<PAGE>
                                  EXHIBIT 10.90



                       FINOVA LOAN AND SECURITY AGREEMENT






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                             Finova Graphic Omitted




                           LOAN AND SECURITY AGREEMENT

                         -------------------------------


                      Play Co. Toys & Entertainment Corp.,
                             a Delaware corporation
                         -------------------------------


                               550 Rancheros Drive
                          San Marcos, California 92069
                         -------------------------------


                             Borrower Fed ID Tax No.
                                   95-3024222
                         -------------------------------


                            Credit Limit: $7,100,000

                         -------------------------------


                          Dated as of January 21, 1998











                                CORPORATE FINANCE







<PAGE>
THIS  LOAN  AND  SECURITY  AGREEMENT  (collectively  with the  Schedule  to Loan
Agreement (the  "Schedule")  attached hereto,  the "Agreement")  dated as of the
date set forth on the cover page,  is entered  into by and between the  borrower
named on the cover  page (the  "Borrower"),  whose  address  is set forth on the
cover page,  and FINOVA  Capital  Corporation  ("FINOVA"),  whose address is 355
South Grand Avenue, Los Angeles, California 90071.

1.                DEFINITIONS.

     1.1 Defined Terms. As used in this Agreement,  the following terms have the
definitions set forth below: -------------

     "ABC" means ABC Fund,  Inc. a Belize  corporation  and its  successors  and
assigns.

     "ADA" has the meaning set forth in Section 4.1(z) hereof.

     "Additional Sums" has the meaning set forth in Section 2.9(a) hereof.

     "Affiliate"  means any Person  controlling,  controlled  by or under common
control with  Borrower.  For purposes of this  definition,  "control"  means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of any Person,  whether through  ownership of common
or preferred stock or other equity interests, by contract or otherwise.  Without
limiting the  generality of the  foregoing,  each of the  following  shall be an
Affiliate: any officer, director, --------- employee or other agent of Borrower,
any shareholder,  member or subsidiary of Borrower,  any Guarantor and any other
Person  with  whom or  which  Borrower  has  common  shareholders,  officers  or
directors.

     "Agreement" has the meaning set forth in the preamble.

     "Annual Renewal Fee" has the meaning set forth in the Schedule.

     "Applicable Usury Law" has the meaning set forth in Section 2.9(b) hereof.

     "Blocked Account" has the meaning set forth in Section 2.10(c) hereof.

     "Business Day" means any day on which commercial banks in both Los Angeles,
California and Phoenix, Arizona are open for business.

     "Capital Expenditures" means all expenditures made and liabilities incurred
for the acquisition of any fixed asset or improvement, replacement, substitution
or addition thereto which has a useful life of more than one year and including,
without  limitation,  those arising in connection with Capital  Leases.  Capital
Expenditures  shall include expenses incurred by Borrower in connection with the
opening of new stores.

     "Capital Lease" means any lease of property by Borrower that, in accordance
with GAAP, should be capitalized for financial  reporting purposes and reflected
as a liability on the balance sheet of Borrower.

     "Closing Fee" has the meaning set forth in the Schedule.

     "Closing  Date"  means  the  date of the  initial  advance  made by  FINOVA
pursuant to this Agreement.

     "Code"  means the Uniform  Commercial  Code as adopted and in effect in the
State of Arizona from time to time.

     "Collateral" has the meaning set forth in Section 3.1 hereof.

     "Collateral Monitoring Fee" has the meaning set forth in the Schedule.

     "Deposit Accounts" has the meaning set forth in Section 9-105 of the Code.
<PAGE>
     "Dominion Account" has the meaning set forth in Section 2.10(c) hereof.

     "Due  Date"  means the  first  date to occur of:  (i)  acceleration  of the
Obligations  pursuant to Section 7.2 hereof,  (ii) prepayment of the Obligations
pursuant  to  Section  9.2(d)  hereof  or (iii)  termination  of this  Agreement
pursuant to Section 9.2(b) hereof. --------

     "Eligible  Inventory"  means  Inventory  which  FINOVA,  in  its  Permitted
Discretion, deems eligible Inventory, based on such considerations as FINOVA may
from time to time deem  appropriate.  Without  limiting  the  generality  of the
foregoing,  no  Inventory  shall  be  Eligible  Inventory  unless,  in  FINOVA's
Permitted Discretion, such Inventory: (i) consists of raw materials and finished
goods,  in good,  new and salable  condition  which do not  constitute  Obsolete
Inventory, returns, rejects or unmerchantable,  and are not comprised of work in
process,  packaging  materials or supplies;  (ii) meets all standards imposed by
any  governmental  agency or  authority;  (iii)  conforms in all respects to the
warranties and representations set forth herein; (iv) is at all times subject to
FINOVA's duly perfected,  first priority security interest;  and (v) is situated
at a location  in  compliance  with  Section  5.16  hereof  that is subject to a
Landlord's  Waiver or is at a location in  compliance  with  Section 5.16 hereof
with  respect to which  FINOVA has  applied a Rent  Reserve  against  Borrower's
borrowing  availability  and  which  location  is  either  Borrower's  corporate
warehouse or one of its retail stores. For all purposes hereunder, the amount of
otherwise  Eligible  Inventory  shall be reduced by the amount of the  Shrinkage
Reserve.

     "Equipment"  means  all  of  Borrower's   present  and  hereafter  acquired
machinery,  molds, machine tools,  motors,  furniture,  equipment,  furnishings,
fixtures,  trade fixtures,  motor vehicles,  tools, parts, dyes, jigs, goods and
other  tangible  personal  property  (other  than  Inventory)  of every kind and
description used in Borrower's  operations or owned by Borrower and any interest
in  any  of  the  foregoing,  and  all  attachments,   accessories,  accessions,
replacements,  substitutions, additions or improvements to any of the foregoing,
wherever located.

     "ERISA" means the  Employment  Retirement  Income  Security Act of 1974, as
amended, and the regulations thereunder.

     "ERISA Affiliate" means each trade or business (whether or not incorporated
and whether or not foreign) which is or may hereafter become a member of a group
of which  Borrower is a member and which is treated as a single  employer  under
ERISA Section 4001(b)(1), or IRC Section 414.

     "Event of Default" means any of the events set forth in Section 7.1 hereof.

     "Examination Fee" has the meaning set forth in the Schedule.

     "Excess  Availability" means, as of the date of determination  thereof, the
amount by which the  average  daily  total  principal  balance of the  Revolving
Credit Loans facility which Borrower would be permitted to have outstanding over
the prior thirty (30) days,  based on the formulas and reserves set forth in the
Schedule,  exceeds  the  amount of the  Revolving  Credit  Loans  then  actually
outstanding,  such excess then being  reduced by an amount  necessary to provide
for the payment of all accounts  payable of Borrower  which are more than thirty
(30) days past written due date and all book overdrafts.

     "FINOVA Affiliate" has the meaning set forth in Section 9.22 hereof.
<PAGE>
     "GAAP" means generally accepted accounting  principles in the United States
of  America  as in effect  from time to time as set  forth in the  opinions  and
pronouncements of the Accounting  Principles Board and the American Institute of
Certified  Public  Accountants  and the  statements  and  pronouncements  of the
Financial  Accounting Standards Boards which are applicable to the circumstances
as of the date of  determination  consistently  applied,  except  that,  for the
financial covenants set forth in this Agreement, GAAP shall be determined on the
basis of such  principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial  statements delivered to FINOVA
prior to the date hereof.

     "General  Intangibles" means all general  intangibles of Borrower,  whether
now owned or  hereafter  created or acquired  by  Borrower,  including,  without
limitation,  all choses in action, causes of action, corporate or other business
records,   Deposit  Accounts,   inventions,   designs,   drawings,   blueprints,
Trademarks,  Copyrights,  Licenses and Patents, names, trade secrets,  goodwill,
copyrights,  registrations,  licenses, franchises,  customer lists, security and
other deposits,  rights in all litigation presently or hereafter pending for any
cause or claim (whether in contract,  tort or otherwise),  and all judgments now
or hereafter arising therefrom, all claims of Borrower against FINOVA, rights to
purchase or sell real or personal property,  rights as a licensor or licensee of
any  kind,  royalties,  telephone  numbers,  proprietary  information,  purchase
orders,  and all insurance  policies and claims  (including  without  limitation
credit,  liability,  property  and other  insurance)  tax  refunds  and  claims,
computer  programs,  discs,  tapes  and tape  files,  claims  under  guaranties,
security  interests or other  security  held by or granted to Borrower to secure
payment  of  any  of  the  Receivables  by an  account  debtor,  all  rights  to
indemnification  and all other  intangible  property  of every  kind and  nature
(other than Receivables).

     "Guarantor"   means  United  Textiles  &  Toys   Corporation,   a  Delaware
corporation.

     "Hoepner" means Gayle Hoepner Family Trust and its successors and assigns.

     "Incipient Default" means an event which, with notice or passage of time or
both, would constitute an Event of Default.

     "Indebtedness"  means all of  Borrower's  present  and future  obligations,
liabilities,  debts,  claims and indebtedness,  contingent,  fixed or otherwise,
however evidenced,  created, incurred, acquired, owing or arising, whether under
written or oral agreement,  operation of law or otherwise, and includes, without
limiting the foregoing (i) the Obligations,  (ii) obligations and liabilities of
any Person  secured by a lien,  claim,  encumbrance  or security  interest  upon
property owned by Borrower, even thoug Borrower has not assumed or become liable
therefor,  (iii) obligations and liabilities  created or arising under any lease
(including  Capital  Leases)  or  conditional  sales  contract  or  other  title
retention agreement with respect to property used or acquired by Borrower,  even
though the rights and  remedies of the  lessor,  seller or lender are limited to
repossession, (iv) all unfunded pension fund obligations and liabilities and (v)
deferred taxes.

     "Initial Term" has the meaning set forth on the Schedule.

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

     "IRC"  means  the  Internal  Revenue  Code of  1986,  as  amended,  and the
regulations thereunder.
<PAGE>
     "L/C Line" has the meaning set forth in the Schedule.

     "L/C Line Reserve"  means:  (a) during the first Loan Year and at all times
after an Event of Default  has  occurred  (regardless  of whether  such Event of
Default  is  continuing),  an  amount  equal  to Six  Hundred  Thousand  Dollars
($600,000), and (b) at all other times, an amount equal to Five Hundred Thousand
Dollars ($500,000). ----------------

     "Landlord's  Waiver"  means a Landlord's  Waiver and  Consent,  in form and
substance  acceptable  to  FINOVA  in its  Permitted  Discretion,  as  otherwise
required pursuant to Section 4.1(k) hereof.

     "Lease  Termination  Reserve"  means  an  amount  equal  to the  Borrower's
remaining  unsatisfied  liability  under any store  leases  which  Borrower  has
breached  less any  mitigating  factors,  all as  determined  by  FINOVA  in its
Permitted Discretion.  The lease defaults described on Exhibit 3 to the Schedule
shall not be subject to a Lease Termination Reserve. -------------------------

     "Letter of Credit" has the meaning set forth in the Schedule.

     "Loans" has the meaning set forth in Section 2.2 hereof.

     "Loan Documents"  means,  collectively,  this Agreement,  any note or notes
executed by  Borrower  and  payable to FINOVA,  and any other  present or future
agreement  entered into in  connection  with this  Agreement,  together with all
alterations,  amendments,  changes,  extensions,  modifications,   refinancings,
refundings, renewals,  replacements,  restatements, or supplements, of or to any
of the foregoing.

     "Loan Party" means Borrower,  each Guarantor,  each Subordinating  Creditor
and each other party (other than FINOVA) to any Loan Document.

     "Loan  Reserves"  means, as of any date of  determination,  such amounts as
FINOVA may from time to time  establish  and revise in good faith  reducing  the
amount of Revolving  Credit Loans which would otherwise be available to Borrower
under the lending  formula(s)  provided in the Schedule:  (a) to reflect events,
conditions, contingencies or risks which, as determined by FINOVA in good faith,
do or may  affect  either  (i) the  Collateral  or any other  property  which is
security  for the  Obligations  or its  value,  (ii)  the  assets,  business  or
prospects of Borrower or any Guarantor or (iii) the security interests and other
rights of FINOVA in the Collateral (including the enforceability, perfection and
priority  thereof)  or (b) to  reflect  FINOVA's  good  faith  belief  that  any
collateral report or financial information furnished by or on behalf of Borrower
or any  Guarantor  to  FINOVA  is or may have  been  incomplete,  inaccurate  or
misleading in any material respect or (c) in respect of any state of facts which
FINOV  determines  in good faith  constitutes  an Event of Default or  Incipient
Default.  "Loan  Reserves"  shall be in addition to, and shall not include,  any
amounts  denominated as a Shrinkage Reserve, a Rent Reserve, an L/C Line Reserve
or a Lease Termination Reserve.

     "Loan Year" means each twelve (12) month period  commencing  on the Closing
Date.

     "Maximum Interest Rate" has the meaning set forth in Section 2.9(b) hereof.

     "Minimum Interest Charge" has the meaning set forth in the Schedule.

     "Multiemployer  Plan"  means a  "multiemployer  plan" as  defined  in ERISA
Sections  3(37) or  4001(a)(3) or IRC Section  414(f) which covers  employees of
Borrower or any ERISA Affiliate.

     "Multimedia"  means  Multimedia  Concepts  International,  Inc., a Delaware
corporation and its successors and assigns.

     "Net Worth" at any date means Borrower's net worth determined in accordance
with GAAP.
<PAGE>
     "Obligations"  means  all  present  and  future  loans,  advances,   debts,
liabilities,  obligations,  covenants, duties and indebtedness at any time owing
by Borrower to FINOVA,  whether  evidenced by this Agreement,  any note or other
instrument or document,  whether arising from an extension of credit, opening of
a letter of credit,  banker's  acceptance,  loan,  guaranty,  indemnification or
otherwise,  whether direct or indirect  (including,  without  limitation,  those
acquired by assignment and any participation by FINOVA in Borrower's debts owing
to others),  absolute or contingent,  due or to become due,  including,  without
limitation,  all interest,  charges,  expenses,  fees,  attorney's fees,  expert
witness fees,  Examination  Fees, letter of credit fees,  Collateral  Monitoring
Fees,  Closing Fees,  Annual Renewal Fees,  Termination  Fees,  Minimum Interest
Charges and any other sums  chargeable to Borrower  hereunder or under any other
agreement with FINOVA.

     "Obsolete  Inventory" means otherwise  Eligible Inventory which consists of
raw materials and/or finished goods, in good, new and salable condition,  which:
(i)  turn   over   less   than   one  time  per  year  or  (ii)  are   obsolete.
------------------

     "Overadvance" has the meaning set forth in Section 2.3.

     "Overline" has the meaning set forth in Section 2.3.

     "PBGC" means the Pension Benefit Guarantee Corporation.

     "Permitted  Discretion"  means  FINOVA's  judgment  exercised in good faith
based upon its  consideration of any factor which FINOVA believes in good faith:
(i)  will  or  could  adversely   affect  the  value  of  any  Collateral,   the
enforceability  or priority of FINOVA's liens thereon or the amount which FINOVA
would be likely to receive (after giving  consideration to delays in payment and
costs of enforcement) in the liquidation of such Collateral;  (ii) suggests that
any collateral report or financial information delivered to FINOVA by any Person
on behalf  of the  Borrower  is  incomplete,  inaccurate  or  misleading  in any
material  respect;  (iii)  materially  increases the likelihood of a bankruptcy,
reorganization or other insolvency  proceeding involving the Borrower,  any Loan
Party or any of the Collateral;  or (iv) creates or reasonably could be expected
to create an Event of Default. In exercising such judgment,  FINOVA may consider
such  factors  already  included  in or tested  by the  definition  of  Eligible
Inventory,  as well as any of the  following:  (i) the  financial  and  business
climate of the Borrower's industry and general  macroeconomic  conditions,  (ii)
changes in  collection  history and dilution  with  respect to the  Receivables,
(iii)  changes in demand for,  and pricing of,  Inventory,  (iv)  changes in any
concentration of risk with respect to Receivables and/or Inventory,  and (v) any
other  factors  that  change the credit  risk of lending to the  Borrower on the
security of the  Receivables and Inventory.  The burden of establishing  lack of
good faith hereunder shall be on the Borrower.

     "Permitted  Encumbrance"  means  each of the  liens,  mortgages  and  other
security interests set forth on the Schedule and denominated as such.

     "Person" means any  individual,  sole  proprietorship,  partnership,  joint
venture, trust, unincorporated organization,  association,  corporation, limited
liability company,  government,  or any agency or political division thereof, or
any other entity.

     "Plan"  means any plan  described  in ERISA  Section  3(2)  maintained  for
employees of Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

     "Prepared  Financials"  means the balance sheets of Borrower as of the date
set forth in the Schedule in the section entitled 'Reporting Requirements',  and
as of each  subsequent  date on which  audited  balance  sheets are delivered to
FINOVA from time to time  hereunder,  and the related  statements of operations,
changes in  stockholder's  equity and changes in cash flow for the periods ended
on such dates.
<PAGE>
     "Prime Rate" has the meaning set forth in the Schedule.

