AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT


         THIS AMENDED AND RESTATED CREDIT AND SECURITY  AGREEMENT  ("Agreement")
is made as of the  25th  day of  March,  1998,  by and  among  KEYBANK  NATIONAL
ASSOCIATION,  a national banking association (the "Bank"), with an office at 127
Public  Square,  Cleveland,  Ohio 44114;  MORGAN  DRIVE AWAY,  INC.,  an Indiana
corporation with offices at 2746 Old U.S. Route 20 West, Elkhart,  Indiana 46515
("Morgan");  TDI,  INC.,  an Indiana  corporation  with offices at 2746 Old U.S.
Route 20 West, Elkhart,  Indiana 46515 ("TDI") and INTERSTATE INDEMNITY COMPANY,
a Vermont  corporation  with  offices at 2746 Old U.S.  Route 20 West,  Elkhart,
Indiana  46515  ("Interstate"  and,   collectively  with  Morgan  and  TDI,  the
"Borrowers",  with each being a  "Borrower");  and THE  MORGAN  GROUP,  INC.,  a
Delaware  corporation  with  offices  at 2746 Old U.S.  Route 20 West,  Elkhart,
Indiana 46515 ("Group").

                                R E C I T A L S:

         A. The Borrowers and the Bank are the parties to that certain Revolving
Credit Facility  Agreement dated March 27, 1997 (as amended by a First Amendment
thereto dated March 6, 1998, the "Original Credit Agreement").

         B.  The  Borrowers'  loan  indebtedness  to the  Bank  pursuant  to the
Original Credit  Agreement,  is evidenced by a Master Revolving Note dated March
27, 1997 and amended March 6, 1998 in the principal  amount of $13,000,000  (the
"Existing  Revolving Loans"),  and such loan indebtedness,  together with all of
the Borrowers' other indebtedness and obligations to the Bank, is secured by the
Security  Agreements  of Morgan and TDI in favor of the Bank and dated March 27,
1997 (collectively, as amended, the "Existing Security Agreements").

         C. The  Borrowers  have  requested  the Bank to increase the  aggregate
principal amount of loans available to the Borrowers,  to extend the maturity of
such  indebtedness to the Bank and to amend and restate the terms and conditions
of the Original Credit Agreement.

         D. Subject to the terms and conditions  hereinafter set forth, the Bank
has indicated its  willingness  to increase  such  availability,  to extend said
maturity and amend and restate the Original Credit Agreement.

         E. In addition to the  foregoing,  from time to time the  Borrowers may
request  the Bank to issue  letters  of  credit  on behalf of some or all of the
Borrowers; however, the Bank has made no commitment to do so.



<PAGE>

         F. None of the Borrowers'  indebtedness  and  obligations in respect of
the Existing  Revolving Loans  outstanding as of the date hereof shall be deemed
repaid or otherwise satisfied upon the execution and closing of the transactions
contemplated by this Agreement;  but, instead, the loans hereunder are and shall
be  deemed  to be the  same  indebtedness  as that of the  Borrowers  under  the
Existing Revolving Loans.

                              A G R E E M E N T S:

         NOW, THEREFORE,  in consideration of the terms and conditions contained
herein, and of any extension of credit heretofore,  now or hereafter made by the
Bank to or for the benefit of the Borrowers and Group, the parties hereto hereby
agree that the Original Credit  Agreement and the Existing  Security  Agreements
are hereby amended and restated in their entirety to provide as follows:

1.       GENERAL DEFINITIONS

         When  used  herein,  the  following  terms  shall  have  the  following
meanings:

         Account(s): Account(s) and any other right to payment for goods sold or
leased or for services  rendered which is not a General  Intangible or evidenced
by an Instrument,  Document or Chattel Paper,  whether or not it has been earned
by performance,  and includes,  without limitation, all rights to payment earned
or unearned  under a charter or other  contract  involving  the use or hire of a
vessel and all rights incident to the charter or contract.

         Account Debtor: Any Person who, or any of whose property,  shall at the
time in question be obligated  in respect of all or any part of a Receivable  or
any  part  thereof  and  includes,  without  limitation,  co-makers,  indorsers,
guarantors,  pledgors,  hypothecators,  mortgagors,  and any  other  Person  who
agrees,  conditionally  or  otherwise,  to make any loan to,  purchase  from, or
investment in, any other Account Debtor or otherwise  assure or guaranty against
loss on any  Receivable  in which a Borrower now has or  hereafter  acquires any
rights.

         Adjusted  LIBOR:  A rate  per  annum  equal  to the  quotient  obtained
(rounded  upwards,  if necessary,  to the nearest 1/100th of 1%) by dividing (i)
the applicable LIBOR rate by (ii) 1.00 minus the Reserve  Percentage,  and which
Adjusted LIBOR shall be  automatically  adjusted on and as of the effective date
of any change in the Reserve Percentage.



<PAGE>




         Affiliate:  When used with reference to any Person (the  "subject"),  a
Person that is in control of,  under the  control  of, or under  common  control
with,  the  subject,  the term  "control"  meaning the  possession,  directly or
indirectly,  legally or  beneficially,  of the power to direct the management or
policies of a Person,  whether  through the ownership of voting  securities,  by
contract, or otherwise. For the purposes of this Agreement, and without limiting
the  generality  of the  foregoing,  any holder of Stock in a Borrower  or their
parent, Group, shall be deemed to be an Affiliate of a Borrower.


         Annualized  EBIT:  As of the end of any fiscal  quarter,  EBIT for such
fiscal  quarter,  plus  EBIT for the  three  (3)  immediately  preceding  fiscal
quarters; provided, however, that (i) as at the end of the fiscal quarter ending
June 30, 1998 only, Annualized EBIT shall be deemed to mean EBIT for such fiscal
quarter,  plus EBIT for the immediately preceding fiscal quarter, and (ii) as at
the end of the fiscal quarter ending  September 30, 1998 only,  Annualized  EBIT
shall be deemed to mean EBIT for such fiscal quarter,  plus EBIT for the two (2)
immediately preceding fiscal quarters.

         Annualized Interest Expense:  As of the end of any fiscal quarter,  the
aggregate of Consolidated  interest expense (including without limitation,  that
attributable to capitalized  leases in accordance with GAAP) on all Funded Debt,
on a Consolidated  basis, for such fiscal quarter,  plus  Consolidated  interest
expense  for the three (3)  immediately  preceding  fiscal  quarters;  provided,
however, that (i) as at the end of the fiscal quarter ending June 30, 1998 only,
Annualized  Interest  Expense  shall be  deemed  to mean  Consolidated  interest
expense for such fiscal  quarter,  plus  Consolidated  interest  expense for the
immediately  preceding  fiscal  quarter,  and  (ii) as at the end of the  fiscal
quarter ending  September 30, 1998 only,  Annualized  Interest  Expense shall be
deemed to mean  Consolidated  interest  expense  for such fiscal  quarter,  plus
Consolidated  interest  expense  for the two (2)  immediately  preceding  fiscal
quarters.



<PAGE>




         Bank Debt: Collectively, all Debt of the Borrowers to the Bank, whether
incurred  directly  to the  Bank  or  acquired  by it by  purchase,  pledge,  or
otherwise,  and  whether  participated  to or from the Bank in whole or in part,
including,  without  limitation,  the Borrowers'  Debt to the Bank in respect of
letters of credit from time to time issued for a Borrower and any  reimbursement
agreement in connection therewith,  interest, charges, expenses, attorneys' fees
and other sums  chargeable to the Borrowers by the Bank and future advances made
to or for the benefit of a Borrower, whether arising under this Agreement, under
any of the Other  Agreements  or  acquired  by the Bank  from any other  source,
whether evidenced by the Revolving Note or any other instrument,  or any note or
instrument in  modification,  replacement,  supplement or substitution  thereof,
whether  heretofore,  now or hereafter owing,  arising,  due or payable from any
Borrower to the Bank and howsoever  evidenced,  created,  incurred,  acquired or
owing,  whether  primary,  secondary,  direct,  contingent,  fixed or otherwise,
including obligations of performance.


         Banking Day:  Any day of the week,  other than  Saturday or Sunday,  on
which the Bank is open for business in Cleveland, Ohio; provided, however, that,
when used in connection with a LIBOR Loan (other than in the definition of LIBOR
Margin),  "Banking  Day"  shall  mean any such day on which  banks  are open for
dealings in or quoting deposit rates for dollar deposits in the London interbank
market.

         Basis Point: One one-hundredth of one percent (0.01%) per annum.

         Borrowing  Base:  At any time and from time to time, an amount equal to
eighty  percent  (80%)  of the  sum of  (i)  the  aggregate  face  value  of the
Borrowers'  Eligible  Accounts at such time,  plus (ii) the amount  equal to the
remainder  of (a) the In  Transit  Amount at such time,  minus (b) the  Eligible
Reserve at such time.

         Change in Control:  After the Closing Date, (i) the  acquisition by any
Person or group of  Persons  (within  the  meaning  of  Section  13 or 14 of the
Securities  Exchange Act of 1934, as amended),  of beneficial  ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange  Commission  under such
Act) or  control  of __% or more of the  outstanding  shares  of the Stock (on a
fully  diluted  basis) of any  Obligor or (b)  during any period of twelve  (12)
consecutive  calendar  months,  the ceasing of individuals who were directors of
Group on the first day of such period to  constitute  a majority of the board of
directors of Group.

         Charges:  As defined in Section 6.1(D).

         Chattel  Paper:  A writing or  writings  (other than a charter or other
contract  involving the use or hire of a vessel) which  evidence both a monetary
obligation and a security  interest in or a lease of specific goods, and, when a
transaction  is evidenced  both by such a security  agreement or lease and by an
Instrument  or  series of  Instruments,  the group of  writings  taken  together
constitutes Chattel Paper.

         Closing Date:  As defined in Section 3.3.

         Collateral:  All of the property and interests in property described in
Section 5.1 and all other property and interests in property  which shall,  from
time to time, secure the Bank Debt, including,  without limitation, the Accounts
and  other  Receivables,   the  General  Intangibles,  the  Inventory,  and  the
Equipment.



<PAGE>




         Consolidated:   Group   and  its   Subsidiaries,   including,   without
limitation, the Borrowers, taken as a whole.


         Consolidated  Net  Worth:  The  excess of the net book value of Group's
Consolidated assets over all of Group's Consolidated liabilities,  as determined
on an accrual basis and in accordance with GAAP.

         Controlled Group: All members of a controlled group of corporations and
all trades or businesses  (whether or not  incorporated),  if any,  under common
control which, together with a Borrower,  are treated as a single employer under
Section 414(b) or 414(c) of the Internal Revenue Code of 1986, as amended.

         Debt: Collectively, all liabilities, indebtedness and other obligations
of the Person or Persons in question,  including, without limitation, every such
obligation  whether  owing by one such  Person  alone or with one or more  other
Persons in a joint, several, or joint and several capacity, whether now owing or
hereafter arising, whether owing absolutely or contingently,  whether created by
lease,  loan,  overdraft,   guaranty  of  payment,  or  other  contract,  or  by
quasi-contract,  tort, statute, other operation of law, or otherwise. Without in
any  way  limiting  the  generality  of  the  foregoing,   Debt  of  an  Obligor
specifically  includes (i) all obligations or liabilities of any Person that are
secured  by any Lien upon  property  owned by such  Obligor,  even  though  such
Obligor  has not  assumed or become  liable for the  payment  thereof;  (ii) all
obligations  or  liabilities  created  or  arising  under  any  lease of real or
personal  property,  or conditional  sale or other title retention  agreement in
respect of property used and/or acquired by such Obligor, even though the rights
and  remedies of the lessor,  seller  and/or  lender  thereunder  are limited to
repossession of such property;  (iii) all unfunded  pension fund obligations and
liabilities; and (iv) deferred taxes.

         Debt Service: For any period, the sum of all interest,  principal, fees
and other charges,  if any,  including the current maturities  thereof,  due and
payable by an Obligor during such period on Funded Debt.

         Default Interest Rate:  As defined in Section 8.4.



<PAGE>




         Document:  (a) A document that purports to be issued by or addressed to
a bailee and that  purports to cover goods that are in the  bailee's  possession
that are either  identified  or fungible  portions of an  identified  mass,  and
includes a bill of lading,  dock warrant,  dock receipt,  warehouse receipt,  or
order for the  delivery  of goods,  and any other  document  that in the regular
course of business or financing  is treated as  adequately  evidencing  that the
Person in  possession  of it is entitled to  receive,  hold,  and dispose of the
document  and the goods it covers or (b) a receipt  issued by the owner of goods
including distilled spirits or agricultural  commodities that are stored under a
statute  requiring a bond  against  withdrawal  or a license for the issuance of
receipts in the nature of a warehouse receipt


         EBIT:  For any period,  net income of Group and its  Subsidiaries  on a
Consolidated  basis  determined in accordance with GAAP but (i) before deduction
for interest  expense on all Funded Debt, (ii) before  provision for taxes based
on income,  if any,  and (iii)  excluding  the effect of any (a)  non-recurring,
non-cash  gains and (b) gains and losses from the sale or other  disposition  of
assets, other than Inventory in the ordinary course of business.

         Eligible Accounts: Those Accounts determined by the Bank to be Eligible
Accounts as provided in Section 4.1.

         Eligible Reserve:  As of any date on which a Borrowing Base certificate
or report of Accounts is delivered  to the Bank that  portion of those  Accounts
included in the In Transit Amount contained in such certificate or report which,
in the  Borrowers'  reasonable  and prudent  judgment  based upon the Borrowers'
experience  with Accounts of such type (but at all times subject to the approval
of the Bank in its sole  discretion)  are out of period (i.e.,  as to which,  on
such  delivery  date,  the  applicable  transportation  services  have  not been
completed,  necessary  Documents in respect thereof have not been delivered,  or
both) and which were identified in the Borrower's  Borrowing Base Certificate or
report of Accounts (as required by Section  7.1(B)(iv)  hereof) as of the end of
the immediately preceding month.

         Equipment:  All goods that (a) are used or bought for use  primarily in
business, including, without limitation, farming or a profession, or by a Person
who is a non-profit organization or a governmental  subdivision or agency or (b)
are not Inventory, farm products, or consumer goods, it being the intention that
the term Equipment include,  without limitation,  machinery,  equipment,  tools,
furniture,  furnishings  and  fixtures,  including,  but  not  limited  to,  all
manufacturing,  fabricating,  processing,  transporting and packaging equipment,
power  systems,   heating,   cooling  and  ventilating  systems,   lighting  and
communication  systems,  fire prevention,  alarm and security  systems,  laundry
systems, and computing and data processing systems.

         ERISA: Title IV of the Employee Retirement Income Security Act of 1974,
as amended.

         Eurocurrency  Liabilities:  As that term is defined in  Regulation D of
the Board of Governors of the Federal Reserve System,  as in effect from time to
time.



<PAGE>




         Event of Default:  As defined in Section 8.1.


         Existing Revolving Loans:  As defined in Recital B, above.

         Existing Security Agreements:  As defined in Recital B above.

         Fed Funds Rate: For any period,  a fluctuating  interest rate per annum
equal for each day during  such period to the  weighted  average of the rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published for such day (or, if such day is
not a Banking Day, for the next  preceding  Banking Day) by the Federal  Reserve
Bank of New York,  or, if such rate is not so  published  for any day which is a
Banking Day,  the average of the  quotations  for such day on such  transactions
received by the Bank from three (3) federal funds brokers of recognized standing
selected by it.

         Financials:  Those financial statements of Borrowers listed on Schedule
1A hereto, all of which financial  statements have been delivered to the Bank in
connection with its review of the Borrowers' request for credit.

         Funded  Debt:  With  respect to any Person,  without  duplication,  (a)
obligations for money borrowed including,  without  limitation,  all capitalized
leases,  notes  payable,  drafts  accepted  representing  extensions  of credit,
obligations evidenced by bonds, debentures,  notes or other similar instruments,
and obligations  upon which interest charges are customarily paid or discounted,
(b) obligations to pay the deferred purchase price of property or services,  (c)
obligations  secured by any Lien on the properties or assets of the Person,  (d)
obligations  of such  Person in respect of  currency  or  interest  rate swap or
comparable  transactions and (e) obligations under direct or indirect guaranties
in respect  of,  and  obligations  (contingent  or  otherwise)  to  purchase  or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness  or  obligations  of others of the kinds referred to in clauses (a)
through (d) above,  the amount of which  indebtedness  or obligation  under this
clause (e) shall be deemed to be an amount  equal to the stated or  determinable
amount  of such  primary  obligation,  or if less,  the  maximum  amount of such
primary  obligation  for which such  Person  may be liable,  or if not stated or
determinable,  the maximum  reasonably  anticipated in respect thereof (assuming
such Person is required to perform thereunder).

         GAAP: Generally accepted accounting  principles as from time to time in
effect which shall include the official interpretations thereof by the Financial
Accounting  Standards Board or any successor  accounting authority of comparable
standing, consistently applied.



<PAGE>




         General Intangible: Any personal property,  including things in action,
other than goods, Accounts,  Chattel Paper, Documents,  Instruments,  money, and
all other contract rights, choses in action, causes of action,  company or other
business records, inventions, designs, patents, patent applications, trademarks,
trade names,  trade secrets,  good will,  copyrights,  registrations,  licenses,
franchises,  permits, tax claims,  computer programs,  and any guarantee claims,
security  interests or other security held by or granted to a Borrower to secure
payment by an Account  Debtor of any of the  Accounts  and all other  intangible
personal property of every kind and nature  whatsoever.  All licenses,  patents,
patent  applications,  copyrights,  trademarks  and trade names now owned by the
Borrowers which, as of the date hereof,  shall serve as Collateral are listed on
Schedule 1B hereto.


         Guaranty:  As defined in Section 3.1(Q).

         In Transit  Amount:  As of any date during a month,  an amount equal to
the lesser of (i) the aggregate amount of Accounts for  transportation  services
of a  Borrower  which  the  Borrowers  have  included  in their  Borrowing  Base
certificate or report of Accounts (as required by Section  7.1(B)(iv) hereof) as
of the end of the immediately  preceding month,  which otherwise meet all of the
criteria  to be  Eligible  Accounts,  but as to which,  although  transportation
services in respect thereof were commenced to be performed as of such month end,
not all such transportation  services were completed as of such month end or, if
such services were  completed as of such month end, not all necessary  Documents
were received as of such month end by such Borrower or (ii) $3,500,000.

         Instrument: A negotiable instrument, or a certificated security, or any
other writing which  evidences a right to the payment of money and is not itself
a security  agreement or lease and is of a type which is in the ordinary  course
of  business   transferred  by  delivery  with  any  necessary   indorsement  or
assignment.

         Interest  Coverage  Ratio:  As of any date, the ratio of (i) Annualized
EBIT as of such date to (ii) Annualized Interest Expense as of such date.



<PAGE>

         Interest Period: For each LIBOR Loan, the period commencing on the date
of such LIBOR Loan or the date of the Rate Conversion or Rate  Continuation of a
Revolving Loan into such LIBOR Loan and ending on the numerically  corresponding
day of the period  selected by the Borrowers  pursuant to the provisions  hereof
and  each  subsequent  period  commencing  on the  last  day of the  immediately
preceding  Interest  Period in respect of such  Revolving Loan and ending on the
last day of the period  selected by the  Borrowers  pursuant  to the  provisions
hereof.  The  duration of each such  Interest  Period shall be one (1), two (2),
three (3) or six (6) months,  in each case as the  Borrowers  may  select,  upon
delivery to the Bank of a notice  therefor in  accordance  with this  Agreement;
provided, however, that:


                  (i)      no  Interest  Period may end on a date later than the
                           Revolving Facility Termination Date;

                  (ii)     if there is no such numerically  corresponding day in
                           the month  that is such,  as the case may be,  first,
                           second,  third or sixth month after the  commencement
                           of an Interest Period, such Interest Period shall end
                           on the last day of such month; and

                  (iii)    whenever  the  last  day of any  Interest  Period  in
                           respect of a LIBOR Loan  would  otherwise  occur on a
                           day other  than a Banking  Day,  the last day of such
                           Interest  Period  shall be  extended  to occur on the
                           next succeeding Banking Day; provided,  however, that
                           if such  extension  would  cause the last day of such
                           Interest  Period  to  occur  in  the  next  following
                           calendar month,  the last day of such Interest Period
                           shall occur on the immediately preceding Banking Day.

         Inventory:  Goods  that are held by a Person who holds them for sale or
lease or to be  furnished  under  contracts  of service or if that Person has so
furnished them, or if they are parts, supplies, raw materials,  work in process,
or materials used or consumed in a business,  repossessed goods,  returned goods
and goods in transit, except that Inventory does not include Equipment.

         Leverage Ratio: As of any date, the percentage equivalent of the number
resulting from dividing (i) the amount of Consolidated  Funded Debt on such date
by (ii) an amount equal to the sum of (a) the amount of Consolidated Funded Debt
on such date, plus (b) Consolidated Net Worth on such date.



<PAGE>




         LIBOR: With respect to any LIBOR Loan for any Interest Period,  the per
annum rate of  interest,  determined  by the Bank in  accordance  with its usual
procedures (which determination shall be conclusive absent manifest error) as of
approximately  11:00  A.M.  (London  time)  two (2)  Banking  Days  prior to the
beginning of such Interest  Period  pertaining to such LIBOR Loan,  appearing on
page 3750 of the Telerate  Service (or any  successor to or  substitute  page of
such Service,  or any successor to or substitute for such Service providing rate
quotations  comparable to those currently provided on such page of such Service,
as determined by the Bank from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank  market)
as the rate in the London  interbank  market for dollar  deposits in immediately
available funds with a maturity comparable to such Interest Period. In the event
that such a rate quotation is not available for any reason,  then the rate shall
be the rate, determined by the Bank as of approximately 11:00 A.M. (London time)
two (2) Banking Days prior to the beginning of such Interest  Period  pertaining
to such LIBOR Loan, to be the average  (rounded  upwards,  if necessary,  to the
nearest one  sixteenth  of one percent  (1/16th of 1%) of the per annum rates of
interest at which dollar deposits in immediately  available funds  approximately
equal in principal  amount to such LIBOR Loan and for a maturity  comparable  to
the  Interest  Period are  offered to the  Reference  Bank by prime banks in the
London interbank market.


