EXHIBIT 4.15



                           LOAN AND SECURITY AGREEMENT


                                  by and among


                        STARCRAFT AUTOMOTIVE GROUP, INC.

                                       and

                         NATIONAL MOBILITY CORPORATION,
                                  as Borrowers,


                                       and


                              STARCRAFT CORPORATION

                                       and

                         IMPERIAL AUTOMOTIVE GROUP, INC.
                          as Additional Credit Parties,


                                       and


                          FOOTHILL CAPITAL CORPORATION,
                                    as Lender


                          DATED AS OF OCTOBER 30, 1998






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                                TABLE OF CONTENTS

                                                                            Page


1. DEFINITIONS AND CONSTRUCTION...............................................1
         1.1. Definitions.....................................................1
         1.2. Accounting Terms...............................................17
         1.3. Code...........................................................17
         1.4. Construction...................................................17
         1.5. Schedules and Exhibits.........................................17

2. LOAN AND TERMS OF PAYMENT.................................................17
         2.1. Revolving Advances.............................................17
         2.2. Letters of Credit..............................................19
         2.3. Term Loan......................................................21
         2.4. Intentionally Omitted..........................................21
         2.5. Overadvances...................................................22
         2.6. Interest:  Rates, Payments and Calculations....................22
         2.7. Collection of Accounts.........................................24
         2.8. Crediting Payments; Application of Collections.................24
         2.9. Designated Account.............................................25
         2.10. Maintenance of Loan Account; Statements of Obligations........25
         2.11. Fees..........................................................25
         2.12. Eurodollar Rate Loans.........................................26
         2.13. Illegality....................................................27
         2.14. Requirements of Law...........................................28
         2.15. Indemnity.....................................................29

3. CONDITIONS; TERM OF AGREEMENT.............................................30
         3.1. Conditions Precedent to the Initial Advance, 
               Letter of Credit and the Term Loan............................30
         3.2. Conditions Precedent to all Advances,
               all Letters of Credit and the Term Loan.......................32
         3.3. Condition Subsequent...........................................33
         3.4. Term; Automatic Renewal........................................33
         3.5. Effect of Termination..........................................33
         3.6. Early Termination by Borrowers.................................34
         3.7. Termination Upon Event of Default..............................34

4. CREATION OF SECURITY INTEREST.............................................34
         4.1. Grant of Security Interest.....................................34
         4.2. Negotiable Collateral..........................................34
         4.3. Collection of Accounts, General Intangibles, 
               and Negotiable Collateral.....................................35
         4.4. Delivery of Additional Documentation Required..................35
         4.5. Power of Attorney..............................................35
         4.6. Right to Inspect...............................................36

5. REPRESENTATIONS AND WARRANTIES............................................36
         5.1. No Encumbrances................................................36
         5.2. Eligible Accounts..............................................36
         5.3. Eligible Inventory.............................................37
         5.4. Equipment......................................................37
         5.5. Location of Inventory and Equipment............................37
         5.6. Inventory Records..............................................37
         5.7. Location of Chief Executive Office; FEIN.......................37
         5.8. Due Organization and Qualification; Subsidiaries...............37
         5.9. Due Authorization; No Conflict.................................38
         5.10. Litigation....................................................38
         5.11. No Material Adverse Change....................................39
         5.12. Solvency......................................................39
         5.13. Employee Benefits.............................................39
         5.14. Environmental Condition.......................................39
         5.15. Year 2000 Compliance..........................................40
         5.16. Consigned Chassis.............................................40
         5.17. Starcraft Southwest, Inc......................................40

6. AFFIRMATIVE COVENANTS.....................................................40
         6.1. Accounting System..............................................40
         6.2. Collateral Reporting...........................................40
         6.3. Financial Statements, Reports, Certificates....................41
         6.4. Tax Returns....................................................42
         6.5. Guarantor Reports..............................................43
         6.6. Returns........................................................43
         6.7. Title to Equipment.............................................43
         6.8. Maintenance of Equipment.......................................43
         6.9. Taxes..........................................................43
         6.10. Insurance.....................................................44
         6.11. No Setoffs or Counterclaims...................................45
         6.12. Location of Inventory and Equipment...........................45
         6.13. Compliance with Laws..........................................46
         6.14. Employee Benefits.............................................46
         6.15. Leases........................................................47

7. NEGATIVE COVENANTS........................................................47
         7.1. Indebtedness...................................................47
         7.2. Liens..........................................................48
         7.3. Restrictions on Fundamental Changes............................48
         7.4. Disposal of Assets.............................................48
         7.5. Change Name....................................................48
         7.6. Guarantee......................................................48
         7.7. Nature of Business.............................................48
         7.8. Prepayments and Amendments.....................................48
         7.9. Change of Control..............................................49
         7.10. Consignments; New Chassis Supplier Agreements.................49
         7.11. Distributions.................................................49
         7.12. Accounting Methods............................................49
         7.13. Investments...................................................49
         7.14. Transactions with Affiliates..................................50
         7.15. Suspension....................................................50
         7.16. Compensation..................................................50
         7.17. Use of Proceeds...............................................50
         7.18. Change in Location of Chief Executive Office; Inventory 
                    and Equipment with Bailees................................50
         7.19. No Prohibited Transactions Under ERISA.........................50
         7.20. Financial Covenants............................................51
         7.21. Capital Expenditures...........................................52

8. EVENTS OF DEFAULT..........................................................52

9. FOOTHILL'S RIGHTS AND REMEDIES.............................................54
         9.1. Rights and Remedies.............................................54
         9.2. Remedies Cumulative.............................................56

10. TAXES AND EXPENSES........................................................56

11. WAIVERS; INDEMNIFICATION..................................................57
         11.1. Demand; Protest; etc...........................................57
         11.2. Foothill's Liability for Collateral............................57
         11.3. Indemnification................................................57

12. NOTICES...................................................................58

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER................................59

14. DESTRUCTION OF BORROWERS' DOCUMENTS.......................................59

15. GENERAL PROVISIONS........................................................60
         15.1. Effectiveness..................................................60
         15.2. Successors and Assigns.........................................60
         15.3. Section Headings...............................................60
         15.4. Interpretation.................................................60
         15.5. Severability of Provisions.....................................60
         15.6. Amendments in Writing..........................................61
         15.7. Counterparts; Facsimile Execution..............................61
         15.8. Revival and Reinstatement of Obligations.......................61
         15.9. Integration....................................................61
         15.10. Joint and Several Liability...................................61


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                             SCHEDULES AND EXHIBITS


Schedule E-1               Eligible Inventory Locations

Schedule P-1               Permitted Liens

Schedule R-1               Real Property Collateral

Schedule 5.7               Chief Executive Office and FEIN

Schedule 5.8               Subsidiaries

Schedule 5.10              Litigation

Schedule 5.14              Environmental Matters

Schedule 5.13              ERISA Benefit Plans

Schedule 6.12              Location of Inventory and Equipment

Schedule 7.1               Indebtedness

Schedule 7.6               Guaranties

Schedule 7.14              Affiliate Transactions

Exhibit C-1                Form of Compliance Certificate



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                           LOAN AND SECURITY AGREEMENT


     THIS LOAN AND SECURITY AGREEMENT (this "Agreement"),  is entered into as of
October 30, 1998, among FOOTHILL CAPITAL CORPORATION,  a California  corporation
("Foothill"),  with a place of business located at 11111 Santa Monica Boulevard,
Suite 1500, Los Angeles,  California  90025-3333 and STARCRAFT AUTOMOTIVE GROUP,
INC. ("SAG"), an Indiana corporation,  NATIONAL MOBILITY CORPORATION ("NMC"), an
Indiana corporation,  STARCRAFT CORPORATION ("SC"), an Indiana corporation,  and
IMPERIAL  AUTOMOTIVE GROUP, INC. ("IAG"), an Indiana  corporation,  (SAG and NMC
are each individually a "Borrower", and collectively "Borrowers";  and SAG, NMC,
SC and IAG are each individually a "Company", and collectively "Companies").

     The parties agree as follows:

1.   DEFINITIONS AND CONSTRUCTION.

     1.1. Definitions.

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

     "Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account.

     "Accounts"  means,  with respect to a Company,  all currently  existing and
hereafter arising accounts,  contract rights, and all other forms of obligations
owing to such Company arising out of the sale or lease of goods or the rendition
of services by such Company,  irrespective of whether earned by performance, and
any and all credit insurance, guaranties, or security therefor.

     "Additional Raw Material  Availability  Amount" means,  during November and
December of each fiscal  year,  an amount  equal to 10% of the value of Eligible
Inventory   consisting  of  raw  materials  (with  such  percentage  subject  to
adjustment as provided in Section  2.1(b)),  during January and February of each
fiscal year, an amount equal to 5% of the value of Eligible Inventory consisting
of raw  materials  (with such  percentage  subject to  adjustment as provided in
Section 2.1(b)), and at all other times, an amount equal to zero.

     "Adjusted  Eurodollar Rate" means, with respect to each Interest Period for
any Eurodollar Rate Loan, the rate per annum (rounded upwards, if necessary,  to
the next 1/16%) determined by dividing (a) the Eurodollar Rate for such Interest
Period by (b) a percentage equal to (i) 100% minus (ii) the Reserve  Percentage.
The Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of
any change in the Reserve Percentage.


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     "Advances" has the meaning set forth in Section 2.1(a).

     "Affiliate"  means, as applied to any Person, any other Person who directly
or indirectly  controls,  is controlled by, is under common control with or is a
director or officer of such Person.  For purposes of this definition,  "control"
means the possession,  directly or indirectly,  of the power to vote 15% or more
of the securities  having ordinary voting power for the election of directors or
the direct or indirect power to direct the management and policies of a Person.

     "Agreement" has the meaning set forth in the preamble hereto.

     "Authorized Person" means any officer or other employee of any Borrower.

     "Average Unused Portion of Maximum  Revolving Amount" means, as of any date
of determination,  (a) the Maximum Revolving Amount, less (b) the sum of (i) the
average Daily Balance of Advances that were  outstanding  during the immediately
preceding  calendar  month,  plus (ii) the average  Daily Balance of the undrawn
Letters  of Credit  that  were  outstanding  during  the  immediately  preceding
calendar month, plus (iii) the average Daily Balance of the Tecstar  Obligations
that were outstanding during the immediately preceding calendar month.

     "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.ss. 101
et seq.), as amended, and any successor statute.

     "Benefit Plan" means a "defined  benefit plan" (as defined in Section 3(35)
of ERISA) for which any Company,  any  Subsidiary  of any Company,  or any ERISA
Affiliate  has been an  "employer"  (as defined in Section 3(5) of ERISA) within
the past six years.

     "Borrower" has the meaning set forth in the preamble to this Agreement.

     "Borrowing Base" has the meaning set forth in Section 2.1(a).

     "Business Day" means any day that is not a Saturday, Sunday or other day on
which  national  banks are  authorized  or required  to close,  except that if a
determination  of a Business Day shall relate to any Eurodollar Rate Loans,  the
term  Business  Day shall  also  exclude  any day on which  banks are closed for
dealings in dollar deposits in the London  interbank  market or other applicable
Eurodollar Rate market.

     "Change  of  Control"  shall be deemed to have  occurred  at such time as a
"person" or "group"  (within the meaning of Sections  13(d) and  14(d)(2) of the
Securities  Exchange Act of 1934) becomes the "beneficial  owner" (as defined in
Rule 13d-3 under the Securities  Exchange Act of 1934),  directly or indirectly,
of more  than 20% of the  total  voting  power  of all  classes  of  stock  then
outstanding of any Company entitled to vote in the election of directors.


<PAGE>

     "Closing  Date"  means the date of the first to occur of the  making of the
initial Advance,  the issuance of the initial Letter of Credit or the funding of
the Term Loan.

     "Code" means the Illinois Uniform Commercial Code.

     "Collateral" means, with respect to a Company, each of the following:

     (a) such Company's Accounts,

     (b) such Company's Books,

     (c) such Company's Equipment,

     (d) such Company's General Intangibles,

     (e) such Company's Inventory,

     (f) such Company's Negotiable Collateral,

     (g) the Real Property Collateral,

     (h) any money,  or other assets of such Company that now or hereafter  come
into the possession, custody, or control of Foothill, and

     (i) the proceeds and products,  whether  tangible or intangible,  of any of
the  foregoing,  including  proceeds  of  insurance  covering  any or all of the
Collateral  of  such  Company,  and  any  and  all  Accounts,  Company's  Books,
Equipment, General Intangibles, Inventory, Negotiable Collateral, Real Property,
money, deposit accounts, or other tangible or intangible property resulting from
the sale, exchange, collection, or other disposition of any of the foregoing, or
any portion thereof or interest therein, and the proceeds thereof.

     "Collateral  Access  Agreement" means a landlord waiver,  mortgagee waiver,
bailee  letter,  or  acknowledgment  agreement of any  warehouseman,  processor,
lessor,  consignee,  or other Person in  possession  of,  having a Lien upon, or
having rights or interests in the Equipment or Inventory,  in each case, in form
and substance satisfactory to Foothill.

     "Collections" means all cash, checks, notes,  instruments,  and other items
of payment  (including,  insurance  proceeds,  proceeds  of cash  sales,  rental
proceeds, and tax refunds).

     "Company's Books" means,  with respect to a Company,  all of such Company's
books and  records  including:  ledgers;  records  indicating,  summarizing,  or
evidencing  such Company's  properties or assets  (including the  Collateral) or
liabilities;  all information  relating to such Company's business operations or
financial condition;  and all computer programs,  disk or tape files, printouts,
runs, or other computer prepared information.


<PAGE>

     "Compliance  Certificate" means a certificate  substantially in the form of
Exhibit C-1 and delivered by the chief accounting officer of SAG to Foothill.

     "Daily  Balance"  means,   with  respect  to  the  Obligations  or  Tecstar
Obligations,  the amount of an Obligation or Tecstar Obligation, as the case may
be, owed at the end of a given day.

     "deems  itself  insecure"  means that the Person deems  itself  insecure in
accordance with the provisions of Section 1208 of the Code.

     "Default"  means an event,  condition,  or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.

     "Designated   Account"  means  account  number   501-937-643  of  Borrowers
maintained  with  Borrowers'  Designated  Account  Bank,  or such other  deposit
account  of  Borrowers  (located  within  the  United  States)  which  has  been
designated, in writing and from time to time, by Borrowers to Foothill.

     "Designated Account Bank" means National City Bank of Indiana, whose office
is located at One National City Center, Suite 735E, Indianapolis, Indiana 46255,
and whose ABA number is 074000065.

     "Dilution" means, in each case based upon the experience of the immediately
prior 3 fiscal months,  the result of dividing the Dollar amount of (a) bad debt
write-downs,  discounts  from the invoice  amount of any  Account,  advertising,
returns,  promotions,  credits,  or other  dilutive  items  with  respect to the
Accounts of Borrowers by (b)  Borrowers'  Collections  (excluding  extraordinary
items) plus the Dollar amount of clause (a).

     "Dilution  Reserve"  means,  as of any  date of  determination,  an  amount
sufficient to reduce  Foothill's  advance rate against Eligible  Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.

     "Disbursement  Letter" means an instructional letter executed and delivered
by Borrowers to Foothill  regarding  the  extensions of credit to be made on the
Closing Date, the form and substance of which shall be satisfactory to Foothill.

     "Dollars or $" means United States dollars.

     "Early Termination Premium" has the meaning set forth in Section 3.6.

     "EBITDA"  means,  for  any  period,  the  consolidated  net  income  of  SC
(including Tecstar,  Inc.) for such period (exclusive of extraordinary gains and
losses),  plus  interest,  taxes,  depreciation  and  amortization  deducted  in
determining such net income for such period.

<PAGE>

     "Eligible  Accounts"  means  those  Accounts  created by a Borrower  in the
ordinary course of business,  that arise out of such Borrower's sale of goods or
rendition  of  services,   that  strictly  comply  with  each  and  all  of  the
representations and warranties respecting Accounts made by Borrowers to Foothill
in the Loan  Documents,  and that are and at all times continue to be acceptable
to Foothill in all respects;  provided,  however,  that standards of eligibility
may be fixed and revised from time to time by Foothill in Foothill's  reasonable
credit judgment. Eligible Accounts shall not include the following:

     (a) Accounts of a Borrower that the Account Debtor has failed to pay within
60 days of due date or Accounts with selling terms of more than 30 days;

     (b)  Accounts  of a Borrower  owed by an Account  Debtor or its  Affiliates
where  50% or  more  of all  Accounts  owed  by  that  Account  Debtor  (or  its
Affiliates) to Borrowers are deemed ineligible under clause (a) above;

     (c) Accounts of a Borrower  with respect to which the Account  Debtor is an
employee, Affiliate, or agent of a Company;

     (d)  Accounts  of a  Borrower  with  respect  to which  goods are placed on
consignment,  guaranteed sale, sale or return, sale on approval,  bill and hold,
or other  terms by reason of which the  payment  by the  Account  Debtor  may be
conditional;

     (e) Accounts of a Borrower  that are not payable in Dollars or with respect
to which the Account Debtor: (i) does not maintain its chief executive office in
the United States or Canada  (provided,  that the  aggregate  amount of Advances
against the  Eligible  Accounts of Account  Debtors  with their chief  executive
office in Canada shall not exceed $500,000),  or (ii) is not organized under the
laws of the United States or any State  thereof,  or (iii) is the  government of
any foreign country or sovereign state, or of any state, province, municipality,
or other political  subdivision  thereof, or of any department,  agency,  public
corporation,  or  other  instrumentality  thereof,  unless  (y) the  Account  is
supported by an  irrevocable  letter of credit  satisfactory  to Foothill (as to
form, substance, and issuer or domestic confirming bank) that has been delivered
to Foothill and is directly drawable by Foothill,  or (z) the Account is covered
by credit  insurance  in form and  amount,  and by an insurer,  satisfactory  to
Foothill;

     (f)  Accounts of a Borrower  with  respect to which the  Account  Debtor is
either (i) the United States or any department,  agency, or  instrumentality  of
the United States  (exclusive,  however,  of Accounts with respect to which such
Borrower has complied,  to the satisfaction of Foothill,  with the Assignment of
Claims  Act,  31  U.S.C.  ss.  3727),  or (ii) any  State of the  United  States
(exclusive,  however,  of  Accounts  owed by any  State  that  does  not  have a
statutory counterpart to the Assignment of Claims Act);

     (g) Accounts of a Borrower  with  respect to which the Account  Debtor is a
creditor  of a  Borrower,  has or has  asserted a right of setoff  (unless  such
Account Debtor has executed and delivered to Foothill a no offset letter in form
and substance satisfactory to Foothill), has disputed its liability, or has made
any claim with  respect to the Account  (but only to the extent of the amount of
the liability owing to such Account  Debtor,  the amount of the set off that has
or may be asserted,  the amount of the  disputed  liability or the amount of the
claim, as the case may be);

<PAGE>

     (h)  Accounts  of  a  Borrower   owing  by  the  Illinois   Department   of
Transportation if such obligations owing to Borrowers exceed 20% of all Eligible
Accounts,  to the  extent of the  obligations  owing by such  Account  Debtor in
excess of such  percentage,  Accounts of a Borrower  owing by the General Motors
Overseas Distribution  Corporation if such obligations owing to Borrowers exceed
25% of all Eligible  Accounts,  to the extent of the  obligations  owing by such
Account Debtor in excess of such percentage (provided, that if acceptable credit
insurance  is received by  Foothill,  Foothill  will  consider  increasing  such
concentration  limit  with  respect  to  General  Motors  Overseas  Distribution
Corporation), or Accounts of a Borrower with respect to an Account Debtor (other
than the Illinois  Department  of  Transportation  and General  Motors  Overseas
Distribution  Corporation) whose total obligations owing to Borrowers exceed 10%
of all Eligible Accounts, to the extent of the obligations owing by such Account
Debtor in excess of such percentage;

     (i)  Accounts of a Borrower  with  respect to which the  Account  Debtor is
subject  to any  Insolvency  Proceeding,  or becomes  insolvent,  or goes out of
business;

     (j)  Accounts  of a  Borrower  the  collection  of which  Foothill,  in its
reasonable  credit  judgment,  believes  to be doubtful by reason of the Account
Debtor's financial condition;

     (k)  Accounts of a Borrower  with respect to which the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, Accounts of
a Borrower  with  respect to which the  Account  Debtor has been  billed but the
goods giving rise to such Accounts have not been  shipped,  the services  giving
rise to such Account have not been performed and accepted by the Account Debtor,
or the Account otherwise does not represent a final sale;

     (l)  Accounts of a Borrower  with  respect to which the  Account  Debtor is
located in the states of New Jersey,  Minnesota  or West  Virginia (or any other
state that  requires a creditor  to file a Business  Activity  Report or similar
document in order to bring suit or otherwise  enforce its remedies  against such
Account  Debtor in the courts or through any  judicial  process of such  state),
unless such Borrower has qualified to do business in New Jersey, Minnesota, West
Virginia,  or such other  states,  or has filed a Notice of Business  Activities
Report with the applicable  division of taxation,  the department of revenue, or
with such other state offices,  as appropriate,  for the  then-current  calendar
year, or is exempt from such filing requirement; and

     (m)  Accounts  of a Borrower  that  represent  progress  payments  or other
advance  billings that are due prior to the  completion of  performance  by such
Borrower of the subject contract for goods or services; and

<PAGE>

     (n) Accounts representing rebate obligations owing to a Borrower.

