EXHIBIT (a)


                           AMENDED AND RESTATED
                             CREDIT AGREEMENT


     THIS AMENDED AND RESTATED  REVOLVING CREDIT AGREEMENT,  made as of the 14th
day  of  June,  1996,  by  and  between  DOUGHTIE'S  FOODS,  INC.  , a  Virginia
corporation  (the "Borrower),  and CRESTAR BANK, a Virginia banking  corporation
formerly known as United Virginia Bank (the "Bank"), provides as follows:

     The Borrower and the Bank are parties to that certain  Amended and Restated
Revolving  Credit Agreement dated as of November 15, 1994, as amended by a First
Amendment  to Revolving  Credit  Agreement  dated as of  September  13, 1995 and
letter  agreements  dated  March  25  and  March  29,  1996  (collectively,  the
"Agreement").  The  parties  desire  to  amend  and  restate  the  Agreement  as
hereinafter set forth.


SECTION 1.     DEFINITIONS.

     Capitalized terms used in this Agreement shall have the meanings  specified
in Annex I hereto (unless otherwise defined herein).


SECTION 2.     CREDIT COMMITMENTS.

     2.1 Revolving Credit Loans. The Bank has made and, subject to the terms and
conditions  herein set forth,  shall make revolving credit loans (the "Revolving
Credit Loans") to the Borrower,  from time to time during the Commitment  Period
in amounts not to exceed,  in the  aggregate  outstanding  at any one time,  the
lesser of (i) the Borrowing  Base, or (ii)  $7,500,000  (the  "Revolving  Credit
Commitment"). The Revolving Credit Loans shall be evidenced by a promissory note
in the form attached hereto as Exhibit A (the "Revolving  Credit Note").  During
the  Commitment  Period,  the  Borrower  may use the  Commitment  by  borrowing,
prepaying  the  Revolving  Credit Loans in whole or in part  without  premium or
penalty,  and  reborrowing,  all in  accordance  with the terms  and  conditions
hereof.

     2.2 Term  Loan.  Subject  to and upon the terms and  conditions  herein set
forth, the Bank shall make a term loan (the "Term Loan" and,  collectively  with
the Revolving Credit Loans,


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the  "Loans") to the  Borrower on the Closing  Date in the  principal  amount of
$1,750,000.  The Term Loan shall be evidenced  by a promissory  note in the form
attached  hereto as Exhibit B (the "Term Loan Note" and,  collectively  with the
Revolving Credit Note, the "Notes").


SECTION 3.     REPRESENTATIONS AND WARRANTIES.

     In order to induce  the Bank to enter into this  Agreement  and to make the
Loans,  the  Borrower  makes  the  following   representations,   covenants  and
warranties  which shall survive the execution and delivery of this Agreement and
the other documents and instruments referred to herein:

     3.1 Status.  Each of the Borrower and the  Subsidiaries is a duly organized
and  validly  existing  corporation  in  good  standing  under  the  laws of the
jurisdiction of its  incorporation  and has the corporate power and authority to
own or hold under lease its  property  and assets,  to transact  the business in
which it is engaged, to enter into and perform this Agreement and the other Loan
Documents to which it is party,  and,  with respect to the  Borrower,  to borrow
hereunder;  and each of the Borrower and the  Subsidiaries  is duly qualified or
licensed as a foreign  corporation in good standing in each  jurisdiction  where
failure to so qualify  would have a material  adverse  effect on the business or
assets of the Borrower and the Subsidiaries, taken as a whole.

     3.2  Compliance  with  Other  Instruments.  Neither  the  Borrower  nor any
Subsidiary is in material default under any Material  Agreement to which it is a
party, and neither the execution,  delivery or performance of this Agreement and
the other Loan Documents,  nor the  consummation of the  transactions  herein or
therein  contemplated,  nor compliance  with the terms and provisions  hereof or
thereof,  will contravene any provision of law,  statute,  rule or regulation to
which the  Borrower  or the  Subsidiaries  is subject or any  judgment,  decree,
franchise,  order or permit  applicable to the Borrower or the  Subsidiaries  or
will conflict or will be inconsistent  with or will result in any breach of, any
of the terms,  covenants,  conditions or provisions  of, or constitute a default
under, or, except as provided by the Security Documents,  result in the creation
or  imposition  of (or the  obligation to create or impose) any Lien upon any of
the property or assets of the Borrower or the Subsidiaries (other than Permitted
Encumbrances) pursuant to, the terms of any indenture,  mortgage,  deed of trust
or Material Agreement to which the Borrower or a Subsidiary is a signatory or by
which it is bound or to which it may be  subject or violate  any  provision  the
certificate of incorporation or bylaws of the Borrower or a Subsidiary.

     3.3 Litigation.  There are no actions,  suits or proceedings pending or, to
the knowledge of the Borrower, threatened, against


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or  affecting  the Borrower or the  Subsidiaries  before any court or before any
governmental or administrative body or agency,  which, if adversely  determined,
would have a material  adverse  effect on the business or assets of the Borrower
and the Subsidiaries, taken as a whole.

     3.4 Compliance  with Law.  Except for (i) matters which do not exceed a sum
in question in excess of $75,000  individually,  or in the aggregate  exceed the
sum in question of $250,000 or (ii)  matters  which  exceed a sum in question in
excess of $75,000  individually,  or in the aggregate exceed the sum in question
of  $250,000,  but which will not  materially  adversely  affect the business or
operation  of the  Borrower  and the  Subsidiaries,  taken as a  whole:  (a) all
business and operations of the Borrower and the  Subsidiaries  have been and are
being conducted in accordance with all applicable laws, rules and regulations of
all Federal, state, local and other governmental authorities including all laws,
rules and regulations relating to environmental protection; (b) the Borrower and
the  Subsidiaries  have obtained all permits,  licenses and  authorizations,  or
consents which are otherwise necessary, for the Borrower and the Subsidiaries to
conduct its business as it is presently  being  conducted;  and (c) the Borrower
and the  Subsidiaries  are not parties to, have not been  threatened  with,  and
there are no facts existing as a basis for, any governmental or other proceeding
which might result in a suspension, limitation or revocation of any such permit,
license or authorization.

     3.5  Capitalization  of  Subsidiaries.  All of the issued  and  outstanding
capital stock of the  Subsidiaries  (the  "Subsidiary  Stock") has been duly and
validly issued and is fully paid and nonassessable.  All of the Subsidiary Stock
is owned by the Borrower or a Subsidiary, free and clear of any and all Liens.

     3.6  Governmental  Approvals.  No  order,  permission,  consent,  approval,
license,  authorization,  registration  or  validation  of, or filing  with,  or
exemption by, any governmental agency, commission,  board or public authority is
required to authorize, or is required in connection with the execution, delivery
and performance of, this Agreement or the other Loan Documents.

     3.7 Federal  Reserve  Margin  Regulations;  Proceeds.  The  Borrower is not
engaged principally,  or as one of its important activities,  in the business of
extending  credit for the purpose of  purchasing  or carrying  any margin  stock
(within the meaning of  Regulation  U of the Board of  Governors  of the Federal
Reserve  System).  No part of the proceeds of the Loans will be used to purchase
or carry any such margin stock or to extend  credit to others for the purpose of
purchasing or carrying any such margin stock.






<PAGE>

     3.8  Taxes.

         (a)  All tax  returns  of any  nature  whatsoever,  including,  but not
limited to, all Federal income,  payroll,  stock transfer and excise tax returns
and all appropriate state and local income,  sales, excise,  payroll,  franchise
and real and personal property tax returns, and corresponding  returns under the
laws of any jurisdiction, which are required to be filed by the Borrower and the
Subsidiaries  or on their behalf,  have been or will be filed by the due date or
extended due date of such returns.

