with this Agreement; or

         (b)  Any  representation  or  warranty  made  by  the  Borrower  or any
Guarantor  herein  or in  the  Loan  Documents  or  which  is  contained  in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in  connection  with any Loan  Document  shall  prove to have been
incorrect in any material respect when made; or

         (c) The Borrower or any Guarantor  shall fail to perform or observe any
term, covenant,  or agreement contained in Section 5.01 of this Agreement within
five (5) days of the date required for such performance; or

         (d) The Borrower or any Guarantor  shall fail to perform or observe any
other term, covenant, or agreement contained in this Agreement in any other Loan
Document  (other than the Notes) on its part to be performed or observed  beyond
any applicable grace or cure period; or

         (e) The  Borrower,  any  Guarantor,  or any  Subsidiary of the Borrower
shall fail to pay any Debt  (excluding  Debt  evidenced by any Term Loan Note or
the Revolving Credit Note) of the Borrower, any Guarantor or any such Subsidiary
(as the case may be), or any interest or premium  thereon,  when due (whether by
scheduled maturity, required prepayment,  acceleration, demand or otherwise) and

                                      -44-
<PAGE>

such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other default under
any agreement or instrument  relating to any such Debt, or any other event shall
occur and shall continue after the applicable grace period, if any, specified in
such  agreement  or  instrument,  if the  effect of such  default or event is to
accelerate,  or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be  declared  to be due and  payable,  or required to be prepaid
(other than by a regularly scheduled required  prepayment),  prior to the stated
maturity thereof; or

         (f) The Borrower, any Guarantor or any Subsidiary of the Borrower shall
generally  not pay its Debts as such Debts become due, or shall admit in writing
its inability to pay its Debts generally, or shall make a general assignment for
the benefit of creditors;  or any  proceeding  shall be instituted by or against
the Borrower,  any Guarantor or any such  Subsidiary  seeking to adjudicate it a
bankrupt or  insolvent,  or seeking  liquidation,  winding  up,  reorganization,
arrangement,  adjustment,  protection, relief, or composition of it or its Debts
under any law relating to bankruptcy,  insolvency or reorganization or relief of
debtors,  or seeking  the entry of an order for relief or the  appointment  of a
receiver,  trustee, or other similar official for it or for any substantial part
of its property and if  instituted  against the  Borrower,  any Guarantor or any
such  Subsidiary  shall  remain  undismissed  for a period  of 60  days;  or the
Borrower,  any  Guarantor  or any  such  Subsidiary  shall  take any  action  to
authorize any of the actions set forth above in this subsection (e); or

         (g) Any judgment or order or combination of judgments or orders for the
payment of money, in excess of $50,000.00 in the aggregate,  which sum shall not
be subject to full, complete and effective insurance coverage, shall be rendered
against the Borrower, any Guarantor or any Subsidiary of the Borrower and either
(i) enforcement  proceedings shall have been commenced by any creditor upon such
judgment  or order or (ii)  there  shall be any  period of 60  consecutive  days
during which a stay of  enforcement  of such  judgment or order,  by reason of a
pending appeal or otherwise, shall not be in effect; or

                                      -45-
<PAGE>

         (h) Any  Guarantor  shall  fail  to  perform  or  observe  any  term or
provision  of its  Guaranty  or  any  representation  or  warranty  made  by any
Guarantor  (or  any of  its  officers  or  partners)  in  connection  with  such
Guarantor's  Guaranty shall prove to have been incorrect in any material respect
when made; or

