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                      AMENDED AND RESTATED REVOLVING CREDIT

                                       AND

                               SECURITY AGREEMENT


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                        IBJ SCHRODER BANK & TRUST COMPANY
                                   (AS AGENT)

                                       AND

                        IBJ SCHRODER BANK & TRUST COMPANY
                                       AND
                             NATIONAL BANK OF CANADA
                                  (AS LENDERS)

                                      WITH


                         ALLSTATE FINANCIAL CORPORATION
                                   (BORROWER)


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                               AS OF MAY 28, 1997


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<PAGE>



                              AMENDED AND RESTATED
                                REVOLVING CREDIT
                                       AND
                               SECURITY AGREEMENT


                  Amended and Restated  Revolving Credit and Security  Agreement
("Agreement") dated as of May __, 1997 between ALLSTATE FINANCIAL CORPORATION, a
corporation   organized   under  the  laws  of  the   Commonwealth  of  Virginia
("Borrower"),   the  undersigned  financial  institutions   (collectively,   the
"Lenders"  and  individually  a "Lender")  and IBJ SCHRODER BANK & TRUST COMPANY
("IBJS"), as agent for Lenders (IBJS, in such capacity, the "Agent").

                                   BACKGROUND

                  Borrower  is a party  with  Lenders  and Agent to a  Revolving
Credit and  Security  Agreement  dated as of May 13,  1994 (as the same has been
amended,  restated,  supplemented or otherwise modified,  from time to time, the
"Existing  Agreement") pursuant to which Agent and Lenders provide Borrower with
certain financial accommodations.

                  By execution of this  Agreement,  Borrower,  Lenders and Agent
intend to amend and restate the Existing  Agreement  in its entirety  and, as so
amended and  restated,  the Existing  Agreement  shall read in full as set forth
herein on the Effective Date.

                  IN  CONSIDERATION  of the mutual  covenants  and  undertakings
herein contained, Borrower and Lenders hereby agree as follows:

                            AMENDMENT AND RESTATEMENT

           As of the date of this Agreement, the terms,  conditions,  covenants,
agreements,  representations and warranties  contained in the Existing Agreement
shall be deemed  amended and  restated in their  entirety as follows;  provided,
however,  nothing contained in this Agreement shall impair,  limit or affect the
Liens  heretofore  granted,  pledged  and/or  assigned  to Agent for the ratable
benefit of Lenders with respect to Collateral as security for the Obligations to
Agent and Lenders under the Existing Agreement.

I.         DEFINITIONS.

           1.1.  Accounting  Terms.  As used in this  Agreement,  the  Revolving
Credit Note,  or any  certificate,  report or other  document  made or delivered
pursuant  to this  Agreement,  accounting  terms not  defined in Section  1.2 or
elsewhere in this Agreement and  accounting  terms partly defined in Section 1.2
to the extent not  defined,  shall have the  respective  meanings  given to them
under GAAP.

           1.2.        General Terms.  For purposes of this Agreement the
following terms shall have the following meanings:




<PAGE>



                       "Account Debtor" shall mean any Person who may become
obligated under, with respect to, or on account of, a Receivable.

                       "Advances" shall mean and include, without
duplication, the Revolving Advances, the Inventory Value Advances,
the Equipment Value Advances and Letters of Credit.

                       "Advance Rates" shall have the meaning set forth in
Section 2.1(a) hereof.

                       "Affiliate" of any Person shall mean (a) any Person
(other than a Subsidiary)  which,  directly or indirectly,  is in control of, is
controlled  by, or is under common  control with such Person,  or (b) any Person
who is a director,  officer,  joint venturer or partner (i) of such Person, (ii)
of any Subsidiary of such Person or (iii) of any Person  described in clause (a)
above.  For  purposes  of this  definition,  control of a Person  shall mean the
power,  direct or  indirect,  (x) to vote 10% or more of the  securities  having
ordinary  voting power for the  election of directors of such Person,  or (y) to
direct or cause the  direction  of the  management  and  policies of such Person
whether by contract or otherwise.

                       "Agreement" shall have the meaning set forth in the
preamble hereof.

                       "Base Rate" shall mean the base rate of IBJS as
publicly  announced by IBJS at its principal office from time to time, such rate
to be adjusted  automatically,  without  notice,  on the  effective  date of any
change in such rate.  This rate of interest is  determined  from time to time by
IBJS as a means of pricing  some loans to its  customers  and is neither tied to
any  external  rate of  interest  or index nor does it  necessarily  reflect the
lowest  rate of interest  actually  charged by IBJS to any  particular  class or
category of customers of IBJS.

                       "Borrower" shall have the meaning set forth in the
preamble to this Agreement and shall extend to all permitted
successors and assigns.

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

                       "Borrowing Base Certificate" shall mean a certificate
in the form  attached  hereto as Exhibit  1.2(a)  provided by Borrower to Agent,
showing the calculation, as of the relevant period, of the Borrowing Base.

                       "Brasch Employment Agreement" shall mean the Severance
Agreement dated as of July 1, 1996 between Borrower and Richard Brasch.

                       "Business Day" shall mean with respect to Eurodollar
Rate  Loans,  any day on  which  commercial  banks  are open  for  domestic  and
international business, including dealings in Dollar deposits in London, England
and New York, New York and with respect to all


                                       -2-



<PAGE>



other matters,  any day that is not a Saturday, a Sunday or a day on which banks
are required to be closed in the State of Virginia or New York.

                       "C. Fishman Employment Agreement" shall mean the
Employment and Compensation  Agreement dated as of July 1, 1996 between Borrower
and Craig Fishman.

                       "Capital Expenditures" shall mean all payments for any
fixed assets or improvements  or for  replacements,  substitutions  or additions
thereto,  that have a useful life of more than one year and that are required to
be capitalized under GAAP.

                       "Cash Collateral Account" shall have the meaning set
forth in Section 2.10(e).

                       "Cash Equivalents" shall mean (a) certificates of
deposit  in  dollars  of any Lender or any  commercial  banks  registered  to do
business  in any state of the United  States (i) having  capital  and surplus in
excess  of  $1,000,000,000  and (ii)  whose  long-term  debt  rating is at least
investment  grade as  determined  by either  Standard  & Poor's  Corporation  or
Moody's Investor Service, Inc., (b) readily marketable direct obligations of the
United  States  government  or any agency  thereof  which are backed by the full
faith and  credit of the  United  States,  (c)  commercial  paper at the time of
acquisition having a rating of at least "A-l" from Standard & Poor's Corporation
or "Prime-1" from Moody's Investor Service, Inc., (d) repurchase agreements with
commercial banks of a type described in (a) above covering securities  described
in (b) above,  and (e)  investments in money market funds  substantially  all of
whose assets are comprised of  securities of the types  described in clauses (a)
through (d) above.

                       "CERCLA" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss.ss.9601 et seq.

                       "Change of Control" shall mean (a) the occurrence of
any event (whether in one or more  transactions)  which results in a transfer of
control of Borrower  to a Person who is not an Original  Owner or (b) any merger
or consolidation of or with Borrower or sale of all or substantially  all of the
property or assets of Borrower,  except as specifically  provided in Section 7.1
herein.  For purposes of this  definition,  "control of Borrower" shall mean the
power,  direct  or  indirect  (x) to vote 50% or more of the  securities  having
ordinary voting power for the election of directors of Borrower or (y) to direct
or cause the direction of the management and policies of Borrower by contract or
otherwise.

                       "Charges" shall mean all taxes, charges, fees,
imposts,  levies or other assessments,  including,  without limitation,  all net
income,  gross income,  gross  receipts,  sales,  use, ad valorem,  value added,
transfer,  franchise,  profits, inventory, capital stock, license,  withholding,
payroll,


                                       -3-



<PAGE>



employment, social security, unemployment,  excise, severance, stamp, occupation
and property taxes, custom duties, fees,  assessments,  liens and charges of any
kind whatsoever,  together with any interest and any penalties, additions to tax
or additional  amounts,  imposed by any taxing or other  authority,  domestic or
foreign (including, without limitation, the Pension Benefit Guaranty Corporation
or any environmental agency or superfund), upon the Collateral, the Obligations,
Borrower or any of its Subsidiaries.

                       "Claims" shall mean all security interests, Liens,
claims or encumbrances  held or asserted by any Person against any or all of the
Collateral, other than (A) Charges and (B) Permitted Encumbrances.

                       "Class A Eligible Receivables Exposure" shall mean
Eligible Receivables which have formal due dates, and which remain unpaid ninety
(90) days or less from the original due date multiplied by the applicable Client
Stated Advance Rate for such Receivables.

                       "Class B Eligible Receivables Exposure" shall mean
Eligible  Receivables  which do not have  formal  due dates and which  have been
owned by Borrower  for one hundred  twenty  (120) days or less from the Purchase
Date,  multiplied  by  the  applicable  Client  Stated  Advance  Rate  for  such
Receivables.

                       "Class C Eligible Receivables Exposure" shall mean
Eligible  Receivables  which do not have  formal  due dates and which  have been
owned by Borrower for more than one hundred  twenty (120) days but less than two
hundred  forty  one  (241)  days  from  the  Purchase  Date,  multiplied  by the
applicable Client Stated Advance Rate for such Receivables.

                       "Client" shall mean any Person with whom Borrower is a
party to a Factoring Agreement, a Collateral Funding Repayment
Agreement and/or an Inventory Collateral Funding Repayment
Agreement.

                       "Client Funded Equipment" shall have the meaning set
forth in Section 2.2 hereof.

                       "Client Stated Advance Rate" shall mean the stated
advance rate to each Client under the applicable Factoring
Agreement.

                       "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time and the regulations promulgated
thereunder.

                       "Collateral" shall mean and include:

                                (a)         all Receivables;



                                       -4-



<PAGE>



                                (b)         all Equipment;

                                (c)         all General Intangibles;

                                (d)         all Inventory;

                                (e)         all Subsidiary Stock;

                                (f)         all of Borrower's right, title and
interest in and to (i) its goods and other property  including,  but not limited
to all merchandise returned to Clients or rejected by Account Debtors,  relating
to or  securing  any of the  Receivables;  (ii) all of  Borrower's  rights  as a
consignor, a consignee,  an unpaid vendor,  mechanic,  artisan, or other lienor,
including  stoppage in  transit,  setoff,  detinue,  replevin,  reclamation  and
repurchase;  (iii)  all  additional  amounts  due to  Borrower  from any  Client
relating to the  Receivables;  (iv) other property,  including  warranty claims,
relating to any goods securing this  Agreement;  (v) all of Borrower's  contract
rights,  rights of  payment  which  have been  earned  under a  contract  right,
instruments,  documents,  chattel paper,  warehouse receipts,  deposit accounts,
investment  property,  money  and  securities;  (vi)  if and  when  obtained  by
Borrower,  all  personal  property of third  parties in which  Borrower has been
granted a lien or security  interest as security for the payment or  enforcement
of Receivables;  and (vii) any other goods,  personal  property or real property
now owned or  hereafter  acquired  in which  Borrower  has  expressly  granted a
security  interest  or may in the  future  grant a  security  interest  to Agent
hereunder,  under any Other Document or in any amendment or supplement hereto or
thereto, or under any other agreement between Agent and Borrower;

                                (g)      all of Borrower's ledger sheets, ledger
cards,  files,  correspondence,  records,  books of  account,  business  papers,
computers, computer software (owned by Borrower or in which it has an interest),
computer  programs,  tapes,  disks and documents relating to (a), (b), (c), (d),
(e), or (f) of this Paragraph; and

                                (h)       all proceeds and products of (a), (b),
(c),  (d),  (e), (f) and (g) in whatever  form,  including,  but not limited to:
cash,   deposit  accounts   (whether  or  not  comprised  solely  of  proceeds),
certificates of deposit,  insurance proceeds (including hazard, flood and credit
insurance),  negotiable  instruments  and other  instruments  for the payment of
money, chattel paper, security agreements,  documents,  eminent domain proceeds,
condemnation proceeds and tort claim proceeds.

                       "Collateral Assignment of Security" shall mean the
agreement executed by Borrower in favor of Agent pursuant to which all rights of
Borrower under each  Factoring  Agreement and related  documents  (including all
UCC-1 Financing  Statements) are collaterally  assigned to Agent for the benefit
of itself and Lenders.



                                       -5-


<PAGE>



                       "Collateral Funding Repayment Agreement" shall mean a
Collateral   Funding   Repayment   Agreement   and  such  other   agreements  in
substantially  the forms attached  hereto as Exhibit 1.2(b) entered into between
Borrower and a Client,  together with such modifications thereto as Borrower may
from time to time deem  appropriate or desirable and such other agreements to be
approved by Agent in its sole reasonable discretion; provided, however, that, no
such modifications can be made without Agent's approval following the occurrence
and during the  continuance  of an Event of  Default,  such  approval  not to be
unreasonably withheld.

                       "Commitment Percentage" of any Lender shall mean the
percentage  set forth below such Lender's  name on the signature  page hereof as
same may be adjusted upon any assignment by a Lender pursuant to Section 15.3(b)
hereof.

                       "Commitment Transfer Supplement" shall mean a document
in the form of Exhibit 15.3 hereto, properly completed and otherwise in form and
substance  satisfactory  to Agent by which the Purchasing  Lender  purchases and
assumes a portion  of the  obligation  of Lenders  to make  Advances  under this
Agreement.

                       "Consents" shall mean all filings and all licenses,
permits,  consents,  approvals,  authorizations,  qualifications  and  orders of
governmental authorities and other third parties, domestic or foreign, necessary
to carry on Borrower's  business,  including,  without limitation,  any Consents
required under all applicable federal, state or other applicable law.

                       "Controlled Group" shall mean all members of a
controlled  group of corporations  and all trades or businesses  (whether or not
incorporated) under common control which, together with Borrower, are treated as
a single employer under Section 414 of the Code.

                       "Convertible, Senior Subordinated Notes" shall mean up
to an  aggregate  principal  amount  of  $5,000,000.00  in  convertible,  senior
subordinated notes issued by Borrower from time to time pursuant to an Indenture
of Trust dated as of September 11, 1995 between Borrower and Fleet National Bank
of  Connecticut  (successor  by merger to  Shawmut  Bank  Connecticut,  National
Association)  (as  modified,  supplemented  or  amended  from  time  to  time in
accordance with the terms thereof, the "Indenture"),  which notes (i) shall bear
interest  at a rate not to exceed 10% per annum  payable  quarterly  in arrears,
(ii) shall not call for any scheduled  repayment of principal prior to September
30, 2000,  (iii) shall at all times be unsecured,  (iv) shall be subordinated in
right of payment (as and to the extent provided in the indenture) to the payment
or repayment of the Obligations, and (v) may, as specified therein, be converted
from time to time into common Stock of Borrower.

                       "Credit Standards" shall have the meaning set forth in
Section 6.8.


                                       -6-


<PAGE>




                       "Default" shall mean an event which, with the giving
of notice or passage of time or both, would constitute an Event of
Default.

                       "Default Rate" shall have the meaning set forth in
Section 3.1 hereof.

                       "Demas Employment Agreement" shall mean the Severance
Agreement dated as of July 1, 1996 between Borrower and George Demas.

                       "Depository Account" shall have the meaning set forth
in Section 4.16(a).

                       "Documents" shall have the meaning set forth in
Section 8.1(c) hereof.

                       "Dollar" and the sign "$" shall mean lawful money of
the United States of America.

                       "Domestic Rate Loans" shall mean any Advance that
bears interest based upon the Base Rate.

                       "EBIT" shall mean Borrower's and its Subsidiaries' net
income before interest and taxes on a consolidated basis.

                       "Effective Date" shall mean the date on which all of
the conditions precedent in Section 8.1 have been satisfied.

                       "Eligible Client Funded Inventory" shall have the
meaning set forth in Section 2.2A(a) hereof.

                       "Eligible Receivables" shall mean each Receivable set
forth on the most recent Schedule of Receivables  delivered by Borrower to Agent
and on other  considerations  as Agent may from  time to time deem  appropriate;
provided, however, that under no circumstances shall a Receivable be an Eligible
Receivable  unless  Borrower  has recorded on its books and records and actually
made  advances  or  loans  to a  Client  pursuant  to the  applicable  Factoring
Agreement with respect to such Receivable.  In determining  whether a particular
Receivable  constitutes  an  Eligible  Receivable,  Agent shall  include  only a
Receivable:

                       (a)     purportedly purchased by Borrower in the ordinary
course of business pursuant to a Factoring  Agreement of Receivables which arose
from the sale of goods or the performance of services by Clients in the ordinary
course of the Client's business;

                       (b)      upon which (i) Borrower's right to receive
payment is absolute and not  contingent  upon the  fulfillment  of any condition
whatever  and (ii)  Borrower  is able to bring  suit or  otherwise  enforce  its
remedies  against the Client and (iii) Borrower has the right to enforce payment
against the Account Debtor through judicial process;


                                       -7-


<PAGE>




                       (c)      against which is asserted no defense,
counterclaim or setoff,  whether  well-founded or otherwise  except for ordinary
course adjustments (Agent reserves the right to establish appropriate reserves);

                       (d)      that is a true and correct statement of a bona
fide indebtedness  incurred in the amount of the Receivable for merchandise sold
to and accepted  by, or for services  performed by a Client and accepted by, the
Account Debtor obligated upon such Receivable (whether or not such services were
performed for the Account Debtor);

                       (e)      with respect to which an invoice or similar
statement has been sent by the Client or by Borrower;

                       (f)      that is owned by Borrower and not subject to any
right, claim or interest of another (but only to the extent of such right, claim
or  interest)  other than (i) the  security  interest  in favor of Agent for the
benefit of Lenders, (ii) Risk Participations granted by Borrower which are fully
disclosed on the books and records of Borrower  and  disclosed to Lenders in the
Schedule of  Receivables  delivered to Agent  pursuant to Section 9.2 hereof and
(iii) Liens  subordinated  to the Lien of Borrower and as to which the holder of
any such Lien has  agreed  not to  exercise  any  rights or  remedies  until all
obligations of the Client to Borrower have been paid in full;

                       (g)     that does not arise from a sale to or performance
of services for an employee, affiliate, parent or subsidiary of
Borrower, or an entity which has common officers or directors with
Borrower;

                       (h)      that is not the obligation of an Account Debtor
that  is the  federal  government  or a  political  subdivision  thereof  unless
Borrower has complied with the Federal Assignment of Claims Act of 1940, and any
amendments thereto, with respect to such obligation;

                       (i)      that is not the obligation of an Account Debtor
located in a foreign  country  (other than  Puerto  Rico or Canada)  unless such
obligation  is  secured  by a letter  of  credit  or a  guaranty  issued  by the
Export-Import  Bank  of the  United  States  acceptable  to  Agent  in its  sole
reasonable judgment;

                       (j)      to the extent that the amount of the Receivable
is not  subject to claims by an Account  Debtor to whom  Borrower or a Client is
liable for goods sold or services  rendered by the Account Debtor to Borrower or
such Client;

                       (k)      that does not arise with respect to goods which
are delivered on a cash-on-delivery  basis or placed on consignment,  guaranteed
sale or other terms by reason of which the payment by the Account  Debtor may be
conditional;



                                       -8-


<PAGE>



                       (l)      that is not in default; provided, that a
Receivable  shall  be  deemed  in  default  upon  the  occurrence  of any of the
following:

                                (i)  The Receivable is not paid within the two
           hundred forty day period starting on the date of acquisition
           thereof by Borrower;

                           (ii)  Any   Account   Debtor   obligated   upon  such
           Receivable  suspends  business,  makes a general  assignment  for the
           benefit of  creditors,  or fails to pay its debts  generally  as they
           come due; or

                          (iii) Any  petition is filed by or against any Account
           Debtor obligated upon such Receivable under any bankruptcy law or any
           other law or laws for the relief of debtors; provided,  however, that
           $1,000,000  in  the  aggregate  at  any  one  time   outstanding   of
           Receivables representing post-petition obligations of Account Debtors
           operating  under Chapter 11 of Title 11 of the United States Code and
           which  otherwise  constitute  Eligible  Receivables  hereunder may be
           deemed to be Eligible Receivables;

                       (m)      that is not the obligation of an Account Debtor
that is in default (as defined in subparagraph (l) above) on fifty percent (50%)
or more of the Receivables upon which such Account Debtor is obligated;

                       (n)  that does not arise from the sale of goods which
remain in Borrower's or a Client's possession or under Borrower's
or a Client's control;

                       (o)      (i)  Borrower shall have purchased pursuant to a
valid, binding and enforceable  Factoring Agreement,  (ii) with respect to which
Borrower shall have taken all actions (including, without limitation, the filing
of financing  statements under the Uniform  Commercial Code) necessary to create
in favor of Borrower a valid perfected first priority  security interest in each
such  Receivable,  (iii) with respect to which there shall not exist any default
declared by Borrower  against a Client with  respect to such  Client's  recourse
obligations  under or with  respect  to the  Factoring  Agreement  and (iv) with
respect to which the Account  Debtor  shall have been  notified to pay  Borrower
directly or to a location under Borrower's control;

                       (p)      with respect to which the applicable Client is
not the subject of a proceeding  under Title 11 of the United States Code or had
a petition filed by or against it under any bankruptcy or insolvency law, except
for S.O.S. Enterprises, Ltd. and except for purchases of Receivables outstanding
at any  time not in  excess  of 15% of the sum of  Tangible  Net  Worth  and the
aggregate principal amount of outstanding Convertible, Senior Subordinated Notes
based upon Borrower's most recent consolidated  balance sheet delivered to Agent
in accordance with Section 9.6 or 9.7 hereof as to which


                                       -9-


<PAGE>



Borrower has  obtained an order (i)  authorizing  interim or final  financing of
post-petition   Receivables  and  a  superpriority  Lien  on  all  post-petition
Receivables  and  unshipped  goods,  (ii)  containing a finding that Borrower is
entitled to the  protection  of Section  364(e) of Title 11 of the United States
Code,  and (iii) if Borrower owns any  pre-petition  Receivables  of the Client,
permitting  Borrower  to collect  and apply the  proceeds  of such  pre-petition
Receivables;

                       (q)  that does not relate to the Viatical Settlement
and Personal Injury Settlement Businesses;

                       (r)      to the extent such Receivable is not subject to
the rights of a participant in a Risk Participation;

                       (s)  that is not a Receivable relating to medicare,
medicaid, social security or medical billings to other governmental
authorities; and

                       (t)      notwithstanding (a) through (s) above, that is
otherwise acceptable to Required Lenders as determined in good faith by Required
Lenders in the exercise of their discretion in a reasonable manner.

                       "Environmental Authority" shall have the meaning set
forth in Section 4.20(d).

                       "Environmental Complaint" shall have the meaning set
forth in Section 4.20(d) hereof.

                       "Environmental Laws" shall mean all federal, state and
local  environmental,  land  use,  zoning,  health,  chemical  use,  safety  and
sanitation  laws,  statutes,  ordinances and codes relating to the protection of
the  environment  and/or  governing  the use,  storage,  treatment,  generation,
transportation,  processing,  handling,  production  or  disposal  of  Hazardous
Substances and the rules, regulations,  policies,  guidelines,  interpretations,
decisions,  orders  and  directives  of  federal,  state and local  governmental
agencies and authorities with respect thereto.

                       "Equipment" shall mean and include all of Borrower's
goods (excluding Inventory) whether now owned or hereafter acquired and wherever
located including,  without  limitation,  all equipment,  machinery,  apparatus,
motor vehicles, fittings, furniture,  furnishings,  fixtures, parts, accessories
and all replacements and substitutions therefor or accessions thereto.

                       "Equipment Collateral Assignment of Security" shall
mean the agreement  executed by Borrower in favor of Agent pursuant to which all
rights of Borrower under each Collateral Funding Repayment Agreement and related
documents (including all UCC-1 Financing  Statements) are collaterally  assigned
to Agent for the benefit of itself and Lenders.



                                      -10-



<PAGE>



                       "Equipment Value Advances" shall mean the Advances
made pursuant to Section 2.2 hereof.

                       "ERISA" shall mean the Employee Retirement Income
Security Act of 1974 (or any  successor  legislation  thereto),  as amended from
time to time and the rules and regulations promulgated thereunder.

                       "Eurodollar Rate Loan" shall mean an Advance at any
time that bears interest based on the Eurodollar Rate.

                       "Eurodollar Rate" shall mean for any Eurodollar Rate
Loan for the then current  Interest Period  relating  thereto the rate per annum
(such  Eurodollar  Rate to be  adjusted  to the  next  higher  1/100 of one (1%)
percent)  equal to the  quotient of (a) LIBOR,  divided by (b) a number equal to
1.00  minus the  aggregate  of the rates  (expressed  as a  decimal)  of reserve
requirements current on the day that is two Business Days prior to the beginning
of the  Interest  Period  (including  without  limitation  basic,  supplemental,
marginal and emergency  reserves) under any regulation  promulgated by the Board
of Governors of the Federal Reserve System (or any other governmental  authority
having  jurisdiction  over IBJS) as in effect  from time to time,  dealing  with
reserve  requirements  prescribed for Eurocurrency funding including any reserve
requirements  with respect to "Eurocurrency  liabilities"  under Regulation D of
the Board of Governors of the Federal Reserve System.

                       "Event of Default" shall mean the occurrence and
continuance of any of the events set forth in Article X hereof.

                       "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.

                       "Factoring Agreement" shall mean an Accounts
Receivable  Factoring  and  Security  Agreement  and such  other  agreements  in
substantially  the forms attached  hereto as Exhibit 1.2(c) entered into between
Borrower and a Client,  together with such modifications thereto as Borrower may
from time to time deem  appropriate or desirable and such other agreements to be
approved by Agent in its sole reasonable discretion; provided, however, that, no
such modifications can be made without Agent's approval following the occurrence
and during the  continuance  of an Event of  Default,  such  approval  not to be
unreasonably withheld.

                       "Federal Funds Rate" shall mean, for any day, the
weighted  average of the rates on  overnight  Federal  funds  transactions  with
members of the Federal  Reserve  System  arranged by Federal funds  brokers,  as
published  for  such  day (or if such day is not a  Business  Day,  for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so  published  for any day  which  is a  Business  Day,  the  average  of
quotations for such day on such transactions received by IBJS from


                                      -11-


<PAGE>



three Federal funds brokers of recognized standing selected by
IBJS.

                       "Fiscal Month" shall mean any of the monthly
accounting periods of Borrower.

                       "Fiscal Quarter" shall mean any of the quarterly
accounting periods of Borrower.

                       "Fiscal Year" shall mean the 12-month period of
Borrower ending December 31 of each year.

                       "GAAP" shall mean generally accepted accounting
principles in the United States of America in effect from time to
time.

                       "General Intangibles" shall mean and include all of
Borrower's  general  intangibles,   whether  now  owned  or  hereafter  acquired
including, without limitation, all choses in action, causes of action, corporate
or other business records,  inventions,  designs,  patents, patent applications,
equipment formulations,  manufacturing  procedures,  quality control procedures,
trademarks,  trade  secrets,  goodwill,  copyrights,  registrations,   licenses,
franchises,  customer lists, tax refunds, tax refund claims,  computer programs,
all claims under  guaranties,  security  interests or other  security held by or
granted to Borrower to secure payment of any of the Receivables by a Client, all
amounts due from each Client to Borrower,  all rights of indemnification and all
other intangible property of every kind and nature (other than Receivables).

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

                       "Guaranteed Indebtedness"  shall mean, as to any
Person,  any obligation of such Person  guaranteeing  any  indebtedness,  lease,
dividend,  or  other  obligation  ("primary  obligations")  of any  Person  (the
"primary obligor") in any manner including,  without limitation,  any obligation
or  arrangement  of such Person (i) to purchase or  repurchase  any such primary
obligation,  (ii) to advance or supply  funds (a) for the purchase or payment of
any such primary obligation or (b) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance  sheet  condition of the primary  obligor,  (iii) to purchase  property,
securities  or services  primarily  for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such  primary  obligation,  or (iv)  to  indemnify  the  owner  of such  primary
obligation against loss in respect thereof.



                                      -12-


<PAGE>



                       "Guaranty" shall mean the joint and several guaranty
of the obligations of Borrower executed by Guarantors in favor of
Lenders.

                       "Guarantors" shall mean, collectively, LOI, SSI, AFC
Holding Corporation, Premium Sales Northeast, Inc., Business
Funding of America, Inc., Receivable Financing Corporation and
Business Funding of Florida, Inc.

                       "Hazardous Discharge" shall have the meaning set forth
in Section 4.19(d) hereof.

                       "Hazardous Substance" shall mean, without limitation,
any  flammable  explosives,   radon,   radioactive  materials,   asbestos,  urea
formaldehyde foam insulation, polychlorinated byphenyls, petroleum and petroleum
products,  methane,  hazardous materials,  Hazardous Wastes,  hazardous or toxic
substances or related  materials as defined in CERCLA,  the Hazardous  Materials
Transportation Act, as amended (49 U.S.C.  Sections 1801, et seq.), RCRA, or any
other  applicable  Environmental  Law and in the  regulations  adopted  pursuant
thereto.

                       "Hazardous Wastes" shall mean all waste materials
subject to regulation under CERCLA,  RCRA or applicable state law, and any other
applicable  Federal and state laws now in force or hereafter enacted relating to
hazardous waste disposal.

                       "Hotsenpiller Employment Agreement" shall mean an
Employment and Compensation  Agreement at any time entered into between Borrower
and Wade Hotesenpiller in a form similar to the Matthy Employment Agreement with
cash compensation not to exceed $175,000.

                       "IBJS" shall have the meaning set forth in the
preamble.

                       "Indebtedness" of a Person at a particular date shall
mean all  obligations  of such  Person  which in  accordance  with GAAP would be
classified upon a balance sheet as liabilities (except capital stock and surplus
earned  or  otherwise)  and  in any  event,  without  limitation  by  reason  of
enumeration,  shall include all  indebtedness,  debt and other similar  monetary
obligations of such Person whether  direct or guaranteed,  and all premiums,  if
any,  due at the  required  prepayment  dates  of  such  indebtedness,  and  all
indebtedness  secured by a Lien on assets owned by such  Person,  whether or not
such indebtedness actually shall have been created,  assumed or incurred by such
Person.  Any  indebtedness of such Person resulting from the acquisition by such
Person of any  assets  subject to any Lien  shall be  deemed,  for the  purposes
hereof,  to be the  equivalent of the creation,  assumption and incurring of the
indebtedness  secured  thereby,  whether or not actually so created,  assumed or
incurred.




                                      -13-



<PAGE>



                       "Interest Period" shall mean the period provided for
any Eurodollar Rate Loan pursuant to Section 2.12(b) hereof.

                       "Inventory" shall mean all of Borrower's now owned or
hereafter  acquired  goods,  merchandise and other personal  property,  wherever
located,  to be  furnished  under any  contract  of  service or held for sale or
lease,  all raw  materials,  work in process,  finished  goods and materials and
supplies  of any  kind,  nature  or  description  which  are or might be used or
consumed in  Borrower's  business or used in selling or  furnishing  such goods,
merchandise  and other  personal  property,  and all documents of title or other
documents representing them.

                       "Inventory Borrowing Base" shall have the meaning set
forth in Section 2.2A(a).

                       "Inventory Collateral Assignment of Security" shall
mean the agreement  executed by Borrower in favor of Agent pursuant to which all
rights of Borrower under each Inventory  Collateral Funding Repayment  Agreement
and  related   documents   (including  all  UCC-1   Financing   Statements)  are
collaterally assigned to Agent for its benefit and the benefit of the Lenders.

                       "Inventory Collateral Funding Repayment Agreement"
shall mean an Inventory  Collateral  Funding Repayment  Agreement and such other
agreements in substantially  the forms attached hereto as Exhibit 1.2(d) entered
into between Borrower and a Client,  together with such modifications thereto as
Borrower  may from time to time deem  appropriate  or  desirable  and such other
agreements to be approved by Agent in its sole reasonable discretion;  provided,
however,  that,  no such  modifications  can be made  without  Agent's  approval
following the occurrence and during the continuance of an Event of Default, such
approval not to be unreasonably withheld.

                       "Inventory Value Advances" shall mean Advances made
pursuant to Section 2.2A(a) hereof.

                       "IRS" shall mean the Internal Revenue Service, or any
successor thereto.

                       "Lender and "Lenders" shall have the meaning ascribed
to  such  term  in the  Preamble  and  shall  include  each  person  which  is a
transferee, successor or assign of any Lender.

                       "Letter of Credit Application" shall have the meaning
set forth in Section 2.9(a).

                       "Letter of Credit Fees" shall have the meaning set
forth in Section 3.2.

                       "Letter of Credit Obligations" means at any time with
respect  to all  Letters  of  Credit  issued  by and  caused to be issued at the
request of the Agent in accordance with Section 2.8 the sum of (x) the aggregate
undrawn amount of all Letters of Credit


                                      -14-


<PAGE>



outstanding at such time, plus (y) the aggregate amount of all Letters of Credit
for which the issuer and/or the Lenders have not been reimbursed and as to which
a Revolving Advance has not been made.

                       "Letter of Guaranty" shall mean an agreement,
instrument or other arrangement  pursuant to which Borrower provides a guarantee
or similar  undertaking  with respect to obligations of any Client and,  without
duplication, all additional Guaranteed Indebtedness (other than the Guaranty).

