NationsCredit Commercial Funding 

                           Loan and Security Agreement

         This  Loan  and  Security  Agreement  (as  it  may  be  amended,   this
"Agreement") is entered into on April 29, 1998 between NATIONSCREDIT  COMMERCIAL
CORPORATION,  THROUGH ITS NATIONSCREDIT  COMMERCIAL FUNDING DIVISION ("Lender"),
having an address at 1177 Avenue of the Americas, 36th Floor, New York, New York
10036 and FLIGHTWAYS  MANUFACTURING,  INC.  ("Borrower"),  whose chief executive
office  is  located  at  7660  Densmore  Avenue,  Van  Nuys,   California  91406
("Borrower's Address").  The Schedules to this Agreement are an integral part of
this  Agreement and are  incorporated  herein by reference.  Terms used, but not
defined elsewhere, in this Agreement are defined in Schedule B.

1.       LOANS AND CREDIT ACCOMMODATIONS.

         1.1  Amount.  Subject  to the terms and  conditions  contained  in this
Agreement, Lender will:

                  (a) Revolving  Loans and Credit  Accommodations.  From time to
time during the Term at Borrower's  request,  make  revolving  loans to Borrower
("Revolving Loans"),  and make letters of credit,  bankers acceptances and other
credit accommodations ("Credit  Accommodations")  available to Borrower, in each
case to the extent  that there is  sufficient  Availability  at the time of such
request to cover,  dollar for dollar,  the  requested  Revolving  Loan or Credit
Accommodation;  provided,  that after giving  effect to such  Revolving  Loan or
Credit  Accommodation,  (x) the outstanding balance of all monetary  Obligations
(including the principal balance of any Term Loan and, solely for the purpose of
determining  compliance with this provision,  the Credit Accommodation  Balance)
will not exceed the Maximum Flightways Facility Amount set forth in Section 1 of
Schedule  A and (y) none of the other  Loan  Limits  set  forth in  Section 1 of
Schedule A will be exceeded. For this purpose, "Availability" means:

                           (i) the aggregate  amount of Eligible  Accounts (less
         maximum existing or asserted taxes, discounts,  credits and allowances)
         multiplied by the Accounts Advance Rate set forth in Section 1(b)(i) of
         Schedule A but not to exceed the Accounts Sublimit set forth in Section
         1(c) of Schedule A;

                                      plus

                           (ii) the  lower of cost or market  value of  Eligible
         Inventory  multiplied  by the  Inventory  Advance  Rate(s) set forth in
         Section  1(b)(ii)  of  Schedule  A,  but not to  exceed  the  Inventory
         Sublimit(s) set forth in Section 1(d) of Schedule A;

                                      minus

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                           (iii)  all  Reserves  which  Lender  has  established
         pursuant  to  Section  1.2  (including   those  to  be  established  in
         connection with the requested Revolving Loan or Credit  Accommodation);
         and


                                     minus

                           (iv) the  outstanding  balance of all of the monetary
         Obligations   (excluding  the  Credit  Accommodation  Balance  and  the
         principal balance of the Term Loan). (b) Term Loan. On the date of this
         Agreement,  make a term  loan to  Borrower  (the  "Term  Loan")  in the
         principal amount, if any, set forth in Section 2(a) of Schedule A.

         1.2  Reserves.  Lender may from time to time  establish and revise such
reserves as Lender deems  appropriate  in its sole  discretion  ("Reserves")  to
reflect  (i) events,  conditions,  contingencies  or risks  which  affect or may
affect (A) the  Collateral  or its value,  or the security  interests  and other
rights of Lender in the  Collateral or (B) the assets,  business or prospects of
Borrower or any Obligor,  (ii) Lender's  good faith concern that any  Collateral
report or  financial  information  furnished  by or on behalf of Borrower or any
Obligor to Lender is or may have been  incomplete,  inaccurate  or misleading in
any material respect,  (iii) any fact or circumstance which Lender determines in
good faith  constitutes,  or could constitute,  a Default or Event of Default or
(iv) any other events or  circumstances  which Lender  determines  in good faith
make the  establishment or revision of a Reserve  prudent.  Without limiting the
foregoing,  Lender shall (x) in the case of each Credit Accommodation issued for
the  purchase of Inventory  (a) which meets the criteria for Eligible  Inventory
set forth in clauses (i), (ii), (iii), (v) and (vi) of Eligible  Inventory,  (b)
which is or will be in  transit  to one of the  locations  set forth in  Section
10(d),  (c) which is fully  insured in a manner  satisfactory  to Lender and (d)
with  respect to which  Lender is in  possession  of all bills of lading and all
other  documentation  which  Lender  has  requested,  all in form and  substance
satisfactory to Lender in its sole discretion,  establish a Reserve equal to the
cost of such Inventory (plus all duties, freight,  taxes,  insurance,  costs and
other  charges  and  expenses  relating  to such  Credit  Accommodation  or such
Eligible Inventory) multiplied by a percentage equal to 100% minus the Inventory
Advance Rate  applicable to Eligible  Inventory and (y) in the case of any other
Credit  Accommodation  issued for any purpose,  establish a Reserve equal to the
full amount of such Credit  Accommodation  plus all costs and other  charges and
expenses relating to such Credit  Accommodation.  In addition,  (x) Lender shall
establish  a  permanent  Reserve  in the  amount  set forth in  Section  1(f) of
Schedule  A, and (y) if the  outstanding  principal  balance  of the  Term  Loan
advance  with  respect to  Eligible  Equipment  exceeds  the  percentage  of the
appraised value of such Eligible Equipment set forth in Section 2(a) of Schedule
A, Lender may establish an additional Reserve in the amount of such excess (and,
for this purpose,  payments of principal of the Term Loan made by Borrower shall
be deemed to apply to the Term Loan advance  with respect to Eligible  Equipment
and Real Property, respectively, in proportion to the original principal amounts
of such advances). Lender may, in its discretion,  establish and revise Reserves
by deducting  them in  determining  Availability  or by  reclassifying  Eligible
Accounts or Eligible Inventory as ineligible.

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         1.3 Other Provisions Applicable to Credit  Accommodations.  Lender may,
in its sole  discretion and on terms and conditions  acceptable to Lender,  make
Credit  Accommodations  available  to  Borrower  either by issuing  them,  or by
causing  other  financial  institutions  to issue  them  supported  by  Lender's
guaranty or indemnification;  provided,  that after giving effect to each Credit
Accommodation,  the  Credit  Accommodation  Balance  will not  exceed the Credit
Accommodation Limit set forth in Section 1(e) of Schedule A. Any amounts paid by
Lender in respect of a Credit  Accommodation will be treated for all purposes as
a Revolving Loan which shall be secured by the Collateral and bear interest, and
be payable,  in the same manner as a Revolving Loan.  Borrower agrees to execute
all documentation  required by Lender or the issuer of any Credit  Accommodation
in connection with any such Credit Accommodation.

         1.4 Repayment.  Accrued interest on all monetary  Obligations  shall be
payable  on the first day of each  month.  Principal  of the Term Loan  shall be
repaid as set forth in  Section  2(b) of  Schedule  A. If at any time any of the
Loan Limits are exceeded,  Borrower will  immediately pay to Lender such amounts
and/or   provide  cash   collateral   to  Lender  with  respect  to  the  Credit
Accommodation  Balance in the manner set forth in Section  7.3,  as shall  cause
Borrower to be in full compliance  with all of the Loan Limits.  Notwithstanding
the  foregoing,  Lender may, in its sole  discretion,  make or permit  Revolving
Loans,  the  Term  Loan,  any  Credit   Accommodations  or  any  other  monetary
Obligations to be in excess of any of the Loan Limits;  provided,  that Borrower
shall, upon Lender's demand,  pay to Lender such amounts as shall cause Borrower
to be in full  compliance  with  all of the Loan  Limits.  All  unpaid  monetary
Obligations  shall be payable in full on the Maturity  Date set forth in Section
7.1 or, if earlier, the date of any early termination pursuant to Section 7.2.

         1.5  Minimum  Borrowing.  Subject to the terms and  conditions  of this
Agreement,  Borrower  agrees  to (i)  borrow  sufficient  amounts  to cause  the
outstanding  principal  balance  of the Loans to equal or  exceed,  at all times
prior to the  Maturity  Date,  the Minimum Loan Amount set forth in Section 4 of
Schedule A and (ii) maintain  Availability  sufficient to enable  Borrower to do
so.  However,  Lender shall not be  obligated to loan  Borrower the Minimum Loan
Amount other than in  accordance  with all of the terms and  conditions  of this
Agreement.

2.       INTEREST AND FEES.

         2.1  Interest.  All Loans and other  monetary  Obligations  shall  bear
interest  at the  Interest  Rate(s) set forth in Section 3 of Schedule A, except
where  expressly  set forth to the  contrary in this  Agreement  or another Loan
Document;  provided, that after the occurrence of an Event of Default, all Loans
and other monetary  Obligations  shall, at Lender's  option,  bear interest at a
rate per  annum  equal  to two  percent  (2%) in  excess  of the rate  otherwise
applicable thereto (the "Default Rate") until paid in full  (notwithstanding the
entry of any  judgment  against  Borrower or the  exercise of any other right or
remedy by Lender), and all such interest shall be payable on demand.  Changes in
the  Interest  Rate shall be effective as of the date of any change in the Prime
Rate.  Notwithstanding anything to the contrary contained in this Agreement, the
aggregate of all amounts deemed to be interest hereunder and charged

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<PAGE>

or collected  by Lender is not  intended to exceed the highest rate  permissible
under any applicable law, but if it should, such interest shall automatically be
reduced to the extent  necessary to comply with  applicable  law and Lender will
refund to Borrower any such excess interest received by Lender.

         2.2 Fees and Warrants.  Borrower  shall pay Lender the following  fees,
and issue Lender the following  warrants,  which are in addition to all interest
and other sums payable by Borrower to Lender under this  Agreement,  and are not
refundable:

                  (a)  Closing  Fee.  A closing  fee in the  amount set forth in
Section 6(a) of Schedule A.

                  (b) Facility  Fees. A facility fee for the Initial Term in the
amount set forth in Section  6(b)(i) of Schedule A (which  shall be fully earned
as of the date of this Agreement and shall be payable in equal installments due,
respectively,  on each  anniversary  thereof  during the  Initial  Term),  and a
facility fee for each  Renewal Term in the amount set forth in Section  6(b)(ii)
of Schedule A (which  shall be fully  earned as of the first day of such Renewal
Term and shall be payable in equal installments due, respectively,  on the first
day of such Renewal  Term and on each  anniversary  thereof  during such Renewal
Term).

                  (c) Servicing  Fee. A monthly  servicing fee in the amount set
forth in Section 6(c) of Schedule A, in consideration of Lender's administration
and other services for each month (or part thereof), which shall be fully earned
as of, and  payable in advance on, the date of this  Agreement  and on the first
day of each month thereafter so long as any of the Obligations are outstanding.

                  (d) Unused  Line Fee.  An unused line fee set forth in Section
6(d) of Schedule A.

                  (e) Minimum  Borrowing  Fee. A minimum  borrowing fee equal to
the excess,  if any, of (i) interest which would have been payable in respect of
each period set forth in Section 6(e) of Schedule A if, at all times during such
period,  the principal balance of the Loans was equal to the Minimum Loan Amount
over (ii) the actual interest payable in respect of such period, which fee shall
be fully  earned as of the first day of such  period and payable on the date set
forth in Section 6(e)(ii) of Schedule A and on the Maturity Date.

                  (f)  Success  Fee.  A success  fee in the  amount set forth in
Section  6(e)(i) of Schedule  A, which  shall be fully  earned as of the date of
this Agreement and payable as set forth in Section 6(f) of Schedule A.

                  (g) Warrants. Warrants to acquire the capital stock of Spares,
as  summarized  in Section  6(g) of  Schedule A and as more fully set forth in a
separate  warrant  agreement  executed  by  Spares  contemporaneously  with this
Agreement.

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<PAGE>

                  (h) Credit  Accommodation  Fees.  All of the fees  relating to
Credit Accommodations set forth in Section 6(i) and 6(j) of Schedule A.

         2.3  Computation  of Interest and Fees.  All interest and fees shall be
calculated daily on the closing balances in the Loan Account based on the actual
number  of days  elapsed  in a year of 360 days.  For  purposes  of  calculating
interest and fees, if the outstanding  daily principal  balance of the Revolving
Loans is a credit balance, such balance shall be deemed to be zero.