         LIBOR Loan:  Those Revolving Loans described in Sections 2.1(A) and 2.3
hereof on which the Borrowers shall pay interest at a rate based on LIBOR.

         LIBOR Margin: (a) Until five (5) Banking Days (or such lesser period as
the Bank may determine in its discretion)  after the Borrowers have delivered to
the Bank the  Consolidated  financial  statements  and related  certificates  in
respect of the fiscal year ending  December 31, 1998 pursuant to Section 7.1(B),
below, one hundred  sixty-five (165) Basis Points,  and (b) thereafter,  at such
time(s),  and from time to time, as Interest Coverage Ratio as at the end of the
immediately  preceding fiscal quarter (commencing with the fiscal quarter ending
December 31, 1998) is any of the  following  ratios,  the number of Basis Points
set forth opposite such ratio:

Interest Coverage Ratio                              LIBOR Margin

Less than 3.00 to 1                                  LIBOR Loans not available

Equal to or greater than 3.00 to
   1 and less than 3.50 to 1                         One hundred fifty (150)
                                                        Basis Points

Equal to or greater than 3.50 to
   1 and less than 4.50 to 1                         One hundred twenty-five
                                                        (125) Basis Points

Equal to or greater than 4.50 to 1                   One hundred (100) Basis
                                                        Points.



<PAGE>




Decreases in the LIBOR Margin shall be made  effective five (5) Banking Days (or
such lesser period as the Bank may determine in its discretion) after the Bank's
receipt of the Obligors' financial statements and related certificates  pursuant
to Section 7.1(B), below,; increases in the LIBOR Margin shall be made effective
as of the  earlier of (i) five (5) Banking  Days (or such  lesser  period as the
Bank may determine in its discretion)  after the Bank's receipt of the Obligors'
financial statements and related certificates pursuant to Section 7.1(B), below,
or (ii) the date on which such  statements  are due to be  delivered to the Bank
pursuant to said Section.


         LIBOR Prepayment Compensation Rate: As defined in Section 2.8, below.

         Lien:  Any  mortgage,   pledge,   assignment,   lien,  claim,   charge,
encumbrance,  or security  interest of any kind,  or the interest of a vendor or
lessor  under any  conditional  sale  agreement,  capital  lease or other  title
retention agreement.

         Lock box Agreement:  As defined in Section 5.9(D).

         Maximum  Commitment:  Fifteen  Million Dollars  ($15,000,000),  as such
amount may from time to time be reduced pursuant to Section 2.5, below.

         Maximum Revolving Credit: At any time and from time to time, the lesser
of (i) the Maximum Commitment or (ii) the Borrowing Base at such time.

         Multiemployer  Plan:  A  "multiemployer  plan" as  defined  in  Section
4001(a)(3) of ERISA, under which a Borrower is an employer.

         Obligors: Collectively,  Morgan, TDI, Interstate, and Group, each being
an "Obligor".

         Original Credit Agreement: As defined in Recital A, above.

         Other  Agreements:  The Revolving Note, the Guaranty,  subordination or
intercreditor  agreements,  patent and  trademark  security  agreements  and all
Supplemental Documentation and all other documents or writings executed by or on
behalf  of any  Obligor  or  delivered  to  the  Bank  in  connection  with  the
transaction contemplated hereby.

         PBGC: Pension Benefit Guaranty  Corporation or any governmental  entity
succeeding to the functions thereof.

         Permitted Encumbrances: As defined in Section 6.1(B).

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



<PAGE>




         Plan: Any employee pension benefit plan subject to ERISA established or
maintained by a Borrower or any member of the Controlled Group, or any such Plan
to which such  Borrower  or any member of the  Controlled  Group is  required to
contribute on behalf of any of its employees.


         Possible Default:  Any event,  situation or thing which, with the lapse
of any applicable grace period or the giving of notice or both, would constitute
an Event of Default and which has not been consented to by the Bank in writing.

         Prepayment LIBOR: As defined in Section 2.8, below.

         Previous  Minimum:  As at the end of any fiscal  quarter,  the  minimum
Consolidated  Net Worth  required to be maintained by the Obligors as at the end
of the  immediately  preceding  fiscal  quarter  pursuant to the  provisions  of
Section 7.2(G), below.

         Prime Rate: The higher of (i) the per annum rate equal to the Fed Funds
Rate plus one hundred  fifty (150) Basis Points or (ii) that  variable  interest
rate  established  from time to time by the Bank as the  Bank's  Prime  Rate (or
equivalent  rate  otherwise  named),  whether  or  not  such  rate  is  publicly
announced;  the Prime  Rate may not  necessarily  be the  lowest  interest  rate
charged by Bank for commercial or other extensions of credit.

         Prime Rate Loans:  Those  loans  described  in Sections  2.1(A) and 2.3
hereof on which the Borrowers  shall pay interest at the rate based on the Prime
Rate.

         Proceeds:  Whatever  is  received or  receivable  upon sale,  exchange,
collection, or other disposition of any property (including, without limitation,
Collateral) or Proceeds,  whether directly or indirectly,  and includes, without
limitation, the proceeds of any casualty, liability, or title insurance relating
to any such  property and any goods or other  property  returned  after any such
sale, exchange, collection, or other disposition.

         Products:   Property   directly  or  indirectly   resulting   from  any
manufacturing, processing, assembling, or commingling of any goods.

         Quarterly Increase: As at the end of any fiscal quarter, the greater of
(i) an amount equal to fifty percent (50%) of  Consolidated  net income for such
quarter determined in accordance with GAAP or (ii) zero dollars ($0).

         Rate  Continuation:  A continuation of a LIBOR Loan having a particular
Interest  Period as a LIBOR Loan having an Interest  Period of the same duration
pursuant to Section 2.1(B) hereof.



<PAGE>




         Rate Conversion: A conversion pursuant to Section 2.1(B) of a Revolving
Loan of one Type into a  Revolving  Loan of another  Type and,  with  respect to
LIBOR  Loans,  from one  permissible  Interest  Period  to  another  permissible
Interest Period.


         Rate Conversion/Continuation  Request: A request for Rate Conversion or
Rate Continuation made pursuant to Section 2.1(B).

         Receivable: Any claim for or right to payment, however arising, whether
classified as an Account, a General Intangible, or otherwise, whether contingent
or fixed, whether or not evidenced by any writing, and, if so evidenced, whether
evidenced by Chattel Paper, one or more Instruments, or otherwise.

         Reference Bank:  The Cayman Islands branch office of the Bank.

         Regulatory Change: As to the Bank, any change in United States federal,
state  or  foreign  laws  or  regulations  or  the  adoption  or  making  of any
interpretations,  directives or requests of or under any United States  federal,
state or foreign laws or regulations (whether or not having the force of law) by
any  court  or  governmental   authority  charged  with  the  interpretation  or
administration thereof.

         Request: Any of the borrowing request for a Revolving Loan described in
Section 2.1(A), below., or a Rate Conversion or Rate Continuation Request.

         Reserve  Percentage:  For any  day,  that  percentage  (expressed  as a
decimal) which is in effect on such day, as prescribed by the Board of Governors
of the Federal  Reserve System (or any successor)  for  determining  the maximum
reserve requirement  (including,  without limitation,  all basic,  supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other  scheduled  changes in reserve  requirements)  for a member bank of the
Federal  Reserve  System  in  Cleveland,   Ohio,  in  respect  of  "Eurocurrency
Liabilities".

         Revolving Credit Facility:  As defined in Section 2.1(A).

         Revolving Facility Termination Date:  As defined in Section 2.1(E).

         Revolving Loan(s):  As defined in Section 2.1(A).

         Revolving Note:  As defined in Section 2.1(D).

         Special Collateral:  As defined in Section 5.2.



<PAGE>




         Stock:  All  shares,   options,   membership   interests,   partnership
interests,  participation or other  equivalents or equity  interests  (howsoever
designated) of or in, as the case may be, a corporation  or a limited  liability
company, whether voting or non-voting,  including without limitation,  warrants,
convertible   debentures   and  all   agreements,   instruments   and  documents
convertible, in whole or in part, into any one or more or all of the foregoing.


         Subordinated  Debt:  That  portion of the Debt of an  Obligor  which is
subordinated  in a manner  satisfactory  in form and substance to the Bank as to
right and time of payment of principal  and  interest  thereon to any and all of
the Bank Debt.

         Subsidiary:  Any corporation,  limited liability company,  partnership,
entity or other Person of which more than 50% of the  outstanding  capital Stock
having ordinary voting power to vote for directors of such Person  (irrespective
of  whether,  at the time,  stock of any other  class or classes of such  Person
shall  have or  might  have  voting  power by  reason  of the  happening  of any
contingency)  is at the time,  directly or indirectly,  owned by a Person and/or
one or more Subsidiaries of such Person.

         Supplemental   Documentation:   Agreements,   instruments,   documents,
certificates  of  title,  financing  statements,  warehouse  receipts,  bills of
lading,  notices of  assignment  of accounts,  schedules  of accounts  assigned,
mortgages and other written matter necessary or requested by the Bank to perfect
and maintain perfected the Bank's Liens in the Collateral.

         Type: When used in respect of any Revolving  Loan,  LIBOR or Prime Rate
as applicable to such Revolving Loan.

         Other Terms. Other terms contained in this Agreement shall,  unless the
context  indicates  otherwise,  have the  meanings  provided  for by the Uniform
Commercial  Code (the  "Code")  of the State of Ohio to the  extent the same are
used or defined  therein.  Any accounting terms used in this Agreement which are
not specifically  defined herein shall have the meanings  customarily given such
terms in accordance  with GAAP.  The terms  "fiscal  year" and "fiscal  quarter"
shall refer to the fiscal year of the Obligors  ending  December 31 of each year
and the quarters  thereof ending March 31, June 30, September 30 and December 31
of each year. Unless otherwise expressly stated, all references to a time of day
shall be deemed to mean Cleveland, Ohio time.

2.       LOANS:  GENERAL TERMS

         2.1.  Revolving Credit; Revolving Note.



<PAGE>




         (A)  Advance  of Loans.  Subject  to the terms and  conditions  of this
Agreement,  on the Closing Date the terms and conditions of the Original  Credit
Agreement and the Existing Security  Agreements shall be amended and restated in
their entirety to provide for an amended and restated  revolving credit facility
(the  "Revolving  Credit  Facility")  under  which,  subject  to the  terms  and
conditions  hereof,  the Bank  shall,  from time to time,  upon  written or oral
(confirmed promptly in writing) request of a Borrower therefor, advance loans to
one or more of the Borrowers  (each a "Revolving  Loan" and,  collectively,  the
"Revolving  Loans")  in the  maximum  aggregate  principal  amount  at any  time
outstanding  of not more  than the  Maximum  Revolving  Credit.  The  Borrowers'
requests  for  Revolving  Loans shall be in form and  content  from time to time
prescribed  by the Bank and shall be  delivered to the Bank not later than 12:00
noon of the  Banking  Day on which a Prime Rate Loan is to be  advanced  and not
later than 12:00 noon three (3) Banking Days prior to the Banking Day on which a
LIBOR Loan is to be  advanced.  Unless  otherwise  requested  by a  Borrower  in
writing (and approved by the Bank),  all Revolving  Loans shall be advanced into
demand deposit account No. ___________, maintained by the Borrowers at an office
of the Bank  designated by the Bank and  reasonably  satisfactory  to Borrowers.
Subject to the terms and conditions set forth in this  Agreement,  the Borrowers
shall have the option to request  Revolving  Loans  comprised  of (i) Prime Rate
Loans  maturing  on or  before  the  Revolving  Facility  Termination  Date,  in
aggregate  amounts of not less than One Hundred Thousand  Dollars  ($100,000) or
(ii)  LIBOR  Loans in  aggregate  amounts  of not less  than Two  Hundred  Fifty
Thousand  Dollars  ($250,000).  Subject  to the  terms  and  conditions  of this
Agreement,  the Borrowers may, during the term of the Revolving Credit Facility,
repay and reborrow the Revolving Loans advanced thereunder.


         (B) Rate  Conversion  and  Continuation.  The Borrowers  shall have the
right to cause a Rate  Conversion or Rate  Continuation  in respect of Revolving
Loans then outstanding,  upon request delivered by the Borrowers to the Bank not
later than 12:00 noon (i) on the day which is the Banking Day that the Borrowers
desire to convert any LIBOR  Loans into a Prime Rate Loan,  (ii) on the day that
is three (3)  Banking  Days prior to the  Banking  Day upon which the  Borrowers
desire to convert  any Prime  Rate Loan into a LIBOR  Loan for a given  Interest
Period,  (iii) on the day which is three (3)  Banking  Days prior to the Banking
Day upon which the  Borrowers  desire to continue any LIBOR Loan as a LIBOR Loan
for an additional Interest Period of the same duration, (iv) on the day which is
three (3) Banking Days prior to the Banking Day upon which the Borrowers  desire
to convert any LIBOR Loan having a particular  Interest Period into a LIBOR Loan
having a different  permissible Interest Period,  provided,  however,  that each
such Rate Conversion or Rate Continuation shall be subject to the following:



<PAGE>




                  (1) if less  than all the  outstanding  principal  amount of a
         Revolving  Loan is  converted or  continued,  the  aggregate  principal
         amount of such Revolving  Credit Loans converted or continued shall be,
         (i) in the  case of  LIBOR  Loans,  not less  than  Two  Hundred  Fifty
         Thousand Dollars ($250,000),  and (ii) in the case of Prime Rate Loans,
         not less than One Hundred Thousand Dollars ($100,000);


                  (2)  each  Rate  Conversion  or  Rate  Continuation  shall  be
         effected by the Bank's  applying  the  proceeds of the  Revolving  Loan
         resulting  from  such  Rate  Conversion  or  Rate  Continuation  to the
         Revolving  Loan being  converted or continued,  as the case may be, and
         the accrued  interest on any such Revolving  Loan (or portion  thereof)
         being converted or continued shall be paid to the Bank by the Borrowers
         at the time of such Rate Conversion or Rate Continuation;

                  (3) LIBOR Loans may not be  converted  or  continued at a time
         other than the end of the Interest Period applicable thereto unless the
         Borrowers shall pay, upon demand,  any amounts due to the Bank pursuant
         to Section 2.8;

                  (4) Revolving  Loans may not be converted into or continued as
         LIBOR  Loans (a) at any time  during  which an Event of Default  exists
         (provided  that this clause  shall not be  construed to limit any other
         right or remedy  of the  Bank) or (b) less than one month  prior to the
         Revolving  Facility  Termination  Date or for an Interest  Period which
         would continue after the Revolving Facility Termination Date;

                  (5) any LIBOR Loan that cannot be converted  into or continued
         as a LIBOR  Loan  by  reason  of  clause  (4)  shall  be  automatically
         converted  at the end of the  Interest  Period in effect for such LIBOR
         Loan into a Prime Rate Loan.



<PAGE>




Each   such   request   for   a   conversion    or    continuation    (a   "Rate
Conversion/Continuation  Request")  in  respect  of a  Revolving  Loan  shall be
transmitted by the Borrowers to the Bank, by telecopier,  telex or cable (in the
case of telex or cable,  confirmed in writing prior to the effective date of the
Rate Conversion or Rate Continuation requested),  in form and content prescribed
by the Bank,  specifying  (i) the identity and amount of the Revolving Loan that
the  Borrowers  request be  converted or  continued,  (ii) the Type of Revolving
Credit Loan into which such  Revolving  Loan is to be  converted  or  continued,
(iii) if such notice requests a Rate Conversion, the date of the Rate Conversion
(which  shall be a Banking  Day) and (iv) in the case of a Revolving  Loan being
converted into or continued as a LIBOR Loan, the Interest  Period for such LIBOR
Loan.   The   Borrowers   may  make  a  Rate   Conversion/Continuation   Request
telephonically so long as written  confirmation  thereof is received by the Bank
by 1:00 p.m.  on the same day of such  telephonic  Rate  Conversion/Continuation
Request.  The  Bank  may rely on such  telephonic  Rate  Conversion/Continuation
Request to the same extent that the Bank may rely on a written Rate  Conversion/
Continuation  Request.  Each  Rate   Conversion/Continuation   Request,  whether
telephonic  or written,  shall be  irrevocable  and binding on the Borrowers and
subject to the indemnification provisions of this Article 2. The Borrowers shall
bear all risks related to their giving any Rate Conversion/Continuation  Request
telephonically  or by such other method of  transmission  as any Borrower  shall
elect.


         (C) Failure Of Borrowers To Elect.  If no Interest  Period is specified
in any Request for a LIBOR Loan, the Borrowers  shall be deemed to have selected
an Interest  Period with a duration of one (1) month with  respect to such LIBOR
Loan.  If the Borrowers  shall not have given notice in accordance  with Section
2.1(B) to continue any LIBOR Loan into a subsequent  Interest  Period (and shall
not  have  otherwise  delivered  a  Rate   Conversion/Continuation   Request  in
accordance  with  Section  2.1(B) to convert  such LIBOR  Loan),  subject to the
limitations set forth in Sections 2.1 and 2.3, such LIBOR Loan shall, at the end
of the Interest Period  applicable  thereto (unless repaid pursuant to the terms
hereof), automatically shall be converted to a Prime Rate Loan.

         (D) Revolving  Note.  The  Borrowers'  joint and several Debt under the
Revolving  Loans shall be evidenced by an amended and restated  promissory  note
executed and  delivered by the  Borrowers to evidence the  Revolving  Loans (the
"Revolving  Note",  which term, for the purposes of this Agreement and the Other
Agreements, shall include any and all amendments,  modifications,  replacements,
supplements and substitutions thereof),  which shall be in the form of Exhibit A
attached hereto and made a part hereof.

         (E) Term.  The  Revolving  Credit  Facility  shall have an initial term
commencing on the Closing Date and  terminating  on April 30, 2001 (as such date
may be extended pursuant to a writing executed by the Borrowers and the Bank, in
the Bank's sole and absolute  discretion,  the "Revolving  Facility  Termination
Date").

         2.2.  Security;  Guaranty.  The  payment of the Bank  Debt,  including,
without  limitation,  the Revolving Loans, shall be secured by Liens in favor of
the Bank in the  Collateral  and shall be  guaranteed  by Group  pursuant to the
Guaranty.

         2.3.  Interest  Rates.  The Revolving  Loans shall be advanced as Prime
Rate Loans or LIBOR Loans pursuant to Section 2.1,  above.  The Borrowers  shall
pay interest on the unpaid  principal  amount of each Revolving Loan made by the
Bank from the date of such Revolving  Loan until such principal  amount shall be
paid in full at the following times and rates per annum:



<PAGE>




      (i)         Prime Rate Loans. During such periods as a Revolving Loan is a
                  Prime  Rate Loan,  a rate per annum  equal at all times to the
                  Prime Rate, payable quarterly,  in arrears, on the last day of
                  each  calendar  quarter and at maturity  (whether by reason of
                  acceleration or otherwise).


     (ii)         LIBOR  Loans.  During such  periods as a  Revolving  Loan is a
                  LIBOR Loan,  a rate per annum equal to the sum of the Adjusted
                  LIBOR,  plus the LIBOR  Margin  from  time to time in  effect,
                  payable (a) on the last day of each Interest Period and (b) if
                  such Interest Period has a duration of more than three months,
                  three months after the first day of such  Interest  Period and
                  (c) on the date such LIBOR Loan shall be  converted to a Prime
                  Rate Loan or to a LIBOR Loan of a different Interest Period or
                  paid  in  full  and  at   maturity   (whether   by  reason  of
                  acceleration or otherwise).

Interest on Prime Rate Loans shall be calculated daily on the basis of a 365-day
year, or when  applicable  366-day year (that is,  computed by obtaining a daily
interest  factor at the  applicable  rate based upon a 365-day (or 366-day) year
and  multiplying  such factor by the actual number of days elapsed)  Interest on
LIBOR Loans shall be  calculated  daily on the basis of a 360-day year (that is,
computed by obtaining a daily interest  factor at the applicable rate based upon
a  360-day  year and  multiplying  such  factor  by the  actual  number  of days
elapsed).   Subject  to  any  maximum  interest  rate  limitation  specified  by
applicable  law, the variable rate of interest  provided for herein shall change
automatically  without  notice to the  Borrowers  with each  change in the Prime
Rate.  In no  contingency  or event  whatsoever  shall the interest rate charged
pursuant  to the terms of this  Agreement  exceed the highest  rate  permissible
under  any  law  which a  court  of  competent  jurisdiction  shall,  in a final
determination, deem applicable hereto. In the event that such a court determines
that  the  Bank  has  received  interest  hereunder  in  excess  of the  highest
applicable  rate,  the Bank shall  promptly  refund such excess  interest to the
Borrowers;  and the Borrowers hereby agrees that the refund of such excess shall
be the Borrowers' sole remedy or claim, at law and in equity,  in respect of the
Bank's charging or receipt of interest in excess of that permitted by law.

