FOURTH AMENDED AND RESTATED
                          WAREHOUSING CREDIT AGREEMENT

                                      AMONG

                          PLM EQUIPMENT GROWTH FUND VI
                     PLM EQUIPMENT GROWTH & INCOME FUND VII
               PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
                          PLM FINANCIAL SERVICES, INC.

                                       AND

                           THE LENDERS LISTED HEREIN,

                                       AND

                           FIRST UNION NATIONAL BANK,
                                    as Agent







                                December 15, 1998

<PAGE>

                          WAREHOUSING CREDIT AGREEMENT

                                TABLE OF CONTENTS

                                                                        Page
SECTION 1.        DEFINITIONS.............................................1

         1.1      Defined Terms...........................................1

         1.2      Accounting Terms........................................17

         1.3      Other Terms.............................................17

         1.4      Schedules And Exhibits..................................18

SECTION 2.        AMOUNT AND TERMS OF CREDIT..............................18

         2.1      Commitment To Lend......................................18

                  2.1.1    Revolving Facility.............................18

                           (a)      Facility Commitments..................18

                           (b)      Each Loan.............................19

                  2.1.2    Funding........................................20

                  2.1.3    Utilization Of The Loans.......................20

         2.2      Repayment And Prepayment................................20

                  2.2.1    Repayment......................................20

                  2.2.2    Voluntary Prepayment...........................20

                  2.2.3    Mandatory Prepayments..........................20

         2.3      Calculation Of Interest; Post-Maturity Interest.........21

         2.4      Manner Of Payments......................................21

         2.5      Payment On Non-Business Days............................21

         2.6      Application Of Payments.................................21

         2.7      Procedure For The Borrowing Of Loans....................22

                  2.7.1    Notice Of Borrowing............................22

                  2.7.2    Unavailability Of LIBOR Loans..................22

         2.8      Conversion And Continuation Elections...................22

                  2.8.1    Election.......................................22

                  2.8.2    Notice Of Conversion...........................23

                  2.8.3    Interest Period................................23

                  2.8.4    Unavailability Of LIBOR Loans..................23

         2.9      Discretion Of Lenders As To Manner Of Funding...........23

         2.10     Distribution Of Payments................................24

         2.11     Agent's Right To Assume Funds Available For Advances....24

         2.12     Agent's Right To Assume Payments Will Be Made By Borrower..24

         2.13     Capital Requirements....................................24

         2.14     Taxes...................................................25

                  2.14.1   No Deductions..................................25

                  2.14.2   Miscellaneous Taxes............................25

                  2.14.3   Indemnity......................................25

                  2.14.4   Required Deductions............................25

                  2.14.5   Evidence of Payment............................26

                  2.14.6   Foreign Persons................................26

                  2.14.7   Income Taxes...................................26

                  2.14.8   Reimbursement Of Costs.........................27

                  2.14.9   Jurisdiction...................................27

         2.15     Illegality..............................................27

                  2.15.1   LIBOR Loans....................................27

                  2.15.2   Prepayment.....................................27

                  2.15.3   Prime Rate Borrowing...........................28

         2.16     Increased Costs.........................................28

         2.17     Inability To Determine Rates............................28

         2.18     Prepayment Of LIBOR Loans...............................28

SECTION 3.  CONDITIONS  PRECEDENT TO  EFFECTIVENESS  OF THIS  AGREEMENT  AND THE
MAKING OF LOANS...........................................................29

         3.1      Effectiveness of This Agreement.........................29

                  3.1.1    Partnership, Company And Corporate Documents...29

                  3.1.2    Notes..........................................29

                  3.1.3    Security Documents.............................29

                  3.1.4    Opinion Of Counsel.............................29

                  3.1.5    Reaffirmation of Guaranty......................29

                  3.1.6    TEC AcquiSub Amendment.........................29

                  3.1.7    Bringdown Certificate..........................29

                  3.1.8    Fees...........................................29

                  3.1.9    Other Documents................................29

         3.2      All Loans...............................................30

                  3.2.1    Notice Of Borrowing............................30

                  3.2.2    No Event Of Default............................30

                  3.2.3    Representations And Warranties.................30

                  3.2.4    Insurance......................................30

                  3.2.5    Other Instruments..............................30

         3.3      Further Conditions To All Loans.........................30

                  3.3.1    General Partner Or Manager.....................30

                  3.3.2    Removal Of General Partner Or Manager..........30

                  3.3.3    Purchaser......................................31

SECTION 4.        BORROWERS' AND FSI'S REPRESENTATIONS AND WARRANTIES.....31

         4.1      General Representations And Warranties..................31

                  4.1.1    Existence And Power............................31

                  4.1.2    Loan Documents And Notes Authorized; Binding 
                           Obligations....................................31

                  4.1.3    No Conflict; Legal Compliance..................31

                  4.1.4    Financial Condition............................32

                  4.1.5    Executive Offices..............................32

                  4.1.6    Litigation.....................................32

                  4.1.7    Material Contracts.............................32

                  4.1.8    Consents And Approvals.........................32

                  4.1.9    Other Agreements...............................33

                  4.1.10   Employment And Labor Agreements................33

                  4.1.11   ERISA..........................................33

                  4.1.12   Labor Matters..................................33

                  4.1.13   Margin Regulations.............................33

                  4.1.14   Taxes..........................................34

                  4.1.15   Environmental Quality..........................34

                  4.1.16   Trademarks, Patents, Copyrights, Franchises 
                           And Licenses...................................35

                  4.1.17   Full Disclosure................................35

                  4.1.18   Other Regulations..............................35

                  4.1.19   Solvency.......................................35

                  4.1.20   Year 2000......................................35

         4.2      Representations And Warranties At Time Of First Advance.35

                  4.2.1    Power And Authority............................35

                  4.2.2    No Conflict....................................36

                  4.2.3    Consents And Approvals.........................36

         4.3      Survival Of Representations And Warranties..............36

SECTION 5.        BORROWERS' AND FSI'S AFFIRMATIVE COVENANTS..............36

         5.1      Records And Reports.....................................36

                  5.1.1    Quarterly Statements...........................36

                  5.1.2    Annual Statements..............................37

                  5.1.3    Borrowing Base Certificate.....................37

                  5.1.4    Compliance Certificate.........................37

                  5.1.5    Reports........................................37

                  5.1.6    Insurance Reports..............................37

                  5.1.7    Certificate Of Responsible Officer.............38

                  5.1.8    Employee Benefit Plans.........................38

                  5.1.9    ERISA Notices..................................38

                  5.1.10   Pension Plans..................................38

                  5.1.11   SEC Reports....................................38

                  5.1.12   Tax Returns....................................38

                  5.1.13   Additional Information.........................39

         5.2      Existence; Compliance With Law..........................39

         5.3      Insurance...............................................40

         5.4      Taxes And Other Liabilities.............................40

         5.5      Inspection Rights; Assistance...........................40

         5.6      Maintenance Of Facilities; Modifications................40

                  5.6.1    Maintenance Of Facilities......................40

                  5.6.2    Certain Modifications To The Equipment.........41

         5.7      Supplemental Disclosure.................................41

         5.8      Further Assurances......................................41

         5.9      Lockbox.................................................41

         5.10     Environmental Laws......................................41

SECTION 6.        BORROWER'S AND FSI'S NEGATIVE COVENANTS.................41

         6.1      Liens; Negative Pledges; And Encumbrances...............41

         6.2      Acquisitions............................................42

         6.3      Limitations On Indebtedness.............................42

         6.4      Use Of Proceeds.........................................43

         6.5      Disposition Of Assets...................................43

         6.6      Restriction On Fundamental Changes......................43

         6.7      Transactions With Affiliates............................44

         6.8      Maintenance Of Business.................................44

         6.9      No Distributions........................................44

         6.10     Events Of Default.......................................44

         6.11     ERISA...................................................44

         6.12     No Use Of Any Lender's Name.............................44

         6.13     Certain Accounting Changes..............................44

         6.14     Amendments Of Limited Partnership Or Operating Agreements..45

SECTION 7.        FINANCIAL COVENANTS OF BORROWER AND FSI.................45

         7.1      Maximum Funded Debt Ratio...............................45

         7.2      Minimum Debt Service Ratio..............................45

         7.3      Cash Balances...........................................45

SECTION 8.        EVENTS OF DEFAULT AND REMEDIES..........................45

         8.1      Events Of Default.......................................45

                  8.1.1    Failure To Make Payments.......................45

                  8.1.2    Other Agreements...............................46

                  8.1.3    Breach Of Covenants............................46

                  8.1.4    Breach Of Representations Or Warranties........46

                  8.1.5    Failure To Cure................................46

                  8.1.6    Insolvency.....................................47

                  8.1.7    Bankruptcy Proceedings.........................47

                  8.1.8    Material Adverse Effect........................47

                  8.1.9    Judgments, Writs And Attachments...............47

                  8.1.10   Legal Obligations..............................48

                  8.1.11   TEC AcquiSub Agreement.........................48

                  8.1.12   Change Of General Partner Or Manager...........48

                  8.1.13   Change Of Purchaser............................48

                  8.1.14   Criminal Proceedings...........................48

                  8.1.15   Action By Governmental Authority...............48

                  8.1.16   Governmental Decrees...........................49

         8.2      Waiver Of Default.......................................49

         8.3      Remedies................................................49

         8.4      Set-Off.................................................50

         8.5      Rights And Remedies Cumulative..........................50

SECTION 9.        AGENT...................................................50

         9.1      Appointment.............................................50

         9.2      Delegation Of Duties....................................51

         9.3      Exculpatory Provisions..................................51

         9.4      Reliance By Agent.......................................51

         9.5      Notice Of Default.......................................52

         9.6      Non-Reliance On Agent And Other Lenders.................52

         9.7      Indemnification.........................................52

         9.8      Agent In Its Individual Capacity........................53

         9.9      Resignation And Appointment Of Successor Agent..........53

SECTION 10.       EXPENSES AND INDEMNITIES................................53

         10.1     Expenses................................................53

         10.2     Indemnification.........................................54

                  10.2.1   General Indemnity..............................54

                  10.2.2   Environmental Indemnity........................54

                  10.2.3   Survival; Defense..............................55

SECTION 11.       MISCELLANEOUS...........................................55

         11.1     Survival................................................55

         11.2     No Waiver By Agent Or Lenders...........................55

         11.3     Notices.................................................55

         11.4     Headings................................................56

         11.5     Severability............................................56

         11.6     Entire Agreement; Construction; Amendments And Waivers..56

         11.7     Reliance By Lenders.....................................57

         11.8     Marshaling; Payments Set Aside..........................57

         11.9     No Set-Offs By Borrowers................................57

         11.10    Binding Effect, Assignment..............................57

         11.11    Counterparts............................................59

         11.12    Equitable Relief........................................59

         11.13    Written Notice Of Claims; Claims Bar....................59

         11.14    Waiver Of Punitive Damages..............................59

         11.15    Relationship Of Parties.................................59

         11.16    Obligations Of Each Borrower............................60

         11.17    Co-Borrower Waivers.....................................61

         11.18    Governing Law...........................................61

         11.19    Waiver Of Jury Trial....................................62



<PAGE>


                           FOURTH AMENDED AND RESTATED
                          WAREHOUSING CREDIT AGREEMENT


         THIS FOURTH  AMENDED  AND  RESTATED  WAREHOUSING  CREDIT  AGREEMENT  is
entered into as of December 15, 1998, by and among PLM EQUIPMENT GROWTH FUND VI,
a California limited  partnership ("EGF VI"), PLM EQUIPMENT GROWTH & INCOME FUND
VII, a California  limited  partnership  ("EGF  VII"),  and  PROFESSIONAL  LEASE
MANAGEMENT  INCOME FUND I, L.L.C., a Delaware limited liability company ("Income
Fund I") (EGF V, EGF VI, EGF VII and  Income  Fund I each  individually  being a
"Borrower" and,  collectively,  the  "Borrowers"),  and PLM FINANCIAL  SERVICES,
INC., a Delaware corporation and the sole general partner, in the case of EGF V,
EGF VI and EGF VII, and the sole manager,  in the case of Income Fund I ("FSI"),
the banks,  financial  institutions and institutional  lenders from time to time
party  hereto and  defined  as Lenders  herein  and FIRST  UNION  NATIONAL  BANK
("FUNB") not in its individual capacity, but solely as Agent.

This  Agreement  amends,  restates and  supersedes the Growth Fund Agreement (as
defined below).

                                    RECITALS

         A.  Borrowers,  Lenders and Agent  entered into that Third  Amended and
Restated  Warehousing  Credit Agreement dated as of December 2, 1997, as amended
to the date hereof (as so amended,  the "Growth  Fund  Agreement"),  pursuant to
which  Lenders have agreed to extend and make  available  to  Borrowers  certain
advances of credit.

         B.  Borrowers  and Lenders  desire to amend and restate the Growth Fund
Agreement as set forth herein.

         C. Lenders have agreed to make such credit available to Borrowers,  but
only upon the terms and subject to the conditions  hereinafter  set forth and in
reliance on the representations and warranties set forth herein.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
mutual  covenants  hereinafter set forth, and intending to be legally bound, the
parties hereto agree as follows:

section 1.        DEFINITIONS.

1.1 Defined  Terms.  As used  herein,  the  following  terms have the  following
meanings:

         "Acquisition" means, with respect to any Borrower, any transaction,  or
any series of related transactions,  by which such Borrower, FSI or any of FSI's
Subsidiaries,   including,   without  limitation,  TEC  AcquiSub,   directly  or
indirectly (a) acquires any ongoing business or all or substantially  all of the
assets of any Person or division thereof,  whether through a purchase of assets,
merger or otherwise,  or (b) acquires (in one  transaction or as the most recent
transaction in a series of  transactions)  control of at least a majority of the
stock  of a  corporation  having  ordinary  voting  power  for the  election  of
directors,  or (c)  acquires  control  of at least a majority  of the  ownership
interests in any partnership or joint venture.

         "Adjusted  LIBOR" means,  for each Interest  Period in respect of LIBOR
Loans,  an interest rate per annum (rounded  upward to the nearest 1/16th of one
percent (0.0625%)) determined pursuant to the following formula:

                    Adjusted LIBOR =                  LIBOR
                                     -------------------------------------
                                     1.00 - Eurodollar Reserve Percentage

The Adjusted LIBOR shall be adjusted  automatically  as of the effective date of
any change in the Eurodollar Reserve Percentage.

         "Advance"  means any  Advance  made or to be made by any  Lender to any
Borrower as set forth in Section 2.1.1.

         "Affiliate"  means,  with respect to any Person,  (a) each Person that,
directly or indirectly,  through one or more  intermediaries,  owns or controls,
whether beneficially or as a trustee,  guardian or other fiduciary, five percent
(5.0%) or more of the stock  having  ordinary  voting  power in the  election of
directors of such Person or of the  ownership  interests in any  partnership  or
joint  venture,  (b) each Person that  controls,  is  controlled  by or is under
common control with such Person or any Affiliate of such Person,  or (c) each of
such Person's  officers,  directors,  joint  venturers  and partners;  provided,
however,  that in no case shall any Lender or Agent be deemed to be an Affiliate
of any Borrower or FSI for purposes of this  Agreement.  For the purpose of this
definition,  "control"  of a Person  shall  mean  the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of its  management or
policies,  whether  through the ownership of voting  securities,  by contract or
otherwise.

         "Agent"  means FUNB  solely  when  acting in its  capacity as the Agent
under this  Agreement  or any of the other  Loan  Documents,  and any  successor
Agent.

         "Agent's Side Letter" means the side letter  agreement  dated  December
15, 1998, by and between Borrowers, TEC AcquiSub, AFG and Agent.

         "Agreement" means this Fourth Amended and Restated  Warehousing  Credit
Agreement dated as of December 15, 1998, including all amendments, modifications
and supplements  hereto,  renewals,  extensions or restatements  hereof, and all
appendices,  exhibits and schedules to any of the foregoing,  and shall refer to
the Agreement as the same may be in effect from time to time.

         "Aircraft"  means any corporate,  commuter,  or commercial  aircraft or
helicopters,  with  modifications (as applicable) and replacement or spare parts
used in connection therewith,  including, without limitation,  engines, rotables
or propellers,  and any engines,  rotables and  propellers  used on a stand-lone
basis.

         "Applicable Margin" means:

(a)      with respect to Prime Rate Loans, zero percent (0.00%); and

(b) with respect to LIBOR Loans, one and five-eighths percent (1.625%).

         "Assignment  and  Acceptance"  has the  meaning  set  forth in  Section
11.10.2.

         "Bankruptcy  Code" means the  Bankruptcy  Code of 1978, as amended,  as
codified  under Title 11 of the United  States Code,  and the  Bankruptcy  Rules
promulgated thereunder, as the same may be in effect from time to time.

         "Borrower" has the meaning set forth in the Preamble.

         "Borrowing  Base" means,  as  calculated  separately  for each Borrower
individually  as at any date of  determination,  an amount not to exceed the sum
of:

                  (a) fifty percent (50.0%) of the  unrestricted  cash available
for the purchase of Eligible Inventory by such Borrower,

                  plus

                  (b) an  amount  equal to the  lesser  of (i)  seventy  percent
(70.0%) of the  aggregate  net book value or (ii) fifty  percent  (50.0%) of the
aggregate  net fair market  value of all Eligible  Inventory  then owned by such
Borrower or a Marine  Subsidiary  or owned of record by an Owner Trustee for the
beneficial  interest of such Borrower or any Marine  Subsidiary of such Borrower
(provided,  however,  that  there  shall be  excluded  from this  clause (b) the
aggregate net book value or aggregate net fair market value, as the case may be,
of all items of  Eligible  Inventory  which are  either  (i)  off-lease  or (ii)
subject to a Lease under which any  applicable  lease or rental  payment is more
than  ninety  (90) days past due,  but only to the extent and in the amount that
the aggregate  net book value or net fair market  value,  as the case may be, of
such otherwise  excluded  Eligible  Inventory exceeds fifteen percent (15.0%) of
the respective net book value or net fair market value of all Eligible Inventory
included in this clause (b) notwithstanding this proviso),

                  less

                  (c) the  aggregate  Consolidated  Funded Debt of such Borrower
then  outstanding,  excluding  the  aggregate  principal  amounts  of the  Loans
outstanding for such Borrower under the Facility,

in each  case  computed,  (1) with  respect  to any  requested  Loan,  as of the
requested  Funding Date (and shall include the item(s) of Eligible  Inventory to
be acquired  with the proceeds of the requested  Loan),  and (2) with respect to
the delivery of any monthly Borrowing Base Certificate to be furnished  pursuant
to  Section  5.1.3,  as of the last day of the  calendar  month for  which  such
Borrowing  Base  Certificate  is  furnished  (provided,  that for the purpose of
computing  the  Borrowing  Base,  in the  event  that any  Borrower  or a Marine
Subsidiary of such Borrower shall own less than one hundred percent  (100.0%) of
the record or beneficial  interests in any item of Eligible Inventory,  with one
or more of the other Equipment Growth Funds owning of record or beneficially the
remaining interests, there shall be included only such Borrower's or such Marine
Subsidiary's,  as the case may be,  ratable  interest  in such item of  Eligible
Inventory).

         "Borrowing Base  Certificate"  means,  with respect to any Borrower,  a
certificate  with  appropriate  insertions  setting forth the  components of the
Borrowing  Base of such  Borrower as of the last day of the month for which such
certificate is submitted or as of a requested  Funding Date, as the case may be,
which  certificate shall be substantially in the form set forth in Exhibit B and
certified by a Responsible Officer of such Borrower.

         "Business Day" means any day which is not a Saturday, Sunday or a legal
holiday under the laws of the States of California or North Carolina or is not a
day on which banking  institutions  located in the States of California or North
Carolina are  authorized  or permitted  by law or other  governmental  action to
close and,  with  respect to LIBOR  Loans,  means any day on which  dealings  in
foreign  currencies  and exchanges may be carried on by Agent and Lenders in the
London interbank market.

         "Casualty  Loss" means any of the following  events with respect to any
item of Eligible Inventory:  (a) the actual total loss or compromised total loss
of such item of Eligible  Inventory;  (b) such item of Eligible  Inventory shall
become lost, stolen,  destroyed,  damaged beyond repair or permanently  rendered
unfit  for use for any  reason  whatsoever;  (c)  the  seizure  of such  item of
Eligible Inventory for a period exceeding sixty (60) days or the condemnation or
confiscation  of such item of Eligible  Inventory;  or (d) such item of Eligible
Inventory shall be deemed under its lease to have suffered a casualty loss as to
the entire item of Eligible Inventory.

         "Charges"  means,  with respect to any  Borrower,  all federal,  state,
county,  city,  municipal,  local,  foreign or other governmental taxes, levies,
assessments,  charges  or  claims,  in each case then due and  payable,  upon or
relating to (a) the Loans made to such Borrower  hereunder,  (b) such Borrower's
employees,  payroll,  income or gross receipts, (c) such Borrower's ownership or
use  of any of its  Properties  or  assets  or (d)  any  other  aspect  of  such
Borrower's business.

         "Closing" means the time at which each of the conditions  precedent set
forth in  Section 3 to the making of the first  Loan  hereunder  shall have been
duly fulfilled or satisfied by each Borrower.

         "Closing Date" means the date on which Closing occurs.

         "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  the
Treasury  Regulations adopted thereunder and the Treasury  Regulations  proposed
thereunder  (to  the  extent  Requisite  Lenders,   in  their  sole  discretion,
reasonably  determine that such proposed  regulations  set forth the regulations
that  apply in the  circumstances),  as the same may be in  effect  from time to
time.

         "Commitment" means with respect to each Lender the amounts set forth on
Schedule A and "Commitments" means all such amounts collectively, as each may be
amended from time to time upon the  execution  and delivery of an  instrument of
assignment  pursuant to Section 11.10,  which  amendments  shall be evidenced on
Schedule 1.1.

         "Commitment Termination Date" means December 14, 1999.

         "Compliance  Certificate"  means,  with  respect  to  any  Borrower,  a
certificate signed by a Responsible  Officer of such Borrower,  substantially in
the  form of  Exhibit  E,  with  such  changes  as Agent  may from  time to time
reasonably  request  for the  purpose of having such  certificate  disclose  the
matters certified therein and the method of computation thereof.

         "Consolidated  EBITDA" means,  for any Borrower,  as measured as at any
date of determination for any period on a consolidated basis, the sum of (a) the
Consolidated  Net  Income of such  Borrower,  plus (b) all  amounts  treated  as
expenses for  depreciation and the amortization of intangibles of any kind, plus
(c) all accrued taxes on or measured by income,  plus (d) Consolidated  Interest
Expense, and in the cases of clauses (b), (c) and (d), above, each to the extent
included in the determination of Consolidated Net Income.

         "Consolidated Funded Debt" means, for any Borrower,  as measured at any
date of determination on a consolidated  basis, the total amount of all interest
bearing  obligations  (including   Indebtedness  for  borrowed  money)  of  such
Borrower,  capital lease obligations of such Borrower as a lessee and the stated
amount of all  outstanding  undrawn  letters of credit  issued on behalf of such
Borrower or for which such Borrower is liable.

         "Consolidated  Intangible Assets" means, for any Person, as measured at
any date of determination on a consolidated basis, all intangible assets of such
Person.

         "Consolidated Interest Expense" means, for any Borrower, as measured at
any date of  determination  for any period on a  consolidated  basis,  the gross
interest  expense of such Borrower for the period  (including  all  commissions,
discounts,  fees and other charges in connection  with standby letters of credit
and similar instruments), less interest income for that period.

         "Consolidated  Net Income" means, for any Borrower,  as measured at any
date of determination for any period on a consolidated basis, the net income (or
loss) of such Borrower for such period taken as a single accounting period.

         "Consolidated Net Worth" means, for any Person, as measured at any date
of  determination,   the  difference  between   Consolidated  Total  Assets  and
Consolidated Total Liabilities.

         "Consolidated Tangible Net Worth" means, for any Person, as measured at
any date of  determination,  the difference  between  Consolidated Net Worth and
Consolidated Intangible Assets.

         "Consolidated  Total Assets" means, for any Person,  as measured at any
date of determination on a consolidated basis, all assets of such Person.

         "Consolidated  Total Liabilities" means, for any Person, as measured at
any date of  determination  on a  consolidated  basis,  all  liabilities of such
Person.

         "Contingent  Obligation"  means,  as to any  Person,  (a) any  Guaranty
Obligation  of  that  Person  and (b)  any  direct  or  indirect  obligation  or
liability, contingent or otherwise, of that Person, (i) in respect of any letter
of credit or similar  instrument  issued for the account of that Person or as to
which that Person is otherwise liable for  reimbursement of drawings,  (ii) with
respect to the  Indebtedness  of any  partnership or joint venture of which such
Person  is a partner  or a joint  venturer,  (iii) to  purchase  any  materials,
supplies or other property from, or to obtain the services of, another Person if
the relevant  contract or other  related  document or  obligation  requires that
payment for such materials,  supplies or other  property,  or for such services,
shall be made  regardless  of whether  delivery of such  materials,  supplies or
other property is ever made or tendered,  or such services are ever performed or
tendered,  or (iv) in respect of any interest rate  protection  contract that is
not entered into in connection with a bona fide hedging  operation that provides
offsetting  benefits to such  Person.  The amount of any  Contingent  Obligation
shall (subject, in the case of Guaranty Obligations, to the last sentence of the
definition of "Guaranty  Obligation") be deemed equal to the maximum  reasonably
anticipated  liability  in respect  thereof,  and shall,  with respect to clause
(b)(iv) of this definition, be marked to market on a current basis.

         "Debt Service Ratio" means, as measured separately for each Borrower as
at any date of  determination,  the ratio of (a) Consolidated  EBITDA to (b) the
sum of (i) Consolidated  Interest Expense plus (ii) an amount equal to three and
one-eighths  percent (3.125%) of Consolidated  Funded Debt (Consolidated  EBITDA
and  Consolidated  Interest  Expense to be measured on a quarterly basis for the
current fiscal quarter).

         "Default Rate" has the meaning set forth in Section 2.3.

         "Designated  Deposit Account" means a demand deposit account maintained
by Borrowers with FUNB designated by written notice from Borrowers to Agent.

         "Dollars"  and the sign "$" means lawful money of the United  States of
America.

         "Effective  Amount"  means with  respect to any Loans on any date,  the
aggregate  outstanding  principal  amount  thereof  after  giving  effect to any
borrowing and prepayments or repayments thereof occurring on such date.

         "EGF"  means  PLM   Equipment   Growth  Fund,   a  California   limited
partnership.

         "EGF  II"  means  PLM  Equipment  Growth  Fund,  a  California  limited
partnership.