          (b) Except for amounts which in the aggregate do not exceed  $250,000,
(i) all tax amounts as shown on the applicable  returns and notices described in
Section  3.8(a)  reflect all taxes due and payable  with  respect to the periods
covered thereby, (ii) there are no other tax liabilities,  interest or penalties
payable by the Borrower and the Subsidiaries  with respect to such periods,  and
(iii) no other tax liabilities,  disallowances or assessments have been assessed
or proposed which remain unpaid.

     3.9 Investment  Company Act.  Neither the Borrower nor the entering into of
the Loan  Documents  nor the  issuance  of the  Notes is  subject  to any of the
provision of the Investment Company Act of 1940, as amended.

     3.10  Material  Agreements.  All patents,  Material  Agreements  or similar
commitments of the Borrower and the Subsidiaries are in full force,  none of the
parties  thereunder are in material default  thereunder and no written notice of
default has been given or received.

     3.11 Financial Condition.

          (a) The Financial  Statements of the Borrower and the Subsidiaries for
the year ended December 30, 1995,  audited by Price Waterhouse and the unaudited
Financial Statements for the three-month period ended March 30, 1996, previously
delivered to the Bank, have been prepared in accordance with generally  accepted
accounting  principles  consistently  applied and fairly  present the  financial
condition and the results of  operations of the Borrower.  There are no material
liabilities or any material  unrealized or anticipated  losses from  unfavorable
commitments which are not disclosed in such Financial Statements. There has been
no material adverse change in the operations,  business, or assets of, or in the
condition  (financial or otherwise) of, the Borrower and the  Subsidiaries  from
that set forth in such Financial Statements.

          (b) At the time of,  and after  giving  effect  to, the making of each
Loan, each of the Borrower and Dutterer's (i) is Solvent, and (ii) possesses, in
the opinion of the Borrower, sufficient capital to conduct the business in which
it is engaged or presently proposes to engage.

     3.12 Disclosure.  Neither this Agreement nor any of the Security  Documents
nor any statement, list, certificate or other


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document or information, or any Schedules to this Agreement,  delivered or to be
delivered  to the Bank  contains  or will  contain  any  untrue  statement  of a
material fact or omits or will omit to state a material  fact  necessary to make
statements  contained  herein,  in light of the  circumstances in which they are
made, not misleading.

     3.13 The Security  Documents.  The Security  Documents,  when  executed and
delivered and, to the extent  appropriate,  filed or recorded in locations where
required by law in connection with the execution and delivery hereof, will grant
to the Bank a valid and perfected Lien in an on the property  described  therein
(the  "Collateral"),  and no Person will have any right, title or interest in or
to the  Collateral  which is, or which shall be, prior,  paramount,  superior or
equal to the right, title and interest of the Bank therein, except for Permitted
Encumbrances.


SECTION 4.     CONDITIONS PRECEDENT TO TERM LOAN.

     The Bank  shall not be  obligated  to make the Term Loan or any  additional
Revolving Credit Loans unless on the Closing Date (unless otherwise specifically
indicated) the following  conditions have been satisfied to the  satisfaction of
the Bank:

     4.1 Notes.  The Bank shall have  received  the  Notes,  duly  executed  and
completed by the Borrower.

     4.2 Supporting  Documents of the Borrower.  There shall have been delivered
to the Bank such opinions,  information  and copies of documents,  approvals and
records  (certified where appropriate) of corporate and legal proceedings as the
Bank may have  reasonably  requested  relating to the  Borrower's and Dutterer's
entering into and  performance of this Agreement and the other Loan Documents to
which each is a party. Such documents shall, in any event, include:

          (a)  certified  copies  of the  corporate  charter  and  bylaws of the
Borrower and Dutterer's;

          (b) certificates of authorized officers of the Borrower and Dutterer's
certifying the corporate  resolutions of the Borrower and Dutterer's relating to
the  entering  into  and   performance  of  the  aforesaid   documents  and  the
transactions contemplated thereby; and

          (c) certificates of authorized officers of the Borrower and Dutterer's
with respect to the  incumbency  and  specimen  signatures  of their  respective
officers or  representatives  authorized to execute such documents and any other
documents and papers, and to take any other action, in connection therewith; and




<PAGE>


          (d) an opinion of McGuire, Woods, Battle, & Boothe, L.L.P., counsel to
the Borrower and Dutterer's.

     4.3 Security Documents. There shall have been delivered to the Bank:

          (a) a deed of trust from the Borrower on the Virginia Real Property in
the form attached  hereto as Exhibit C (the "Virginia Deed of Trust") and a deed
of trust from  Dutterer's  on the Maryland  Real  Property in the form  attached
hereto as Exhibit D (the  "Maryland  Deed of Trust" and,  collectively  with the
Virginia Deed of Trust, the "Deeds of Trust");

          (b) a  security  agreement  from the  Borrower,  in the form  attached
hereto as  Exhibit  E (the  "Security  Agreement"),  granting  to the  Bank,  as
security  for  the  Loans,  a  security  interest  in all  accounts,  inventory,
furniture, fixtures and equipment, general intangibles,  instruments,  documents
and chattel paper of the Borrower;

          (c) a security  agreement from  Dutterer's in the form attached hereto
as Exhibit F (the  "Dutterer's  Security  Agreement"),  granting to the Bank, as
security  for the Loans,  a security  interest in that certain  promissory  note
dated  September 3, 1995,  payable to Dutterer's,  by Value Added Food Services,
Inc. in the original principal amount of $1,038,756 (the "VAFSI Note");

          (d) the  assignment  by the  Borrower to the Bank of monies due and to
become  due from the U.S.  Defense  Logistics  Agency for the supply of foods to
military  facilities in southern Virginia in the form attached hereto as Exhibit
G (the "Assignment");

          (e)  appropriate financing statements on forms UCC-1;

          (f)  the "VAFSI Note";

          (g) a guaranty from Dutterer's, in the form attached hereto as Exhibit
H, guaranteeing the payment of the Loan (the "Dutterer's Guaranty"); and

          (h)  evidence  satisfactory  to the Bank that each of the Borrower and
Dutterer's  has  sufficient  right,  title and interest in and to the Collateral
owned by it to grant to the Bank the Liens contemplated  hereby and by the Deeds
of Trust and the Security  Agreements and that all Security Documents  necessary
to provide the Bank with  perfected  Liens in the  Collateral  (subject  only to
Permitted Encumbrances) have been filed or recorded or delivered to the Bank (or
to the duly  authorized  agent of the title  insurance  company issuing the loan
insurance  policies  in favor of the Bank,  in which  case the Bank  shall  have
received  written  or telefax  confirmation  from such agent that such agent has
received and will record the Deeds of Trust) in form satisfactory to the Bank.


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     4.4 Representations and Warranties. All representations and warranties made
by the Borrower  herein or  otherwise  by the Borrower in writing in  connection
therewith  shall be true and  correct  in all  material  respects  with the same
effect as though such representations and warranties have been made at and as of
such time.

     4.5  Insurance.  The Borrower  shall have  furnished  to the Bank  evidence
acceptable  to the Bank that the  insurance  policies  required  by the Deeds of
Trust and  Section  6.4  hereof  have been  obtained  and are in full  force and
effect.