     "Prohibited  Transaction" means any transaction described in Section 406 of
ERISA which is not exempt by reason of Section 408 of ERISA, and any transaction
described in Section 4975(c) of the IRC which is not exempt by reason of Section
4975(c)(2) of the IRC.

     "Receivables"  means all of  Borrower's  now owned and  hereafter  acquired
accounts  (whether  or not earned by  performance),  proceeds  of any letters of
credit  naming  Borrower  as  beneficiary,   contract  rights,   chattel  paper,
instruments,  documents and all other forms of  obligations at any time owing to
Borrower,  all  guaranties  and other  security  therefor,  whether  secured  or
unsecured,  all  merchandise  returned to or  repossessed  by Borrower,  and all
rights of  stoppage  in transit  and all other  rights or  remedies of an unpaid
vendor, lienor or secured party.

     "Renewal Term" has the meaning set forth on the Schedule.

     "Rent Reserve"  means an amount equal to three (3) months' rent  (including
without limitation monthly base rent and monthly estimates of operating charges,
and all other amounts,  chargeable under the applicable lease), as determined by
FINOVA in its Permitted Discretion,  attributable to each real property lease of
Borrower for which Borrower has not delivered to FINOVA a Landlord's Waiver.

     "Reportable  Event" means a reportable  event  described in Section 4043 of
ERISA or the  regulations  thereunder,  a  withdrawal  from a Plan  described in
Section 4063 of ERISA, or a cessation of operations described in Section 4068(f)
of ERISA.

     "Revolving Credit Loans" has the meaning set forth in the Schedule.

     "Revolving Interest Rate" has the meaning set forth in the Schedule.

     "Schedule" has the meaning set forth in the preamble.

     "Shrinkage  Reserve"  means an amount equal to five  percent  (5.0%) of the
value of Borrower's  Inventory,  calculated at the lower of cost or market value
and determined on a first-in, first-out basis, or such greater amount as FINOVA,
in its Permitted Discretion, deems appropriate from time to time.

     "Subordinated Debt" means liabilities of Borrower the repayment of which is
subordinated,  to the payment and performance of the Obligations,  pursuant to a
subordination agreement acceptable to FINOVA in its sole discretion.

     "Subordinating Creditor" means each of (i) Multimedia,  (ii) Hoepner, (iii)
Guarantor and (iv) ABC.

     "Termination Fee" has the meaning set forth in Section 9.2(d) hereof.

     "Total Facility" has the meaning set forth in Section 2.1 hereof.

     "Trademarks,  Copyrights,  Licenses  and Patents"  means all of  Borrower's
right,  title and interest in and to,  whether now owned or hereafter  acquired:
(i) trademarks, trademark registrations,  trade names, trade name registrations,
service  mark and  service  mark  registrations,  and  trademark  or trade  name
applications,  including  without  limitation such as are listed on the Schedule
attached hereto and made a part hereof,  as the same may be amended from time to
time, and (a) renewals thereof, (b) all income, royalties,  damages and payments
now and hereafter due and/or  payable with respect  thereto,  including  without
limitation,  damages and payments for past or future infringements  thereof, (c)
the right to sue for past,  present and future  infringements  thereof,  (d) all
rights  corresponding  thereto throughout the world, and (e) the goodwill of the
business operated by Borrower connected with and symbolized by any trademarks or
trade  names;   (ii)   copyrights,   copyright   registrations   and   copyright
applications,  including  without  limitation such as are listed on the Schedule
attached hereto and made a part hereof,  as the same may be amended from time to
time, and (a) renewals thereof, (b) all income, royalties,  damages and payments
now and hereafter due and/or  payable with respect  thereto,  including  without
limitation,  damages and payments for past or future infringements  thereof, (c)
the right to sue for past, present and future infringements thereof, and (d) all
rights  corresponding  thereto throughout the world;  (iii) license  agreements,

<PAGE>
including without  limitation such as are listed on the Schedule attached hereto
and made a part hereof,  and the right to prepare for sale,  sell and  advertise
for sale any Inventory  now or hereafter  owned by Borrower and now or hereafter
covered by such licenses;  and (iv) patents and patent applications,  registered
or pending,  including  without  limitation  such as are listed on the  Schedule
attached hereto, together with all income,  royalties,  shop rights, damages and
payments  thereto,  the right to sue for infringements  thereof,  and all rights
thereto  throughout  the  world  and  all  reissues,  divisions,  continuations,
renewals, extensions and continuations-in-part thereof.

     "Unused Line Fee" has the meaning set forth in the Schedule.

     1.2 Additional Provisions; Other Terms. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
the terms  defined in this  Agreement  shall  include  the plural as well as the
singular,  and vice versa. All accounting  terms used in this Agreement,  unless
otherwise  indicated,  shall have the meanings given to such terms in accordance
with  GAAP.  All other  terms  contained  in this  Agreement,  unless  otherwise
indicated, shall have  ----------------------------------  the meanings provided
by the Code, to the extent such terms are defined therein.

2. LOANS; INTEREST RATE AND OTHER CHARGES.

     2.1 Total  Facility.  Upon the terms and  conditions  set forth  herein and
provided  that no Event of Default or Incipient  Default shall have occurred and
be continuing,  FINOVA shall, upon Borrower's request, make advances to Borrower
from time to time in an aggregate outstanding principal amount not to exceed the
Total Facility amount (the "Total  Facility") set forth on the Schedule  hereto,
subject to deduction of reserves for accrued interest and such other reserves as
FINOVA deems proper from time to time,  and less amounts FINOVA may be obligated
to pay in the future on behalf of Borrower.  The Schedule is an integral part of
this Agreement and all  references to "herein",  "herewith" and words of similar
import shall for all purposes be deemed to include the Schedule.

     2.2  Loans.  Advances  under the Total  Facility  (each a "Loan")  shall be
comprised of the amounts shown on the Schedule. ----- ----

     2.3  Overlines;  Overadvances.  If at  any  time  or  for  any  reason  the
outstanding amount of advances extended or issued pursuant hereto exceeds any of
the dollar limitations ("Overline") or percentage limitations ("Overadvance") in
the Schedule,  then Borrower  shall,  upon FINOVA's  demand,  immediately pay to
FINOVA,  in cash,  the full amount of such  Overline or  Overadvance  which,  at
FINOVA's option,  may be applied to reduce the outstanding  principal balance of
the Loans.  Without limiting Borrower's  obligation to repay to FINOVA on demand
the  amount of any  Overline  or  Overadvance,  Borrower  agrees  to pay  FINOVA
interest on the outstanding principal amount of any Overline or Overadvance,  on
demand,  at the rate set forth on the Schedule and  applicable  to the Revolving
Credit Loans.

     2.4 [Reserved]

     2.5 Loan Account.  All advances made hereunder shall be added to and deemed
part of the  Obligations  when  made.  FINOVA  may from time to time  charge all
Obligations of Borrower to Borrower's loan account with FINOVA. ------------

     2.6  Interest;  Fees.  Borrower  shall  pay  FINOVA  interest  on the daily
outstanding  balance of the  Obligations  at the per annum rate set forth on the
Schedule.  Borrower  shall also pay  FINOVA the fees set forth on the  Schedule.
--------------  

     2.7 Default  Interest Rate. Upon the occurrence and during the continuation
of an  Event of  Default,  Borrower  shall  pay  FINOVA  interest  on the  daily
outstanding  balance  of the  Obligations  at a rate  per  annum  which is three
percent (3.0%) in excess of the rate which would otherwise be applicable thereto
pursuant  to the  Schedule.  Upon the  curing  of all  Events  of  Default,  the
outstanding  balance  of the  Obligations  shall  accrue at the rate  applicable
thereto pursuant to the Schedule. ---------------------
<PAGE>
     2.8 Examination  Fee.  Borrower agrees to pay to FINOVA the Examination Fee
in the  amount  set forth on the  Schedule  in  connection  with  each  audit or
examination  of Borrower  performed by FINOVA prior to or after the date hereof.
Without  limiting the generality of the foregoing,  Borrower shall pay to FINOVA
an  initial  Examination  Fee in an amount  equal to the amount set forth on the
Schedule.  Such initial Examination Fee shall be deemed fully earned at the time
of  payment  and  due and  payable  ---------------  upon  the  closing  of this
transaction,  and shall be deducted from any good faith deposit paid by Borrower
to FINOVA prior to the date of this Agreement.

     2.9 Excess Interest.

     (a) The contracted for rate of interest of the Loans  contemplated  hereby,
without  limitation,  shall consist of the following:  (i) the interest rate set
forth on the Schedule,  calculated  and applied to the principal  balance of the
Obligations in accordance with the provisions of this  Agreement;  (ii) interest
after  an  Event  of  Default,  calculated  and  applied  to the  amount  of the
Obligations in accordance with the provisions  hereof;  and (iii) all Additional
Sums (as herein defined), if any. Borrower agrees to pay an effective contracted
for rate of  interest  which is the sum of the  above-referenced  elements.  The
Examination  Fees,  attorneys fees,  expert witness fees, letter of credit fees,
Collateral Monitoring Fees, Closing Fees, Unused Line Fees, Annual Renewal Fees,
Termination  Fees,  Minimum  Interest  Charges,  other fees and charges,  goods,
things  in  action or any other  sums or  things  of value  paid or  payable  by
Borrower  (collectively,  the  "Additional  Sums"),  whether  pursuant  to  this
Agreement or any other  documents or  instruments  in any way pertaining to this
lending transaction, or otherwise with respect to this lending transaction, that
under any  applicable  law may be deemed to be  interest  with  respect  to this
lending  transaction,  for the purpose of any  applicable law that may limit the
maximum  amount  of  interest  to  be  charged  with  respect  to  this  lending
transaction,  shall be  payable  by  Borrower  as,  and  shall be  deemed to be,
additional  interest and for such purposes only, the agreed upon and "contracted
for  rate of  interest"  of this  lending  transaction  shall  be  deemed  to be
increased by the rate of interest resulting from the inclusion of the Additional
Sums.

     (b) It is the intent of the  parties  to comply  with the usury laws of the
State of Arizona (the "Applicable  Usury Law").  Accordingly,  it is agreed that
notwithstanding  any provisions to the contrary in this Agreement,  or in any of
the documents  securing payment hereof or otherwise relating hereto, in no event
shall  this  Agreement  or such  documents  require  the  payment  or permit the
collection of interest in excess of the maximum  contract rate  permitted by the
Applicable  Usury Law (the "Maximu  Interest  Rate").  In the event (a) any such
excess of interest  otherwise would be contracted for,  charged or received from
Borrower or otherwise in connection with the loan evidenced  hereby,  or (b) the
maturity of the  Obligations  is  accelerated in whole or in part, or (c) all or
part  of  the  Obligations  shall  be  prepaid,   so  that  under  any  of  such
circumstances  the amount of  interest  contracted  for,  shared or  received in
connection  with the loan evidenced  hereby,  would exceed the Maximum  Interest
Rate,  then in any such event (1) the provisions of this paragraph  shall govern
and control,  (2) neither  Borrower nor any other Person now or hereafter liable
for the payment of the Obligations  shall be obligated to pay the amount of such
interest to the extent that it is in excess of the Maximum  Interest  Rate,  (3)
any such  excess  which may have been  collected  shall be either  applied  as a
credit against the then unpaid  principal  amount of the Obligations or refunded
to Borrower, at FINOVA's option, and (4) the effective rate of interest shall be
automatically  reduced to the  Maximum  Interest  Rate.  It is  further  agreed,
without  limiting the generality of the foregoing,  that to the extent permitted
by the Applicable Usury Law: (x) all calculations of interest which are made for
the purpose of determining  whether such rate would exceed the Maximum  Interest
Rate shall be made by amortizing, prorating, allocating and spreading during the
period of the full stated term of the loan evidenced hereby, all interest at any
time  contracted  for,  charged  or  received  from  Borrower  or  otherwise  in
connection  with such  loan;  and (y) in the event  that the  effective  rate of
interest on the loan should at any time exceed the Maximum  Interest Rate,  such
excess  interest  that would  otherwise  have been  collected  had there been no
ceiling imposed by the Applicable Usury Law shall be paid to FINOVA from time to

<PAGE>
time, if and when the effective  interest rate on the loan otherwise falls below
the  Maximum  Interest  Rate,  to the extent that  interest  paid to the date of
calculation  does not exceed the Maximum  Interest Rate, until the entire amount
of interest which would  otherwise have been collected had there been no ceiling
imposed  by the  Applicable  Usury Law has been paid in full.  Borrower  further
agrees that should the Maximum  Interest Rate be increased at any time hereafter
because  of a  change  in the  Applicable  Usury  Law,  then to the  extent  not
prohibited  by the  Applicable  Usury Law,  such  increases  shall  apply to all
indebtedness  evidenced  hereby  regardless of when incurred;  but, again to the
extent not prohibited by the Applicable  Usury Law, should the Maximum  Interest
Rate be  decreased  because  of a  change  in the  Applicable  Usury  Law,  such
decreases shall not apply to the  indebtedness  evidenced  hereby  regardless of
when incurred.

         2.10     Principal Payments; Proceeds of Collateral.

     (a)  Principal   Payments.   Except  where  evidenced  by  notes  or  other
instruments issued or made by Borrower to FINOVA specifically containing payment
provisions  which are in  conflict  with this  Section  2.10 (in which event the
conflicting  provisions  of said  notes or other  instruments  shall  govern and
control),  that portion of the  Obligations  consisting of principal  payable on
account of Loans  shall be payable by Borrower  to FINOVA  immediately  upon the
earliest of (i) the receipt by FINOVA or Borrower of any  proceeds of any of the
Collateral,  to the  extent of said  proceeds  or (ii) the Due  Date;  provided,
however, that any Overadvance or Overline shall be payable on demand pursuant to
the provisions of Section 2.3 hereof.

     (b) Collections.  Until FINOVA notifies Borrower to the contrary,  Borrower
may make  collection  of all  Receivables  for FINOVA and shall receive all such
payments or sums as trustee of FINOVA and immediately  deliver all such payments
or sums to FINOVA in their  original  form,  duly endorsed in blank or cause the
same to be deposited into a Blocked Account or Dominion  Account.  FINOVA or its
designee may, at any time, notify account debtors that the Receivables have been
assigned to FINOVA and of FINOVA's security  interest  therein,  and may collect
the  Receivables  directly  and  charge the  collection  costs and  expenses  to
Borrower's  loan account.  Borrower  agrees that, in computing the charges under
this  Agreement,  all  items of  payment  shall be deemed  applied  by FINOVA on
account of the Obligations two (2) Business Days after receipt by FINOVA of good
funds which have been finally credited to FINOVA's  account,  whether such funds
are  received  directly  from  Borrower or from the Blocked  Account bank or the
Dominion  Account bank,  pursuant to Section 2.10(c) hereof,  and this provision
shall apply  regardless of the amount of the Obligations  outstanding or whether
any  Obligations  are  outstanding;  provided,  that if any such good  funds are
received  after 12:00 p.m. noon (Los Angeles time) on any Business Day or at any
time on any day not  constituting  a Business  Day,  such funds  shall be deemed
received on the  immediately  following  Business Day.  FINOVA is not,  however,
required  to credit  Borrower's  account  for the  amount of any item of payment
which is  unsatisfactory  to FINOVA in its Permitted  Discretion  and FINOVA may
charge  Borrower's  loan account for the amount of any item of payment  which is
returned to FINOVA  unpaid.  For  purposes  of this  Section  2.10(b),  payments
received and to be received by Borrower from credit card companies  (e.g.  Visa,
Mastercard and American Express) shall be deemed cash rather than a Receivable.

     (c) Establishment of a Lockbox Account or Dominion Account. Unless Borrower
shall be  otherwise  directed  by FINOVA in  writing,  Borrower  shall cause all
proceeds of Collateral  to be deposited  into a lockbox  account,  or such other
"blocked account" as FINOVA may require (each, a "Blocked  Account") pursuant to
an  arrangement  with such bank as may be selected by Borrower and be acceptable
to FINOVA which proceeds,  unless otherwise provided herein, shall be applied in
payment  of the  Obligations  i such  order  as  FINOVA  determines  in its sole
discretion.  Borrower  shall  issue to any such  bank an  irrevocable  letter of
instruction  directing  said bank to transfer such funds so deposited to FINOVA,
either to any account  maintained  by FINOVA at said bank or by wire transfer to
appropriate account(s) of FINOVA. All funds deposited in a Blocked Account shall
immediately  become the sole  property of FINOVA and  Borrower  shall obtain the
agreement  by such  bank to  waive  any  offset  rights  against  the  funds  so
deposited. FINOVA assumes no responsibility for any Blocked Account arrangement,
including  without  limitation,  any claim of accord and satisfaction or release

<PAGE>
with respect to deposits accepted by any bank thereunder.  Alternatively, FINOVA
may establish  depository  accounts in the name of FINOVA at a bank or banks for
the  deposit of such funds  (each,  a "Dominion  Account")  and  Borrower  shall
deposit  all  proceeds  of  Receivables  and all  cash  proceeds  of any sale of
Inventory  or, to the extent  permitted  herein,  Equipment  or cause same to be
deposited,  in kind, in such  Dominion  Accounts of FINOVA in lieu of depositing
same to Blocked Accounts,  and, unless otherwise provided herein, all such funds
shall be applied by FINOVA to the Obligations in such order as FINOVA determines
in its sole discretion.