         "EGF III" means PLM  Equipment  Growth Fund III, a  California  limited
partnership.

         "EGF IV" means  PLM  Equipment  Growth  Fund IV, a  California  limited
partnership.

         "EGF  V"  means  PLM  Equipment  Growth  Fund V, a  California  limited
partnership.

         "EGF VI" has the meaning set forth in the Preamble to this Agreement

         "EGF VII" has the meaning set forth in the Preamble to this Agreement.

         "Eligible  Assignee"  means (a) a commercial  bank organized  under the
laws of the United States, or any State thereof; (b) a commercial bank organized
under the laws of any other  country which is a member of the  Organization  for
Economic Cooperation and Development ("OECD"), or a political subdivision of any
such country,  provided,  however,  that such bank is acting through a branch or
agency located in the country in which it is organized or another  country which
is also a member of the OECD; (d) an insurance  company organized under the laws
of the  United  States;  (e) a  commercial  finance  company,  mutual  or  other
investment  fund,  lease  financing  company  or  other  institutional  investor
(whether a corporation,  partnership,  trust or other entity) that is engaged in
making,  purchasing or otherwise  investing in commercial  loans in the ordinary
course of its business,  provided that such Person is an  "accredited  investor"
(as defined in Regulation D under the Securities  Act of 1933, as amended);  (f)
any Lender party to this Agreement;  (g) any Lender  Affiliate and (h) any other
Person  approved by Agent and  Borrower,  such  approval not to be  unreasonably
withheld;  provided, however, that (i) Borrower's approval shall not be required
so long as an  Event of  Default  has  occurred  and is  continuing  and (ii) an
Affiliate of Borrower shall not qualify as an Eligible Assignee.

         "Eligible Inventory" means, with respect to any Borrower, all Trailers,
Aircraft and Aircraft engines, Railcars,  cargo-containers,  marine vessels and,
if approved by Requisite Lenders, other related Equipment, in each case owned by
such  Borrower  or a Marine  Subsidiary  of such  Borrower  (or  jointly by such
Borrower and one or more of the other Equipment Growth Funds) or, subject to the
approval  of  Agent,  any  owner  trust  of  which  such  Borrower  is the  sole
beneficiary or owner (or is the beneficiary or owner jointly with one or more of
the other Equipment Growth Funds), as applicable,  or solely with respect to any
marine vessel registered in Liberia, The Bahamas,  Hong Kong, Singapore or other
registry acceptable to Agent in its sole discretion, any nominee entity of which
such Borrower or a Marine Subsidiary of such Borrower is the sole beneficiary or
direct or indirect  owner (or as the  beneficiary  or direct or  indirect  owner
jointly with one or more of the other Equipment Growth Funds).

         "Employee  Benefit  Plan"  means,  with  respect to any  Borrower,  any
Pension Plan and any employee  welfare  benefit plan, as defined in Section 3(1)
of ERISA,  that is maintained for the employees of such Borrower,  FSI or any of
FSI's Subsidiaries or any ERISA Affiliate of such Borrower.

         "Environmental Claims" means, with respect to any Borrower, all claims,
however  asserted,  by any  Governmental  Authority  or  other  Person  alleging
potential  liability or responsibility for violation of any Environmental Law or
for release or injury to the  environment or threat to public  health,  personal
injury  (including  sickness,   disease  or  death),  property  damage,  natural
resources damage, or otherwise  alleging liability or responsibility for damages
(punitive  or  otherwise),   cleanup,   removal,  remedial  or  response  costs,
restitution,  civil or criminal  penalties,  injunctive relief, or other type of
relief,  resulting  from or based upon (a) the presence,  placement,  discharge,
emission or release  (including  intentional  and  unintentional,  negligent and
non-negligent,  sudden or non-sudden,  accidental or  non-accidental  placement,
spills, leaks, discharges,  emissions or releases) of any Hazardous Material at,
in,  or  from  Property,  whether  or not  owned  by such  Borrower,  FSI or any
Subsidiary  of FSI,  or (b) any  other  circumstances  forming  the basis of any
violation, or alleged violation, of any Environmental Law.

         "Environmental Laws" means all foreign,  federal,  state or local laws,
statutes, common law duties, rules, regulations,  ordinances and codes, together
with  all   administrative   orders,   directed  duties,   requests,   licenses,
authorizations   and  permits  of,  and  agreements   with,   any   Governmental
Authorities, in each case relating to environmental, health, safety and land use
matters,  including the Comprehensive  Environmental Response,  Compensation and
Liability Act of 1980,  the Clean Air Act, the Federal Water  Pollution  Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic  Substances  Control Act and the Emergency  Planning and
Community Right-to-Know Act.

         "Environmental Permit" has the meaning set forth in Section 4.1.15.

         "Equipment"  means,  with  respect  to  any  Borrower,   all  items  of
transportation related equipment owned directly or beneficially by such Borrower
or by any Marine  Subsidiary of such Borrower and held for lease or rental,  and
shall include  items of equipment  legal or record title to which is held by any
owner trust or nominee entity in which such Borrower or any Marine Subsidiary of
such Borrower holds the sole beneficial interest.

         "Equipment Growth Funds" means any and all of EGF, EGF II, EGF III, EGF
IV, EGF V, EGF VI, EGF VII and Income Fund I.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended,  as the same may be in  effect  from  time to time,  and any  successor
statute.

         "ERISA  Affiliate"  means,  as  applied  to any  Person,  any  trade or
business  (whether  or not  incorporated)  which is a member of a group of which
that Person is a member and which is under common  control within the meaning of
the regulations promulgated under Section 414 of the Code.

         "Eurodollar  Reserve  Percentage" means the maximum reserve  percentage
(expressed as a decimal,  rounded  upward to the nearest  1/100th of one percent
(0.01%)) in effect from time to time  (whether or not  applicable to any Lender)
under  regulations  issued by the  Federal  Reserve  Board for  determining  the
maximum  reserve  requirement  (including any emergency,  supplemental  or other
marginal reserve requirement) with respect to Eurocurrency  liabilities having a
term comparable to such Interest Period.

         "Event of Default" means any of the events set forth in Section 8.1.

         "Facility" means the total Commitments described in Schedule A, as such
Schedule A may be amended  from time to time as set forth on Schedule  1.1,  for
the  revolving  credit  facility  described  in Section  2.1.1 to be provided by
Lenders  to  Borrowers,  on a several  but not joint  basis,  according  to each
Lender's Pro Rata Share.

         "Federal  Funds  Rate"  means,  for any day,  the rate set forth in the
weekly   statistical   release   designated  as  H.15(519),   or  any  successor
publication,  published  by  the  Federal  Reserve  Board  (including  any  such
successor,  "H.15(519)")  for such  day  opposite  the  caption  "Federal  Funds
(Effective)".  If on any  relevant  day  such  rate  is  not  yet  published  in
H.15(519),  the rate for  such  day  will be the  rate  set  forth in the  daily
statistical  release  designated as the Composite 3:30 p.m.  Quotations for U.S.
Government Securities,  or any successor  publication,  published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotation,  the rate for such day
will be the arithmetic  mean of the rates for the last  transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of
three leading brokers of Federal funds transactions in New York City selected by
Agent.

         "Federal  Reserve  Board"  means the Board of  Governors of the Federal
Reserve System and any successor thereto.

         "Form 1001" has the meaning set forth in Section 2.14.6.

         "Form 4224" has the meaning set forth in Section 2.14.6.

         "FSI" has the meaning set forth in the Preamble.

         "FUNB" has the meaning set forth in the Preamble.

         "Funded Debt Ratio" means, as measured  separately for each Borrower as
at any date of determination,  the ratio of (a) the Consolidated  Funded Debt of
such  Borrower to (b) the sum of (i) the  aggregate net fair market value of the
Equipment  owned of record  and  beneficially  by such  Borrower  or any  Marine
Subsidiary  of such  Borrower  or owned of  record by an Owner  Trustee  for the
beneficial  interest of such Borrower or any Marine  Subsidiary of such Borrower
plus (ii) the unrestricted cash available for the purchase of Eligible Inventory
for such Borrower  (provided,  that for the purpose of computing the Funded Debt
Ratio,  in the event that any Borrower or a Marine  Subsidiary  of such Borrower
shall own less than one hundred  percent  (100.0%)  of the record or  beneficial
interests  in any item of  Equipment,  with one or more of the  other  Equipment
Growth Funds owning of record or  beneficially  the remaining  interests,  there
shall be included any such Borrower's or such Marine  Subsidiary's,  as the case
may be, ratable interest in such item of Equipment).

         "Funding Date" means with respect to any proposed borrowing  hereunder,
the date funds are  advanced  to any  Borrower  for any Loan  requested  by such
Borrower.

         "GAAP" means generally  accepted  accounting  principles set forth from
time to time in the opinions and  pronouncements  of the  Accounting  Principles
Board and the American  Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar  function of  comparable  stature and  authority  within the  accounting
profession),  or in such  other  statements  by such  other  entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.

         "Governmental   Authority"  means  (a)  any  federal,   state,  county,
municipal or foreign  government,  or  political  subdivision  thereof,  (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department,  instrumentality  or public  body,  (c) any court or  administrative
tribunal or (d) with respect to any Person,  any  arbitration  tribunal or other
non-governmental authority to whose jurisdiction that Person has consented.

         "Guaranty" means that Guaranty dated as of November 5, 1996 executed by
PLMI in favor of Lenders and Agent.

         "Guaranty  Obligation"  means, as applied to any Person,  any direct or
indirect  liability of that Person with respect to any  Indebtedness,  lease for
capital  equipment  other than  Equipment,  dividend,  letter of credit or other
obligation  (the  "primary   obligations")   of  another  Person  (the  "primary
obligor"),  including any obligation of that Person,  whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, or (b) to advance or
provide  funds (i) for the payment or discharge of any such primary  obligation,
or (ii) to maintain  working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or  financial  condition  of the primary  obligor,  or (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such  primary  obligation  of the ability of the primary  obligor to make
payment of such primary obligation,  or (d) otherwise to assure or hold harmless
the holder of any such primary obligation  against loss in respect thereof.  The
amount  of any  Guaranty  Obligation  shall be  deemed  equal to the  stated  or
determinable  amount of the primary obligation in respect of which such Guaranty
Obligation  is  made  or,  if  not  stated  or if  indeterminable,  the  maximum
reasonably anticipated liability in respect thereof.

         "Hazardous  Materials"  means all those  substances which are regulated
by, or which may form the  basis of  liability  under,  any  Environmental  Law,
including all substances  identified under any Environmental Law as a pollutant,
contaminant,  hazardous waste, hazardous  constituent,  special waste, hazardous
substance,  hazardous  material,  or toxic substance,  or petroleum or petroleum
derived substance or waste.

         "IMI" means PLM Investment  Management,  Inc., a California corporation
and a wholly-owned Subsidiary of FSI.

         "Income  Fund I" has the  meaning  set  forth in the  Preamble  to this
Agreement.

         "Indebtedness"  means, as to any Person,  (a) all  indebtedness of such
Person for borrowed money, (b) all leases of equipment of such Person as lessee,
(c) to the extent not included in clause (b), above,  all capital leases of such
Person as lessee,  (d) any  obligation of such Person for the deferred  purchase
price of Property or services (other than trade or other accounts payable in the
ordinary  course of business  and not more than ninety (90) days past due),  (e)
any  obligation  of such  Person  that is  secured  by a Lien on  assets of such
Person, whether or not that Person has assumed such obligation or whether or not
such obligation is non-recourse to the credit of such Person, (f) obligations of
such Person  arising under  acceptance  facilities or under  facilities  for the
discount of accounts  receivable  of such Person and (g) any  obligation of such
Person to reimburse the issuer of any letter of credit issued for the account of
such Person upon which a draw has been made.

         "Indemnified Liability" has the meaning set forth in Section 10.2.

         "Indemnified Person" has the meaning set forth in Section 10.2.

         "Interest  Differential"  means,  with respect to any  prepayment  of a
LIBOR Loan on a day other than an Interest Payment Date on which such LIBOR Loan
matures,  the  difference  between (a) the per annum  interest rate payable with
respect to such LIBOR Loan as of the date of the prepayment and (b) the Adjusted
LIBOR on, or as near as  practicable  to, the date of the prepayment for a LIBOR
Loan  commencing  on such  date and  ending  on the  last day of the  applicable
Interest Period.  The determination of the Interest  Differential by Agent shall
be conclusive in the absence of manifest error.

         "Interest Payment Date" means, with respect to any LIBOR Loan, the last
day of each Interest  Period  applicable to such Loan and, with respect to Prime
Rate Loans,  the first Business Day of each calendar month following the Funding
Date of such Prime Rate Loan; provided, however, that if any Interest Period for
a LIBOR Loan exceeds three (3) months,  interest  shall also be paid on the date
which falls three (3) months after the beginning of such Interest Period.

         "Interest Period" means, with respect to any LIBOR Loan, the one-month,
two-month or three-month period selected by the Requesting  Borrower pursuant to
Section 2, in each  instance  commencing on the  applicable  Funding Date of the
Loan; provided, however, that any Interest Period which would otherwise end on a
day that is not a Business  Day shall end on the next  succeeding  Business  Day
except that in the instance of any LIBOR Loan, if such next succeeding  Business
Day falls in the next calendar month,  the Interest Period shall end on the next
preceding Business Day.

         "Investment  Company Act" means the Investment  Company Act of 1940, as
amended (15 U.S.C.ss.  80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.

         "IRS" means the Internal Revenue Service and any successor thereto.

         "Lease" means, for any Borrower,  each and every item of chattel paper,
installment  sales  agreement,  equipment lease or rental  agreement  (including
progress payment authorizations)  relating to an item of Equipment of which such
Borrower is the record or  beneficial  lessor and in respect of which the lessee
and lease terms (including,  without limitation, as to rental rate, maturity and
insurance coverage) are acceptable to Agent, in its reasonable  discretion.  The
term "Lease" includes (a) all payments to be made thereunder,  (b) all rights of
such Borrower therein, and (c) any and all amendments,  renewals,  extensions or
guaranties thereof.

         "Lender  Affiliate" means a Person engaged primarily in the business of
commercial  banking and that is an Affiliate of a Lender or of a Person of which
a Lender is an Affiliate.

         "Lenders"   means   the   banks,   financial   institutions   or  other
institutional  lenders which have executed signature pages to this Agreement and
such other  Assignees,  banks,  financial  institutions  or other  institutional
lenders as shall hereafter execute and deliver an Assignment and Acceptance with
respect to all or any  portion of the  Commitments  and the Loans  advanced  and
maintained  pursuant  to  the  Commitments,  in  each  case  pursuant  to and in
accordance with Section 11.10.

         "Lending  Office"  means,  with  respect to any  Lender,  the office or
offices of the Lender  specified as its lending office  opposite its name on the
applicable  signature page hereto, or such other office or offices of the Lender
as it may from time to time notify Borrowers and Agent.

         "LIBOR"  means,  with  respect to any Loan to be made,  continued as or
converted  into a LIBOR Loan,  the London  Inter-Bank  Offered Rate  (determined
solely by Agent), rounded upward to the nearest 1/16th of one percent (0.0625%),
at which  Dollar  deposits  are  offered  to Agent by major  banks in the London
interbank market at or about 11:00 a.m., London time, on the second Business Day
prior to the first day of the related  Interest Period with respect to such Loan
in an aggregate amount  approximately equal to the amount of such Loan and for a
period  of time  comparable  to the  number of days in the  applicable  Interest
Period.  The  determination of LIBOR by Agent shall be conclusive in the absence
of manifest error.

         "LIBOR Loan" means a Loan that bears interest based on Adjusted LIBOR.

         "Lien"  means  any  mortgage,  pledge,  hypothecation,  assignment  for
security,  security  interest,  encumbrance,  levy,  lien or charge of any kind,
whether  voluntarily  incurred  or arising  by  operation  of law or  otherwise,
affecting any Property,  including any agreement to grant any of the  foregoing,
any conditional sale or other title retention agreement, any lease in the nature
of a security  interest,  and the filing of or  agreement to file or deliver any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a  security  interest)  under the UCC or
comparable law of any jurisdiction.

         "Limited  Partnership  Agreement" means (a) for EGF VI, the Amended and
Restated Limited Partnership Agreement dated as of December 20, 1991 and (b) for
EGF VII, the Third Amended and Restated Limited Partnership Agreement of EGF VII
dated as of May 10, 1993, as amended by the First Amendment to the Third Amended
and Restated Limited Partnership  Agreement dated May 28, 1993 and by the Second
Amendment to Third Amended and Restated Limited  Partnership  Agreement dated as
of January 21, 1994.

         "Loan" has the meaning set forth in Section 2.1.1.

         "Loan  Document"  when used in the singular and "Loan  Documents"  when
used in the plural means any and all of this Agreement,  the Notes,  the Lockbox
Agreement  and the  Guaranty  and any and all other  agreements,  documents  and
instruments executed and delivered by or on behalf or support of any Borrower to
Agent or any Lender or any of their respective  authorized  designees evidencing
or otherwise  relating to the Advances and the Liens granted to Agent, on behalf
of Lenders,  with respect to the Advances,  as the same may from time to time be
amended, modified, supplemented or renewed.

         "Lockbox" has the meaning set forth in Section 5.9.

         "Lockbox  Agreement"  means the Lockbox  Agreement  dated  December 15,
1998, among Borrowers,  FUNB and Agent on behalf and for the benefit of Lenders,
relating to the Lockbox.

         "Marine  Subsidiary"  means,  for any  Borrower,  a Subsidiary  of such
Borrower (in which the remaining record or beneficial ownership interests may be
held by TEC AcquiSub or any Equipment  Growth Fund) organized for the purpose of
holding legal record title to one or more marine vessels or to aircraft rotables
and spare parts.

         "Material Adverse Effect" means, with respect to any Borrower,  any set
of circumstances or events which (a) has or could reasonably be expected to have
any material adverse effect  whatsoever upon the validity or  enforceability  of
any Loan  Document,  (b) is or could  reasonably  be expected to be material and
adverse to the condition (financial or otherwise) or business operations of such
Borrower  or FSI,  (c)  materially  impairs or could  reasonably  be expected to
materially   impair  the  ability  of  such  Borrower  or  FSI  to  perform  its
Obligations,  or (d)  materially  impairs or could  reasonably  be  expected  to
materially  impair the  ability of Agent or any Lender to enforce  any of its or
their legal remedies pursuant to the Loan Documents.

         "Maturity  Date" means,  with respect to each Loan  advanced by Lenders
hereunder,  the date  which is one  hundred  seventy-nine  (179)  days after the
Funding  Date of such Loan or such  earlier  or later date as  requested  by the
Requesting  Borrower  and  approved  by  Requisite  Lenders,  in their  sole and
absolute discretion; provided, however, in no event shall any Maturity Date be a
date which is later than the Commitment Termination Date.

         "Maximum Availability" has the meaning set forth in Section 2.1.1.

         "Multiemployer   Plan"  means,   with  respect  to  any   Borrower,   a
"multiemployer  plan" as defined in Section  4001(a)(3)  of ERISA,  and to which
such Borrower,  FSI or any of FSI's  Subsidiaries or any ERISA Affiliate of such
Borrower,  FSI or any of FSI's  Subsidiaries is making, or is obligated to make,
contributions or has made, or been obligated to make,  contributions  within the
preceding five (5) years.

         "Note" has the  meaning set forth in Section  2.1.1(a)(i),  and any and
all replacements, substitutions and renewals thereof.

         "Notice of Borrowing"  means a notice given by any Borrower to Agent in
accordance  with  Section  2.7,  substantially  in the form of  Exhibit  F, with
appropriate insertions.

         "Notice  of  Conversion/Continuation"  means  a  notice  given  by  any
Borrower to Agent in accordance with Section 2.8,  substantially  in the form of
Exhibit G, with appropriate insertions.

         "Obligations" means, with respect to any Borrower, all loans, advances,
liabilities and  obligations for monetary  amounts owing by such Borrower to any
Lender or Agent, whether due or to become due, matured or unmatured,  liquidated
or  unliquidated,  contingent  or  non-contingent,  and all covenants and duties
regarding  such  amounts,  of any kind or nature,  arising under any of the Loan
Documents.  This term includes,  without  limitation,  all  principal,  interest
(including  interest that accrues after the commencement of a case or proceeding
against such Borrower  under the  Bankruptcy  Code),  fees,  including,  without
limitation,  any  and all  prepayment  fees,  facility  fees,  commitment  fees,
arrangement  fees,  agent fees and  attorneys'  fees and any and all other fees,
expenses,  costs or other sums chargeable to such Borrower under any of the Loan
Documents.

         "Operating  Agreement"  means the Fifth Amended and Restated  Operating
Agreement of Income Fund I, entered into as of January 24, 1995.

         "Opinion of Counsel" means the favorable written legal opinion of Susan
Santo,  general  counsel  of FSI,  on behalf of FSI for  itself  and as the sole
general  partner  or  managing   member,   as  applicable,   of  each  Borrower,
substantially in the form of Exhibit D.

         "Other Taxes" has the meaning set forth in Section 2.14.2.

         "Overadvance"  has the meaning set forth in Sections  2.1.1(a)(iii) and
(iv).

         "Owner  Trustee"  means  any  Person  acting in the  capacity  of (a) a
trustee for any owner trust or (b) a nominee entity,  in each case holding title
to any  Eligible  Inventory  pursuant to a trust or similar  agreement  with any
Borrower or FSI.

         "PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.

         "Pension  Plan"  means,  with  respect to any  Borrower,  any  employee
pension  benefit plan,  as defined in Section 3(2) of ERISA,  that is maintained
for the  employees of such  Borrower,  FSI or any of FSI's  Subsidiaries  or any
ERISA Affiliate of such Borrower, FSI or any of FSI's Subsidiaries, other than a
Multiemployer Plan.

         "Permitted Liens" has the meaning set forth in Section 6.1.

         "Permitted  Rights of  Others"  means,  as to any  Property  in which a
Person has an interest, (a) an option or right to acquire a Lien that would be a
Permitted Lien, (b) the reversionary  interest of a lessor under a lease of such
Property and (c) an option or right of the lessee under a lease of such Property
to purchase such property at fair market value.

         "Person" means any individual, sole proprietorship,  partnership, joint
venture,   limited  liability  company,  trust,   unincorporated   organization,
association,  corporation,  institution, public benefit corporation, firm, joint
stock company, estate, entity or Governmental Authority.

         "PLMI" means PLM International, Inc., a Delaware corporation.

         "Potential  Event of Default"  means a condition or event which,  after
notice or lapse of time or both, will constitute an Event of Default.

         "Prepayment Date" has the meaning set forth in Section 2.2.2.

         "Prime  Rate"  means,  at any  time,  the rate of  interest  per  annum
publicly  announced from time to time by FUNB as its prime rate.  Each change in
the Prime Rate shall be  effective as of the opening of business on the day such
change in the Prime Rate occurs.  The parties hereto  acknowledge  that the rate
announced  publicly by FUNB as its Prime Rate is an index or base rate and shall
not necessarily be its lowest rate charged to FUNB's customers or other banks.

         "Prime Rate Loan" means any  borrowing  which bears  interest at a rate
determined with reference to the Prime Rate.

         "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.

         "Pro Rata Share" means,  as to any Lender at any time,  the  percentage
equivalent (expressed as a decimal,  rounded to the ninth decimal place) at such
time of the  Effective  Amount of such  Lender's  Loans divided by the Effective
Amount of all Loans, or if no Loans are outstanding,  the percentage  equivalent
(expressed  as a decimal,  rounded to the ninth  decimal  place) at such time of
such Lender's aggregate  Commitments divided by the aggregate Commitments or, if
the  Commitments  have expired or been  terminated and all Loans repaid in full,
the percentage equivalent (expressed as a decimal,  rounded to the ninth decimal
place) of the Effective  Amount of such Lender's  Loans divided by the aggregate
Effective Amount of all Loans immediately before such repayment in full.

         "Public  Utility  Holding Company Act" means the Public Utility Holding
Company Act of 1935, as amended (15  U.S.C.ss.  79 et seq.) as the same shall be
in effect from time to time, and any successor statute thereto.

         "Railcar"  means  all  railroad  rolling  stock,   including,   without
limitation,  all coal, timber,  plastic pellet,  tank, hopper, flat and box cars
and locomotives.

         "Reaffirmation of Guaranty" means the Acknowledgement and Reaffirmation
of Guaranty, dated as of December 15, 1998, executed by PLMI in favor of Lenders
reaffirming its obligations under the Guaranty.

         "Regulations T, U and X" means, collectively, Regulations G, T, U and X
adopted  by the  Federal  Reserve  Board  (12  C.F.R.  Parts  220,  221 and 224,
respectively) and any other regulation in substance substituted therefor.

         "Requesting  Borrower" means any Borrower requesting a Loan pursuant to
Section 2.1.1.

         "Requirement  of Law" means,  as to any Person,  any law  (statutory or
common),  treaty, rule, regulation,  guideline or determination of an arbitrator
or of a Governmental  Authority,  in each case applicable to or binding upon the
Person or any of its  property or to which the Person or any of its  property is
subject.

         "Requisite Lenders" means any combination of Lenders whose combined Pro
Rata Share (and voting interest with respect thereto) of all amounts outstanding
under this  Agreement,  or, in the event there are no amounts  outstanding,  the
Commitments,  is greater than sixty-six and two-thirds  percent (66 2/3%) of all
such amounts outstanding or the total Commitments, as the case may be; provided,
however,  that in the event there are only two (2)  Lenders,  Requisite  Lenders
means both Lenders.

         "Responsible  Officer"  means  for  (i)  FSI,  any  of  the  President,
Executive  Vice  President,  Chief  Financial  Officer,  Secretary  or Corporate
Controller of FSI having  authority to request  Advances or perform other duties
required  hereunder,  and (ii) Borrowers,  any of the President,  Executive Vice
President,  Chief Financial Officer, Secretary or Corporate Controller of FSI as
the sole  general  partner  of EGF V, EGF VI or EGF VII,  as the case may be, or
sole manager of Income Fund I, in each case having authority to request Advances
or perform other duties required hereunder

         "SEC" means the  Securities  and Exchange  Commission and any successor
thereto.

