EXHIBIT 10.121

                     PROMISSORY NOTE AND SECURITY AGREEMENT
                        WITH FOOTHILL CAPITAL CORPORATION

                             SECURED PROMISSORY NOTE



$350,000.00                                             Los Angeles, California
                                                               October 26, 1995


         FOR VALUE RECEIVED, the undersigned ("Maker") hereby promises to pay to
FOOTHILL CAPITAL CORPORATION,  a California corporation ("Foothill"),  or order,
at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333,
or at such other address as the holder of this Secured  Promissory Note ("Note")
may  specify in writing,  the  principal  sum of Three  Hundred  Fifty  Thousand
Dollars  ($350,000.00) or, if less, the then outstanding principal amount of the
term loan made by Foothill in connection with that certain  Security  Agreement,
dated as of even  date  herewith,  between  Maker  and  Foothill  (as  hereafter
amended,   restated,   supplemented,   or  modified  from  time  to  time,   the
"Agreement"),  plus interest and the Monthly  Service Charge  (defined below) in
the manner and upon the terms and conditions set forth below.  This Note is made
in connection  with the  Agreement,  the  provisions  of which are  incorporated
herein by reference. All capitalized terms used herein, unless otherwise defined
herein, shall have the meanings ascribed to them in the Agreement.

1.       Rate and Payment of Interest

         The  principal  balance of this Note shall bear  interest from the date
         hereof  until  paid in full  at a per  annum  rate  equal  to four  (4)
         percentage  points above the Reference Rate. For purposes of this Note,
         "Reference  Rate" means the highest of the  variable  rates of interest
         per annum most recently announced by: (a) Bank of America, N.T. & S.A.,
         San  Francisco,   California;   (b)  Mellon  Bank,  N.A.,   Pittsburgh,
         Pennsylvania;  and (c)  Citibank,  N,A.,  New York,  New  York,  or any
         successor to any of the foregoing institutions,  as its "Prime Rate" or
         "Reference  Rate",  as the case may be,  whether or not such  announced
         rate is the best rate available from such financial institution, all as
         determined by Foothill. In the event that the Reference Rate is changed
         from time to time hereafter,  the applicable rate of interest hereunder
         automatically  and  immediately  shall be  increased or decreased by an
         amount  equal to the  Reference  Rate  change.  The  rates of  interest
         charged  hereunder  shall be based upon the average  Reference  Rate in
         effect  during the month.  Upon the  occurrence  of an Event of Default
         under the  Agreement,  the rate of interest on this Note shall,  at the
         option of the holder of this Note, be increased to eight (8) percentage
         points above the Reference Rate. Interest charged on this Note shall be
         computed  on the  basis of a three  hundred  sixty  (360)  day year for
         actual days elapsed.

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

                                                          [FFI\PNO:FOOT1026.PNO]

<PAGE>



2.       Schedule of Payments

         Principal,  interest,  and the Monthly  Service  Charge under this Note
         shall be due and payable according to the following schedule:

          A.        Interest  and the Monthly  Service  Charge  shall be due and
                    payable  in  arrears  on the first  (1st) day of each  month
                    commencing December 1, 1995, and continuing thereafter until
                    this Note has been paid in full;

          B.        Forty-seven  (47)  installments  of  principal,  each in the
                    amount  of  Seven   Thousand  Two  Hundred   Ninety  Dollars
                    ($7,290.00), shall be due and payable on the first (1st) day
                    of each month commencing December 1, 1995;

          C.        One  (1)  installment  of  principal  in  the  amount  Seven
                    Thousand Three Hundred Seventy  Dollars  ($7,370.00) (or the
                    outstanding  remaining  principal  balance of this Note,  if
                    such outstanding  principal balance is other than $7,370.00)
                    shall be due and payable on November 1, 1999; and

          D.        Any  remaining  outstanding  principal,  together  with  all
                    accrued and unpaid interest thereon and any other sums owing
                    in  connection  herewith  (including,  but not  limited  to,
                    Monthly Service  Charges that remain  unpaid),  shall be due
                    and payable in full on November 1, 1999.

3.       Monthly Service Charges

         In addition to the  interest  and other  amounts due under this Note, a
         service  charge of 3/10 of one percent (.3%) per month shall be payable
         monthly in arrears  based on the average  daily  outstanding  principal
         balance of this  Note,  calculated  on the basis of a 360-day  year and
         paid for actual days elapsed (the "Monthly Service Charge").

4.       Prepayment

         Voluntary  prepayments  of the principal  balance of this Note shall be
         permitted  at any time;  provided  that each such  prepayment  shall be
         accompanied by all interest and any Monthly  Service  Charges that have
         accrued and remain unpaid with respect to the amount of principal being
         repaid and a prepayment fee equal to the following:

          (i)       Ten percent (10%) of the amount  prepaid with respect to any
                    prepayments made prior to June 1, 1997; and

          (ii)      Three percent (3%) of the amount prepaid with respect to any
                    prepayments  made on or after  June 1,  1997,  and  prior to
                    November 1, 1999.

         Amounts  repaid  or  prepaid  with  respect  to  this  Note  may not be
         re-borrowed.  Partial  prepayments  of  principal  shall be  applied to
         scheduled payments of principal in the inverse order of their maturity.

                                                          [FFI\PNO:FOOT1026.PNO]

<PAGE>



5.       Holder's Right of Acceleration

         Upon the  occurrence  of an  Event  of  Default  under  the  Agreement,
         including,  but not limited to, the failure to pay any  installment  of
         principal,  interest, or Monthly Service Charge hereunder when due, the
         holder of this Note may, at its election  and without  notice to Maker,
         declare the entire balance hereof  (including,  but not limited to, all
         principal,  interest,  and Monthly Service Charges) immediately due and
         payable.

6.       Additional Rights of Holder

         If any installment of principal,  interest,  or Monthly Service Charges
         hereunder  is not paid when due,  the holder  shall have the  following
         rights in addition to the rights set forth  herein,  in the  Agreement,
         and under law:

          A.        the  right to  compound  interest  and the  Monthly  Service
                    Charge by adding the unpaid  interest and/or Monthly Service
                    Charge to  principal,  with such amount  thereafter  bearing
                    interest  and  the  Monthly  Service  Charge  at  the  rates
                    provided in this Note; and

          B.        if any  installment is more than ten (10) days past due, the
                    right to  collect a charge  equal to the  greater of Fifteen
                    Dollars  ($15.00) or five  percent  (5%) of the late payment
                    for each month in which it is late.  This charge is a result
                    of a reasonable endeavor by Maker and the holder to estimate
                    the holder's added costs and damages  resulting from Maker's
                    failure to make timely payments under this Note; hence Maker
                    agrees that the charge shall be presumed to be the amount of
                    damage  sustained  by  the  holder  since  it  is  extremely
                    difficult  to  determine  the  actual  amount  necessary  to
                    reimburse the holder for damages.

7.       General Provisions

          A.        If this Note is not paid when due, Maker further promises to
                    pay  all  costs  of   collection,   foreclosure   fees,  and
                    reasonable  attorneys' fees incurred by the holder,  whether
                    or not suit is filed hereon,  together with the fees,  costs
                    and expenses as provided in the Agreement.

          B.        Maker hereby consents to any and all renewals, replacements,
                    and/or  extensions  of time for payment of this Note before,
                    at, or after maturity.

          C.        Maker  hereby  consents  to  the  acceptance,   release,  or
                    substitution of security for this Note.

          D.        Presentment  for  payment,   demand,   notice  of  dishonor,
                    protest, and notice of protest are hereby expressly waived.

          E.        No delay or  omission on the part of the holder of this Note
                    in exercising any right shall operate as a waiver thereof or
                    of any other right.