     (d) Payments Without  Deductions.  Borrower shall pay principal,  interest,
and all other  amounts  payable  hereunder,  or under any other  Loan  Document,
without any deduction whatsoever,  including,  but not limited to, any deduction
for any setoff or counterclaim. ---------------------------

     (e)  Collection  Days Upon  Repayment.  In the event  Borrower  repays  the
Obligations  in full at any  time  hereafter,  such  payment  in full  shall  be
credited  (conditioned upon final collection) to Borrower's loan account two (2)
Business Days after FINOVA's receipt thereof. ------------------------------

     (f) Monthly  Accountings.  FINOVA shall  provide  Borrower  monthly with an
account of  advances,  charges,  expenses  and  payments  made  pursuant to this
Agreement.  Such  account  shall be deemed  correct,  accurate  and  binding  on
Borrower  and an account  stated  (except for  reverses  and  reapplications  of
payments made and corrections of errors  discovered by FINOVA),  unless Borrower
notifies  FINOVA in writing to the contrary  within  thirty (30) days after each
account is rendered,  describing the nature of  -------------------  any alleged
errors or admissions.

         2.11  Application of Collateral.  Except as otherwise  provided herein,
FINOVA shall have the  continuing  and  exclusive  right to apply or reverse and
re-apply  any and all payments to any portion of the  Obligations  in such order
and manner as FINOVA shall determine in its sole discretion.  To the extent that
Borrower  makes a payment or FINOVA  receives  any  payment or  proceeds  of the
Collateral for Borrower's benefit which is subsequently invalidated, declared to
be fraudulent or preferential,  set aside or required to be repaid to a trustee,
debtor in  possession,  receiver or any other party  under any  bankruptcy  law,
common  law or  equitable  cause,  or  otherwise,  then,  to  such  extent,  the
Obligations  or part  thereof  intended  to be  satisfied  shall be revived  and
continue as if such payment or proceeds had not been received by FINOVA.

         2.12  Application  of  Payments.  The amount of all payments or amounts
received  by FINOVA  with  respect  to the Loan  shall be  applied to the extent
applicable under this Agreement: (i) first, to accrued interest through the date
of such payment,  including any Default  Interest;  (ii) then, to any late fees,
overdue risk  assessments,  Examination  Fees and expenses,  collection fees and
expenses  and any other fees and  expenses  due to FINOVA  hereunder;  and (iii)
last,  the remaining  balance,  if any, to the unpaid  principal  balance of the
Loan;  provided however,  while an Event of Default exists under this Agreement,
or under any other Loan Document,  each payment  hereunder  shall be (x) held as
cash  collateral to secure  Obligations  relating to any contingent  obligations
arising under the Loan Documents and/or (y) applied to amounts owed to FINOVA by
Borrower as FINOVA in its sole discretion may determine. In calculating interest
and applying  payments as set forth above:  (a) interest shall be calculated and
collected  through  the date a payment is actually  applied by FINOVA  under the
terms of this  Agreement;  (b)  interest  on the  outstanding  balance  shall be
charged  during any grace  period  permitted  hereunder;  (c) at the end of each
month,  all accrued and unpaid interest and other charges provided for hereunder
shall be added to the principal  balance of the Loan; and (d) to the extent that
Borrower  makes a payment or FINOVA  receives  any  payment or  proceeds  of the
Collateral for Borrower's benefit that is subsequently invalidated, set aside or
required to be repaid to any other Person, then, to such extent, the Obligations
intended to be  satisfied  shall be revived and  continue as if such  payment or
proceeds had not been received by FINOVA and FINOVA may adjust the Loan balances
as FINOVA, in its sole discretion, deems appropriate under the circumstances.
<PAGE>
         2.13  Notification  of Closing.  Borrower  shall provide FINOVA with at
least forty-eight (48) hours prior written notice of the Closing Date, to enable
FINOVA to arrange for the  availability  of funds. In the event the closing does
not take place on the date specified in Borrower's notice to FINOVA,  other than
through the fault of FINOVA,  Borrower  agrees to reimburse  FINOVA for FINOVA's
costs  to  maintain  the  necessary  funds  available  for the  closing,  at the
Revolving  Interest Rate with respect to an amount equal to the initial  advance
under the  Revolving  Credit Loans  facility  which is to be made on the Closing
Date,  for the  number  of days  which  elapse  between  the date  specified  in
Borrower's  notice and the date upon which the closing  actually  occurs  (which
number of days shall not include the date  specified in Borrower's  notice,  but
shall include the Closing Date).

3.                SECURITY.

         3.1  Security  Interest  in the  Collateral.  To secure the payment and
performance  of the  Obligations  when due,  Borrower  hereby grants to FINOVA a
first priority security interest (subject only to Permitted Encumbrances) in all
of Borrower's now owned or hereafter acquired or arising  Inventory,  Equipment,
Receivables,  life  insurance  policies  and the proceeds  thereof,  Trademarks,
Copyrights,  Licenses  and Patents,  Investment  Property (as defined in Section
9-115 of the Code) and General Intangibles,  including,  without limitation, all
of Borrower's  Deposit Accounts,  money, any and all property now or at any time
hereafter in FINOVA's possession (including claims and credit balances), and all
proceeds (including proceeds of any insurance policies, proceeds of proceeds and
claims  against  third  parties),  all  products  and all books and  records and
computer data related to any of the foregoing  (all of the  foregoing,  together
with all other  property  in which  FINOVA  may be  granted  a lien or  security
interest,  and  together  with the  Letters of Credit,  are  referred to herein,
collectively, as the "Collateral").

     3.2 Perfection and Protection of Security Interest.  Borrower shall, at its
expense, take all actions requested by FINOVA at any time to perfect,  maintain,
protect and enforce FINOVA's first priority  security  interest and other rights
in the Collateral and the priority thereof from time to time, including, without
limitation,  (i) executing and filing  financing or continuation  statements and
amendments  thereof and executing and  delivering  such  documents and titles in
connection  with  motor  vehicles  as  FINOVA  shall  require,  all in form  and
substance  satisfactory to FINOVA,  (ii)  maintaining a perpetual  inventory and
complete  and accurate  stock  records,  (iii)  delivering  to FINOVA  warehouse
receipts  covering any portion of the  Collateral  located in warehouses and for
which warehouse  receipts are issued,  and transferring  Inventory to warehouses
designated by FINOVA,  (iv) placing  notations on Borrower's books of account to
disclose  FINOVA's  security  interest  therein and (v) delivering to FINOVA all
letters  of credit on which  Borrower  is named  beneficiary.  FINOVA  may file,
without  Borrower's  signature,  one or  more  financing  statements  disclosing
FINOVA's security interest under this Agreement.  Borrower agrees that a carbon,
photographic,  photostatic  or  other  reproduction  of this  Agreement  or of a
financing statement is sufficient as a financing statement. If any Collateral is
at any time in the possession or control of any  warehouseman,  bailee or any of
Borrower's  agents or  processors,  Borrowe shall notify such Person of FINOVA's
security interest in such Collateral and, upon FINOVA's  request,  instruct them
to  hold  all  such   Collateral  for  FINOVA's   account  subject  to  FINOVA's
instructions.  From time to time, Borrower shall, upon FINOVA's request, execute
and deliver  confirmatory written instruments pledging the Collateral to FINOVA,
but  Borrower's  failure  to do so shall not affect or limit  FINOVA's  security
interest or other rights in and to the Collateral.  Until the  Obligations  have
been full satisfied and FINOVA's  obligation to make further advances  hereunder
has terminated,  FINOVA's  security interest in the Collateral shall continue in
full force and effect.

     3.3 Preservation of Collateral. FINOVA may, in its Permitted Discretion, at
any time  discharge any lien or  encumbrance on the Collateral or bond the same,
pay any insurance, maintain guards, pay any service bureau, obtain any record or
take any other action to preserve the  Collateral and charge the cost thereof to
Borrower's loan account as an Obligation. --------------------------
<PAGE>
     3.4  Insurance.  Borrower will  maintain and deliver  evidence to FINOVA of
such insurance as is required by FINOVA,  written by insurers,  in amounts,  and
with  lender's  loss  payee,   additional   insured,   and  other  endorsements,
satisfactory  to FINOVA.  All premiums with respect to such  insurance  shall be
paid by Borrower as and when due.  Accurate and certified copies of the policies
shall be delivered by Borrower to FINOVA.  If Borrower fails to comply with this
Section,  FINOVA may (but shall not  ---------  be  required  to)  procure  such
insurance and endorsements at Borrower's  expense and charge the cost thereof to
Borrower's loan account as an Obligation.

     3.5 Collateral Reporting; Inventory.

     (a)  Invoices.  Borrower  shall not  re-date  any  invoice or sale from the
original date thereof or make sales on extended terms beyond those  customary in
Borrower's  industry,  or otherwise extend or modify the term of any Receivable.
If Borrower  becomes  aware of any matter  affecting any  Receivable,  including
information  affecting the credit of the account debtor thereon,  Borrower shall
promptly notify FINOVA in writing.
 
     (b) Instruments.  In the event any Receivable is or becomes  evidenced by a
promissory  note,  trade  acceptance or any other  instrument for the payment of
money,   Borrower   shall   immediately   deliver  such   instrument  to  FINOVA
appropriately endorsed to FINOVA and, regardless of the form of any presentment,
demand, notice of dishonor,  protest and notice of protest with respect thereto,
Borrower shall remain liable thereon until such instrument is paid in full.
 
     (c) Physical  Inventory.  Borrower  shall  conduct a physical  count of the
Inventory at such intervals as FINOVA requests and promptly supply FINOVA with a
copy of such accounts  accompanied  by a report of the value  (calculated at the
lower of cost or market value on a first in,  first out basis) of the  Inventory
and such  additional  information  with  respect to the  Inventory as FINOVA may
request from time to time.

     (d) Returns. If any account debtor returns any Inventory to Borrower in the
ordinary  course of its business,  Borrower shall promptly  determine the reason
for such return and promptly  issue a credit  memorandum  to the account  debtor
(sending a copy to FINOVA) in the appropriate  amount and if such account debtor
is other than a retail customer,  a copy of such credit memorandum shall be sent
to FINOVA.

     (e) Borrower shall not consign any Inventory.

         3.6      Receivables and Inventory.

         (a)      Eligibility.  

     (i) Borrower  represents and warrants that each Receivable,  if any, covers
and shall  cover a bona fide  sale or lease and  delivery  by it of goods or the
rendition by it of services in the ordinary course of its business, and shall be
for a liquidated  amount and FINOVA's  security interest shall not be subject to
any offset, deduction,  counterclaim,  rights of return or cancellation, lien or
other condition.

     (ii) FINOVA at any time shall be entitled to (i)  establish and increase or
decrease reserves against Eligible  Inventory,  (ii) reduce the advance rates in
the Schedule or restore  such  advance  rates to any level equal to or below the
advance rates set forth in the Schedule or (iii) impose additional  restrictions
(or  eliminate  the  same) to the  standards  of  eligibility  set  forth in the
definitions   of  "Eligible   Inventory,"  in  the  exercise  of  its  Permitted
Discretion. FINOVA may but shall not be required to rely on the schedules and/or
reports  delivered  to FINOVA in  connection  herewith in  determining  the then
eligibility of Inventory. Reliance thereon by FINOVA from time to time shall not
be deemed to limit the right of FINOVA to revise  advance  rates or standards of
eligibility as provided above.
<PAGE>
     (b)  Disputes.  Borrower  shall notify  FINOVA  promptly of all disputes or
claims and settle or adjust such disputes or claims at no expense to FINOVA, but
no discount,  credit or allowance  shall be granted to any account debtor and no
returns of merchandise  shall be accepted by Borrower without FINOVA's  consent,
except for  discounts,  credits  and  allowances  made or given in the  ordinary
course of Borrower's  business.  FINOVA may, at any time after the occurrence of
an Event of Default,  settle or adjust  disputes or claims directly with account
debtors  for  amounts and upon terms which  FINOVA  considers  advisable  in its
reasonable  credit  judgment and, in all cases,  FINOVA shall credit  Borrower's
loan  account  with only the net  amounts  received  by FINOVA in payment of any
Receivables.

     3.7  Equipment.  Borrower  shall keep and  maintain  the  Equipment in good
operating  condition and repair and make all necessary  replacements  thereto to
maintain and preserve the value and  operating  efficiency  thereof at all times
consistent  with  Borrower's  past  practice,  ordinary wear and tear  excepted.
Borrower  shall not permit any item of Equipment to become a fixture (other than
a trade fixture) to real estate or an accession to other property. ---------

     3.8  Other  Liens;  No  Disposition  of  Collateral.  Borrower  represents,
warrants and covenants  that except for FINOVA's  security  interest,  Permitted
Encumbrances,  and such other liens, claims and encumbrances as may be permitted
by  FINOVA  in its  sole  discretion  from  time  to time  in  writing,  (a) all
Collateral is and shall  continue to be owned by it free and clear of all liens,
claims and encumbrances  whatsoever and (b) Borrower shall not, without FINOVA's
prior  written  approval,  sell,  encumber  or  dispose  of or permit  the sale,
encumbrance or disposal of any Collateral or all or any substantial  part of any
of its other assets (or any interest of Borrower  therein),  except for the sale
of Inventory in the ordinary  course of  Borrower's  business and except for the
sale of no more than Fifty Thousand  Dollars  ($50,000),  in the  aggregate,  of
fixtures  within any one (1) calendar  year.  In the event FINOVA gives any such
prior written approval with respect to any such sale of Collateral, the same may
be  conditioned  on the sale price  being equal to, or greater  than,  an amount
acceptable  to FINOVA.  The  proceeds of any such sales of  Collateral  shall be
remitted  to  FINOVA   pursuant  to  this  Agreement  for   application  to  the
Obligations.

     3.9 Collateral Security.  The Obligations shall constitute one loan secured
by the Collateral.  FINOVA may, in its sole discretion,  (i) exchange,  enforce,
waive or release any of the  Collateral,  (ii) apply  Collateral  and direct the
order  or  manner  of  sale  thereof  as it may  determine,  and  (iii)  settle,
compromise,  collect or otherwise liquidate any Collateral in any manner without
affecting  its  right  to take  any  other  action  with  respect  to any  other
Collateral. -------------------

4.                CONDITIONS OF CLOSING.

     4.1 Initial  Advance.  The obligation of FINOVA to make the initial advance
hereunder is subject to the  fulfillment,  to the satisfaction of FINOVA and its
counsel,  of each of the following  conditions on or prior to the date set forth
on the Schedule: ---------------

     (a) Loan  Documents.  FINOVA shall have received each of the following Loan
Documents:  (i) the  Agreement  fully and properly  executed by  Borrower;  (ii)
promissory  notes in such  amounts  and on such terms and  conditions  as FINOVA
shall specify,  executed by Borrower;  (iii) Guaranties  executed by each of the
Guarantors;  (iv) such security agreements,  intellectual  property assignments,
pledge  agreements,  mortgages  and deeds of trust as FINOVA  may  require  with
respect to this  Agreement and any  Guaranties,  executed by each of the parties
thereto and, if  applicable,  duly  acknowledged  for recording or filing in the
appropriate  governmental  offices;  (v)  Subordination  Agreements  in form and
substance acceptable to FINOVA, executed by each of the Subordinating Creditors,
together  with  copies  of all  instruments  subject  thereto  showing  a legend
indicating such  subordination;  (vi) such Blocked  Account or Dominion  Account
agreements as it shall determine;  and (vii) such other  documents,  instruments
and  agreements  in  connection  herewith  as FINOVA  shall  require,  executed,
certified and/or acknowledged by such parties as FINOVA shall designate;
<PAGE>
     (b) Minimum Excess  Availability.  Borrower shall have Excess  Availability
under the Revolving  Credit Loans facility of not less than the amount specified
in the Schedule,  after giving effect to the initial advance hereunder and after
giving  effect  to any  applicable  Loan  Reserves  or  other  reserves  against
borrowing     availability     under     the     Revolving     Credit     Loans;
---------------------------

     (c) Terminations by Existing Lender.  Borrower's  existing  lender(s) shall
have executed and delivered UCC termination  statements and other  documentation
evidencing the termination of its liens and security  interests in the assets of
Borrower or a  subordination  agreement in form and  substance  satisfactory  to
FINOVA in its sole discretion; -------------------------------

     (d) Charter  Documents.  FINOVA shall have  received  copies of  Borrower's
By-laws and Articles or Certificate of Incorporation,  as amended,  modified, or
supplemented  to the Closing  Date,  certified  by the  Secretary  of  Borrower;
-----------------

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

     (f) Foreign  Qualification.  FINOVA  shall have  received  certificates  of
corporate status with respect to Borrower and each other Loan Party,  each dated
within ten (10) days of the Closing  Date,  issued by the  Secretary of State of
each state in which such party's  failure to be duly qualified or licensed would
have a material adverse effect on its financial condition or assets,  indicating
that such party is in good standing; ---------------------