         "Solvent"  means, as to any Person at any time, that (a) the fair value
of the  Property  of such  Person is greater  than the  amount of such  Person's
liabilities  (including  disputed,  contingent and unliquidated  liabilities) as
such value is  established  and  liabilities  evaluated  for purposes of Section
101(31) of the  Bankruptcy  Code;  (b) the present  fair  saleable  value of the
Property  in an orderly  liquidation  of such Person is not less than the amount
that will be required to pay the probable  liability of such Person on its debts
as they become absolute and matured; (c) such Person is able to realize upon its
Property and pay its debts and other liabilities (including disputed, contingent
and  unliquidated  liabilities) as they mature in the normal course of business;
(d) such  Person does not intend to, and does not  believe  that it will,  incur
debts or  liabilities  beyond  such  Person's  ability  to pay as such debts and
liabilities  mature;  and (e)  such  Person  is not  engaged  in  business  or a
transaction,  and is not about to engage in business or a transaction, for which
such Person's property would constitute unreasonably small capital.

         "Subsidiary"  means,  with  respect  to any  Person,  any  corporation,
association,  partnership,  limited  liability  company or other business entity
(other than  Equipment  Growth  Funds) of which an  aggregate  of fifty  percent
(50.0%) or more of the  beneficial  interest (in the case of a  partnership)  or
fifty  percent  (50%) or more of the  outstanding  stock,  units or other voting
interest  having  ordinary  voting  power to elect a majority of the  directors,
managers or trustees of such Person  (irrespective of whether,  at the time, the
stock,  units or other  voting  interest  of any other  class or classes of such
Person shall have or might have voting  power by reason of the  happening of any
contingency)  is  at  the  time,  directly  or  indirectly,   owned  legally  or
beneficially by such Person and/or one or more Subsidiaries of such Person.

         "Taxes" has the meaning set forth in Section 2.14.1.

         "TEC" means PLM  Transportation  Equipment  Corporation,  a  California
corporation and a wholly-owned Subsidiary of FSI.

         "TEC AcquiSub" means TEC AcquiSub,  Inc., a California  special purpose
corporation and a wholly-owned Subsidiary of TEC.

         "TEC  AcquiSub   Agreement"   means  the  Third  Amended  and  Restated
Warehousing  Credit  Agreement  dated as of December 15, 1998,  by and among TEC
AcquiSub,  Lenders  and Agent,  and as the same may from time to time be further
amended, modified, supplemented, renewed, extended or restated.

         "Termination  Event"  means,  with  respect  to  any  Borrower,  (a)  a
"reportable event" described in Section 4043 of ERISA and the regulations issued
thereunder  (other  than a  reportable  event not subject to the  provision  for
30-day notice to the PBGC under such regulations), or (b) the withdrawal of such
Borrower, FSI or any of FSI's Subsidiaries or any of their ERISA Affiliates from
a  Pension  Plan  during  a plan  year in which  any of them was a  "substantial
employer"  as  defined in Section  4001(a)(2)  of ERISA,  or (c) the filing of a
notice of intent to terminate a Pension Plan or the  treatment of a Pension Plan
amendment as a termination  under Section 4041 of ERISA,  or (d) the institution
of  proceedings  to terminate a Pension Plan by the PBGC, or (e) any other event
or condition which might constitute  grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan.

         "Trailer"  means (a)  vehicles  having a minimum  length of twenty (20)
feet used in trailer or freight car service and constructed for the transport of
commodities or containers from point to point and (b) associated equipment.

         "UCC" means the Uniform  Commercial  Code as the same may, from time to
time, be in effect in the State of California;  provided,  however, in the event
that, by reason of mandatory  provisions of law, any and all of the  attachment,
perfection or priority of the Lien of Agent, on behalf of Lenders, in and to any
collateral  is  governed  by the  Uniform  Commercial  Code  as in  effect  in a
jurisdiction  other than the State of California,  the term "UCC" shall mean the
Uniform  Commercial Code as in effect in such other jurisdiction for purposes of
the provisions  hereof relating to such  attachment,  perfection or priority and
for purposes of definitions related to such provisions.

         "Utilization  Leases"  means  Leases  for  Equipment  held for lease in
pooling or similar  arrangements  where the actual  rental  payments  under such
Lease is based on and for the  actual  period  of  utilization  of such  item of
Equipment rather than the Lease term.

1.2 Accounting  Terms.  Any accounting  term used in this Agreement  shall have,
unless otherwise  specifically  provided herein,  the meaning  customarily given
such term in  accordance  with  GAAP,  and all  financial  data  required  to be
submitted by this  Agreement  shall be prepared and computed,  unless  otherwise
specifically  provided  herein,  in accordance  with GAAP. That certain terms or
computations  are explicitly  modified by the phrase "in  accordance  with GAAP"
shall in no way be  construed  to limit the  foregoing.  In the event  that GAAP
changes during the term of this  Agreement such that the covenants  contained in
Section 7 would  then be  calculated  in a  different  manner or with  different
components,  (a) the  parties  hereto  agree to  amend  this  Agreement  in such
respects as are necessary to conform those  covenants as criteria for evaluating
each Borrower's  financial  condition to substantially the same criteria as were
effective  prior to such change in GAAP and (b) each Borrower shall be deemed to
be in  compliance  with the  covenants  contained in the  aforesaid  subsections
during the sixty (60) day period following any such change in GAAP if and to the
extent that each Borrower would have been in compliance  therewith under GAAP as
in effect immediately prior to such change.

1.3 Other Terms.  All other undefined  terms contained in this Agreement  shall,
unless the context  indicates  otherwise,  have the meanings provided for by the
UCC to the  extent  the same are used or defined  therein.  The words  "herein,"
"hereof"  and  "hereunder"  and  other  words of  similar  import  refer to this
Agreement as a whole,  including the Exhibits and Schedules hereto, all of which
are by this reference  incorporated  into this  Agreement,  as the same may from
time to time be amended,  modified or  supplemented,  and not to any  particular
section,  subsection or clause contained in this Agreement. The term "including"
shall  not be  limiting  or  exclusive,  unless  specifically  indicated  to the
contrary. The term "or" is disjunctive;  the term "and" is conjunctive. The term
"shall" is mandatory; the term "may" is permissive. Wherever from the context it
appears  appropriate,  each term stated in either the  singular or plural  shall
include the singular and plural, and pronouns stated in the masculine,  feminine
or neuter gender shall include the masculine, feminine and the neuter.

1.4  Schedules  And  Exhibits.  Any  reference  to  a  "Section,"  "Subsection,"
"Exhibit," or "Schedule" shall refer to the relevant Section or Subsection of or
Exhibit or Schedule to this  Agreement,  unless  specifically  indicated  to the
contrary.

Section 2.        AMOUNT AND TERMS OF CREDIT.

2.1      Commitment To Lend.

2.1.1 Revolving Facility.  Subject to the terms and conditions of this Agreement
and in reliance upon the  representations  and warranties of Borrowers set forth
herein,  Lenders hereby agree to make Advances (as defined below) of immediately
available funds to Borrowers,  on a revolving basis, from the Closing Date until
the Business Day immediately  preceding the Commitment  Termination Date, in the
aggregate  principal amount  outstanding at any time not to exceed the lesser of
(a) the total  Commitments for the Facility less the aggregate  principal amount
then outstanding  under the TEC AcquiSub  Agreement or (b) for any one Borrower,
its   respective   Borrowing   Base  (such  lesser  amount  being  the  "Maximum
Availability"), as more fully set forth in this Section 2.1.1. The obligation of
Borrowers  to repay the Advances  made to any Borrower  shall be several but not
joint.

(a)      Facility Commitments.

(i) On the Funding Date requested by any Borrower (the  "Requesting  Borrower"),
after such Borrower shall have satisfied all applicable conditions precedent set
forth in Section 3, each Lender shall  advance  immediately  available  funds to
Agent (each such advance being an "Advance")  evidencing  such Lender's Pro Rata
Share of a loan  ("Loan").  Agent shall  immediately  advance  such  immediately
available  funds to such  Borrower at the  Designated  Deposit  Account (or such
other deposit  account at FUNB or such other  financial  institution as to which
such  Borrower and Agent shall agree at least three (3)  Business  Days prior to
the requested  Funding Date) on the Funding Date with respect to such Loan.  The
Requesting  Borrower shall pay interest  accrued on the Loan at the rates and in
the manner set forth in Section 2.1.1(b). Subject to the terms and conditions of
this Agreement, the unpaid principal amount of each Loan and all unpaid interest
accrued thereon,  together with all other fees,  expenses,  costs and other sums
chargeable to the Requesting Borrower incurred in connection  therewith shall be
due and payable no later than the Maturity Date of such Loan. Each Loan advanced
hereunder  by each  Lender  shall  be  evidenced  by the  Requesting  Borrower's
revolving  promissory note in favor of such Lender  substantially in the form of
Exhibit A (each a "Note").

(ii) The  obligation  of  Lenders  to make any Loan from time to time  hereunder
shall be limited to the then applicable Maximum Availability. For the purpose of
determining  the amount of the  Borrowing  Base  available at any one time,  the
amount available shall be the total amount of the Borrowing Base as set forth in
the Borrowing Base Certificate delivered to Agent pursuant to Section 3.2.1 with
respect to such requested Loan.  Nothing contained in this Agreement shall under
any  circumstance  be deemed to require any Lender to make any Advance under the
Facility  which,  in the  aggregate  principal  amount,  either (1) taking  into
account such Lender's portion of the principal  amounts  outstanding  under this
Agreement  and the  making  of such  Advance,  exceeds  the  lesser  of (A) such
Lender's Commitment for the Facility and (B) such Lender's Pro Rata Share of the
Requesting  Borrower's  Borrowing Base, or (2) taking into account such Lender's
portion of the aggregate  principal  amounts  outstanding  under this Agreement,
under the TEC AcquiSub Agreement,  and the making of such Advance,  exceeds such
Lender's Commitment for the Facility.

(iii) If at any time and for any reason the  aggregate  principal  amount of the
Loan(s) then  outstanding to any Borrower shall exceed the Maximum  Availability
for such Borrower (the amount of such excess,  if any, being an  "Overadvance"),
such  Borrower  shall  immediately  repay the full  amount of such  Overadvance,
together with all interest  accrued  thereon;  provided,  however,  that if such
Overadvance  occurs  solely  as a result  of a  decrease  in the  amount  of the
Borrowing Base due solely to a decrease in the computation of the Borrowing Base
under  clause (b), as set forth on a Borrowing  Base  Certificate  delivered  to
Agent  pursuant to Section  5.1.3,  then, to the extent of such  decrease,  such
Borrower shall not be required under this Section  2.1.1(a)(iii)  to prepay such
Overadvance  but  Lenders  shall  have no  obligation  to make or fund any Loans
hereunder so long as such Overadvance condition shall remain in effect.

(iv) Amounts  borrowed by Borrowers under this Facility may be repaid and, prior
to the  Commitment  Termination  Date and  subject to the  applicable  terms and
conditions precedent to borrowings  hereunder,  reborrowed;  provided,  however,
that no Loan  shall have a  Maturity  Date  which is later  than the  Commitment
Termination  Date and no LIBOR Loan shall have an Interest  Period  ending after
the Maturity Date.

(v) Each request for a Loan hereunder shall  constitute a  reaffirmation  by the
Requesting  Borrower and the  Responsible  Officer  requesting the same that the
representations and warranties contained in this Agreement are true, correct and
complete in all material respects to the same extent as though made on and as of
the  date  of  the  request,  except  to the  extent  such  representations  and
warranties  specifically relate to an earlier date, in which event they shall be
true, correct and complete in all material respects as of such earlier date.

(b) Each Loan.  Each Loan made by Lenders  hereunder  shall,  at the  Requesting
Borrower's  option in accordance with the terms of this Agreement,  be either in
the  form of a  Prime  Rate  Loan or a LIBOR  Loan.  Subject  to the  terms  and
conditions  of this  Agreement,  each Loan shall bear interest on the sum of the
unpaid  principal  balance  thereof  outstanding  on each day from the date when
made,  continued or converted  until such Loan shall have been fully repaid at a
rate per annum equal to the Prime  Rate,  as the same may  fluctuate  on a daily
basis, or the Adjusted  LIBOR,  as the case may be, plus the Applicable  Margin.
Interest  on  each  Loan  funded  hereunder  shall  be due  and  payable  by the
Requesting  Borrower in arrears on each Interest  Payment Date, with all accrued
but unpaid  interest on such Loan being due and payable on the date such Loan is
repaid,  whether by prepayment  or at maturity,  and with all accrued but unpaid
interest being due and payable by the  Requesting  Borrower on the Maturity Date
for such Loan.

         Each  Advance  made by a  Lender  as part of a Loan  hereunder  and all
repayments  of  principal  with  respect to such  Advance  shall be evidenced by
notations made by such Lender on the books and records of such Lender; provided,
however,  that the failure by such Lender to make such notations shall not limit
or  otherwise  affect  the  obligations  of any  Borrower  with  respect  to the
repayments  of  principal  or payments  of interest on any Advance or Loan.  The
aggregate  unpaid amount of each Advance set forth on the books and records of a
Lender  shall be  presumptive  evidence of such  Lender's  Pro Rata Share of the
principal amount owing and unpaid by any Borrower under its Note.

2.1.2  Funding.  Promptly  following  the  receipt  of such  documents  required
pursuant to Section 3.2.1 and approval of a Loan by Agent, Agent shall notify by
telephone,  telecopier,  facsimile  or telex each  Lender of the (a)  Requesting
Borrower,  (b) the principal amount (including  Lender's Pro Rata Share thereof)
and (c) Funding Date of the Loan  requested  by such  Requesting  Borrower.  Not
later than 1:00 p.m.,  North  Carolina  time,  on the Funding Date for any Loan,
each  Lender  shall  make an  Advance  to Agent for the  account  of  Requesting
Borrower in the amount of its Pro Rata Share of the Loan being  requested.  Upon
satisfaction of the applicable  conditions precedent set forth in Section 3, all
Advances  shall be credited in  immediately  available  funds to the  Designated
Deposit Account.

2.1.3  Utilization  Of The Loans.  The Loans made under the Facility may be used
solely for the purpose of acquiring the specific items of Equipment.

2.2      Repayment And Prepayment.

2.2.1 Repayment.  Unless prepaid pursuant to Section 2.2.2, the principal amount
of each Loan  hereunder  made to a  Requesting  Borrower  shall be repaid by the
Requesting Borrower to Lenders not later than the Maturity Date of such Loan.

2.2.2  Voluntary  Prepayment.  Subject to Section 2.18,  any Borrower may in the
ordinary  course of such Borrower's  business,  upon at least three (3) Business
Days' written  notice,  or telephonic  notice  promptly  confirmed in writing to
Agent,  which notice shall be irrevocable,  prepay any Loan in whole or in part.
Such notice of prepayment  shall specify the date and amount of such  prepayment
and  whether  such  prepayment  is of Prime  Rate Loans or LIBOR  Loans,  or any
combination  thereof.  Such  prepayment  of  Loans,  together  with any  amounts
required  pursuant to Section 2.18, shall be in immediately  available funds and
delivered to Agent not later than 1:00 p.m.,  North  Carolina  time, on the date
for prepayment  stated in such notice (the "Prepayment  Date").  With respect to
any  prepayment  under this Section  2.2.2,  all interest on the amount  prepaid
accrued up to but excluding the date of such prepayment shall be due and payable
on the Prepayment Date.

2.2.3    Mandatory Prepayments.

(a) In the event that any item of Eligible  Inventory  shall be sold or assigned
by any Borrower or any Marine  Subsidiary  of such  Borrower,  or the  ownership
interests  (whether Stock or otherwise) of any Borrower in any Marine Subsidiary
of such  Borrower  owning  record or  beneficial  title to any item of  Eligible
Inventory  shall be sold or  transferred,  then such Borrower shall  immediately
prepay the Loan made with respect to such Eligible Inventory so sold or assigned
or with respect to the Eligible  Inventory  owned by such Marine  Subsidiary  so
sold or transferred, together with any accrued interest on such Loan to the date
of prepayment  and any amounts  required  pursuant to Section 2.18.  The sale or
assignment of Eligible Inventory by an Owner Trustee,  or the sale or assignment
of any Borrower's or any Marine  Subsidiary's  beneficial  interest in any owner
trust  (or  nominee  entity)  holding  title  to  Eligible  Inventory,  shall be
considered a sale or assignment,  as the case may be, of such Eligible Inventory
by such Borrower or such Marine Subsidiary, as the case may be.

(b) In the event  that any of the  Eligible  Inventory  shall have  sustained  a
Casualty Loss, the applicable  Borrower shall promptly  notify Agent and Lenders
of such Casualty Loss and make arrangements  reasonably  acceptable to the Agent
to cause  any and all cash  proceeds  received  by such  Borrower  to be paid to
Lenders as a prepayment hereunder. To the extent not so prepaid, the Loan funded
with  respect  to such  Eligible  Inventory  will  nevertheless  be paid by such
Borrower as provided in Section 2.2.1.

2.3 Calculation Of Interest; Post-Maturity Interest. Interest on the Loans shall
be  computed on the basis of a  365/366-day  year for all Prime Rate Loans and a
360-day  year for all LIBOR Loans and the actual  number of days  elapsed in the
period during which such interest  accrues.  In computing  interest on any Loan,
the date of the  making of such Loan shall be  included  and the date of payment
shall be excluded. Each change in the interest rate of Prime Rate Loans based on
changes in the Prime Rate and each change in the Adjusted LIBOR based on changes
in the Eurodollar Reserve Percentage shall be effective on the effective date of
such change and to the extent of such change.  Agent shall give Borrowers notice
of any such change in the Prime  Rate;  provided,  however,  that any failure by
Agent to provide  Borrowers with notice hereunder shall not affect Agent's right
to make changes in the  interest  rate of any Loan based on changes in the Prime
Rate.  Upon the occurrence and during the  continuation  of any Event of Default
under this  Agreement,  Advances  under this  Agreement  will,  at the option of
Requisite  Lenders,  bear  interest at a rate per annum which is  determined  by
adding two percent (2.00%) to the Applicable  Margin for such Loan (the "Default
Rate").  This may result in the  compounding  of interest.  The  imposition of a
Default Rate will not constitute a waiver of any Event of Default.

2.4 Manner Of Payments.  All  repayments  or  prepayments  of principal  and all
payments  of  interest,  fees,  costs,  expenses  and other sums  chargeable  to
Borrowers  under this  Agreement,  the Notes or any of the other Loan  Documents
shall  be in  lawful  money of the  United  States  of  America  in  immediately
available  funds and delivered to Agent,  for the account of Lenders,  not later
than 1:00 p.m.,  North  Carolina  time, on the date due at First Union  National
Bank,  One First  Union  Center,  301 South  College  Street,  Charlotte,  North
Carolina 28288,  Attention:  Maria Ostrowski,  or such other place as shall have
been designated in writing by Agent.

2.5 Payment On  Non-Business  Days.  Whenever  any payment to be made under this
Agreement, the Note or any of the other Loan Documents shall be stated to be due
on a day which is not a Business  Day,  such  payment  shall be made on the next
succeeding  Business  Day and  such  extension  of time  shall  in such  case be
included  in the  computation  of the  payment of  interest  thereon;  provided,
however, that no Loan shall have remained outstanding after the Maturity Date of
such Loan.

2.6  Application  Of  Payments.  All  payments  to or for the benefit of Lenders
hereunder  shall be applied to the Obligations of any Borrower making payment in
the  following  order:  (a) then due and  payable  fees as set forth in  Section
2.1.1(a)(i) and, at the direction of such Borrower or upon prior notice given to
such Borrower by Agent, other then due and payable fees, expenses and costs; (b)
then due and payable interest payments and mandatory  prepayments;  and (c) then
due and payable principal payments and optional prepayments; provided that if an
Event of Default shall have occurred and be  continuing,  Lenders shall have the
exclusive  right to apply  any and all such  payments  against  the then due and
owing Obligations of such Borrower as Lenders may deem advisable.  To the extent
any Borrower fails to make payment required  hereunder or under any of the other
Loan  Documents,  each Lender is authorized to, and at its sole option may, make
such payments on behalf of such  Borrower.  To the extent  permitted by law, all
amounts  advanced by any Lender  hereunder or under other provisions of the Loan
Documents shall accrue interest at the same rate as Loans hereunder.

2.7      Procedure For The Borrowing Of Loans.

2.7.1  Notice  Of  Borrowing.  Each  borrowing  of Loans  shall be made upon any
Requesting Borrower's  irrevocable written notice delivered to Agent in the form
of a Notice of Borrowing,  executed by a Responsible  Person of such  Requesting
Borrower,  with  appropriate  insertions  (which  Notice  of  Borrowing  must be
received by Lender prior to 12:00 noon,  Charlotte,  North Carolina time,  three
(3) Business Days prior to the requested Funding Date) specifying:

(a) the amount of the requested borrowing,  which, if a LIBOR Loan is requested,
shall be not less than One Million Dollars ($1,000,000);

(b)      the requested Funding Date, which shall be a Business Day;

(c) whether the borrowing is to be comprised of one or more LIBOR Loans or Prime
Rate Loans; and

(d) the  duration  of the  Interest  Period  applicable  to any such LIBOR Loans
included in such Notice of Borrowing.  If the Notice of Borrowing  shall fail to
specify the duration of the Interest Period for any borrowing comprised of LIBOR
Loans, such Interest Period shall be three (3) months.

2.7.2  Unavailability  Of LIBOR  Loans.  Unless Agent shall  otherwise  consent,
during  the  existence  of an Event of Default or  Potential  Event of  Default,
Borrowers may not elect to have a Loan made as a LIBOR Loan.

2.8      Conversion And Continuation Elections.

2.8.1 Election. Each Borrower may, upon irrevocable written notice to Agent:

(a) elect to convert on any  Business  Day,  any Prime Rate Loan (or any portion
thereof in an amount equal to at least One Million Dollars  ($1,000,000)) into a
LIBOR Loan; or

(b) elect to convert on any  Interest  Payment  Date any LIBOR Loan  maturing on
such Interest Payment Date (or any portion thereof) into a Prime Rate Loan; or

(c) elect to continue on any Interest  Payment  Date any LIBOR Loan  maturing on
such  Interest  Payment  Date (or any portion  thereof in an amount  equal to at
least One Million Dollars ($1,000,000));

provided,  that if the  aggregate  amount  of LIBOR  Loans  outstanding  to such
Borrower  shall have been  reduced,  by payment,  prepayment,  or  conversion of
portion  thereof,   to  be  less  than   $1,000,000,   such  LIBOR  Loans  shall
automatically  convert  into  Prime Rate  Loans,  and on and after such date the
right of such  Borrower to continue  such Loans as, and convert such Loans into,
LIBOR Loans shall terminate.

2.8.2 Notice Of Conversion.  Each  conversion or  continuation of Loans shall be
made upon any Borrower's  irrevocable  written notice  delivered to Agent in the
form of a Notice of Conversion/Continuation, executed by a Responsible Person of
such    Borrower,    with    appropriate    insertions    (which    Notice    of
Conversion/Continuation  must  be  received  by  Lender  prior  to  12:00  noon,
Charlotte,  North  Carolina time, at least three (3) Business Days in advance of
the proposed conversion date or continuation date specifying:

(a)      the proposed conversion date or continuation date;

(b)      the aggregate amount of Loans to be converted or continued;

(c)      the nature of the proposed conversion or continuation; and

(d)      the duration of the requested Interest Period.

2.8.3 Interest Period.  If upon the expiration of any Interest Period applicable
to any LIBOR Loan, the  Requesting  Borrower has failed to select a new Interest
Period to be  applicable to such LIBOR Loan,  such  Borrower  shall be deemed to
have elected to convert  such LIBOR Loan into a Prime Rate Loan  effective as of
the last day of such current Interest Period.

2.8.4  Unavailability  Of LIBOR  Loans.  Unless Agent shall  otherwise  consent,
during  the  existence  of an Event of Default or  Potential  Event of  Default,
Borrowers  may not elect to have a Loan  converted  into or continued as a LIBOR
Loan.

2.9 Discretion Of Lenders As To Manner Of Funding. Notwithstanding any provision
of this  Agreement  to the  contrary,  each Lender shall be entitled to fund and
maintain  its  funding  of all or any part of its LIBOR  Loans in any  manner it
elects,  it being understood,  however,  that for the purposes of this Agreement
all determinations hereunder shall be made as if such Lender actually funded and
maintained  each LIBOR Loan through the  purchase of deposits  having a maturity
corresponding  to the  maturity of the LIBOR Loan and  bearing an interest  rate
equal to the LIBOR rate  (whether or not,  in any  instance,  Lender  shall have
granted  any  participations  in such  Loan).  Each Lender may, if it so elects,
fulfill  any  commitment  to make  LIBOR  Loans by  causing a foreign  branch or
affiliate to make or continue such LIBOR Loans; provided,  however, that in such
event such Loans shall be deemed for the purposes of this Agreement to have been
made by such Lender,  and the  obligation of Borrowers to repay such Loans shall
nevertheless  be to such Lender and shall be deemed held by such Lender,  to the
extent of such Loans, for the account of such branch or affiliate.

2.10  Distribution  Of  Payments.  Agent shall  immediately  distribute  to each
Lender, at such address as each Lender shall designate,  its respective interest
in all repayments and  prepayments of principal and all payments of interest and
all fees,  expenses and costs  received by Agent on the same day and in the same
type of funds as payment was  received.  In the event Agent does not  distribute
such payments on the same day  received,  if such payments are received by Agent
by 1:00 p.m.,  North  Carolina time, or if received after such time, on the next
succeeding Business Day, such payment shall accrue interest at the Federal Funds
Rate.

2.11 Agent's Right To Assume Funds  Available  For Advances.  Unless Agent shall
have been  notified  by any Lender no later than the  Business  Day prior to the
respective  Funding  Date of a Loan that  such  Lender  does not  intend to make
available  to Agent an  Advance in  immediately  available  funds  equal to such
Lender's Pro Rata Share of the total  principal  amount of such Loan,  Agent may
assume that such  Lender has made such  Advance to Agent on the date of the Loan
and  Agent  may,  in  reliance  upon  such  assumption,  make  available  to the
Requesting  Borrower a corresponding  Advance. If Agent has made funds available
to such Borrower  based on such  assumption and such Advance is not in fact made
to Agent by such  Lender,  Agent shall be entitled to recover the  corresponding
amount of such  Advance on demand  from such  Lender.  If such  Lender  does not
promptly pay such corresponding  amount upon Agent's demand,  Agent shall notify
such Requesting  Borrower and such Requesting  Borrower shall repay such Advance
to Agent.  Agent also shall be entitled to recover from such Lender  interest on
such Advance in respect of each day from the date such Advance was made by Agent
to such Requesting  Borrower to the date such corresponding  amount is recovered
by Agent at the Federal Funds Rate. Nothing in this Section 2.11 shall be deemed
to relieve  any Lender  from its  obligation  to fulfill  its  Commitment  or to
prejudice  any rights which Agent or such  Requesting  Borrower may have against
such Lender as a result of any default by such Lender under this Agreement.