         (i) Any of the  following  events  occur or exist  with  respect to the
Borrower,  any  Subsidiary  of the  Borrower,  or any ERISA  Affiliate:  (i) any
Prohibited  Transaction  involving  any Plan;  (ii) any  Reportable  Event  with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the  termination of any Plan;  (iv) any event or
circumstance  that might  constitute  grounds  entitling  the PBGC to  institute
proceedings  under  Section  4042 of ERISA  for the  termination  of, or for the
appointment of a trustee to administer, any Plan, or the institution of the PBGC
of any such proceedings;  (v) complete or partial  withdrawal under Section 4201
or 4204 of ERISA from a Multiemployer Plan or the reorganization  insolvency, or
termination of any  Multiemployer  Plan;  and in each case above,  such event or
condition,  together with all other events or  conditions,  if any, could in the
opinion of the Bank  subject  the  Borrower,  any such  Subsidiary  or any ERISA
Affiliate to any tax,  penalty,  or other  liability to a Plan, a  Multiemployer
Plan, the PBGC, or otherwise (or any combination thereof) which in the aggregate
exceeds or may exceed $50,000.00; or

         (j) This  Agreement or any other Loan  Document,  at any time after its
execution and delivery and for any reason, ceases to be in full force and effect
or shall be declared to be null and void, or the validity or  enforceability  of
any  document  or  instrument  delivered  pursuant  to this  Agreement  shall be
contested  by the  Borrower,  any  Guarantor  or any party to such  document  or
instrument  or the  Borrower,  any  Guarantor  or any party to such  document or
instrument  shall deny that it has any or further  liability or obligation under
any such document or instrument; or

         (k) An event of default  specified in any Loan Document other than this
Agreement shall have occurred and be continuing.

                                      -46-
<PAGE>

         SECTION 6.02. Remedies on Default.  Upon the occurrence and continuance
of an Event of  Default  the Bank may by  written  notice to the  Borrower,  (i)
terminate the Commitment, (ii) declare the Term Loan Notes, the Revolving Credit
Note, all interest thereon and all other amounts payable under this Agreement to
be forthwith due and payable,  whereupon the Commitment shall be terminated, the
Term Loan Notes,  the  Revolving  Credit  Note,  all such  interest and all such
amounts  shall become and be forthwith  due and  payable,  without  presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower and (ii) proceed to enforce its rights whether by suit in
equity or by action at law, whether for specific  performance of any covenant or
agreement  contained in this  Agreement or any Loan  Document,  or in aid of the
exercise of any power  granted in either this  Agreement or any Loan Document or
proceed to obtain  judgment or any other relief  whatsoever  appropriate  to the
enforcement  of its rights,  or proceed to enforce any other legal or  equitable
right  which  the Bank may have by  reason  of the  occurrence  of any  Event of
Default  hereunder  or under  any Loan  Document,  provided,  however,  upon the
occurrence of an Event of Default referred to in Section 6.01(e), the Commitment
shall be immediately terminated, the Term Loan Notes, the Revolving Credit Note,
all interest thereon and all other amounts payable under this Agreement shall be
immediately  due and payable  without  presentment,  demand,  protest or further
notice of any kind,  all of which are hereby  expressly  waived by the Borrower.
Any amounts collected  pursuant to action taken under this Section 6.02 shall be
applied to the payment of, first,  any costs incurred by the Bank in taking such
action, including but without limitation attorneys fees and expenses, second, to
payment of the accrued  interest on the Term Loan Notes and the Revolving Credit
Note, and third,  to payment of the unpaid  principal of the Term Loan Notes and
the Revolving Credit Note.

         SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved
to the Bank hereunder or in any Loan Document is intended to be exclusive of any
other available  remedy,  but each and every such remedy shall be cumulative and
in  addition  to every  other  remedy  given  under this  Agreement  or any Loan
Document or now or hereafter  existing at law or in equity. No delay or omission
to exercise any right or power  accruing  upon any Event of Default shall impair
any such right or power or shall be  construed to be a waiver  thereof,  but any
such right and power may be  exercised  from time to time and as often as may be

                                      -47-

<PAGE>

deemed  expedient.  In order to entitle the Bank to exercise any remedy reserved
to it in this Article VI, it shall not be  necessary  to give any notice,  other
than such notice as may be herein expressly required in this Agreement or in any
Loan Document.