         2.4 Loan Account;  Monthly  Accountings.  Lender shall  maintain a loan
account for Borrower  reflecting  all advances,  charges,  expenses and payments
made pursuant to this Agreement (the "Loan Account"), and shall provide Borrower
with a monthly  accounting  reflecting  the activity in the Loan  Account.  Each
accounting  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 Lender),  unless Borrower notifies Lender in
writing to the  contrary  within  sixty days  after  such  account is  rendered,
describing  the nature of any alleged errors or  admissions.  However,  Lender's
failure to maintain the Loan Account or to provide any such accounting shall not
affect the legality or binding nature of any of the Obligations.  Interest, fees
and other monetary  Obligations  due and owing under this  Agreement  (including
fees and other amounts paid by Lender to issuers of Credit  Accommodations) may,
in Lender's  discretion,  be charged to the Loan Account, and will thereafter be
deemed to be  Revolving  Loans and will bear  interest at the same rate as other
Revolving Loans.

3.       SECURITY INTEREST.

         3.1  To  secure  the  full  payment  and  performance  of  all  of  the
Obligations  when due,  Borrower  hereby grants to Lender a continuing  security
interest in all of  Borrower's  property  and  interests  in  property,  whether
tangible or  intangible,  now owned or in  existence  or  hereafter  acquired or
arising,  wherever  located,   including  Borrower's  interest  in  all  of  the
following,  whether or not  eligible  for lending  purposes:  (i) all  Accounts,
Chattel Paper, Instruments,  Documents,  Goods (including Inventory,  Equipment,
farm products and consumer goods),  Investment  Property,  General  Intangibles,
Deposit  Accounts  and  money,  (ii) all  proceeds  and  products  of all of the
foregoing  (including proceeds of any insurance  policies,  proceeds of proceeds
and claims  against  third  parties  for loss or any  destruction  of any of the
foregoing) and (iii) all books and records relating to any of the foregoing.

4.       ADMINISTRATION.

         4.1 Lock Boxes and Blocked  Accounts.  Borrower  will,  at its expense,
establish  (and  revise  from time to time as  Lender  may  require)  collection
procedures acceptable to Lender, in Lender's sole discretion, for the collection
of checks,  wire transfers and other proceeds of Accounts ("Account  Proceeds"),
which may include (i)  directing  all Account  Debtors to send all such proceeds
directly  to a post  office  box  designated  by  Lender  either  in the name of
Borrower (but as to which Lender has exclusive  access) or in the name of Lender
(a "Lock

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<PAGE>

Box") or (ii) depositing all Account  Proceeds  received by Borrower into one or
more bank  accounts  maintained in Lender's  name (each,  a "Blocked  Account"),
under an arrangement  acceptable to Lender with a depository  bank acceptable to
Lender,  pursuant to which all funds  deposited into each Blocked Account are to
be  transferred  to Lender in such manner,  and with such  frequency,  as Lender
shall  specify  or (iii) a  combination  of the  foregoing.  Borrower  agrees to
execute, and to cause its depository banks to execute, such Lock Box and Blocked
Account agreements and other  documentation as Lender shall require from time to
time in connection with the foregoing.

         4.2  Remittance  of  Proceeds.  Except as provided in Section  4.1, all
proceeds  arising from the sale or other  disposition of any Collateral shall be
delivered, in kind, by Borrower to Lender in the original form in which received
by Borrower not later than the second  Business  Day after  receipt by Borrower.
Until so delivered to Lender,  Borrower  shall hold such  proceeds  separate and
apart from  Borrower's  other funds and property in an express trust for Lender.
Nothing in this  Section  4.2 shall limit the  restrictions  on  disposition  of
Collateral set forth elsewhere in this Agreement.

         4.3 Application of Payments. Lender may, in its sole discretion, apply,
reverse and  re-apply  all cash and  non-cash  proceeds of  Collateral  or other
payments  received with respect to the Obligations,  in such order and manner as
Lender  shall  determine,  whether or not the  Obligations  are due, and whether
before or after the occurrence of a Default or an Event of Default. For purposes
of determining  Availability,  such amounts will be credited to the Loan Account
and the Collateral balances to which they relate upon Lender's receipt of advice
from  Lender's Bank (set forth in Section 11 of Schedule A) that such items have
been credited to Lender's  account at Lender's  Bank (or upon  Lender's  deposit
thereof at Lender's Bank in the case of payments received by Lender in kind), in
each case  subject to final  payment and  collection.  However,  for purposes of
computing  interest on the  Obligations,  such items shall be deemed  applied by
Lender  one and  one-half  Business  Days  after  Lender's  receipt of advice of
deposit thereof at Lender's Bank.

         4.4 Notification;  Verification.  Lender or its designee may, from time
to time,  whether or not a Default or Event of Default has occurred:  (i) verify
directly  with the  Account  Debtors  the  validity,  amount  and other  matters
relating to the  Accounts  and Chattel  Paper,  by means of mail,  telephone  or
otherwise, either in the name of Borrower or Lender or such other name as Lender
may choose;  (ii) notify Account Debtors that Lender has a security  interest in
the  Accounts  and that payment  thereof is to be made  directly to Lender;  and
(iii) demand,  collect or enforce payment of any Accounts and Chattel Paper (but
without any duty to do so).

         4.5 Power of Attorney.  Borrower hereby grants to Lender an irrevocable
power of attorney,  coupled with an interest,  authorizing and permitting Lender
(acting  through any of its officers,  employees,  attorneys or agents),  at any
time  (whether  or not a  Default  or  Event  of  Default  has  occurred  and is
continuing, except as expressly provided below), at Lender's option, but without
obligation, with or without notice to Borrower, and at Borrower's expense, to do
any or all of the  following,  in Borrower's  name or otherwise:  (i) execute on
behalf of

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Borrower any documents that Lender may, in its sole  discretion,  deem advisable
in order to perfect and maintain Lender's security  interests in the Collateral,
to  exercise a right of  Borrower  or  Lender,  or to fully  consummate  all the
transactions  contemplated  by this  Agreement  and  the  other  Loan  Documents
(including such financing statements and continuation financing statements,  and
amendments  thereto,  as Lender shall deem necessary or appropriate) and to file
as a financing  statement any copy of this Agreement or any financing  statement
signed by Borrower;  (ii) execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase,  sell or otherwise  dispose of
or lease (as lessor or lessee)  any real or personal  property  which is part of
the  Collateral  or in which Lender has an interest;  (iii) execute on behalf of
Borrower any invoices  relating to any  Accounts,  any draft against any Account
Debtor and any notice to any Account  Debtor,  any proof of claim in bankruptcy,
any  notice  of  Lien  or  claim,  assignment  or  satisfaction  of  mechanic's,
materialman's  or other Lien;  (iv)  receive and  otherwise  take control in any
manner of any cash or non-cash items of payment or proceeds of  Collateral;  (v)
endorse Borrower's name on all checks and other forms of remittances received by
Lender;  (vi) pay,  contest or settle any Lien,  charge,  encumbrance,  security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon,  or otherwise take any action to terminate or discharge the same; (vii)
after the occurrence of a Default or Event of Default,  grant extensions of time
to pay,  compromise  claims relating to, and settle Accounts,  Chattel Paper and
General  Intangibles for less than face value and execute all releases and other
documents in  connection  therewith;  (viii) pay any sums required on account of
Borrower's  taxes or to secure the release of any Liens  therefor;  (ix) pay any
amounts  necessary  to  obtain,  or  maintain  in effect,  any of the  insurance
described  in Section  5.13;  (x) settle and adjust,  and give  releases of, any
insurance  claim  that  relates  to any of the  Collateral  and  obtain  payment
therefor;  (xi)  instruct  any third  party  having  custody  or  control of any
Collateral or books or records  belonging  to, or relating to,  Borrower to give
Lender the same rights of access and other rights with respect thereto as Lender
has under this  Agreement;  and (xii) after the occurrence of a Default or Event
of Default,  change the address for  delivery of  Borrower's  mail in respect of
payments  from  Account  Debtors  and  receive  and open all mail  addressed  to
Borrower;  provided,  that  Lender  shall  promptly  forward  all other  mail of
Borrower to Borrower at its address set forth in Section  9.1.  Any and all sums
paid, and any and all costs, expenses,  liabilities,  obligations and reasonable
attorneys' fees incurred, by Lender with respect to the foregoing shall be added
to and become  part of the  Obligations,  shall be payable on demand,  and shall
bear interest at a rate equal to the highest  interest rate applicable to any of
the Obligations.  Borrower agrees that Lender's rights under the foregoing power
of attorney or any of Lender's  other rights  under this  Agreement or the other
Loan  Documents  shall not be construed to indicate that Lender is in control of
the business, management or properties of Borrower.

         4.6 Disputes.  Borrower shall promptly notify Lender of all disputes or
claims  relating  to Accounts  and Chattel  Paper.  Borrower  will not,  without
Lender's  prior  written  consent,  compromise  or settle any Account or Chattel
Paper for less than the full  amount  thereof,  grant any  extension  of time of
payment  of any  Account  or Chattel  Paper,  release  (in whole or in part) any
Account Debtor or other person liable for the payment of any Account or Chattel

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Paper  or  grant  any  credits,  discounts,   allowances,   deductions,   return
authorizations or the like with respect to any Account or Chattel Paper;  except
that prior to an Event of Default  Borrower  may do such things in the  ordinary
course of business.  Borrower will promptly report any such permitted settlement
or forgiveness to Lender.

         4.7 Invoices. At Lender's request, Borrower will cause all invoices and
statements  which it sends to  Account  Debtors  or other  third  parties  to be
marked,  in a manner  satisfactory  to  Lender,  to  reflect  Lender's  security
interest therein.

         4.8 Inventory.

                  (a)  Returns.  Provided  that no Event of Default has occurred
and is  continuing,  if any Account  Debtor returns any Inventory to Borrower in
the ordinary course of its business, Borrower will promptly determine the reason
for such return and promptly issue a credit  memorandum to the Account Debtor in
the appropriate  amount  (sending a copy to Lender).  After the occurrence of an
Event of Default,  Borrower will not accept any return  without  Lender's  prior
written  consent.  Regardless  of  whether  an Event of  Default  has  occurred,
Borrower will, until such time as Borrower has issued a credit memorandum to the
Account  Debtor,  (i) hold the  returned  Inventory  in trust for  Lender;  (ii)
segregate all returned  Inventory from all of Borrower's  other property;  (iii)
conspicuously  label the  returned  Inventory  as  Lender's  property;  and (iv)
immediately notify Lender of the return of such Inventory, specifying the reason
for such return,  the location and condition of the returned  Inventory  and, at
Lender's  request,  deliver  such  returned  Inventory  to Lender at an  address
specified by Lender.

                  (b) Other Covenants. Borrower will not, without Lender's prior
written  consent,   (i)  store  any  Inventory  or  other  Collateral  with  any
warehouseman  or other third  party  other than as set forth in Section  9(d) of
Schedule A or (ii) sell any  Inventory  on a  sale-or-return,  guaranteed  sale,
consignment,  or other contingent basis. Borrower will produce Inventory only in
accordance with the Fair Labor Standards Act of 1938 as amended,  and all rules,
regulations and orders promulgated thereunder.

         4.9 Access to Collateral,  Books and Records.  At reasonable times, and
on one Business  Day's notice,  prior to the occurrence of a Default or an Event
of Default, and at any time and with or without notice after the occurrence of a
Default or an Event of  Default,  Lender or its  agents  shall have the right to
inspect the Collateral,  and the right to examine and copy Borrower's  books and
records. Lender shall take reasonable steps to keep confidential all information
obtained in any such inspection or examination,  but Lender shall have the right
to disclose any such information to its auditors, regulatory agencies, attorneys
and participants, and pursuant to any subpoena or other legal process; provided,
however, that if Lender is required to disclose any such information pursuant to
any  subpoena or other  legal  process,  Lender  shall  notify  Borrower of such
required  disclosure and Lender shall refrain from making such disclosure  until
the earlier of Borrower's  consent thereto and the date immediately prior to the
expiration of the period in which Lender must comply with such subpoena or other
legal process, during which time Borrower shall be entitled to pursue all

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remedies  available to Borrower to delay or prevent such  disclosure;  provided,
further,  that  Lender  shall not be liable for any  damages  or other  costs or
expenses  resulting  from any action of Borrower  under this  Section  4.9,  and
Borrower  agrees to  indemnify  Lender  for any losses  incurred  by Lender as a
result of any such actions by Borrower under this Section 4.9.  Borrower  agrees
to give Lender access to any or all of  Borrower's  premises to enable Lender to
conduct such  inspections and  examinations.  Such  inspections and examinations
shall be at Borrower's  expense and the charge therefor shall be $650 per person
per day (or such higher amount as shall represent Lender's then current standard
charge),  plus  reasonable  out-of-pockets  expenses.  Lender may, at Borrower's
expense,  use  Borrower's  personnel,  computer and other  equipment,  programs,
printed  output and  computer  readable  media,  supplies  and  premises for the
collection, sale or other disposition of Collateral to the extent Lender, in its
sole discretion,  deems appropriate.  Borrower hereby irrevocably authorizes all
accountants  and third parties to disclose and deliver to Lender,  at Borrower's
expense, all financial information,  books and records, work papers,  management
reports and other  information in their  possession  regarding  Borrower and not
subject to professional privilege, such as attorney-client  privilege.  Borrower
will not enter into any agreement  with any accounting  firm,  service bureau or
third  party to store  Borrower's  books or records at any  location  other than
Borrower's  Address  without first  obtaining  Lender's  written  consent (which
consent may be conditioned  upon such accounting  firm,  service bureau or other
third party  agreeing  to give Lender the same rights with  respect to access to
books and records and related rights as Lender has under this Agreement).