2.12 Agent's  Right To Assume  Payments  Will Be Made By Borrower.  Unless Agent
shall have been notified by any Borrower  prior to the date on which any payment
to be made by such Borrower  hereunder is due that such Borrower does not intend
to remit such  payment,  Agent may,  in its sole  discretion,  assume  that such
Borrower  has  remitted  such  payment  when so due and Agent  may,  in its sole
discretion and in reliance upon such  assumption,  make available to each Lender
on such  payment  date an amount  equal to such  Lender's Pro Rata Share of such
assumed  payment.  If such  Borrower  has not in fact  remitted  such payment to
Agent,  each Lender shall  forthwith on demand repay to Agent the amount of such
assumed payment made available to such Lender, together with interest thereon in
respect of each date from and including the date such amount was made  available
by Agent to such  Lender  to the date  such  amount  is  repaid  to Agent at the
Federal Funds Rate.

2.13 Capital Requirements. If any Lender determines that compliance with any law
or  regulation  or with any  guideline or request from any central bank or other
Governmental  Authority  (whether  or not  having the force of law) has or would
have the effect of reducing  the rate of return on the capital of such Lender or
any corporation  controlling  such Lender as a consequence of, or with reference
to, such Lender's  Commitment or its making or maintaining its Pro Rata Share of
the Loans below the rate which such Lender or such other  corporation could have
achieved  but for such  compliance  (taking  into  account the  policies of such
Lender or corporation  with regard to capital),  then each Borrower shall,  from
time to time,  upon written demand by such Lender (with a copy of such demand to
Agent),  immediately pay to such Lender (a) such additional  amounts as shall be
sufficient to compensate  such Lender or other  corporation  for such  reduction
resulting  from such  Borrower's  Loans or (b) in the case where such  reduction
results  from  compliance  with any such law,  regulation,  guideline or request
affecting only the  Commitments and not the Loans,  such  additional  amounts as
shall be  sufficient  to compensate  such Lender or other  corporation  for such
reduction  based  on  each  Borrower's   percentage  of  average  usage  of  the
Commitments  versus the total  average  usage by all  Borrowers.  A  certificate
submitted by such Lender to any Borrower,  stating that the amounts set forth as
payable to such Lender are true and correct, shall be conclusive and binding for
all purposes,  absent  manifest  error.  Each Lender  agrees  promptly to notify
effected  Borrowers and Agent of any circumstances that would cause any Borrower
to pay additional amounts pursuant to this section, provided that the failure to
give  such  notice  shall  not  affect  Borrowers'  obligation  to pay any  such
additional amounts.

2.14     Taxes.

2.14.1 No Deductions.  Subject to Section  2.14.7,  any and all payments by each
Borrower  to each Lender or Agent  under this  Agreement  shall be made free and
clear of, and  without  deduction  or  withholding  for,  any and all present or
future taxes,  levies,  imposts,  deductions,  charges or withholdings,  and all
liabilities  with  respect  thereto,  excluding,  in the case of each Lender and
Agent,  such taxes (including income taxes or franchise taxes) as are imposed on
or measured by each Lender's net income (all such  non-excluded  taxes,  levies,
imposts,  deductions,  charges,  withholdings and liabilities  being hereinafter
referred to as "Taxes").

2.14.2  Miscellaneous  Taxes.  In addition,  Borrowers  shall pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar  levies  which  arise from any  payment  made  hereunder  or from the
execution,  delivery or  registration  of, or  otherwise  with  respect to, this
Agreement  or any  other  Loan  Documents  (hereinafter  referred  to as  "Other
Taxes").

2.14.3 Indemnity.  Subject to Section 2.14.7,  each Borrower shall indemnify and
hold  harmless each Lender and Agent for the full amount of Taxes or Other Taxes
(including  any Taxes or Other  Taxes  imposed  by any  jurisdiction  on amounts
payable under this Section 2.14) paid by such Lender or Agent in relation to any
payments made by or  Obligations  of such Borrower and any liability  (including
penalties,  interest,  additions to tax and expenses)  arising therefrom or with
respect  thereto,  whether or not such Taxes or Other  Taxes were  correctly  or
legally asserted. Payment under this indemnification shall be made within thirty
(30) days from the date any Lender or Agent makes written demand therefor.

2.14.4 Required  Deductions.  If any Borrower shall be required by law to deduct
or  withhold  any Taxes or Other  Taxes from or in  respect  of any sum  payable
hereunder to any Lender or Agent, then, subject to Section 2.14.7:

(a) the sum payable  shall be  increased  as  necessary so that after making all
required deductions  (including deductions applicable to additional sums payable
under this Section 2.14) such Lender or Agent,  as the case may be,  receives an
amount equal to the sum it would have received had no such deductions been made;

(b)      such Borrower shall make such deductions, and

(c) such Borrower  shall pay the full amount  deducted to the relevant  taxation
authority or other authority in accordance with applicable law.

2.14.5  Evidence  of  Payment.  Within  thirty  (30) days  after the date of any
payment by any Borrower of Taxes or Other Taxes,  such Borrower shall furnish to
Agent the original or a certified copy of a receipt  evidencing payment thereof,
or other evidence of payment satisfactory to Agent.

2.14.6  Foreign  Persons.  Each Lender which is a foreign person (i.e., a person
other than a United States person for United States Federal income tax purposes)
shall:

(a) No later than the date upon which such Lender becomes a party hereto deliver
to Borrowers through Agent two (2) accurate and complete signed originals of IRS
Form 4224 or any successor  thereto ("Form 4224"),  or two accurate and complete
signed  originals of IRS Form 1001 or any successor  thereto ("Form  1001"),  as
appropriate, in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal,  interest and fees under this
Agreement free from withholding of United States Federal income tax;

(b) If at any time such Lender makes any changes  necessitating  a new Form 4224
or Form 1001, with reasonable  promptness  deliver to Borrowers through Agent in
replacement  for,  or in  addition  to,  the forms  previously  delivered  by it
hereunder,  two  accurate  and complete  signed  originals of Form 4224;  or two
accurate and complete  signed  originals of Form 1001, as  appropriate,  in each
case indicating that the Lender is on the date of delivery  thereof  entitled to
receive payments of principal,  interest and fees under this Agreement free from
withholding of United States Federal income tax;

(c) Before or promptly after the occurrence of any event  (including the passing
of time but excluding any event  mentioned in (ii) above)  requiring a change in
or renewal of the most recent  Form 4224 or Form 1001  previously  delivered  by
such  Lender,  deliver to  Borrowers  through  Agent two  accurate  and complete
original  signed copies of Form 4224 or Form 1001 in  replacement  for the forms
previously delivered by the Lender; and

(d) Promptly upon any Borrower's or Agent's  reasonable  request to that effect,
deliver  to such  Borrower  or Agent  (as the case may be) such  other  forms or
similar  documentation  as may be required  from time to time by any  applicable
law,  treaty,  rule or regulation in order to establish such Lender's tax status
for withholding purposes.

2.14.7  Income  Taxes.  Borrowers  will not be  required  to pay any  additional
amounts in respect  of United  States  Federal  income tax  pursuant  to Section
2.14.4 to Lender for the account of any Lending Office of such Lender:

(a) If the obligation to pay such  additional  amounts would not have arisen but
for a failure by such Lender to comply with its obligations under Section 2.14.6
in respect of such Lending Office;

(b) If such Lender  shall have  delivered to Borrowers a Form 4224 in respect of
such Lending Office  pursuant to Section 2.14.6 and such Lender shall not at any
time be entitled to exemption  from  deduction or  withholding  of United States
Federal income tax in respect of payments by Borrowers hereunder for the account
of such Lending  Office for any reason other than a change in United  States law
or regulations or in the official  interpretation  of such law or regulations by
any Governmental  Authority  charged with the  interpretation  or administration
thereof  (whether  or not having the force of law) after the date of delivery of
such Form 4224; or

(c) If such Lender  shall have  delivered to Borrowers a Form 1001 in respect of
such Lending Office pursuant to Section 2.14.6, and such Lender shall not at any
time be entitled to exemption  from  deduction or  withholding  of United States
Federal income tax in respect of payments by Borrowers hereunder for the account
of such Lending  Office for any reason other than a change in United  States law
or  regulations  or any  applicable tax treaty or regulations or in the official
interpretation  of any such  law,  treaty  or  regulations  by any  Governmental
Authority charged with the interpretation or administration  thereof (whether or
not having the force of law) after the date of delivery of such Form 1001.

2.14.8 Reimbursement Of Costs. If, at any time, any Borrower requests any Lender
to deliver any forms or other documentation pursuant to Section 2.14.6(a),  then
such Borrower  shall,  on demand of such Lender  through  Agent,  reimburse such
Lender  for  any  costs  and  expenses  (including   reasonable  attorney  fees)
reasonably  incurred by such Lender in the preparation or delivery of such forms
or other documentation.

2.14.9  Jurisdiction.  If any Borrower is required to pay additional  amounts to
any Lender or Agent pursuant to Section  2.14.4,  then such Lender shall use its
reasonable   good  faith   efforts   (consistent   with  legal  and   regulatory
restrictions)  to  change  the  jurisdiction  of  its  Lending  Office  so as to
eliminate  any such  additional  payment by such Borrower  which may  thereafter
accrue  if such  change,  in the  judgment  of  such  Lender,  is not  otherwise
disadvantageous to such Lender.

2.15     Illegality.

2.15.1 LIBOR Loans. If any Lender shall  determine that the  introduction of any
Requirement  of  Law,  or  any  change  in  any  Requirement  of  Law  or in the
interpretation  or  administration  thereof,  has made it unlawful,  or that any
central bank or other  Governmental  Authority has asserted that it is unlawful,
for such  Lender or its  Lending  Office to make LIBOR  Loans,  then,  on notice
thereof by Lender to the Requesting  Borrower,  the obligation of such Lender to
make LIBOR Loans shall be suspended  until such Lender  shall have  notified the
Requesting Borrower that the circumstances  giving rise to such determination no
longer exists.

2.15.2  Prepayment.  If a Lender shall determine that it is unlawful to maintain
any LIBOR Loan,  Borrowers  shall  prepay in full all LIBOR Loans of such Lender
then outstanding, together with interest accrued thereon, either on the last day
of the Interest Period thereof if such Lender may lawfully  continue to maintain
such LIBOR Loans to such day, or  immediately,  if such Lender may not  lawfully
continue to maintain such LIBOR Loans,  together with any amounts required to be
paid in connection therewith pursuant to Section 2.18.

2.15.3  Prime Rate  Borrowing.  If any  Borrower is required to prepay any LIBOR
Loan  immediately as provided in Section  2.15.2,  then  concurrently  with such
prepayment,  such Borrower  shall borrow,  in the amount of such  prepayment,  a
Prime Rate Loan.

2.16 Increased  Costs. If any Lender shall determine that, due to either (a) the
introduction  of or any change (other than any change by way of imposition of or
increase in reserve requirements included in the calculation of the LIBOR) in or
in the  interpretation  of any Requirement of Law or (b) the compliance with any
guideline  or request  from any  central  bank or other  Governmental  Authority
(whether  or not having the force of law),  there  shall be any  increase in the
cost to such Lender of agreeing to make or making,  funding or  maintaining  any
LIBOR Loans,  then  Borrowers  shall be liable on a joint and several basis for,
and shall from time to time,  upon demand  therefor by such Lender,  pay to such
Lender such  additional  amounts as are sufficient to compensate such Lender for
such increased costs.

2.17 Inability To Determine  Rates.  If Agent shall have determined that for any
reason adequate and reasonable means do not exist for ascertaining the LIBOR for
any requested  Interest Period with respect to a proposed LIBOR Loan or that the
LIBOR  applicable for any requested  Interest  Period with respect to a proposed
LIBOR Loan does not adequately and fairly reflect the cost to Lenders of funding
such Loan,  Agent will forthwith give notice of such  determination to Borrowers
and each Lender. Thereafter, the obligation of Lenders to make or maintain LIBOR
Loans,  as the case may be,  hereunder  shall be  suspended  until  Agent,  upon
instruction from Requisite Lenders, revokes such notice in writing. Upon receipt
of such  notice,  Borrowers  may  revoke any  Notice of  Borrowing  or Notice of
Conversion/Continuation  then  submitted.  If a Borrower  does not  revoke  such
notice,  Lenders shall make,  convert or continue the Loans, as proposed by such
Borrower,  in the amount  specified in the applicable  notice  submitted by such
Borrower,  but such Loans shall be made,  converted  or  continued as Prime Rate
Loans instead of LIBOR Loans, as the case may be.

2.18 Prepayment Of LIBOR Loans. Each Borrower agrees, severally but not jointly,
that in the event that such Borrower  prepays or is required to prepay any LIBOR
Loan by  acceleration  or  otherwise or fails to draw down or convert to a LIBOR
Loan after giving notice thereof, it shall reimburse each Lender for its funding
losses due to such  prepayment or failure to draw.  Borrowers and Lenders hereby
agree  that such  funding  losses  shall  consist  of the sum of the  discounted
monthly  differences for each month during the applicable or requested  Interest
Period, calculated as follows for each such month:

(a)  Principal  amount of such LIBOR Loan times (number of days between the date
of prepayment  and the last day in the  applicable  Interest  Period  divided by
360), times the applicable Interest Differential, plus

(b) All actual  out-of-pocket  expenses  (other than those taken into account in
the  calculation  of the  Interest  Differential)  incurred by Lenders and Agent
(excluding  allocation  of any  expense  internal  to  Lenders  and  Agent)  and
reasonably  attributable to such payment,  prepayment or failure to draw down or
convert as described  above;  provided that no  prepayment  fee shall be payable
(and no credit or rebate  shall be  required)  if the  product of the  foregoing
formula is not a positive number.

Section 3.  CONDITIONS  PRECEDENT TO  EFFECTIVENESS  OF THIS  AGREEMENT  AND THE
MAKING OF LOANS.

3.1  Effectiveness  of This Agreement.  The  effectiveness  of this Agreement is
subject to the satisfaction of the following conditions precedent:

3.1.1 Partnership,  Company And Corporate Documents.  Agent shall have received,
in form and substance  satisfactory  to Lenders and their  respective  counsel a
certified  copy of the records of all actions  taken by each  Borrower,  FSI and
PLMI,  including all  resolutions of each Borrower and corporate  resolutions of
FSI and PLMI, authorizing or relating to the execution, delivery and performance
of this  Agreement  and the other Loan  Documents  and the  consummation  of the
transactions contemplated hereby and thereby.

3.1.2  Notes.  Agent  shall  have  received  new  Notes,  in form and  substance
satisfactory to Lenders, and duly executed and delivered by each Borrower, which
Notes  shall  replace  and  supersede  the Notes  issued by  Borrowers  to Agent
pursuant to the Growth Fund Agreement.

3.1.3  Opinion Of Counsel.  Agent shall have  received  an  originally  executed
Opinion of Counsel, in form and substance  satisfactory to Lenders,  dated as of
the Closing Date and addressed to Lenders, together with copies of any officer's
certificate  or  legal  opinion  of  other  counsel  or  law  firm  specifically
identified and expressly relied upon by such counsel.

3.1.4 Reaffirmation of Guaranty.  Agent shall have received the Reaffirmation of
Guaranty,  in form and  substance  satisfactory  to Lenders,  duly  executed and
delivered by PLMI.

3.1.5 TEC  AcquiSub  Amendment.  Agent  shall  have  received  the TEC  AcquiSub
Agreement,  duly  executed and  delivered by TEC  AcquiSub,  and all  conditions
precedent to the  effectiveness  of the TEC AcquiSub  Agreement  shall have been
satisfied.

3.1.6  Bringdown  Certificate.  Separate  certificates,  dated as of the Closing
Date,  of the Chief  Financial  Officer or Corporate  Controller  of FSI, in its
capacity  as the  sole  general  partner  of EGF VI and EGF VII and as the  sole
manager  of  Income  Fund I, to the  effect  that  (i) the  representations  and
warranties  of each  Borrower  contained  in  Section 4 are true,  accurate  and
complete in all material  respects as of the Closing Date as though made on such
date and (ii) no Event of  Default  or  Potential  Event of  Default  under this
Agreement has occurred.

3.1.7 Fees. Agent shall have received the Agent's Side Letter,  duly executed by
Borrowers and TEC AcquiSub,  and Agent shall have received the fees described in
the Agent's Side Letter.

3.1.8  Other  Documents.   Agent  shall  have  received  such  other  documents,
information and items from Borrowers and FSI as reasonably requested by Agent.

3.2 All Loans. Unless waived in writing by Requisite Lenders,  the obligation of
any Lender to make any Advance is subject to the  satisfaction  of the following
further conditions precedent:

3.2.1 Notice Of  Borrowing.  At least three (3)  Business  Days before each Loan
hereunder with respect to any  acquisition  of Equipment by any Borrower,  Agent
shall  have  received  (i)  Notice  of  Borrowing  and  (ii)  a  Borrowing  Base
Certificate,  with  appropriate  insertions,  executed  by the  Chief  Financial
Officer or Corporate Controller of such Borrower.

3.2.2 No Event Of Default.  No event shall have  occurred and be  continuing  or
would result from the making of any Loan on such Funding Date which  constitutes
an Event of Default or Potential  Event of Default under this Agreement or under
(and as  separately  defined  in) the TEC  AcquiSub  Agreement  or under (and as
separately defined in) the AFG Agreement,  or which with notice or lapse of time
or both would constitute an Event of Default or Potential Event of Default under
this Agreement or under the TEC AcquiSub Agreement or the AFG Agreement.

3.2.3  Representations  And  Warranties.   All  representations  and  warranties
contained  in the Loan  Documents  shall be true,  accurate  and complete in all
material  respects  with the same  effect as  though  such  representations  and
warranties  had been made on and as of such  Funding  Date (except to the extent
such  representations and warranties  specifically relate to an earlier date, in
which case they shall be true, accurate and complete in all material respects as
of such earlier date).

3.2.4  Insurance.  The  insurance  required to be  maintained  by such  Borrower
pursuant to the Loan Documents shall be in full force and effect.

3.2.5 Other  Instruments.  Agent shall have received such other  instruments and
documents as it may have reasonably  requested from Borrowers in connection with
the Loans to be made on such date.

3.3 Further  Conditions To All Loans.  Notwithstanding  anything to the contrary
contained in this Agreement,  unless waived in writing by Requisite Lenders,  no
Lender  shall have any  obligation  hereunder  to make any Advance if any of the
following events shall occur:

3.3.1 General  Partner Or Manager.  FSI shall have ceased to be the sole general
partner of any of EGF V, EGF VI or EGF VII or the sole manager of Income Fund I,
whether due to the voluntary or involuntary withdrawal, substitution, removal or
transfer  of FSI  from or of all or any  portion  of FSI's  general  partnership
interest or capital contribution in such Borrower.

3.3.2 Removal Of General Partner Or Manager. Twenty five percent (25.0%) or more
of the limited partners (measured by such partners'  percentage interest) of any
Equipment  Growth  Fund  shall at any time  vote to  remove  FSI as the  general
partner of such  Equipment  Growth  Fund or a majority  in  interest  of Class A
members,  as that term is defined in the Operating  Agreement,  of Income Fund I
shall at any time vote to remove FSI as manager of Income  Fund I, in each case,
regardless of whether FSI is actually removed.

3.3.3 Purchaser.  Requesting Borrower,  TEC AcquiSub,  FSI or their Subsidiaries
shall have ceased to be the purchaser of Eligible  Inventory for such Requesting
Borrower.

Section 4.        BORROWERS' AND FSI'S REPRESENTATIONS AND WARRANTIES.

4.1 General  Representations  And Warranties.  Each Borrower,  severally,  as to
itself,  but not jointly as to the other Borrowers and FSI, and FSI, jointly and
severally  with each Borrower as to each such Borrower and as to itself,  hereby
warrant and  represent to Agent and each Lender as follows,  and agree that each
of said warranties and  representations  shall be deemed to continue until full,
complete and  indefeasible  payment and performance of the Obligations and shall
apply anew to each borrowing hereunder:

4.1.1  Existence And Power.  Each Borrower is a limited  partnership  or, in the
case of Income Fund I, a limited  liability  company,  and FSI is a corporation,
each duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and is duly qualified and licensed as a foreign
corporation,  partnership  or limited  liability  company,  as  applicable,  and
authorized  to do business in each  jurisdiction  within the United States where
its  ownership  of  Property  and assets or conduct of  business  requires  such
qualification.  Each  Borrower and FSI has the power and  authority,  rights and
franchises to own their Property and assets and to carry on their  businesses as
now conducted.  Each Borrower and FSI has the power and authority to execute and
deliver the Loan Documents (to the extent each is a party thereto) and all other
instruments and documents contemplated hereby or thereby.

4.1.2 Loan Documents And Notes Authorized;  Binding Obligations.  The execution,
delivery and  performance of this Agreement and each of the other Loan Documents
to which any  Borrower is a party and  delivery  and payment of such  Borrower's
respective Notes have been duly authorized by all necessary and proper action on
the part of such  Borrower.  The  execution,  delivery and  performance  of this
Agreement and each of the other Loan Documents to which FSI is a party have been
duly authorized by all necessary and proper corporate action on the part of FSI.
The Loan  Documents  constitute  legally valid and binding  obligations  of each
Borrower and FSI, as the case may be, enforceable against each Borrower and FSI,
to the  extent  any one of them is a party  thereto,  in  accordance  with their
respective  terms,  except as enforcement  thereof may be limited by bankruptcy,
insolvency  or  other  laws  affecting  the  enforcement  of  creditors'  rights
generally.

4.1.3 No Conflict; Legal Compliance. (a) The execution, delivery and performance
of this  Agreement,  and each of the other  Loan  Documents  and the  execution,
delivery  and payment of the Notes will not:  (i)  contravene  any  provision of
FSI's  certificate of incorporation or bylaws;  (ii) contravene any provision of
any Borrowers' Limited Partnership  Agreements or, in the case of Income Fund I,
Operating  Agreement  or other  formation  or  organization  document;  or (iii)
contravene,  conflict with or violate any applicable  law or regulation,  or any
order,  writ,  judgment,  injunction,  decree,  determination  or  award  of any
Governmental  Authority,  which  contravention,  conflict or  violation,  in the
aggregate,  may have Material Adverse Effect; and (b) the execution and delivery
of this  Agreement,  and each of the other Loan  Documents and the execution and
delivery of the Notes will not violate or result in the breach of, or constitute
a default  under any  indenture  or other  loan or  credit  agreement,  or other
agreement or instrument  which are, in the aggregate,  material and to which any
Borrower or FSI is a party or by which any Borrower,  FSI or their  Property and
assets may be bound or affected. Neither any Borrower nor FSI is in violation or
breach of or default under any law, rule,  regulation,  order,  writ,  judgment,
injunction,  decree,  determination or award or any contract,  agreement, lease,
license,  indenture or other instrument to which any one of them is a party, the
non-compliance  with,  the  violation  or breach of or the  default  under which
would, with reasonable likelihood, have a Material Adverse Effect.

4.1.4  Financial  Condition.  Each  Borrower's  and FSI's  audited  consolidated
financial  statements as of December 31, 1997 and Borrowers' and FSI's unaudited
consolidated  financial  statements  as of September  30, 1998,  copies of which
heretofore have been delivered to Agent by such Borrower and FSI,  respectively,
and all other  financial  statements  and other data submitted in writing by any
Borrower  and FSI to Agent or any  Lender in  connection  with the  request  for
credit  granted  by this  Agreement,  are true,  accurate  and  complete  in all
material respects,  and said financial  statements and other data fairly present
the  consolidated  financial  condition of such Borrower and FSI, as of the date
thereof,  and have been  prepared  in  accordance  with GAAP,  subject to fiscal
year-end  audit  adjustments.  There has been no material  adverse change in the
business,  properties  or  assets,  operations,   prospects,   profitability  or
financial or other condition of any Borrower or FSI since December 31, 1997.

4.1.5 Executive Offices. The current location of each Borrower's and FSI's chief
executive  offices  and  principal  places of  business is set forth on Schedule
4.1.5.

4.1.6  Litigation.  Except as disclosed on Schedule 4.1.6,  there are no claims,
actions, suits,  proceedings or other litigation pending or, to the best of each
Borrower's  and FSI's  knowledge,  after due  inquiry,  threatened  against  any
Borrower, FSI or any of FSI's Subsidiaries,  including,  without limitation, TEC
AcquiSub, at law or in equity before any Governmental  Authority or, to the best
of each Borrower's and FSI's knowledge,  after due inquiry, any investigation by
any  Governmental  Authority  of  any  Borrower's  or  FSI's  or  any  of  FSI's
Subsidiaries',   including,   without  limitation,   TEC  AcquiSub's,   affairs,
Properties  or assets  which would,  with  reasonable  likelihood,  if adversely
determined, have a Material Adverse Effect. Other than any liability incident to
the litigation or proceedings disclosed on Schedule 4.1.6, neither any Borrower,
nor  FSI nor any of  FSI's  Subsidiaries,  including,  without  limitation,  TEC
AcquiSub, has any Contingent Obligations which are not provided for or disclosed
in the financial  statements  delivered to Agent  pursuant to Sections 4.1.4 and
5.1.

4.1.7 Material Contracts. Schedule 4.1.7 lists all currently effective contracts
and agreements  (whether  written or oral) to which each Borrower is a party and
which (i) could involve the payment or receipt by such  Borrower  after the date
of this Agreement of more than $250,000 or (ii) otherwise  materially affect the
business,  operations  or financial  condition of any  Borrower  (the  "Material
Contracts").  Except as  disclosed  on  Schedule  4.1.7,  there are no  material
defaults under any such Material  Contract by any Borrower,  to the best of each
Borrower's  knowledge,  by any other party to any such Material  Contract.  Each
Borrower has delivered to Agent true and correct copies of all such contracts or
agreements   (or,  with  respect  to  oral  contracts  or  agreements,   written
descriptions of the material terms thereof).

4.1.8  Consents  And  Approvals.  Except as set  forth in  Schedule  4.1.8,  all
consents and approvals of, filings and registrations  with, and other actions in
respect  of,  all  Governmental  Authorities  required  to be  obtained  by  any
Borrower,  FSI or any of FSI's  Subsidiaries  in order to make or consummate the
transactions  contemplated  under the Loan  Documents have been, or prior to the
time when required will have been,  obtained,  given,  filed or taken and are or
will be in full force and effect.

