EXHIBIT 10.16.12


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                            DATED 31ST DECEMBER 2004
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                UPS CAPITAL GLOBAL TRADE FINANCE CORPORATION (1)
                                   (AS LENDER)

                                       AND

                           TARRANT COMPANY LIMITED (2)
                                       AND
                               MARBLE LIMITED (3)
                                       AND
                         TRADE LINK HOLDINGS LIMITED (4)
                                 (AS BORROWERS)

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                                 LOAN AGREEMENT
                         RELATING TO A US$5,000,000 LOAN

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                              BARLOW LYDE & GILBERT
                   SUITE 1901, 19TH FLOOR, CHEUNG KONG CENTER
                             2 QUEEN'S ROAD CENTRAL
                                    HONG KONG

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<PAGE>


THIS AGREEMENT is made the 31st day of December, 2004


BETWEEN:

(1)      UPS CAPITAL GLOBAL TRADE FINANCE CORPORATION (the "LENDER");

(2)      TARRANT  COMPANY  LIMITED a  company  incorporated  in Hong Kong  under
         company number 163310 with its registered office at 13th Floor,  Lladro
         Centre, 72-80 Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong
         ("TARRANT");

(3)      MARBLE LIMITED a company incorporated in Hong Kong under company number
         399753 with its registered office at 13th Floor,  Lladro Centre,  72-80
         Hoi Yuen Road, Kwun Tong, Kowloon, Hong Kong ("MARBLE"); and

(4)      TRADE LINK HOLDINGS  LIMITED a company  incorporated in Hong Kong under
         company number 592076 with its registered office at 13th Floor,  Lladro
         Centre,  72-80 Hoi Yuen Road,  Kwun Tong,  Kowloon,  Hong Kong  ("TRADE
         LINK").


WHEREAS:

(A)      Under the  provisions  of the Facility  Agreement,  the Lender has made
         available to the  Borrowers a trade finance  facility,  under which the
         Existing  Indebtedness  is  currently  outstanding  and  payable by the
         Borrowers to the Lender.

(B)      The Borrowers have requested the Lender to advance a two-year term loan
         in the amount of  US$5,000,000  for the purposes of reducing the amount
         of the  Existing  Indebtedness,  and the Lender has agreed to make such
         advance  upon and subject to the terms and  conditions  set out in this
         Agreement.


1.       INTERPRETATION

1.1      In this Agreement, unless the context requires otherwise, the following
         words and expressions have the following meanings:

         "ASSIGNMENT OF NOTES"      the  assignment of notes  executed as of the
                                    date hereof by Tarrant  Luxembourg in favour
                                    of the Lender,  in respect of the benefit of
                                    two  promissory  notes  made by Kamel  Nacif
                                    Borge in favour  of  Tarrant  Mexico,  S. de
                                    R.L. de C.V. in the sums of US$2,550,000 and
                                    US$1,360,000  respectively,  the  benefit of
                                    each of which has been  assigned  to Tarrant
                                    Luxembourg;

         "AUDITORS"                 Grant  Thornton,  LLP,  or any other firm of
                                    accountants of similar standing  selected by
                                    the  Borrowers  and   satisfactory   to  the
                                    Lender;


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<PAGE>


         "BORROWERS"                Tarrant,   Marble   and   Trade   Link   and
                                    "BORROWER" means any of them;

         "BUSINESS DAY"             a day  (excluding  Saturday)  on which banks
                                    are open for business in Hong Kong;

         "COMPANIES ORDINANCE"      the Companies  Ordinance  (Chapter 32 of the
                                    Laws of Hong Kong);


         "CONTINUING SECURITY       (i)      the Syndicated  Composite Guarantee
         DOCUMENTS"                          and Debenture,

                                    (ii)     the Tarrant  Luxembourg Charge over
                                             Shares, and

                                    (iii)    the  Intercreditor   Agreement,  in
                                             each case as  amended  or  modified
                                             from time to time;

         "D/AS"                     any Documents against  Acceptance which have
                                    been   financed  by  the  Lender  under  the
                                    Facility Agreement;

         "DEFAULT"                  an Event of Default or any condition, act or
                                    event  which  (with the  giving  of  notice,
                                    lapse of time, making of any  determination,
                                    fulfilment   of   any   condition   or   any
                                    combination  of any of  the  foregoing)  may
                                    become an Event of Default;

         "DEFAULT INTEREST PERIOD"  the meaning given to it in Clause 4.2;

         "ENVIRONMENTAL             any authorisation, permit, licence, consent,
         AUTHORISATION"             registration  or other approval  required by
                                    or pursuant to any Environmental Law;

         "ENVIRONMENTAL LAWS"       all applicable laws,  regulations,  codes of
                                    practice,   circulars,   statutory   guides,
                                    guidance notes and the like (whether in Hong
                                    Kong,  the  United  States  or in any  other
                                    jurisdiction  in which any Borrower  carries
                                    on its  business  or in which its assets may
                                    be  situated)   relating  to  contamination,
                                    human  health,  safety  or  the  environment
                                    including but not limited to those  relating
                                    to  waste,  nuisance,   health  and  safety,
                                    noise,   packaging   or   the   manufacture,
                                    processing,   use,   handling,    treatment,
                                    storage,  labelling,   recovery,  recycling,
                                    transport    or   disposal   of    Hazardous
                                    Substances;

         "EVENT OF DEFAULT"         any  event  or  circumstance   specified  in
                                    Clause 9.1;

         "EXISTING INDEBTEDNESS"    the total  aggregate  amount of indebtedness
                                    which  is  outstanding  and  payable  by the
                                    Borrowers  to the Lender (in its capacity as
                                    the  Agent  (as  defined  in  the   Facility
                                    Agreement) and the Issuer (as defined in the
                                    Facility   Agreement)   under  the  Facility
                                    Agreement)  and the Banks (as defined in the
                                    Facility   Agreement)   under  the  Facility
                                    Agreement as at the date of this  Agreement,
                                    in the sum of US$19,956,051.84;


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<PAGE>


         "FRI"                      Fashion  Resource  (TCL),  Inc.,  a  company
                                    incorporated  under the laws of the state of
                                    California  in the United  States of America
                                    with  its  registered  office  at 3151  East
                                    Washington Boulevard, Los Angeles, Ca 90023,
                                    USA;

         "FACILITY AGREEMENT"       the  syndicated  letter of  credit  facility
                                    agreement  entered into on 13th June 2002 by
                                    and between the Borrowers and the Lender (in
                                    its  capacity  as the Agent  and the  Issuer
                                    thereunder),  as  amended  by nine  deeds of
                                    variation  entered  into  on  26th  February
                                    2003,  19th May 2003,  2nd June  2003,  18th
                                    June 2003,  23rd December  2003,  17th March
                                    2004, 5th May 2004,  17th June 2004 and 29th
                                    October  2004 and as further  amended by the
                                    Tenth Deed of  Variation,  pursuant to which
                                    the  Lender  agreed,  inter  alia,  to  make
                                    available  to the  Borrowers a facility  for
                                    the issue of  letters  of  credit,  upon the
                                    terms and subject to the  conditions set out
                                    therein;

         "FINANCE DOCUMENTS"        this Agreement,  the Security  Documents and
                                    any other agreement,  deed, notice, document
                                    or certificate  entered into by any Borrower
                                    pursuant  thereto or otherwise in connection
                                    therewith,   in  each  case  as  amended  or
                                    modified from time to time;

         "FINANCIAL STATEMENTS"     any  financial  statements  required  to  be
                                    delivered  to the Lender  pursuant to Clause
                                    9.4.1 and complying  with the  provisions of
                                    Clause 9.5;

         "FINANCIAL YEAR"           any period of twelve  months  ending on 31st
                                    December;

         "FISCAL QUARTER"           each and  every  period  of  three  calendar
                                    months  during  the term of this  Agreement,
                                    comprising:
                                    (a)      1st  January  to 31st  March  (both
                                             dates inclusive);
                                    (b)      1st April to 30th June (both  dates
                                             inclusive);
                                    (c)      1st  July to 30th  September  (both
                                             dates   inclusive);   or
                                    (d)      1st October to 31st December  (both
                                             dates inclusive);

         "FLOTATION"                the  inclusion  of any part of the  ordinary
                                    share  capital of any Parent or any Borrower
                                    on any recognised investment exchange;

         "GAAP"                     (a)      in  respect of  provisions  in this
                                             Agreement  that  apply  only to the
                                             Borrowers,    generally    accepted
                                             accounting  principles and policies
                                             in Hong Kong consistently  applied;
                                             and


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<PAGE>


                                    (b)      in  respect of  provisions  in this
                                             Agreement  that apply either to (i)
                                             TAG;  or (ii)  TAG  and  all  other
                                             members   of   the   Group   on   a
                                             consolidated    basis,    generally
                                             accepted accounting  principles and
                                             policies  in the  United  States of
                                             America consistently applied;

         "GMAC"                     GMAC  Commercial   Finance  LLC,  a  limited
                                    liability  company  incorporated  under  the
                                    laws of New  York in the  United  States  of
                                    America  (as  successor  by merger with GMAC
                                    Commercial Credit LLC);

         "GROUP"                    at any time, TAG and all TAG's  Subsidiaries
                                    (and member of the Group shall be  construed
                                    accordingly);

         "HK DOLLARS" or "HK$"      Hong Kong  dollars,  the lawful  currency of
                                    Hong Kong;

         "HAZARDOUS SUBSTANCE"      any radioactive emissions and any natural or
                                    artificial  substance  (whether  in solid or
                                    liquid  form  or in  the  form  of a gas  or
                                    vapour and whether  alone or in  combination
                                    with any other substance) capable of causing
                                    harm to the  environment,  human  health  or
                                    welfare  or  to  any   organism,   including
                                    (without  limitation)  any  type of waste or
                                    any form of energy;

         "HONG KONG"                the Hong Kong Special  Administrative Region
                                    of the People's Republic of China;

         "INTERCREDITOR AGREEMENT"  an  amended   and   restated   intercreditor
                                    agreement  entered into as of 13th  December
                                    2004 by and between GMAC,  the Lender,  TAG,
                                    FRI, Tag Mex, Inc., United Apparel Ventures,
                                    LLC.,  Private Brands,  Inc., and No! Jeans,
                                    Inc.,   setting   out  the   terms   of  the
                                    relationship  between  the  parties  thereto
                                    regarding,  inter alia, the security granted
                                    by certain of the parties thereto to each of
                                    GMAC and the Lender;