                                                          [FFI\PNO:FOOT1026.PNO]

<PAGE>



          F.        Any waiver of any rights under this Note, the Agreement,  or
                    under any other  agreement,  instrument,  or paper signed by
                    Maker is neither valid nor effective  unless made in writing
                    and signed by the holder of this Note.

          G.        A waiver by the  holder  of this Note upon any one  occasion
                    shall  not be  construed  as a bar or waiver of any right or
                    remedy on any future occasion.

          H.        Should  any one or more of the  provisions  of this  Note be
                    determined  illegal or  unenforceable,  all other provisions
                    shall nevertheless remain effective.

          I.        This  Note  cannot  be  changed,   modified,   amended,   or
                    terminated orally.

          J.        The validity of this Note, its construction, interpretation,
                    and enforcement,  and the rights of the parties hereto shall
                    be   determined   under,   governed  by,  and  construed  in
                    accordance with the laws of the State of California, without
                    reference to the principles of conflicts of laws thereof.

8.       Security for this Note

         This Note is secured by collateral  described in the Agreement,  and is
         subject to all of the terms and conditions thereof,  including, but not
         limited to, the  remedies  specified  therein or granted in  connection
         therewith.

9.       Venue; Jurisdiction; Waiver of Trial by Jury

         MAKER AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
         THIS NOTE SHALL BE TRIED AND  LITIGATED  ONLY IN THE STATE AND  FEDERAL
         COURTS LOCATED IN THE COUNTY OF LOS ANGELES,  STATE OF CALIFORNIA,  OR,
         AT THE SOLE OPTION OF  FOOTHILL,  IN ANY OTHER COURT IN WHICH  FOOTHILL
         SHALL  INITIATE  LEGAL OR EQUITABLE  PROCEEDINGS  AND WHICH HAS SUBJECT
         MATTER  JURISDICTION  OVER THE MATTER IN CONTROVERSY.  MAKER WAIVES, TO
         THE EXTENT  PERMITTED UNDER  APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
         ASSERT THE  DOCTRINE OF FORUM NON  CONVENIENS  OR TO OBJECT TO VENUE TO
         THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 9.
         MAKER, TO THE EXTENT IT MAY LEGALLY DO SO, HEREBY  EXPRESSLY WAIVES ANY
         RIGHT TO TRIAL BY JURY OF ANY CLAIM,  DEMAND,  ACTION, CAUSE OF ACTION,
         OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS NOTE, OR IN ANY WAY
         CONNECTED  WITH, OR RELATED TO, OR  INCIDENTAL  TO, THE DEALINGS OF THE
         PARTIES  HERETO WITH RESPECT TO THIS NOTE OR THE  TRANSACTIONS  RELATED
         THERETO,  IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND
         IRRESPECTIVE  OF WHETHER  SOUNDING IN  CONTRACT,  TORT,  OR  OTHERWISE.
         MAKER,  TO THE EXTENT IT MAY LEGALLY DO SO, HEREBY AGREES THAT ANY SUCH
         CLAIM, DEMAND,  ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED
         BY A COURT  TRIAL  WITHOUT A JURY AND THAT THE  HOLDER OF THIS NOTE MAY
         FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9 WITH ANY COURT
         AS WRITTEN  EVIDENCE OF THE CONSENT OF MAKER TO THE WAIVER OF ITS RIGHT
         TO TRIAL BY JURY.

                                                          [FFI\PNO:FOOT1026.PNO]

<PAGE>


         IN WITNESS  WHEREOF,  this Note has been  executed and delivered on the
date first set forth above.



                                        Fantastic Foods International, Inc.,
                                        a California corporation



                                        By:  /s/  J.L. Lawver
                                             ---------------------------------
                                             Name:     J.L. Lawver
                                             Its:      President

                                                          [FFI\PNO:FOOT1026.PNO]

<PAGE>

                               SECURITY AGREEMENT



         THIS SECURITY AGREEMENT is entered into as of October 26, 1995, between
FOOTHILL CAPITAL  CORPORATION,  a California  corporation  ("Foothill"),  with a
place of  business  located at 11111 Santa  Monica  Boulevard,  Suite 1500,  Los
Angeles,  California  90025-3333,  and FANTASTIC  FOODS  INTERNATIONAL,  INC., a
California corporation ("Borrower"),  with its chief executive office located at
5345 Third Street, Irwindale California 91706.

         The parties agree as follows:

1.       Definitions and Construction

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

                  "Accounts" means all presently  existing and hereafter arising
                  accounts,  contract rights, and all other forms of obligations
                  owing to Borrower arising out of the sale or lease of goods or
                  the  rendition of services by Borrower,  whether or not earned
                  by performance, and any and all credit insurance,  guaranties,
                  and  other  security  therefor,  as  well  as all  merchandise
                  returned to or  reclaimed  by Borrower  and  Borrower's  Books
                  relating to any of the foregoing.

                  "Agreement" means this Security  Agreement and any extensions,
                  riders, supplements, notes, amendments, or modifications to or
                  in connection with this Security Agreement.

                  "Borrower's  Books" means all of Borrower's  books and records
                  including:   ledgers;  records  indicating,   summarizing,  or
                  evidencing   Borrower's   assets   or   liabilities,   or  the
                  Collateral;  all information  relating to Borrower's  business
                  operations or financial condition;  and all computer programs,
                  disc  or  tape  files,  printouts,  runs,  or  other  computer
                  prepared  information,   and  the  equipment  containing  such
                  information.

                  "Closing Date" means the date on which Foothill makes the loan
                  to Borrower under the Term Note.

                  "Code" means the California Uniform Commercial Code.

                  "Collateral"  means  each  of  the  following:  the  Accounts;
                  Borrower's Books; the Equipment; the General Intangibles;  the
                  Inventory;  the  Negotiable  Collateral;  any money,  or other
                  assets of Borrower which  hereafter come into the  possession,
                  custody,  or  control  of  Foothill;   and  the  proceeds  and
                  products,  whether  tangible  or  intangible,  of  any  of the
                  foregoing, including proceeds of insurance covering any or all
                  of the  Collateral,  and  any  and  all  Accounts,  Equipment,
                  General Intangibles,  Inventory, Negotiable Collateral, money,
                  deposit  accounts,  or other  tangible or intangible  property
                  resulting   from  the  sale  or  other   disposition   of  the
                  Collateral,  or any portion thereof or interest  therein,  and
                  the proceeds thereof.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         1

<PAGE>



                  "Equipment"  means all of  Borrower's  present  and  hereafter
                  acquired   machinery,   machine  tools,   motors,   equipment,
                  furniture,  furnishings,  fixtures,  vehicles (including motor
                  vehicles and  trailers),  tools,  parts,  dies,  jigs,  goods,
                  including,   without  limitation,   the  items  of  Borrower's
                  equipment set forth on Schedule E-1 attached  hereto,  and any
                  interest  in  any  of  the  foregoing,  and  all  attachments,
                  accessories,    accessions,    replacements,    substitutions,
                  additions, and improvements to any of the foregoing,  wherever
                  located.