         2.4.  Payments.  Except as  otherwise  provided  in  Section  5.9,  all
payments  to the Bank shall be payable at the Bank's  address set forth above or
at such  other  place or places as the Bank may  designate  from time to time in
writing to the  Borrowers.  Subject  always to the  provisions of Article 8, the
Bank Debt shall be payable as follows:



<PAGE>




         (A) Interest.  Interest payable pursuant to this Agreement shall be due
on the dates  specified in Section 2.3,  above,  or, at the Bank's  option,  the
amount of  interest  payable  under  the  Revolving  Note  shall be added to the
principal  balance of the Revolving  Note and be deemed an additional  Revolving
Loan thereunder;  provided,  however,  that, in addition, all accrued and unpaid
interest in respect of the Revolving Note not theretofore  paid shall be due and
payable at maturity, whether by acceleration or otherwise;


         (B) Costs,  Fees.  Costs,  fees and expenses  payable  pursuant to this
Agreement  shall be payable as and when provided in this  Agreement  and, if not
specified, then on demand;

         (C) Principal.  From and after the Closing Date,  principal  payable on
account of  Revolving  Loans  shall be due and  payable  to the extent  required
pursuant to Section  7.1(A),  below;  and,  without  limiting  any other  remedy
available to the Bank,  upon and during the  continuance of an Event of Default,
to the extent and on the date of any  collections  received  with respect to any
Proceeds of the  Collateral  and not applied to interest,  and the entire unpaid
principal  balance  of all  Revolving  Loans  shall  be  payable  in full on the
Revolving Facility Termination Date;

         (D) Other Bank Debt.  The  balance of the Bank Debt,  if any,  shall be
payable as and when provided in this Agreement or the Other  Agreements  and, if
not specified, then on demand.

To the extent,  if any, that the Bank renders  statements of account relating to
the  Revolving  Loans and other Bank Debt (and the Bank shall have no obligation
to do so),  such  statements  shall be presumed  correct and accurate and shall,
except for the Bank's right to reapply  payments,  constitute an account  stated
between the Borrowers and the Bank,  unless  thereafter waived in writing by the
Bank or unless,  within thirty (30) days after the Bank's mailing  thereof,  the
Borrowers  deliver  to the  Bank,  by  registered  or  certified  mail,  written
objection  thereto  specifying the error or errors, if any,  contained  therein.
Except as provided in the definition of Interest Period, whenever any payment to
be made hereunder,  including  without  limitation any payment to be made on the
Revolving  Note,  shall be stated to be due on a day which is not a Banking Day,
such payment shall be made on the next succeeding Banking Day and such extension
of time  shall in each  case be  included  in the  computation  of the  interest
payable  on the  Revolving  Note.  Each  Borrower  hereby  authorizes  the Bank,
automatically  and without further  instruction from such Borrower,  to withdraw
from and charge any demand deposit or other account of such Borrower  maintained
at the Bank to pay to the Bank any principal, interest or other Bank Debt on the
date on which  the same are due and  payable,  whether  at  stated  maturity  or
acceleration.



<PAGE>




         2.5.  Optional  Reduction of  Commitment.  The Borrowers  may, at their
option  from time to time,  reduce the amount of the  Maximum  Commitment  by an
amount  which  is One  Million  Dollars  ($1,000,000)  or an  integral  multiple
thereof;  provided  that (i) the  Borrowers  shall  deliver to the Bank  written
notice of the amount and  effective  date of any  requested  reduction  at least
three (3) Banking Days prior to such proposed effective, and (ii) on or prior to
the date on which such reduction is effective, the Borrowers shall have (a) paid
to the Bank such  portion  of the  principal  of the  Revolving  Loans as may be
required by the terms of Section  7.1(A) of this  Agreement and (b) executed and
delivered to the Bank such amendments to this Agreement,  the Revolving Note and
the  Other  Agreements  as the Bank  may  reasonably  request  to  reflect  such
reduction.


         2.6.  Closing Fee. On the Closing Date, the Borrowers  shall pay to the
Bank a closing fee in the amount of Twenty-five Thousand Dollars ($25,000).

         2.7. Facility Fee. The Borrowers  agree to pay to the Bank, on the last
day of each calendar  quarter during the term of the Revolving  Credit  Facility
and at earlier  maturity,  whether by acceleration  or otherwise,  as a facility
fee,  in  arrears in respect  of the  immediately  preceding  quarter or portion
thereof,  an amount  equal to  twenty-five  (25)  Basis  Points  of the  Maximum
Commitment,  calculated  on the basis of a 360-day  year (that is,  computed  by
obtaining  a daily  factor at such per annum rate based upon a 360-day  year and
multiplying  such factor by the actual number of days  elapsed).  In addition to
the  foregoing,  the Borrowers  shall pay, on the quarter end next following the
Closing  Date,  any and all  unpaid  facility  fee  payments  accrued  under the
Original Credit Agreement as of the Closing Date.



<PAGE>




         2.8. Prepayment Compensation for LIBOR Loans. In any case of prepayment
of any LIBOR Loan,  the Borrowers  agree that if Adjusted LIBOR as determined as
of 11:00 a.m.  London time, two (2) Banking Days prior to the date of prepayment
of any LIBOR Loan (hereafter,  "Prepayment  LIBOR") shall be lower than the last
Adjusted LIBOR  previously  determined for such LIBOR Loan with respect to which
prepayment  is  intended  to be  made  (hereinafter,  "Last  LIBOR"),  then  the
Borrowers shall,  upon written notice by the Bank,  promptly pay to the Bank, in
immediately available funds, compensation for such prepayment measured by a rate
(the  "LIBOR  Prepayment  Compensation  Rate")  which  shall  be  equal  to  the
difference  between the Last LIBOR and the Prepayment  LIBOR. In determining the
Prepayment  LIBOR,  the Bank shall  apply a rate equal to  Adjusted  LIBOR for a
deposit  approximately  equal to the amount of such  prepayment  which  would be
applicable to an Interest  Period  commencing on the date of such prepayment and
having a duration as nearly equal as  practicable  to the remaining  duration of
the actual Interest Period during which such prepayment is to be made. The LIBOR
Prepayment  Compensation  Rate  shall  be  applied  to all or  such  part of the
principal  amount of the  Revolving  Note as  related  to the  LIBOR  Loan to be
prepaid,  and the  prepayment  compensation  shall be  computed  for the  period
commencing  with the date on which  such  prepayment  is to be made to that date
which coincides with the last day of the Interest Period previously  established
when the LIBOR  Loan which is to be  prepaid  was made.  In the event a Borrower
cancels a Request with respect to a LIBOR Loan subsequent to the delivery to the
Bank of such notice,  such  cancellation  shall be treated as a prepayment as to
which the Bank shall be entitled to the aforementioned  prepayment  compensation
for the full  Interest  Period  which would have been in effect had such Request
not been  canceled;  provided  that,  in such case,  Prepayment  LIBOR  shall be
measured on the date on which the Bank receives notice of  cancellation  and not
two (2) Banking Days prior thereto.



         2.9  Reserves; Taxes; Indemnities.

         (A) Reserves or Deposit Requirements. If at any time any law, treaty or
regulation  (including,  without  limitation,  Regulation  D  of  the  Board  of
Governors of the Federal  Reserve System) or the  interpretation  thereof by any
governmental  authority charged with the  administration  thereof or any central
bank or other fiscal,  monetary or other  authority shall impose (whether or not
having the force of law),  modify or deem  applicable any reserve and/or special
deposit requirement (other than reserves included in the Reserve Percentage, the
effect of which is  reflected in the  interest  rate(s) of the LIBOR  Loan(s) in
question)  against assets held by, or deposits in or for the amount of any loans
by, the Bank,  and the result of the  foregoing is to increase the cost (whether
by  incurring  a cost or adding to a cost) to the Bank of making or  maintaining
hereunder LIBOR Loans or to reduce the amount of principal or interest  received
by the Bank with respect to such LIBOR  Loans,  then upon demand by the Bank the
Borrowers shall pay to the Bank from time to time on the dates on which interest
is  otherwise  due with  respect  to such  loans,  as  additional  consideration
hereunder,  additional  amounts sufficient to fully compensate and indemnify the
Bank for such increased cost or reduced amount,  assuming (which  assumption the
Bank need not corroborate)  such additional cost or reduced amount was allocable
to such LIBOR Loans. A certificate as to the increased cost or reduced amount as
a result  of any event  mentioned  in this  Section  2.9(A),  setting  forth the
calculations therefor,  shall be promptly submitted by the Bank to the Borrowers
and shall, in the absence of manifest error, be conclusive and binding as to the
amount thereof. Notwithstanding any other provision of this Agreement, after any
such demand for compensation by the Bank, the Borrowers, upon at least three (3)
Banking Days' prior written  notice to the Bank,  may prepay the affected  LIBOR
Loans in full or convert all LIBOR Loans to Prime Rate Loans  regardless  of the
Interest Period of any thereof.  Any such prepayment or conversion shall entitle
the Bank to the prepayment  compensation provided for in Section 2.8 hereof. The
Bank will notify the  Borrowers as promptly as  practicable  of the existence of
any event which will likely  require  the payment by the  Borrowers  of any such
additional amount under this Section.


<PAGE>




         (B)  Imposition  Of  Taxes.  In the  event  that by  reason of any law,
regulation  or  requirement  or in the  interpretation  thereof  by an  official
authority,  or the imposition of any  requirement of any central bank whether or
not having the force of law, the Bank shall,  with respect to this  Agreement or
any  transaction  under this Agreement,  be subjected to any tax, levy,  impost,
charge,  fee, duty,  deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of the Bank) and if any such  measures
or any other similar measure shall result in an increase in the cost to the Bank
of making or  maintaining  any LIBOR  Loan or in a  reduction  in the  amount of
principal, interest or commitment fee receivable by the Bank in respect thereof,
then the Bank shall promptly notify the Borrowers  stating the reasons therefor.
The Borrowers shall  thereafter pay to the Bank upon demand from time to time on
the dates on which  interest is otherwise  due with respect to such LIBOR Loans,
as additional  consideration  hereunder,  such additional  amounts as will fully
compensate the Bank for such increased cost or reduced amount.  A certificate as
to any such increased  cost or reduced  amount,  setting forth the  calculations
therefor,  shall be submitted  by the Bank to the  Borrowers  and shall,  in the
absence of manifest  error,  be conclusive and binding as to the amount thereof.
Notwithstanding any other provision of this Agreement, after any such demand for
compensation  by the Bank, the  Borrowers,  upon at least three (3) Banking Days
prior written notice to the Bank, may prepay the affected LIBOR Loans in full or
convert all LIBOR Loans to Prime Rate Loans regardless of the Interest Period of
any  thereof.  Any such  prepayment  or  conversion  shall  entitle  the Bank to
prepayment compensation provided for in Section 2.8 hereof.


         (C) Eurodollar Deposit Unavailable or Interest Rate Unascertainable. In
respect of any LIBOR Loan, in the event that the Bank shall have determined that
dollar deposits of the relevant amount for the relevant Interest Period for such
LIBOR Loan are not available to the Reference Bank in the applicable  Eurodollar
market or that, by reason of circumstances  affecting such market,  adequate and
reasonable means do not exist for ascertaining the LIBOR rate applicable to such
Interest  Period,  the Bank shall promptly give notice of such  determination to
the  Borrowers  and (i)  any  notice  of a new  LIBOR  Loan  (or  conversion  or
continuation  of an  existing  loan to a LIBOR  Loan)  previously  given  by the
Borrowers and not yet borrowed (or  converted or continued,  as the case may be)
shall be deemed a notice to make a Prime Rate Loan, and (ii) the Borrowers shall
be obligated  either to prepay or to convert any outstanding  LIBOR Loans on the
last day of the then current  Interest  Period or Periods with respect  thereto.
Any  such  prepayment  or  conversion  shall  entitle  the  Bank  to  prepayment
compensation provided for in Section 2.8 hereof.



<PAGE>




         (D)  Indemnity.  Without  prejudice  to any  other  provisions  of this
Article 2, the Borrowers  hereby  jointly and  severally  agree to indemnify the
Bank  against  any loss or  expense  which  the Bank may  sustain  or incur as a
consequence  of any default by the  Borrowers  in payment when due of any amount
due hereunder in respect of any LIBOR Loan,  including,  but not limited to, any
loss of  profit,  premium or  penalty  incurred  by the Bank in respect of funds
borrowed by it for the  purpose of making or  maintaining  such LIBOR  Loan,  as
determined by the Bank in the exercise of its sole but reasonable discretion.  A
certificate  as to any such loss or expense  shall be promptly  submitted by the
Bank to the Borrowers and shall, in the absence of manifest error, be conclusive
and binding as to the amount thereof.


         (E) Changes in Law Rendering LIBOR Loans  Unlawful.  If at any time any
new law,  treaty or  regulation,  or any change in any existing  law,  treaty or
regulation,   or  any  interpretation  thereof  by  any  governmental  or  other
regulatory  authority  charged with the  administration  thereof,  shall make it
unlawful  for the Bank to fund any  LIBOR  Loan  which it is  committed  to make
hereunder with moneys obtained in the Eurodollar  market,  the commitment of the
Bank to fund LIBOR Loans shall,  upon the  happening of such event  forthwith be
suspended  for the  duration of such  illegality,  and the Bank shall by written
notice to the Borrowers  declare that its commitment  with respect to such LIBOR
Loans has been so suspended;  and, if and when such illegality  ceases to exist,
such suspension  shall cease, and the Bank shall similarly notify the Borrowers.
If any such change shall make it unlawful for the Bank to continue in effect the
funding in the applicable Eurodollar market of any LIBOR Loan previously made by
it  hereunder,  the Bank shall,  upon the  happening  of such event,  notify the
Borrowers  thereof in writing  stating the reasons  therefor,  and the Borrowers
shall, on the earlier of (i) the last day of the then current Interest Period or
(ii) if  required by such law,  regulation  or  interpretation,  on such date as
shall be specified in such notice,  either convert all LIBOR Loans to Prime Rate
Loans to the extent  permissible  under this Agreement or prepay all LIBOR Loans
to the Bank in full. Any such prepayment or conversion shall entitle the Bank to
prepayment compensation as provided in Section 2.8 hereof.

         (F)  Funding.  The Bank may,  but shall not be required  to, make LIBOR
Loans hereunder with funds obtained outside the United States.



<PAGE>




         2.10.  Capital  Adequacy.  If the Bank  shall  have  determined,  that,
whether in effect at the date of this  Agreement  or  hereafter  in effect,  any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental  authority,  central bank or comparable agency charged with the
interpretation  or  administration  thereof,  or compliance by the Bank with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority,  central bank or comparable  agency, has or would
have the effect of reducing the rate of return on the Bank's  capital  allocated
to the  transactions  contemplated  by this  Agreement  (or the  capital  of its
holding company) as a consequence of its obligations  hereunder to a level below
that which the Bank (or its holding  company)  could have  achieved but for such
adoption, change or compliance (taking into consideration the Bank's policies or
the  policies of its holding  company  with  respect to capital  adequacy) by an
amount deemed by the Bank to be material, then from time to time, within fifteen
(15) days after  demand by the Bank,  the  Borrowers  shall pay to the Bank such
additional  amount  or  amounts  as will  compensate  the Bank  (or its  holding
company) for such reduction.  The Bank will designate a different lending office
if such  designation  will avoid the need for,  or reduce  the  amount of,  such
compensation   and  will  not,  in  the  judgment  of  the  Bank,  be  otherwise
disadvantageous  to the Bank. A certificate  of the Bank  claiming  compensation
under this Section and setting forth the additional amount or amounts to be paid
to it  hereunder  shall be  conclusive  in the  absence of  manifest  error.  In
determining  such  amount,  the  Bank  may  use  any  reasonable  averaging  and
attribution methods.  Failure on the part of the Bank to demand compensation for
any  reduction  in  return on  capital  with  respect  to any  period  shall not
constitute  a  waiver  of the  Bank's  rights  to  demand  compensation  for any
reduction  in return on  capital  in such  period  or in any other  period.  The
protection of this Section 2.10 shall be available to the Bank regardless of any
possible  contention of the invalidity or inapplicability of the law, regulation
or other condition which shall have been imposed.


         2.11.  All Advances to Constitute One Debt; Same Debt.

         (A) Single  Indebtedness.  All  Revolving  Loans and other  advances of
credit by the Bank to or for the  benefit of any or all of the  Borrowers  under
this Agreement and the Other  Agreements shall constitute one Debt, and all Debt
and  obligations of the Borrowers to the Bank under this Agreement and all Other
Agreements  shall constitute one general  obligation,  (i) secured by the Bank's
Lien in the  Collateral  and by other Liens  heretofore,  now, or at any time or
times  hereafter  granted  to the  Bank by the  Borrowers  or  others,  and (ii)
guaranteed by the Guaranty. The Borrowers and Group agree that all of the rights
of the Bank set forth in this Agreement  shall apply to any  modification  of or
supplement to this  Agreement and the Other  Agreements,  unless such rights are
expressly modified by any such modification or supplement.



<PAGE>




         (B) Same  Indebtedness.  This Agreement and the Other  Agreements shall
not be deemed to provide for or effect a repayment and re-advance of any portion
of the Existing Revolving Loans now outstanding,  it being the intention of both
the  Borrowers  and the Bank  hereby  that the  Indebtedness  owing  under  this
Agreement  be and  hereby  is the same  Indebtedness  as that  owing  under  the
Original Credit Agreement immediately prior to the effectiveness hereof.


3.       CONDITIONS TO ADVANCE OF LOANS

         3.1.  Conditions  to Initial  Advance of Revolving  Loans.  The initial
advance of Revolving Loans, and the performance by the Bank of the other actions
to be taken by it hereunder,  are subject to the  fulfillment  (unless waived by
the Bank) of each of the following conditions precedent:

         (A)  Representations  and Warranties.  All of the  representations  and
warranties  in Article 6 shall have been true on the date when made and shall be
true on and as of the Closing Date.

         (B)  Compliance.  The  Borrowers  shall be in compliance on the Closing
Date with all the  applicable  terms and  provisions  of this  Agreement and the
Other  Agreements  to be observed or performed by it, and no Event of Default or
Possible Default shall have occurred and be continuing.

         (C) Closing Certificate. The Borrowers shall have delivered to the Bank
a  certificate,  dated as of the  Closing  Date and  signed by their  respective
President or Treasurer certifying  compliance with the conditions of subsections
3.1(A) and (B).

         (D) Note.  The Borrowers  shall have executed and delivered to the Bank
the Revolving Note.

         (E) Opinion. The Bank shall have received the favorable written opinion
of Barnes &  Thornburg,  counsel to the  Obligors,  dated the  Closing  Date and
addressed  to the Bank and  substantially  to the  effect set forth in Exhibit B
hereto, and covering such other matters as the Bank may reasonably request.

         (F) Perfection.  The Bank shall have received evidence  satisfactory to
it of the  perfection  and  priority  of the  Bank's  security  interest  in the
Collateral  by  the  filing  of  appropriate   financing   statements  with  the
Secretaries of State of Indiana and Vermont and the Recorder of Elkhart  County,
Indiana.

         (G)  Insurance.  The Borrowers  shall have  furnished a certificate  or
other  satisfactory  evidence that the  insurance  required by Section 7.4 is in
full force and effect.



<PAGE>

         (H) Entity  Certificates.  On or before the Closing Date,  each Obligor
shall deliver to the Bank the following (provided,  however,  that at the option
of the Borrowers,  the documents required by clauses (ii) and (iii),  below, may
be  delivered to the Bank not later than sixty (60) days  following  the Closing
Date):


                   (i)     a certificate  of existence for such Obligor from the
                           Secretary  of  the  state  of its  incorporation  and
                           certificates of  qualification  for such Obligor from
                           the Secretary of State of each other state with which
                           such Obligor is required to qualify to do business as
                           a foreign corporation, all dated as of a date as near
                           to the Closing Date as practicable;

                  (ii)     a true and complete copy of such  Obligor's  Articles
                           of  Incorporation/Charter  certified by the Secretary
                           of State of the  state of its  incorporation  as of a
                           date as near to the Closing Date as practicable;

                  (iii)    a certificate of such Obligor signed by its Secretary
                           dated as of the Closing Date certifying that attached
                           thereto are true and  complete  copies of its Code of
                           Regulations/Bylaws;

                  (iv)     a certificate of such Obligor signed by its Secretary
                           dated  as of the  Closing  Date  certifying  (a) that
                           attached  thereto is a complete  copy of  resolutions
                           adopted by the directors of such Obligor, authorizing
                           the  execution,  delivery  and  performance  of  this
                           Agreement and the Other Agreements to be performed by
                           such Obligor hereunder, (b) that such resolutions are
                           in  full  force  and  effect,   without  modification
                           thereto  and  (c) the  names  and  signatures  of the
                           officers of such Obligor; and

                  (v)      such  other  documents  as the  Bank  may  reasonably
                           request in  connection  with the company  proceedings
                           taken by such Obligor  authorizing this Agreement and
                           the transactions contemplated hereby.

         (I) Special  Counsel.  All legal matters incident to this Agreement and
the  consummation of the  transactions  contemplated  hereby shall be reasonably
satisfactory to Berick, Pearlman & Mills Co., L.P.A.,  Cleveland,  Ohio, special
counsel to the Bank.

         (J) Landlord Waivers.  Each Borrower shall have delivered to the Bank a
landlord  consent and waiver agreement in the form of Exhibit C hereto from each
lessor or licensor of real  property  occupied by such  Borrower or at which any
Collateral is located.



<PAGE>




         (K)  Guaranty.  Group shall have executed and delivered to the Bank its
Amended and  Restated  Continuing  Guaranty in the form of Exhibit D hereto (the
"Guaranty").


         (L) Opening  Eligible  Accounts.  The Borrowers shall have delivered to
the Bank an opening borrowing base certificate,  in form prescribed by the Bank,
attached  to which  shall be an aging of the  Borrowers'  Accounts  meeting  the
criteria set forth in Section  7.1(B)(iv),  reflecting  such  Accounts as of the
close of business February 28, 1998.

         (M) Closing Fee. The Bank shall have  received the closing fee required
by Section 2.6 hereof in immediately available funds.

         (N)  Other   Matters.   The  Bank  shall  have   received   such  other
certificates,   opinions,  agreements  and  documents,  in  form  and  substance
satisfactory to it, as the Bank may request.

