LOAN AND SECURITY AGREEMENT


                                     BETWEEN


                               DRYCLEAN USA, INC.


                                  ("BORROWER")



                                       AND



                            FIRST UNION NATIONAL BANK


                                   ("LENDER")





                          DATED AS OF DECEMBER 19, 2001



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                                                 TABLE OF CONTENTS

                                                                                               PAGE
<S>      <C>                                                                                     <C>
1.       Definitions; Financial and Other Terms...................................................1
         1.1.        Definitions..................................................................1
         1.2.        Financial Terms..............................................................8
         1.3.        Other Terms..................................................................8
2.       Representations and Warranties...........................................................8
         2.1.        Valid Existence and Power....................................................8
         2.2.        Authority....................................................................8
         2.3.        Condition....................................................................8
         2.4.        Financial Statements.........................................................9
         2.5.        Litigation; Government Regulation............................................9
         2.6.        Agreements, Etc..............................................................9
         2.7.        Authorizations...............................................................9
         2.8.        Title; Collateral............................................................9
         2.9.        Location and Names...........................................................9
         2.10.       Taxes.......................................................................10
         2.11.       Labor Law Matters...........................................................10
         2.12.       Accounts....................................................................10
         2.13.       Use and Location of Collateral..............................................10
         2.14.       Judgment Liens..............................................................10
         2.15.       Intent and Effect of Transactions; Borrower's Solvency......................10
         2.16.       Subsidiaries................................................................11
         2.17.       Hazardous Materials.........................................................11
         2.18.       ERISA.......................................................................11
         2.19.       Investment Company Act......................................................11
         2.20.       Trade Relations.............................................................11
         2.21.       Maintenance of Business and Properties......................................11
         2.22.       Full Disclosure.............................................................11
3.       Loans...................................................................................12
         3.1.        Advances of Loans...........................................................12
         3.2.        The Notes...................................................................12
         3.3.        Notice and Manner of Borrowing..............................................13
         3.4.        Interest....................................................................13
         3.5.        Repayment of Loans..........................................................13
         3.6.        Costs, Fees and Expenses....................................................13
         3.7.        Prepayments.................................................................13
         3.8.        Payments and Computations...................................................14
         3.9.        Facility for Letters of Credit..............................................14
         3.10.       Facility for Foreign Exchange...............................................16
4.       Conditions Precedent to Borrowing.......................................................17
         4.1.        Advance.....................................................................17
         4.2.        Conditions Precedent to Each Advance of a Loan or
                     Issuance of a Letter of Credit or
                     Purchasing Forward Exchange.................................................19
         4.3.        Waiver of Conditions Precedent..............................................20
5.       Covenants of the Borrower...............................................................20
         5.1.        Use of Loan Proceeds........................................................20
         5.2.        Maintenance of Business and Properties......................................20
         5.3.        Insurance...................................................................20
         5.4.        Notice of Default...........................................................21
         5.5.        Inspections.................................................................21
         5.6.        Financial Information.......................................................21
         5.8.        Liens.......................................................................23

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         5.9.        Redemptions.................................................................23
         5.10.       Merger, Sale, Etc...........................................................23
         5.11.       Loans, Guaranties and Other Investments.....................................23
         5.12.       Change in Business..........................................................23
         5.13.       Accounts....................................................................23
         5.14.       Transactions with Affiliates................................................24
         5.15.       No Change in Name or Offices; Removal of Collateral.........................24
         5.16.       No Sale, Leaseback..........................................................24
         5.17.       Margin Stock................................................................24
         5.18.       Payment of Taxes, Etc.......................................................24
         5.19.       Comply with ERISA...........................................................24
         5.20.       Compliance; Hazardous Materials.............................................24
         5.21.       Subsidiaries................................................................24
         5.22.       Compliance with Assignment Laws.............................................24
         5.23.       Further Assurances..........................................................25
         5.24.       Withholding Taxes...........................................................25
         5.25.       Financial Covenants.........................................................25
         5.26.       Lender Account..............................................................25
         5.27.       Fiscal Year; Accounting Method..............................................25
         5.28.       Default on Other Obligations................................................25
         5.29.       SEC Filing..................................................................25
         5.30.       Compliance with Laws........................................................25
         5.31.       Chattel Paper...............................................................25
6.       Default.................................................................................26
         6.1.        Events of Default...........................................................26
         6.2.        Acceleration of the Indebtedness............................................27
         6.3.        Default Rate................................................................28
         6.4.        Rights and Remedies.........................................................28
         6.5.        Application of Proceeds.....................................................29
         6.6.        Appointment of the Lender as the Borrower's Lawful Attorney.................29
         6.7.        Collections; The Lender's Right to Notify Account Debtors
                        and to Endorse Borrower's Name...........................................29

7.       Security Agreement; Collateral..........................................................30
         7.1.        Security Interest...........................................................30
         7.2.        Inspection of Collateral....................................................30
         7.3.        Other Rights................................................................31
         7.4.        Tangible Collateral; Inventory..............................................31
         7.5.        The Lender's Payment of Claims Asserted Against the Collateral..............31
8.       Term of Agreement.......................................................................31
         8.1.        Term and Right to Terminate.................................................31
         8.2.        Effect of Termination.......................................................32
9.       Miscellaneous...........................................................................32
         9.1.        Rights and Remedies Cumulative; Non-Waiver; Etc.............................32
         9.2.        Survival of Representations; Reinstatement of Indebtedness..................32
         9.3.        Expenses; Indemnification...................................................33
         9.4.        Notices.....................................................................33
         9.5.        Successors and Assigns......................................................34
         9.6.        Counterparts; Construction; Gender..........................................34
         9.7.        Powers......................................................................34
         9.8.        Approvals...................................................................34
         9.9.        Indemnification of the Lender...............................................34
         9.10.       Waivers by the Borrower.....................................................34
         9.11.       Lawful Charges; Late Charge.................................................35
         9.12.       Amendment...................................................................35
         9.13.       Severability................................................................35
         9.14.       Entire Agreement............................................................35
         9.15.       Separate Legal Counsel......................................................35
         9.16.       Right of Setoff.............................................................35
         9.17.       Arbitration; Preservation and Limitation of Remedies........................36
         9.18.       GOVERNING LAW; JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.................36
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                                                ii
<PAGE>