     "Eligible  Inventory"  means  Inventory of a Borrower  consisting  of first
quality  finished goods held for sale in the ordinary  course of such Borrower's
business for which an order has been placed by an Account Debtor,  uncut chassis
owned by a Borrower and raw materials (such as fiberglass shells,  wheels, wood,
electronic devices (including televisions, radios and speakers), windows, doors,
carpet,  fabrics and  graphics/decals) for such finished goods, that are located
at or in-transit  between such Borrower's  premises  identified on Schedule E-1,
that strictly  comply with each and all of the  representations  and  warranties
respecting  Inventory  made by such Borrower to Foothill in the Loan  Documents,
and that are and at all times  continue  to be  acceptable  to  Foothill  in all
respects;  provided,  however,  that standards of  eligibility  may be fixed and
revised from time to time by Foothill in Foothill's  reasonable credit judgment.
In determining  the amount to be so included,  Inventory  shall be valued at the
lower of cost or market on a basis  consistent  with a  Borrower's  current  and
historical accounting practices;  provided, that chassis consigned to a Borrower
or owned by a Borrower  and subject to a Lien in favor of the  supplier  thereof
shall not be part of finished  goods. An item of Inventory shall not be included
in Eligible Inventory if:

     (a) it is not owned solely by a Borrower or a Borrower  does not have good,
valid, and marketable title thereto (provided,  that the interest of the chassis
supplier in the  finished  goods shall not cause such  finished  goods to not be
Eligible  Inventory to the extent such  supplier  has executed an  Intercreditor
Agreement with Foothill);

     (b) it is not located at one of the locations set forth on Schedule E-1;

     (c) it is not  located on  property  owned or leased by a Borrower  or in a
contract  warehouse,  in each case,  subject to a  Collateral  Access  Agreement
executed by the mortgagee,  lessor,  the warehouseman,  or other third party, as
the case may be, and segregated or otherwise separately  identifiable from goods
of others, if any, stored on the premises;

     (d) it is not  subject to a valid and  perfected  first  priority  security
interest in favor of Foothill;

     (e) it consists of goods returned or rejected by a Borrower's  customers or
goods in transit;

     (f) it is an uncut chassis  manufactured  by General Motors  Corporation or
any of its affiliates or subsidiaries  unless a Borrower  purchased such chassis
from the General Motors Vehicle Overseas Division of General Motors Corporation;

     (g) it is an uncut chassis manufactured by Ford Motor Company or any of its
affiliates  or  subsidiaries  unless such chassis is a cutaway bus chassis and a
Borrower has paid the full purchase price therefor and obtained the  certificate
of origin with respect thereto; and

<PAGE>

     (h) it is obsolete or slow moving, a demonstration model,  work-in-process,
consigned Inventory, packaging and shipping materials, supplies used or consumed
in a  Borrower's  business,  Inventory  subject  to a Lien in favor of any third
Person, bill and hold goods,  defective goods,  "seconds," or Inventory acquired
on consignment.

     "Equipment" means, with respect to a Company, all of such Company's present
and hereafter acquired machinery,  machine tools, motors, equipment,  furniture,
furnishings,  fixtures, vehicles (including motor vehicles and trailers), tools,
parts, goods (other than consumer goods, farm products, or Inventory),  wherever
located,  including,  (a) any interest of such Company in any of the  foregoing,
and (b) all attachments,  accessories, accessions, replacements,  substitutions,
additions, and improvements to any of the foregoing.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  29
U.S.C.  ss.ss.  1000  et  seq.,  amendments  thereto,  successor  statutes,  and
regulations or guidance promulgated thereunder.

     "ERISA  Affiliate"  means  (a)  any  corporation  subject  to  ERISA  whose
employees  are treated as employed by the same  employer as the employees of any
Company  under IRC Section  414(b),  (b) any trade or business  subject to ERISA
whose employees are treated as employed by the same employer as the employees of
any Company under IRC Section 414(c),  (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC,  any  organization  subject to ERISA that is a
member of an affiliated service group of which any Company is a member under IRC
Section  414(m),  or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC,  any party  subject to ERISA  that is a party to an  arrangement
with any Company and whose  employees are aggregated  with the employees of such
Company under IRC Section 414(o).

     "ERISA Event" means (a) a Reportable Event with respect to any Benefit Plan
or  Multiemployer  Plan,  (b)  the  withdrawal  of  any  Company,   any  of  its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the  providing  of notice of intent to  terminate  a Benefit  Plan in a distress
termination (as described in Section  4041(c) of ERISA),  (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or  Multiemployer  Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1),  (2),
or (3) of ERISA for the  termination  of,  or the  appointment  of a trustee  to
administer,  any Benefit Plan or Multiemployer  Plan, or (ii) that may result in
termination of a Multiemployer  Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete  withdrawal  within the meaning of Sections 4203 and 4205 of
ERISA,  of any  Company,  any of its  Subsidiaries  or ERISA  Affiliates  from a
Multiemployer  Plan,  or (g)  providing  any security to any Plan under  Section
401(a)(29) of the IRC by any Company or its  Subsidiaries  or any of their ERISA
Affiliates.

<PAGE>

     "Eurodollar  Rate"  means,  with  respect  to  the  Interest  Period  for a
Eurodollar  Rate Loan, the interest rate per annum at which United States dollar
deposits are offered to Foothill (or its Affiliate) by major banks in the London
interbank  market (or other  Eurodollar  Rate market selected by Foothill) on or
about 11:00 a.m.  (California time) 2 Business Days prior to the commencement of
such Interest Period in amounts  comparable to the amount of the Eurodollar Rate
Loans requested by and available to Borrowers in accordance with this Agreement,
with a maturity  of  comparable  duration  to the  Interest  Period  selected by
Borrowers.

     "Eurodollar  Rate Loans"  means any Loan (or any portion  thereof)  made or
outstanding  hereunder  during any period when interest on such Loan (or portion
thereof) is payable based on the Adjusted Eurodollar Rate.

     "Event of Default" has the meaning set forth in Section 8.

     "Excess Loan  Availability"  means,  as of the Closing Date,  the amount by
which the lesser of (A) the Maximum Revolving Amount and (B) the Borrowing Base,
exceeds  the sum of  Obligations  (other  than the Term  Loan) and the amount of
deterioration in the payables over 60 days past due since the date of Foothill's
last audit of Borrowers.

     "Existing Lender" means Bank One, N.A.

     "FEIN" means Federal Employer Identification Number.

     "Foothill" has the meaning set forth in the preamble to this Agreement.

     "Foothill Account" has the meaning set forth in Section 2.7.

     "Foothill  Expenses"  means all: costs or expenses  (including  taxes,  and
insurance  premiums)  required  to be paid by  Companies  under  any of the Loan
Documents  that  are paid or  incurred  by  Foothill;  fees or  charges  paid or
incurred  by  Foothill  in  connection  with  Foothill's  transactions  with any
Company, including, fees or charges for photocopying, notarization, couriers and
messengers,  telecommunication,  public  record  searches  (including  tax lien,
litigation,  and UCC  searches  and  including  searches  with  the  patent  and
trademark  office,  the copyright  office, or the department of motor vehicles),
filing, recording, publication,  appraisal (including periodic Personal Property
Collateral and Real Property Collateral  appraisals),  real estate surveys, real
estate title policies and  endorsements,  and  environmental  audits;  costs and
expenses  incurred by Foothill in the  disbursement of funds to any Borrower (by
wire transfer or otherwise); charges paid or incurred by Foothill resulting from
the  dishonor  of checks;  costs and  expenses  paid or  incurred by Foothill to
correct  any  default or enforce  any  provision  of the Loan  Documents,  or in
gaining possession of, maintaining,  handling,  preserving,  storing,  shipping,
selling,  preparing  for sale, or  advertising  to sell the  Collateral,  or any
portion  thereof,  irrespective  of  whether  a sale is  consummated;  costs and
expenses paid or incurred by Foothill in examining any  Company's  Books;  costs
and  expenses  of third  party  claims or any other  suit  paid or  incurred  by
Foothill in enforcing or defending the Loan Documents or in connection  with the
transactions  contemplated by the Loan Documents or Foothill's relationship with
any Company or any  guarantor;  and  Foothill's  reasonable  attorneys  fees and
expenses incurred in advising, structuring, drafting, reviewing,  administering,
amending, terminating, enforcing (including attorneys fees and expenses incurred
in connection with a "workout," a "restructuring,"  or an Insolvency  Proceeding
concerning  any Company or any  guarantor  of the  Obligations),  defending,  or
concerning the Loan Documents, irrespective of whether suit is brought.

<PAGE>

     "GAAP" means  generally  accepted  accounting  principles as in effect from
time to time in the United States, consistently applied.

     "General  Intangibles"  means,  with  respect  to a  Company,  all of  such
Company's  present and future general  intangibles  and other personal  property
(including  contract  rights,  rights  arising  under common law,  statutes,  or
regulations,  choses  or things  in  action,  goodwill,  patents,  trade  names,
trademarks,  servicemarks,  copyrights,  blueprints,  drawings, purchase orders,
customer  lists,  monies due or  recoverable  from pension  funds,  route lists,
rights to payment and other rights  under any royalty or  licensing  agreements,
infringement claims, computer programs,  information contained on computer disks
or tapes, literature,  reports,  catalogs,  deposit accounts,  insurance premium
rebates, tax refunds, and tax refund claims),  other than goods,  Accounts,  and
Negotiable Collateral.

     "Governing  Documents" means the certificate or articles of  incorporation,
by-laws, or other organizational or governing documents of any Person.

     "Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive,  legislative,
judicial, regulatory or administrative functions of or pertaining to government.

     "Guaranties"  means (i) the Guaranty of even date  herewith  executed by SC
and (ii) the Guaranty of even date herewith executed by IAG.

     "Hazardous  Materials"  means (a) substances that are defined or listed in,
or otherwise  classified  pursuant to, any  applicable  laws or  regulations  as
"hazardous   substances,"  "hazardous  materials,"  "hazardous  wastes,"  "toxic
substances,"  or any other  formulation  intended to define,  list,  or classify
substances  by  reason  of   deleterious   properties   such  as   ignitability,
corrosivity,   reactivity,   carcinogenicity,   reproductive  toxicity,  or  "EP
toxicity",  (b) oil, petroleum,  or petroleum derived  substances,  natural gas,
natural gas liquids,  synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any  radioactive  materials,  and (d)  asbestos  in any  form  or  electrical
equipment  that  contains  any oil or  dielectric  fluid  containing  levels  of
polychlorinated biphenyls in excess of 50 parts per million.

     "Indebtedness"  means: (a) all obligations of a Company for borrowed money,
(b) all obligations of a Company evidenced by bonds, debentures, notes, or other
similar  instruments and all  reimbursement or other obligations of a Company in
respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial  products,  (c) all obligations of a Company under capital leases, (d)
all  obligations  or  liabilities of others secured by a Lien on any property or
asset of a Company,  irrespective  of whether  such  obligation  or liability is
assumed,  and (e) any  obligation  of a  Company  guaranteeing  or  intended  to
guarantee  (whether  guaranteed,  endorsed,  co-made,  discounted,  or sold with
recourse to such Company) any indebtedness,  lease, dividend,  letter of credit,
or other obligation of any other Person.

<PAGE>

     "Insolvency  Proceeding"  means any proceeding  commenced by or against any
Person under any provision of the Bankruptcy Code or under any other  bankruptcy
or insolvency law, assignments for the benefit of creditors,  formal or informal
moratoria,  compositions,  extensions  generally with creditors,  or proceedings
seeking reorganization, arrangement, or other similar relief.

     "Intangible  Assets" means, with respect to any Person, that portion of the
book value of all of such Person's  assets that would be treated as  intangibles
under GAAP.

     "Intercreditor  Agreements"  means those certain  intercreditor  agreements
between  Foothill and each of General Motors  Acceptance  Corporation,  Chrysler
Credit  Corporation  and Ford Motor Credit  Company,  and any other consignor of
chassis to a Borrower.

     "Interest  Period"  shall mean for any  Eurodollar  Rate Loan,  a period of
approximately  30, 60 or 90 days  duration  as  Borrowers  may elect,  the exact
duration to be  determined  in  accordance  with the  customary  practice in the
applicable  Eurodollar Rate market;  provided,  that, Borrowers may not elect an
Interest  Period which will end after the last day of the  then-current  term of
this Agreement.

     "Inventory"  means,  with  respect to a  Company,  all  present  and future
inventory in which such Company has any interest,  including goods held for sale
or  lease  or to be  furnished  under  a  contract  of  service  and all of such
Company's present and future raw materials, work in process, finished goods, and
packing and shipping materials, wherever located.

     "Inventory  Reserve"  means an amount equal to (i) zero,  during the period
commencing  on the Closing Date and ending  December 31,  1998,  (ii)  $100,000,
during the period commencing  January 1, 1999 and ending January 31, 1999, (iii)
$200,000 during the period  commencing  February 1, 1999 and ending February 28,
1999, (iv) $300,000, during the period commencing March 1, 1999 and ending March
31, 1999,  (v) $400,000  during the period  commencing  April 1, 1999 and ending
April 30, 1999, and (vi) $500,000 at all times on and after May 1, 1999.

     "IRC"  means  the  Internal  Revenue  Code of  1986,  as  amended,  and the
regulations thereunder.

     "L/C" has the meaning set forth in Section 2.2(a).

     "L/C Guaranty" has the meaning set forth in Section 2.2(a).

     "Letter  of  Credit"  means  an  L/C  or an L/C  Guaranty,  as the  context
requires.

<PAGE>

     "Lien" means any interest in property  securing an obligation owed to, or a
claim by, any Person other than the owner of the property, whether such interest
shall be based on the common law,  statute,  or contract,  whether such interest
shall be recorded or perfected,  and whether such  interest  shall be contingent
upon the  occurrence  of some future  event or events or the  existence  of some
future  circumstance or  circumstances,  including the lien or security interest
arising  from a mortgage,  deed of trust,  encumbrance,  pledge,  hypothecation,
assignment,  deposit arrangement,  security agreement,  adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including  reservations,  exceptions,  encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Real Property.

     "Loan Account" has the meaning set forth in Section 2.10.

     "Loan Documents" means this Agreement, the Disbursement Letter, the Letters
of Credit, the Lockbox Agreements,  Mortgages,  the Stock Pledge Agreement,  the
Trademark  Mortgage,  the Patent  Mortgage,  the  Guaranties,  any note or notes
executed  by any  Borrower  and  payable to  Foothill,  and any other  agreement
entered into, now or in the future, in connection with this Agreement.

     "Loans" means the Advances and the Term Loan.

     "Lockbox Account" shall mean a depository account  established  pursuant to
one of the Lockbox Agreements.

     "Lockbox  Agreements"  means those  certain  Lockbox  Operating  Procedural
Agreements  and  those  certain  Depository  Account  Agreements,  in  form  and
substance satisfactory to Foothill, each of which is among Borrowers,  Foothill,
and one of the Lockbox Banks.

     "Lockbox  Banks"  means  National  City  Bank or such  other  banks  as are
acceptable to Foothill.

     "Lockboxes" has the meaning set forth in Section 2.7.

<PAGE>

     "Material  Adverse  Change"  means  (a) a  material  adverse  change in the
business, prospects,  operations,  results of operations, assets, liabilities or
condition  (financial or otherwise) of any Company,  (b) the material impairment
of any Company's  ability to perform its obligations under the Loan Documents to
which it is a party or of Foothill to enforce the  Obligations  or realize  upon
the Collateral,  (c) a material adverse effect on the value of the Collateral or
the amount that Foothill would be likely to receive (after giving  consideration
to delays  in  payment  and costs of  enforcement)  in the  liquidation  of such
Collateral,  or (d) a material  impairment of the priority of  Foothill's  Liens
with respect to the Collateral.

     "Maximum Amount" means, as of any date of determination, $14,000,000.

     "Maximum  Revolving  Amount"  means  $14,000,000  less (a) the  outstanding
principal  amount of the Term Loan and (b) the  Tecstar  Obligations;  provided,
that so long as the maximum  principal  amount of "Senior  Debt" as set forth in
that certain  Subordination  Agreement  between Foothill and Existing Lenders is
$14,000, the Maximum Revolving Amount means $13,500,000 less (a) the outstanding
principal amount of the Term Loan and (b) the Tecstar Obligations.

     "Mortgages" means one or more mortgages, deeds of trust, or deeds to secure
debt,  executed by a Company in favor of  Foothill,  the form and  substance  of
which  shall be  satisfactory  to  Foothill,  that  encumber  the Real  Property
Collateral and the related improvements thereto.

     "Multiemployer  Plan" means a  "multiemployer  plan" (as defined in Section
4001(a)(3) of ERISA) to which any Company, any of its Subsidiaries, or any ERISA
Affiliate has contributed,  or was obligated to contribute,  within the past six
years.

     "Negotiable  Collateral"  means,  with  respect to a  Company,  all of such
Company's  present and future  letters of credit,  notes,  drafts,  instruments,
investment property, security entitlements,  securities (including the shares of
stock of  Subsidiaries  of such Company),  documents,  personal  property leases
(wherein such Company is the lessor),  chattel paper,  and such Company's  Books
relating to any of the foregoing.

     "Obligations"  means all loans  (including,  without  limitation,  the Term
Loan), Advances,  debts,  principal,  interest (including any interest that, but
for the provisions of the  Bankruptcy  Code,  would have  accrued),  guaranties,
contingent  reimbursement  obligations under any outstanding  Letters of Credit,
premiums  (including Early  Termination  Premiums),  liabilities  (including all
amounts charged to Borrowers' Loan Account pursuant hereto), obligations,  fees,
charges,  costs, or Foothill Expenses  (including any fees or expenses that, but
for the provisions of the Bankruptcy Code, would have accrued),  lease payments,
guaranties,  covenants,  and duties owing by any Company to Foothill of any kind
and  description  (whether  pursuant to or  evidenced  by the Loan  Documents or
pursuant  to  any  other  agreement  between  Foothill  and  any  Company,   and
irrespective  of whether for the payment of money),  whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and  including  any debt,  liability,  or  obligation  owing from any Company to
others that Foothill may have  obtained by assignment or otherwise,  and further
including  all  interest not paid when due and all  Foothill  Expenses  that any
Company is  required  to pay or  reimburse  by the Loan  Documents,  by law,  or
otherwise.

<PAGE>

     "Overadvance" has the meaning set forth in Section 2.5.

     "Participant"  means any Person to which Foothill has sold a  participation
interest in its rights under the Loan Documents.

     "Patent  Mortgage" means that certain Patent Mortgage of even date herewith
between SC and Foothill.

     "Pay-Off  Letter"  means  a  letter,  in  form  and  substance   reasonably
satisfactory to Foothill,  from Existing Lender  respecting the amount necessary
to repay in full all of the  obligations of Companies  owing to Existing  Lender
(other than a $3,000,000 term loan).

     "PBGC" means the Pension Benefit  Guaranty  Corporation as defined in Title
IV of ERISA, or any successor thereto.

     "Permitted  Liens" means (a) Liens held by  Foothill,  (b) Liens for unpaid
taxes  that  either (i) are not yet due and  payable or (ii) are the  subject of
Permitted  Protests,  (c) Liens set forth on Schedule  P-1, (d) the interests of
lessors under operating leases and purchase money Liens of lessors under capital
leases to the  extent  that the  acquisition  or lease of the  underlying  asset
occurs after the Closing Date and is permitted under Section 7.21 and so long as
the Lien only  attaches to the asset  purchased or acquired and only secures the
purchase  price of the asset,  (e) Liens arising by operation of law in favor of
warehousemen,   landlords,  carriers,  mechanics,   materialmen,   laborers,  or
suppliers, incurred in the ordinary course of business of any Company and not in
connection with the borrowing of money,  and which Liens either (i) are for sums
not yet due and  payable,  or (ii) are the subject of  Permitted  Protests,  (f)
Liens  arising  from  deposits  made  in  connection  with  obtaining   worker's
compensation or other  unemployment  insurance,  (g) Liens or deposits to secure
performance  of bids,  tenders,  or leases (to the extent  permitted  under this
Agreement),  incurred in the ordinary course of business of a Company and not in
connection with the borrowing of money,  (h) Liens arising by reason of security
for surety or appeal bonds in the ordinary course of business of a Company,  (i)
Liens of or resulting  from any judgment or award that would not have a Material
Adverse Effect and as to which the time for the appeal or petition for rehearing
of which has not yet expired,  or in respect of which a Company is in good faith
prosecuting an appeal or proceeding for a review, and in respect of which a stay
of execution pending such appeal or proceeding for review has been secured,  (j)
Liens with respect to the Real Property  Collateral  that are  exceptions to the
commitments  for title  insurance  issued in connection  with the Mortgages,  as
accepted by Foothill, and (k) with respect to any Real Property that is not part
of the Real Property  Collateral,  easements,  rights of way, zoning and similar
covenants and restrictions,  and similar  encumbrances that customarily exist on
properties of Persons engaged in similar  activities and similarly  situated and
that  in any  event  do not  materially  interfere  with  or  impair  the use or
operation of the Collateral by a Company or the value of Foothill's Lien thereon
or therein, or materially interfere with the ordinary conduct of the business of
a Company.