         3.2. Conditions Precedent to Subsequent Revolving Loans. The advance of
Revolving  Loans after the Closing Date shall be subject to the  fulfillment  of
each of the following conditions precedent:

         (A) Representations and Warranties.  The representations and warranties
contained in this Agreement shall be true in all material  respects on and as of
the date of such  subsequent  Revolving Loan, with the same effect as if made on
and as of such date.

         (B) No  Default.  No Event of Default or  Possible  Default  shall have
occurred and be continuing.

         (C)  Documents.  The Bank  shall have  received  such  Requests,  other
certificates (including, without limitation, borrowing certificates), agreements
and  documents,  in form  and  substance  satisfactory  to it,  as the  Bank may
reasonably request.

         3.3.  Closing.  The closing of the initial  advance of Revolving  Loans
hereunder  shall,  subject  to the  terms  and  conditions  of  this  Agreement,
including, without limitation, Section 3.1, take place at the offices of Berick,
Pearlman  &  Mills  Co.,  L.P.A.,  1350  Eaton  Center,  1111  Superior  Avenue,
Cleveland,  Ohio, on a date mutually  agreed upon by the Borrowers and the Bank,
but not later than April 3, 1998, at 11:00 a.m., or at such other time and place
as the parties may agree (such date of initial  advance being referred to as the
"Closing Date").


<PAGE>

4.       ELIGIBLE ACCOUNTS

         4.1.  Eligible  Accounts.  On the report of Accounts  (delivered to the
Bank monthly pursuant to Section 7.1(B)(iv) and as provided in Section 5.6), the
Borrowers  shall  designate  which of the Accounts  listed thereon the Borrowers
believe to be Eligible  Accounts  pursuant to the criteria  (other than that set
forth on clause (J), below). The Bank shall review such report and determine, in
its sole  discretion  (exercised in good faith),  which Accounts  listed thereon
shall be  deemed  an  "Eligible  Account";  the Bank  shall  have no  obligation
whatsoever to accept the designations of the Borrowers.

         In  determining  which Accounts will be "Eligible  Accounts",  the Bank
may, inter alia, consider the following requirements:

         The Account is subject to a perfected  first  priority Lien in favor of
the Bank and is due no more than thirty (30) days from the date of invoice under
the original terms of shipment or service,  arises from the delivery of goods or
performance  of services by a Borrower in the ordinary  course of its  business,
conforms to the warranties and representations set forth in Section 6.2 and:

         (A) is an Account upon which such  Borrower's  right to receive payment
is absolute and not contingent  upon any further  performance or delivery or the
fulfillment of any condition  whatsoever (e.g.,  consignment or guaranteed sale)
and does not include any sales or other taxes,  and such Borrower has possession
of, or has delivered or will deliver as required  hereunder to the Bank,  copies
of invoices,  shipping and delivery  receipts  evidencing  such  performance  or
shipment;

         (B) is unpaid for not more than thirty (30) days following the due date
of the invoice therefor;

         (C) does not  arise  from a sale or  sales  to an  Affiliate  or from a
consumer  transaction  (being one for  primarily  personal,  family or household
purposes);

         (D) is not the  obligation  of an Account  Debtor  located in a foreign
country other than Canada,  except those foreign Accounts  supported by a letter
of credit  acceptable  to the Bank which letter of credit is confirmed or issued
by a United  States bank or other bank  acceptable to the Bank or is an Eligible
Account insured by the Foreign Credit Insurance  Association,  provided that the
letter of credit or insurance in respect of such foreign Accounts is assigned to
the Bank by assignments in form and substance satisfactory to the Bank;

         (E) does not arise from a contract containing a prohibition against the
assignment or grant of a security interest therein;



<PAGE>




         (F) is not an Account  from the  United  States of America or any state
thereof,  or any department,  administration,  agency or  instrumentality of any
thereof, unless the Bank is satisfied that its security interest in such Account
has  been  perfected  pursuant  to  the  Federal  Assignment  of  Claims  Act or
equivalent state statute;


         (G) is not an Account of an Account Debtor who has suspended  business,
made a general  assignment  for the benefit of  creditors,  committed any act of
insolvency,  filed or has had filed against it any petition under any bankruptcy
law or any other law or laws for the relief of debtors;

         (H) is not evidenced by an  Instrument,  Chattel Paper or other written
agreement  (other  than  invoices),  unless  the  Instrument  or  Chattel  Paper
evidencing the Account has been delivered to and endorsed in favor of the Bank;

         (I) is not an Account of an Account  Debtor who shall have  objected to
paying such Account,  or any portion thereof, as a result of an objection to the
quality or  quantity of goods or services  provided by such  Borrower,  or shall
have rejected, returned or refused to accept such goods or services;

         (J) is not an Account which is, in the Bank's good faith judgment,  (i)
the Account of an Account Debtor which is an undue credit risk or (ii) otherwise
unacceptable to the Bank.

5.       COLLATERAL:  GENERAL TERMS

         5.1.  Security Interest.

         (A) Grant.  To secure the prompt payment to the Bank and performance of
the Bank  Debt,  on the  Closing  Date,  (1) all of the  terms,  conditions  and
provisions  of each Security  Agreement are hereby merged into,  and amended and
restated in their  entirety by, this  Agreement,  and (2) each  Borrower  hereby
regrants  (or,  in the case of  Interstate,  grants)  to the  Bank a  continuing
security  interest in and to all of the  following  property  and  interests  in
property of such Borrower, whether now owned or existing,  hereafter acquired or
arising,  or in  which  such  Borrower  now or  hereafter  has any  rights,  and
wheresoever located:

                  (i)      All  Accounts  and  other  Receivables,  Instruments,
                           Documents, Chattel Paper and General Intangibles;

                  (ii)     All Equipment;

                  (iii)    All Inventory;

                  (iv)     All monies, residues and property of any kind, now or
                           at any time or times hereafter,  in the possession or
                           under control of the Bank or a bailee of the Bank;



<PAGE>




                  (v)      All   accessions  to,   substitutions   for  and  all
                           replacements, Products and Proceeds of the foregoing,
                           including, without limitation,  proceeds of insurance
                           policies insuring the Collateral; and


                  (vi)     All books and records (including, without limitation,
                           customer  lists,  credit  files,  computer  programs,
                           print-outs and other computer  materials and records)
                           of such Borrower pertaining to any of the foregoing.

         5.2. Special Collateral.  Immediately upon a Borrower's receipt of that
portion  of the  Collateral  which  is or  becomes  evidenced  by an  agreement,
instrument and/or document,  including,  without  limitation,  promissory notes,
trade  acceptances,  documents of title and  warehouse  receipts  (the  "Special
Collateral"),  such  Borrower  shall  deliver the original  thereof to the Bank,
together with appropriate  endorsements  and/or other specific evidence (in form
and substance acceptable to the Bank) of assignment thereof to the Bank.

         5.3.  Further  Assurances.  At the Bank's request,  each Borrower shall
execute  and/or  deliver to the Bank, at any time  hereafter,  all  Supplemental
Documentation  that the  Bank  may  reasonably  request,  in form and  substance
acceptable  to the  Bank,  and pay the costs of any  recording  or filing of the
same.  Without limiting the generality of the foregoing,  at the Bank's request,
each  Borrower  shall  execute  and  deliver  for filing a Patent and  Trademark
Security  Agreement  in form and  substance  satisfactory  to the Bank upon such
Borrower's  acquisition of any patent or registered mark or interest  therein or
rights  thereto.  The  Borrowers  agree  that a carbon,  photographic,  or other
reproduction of a financing  statement,  is sufficient as a financing statement.
Each Borrower  immediately on demand therefor by the Bank,  shall deliver to the
Bank evidence of ownership, if any, of any of the Collateral.

         5.4. Preservation of Collateral. The Borrowers will keep the Collateral
and all rights with  respect  thereto and proceeds of both free from any adverse
Lien, except for Permitted Encumbrances,  and, subject to ordinary wear and tear
and  obsolescence,  in good condition,  and will not waste or destroy any of the
same.  The Borrowers  will not use the Collateral in violation of any applicable
statute or ordinance.

         5.5.  Verification of Collateral; Inspections; Audit.



<PAGE>




         (A) Any of the  Bank's  officers,  employees  or agents  shall have the
right,  at any time or times  hereafter,  in the Bank's name or in the name of a
Borrower  to verify the  validity,  amount or any other  matter  relating to any
Collateral by mail, telephone,  telegraph or otherwise.  The Bank shall endeavor
to give the Borrowers  prompt  notice of the names of Account  Debtors with whom
the Bank has conducted such verification, provided that the Bank's failure to do
so shall not give rise to any claim or defense against the Bank.


         (B) The Bank (by any of its officers,  employees  and/or  agents) shall
have the right, at any time or times during usual business hours, to inspect the
Collateral, all records related thereto (and to make extracts from such records)
and the  premises  upon  which any of the  Collateral  is  located,  to  discuss
Borrower's affairs and finances with any attorney, accountant, Account Debtor or
creditor of a Borrower and to verify the amount,  quality,  quantity,  value and
condition of, or any other matter relating to, the Collateral.

         5.6. Assignments;  Records and Reports of Accounts. Each Borrower shall
keep accurate and complete  records of its Accounts;  and, on the date specified
in  Section  7.1(B)(iii)  below  (and upon  earlier  demand by the  Bank),  each
Borrower  shall  deliver to the Bank,  in form and  substance  acceptable to the
Bank, a detailed aged trial balance of all then existing Accounts specifying the
names,  face value and dates of invoice(s) for each Account Debtor  obligated on
an Account so listed and,  upon  demand by the Bank,  the  original  copy of all
documents, including, without limitation, repayment histories and present status
reports,  relating  to the  Accounts  so  scheduled  and such other  matters and
information  relating  to the  status of the  Accounts  as the Bank shall in its
discretion request.

         5.7. Federal and State Accounts. Upon the Bank's request, the Borrowers
shall,  if any Accounts arise out of contracts with the United States of America
or  any   state   thereof   or  any   department,   administration,   agency  or
instrumentality  of any thereof,  immediately notify the Bank thereof in writing
and execute any and all  instruments  and take all steps required by the Bank in
order  that all  monies  due and to become  due  under  such  contract  shall be
assigned  to the Bank and  notice  thereof  given to the  Government  under  the
Federal Assignment of Claims Act, as amended. Or equivalent state statute.

         5.8.  Inventory and  Equipment.  The Borrowers  shall at all reasonable
times and from time to time allow the Bank,  by or through any of its  officers,
agents,  attorneys or  accountants,  to examine or inspect the Inventory and the
Equipment and all records concerning the same wherever located and shall furnish
to the  Bank  such  other  information  with  respect  thereto  as the  Bank may
reasonably request.



<PAGE>




         5.9.  Collections;  Notice of Assignment; Lock Box. Upon and during the
continuance of an Event of Default,  without limiting or otherwise impairing the
Bank's right to exercise any other right or remedy which may be available to the
Bank,  the Bank may,  upon notice to the  Borrowers,  require that the following
provisions shall become effective:


                  (A) So long as the Bank  does  not  request  that the  Account
         Debtors on the  Accounts be notified of the  assignment  thereof to the
         Bank, the Borrowers may make collections on the Accounts,  and hold the
         proceeds for the Bank in the exact form in which they are received from
         collections  in trust for the Bank,  and turn over such proceeds to the
         Bank in the  exact  form in which  they  are  received,  together  with
         endorsements  in favor of the Bank and a  collection  report  in a form
         acceptable to the Bank.  Said proceeds shall be deposited with the Bank
         in  a  collections   account(s)  maintained  with  the  Bank  or  other
         nationally  chartered  bank  acceptable to the Bank over which the Bank
         alone shall have power of withdrawal,  pursuant to an account agreement
         in form and  substance  satisfactory  to the Bank.  The Bank may in its
         discretion  at least once a Banking  Day apply the whole or any part of
         the  funds  on  deposit  in such  collections  account(s)  against  the
         principal and/or interest of any Revolving Loans or any other Bank Debt
         which is then due,  and any  portion  of said  funds on deposit in such
         collection  account(s)  which the Bank elects not to apply to such Bank
         Debt  shall be paid over and  deposited  by the Bank to the  Borrowers'
         commercial account,  provided,  however, that no such transfer from the
         collections   account(s)  will  be  made  of  funds  deposited  in  the
         collections account(s) less than one (1) Banking Day before the date of
         such transfer.

                  (B) The Bank may notify  Account  Debtors on any Accounts that
         the  Accounts  have been  assigned to the Bank and shall be paid to the
         Bank.  Upon  request  of the Bank at any time,  the  Borrowers  will so
         notify such Account  Debtors and will  indicate on all billings to such
         Account  Debtors that the Accounts are payable to the Bank. The Bank is
         hereby  authorized  to make  any  endorsement  on any  collection  on a
         Borrower's behalf.

                  (C) To evidence the Bank's  rights  hereunder,  each  Borrower
         will  upon  request  of the Bank  assign or  endorse  the  Accounts  or
         proceeds  thereof to the Bank as the Bank may  request.  The Bank shall
         have full power to collect, compromise, endorse, sell or otherwise deal
         with the  Accounts  or  proceeds  thereof  in its own name or that of a
         Borrower.  The cost of collection and  enforcement of Accounts,  or any
         Instrument belonging to a Borrower for goods sold or services rendered,
         including  attorneys' fees and out-of-pocket  expenses,  shall be borne
         solely by the Borrowers, whether the same are incurred by the Bank or a
         Borrower.



<PAGE>




                  (D) Each  Borrower  shall cause all  Accounts to be  collected
         through  a  lock-box  arrangement  with the Bank and  shall  execute  a
         lock-box agreement in form and substance  satisfactory to the Bank (the
         "Lock-box  Agreement").  In the event that a Borrower  shall default on
         its   obligation  to  have  Accounts   collected   through  a  lock-box
         arrangement,  the Bank may forthwith  notify all or any Account Debtors
         of the security  interest  granted to the Bank and request said Account
         Debtors to send all  payments to be made in respect of Accounts to said
         lock box, or to otherwise  remit the same to the Bank. The Bank in such
         event shall have full power and authority to endorse Borrower's name on
         any check,  draft,  note or other  instrument  for the payment of money
         which shall be received  from an Account  Debtor.  Each  Borrower  also
         agrees  upon the Bank's  request to execute  and  deliver to the Bank a
         power of  attorney in form  satisfactory  to the Bank  authorizing  any
         officer of the Bank to notify postal  authorities to change the address
         for delivery of such  Borrower's  mail to an address  designated by the
         Bank, and  authorizing  the Bank to open all such mail delivered to the
         designated  address with full power to endorse such  Borrower's name on
         any check,  draft or other  instrument for the payment of money from an
         Account Debtor for collection, provided that the Bank promptly provides
         a list of all such instruments for the payment of money endorsed by the
         Bank and delivers all other unrelated mail promptly to such Borrower.




<PAGE>




         5.10. Additional Collateral.  Any and all deposits or other sums at any
time  credited by or due from the Bank to the  Borrowers or any of them shall at
all times  constitute  additional  security for the Bank Debt and may be set off
against  any such  Bank  Debt at any time,  whether  or not it is then  due,  or
whether or not other  security  held by the Bank is considered by the Bank to be
adequate.  Any  and  all  Instruments,   documents,  policies,  certificates  of
insurance,  securities,  goods, accounts receivable,  choses in action,  Chattel
Paper,  cash,  property  and the proceeds  thereof  (whether or not the same are
Collateral or the proceeds  thereof)  owned by a Borrower or in which a Borrower
has an interest, which now or hereafter are at any time in possession or control
of the Bank,  in  transit  by mail or  carrier  to or from the  Bank,  or in the
possession  of any third party acting in the Bank's  behalf,  without  regard to
whether  the Bank  received  the same in pledge  for  safekeeping,  as agent for
collection or transmission or otherwise,  or whether the Bank has  conditionally
released the same,  shall constitute  additional  security for the Bank Debt and
may be applied  at any time to any such Bank Debt which is then due,  whether by
acceleration or otherwise. In addition, all other collateral security given by a
Borrower  in favor of the Bank,  whether by pledge,  mortgage  lien or  security
interest,  shall  secure  all of the Bank  Debt as if  expressly  stated  in the
agreement or document relating to such collateral security.


         5.11.  Proceeds of  Collateral.  The Borrowers  shall not,  without the
prior written consent of the Bank, sell, lease,  grant a security interest in or
otherwise  dispose  of or  encumber  (other  than  Permitted  Encumbrances)  the
Collateral,  or any part  thereof or  interest  therein,  except for the sale of
Inventory in the normal course of the Borrowers'  business and the sale or other
disposition of Equipment  which is obsolete or otherwise in need of replacement.
In the event any  Collateral is sold,  transferred  or otherwise  disposed of as
herein  provided,  the  Borrowers  shall deliver all of the cash proceeds of any
such sale,  transfer or disposition to the Bank, which proceeds shall be applied
to the  repayment  of the Bank  Debt in such  order  as the Bank may  determine;
provided  that, so long as no Event of Default or Possible  Default then exists,
the  Borrowers  may utilize such  proceeds for the  acquisition  of  replacement
Equipment of like kind and utility.

6.       WARRANTIES AND REPRESENTATIONS

         6.1.  General  Warranties  and  Representations.  Each  Obligor  hereby
warrants and represents that:

         (A) Organization. Each Obligor is a corporation duly organized, validly
existing and in good standing  under the laws of the State of its  incorporation
and is  qualified  or licensed to do business  and is in good  standing in every
other  jurisdiction  wherein failure to so qualify would have a material adverse
effect on the  financial  condition,  operations,  business  or property of such
Obligor;

         (B) Title. Each Borrower has good,  indefeasible and merchantable title
to and ownership of all Collateral,  free and clear of all Liens except those of
the Bank and those,  if any,  listed on Schedule  6.1(B) hereto (the  "Permitted
Encumbrances");

         (C) ERISA.  No Obligor has received any notice to the effect that it is
not  in  full  compliance  with  any of  the  requirements  of  ERISA,  and  the
regulations  promulgated  thereunder  and,  to the best of its  knowledge  there
exists no event described in Section 4043(b)(3) thereof ("Reportable Event"). No
Obligor  now  has,  or  ever  has  had,  any   obligation  to  contribute  to  a
Multiemployer Plan;



<PAGE>




         (D) Taxes.  Each  Obligor  has filed all  federal,  state and local tax
returns and other  reports  required by law and has paid,  to the extent due and
payable,  all  federal,  state,  county,   municipal,   and  other  governmental
(including, but not limited to, the PBGC) taxes, levies,  assessments,  or Liens
upon or relating  to the  Collateral,  the Bank Debt,  its  employees,  payroll,
income and gross  receipts,  its ownership or use of any of its assets,  and any
other  aspect of its  business  (hereinafter  referred  to  collectively  as the
"Charges");


         (E) Locations.  The offices and/or  locations where each Borrower keeps
its  respective   Inventory,   Equipment  and  books  and  records  relating  to
Collateral,  including,  without  limitation,  computer programs,  printouts and
other  computer  materials and records  concerning  the  Collateral,  are at the
locations  listed on Schedule 6.1(E) hereto;  the chief executive office of each
Borrower  is located at 2746 Old U.S.  Route 20 West,  Elkhart,  Indiana  46515,
except that c/o Skandia International Risk Management,  346 Shelburne Road, P.O.
Box 64649,  Burlington,  Vermont  05406-4649 is also an address at which certain
records of Interstate may be located from time to time.

         (F) Other Names.  No Borrower has, during the preceding five (5) years,
been known as or used any other company or fictitious  name; no Borrower has any
Subsidiaries;

         (G)  Stock.  100% of all  outstanding  shares or units of Stock of each
Borrower  are  owned by  Group,  and all such  shares  or units  have  been duly
authorized and are validly issued,  fully paid for and  non-assessable  and have
been issued in compliance with all applicable  federal and state laws, rules and
regulations, including, without limitation, all so-called "Blue-Sky" laws;

         (H)  Real  Property.  Certain  of the  Borrowers  own  parcels  of real
property at various  locations  throughout the United States;  however,  none is
deemed by the Borrowers to be material on a Consolidated  basis,  other than the
premises owned by Morgan known as 2746 Old U.S. Route 20 West, Elkhart,  Indiana
46515; and no Borrower is a party to any material lease for real property;

         (I) Authorization;  Valid and Binding.  Each Obligor has full power and
authority and is duly authorized and empowered to enter into,  execute,  deliver
and perform this Agreement and the Other  Agreements to which it is a party, and
its officers  executing and delivering  this Agreement and the Other  Agreements
are duly  authorized  and empowered to do so; and each of this Agreement and the
Other Agreements upon delivery to the Bank, will be valid and binding obligation
of such Obligor  enforceable in accordance with its respective terms;  provided,
however,  such  enforceability  may be (i)  limited  by  applicable  bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors'  rights generally (except that the Bank Debt and Liens in favor of
the Bank  described or set forth in or created by this  Agreement  and the Other
Agreements  are not void ab initio or  voidable),  and (ii)  subject  to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law);



<PAGE>




         (J) No  Violation.  The  execution,  delivery and  performance  by each
Obligor of this Agreement and the Other  Agreements to which it is a party shall
not,  by the lapse of time,  the  giving of notice or  otherwise,  constitute  a
violation of any applicable  law or a breach of any provision  contained in such
Obligor's Articles of  Incorporation/Charter  or Code of  Regulations/Bylaws  or
contained in any agreement,  instrument or document to which such Obligor is now
a party or by which it is bound;


         (K)  Financials.  The Financials  have been prepared in accordance with
GAAP and fairly  present in all material  respects the assets,  liabilities  and
financial  condition  and results of operations of each Borrower and Group as of
the dates thereof;  there are no omissions or other facts or circumstances which
are or may be material and there has been no material and adverse  change in the
assets,  liabilities or financial condition of any Obligor since the date of the
Financials;  there exist no equity or long-term  investments  in, or outstanding
advances to, any Person by any Obligor not  reflected in the  Financials;  there
exist no actions or proceedings  pending or threatened against any Obligor,  nor
has any Obligor guaranteed the obligations of any other Person;

         (L)  Judgments;  Decrees.  No  Obligor  is in default in respect of any
judgment, order, writ, injunction,  decree or decision of any governmental body,
which default would have a material  adverse effect on the financial  condition,
operations,  business  or  property  of such  Obligor;  and each  Obligor  is in
compliance  in  all  material   respects  with  all   applicable   statutes  and
regulations,  a violation of which would have a material adverse effect upon the
financial condition, operations, business or property of such Obligor;

         (M) Valid Liens.  Upon execution and delivery of this Agreement and the
Other  Agreements,  the Liens in favor of the Bank  provided for  hereunder  and
thereunder  will constitute a duly perfected first priority Lien in the property
described  therein (to the  extent,  as to  personal  property,  that a security
interest therein can be perfected by the filing of financing statements) subject
to no prior or equal Liens, except for the Permitted Encumbrances; and

         (N) Fed  Regulations.  Each  Obligor's  execution  and delivery of this
Agreement  and the Other  Agreements to which it is a party does not directly or
indirectly  violate or result in a  violation  of  Regulations  G, U or X of the
Board of  Governors  of the Federal  Reserve  System,  and no Borrower  owns nor
intends  to  purchase  or  carry  any  "margin  security",  as  defined  in said
Regulations.