                           LOAN AND SECURITY AGREEMENT


         AGREEMENT, dated as of December 19, 2001, between DRYCLEAN USA, INC., a
Delaware corporation (the "Borrower"), and FIRST UNION NATIONAL BANK, a national
banking association (the "Lender");

                              W I T N E S S E T H:

         WHEREAS,    Steiner-Atlantic   Corporation,   a   Florida   corporation
("Steiner-Atlantic")  and Lender are parties to a Loan and  Security  Agreement,
dated as of November 2, 1998,  pursuant to which Lender has made,  and continues
to make loans to the Borrower (the "Existing Facility");

         WHEREAS,  Steiner-Atlantic  is a  wholly-owned  subsidiary of Borrower,
and, as a condition  precedent  to Lender  providing  the  Existing  Facility to
Steiner  Atlantic,  Lender  required  Borrower  to  guaranty  Steiner-Atlantic's
obligations  under the Existing Facility pursuant to the terms and conditions of
a Guaranty and Security Agreement,  dated November 2, 1998, executed by Borrower
in favor of Lender;

         WHEREAS,  Lender has requested,  and Borrower and Steiner-Atlantic have
agreed,   to   change   the   borrowing   relationship   among   the   Borrower,
Steiner-Atlantic and Lender;

         WHEREAS, as a condition  precedent to so agreeing,  Lender has required
Borrower enter into this Agreement.

         In consideration of the mutual covenants herein contained and to induce
the Lender to extend credit to the Borrower, the parties agree as follows:

         1.      Definitions; Financial and Other Terms.
                 ---------------------------------------

                  1.1.  Definitions.  In addition to the terms defined elsewhere
in this Agreement, the following terms shall have the meanings set forth below:

                  "Accounts" means all accounts,  accounts receivable,  contract
rights, notes, bills, acceptances, choses in action, chattel paper, instruments,
documents, and other forms of obligations at any time owing to a Person, and all
"Accounts," as that term is defined in the Code, the proceeds thereof and all of
such Person's rights with respect to any goods represented  thereby,  whether or
not delivered, goods returned by customers and all rights as an unpaid vendor or
lienor,  including rights of stoppage in transit and of recovering possession by
proceedings  including  replevin  and  reclamation,  together  with all customer
lists,  books and records,  ledger and account  cards,  computer  tapes,  disks,
printouts and records,  whether now in existence or hereafter created,  relating
to Accounts.

                  "Account  Debtor"  means any  Person  who is or who may become
obligated to a Person, under, with respect to, or on account of an Account.

                  "Adjusted LIBOR Market Index Rate (Revolving)" means the LIBOR
Market Index Rate plus two and one-half percent (2.50%) per annum.

                  "Adjusted  LIBOR  Market  Index Rate  (Term)"  means the LIBOR
Market Index Rate plus two and  sixty-five one  hundredths  percent  (2.65%) per
annum.

                  "Advance" means the advance of funds under a Revolving  Credit
Loan.
<PAGE>

                  "Advance  Date"  means  the date a  Revolving  Credit  Loan is
advanced hereunder.

                  "Advance  Request"  means  a  request  for  an  Advance  of  a
Revolving  Credit Loan under  Section 3.3,  substantially  in the form as Lender
shall request.

                  "Affiliate"  of a named Person means (a) any Person  owning 5%
or more of the voting stock or rights of such named Person or of which the named
Person  owns  5% or more  of  such  voting  stock  or  rights;  (b)  any  Person
controlling,  controlled by or under common control with such named Person;  (c)
any  officer or  director of such named  Person or any  Affiliates  of the named
Person;  and (d) any family  member of the named Person or any Affiliate of such
named  Person.  For  the  purposes  of  this  definition,  "control"  means  the
possession,  directly  or  indirectly,  to  direct  or cause  the  direction  of
management and policies of such Person, whether through ownership of securities,
by control or otherwise.

                  "Beneficiary"  means the  person who is the  beneficiary  of a
Letter of Credit.

                  "Borrower Collateral" means all property, assets and rights of
the Borrower (other than real estate), wherever located and whether now owned by
Borrower or hereafter acquired, including, but not limited to all of Borrower's:
(a) Inventory;  (b) General Intangibles;  (c) Accounts and Chattel Paper and any
other instrument or intangible  representing payment for goods or services;  (d)
Equipment; (e) Instruments;  (f) Investment Property; (g) Documents; (h) Deposit
Accounts;  (i) Letter of Credit Rights; (j) General Intangibles;  and (k) parts,
replacements,  additions, accessions,  substitutions,  profits, and products and
cash and non-cash proceeds of any of the foregoing (including insurance proceeds
payable by reason of loss or damage  thereto) in any form and wherever  located.
Borrower Collateral shall include all written or electronically recorded records
relating to any such Borrower Collateral and other rights relating thereto.