                                   ARTICLE VII

                                  MISCELLANEOUS

         SECTION 7.01. Amendments, Etc. No amendment, modification,  termination
or waiver of any  provision  of any Loan  Document to which the  Borrower or any
Guarantor  is a party,  nor  consent to any  departure  by the  Borrower  or any
Guarantor from any provision of any Loan Document to which it is a party,  shall
in any event be effective  unless the same shall be in writing and signed by the
Bank,  and then such waiver or consent  shall be effective  only in the specific
instance and for the specific purpose for which given.

         SECTION  7.02.  Notices,  Etc.  All  notices  and other  communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed,  telegraphed,  sent by facsimile or delivered, if to the Borrower or
any Guarantor, at the address of the Borrower set forth at the beginning of this
Agreement  and if to the  Bank,  at the  address  of the Bank  set  forth at the
beginning of this Agreement to the attention of Douglas Schumacher, V.P., or, as
to each party,  at such other  address as shall be designated by such party in a
written  notice  complying as to delivery with the terms of this Section 7.02 to
the other parties. Any notice shall be conclusively deemed to have been received
by a party  hereto and to be  effective  on the day on which  delivered  to such
party in the manner set forth above if hand delivered or sent by Federal Express
or other reputable courier of national  reputation,  or if sent by registered or
certified  mail, on the third  business day after the day on which mailed in the
United States, addressed to such party.

         SECTION 7.03. No Waiver,  Remedies.  No failure on the part of the Bank
to exercise,  and no delay in exercising,  any right,  power or remedy under any
Loan  Document,  shall  operate  as a waiver  thereof;  nor shall any  single or
partial  exercise of any right  under any Loan  Document  preclude  any other or
further  exercise  thereof or the  exercise  of any other  right.  The  remedies
provided in the Loan  Documents are cumulative and not exclusive of any remedies
provided by law.

                                      -48-
<PAGE>

         SECTION 7.04. Costs,  Expenses and Taxes. The Borrower agrees to pay on
demand all costs and expenses of the Bank in  connection  with the  preparation,
execution,  delivery and  administration  of this  Agreement,  the Notes and any
other Loan Documents,  including,  without  limitation,  the reasonable fees and
expenses  of  counsel  for the Bank with  respect  thereto  and with  respect to
advising the Bank as to its rights and  responsibilities  under this  Agreement,
and all  costs and  expenses,  if any  (including  reasonable  counsel  fees and
expenses),  in connection with the enforcement of this Agreement,  the Notes and
any other Loan  Documents.  The Borrower and the  Guarantors  shall at all times
protect,  indemnify,  defend and save harmless the Bank from and against any and
all  claims,  actions,  suits  and other  legal  proceedings,  and  liabilities,
obligations,   losses,  damages,   penalties,   judgments,  costs,  expenses  or
disbursements  which the Bank may, at any time, sustain or incur by reason of or
in consequence of or arising out of the execution and delivery of this Agreement
and the consummation of the transactions  contemplated  hereby. The Borrower and
the Guarantors  acknowledge  that it is the intention of the parties hereto that
this Agreement  shall be construed and applied to protect and indemnify the Bank
against  any and all  risks  involved  in the  execution  and  delivery  of this
Agreement and the consummation of the transactions  contemplated  hereby, all of
which risks are hereby  assumed by the Borrower and the  Guarantors,  including,
without limitation, any and all risks of the acts or omissions, whether rightful
or  wrongful,  of any  present  or  future  de jure or de  facto  government  or
governmental authority,  provided that the Borrower and the Guarantors shall not
be liable for any portion of such  liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Bank's gross negligence or willful  misconduct.  The provisions of this
Section 7.04 shall survive the payment of the Notes and the  termination of this
Agreement.