<PAGE>




         6.2.  Account  Warranties  and  Representations.  Each Borrower  hereby
warrants and  represents to the Bank,  that the Bank may, in  determining  which
Accounts  listed on or included or reflected  in any  borrowing  certificate  or
report  of  Accounts  are  Eligible   Accounts,   rely  on  all   statements  or
representations made by the Borrowers on or with respect to any such Certificate
or report and, unless otherwise indicated in writing by a Borrower, that:


         (A) Genuine. They are genuine, are in all respects what they purport to
be, are not  evidenced  by a judgment  and are  evidenced  by only one,  if any,
executed original instrument,  agreement,  contract or document,  which has been
delivered to the Bank;

         (B)  Complete  Transactions.  Except for  Accounts  included  in the In
Transit Amount,  they represent bona fide  transactions  completed in accordance
with the terms and provisions contained in any documents related thereto;

         (C) Due and  Owing.  The  face  amounts  included  in or  shown  on any
schedule of Accounts  provided to the Bank,  and/or all invoices and  statements
delivered  to the Bank with  respect to any  Account  are,  except for  Accounts
included in the In Transit Amount,  actually and absolutely  owing to a Borrower
and are not contingent for any reason;

         (D) No Setoff. To the best of such Borrower's  knowledge,  there are no
setoffs,  counterclaims or disputes existing or asserted in respect thereof, and
such Borrower has not made any agreement with any Account Debtor  thereunder for
any deduction therefrom,  except a discount or allowance allowed in the ordinary
course of business for prompt payment,  all of which discounts or allowances are
reflected  in the  calculation  of the  face  value of each  respective  invoice
related thereto;

         (E) No Impairment. To the best of such Borrower's knowledge, except for
Accounts  included  in the  Eligible  Reserve,  there  are no  facts,  events or
occurrences which in any way impair the validity or enforcement  thereof or tend
to reduce the amount  payable  thereunder  included in or shown on any borrowing
certificate or report of Accounts, and on all contracts, invoices and statements
delivered to the Bank in respect thereof;

         (F) Capacity.  To the best of such  Borrower's  knowledge,  all Account
Debtors  thereunder  had the  capacity to  contract at the time any  contract or
other document giving rise to the Account was executed;

         (G) No Liens.  They are not subject to any Lien except for the security
interest in favor of the Bank created hereby; and

         (H) Valid.  Such Borrower has no knowledge of any fact of  circumstance
which would impair the validity or collectibility  thereof,  except for Accounts
included in the Eligible Reserve.



<PAGE>




         6.3.  Warranty and  Reaffirmation  of Warranties  and  Representations;
Survival of Warranties  and  Representations.  Except as otherwise  disclosed in
writing by the  Borrowers  to the Bank,  each  request for an advance  made by a
Borrower  pursuant  to  this  Agreement  shall  constitute  (i) a  warranty  and
representation  by the  Borrowers  to the Bank that there does not then exist an
Event of Default or Possible Default,  and (ii) a reaffirmation by the Borrowers
as of the date of said request of the representations  and warranties  contained
in  Sections  6.1  and  6.2  with  respect  to  Collateral  then  existing.  All
representations and warranties of the Borrowers and the other Obligors contained
in this Agreement and the Other Agreements shall survive the execution, delivery
and  acceptance   thereof  by  the  parties  thereto  and  the  closing  of  the
transactions described therein or related thereto.


7.       COVENANTS AND CONTINUING AGREEMENTS

         7.1.  Affirmative  Covenants.   The  Borrowers  jointly  and  severally
covenant and agree, and where indicated the other Obligors jointly and severally
covenant and agree, that they shall:

         (A)  Collateral  Maintenance.  The Borrowers  shall maintain as minimum
security for the Revolving Loans, Eligible Accounts having, in the aggregate,  a
Borrowing Base (as determined  pursuant to the  definition  thereof,  above) not
less than the aggregate unpaid  principal of all Revolving  Loans;  and, if not,
immediately  pay to the Bank the  difference  between the Borrowing Base at such
time and the aggregate unpaid principal amount of the Revolving Loans;

         (B) Financial Reporting.  The Obligors shall keep and maintain accurate
books of account and financial records in respect of their respective businesses
and property and cause to be furnished to the Bank the following:

                  (i)      as soon as available,  but not later than ninety (90)
                           days  after  the close of each  fiscal  year of Group
                           hereafter, audited financial statements of Group on a
                           Consolidated basis and of Interstate as at the end of
                           such  year  prepared  in  accordance  with  generally
                           accepted auditing principles by a firm of independent
                           certified public accountants of recognized  standing,
                           acceptable  to the  Bank  and  selected  by  Group or
                           Interstate,  as the  case  may  be,  which  financial
                           statements shall include a balance sheet,  statements
                           of income and  surplus,  statements  of cash flow,  a
                           reconciliation  of capital  accounts,  any management
                           letters written by such accountants and consolidating
                           financial statements for each of the other Obligors;



<PAGE>

                  (ii)     concurrently  with  the  delivery  of  the  financial
                           statements  described  in  Subsection  (i)  above,  a
                           certificate  of  such  certified  public  accountants
                           certifying  to  the  Bank  that,   based  upon  their
                           examination   of  the   affairs   of  Group  and  its
                           Subsidiaries  or of  Interstate,  as the case may be,
                           performed in connection  with the preparation of said
                           financial  statements,  they  are  not  aware  of the
                           existence   of  any  Event  of  Default  or  Possible
                           Default,  or, if they are aware of such  condition or
                           event, the nature thereof;


                  (iii)    as soon as available,  but not later than  forty-five
                           (45) days  after the end of each  fiscal  quarter  of
                           Group,  as of the end of such  quarter (a)  unaudited
                           interim   financial   statements   of   Group   on  a
                           Consolidated  basis,  including  a balance  sheet and
                           statements  of  income  and  surplus  (together  with
                           consolidating   statements  for  each  of  the  other
                           Obligors),   fairly   representing  in  all  material
                           respects Group's Consolidated  financial condition as
                           of the end of such  month  and (b) a  certificate  in
                           form and substance  satisfactory to the Bank executed
                           by the  chief  financial  officer  of each  Borrower,
                           certifying as to compliance by the Borrowers with the
                           covenants  contained in Sections 7.2 (F), (G) and (H)
                           of this Agreement,  which certificate shall set forth
                           in  detail  satisfactory  to  the  Bank  calculations
                           evidencing such compliance;

                  (iv)     as soon as available,  but not later than twenty (20)
                           days  after the end of each  month,  (a) a  Borrowing
                           Base certificate (in form and substance designated by
                           the Bank from time to time) duly  completed and which
                           shall contain the In Transit  Amount and the Eligible
                           Reserve  as of such month end and (b) upon the Bank's
                           request, a report as to each Borrower's Accounts with
                           a  supporting  aged trial  balance  listing  for each
                           Account  Debtor,  the number and dollar amount of the
                           Accounts due from such  Account  Debtor that are past
                           due for not more than thirty (30) days,  past due for
                           not more than sixty (60) days,  past due for not more
                           than  ninety  (90)  days,  and past due for more than
                           ninety  (90) days,  with the total  dollar  amount of
                           each of the foregoing;

                  (v)      not later than thirty (30) days after the end of each
                           fiscal year of the Borrowers, a business plan of each
                           Borrower  in  respect of the  immediately  succeeding
                           fiscal  year,  which shall have been  approved by the
                           Board of Directors of such Borrower,  and which shall
                           include  a  projection  of  such  Borrower's  balance
                           sheet,  earnings/loss  and cash flow for each  fiscal
                           quarter during such succeeding fiscal year;

                  (vi)     immediately  upon becoming  aware of the existence of
                           an Event of Default,  a written notice specifying the
                           nature  and  period  of  existence  thereof  and what
                           action the Obligor in question is taking or proposing
                           to take in respect thereof; and



<PAGE>




                  (vii)    promptly,  such other data and information (financial
                           and  otherwise)  as the  Bank,  from  time  to  time,
                           reasonably may require;


         (C)  Existence;  Qualification.  Each  Obligor  shall  maintain (i) its
corporate   existence  in  the  jurisdiction  of  its  formation  and  (ii)  its
qualification  in each other  jurisdiction  in which the  failure so to do would
have a material adverse effect on its financial condition,  business, operations
or property;

         (D) Charges. The Obligors shall pay and discharge promptly when due (i)
all  Charges  and (ii) all  lawful  Debt,  obligations  and  claims  for  labor,
materials  and supplies or  otherwise  which,  if unpaid,  might have a material
adverse  effect on its financial  condition,  operations,  business or property,
provided that Obligors shall not be required to pay and discharge or cause to be
paid and  discharged  any  such  Charges,  Debt  (other  than  the  Bank  Debt),
obligations or claims so long as the validity thereof shall be contested in good
faith and by appropriate proceedings diligently conducted,  and further provided
that a reserve or other  appropriate  provision as shall be in  accordance  with
GAAP shall have been made therefor;

         (E) Compliance  with Laws. The Obligors shall observe and comply in all
material  respects  with  all  laws  (including  ERISA),   ordinances,   orders,
judgments, rules, regulations,  certifications,  franchises,  permits, licenses,
directions and requirements of all governmental bodies, which now or at any time
hereafter  may be  applicable  to it, a violation of which might have a material
adverse effect on its financial condition, operations, business or property;

         (F) Inspection.  Each Obligor shall permit  representatives of the Bank
to visit its  offices  during  normal  business  hours to examine  the books and
records thereof and accountants' reports relating thereto, and to make copies or
extracts therefrom, and to discuss the affairs of such Obligor with the officers
thereof,  at all reasonable  times,  and, at all reasonable  times,  to meet and
discuss the affairs of such Obligor with Group's accountants;

         (G) Material  Commitments.  Each Borrower  shall maintain in full force
and effect, all material agreements,  including, without limitation, all leases,
franchises,  copyrights,  patents,  licenses,  permits,  applications,  reports,
authorizations  and  other  rights,  as are  necessary  for the  conduct  of its
business;



<PAGE>




         (H) Account  Notification.  The  Borrowers  shall,  immediately  upon a
Borrower's  learning thereof,  inform the Bank, in writing,  of (i) any material
delay in a  Borrower's  performance  of any of its  obligations  to any  Account
Debtor and of any assertion of any material claims,  offsets or counterclaims by
any Account  Debtor and of any  allowances,  credits (other than as permitted in
Section  6.2(D)) or other  monies  granted by a Borrower to any Account  Debtor;
(ii) all material adverse information relating to the financial condition of any
Account  Debtor;  (iii) any facts  relating  to any Account  which would  render
untrue, in any material  respects,  any representation or warranty made pursuant
to Section 6.2;  (iv) any  litigation  affecting a Borrower,  whether or not the
claim is  considered  by the  Borrowers to be covered by  insurance,  and of the
institution of any suit or  administrative  proceeding  which may materially and
adversely affect the operations,  financial  condition or business of a Borrower
or the Bank's security interest in the Collateral;


         (I)  Taxes.  The  Borrowers  shall pay all stamp and any other  similar
excise taxes claimed  payable by any Federal or state  authority with respect to
this  Agreement  or the  Revolving  Note,  which  obligation  shall  survive the
termination of this Agreement and payment of the Bank Debt;

         (J) Discharge  Liens.  The Borrowers  shall promptly after discovery of
existence  discharge any Liens against the Collateral,  other than the Permitted
Encumbrances;

         (K)  Repair.  The  Borrowers  shall  keep  and  maintain  all  tangible
Collateral  in good  operating  order  and  repair,  ordinary  wear and tear and
obsolescence excepted; and

         (L) Other  Covenants.  The Borrowers shall perform,  observe and comply
with such other covenants as the Bank may from time to time  reasonably  require
of the  Borrowers to assure the repayment in full of all of the Bank Debt or the
complete and timely  performance  by the Borrowers of all the  provisions of the
Borrowers hereunder.

         7.2. Negative  Covenants.  The Borrowers jointly and severally covenant
and agree, and where indicated the other Obligors jointly and severally covenant
and agree, that they shall not:

         (A) Other Debt.  No  Borrower  shall  incur,  create,  assume,  or have
outstanding  any  Funded  Debt,  except (i)  instruments  creating  or  securing
Permitted Encumbrances,  (ii) the Revolving Note, (iii) notes for Debt otherwise
owing to the Bank, (iv) Subordinated  Debt, (v) Funded Debt shown as liabilities
of one or more of the Obligors on the Consolidated  balance sheet of Group as of
December  31, 1997  delivered  to the Bank prior to the Closing  Date,  and (vi)
Funded Debt,  in addition to that  described in clauses (i) through (v),  above,
which does not at any time in the aggregate  exceed  $750,000 on a  Consolidated
basis;



<PAGE>




         (B) Sale and Leaseback;  Liens.  Except as provided in Section 5.11, no
Borrower shall enter into any sale and leaseback transaction or arrangement with
any  Person  with  respect  to  any  of  the  assets  of  such  Borrower  or its
Subsidiaries,  or grant a security interest,  mortgage,  pledge,  hypothecate or
otherwise  voluntarily  place a Lien upon any assets for any  obligation of such
Borrower, except for Permitted Encumbrances;


         (C) Merger; Consolidation;  Sale. No Obligor shall merge or consolidate
with or into,  or enter  into any merger  agreement  with any other  entity,  or
lease,  sell or  transfer  all or  substantially  all its  property,  assets and
business to any other entity, other than another Obligor;

         (D) Investments. No Obligor shall make any advance to, or investment of
any kind in,  or loan any money to, or  guarantee  any  obligation  of any other
Person or purchase any evidence of Debt or securities  (including  Stock) or the
business or  substantially  all of the property of any other Person or hereafter
make   prepayments  or  advances  to  others  except  for  (i)  endorsements  of
instruments  or items of  payment  for  deposit to the  general  account of such
Obligor  in the  ordinary  course of  business  or for  delivery  to the Bank on
account of the Bank Debt,  (ii) loans to officers of a Borrower  the proceeds of
which  are used to fund his or her  obligations  in  connection  with his or her
exercise of rights under an employee stock option plan, so long as the aggregate
amount of all such loans at any time  outstanding  does not exceed $600,000 on a
Consolidated  basis,  (iii)  advances  to  employees  (other  than  of the  type
described in clause (ii),  above) made in the ordinary  course of such Obligor's
business  in the  aggregate  amount  of  not  more  than  $150,000  at any  time
outstanding on a Consolidated  basis, (iv) the obligations of such Obligor under
and pursuant to this Agreement and the Other  Agreements and (v) Subsidiaries of
Group which are  guarantors  of the Bank Debt pursuant to a Guaranty in the form
of Exhibit D hereto;

         (E) Assignment of Accounts.  No Obligor shall sell,  assign or transfer
any notes,  accounts receivable or money due or to become due either as security
or otherwise,  except to secure the Debt of the Obligors hereunder or other Debt
now or hereafter owing to the Bank;

         (F) Leverage. The Obligors shall not allow the Leverage Ratio as at the
end of any fiscal quarter to be greater than forty-five percent (45%).

         (G) Net Worth. The Obligors shall not allow  Consolidated Net Worth (i)
as at the end of the fiscal  quarter  ending  March 31,  1998 to be less than an
amount equal to the sum of (a) $12,000,000,  plus (b) the Quarterly Increase for
such fiscal quarter;  and (ii) as at the end of any fiscal quarter thereafter to
be less than an amount  equal to the sum of (a) the  Previous  Minimum  for such
fiscal quarter, plus (b) the Quarterly Increase for such fiscal quarter.


<PAGE>




         (H)  Interest  Coverage.  The  Obligors  shall not  allow the  Interest
Coverage Ratio as of the end of any fiscal quarter, commencing June 30, 1998, to
be less  than (a) as at the end of the  fiscal  quarters  ending  June  30,  and
September  30,  1998,  2.50 to 1,  and (b) as at the end of any  fiscal  quarter
thereafter, 3.00 to 1;


         (I) Drafts;  Trade  Acceptances.  No Obligor shall accept any drafts or
trade acceptances against it;

         (J) Records and  Collateral  Locations.  No Borrower  shall  remove its
books and  records  and/or  the  Collateral  from the  location(s)  set forth in
Schedule  6.1(E) or keep any of such books and records  and/or the Collateral at
any other  office(s)  or  location(s)  unless (i) such  Borrower  gives the Bank
written  notice thereof and of the new location of said books and records and/or
the Collateral at least thirty (30) days prior thereto and (ii) the other office
or location is within the continental United States of America; or

         (K) Plans.  No Obligor shall  terminate any Plan which would (i) result
in any  liability of any Obligor to the PBGC,  or (ii) permit the  occurrence of
any  Reportable  Event (as  defined in Section  6.1(C)),  or any other  event or
condition,  which presents a risk of such a termination by the PBGC of any Plan,
or (iii) withdraw or effect a partial  withdrawal from a  Multiemployer  Plan if
such withdrawal would result in any Obligor's incurring any withdrawal liability
in excess of $100,000.

         7.3. Payment of Charges and Claims.  If an Obligor at any time or times
hereafter,  shall  fail to pay the  Charges  when  due or  promptly  obtain  the
discharge of such Charges or of any Lien asserted  against the  Collateral,  the
Bank may,  without  waiving or  releasing  any  obligation  or  liability of the
Obligors or any Event of Default,  in its sole discretion,  at any time or times
thereafter, make such payment, or any part thereof, or obtain such discharge and
take any other action with respect thereto which the Bank deems  advisable.  All
sums  paid  by  the  Bank  hereunder  and  any  expenses,  including  reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable,  upon demand,  by the  Borrowers to the Bank and shall be additional
Bank Debt hereunder secured by the Collateral.

         7.4.  Insurance, Payment of Premiums.



<PAGE>




         (A) Maintenance of Insurance. Each Borrower shall, at its sole cost and
expense,  keep and maintain (i) the tangible Collateral and the records relating
to the Accounts insured for their full insurable value against loss or damage by
fire (including  so-called "extended  coverage"),  theft,  explosion,  sprinkler
leakage and all other  hazards  and risks  ordinarily  insured  against by other
prudent  owners or users of such  properties  in similar  businesses  (sometimes
referred to herein as "casualty  insurance"),  and (ii)  insurance for liability
from personal injury and property  damage in such amounts as similar  businesses
maintain.  The  Borrowers  shall  notify  the  Bank  promptly  of any  event  or
occurrence  causing a material loss or decline in value of such  Collateral  and
the estimated  (or actual,  if  available)  amount of such loss or decline.  All
policies of  insurance  on such  Collateral  shall be in form and with  insurers
recognized as adequate by prudent  business  persons and all such policies shall
provide such coverages and be in such amounts as may be reasonably  satisfactory
to the Bank.


         (B) Evidence;  Requirements;  Power of Attorney. At the Bank's request,
the Borrowers shall deliver to the Bank the original (or certified copy) of each
policy of insurance  required  hereunder and evidence of payment of all premiums
therefor.  Such  policies  of  casualty  insurance  shall  contain  a  mortgagee
endorsement  or  provision,  in form and substance  acceptable to the Bank,  and
shall show loss payable to the Bank. Such policies, or an independent instrument
furnished to the Bank, shall provide that the insurance  companies will give the
Bank at least thirty (30) days prior  written  notice  before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
a Borrower,  or any other  Person  shall affect the right of the Bank to recover
under such  policy or  policies  of  insurance  in case of loss or damage.  Each
Borrower  hereby directs all insurers under such policies of casualty  insurance
to pay all  proceeds  payable  thereunder  directly to the Bank.  Each  Borrower
irrevocably  makes,  constitutes  and  appoints  the  Bank  (and  all  officers,
employees or agents  designated by the Bank) as such  Borrower's true and lawful
attorney and  agent-in-fact  for the purpose of making,  settling and  adjusting
claims under such  policies of casualty  insurance,  endorsing  the name of such
Borrower  on any check,  draft,  instrument  or other  items of payment  for the
proceeds  of  such   policies  of   casualty   insurance   and  for  making  all
determinations   and  decisions  with  respect  to  such  policies  of  casualty
insurance. In the event a Borrower, at any time hereafter,  shall fail to obtain
or  maintain  any of the  policies  of  insurance  required  above or to pay any
premium in whole or in part relating thereto,  then the Bank, without waiving or
releasing any  obligations or Event of Default,  may at any time thereafter (but
shall be under no obligation  to) obtain and maintain such policies of insurance
and pay such premium and take any other action with  respect  thereto  which the
Bank deems advisable.  All sums so disbursed by the Bank,  including  reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable on demand by the Borrowers to the Bank and shall be  additional  Bank
Debt hereunder secured by the Collateral.



<PAGE>




         7.5.  Use of  Proceeds.  The  Borrowers  covenant  and  agree  that the
proceeds of the Revolving Loans for working  capital for corporate  purposes and
the conduct of their respective businesses.


