AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT



                  This  Amended and  Restated  Loan and  Security  Agreement  is
entered into by and between the undersigned Borrowers and the undersigned Lender
in light of the following facts:

                                    RECITALS

                   WHEREAS,  Associated  Concrete  Products,  Inc.  ("Associated
Concrete"),  DeKalb  Concrete  Products,  Inc.  ("DeKalb"),   Dalworth  Concrete
Products,  Inc. ("Dalworth"),  Associated Plastics, Inc. ("Associated Plastics")
and The Surfer  Publications,  Inc.  ("Surfer")  have  entered  into related and
affiliated Loan and Security Agreements with The CIT Group/Credit Finance, Inc.,
each dated as of June 27, 1995 and as subsequently  amended  (collectively,  the
"Original  Loan   Agreements"),   and  certain  other   documents,   guaranties,
instruments and agreements related thereto  (collectively with the Original Loan
Agreements,  the "Original Loan Documents"),  whereby Lender provided collective
credit facilities to the above companies; and

                  WHEREAS,  Lender  is  willing  to  provide  additional  credit
facilities to Associated  Concrete,  DeKalb,  Dalworth and  Associated  Plastics
(collectively, "Borrowers") as more particularly set forth herein; and

                  WHEREAS,  Borrowers  are  executing  this Amended and Restated
Loan and Security  Agreement  jointly and severally as co-borrowers on the terms
and conditions provided herein; and

                  WHEREAS, Surfer and Lender are also entering into an agreement
terminating their Loan and Security Agreement dated as of June 27, 1995; and

                  WHEREAS,  the operations of Borrower are  interrelated and the
financial  success of each Borrower is dependent  upon the financial  success of
each other Borrower; and

                  WHEREAS,  Borrowers have determined that it is in their mutual
best interest and  convenience  to obtain  financing  from Lender on a joint and
several basis; and

                  WHEREAS, Borrowers and Lender do hereby jointly and severally,
individually  and  collectively,  enter into this Amended and Restated  Loan and
Security  Agreement  (this  "Agreement")  concerning  the loans and other credit
accommodations  made or to be made by Lender to  Borrowers in place and stead of
the Original Loan Agreement.

                  NOW, THEREFORE, Borrowers and Lender agree as follows:


                                      -1-
<PAGE>


SECTION 1.                 PARTIES


                  1.1 The  "Borrowers" are the persons,  firms,  corporations or
other  entities  identified as the Borrowers in the foregoing  recitals and with
more  particularity  in Section 10,  jointly  and  severally,  individually  and
collectively, together with their respective successors and assigns.

                   1.2 The "Lender" is The CIT Group/Credit  Finance,  Inc., and
its successors and assigns.

SECTION 2.        LOANS AND OTHER CREDIT ACCOMMODATIONS

                  2.1 Revolving  Loans.  Lender shall,  subject to the terms and
conditions  contained  herein,  make  revolving  loans to Borrowers  ("Revolving
Loans") in amounts  requested by Borrowers  from time to time, but not in excess
of  the  Net  Availability  existing  immediately  prior  to the  making  of the
requested  Revolving  Loan and provided the requested  Revolving  Loan would not
cause the outstanding Obligations to exceed the Maximum Credit.

                           (a) The  "Maximum  Credit"  is set  forth in  Section
         10.1(a) hereof.

                           (b) The "Gross  Availability"  shall be calculated at
         any time as the sum of

                           (i)  the   product   obtained  by   multiplying   the
                   then-outstanding  amount  of  Eligible  Accounts,  net of all
                   taxes, discounts, allowances and credits given or claimed, by
                   the  Eligible  Accounts   Percentage  set  forth  in  Section
                   10.1(b),

                           plus:  (ii) the product  obtained by multiplying  the
                   applicable Eligible Inventory Percentages,  if any, set forth
                   in Section 10.1(b) by the values (as reasonably determined by
                   Lender  based on the  lower of cost or  market)  of  Eligible
                   Inventory,  but the  amount  so added  shall not  exceed  any
                   sublimits set forth in Section 10.1(c),

                   minus:  (iii) any Reserves.

                           (c) The "Net Availability" shall be calculated at any
         time as an amount equal to the Gross  Availability  minus the aggregate
         amount of all then-outstanding Obligations of Borrowers to Lender.

                           (d)  "Eligible  Accounts"  are  accounts  created  by
         Borrowers in the ordinary course of their  respective  businesses which
         are and remain  acceptable  to Lender  for  lending  purposes.  General
         criteria for  Eligible  Accounts are set forth below but may be revised
         from time to time by Lender,  in its  reasonable  credit  judgment,  on
         fifteen (15) days' prior written notice to Borrowers.  Lender shall, in
         general,  deem  accounts to be Eligible  Accounts if: (1) such accounts
         arise  from  bona fide  completed  transactions  and


                                       -2-
<PAGE>


         have not  remained  unpaid  for more than the  number of days after the
         invoice  date or the  number  of days  past due set  forth  in  Section
         10.1(d);  (2) the  amounts  of the  accounts  reported  to  Lender  are
         absolutely   owing  to  Borrowers  and  do  not  arise  from  sales  on
         consignment,  guaranteed sale or other terms under which payment by the
         account  debtors  may be  conditional  or  contingent;  (3) the account
         debtor's  chief  executive  office or  principal  place of  business is
         located  in the United  States or Canada or  payment of the  account is
         fully  supported  by a letter of credit  assigned to Lender and in form
         and substance acceptable to Lender; (4) such accounts do not arise from
         progress  billings  (i.e.,  partial  billings  based on  percentage  of
         completion of construction or other projects), consignments, retainages
         or bill and hold sales (other than bill and hold sales not in excess of
         $200,000  in  the  aggregate   outstanding  at  any  time)  unless  the
         applicable   Borrower   provides  a  bill  and  hold   letter  in  form
         satisfactory to Lender; (5) there are no contra relationships, setoffs,
         counterclaims  or disputes  existing  with respect  thereto and,  where
         Lender deems  appropriate,  it is furnished with a non-offset letter in
         form and substance satisfactory to Lender, and there are no other facts
         existing or threatened  which would impair or delay the  collectability
         of all or any portion  thereof;  (6) the goods giving rise thereto were
         not at the time of the sale subject to any liens except those permitted
         in this  Agreement;  (7) such accounts are not accounts with respect to
         which the  account  debtor or any  officer  or  employee  thereof is an
         officer,  employee  or agent  of or is  affiliated  with any  Borrower,
         directly  or  indirectly,  whether  by  virtue  of  family  membership,
         ownership,  control, management or otherwise; (8) such accounts are not
         accounts with respect to which the account  debtor is the United States
         or any State or political subdivision thereof or any department, agency
         or  instrumentality  of the  United  States,  any  State  or  political
         subdivision,  unless there has been  compliance  with the Assignment of
         Claims  Act or any  similar  State or local  law,  if  applicable;  (9)
         Borrowers  have  delivered  to Lender or Lender's  representative  such
         documents as Lender may have  requested  pursuant to Section 5.8 hereof
         in  connection  with such  accounts  and Lender  shall have  received a
         verification  of  such  account,  satisfactory  to it,  if  sent to the
         account  debtor or any other obligor or any bailee  pursuant to Section
         5.4  hereof;  (10) there are no facts,  existing or  threatened,  which
         might result in any  material  adverse  change in the account  debtor's
         financial condition; (11) such accounts owed by a single account debtor
         or its  affiliates do not represent  more than thirty  percent (30%) of
         all otherwise  Eligible Accounts for Borrowers  (provided that accounts
         excluded from  Eligible  Accounts  solely by reason of this  subsection
         (11) shall  nevertheless be considered  Eligible Accounts to the extent
         of the amount of such  accounts  which does not exceed  thirty  percent
         (30%) of all  otherwise  Eligible  Accounts for  Borrowers);  (12) such
         accounts  are not owed by an account  debtor  whose  accounts  or whose
         affiliates'  accounts  greater than one hundred  twenty (120) days past
         invoice date  comprise more than fifty percent (50%) of the accounts of
         such account  debtor or its  affiliates  owed to  Borrowers;  (13) such
         accounts are owed by account  debtors whose total  indebtedness  to any
         Borrower  does not exceed the amount of any customer  credit  limits as
         established,  and  changed,  from  time to time by  Lender on notice to
         Borrowers (accounts excluded from Eligible Accounts solely by reason of
         this subsection (13) shall nevertheless be considered Eligible Accounts
         to the extent the amount of such accounts does not exceed such customer
         credit  limit);  (14) such accounts



                                      -3-
<PAGE>


         are owed by account debtors deemed creditworthy at all times by Lender;
         and (15) where  applicable,  Borrowers have complied with all mechanics
         lien laws.


                           (e)  "Eligible  Inventory"  is  inventory  owned by a
         Borrower  valued at the lower of cost or  market  which is and  remains
         acceptable to Lender as Lender shall  reasonably  determine for lending
         purposes  and is located at one of the  addresses  set forth in Section
         10.6(d).

                           (f) Lender  shall have a  continuing  right to deduct
         reserves in determining  the Gross  Availability  ("Reserves"),  and to
         increase and decrease  such  Reserves  from time to time, if and to the
         extent  that,  in  Lender's  reasonable  judgment,  such  Reserves  are
         necessary to protect  Lender  against any state of facts which does, or
         would,  with notice or passage of time or both,  constitute an Event of
         Default or have a material  adverse  effect on any  Collateral.  Lender
         may, at its option,  implement  Reserves by designating as ineligible a
         sufficient  amount of accounts or  inventory  which would  otherwise be
         Eligible  Accounts  or  Eligible   Inventory  so  as  to  reduce  Gross
         Availability  by the  amount of the  intended  Reserve.  Promptly  upon
         Lender's actual receipt of information  which it determines  eliminates
         the need for a  particular  Reserve,  Lender  shall  reduce  the  total
         Reserves  accordingly;  provided,  however,  that nothing  herein shall
         affect Lender's right to establish and maintain Reserves as provided in
         the first sentence of this subsection 2.1(f).

                           (g)  Subject  to the  terms  and  conditions  hereof,
         including,  but not limited to, the existence of  sufficient  Gross and
         Net  Availability,  Borrowers agree to borrow amounts from time to time
         such that the aggregate  outstanding  principal amount of all Revolving
         Loans,  Accommodations,  Real Property Term Loans,  Capital Expenditure
         Loans and the Equipment  Loan to Borrowers  shall at all times equal or
         exceed the principal amount set forth in Section 10.1(e) as the Minimum
         Borrowing;  provided,  that the  only  consequence  of a breach  of the
         foregoing  shall be the  required  payment  set forth in the  following
         sentence.  If the average  aggregate  outstanding  principal  amount of
         Revolving  Loans,  Accommodations,  Real Property  Term Loans,  Capital
         Expenditure  Loans and the Equipment Loan to Borrowers for any month is
         less than the Minimum Borrowing,  Borrowers shall jointly and severally
         pay  Lender a fee  equal to the  amount of  interest  that  would  have
         accrued during such month on such difference. Such fee shall be payable
         at the per annum  interest rate provided in Section  10.4(a) and in the
         manner provided herein for the payment of such interest.

                  2.2      Intentionally Deleted.

                  2.3      Accommodations.

                           (a)  Subject  to the terms and  conditions  contained
         herein,  Lender shall issue or cause to be issued, from time to time at
         a  Borrower's  request  and on terms and  conditions  and for  purposes
         satisfactory to Lender, credit accommodations  consisting of



                                      -4-
<PAGE>


         letters  of  credit,   bankers'   acceptances,   merchandise   purchase
         guaranties  or other  guaranties  or  indemnities  for such  Borrower's
         account  (collectively,  "Accommodations").  Any Borrower requesting an
         Accommodation shall execute and perform additional  agreements relating
         to such  Accommodation  in form and  substance  acceptable to Lender as
         Lender may reasonably  determine and the issuer of such  Accommodation,
         all of which shall  supplement the rights and remedies  granted herein.
         Any payments  made by Lender or any  affiliate of Lender in  connection
         with the Accommodations shall constitute  additional Revolving Loans to
         Borrowers.