4.1.9 Other Agreements. Neither any Borrower, FSI nor any of FSI's Subsidiaries,
including,  without limitation,  TEC AcquiSub,  is a party to or is bound by any
agreement,  contract,  lease,  license  or  instrument,  or is  subject  to  any
restriction under its respective charter or formation  documents,  which has, or
is likely in the foreseeable future to have, a Material Adverse Effect.  Neither
any  Borrower  nor FSI has entered  into and,  as of the  Closing  Date does not
contemplate entering into, any material agreement or contract with any Affiliate
of any Borrower or FSI on terms that are less  favorable to such Borrower or FSI
than those  that might be  obtained  at the time from  Persons  who are not such
Affiliates.

4.1.10  Employment  And Labor  Agreements.  There are no  collective  bargaining
agreements or other labor agreements covering any employees of any Borrower, FSI
or any of FSI's Subsidiaries.

4.1.11  ERISA.  No Borrower has an Employee  Benefit Plan subject to ERISA.  All
Pension  Plans of FSI and any of FSI's  Subsidiaries,  that are  intended  to be
qualified under Section 401(a) of the Code have been determined by the IRS to be
qualified  or FSI or any of FSI's  Subsidiaries  will obtain such  determination
prior to  instituting  such a Pension Plan. All Pension Plans existing as of the
date hereof  continue to be so qualified.  No "reportable  event" (as defined in
Section  4043 of ERISA)  has  occurred  and is  continuing  with  respect to any
Pension Plan for which the thirty-day notice requirement may not be waived other
than those of which the  appropriate  Governmental  Authority has been notified.
All  Employee  Benefit  Plans  of FSI or any of  FSI's  Subsidiaries  have  been
operated in all material  respects in accordance with their terms and applicable
law,  including ERISA, and no "prohibited  transaction" (as defined in ERISA and
the Code) that would  result in any  material  liability  to FSI or any of FSI's
Subsidiaries has occurred with respect to any such Employee Benefit Plan.

4.1.12 Labor Matters.  There are no strikes or other labor disputes  against any
Borrower,  FSI or any of FSI's  Subsidiaries  or, to the best of each Borrower's
and FSI's knowledge, after due inquiry,  threatened against any Borrower, FSI or
any of FSI's  Subsidiaries,  which would,  with  reasonable  likelihood,  have a
Material Adverse Effect. All payments due from any Borrower or FSI on account of
employee health and welfare insurance which would,  with reasonable  likelihood,
have a  Material  Adverse  Effect  if not paid  have  been  paid or, if not due,
accrued as a liability on the books of such Borrower or FSI.

4.1.13  Margin  Regulations.  Neither  any  Borrower  nor FSI  own  any  "margin
security", as that term is defined in Regulation U of the Federal Reserve Board,
and the  proceeds  of the Loans under this  Agreement  will be used only for the
purposes  contemplated  hereunder.  None of the Loans will be used,  directly or
indirectly,  for the purpose of purchasing or carrying any margin security,  for
the  purpose of  reducing  or retiring  any  indebtedness  which was  originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loans under this  Agreement  to be  considered a "purpose
credit"  within the meaning of  Regulations T, U and X. Neither any Borrower nor
FSI will take or permit any agent  acting on its behalf to take any action which
might cause this  Agreement or any  document or  instrument  delivered  pursuant
hereto to violate any regulation of the Federal Reserve Board.

4.1.14 Taxes.  All federal,  state,  local and foreign tax returns,  reports and
statements  required to be filed by any  Borrower,  FSI and, to the best of each
Borrower's and FSI's knowledge,  after due inquiry, by any of FSI's Subsidiaries
have been filed with the appropriate  Governmental  Authorities where failure to
file would, with reasonable likelihood,  have a Material Adverse Effect, and all
material  Charges and other  impositions  shown thereon to be due and payable by
any Borrower,  FSI or such  Subsidiary have been paid prior to the date on which
any fine,  penalty,  interest or late charge may be added thereto for nonpayment
thereof, or any such fine, penalty, interest, late charge or loss has been paid,
or such Borrower,  FSI or such Subsidiary is contesting its liability  therefore
in good faith and has fully  reserved all such amounts  according to GAAP in the
financial  statements  provided to Agent pursuant to Section 5.1. Each Borrower,
FSI and, to the best of each Borrower's and FSI's knowledge,  after due inquiry,
each of FSI's  Subsidiaries  has paid when due and payable all material  Charges
upon  the  books  of any  Borrower,  FSI or such  Subsidiary  and no  Government
Authority  has  asserted  any Lien  against  any  Borrower,  FSI or any of FSI's
Subsidiaries  with respect to unpaid Charges.  Proper and accurate  amounts have
been  withheld by each  Borrower,  FSI and, to the best of each  Borrower's  and
FSI's  knowledge,  after  due  inquiry,  each of  FSI's  Subsidiaries  from  its
employees for all periods in full and complete  compliance  with the tax, social
security and unemployment  withholding provisions of applicable federal,  state,
local  and  foreign  law and such  withholdings  have  been  timely  paid to the
respective Governmental Authorities.

4.1.15   Environmental Quality.

(a) Except as specifically disclosed in Schedule 4.1.15, the on-going operations
of each  Borrower,  FSI and each of FSI's  Subsidiaries  comply in all  material
respects with all Environmental Laws, except such non-compliance which would not
(if enforced in accordance with applicable law) result in liability in excess of
$250,000 in the aggregate.

(b) Except as specifically  disclosed in Schedule 4.1.15, each Borrower, FSI and
each of FSI's  Subsidiaries has obtained all licenses,  permits,  authorizations
and registrations required under any Environmental Law ("Environmental Permits")
and necessary for its ordinary course operations, all such Environmental Permits
are in good standing,  and each Borrower,  FSI and each of FSI's Subsidiaries is
in  compliance  with all material  terms and  conditions  of such  Environmental
Permits.

(c) Except as specifically  disclosed in Schedule 4.1.15,  neither any Borrower,
FSI or any of FSI's Subsidiaries nor any of their respective present Property or
operations is subject to any  outstanding  written order from or agreement  with
any   Governmental   Authority   nor   subject  to  any   judicial  or  docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material.

(d) Except as specifically  disclosed in Schedule 4.1.15, there are no Hazardous
Materials or other  conditions  or  circumstances  existing  with respect to any
Property, or arising from operations prior to the Closing Date, of any Borrower,
FSI or any of FSI's  Subsidiaries that would reasonably be expected to give rise
to Environmental  Claims with a potential liability of any Borrower,  FSI or any
of FSI's  Subsidiaries  in  excess of  $250,000  in the  aggregate  for any such
condition, circumstance or Property.

4.1.16 Trademarks,  Patents, Copyrights,  Franchises And Licenses. Each Borrower
and FSI and, to the best of their  knowledge,  after due inquiry,  each of FSI's
Subsidiaries possess and owns all necessary trademarks, trade names, copyrights,
patents,  patent  rights,  franchises  and  licenses  which are  material to the
conduct of their business as now operated.

4.1.17 Full Disclosure. As of the Closing Date, no information contained in this
Agreement,  the other Loan Documents or any other documents or written materials
furnished by or on behalf of any Borrower or FSI to Agent or any Lender pursuant
to the terms of this Agreement or any of the other Loan  Documents  contains any
untrue or  inaccurate  statement of a material fact or omits to state a material
fact necessary to make the statement  contained herein or therein not misleading
in light of the circumstances under which made.

4.1.18 Other Regulations. Neither any Borrower nor FSI is: (a) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary  company" of
a "holding  company," or an "affiliate" of such a "subsidiary  company," as such
terms  are  defined  in  the  Public  Utility  Holding  Company  Act  or  (b) an
"investment  company,"  or  an  "affiliated  person"  of,  or  a  "promoter"  or
"principal  underwriter" for, an "investment company," as such terms are defined
in the  Investment  Company  Act.  The  making  of the Loans  hereunder  and the
application  of the  proceeds  and  repayment  thereof by each  Borrower and the
performance  of the  transactions  contemplated  by this Agreement and the other
Loan Documents  will not violate any provision of the Investment  Company Act or
the Public Utility Holding Company Act, or any rule,  regulation or order issued
by the SEC thereunder.

4.1.19 Solvency. Each Borrower and FSI are Solvent.

4.1.20 Year 2000.  Each  Borrower has reviewed the areas within its business and
operations  which  could be  adversely  affected  by,  and has  developed  or is
developing a program to address on a timely basis, the "Year 2000 Problem" (that
is,  the risk  that  computer  applications  used by  Borrower  may be unable to
recognize and perform properly date-sensitive  functions involving certain dates
prior to and any date on or after  December  31,  1999),  and have made  related
appropriate inquiry of material suppliers,  vendors and customers. Based on such
review and program,  each Borrower  believes that the "Year 2000 Problem"  would
not with reasonable likelihood have or result in a Material Adverse Effect.

4.2  Representations  And Warranties At Time Of First  Advance.  At the time any
Borrower makes a request for an initial borrowing hereunder, each such Borrower,
severally,  as to itself, but not jointly as to the other Borrowers and FSI, and
FSI, jointly and severally with each Borrower as to each such Borrower and as to
itself,  hereby  warrant and represent to Agent and each Lender as follows,  and
agree  that  each of said  warranties  and  representations  shall be  deemed to
continue until full,  complete and  indefeasible  payment and performance of the
Obligations and shall apply anew to each additional borrowing hereunder:

4.2.1 Power And Authority.  Each Borrower and FSI has the power and authority to
perform the terms of the Loan  Documents (to the extent each is a party thereto)
and all other instruments and documents contemplated hereby or thereby.

4.2.2 No Conflict. The performance of this Agreement, and each of the other Loan
Documents  and the payment of the Notes will not violate or result in the breach
of,  or  constitute  a  default  under  any  indenture  or other  loan or credit
agreement,  or other  agreement  or  instrument  which  are,  in the  aggregate,
material and to which any  Borrower or FSI is a party or by which any  Borrower,
FSI or their Property and assets may be bound or affected.

4.2.3  Consents  And  Approvals.  No approval,  authorization  or consent of any
trustee or holder of any indebtedness or obligation of any Borrower or FSI or of
any other Person under any such material agreement,  contract,  lease or license
or similar  document or instrument to which such  Borrower,  FSI or any of FSI's
Subsidiaries is a party or by which such Borrower, FSI or any such Subsidiary is
bound,  is  required  to be  obtained  by any  such  Borrower,  FSI or any  such
Subsidiary in order to make or consummate the  transactions  contemplated  under
the Loan Documents.

4.3  Survival  Of  Representations  And  Warranties.  So  long  as  any  of  the
Commitments  shall be available and until payment and performance in full of the
Obligations,  the representations  and warranties  contained herein shall have a
continuing effect as having been true when made.

Section 5.        BORROWERS' AND FSI'S AFFIRMATIVE COVENANTS.

         Each Borrower, severally, as to itself, but not jointly as to the other
Borrowers and FSI, and FSI,  jointly and severally with each Borrower as to each
Borrower and as to itself (and, where applicable, PLMI) covenant and agree that,
so long as any of the  Commitments  shall be available and until full,  complete
and indefeasible  payment and performance of the  Obligations,  unless Requisite
Lenders shall  otherwise  consent in writing,  each Borrower and FSI shall do or
cause to have done all of the following:

5.1 Records  And  Reports.  Maintain,  and cause each of FSI's  Subsidiaries  to
maintain, a system of accounting  administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP,
and deliver to Agent or caused to be delivered to Agent:

5.1.1 Quarterly Statements. As soon as practicable and in any event within sixty
(60) days after the end of each  quarterly  accounting  period of each Borrower,
FSI and PLMI,  except with  respect to the final  fiscal  quarter of each fiscal
year, in which case as soon as  practicable  and in any event within one hundred
twenty  (120)  days  after  the end of such  fiscal  quarter,  consolidated  and
consolidating  balance  sheets  of FSI and  PLMI  and a  balance  sheet  of each
Borrower as at the end of such period and the related  consolidated  (and, as to
statements  of income  only for FSI,  consolidating)  statements  of income  and
stockholders'  or  members'  equity  of each  Borrower  and FSI and the  related
consolidated  statements of income,  stockholders'  or members'  equity and cash
flows of PLMI (and,  as to statements  of income only,  consolidating)  for such
quarterly accounting period,  setting forth in each case in comparative form the
consolidated figures for the corresponding  periods of the previous year, all in
reasonable  detail and  certified  by the Chief  Financial  Officer or Corporate
Controller of the general  partner or manager of each  Borrower,  as applicable,
FSI and PLMI  that  they (i) are  complete  and  fairly  present  the  financial
condition  of such  Borrower,  FSI and PLMI as at the  dates  indicated  and the
results of their  operations  and  changes  in their  cash flow for the  periods
indicated, (ii) disclose all liabilities of each Borrower, FSI and PLMI that are
required to be reflected or reserved against under GAAP,  whether  liquidated or
unliquidated,  fixed or  contingent  and (iii) have been  prepared in accordance
with  GAAP,  subject  to  changes  resulting  from  audit  and  normal  year-end
adjustment;

5.1.2  Annual  Statements.  As soon as  practicable  and in any event within one
hundred twenty (120) days after the end of each fiscal year of each Borrower and
PLMI,  consolidated and consolidating balance sheets of PLMI and a balance sheet
of each Borrower as at the end of such year and the related  consolidated  (and,
as to statements of income only for PLMI,  consolidating)  statements of income,
stockholders' or members' equity and cash flows of each Borrower, if applicable,
and PLMI for such fiscal year,  setting forth in each case, in comparative  form
the consolidated figures for the previous year, all in reasonable detail and (i)
in the case of such consolidated  financial statements,  accompanied by a report
thereon of an  independent  public  accountant of recognized  national  standing
selected by each Borrower and PLMI and satisfactory to Agent, which report shall
contain an opinion  which is not  qualified in any manner or which  otherwise is
satisfactory to Requisite  Lenders,  in their sole  discretion,  and (ii) in the
case  of  such  consolidating  financial  statements,  certified  by  the  Chief
Financial Officer or Corporate Controller of PLMI;

5.1.3 Borrowing Base Certificate.  As soon as practicable,  and in any event not
later than  fifteen  (15) days after the end of each  calendar  month in which a
Loan has been, or is, outstanding,  a Borrowing Base Certificate dated as of the
last day of such month,  duly executed by a Chief Financial Officer or Corporate
Controller of the general partner or manager of each Borrower,  with appropriate
insertions;

5.1.4 Compliance Certificate. As soon as practicable, and in any event not later
than forty-five (45) days after the end of each fiscal quarter of each Borrower,
a Compliance  Certificate  dated as of the last day of such fiscal quarter,  and
executed by the Chief Financial  Officer or Corporate  Controller of the general
partner or manager of such Borrower, with appropriate insertions.

5.1.5 Reports. At Agent's request,  promptly upon receipt thereof, copies of all
reports  submitted  to  each  Borrower,   FSI  or  PLMI  by  independent  public
accountants  in  connection  with each annual,  interim or special  audit of the
financial statements of such Borrower, FSI or PLMI made by such accountants;

5.1.6 Insurance  Reports.  (i) On the date six months after the Closing Date and
thereafter upon Agent's reasonable request,  which request will not be made more
than once  during any  calendar  year  (unless  an Event of  Default  shall have
occurred and be continuing),  a report from each Borrower's insurance broker, in
such detail as Agent may reasonably request,  as to the insurance  maintained or
caused  to  be  maintained  by  each  Borrower   pursuant  to  this   Agreement,
demonstrating  compliance with the requirements hereof and thereof,  and (ii) as
soon as  possible  and in no event  later  than  fifteen  (15) days prior to the
expiration date of any insurance policy of any Borrower,  a written confirmation
that such policy is in process of renewal and is not  terminated or subject to a
notice of non-renewal from such Borrower's insurance broker; provided,  however,
that such Borrower shall give Agent prompt  written notice if changes  affecting
risk coverage will be made to such policy or if the policy will be terminated;

5.1.7  Certificate  Of  Responsible  Officer.  Promptly  upon any officer of any
Borrower  or FSI  obtaining  knowledge  (a)  of any  condition  or  event  which
constitutes  an Event of  Default  or  Potential  Event of  Default  under  this
Agreement,  (b) that any Person has given any notice to any Borrower,  FSI, TEC,
TEC AcquiSub or PLMI or taken any other action with respect to a claimed default
or event or  condition  of the type  referred  to in Section  8.1.2,  (c) of the
institution  of any  litigation  or of the  receipt of written  notice  from any
Governmental  Authority  as to  the  commencement  of any  formal  investigation
involving  an alleged or asserted  liability  of any  Borrower,  FSI,  TEC,  TEC
AcquiSub or PLMI equal to or greater  than  $500,000 or any adverse  judgment in
any litigation  involving a potential  liability of any Borrower,  FSI, TEC, TEC
AcquiSub or PLMI equal to or greater than $500,000, or (d) of a material adverse
change in the business,  operations,  properties, assets or condition (financial
or otherwise) of any Borrower,  FSI, TEC, TEC AcquiSub or PLMI, a certificate of
a  Responsible  Officer of any Borrower or FSI, as  applicable,  specifying  the
notice  given or action  taken by such  Person  and the  nature of such  claimed
default,  Event of Default,  Potential Event of Default,  event or condition and
what action such Borrower,  FSI, TEC, TEC AcquiSub or PLMI has taken,  is taking
and proposes to take with respect thereto;

5.1.8 Employee Benefit Plans.  Promptly upon becoming aware of the occurrence of
any (a) Termination Event in connection with any Pension Plan or (b) "prohibited
transaction"  (as such term is defined in ERISA and the Code) in connection with
any Employee  Benefit Plan or any trust  created  thereunder,  a written  notice
specifying  the nature  thereof,  what  action any  Borrower or any of its ERISA
Affiliates has taken, is taking or proposes to take with respect  thereto,  and,
when known,  any action taken or  threatened by the IRS or the PBGC with respect
thereto;

5.1.9  ERISA  Notices.  With  reasonable  promptness,  copies of (a) all notices
received by any Borrower,  FSI, any of FSI's  Subsidiaries or any of their ERISA
Affiliates  of the PBGC's  intent to  terminate  any  Pension  Plan or to have a
trustee appointed to administer any Pension Plan, (b) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by any Borrower, FSI,
any of FSI's  Subsidiaries  or any of their ERISA  Affiliates  with the IRS with
respect to each Pension Plan covering  employees of any Borrower,  FSI or any of
FSI's  Subsidiaries,  and (c) all notices received by any Borrower,  FSI, any of
FSI's  Subsidiaries or any of their ERISA  Affiliates from a Multiemployer  Plan
sponsor concerning the imposition or amount of withdrawal  liability pursuant to
Section 4202 of ERISA;

5.1.10 Pension Plans. Promptly upon receipt by any Borrower, FSI or any of FSI's
Subsidiaries, any challenge by the IRS to the qualification under Section 401 or
501 of the Code of any Pension Plan;

5.1.11 SEC  Reports.  As soon as  available  and in no event later than five (5)
days  after the same shall have been filed with the SEC, a copy of each Form 8-K
Current  Report,  Form 10-K Annual Report,  Form 10-Q Quarterly  Report,  Annual
Report to  Shareholders,  Proxy  Statement  and  Registration  Statement  of any
Borrower and PLMI;

5.1.12 Tax Returns.  Upon the request of Agent,  copies of all  federal,  state,
local and foreign tax  returns  and reports in respect of income,  franchise  or
other taxes on or measured by income  (excluding sales, use or like taxes) filed
by or on behalf of any Borrower and FSI; and

5.1.13 Additional  Information.  Such other information respecting the condition
or  operations,  financial  or  otherwise,  of any  Borrower  and  PLMI  and its
Subsidiaries  as Agent or any Lender may from time to time  reasonably  request,
and such  information  regarding  the lessees  under Leases as any Borrower from
time to time receives or Agent or any Lender reasonably requests.

         All financial statements of Borrowers,  FSI and PLMI to be delivered by
any Borrower and FSI to Agent  pursuant to this Section 5.1 will be complete and
correct and present  fairly the financial  condition of each  Borrower,  FSI and
PLMI as of the date thereof; will disclose all liabilities of each Borrower, FSI
and PLMI that are  required  to be  reflected  or reserved  against  under GAAP,
whether  liquidated or  unliquidated,  fixed or  contingent;  and will have been
prepared  in  accordance  with  GAAP.  All tax  returns  submitted  to  Agent by
Borrowers  and FSI will,  to the best of each  Borrower's  and FSI's  knowledge,
after due inquiry, be true and correct.  Each Borrower and FSI hereby agree that
each time any one of them submits a financial  statement or tax return to Agent,
such  Borrower and FSI shall be deemed to represent  and warrant to Lenders that
such  financial  statement  or tax  return  complies  with all of the  preceding
requirements set forth in this paragraph.

         Statements of financial performance required to be provided by Borrower
to Agent  pursuant to this  Section  5.1 shall (a) include a statement  that the
Year 2000  remediation  efforts of Borrower are  proceeding  as scheduled and no
Material  Adverse  Effect is  expected  to result  from the "Year 2000  Problem"
(within the meaning of such term set forth in Section 4.20) or such  remediation
efforts and (b) indicate whether an auditor, regulator or third party consultant
has issued a management  letter or other  communication  regarding the Year 2000
exposure, program or progress of Borrower.

5.2  Existence;  Compliance  With Law. Each Borrower and FSI shall  preserve and
maintain,  and FSI shall cause each of FSI's  Subsidiaries,  including,  without
limitation,  TEC AcquiSub, to preserve and maintain,  their existence and all of
their  licenses,  permits,   governmental  approvals,   rights,  privileges  and
franchises  necessary or desirable in the normal conduct of their  businesses as
now  conducted  or  presently  proposed  to  be  conducted  (including,  without
limitation,  their  qualification  to do business in each  jurisdiction in which
such qualification is necessary or desirable in view of its business);  conduct,
and  cause  each of  FSI's  Subsidiaries,  including,  without  limitation,  TEC
AcquiSub,  and any Owner  Trustee to  conduct,  its  business  in an orderly and
regular manner;  and comply,  and cause each of FSI's  Subsidiaries,  including,
without limitation,  TEC AcquiSub, and any Owner Trustee, to comply, with (a) as
to any Borrower,  its Limited  Partnership  Agreement,  Operating  Agreement and
other  organizational  documents,  as applicable,  and as to FSI and each of its
Subsidiaries, including, without limitation, TEC AcquiSub, the provisions of its
respective certificate or articles of incorporation,  as applicable,  and bylaws
and (b) the requirements of all applicable laws, rules, regulations or orders of
any  Governmental   Authority  and  requirements  for  the  maintenance  of  any
Borrower's,   FSI's  or  such   Subsidiary's   insurance,   licenses,   permits,
governmental  approvals,  rights,  privileges and franchises,  except, in either
case,  to the extent  that the  failure to comply  therewith  would not,  in the
aggregate, with reasonable likelihood, have a Material Adverse Effect.

5.3 Insurance. Each Borrower and FSI shall maintain and keep in force, and cause
each of FSI's  Subsidiaries,  including,  without limitation,  TEC AcquiSub,  to
maintain  and  keep  in  force  insurance  of  the  types  and in  amounts  then
customarily  carried in lines of business  similar to that of Borrowers,  FSI or
any of FSI's  Subsidiaries  as the case may be,  including,  but not limited to,
fire, extended coverage, public liability, property damage, environmental hazard
and workers'  compensation,  in each case carried with financially sound Persons
and  in  amounts  satisfactory  to  Requisite  Lenders  (subject  to  commercial
reasonableness as to each type of insurance);  provided, however, that the types
and amounts of  insurance  shall not provide any less  coverage for any Borrower
than  provided  as of the  Closing  Date by the  existing  blanket  policies  of
insurance  for PLMI and its  Subsidiaries.  All such  policies  as to  liability
insurance shall carry endorsements naming Agent and each Lender as an additional
insured and, upon the reasonable request of Agent, all such policies of property
insurance  shall carry  endorsements  naming Agent as principal loss payee as to
any  property  owned by  Borrowers  and  financed by  Lenders,  and in each case
indicating that (a) any loss thereunder shall be payable to Agent or Lenders, as
the  case  may  be,   notwithstanding   any   action,   inaction  or  breach  of
representation  or  warranty  by any  Borrower  or FSI;  (b)  there  shall be no
recourse  against  any Lender for  payment of  premiums  or other  amounts  with
respect  thereto,  and (c) at least fifteen (15) days' prior  written  notice of
cancellation,  lapse or material  change in coverage  shall be given to Agent by
the insurer.

5.4 Taxes And Other  Liabilities.  Promptly pay and  discharge and cause each of
FSI's Subsidiaries, including, without limitation, TEC AcquiSub, promptly to pay
and discharge all material Charges when due and payable,  except (a) such as may
be paid thereafter without penalty or (b) such as may be contested in good faith
by  appropriate   proceedings  and  for  which  an  adequate  reserve  has  been
established  and is maintained in  accordance  with GAAP.  Each Borrower and FSI
shall  promptly  notify Agent of any material  challenge,  contest or proceeding
pending by or against any  Borrower,  FSI and PLMI or any of FSI's  Subsidiaries
before any taxing authority.

5.5 Inspection Rights;  Assistance. At any reasonable time and from time to time
during  normal  business  hours,  permit  Agent  or any  Lender  or  any  agent,
representative or employee thereof,  to examine and make copies of and abstracts
from the financial records and books of account of each Borrower,  FSI or any of
FSI's  Subsidiaries,  including,  without  limitation,  TEC AcquiSub,  and other
documents in the possession or under the control of any Borrower,  FSI or any of
FSI's Subsidiaries, including, without limitation, TEC AcquiSub, relating to any
obligation  of any  Borrower  or FSI  arising  under  or  contemplated  by  this
Agreement  and to visit  the  offices  of any  Borrower  or FSI to  discuss  the
affairs,  finances  and accounts of any Borrower or FSI with any of the officers
of any Borrower or FSI, and, upon  reasonable  notice and during normal business
hours  (unless  an Event of  Default or  Potential  Event of Default  shall have
occurred and be  continuing,  in which event no notice is required),  to conduct
audits of and appraise Equipment. Such audits and appraisals shall be subject to
the lessee's right to quiet enjoyment as set forth in the respective lease.

5.6      Maintenance Of Facilities; Modifications.

5.6.1 Maintenance Of Facilities. Each Borrower and FSI shall keep and cause each
of FSI's Subsidiaries, including, without limitation, TEC AcquiSub, to keep, all
of their respective Properties which are useful or necessary to such Borrower's,
FSI's or such Subsidiary's  business, in good repair and condition,  normal wear
and tear excepted, and from time to time make, and cause each such Subsidiary to
make necessary  repairs thereto,  and renewals and replacements  thereof so that
each  Borrower's,  FSI's or such  Subsidiary's  Properties  shall  be fully  and
efficiently preserved and maintained.