                  "Borrowing  Base" means the lesser of (i)  $2,250,000  or (ii)
60% of Eligible  Accounts  plus 50% of Eligible  Inventory  consisting  of spare
parts plus 60% of Eligible Inventory consisting of equipment.

                  "Borrowing   Base   Certificate"   means  the  Borrowing  Base
Certificate  substantially in the form of Exhibit A or such other form as Lender
may request.

                 "Business  Day" means a weekday on which  commercial  banks are
open for business in Miami, Florida.

                  "Chattel  Paper" means all writing or writings  which evidence
both a monetary  obligation and a security  interest in or the lease of specific
goods and in  addition  includes  all  property  included in the  definition  of
"chattel paper" as used in the Code.

                  "Closing Date" means the date first above written.

                  "Code"  means the  Uniform  Commercial  Code,  as in effect in
Florida and in any other  jurisdiction,  as  applicable,  from time to time, and
includes without  limitation Article 9 thereof as currently in effect in Florida
and as the same will be in effect as of January 1, 2002.

                  "Collateral"  means all Borrower  Collateral and all Guarantor
Collateral.

                  "Consolidated  Tangible  Total  Assets" means all assets which
would properly be shown on Borrower's  consolidated  balance sheet in accordance
with  GAAP,  less  the  aggregate


                                       2
<PAGE>

amount of such  assets  which  are  General  Intangibles  or are  classified  as
intangible assets in accordance with GAAP.

                  "Consolidated  Tangible Net Worth" means Consolidated Tangible
Total Assets less Consolidated Total Liabilities.

                  "Consolidated  Total  Liabilities" means all liabilities which
would properly be shown on Borrower's  consolidated  balance sheet in accordance
with GAAP,  except  indebtedness  for borrowed money which is  subordinated in a
manner satisfactory to Lender in its sole discretion.

                  "Debt" means all  liabilities of a Person as determined  under
GAAP and all  obligations  which such Person has  guaranteed  or endorsed or for
which such Person is otherwise secondarily or jointly liable, and shall include,
without  limitation (a) all obligations for borrowed money or purchased  assets,
(b) obligations  secured by assets whether or not any personal liability exists,
(c) the capitalized amount of any capital or finance lease obligations,  (d) the
unfunded portion of pension or benefit plans or other similar  liabilities,  (e)
obligations  as a  general  partner,  (f)  contingent  obligations  pursuant  to
guaranties,  endorsements, letters of credit and other secondary liabilities and
(g) obligations for deposits.

                  "Default"  means any event  which with the  passage of time or
the giving of notice or both would become an Event of Default.

                  "Default  Rate"  means a rate  equal to the  lesser of (a) the
Prime  Rate plus five  percent  per annum or (b) the  highest  rate of  interest
allowed by applicable law.

                  "Eligible Accounts" shall mean all genuine, bona fide Accounts
(valued net of the maximum  amount of any discounts or other  reductions) of the
Borrower arising in the ordinary course of Borrower's business from the sale and
delivery of Inventory or the  rendition of services as to which the Lender has a
first priority  perfected Lien subject only to Permitted Liens,  excluding:  (a)
Accounts  outstanding for 91 days or more from the date of invoice; (b) Accounts
owing from any Affiliate of the Borrower; (c) Accounts owed by a creditor of the
Borrower  or which are in dispute or  subject  to any  counterclaim,  deduction,
contra-account or offset;  (d) Accounts owing by any Account Debtor which is not
Solvent;  (e) Accounts arising from a sale on a bill-and-hold,  guaranteed sale,
sale-or-return,  sale-on-approval,  consignment  or  similar  basis  or which is
subject to repurchase,  return,  rejection,  repossession,  loss or damage;  (f)
Accounts owed by an Account Debtor in the State of Minnesota or the State of New
Jersey  (unless  Borrower has  qualified to do business in such State or filed a
current Notice of Business  Activities report in such State); (g) Accounts as to
which  the goods  giving  rise to the  Account  have not been  delivered  to and
accepted by the Account Debtor or the service giving rise to the Account has not
been  completely  performed or which do not represent a final sale; (h) Accounts
owed by the United States of America  unless the Borrower shall have complied to
the Lender's  satisfaction  with the Federal  Assignment  of Claims Act; (i) the
total  Accounts owed by an Account  Debtor and its  Affiliates  exceeds a credit
limit  established  by the  Lender  in its  discretion  (to the  extent  of such
excess); (j) the Account is evidenced by a note or other instrument, (other than
Chattel  Paper) or  reduced  to  judgment;  (k)  Accounts  which,  by  contract,
subrogation,  mechanics'  lien laws or  otherwise,  are subject to claims by the
Borrower's creditors or other third parties or which are owed by Account Debtors
as to whom any creditor of the Borrower (including any bonding company) has lien
rights;  (l) other Accounts for which the validity,  collectibility or amount of
which is  determined in good faith by the Borrower or the Lender to be doubtful;
(m) any Account  for which there is any  discount,  allowance,  claim,  set-off,
counterclaim or Lien which has not been disclosed in writing to the Lender;  (n)
any Account to the extent it is not for a liquidated  amount;  and (o) any other
Account which the Lender,  upon notice to the Borrower,  deems ineligible in its
sole  credit   judgment.   No  Accounts  shall  be



                                       3
<PAGE>

Eligible Accounts if any representation, warranties or covenants herein relating
thereto shall be inaccurate or violated. Unless the Borrower notifies the Lender
in  writing  to the  contrary,  the  Borrower  shall be  deemed  to have  made a
continuing representation and warranty that each Eligible Account has not become
ineligible.  For the purposes of this  definition,  Borrower  shall also include
Steiner-Atlantic Corporation, a Florida corporation.