                           (b) In  addition  to the fees and costs of any issuer
         in connection with issuing or administering  Accommodations,  Borrowers
         shall  pay  monthly  to  Lender  from  the  date  of  issuance  of  any
         Accommodation until termination or payment thereof, on the first day of
         each month for the preceding  month, a charge on the face amount of all
         outstanding  Accommodations  computed  daily at the  rate set  forth in
         Section 10.3(a) (the "Accommodation Charges").

                           (c) No  Accommodation  will be issued unless the full
         amount  of  the  Accommodation  requested,  plus  fees  and  costs  for
         issuance,  is less than the Net Availability existing immediately prior
         to the issuance of the  requested  Accommodation,  or if the  requested
         Accommodation  would cause the sum of the  outstanding  Obligations  to
         exceed  the  Maximum  Credit,  or cause  the sum of the open  amount of
         Accommodations to exceed,  at any time, the Accommodation  sublimit set
         forth in Section 10.3(b).

                           (d) All indebtedness,  liabilities and obligations of
         any sort whatsoever,  however arising, whether present or future, fixed
         or  contingent,  secured or  unsecured,  due or to become due,  paid or
         incurred or  otherwise  arising in  connection  with any  Accommodation
         shall be included in the term  "Obligations"  as defined in Section 4.2
         below, and shall include,  without  limitation,  (i) all amounts due or
         which may become due under such Accommodation; (ii) all amounts charged
         or  chargeable to Borrowers or to Lender by any bank,  other  financial
         institution or  correspondent  bank which opens,  issues or is involved
         with such Accommodation;  (iii) Lender's  Accommodation Charges and all
         fees, costs and other charges of any issuer of such Accommodation;  and
         (iv) all duties,  freight,  taxes, costs,  insurance and all such other
         charges and expenses  which may pertain  directly or  indirectly to any
         Obligations or such Accommodation or to the goods or documents relating
         thereto.

                           (e) Borrowers  unconditionally agree to indemnify and
         hold  Lender  harmless  from  any  and all  loss,  claim  or  liability
         (including reasonable attorneys' fees) arising from any transactions or
         occurrences  relating to any Accommodation  established or opened for a
         Borrower's  account,  the Collateral relating thereto and any drafts or
         acceptance  thereunder,  including  any such  loss or claim  due to any
         action taken by the issuer of such Accommodation,  other than any loss,
         claim or liability to the extent arising from Lender's gross negligence
         or wilful  misconduct.  Borrowers  further  agree to indemnify and hold
         Lender  harmless  for any errors or omissions  in  connection  with the


                                      -5-
<PAGE>


         Accommodations,  whether  caused  by  Lender,  by  the  issuer  of  any
         Accommodation  or otherwise,  other than errors resulting from Lender's
         gross  negligence  or  wilful  misconduct.   Borrowers'   unconditional
         obligation to indemnify and hold Lender  harmless  under this provision
         shall not be  modified  or  diminished  for any reason or in any manner
         whatsoever,  except  as set  forth  herein.  Borrowers  agree  that any
         charges  made to Lender by any  issuer  of any  Accommodation  shall be
         conclusive on Borrowers,  except in the case of manifest error, and may
         be charged to Borrowers' loan account.


                           (f)  Lender   shall  not  be   responsible   for  the
         conformity  of any goods to the  documents  presented,  the validity or
         genuineness  of any  documents  or  delay,  default,  or  fraud  by any
         Borrower  or  shipper  and/or  anyone  else  in  connection   with  the
         Accommodations or any underlying transaction.

                           (g) Borrowers  agree that any action taken by Lender,
         if  taken in good  faith,  or any  action  taken  by an  issuer  of any
         Accommodation,  under or in connection with any Accommodation, shall be
         binding on Borrowers  and shall not create any  resulting  liability to
         Lender.  In  furtherance  thereof  Lender  shall,  upon and  during the
         continuance  of an Event of Default,  have the full right and authority
         to clear and resolve any questions of non-compliance  of documents;  to
         give any instructions as to acceptance or rejection of any documents or
         goods; to execute for Borrowers'  account any and all  applications for
         steamship or airway  guarantees,  indemnitees  or delivery  orders;  to
         grant any  extensions  of the maturity of, time of payment for, or time
         of  presentation  of, any  drafts,  acceptances,  or  documents,  if in
         Lender's  discretion  such  action  is  reasonably  necessary  for  the
         protection  or  preservation  of the  Collateral;  and to  agree to any
         amendments,   renewals,   extensions,    modifications,    changes   or
         cancellations  of  any  of  the  terms  or  conditions  of  any  of the
         applications  or  Accommodations.  All of the foregoing  actions may be
         taken in Lender's sole name,  and the issuer  thereof shall be entitled
         to  comply  with and honor any and all such  documents  or  instruments
         executed by or received  solely from Lender,  all without  notice to or
         any consent from any Borrower.  None of the foregoing actions described
         in this  subsection  2.3  (g)  may be  taken  by any  Borrower  without
         Lender's express written consent.

         2.4 Real Property Term Loans.  Upon Borrowers'  request  therefor,  and
subject to the  satisfaction  of the  conditions to such loans set forth in this
Section 2.4 and in any other  agreement  between  Borrowers  and Lender,  Lender
shall make up to eight (8) separate  term loans to Borrowers on the basis of the
Real  Property  as defined  in Section  4.3(f)  below  (collectively,  the "Real
Property  Term  Loans").  Each Real  Property  Term Loan shall be in an original
principal  amount not to exceed  seventy  percent (70%) of the appraised  "quick
sale  value"  of the Real  Property  (as  determined  by one or more  appraisers
acceptable  to Lender in its sole  discretion)  and shall be  evidenced  by, and
payable in accordance with the terms of, a promissory note, substantially in the
form of Exhibit  2.4  attached  hereto,  executed by  Borrowers  to the order of
Lender,  providing  for,  among other  terms,  amortization  of  principal  on a
straight-line  basis over  ninety-six  (96) months (each,  a "Real Property Term
Loan Note", and collectively,  the "Real Property Term Loan Note"). The original
principal  amount of all Real  Property  Term Loans in


                                      -6-
<PAGE>


the  aggregate  shall not exceed Four  Million  Five  Hundred  Thousand  Dollars
($4,500,000).  Borrowers may prepay, in whole or in part, any or all of the Real
Property Terms Loans without  premium or penalty  provided such  prepayments are
made with the  proceeds of either (i) a sale of the Real  Property  which is the
basis for such Real  Property  Term Loan or (ii) a  refinance  loan  provided to
Borrowers by an independent,  third-party lender.  Lender promptly shall release
its lien on the Real  Property  relating  to any such loan  which is  prepaid by
Borrowers as permitted by the preceding sentence.  Lender also shall release its
lien on all or any portion of the Real Property to facilitate Borrowers' sale of
the Real  Property or obtaining of financing on the basis thereof if at the time
of  Borrowers'  request  for such  release  there  exists  no  Event of  Default
(including,  without  limitation,  any  overadvance  under the  Revolving  Loans
facility -- i.e., Borrowers do not have Revolving Loans outstanding in excess of
the maximum  applicable  percentage or dollar  limitations set forth in Sections
2.1 or 10.1).


         2.5 Equipment Term Loan. Upon completion of satisfactory  due diligence
with respect to the Equipment conducted by Lender, Lender shall make a term loan
to  Borrowers,  on the  basis of the  Equipment  as  described  in the June 1997
Accuval  appraisal,  in an  original  principal  amount of Six  Million  Dollars
($6,000,000)  (the "Equipment Term Loan").  Borrowers shall utilize a portion of
the proceeds of the Equipment  Term Loan to repay,  in full,  their  outstanding
term loan obligations to The CIT Group/Equipment  Financing,  Inc. The Equipment
Term Loan shall be evidenced by, and payable in accordance  with the terms of, a
promissory  note,  substantially  in the form of Exhibit  2.5  attached  hereto,
executed by Borrower to the order of Lender,  providing  for, among other terms,
amortization of principal on a  straight-line  basis over eight-four (84) months
(the "Equipment Term Loan Note").

         2.6  Capital  Expenditures  Loan  Facility.   Upon  Borrowers'  request
therefor from time to time,  Lender shall,  subject to the terms and  conditions
set forth in this Section 2.6,  make term loans to  Borrowers  (individually,  a
"Capital  Expenditure Loan" and collectively,  the "Capital Expenditure Loans"),
all  of  which  shall  not  exceed  in  the  aggregate   Three  Million  Dollars
($3,000,000) at any time outstanding,  to facilitate  Borrowers'  acquisition of
new Equipment (i.e.,  Equipment  purchased by a Borrower within three (3) months
before  Borrowers'  request  for a related  Capital  Expenditure  Loan) for uses
directly related to Borrowers' business operations as conducted  consistent with
the terms of this Agreement. Each Capital Expenditure Loan shall be evidenced by
and payable in accordance with the terms of a promissory note,  substantially in
the form of Exhibit 2.6  attached  hereto,  executed by Borrower to the order of
Lender,  providing  for,  among other  terms,  amortization  of  principal  on a
straight-line   basis  over  sixty  (60)  months  and  for  permitted  voluntary
prepayments of principal,  in whole or in part, at any time,  without premium or
penalty (each, a "Capital Expenditure Loan Note, and collectively,  the "Capital
Expenditure  Loan Notes").  Lender may, at any time and from time to time in its
sole  discretion  for any  purpose,  (i)  consolidate  multiple,  or all of the,
Capital   Expenditure  Loan  Notes  into  a  single  promissory  note,  or  (ii)
consolidate  multiple,  or all of the,  Capital  Expenditure Loan Notes with the
Equipment Term Loan Note. All terms and provisions of all such promissory  notes
so consolidated shall remain the same as immediately prior to consolidation.

                  Upon approval by Lender,  each Capital  Expenditure Loan shall
be in an amount requested by Borrowers up to eighty percent (80%) of the cost of
the Equipment as reflected in 


                                      -7-
<PAGE>


the invoice  therefor;  provided,  however,  Capital  Expenditure Loans shall be
limited to the cost of the purchased Equipment itself, and shall not include any
ancillary  costs or expenses  associated with the acquisition of such Equipment,
such  as,  but  not  limited  to,  freight  and  other  transportation  charges,
installation  and delivery  charges,  brokerage  commissions,  sales taxes,  and
similar "soft" costs and expenses.


                  Lender  shall not be required to make any Capital  Expenditure
Loan hereunder unless on the date such loan is to be funded by Lender all of the
following conditions have been satisfied:

                           (a)  Supplement.  Borrower  shall have  executed  and
         delivered to Lender a supplement,  in form and substance  acceptable to
         Lender,  describing in a manner satisfactory to Lender the Equipment to
         be financed by such loan;

                           (b) Note.  The Capital  Expenditure  Note  evidencing
         such loan shall have been duly executed and delivered to Lender;

                           (c) Equipment Delivery.  The Equipment being financed
         by such loan  shall  have  been duly  delivered  to and  accepted  by a
         Borrower;

                           (d) Invoice and Title. If requested by Lender, Lender
         shall have  received  copies of the  invoice or invoices  covering  the
         acquisition  of the items of Equipment  being  financed  with such loan
         together with copies of the bills of sale, if any, conveying such items
         to a Borrower;

                           (e)  Payment  of  Equipment   Cost.Lender   shall  be
         satisfied  that the cost of each item of  Equipment  being  financed by
         such loan has been, or  concurrently  with the making of such loan will
         be, fully paid.

                           (f)  Insurance.  Lender shall have received  evidence
         satisfactory  to it that the Equipment  being  financed by such loan is
         insured in accordance with the provisions of this Agreement.

                           (g) Security  Interest.  All filings,  recordings and
         other  actions  deemed  necessary  or  desirable  by Lender in order to
         establish,  protect,  preserve and perfect its security interest in the
         Equipment  being  financed  by such  loan as a  valid  perfected  first
         priority  security  interest shall have been duly effected,  including,
         without  limitation,   the  filing  of  financing  statements  and  the
         recordation of landlord and/or mortgagee waivers or disclaimers  and/or
         severance agreements,  all in from and substance satisfactory to Lender
         and all fees,  taxes and other  charges  relating  to such  filings and
         recordings shall be or shall have been paid by Borrowers.