         "INTEREST PERIOD"          has the  meaning  ascribed  to it in  Clause
                                    4.1.3;

         "LOAN"                     has the  meaning  ascribed  to it in  Clause
                                    2.1;

         "MANAGEMENT ACCOUNTING     each  period  of one  calendar  month in any
         PERIOD"                    year;

         "MANAGEMENT ACCOUNTS"      the   unaudited   but    consolidated    and
                                    consolidating management accounts of each of
                                    the Parents and the  Borrowers in respect of
                                    each successive Management Accounting Period
                                    required  to  be  delivered  to  the  Lender
                                    pursuant to Clause 9.4.2;


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<PAGE>


         "NEW SECURITY DOCUMENTS"   (i) the guarantee  agreement entered into as
                                    of the  date  hereof  by Mr  Gerard  Guez in
                                    favour  of the  Lender;  (ii) the  guarantee
                                    agreement entered into as of the date hereof
                                    by Mr Max  Azria in  favour  of the  Lender;
                                    (iii) the guarantee  agreement  entered into
                                    as of the date  hereof  by FRI in  favour of
                                    the Lender and TAG in favour of the  Lender;
                                    (iv) the  guarantee  entered  into as of the
                                    date hereof by Tarrant  Luxembourg in favour
                                    of  the   Lender;   (v)  the  Stock   Pledge
                                    Agreement; and (vi) the Assignment of Notes,
                                    in each case as  amended  or  modified  from
                                    time to time;

         "ORIGINAL FINANCIAL        the  financial  statements of TAG, the Group
         STATEMENTS"                and the  Borrowers  for the  Financial  Year
                                    ending 31st December 2003;

         "PARENTS"                  TAG and  Tarrant  Luxembourg,  and  "PARENT"
                                    means either of them;

         "PERMITTED ENCUMBRANCE"    any   encumbrance   permitted  under  Clause
                                    10.3.1;

         "PERMITTED INDEBTEDNESS"   any  indebtedness   permitted  under  Clause
                                    10.3.3;

         "RELEVANT ACCOUNTING       the meaning given to it in Clause 9.6;
         INFORMATION"

         "SALE"                     in relation to any Borrower, any transaction
                                    pursuant  to  which  a  person  (or  persons
                                    acting in  concert)  obtains  control of the
                                    relevant  Borrower (other than those persons
                                    having  control  of  the  relevant  Borrower
                                    immediately   after   the   date   of   this
                                    Agreement)  or in  terms  of  which  all  or
                                    substantially  all  of  the  assets  of  the
                                    relevant Borrower,  or of the Borrowers as a
                                    whole, are transferred to such person;

         "SECURITY DOCUMENTS"       collectively    the   Continuing    Security
                                    Documents and the New Security Documents, in
                                    each case as amended or  modified  from time
                                    to time;

         "STOCK PLEDGE AGREEMENT"   the stock  pledge  agreement  executed as of
                                    the date  hereof by Mr Gerard Guez in favour
                                    of the  Lender in  respect  of his shares in
                                    TAG;

         "SUBSIDIARY"               a subsidiary  as that term is defined in the
                                    Companies Ordinance;

         "SYNDICATED COMPOSITE      a   syndicated   composite   guarantee   and
         GUARANTEE AND DEBENTURE"   debenture  entered  into on 13th  June  2002
                                    between the Borrowers and the


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<PAGE>


                                    Lender (in its capacity as Security  Trustee
                                    thereunder);

         "TAG"                      Tarrant    Apparel    Group,    a    company
                                    incorporated  under the laws of the state of
                                    California  in the United  States of America
                                    with  its  registered  office  at 3151  East
                                    Washington Boulevard, Los Angeles, Ca 90023,
                                    USA;

         "TARRANT LUXEMBOURG"       Tarrant  Luxembourg  Sarl (formerly known as
                                    Machrima Luxembourg International S.a.r.l.),
                                    a  company   existing   under  the  laws  of
                                    Luxembourg with its registered  office at 7,
                                    Parc d'Activite Syrdall, L-5365 Munsbach;

         "TARRANT LUXEMBOURG        the charge over shares  executed on February
         CHARGE OVER SHARES"        26, 2003, by Tarrant Luxembourg in favour of
                                    the  Lender  (in its  capacity  as  Security
                                    Trustee thereunder) in respect of its shares
                                    in Tarrant;

         "TENTH DEED OF VARIATION"  the Tenth Deed of  Variation to the Facility
                                    Agreement   (in  such  form  and  with  such
                                    contents as are  satisfactory to the Lender)
                                    the  execution  of  which  by  each  of  the
                                    Borrowers  is a condition  precedent  to the
                                    Loan as is referred to in Clause 3.1.3;

         "US DOLLARS" or "US$"      United States  dollars,  the lawful currency
                                    of the United States of America; and

         "WARRANTIES"               the  representations  and warranties set out
                                    in Clause 8 and "WARRANTY"  means any one of
                                    them.


1.2      References to statutory  provisions shall be construed as references to
         those  provisions as amended or re-enacted or as their  application  is
         modified by other provisions  (whether before or after the date hereof)
         from time to time and shall  include any  provisions  of which they are
         re-enactments (whether with or without modification).

1.3      References  herein to  "RECITALS",  "CLAUSES"  and  "SCHEDULES"  are to
         recitals  and clauses in and  schedules  to this  Agreement  unless the
         context requires otherwise and the Schedules to this Agreement shall be
         deemed to form an integral part of this Agreement.

1.4      The  expressions  the "LENDER"  and the  "BORROWERS"  shall,  where the
         context  permits,  include their  respective  successors  and permitted
         assigns.

1.5      The headings are inserted for convenience only and shall not affect the
         construction of this Agreement.

1.6      Unless the context  requires  otherwise,  words  importing the singular
         include the plural and vice versa and words  importing a gender include
         every gender.

1.7      The  obligations  of the Borrowers  under this Agreement are joint
         and several.


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<PAGE>


2.       THE LOAN

2.1      Subject to the provisions of this  Agreement,  the Lender shall lend to
         the Borrowers and the Borrowers shall borrow from the Lender the sum of
         US$5,000,000  (the "LOAN") upon and subject to the terms and conditions
         set out in this Agreement.

2.2      Forthwith upon the  satisfaction of the conditions  precedent set forth
         in Clause 3.1, the Lender shall give a written  notice to the Borrowers
         whereupon:-

         2.2.1    the Loan shall  forthwith  be deemed to have been  advanced by
                  the Lender to the Borrowers  (receipt of which shall be deemed
                  to have been  acknowledged  by the  Borrowers,  and the Lender
                  shall be under no further obligation to pay any further amount
                  to the Borrowers in respect of the Loan); and

         2.2.2    the  outstanding  aggregate  amount  due  and  payable  by the
                  Borrowers to the Lender in respect of D/As  immediately  prior
                  to the date of this Agreement shall be deemed to be reduced by
                  the  sum  of  US$5,000,000,   thereby  reducing  the  Existing
                  Indebtedness by the sum of US$5,000,000.

3.       CONDITIONS PRECEDENT

3.1      The  Lender's  obligations  to  advance  the Loan to the  Borrowers  is
         conditional upon satisfaction of the following conditions precedent:-

         3.1.1    the  execution  and delivery by each of the  Borrowers of this
                  Agreement and all  documents in connection  with or incidental
                  to the Loan;

         3.1.2    the  execution  and delivery of the Tenth Deed of Variation by
                  each of the Borrowers;

         3.1.3    the  execution  and delivery of an Amendment  Agreement to the
                  Tarrant  Luxembourg Charge over Shares by Tarrant  Luxembourg,
                  pursuant  to  which   Tarrant   Luxembourg   shall  agree  and
                  acknowledge  that the obligations of Tarrant  Luxembourg under
                  the Finance  Documents  to which it is a party shall be deemed
                  to be included  in the  definition  of  "Secured  Obligations"
                  under the Tarrant Luxembourg Charge over Shares;

         3.1.4    the  execution  and delivery of an Amendment  Agreement to the
                  Syndicated  Composite  Guarantee  and Debenture by each of the
                  Borrowers,  pursuant  to which the  Borrowers  shall agree and
                  acknowledge  that the  obligations of the Borrowers under this
                  Agreement  shall be deemed to be included in the definition of
                  "Secured Obligations" under the Syndicated Composite Guarantee
                  and Debenture

         3.1.5    the  execution  and  delivery  of  each  of the  New  Security
                  Documents by each of the parties thereto;


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         3.1.6    the  due  payment  by the  Borrowers  of any  amounts  due and
                  payable  to the Lender in respect of D/As in excess of the sum
                  of US$5,000,000; and

         3.1.7    such other  documentation as may be reasonably required by the
                  Lender or the Lender's legal counsel.

3.2      If the foregoing conditions are not satisfied, or waived by the Lender,
         by 31st  December  2004 this  Agreement  shall  terminate  and be of no
         further  force or effect and no party shall have any claim  against the
         other party.

3.3      Following the date upon which the Loan is advanced by the Lender to the
         Borrowers  under  and in  accordance  with  Clauses  2.1 and  2.2  (the
         "CLOSING  DATE"),  the  Borrowers  shall  deliver,  or shall  cause and
         procure that there shall be delivered, to the Lender:-

         3.3.1    a US legal  opinion in  respect of each of TAG and FRI,  and a
                  Hong Kong legal  opinion in respect of each of the  Borrowers,
                  in each case in form and substance  satisfactory to the Lender
                  and given by such counsel as are  satisfactory  to the Lender,
                  within thirty (30) days of the Closing Date;

         3.3.2    certified true copies of resolutions of each of the Borrower's
                  board of directors  authorising  the acceptance of the Loan on
                  the  terms  of this  Agreement  within  seven  (7) days of the
                  Closing Date; and

         3.3.3    loan  certificates  duly executed by each of TAG, FRI, Tarrant
                  Luxembourg and each of the Borrowers, in each case in form and
                  substance satisfactory to the Lender, within seven (7) days of
                  the Closing Date.