5.6.2 Certain  Modifications  To The Equipment.  Subject to Section 5.6.1,  each
Borrower and FSI shall promptly  make, or cause to be made,  all  modifications,
additions and adjustments to the Eligible  Inventory as may from time to time be
required by any Governmental  Authority having  jurisdiction over the operation,
safety or use thereof.

5.7 Supplemental Disclosure. From time to time as may be necessary (in the event
that such information is not otherwise delivered by Borrowers or FSI to Agent or
Lenders  pursuant  to  this  Agreement),   so  long  as  there  are  Obligations
outstanding  hereunder,  disclose  to  Agent  in  writing  any  material  matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been  required to be set forth or described by any Borrower or FSI in
this Agreement or any of the other Loan  Documents  (including all Schedules and
Exhibits hereto or thereto) or which is necessary to correct any information set
forth or described by Borrowers or FSI  hereunder or thereunder or in connection
herewith which has been rendered inaccurate thereby.

5.8 Further Assurances.  In addition to the obligations and documents which this
Agreement  expressly requires Borrowers or FSI to execute,  deliver and perform,
each Borrower or FSI shall execute,  deliver and perform,  and shall cause FSI's
Subsidiaries  to execute,  deliver  and  perform,  any and all  further  acts or
documents  which  Agent or Lenders  may  reasonably  require to  effectuate  the
purposes of this Agreement or any of the other Loan Documents.

5.9 Lockbox. Each Borrower shall, unless otherwise directed in writing by Agent,
cause all  remittances  made by the obligor under any Lease to be made to a lock
box (the  "Lockbox")  maintained  with FUNB  pursuant to the Lockbox  Agreement.
Unless  otherwise  directed  by  Agent  in  writing,   all  invoices  and  other
instructions submitted by any Borrower to the obligor relating to Lease payments
shall designate the Lockbox as the place to which such payments shall be made.

5.10  Environmental  Laws. Each Borrower and FSI shall, and FSI shall cause each
of its  Subsidiaries  to,  conduct  its  operations  and keep and  maintain  its
Property in material compliance with all Environmental Laws.

Section 6.        BORROWER'S AND FSI'S NEGATIVE COVENANTS.

         So long as any of the  Commitments  shall be available  and until full,
complete and  indefeasible  payment and performance of the  Obligations,  unless
Requisite Lenders shall otherwise consent in writing, each Borrower,  severally,
as to  itself,  but not  jointly  as to the other  Borrowers  and FSI,  and FSI,
jointly and  severally  with each  Borrower as to such  Borrower  and to itself,
covenants and agrees as follows:

6.1 Liens;  Negative Pledges; And Encumbrances.  Each Borrower shall not create,
incur,  assume or suffer to exist, and shall not permit any Marine Subsidiary of
such Borrower or Owner Trustee  holding  record title to any Eligible  Inventory
for the beneficial interest of such Borrower to create,  incur, assume or suffer
to exist, and FSI shall not permit any of its Subsidiaries  (including,  without
limitation,  TEC and TEC AcquiSub) to create,  incur, assume or suffer to exist,
any Lien of any nature upon or with respect to any of their respective Property,
whether now or hereafter owned, leased or acquired,  except  (collectively,  the
"Permitted Liens"):

6.1.1 Existing Liens  disclosed on Schedule 6.1,  provided that the  obligations
secured thereby are not increased;

6.1.2 Liens for Charges if payment  shall not at the time be required to be made
in accordance with Section 5.4;

6.1.3 Liens in respect of pledges,  obligations  or deposits (a) under  workers'
compensation laws,  unemployment insurance and other types of social security or
similar  legislation,  (b) in connection  with surety,  appeal and similar bonds
incidental to the conduct of litigation, (c) in connection with bid, performance
or  similar  bonds and  mechanics',  laborers'  and  materialmen's  and  similar
statutory  Liens not then  delinquent,  or (d)  incidental to the conduct of the
business of such Borrower,  any Marine Subsidiary of such Borrower, or any Owner
Trustee or any of FSI's  Subsidiaries  and which were not incurred in connection
with the  borrowing of money or the  obtaining  of advances or credit;  provided
that  the  Liens  permitted  by  this  Section  6.1.3  do not  in the  aggregate
materially  detract  from the value of any assets or property  of or  materially
impair the use thereof in the  operation of the business of such  Borrower,  any
Owner  Trustee  or any of FSI's  Subsidiaries;  and  provided  further  that the
adverse  determination  of any  claim or  liability,  contingent  or  otherwise,
secured by any of such Liens would not either  individually or in the aggregate,
with reasonable likelihood, have a Material Adverse Effect;

6.1.4    Permitted Rights of Others; and

6.1.5  Liens  granted  in favor of Agent on  behalf  of  Lenders  under  the TEC
AcquiSub Agreement and the security agreement and other loan documents delivered
by TEC AcquiSub pursuant thereto.

6.2  Acquisitions.  Each  Borrower  shall  not,  and shall not permit any Marine
Subsidiary  of such  Borrower  to, and FSI shall not permit TEC and TEC AcquiSub
to, make any  Acquisition  or enter into any agreement to make any  Acquisition,
other than with respect to the  purchase of Equipment in the ordinary  course of
business or the formation or acquisition of a Marine Subsidiary.

6.3 Limitations On Indebtedness.  Each Borrower shall not create,  incur, assume
or suffer to exist,  nor permit any Marine  Subsidiary of such Borrower or Owner
Trustee  holding  record  title to any  Eligible  Inventory  for the  beneficial
interest of such Borrower to create,  incur,  assume or suffer to exist, and FSI
shall not permit any of its Subsidiaries (including, without limitation, TEC and
TEC AcquiSub) to create,  incur,  assume or suffer to exist, any Indebtedness or
Contingent  Obligation;  provided,  however,  that this Section 6.3 shall not be
deemed to prohibit:

6.3.1 The Obligations to Lenders and Agent arising hereunder and under the other
Loan Documents;

6.3.2  Existing  Indebtedness  disclosed  on  Schedule  6.3(a)  and  anticipated
Indebtedness disclosed on Schedule 6.3(b);

6.3.3  Indebtedness of any Subsidiary of FSI, provided that such Indebtedness is
non-recourse as to FSI, TEC and TEC AcquiSub;

6.3.4 The acquisition of goods, supplies or merchandise on normal trade credit;

6.3.5 The endorsement of negotiable  instruments received in the ordinary course
of any Borrower's business as presently conducted;

6.3.6  Indebtedness  incurred in respect of the deferred  purchase  price for an
item  of  Equipment,  but  only  to the  extent  that  the  incurrence  of  such
Indebtedness  is customary in the industry  with respect to the purchase of this
type of equipment (provided that such Indebtedness shall only be permitted under
this Section 6.3.6 if, taking into account the incurrence of such  Indebtedness,
the Borrower incurring such Indebtedness shall not be in violation of any of the
financial  covenants  set  forth  in  Section  7 if  measured  as of the date of
incurrence as determined by GAAP); and

6.3.7  Any  Guaranty  Obligations  of any  Borrower  in the form of  performance
guaranties undertaken on behalf of a Marine Subsidiary of such Borrower in favor
of the charter party in connection with the leasing of a marine vessel on a time
charter;

6.4 Use Of Proceeds.  Each  Borrower and FSI shall not, and shall not permit any
Marine  Subsidiary of such Borrower or Owner Trustee holding record title to any
Eligible  Inventory for the beneficial  interest of such Borrower or FSI to, use
the proceeds of any Loan except for the purpose set forth in Section 2.1.3,  and
shall not, and shall not permit any such Marine Subsidiary or such Owner Trustee
to, use the proceeds to repay any loans or advances made by any other Person.

6.5 Disposition Of Assets. Each Borrower and FSI shall not, and shall not permit
any Marine Subsidiary of such Borrower or any Owner Trustee holding record title
to any Eligible  Inventory for the  beneficial  interest of such Borrower or FSI
to, sell, assign or otherwise dispose of, any of its or their respective assets,
except for full, fair and reasonable  consideration,  or enter into any sale and
leaseback  agreement  covering any of its or their  respective  fixed or capital
assets.

6.6  Restriction  On Fundamental  Changes.  Each Borrower and FSI shall not, and
shall not permit any  Marine  Subsidiary  of such  Borrower  to,  enter into any
transaction  of  merger,   consolidation   or   recapitalization,   directly  or
indirectly,  whether by operation of law or otherwise, or liquidate,  wind up or
dissolve itself (or suffer any  liquidation or  dissolution),  or convey,  sell,
lease, assign,  transfer or otherwise dispose of, in one transaction or a series
of transactions,  all or any part of its business,  Property or assets,  whether
now owned or  hereafter  acquired,  or acquire by purchase or  otherwise  all or
substantially  all the  business,  Property  or  assets  of,  or  stock or other
evidence of beneficial  ownership of, any Person,  except sales (a) of Equipment
in the ordinary  course of business  (for the purposes of this Section 6.6, with
respect to any Borrower and any Marine  Subsidiary  of such  Borrower,  ordinary
course of business shall refer to the business of the Equipment Growth Funds and
all Marine Subsidiaries, collectively) and (b) any Subsidiary of FSI (other than
TEC AcquiSub) may be merged or consolidated with or into FSI or any wholly-owned
Subsidiary  of  FSI,  or  be  liquidated,  wound  up or  dissolved,  or  all  or
substantially  all of its  business,  property or assets may be conveyed,  sold,
leased,  transferred or otherwise disposed of, in one transaction or a series of
transactions,  to, FSI or any wholly-owned  Subsidiary of FSI; provided that, in
the case of such a merger or consolidation,  FSI or such wholly-owned Subsidiary
shall  be  the  continuing  or  surviving  corporation.  6.7  Transactions  With
Affiliates.  Each Borrower shall not, and shall not permit any Marine Subsidiary
of such Borrower to,  directly or indirectly,  enter into or permit to exist any
transaction  (including,  without  limitation,  the  purchase,  sale,  lease  or
exchange  of any  property  or the  rendering  of any  service)  with any of its
Affiliates  on terms that are less  favorable  to such  Borrower  or such Marine
Subsidiary  than those that might be obtained  at the time from  Persons who are
not such Affiliates.

6.8  Maintenance Of Business.  Each Borrower shall not, and FSI shall not permit
any of its existing Subsidiaries to, engage in any business materially different
than the business currently engaged in by such Person.

6.9 No  Distributions.  Each Borrower shall not make, pay or set apart any funds
for the payment of distribution to its partners or members if such  distribution
would cause or result in an Event of Default or Potential Event of Default.

6.10 Events Of Default. Each Borrower and FSI shall not take or omit to take any
action,  which  act or  omission  would,  with the lapse of time,  or  otherwise
constitute (a) a default,  event of default or Event of Default under any of the
Loan  Documents or (b) a default or an event of default under any other material
agreement,  contract,  lease, license,  mortgage, deed of trust or instrument to
which either is a party or by which either or any of their  Properties or assets
is bound,  which default or event of default would, with reasonable  likelihood,
have a Material Adverse Effect.

6.11 ERISA. If any Borrower or FSI or any of their ERISA  Affiliates  incurs any
obligation to contribute to any Pension Plan,  then such Borrower or FSI, as the
case may be,  shall  not (a)  terminate,  or  permit  such  ERISA  Affiliate  to
terminate,  any Pension Plan so as to result in any liability  that would,  with
reasonable likelihood, have a Material Adverse Effect or (b) make or permit such
ERISA Affiliate to make a complete or partial  withdrawal (within the meaning of
Section  4201 of  ERISA)  from any  Multiemployer  Plan so as to  result  in any
liability  that  would,  with  reasonable  likelihood,  have a Material  Adverse
Effect.

6.12  No Use Of Any  Lender's  Name.  Each  Borrower  and FSI  shall  not use or
authorize others to use any Lender's name or marks in any publication or medium,
including,  without  limitation,  any prospectus,  without such Lender's advance
written authorization.

6.13 Certain Accounting Changes.  Each Borrower shall not change its fiscal year
end from  December  31,  nor make any  change in its  accounting  treatment  and
reporting practices except as permitted by GAAP; provided,  however, that should
any Borrower  change its  accounting  treatment or reporting  practices in a way
that  would  cause  a  change  in  the  calculation,  or  in  the  results  of a
calculation,  of any of the  financial  covenants set forth in Section 7, below,
then such  Borrower  shall  continue  to  calculate  such  covenants  as if such
accounting treatment or reporting practice had not been changed unless otherwise
agreed to by Requisite Lenders.

6.14 Amendments Of Limited  Partnership Or Operating  Agreements.  Each Borrower
shall  not,  shall  not  cause to occur and  shall  not  permit  any  amendment,
modification  or  supplement  of or to any of the  terms or  provisions  of such
Borrower's Limited  Partnership  Agreement or, in the case of Income Fund I, its
Operating Agreement,  which amendment,  modification or supplement would affect,
limit or otherwise  impair such  Borrower's  ability to pay the  Obligations  or
perform its obligations under this Agreement or any of the other Loan Documents.

Section 7.        FINANCIAL COVENANTS OF BORROWER AND FSI.

         Each Borrower, severally, as to itself, but not jointly as to the other
Borrowers and FSI, and FSI,  jointly and severally with each Borrower as to each
Borrower and as to itself,  covenant and agree that, so long as the  Commitments
hereunder shall be available,  and until full, complete and indefeasible payment
and performance of the Obligations,  including,  without  limitation,  all Loans
evidenced by the Notes,  unless  Requisite  Lenders shall  otherwise  consent in
writing, Borrowers and FSI shall perform the following financial covenants. Each
Borrower and FSI agree and understand that (except as expressly provided herein)
all covenants  under this Section 7 shall be subject to quarterly  compliance or
compliance  as of the date of any request for a Loan  pursuant to Section  3.2.1
(as measured on the last day of each fiscal quarter of such Borrower, or FSI, as
the case may be, or as of the date of any request for a Loan pursuant to Section
3.2.1),  and in each case review by Lenders of the respective  fiscal  quarter's
consolidated  financial  statements  delivered to Agent by each Borrower and FSI
pursuant  to  Section  5.1;  provided,  however,  that the  following  financial
covenants  shall  apply only as to those  Borrowers  requesting  a Loan or as to
which a Loan remains outstanding.

7.1 Maximum Funded Debt Ratio.  Each Borrower shall maintain a Funded Debt Ratio
of not greater than 0.5:1.0.

7.2 Minimum Debt Service  Ratio.  Each  Borrower  shall  maintain a Debt Service
Ratio of not less than 1.75:1.0.

7.3 Cash Balances.  The Equipment  Growth Funds of which FSI is the sole general
partner shall maintain aggregate unrestricted cash balances of $10,000,000.

section 8.        EVENTS OF DEFAULT AND REMEDIES.

8.1 Events Of Default. As to any Borrower,  the occurrence of any one or more of
the  following  shall  constitute  an Event of  Default  for each such  Borrower
individually:

8.1.1 Failure To Make  Payments.  Such Borrower,  any Marine  Subsidiary of such
Borrower or any Owner Trustee holding record title to any Eligible Inventory for
the  beneficial  interest  of such  Borrower  or FSI fails to pay any sum due to
Lenders or Agent arising under this Agreement,  the Note of such Borrower or any
of the other Loan  Documents  when and as the same shall become due and payable,
whether by  acceleration or otherwise and such failure shall not have been cured
to Lenders' satisfaction within five (5) calendar days; or

8.1.2  Other  Agreements.  (a) Such  Borrower,  any  Marine  Subsidiary  of such
Borrower,  FSI, TEC, TEC AcquiSub or any Owner Trustee  holding  record title to
any Eligible Inventory for the beneficial  interest of such Borrower defaults in
the  repayment  of any  principal  of or the  payment  of  any  interest  on any
Indebtedness  of such  Borrower,  any such  Marine  Subsidiary,  FSI,  TEC,  TEC
AcquiSub or any such Owner  Trustee,  respectively,  or breaches any term of any
evidence  of such  Indebtedness  or  defaults  in any  payment in respect of any
Contingent  Obligation  (excluding,  as to FSI, any Contingent Obligation of FSI
arising  solely as a result of FSI's  status as a general  partner of any Person
other than such Borrower),  in each case exceeding, in the aggregate outstanding
principal amount, $2,000,000, or such Borrower, any Marine Subsidiary, FSI, TEC,
TEC AcquiSub or any Owner Trustee  breaches or violates any term or provision of
any evidence of such  Indebtedness or Contingent  Obligation or of any such loan
agreement,  mortgage, indenture, guaranty or other agreement relating thereto if
the  effect  of such  breach  is to permit  acceleration  under  the  applicable
instrument, loan agreement, mortgage, indenture, guaranty or other agreement and
such failure  shall not have been cured within the  applicable  cure period,  or
there is an  acceleration  under  the  applicable  instrument,  loan  agreement,
mortgage,  indenture,  guaranty or other agreement;  or (b) PLMI defaults in the
repayment of any principal of or the payment of any interest on any Indebtedness
or defaults in any payment in respect of any Contingent Obligation, in each case
exceeding,  in the aggregate outstanding principal amount,  $2,000,000,  or PLMI
breaches or violates any term or provision of any evidence of such  Indebtedness
or Contingent  Obligation or of any such loan  agreement,  mortgage,  indenture,
guaranty  or  other  agreement  relating  thereto  with  the  result  that  such
Indebtedness  or Contingent  Obligation  becomes or is caused to become then due
and payable in its entirety, whether by acceleration of otherwise; or

8.1.3 Breach Of  Covenants.  Such  Borrower or FSI fails or neglects to perform,
keep or observe any of the covenants contained in Sections 2.1.3, 5.2, 5.3, 5.9,
6.1,  6.2,  6.3,  6.4,  6.5, 6.6, 6.7, 6.8, 6.9 or 6.13, or any of the financial
covenants contained in Section 7 of this Agreement; or

8.1.4 Breach Of  Representations  Or Warranties.  Any representation or warranty
made by or on behalf of such Borrower or FSI in this  Agreement or any statement
or  certificate  at any time given in writing  pursuant  hereto or in connection
herewith shall be false,  misleading or incomplete in any material  respect when
made; or

8.1.5  Failure To Cure.  Except as provided in  Sections  8.1.1 and 8.1.3,  such
Borrower, FSI or any Marine Subsidiary of such Borrower or Owner Trustee holding
record  title to any  Eligible  Inventory  for the  beneficial  interest of such
Borrower or FSI fails or neglects  to perform,  keep or observe any  covenant or
provision of this  Agreement or of any of the other Loan  Documents or any other
document or agreement executed by such Borrower, FSI or any Marine Subsidiary of
such Borrower or Owner Trustee  holding  record title to any Eligible  Inventory
for the beneficial interest of such Borrower or FSI in connection  therewith and
the same has not been cured to Requisite  Lenders'  satisfaction  within  thirty
(30) calendar  days after such  Borrower,  FSI or any Marine  Subsidiary of such
Borrower or Owner Trustee holding record title to any Eligible Inventory for the
beneficial interest of such Borrower or FSI shall become aware thereof,  whether
by written notice from Agent or any Lender or otherwise; or

8.1.6 Insolvency.  Such Borrower,  any Marine  Subsidiary of such Borrower,  TEC
AcquiSub,  any other Borrower (but only for so long as Obligations of such other
Borrower  remain or Commitments to such other Borrower are available  under this
Agreement),  FSI,  TEC, PLMI or any Owner  Trustee  holding  record title to any
Eligible  Inventory for the  beneficial  interest of such Borrower or FSI or any
other guarantor of any of such Borrower's or FSI's  obligations to Lenders shall
(a) cease to be Solvent,  (b) admit in writing its inability to pay its debts as
they mature, (c) make an assignment for the benefit of creditors,  (d) apply for
or consent to the  appointment of a receiver,  liquidator,  custodian or trustee
for it or for a  substantial  part  of its  Properties  or  business,  or such a
receiver,  liquidator,  custodian or trustee  otherwise  shall be appointed  and
shall not be discharged within sixty (60) days after such appointment; or

8.1.7  Bankruptcy  Proceedings.   Bankruptcy,   insolvency,   reorganization  or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the  relief of debtors  shall be  instituted  by or against  such
Borrower,  any Marine  Subsidiary  of such  Borrower,  TEC  AcquiSub,  any other
Borrower (but only for so long as Obligations  of such other Borrower  remain or
Commitments to such other  Borrower are available  under this  Agreement),  FSI,
TEC, PLMI or any Owner Trustee  holding  record title to any Eligible  Inventory
for the  beneficial  interest of such Borrower or FSI or any other  guarantor of
any of such Borrower's or FSI's obligations to Lenders or any order, judgment or
decree shall be entered  against such  Borrower,  any Marine  Subsidiary of such
Borrower,  TEC AcquiSub, any other Borrower (but only for so long as Obligations
of such  other  Borrower  remain  or  Commitments  to such  other  Borrower  are
available  under this  Agreement),  FSI, TEC, PLMI or any Owner Trustee  holding
record  title to any  Eligible  Inventory  for the  beneficial  interest of such
Borrower  or FSI or any  other  guarantor  of any of such  Borrower's  or  FSI's
obligations to Lenders decreeing its dissolution or division; provided, however,
with respect to an involuntary  petition in bankruptcy,  such petition shall not
have been dismissed within sixty (60) days after the filing of such petition; or

8.1.8  Material  Adverse  Effect.  There shall have been a change in the assets,
liabilities,  financial  condition,  operations,  affairs or  prospects  of such
Borrower, any Marine Subsidiary of such Borrower,  TEC AcquiSub,  FSI, TEC, PLMI
or any Owner  Trustee  holding  record title to any Eligible  Inventory  for the
beneficial  interest of such  Borrower or FSI or any other  guarantor  of any of
such  Borrower's  or FSI's  obligations  to  Lenders  which,  in the  reasonable
determination of Requisite Lenders has, either individually or in the aggregate,
had a Material Adverse Effect; or

8.1.9 Judgments, Writs And Attachments. There shall be a money judgment, writ or
warrant of attachment or similar process entered or filed against such Borrower,
any Marine  Subsidiary of such  Borrower,  TEC  AcquiSub,  FSI, TEC or any Owner
Trustee  holding  record  title to any  Eligible  Inventory  for the  beneficial
interest  of such  Borrower  or FSI which (net of  insurance  coverage)  remains
unvacated, unbonded, unstayed or unpaid or undischarged for more than sixty (60)
days (whether or not  consecutive)  or in any event later than five (5) calendar
days prior to the date of any proposed sale thereunder, which, together with all
such other unvacated,  unbonded,  unstayed, unpaid and undischarged judgments or
attachments  against such  Borrower or any Marine  Subsidiary  of such  Borrower
exceeds in the  aggregate  $1,000,000;  against  FSI  exceeds  in the  aggregate
$500,000;  against TEC or TEC AcquiSub  exceeds in the  aggregate  $500,000;  or
against any Owner Trustee holding record title to any Eligible Inventory for the
beneficial interest of such Borrower or FSI exceeds in the aggregate $1,000,000;
or against any  combination  of the foregoing  Persons  exceeds in the aggregate
$1,000,000; or

8.1.10 Legal  Obligations.  Any of the Loan Documents shall for any reason other
than  the  full,  complete  and  indefeasible  satisfaction  of the  Obligations
thereunder  cease to be, or be  asserted  by such  Borrower,  FSI or any  Marine
Subsidiary  of such  Borrower  or  Owner  Trustee  holding  record  title to any
Eligible  Inventory for the  beneficial  interest of such Borrower or FSI not to
be, a legal,  valid and binding  obligation of such Borrower,  FSI or any Marine
Subsidiary  of such  Borrower  or  Owner  Trustee  holding  record  title to any
Eligible  Inventory  for  the  beneficial  interest  of  such  Borrower  or FSI,
respectively enforceable against such Person in accordance with its terms; or

8.1.11 TEC  AcquiSub  Agreement.  The  occurrence  of any "Event of  Default" as
defined under the TEC AcquiSub  Agreement or any other loan or security document
related to the TEC AcquiSub Agreement; or

8.1.12  Change Of General  Partner Or  Manager.  FSI shall  cease to be the sole
general partner or the sole manager,  as applicable,  of such Borrower,  whether
due to  the  voluntary  or  involuntary  withdrawal,  substitution,  removal  or
transfer  of FSI  from or of all or any  portion  of FSI's  general  partnership
interest or capital contribution in such Borrower; or

8.1.13  Change Of Purchaser.  Requesting  Borrower,  TEC AcquiSub,  FSI or their
Subsidiaries  shall cease to be the  purchaser  of Eligible  Inventory  for such
Requesting Borrower.

8.1.14 Criminal Proceedings.  A criminal proceeding shall have been filed in any
court naming any  Borrower,  FSI or any Marine  Subsidiary  of such  Borrower or
Owner Trustee holding record title to any Eligible  Inventory for the beneficial
interest  of such  Borrower  or FSI as a  defendant  for which  forfeiture  is a
potential penalty under applicable federal or state law which, in the reasonable
determination of Requisite Lenders, may have a Material Adverse Effect; or

8.1.15 Action By Governmental  Authority.  Any  Governmental  Authority enters a
decree,  order  or  ruling  ("Government  Action")  which  will  materially  and
adversely  affect any  Borrower's,  any Marine  Subsidiary  of such  Borrower's,
FSI's,  TEC's,  TEC  AcquiSub's  or PLMI's  financial  condition,  operations or
ability to perform or pay such party's  obligations arising under this Agreement
or any instrument or agreement  executed pursuant to the terms of this Agreement
or which will  similarly  affect any Owner Trustee  holding  record title to any
Eligible  Inventory  for the  beneficial  interest of such Borrower or FSI. Such
Borrower  or FSI shall have  thirty  (30) days from the  earlier of the date (a)
Borrower or FSI, as applicable,  first discovers it is the subject of Government
Action or (b) a Lender or any agency gives notice of  Government  Action to take
such steps as are necessary to obtain relief from the Government Action. For the
purpose of this paragraph, "relief from Government Action" means to discharge or
to obtain a dismissal of or release or relief from (i) any Government  Action so
that the affected party or parties do not incur  monetary  liability (A) of more
than  $1,000,000  in the case of any Borrower or any Marine  Subsidiary  of such
Borrower,  (B) of more  than  $500,000  in the  case of  FSI,  (C) of more  than
$500,000  in the  case of TEC,  (D) of more  than  $250,000  in the  case of TEC
AcquiSub,  (E) of more than  $1,000,000 in the case of PLMI, or (F) of more than
$1,000,000,  in the aggregate,  in the case of any  combination of the foregoing
Persons, or (ii) any disqualification of or other limitation on the operation of
any Borrower, any Marine Subsidiary of such Borrower, FSI, TEC, TEC AcquiSub and
PLMI, or any of them, which in the reasonable determination of Requisite Lenders
may have a Material Adverse Effect; or

8.1.16 Governmental  Decrees.  Any Governmental  Authority,  including,  without
limitation,  the SEC,  shall  enter a decree,  order or ruling  prohibiting  the
Equipment  Growth Funds from releasing or paying to FSI any funds in the form of
management fees, profits or otherwise which, in the reasonable  determination of
Requisite Lenders, may have a Material Adverse Effect.