     (g) Authorizing  Resolutions  and Incumbency.  FINOVA shall have received a
certificate  from the  Secretary  of Borrower  attesting  to (i) the adoption of
resolutions of Borrower's  Board of Directors,  and  shareholders  or members if
necessary,  authorizing  the  borrowing of money from FINOVA and  execution  and
delivery of this  Agreement and the other Loan  Documents to which Borrower is a
party, and authorizing  specific  officers of Borrower to execute same, and (ii)
the  authenticity  of original  --------------------------------------  specimen
signatures of such officers;

     (h) Insurance.  FINOVA shall have received the insurance  certificates  and
certified  copies of  policies  required  by  Section  3.4  hereof,  in form and
substance  satisfactory  to FINOVA and its counsel,  together with an additional
insured  endorsement  in favor of FINOVA with respect to all liability  policies
and a lender's loss payable  endorsement  in favor of FINOVA with respect to all
casualty  and  business  interruption  policies,  each  in  form  and  substance
acceptable to FINOVA and its counsel; ---------

     (i) Title  Insurance.  FINOVA shall have received  binding  commitments  to
issue such title insurance with respect to Collateral or security for Guaranties
which is comprised of real property as it shall determine; ---------------

     (j) Searches;  Certificates of Title.  FINOVA shall have received  searches
reflecting the filing of its financing  statements  and fixture  filings in such
jurisdictions  as it shall  determine,  and shall have received  certificates of
title with respect to the  Collateral  which shall have been duly  executed in a
manner  sufficient to perfect all of the security  interests  granted to FINOVA;
-------------------------------

     (k)  Landlord,  Bailee and  Mortgagee  Waivers.  FINOVA shall have received
Landlord's  Waivers from the lessors of all  locations  where any  Collateral is
located,   with  the   exception   of  no  more  than   seven   (7)   locations;
---------------------------------------

     (l) Fees.  Borrower  shall have paid all fees  payable by it on the Closing
Date pursuant to this Agreement;
<PAGE>
     (m) Opinion of Counsel. FINOVA shall have received an opinion of Borrower's
counsel covering such matters as FINOVA shall determine in its sole discretion;

     (n) Officer  Certificate.  FINOVA shall have received a certificate  of the
President  and the Chief  Financial  Officer or similar  official  of  Borrower,
attesting  to the  accuracy of each of the  representations  and  warranties  of
Borrower  set forth in this  Agreement  and the  fulfillment  of all  conditions
precedent to the initial advance hereunder; -------------------

     (o) Solvency Certificate. If requested, FINOVA shall have received a signed
certificate of the Borrower's  duly elected Chief Financial  Officer  concerning
the solvency and financial  condition of Borrower,  on FINOVA's  standard  form;
--------------------

     (p)  Blocked  Account.  The Blocked  Account or the  Dominion  Account,  as
referred  to in  Section  2.10(c)  hereof,  shall have been  established  to the
satisfaction of FINOVA in its sole discretion; ---------------

     (q) [Reserved]

     (r) Environmental Certificate.  FINOVA shall have received an Environmental
Certificate from Borrower,  in form and substance  satisfactory to FINOVA in its
discretion, with respect to all locations of Collateral;


     (s) Search and  References.  FINOVA  shall have  received  and approved the
results  of  UCC,  tax  lien,  litigation,  judgment,  and  bankruptcy  searches
regarding  Borrower and such other Persons as FINOVA shall deem  necessary,  and
shall have received satisfactory customer, vendor and credit reference checks on
Borrower and such other Persons as FINOVA shall deem necessary.

     (t) [Reserved]

     (u) [Reserved]

     (v) No Material  Adverse  Changes.  Prior to the Closing Date,  there shall
have occurred no material adverse change in the financial  condition of Borrower
or any  Guarantor,  or in  the  condition  of  the  assets  of  Borrower  or any
Guarantor,  from that shown on the draft  financial  statements for Borrower and
Guarantor dated on the date set forth in the Schedule. At the closing,  Borrower
shall deliver to FINOVA an officer's  certification  confirming that Borrower is
unaware of the  existence of any such material  adverse  change in Borrower's or
Guarantor's financial condition.

     (w) Material Agreements.  FINOVA shall have received, reviewed and approved
all material agreements to which Borrower shall be a party.

     (x) Projections.  Borrower shall submit cash flow projections and pro forma
balance  sheet with  adjusting  entries (i) showing that the proposed  financing
will provide  sufficient  funds for the  Borrower's  projected  working  capital
needs, and (ii) showing:  (a) that the Borrower will have reasonably  sufficient
capital for the conduct of its business  following the initial funding,  and (b)
that the  Borrower  will not incur debts beyond its ability to pay such debts as
they mature. -----------

     (y) Opinions. To the extent any Person other than Borrower shall be parties
to the  Loan  Documents,  FINOVA  reserves  the  right to  require  satisfactory
opinions of counsel for each such Person  concerning the proper  organization of
such  Person and the due  authorization,  execution,  delivery,  enforceability,
validity  and  binding  effect of the Loan  Documents  to which such Person is a
party.  Each such  opinion of counsel  shall  confirm,  to the  satisfaction  of
FINOVA,  that  the  opinion  is  being  --------  delivered  to  FINOVA  at  the
instruction of the party represented by such counsel, that FINOVA is entitled to
rely on such opinion and that for purposes of such reliance, FINOVA is deemed to
be in privity with the opining counsel.
<PAGE>
     (z) ADA Compliance. If necessary, as of the Closing Date, Borrower shall be
in compliance with the Americans with  Disabilities Act of 1990 ("ADA"),  or, if
any  renovations  of  Borrower's   facilities  or  modifications  of  Borrower's
employment  practices  shall be required to bring them into  compliance with the
ADA, review and approval by FINOVA of Borrower's proposed plan to come into such
compliance.  Borrower  shall deliver  representations  and  warranties to FINOVA
concerning  Borrower's  compliance with the ADA, and no evidence shall have come
to the attention of FINOVA  indicating  that Borrower is not in compliance  with
the ADA (except to the extent that FINOVA has reviewed  and approved  Borrower's
plan to come into compliance).

     (aa) Subordination Agreements. FINOVA and each Subordinating Creditor shall
have entered into a Subordination  Agreement, in form and substance satisfactory
to FINOVA, providing among other things that such Subordinating Creditor's right
to  payments  in respect  of the  Subordinated  Debt held by such  Subordinating
Creditor   shall   be   subordinated   in  right  of   payment   to  the   Loan.

     (bb)  Guarantor  Documents.  FINOVA shall have  received  each  Guarantor's
charter documents,  good standing  certificate and resolutions  corresponding to
the  requirements  of Borrower  under  Section  4.1(d),  (e) (h) and (g) hereof.

     (cc) [Reserved].

     (dd) Employment and Non-compete Agreements.  FINOVA shall have reviewed and
approved all  employment  and  non-compete  agreements to be in effect as of the
Closing Date between Borrower and any other Person.

     (ee) Asset Appraisal. Borrower shall have provided to FINOVA, at Borrower's
sole cost and expense,  an asset  appraisal of all Borrower's  fixed assets upon
which FINOVA shall be granted a first priority lien and security interest, which
appraisal must be acceptable to FINOVA in all respects. ---------------

     (ff)  Transaction  Costs.  Borrower  shall  provide  to FINOVA a  complete,
itemized  summary of all  transaction  costs paid or  incurred  by any Person in
connection with the making of the Loan, which transaction costs shall not exceed
a reasonable amount, as well as appropriate  documentation evidencing such costs
and the payment thereof.  All such information must be acceptable to FINOVA,  in
FINOVA's sole discretion, exercised in good faith. -----------------

     (gg) Schedule Conditions.  Borrower shall have complied with all additional
conditions precedent as set forth in the Schedule attached hereto.

     (hh) Other  Matters.  All other  documents  and legal matters in connection
with the transactions  contemplated by this Agreement shall have been delivered,
executed and recorded and shall be in form and substance  satisfactory to FINOVA
and its counsel. -------------

         4.2 Subsequent  Advances.  The obligation of FINOVA to make any advance
shall be subject to the further conditions precedent that, on and as of the date
of such advance: (a) the representations and warranties of Borrower set forth in
this Agreement shall be accurate, before and after giving effect to such advance
or issuance  and to the  application  of any proceeds  thereof;  (b) no Event of
Default or Incipient  Default has occurred  and is  continuing,  or would result
from such advance or issuanc or from the  application  of any proceeds  thereof;
(c)  no  material  adverse  change  has  occurred  in the  Borrower's  business,
operations,  financial  condition,  in the condition of the  Collateral or other
assets of Borrower or in the prospect of repayment of the  Obligations;  and (d)
FINOVA shall have received such other approvals, opinions or documents as FINOVA
shall reasonably request.
<PAGE>
5.                REPRESENTATIONS AND WARRANTIES.

         Borrower represents and warrants that:

     5.1 Due Organization.  It is a corporation duly organized, validly existing
and in good standing  under the laws of the State set forth on the Schedule,  is
qualified and authorized to do business and is in good standing in all states in
which such  qualification  and good  standing  are  necessary in order for it to
conduct its  business  and own its  property,  and has all  requisite  power and
authority to conduct its business as  presently  conducted,  to own its property
and to execute and deliver each of the Loan Documents to which it is a party and
perform  all of its  Obligations  thereunder,  and has not  taken  any  steps to
wind-up, dissolve or otherwise liquidate its assets;

     5.2 Other Names.  Borrower has not,  during the  preceding  five (5) years,
been known by or used any other corporate or fictitious name except as set forth
on the Schedule,  nor has Borrower been the surviving corporation of a merger or
consolidation or acquired all or  substantially  all of the assets of any Person
during such time; -----------

     5.3 Due Authorization.  The execution, delivery and performance by Borrower
of the Loan  Documents  to  which  it is a party  have  been  authorized  by all
necessary  corporate  action and do not and shall not  constitute a violation of
any applicable law or of Borrower's  Articles or Certificate of Incorporation or
By-Laws or any other  document,  agreement or instrument to which  Borrower is a
party or by which Borrower or its assets are bound; -----------------

     5.4 Binding  Obligation.  Each of the Loan Documents to which Borrower is a
party is the legal, valid and binding obligation of Borrower enforceable against
Borrower in accordance with its terms; ------------------

     5.5 Intangible  Property.  Borrower  possesses  adequate assets,  licenses,
patents, patent applications, copyrights, trademarks, trademark applications and
trade names for the present and planned future  conduct of its business  without
any known  conflict  with the rights of  others,  and each is valid and has been
duly registered or filed with the appropriate governmental authorities;  each of
Borrower's patents,  patent applications,  copyrights,  trademarks and trademark
applications which have been registered or filed with any governmental authority
(including the U.S. Patent and Trademark Office and the Library of Congress) are
listed by name, date and filing number on the Schedule;

     5.6 Capital.  Borrower has capital  sufficient to conduct its business,  is
able to pay its debts as they mature,  and owns  property  having a fair salable
value  greater  than the  amount  required  to pay all of its  debts  (including
contingent debts);

     5.7  Material  Litigation.  Borrower  has no pending or overtly  threatened
litigation,  actions or proceedings  which would materially and adversely affect
its  business,  assets,  operations,   prospects  or  condition,   financial  or
otherwise, or the Collateral or any of FINOVA's interests therein;

     5.8 Title;  Security Interests of FINOVA.  Borrower has good,  indefeasible
and merchantable title to the Collateral and, upon the execution and delivery of
the Loan Documents,  the filing of UCC-1 Financing  Statements,  delivery of the
certificate(s)  evidencing any pledged securities,  the filing of any collateral
assignments or security agreements regarding Borrower,  Trademarks,  Copyrights,
Licenses and Patents, if any, with the appropriate  governmental offices and the
recording of any mortgage or deeds of trust with  respect to real  property,  in
each case in the  appropriate  offices,  this Agreement and such documents shall
create valid and perfected first priority liens in the Collateral,  subject only
to Permitted Encumbrances;

     5.9 Restrictive  Agreements;  Labor  Contracts.  Borrower is not a party or
subject  to any  contract  or  subject  to any  charge,  corporate  restriction,
judgment,  decree or order  materially  and  adversely  affecting  its business,
assets,  operations,  prospects or condition,  financial or otherwise,  or which
restricts its right or ability to incur Indebtedness, and it is not party to any
labor dispute. In addition,  no labor contract is scheduled to expire during the
Initial Term of this  Agreement,  except as disclosed to FINOVA in writing prior
to the date hereof;
<PAGE>
     5.10  Laws.  Borrower  is  not in  violation  of  any  applicable  statute,
regulation,  ordinance  or any  order of any  court,  tribunal  or  governmental
agency, in any respect materially and adversely  affecting the Collateral or its
business,  assets, operations,  prospects or condition,  financial or otherwise;

     5.11 Consents. Borrower has obtained or caused to be obtained or issued any
required consent of a governmental agency or other Person in connection with the
financing contemplated hereby; --------

     5.12  Defaults.  Borrower  is not in  default  with  respect  to any  note,
indenture, loan agreement,  mortgage, lease, deed or other agreement to which it
is a party or by which it or its assets are  bound,  nor has any event  occurred
which, with the giving of notice or the lapse of time, or both, would cause such
a default, except as set forth on Exhibit 3 of the Schedule; --------

     5.13 Financial Condition. The Prepared Financials fairly present Borrower's
financial  condition and results of  operations  and those of such other Persons
described  therein as of the date thereof in accordance with GAAP;  there are no
material omissions from the Prepared  Financials or other facts or circumstances
not  reflected  in the Prepared  Financials;  and there has been no material and
adverse change in such financial  condition or operations  since the date of the
initial Prepared Financials ------------------- delivered to FINOVA hereunder;

     5.14 ERISA.  None of Borrower,  any ERISA Affiliate,  or any Plan is or has
been in violation of any of the  provisions of ERISA,  any of the  qualification
requirements  of IRC  Section  401(a)  or any of the  published  interpretations
thereunder,  nor has Borrower or any ERISA Affiliate received any notice to such
effect.  No notice of intent to  terminate a Plan has been filed  under  Section
4041 of ERISA,  nor has any Plan been terminated  under ERISA.  The PBGC has not
instituted  proceedings to terminate,  or appointed a trustee to  administer,  a
Plan.  No lien upon the assets of Borrower has arisen with respect to a Plan. No
prohibited  transaction or Reportable Event has occurred with respect to a Plan.
Neither  Borrower nor any ERISA Affiliate has incurred any withdrawal  liability
with respect to any Multiemployer  Plan.  Borrower and each ERISA Affiliate have
made all contributions  required to be made by them to any Plan or Multiemployer
Plan when due. There is no accumulated funding deficienc in any Plan, whether or
not waived;

     5.15 Taxes. Borrower has filed all tax returns and such other reports as it
is  required  by law to file and has  paid or made  adequate  provision  for the
payment on or prior to the date when due of all taxes,  assessments  and similar
charges that are due and payable; -----

     5.16 Locations;  Federal Tax ID No.  Borrower's  chief executive office and
the offices and locations where it keeps the Collateral (except for Inventory in
transit) are at the locations  set forth on the  Schedule,  except to the extent
that such  locations  may have been changed after notice to FINOVA in accordance
with Section 6.1.4 hereof;  Borrower's federal tax  identification  number is as
shown on the cover page to this Agreement; ----------------------------

     5.17  Business   Relationships.   There  exists  no  actual  or  threatened
termination,  cancellation  or limitation of, or any  modification or change in,
the  business  relationship  between  Borrower  and any customer or any group of
customers whose  purchases  individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there exists no present
condition  or state  of  facts  or  circumstances  which  would  materially  and
adversely affect Borrower or prevent Borrowe from conducting such business after
the  consummation  of  the  transactions   contemplated  by  this  Agreement  in
substantially the same manner in which it has heretofore been conducted; and

     5.18  Reaffirmations.  Each request for a loan made by Borrower pursuant to
this Agreement shall constitute (i) an automatic  representation and warranty by
Borrower  to FINOVA that there does not then exist any Event of Default and (ii)
a reaffirmation as of the date of said request of all of the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents.
<PAGE>
6.                COVENANTS.