4.       INTEREST

4.1      The  Borrowers  shall  pay  interest  on the  aggregate  principal
         amount of the Loan for the time being  outstanding  in  accordance
         with the following terms:-

         4.1.1      The rate of  interest  applicable  to the Loan for each
                    Interest  Period (as defined in Clause  4.1.3) shall be
                    the aggregate of :-

                  (a)      the interest rate  published  under the "Money Rates"
                           section of THE WALL  STREET  JOURNAL  (on each day on
                           which it is  published)  as the  "prime  rate" on the
                           first day of that Interest  Period,  as such rate may
                           change from time to time; provided,  however, that if
                           THE WALL STREET  JOURNAL  shall cease to publish such
                           rate (or  itself  ceases to be  published),  then the
                           interest  rate shall be the highest  among the prime,
                           base or equivalent  rates then publicly  announced by
                           Bank  of  America,  N.A.,  JPMorgan  Chase  Bank  and
                           Wachovia  Bank,   National   Association   (or  their
                           respective  successors-in-interest) from time to time
                           and in  force  on the  first  day  of  that  Interest
                           Period; and

                  (b)      two percent (2%) per annum;

         4.1.2    Interest shall accrue from day to day, and shall be calculated
                  on the basis of the actual  number of days  elapsed  and a 360
                  day year, including the first day


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                  of the period  during which it accrues but excluding the last,
                  and shall be paid in arrears on the last day of each  Interest
                  Period; and

         4.1.3    Each  interest  period  shall be a period of one (1)  calendar
                  month (each an "INTEREST PERIOD") provided that:

                  (a)      the first Interest  Period shall commence on the date
                           upon  which  the  Loan  is  made,  and  shall  end on
                           February 1, 2005;

                  (b)      each  Interest  Period  (except  the  first  Interest
                           Period)  shall  commence  on  the  last  day  of  the
                           preceding Interest Period applicable to the Loan;

                  (c)      any Interest  Period which would  otherwise  end on a
                           non-Business  Day  shall  instead  end  on  the  next
                           following Business Day or, if that Business Day is in
                           another calendar month, on the immediately  preceding
                           Business Day;

                  (d)      if any Interest Period commences on the last Business
                           Day of a calendar  month or on a day for which  there
                           is no numerically  corresponding day in the following
                           calendar month,  that Interest Period shall,  subject
                           to Clause  4.1.3(e),  end on the last Business Day of
                           such later calendar month; and

                  (e)      any  Interest  Period  which would  otherwise  extend
                           beyond  the date on which  the Loan is repaid in full
                           shall instead end on such date.

4.2      If any Borrower does not pay any sum payable by it under this Agreement
         on its due date in  accordance  with the  provisions of Clauses 4.1, 5,
         6.2 or 11.2 or if any sum due and  payable  by any  Borrower  under any
         judgment of any court in connection  with this Agreement is not paid on
         the date of such judgment, it shall pay interest on the balance for the
         time  being  outstanding  (such  balance  being  referred  to  in  this
         Agreement  as the "UNPAID  SUM") for the period  beginning  on such due
         date or, as the case may be, the date of such  judgment,  in accordance
         with the provisions of this Clause 4.2:-

         4.2.1    Interest   under  this  Clause  4.2  shall  be  calculated  by
                  reference to successive  periods of one month (each a "DEFAULT
                  INTEREST PERIOD"),  each of which (other than the first, which
                  shall  begin on the due date for  payment  or, as the case may
                  be, the date of  judgment  as referred to in Clause 4.2) shall
                  begin on the last day of the preceding period;

         4.2.2    The rate of interest  applicable to an unpaid sum from time to
                  time  during each  Default  Interest  Period  relating to that
                  unpaid sum shall be the rate per annum which is the greater of
                  (a) two and one-half  percent 2.5% per annum above the rate of
                  interest  rate set forth in Clause  4.1.1 and (b) ten  percent
                  (10%) per annum; and

         4.2.3    Any  interest  accrued due under Clause 4.2.2 in respect of an
                  unpaid sum shall be due and  payable  and shall be paid by the
                  relevant Borrower at the end of the Default Interest Period by
                  reference to which it is  calculated  or on


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<PAGE>


                  such other date as the Lender may specify by written notice to
                  the  relevant  Borrower.  If not  paid  on the due  date,  the
                  interest  shall be added to and form part of the unpaid sum on
                  which interest shall accrue and be payable in accordance  with
                  the  provisions of this Clause 4.2 to the extent  permitted by
                  law.

5.       REPAYMENT AND PREPAYMENT

5.1      Save where otherwise provided in this Agreement, and in addition to the
         payments to be made under Clause 4.1.2,  the Borrowers  shall repay the
         Loan in 24 equal monthly  instalments of US$208,333.33  each (save that
         the final  instalment shall be in the sum of  US$208,333.41)  The first
         such instalment will be paid by the Borrowers to the Lender on the last
         day of the first Interest Period,  and each successive  instalment will
         be  paid  by the  Borrowers  to the  Lender  on the  last  day of  each
         successive Interest Period.

5.2      The  Borrowers  may,  at any time,  prepay the whole or any part of the
         Loan on any  Business  Day.  Any such  prepayment  shall be  applied in
         reducing the repayment instalments under Clause 5.1 in inverse order of
         maturity.  The  Borrowers  shall be bound to prepay  the  amount of the
         prepayment  so  notified  in  accordance  with  such  notice.  Any such
         prepayment  must be accompanied by the payment of all accrued  interest
         on the amount  prepaid and all other  payments due by the  Borrowers to
         the Lender in respect  thereof.  The  Borrowers may not repay or prepay
         the Loan or any part  thereof  except  as  expressly  provided  in this
         Agreement and may not re-borrow any amount repaid or prepaid.

5.3      The  Borrowers  hereby agree with and  undertake to the Lender that, in
         the event that any Borrower raises any finance or funding through or by
         means of any issuance of debt or equity to any person, the whole amount
         of the proceeds of such debt or equity issuance shall forthwith be used
         by such Borrower solely for the purposes of prepaying the whole or part
         of the Loan in accordance with the provisions of Clause 5.2.

6.       TAXES

6.1      All  payments  by the  Borrowers  under  this  Agreement  shall be made
         without  set-off or  counterclaim,  free and clear of any  deduction or
         withholding  of any kind.  If the Borrowers are required by law to make
         any deduction or withholding from any such payment,  whether on account
         of tax or  otherwise,  the sum due from it in respect  of such  payment
         shall be  increased to the extent  necessary to ensure that,  after the
         making of such  deduction  or  withholding,  the  Lender  receives  and
         retains  (free from any  liability in respect of any such  deduction or
         withholding)  a net sum equal to the sum which it would  have  received
         had no deduction or withholding  been made or been required to be made.
         The  Borrowers   shall   promptly   supply  the  Lender  with  evidence
         satisfactory  to the Lender that the  Borrowers  have  accounted to the
         relevant authority for any sum deducted or withheld.

6.2      Without  prejudice  to the  provisions  of Clause 6.1, if the Lender is
         required  to make any  payment on account of tax (other than tax on its
         overall net income) on or calculated by reference to the Loan and/or by
         reference to any sum received or receivable under this Agreement by the
         Lender (including,  without limitation,  any


                                       10
<PAGE>


         sum  received or  receivable  under this Clause 6) or any  liability in
         respect of any such  payment is asserted,  imposed,  levied or assessed
         against the Lender,  the  Borrowers  shall,  upon demand of the Lender,
         promptly  indemnify  the Lender  against  such  payment  or  liability,
         together with any interest,  penalties and expenses payable or incurred
         in connection therewith.

7.       INCREASED COSTS AND ILLEGALITY

7.1      If, as a result of the  introduction  of, or any  change  in,  any law,
         treaty or  regulation  (whether  or not having the force of law) or its
         interpretation  or  application  or  compliance  with  any of the  same
         (including,  without limitation,  those relating to taxation,  reserve,
         special deposit, cash ratio, liquidity or capital adequacy requirements
         or any other banking or monetary  controls) or with any request from or
         requirement  (whether  or not having  the force of law) of any  central
         bank or other fiscal, monetary or other authority:-

         7.1.1    the Lender  suffers a cost or an increased cost as a result of
                  it funding or maintaining the Loan under this Agreement; or

         7.1.2    any sum  received  or  receivable  by the  Lender  under  this
                  Agreement  or the  effective  return to it is  reduced  or the
                  Lender  becomes  liable to make any payment (other than tax on
                  its  overall net  income) or  foregoes  any  interest or other
                  return on or  calculated by reference to the amount of any sum
                  received or receivable by it under this Agreement; or

         7.1.3    the Lender  suffers a  reduction  in the rate of return on its
                  overall  capital below that which might  reasonably  have been
                  anticipated  at the date of this  Agreement and which it would
                  have been able to achieve but for having  entered  into and/or
                  performing its  obligations  and/or funding or maintaining the
                  Loan under this Agreement,

         the Borrowers will,  from time to time, on demand  indemnify the Lender
         for the full amount, as the case may be, of such cost,  increased cost,
         reduction, reduction in return, liability or foregone interest or other
         return.  Concurrently with its demand for  indemnification,  the Lender
         shall  provide  a  certificate  to  the  Borrowers  calculating,   with
         reasonable  specificity,   the  amount  for  which  Lender  is  seeking
         indemnification.

7.2      If, at any time,  it is unlawful or contrary to any official  directive
         or request  of any  central  bank or other  fiscal,  monetary  or other
         authority  or  impossible  for the  Lender  to allow the Loan to remain
         outstanding then the Lender shall, promptly after becoming aware of the
         same,  deliver to the  Borrowers a certificate  to that effect.  If the
         Lender so  requires,  the  Borrowers  shall on such date as the  Lender
         shall have specified repay the Loan together with accrued  interest and
         all other amounts owing to the Lender under this Agreement.