         SECTION  7.05.  Right of Set-off.  Upon the  occurrence  and during the
continuance of any Event of Default,  the Bank is hereby  authorized at any time
and from time to time,  to the fullest  extent  permitted by law, to set off and
apply any and all deposits (general or special,  time or demand,  provisional or
final) at any time held and other  indebtedness at any time owing by the Bank or
any affiliate of the Bank to or for the credit or the account of the Borrower or
any  Guarantor  against any and all of the  obligations  of the  Borrower or any
Guarantor now or hereafter existing under this Agreement and the Term Loan Notes
and the Revolving Credit Note irrespective of whether or not the Bank shall have
made any demand under this  Agreement or the Term Loan Notes,  or the  Revolving
Credit Note and although such  obligations  may be unmatured.  The rights of the
Bank  under this  Section  are in  addition  to all other  rights  and  remedies
(including,  without  limitation,  other  rights of set-off)  which the Bank may
have.

                                      -49-
<PAGE>

         SECTION 7.06.  Binding Effect.  This Agreement  shall become  effective
when it shall have been executed by the Borrower,  the  Guarantors  and the Bank
and  thereafter  it  shall be  binding  upon and  inure  to the  benefit  of the
Borrower,  the  Guarantors  and the Bank and  their  respective  successors  and
assigns, except that neither the Borrower nor any Guarantor shall have any right
to assign its rights  hereunder or any interest herein without the prior written
consent of the Bank.

         SECTION 7.07. Further Assurances. The Borrower and each Guarantor agree
at any time and from time to time at its  expense,  upon  request of the Bank or
its counsel,  to promptly execute,  deliver,  or obtain or cause to be executed,
delivered or obtained any and all further  instruments and documents and to take
or cause to be  taken  all such  other  action  the Bank may deem  desirable  in
obtaining the full benefits of, this Agreement or any other Loan Document.

         SECTION 7.08. Section Headings, Severability, Entire Agreement. Section
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this  Agreement.  Every  provision of this Agreement
and each Loan Document is intended to be severable;  if any term or provision of
this Agreement, any Loan Document, or any other document delivered in connection
herewith shall be invalid,  illegal or unenforceable for any reason  whatsoever,
the validity,  legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired  thereby.  All exhibits and
schedules to this  Agreement  shall be annexed  hereto and shall be deemed to be
part of this Agreement.  This Agreement and the exhibits and schedules  attached
hereto embody the entire Agreement and understanding  between the Borrower,  the
Guarantors and the Bank and supersede all prior  agreements  and  understandings
relating to the subject matter hereof.

                                      -50-
<PAGE>

         SECTION 7.09.  Governing Law. This Agreement,  the Term Loan Notes, the
Revolving  Credit Note and all other Loan  Documents  shall be governed  by, and
construed in accordance with, the laws of the State of New York.

         SECTION 7.10.  Waiver of Jury Trial.  The Borrower,  each Guarantor and
the Bank  waive all rights to trial by jury on any cause of action  directly  or
indirectly involving the terms, covenants or conditions of this Agreement or any
Loan Document.

         SECTION 7.11. Execution in Counterparts. This Agreement may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

         SECTION 7.12. Amended and Restated Agreement. This Agreement amends and
replaces  that  certain  Loan  Agreement  dated as of April 28, 1998 between the
Borrower and the Bank, which agreement has heretofore been amended pursuant to a
First  Amendment  dated as of June 7,  1999 and a Second  Amendment  dated as of
August 18,  2000 (as so  amended,  the "Prior  Agreement").  In the event of any
conflict between this Agreement and the Prior Agreement,  the provisions of this
Agreement shall govern.

                                      -51-

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

                                   AMERICAN MEDICAL ALERT CORP.

                                   By: /s/ Jack Rhian
                                      ----------------------------------------
                                      Jack Rhian
                                      Vice President - Operations

                                   HCI ACQUISITION CORP.

                                   By: /s/ Jack Rhian
                                      ----------------------------------------
                                      Jack Rhian
                                      Secretary

                                   EUROPEAN AMERICAN BANK


                                   By: /s/ Douglas Schumacher
                                      ----------------------------------------
                                      Douglas Schumacher
                                      Vice President









                                      -52-