     6.1  Affirmative  Covenants.  Borrower  covenants  that,  so  long  as  any
Obligation  remains  outstanding  and this  Agreement  is in  effect,  it shall:

     6.1.1 Taxes.  File all tax returns and pay or make  adequate  provision for
the payment of all taxes,  assessments and other charges on or prior to the date
when due; 

     6.1.2  Notice of  Litigation.  Promptly  notify  FINOVA in  writing  of any
litigation, suit or administrative proceeding which may materially and adversely
affect the Collateral or Borrower's business, assets,  operations,  prospects or
condition,  financial  or  otherwise,  whether  or not the claim is  covered  by
insurance;

     6.1.3 ERISA.  Notify FINOVA in writing (i) promptly upon the  occurrence of
any event  described  in  Paragraph  4043 of ERISA,  other  than a  termination,
partial  termination  or merger of a Plan or a transfer  of a Plan's  assets and
(ii)  prior to any  termination,  partial  termination  or merger of a Plan or a
transfer of a Plan's assets; 

     6.1.4 Change in Location.  Notify  FINOVA in writing  forty-five  (45) days
prior to any change in the location of Borrower's  chief executive office or the
location of any Collateral, or Borrower's opening of any other place of business
and  fifteen  (15) days prior to  Borrower's  closing of any place of  business;

     6.1.5  Corporate  Existence.  Maintain  its  corporate  existence  and  its
qualification  to do business and good standing in all states  necessary for the
conduct of its business and the ownership of its property and maintain  adequate
assets,  licenses,  patents,  copyrights,  trademarks  and  trade  names for the
conduct of its business;

     6.1.6  Labor  Disputes.  Promptly  notify  FINOVA in  writing  of any labor
dispute to which  Borrower is or may become  subject and the  expiration  of any
labor contract to which Borrower is a party or bound;

     6.1.7 Violations of Law. Promptly notify FINOVA in writing of any violation
of any law, statute,  regulation or ordinance of any governmental  entity, or of
any agency  thereof,  applicable to Borrower  which may materially and adversely
affect the Collateral or Borrower's business,  assets, prospects,  operations or
condition, financial or otherwise;

     6.1.8  Defaults.  Notify FINOVA in writing within five (5) Business Days of
Borrower's default under any material note, indenture, loan agreement, mortgage,
lease or other  agreement to which  Borrower is a party or by which  Borrower is
bound, or of any other default under any Indebtedness of Borrower; --------

     6.1.9 Capital Expenditures. Promptly notify FINOVA in writing of the making
of any Capital Expenditure  materially affecting  Borrower's  business,  assets,
prospects, operations or condition, financial or otherwise, except to the extent
permitted in the Schedule; --------------------

     6.1.10 Books and Records.  Keep adequate  records and books of account with
respect  to its  business  activities  in  which  proper  entries  are  made  in
accordance   with  GAAP,   reflecting   all  of  its   financial   transactions;

     6.1.11 Leases; Warehouse Agreements.  Provide FINOVA with (i) copies of all
agreements between Borrower and any landlord,  warehouseman or bailee which owns
any premises at which any Collateral may, from time to time, be located (whether
for processing,  storage or otherwise), and (ii) without limiting the Landlord's
Waivers,  bailee  and/or  mortgagee  waivers to be provided  pursuant to Section
4.1(k) hereof, additional Landlord's Waivers, bailee and/or mortgagee waivers in
form  acceptable to FINOVA with respect to all locations where any Collateral is
hereafter located;
<PAGE>
     6.1.12 Additional Documents. At FINOVA's request, promptly execute or cause
to be executed and  delivered to FINOVA any and all  documents,  instruments  or
agreements  deemed  necessary  by FINOVA to  facilitate  the  collection  of the
Obligations  or the  Collateral  or otherwise to give effect to or carry out the
terms or intent of this  Agreement or any of the other Loan  Documents.  Without
limiting the generality of the foregoing,  if any of the Receivables with a face
value in excess of One Thousand  Dollars  ($1,000) arises out of a contract with
the  United  States  of  America  or  any  department,  agency,  subdivision  or
instrumentality  thereof,  Borrower shall promptly notify FINOVA of such fact in
writing and shall execute any  instruments and take any other action required or
requested by FINOVA to comply with the  provisions of the Federal  Assignment of
Claims Act; and

     6.1.13 Financial  Covenants.  Comply with the financial covenants set forth
on the Schedule.

     6.1.14 Life Insurance.  To the extent,  at any time during the term of this
Agreement,  Borrower purchases a life insurance policy on the life of any of its
officers or directors  (collectively,  the "Life  Insurance  Policy"),  the Life
Insurance  Policy  shall be  collaterally  assigned  to FINOVA  (pursuant  to an
assignment  in form  satisfactory  to  FINOVA,  hereinafter  referred  to as the
"Assignment of Life  Insurance") and be accepted and  acknowledged in writing by
the applicable insurer or its authorized representative.  Borrower hereby grants
to  FINOVA a  security  interest  in the Life  Insurance  Policy,  now  owned or
hereafter acquired,  all replacements thereof, any supplementary contract issued
in connection  therewith,  and all proceeds of the foregoing  (including without
limitation, the beneficiary's interest therein,  collectively referred to as the
"Insurance  Collateral") to secure Borrower's payment and performance of all the
Obligations.  The  insurer  under the Life  Insurance  Policy  and the terms and
conditions of the Life  Insurance  Policy are subject to the approval of FINOVA.
The original of the policy  evidencing the Life Insurance  Policy,  signed by an
authorized  insurance  company  representative,  shall be  delivered  to  FINOVA
immediately  following its issuance  together  with a duly  executed  Collateral
Assignment of Life Insurance which has been accepted and acknowledged in writing
by the applicable insurer or its authorized  representative.  The Life Insurance
Policy shall require the insure to provide  FINOVA with thirty (30) days advance
written  notice of any  cancellation  and/or any  material  change in  coverage.
Borrower  warrants and represents  that it is and will be (throughout the entire
term of the  Loan)  the  owner and  beneficiary  of the Life  Insurance  Policy.
Notwithstanding  anything herein to the contrary,  upon the maturity of the Life
Insurance  Policy or upon the death of the individual  insured,  the proceeds of
the Life Insurance Policy shall be paid directly to FINOVA, shall (at the option
of FINOVA) be treated as a prepayment and, if treated as a prepayment,  shall be
applied in order  against (a) all of Borrower's  Obligations,  other than as set
forth in the remaining subsections of this paragraph, (b) all costs and expenses
of FINOVA in connection with such prepayment,  (c) accrued interest, and (d) the
unpaid  principal  balance of the Loans in such manner as FINOVA shall elect. No
prepayment  premium or Termination Fee shall be due and owing in connection with
such  prepayment.  To the extent that the proceeds of said Life Insurance Policy
exceed the amount of  Borrower's  Obligations,  any such excess shall be paid by
FINOVA directly to Borrower.  Notwithstanding  anything to the contrary  herein,
the obligations, undertakings and representations of Borrower under this Section
16.1.14 shall survive the Closing Date and shall be a continuing  obligation and
agreement of Borrower hereunder.

     6.2 Negative  Covenants.  Without  FINOVA's  prior written  consent,  which
consent  FINOVA may withhold in its sole  discretion,  so long as any Obligation
remains outstanding and this Agreement is in effect, Borrower shall not:

     6.2.1 Mergers.  Merge or consolidate  with or acquire any other Person,  or
make any other  material  change in its capital  structure or in its business or
operations which might adversely affect the repayment of the Obligations;

     6.2.2 Loans. Make advances, loans or extensions of credit to, or invest in,
any Person,  except for loans or cash advances to employees  which are permitted
in the Schedule;
<PAGE>
     6.2.3  Dividends.  Declare or pay cash  dividends  upon any of its stock or
distribute any of its property or redeem,  retire,  purchase or acquire directly
or indirectly any of its stock the foregoing shall not however, prevent Borrower
from declaring stock dividends on any of its stock;

     6.2.4 Adverse Transactions. Enter into any transaction which materially and
adversely affects the Collateral or its ability to repay the Obligations in full
as and when due;

     6.2.5 Indebtedness of Others.  Guarantee or become directly or contingently
liable for the Indebtedness of any Person,  except by endorsement of instruments
for deposit and except for the existing guarantees made by Borrower prior to the
date hereof, if any, which are set forth in the Schedule;

     6.2.6  Repurchase.  Make  a  sale  to  any  customer  on  a  bill-and-hold,
guaranteed sale, sale and return,  sale on approval,  consignment,  or any other
repurchase or return basis;

     6.2.7 Name.  Use any corporate or fictitious  name other than its corporate
name as set forth in its Articles or  Certificate of  Incorporation  on the date
hereof or as set forth on the Schedule;

     6.2.8  Prepayment.  Prepay any  Indebtedness  other than trade payables and
other than the Obligations;

     6.2.9 Capital Expenditure.  Make or incur any Capital Expenditure if, after
giving effect  thereto,  the  aggregate  amount of all Capital  Expenditures  by
Borrower in any fiscal year would exceed the amount set forth on the Schedule;

     6.2.10   Compensation.   Pay  total   compensation,   including   salaries,
withdrawals,  fees, bonuses,  commissions,  drawing accounts and other payments,
whether directly or indirectly, in money or otherwise, during any fiscal year to
all of Borrower's  executives,  officers and directors (or any relative thereof)
in an amount in excess of the amount set forth on the Schedule;

     6.2.11  Indebtedness.   Create,  incur,  assume  or  permit  to  exist  any
Indebtedness  (including  Indebtedness  in  connection  with Capital  Leases) in
excess of the amount set forth on the Schedule,  other than (i) the Obligations,
(ii) trade payables and other contractual obligations to suppliers and customers
incurred  in the  ordinary  course of  business,  and (iii)  other  Indebtedness
existing on the date of this Agreement and reflected in the Prepared  Financials
(except  Indebtedness  paid on the dat of this  Agreement  from  proceeds of the
initial advances hereunder), and (iv) Subordinated Debt;

     6.2.12 Affiliate  Transactions.  Except as set forth below, sell, transfer,
distribute  or pay any  money or  property  to any  Affiliate,  or invest in (by
capital  contribution  or  otherwise)  or  purchase or  repurchase  any stock or
Indebtedness,  or any  property,  of any  Affiliate,  or  become  liable  on any
guaranty of the  indebtedness,  dividends or other obligations of any Affiliate.
Notwithstanding  the  foregoing,  Borrower  may pay  compensation  permitted  by
Section 6.2.10 to employees who are  Affiliates  and, if no Event of Default has
occurred,  Borrower may (i) engage in transactions with Affiliates in the normal
course of  business,  in amounts  and upon terms  which are fully  disclosed  to
FINOVA and which are no less favorable to Borrower than would be obtainable in a
comparable arm's length  transaction with a Person who is not an Affiliate,  and
(ii) make payments to a Subordinating Creditor that is an Affiliate,  subject to
and only to the extent expressly permitted in the Subordination Agreemen between
such Subordinating Creditor and FINOVA;

     6.2.13 Nature of Business. Enter into any new business or make any material
change in any of Borrower's business objectives, purposes or operations;
<PAGE>
     6.2.14  FINOVA's  Name.  Use the name of FINOVA in  connection  with any of
Borrower's  business or activities,  except in connection with internal business
matters or as required in dealings  with  governmental  agencies  and  financial
institutions  or with trade creditors of Borrower,  solely for credit  reference
purposes; or -------------

     6.2.15 Margin Security. Borrower will not (and has not in the past) engaged
principally, or as one of its important activities, in the business of extending
credit for the  purpose of  purchasing  or  carrying  margin  stock  (within the
meaning of  Regulation G or Regulation U issued by the Board of Governors of the
Federal  Reserve  System),  and no proceeds of any Loan or other advance will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock, or in any manner which might
cause such Loan or other advance or the  application of such proceeds to violate
(or require any regulatory  filing under) Regulation G, Regulation T, Regulation
U, Regulation X or any other regulation of the Board of Governors of the Federal
Reserve  System,  in each case as in effect on the date or dates of such Loan or
other  advance  and such use of  proceeds.  Further,  no proceeds of any Loan or
other  advance will be used to acquire any security of class which is registered
pursuant to Section 12 of the Securities Exchange Act of 1934.

     6.2.16  Real  Property.  Purchase  or  acquire  any real  property  without
FINOVA's  prior  written  consent,  a condition of which  consent  shall include
delivery  of  appropriate  environmental  reports  and  analysis,  in  form  and
substance satisfactory to FINOVA and its counsel. -------------

     6.2.17 Borrower's  Auditors.  Change  Borrower's  auditors without FINOVA's
prior written consent.

     6.2.18  Borrower's  Fiscal  Year.  Change  Borrower's  fiscal year  without
FINOVA's prior written consent.

         7.       DEFAULT AND REMEDIES.

     7.1  Events  of  Default.  Any one or more of the  following  events  shall
constitute an Event of Default under this Agreement: -----------------

     (a)  Borrower  fails  to pay  when  due  and  payable  any  portion  of the
Obligations at stated maturity, upon acceleration or otherwise;

     (b) Borrower or any other Loan Party fails or neglects to perform, keep, or
observe any  Obligation  including,  but not  limited  to, any term,  provision,
condition,  covenant  or  agreement  contained  in any  Loan  Document  to which
Borrower  or such  other  Loan  Party is a party  and such  failure  or  neglect
continues for a period of five (5) days following its occurrence;

     (c) Any material  adverse  change  occurs in Borrower's  business,  assets,
operations, prospects or condition, financial or otherwise;

     (d) The  prospect of  repayment  of any portion of the  Obligations  or the
value or priority of FINOVA's  security interest in the Collateral is materially
impaired;

     (e) Any portion of Borrower's  assets is seized,  attached,  subjected to a
writ or distress  warrant,  is levied upon or comes into the  possession  of any
judicial officer;

     (f) Borrower shall  generally not pay its debts as they become due or shall
enter into any agreement  (whether  written or oral), or offer to enter into any
agreement,  with all or a  significant  number of its  creditors  regarding  any
moratorium or other indulgence with respect to its debts or the participation of
such  creditors  or their  representatives  in the  supervision,  management  or
control of the business of Borrower;

     (g) Any bankruptcy or other insolvency proceeding is commenced by Borrower,
or any such proceeding is commenced against Borrower and remains undischarged or
unstayed for forty-five (45) days;
<PAGE>
     (h) Any notice of lien,  levy or assessment is filed of record with respect
to any of Borrower's assets;

     (i) Any  judgments  are entered  against  Borrower in an  aggregate  amount
exceeding  Fifty Thousand  Dollars  ($50,000) in any fiscal year unless the same
are paid, covered by insurance or bonded, in a manner satisfactory to FINOVA;

     (j) Any  default  shall  occur  under (i) any  material  agreement  between
Borrower and any third party including,  without  limitation,  any default which
would  result in a right by such third party to  accelerate  the maturity of any
Indebtedness  of Borrower to such third party and the  aggregate  amount of such
Indebtedness in default shall exceed Fifty Thousand Dollars  ($50,000),  or (ii)
any Subordinated Debt;

     (k) Any  representation  or warranty made or deemed to be made by Borrower,
any  Affiliate  or any  other  Loan  Party in any  Loan  Document  or any  other
statement,  document  or  report  made or  delivered  to  FINOVA  in  connection
therewith shall prove to have been misleading in any material respect;

     (l) Any Guarantor dies, terminates or attempts to terminate its Guaranty or
any security  therefor or becomes subject to any bankruptcy or other  insolvency
proceeding;

     (m) Any Prohibited Transaction or Reportable Event shall occur with respect
to a Plan which could have a material adverse effect on the financial  condition
of Borrower;  any lien upon the assets of Borrower in  connection  with any Plan
shall  arise;  Borrower or any of its ERISA  Affiliates  shall fail to make full
payment when due of all amounts  which  Borrower or any of its ERISA  Affiliates
may be  required  to pay to any  Plan or any  Multiemployer  Plan as one or more
contributions  thereto;  Borrower  or any of its  ERISA  Affiliates  creates  or
permits  the  creation of any  accumulated  funding  deficiency,  whether or not
waived;

     (n) Any  transfer of the issued and  outstanding  shares of common stock or
other  evidence  of  ownership  of Borrower  which  results in Ilan Arbel or his
Affiliates owning less than fifty-one percent (51%) of the outstanding shares of
common stock of Borrower; or

     (o) The aggregate  amount of the Letters of Credit shall be less than Three
Million  Dollars  ($3,000,000),  or any Letter of Credit  shall:  (i) fail to be
renewed  less than sixty (60) days prior to its expiry or for a period less than
the  then-remaining  term  of the  Loans,  or (ii) be  dishonored,  or any  draw
thereupon refused by the issuer, or (iii) be from an issuer no longer acceptable
to FINOVA in its Permitted Discretion.

     NOTWITHSTANDING  ANYTHING TO THE CONTRARY HEREIN, FINOVA RESERVES THE RIGHT
TO CEASE MAKING ANY LOANS DURING ANY PERIOD WHILE AN INCIPIENT  DEFAULT  EXISTS,
AND THEREAFTER IF AN EVENT OF DEFAULT HAS OCCURRED.