                       "Letters of Credit" shall have the meaning set forth
in Section 2.8.

                       "LIBOR" shall mean for any Eurodollar Rate Loan for
the then current Interest Period relating thereto,  the rate per annum quoted by
Agent to Borrower two (2) Business  Days prior to the first day of such Interest
Period as the rate  available  to Agent in the  interbank  market  for  offshore
Dollar  deposits  in  immediately  available  funds  for a period  equal to such
Interest  Period and in an amount  equal to the amount of such  Eurodollar  Rate
Loan.

                       "Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation,   assignment,  security  interest,  lien  (whether  statutory  or
otherwise),  Charge,  Claim or  encumbrance,  or  preference,  priority or other
security  agreement or preferential  arrangement  held or asserted in respect of
any asset of any kind or nature whatsoever  including,  without limitation,  any
conditional  sale  or  other  title  retention   agreement,   any  lease  having
substantially  the same economic effect as any of the foregoing,  and the filing
of, or agreement to give, any financing  statement under the Uniform  Commercial
Code or comparable law of any jurisdiction.

                       "Lockbox Account" shall have the meaning set forth in
Section 4.16(a).

                       "LOI" shall mean Lifetime Options, Inc., a Viatical
Settlement Company, a Maryland corporation.

                       "Madden Employment Agreement" shall mean the
Employment and  Compensation  Agreement dated as of May 5, 1997 between Borrower
and Frank Madden in  substantially  the form delivered to the Agent prior to the
Effective Date pursuant to a facsimile dated May 22, 1997.

                       "Material Adverse Effect" shall mean a material
adverse effect on (i) the business, assets,  operations,  prospects or financial
or other  condition  of Borrower  and its  Subsidiaries  taken as a whole,  (ii)
Borrower's and its  Subsidiaries'  collective  ability to pay the Obligations in
accordance with the terms thereof,  (iii) the Collateral or Agent's Liens on the
Collateral or the priority of any such Lien, or (iv) Agent's and Lenders' rights
and remedies under this Agreement and the Other Documents.


                                      -15-



<PAGE>





                       "Matthy Employment Agreement" shall mean the
Employment and Compensation  Agreement dated as of July 1, 1996 between Borrower
and Peter Matthy.

                       "Maximum Equipment Value Advance Amount" shall mean
$5,000,000.

                       "Maximum Inventory Value Advance Amount" shall mean
$2,500,000.

                       "Maximum Revolving Advance Amount" shall mean
$25,000,000.

                       "Multiemployer Plan" shall mean a plan described in
Sections  3(37)  and  Section  4001(a)(3)  of  ERISA to  which  Borrower  has an
obligation to contribute.

                       "Obligations" shall mean all loans, advances, debts,
liabilities,  and obligations, of every kind, nature and description,  direct or
indirect,  secured or unsecured,  joint, several, joint and several, absolute or
contingent, due or to become due, now existing or hereafter arising, contractual
or  tortious,  liquidated  or  unliquidated,  owing  by  Borrower  or any of its
Subsidiaries or all of them to Agent or any Lender, at any time,  whether or not
evidenced by any note, agreement or other instrument, arising in each case under
any of this Agreement or under any Other Document.  This term includes,  without
limitation, all principal, interest, fees, charges, reimbursement obligations in
respect of Letter of Credit Obligations, expenses, attorneys' fees and any other
sum  chargeable  to  Borrower  or any or all  of  its  Subsidiaries  under  this
Agreement or under any of the Other Documents.

                       "Operating Account" shall have the meaning set forth
in Section 4.16(c).

                       "Original Closing Date" shall mean May 13, 1994.

                       "Original Owners" shall mean, collectively, Leon
Fishman, Barbara Fishman and Eugene R. Haskin.

                       "Other Documents" shall mean the Revolving Credit
Note,  Stock  Pledge  Agreements,   Guaranty,  Security  Agreement,   Collateral
Assignment of Security,  Equipment Collateral Assignment of Security,  Inventory
Collateral Assignment of Security and any and all other agreements,  instruments
and documents,  including,  without limitation,  guaranties,  pledges, powers of
attorney, consents, and all other writings heretofore, now or hereafter executed
by  Borrower  and/or  delivered  to  Agent  or  any  Lender  in  respect  of the
transactions contemplated by this Agreement.

                       "Parent" of any Person shall mean a corporation or
other entity owning, directly or indirectly more than 50% of the


                                      -16-



<PAGE>



shares of stock or other  ownership  interests  having  ordinary voting power to
elect a majority of the  directors of the Person,  or other  Persons  performing
similar functions for any such Person.

                       "Participant" shall mean each Person who shall be
granted the right by any Lender to  participate  in any of the  Advances and who
shall  have  entered  into a  participation  agreement  in  form  and  substance
satisfactory to such Lender.

                       "Payment Office" shall mean initially One State
Street,  New York,  New York;  thereafter,  such other office of Agent,  if any,
which it may designate by notice to Borrower to be the Payment Office.

                       "Performance-Based Incentive Compensation Plan" shall
mean the  performance-based  incentive  compensation  plan for  employees of the
Borrower and its  Subsidiaries  in the form  delivered to the Agent prior to the
Effective  Date, as same may be modified,  supplemented  or amended from time to
time by  resolution  of the  Borrower's  board of directors or the  compensation
committee thereof.
                       "Permitted Encumbrances" shall mean (a) Liens in favor
of Agent for the benefit of Lenders;  (b) Liens for taxes,  assessments or other
governmental  charges not  delinquent,  or, being contested in good faith and by
appropriate  proceedings  and with  respect to which proper  reserves  have been
taken by Borrower; provided, that, the Lien shall have no effect on the priority
of the Liens in favor of Agent or the Lien shall not, in the sole  discretion of
Agent,  materially  adversely  affect the value of the assets in which Agent has
such a Lien;  (c) Liens  disclosed in the  financial  statements  referred to in
Section  5.5;  (d)  deposits  or pledges to secure  obligations  under  worker's
compensation,  social security or similar laws, or under unemployment insurance;
(e) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the  payment of money),  leases,  statutory  obligations,  surety and appeal
bonds (or in lieu of security  or appeal  bonds) and other  obligations  of like
nature arising in the ordinary course of Borrower's business; (f) judgment Liens
that have been stayed or bonded and mechanics', worker's, materialmen's or other
like Liens arising in the ordinary course of Borrower's business with respect to
obligations  which  are not due or which are being  contested  in good  faith by
Borrower;  (g) Liens  placed upon fixed  assets  hereafter  acquired to secure a
portion of the purchase price thereof, provided that (x) any such lien shall not
encumber  any  other  property  of  Borrower  and (y) the  aggregate  amount  of
Indebtedness secured by such Liens incurred as a result of such purchases during
any fiscal year shall not exceed the amount  provided  for in Section  7.6;  (h)
other Liens incidental to the conduct of Borrower's business or the ownership of
its property and assets which were not incurred in connection with the borrowing
of money  or the  obtaining  of  advances  or  credit,  and  which do not in the
aggregate materially detract from Agent's rights in and to the Collateral or the
value of Borrower's property or assets or which do not materially impair the use
thereof in the operation of


                                      -17-


<PAGE>



Borrower's  business;  (i) Liens  covering  property of Borrower  following  the
exercise by Borrower of its rights and remedies  against a Client or a guarantor
of a Client; (j)  warehouseman's  liens covering imported goods of Clients as to
which  Borrower  may from time to time own or be deemed to own such  goods;  (k)
Risk  Participations,  to the extent  permitted  under Section 7.1; (l) Liens on
Receivables  (other than Receivables  generated by Borrower) in favor of a party
other than Agent;  provided,  that, such Liens are  subordinated to any Liens on
such  Receivables  in favor of  Borrower  pursuant  to a  written  subordination
agreement  pursuant to which, in each case, the  subordinated  lienor shall have
agreed not to exercise  any rights or  remedies  prior to payment in full of all
amounts  owing to Borrower;  (m) Liens on  Receivables  generated by Borrower in
favor of a party other than Agent;  provided,  that, such Liens are subordinated
to any  Liens  on such  Receivables  in favor of  Agent  pursuant  to a  written
subordination agreement pursuant to which, in each case, the subordinated lienor
shall have  agreed not to exercise  any rights or  remedies  prior to payment in
full of all  amounts  owing to Agent and  Lenders;  and (n) Liens  disclosed  on
Schedule 1.2(a).

                       "Person" shall mean an individual, a partnership, a
corporation, a business trust, a joint stock company, a trust, an unincorporated
association,  a joint venture,  a governmental  authority or any other entity of
whatever nature.

                       "Personal Injury Settlement Business" shall mean the
purchase by SSI of all or a portion of the proceeds of personal  injury or other
legal or equitable claims at a discount from an injured party or other claimant.

                       "Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA,  maintained  for  employees of Borrower or any
member of the Controlled  Group or any such Plan to which Borrower or any member
of the  Controlled  Group is  required  to  contribute  on  behalf of any of its
employees.

                       "Purchase Date" shall mean, with respect to any
Receivable  purported to be purchased by Borrower,  the original  date  Borrower
makes advances or loans to a Client with respect to such Receivable  pursuant to
a Factoring Agreement.

                       "Purchasing Lender" shall have the meaning set forth
in Section 15.3(d).

                       "RCRA" shall mean the Resource Conservation and
Recovery Act, 42 U.S.C. ss.ss. 6901 et seq., as same may be amended
from time to time.

                       "Real Property" shall mean any real property owned or
leased by Borrower and set forth on Schedule  1.2(b) and all hereafter  owned or
leased real property of Borrower.



                                      -18-


<PAGE>



                       "Receivables" shall mean and include (a) all of
Borrower's accounts,  contract rights,  instruments  (including those evidencing
indebtedness  among  Borrower and its  Affiliates),  documents,  chattel  paper,
general intangibles relating to accounts, drafts and acceptances,  and all other
forms of obligations  owing to Borrower arising out of or in connection with (i)
the sale or lease of Inventory by  Borrower,  (ii) the  rendition of services by
Borrower, (iii) all accounts, contract rights, instruments,  documents,  chattel
paper, general intangibles relating to accounts, drafts and acceptances, and all
other  forms of  obligations  which have been  assigned to and/or  purchased  by
Borrower or (iv) any other transaction and (b) all guarantees and other security
therefor,  whether secured or unsecured,  now existing or hereafter created, and
whether or not specifically sold or assigned to Lender hereunder.

                       "Register" shall have the meaning set forth in Section
15.3(e).

                       "Related Person" shall mean as to any Person, any
other Person which,  together with such Person,  is treated as a single employer
under Section 414(c) of the Code.

                       "Release" shall have the meaning set forth in Section
5.7(c)(i) hereof.

                       "Required Lenders" shall mean, at any time for the
determination  thereof,  Lenders  holding  sixty-six and two-thirds  percent (66
2/3%) or more of the  outstanding  Advances at such time or, if no Advances  are
outstanding at such time,  sixty-six and two-thirds percent (66 2/3%) or more of
the Commitment Percentages of all Lenders.

                       "Reserves" shall mean such reserves for doubtful
accounts,  returns, allowances and the like as may be established by Borrower or
any  Subsidiary  or such  additional  or further  reserves as may  otherwise  be
required in accordance with GAAP.

                       "Restricted Payment" shall mean (i) the declaration of
a payment of any dividend or the incurrence of any liability to make any payment
or  distribution  of cash or other  property or assets in respect of  Borrower's
Stock,  (ii)  any  payment  on  account  of the  purchase,  redemption  or other
retirement of  Borrower's  Stock or any other  payment or  distribution  made in
respect  thereof,  either  directly or indirectly,  or (iii) any payment,  loan,
contribution, or other transfer of funds or other property to any Stockholder or
any Subsidiary of such Person except for reasonably equivalent value.

                       "Revolving Advances" shall mean Advances made other
than Letters of Credit, Equipment Value Advances and Inventory
Value Advances.



                                      -19-



<PAGE>



                       "Revolving Credit Note" shall mean the promissory
note(s) referred to in Section 2.1(a) hereof and all replacements, substitutions
and amendments of such promissory note,  including any promissory note(s) issued
to any Lender.

                       "Revolving Interest Rate" shall mean an interest rate
per  annum  equal to (a) the sum of the Base Rate plus  twenty  five (25)  basis
points,  with  respect to Domestic  Rate Loans or (b) the sum of the  Eurodollar
Rate plus 225 basis points, with respect to Eurodollar Rate Loans.

                       "Risk Participation" shall mean a participation
agreement  between  Borrower  and another  Person as  purchaser  of an undivided
participation in Borrower's exposure under a Factoring  Agreement,  a Collateral
Funding  Repayment  Agreement and/or an Inventory  Collateral  Funding Repayment
Agreement,  such  participation  to be on terms and  conditions  and pursuant to
agreements  consistent  with  Borrower's  historical  practices,  each of  which
participations shall be disclosed in writing to Agent.

                       "Schedule of Receivables" shall have the meaning set
forth in Section 9.2.

                       "Security Agreement" shall mean the Security Agreement
executed jointly and severally by each Guarantor securing the
obligations under the Guaranty.

                       "SSI" shall mean Settlement Solutions, Inc., a
Virginia corporation.

                       "Settlement Date" shall mean any Wednesday.

                       "Stock" shall mean all shares, options, warrants,
general or limited  partnership  interests,  participations or other equivalents
(regardless of how designated) of or in a corporation, partnership or equivalent
entity whether voting or nonvoting, including, without limitation, common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3all-1 of the General Rules and  Regulations  promulgated  by the Securities and
Exchange Commission under the Exchange Act).

                       "Stockholders" shall mean all of the holders of Stock
of Borrower from time to time.

                       "Stock Pledge Agreements" shall mean, collectively,
the (a) the pledge and security agreement between Agent and Borrower dated as of
the Original  Closing Date relating to the pledge by Borrower of the  Subsidiary
Stock and (b) the pledge and security  agreement  between Agent and LOI dated as
of the Original  Closing Date relating to the pledge by LOI of the stock of SSI,
each such pledge  agreement  being in form and substance  satisfactory to Lender
and each being  accompanied by (i) original  certificates  evidencing all of the
Subsidiary Stock or the stock of SSI, as the


                                      -20-



<PAGE>



case may be, and (ii) undated stock powers relating thereto endorsed in blank by
Borrower or LOI, as the case may be.

                       "Subsidiary" of any Person shall mean a corporation or
other  entity  of whose  shares  of stock or other  ownership  interests  having
ordinary voting power (other than stock or other ownership interests having such
power only by reason of the happening of a  contingency)  to elect a majority of
the directors of such corporation, or other Persons performing similar functions
for such entity, are owned, directly or indirectly, by such Person.

                       "Subsidiary Stock" shall mean all of the issued and
outstanding shares of stock owned by Borrower of LOI, AFC Holding
Corporation, Premium Sales Northeast, Inc., Business Funding of
America, Inc., Receivable Financing Corporation and Business
Funding of Florida, Inc.

                       "Tangible Net Worth" shall mean the gross book value
of  the  assets  of  Borrower  and  its  Subsidiaries  on a  consolidated  basis
(exclusive of goodwill, patents,  trademarks, trade names, organization expense,
treasury  stock,  unamortized  debt discount and expense,  deferred  charges and
other like  intangibles)  minus (without  duplication)  (i) Reserves  applicable
thereto, and (ii) all of Borrower's and its Subsidiaries' liabilities (including
accrued and deferred income taxes),  in each case, as such items would appear on
a  consolidated  balance  sheet of  Borrower  and its  Subsidiaries  prepared in
accordance with GAAP.

                       "Term" shall mean the Original Closing Date through
May 12,  2000,  as same may be extended in  accordance  with the  provisions  of
Section 13.1.

                       "Termination Date" shall have the meaning set forth in
Section 13.1.

                       "Termination Event" shall mean (i) a Reportable Event
with respect to any Plan or  Multiemployer  Plan;  (ii) the withdrawal of either
Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan
during a plan year in which such entity was a "substantial  employer" as defined
in  Section  4001(a)(2)  of ERISA;  (iii) the  providing  of notice of intent to
terminate  a Plan in a distress  termination  described  in  Section  4041(c) of
ERISA;  (iv) the  institution  by the PBGC of proceedings to terminate a Plan or
Multiemployer  Plan;  (v) any event or condition  (a) which might  reasonably be
expected to constitute  grounds under Section 4042 of ERISA for the  termination
of, or the  appointment  of a trustee to administer,  any Plan or  Multiemployer
Plan, or (b) that may result in termination of a Multiemployer  Plan pursuant to
Section 4041A of ERISA;  or (vi) the partial or complete  withdrawal  within the
meaning of Sections 4203 and 4205 of ERISA,  of either Borrower or any member of
the Controlled Group from a Multiemployer Plan.

                       "Total Liabilities" shall mean, as of any date of
calculation, the total liabilities of Borrower and its Subsidiaries


                                      -21-



<PAGE>



at such date  determined on a consolidated  basis in accordance  with GAAP plus,
without duplication,  the sum of the Letter of Credit Obligations outstanding at
such time and the stated amount of all Letters of Guaranty  outstanding  at such
time in excess of $5,000,000.

                       "Toxic Substance" shall mean and include any material
present on the Real Property  which has been shown to have  significant  adverse
effect  on human  health  or which is  subject  to  regulation  under  the Toxic
Substances Control Act (TSCA), 15 U.S.C.  ss.ss. 2601 et seq.,  applicable state
law,  or any other  applicable  Federal or state laws now in force or  hereafter
enacted  relating to toxic  substances.  "Toxic  substance"  includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.

                       "Transferee" shall have the meaning set forth in
Section 15.3(b) hereof.

                       "Undrawn Availability" at a particular date shall mean
an amount equal to (a) the lesser of (i) the Borrowing Base on such date or (ii)
the Maximum  Revolving Advance Amount on such date, minus (b) the sum of (i) the
outstanding  amount of Advances on such date plus (ii) all amounts due and owing
to Borrower's trade creditors which are outstanding beyond normal trade terms on
such date.

                       "Viatical Settlement Business" shall mean the entry
into an agreement  by LOI with a Person  owning a life  insurance  policy or who
owns or is covered under a group policy  insuring the life of a person who has a
catastrophic or life threatening illness or condition and pursuant to which LOI,
as the viatical  settlement  provider,  pays compensation which is less than the
expected death benefit of the insurance policy or certificate, in return for the
policyowner's assignment, transfer, sale, devise or bequest of the death benefit
or ownership of the insurance policy or certificate to LOI.

                       "Week" shall mean the time period commencing with a
Wednesday and ending on the following Tuesday.

                       "Winkler Employment Agreement" shall mean the
Employment and Compensation Agreement dated July 1, 1996 between
Borrower and Mr. Lawrence M. Winkler.

           1.3.        Uniform Commercial Code Terms.  All terms used herein
and defined in the Uniform Commercial Code as adopted in the State
of New York shall have the meaning given therein unless otherwise
defined herein.

           1.4.        Certain Matters of Construction.  The terms "herein",
"hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular section,
paragraph or subdivision.  Any pronoun used shall be deemed to
cover all genders.  Wherever appropriate in the context, terms used


                                      -22-



<PAGE>



herein in the singular also include the plural and vice versa. All references to
statutes and related  regulations  shall include any  amendments of same and any
successor statutes and regulations.  All references to this Agreement, any other
instruments or agreements,  including, without limitation,  references to any of
the Other  Documents  entered  into by or for the benefit of Agent or any Lender
shall include any and all  modifications  or amendments  thereto and any and all
extensions or renewals thereof.


II.        ADVANCES, PAYMENTS.

           2.1.        (a)      Revolving Advances.  Subject to the terms and
conditions set forth in this Agreement, each Lender, severally and
not jointly, will make Revolving Advances to Borrower in aggregate
amounts outstanding at any time equal to such Lender's Commitment
Percentage of the lesser of x) the Maximum Revolving Advance Amount
(less the sum of the aggregate amount of (I) outstanding Letters of
Credit, (II) outstanding Equipment Value Advances and (III)
outstanding Inventory Value Advances) or y) an amount equal to the
sum of:

                       (i) (A) 85%,  subject to the provisions of Section 2.1(b)
                       hereof,  of the  lesser  of (x)  the  value  of  Class  A
                       Eligible Receivables Exposure or (y) the aggregate amount
                       from time to time  outstanding of actual cash advances by
                       Borrower  to  Clients  secured  by  Eligible  Receivables
                       utilized  in  computing  Class  A  Eligible   Receivables
                       Exposure,  plus (B) 75%,  subject  to the  provisions  of
                       Section  2.1(b)  hereof,  of the  lesser  of (x) value of
                       Class  B  Eligible   Receivables   Exposure  or  (y)  the
                       aggregate  amount from time to time outstanding of actual
                       cash advances by Borrower to Clients  secured by Eligible
                       Receivables   utilized  in  computing  Class  B  Eligible
                       Receivables  Exposure,  plus  (C)  65%,  subject  to  the
                       provisions of Section 2.1(b) hereof, of the lesser of (x)
                       value of Class C Eligible Receivables Exposure or (y) the
                       aggregate  amount from time to time outstanding of actual
                       cash advances by Borrower to Clients  secured by Eligible
                       Receivables   utilized  in  computing  Class  C  Eligible
                       Receivables Exposure (collectively,  the "Advance Rates")
                       less such  reserves as Agent may  reasonably  deem proper
                       and  necessary  from  time  to time  in  connection  with
                       charges, judgments, or other amounts which Agent may have
                       to pay to protect  and  preserve  the  Collateral  or the
                       priority of the Lien of Agent therein, minus

                       (ii) the aggregate amount of outstanding Letters of
                       Credit.

           The sum of the amounts derived from Section 2.1 (a)(y)(i) at any time
and  from  time to time  shall  be  referred  to as the  "Borrowing  Base".  The
Revolving Advances shall be evidenced by a


                                      -23-



<PAGE>



Revolving  Credit  Note in  substantially  the form  attached  hereto as EXHIBIT
2.1(A)  issued by Borrower to each  Lender in an amount  equal to such  Lender's
Commitment Percentage of the Maximum Revolving Advance Amount.

                       (b)      Discretionary Rights.  The Advance Rates may be
(i)  decreased by Agent at any time and from time to time in the exercise of its
reasonable discretion or (ii) increased by Required Lenders at any time and from
time to time in the exercise of their reasonable  discretion.  Borrower consents
to any such increases or decreases and acknowledges  that decreasing the Advance
Rates may limit or restrict  Advances  requested by  Borrower.  Agent shall give
Borrower  five (5) days prior  written  notice of any  decrease  in the  Advance
Rates.

           2.2.  Equipment  Value  Advances.   (a)  Subject  to  the  terms  and
conditions of this Agreement,  each Lender, severally and not jointly, agrees to
make loans to Borrower  ("Equipment  Value Advances") to permit Borrower to make
loans or advances to Clients secured by the Clients'  equipment  ("Client Funded
Equipment") in aggregate amounts  outstanding at any time equal to such Lender's
Commitment  Percentage of the lesser of (i) the Maximum  Equipment Value Advance
Amount, (ii) eighty-five percent (85%) of the aggregate amount from time to time
outstanding  of actual cash  advances by Borrower to Clients which is secured by
Client Funded Equipment or (iii) sixty percent (60%) of the liquidation value of
such Client Funded Equipment; provided, however, the maximum amount of Equipment
Value Advances is subject to the further  limitations that: (A) from May 1, 1998
through and including  April 30, 1999 Equipment  Value Advances shall not exceed
the sum of (I) the  difference  between  (x)  $5,000,000  and (y) the  amount of
outstanding  Equipment  Value  Advances as of April 30, 1998 plus (II) principal
payments made by Borrower with respect to Equipment  Value Advances  outstanding
as of April 30, 1998 and (B) on and after May 1, 1999  Equipment  Value Advances
shall not exceed the sum of (I) the difference  between  $5,000,000 and (II) the
amount of outstanding  Equipment Value Advances as of April 30, 1999;  provided,
further,  that under no  circumstances  shall  Equipment  Value Advances be made
against Client Funded  Equipment  unless  Borrower has recorded on its books and
records  and  actually  made  advances  or  loans to a  Client  pursuant  to the
applicable  Collateral  Funding  Repayment  Agreement.   Borrower  may  use  the
Equipment  Value  Advances  by  borrowing,  repaying  and  reborrowing,  all  in
accordance with the terms and conditions  hereof. The proceeds of each Equipment
Value  Advance  requested  by Borrower  shall,  to the extent  Lenders make such
Equipment  Value Advance,  be made available to Borrower on the day so requested
by way of credit to Borrower's Operating Account, or such other bank as Borrower
may designate following  notification to Agent, in immediately available federal
or  other  immediately  available  funds.  The  aggregate  principal  amount  of
Equipment  Value Advances (X) outstanding on April 30, 1998 will be amortized on
the basis of a thirty-six (36) month amortization  schedule and shall be payable
in equal monthly  installments  commencing on May 1, 1998 and on the last day of
each month thereafter with the balance payable


                                      -24-



<PAGE>



upon  the  expiration  of the  Term,  and (Y)  outstanding  on  April  30,  1999
(excluding any Equipment Value Advances that were outstanding on April 30, 1998)
will be amortized on the basis of a thirty-six (36) month amortization  schedule
and shall be payable in equal monthly installments commencing May 1, 1999 and on
the  last  day of each  month  thereafter  with  the  balance  payable  upon the
expiration of the Term,  subject to acceleration upon the occurrence of an Event
of Default under this Agreement or termination of this Agreement.  Any repayment
(other than regularly scheduled monthly amortization  payments) or prepayment of
Equipment  Value  Advances  shall be applied in the inverse order of maturity to
the then remaining monthly amortization of Equipment Value Advances.

           (b) The agreement of Lenders to make each Equipment  Value Advance is
subject to satisfaction of the following  conditions  precedent:  (i) receipt by
Agent of (1) copies of all documentation and appraisals required to be delivered
by a Client to Borrower pursuant to the applicable  Collateral Funding Repayment
Agreement,  (2) evidence  that such Client has obtained  insurance  covering the
theft,  destruction  or other loss of the Client  Funded  Equipment and (3) such
other documentation and evidence that Agent may reasonably  request,  including,
without  limitation,  copies of UCC-1 financing  statements  filed in accordance
with Section 6.10 hereof or evidence that such  financing  statements  have been
filed in  accordance  therewith  and (ii) after  giving  effect  thereto (1) the
aggregate  principal  amount of Equipment Value Advances  outstanding  shall not
exceed  the lesser of (i) the  Maximum  Equipment  Value  Advance  Amount,  (ii)
eighty-five  percent (85%) of the aggregate amount from time to time outstanding
of actual cash  advances  made by Borrower to Clients which is secured by Client
Funded Equipment in accordance with the Collateral  Funding Repayment  Agreement
or (iii) sixty  percent  (60%) of the  liquidation  value of such Client  Funded
Equipment,  (2) the aggregate  outstanding Advances shall not exceed the Maximum
Revolving Advance Amount,  and (3) the sum of the aggregate  principal amount of
Equipment  Value  Advances  outstanding  and the aggregate  principal  amount of
Inventory Value Advances  outstanding shall not exceed $7,500,000 less regularly
scheduled  monthly  amortization  payments on and after the Effective  Date with
respect to Equipment Value Advances (but only to the extent that Borrower is not
permitted to incur additional  Equipment Value Advances in amounts equal to such
payments).

           2.2A  Inventory  Value  Advances.   (a)  Subject  to  the  terms  and
conditions of this Agreement,  each Lender, severally and not jointly, agrees to
make loans to Borrower  ("Inventory  Value Advances") to permit Borrower to make
loans or advances to Clients  secured by Eligible  Client  Funded  Inventory (as
defined  below)  in  aggregate  amounts  outstanding  at any time  equal to such
Lender's Commitment  Percentage of the lesser of (i) the Maximum Inventory Value
Advance  Amount  or (ii) (x) to the  extent  (but only to the  extent)  that the
aggregate  amount  from time to time  outstanding  of actual  cash  advances  by
Borrower to Clients  which is secured by Eligible  Client  Funded  Inventory  is
equal to or less  than  fifty  percent  (50%) of the  liquidation  value of such
Eligible Client


                                      -25-



<PAGE>



Funded Inventory, thirty percent (30%) of the aggregate amount from time to time
outstanding of such actual cash advances by Borrower to Clients  secured by such
Eligible Client Funded  Inventory and (y) to the extent (but only to the extent)
that the aggregate  amount from time to time outstanding of actual cash advances
by Borrower  to Clients  which is secured by Eligible  Client  Funded  Inventory
exceeds 50% of the liquidation  value of such Eligible Client Funded  Inventory,
twenty-five  percent (25%) of the aggregate amount from time to time outstanding
of such actual cash  advances  by Borrower to Clients  secured by such  Eligible
Client  Funded  Inventory  (the sum of  preceding  clauses  (ii)(x) and (y), the
"Inventory  Borrowing  Base");  provided,  however,  that under no circumstances
shall Inventory Value Advances be made against  Eligible Client Funded Inventory
unless Borrower has recorded on its books and records and actually made advances
or loans to a Client  pursuant to the applicable  Inventory  Collateral  Funding
Repayment Agreement. "Eligible Client Funded Inventory" shall mean, with respect
to any Client,  all of such Client's raw materials  inventory and finished goods
inventory to the extent (i) Borrower  provides Agent with a written  description
thereof  in  reasonable  detail and a written  request  that such  inventory  be
treated as Eligible Client Funded  Inventory and (ii) Agent does not, within two
business days of its receipt of such description and request, notify Borrower in
writing  that,  in the exercise of Agent's  sole,  reasonable  discretion,  such
inventory (or a specified  portion thereof) does not constitute  Eligible Client
Funded  Inventory.  Notwithstanding  the foregoing,  Borrower  acknowledges  and
agrees that dynamic  random  access memory chips shall not  constitute  Eligible
Client Funded  Inventory  unless Agent (in the exercise of its sole and absolute
discretion) affirmatively consents thereto in writing.

Borrower  may use the  Inventory  Value  Advances  by  borrowing,  repaying  and
reborrowing,  all in  accordance  with the  terms  and  conditions  hereof.  The
proceeds of each Inventory  Value Advance  requested by Borrower  shall,  to the
extent Lenders make such Inventory Value Advance,  be made available to Borrower
on the day so requested by way of credit to  Borrower's  Operating  Account,  or
such other bank as Borrower may designate  following  notification  to Agent, in
immediately   available  federal  or  other  immediately  available  funds.  The
aggregate  principal amount of Inventory Value Advances  outstanding on the last
day of the Term  shall be  payable  in full  upon the  expiration  of the  Term,
subject to  acceleration  upon the  occurrence of an Event of Default under this
Agreement or termination of this Agreement.

           (b) The agreement of Lenders to make each Inventory  Value Advance is
subject to satisfaction of the following  conditions  precedent:  (i) receipt by
Agent of (1) copies of all documentation and appraisals required to be delivered
by a Client to Borrower pursuant to the applicable  Inventory Collateral Funding
Repayment  Agreement,  (2)  evidence  that such  Client has  obtained  insurance
covering the theft,  destruction  or other loss of the Client Funded  Inventory,
(3) a  copy  of a  duly  executed  inventory  management  or  inventory  control
agreement among Borrower, the applicable Client


                                      -26-



<PAGE>



and  DiversiCorp,  Inc.  (or another  third  party  collateral  monitoring  firm
selected  by  Borrower  and  reasonably  satisfactory  to Agent)  or  Borrower's
description  of alternative  inventory  control or management  procedures  which
procedures  must be  satisfactory  to Agent in its sole  discretion and (4) such
other documentation and evidence that Agent may reasonably  request,  including,
without  limitation,  copies of UCC-1 financing  statements  filed in accordance
with Section 6.10 hereof or evidence that such  financing  statements  have been
filed in  accordance  therewith  and (ii) after  giving  effect  thereto (1) the
aggregate  principal  amount of Inventory Value Advances  outstanding  shall not
exceed the lesser of (i) the Maximum  Inventory Value Advance Amount or (ii) the
Inventory  Borrowing  Base,  (2) the aggregate  outstanding  Advances  shall not
exceed the Maximum  Revolving  Advance  Amount and (3) the sum of the  aggregate
principal  amount of Inventory  Value  Advances  outstanding  and the  aggregate
principal  amount of  Equipment  Value  Advances  outstanding  shall not  exceed
$7,500,000 less regularly scheduled monthly  amortization  payments on and after
the  Effective  Date with respect to Equipment  Value  Advances (but only to the
extent that  Borrower  is not  permitted  to incur  additional  Equipment  Value
Advances in amounts equal to such payments).

           2.3.  Disbursement  of  Revolving  Advance  Proceeds.  All  Revolving
Advances  shall be  disbursed  from  whichever  office or other  place Agent may
designate from time to time and,  together with any and all other Obligations of
Borrower to Agent or Lenders,  shall be charged to Borrower's account on Agent's
books.  During the Term,  Borrower may use the Revolving  Advances by borrowing,
prepaying  and  reborrowing,  all in  accordance  with the terms and  conditions
hereof.  The proceeds of each Revolving  Advance requested by Borrower or deemed
to have been  requested by Borrower  under Section  2.12(a)  hereof shall,  with
respect  to  requested  Revolving  Advances  to the  extent  Lenders  make  such
Revolving Advances, be made available to Borrower on the day so requested by way
of credit to Borrower's  Operating  Account,  or such other bank as Borrower may
designate following  notification to Agent, in immediately  available federal or
other immediately  available funds or, with respect to Revolving Advances deemed
to have  been  requested,  be  disbursed  to Agent  in  payment  of  outstanding
Obligations.