8.2 Waiver Of  Default.  An Event of Default may be waived only with the written
consent of Requisite  Lenders,  or if expressly  provided,  of all Lenders.  Any
Event of  Default  so waived  shall be  deemed to have been  cured and not to be
continuing;  but no such  waiver  shall be deemed a  continuing  waiver or shall
extend to or affect any  subsequent  like  default or impair any rights  arising
therefrom.

8.3 Remedies.  Upon the  occurrence  and  continuance of any Event of Default or
Potential Event of Default,  Lenders shall have no further obligation to advance
money or extend credit to or for the benefit of the  defaulting  Borrower or any
other  Borrower,  regardless of whether such Event of Default or Potential Event
of Default has occurred with respect to such Borrower or another Borrower.

         In addition, upon the occurrence and during the continuance of an Event
of Default,  except an Event of Default arising under Section 8.1.11 hereof (the
remedies  for  which  shall be  limited  to  those  set  forth in the  preceding
paragraph),  Lenders or Agent, on behalf of Lenders,  may, as to such defaulting
Borrower,  or as to all Borrowers  should such Event of Default  result from the
actions or inactions of FSI, at the option of Requisite  Lenders,  do any one or
more of the following,  all of which are hereby  authorized by each Borrower and
FSI:

8.3.1  Declare  all or any  of the  Obligations  of  such  Borrower  under  this
Agreement,  the Notes of such  Borrower,  the other Loan Documents and any other
instrument  executed  by such  Borrower  pursuant  to the Loan  Documents  to be
immediately  due and payable,  and upon such  declaration  such  obligations  so
declared due and payable shall immediately become due and payable; provided that
if such Event of Default is under part 8.1.6 or 8.1.7 of Section  8.1,  then all
of the  Obligations  of each Borrower shall become  immediately  due and payable
forthwith  without the  requirement  of any notice or other action by Lenders or
Agent;

8.3.2 Terminate this Agreement as to any future liability or obligation of Agent
or Lenders as to such  Borrower or as to each  Borrower if such Event of Default
results  from the  actions,  inactions or violation of any covenant of or by FSI
(excluding, as to FSI, Events of Default under Section 8.1.2 arising in relation
to Contingent  Obligation of FSI arising solely as a result of FSI's status as a
general partner of any Person other than such Borrower); and

8.3.3 Exercise in addition to all other rights and remedies  granted  hereunder,
any and all rights and remedies  granted  under the Loan  Documents or otherwise
available at law or in equity.

8.4      Set-Off.

8.4.1 During the continuance of an Event of Default,  any deposits or other sums
credited by or due from any Lender to any Borrower or FSI (exclusive of deposits
in  accounts  expressly  held in the name of third  parties or held in trust for
benefit  of third  parties)  may be  set-off  against  the  Obligations  of such
Borrower and any and all other liabilities, due or existing or hereafter arising
and owing by such  Borrower  or FSI to  Lenders.  Each  Lender  agrees to notify
promptly  Borrowers  and FSI and Agent of any such set-off;  provided,  that the
failure to give such notice shall not affect the validity of any such set-off.

8.4.2 Each Lender agrees that if it shall, whether by right of set-off, banker's
lien or similar remedy pursuant to Section 8.4.1, obtain any payment as a result
of which the outstanding and unpaid principal portion of the Commitments of such
Lender shall be less than such  Lender's Pro Rata Share of the  outstanding  and
unpaid  principal  portion of the  aggregate  of all  Commitments,  such  Lender
receiving  such payment shall  simultaneously  purchase from each other Lender a
participation  in the  Commitments  held by such Lenders so that the outstanding
and unpaid principal amount of the Commitments and participations in Commitments
of such Lender shall be in the same proportion to the unpaid principal amount of
the aggregate of all Commitments then outstanding as the unpaid principal amount
under the Commitments of such Lender outstanding immediately prior to receipt of
such  payment  was to the  unpaid  principal  amount  of  the  aggregate  of all
Commitments  outstanding  immediately  prior to such  Lender's  receipt  of such
payment; provided,  however, that if any such purchase shall be made pursuant to
this Section  8.4.2 and the payment  giving rise  thereto  shall  thereafter  be
recovered,  such purchase  shall be rescinded to the extent of such recovery and
the purchase price restored without interest.  Each Borrower  expressly consents
to the foregoing arrangements and agrees that any Lender holding a participation
in a Commitment deemed to have been so purchased may exercise any and all rights
of set-off,  banker's lien or similar  remedy with respect to any and all moneys
owing by Borrower to such Lender as fully as if such Lender held a Commitment in
the amount of such participation.

8.5 Rights And Remedies  Cumulative.  The enumeration of the rights and remedies
of  Agent  and  Lenders  set  forth  in this  Agreement  is not  intended  to be
exhaustive  and the  exercise by Agent and Lenders of any right or remedy  shall
not preclude the exercise of any other rights or remedies, all of which shall be
cumulative,  and  shall  be in  addition  to any  other  right or  remedy  given
hereunder or under the Loan Documents or that may now or hereafter  exist in law
or in equity or by suit or otherwise.  No delay or failure to take action on the
part of Agent and Lenders in  exercising  any right,  power or  privilege  shall
operate as a waiver hereof, nor shall any single or partial exercise of any such
right,  power or privilege  preclude  other or further  exercise  thereof or the
exercise of any other  right,  power or  privilege or shall be construed to be a
waiver of any Event of  Default  or  Potential  Event of  Default.  No course of
dealing  between any Borrower,  FSI,  Agent,  or any Lender or their  respective
agents or  employees  shall be  effective  to change,  modify or  discharge  any
provision  of this  Agreement or any of the Loan  Documents  or to  constitute a
waiver of any Event of Default or Potential Event of Default.

section 9.        AGENT.

9.1 Appointment.  Each of the Lenders hereby irrevocably designates and appoints
FUNB as the  Agent of such  Lender  under  this  Agreement  and the  other  Loan
Documents,  and each such Lender  irrevocably  authorizes  FUNB as the Agent for
such  Lender to take such  action on its  behalf  under the  provisions  of this
Agreement  and the other Loan  Documents and to exercise such powers and perform
such  duties  as are  expressly  delegated  to the  Agent  by the  terms of this
Agreement and such other Loan Documents,  together with such other powers as are
reasonably  incidental  thereto.  Notwithstanding  any provision to the contrary
elsewhere in this  Agreement or such other Loan  Documents,  the Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein,  or  any  fiduciary  relationship  with  any  Lender,  and  no  implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this  Agreement  or the other Loan  Documents  or  otherwise  exist
against Agent.  To the extent any provision of this Agreement  permits action by
Agent,  Agent  shall,  subject to the  provisions  of this  Section 9, take such
action if directed in writing to do so by Requisite Lenders.

9.2  Delegation  Of  Duties.  Agent may  execute  any of its  duties  under this
Agreement and the other Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel  concerning all matters pertaining to
such duties.  Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.

9.3 Exculpatory  Provisions.  Neither Agent nor any of its officers,  directors,
employees,  agents,  attorneys-in-fact or Affiliates shall be (a) liable for any
action  lawfully  taken or omitted to be taken by it or such Person  under or in
connection  with this Agreement or the other Loan  Documents  (except for its or
such Person's own gross negligence or willful misconduct), or (b) responsible in
any  manner to any  Lender  for any  recitals,  statements,  representations  or
warranties  made  by any  Borrower  or any  officer  thereof  contained  in this
Agreement or the other Loan Documents or in any certificate,  report,  statement
or other document  referred to or provided for in, or received by Agent under or
in connection with, this Agreement or the other Loan Documents or for the value,
validity,  effectiveness,  genuineness,  enforceability  or  sufficiency of this
Agreement  or the other Loan  Documents  or for any  failure of any  Borrower to
perform its  obligations  hereunder or thereunder.  Agent shall not be under any
obligation  to any Lender to  ascertain  or to inquire as to the  observance  or
performance  of any of the  agreements  contained  in, or  conditions  of,  this
Agreement, or to inspect the Properties, books or records of any Borrower.

9.4  Reliance By Agent.  Agent  shall be  entitled  to rely,  and shall be fully
protected  in relying,  upon any note,  writing,  resolution,  notice,  consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed,  sent or made by the proper  Person
or Persons and upon advice and statements of legal counsel  (including,  without
limitation,  counsel to Borrowers),  independent  accountants  and other experts
selected  by Agent.  Agent may deem and treat the payee of any  promissory  note
issued  pursuant to this Agreement as the owner thereof for all purposes  unless
such  promissory  note shall have been  transferred  in accordance  with Section
11.10 hereof.  Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan  Documents  unless it shall first
receive such advice or concurrence of Requisite  Lenders as it deems appropriate
or it shall first be indemnified to its  satisfaction by Lenders against any and
all  liability  and  expense  which may be incurred by it by reason of taking or
continuing  to take any such  action  except  for its own  gross  negligence  or
willful misconduct. Agent shall in all cases be fully protected in acting, or in
refraining  from acting,  under this  Agreement in accordance  with a request of
Requisite  Lenders,  and such  request  and any  action  taken or failure to act
pursuant thereto shall be binding upon all Lenders.

9.5 Notice Of Default.  Agent shall not be deemed to have knowledge or notice of
the occurrence of any Event of Default or Potential  Event of Default  hereunder
unless Agent has received notice from a Lender or any Borrower referring to this
Agreement,  describing  such Event of Default or Potential  Event of Default and
stating  that such  notice is a "notice  of  default".  In the event  that Agent
receives such a notice, Agent shall promptly give notice thereof to Lenders. The
Agent shall take such action with  respect to such Event of Default or Potential
Event of Default as shall be reasonably directed by Requisite Lenders;  provided
that unless and until Agent shall have received such directions,  Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Event of Default or Potential  Event of Default as it shall
deem advisable in the best interests of Lenders.

9.6 Non-Reliance On Agent And Other Lenders. Each Lender expressly  acknowledges
that  neither  Agent  nor any of its  officers,  directors,  employees,  agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by Agent hereinafter taken,  including any review of the affairs
of Borrower,  shall be deemed to constitute  any  representation  or warranty by
Agent to any Lender. Each Lender represents to Agent that it has,  independently
and without reliance upon Agent or any other Lender, and based on such documents
and  information  as it has deemed  appropriate,  made its own  appraisal of and
investigation  into the  business,  operations,  property,  financial  and other
condition  and  creditworthiness  of each  Borrower  and FSI  and  made  its own
decision to make its Loans hereunder and enter into this Agreement.  Each Lender
also represents that it will,  independently  and without reliance upon Agent or
any other Lender,  and based on such documents and  information as it shall deem
appropriate at the time,  continue to make its own credit  analysis,  appraisals
and decisions in taking or not taking action under this  Agreement and the other
Loan Documents,  and to make such  investigation as it deems necessary to inform
itself as to the business,  operations,  property, financial and other condition
and  creditworthiness of each Borrower and FSI. Except for notices,  reports and
other  documents  expressly  required  to be  furnished  to the Lenders by Agent
hereunder  or by the  other  Loan  Documents,  Agent  shall not have any duty or
responsibility  to  provide  any  Lender  with any  credit or other  information
concerning the business, operations,  property, financial and other condition or
creditworthiness  of each Borrower and FSI which may come into the possession of
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.

9.7  Indemnification.  Each Lender agrees to indemnify  Agent in its capacity as
such (to the extent  not  reimbursed  by  Borrowers  and  without  limiting  the
obligation of Borrowers to do so), ratably  according to the respective  amounts
of  their  Pro Rata  Share of the  Commitments,  from  and  against  any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  of any kind whatsoever which may at any time
(including,  without limitation, at any time following the payment of the Loans)
be imposed on,  incurred by or asserted  against Agent in any way relating to or
arising out of this  Agreement  or the other Loan  Documents,  or any  documents
contemplated   by  or  referred  to  herein  or  therein  or  the   transactions
contemplated  hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing; provided that no Lender shall be liable
for the  payment  of any  portion  of  such  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
resulting solely from Agent's bad faith, gross negligence or willful misconduct.
The  agreements in this Section 9.7 shall survive the repayment of the Loans and
all other amounts payable hereunder.

9.8 Agent In Its  Individual  Capacity.  Agent and its Affiliates may make loans
to, accept  deposits from and generally  engage in any kind of business with any
Borrower  or FSI as though  Agent  were not Agent  hereunder.  With  respect  to
Advances  made or renewed  by it,  Agent  shall have the same  rights and powers
under this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not Agent, and the terms "Lender" and "Lenders" shall
include Agent in its individual capacity.

9.9 Resignation And Appointment Of Successor Agent. Agent may resign at any time
by giving  thirty  (30) days'  prior  written  notice  thereof  to  Lenders  and
Borrowers;  provided,  however,  that the retiring Agent shall continue to serve
until a successor  Agent shall have been selected and approved  pursuant to this
Section  9.9.  Upon any such  notice,  Agent  shall  have the right to appoint a
successor  Agent;  provided,  however,  that if such  successor  shall  not be a
signatory to this Agreement, such appointment shall be subject to the consent of
Requisite Lenders.  Agent may be replaced by Requisite Lenders,  with or without
cause;  provided,  however,  that  any  successor  agent  shall  be  subject  to
Borrowers' consent, which consent shall not be unreasonably  withheld.  Upon the
acceptance of any appointment as an Agent hereunder by a successor  Agent,  such
successor  Agent  shall  thereupon  succeed  to and become  vested  with all the
rights,  powers,  privileges and duties of the retiring Agent,  and the retiring
Agent shall be discharged from its duties and obligations  under this Agreement.
After any retiring  Agent's  resignation  hereunder as Agent,  the provisions of
this Section 9 shall inure to its benefit as to any actions  taken or omitted to
be taken by it while it was Agent under this Agreement.

section 10.       EXPENSES AND INDEMNITIES.

10.1  Expenses.  Borrowers  and Lenders  agree  that,  as the  following  costs,
expenses,  charges and other  disbursements  benefit  each  Borrower and as such
costs,  expenses,  charges  and other  disbursements  cannot  easily be  ratably
allocated to the account of any Borrower or  Borrowers,  each  Borrower,  unless
otherwise specified in this Section 10.1, shall pay, as its Obligation, promptly
on  demand,  and in any  event  within  thirty  (30)  days of the  invoice  date
therefor, (a) all costs, expenses,  charges and other disbursements  (including,
without  limitation,  all reasonable  attorneys' fees and allocated  expenses of
outside  counsel and in-house legal staff)  incurred by or on behalf of Agent or
any Lender in  connection  with the  preparation  of the Loan  Documents and all
amendments  and  modifications  thereof,  extensions  thereto  or  substitutions
therefor, and all costs, expenses, charges or other disbursements incurred by or
on behalf of Agent or any Lender  (including,  without limitation all reasonable
attorney's  fees and allocated  expenses of outside  counsel and in-house  legal
staff) in  connection  with the  furnishing  of opinions of counsel  (including,
without  limitation,  any opinions  requested by Lenders as to any legal matters
arising  hereunder) and of Borrowers'  performance  of and  compliance  with all
agreements and conditions contained herein or in any of the other Loan Documents
on its part to be performed  or complied  with;  (b) all other costs,  expenses,
charges and other disbursements  incurred by or on behalf of Agent or any Lender
in connection  with the  negotiation,  preparation,  execution,  administration,
continuation and enforcement of the Loan Documents,  and the making of the Loans
hereunder; (c) all costs, expenses,  charges and other disbursements (including,
without  limitation,  all reasonable  attorney's fees and allocated  expenses of
outside  counsel and in-house legal staff)  incurred by or on behalf of Agent or
any Lender in  connection  with the  assignment  or attempted  assignment to any
other Person of all or any portion of any Lender's interest under this Agreement
pursuant to Section  11.10;  and (d)  regardless of the existence of an Event of
Default or Potential Event of Default, all legal, appraisal,  audit, accounting,
consulting  or other  fees,  costs,  expenses,  charges  or other  disbursements
incurred  by or on  behalf  of  Agent  or any  Lender  in  connection  with  any
litigation,  contest, dispute, suit, proceeding or action (whether instituted by
Lenders,  Agent,  any  Borrower  or any other  Person)  seeking to  enforce  any
Obligations  of, or collecting  any payments due from,  any Borrower  under this
Agreement and the Notes,  all of which amounts shall be deemed to be part of the
Obligations;  provided,  however,  that Lenders shall be entitled to collect the
full amount of such costs, expenses,  charges and other disbursements only once.
Notwithstanding anything to the contrary contained in this Section 10.1, so long
as no Event of Default or Potential  Event of Default shall have occurred and be
continuing,  all appraisals of the Eligible Inventory shall be at the expense of
Lenders.  If an Event of  Default  or  Potential  Event of  Default  shall  have
occurred  and be  continuing,  such  appraisals  shall be at the  expense of the
Requesting Borrower.

10.2 Indemnification.  Whether or not the transactions contemplated hereby shall
be consummated:

10.2.1 General  Indemnity.  Each Borrower,  as to itself,  and FSI,  jointly and
severally as to itself and each Borrower,  shall pay,  indemnify,  and hold each
Lender,  Agent  and each of their  respective  officers,  directors,  employees,
counsel,  agents and attorneys-in-fact  (each, an "Indemnified Person") harmless
from  and  against  any  and  all  liabilities,  obligations,  losses,  damages,
penalties,  actions, judgments, suits, costs, charges, expenses or disbursements
(including  reasonable  attorney's  fees  and the  allocated  cost  of  in-house
counsel)  of any  kind or  nature  whatsoever  with  respect  to the  execution,
delivery, enforcement,  performance and administration of this Agreement and any
other Loan Documents,  or the transactions  contemplated hereby and thereby, and
with respect to any investigation, litigation or proceeding (including any case,
action or proceeding before any court or other  Governmental  Authority relating
to bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of
debtors or any appellate  proceeding)  related to this Agreement or the Loans or
the use of the  proceeds  thereof,  whether or not any  Indemnified  Person is a
party thereto (all the foregoing,  collectively, the "Indemnified Liabilities");
provided,  that  Borrowers  and FSI shall have no  obligation  hereunder  to any
Indemnified  Person with  respect to  Indemnified  Liabilities  arising from the
gross negligence or willful misconduct of such Indemnified Person.

10.2.2   Environmental Indemnity.

(a) Each Borrower,  to the extent of its pro rata share of ownership of Property
involved in any investigation, litigation or proceeding, as set forth below, and
FSI hereby  jointly and severally  agree to indemnify,  defend and hold harmless
each Indemnified Person, from and against any and all liabilities,  obligations,
losses, damages, penalties,  actions, judgments, suits, costs, charges, expenses
or disbursements (including reasonable attorneys' fees and the allocated cost of
in-house counsel and of internal environmental audit or review services),  which
may be incurred by or asserted  against such  Indemnified  Person in  connection
with or arising out of any pending or  threatened  investigation,  litigation or
proceeding, or any action taken by any Person, with respect to any Environmental
Claim  arising out of or related to any  Property  owned,  leased or operated by
such Borrower. No action taken by legal counsel chosen by Agent or any Lender in
defending against any such investigation,  litigation or proceeding or requested
remedial,  removal or response action shall (except for actions which constitute
fraud,  willful  misconduct,  gross  negligence  or material  violations of law)
vitiate or in any way impair  Borrowers' or FSI's  obligation and duty hereunder
to indemnify  and hold  harmless  Agent and each  Lender.  Agent and all Lenders
agree to use  reasonable  efforts to cooperate  with  Borrowers  respecting  the
defense of any matter indemnified hereunder, except insofar as and to the extent
that their respective interests may be adverse to Borrowers' or FSI's in Agent's
or such Lender's sole discretion.

(b) In no event  shall any site visit,  observation,  or testing by Agent or any
Lender be deemed a  representation  or warranty that Hazardous  Materials are or
are not  present  in, on, or under the site,  or that there has been or shall be
compliance with any  Environmental  Law.  Neither  Borrowers,  FSI nor any other
Person is entitled to rely on any site visit,  observation,  or testing by Agent
or any Lender. Except as otherwise provided by law, neither Agent nor any Lender
owes any duty of care to  protect  Borrowers,  or any one of them,  or any other
Person  against,  or to inform  Borrowers  or any other party of, any  Hazardous
Materials or any other adverse condition affecting any site or Property. Neither
Agent nor any Lender  shall be obligated  to disclose to  Borrowers,  FSI or any
other Person any report or findings made as a result of, or in connection  with,
any site visit, observation, or testing by Agent or any Lender.

10.2.3  Survival;  Defense.  The  obligations in this Section 10.2 shall survive
payment of all other  Obligations.  At the election of any  Indemnified  Person,
Borrowers shall defend such Indemnified Person using legal counsel  satisfactory
to such Indemnified Person in such Person's reasonable  discretion,  at the sole
cost and expense of  Borrowers,  which cost and expense  shall be  allocated  to
Borrowers  according  to such  Borrower's  pro rata  share of  ownership  of any
Property in relation to which such  obligations  arise.  All amounts owing under
this Section 10.2 shall be paid within thirty (30) days after written demand.

section 11.       MISCELLANEOUS.

11.1 Survival.  All covenants,  agreements,  representations and warranties made
herein shall survive the  execution  and delivery of the Loan  Documents and the
making of the Loans hereunder.

11.2 No Waiver By Agent Or Lenders.  No failure or delay on the part of Agent or
any  Lender  in the  exercise  of any  power,  right  or  privilege  under  this
Agreement, the Notes or any of the other Loan Documents shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein,  nor shall any single or partial  exercise of any such power,  right or
privilege  preclude  other or further  exercise  thereof or of any other  right,
power or privilege.

11.3  Notices.  Except as otherwise  provided in this  Agreement,  any notice or
other communication herein required or permitted to be given shall be in writing
and may be delivered in person,  with  receipt  acknowledged,  or sent by telex,
facsimile,  telecopy, computer transmission or by United States mail, registered
or  certified,  return  receipt  requested,  or  by  Federal  Express  or  other
nationally   recognized   overnight   courier   service,   postage  prepaid  and
confirmation of receipt  requested,  and addressed as set forth on the signature
pages to this Agreement or at such other address as may be substituted by notice
given as herein  provided.  The giving of any notice  required  hereunder may be
waived in writing by the party  entitled to receive such notice.  Every  notice,
demand, request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly  given or served on the date on which the same
shall have been  personally  delivered,  with receipt  acknowledged,  or sent by
telex,   facsimile,   telecopy  or  computer   transmission   (with  appropriate
answerback), three (3) Business Days after the same shall have been deposited in
the United  States mail or on the next  succeeding  Business Day if the same has
been sent by Federal Express or other nationally  recognized  overnight  courier
service.  Failure or delay in delivering copies of any notice, demand,  request,
consent, approval,  declaration or other communication to the persons designated
above to receive copies shall in no way adversely  affect the  effectiveness  of
such  notice,  demand,  request,   consent,   approval,   declaration  or  other
communication.

11.4 Headings.  Section and  subsection  headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

11.5  Severability.  Whenever possible,  each provision of this Agreement,  each
Note and each of the other Loan Documents  shall be interpreted in such a manner
as  to be  valid,  legal  and  enforceable  under  the  applicable  law  of  any
jurisdiction. Without limiting the generality of the foregoing sentence, in case
any  provision of this  Agreement,  any Note or any of the other Loan  Documents
shall be  invalid,  illegal or  unenforceable  under the  applicable  law of any
jurisdiction,  the  validity,  legality  and  enforceability  of  the  remaining
provisions, or of such provision in any other jurisdiction, shall not in any way
be affected or impaired thereby.

11.6     Entire Agreement; Construction; Amendments And Waivers.

11.6.1 This  Agreement,  the Notes and each of the other Loan Documents dated as
of the date hereof, taken together,  constitute and contain the entire agreement
among Borrowers,  Lenders and Agent and supersede any and all prior  agreements,
negotiations,  correspondence,  understandings  and  communications  between the
parties, whether written or oral, respecting the subject matter hereof.

11.6.2  This  Agreement  is the  result  of  negotiations  between  and has been
reviewed by each Borrower,  FSI, and each Lender  executing this Agreement as of
the  Closing  Date and Agent and their  respective  counsel;  accordingly,  this
Agreement  shall be deemed  to be the  product  of the  parties  hereto,  and no
ambiguity shall be construed in favor of or against  Borrowers,  FSI, Lenders or
Agent.  Borrowers,  FSI,  Lenders  and Agent  agree that they intend the literal
words of this  Agreement and the other Loan Documents and that no parol evidence
shall be necessary or appropriate to establish Borrowers', FSI's any Lender's or
Agent's actual intentions.

11.6.3 No  amendment,  modification,  discharge  or waiver of or  consent to any
departure by any Borrower or FSI from, any provision in this Agreement or any of
the other Loan Documents  relating to (a) the definition of "Borrowing  Base" or
"Requisite  Lenders," (b) any increase of the amount of any Commitment,  (c) any
reduction of principal, interest or fees payable hereunder, (d) any postponement
of any date  fixed for any  payment  or  prepayment  of  principal  or  interest
hereunder  or (e) this Section  11.6.3  shall be  effective  without the written
consent of all Lenders. Any and all other amendments, modifications,  discharges
or  waivers  of,  or  consents  to any  departures  from any  provision  of this
Agreement or of any of the other Loan Documents  shall not be effective  without
the written consent of Requisite Lenders.  Any waiver or consent with respect to
any  provision of the Loan  Documents  shall be  effective  only in the specific
instance  and for the specific  purpose for which it was given.  No notice to or
demand on any  Borrower or FSI in any case shall  entitle any Borrower or FSI to
any other or further  notice or demand in similar  or other  circumstances.  Any
amendment,  modification,  waiver or consent  effected in  accordance  with this
Section  11.6  shall be binding  upon each  Lender  then  party  hereto and each
subsequent Lender, on Borrower, and on FSI.

11.7  Reliance  By  Lenders.  All  covenants,  agreements,  representations  and
warranties  made  herein by each  Borrower  or FSI  shall,  notwithstanding  any
investigation  by Lenders or Agent be deemed to be  material to and to have been
relied upon by Lenders.