         7.2 Remedies.  Upon the occurrence of an Event of Default,  FINOVA may,
at its option and in its sole  discretion  and in  addition  to all of its other
rights under the Loan  Documents,  cease making Loans,  terminate this Agreement
and/or  declare  all of the  Obligations  to be  immediately  payable  in  full.
Borrower agrees that FINOVA shall also have all of its rights and remedies under
applicable law, including,  without limitation,  the default rights and remedies
of a  secured  party  under  the Code,  and upon the  occurrence  of an Event of
Default  Borrower  hereby consents to the appointment of a receiver by FINOVA in
any  action   initiated  by  FINOVA  pursuant  to  this  Agreement  and  to  the
jurisdiction  and venue set forth in Section  9.26 hereof,  and Borrower  waives
notice and posting of a bond in connection  therewith.  Further,  FINOVA may, at
any time, take possession of the Collateral and keep it on Borrower's  premises,
at no cost to FINOVA,  or remove any part of it to such other place(s) as FINOVA
may desire,  or Borrower shall,  upon FINOVA's demand,  at Borrower's sole cost,
assemble the  Collateral  and make it available to FINOVA at a place  reasonably

<PAGE>
convenient  to FINOVA.  FINOVA may sell and deliver any  Collateral at public or
private sales, for cash, upon credit or otherwise,  at such prices and upon such
terms as FINOVA  deems  advisable,  at FINOVA's  discretion,  and may, if FINOVA
deems it  reasonable,  postpone  or  adjourn  any sale of the  Collateral  by an
announcement  at the time and place of sale or of such  postponed  or  adjourned
sale  without  giving a new notice of sale.  Borrower  agrees that FINOVA has no
obligation to preserve  rights to the  Collateral or marshal any  Collateral for
the benefit of any Person.  FINOVA is hereby granted a license or other right to
use,  without  charge,  Borrower's  labels,  patents,  copyrights,  name,  trade
secrets,  trade  names,  trademarks  and  advertising  matter,  or  any  similar
property,  in completing  production,  advertising or selling any Collateral and
Borrower's rights unde all licenses and all franchise  agreements shall inure to
FINOVA's  benefit.  Any  requirement  of reasonable  notice shall be met if such
notice is mailed  postage  prepaid to  Borrower  at its address set forth in the
heading  to this  Agreement  at  least  ten  (10)  days  before  sale  or  other
disposition. The proceeds of sale shall be applied, first, to all attorneys fees
and other  expenses of sale,  and second,  to the  Obligations  in such order as
FINOVA shall elect,  in its sole  discretion.  FINOVA shall return any excess to
Borrower and  Borrower  shall remain  liable for any  deficiency  to the fullest
extent  permitted  by law. In  addition,  without  limiting or barring any other
remedy  available  to it, but  subject to the  provisions  of Section 7.3 below,
FINOVA may draw upon each and every Letter of Credit,  and the proceeds  thereof
shall  be  applied  in  payment  of the  Obligations  in such  order  as  FINOVA
determines in its sole discretion.

         7.3 Letter of Credit. FINOVA hereby agrees, that upon the occurrence of
either of an Event of Default,  FINOVA will limit its draw against the Letter of
Credit to an initial  draw in an amount  equal to the amounts  then  outstanding
under Section  2.2(b) of the Schedule plus any amounts  outstanding at such time
in excess of the  amounts  available  under the  lending  formulas  set forth in
Section 2.2(a) of the Schedule,  and FINOVA will refrain from making any further
draw  against  the  Letter of Credi for a period  of fifty  (50) days  after the
occurrence of the Event of Default,  at which time FINOVA may  immediately  draw
the balance of the Letter of Credit; provided,  however, that FINOVA's agreement
to delay the full draw against the Letter of Credit as aforedescribed  shall not
apply if a draw  under  the  Letter  of  Credit  involves  an  Event of  Default
described Sections 7.1(f), 7.1(g), 7.1(k) or 7.1(o) hereof.

         7.4 Standards for Determining Commercial  Reasonableness.  Borrower and
FINOVA  agree  that  the  following  conduct  by  FINOVA  with  respect  to  any
disposition of Collateral shall conclusively be deemed  commercially  reasonable
(but other conduct by FINOVA, including, but not limited to, FINOVA's use in its
sole discretion of other or different times,  places and manners of noticing and
conducting any disposition of Collateral shall not be deemed unreasonable):  Any
public  or  private  disposition:  (i) as to which on no  later  than the  tenth
(calendar  day prior  thereto  written  notice  thereof is mailed or  personally
delivered to Borrower and, with respect to any public  disposition,  on no later
than the tenth calendar day prior thereto  notice thereof  describing in general
non-specific  terms,  the  Collateral  to be disposed of is published  once in a
newspaper of general circulation in the county where the sale is to be conducted
(provided  that no notice of any public or private  disposition  need be given t
the  Borrower or  published  if the  Collateral  is  perishable  or threatens to
decline  speedily  in value  or is of a type  customarily  sold on a  recognized
market);  (ii) which is conducted  at any place  designated  by FINOVA,  with or
without the  Collateral  being  present;  and (iii) which  commences at any time
between  8:00  a.m.  and  5:00  p.m.  Without  limiting  the  generality  of the
foregoing,  Borrower  expressly  agrees that, with respect to any disposition of
accounts,   instruments  and  general  intangibles,  it  shall  be  commercially
reasonable for FINOVA to direct any prospective  purchaser  thereof to ascertain
directly from Borrower any and all information  concerning the same,  including,
but not limited to, the terms of payment,  aging and  delinquency,  if any,  the
financial  condition  of any  obligor or  account  debtor  thereon or  guarantor
thereof, and any collateral therefor.
<PAGE>
8.                EXPENSES AND INDEMNITIES

         8.1  Expenses.  Borrower  covenants  that,  so long  as any  Obligation
remains  outstanding  and this  Agreement  remains in effect,  it shall promptly
reimburse  FINOVA  for all  costs,  fees and  expenses  incurred  by  FINOVA  in
connection   with   the   negotiation,    preparation,    execution,   delivery,
administration and enforcement of each of the Loan Documents, including, but not
limited to, the attorneys' and paralegals' fees of in-house and outside counsel,
expert witness fees, lien, title search and insurance fees,  appraisal fees, all
charges and  expenses  incurred  in  connection  with any and all  environmental
reports and environmental remediation activities, and all other costs, expenses,
taxes and filing or recording fees payable in connection  with the  transactions
contemplated by this  Agreement,  including  without  limitation all such costs,
fees and  expenses  as FINOVA  shall  incur or for  which  FINOVA  shall  become
obligated  in  connection  with  (i)  any  inspection  or  verification  of  the
Collateral,   (ii)  any  proceeding  relating  to  the  Loan  Documents  or  the
Collateral,  (iii)  actions  taken with respect to the  Collateral  and FINOVA's
security  interest  therein,  including,  without  limitation,  the  defense  or
prosecution of any action involving FINOVA and Borrower or any third party, (iv)
enforcement  of  any  of  FINOVA's  rights  and  remedies  with  respect  to the
Obligations  or Collateral  and (v)  consultation  with  FINOVA's  attorneys and
participation in any workout, bankruptcy or other insolvency or other proceeding
involving any Loan Party or any  Affiliate,  whether or not suit is filed or the
issues are peculiar to federal  bankruptcy or state  insolvency  laws.  Borrower
shall  also pay all  FINOVA  charges  in  connection  with bank wire  transfers,
forwarding  of loan  proceeds,  deposits  of checks and other  items of payment,
returned  checks,  establishment  and maintenance of lockboxes and other Blocked
Accounts,  and all other bank and  administrative  matters,  in accordance  with
FINOVA's  schedule  of bank and  administrative  fees and charges in effect from
time to time.  FINOVA will not charge an accommodation fee or restructure fee if
at any time during the second Loan Year,  Borrower  and Lender agree to increase
the advance rates against Borrower's  Eligible Inventory as set forth in Section
2.2 of the  Schedule.  The  foregoing  shall not  however  prevent  FINOVA  from
charging an  accommodation  fee or restructure  fee in connection with any other
amendments to the Loan  Documents or limit the ability of FINOVA to require that
the Borrowe reimburse FINOVA for FINOVA's  attorneys' fees and costs incurred in
connection  with any and all amendments to the Loan  Documents,  including those
dealing solely with an increase in the advance rates.

         8.2      Environmental Matters.

         The  Environmental  Certificate  dated  on or  about  the  date of this
Agreement  is  incorporated  herein for all  purposes as if fully stated in this
Agreement.

9.                MISCELLANEOUS.

         9.1      Examination of Records; Financial Reporting.

         (a) Examinations. FINOVA shall at all reasonable times have full access
to and the right to examine,  audit,  make abstracts and copies from and inspect
Borrower's records, files, books of account and all other documents, instruments
and  agreements  relating  to the  Collateral  and the right to check,  test and
appraise  the  Collateral.  Borrower  shall  deliver  to FINOVA  any  instrument
necessary  for FINOVA to obtain  records  from any  service  bureau  maintaining
records for Borrower.  All  instruments  and  certificates  prepared by Borrower
showing the value of any of the Collateral  shall be accompanied,  upon FINOVA's
request,  by copies of related purchase orders and invoices.  FINOVA may, at any
time  after  the  occurrence  of an Event of  Default,  remove  from  Borrower's
premises Borrower's books and records (or copies thereof) or require Borrower to
deliver such books and records or copies to FINOVA.  FINOVA may, without expense
to FINOVA,  use such of  Borrower's  personnel,  supplies and premises as may be
reasonably necessary for maintaining or enforcing FINOVA's security interest.
<PAGE>
         (b)  Reporting  Requirements.   Borrower  shall  furnish  FINOVA,  upon
request,  such  information  and statements as FINOVA shall request from time to
time regarding Borrower's business affairs,  financial condition and the results
of its operations.  Without  limiting the generality of the foregoing,  Borrower
shall  provide  FINOVA with:  (i) FINOVA's  standard  form  collateral  and loan
report, daily, and upon FINOVA's request, copies of sales journals, cash receipt
journals,  and  deposit  slips;  (ii)  upon  FINOVA's  request,  copies of sales
invoices,  customer  statements and credit memoranda issued,  remittance advices
and reports; (iii) copies of shipping and delivery documents, upon request; (iv)
on or prior to the date set forth on the Schedule, monthly agings (aged from due
date)  and   reconciliations  of  Receivables  (with  listings  of  concentrated
accounts),  payables reports,  inventory  reports,  compliance  certificates and
unaudited financial statements (exclusive of changes in stockholder's equity and
changes in cash  flow)  with  respect  to the prior  month  prepared  on a basis
consistent  with such  statements  prepared  in prior  months and  otherwise  in
accordance  with GAAP; (v) within forty five (45) days following the end of each
calendar  quarter,  quarterly  unaudited  changes  in  stockholder's  equity and
changes in cash flow with  respect to the prior  quarter  prepared  on the basis
consistent  with such  statements  prepared in prior  quarters and  otherwise in
accordance  with GAAP;  (vi) audited annual  consolidated  financia  statements,
prepared in  accordance  with GAAP applied on a basis  consistent  with the most
recent Prepared  Financials  provided to FINOVA by Borrower,  including  balance
sheets,  income and cash flow statements,  accompanied by the unqualified report
thereon of independent  certified public  accountants  acceptable to FINOVA,  as
soon as available,  and in any event, within ninety five (95) days after the end
of each of Borrower's fiscal years; and (vii) such certificates  relating to the
foregoing  as FINOVA  may  request,  including,  without  limitation,  a monthly
certificate  from the  president  and the chief  financial  officer of  Borrower
showing Borrower's  compliance with each of the financial covenants set forth in
this Agreement,  and stating  whether any Event of Default or Incipient  Default
has occurred,  and if so, the steps being taken to prevent or cure such Event of
Default or Incipient Default.  All reports or financial  statements submitted by
Borrower  shall be in  reasonable  detail and shall be certified by th principal
financial officer of Borrower as being complete and correct.

     (c) Guarantor's Financial Statements and Tax Returns.  Borrower shall cause
each of the Guarantors to deliver to FINOVA such  Guarantor's  annual  financial
statement (in form acceptable to FINOVA) and a copy of such Guarantor's  federal
income tax return with respect to the  corresponding  year,  in each case on the
date when such tax return is due or, if earlier, on the date when available.

         9.2      Term; Termination.

     (a) Term.  The Initial Term of the Revolving  Credit Loans facility and the
obligation of FINOVA to made advances  with respect  thereto in accordance  with
this Agreement shall be as set forth on the Schedule,  and the Revolving  Credit
Loans facility and this Agreement shall be automatically renewed for one or more
Renewal  Term(s) as set forth in the  Schedule,  unless  earlier  terminated  as
provided herein.

     (b)  Prior  Notice.  Each  party  shall  have the right to  terminate  this
Agreement  effective at the end of the Initial Term or at the end of any Renewal
Term by giving  the other  party  written  notice  not less than sixty (60) days
prior to the  effective  date of such  termination,  by  registered or certified
mail.

                       FINOVA Loan and Security Agreement




     (c)  Payment  in  Full.  Upon  the  effective  date  of  termination,   the
Obligations shall become immediately due and payable in full in cash.
<PAGE>
     (d) Early  Termination;  Termination  Fee. In addition to the procedure set
forth in Section  9.2(b),  Borrower may terminate this Agreement at any time but
only  upon  sixty  (60)  days'  prior  written  notice  and  prepayment  of  the
Obligations  in full,  and not in  part.  Upon any  such  early  termination  by
Borrower or any  termination  of this Agreement by FINOVA upon the occurrence of
an Event of Default,  then, and in any such event,  Borrower shall pay to FINOVA
upon the effective date of such termination a fee (the "Termination  Fee") in an
amount equal to the amount shown on the Schedule.

     9.3 Recourse to Security; Certain Waivers. All Obligations shall be payable
by Borrower as provided  for herein  and, in full,  at the  termination  of this
Agreement;  recourse  to security  shall not be  required at any time.  Borrower
waives  presentment and protest of any instrument and notice thereof,  notice of
default and, to the extent  permitted by  applicable  law, all other  notices to
which Borrower might otherwise be entitled.

     9.4 No Waiver by FINOVA.  Neither  FINOVA's  failure to exercise any right,
remedy or option under this  Agreement,  any  supplement,  the Loan Documents or
other  agreement  between  FINOVA  and  Borrower  nor any  delay  by  FINOVA  in
exercising  the same  shall  operate as a waiver.  No waiver by FINOVA  shall be
effective  unless in writing  and then only to the extent  stated.  No waiver by
FINOVA shall affect its right to require strict  performance of this  Agreement.
FINOVA's  rights and remedies  shall be  -------------------  cumulative and not
exclusive.

     9.5 Binding on Successor  and  Assigns.  All terms,  conditions,  promises,
covenants,  provisions  and  warranties  shall  inure to the benefit of and bind
FINOVA's and  Borrower's  respective  representatives,  successors  and assigns.

     9.6 Severability. If any provision of this Agreement shall be prohibited or
invalid  under  applicable  law, it shall be  ineffective  only to such  extent,
without invalidating the remainder of this Agreement. 

     9.7 Amendments; Assignments. This Agreement may not be modified, altered or
amended,  except by an  agreement  in writing  signed by  Borrower  and  FINOVA.
Borrower may not sell,  assign or transfer any interest in this Agreement or any
other Loan Document, or any portion thereof, including,  without limitation, any
of Borrower's rights, title, interests, remedies, powers and duties hereunder or
thereunder.   Borrower   hereby  consents  to  FINOVA's   participation,   sale,
assignment,  transfer or other disposition,  at any time or times hereafter,  of
this Agreement and any of the other Loan Documents,  or of any portion hereof or
thereof,  including,  without  limitation,  FINOVA's rights,  title,  interests,
remedies,  powers and duties hereunder or thereunder.  In connection  therewith,
FINOVA may disclose all documents and information  which FINOVA now or hereafter
may have relating to Borrower or Borrower's business.  To the extent that FINOVA
assigns its rights and  obligations  hereunder  to a third  party,  FINOVA shall
thereafter  be released  from such  assigned  obligations  to Borrower  and such
assignment shall effect a novation between Borrower and such third party.

     9.8  Integration.  This  Agreement,  together with the Schedule (which is a
part hereof) and the other Loan Documents,  reflect the entire  understanding of
the parties with respect to the transactions contemplated hereby. 

     9.9  Survival.  All of  the  representations  and  warranties  of  Borrower
contained in this Agreement shall survive the execution, delivery and acceptance
of this  Agreement by the parties.  No  termination  of this Agreement or of any
guaranty of the  Obligations  shall  affect or impair the  powers,  obligations,
duties, rights, representations, warranties or liabilities of the parties hereto
and all shall survive such termination. 

     9.10 Evidence of Obligations.  Each Obligation may, in FINOVA's discretion,
be evidenced by notes or other instruments issued or made by Borrower to FINOVA.
If not so evidenced,  such Obligation  shall be evidenced solely by entries upon
FINOVA's books and records.
<PAGE>
     9.11 Loan Requests.  Each oral or written  request for a loan by any Person
who purports to be any employee,  officer or authorized  agent of Borrower shall
be made to FINOVA on or prior to 11:00 a.m.,  Los Angeles,  California  time, on
the  Business  Day on which the  proceeds  thereof are  requested  to be paid to
Borrower and shall be conclusively presumed to be made by a Person authorized by
Borrower to do so and the  crediting of a loan to Borrower's  operating  account
shall conclusively  establish  Borrower's  obligation to repay such loan. Unless
and until Borrower otherwise directs FINOVA in writing, all loans shall be wired
to Borrower's operating account set forth on the Schedule.