<PAGE>

     "Permitted  Protest" means the right of a Company to protest any Lien other
than any such Lien that secures the  Obligations,  tax (other than payroll taxes
or taxes that are the subject of a United  States  federal tax lien),  or rental
payment,  provided  that  (a) a  reserve  with  respect  to such  obligation  is
established  on the  books  of such  Company  in an  amount  that is  reasonably
satisfactory  to Foothill,  (b) any such protest is  instituted  and  diligently
prosecuted  by such Company in good faith,  and (c) Foothill is satisfied  that,
while  any  such  protest  is  pending,  there  will  be no  impairment  of  the
enforceability,  validity, or priority of any of the Liens of Foothill in and to
the Collateral.

     "Person"  means  and  includes  natural  persons,   corporations,   limited
liability  companies,  limited  partnerships,   general  partnerships,   limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other  organizations,  irrespective  of  whether  they are legal  entities,  and
governments and agencies and political subdivisions thereof.

     "Personal  Property  Collateral"  means all Collateral  other than the Real
Property Collateral.

     "Plan" means any employee benefit plan, program, or arrangement  maintained
or  contributed  to by any  Company  or  with  respect  to  which  it may  incur
liability.

     "Real  Property"  means any estates or interests in real property now owned
or hereafter acquired by a Company.

     "Real Property Collateral" means the parcel or parcels of real property and
the  related  improvements  thereto  identified  on Schedule  R-1,  and any Real
Property hereafter acquired by a Company.

     "Reference  Rate" means the  variable  rate of  interest,  per annum,  most
recently  announced  by Norwest Bank  Minnesota,  National  Association,  or any
successor  thereto,  as its "base rate,"  irrespective of whether such announced
rate is the best rate available from such financial institution.

     "Reference  Rate  Loan"  means any Loan (or any  portion  thereof)  made or
outstanding  hereunder  during any period when interest on such Loan (or portion
thereof) is payable based on the Reference Rate.

     "Renewal Date" has the meaning set forth in Section 3.4.

     "Reportable  Event" means any of the events described in Section 4043(c) of
ERISA or the regulations  thereunder  other than a Reportable  Event as to which
the  provision  of 30  days  notice  to the  PBGC  is  waived  under  applicable
regulations.

<PAGE>

     "Reserve  Percentage"  means and refers to, as of the date of determination
thereof,  the maximum  percentage  (rounded upward,  if necessary to the nearest
1/100th of 1%), as determined by Foothill (or its Affiliate) in accordance  with
its (or their) usual procedures (which  determination shall be conclusive in the
absence of manifest error),  that is in effect on such date as prescribed by the
Federal  Reserve  Board for  determining  the  reserve  requirements  (including
supplemental,  marginal,  and emergency  reserve  requirements)  with respect to
eurocurrency  funding (currently  referred to as "eurocurrency  liabilities") by
Foothill or its Affiliates.

     "Retiree  Health Plan" means an "employee  welfare benefit plan" within the
meaning of Section 3(1) of ERISA that  provides  benefits to  individuals  after
termination of their employment, other than as required by Section 601 of ERISA.

     "Solvent"  means,  with respect to any Person on a particular date, that on
such  date (a) at fair  valuations,  all of the  properties  and  assets of such
Person are greater than the sum of the debts, including contingent  liabilities,
of such Person,  (b) the present fair salable value of the properties and assets
of such  Person is not less than the  amount  that will be  required  to pay the
probable  liability  of such  Person on its debts as they  become  absolute  and
matured,  (c) such Person is able to realize upon its  properties and assets and
pay  its  debts  and  other  liabilities,   contingent   obligations  and  other
commitments  as they mature in the normal  course of  business,  (d) such Person
does not intend to, and does not believe  that it will,  incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in  business  or a  transaction,  and is not about to engage  in  business  or a
transaction,  for which such  Person's  properties  and assets would  constitute
unreasonably  small capital  after giving due  consideration  to the  prevailing
practices  in the  industry in which such Person is engaged.  In  computing  the
amount  of  contingent  liabilities  at  any  time,  it is  intended  that  such
liabilities  will be computed at the amount that,  in light of all the facts and
circumstances  existing at such time,  represents the amount that reasonably can
be expected to become an actual or matured liability.

     "Stock Pledge  Agreement" means that certain Stock Pledge Agreement of even
date herewith between SC and Foothill.

     "Subsidiary"  of  a  Person  means  a  corporation,   partnership,  limited
liability  company,  or other entity in which that Person directly or indirectly
owns or  controls  the  shares  of  stock or other  ownership  interests  having
ordinary  voting power to elect a majority of the board of directors (or appoint
other comparable managers) of such corporation,  partnership,  limited liability
company, or other entity.

     "Tangible Net Worth" means, as of any date of determination, the difference
of (a) total  stockholder's  equity of SC on a consolidated basis, minus (b) the
sum of: (i) all Intangible Assets and "other assets" of the Companies,  (ii) all
of the Companies'  prepaid expenses,  and (iii) all amounts due to the Companies
from Affiliates.

     "Tecstar  Loan  Agreement"  means that certain Loan and Security  Agreement
dated as of November 20, 1998 between Tecstar, Inc. and Foothill.

<PAGE>

     "Tecstar  Obligations"  means the  "Obligations" (as defined in the Tecstar
Loan Agreement).

     "Term Loan" has the meaning set forth in Section 2.3.

     "Trademark  Mortgage"  means that certain  Trademark  Mortgage of even date
herewith between SC and Foothill.

     "Voidable Transfer" has the meaning set forth in Section 15.8.

     1.2. Accounting Terms.

     All accounting terms not specifically  defined herein shall be construed in
accordance with GAAP. When used herein,  the term "financial  statements"  shall
include the notes and schedules thereto.  Whenever the term "Company" is used in
respect of a financial covenant or a related definition,  it shall be understood
to mean Companies on a consolidated  basis unless the context  clearly  requires
otherwise.

     1.3. Code.

     Any terms  used in this  Agreement  that are  defined  in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.

     1.4. Construction.

     Unless the context of this Agreement clearly requires otherwise, references
to the plural  include the  singular,  references  to the  singular  include the
plural,  the term  "including"  is not limiting,  and the term "or" has,  except
where  otherwise  indicated,  the inclusive  meaning  represented  by the phrase
"and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms
in this  Agreement  refer to this Agreement as a whole and not to any particular
provision  of this  Agreement.  An  Event  of  Default  shall  "continue"  or be
"continuing" until such Event of Default has been waived in writing by Foothill.
Section,  subsection,  clause,  schedule,  and  exhibit  references  are to this
Agreement unless otherwise specified.  Any reference in this Agreement or in the
Loan Documents to this Agreement or any of the Loan Documents  shall include all
alterations,   amendments,   changes,   extensions,   modifications,   renewals,
replacements,   substitutions,   and  supplements,   thereto  and  thereof,   as
applicable.

     1.5. Schedules and Exhibits.

     All of the  schedules  and  exhibits  attached to this  Agreement  shall be
deemed incorporated herein by reference.
<PAGE>

2.   LOAN AND TERMS OF PAYMENT.

     2.1. Revolving Advances.

     (a) Subject to the terms and conditions of this Agreement,  Foothill agrees
to make  advances  ("Advances")  to  Borrowers in an amount  outstanding  not to
exceed at any one time the lesser of (i) the Maximum  Revolving  Amount less the
outstanding  balance of all undrawn or unreimbursed  Letters of Credit,  or (ii)
the Borrowing Base less (A) the aggregate  amount of all undrawn or unreimbursed
Letters of Credit.  For purposes of this Agreement,  "Borrowing Base", as of any
date of determination, shall mean the result of:

                           (w) the  lesser of (i) 85% of  Eligible  Accounts  of
                  Borrowers,  less the amount,  if any, of the Dilution Reserve,
                  and  (ii) an  amount  equal  to  Borrowers'  Collections  with
                  respect to Accounts of Borrowers for the immediately preceding
                  60 day period, plus

                           (x) the lower of (i) $6,000,000,  and (ii) the sum of
                  (A)  the  lower  of  (1)  75%  of the  value  of the  Eligible
                  Inventory  consisting of uncut chassis owned by a Borrower and
                  (2)  $3,000,000,  and (B) the lower of (1) 75% of the value of
                  the Eligible  Inventory  consisting of finished goods, and (2)
                  80% of the  orderly  liquidation  value (as  determined  by an
                  appraiser and an appraisal methodology acceptable to Foothill)
                  of the Eligible Inventory consisting of finished goods, plus

                           (y) the lowest of (i) $3,000,000, (ii) the sum of 35%
                  of the  value  of the  Eligible  Inventory  consisting  of raw
                  materials and 100% of the Additional Raw Material Availability
                  Amount,  and (iii) 80% of the  orderly  liquidation  value (as
                  determined  by  an  appraiser  and  an  appraisal  methodology
                  acceptable to Foothill) of the Eligible  Inventory  consisting
                  of raw materials, minus

                           (z)  the  aggregate  amount  of  reserves,   if  any,
                  established by Foothill under Section 2.1(b);

provided, that the aggregate Advances outstanding predicated on the availability
described  in clauses  (x) and (y) above shall not exceed (A) 300% of the amount
of availability  created under clause (w) above during the period  commencing on
the date  hereof  and  ending  December  24,  1999,  (B) 180% of the  amount  of
availability  created  under  clause (w) above during the period  commencing  on
December 25, 1998 and ending on January 31,  1999,  or (C) 160% of the amount of
availability  created under clause (w) above at any time on or after February 1,
1999.
<PAGE>

         (b) Anything to the contrary in Section  2.1(a) above  notwithstanding,
Foothill may create  reserves  against the Borrowing  Base or reduce its advance
rates based upon Eligible  Accounts or Eligible  Inventory  without declaring an
Event of Default  (i) for any amount  subject to a Permitted  Protest,  (ii) for
amounts owing to landlords or similar Persons that could assert a statutory lien
in respect of any of the  Collateral,  (iii) for such amounts as Foothill  deems
appropriate for finished goods that may be located with a processor, and/or (iv)
as determined by Foothill in its reasonable  credit  judgment.  Without limiting
the  foregoing,  Foothill  shall  establish the  Inventory  Reserve as a reserve
against the Borrowing Base.

         (c) Each Loan shall be made upon a Borrower's  request (pursuant to the
terms of Section 2.9), which request shall be irrevocable except as set forth in
Section  2.12,  specifying  (i) the  amount  of the  requested  Loan;  (ii)  the
requested  funding date of such Loan;  (iii) whether the Loan is to constitute a
Eurodollar  Rate  Loan or a  Reference  Rate  Loan;  and (iv) if such Loan is to
constitute a Eurodollar Rate Loan, the requested Interest Period therefor.  If a
requested  Loan  constitutes  a  Eurodollar  Rate  Loan,  such  request  must be
delivered to Foothill no later than 11:00 a.m. (California time) 2 Business Days
prior to the requested  funding date therefor.  (d) Amounts borrowed pursuant to
this Section 2.1 may be repaid and,  subject to the terms and conditions of this
Agreement,  reborrowed  at any  time  during  the term of this  Agreement.  2.2.
Letters of Credit.

(a) Subject to the terms and conditions of this  Agreement,  Foothill  agrees to
issue  letters of credit for the  account of a Borrower  (each,  an "L/C") or to
issue guarantees of payment (each such guaranty, an "L/C Guaranty") with respect
to letters of credit  issued by an issuing  bank for the  account of a Borrower.
Foothill  shall  have no  obligation  to issue a Letter  of Credit if any of the
following would result:

                  (i) the  aggregate  amount  of all  undrawn  and  unreimbursed
         Letters of Credit,  would exceed the Borrowing  Base less the amount of
         outstanding Advances; or

                  (ii) the  aggregate  amount  of all  undrawn  or  unreimbursed
         Letters of Credit would exceed the lower of: (x) the Maximum  Revolving
         Amount less the amount of outstanding Advances;  or (y) $2,000,000;  or
         (iii) the  outstanding  Obligations  (other  than  under the Term Loan)
         would exceed the Maximum  Revolving  Amount.  Each  Borrower  expressly
         understands  and  agrees  that  Foothill  shall have no  obligation  to
         arrange for the issuance by issuing banks of the letters of credit that
         are to be the subject of L/C  Guarantees.  Each  Borrower  and Foothill
         acknowledge and agree that certain of the letters of credit that are to
         be the  subject of L/C  Guarantees  may be  outstanding  on the Closing
         Date. Each Letter of Credit shall have an expiration date no later than
         60 days  prior to the date on which  this  Agreement  is  scheduled  to
         terminate  under Section 3.4 (without  regard to any potential  renewal
         term) and all such  Letters  of Credit  shall be in form and  substance
         acceptable to Foothill in its sole discretion. If Foothill is obligated
         to advance funds under a Letter of Credit,  Borrowers immediately shall
         reimburse  such  amount  to  Foothill  and,  in  the  absence  of  such
         reimbursement,  the amount so advanced  immediately  and  automatically
         shall be deemed to be an Advance hereunder and, thereafter,  shall bear
         interest at the rate then applicable to Advances under Section 2.6.
<PAGE>

         (b) Each Borrower hereby agrees to indemnify,  save,  defend,  and hold
Foothill harmless from any loss, cost, expense, or liability, including payments
made by Foothill,  expenses,  and reasonable attorneys fees incurred by Foothill
arising out of or in connection with any Letter of Credit.  Each Borrower agrees
to be bound by the issuing bank's regulations and interpretations of any Letters
of Credit guarantied by Foothill and opened to or for a Borrower's account or by
Foothill's  interpretations of any L/C issued by Foothill to or for a Borrower's
account,  even though this  interpretation may be different from such Borrower's
own, and each Borrower  understands and agrees that Foothill shall not be liable
for any error,  negligence,  or mistake,  whether of omission or commission,  in
following any Borrower's instructions or those contained in the Letter of Credit
or  any  modifications,   amendments,  or  supplements  thereto.  Each  Borrower
understands  that the L/C  Guarantees  may  require  Foothill to  indemnify  the
issuing  bank for  certain  costs or  liabilities  arising out of claims by such
Borrower  against such issuing bank.  Each Borrower  hereby agrees to indemnify,
save, defend, and hold Foothill harmless with respect to any loss, cost, expense
(including  reasonable  attorneys fees), or liability incurred by Foothill under
any L/C Guaranty as a result of Foothill's  indemnification  of any such issuing
bank.

         (c) Each Borrower hereby  authorizes and directs any bank that issues a
letter of credit  guaranteed by Foothill to deliver to Foothill all instruments,
documents, and other writings and property received by the issuing bank pursuant
to such letter of credit,  and to accept and rely upon  Foothill's  instructions
and agreements  with respect to all matters that it would  otherwise  accept and
rely upon Borrowers'  instructions  and  agreements,  arising in connection with
such letter of credit and the related application.  Such Borrower may or may not
be the "applicant" or "account party" with respect to such letter of credit. 

         (d) Any and all  charges,  commissions,  fees,  and costs  incurred  by
Foothill  relating to the  letters of credit  guaranteed  by  Foothill  shall be
considered  Foothill  Expenses for purposes of this  Agreement  and  immediately
shall be reimbursable by Borrowers to Foothill.

         (e) Immediately upon the termination of this Agreement, Borrowers agree
to either (i) provide cash  collateral to be held by Foothill in an amount equal
to 102% of the maximum amount of Foothill's obligations under Letters of Credit,
or  (ii)  cause  to be  delivered  to  Foothill  releases  of all of  Foothill's
obligations under outstanding Letters of Credit. At Foothill's  discretion,  any
proceeds of Collateral of Borrowers  received by Foothill  after the  occurrence
and  during  the  continuation  of an Event of  Default  may be held as the cash
collateral  required by this Section 2.2(e).  
<PAGE>

         (f) If by reason of (i) any change in any applicable law, treaty, rule,
or  regulation  or  any  change  in the  interpretation  or  application  by any
governmental  authority of any such applicable law, treaty, rule, or regulation,
or (ii) compliance by the issuing bank or Foothill with any direction,  request,
or  requirement  (irrespective  of  whether  having  the  force  of  law) of any
governmental  authority or monetary  authority  including,  without  limitation,
Regulation  D of the Board of Governors  of the Federal  Reserve  System as from
time to time in effect (and any successor thereto): 

                  (A) any reserve,  deposit,  or similar requirement is or shall
         be imposed or  modified  in  respect  of any  Letters of Credit  issued
         hereunder, or

                  (B) there shall be imposed on the issuing bank or Foothill any
         other condition regarding any letter of credit, or Letter of Credit, as
         applicable, issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly,
the cost to the issuing bank or Foothill of issuing,  making,  guaranteeing,  or
maintaining  any letter of credit,  or Letter of Credit,  as  applicable,  or to
reduce  the  amount  receivable  in  respect  thereof  by such  issuing  bank or
Foothill,  then,  and in any such  case,  Foothill  may,  at any  time  within a
reasonable  period after the additional  cost is incurred or the amount received
is reduced, notify Borrowers,  and Borrowers shall pay on demand such amounts as
the issuing  bank or Foothill  may specify to be  necessary  to  compensate  the
issuing bank or Foothill for such additional cost or reduced  receipt,  together
with  interest on such amount from the date of such demand until payment in full
thereof at the rate set forth in Section 2.6(a)(i) or (c)(i), as applicable. The
determination by the issuing bank or Foothill, as the case may be, of any amount
due pursuant to this Section 2.2(f), as set forth in a certificate setting forth
the calculation thereof in reasonable detail,  shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.

         2.3. Term Loan.

         Foothill  has agreed to make a term loan (the "Term Loan") to Borrowers
in the original principal amount of $4,800,000. The Term Loan shall be repaid in
36  installments of principal each in the amount of $57,143 (except for the last
such installment which shall be in the amount of the unpaid principal balance of
the Term Loan).  Each such installment shall be due and payable on the first day
of each  calendar  month  commencing  on the first day of  December  1, 1998 and
continuing on the first day of each  succeeding  calendar  month,  and the final
payment shall be on the third  anniversary of the Closing Date. The  outstanding
principal  balance and all accrued and unpaid interest under the Term Loan shall
be due and payable upon the termination of this Agreement, whether by its terms,
by prepayment,  by acceleration,  or otherwise.  The unpaid principal balance of
the Term Loan may be prepaid in whole or in part  without  penalty or premium at
any time during the term of this  Agreement upon 30 days prior written notice by
Borrowers  to  Foothill  and with the prior  written  consent of  Foothill.  All
prepayments  of principal of the Term Loan shall be applied to the  installments
due on the  Term  Loan in the  inverse  order  of their  maturity.  All  amounts
outstanding under the Term Loan shall constitute Obligations.
<PAGE>

         2.4. Intentionally Omitted.

         2.5. Overadvances.

         If, at any time or for any  reason,  the amount of  Obligations  (other
than the Term Loan) owed by Borrowers  to Foothill  pursuant to Sections 2.1 and
2.2 is greater  than either the Dollar or  percentage  limitations  set forth in
Sections  2.1 and 2.2 (an  "Overadvance"),  Borrowers  immediately  shall pay to
Foothill,  in cash, the amount of such excess to be used by Foothill  first,  to
repay  Advances  outstanding  under Section 2.1 and,  thereafter,  to be held by
Foothill as cash  collateral to secure  Borrowers'  obligation to repay Foothill
for all amounts paid pursuant to Letters of Credit.