5.       REPRESENTATIONS, WARRANTIES AND COVENANTS.

         To induce  Lender to enter into this  Agreement,  Borrower  represents,
warrants  and  covenants  as  follows  (it being  understood  that (i) each such
representation  and warranty  will be deemed remade as of the date on which each
Loan is made and each Credit Accommodation is provided and shall not be affected
by any knowledge of, or any investigation  by, Lender,  and (ii) compliance with
each such covenant will be a condition to each Loan and Credit Accommodation:

         5.1  Existence  and  Authority.  Borrower  is duly  organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation or formation. Borrower is qualified and licensed to do business in
all  jurisdictions  in which any failure to do so would have a material  adverse
effect on Borrower. The execution,  delivery and performance by Borrower of this
Agreement  and all of the  other  Loan  Documents  have  been  duly and  validly
authorized,  do not violate Borrower's articles or certificate of incorporation,
by-laws  or  other  organizational  documents,  or any law or any  agreement  or
instrument or any court order which is binding upon Borrower or its property, do
not constitute  grounds for acceleration of any indebtedness or obligation under
any agreement or instrument which is binding upon Borrower or its property,  and
do not require the consent of any  Person.  This  Agreement  and such other Loan
Documents have been duly executed and delivered by, and are enforceable against,
Borrower, and all other Obligors who have signed them, in accordance with their

                                       9
<PAGE>

respective terms.  Sections 9(g) and 9(h) of Schedule A sets forth the ownership
of Borrower and its Subsidiaries as of the date of this Agreement.

         5.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this  Agreement  is its correct and  complete  legal name.  Listed in
Section 9 of Schedule A are all prior names of  Borrower  and all of  Borrower's
present  and prior  trade  names.  Borrower  shall give Lender at least 30 days'
prior written notice before  changing its name or doing business under any other
name.  Borrower has complied  with all laws  relating to the conduct of business
under a fictitious  business name.  Borrower represents and warrants that (i) to
the best of its knowledge, each trade name does not refer to another corporation
or other legal entity; (ii) all Accounts invoiced under any such trade names are
owned exclusively by Borrower and are subject to the security interest of Lender
and the other  terms of this  Agreement  and (iii) all  schedules  of  Accounts,
including  any sales made or services  rendered  using the trade name shall show
Borrower's name as assignor.

         5.3  Title  to  Collateral;  Permitted  Liens.  Borrower  has  good and
marketable  title to the Collateral.  The Collateral now is and will remain free
and clear of any and all liens,  charges,  security interests,  encumbrances and
adverse claims, except for Permitted Liens. Lender now has, and will continue to
have, a first-priority perfected and enforceable security interest in all of the
Collateral,  subject only to the Permitted Liens, and Borrower will at all times
defend  Lender and the  Collateral  against  all  claims of others.  None of the
Collateral which is Equipment is or will be affixed to any real property in such
a manner, or with such intent, as to become a fixture.  Borrower is not a lessee
under any real property lease pursuant to which the lessor may obtain any rights
in any of the Collateral, and no such lease now prohibits, restrains, impairs or
conditions, or will prohibit, restrain, impair or condition, Borrower's right to
remove any  Collateral  from the leased  premises.  Whenever any  Collateral  is
located  upon  premises  in which any third  party has an  interest  (whether as
owner,  mortgagee,  beneficiary  under a deed  of  trust,  lien  or  otherwise),
Borrower  shall,  whenever  requested by Lender,  cause each such third party to
execute and deliver to Lender,  in form  acceptable to Lender,  such waivers and
subordinations as Lender shall specify,  so as to ensure that Lender's rights in
the Collateral  are, and will continue to be, superior to the rights of any such
third party.  Borrower will keep in full force and effect,  and will comply with
all the terms of, any lease of real property  where any of the Collateral now or
in the future may be located.

         5.4 Accounts and Chattel  Paper.  As of each date reported by Borrower,
all Accounts which  Borrower has reported to Lender as being  Eligible  Accounts
comply in all respects with the criteria for  eligibility  established by Lender
and in effect at such time.  Should an Account  that has been  reported  in good
faith as an  Eligible  Account  subsequently  be  determined  to be  ineligible,
Borrower  will  have 15 days to fix the  error by  providing  a new  report  not
including that Account and no Event of Default shall have occurred provided that
the amount advanced to Borrower does not exceed  Availability.  All Accounts and
Chattel Paper are genuine and in all respects what they purport to be, arise out
of a completed, bona fide and unconditional and non-contingent sale and delivery
of goods or rendition of services

                                       10
<PAGE>

by Borrower in the ordinary  course of its business and in  accordance  with the
terms and  conditions  of all  purchase  orders,  contracts  or other  documents
relating thereto, each Account Debtor thereunder had the capacity to contract at
the time any contract or other document giving rise to such Accounts and Chattel
Paper were  executed,  and the  transactions  giving rise to such  Accounts  and
Chattel  Paper  comply  with all  applicable  laws and  governmental  rules  and
regulations.

         5.5  Investment  Property.  Borrower  will  take  any and  all  actions
required  or  requested  by Lender,  from time to time,  to (i) cause  Lender to
obtain exclusive  control of any Investment  Property in a manner  acceptable to
Lender and (ii) obtain from any issuers of  Investment  Property  and such other
Persons as Lender shall specify, for the benefit of Lender, written confirmation
of Lender's  exclusive  control over such Investment  Property.  For purposes of
this Section 5.5, Lender shall have exclusive control of Investment  Property if
(A) such Investment  Property  consists of certificated  securities and Borrower
delivers such certificated  securities to Lender (with appropriate  endorsements
if such  certificated  securities are in registered  form);  (B) such Investment
Property consists of uncertificated  securities and either (x) Borrower delivers
such  uncertificated  securities  to Lender or (y) the  issuer  thereof  agrees,
pursuant to documentation in form and substance  satisfactory to Lender, that it
will comply with  instructions  originated by Lender without  further consent by
Borrower, and (C) such Investment Property consists of security entitlements and
either (x) Lender becomes the entitlement  holder thereof or (y) the appropriate
securities  intermediary agrees, pursuant to documentation in form and substance
satisfactory to Lender,  that it will comply with entitlement  orders originated
by Lender without further consent by Borrower.

         5.6 Place of Business;  Location of Collateral.  Borrower's  Address is
Borrower's chief executive office and the location of its books and records.  In
addition, except as provided in the immediately following sentence, Borrower has
places of business and  Collateral  located only at the  locations  set forth on
Sections  9(d) and 9(e) of  Schedule  A.  Borrower  will give Lender at least 30
days' prior written  notice  before  opening any  additional  place of business,
changing its chief executive office or the location of its books and records, or
moving any of the Collateral to a location other than Borrower's  Address or one
of the  locations  set forth in  Sections  9(d) and 9(e) of Schedule A, and will
execute and deliver all financing  statements and other agreements,  instruments
and documents which Lender shall require as a result thereof.

         5.7  Financial   Condition,   Statements  and  Reports.  All  financial
statements delivered to Lender by or on behalf of Borrower have been prepared in
conformity  with GAAP and completely and fairly reflect the financial  condition
of Borrower in all material  respects,  at the times and for the periods therein
stated (subject to year-end  adjustments).  Between the last date covered by any
such financial statement provided to Lender and the date hereof,  there has been
no material  adverse change in the financial  condition or business of Borrower.
Borrower  is  solvent  and  able to pay its  debts  as they  come  due,  and has
sufficient  capital to carry on its business as now conducted and as proposed to
be conducted.  All schedules,  reports and other  information and  documentation
delivered by Borrower to Lender

                                       11
<PAGE>

with respect to the Collateral  are, or will be, when delivered,  true,  correct
and  complete  as of the date  delivered  or the date  specified  therein in all
material respects.

         5.8 Tax Returns  and  Payments;  Pension  Contributions.  Borrower  has
timely  filed all tax returns  and  reports  required  by  applicable  law,  and
Borrower  has  timely  paid all  applicable  taxes,  assessments,  deposits  and
contributions  now or in the future owed by  Borrower.  Borrower  may,  however,
defer payment of any contested taxes; provided,  that Borrower (i) in good faith
contests  Borrower's  obligation  to pay such taxes by  appropriate  proceedings
promptly and  diligently  instituted  and  conducted;  (ii)  notifies  Lender in
writing  of  the  commencement   of,  and  any  material   development  in,  the
proceedings;  (iii) posts  bonds or takes any other  steps  required to keep the
contested  taxes  from  becoming  a Lien  upon  any of the  Collateral  and (iv)
maintains  adequate  reserves  therefor  in  conformity  with GAAP.  Borrower is
unaware of any claims or  adjustments  proposed for any of Borrower's  prior tax
years  which  could  result in  additional  taxes  becoming  due and  payable by
Borrower. Borrower has paid, and shall continue to pay, all amounts necessary to
fund all present and future  pension,  profit sharing and deferred  compensation
plans in  accordance  with their  terms,  and Borrower  has not  withdrawn  from
participation in, permitted partial or complete termination of, or permitted the
occurrence  of any other event with respect to, any such plan which could result
in any liability of Borrower,  including  any  liability to the Pension  Benefit
Guaranty  Corporation or any other governmental  agency.  Borrower shall, at all
times,  utilize the services of an outside  payroll  service  providing  for the
automatic deposit of all payroll taxes payable by Borrower.

         5.9  Compliance  with  Laws.  Borrower  has  complied  in all  material
respects with all provisions of all applicable laws and  regulations,  including
those relating to Borrower's ownership of real or personal property, the conduct
and  licensing of Borrower's  business,  the payment and  withholding  of taxes,
ERISA and other employee matters, safety and environmental matters.

         5.10  Litigation.  Section  9(f) of  Schedule A  discloses  all claims,
proceedings,  litigation or investigations pending or (to the best of Borrower's
knowledge)  threatened against Borrower.  There is no claim,  suit,  litigation,
proceeding or  investigation  pending or (to the best of  Borrower's  knowledge)
threatened  by or  against  or  affecting  Borrower  in any court or before  any
governmental  agency (or any basis therefor known to Borrower) which may result,
either  separately or in the  aggregate,  in any material  adverse change in the
financial  condition or business of Borrower,  or in any material  impairment in
the  ability of  Borrower to carry on its  business  in  substantially  the same
manner as it is now being  conducted.  Borrower will  promptly  inform Lender in
writing of any claim,  proceeding,  litigation  or  investigation  in the future
threatened or instituted by or against Borrower.

         5.11 Use of Proceeds. All proceeds of all Loans will be used solely for
lawful business purposes.

         5.12 Insurance.  Borrower will at all times carry  property,  liability
and other  insurance,  with  insurers  acceptable  to  Lender,  in such form and
amounts, and with such deductibles

                                       12
<PAGE>

and other  provisions,  as Lender  shall  require,  and  Borrower  will  provide
evidence of such  insurance  to Lender,  so that Lender is  satisfied  that such
insurance is, at all times,  in full force and effect.  Each property  insurance
policy shall name Lender as loss payee and shall contain a lender's loss payable
endorsement in form acceptable to Lender,  each liability insurance policy shall
name Lender as an additional insured, and each business  interruption  insurance
policy  shall be  collaterally  assigned  to Lender,  all in form and  substance
satisfactory  to Lender.  All policies of insurance  shall provide that they may
not be  cancelled or changed  without at least  thirty (30) days' prior  written
notice to Lender, shall contain breach of warranty coverage, and shall otherwise
be in form and substance satisfactory to Lender. Upon receipt of the proceeds of
any such  insurance,  Lender  shall  apply such  proceeds  in  reduction  of the
Obligations  as Lender shall  determine in its sole  discretion.  Borrower  will
promptly deliver to Lender copies of all reports made to insurance companies.