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

                  "Foothill  Expenses"  means all: costs or expenses  (including
                  taxes,  photocopying,  notarization,   telecommunication,  and
                  insurance  premiums) required to be paid by Borrower under any
                  of the Loan  Documents  that are paid or advanced by Foothill;
                  documentation,   filing,  recording,  publication,   appraisal
                  (including  periodic Collateral  appraisals),  and search fees
                  assessed,  paid,  or incurred by Foothill in  connection  with
                  Foothill's  transactions  with  Borrower;  costs and  expenses
                  incurred by Foothill in the  disbursement of funds to Borrower
                  (by wire transfer or  otherwise);  charges paid or incurred by
                  Foothill  resulting  from the  dishonor  of checks;  costs and
                  expenses  paid or  incurred by Foothill to correct any default
                  or enforce any provision of the Loan Documents,  or in gaining
                  possession of,  maintaining,  handling,  preserving,  storing,
                  shipping,  selling, preparing for sale, or advertising to sell
                  the Collateral,  or any portion thereof, whether or not a sale
                  is  consummated;  costs  and  expenses  paid  or  incurred  by
                  Foothill in examining  Borrower's Books; costs and expenses of
                  third  party  claims or any other  suit  paid or  incurred  by
                  Foothill in  enforcing or defending  the Loan  Documents;  and
                  Foothill's reasonable attorneys' fees and expenses incurred in
                  advising,  structuring,  drafting,  reviewing,  administering,
                  amending,  terminating,  enforcing (including  attorneys' fees
                  and  expenses  incurred  in  connection  with a  "workout,"  a
                  "restructuring,"  or  an  Insolvency   Proceeding   concerning
                  Borrower or any guarantor of the Obligations),  defending,  or
                  concerning the Loan Documents, whether or not suit is brought.

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

                  "General  Intangibles"  means all of  Borrower's  present  and
                  future  general   intangibles  and  other  personal   property
                  (including  choses  or things in  action,  goodwill,  patents,
                  trade   names,   trademarks,    service   marks,   copyrights,
                  blueprints,  drawings, purchase orders, customer lists, monies
                  due or recoverable from pension funds, route lists, monies due
                  under  any  royalty  or  licensing  agreements,   infringement
                  claims,  computer  programs,  computer discs,  computer tapes,
                  literature,  reports,  catalogs,  deposit accounts,  insurance
                  premium  rebates,  tax refunds,  and tax refund  claims) other
                  than goods and Accounts,  and Borrower's Books relating to any
                  of the foregoing.

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

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         2

<PAGE>



                  "Inventory"  means all present and future  inventory  in which
                  Borrower has any  interest,  including  goods held for sale or
                  lease or to be  furnished  under a contract of service and all
                  of  Borrower's  present  and  future  raw  materials,  work in
                  process,  finished goods, and packing and shipping  materials,
                  wherever located,  and any documents of title representing any
                  of the  above  and  Borrower's  Books  relating  to any of the
                  foregoing.

                  "Judicial  Officer or Assignee"  means any trustee,  receiver,
                  controller,  custodian, assignee for the benefit of creditors,
                  or any other person or entity  having powers or duties like or
                  similar  to the  powers  and  duties of a  trustee,  receiver,
                  controller,   custodian,   or  assignee  for  the  benefit  of
                  creditors.

                  "Loan Documents" means, collectively, this Agreement, the Term
                  Note and any other  agreement  entered into in connection with
                  this  Agreement,  together with all  alterations,  amendments,
                  changes, extensions, modifications,  refinancings, refundings,
                  renewals, replacements, restatements, or supplements, of or to
                  any of the foregoing.

                  "Negotiable  Collateral"  means all of Borrower's  present and
                  future  letters  of  credit,   notes,   drafts,   instruments,
                  documents,  leases,  and chattel paper,  and Borrower's  Books
                  relating to any of the foregoing.

                  "Obligations"  means all loans,  advances,  debts,  principal,
                  interest  (including any interest that, but for the provisions
                  of the United States  Bankruptcy  Code,  would have  accrued),
                  premiums,   liabilities  (including  all  amounts  charged  to
                  Borrower's loan account pursuant to any agreement  authorizing
                  Foothill  to charge  Borrower's  loan  account),  obligations,
                  fees, lease payments, guaranties,  covenants, and duties owing
                  by Borrower to Foothill of any kind and  description  (whether
                  pursuant to or evidenced by the Loan Documents, by any note or
                  other  instrument,  or by any other agreement between Foothill
                  and  Borrower,  and  whether or not for the payment of money),
                  whether direct or indirect,  absolute or contingent, due or to
                  become due, now existing or hereafter  arising,  and including
                  any debt,  liability,  or  obligation  owing from  Borrower to
                  others  that  Foothill  may have  obtained  by  assignment  or
                  otherwise,  and further  including  all interest not paid when
                  due and all Foothill Expenses that Borrower is required to pay
                  or reimburse by the Loan Documents, by law, or otherwise.

                  "Pay-Off  Letters"  means  letters,   in  form  and  substance
                  reasonably  satisfactory  to  Foothill,  from  other  lenders,
                  secured creditors,  or lessors respecting the amount necessary
                  to (a) repay in full all of the  obligations of Borrower owing
                  to such lenders,  secured  creditors,  and/or  lessors and (b)
                  obtain  (i)  terminations/releases  of  all  of  the  security
                  interests or liens existing in favor of such lenders,  secured
                  creditors,  and/or  lessors in and to the properties or assets
                  of  Borrower  and  (ii)  good  and  marketable  title  to such
                  properties or assets (in the case of leased property).

                  "Permitted Liens" means: (a) liens and security interests held
                  by Foothill; and (b) liens for unpaid taxes that  are  not yet
                  due and payable.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         3

<PAGE>



                  "Term Note" means that certain  Secured  Promissory  Note,  of
                  even date herewith,  by Borrower to the order of Foothill,  in
                  the original  principal amount of Three Hundred Fifty Thousand
                  Dollars    ($350,000),    and   any   extensions,    renewals,
                  replacements, or substitutions therefor.

          1.2       Accounting  Terms.  All  accounting  terms not  specifically
                    defined  herein shall be construed in accordance  with GAAP.
                    When used  herein,  the term  "financial  statements"  shall
                    include the notes and schedules thereto.

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

         1.4      Construction.  Unless the  context of this  Agreement  clearly
                  requires  otherwise,  references  to the  plural  include  the
                  singular,  to the  singular  include the plural,  and the term
                  "including"  is not limiting.  The words  "hereof,"  "herein,"
                  "hereby,"  "hereunder,"  and similar  terms in this  Agreement
                  refer to this  Agreement as a whole and not to any  particular
                  provision of this Agreement. Section, subsection,  clause, and
                  exhibit  references  are to this  Agreement  unless  otherwise
                  specified.

          1.5       Schedules  and  Exhibits.  All of the schedules and exhibits
                    attached  to this  Agreement  shall be  deemed  incorporated
                    herein by reference.

2.       Fees

         Borrower shall pay to Foothill the following fees:

          2.1       Closing  Fee.  A one  time  closing  fee of  Seven  Thousand
                    Dollars  ($7,000)  which is earned,  in full, on the Closing
                    Date and is due and  payable  by  Borrower  to  Foothill  in
                    connection with this Agreement on the Closing Date;

         2.2      Appraisal  and  Documentation  Fees  .  Foothill's   customary
                  appraisal fee of Seven  Hundred  Fifty Dollars  ($750) per day
                  per appraiser,  plus out-of-pocket expenses for each appraisal
                  of the Collateral performed by Foothill or its agents.