           2.4. Maximum Revolving  Advances . The aggregate balance of Revolving
Advances  outstanding at any time shall not exceed the lesser of (x) the Maximum
Revolving  Advance  Amount  less  the  sum of (a)  outstanding  Equipment  Value
Advances,  (b) outstanding Inventory Value Advances, and (c) outstanding Letters
of Credit and (y) the Borrowing Base.

           2.5. Maximum  Equipment Value Advances.  The aggregate balance of the
Equipment Value Advances  outstanding at any time shall not exceed the lesser of
(i) the Maximum Equipment Value Advance Amount,  (ii) eighty-five  percent (85%)
of the aggregate amount from time to time outstanding of actual cash advances by
Borrower to Clients secured by Client Funded Equipment or (iii)


                                      -27-



<PAGE>



sixty percent (60%) of the liquidation value of such Client Funded
Equipment.

           2.5A Maximum  Inventory Value Advances.  The aggregate balance of the
Inventory Value Advances  outstanding at any time shall not exceed the lesser of
(i) the Maximum  Inventory Value Advance Amount or (ii) the Inventory  Borrowing
Base.

           2.6. Repayment of Excess Advances. The aggregate balance of Revolving
Advances, Equipment Value Advances and Inventory Value Advances, as the case may
be,  outstanding  at any time in excess of the maximum  permitted  under Section
2.4,  Section 2.5 or Section 2.5A, as applicable,  shall be immediately  due and
payable without the necessity of any demand,  at the Payment Office,  whether or
not a Default or Event of Default has occurred.

           2.7. Statement of Account.  Agent shall maintain,  in accordance with
its customary procedures,  a loan account in the name of Borrower in which shall
be recorded the date and amount of each Advance made by Lenders and the date and
amount of each payment in respect  thereof;  provided,  however,  the failure by
Agent to record the date and amount of any Advance  shall not  adversely  affect
Agent or any  Lender.  By the  tenth  day of each  month,  Agent  shall  send to
Borrower a statement showing the accounting for the Advances made, payments made
or credited  in respect  thereof,  and other  transactions  between  Lenders and
Borrower,  during the preceding  month.  The monthly  statements shall be deemed
correct and  binding  upon  Borrower in the absence of manifest  error and shall
constitute an account stated between  Lenders and Borrower unless Agent receives
a written statement of Borrower's specific exceptions thereto within thirty (30)
days after such  statement  is received by  Borrower.  The records of Agent with
respect to the loan  account  shall be prima  facie  evidence  of the amounts of
Advances and other charges thereto and of payments applicable thereto.

           2.8. Letters of Credit.  Subject to the terms and conditions  hereof,
Agent  shall  issue or cause the  issuance  of  Letters of Credit  ("Letters  of
Credit");  provided,  however, that Agent will not be required to issue or cause
to be issued any  Letters of Credit to the extent  that the face  amount of such
Letters  of Credit  would then  cause the sum of (i) the  outstanding  Revolving
Advances plus (ii)  outstanding  Letters of Credit (with the requested Letter of
Credit  being deemed to be  outstanding  for  purposes of this  calculation)  to
exceed the lesser of (x) the sum of (a) Maximum  Revolving  Advance  Amount less
(b) outstanding  Equipment  Value Advances less (c) outstanding  Inventory Value
Advances  or (y) the  Borrowing  Base.  The  maximum  amount of Letter of Credit
Obligations shall not exceed  $5,000,000.00 in the aggregate  outstanding at any
time. All disbursements or payments related to Letters of Credit shall be deemed
to be  Domestic  Rate Loans  consisting  of  Revolving  Advances  and shall bear
interest at the  Revolving  Interest  Rate for Domestic  Rate Loans.  Once drawn
upon, a Letter of Credit shall be deemed not to be outstanding for all


                                      -28-



<PAGE>



purposes  hereof to the extent of such drawing;  Letters of Credit that have not
been drawn upon shall not bear interest.

           2.9.        Issuance of Letters of Credit.

                       (a)      Borrower may request Agent to issue or cause the
issuance of a Letter of Credit by  delivering  to Agent at the  Payment  Office,
Agent's or if a different  issuing bank,  such issuing  bank's  standard form of
Letter of Credit Application (collectively,  the "Letter of Credit Application")
completed to the satisfaction of Agent; and, such other certificates,  documents
and other papers and information as Agent may reasonably request.

                       (b)      Each Letter of Credit shall, among other things,
(i) provide for the payment of drafts when  presented  for honor  thereunder  in
accordance  with  the  terms  thereof  and  when  accompanied  by the  documents
described  therein  and (ii) have an expiry  date not later  than six (6) months
with  respect to trade  Letters of Credit and twelve (12) months with respect to
standby  Letters of Credit after such Letter of Credit's date of issuance and in
no event later than the last day of the Term. Each Letter of Credit  Application
and each Letter of Credit  shall be subject to the Uniform  Customs and Practice
for  Documentary  Credits  (1993  Revision),  International  Chamber of Commerce
Publication  No. 500, and any amendments or revision  thereof and, to the extent
not inconsistent therewith, the laws of the State of New York.

           2.10.       Requirements For Issuance of Letters of Credit.

                       (a)      In connection with the issuance of any Letter of
Credit,  Borrower shall indemnify,  save and hold Agent and each Lender harmless
from any loss,  cost,  expense  or  liability,  including,  without  limitation,
payments made by Agent and any Lender,  and expenses and  reasonable  attorneys'
fees incurred by Agent or any Lender arising out of, or in connection  with, any
Letter of Credit to be issued or created for Borrower  other than for Agent's or
any Lender's gross negligence or willful misconduct.  Borrower shall be bound by
Agent's  or  any  issuing  or  accepting  bank's   regulations  and  good  faith
interpretations  of any  Letter  of  Credit  issued or  created  for  Borrower's
account, although this interpretation may be different from Borrower's own; and,
neither  Agent nor any Lender,  the bank which opened the Letter of Credit,  nor
any of its  correspondents  shall  be  liable  for  any  error,  negligence,  or
mistakes,  whether of omission or commission,  in following  Borrower's  written
instructions   or  those   contained  in  any  Letter  of  Credit,   or  of  any
modifications,  amendments  or  supplements  thereto or in issuing or paying any
Letter of Credit,  except for  Agent's or any  Lender's or such  issuing  bank's
willful misconduct or gross negligence.

                       (b)      In connection with all Letters of Credit issued
or caused to be issued by Agent under this  Agreement,  Agent,  or its designee,
shall, upon Borrower's written request,  act as Borrower's  attorney,  with full
power and authority (i) to sign and/or endorse


                                      -29-



<PAGE>



Borrower's  name  upon  any  warehouse  or  other  receipts,  letter  of  credit
applications and  acceptances;  (ii) to sign Borrower's name on bills of lading;
(iii) to clear Inventory through the United States of America Customs Department
("Customs")  in the name of Borrower or Agent or Agent's  designee,  and to sign
and delivery to Customs officials powers of attorney in the name of Borrower for
such purpose; and (iv) to complete in Borrower's name or Agent's, or in the name
of  Agent's  designee,  any order,  sale or  transaction,  obtain the  necessary
documents in connection  therewith,  and collect the proceeds  thereof.  Neither
Agent nor its  attorneys  will be liable for any acts or  omissions  nor for any
error  of  judgment  or  mistakes  of fact or law,  except  for  Agent's  or its
attorney's willful misconduct or gross negligence.

                       (c)     Each Lender shall to the extent of the percentage
amount equal to the product of such  Lender's  Commitment  Percentage  times the
aggregate amount of all disbursements made with respect to the Letters of Credit
be deemed to have  irrevocably  purchased  an  undivided  participation  in each
Revolving Advance made as a consequence of such disbursement.  In the event that
at the time a  disbursement  is made the unpaid  balance of  Revolving  Advances
exceeds or would exceed, with the making of such disbursement, the lesser of (a)
the sum of (i) Maximum Revolving Advance Amount less (ii) outstanding  Equipment
Value  Advances  less  (iii)  outstanding  Inventory  Value  Advances  less (iv)
outstanding  Letters of Credit or (b) the Borrowing Base, and such  disbursement
is not reimbursed by Borrower within two (2) Business Days, Agent shall promptly
notify each Lender and upon  Agent's  demand each Lender shall pay to Agent such
Lender's  proportionate  share of such unreimbursed  disbursement  together with
such Lender's  proportionate  share of Agent's  unreimbursed  costs and expenses
relating to such unreimbursed disbursement. Upon receipt by Agent of a repayment
from Borrower of any amount  disbursed by Agent for which Agent had already been
reimbursed by Lenders,  Agent shall deliver to each of Lenders that Lender's pro
rata share of such  repayment.  Each  Lender's  participation  commitment  shall
continue  until  the last to occur of any of the  following  events:  (A)  Agent
ceases to be obligated to issue  Letters of Credit  hereunder;  (B) no Letter of
Credit issued hereunder  remains  outstanding and uncancelled or (C) all Persons
(other than Borrower) have been fully  reimbursed for all payments made under or
relating to Letters of Credit.

                       (d)  In the event that any Letter of Credit
Obligation,  whether  or not then  due and  payable,  shall  for any  reason  be
outstanding on the Termination  Date,  Borrower will pay to Lenders cash or Cash
Equivalents  in an amount equal to the maximum amount then available to be drawn
under all such Letters of Credit.  Such funds or Cash Equivalents  shall be held
by Agent in a cash collateral account (the "Cash Collateral Account").  The Cash
Collateral  Account shall be in the name of Lenders or the Agent for the benefit
of Lenders (as a cash collateral account),  and shall be under the sole dominion
and control of Agent and subject to the terms of this Section 2.10(d).  Borrower
hereby  pledges,  and  grants  to the  Agent for the  benefit  of the  Lenders a
security interest in,


                                      -30-



<PAGE>



all such funds or Cash Equivalents held in the Cash Collateral Account from time
to time and all proceeds  thereof,  as security for the payment of all Letter of
Credit Obligations, whether or not then due.

                       From time to time after funds are deposited in the
Cash  Collateral  Account,  the Agent and/or the Lenders may apply such funds or
Cash Equivalents then held in the Cash Collateral  Account to the payment of any
amounts, in such order as Lenders may elect, as shall be or shall become due and
payable  by  Borrower  to  Lenders   with  respect  to  such  Letter  of  Credit
Obligations.

                       Neither Borrower nor any Person or entity claiming on
behalf of or through  Borrower shall have any right to withdraw any of the funds
or Cash  Equivalents held in the Cash Collateral  Account,  except that upon the
termination of any Letter of Credit  Obligation in accordance with its terms and
the payment of all amounts payable by Borrower to Lenders in respect thereof, if
no Default or Event of Default  exists and is continuing at such time, any funds
remaining in the Cash Collateral  Account in excess of the then remaining Letter
of Credit Obligations shall be returned to Borrower.

                       The Agent and the Lenders shall not have any
obligation  to invest the funds in the Cash  Collateral  Account or deposit such
funds in an interest-bearing account, and interest and earnings thereon, if any,
shall be the property of Lenders.

           2.11.  Additional Payments.  Any sums expended by Agent or any Lender
due to Borrower's  failure to perform or comply with its obligations  under this
Agreement  or any  Other  Document  including,  without  limitation,  Borrower's
obligations  under Sections 4.2, 4.4, 4.12,  4.13,  4.14 and 6.1 hereof,  may be
charged  to  Borrower's  account  as  a  Revolving  Advance  and  added  to  the
Obligations.

           2.12.       Manner of Borrowing and Repayment of Advances.

           (a)  Borrower may notify Agent prior to 3:00 P. M. (New York time) on
a Business  Day of its  request  to incur,  on that day,  a  Revolving  Advance,
Equipment  Value Advance and/or  Inventory Value Advance  hereunder.  Should any
amount  required to be paid as interest  hereunder,  or as fees or other charges
under this Agreement or any Other Document,  not be paid when due, same shall be
deemed a request for a Revolving  Advance as of the date such payment is due, in
the amount  required to pay in full such  interest,  fee,  charge or  Obligation
under  this  Agreement  or  any  Other  Document,  and  such  request  shall  be
irrevocable.

           (b)  Notwithstanding  the  provisions  of (a)  above,  in  the  event
Borrower desires to obtain a Eurodollar Rate Loan,  Borrower shall give Agent at
least three (3) Business Days' prior written notice,  specifying (i) the date of
the  proposed  borrowing  (which  shall  be a  Business  Day),  (ii) the type of
borrowing  and the  amount on the date of such  Advance  to be  borrowed,  which
amount shall not


                                      -31-



<PAGE>



be less than $1,000,000  initially or an integral multiple of $100,000 in excess
thereof and (iii) the duration of the first Interest Period  therefor.  Interest
Periods for Eurodollar  Rate Loans shall be for 30, 60 or 90 days. No Eurodollar
Rate Loan  shall be made  available  to  Borrower  during the  continuance  of a
Default or an Event of  Default.  No more than three (3)  Eurodollar  Rate Loans
shall be outstanding at any time.

           (c) Each Interest  Period of a Eurodollar Rate Loan shall commence on
the date  such  Eurodollar  Rate  Loan is made  and  shall  end on such  date as
Borrower may elect as set forth in (b)(iii) above provided that the exact length
of each Interest  Period shall be determined in accordance  with the practice of
the interbank  market for offshore  Dollar deposits and no Interest Period shall
end after the last day of the Term.

           Borrower  shall elect the initial  Interest  Period  applicable  to a
Eurodollar  Rate Loan by its  notice of  borrowing  given to Agent  pursuant  to
Section  2.12(b)  or by its  notice of  conversion  given to Agent  pursuant  to
Section  2.12(d),  as the case may be. Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current  Interest Period  applicable to such Eurodollar Rate Loan. If Agent does
not receive timely notice of the Interest  Period elected by Borrower,  Borrower
shall be deemed to have elected to convert to a Domestic Rate Loan in accordance
with Section 2.12(d) hereinbelow.

                       (d)      Provided that no Event of Default shall have
occurred and be  continuing,  Borrower may, on the last Business Day of the then
current Interest Period  applicable to any outstanding  Eurodollar Rate Loan, or
on any Business Day with respect to Domestic  Rate Loans,  convert any such loan
into a loan of another type in the same aggregate principal amount provided that
any conversion of a Eurodollar Rate Loan shall be made only on the last Business
Day of the then current Interest Period applicable to such Eurodollar Rate Loan.
If a Borrower desires to convert a loan, Borrower shall give Agent not less than
three (3) Business  Days' prior  written  notice to convert from a Domestic Rate
Loan to a Eurodollar Rate Loan or one (1) Business Day's prior written notice to
convert from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying the date
of such  conversion,  the loans to be converted and if the  conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest
Period therefor.

                       (e)      At its option and upon three (3) Business Days'
prior written notice,  Borrower may prepay the Eurodollar Rate Loans in whole at
any time or in part from time to time,  without  premium  or  penalty,  but with
accrued  interest on the principal  being prepaid to the date of such repayment.
Borrower  shall specify the date of prepayment of Advances  which are Eurodollar
Rate Loans and the amount of such  prepayment.  In the event that any prepayment
of a Eurodollar Rate Loan is required or permitted on a date other


                                      -32-



<PAGE>



than the last  Business  Day of the then  current  Interest  Period with respect
thereto,  Borrower shall indemnify Agent and Lenders therefor in accordance with
Section 2.12(f) hereof.

                       (f)      Borrower shall indemnify Agent and Lenders and
hold Agent and Lenders  harmless from and against any and all losses or expenses
that Agent and Lenders may sustain or incur as a consequence of any  prepayment,
conversion  of or any default by Borrower in the payment of the  principal of or
interest  on any  Eurodollar  Rate Loan or failure  by  Borrower  to  complete a
borrowing  of, a prepayment  of or  conversion  of or to a Eurodollar  Rate Loan
after notice thereof has been given, including, but not limited to, any interest
payable by Agent or Lenders to lenders of funds  obtained by it in order to make
or  maintain  its  Eurodollar  Rate Loans  hereunder.  A  certificate  as to any
additional amounts payable pursuant to the foregoing sentence submitted by Agent
or any Lender to Borrower shall be conclusive absent manifest error.

                       (g)      Notwithstanding any other provision hereof, if
any applicable law, treaty, regulation or directive, or any change therein or in
the interpretation or application thereof, shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender)  makes or maintains any  Eurodollar  Rate Loans to make or maintain
its  Eurodollar  Rate Loans the  obligation of Lenders to make  Eurodollar  Rate
Loans hereunder shall forthwith be cancelled and Borrower shall, if any affected
Eurodollar  Rate Loans are then  outstanding,  promptly upon request from Agent,
either pay all such  affected  Eurodollar  Rate Loans or convert  such  affected
Eurodollar  Rate  Loans  into  loans of  another  type.  If any such  payment or
conversion of any Eurodollar Rate Loan is made on a day that is not the last day
of the Interest Period  applicable to such Eurodollar Rate Loan,  Borrower shall
pay Agent,  upon Agent's request,  such amount or amounts as may be necessary to
compensate  Lenders for any loss or expense  sustained or incurred by Lenders in
respect of such  Eurodollar Rate Loan as a result of such payment or conversion,
including (but not limited to) any interest or other amounts  payable by Lenders
to  lenders of funds  obtained  by  Lenders  in order to make or  maintain  such
Eurodollar  Rate  Loan.  A  certificate  as to any  additional  amounts  payable
pursuant to the  foregoing  sentence  submitted by Lenders to Borrower  shall be
conclusive absent manifest error.

           (h) The Revolving  Advances  shall be due and payable in full and the
Letter of Credit  Obligations shall be fully  collateralized in each case to the
satisfaction of Agent on the last day of the Term subject to earlier  prepayment
as herein provided.

           (i) Borrower  shall pay  principal,  interest,  and all other amounts
payable  hereunder,   or  under  any  Other  Document,   without  any  deduction
whatsoever,  including,  but not  limited  to, any  deduction  for any setoff or
counterclaim.


                                      -33-



<PAGE>




           (j)         Each borrowing of Revolving Advances shall be advanced
according to the Commitment Percentages of Lenders.

           (k) Each payment  (including each  prepayment) by Borrower on account
of the principal of and interest on the Revolving  Credit Note, shall be applied
by the Agent to the  Revolving  Advances  and,  subject to Sections 2.2 and 2.2A
hereof,  to Equipment Value Advances and Inventory  Value Advances,  as the case
may be, as  applicable  pro rata  according  to the  Commitment  Percentages  of
Lenders.   Except  as  expressly  provided  herein,   all  payments   (including
prepayments)  to be made by Borrower on account of principal,  interest and fees
shall be made  without  set-off  or  counterclaim  and shall be made to Agent on
behalf of Lenders to the Payment Office,  in each case on or prior to 3:00 P.M.,
New York time, in Dollars and in immediately  available funds.  Agent shall have
the  right  to  effectuate  payment  on any and all  Obligations  due and  owing
hereunder  by charging  Borrower's  account or by making  Revolving  Advances as
provided in this Section  2.12.  In the event Agent fails to remit to any Lender
such  Lender's  pro rata  share of  interest  or fees to which  such  Lender  is
entitled in a prompt  manner but in any event within one (1) Business Day of the
payment of same by Borrower  to Agent,  Agent shall pay to such Lender on demand
for each day there is a delay in payment an amount  equal to the  product of (i)
the Federal Funds Rate (computed on the basis of a year of 360 days), times (ii)
such amount.

           (l)  (i)  Notwithstanding  anything  to  the  contrary  contained  in
Sections  2.12(a),  (h),  (i),  (j) and (k)  hereof,  commencing  with the first
Business Day following the Original  Closing Date,  each  borrowing of Revolving
Advances,  Equipment Value Advances and/or Inventory Value Advances (as the case
may be) shall be  advanced  by Agent and each  payment by Borrower on account of
Revolving  Advances Equipment Value Advances and/or Inventory Value Advances (as
the case may be) shall be applied first to those Revolving  Advances,  Equipment
Value  Advances  and/or  Inventory  Value  Advances (as the case may be) made by
Agent. On or before 3:00 P.M., New York time, on each Settlement Date commencing
with the first  Settlement Date following the Original  Closing Date,  Agent and
Lenders shall make certain  payments as follows:  (I) if the aggregate amount of
new Revolving Advances, Equipment Value Advances and/or Inventory Value Advances
(as the case may be)  made by  Agent  during  the  preceding  Week  exceeds  the
aggregate  amount of  repayments  applied  to  outstanding  Revolving  Advances,
Equipment  Value Advances  and/or  Inventory Value Advances (as the case may be)
during such preceding  Week,  then each Lender shall provide Agent with funds in
an amount equal to its Commitment  Percentage of the difference between (w) such
new Revolving Advances, Equipment Value Advances and/or Inventory Value Advances
(as the case may be) and (x) such repayments and (II) if the aggregate amount of
repayments applied to outstanding  Revolving Advances,  Equipment Value Advances
and/or  Inventory Value Advances (as the case may be) during such preceding Week
exceeds the aggregate amount of new Revolving Advances, Equipment Value Advances
and/or Inventory Value Advances (as the case may be) made during such Week, then
Agent shall


                                      -34-



<PAGE>



provide each Lender with its Commitment Percentage of the difference between (y)
such  repayments and (z) such new Revolving  Advances,  Equipment Value Advances
and/or Inventory Value Advances
(as the case may be).

                                (ii)  Each Lender shall be entitled to earn
interest at the Revolving  Interest  Rate on  outstanding  Advances  (other than
Letters of Credit) which it has funded.

                                (iii)  Promptly following each Settlement Date,
Agent  shall  submit to each  Lender a  certificate  with  respect  to  payments
received  and  Advances  (other  than  Letters of Credit)  made  during the Week
immediately  preceding such Settlement  Date. Such certificate of Agent shall be
conclusive in the absence of manifest error.

                       (m)      If any Lender or Participant (a "benefitted
Lender")  shall at any time receive any payment of all or part of its  Revolving
Advances,  Equipment Value Advances and/or Inventory Value Advances (as the case
may be) or  interest  thereon,  or receive  any  Collateral  in respect  thereof
(whether  voluntarily or  involuntarily  or by set-off) in a greater  proportion
than any such payment to and Collateral received by any other Lender, if any, in
respect of such other  Lender's  Revolving  Advances,  Equipment  Value Advances
and/or  Inventory Value Advances (as the case may be) or interest  thereon,  and
such greater  proportionate  payment or receipt of  Collateral  is not expressly
permitted  hereunder,  such  benefitted  Lender shall purchase for cash from the
other  Lenders  such  portion of each such other  Lender's  Revolving  Advances,
Equipment Value Advances and/or Inventory Value Advances (as the case may be) or
shall provide such other Lender with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds  ratably with each
of the other  Lenders;  provided,  however,  that if all or any  portion of such
excess payment or benefits is thereafter  recovered from such benefitted Lender,
such purchase shall be rescinded,  and the purchase price and benefits returned,
to the extent of such recovery, but without interest.  Each Lender so purchasing
a portion of another  Lender's  Revolving  Advances,  Equipment  Value  Advances
and/or  Inventory Value Advances (as the case may be) may exercise all rights of
payment (including,  without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.

                       (n)      Unless Agent shall have been notified by
telephone,  confirmed  in writing,  by any Lender that such Lender will not make
the amount which would  constitute  its  Commitment  Percentage of the Revolving
Advances,  Equipment Value Advances and/or Inventory Value Advances (as the case
may be)  available to Agent,  Agent may (but shall not be  obligated  to) assume
that such Lender shall make such amount available to Agent and, in reliance upon
such assumption,  make available to Borrower a corresponding  amount. Agent will
promptly notify Borrower of its receipt of any


                                      -35-



<PAGE>



such notice from a Lender.  If such amount is made  available to Agent on a date
after a  Settlement  Date,  such  Lender  shall pay to Agent on demand an amount
equal to the product of (i) the daily average  Federal  Funds Rate  (computed on
the basis of a year of 360 days)  during such  period as quoted by Agent,  times
(ii) such  amount,  times  (iii) the  number  of days  from and  including  such
Settlement Date to the date on which such amount becomes  immediately  available
to Agent.  A  certificate  of Agent  submitted to any Lender with respect to any
amounts owing under this  paragraph (n) shall be  conclusive,  in the absence of
manifest  error.  If such amount is not in fact made  available to Agent by such
Lender within three (3) Business Days after such Settlement Date, Agent shall be
entitled to recover such an amount,  with interest thereon at the rate per annum
then applicable to Revolving Advances, Equipment Value Advances and/or Inventory
Value  Advances  (as the  case  may be)  hereunder,  on  demand  from  Borrower;
provided,  however,  that Agent's right to such recovery  shall not prejudice or
otherwise adversely affect Borrower's rights (if any) against such Lender.

            2.13.       Use of Proceeds.  Borrower shall apply the proceeds of
the Revolving Advances to provide for the working capital and
general corporate needs of Borrower and for any investment
permitted under Section 7.4 hereof.


III.  INTEREST AND FEES.

           3.1.  Interest.  Interest on Advances  (other than Letters of Credit)
shall be payable  in  arrears  on the first day of each  month  with  respect to
Domestic Rate Loans and, with respect to  Eurodollar  Rate Loans,  at the end of
each  Interest  Period.  Interest  charges shall be computed on the daily unpaid
balance of Advances  (other than  Letters of Credit)  outstanding  at the end of
each day during the month at a rate per annum  equal to the  Revolving  Interest
Rate.  Whenever,  subsequent  to the date of this  Agreement,  the Base  Rate is
increased or  decreased,  the  Revolving  Interest  Rate for Domestic Rate Loans
shall be  similarly  changed  without  notice or demand of any kind by an amount
equal to the amount of such  change in the Base Rate during the time such change
or  changes  remain in  effect.  Upon and after  the  occurrence  of an Event of
Default,  and during the continuation  thereof, the Advances (other than Letters
of Credit) shall bear interest at the  applicable  Revolving  Interest Rate plus
two (2%) percent (the "Default Rate").

           3.2.        Letter of Credit Fees.

           In the event that Agent or Lenders  shall  incur any Letter of Credit
Obligations  pursuant hereto at the request or on behalf of Borrower  hereunder,
Borrower  agrees  to pay to  Agent  for  the  ratable  benefit  of  Lenders,  as
compensation to Lenders for such Letter of Credit  Obligation,  (i) all fees and
charges  paid by Lenders on account of such Letter of Credit  Obligation  to the
issuer or like party (other than commissions paid by Agent or Lenders and


                                      -36-



<PAGE>



negotiation  charges) and (ii) commencing with the month in which such Letter of
Credit  Obligation is incurred by Lenders and monthly  thereafter for each month
during which such Letter of Credit  Obligation shall remain  outstanding,  a fee
(the  "Letter of Credit  Fee") at a rate equal to (a) 175 basis points per annum
on all trade  Letters of Credit and all standby  Letters of Credit  expiring 180
days or less from date of  issuance  and (b) 175 basis  points  per annum on all
standby  Letters  of Credit  expiring  more than 180 days but less than 360 days
from date of issuance,  in each case based upon the daily outstanding  amount of
such  Letter  of Credit  Obligations  on each day  during  the  previous  month,
determined  on the basis of a year of 360 days.  So long as any Event of Default
shall  have  occurred  and be  continuing,  the  Letter of  Credit  Fee shall be
increased by two percent (2%) per annum above the rate otherwise  applicable and
the Letter of Credit Fee shall be payable on demand.  Fees payable in respect of
Letter of Credit  Obligations  shall be paid to Agent for the ratable benefit of
Lenders, in arrears, on the first day of such calendar month.

           3.3.        Closing Fee. Upon the execution of this Agreement,
Borrower shall pay to Agent for the ratable benefit of Lenders a
closing fee of $50,000.

           3.4.  Unused  Line Fee.  If,  for any month  during  the term of this
Agreement,  the daily unpaid  balance of the Advances  outstanding at the end of
each day of such month does not equal the Maximum Revolving Advance Amount, then
Borrower  shall pay to Agent for the ratable  benefit of Lenders a fee at a rate
equal to one quarter of one percent  (1/4%)  multiplied by (x) the lesser of (i)
the Maximum  Revolving  Advance Amount or (ii) the Borrowing Base, minus (y) the
unpaid  balance of  Advances.  Such fee shall be  payable  to Agent for  ratable
benefit of Lenders in arrears on the first day of each month.

           3.5. Collateral Evaluation Fee. Borrower shall pay Agent a collateral
evaluation  fee equal to $1,500  per  month  commencing  on the first day of the
month following the Effective Date and on the first day of each month thereafter
during the Term. The collateral evaluation fee shall be deemed earned in full on
the date when same is due and  payable  hereunder  and shall not be  subject  to
rebate or proration upon termination of this Agreement for any reason.

           3.6. Field Examinations. Borrower shall pay to Agent on the first day
of each month (following any month) in which Agent performs a field  examination
a fee of $500.00 per day for each person  employed  to perform  such  monitoring
plus all out of pocket  expenses  incurred by Agent in the  performance  of such
examination.  Field  examinations  shall be  conducted no more than four times a
year provided that no Event of Default shall have occurred and be continuing.

           3.7.        Computation of Interest and Fees.  Interest and fees
hereunder shall be computed on the basis of a year of 360 days and
for the actual number of days elapsed.  If any payment to be made


                                      -37-



<PAGE>



hereunder  becomes due and payable on a day other than a Business  Day,  the due
date thereof  shall be extended to the next  succeeding  Business Day and,  with
respect to  payments  of  principal,  interest  thereon  shall be payable at the
Revolving Interest Rate for Domestic Rate Loans during such extension.

           3.8. Maximum Charges. In no event whatsoever shall interest and other
charges charged  hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto.  In the event  that a court  determines  that  Agent or any  Lender  has
received  interest  and other  charges  hereunder  in excess of the highest rate
applicable  hereto,  such excess  interest  shall be first applied to any unpaid
principal balance owed by Borrower, and if the then remaining excess interest is
greater than the previously  unpaid  principal  balance,  Lenders shall promptly
refund such excess amount to Borrower and the provisions  hereof shall be deemed
amended to provide for such permissible rate.

           3.9.  Increased Costs. In the event that any change in any applicable
law, treaty or governmental regulation,  or in the interpretation or application
thereof, or compliance by any Lender (for purposes of this Section 3.9, the term
"Lender"  shall  include  Agent  or any  Lender  and  any  corporation  or  bank
controlling  Agent or any  Lender)  and the office or branch  where Agent or any
Lender (as so defined)  makes or maintains  any  Eurodollar  Rate Loans with any
request or  directive  (whether or not having the force of law) from any central
bank or other  financial,  monetary  or other  authority,  occurring  after  the
Effective Date shall:

                       (a)      subject Agent or any Lender to any tax of any
kind  whatsoever  with respect to this Agreement or change the basis of taxation
of payments  to Agent or any Lender of  principal,  fees,  interest or any other
amount payable hereunder or under any Other Documents (except for changes in any
tax  measured or imposed on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);

                       (b)      INTENTIONALLY OMITTED.

                       (c)      impose on Agent or any Lender or the London
Interbank Eurodollar Market any other condition with respect to
this Agreement or any Other Documents;

and the  result  of any of the  foregoing  is to  increase  the cost to Agent or
Lender of making,  renewing or maintaining  any Advances  hereunder by an amount
that Agent or such  Lender  deems to be  material or to reduce the amount of any
payment  (whether of principal,  interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material,  then,  in
any case Borrower shall promptly pay Agent or such Lender, upon its demand, such
additional  amount as will  compensate  Agent or such Lender for such additional
cost or such  reduction,  as the case may be,  provided that the foregoing shall
not apply to increased costs


                                      -38-



<PAGE>



which are reflected in the Eurodollar  Rate.  Agent or such Lender shall certify
the amount of such additional cost or reduced amount (which  certification shall
be  supported  by  calculations  in  reasonable  detail) to  Borrower,  and such
certification shall be conclusive absent manifest error.

           3.10.       Capital Adequacy.

                       (a)      In the event that any change after the Effective
Date in any applicable  law,  rule,  regulation or guideline  regarding  capital
adequacy,  or any  change  after the  Effective  Date in the  interpretation  or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration  thereof, or compliance
by Agent or any Lender (for  purposes of this Section  3.10,  the term  "Lender"
shall include Agent or any Lender and any corporation or bank controlling  Agent
or any  Lender)  and the  office  or branch  where  Agent or any  Lender  (as so
defined)  makes or  maintains  any  Eurodollar  Rate Loans  with any  request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority,  central bank or comparable  agency made after the Effective
Date,  has the effect of  reducing  the rate of return on Agent or any  Lender's
capital as a  consequence  of its  obligations  hereunder  to a level below that
which Agent or such Lender could have achieved but for such adoption,  change or
compliance  (taking into  consideration  Agent's and each Lender's policies with
respect to capital  adequacy)  by an amount  deemed by Agent or any Lender to be
material,  then,  from time to time,  Borrower shall pay upon demand to Agent or
such Lender such additional  amount or amounts as will compensate  Agent or such
Lender for such reduction.  In determining such amount or amounts, Agent or such
Lender may use any reasonable  averaging or attribution  methods. The protection
of this Section 3.10 shall be available to Agent and each Lender  regardless  of
any possible  contention of invalidity  or  inapplicability  with respect to the
applicable law, regulation or condition.