         5.13 Financial and Collateral Reports.  Borrower has kept and will keep
adequate  records and books of account with  respect to its business  activities
and the  Collateral  in which proper  entries are made in  accordance  with GAAP
reflecting  all its  financial  transactions,  and will cause to be prepared and
furnished to Lender the following  (all to be prepared in accordance  with GAAP,
unless Borrower's  certified public accountants concur in any change therein and
such change is disclosed to Lender and is consistent with GAAP):

                  (a) Collateral  Reports. On or before the fifteenth (15th) day
of each  month,  an  aging of  Borrower's  Accounts,  Chattel  Paper  and  notes
receivable, and weekly inventory reports, if any, all in such form, and together
with such additional certificates,  schedules and other information with respect
to the  Collateral  or the business of Borrower or any Obligor,  as Lender shall
request,  in each case,  with  respect to any items that  exceed  dollar  limits
established  by Lender either orally or in writing from time to time;  provided,
that  Borrower's  failure to execute  and  deliver  the same shall not affect or
limit Lender's security  interests and other rights in any of the Accounts,  nor
shall Lender's  failure to advance or lend against a specific  Account affect or
limit Lender's  security  interest and other rights therein.  Together with each
such schedule, Borrower shall furnish Lender, upon its request, with copies (or,
at Lender's request,  originals) of all contracts,  orders,  invoices, and other
similar documents,  and all original shipping  instructions,  delivery receipts,
bills of  lading,  and other  evidence  of  delivery,  for any goods the sale or
disposition  of which gave rise to such  Accounts,  and  Borrower  warrants  the
genuineness  of all of the  foregoing.  In addition,  Borrower  shall deliver to
Lender,  upon its request,  the  originals of all  Instruments,  Chattel  Paper,
security  agreements,  guaranties and other documents and property evidencing or
securing any Accounts,  immediately upon receipt thereof and in the same form as
received,  with all  necessary  endorsements.  Lender may  destroy or  otherwise
dispose  of all  documents,  schedules  and  other  papers  delivered  to Lender
pursuant to this Agreement (other than originals of Instruments,  Chattel Paper,
security  agreements,  guaranties and other documents and property evidencing or
securing any Accounts) six months after Lender  receives them,  unless  Borrower
requests  their  return in writing in advance and  arranges  for their return to
Borrower at Borrower's expense.

                                       13
<PAGE>

                  (b) Annual Statements. Not later than one hundred twenty (120)
days after the close of each fiscal year of Borrower,  unqualified (except for a
qualification  for a change in accounting  principles  with which the accountant
concurs) audited financial statements of Borrower and its Subsidiaries as of the
end of such year, on a consolidated and consolidating basis, certified by a firm
of independent  certified public accountants of recognized  standing selected by
Borrower but acceptable to Lender, together with a copy of any management letter
issued in connection therewith;

                  (c) Interim  Statements.  Not later than twenty-five (25) days
after the end of each month  hereafter which is not the last month of a calendar
quarter,  and  forty-five  (45) days after the last day of a  calendar  quarter,
including the last month of Borrower's fiscal year,  unaudited interim financial
statements of Borrower and its  Subsidiaries  as of the end of such month and of
the  portion of  Borrower's  fiscal year then  elapsed,  on a  consolidated  and
consolidating basis, certified by the principal financial officer of Borrower as
prepared  in  accordance  with  GAAP  and  fairly  presenting  the  consolidated
financial  position and results of operations  of Borrower and its  Subsidiaries
for such  month and period  subject  only to  changes  from  audit and  year-end
adjustments and except that such statements need not contain notes;

                  (d) Projections.  No later than the end of each fiscal year of
Borrower,  such  projections of the business of Borrower and its Subsidiaries as
Lender shall request from time to time;

                  (e) Shareholder  Reports,  Etc.  Promptly after the sending or
filing thereof,  as the case may be, copies of any proxy  statements,  financial
statements or reports which Borrower has made available to its  shareholders and
copies of any regular,  periodic and special reports or registration  statements
which  Borrower  files  with  the  Securities  and  Exchange  Commission  or any
governmental  authority  which  may be  substituted  therefor,  or any  national
securities exchange;

                  (f) ERISA  Reports.  Upon  request  by  Lender,  copies of any
annual report to be filed  pursuant to the  requirements  of ERISA in connection
with each plan subject thereto; and

                  (g)  Other  Information.   Such  other  data  and  information
(financial and otherwise) as Lender,  from time to time, may reasonably request,
bearing  upon  or  related  to the  Collateral  or  Borrower's  and  each of its
Subsidiary's financial condition or results of operations.

         Concurrently with the delivery of the financial statements described in
clause (b) above,  Borrower  shall forward to Lender a copy of the  accountants'
letter  to  Borrower's  management  that is  prepared  in  connection  with such
financial statements.

         5.14 Litigation Cooperation.  Should any third-party suit or proceeding
be  instituted  by or against  Lender with respect to any  Collateral  or in any
manner  relating to Borrower,  Borrower shall,  without expense to Lender,  make
available Borrower and its officers,  employees and agents, and Borrower's books
and records, without charge, to the extent that

                                       14
<PAGE>

Lender may deem them  reasonably  necessary  in order to prosecute or defend any
such suit or proceeding.

         5.15 Maintenance of Collateral,  Etc. Borrower will maintain all of its
Equipment  in good  working  condition,  ordinary  wear and tear  excepted,  and
Borrower will not use the  Collateral  for any unlawful  purpose.  Borrower will
immediately  advise  Lender in  writing  of any  material  loss or damage to the
Collateral and of any investigation,  action, suit, proceeding or claim relating
to the  Collateral  or which may result in an  adverse  impact  upon  Borrower's
business, assets or financial condition.

         5.16  Notification of Changes.  Borrower will promptly notify Lender in
writing of any change in its officers or directors,  the opening of any new bank
account or other deposit account, or any material adverse change in the business
or  financial  affairs of Borrower or the  existence of any  circumstance  which
would make any  representation  or warranty of Borrower  untrue in any  material
respect or constitute a material breach of any covenant of Borrower.

         5.17 Further  Assurances.  Borrower agrees,  at its expense to take all
actions,  and  execute  or cause to be  executed  and  delivered  to Lender  all
promissory notes, security agreements, agreements with landlords, mortgagees and
processors and other bailees,  subordination  and  intercreditor  agreements and
other  agreements,  instruments and documents as Lender may request from time to
time, to perfect and maintain Lender's security  interests in the Collateral and
to fully effectuate the transactions contemplated by this Agreement.

         5.18 Negative  Covenants.  Borrower will not,  without  Lender's  prior
written consent which consent will not be unreasonably  withheld or delayed, (i)
merge or consolidate with another Person, form any new Subsidiary or acquire any
interest in any Person; (ii) acquire any assets except in the ordinary course of
business  and as  otherwise  permitted  by this  Agreement  and the  other  Loan
Documents;  (iii)  enter into any  transaction  outside the  ordinary  course of
business;  (iv) sell or transfer any  Collateral  or other  assets,  except that
Borrower  may sell  finished  goods  Inventory  in the  ordinary  course  of its
business;  (v) make any loans to, or investments in, any other Person (including
without  limitation  any Other  Borrower)  in the form of money or other  assets
except for the loan existing on the date hereof and set forth in Section 9(i) of
Schedule A; (vi) incur any debt outside the ordinary  course of business  except
the debt  existing on the date hereof and set forth in Section  9(j) of Schedule
A; (vii) guaranty or otherwise  become liable with respect to the obligations of
another  party  or  entity;  (viii)  pay  or  declare  any  dividends  or  other
distributions  on Borrower's  stock,  if Borrower is a  corporation  (except for
dividends  payable  solely in capital  stock of Borrower) or with respect to any
equity  interests,  if  Borrower  is not a  corporation;  (ix)  redeem,  retire,
purchase or otherwise acquire, directly or indirectly, any of Borrower's capital
stock or other  equity  interests;  (x) make any  change in  Borrower's  capital
structure (except for a transfer of the ownership of all of the capital stock of
Borrower from Spares to Aero Management pursuant to documentation  acceptable to
Lender in its sole  discretion);  (xi) dissolve or elect to dissolve;  (xii) pay
any  principal or interest on any  indebtedness  owing to an  Affiliate,  (xiii)
enter into

                                       15
<PAGE>

any  transaction  with an Affiliate  other than on arms-length  terms;  or (xiv)
agree to do any of the foregoing.

         5.19 Financial Covenants.

                  (a) Capital  Expenditures.  Borrower will not expend or commit
to expend,  directly or indirectly,  for capital expenditures (including capital
lease obligations) in excess of the amount set forth in Section 8(a) of Schedule
A as the Capital Expenditure Limitation in any fiscal year.

                  (b) Net Worth. Borrower will at all times maintain a net worth
of at least the amount set forth in Section  8(b) of  Schedule A as the  Minimum
Net Worth Requirement.

                  (c)  Working  Capital.  Borrower  will at all  times  maintain
working  capital of at least the amount set forth in Section  8(c) of Schedule A
as the Minimum Working Capital Requirement.

                  (d) Other Financial  Covenants.  Borrower will comply with any
additional financial covenants set forth in Section 8(f) of Schedule A.

6.       RELEASE AND INDEMNITY.

         6.1 Release.  Borrower  hereby  releases  Lender and its Affiliates and
their respective directors,  officers,  employees,  attorneys and agents and any
other Person  affiliated  with or representing  Lender (the "Released  Parties")
from any and all liability  arising from acts or omissions  under or pursuant to
this  Agreement,  whether based on errors of judgment or mistake of law or fact,
except for those arising from gross negligence or willful  misconduct.  However,
in no circumstance  will any of the Released  Parties be liable for lost profits
or other  special or  consequential  damages.  Such  release is made on the date
hereof  and  remade  upon each  request  for a Loan or Credit  Accommodation  by
Borrower. Without limiting the foregoing:

                  (a)  Lender  shall  not be  liable  for  (i) any  shortage  or
discrepancy  in, damage to, or loss or  destruction  of, any goods,  the sale or
other  disposition  of which  gave  rise to an  Account;  (ii) any  error,  act,
omission,  or delay of any kind occurring in the settlement,  failure to settle,
collection or failure to collect any Account; (iii) settling any Account in good
faith  for  less  than  the  full  amount  thereof;  or (iv)  any of  Borrower's
obligations under any contract or agreement giving rise to an Account; and

                  (b) In connection with Credit Accommodations or any underlying
transaction,  Lender shall not be responsible for the conformity of any goods to
the documents  presented,  the validity or genuineness of any documents,  delay,
default or fraud by Borrower,  shippers and/or any other Person. Borrower agrees
that any action taken by Lender,  if taken in good faith, or any action taken by
an issuer of any Credit  Accommodation,  under or in connection  with any Credit
Accommodation,  shall be binding on Borrower and shall not create any  resulting
liability to Lender.  In furtherance  thereof,  Lender shall have the full right
and

                                       16
<PAGE>

authority to clear and resolve any questions of non-compliance of documents,  to
give any  instructions  as to acceptance or rejection of any documents or goods,
to execute for  Borrower's  account any and all  applications  for  steamship or
airway  guaranties,  indemnities or delivery orders,  to grant any extensions of
the maturity of, time of payment  for, or time of  presentation  of, any drafts,
acceptances or documents, and to agree to any amendments,  renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the Credit Accommodations or applications and other documentation  pertaining
thereto.

         6.2 Indemnity. Borrower hereby agrees to indemnify the Released Parties
and hold them harmless from and against any and all claims, debts,  liabilities,
demands,  obligations,  actions, causes of action, penalties, costs and expenses
(including attorneys' fees), of every nature,  character and description,  which
the  Released  Parties  may sustain or incur based upon or arising out of any of
the  transactions  contemplated by this Agreement or the other Loan Documents or
any of the Obligations,  including any  transactions or occurrences  relating to
the issuance of any Credit  Accommodation,  the Collateral relating thereto, any
drafts  thereunder and any errors or omissions  relating thereto  (including any
loss or claim due to any  action or  inaction  taken by the issuer of any Credit
Accommodation)  (and for this  purpose  any  charges  to Lender by any issuer of
Credit Accommodations shall be conclusive as to their appropriateness and may be
charged to the Loan  Account),  or any other matter,  cause or thing  whatsoever
occurred, done, omitted or suffered to be done by Lender relating to Borrower or
the Obligations  (except any such amounts sustained or incurred as the result of
the willful misconduct of the Released Parties).  Notwithstanding  any provision
in this  Agreement to the contrary,  the  indemnity  agreement set forth in this
Section shall survive any termination of this Agreement.

7.       TERM.

         7.1 Maturity  Date.  Lender's  obligation  to make Loans and to provide
Credit  Accommodations  under this Agreement shall initially  continue in effect
until the  Initial  Maturity  Date set forth in  Section  7 of  Schedule  A (the
"Initial Term");  provided,  that such date shall automatically be extended (the
Initial  Maturity  Date,  as it may be so  extended,  being  referred  to as the
"Maturity  Date") for  successive  additional  terms of three years each (each a
"Renewal  Term"),  unless one party gives written notice to the other,  not less
than sixty (60) days prior to the Maturity  Date,  that such party elects not to
extend the  Maturity  Date.  This  Agreement  and the other Loan  Documents  and
Lender's  security  interests  in  and  Liens  upon  the  Collateral,   and  all
representations,  warranties  and  covenants  of Borrower  contained  herein and
therein, shall remain in full force and effect after the Maturity Date until all
of the monetary Obligations are indefeasibly paid in full.