3.       Conditions to Effectiveness: Term of Agreement

          3.1       Conditions Precedent. The obligation of Foothill to make the
                    loan   evidenced   by  the  Term  Note  is  subject  to  the
                    fulfillment,   to  the  satisfaction  of  Foothill  and  its
                    counsel,  of each of the  following  conditions on or before
                    the Closing Date:

                    (a)       The Closing Date shall occur on or before  October
                              31, 1995;

                    (b)       Other  than with  respect to  Permitted  Liens (if
                              any), Borrower's existing lenders,  creditors, and
                              lessors shall have executed and delivered  Pay-Off
                              Letters,  UCC  termination  statements,  bills  of
                              sale,  and  other  documentation   evidencing  the
                              termination of their liens and security  interests
                              in the assets of  Borrower  (and the  transfer  of
                              title to such assets to  Borrower,  in the case of
                              leased  property) or a subordination  agreement in
                              form and substance satisfactory to Foothill in its
                              sole discretion;

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                                               4

<PAGE>



                  (c)      Foothill  shall have  received  copies of  Borrower's
                           Bylaws and Articles or Certificate of  Incorporation,
                           as amended,  modified, or supplemented to the Closing
                           Date, certified by the Secretary of Borrower;

                  (d)      Foothill   shall  have  received  a  certificate   of
                           corporate  status  with  respect to  Borrower,  dated
                           within  ten (10)  days of the  Closing  Date,  by the
                           Secretary of State of the state of  incorporation  of
                           Borrower,   which  certificate  shall  indicate  that
                           Borrower is in good standing in such state;

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

                  (f)      Foothill   shall  have   received   certificates   of
                           corporate status with respect to Borrower, each dated
                           within  ten  (10)  days  of the  Closing  Date,  such
                           certificates  to be issued by the  Secretary of State
                           of  the  states  in  which  its  failure  to be  duly
                           qualified or licensed  would have a material  adverse
                           effect  on  the  financial  condition  or  assets  of
                           Borrower,  which  certificates  shall  indicate  that
                           Borrower is in good standing;

                  (g)      Foothill    shall   have   received   the   insurance
                           certificates,  certified copies of policies, required
                           by Section  6.7 hereof  along with a 438BFU  Lender's
                           Loss Payable Endorsement naming Foothill as sole loss
                           payee,  all in form  and  substance  satisfactory  to
                           Foothill and its counsel;

                  (h)      Foothill  shall have  received  each of the following
                           documents  and  agreements,  in  form  and  substance
                           satisfactory  to  Foothill  and  its  counsel,   duly
                           executed,  and each such document and agreement shall
                           be in full force and effect:

                           (1)      This Agreement;

                           (2)      Secured Promissory Note; and

                           (3)      Validity Guaranty from Jon L. Lawver, 
                                    individually;

                  (i)      Foothill shall have received searches  reflecting the
                           filing  of  its  financing   statements  and  fixture
                           filings,  and shall  have  received  certificates  of
                           title with respect to the Collateral which shall have
                           been duly  executed  in order to  perfect  all of the
                           security interests granted to Foothill;

                    (j)       Foothill   shall  have   received   landlord   and
                              mortgagee  waivers from the lessors and mortgagees
                              of the locations where the Equipment is located;

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         5

<PAGE>



                  (k)      Foothill   shall  have   received   the  Closing  Fee
                           referenced  in Section 2.1, all of Foothill  Expenses
                           incurred as of the Closing Date,  and all other costs
                           and  expenses  incurred  by  Foothill  in  connection
                           herewith,  including without limitation,  audit fees,
                           search fees, appraisal fees, documentation, recording
                           and  filing  fees,  and the fees and costs of Morgan,
                           Lewis & Bockius LLP, for the negotiation, preparation
                           and documentation of the Loan Documents;

                  (l)      All  representations and warranties set forth in this
                           Agreement  and the other Loan  Documents are true and
                           correct as of the Closing Date, no "Event of Default"
                           has occurred under this Agreement or any of the other
                           Loan Documents,  and all of the Loan Documents are in
                           full force and effect: and

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

         3.2      Term. This Agreement shall become effective upon the execution
                  and  delivery  hereof  by  Borrower  and  Foothill,  and shall
                  continue in full force and effect until all  Obligations  have
                  been indefeasibly paid in full.

4.       Creation of Security Interest

         4.1      Grant of Security Interest. Borrower hereby grants to Foothill
                  a continuing  security interest in all currently  existing and
                  hereafter  acquired or arising  Collateral  in order to secure
                  prompt  repayment of any and all  Obligations  and in order to
                  secure prompt performance by Borrower of each of its covenants
                  and  duties  under  the Loan  Documents.  Foothill's  security
                  interest  in the  Collateral  shall  attach to all  Collateral
                  without further act on the part of Foothill or Borrower.

         4.2      Delivery of Additional Documentation Required.  Borrower shall
                  execute and deliver to Foothill, prior to or concurrently with
                  Borrower's execution and delivery of this Agreement and at any
                  time  thereafter  at the request of  Foothill,  all  financing
                  statements,   continuation   financing   statements,   fixture
                  filings,  security  agreements,  chattel  mortgages,  pledges,
                  assignments,    endorsements   of   certificates   of   title,
                  applications for title, affidavits,  reports, notices, letters
                  of  authority,  and all  other  documents  that  Foothill  may
                  reasonably  request,  in form  satisfactory  to  Foothill,  to
                  perfect and continue perfected  Foothill's  security interests
                  in the Collateral and in order to fully  consummate all of the
                  transactions contemplated under the Loan Documents.

          4.3       Power  of  Attorney.   Borrower  hereby  irrevocably  makes,
                    constitutes,  and appoints  Foothill  (and any of Foothill's
                    officers,  employees,  or agents  designated by Foothill) as
                    Borrower's true and lawful attorney, with power to: (a) sign
                    the name of Borrower on any of the  documents  described  in
                    Section  4.2  or  on  any  other  similar  documents  to  be
                    executed, recorded, or filed in order to perfect or continue
                    perfected  Foothill's  security  interest in the Collateral;
                    (b)  endorse   Borrower's  name  on  any  checks,   notices,
                    acceptances,  money orders, drafts, or other item of payment
                    or security that may come into Foothill's possession; (c) at
                    any time that an Event of Default  has  occurred or Foothill
                    deems itself insecure,  make,  settle, and adjust all claims
                    under  Borrower's  policies of  insurance  in respect of the
                    Collateral  and make all  determinations  and decisions with
                    respect to such policies of insurance.  The  appointment  of
                    Foothill as Borrower's  attorney,  and each and every one of
                    Foothill's   rights  and  powers,   being  coupled  with  an
                    interest,  is irrevocable  until all of the Obligations have
                    been fully repaid and performed and Foothill's obligation to
                    provide advances hereunder is terminated.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         6

<PAGE>



         4.4      Right  to  Inspect.  Foothill  (through  any of its  officers,
                  employees,  or agents) shall have the right, from time to time
                  hereafter, to inspect Borrower's Books and to check, test, and
                  appraise  the   Collateral  in  order  to  verify   Borrower's
                  financial condition or the amount,  quality,  value, condition
                  of, or any other matter relating to, the Collateral.

5.       Representations and Warranties

         Borrower represents and warrants as follows:

         5.1      Prior  Encumbrances.  Borrower has good and indefeasible title
                  to the Collateral,  free and clear of liens, claims,  security
                  interests,  or encumbrances except for Permitted Liens. Except
                  with respect to certain  machinery and equipment  that will be
                  purchased  with the  proceeds of the loan  represented  by the
                  Term  Note,  none of the  Collateral  has  been  purchased  by
                  Borrower  within  the  six (6)  months  period  preceding  the
                  Closing  Date,  except for sales to Borrower  in the  ordinary
                  course of the seller's business.

         5.2      Location of Equipment.  The Equipment is not now and shall not
                  at any time  hereafter be stored with a bailee,  warehouseman,
                  or similar party  without  Foothill's  prior written  consent.
                  Borrower  shall  keep  the  Equipment  only  at the  following
                  locations: (i) 5345 Third Street, Irwindale,  California 91706
                  and (ii)  119  West  Live  Oak,  Units  B, C, and D,  Arcadia,
                  California  91007.  None of the  Equipment  has been  located,
                  during the six (6) month period prior to the Closing  Date, in
                  any  jurisdiction  other than the county(ies) and state(s) set
                  forth in this Section.

         5.3      Location of Chief Executive Office. The chief executive office
                  of Borrower is located at the address  indicated  in the first
                  paragraph of this Agreement and Borrower  covenants and agrees
                  that it will  not,  without  thirty  (30) days  prior  written
                  notification  to  Foothill,   relocate  such  chief  executive
                  office.