                       (b)      A certificate of Agent or such Lender setting
forth  such  amount  or  amounts  (which   certificate  shall  be  supported  by
calculations in reasonable  detail) as shall be necessary to compensate Agent or
such Lender with respect to Section  3.10(a)  hereof when  delivered to Borrower
shall be conclusive absent manifest error.

           3.11.  Survival.  The obligations of Borrower under Sections
2.10, 3.9 and, 3.10 shall survive termination of this Agreement and
the Other Documents and payment in full of the Obligations.

           3.12.       Basis For Determining Interest Rate Inadequate or
Unfair.  In the event that Agent or any Lender shall have
determined that:

                       (a)      reasonable means do not exist for ascertaining
the Eurodollar Rate for any Interest Period; or


                                      -39-



<PAGE>




                       (b)      Dollar deposits in the relevant amount and for
the relevant  maturity  are not  available  in the London  interbank  Eurodollar
market,  with  respect  to an  outstanding  Eurodollar  Rate  Loan,  a  proposed
Eurodollar  Rate Loan,  or a proposed  conversion of a Domestic Rate Loan into a
Eurodollar Rate Loan,

then Agent shall give Borrower prompt written,  telephonic or telegraphic notice
of  such  determination.  If such  notice  is  given,  (i)  any  such  requested
Eurodollar  Rate Loan shall be made as a Domestic  Rate  Loan,  unless  Borrower
shall  notify  Agent no later  than  10:00  a.m.  (New York  City  time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such  borrowing  shall be cancelled or made as an unaffected  type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted into a Domestic Rate Loan,  or, if Borrower shall notify Agent,  no
later than 10:00 a.m.  (New York City time) two (2)  Business  Days prior to the
proposed  conversion,  shall be maintained  as an unaffected  type of Eurodollar
Rate Loan and (iii) any  outstanding  affected  Eurodollar  Rate Loans  shall be
converted  into a  Domestic  Rate  Loan as of the last  day of the then  current
Interest  Period,  or, if Borrower shall notify Agent,  no later than 10:00 a.m.
(New York City time) two (2) Business Days prior to the last Business Day of the
then current Interest Period  applicable to such affected  Eurodollar Rate Loan,
such affected Eurodollar Rate Loan shall be converted into an unaffected type of
Eurodollar  Rate  Loan on the last  Business  Day of the then  current  Interest
Period for such  affected  Eurodollar  Rate  Loans.  Until such  notice has been
withdrawn,  Lenders  shall  have  no  obligation  to make  an  affected  type of
Eurodollar Rate Loan or maintain  outstanding affected Eurodollar Rate Loans and
Borrower  shall  not have the  right  to  convert  a  Domestic  Rate  Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.


IV.  COLLATERAL:  GENERAL TERMS

           4.1.  Security  Interest  in the  Collateral.  To secure  the  prompt
payment and  performance to Agent and each Lender of the  Obligations,  Borrower
hereby assigns,  pledges and grants to Agent for its benefit and for the ratable
benefit  of each  Lender a  continuing  security  interest  in and to all of the
Collateral,  whether now owned or existing or hereafter  acquired or arising and
wheresoever  located.  Borrower  shall  mark its  books  and  records  as may be
necessary or  appropriate  to  evidence,  protect and perfect  Agent's  security
interest and shall cause its financial  statements to reflect the existence of a
security interest.

           4.2.        Perfection of Security Interest.  Borrower shall take
all action that may be necessary or desirable, or that Agent may
request, so as at all times to maintain the validity, perfection,
enforceability and priority of Agent's security interest in the
Collateral or to enable Agent to protect, exercise or enforce its


                                      -40-



<PAGE>



rights  hereunder  and in the  Collateral,  including,  but not  limited  to (i)
immediately discharging all Liens other than Permitted Encumbrances,  (ii) using
its best efforts to obtain landlords' or mortgagees' lien waivers,  (iii) making
available to Agent at the locations where same are kept, endorsed or accompanied
by such instruments of assignment as Agent may specify, and stamping or marking,
in such manner as Agent may  specify,  any and all chattel  paper,  instruments,
letters of credits and advices  thereof and  documents  evidencing  or forming a
part of the  Collateral,  (iv)  entering  into  warehousing,  lockbox  and other
custodial  arrangements  satisfactory to Agent, and (v) executing and delivering
financing statements, instruments of pledge, mortgages, notices and assignments,
in each  case in form and  substance  satisfactory  to  Agent,  relating  to the
creation, validity, perfection,  maintenance or continuation of Agent's security
interest  under  the  Uniform  Commercial  Code or  other  applicable  law.  All
reasonable  charges,  expenses  and fees  Agent  may  incur in doing  any of the
foregoing,  and any local taxes relating thereto, shall be charged to Borrower's
account as a  Revolving  Advance  and added to the  Obligations,  or, at Agent's
option, shall be paid to Agent immediately upon demand.

           4.3.  Disposition of Collateral.  Borrower will safeguard and protect
all  Collateral  for Agent's  general  account and make no  disposition  thereof
whether by sale,  lease or  otherwise  except (a) the sale of  Inventory  in the
ordinary  course of business,  (b) the  disposition  or transfer of obsolete and
worn-out  Equipment  in the ordinary  course of business  during any fiscal year
having an aggregate  fair market value of not more than $50,000 and (c) which is
otherwise permitted in Article VII of this Agreement.

           4.4. Preservation of Collateral.  Following the occurrence and during
the continuation of an Event of Default,  in addition to the rights and remedies
set forth in Section 11.1 hereof,  Agent: (a) may at any time take such steps as
Agent  deems  necessary  to protect  Agent's  interest  in and to  preserve  the
Collateral, including the hiring of such security guards or the placing of other
security protection  measures as Agent may deem appropriate;  (b) may employ and
maintain at any of Borrower's premises a custodian who shall have full authority
to do all acts necessary to protect Agent's interests in the Collateral; (c) may
lease  warehouse  facilities  to  which  Agent  may  move  all  or  part  of the
Collateral;  (d) may use any of Borrower's owned or leased lifts, hoists, trucks
and other  facilities or equipment for handling or removing the Collateral;  and
(e) shall  have,  and is hereby  granted,  a right of ingress  and egress to the
places where the Collateral is located,  and may proceed over and through any of
Borrower's owned or leased property.  Borrower shall cooperate fully with all of
Agent's  efforts  to  preserve  the  Collateral  and will take such  actions  to
preserve  the  Collateral  as Agent  may  direct.  All of  Agent's  expenses  of
preserving the Collateral,  including any expenses  relating to the bonding of a
custodian,  shall be charged to  Borrower's  account as a Revolving  Advance and
added to the Obligations.


                                      -41-



<PAGE>




           4.5. Ownership of Collateral.  With respect to the Collateral, at the
time the Collateral becomes subject to Agent's security  interest:  (a) Borrower
shall be the sole  owner of and  fully  authorized  and able to sell,  transfer,
pledge  and/or  grant a first  security  interest  in each and every item of the
Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all  Liens  whatsoever;  (b) each  document  and  agreement
executed  by  Borrower  or  delivered  to Agent or any  Lender  by  Borrower  in
connection  with  this  Agreement  shall be true  and  correct  in all  material
respects at the time executed or delivered;  (c) all signatures and endorsements
of Borrower that appear on such  documents and  agreements  shall be genuine and
Borrower  shall have full capacity to execute same; and (d) except for Inventory
relating to import  financing by Borrower and except with respect to the sale of
Inventory  in the  ordinary  course of  business  and  Equipment  to the  extent
permitted in Section 4.3 hereof,  Borrower's  Equipment and  Inventory  shall be
located  as set  forth on  Schedule  4.5 and  shall  not be  removed  from  such
location(s)  without the prior written consent of Agent,  not to be unreasonably
withheld.

           4.6. Defense of Agent's and Lender's Interests. Until (a) payment and
performance  in  full of all of the  Obligations  and  (b)  termination  of this
Agreement,  Agent's interests in the Collateral shall continue in full force and
effect.  During such period  Borrower shall not,  without  Agent's prior written
consent,  pledge,  sell (except Inventory in the ordinary course of business and
Equipment  to the extent  permitted in Section 4.3  hereof),  assign,  transfer,
create  or  suffer  to exist a Lien  upon or  encumber  or allow or suffer to be
encumbered  in any  way  except  for  Permitted  Encumbrances,  any  part of the
Collateral.  Borrower shall defend Agent's interests in the Receivables  against
any  and all  Persons  whatsoever  and  shall  defend  Agent's  interest  in the
Collateral other than Receivables  against any and all persons  whatsoever other
than  creditors of its Clients.  At any time following the occurrence and during
the  continuation  of an Event of  Default,  Agent  shall have the right to take
possession  of the  indicia of the  Collateral  and the  Collateral  in whatever
physical form  contained,  including  without  limitation:  labels,  stationery,
documents,  instruments and advertising materials. If Agent exercises this right
to take possession of the Collateral,  Borrower shall, upon demand,  assemble it
in the best manner possible and make it available to Agent at a place reasonably
convenient  to Agent.  In addition,  with respect to all  Collateral,  Agent and
Lenders shall be entitled to all of the rights and remedies set forth herein and
further  provided  by the  Uniform  Commercial  Code or  other  applicable  law.
Following  the  occurrence  and during the  continuation  of an Event of Default
Borrower shall at Agent's  request,  and Agent may, at its option,  instruct all
suppliers, carriers, forwarders, warehouses or others receiving or holding cash,
checks,  Inventory,  documents  or  instruments  in which Agent holds a security
interest to deliver  same to Agent and/or  subject to Agent's  order and if they
shall come into Borrower's possession,  they, and each of them, shall be held by
Borrower in trust as Agent's trustee, and Borrower


                                      -42-



<PAGE>



will immediately  deliver them to Agent in their original form together with any
necessary endorsement.

           4.7.  Books and  Records.  Borrower  (a) shall keep  proper  books of
record and account in which full,  true and correct  entries will be made of all
dealings or transactions of or in relation to its business and affairs;  (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims;  and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables,  advances and investments and
all  other  proper  accruals   (including   without   limitation  by  reason  of
enumeration,  accruals  for  premiums,  if any,  due on  required  payments  and
accruals for depreciation,  obsolescence, or amortization of properties),  which
should be set aside from such  earnings in  connection  with its  business.  All
determinations  pursuant to this subsection shall be made in accordance with, or
as required  by, GAAP  consistently  applied in the opinion of such  independent
public accountant as shall then be regularly engaged by Borrower.

           4.8. Financial Disclosure. Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by Borrower at any time during the
term of this Agreement to exhibit and deliver to Agent and each Lender copies of
any of  Borrower's  financial  statements,  trial  balances or other  accounting
records of any sort in the accountant's or auditor's possession, and to disclose
to Agent and each Lender any  information  such  accountants may have concerning
Borrower's financial status and business operations.  Borrower hereby authorizes
all federal, state and municipal authorities to furnish to Agent and each Lender
copies of reports or examinations relating to Borrower, whether made by Borrower
or  otherwise;  however,  Agent and each  Lender  will  attempt  to obtain  such
information  or  materials  directly  from  Borrower  prior  to  obtaining  such
information or materials from such accountants or such authorities and Agent and
each Lender shall provide  Borrower with the  opportunity  to participate in any
meeting or communication with such accountants or such authorities.

           4.9.  Compliance  with Laws.  Borrower  shall  comply  with all acts,
rules,  regulations  (including  those  relating to licensing and  regulation of
Borrower's business, ERISA, those regarding the collection,  payment and deposit
of sales,  employees' income,  unemployment and social security taxes, and those
relating to environmental matters) and orders of any legislative, administrative
or judicial body or official applicable to the Collateral or any part thereof or
to the operation of Borrower's business the non-compliance with which would have
a Material Adverse Effect.

           4.10.       Inspection of Premises.  Subject to the limitation on
field examinations contained in Section 3.6, at all reasonable
times Agent or any Lender shall have full access to and the right
to audit, check, inspect and make abstracts and copies from
Borrower's books, records, audits, correspondence and all other


                                      -43-



<PAGE>



papers  relating to the Collateral and the operation of Borrower's  business and
Agent, any Lender and their agents may enter upon any of Borrower's  premises at
any time during business hours and at any other  reasonable  time, and from time
to time,  for the purpose of inspecting  the  Collateral and any and all records
pertaining thereto and the operation of Borrower's business.

           4.11. Insurance Policies. Schedule 4.11(a) lists all insurance of any
nature maintained for current  occurrences by Borrower or its  Subsidiaries,  as
well as a summary of the terms of such insurance. Such insurance covers, without
limitation,  environmental,  fire, theft, burglary,  public liability,  property
damage,  product  liability,  workers'  compensation,  and  insurance  on all of
Borrower's and each of its Subsidiaries  tangible property and assets,  wherever
located, all in amounts customary for Borrower's and such Subsidiary's  industry
and under policies  issued by insurers and pursuant to policies  satisfactory to
Agent and in any event in compliance with any insurance  requirements under this
Agreement or under any Other Document.  Except as set forth on Schedule 4.11(b),
(a) all of such  policies of insurance  which are liability  insurance  policies
shall name Agent as additional  insureds and (b) Borrower  shall and shall cause
its  Subsidiaries  to use its best  efforts to ensure that all such  policies of
insurance which are casualty insurance policies shall contain an endorsement, in
form and  substance  acceptable  to Agent,  showing loss  payable to Agent.  The
endorsement   referenced  in  clause  (b)  of  the  preceding  sentence,  or  an
independent  instrument  furnished to Agent in lieu of such  endorsement,  shall
provide  that the  insurance  companies  will give  Agent at least 30 days prior
written notice before any such policy or policies of insurance  shall be altered
or  cancelled  and that no act or default of Borrower or any other  Person shall
affect the right of Agent to recover  under such policy or policies of insurance
in case of loss or damage.  All of such policies (or replacements  therefor) are
in full force and effect (except to the extent same relate to assets disposed of
as permitted  in Article VII hereof) and provide  coverage of such risks and for
such amounts as is  customarily  maintained for businesses of the scope and size
of Borrower.

           4.12. Failure to Pay Insurance. If Borrower fails to obtain insurance
as  hereinabove  provided,  or to keep the  same in  force,  Agent,  if Agent so
elects,  may obtain such  insurance and pay the premium  therefor for Borrower's
account,  and charge Borrower's account therefor and such expenses so paid shall
be part of the Obligations.

           4.13.       Payment of Taxes.  Borrower will pay, when due, all
taxes, assessments and other Charges or Claims lawfully levied or
assessed upon Borrower or any of the Collateral including, without
limitation, real and personal property taxes, assessments and
charges and all franchise, income, employment, social security
benefits, withholding, and sales taxes except to the extent any of
the foregoing constitutes a Permitted Encumbrance.  Subject to the
preceding sentence, if any tax by any governmental authority is or


                                      -44-



<PAGE>



may be imposed on or as a result of any transaction  between  Borrower and Agent
or any Lender which Agent or any Lender may be required to withhold or pay or if
any taxes, assessments,  or other Charges remain unpaid after the date fixed for
their  payment,  or if any Claim  shall be made  which,  in Agent's or  Lender's
opinion,  may possibly create a valid Lien on the Collateral,  Agent may without
notice to Borrower  pay the taxes,  assessments  or other  Charges and  Borrower
hereby  indemnifies and holds Agent and each Lender harmless in respect thereof.
Neither Agent nor any Lender will pay any taxes,  assessments  or Charges to the
extent that  Borrower has  contested or disputed  those  taxes,  assessments  or
Charges in good faith, by expeditious protest, administrative or judicial appeal
or  similar  proceeding  provided  that  any  related  tax  lien is  stayed  and
sufficient  reserves are established to the reasonable  satisfaction of Agent to
protect Agent's  security  interest in or Lien on the Collateral.  The amount of
any  payment by Agent  under this  Section  4.13 shall be charged to  Borrower's
account as a Revolving Advance and added to the Obligations.

           4.14. Payment of Leasehold  Obligations.  Borrower shall at all times
pay, when and as due, its rental  obligations under all leases under which it is
a tenant, and shall otherwise comply, in all material  respects,  with all other
terms of such  leases  and keep them in full force and  effect  and,  at Agent's
request will provide evidence of having done so.

           4.15.       Receivables.

                       (a)      Nature of Receivables.  At the time of the
purchase by  Borrower of any  Client's  Receivables  pursuant to the  applicable
Factoring  Agreement,  based upon the representations of such Client to Borrower
under  the  applicable  Factoring  Agreement  with  Borrower  having  no  actual
knowledge to the contrary,  each of the Receivables shall be (i) a bona fide and
valid  account  representing  a bona fide  indebtedness  incurred by the Account
Debtor  therein  named,  for a fixed  sum as set forth in the  invoice  relating
thereto (provided immaterial or unintentional invoice errors shall not be deemed
to be a breach hereof) with respect to an absolute sale or lease and delivery of
goods upon stated terms of the  applicable  Client,  or work,  labor or services
theretofore  rendered by the applicable Client as of the date each Receivable is
created  and  (ii) due and  owing in  accordance  with the  applicable  Client's
standard terms of sale without dispute,  setoff or counterclaim except as may be
stated on the accounts receivable schedules, if any, delivered by the applicable
Client to Borrower.

                      (b)      Solvency of Account Debtor.  Each Account Debtor,
to the best of Borrower's knowledge,  as of the date each Receivable is created,
is  solvent  and able to pay all  Receivables  on which  the  Account  Debtor is
obligated in full when due or with  respect to such Account  Debtors of Client's
who are  not  solvent  Borrower  has set up on its  books  and in its  financial
records  bad  debt  reserves  adequate  in  Borrower's  opinion  to  cover  such
Receivables.



                                      -45-


<PAGE>



                       (c)      Locations of Borrower.  Borrower's chief
executive  office is located at 2700 South Quincy  Street,  Arlington,  Virginia
22206.  Except as set forth in Schedule 4.15(c)  attached hereto,  until written
notice is given to Agent by Borrower  of any other  office at which it keeps its
records  pertaining  to  Receivables,  all  such  records  shall be kept at such
executive office.

                       (d)      Collection of Receivables.  Until Borrower's
authority to do so is terminated by Agent by written  notice (which notice Agent
may only give at any time following the occurrence and during the continuance of
an Event of Default), Borrower will, at Borrower's sole cost and expense, but on
Agent's behalf and for Agent's account, collect as Agent's property and in trust
for Agent all amounts  received on  Receivables,  and shall not  commingle  such
collections  with  Borrower's  funds.  Borrower shall in accordance with Section
4.16 hereof deposit in the Lockbox Account,  all checks,  drafts,  notes,  money
orders,  acceptances,  cash and other  evidences  of  Indebtedness  collected by
Borrower.

                       (e)      Notification of Assignment of Receivables.  At
any time  following the occurrence  and during the  continuation  of an Event of
Default,  Agent  shall have the right to send notice of the  assignment  of, and
Agent's  security  interest  in, the  Receivables  to any and all Clients or any
third  party  holding  or  otherwise  concerned  with  any  of  the  Collateral.
Thereafter  (until such Event of Default has been cured or waived),  Agent shall
have  the  sole  right  to  collect  the  Receivables,  take  possession  of the
Collateral,  or both.  Agent's actual collection  expenses,  including,  but not
limited to,  stationery and postage,  telephone and telegraph,  secretarial  and
clerical  expenses  and  the  salaries  of any  collection  personnel  used  for
collection, may be charged to Borrower's account and added to the Obligations.

                       (f)      Power of Agent to Act on Borrower's Behalf.

           (1) Borrower  hereby  irrevocably  constitutes and appoints Agent and
any officer or agent thereof,  with full power of substitution,  as its true and
lawful  attorney-in-fact  with full irrevocable power and authority in the place
and stead of Borrower and in the name of Borrower or in its own name,  from time
to time in Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and deliver any
and all  documents  and  instruments  which may be  necessary  or  desirable  to
accomplish the purposes of this Agreement and,  without  limiting the generality
of the  foregoing,  hereby  grants to Agent the  power and  right,  on behalf of
Borrower,  without  notice to or assent by Borrower,  and at any time, to do the
following:

                       (i) except as provided in Section  4.15(d) or (e), in the
           name of Borrower,  in its own name or otherwise,  take possession of,
           endorse  and  receive   payment  of  any   checks,   drafts,   notes,
           acceptances, or


                                      -46-



<PAGE>



           other instruments for the payment of monies due under any Collateral;
           and
                       (ii) upon the occurrence and during the  continuation  of
           an Event of Default,  receive payment of any and all monies,  claims,
           and other  amounts due or to become due at any time arising out of or
           in respect of any Collateral other than the Receivables.

           (2) Borrower  hereby  irrevocably  constitutes and appoints Agent and
any officer or agent thereof,  with full power of substitution,  as its true and
lawful  attorney-in-fact  with full irrevocable power and authority in the place
and stead of Borrower and in the name of Borrower or in its own name,  from time
to time in Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and deliver any
and all  documents  and  instruments  which may be  necessary  or  desirable  to
accomplish the purposes of this Agreement and,  without  limiting the generality
of the  foregoing,  hereby  grants to Agent the  power and  right,  on behalf of
Borrower,  without  notice to or assent by  Borrower,  upon the  occurrence  and
during the continuation of an Event of Default, to do the following:

                       (i) subject to the terms of the Factoring Agreements, the
           Collateral  Funding  Repayment  Agreements,  if  any,  the  Inventory
           Collateral Funding Repayment Agreements,  if any and the terms of the
           Receivables,  ask, demand, collect, receive and give acquittances and
           receipts  for  any and all  money  due or to  become  due  under  any
           Collateral,  and take  ownership and control of any and all lockboxes
           and other depository  accounts by written notice to any bank or other
           institution maintaining such lockboxes or other depository accounts;

                       (ii)   pay or discharge taxes, liens, security
           interests, or other encumbrances levied or placed on or
           threatened against the Collateral;

                       (iii) effect any repairs or obtain any  insurance  called
           for by the  terms  of this  Agreement  and pay all or any part of the
           premiums therefor and costs thereof;

                       (iv) direct any party liable for any payment  under or in
           respect  of any of the  Collateral  to  make  payment  of any and all
           monies due or to become due thereunder, directly to Agent or as Agent
           shall direct;

                       (v) sign and  endorse  any  invoices,  freight or express
           bills, bills of lading, storage or warehouse receipts, drafts against
           debtors, assignments,  verifications,  and notices in connection with
           accounts  and  other   documents   constituting  or  related  to  the
           Collateral;



                                      -47-



<PAGE>



                       (vi)  subject to the terms of the  Factoring  Agreements,
           the Collateral  Funding Repayment  Agreements,  if any, the Inventory
           Collateral Funding Repayment Agreements, if any, and the terms of the
           Receivables,  settle,  compromise  or  adjust  any suit,  action,  or
           proceeding  described below and, in connection  therewith,  give such
           discharges or releases as Agent may deem appropriate;

                       (vii) subject to the terms of the  Factoring  Agreements,
           the Collateral  Funding Repayment  Agreements,  if any, the Inventory
           Collateral Funding Repayment Agreements, if any, and the terms of the
           Receivables,  file any claim or take or commence  any other action or
           proceeding  in any  court  of  law  or  equity  or  otherwise  deemed
           appropriate  by Agent for the purpose of collecting  any and all such
           monies due under any Collateral whenever due and payable;

                       (viii) subject to the terms of the Factoring  Agreements,
           the Collateral  Funding Repayment  Agreements,  if any, the Inventory
           Collateral Funding Repayment Agreements, if any, and the terms of the
           Receivables, commence and prosecute any suits, actions or proceedings
           at law or equity in any court of  competent  jurisdiction  to collect
           the  Collateral or any part thereof and to enforce any other right in
           respect of any Collateral;

                       (ix)  defend  any  suit,  action  or  proceeding  brought
           against  Borrower with respect to any Collateral if Borrower does not
           defend such suit,  action or  proceeding  or if Agent  believes  that
           Borrower is not pursuing  such defense in a manner that will maximize
           the recovery with respect to such Collateral;

                       (x) license or, to the extent  permitted by an applicable
           license,  sublicense  whether  general,  specific or  otherwise,  and
           whether  on an  exclusive  or  non-exclusive  basis,  any  patent  or
           trademark  throughout  the  world  for  such  term or  terms  on such
           conditions and in such manner as Agent shall, in its sole discretion,
           determine;

                       (xi)  subject to Section  11.1  hereof,  sell,  transfer,
           pledge,  make any agreement  with respect to, or otherwise  deal with
           any of the Collateral as fully and completely as Borrower could,  and
           to do, at Agent's option and Borrower's expense, at any time, or from
           time to time,  all acts  and  things  which  Agent  reasonably  deems
           necessary to perfect,  preserve,  or,  subject to Section 11.l hereof
           and the terms of the Factoring  Agreements,  the  Collateral  Funding
           Repayment  Agreements,  if  any,  the  Inventory  Collateral  Funding
           Repayment Agreements, if any, realize upon the Collateral and Agent's
           Lien therein in order to effect the intent of this Agreement,  all as
           fully and effectively as Borrower might do;




                                      -48-



<PAGE>



                       (xii) contact, make any agreement with, or otherwise deal
           with any  governmental  or regulatory  agency in connection  with the
           operation of Borrower's  business or the possession or liquidation of
           any or all of the Collateral; and

                       (xiii) change the address for delivery of mail  addressed
           to  Borrower  to such  address  as Agent may  designate  and open and
           dispose of all such mail.

           (3) Borrower  hereby  ratifies,  to the extent  permitted by law, all
that said attorneys shall lawfully do or cause to be done by virtue hereof,  and
said  attorneys  or  designees  shall not be liable for any acts of  omission or
commission  nor for any error of judgment  or mistake of fact or of law,  unless
done  maliciously  or with gross (not mere)  negligence.  The powers of attorney
granted pursuant to this Section 4.15(f) are powers coupled with an interest and
shall be irrevocable  until the Obligations  are paid or otherwise  satisfied in
full.

           (4) The powers  conferred  on Agent  hereunder  are solely to protect
Agent's  interests  in the  Collateral  and shall not impose any duty upon it to
exercise any such powers.  Agent shall be  accountable  only for amounts that it
actually  receives as a result of the exercise of such powers and neither  Agent
nor any  Lender  nor any of their  officers,  directors,  employees,  agents  or
representatives  shall be responsible to Borrower for any act or failure to act,
except for their own gross negligence or willful misconduct.

           (5)  Borrower  also  authorizes  Agent,  at any time and from time to
time, upon the occurrence and during the continuation of an Event of Default, to
(i)  communicate  in its own name with any party to any contract  with regard to
the  assignment  of the right,  title and  interest of Borrower in and under the
contracts and other matters relating thereto and (ii) execute any  endorsements,
assignments  or other  instruments of conveyance or transfer with respect to the
Collateral.

                       (g)      No Liability.  Neither Agent nor any Lender
shall,  under any circumstances or in any event  whatsoever,  have any liability
for any error or  omission  or delay of any kind  occurring  in the  settlement,
collection or payment of any of the  Receivables or any  instrument  received in
payment thereof, or for any damage resulting therefrom except for Agent's or any
Lender's gross  negligence or willful  misconduct.  Following the occurrence and
during the  continuance  of an Event of Default  and subject to the terms of the
applicable Factoring Agreements, the Collateral Funding Repayment Agreements, if
any, the Inventory  Collateral  Funding  Repayment  Agreements,  if any, and the
terms of the  Receivables,  Agent may,  without notice or consent from Borrower,
sue upon or  otherwise  collect,  extend the time of payment of,  compromise  or
settle for cash,  credit or upon any terms any of the  Receivables  or any other
securities,  instruments  or insurance  applicable  thereto  and/or  release any
obligor thereof. Agent is


                                      -49-



<PAGE>



authorized  and  empowered to accept,  following the  occurrence  and during the
continuance of an Event of Default,  the return of the goods  represented by any
of the  Receivables  to the extent  Borrower  would be empowered to accept same,
without notice to or consent by Borrower,  all without discharging or in any way
affecting Borrower's liability hereunder.



           4.16.       Cash Management Systems

                 (a) Commencing on the Original  Closing Date and for so long as
any  Obligations  are  outstanding,  Borrower  shall  deposit  within  three (3)
Business  Days  following  the date of receipt  thereof or cause to be deposited
directly  all cash,  checks,  notes,  drafts or other  similar  items of payment
relating to or constituting  payments made in respect of any and all Receivables
into one  collection  account  in  Borrower's  name at each  bank  set  forth on
Schedule  4.16 hereto that have no rights of setoff or  recoupment  or any other
claim  against such  accounts  (collectively,  the "Lockbox  Accounts").  To the
extent that any Lockbox  Accounts are from time to time  maintained  at Agent or
any other Lender,  all cash,  checks,  notes,  drafts and other similar items of
payment  from time to time  deposited  in such  Lockbox  Accounts  shall be made
available  to  Borrower  for all  purposes  hereof  at the times and in a manner
consistent  with IBJS's past practices with Borrower.  At any time when an Event
of Default is not  continuing,  Borrower may pay down the  Advances  (other than
Letters  of Credit) by (i)  wiring  funds  from the  Lockbox  Account to Agent's
depository  account as  designated  by Agent from time to time (the  "Depository
Account"),  and (ii) providing notice to Agent of such deposit. At any time when
an Event of Default is not continuing,  Borrower may, in lieu of wiring funds to
the Depository  Account,  cause the transfer of funds in the Lockbox Accounts to
its Operating Accounts.  Blocked account  arrangements shall be established with
the banks at which the  Lockbox  Accounts  are  maintained.  At any time when an
Event of Default is continuing,  all amounts  deposited in the Lockbox  Accounts
shall on the same day that such amounts are available  for transfer,  unless the
Lockbox  Account banks are otherwise  instructed by Agent, be deposited via wire
transfer,  in immediately  available funds, into the Depository  Account.  Agent
shall give Borrower at least five (5) Business Days notice prior to changing the
Depository  Account.  So long as no Default has  occurred,  Borrower  may open a
Lockbox  Account  with any bank in lieu of or in  addition  to those  listed  on
Schedule 4.16 hereto; provided,  however, that (i) Agent shall have consented to
the opening of such Lockbox  Account with such bank, and (ii) at the time of the
opening  of such  Lockbox  Account  Borrower  shall  deliver  to Agent a blocked
account agreement duly executed by Borrower and such bank, in form and substance
satisfactory to Agent. The Lockbox  Accounts shall be cash collateral  accounts,
with all cash,  checks  and other  similar  items of  payment  in such  accounts
securing payment of the  Obligations,  and in which Borrower will have granted a
Lien to Agent for the benefit of Lenders.


                                      -50-



<PAGE>




                 (b) All amounts  deposited in the  Depository  Account shall be
deemed  received by Agent in accordance with Section 2.12(k) hereof and shall be
applied by Agent  against any then due and payable  interest and fees  hereunder
and then against the outstanding balance of Revolving Advances,  Inventory Value
Advances and Equipment  Value  Advances in such order as Agent shall  determine,
provided,  however,  so long as no Event of Default  shall have  occurred and is
continuing  (or would  occur  after  giving  effect to the  application  of such
amounts as requested by Borrower) Borrower may determine the order in which such
amounts  shall be  applied.  In no event  shall any  amount be  applied by Agent
against such  interest  and fees and the  outstanding  balance of the  Revolving
Advance  unless and until such amount  shall have been  credited in  immediately
available funds to the Depository Account. Any funds deposited in the Depository
Account  in excess  of the  amount  applied  to such  interest  and fees and the
outstanding  balance of the Advances (the "excess funds") shall remain in and be
held in the Depository  Account as collateral  security  securing the payment of
the  Obligations  and  Borrower  hereby  grants to Agent for the  benefit of the
Lenders a Lien on all cash,  checks and other  similar  items of payment in such
account.  Prior to the  occurrence  and  during the  continuance  of an Event of
Default Borrower may request and obtain the return of any excess funds.

                 (c)  Borrower  shall   maintain  an  account  (the   "Operating
Account") at a bank acceptable to Agent into which Agent or Lenders shall,  from
time to time,  (i)  deposit  proceeds of  Revolving  Advances  made  pursuant to
Section 2.1 hereof for use solely in accordance  with the  provisions of Section
2.13 hereof,  (ii) deposit proceeds of Equipment Value Advances made pursuant to
Section  2.2 hereof for use in  accordance  with the  provisions  of Section 2.2
hereof,  (iii)  deposit  proceeds of Inventory  Value  Advances made pursuant to
Section 2.2A hereof for use in accordance with Section 2.2A hereof,  and (iv) in
accordance  with Section  4.16(a),  cause or permit  transfers  from the Lockbox
Account.  The Operating  Account shall be a cash  collateral  account,  with all
cash, checks and other similar items of payment in such account securing payment
of the Obligations,  and in which Borrower hereby grants a Lien to Agent for the
benefit of Lenders.

           4.17.  Inventory.  All  Inventory  produced by  Borrower  (other than
Inventory purchased or acquired by Borrower from its Clients) has been, and will
be, produced by Borrower in accordance with the Federal Fair Labor Standards Act
of 1938, as amended, and all rules, regulations and orders thereunder.