                  "Eligible  Inventory" shall mean Inventory created or acquired
in the ordinary course of the Borrower's  business  consisting of finished goods
and raw  materials of the  Borrower as to which the Lender has a first  priority
perfected  Lien  subject  only  to  Permitted  Liens,  of  a  kind  usually  and
customarily  sold by the  Borrower  and which is not,  because of  damage,  age,
unmerchantability, obsolescence or any other condition or circumstance, impaired
in condition, value or marketability in the credit judgment of the Lender or the
Borrower,  and which is not,  in the good faith  credit  judgment of the Lender,
deemed  ineligible after notice to the Borrower.  No Inventory shall be eligible
if it is consigned or if it fails to meet all applicable  governmental standards
for its use and sale. No Inventory shall be eligible unless it is located at the
location  of  Borrower  set forth on  Schedule  2.9,  or if it is stored  with a
warehouseman,  bailee or similar party.  Eligible Inventory shall be computed at
the  lesser  of cost or fair  market  value.  No  Inventory  shall  be  Eligible
Inventory if any representation,  warranty,  or covenant herein relating to such
Inventory is inaccurate or violated.  Unless the Borrower notifies the Lender in
writing to the contrary,  the Borrower shall be deemed to have made a continuing
representation  and  warranty  that none of the  Eligible  Inventory  has become
ineligible.  For the purposes of this  definition,  Borrower  shall also include
Steiner-Atlantic Corporation, a Florida corporation.

                  "Equipment" means all furniture,  fixtures,  equipment,  motor
vehicles,  rolling  stock  and  other  tangible  property  of a Person  of every
description, except Inventory, and in addition includes all property included in
the definition of "equipment" as used in the Code.

                  "Event  of  Default"  means  any  event  specified  as such in
Section 6.1,  provided that there shall have been  satisfied any  requirement in
connection  with such  event for the  giving of notice or the lapse of time,  or
both.

                  "Foreign  Exchange  Subfacility"  has the meaning set forth in
Section 3.10.

                  "Forward" shall have the meaning set forth in Section 3.10.

                  "GAAP" shall have the meaning ascribed thereto in Section 1.2.

                  "General  Intangibles" means all intangible  personal property
(including things in action) except Accounts,  Chattel Paper and Instruments (as
defined in the Code),  including all contract  rights,  copyrights,  trademarks,
trade names, service marks, patents, patent drawings,  designs, formulas, rights
to a Person's  name  itself,  customer  lists,  rights to all prepaid  expenses,
marketing expenses,  rights to receive future contracts,  fees,  commissions and
orders  relating in any respect to any  business of a Person,  all  licenses and
permits,  all computer programs and other software owned by a Person, or which a
Person has the right to use,  and all rights  for  breach of  warranty  or other
claims for funds to which a Person may be entitled, and in addition includes all
property  included in the  definition  of "general  intangibles"  as used in the
Code.

                 "Guarantor"  or  "Guarantors"  shall  mean  any  Person  now or
hereafter   guaranteeing,   endorsing  or  otherwise  becoming  liable  for  any
Indebtedness,  including  without  limitation  Steiner-Atlantic  Corporation,  a
Florida  corporation,   Steiner-Atlantic  Brokerage  Company,  Inc.,  a  Florida
corporation, Dryclean USA Development Corp., a Florida corporation, Dryclean USA
License Corp., a Florida corporation.



                                       4
<PAGE>

                  "Guarantor Collateral means all property, assets and rights of
any Guarantor  (other than real estate),  wherever located and whether now owned
by such Guarantor or hereafter  acquired,  including,  but not limited to all of
such  Guarantor's:  (a)  Inventory;  (b) General  Intangibles;  (c) Accounts and
Chattel Paper and any other  instrument or intangible  representing  payment for
goods or services; (d) Equipment; (e) Instruments;  (f) Investment Property; (g)
Documents;  (h)  Deposit  Accounts;  (i) Letter of Credit  Rights;  (j)  General
Intangibles; and (k) parts, replacements,  additions, accessions, substitutions,
profits,  and products and cash and  non-cash  proceeds of any of the  foregoing
(including  insurance  proceeds  payable by reason of loss or damage thereto) in
any form and wherever located. Guarantor Collateral shall include all written or
electronically  recorded records  relating to any such Guarantor  Collateral and
other rights relating thereto.

                  "Guaranty  Agreement"  or  "Guaranty"  shall mean any guaranty
instrument now or hereinafter executed by a Guarantor in favor of Lender.

                  "Indebtedness"  means all obligations now or hereafter owed to
the Lender and/or its Affiliates by the Borrower and/or its Affiliates,  whether
fixed,  contingent or otherwise,  and whether related or unrelated to the Loans,
including, without limitation, amounts owed or to be owed under the terms of the
Loan Documents, or arising out of the transactions described therein, including,
without  limitation,  the  Loans,  Letter  of  Credit  Obligations,  obligations
relating to the Foreign Exchange Subfacility, sums advanced to pay overdrafts on
any  account   maintained  by  the  Borrower  with  the  Lender,   reimbursement
obligations  for  outstanding  letters  of credit  issued at the  request of the
Borrower,  amounts paid by the Lender under letters of credit or drafts accepted
by the  Lender for the  account  of the  Borrower,  together  with all  interest
accruing thereon,  and all fees, costs or expenses payable by Borrower under any
Loan  Document,  including,  but  not  limited  to,  all  costs  of  collection,
reasonable  attorneys' fees, and expenses of or advances by the Lender which the
Lender  pays or  incurs  in  discharge  of  obligations  of the  Borrower  or to
repossess,  protect, preserve, store or dispose of any Collateral,  whether such
amounts are now due or hereafter become due, direct or indirect and whether such
amounts  due  are  from  time to  time  reduced  or  entirely  extinguished  and
thereafter  re-incurred.  The term also includes,  but without  limitation,  the
obligations  of the Borrower  under any Interest Rate Swap Agreement for any and
all "Loss",  "Settlement Amount" and "Unpaid Amounts", as such terms are defined
in such Interest Rate Swap Agreement.