         7.2 Early Termination. Lender's obligation to make Loans and to provide
Credit  Accommodations  under  this  Agreement  may be  terminated  prior to the
Maturity Date as follows:  (i) by Borrower,  effective thirty (30) business days
after written  notice of termination is given to Lender or (ii) by Lender at any
time after the  occurrence  of an Event of Default,  without  notice,  effective
immediately. Notwithstanding the foregoing, no such early

                                       17
<PAGE>

termination  shall  be  effective  unless  each  Other  Borrower  simultaneously
terminates  the  Additional  Loan  Agreement  to  which  it  is a  party.  If so
terminated by Borrower under this Section 7.2,  Borrower shall pay to Lender (i)
an early  termination fee (the "Early  Termination Fee") in the amount set forth
in Section 6(h) of Schedule A plus (ii) any earned but unpaid Facility Fee. Such
fee shall be due and payable on the effective date of termination and thereafter
shall bear interest at a rate equal to the highest rate applicable to any of the
Obligations.  In addition,  if Borrower so terminates and repays the Obligations
without  having  provided  Lender with at least thirty (30) days' prior  written
notice  thereof,  an additional  amount equal to thirty (30) days of interest at
the applicable Interest Rate(s),  based on the average outstanding amount of the
Obligations  for  the  six  month  period  immediately  preceding  the  date  of
termination.

         7.3  Payment of  Obligations.  On the  Maturity  Date or on any earlier
effective  date of  termination,  Borrower  shall  pay and  perform  in full all
Obligations,  whether or not all or any part of such  Obligations  are otherwise
then due and payable.  Without limiting the generality of the foregoing,  if, on
the Maturity Date or on any earlier effective date of termination, there are any
outstanding Credit  Accommodations,  then on such date Borrower shall provide to
Lender cash  collateral  in an amount equal to 110% of the Credit  Accommodation
Balance to secure all of the Obligations  (including  estimated  attorneys' fees
and other  expenses)  relating to said  Credit  Accommodations  or such  greater
percentage or amount as Lender reasonably deems appropriate,  pursuant to a cash
pledge agreement in form and substance satisfactory to Lender.

         7.4 Effect of  Termination.  No termination  shall affect or impair any
right or remedy of Lender or relieve  Borrower of any of the  Obligations  until
all of the  monetary  Obligations  have  been  indefeasibly  paid in full.  Upon
indefeasible  payment and performance in full of all of the monetary Obligations
(or the provision of cash  collateral  with respect to the Credit  Accommodation
Balance as set forth in Section 7.3) and termination of this  Agreement,  Lender
shall  promptly  deliver  to  Borrower  termination  statements,   requests  for
reconveyances  and  such  other  documents  as may  be  reasonably  required  to
terminate Lender's security interests in the Collateral.

8.       EVENTS OF DEFAULT AND REMEDIES.

         8.1 Events of Default.  The  occurrence of any of the following  events
shall constitute an "Event of Default" under this Agreement,  and Borrower shall
give  Lender   immediate   written   notice   thereof:   (i)  if  any  warranty,
representation,  statement, report or certificate made or delivered to Lender by
Borrower  or any of  Borrower's  officers,  employees  or  agents  is  untrue or
misleading;  (ii) if Borrower fails to pay when due any principal or interest on
any Loan or any  other  monetary  Obligation;  (iii) if  Borrower  breaches  any
covenant or obligation contained in this Agreement or any other Loan Document or
fails  to  perform  any  other  non-monetary  Obligation;   (iv)  if  any  levy,
assessment,  attachment,  seizure,  lien or encumbrance  (other than a Permitted
Lien) is made or permitted to exist on all or any part of the Collateral; (v) if
one or more  judgments  aggregating  in excess of $25,000,  or any injunction or
attachment,  is  obtained  against  Borrower  or any  Obligor  or which  remains
unstayed for more

                                       18
<PAGE>

than ten (10) days or is enforced;  (vi) the occurrence of any default under any
financing  agreement,  security  agreement  or other  agreement,  instrument  or
document executed and delivered by (A) Borrower with, or in favor of, any Person
other than Lender or (B) Borrower or any Affiliate of Borrower with, or in favor
of, Lender or any Affiliate of Lender; (vii) the dissolution, death, termination
of existence in good standing,  insolvency or business  failure or suspension or
cessation  of  business  as usual of  Borrower or any Obligor (or of any general
partner of Borrower or any Obligor if it is a partnership) or the appointment of
a receiver,  trustee or custodian  for all or any part of the property of, or an
assignment  for the benefit of  creditors  by Borrower  or any  Obligor,  or the
commencement   of  any   proceeding   by  Borrower  or  any  Obligor  under  any
reorganization,  bankruptcy,  insolvency,  arrangement,  readjustment  of  debt,
dissolution or  liquidation  law or statute of any  jurisdiction,  now or in the
future in effect,  or if Borrower  makes or sends a notice of a bulk transfer or
calls a meeting of its  creditors;  (viii) the  commencement  of any  proceeding
against   Borrower  or  any  Obligor  under  any   reorganization,   bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction,  now or in the future in effect; (ix) the actual or
attempted  revocation  or  termination  of, or limitation or denial of liability
upon, any guaranty of the  Obligations or any security  document by any Obligor;
(x) if Borrower makes any payment on account of any  indebtedness  or obligation
which has been  subordinated to the  Obligations  other than as permitted in the
applicable  subordination  agreement, or if any Person who has subordinated such
indebtedness  or  obligations  attempts to limit or terminate its  subordination
agreement;  (xi) if there is any actual or threatened  indictment of Borrower or
any  Obligor  under  any  criminal   statute  or   commencement   or  threatened
commencement of criminal or civil  proceedings  against Borrower or any Obligor,
pursuant  to which the  potential  penalties  or  remedies  sought or  available
include  forfeiture of any property of Borrower or such Obligor;  (xii) if there
is a change in the record or  beneficial  ownership of an aggregate of more than
20% of the outstanding shares of stock of Borrower (or partnership or membership
interests if it is a partnership or limited liability  company),  in one or more
transactions,  compared  to the  ownership  of  outstanding  shares of stock (or
partnership or membership interests) of Borrower as of the date hereof,  without
the prior written consent of Lender;  (xiii) if there is any change in the chief
executive officer,  chairman or chief financial officer of Borrower; (xiv) if an
event of default occurs under any Additional Loan  Agreement;  or (xv) if Lender
determines in good faith that the Collateral is insufficient to fully secure the
Obligations or that the prospect of payment of performance of the Obligations is
impaired.

    8.2 Remedies.  Upon the occurrence of any Event of Default,  and at any time
thereafter, Lender, at its option, and without notice or demand of any kind (all
of which are hereby expressly waived by Borrower), may do any one or more of the
following:  (i) cease  making Loans or  otherwise  extending  credit to Borrower
under this Agreement or any other Loan Document; (ii) accelerate and declare all
or any part of the Obligations to be immediately  due,  payable and performable,
notwithstanding  any deferred or installment  payments allowed by any instrument
evidencing or relating to any of the  Obligations;  (iii) take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby  authorizes  Lender,  without  judicial  process,  to  enter  onto any of
Borrower's  premises  without  interference  to search for, take  possession of,
keep, store, or remove any of

                                       19
<PAGE>

the  Collateral,  and remain (or cause a custodian to remain) on the premises in
exclusive  control  thereof,  without  charge  for so long as  Lender  deems  it
reasonably  necessary in order to complete the  enforcement  of its rights under
this Agreement or any other  agreement;  provided,  that if Lender seeks to take
possession  of  any  of  the  Collateral  by  court  process,   Borrower  hereby
irrevocably  waives (A) any bond and any  surety or  security  relating  thereto
required by law as an incident to such possession, (B) any demand for possession
prior to the  commencement of any suit or action to recover  possession  thereof
and (C) any  requirement  that Lender retain  possession of, and not dispose of,
any such Collateral  until after trial or final judgment;  (iv) require Borrower
to assemble any or all of the  Collateral and make it available to Lender at one
or more places  designated by Lender which are  reasonably  convenient to Lender
and Borrower,  and to remove the Collateral to such locations as Lender may deem
advisable;  (v)  complete  the  processing,   manufacturing  or  repair  of  any
Collateral  prior to a  disposition  thereof  and,  for such purpose and for the
purpose of  removal,  Lender  shall have the right to use  Borrower's  premises,
vehicles and other Equipment and all other property  without charge;  (vi) sell,
lease or otherwise  dispose of any of the  Collateral,  in its  condition at the
time Lender obtains possession of it or after further manufacturing,  processing
or repair, at one or more public or private sales, in lots or in bulk, for cash,
exchange or other  property,  or on credit (a  "Sale"),  and to adjourn any such
Sale from time to time without notice other than oral  announcement  at the time
scheduled  for Sale (and,  in  connection  therewith,  (A) Lender shall have the
right to conduct such Sale on Borrower's premises without charge, for such times
as  Lender  deems  reasonable,  on  Lender's  premises,  or  elsewhere,  and the
Collateral  need not be located at the place of Sale; (B) Lender may directly or
through any of its  Affiliates  purchase or lease any of the  Collateral  at any
such public disposition, and if permissible under applicable law, at any private
disposition  and (C) any Sale of  Collateral  shall not relieve  Borrower of any
liability Borrower may have if any Collateral is defective as to title, physical
condition or otherwise at the time of sale); (vii) demand payment of and collect
any Accounts, Chattel Paper, Instruments and General Intangibles included in the
Collateral and, in connection therewith,  Borrower irrevocably authorizes Lender
to endorse or sign Borrower's name on all collections, receipts, Instruments and
other  documents,  to take possession of and open mail addressed to Borrower and
remove  therefrom  payments  made  with  respect  to any item of  Collateral  or
proceeds thereof and, in Lender's sole  discretion,  to grant extensions of time
to pay, compromise claims and settle Accounts,  General Intangibles and the like
for less than face value;  and (viii)  demand and receive  possession  of any of
Borrower's  federal  and state  income  tax  returns  and the books and  records
utilized  in the  preparation  thereof or relating  thereto.  In addition to the
rights and remedies set forth above,  Lender shall have all the other rights and
remedies  accorded a secured  party  after  default  under the UCC and under all
other applicable laws, and under any other Loan Document, and all of such rights
and remedies are cumulative and  non-exclusive.  Exercise or partial exercise by
Lender of one or more of its rights or remedies  shall not be deemed an election
or bar Lender from subsequent  exercise or partial  exercise of any other rights
or  remedies.  The failure or delay of Lender to exercise any rights or remedies
shall not  operate  as a waiver  thereof,  but all  rights  and  remedies  shall
continue in full force and effect until all of the  Obligations  have been fully
paid and performed.  If notice of any sale or other disposition of Collateral is
required by law, notice at least seven (7) days prior to the sale

                                       20
<PAGE>

designating  the time and place of sale in the case of a public sale or the time
after which any private sale or other  disposition is to be made shall be deemed
to be reasonable notice, and Borrower waives any other notice. If any Collateral
is sold or  leased  by  Lender  on  credit  terms or for  future  delivery,  the
Obligations  shall not be reduced as a result thereof until payment is collected
by Lender.

         8.3  Application of Proceeds.  Subject to any  application  required by
law, all proceeds  realized as the result of any Sale shall be applied by Lender
to the  Obligations  in  such  order  as  Lender  shall  determine  in its  sole
discretion.  Any  surplus  shall be paid to Borrower  or other  persons  legally
entitled thereto; but Borrower shall remain liable to Lender for any deficiency.
If Lender, in its sole discretion, directly or indirectly enters into a deferred
payment or other credit transaction with any purchaser at any Sale, Lender shall
have the option,  exercisable  at any time,  in its sole  discretion,  of either
reducing  the  Obligations  by the  principal  amount of the  purchase  price or
deferring the reduction of the Obligations until the actual receipt by Lender of
the cash therefor.

9.       GENERAL PROVISIONS.

         9.1 Notices.  All notices to be given under this Agreement  shall be in
writing and shall be given  either  personally,  by reputable  private  delivery
service, by regular first-class mail or certified mail return receipt requested,
addressed  to Lender at the address  shown in the heading to this  Agreement  or
Borrower at 2251-A Ward Avenue,  Simi Valley,  California 93065, or by facsimile
to the  facsimile  number  shown in Section  9(k) of Schedule A, or at any other
address (or to any other facsimile number) designated in writing by one party to
the other party in the manner  prescribed in this Section 9.1. All notices shall
be deemed to have been given when  received  or when  delivery is refused by the
recipient.

         9.2  Severability.   If  any  provision  of  this  Agreement,   or  the
application  thereof  to any  party  or  circumstance,  is  held  to be  void or
unenforceable  by any court of  competent  jurisdiction,  such defect  shall not
affect the remainder of this  Agreement,  which shall continue in full force and
effect.