          5.4       Fictitious   Business   Name(s).   Borrower  uses  only  the
                    following  Fictitious  Business  Names and none  other:  (a)
                    Morelli  Foods,  Inc.,  (b) The Pasta Fresca Co.,  Inc., (c)
                    Nona Morelli, (d) Santino's, and (e) Pasta Fresca Co.

          5.5       Due Organization and Qualification. Borrower is and shall at
                    all times  hereafter be duly  organized  and existing and in
                    good   standing   under   the  laws  of  the  state  of  its
                    incorporation  and qualified and licensed to do business in,
                    and in good  standing  in, any state in which the conduct of
                    its  business or its  ownership of the  Collateral  requires
                    that it be so qualified.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         7

<PAGE>



          5.6       Due Authorization: No Conflict. The execution, delivery, and
                    performance  of the Loan  Documents  are  within  Borrower's
                    corporate powers, have been duly authorized,  and are not in
                    conflict  with  nor  constitute  a breach  of any  provision
                    contained  in   Borrower's   Articles  or   Certificate   of
                    Incorporation, or By-laws, nor will they constitute an event
                    of default under any material agreement to which Borrower is
                    a party.

         5.7      Litigation.  There are no actions or proceedings pending by or
                  against Borrower before any court or administrative agency and
                  Borrower  does not have  knowledge  or belief of any  pending,
                  threatened,     or    imminent    litigation,     governmental
                  investigations,    or   claims,   complaints,    actions,   or
                  prosecutions  involving  Borrower  or  any  guarantor  of  the
                  Obligations,  except for ongoing  collection  matters in which
                  the Borrower is the plaintiff.

         5.8      No  Material  Adverse  Change  in  Financial  Condition.   All
                  financial  statements relating to Borrower or any guarantor of
                  the  Obligations  that have been or may hereafter be delivered
                  by Borrower to Foothill have been prepared in accordance  with
                  GAAP and fairly present Borrower's  financial  condition as of
                  the date thereof and Borrower's  results of operations for the
                  period  then  ended.  There  has not been a  material  adverse
                  change in the financial  condition of Borrower  since the date
                  of the latest financial statements submitted to Foothill on or
                  before the Closing Date.

         5.9      Solvency.  Borrower's  assets at a fair  valuation  exceed the
                  amount of all of its debts at a fair valuation and Borrower is
                  able  to pay  all of its  debts  (including  trade  debts  and
                  contingent liabilities) as they become due.

         5.10     Environmental  Condition.  None of  Borrower's  properties  or
                  assets  has ever  been  used by  Borrower  or,  to the best of
                  Borrower's  knowledge,  by previous owners or operators in the
                  disposal of, or to produce,  store, handle, treat, release, or
                  transport, any hazardous waste or hazardous substance. None of
                  Borrower's  properties  or assets has ever been  designated or
                  identified  in  any  manner  pursuant  to  any   environmental
                  protection statute as a hazardous waste or hazardous substance
                  disposal  site,  or a candidate  for  closure  pursuant to any
                  environmental  protection  statute.  No lien arising under any
                  environmental  protection statute has attached to any revenues
                  or to any  real or  personal  property  owned or  operated  by
                  Borrower.  Borrower  has not  received  a  summons,  citation,
                  notice, or directive from the Environmental  Protection Agency
                  or any other federal or state  governmental  agency concerning
                  any action or omission by Borrower  resulting in the releasing
                  or disposing of hazardous  waste or hazardous  substances into
                  the environment.

         5.11     Reliance  by   Foothill;   Cumulative.   Each   warranty   and
                  representation   contained   in  this   Agreement   shall   be
                  conclusively  presumed  to have  been  relied  on by  Foothill
                  regardless of any investigation made or information  possessed
                  by Foothill.  The  warranties  and  representations  set forth
                  herein  shall be  cumulative  and in  addition  to any and all
                  other warranties and  representations  that Borrower shall now
                  or hereinafter give, or cause to be given, to Foothill.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         8

<PAGE>



6.       Affirmative Covenants

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

         6.1      Financial Statements,  Reports, Certificates.  Borrower agrees
                  to deliver to Foothill:  (a) as soon as available,  but in any
                  event  within  thirty  (30) days  after the end of each  month
                  during each of  Borrower's  fiscal years,  a company  prepared
                  balance  sheet,  income  statement,  and cash  flow  statement
                  covering Borrower's  operations during such period; and (b) as
                  soon as  available,  but in any event within  ninety (90) days
                  after the end of each of Borrower's  fiscal  years,  financial
                  statements of Borrower for each such fiscal year,  reviewed by
                  independent   certified  public   accountants   acceptable  to
                  Foothill,  by  such  accountants  to  have  been  prepared  in
                  accordance  with GAAP,  together  with a  certificate  of such
                  accountants   addressed   to   Foothill   stating   that  such
                  accountants  do not have  knowledge  of the  existence  of any
                  event or condition  constituting an Event of Default,  or that
                  would,  with the  passage  of time or the  giving  of  notice,
                  constitute  an  Event  of  Default.  Such  reviewed  financial
                  statements  shall  include a balance  sheet,  profit  and loss
                  statement,  and cash  flow  statement,  and such  accountants'
                  letter to  management.  Borrower  shall  have  issued  written
                  instructions to its independent  certified public  accountants
                  authorizing  them to communicate  with Foothill and to release
                  to Foothill whatever financial information concerning Borrower
                  that Foothill may request.  If Borrower is a parent company of
                  one or more subsidiaries, or affiliates, or is a subsidiary or
                  affiliate  of  another  company,  then,  in  addition  to  the
                  financial  statements  referred to above,  Borrower  agrees to
                  deliver financial statements prepared on a consolidated basis.

                  Borrower  hereby   irrevocably   authorizes  and  directs  all
                  auditors,  accountants,  or other third  parties to deliver to
                  Foothill,   at  Borrower's   expense,   copies  of  Borrower's
                  financial  statements,   papers  related  thereto,  and  other
                  accounting  records of any nature in their possession,  and to
                  disclose to Foothill any  information  they may have regarding
                  Borrower's business affairs and financial conditions.

         6.2      Other  Reports.  Borrower  agrees to deliver to  Foothill  (i)
                  within twenty-one (21) business days after Borrower's  payroll
                  taxes are due,  evidence  that such  payroll  taxes  have been
                  timely and fully  paid,  and (ii)  promptly  after  receipt by
                  Borrower,  copies of the quarterly statements delivered by ADP
                  to Borrower  regarding  evidence  that such payroll taxes have
                  been paid.

         6.3      Tax Returns.  Borrower agrees to deliver to Foothill copies of
                  each of Borrower's future federal income tax returns,  and any
                  amendments  thereto,  within  thirty  (30) days of the  filing
                  thereof with the Internal Revenue Service.

         6.4      Title to Equipment.  Upon Foothill's  request,  Borrower shall
                  immediately  deliver to Foothill,  properly endorsed,  any and
                  all  evidences  of ownership  of,  certificates  of title,  or
                  applications for title to any items of Equipment.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                         9

<PAGE>



         6.5      Maintenance of Equipment. Borrower shall keep and maintain the
                  Equipment in good operating condition and repair, and make all
                  necessary replacements thereto so that the value and operating
                  efficiency  thereof  shall  at all  times  be  maintained  and
                  preserved.  Borrower shall not permit any item of Equipment to
                  become a  fixture  to real  estate  or an  accession  to other
                  property,  and the  Equipment  is now and  shall at all  times
                  remain personal property.