         2.6. Interest: Rates, Payments and Calculations.

                  (a) Interest Rate. Except as provided in clause (c) below, all
         outstanding  Obligations  (except for undrawn  Letters of Credit) shall
         bear interest as follows:

                           (i) Each Eurodollar Rate Loan (other than the portion
                  thereof that is part of the Term Loan) shall bear  interest at
                  a per annum rate of 3  percentage  points  above the  Adjusted
                  Eurodollar Rate and each  Eurodollar Rate Loan  constituting a
                  portion of the Term Loan shall  bear  interest  at a per annum
                  rate of 3.5  percentage  points above the Adjusted  Eurodollar
                  Rate, and

                           (ii) all other  outstanding  Obligations  (other than
                  the portion  thereof that is part of the Term Loan) shall bear
                  interest at a per annum rate of 0.5  percentage  points  above
                  the  Reference  Rate and the Term Loan (other than the portion
                  thereof  that is part of a  Eurodollar  Rate Loan)  shall bear
                  interest at a per annum rate of 0.75  percentage  points above
                  the  Reference  Rate;  provided,  that,   notwithstanding  the
                  foregoing,  the Revolving  Loans  predicated on the Additional
                  Raw Material  Availability Amount shall bear interest at a per
                  annum rate of 2 percentage points above the Reference Rate.
<PAGE>

         (b)  Letter of Credit  Fee.  Borrowers  shall  pay  Foothill  a fee (in
addition  to the  charges,  commissions,  fees,  and costs set forth in  Section
2.2(d))  equal to 1.75% per  annum  times the  aggregate  undrawn  amount of all
outstanding Letters of Credit.

         (c) Default Rate. Upon the occurrence and during the continuation of an
Event of Default,  (i) all Obligations (except for undrawn Letters of Credit and
the Term Loan) shall bear  interest at a per annum rate equal to 3.5  percentage
points above the Reference Rate, (ii) the Term Loan shall bear interest at a per
annum rate equal to 3.75  percentage  points above the Reference Rate, and (iii)
the Letter of Credit fee provided in Section  2.6(b) shall be increased to 4.75%
per  annum  times  the  amount  of the  undrawn  Letters  of  Credit  that  were
outstanding  during the immediately  preceding  calendar month;  provided,  that
notwithstanding the foregoing,  the Revolving Loans predicated on the Additional
Raw Material  Availability  Amount shall bear  interest at a per annum rate of 6
percentage  points above the Reference Rate. 

         (d) Minimum Interest. In no event shall the rate of interest chargeable
hereunder  for any day be less than 7% per annum.  To the extent  that  interest
accrued  hereunder at the rate set forth herein would be less than the foregoing
minimum  daily  rate,  the  interest  rate  chargeable  hereunder  for  such day
automatically shall be deemed increased to the minimum rate.

         (e) Payments. Interest in respect of Reference Rate Loans and Letter of
Credit  Fees  shall be due and  payable,  in  arrears,  on the first day of each
calendar  month during the term hereof.  Interest in respect of each  Eurodollar
Rate Loan shall be due and payable,  in arrears, on the last day of the Interest
Period  applicable  thereto.  Each Borrower hereby authorizes  Foothill,  at its
option, without prior notice to Borrowers, to charge such interest and Letter of
Credit Fees, all Foothill Expenses (as and when incurred),  the fees and charges
provided  for in  Section  2.11  (as and  when  accrued  or  incurred),  and all
installments  or other  payments due under the Term Loan or any Loan Document to
Borrowers' Loan Account,  which amounts  thereafter shall accrue interest at the
rate then applicable to Advances  hereunder.  Any interest not paid when due and
shall be  compounded  and  shall  thereafter  accrue  interest  at the rate then
applicable to Advances hereunder.

         (f) Computation. The Reference Rate as of the date of this Agreement is
8% per  annum.  In the event the  Reference  Rate is  changed  from time to time
hereafter,   the  applicable  rate  of  interest  hereunder   automatically  and
immediately shall be increased or decreased by an amount equal to such change in
the Reference  Rate. All interest and fees  chargeable  under the Loan Documents
shall be computed  on the basis of a 360 day year for the actual  number of days
elapsed.
<PAGE>

         (g) Intent to Limit  Charges to Maximum  Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement,  plus any other amounts
paid in connection  herewith,  exceed the highest rate permissible under any law
that a court of competent  jurisdiction  shall, in a final  determination,  deem
applicable.  Borrowers and Foothill, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it;  provided,  however,  that,  anything  contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum  allowable under  applicable law, then, ipso facto as of the
date of this  Agreement,  Borrowers are and shall be liable only for the payment
of such maximum as allowed by law, and payment received from Borrowers in excess
of such  legal  maximum,  whenever  received,  shall be  applied  to reduce  the
principal balance of the Obligations to the extent of such excess.

         (h) For  purposes of  calculating  interest,  Revolving  Loans shall be
deemed to be predicated  upon the  availability  created by the  Additional  Raw
Material Availability Amount last. 2.7. Collection of Accounts.

         Borrowers shall at all times maintain  lockboxes (the "Lockboxes") and,
immediately  after the Closing  Date,  shall  instruct all Account  Debtors with
respect to the  Accounts,  General  Intangibles,  and  Negotiable  Collateral of
Borrowers  to remit  all  Collections  in  respect  thereof  to such  Lockboxes.
Borrowers,  Foothill,  and the  Lockbox  Banks  shall  enter  into  the  Lockbox
Agreements,  which among other things shall provide for the opening of a Lockbox
Account for the deposit of Collections at a Lockbox Bank.  Borrowers  agree that
all  Collections  and other  amounts  received by any Borrower  from any Account
Debtor or any other source  immediately  upon receipt shall be deposited  into a
Lockbox Account. No Lockbox Agreement or arrangement  contemplated thereby shall
be modified by any Borrower without the prior written consent of Foothill.  Upon
the terms and subject to the conditions set forth in the Lockbox Agreements, all
amounts received in each Lockbox Account after all applicable collection periods
shall be wired  each  Business  Day into an  account  (the  "Foothill  Account")
maintained by Foothill at a depository selected by Foothill.
<PAGE>

         2.8. Crediting Payments; Application of Collections.

         The receipt of any  Collections by Foothill  (whether from transfers to
Foothill by the Lockbox Banks  pursuant to the Lockbox  Agreements or otherwise)
immediately shall be applied provisionally to reduce the Obligations outstanding
under Section 2.1, but shall not be considered a payment on account  unless such
Collection item is a wire transfer of immediately available federal funds and is
made to the Foothill Account or unless and until such Collection item is honored
when presented for payment.  From and after the Closing Date,  Foothill shall be
entitled to charge  Borrowers for 2 Business Days of  `clearance'  or `float' at
the rate set forth in Section 2.6(a)(i) or Section 2.6(c)(i), as applicable,  on
all Collections that are received by Foothill  (regardless of whether  forwarded
by the Lockbox Banks to Foothill,  whether  provisionally  applied to reduce the
Obligations under Section 2.1, or otherwise).  This  across-the-board 2 Business
Day clearance or float charge on all  Collections is acknowledged by the parties
to  constitute  an integral  aspect of the pricing of  Foothill's  financing  of
Borrowers,  and shall  apply  irrespective  of the  characterization  of whether
receipts are owned by any Borrower or Foothill, and whether or not there are any
outstanding  Advances,  the effect of such  clearance  or float charge being the
equivalent of charging 2 Business Days of interest on such  Collections.  Should
any Collection  item not be honored when  presented for payment,  then Borrowers
shall  be  deemed  not  to  have  made  such  payment,  and  interest  shall  be
recalculated   accordingly.   Anything   to  the   contrary   contained   herein
notwithstanding,  any Collection  item shall be deemed received by Foothill only
if it is received into the Foothill Account on a Business Day on or before 11:00
a.m.  California  time.  If any  Collection  item is received  into the Foothill
Account on a non-Business Day or after 11:00 a.m.  California time on a Business
Day,  it shall be deemed to have been  received by Foothill as of the opening of
business on the immediately following Business Day.

         2.9. Designated Account.

         Foothill is authorized to make the Advances,  the Letters of Credit and
the Term Loan under this Agreement based upon  telephonic or other  instructions
received  from  anyone  purporting  to  be  an  Authorized  Person,  or  without
instructions  if pursuant to Section  2.6(e).  Borrowers  agree to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances  requested by any Borrower and made by
Foothill  hereunder.  Unless  otherwise  agreed by Foothill and  Borrowers,  any
Advance  requested by any Borrower and made by Foothill  hereunder shall be made
to the Designated Account.

         2.10. Maintenance of Loan Account; Statements of Obligations.

         Foothill  shall  maintain  an  account  on its  books  in the  name  of
Borrowers  (the "Loan  Account")  on which  Borrowers  will be charged  with all
Advances made by Foothill to any Borrower or for Borrowers' account,  including,
accrued interest,  Foothill Expenses,  and any other payment  Obligations of any
Borrower. In accordance with Section 2.8, the Loan Account will be credited with
all payments  received by Foothill from any Borrower or for Borrowers'  account,
including  all amounts  received in the Foothill  Account from any Lockbox Bank.
Foothill  shall  render  statements  regarding  the Loan  Account to  Borrowers,
including principal, interest, fees, and including an itemization of all charges
and expenses  constituting Foothill Expenses owing, and such statements shall be
conclusively  presumed  to be correct and  accurate  and  constitute  an account
stated  between  Borrowers  and Foothill  unless,  within 30 days after  receipt
thereof by  Borrowers,  Borrowers  shall deliver to Foothill  written  objection
thereto describing the error or errors contained in any such statements.
<PAGE>

         2.11. Fees.

         Borrowers shall pay to Foothill the following fees:

         (a) Closing Fee. On the Closing Date, a closing fee of $70,000;

         (b) Unused Line Fee. On the first day of each calendar month during the
term of this Agreement, an unused line fee in an amount equal to 0.25% per annum
times the Average Unused Portion of the Maximum Revolving Amount;  

         (c)  Financial   Examination,   Documentation,   and  Appraisal   Fees.
Foothill's  customary  fee of  $650  per day per  examiner,  plus  out-of-pocket
expenses for each financial analysis and examination (i.e., audits) of Borrowers
performed by personnel employed by Foothill;  Foothill's customary appraisal fee
of $1,500 per day per appraiser,  plus out-of-pocket expenses for each appraisal
of the Collateral  performed by personnel employed by Foothill;  and, the actual
charges  paid or incurred by Foothill if it elects to employ the services of one
or more third Persons to perform such financial analyses and examinations (i.e.,
audits) of Borrowers or to appraise the Collateral; and

         (d) Servicing  Fee. On the first day of each calendar  month during the
term  of  this  Agreement,  and  thereafter  so  long  as  any  Obligations  are
outstanding,  a  servicing  fee in an amount  equal to $2,000 per  month.  2.12.
Eurodollar Rate Loans.

         2.12 Eurodollar Rate Loans. Any other provisions herein to the contrary
notwithstanding,   the  following   provisions  shall  govern  with  respect  to
Eurodollar Rate Loans as to the matters covered:

         (a)  Borrowing;  Conversion;  Continuation.  Borrowers may from time to
time,  on or  after  the  Closing  Date,  request  in a  written  or  telephonic
communication  with  Foothill:  (i) Loans to  constitute  Eurodollar  Rate Loans
(pursuant to Section 2.12(c));  (ii) that Reference Rate Loans be converted into
Eurodollar Rate Loans; or (iii) that existing Eurodollar Rate Loans continue for
an  additional  Interest  Period.  Any such request  shall specify the aggregate
amount of the  requested  Eurodollar  Rate  Loans,  the  proposed  funding  date
therefor  (which  shall  be a  Business  Day,  and  with  respect  to  continued
Eurodollar  Rate shall be the last day of the  Interest  Period of the  existing
Eurodollar Rate loans being  continued),  and the proposed  Interest Period,  in
each case subject to the limitations set forth below). Eurodollar Rate Loans may
only be made, continue, or extended if, as of the proposed funding date therefor
each of the following conditions is satisfied:
<PAGE>

                           (v)      no Event of Default exists;

                           (w) no more than 3 Interest  Periods may be in effect
                  at any one time;

                           (x) the amount of each Eurodollar Rate Loan borrowed,
                  converted,  or  continued  must be in an amount  not less than
                  $1,000,000  and  integral  multiples  of  $500,000  in  excess
                  thereof;

                           (y) Foothill shall have  determined that the Interest
                  Period or Adjusted  Eurodollar  Rate is  available to Foothill
                  and can be readily  determined  as of the date of the  request
                  for such Eurodollar Rate Loan by Borrowers; and

                           (z)  Foothill  shall have  received  such  request at
                  least 2  Business  Days  prior to the  proposed  funding  date
                  therefor.

Any request by Borrowers to borrow  Eurodollar Rate Loans, to convert  Reference
Rate Loans to Eurodollar Rate Loans, or to continue any existing Eurodollar Rate
Loans shall be  irrevocable,  except to the extent that Foothill shall determine
under Sections  2.12(a),  2.13 or 2.14 that such Eurodollar Rate Loans cannot be
made or continued.

         (b)  Determination of Interest Period. By giving notice as set forth in
Section  2.12(a),  the Borrowers  shall have the option of selecting an Interest
Period for such Eurodollar  Rate Loan. The  determination  of Interests  Periods
shall be subject to the following provisions:

                           (i) in the case of  immediately  successive  Interest
                  Periods, each successive Interest Period shall commence on the
                  date on which the next preceding Interest Period expires;

                           (ii) if any Interest period would otherwise expire on
                  a day which is not a Business  Day, the Interest  Period shall
                  be extended  to expire on the next  succeeding  Business  Day;
                  provided,  however,  that if the next succeeding  Business Day
                  occurs in the  following  calendar  month,  then such Interest
                  Period shall expire on the immediately preceding Business Day;
<PAGE>
                  

                           (iii)  if any  Interest  Period  begins  on the  last
                  Business Day of a calendar  month, or on a day for which there
                  is no numerically  corresponding  day in the calendar month at
                  the end of such  Interest  Period,  then the  Interest  Period
                  shall end on the last  Business Day of the  calendar  month at
                  the end of such Interest Period; and

                           (iv)  Borrowers  may not  select an  Interest  period
                  which  expires  later than the last day of the current term of
                  this Agreement.

         (c)  Automatic  Conversion;   Optional  Conversion  by  Foothill.   Any
Eurodollar Rate Loan shall  automatically  convert to a Reference Rate Loan upon
the last day of the applicable  Interest Period,  unless Foothill has received a
request to continue such  Eurodollar Rate Loan at least 2 Business Days prior to
the end of such Interest period in accordance with the terms of Section 2.12(a).
Any Eurodollar Rate Loan shall, at Foothill's option,  upon notice to Borrowers,
convert to a Reference Rate Loan in the event that (i) an Event of Default shall
have occurred and be  continuing  as of the last day of the Interest  Period for
such Eurodollar Rate Loan, or (ii) this Agreement shall terminate, and Borrowers
shall pay to Foothill any amounts required by Section 2.15 as a result thereof.

         2.13. Illegality.

         Any other  provision  herein to the  contrary  notwithstanding,  if the
adoption  of or any change in any law or in the  interpretation  or  application
thereof shall make it unlawful for Foothill to make or maintain  Eurodollar Rate
Loans  as  contemplated  by this  Agreement,  (a)  the  obligation  of  Foothill
hereunder to make Eurodollar Rate loans, continue Eurodollar Rate Loans as such,
and convert  Reference  Rate Loans to Eurodollar  Rate Loans shall  forthwith be
cancelled and (b) Foothill's  then  outstanding  Eurodollar  Rate Loans, if any,
shall be converted  automatically to Reference Rate Loans on the respective last
days of the then current  Interest  Periods with respect  thereto or within such
earlier  period as required by law;  provided,  however,  that before making any
such demand,  Foothill  agrees to use reasonable  efforts  (consistent  with its
internal  policy  and  legal  and  regulatory  restrictions  and so long as such
efforts would not be disadvantageous to it, in its reasonable discretion, in any
legal, economic or regulatory manner) to designate a different lending office if
the making of such a designation  would allow  Foothill or its lending office to
continue to perform its  obligations to make  Eurodollar Rate Loans. If any such
conversion  of a Eurodollar  Rate Loan occurs on a day which is not the last day
of the then current Interest period with respect thereto, Borrowers shall pay to
Foothill such amounts,  if any, as may be required  pursuant to Section 2.15. If
circumstances subsequently change so that Foothill shall determine that it is no
longer so affected, Foothill will promptly notify Borrowers, and upon receipt of
such notice,  the  obligations of Foothill to make or continue  Eurodollar  Rate
Loans or to convert  Reference  Rate Loans into  Eurodollar  Rate Loans shall be
reinstated.
<PAGE>

         2.14. Requirements of Law.

         (a)  If  the   adoption  of  or  any  change  in  any  law  or  in  the
interpretation or application thereof or compliance by Foothill with any request
or  directive  (whether or not having the force of law) from any central bank or
other Governmental Authority made subsequent to the date hereof:

                  (i) shall  subject  Foothill to any tax,  levy,  charge,  fee,
         reduction or  withholding of any kind  whatsoever  with respect to this
         Agreement  or any Loan,  or change the basis of taxation of payments to
         Foothill in respect thereof (except for taxes and the  establishment of
         a tax based on the net income of Foothill or changes in the rate of tax
         on the net income of Foothill);

                  (ii) shall  impose,  modify or hold  applicable  any  reserve,
         special deposit,  compulsory loan or similar requirement against assets
         held by, deposits or other  liabilities in or for the account of, Loans
         or other extensions of credit by, or any other acquisition of funds by,
         any office of  Foothill;  or (iii) shall  impose on Foothill  any other
         condition with respect to this Agreement or any Loan; and the result of
         any of the foregoing is to increase the cost to Foothill,  by an amount
         which  Foothill  deems to be  material,  of  making,  converting  into,
         continuing or maintaining Loans or to increase the cost to Foothill, by
         an amount which Foothill deems to be material,  or to reduce any amount
         receivable  hereunder  in respect of Loans,  or to forego any other sum
         payable thereunder or make any payment on account thereof, then, in any
         such case, Borrowers shall promptly pay Foothill,  upon its demand, any
         additional amounts necessary to compensate  Foothill for such increased
         cost or reduced  amount  receivable;  provided,  however,  that  before
         making  any such  demand,  Foothill  agrees to use  reasonable  efforts
         (consistent   with  its  internal   policy  and  legal  and  regulatory
         restrictions  and so long as such efforts would not be  disadvantageous
         to  it,  in  its  reasonable  discretion,  in any  legal,  economic  or
         regulatory  manner) to designate a different  Eurodollar lending office
         if  the  making  of  such  designation  would  allow  Foothill  or  its
         Eurodollar  lending  office to continue to perform its  obligations  to
         make  Eurodollar  Rate  Loans  or  to  continue  to  fund  or  maintain
         Eurodollar Rate Loans and avoid the need for, or materially  reduce the
         amount of, such increased cost. If Foothill  becomes  entitled to claim
         any additional  amounts  pursuant to this Section 2.14,  Foothill shall
         promptly notify Borrowers of the event by reason of which it has become
         so  entitled.  A  certificate  as to  any  additional  amounts  payable
         pursuant to this Section 2.14 submitted by Foothill to Borrowers  shall
         be conclusive in the absence of manifest  error. If Borrowers so notify
         Foothill  within 5 Business Days after Foothill  notifies  Borrowers of
         any increased cost pursuant to the foregoing provisions of this Section
         2.14,  Borrowers may convert all Eurodollar Rate Loans then outstanding
         into  Reference  Rate  loans  in  accordance  with  Section  2.12  and,
         additionally,  reimburse  Foothill  for  any  cost in  accordance  with
         Section 2.15.
<PAGE>

         (b) If  Foothill  shall have  determined  that the  adoption  of or any
change  in any  law  regarding  capital  adequacy  or in the  interpretation  or
application thereof or compliance by Foothill or any Person controlling Foothill
with any request or directive  regarding capital adequacy (whether or not having
the force of law) from any  Governmental  Authority made  subsequent to the date
hereof  does or shall  have the  effect of  increasing  the  amount  of  capital
required to be  maintained  or reducing the rate of return on Foothill's or such
Person's capital as a consequence of its obligations  hereunder to a level below
that which such  Foothill or such Person could have achieved but for such change
or compliance  (taking into  consideration  Foothill's or such Person's policies
with  respect  to  capital  adequacy)  by an  amount  deemed by  Foothill  to be
material, then from time to time, after submission by Foothill to Borrowers of a
prompt written request therefor, Borrowers shall pay to Foothill such additional
amount or amounts as will compensate Foothill or such Person for such reduction.