                  "Interest  Rate Swap  Agreement"  means  each and  every  ISDA
Master Agreement,  including all schedules,  confirmations and exhibits thereto,
entered into at any time between Lender and the Borrower,  as such agreement may
be amended or otherwise modified from time to time hereafter.

                  "Inventory"  means all goods,  merchandise  and other personal
property  of a Person  which is held  for  sale or lease or  furnished  or to be
furnished  under a  contract  for  services  or raw  materials,  and all work in
process and  materials  used or consumed or to be used or consumed in a Person's
business,  and in addition,  includes all property included in the definition of
"inventory" as used in the Code.

                  "Letter of Credit" means a Trade Letter of Credit.

                  "Letter of Credit  Agreement" shall mean any form of letter of
credit agreement  utilized from time to time by the Lender (and each Application
by Applicant for a Credit as referenced therein),  it being understood that each
Letter of Credit issued  thereunder or in connection  therewith  shall be issued
pursuant to and subject to the terms and conditions of this Agreement.



                                       5
<PAGE>

                  "Letter  of Credit  Obligations"  shall  mean all  outstanding
obligations incurred by Lender at the request of the Borrower, whether direct or
indirect,  contingent  or  otherwise,  due or not due,  in  connection  with the
issuance  by Lender of Letters of  Credit.  The amount of such  Letter of Credit
Obligations  shall  equal the  maximum  amount  which may be  payable  by Lender
thereupon or pursuant thereto.

                  "LIBOR  Market  Index  Rate  Loan"  means,  at any  time,  any
outstanding  Loan that bears  interest at the  Adjusted  LIBOR Market Index Rate
(Revolving) or Adjusted LIBOR Market Index Rate (Term) at such time.

                  "LIBOR  Market Index  Rate",  for any day, is the rate for one
month U.S.  dollar  deposits as reported on Telerate page 3750 as of 11:00 a.m.,
London  time,  on such  day,  or if such  day is not a  Business  Day,  then the
immediately  preceding  Business  Day  (or if not so  reported,  then  as may be
determined by Lender from another recognized source or interbank quotation).

                  "Lien"   means  any   mortgage  or  deed  of  trust,   pledge,
hypothecation,  assignment,  deposit arrangement,  lien, charge, claim, security
interest,  easement or  encumbrance,  or preference,  priority or other security
agreement  or  preferential   arrangement  of  any  kind  or  nature  whatsoever
(including,  without  limitation,  any lease or title retention  agreement,  any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing,  and the filing of, or agreement  to give,  any  financing  statement
under the UCC or comparable law of any jurisdiction).

                  "Loans" means the Term Loan and the Revolving Credit Loans.

                  "Loan  Documents"  means this  Agreement,  all other  Security
Agreements,  the Notes, all Guaranty Agreements, all Letter of Credit Agreements
(and all agreements and documents executed in connection  therewith),  all UCC-1
financing  statements  required  under this  Agreement  or any of the other Loan
Documents,  all  Interest  Rate  Swap  Agreements,  and  all  other  agreements,
documents and instruments now or hereafter evidencing, describing, guaranteeing,
relating to or securing the Indebtedness.

                  "Material  Adverse Change" means a material  adverse change in
any of: (i) the  condition  (financial  or  otherwise),  business,  performance,
profits, cash flows, operations,  properties or prospects of the Borrower or any
Guarantor;  (ii) the legality,  validity or  enforceability of any Loan Document
which  substantially  deprives  the Lender of the  benefits  thereof;  (iii) the
ability of the Borrower or any Guarantor to repay the Indebtedness or to perform
its  obligations  under any Loan  Document;  (iv) the rights and remedies of the
Lender under the Loan Documents which  substantially  deprives the Lender of the
benefits thereof;  or (v) the Collateral or the Lender's Liens in the Collateral
or the priority of such Liens.

                  "Material   Adverse   Effect"  means  an  effect  that  has  a
reasonable likelihood of resulting in or causing a Material Adverse Change.

                  "Notes" means the Term Note and the Revolving Credit Note.

                  "Permitted Debt" means (a) the Indebtedness;  (b) Debt payable
to suppliers  and other trade  creditors  in the ordinary  course of business on
ordinary and customary  trade terms and which is not past due more than 30 days;
(c) Debt secured by Permitted Liens; (d) Debt which is subordinated in right and
time of payment to all Indebtedness in a manner reasonably  satisfactory in form
and  substance to the Lender;  and (e) such other Debt as the Lender may consent
to in writing from time to time.



                                       6
<PAGE>

                  "Permitted  Liens" means (a) Liens securing the  Indebtedness;
(b) Liens for taxes and other  statutory  Liens,  landlord's  Liens and  similar
Liens arising by operation of law (provided they are subordinate to the Lender's
Liens on Collateral) so long as the obligations secured thereby are not past due
more  than 30 days;  (c)  Liens  described  on  Schedule  1.1  hereto  (if any),
provided,  however,  that no Debt not now  secured  by such Liens  shall  become
secured by such Liens  hereafter  other than Liens  arising by  operation of law
(provided they are  subordinate  to the Lender's  Liens on Collateral)  and such
Liens shall not encumber any other assets;  and (d) purchase  money Liens to the
extent  such  Liens  secure not more than 100% of the  purchase  price of assets
purchased without violating the terms hereof and cover only assets purchased.