     4.6 Title  Insurance.  The Bank shall have received (i) copies of all title
insurance  policies,  title  searches,  abstracts  of titles or other title work
requested by the Bank with regard to the Real  Property,  (ii) legal,  valid and
binding  commitments from Lawyers Title Insurance  Company,  or such other title
insurance  company  as shall be  acceptable  to the Bank,  to issue  loan  title
insurance  policies  or  updates  to  existing  policies  in form and  substance
satisfactory to the Bank in respect of the Deeds of Trust showing that the Deeds
of Trust are valid first Liens subject only to Permitted  Encumbrances  and that
the Virginia Real Property and the Maryland Real Property is owned in fee simple
by the Borrower and Dutterer's,  respectively,  free of encumbrances  other than
Permitted  Encumbrances.  Such  commitment(s)  shall  include  such  affirmative
coverage  and other  endorsements  as the Bank  shall  require  and shall in all
respects be acceptable to the Bank in its sole  discretion.  The Bank shall also
have received  evidence on or prior to the  execution and delivery  thereof that
the  Borrower  has  arranged  for the  payment  of the  premium  for such  title
insurance policies or updates to existing policies.

     4.7 Surveys.  The Bank shall have received  current physical surveys of the
Virginia Real Property and  improvements,  prepared and certified by a certified
land surveyor in accordance with the Minimum  Standard Detail  Requirements  for
ALTA/ACSM  Land Title  Surveys  meeting the accuracy  requirements  of a Class A
survey, and otherwise  acceptable to the Lender,  which surveys shall designate,
without limitation, (i) the dimensions of the Real Property, (ii) the dimensions
and location of the buildings and other improvements  constructed thereon, (iii)
the  dimensions  of the  parking  areas as well as the total  number of  on-site
parking spaces,  (iv) the location of all easements of record affecting the Real
Property,  specifying  the  holder  of each  such  easement  and  the  pertinent
recordation  information,  (v) any and all buildings  restriction and/or setback
lines and (vi)  means of  ingress  and  egress.  In  addition  to the  foregoing
requirements,  such surveys shall (i) be prepared in accordance  with the Survey
Instructions  of Lawyers Title Insurance  Corporation  Surveyor's  report,  (ii)
contain  a metes  and  bounds  description  of the  Real  Property,  (iii)  show
appurtenant  easements and rights of way on adjoining  property  benefiting  the
Real Property,  and (iv) be specifically certified to the Bank as well as to the
Borrower and


<PAGE>



Lawyers Title  Insurance  Corporation or such other  applicable  title insurance
company.

     4.8 Appraisal.  The Bank shall have received an appraisal,  by an appraiser
selected by the Bank,  of the fair market value of the Virginia  Real  Property,
which appraisal shall be satisfactory to the Bank in all respects.

     4.9   Environmental   Audit  Report.   The  Bank  shall  have  received  an
environmental site assessment or environmental audit report on the Virginia Real
Property from an engineer or other  qualified  environmental  expert selected by
the Bank, which appraisal shall be satisfactory to the Bank in all respects.


SECTION 5.     CONDITIONS PRECEDENT TO EACH LOAN.

     The Bank shall not be  obligated to make any Loan  hereunder  unless on the
date  of  such  Loan  the  following  conditions  have  been  satisfied  to  the
satisfaction  of the Bank (and each  borrowing by the Borrower  hereunder  shall
constitute a representation  and warranty by the Borrower as of the date of such
borrowing that such conditions have been so satisfied):

     5.1  Default.  On the date of the Loan (and after  giving  effect  thereto)
there shall exist no Event of Default and no condition, event or act which, with
the  giving of notice  or lapse of time,  or both,  as  specified  in  Section 8
hereof, would constitute an Event of Default.

     5.2 Maximum Amount of Revolving Credit Loans. The unpaid principal  balance
of the Revolving Credit Note, after giving effect to such Revolving Credit Loan,
shall not exceed the lesser of (i) the Borrowing Base, or (ii) $7,500,000.


SECTION 6.     AFFIRMATIVE COVENANTS.

     The Borrower  covenants  and agrees that,  so long as the  Commitment is in
effect,  and until the Notes,  together with interest and all other  obligations
incurred hereunder,  are paid in full, the Borrower will, unless having procured
the written consent of the Bank otherwise:

     6.1  Financial Statements.  Furnish to the Bank:

          (a) As soon as  practicable  and in any event within 45 days after the
close of each quarter of each fiscal year of the Borrower and its  Subsidiaries,
as at the end of and for the period commencing at the end of the previous fiscal
year  and  ending  with  such  quarter,   as  the  case  may  be,  an  unaudited
consolidating  and  consolidated  balance  sheet(s)  of  the  Borrower  and  its
Subsidiaries,  and a consolidating  and consolidated  statement(s) of income and
surplus account of the Borrower and


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its Subsidiaries; all in reasonable detail and certified by the chief accounting
officer of the Borrower  subject to year-end audit and  adjustments  and setting
forth in comparative form the corresponding figures as of one year prior thereto
or for the appropriate periods of the preceding fiscal year, as the case may be;

          (b) As soon as practicable  and in any event within 120 days after the
close of each fiscal year of the Borrower and its Subsidiaries, as at the end of
and for the fiscal year just  closed,  as the case may be, a  consolidating  and
consolidated  balance  sheet(s)  of the  Borrower  and its  Subsidiaries,  and a
consolidating and consolidated statement(s) of income and surplus account of the
Borrower and its Subsidiaries for such fiscal year setting forth, in the case of
consolidating and consolidated balance sheets and statements,  the corresponding
figures of the previous  annual audit in  comparative  form,  all in  reasonable
detail and certified by Price Waterhouse or other independent public accountants
of recognized standing selected by the Borrower and satisfactory to the Bank;

          (c) Promptly upon receipt  thereof,  copies of all detailed  financial
reports,  if any,  submitted to the Borrower or any of its  Subsidiaries  by its
independent  auditors,  in connection with each annual or interim audit of their
respective books by such auditors;

          (d) As soon as  practicable  and in any event within 10 days after the
close of each month of each fiscal year of the  Borrower  and its  Subsidiaries,
detailed  information in form  satisfactory to the Bank concerning the Inventory
and Receivables of the Borrower (including but not limited to, aging information
(in 30-day increments) with respect thereto).

          (e) As soon as practicable  and in any event within 120 days after the
close of each fiscal year, a copy of the  Borrower's  annual report on Form 10-K
to the Securities and Exchange Commission;

          (f) As soon as  practicable  and in any event within 60 days after the
close of each fiscal quarter, a copy of the Borrower's  quarterly report on Form
10-Q to the Securities and Exchange Commission;

          (g) At any time and from time to time,  as the  Bank,  in its sole and
absolute discretion, deems necessary and appropriate, a commercial finance audit
of  Inventory  and  Receivables,  such audit to be  conducted by the Bank or its
agents at the expense of the  Borrower;  provided,  however,  that such  expense
shall  be  consistent  with  the  expense  of other  commercial  finance  audits
performed by the Bank for other, similarly situated customers of the Bank; and




<PAGE>


          (h) With reasonable promptness,  such other information respecting the
business,  operations and financial conditions of the Borrower or any Subsidiary
as any Bank may, from time to time, reasonably request.

     6.2 Notice of  Litigation.  Promptly give written notice to the Bank of (i)
any action or  proceeding,  or to the extent  the  Borrower  may have any notice
thereof, any claim, which may reasonably be expected to be commenced or asserted
against the Borrower or any of its  Subsidiaries in which the amount involved is
$250,000 or more and not covered by  insurance,  and (ii) any dispute  which may
exist  between the  Borrower  or any of its  Subsidiaries  and any  governmental
regulatory body (including any audit by the Internal Revenue Service), which may
substantially  affect the normal  business  operations of the Borrower or any of
its Subsidiaries or any of their respective properties and assets.