           4.18.  Maintenance  of Equipment.  The Equipment used in the ordinary
course of Borrower's  business shall be maintained in good  operating  condition
and repair (reasonable wear and tear excepted) and all necessary replacements of
and repairs thereto shall be made so that the value and operating  efficiency of
the  Equipment  shall be maintained  and  preserved.  Borrower  shall not use or
operate such Equipment in violation of any law, statute,  ordinance,  code, rule
or regulation. Borrower shall have the right to sell


                                      -51-



<PAGE>



Equipment to the extent set forth in Section 4.3 hereof or Article VII hereof.

           4.19.  Exculpation of Liability.  Nothing herein  contained  shall be
construed to constitute  Agent or any Lender as Borrower's agent for any purpose
whatsoever,  nor shall  Agent or any  Lender be  responsible  or liable  for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and  regardless of the cause thereof  except to
the  extent  of  Agent's  or any  such  Lender's  gross  negligence  or  willful
misconduct.  Neither Agent nor any Lender,  whether by anything herein or in any
assignment  or  otherwise,  assumes  any of  Borrower's  obligations  under  any
contract or agreement  assigned to Agent or such Lender,  and neither  Agent nor
any Lender shall be  responsible  in any way for the  performance by Borrower of
any of the terms and conditions thereof.

           4.20.       Environmental Matters. (a)  Borrower will ensure that
the Real Property remains in compliance with all Environmental Laws
and it will not place or permit to be placed any Hazardous
Substances on any Real Property except as not prohibited by
applicable law or appropriate governmental authorities or except as
would not have a Material Adverse Effect.

                       (b)      Borrower will, with respect to Real Property
owned by  Borrower  establish  and  maintain  a system  to  assure  and  monitor
continued  compliance with all applicable  Environmental Laws which system shall
include periodic reviews of such compliance.

                       (c)      Borrower will (i) employ in connection with its
use of the Real Property appropriate technology necessary to maintain compliance
with any applicable Environmental Laws and (ii) dispose of any and all Hazardous
Waste  generated at the Real Property  owned by Borrower only at facilities  and
with carriers that  maintain  valid permits under RCRA and any other  applicable
Environmental  Laws.  Borrower shall use its best efforts to obtain certificates
of disposal,  such as hazardous  waste  manifest  receipts,  from all treatment,
transport,  storage or disposal  facilities or operators employed by Borrower in
connection  with the transport or disposal of any Hazardous  Waste  generated at
the Real Property.

                       (d)      In the event Borrower obtains, gives or receives
notice of any  Release  or threat of  Release of a  reportable  quantity  of any
Hazardous  Substances  at the Real  Property  (any such event being  hereinafter
referred to as a "Hazardous  Discharge")  or receives  any notice of  violation,
request for information or notification  that it is potentially  responsible for
investigation  or  cleanup of  environmental  conditions  at the Real  Property,
demand letter or complaint, order, citation, or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting the Real
Property  (any of the  foregoing  is  referred  to herein  as an  "Environmental
Complaint") from any Person or entity, including any state agency responsible in
whole or in part


                                      -52-



<PAGE>



for environmental  matters in the state in which the Real Property is located or
the United  States  Environmental  Protection  Agency (any such person or entity
hereinafter the "Environmental Authority"), then Borrower shall, within five (5)
Business  Days,  give  written  notice  of same to  Agent  detailing  facts  and
circumstances of which Borrower is aware giving rise to the Hazardous  Discharge
or Environmental Complaint. Such information is to be provided to allow Agent to
protect its security interest in the Real Property and is not intended to create
nor shall it  create  any  obligation  upon  Agent or any  Lender  with  respect
thereto.

                       (e)      Borrower shall promptly forward to Agent copies
of any request for  information,  notification  of potential  liability,  demand
letter relating to potential responsibility with respect to the investigation or
cleanup of  Hazardous  Substances  at any other site owned,  operated or used by
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of  correspondence  between Borrower and the Environmental  Authority  regarding
such claims to Agent until the claim is settled. Borrower shall promptly forward
to Agent copies of all documents and reports concerning a Hazardous Discharge at
the Real  Property  that  Borrower is  required to file under any  Environmental
Laws.  Such  information  is to be  provided  solely to allow  Agent to  protect
Agent's security interest in the Real Property and the Collateral.

                       (f)      Borrower shall respond promptly to any Hazardous
Discharge or Environmental  Complaint with respect to Real Property and take all
necessary  action in order to  safeguard  the  health of any Person and to avoid
subjecting  the  Collateral  or Real  Property to any Lien other than  Permitted
Encumbrances.  Except as provided in the preceding  sentence,  if Borrower shall
fail to  respond  promptly  to any such  Hazardous  Discharge  or  Environmental
Complaint or Borrower shall fail to comply with any of the  requirements  of any
Environmental  Laws,  Agent on behalf of Lenders may, but without the obligation
to do so, for the sole purpose of protecting Agent's interest in Collateral: (A)
give such  notices  or (B) enter  onto the Real  Property  (or  authorize  third
parties to enter onto the Real Property) and take such actions as Agent (or such
third parties as directed by Agent) deem reasonably  necessary or advisable,  to
clean up, remove,  mitigate or otherwise deal with any such Hazardous  Discharge
or Environmental  Complaint. All reasonable costs and expenses incurred by Agent
and  Lenders  (or such  third  parties)  in the  exercise  of any  such  rights,
including  any sums  paid in  connection  with any  judicial  or  administrative
investigation  or  proceedings,  fines and  penalties,  together  with  interest
thereon  from the date  expended at the  Default  Rate for  Domestic  Rate Loans
constituting Revolving Advances shall be paid upon demand by Borrower, and until
paid shall be added to and become a part of the Obligations secured by the Liens
created by the terms of this Agreement or any Other Document.

                       (g)      If Agent has any reason to believe that a
Hazardous Discharge has occurred or exists with respect to any Real


                                      -53-



<PAGE>



Property owned by Borrower, promptly upon the written request of Agent, Borrower
shall  provide  Agent,  at  Borrower's  expense,   with  an  environmental  site
assessment  or   environmental   audit  report  prepared  by  an   environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable  degree of certainty the  existence of a Hazardous  Discharge and the
potential  costs in  connection  with  abatement,  cleanup  and  removal  of any
Hazardous Substances found on, under, at or within the Real Property. Any report
or  investigation  of such  Hazardous  Discharge  proposed and  acceptable to an
appropriate  Environmental  Authority that is charged to oversee the clean-up of
such  Hazardous  Discharge  shall be  acceptable  to Agent.  If such  estimates,
individually or in the aggregate, exceed $500,000, Agent shall have the right to
require Borrower to post a bond,  letter of credit or other security  reasonably
satisfactory to Agent to secure payment of these costs and expenses.

                       (h)      Borrower shall defend and indemnify Agent and
Lenders  and  hold  Agent,  Lenders  and  their  respective  employees,  agents,
directors and officers harmless from and against all loss, liability, damage and
expense,  claims,  costs, fines and penalties,  including reasonable  attorney's
fees,  suffered  or  incurred  by Agent or  Lenders  under or on  account of any
Environmental  Laws  with  respect  to the  Real  Property,  including,  without
limitation, the assertion of any lien thereunder,  with respect to any Hazardous
Discharge, the presence of any Hazardous Substances affecting the Real Property,
whether or not the same  originates  or emerges  from the Real  Property  or any
contiguous  real estate,  including  any loss of value of the Real Property as a
result of the foregoing  except to the extent such loss,  liability,  damage and
expenses is attributable to Agent's or any Lender's or their employees', agents'
or officers'  gross  negligence or willful  misconduct.  Borrower's  obligations
under this  Section  4.20 shall arise upon the  discovery of the presence of any
Hazardous Substances at the Real Property, whether or not any federal, state, or
local environmental agency has taken or threatened any action in connection with
the  presence  of  any  Hazardous  Substances.  Borrower's  obligation  and  the
indemnifications hereunder shall survive the termination of this Agreement.

                       (i)      For purposes of Section 4.20 and 5.7, all
references to Real  Property  shall not include any interest of Borrower in Real
Property which is a mortgagee's interest.


V.  REPRESENTATIONS AND WARRANTIES.

           Borrower represents and warrants as follows:

           5.1.        Authority.  Borrower has full power, authority and
legal right to enter into this Agreement and the Other Documents
and perform all Obligations hereunder.  The execution, delivery and
performance hereof and of the Other Documents (a) are within
Borrower's corporate powers, have been duly authorized, are not in


                                      -54-



<PAGE>



contravention  of  law  or the  terms  of  Borrower's  by-laws,  certificate  of
incorporation or other applicable  documents relating to Borrower's formation or
to  the  conduct  of  Borrower's  business  or  of  any  material  agreement  or
undertaking to which Borrower is a party or by which Borrower is bound,  and (b)
do not  conflict  with nor result in any breach in any of the  provisions  of or
constitute  a  default  under or  result  in the  creation  of any  Lien  except
Permitted  Encumbrances  upon any asset of Borrower  under the provisions of any
agreement,  charter, by-law, or other instrument to which Borrower is a party or
by which it may be bound.

           5.2. Formation and  Qualification.  (a) Borrower is duly incorporated
and in good  standing  under the laws of the  Commonwealth  of  Virginia  and is
qualified  to do  business  and is in good  standing  in the  states  listed  on
Schedule  5.2(a) which  constitute  all states in which  qualification  and good
standing are necessary for Borrower to conduct its business and own its property
and where the  failure to so  qualify  would  have a  Material  Adverse  Effect.
Borrower has delivered to Agent true and complete  copies of its  certificate of
incorporation  and by-laws and will  promptly  notify Agent of any  amendment or
changes thereto.

                       (b)      The only Subsidiaries of Borrower are listed on
Schedule  5.2(b),  which  sets  forth  such  Subsidiaries,  together  with their
respective  jurisdictions  of  organization,  and the authorized and outstanding
capital  Stock of each such  Subsidiary,  by class and number and  percentage of
each class  legally  owned by Borrower or a Subsidiary  of Borrower or any other
Person.

           5.3. Survival of Representations and Warranties.  All representations
and warranties of Borrower  contained in this Agreement and the Other  Documents
shall be true at the time of  Borrower's  execution  of this  Agreement  and the
Other  Documents,  and shall  survive the  execution,  delivery  and  acceptance
thereof by the parties  thereto and the  closing of the  transactions  described
therein or related thereto.

           5.4. Tax Returns.  Borrower's  federal tax  identification  number is
54-1208450. Borrower has filed all federal, state and material local tax returns
and other material reports it is required by law to file and has paid all taxes,
assessments, fees and other governmental charges that are due and payable except
as provided in Section 4.13 hereof. As of the Effective Date, federal, state and
local income tax returns of Borrower have been examined and reported upon by the
appropriate  taxing authority or closed by applicable  statute and satisfied for
all fiscal  years prior to and  including  the fiscal year ending  December  31,
1989.  The  provision  for taxes on the books of Borrower  are  adequate for all
years not closed by applicable  statutes,  and for its current  fiscal year, and
Borrower  has no  knowledge  of  any  deficiency  or  additional  assessment  in
connection  therewith not provided for on its books.  Borrower has no obligation
under any written tax sharing agreement.



                                      -55-



<PAGE>



           5.5.        Financial Statements.

           The consolidated and  consolidating  balance sheets of Borrower,  its
Subsidiaries and such other Persons described therein (including the accounts of
all  Subsidiaries   for  the  respective   periods  during  which  a  subsidiary
relationship  existed) as of December 31, 1996,  and the related  statements  of
income, changes in stockholder's equity, and changes in cash flow for the period
ended on such date,  all  accompanied  by reports  thereon  containing  opinions
without  qualification by independent  certified public  accountants,  copies of
which have been delivered to Agent,  have been prepared in accordance with GAAP,
consistently   applied   (except  for  changes  in  application  in  which  such
accountants  concur) and present  fairly in all material  respects the financial
position of Borrower and its  Subsidiaries at such date and the results of their
operations for such period.  Since December 31, 1996 there has been no change in
the condition,  financial or otherwise, of Borrower or its Subsidiaries as shown
on the consolidated balance sheet as of such date and no change in the aggregate
value of  machinery,  equipment  and Real  Property  owned by  Borrower  and its
Subsidiaries,  except changes in the ordinary course of business,  none of which
individually or in the aggregate has a Material Adverse Effect.

           5.6.  Corporate  Name.  Borrower  has not  been  known  by any  other
corporate  name in the past  five  years and does not sell  Inventory  under any
other  name  except as set forth on  Schedule  5.6,  nor has  Borrower  been the
surviving   corporation  of  a  merger  or  consolidation  or  acquired  all  or
substantially  all of the assets of any person  during  the  preceding  five (5)
years.

           5.7.        O.S.H.A..

                       (a)      Borrower has duly complied with, and its
facilities,   business,  assets,  property,  leaseholds  and  Equipment  are  in
compliance  in all  material  respects  with,  the  provisions  of  the  Federal
Occupational  Safety and Health Act; there have been no  outstanding  citations,
notices  or orders of  non-compliance  issued to  Borrower  or  relating  to its
business, assets, property, leaseholds or equipment under such law.

                       (b)      (i) There are no visible signs of releases,
spills,  discharges,  leaks or disposal (collectively referred to as "Releases")
of Hazardous  Substances at, upon,  under or within any Real Property  except to
the extent disclosed in writing from time to time by Borrower to Agent;  (ii) to
the best of  Borrower's  knowledge  there are no  underground  storage  tanks or
polychlorinated  biphenyls on the Real Property; (iii) to the best of Borrower's
knowledge  the Real  Property  has never  been used as a  treatment,  storage or
disposal  facility  of  Hazardous  Waste;  and  (iv) to the  best of  Borrower's
knowledge no Hazardous  Substances are present on the Real  Property,  excepting
such quantities as are handled in accordance with all applicable  manufacturer's
instructions and governmental  regulations and in proper storage  containers and
as


                                      -56-



<PAGE>



are necessary for the operation of the commercial business of
Borrower or of its tenants.

           5.8.        Solvency; No Litigation, Violation, Indebtedness or
Default.

                       (a)      Borrower is solvent, able to pay its debts as
they mature,  has capital sufficient to carry on its business and all businesses
in which  it is about to  engage,  and (i) as of the  Effective  Date,  the fair
present saleable value of its assets, calculated on a going concern basis, is in
excess of the amount of its  liabilities  and (ii)  subsequent  to the Effective
Date,  the fair  saleable  value of its assets  (calculated  on a going  concern
basis) will be in excess of the amount of its liabilities.

                       (b)      Except as disclosed in Schedule 5.8(b) or except
as  disclosed  in a public  filing  made by  Borrower,  a copy of which has been
provided to Agent,  Borrower  has (i) no pending  or, to the best of  Borrower's
knowledge,   threatened  litigation,  actions  or  proceedings  which  would  if
adversely  determined have a Material  Adverse Effect,  or impair the ability of
Borrower to perform this  Agreement,  and (ii) no liabilities  nor  indebtedness
other than the Obligations and other liabilities or Indebtedness permitted under
Article VII.

                       (c)      Borrower is not in violation of any applicable
statute, regulation or ordinance which would have a Material Adverse Effect, nor
is Borrower in  violation of any order of any court,  governmental  authority or
arbitration board or tribunal.

                       (d)     Neither Borrower nor any member of the Controlled
Group  maintains or  contributes to any Plan other than those listed on Schedule
5.8(d) hereto.  Except as set forth in Schedule 5.8(d), (i) no Plan has incurred
any "accumulated  funding  deficiency," as defined in Section 302(a)(2) of ERISA
and Section  412(a) of the Code,  whether or not waived,  and  Borrower and each
member  of  the  Controlled  Group  has  met  all  applicable   minimum  funding
requirements  under Section 302 of ERISA in respect of each Plan, (ii) each Plan
which is  intended to be a qualified  plan under  Section  401(a) of the Code as
currently in effect has been determined by the IRS to be qualified under Section
401(a) of the Code and the trust related  thereto is exempt from federal  income
tax under Section 501(a) of the Code,  (iii) neither  Borrower nor any member of
the  Controlled  Group has incurred any liability to the PBGC other than for the
payment of  premiums,  and there are no premium  payments  which have become due
which are unpaid,  (iv) no Plan has been  terminated  by the plan  administrator
thereof or by the PBGC, and there is no occurrence which would cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any Plan, (v) at this
time,  the current value of the assets of each Plan exceeds the present value of
the accrued benefits and other liabilities of such Plan and neither Borrower nor
any member of the  Controlled  Group knows of any facts or  circumstances  which
would materially  change the value of such assets and accrued benefits and other
liabili-


                                      -57-



<PAGE>



ties, (vi) neither  Borrower nor any member of the Controlled Group has breached
any of the  responsibilities,  obligations or duties imposed on it by ERISA with
respect to any Plan, (vii) neither Borrower nor any member of a Controlled Group
has  incurred any  liability  for any excise tax arising  under  Section 4972 or
4980B of the Code the effect of which would have a Material Adverse Effect,  and
no fact exists to the best of Borrower's  knowledge which could give rise to any
such liability,  (viii) neither  Borrower nor any member of the Controlled Group
nor any fiduciary of, nor any trustee to, any Plan, has engaged in a "prohibited
transaction"  described  in Section 406 of the ERISA or Section 4975 of the Code
nor taken any action which would  constitute  or result in a  Termination  Event
with respect to any such Plan which is subject to ERISA,  (ix) Borrower and each
member of the Controlled Group has made all  contributions  due and payable with
respect to each Plan, (x) there exists no event  described in Section 4043(b) of
ERISA, for which the thirty (30) day notice period contained in 29 CFR ss.2615.3
has not been  waived,  (xi) neither  Borrower  nor any member of the  Controlled
Group has any fiduciary  responsibility for investments with respect to any plan
existing for the benefit of persons other than employees or former  employees of
Borrower and any member of the Controlled  Group, and (xii) neither Borrower nor
any member of the Controlled Group has withdrawn,  completely or partially, from
any Multiemployer Plan so as to incur liability under the Multiemployer  Pension
Plan  Amendments  Act of 1980 the effect of which would have a Material  Adverse
Effect.

     5.9.  Patents,  Trademarks,  Copyrights and Licenses.  All patents,  patent
applications,  trademarks,  trademark applications,  service marks, service mark
applications,  copyrights,  copyright applications,  design rights,  tradenames,
assumed names,  trade secrets and licenses owned or utilized by Borrower are set
forth on Schedule  5.9,  are valid and to the extent set forth on  Schedule  5.9
have been duly registered or filed with all appropriate governmental authorities
and constitute all of the  intellectual  property rights which are necessary for
the operation of its business;  there is no objection to or pending challenge to
the validity of any such material patent, trademark,  copyright,  design rights,
tradename,  trade secret or license and Borrower is not aware of any grounds for
any challenge,  except as set forth in Schedule 5.9 hereto. Each patent,  patent
application,   patent  license,  trademark,  trademark  application,   trademark
license,   service  mark,  service  mark  application,   service  mark  license,
copyright, copyright application and copyright license owned or held by Borrower
and all trade secrets used by Borrower consists of original material or property
developed by Borrower or was lawfully  acquired by Borrower  from the proper and
lawful owner thereof.  Each of such items has been  maintained so as to preserve
the value thereof from the date of creation or acquisition thereof. With respect
to all custom software used by Borrower, Borrower is in possession of all source
and object codes related to each piece of such software or is the beneficiary of
a source code escrow  agreement,  each such source code escrow  agreement  being
listed on Schedule 5.9 hereto.


                                      -58-



<PAGE>




           5.10.  Licenses  and Permits.  Except as set forth in Schedule  5.10,
Borrower (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal,  state,
or  local  law  or  regulation  for  the  operation  of  its  business  in  each
jurisdiction  wherein it is now  conducting or proposes to conduct  business and
where the failure to comply with or procure such  licenses or permits would have
a Material Adverse Effect.

           5.11.  Default  of  Indebtedness.  Borrower  is not in default in the
payment  of the  principal  of or  interest  on any  Indebtedness  or under  any
instrument  or  agreement  under or subject to which any  Indebtedness  has been
issued in excess of $100,000 in the  aggregate  and no event has occurred  under
the  provisions of any such  instrument  or agreement  which with or without the
lapse of time or the giving of notice, or both,  constitutes or would constitute
an event of default thereunder.

           5.12.       No Default.  Borrower is not in default in the payment
or performance of any of its contractual obligations which default
would have a Material Adverse Effect and no Default has occurred
and is continuing.

           5.13.  No  Burdensome  Restrictions.  Borrower  is not  party  to any
contract or agreement  the  performance  of which would have a Material  Adverse
Effect.  Borrower  has not agreed or  consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property,  whether
now  owned  or  hereafter  acquired,  to be  subject  to a Lien  which  is not a
Permitted Encumbrance.

           5.14.  No Labor  Disputes.  Borrower  is not  involved  in any  labor
dispute which would have a Material  Adverse  Effect;  to the best of Borrower's
knowledge  there are no  strikes or  walkouts  or union  organization  of any of
Borrower's  employees  threatened  or in  existence  and no  labor  contract  is
scheduled  to expire  during the Term other than as set forth on  Schedule  5.14
hereto.

           5.15.  Margin  Regulations.  Borrower  is not  engaged,  nor  will it
engage,  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  respective  meanings  of each  of the  quoted  terms  under
Regulation U or  Regulation  G of the Board of Governors of the Federal  Reserve
System as now and from time to time hereafter in effect. No part of the proceeds
of any Advance will be used by Borrower for  "purchasing" or "carrying"  "margin
stock" as defined in Regulations U and G of such Board of Governors.

           5.16.       Investment Company Act.  Borrower is not an
"investment company" registered or required to be registered under
the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.



                                      -59-



<PAGE>



           5.17.  Disclosure.  No representation or warranty made by Borrower in
this Agreement or in any financial statement,  report,  certificate or any other
document furnished by Borrower in connection herewith or therewith contained any
untrue  statement of a material  fact when made or omitted to state any material
fact necessary to make the statements herein or therein not misleading. There is
no fact known to Borrower  which  Borrower has not disclosed to Agent in writing
with respect to the transactions contemplated by this Agreement which would have
a Material Adverse Effect.

           5.18.  Swaps.  Borrower is not a party to, nor will it be a party to,
any swap  agreement  whereby  Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default  thereunder  are  payable on an  unlimited  "two-way  basis"
without regard to fault on the part of either party.

           5.19.   Conflicting   Agreements.   No  provision  of  any  mortgage,
indenture, contract, agreement, judgment, decree or order binding on Borrower or
affecting the Collateral  conflicts  with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.

           5.20.  Application of Certain Laws and Regulations.  Neither Borrower
nor any Subsidiary of Borrower is subject to any statute, rule or regulation not
applicable  to  businesses  in general  which  regulates  the  incurrence of any
Indebtedness.  No  Affiliate  of  Borrower  is subject to any  statute,  rule or
regulation  which  regulates the  incurrence of any  Indebtedness  the effect of
which would have a Material Adverse Effect.

           5.21.       Property of Borrower.  On the Effective Date, Borrower
will own all the property and possess all of the rights and
Consents necessary for the conduct of the business of Borrower.

           5.22.       Other Ventures.  Borrower is not engaged in any joint
venture or partnership with any other Person.



VI.  AFFIRMATIVE COVENANTS.

           Borrower  shall,  until  payment  in  full  of  the  Obligations  and
termination of this Agreement:

           6.1.  Payment of Fees. Pay to Agent on demand all usual and customary
fees and expenses  which Agent incurs in connection  with (a) the  forwarding of
Advance  proceeds  and (b) the  establishment  and  maintenance  of any  Lockbox
Account or  Depository  Account as  provided  for in  Section  4.16.  Agent may,
without  making  demand,  charge the account of  Borrower  for all such fees and
expenses.



                                      -60-



<PAGE>



           6.2. Conduct of Business and Maintenance of Existence and Assets. (a)
Conduct  continuously  and  operate  actively  its  business  according  to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition  (reasonable wear and tear excepted
and  except  as  may be  disposed  of in  accordance  with  the  terms  of  this
Agreement),  including,  without limitation, all licenses, patents,  copyrights,
tradenames,  trade  secrets and  trademarks  and take all actions  necessary  to
enforce and protect the  validity of any  intellectual  property  right or other
right  included  in the  Collateral;  (b)  keep in full  force  and  effect  its
existence  and comply in all  material  respects  with the laws and  regulations
governing  the conduct of its  business  where the failure to do so would have a
Material  Adverse  Effect;  and (c)  make  all  such  reports  and pay all  such
franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and
franchises  under the laws of the  United  States or any  political  subdivision
thereof where the failure to do so would have a Material Adverse Effect.

           6.3.        Violations.  Promptly notify Agent in writing of any
violation of any law, statute, regulation or ordinance of any
governmental entity, or of any agency thereof, applicable to
Borrower which may have a Material Adverse Effect.

           6.4.  Government  Receivables.  At the request of Agent,  (a) take or
cause to be taken  all  steps  necessary  to  protect  Agent's  interest  in the
Collateral under the Federal  Assignment of Claims Act or other applicable state
or local statutes or ordinances to the extent applicable; (b) shall use its best
efforts to cause  Clients  to take all steps  necessary  to  protect  Borrower's
rights to receive  payment  under  contracts  between the United States and such
Clients to the extent Borrower has purported to purchase  Receivables under such
contracts;  and (c) after the occurrence and during the  continuance of an Event
of Default deliver to Agent  appropriately  endorsed,  any instrument or chattel
paper  connected  with any  Receivable  arising  out of  contracts  between  (i)
Borrower  and  the  United  States,  any  state  or any  department,  agency  or
instrumentality  of any of them and (ii) any Client and the United  States,  any
state or any department,  agency or instrumentality of any of them to the extent
in Borrower's possession.

           6.5.  Execution of Supplemental  Instruments.  Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements,  statements,
assignments  and  transfers,  or  instructions  or  documents  relating  to  the
Collateral,  and such other instruments as Agent may request,  in order that the
full intent of this Agreement may be carried into effect including (i) using its
best efforts to secure all consents and approvals  necessary or appropriate  for
the assignment to or for the benefit of Agent of any license or contract held by
Borrower  or in which  Borrower  has any rights not  heretofore  assigned,  (ii)
filing any financing or  continuation  statements  under the UCC with respect to
the liens and security interests granted hereunder or under any Other Document,


                                      -61-



<PAGE>



and (iii)  transferring  Collateral to Agent's possession or the possession of a
Person to whom such transfer will perfect Agent's Lien under  applicable law (if
such Collateral can be perfected only by possession).

           6.6. Payment of Indebtedness.  Pay, discharge or otherwise satisfy at
or before maturity (subject,  where applicable,  to specified grace periods and,
in the  case  of the  trade  payables,  to  normal  payment  practices)  all its
obligations  and  liabilities  of whatever  nature  other than  obligations  and
liabilities  which in the aggregate do not exceed  $100,000  outstanding  at any
time or ,  except  when the  amount  or  validity  thereof  is  currently  being
contested  in good faith by  appropriate  proceedings  and  Borrower  shall have
provided for such reserves as Agent may  reasonably  deem proper and  necessary,
subject at all times to any  applicable  subordination  arrangement  in favor of
Agent or Lenders.

           6.7.   Standards  of  Financial   Statements.   Cause  all  financial
statements  referred to in Sections  9.6,  9.7,  9.8,  9.9, 9.10 and 9.11, as to
those to which GAAP is  applicable  to be complete  and correct in all  material
respects  (subject,  in the case of  interim  financial  statements,  to  normal
year-end audit adjustments and except for the omission of footnotes as permitted
by the rules of the  Securities  and  Exchange  Commission  or other  applicable
governmental  authority)  and  to  be  prepared  in  reasonable  detail  and  in
accordance  with GAAP  applied  consistently  throughout  the periods  reflected
therein (except as concurred in by such reporting accountants or officer, as the
case may be, and disclosed therein).

           6.8.  Credit  Standards.  Borrower  shall (a)  maintain  its internal
credit  approval  and  classification  standards  as set  forth in  Exhibit  6.8
("Credit  Standards"),  (b) apply  the  Credit  Standards  to each  purchase  of
Receivables  and (c) not modify the Credit  Standards  without the prior written
consent of Agent in each instance, such consent not to be withheld unreasonably.

           6.9.   Insurance.   Borrower  shall  and  shall  cause  each  of  its
Subsidiaries to maintain  insurance in the type, scope and amounts  described in
Section 4.11 hereof.  Borrower and each of its  Subsidiaries  shall use its best
efforts to cause its insurance  carriers to be obligated to notify Agent 30 days
in advance if any carrier  intends to cancel the  insurance  policies.  Borrower
shall,  and shall cause each of its  Subsidiaries to, pay when due all insurance
premiums  payable by them.  Borrower  shall deliver to Agent,  upon  request,  a
certificate  of  insurance  that  evidences  the  existence  of each  policy  of
insurance,  payment of all premiums  therefor and  compliance  with Section 4.11
hereof and this Section 6.9. In addition,  Borrower  shall notify Agent promptly
of any  occurrence  causing a  material  loss or decline in value of any real or
personal  property used by Borrower and the estimated (or actual,  if available)
amount of such  loss or  decline.  Upon the  occurrence  of any event  causing a
material loss or decline in value of any real or personal property of any Client
against which Borrower has


                                      -62-



<PAGE>



made  documented  advances and with  respect to which  Borrower has received the
proceeds  thereof,  Borrower shall notify Agent by the end of the month in which
such proceeds are received. In the event Borrower at any time or times hereafter
shall fail to obtain or maintain any of the policies of insurance required above
or to pay any  premium  in whole or in part  relating  thereto,  Agent,  without
waiving or releasing any  Obligations or Default or Event of Default  hereunder,
may at any time or times  thereafter  (but shall not be obligated to) obtain and
maintain  such  policies of insurance  and pay such  premiums and take any other
action with respect thereto which Agent deems  advisable.  All sums so disbursed
by Agent,  including reasonable attorneys' fees, court costs, expenses and other
charges relating thereto,  shall be payable, on demand, by Borrower to Agent and
shall be  additional  Obligations  hereunder  secured by the  Collateral.  Agent
reserves  the right at any time,  upon review of  Borrower's  risk  profile,  to
require  additional  forms and limits of  insurance  to, in  Agent's  reasonable
opinion, adequately protect Lenders' interests.

           6.10. Filing of Financing Statements. Borrower shall file appropriate
UCC-1 financing  statements  against Clients to the extent  necessary to perfect
Borrower's  ownership  or  security  interests  under the  applicable  Factoring
Agreement,  applicable  Collateral Funding Repayment Agreement and/or applicable
Inventory  Collateral  Funding Repayment  Agreement,  if any, to the extent such
interest  may be  perfected  by filing  financing  statements  under the Uniform
Commercial Code.

VII.  NEGATIVE COVENANTS.

           Borrower shall not, until satisfaction in full of the Obligations and
termination of this Agreement:

           7.1.        Merger, Consolidation, Acquisition and Sale of Assets.

                       (a)      Except as permitted under Section 7.4, 7.7 or
7.12 hereof,  enter into any merger,  consolidation or other reorganization with
or into any other Person or acquire all or a  substantial  portion of the assets
or stock of any Person or permit any other Person to  consolidate  with or merge
with it.

                       (b)      Except as permitted under Section 4.3, sell,
lease,  transfer or otherwise dispose of any of its properties or assets, except
in the ordinary course of its business.

Provided,  however,  that  in the  case  of  preceding  clauses  (a) and (b) (i)
Borrower  may acquire  Receivables  in the  ordinary  course of  business;  (ii)
Borrower  may acquire  assets of Clients or  guarantors  of Clients  pursuant to
foreclosure  or other  realization  proceedings  and Borrower or a Subsidiary of
Borrower may own real property  which has been bid in for  obligations  owing to
Borrower at a foreclosure sale of assets of a Client or a guarantor of a Client;
(iii)  Borrower  may sell,  transfer,  convey,  assign or  otherwise  dispose of
Collateral (including Receivables) acquired by Borrower


                                      -63-



<PAGE>



in  connection  with  a  default  by a  Client;  (iv)  Borrower  may  sell  Risk
Participations in Factoring Agreements,  Collateral Funding Repayment Agreements
and/or Inventory  Collateral  Funding  Repayment  Agreements  provided that such
sales are recorded on the books of Borrower and disclosed to Agent; (v) Borrower
may make  transfers  resulting  from any casualty or  condemnation  of assets or
properties,  (vi)  Borrower  may  engage in  transactions  contemplated  in this
Agreement,  (vii) Borrower may sell all or part of the stock owned by it in LOI,
(viii) Borrower may sell warrants and stock and make other investments permitted
pursuant to Sections  7.4(a) and (d) hereof,  (ix) Borrower may sell,  transfer,
convey,  assign or otherwise  dispose of Collateral  (including  Receivables) in
connection  with the  repayment  of a Client's  obligations  to Borrower and (x)
Borrower may sell, transfer,  convey,  assign or otherwise dispose of Collateral
(including  Receivables) to a direct wholly-owned  Subsidiary of Borrower if (i)
in  the  exercise  of  Borrower's  business  judgment,   such  sale,   transfer,
conveyance,  assignment or other  disposition  should maximize the value of such
Collateral  and/or reduce risks to Borrower  associated  with such Collateral or
the collection  thereof,  (ii) Borrower shall notify Agent upon such  occurrence
and (iii) such  Subsidiary  is or shall  become a party to the  Guaranty and the
Security Agreement.