8.       REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1      Each  Borrower  represents  and  warrants to and for the benefit of the
         Lender  that,  except as  disclosed  to and  accepted  by the Lender in
         writing:


                                       11
<PAGE>


         8.1.1    STATUS:  each  Borrower is a limited  liability  company  duly
                  incorporated  or a  corporation  duly  organised  and  validly
                  existing  and  in  good   standing   under  the  laws  of  its
                  jurisdiction of  incorporation  having the power and authority
                  to own its assets and to conduct the business  and  operations
                  which it conducts or proposes to conduct;

         8.1.2    POWERS AND AUTHORITY: each of the Borrowers has full power and
                  authority  to  enter  into  and  perform  each of the  Finance
                  Documents  to  which  it is or will be a party  and any  other
                  document  to be  entered  into by it  pursuant  hereto and has
                  taken all necessary corporate or other action to authorise the
                  execution,  delivery  and  performance  of each  such  Finance
                  Document and each such other document;

         8.1.3    AUTHORISATIONS: all actions, conditions and things required by
                  all applicable  laws and  regulations to be taken,  fulfilled,
                  obtained or done in order (i) to enable each of the  Borrowers
                  lawfully to enter into,  exercise its rights under and perform
                  and comply  with its  obligations  under  each of the  Finance
                  Documents  to  which  it is or will be a party  and any  other
                  document to be entered into  pursuant  hereto,  (ii) to ensure
                  that  those   obligations  are  valid,   legally  binding  and
                  enforceable  in  accordance  with their  respective  terms and
                  (iii) to make each of the Finance  Documents to which it is or
                  will be a party and all such  other  documents  admissible  in
                  evidence in Hong Kong and, if different,  its  jurisdiction of
                  incorporation have been taken, fulfilled, obtained or done;

         8.1.4    NON-VIOLATION:  the execution by each of the Borrowers of, and
                  the  exercise  by  each of the  Borrowers  of its  rights  and
                  performance of or compliance with its obligations  under, each
                  of the Finance  Documents  to which it is a party does not and
                  will not violate (i) any law or  regulation to which it or any
                  of its assets is subject or (ii),  to an extent or in a manner
                  which has or could have a material  adverse  effect on it, any
                  agreement  to which it is a party or which is binding on it or
                  its assets or conflict with its  constitutional  documents and
                  in  particular  will not cause any limit on the  borrowing  or
                  other  powers of any of the  Borrowers or the exercise of such
                  powers by its board of directors to be exceeded;

         8.1.5    OBLIGATIONS  BINDING: the obligations of each of the Borrowers
                  under each of the  Finance  Documents  to which it is as party
                  are legal,  valid and binding and  enforceable  in  accordance
                  with their respective terms;

         8.1.6    LITIGATION:  save as disclosed in writing to and agreed by the
                  Lender  prior to the date of this  Agreement,  no  Borrower is
                  involved  or  engaged  in  any   litigation,   arbitration  or
                  administrative proceedings (whether as plaintiff or defendant)
                  nor,  to the best of its  knowledge  is any  such  litigation,
                  arbitration or administrative  proceedings threatened, nor are
                  there  any  circumstances  likely  to give  rise  to any  such
                  litigation, arbitration or proceedings;

         8.1.7    NO DEFAULT:  no Borrower is in breach of or default  under any
                  agreement or arrangement or any statutory or legal requirement
                  to an extent or in a


                                       12
<PAGE>


                  manner which has or could have a material adverse effect on it
                  or on any of the other  Borrowers  and no Event of Default has
                  occurred and is continuing;

         8.1.8    PARI PASSU RANKING:  each Borrower's payment obligations under
                  each of the Finance  Documents  to which it is a party rank at
                  least pari  passu  with the claims of all its other  unsecured
                  and   unsubordinated   creditors,   except   for   obligations
                  mandatorily preferred by law applying to companies generally;

         8.1.9    EXISTING ENCUMBRANCES:  no encumbrance exists over the present
                  or  future  assets  of  any  Borrower   except  for  Permitted
                  Encumbrances;

         8.1.10   FUTURE ENCUMBRANCES: the execution by each of the Borrowers of
                  each of the  Finance  Documents  to  which  it is or will be a
                  party and the exercise by each such Borrower of its rights and
                  performance of or compliance with its  obligations  thereunder
                  will not result in the  existence of or oblige any Borrower to
                  create  any  encumbrance  over  all or any of its  present  or
                  future assets except for Permitted Encumbrances;

         8.1.11   FINANCIAL STATEMENTS:  the Financial Statements of each of the
                  Borrowers  were  prepared in  accordance  with GAAP and give a
                  true and fair view of the financial  condition of the Group at
                  the date as of which they were prepared and the results of the
                  Group's business and operations during the Financial Year then
                  ended  and  disclose  or  reserve   against  all   liabilities
                  (contingent  or  otherwise)  of each member of the Group as at
                  that date and all  unrealised or  anticipated  losses from any
                  commitment  entered into by each member of the Group and which
                  existed on that date;

         8.1.12   INDEBTEDNESS:  no  Borrower  has any  indebtedness  except for
                  Permitted Indebtedness;

         8.1.13   ENVIRONMENTAL LAWS: no Borrower has breached any Environmental
                  Law and no condition exists or act or event has occurred which
                  could give rise to any breach of, or any liability of any kind
                  under, any Environmental Law;

         8.1.14   ENVIRONMENTAL  AUTHORISATIONS:  each Borrower is in possession
                  of all Environmental  Authorisations  required for the conduct
                  of its  business or  operations  (or any part  thereof) and no
                  Borrower has breached  any of the terms or  conditions  of any
                  such Environmental Authorisation;

         8.1.15   NOTICES  OF  ENVIRONMENTAL   BREACHES:  (i)  no  Borrower  has
                  received  any  summons,  complaint,  order or similar  written
                  notice  that  it is  not in  compliance  with,  or any  public
                  authority  is   investigating   its   compliance   with,   any
                  Environmental  Law or that it is or may be liable to any other
                  person as a result of a  potential  or actual  discharge  of a
                  Hazardous  Substance  and  (ii)  none of the  present  or past
                  operations of any Borrower is the subject of any investigation
                  by any public authority evaluating whether any remedial action
                  is needed to respond to a potential  or actual  discharge of a
                  Hazardous Substance;


                                       13
<PAGE>


         8.1.16   NO DEPOSIT OF HAZARDOUS SUBSTANCES: no Hazardous Substance has
                  at  any  time  been  used,  disposed  of,  generated,  stored,
                  transported,  dumped, released,  deposited, buried, discharged
                  or emitted at, on, from or under any premises  owned,  leased,
                  occupied or controlled by any Borrower;

         8.1.17   LIABILITY FOR  ENVIRONMENTAL  CLAIMS:  no Borrower has entered
                  into any negotiations or settlement agreements with any person
                  (including,   without  limitation,  any  prior  owner  of  its
                  property)  imposing material  obligations or liabilities on it
                  with  respect  to  any  remedial  action  in  response  to the
                  potential  or actual  discharge  of a Hazardous  Substance  or
                  environmentally related claim;

         8.1.18   TAXES:  each  Borrower  has  filed all tax  returns  and other
                  reports  required  to be filed  and has paid all taxes due and
                  payable by it and no material  claims are being  asserted with
                  respect to taxes save for normal assessments;

         8.1.19   MATERIAL  ADVERSE CHANGE:  there has been no material  adverse
                  change in the  financial  condition of any Borrower  since the
                  date to which the most recent Financial  Statements  delivered
                  to the Lender were made up nor in the  consolidated  financial
                  condition,  business,  assets or operations of the Group since
                  that date;

         8.1.20   INFORMATION:  all information  provided by any Borrower to the
                  Lender from time to time in connection with this Agreement and
                  all  other  Finance  Documents  was  true and  correct  in all
                  material  respects  as at its  date  or as at the  date it was
                  provided and did not at that date omit  anything  material and
                  no adverse  change has occurred  since such date which renders
                  any such  information  misleading  in a material  respect;  in
                  addition full  disclosure has been made to the Lender prior to
                  the date of this  Agreement  of all other facts in relation to
                  the assets of the Borrowers as are material and ought properly
                  to be made known to any person  proposing to advance moneys or
                  make  facilities  available to the  Borrowers  and to enable a
                  true and correct  view of such  assets to be obtained  and all
                  expressions  of  expectation,  intention,  belief and  opinion
                  contained  therein were  correct in all material  respects and
                  honestly  made on  reasonable  grounds  after due and  careful
                  enquiry;

         8.1.21   INSURANCES:  no Borrower has done or omitted to do or suffered
                  anything  to be  done  or not to be done  which  has or  might
                  render  any  policies  of  insurance  taken  out by it void or
                  voidable and, to the best of its  knowledge,  information  and
                  belief,  there are no circumstances  which would or might give
                  rise  to  any  material  claim  under  any  such  policies  of
                  insurance;

         8.1.22   BUSINESS  CONSENTS:  all  necessary  licences,   consents  and
                  authorisations  have been  obtained by each  Borrower  for the
                  carrying on of its  business  and  operations  as the same are
                  currently  carried  on and are in full  force and  effect  and
                  there are no  circumstances  which  indicate  that any of such
                  licences, consents and authorisations are likely to be revoked
                  in whole  or in


                                       14
<PAGE>


                  part in the  ordinary  course  of events  the  effect of which
                  revocation  would be likely to have a material  adverse effect
                  on any Borrower;

         8.1.23   DEDUCTIONS AND  WITHHOLDINGS:  no Borrower is required to make
                  any  deduction  or  withholding  from any  payment it may make
                  under this Agreement or any other Finance Document;

         8.1.24   WINDING-UP:  no Borrower  has taken any  corporate  action nor
                  have any other  steps  been  taken or legal  proceedings  been
                  started  or (to  the  best  of the  Borrowers'  knowledge  and
                  belief)  threatened  against any Borrower for its  winding-up,
                  dissolution or re-organisation (other than for the purposes of
                  a bona fide solvent scheme of  reconstruction  or amalgamation
                  previously  approved  in  writing  by the  Lender)  or for the
                  appointment   of  a   liquidator,   receiver,   administrator,
                  administrative  receiver,  trustee or similar officer of it or
                  of any or all of its assets; and

         8.1.25   CONTROL:  TAG is the direct or indirect  legal and  beneficial
                  owner of not less than 100% of the  equity  share  capital  of
                  each of FRI and Tarrant Luxembourg,  and Tarrant Luxembourg is
                  the direct legal and beneficial owner of not less than 100% of
                  the equity share capital of Tarrant, and Tarrant is the direct
                  legal and beneficial owner of not less than 100% of the equity
                  share capital of each of Marble and Trade Link.

8.2      Each of the  Warranties in Clause 8.1 will be correct and complied with
         on the date of this  Agreement  and will also be correct  and  complied
         with on each day from the date of this  Agreement  to the date on which
         all amounts due under this  Agreement are fully repaid by the Borrowers
         as if repeated then by reference to the then existing circumstances.

9.       FINANCIAL CONDITION

9.1      MAINTENANCE OF BOOKS AND RECORDS: The Borrowers shall maintain,  at all
         times,  books,  records and accounts  which are complete and correct in
         all material  respects and in relation to which timely entries are made
         of their  transactions in accordance with GAAP. The Borrowers shall, by
         means of  appropriate  entries,  reflect  in such  accounts  and in all
         Financial  Statements proper liabilities and reserves for all taxes and
         proper  provision for  depreciation and amortisation of any property or
         asset and bad debts, all in accordance with GAAP.