     9.12  Notices.  Any  notice  required  hereunder  shall be in  writing  and
addressed  to the  Borrower  and  FINOVA  at their  addresses  set  forth at the
beginning of this Agreement.  Notices  hereunder shall be deemed received on the
earlier of receipt, whether by mail, personal delivery, facsimile, or otherwise,
or upon deposit in the United States mail, postage prepaid. -------

     9.13 Brokerage Fees.  Borrower represents and warrants to FINOVA that, with
respect to the financing transaction herein contemplated,  no Person is entitled
to any brokerage fee or other  commission  and Borrower  agrees to indemnify and
hold FINOVA harmless against any and all such claims. --------------

     9.14  Disclosure.  No  representation  or warranty made by Borrower in this
Agreement,  or in any  financial  statement,  report,  certificate  or any other
document  furnished in connection  herewith  contains any untrue  statement of a
material  fact or  omits  to  state  any  material  fact  necessary  to make the
statements herein or therein not misleading.  There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to FINOVA in writing  with  respect  to the  transactions  contemplated  by this
Agreement  which  materially  and  adversely   affects  the  business,   assets,
operations, prospects or condition (financial or otherwise), of Borrower.

     9.15  Publicity.  FINOVA is hereby  authorized to issue  appropriate  press
releases and to cause a tombstone to be published announcing the consummation of
this  transaction  and the  aggregate  amount  thereof.  Borrower is also hereby
authorized to issue  appropriate  press  releases and to cause a tombstone to be
published  announcing the  consummation  of this  transaction  and the aggregate
amount  thereof  with the prior  written  consent of FINOVA  which  shall not be
unreasonably withheld. 

     9.16 Captions.  The Section titles  contained in this Agreement are without
substantive meaning and are not part of this Agreement. 

     9.17 Injunctive  Relief.  Borrower  recognizes  that, in the event Borrower
fails to  perform,  observe  or  discharge  any of its  Obligations  under  this
Agreement,  any  remedy at law may  prove to be  inadequate  relief  to  FINOVA.
Therefore,  FINOVA,  if it so  requests,  shall be  entitled  to  temporary  and
permanent  injunctive  relief in any such case without the  necessity of proving
actual damages.

     9.18 Counterparts;  Facsimile Execution.  This Agreement may be executed in
one or more counterparts,  each of which taken together shall constitute one and
the  same  instrument,   admissible  into  evidence.  Delivery  of  an  executed
counterpart of this Agreement by telefacsimile  shall be equally as effective as
delivery  of a  manually  executed  counterpart  of this  Agreement.  Any  party
delivering an executed counterpart of this Agreement by telefacsimile shall also
deliver a manually  executed  counterpart of this Agreement,  but the failure to
deliver  a  manually  executed   counterpart  shall  not  affect  the  validity,
enforceability, and binding effect of this Agreement.

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

     9.20  Time of  Essence.  Time is of the  essence  for  the  performance  by
Borrower of the Obligations set forth in this Agreement.
<PAGE>
     9.21  Limitation  of  Actions.  Borrower  agrees that any claim or cause of
action by  Borrower  against  FINOVA,  or any of FINOVA's  directors,  officers,
employees,  agents,  accountants  or  attorneys,  based upon,  arising  from, or
relating to this  Agreement,  or any other present or future  agreement,  or any
other transaction  contemplated hereby or thereby or relating hereto or thereto,
or any other matter,  cause or thing whatsoever,  whether or not relating hereto
or thereto,  occurred,  done,  omitted or  suffered to be done by FINOVA,  or by
FINOVA's  directors,  officers,  employees,  agents,  accountants  or attorneys,
whether  sounding in contract or in tort or  otherwise,  shall be barred  unless
asserted by Borrower by the  commencement  of an action or proceeding in a court
of competent jurisdiction by the filing of a complaint within one year after the
first act,  occurrence or omission upon which such claim or cause of action,  or
any part thereof,  is based and service of a summons and complaint on an officer
of FINOVA or any other Person  authorized to accept service of process on behalf
of  FINOVA,  within  thirty  (30) days  thereafter.  Borrower  agrees  that such
one-year  period of time is a  reasonable  and  sufficient  time for Borrower to
investigate and act upon any such claim or cause of action.  The one-year period
provided  herein shall not be waived,  tolled,  or extended except by a specific
written  agreement of FINOVA.  This provision  shall survive any  termination of
this Loan Agreement or any other agreement.

     9.22 Liability. Neither FINOVA nor any FINOVA Affiliate shall be liable for
any indirect,  special,  incidental or consequential  damages in connection with
any breach of contract,  tort or other wrong  relating to this  Agreement or the
Obligations  or  the   establishment,   administration  or  collection   thereof
(including   without   limitation   damages  for  loss  of   profits,   business
interruption,   or  the  like),   whether  such  damages  are   foreseeable   or
unforeseeable,  even if  FINOVA  has been  advised  of the  possibility  of such
damages.  Neither  FINOVA,  nor any  FINOVA  Affiliate  shall be liable  for any
claims,  demands,  losses or damages,  of any kind  whatsoever,  made,  claimed,
incurred or suffered by the Borrower through the ordinary  negligence of FINOVA,
or any FINOVA  Affiliate.  "FINOVA  Affiliate"  shall mean  FINOVA's  directors,
officers,  employees, agents, attorneys or any other Person or entity affiliated
with or representing FINOVA. ----------------

     9.23 Notice of Breach by FINOVA.  Borrower  agrees to give  FINOVA  written
notice of (i) any  action or  inaction  by FINOVA or any  attorney  of FINOVA in
connection with any Loan Documents that may be actionable  against FINOVA or any
attorney of FINOVA or (ii) any defense to the payment of the Obligations for any
reason,  including, but not limited to, commission of a tort or violation of any
contractual duty or duty implied by law. Borrower agrees that unless such notice
is fully given as promptl as possible (and in any event within thirty (30) days)
after  Borrower  has  knowledge,  or with the exercise of  reasonable  diligence
should have had  knowledge,  of any such action,  inaction or defense,  Borrower
shall not assert,  and  Borrower  shall be deemed to have  waived,  any claim or
defense arising therefrom.

     9.24  Application of Insurance  Proceeds.  The net proceeds of any casualty
insurance  insuring  the  Collateral,  after  deducting  all costs and  expenses
(including attorneys' fees) of collection, shall be applied, at FINOVA's option,
either toward  replacing or restoring the  Collateral,  in a manner and on terms
satisfactory  to FINOVA,  or toward  payment of the  Obligations.  Any  proceeds
applied to the payment of Obligations  shall be applied in such manner as FINOVA
may elect. In no event shall such  application  relieve Borrower from payment in
full of all installments of principal and interest which  thereafter  become due
in the order of maturity thereof.

     9.25 Power of  Attorney.  Borrower  appoints  FINOVA and its  designees  as
Borrower's  attorney,  with the power to endorse  Borrower's name on any checks,
notes, acceptances, money orders or other forms of payment or security that come
into  FINOVA's  possession;  to sign  Borrower's  name on any invoice or bill of
lading relating to any Receivable,  on drafts against customers,  on assignments
of Receivables, on notices of assignment,  financing statements and other public
records,  on  verifications  of accounts  and on notices to customers or account
debtors;  to send  requests  for  verification  of  Receivables  to customers or
account  debtors;  after the  occurrence of any Event of Default,  to notify the
post office authorities to change the address for delivery of Borrower's mail to
an address designated by FINOVA and to open and dispose of all mail addressed to
Borrower;  and to do all other  things  FINOVA  deems  necessary or desirable to
carry out the terms of this Agreement. Borrower hereby ratifies and approves all
acts of such attorney.  Neither FINOVA nor any of its designees  shall be liable
for any acts or  omissions  nor for any error of  judgment or mistake of fact or
law while  acting as  Borrower's  attorney.  This power,  being  coupled with an

<PAGE>
interest,  is irrevocable  until the  Obligations  have been fully satisfied and
FINOVA's obligation to provide loans hereunder shall have terminated

     9.26 Governing Law; Waivers.  THIS AGREEMENT,  INCLUDING WITHOUT LIMITATION
ENFORCEMENT OF THE  OBLIGATIONS,  SHALL BE  INTERPRETED  IN ACCORDANCE  WITH THE
INTERNAL  LAWS (AND NOT THE  CONFLICT  OF LAWS  RULES)  OF THE STATE OF  ARIZONA
GOVERNING CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.  BORROWER HEREBY
CONSENTS TO THE  EXCLUSIVE  JURISDICTION  OF ANY STATE OR FEDERAL  COURT LOCATED
WITHIN THE COUNTY OF  MARICOPA IN THE STATE OF ARIZONA OR, AT THE SOLE OPTION OF
FINOVA,  IN ANY OTHER COURT IN WHICH  FINOVA SHALL  INITIATE  LEGAL OR EQUITABLE
PROCEEDINGS  AND  WHICH  HAS  SUBJECT  MATTER  JURISDICTION  OVER THE  MATTER IN
CONTROVERSY.  BORROWER  WAIVES ANY OBJECTION OF FORUM NON  CONVENIENS AND VENUE.
BORROWER  FURTHER  WAIVES  PERSONAL  SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS  THAT ALL SUCH  SERVICE  OF  PROCESS BE MADE IN THE MANNER SET FORTH IN
SECTION 9.12 HEREOF FOR THE GIVING OF NOTICE.  BORROWER FURTHER WAIVES ANY RIGHT
IT MAY OTHERWISE HAVE TO COLLATERALLY ATTACK ANY JUDGMENT ENTERED AGAINST IT.

     9.27 MUTUAL WAIVER OF RIGHT TO JURY TRIAL.  FINOVA AND BORROWER EACH HEREBY
WAIVES  THE  RIGHT TO TRIAL BY JURY IN ANY  ACTION  OR  PROCEEDING  BASED  UPON,
ARISING OUT OF, OR IN ANY WAY  RELATING TO: (i) THIS  AGREEMENT;  (ii) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN FINOVA AND BORROWER;  OR (iii)
ANY CONDUCT,  ACTS OR OMISSIONS OF FINOVA OR BORROWER OR ANY OF THEIR DIRECTORS,
OFFICERS,  EMPLOYEES,  AGENTS,  ATTORNEYS OR ANY OTHER PERSONS  AFFILIATED  WITH
FINOVA OR BORROWER; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT
OR TORT OR OTHERWISE.

                            [SIGNATURE PAGE FOLLOWS]





<PAGE>
                                                                       BORROWER:
                                            PLAY CO. TOYS & ENTERTAINMENT CORP.,
                                                          a Delaware corporation

Witness: Barton Nachamie, Esq.                          By:  /s/ James B. Frakes
                                               Print Name: Name: James B. Frakes
                                                                  Its: Secretary

                                                                         FINOVA:
                              FINOVA CAPITAL CORPORATION, a Delaware corporation

                                                              By: Philip J. Isom
                                                            Name: Philip J. Isom
                                                   Its: Assistant Vice President

STATE OF                   )
                           ) ss.
COUNTY OF                  )

                  The foregoing instrument was acknowledged before me this _____
day of January 1998, by __________________________, the _____________________ of
PLAY CO. TOYS & ENTERTAINMENT  CORP., a Delaware  corporation,  on behalf of the
corporation


Notary Public
My Commission Expires:

<PAGE>
                       FINOVA Loan and Security Agreement




                                  EXHIBIT 10.91

                     SCHEDULE TO LOAN AND SECURITY AGREEMENT





<PAGE>
                     Schedule to Loan and Security Agreement

Borrower:           Play Co. Toys & Entertainment Corp., a Delaware corporation
Address:            550 Rancheros Drive
                    San Marcos,  California  92069

Date:               January 21, 1998

This Schedule forms an integral part of the Loan and Security  Agreement between
the above Borrower and FINOVA Capital  Corporation dated the above date, and all
references  herein and therein to this  "Agreement"  shall be deemed to refer to
said Agreement and to this Schedule.


TOTAL FACILITY (SECTION 2.1):

     The "Total  Facility"  is:  Seven  Million  One  Hundred  Thousand  Dollars
($7,100,000).

     LOANS  (SECTION  2.2):  Revolving  Credit Loans: A revolving line of credit
consisting  of loans  against  Borrower's  Eligible  Inventory  and  against the
Letters of Credit  (collectively,  the "Revolving Credit Loans") in an aggregate
outstanding principal amount not to exceed the sum of (a) and (b) below:

     (a) the lesser of (i) or (ii) below:

     (i) Four Million Six Hundred Thousand Dollars  ($4,600,000) less the amount
of the Loan Reserves; or

     (ii) the sum of

     (A) one of the  following  subparagraphs  (x) or (y),  as  applicable:  (1)
during the calendar  months of January  through and  including  July of: (x) the
first Loan Year,  fifty-five  percent (55%) of the value of Borrower's  Eligible
Inventory, or (y) each subsequent Loan Year, fifty percent (50%) of the value of
Borrower's Eligible  Inventory,  in each case calculated at the lower of cost or
market value and determined on a first-in,  first-out  basis,  or (2) during the
calendar months of August through and including  December of: (x) the first Loan
Year, sixty-five percent (65%) of the value of Borrower's Eligible Inventory, or
(y) each  subsequent  Loan Year,  sixty percent (60%) of the value of Borrower's
Eligible Inventory, in each case calculated at the lower of cost or market value
and determined on a first-in,  first-out basis; less (B) any Loan Reserves, less
(C) an amount equal to the Rent  Reserve,  less (D) an amount equal to the Lease
Termination Reserve; plus (b) the lesser of (i) or (ii) below: (i) Three Million
Dollars  ($3,000,000)  less  the  amount  of the L/C Line  Reserve;  or (ii) the
aggregate  principal  amount of the Letters of Credit less the amount of the L/C
Line Reserve.

     INTEREST AND FEES (SECTION 2.6):  Revolving  Interest Rate.  Borrower shall
pay to FINOVA interest on the daily outstanding balance of Borrower's  Revolving
Credit Loans at a per annum rate of one and one-half  percent  (1.50%) in excess
of the rate of interest announced publicly by Citibank,  N.A., (or any successor
thereto), from time to time as its "prime rate" (the "Prime Rate") which may not
be such  institution's  lowest rate. The interest rate  chargeable  hereunder in
respect of the Revolving  Credit Loans (herein,  the "Revolving  Interest Rate")
shall be increased or decreased, as the case may be, without notice or demand of
any kind, upon the  announcement of any change in the Prime Rate. Each change in
the Prime Rate  shall be  effective  hereunder  on the first day  following  the
announcement  of such  change.  Interest  charges and all other fees and charges
herein  shall be  computed  on the basis of a year of 360 days and  actual  days
elapsed  and shall be  payable  to FINOVA  in  arrears  on the first day of each
month.  Minimum Interest Charge.  With respect to each calendar month or portion
thereof during the term of this Agreement (excluding the calendar month in which
this Agreement is executed), Borrower shall also pay FINOVA, on the first day of
the next  month,  as a minimum  charge,  the  amount by which  accrued  interest
pursuant to the Revolving  Interest Rate section above for such month or portion
thereof is less than  twenty  Five  Thousand  Dollars  ($25,000)  (the  "Minimum
Interest  Charge").  Notwithstanding  the  occurrence  of any  Event of  Default

<PAGE>
hereunder,  the  Minimum  Interest  Charge  shall  be paid by  Borrower  for the
unexpired  portion of the  Initial  Term or any Renewal  Term of this  Agreement
until this Agreement is terminated. Collateral Monitoring Fee. At the closing of
this  transaction  and on the first  day of each  calendar  quarter  thereafter,
Borrower  shall pay FINOVA a fixed  collateral  monitoring  fee of Ten  Thousand
Dollars  ($10,000) per fiscal quarter or portion thereof during the term of this
Agreement ("Collateral  Monitoring Fee"); provided however, that Borrower agrees
and  acknowledges  that each fiscal quarter a full quarter's fee shall be deemed
earned at the beginning of the respective  fiscal  quarter.  Closing Fee. At the
closing of this  transaction,  Borrower  shall pay to FINOVA a closing fee in an
amount equal to one percent (1.0%) of the Total Facility  ("Closing Fee"), which
shall be deemed  fully earned on the date such  payment is due.  Annual  Renewal
Fee. On the first anniversary of the date of this Agreement,  Borrower shall pay
FINOVA a renewal fee in an amount  equal to  one-half of one percent  (0.50%) of
the Total  Facility,  and on each  subsequent  anniversary  of said date, if any
portion of the  Obligations  remains unpaid or  unperformed,  Borrower shall pay
FINOVA a renewal fee in an amount equal to one-quarter of one percent (0.25%) of
the Total  Facility,  (collectively  the "Annual  Renewal Fee"),  which shall be
deemed  fully  earned on the date due and shall be  non-refundable.  Unused Line
Fee. With respect to each fiscal quarter,  or portion thereof during the term of
this  Agreement,  Borrower  shall pay to FINOVA a fee equal to  one-half  of one
percent  (0.50%) per annum of the difference  between the Total Facility and the
average  daily  outstanding  balance of the  Revolving  Credit Loans during such
quarter,  or portion thereof ("Unused Line Fee"),  which fee shall be calculated
and payable quarterly,  in arrears, and shall be due and payable,  commencing on
the first  Business Day of th  Borrower's  first fiscal  quarter  following  the
Closing Date and  continuing  on the first  Business Day of each fiscal  quarter
thereafter. Examination Fee. Borrower agrees to pay to FINOVA an examination fee
in the amount of Six  Hundred  Dollars  ($600) per person per day in  connection
with each audit or examination of Borrower performed by FINOVA prior to or after
the date hereof,  plus all costs and expenses  incurred in connection  therewith
(the  "Examination  Fee").  Without  limiting the  generality of the  foregoing,
Borrower  shall pay to FINOVA an initial  Examination  Fee in an amount equal to
Six  Hundred  Dollars  ($600)  per person  per day,  plu all costs and  expenses
incurred in connection  therewith.  Such initial Examination Fee shall be deemed
fully earned at the time of payment and due and payable upon the closing of this
transaction,  and shall be deducted from any good faith deposit paid by Borrower
to FINOVA  prior to the date of this  Agreement.  Upon the request of  Borrower,
FINOVA will provide Borrower with a breakdown of the costs and expenses incurred
in connection with each audit or examination of Borrower performed by FINOVA.