                  2.7 Obligations In Excess of Limitations;  Certain Amounts Due
Without Demand. Lender may, in the exercise of its reasonable judgment,  make or
permit  Revolving


                                      -8-
<PAGE>


Loans,  Accommodations,  Real Property Term Loans, Capital Expenditure Loans, or
the Equipment Term Loans or other  Obligations in excess of the Maximum  Credit,
Gross  Availability  or  applicable  sublimits.  To the  extent  such  excess is
permitted  by Lender,  all or any  portion of such excess  shall  become due and
payable upon Lender's  demand  therefor.  To the extent the aggregate  amount of
Revolving Loans,  Accommodations,  Real Property Term Loans, Capital Expenditure
Loans,  the  Equipment  Term  Loans or other  Obligations  at any time  exceeds,
without  the  consent of Lender,  the  Maximum  Credit,  Gross  Availability  or
applicable  sublimits,  all of such excess  shall be due and payable  within ten
(10) days of Lender's  demand  therefor  (during which time Lender  reserves the
right to stop making additional loans or Accommodations).


SECTION 3. INTEREST AND FEES

                  3.1      Interest.

                           (a)  Interest  on  all  Obligations  other  than  the
         Equipment Term Loan and the Capital  Expenditure Loans shall be payable
         by  Borrowers  on the  first  day of each  month,  calculated  upon the
         closing daily outstanding  principal balances in the loan account(s) of
         Borrowers for each day during the immediately  preceding  month, at the
         per  annum  rate set forth as the  Interest  Rate in  Section  10.4(a).
         Interest on the Equipment Term Loan and the Capital  Expenditure  Loans
         shall  be  payable  by  Borrowers  on  the  first  day of  each  month,
         calculated upon the closing daily outstanding principal balances in the
         loan  account(s)  of  Borrower  for each  day  during  the  immediately
         preceding  month,  at the per annum rate set forth as the Interest Rate
         (Equipment  Loans) in Section  10.4(b).  The respective  Interest Rates
         provided in Sections  10.4(a) and (b) shall  increase or decrease by an
         amount equal to each increase or decrease,  respectively,  in the Prime
         Rate (as defined below),  effective as of the date of each such change.
         Interest shall be calculated on the basis of actual days elapsed over a
         360-day year.  Notwithstanding the foregoing provisions of this Section
         3.1(a)  regarding the rates of interest  applicable  to the  respective
         Obligations:

                                    (i) If at any time the  amount  of  interest
                  computed   on  the  basis  of  Section   10.4(a)  or  (b)  (as
                  applicable,  the  "Annual  Rate")  would  exceed the amount of
                  interest  computed  upon  the  basis  of the  maximum  rate of
                  interest  (the "Maximum  Legal Rate")  permitted by applicable
                  state or federal  law in effect  from time to time  hereafter,
                  after  taking  into  account,   to  the  extent   required  by
                  applicable  law,  any  and all  fees,  payments,  charges  and
                  calculations  provided  for in this  Agreement or in any other
                  agreement between  Borrowers and Lender,  the interest payable
                  under this  Agreement  shall be  computed  on the basis of the
                  Maximum Legal Rate, but any subsequent reduction in the Annual
                  Rate  shall  not  reduce  such  interest   thereafter  payable
                  hereunder  below  the  amount  computed  on the  basis  of the
                  Maximum Legal Rate until the aggregate amount equals the total
                  amount of interest  which would have accrued if such  interest
                  had been at all  times  computed  solely  on the  basis of the
                  Annual Rate.


                                      -9-
<PAGE>


                                    (ii) No agreements,  conditions,  provisions
                  or  stipulations  contained  in this  Agreement  or any  other
                  instrument,   document  or  agreement  between  Borrowers  and
                  Lender, or default of Borrowers,  or the exercise by Lender of
                  the  right  to  accelerate  the  payment  or the  maturity  of
                  principal and interest,  or to exercise any option  whatsoever
                  contained  in this  Agreement or any other  agreement  between
                  Borrowers  and  Lender,  or the  arising  of  any  contingency
                  whatsoever,  shall  entitle  Lender to collect,  in any event,
                  interest  exceeding  the  Maximum  Legal  Rate and in no event
                  shall  Borrowers be obligated to pay interest  exceeding  such
                  Maximum  Legal  Rate,  and  all   agreements,   conditions  or
                  stipulations,  if any,  which may in any event or  contingency
                  whatsoever  operate to bind,  obligate or compel  Borrowers to
                  pay a rate of interest exceeding the Maximum Legal Rate, shall
                  be without  binding force or effect,  at law or in equity,  to
                  the extent  only of the excess of interest  over such  Maximum
                  Legal  Rate.  In the event  that any  interest  is  charged in
                  excess  of  the  Maximum  Legal  Rate  ("Excess"),   Borrowers
                  acknowledge  and  stipulate  that any such charge shall be the
                  result of an accidental  and bona fide error,  and such Excess
                  shall be,  first,  applied  to  reduce  the  principal  of the
                  Revolving  Loans then  unpaid  hereunder;  second,  applied to
                  reduce  Borrowers'  other  Obligations  hereunder;  and third,
                  returned to  Borrowers,  it being the intention of the parties
                  hereto not to enter at any time into a usurious  or  otherwise
                  illegal   relationship.   Borrowers   recognize   that,   with
                  fluctuations  in the Annual Rate and the  Maximum  Legal Rate,
                  such an unintentional result could inadvertently occur. By the
                  execution of this Agreement,  Borrowers  covenant that (x) the
                  credit or return of any Excess shall constitute the acceptance
                  by Borrowers of such Excess,  and (y) Borrowers shall not seek
                  or  pursue  any  other  remedy,  legal or  equitable,  against
                  Lender,  based  in  whole  or in part  upon  the  charging  or
                  receiving of any interest in excess of the maximum  authorized
                  by applicable  law. For the purpose of determining  whether or
                  not any Excess has been contracted for,  charged,  or received
                  by Lender, all interest at any time contracted for, charged or
                  received by the Lender in connection with this Agreement shall
                  be  amortized,  prorated,  allocated and spread in equal parts
                  during the entire term of this Agreement.

                                    (iii) The  provisions of Section  3.1(a)(ii)
                  shall be deemed to be  incorporated  into  every  document  or
                  communication  relating to the Obligations which sets forth or
                  prescribes  any  account,  right or claim or alleged  account,
                  right or claim of Lender  with  respect to  Borrowers  (or any
                  other obligor in respect of the  Obligations),  whether or not
                  any provision of Section 3.1 is referred to therein.  All such
                  documents and communications and all figures set forth therein
                  shall,  for the sole  purpose of  computing  the extent of the
                  liabilities   and  obligations  of  Borrowers  (or  any  other
                  obligor)  asserted  by  Lender  thereunder,  be  automatically
                  recomputed  by  Borrowers  or such  obligor,  and by any court
                  considering  the same,  to give effect to the  adjustments  or
                  credits required by Section 3.1.(a)(ii).


                                    (iv) If the applicable  state or federal law
                  is amended in the future


                                      -10-
<PAGE>


                  to allow a greater  rate of interest to be charged  under this
                  Agreement  or any  other  loan  documents  than  is  presently
                  allowed  by   applicable   state  or  federal  law,  then  the
                  limitation  of interest  hereunder  shall be  increased to the
                  maximum  rate of  interest  allowed  by  applicable  state  or
                  federal  law, as amended,  which  increase  shall be effective
                  hereunder on the  effective  date of such  amendment,  and all
                  interest  charges  owing to Lender by reason  thereof shall be
                  payable upon demand.

                           (b) Anything herein to the contrary  notwithstanding,
         interest  shall  not be due  or  payable  on  the  face  amount  of any
         outstanding  Accommodations,  but shall be due on any amounts  drawn on
         Accommodations.

                           (c) The "Prime Rate" is the rate of interest publicly
         announced  by The Chase  Manhattan  Bank in New  York,  New York as its
         prime rate or similar such designation (such rate is not intended to be
         the lowest rate of interest charged by such bank to its borrowers).

                  3.2      Intentionally Omitted.

                  3.3      Intentionally Omitted.

                  3.4 Unused Line Fee. Borrowers,  jointly and severally,  shall
pay Lender on the first day of each month,  in  arrears,  during the initial and
any  renewal  term an Unused Line Fee at the rate per annum set forth in Section
10.4(d),  calculated on the amount,  if any, by which the Maximum Credit exceeds
the   average   outstanding   principal   balance   of  all   Revolving   Loans,
Accommodations,  Real Property Terms Loans,  Capital  Expenditure  Loans and the
Equipment Term Loan outstanding during the preceding month.

                  3.5 Charges to Loan Account.  At Lender's option, all payments
of principal,  interest, fees, costs, expenses and other charges provided for in
this  Agreement,  or in any other  agreement now or hereafter  existing  between
Lender an  Borrowers,  may be charged on the date when due as  principal  to any
loan  account(s) of Borrowers  maintained by Lender,  and shall  thereafter bear
interest at the rate and payable in the manner  provided  herein for the accrual
and payment of interest on outstanding Obligations.

SECTION 4. GRANT OF SECURITY INTEREST

                  4.1 Grant of  Security  Interest.  To secure the  payment  and
performance  in full of all  Obligations,  Borrowers  hereby  grant to  Lender a
continuing  security  interest in and lien upon, and a right of setoff  against,
and  Borrowers  hereby  assign  and  pledge to  Lender,  all of the  Collateral,
including any Collateral not deemed eligible for lending purposes.


                  4.2  Obligations.   "Obligations"   shall  mean  any  and  all
Revolving Loans,  Accommodations,  Real Property Term Loans, Capital Expenditure
Loans,  the  Equipment  Term Loan and all other  indebtedness,  liabilities  and
obligations of every kind,  nature and description


                                      -11-
<PAGE>


owing by Borrowers to Lender, including principal,  interest,  charges, fees and
expenses, however evidenced,  whether as principal,  surety, endorser, guarantor
or otherwise,  whether  arising under this  Agreement or otherwise,  whether now
existing or  hereafter  arising,  whether  arising  before,  during or after the
initial or any renewal Term or after the  commencement  of any case with respect
to any Borrower under the United States  Bankruptcy Code or any similar statute,
whether direct or indirect, absolute or contingent, joint or several, due or not
due,  primary or secondary,  liquidated or  unliquidated,  secured or unsecured,
original, renewed or extended and whether arising directly or howsoever acquired
by  Lender  including  from  any  other  entity  outright,  conditionally  or as
collateral security, by assignment, merger with any other entity, participations
or interests of Lender in the  obligations  of Borrowers to others,  assumption,
operation of law,  subrogation  or otherwise  and shall also include all amounts
chargeable to Borrowers  under this  Agreement or in connection  with any of the
foregoing.