     6.3  Payment  of  Charges.  Duly pay and  discharge,  and cause each of its
Subsidiaries  to  duly  pay  and  discharge  (i)  all  taxes,   assessments  and
governmental  charges or levies  imposed  upon or against it or its  property or
assets,  or upon any property leased by it, prior to the date on which penalties
attach thereto,  unless and to the extent only that such taxes,  assessments and
governmental  charges  or  levies  are  being  contested  in good  faith  and by
appropriate  proceedings,  (ii) all lawful claims, whether for labor, materials,
supplies,  services or anything else, which might or could, if unpaid,  become a
lien or charge upon such property or assets,  unless and to the extent only that
the validity  thereof is being  contested in trade bills when due in  accordance
with their original terms, including any applicable grace periods, unless and to
the extent only that such trade bills are being  contested  in good faith and by
appropriate proceedings.

     6.4 Insurance. Keep, and cause each of its Subsidiaries to keep, (i) all of
its  insurable  property  insured  at  all  times  with  financially  sound  and
responsible  insurance  carriers against loss or damage by fire and other risks,
casualties and  contingencies as required by the Security  Documents and in such
manner and to the extent  that like  properties  are  customarily  so insured by
other corporations  engaged in the same or similar business similarly  situated,
(ii)  adequate  insurance at all times with  financially  sound and  responsible
insurance  carriers  against  liability  on  account  of damage to  persons  and
properties  and under all  applicable  workmen's  compensation  laws,  and (iii)
adequate insurance covering such other risks as the Bank may reasonably request.

     6.5  Maintenance of Records.  Keep, and cause each of its  Subsidiaries  to
keep, at all times books of record and accounts in which full,  true and correct
entries will be made of all dealings or transactions in relation to its business
and  affairs,  and  the  Borrower  will  provide,  and  will  cause  each of its
Subsidiaries  to provide,  adequate  protection  against  loss or damage to such
books of record and account.

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     6.6  Preservation  of  Corporate  Existence.   Maintain  and  preserve  its
corporate  existence  and right to carry on its  business  and duly  procure all
necessary  renewals and  extensions  thereof,  use its best efforts to maintain,
preserve and renew all rights,  powers,  privileges and franchises  which in the
opinion of the Board of Directors of the Borrower continue to be advantageous to
it and comply in all material  respects with all applicable  laws,  statutes and
regulations  of the United  States of America and of any State or  municipality,
and of any agency  thereof,  in respect of the conduct of its  business,  and in
each such case, cause each of its Subsidiaries so to do.

     6.7 Preservation of Assets.  Keep, and cause each of its Subsidiaries so to
keep, its property in good repair,  working order and condition and from time to
time make all needful and proper repairs,  renewals,  replacements,  extensions,
additions, betterments and improvements thereto, so that the business carried on
by it may be properly and  advantageously  conducted at all times in  accordance
with prudent business management.

     6.8 Inspection of Books and Assets.  Allow any  representative,  officer or
accountant of the Bank to visit and inspect any of its property,  to examine its
books of record and account and to discuss its  affairs,  finances  and accounts
with  its  officers,  and at such  reasonable  time and as often as the Bank may
request and, in each such case, cause each of its Subsidiaries so to do.

     6.9 Payment of Indebtedness.  Duly and punctually pay, or cause to be paid,
the  principal  of and the  interest  on all  Indebtedness  for  Borrowed  Money
heretofore  or  hereafter  incurred  or assumed by it, or in respect of which it
shall  otherwise  be liable,  when and as the same shall become due and payable,
unless  such  Indebtedness  for  Borrowed  Money be  renewed  or  extended,  and
faithfully  observe,  perform and discharge all the  covenants,  conditions  and
obligations  which  are  imposed  on it by any  and  all  indentures  and  other
agreements securing, relating to, or evidencing such Indebtedness or pursuant to
which such  Indebtedness for Borrowed Money is incurred,  and not permit any act
or  omission  to occur or exist  which  is or may be  declared  to be a  default
thereunder.

     6.10 Further  Assurances.  Make,  execute or endorse,  and  acknowledge and
deliver or file, all such vouchers,  invoices,  notices,  and certifications and
additional agreements,  undertakings,  conveyances,  transfers,  assignments, or
further  assurances,  and take any and all such other actions,  as the Bank may,
from time to time,  deem necessary or proper in connection  with this Agreement,
the obligations of the Borrower hereunder or under the other Loan Documents,  or
for the  better  assuring  and  confirming  unto the Bank all or any part of the
security for the Notes.


<PAGE>



     6.11  Notice  of  Default.  Forthwith  upon  any  officer  of the  Borrower
obtaining knowledge of the existence of an Event of Default, deliver to the Bank
a  certificate  signed by an  officer  of the  Borrower  specifying  the  nature
thereof,  the period of existence thereof, and what action the Borrower proposes
to take with respect thereto.

     6.12 Arms-length  Transactions.  Conduct and cause each of its Subsidiaries
to  conduct  all  transactions  with  any of  its  respective  Affiliates  on an
arms-length basis.

     6.13  Solvency.  Continue  to be Solvent and ensure  each  Subsidiary  will
continue to be Solvent.

     6.14  Lock  Box.  At the  request  of the  Bank,  in its sole and  absolute
discretion,   enter  into  a  lock-box   arrangement,   for  the  collection  of
Receivables,  such  arrangement to be  satisfactory in form and substance to the
Bank.

     6.15  Collateralization of Outstanding Letters of Credit. At the request of
the  Bank,  in its sole  and  absolute  discretion,  provide  liquid  collateral
acceptable to the Bank as security for any outstanding  letters of credit issued
by the Bank at the request of and for the account of the Borrower.

     6.16  Assignment  of Claims Act.  Deliver or cause to be  delivered  to the
Bank,  within 60 days  following  the  Closing  Date,  copies of  Notices to the
contracting and disbursing officers for the contract which is the subject of the
Assignment,  such notices  having been duly  acknowledged  by such  officers and
sufficient to perfect the Assignment in favor of the Bank.


SECTION 7.     NEGATIVE COVENANTS.

     The  Borrower  covenants  and agrees that so long as the  Commitment  is in
effect and until the Notes,  together  with  interest and all other  obligations
incurred  hereunder,  are paid in full,  the Borrower  will not,  without  first
having procured the written consent of the Bank:

     7.1 Liens. Contract, create, incur, assume or suffer to exist any Lien upon
or with respect to, or by transfer or otherwise  subject to the prior payment of
any  indebtedness  (other than the Notes),  any of the  Collateral  or any other
property of the  Borrower,  whether now owned or hereafter  acquired,  or permit
Dutterer's  so to do;  except (i) liens for taxes not yet due or which are being
contested in good faith by appropriate  proceedings,  (ii) other liens, charges,
and  encumbrances  incidental to the conduct of its business or the ownership of
the Collateral or such other property which were not incurred in connection with
the  borrowings of money or the obtaining of advances or credit and which do not
materially  detract from the value of the  Collateral or such other  property or
materially  impair the use thereof in the operation of its  business;  and (iii)
Liens in favor of the Bank;


<PAGE>




     7.2 Other Indebtedness.  Contract, create, incur, assume or suffer to exist
any  Indebtedness  for Borrowed  Money (other than  indebtedness  to the Bank or
trade debt incurred in the ordinary course of business) or permit  Dutterer's so
to do.