         2.15. Indemnity.

         Each  Borrower  agrees  to  indemnify  Foothill  and to  hold  Foothill
harmless  from any loss or  expense  which  Foothill  may  sustain or incur as a
consequence  of (a) default by Borrowers  in payment  when due of the  principal
amount of or interest on any  Eurodollar  Rate Loan, (b) default by Borrowers in
making a borrowing of, conversion into, or continuation of Eurodollar Rate Loans
after  Borrowers have given a notice  requesting the same in accordance with the
provisions of this Agreement,  (c) default by Borrowers in making any prepayment
after Borrowers have given a notice thereof in accordance with the provisions of
this Agreement,  or (d) the making of a prepayment of Eurodollar Rate Loans on a
day  which  is not the last  day of an  Interest  Period  with  respect  thereto
(whether due to the  termination  of this Agreement upon the Event of Default or
otherwise),  including,  in each case,  any such loss or expense (but  excluding
loss of margin)  arising from the  reemployment  of funds obtained by it or from
fees payable to  terminate  the  deposits  from which such funds were  obtained.
Calculation of all amounts  payable to Foothill under this Section 2.15 shall be
made as though  Foothill had actually  funded the relevant  Eurodollar Rate Loan
through the purchase of a deposit bearing  interest at the Eurodollar Rate in an
amount  equal to the amount of such  Eurodollar  Rate Loan and having a maturity
comparable to the relevant Interest Period; provided, however, that Foothill may
fund each of the  Eurodollar  Rate  Loans in any  manner  it sees  fit,  and the
foregoing  assumption  shall be  utilized  only for the  calculation  of amounts
payable under this Section 2.15.

3.   CONDITIONS; TERM OF AGREEMENT.

         3.1. Conditions Precedent to the Initial Advance,  Letter of Credit and
the Term Loan.

         The  obligation of Foothill to make the initial  Advance,  to issue the
initial Letter of Credit or to make the Term Loan is subject to the fulfillment,
to the  satisfaction  of  Foothill  and its  counsel,  of each of the  following
conditions on or before the Closing Date:

         (a) the Closing Date shall occur on or before November 20, 1998;

         (b) Foothill shall have received searches  reflecting the filing of its
financing statements and fixture filings for each Company and Tecstar, Inc.; 
<PAGE>

         (c) Foothill shall have received each of the following documents,  duly
executed, and each such document shall be in full force and effect:

                  (i) the Lockbox Agreements;

                  (ii) the  Disbursement  Letter;  

                  (iii)  the  Pay-Off  Letters,  together  with UCC  termination
         statements and other  documentation  evidencing the termination by each
         Existing Lender of its Liens in and to the properties and assets of all
         Companies;

                  (iv) the Mortgages,  the Guaranties,  the Trademark  Mortgage,
         the Patent Mortgage and the Stock Pledge Agreement; and

                  (v) the Intercreditor Agreements.

         (d) Foothill  shall have received a  certificate  from the Secretary of
each Company  attesting to the  resolutions of such Company's Board of Directors
authorizing its execution,  delivery,  and performance of this Agreement and the
other Loan Documents to which such Company is a party and  authorizing  specific
officers of Company to execute the same;

         (e) Foothill  shall have received  copies of each  Company's  Governing
Documents, as amended,  modified, or supplemented to the Closing Date, certified
by the Secretary of such Company; 

         (f) Foothill  shall have received a certificate  of status with respect
to each Company,  dated within 30 days of the Closing Date, such  certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Company,  which certificate shall indicate that such Company is in good standing
in such jurisdiction;

         (g) Foothill shall have received certificates of status with respect to
each Company,  each dated within 30 days of the Closing Date, such  certificates
to be  issued  by the  appropriate  officer  of the  jurisdictions  in which its
failure to be duly  qualified or licensed  would  constitute a Material  Adverse
Change,  which certificates shall indicate that such Company is in good standing
in such jurisdictions;

         (h) Foothill shall have received a certificate  of insurance,  together
with the  endorsements  thereto,  as are required by Section 6.10,  the form and
substance of which shall be satisfactory to Foothill and its counsel;

         (i)  Foothill  shall  have  received  the  $2,000,000  promissory  note
executed by Tecstar,  Inc. in favor of SAG endorsed to Foothill and the Security
Agreement executed by Tecstar, Inc. and SAG, and such documents shall be in form
and substance satisfactory to Foothill;

         (j)  Foothill  shall  have  reviewed  and shall be  satisfied  with the
results of the Inventory and Equipment appraisals;

         (k) Foothill shall have reviewed each Company's chassis agreements with
its suppliers and shall be satisfied with the results thereof;
<PAGE>

         (l) Foothill shall have received such Collateral Access Agreements from
lessors, warehousemen, bailees, and other third persons as Foothill may require;

         (m) Foothill  shall have received an opinion of  Companies'  counsel in
form and substance satisfactory to Foothill in its sole discretion;

         (n) Foothill  shall have  received (i)  appraisals of the Real Property
Collateral  and  appraisals  of the  Equipment,  in each  case  satisfactory  to
Foothill and in  compliance  with FIRREA  guidelines,  (ii) ALTA surveys for the
Real Property  Collateral,  and (iii)  mortgagee  title  insurance  policies (or
marked  commitments  to issue the  same)  issued  by a title  insurance  company
satisfactory  to  Foothill  (each a  "Mortgage  Policy"  and  collectively,  the
"Mortgage  Policies") in amounts satisfactory to Foothill assuring Foothill that
the Mortgages on such Real Property  Collateral are valid and enforceable  first
priority  mortgage Liens on such Real Property  Collateral free and clear of all
defects and encumbrances except Permitted Liens, and the Mortgage Policies shall
otherwise be in form and  substance  reasonably  satisfactory  to Foothill;  

         (o) Foothill shall have received a phase-I  environmental  report and a
real estate survey shall have been  completed  with respect to the Real Property
Collateral  and  copies  thereof   delivered  to  Foothill;   the  environmental
consultants and surveyors retained for such reports or surveys, the scope of the
reports or surveys,  and the results  thereof shall be acceptable to Foothill in
its sole discretion.

         (p)  Foothill  shall have  reviewed  the  Companies'  proposed  payment
schedule to General  Motors  Company with respect to $3,000,000  past due amount
and shall be satisfied with the results thereof;

         (q) Foothill  shall have entered into a  Subordination  Agreement  with
Existing Lender on terms and conditions satisfactory to Foothill;

         (r) Foothill shall have received background searches of the officers of
the Companies and be satisfied with the results thereof;

         (s) Foothill  shall have  received  satisfactory  evidence that all tax
returns  required to be filed by each  Borrower  have been timely  filed and all
taxes upon each  Borrower or its  properties,  assets,  income,  and  franchises
(including  real  property  taxes and  payroll  taxes)  have been paid  prior to
delinquency, except such taxes that are the subject of a Permitted Protest;
<PAGE>

         (t)  Foothill  shall  have  received  the  Companies'   business  plan,
availability projections and cash flow projections for the fiscal year ending on
the Sunday  closest to September  30, 1999 and such  business plan and cash flow
projections shall be satisfactory to Foothill;

         (u) Borrowers shall have Excess  Availability of at least $75,000 after
giving effect to the funding of the initial Loans and Letters of Credit; and

         (v) all  other  documents  and legal  matters  in  connection  with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance  satisfactory to Foothill and its
counsel.  

         3.2.  Conditions  Precedent to all Advances,  all Letters of Credit and
the Term Loan.

         The  following  shall be  conditions  precedent  to all  Advances,  all
Letters of Credit and the Term Loan hereunder:

         (a) the representations and warranties  contained in this Agreement and
the other Loan Documents  shall be true and correct in all respects on and as of
the date of such  extension  of  credit,  as though  made on and as of such date
(except to the extent that such  representations and warranties relate solely to
an earlier date);

         (b)  no  Default  or  Event  of  Default  shall  have  occurred  and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;  and (c) no injunction,  writ,  restraining  order, or other
order of any nature prohibiting,  directly or indirectly,  the extending of such
credit shall have been issued and remain in force by any governmental  authority
against  any  Company,  Foothill,  or any of their  Affiliates.  

         3.3. Condition Subsequent.

         As a condition subsequent to initial closing hereunder, Borrowers shall
perform or cause to be performed the  following  (the failure by Borrowers to so
perform or cause to be performed constituting an Event of Default) within:

         (a) 30 days of the  Closing  Date,  deliver to Foothill  the  certified
copies of the policies of insurance,  together with the endorsements thereto, as
are  required  by  Section  6.10,  the form  and  substance  of  which  shall be
satisfactory to Foothill and its counsel; and

         (b) 10 days of the  Closing  Date,  deliver  to  Foothill  availability
projections  for the fiscal year ending on the Sunday  closest to September  30,
1999. 
<PAGE>

         3.4. Term; Automatic Renewal.

         This Agreement  shall become  effective upon the execution and delivery
hereof by Borrowers and Foothill and shall continue in full force and effect for
a term  ending on the date (the  "Renewal  Date")  that is three  years from the
Closing Date and automatically  shall be renewed for successive one year periods
thereafter,  unless  sooner  terminated  pursuant  to the terms  hereof.  Either
Borrowers or Foothill may terminate this Agreement effective on the Renewal Date
or on any one year  anniversary  of the Renewal Date by giving the other parties
at  least  90 days  prior  written  notice;  provided,  that  Borrowers  may not
terminate this  Agreement  unless  contemporaneously  therewith the Tecstar Loan
Agreement is terminated. The foregoing notwithstanding,  Foothill shall have the
right to terminate its obligations under this Agreement  immediately and without
notice upon the occurrence and during the continuation of an Event of Default.

         3.5. Effect of Termination.

         On  the  date  of  termination  of  this  Agreement,   all  Obligations
(including contingent reimbursement obligations of Borrowers with respect to any
outstanding  Letters of Credit) immediately shall become due and payable without
notice or demand.  No termination of this Agreement,  however,  shall relieve or
discharge Borrowers of their duties,  Obligations,  or covenants hereunder,  and
Foothill's  continuing  security  interests  in the  Collateral  shall remain in
effect  until  all  Obligations  have  been  fully and  finally  discharged  and
Foothill's  obligation to provide additional credit hereunder is terminated.  If
any  Borrower has sent a notice of  termination  pursuant to the  provisions  of
Section 3.4, but Borrowers  fail to pay the  Obligations in full on the date set
forth in said  notice,  then  Foothill  may, but shall not be required to, renew
this Agreement for an additional term of one year.

         3.6. Early Termination by Borrowers.

         The provisions of Section 3.4 that allow  termination of this Agreement
by  Borrowers  only  on the  Renewal  Date  and  certain  anniversaries  thereof
notwithstanding,  Borrowers  have the  option,  at any time  upon 90 days  prior
written  notice to Foothill,  to terminate this Agreement by paying to Foothill,
in cash,  the  Obligations  (including  an amount  equal to 102% of the  undrawn
amount of the Letters of Credit),  in full,  together with a premium (the "Early
Termination  Premium") equal to (a) 2% of the Maximum Amount if such termination
occurs on or before the first anniversary of the date hereof,  and (b) 1% of the
Maximum  Amount if such  termination  occurs after the first  anniversary of the
date  hereof but on or before  the third  anniversary  of the date  hereof or 1%
after the third anniversary of the date hereof but before the end of any renewal
term.

         3.7. Termination Upon Event of Default.

         If Foothill  terminates  this Agreement upon the occurrence of an Event
of  Default,  in  view  of  the   impracticability  and  extreme  difficulty  of
ascertaining  actual  damages  and by mutual  agreement  of the  parties as to a
reasonable calculation of Foothill's lost profits as a result thereof, Borrowers
shall pay to Foothill upon the effective date of such termination,  a premium in
an amount equal to the Early Termination  Premium. The Early Termination Premium
shall be  presumed  to be the amount of damages  sustained  by  Foothill  as the
result of the early  termination and Borrowers agree that it is reasonable under
the circumstances currently existing. The Early Termination Premium provided for
in this Section 3.7 shall be deemed included in the Obligations.
<PAGE>

4.   CREATION OF SECURITY INTEREST.

         4.1. Grant of Security Interest.

         Each Company hereby grants to Foothill a continuing  security  interest
in all currently  existing and hereafter  acquired or arising Personal  Property
Collateral  of such Company in order to secure  prompt  repayment of any and all
Obligations and in order to secure prompt performance by each Company of each of
its covenants and duties under the Loan Documents. Foothill's security interests
in the  Personal  Property  Collateral  shall  attach to all  Personal  Property
Collateral without further act on the part of Foothill or any Company.  Anything
contained  in  this  Agreement  or any  other  Loan  Document  to  the  contrary
notwithstanding,  except  for the sale of  Inventory  to buyers in the  ordinary
course of  business  and as  permitted  under  Section  7.4,  no Company has any
authority,  express  or  implied,  to  dispose  of any  item or  portion  of the
Collateral.

         4.2. Negotiable Collateral.

         In the event that any Collateral,  including proceeds,  is evidenced by
or consists of Negotiable Collateral, Companies, immediately upon the request of
Foothill,  shall  endorse and deliver  physical  possession  of such  Negotiable
Collateral to Foothill.

         4.3.  Collection  of  Accounts,  General  Intangibles,  and  Negotiable
Collateral.

         At any time,  Foothill or Foothill's  designee may (a) notify customers
or Account  Debtors of a Company  that the  Accounts,  General  Intangibles,  or
Negotiable  Collateral  have been  assigned to Foothill or that  Foothill  has a
security interest therein,  and (b) collect the Accounts,  General  Intangibles,
and Negotiable  Collateral directly and charge the collection costs and expenses
to the  Loan  Account.  Each  Company  agrees  that it will  hold in  trust  for
Foothill,   as  Foothill's  trustee,   any  Collections  that  it  receives  and
immediately will deliver said Collections to the Lockbox or to Foothill in their
original form as received by such Company.

         4.4. Delivery of Additional Documentation Required.

         At any time upon the request of Foothill,  each Company  shall  execute
and  deliver  to  Foothill  all  financing  statements,  continuation  financing
statements,   fixture  filings,  security  agreements,   pledges,   assignments,
endorsements  of  certificates  of title,  applications  for title,  affidavits,
reports,  notices,  schedules of accounts,  letters of authority,  and all other
documents  that  Foothill  reasonably  may  request,  in  form  satisfactory  to
Foothill, to perfect and continue perfected Foothill's security interests in the
Collateral,   and  in  order  to  fully   consummate  all  of  the  transactions
contemplated hereby and under the other the Loan Documents.
<PAGE>

         4.5. Power of Attorney.

         Each  Company  hereby  irrevocably  makes,  constitutes,  and  appoints
Foothill (and any of Foothill's  officers,  employees,  or agents  designated by
Foothill) as such Company's true and lawful  attorney,  with power to (a) if any
Company  refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4,  sign the name of such Company on any of the documents
described  in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing or Foothill deems itself insecure, sign such Company's name on
any invoice or bill of lading  relating to any Account,  drafts against  Account
Debtors,  schedules and assignments of Accounts,  verifications of Accounts, and
notices to Account Debtors, (c) send requests for verification of Accounts,  (d)
endorse such Company's name on any Collection item that may come into Foothill's
possession,  (e) at any time  that an  Event  of  Default  has  occurred  and is
continuing or Foothill deems itself insecure, notify the post office authorities
to  change  the  address  for  delivery  of such  Company's  mail to an  address
designated by Foothill,  to receive and open all mail addressed to such Company,
and to retain all mail relating to the  Collateral and forward all other mail to
such  Company,  (f) at any time that an Event of  Default  has  occurred  and is
continuing  or Foothill  deems itself  insecure,  make,  settle,  and adjust all
claims under such  Company's  policies of insurance and make all  determinations
and decisions  with respect to such  policies of insurance,  and (g) at any time
that an Event of Default has occurred and is continuing or Foothill deems itself
insecure, settle and adjust disputes and claims respecting the Accounts directly
with Account Debtors,  for amounts and upon terms that Foothill determines to be
reasonable,  and Foothill may cause to be executed and  delivered  any documents
and releases  that  Foothill  determines to be  necessary.  The  appointment  of
Foothill as each Company's attorney, and each and every one of Foothill's rights
and powers,  being  coupled with an interest,  is  irrevocable  until all of the
Obligations  have been fully and finally  repaid and  performed  and  Foothill's
obligation to extend credit hereunder is terminated.

         4.6. Right to Inspect.

         Foothill (through any of its officers, employees, or agents) shall have
the right,  from time to time hereafter to inspect each  Company's  Books and to
check,  test,  and appraise  the  Collateral  in order to verify each  Company's
financial condition or the amount,  quality,  value,  condition of, or any other
matter relating to, the Collateral. Foothill shall have the right, at Borrowers'
expense,  to obtain desk top appraisals of the Inventory on a semi-annual  basis
and full count  appraisals of the  Inventory on an annual  basis,  in each case,
such appraisals to be in form, scope and methodology  acceptable to Foothill and
performed by an appraiser acceptable to Foothill.
<PAGE>

5.   REPRESENTATIONS AND WARRANTIES.

         In order to induce Foothill to enter into this Agreement,  each Company
makes the following representations and warranties which shall be true, correct,
and complete in all respects as of the date hereof, and shall be true,  correct,
and complete in all respects as of the Closing  Date,  and at and as of the date
of the making of each Advance, Letter of Credit or Term Loan made thereafter, as
though made on and as of the date of such Advance, Letter of Credit or Term Loan
(except to the extent that such  representations and warranties relate solely to
an earlier  date) and such  representations  and  warranties  shall  survive the
execution and delivery of this Agreement:

         5.1. No Encumbrances.

         Each  Company  has  good  and  indefeasible  title  to  its  respective
Collateral, free and clear of Liens except for Permitted Liens.

         5.2. Eligible Accounts.

         The  Eligible   Accounts  of  each  Borrower  are  bona  fide  existing
obligations  created by the sale and delivery of  Inventory or the  rendition of
services to Account Debtors in the ordinary course of such Borrower's  business,
unconditionally  owed to such  Borrower  without  defenses,  disputes,  offsets,
counterclaims,  or rights of return or cancellation. The property giving rise to
such  Eligible  Accounts  has been  delivered to the Account  Debtor,  or to the
Account Debtor's agent for immediate shipment to and unconditional acceptance by
the  Account  Debtor.  No  Borrower  has  received  notice of actual or imminent
bankruptcy, insolvency, or material impairment of the financial condition of any
Account Debtor regarding any Eligible Account.

         5.3. Eligible Inventory.

         All Eligible Inventory is of good and merchantable  quality,  free from
defects.

         5.4. Equipment.

         All of the  Equipment  of each  Company is used or held for use in such
Company's respective business and is fit for such purposes.
<PAGE>

         5.5. Location of Inventory and Equipment.

         The Inventory and Equipment are not stored with a bailee, warehouseman,
or similar party (without Foothill's prior written consent) and are located only
at the locations  identified on Schedule 6.12 or otherwise  permitted by Section
6.12.

         5.6. Inventory Records.

         Each  Company  keeps  correct  and  accurate   records   itemizing  and
describing the kind,  type,  quality,  and quantity of the  Inventory,  and such
Company's cost therefor.

         5.7. Location of Chief Executive Office; FEIN.

         The address of each  Company 's chief  executive  office and FEIN is as
set forth on Schedule 5.7.

         5.8. Due Organization and Qualification; Subsidiaries.

         (a) Each Company is duly  organized  and existing and in good  standing
under  the laws of the  jurisdiction  of its  incorporation  and  qualified  and
licensed to do business in, and in good standing in, any state where the failure
to be so licensed or qualified  reasonably  could be expected to have a Material
Adverse Change.

         (b) Set forth on Schedule  5.8, is a complete and accurate list of each
Company's  direct and indirect  Subsidiaries,  showing:  (i) the jurisdiction of
their  incorporation;  (ii) the  number of shares  of each  class of common  and
preferred stock authorized for each of such  Subsidiaries;  and (iii) the number
and the percentage of the  outstanding  shares of each such class owned directly
or indirectly by such Company. All of the outstanding capital stock of each such
Subsidiary  has been validly  issued and is fully paid and  non-assessable.  

         (c)  Except as set forth on  Schedule  5.8,  no  capital  stock (or any
securities,  instruments,  warrants,  options,  purchase  rights,  conversion or
exchange rights, calls,  commitments or claims of any character convertible into
or exercisable  for capital  stock) of any direct or indirect  Subsidiary of any
Company is subject to the issuance of any security, instrument, warrant, option,
purchase right,  conversion or exchange right, call,  commitment or claim of any
right,  title,  or  interest  therein or thereto.  

         5.9. Due Authorization; No Conflict.

         (a) The execution,  delivery,  and  performance by each Company of this
Agreement  and the  Loan  Documents  to  which  it is a  party  have  been  duly
authorized by all necessary corporate action.
<PAGE>

         (b) The execution,  delivery,  and  performance by each Company of this
Agreement and the Loan  Documents to which it is a party do not and will not (i)
violate any provision of federal,  state, or local law or regulation  (including
Regulations  G, T, U, and X of the Federal  Reserve  Board)  applicable  to such
Company,  the Governing  Documents of such Company, or any order,  judgment,  or
decree of any court or other  Governmental  Authority  binding on such  Company,
(ii) conflict  with,  result in a breach of, or  constitute  (with due notice or
lapse of time or both) a default  under any material  contractual  obligation or
material  lease of such  Company,  (iii)  result in or require  the  creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such  Company,  other than  Permitted  Liens,  or (iv)  require any  approval of
stockholders  or any  approval  or  consent  of any  Person  under any  material
contractual obligation of such Company. 