                  4.3 Collateral.  "Collateral"  shall mean all of the following
property of Borrowers:

                           (a) All now owned and hereafter acquired right, title
         and  interest  of  Borrowers  in, to and in respect  of all:  accounts,
         including  without  limitation  all interests in goods  represented  by
         accounts, returned, reclaimed or repossessed goods with respect thereto
         and rights as an unpaid  vendor;  chattel  paper;  general  intangibles
         (including,  but not  limited  to,  tax and duty  claims  and  refunds,
         registered  and  unregistered  patents,   trademarks,   service  marks,
         copyrights, trade names, applications for the foregoing, trade secrets,
         goodwill,  processes,  drawings,  blueprints,  customer lists,  license
         agreements  and  licenses  (to the  extent a security  interest  may be
         granted  therein),  whether as licensor or licensee,  computer software
         programs and systems (to the extent a security  interest may be granted
         therein),  choses in action and other  claims,  and existing and future
         leasehold interests in equipment, real estate and fixtures); documents;
         instruments;  letters of credit,  bankers'  acceptances  or guaranties;
         cash  monies,   deposits,   securities  (other  than  investment  grade
         securities held as of the date hereof for investment purposes only, and
         the proceeds therefrom),  bank accounts,  deposit accounts, credits and
         other  property  now or hereafter  held in any capacity by Lender,  its
         affiliates or any entity which,  at any time,  participates in Lender's
         financing of Borrowers or at any other depository or other  institution
         (but excluding, in any event, cash monies, deposits,  securities,  bank
         accounts and deposit accounts held outside the United States or Canada,
         provided  the  foregoing  is  not  the  proceeds  of  Collateral);  and
         agreements  or  property  securing  or  relating  to any  of the  items
         referred to above;

                           (b) All now owned and hereafter acquired right, title
         and  interest of Borrowers  in, to and in respect of goods,  including,
         but not limited to:


                                    (i) All inventory, wherever located, whether
                  now owned or hereafter  acquired,  of whatever kind, nature or
                  description,  including  all raw  materials,  work-in-process,
                  finished goods (including,  without limitation,  hardware) and
                  materials to be used or consumed in any  Borrower's  business;
                  and


                                      -12-


<PAGE>


                  all names or marks  affixed  to or to be affixed  thereto  for
                  purposes of selling same by the seller,  manufacturer,  lessor
                  or licensor thereof;

                                    (ii) All equipment  and  fixtures,  wherever
                  located,  whether now owned or hereafter acquired,  including,
                  without limitation, all machinery,  equipment, motor vehicles,
                  furniture   and   fixtures,   and  any   and  all   additions,
                  substitutions,   replacements   (including  spare  parts)  and
                  accessions    thereof   and   thereto    (collectively,    the
                  "Equipment");

                                    (iii) All  consumer  goods,  farm  products,
                  crops,  timber,  minerals or the like (including oil and gas),
                  wherever located,  whether now owned or hereafter acquired, of
                  whatever kind, nature or description;

                           (c) All now owned and hereafter acquired right, title
         and  interest  of any  Borrower  in,  to and in  respect  of any  other
         personal  property or any  fixtures in or upon which  Lender has or may
         hereafter have a security interest, lien or right of setoff;

                           (d) All present and future books and records relating
         to  any of the  above,  including,  without  limitation,  all  computer
         programs (to the extent a security  interest  may be granted  therein),
         printed  output  and  computer  readable  data,  in any  media,  in the
         possession or control of any Borrower,  any computer  service bureau or
         other third party;

                           (e) All notes,  security interests and deeds of trust
         or mortgages in favor of any Borrower;

                           (f) All right, title and interest of any Borrower in,
         to and in  respect  of the  parcels of real  property  and the  related
         improvements  thereto  identified in Schedule F and any parcels of real
         property and related  improvements,  if any, thereto hereafter acquired
         in fee by any Borrower (collectively, the "Real Property"); and

                           (g) All  products  and  proceeds of the  foregoing in
         whatever form and wherever located, including,  without limitation, all
         insurance  proceeds and all claims  against  third  parties for loss or
         destruction of or damage to any of the foregoing.

SECTION  5. COLLECTION AND ADMINISTRATION

                  5.1 Collections. Borrowers shall, at Borrowers' expense and in
the manner  requested by Lender from time to time,  direct that  remittances and
all other proceeds of accounts and other Collateral shall be directly  deposited
into a bank account maintained in the name of Lender under arrangements with the
depository  bank  under  which all funds  deposited  to such  bank  account  are
required to be transferred  solely to Lender.  Borrowers  shall bear all risk of
loss  of any  funds  deposited  into  such  account.  In  connection  therewith,
Borrowers  shall execute such bank account  agreements as Lender shall  specify.
Any  collections  or other  proceeds  received by


                                      -13-
<PAGE>


any  Borrower  shall be held in trust for Lender  and  immediately  remitted  to
Lender, in kind.


                  5.2  Payments.  All  Obligations  shall be payable at Lender's
office  set  forth  below  or at  Bank  of  America,  NT & SA,  in Los  Angeles,
California, or such substitute bank as Lender may determine ("Lender's Bank") or
such other  place as Lender may  designate  from time to time.  For  purposes of
determining  Gross and Net  Availability,  remittances  and other  payments with
respect to the  Collateral  and  Obligations  will be treated as credited to the
loan account of Borrowers  maintained by Lender and Collateral balances to which
they relate, upon the date of Lender's receipt of advice from Lender's Bank that
such remittances or other payments have been credited to Lender's account, which
advice shall be deemed received not more than one business day from the date any
such remittance or other payment is credited to Lender's account, or in the case
of remittances or other payments,  received directly in kind by Lender, upon the
date of Lender's deposit thereof at Lender's Bank,  subject to final payment and
collection.  In  computing  interest  charges,  the loan  account  of  Borrowers
maintained by Lender will be credited with  remittances  and other  payments two
(2) Business Days after Lender has received  advice of receipt of remittances in
Lender's  account at Lender's  Bank. For purposes of this  Agreement,  "Business
Day" shall mean any day other than a Saturday,  Sunday or any other day on which
banks located in Los Angeles,  California,  or New York, New York are authorized
to close.

                  5.3 Loan Account Statements. Lender shall deliver to Borrowers
monthly a joint loan  account  statement.  Each  statement  shall be  considered
correct and binding upon Borrowers as an account  stated,  except as to manifest
error or to the extent that Lender  receives,  within  sixty (60) days after the
mailing  of such  statement,  written  notice  from  Borrowers  of any  specific
exceptions by Borrowers to that statement.

                  5.4 Direct  Collections.  Lender may,  at any time,  after and
during  the  continuance  of an Event of  Default  or if at any time in its sole
judgment  Lender  has a  reasonable  belief  that  Borrowers  are  or  may be in
violation  of the  Agreement,  whether or not an Event of Default  has  actually
occurred,  without  notice to or consent of  Borrowers,  (a) notify any  account
debtor  that the  accounts  and  other  Collateral  which  includes  a  monetary
obligation have been assigned to Lender by Borrowers and that payment thereof is
to be made to the order of and directly to Lender; (b) send, or cause to be sent
by its  designee,  requests  (which may identify the sender by a pseudonym)  for
verification of accounts and other Collateral  directly to any account debtor or
any other obligor or any bailee with respect thereto; and (c) demand, collect or
enforce payment of any accounts or such other  Collateral,  but without any duty
to do so, and Lender  shall not be liable for any  failure to collect or enforce
payment thereof.  At Lender's  request,  all invoices and statements sent to any
account debtor,  other obligor or bailee, shall state that the accounts and such
other  Collateral have been assigned to Lender and are payable directly and only
to Lender.

                  5.5 Attorney-in-Fact.  Borrowers hereby appoint Lender and any
designee of Lender as Borrowers'  attorney-in-fact  and authorize Lender or such
designee,  at Borrowers'  sole  expense,  to exercise at any time in Lender's or
such designee's  discretion all or any of the following powers,  which powers of
attorney,  being  coupled  with an  interest,  shall be  irrevocable


                                      -14-
<PAGE>


until all  Obligations  have  been paid in full:  (a)  receive,  take,  endorse,
assign, deliver, accept and deposit, in the name of Lender or Borrowers, any and
all cash, checks,  commercial paper,  drafts,  remittances and other instruments
and documents  relating to the Collateral or the proceeds thereof;  (b) transmit
to account  debtors,  other  obligors or any bailee's  notice of the interest of
Lender in the Collateral or request from account  debtors or such other obligors
or bailees at any time,  in the name of  Borrowers  or Lender or any designee of
Lender, information concerning the Collateral and any amounts owing with respect
thereto;  (c) notify account debtors or other obligors to make payment  directly
to Lender to the extent  permitted in Section  5.4, or notify  bailees as to the
disposition of Collateral;  (d) during the continuance of an Event of Default or
if Borrowers so agree,  take or bring,  in the name of Lender or Borrowers,  all
steps, actions,  suits or proceedings deemed by Lender necessary or desirable to
effect   collection  of  or  other  realization  upon  the  accounts  and  other
Collateral;  (e)  during  the  continuance  of an Event of  Default,  change the
address for delivery of mail to Borrowers and to receive and open mail addressed
to any Borrower;  (f) during the continuance of an Event of Default,  extend the
time  of  payment  of,  compromise  or  settle  for  cash,  credit,   return  of
merchandise,  and upon any terms or  conditions,  any and all  accounts or other
Collateral  which  includes a monetary  obligation  and discharge or release the
account debtor or other obligor,  without affecting any of the Obligations;  and
(g) execute in the name of  Borrowers  and file  against  Borrowers  in favor of
Lender financing statements or amendments with respect to the Collateral.

                  5.6 Liability.  Borrowers hereby release and exculpate Lender,
its officers,  employees and designees, from any liability arising from any acts
under this Agreement or in furtherance  thereof,  whether as attorney-in-fact or
otherwise,  whether of omission or commission,  and whether based upon any error
of judgment  or mistake of law or fact,  except for gross  negligence  or wilful
misconduct.  In no event will Lender have any  liability to  Borrowers  for lost
profits or other special or consequential damages.

                  5.7 Administration of Accounts. After written notice by Lender
to Borrowers upon or during the  continuance  of an Event of Default,  Borrowers
shall not,  without the prior written  consent of Lender in each  instance,  (a)
grant any  extension  of time of  payment  of any of the  accounts  or any other
Collateral which includes a monetary obligation; (b) compromise or settle any of
the accounts or any such other Collateral for less than the full amount thereof;
(c) release in whole or in part any account  debtor or other  person  liable for
the payment of any of the  accounts or any such other  Collateral;  or (d) grant
any credits,  discounts,  allowances,  deductions,  return authorizations or the
like with respect to any of the accounts or any such other Collateral.

                  5.8 Documents.  At such times as Lender may reasonably request
and in the manner  specified  by Lender,  Borrowers  shall  deliver to Lender or
Lender's  representative,  as Lender  shall  designate,  copies or  originals of
invoices,  agreements, proofs of rendition of services and delivery of goods and
other documents  evidencing or relating to the  transactions  which gave rise to
accounts or other  Collateral,  together  with  customer  statements,  schedules
describing  the accounts or other  Collateral  and/or  statements of account and
confirmatory assignments to Lender of the accounts or other Collateral,  in form
and substance  satisfactory  to Lender and duly  executed by Borrowers.  Without
limiting the  provisions  of Section 5.7,  any  Borrower's  granting of credits,
discounts,  allowances,  deductions,  return  authorizations  or the  like  will
promptly be


                                      -15-
<PAGE>


reported  to  Lender  in  writing.  In no  event  shall  any  such  schedule  or
confirmatory  assignment  (or the  absence  thereof  or  omission  of any of the
accounts or other  Collateral  therefrom)  limit or in any way be construed as a
waiver, limitation or modification of the security interests or rights of Lender
or the  warranties,  representations  and  covenants  of  Borrowers  under  this
Agreement. Any documents, schedules, invoices or other paper delivered to Lender
by any Borrower  may be  destroyed  or  otherwise  disposed of by Lender six (6)
months after receipt by Lender,  unless such Borrower  requests  their return in
writing  in  advance  and makes  prior  arrangements  for their  return,  at its
expense.

                  5.9  Access.  From  time to time as  reasonably  requested  by
Lender, Lender or its designee shall have complete access to all of the premises
where  Collateral  is located for the  purposes of  inspecting  the  Collateral,
including Borrowers' books and records, and Borrowers shall permit Lender or its
designee to make such copies of such books and records or extracts  therefrom as
Lender may request. Without expense to Lender, Lender may use such of Borrowers'
personnel, equipment, including computer equipment, programs, printed output and
computer  readable media,  supplies and premises as Lender shall request for the
collection of accounts and  realization on other  Collateral.  Borrowers  hereby
irrevocably  authorize all accountants and third parties,  with the exception of
Borrowers'  attorneys  with  respect to  information  for which a  privilege  is
asserted,  to disclose and deliver to Lender at Borrowers' expense all financial
information,  books and  records,  work  papers,  management  reports  and other
information in their possession regarding  Borrowers.  Borrowers shall reimburse
Lender for its reasonable expenses incurred under this Section.