     7.3 Consolidation and Merger. Wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation or permit Dutterer's so to
do (or agree to do any of the  foregoing  at any future  time)  except  that (i)
Dutterer's  may merge into the Borrower  provided that the Borrower shall at all
times be the  continuing  corporation,  and (ii)  Dutterer's  may merge  into or
consolidate with any other Subsidiary.

     7.4 Sale of Assets.  Convey,  sell, lease or otherwise dispose of (or agree
to do any of the  foregoing at any future time or permit  Dutterer's  so to do),
(i) all or a  substantial  part of its  property  or  assets or any part of such
property or assets essential to the conduct of its business substantially as now
conducted,  or (ii) any of its assets, except in the ordinary course of business
(excluding  the sale of  obsolete  equipment)  or with the  consent of the Bank,
which consent shall not be unreasonably withheld. The Bank acknowledges that the
Borrower  intends to cause  Dutterer's  to sell the Maryland  Real  Property and
agrees that it will not unreasonably withhold its consent to such a sale and the
release of the Bank's lien on the Maryland  Real  Property;  provided,  however,
that the Bank's consent and release may be conditioned  upon the  application of
the net proceeds of any such sale to the Loans as  determined by the Bank in its
sole discretion.

     7.5 Borrowing Base.  Permit the aggregate  unpaid  principal  amount of the
Revolving Credit Note at any time outstanding to exceed the Borrowing Base.

     7.6 Related Transactions.  Enter into any transaction with any Person which
is an  Affiliate  of the  Borrower  or  Dutterer's,  or in which any  officer or
director of the  Borrower or a  Subsidiary  has a  financial  interest,  on more
favorable terms than if such Person was totally unrelated,  or permit Dutterer's
to so do.

     7.7 Engage in Same Type of Business.  Enter into,  or permit  Dutterer's to
enter  into,  any  business  which is  substantially  different  from and/or not
connected  with the  business in which the Borrower or  Dutterer's  is presently
engaged.

     7.8 Sale of  Accounts  Receivable.  Sell,  discount,  transfer,  assign  or
otherwise  dispose  of  any  of  its  accounts  receivable,   notes  receivable,
installment  or  conditional  sales  agreements  or any  other of its  rights to
receive  income or monies  howsoever  evidenced  or permit  Dutterer's  so to do
except pursuant to the Security Documents.


<PAGE>





     7.9  Tangible Net Worth.  Permit  Tangible Net Worth to be at any time less
than  $7,000,000;  provided,  however,  that on December 31,  1996,  and on each
December 31 thereafter,  such amount shall increase by the greater of (i) 75% of
the Borrower's net income for the fiscal year then ended, or (ii) $500,000.

     7.10 Debt; Equity Ratio. Permit the ratio of Long-Term Debt to Tangible Net
Worth to exceed at any time 1.75:1.0.

     7.11  Current  Ratio.  Permit  the  ratio  of  current  assets  to  current
labilities at any time to be less than 1.25:1.0.

     7.12  Capital  Expenditures.  In any fiscal year make or commit to make any
direct or indirect capital expenditures in excess of $300,000.

     7.13 Debt Service Coverage Ratio.  Permit the ratio  (determined at the end
of each fiscal year and for such year) of EBITD to Debt  Service to be less than
1.25:1.0.

     7.14 Real Estate. Directly or indirectly, make any investment in, or engage
in any  development  of, real estate,  other than in the ordinary  course of the
Borrower's regular business.

     7.15  Dividends.  During  any fiscal  year,  declare  or pay,  directly  or
indirectly,  any  dividends  on any  class  of its  capital  stock,  or make any
distribution to any shareholder or shareholders as such, in excess of $163,000.


SECTION 8.     EVENTS OF DEFAULT.

     Upon the  occurrence  of any of the  following  specified  events  (each an
"Event of Default"):

     8.1  Principal  and  Interest.  The Borrower  shall  default in the due and
punctual  payment of (i) any principal due on the Notes; or (ii) for a period of
15 days,  any interest on the Notes or in the due and punctual  payment of other
amounts due hereunder; or

     8.2  Representations  and  Warranties.  Any  representation,   warranty  or
statement made by the Borrower herein or otherwise in writing by the Borrower or
Dutterer's  in  connection  herewith  or  therewith,  or in any  certificate  or
statement furnished pursuant to or in connection herewith or therewith, shall be
breached or shall prove to be untrue in any  material  respect on the date as of
which made; or

     8.3 Negative  Covenants.  The Borrower shall default in the due performance
or observance of any term,  covenant or agreement on its part to be performed or
observed pursuant to Sections 7.3, 7.4, 7.7 or 7.8 of this Agreement; or


<PAGE>




     8.4 Other  Covenants.  The Borrower shall default in the due performance or
observance  of any term,  covenant or  agreement  on its part to be performed or
observed  pursuant to any of the provisions of this Agreement  (other than those
referred to in  Sections  8.1,  8.2 and 8.3) and such  default  (which  shall be
capable of cure)  shall  continue  unremedied  for a period of 30 days after the
earlier of the date on which the Bank gives the Borrower  notice of such default
or on the date an officer of the Borrower becomes aware thereof; or

     8.5 Other  Obligations.  Any indebtedness of the Borrower (i) shall be duly
declared  to be or shall  become due and  payable  prior to the stated  maturity
thereof,  or (ii) shall not be paid as and when the same becomes due and payable
including any  applicable  grace period,  or there shall occur and be continuing
any event which constitutes an event of default under any instrument,  agreement
or evidence of indebtedness  relating to any  indebtedness of the Borrower,  the
effect of which is to permit the  holder or  holders  to cause the  indebtedness
evidenced thereby to become due prior to its stated maturity; or

     8.6  Insolvency.  The Borrower or Dutterer's  shall  dissolve or suspend or
discontinue  its  business,  or shall  make an  assignment  for the  benefit  of
creditors or a composition  with creditors,  shall be unable or admit in writing
its  inability  to pay its  debts  as they  mature,  shall  file a  petition  in
bankruptcy, shall become insolvent (howsoever such insolvency may be evidenced),
shall be  adjudicated  insolvent  or  bankrupt,  shall  petition or apply to any
tribunal for the appointment of any receiver,  liquidator,  custodian or trustee
of or for it or any substantial  part of its property or assets,  shall commence
any   proceedings   relating  to  it  under  any   bankruptcy,   reorganization,
arrangement, readjustment of debt, receivership,  dissolution or liquidation law
or statute of any  jurisdiction,  whether now or hereafter  in effect;  or there
shall be commenced  against the Borrower or Dutterer's any such proceeding which
shall remain undismissed for a period of 60 days or more, or any order, judgment
or decree approving the petition in any such proceeding shall be entered; or the
Borrower or  Dutterer's  shall by any act or failure to act indicate its consent
to, approval of or acquiescence in, any such proceeding or in the appointment of
any receiver,  liquidator,  custodian or trustee of or for it or any substantial
part of its property or assets, or shall suffer any such appointment to continue
undischarged  or unstayed  for a period of 60 days or more;  or the  Borrower or
Dutterer's  shall  take any  action  for the  purpose  of  effecting  any of the
foregoing; or any court of competent jurisdiction shall assume jurisdiction with
respect to any such  proceeding  or a receiver or trustee or  custodian or other
officer or representative of a court or of creditors, or any court, governmental
officer  or  agency,  shall  under  color  of  legal  authority,  take  and hold
possession of any substantial  part of the property or assets of the Borrower or
Dutterer's; or


<PAGE>




     8.7 Other Documents.  Any of the Security  Documents shall fail to grant to
the Bank the Lien intended to be created thereby  (provided,  however,  that the
Borrower  shall cause the Lien of the  Assignment to be perfected not later than
90 days after the date hereof);

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing  the Bank may, by written  notice to the Borrower:  (i)
declare the principal of an accrued  interest on the Notes to be,  whereupon the
same shall  forthwith  become,  due and  payable  without  presentment,  demand,
protest  or other  notice of any kind,  all of which  are  hereby  waived by the
Borrower;  and/or  (ii)  declare the  Revolving  Credit  Commitment  terminated,
whereupon the Revolving Credit Commitment shall forthwith terminate immediately;
provided that if any Event of Default  described in Section 8.6 shall occur with
respect to the Borrower or Dutterer's,  the result which would  otherwise  occur
only upon the giving of  written  notice by the Bank to the  Borrower  as herein
described shall occur automatically, without the giving of any such notice.