                  "Person" means any natural person, corporation, unincorporated
organization, trust, joint stock company, joint venture, association, limited or
general partnership, limited liability company, any government, or any agency or
political subdivision of any government.

                  "Prime  Rate"  shall be (for any day)  that  rate of  interest
announced  by Lender  from time to time as its Prime  Rate and is one of several
interest  rate bases used by Lender.  Lender lends at rates both above and below
its Prime  Rate,  and  Borrower  acknowledges  that  Lender's  Prime Rate is not
represented  or  intended  to be the lowest or most  favorable  rate of interest
offered by Lender.

                  "Revolving  Credit  Loan"  shall have the meaning set forth in
Section 3.1(b).

                  "Revolving  Credit Loan Maturity  Date" shall mean the earlier
of (i)  October 30, 2002 or (ii) the date the Lender  demands  repayment  of the
Revolving  Credit  Loans,  unless  renewed,  extended  or modified in writing by
Lender, in its sole discretion.

                  "Revolving  Credit Note" shall mean the revolving  credit note
referenced in Section 3.2.

                  "Security  Agreement"  means this Agreement as it relates to a
Lien on any or all of the Collateral, and any other mortgage, security agreement
or similar instrument now or hereafter  executed by the Borrower,  any Guarantor
or any other Person  granting the Lender a Lien on any  Collateral to secure the
Indebtedness.

                  "Solvent"  means,  as to any  Person,  that  such  Person  has
capital  sufficient to carry on its business and  transactions  and all business
and  transactions in which it is about to engage and is able to pay its debts as
they mature and owns  property  having a value,  both at fair  valuation  and at
present fair saleable value, greater than the amount required to pay its debts.

                  "Spot" shall have the meaning set forth in Section 3.10.

                  "Subsidiary"  means  any  corporation,  partnership  or  other
Person in which the Borrower,  directly or  indirectly,  owns 50% or more of the
stock, capital or income interests, or other beneficial interests.

                  "Term" shall have the meaning ascribed thereto in Section 8.1.

                  "Term  Loan"  shall  have the  meaning  set  forth in  Section
3.1(a).

                  "Term Loan Maturity Date" shall mean December 30, 2004.

                  "Term Note" means the term note referenced in Section 3.2.



                                       7
<PAGE>

                  "Trade  Letter of Credit" shall mean a letter of credit (sight
or time)  issued by the Lender  for the  account  of the  Borrower  payable to a
supplier of Borrower upon presentation of appropriate supporting documentation.

                  1.2.  Financial  Terms.  All financial terms used herein shall
have  the  meanings  assigned  to  them  under  generally  accepted   accounting
principles  consistently  applied  and  maintained  on a basis for the  Borrower
throughout the period indicated and consistent with the prior financial practice
of the Borrower on a consolidated  basis ("GAAP"),  unless another meaning shall
be specified.

                  1.3. Other Terms.  All other  capitalized  terms  contained in
this Agreement shall, when the context so indicates,  have the meanings provided
for by the  Code to the  extent  the  same  are  used or  defined  therein.  Any
reference  to this  Agreement  or any other  Loan  Document  shall  include  any
amendment,  supplement,  enlargement,  extension,  renewal, restatement or other
modification thereof.

         2.       Representations  and Warranties. In order to induce the Lender
to enter  into this  Agreement  and to make the Loans,  to issue the  Letters of
Credit  and  to  extend  credit   accommodations   under  the  Foreign  Exchange
Subfacility,  the Borrower makes the following  representations  and warranties,
all of which shall survive the execution and delivery of the Loan  Documents and
the making of the Loans and the  issuance  of Letters of Credit  hereunder,  and
shall be deemed to be made on each day on which any Loan is outstanding  (except
to the extent a representation  and warranty is made as of a particular date, in
which case they shall be true and correct as of such date).

                  2.1. Valid Existence and Power. Borrower and each Guarantor is
a  corporation  duly  organized,  validly  existing and in good standing (or its
status is active,  as  applicable),  under the laws of the  jurisdiction  of its
organization  and is duly  qualified  or licensed  to  transact  business in all
places where the failure to be so qualified could reasonably be expected to have
a Material Adverse Effect. Borrower and each Guarantor has the power to make and
perform  the Loan  Documents  executed  by each and all  such  instruments  will
constitute the legal, valid and binding obligations of such Person,  enforceable
in accordance with their respective terms,  except to the extent  enforceability
may be limited by bankruptcy,  fraudulent conveyance,  insolvency, moratorium or
other laws relating to  creditors'  rights  generally and general  principles of
equity.

                  2.2. Authority. The execution, delivery and performance of the
Loan Documents by Borrower and each  Guarantor have been duly  authorized by all
necessary  action of such Person,  and do not and will not violate any provision
of law or regulation,  or any writ, order or decree of any court or governmental
or regulatory authority or agency or any provision of the governing  instruments
of such Person,  and do not and will not, with the passage of time or the giving
of notice, result in a breach of, or constitute a default or require any consent
under, or result in the creation of any Lien, other than Permitted  Liens,  upon
any  property  or  assets  of such  Person  pursuant  to,  any law,  regulation,
instrument  or agreement to which such Person is a party or by which such Person
or its respective properties may be subject, bound or affected.