9.2      ACCESS TO BOOKS AND  ACCOUNTING  RECORDS:  The Borrowers  shall without
         notice  following the occurrence of a Default which is  continuing,  or
         otherwise upon receiving not less than  forty-eight  (48) hours' notice
         from the  Lender at any  reasonable  time and by  arrangement  with the
         relevant  Borrower,  permit the Lender or any person  authorised by the
         Lender to have access to its  premises  and  accounting  records and to
         make  extracts  from and take copies of its  accounting  records and to
         discuss any matter with any of its personnel and officers and make such
         enquiries as the Lender may  reasonably  require from time to time, the
         reasonable costs and expenses  properly  incurred thereby to be for the
         account of the relevant Borrower.


                                       15
<PAGE>


9.3      QUARTERLY FIELD AUDITS:  Without limiting the generality of Clause 9.2,
         the Lender shall be entitled to conduct a quarterly  field audit of the
         books and accounting records of any of the Borrowers, such field audits
         to be  conducted  at any time  within  the  fourteen  (14)  day  period
         following the end of each  calendar  quarter  (namely 31st March,  30th
         June,  30th September and 31st  December).  Each of the Borrowers shall
         permit the Lender or any person authorised by the Lender to have access
         to its premises and  accounting  records and to make  extracts from and
         take  copies of its  accounting  records and to discuss any matter with
         any of its personnel and officers and make such enquiries as the Lender
         may  reasonably  require from time to time,  the  reasonable  costs and
         expenses  properly  incurred  thereby  to be  for  the  account  of the
         relevant Borrower,  provided that such costs and expenses in respect of
         each quarterly field audit conducted by the Lender shall not exceed, in
         aggregate for all three Borrowers,  the sum of US$6,000 per audit, plus
         (i) all out of pocket  expenses  incurred  by the Lender in relation to
         such  audit,  and (ii) (in the event that any work in  relation  to any
         such audit is carried out in the United  States) an  additional  sum of
         US$750 per day for each person  engaged or  appointed  by the Lender to
         undertake such work.

9.4      PROVISION OF FINANCIAL  INFORMATION:  Each of the Borrowers  shall
         deliver to the Lender:

         9.4.1    FINANCIAL  STATEMENTS:  as soon as the same become  available,
                  but in any  event  within  100  days  after  the  end of  each
                  Financial  Year,  the  Financial  Statements  for  each of the
                  Parents and each  Borrower for such  Financial  Year  together
                  with the  statutory  audited  accounts of each other member of
                  the Group for such Financial Year;

         9.4.2    MANAGEMENT ACCOUNTS: as soon as the same become available, but
                  in any  event  within  45 days  of the end of each  Management
                  Accounting  Period,  the  Management  Accounts for each of the
                  Parents  and  each  Borrower  as at the  end of and  for  that
                  Management  Accounting  Period,  and a consolidation  of those
                  Management  Accounts  showing the  financial  position for the
                  Financial Year to date;

         9.4.3    COMPLIANCE  CERTIFICATES:  together  with the  delivery of the
                  Management  Accounts  pursuant to Clause  9.4.2,  a compliance
                  certificate  duly signed by one of its directors and its chief
                  financial or accounting  officer confirming that, at all times
                  during the  relevant  Management  Accounting  Period,  all the
                  financial  covenants  set out in Clause  9.6 have  been  fully
                  complied with;

         9.4.4    GENERAL  INFORMATION:   at  the  same  time  as  sent  to  its
                  shareholders or creditors generally, any circular, document or
                  other  written   information   sent  to  its  shareholders  or
                  creditors as such;

         9.4.5    WEEKLY  SALES  REPORTS:  on or before the close of business on
                  Wednesday  of each week,  a sales  report for the  immediately
                  preceding week, in such format and containing such information
                  about the business and  operations of each member of the Group
                  as the Agent may from time to time specify; and


                                       16
<PAGE>


         9.4.6    OTHER  INFORMATION:  from time to time on the  request  of the
                  Lender,  such information  about the business,  operations and
                  financial  condition of each member of the Group as the Lender
                  may reasonably require.

9.5      FINANCIAL  INFORMATION  -  BASIS  OF  PREPARATION:   Each  of  the
         Borrowers shall ensure that:

         9.5.1    TRUE AND FAIR VIEW: each set of Financial Statements delivered
                  by it  pursuant  to Clause  9.4.1 is  prepared  using the same
                  accounting  principles  and  policies  as  were  used  in  the
                  preparation of the Original  Financial  Statements and gives a
                  true and fair view of the financial  condition of the relevant
                  Parent or Borrower  (as the case may be),  and (in the case of
                  the Parents) each member of the Group and the Group as a whole
                  as  at  the  end  of  the  period  to  which  those  Financial
                  Statements  relate  and  of the  result  of  their  respective
                  businesses and operations during such period; and

         9.5.2    AUDIT:  each  set  of  Financial  Statements  delivered  by it
                  pursuant to Clause  9.4.1 has been audited by its Auditors and
                  each set of  Management  Accounts  delivered by it pursuant to
                  Clause  9.4.2  has  been  certified  as being  correct  by the
                  relevant  Parent  or  Borrower  (as the case  may be),  acting
                  through its chief financial or accounting officer,  subject to
                  normal year-end adjustments.

9.6      FINANCIAL  RATIOS:  Each of the  Borrowers  shall ensure  that,  at all
         times, the financial  condition of TAG and the Group (on a consolidated
         basis),  measured on a quarterly basis, shall be such that Tangible Net
         Worth  shall be not less than the  following  amounts on the  following
         dates:

DATE                                                   TANGIBLE NET WORTH
----------------------------------------------------   -------------------------
31st December, 2004                                    US$22,000,000
----------------------------------------------------   -------------------------
31st March, 2005                                       US$22,000,000
----------------------------------------------------   -------------------------
30th June, 2005, and on the last date of each Fiscal   US$25,000,000
Quarter thereafter
----------------------------------------------------   -------------------------

         as calculated by reference to the accounting information (the "RELEVANT
         ACCOUNTING  INFORMATION")  most recently delivered under this Agreement
         being (i) the  annual  audited  Financial  Statements  delivered  under
         Clause 9.4.1 and (ii) each set of Management  Accounts (as consolidated
         for the relevant Fiscal Quarter) delivered under Clause 9.4.2.

9.7      FINANCIAL  RATIOS - DEFINITION OF TERMS:  For the purposes of this
         Clause 9, the following terms shall have the following meanings:-

         9.7.1    TANGIBLE NET WORTH: means a sum equal to the aggregate amount,
                  at the date (the  "ACCOUNTING  INFORMATION  DATE") as of which
                  the Relevant  Accounting  Information shall have been prepared
                  and  calculated  by  reference  to  the  Relevant   Accounting
                  Information,  of all  assets (as that term is  interpreted  in
                  accordance  with  GAAP  consistently  applied)  of TAG and the
                  Group (on a consolidated basis), but excluding:


                                       17
<PAGE>


                  (a)      all assets that are properly classified under GAAP as
                           intangible  assets  (as that term is  interpreted  in
                           accordance with GAAP consistently applied) of TAG and
                           the Group (on a consolidated basis); and

                  (b)      moneys due and payable by Mr.  Gerard Guez to TAG and
                           the Group (on a consolidated basis),

                  less Total Liabilities.

         9.7.2    TOTAL   LIABILITIES:   means  the  aggregate   amount  of  all
                  liabilities of TAG and the Group (on a consolidated basis).

9.8      CHANGES IN BASIS OF  PREPARATION  OF RELEVANT  ACCOUNTING  INFORMATION:
         Where any Relevant Accounting  Information to be delivered under Clause
         9 has  been  prepared  in a  manner  which  is  inconsistent  with  the
         accounting principles or policies in accordance with which the Original
         Financial  Statements were prepared,  whether as a result of any change
         in such  principles or otherwise,  the relevant  Parent or Borrower (as
         the case may be) shall provide to the Lender a written  explanation  of
         any such  inconsistency,  together with details of its effects.  If any
         such inconsistency  would be likely to affect the ability of the Lender
         to satisfy itself from the information delivered as Relevant Accounting
         Information  as to  compliance  with the  provisions of Clause 9.6, the
         Lender shall have the right to adjust the  financial  ratios set out in
         Clause 9.6 or the relevant  definitions  set out in Clause 9.7 so as to
         reflect  so  far as is  practicable  the  effect  of  any  such  change
         (provided   that  the   effect  of  such   adjustments,   taking   into
         consideration  such  change,  shall not be such as to  render  the said
         financial ratios more onerous upon the relevant Borrower than as at the
         date of this Agreement).

10.      COVENANTS

10.1     DURATION: The undertakings in this Clause 10 shall remain in force from
         the date of this  Agreement  and so long as any  amount is  outstanding
         under this Agreement.

10.2     POSITIVE COVENANTS: Each Borrower undertakes that:

         10.2.1   CONSENTS:  it will obtain, comply with the terms of and do all
                  that is  necessary  to  maintain  in full force and effect all
                  authorisations,  approvals,  licences and consents required by
                  all applicable  laws and  regulations to enable it lawfully to
                  enter into, perform and comply with its obligations under each
                  of the Finance Documents to which it is or will be a party and
                  any document to be entered into pursuant  thereto or to ensure
                  the legality,  validity,  enforceability  or  admissibility in
                  evidence of such Finance  Documents  and each such document in
                  Hong Kong and, if different, its jurisdiction of incorporation
                  and  any  jurisdiction  in  which  any  of its  assets  may be
                  situated;

         10.2.2   INSURANCE:  it will  maintain  policies of insurance on and in
                  relation to its business and assets with financially sound and
                  reputable insurers acceptable to the Lender against such risks
                  and to such  extent as is usual for  companies  carrying  on a
                  business  such  as that  carried  on by  each  Borrower  whose
                  practice is not to self insure;


                                       18
<PAGE>


         10.2.3   COMPLIANCE  WITH LAW: it will comply with all applicable  laws
                  and regulations including,  without limitation, any applicable
                  Environmental Law;

         10.2.4   CONDUCT OF BUSINESS:  it has the right to conduct its business
                  and  operations  as  they  are  conducted  in  all  applicable
                  jurisdictions  and  will do all  things  necessary  (including
                  compliance  with all terms and  conditions of any licences and
                  consents)  to  obtain,  preserve  and keep in full  force  and
                  effect all rights,  licences  and  authorisations  (including,
                  without  limitation,  all  Environmental  Authorisations)  and
                  consents as are necessary for the conduct of such business and
                  operations;