         (c) Other than the filing of appropriate financing statements,  fixture
filings, and mortgages, the execution, delivery, and performance by each Company
of this Agreement and the Loan Documents to which such Company is a party do not
and will not require any registration with,  consent,  or approval of, or notice
to,  or  other  action  with  or by,  any  federal,  state,  foreign,  or  other
Governmental Authority or other Person.

         (d) This  Agreement  and the Loan  Documents to which each Company is a
party, and all other documents  contemplated  hereby and thereby,  when executed
and delivered by such Company will be the legally valid and binding  obligations
of such  Company,  enforceable  against  such Company in  accordance  with their
respective terms,  except as enforcement may be limited by equitable  principles
or by  bankruptcy,  insolvency,  reorganization,  moratorium,  or  similar  laws
relating to or limiting creditors' rights generally.

         (e)  The  Liens  granted  by each  Company  to  Foothill  in and to its
properties  and assets  pursuant to this  Agreement and the other Loan Documents
are validly  created,  perfected,  and first  priority  Liens,  subject  only to
Permitted Liens. 

         5.10. Litigation.

         There are no actions or  proceedings  pending by or against any Company
before  any  court  or  administrative  agency  and  none of the  Companies  has
knowledge  or  belief  of  any  pending,  threatened,  or  imminent  litigation,
governmental  investigations,  or claims,  complaints,  actions, or prosecutions
involving  any Company or any  guarantor  of the  Obligations,  except for:  (a)
ongoing  collection  matters in which any Company is the plaintiff;  (b) matters
disclosed on Schedule 5.10; and (c) matters  arising after the date hereof that,
if decided adversely to any Company, would not have a Material Adverse Change.
<PAGE>

         5.11. No Material Adverse Change.

         All financial  statements  relating to each Company or any guarantor of
the  Obligations  that have been delivered by such Company to Foothill have been
prepared in  accordance  with GAAP (except,  in the case of unaudited  financial
statements,  for the lack of  footnotes  and being  subject  to  year-end  audit
adjustments)  and  fairly  present  such  Company's  (or  such  guarantor's,  as
applicable)  financial  condition  as of the date  thereof  and  such  Company's
results of operations  for the period then ended.  There has not been a Material
Adverse  Change with respect to any Company (or such  guarantor,  as applicable)
since the date of the latest  financial  statements  submitted to Foothill on or
before the Closing Date.

         5.12. Solvency.

         Each  Company  (other than IAG) is Solvent.  No transfer of property is
being made by any Company and no obligation is being  incurred by any Company in
connection  with the  transactions  contemplated  by this Agreement or the other
Loan  Documents with the intent to hinder,  delay,  or defraud either present or
future creditors of any Company.

         5.13. Employee Benefits.

         No Company,  any of its Subsidiaries,  or any of their ERISA Affiliates
maintains  or  contributes  to any  Benefit  Plan,  other than  those  listed on
Schedule 5.13. Each Company,  each of its  Subsidiaries and each ERISA Affiliate
have satisfied the minimum  funding  standards of ERISA and the IRC with respect
to each Benefit Plan to which it is obligated to contribute.  No ERISA Event has
occurred nor has any other event occurred that may result in an ERISA Event that
reasonably could be expected to result in a Material Adverse Change.  No Company
or its  Subsidiaries,  any  ERISA  Affiliate,  or any  fiduciary  of any Plan is
subject to any direct or indirect  liability  with respect to any Plan under any
applicable  law,  treaty,  rule,  regulation,  or  agreement.  No Company or its
Subsidiaries or any ERISA Affiliate is required to provide  security to any Plan
under Section 401(a)(29) of the IRC.

         5.14. Environmental Condition.

         No  Company's  properties  or assets has ever been used by such Company
or, to the best of such Company's knowledge,  by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous  Materials,  except in compliance with applicable laws or as described
on Schedule 5.14. No Company's  properties or assets has ever been designated or
identified in any manner pursuant to any environmental  protection  statute as a
Hazardous  Materials  disposal site, or a candidate for closure  pursuant to any
environmental  protection  statute.  No Lien  arising  under  any  environmental
protection  statute  has  attached  to any  revenues  or to any real or personal
property owned or operated by any Company. Except as described on Schedule 5.14,
no Company has  received a summons,  citation,  notice,  or  directive  from the
Environmental  Protection  Agency or any  other  federal  or state  governmental
agency  concerning  any  action or  omission  by any  Company  resulting  in the
releasing or disposing of Hazardous Materials into the environment.
<PAGE>

         5.15. Year 2000 Compliance.

         Companies have begun to undertake a comprehensive review and assessment
of their computer  applications and have begun to make inquiry of their material
suppliers,  vendors and customers. Based on the foregoing,  Companies reasonably
believe that what is commonly  referred to as the "Year 2000 problem"  (that is,
the  risk  that  computer  applications  used by any  Person  may be  unable  to
recognize and perform properly date-sensitive  functions involving certain dates
prior to and any date  after  December  31,  1999) will not result in a Material
Adverse Change on the operations, business, properties, or conditions (financial
or otherwise) of Companies.  Companies are taking all necessary and  appropriate
steps to ascertain the extent of, quantify and successfully address the business
and  financial  risks  facing  Companies  as a result of the Year 2000  problem,
including  ascertaining  risks  resulting  from the failure of key customers and
suppliers of  Companies  to address  successfully  the Year 2000  problems,  and
Companies'  material  computer  applications  will, on or before March 31, 1999,
adequately address the Year 2000 problem in all material respects.

         5.16. Consigned Chassis.

         No Company's Inventory includes any chassis consigned to such Company.

         5.17. Starcraft Southwest, Inc.

         Starcraft Southwest, Inc. is a wholly-owned subsidiary of SC. It has no
assets and conducts no business operations.

6.   AFFIRMATIVE COVENANTS.

         Each Company covenants and agrees that, so long as any credit hereunder
shall be  available  and until full and final  payment of the  Obligations,  and
unless Foothill shall otherwise consent in writing, each Company shall do all of
the following:

         6.1. Accounting System.

         Maintain a standard and modern system of  accounting  that enables each
Company to produce  financial  statements in accordance  with GAAP, and maintain
records  pertaining to the Collateral  that contain  information as from time to
time may be  requested  by  Foothill.  Each  Company  also  shall  keep a modern
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
<PAGE>

         6.2. Collateral Reporting.

         Provide Foothill with the following documents at the following times in
form  satisfactory  to  Foothill:  (a)  on a  weekly  basis,  a  sales  journal,
collection  journal,  and credit  register  since the last such  schedule  and a
calculation  of the Borrowing  Base as of such date, (b) on a monthly basis and,
in any event, by no later than the 10th day of each fiscal month during the term
of this Agreement,  (i) a detailed calculation of the Borrowing Base, and (ii) a
detailed aging by due date, by total, of the Accounts of each Borrower, together
with a  reconciliation  to  the  detailed  calculation  of  the  Borrowing  Base
previously provided to Foothill, (c) on a monthly basis and, in any event, by no
later than the 10th day of each fiscal month during the term of this  Agreement,
a summary aging,  by vendor,  of each Borrower's  accounts  payable and any book
overdraft,  (d) on a weekly basis,  Inventory reports specifying each Borrower's
cost  and  the  wholesale  market  value  of its  Inventory  by  category,  with
additional  detail  showing  additions  to  and  deletions  from  the  Inventory
(provided,  that the  Inventory  report with respect to raw  materials  shall be
delivered on a monthly basis),  (e) on a weekly basis a report identifying those
Accounts  which have been  invoiced to the customer  thereof but with respect to
which  the  Inventory  has not yet been  shipped,  (f) on each  Business  Day if
requested by Foothill,  notice of all  returns,  disputes or claims  (other than
claims described in the warranty claims report delivered to Foothill pursuant to
clause (h) below),  (g) upon request,  copies of invoices in connection with the
Accounts,  customer  statements,  credit memos,  remittance advices and reports,
deposit slips,  shipping and delivery  documents in connection with the Accounts
and for Inventory and Equipment  acquired by each Borrower,  purchase orders and
invoices, (h) on a quarterly basis, a detailed list of each Borrower's customers
and a warranty claims report in form and substance satisfactory to Foothill, (i)
on a monthly  basis,  a calculation  of the Dilution for the prior fiscal month;
and (j) such other reports as to the  Collateral  or the financial  condition of
each Borrower as Foothill may request from time to time. Original sales invoices
evidencing  daily sales shall be mailed by each Borrower to each Account  Debtor
and, at Foothill's direction, the invoices shall indicate on their face that the
Account  has been  assigned  to Foothill  and that all  payments  are to be made
directly to Foothill.  In addition to the  foregoing,  Borrowers  shall promptly
provide  to  Foothill  any report  that  Borrowers  deliver  to  General  Motors
Corporation.
<PAGE>

         6.3. Financial Statements, Reports, Certificates.

         Deliver to Foothill: (a) as soon as available,  but in any event within
30 days after the end of each fiscal month during each of SC's fiscal  years,  a
company prepared  balance sheet,  income  statement,  and statement of cash flow
covering the Companies'  consolidated operations during such period; (b) as soon
as available, but in any event within 90 days after the end of each of each SC's
fiscal  years,  consolidated  financial  statements  of Companies  for each such
fiscal year,  audited by independent  certified  public  accountants  reasonably
acceptable  to  Foothill  and  certified,  without any  qualifications,  by such
accountants  to have been  prepared in  accordance  with GAAP,  together  with a
certificate  of  such  accountants  addressed  to  Foothill  stating  that  such
accountants  do not have  knowledge of the  existence of any Default or Event of
Default;  and (c) at the end of a fiscal year a monthly budget for the following
fiscal year, on a Company by Company basis.  Such audited  financial  statements
shall include a balance sheet, profit and loss statement,  and statement of cash
flow and, if prepared,  such  accountants'  letter to management.  The financial
statements  referred to above shall be prepared on a  consolidated  basis for SC
and its Subsidiaries.

         Together  with the above,  SC also shall  deliver to Foothill SC's Form
10-Q Quarterly  Reports,  Form 10-K Annual Reports and Form 8-K Current Reports,
and any other filings made by SC with the Securities and Exchange Commission, if
any, as soon as the same are filed, or any other information that is provided by
SC to its shareholders,  and any other report  reasonably  requested by Foothill
relating to the financial condition of SC and its Subsidiaries.  In addition, so
long as  Starshak  &  Associates  is engaged by the  Companies,  SC shall  cause
Starshak & Associates to deliver to Foothill a monthly status report.

         Each fiscal  month,  together with the  financial  statements  provided
pursuant to Section 6.3(a), SC shall deliver to Foothill a certificate signed by
its chief  financial  officer to the effect that:  (i) all financial  statements
delivered or caused to be delivered to Foothill  hereunder have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of  footnotes  and being  subject to year-end  audit  adjustments)  and
fairly present the financial condition of each Company, (ii) the representations
and  warranties of each Company  contained in this  Agreement and the other Loan
Documents are true and correct in all material respects on and as of the date of
such  certificate,  as though made on and as of such date  (except to the extent
that such  representations  and  warranties  relate solely to an earlier  date),
(iii) for each fiscal month that also is the date on which a financial  covenant
in  Sections  7.20  and  7.21  is  to  be  tested,   a  Compliance   Certificate
demonstrating in reasonable detail compliance at the end of such period with the
applicable  financial covenants contained in Sections 7.20 and 7.21, and (iv) on
the date of delivery of such  certificate  to Foothill  there does not exist any
condition  or event that  constitutes  a Default or Event of Default (or, in the
case of  clauses  (i),  (ii),  or (iii),  to the  extent of any  non-compliance,
describing such non-compliance as to which he or she may have knowledge and what
action  Companies  have  taken,  are  taking,  or propose  to take with  respect
thereto).
<PAGE>

         Each Company shall have issued written  instructions to its independent
certified public  accountants  authorizing them to communicate with Foothill and
to release to Foothill whatever  financial  information  concerning such Company
that  Foothill  may request.  Such Company  hereby  irrevocably  authorizes  and
directs  all  auditors,  accountants,  or other  third  parties  to  deliver  to
Foothill,  at  such  Company's  expense,  copies  of  such  Company's  financial
statements,  papers related thereto,  and other accounting records of any nature
in their  possession,  and to disclose to Foothill any information they may have
regarding such Company's business affairs and financial conditions.

         6.4. Tax Returns.

         Deliver to Foothill  copies of each of each  Company's  future  federal
income tax returns,  and any  amendments  thereto,  within 30 days of the filing
thereof with the Internal Revenue Service.

         6.5. Guarantor Reports.

         Cause  any  guarantor  of any of the  Obligations  (other  than IAG) to
deliver its annual  financial  statements at the time when each Company provides
its audited  financial  statements to Foothill and copies of all federal  income
tax returns as soon as the same are  available and in any event no later than 30
days after the same are required to be filed by law.

         6.6. Returns.

         Cause returns and allowances,  if any, as between each Borrower and its
Account  Debtors  to be on the same  basis  and in  accordance  with  the  usual
customary practices of such Borrower, as they exist at the time of the execution
and  delivery  of this  Agreement.  If, at a time when no Event of  Default  has
occurred  and is  continuing,  any Account  Debtor  returns any  Inventory  to a
Borrower, such Borrower promptly shall determine the reason for such return and,
if such Borrower accepts such return,  issue a credit memorandum (with a copy to
be sent to Foothill) in the appropriate  amount to such Account Debtor. If, at a
time when an Event of Default has occurred and is continuing, any Account Debtor
returns any Inventory to such Borrower,  such Borrower  promptly shall determine
the reason for such return and, if Foothill consents (which consent shall not be
unreasonably  withheld),  issue a credit  memorandum  (with a copy to be sent to
Foothill) in the appropriate amount to such Account Debtor.

         6.7. Title to Equipment.

         Upon  Foothill's  request,  each Company  immediately  shall deliver to
Foothill, properly endorsed, any and all evidences of ownership of, certificates
of title, or applications for title to any items of Equipment.
<PAGE>

         6.8. Maintenance of Equipment.

         Maintain the Equipment in good operating condition and repair (ordinary
wear and tear excepted), and make all necessary replacements thereto so that the
value and operating  efficiency  thereof  shall at all times be  maintained  and
preserved.  Other than those items of Equipment that constitute  fixtures on the
Closing  Date, no Company shall permit any item of Equipment to become a fixture
to real estate or an accession to other  property,  and such Equipment  shall at
all times remain personal property.

         6.9. Taxes.

         Cause all assessments and taxes, whether real, personal,  or otherwise,
due or payable by, or imposed, levied, or assessed against any Company or any of
its property to be paid in full, before  delinquency or before the expiration of
any extension period,  except to the extent that the validity of such assessment
or tax shall be the subject of a Permitted Protest. To the extent that a Company
fails timely to make  payment of such taxes or  assessments,  Foothill  shall be
entitled,  in its discretion,  to reserve an amount equal to such unpaid amounts
against the Borrowing  Base.  Each Company shall make due and timely  payment or
deposit  of  all  such  federal,  state,  and  local  taxes,   assessments,   or
contributions  required of it by law,  and will execute and deliver to Foothill,
on demand,  appropriate certificates attesting to the payment thereof or deposit
with respect  thereto.  Each Company will make timely  payment or deposit of all
tax payments and withholding taxes required of it by applicable laws,  including
those laws concerning F.I.C.A.,  F.U.T.A.,  state disability,  and local, state,
and federal income taxes,  and will, upon request,  furnish  Foothill with proof
satisfactory to Foothill  indicating that such Company has made such payments or
deposits.

         6.10. Insurance.

         (a) At its  expense,  keep the  Personal  Property  Collateral  insured
against  loss or damage by fire,  theft,  explosion,  sprinklers,  and all other
hazards and risks,  and in such amounts,  as are ordinarily  insured  against by
other owners in similar  businesses.  Each Company also shall maintain  business
interruption, public liability, product liability, and property damage insurance
relating to Company's ownership and use of the Personal Property Collateral,  as
well as insurance against larceny, embezzlement, and criminal misappropriation.

         (b) At its  expense,  obtain and  maintain  (i)  insurance  of the type
necessary to insure the improvements and fixtures on the Real Property,  for the
full replacement cost thereof,  against any loss by fire, lightning,  windstorm,
hail, explosion,  aircraft, smoke damage, vehicle damage, earthquakes,  elevator
collision,  and other risks from time to time included under "extended coverage"
policies,  in such amounts as Foothill may require,  but in any event in amounts
sufficient  to  prevent  any  Company  from  becoming  a  co-insurer  under such
policies,  (ii)  combined  single  limit  bodily  injury  and  property  damages
insurance against any loss, liability, or damages on, about, or relating to each
parcel of Real Property  Collateral,  in an amount of not less than  $2,000,000;
(iii) business rental  insurance  covering annual receipts for a 12 month period
for each parcel of Real Property  Collateral;  and (iv) insurance for such other
risks as Foothill may require.  Replacement  costs, at Foothill's option, may be
redetermined  by an insurance  appraiser,  satisfactory  to  Foothill,  not more
frequently  than once every 12 months at Borrowers'  cost. 
<PAGE>

         (c) All such  policies of  insurance  shall be in such form,  with such
companies,  and in such amounts as may be reasonably  satisfactory  to Foothill.
All hazard  insurance and such other insurance as Foothill shall specify,  shall
contain a Form 438BFU (NS) mortgagee  endorsement,  or an equivalent endorsement
satisfactory to Foothill, showing Foothill as sole loss payee thereof, and shall
contain a waiver of  warranties.  Every policy of insurance  referred to in this
Section  6.10 shall  contain an agreement by the insurer that it will not cancel
such policy except after 30 days prior  written  notice to Foothill and that any
loss payable thereunder shall be payable  notwithstanding  any act or negligence
of  Companies  or  Foothill  which  might,  absent such  agreement,  result in a
forfeiture of all or a part of such insurance  payment and  notwithstanding  (i)
occupancy or use of the Real Property  Collateral  for purposes  more  hazardous
than permitted by the terms of such policy, (ii) any foreclosure or other action
or proceeding taken by Foothill  pursuant to the Mortgages upon the happening of
an Event of  Default,  or (iii)  any  change in title or  ownership  of the Real
Property  Collateral.  Companies shall deliver to Foothill  certified  copies of
such  policies of insurance and evidence of the payment of all then due premiums
therefor. (d) Original policies or certificates thereof satisfactory to Foothill
evidencing  such insurance shall be delivered to Foothill at least 30 days prior
to the expiration of the existing or preceding  policies.  Companies  shall give
Foothill prompt notice of any loss covered by such insurance, and Foothill shall
have the right to adjust any loss.  Foothill  shall have the exclusive  right to
adjust  all  losses  payable  under  any such  insurance  policies  without  any
liability to Companies  whatsoever  in respect of such  adjustments.  Any monies
received  as  payment  for any loss under any  insurance  policy  including  the
insurance policies mentioned above, shall be paid over to Foothill to be applied
at the option of Foothill  either to the prepayment of the  Obligations  without
premium, in such order or manner as Foothill may elect, or shall be disbursed to
Companies under stage payment terms  satisfactory to Foothill for application to
the cost of repairs, replacements, or restorations; provided, that so long as no
Event of Default  exists the proceeds of a casualty  involving less than $50,000
shall be remitted to Companies. All repairs, replacements, or restorations shall
be effected with reasonable promptness and shall be of a value at least equal to
the  value  of  the  items  or  property  destroyed  prior  to  such  damage  or
destruction. Upon the occurrence of an Event of Default, Foothill shall have the
right to apply all prepaid  premiums to the payment of the  Obligations  in such
order  or form as  Foothill  shall  determine.  (e) No  Company  shall  take out
separate insurance  concurrent in form or contributing in the event of loss with
that  required to be  maintained  under this Section  6.10,  unless  Foothill is
included  thereon as named  insured  with the loss  payable to Foothill  under a
standard 438BFU (NS) Mortgagee endorsement,  or its local equivalent.  Companies
immediately shall notify Foothill whenever such separate insurance is taken out,
specifying  the  insurer  thereunder  and full  particulars  as to the  policies
evidencing  the  same,  and  originals  of such  policies  immediately  shall be
provided to Foothill.
<PAGE>

         6.11. No Setoffs or Counterclaims.

         Make  payments  hereunder  and under the other Loan  Documents by or on
behalf of each Company without setoff or counterclaim and free and clear of, and
without  deduction or withholding  for or on account of, any federal,  state, or
local taxes.