         6.6      Taxes. All assessments and taxes, whether real,  personal,  or
                  otherwise,  due or payable by, or imposed, levied, or assessed
                  against  Borrower or any of its property  have been paid,  and
                  shall hereafter be paid in full, before  delinquency or before
                  the  expiration of any extension  period.  Borrower shall make
                  due and timely payment or deposit of all federal,  state,  and
                  local taxes,  assessments,  or contributions required of it by
                  law,  and will  execute  and deliver to  Foothill,  on demand,
                  appropriate  certificates  attesting to the payment or deposit
                  thereof.  Borrower shall make timely payment or deposit of all
                  tax  payments  and   withholding   taxes  required  of  it  by
                  applicable  laws,  including those laws  concerning  F.I.C.A.,
                  F.U.T.A.,  state  disability,  and local,  state,  and federal
                  income taxes, and shall,  upon request,  furnish Foothill with
                  proof  satisfactory  to Foothill  indicating that Borrower has
                  made such payments or deposits.

         6.7      Insurance.

                  (a)      Borrower,  at its expense,  shall keep the Collateral
                           insured against "all risks"  including loss or damage
                           by fire, theft, explosion,  sprinklers, and all other
                           hazards and risks,  and in the full  insurable  value
                           thereof.   Borrower  also  shall  maintain   business
                           interruption,  public liability,  and property damage
                           insurance relating to Borrower's ownership and use of
                           the Collateral.

                    (b)       All such  policies of  insurance  shall be in such
                              form, with such companies,  and in such amounts as
                              may be satisfactory to Foothill. All such policies
                              of insurance (except those of public liability and
                              property  damage) shall contain a 438BFU  lender's
                              loss  payable   endorsement,   or  an   equivalent
                              endorsement  in a form  satisfactory  to Foothill,
                              showing Foothill as loss payee thereof,  and shall
                              contain a waiver of warranties,  and shall specify
                              that the insurer  must give at least ten (10) days
                              prior written notice to Foothill before  canceling
                              its policy for any reason.  Borrower shall deliver
                              to Foothill  certified  copies of such policies of
                              insurance  and  evidence  of  the  payment  of all
                              premiums therefor.  All proceeds payable under any
                              such  policy  shall be payable to  Foothill  to be
                              applied on account of the Obligations.

         6.8      Foothill  Expenses.  Borrower  shall  immediately  and without
                  demand  reimburse  Foothill for all sums  expended by Foothill
                  which  constitute   Foothill   Expenses  and  Borrower  hereby
                  authorizes  and approves all advances and payments by Foothill
                  for  items  constituting   Foothill  Expenses.   Any  Foothill
                  Expenses  not  paid  promptly  by  Borrower  shall  constitute
                  Obligations  and shall accrue  interest at the rate and in the
                  manner of Obligations existing under the Term Note.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        10

<PAGE>



         6.9      No Setoffs or Counterclaims.  All payments hereunder and under
                  the other  Loan  Documents  made by or on  behalf of  Borrower
                  shall be made  without  setoff  or  counterclaim  and free and
                  clear of,  and  without  deduction  or  withholding  for or on
                  account of, any federal, state or local taxes.

7.       Negative Covenants

         Borrower  covenants  and agrees that,  so long as any credit  hereunder
         shall  be  available  and  until  payment  in full of the  Obligations,
         Borrower  will not do any of the  following  without  Foothill's  Prior
         written consent:

         7.1      Liens. Create,  incur, assume, or permit to exist, directly or
                  indirectly,  any  lien  on or  with  respect  to  any  of  the
                  Collateral,  of any  kind,  whether  now  owned  or  hereafter
                  acquired,  or any  income or  profits  therefrom,  except  for
                  Permitted Liens.

         7.2      Restrictions   on   Fundamental   Changes.   Enter   into  any
                  acquisition,   merger,   consolidation,   reorganization,   or
                  recapitalization,   or  reclassify  its  capital   stock,   or
                  liquidate,   wind  up,  or  dissolve  itself  (or  suffer  any
                  liquidation or dissolution),  or convey, sell, assign,  lease,
                  transfer,  or otherwise  dispose of, in one  transaction  or a
                  series of  transactions,  all or any  substantial  part of its
                  business,  property, or assets, whether now owned or hereafter
                  acquired,   or  acquire  by  purchase  or  otherwise   all  or
                  substantially  all the  assets,  stock,  or other  evidence of
                  beneficial ownership of any person or entity.

         7.3      Extraordinary  Transactions and Disposal of Collateral.  Sell,
                  lease, or otherwise dispose of, move,  relocate,  or transfer,
                  whether by sale or otherwise,  any of the  Collateral  (except
                  that Inventory may be sold by Borrower in the ordinary  course
                  of Borrower's business in accordance with past practice).

          7.4       Change Name. Change Borrower's name, business structure,  or
                    identity, or add any new fictitious name.

8.       Events of Default

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

         8.1      If Borrower fails to pay when due and payable or when declared
                  due and payable,  any portion of the  Obligations  (whether of
                  principal, interest [including any interest which, but for the
                  provisions of the United States  Bankruptcy  Code,  would have
                  accrued  on such  amounts],  fees and  charges  due  Foothill,
                  taxes, reimbursement of Foothill Expenses, or otherwise);

         8.2      If Borrower fails or neglects to perform, keep, or observe any
                  term, provision,  condition,  covenant, or agreement contained
                  in this  Agreement,  in any of the Loan  Documents,  or in any
                  other  present  or  future  agreement   between  Borrower  and
                  Foothill;

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        11

<PAGE>



         8.3      If there is a material impairment of the prospect of repayment
                  of any  portion  of the  Obligations  owing to  Foothill  or a
                  material  impairment  of the value or priority  of  Foothill's
                  security interests in the Collateral;

         8.4      If any  material  portion of  Borrower's  assets is  attached,
                  seized,  subjected to a writ or distress warrant, or is levied
                  upon, or comes into the possession of any Judicial  Officer or
                  Assignee;

         8.5      If an Insolvency Proceeding is commenced by Borrower;

         8.6      If an Insolvency Proceeding is commenced against Borrower;

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

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

          8.9       If a judgment or other claim  becomes a lien or  encumbrance
                    upon any material portion of Borrower's assets;

         8.10     If there  is a  default  in any  material  agreement  to which
                  Borrower is a party with third parties resulting in a right by
                  such third parties,  whether or not  exercised,  to accelerate
                  the maturity of Borrower's indebtedness thereunder;

         8.11     If  any  misstatement  or  misrepresentation   exists  now  or
                  hereafter  in  any  warranty,  representation,  statement,  or
                  report made to Foothill by Borrower or any officer,  employee,
                  agent,  or director of  Borrower,  or if any such  warranty or
                  representation is withdrawn by any officer or director; or

         8.12     If the  obligation of any guarantor or other third party under
                  any loan document is limited or terminated by operation of law
                  or by the  guarantor or other third party  thereunder,  or any
                  guarantor  or other  third  party  becomes  the  subject of an
                  Insolvency Proceeding.

9.       Foothill's Rights and Remedies

         9.1      Rights  and  Remedies.  Upon  the  occurrence  of an  Event of
                  Default  Foothill may, at its election,  without notice of its
                  election  and  without  demand,  do  any  one or  more  of the
                  following, all of which are authorized by Borrower:

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

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        12

<PAGE>



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

                    (c)       Without  notice to or demand upon  Borrower or any
                              guarantor,  make such payments and do such acts as
                              Foothill  considers  necessary  or  reasonable  to
                              protect its security  interest in the  Collateral.
                              Borrower  agrees to  assemble  the  Collateral  if
                              Foothill so requires,  and to make the  Collateral
                              available to Foothill as Foothill  may  designate.
                              Borrower authorizes Foothill to enter the premises
                              where  the  Collateral  is  located,  to take  and
                              maintain possession of the Collateral, or any part
                              of  it,  and  to  pay,   purchase,   contest,   or
                              compromise any encumbrance,  charge,  or lien that
                              in Foothill's determination appears to be prior or
                              superior to its  security  interest and to pay all
                              expenses  incurred in connection  therewith.  With
                              respect  to  any  of  Borrower's  owned  premises,
                              Borrower hereby grants Foothill a license to enter
                              into possession of such premises and to occupy the
                              same, without charge, for up to one hundred twenty
                              (120) days in order to exercise any of  Foothill's
                              rights or  remedies  provided  herein,  at law, in
                              equity, or otherwise;

                    (d)       Without  notice to  Borrower  (such  notice  being
                              expressly   waived)  set  off  and  apply  to  the
                              Obligations  any and all (i) balances and deposits
                              of Borrower held by Foothill, or (ii) indebtedness
                              at any  time  owing  to or for the  credit  or the
                              account of Borrower held by Foothill;

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

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

                    (g)       Foothill may credit bid and purchase at any public
                              sale.