To the extent Borrower sells, transfers, conveys, assigns, or otherwise disposes
of properties or assets  pursuant to this Section 7.1 (or pursuant to any waiver
hereof) (i) the properties or assets so sold, transferred,  conveyed,  assigned,
or otherwise  disposed of shall be sold,  transferred,  conveyed,  assigned,  or
otherwise  disposed of free and clear of the Liens created by this Agreement and
the Other Documents, but such Liens shall continue in the proceeds of such sale,
transfer,  conveyance,  assignment or other  disposition  and (ii) to the extent
that such sale, transfer, conveyance, assignment or disposition is in connection
with Sections  7.1(iii) or 7.1(ix)  above,  Borrower  shall  promptly remit such
proceeds to Agent for application to the outstanding Obligations.

           7.2.        Creation of Liens.  Create or suffer to exist any Lien
upon or against any of its property or assets now owned or
hereafter acquired, except Permitted Encumbrances.

           7.3.  Guaranties.  Become liable upon the  obligations of any person,
firm or corporation by assumption,  endorsement or guaranty thereof or otherwise
(other than to Agent or Lenders)  except (a) as disclosed  on Schedule  7.3, (b)
the  Guaranty,  Letters  of  Guaranty  and  Guaranteed  Indebtedness  thereunder
provided that such Letters of Guaranty and Guaranteed Indebtedness shall only be
provided on a fully secured basis (as  determined by Borrower in the  reasonable
exercise of its  business  judgment at the time any such Letters of Guaranty and
Guaranteed Indebtedness are provided) or Borrower shall otherwise have available
to it at the time  payment  is made upon such  Letters  Guaranty  or  Guaranteed
Indebtedness  sufficient  Collateral  to  secure  such  performance  and (c) the
endorsement of checks in the ordinary course of business and (d) to the extent


                                      -64-



<PAGE>



permitted by law the  indemnification  of officers and  directors of AFC Holding
Corporation who are not also officers or directors of the Borrower (if any) from
and  against  costs and losses  incurred  in  connection  with the  service  and
performance  by such  officers  and  directors  (if any) of their  duties to AFC
Holding Corporation.

           7.4. Investments.  Except as permitted by and subject to the terms of
Sections 7.1, 7.3, 7.5, 7.10, or 7.12 hereof, make any investment in, or make or
accrue loans or advances of money to any Person,  through the direct or indirect
holding of  securities or otherwise;  provided,  however,  that (a) Borrower may
purchase  and own Cash  Equivalents,  (b)  Borrower  may  maintain  its existing
investments  set forth on Schedule 7.4, (c) Borrower may in the ordinary  course
of business  make loans and advances of money or credit to or for the benefit of
Clients in accordance with Section 7.5(d) hereof,  and (d) Borrower may maintain
those investments set forth in Schedule 7.4 and may make additional  investments
in  Clients  through  the  acquisition  of stock  options or  warrants  (and the
exercise thereof);  provided further, however, that all investments set forth in
clauses  (a),  (b),  (c) and (d)  above  shall be  pledged  to the Agent for the
benefit of the Lenders.

           7.5.  Loans.  Except as otherwise  permitted under Sections 7.3, 7.4,
7.7 or 7.10 hereof, make advances,  loans or extensions of credit to any Person,
including without  limitation,  any Parent,  Subsidiary or Affiliate except with
respect to (a) the extension of credit in connection with the sale of Collateral
to the extent  permitted  hereunder,  (b) loans to its employees in the ordinary
course of  business  not to exceed the  aggregate  amount of $50,000 at any time
outstanding,  (c)  loans  to LOI and  SSI for  working  capital  purposes,  such
outstanding loans not to exceed in the aggregate  $4,000,000  outstanding at any
time; provided,  however,  that if (i) all such intercompany loans to LOI and/or
SSI,  as the case may be, are paid in full and (ii)  Borrower  agrees in writing
not to make any further  loans to SSI and/or LOI, as the case may be,  Agent and
Lenders will release LOI and SSI from their  obligations  under the Guaranty and
the Security  Agreement,  (d) advances,  loans or extensions of credit to or for
the benefit of Clients in accordance with the applicable  Factoring  Agreements,
Collateral Funding Repayment  Agreement and/or applicable  Inventory  Collateral
Funding Repayment  Agreement which at the time made are either (i) fully secured
(as determined by Borrower in the reasonable  exercise of its business  judgment
at the time any such  advances,  loans or  extensions of credit are provided) or
(ii)  after a  Client  has  defaulted  under  its  Factoring  Agreement  or,  if
applicable,   its  Collateral  Funding  Repayment  Agreement  or  its  Inventory
Collateral  Funding Repayment  Agreement and in connection with a work-out,  for
the purpose of maximizing the amount to be realized upon the collateral securing
such advances,  loans or extensions of credit,  provided that Agent (1) has been
notified that it is a work-out and (2) has been given the reasonable  details of
Borrower's  work-out plan, (e) advances to Receivable  Financing  Corporation to
pay legal fees and any final  judgment  in an amount not in excess of  $425,000;
and (f) advances to Subsidiaries who have acquired property in


                                      -65-



<PAGE>



foreclosure or from Borrower, such advances to all Subsidiaries not to exceed in
the aggregate $350,000 in any Fiscal Year.

           7.6.        Capital Expenditures.  Make Capital Expenditures in
excess of $150,000 in any fiscal year; provided, that, Borrower may
make Capital Expenditures up to an additional $500,000 for the
purchase of computer equipment.

           7.7.  Restricted  Payments.   Except  as  otherwise  permitted  under
Sections 7.5 or 7.10, make any Restricted Payments;  provided,  that (a) so long
as no Default has occurred and is continuing, or would exist after giving effect
to any such payment,  subsequent  to the receipt by Agent of  Borrower's  annual
audited financial statements pursuant to Section 9.6 hereof for any Fiscal Year,
Borrower  may declare and pay cash  dividends  in an amount not to exceed 50% of
Borrower's  consolidated  net income  determined in accordance with GAAP for the
preceding  Fiscal Year,  (b)  Borrower  may declare and pay  dividends in common
stock of  Borrower,  (c)  Subsidiaries  of Borrower  may declare and pay cash or
other dividends to Borrower, (d) so long as no Event of Default has occurred and
is continuing  or would exist after giving effect to any such payment,  Borrower
may make Restricted Payments to the Stockholders in the form of all or a portion
of the Stock of LOI and/or SSI, and to the extent the Stock of LOI and/or SSI is
distributed in accordance  with the  foregoing,  Agent shall release its Lien on
the Stock of LOI and SSI held by Agent pursuant to the  applicable  Stock Pledge
Agreement,  (e)  Borrower  may from time to time  acquire,  purchase,  redeem or
otherwise  retire common Stock of Borrower in exchange for  Convertible,  Senior
Subordinated  Notes,  (f)  Borrower  may make  regularly  scheduled  payments of
principal and interest in respect of the Convertible,  Senior Subordinated Notes
in accordance with (and subject to) the terms thereof and of the Indenture,  and
(g)  Borrower  may from time to time issue  common  Stock of  Borrower  upon the
proper exercise of the conversion  rights contained in the  Convertible,  Senior
Subordinated  Notes and in the  Indenture  (whether or not Borrower is deemed to
have  received   reasonably   equivalent  value  in  connection  with  any  such
conversion).

           7.8.  Indebtedness.  Create,  incur,  assume  or  suffer to exist any
Indebtedness  (exclusive  of trade  debt) of  Borrower  except in respect of (i)
Indebtedness to Agent and Lenders (including all Obligations); (ii) Indebtedness
incurred for capital expenditures  permitted under Section 7.6 hereof; (iii) the
Guaranty  and to the extent  permitted  in Section 7.3, the Letters of Guaranty,
and the Guaranteed  Indebtedness  thereunder;  (iv) credit balances of factoring
clients and accrued expenses  determined,  in each case, in a manner  consistent
with the  determination  of the line item entitled "credit balances of factoring
clients" and "accounts payable and accrued expenses", respectively, appearing in
Borrower's  audited  balance  sheet dated  December 31, 1996;  (v)  Indebtedness
arising from any judgment,  compromise,  settlement  or consent  relating to any
litigation, investigation or other proceeding whether or not actually commenced;
(vi) Indebtedness


                                      -66-



<PAGE>



under Risk  Participations  permitted  pursuant to Section 7.1; (vii)  unsecured
Indebtedness incurred in the ordinary course of business (except with respect to
the  Convertible,   Senior   Subordinated   Notes),  not  to  exceed  $5,000,000
outstanding  at any one time in the  aggregate,  bearing  interest at a rate not
greater than the Base Rate plus five percent (5%), provided that the instruments
evidencing such Indebtedness shall state that no repayment shall be made on such
Indebtedness  so long as any Event of Default  shall exist and is  continuing or
would occur as a result of or after giving  effect to any such  payment;  (viii)
Indebtedness  to AFC Holding  Corporation so long as  immediately  prior to each
loan  giving  rise to such  Indebtedness,  Borrower  pays a like  amount  to AFC
Holding  Corporation  in  a  transaction  permitted  under  Section  7.10;  (ix)
Indebtedness  secured by Liens  permitted  under Section 7.2; (x) accrued income
and other taxes not yet payable;  and (xi) unsecured  notes payable  incurred by
Subsidiaries  of  Borrower  to  related  parties  and  appearing  on  Borrower's
consolidated  balance sheet from time to time not in excess of $1,250,000 in the
aggregate outstanding at any time.

           7.9.  Nature of  Business.  Substantially  change  the  nature of the
business in which it is  presently  engaged as disclosed  in  Borrower's  Annual
Report on Form 10-KSB for Fiscal Year ended  December  31,  1993,  nor except as
specifically permitted hereby purchase or invest, directly or indirectly, in any
assets or property  other than in the ordinary  course of business for assets or
property  which are useful in,  necessary for and are to be used in its business
as presently conducted. With respect to Borrower's Subsidiaries formed after the
Original Closing Date in accordance with Section 7.12, Borrower shall not permit
any such  Subsidiary  to engage in any  business  other than the  marketing  and
development of the business of Borrower  outside the Commonwealth of Virginia or
the marketing and  development of the business or programs  offered by banks and
other financial institutions.

           7.10.       Transactions with Affiliates.

                       (a)  Enter into or be a party to any transaction with
any Affiliate of Borrower,  except as otherwise permitted in this Agreement,  or
in the  ordinary  course  of and  pursuant  to the  reasonable  requirements  of
Borrower's  business and upon fair and reasonable terms that are fully disclosed
to Agent and are no less  favorable  to  Borrower  than would be  obtained  in a
comparable  arm's-length  transaction with a Person not an Affiliate of Borrower
except that (i) Borrower may pay a licensing fee to AFC Holding  Corporation  in
an  amount  equal  to  one  percent  (1%)  of  Borrower's   gross  purchases  of
Receivables,   so  long  as  immediately  following  such  payment  AFC  Holding
Corporation  loans a like amount to Borrower in a  transaction  permitted  under
Section 7.8, (ii) Borrower may pay customary  fees to directors,  (iii) Borrower
may make payments under and in accordance with the Brasch Employment  Agreement,
the C.  Fishman  Employment  Agreement,  the  Demas  Employment  Agreement,  the
Hotsenpiller Employment Agreement,  the Madden Employment Agreement,  the Matthy
Employment Agreement and


                                      -67-



<PAGE>



the  Winkler  Employment  Agreement,  (iv)  Borrower  may make  payments  to any
Subsidiary  formed in accordance with Section 7.12 to fund the salary,  overhead
and other necessary  business expenses of such subsidiaries and (v) Borrower may
(x) issue, from time to time the Convertible, Senior Subordinated Notes and make
regularly  scheduled  payments  of  principal  and  interest  in  respect of the
Convertible,  Senior  Subordinated Notes in accordance with (and subject to) the
terms  thereof and of the Indenture and (y) issue from time to time common Stock
of Borrower upon the proper exercise of the conversion rights contained therein.

                 (b) Enter into any agreement or transaction to pay  management,
consulting,  advisory or similar fees (i) to any Person,  based on or related to
Borrower's or any of its  Subsidiaries'  operating  performance or income or any
percentage  thereof except (x) to Mr. Leon Fishman as and to the extent approved
by the Borrower's board of directors or the compensation  committee thereof, (y)
that  Borrower  may pay  commissions  to  financial  intermediaries  who are not
Affiliates of the  Borrower,  in the ordinary  course of business,  for business
referred  to the  Borrower  and (z)  Borrower  may make  payments  under  and in
accordance with the Performance-Based  Incentive  Compensation Plan), or (ii) to
an Affiliate or Subsidiary except that Borrower may pay management or collateral
administration   fees  to  Subsidiaries  in  amounts  sufficient  to  fund  such
Subsidiary's salary, overhead and necessary business expenses.

           7.11. Leases.  Enter as lessee into any lease arrangement for real or
personal property (unless capitalized and permitted under Section 7.6 hereof) if
after giving effect  thereto,  aggregate  annual rental  payments for all leased
property would exceed $350,000 in any one fiscal year.

           7.12.       Subsidiaries.

                       Except as permitted by Section 7.1 or 7.4 Borrower
shall not directly or indirectly, by operation of law or otherwise,  merge with,
consolidate  with,  acquire  all or  substantially  all of the assets or capital
stock of, or otherwise combine with, any Person or form any Subsidiary after the
date hereof, except that (i) Borrower may form new Subsidiaries in jurisdictions
outside of the Commonwealth of Virginia,  which new Subsidiaries shall be formed
solely for the purpose of marketing  Borrower's products and services outside of
the  Commonwealth  of Virginia or the  products  and services of banks and other
financial  institutions  and  shall  not own any  assets  or,  contract  for any
liabilities  inconsistent with such purpose;  provided,  however,  that upon the
formation of any such  Subsidiary,  Borrower will supplement  Schedule 5.2(b) to
add such Subsidiary thereto and Borrower shall cause such Subsidiary to become a
party to the Guaranty and to grant to the Agent for the benefit of the Lenders a
security  interest in all assets of such  Subsidiary,  all in form and substance
satisfactory  to the Agent;  (ii) with the prior written  consent of Agent (such
consent not to be unreasonably withheld), wholly-owned Subsidiaries


                                      -68-


<PAGE>



of Borrower may merge with and into each other or with and into Borrower;  (iii)
Borrower and its Subsidiaries may acquire  Receivables in the ordinary course of
business;  and (iv) Borrower or a Subsidiary  of Borrower may acquire  assets of
Clients or guarantors of Clients  pursuant to foreclosure  or other  realization
proceedings and Borrower or a Subsidiary of Borrower may own real property which
has been bid in for  obligations  owing to a Borrower at a  foreclosure  sale of
assets of a Client or a guarantor of a Client.

           7.13.       Fiscal Year and Accounting Changes.  Change its fiscal
year end from December 31 or make any change (i) in accounting
treatment and reporting practices except as required by GAAP or
(ii) in tax reporting treatment except as required by law.

           7.14.       Intentionally Omitted.

           7.15. Amendment of Articles of Incorporation,  By-Laws. Amend, modify
or waive any term or material  provision  of its  Articles of  Incorporation  or
By-Laws unless required by law or unless such amendment,  modification or waiver
would not  adversely  affect the  repayment  of  Obligations  and notice of such
change has been given to Agent.

           7.16.  Compliance with ERISA. (i) (x) Maintain,  or permit any member
of the Controlled Group to maintain,  or (y) become obligated to contribute,  or
permit any member of the Controlled Group to become obligated to contribute,  to
any Plan,  other  than  those  Plans  disclosed  on  Schedule  5.8(d)  except as
otherwise  disclosed to Agent in writing,  (ii) engage,  or permit any member of
the Controlled Group to engage, in any non-exempt "prohibited  transaction",  as
that term is defined in section 406 of ERISA and Section 4975 of the Code, (iii)
incur, or permit any member of the Controlled  Group to incur,  any "accumulated
funding deficiency",  as that term is defined in Section 302 of ERISA or Section
412 of the Code,  the effect of which would have a Material  Adverse Effect (iv)
terminate,  or permit any member of the Controlled Group to terminate,  any Plan
where such event could result in any  liability of Borrower or any member of the
Controlled  Group or the imposition of a lien on the property of Borrower or any
member of the Controlled  Group pursuant to Section 4068 of ERISA, the effect of
which would have a Material  Adverse Effect (v) assume,  or permit any member of
the   Controlled   Group  to  assume,   any  obligation  to  contribute  to  any
Multiemployer  Plan  not  disclosed  on  Schedule  5.8(d)  except  as  otherwise
disclosed to Agent unless otherwise  disclosed to Agent in writing,  (vi) incur,
or permit any member of the Controlled Group to incur, any withdrawal  liability
to any  Multiemployer  Plan the effect of which  would  have a Material  Adverse
Effect;  (vii)  fail  promptly  to  notify  Lender  of  the  occurrence  of  any
Termination Event,  (viii) fail to comply in all material respects,  or permit a
member of the Controlled Group to fail to comply in all material respects,  with
the requirements of ERISA or the Code or other applicable laws in respect of any
Plan, (ix) fail to meet, or permit any member of the Controlled Group to


                                      -69-


<PAGE>



fail to  meet,  all  minimum  funding  requirements  under  ERISA or the Code or
postpone  or delay or allow any member of the  Controlled  Group to  postpone or
delay any  funding  requirement  with  respect to any Plan,  the effect of which
would in any case have a Material Adverse Effect.

           7.17.   Prepayment  of  Indebtedness.   At  any  time,   directly  or
indirectly,  prepay  any  Indebtedness  (other  than to  Agent or  Lenders),  or
repurchase,  redeem,  retire or otherwise  acquire any  Indebtedness of Borrower
other than when due in  accordance  with the terms of the  agreements  governing
such Indebtedness or repurchase,  redeem,  retire or otherwise acquire, in whole
or in part,  the  Convertible,  Senior  Subordinated  Notes prior to their final
stated  maturity  in the year 2000,  provided  that  nothing  contained  in this
Section 7.17 shall (or shall be deemed to) restrict or impair Borrower's ability
to issue from time to time common Stock of Borrower upon the proper  exercise of
the conversion rights contained in the Convertible,  Senior  Subordinated  Notes
and in the Indenture.

           7.18. Pledge of Credit.  Pledge Agent's or any Lender's credit on any
purchases or for any purpose  whatsoever (other than Letters of Credit issued in
accordance  with this Agreement) or use any portion of any Advance in or for any
business  other  than  Borrower's  business  as  conducted  on the  date of this
Agreement except as otherwise permitted under Sections 7.9 or 7.12.

           7.19.       Financial Covenants.  Breach, on a consolidated basis,
any of the following financial covenants, each of which shall be
calculated in accordance with GAAP as in effect on the Effective
Date:

                       (a)      (i) On the last day of each Fiscal Quarter
commencing  with the Fiscal  Quarter ending June 30, 1997, the ratio of (a) EBIT
to  (b)  interest  expense  (other  than  interest  expense  in  respect  of the
Convertible,  Senior  Subordinated Notes for the four Fiscal Quarters then ended
(taken as one accounting period) shall not be less than 3:1 and (ii) on the last
day of each Fiscal  Quarter  commencing  with the Fiscal  Quarter ended June 30,
1997,  the ratio of (A) EBIT to (B) total  interest  expense for the four Fiscal
Quarters then ended (taken as one accounting period) shall not be less than 2:1.

                       (b)     On the last day of each Fiscal Quarter, the ratio
of (i) Total Liabilities to (ii) Tangible Net Worth plus the aggregate principal
amount of Convertible,  Senior  Subordinated  Notes then  outstanding  shall not
exceed 2:1.

                       (c)      (1) The sum of (i) Tangible Net Worth plus (ii)
the  aggregate  principal  amount  of  Convertible,  Senior  Subordinated  Notes
outstanding  shall equal or exceed  $27,250,000 on December 31, 1996, and (2) on
the last day of any Fiscal Quarter thereafter, the sum of (i) Tangible Net Worth
and (ii) the aggregate  principal  amount of  Convertible,  Senior  Subordinated
Notes then outstanding,


                                      -70-



<PAGE>



shall  equal or exceed  the sum of (x)  $27,250,000  and (y)  $10,000  times the
number of Fiscal  Quarters  elapsed  from  December  31, 1996 to the end of such
Fiscal Quarter.

                       (d)      (i) Net cash advanced to any Client by Borrower
(net of Risk  Participations  sold with respect to such Client) shall not at any
time  exceed  25%  of the  sum  of  (x)  Borrower's  Tangible  Net  Worth  (on a
consolidated  basis)  and (y) the  aggregate  principal  amount of  Convertible,
Senior  Subordinated  Notes outstanding at such time; and (ii) net cash advanced
by Borrower (net of Risk  Participations)  with respect to Receivables owed by a
single  Account  Debtor  shall  not at any  time  exceed  25% of the  sum of (x)
Borrower's  Tangible Net Worth (on a  consolidated  basis) and (y) the aggregate
principal amount of Convertible,  Senior  Subordinated Notes outstanding at such
time.

                       For purposes of this Section 7.19(d), (x) each agency,
branch or  division  of the  Federal  government  shall be treated as a separate
Account Debtor and (y) each insurance company under state workman's compensation
arrangements shall be treated as a separate Account Debtor.

           7.20.       Assets of Certain Subsidiaries.  Permit Receivable
Financing Corporation or Premium Sales Northeast, Inc. to acquire
any additional assets.


VIII.  CONDITIONS PRECEDENT.

           8.1.        Conditions to Initial Advances.  The agreement of
Lenders to make the initial Advances requested to be made on the
Effective Date is subject to the satisfaction, or waiver by
Lenders, immediately prior to or concurrently with the making of
such Advances, of the following conditions precedent:

                       (a)     Revolving Credit Note.  Agent shall have received
the Revolving Credit Note duly executed and delivered by an
authorized officer of Borrower;

                       (b)      Filings, Registrations and Recordings.  Each
document (including,  without limitation,  any Uniform Commercial Code financing
statement)  required  by this  Agreement,  any  Other  Document  or under law or
reasonably  requested by Agent to be filed,  registered  or recorded in order to
create,  in favor of Agent,  a perfected  security  interest in or lien upon the
Collateral  shall have been  properly  filed,  registered  or  recorded  in each
jurisdiction  in which the filing,  registration  or  recordation  thereof is so
required or requested,  and to the extent  practicable Agent shall have received
an  acknowledgment  copy,  or other  evidence  satisfactory  to it, of each such
filing,  registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;



                                      -71-



<PAGE>



                       (c)      Corporate Proceedings of Borrower.  Agent shall
have  received  a copy of the  resolutions  in  form  and  substance  reasonably
satisfactory   to  Agent,  of  the  Board  of  Directors  of  Borrower  and  its
Subsidiaries,  as  applicable,  authorizing  (i)  the  execution,  delivery  and
performance of this Agreement,  the Revolving Credit Note, Collateral Assignment
of Security,  Guaranty,  Security  Agreement,  Stock Pledge Agreements,  and any
related  agreements  (collectively  the  "Documents")  and (ii) the  granting by
Borrower  and each  Guarantor  of the  security  interests in and liens upon the
Collateral in each case certified by the Secretary or an Assistant  Secretary of
Borrower and each  Guarantor as of the Effective  Date;  and,  such  certificate
shall  state  that the  resolutions  thereby  certified  have not been  amended,
modified, revoked or rescinded as of the date of such certificate;

                       (d)     Incumbency Certificates of Borrower.  Agent shall
have  received a  certificate  of the  Secretary  or an  Assistant  Secretary of
Borrower,  dated the Effective  Date, as to the  incumbency and signature of the
officers  of  Borrower  executing  this  Agreement,  any  certificate  or  other
documents to be delivered by it pursuant  hereto,  together with evidence of the
incumbency of such Secretary or Assistant Secretary;

                       (e)      Certificates.  Agent shall have received a copy
of the Articles or Certificate of Incorporation of Borrower,  and all amendments
thereto,  certified by the Secretary of State or other  appropriate  official of
its  jurisdiction  of  incorporation  together  with  copies of the  By-Laws  of
Borrower and all  agreements of Borrower's  Stockholder's  certified as accurate
and complete by the Secretary of Borrower;

                       (f)      Good Standing Certificates.  Agent shall have
received good  standing  certificates  for Borrower  dated not more than fifteen
(15) days prior to the Effective Date, issued by the Secretary of State or other
appropriate  official  of  Borrower's  jurisdiction  of  incorporation  and each
jurisdiction  where  the  conduct  of  Borrower's  business  activities  or  the
ownership of its properties necessitates qualification;

                       (g)      Legal Opinion.  Agent shall have received the
executed  legal opinion of Craig Fishman in form and substance  satisfactory  to
Lenders which shall cover such matters incident to the transactions contemplated
by this Agreement,  the Revolving  Credit Note, and related  agreements as Agent
may reasonably require;

                       (h)      No Litigation.  (i) No litigation, investigation
or proceeding  before or by any arbitrator or  Governmental  Authority  shall be
continuing or, to the best of Borrower's knowledge,  threatened against Borrower
or against the  officers or directors  of Borrower  (A) in  connection  with the
Documents  or any of the  transactions  contemplated  thereby and which,  in the
reasonable  opinion  of Agent,  is  deemed  material  or (B) which if  adversely
determined, would, in the reasonable opinion of Agent, have a


                                      -72-



<PAGE>



Material Adverse Effect other than litigation  previously  disclosed to Agent in
Borrower's  Quarterly  Report on Form 10-Q for the quarter  ended  September 30,
1996, Borrower's Annual Report on Form 10-KSB for Fiscal Year ended December 31,
1996 and  Borrower's  Quarterly  Report on Form 10-Q for the quarter ended March
31, 1997; and (ii) no injunction,  writ, restraining order or other order of any
nature  materially  adverse  to  Borrower  or the  conduct  of its  business  or
inconsistent with the due consummation of the transactions  contemplated  hereby
shall have been issued by any governmental authority;

                       (i)      Financial Condition Certificate.  Agent shall
have received an executed Financial Condition Certificate in the
form of Exhibit 8.1(i).

                       (j)      Collateral Examination.  Agent shall have
completed Collateral examinations and received appraisals,  the results of which
shall be  satisfactory  in form and  substance to Lenders,  of the  Receivables,
Inventory,  General  Intangibles,  and  Equipment  of Borrower and all books and
records in connection therewith;

                       (k)      Fees. Agent shall have received all fees due and
payable to Agent and Lenders on or prior to the Effective Date
pursuant to this Agreement and under any related agreement;

                       (l)      Insurance. Agent shall have received in form and
substance  satisfactory  to  Agent,  certified  copies  of  Borrower's  casualty
insurance policies, together with, to the extent contemplated in this Agreement,
loss payable  endorsements  on Agent's  standard form of loss payee  endorsement
naming  Agent as loss  payee,  and  certified  copies  of  Borrower's  liability
insurance policies, together with, to the extent contemplated in this Agreement,
endorsements naming Agent as a co-insured;

                       (m)      Leasehold Agreements.  Agent shall have received
a landlord agreement satisfactory to Agent with respect to
Borrower's chief executive office;

                       (n)      Reaffirmation of Guaranty, Stock Pledge
Agreements, etc.. Agent shall have received an executed (i) reaffirmation of the
Guaranty and Security Agreement, (ii) reaffirmation of the Collateral Assignment
of Security and (iii) reaffirmation of the Stock Pledge Agreements, each in form
and substance satisfactory to Lenders;

                       (o)     Payment Instructions; Borrowing Base Certificate.
Agent shall have  received  written  instructions  from  Borrower  directing the
application of proceeds of the initial  Advances made pursuant to this Agreement
and an initial Borrowing Base Certificate from Borrower reflecting that Borrower
has Eligible  Receivables  in amounts  sufficient in value and amount to support
Advances  in the  amount  by or on  behalf  of  Borrower  on the  date  of  such
certificate;


                                      -73-



<PAGE>




                       (p)     Lockbox Accounts.  Agent shall have received duly
executed blocked account agreements with respect to the Lockbox Accounts in form
and substance and with financial institutions acceptable to Agent;

                       (q)      Consents.  Agent shall have received any and all
Consents  necessary to permit the effectuation of the transactions  contemplated
by this Agreement and the Other  Documents;  and, Agent shall have received such
Consents and waivers of such third  parties as might assert  claims with respect
to the Collateral, as Agent and its counsel shall deem necessary;

                       (r)      No Adverse Material Change.  Since December 31,
1996, there shall not have occurred any event, condition or state of facts which
would have a Material Adverse Effect;

                       (s)     Undrawn Availability.  After giving effect to the
initial Advance hereunder, Borrower shall have aggregate Undrawn Availability of
at least $2,500,000.

                       (t)     Contract Review.  Lenders shall have reviewed all
material contracts of Borrower and such contracts shall be
satisfactory in all respects to Lenders;

                       (u)     Closing Certificate.  Agent shall have received a
closing  certificate  signed by the  President  and Chief  Financial  Officer of
Borrower dated as of the date hereof,  stating that (i) all  representations and
warranties  set forth in this  Agreement  and the Other  Documents  are true and
correct on and as of such date, (ii) Borrower is on such date in compliance with
all the terms and provisions set forth in this Agreement and the other Documents
and  (iii) on such date no  Default  or Event of  Default  has  occurred  and is
continuing;

                       (v)      Representations and Warranties.  Each of the
representations  and  warranties  made by  Borrower  and each  Subsidiary  in or
pursuant  to this  Agreement  and any of the  Other  Documents  and  each of the
representations  and  warranties  contained  in  any  certificate,  document  or
financial  or  other  statement  furnished  by  Borrower  any  time  under or in
connection  with this Agreement or any Other Documents shall be true and correct
on and as of the  Effective  Date as if made on and as of such  date  except  as
otherwise disclosed to Agent in writing on or before the Effective Date; and

                       (w)      Other.  All corporate and other proceedings, and
all  documents,  instruments  and other  legal  matters in  connection  with the
transactions  contemplated  by this Agreement  shall be satisfactory in form and
substance to Agent, Lenders and their counsel.

           8.2.        Conditions to Each Advance.  The agreement of Lenders
to make any Advance requested to be made on any date (including,
without limitation, its initial Advance), is subject to the


                                      -74-


<PAGE>



satisfaction of the following conditions precedent as of the date
such Advance is made:

                       (a)      Representations and Warranties.  Each of the
representations and warranties made by Borrower in or pursuant to this Agreement
and any Other Document to which it is a party,  and each of the  representations
and  warranties  contained  in any  certificate,  document or financial or other
statement furnished by Borrower to Agent at any time under or in connection with
this  Agreement or any Other  Document shall be true and correct in all material
respects on and as of such date as if made on and as of such date;

                       (b)      No Default.  No Event of Default shall have
occurred and be  continuing  on such date, or would exist after giving effect to
the Advances requested to be made, on such date; provided,  however that Lenders
in their sole  discretion,  may continue to make  Advances  notwithstanding  the
existence of an Event of Default; and

                       (c)      Maximum Advances.  In the case of any Advances
requested to be made, after giving effect thereto,  the aggregate Advances shall
not exceed the maximum  Advances  permitted  under  Section 2.4,  Section 2.5 or
Section 2.5A hereof, as applicable.

Each  request  for  an  Advance  by  Borrower   hereunder  shall   constitute  a
representation  and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.


IX.  INFORMATION AS TO BORROWER.

           Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:

           9.1. Disclosure of Material Matters.  Promptly upon learning thereof,
report to Agent all  matters  materially  and  adversely  affecting  the  value,
enforceability  or  collectibility  of the  Collateral  taken as a  whole.  With
respect  to any  Client  whose  Receivables  are at the  time  of  determination
included in the  Borrowing  Base,  Borrower  shall  notify  Agent  within  three
Business Days  following any  unreimbursed  adjustment  to such  Receivables  in
excess of $100,000.

           9.2.  Schedules;  Borrowing Base Certificate.  Deliver to Agent on or
before the  fifteenth  (15th) day of each month as and for the prior month (a) a
Borrowing Base Certificate;  provided,  however, Borrower may submit a Borrowing
Base   Certificate  more  frequently,   (b)  accounts   receivable   ageings  in
substantially  the form  delivered  to Agent prior to the  Effective  Date,  (c)
Schedule of Receivables  ("Schedule of  Receivables")  substantially in the form
and detail of an IBJS  Lending  Base  Worksheet  with such changes as Agent may,
from time to time, request, (d) a schedule of loans


                                      -75-



<PAGE>



made by  Borrower to its Clients  which are secured by Client  Funded  Equipment
stating  the name of the  Client to which  such  loans  are made and the  dollar
amount thereof and (e) a schedule of loans made by Borrower to its Clients which
are secured by Eligible Client Funded  Inventory  stating the name of the Client
to which  such  loans  are made and the  dollar  amount  thereof.  In  addition,
Borrower will deliver to Agent at such intervals as Agent may require  following
the  occurrence  and  during  the  continuation  of an  Event  of  Default:  (i)
confirmatory  assignment  schedules,  (ii)  copies of Client's  invoices,  (iii)
evidence of shipment or  delivery  of goods,  and (iv) such  further  schedules,
documents  and/or  information  regarding  the  Collateral  as Agent may require
including,  without  limitation,  trial balances and test  verifications.  Agent
shall have the right to confirm and verify all  Receivables in writing,  or upon
the occurrence and during the continuation of an Event of Default, by any manner
and  through  any medium it  considers  advisable  and do  whatever  it may deem
reasonably  necessary  to  protect  its  interests  hereunder.  The  items to be
provided  under the second  sentence of this  Section are,  when  required to be
delivered under such sentence,  to be in form satisfactory to Agent and executed
when appropriate by Borrower and delivered to Agent from time to time solely for
Agent's  convenience in maintaining  records of the  Collateral,  and Borrower's
failure  to  deliver  any of such items to Agent  shall not  affect,  terminate,
modify or otherwise limit Agent's Lien with respect to the Collateral.