         6.12. Location of Inventory and Equipment.

         Keep the Inventory and  Equipment  only at the locations  identified on
Schedule 6.12; provided,  however, that Companies may amend Schedule 6.12 to add
a new location so long as such  amendment  occurs by written  notice to Foothill
not less than 30 days prior to the date on which the  Inventory  or Equipment is
moved  to such  new  location,  so  long as such  new  location  is  within  the
continental  United  States,  and so  long  as,  at the  time  of  such  written
notification,  Companies  provide any financing  statements  or fixture  filings
necessary to perfect and continue  perfected  Foothill's  security  interests in
such assets and also provide to Foothill a Collateral Access Agreement.

         6.13. Compliance with Laws.

         Comply  with  the   requirements   of  all  applicable   laws,   rules,
regulations, and orders of any governmental authority,  including the Fair Labor
Standards Act and the Americans With  Disabilities  Act, other than laws, rules,
regulations,  and orders the non-compliance  with which,  individually or in the
aggregate,  would  not have and  could  not  reasonably  be  expected  to have a
Material Adverse Change.

         6.14. Employee Benefits.

         (a)  Promptly,  and in any event  within  10  Business  Days  after any
Company  or any of its  Subsidiaries  knows or has  reason to know that an ERISA
Event has  occurred  that  reasonably  could be expected to result in a Material
Adverse Change,  deliver a written  statement of the chief financial  officer of
such Company describing such ERISA Event and any action that is being taken with
respect thereto by such Company, any such Subsidiary or ERISA Affiliate, and any
action  taken or  threatened  by the IRS,  Department  of Labor,  or PBGC.  Such
Company or such  Subsidiary,  as  applicable,  shall be deemed to know all facts
known by the  administrator of any Benefit Plan of which it is the plan sponsor,
shall promptly, and in any event within 3 Business Days after the filing thereof
with the IRS,  deliver a copy of each funding  waiver request filed with respect
to any Benefit Plan and all communications  received by such Company, any of its
Subsidiaries or, to the knowledge of Companies, any ERISA Affiliate with respect
to such  request,  and shall  promptly,  and in any event within 3 Business Days
after receipt by such Company,  any of its  Subsidiaries or, to the knowledge of
Companies,  any ERISA Affiliate,  of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, deliver copies
of each such notice.
<PAGE>

         (b) Cause to be delivered to Foothill, upon Foothill's request, each of
the  following:  (i) a copy of each  Plan  (or,  where  any such  plan is not in
writing,  complete  description  thereof)  (and  if  applicable,  related  trust
agreements or other funding instruments) and all amendments thereto, all written
interpretations   thereof  and  written  descriptions  thereof  that  have  been
distributed to employees or former employees of any Company or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any  governmental  agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit  Plan;  (v) a listing of all  Multiemployer  Plans,  with the  aggregate
amount  of the  most  recent  annual  contributions  required  to be made by any
Company or any ERISA  Affiliate  to each such plan and copies of the  collective
bargaining  agreements  requiring such contributions;  (vi) any information that
has been  provided to any Company or any ERISA  Affiliate  regarding  withdrawal
liability under any  Multiemployer  Plan; and (vii) the aggregate  amount of the
most  recent  annual  payments  made to former  employees  of any Company or its
Subsidiaries under any Retiree Health Plan. 

         6.15. Leases.

         Pay when due all rents and other  amounts  payable  under any leases to
which any Company is a party or by which any Company's properties and assets are
bound,  unless such  payments  are the subject of a  Permitted  Protest.  To the
extent that any  Company  fails  timely to make  payment of such rents and other
amounts  payable when due under its leases,  Foothill shall be entitled,  in its
discretion,  to reserve  an amount  equal to such  unpaid  amounts  against  the
Borrowing Base.

7.   NEGATIVE COVENANTS.

         Each Company covenants and agrees that, so long as any credit hereunder
shall be  available  and until  full and final  payment of the  Obligations,  no
Company will do any of the following without Foothill's prior written consent:

         7.1. Indebtedness.

         Create,  incur,  assume,  permit,  guarantee,  or  otherwise  become or
remain, directly or indirectly, liable with respect to any Indebtedness, except:
<PAGE>

         (a)   Indebtedness   evidenced  by  this   Agreement,   together   with
Indebtedness  to  issuers  of  letters  of credit  that are the  subject  of L/C
Guarantees;

         (b) Indebtedness set forth on Schedule 7.1; 

         (c) Indebtedness secured by Permitted Liens; and

         (d)  refinancings,  renewals,  or extensions of Indebtedness  permitted
under clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens  associated  therewith) so long as: (i) the terms and conditions
of such  refinancings,  renewals,  or  extensions do not  materially  impair the
prospects  of  repayment of the  Obligations  by any Company,  (ii) the net cash
proceeds  of such  refinancings,  renewals,  or  extensions  do not result in an
increase in the aggregate  principal  amount of the  Indebtedness so refinanced,
renewed,  or  extended,  (iii)  such  refinancings,   renewals,  refundings,  or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced,  renewed,  or extended,  and (iv) to the extent that
Indebtedness  that is  refinanced  was  subordinated  in right of payment to the
Obligations,  then the  subordination  terms and  conditions of the  refinancing
Indebtedness  must be at least as favorable to Foothill as those  applicable  to
the refinanced Indebtedness. 

         7.2. Liens.

         Create, incur, assume, or permit to exist, directly or indirectly,  any
Lien on or with respect to any of its property or assets,  of any kind,  whether
now owned or hereafter acquired, or any income or profits therefrom,  except for
Permitted Liens (including Liens that are replacements of Permitted Liens to the
extent that the original  Indebtedness is refinanced under Section 7.1(d) and so
long as the  replacement  Liens only  encumber  those  assets or  property  that
secured the original Indebtedness).

         7.3. Restrictions on Fundamental Changes.

         Enter   into   any   merger,    consolidation,    reorganization,    or
recapitalization,  or reclassify  its capital stock,  or liquidate,  wind up, or
dissolve itself (or suffer any  liquidation or  dissolution),  or convey,  sell,
assign, lease, transfer, or otherwise dispose of, in one transaction or a series
of transactions, all or any substantial part of its property or assets.
<PAGE>

         7.4. Disposal of Assets.

         Sell,  lease,  assign,  transfer,  or  otherwise  dispose of any of any
Company's  properties  or assets  other than (i) sales of Inventory to buyers in
the ordinary course of such Company's  business as currently  conducted and (ii)
so long as no Event of  Default  exists  or would be  caused  thereby,  sales of
obsolete or unuseful  Equipment in the aggregate amount not to exceed $50,000 in
any fiscal year.

         7.5. Change Name.

         Change any  Company's  name,  FEIN,  corporate  structure  (within  the
meaning of Section 9402(7) of the Code), or identity,  or add any new fictitious
name.

         7.6. Guarantee.

         Except as described on Schedule 7.6,  guarantee or otherwise  become in
any way liable with respect to the  obligations  of any third  Person  except by
endorsement  of  instruments or items of payment for deposit to the account of a
Borrower or which are transmitted or turned over to Foothill.

         7.7. Nature of Business.

         Make any change in the principal nature of any Company's business.

         7.8. Prepayments and Amendments.

         (a)  Except in  connection  with a  refinancing  permitted  by  Section
7.1(d),  prepay,  redeem,  retire,  defease,  purchase, or otherwise acquire any
Indebtedness owing to any third Person, other than the Obligations in accordance
with this Agreement, and

         (b) Directly or indirectly,  amend, modify, alter,  increase, or change
any  of  the  terms  or  conditions  of  any  agreement,  instrument,  document,
indenture,  or other writing  evidencing or  concerning  Indebtedness  permitted
under Sections 7.1(b), (c) or (d). 

         7.9. Change of Control.

         Cause,  permit,  or  suffer,  directly  or  indirectly,  any  Change of
Control.
<PAGE>

         7.10. Consignments; New Chassis Supplier Agreements.

         Consign any Inventory or sell any  Inventory on bill and hold,  sale or
return,  sale on  approval,  or other  conditional  terms of sale;  or commingle
consigned chassis and chassis owned by a Borrower; or enter into any arrangement
to acquire  chassis on consignment  unless the consignor  thereof enters into an
intercreditor agreement with Foothill satisfactory to Foothill.

         7.11. Distributions.

         Make any distribution or declare or pay any dividends (in cash or other
property, other than capital stock) on, or purchase,  acquire, redeem, or retire
any of any  Company's  capital  stock,  of any class,  whether now or  hereafter
outstanding.

         7.12. Accounting Methods.

         Modify or change its method of  accounting  or enter into,  modify,  or
terminate any agreement  currently  existing,  or at any time hereafter  entered
into with any third party  accounting firm or service bureau for the preparation
or storage of any Company's  accounting  records without said accounting firm or
service bureau agreeing to provide Foothill information regarding the Collateral
or such Company's financial condition. Each Company waives the right to assert a
confidential  relationship,  if any,  it may have  with any  accounting  firm or
service bureau in connection with any information requested by Foothill pursuant
to or in accordance  with this  Agreement,  and agrees that Foothill may contact
directly  any such  accounting  firm or service  bureau in order to obtain  such
information.

         7.13. Investments.

         Directly  or  indirectly  make,   acquire,  or  incur  any  liabilities
(including contingent obligations) for or in connection with (a) the acquisition
of the securities  (whether debt or equity) of, or other interests in, a Person,
(b) loans,  advances,  capital  contributions,  or  transfers  of  property to a
Person,  or (c) the acquisition of all or substantially all of the properties or
assets  of a Person;  provided,  that so long as no Event of  Default  exists or
would be  caused  thereby,  Companies  may make  loans to  Tecstar,  Inc.  in an
aggregate  principal amount  outstanding not to exceed $2,000,000 at any time so
long as such loans are  evidenced by one or more  promissory  notes  assigned to
Foothill.

         7.14. Transactions with Affiliates.

         Except as described on Schedule 7.14, directly or indirectly enter into
or permit to exist any material  transaction  with any  Affiliate of any Company
except  for  transactions  that are in the  ordinary  course  of such  Company's
business,  upon fair and reasonable terms, that are fully disclosed to Foothill,
and that are no less  favorable  to such  Company  than would be  obtained in an
arm's length transaction with a non-Affiliate.
<PAGE>

         7.15. Suspension.

         Suspend or go out of a substantial portion of its business.

         7.16. Compensation.

         Increase  the  annual  fee or  per-meeting  fees paid to  directors  of
Companies  during any fiscal year by more than 15% over the prior  fiscal  year;
pay or accrue total cash  compensation,  during any fiscal year, to officers and
senior  management  employees of  Companies in an aggregate  amount in excess of
115% of that  paid or  accrued  in the prior  fiscal  year;  provided,  that the
foregoing shall not prohibit  Companies from employing  additional  officers and
senior  management at a compensation  level comparable for that type of position
in the industry.

         7.17. Use of Proceeds.

         Use the proceeds of the Advances and the Term Loan made  hereunder  for
any  purpose  other  than  (i) on the  Closing  Date,  (y) to  repay in full the
outstanding principal,  accrued interest, and accrued fees and expenses owing to
Existing Lenders,  and (z) to pay  transactional  costs and expenses incurred in
connection with this Agreement,  and (ii) thereafter,  consistent with the terms
and conditions hereof, for its lawful and permitted corporate purposes.

         7.18.  Change in  Location of Chief  Executive  Office;  Inventory  and
Equipment with Bailees.

         Relocate its chief executive office to a new location without providing
30 days prior  written  notification  thereof to Foothill and so long as, at the
time of such written notification, Borrowers provide any financing statements or
fixture filings necessary to perfect and continue perfected  Foothill's security
interests  and also  provides to Foothill a  Collateral  Access  Agreement  with
respect to such new location.  The Inventory and Equipment shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party without
Foothill's prior written consent.

         7.19. No Prohibited Transactions Under ERISA.

         Directly or indirectly:

         (a) engage,  or permit any Subsidiary of any Company to engage,  in any
prohibited  transaction  which is reasonably likely to result in a civil penalty
or excise tax  described in Sections 406 of ERISA or 4975 of the IRC for which a
statutory or class  exemption is not  available or a private  exemption  has not
been previously obtained from the Department of Labor;
<PAGE>

         (b) permit to exist with  respect to any Benefit  Plan any  accumulated
funding  deficiency  (as defined in  Sections  302 of ERISA and 412 of the IRC),
whether or not  waived;  

         (c) fail,  or permit any  Subsidiary  of any  Company  to fail,  to pay
timely required  contributions  or annual  installments  due with respect to any
waived funding deficiency to any Benefit Plan;

         (d)  terminate,  or permit any  Subsidiary of any Company to terminate,
any Benefit Plan where such event would result in any liability of such Company,
any of its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;

         (e) fail, or permit any  Subsidiary of any Company to fail, to make any
required contribution or payment to any Multiemployer Plan;

         (f) fail,  or permit any  Subsidiary of any Company to fail, to pay any
required  installment or any other payment required under Section 412 of the IRC
on or before the due date for such installment or other payment;

         (g) amend,  or permit any  Subsidiary  of any Company to amend,  a Plan
resulting  in an increase in current  liability  for the plan year such that any
Company,  any  Subsidiary  of any Company or any ERISA  Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC; or

         (h) withdraw, or permit any Subsidiary of any Company to withdraw, from
any  Multiemployer  Plan where such withdrawal is reasonably likely to result in
any liability of any such entity under Title IV of ERISA; which, individually or
in the  aggregate,  results in or  reasonably  would be  expected to result in a
claim against or liability of any Company,  any of its Subsidiaries or any ERISA
Affiliate in excess of $100,000.
<PAGE>

         7.20. Financial Covenants.

         Fail to maintain:

         (a)  Tangible  Net Worth.  Tangible  Net Worth of at least (i) negative
$3,200,000 as of the last day of the fiscal quarter ending on the Sunday closest
to December 31, 1998, (ii) negative  $3,200,000 as of the last day of the fiscal
quarter ending on the Sunday closest to March 31, 1999, (iii) negative  $350,000
as of the last day of the fiscal  quarter  ending on the Sunday  closest to June
30, 1999,  and (iv) $700,000 as of the last day of the fiscal  quarter ending on
the Sunday  closest to September 30, 1999.  For each fiscal quarter ending after
the Sunday closest to September 30, 1999,  Companies shall maintain Tangible Net
Worth at a level to be  determined  by  Foothill,  which  level will be based on
Companies'  projections  (but in no event will Tangible Net Worth as of the last
day of any such fiscal quarter be less than $700,000);

         (b) EBITDA.  EBITDA of at least (i) negative  $2,400,000 for the fiscal
quarter ending on the Sunday closest to December 31, 1998; (ii) $362,000 for the
fiscal quarter ending on the Sunday closest to March 31, 1999;  (iii) $1,518,000
for the fiscal  quarter  ending on the Sunday closest to June 30, 1999; and (iv)
$410,000 for the fiscal  quarter  ending on the Sunday  closest to September 30,
1999.  For each fiscal  quarter ending after the Sunday closest to September 30,
1999,  Companies  shall maintain EBITDA at a level to be determined by Foothill,
which  level  will be based on  Companies'  projections  (but in no event  shall
EBITDA for any fiscal quarter be less than the level of EBITDA  required for the
corresponding fiscal quarter in the immediate preceding fiscal year).  Companies
agree to deliver  to  Foothill  projections  for each  fiscal  year prior to the
beginning  of such  fiscal  year  and  such  projections  shall  be in form  and
substance acceptable to Foothill.

         7.21. Capital Expenditures.

         Make capital expenditures in any fiscal year in excess of $500,000.

8.   EVENTS OF DEFAULT.

         Any one or more of the  following  events shall  constitute an event of
default (each, an "Event of Default") under this Agreement:

         8.1. If any Company  fails to pay when due and payable or when declared
due and payable, any portion of the Obligations (whether of principal,  interest
(including any interest  which,  but for the provisions of the Bankruptcy  Code,
would  have  accrued  on  such   amounts),   fees  and  charges  due   Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);
<PAGE>

         8.2. (a) If a Company fails or neglects to perform, keep or observe any
term,  provision,  condition,  covenant or  agreement  contained in Sections 6.1
(Accounting  System),  6.2 (Collateral  Reporting),  6.3 (Financial  Statements,
Reports,  Certificates),  6.4 (Tax  Returns),  6.7  (Title  to  Equipment),  6.8
(Maintenance  of Equipment),  6.12 (Location of Inventory and  Equipment),  6.13
(Compliance  with  Laws),  6.14  (Employee  Benefits)  or 6.15  (Leases) of this
Agreement and such failure  continues for a period of 5 Business Days; or (b) if
a Company or any other  Obligor  fails or neglects to perform,  keep, or observe
any other term,  provision,  condition,  covenant or agreement contained in this
Agreement,  or in any of the other Loan Documents;  in each case, other than any
such term, provision,  condition,  covenant, or agreement that is the subject of
another provision of this Section 8, in which event such other provision of this
Section 8 shall govern;  provided,  that during any period of time that any such
failure  or  neglect of a Company  or such  other  Obligor  referred  to in this
paragraph exists, even if such failure or neglect is not yet an Event of Default
by virtue of the existence of a grace or cure period or the pre-condition of the
giving of a notice,  Foothill  shall not be required  during such period to make
Advances to Borrowers.  

         8.3. If there is a Material Adverse Change;

         8.4. If any material  portion of any Company's  properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person;

         8.5. If an Insolvency Proceeding is commenced by any Company;

         8.6. If an Insolvency  Proceeding is commenced  against any Company and
any of the following  events occur:  (a) any Company consents to the institution
of the  Insolvency  Proceeding  against  it;  (b) the  petition  commencing  the
Insolvency  Proceeding is not timely  controverted;  (c) the petition commencing
the Insolvency  Proceeding is not dismissed  within 60 calendar days of the date
of the filing  thereof;  provided,  however,  that,  during the pendency of such
period, Foothill shall be relieved of its obligation to extend credit hereunder;
(d) an interim  trustee is appointed to take  possession of all or a substantial
portion of the  properties  or assets of, or to operate  all or any  substantial
portion of the business  of, any Company;  or (e) an order for relief shall have
been issued or entered therein;

         8.7. If any Company is enjoined, restrained, or in any way prevented by
court order from  continuing to conduct all or any material part of its business
affairs;

         8.8. If a notice of Lien,  levy,  or assessment is filed of record with
respect  to any of any  Company's  properties  or  assets by the  United  States
Government,  or any department,  agency, or instrumentality  thereof,  or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any  time  hereafter  to any one or more of  such  entities  becomes  a Lien,
whether choate or otherwise,  upon any of any Company's properties or assets and
the same is not paid on the payment date thereof;
<PAGE>

         8.9. If a judgment  or other claim in excess of $50,000  becomes a Lien
or encumbrance upon any material portion of any Company's properties or assets;

         8.10. If there is a default under any of the agreements between General
Motors  Acceptance  Corporation  or any of its  Affiliates,  Ford  Motor  Credit
Company or any of its Affiliates or Chrysler Financial Company, L.L.C. or any of
its Affiliates, on the one hand, and any of the Companies, on the other hand; or
if there is a  default  under  any  Intercreditor  Agreement;  or if there is an
"Event of Default" as defined in the Tecstar  Loan  Agreement;  or if there is a
default under any other material  agreement to which any Company is a party with
one or more third  Persons and such default (a) occurs at the final  maturity of
the obligations  thereunder,  or (b) results in a right by such third Person(s),
irrespective of whether  exercised,  to accelerate the maturity of any Company's
obligations thereunder; or if any of the Intercreditor Agreements is terminated;


         8.11. If any Company makes any payment on account of Indebtedness  that
has been  contractually  subordinated  in right of payment to the payment of the
Obligations,  except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;

         8.12. If any  warranty,  representation,  statement,  or report made to
Foothill  by any Company or any  officer,  employee,  agent,  or director of any
Company,  is untrue or misleading  in any material  respect when made, or if any
such warranty or representation is withdrawn; or

         8.13. If the  obligation  of any guarantor  under its guaranty or other
third Person under any Loan  Document is limited or  terminated  by operation of
law or by the guarantor or other third Person thereunder,  or any such guarantor
or other third Person becomes the subject of an Insolvency Proceeding.