         9.3 Integration.  This Agreement and the other Loan Documents represent
the  final,  entire  and  complete  agreement  between  Borrower  and Lender and
supersede all prior and contemporaneous  negotiations,  oral representations and
agreements,  all of which are merged and integrated into this  Agreement.  THERE
ARE NO ORAL  UNDERSTANDINGS,  REPRESENTATIONS  OR AGREEMENTS BETWEEN THE PARTIES
WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

         9.4  Waivers.  The  failure  of Lender at any time or times to  require
Borrower to strictly  comply with any of the provisions of this Agreement or any
other Loan  Documents  shall not waive or diminish  any right of Lender later to
demand and receive strict compliance therewith.  Any waiver of any default shall
not waive or affect any other default, whether prior or subsequent,  and whether
or not  similar.  None of the  provisions  of this  Agreement  or any other Loan
Document shall be deemed to have been waived by any act or knowledge of

                                       21
<PAGE>

Lender or its agents or employees,  but only by a specific written waiver signed
by an authorized  officer of Lender and delivered to Borrower.  Borrower  waives
demand, protest, notice of protest and notice of default or dishonor,  notice of
payment and nonpayment, release, compromise, settlement, extension or renewal of
any commercial paper, Instrument, Account, General Intangible, Document, Chattel
Paper,  Investment  Property  or  guaranty  at any time  held by Lender on which
Borrower  is or may in any way be  liable,  and  notice of any  action  taken by
Lender,  unless expressly  required by this Agreement,  and notice of acceptance
hereof.

         9.5  Amendment.  The terms and  provisions of this Agreement may not be
amended  or  modified  except  in a  writing  executed  by  Borrower  and a duly
authorized officer of Lender.

         9.6 Time of  Essence.  Time is of the  essence  in the  performance  by
Borrower of each and every  obligation  under this  Agreement and the other Loan
Documents.

         9.7 Attorneys Fees and Costs.  Borrower shall reimburse  Lender for all
reasonable  attorneys' and paralegals'  fees (including  in-house  attorneys and
paralegals  employed  by  Lender)  and  all  filing,  recording,  search,  title
insurance, appraisal, audit, and other costs incurred by Lender, pursuant to, in
connection  with,  or  relating  to this  Agreement,  including  all  reasonable
attorneys'  fees and costs Lender incurs to prepare and negotiate this Agreement
and the other Loan  Documents;  to obtain legal advice in  connection  with this
Agreement and the other Loan Documents or Borrower or any Obligor; to administer
this  Agreement  and the other Loan  Documents  (including  the cost of periodic
financing  statement,  tax lien and other  searches  conducted  by  Lender);  to
enforce,  or seek to enforce,  any of its rights;  prosecute actions against, or
defend actions by,  Account  Debtors;  to commence,  intervene in, or defend any
action or proceeding;  to initiate any complaint to be relieved of the automatic
stay in bankruptcy;  to file or prosecute any probate claim,  bankruptcy  claim,
third-party  claim, or other claim; to examine,  audit, copy, and inspect any of
the  Collateral  or any of  Borrower's  books and  records;  to protect,  obtain
possession  of,  lease,  dispose  of, or  otherwise  enforce  Lender's  security
interests  in,  the  Collateral;  and  to  otherwise  represent  Lender  in  any
litigation relating to Borrower.  If either Lender or Borrower files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable  costs and attorneys'
fees, including reasonable attorneys' fees and costs incurred in the enforcement
of,  execution  upon or defense of any order,  decree,  award or  judgment.  All
attorneys'  fees and costs to which  Lender  may be  entitled  pursuant  to this
Section  shall  immediately  become  part of the  Obligations,  shall  be due on
demand,  and shall bear  interest at a rate equal to the highest  interest  rate
applicable to any of the Obligations.

         9.8  Benefit  of  Agreement;  Assignability.  The  provisions  of  this
Agreement  shall be  binding  upon and inure to the  benefit  of the  respective
successors,  assigns,  heirs,  beneficiaries and representatives of Borrower and
Lender;  provided,  that  Borrower  may not assign or transfer any of its rights
under this  Agreement  without  the prior  written  consent  of Lender,  and any
prohibited  assignment  shall be void.  No consent  by Lender to any  assignment
shall release  Borrower from its  liability for any of the  Obligations.  Lender
shall have the right to

                                       22
<PAGE>

assign all or any of its rights and obligations under the Loan Documents, and to
sell participating interests therein, to one or more other Persons, and Borrower
agrees to execute all agreements,  instruments and documents requested by Lender
in connection with each such assignment and participation.

         9.9 Joint and Several Liability.  If Borrower consists of more than one
Person,  their liability  shall be joint and several,  and the compromise of any
claim with,  or the release of, any Borrower  shall not  constitute a compromise
with, or a release of, any other Borrower or any other Obligor.

         9.10 Headings;  Construction.  Section and subsection headings are used
in this Agreement only for convenience. Borrower and Lender acknowledge that the
headings  may not  describe  completely  the  subject  matter of the  applicable
Sections or  subsections,  and the  headings  shall not be used in any manner to
construe,  limit,  define or interpret any term or provision of this  Agreement.
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty  or ambiguity in any term or  provision of this  Agreement  shall be
construed  strictly against Lender or Borrower under any rule of construction or
otherwise.

         9.11  GOVERNING  LAW;  CONSENT TO FORUM,  ETC. THIS  AGREEMENT HAS BEEN
NEGOTIATED,  EXECUTED AND  DELIVERED,  AND SHALL BE DEEMED TO HAVE BEEN MADE, IN
NEW YORK,  NEW YORK,  AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH
THE LAWS OF SUCH STATE.  BORROWER  HEREBY CONSENTS AND AGREES THAT THE STATE AND
FEDERAL  COURTS  IN NEW  YORK OR THE  STATE IN WHICH  ANY OF THE  COLLATERAL  IS
LOCATED SHALL HAVE  NON-EXCLUSIVE  JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT,  ANY OTHER
LOAN  DOCUMENTS OR ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION  IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,  AND WAIVES ANY
OBJECTION  WHICH  BORROWER  MAY HAVE BASED UPON LACK OF  PERSONAL  JURISDICTION,
IMPROPER VENUE OR FORUM NON  CONVENIENS.  BORROWER ALSO AGREES THAT ANY CLAIM OR
DISPUTE BROUGHT BY BORROWER AGAINST LENDER PURSUANT TO THIS AGREEMENT, ANY OTHER
LOAN  DOCUMENT  OR ANY MATTER  ARISING OUT OF THIS  AGREEMENT  OR ANY OTHER LOAN
DOCUMENT  SHALL BE BROUGHT  EXCLUSIVELY  IN THE STATE AND FEDERAL  COURTS OF NEW
YORK.  BORROWER  HEREBY WAIVES  PERSONAL  SERVICE OF THE SUMMONS,  COMPLAINT AND
OTHER PROCESS  ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS,  COMPLAINT  AND OTHER  PROCESS  MAY BE MADE IN THE  MANNER AND SHALL BE
DEEMED RECEIVED AS SET FORTH IN SECTION 9.1 FOR NOTICES, TO THE EXTENT PERMITTED
BY LAW. NOTHING IN THIS

                                       23
<PAGE>

AGREEMENT  SHALL BE DEEMED  OR  OPERATE  TO AFFECT  THE RIGHT OF LENDER TO SERVE
LEGAL  PROCESS  IN ANY  OTHER  MANNER  PERMITTED  BY  LAW,  OR TO  PRECLUDE  THE
ENFORCEMENT  BY LENDER OF ANY  JUDGMENT  OR ORDER  OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION  UNDER  THIS  AGREEMENT  TO  ENFORCE  THE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.

    9.12 WAIVER OF JURY TRIAL,  ETC.  BORROWER  WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER ALSO WAIVES) IN ANY ACTION, SUIT,  PROCEEDING OR COUNTERCLAIM
OF ANY  KIND  ARISING  OUT OF OR  RELATED  TO ANY  OF THE  LOAN  DOCUMENTS,  THE
OBLIGATIONS  OR THE  COLLATERAL  OR ANY CONDUCT,  ACTS OR OMISSIONS OF LENDER OR
BORROWER OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR
AGENTS OR ANY OTHER PERSONS AFFILIATED WITH LENDER OR BORROWER, WHETHER SOUNDING
IN  CONTRACT,  TORT OR  OTHERWISE;  (ii) THE  RIGHT  TO  INTERPOSE  ANY  CLAIMS,
DEDUCTIONS,  SETOFFS OR  COUNTERCLAIMS  OF ANY KIND IN ANY ACTION OR  PROCEEDING
INSTITUTED BY LENDER WITH RESPECT TO THE LOAN  DOCUMENTS OR ANY MATTER  RELATING
THERETO,  EXCEPT FOR  COMPULSORY  COUNTERCLAIMS;  (iii) NOTICE PRIOR TO LENDER'S
TAKING  POSSESSION OR CONTROL OF THE  COLLATERAL  OR ANY BOND OR SECURITY  WHICH
MIGHT BE  REQUIRED BY ANY COURT  PRIOR TO  ALLOWING  LENDER TO  EXERCISE  ANY OF
LENDER'S  REMEDIES  AND (iv) THE  BENEFIT  OF ALL  VALUATION,  APPRAISEMENT  AND
EXEMPTION LAWS. BORROWER  ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO LENDER'S  ENTERING INTO THIS  AGREEMENT AND THAT LENDER IS RELYING
UPON THE  FOREGOING  WAIVERS  IN ITS FUTURE  DEALINGS  WITH  BORROWER.  BORROWER
WARRANTS AND  REPRESENTS  THAT IT HAS REVIEWED  THE  FOREGOING  WAIVERS WITH ITS
LEGAL  COUNSEL AND HAS KNOWINGLY  AND  VOLUNTARILY  WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING  CONSULTATION  WITH LEGAL COUNSEL.  IN THE EVENT OF  LITIGATION,  THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

                                       24
<PAGE>


         IN WITNESS  WHEREOF,  Borrower and Lender have signed this Agreement as
of the date set forth in the heading.

Borrower:                                       Lender:

FLIGHTWAYS MANUFACTURING, INC.                  NATIONSCREDIT COMMERCIAL
                                                CORPORATION, THROUGH ITS 
                                                NATIONSCREDIT COMMERCIAL FUNDING
                                    DIVISION

By /s/ Lawrence J. Troyna                       By /s/ Scott James Lorimer 
  ------------------------                         -----------------------------
     Its CFO                                         Its Authorized Signatory


                                       25
<PAGE>


                                   Schedule A

                          Description of Certain Terms

         This  Schedule is an integral  part of the Loan and Security  Agreement
between FLIGHTWAYS MANUFACTURING, INC. and NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION (the "Agreement").


1.      Loan Limits for Revolving Loans:

        (a)    Maximum Facility 
               Amount:                             $10,000,000

        (b)    Advance Rates:

               (i)    Accounts                     80%;  provided,  that if  the
                      Advance Rate:                Dilution  Percent age exceeds
                                                   5%,  such  advance  rate will
                                                   be  reduced  by the number of
                                                   full or  partial   percentage
                                                   points of such excess

               (ii)    Inventory 
                       Advance 
                       Rate(s):

                      (A) Finished 
                          goods:                   not applicable

                      (B) Raw                      40%  against   eligible   raw
                          materials:               material inventory

                      (C) Work in 
                          process:                  not applicable

        (c)    Accounts Sublimit:                  At any time of determination,
                                                   the    Maximum     Flightways
                                                   Facility   Amount  less   the
                                                   aggregate  advances   against
                                                   Inventory   outstanding    at
                                                   such time

        (d)    Inventory 
               Sublimit(s):

                                      A-1
<PAGE>

               (i)   Overall sublimit              $5,000,000, minus the portion
                     on advances                   of the  Other  Borrower  Loan
                     against Eligible              Balance  at such time that is
                     Inventory                     predicated     on    eligible
                                                   inventory    of   the   Other
                                                   Borrowers                    

               (ii)  Sublimit on                   not applicable
                     advances 
                     against finished 
                     goods            

               (iii) Sublimit on 
                     advances 
                     against raw 
                     materials                     $1,000,000

               (iv)  Sublimit on 
                     advances 
                     against work in 
                     process                       not applicable

        (e)    Credit 
               Accommodation 
               Limit:                              not applicable

        (f)    Permanent Reserve 
               Amount:                             not applicable

        (g)    Maximum Flightways                  $10,000,000,  minus the Other
               Facility Amount                     Borrower Loan Balance at such
                                                   time                         


2.      Loan Limits for Term 
        Loan:

        (a)    Principal Amount:                   not applicable

        (b)    Repayment Schedule:                 not applicable

3.      Interest Rates:

       (a)    Revolving Loans:                     3.00%  per annum in excess of
                                                   the Prime Rate               