           9.3.        Litigation.  Promptly notify Agent in writing of any
litigation affecting Borrower, whether or not the claim is covered
by insurance, and of any suit or administrative proceeding, which
in any case  may have a Material Adverse Effect.

           9.4.  Occurrence of Defaults,  etc.  Promptly notify Agent in writing
upon the occurrence of (a) any Event of Default;  (b) any event,  development or
circumstance  whereby any financial  statements  or other  reports  furnished to
Agent fail in any material  respect to present  fairly,  in accordance with GAAP
consistently  applied,  the financial condition or operating results of Borrower
as of the date of such statements;  (c) any accumulated  retirement plan funding
deficiency  which, if such  deficiency  continued for two plan years and was not
corrected  as provided  in Section  4971 of the  Internal  Revenue  Code,  could
subject  Borrower to a tax imposed by Section 4971 of the Internal  Revenue Code
the effect of which  would have a Material  Adverse  Effect;  (d) each and every
default by Borrower  which might result in the  acceleration  of the maturity of
any  Indebtedness  for  borrowed  money in an  aggregate  amount  in  excess  of
$100,000,  including the names and addresses of the holders of such Indebtedness
with  respect to which there is a default  existing or with respect to which the
maturity has been or could be accelerated,  and the amount of such Indebtedness;
and (e) any other development in the business or affairs of Borrower which might
reasonably be likely to have a Material Adverse Effect;  in each case describing
the  nature  thereof  and the  action  Borrower  proposes  to take with  respect
thereto.



                                      -76-



<PAGE>



           9.5.        Intentionally Omitted.

           9.6. Annual  Financial  Statements.  Furnish Agent within one hundred
(100) days after the end of each Fiscal Year annual audited financial statements
of Borrower and its  Subsidiaries on a consolidated  basis and annual  unaudited
financial  statements of Borrower and its Subsidiaries on a consolidating  basis
excluding the statement of cash flows, including, but not limited to, statements
of income and  stockholders'  equity from the beginning of the prior fiscal year
to the end of such  fiscal  year  and the  balance  sheet  as at the end of such
fiscal  year,  all  prepared in  accordance  with GAAP (only with respect to the
consolidated  financial  statements)  applied on a basis  consistent  with prior
practices,  and in reasonable detail and reported upon without  qualification by
Deloitte  & Touche or  another  independent  certified  public  accounting  firm
selected by Borrower and  satisfactory to Agent (the  "Accountants");  provided,
however, that delivery of substantially the same financial statement information
that is required by an Annual  Report on Form 10-KSB or any  successor  form for
such  Fiscal  Year  under the  Exchange  Act,  together  with the  consolidating
financial  statements  referred  to  herein,  shall be  deemed  to  satisfy  the
requirements  of this Section 9.6. The report of such  accounting  firm shall be
accompanied by a statement of such accounting firm certifying that in making the
examination upon which such report was based either no information came to their
attention  which to their  knowledge  constituted an Event of Default under this
Agreement or, if such information  came to their attention,  specifying any such
default,  and such report shall  contain or have appended  thereto  calculations
which set forth Borrower's  compliance with the financial covenants contained in
Sections 7.6, 7.11 and 7.19. In addition,  the reports shall be accompanied by a
certificate of Borrower's President,  Chief Financial Officer or Chief Operating
Officer which shall state that, based on an examination sufficient to permit him
to make an informed  statement,  no Default or Event of Default  exists,  or, if
such is not the case,  specifying such Default or Event of Default,  its nature,
when it occurred, whether it is continuing and the steps being taken by Borrower
with respect to such event and, such  certificate  shall have  appended  thereto
calculations which set forth Borrower's  compliance with the financial covenants
contained in Sections 7.6, 7.11 and 7.19.

           9.7.  Quarterly  Financial  Statements.  Furnish Agent within 55 days
after the end of the first  three  Fiscal  Quarters of each year,  an  unaudited
balance  sheet  of  Borrower  and  its   Subsidiaries  on  a  consolidated   and
consolidating basis and unaudited  statements of income and stockholders' equity
and  cash  flow  of  Borrower  and  its  Subsidiaries  on a  consolidated  basis
reflecting  results of  operations  from the beginning of the fiscal year to the
end of such quarter and for such quarter,  prepared on a basis  consistent  with
prior  practices and complete and correct in all material  respects,  subject to
normal year end adjustments,  provided,  however, that delivery of substantially
the same financial statement  information that is required by a Quarterly Report
on Form 10-Q or any


                                      -77-



<PAGE>



successor form for such Fiscal Quarter under the Exchange Act, together with the
consolidating  financial  statements  referred  to  herein,  shall be  deemed to
satisfy the  requirements  of this Section 9.7. The reports shall be accompanied
by a  certificate  of Borrower's  President,  Chief  Financial  Officer or Chief
Operating Officer which shall state that, based on an examination  sufficient to
permit him to make an informed statement, no Default or Event of Default exists,
or, if such is not the case,  specifying  such Default or Event of Default,  its
nature, when it occurred,  whether it is continuing and the steps being taken by
Borrower  with respect to such event and, such  certificate  shall have appended
thereto  calculations  which set forth Borrower's  compliance with the financial
covenants contained in Sections 7.6, 7.11 and 7.19

           9.8.        Intentionally Omitted.

           9.9.        Other Reports.  Furnish Agent as soon as available,
but in any event within ten (10) days after the issuance thereof,
with copies of such financial statements, reports and returns as
Borrower shall send to its Stockholders.

           9.10.   Additional   Information.   Furnish  Agent  with   additional
information  as Agent  shall  reasonably  request  in order to  enable  Agent to
determine  whether  the terms,  covenants,  provisions  and  conditions  of this
Agreement  and the  Revolving  Credit Note have been  complied  with by Borrower
including, without limitation, copies of all environmental audits and reviews in
Borrower's  possession or subject to Borrower's  control.  Borrower shall (a) at
least ten (10) days prior thereto, notify Agent of Borrower's opening of any new
office or place of  business or  Borrower's  closing of any  existing  office or
place of business,  and (b) promptly upon Borrower's  learning  thereof,  notify
Agent of any material labor dispute to which Borrower is a party, any strikes or
walkouts relating to any of its plants or other  facilities,  and the expiration
of any labor  contract  to which  Borrower  is a party or by which  Borrower  is
bound.

           9.11.  Projected  Operating Budget.  Within 100 days after the end of
each Fiscal Year, furnish Agent an operating plan,  approved by Borrower's board
of directors,  which  includes the quarterly  budget for the following  year and
which  integrates   operating  profit   projections,   such  projections  to  be
accompanied by a certificate  signed by Borrower's  President,  Chief  Financial
Officer or Chief Operating Officer to the effect that such projections have been
prepared on the basis of sound financial planning practice  consistent with past
budgets and financial statements and that such officer has no reason to question
the  reasonableness  of any material  assumptions on which such projections were
prepared;   provided   that  such   certificate   may  contain   the   following
qualification:

                       Projections  as to future  events are not to be viewed as
                       facts and actual results during the period(s)  covered by
                       these projections may


                                      -78-



<PAGE>



                       differ from the projected results and such
                       differences may be material.

           9.12.       Intentionally Omitted.

           9.13. Notice of Suits, Adverse Events.  Furnish Agent with (x) prompt
notice of (i) any lapse or other  termination  of any Consent issued to Borrower
by any  Governmental  Authority  or any other  Person  that is  material  to the
operation  of  Borrower's  business,  and (ii) any  refusal by any  Governmental
Authority or any other Person to renew or extend any such Consent, (y) copies of
any  periodic  or  special  reports  filed by  Borrower  with  any  Governmental
Authority or Person, if such reports indicate any material adverse change in the
business,  operations,  affairs or  condition  of Borrower and (z) copies of any
notices and other communications from any Governmental Authority or Person which
specifically  relate to Borrower which are reasonably  likely to have a Material
Adverse Effect.

           9.14.  ERISA Notices and Requests.  Furnish Agent with prompt written
notice in the event  that (i)  Borrower  or any member of the  Controlled  Group
knows or has reason to know that a Termination Event has occurred, together with
a written  statement  describing such Termination  Event and the action, if any,
which  Borrower  or member of the  Controlled  Group has taken,  is  taking,  or
proposes to take with  respect  thereto  and,  when known,  any action  taken or
threatened  by the Internal  Revenue  Service,  Department of Labor or PBGC with
respect  thereto,  (ii) Borrower or any member of the Controlled  Group knows or
has reason to know that a prohibited  transaction (as defined in Sections 406 of
ERISA and 4975 of the  Internal  Revenue  Code)  has  occurred  together  with a
written  statement  describing such transaction and the action which Borrower or
any member of the Controlled Group has taken, is taking or proposes to take with
respect  thereto,  (iii) a funding waiver request has been filed with respect to
any Plan together  with all  communications  received by either  Borrower or any
member of the Controlled  Group with respect to such request,  (iv) any increase
in the benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which either Borrower or any member
of the Controlled Group was not previously  contributing  shall occur the effect
of which would have a Material Adverse Effect, (v) Borrower or any member of the
Controlled  Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice,  (vi) Borrower or any member of the Controlled  Group shall
receive any unfavorable  determination  letter from the Internal Revenue Service
regarding the qualification of a Plan under Section 401(a) of the Code, together
with copies of each such letter;  (vii) Borrower or any member of the Controlled
Group shall receive a notice  regarding the imposition of withdrawal  liability,
together with copies of each such notice;  (viii)  Borrower or any member of the
Controlled Group shall fail to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for


                                      -79-



<PAGE>



such installment or payment; (ix) Borrower or any member of the Controlled Group
knows that (a) a  Multiemployer  Plan has been  terminated and such  termination
would have a Material Adverse Effect, (b) the administrator or plan sponsor of a
Multiemployer  Plan intends to terminate a  Multiemployer  Plan, or (c) the PBGC
has  instituted  or will  institute  proceedings  under Section 4042 of ERISA to
terminate a Multiemployer Plan.

           9.15. Additional  Documents.  To the extent not inconsistent with any
other provision of this Agreement,  execute and deliver to Agent,  upon request,
such  documents  and  agreements  as Agent  may,  from time to time,  reasonably
request to carry out the purposes, terms or conditions of this Agreement.


X.  EVENTS OF DEFAULT.

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

                       10.1.  failure by Borrower to pay any principal or
interest  on the  Obligations  when due,  whether  at  maturity  or by reason of
acceleration pursuant to the terms of this Agreement,  or by required prepayment
pursuant to the terms of this Agreement or failure to pay any other  liabilities
or make any other  payment,  fee or charge to Lenders or Agent  provided  for in
this Agreement;

                       10.2.  any representation or warranty made or deemed
made by Borrower in this Agreement or any Other Document or in any  certificate,
document or financial or other statement furnished by Borrower or any Subsidiary
at any time in  connection  herewith  or  therewith  shall  prove  to have  been
misleading in any material  respect on the date when made or deemed to have been
made or furnished;

                       10.3.  failure by Borrower to (i) furnish when due the
financial  information  required under Article IX, or (ii) permit the inspection
of its  books  or  records  under  and in  accordance  with  the  terms  of this
Agreement;

                       10.4.  issuance of a notice of Lien, levy, assessment,
injunction or attachment  against  property of Borrower or Guarantors  having an
aggregate  value of more  than  $500,000  outstanding  at any time  which is not
stayed, bonded, paid or discharged for a period of sixty (60) days;

                       10.5.  except to the extent addressed by other Events
of Default,  failure or neglect of Borrower or any Guarantor to perform, keep or
observe any term, provision,  condition, covenant herein contained, or contained
in any other  agreement or  arrangement,  now or hereafter  entered into between
Borrower  and Lender which  failure or neglect  shall  remain  unremedied  for a
period of the earlier of (x) ten (10) days after Borrower shall


                                      -80-



<PAGE>



receive  written  notice from Agent of any such  failure or (y) thirty (30) days
after Borrower shall become aware thereof;

                       10.6.  any judgment is rendered or judgment liens
filed  against  Borrower  or  Guarantors  for an  aggregate  amount in excess of
$500,000  outstanding  at any time not fully  covered by insurance  which within
forty-five  (45)  days  of such  rendering  or  filing  is not  either  vacated,
satisfied, stayed, bonded or discharged of record;

                       10.7.  Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver,  custodian,  trustee
or liquidator of itself or of all or a  substantial  part of its property,  (ii)
make a general  assignment  for the  benefit  of  creditors,  (iii)  commence  a
voluntary case under any state or federal  bankruptcy  laws (as now or hereafter
in effect),  (iv) be  adjudicated a bankrupt or  insolvent,  (v) file a petition
seeking to take  advantage of any other law providing for the relief of debtors,
(vi)  acquiesce  to, or fail to have  dismissed,  within  thirty (30) days,  any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;

                       10.8.  Borrower shall admit in writing its inability,
or be generally unable, to pay its debts as they become due or
cease operations of its present business;

                       10.9.  any Subsidiary (other than Receivable Financing
Corporation  and Premium  Sales  Northeast,  Inc.) of Borrower or any  Guarantor
shall  (i)  apply  for or  consent  to the  appointment  of,  or the  taking  of
possession by, a receiver,  custodian, trustee or liquidator of itself or of all
or a substantial part of its property,  (ii) admit in writing its inability,  or
be generally  unable, to pay its debts as they become due or cease operations of
its  present  business,  (iii)  make a general  assignment  for the  benefit  of
creditors,  (iv) commence a voluntary case under any state or federal bankruptcy
laws  (as  now or  hereafter  in  effect),  (v) be  adjudicated  a  bankrupt  or
insolvent,  (vi) file a  petition  seeking  to take  advantage  of any other law
providing  for the  relief  of  debtors,  (vii)  acquiesce  to,  or fail to have
dismissed,  within  thirty  (30)  days,  any  petition  filed  against it in any
involuntary  case under such bankruptcy  laws, or (viii) take any action for the
purpose of effecting any of the foregoing;

                       10.10.  An "Event of Default" under (and as defined
in) the Indenture shall have occurred and be continuing;

                       10.11.  any Lien created hereunder or provided for
hereby or under any Other Document for any reason ceases to be or is not a valid
and perfected Lien having a first priority interest except as otherwise provided
herein or in any Other Document;



                                      -81-



<PAGE>



                       10.12.  any default of the obligations of Borrower
under any other agreement to which it is a party the effect of
which shall result in a Material Adverse Effect;

                       10.13.  termination or breach of the Guaranty,
Security  Agreement,  Stock  Pledge  Agreements,  or  Collateral  Assignment  of
Security, or Equipment Collateral Assignment of Security or Inventory Collateral
Assignment of Security or if any Guarantor attempts to terminate,  challenge the
validity of, or its liability under, any such Guaranty;

                       10.14.  any Change of Control;

                       10.15.  any material provision of this Agreement
shall, for any reason, cease to be valid and binding on Borrower,
or Borrower shall so claim in writing to Agent; or

                       10.16.  an event or condition specified in Sections
7.16 or 9.14  hereof  shall  occur or exist with  respect to any Plan and,  as a
result  of such  event or  condition,  together  with all other  such  events or
conditions,  Borrower or any member of the Controlled  Group shall incur,  or in
the opinion of Agent be reasonably likely to incur, a liability to a Plan or the
PBGC (or both) which, in the reasonable judgment of Agent, would have a Material
Adverse  Effect  upon the  Collateral  or the ability of Borrower to perform its
Obligations under this Agreement.


XI.  LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

           11.1. Rights and Remedies. Upon the occurrence of an Event of Default
pursuant to Section 10.7 all  Obligations  shall be immediately  due and payable
and this  Agreement  and the  obligation  of Lenders to make  Advances  shall be
deemed  terminated;  and,  upon the  occurrence  of any of the  other  Events of
Default and at any time thereafter (such Event of Default not having  previously
been cured or waived),  upon the declaration of the Agent with the consent of or
at the direction of Required  Lenders all  Obligations  shall be immediately due
and  payable  and with the consent of or at the  direction  of Required  Lenders
Agent shall have the right to terminate  this  Agreement  and to  terminate  the
obligation  of  Lenders to make  Advances.  Upon the  occurrence  and during the
continuance of any Event of Default,  Agent shall have the right to exercise any
and all other  rights  and  remedies  provided  for  herein,  under the  Uniform
Commercial Code and at law or equity generally,  including,  without limitation,
the right to foreclose the security interests granted herein and to realize upon
any Collateral by any available  judicial procedure and/or to take possession of
and sell any or all of the Collateral with or without  judicial  process.  Agent
may following the occurrence  and during the  continuance of an Event of Default
enter any of  Borrower's  premises or other  premises  without legal process and
without incurring liability to Borrower therefor, and Agent may thereupon, or at
any time  thereafter,  in its  discretion  without  notice or  demand,  take the
Collateral and remove


                                      -82-



<PAGE>



the same to such  place as  Agent  may deem  advisable  and  Agent  may  require
Borrower to make the Collateral  available to Agent at a convenient  place. With
or without  having the  Collateral at the time or place of sale,  Agent may sell
the Collateral,  or any part thereof,  at public or private sale, at any time or
place,  in one or more  sales,  at such  price or prices,  and upon such  terms,
either for cash,  credit or future  delivery,  as Agent may elect.  Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type  customarily sold on a recognized  market,  Agent shall
give Borrower  reasonable  notification  of such sale or sales,  it being agreed
that in all events  written  notice  mailed to  Borrower  at least ten (10) days
prior to such sale or sales is reasonable notification. At any public sale Agent
or any Lender may bid for and become the purchaser, and Agent, any Lender or any
other  purchaser  at any such sale  thereafter  shall hold the  Collateral  sold
absolutely free from any claim or right of whatsoever kind, including any equity
of redemption and such right and equity are hereby expressly waived and released
by Borrower.  The proceeds  realized  from the sale of any  Collateral  shall be
applied first to the reasonable costs, expenses and attorneys' fees and expenses
incurred by Agent for collection and for  acquisition,  completion,  protection,
removal,  storage,  sale and delivery of the Collateral;  second to interest due
upon any of the Obligations;  and third to the principal of the Obligations.  If
any  deficiency  shall arise,  Borrower shall remain liable to Agent and Lenders
therefor.  Any surplus shall be returned to Borrower  unless any other Person(s)
shall be entitled to same as a matter of law.

           11.2.  Agent's  Discretion.  Agent  shall  have the right in its sole
discretion to determine  which  rights,  Liens,  security  interests or remedies
Agent may at any time pursue, relinquish,  subordinate, or modify or to take any
other action with  respect  thereto and such  determination  will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.

           11.3.  Setoff.  In  addition to any other  rights  which Agent or any
Lender  may have  under  applicable  law,  upon the  occurrence  and  during the
continuance of an Event of Default hereunder, Agent and such Lender shall have a
right to apply any of  Borrower's  property  held by Agent and such Lender or by
IBJS to reduce the Obligations.

           11.4.       Rights and Remedies not Exclusive.  The enumeration of
the foregoing rights and remedies is not intended to be exhaustive
and the exercise of any right or remedy shall not preclude the
exercise of any other right or remedies, all of which shall be
cumulative and not alternative.


XII.  WAIVERS AND JUDICIAL PROCEEDINGS.

           12.1.       Waiver of Notice.  Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest


                                      -83-



<PAGE>



and notice thereof with respect to any and all instruments, notice of acceptance
hereof,  notice of loans or advances made, credit extended,  Collateral received
or  delivered,  or any other  action  taken in  reliance  hereon,  and all other
demands and notices of any  description,  except such as are expressly  provided
for herein.

           12.2.       Delay.  No delay or omission on Agent's or any
Lender's part in exercising any right, remedy or option shall
operate as a waiver of such or any other right, remedy or option or
of any default.

           12.3.  Jury Waiver.  EACH PARTY TO THIS  AGREEMENT  HEREBY  EXPRESSLY
WAIVES  ANY  RIGHT TO TRIAL BY JURY OF ANY  CLAIM,  DEMAND,  ACTION  OR CAUSE OF
ACTION (A) ARISING  UNDER THIS  AGREEMENT OR ANY OTHER  INSTRUMENT,  DOCUMENT OR
AGREEMENT  EXECUTED  OR  DELIVERED  IN  CONNECTION  HEREWITH,  OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,  DOCUMENT OR
AGREEMENT  EXECUTED OR DELIVERED IN  CONNECTION  HEREWITH,  OR THE  TRANSACTIONS
RELATED  HERETO OR  THERETO  IN EACH CASE  WHETHER  NOW  EXISTING  OR  HEREAFTER
ARISING,  AND WHETHER  SOUNDING IN CONTRACT OR TORT OR OTHERWISE  AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND,  ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY,  AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE  CONSENTS OF THE PARTIES  HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.


XIII.  EFFECTIVE DATE AND TERMINATION.

           13.1.  Term. This Agreement,  which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of each of
Borrower,  Agent and each Lender,  shall become effective on the date hereof and
shall continue in full force and effect until the end of the initial Term unless
sooner  terminated as herein provided.  Borrower may terminate this Agreement at
any time  during the Term upon not less than  thirty  (30) days'  prior  written
notice to Agent  ("Termination  Date") upon payment in full of the  Obligations;
provided  however that Borrower pays to Agent for the ratable benefit of Lenders
an early  termination  fee in an amount equal to the Required  Percentage of the
Maximum Revolving Advance Amount.  For the purposes of this paragraph,  Required
Percentage  shall mean (a) 1% from the  Effective  Date  through  and  including
November 12, 1997, (b) 1/2% from November 13, 1997 through and including May 12,
1998 and (c) 0% at any time thereafter. Notwithstanding the foregoing, if during
the period  commencing  February  12, 1998 through and  including  May 12, 1998,
Borrower secures  replacement  financing from another  financial  institution on
terms  and  conditions  similar  to (or  more  favorable  than)  those  provided
hereunder,  but without the  necessity  of a borrowing  base or formula  advance
rate, Agent and Lenders shall waive the early termination fee,  provided,  that,
prior to such





<PAGE>



termination Borrower shall provide Agent and Lenders a good faith opportunity to
match the terms of any replacement financing.

           13.2. Termination.  The termination of the Agreement shall not affect
any of Borrower's,  Agent's or any Lender's  rights,  or any of the  Obligations
having their inception prior to the effective date of such termination,  and the
provisions  hereof shall continue to be fully  operative  until all  Obligations
have been paid in full.  The  security  interests,  Liens and rights  granted to
Agent and Lenders  hereunder and the financing  statements filed hereunder shall
continue  in full force and  effect,  notwithstanding  the  termination  of this
Agreement  or the  fact  that  Borrower's  account  may  from  time  to  time be
temporarily  in a zero or  credit  position,  until  all of the  Obligations  of
Borrower  have been paid or  performed  in full  after the  termination  of this
Agreement or Borrower has  furnished  Agent and Lenders with an  indemnification
satisfactory to Agent and Lenders with respect thereto. Upon termination of this
Agreement and payment in full of all Obligations in immediately  available funds
(or,  with respect to  Obligations  arising out of an  indemnification  claim of
Agent and/or any Lender  against  Borrower in accordance  with the terms of this
Agreement  which has been  made at such  time,  the  establishment  of  security
arrangements  satisfactory to Agent and Lenders),  at the request and expense of
Borrower,  Agent  shall  deliver  to  Borrower  (without  recourse  and  without
representation  and warranty) all Collateral then in Agent's (or its designee's)
possession and deliver to Borrower (without recourse and without  representation
and warranty)  termination  statements  with respect to the  Collateral and take
such further  actions as may be required under the Other  Documents or as may be
reasonably  requested by Borrower to fully release (i) the  Collateral  from all
Liens in favor of Agent and (ii)  Borrower and its  Subsidiaries  hereunder  and
under the Other Documents. All representations,  warranties,  covenants, waivers
and  agreements  contained  herein shall  survive  termination  hereof until all
Obligations  are repaid or performed in full,  except for those which,  by their
terms, expressly survive termination of this Agreement.


XIV.  Regarding Agent.

           14.1. Appointment. Each Lender hereby designates IBJS to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably  authorizes  Agent to take  such  action  on its  behalf  under  the
provisions of this Agreement and the Other Documents and to exercise such powers
and to  perform  such  duties  hereunder  and  thereunder  as  are  specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal  and  interest,  fees,  charges and  collections  (without
giving effect to any collection days) received  pursuant to this Agreement,  for
the ratable benefit of Lenders. Agent may perform any of its duties hereunder by
or through its agents or employees. As to any matters not expressly


                                      -85-



<PAGE>



provided for by this Agreement (including without limitation,  collection of the
Revolving Credit Note) Agent shall not be required to exercise any discretion or
take any action,  but shall be  required  to act or to refrain  from acting (and
shall be fully  protected  in so  acting or  refraining  from  acting)  upon the
instructions of the Required Lenders,  and such  instructions  shall be binding;
provided,  however,  that Agent shall not be  required to take any action  which
exposes  Agent to liability or which is contrary to the  Documents or applicable
law unless Agent is furnished with an indemnification reasonably satisfactory to
Agent with respect thereto.

           14.2.   Nature   of   Duties.   Agent   shall   have  no   duties  or
responsibilities  except those  expressly set forth in this  Agreement.  Neither
Agent nor any of its  officers,  directors,  employees  or  agents  shall be (i)
liable  for any  action  taken  or  omitted  by them  as  such  hereunder  or in
connection  herewith,  unless  caused by their  gross  negligence  (but not mere
negligence)  or willful  misconduct,  or (ii)  responsible  in any manner to any
Lender for any  recitals,  statements,  representations  or  warranties  made by
Borrower or any officer thereof  contained in this  Agreement,  or in any of the
Other  Documents or in any  certificate,  report,  statement  or Other  Document
referred  to or provided  for in, or  received  by Agent under or in  connection
with, this Agreement or any of the Other  Documents or for the value,  validity,
effectiveness,  genuineness, enforceability or sufficiency of this Agreement, or
any of the Other  Documents  or for any  failure  of  Borrower  to  perform  its
obligations hereunder.  Agent shall not be under any obligation to any Lender to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements  contained in, or conditions  of, this  Agreement or any of the Other
Documents,  or to inspect  the  properties,  books or records of  Borrower.  The
duties of Agent shall be mechanical and  administrative  in nature;  Agent shall
not have by reason of this Agreement a fiduciary  relationship in respect of any
Lender; and nothing in this Agreement,  expressed or implied,  is intended to or
shall be so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.

           14.3. Lack of Reliance on Agent and  Resignation.  Independently  and
without reliance upon Agent or any other Lender,  each Lender has made and shall
continue  to  make  (i)  its  own  independent  investigation  of the  financial
condition  and  affairs  of  Borrower  in  connection  with the  making  and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection  herewith,  and (ii) its own appraisal of the  creditworthiness of
Borrower.  Agent shall have no duty or responsibility,  either initially or on a
continuing  basis,  to provide any Lender  with any credit or other  information
with respect  thereto,  whether coming into its possession  before making of the
Advances or at any time or times thereafter except as shall be provided by or on
behalf of Borrower pursuant to the terms hereof.  Agent shall not be responsible
to any Lender for any  recitals,  statements,  information,  representations  or
warranties


                                      -86-



<PAGE>



herein or in any agreement,  document,  certificate or a statement  delivered in
connection  with or for the  execution,  effectiveness,  genuineness,  validity,
enforceability, collectability or sufficiency of this Agreement or the Revolving
Credit Note, or of the financial  condition of Borrower,  or be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Revolving Credit Note, the Other
Documents or the financial condition of Borrower,  or the existence of any Event
of Default.

           Agent may resign on sixty (60) days'  written  notice to Borrower and
each of the  Lenders  and upon  such  resignation,  the  Required  Lenders  will
promptly  designate a  successor  Agent  reasonably  satisfactory  to  Borrower.
Without the consent of any Lender,  the Borrower or any other Person,  Agent may
appoint IBJ Schroder Business Credit Corporation as successor Agent.

           Any such  successor  Agent shall  succeed to the  rights,  powers and
duties of Agent,  and the term "Agent" shall mean such successor agent effective
upon its appointment,  and the former Agent's rights, powers and duties as Agent
shall be  terminated,  without  any other or further  act or deed on the part of
such former Agent. After any Agent's  resignation or removal hereunder as Agent,
the  provisions of this Article XIV shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

           14.4.  Certain Rights of Agent.  If Agent shall request  instructions
from  Lenders with  respect to any act or action  (including  failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain  from such act or taking such  action  unless and until Agent shall have
received  instructions  from the  Required  Lenders;  and Agent  shall not incur
liability  to any  Person by  reason  of so  refraining.  Without  limiting  the
foregoing,  Lenders shall not have any right of action whatsoever  against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

           14.5.  Reliance.  Agent shall be entitled to rely, and shall be fully
protected in relying,  upon any note, writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message,  cablegram,  order or other
document or  telephone  message  believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and its duties hereunder, upon
advice of counsel selected by it. Agent may employ agents and  attorneys-in-fact
and shall not be liable for the  default  or  misconduct  of any such  agents or
attorneys-in-fact selected by Agent with reasonable care.

           14.6.       Notice of Default.  Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default
hereunder or under the Other Documents, unless Agent has received


                                      -87-



<PAGE>



notice  from a Lender  or  Borrower  referring  to this  Agreement  or the Other
Documents,  describing  such Event of Default and stating  that such notice is a
"notice of default". In the event that Agent receives such a notice, Agent shall
give  notice  thereof to Lenders.  Agent shall take such action with  respect to
such Event of Default as shall be reasonably  directed by the Required  Lenders;
provided,  that,  unless and until Agent shall have  received  such  directions,
Agent may (but shall not be  obligated  to) take such  action,  or refrain  from
taking  such  action,  with  respect  to such  Event of Default as it shall deem
advisable in the best interests of Lenders.

           14.7.  Indemnification.  To the extent  Agent is not  reimbursed  and
indemnified  by Borrower,  each Lender will  reimburse  and  indemnify  Agent in
proportion  to its  respective  portion of the Advances  (or, if no Advances are
outstanding,  according to its Commitment Percentage),  from and against any and
all liabilities,  obligations,  losses, damages, penalties,  actions, judgments,
suits,  costs,  expenses or disbursements of any kind or nature whatsoever which
may be imposed on,  incurred  by or asserted  against  Agent in  performing  its
duties hereunder,  or in any way relating to or arising out of this Agreement or
any Other Document;  provided that,  Lenders shall not be liable for any portion
of  such  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits, costs, expenses or disbursements resulting from Agent's gross
negligence (but not mere negligence) or willful misconduct.

           14.8.  Agent  in  its  Individual  Capacity.   With  respect  to  the
obligation of Agent to lend under this Agreement,  the Advances made by it shall
have the same rights and powers  hereunder as any other Lender and as if it were
not performing the duties as Agent  specified  herein;  and the term "Lender" or
any similar term shall, unless the context clearly otherwise indicates,  include
Agent in its individual capacity as a Lender.  Agent may engage in business with
Borrower  as if it were not  performing  the duties  specified  herein,  and may
accept fees and other  consideration  from  Borrower for services in  connection
with this  Agreement  or  otherwise  without  having to account  for the same to
Lenders.

           14.9.       Delivery of Documents.  To the extent Agent receives
documents and information from or on behalf of Borrower pursuant to
the terms of this Agreement, Agent will promptly furnish such
documents and information to Lenders.

           14.10.  Borrower'  Undertaking  to Agent.  Without  prejudice  to its
obligations  to the  Lenders  under  the  other  provisions  of this  Agreement,
Borrower  hereby  undertakes  with  Agent to pay to Agent  from  time to time on
demand all  amounts  from time to time due and  payable by it for the account of
Agent or the Lenders or any of them pursuant to this Agreement to the extent not
already paid.  Any such payment made to Agent  pursuant to any such demand shall
pro tanto satisfy Borrower's obligations to make payments for the account of the
Lenders or the relevant one or more of them pursuant to this Agreement.


                                      -88-



<PAGE>




           14.11.  Sharing of Setoffs.  Each of the Lenders  agrees that (i) all
Obligations  of  Borrower  to each  Lender  under this  Agreement  and under the
Revolving  Credit Note rank pari passu in all respects with each other, and (ii)
if any Lender shall,  through the exercise of a right of banker's lien,  setoff,
counterclaim or otherwise,  obtain payment  (whether from Borrower or otherwise)
with respect to principal of or interest on Revolving Advances, which results in
its receiving more than its pro rata share of the Revolving  Advances,  then (A)
such  Lender  shall be deemed to have  simultaneously  purchased  from the other
Lenders a share in their Revolving  Advances so that the amount of the Revolving
Advances of all Lenders shall be equal to their  Commitment  Percentage  and (B)
such other  adjustments shall be made from time to time as shall be equitable to
insure that all Lenders  share such payments  ratably.  If all or any portion of
any such excess  payment is thereafter  recovered from the Lender which received
the same,  the purchase  provided in this Section  14.11 shall be deemed to have
been  rescinded  to the  extent of such  recovery,  without  interest.  Borrower
expressly consents to the foregoing  arrangements and agrees that each Lender so
purchasing  a portion of another  Lender's  Revolving  Advances may exercise all
rights of payment (including without limitation,  all rights of setoff, banker's
lien or  counterclaim)  with  respect to such portion as fully as if such Lender
were the direct holder of such portion.