         7.6.  Survival of Obligations Upon Termination of Agreement.  Except as
otherwise  expressly provided for in this Agreement and in the Other Agreements,
no  termination  or  cancellation  (regardless  of cause or  procedure)  of this
Agreement or the Other  Agreements shall in any way affect or impair the powers,
obligations,  duties,  rights,  and  liabilities  of the  Obligors  or the  Bank
relating to any  transaction  or event  occurring  prior to such  termination or
cancellation.

8.       EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

         8.1.  Events  of  Default.  The  occurrence  of any  one or more of the
following events shall constitute an "Event of Default":

         (A) Payment. If the Borrowers shall fail to pay (i) when due, or within
five  (5)  days  thereafter,  any  principal  (including,   without  limitation,
principal due pursuant to Section 7.1(A), above) or interest under the Revolving
Note or (ii) any other  portion of the Bank Debt  within ten (10) days after the
Bank sends to the Borrowers written demand therefor;

         (B) Other  Covenants.  If an Obligor (i) shall fail or omit to perform,
observe or satisfy any of the  warranties,  covenants,  agreements or conditions
contained in Section 7.2,  above or (ii) shall fail or omit to perform,  observe
or satisfy any of the  warranties,  covenants,  agreements or conditions  (other
than those  referred to in Paragraph (A) or in clause (i) of this Paragraph (B))
contained in this  Agreement or any of the Other  Agreements and such failure or
omission shall not have been fully  corrected  within thirty (30) days after the
giving of written notice thereof to the Borrowers by the Bank that the specified
Possible Default is to be remedied;  provided, however, that if any such failure
or omission is not of the type which is susceptible to correction within said 30
day period, then such failure or omission shall be deemed an Event of Default as
of the date of occurrence thereof;

         (C)  Representations  and Warranties.  Any warranty,  representation or
written  statement  made or  furnished to the Bank by or on behalf of an Obligor
proves to have been false in any material respect when made or furnished;

         (D) Cross Default. If any event occurs which allows the acceleration of
the  maturity of the Debt of any Obligor for Funded Debt owing to Persons  other
than  the  Bank in  excess  of  $500,000,  including,  without  limitation,  the
Subordinated Debt;



<PAGE>




         (E)  Levy.  If any  Collateral  is  levied  upon,  seized  or  attached
judicially,  and, in any of such events,  the Bank does not immediately  receive
substitute  or  replacement  Collateral  satisfactory  to the  Bank in its  sole
discretion;


         (F) Obligor  Insolvency.  If any Obligor shall suspend business,  or if
any  Obligor  shall  become  insolvent  or shall file a  voluntary  petition  in
bankruptcy,  or shall  file a  voluntary  petition  or an answer  admitting  the
jurisdiction of the court and the material  allegations of, or shall consent to,
any  involuntary  petition  pursuant  to or  purporting  to be  pursuant  to any
bankruptcy,  reorganization or insolvency law of any jurisdiction, or shall make
an assignment for the benefit of creditors, or shall apply for or consent to the
appointment  of any  receiver  or  trustee of all or a  substantial  part of the
property of such Obligor;

         (G)  Obligor  Involuntary  Proceedings.  If an order  shall be  entered
against  any  Obligor  (without  the  application,  approval  or consent of such
Obligor) and shall not be dismissed or stayed  within  thirty (30) days from its
entry pursuant to or purporting to be pursuant to any bankruptcy, reorganization
or insolvency  law of any  jurisdiction  (i) approving an  involuntary  petition
seeking reorganization or liquidation; or (ii) approving an involuntary petition
seeking an arrangement  with creditors of such Obligor;  or (iii) appointing any
receiver  or  trustee  of all or a  substantial  part  of the  property  of such
Obligor;

         (H) Other  Insolvency.  Default by any other surety or guarantor for an
Obligor in any  obligation  or  liability to the Bank or the  occurrence  of any
event  described  in Section  8.1(F) or (G) in respect of any such  guarantor or
surety;

         (I) Loss of  Collateral.  Any  material  portion of the  Collateral  is
damaged or lost by fire,  theft or other  casualty  which is uninsured,  and the
Borrowers  do  not  immediately,   upon  demand,   furnish  additional  security
satisfactory to the Bank;

         (J) Change of Control.  A Change of Control shall occur;

         (K)  Judgments.  Final  judgment  for the payment of money in excess of
$100,000  shall be  rendered  against  any  Obligor,  and the same shall  remain
undischarged  for a period of thirty (30) days during which  execution shall not
be effectively stayed;

         (L) Subordinated  Default.  Any obligee of Subordinated  Debt shall (i)
fail to materially comply with the  subordination  provisions of the instruments
evidencing such Subordinated Debt or any separate  subordination  agreement,  or
(ii) initiate judicial proceedings against a Borrower or take any action seeking
to obtain  possession  of any assets of a Borrower  without  the  consent of the
Bank; or



<PAGE>




         (M)  ERISA.  If (i) any  Reportable  Event  occurs  and the Bank in its
reasonable  determination  deems such Reportable Event to constitute grounds (A)
for the  termination  of any Plan by the PBGC or (B) for the  appointment by the
appropriate United States district court of a trustee to administer any Plan and
such  Reportable  Event shall not have been fully  corrected  or remedied to the
full  satisfaction  of the Bank within  thirty (30) days after giving of written
notice of such determination to the Borrowers by the Bank or (ii) any Plan shall
be terminated  within the meaning of title IV of ERISA, or (iii) a trustee shall
be appointed by the  appropriate  United States district court to administer any
Plan, or (iv) the PBGC shall  institute  proceedings to terminate any Plan or to
appoint a trustee to administer any Plan.


         8.2.  Acceleration of the Bank Debt.

         (A) Optional  Acceleration.  Upon the occurrence of an Event of Default
described in Section 8.1(A), (B), (C), (D), (E), (H), (I), (J), (K), (L), or (M)
and at any  time  thereafter,  if any  such  Event  of  Default  shall  then  be
continuing,  the Revolving Loans and all other Bank Debt shall, at the option of
the Bank and without demand,  notice, or legal process of any kind, be declared,
and thereupon  immediately  shall become,  due and payable in full, and the Bank
shall have no further obligation to advance Revolving Loans hereunder.

         (B) Automatic Acceleration.  Upon the occurrence of an Event of Default
described  in Section  8.1(F) or (G),  all of the Bank Debt shall  automatically
without any declaration or other action by the Bank, and without demand,  notice
or legal process of any kind, be declared, and immediately shall become, due and
payable,  and the Bank  shall have no further  obligation  to advance  Revolving
Loans hereunder.

         8.3. Remedies. Upon, and thereafter during the continuance of, an Event
of Default, the Bank shall have the following other rights and remedies:

         (A) Cumulative  Remedies.  In addition to any other rights and remedies
contained  in this  Agreement  and in all of the  Other  Agreements,  all of the
rights and remedies of a secured party under the Code or other  applicable  law,
all of which rights and remedies  (under this Agreement,  the Other  Agreements,
the Code and at law and in equity) shall be cumulative and nonexclusive,  to the
extent permitted by law;

         (B) Mail.  The right to open the mail of the  Borrowers and collect any
and all amounts due from the Account Debtors;



<PAGE>




         (C)  Entry;  Assembly  of  Collateral.  The right to (i) enter upon the
premises of the Borrowers without any obligation to pay rent,  through self-help
and without judicial process, without first obtaining a final judgment or giving
notice and opportunity for a hearing on the validity of the Bank's claim, or any
other place or places where the  Collateral is located and kept,  and remove the
Collateral  therefrom to the premises of the Bank or any agent of the Bank,  for
such time as the Bank may desire,  in order to collect or liquidate  effectively
the  Collateral,  or (ii) require the Borrowers to assemble the  Collateral  and
make it available to the Bank at a place to be  designated  by the Bank,  in its
sole discretion;


         (D) Collection, Compromise of Accounts. The right to (i) demand payment
of the Accounts;  (ii) enforce payment of the Accounts,  by legal proceedings or
otherwise;  (iii) exercise all of a Borrower's  rights and remedies with respect
to the collection of the Accounts and Special Collateral;  (iv) settle,  adjust,
compromise,  extend or renew the Accounts;  (v) settle, adjust or compromise any
legal  proceedings  brought  to  collect  the  Accounts;  (vi) if  permitted  by
applicable  law,  sell or assign the Accounts and Special  Collateral  upon such
terms,  for such amounts and at such time or times as the Bank deems  advisable;
(vii)  discharge  and release the Accounts and Special  Collateral;  (viii) take
control,  in any  manner,  of any item of payment  or  proceeds  referred  to in
Section 5.9; (ix) prepare,  file and sign each  Borrower's  name on any Proof of
Claim in bankruptcy or similar document against any Account Debtor; (x) prepare,
file and  sign  each  Borrower's  name on any  Notice  of  Lien,  Assignment  or
Satisfaction  of Lien or similar  document in  connection  with the Accounts and
Special  Collateral;  (xi) do all acts and things  necessary  in the Bank's sole
discretion,  and at its option to fulfill each Borrower's obligations under this
Agreement;  (xii)  endorse the name of each  Borrower  upon any  chattel  paper,
document, instrument,  invoice, freight bill, bill of lading or similar document
or agreement relating to the Collateral;  (xiii) use each Borrower's  stationery
and sign the name of such Borrower to  verifications of the Accounts and notices
thereof  to  Account  Debtors  and  (xiv)  use the  information  recorded  on or
contained in any data  processing  equipment and computer  hardware and software
relating to the Collateral to which such Borrower has access; and



<PAGE>




         (E) Sale; Disposition. The right to (i) sell or to otherwise dispose of
all or any Collateral in its then condition or after any further modification or
processing  thereof, at public or private sale or sales, in lots or in bulk, for
cash or on credit, all as the Bank, in its sole discretion,  may deem advisable;
(ii) adjourn such sales from time to time with or without notice;  (iii) conduct
such sales on a Borrower's  premises or elsewhere and use a Borrower's  premises
without  charge  for such  sales for such time or times as the Bank may see fit.
The Bank is hereby granted a license or other right to use, without charge, each
Borrower's labels,  copyrights,  rights of use of any name, trade secrets, trade
names, trademarks and advertising matter, or any property of a similar nature as
it  pertains  to the  Collateral,  in  advertising  for  sale  and  selling  any
Collateral,  and each  Borrower's  rights  under all  licenses,  permits and all
franchise agreements which are Collateral shall inure to the Bank's benefit. The
Bank shall have the right to sell, lease or otherwise dispose of the Collateral,
or any part thereof,  for cash, credit or any combination  thereof, and the Bank
may  purchase  all or any part of the  Collateral  at public or, if permitted by
law,  private sale and, in lieu of actual  payment of such purchase  price,  may
setoff the amount of such price  against the Bank Debt.  The  proceeds  realized
from the sale of any Collateral shall be applied first to the reasonable  costs,
expenses and  attorneys'  fees and expenses  incurred by the Bank for collection
and for acquisition, completion, protection, removal, storage, sale and delivery
of the  Collateral;  second to interest due upon any of the Bank Debt;  third to
the principal of the Revolving  Loans; and fourth to the remaining Bank Debt, if
any. Subject to any applicable  order of court or other  requirement of law, any
surplus shall be paid to the Borrowers or other claimants as their interests may
appear.  If any deficiency shall arise, the Borrowers shall remain liable to the
Bank therefor.


         8.4.  Interest Rate in the Event of Default.  Upon the  occurrence  and
during the continuance of an Event of Default,  the rate of interest accruing on
the Bank Debt (the "Default  Interest  Rate") shall,  at the Bank's  option,  be
increased to a rate per annum which shall be three hundred (300) Basis Points in
excess of the rate of interest which would otherwise  accrue pursuant to Section
2.3.

         8.5.  Notice.  Any notice  required  to be given by the Bank of a sale,
lease,  other  disposition of the Collateral or any other intended action by the
Bank, if given five (5) days prior to such  proposed  action,  shall  constitute
commercially reasonable and fair notice thereof to the Borrowers.

         8.6.  Rights  Cumulative.  The Bank's  rights and  remedies  herein are
cumulative  and  non-exclusive;  and no such right or remedy  specified  in this
Article 8 shall be deemed to limit,  before or after the  occurrence of an Event
of Default, the exercise of any right of the Bank provided for elsewhere in this
Agreement or in the Other Agreements,  including,  without limitation Article 5,
above, or at law or in equity.

9.       MISCELLANEOUS

         9.1.  Appointment  of  the  Bank  as  Lawful  Attorney.  Each  Borrower
irrevocably  designates,  makes,  constitutes  and  appoints  the Bank  (and all
persons designated by the Bank) as such Borrower's true and lawful attorney (and
agent-in-fact)  and the Bank, or the Bank's agent,  may,  without notice to such
Borrower:


<PAGE>




         (A) At such time or times  hereafter as the Bank or said agent,  in its
sole discretion,  may determine,  in such Borrower's or the Bank's name, endorse
such Borrower's name on any checks,  notes, drafts or any other payment relating
to and/or proceeds of the Collateral  which come into the possession of the Bank
or under the Bank's control; and


         (B)  Sign  the  name  of  such  Borrower  on any  of  the  Supplemental
Documentation and deliver any of the Supplemental  Documentation to such Persons
as the Bank, in its sole discretion, may elect.

         9.2.  Modification of Agreement;  Sale of Interest.  This Agreement and
the Other  Agreements  may not be  modified,  altered or  amended,  except by an
agreement in writing  signed by the Obligors and the Bank. No Borrower may sell,
assign or  transfer  this  Agreement,  or the Other  Agreements  or any  portion
thereof, including, without limitation, such Borrower's rights, title, interest,
remedies,  powers,  and/or duties  hereunder or thereunder.  Each Obligor hereby
consents  to the  Bank's  participation,  sale,  assignment,  transfer  or other
disposition,  at any time or times  hereafter  of this  Agreement,  or the Other
Agreements, or of any portion hereof or thereof, including,  without limitation,
the Bank's rights, title, interest, remedies, powers, and/or duties hereunder or
thereunder.

         9.3. Expenses (Including Attorneys' Fees). The Borrowers shall pay, and
upon  demand  reimburse  the Bank,  for all of the  Bank's  costs  and  expenses
incidental to the  extension of credit and the  administration  or  modification
thereof (including,  without limitation, the collection of any and all Bank Debt
and the  negotiation,  preparation  and enforcement of this Agreement and all of
the Other  Agreements)  provided for in this  Agreement  or any Other  Agreement
including  reasonable  fees and  out-of-pocket  expenses of the Bank's  counsel,
title fees,  survey fees,  inspection fees,  revenue,  stamp,  excise,  note and
mortgage taxes claimed payable by any federal,  state or local  authority,  with
obligation to pay all such costs to survive the  termination  of this  Agreement
and payment of the Bank Debt. All such expenses paid by the Bank hereunder shall
be additional Bank Debt secured by the Collateral.



<PAGE>




         9.4.  Waiver  by the Bank.  The  Bank's  failure,  at any time or times
hereafter,  to require strict performance by an Obligor of any provision of this
Agreement or the Other Agreements shall not waive,  affect or diminish any right
of the  Bank  thereafter  to  demand  strict  compliance  and  performance.  Any
suspension or waiver by the Bank of an Event of Default under this  Agreement or
the Other  Agreements  shall not  suspend,  waive or affect  any other  Event of
Default under this  Agreement or the Other  Agreements,  and no Event of Default
under  this  Agreement  or the  Other  Agreements  shall be  deemed to have been
suspended  or waived  by the Bank,  unless  such  suspension  or waiver is by an
instrument  in  writing  signed  by an  officer  of the  Bank,  directed  to the
Borrowers and specifying such suspension or waiver.


         9.5. Severability.  Wherever possible, each provision of this Agreement
and the Other  Agreements shall be interpreted in such manner as to be effective
and valid under  applicable  law. If,  however,  any provision of this Agreement
shall be prohibited by or invalid under  applicable law, such provision shall be
ineffective  to  the  extent  of  such   prohibition   or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
Agreement, unless the ineffectiveness of such provision materially and adversely
alters the benefits accruing to any party hereunder.

         9.6. Parties.  This Agreement and the Other Agreements shall be binding
upon and inure to the benefit of the Obligors and the Bank and their  respective
successors and assigns. This provision,  however,  shall not be deemed to modify
Section 9.2 hereof.

         9.7.  Conflict of Terms.  The Other  Agreements and all Exhibits hereto
are  incorporated  in  this  Agreement  by this  reference  thereto.  Except  as
otherwise  provided in this  Agreement  and except as otherwise  provided in the
Other  Agreements  by specific  reference  to the  applicable  provision of this
Agreement,  if any provision contained in this Agreement is in conflict with, or
inconsistent  with,  any  provision  in  the  Other  Agreements,  the  provision
contained in this Agreement shall govern and control.

         9.8.  Waivers by  Obligors.  Except as  otherwise  provided for in this
Agreement, each Obligor waives (i) presentment, demand and protest and notice of
presentment,  protest,  default,  non-payment,  maturity,  release,  compromise,
settlement,  extension  or renewal  of any or all  commercial  paper,  accounts,
contract  rights,  documents,  instruments,  chattel paper and guaranties at any
time held by the Bank on which such  Obligor may in any way be liable and hereby
ratifies and confirms  whatever the Bank may do in this regard;  (ii) all rights
to notice of a hearing prior to the Bank's  taking  possession or control of, or
to the Bank's  replevy,  attachment or levy upon,  the Collateral or any bond or
security  which might be  required  by any court  prior to allowing  the Bank to
exercise  any of the Bank's  remedies;  and (iii) the benefit of all  valuation,
appraisement  and exemption  laws.  Each Obligor  acknowledges  that it has been
advised  by  counsel  of its  choice  with  respect  to this  Agreement  and the
transactions evidenced by this Agreement.



<PAGE>




         9.9.  Governing  Law.  THIS  AGREEMENT IS EXECUTED AND DELIVERED IN THE
STATE OF OHIO,  THE LAWS OF WHICH SHALL GOVERN THE  VALIDITY,  ENFORCEMENT,  AND
INTERPRETATION HEREOF AND OF THE OTHER AGREEMENTS.  EACH OBLIGOR HEREBY CONSENTS
TO THE  JURISDICTION  OF ANY STATE OR FEDERAL COURT LOCATED  WITHIN THE STATE OF
OHIO OR ANY  JURISDICTION  IN WHICH  COLLATERAL IS LOCATED,  AND WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON ITSELF,  AND CONSENTS  THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY REGISTERED  OR CERTIFIED  MAIL DIRECTED TO SUCH OBLIGOR AT
THE ADDRESS OF SUCH  OBLIGOR SET FORTH IN SECTION  9.11,  BELOW,  AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.


         9.10. WAIVER OF JURY TRIAL. EACH OF THE BANK, MORGAN,  TDI,  INTERSTATE
AND  GROUP,  TO THE  EXTENT  PERMITTED  BY LAW,  WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE  IN RESOLVING ANY DISPUTE,  WHETHER  SOUNDING IN CONTRACT,  TORT, OR
OTHERWISE,  BETWEEN  THE  BANK  AND  ANY OF THE  OBLIGORS  ARISING  OUT  OF,  IN
CONNECTION  WITH,  RELATED TO, OR  INCIDENTAL  TO THE  RELATIONSHIP  ESTABLISHED
BETWEEN  ANY AND ALL OF THE  OBLIGORS  AND THE  BANK  IN  CONNECTION  WITH  THIS
AGREEMENT OR ANY OF THE OTHER  AGREEMENTS OR THE  TRANSACTIONS  RELATED THERETO.
THIS  WAIVER  SHALL NOT IN ANY WAY  AFFECT,  WAIVE,  LIMIT,  AMEND OR MODIFY THE
BANK'S  ABILITY TO PURSUE  REMEDIES  PURSUANT TO ANY  CONFESSION  OF JUDGMENT OR
COGNOVIT  PROVISION  CONTAINED IN THE REVOLVING NOTE, ANY GUARANTY OF PAYMENT OR
ANY OTHER AGREEMENT, INSTRUMENT OR DOCUMENT RELATED THERETO.

         9.11.  Notice.  All notices,  requests,  demands,  directions and other
communications  given to or made upon any party hereto under the  provisions  of
this Agreement  shall be in writing  (including  telecopied  communication)  and
shall be hand delivered or sent by certified mail, return receipt requested,  or
first class  "Express  Mail" or  overnight  courier  service,  with  receipt for
delivery thereof, or by telex, telecopy or telegram with confirmation in writing
by certified mail, return receipt requested or Express Mail or overnight courier
service, with receipt for delivery thereof, in all cases with postage or charges
prepaid, to the applicable party, addressed as follows:

         If to the Bank:   KeyBank National Association
                                            127 Public Square
                                            Cleveland, Ohio  44114
                                            Attn: Mark A. LoSchiavo

         With a copy to:   Berick, Pearlman & Mills Co., L.P.A.
                                            1350 Eaton Center
                                            1111 Superior Avenue
                                            Cleveland, Ohio  44114
                                            Osborne Mills, Jr., Esq.

         If to an Obligor: c/o The Morgan Group, Inc.
                           2746 Old U.S. Route 20 West
                             Elkhart, Indiana 46515
                              Attn: Dennis Duerksen



<PAGE>




         With a copy to:   Barnes & Thornburg

                           600 1st Source Bank Center
                           100 North Michigan
                           South Bend, Indiana 46601
                           Attn: Brian J. Lake, Esq.

or in accordance with any unrevoked  written direction from any party to each of
the other parties hereto. Each such notice shall be deemed to have been given or
received on the date  received,  except when sent by Express  Mail or  overnight
courier service, in which case such notice shall be deemed to have been received
on the next business day  thereafter,  and except further when sent by certified
mail,  in which case such  notice  shall be deemed to have been  received on the
third business day thereafter.