         10.2.5   PAYMENT OF TAXES AND CLAIMS:  it will duly and  punctually pay
                  and discharge (i) all taxes imposed upon it or its  properties
                  (save where the same are being  contested in good faith and by
                  appropriate  proceedings and where adequate reserves are being
                  maintained  with respect  thereto) and (ii) all lawful  claims
                  which, if unpaid, would by law become encumbrances upon any of
                  its properties;

         10.2.6   NOTIFICATION OF DEFAULT: it will promptly notify the Lender in
                  writing (in reasonable  detail and setting out the action that
                  is proposed  to be taken in relation to it) of the  occurrence
                  of  any  Default  and,  as  soon  as  reasonably   practicable
                  following receipt of a written request to that effect from the
                  Lender,  confirm  to  the  Lender  that,  save  as  previously
                  notified to the Lender or as notified in such confirmation, no
                  Default has occurred;

         10.2.7   LITIGATION:  it will promptly notify the Lender in writing (in
                  reasonable  detail and setting out the action that is proposed
                  to be  taken in  relation  to it) of the  commencement  of any
                  litigation, arbitration or similar proceedings, or the service
                  of any writ or other  document  in relation  thereto,  brought
                  against any Borrower or Parent, and will keep the Lender fully
                  informed of all  material  developments  in the course of such
                  litigation,  arbitration  or  similar  proceedings  until  its
                  resolution or settlement;

         10.2.8   NOTIFICATION  OF  CROSS-DEFAULT:  it will promptly  notify the
                  Lender in writing  (in  reasonable  detail and setting out the
                  action  that is proposed to be taken in relation to it) if any
                  financial indebtedness of :-

                  (i)      any Borrower of an amount in excess of US$50,000; or

                  (ii)     any Parent of an amount in excess of US$500,000,

                  due to any person (including  without limitation GMAC), is not
                  paid when due or is  declared to be or  otherwise  becomes due
                  and payable prior to its specified maturity or any creditor of
                  any Borrower or Parent  (including  without  limitation  GMAC)
                  becomes  entitled  to declare  any such  indebtedness  due and
                  payable prior to its specified maturity; and

         10.2.9   PARI PASSU RANKING:  it will ensure that its obligations under
                  each of the Finance Documents do and will at all times rank at
                  least  equally and rateably in all respects with all its other
                  unsecured  and


                                       19
<PAGE>


                  unsubordinated   obligations   save  for   those   obligations
                  mandatorily preferred by any applicable law.

10.3     NEGATIVE COVENANTS: Each Borrower undertakes that:

         10.3.1   ENCUMBRANCES:  it will not,  without the prior  consent of the
                  Lender,  create,  agree to create or  permit  to  subsist  any
                  encumbrance  on or over its  respective  assets to secure  any
                  indebtedness of any person other than the following:

                  (a)      any   equipment   rental   leases  or  hire  purchase
                           agreements  entered  into  by  any  Borrower  in  the
                           ordinary course of business which in aggregate do not
                           exceed the sum of US$500,000 in any particular year;

                  (b)      any encumbrance on or over the assets of any Borrower
                           subsisting  at the date of this  Agreement and agreed
                           to by the Lender (including the security in favour of
                           the  Lender  as  specified  or  referred  to  in  the
                           Facility  Agreement),  provided that, except with the
                           prior consent of the Lender,  the principal,  capital
                           or nominal amount secured by any such encumbrance may
                           not be increased  beyond the maximum amount which may
                           be secured by the relevant encumbrance at the date of
                           this Agreement;

                  (c)      liens arising  solely by operation of law incurred in
                           the ordinary course of business and not in connection
                           with  the  borrowing  of  money,  for  sums  not  yet
                           overdue;

                  (d)      encumbrances   arising   out   of   title   retention
                           provisions  in a supplier's  standard  conditions  of
                           supply  (any such  standard  conditions  to have been
                           approved by the Lender) in respect of goods  acquired
                           by the  relevant  person  in the  ordinary  course of
                           trading; and

                  (e)      any other encumbrance created or outstanding with the
                           prior written consent of the Lender;

         10.3.2   DISPOSALS:  without the prior consent of the Lender (which may
                  be subject to, inter alia, the  application of all proceeds of
                  a disposal  towards  prepayment  of the Loan in such manner as
                  the Lender may reasonably require),  it will not (whether by a
                  single  transaction  or  a  number  of  related  or  unrelated
                  transactions  and  whether  at one  time or over a  period  of
                  time), sell,  transfer,  assign,  lease out, lend or otherwise
                  dispose of (whether outright, by a sale and repurchase or sale
                  and leaseback arrangement or otherwise) any part of its assets
                  (other  than any sale of goods  or  services  in the  ordinary
                  course of its business) having an aggregate value in excess of
                  US$1 million in any one Financial Year;

         10.3.3   INDEBTEDNESS:  it will not,  without the prior  consent of the
                  Lender, incur or maintain any indebtedness other than:

                  (a)      indebtedness under the Finance Documents;


                                       20
<PAGE>


                  (b)      suppliers'  credit extended in the ordinary course of
                           trading and on arms' length terms;

                  (c)      indebtedness   between   members   of  the  Group  as
                           disclosed to and permitted by the Lender;

                  (d)      loans from its major shareholders  (provided that all
                           such  loans  are   subordinated   to  the  Borrower's
                           indebtedness to the Lender);

                  (e)      indebtedness under the Facility Agreement; and/or

                  (f)      indebtedness   to  DBS  Bank  (Hong   Kong)   Limited
                           (formerly known as Dao Heng Bank) under (x) an export
                           line  of  credit  of up to  HK$35,000,000,  and (y) a
                           temporary line of up to HK$2,700,000.

         10.3.4   LOANS AND  GUARANTEES:  it will not make any loans,  grant any
                  credit  (save in the  ordinary  course of trading) or give any
                  guarantee  to or for the  benefit of any  person or  otherwise
                  voluntarily   assume   any   liability,   whether   actual  or
                  contingent,  in respect of any  obligation of any other person
                  (save as required pursuant to the Finance Documents) in excess
                  of US$1 million in aggregate;

         10.3.5   CHANGE OF BUSINESS OR OPERATIONS: it will ensure that there is
                  no material change in the nature of its business or operations
                  (whether  by a single  transaction  or a number of  related or
                  unrelated  transactions,  whether at one time or over a period
                  of time and whether by disposal, acquisition or otherwise);

         10.3.6   ACCOUNTING  REFERENCE  DATE:  it will not,  without  the prior
                  approval of the Lender, change, and will procure that no other
                  member of the Group changes, its accounting reference date;

         10.3.7   SUBSIDIARIES: save with the Lender's prior written consent, it
                  will not,  directly  or  indirectly,  organise  or acquire any
                  Subsidiary  (other than those in  existence  as at the date of
                  this  Agreement  and which have been  advised to the Lender in
                  writing);

         10.3.8   NO  ACQUISITIONS:  save with the prior written  consent of the
                  Lender,  it will  not make any  acquisitions,  enter  into any
                  finance  lease or any other  commitment,  or otherwise  expend
                  capital  expenditure  in any  Financial  Year of a  value,  or
                  aggregate  value for the Borrowers taken as a whole, in excess
                  of US$2 million  other than any budgeted  capital  expenditure
                  which has been approved by the Lender;

         10.3.9   DISTRIBUTIONS:  save with the  prior  written  consent  of the
                  Lender and subject to due compliance and anticipated continued
                  compliance,  in the reasonable opinion of the Lender, with all
                  financial  ratios set out in Clause 9.6, it will not pay, make
                  or declare  any  dividend or other  distribution  nor repay or
                  permit  to  be  repaid  any  unsecured  loan  stock  or  other
                  subordinated indebtedness;


                                       21
<PAGE>


         10.3.10  SALE, FLOTATION,  CONTROL: save with the prior written consent
                  of  the  Lender,  it  will  not  enter  into  negotiations  or
                  arrangements for any Sale, Flotation or change of ownership;

         10.3.11  CHANGES IN CAPITAL  STRUCTURE/JURISDICTION  OF  formation:  it
                  will not make  any  change  in its  capital  structure  or its
                  jurisdiction  of formation save where made in accordance  with
                  the Finance Documents or with the prior consent of the Lender,
                  not to be unreasonably withheld; and

         10.3.12  CAPITAL EXPENDITURE:  without the prior consent of the Lender,
                  it will not  (whether by a single  transaction  or a number of
                  related or unrelated  transactions  and whether at one time or
                  over a period of time), incur any capital  expenditure with an
                  aggregate  value in excess  of  US$800,000  in any one  Fiscal
                  Quarter.

11.      EVENTS OF DEFAULT

11.1     The Loan and any  unpaid  interest  shall  immediately  become  due and
         payable,  and the Lender may thereupon demand immediate  repayment,  if
         any of the following events (each an "EVENT OF DEFAULT") should occur:

         11.1.1   NON-PAYMENT:  any  Borrower  does  not  pay  when  due any sum
                  payable  by it  under  this  Agreement  or any  other  Finance
                  Document  in the  manner  specified  in the  relevant  Finance
                  Document;

         11.1.2   FAILURE TO DELIVER DOCUMENTS: the Borrowers fail to deliver to
                  the Lender any legal opinion,  loan certificate or resolutions
                  required to be delivered  pursuant to Clause 3.3 in accordance
                  with the time limits set out therein;

         11.1.3   BREACH OF  REPRESENTATION OR WARRANTY:  any  representation or
                  warranty made or deemed to be repeated by any Borrower in this
                  Agreement  or any other  Finance  Document or in any  document
                  delivered  pursuant to it is not complied with or is or proves
                  to have been incorrect or misleading when made or deemed to be
                  repeated;

         11.1.4   BREACH OF  UNDERTAKING:  any Borrower fails duly to perform or
                  comply with any  obligation  expressed  to be assumed by it in
                  Clauses 9 and 10;

         11.1.5   BREACH OF OTHER OBLIGATION: any Borrower fails duly to perform
                  or comply with any other obligation expressed to be assumed by
                  it in this  Agreement or any other  Finance  Document,  or any
                  other  person  fails  duly  to  perform  or  comply  with  any
                  obligation  expressed  to be  assumed  by it in  any  Security
                  Document to which it is a party,  and such failure (if capable
                  of  remedy)  is not  remedied  within  fifteen  days after the
                  earlier of (i) the date upon which any such  Borrower or other
                  person (as the case may be) becomes  aware of such  default or
                  (ii) the date upon which the Lender has notified such Borrower
                  or other person (as the case may be) of such default or if any
                  such Finance  Document or Security  Document  shall  terminate
                  (other  than by the  effluxion  of time  or with  the  written
                  consent of the Lender) or become void or unenforceable;