                  5.10  Environmental  Audits. If Lender has a reasonable belief
that any  premises  or  property  of a  Borrower  where a  material  part of the
Collateral  is located  is in  material  violation  of any law  relating  to the
storage,  release or manufacture of hazardous or toxic  substances,  at the sole
expense of Borrowers, Borrowers shall provide Lender, or its designee, from time
to time upon reasonable request,  complete access to the affected facilities for
the purpose of conducting an environmental audit of such facilities as Lender or
its designees may deem necessary.  Borrowers agree to cooperate with Lender with
respect to any environmental  audit conducted by Lender or its designee pursuant
to this Section 5.10.

SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS


                  Borrowers hereby represent, warrant and covenant to Lender the
following,  the truth and accuracy of which, and compliance with which, shall be
continuing  conditions of the making of loans or other credit  accommodations by
Lender  to  Borrowers.  Each  statement  below  shall be  deemed a  warranty  or
representation if so specified, and otherwise shall be deemed a covenant.

                  6.1 Financial and Other Reports.  Each Borrower shall keep and
maintain its books and records in accordance with generally accepted  accounting
principles,  consistently  applied.  Borrowers  shall,  at their  sole  expense,
deliver  to Lender  (a)  weekly,  on or before  the end of the  following  week,
accurate and complete perpetual inventory reports if Borrowers' Net


                                      -16-
<PAGE>


Availability is less than $1,000,000; (b) monthly, on or before the tenth (10th)
day of each month,  accurate and complete  accounts  receivable and accounts and
notes payable agings; (c) monthly, on or before the twentieth (20th) day of each
month,  internally prepared income statements and a monthly inventory report for
the prior month  (provided Net  Availability is not less than  $1,000,000);  (d)
quarterly,  on or before  the  twentieth  (20th) day of each  fiscal  quarter of
Borrowers,  internally  prepared interim  financial  statements for the previous
fiscal quarter; (e) annually,  as soon as available,  but in no event later than
one hundred  twenty  (120) days after the end of  Borrowers'  respective  fiscal
years, audited financial statements of Borrowers (prepared on a consolidated and
consolidating  basis along with the  affiliates of Borrowers and any  guarantor)
accompanied by the report and opinion  thereon of independent  certified  public
accountants  acceptable to Lender;  and (f) with such  frequency as Lender shall
request,  cash flow  projections  in a form  acceptable  to  lender.  All of the
foregoing shall be in such form and together with such  information with respect
to the  business  of  Borrowers  or any  guarantor,  as Lender  may in each case
reasonably request. Borrowers shall also provide to Lender, within ten (10) days
after  Borrowers'  delivery  thereof to the Securities and Exchange  Commission,
accurate and complete copies of any reports, forms or other documents (including
Forms 10-K and 10-Q) prepared or delivered by any Borrower to the Securities and
Exchange Commission.

                  6.2 Trade  Names.  Each  Borrower may from time to time render
invoices to account debtors under its trade name(s) set forth in Section 10.6(f)
after Lender has received  prior written notice from such Borrower of the use of
such trade name(s) and as to which,  such Borrower  agrees that:  (a) such trade
name  does not refer to  another  corporation  or other  legal  entity;  (b) all
accounts and proceeds  thereof  (including  any returned  merchandise)  invoiced
under any such  trade  names  are owned  exclusively  by such  Borrower  and are
subject  to the  security  interest  of  Lender  and  the  other  terms  of this
Agreement;  and (c) all  schedules  of  accounts  and  confirmatory  assignments
including  any sales made or services  rendered  using the trade name shall show
such  Borrower's  name as assignor and Lender is authorized to receive,  endorse
and deposit to any loan account of such Borrower maintained by Lender all checks
or  other   remittances  made  payable  to  any  trade  name  of  such  Borrower
representing payment with respect to such sales or services.

                  6.3 Losses.  Borrowers shall promptly notify Lender in writing
of any loss, damage,  investigation,  action, suit, proceeding or claim relating
to a material  portion  of the  Collateral  or which may result in any  material
adverse change in any  Borrower's  business,  assets,  liabilities or condition,
financial or otherwise.

                  6.4 Books  and  Records.  Each  Borrower's  books and  records
concerning  accounts and its chief executive  office are and shall be maintained
only at its address set forth in Section  10.6(c).  Each  Borrower's  only other
places of business and the only other  locations of Collateral,  if any, are and
shall be the  addresses  set  forth in  Sections  10.6(d)  and  10.6(e)  hereof,
provided  that such  Borrower  may change such  locations or open a new place of
business upon thirty (30) days' prior written  notice to Lender  (except in case
of damage or destruction,  in which case notice shall be given concurrently with
the change of  location).  Prior to any change in location or opening of any new
place of business, the applicable Borrower shall execute and


                                      -17-
<PAGE>


deliver  or  cause  to be  executed  and  delivered  to  Lender  such  financing
statements,  financing documents and security and other agreements as Lender may
reasonably require,  including,  without limitation,  those described in Section
6.14.

                  6.5 Title.  Borrowers warrant and represent that they have and
at all times will continue to have good and marketable title, free from defects,
to all of the  Collateral,  free and  clear of all  liens,  security  interests,
claims or encumbrances of any kind except (i) sales of inventory in the ordinary
course of business,  (ii) purchase money equipment liens in favor of the sellers
of such equipment or the lenders financing such sale, (iii)  non-delinquent  tax
liens,  (iv)  involuntary  liens  released  or  discharged  within 30 days after
Borrowers' discovery thereof, (v) liens in favor of Lender, (vi) those set forth
on Schedule A hereto, and (vii) as to any Real Property,  any easements,  leases
or other encumbrances not having any material and adverse effect on the value of
such Real Property.

                  6.6  Disposition  of  Assets.   Except  as  otherwise  allowed
hereunder,  no Borrower  shall directly or  indirectly,  without  Lender's prior
written consent: (a) sell, lease, transfer, assign, abandon or otherwise dispose
of any part of the Collateral or any material portion of its other assets (other
than sales of inventory to buyers and use or other  disposition  of inventory by
such  Borrower,  all in the ordinary  course of such  Borrower's  business  and,
provided  no Event of Default has  occurred  and is  continuing,  sales or other
dispositions of equipment in the ordinary  course of such  Borrower's  business,
provided that such sale or disposition  would not have a material adverse effect
on such  Borrower);  or (b)  consolidate  with or merge  with or into any  other
entity,  or permit any other  entity to  consolidate  with or merge with or into
such  Borrower,  other than as permitted  under Section  7.1(e);  or (c) form or
acquire any interest in any firm, corporation or other entity.

                  6.7  Insurance.  Borrowers  shall at all  times  maintain,  at
Borrowers'  expense,  with financially  sound and reputable  insurers,  casualty
insurance (including,  without limitation,  at the option of Lender if available
at  commercially  reasonable  rates,  earthquake  insurance) with respect to the
Collateral and other assets.  All such insurance policies shall be in such form,
substance,  amounts  and  coverage  as may be  satisfactory  to Lender and shall
provide for thirty (30) days' prior  written  notice to Lender of  cancellation,
reduction or other alteration of coverage.  Borrowers hereby irrevocably appoint
Lender and any designee of Lender as  attorney-in-fact  for  Borrowers to obtain
such insurance at Borrowers'  expense, if Borrowers do not do so, and, after and
during the continuance of an Event of Default,  to adjust or settle any claim or
other matter under or arising  pursuant to such insurance or to amend or replace
such insurance. Borrowers shall deliver to Lender evidence of such insurance and
a lender's loss payable  endorsement  satisfactory  to Lender as to all existing
and future  insurance  policies with respect to the Collateral.  Borrowers shall
deliver to Lender, in kind, all instruments  representing  proceeds of insurance
received by Borrowers.  Lender may apply any insurance  proceeds received at any
time to the cost of repairs to or  replacement  of any portion of the Collateral
and/or,  at  Lender's  option,  to  payment  of or as  security  for  any of the
Obligations, whether or not due, in any order or manner as Lender determines.


                                      -18-
<PAGE>


                  6.8  Compliance   With  Laws.   Each  Borrower   warrants  and
represents  that  it is  and  at  all  times  will  continue  to be in  material
compliance  with  the  requirements  of all  applicable  material  laws,  rules,
regulations and orders of any  governmental  authority  relating to its business
(including laws,  rules,  regulations and orders relating to taxes,  payment and
withholding of payroll taxes,  employer and employee  contributions  and similar
items, securities, employee retirement and welfare benefits, employee health and
safety or environmental matters),  other than laws, rules, regulations or orders
being  contested in good faith,  which contest does not materially and adversely
affect such Borrowers' business,  financial condition or the Collateral, and all
material  agreements or other material  instruments  binding on such Borrower or
its property.  All of Borrower's  inventory shall be produced in accordance with
the  requirements  of the Federal Fair Labor  Standards Act of 1938, as amended,
and all rules,  regulations and orders related  thereto.  Borrower shall pay and
discharge all taxes,  assessments and governmental  charges against any Borrower
or any  Collateral  prior to the date on which  penalties  are  imposed or liens
attach with respect  thereto,  unless the same are being contested in good faith
and, at Lender's option (if, in Lender's  reasonable  judgment,  such contest is
likely to have a material adverse effect on such Borrower's business,  financial
condition or the Collateral),  Reserves are established for the amount contested
and penalties which may accrue thereon.

                  6.9  Accounts.  Borrowers  warrant  and  represent  that  with
respect to each  account  deemed an  Eligible  Account,  except as  reported  in
writing to Lender,  Borrowers  have no  knowledge  that any of the  criteria for
eligibility are not or are no longer  satisfied.  As to each account,  except as
disclosed  in writing to Lender at the time such  account  arises and except for
possible  claims for defect or breach of warranty  (a) each is valid and legally
enforceable and represents an undisputed bona fide indebtedness  incurred by the
account debtor for the sum reported to Lender;  (b) each arises from an absolute
and unconditional sale of goods, without any right of return or consignment,  or
from a  completed  rendition  of  services;  (c) each is not,  at the time  such
account arises, subject to any defense,  offset,  dispute,  contra relationship,
counterclaim, or any given or claimed credit, allowance or discount; and (d) all
statements made and all unpaid balances and other  information  appearing in the
invoices,  agreements, proofs of rendition of services and delivery of goods and
other documentation relating to the accounts, and all confirmatory  assignments,
schedules, statements of account and books and records with respect thereto, are
true and correct and in all respects what they purport to be.


                  6.10     Use of Equipment; Maintenance Identification.

                           (a) Borrowers will not move any of the Equipment from
         the locations  specified on Schedules B and C without the prior written
         consent  of Lender  (except  that this  restriction  shall not apply to
         motor  vehicles  used  to  transport  other  Equipment,   inventory  or
         materials, or to any Equipment while in transit to a location specified
         on Schedule B or C).

                           (b) Borrowers will use the Equipment in a careful and
         proper manner, will comply with and conform in all material respects to
         all governmental laws, rules and regulations relating thereto, and will
         cause the Equipment to be operated  materially  in


                                      -19-
<PAGE>


         accordance  with  the  manufacturer's  or  supplier's  instructions  or
         manuals and only by competent and duly qualified personnel.

                           (c) Borrowers  will,  at their own expense,  keep and
         maintain the Equipment in good repair,  condition and working order and
         furnish all parts,  replacements,  mechanisms,  devices  and  servicing
         required therefor so that the value, condition and operating efficiency
         thereof will at all times be maintained and preserved,  reasonable wear
         and tear and damage by  casualty  excepted.  All such  repairs,  parts,
         mechanisms, devices and replacements shall immediately, without further
         act, become part of the Equipment and subject to the security  interest
         created by this  Agreement.  Borrowers  will not make or authorize  any
         improvement,  change,  addition or  alteration to the Equipment if such
         improvement,  change, addition or alteration will materially impair the
         originally  intended  function or use of the  Equipment  or  materially
         impair the value of the  Equipment as it existed  immediately  prior to
         such improvement, change, addition or alteration. Any part added to the
         Equipment  in  connection  with any  improvement,  change,  addition or
         alteration shall  immediately,  without further act, become part of the
         Equipment  and  subject  to  the  security  interest  created  by  this
         Agreement.