11.8  Marshaling;  Payments Set Aside.  Lenders  shall be under no obligation to
marshal any assets in favor of any Borrower or any other person or against or in
payment of any or all of the Obligations.  To the extent that any Borrower makes
a payment or  payments  to Lenders or Agent,  or Lenders or Agent,  on behalf of
Lenders, enforce their or its Liens or exercises their or its rights of set-off,
and such payment or payments or the proceeds of such  enforcement  or set-off or
any part thereof are  subsequently  invalidated,  declared to be  fraudulent  or
preferential,  set aside or required to be repaid to a trustee,  receiver or any
other party under Title 11 of the United  States Code or under any other similar
federal or state law, common law or equitable cause,  then to the extent of such
recovery  the  obligation  or part thereof  originally  intended to be satisfied
shall be revived and  continued  in full force and effect as if such payment had
not been made or such enforcement or set-off had not occurred.

11.9 No Set-Offs By Borrowers.  All sums payable by Borrowers or FSI pursuant to
this  Agreement,  any Note or any of the other Loan  Documents  shall be payable
without notice or demand and shall be payable in United States  Dollars  without
set-off or reduction of any manner whatsoever.

11.10    Binding Effect, Assignment.

11.10.1 This Agreement,  the Notes and the other Loan Documents shall be binding
upon and shall inure to the benefit of the parties  hereto and thereto and their
respective successors and assigns,  except that no Borrower nor FSI shall assign
its rights hereunder or thereunder or any interest herein or therein without the
prior  written  consent of each Lender.  Each Lender shall (a) have the right in
accordance  with this Section 11.10 to sell and assign to any Eligible  Assignee
all or any portion of its interest  (provided  that any such partial  assignment
shall  not  be  for a  principal  amount  of  less  than  Five  Million  Dollars
($5,000,000))  under this  Agreement,  its  respective  Notes and the other Loan
Documents,  together with a ratable  interest in the TEC AcquiSub  Agreement and
the related Notes and other Loan Documents (as separately  described and defined
in those  agreements),  subject to the prior  written  consent  of the  affected
Borrower, which consent shall not be unreasonably withheld, and (b) to grant any
participation  or other interest  herein or therein,  except that each potential
participant  to which a Lender  intends to grant any rights under  Sections 2.9,
2.10, 5.1 or 10.2 shall be subject to the prior written  consent of the affected
Borrower, which consent shall not be unreasonably withheld;  provided,  however,
that no such sale,  assignment or participation  grant shall result in requiring
registration  under the  Securities  Act of 1933, as amended,  or  qualification
under any state securities law.

11.10.2 Subject to the limitations of this Section 11.10.2, each Lender may sell
and assign,  from time to time,  all or any portion of its Pro Rata Share of the
Commitments  to any of its  Affiliates  or, with the  approval  of the  affected
Borrower and FSI (which  approval shall not be  unreasonably  withheld),  to any
other financial  institution  acceptable to Agent,  subject to the assumption by
such assignee of the share of the  Commitments  so assigned.  The  assignment to
such  Affiliate  or  other  financial  institution  shall  be  evidenced  by  an
Assignment and Assumption in the form of Exhibit H ("Assignment and Acceptance")
executed by the assignor  Lender  (hereinafter  from time to time referred to as
the "Assignor Lender") and such Affiliate or other financial institution (which,
upon such assignment shall become a Lender hereunder  (hereinafter  from time to
time referred to as the "Assignee Lender")).  The Assignment and Assumption need
not include  any of the  economic or  financial  terms upon which such  Assignee
Lender receives the assignment from the Assignor Lender, and such terms need not
be disclosed  to or approved by such  Borrower or FSI;  provided  only that such
terms do not diminish the obligations  undertaken by such Assignee Lender in the
Assignment and Assumption or increase the  obligations of Borrowers or FSI under
this  Agreement.  Upon  execution of such  Assignment  and  Assumption,  (a) the
definition  of  "Commitments"  in Section 1 hereof  and the Pro Rata  Shares set
forth therein  shall be deemed to be amended to reflect each  Lender's  share of
the  Commitments,  giving effect to the assignment  and (b) the Assignee  Lender
shall,  from the effective date of the instrument of assignment and  assumption,
be subject to all of the  obligations,  and entitled to all of the rights,  of a
Lender  hereunder,  except as may be  expressly  provided to the contrary in the
Assignment  and  Assumption.  To the extent  the  obligations  hereunder  of the
Assignor Lender are assumed by the Assignee Lender, the Assignor Lender shall be
relieved  of such  obligations.  Upon  the  assignment  of any  interest  by any
Assignor Lender pursuant to this Section 11.10.2, such Assignor Lender agrees to
supplement  Schedule  1.1 to show  the  date of such  assignment,  the  Assignor
Lender,  the Assignee Lender,  the Assignee Lender's address for notice purposes
and the amount of the Commitments so assigned.  In connection and as a condition
to each assignment hereunder,  the Assignor Lender agrees to pay or to cause the
Assignee  Lender to pay to Agent a processing  fee of $3,500;  provided  that no
processing  fee  shall be  charged  for any  assignment  to a Lender or a Lender
Affiliate.

11.10.3 Subject to the limitations of this Section 11.10.3,  any Lender may also
grant,  from time to time,  participation  interests  in the  interests  of such
Lender under this Agreement, the Notes and the other Loan Documents to any other
financial  institution  without  notice to, or approval of, any Borrower or FSI.
The  grant  of such a  participation  interest  shall  be on such  terms  as the
granting Lender determines are appropriate, provided only that (a) the holder of
such  participation  interest shall not have any of the rights of a Lender under
this Agreement except, if the participation agreement expressly provides, rights
under  Sections 2.9,  2.10,  5.1 and 10.2,  and (b) the consent of the holder of
such a participation interest shall not be required for amendments or waivers of
provisions  of the Loan  Documents  other than, if the  participation  agreement
expressly  provides,  those  which  (i)  increase  the  monetary  amount  of any
Commitment,  (ii)  decrease  any fee or any other  monetary  amount  payable  to
Lenders,  or (iii) extend the date upon which any monetary  amount is payable to
Lenders.

11.11  Counterparts.  This Agreement and any  amendments,  waivers,  consents or
supplements  hereto  may be  executed  in any  number  of  counterparts,  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed and delivered  shall be deemed an original,  but all such  counterparts
together shall constitute but one and the same  instrument.  Each such agreement
shall become effective upon the execution of a counterpart  hereof or thereof by
each of the parties  hereto or thereto,  delivery  of each such  counterpart  to
Agent.

11.12  Equitable  Relief.  Borrowers  and FSI  recognize  that, in the event any
Borrower or FSI fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement,  any Note or any of the other Loan Agreements,
any  remedy  at law may  prove to be  inadequate  relief  to  Lenders  or Agent;
therefore,  Borrowers and FSI agree that Lenders or Agent,  if Lenders or Agents
so request,  shall be entitled to temporary and permanent  injunctive  relief in
any such case without the necessity of proving actual damages.

11.13 Written  Notice Of Claims;  Claims Bar. EACH BORROWER AND FSI HEREBY AGREE
THAT EACH SHALL GIVE  PROMPT  WRITTEN  NOTICE OF ANY CLAIM OR CAUSE OF ACTION IT
BELIEVES  IT HAS,  OR MAY SEEK TO ASSERT OR ALLEGE  AGAINST ANY LENDER OR AGENT,
WHETHER SUCH CLAIM IS BASED IN LAW OR EQUITY,  ARISING  UNDER OR RELATED TO THIS
AGREEMENT,  ANY  NOTE  OR  ANY OF  THE  OTHER  LOAN  DOCUMENTS  OR TO THE  LOANS
CONTEMPLATED  HEREBY OR THEREBY OR ANY ACT OR  OMISSION  TO ACT BY ANY LENDER OR
AGENT WITH  RESPECT  HERETO OR  THERETO,  AND THAT IF IT SHALL FAIL TO GIVE SUCH
PROMPT  NOTICE TO AGENT WITH  REGARD TO ANY SUCH  CLAIM OR CAUSE OF  ACTION,  IT
SHALL BE DEEMED TO HAVE  WAIVED,  AND SHALL BE FOREVER  BARRED FROM  BRINGING OR
ASSERTING SUCH CLAIM OR CAUSE OF ACTION IN ANY SUIT, ACTION OR PROCEEDING IN ANY
COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY.

11.14  Waiver Of Punitive  Damages.  NOTWITHSTANDING  ANYTHING  TO THE  CONTRARY
CONTAINED IN THIS AGREEMENT,  EACH BORROWER AND FSI HEREBY AGREE THAT EACH SHALL
NOT SEEK FROM  LENDERS  OR  AGENT,  UNDER ANY  THEORY OF  LIABILITY,  INCLUDING,
WITHOUT LIMITATION, ANY THEORY IN TORTS, ANY PUNITIVE DAMAGES.

11.15  Relationship Of Parties.  The relationship  between Borrowers and FSI, on
the one hand,  and  Lenders and Agent,  on the other,  is, and at all time shall
remain  solely that of a borrower and lenders.  Neither  Lenders nor Agent shall
under any  circumstances  be  construed  to be  partners or joint  venturers  of
Borrowers or FSI or any of their  Affiliates;  nor shall Lenders nor Agent under
any  circumstances be deemed to be in a relationship of confidence or trust or a
fiduciary  relationship with Borrowers or FSI or any of their Affiliates,  or to
owe any  fiduciary  duty to any Borrower or any of its  Affiliates.  Lenders and
Agent do not undertake or assume any  responsibility or duty to Borrowers or FSI
or any of their Affiliates to select, review, inspect,  supervise, pass judgment
upon or otherwise  inform  Borrowers or any of their Affiliates of any matter in
connection  with  its or their  Property,  any  collateral  held by Agent or any
Lender  or the  operations  of  Borrowers  or FSI  or any of  their  Affiliates.
Borrowers and each of their Affiliates shall rely entirely on their own judgment
with respect to such matters, and any review, inspection,  supervision, exercise
of  judgment  or supply of  information  undertaken  or assumed by any Lender or
Agent in  connection  with such matters is solely for the  protection of Lenders
and Agent and neither Borrowers nor any Affiliate is entitled to rely thereon.

11.16  Obligations  Of Each  Borrower.  Each  Borrower  and FSI agrees  that its
liability  hereunder shall be the immediate,  direct,  and primary obligation of
such Borrower or FSI, as the case may be, and shall not be  contingent  upon the
Agent's  or any  Lender's  exercise  or  enforcement  of any  remedy it may have
against any other Borrower,  FSI or any other person,  or against any collateral
or any security for the  Obligations.  Without  limiting the  generality  of the
foregoing,  the Obligations shall remain in full force and effect without regard
to and shall not be impaired or affected  by, nor shall such  Borrower or FSI be
exonerated or discharged by, any of the following events:

11.16.1  Insolvency,  bankruptcy,   reorganization,   arrangement,   adjustment,
composition,  assignment  for the  benefit  of  creditors,  death,  liquidation,
winding up or dissolution of any Borrower or any guarantor of the Obligations of
any Borrower;

11.16.2 Any  limitation,  discharge,  or cessation of the liability of any other
Borrower or any guarantor for the  Obligations of such other Borrower due to any
statute,  regulation or rule of law, or any  invalidity or  unenforceability  in
whole or in part of the  documents  evidencing  the  Obligations  of such  other
Borrower or any guaranty of the Obligations of such other Borrower;

11.16.3 Any merger,  acquisition,  consolidation  or change in  structure of any
Borrower or any guarantor of the Obligations of any Borrower or any sale, lease,
transfer or other  disposition of any or all of the assets,  shares or interests
in or of any Borrower or any guarantor of the Obligations of any Borrower;

11.16.4 Any assignment or other  transfer,  in whole or in part, of any Lender's
interests in and rights under this Agreement or any of the other Loan Documents,
including,  without limitation, any assignment or other transfer, in whole or in
part, of Banks' interests in and to any collateral;

11.16.5 Any claim,  defense,  counterclaim  or setoff,  other than that of prior
performance,  that any  Borrower  or any  guarantor  of the  Obligations  of any
Borrower  may have or assert,  including,  but not  limited  to, any  defense of
incapacity  or lack of  corporate or other  authority  to execute any  documents
relating to the Obligations of any Borrower or any collateral;

11.16.6 Agent's or any Lender's  amendment,  modification,  renewal,  extension,
cancellation or surrender of any agreement,  document or instrument  relating to
this  Agreement,  the  Obligations  of any  Borrower or any  collateral,  or any
exchange, release, or waiver of any collateral;

11.16.7 Agent's or any Lender's  exercise or nonexercise of any power,  right or
remedy  with  respect to the  Obligations  of any  Borrower  or any  collateral,
including,  but not limited to, the  compromise,  release,  settlement or waiver
with or of any Borrower or any other person;

11.16.8 Agent's or any Lender's vote, claim, distribution, election, acceptance,
action or inaction in any  bankruptcy  case  related to the  Obligations  of any
Borrower or any collateral; and

11.16.9 Any impairment or invalidity of any collateral or any failure to perfect
any of Agent's liens thereon.

11.17  Co-Borrower  Waivers.  Each Borrower and FSI hereby  expressly waives (a)
diligence,  presentment,  demand for  payment and  protest  affecting  any other
Borrower's or FSI's liability under the Loan Documents; (b) discharge due to any
disability of any Borrower or FSI; (c) any defenses of any other Borrower or FSI
to  obligations  under the Loan Documents not arising under the express terms of
the Loan  Documents  or from a  material  breach  thereof by Agent or any Lender
which under applicable law has the effect of discharging any other Borrower from
the  Obligations  of any  Borrower  as to which this  Agreement  is sought to be
enforced;  (d) the benefit of any act or  omission by Agent or any Lender  which
directly or indirectly  results in or aids the  discharge of any other  Borrower
from  any of the  Obligations  of  any  such  Borrower  by  operation  of law or
otherwise; (e) all notices whatsoever,  including, without limitation, notice of
acceptance of the incurring of the Obligations of any Borrower; (f) any right it
may have to require Agent or any Lender to disclose to it any  information  that
Agent or Lenders may now or hereafter acquire concerning the financial condition
or any circumstances  that bear on the risk of nonpayment by any other Borrower,
including the release of such other Borrower from its Obligations hereunder; and
(g) any requirement that Agent and Lenders exhaust any right, power or remedy or
proceed  against any other  Borrower or any other security for, or any guarantor
of, or any other party liable for, any of the  Obligations  of any Borrower,  or
any portion thereof  (including without limitation any requirements set forth in
Section 26-7 of the North Carolina General Statutes). Each Borrower specifically
agrees that it shall not be necessary or required,  and  Borrowers  shall not be
entitled to require, that Agent or any Lender (i) file suit or proceed to assert
or obtain a claim for personal  judgment  against any other  Borrower for all or
any part of the Obligations of any Borrower;  (ii) make any effort at collection
or  enforcement  of all or any part of the  Obligations of any Borrower from any
Borrower;  (iii) foreclose against or seek to realize upon any collateral or any
other security now or hereafter  existing for all or any part of the Obligations
of any  Borrower;  (iv)  file  suit or  proceed  to obtain or assert a claim for
personal  judgment  against any Borrower or any  guarantor or other party liable
for all or any part of the  Obligations of any Borrower;  (v) exercise or assert
any other  right or remedy to which Agent or any Lender is or may be entitled in
connection  with the  Obligations  of any  Borrower or any  security or guaranty
relating  thereto  to  assert;  or (vi)  file any  claim  against  assets of one
Borrower  before or as a  condition  of  enforcing  the  liability  of any other
Borrower under this Agreement or the Notes.

11.18 Governing Law. Except as otherwise  expressly  provided in any of the Loan
Documents, in all respects, including all matters of construction,  validity and
performance,  this  Agreement and the  Obligations  arising  hereunder  shall be
governed by, and  construed  and enforced in  accordance  with,  the laws of the
State of California  applicable  to contracts  made and performed in such state,
without regard to the  principles  thereof  regarding  conflict of laws, and any
applicable laws of the United States of America.

11.19 Waiver Of Jury Trial.  TO THE EXTENT  PERMITTED BY  APPLICABLE  LAW,  EACH
BORROWER  AND FSI,  BY  EXECUTION  HEREOF,  AND THE  AGENT AND EACH  LENDER,  BY
ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY
MAY  HAVE  TO A TRIAL  BY  JURY  IN  RESPECT  OF ANY  LITIGATION  BASED  ON THIS
AGREEMENT,  OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS AGREEMENT,  OR ANY
COURSE OF CONDUCT, COURSE OF DEALING,  STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS  OF  ANY  PARTY  WITH  RESPECT  HERETO.  THIS  PROVISION  IS A  MATERIAL
INDUCEMENT  TO THE AGENT AND EACH LENDER TO ACCEPT THIS  AGREEMENT AND THE NOTES
EXECUTED AND DELIVERED BY EACH BORROWER PURSUANT TO THIS AGREEMENT.



<PAGE>


         WITNESS the due  execution  hereof by the  respective  duly  authorized
officers of the undersigned as of the date first written above.

BORROWER                PLM EQUIPMENT GROWTH FUND VI
                        BY PLM FINANCIAL SERVICES, INC.,
                        ITS GENERAL PARTNER


                        By  /s/ Richard Brock
                            ---------------------------------
                            Richard Brock
                            Vice President


                        PLM EQUIPMENT GROWTH & INCOME FUND VII
                        BY PLM FINANCIAL SERVICES, INC.,
                        ITS GENERAL PARTNER


                        By  /s/ Richard Brock
                            ----------------------------------
                            Richard Brock
                            Vice President


                        PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
                        BY PLM FINANCIAL SERVICES, INC.,
                        ITS MANAGER



                        By /s/ Richard Brock
                           -------------------------------------
                           Richard Brock
                           Vice President

                       Notice to any Borrower to be sent to:

                            [Insert name of Borrower]
                        c/o PLM Financial Services, Inc.
                        One Market Plaza
                        Steuart Street Tower, Suite 900
                        San Francisco, CA 94105
                        Attention:     Richard Brock
                                       Vice President
                        Telephone:     415/974-1399
                        Telecopy:      415/882-0860

                        With a copy to:

                        TEC AcquiSub, Inc.
                        One Market Plaza
                        Steuart Street Tower, Suite 900
                        San Francisco, CA  94105
                        Attention:     General Counsel
                        Telephone:     415/896-1138
                        Facsimile:     415/882-0860

FSI                     PLM FINANCIAL SERVICES, INC.


                        By  /s/ Richard Brock
                            ----------------------------------
                            Richard Brock
                            Vice President

                        Notice to be sent to:

                        PLM Financial Services, Inc.
                        One Market Plaza
                        Steuart Street Tower, Suite 900
                        San Francisco, CA 94105
                        Attention:     Richard Brock
                                       Vice President 
                        Telephone:     415/974-1399
                        Telecopy:      415/882-0860


AGENT                   FIRST UNION NATIONAL BANK


                        By  /s/ Bill A. Shirley
                            ----------------------------------
                        Printed Name:  Bill A. Shirley
                        Title:   Senior Vice President

                        Notice to be sent to:

                        First Union National Bank
                        One First Union Center
                        301 South College Street
                        Charlotte, NC  28288
                        Attention:     Russ Morrison
                        Telephone:     704/383-9687
                        Facsimile:     704/374-4092


LENDERS                 FIRST UNION NATIONAL BANK


                        By  /s/ Bill A. Shirley
                            -----------------------------------
                        Printed Name:  Bill A. Shirley
                        Title:  Senior Vice President


                        Notice to be sent to:

                        First Union National Bank
                        One First Union Center
                        301 South College Street
                        Charlotte, NC  28288
                        Attention:     Russ Morrison
                        Telephone:     704/383-9687
                        Facsimile:     704/374-4092



<PAGE>


                          ACKNOWLEDGEMENT OF AMENDMENT
                          AND REAFFIRMATION OF GUARANTY
                                 (Growth Funds)


         SECTION 1. PLM  International,  Inc.  ("PLMI") hereby  acknowledges and
confirms  that it has reviewed and  approved  the terms and  conditions  of this
Fourth Amended and Restated Warehousing Credit Agreement ("Agreement").

         SECTION 2. PLMI hereby  consents to this  Agreement and agrees that its
Guaranty of the  Obligations of Borrowers  under the Growth Fund Agreement shall
continue  in full  force  and  effect  under the  Agreement,  shall be valid and
enforceable and shall not be impaired or otherwise  affected by the execution of
this  Agreement or any other  document or  instrument  delivered  in  connection
herewith.

         SECTION 3. PLMI  represents and warrants  that,  after giving effect to
this Agreement, all representations and warranties contained in its Guaranty are
true, accurate and complete as if made the date hereof.

GUARANTOR                       PLM INTERNATIONAL, INC.


                                By  Robert N. Tidball
                                    -----------------------------
                                    Robert N. Tidball
                                    President




<PAGE>


                                   SCHEDULE A

                                  (COMMITMENTS)


                                                        Pro Rata
Lender                        Commitment                  Share

First Union National Bank     $24,500,000                  100%






<PAGE>


                                INDEX OF EXHIBITS


Exhibit A.........Form of Revolving Promissory Note

Exhibit B.........Form of Borrowing Base Certificate

Exhibit C.........Form of Opinion of Counsel

Exhibit D.........Form of Compliance Certificate

Exhibit E.........Form of Notice of Borrowing

Exhibit F.........Form of Notice of Conversion/Continuation

Exhibit G.........Form of Assignment and Acceptance


<PAGE>


                               INDEX OF SCHEDULES


Schedule A                 Commitments

Schedule 1.1               Amendments to Schedule A

Schedule 4.1.5             Executive Offices and Principal Places of Business

Schedule 4.1.6             Litigation

Schedule 4.1.7             Material Contracts

Schedule 4.1.8             Consent and Approvals

Schedule 4.1.15            Environmental Disclosures

Schedule 6.1               Existing Liens

Schedule 6.3(a)            Existing Indebtedness

Schedule 6.3(b)            Anticipated Indebtedness


<PAGE>

                                  EXHIBIT A

                            REVOLVING PROMISSORY NOTE
                                    [LENDER]


$____________                                     San Francisco, California
                                                  Date:   December __, 1998


         [BORROWER],  a  _____________________   (the  "Borrower"),   FOR  VALUE
RECEIVED,  hereby  unconditionally  promises  to pay to the  order  of  [LENDER]
("[_________________]"),  in lawful money of the United  States of America,  the
aggregate outstanding principal amount of  [_________________]'s  Pro Rata Share
of all Loans made to the Borrower under the Credit Agreement  referred to below,
payable in the amounts, on the dates and in the manner set forth below.

         This  revolving  promissory  note  (this  "Note")  is one of the  Notes
referred to and defined in that certain Fourth Amended and Restated  Warehousing
Credit  Agreement  dated as of  December  15, 1998 (as the same may from time to
time be further amended, modified, supplemented,  renewed, extended or restated,
the "Credit Agreement") by and among PLM Equipment Growth Fund VI, PLM Equipment
Growth & Income  Fund  VII and  Professional  Lease  Management  Income  Fund I,
L.L.C.,  as co-borrowers,  PLM Financial  Services,  Inc., the banks,  financial
institutions and other institutional lenders from time to time party thereto and
defined  therein as  Lenders  (such  entities,  together  with their  respective
successors and assigns being collectively referred to herein as "Lenders"),  and
FUNB  in its  capacity  as  Agent  on  behalf  and for the  benefit  of  Lenders
("Agent"). All capitalized terms used but not defined herein shall have the same
meaning as given to them in the Credit Agreement.

         1.  Principal  Payments.  Subject  to the terms and  conditions  of the
Credit Agreement,  including,  without  limitation,  terms relating to mandatory
prepayments  of  principal   (Section   2.2.3),   the  entire  principal  amount
outstanding  under each Loan  evidenced by this Note shall be due and payable on
the  Maturity  Date with  respect to such Loan,  with any and all unpaid and not
previously due and payable  principal amounts under each such Loan being due and
payable on the Commitment Termination Date.

         2. Interest Rate. The Borrower  further promises to pay interest on the
sum of the daily unpaid  principal  balance of all Loans  evidenced by this Note
outstanding  on each day in lawful money of the United  States of America,  from
the  Closing  Date until all such  principal  amounts  shall have been repaid in
full,  which  interest  shall be payable at the rates per annum and on the dates
determined pursuant to the Credit Agreement.

         3. Place Of Payment.  All amounts payable hereunder shall be payable to
the  Agent,  on  behalf of  [_________________],  at the  office of First  Union
National  Bank,  One First Union Center,  301 South College  Street,  Charlotte,
North Carolina 28288, Attention: Maria Ostrowski, or such other place of payment
as may be specified by the Agent in writing.

         4. Application Of Payments;  Acceleration.  Payments on this Note shall
be applied in the manner set forth in the Credit Agreement. The Credit Agreement
contains  provisions  for  acceleration  of the  maturity  of the Loans upon the
occurrence of certain stated events and also provides for mandatory and optional
prepayments  of  principal  prior  to  the  stated  maturity  on the  terms  and
conditions therein specified.

         Each Advance made by  [_________________]  to the Borrower constituting
[_________________]'s  Pro Rata Share of a Loan made to the Borrower pursuant to
the Credit Agreement shall be recorded by  [_________________]  on its books and
records.  The failure of  [_________________]  to record any such Advance or any
repayment or prepayment  made on account of the principal  balance thereof shall
not limit or otherwise affect the obligation of the Borrower under this Note and
under the Credit Agreement to pay the principal,  interest and other amounts due
and payable thereunder.

         5. Default.  The Borrower's  failure to pay timely any of the principal
amount due under this Note or any accrued  interest  or other  amounts due under
this Note on or within five (5)  calendar  days after the date the same  becomes
due and payable shall  constitute a default under this Note. Upon the occurrence
of a default  hereunder or an Event of Default under the Credit  Agreement  with
respect  to the  Borrower,  all unpaid  principal,  accrued  interest  and other
amounts  owing  hereunder  shall,  at the  option of the  Required  Lenders,  be
immediately  collectible  by the  Lenders  and the Agent  pursuant to the Credit
Agreement and applicable law.

         6. Waivers.  The Borrower  waives  presentment  and demand for payment,
notice of  dishonor,  protest and notice of protest of this Note,  and shall pay
all costs of collection when incurred by or on behalf of the Lenders, including,
without  limitation,  reasonable  attorneys'  fees,  costs and other expenses as
provided in the Credit Agreement.

         7.  Governing  Law.  This Note shall be governed by, and  construed and
enforced in  accordance  with,  the laws of the State of  California,  excluding
conflict  of laws  principles  that would cause the  application  of laws of any
other jurisdiction.

         8.  Successors And Assigns.  The provisions of this Note shall inure to
the benefit of and be binding on any  successor to the Borrower and shall extend
to any holder hereof.

BORROWER                          [BORROWER]

                                  By: PLM FINANCIAL SERVICES, INC.,
                                      a Delaware corporation
                                      Its [General Partner][Manager]


                                  By  
                                     J. Michael Allgood
                                     Chief Financial Officer