       (b)    Term Loan:                           not applicable

                                      A-2
<PAGE>

4.      Minimum Loan Amount:                       not applicable

5.      Maximum days after 
        invoice date for Eligible 
        Accounts:                                  90

6.      Fees:

        (a)    Closing Fee:                        not applicable

        (b)    Facility Fee:

               (i)    Initial Term:                not applicable

               (ii)   Renewal 
                      Term(s):                     not applicable

        (c)    Servicing Fee:                      not applicable

        (d)    Unused Line Fee:                    not applicable

        (e)    Minimum Borrowing 
               Fee:                                not applicable

               (i)   Applicable period:            not applicable

               (ii)  Date payable:                 not applicable

        (f)    Success Fee:                        not applicable

        (g)    Warrants:                           not applicable

        (h)    Early Termination 
               Fee:                                not applicable

        (i)    Fees for letters of 
               credit (or guaranties 
               by Lender):                         not applicable


                                      A-3
<PAGE>

        (j)    Fees for other Credit 
               Accommodations:                     not applicable

7.      Initial Maturity Date:                     April 17, 2000

8.      Financial Covenants:

        (a)    Capital Expenditure 
               Limitation:                         not applicable

        (b)    Minimum Net Worth 
               Requirement:                        not applicable

        (c)    Minimum Working 
               Capital Requirement:                not applicable

        (d)    Limitation on 
               Purchase Money 
               Security Interests:                 not applicable

        (e)    Limitation on 
               Equipment Leases:                   not applicable

        (f)    Additional Financial 
               Covenants:                          not applicable

9.      Borrower Information:

        (a)    Prior Names of 
               Borrower:                           None

        (b)    Prior Trade Names of 
               Borrower:                           None

        (c)    Existing Trade 
               Names of Borrower:                  None

        (d)    Inventory Locations:                7660 Densmore Avenue
                                                   Van Nuys, California 91406

        (e)    Other Locations:                    None

                                      A-4
<PAGE>


        (f)    Litigation:                         Robert      Snukal     versus
                                                   Flightways     Manufacturing,
                                                   Inc.                         

        (g)    Ownership of Borrower:              100% owned by Spares

        (h)    Subsidiaries (and 
               ownership thereof):                 None

        (i)    Existing Loans:                     None

        (j)    Existing 
               Indebtedness:                       None

        (k)    Facsimile Numbers:

               Borrower:                           (818) 908-2186

               Lender:                             (212) 597-1666

10.     Description of Real                        None
        Property:

11.     Lender's Bank:                             The  First  National  Bank of
                                                   Chicago  One  First  National
                                                   Plaza Chicago, Illinois 60670


         IN WITNESS WHEREOF,  Borrower and Lender have signed this Schedule A as
of the date set forth in the heading to the Agreement.

Borrower:                                      Lender:

FLIGHTWAYS MANUFACTURING, INC.                 NATIONSCREDIT COMMERCIAL 
                                               CORPORATION, THROUGH ITS 
                                               NATIONSCREDIT COMMERCIAL FUNDING 
                                    DIVISION

By /s/ Lawrence J. Troyna                      By /s/ Scott James Lorimer 
   -------------------------                     -------------------------------
  Its CFO                                         Its Authorized Signatory


                                       A-5
<PAGE>

                                   Schedule B

                                   Definitions

         This  Schedule is an integral  part of the Loan and Security  Agreement
between FLIGHTWAYS MANUFACTURING, INC. and NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING (the "Agreement").

         As used in the  Agreement,  the  following  terms  have  the  following
meanings:

                  "Account"  means any right to payment for Goods sold or leased
or for services  rendered  which is not  evidenced by an  Instrument  or Chattel
Paper, whether or not it has been earned by performance.

                  "Account  Debtor"  means the  obligor on an Account or Chattel
Paper.

                  "Account Proceeds" has the meaning set forth in Section 4.1.

                  "Additional  Loan  Agreement"  means the Aero  Management Loan
Agreement,  the Fields Loan Agreement and all other Loan and Security Agreements
between Lender and any Affiliate of Borrower, Aero Management,  Fields or Spares
that  Borrower,  all Other  Borrowers  at the time and  Lender  designate  as an
Additional Loan Agreement.

                  "Aero  Management"  means  Fields  Aero  Management,  Inc.,  a
California corporation and an Affiliate of Borrower.

             "Aero  Management  Loan  Agreement"  means  the Loan  and  Security
Agreement dated as of April 18, 1997 between Aero  Management and Lender,  as it
may be amended from time to time.

             "Aero Management Loan Balance" means the outstanding balance of all
monetary  obligations  (including  without limitation the aggregate undrawn face
amount of all  outstanding  letters of  credit,  bankers  acceptances  and other
credit  accommodations  and all  interest,  fees and costs  due or, in  Lender's
estimation,  likely to become due in connection  therewith)  of Aero  Management
under the Aero Management Loan Agreement.

                  "Affiliate"  means,  with  respect to any Person,  a relative,
partner,  shareholder,  member, manager, director,  officer, or employee of such
Person,  any parent or  subsidiary  of such Person,  or any Person  controlling,
controlled  by or under  common  control  with such  Person or any other  Person
affiliated,  directly or indirectly, by virtue of family membership,  ownership,
management or otherwise other than McDonnell  Douglas  Corporation or any of its
affiliates.

                  "Agreement"  and "this  Agreement"  mean the Loan and Security
Agreement of which this Schedule B is a part and the Schedules thereto.

                  "Availability" has the meaning set forth in Section 1.1(a)

                                      B-1
<PAGE>

                  "Bankruptcy  Code" means the United States Bankruptcy Code (11
U.S.C. ss. 101 et seq.).

                  "Blocked Account" has the meaning set forth in Section 4.1.

                  "Borrower"  has the  meaning  set forth in the  heading to the
Agreement.

                  "Borrower's  Address" has the meaning set forth in the heading
to the Agreement.

                  "Borrower  Guaranty" means the Guaranty dated as of January 2,
1997, as it may be amended or modified from time to time,  executed by Borrower,
pursuant  to  which  Borrower  has  guaranteed  repayment  in full of the  Other
Borrower Loan Balance.

                  "Business  Day" means a day other than a Saturday or Sunday or
any other day on which Lender or banks in New York are authorized to close.

                  "Chattel Paper" has the meaning set forth in the UCC.

                  "Collateral"  means all property and  interests in property in
or upon which a security  interest  or other  Lien is granted  pursuant  to this
Agreement or the other Loan Documents.

                  "Credit  Accommodation"  has the  meaning set forth in Section
1.1(a).

                  "Credit  Accommodation  Balance"  means  the  sum of  (i)  the
aggregate undrawn face amount of all outstanding Credit  Accommodations and (ii)
all interest,  fees and costs due or, in Lender's  estimation,  likely to become
due in connection therewith.

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

                  "Default Rate" has the meaning set forth in Section 2.1.

                  "Deposit Account" has the meaning set forth in the UCC.

                  "Dilution  Percentage"  means the gross amount of all returns,
allowances,  discounts,  credits,  write-offs  and  similar  items  relating  to
Borrower's  Accounts as a percentage of Borrower's gross sales,  calculated on a
ninety (90) day rolling average.

                  "Document" has the meaning set forth in the UCC.

                  "Early  Termination  Fee" has the meaning set forth in Section
7.2.

                  "Eligible  Account"  means, at any time of  determination,  an
Account  which  satisfies  the  general  criteria  set forth  below and which is
otherwise  acceptable  to  Lender  (provided,  that  Lender  may,  in  its  sole
discretion,  change the general criteria for  acceptability of Eligible Accounts
upon at least fifteen (15) days' prior notice to Borrower).  An Account shall be
deemed to meet the current  general  criteria if (i) neither the Account  Debtor
nor any of its  Affiliates  is an  Affiliate,  creditor  or supplier of Borrower
(provided, that Accounts deemed to be ineligible solely by reason

                                      B-2
<PAGE>

of this  clause (i)  because  the  Account  Debtor is a creditor  or supplier of
Borrower shall be considered  Eligible Accounts to the extent the amount of such
Accounts exceeds the amount owing by Borrower to such Account  Debtor);  (ii) it
does not remain  unpaid more than the number of days after the original  invoice
date set forth in  Section 5 of  Schedule  A;  (iii) the  Account  Debtor or its
Affiliates are not past due on other Accounts owing to Borrower  comprising more
than 50% of all of the Accounts  owing to Borrower by such Account Debtor or its
Affiliates;  (iv) all Accounts  owing by the Account Debtor or its Affiliates do
not represent more than 25% of all otherwise  Eligible Accounts unless otherwise
approved by Lender  (provided,  that Accounts  which are deemed to be ineligible
solely by this clause (iv) shall be considered  Eligible  Accounts to the extent
of the  amount  thereof  which does not  exceed  20% of all  otherwise  Eligible
Accounts);  (v) no  covenant,  representation  or  warranty  contained  in  this
Agreement with respect to such Account (including any of the representations set
forth in Section 5.4) has been breached;  (vi) the Account is not subject to any
contra  relationship,  counterclaim,  dispute  or  set-off;  (vii)  the  Account
Debtor's chief executive office or principal place of business is located in the
United  States or Provinces  of Canada which have adopted the Personal  Property
Security Act or a similar  act,  unless (A) the sale is fully backed by a letter
of credit,  guaranty or acceptance  acceptable to Lender in its sole discretion,
and if backed by a letter of credit,  such  letter of credit has been  issued or
confirmed by a bank satisfactory to Lender, is sufficient to cover such Account,
and if  required  by  Lender,  the  original  of such  letter of credit has been
delivered  to Lender or Lender's  agent and the issuer  thereof  notified of the
assignment  of the  proceeds  of such  letter of credit  to  Lender,  or (B) suc
Account is subject to credit  insurance  payable to Lender  issued by an insurer
and on terms and in an amount acceptable to Lender;  provided, that an aggregate
amount of up to $75,000 of foreign  Accounts  in excess of the  existing  credit
insurance  limits  shall be deemed to be subject to credit  insurance so long as
Borrower has applied for acceptable  credit insurance  relating to such Accounts
or credit  insurance in any amount is already in effect for such Account Debtor;
(viii) it is  absolutely  owing to Borrower  and does not arise from a sale on a
bill-and-hold, guarantied sale, sale-or-return,  sale-on-approval,  consignment,
retainage  or any  other  repurchase  or return  basis or  consist  of  progress
billings;  (ix) Lender shall have verified the Account in a manner  satisfactory
to Lender;  (x) the  Account  Debtor is not the United  States of America or any
state or political  subdivision  (or any department,  agency or  instrumentality
thereof), unless Borrower has complied with the Assignment of Claims Act of 1940
(31 U.S.C.  ss.203 et seq.) or other applicable  similar state or local law in a
manner  satisfactory to Lender; (xi) it is at all times subject to Lender's duly
perfected,  first priority  security interest and to no other Lien that is not a
Permitted  Lien,  and the goods giving rise to such Account (A) were not, at the
time of sale,  subject  to any Lien  except  Permitted  Liens  and (B) have been
delivered to and accepted by the Account Debtor,  or the services giving rise to
such Account have been performed by Borrower and accepted by the Account Debtor;
(xii) the Account is not evidenced by Chattel Paper or an Instrument of any kind
and has not  been  reduced  to  judgment;  (xiii)  the  Account  Debtor's  total
indebtedness  to  Borrower  does not  exceed  the  amount  of any  credit  limit
established by Borrower or Lender and the Account Debtor is otherwise  deemed to
be  creditworthy  by Lender  (provided,  that  Accounts  deemed to be ineligible
solely by reason of this clause (xiii) shall be considered  Eligible Accounts to
the extent the amount of such  Accounts does not exceed the lower of such credit
limits);  (xiv)  there are no facts or  circumstances  existing,  or which could
reasonably be anticipated to occur,  which might result in any adverse change in
the Account Debtor's financial condition or impair or delay

                                      B-3
<PAGE>

the  collectibility of all or any portion of such Account;  (xv) Lender has been
furnished  with all documents and other  information  pertaining to such Account
which Lender has requested, or which Borrower is obligated to deliver to Lender,
pursuant to this  Agreement;  and (xvi)  Borrower has not made an agreement with
the Account Debtor to extend the time of payment thereof beyond the time periods
set forth in clause (ii) above.

                  "Eligible  Equipment"  means,  at any  time of  determination,
Equipment owned by Borrower which Lender,  in its sole  discretion,  deems to be
eligible for borrowing purposes.