                    Foothill  shall  give  notice  of  the  disposition  of  the
                    Collateral as follows:

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

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        13

<PAGE>



                              (ii)      The notice shall be personally delivered
                                        or mailed,  postage prepaid, to Borrower
                                        as provided in Section 12, at least five
                                        (5) calendar  days before the date fixed
                                        for  the  sale,  or at  least  five  (5)
                                        calendar  days  before  the  date  on or
                                        after  which the  private  sale or other
                                        disposition  is to be made,  unless  the
                                        Collateral is perishable or threatens to
                                        decline  speedily  in  value.  Notice to
                                        persons other than Borrower  claiming an
                                        interest in the Collateral shall be sent
                                        to such addresses as they have furnished
                                        to Foothill; and

                              (iii)     If  the  sale  is to be a  public  sale,
                                        Foothill  also shall give  notice of the
                                        time and  place by  publishing  a notice
                                        one time at least five (5) calendar days
                                        before   the  date  of  the  sale  in  a
                                        newspaper of general  circulation in the
                                        county in which the sale is to be held.

          9.2       Deficiency:  Excess  Proceeds.  Any  deficiency  that exists
                    after  disposition  of the Collateral as provided above will
                    be  paid  immediately  by  Borrower.   Any  excess  will  be
                    returned,  without  interest  and  subject  to the rights of
                    third parties, by Foothill to Borrower.

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

10.      Taxes and Expenses Regarding the Collateral

         If Borrower fails to pay any monies (whether taxes, rents, assessments,
         insurance premiums,  or otherwise) due to third persons or entities, or
         fails to make any deposits or furnish any required  proof of payment or
         deposit,  all as required under the terms of this  Agreement,  then, to
         the extent that Foothill determines that such failure by Borrower could
         have  a  material  adverse  effect  on  Foothill's   interests  in  the
         Collateral,  in its  discretion  and without  prior notice to Borrower,
         Foothill  may do any or all of the  following:  (a) make payment of the
         same or any part thereof; or (b) obtain and maintain insurance policies
         of the type  described in Section 6.7, and take any action with respect
         to such  policies  as  Foothill  deems  prudent.  Any  amounts  paid or
         deposited by Foothill  shall  constitute  Foothill  Expenses,  shall be
         immediately  charged to  Borrower  and become  additional  Obligations,
         shall bear interest at the then  applicable  rate set forth in the Term
         Note,  and shall be secured by the  Collateral.  Any  payments  made by
         Foothill  shall not constitute an agreement by Foothill to make similar
         payments  in the future or a waiver by Foothill of any Event of Default
         under this  Agreement.  Foothill need not inquire as to, or contest the
         validity of, any such expense, tax, security interest,  encumbrance, or
         lien and the  receipt  of the usual  official  notice  for the  payment
         thereof shall be conclusive  evidence that the same was validly due and
         owing.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        14

<PAGE>



11.      Waivers: Indemnification

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

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

         11.3     Indemnification. Borrower agrees to indemnify Foothill and its
                  officers,  employees,  and agents and hold  Foothill  harmless
                  against: (a) all obligations, demands, claims, and liabilities
                  claimed or asserted by any other party,  and (b) all losses in
                  any way suffered, incurred, or paid by Foothill as a result of
                  or in any way arising out of,  following,  or consequential to
                  transactions  with Borrower  whether under this Agreement,  or
                  otherwise.  This  provision  shall survive the  termination of
                  this Agreement.

12.      Notices

         Unless otherwise provided in this Agreement,  all notices or demands by
         any party  relating to this  Agreement or any other  agreement  entered
         into in  connection  therewith  shall be in  writing  and  (except  for
         financial  statements and other  informational  documents  which may be
         sent  by  first-class  mail,   postage  prepaid)  shall  be  personally
         delivered or sent by registered  or certified  mail,  postage  prepaid,
         return receipt requested, or by prepaid telex, TWX,  telefacsimile,  or
         telegram  (with  messenger  delivery   specified)  to  Borrower  or  to
         Foothill, as the case may be, at its addresses set forth below:

         If to Borrower:            Fantastic Foods International, Inc.
                                    5345 Third Street
                                    Irwindale, California 91706
                                    Attn:   Jon L. Lawver

         If to Foothill:            Foothill Capital Corporation
                                    11111 Santa Monica Boulevard
                                    Suite 1500
                                    Los Angeles, California 90025-3333
                                    Attn:   Small Business Lending
                                            Division Manager

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

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        15

<PAGE>



13.      Choice of Law and Venue; Jury Trial Waiver

         THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION,  INTERPRETATION,  AND
         ENFORCEMENT,  AND THE RIGHTS OF THE PARTIES  HERETO SHALL BE DETERMINED
         UNDER,  GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
         OF THE STATE OF  CALIFORNIA,  WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
         OF LAW. THE PARTIES  AGREE THAT ALL ACTIONS OR  PROCEEDINGS  ARISING IN
         CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE
         STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
         CALIFORNIA  OR, AT THE SOLE OPTION OF  FOOTHILL,  IN ANY OTHER COURT IN
         WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE  PROCEEDINGS AND WHICH
         HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF
         BORROWER AND FOOTHILL WAIVES,  TO THE EXTENT PERMITTED UNDER APPLICABLE
         LAW,  ANY  RIGHT  EACH MAY HAVE TO  ASSERT  THE  DOCTRINE  OF FORUM NON
         CONVENIENS  OR TO  OBJECT  TO VENUE TO THE  EXTENT  ANY  PROCEEDING  IS
         BROUGHT IN  ACCORDANCE  WITH THIS  SECTION 13.  BORROWER  AND  FOOTHILL
         HEREBY  WAIVE THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
         CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN  DOCUMENTS
         OR ANY OF THE TRANSACTIONS  CONTEMPLATED  THEREIN,  INCLUDING  CONTRACT
         CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
         STATUTORY  CLAIMS.  BORROWER  AND  FOOTHILL  REPRESENT  THAT  EACH  HAS
         REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
         TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
         LITIGATION,  A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
         TO A TRIAL BY THE COURT.

14.      Destruction of Borrower's Documents

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

15.      General Provisions

          15.1      Effectiveness.  This  Agreement  shall be binding and deemed
                    effective when executed by Borrower and Foothill.

          15.2      Successors and Assigns.  This Agreement shall bind and inure
                    to the benefit of the  respective  successors and assigns of
                    each of the parties;  provided,  however,  that Borrower may
                    not assign this Agreement or any rights or duties  hereunder
                    without  Foothill's prior written consent and any prohibited
                    assignment  shall  be  absolutely  void.  No  consent  to an
                    assignment  by  Foothill  shall  release  Borrower  from its
                    Obligations.  Foothill  may assign  this  Agreement  and its
                    rights and duties hereunder.  Foothill reserves the right to
                    sell, assign,  transfer,  negotiate, or grant participations
                    in all or any part of, or any interest in Foothill's  rights
                    and benefits hereunder.  In connection  therewith,  Foothill
                    may disclose all documents and  information  which  Foothill
                    now or hereafter may have relating to Borrower or Borrower's
                    business. To the extent that Foothill assigns its rights and
                    obligations  hereunder  to a  third  party,  Foothill  shall
                    thereafter  be released from such  assigned  obligations  to
                    Borrower and such assignment shall effect a novation between
                    Borrower and such third party.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        16

<PAGE>



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

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

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

          15.6      Amendments in Writing.  This Agreement  cannot be changed or
                    terminated  orally.  All prior  agreements,  understandings,
                    representations,  warranties, and negotiations,  if any, are
                    merged into this Agreement.