                  2.3.  Condition.  Other  than as  disclosed  in the  financial
statements  most  recently  delivered  to the Lender,  neither  Borrower nor any
Guarantor has any direct or contingent obligations or liabilities required to be
disclosed  therein  under  GAAP  (including  any  guarantees  or  leases) or any
material  unrealized or anticipated  losses from any commitments  required to be
disclosed therein under GAAP, except for executory contracts.  To the Borrower's
knowledge,  there is no fact which the Borrower has not  disclosed to the Lender
in writing which could reasonably be expected to have a Material Adverse Effect.



                                       8
<PAGE>

                  2.4.  Financial   Statements.   The  financial  statements  of
Borrower and each Guarantor delivered to Lender have been prepared in accordance
with GAAP, contain no material misstatements or omissions, and fairly present in
all material  respects the financial  position,  assets and  liabilities of such
Person as of the respective dates thereof and the results of operations and cash
flows of such Person for the respective periods then ended.

                  2.5. Litigation;  Government Regulation. There are no actions,
suits or proceedings  pending or threatened against or affecting the Borrower or
any Guarantor at law or in equity before any court or administrative  officer or
agency which, if adversely  determined,  could  reasonably be expected to have a
Material  Adverse Effect.  Neither Borrower nor any Guarantor is in violation of
or  in  default  under  any  applicable  statute,  rule,  order,  decree,  writ,
injunction or regulation of any  governmental  body  (including any court),  the
violation  of which could  reasonably  be  expected  to have a Material  Adverse
Effect.

                  2.6. Agreements,  Etc. Neither Borrower nor any Guarantor is a
party to any agreement or instrument or subject to any court order, governmental
decree or any charter or other corporate  restriction  which could reasonably be
expected to have a Material  Adverse Effect.  Neither Borrower nor any Guarantor
is in  default  in the  performance,  observance  or  fulfillment  of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which it is a party,  or any law,  regulation,  decree,  order or the like which
could  reasonably be expected to have a Material  Adverse Effect.  No Default or
Event of Default has occurred.

                  2.7. Authorizations.  All authorizations,  consents, approvals
and licenses  required  under  applicable law or regulation for the ownership or
operation of the property  owned or operated by the Borrower or any Guarantor or
for the  conduct of any  business  in which the  Borrower  or any  Guarantor  is
engaged have been duly issued and are in full force and effect,  and neither the
Borrower nor any Guarantor is in default, nor has any event occurred which, with
the  passage  of time or the  giving of  notice,  or both,  would  constitute  a
default,  under any of the terms or provisions of any part thereof, or under any
order,  decree,  ruling,  regulation  or other  decision  or  instrument  of any
governmental  commission,  bureau  or  other  administrative  agency  or  public
regulatory body having  jurisdiction  over the Borrower or any Guarantor,  which
default is reasonably likely to have a Material Adverse Effect.  Except as noted
herein,  no approval,  consent or  authorization  of, or filing or  registration
with,  any  governmental  commission,  bureau or other  regulatory  authority or
agency is required with respect to the execution, delivery or performance of any
Loan Document by the Borrower or any Guarantor.

                  2.8.  Title;  Collateral.  The Borrower  and/or each Guarantor
have good  title to the  Collateral  and to all of the  assets  set forth in the
financial  statements  most recently  delivered to the Lender (except  Inventory
sold  since the date of such  financial  statements  in the  ordinary  course of
business), free and clear of all Liens, except Permitted Liens. The Borrower and
the Guarantors alone have full ownership rights in all Collateral,  subject only
to Permitted  Liens.  The Liens granted to the Lender herein and pursuant to any
other  Security  Agreement  (a)  constitute  and,  as to  subsequently  acquired
property,  will  constitute,  Liens  under  applicable  law  including,  without
limitation,  the Code,  entitled to all of the rights,  benefits and  priorities
provided by applicable law including,  without limitation, the Code and (b) are,
and as to such  subsequently  acquired  property will be, first priority,  fully
perfected,  superior and prior to the rights of all third persons,  now existing
or hereafter arising,  subject only to Permitted Liens. All of the Collateral is
intended  for use  solely  in the  Borrower's  business.  Except as set forth on
Schedule  2.8, no  Affiliate  of Borrower has any interest in any assets used in
Borrower's business.

                  2.9.  Location  and  Names.  The chief  executive  office  and
principal  place of business of the  Borrower,  where its  business  records are
located,  is the address  designated for notices in Section 9.4. Borrower has no
other places of  business,  except as shown on Schedule


                                       9
<PAGE>

2.9.  Borrower  has not,  during the past five years,  been known as or used any
other corporate, fictitious or trade names or been the subject of any bankruptcy
or similar proceeding.

                  2.10. Taxes.  Neither Borrower nor any Guarantor is delinquent
in  the  payment  of any  taxes  which  have  been  levied  or  assessed  by any
governmental authority against it or its assets. The Borrower and each Guarantor
has timely filed all tax returns which are required by law to be filed, and have
paid all taxes and all other  assessments  or fees levied upon the  Borrower and
any Guarantor or upon its properties to the extent that such taxes,  assessments
or fees have become due.  No  controversy  in respect of taxes is pending or, to
the knowledge of the Borrower, threatened against the Borrower or any Guarantor.
The  Borrower  and  each  Guarantor  has paid all  withholding,  FICA and  other
payments  required by federal,  state or local  governments  with respect to any
wages paid to employees.