                           (d) If requested by Lender in writing,  Debtor shall,
         at its expense,  attach to each item of Equipment a notice satisfactory
         to  Lender  disclosing  Lender's  security  interest  in  such  item of
         Equipment.

                  6.11 Intentionally Deleted.

                  6.12 Affiliate  Transactions.  Except as permitted  below,  no
Borrower will, directly or indirectly: (a) lend or advance money or property to,
guarantee  or assume  indebtedness  of, or invest (by  capital  contribution  or
otherwise) in any person, firm, corporation or other entity in excess of $75,000
(inclusive of any outstanding loans or advances permitted pursuant to clause (d)
of this  Section  6.12;  or (b)  declare,  pay or make  any  dividend  or  other
distribution on account of any shares of any class of stock of such Borrower now
or hereafter  outstanding  except,  if such  Borrower is an "S  corporation"  as
defined in the  Internal  Revenue  Code of 1986,  as amended,  for  dividends to
shareholders  in an amount  equal to their  state and  federal  tax  liabilities
associated with such status from time to time; or (c) except as set forth in any
subordination  agreement  between  Lender  and the  applicable  party,  make any
payment of the principal amount of or interest on any indebtedness  owing to any
officer,  director,  shareholder or affiliate of such Borrower;  or (d) make any
loans or advances to any officer, director,  employee,  shareholder or affiliate
of such Borrower in a principal  amount  outstanding in excess of $75,000 in the
aggregate at any time;  or (e) enter into any sale,  lease or other  transaction
with any officer, director, employee,  shareholder or affiliate of such Borrower
on terms that are less  favorable  to such  Borrower  than those  which might be
obtained at the time from  persons who are not an officer,  director,  employee,
shareholder or affiliate of such Borrower. Notwithstanding the foregoing: (i) so
long as Borrowers maintain a net worth on a consolidated basis (as determined in
accordance with generally accepted accounting principles,  consistently applied)
in the amount set forth in Section  10.5(a),  Borrowers  shall not be subject to
the  restrictions  provided in 6.12(a) or


                                      -20-
<PAGE>


(b);  (ii) on or after the date of this  Agreement and prior to January 1, 2001,
Borrowers may from time to time make principal  repayments to For Better Living,
Inc.  ("FBLI") of up to  $2,500,000 in the  aggregate  plus accrued  interest in
accordance with the terms of the Promissory  Note, dated August 12, 1997, in the
original  principal amount of $4,500,000,  executed by Borrowers to the order of
FBLI in respect of Borrowers'  outstanding  inter-company  indebtedness  to such
affiliate  evidenced  by the FBLI  Note,  and from and after  January  1,  2001,
Borrowers may from time to time make  additional  principal  repayments of up to
$2,000,000 in the aggregate  plus accrued  interest in accordance  with the FBLI
Note to FBLI in respect of Borrowers' outstanding inter-company  indebtedness to
such  affiliate  evidenced by the FBLI Note ; and (iii)  Borrowers  may make the
payments  to  For  Better  Living,  Inc.  required  by the  Management  Services
Agreement by and among  Borrowers  and such  affiliate  as such  agreement is in
effect on the date hereof.

                  6.13 Fees and  Expenses.  Borrowers  shall  pay,  on  Lender's
demand, all reasonable costs,  expenses,  fees, filing fees and taxes payable in
connection with the preparation,  execution, delivery, recording, administration
(including  Lender's  standard wire  transfer and returned  check fees as Lender
shall,  from  time  to  time,  advise   Borrowers),   collection,   liquidation,
enforcement and defense of the  Obligations,  Lender's rights in the Collateral,
this  Agreement,  and all other  existing  and future  agreements  or  documents
contemplated  herein or  related  hereto,  including  any  amendments,  waivers,
supplements  or consents  which may hereafter be made or entered into in respect
hereof,  or in any  way  involving  claims  by or  against  Lender  directly  or
indirectly  arising out of or related to the relationship  between Borrowers and
Lender or any guarantor and Lender (unless Lender is not the prevailing party in
any litigation  initiated by any Borrower  against Lender),  including,  but not
limited to, the following,  whether incurred before, during or after the initial
or any renewal  Term or after the  commencement  of any case with respect to any
Borrower or any guarantor under the United States Bankruptcy Code or any similar
statute:  (a) all costs and expenses of filing or recording  (including  Uniform
Commercial Code financing  statement filing taxes and fees,  documentary  taxes,
intangibles taxes and mortgage recording taxes and fees, if applicable); (b) all
title insurance and other insurance  premiums,  appraisal fees,  search fees and
fees incurred in connection with any  environmental  report,  audit,  survey, or
remediation;  (c) all fees as then in effect  relating  to the wire  transfer of
loan  proceeds and all other funds and fees then in effect for  returned  checks
and credit reports;  (d) all expenses and costs heretofore and from time to time
hereafter  incurred by Lender during the course of periodic,  field examinations
of the Collateral and Borrowers' operations,  plus a per diem charge at the then
prevailing rate (currently $650.00 per person per day) for Lender's examiners in
the field and office;  and (e) the costs, fees and disbursements of in-house and
outside  counsel  to  Lender,  including  but  not  limited  to  such  fees  and
disbursements  incurred as a result of  litigation  between  the parties  hereto
(unless  Lender is not the prevailing  party in any litigation  initiated by any
Borrower against Lender),  any third party and in any appeals arising therefrom.
Anything  herein  to  the  contrary  notwithstanding,  Borrowers  shall  not  be
obligated to reimburse Lender for fees of Lender's  in-house counsel relating to
the  drafting,  negotiating  or closing  of the  transaction  described  in this
Agreement.

                  6.14 Further Assurances. At the request of Lender, at any time
and from time to time, at Borrowers'  sole expense,  Borrowers shall execute and
deliver  or cause to be  executed


                                      -21-
<PAGE>


and delivered to Lender, such agreements,  documents and instruments,  including
waivers,   consents  and  subordination  agreements  from  landlords,   bailees,
mortgagees  or other  holders of property  of any  Borrower or of loans due from
Borrowers or security  interests or liens in the Collateral,  and do or cause to
be done  such  further  acts as  Lender,  in its  reasonable  discretion,  deems
necessary  or desirable  to create,  preserve,  perfect or validate any security
interest of Lender or the priority  thereof in the  Collateral  and otherwise to
effectuate  the  provisions  and purposes of this  Agreement.  Borrowers  hereby
authorize Lender to file financing statements or amendments against Borrowers in
favor of Lender with respect to the Collateral, without Borrowers' signature and
to file as financing statements any carbon,  photographic or other reproductions
of this Agreement or any financing statements signed by Borrowers.

                  6.15  Environmental  Condition.  Each  Borrower  warrants  and
represents  that to the best of its knowledge,  none of its properties or assets
has  ever  been   designated  or  identified  in  any  manner  pursuant  to  any
environmental  protection  statute as a hazardous  waste or hazardous  substance
disposal  site,  or a  candidate  for  closure  pursuant  to  any  environmental
protection  statute  except as identified in Phase I  environmental  assessments
acceptable to Lender performed by Dames & Moore Group or as otherwise  disclosed
to Lender in writing. No lien arising under any environmental protection statute
has  attached to any revenues or to any real or personal  property  owned by any
Borrower, except as disclosed in Schedule E. No Borrower 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
such Borrower  resulting in the releasing,  or otherwise  disposing of hazardous
waste or hazardous substances into the environment.  Subject to Schedule E, each
Borrower  is  in  compliance  in  all  material   respects  with  all  statutes,
regulations,   ordinances  and  other  legal  requirements   pertaining  to  the
production, storage, handling, treatment, release, transportation or disposal of
any hazardous waste or hazardous substance.

SECTION 7. EVENTS OF DEFAULT AND REMEDIES


                  7.1 Events of Default.  All  Obligations  shall be immediately
due and payable,  without notice or demand, and any provisions of this Agreement
as  to  future  loans  and  credit  accommodations  by  Lender  shall  terminate
automatically,  upon the  termination  or  non-renewal  of this Agreement or, at
Lender's  option,  upon or at any time after the  occurrence or existence of any
one or more of the following (each, an "Event of Default"):

                           (a)  Borrowers  fail  to  pay  when  due  any  of the
         Obligations or fails to perform any of the terms of this Agreement, any
         deeds of trust or  mortgages  executed in favor of Lender,  any note or
         any other existing or future agreement  between Borrowers and Lender or
         any affiliate of Lender,  provided that Borrowers  shall have five days
         from  the  date of  breach  to cure  non-monetary  breaches  which,  in
         Lender's  judgment,  would  not  have  a  material  adverse  effect  on
         Borrowers,   the  Collateral  or  the  prospect  of  repayment  of  the
         Obligations, or which, in Lender's judgment, are not material breaches;

                           (b) Any  representation,  warranty  or  statement  of
         material  fact made by


                                      -22-
<PAGE>


         any  Borrower  to Lender  in this  Agreement  or any  other  agreement,
         schedule,  confirmatory assignment or otherwise, or to any affiliate of
         Lender, shall prove materially inaccurate or misleading when made;

                           (c)  Any  guarantor  or  subordinated  creditor  of a
         Borrower  revokes,  terminates or fails to perform within ten (10) days
         of  when  required,  any of the  terms  of any  guaranty,  endorsement,
         subordination  agreement  or other  agreement  of such party with or in
         favor of Lender or any affiliate of Lender;

                           (d) Any  judgment(s)  in  excess of  $250,000  in the
         aggregate or any injunction (the  enforcement of which would materially
         and  adversely  affect  any  Borrower's  business,  the  Collateral  or
         Lender's security interest therein, or such Borrower's ability to repay
         the  Obligations  as  provided  in this  Agreement)  or  attachment  is
         obtained  against such Borrower or any guarantor and is either enforced
         or  remains  unstayed  for a period of twenty  (20) days  unless  fully
         covered by insurance without  reservation of rights or fully paid under
         an insurance policy (regardless of reservation of rights);

                           (e) Any guarantor  which is a natural person dies, or
         any Borrower or any guarantor  which is a partnership or corporation is
         dissolved,  or any  Borrower or any  guarantor  which is a  corporation
         fails to maintain its corporate  existence in good standing (other than
         through merger with another  affiliate or any  guarantor,  or any other
         merger specifically permitted hereunder),  or the usual business of any
         Borrower or any guarantor ceases or is suspended;

                           (f) Any change occurs in the controlling ownership of
         any Borrower or any guarantor which is a corporation;

                           (g)  (i)  Borrowers  and  their   affiliates,   on  a
         consolidated  basis,  become  insolvent,  or  (ii)  any  Borrower,  any
         affiliate  or any  guarantor  makes an  assignment  for the  benefit of
         creditors,  makes or sends notice of a bulk transfer or calls a general
         meeting of its creditors or principal creditors;

                           (h) Any petition or application  for any relief under
         the bankruptcy  laws of the United States now or hereafter in effect or
         under any  insolvency,  reorganization,  receivership,  readjustment of
         debt, dissolution or liquidation law or statute of any jurisdiction now
         or  hereafter  in effect  (whether  at law or in equity) is filed by or
         against any Borrower or any guarantor and in the case of an involuntary
         petition in  bankruptcy,  is not dismissed  within sixty (60) days from
         the date of the filing thereof;

                           (i) Any  indictment or  threatened  indictment of any
         Borrower  or any  guarantor  occurs  under  any  criminal  statute,  or
         criminal or civil  proceedings are commenced or threatened  against any
         Borrower or any guarantor, pursuant to which statute or proceedings the
         penalties or remedies  sought or available  include  forfeiture  of any
         material portion of the property of such Borrower or guarantor;


                                      -23-
<PAGE>


                           (j) Lender in its reasonable credit judgment believes
         that  either  (i)  the  prospect  of  payment  or  performance  of  the
         Obligations  is  materially  impaired;  or (ii) the  Collateral  is not
         sufficient to fully secure the Obligations,  and such condition has not
         been cured within ten (10) days after  Lender's  written notice thereof
         to Borrowers;

                           (k)  Any  material  change  occurs  in  the  type  of
         business in which any  Borrower or any  guarantor  is engaged as of the
         date of this Agreement; or

                           (l) Any  default  or event of  default  occurs on the
         part of any Borrower  under any  agreement,  document or  instrument to
         which such  Borrower is a party or by which such Borrower or any of its
         property is bound,  creating or  relating to any  indebtedness  of such
         Borrower  to any  person or entity  other  than  Lender in a  principal
         amount  exceeding  $500,000,  if  the  effect  of  such  default  is to
         accelerate the maturity of all or any part of such indebtedness, or all
         or any part of any such  indebtedness  shall be  declared to be due and
         payable or required to be prepaid for any other reason, in either event
         prior to the stated maturity thereof.