SECTION 9.     MISCELLANEOUS.

     9.1 Calculations and Financial Data.  Calculations  hereunder shall be made
and financial data required  hereby shall be prepared both as to  classification
of items and as to amount  in  accordance  with  generally  accepted  accounting
principles, consistent with the Financial Statements.

     9.2 Amendment and Waiver. Except as otherwise provided, no provision of any
of the Loan Documents may be changed,  waived,  discharged or terminated orally,
but  only  by an  instrument  in  writing  signed  by  the  party  against  whom
enforcement of the change, waiver,  discharge or termination is sought. Any such
change, waiver, discharge or termination shall be effective only in the specific
instance and for the specific purposes for which made or given.

     9.3  Expenses.

          (a)  Whether  or not the  transactions  hereby  contemplated  shall be
consummated,  the  Borrower  shall pay all  reasonable  out-of-pocket  costs and
expenses of the Bank incurred in  connection  with the  preparation,  execution,
delivery,  filing and recording and amendment (including any waiver or consent),
modification, and enforcement of the Loan Documents and the making and repayment
of the Loans,  and the  payment of all  interest  and fees,  including,  without
limitation,  the  reasonable  fees and  expenses  of Kaufman & Canoles,  special
counsel for the Bank, and any local counsel retained by the Bank.


<PAGE>



          (b) The Borrower agrees to pay, and to save the Bank harmless from all
damages,  liability  and expenses  for, any stamp and similar  taxes  (including
interest and  penalties,  if any),  which may be payable in connection  with the
Loan  Documents or the issuance of the Notes or any  modification  of any of the
foregoing.

          (c) All obligations  provided for in this Section 9.3 and Section 6.10
shall survive any  termination  of this Agreement and the payment in full of the
Notes.

     9.4  Successors and Assigns; Descriptive Headings.

          (a) This Agreement shall bind, and the benefits hereof shall inure to,
the Borrower and the Bank and their  respective  successors and assigns provided
that the  Borrower  may not  transfer  or assign  any or all of its  rights  and
obligations hereunder, without the prior written consent of the Bank.

          (b)  The  descriptive  headings  of the  various  provisions  of  this
Agreement are inserted for convenience of reference only and shall not be deemed
to affect the meaning or construction of any of the provisions hereof.

     9.5 Notices, Requests, Demands, Etc. Except as otherwise expressly provided
herein, all notices,  requests,  demands or other  communications to or upon the
respective  parties  hereto shall be deemed to have been duly given or made when
deposited  in the  mails  (by  registered  or  certified  mail,  return  receipt
requested), postage prepaid, or in the case of telex, telegraphic, telecopier or
cable  notice,  when  delivered  to the telex,  telegraph,  telecopier  or cable
company,  or in the case of  telex or  telecopier  notice  sent  over a telex or
telecopier owned or operated by a party hereto, when sent, addressed as follows:
(i) if to the Bank, at the Bank's  Office,  and (ii) if to the Borrower,  at its
address specified with its signature below, or to such other addresses as either
of the parties  hereto may hereafter  specify to the other in writing,  provided
that  communication  with  respect to a change of address  shall be deemed to be
effective when actually received.

     9.6 Governing  Law. This  Agreement and the rights and  obligations  of the
parties  hereunder  shall  be  governed  by and  construed  and  interpreted  in
accordance  with the  internal  laws of the  Commonwealth  of Virginia  (without
regard to principles of conflicts of law).

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




<PAGE>


     9.8 Waiver.  No failure or delay on the part of the Bank in exercising  any
right,  power or privilege under this Agreement or any other Loan Document,  and
no course of dealing between the Borrower and the Bank shall operate as a waiver
thereof;  nor shall any  single  or  partial  exercise  of any  right,  power or
privilege  hereunder  preclude  any other or  further  exercise  thereof  or the
exercise of any other right, power or privilege.  The rights and remedies herein
expressly  provided are  cumulative  and not exclusive of any rights or remedies
which the Bank would  otherwise  have  pursuant to such  documents  or at law or
equity.  No notice to or demand on the  Borrower  in any case shall  entitle the
Borrower  to any  other  or  further  notice  or  demand  in  similar  or  other
circumstances  or  constitute  a waiver of the right of the Bank to any other or
further action in any circumstances without notice or demand.

     9.9  Severability.  If any  provision  of this  Agreement  shall be held or
deemed to be or shall, in fact, be illegal,  inoperative or  unenforceable,  the
same shall not affect any other  provision  or  provisions  herein  contained or
render the same invalid, inoperative or unenforceable to any extent whatever.

     9.10 Right of Set-off.  In addition to any rights now or hereafter  granted
under  applicable  law or  otherwise  and not by way of  limitation  of any such
rights, upon the occurrence of an Event of Default the Bank is hereby authorized
at any time or from time to time, without notice to the Borrower or to any other
Person,  any such  notice  being  hereby  expressly  waived,  to set-off  and to
appropriate and apply any and all deposits (general or special,  time or demand,
provisional  or final) and any other  indebtedness  at any time held or owing by
the Bank to or for the credit or the  account  of the  Borrower  against  and on
account of the  obligations  and  liabilities of the Borrower to the Bank now or
hereafter  existing under any of the Loan Documents  irrespective  of whether or
not the Bank shall have made any demand  hereunder  or  thereunder  and although
said obligations,  liabilities or claims, or any of them, shall be contingent or
unmatured.  The Bank exercising any rights granted under this Section 9.10 shall
thereafter notify the Borrower of such action; provided that the failure to give
such notice shall not affect the validity of such set-off and application.

     9.11 No Third Party Beneficiaries. This Agreement is solely for the benefit
of the Bank and the Borrower and their respective successors and assigns (except
as otherwise  expressly  provided herein) and nothing  contained herein shall be
deemed to confer  upon  anyone  other than the  Borrower  and the Bank and their
respective  successors  and  assigns  any right to insist on or to  enforce  the
performance  or  observance  of any of the  obligations  contained  herein.  All
conditions  to the  obligations  of the Bank to make  the  Loans  hereunder  are
imposed  solely and  exclusively  for the benefit of the Bank and its successors
and assigns and no other Person shall have standing to require  satisfaction  of
such  conditions in accordance  with their terms and no other Person shall under
any circumstances be deemed to be beneficiary of such conditions.


<PAGE>





     9.12 Survival. Each of the representations,  warranties,  terms, covenants,
agreements and conditions contained in this Agreement shall specifically survive
the  execution and delivery of this  Agreement and the other Loan  Documents and
the making of the Loans and shall, unless otherwise expressly provided, continue
in full force and effect until the Loans  together  with interest  thereon,  the
commitment  fees, and all other sums payable  hereunder or thereunder  have been
indefeasibly paid in full.