                  "Eligible  Inventory"  means,  at any  time of  determination,
Inventory  (other than  packaging  materials and supplies)  which  satisfies the
general  criteria  set forth below and which is otherwise  acceptable  to Lender
(provided, that Lender may, in its sole discretion,  change the general criteria
for  acceptability of Eligible  Inventory upon at least fifteen (15) days' prior
written  notice to  Borrower).  Inventory  shall be  deemed to meet the  current
general  criteria if (i) it consists of finished goods;  (ii) it is in good, new
and saleable condition; (iii) it is not slow-moving,  obsolete,  unmerchantable,
returned due to defects or  repossessed;  (iv) it is not in the  possession of a
processor,  consignee or bailee,  or located on premises  leased or subleased to
Borrower,  or  subject  to a mortgage  in favor of a Person  other than  Lender,
unless such processor, consignee, bailee or mortgagee or the lessor or sublessor
of  such  premises,  as  the  case  may  be,  has  executed  and  delivered  all
documentation  which Lender shall require to evidence the subordination or other
limitation  or  extinguishment  of such  Person's  rights  with  respect to such
Inventory and Lender's right to gain access thereto;  (v) it meets all standards
imposed  by  any  governmental  agency  or  authority,  and  if  required  to be
registered with the Federal Aviation Administration,  it has been so registered;
(vi)  it  conforms   in  all   respects  to  any   covenants,   warranties   and
representations set forth in the Agreement;  (vii) it is at all times subject to
Lender's duly  perfected,  first  priority  security  interest and no other Lien
except a Permitted Lien; (viii) it has not been consigned to Borrower;  and (ix)
it is situated at an Inventory  Location listed in Section 9(d) of Schedule A or
other location of which Lender has been notified as required by Section 5.6.

                  "Equipment"  means all Goods  which are used or bought for use
primarily in business  (including farming or a profession) or by a Person who is
a non-profit  organization or  governmental  subdivision or agency and which are
not Inventory, farm products or consumer goods, including all machinery,  molds,
machine  tools,  motors,  furniture,  equipment,  furnishings,  fixtures,  trade
fixtures,  motor vehicles,  tools,  parts,  dies and jigs, and all  attachments,
accessories, accessions, replacements,  substitutions, additions or improvements
to, or spare parts for, any of the foregoing.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974 and all rules, regulations and orders promulgated thereunder.

                  "Event of Default" has the meaning set forth in Section 8.1.

                  "Fields"  means  Fields   Aircraft  Spares   Incorporated,   a
California  corporation  and an Affiliate of Borrower.  

                                      B-4
<PAGE>

                  "Fields Loan Agreement" means the Loan and Security  Agreement
dated as of April 18, 1997 between Fields and Lender,  as it may be amended from
time to time.

                  "Fields Loan  Balance"  means the  outstanding  balance of all
monetary  obligations  (including  without limitation the aggregate undrawn face
amount of all  outstanding  letters of  credit,  bankers  acceptances  and other
credit  accommodations  and all  interest,  fees and costs  due or, in  Lender's
estimation,  likely to become due in  connection  therewith) of Fields under the
Fields Loan Agreement.

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

                  "General  Intangibles"  has the  meaning set forth in the UCC,
and  includes  all books and  records  pertaining  to the  Collateral  and other
business  and  financial  records in the  possession  of  Borrower  or any other
Person, inventions, designs, drawings, blueprints, patents, patent applications,
trademarks, trademark applications (other than

                  "intent to use" applications until a verified statement of use
is filed with  respect to such  applications)  and the  goodwill of the business
symbolized  thereby,  names, trade names, trade secrets,  goodwill,  copyrights,
registrations,   licenses,  franchises,   customer  lists,  security  and  other
deposits,  causes of action  and other  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,  rights to
purchase or sell real or personal property,  rights as a licensor or licensee of
any  kind,  royalties,   telephone  numbers,  internet  addresses,   proprietary
information,  purchase orders,  and all insurance policies and claims (including
life  insurance,  key man  insurance,  credit  insurance,  liability  insurance,
property  insurance  and other  insurance),  tax refunds and claims,  letters of
credit, banker's acceptances and guaranties, computer programs, discs, tapes and
tape files in the  possession  of Borrower  or any other  Person,  claims  under
guaranties, security interests or other security held by or granted to Borrower,
all rights to  indemnification  and all other intangible  property of every kind
and nature.

                  "Goods"  means all  things  which are  movable at the time the
security interest  attaches or which are fixtures (other than money,  Documents,
Instruments,  Investment Property, Accounts, Chattel Paper, General Intangibles,
or minerals or the like  (including oil and gas) before  extraction),  including
standing  timber which is to be cut and removed  under a conveyance  or contract
for sale, the unborn young of animals, and growing crops.

                  "Initial Term" has the meaning set forth in Section 7.1.

                  "Instrument" has the meaning set forth in the UCC.

                  "Inventory"  means  all  Goods  held  for  sale  or  lease  or
furnished  or to be furnished  under  contracts  of service,  including  all raw
materials,  work in process,  finished goods, goods in transit and materials and
supplies  which  are or  might  be used or  consumed  in a  business  or used in
connection with the  manufacture,  packing,  shipping,  advertising,  selling or
finishing of such Goods,  and all products of the  foregoing,  and shall include
interests in goods represented by Accounts,  returned,  reclaimed or repossessed
goods and rights as an unpaid vendor.

                                      B-5
<PAGE>

                  "Investment Property" shall mean all of Borrower's securities,
whether  certificated or  uncertificated,  securities  entitlements,  securities
accounts, commodity contracts and commodity accounts.

                  "Lender"  has the  meaning  set  forth in the  heading  to the
Agreement.

                  "Lien" means any interest in property  securing an  obligation
owed to, or a claim by, a Person other than the owner of the  property,  whether
such interest is based on common law,  statute or contract,  including rights of
sellers under  conditional  sales  contracts or title  retention  agreements and
reservations,  exceptions, encroachments,  easements, rights-of-way,  covenants,
conditions,  restrictions,  leases and other title  exceptions and  encumbrances
affecting property. For the purpose of this Agreement,  Borrower shall be deemed
to be the owner of any  property  which it has  acquired  or holds  subject to a
conditional sale agreement or other  arrangement  pursuant to which title to the
property  has been  retained  by or vested in some  other  Person  for  security
purposes.

                  "Loan Account" has the meaning set forth in Section 2.4.

                  "Loan Documents" means the Agreement and all notes, guaranties
(including  without  limitation  the Borrower  Guaranty),  security  agreements,
certificates, landlord's agreements, Lock Box and Blocked Account agreements and
all other  agreements,  documents and instruments  now or hereafter  executed or
delivered  by Borrower or any Obligor in  connection  with,  or to evidence  the
transactions contemplated by, this Agreement.

                  "Loan Limits" means, collectively, the Availability limits and
all other limits on the amount of Loans and Credit  Accommodations  set forth in
this Agreement.

                  "Loans" means, collectively,  the Revolving Loans and any Term
Loan.

                  "Lock Box" has the meaning set forth in Section 4.1.

                  "Maturity Date" has the meaning set forth in Section 7.1.

                  "Obligations"  means all present and future  Loans,  advances,
debts,  liabilities,  obligations,  guaranties (including without limitation the
Borrower  Guaranty),  covenants,  duties and  indebtedness  at any time owing by
Borrower to Lender,  whether  evidenced  by this  Agreement or any note or other
instrument or document,  whether arising from an extension of credit, opening of
a Credit  Accommodation,  guaranty,  indemnification or otherwise (including all
fees,  costs  and  other  amounts  which  may be  owing  to  issuers  of  Credit
Accommodations  and all  taxes,  duties,  freight,  insurance,  costs  and other
expenses,  costs or amounts payable in connection with Credit  Accommodations or
the underlying goods),  whether direct or indirect  (including those acquired by
assignment and any participation by Lender in Borrower's  indebtedness  owing to
others),  whether  absolute or  contingent,  whether  due or to become due,  and
whether  arising  before or after the  commencement  of a  proceeding  under the
Bankruptcy  Code  or any  similar  statute,  including  all  interest,  charges,
expenses,  fees,  attorney's fees,  expert witness fees,  audit fees,  letter of
credit fees, loan fees, Early Termination  Fees,  minimum borrowing fees and any
other sums  chargeable to Borrower  under this Agreement or under any other Loan
Document.

                                      B-6
<PAGE>

                  "Obligor" means any guarantor,  endorser,  acceptor, surety or
other person liable on, or with respect to, the  Obligations or who is the owner
of any property which is security for the Obligations, other than Borrower.

                  "Other Borrower" means, collectively,  Aero Management, Fields
and any other borrower under an Additional Loan Agreement.

                  "Other  Borrower Loan Balance"  means the Fields Loan Balance,
the Aero  Management  Loan Balance and the  outstanding  balance of any monetary
obligations  (including  without limitation the aggregate undrawn face amount of
all  outstanding  letters  of  credit,  bankers  acceptances  and  other  credit
accommodations and all interest,  fees and costs due or, in Lender's estimation,
likely to become due in connection  therewith) of each Other Borrower under each
Additional Loan Agreement.

                  "Permitted Liens" means: (i) purchase money security interests
in specific  items of Equipment  in an aggregate  amount not to exceed the limit
set forth in  Section  8(d) of  Schedule  A; (ii)  leases of  specific  items of
Equipment  in an  aggregate  amount not to exceed the limit set forth in Section
8(e) of  Schedule  A;  (iii)  Liens  for  taxes  not yet due and  payable;  (iv)
additional Liens which are fully subordinate to the security interests of Lender
and are  consented  to in  writing  by  Lender;  (v)  security  interests  being
terminated  concurrently  with the  execution of this  Agreement;  (vi) Liens of
materialmen,  mechanics, warehousemen or carriers arising in the ordinary course
of business  and  securing  obligations  which are not  delinquent;  (vii) Liens
incurred  in  connection  with the  extension,  renewal  or  refinancing  of the
indebtedness secured by Liens of the type described in clause (i) or (ii) above;
provided,  that any  extension,  renewal or  replacement  Lien is limited to the
property  encumbered  by the  existing  Lien  and the  principal  amount  of the
indebtedness being extended, renewed or refinanced does not increase; and (viii)
Liens in favor of  customs  and  revenue  authorities  which  secure  payment of
customs duties in connection with the importation of goods. Lender will have the
right to require,  as a condition to its consent  under clause (iv) above,  that
the holder of the additional  Lien sign an  intercreditor  agreement in form and
substance satisfactory to Lender, in its sole discretion, acknowledging that the
Lien is  subordinate  to the security  interests of Lender,  and agreeing not to
take any  action to  enforce  its  subordinate  Lien so long as any  Obligations
remain  outstanding,  and that  Borrower  agree that any uncured  default in any
obligation  secured by the  subordinate  Lien shall also  constitute an Event of
Default under this Agreement.

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

                  "Prime  Rate"  means,  at any given  time,  the prime  rate as
quoted in The Wall Street Journal as the base rate on corporate  loans posted as
of such time by at least 75% of the nation's 30 largest banks (which rate is not
necessarily the lowest rate offered by such banks).

                  "Real Property"  means the real property  described in Section
10 of Schedule A.

                  "Released Parties" has the meaning set forth in Section 6.1.

                                      B-7
<PAGE>


                  "Renewal Term" has the meaning set forth in Section 7.1.

                  "Reserves" has the meaning set forth in Section 1.2.

                  "Revolving Loans" has the meaning set forth in Section 1.1(b).

                  "Sale" has the meaning set forth in Section 8.2.

                  "Spares"   means  Fields   Aircraft   Spares,   Inc.,  a  Utah
corporation and the parent of Borrower.

                  "Subsidiary"  means any corporation or other entity of which a
Person owns, directly or indirectly,  through one or more  intermediaries,  more
than  50% of the  capital  stock  or  other  equity  interest  at  the  time  of
determination.

                  "Term"  means  the  period  commencing  on the  date  of  this
Agreement and ending on the Maturity Date.

                  "Term Loan" has the meaning set forth in Section 1.1(b).

                  "UCC" means, at any given time, the Uniform Commercial Code as
adopted and in effect at such time in the State of New York.

         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 UCC,  to the extent  such terms are defined
therein.  The term  "including,"  whenever  used in this  Agreement,  shall mean
"including  but not limited to." The singular form of any term shall include the
plural  form,  and vice  versa,  when the  context so  requires.  References  to
Sections,  subsections  and  Schedules are to Sections and  subsections  of, and
Schedules to, this  Agreement.  All  references to agreements and statutes shall
include all amendments thereto and successor statutes in the case of statutes.

         IN WITNESS WHEREOF,  Borrower and Lender have signed this Schedule B as
of the date set forth in the heading to the Agreement.

Borrower:                                      Lender:

FLIGHTWAYS MANUFACTURING, INC.                 NATIONSCREDIT COMMERCIAL 
                                               CORPORATION, THROUGH ITS 
                                               NATIONSCREDIT COMMERCIAL FUNDING 
                                    DIVISION

By /s/ Lawrence J. Troyna                     By /s/ Scott James Lorimer 
  --------------------------                     -------------------------------
     Its CFO                                        Its Authorized Signatory

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