                  7.2 Remedies.  Upon the  occurrence of an Event of Default and
at any time during the  continuance  thereof,  Lender shall have all the default
rights and remedies  provided in this Agreement,  any other  agreements  between
Borrower and Lender, the Uniform Commercial Code or other applicable law, all of
which rights and remedies may be exercised without notice to Borrowers, all such
notices  being hereby  waived,  except such notice as is expressly  provided for
hereunder or is not waivable  under  applicable  law. All rights and remedies of
Lender  are  cumulative  and not  exclusive  and are  enforceable,  in  Lender's
discretion,  alternatively,  successively  or  concurrently  on any  one or more
occasions and in any order Lender may determine. Without limiting the foregoing,
Lender may (a) accelerate the payment of all  Obligations  and demand  immediate
payment thereof to Lender;  (b) with or without  judicial  process or the aid or
assistance  of  others,  enter  upon  any  premises  on or in  which  any of the
Collateral  may be located and take  possession  of the  Collateral  or complete
processing,  manufacturing  and repair of all or any portion of the  Collateral;
(c) require Borrower,  at Borrowers'  expense, to assemble and make available to
Lender any part or all of the  Collateral  at any place and time  designated  by
Lender; (d) collect, foreclose,  receive,  appropriate, set off and realize upon
any and all Collateral;  (e) extend the time of payment of, compromise or settle
for cash, credit, return of merchandise,  and upon any terms or conditions,  any
and all accounts or other  Collateral  which includes a monetary  obligation and
discharge or release the account debtor or other obligor,  without affecting any
of the Obligations;  and (f) sell, lease, transfer, assign, deliver or otherwise
dispose of any and all Collateral (including, without limitation,  entering into
contracts  with respect  thereto,  by public or private  sales at any  exchange,
broker's  board,  any office of Lender or  elsewhere) at such prices or terms as
Lender may deem reasonable,  for cash, upon credit or for future delivery,  with
the Lender having the right to purchase the whole or any part of the  Collateral
at any such  public  sale,  all of the  foregoing  being  free from any right or
equity of redemption of Borrowers, which right or equity of redemption is hereby
expressly waived and released by Borrowers.  If any of the Collateral is sold or
leased by Lender upon credit terms or for future delivery, the Obligations shall
not be reduced as a result thereof until payment


                                      -24-
<PAGE>


therefor is finally  collected by Lender. If notice of disposition of Collateral
is  required  by law,  five (5)  days'  prior  notice  by  Lender  to  Borrowers
designating  the time and place of any public  sale or the time after  which any
private sale or other intended  disposition of Collateral is to be made shall be
deemed to be reasonable  notice thereof and Borrowers waive any other notice. If
Lender  institutes an action to recover any  Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrowers waive the posting of any bond
which might otherwise be required.


                  7.3  Application  of  Proceeds.  Lender  may  apply  the  cash
proceeds  of  Collateral  actually  received  by Lender  from any  sale,  lease,
foreclosure  or other  disposition  of the  Collateral  to payment of any of the
Obligations, in whole or in part (including reasonable attorneys' fees and legal
expenses  incurred by Lender with  respect  thereto or otherwise  chargeable  to
Borrowers)  and in such  order as Lender  may  elect,  whether  or not then due.
Borrowers  shall  remain  liable to Lender  for the  payment  of any  deficiency
together with interest at the highest rate provided for herein and all costs and
expenses of collection or enforcement,  including reasonable attorneys' fees and
legal expenses.

                  7.4 Lender's Cure of Third Party Agreement  Default.  Upon and
during the  continuance of an Event of Default  Lender may, at its option,  cure
any default by Borrowers  under any agreement  with a third party or pay or bond
on appeal any  judgment  entered  against  Borrowers,  discharge  taxes,  liens,
security  interests or other encumbrances at any time levied on or existing with
respect to the Collateral  and pay any amount,  incur any expense or perform any
act which,  in Lender's sole judgment,  is necessary or appropriate to preserve,
protect,  insure,  maintain or realize  upon the  Collateral.  Lender may charge
Borrowers'  loan  account(s)  for any amounts so  expended,  such  amounts to be
repayable by Borrowers on demand.  Lender shall be under no obligation to effect
such cure, payment,  bonding or discharge, and shall not, by doing so, be deemed
to have assumed any obligation or liability of Borrowers.


SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND CONSENTS

                  8.1 Jury Trial  Waiver.  BORROWERS  AND LENDER  EACH WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED BY EITHER OF THEM
AGAINST THE OTHER WHICH PERTAINS  DIRECTLY OR INDIRECTLY TO THIS AGREEMENT,  THE
OBLIGATIONS,  THE  COLLATERAL,  ANY ALLEGED  TORTIOUS  CONDUCT BY  BORROWERS  OR
LENDER, OR, IN ANY WAY, DIRECTLY OR INDIRECTLY,  ARISES OUT OF OR RELATES TO THE
RELATIONSHIP BETWEEN BORROWERS AND LENDER. IN NO EVENT WILL LENDER BE LIABLE FOR
LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.

                  8.2 Counterclaims. Borrowers waive all rights to interpose any
claims, deductions,  setoffs or counterclaims of any kind, nature or description
in any action or proceeding instituted by Lender with respect to this Agreement,
the  Obligations,  the  Collateral or any matter  arising  therefrom or relating
thereto, except compulsory counterclaims.


                                      -25-
<PAGE>


                  8.3  Jurisdiction.  Borrowers  hereby  irrevocably  submit and
consent  to the  non-exclusive  jurisdiction  of the  State and  Federal  Courts
located in the State of California  and any other State where any  Collateral is
located, with respect to any action or proceeding arising out of this Agreement,
the  Obligations,  the  Collateral or any matter  arising  therefrom or relating
thereto.  In any such action or proceeding,  Borrowers waive personal service of
the summons and complaint or other process and papers therein and agree that the
service  thereof may be made by mail  directed to Borrowers at their  respective
chief  executive  offices  set forth  herein or other  address  thereof of which
Lender has received notice as provided herein or as otherwise  permitted by law,
service to be deemed complete five (5) days after mailing, or as permitted under
the rules of either of said Courts.  Any such action or proceeding  commenced by
Borrowers  against  Lender will be litigated  only in a federal court located in
the  Central  District  of  California,  or a state  court in the  County of Los
Angeles, California.

                  8.4 No Waiver by Lender.  Lender shall not, by any act, delay,
omission or otherwise be deemed to have expressly or impliedly waived any of its
rights or  remedies  unless  such  waiver  shall be in writing  and signed by an
authorized  officer of Lender.  A waiver by Lender of any right or remedy on any
one  occasion  shall not be construed as a bar to or waiver of any such right or
remedy which Lender would otherwise have on any future occasion, whether similar
in kind or otherwise.

SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS

                  9.1 Term.  This  Agreement  shall only become  effective  upon
execution and delivery by Borrowers and Lender and shall  continue in full force
and effect for a term of five (5) years from the date hereof and shall be deemed
automatically  renewed for successive terms of two (2) years  thereafter  unless
terminated  as of the end of the initial or any renewal  term (each a "Term") by
either party giving the other  written  notice at least sixty (60) days prior to
the end of the then-current Term.

                  9.2  Early  Termination.  Borrowers  may also  terminate  this
Agreement by giving  Lender at least thirty (30) days' prior  written  notice at
any time and upon payment in full of all of the Obligations as provided  herein,
including the early  termination fee provided below.  Lender shall also have the
right to terminate this Agreement at any time upon or during the  continuance of
an Event of Default.  If Lender  terminates  this  Agreement  upon or during the
continuance  of an  Event of  Default,  or if  Borrowers  shall  terminate  this
Agreement as  permitted  herein  effective  prior to the end of the then current
Term,  in  addition  to all  other  Obligations,  Borrowers  shall  jointly  and
severally pay to Lender, upon the effective date of termination,  in view of the
impracticality  and extreme  difficulty of  ascertaining  actual  damages and by
mutual agreement of the parties as to a reasonable  calculation of Lender's lost
profits, an early termination fee equal to the following  applicable  percentage
of the Maximum Credit:

                           (a) three  percent  (3%),  if such early  termination
         occurs on or prior to the first anniversary of this Agreement;


                                      -26-
<PAGE>


                           (b)  two  percent  (2%),  if such  early  termination
         occurs on or prior to the second anniversary of this Agreement;

                           (c)  one  percent  (1%),  if such  early  termination
         occurs on or prior to the third anniversary of this Agreement; and

                           (d) zero  percent  (0%),  if such  early  termination
         occurs at any time after the third anniversary of this Agreement.

                  9.3 Additional Cash  Collateral.  Upon any termination of this
Agreement  by  Borrowers  as  permitted  herein,  in  addition to payment of all
Obligations  which are not  contingent,  Borrowers  shall deposit such amount of
cash  collateral  as Lender  determines is necessary to secure Lender from loss,
cost,  damage or expense,  including  reasonable  attorneys' fees, in connection
with any open Accommodations or remittance items or other payments provisionally
credited to the Obligations or with respect to which Lender has not yet received
final payment.  All other security interests shall be released (and Lender shall
promptly take all action  necessary to effect such release) upon  termination of
this Agreement,  termination of any commitments of Lender hereunder and full and
final payment to Lender of all the  Obligations.  The unused portion of all sums
deposited  pursuant to this Section 9.3 shall be promptly  returned to Borrowers
when any Accommodation terminates, any remittance item or other credited payment
is verified, or when Lender receives full and final payment on any provisionally
credited  amount (as the case may be). In the event that Lender has a reasonable
basis to  believe  that any final  payment  made to  Lender  may be  subject  to
contingency or defeasance,  or if Lender in its reasonable  judgment  determines
that Lender may be subject to some other contingent liability or expense that is
the  responsibility of Borrowers  hereunder (and not otherwise covered under the
first  sentence of this  Section  9.3),  then Lender may, as a condition  to the
release of security  interests  hereunder,  require the provision of appropriate
indemnities,  letters of  credit,  cash  collateral  or other  similar  security
reasonably   acceptable  to  Lender  to  cover  any  such  possible  defeasance,
contingent liability or expense.


                  9.4  Notices.  Except  as  otherwise  provided,  all  notices,
requests  and  demands  hereunder  shall be in writing  and shall be (a) made to
Lender at its address set forth in Section 10.6(a) and to Borrowers as set forth
in Section  10.6(c),  or to such other  address as either party may designate by
written notice to the other in accordance with this provision; and (b) deemed to
have been given or made: if by hand,  immediately  upon  delivery;  if by telex,
telegram or  facsimile,  immediately  upon  receipt;  if by  overnight  delivery
service,  one (1) day after  dispatch;  and if by first class or certified mail,
three (3) days after deposit in the U.S. Mail,  postage prepaid and addressed as
set forth herein.

                  9.5  Severability.  If any provision of this Agreement is held
to be invalid or  unenforceable,  such provision shall not affect this Agreement
as a whole,  but this Agreement  shall be construed as though it did not contain
the particular provision held to be invalid or unenforceable.