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


2410 Wesley Street                 DOUGHTIE'S FOODS, INC.
Portsmouth, VA 23707

                              By: Marion S. Whitfield, Jr.
                                  ------------------------
                                  (Signature)
                                  Senior Vice President


                                  CRESTAR BANK


                              By: Bruce W. Nave
                                  ------------------------
                                    (Signature)
                                   Vice President

<PAGE>


<PAGE>



                                ANNEX I

                                DEFINITIONS

     As used in the Amended and Restated Credit  Agreement to which this Annex I
is annexed,  the following terms shall have the meanings herein  specified or as
specified  in the Section of such  Credit  Agreement  or in such other  document
herein referenced:

     "Affiliate"  shall  mean any Person  directly  or  indirectly  controlling,
controlled by or under common control with, the Borrower.

     "Agreement"  shall mean the Amended and Restated Credit  Agreement to which
this  Annex I is  attached  as it may from  time to time be  amended,  extended,
supplemented or otherwise modified.

     "Assignment" - Section 4.3(d).

     "Bank" - introductory paragraph.

     "Bank's Office" shall mean 500 East Main Street,  Norfolk,  Virginia 23510,
Attention: Commercial Division.

     "Borrower" - introductory paragraph.

     "Borrowing  Base" shall mean at a particular  time,  the sum of (x) the Net
Security Value of Eligible Inventory plus (y) the Net Security Value of Eligible
Receivables.

     "Business Day" shall mean any day excluding Saturday, Sunday and any day on
which banks in Norfolk, Virginia are authorized by law or governmental action to
close.

     "Capitalized  Lease  Obligation"  shall mean any  obligation to pay rent or
other amounts under any lease (or other arrangement  conveying the right to use)
real  and/or  personal  property,  which  obligation  is, or is  required to be,
classified  and accounted for as a capital lease on a balance sheet  prepared in
accordance with generally accepted accounting principles.

     "Collateral" - Section 3.13.

     "Commitment  Period" shall mean, for the Revolving Credit  Commitment,  the
period from and including the date hereof to and including the Termination Date.

     "Debt Service"  shall mean, for any period,  the aggregate of all principal
and interest payments required, scheduled or made during such period.

     "Deeds of Trust" - Section 4.3(a).

     "Default" shall mean any event which with notice or lapse of time, or both,
would become an Event of Default.

<PAGE>





     "Dollars", "U.S. $", "$", and "U.S. dollars" shall mean the lawful currency
of the United States of America.

     "Dutterer's"   shall  mean  Dutterer's  of  Manchester  Corp.,  a  Maryland
corporation and a Subsidiary.

     "Dutterer's Guaranty" - Section 4.3(g).

     "Dutterer's Security Agreement" - Section 4.3(c).

     "EBITD"  shall  mean,  for any  period,  the sum for such period of (i) net
income,  (ii) taxes accrued to any  government or  governmental  instrumentality
(other  than real  estate  taxes,  sales  taxes or use  taxes),  (iii)  interest
expense, and (iv) to the extent earnings have been reduced thereby, depreciation
expense, amortization expense and other non-cash expenses, minus dividends.

     Eligible  Inventory"  or  "Inventory  Value" shall mean, at the time of any
determination  thereof,  all Inventory of the Borrower as to which the following
requirements  have been  fulfilled  to the  satisfaction  of the  Bank:  (a) the
Borrower has lawful and absolute title to such  Inventory;  (b) the Borrower has
the full and unqualified  right to assign and grant a security  interest in such
Inventory  to the Bank as  security  for the  Loans;  (c)  except  as  otherwise
permitted hereunder, all of such Inventory is subject to a fully perfected first
security interest in favor of the Bank pursuant to the Security Documents, prior
to the rights of, and enforceable as such against, any other Person; (d) none of
such Inventory is subject to any security interest or other Lien in favor of any
person other than the Lien of the Bank  pursuant to the Security  Documents  and
other Liens  permitted  hereunder;  and (e) none of such  Inventory is obsolete,
unsalable, damaged or otherwise unfit for sale or further processing.

     "Eligible  Receivables"  shall  mean,  at the  time  of  any  determination
thereof, all Receivables of the Borrower as to which the following  requirements
have been fulfilled to the satisfaction of the Bank: (a) the Borrower has lawful
and absolute title to each of such Receivables;  (b) each of such Receivables is
a valid,  legally  enforceable  obligation of the Person who is obligated  under
such Receivables (the "account debtor"); (c) none of such Receivables is subject
to any dispute,  off-set,  counterclaim or other claim or defense on the part of
the  account  debtor or to any claim on the part of the account  debtor  denying
liability  under such  Receivable in whole or in part;  (d) the Borrower has the
full and  unqualified  right to assign  and grant a  security  interest  in such
Receivables to the Bank as security for the Loans;  (e) all of such  Receivables
are subject to a fully  perfected  first security  interest in favor of the Bank
pursuant to the Security  Documents,  prior to the rights of, and enforceable as
such against, any other Person; (f) none


<PAGE>



of such Receivables is subject to any security  interest or Lien in favor of any
Person other than the lien of the Bank  pursuant to the Security  Documents  and
other Liens permitted hereunder; (g) each of such Receivables is evidenced by an
invoice  rendered to the account debtor and is not evidenced by an instrument or
chattel  paper;  (h) each of such  Receivables  has arisen  from the sale (on an
absolute and not a  consignment  or approval  basis) of goods by the Borrower in
the ordinary course of the Borrower's business, which goods have been shipped or
delivered to the account debtor for such Receivables or otherwise  identified to
the contract of sale to such account debtor if title has passed;  (i) no account
debtor in respect of any of the Receivables is (A)  incorporated in or primarily
conducting  business in any  jurisdiction  located  outside the United States of
America or Puerto Rico,  (B) an Affiliate  of the  Borrower,  or (C) any foreign
government  or any  agency,  department  or  instrumentality  therefor;  (j) the
Borrower  is not  aware  and has no  reason  to be aware of any  reorganization,
bankruptcy, receivership,  custodianship,  insolvency or other like condition in
respect  of any  account  debtor  for any of the  Receivables;  (k) none of such
Receivables has been outstanding more than 90 days from their respective invoice
dates;  (l) none of such Receivables are due from an account debtor with respect
to which  25% or more,  in  amount,  of  Receivables  due  therefrom  have  been
outstanding more than 90 days from their  respective  invoice dates; and (m) the
Borrower is not in default in any obligation to the account debtor in respect to
any goods provided or services rendered by such account debtor or otherwise.

     "Event of  Default"  shall mean each of the  Events of  Default  defined in
Section 8.

     "Financial  Statements"  shall  mean,  with  respect  to  any  Person,  the
statement of financial  position  (balance  sheet) and the statement of earnings
and stockholders' equity of such person.

     "Guarantee"  shall  mean,  by any Person,  any  obligation,  contingent  or
otherwise,  of such Person directly or indirectly  guaranteeing any Indebtedness
for Borrowed Money or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation,  direct or indirect, contingent
or otherwise,  of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such  Indebtedness  for Borrowed  Money or other
obligation (whether arising by virtue of partnership arrangements,  by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
for Borrowed Money or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), provided that the
term "Guarantee" shall not include endorsements for collection of deposit in the
ordinary  course  of  business.  The  term  "Guarantee"  used  as a  verb  has a
corresponding meaning.


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     "Indebtedness   for  Borrowed   Money"  shall  mean  all   indebtedness  of
(including,  without  limitation,  all indebtedness  assumed by) a Person (i) in
respect of money borrowed (including,  without limitation,  the unpaid amount of
the  purchase  price  of any  property,  incurred  for such  purpose  in lieu of
borrowing  money  or  using  available  funds  to  pay  said  amount,   and  not
constituting an account  payable or expense  accrual  incurred or assumed in the
ordinary  course  of  business),  or  evidenced  by  a  promissory  note,  bond,
debenture,  or other  like  obligation  to pay  money,  or (ii)  constituting  a
Capitalized Lease Obligation of such Person,  or (iii)  constituting a Guarantee
by such Person.