                                       22
<PAGE>


         11.1.6   DEFAULT UNDER THE FACILITY AGREEMENT:  any Default (as defined
                  in  the   Facility   Agreement)   occurs  under  the  Facility
                  Agreement;

         11.1.7   CROSS-DEFAULT:  any financial  indebtedness of any Borrower or
                  any Parent to any person of an amount in excess of  US$500,000
                  (in the case of any Borrower) or US$2,500,000  (in the case of
                  any Parent) (or, in each case, its foreign currency equivalent
                  as  determined  by the  Lender)  is not  paid  when  due or is
                  declared to be or otherwise  becomes due and payable  prior to
                  its  specified  maturity or any  creditor  of any  Borrower or
                  Parent becomes  entitled to declare any such  indebtedness due
                  and payable prior to its specified maturity;

         11.1.8   INSOLVENCY:  any Borrower, Parent or other member of the Group
                  is  unable  to pay its debts as they fall due (or is deemed by
                  law or by a  court  to be  unable  to pay its  debts),  stops,
                  suspends or threatens to stop or suspend payment of all or any
                  part of its  indebtedness or commences  negotiations  with any
                  one or  more  of its  creditors  with  a view  to the  general
                  readjustment  or  re-scheduling  of  all or  any  part  of its
                  indebtedness or makes a general assignment for the benefit of,
                  or  composition  with, its creditors or a moratorium is agreed
                  or declared in respect  of, or  affecting,  all or any part of
                  its indebtedness;

         11.1.9   ENFORCEMENT PROCEEDINGS:  a distress,  attachment,  execution,
                  diligence or other legal  process is levied,  enforced or sued
                  out on or  against  all  or any  part  of  the  assets  of any
                  Borrower,  Parent  or other  member  of the  Group  and is not
                  discharged within five business days;

         11.1.10  WINDING-UP:  any Borrower, Parent or other member of the Group
                  takes any  corporate  action or other steps are taken or legal
                  or  other   proceedings   are  started  for  its   winding-up,
                  dissolution or re-organisation  other than for the purposes of
                  a bona fide,  solvent scheme of reconstruction or amalgamation
                  previously  approved in writing by the Lender the  appointment
                  of  a  liquidator,  receiver,  administrator,   administrative
                  receiver, trustee or similar officer of it or of any or all of
                  its assets;

         11.1.11  ENCUMBRANCE ENFORCEABLE: any encumbrance on or over the assets
                  of any  Borrower or Parent  becomes  enforceable  and any step
                  (including  the taking of possession or the  appointment  of a
                  receiver,  manager or similar person) is taken to enforce that
                  encumbrance;

         11.1.12  EXPROPRIATION:  all or any  material  part  of the  shares  or
                  assets  of any  Borrower  or Parent  is  seized,  compulsorily
                  acquired, nationalised or otherwise expropriated or custody or
                  control  assumed  by any  public  authority  or any  court  of
                  competent   jurisdiction   at  the   instance  of  any  public
                  authority,  except  where  contested  in good  faith by proper
                  proceedings  diligently pursued where a stay of enforcement is
                  in effect;


                                       23
<PAGE>


         11.1.13  TERMINATION OF ANY GUARANTEE: any guarantee of any amounts due
                  and payable under this Agreement or any other Finance Document
                  shall be terminated, revoked or declared void or invalid;

         11.1.14  JUDGMENTS:  one or more  final  judgments  for the  payment of
                  money  aggregating  in excess of US$500,000  shall be rendered
                  against  any  Borrower  or Parent and such  Borrower or Parent
                  shall fail to discharge  the same within thirty (30) days from
                  the date of entry thereof or to appeal  therefrom or to obtain
                  a stay of execution pending an appeal therefrom;

         11.1.15  CESSATION OF BUSINESS:  any Borrower or Parent ceases to carry
                  on all or a substantial  part of the business it carries on at
                  the date hereof or enters into any unrelated business;

         11.1.16  ILLEGALITY:  it is or will become unlawful for any Borrower or
                  Parent to perform or comply with any of its obligations  under
                  this  Agreement  or any other  Finance  Document  or  Security
                  Document, or any such obligation is not or ceases to be legal,
                  valid and binding;

         11.1.17  REPUDIATION:  any  Borrower or Parent  repudiates,  or does or
                  causes  to  be  done  anything   evidencing  an  intention  to
                  repudiate this Agreement or any other Finance Document;

         11.1.18  MATERIAL  ADVERSE  CHANGE:  there occurs any material  adverse
                  change  in  any  Borrower's  or  Parent's  assets,   business,
                  operations or condition (financial or otherwise);

         11.1.19  AUDIT  QUALIFICATION:  the Auditors qualify their annual audit
                  report  to  any  Financial   Statements  delivered  or  to  be
                  delivered under the Facility  Agreement and such qualification
                  is in a manner  which the Lender  considers to be material and
                  adverse to the relevant Borrower or the Group; and/or

         11.1.20  CHANGE OF CONTROL:  any person or group of  connected  persons
                  which  does not  have  control  at the date of this  Agreement
                  acquires control of any of the Borrowers.

11.2     If at any time and for any  reason  (and  whether  within or beyond the
         control  of any  party to any of the  Finance  Documents)  any Event of
         Default has  occurred,  then,  at any time  thereafter  and whilst such
         Event of Default is occurring, the Lender may enforce any or all of its
         rights under any of the Finance Documents or under applicable law.

12.      INDEMNITIES AND CURRENCY OF ACCOUNT

12.1     Each Borrower shall  indemnify on demand the Lender against any funding
         or other cost,  loss  (including  any foreign  exchange  contract  loss
         incurred by any of them),  expense or liability which it may sustain or
         incur,  directly or  indirectly,  as a result of the  occurrence of any
         Default  or any  default  by any  Borrower  in the  performance  of its
         obligations under this Agreement.


                                       24
<PAGE>


12.2     Any amount  received or  recovered  by the Lender in respect of any sum
         expressed to be due to it from any Borrower under this Agreement or any
         other  Finance  Document  in a currency  other than the  currency  (the
         "CONTRACTUAL  CURRENCY")  in which such sum is so  expressed  to be due
         (whether  as a result of, or of the  enforcement  of, any  judgment  or
         order of a court or tribunal of any jurisdiction, the winding-up of any
         Borrower  or  otherwise)  shall  only  constitute  a  discharge  to the
         relevant  Borrower  to the  extent  of the  amount  of the  contractual
         currency  that the  recipient  is able,  in  accordance  with its usual
         practice,  to purchase  with the amount of the  currency so received or
         recovered on the date of receipt or recovery  (or, if later,  the first
         date on which  such  purchase  is  practicable).  If the  amount of the
         contractual  currency  so  purchased  is less  than the  amount  of the
         contractual  currency  so  expressed  to be  due  the  Borrowers  shall
         indemnify the recipient  against any loss  sustained by it as a result,
         including the cost of making any such purchase.

12.3     The  Borrowers  and each of them shall  promptly  indemnify  the Lender
         against any cost, loss or liability  incurred by the Lender as a result
         of:

         12.3.1   investigating  any event  which it  reasonably  believes  is a
                  Default; or

         12.3.2   acting or relying on any notice,  request or instruction which
                  it  believes  to  be   genuine,   correct  and   appropriately
                  authorised.

12.4     Each of the  indemnities  in this Clause 12  constitutes a separate and
         independent  obligation  from the other  obligations in this Agreement,
         shall give rise to a separate and  independent  cause of action,  shall
         apply  irrespective of any time or indulgence granted by the Lender and
         shall continue in full force and effect notwithstanding  termination of
         this Agreement or any order, judgment,  claim or proof for a liquidated
         amount in  respect  of any sum due under  this  Agreement  or any other
         judgment or order.

13.      GENERAL

13.1     All  payments  by  the  Borrowers   hereunder  shall  be  made  (a)  in
         immediately  available  funds  free and  clear of any  withholdings  or
         deductions for any present or future taxes, imposts,  levies, duties or
         other  charges and (b) free and clear of and without any  deduction for
         or on account of any set-off or counterclaim.

13.2     All payments by the Borrowers shall be made not later than 2:00 p.m. on
         the due date. US dollars is the currency of account and payment for all
         sums at any time due from the Borrowers under or in connection with any
         of the Finance  Documents  (including  damages)  provided that (i) each
         payment in respect of costs and expenses  shall be made in the currency
         in which the same were  incurred;  and (ii) any amount  expressed to be
         payable in a currency other than US dollars shall be paid in that other
         currency.

13.3     On each date on which this  Agreement  requires an amount to be paid by
         any  Borrower,  such  Borrower  shall  make the same  available  to the
         Lender:-

         13.3.1   where such amount is denominated in US dollars,  by payment in
                  US dollars  and in same day funds (or in such  other  funds as
                  may for the  time  being  be


                                       25
<PAGE>


                  customary  in Hong  Kong for the  settlement  in Hong  Kong of
                  banking transactions in US dollars); or

         13.3.2   where such amount is  denominated  in a Foreign  Currency,  by
                  payment in such Foreign Currency and in immediately available,
                  freely  transferable,  cleared funds to such account with such
                  bank in the principal  financial centre of the country of such
                  Foreign Currency as the Lender may specify for this purpose.

13.4     Each Borrower  authorises  the Lender without prior notice to any other
         Borrower to apply any credit balance (whether or not then due) to which
         that  Borrower is at any time  beneficially  entitled on any account at
         any office of the Lender in or towards satisfaction of any sum then due
         from it to the  Lender  under  this  Agreement  and unpaid and for this
         purpose to purchase with the monies  standing to the credit of any such
         account  such  other  currencies  as may be  necessary  to effect  such
         application (but so that nothing in this Clause 13.4 shall be effective
         to create a charge). The Lender shall not be obliged to exercise any of
         its rights under this clause which shall be without prejudice to and in
         addition  to any right of set-off,  combination  of  accounts,  lien or
         other right to which it is at any time otherwise  entitled  (whether by
         operation of law, contract or otherwise).