           14.12.  Applicability  of Section to  Borrower.  Except as  otherwise
provided in this Article XIV, the rights and  obligations of Borrower under this
Agreement  shall not be affected  by any  provision  otherwise  included in this
Article XIV.  Borrower shall be permitted to rely on  communications  from Agent
which it  reasonably  believes  are made on behalf of Agent  and,  if  specified
therein,  the Lenders or the Required Lenders, and except as otherwise set forth
specifically  herein,  all notices and payments to be made by Borrower hereunder
shall be made to Agent.  Further,  if any Lender shall be in default  hereunder,
such default shall not affect the rights and  obligations of Borrower  hereunder
or the rights and obligations of any other Lender hereunder.


XIV.  MISCELLANEOUS.

           15.1.  Governing  Law.  This  Agreement  shall  be  governed  by  and
construed  in  accordance  with the laws of the  State  of New York  applied  to
contracts  to be  performed  wholly  within the State of New York.  Any judicial
proceeding   brought  by  or  against  Borrower  with  respect  to  any  of  the
Obligations, this Agreement or any related agreement may be brought in any court
of competent  jurisdiction  in the State of New York,  United States of America,
and, by execution and delivery of this  Agreement,  Borrower  accepts for itself
and in  connection  with its  properties,  generally  and  unconditionally,  the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any  judgment  rendered  thereby  in  connection  with this  Agreement.
Nothing  herein shall affect the right to serve process in any manner  permitted
by law or shall limit the


                                      -89-



<PAGE>



right of Lenders to bring  proceedings in the courts of any other  jurisdiction.
Borrower waives any objection to jurisdiction and venue of any action instituted
hereunder in the aforesaid courts and shall not assert any defense based on lack
of  jurisdiction  or venue or based  upon  forum non  conveniens.  Any  judicial
proceeding by Borrower against Lenders  involving,  directly or indirectly,  any
matter or claim in any way arising  out of,  related to or  connected  with this
Agreement or any related agreement,  shall be brought only in a federal or state
court located in the City of New York, State of New York.

           15.2.  Entire  Understanding.  (a) This  Agreement  and the documents
executed   concurrently   herewith  contain  the  entire  understanding  between
Borrower,  Agent  and each  Lender  and  supersedes  all  prior  agreements  and
understandings,  if any,  relating to the subject matter  hereof.  Any promises,
representations,  warranties or guarantees not herein  contained and hereinafter
made shall have no force and effect  unless in  writing,  signed by  Borrower's,
Agent's and each Lender's  respective  officers.  Neither this Agreement nor any
portion  or  provisions  hereof  may  be  changed,  modified,  amended,  waived,
supplemented,  discharged,  cancelled or  terminated  orally or by any course of
dealing,  or in any manner other than by an  agreement  in writing,  executed in
accordance with Section 15.2(b) hereof.  Borrower  acknowledges that it has been
advised by counsel in connection  with the  execution of this  Agreement and the
Other  Documents  and is not relying  upon oral  representations  or  statements
inconsistent with the terms and provisions of this Agreement.

                       (b)      The Required Lenders, Agent with the consent in
writing of the Required Lenders,  and Borrower may, subject to the provisions of
this  Section  15.2  (b),  from time to time  enter  into  written  supplemental
agreements to this Agreement,  the Revolving  Credit Note or the Other Documents
executed by Borrower,  for the purpose of adding or deleting any  provisions  or
otherwise  changing,  varying or  waiving  in any manner the rights of  Lenders,
Agent or Borrower  thereunder or the conditions,  provisions or terms thereof or
waiving any Event of Default  thereunder,  but only to the extent  specified  in
such written agreements;  provided, however, that no such supplemental agreement
shall, without the consent of all Lenders:

                       (i)     increase or decrease the amount of the Commitment
Percentage of any Lender,  it being understood and agreed that this Section 15.2
(b)(i)  does not (and shall not be deemed to)  require the consent of any Lender
(other  than a  transferor  Lender or  Purchasing  Lender) to an  increase  or a
decrease in the  Commitment  Percentage  of a transferor  Lender or a Purchasing
Lender in connection with an assignment effected in accordance with Section 15.3
(d) hereof.

                       (ii)    change the maturity of the Revolving Credit Note,
or increase the Maximum Revolving Advance Amount, the Maximum
Equipment Value Advance Amount, the Maximum Inventory Value Advance


                                      -90-



<PAGE>



Amount or the sublimit with respect to Letters of Credit,  or reduce the rate or
extend the time of payment of  interest  or of any fee  payable by  Borrower  to
Agent for the ratable benefit of Lenders pursuant to this Agreement.

                       (iii)           alter the definition of the term Required
Lenders or the eligibility  standards  applied by Agent to the  determination of
which Receivables are Eligible Receivables.

                       (iv)       alter, amend or modify this Section 15.2(b) or
release Collateral having a fair market value of in excess of $100,000, it being
understood and agreed that this Section  15.2(b) (iv) does not (and shall not be
deemed  to)  require  the  consent  of any  Lender  (or all of the  Lenders)  in
connection with a sale, transfer, conveyance, assignment or other disposition of
any of Borrower's  properties or assets (or any of the Collateral) to the extent
any  such  sale,  transfer,  conveyance,  assignment  or  other  disposition  is
authorized or permitted by the terms of this Agreement or any Other Document.

                       (v)      change the rights and duties of Agent.

Any such  supplemental  agreement shall apply equally to each of the Lenders and
shall be binding upon Borrower,  Lenders and Agent and all future holders of the
Revolving Credit Note and all Participants. In the case of any waiver, Borrower,
Agent and Lenders shall be restored to their former  positions  and rights,  and
any Event of Default waived shall be deemed to be cured and not continuing,  but
no waiver of a specific Event of Default shall extend to any subsequent Event of
Default (whether or not the subsequent Event of Default is the same as the Event
of Default which was waived), or impair any right consequent thereon.

           15.3.       Successors and Assigns; Participations; New Lenders.

                       (a)     This Agreement shall be binding upon and inure to
the benefit of Borrower, Agent, each Lender, all future holders of the Revolving
Credit Note and their  respective  successors and assigns,  except that Borrower
may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Agent and each Lender.

                       (b)      Subject to Section 15.3(d), and subject to
Borrower's consent, which consent shall not be unreasonably withheld, any Lender
may sell,  assign or transfer all or any part of its rights under this Agreement
and the Revolving Credit Note and all Other Documents, instruments and documents
provided  Borrower is given notice of such sale as soon as  practicable  and the
transferee  agrees to perform the obligations of the transferor.  In addition to
the foregoing,  any Lender may grant one or more participations in its interests
in the Advances in a minimum amount equal to $3,000,000 or in integral multiples
of $l,000,000 in excess thereof;  provided,  however, that (a) such Lender shall
remain a "Lender" for all purposes under this Agreement, (b) any


                                      -91-



<PAGE>



such grant of a  participation  will be made in compliance  with all  applicable
state or federal laws, rules and regulations,  and (c) no Lender shall grant any
participation  under  which the  participant  shall have  rights to approve  any
amendment to or waiver of this Agreement or the Other  Documents,  except to the
extent such amendment or waiver would: (i) increase the amount of the Commitment
Percentage of any Lender;  (ii) change the maturity of the Revolving Credit Note
or the  principal  amount  thereof,  or reduce  the rate or  extend  the time of
payment  of  interest  thereon  or of any fee  payable  by  Borrower  to Lenders
pursuant to this  Agreement;  (iii) alter the  definition  of the term  Required
Lenders;  (iv) alter,  amend or modify this Section  15.2(b);  or (v) change the
rights and duties of Agent.  In the case of any  participation,  the participant
shall not have any rights  under this  Agreement  or any of the Other  Documents
(the participant's right against such Lender in respect of such participation to
be those set forth in the  participation  or other  agreement  executed  by such
Lender and the  participant  related  thereto)  and all  amounts  payable to any
Lender  hereunder  (including,  without  limitation,  Sections  3.2, 3.10 or 3.9
hereof) shall be  determined as if such Lender had not sold such  participation.
In no event shall any  participant  grant a participation  in its  participation
interest in the Advances without the prior written consent of Agent.

                       (c)      In connection with any assignments,
participations or offers thereof pursuant to this Section 15.3 each Lender shall
be entitled to provide to any assignee or participant or prospective assignee or
participant such  information  pertaining to Borrower or any of its Subsidiaries
as  such  Lender  may  deem  appropriate  or such  assignee  or  participant  or
prospective assignee or participant may request;  provided,  however,  that such
assignee or participant or prospective  assignee or participant  shall agree (i)
to  treat  in  confidence  all  such  information,  (ii)  not to  disclose  such
information  to any third party,  and (iii) not to make use of such  information
for purposes of  transactions  other than  contemplated  by such  assignment  or
participation.

                       (d)      Subject to Borrower's consent, which consent
shall not be unreasonably  withheld, any Lender may sell, assign or transfer all
or any part of its rights under this Agreement and the Other Documents to one or
more additional banks or financial institutions and one or more additional banks
or  financial  institutions  may  commit  to  make  Advances  hereunder  (each a
"Purchasing Lender"),  in minimum amounts of not less than $3,000,000,  pursuant
to a  Commitment  Transfer  Supplement,  executed by a  Purchasing  Lender,  the
transferor  Lender,  and Agent and delivered to Agent for  recording.  Upon such
execution,  delivery,  acceptance  and  recording,  from and after the  transfer
effective date determined pursuant to such Commitment Transfer  Supplement,  (i)
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such  Commitment  Transfer  Supplement,  have the rights and obligations of a
Lender thereunder with a Commitment  Percentage as set forth therein;  provided,
however, that unless Borrower consents,  IBJS shall maintain at all times during
the Term


                                      -92-



<PAGE>



a  Commitment  Percentage  in  excess  of 50%,  and (ii) the  transferor  Lender
thereunder shall, to the extent provided in such Commitment Transfer Supplement,
be released from its obligations under this Agreement,  the Commitment  Transfer
Supplement  creating a  novation  for that  purpose.  Such  Commitment  Transfer
Supplement  shall be deemed to amend this  Agreement to the extent,  and only to
the extent,  necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment  Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents.  Borrower hereby
consents to the addition of such Purchasing Lender and the resulting  adjustment
of the  Commitment  Percentages  arising  from the  purchase by such  Purchasing
Lender of all or a portion  of the  rights and  obligations  of such  transferor
Lender  under  this  Agreement  and the Other  Documents.  Without in any manner
limiting the foregoing,  the Borrower and each Lender  specifically  consents to
the sale,  assignment  and/or  transfer by IBJS to IBJ Schroder  Business Credit
Corporation  of  all or any  part  of its  rights  and  obligations  under  this
Agreement and the Other Documents in its capacity as Agent and as Lender.

                       (e)      Agent shall maintain at its address a copy of
each  Commitment  Transfer  Supplement  delivered  to  it  and a  register  (the
"Register") for the recordation of the names and addresses of the Advances owing
to each  Lender  from  time to  time.  The  entries  in the  Register  shall  be
conclusive,  in the absence of manifest error,  and Borrower,  Agent and Lenders
may treat each Person whose name is recorded in the Register as the owner of the
Advance recorded therein for the purposes of this Agreement.  The Register shall
be available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a fee in the
amount of $3000 payable by the applicable  Purchasing  Lender upon the effective
date of each transfer or assignment to such Purchasing Lender.

                       (f)      At Agent's or Lenders' expense, Borrower shall
execute  and  deliver  to  Agent,  upon  request,  such  further  documents  and
agreements  and do such further acts and things as Agent may request in order to
carry out the purposes, terms or conditions of this Section 15.3.

           15.4.  Application  of Payments.  Agent shall have the continuing and
exclusive  right to apply or reverse  and  re-apply  any payment and any and all
proceeds of Collateral to any portion of the  Obligations in accordance with the
terms of this Agreement. To the extent that Borrower makes a payment or Agent or
any Lender  receives any payment or proceeds of the  Collateral  for  Borrower's
benefit,  which are  subsequently  invalidated,  declared  to be  fraudulent  or
preferential,  set  aside or  required  to be  repaid  to a  trustee,  debtor in
possession,  receiver,  custodian or any other party under any  bankruptcy  law,
common law or equitable  cause,  then, to such extent,  the  Obligations or part
thereof intended to


                                      -93-



<PAGE>



be  satisfied  shall be revived and  continue as if such payment or proceeds had
not been received by Agent or such Lender.

           15.5. Indemnity.  Borrower shall indemnify Agent and each Lender from
and against any and all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses and  disbursements of any kind or
nature  whatsoever   (including,   without   limitation,   reasonable  fees  and
disbursements  of  counsel)  which may be imposed on,  incurred  by, or asserted
against  Agent or any  Lender in any  litigation,  proceeding  or  investigation
instituted or conducted by any  governmental  agency or  instrumentality  or any
other Person with respect to any aspect of, or any transaction  contemplated by,
or referred to in, or any matter related to, this Agreement,  whether or not the
Agent or any Lender is a party  thereto,  except to the  extent  that any of the
foregoing arises out of the gross negligence or willful  misconduct of the party
being indemnified.

           15.6.  Notice.  Any  notice  or  request  hereunder  may be  given to
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of  change  of  address  under  this  Section.  Any  notice or  request
hereunder shall be in writing and given by (a) hand delivery,  (b) registered or
certified mail, return receipt  requested,  (c) telex or telegram,  subsequently
confirmed by registered or certified  mail, or (d) telefax to the number set out
below (or such other number as may hereafter be specified in a notice designated
as a notice  of  change  of  address)  with  telephone  communication  to a duly
authorized  officer of the  recipient  confirming  its receipt and  subsequently
confirmed by registered or certified mail or recognized  overnight courier.  Any
notice or other  communication  required or permitted pursuant to this Agreement
shall be deemed  given on the earliest of (a) when  personally  delivered to any
officer  of the  party to whom it is  addressed,  (b) on the  earlier  of actual
receipt  thereof or five (5) days  following  posting  thereof by  certified  or
registered mail,  postage prepaid,  or (c) upon actual receipt thereof when sent
by a recognized  overnight  delivery  service or (d) upon actual receipt thereof
when  sent  by  telecopier  to  the  number  set  forth  below  with   telephone
communication  confirming  receipt in each case  addressed  to each party at its
address  set forth  below or at such  other  address  as has been  furnished  in
writing by a party to the other by like notice:

           (A) If IBJS (either as Agent or a Lender), at:

                                IBJ Schroder Bank & Trust
                                   Company
                                One State Street
                                New York, New York 10004
                                Attention:  Alfred J. Scoyni
                                Telephone:   (212) 858-2020
                                Telecopier:  (212) 858-2151

               with a copy to:  Hahn & Hessen


                                      -94-



<PAGE>



                                 350 Fifth Avenue
                                 New York, New York 10118
                                 Attention: Steven J. Seif
                                 Telephone:   (212) 736-1000
                                 Telecopier:  (212) 594-7167

           (B) If to any Lender other than Agent, as specified in the applicable
Commitment Transfer Supplement (or a schedule thereto).

           (C)  If to Borrower, at:  Allstate Financial Corporation
                                     2700 South Quincy Street
                                     Suite 540
                                     Arlington, Virginia 22206
                                     Attention: Craig Fishman -
                                            President
                                     Telephone: (703) 931-2274
                                     Telecopier: (703) 931-2034

                       with a copy to its General Counsel at the same
address, telephone and telecopier numbers.

           15.7.  Severability.  If any part of this  Agreement  is contrary to,
prohibited  by, or deemed invalid under  applicable  laws or  regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

           15.8.  Expenses.  All  reasonable,  out-of-pocket  costs and expenses
including,  without  limitation,  reasonable  attorneys' fees and  disbursements
incurred  by Agent,  Agent on behalf of Lenders  and  Lenders (a) in all efforts
made  to  enforce  payment  of  any  Obligation  or  effect  collection  of  any
Collateral,   or  (b)  in  connection  with  the  entering  into,  modification,
amendment,  administration  and enforcement of this Agreement or any consents or
waivers hereunder and all related agreements,  documents and instruments, or (c)
following the occurrence and during the  continuance of an Event of Default,  in
instituting,  maintaining,  preserving,  enforcing  and  foreclosing  on Agent's
security interest in or Lien on any of the Collateral,  whether through judicial
proceedings  or  otherwise,  or (d) in defending or  prosecuting  any actions or
proceedings  arising out of or relating to Agent's or any Lender's  transactions
hereunder with Borrower,  or (e) in connection with any advice given to Agent or
any Lender with respect to its rights and  obligations  under this Agreement and
all Other Documents, may be charged to Borrower's account as a Revolving Advance
and  shall  be  part  of  the  Obligations;   provided,   that,  the  reasonable
out-of-pocket  fees and  expenses  of  counsel to Agent in  connection  with the
initial  closing  of  the  loans  hereunder  shall  not  exceed  $50,000  in the
aggregate.

           15.9.       Injunctive Relief.  Borrower recognizes that, in the
event Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, any remedy at law


                                      -95-



<PAGE>



may prove to be inadequate  relief to Lenders;  therefore,  each Lender, if such
Lender so requests,  shall be entitled to  temporary  and  permanent  injunctive
relief in any such case without the necessity of proving actual damages.

           15.10.      Consequential Damages.  Neither Lenders nor any agent
r attorney for any of them shall be liable to Borrower for
consequential damages arising from any breach of contract, tort or
other wrong relating to the establishment, administration or
collection of the Obligations.

           15.11.       Captions.  The captions at various places in this
Agreement are intended for convenience only and do not constitute
and shall not be interpreted as part of this Agreement.

           15.12.  Counterparts.  This Agreement may be executed in one
or more counterparts, each of which taken together shall constitute
one and the same instrument.



                                      -96-



<PAGE>




           15.13. Construction.  The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any  ambiguities  are to be resolved  against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

           Each of the parties has signed this  Agreement  as of the 13th day of
May 1997.



                                 ALLSTATE FINANCIAL CORPORATION


                                 --------------------------------
           Name: Craig Fishman
            Title: President

                                 IBJ SCHRODER BANK & TRUST COMPANY,
         as Lender and as Agent


                                 -------------------------------
                                 Name:  Alfred J. Scoyni
          Title: Vice President

                                 Commitment Percentage:  60%

                                 NATIONAL BANK OF CANADA, as Lender


                                 -------------------------------
                                 Name:
                                 Title:

                                 -------------------------------
                                 Name:
                                 Title:

                                 Commitment Percentage:  40%


                                      -97-



<PAGE>



STATE OF NEW YORK                 )
                                  ) ss.
COUNTY OF NEW YORK                )


           On  this  ______  day  of  May,  1997,   before  me  personally  came
_____________, to me known, who, being by me duly sworn, did depose and say that
he is the  ______________  of ALLSTATE  FINANCIAL  CORPORATION,  the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the board of directors of said corporation.

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


STATE OF NEW YORK                 )
                                  ) ss.
COUNTY OF NEW YORK                )


           On  this  _____  day  of  May,  1997,   before  me  personally   came
_________________,  to me known, who, being by me duly sworn, did depose and say
that  he is  the  ______________  of IBJ  SCHRODER  BANK &  TRUST  COMPANY,  the
corporation described in and which executed the foregoing instrument and that he
was authorized to sign his name thereto on behalf of said corporation.


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




                                      -98-



<PAGE>





                                Table of Contents



I.         DEFINITIONS......................................................  1
           -----------
           1.1.          Accounting Terms...................................  1
                         ----------------
           1.2.          General Terms......................................  1
                         -------------
           1.3.          Uniform Commercial Code Terms...................... 22
                         -----------------------------
           1.4.          Certain Matters of Construction.................... 22
                         -------------------------------

II.        ADVANCES, PAYMENTS............................................... 23
           ------------------
           2.1.          (a)      Revolving Advances........................ 23
                                  ------------------
                         (b)      Discretionary Rights...................... 24
                                  --------------------
           2.2.          ................................................... 24
           2.3.          Disbursement of Revolving Advance Proceeds......... 27
                         ------------------------------------------
           2.4.          ................................................... 27
           2.5.          ................................................... 27
           2.6.          ................................................... 28
           2.7.          Statement of Account............................... 28
                         --------------------
           2.8.          Letters of Credit.................................. 28
                         -----------------
           2.9.          Issuance of Letters of Credit...................... 29
                         -----------------------------
           2.10.         Requirements For Issuance of Letters of Credit..... 29
                         ----------------------------------------------
           2.11.         Additional Payments................................ 31
                         -------------------
           2.12.         Manner of Borrowing and Repayment of Advances...... 31
                         ---------------------------------------------
           2.13.         Use of Proceeds.................................... 36
                         ---------------

III.  INTEREST AND FEES..................................................... 36
      -----------------
           3.1.          Interest........................................... 36
                         --------
           3.2.          Letter of Credit Fees.............................. 36
                         ---------------------
           3.3.          Closing Fee........................................ 37
                         -----------
           3.4.          Unused Line Fee.................................... 37
                         ---------------
           3.5.          Collateral Evaluation Fee.......................... 37
                         -------------------------
           3.6.          Field Examinations................................. 37
                         ------------------
           3.7.          Computation of Interest and Fees................... 37
                         --------------------------------
           3.8.          Maximum Charges.................................... 38
                         ---------------
           3.9.          Increased Costs.................................... 38
                         ---------------
           3.10.         Capital Adequacy................................... 39
                         ----------------
           3.11.  Survival.................................................. 39
                  --------


IV.  COLLATERAL:  GENERAL TERMS............................................. 40
     --------------------------
           4.1.          Security Interest in the Collateral................ 40
                         -----------------------------------
           4.2.          Perfection of Security Interest.................... 40
                         -------------------------------
           4.3.          Disposition of Collateral.......................... 41
                         -------------------------
           4.4.          Preservation of Collateral......................... 41
                         --------------------------
           4.5.          Ownership of Collateral............................ 42
                         -----------------------
           4.6.          Defense of Agent's and Lender's Interests.......... 42
                         -----------------------------------------
           4.7.          Books and Records.................................. 43
                         -----------------
           4.8.          Financial Disclosure............................... 43
                         --------------------
           4.9.          Compliance with Laws............................... 43
                         --------------------
           4.10.         Inspection of Premises............................. 43
                         ----------------------
           4.12.         Failure to Pay Insurance........................... 44
                         ------------------------


                                       -i-



<PAGE>



           4.13.         Payment of Taxes.................................... 44
                         ----------------
           4.14.         Payment of Leasehold Obligations.................... 45
                         --------------------------------
           4.15.         Receivables......................................... 45
                         -----------
                         (a)      Nature of Receivables...................... 45
                                  ---------------------
                         (b)      Solvency of Account Debtor................. 45
                                  --------------------------
                         (c)      Locations of Borrower...................... 46
                                  ---------------------
                         (d)      Collection of Receivables.................. 46
                                  -------------------------
                         (e)      Notification of Assignment of Receivables.. 46
                                  -----------------------------------------
                         (f)      Power of Agent to Act on Borrower's Behalf. 46
                                  ------------------------------------------
                         (g)      No Liability............................... 49
                                  ------------
           4.16.         Cash Management Systems............................. 50
                         -----------------------
           4.17.         Inventory........................................... 51
                         ---------
           4.18.         Maintenance of Equipment............................ 51
                         ------------------------
           4.19.         Exculpation of Liability............................ 52
                         ------------------------
           4.20.         Environmental Matters............................... 52
                         ---------------------

V.  REPRESENTATIONS AND WARRANTIES........................................... 54
    ------------------------------
           5.1.          Authority........................................... 54
                         ---------
           5.2.          Formation and Qualification......................... 55
                         ---------------------------
           5.3.          Survival of Representations and Warranties.......... 55
                         ------------------------------------------
           5.4.          Tax Returns......................................... 55
                         -----------
           5.5.          Financial Statements................................ 55
                         --------------------
           5.6.          Corporate Name...................................... 56
                         --------------
           5.7.          O.S.H.A............................................. 56
                         --------
                         5.8.     Solvency; No Litigation, Violation, Indebte
                         ness or Default..................................... 57
                         ---------------
           5.9.          Patents, Trademarks, Copyrights and Licenses........ 58
                         --------------------------------------------
           5.10.         Licenses and Permits................................ 58
                         --------------------
           5.11.         Default of Indebtedness............................. 59
                         -----------------------
           5.12.         No Default.......................................... 59
                         ----------
           5.13.         No Burdensome Restrictions.......................... 59
                         --------------------------
           5.14.         No Labor Disputes................................... 59
                         -----------------
           5.15.         Margin Regulations.................................. 59
                         ------------------
           5.16.         Investment Company Act.............................. 59
                         ----------------------
           5.17.         Disclosure.......................................... 59
                         ----------
           5.18.         Swaps............................................... 60
                         -----
           5.19.         Conflicting Agreements.............................. 60
                         ----------------------
           5.20.         Application of Certain Laws and Regulations......... 60
                         -------------------------------------------
           5.21.         Property of Borrower................................ 60
                         --------------------
           5.22.         Other Ventures...................................... 60
                         --------------
                         .................................................... 60

VI.  AFFIRMATIVE COVENANTS................................................... 60
           6.1.          Payment of Fees..................................... 60
                         ---------------
           6.2.          Conduct of Business and Maintenance of Existence
                         and Assets.......................................... 60
                         ----------
           6.3.          Violations.......................................... 61
                         ----------
           6.4.          Government Receivables.............................. 61
                         ----------------------
           6.5.          Execution of Supplemental Instruments............... 61
                         -------------------------------------
           6.6.          Payment of Indebtedness............................. 62
                         -----------------------
           6.7.          Standards of Financial Statements................... 62
                         ---------------------------------
           6.8.          Credit Standards.................................... 62
                         ----------------
           6.9.          Insurance........................................... 62
                         ---------
           6.10.         Filing of Financing Statements...................... 63
                         ------------------------------


                                      -ii-



<PAGE>




VII.  NEGATIVE COVENANTS..................................................... 63
           7.1.          Merger, Consolidation, Acquisition and Sale of
                         Assets.............................................. 63
                         ------
           7.2.          Creation of Liens................................... 64
                         -----------------
           7.3.          Guaranties.......................................... 64
                         ----------
           7.4.          Investments......................................... 65
                         -----------
           7.5.          Loans............................................... 65
                         -----
           7.6.          Capital Expenditures................................ 66
                         --------------------
           7.7.          Restricted Payments................................. 66
                         -------------------
           7.8.          Indebtedness........................................ 66
                         ------------
           7.9.          Nature of Business.................................. 67
                         ------------------
           7.10.         Transactions with Affiliates........................ 67
                         ----------------------------
           7.11.         Leases.............................................. 68
                         ------
           7.12.         Subsidiaries........................................ 68
                         ------------
           7.13.         Fiscal Year and Accounting Changes.................. 69
                         ----------------------------------
           7.14.         Intentionally Omitted............................... 69
                         ---------------------
           7.15.         Amendment of Articles of Incorporation, By-Laws..... 69
                         -----------------------------------------------
           7.16.         Compliance with ERISA............................... 69
                         ---------------------
           7.17.         Prepayment of Indebtedness.......................... 70
                         --------------------------
                         .................................................... 70
           7.18.         Pledge of Credit.................................... 70
                         ----------------

VIII.  CONDITIONS PRECEDENT.................................................. 71
       --------------------
           8.1.          Conditions to Initial Advances...................... 71
                         ------------------------------
                         (a)      Revolving Credit Note...................... 71
                                  ---------------------
                         (b)      Filings, Registrations and Recordings...... 71
                                  -------------------------------------
                         (c)      Corporate Proceedings of Borrower.......... 72
                                  ---------------------------------
                         (d)      Incumbency Certificates of Borrower........ 72
                                  -----------------------------------
                         (e)      Certificates............................... 72
                                  ------------
                         (f)      Good Standing Certificates................. 72
                                  --------------------------
                         (g)      Legal Opinion.............................. 72
                                  -------------
                         (h)      No Litigation.............................. 72
                                  -------------
                         (i)      Financial Condition Certificate............ 73
                                  -------------------------------
                         (j)      Collateral Examination..................... 73
                                  ----------------------
                         (k)      Fees....................................... 73
                                  ----
                         (l)      Insurance.................................. 73
                                  ---------
                         (m)      Leasehold Agreements....................... 73
                                  --------------------
                         (n)      Reaffirmation of Guaranty, Stock Pledge
                                  ---------------------------------------
                                  Agreements, etc............................ 73
                         (o)      Payment Instructions; Borrowing Base
                                  Certificate................................ 73
                                  -----------
                         (p)      Lockbox Accounts........................... 74
                                  ----------------
                         (q)      Consents................................... 74
                                  --------
                         (r)      No Adverse Material Change................. 74
                                  --------------------------
                         (s)      Undrawn Availability....................... 74
                                  --------------------
                         (t)      Contract Review............................ 74
                                  ---------------
                         (u)      Closing Certificate........................ 74
                                  -------------------
                         (v)      Representations and Warranties............. 74
                                  ------------------------------
                         (w)      Other...................................... 74
                                  -----
           8.2.          Conditions to Each Advance.......................... 74
                         --------------------------
                         (a)      Representations and Warranties............. 75
                                  ------------------------------
                         (b)      No Default................................. 75
                                  ----------
                         (c)      Maximum Advances........................... 75
                                  ----------------



                                      -iii-



<PAGE>



IX.  INFORMATION AS TO BORROWER.............................................. 75
     --------------------------
           9.1.          Disclosure of Material Matters...................... 75
                         ------------------------------
           9.2.          Schedules; Borrowing Base Certificate............... 75
                         -------------------------------------
           9.3.          Litigation.......................................... 76
                         ----------
           9.4.          Occurrence of Defaults, etc......................... 76
                         ---------------------------
           9.5.          Intentionally Omitted............................... 77
                         ---------------------
           9.6.          Annual Financial Statements......................... 77
                         ---------------------------
           9.7.          Quarterly Financial Statements...................... 77
                         ------------------------------
           9.8.          Intentionally Omitted............................... 78
                         ---------------------
           9.9.          Other Reports....................................... 78
                         -------------
           9.10.         Additional Information.............................. 78
                         ----------------------
           9.11.         Projected Operating Budget.......................... 78
                         --------------------------
           9.12.         Intentionally Omitted............................... 79
                         ---------------------
           9.13.         Notice of Suits, Adverse Events..................... 79
                         -------------------------------
           9.14.         ERISA Notices and Requests.......................... 79
                         --------------------------
           9.15.         Additional Documents................................ 80
                         --------------------

X.  EVENTS OF DEFAULT........................................................ 80

XI.  LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.............................. 82
     ------------------------------------------
           11.1.         Rights and Remedies................................. 82
                         -------------------
           11.2.         Agent's Discretion.................................. 83
                         ------------------
           11.3.         Setoff.............................................. 83
                         ------
           11.4.         Rights and Remedies not Exclusive................... 83
                         ---------------------------------

XII.  WAIVERS AND JUDICIAL PROCEEDINGS....................................... 83
      --------------------------------
           12.1.         Waiver of Notice.................................... 83
                         ----------------
           12.2.         Delay............................................... 84
                         -----
           12.3.         Jury Waiver......................................... 84
                         -----------

XIII.  EFFECTIVE DATE AND TERMINATION........................................ 84
       ------------------------------
           13.1.         Term................................................ 84
                         ----
           13.2.         Termination......................................... 85
                         -----------

XIV.  Regarding Agent........................................................ 85
      ---------------
           14.1.         Appointment......................................... 85
                         -----------
           14.2.         Nature of Duties.................................... 86
                         ----------------
           14.3.         Lack of Reliance on Agent and Resignation........... 86
                         -----------------------------------------
           14.4.         Certain Rights of Agent............................. 87
                         -----------------------
           14.5.         Reliance............................................ 87
                         --------
           14.6.         Notice of Default................................... 87
                         -----------------
           14.7.         Indemnification..................................... 88
                         ---------------
           14.8.         Agent in its Individual Capacity.................... 88
                         --------------------------------
           14.9.         Delivery of Documents............................... 88
                         ---------------------
           14.10.        Borrower' Undertaking to Agent...................... 88
                         ------------------------------
           14.12.        Applicability of Section to Borrower................ 89
                         ------------------------------------

XIV.  MISCELLANEOUS.......................................................... 89
           15.2.         Entire Understanding................................ 90
                         --------------------
           15.3.         Successors and Assigns; Participations; New
                         Lenders............................................. 91
                         -------
           15.4.         Application of Payments............................. 93
                         -----------------------
           15.5.         Indemnity........................................... 94
                         ---------
           15.6.         Notice.............................................. 94
                         ------


                                      -iv-



<PAGE>


           15.7.         Severability........................................ 95
                         ------------
           15.8.         Expenses............................................ 95
                         --------
           15.9.         Injunctive Relief................................... 95
                         -----------------
           15.10.        Consequential Damages............................... 96
                         ---------------------
           15.11.         Captions........................................... 96
                          --------
           15.12.  Counterparts.............................................. 96
                   ------------
                         15.13.  Construction................................ 96



                                       -v-



<PAGE>