     "Inventory"  shall  have  the  meaning  assigned  thereto  in the  Security
Agreement.

     "Lien"  shall mean any  mortgage,  deed of trust,  security  deed,  pledge,
security interest,  encumbrance, lien or other charge of any kind (including any
agreement to give any of the foregoing, any lease in the nature thereof, and any
conditional  sale or other  title  retention  agreement),  any lien  arising  by
operation of law and the filing of or agreement to give any financing  statement
under the Uniform Commercial Code of any jurisdiction.

     "Loans" - Section 2.2.

     "Loan Documents" shall mean, collectively, the Agreement, the Notes and the
Security  Documents and any other  instruments  or documents  delivered by or on
behalf of the Borrower or Dutterer's hereunder.

     "Long-Term  Debt"  shall  mean  all  Indebtedness  for  Borrowed  Money  as
determined in accordance with generally accepted accounting principles.

     "Material  Agreement"  shall mean all  outstanding  contracts,  agreements,
leases and other understandings to which the Borrower and/or its Subsidiaries is
a party, or by or under which it has any rights or  obligations,  except for (i)
those (other than orders for the purchase and sale of merchandise)  involving an
income to or  expenditure  by the Borrower or a Subsidiary of less than $250,000
or  expiring  no later  than one (1) year from the date  hereof,  and (ii) those
contracts  or  orders  for the  purchase  and sale of  merchandise  involving  a
commitment  for less than one (1) year or involving a  commitment  for less than
$250,000.

     "Maryland Deed of Trust" - Section 4.3(a).

     "Maryland  Real  Property"  shall mean the real  property of  Dutterer's in
Manchester, Maryland described in the Maryland Deed of Trust.


<PAGE>



     "Net Security Value" shall mean, in respect to (i) Eligible Receivables, an
amount  equal to 85% (or such  other  greater or lesser  percentage  as the Bank
shall from time to time  determine in its sole and absolute  discretion)  of the
book value of Eligible  Receivables as reflected on the books of the Borrower in
accordance  with  generally-accepted   accounting  principles  on  any  date  of
determination  thereof,  less a reserve for discounts and  allowances;  and (ii)
Eligible  Inventory,  an amount  equal to 20% (or such  other  greater or lesser
percentage  as the  Bank  shall  from  time to time  determine  in its  sole and
absolute  discretion) of the value of the Eligible Inventory as reflected on the
books of the  Borrower as at the date of any  determination  thereof,  valued in
accordance with generally-accepted accounting principles based on FIFO.

     "Notes" - Section 2.2.

     "Permitted Encumbrances" shall mean the Liens listed on Schedule I attached
hereto.

     "Person" shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company,  a trust, an unincorporated
association,  a joint  venture or other entity or a  government  or an agency or
political subdivision thereof.

     "Real Property" shall mean the Maryland Real Property and the Virginia Real
Property.

     "Receivables"  shall mean Accounts and General  Intangibles,  as defined in
the Security Agreement.

     "Revolving Credit Commitment" - Section 2.1.

     "Revolving Credit Loans" - Section 2.1.

     "Revolving Credit Note" - Section 2.1.

     "Security Agreement" - Section 4.3(b).

     "Security  Documents"  shall mean the  collective  reference to each of the
instruments or documents  referred to in Section 4.3 pursuant to which a Lien or
security  interest  in the  Collateral  is  intended  to be granted to the Bank,
including all supplements or amendments thereto or replacements thereof.

     "Solvent"  shall mean,  with respect to any Person,  that the fair value of
the property of such Person is, on the date of  determination,  greater than the
total amount of liabilities (including contingent liabilities) of such Person as
of  such  date  and  that,  as of  such  date,  such  Person  is able to pay all
Indebtedness for Borrowed Money of such Person as such Indebtedness for Borrowed
Money matures.



<PAGE>



     "Subsidiary" shall mean Dutterer's and any other firm,  corporation,  trust
or other  unincorporated  organization  or association or other  enterprise more
than 50% of the indicia of equity rights (whether capital stock or otherwise) of
which is at the time owned,  directly or indirectly,  by the Borrower  and/or by
one or more of its Subsidiaries.

     "Subsidiary Stock" - Section 3.5.

     "Tangible Net Worth" shall mean, as at any date at which the amount thereof
shall be determined,  the amount by which the sum of (a) the par value (or value
stated on the books of the  corporation)  of the capital stock of all classes of
the Borrower, and (b) the amount of the consolidated surplus, capital or earned,
of the  Borrower  and its  Subsidiaries,  exceeds the  aggregate  of all amounts
appearing on the asset side of the balance sheet for goodwill,  patents,  patent
right,  trademarks,  trade  names,  copyrights,   franchises,   treasury  stock,
organizational  expenses and other  similar  items,  if any, all  determined  in
accordance with generally  accepted  accounting  principles  consistent with the
Financial Statements.

     "Term Loan" - Section 2.2.

     "Term Loan Note" - Section 2.2.

     "Termination  Date" shall mean July 31,  1997,  or such earlier date as the
Commitment  shall  terminate  as  provided  herein  or  such  later  date as may
hereafter be agreed to by the Bank, in writing.

     "UCC" - Section 3.13.

     "VAFSI Note" - Section 4.3(c).

     "Virginia Deed of Trust" - Section 4.3(a).

     "Virginia  Real  Property"  shall mean the real property of the Borrower in
Portsmouth, Virginia described in the Virginia Deed of Trust.

     "Written" or "in writing" shall mean any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.


<PAGE>


<PAGE>




                                SCHEDULE I

                          PERMITTED ENCUMBRANCES


     A.1. With respect to the Real Property, all those matters shown in Schedule
B, Section 2 of the Lawyers Title  Insurance  Corporation  Commitment  Case Nos.
1960353 and C965185N issued to the Bank.

     A.2. With respect to property other than Real Property:

          (a) Such minor  defects,  irregularities,  encumbrances  and clouds on
title as do not, in the aggregate,  materially impair the value of such property
or its use for the purpose for which it is held;

          (b) Deposits under worker's  compensation,  unemployment insurance and
social  security  laws or to secure  statutory  obligations  or surety or appeal
bonds or performance of other similar bonds in the ordinary  course of business,
or  statutory  liens  of  landlords,  carriers,   warehousemen,   mechanics  and
materialmen and other similar liens, in respect of liabilities which are not yet
due or which are being contested in good faith,  liens for taxes not yet due and
payable, and liens for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate proceedings;

          (c) Purchase money Liens granted to the seller or Person financing the
seller on assets if (i) limited to the specific  assets  acquired;  and (ii) the
debt secured by the Lien is the unpaid  balance of the  acquisition  cost of the
specific assets on which the Lien is granted;

          (d) Liens  granted  to the Bank in  connection  with the  transactions
contemplated hereby or otherwise; and

          (e) Liens upon real and/or tangible  personal  property acquired after
the date of this  Agreement  (by  purchase,  construction  or  otherwise) by the
Borrower or any Subsidiary,  each of which Liens existed on such property before
the  time of its  acquisition  and  was not  created  in  anticipation  thereof;
provided,  however,  that no such Lien shall  extend to or cover any property of
the Borrower or such Subsidiary  other than the respective  property so acquired
and improvements thereon.


<PAGE>