     CONDITIONS OF CLOSING  (SECTION  4.1): The obligation of FINOVA to make the
initial advance hereunder is subject to the fulfillment,  to the satisfaction of
FINOVA and its counsel, of each of the following conditions,  in addition to the
conditions  set  forth  in  Sections  4.1  and 4.2  above:  (a)  Minimum  Excess
Availability  (Section  4.1(b)).  Not less  than Six  Hundred  Thousand  Dollars
($600,000).  (b) Equity  Investment.  FINOVA  shall have  received  satisfactory
evidence  that,  on or before the  Closing  Date,  Borrower  shall  have  raised
additional  equity of not less than One Million  Five Hundred  Thousand  Dollars
($1,500,000)  either by: (i) having completed a secondary offering of its stock,
raising cash proceeds net to Borrower in such amount,  or (ii) otherwise  having
raised  additional  equity  in  such  amount  from  third-party  investors.  (c)
Landlord's  Waivers.  Borrower  shall have obtained  Landlord's  Waivers for all
locations  where  Collateral is located with the exception of no more than seven
(7) locations; or, for any such location where Borrower is not able to deliver a
Landlord's  Waiver,  FINOVA shall have approved of Borrower's storing Collateral
at such location  (subject to the  application of the Rent Reserve for each such
location).  (d) Letters of Credit. Borrower shall have caused to be delivered to
FINOVA one or more irrevocable and unconditional  letters of credit for FINOVA's
benefit  (each,  together  with  any  substitutions,  renewals  or  replacements
thereof,  a "Letter  of  Credit").  The  Letters  of Credit  shall be: (i) in an
aggregate   amount  of  not  less  than  Three  Million  United  States  Dollars
(US$3,000,000),  (ii) in form and  substance,  and upon such  terms  (including,
without limitation,  acceptable automatic renewa provisions) and subject to such
conditions,  acceptable to FINOVA in its sole  discretion,  (iii) from an issuer
acceptable  to  FINOVA  in its  sole  discretion  (confirmed  or  advised  by an
acceptable domestic bank in FINOVA's sole discretion); and (iv) having an expiry

<PAGE>
not  earlier  than  the  end of the  Initial  Term.  Borrower  shall  cause  the
conditions  precedent  set forth in Section 4.1 of this  Agreement and set forth
above in this  Schedule to be satisfied,  and shall  provide  evidence to FINOVA
that all such conditions precedent have been satisfied, on or before February 3,
1998.

     BORROWER  INFORMATION:  Borrower's  State of  Incorporation  (Section 5.1):
Delaware.

     Borrower's Trademarks,  Copyrights, Licenses and Patents (Section 5.5): See
Exhibit 1 to this Schedule.

     Fictitious Names/Prior Corporate Names (Section 5.2):

     Prior Corporate Names: Play Co. Toys, Inc.

     Fictitious Names/Store Names: See Exhibit 2 to this Schedule.

     Borrower Locations (Section 5.16): See Exhibit 2 to this Schedule.

     Permitted Encumbrances (Section 1.1):

     (a)  Subordinate  lien in all Collateral in favor of  Multimedia,  securing
Borrower's  obligations to Multimedia with respect to Multimedia's providing the
Letters of Credit,  pursuant  to that  certain  Reimbursement  and  Compensation
Agreement dated January 21, 1998.

     (b) Subordinate lien in all of the Collateral in favor of Hoepner, securing
Borrower's obligations to Hoepner with respect to Borrower's acquisition of Toys
International,  securing a remaining balance of not more than One Hundred Twenty
Five Thousand Dollars ($125,000).

     (c) Capital Leases or purchase money financings by and between Borrower and
a lessor,  vendor or their respective  assignees with respect to the purchase of
Equipment or fixtures, provided that the entire principal amount incurred during
any fiscal year does not exceed Seven Hundred Fifty Thousand Dollars ($750,000),
in the aggregate.

     (d)  Subordinate  lien in all of the  Collateral in favor of ABC,  securing
Borrower's obligations to ABC with respect to ABC's providing Letters of Credit,
pursuant  to  that  certain  5%  Convertible,   Callable,  Secured  Subordinated
Debenture dated January 21, 1998.


     FINANCIAL  COVENANTS  (SECTION  6.1.13):  Borrower  shall  comply  with the
following covenant. Compliance shall be determined as of the end of each month:

     Net  Worth:  Borrower  shall  maintain  a Net Worth of not less than  Seven
Hundred Fifty Thousand Dollars  ($750,000).  The foregoing covenant shall tested
without taking into account any  additional  equity  investment or  contribution
made  in or to  Borrower  following  the  Closing  Date;  it  being  agreed  and
understood that the making of an additional equity investment or contribution in
or to Borrower  after the Closing Date shall not constitute a cure of Borrower's
violation of this financial covenant.


     NEGATIVE COVENANTS (SECTION 6.2):

     Employee  Advances:  Borrower  shall  not make any  loans  or  advances  to
employees  except in the ordinary  course of business and  consistent  with past
practices of Borrower in an aggregate  amount  outstanding  not exceeding at any
time Fifty Thousand Dollars ($50,000).
<PAGE>
     Existing Guaranties: None.

     Capital  Expenditures:  Borrower  shall  not  make  or  incur  any  Capital
Expenditure  if, after giving effect thereto,  the aggregate  amount of all cash
Capital  Expenditures  and the full  principal  amount of all  financed  Capital
Expenditures,  incurred by Borrower in any fiscal year  (beginning with the 1998
fiscal year) would exceed One Million Dollars ($1,000,000.00).

     Compensation:   Borrower  shall  not  pay  total  compensation,   including
salaries,  withdrawals,  fees, bonuses, commissions,  drawing accounts and other
payments,  whether  directly or  indirectly,  in money or otherwise,  during any
fiscal year to all of  Borrower's  executives,  officers and  directors  (or any
relative  thereof) in an amount in excess in excess of one  hundred  twenty five
percent  (125%) of such total  compensation  paid in the  immediately  preceding
fiscal year. Indebtedness: Borrower shall not create, incur, assume or permit to
exist any  Indebtedness  (including  Indebtedness  in  connection  with  Capital
Leases) in excess of One Million  Dollars  ($1,000,000),  inclusive of the Seven
Hundred Fifty  Thousand  Dollars  ($750,000) of purchase  money  financings  and
Capital Leases described in the Borrower  Informative  Section of this Schedule,
other  than (i) the  Obligations,  (ii)  trade  payables  and other  contractual
obligations  to  supplier  and  customers  incurred  in the  ordinary  course of
business and (iii) other Indebtedness existing on the date of this Agreement and
constituting a Permitted  Encumbrance  (other than Indebtedness paid on the date
of this  Agreement  from  proceeds of the  initial  advances  hereunder).  Lease
Defaults:   Borrower  shall  not  at  any  time  permit  Borrower's  unsatisfied
obligations,  under  store  leases  that have  been  intentionally  breached  by
Borrower  in  connection  with the closing of stores in the  ordinary  course of
Borrower's  business,  to exceed at any one time Seven  Hundred  Fifty  Thousand
Dollars ($750,000).

REPORTING REQUIREMENTS (SECTION 9.1):

     1. Upon request,  Borrower shall provide FINOVA with monthly agings aged by
invoice date and  reconciliations  of Receivables within fifteen (15) days after
the end of each month (for purposes of this paragraph,  payments received and to
be received by Borrower from credit card companies  (e.g.  Visa,  Mastercard and
American Express) shall be deemed cash rather than a Receivable).

     2. Borrower shall provide FINOVA with monthly  accounts payable agings aged
by due date,  outstanding  or held check  registers and  inventory  certificates
within ten (10) days after the end of each month.

     3. Borrower shall provide FINOVA with monthly  perpetual  inventory reports
for the Inventory valued on a first-in,  first-out basis at the lower of cost or
market  (in  accordance  with  GAAP)  or such  other  inventory  reports  as are
reasonably  requested by FINOVA,  all within ten (10) days after the end of each
month.

     4. Borrower shall provide FINOVA with monthly unaudited internally prepared
financial  statements  within thirty (30) days after the end of each month.  The
monthly financial  statements shall be subject to minor immaterial revisions for
a period of twenty (20) days following their delivery to FINOVA.

     5. Borrower shall provide FINOVA with audited consolidated fiscal financial
statements  within  ninety five (95) days after the end of each fiscal year,  as
more specifically described in Section 9.1(b) hereof, and with an opinion issued
by a Certified Public Accountant which is acceptable to FINOVA.

     6. Borrower shall provide FINOVA with annual operating  budgets  (including
income  statements,  balance sheets and cash flow statements,  by month) for the
upcoming  fiscal  year of Borrower  within  thirty (30) days prior to the end of
each fiscal year of Borrower, subject to year end audit adjustments.

     7.  Borrower's  balance  sheets for purposes of the  definition of Prepared
Financials shall be as of September 30, 1997.
<PAGE>
     TERM (SECTION 9.2):  The initial term of this  Agreement  shall commence on
the Closing Date and end on August 3, 2000 (such period of time being herein the
"Initial Term") and shall be automatically renewed for successive periods of one
(1) year each (each, a "Renewal Term"), unless earlier terminated as provided in
Section 7 or 9.2 above or elsewhere in this Agreement.

     Notwithstanding  anything to the contrary herein contained, the outstanding
principal balance of the Loans and all other Obligations,  if not sooner payable
hereunder, shall in all events be due and payable on the Due Date.

     TERMINATION  FEE  (SECTION  9.2):  Revolving  Credit  Loans  Facility.  The
Termination Fee applicable to the Revolving  Credit Loans facility  provided for
in Section  9.2(d) shall be an amount equal to the  following  percentage of the
average daily outstanding  balance of the Obligations for the 180-day period (or
lesser period if applicable) preceding the date of termination:  (i) two percent
(2.0%), if such early termination occurs on or prior to the first anniversary of
the date of this  Agreement;  and  (ii)  one  percent  (1.0  %),  if such  early
termination occurs after the first anniversary of the date of this Agreement.

     DISBURSEMENT  (SECTION 9.11):  Unless and until Borrower  otherwise directs
FINOVA in writing,  all loans shall be wired to Borrower's  operating account as
set forth on Exhibit 4 to this Schedule.

     ADDITIONAL PROVISIONS:

     1. At Borrower's sole expense,  Borrower shall cause an Inventory appraisal
and audit update to be performed each quarter by Hilco/Great American Group, for
FINOVA's  benefit.  FINOVA  may in  its  sole  discretion  adjust  the  Eligible
Inventory  advance ratio, the Loan Reserves or any other reserves based upon its
review of such inventory appraisal and audit update.



BORROWER:                                     FINOVA:
PLAY CO. TOYS & ENTERTAINMENT CORP., 
a Delaware corporation                        FINOVA CAPITAL CORPORATION,
                                              a Delaware corporation
By: James B. Frakes
Name: James B. Frakes                         By: Philip J. Isom
Its: Secretary                                Name: Philip J. Ison
                                              Its: Assistant Vice President


<PAGE>
                       FINOVA Loan and Security Agreement




                                              EXHIBITS TO THIS SCHEDULE:

Exhibit 1 - Borrower's Trademarks, Copyrights, Licenses and Patents
Exhibit 2 - Borrower's locations where Collateral is stored, and store names
            /trade names associated with such locations
Exhibit 3 - Pending Litigation
Exhibit 4 - Borrower's wiring instructions



<PAGE>

                                  EXHIBIT 1 TO
                           LOAN AND SECURITY AGREEMENT

                                   TRADEMARKS,
                        COPYRIGHTS, LICENSES AND PATENTS





                        TRADEMARKS OWNED BY PLAY CO. TOYS
                  & ENTERTAINMENT CORP., a Delaware corporation

<TABLE>
<CAPTION>

                        Trademark                            Registration No.         Issue Date

<S>                                                              <C>                   <C>   <C>
TUTTI ANIMALI                                                    1,722,723             10/06/92

TOYS INTERNATIONAL (Design)                                      1,872,910             01/10/95





                  TRADEMARKS ORIGINALLY FILED BY PLAY CO. TOYS,
                            a California corporation


                        Trademark                             Registration No.         Issue Date

KNOCK OUT YOUR OPPONENT WITH TKO                                  1,896,335             05/30/95

TKO                                                               1,896,334             05/30/95

P.L. TOYS                                                         1,784,649             07/27/93

PRESCOTT PANDA                                                    1,786,274             08/03/93

PLAY CO.                                                          1,460,385             10/06/87

</TABLE>
<PAGE>


                       FINOVA Loan and Security Agreement




                                  EXHIBIT 2 TO
                           LOAN AND SECURITY AGREEMENT


                           BORROWER'S LOCATIONS WHERE
                              COLLATERAL IS STORED



    STORE NO.
                                                        STORE LOCATION

                                                Los Angeles County, California

       22         Century City
                  10250 Santa Monica Boulevard
                  Los Angeles,  California  90067

        3         Santa Clarita
                  19232 Soledad Canyon Road
                  Santa Clarita,  California  91351

       10         Pasadena
                  885 South Arroya Parkway
                  Pasadena,  California  91105

       20         Woodland Hills
                  19804 Ventura Boulevard
                  Woodland Hills,  California  91364

       24         Toys International
                  Redondo Beach
                  1815 Hawthorne Boulevard, #366
                  Redondo Beach,  California  90277


                                                  Orange County, California

       23         Tutti Anamaili
                  Crystal Court
                  3333 Bear Street
                  Costa Mesa,  California 92626

        4         Santa Margarita
                  27690-B Santa Margarita
                  Mission Viejo,  California  92691

       11         Orange
                  1349 East Katella
                  Orange,  California  92613

       21         South Coast Plaza
                  Suite 1030, South Coast Plaza
                  3333 Bristol Street
                  Costa Mesa,  California  92626

<PAGE>
                                                 Riverside County, California

       19         Corona
                  1210 West Sixth Street
                  Corona,  California  91720


                                              San Bernardino County, California

       15         Redlands
                  837 Tri-City
                  Redlands,  California  92373

       25         Toy Co. Ontario Mills
                  One Mills Circle #302
                  Ontario,  California  91764

       28         Rancho Cucamonga
                  9950 West Foothill Boulevard
                  Rancho Cucamonga,  California  91730


                                                 San Diego County, California

        5         Chula Vista
                  1193 Broadway
                  Chula Vista,  California  92011

        9         Encinitas
                  280 North El Camino Real
                  Encinitas,  California  92024

       16         Clairemont
                  4615-A Clairemont Drive
                  San Diego,  California  92117

        6         El Cajon
                  327 East Magnolia
                  El Cajon, California  92020

       --         Corporate Office
                  550 Rancheros Drive
                  San Marcos,  California  92069


                                                  Ventura County, California

        7         Simi Valley
                  1117 East Los Angeles, #C
                  Simi Valley,  California  93065


                                                   Maricopa County, Arizona

       26         Toy Co.
                  Arizona Mills
                  500 Arizona Mills Circle, #689
                  Tempe,  Arizona  85282








<PAGE>


                                  EXHIBIT 3 TO
                           LOAN AND SECURITY AGREEMENT

                               PENDING LITIGATION


                           Matter  filed by PNS Stores,  Inc. in the Los Angeles
County  California  Superior  Court  pertaining to a contract  action seeking to
enforce the collection of Thirty Nine Thousand Nine Hundred Sixty Six and 92/100
Dollars ($39,966.92) under a sub-lease.

                           Matter filed by Shook Development  Corporation in the
Los Angeles County  California  Superior Court  pertaining to a contract  action
seeking  unspecified damages for unpaid rent and common area maintenance charges
under a lease.

                           Matter  filed  by  Prudential  Insurance  Company  of
America in Orange  County  California  Superior  Court  pertaining to a contract
action  seeking to enforce the  collection  of Fifty Two  Thousand  Five Hundred
Eight Six and 40/100 Dollars ($52,586.40) under a lease.

                           Matter   filed  by   Foothill   Marketplace   in  San
Bernardino  County  California  Superior Court  pertaining to a contract  action
seeking  compensatory damages of Three Hundred Thousand Dollars ($300,000) under
a lease.