         9.12.  Section Titles.  The Section titles  contained in this Agreement
are and shall be without  substantive  meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.

         9.13. No Assurance of Extension or Renewal.  The Borrowers confirm that
the Bank has not made or given any agreement,  understanding  or other assurance
that the Bank will  agree to extend  or renew the term of the  Revolving  Credit
Facility  beyond its maturity stated above.  Without  limiting the generality of
the foregoing  sentence,  the Borrowers  also confirm that the inclusion in this
Agreement of certain  covenants or other provisions  containing or contemplating
dates which are after such stated maturity of the Revolving Credit Facility were
included  herein solely for  convenience in the event that such term is extended
or renewed and shall not be  construed  to imply that the Bank has made or given
any  agreement,  understanding  or other  assurance that it will extend or renew
such term.
<PAGE>

10.      JOINT AND SEVERAL

         The Borrowers  agree and  acknowledge  that their  liability to pay all
Bank Debt and to perform all other  obligations  under this  Agreement  and each
Other Agreement to which they are a party is and shall be joint and several.  No
Borrower shall have any right of subrogation,  reimbursement or similar right in
respect of its  payment of any sum or its  performance  of any other  obligation
hereunder  unless and until all Bank Debt has been paid in full and the Bank has
no further obligation hereunder.  In addition,  each Borrower confirms that upon
the Bank's  advance  of the  Revolving  Loans,  it will have  received  adequate
consideration  and reasonably  equivalent  value for the Debt incurred and other
agreements made in the this Agreement and the Other Agreements in that (i) their
businesses are operated as an integrated  group,  (ii) due to the nature of such
businesses,  it  is  highly  unlikely  that  the  Borrowers  could  be  financed
separately upon terms as favorable as they are under a unified credit  facility,
and (iii) without the financing  provided by the Bank hereunder to the Borrowers
jointly,  no Borrower could reasonably expect to obtain financing  separately on
terms as favorable as those provided for herein.


         IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first set forth above.


BANK                                                          BORROWERS

KEYBANK NATIONAL ASSOCIATION                MORGAN DRIVE AWAY, INC.




By:/s/ Richard A. Pohle                     By:/s/ Dennis Duerksen
   --------------------------                  ----------------------------
   Richard A. Pohle,                           Dennis Duerksen,
   Vice President                              Chief Financial Officer

GUARANTOR

THE MORGAN GROUP, INC.                      TDI, INC.


By:/s/ Dennis Duerksen                     By: /s/ Dennis Duerksen
   --------------------------                  ----------------------------
   Dennis Duerksen,                            Dennis Duerksen,
   Chief Financial Officer                     Chief Financial Officer



                                           INTERSTATE INDEMNITY COMPANY


                                            By:/s/ Dennis Duerksen
                                               ----------------------------
                                               Dennis Duerksen,
                                               Vice President


<PAGE>








                             SCHEDULES AND EXHIBITS


Schedules:

Schedule 1A                Financials

Schedule 1B                Licenses, Patents, Etc.

Schedule 6.1(B)            Permitted Encumbrances

Schedule 6.1(E)            Locations of Inventory, Equipment,
                           Books and Records Relating to Collateral




Exhibits:

Exhibit A                  Form of Revolving Note

Exhibit B                  Form of Opinion of Borrower's Counsel

Exhibit C                  Form of Landlord Waiver

Exhibit D                  Form of Continuing Guaranty



<PAGE>

                                    EXHIBIT A

                   AMENDED AND RESTATED REVOLVING CREDIT NOTE


$15,000,000                                                      Cleveland, Ohio
                                                                  March 31, 1998


         FOR VALUE RECEIVED, the undersigned MORGAN DRIVE AWAY, INC., TDI, INC.,
and  INTERSTATE  INDEMNITY  COMPANY (each a "Borrower"  and,  collectively,  the
"Borrowers"),  jointly  and  severally,  promise  to pay to the order of KEYBANK
NATIONAL ASSOCIATION  (together with any subsequent holder of all or any portion
of this Note, the "Bank"), at 127 Public Square,  Cleveland,  Ohio 44114 or such
other address as the Bank may from time to time  designate in writing,  on April
30, 2001 the  principal  sum of FIFTEEN  MILLION  DOLLARS  ($15,000,000)  or the
aggregate  unpaid  principal  amount of all loans evidenced by this Note made by
the Bank to the  Borrowers or any of them  pursuant to the Credit  Agreement (as
hereinafter defined), whichever is less, in lawful money of the United States of
America.  Capitalized  terms used herein and not otherwise  defined herein shall
have the meanings  ascribed to such terms in that  certain  Amended and Restated
Credit  Agreement and Security  Agreement  dated March 25, 1998 (as the same may
from time to time be amended, supplemented,  restated or otherwise modified, the
"Credit Agreement"), among the Borrowers, the Bank and The Morgan Group, Inc.

         The  Borrowers  jointly and  severally  promise to pay  interest on the
unpaid principal amount of each Revolving Loan evidenced hereby from the date of
such  Revolving  Loan until  principal  amount is paid in full, at such interest
rates,  computed in such manner,  and payable at such times, as are specified in
the Credit  Agreement.  The Borrowers  jointly and  severally  promise to pay on
demand  interest on any overdue  principal and, to the extent  permitted by law,
overdue  interest  from  their  due  dates at the rate or rates set forth in the
Credit  Agreement;  and upon and during the  continuance of an Event of Default,
the  indebtedness  evidenced  hereby shall bear interest at the Default Interest
Rate.

         The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof, will
be shown on a ledger or other  record of the Bank or by such other method as the
Bank may  generally  employ;  provided,  however,  that failure to make any such
entry or any error in such entries  shall in no way detract from the  Borrowers'
obligations under this Note.



<PAGE>




         This Note is the Revolving  Note  referred to in the Credit  Agreement.
Reference is made to the Credit  Agreement for a description of the right of the
Borrowers to anticipate  payments hereof,  the right of the Bank to declare this
Note due prior to its stated maturity, and other terms and conditions upon which
this Note is issued. Without limiting the generality of the foregoing,  upon the
occurrence of an Event of Default of the type described in Section 8.1(F) or (G)
of the Credit Agreement, the maturity of the obligations evidenced hereby shall,
automatically  and  without  any action by the Bank,  be  accelerated,  and such
obligations  shall be  immediately  due and payable.  Upon the occurrence of any
other Event of Default,  the Bank may, at its option,  without notice or demand,
accelerate the maturity of the obligations  evidenced hereby,  which obligations
shall become immediately due and payable.  In the event the Bank shall institute
any  action for the  enforcement  or  collection  of the  obligations  evidenced
hereby,  the  undersigned  agrees to pay all costs and  expenses of such action,
including reasonable attorneys' fees, to the extent permitted by law.


         The  indebtedness  evidenced  by this Note is  secured by a Lien in the
Collateral pursuant to the Credit Agreement and is guaranteed by the Guaranty of
The Morgan Group, Inc.

                  This Note evidences the Borrowers'  indebtedness for Revolving
Loans and amends and  restates  in its  entirety  the Master  Revolving  Note of
Morgan  and TDI in the face  amount of  $13,000,000  in favor of the Bank  dated
March 27,  1997 (as  amended by an  amendment  dated  March 6, 1998,  the "Prior
Note")(with  Interstate  joining in this Note pursuant to the Credit Agreement),
provided  that this Note  shall  not be  construed  to  evidence  a payment  and
readvance of the  Revolving  Loans  evidenced  thereby and hereby,  it being the
intention of the Borrowers  and, by its  acceptance  hereof,  the Bank that both
such Notes evidence the same  indebtedness.  In addition to the foregoing,  this
Note also  evidences  the  indebtedness  of the Borrowers for accrued and unpaid
interest due under the Prior Note which remains  unpaid on the date hereof,  all
of which interest shall be due and payable in full on March 31, 1998.

         The Borrowers  and each  endorser,  surety and  guarantor  hereby waive
diligence,  presentment,  demand, protest and notice of any kind whatsoever. The
failure  to  exercise  or delay  in  exercise  by the Bank of any of its  rights
hereunder in any  particular  instance  shall not constitute a waiver in that or
any subsequent instance.



<PAGE>




         The joint and several  obligations of each of the Borrowers  under this
Note shall be  absolute  and  unconditional  and shall  remain in full force and
effect  until all of the  obligations  hereunder  shall have been paid or deemed
paid and, until such payment has been made,  shall not be discharged,  affected,
modified  or  impaired  upon  the  happening  from  time to  time of any  event,
including without limitation,  any of the following,  whether or not with notice
to or the consent of any of the Borrowers:


         (a)      the  waiver,  compromise,   indulgence,  settlement,  release,
                  termination,  modification  or amendment  (including,  without
                  limitation,  any  extension  or  postponement  of the time for
                  payment or  performance or renewal or  refinancing)  of any or
                  all of the obligations,  covenants or agreements of any of the
                  Borrowers under this Note, the Credit  Agreement or any of the
                  Other Agreements;

         (b)      the failure to give notice to any or all of the  Borrowers  of
                  the occurrence of an Event of Default;

         (c)      the  release,  substitution  or  exchange  by the  Bank of any
                  security held by it for the payment of any of the  Liabilities
                  or the acceptance by the Bank of any  additional  security for
                  the Bank Debt or the availability, or claimed availability, of
                  any other security, collateral or source of repayment;

         (d)      the voluntary or involuntary liquidation, dissolution, sale or
                  other  disposition of all or substantially  all of the assets,
                  marshaling   of   assets   and   liabilities,    receivership,
                  insolvency,   bankruptcy,   assignment   for  the  benefit  of
                  creditors,   reorganization,   arrangement,  composition  with
                  creditors or  readjustment  of, or other  similar  proceedings
                  affecting,  any or all of the Borrowers or any other person or
                  entity  who,  or any of whose  property,  shall at any time in
                  question be  obligated  in respect of the  Liabilities  or any
                  part thereof;

         (e)      any  failure,  omission,  delay  or  neglect  by the  Bank  in
                  enforcing  asserting or exercising any right,  power or remedy
                  under this  Note,  the  Credit  Agreement  or any of the Other
                  Agreements or at law or in equity;

         (f)      the release of any person primarily or secondarily  liable for
                  all or any part of the Bank Debt;

         (g)      any nonperfection or other impairment of any security;

         (h)      any  assignment or transfer by the Bank of all or any interest
                  in this Note;

         (i)      the invalidity or unenforceability of any term or provision in
                  this  Note,   the  Credit   Agreement  or  any  of  the  Other
                  Agreements; or



<PAGE>




         (j)      to the  extent  permitted  by law,  any event or  action  that
                  would, in the absence of the provisions hereof,  result in the
                  release or discharge of any or all of the  Borrowers  from the
                  performance  or  observance  of any  obligation,  covenant  or
                  agreement  contained in this Note, the Credit Agreement or any
                  of the Other Agreements.


Without  limiting  the  foregoing,  it is the  intention of the parties that any
modification,  limitation,  or  discharge  of  the  obligations  of  any  of the
Borrowers  arising  out of or by virtue of any  bankruptcy,  reorganization,  or
similar  proceeding  for relief of debtors  under federal or state law shall not
affect,  modify, limit or discharge the liability of any other co-Obligor in any
manner  whatsoever,  and this Note shall  remain and  continue in full force and
effect and shall be enforceable  against such co-Obligors to the same extent and
with  the  same  force  and  effect  as if any  such  proceedings  had not  been
instituted,  and the other  co-Obligors shall be jointly and severally liable to
the Bank under this Note for the full amount payable hereunder,  irrespective of
any  modification,  limitation,  or discharge of the liability of any co-Obligor
that may result from any such  proceeding.  The  obligations of the Borrowers to
the Bank pursuant hereto include and apply to any payment or repayments received
by the Bank on account of the  liabilities  evidenced  hereby  which  payment or
payments  or any part  thereof  are  subsequently  invalidated,  declared  to be
fraudulent or  preferential,  set aside and/or required to be paid to a trustee,
receiver,  or any  other  person or entity  under  any  bankruptcy,  insolvency,
reorganization,  moratorium,  fraudulent  conveyance or similar law or equitable
doctrine.  If any action or proceeding  seeking such repayment is pending or, in
the Bank's sole  judgment,  threatened,  this Note and,  any  security  interest
herefor, shall remain in full force and effect notwithstanding that one, or more
or all of the  Borrowers  may not then be obligated  to the Bank.  The joint and
several obligations of the Borrowers to the Bank under and pursuant to this Note
and any security therefor,  shall remain in full force and effect until the Bank
has received payment in full of all obligations  hereunder and the expiration of
any  applicable  preference  or  similar  period  pursuant  of  any  bankruptcy,
insolvency,  reorganization,  moratorium or similar law, or at law or in equity,
without  any claim  having  been  made  before  the  expiration  of such  period
asserting an interest in all or any part of any payments received by the Bank.

         If any of the  terms  or  provisions  of  this  Note  shall  be  deemed
unenforceable,  the  enforceability  of the remaining terms and provisions shall
not be affected. This Note shall be governed by and construed in accordance with
the law of the State of Ohio.



<PAGE>




         Each Borrower (a) hereby irrevocably submits to the jurisdiction of the
state courts of the State of Ohio and to the  jurisdiction  of the United States
District  Court for the Northern  District of Ohio, for the purpose of any suit,
action or other proceeding arising out of or based upon this Note or the subject
matter  hereof  brought by the Bank or its  successors or assigns and (b) hereby
waives, and agrees not to assert, by way of motion, as a defense,  or otherwise,
in any such  suit,  action  or  proceeding,  any  claim  that it is not  subject
personally to the jurisdiction of the above-named  courts,  that its property is
exempt  or  immune  from  attachment  or  execution,  that the  suit,  action or
proceeding  is brought  in an  inconvenient  forum,  that the venue of the suit,
action or proceeding is improper or that this Note or the subject  matter hereof
may not be enforced in or by such court and (c) hereby  waives and agrees not to
seek any review by any court of any other  jurisdiction which may be called upon
to grant an enforcement of the judgment of any such Ohio state or federal court.
Each  Borrower  agrees that its  submission to  jurisdiction  and its consent to
service of process by mail is made for the  express  benefit of the Bank.  Final
judgment  against any Borrower in any such  action,  suit or  proceeding  may be
enforced  in  other  jurisdictions  (a) by suit,  action  or  proceeding  on the
judgment, or (b) in any other manner provided by or pursuant to the laws of such
other  jurisdiction;  provided,  however,  that the Bank may at its option bring
suit, or institute other judicial  proceedings,  against a Borrower in any state
or federal  court of the  United  States or of any  country or place  where such
Borrower or its property may be found.


         EACH  BORROWER  AND,  BY  ACCEPTANCE  HEREOF,  THE BANK , TO THE EXTENT
PERMITTED BY LAW WAIVES ANY RIGHT TO HAVE A JURY  PARTICIPATE  IN RESOLVING  ANY
DISPUTE WHETHER  SOUNDING IN CONTRACT,  TORT, OR OTHERWISE  BETWEEN THE BANK AND
SUCH BORROWER ARISING OUT OF, IN CONNECTION  WITH,  RELATED TO, OR INCIDENTAL TO
THE  RELATIONSHIP  ESTABLISHED  BETWEEN SUCH BORROWER (AND, IF  APPLICABLE,  THE
OTHER  BORROWERS  AND MORGAN GROUP,  INC.) AND THE BANK IN CONNECTION  WITH THIS
NOTE,  THE CREDIT  AGREEMENT  OR ANY OTHER  AGREEMENT,  INSTRUMENT,  OR DOCUMENT
EXECUTED OR  DELIVERED  IN  CONNECTION  THEREWITH  OR THE  TRANSACTIONS  RELATED
THERETO.


MORGAN DRIVE             TDI, INC.                 INTERSTATE INDEMNITY
AWAY, INC.                                         COMPANY



By /s/ Dennis Duerksen   By /s/ Dennis Duerksen     By /s/ Dennis Duerksen
  --------------------     ---------------------     ----------------------
  Dennis Duerksen,         Dennis Duerksen,          Dennis Duerksen,
  Chief Financial          Chief Financial           Vice President
  Officer                  Officer


<PAGE>


                                    EXHIBIT C


                LANDLORD ESTOPPEL CERTIFICATE, WAIVER AND CONSENT

         This Landlord Estoppel Certificate,  Waiver and Consent is made this __
day of March, 1998, by  ____________________________,  a _______________________
("Landlord"),  for the  benefit  of  KEYBANK  NATIONAL  ASSOCIATION,  a national
banking association, and its successors and assigns ("Bank").

         Landlord   has   entered   into  a  certain   Lease   Agreement   dated
_____________,   199__  ("Lease")  with  ______________________,   a  __________
corporation  ("Borrower"),  as lessee or tenant, for certain premises consisting
of _______ square feet located at ________________________________, ___________,
_______, ___________ County, _____ _____ ("Premises").

         Bank is about to enter into a financing  arrangement  with Borrower and
as a condition to Bank's financing,  Bank requires,  among other things, certain
liens and security interests in and to all of Borrower's personal property,  now
owned or hereafter acquired,  including,  without limitation,  all of Borrower's
existing and future contract  rights,  accounts,  accounts  receivable,  general
intangibles and all goods,  inventory,  machinery,  equipment,  fixtures,  cash,
documents,  instruments  and chattel  paper now owned or  hereafter  acquired by
Borrower,  wherever  located,  including  all  proceeds  of any  and  all of the
foregoing and all payments under  insurance  policies with respect to any of the
foregoing (collectively, the "Personal Property").

         In addition,  Bank  requires,  as a condition to its agreement to enter
into the above-referenced  transaction,  among other things,  certain agreements
from Landlord with respect to the Lease and the Premises.

         In  consideration  of the foregoing and of Landlord's  ongoing business
relationship with Borrower, Landlord hereby represents and agrees as follows:

         1.       The  Lease,  a true and  complete  copy of  which is  attached
                  hereto as Exhibit A, is at present in full force and effect on
                  the  date  hereof;  it has  not  been  amended,  supplemented,
                  extended or renewed in any respect except for such  amendments
                  as may be  included  in said  Exhibit;  and  there is no other
                  agreement or instrument to which Landlord is a party, which is
                  binding  upon  Borrower  and which  relates  to the  Premises,
                  including any assignment of the Lease.  The terms of the Lease
                  include the following:

                  a.       The  term  of  the  Lease  is  __  (__)  years.   The
                           commencement   date  is   ____________________.   The
                           expiration date is ________________.



<PAGE>






                  b.       The  Lease  provides  for the  following  renewal  or
                           expansion options:

                           ============================

                  c.       The initial  annual base rent payable under the Lease
                           is    $____________    payable   in   equal   monthly
                           installments of $_____________.

                  d.       The  Lease   provides  for  payment  by  Borrower  of
                           additional rent as follows:

                  -----------------------------

                  e.       The  amount  of the  security  deposit  or any  other
                           deposit of Borrower being held by Landlord tinder the
                           Lease is: $___________

2.       There is no action,  whether  voluntary or otherwise,  pending  against
         Landlord  under  bankruptcy or insolvency  laws of the United States or
         any state  thereof which would prevent  Landlord  from  fulfilling  its
         obligations under the Lease.

3.       Landlord represents that Landlord is not in default under the Lease and
         that  Landlord has no knowledge  that  Borrower is currently in default
         thereunder.

4.       Landlord  waives and  relinquishes  all rights of levy or distraint for
         rent.

5.       The Personal  Property may be stored,  utilized and/or installed in the
         Premises and will not be deemed to be a fixture,  real property or part
         of the Premises,  but rather will at all times be  considered  personal
         property.

6.       Landlord  disclaims any interest in the Personal Property and agrees to
         assert no claim to the Personal  Property while Borrower is indebted to
         Bank.  Landlord  represents  and  warrants  to Bank  that the  Personal
         Property is not subject to any lien or claim in favor of any  mortgagee
         of the Premises,  and Landlord  agrees that any future mortgage or lien
         in favor of any  mortgagee of the  Premises  will not create a security
         interest or lien against the Personal Property.

7.       Bank  or  its  representatives  may  enter  upon  the  Premises  at any
         reasonable  time to inspect or remove the Personal  Property  provided,
         however,  that Bank shall  repair at its own  expense any injury to the
         Premises caused by such removal, and may advertise and conduct a public
         auction or private sale on the Premises.


<PAGE>




8.       In the event of a default by Borrower  under any of its  agreements  or
         other  financial  arrangements  with Bank and  notice  of such  default
         having been given to the Landlord,  at the option of Bank, the Personal
         Property may remain on the Premises for up to one hundred  eighty (180)
         days  at the  base  rental  provided  under  the  Lease,  without  Bank
         incurring any other obligations of Borrower under the Lease and without
         Bank being deemed to be in possession of the Premises.


9.       Landlord agrees that simultaneously with any written notice to Borrower
         of any default by Borrower of any of the  provisions of the Lease,  the
         Landlord will give a copy of such written notice to Bank at:

                           KeyBank National Association
                           127 Public Square
                           Cleveland, Ohio  44114
                           Attention: Mark A. LoSchiavo

         Upon receipt of the notice, Bank will have at least thirty (30) days to
         cure the default  (in which event the Lease shall  remain in full force
         and effect), but Bank will have no obligation to do so.

10.      Landlord  consents  to  the  grant  by  Borrower  of an  assignment  of
         Borrower's leasehold interest in the Lease in favor of Bank as security
         for  the  financing  extended  to  Borrower.  Landlord  hereby  further
         consents to  acquisition  by Bank, at Bank's option (which option is to
         be exercised in writing  within  thirty (30) days of Bank's  receipt of
         notice of default as provided  in Section 9, above,  with notice to the
         Landlord),  of the  absolute  ownership of  Borrower's  interest in the
         Lease,  and does hereby agree that if Bank (or any  purchaser  under or
         through  Bank,  including a purchaser  by  foreclosure  or deed in lieu
         thereof)  takes  possession  of the  leasehold  estate,  Bank  (or such
         purchaser) will,  pursuant to the aforementioned  notice, be recognized
         as the  lessee  under  the  Lease.  If Bank  shall  become  the  lessee
         hereunder,  Bank may  sublease  or  assign  the  Lease  for any  lawful
         purpose, subject to Landlord's consent as to the sublessee or assignee,
         and the  assignment  of the Lease shall release and relieve Bank of all
         obligations under the Lease.