9.   FOOTHILL'S RIGHTS AND REMEDIES.

         9.1. Rights and Remedies.

         Upon  the  occurrence,  and  during  the  continuation,  of an Event of
Default  Foothill  may, at its  election,  without  notice of its  election  and
without demand, do any one or more of the following, all of which are authorized
by Companies:

         (a) Declare all Obligations,  whether  evidenced by this Agreement,  by
any of the other Loan Documents, or otherwise, immediately due and payable;
<PAGE>

         (b) Cease advancing money or extending  credit to or for the benefit of
Companies  under this Agreement,  under any of the Loan Documents,  or under any
other agreement  between any Company and Foothill;  

         (c) Terminate  this Agreement and any of the other Loan Documents as to
any future liability or obligation of Foothill, but without affecting Foothill's
rights and  security  interests  in the  Collateral  and without  affecting  the
Obligations;

         (d) Settle or adjust  disputes and claims directly with Account Debtors
for amounts  and upon terms  which  Foothill  considers  advisable,  and in such
cases,  Foothill will credit  Borrowers'  Loan Account with only the net amounts
received by Foothill in payment of such disputed  Accounts  after  deducting all
Foothill Expenses incurred or expended in connection therewith;

         (e) Cause each  Company  to hold all  returned  Inventory  in trust for
Foothill,  segregate  all  returned  Inventory  from all other  property of such
Company or in such Company's  possession and  conspicuously  label said returned
Inventory as the property of Foothill;

         (f) Without notice to or demand upon any Company or any guarantor, make
such payments and do such acts as Foothill considers  necessary or reasonable to
protect  its  security  interests  in the  Collateral.  Each  Company  agrees to
assemble the Personal Property  Collateral if Foothill so requires,  and to make
the  Personal  Property  Collateral   available  to  Foothill  as  Foothill  may
designate.  Each Company  authorizes  Foothill to enter the  premises  where the
Personal Property  Collateral is located, to take and maintain possession of the
Personal Property Collateral, or any part of it, and to pay, purchase,  contest,
or compromise any encumbrance,  charge, or Lien that in Foothill's determination
appears to conflict with its security interests and to pay all expenses incurred
in connection  therewith.  With respect to any of each Company's owned or leased
premises, each Company hereby grants Foothill a license to enter into possession
of such premises and to occupy the same,  without  charge,  in order to exercise
any of Foothill's  rights or remedies  provided  herein,  at law, in equity,  or
otherwise;

         (g) Without notice to any Company (such notice being expressly waived),
and without  constituting  a retention of any collateral in  satisfaction  of an
obligation  (within the meaning of Section 9505 of the Code),  set off and apply
to the  Obligations any and all (i) balances and deposits of any Company held by
Foothill  (including  any amounts  received in the  Lockbox  Accounts),  or (ii)
indebtedness  at any time owing to or for the credit or the account of Borrowers
held by Foothill;

         (h) Hold, as cash collateral,  any and all balances and deposits of any
Company held by Foothill,  and any amounts received in the Lockbox Accounts,  to
secure the full and final repayment of all of the Obligations;
<PAGE>

         (i) Ship, reclaim,  recover, store, finish,  maintain,  repair, prepare
for sale,  advertise for sale, and sell (in the manner  provided for herein) the
Personal  Property  Collateral.  Foothill  is hereby  granted a license or other
right to use, without charge, each Company's labels, patents, copyrights, rights
of use of any name, trade secrets, trade names,  trademarks,  service marks, and
advertising  matter,  or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property  Collateral and any Company's rights under all
licenses and all franchise agreements shall inure to Foothill's benefit;

         (j) Sell the Personal Property Collateral at either a public or private
sale, or both, by way of one or more contracts or  transactions,  for cash or on
terms, in such manner and at such places  (including any Company's  premises) as
Foothill  determines is  commercially  reasonable.  It is not necessary that the
Personal Property Collateral be present at any such sale;

         (k)  Foothill  shall give  notice of the  disposition  of the  Personal
Property Collateral as follows:

                  (i)  Foothill  shall  give  Companies  and  each  holder  of a
         security  interest in the Personal  Property  Collateral  who has filed
         with Foothill a written request for notice,  a notice in writing of the
         time and place of  public  sale,  or, if the sale is a private  sale or
         some other  disposition  other than a public  sale is to be made of the
         Personal  Property  Collateral,  then the time on or  after  which  the
         private sale or other disposition is to be made;

                  (ii) The  notice  shall be  personally  delivered  or  mailed,
         postage  prepaid,  to  Companies as provided in Section 12, at least 10
         days before the date fixed for the sale, or at least 10 days before the
         date on or after which the private sale or other  disposition  is to be
         made;  no  notice  needs to be given  prior to the  disposition  of any
         portion of the  Personal  Property  Collateral  that is  perishable  or
         threatens to decline speedily in value or that is of a type customarily
         sold on a recognized  market.  Notice to Persons  other than  Companies
         claiming an interest in the Personal Property  Collateral shall be sent
         to such addresses as they have furnished to Foothill; (iii) If the sale
         is to be a public sale, Foothill also shall give notice of the time and
         place by  publishing a notice one time at least 10 days before the date
         of the sale in a  newspaper  of  general  circulation  in the county in
         which the sale is to be held;  
<PAGE>

         (l) Foothill may credit bid and purchase at any public sale; and

         (m) Any  deficiency  that  exists  after  disposition  of the  Personal
Property Collateral as provided above will be paid immediately by Companies. Any
excess will be  returned,  without  interest  and subject to the rights of third
Persons, by Foothill to Companies. 

         9.2. Remedies Cumulative.

         Foothill's   rights  and  remedies  under  this  Agreement,   the  Loan
Documents, and all other agreements shall be cumulative. Foothill shall have all
other rights and remedies not inconsistent  herewith as provided under the Code,
by law, or in equity.  No  exercise by Foothill of one right or remedy  shall be
deemed an election,  and no waiver by Foothill of any Event of Default  shall be
deemed a  continuing  waiver.  No delay by Foothill  shall  constitute a waiver,
election, or acquiescence by it.

10.  TAXES AND EXPENSES.

         If any Company  fails to pay any monies  (whether  taxes,  assessments,
insurance  premiums,  or, in the case of leased  properties or assets,  rents or
other amounts payable under such leases) due to third Persons,  or fails to make
any  deposits  or furnish  any  required  proof of payment  or  deposit,  all as
required  under the terms of this  Agreement,  then, to the extent that Foothill
determines that such failure by such Company could result in a Material  Adverse
Change, in its discretion and without prior notice to any Company,  Foothill may
do any or all of the  following:  (a)  make  payment  of the  same  or any  part
thereof;  (b) set up such reserves in Borrowers'  Loan Account as Foothill deems
necessary to protect Foothill from the exposure created by such failure;  or (c)
obtain and maintain  insurance  policies of the type  described in Section 6.10,
and take any action with respect to such policies as Foothill deems prudent. Any
such amounts  paid by Foothill  shall  constitute  Foothill  Expenses.  Any such
payments made by Foothill  shall not constitute an agreement by Foothill to make
similar  payments  in the future or a waiver by Foothill of any Event of Default
under this  Agreement.  Foothill need not inquire as to, or contest the validity
of, any such expense,  tax, or Lien and the receipt of the usual official notice
for the payment  thereof shall be conclusive  evidence that the same was validly
due and owing.

11.  WAIVERS; INDEMNIFICATION.

         11.1. Demand; Protest; etc.

         Each  Company  waives  demand,  protest,  notice of protest,  notice of
default or dishonor,  notice of payment and nonpayment,  nonpayment at maturity,
release, compromise,  settlement,  extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Foothill on which
such Company may in any way be liable.

         11.2. Foothill's Liability for Collateral.

         So long as  Foothill  complies  with  its  obligations,  if any,  under
Section 9207 of the Code,  Foothill  shall not in any way or manner be liable or
responsible  for: (a) the safekeeping of the Collateral;  (b) any loss or damage
thereto  occurring or arising in any manner or fashion  from any cause;  (c) any
diminution  in the value  thereof;  or (d) any act or  default  of any  carrier,
warehouseman,  bailee,  forwarding  agency,  or other Person.  All risk of loss,
damage, or destruction of the Collateral shall be borne by Companies.
<PAGE>

         11.3. Indemnification.

         Each Company shall pay,  indemnify,  defend,  and hold  Foothill,  each
Participant  and  each  of  their  respective  officers,  directors,  employees,
counsel,  agents, and attorneys-in-fact (each, an "Indemnified Person") harmless
(to the fullest  extent  permitted  by law) from and against any and all claims,
demands,  suits,  actions,  investigations,  proceedings,  and damages,  and all
reasonable  attorneys  fees and  disbursements  and  other  costs  and  expenses
actually  incurred in  connection  therewith  (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against,  imposed
upon, or incurred by any of them in connection with or as a result of or related
to the execution, delivery, enforcement, performance, and administration of this
Agreement and any other Loan Documents or the transactions  contemplated herein,
and with respect to any investigation, litigation, or proceeding related to this
Agreement,  any other Loan  Document,  or the use of the  proceeds of the credit
provided  hereunder  (irrespective of whether any Indemnified  Person is a party
thereto),  or any act,  omission,  event or  circumstance  in any manner related
thereto (all the foregoing,  collectively,  the "Indemnified  Liabilities").  No
Company shall have any obligation to any  Indemnified  Person under this Section
11.3  with  respect  to any  Indemnified  Liability  that a court  of  competent
jurisdiction  finally  determines to have resulted from the gross  negligence or
willful misconduct of such Indemnified  Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations.
<PAGE>

12.  NOTICES.

         Unless otherwise provided in this Agreement,  all notices or demands by
any party  relating to this  Agreement  or any other Loan  Document  shall be in
writing and (except for financial  statements and other informational  documents
which may be sent by  first-class  mail,  postage  prepaid)  shall be personally
delivered or sent by  registered  or certified  mail  (postage  prepaid,  return
receipt requested), overnight courier, or facsimile to Companies or to Foothill,
as the case may be, at its address set forth below:

                   If to a Company:     STARCRAFT CORPORATION
                                        2703 College Avenue
                                        Goshen, Indiana  46526
                                        Attn:  Michael H. Schoeffler
                                        Fax No. (219) 534-9524
                   with copies to:      BARNES & THORNBURG
                                        121 West Franklin Street
                                        Suite 200
                                        Elkhart, Indiana  46516
                                        Attn:  Rand W. Nilsson
                                        Fax No. (219) 296-2535
                   If to Foothill:      FOOTHILL CAPITAL CORPORATION
                                        11111 Santa Monica Boulevard
                                        Suite 1500
                                        Los Angeles, California  90025-3333
                                        Attn:  Business Finance Division Manager
                                        Fax No. (310) 478-9788
                   with copies to:      GOLDBERG, KOHN, BELL, BLACK,
                                            ROSENBLOOM & MORITZ, LTD.
                                        55 East Monroe Street
                                        Suite 3700
                                        Chicago, Illinois  60603
                                        Attn:  Gary Zussman, Esq.
                                        Fax No. (312) 332-2196
<PAGE>

         The parties  hereto may change the address at which they are to receive
notices  hereunder,  by notice in writing in the  foregoing  manner given to the
other.  All notices or demands  sent in  accordance  with this Section 12, other
than notices by Foothill in  connection  with Sections 9504 or 9505 of the Code,
shall be deemed  received on the earlier of the date of actual receipt or 3 days
after the deposit thereof in the mail. Each Company acknowledges and agrees that
notices sent by Foothill in  connection  with  Sections 9504 or 9505 of the Code
shall be deemed sent when  deposited in the mail or  personally  delivered,  or,
where permitted by law, transmitted  facsimile or other similar method set forth
above.

13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

         THE VALIDITY OF THIS  AGREEMENT  AND THE OTHER LOAN  DOCUMENTS  (UNLESS
EXPRESSLY   PROVIDED  TO  THE  CONTRARY  IN  AN  ANOTHER  LOAN  DOCUMENT),   THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING  HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED  UNDER,  GOVERNED
BY, AND  CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF  ILLINOIS.  THE
PARTIES AGREE THAT ALL ACTIONS OR  PROCEEDINGS  ARISING IN CONNECTION  WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS  SHALL BE TRIED AND LITIGATED ONLY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS OR, AT
THE SOLE OPTION OF FOOTHILL, IN ANY OTHER COURT IN WHICH FOOTHILL SHALL INITIATE
LEGAL OR EQUITABLE  PROCEEDINGS AND WHICH HAS SUBJECT MATTER  JURISDICTION  OVER
THE MATTER IN  CONTROVERSY.  EACH OF EACH  COMPANY AND FOOTHILL  WAIVES,  TO THE
EXTENT  PERMITTED  UNDER  APPLICABLE  LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE  OF FORUM  NON  CONVENIENS  OR TO  OBJECT  TO VENUE TO THE  EXTENT  ANY
PROCEEDING IS BROUGHT IN  ACCORDANCE  WITH THIS SECTION 13. EACH OF EACH COMPANY
AND FOOTHILL HEREBY WAIVE THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
OF THE  TRANSACTIONS  CONTEMPLATED  THEREIN,  INCLUDING  CONTRACT  CLAIMS,  TORT
CLAIMS,  BREACH OF DUTY CLAIMS,  AND ALL OTHER  COMMON LAW OR STATUTORY  CLAIMS.
EACH OF EACH COMPANY AND FOOTHILL  REPRESENTS  THAT IT HAS REVIEWED  THIS WAIVER
AND EACH  KNOWINGLY  AND  VOLUNTARILY  WAIVES  ITS JURY TRIAL  RIGHTS  FOLLOWING
CONSULTATION  WITH LEGAL  COUNSEL.  IN THE EVENT OF  LITIGATION,  A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
<PAGE>

14.  DESTRUCTION OF BORROWERS' DOCUMENTS.

         All documents,  schedules,  invoices, agings, or other papers delivered
to Foothill may be  destroyed  or  otherwise  disposed of by Foothill 4 calendar
months after they are  delivered  to or received by  Foothill,  unless a Company
requests, in writing, the return of said documents,  schedules,  or other papers
and makes arrangements, at such Company's expense, for their return.

15.  GENERAL PROVISIONS.

         15.1. Effectiveness.

         This Agreement  shall be binding and deemed  effective when executed by
each Company and Foothill.

         15.2. Successors and Assigns.

         This  Agreement  shall bind and inure to the benefit of the  respective
successors  and  assigns  of each of the  parties;  provided,  however,  that no
Company  may assign this  Agreement  or any rights or duties  hereunder  without
Foothill's  prior  written  consent  and  any  prohibited  assignment  shall  be
absolutely  void.  No consent to an  assignment  by Foothill  shall  release any
Company from its Obligations.  Foothill may assign this Agreement and its rights
and duties  hereunder  and no consent or  approval by any Company is required in
connection  with any  such  assignment.  Foothill  reserves  the  right to sell,
assign,  transfer,  negotiate, or grant participations in all or any part of, or
any interest in Foothill's rights and benefits hereunder. In connection with any
such  assignment  or  participation,  Foothill may disclose  all  documents  and
information  which Foothill now or hereafter may have relating to any Company or
any  Company's  business.  To the extent  that  Foothill  assigns its rights and
obligations  hereunder to a third Person,  Foothill thereafter shall be released
from such assigned obligations to Companies.

         15.3. Section Headings.

         Headings and numbers have been set forth herein for  convenience  only.
Unless the contrary is compelled  by the context,  everything  contained in each
Section applies equally to this entire Agreement.
<PAGE>

         15.4. Interpretation.

         Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against  Foothill or Companies,  whether under any rule of
construction or otherwise.  On the contrary, this Agreement has been reviewed by
all parties and shall be  construed  and  interpreted  according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.

         15.5. Severability of Provisions.

         Each  provision of this  Agreement  shall be severable from every other
provision  of  this  Agreement  for  the  purpose  of   determining   the  legal
enforceability of any specific provision.

         15.6. Amendments in Writing.

         This Agreement can only be amended by a writing signed by both Foothill
and Companies.

         15.7. Counterparts; Facsimile Execution.

         This  Agreement  may be executed in any number of  counterparts  and by
different  parties on separate  counterparts,  each of which,  when executed and
delivered,  shall be deemed to be an  original,  and all of  which,  when  taken
together,  shall  constitute  but one and the  same  Agreement.  Delivery  of an
executed  counterpart  of this  Agreement  by  facsimile  shall  be  equally  as
effective as delivery of an original executed counterpart of this Agreement. Any
party  delivering an executed  counterpart  of this  Agreement by facsimile also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver  an  original  executed  counterpart  shall not affect the  validity,
enforceability, and binding effect of this Agreement.

         15.8. Revival and Reinstatement of Obligations.

         If the  incurrence  or payment of the  Obligations  by Companies or any
guarantor of the  Obligations  or the transfer by either or both of such parties
to Foothill of any  property  of either or both of such  parties  should for any
reason  subsequently  be  declared  to be void or  voidable  under  any state or
federal  law  relating  to  creditors'  rights,   including  provisions  of  the
Bankruptcy  Code  relating to  fraudulent  conveyances,  preferences,  and other
voidable   or   recoverable   payments  of  money  or   transfers   of  property
(collectively,  a "Voidable Transfer"),  and if Foothill is required to repay or
restore,  in whole or in part,  any such Voidable  Transfer,  or elects to do so
upon the  reasonable  advice  of its  counsel,  then,  as to any  such  Voidable
Transfer,  or the amount thereof that Foothill is required or elects to repay or
restore,  and as to all  reasonable  costs,  expenses,  and  attorneys  fees  of
Foothill  related  thereto,   the  liability  of  Borrowers  or  such  guarantor
automatically  shall be revived,  reinstated,  and  restored  and shall exist as
though such Voidable Transfer had never been made.
<PAGE>

         15.9. Integration.

         This Agreement,  together with the other Loan  Documents,  reflects the
entire   understanding   of  the  parties  with  respect  to  the   transactions
contemplated  hereby and shall not be  contradicted  or  qualified  by any other
agreement, oral or written, before the date hereof.

         15.10. Joint and Several Liability.

         (a) The obligation of the Borrowers  hereunder and under the other Loan
Documents are joint and several.

         (b) The  liability  of each  Borrower  hereunder  and  under  the  Loan
Documents shall be absolute,  unconditional and irrevocable irrespective of: 

                  (i) any lack of validity,  legality or  enforceability of this
         Agreement, or any other Loan Document as to any Borrower;

                  (ii) the  failure  of  Foothill  (A) to  enforce  any right or
         remedy  against  any  Borrower  or  any  other  Person  (including  any
         guarantor or any Borrower) under the provisions of this Agreement,  any
         other Loan Documents or otherwise, or

                           (B) to  exercise  any  right or  remedy  against  any
                  guarantor of, or collateral  security any  Obligations;  

                  (iii) any change in the time,  manner or place of payment  of,
         or in any  other  term  of,  all or any of the  Obligations,  or  other
         extension, compromise or renewal of any Obligations;

                  (iv) any reduction,  limitation,  impairment or termination of
         any Obligations  with respect to any Borrower for any reason  including
         any claim of waiver, release, surrender,  alteration or compromise, and
         shall not be subject to (and each  Borrower  hereby waives any right to
         or  claim  of) any  defense  or  setoff,  counterclaim,  recoupment  or
         termination  whatsoever  by  reason  of  the  invalidity,   illegality,
         nongenuineness,  irregularity, compromise,  unenforceability of, or any
         other event or occurrence  affecting,  any Obligations  with respect to
         any  Borrower;  

                  (v)   any   addition,    exchange,   release,   surrender   or
         nonperfection  of any  Collateral,  or any  amendment  to or  waiver or
         release or addition of, or consent to departure from any guaranty, held
         by any Foothill securing any of the Obligations; or

                  (vi) any other circumstance which might otherwise constitute a
         defense  available  to,  or a legal  or  equitable  discharge  of,  any
         Borrower, any surety or any guarantor.
<PAGE>

         Each Borrower  agrees if such  Borrower's  joint and several  liability
hereunder, or if any liens securing such joint and several liability, would, but
for the application of this sentence,  be  unenforceable  under  applicable law,
such  joint  and  several  liability  and each  such  lien  shall  be valid  and
enforceable  to the  maximum  extent that would not cause such joint and several
liability or such lien to be enforceable  under  applicable  law, and such joint
and several  liability and such lien shall be deemed to have been  automatically
amended accordingly at all relevant times.

         To the maximum extent permitted by law, each Borrower hereby waives any
defense  arising by reason of any claim or defense  based  upon an  election  of
remedies by Foothill including any defense based upon an election of remedies by
Foothill.



<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Chicago, Illinois.


                             STARCRAFT AUTOMOTIVE GROUP, INC.,
                             an Indian corporation

                             By /s/ Michael H. Schoeffler
                             --------------------------------------
                             Title   Senior Vice President
                                     ------------------------------

                             NATIONAL MOBILITY CORPORATION,
                             an Indiana corporation

                             By /s/ Michael H. Schoeffler
                             --------------------------------------
                             Title   Senior Vice President
                                     ------------------------------

                             IMPERIAL AUTOMOTIVE GROUP, INC.,
                             an Indiana corporation

                             By /s/ Michael H. Schoeffler
                             --------------------------------------
                             Title   Senior Vice President
                                     ------------------------------

                             STARCRAFT CORPORATION,
                             an Indiana corporation

                             By /s/ Michael H. Schoeffler
                             --------------------------------------
                             Title   President
                                     ------------------------------

                             FOOTHILL CAPITAL CORPORATION,
                             a California corporation

                             By /s/ Rhonda R. Foreman
                             --------------------------------------
                             Title   Senior Vice President
                                     ------------------------------