13.5     The  Borrowers  shall,  from  time  to time on  demand  of the  Lender,
         reimburse the Lender for all reasonable costs and expenses  (including,
         legal fees and a reasonable  estimate of the allocable cost of in-house
         counsel and staff) incurred by it in connection  with the  negotiation,
         preparation,  execution and  registration of this Agreement and each of
         the other  Finance  Documents and the  completion  of the  transactions
         contemplated  therein and/or any  amendment,  variation or novation of,
         supplement  to, or waiver or consent in respect of, this  Agreement and
         any of the other Finance Documents.

13.6     The  Borrowers  shall,  from  time  to time on  demand  of the  Lender,
         reimburse the Lender for all costs and expenses  (including legal fees)
         incurred  in or in  connection  with  the  lawful  termination  of this
         Agreement and/or any of the other Finance Documents or the preservation
         and/or enforcement of any of the rights of any of the Lender under this
         Agreement and/or any of the other Finance Documents.

13.7     The  Borrowers  shall pay all stamp,  registration  and other  taxes to
         which any of the Finance  Documents is or at any time may be subject or
         any  judgment  given in  connection  with this  Agreement  or any other
         Finance Document and shall,  from time to time on demand of the Lender,
         indemnify  the  Lender  against  any  liabilities,  costs,  claims  and
         expenses  resulting  from any failure to pay or any delay in paying any
         such tax or judgment.

13.8     This  Agreement  shall be binding  upon and enure to the benefit of the
         Lender and the Borrowers.  The Borrowers may not assign or transfer any
         of its rights and/or  obligations under this Agreement.  The Lender may
         novate, assign and/or transfer all or any of its rights and obligations
         under this Agreement or grant  participation  in all or any part of its
         rights  under  this  Agreement.  The  Borrowers  undertake  to take all
         necessary action and executes all documents  reasonably required by the
         Lender in connection with any such novation assignment or transfer.


                                       26
<PAGE>


13.9     No waiver of any of the Lender's rights or powers or any consent by the
         Lender  shall be valid  unless  signed  by the  Lender in  writing.  No
         failure  or delay by the  Lender  in  exercising  any  right,  power or
         privilege  hereunder shall operate as a waiver  thereof,  nor shall any
         single  or  partial  exercise  preclude  any  other  rights,  power  or
         privilege.  The rights and remedies  provided herein are cumulative and
         not  exclusive  of any rights or remedies  provided by law or any other
         rights the Lender may have.

13.10    The  Borrowers  shall  forthwith  on demand  reimburse  the  Lender all
         expenses  (including  but not  limited to legal fees and  out-of-pocket
         expenses)  on  a  full  indemnity  basis  incurred  by  the  Lender  in
         connection  with the protection of rights under and  enforcement of the
         Finance Documents.

13.11    The  Borrowers  agree that the Lender's  books and records  showing all
         amounts from time to time paid by and owing to it under this  Agreement
         and the transactions  pursuant to this Agreement shall be admissible in
         any action or proceeding arising therefrom,  and shall constitute prima
         facie proof thereof (in the absence of manifest error), irrespective of
         whether  any  such   obligations   are  also  evidenced  by  any  other
         instrument.

13.12    A certificate in writing signed by the manager or other duly authorised
         officer of the Lender stating the amount at any particular time due and
         payable  to the Lender by the  Borrowers  in respect of the Loan or any
         part thereof shall save for manifest  error be  conclusive  and binding
         against the Borrowers.

13.13    If any  provision of this  Agreement  shall be  prohibited  or invalid,
         under  applicable  law, it shall be  ineffective  only to such  extent,
         without invalidating the remainder of this Agreement.

13.14    Any  amendment  or  modification  of the terms and  conditions  of this
         Agreement  shall be agreed in writing  between  the  Borrowers  and the
         Lender.

13.15    This Agreement,  and the documents  referred to in it,  constitutes the
         entire agreement,  and supersedes any previous  agreement,  between the
         parties in relation to the subject matter of this Agreement.

13.16    The parties acknowledge and agree that in the event of a default by any
         party in the  performance of their  respective  obligations  under this
         Agreement,  the  non-defaulting  party  shall  have the right to obtain
         specific performance of the defaulting party's obligations. Such remedy
         to be in addition to any other  remedies  provided under this Agreement
         or at law.

14.      NOTICES

14.1     Any  demand,  notice or other  communication  or document to be made or
         delivered  under this  Agreement  shall be made or  delivered by fax or
         otherwise  in writing  and shall be treated  as having  been  served if
         served  in   accordance   with  Clause  14.2.   Each  demand,   notice,
         communication or other document to be made on or delivered to any party
         to this Agreement may (unless that other person has by 15 days' written
         notice to the other party  specified  another address or fax number) be
         made or delivered to


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<PAGE>


         that other person at its registered office or the address or fax number
         (if any) set out under its name at the end of this Agreement.

14.2     Service of any demand,  notice or other communication or document to be
         made or delivered under this Agreement may be made:

         14.2.1   by leaving it at the address for service referred to in Clause
                  14.1;

         14.2.2   by sending  it through  the post to the  address  for  service
                  referred to in Clause 14.1; or

         14.2.3   by fax to the fax number of the  recipient and so that any fax
                  shall  be  deemed  to be in  writing  and,  if  it  bears  the
                  signature of the server or its  authorised  representative  or
                  agent, to have been signed by or on behalf of the server.

14.3     Any notice,  demand or other  communication or document shall be served
         or treated as served at the following times:

         14.3.1   in the case of service personally or in accordance with Clause
                  14.2.1, at the time of such service;

         14.3.2   in the  case of  service  by  post,  at 9.00 am on the  second
                  working day next  following the day on which it was posted or,
                  in the case of  service  to or from an  address  outside  Hong
                  Kong,  at 9.00 am on the fifth day  following the day on which
                  it was posted; and

         14.3.3   in the case of service  by fax,  if sent  before  9.00 am on a
                  working day, at 11.00 am on the same day, if sent between 9.00
                  am and 5.30 pm on a working  day,  two hours after the time of
                  such  sending or, if sent after 5.30 pm on a working day or on
                  a day  other  than a  working  day,  at  9.00  am on the  next
                  following working day.

         For the purposes of this Clause 14 the term  "WORKING DAY" shall mean a
         day (other than a Saturday,  Sunday or public  holiday)  upon which the
         recipient of any demand,  notice,  communication  or other  document is
         normally  open for  business  in the country of its address for service
         referred to in Clause 14.1 and  references  to any time of day shall be
         construed as  references to the time of day on such working day in that
         country.

14.4     In proving service of any demand,  notice,  communication or other
         document served:

         14.4.1   by post,  it shall be  sufficient  to prove that such  demand,
                  notice,   communication   or  other   document  was  correctly
                  addressed, full postage paid and posted; and

         14.4.2   by fax,  it shall  be  sufficient  to  prove  that the fax was
                  followed by such machine  record as indicates  that the entire
                  fax was sent to the relevant number.


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<PAGE>


15.      GOVERNING LAW

15.1     This  Agreement and the rights and  obligations  of the parties  hereto
         shall be governed by and construed in accordance  with the laws of Hong
         Kong.

15.2     Each of the Borrowers  irrevocably agrees for the benefit of the Lender
         that the  courts  of Hong  Kong  shall  have  jurisdiction  to hear and
         determine any suit,  action or proceeding,  and to settle any disputes,
         which may arise out of or in connection  with this  Agreement  and, for
         such purposes, irrevocably submits to the non-exclusive jurisdiction of
         such courts.

15.3     Each of the Borrowers  irrevocably  waives any objection which it might
         now or  hereafter  have to the courts  referred to in Clause 15.2 being
         nominated  as the  forum to hear and  determine  any  suit,  action  or
         proceeding,  and to settle any  disputes,  which may arise out of or in
         connection  with this  Agreement  and agrees not to claim that any such
         court is not a convenient or appropriate forum.

15.4     The submission to the  jurisdiction of the courts referred to in Clause
         15.2 shall not (and shall not be construed so as to) limit the right of
         the Lender to take proceedings  against the Borrowers or any of them in
         any other  court of  competent  jurisdiction  nor  shall the  taking of
         proceedings  in any one or more  jurisdictions  preclude  the taking of
         proceedings in any other jurisdiction, whether concurrently or not.

15.5     Each of the Borrowers hereby consents generally in respect of any legal
         action  or  proceeding  arising  out  of or  in  connection  with  this
         Agreement  to the giving of any  relief or the issue of any  process in
         connection   with  such  action  or   proceeding   including,   without
         limitation,  the making,  enforcement or execution against any property
         whatsoever  (irrespective  of its use or intended  use) of any order or
         judgment which may be made or given in such action or proceeding.

AS  WITNESS  the hands of the duly  authorised  representatives  of the  parties
hereto the day and year first before written.


                                       29
<PAGE>


SIGNED for and on behalf of         )        /s/ JOHN P. HOLLOWAY
UPS CAPITAL GLOBAL                  )        -----------------------------------
TRADE FINANCE CORPORATION           )        John P. Holloway
by:                                 )

Address:     35 Glenlake Parkway, NE, Atlanta, GA 30328, U.S.A.
Fax:         1 404-828-3775
Attention:   John P. Holloway



SIGNED for and on behalf of         )        /s/ HENRY CHU
TARRANT COMPANY LIMITED             )        -----------------------------------
by:                                 )        Henry Chu, Director

                                             /s/ CHARLES LAI
                                             -----------------------------------
                                             Charles Lai, Director/Secretary
Address:     13th Floor, Lladro Centre
             72-80 Hoi Yuen Road
             Kwun Tong, Kowloon
             Hong Kong
Fax:         852-2343 2801
Attention:   Mr Henry Chu



SIGNED for and on behalf of         )        /s/ HENRY CHU
MARBLE LIMITED                      )        -----------------------------------
by:                                 )        Henry Chu, Director

                                             /s/ GRACE TAM
                                             -----------------------------------
                                             Grace Tam, Director/Secretary
Address:     13th Floor, Lladro Centre
             72-80 Hoi Yuen Road
             Kwun Tong, Kowloon
             Hong Kong
Fax:         852-2343 2801
Attention:   Mr Henry Chu



SIGNED for and on behalf of         )        /s/ HENRY CHU
TRADE LINK HOLDINGS LIMITED         )        -----------------------------------
by:                                 )        Henry Chu, Director

                                             /s/ GRACE TAM
                                             -----------------------------------
                                             Grace Tam, Director/Secretary
Address:     13th Floor, Lladro Centre
             72-80 Hoi Yuen Road
             Kwun Tong, Kowloon
             Hong Kong
Fax:         852-2343 2801
Attention:   Mr Henry Chu


                                       30