11.      This Waiver and Consent is binding on Landlord and the heirs,  personal
         representatives,  successors  and assigns of Landlord and inures to the
         benefit of Bank and the successors and assigns of Bank.

12.      The  agreements  contained  herein shall continue in force until all of
         Borrower's  obligations  and liabilities to Bank are paid and satisfied
         in  full  and  Bank's  financing  commitments  to  Borrower  have  been
         terminated.


<PAGE>




13.      Landlord will notify all successor owners, transferees,  purchasers and
         mortgagees of the Premises of which  Landlord is aware of the existence
         of this Waiver and Consent. Landlord shall not agree to subordinate the
         Lease to the right of any  present  or future  lender or  mortgagee  of
         Landlord  unless such  subordination  includes a provision  that in the
         event of foreclosure  or other right  asserted under the mortgage,  the
         Lease and the rights of  Borrower  thereunder  shall  continue  in full
         force and  effect  and shall not be  disturbed  unless  Borrower  is in
         default under the Lease.


14.      The  agreements  contained  herein may not be  modified  or  terminated
         orally.

         IN WITNESS  WHEREOF,  Landlord has hereunto set its hand as of the date
first above written.

                                           LANDLORD:
                                                    ------------------------



                                           By:_______________________
                                                    Its:_________________


                            BORROWER'S ACKNOWLEDGMENT

         Borrower hereby acknowledges and concurs with the foregoing  agreements
by Landlord as of this ___ day of March, 1998

                                      ------------------------



                                      By:_____________________
                                               Its:_______________


<PAGE>






                                 Acknowledgment

STATE OF ______________ )
                                        )
COUNTY OF ____________ )

         BEFORE  ME, a Notary  Public  for said  county  and  state,  personally
appeared    _______________________________,    a   ________________,   by   its
_____________,  ______________________,  who acknowledged that he/she signed the
foregoing  Waiver and Consent and that the same is the free act and deed of said
___________ and of him/her personally and as such ___________.

         Witness my hand at _______________,  _________, this ____ day of March,
1998.




                                      -----------------------------
                                                   NOTARY PUBLIC

                                      My Commission expires:

<PAGE>

                                   EXHIBIT D

                    AMENDED AND RESTATED CONTINUING GUARANTY


         WHEREAS,  MORGAN DRIVE AWAY, INC., TDI, INC., and INTERSTATE  INDEMNITY
COMPANY (each a "Company" and, collectively, the "Companies"), have entered into
a certain  Amended and Restated  Credit and Security  Agreement  dated March 25,
1998 (as  hereafter  amended  and  supplemented,  the "Credit  Agreement")  with
KeyBank  National  Association,  a national  banking  association  (the "Bank"),
pursuant to which the Companies  have executed and delivered the Revolving  Note
(as this and other  capitalized  terms not  otherwise  herein are defined in the
Credit Agreement) in evidence of its obligations thereunder to the Bank;

         WHEREAS, the undersigned (the "Guarantor") is the record and beneficial
holder of all of the issued and  outstanding  Voting Stock of each Company;  and
the Guarantor will derive  benefits as a result of the Credit  Agreement and the
Revolving Loans to be advanced thereunder; and

         WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement  that  the  Guarantor  execute  and  deliver  this  Guaranty;  and the
Guarantor desires that the Credit Agreement become effective;

         NOW,  THEREFORE,  in order to induce  the Bank to enter into the Credit
Agreement,  and in  consideration  of the  benefits  expected  to  accrue to the
Guarantor  by reason  thereof,  and for other good and  valuable  consideration,
receipt and sufficiency of which are hereby  acknowledged,  the Guarantor hereby
represents and warrants to, and covenants and agrees with the Bank, as follows:



<PAGE>




         The Guarantor does hereby irrevocably and unconditionally  guarantee to
the Bank the punctual  payment of the full amount,  when due (whether by demand,
acceleration  or otherwise),  of (i) the principal and interest on the Revolving
Note issued by the Companies pursuant to the Credit Agreement, and any amendment
or supplement  thereto  whether now outstanding or hereafter  issued  (including
interest accruing thereon after the commencement of any case or proceeding under
any federal or state  bankruptcy,  insolvency  or similar  law (a  "Proceeding")
whether  or not a claim  for  such  interest  is  allowable  in such  Proceeding
("Post-Petition  Interest")),  and (ii) all other obligations and liabilities of
the  Companies  to the Bank  under  the  Credit  Agreement  or under  any  other
agreement or instrument, including, without limitation, in respect of any letter
of credit or any reimbursement agreement in connection therewith, whether now or
hereafter existing,  due or to become due, direct or contingent,  joint, several
or independent, secured or unsecured and whether matured or unmatured (including
Post-Petition  Interest ) (all of the  liabilities  included  in clauses (i) and
(ii)  of  this  Paragraph  are  hereinafter  collectively  referred  to  as  the
"Guaranteed  Obligations").  This is a guaranty of payment and not of collection
and is the primary  obligation of the  Guarantor;  and the Bank may enforce this
Guaranty  against the Guarantor  without any prior pursuit or enforcement of the
Guaranteed  Obligations  against the  Companies,  any  collateral,  any right of
set-off or similar  right,  any other  guarantor  or other  obligor or any other
recourse or remedy in the power of the Bank.


         All payments made by the Guarantor  under or by virtue of this Guaranty
shall be paid to the Bank at its office at 127 Public  Square,  Cleveland,  Ohio
44114 or such other place as the Bank may  hereafter  designate in writing.  The
Guarantor hereby agrees to make all payments under or by virtue of this Guaranty
to the Bank as aforesaid no later than ten (10) days following the date on which
the Bank sends written demand hereunder to the Guarantor.

         The Guarantor  hereby waives (i) notice of acceptance of this Guaranty,
notice of the creation,  renewal or accrual of any of the Guaranteed Obligations
and notice of any other liability to which it may apply,  and notice of or proof
of reliance by the Bank upon this Guaranty,  (ii) diligence,  protest, notice of
protest, presentment, demand of payment, notice of dishonor or nonpayment of any
of the Guaranteed Obligations,  suit or taking other action or making any demand
against,  and any  other  notice to the  Companies  or any  other  party  liable
thereon,  (iii) any defense  based upon any statute or rule of law to the effect
that the  obligation  of a surety must be neither  larger in amount nor in other
respects more burdensome than that of the principal, (iv) any defense based upon
the Bank's  administration  or handling of the  Guaranteed  Obligations,  except
behavior which amounts to bad faith,  and (v) to the fullest extent permitted by
law, any defenses or benefits which may be derived from or afforded by law which
limit  the  liability  of or  exonerate  guarantors  or  sureties,  or which may
conflict with terms of this Guaranty.

         So far as the  Guarantor  is  concerned,  the Bank may, at any time and
from time to time,  without  the consent  of, or notice to, the  Guarantor,  and
without impairing or releasing any of the Guaranteed Obligations hereunder, upon
or without any terms or conditions and in whole or in part:

         1.       modify or change the manner,  place or terms of, and/or change
                  or extend the time of payment of,  renew or alter,  any of the
                  Guaranteed   Obligations,   any  security  therefor,   or  any
                  liability  incurred directly or indirectly in respect thereof,
                  and this Guaranty shall apply to the Guaranteed Obligations as
                  so modified, changed, extended, renewed or altered;


<PAGE>






         2.       request,   accept,  sell,  exchange,   release,   subordinate,
                  surrender,  realize upon or otherwise deal with, in any manner
                  and in any order,  (a) any other guaranty by whomsoever at any
                  time made of the  Guaranteed  Obligations  or any  liabilities
                  (including  any  of  those  hereunder)  incurred  directly  or
                  indirectly in respect thereof or hereof,  and/or any offset or
                  right with respect thereto, and (b) any property by whomsoever
                  at any time  pledged,  mortgaged  or otherwise  encumbered  to
                  secure, or howsoever securing,  the Guaranteed  Obligations or
                  any liabilities  (including any of those  hereunder)  incurred
                  directly or  indirectly in respect  thereof or hereof,  and/or
                  any offset or right with respect thereto;

         3.       exercise or refrain  from  exercising  any rights  against the
                  Companies  or against  any  collateral  or others  (including,
                  without  limitation,  any other guarantor) or otherwise act or
                  refrain from acting;

         4.       settle or compromise  any of the Guaranteed  Obligations,  and
                  security  therefor or any  liability  (including  any of those
                  hereunder)  incurred directly or indirectly in respect thereof
                  or  hereof,  and  subordinate  the  payment of all or any part
                  thereof to the payment of any  liability  (whether due or not)
                  of any Company to  creditors  of such  Company  other than the
                  Bank when,  in the Bank's sole  judgment,  it  considers  such
                  subordination  necessary or helpful in the  protection  of its
                  interest or the exercise of its remedies,  including,  without
                  limitation, the sale or other realization upon collateral;

         5.       apply  in the  manner  determined  by the  Bank  any  sums  by
                  whomsoever paid or howsoever realized to any of the Guaranteed
                  Obligations,  regardless of what  liability or  liabilities of
                  the Companies remain unpaid; and

         6.       amend or otherwise modify,  consent to or waive any breach of,
                  or any act,  omission or default or Event of Default under the
                  Credit  Agreement or the Revolving  Note,  or any  agreements,
                  instruments  or documents  referred to therein or executed and
                  delivered pursuant thereto or in connection therewith.



<PAGE>




         This Guaranty and the  obligations of the Guarantor  hereunder shall be
valid and  enforceable  and shall not be subject to  limitation,  impairment  or
discharge  for any reason  (other  than the  payment  in full of the  Guaranteed
Obligations),  including,  without  limitation,  the  occurrence  of  any of the
following,  whether or not the  Guarantor  shall have had notice or knowledge of
any of them:  (i) any failure to assert or enforce or agreement not to assert or
enforce,  or the stay or  enjoining,  by order of court,  by operation of law or
otherwise,  of the exercise or enforcement  of, any claim or demand of any right
power or remedy with  respect to the  Guaranteed  Obligations  or any  agreement
relating  thereto or with  respect  to any other  guaranty  thereof or  security
therefor,  (ii) any  waiver,  amendment  or  modification  of, or any consent to
departure from, any of the terms or provisions  (including,  without limitation,
provisions relating to Events of Default) of the Credit Agreement, the Revolving
Note or any other agreement at any time executed in connection therewith,  (iii)
the Guaranteed  Obligations or any portion thereof at any time being found to be
illegal,  invalid or  unenforceable  in any  respect,  (iv) the  application  of
payments received from any source to the payment of indebtedness  other than the
Guaranteed  Obligations,  even though the Bank might have  elected to apply such
payment to the payment of all or any part of the Guaranteed Obligations, (v) any
failure  to  perfect  or  continue  perfection  of a  security  interest  in any
collateral which secures any of the Guaranteed  Obligations,  (vi) any defenses,
set-offs or  counterclaims  which any  Company may allege or assert  against the
Bank  in  respect  of  the  Guaranteed  Obligations,   (vii)  the  avoidance  or
voidability of the  Guaranteed  Obligations  under the Bankruptcy  Code or other
applicable  laws,  and  (viii) any other act or thing or  omission  which may or
might in any  manner  or to any  extent  vary the  risk of the  Guarantor  as an
obligor in respect of the Guaranteed Obligations.


         The Guarantor makes the following representations and warranties, which
shall survive the execution and delivery of this Guaranty:

                  The execution,  delivery and  performance of this Guaranty has
                  been  duly   authorized  by  all   necessary   action  of  the
                  Guarantor's shareholders and directors.



<PAGE>




                  Neither the  execution  and delivery of this  Guaranty nor the
                  consummation  of the  transactions  herein  contemplated,  nor
                  compliance  with  the  terms  and  provisions   hereof,   will
                  contravene any provision of the Guarantor's charter or by-laws
                  or of any  law,  statute,  rule or  regulation  to  which  the
                  Guarantor  is  subject  or  any   judgment,   decree,   award,
                  franchise,  order  or  permit,  or  will  conflict  or will be
                  inconsistent with, or will result in any breach of, any of the
                  terms,  covenants or  provisions  of, or  constitute a default
                  under,  or result in the creation or  imposition  of any lien,
                  security interest, charge or other encumbrance upon any of the
                  properties or assets of the Guarantor pursuant to the terms of
                  any  indenture,  mortgage,  deed of trust,  agreement or other
                  instrument to which the Guarantor is a party or by which it is
                  bound or to which it may be subject.


               Any and all  rights  and  claims  of the  Guarantor  against  any
Company  or any  of its  property,  arising  by  reason  of any  payment  by the
Guarantor to the Bank  pursuant to the  provisions  of this  Guaranty,  shall be
subordinate  and  subject  in right of  payment  to the prior  and  indefeasible
payment in full of all Guaranteed  Obligations to the Bank, and until such time,
the Guarantor shall have no right of subrogation, contribution, reimbursement or
similar  right and hereby waives any right to enforce any remedy the Bank or the
Guarantor may now or hereafter have against the  Companies,  any endorser or any
other  guarantor  of all or  any  part  of  the  Guaranteed  Obligations  of the
Companies and any right to  participate  in, or benefit from, any security given
to the Bank to secure any Guaranteed Obligations. Any promissory note evidencing
such liability of any Company to the  undersigned  shall be  non-negotiable  and
shall  expressly state that it is  subordinated  pursuant to this Guaranty.  All
liens and security interests of the Guarantor,  whether now or hereafter arising
and  however  existing,  in any assets of any  Company  or any  assets  securing
Guaranteed  Obligations  shall be and hereby are  subordinated to the rights and
interests of the Bank in those assets until the prior and  indefeasible  payment
in full  of all  Guaranteed  Obligations  to the  Bank  and  termination  of all
financing  arrangements  between the Companies  and the Bank,  provided that the
provisions of this sentence  shall not be construed as a waiver or  modification
of the  provisions  of Section  7.2 of the  Credit  Agreement  restricting  each
Company's right to grant or permit liens or encumbrances on its property.

      The  Guarantor  hereby agrees to indemnify and hold harmless the Bank from
and against  any  losses,  costs or  expenses  (including,  without  limitation,
reasonable  attorneys' fees and litigation costs) ("Loss and Expense")  incurred
by the Bank in connection with the Bank's collection of any sum due hereunder or
its enforcement of its rights hereunder.

      All notices,  requests, demands or other communications hereunder shall be
in writing,  either by letter (delivered by hand or commercial  delivery service
or sent by certified mail, return receipt requested), addressed as follows:

      If to the Guarantor:       2746 Old U.S. Route 20 West
                                 Elkhart, Indiana 46515
                                 Attn: Dennis Duerksen


      If to the Bank:            127 Public Square
                                 Cleveland, Ohio  44114
                                 Attn: Mark A. LoSchiavo



<PAGE>




      Any notice,  request,  demand or other  communication  hereunder  shall be
deemed to have been duly given when  delivered,  in the case of hand delivery or
commercial  delivery  service,  and three (3) business days following deposit in
the mails,  postage prepaid. The Bank and any Guarantor may change the person or
address to whom or which notices are to be given hereunder, by notice duly given
hereunder.


      No delay on the part of the Bank in exercising any of its options,  powers
or rights, and no partial or single exercise thereof, whether arising hereunder,
under the Credit Agreement, the Revolving Note, or otherwise, shall constitute a
waiver thereof or affect any right  hereunder.  No waiver of any such rights and
no  modification,  amendment or discharge of this Guaranty shall be deemed to be
made by the Bank or shall  be  effective  unless  the same  shall be in  writing
signed by the Bank,  and then such waiver  shall apply only with  respect to the
specific  instance involved and shall in no way impair the rights of the Bank or
the  obligations  of the Guarantor to the Bank in any other respect at any other
time.

      Whenever the Bank shall credit any payment to the  Guaranteed  Obligations
or any part thereof, whatever the source or form of payment, the credit shall be
conditional as to the Guarantor  unless and until the payment shall be final and
valid and  indefeasible as to all the world.  Without limiting the generality of
the  foregoing,  the Guarantor  agrees that if any check or other  instrument so
applied  shall be  dishonored  by the  drawer  or any party  thereto,  or if any
proceeds of collateral  so applied shall  thereafter be recovered by any trustee
in  bankruptcy  or  anyone  else,  the Bank in each case may  reverse  any entry
relating  thereto in its books,  and the Guarantor  shall remain liable therefor
even if the  Bank may no  longer  have in its  possession  any  evidence  of the
Guaranteed Obligations to which the payment in question was applied.

      This Guaranty and the  respective  rights and  obligations of the Bank and
the Guarantor  hereunder  shall be construed and enforced in accordance with the
laws of the  State of Ohio  applicable  to  contracts  made and to be  performed
wholly  within such state.  The Guarantor  irrevocably  consents that service of
notice, summons or other process in any action or suit in any court of record to
enforce this  Guaranty  may be made upon the  Guarantor by mailing a copy of the
summons to the  Guarantor  by  certified  or  registered  mail,  at the  address
specified   above.   The   Guarantor   hereby  waives  the  right  to  interpose
counterclaims or set-offs of any kind and description in any such action or suit
arising hereunder or in connection herewith.



<PAGE>




      It is the  intention of the  Guarantor  hereby,  and by acceptance of this
Guaranty  the Lender  agrees,  that this  Guaranty  amends and  restates  in its
entirety the existing guaranty of the Guarantor in favor of the Bank dated March
27, 1997, which, subject to the effectiveness of this Guaranty,  shall be deemed
to be superseded and of no further effect.


      This Guaranty  shall be binding upon the Guarantor and its  successors and
assigns,  and shall  inure to the  benefit  of the Bank and its  successors  and
assigns.  This Guaranty embodies the entire agreement and understanding  between
the  Bank  and  the  Guarantor  and   supersedes   all  prior   agreements   and
understandings relating to the subject matter hereof.

      If this  Guaranty  by the  Guarantor  is held or  determined  to be  void,
invalid or  unenforceable,  in whole or in part,  such holding or  determination
shall not  impair or affect the  validity  and  enforceability  of any clause or
provision not so held to be void, invalid or unenforceable.  If this Guaranty as
to the  Guarantor  would be held or  determined  by a court or  tribunal  having
compe-tent  jurisdiction to be void,  invalid or unenforceable on account of the
amount of its aggregate liability under this Guaranty, then, notwithstanding any
other  provision of this Guaranty to the contrary,  the aggregate  amount of the
liability of the Guarantor under this Guaranty shall, without any further action
by the Guarantor,  the Bank or any other person,  be  automatically  limited and
reduced to an amount which is valid and enforceable.

      The Guarantor (a) hereby  irrevocably  submits to the  jurisdiction of the
state courts of the State of Ohio and to the  jurisdiction  of the United States
District  Court for the Northern  District of Ohio, for the purpose of any suit,
action or other  proceeding  arising  out of or based upon this  Guaranty or the
subject  matter hereof  brought by the Bank or its successors or assigns and (b)
hereby  waives,  and agrees not to assert,  by way of motion,  as a defense,  or
otherwise,  in any such  suit,  action or  proceeding,  any claim that it is not
subject  personally to the  jurisdiction  of the  above-named  courts,  that its
property is exempt or immune from attachment or execution, that the suit, action
or proceeding is brought in an inconvenient  forum,  that the venue of the suit,
action or  proceeding  is improper or that this  Guaranty or the subject  matter
hereof may not be enforced in or by such court and (c) hereby  waives and agrees
not to seek any  review  by any  court of any  other  jurisdiction  which may be
called upon to grant an  enforcement  of the  judgment of any such Ohio state or
federal court.  The Guarantor agrees that its submission to jurisdiction and its
consent to service  of  process by mail is made for the  express  benefit of the
Bank.  Final  judgment  against  the  Guarantor  in any  such  action,  suit  or
proceeding  may be  enforced  in  other  jurisdictions  (a) by suit,  action  or
proceeding on the judgment,  or (b) in any other manner  provided by or pursuant
to the laws of such other jurisdiction;  provided, however, that the Bank may at
its option bring suit,  or institute  other  judicial  proceedings,  against the
Guarantor in any state or federal  court of the United  States or of any country
or place where the Guarantor or its property may be found.


<PAGE>






      Unless the context otherwise requires,  all capitalized terms used in this
Guaranty  without  definition shall have the meanings  provided  therefor in the
Credit Agreement.

      Without  limiting  the effect or  intentions  of the  warrant of  attorney
contained in the following  paragraph,  THE GUARANTOR  AND, BY ITS ACCEPTANCE OF
THIS  GUARANTY,  THE BANK HEREBY  IRREVOCABLY  AGREE TO WAIVE  THEIR  RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THE CREDIT AGREEMENT, ANY NOTE, OR THIS GUARANTY OR ANY DEALINGS BETWEEN THEM
RELATING  TO THE  SUBJECT  MATTER  OF THE  CREDIT  AGREEMENT,  ANY  NOTE OR THIS
GUARANTY AND THE RELATIONSHIPS THEREBY ESTABLISHED.  The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that  relate to the  subject  matter of this  transaction,  including,
without limitation, contract claims, tort claims, breach of duty claims, and all
other statutory and common law claims. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS,  RENEWALS,  SUPPLEMENTS OR  MODIFICATIONS  OF THIS GUARANTY.  In the
event of litigation, this provision may be filed as a written consent to a trial
by the court.

      IN WITNESS  WHEREOF,  the  undersigned has caused this Guaranty to be duly
executed as fully written above as of this 31st day of March, 1998.



                                                 THE MORGAN GROUP, INC.



                                                 By /s/ Dennis Duerksen
                                                    ---------------------------
                                                    Dennis Duerksen,
                                                    Chief Financial Officer