                                      -27-
<PAGE>


                  9.6 Entire Agreement; Amendments;  Assignments. This Agreement
contains the entire  agreement of the parties as to the subject  matter  hereof,
all prior commitments,  proposals and negotiations concerning the subject matter
hereof being merged  herein.  Neither this  Agreement nor any  provision  hereof
shall be amended,  modified or  discharged  orally or by course of conduct,  but
only by a written  agreement  signed by an  authorized  officer of Lender.  This
Agreement  shall be binding upon and inure to the benefit of each of the parties
hereto and their respective  successors and assigns,  except that any obligation
of  Lender  under  this  Agreement  shall  not be  assignable  or  inure  to the
successors and assigns of Borrowers.

                  9.7  Discharge  of Borrower.  Except as otherwise  provided in
Section  9.3,  no  termination  of this  Agreement  shall  relieve or  discharge
Borrowers  of their  obligations,  grants of  Collateral,  duties and  covenants
hereunder or otherwise  until such time as all  Obligations  to Lender have been
fully  and  finally  paid and  satisfied,  including,  without  limitation,  the
continuation and survival in full force and effect of all security interests and
liens of Lender in and upon all then existing and thereafter-arising or acquired
Collateral and all warranties and waivers of Borrowers.

                  9.8 Usage.  All terms  used  herein  which are  defined in the
Uniform  Commercial Code shall have the meanings given therein unless  otherwise
defined in this  Agreement  and all  references to the singular or plural herein
shall also mean the plural or singular, respectively.

                  9.9  Governing  Law. This  Agreement  shall be governed by and
construed in accordance  with the laws of the State of California  applicable to
agreements made and entirely performed therein by California residents.


SECTION 10. ADDITIONAL DEFINITIONS AND TERMS

         10.1     (a) Maximum Credit:                   $30,000,000 inclusive of
                                            all Revolving Loans, Accommodations,
                                                   Real Property Term Loans, the
                                                          Equipment Loan and all
                                                       Capital Expenditure Loans

                  (b) Gross Availability Formulas:

                      Eligible Accounts Percentage:                       90%(1)
                      Eligible Inventory Percentages
                        Raw Materials:                                    60%


--------
(1) Provided  that if dilution  exceeds 6%, the advance rate shall be reduced 1%
for each percent of dilution above 6%.


                                      -28-
<PAGE>


                      Finished Goods (including finished goods described as  60%
                      "build to order" manufactured pursuant to signed
                      purchase orders)
                      Hardware:                                              60%

                  (c) Inventory Sublimit(s):                          $8,000,000

                  (d) Maximum days
                      for Eligible Accounts:          120 days from invoice date

                  (e)      Minimum Borrowing:                         $1,000,000

         10.2     Intentionally Deleted.

         10.3     Accommodations:

                  (a) Lender's Charge for Accommodations:           1.00% over a
                                                                         360-day
                                                                            year

                  (b) Sublimit for Accommodations:                    $2,000,000

         10.4     Fees:


                  (a) Interest Rate:  Prime Rate plus                      1.00%
                                                             over a 360-day year

                  (b) Interest Rate (Equipment Loans):
                      Prime Rate plus                                      0.25%
                                                             over a 360-day year

                  (c) Intentionally Omitted

                  (d) Unused Line Fee:                                     0.25%

         10.5     Financial Covenants:

                  (a) Borrower's consolidated net worth as at
                      September 30, 1997 shall not deteriorate more
                      than $2,500,000 in the aggregate over the initial
                      Term measured on a quarterly basis.  If by
                      September 30, 1997 Borrowers have not made
                      the full $2,500,000 of principal payments to FBLI
                      permitted under Section 6.12, the difference


                                      -29-
<PAGE>


                      between $2,500,000 and the actual aggregate
                      amount of such payments made to FBLI shall be
                      figured into the calculation of Borrowers'
                      consolidated net worth as at September 30, 1997.

         10.6     (a) Lender's Office:       300 South Grand Avenue
                                             Third Floor
                                             Los Angeles, CA 90071

                  (b) Borrowers               Associated Concrete Products, Inc.
                                              DeKalb Concrete Products, Inc.
                                              Dalworth Concrete Products, Inc.
                                              Associated Plastics, Inc.

                  (c) Borrowers' Chief

                        Executive Office:     2301 Dupont Drive, Suite 100
                                              Irvine, California 92612

                  (d) Locations of
                        Eligible Inventory
                        Collateral:           See Schedule "B".

                  (e) Borrowers' Other
                        Offices and
                        Locations of
                        Collateral:           See Schedule "C".

                  (f) Borrowers' Trade
                        Names for
                        Invoicing:            See Schedule "D".

Section 11. SURETYSHIP WAIVERS AND CONSENTS

                           (a) The  Obligations of each Borrower are independent
of the Obligations of each other Borrower.  Each Borrower  expressly  waives all
suretyship rights and defenses, including any right to require Lender to proceed
against any other Borrower,  to proceed against or exhaust any Collateral or any
other  security for the  Obligations  or to pursue any remedy Lender may have at
any time.  Each Borrower  agrees that Lender may proceed against any one or more
Borrower  and/or  the  Collateral  in such  order and  manner  as  Lender  shall
determine in its sole and absolute discretion.  A separate action or actions may
be brought and  prosecuted  against any one or more of the Borrowers  whether an
action is brought or  prosecuted  against any other  Borrower or with respect to
any Collateral or whether any other person shall be joined in any such action or
actions.  Each  Borrower  expressly  waives  the  benefit of any  statute(s)


                                      -30-
<PAGE>


of limitations  affecting its liability  under this Agreement or the enforcement
of the  Obligations  or any  rights of Lender  created  or  granted  under  this
Agreement.  Lender's rights  hereunder shall be reinstated and revived,  and the
obligations  and  liability of each  Borrower  hereunder  shall  continue,  with
respect  to any  amount at any time paid on  account  of the  Obligations  which
thereafter  shall be  required  to be  restored  or  returned by Lender upon the
bankruptcy,  insolvency or reorganization of any Borrower, or otherwise,  all as
though such amount had not been paid.

                           (b)  Each  Borrower  expressly  waives  any  and  all
suretyship defenses including without limitation, those now or hereafter arising
or  asserted  by  reason of (i) any  disability  or other  defense  of any other
Borrower or with respect to the  Obligations;  (ii) the  cessation for any cause
whatsoever of the liability of any other  Borrower and (iii) any act or omission
of Lender or others that directly or indirectly results in or aids the discharge
or release of any other  Borrower or the  Obligations  or any  Collateral or any
guaranty  therefor by operation of law or otherwise.  Each Borrower  agrees that
any  amounts  received  by  Lender  from  whatever  source  on  account  of  the
Obligations  may be  applied  by  Lender  toward  the  payment  of  such  of the
Obligations  and in such  order of  application  as Lender may from time to time
elect;  and,  notwithstanding  any payments made by any Borrower,  such Borrower
shall  have no  right of  subrogation,  reimbursement,  exoneration,  indemnity,
contribution or any other rights that would result in such Borrower being deemed
a creditor of any other Borrower under the federal  Bankruptcy Code or any other
law or for any other purpose and such  Borrower  hereby  irrevocably  waives all
such  rights,  the right to assert any such  rights and any right to enforce any
remedy  which Lender now or may  hereafter  have against any Borrower and hereby
irrevocably  waives any benefit of and any right to participate in, any security
now or hereafter  held by Lender,  whether any of the foregoing  rights arise in
equity, at law or by contract.


                           (c) Each Borrower  represents  and warrants to Lender
that it has established adequate means of obtaining from each other Borrower, on
a  continuing  basis,   financial  and  other  information   pertaining  to  the
businesses,  operations  and condition  (financial  and otherwise) of each other
Borrower and its  properties,  and each  Borrower now is and  hereafter  will be
completely familiar with the businesses, operations and condition (financial and
otherwise)  or each other  Borrower and its  properties.  Each  Borrower  hereby
expressly  waives and  relinquishes  any duty on the part of Lender  (should any
such duty exist) to disclose to any Borrower any matter,  fact or thing  related
to the  businesses,  operations  or condition  (financial  or otherwise) of each
Borrower or its properties, whether now known or hereafter known by Lender.

                           (d) Each Borrower  represents  and warrants that each
waiver  set forth  herein is made with each  Borrower's  full  knowledge  of its
significance and consequences,  and that under the circumstances  each waiver is
reasonable  and not contrary to public  policy or law. If any of such waivers is
determined to be contrary to any applicable  law or public  policy,  such waiver
shall be effective only to the maximum extent permitted by law.

         IN WITNESS WHEREOF, Borrowers and Lender have duly executed this

                                      -31-

<PAGE>


Agreement this 13th day of August, 1997.



LENDER:                                  BORROWERS:

THE CIT GROUP/CREDIT                     ASSOCIATED CONCRETE PRODUCTS, INC.
  FINANCE, INC.


By:_________________________               By:____________________________

Title:______________________               Title:_________________________


                                           DEKALB CONCRETE PRODUCTS, INC.

                                           By: ___________________________

                                           Title: ________________________


                                           DALWORTH CONCRETE PRODUCTS, INC.

                                           By: ___________________________

                                           Title: ________________________


                                           ASSOCIATED PLASTICS, INC.

                                           By: ___________________________

                                           Title: ________________________


                                      -32-
<PAGE>


                                   SCHEDULE A

                                 Permitted Liens


                                      NONE


<PAGE>
                                   SCHEDULE B

                   Locations of Eligible Inventory Collateral


   1.    Associated Concrete Products, Inc.

         a.       4301 W. MacArthur Boulevard
                  Santa Ana, California  92704

         b.       999 West Mission Rock Road
                  Santa Paula, California  93060

         c.       10050 Black Mountain Road
                  San Diego, California  92126

         d.       1901 Isabel
                  Livermore, California 94550

         e.       4491-A South "K" Street
                  Tulare, California  93274

         f.       91-059 Hanua Street
                  Kapolei, Hawaii 96707,
                  subject to Lender's receipt of
                  satisfactory agreements with the
                  owner of such facility

   2.    Associated Plastics, Inc.

         a.       3521 Airport Road
                  Jonesboro, Arkansas

         b.       2626 Kansas Street
                  Riverside, California  92507

   3.    Dalworth Concrete Products, Inc.

         a.       7818 South Cooper
                  Arlington, Texas  76017

         b.       1002 Vulcan Road
                  Haskell, Arkansas  72015



<PAGE>


         c.       5250 F.M. 2855
                  Katy, Texas  77493

         d.       1900 Rilling Road
                  San Antonio, Texas  78214

         e.       3330 North Zaragosa
                  El Paso, Texas  79938

   4.    DeKalb Concrete Products, Inc.

         a.       Turner Road
                  Eastonollee, Georgia  30538

         b.       3408 Highway 17 N.
                  Green Cove Springs, Florida  32043

         c.       5951 Covington Highway
                  Decatur, Georgia 30035


<PAGE>


                                   SCHEDULE C

              Borrowers' Other Offices and Locations of Collateral



   1.     2301 Dupont Drive, Suite 100
          Irvine, California  92612

   2.     500 S. Florida Avenue, Suite 600
          Lakeland, Florida  33801



<PAGE>

                                   SCHEDULE D

                      Borrowers' Trade Names for Invoicing



             The Quikset Organization



<PAGE>


                                   SCHEDULE E

                       Governmental Notices and Directives


                  Monitoring  wells  are  being  operated  at  the  Santa  Paula
facility  pursuant  to orders  and  directives  of the State of  California,  in
connection with the monitoring of underground fuel contaminants.


<PAGE>


                                   SCHEDULE F
                                  Real Property

   1.     3408 Highway 17 North
          Green Cove Springs, Florida
        
   2.     5951 Covington Highway
          Decatur, Georgia
        
   3.     1900 Rilling Road
          San Antonio, Texas
        
   4.     1002 Vulcan Road
          Haskell, Arkansas
        
   5.     5250 Farm to Market Road 2855
          Katy, Texas
        
   6.     3330 North Zaragoza
          El Paso, Texas
        
   7.     7818 South Cooper Street
          Arlington, Texas
        
   8.     Turner Road
          Toccoa, Georgia