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

          15.8      Revival and Reinstatement of Obligations.  If the incurrence
                    or payment of the Obligations by Borrower or the transfer by
                    either or both of such  parties to Foothill of any  property
                    of  either or both of such  parties  should  for any  reason
                    subsequently  be declared to be improper  under any state or
                    federal  law  relating  to  creditors'  rights,   including,
                    without   limitation,   provisions   of  the  United  States
                    Bankruptcy   Code   relating  to   fraudulent   conveyances,
                    preferences,  and other voidable or recoverable  payments of
                    money or  transfers of property  (collectively,  a "Voidable
                    Transfer"), and if Foothill is required to repay or restore,
                    in whole or in part, any such Voidable  Transfer,  or elects
                    to do so upon the reasonable advice of its counsel, then, as
                    to any such Voidable  Transfer,  or the amount  thereof that
                    Foothill  is  required  to repay or  restore,  and as to all
                    reasonable  costs,  expenses and attorneys' fees of Foothill
                    related   thereto,   the   liability   of   Borrower   shall
                    automatically be revived, reinstated, and restored and shall
                    exist as though such Voidable Transfer had never been made.

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        17

<PAGE>



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

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed at Los Angeles, California.

                                        "Borrower"

                                        Fantastic Foods International, Inc.,
                                        a California corporation



                                       By:   /s/       J.L. Lawver
                                             ----------------------------------
                                             Name:     J.L. Lawver
                                             Title:    President

ACCEPTED AND EFFECTIVE
THIS 26TH DAY OF OCTOBER, 1995.

                                        "Foothill"

                                        Foothill Capital Corporation,
                                        a California corporation



                                        By:  /s/       Pamela S. Ferro
                                             ----------------------------------
                                             Name:     Pamela S. Ferro
                                             Title:    Vice President

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        18

<PAGE>



                                  Schedule E-1

                                    Equipment

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        19

<PAGE>



Pasta Fresca Company


                          
============== ===============================================================
00101          EXTRUDER: MARCHIO DEPOSITATO: S/N 1021
00108          PASTA SHEETER, P. DOMINIONI
00116          PACKAGE MACHINE, MULTI-VAC: S/N 573-032
00202A         TORTELLINI MACHINE, SAIMA: MODEL T4B, S/N B101-4
00202B         TORTELLINI MACHINE, SAIMA
00202C         TORTELLINI MACHINE, SAIMA, (NOT VIEWED) DESKTOP
00208          PASTEURIZER, P. DOMINIONI: S/N 270
00218          DRYER, P. DOMINIONI, 3-DOOR
00301          MIXER, TORESANI, MODEL 50A; S/N 86152
00311          PASTA SHEETER, TORESANI; S/N N.A.
00318          PASTA SHEETER, SAIMA; S/N 010/1
00401          PASTEURIZER, PASTA, 30"; S/N N.A.
00410          FREEZE TUNNEL, PASTA; S/N 90-01-60
00501          PASTA CUTTER, FLAT SAIMA
00511          PACKAGING MACHINE, MULTI-VAC, MODEL M855-F-PC; S/N 1094/1
00519          CASE SEALER, 3M; S/N 5332
00601          REFRIGERATOR, WALK-IN 22 X 32 X 14'
00610          FREEZER, WALK-IN, 28 X 25 X 16'
00701          PASTA CUTTER, CALIBRATOR, DOMINIONI
00801          MIXER, TORESANI, 100 KG CAP; S/N N.A. (NOT VIEWED) DESKTOP
00806          PASTA SHEETER, TORESANI
00811          TORTELLINI MACHINE, DOMINIONI; S/N N.A.
00818          LABELER, UNI-LASE
00823          (2) SHRINK WRAPPERS, SERGENT; S/N (1) 46963 & (1) N.A.
00902          PACKAGING MACHINE, MULTI-VAC; S/N 1352
00908          SHRINK WRAPPER, X-RITE; S/N 001045

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        20

<PAGE>


Pasta Fresca Company

                          
============== ================================================================
01001          LOT PIZZA EQUIPMENT: (2)PIZZA OVENS S/N 14566-11-88/17894-82-20;
               DOUGH MIXER S/N 70260; DIVIDER ROUNDER S/N 1299; (3) DOUGH
               ROLLERS S/N 11-6792, 11140 & 4410; PROOFER
01101          TORTELLINI MACHINE, IMA
01108          FORKLIFT TRUCK, MITSUBISHI, 2700# CAP: S/N 52032
01115          COOKER/BLANCHER, RIETZ
01201          PALLET TRUCK, WALK BEHIND, 1500# CAP.; S/N N.A.
01301          MIXER, VULCAN, MODEL L-60; S/N 300353
01307          TORTELLINI MACHINE, DOMINIONI
01313          RAVIOLI MACHINE, DOMINIONI; S/N 2559
01319          PASTA CUTTER, DOMINIONI
01401          PASTA MACHINE, DOMINIONI
01407          CHEESE/MEAT GRINDER
01411          MEAT GRINDER, BENCH; S/N 64969
01417          DOUGH SHEETER, PASTA, DOMINIONI; S/N 2442
01501          PASTEURIZER, DOMINIONI
01506          EXTRUDER, L. PARMIGIANA; S/N 200463
01512          REFRIGERATOR, PHOENIX
01615          PALLET LIFT TRUCK, CROWN; S/N 36953
01621          PACKAGING MACHINE, MULTI-VAC; S/N 968-152
01701          RAVIOLI MACHINE, TORESANI
01707          DOUGH SHEETER, IMA
01713          GNOCCI MACHINE, DOMINIONI; S/N 3099
01719          EXTRUDER, SAIMA, S/N H4/12
01801          TORTELLINI MACHINE, DOMINIONI
01807          MIXER, BLAKESLEE; S/N 224421AAA
01815          EXTRUDER, PASTA, EDLEWEISS; S/N 8501

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        21

<PAGE>


Pasta Fresca Company
                          
============== ================================================================
01901          REFRIGERATOR, WALK-IN, 7 X 11 X 8
01907          REFRIGERATOR, WALK-IN, 9 X 12 X 8
02002          REFRIGERATOR, STANLEY DOUCETTE
02007          PALLET LIFT TRUCK, ROL-LIFT; S/N 2659
02012          LOT SAUCE PRODUCTION SYSTEM W(3) KETTLES; S/N'S 39442, 25991/5350
02020          PACKAGING MACHINE, HOLOMATIC; S/N 32775
02101          FREEZER, WALK-IN, 8'7" X 8'7" X 8'
02109          REFRIGERATOR, WALK-IN, 12 X 19 X 8
02114          PUMP/FILLER, FILAMATIC
02120          VERTICAL CHOPPER / MIXER, HOBART
02201          CASE SEALER, 3M; S/N 1355
02208          PACKAGING / HEAT SEALER UNIT; S/N AP-1166 (NOT VIEWED); DESKTOP
02214          KETTLE, 60 GALLON, ELECTRIC; S/N 29783
02301          REFRIGERATOR, TRUE, 3-DOOR
02306          2 BURNERS, WELLS, ELECTRIC; S/N 7506 & 7507
02312          CONVECTION OVEN, BLODGETT; S/N 058261739112
02318          EXHAUST HOOD, 6' WIDE W/HALON SYSTEM
               Grand Total
============== ===============================================================

                                                           [FFI\AGR:FOOTSEC.AGR]

                                                        22