                  2.11.   Labor  Law  Matters.   None  of  Borrower's   nor  any
Guarantor's  employees is a member of a labor  union,  and the Borrower is not a
party to or  otherwise  bound by,  or  threatened  with any labor or  collective
bargaining  agreement.  None of the Borrower's nor any Guarantor's  employees is
known to be engaged in organizing  any labor union or other  employee group that
is seeking  recognition as a bargaining  unit. No goods or services have been or
will be produced by the Borrower or any Guarantor in violation of any applicable
labor laws or regulations or in violation of any minimum wage,  wage-and-hour or
other similar laws or regulations. Neither Borrower nor any Guarantor is subject
to any material labor dispute.

                  2.12. Accounts.  Each Account,  instrument,  Chattel Paper and
other  writing  constituting  any portion of the  Collateral  is (a) genuine and
enforceable in accordance  with its terms except for such limits thereon arising
from bankruptcy and similar laws relating to creditors'  rights; (b) not subject
to any defense, setoff, claim or counterclaim of any nature against the Borrower
or any Guarantor (i) for claims not exceeding $50,000 in the aggregate  incurred
in the ordinary course of business or (ii) as to which the Borrower has notified
the Lender in writing; and (c) not subject to any other circumstances that would
impair the validity,  enforceability  or amount of such Collateral  except as to
which the  Borrower  has  notified  the Lender in writing.  Each Account and all
Inventory  included in any Advance  Request or  Borrowing  Base  Certificate  or
calculation  delivered  to Lender as an Eligible  Account or Eligible  Inventory
meets  and  will  meet all  requirements  of an  Eligible  Account  or  Eligible
Inventory, as the case may be.

                  2.13.  Use and  Location  of  Collateral.  The  Collateral  is
located  only,  and  shall  at all  times be kept and  maintained  only,  at the
location or  locations as  described  on Schedule  2.9,  which are (i) owned and
operated  by the  Borrower  and/or  any  Guarantor  (and  for  each  of  which a
mortgagee's  waiver has been delivered in accordance  with Section  4.1(f)),  or
(ii) leased and operated by the Borrower  and/or any Guarantor  (and for each of
which a landlord's  lien waiver has been  delivered in  accordance  with Section
4.1(f)).

                  2.14.  Judgment Liens.  Neither the Borrower nor any Guarantor
nor any of their  assets is  subject  to any unpaid  judgments  (whether  or not
stayed) or any judgment liens in any jurisdiction.

                  2.15. Intent and Effect of Transactions;  Borrower's Solvency.
This Agreement and the transactions contemplated herein are not made or incurred
with intent to hinder,  delay or defraud any Person to whom the  Borrower or any
Guarantor has been, is now, or may hereafter become  indebted.  The Borrower and
each  Guarantor  are Solvent.  After giving  effect to this  Agreement,  and the
transactions  contemplated  hereby (including the uses of proceeds  permitted by
this Agreement), the Borrower and each Guarantor will be Solvent and will not be
left with an unreasonably small capital with which to engage in their businesses
or in any businesses or transactions in which Borrower or any Guarantor  intends
to engage.  This Agreement is not



                                       10
<PAGE>

entered  into with the intent to incur,  or with the belief that the Borrower or
any  Guarantor  would  incur,  debts  that  would be  beyond  Borrower's  or any
Guarantor's ability to pay as such debts mature.

                  2.16.  Subsidiaries.  Borrower has the following Subsidiaries:
Steiner-Atlantic  Corp.,  a  Florida  corporation,  Steiner  Atlantic  Brokerage
Company, Inc., a Florida corporation,  Dryclean USA Development Corp., a Florida
corporation, DryClean USA License Corp., a Florida corporation.

                  2.17.  Hazardous  Materials.  Except as  disclosed on Schedule
2.17, the Borrower's and Guarantors'  properties and  improvements  thereon have
not in the past been used,  are not  presently  being used,  and will not in the
future be used for,  nor does the  Borrower  or any  Guarantor  engage  in,  the
handling, storage, manufacture, disposition, processing,  transportation, use or
disposal of hazardous or toxic  materials,  in any such instance in violation of
applicable environmental laws.

                  2.18.  ERISA.  Neither the Borrower nor any  Guarantor has any
pension, profit-sharing or other benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended  ("ERISA") or they have furnished to the
Lender true and complete copies of the latest annual report required to be filed
pursuant to Section 104 of ERISA,  with respect to each employee benefit plan or
other plan maintained for employees of the Borrower or any Guarantor and covered
by Title IV of  ERISA (a  "Plan"),  and no  Termination  Event  (as  hereinafter
defined)  with respect to any Plan has occurred  and is  continuing  and no fact
exists  which  might  constitute  grounds  for a  Termination  Event  or for the
appointment  of a trustee to administer  any such plan. For the purposes of this
Agreement,  a  "Termination  Event"  means a  "reportable  event" as  defined in
Section  4043(b)  of ERISA  ("Reportable  Event"),  or the filing of a notice of
intent to terminate  under  Section 4041 of ERISA.  Neither the Borrower nor any
Guarantor  has  any  unfunded  liability  with  respect  to any  such  Plan.  No
"prohibited  transaction"  (as defined under ERISA) has occurred with respect to
any such Plan. Each such Plan has been administered in accordance with ERISA and
the Code.

                  2.19.  Investment  Company  Act.  Neither the Borrower nor any
Guarantor is an "investment company" as defined in the Investment Company Act of
1940, as amended.

                  2.20.  Trade  Relations.  There exists no actual or threatened
termination,  cancellation  or limitation of, or any  modification or change in,
the business  relationship of the Borrower or any Guarantor with any customer or
any group of customers  whose  purchases  individually  or in the  aggregate are
material to the business of the Borrower or any Guarantor,  or with any material
supplier.

                  2.21.  Maintenance  of Business and  Properties.  Borrower and
each Guarantor  shall at all times  maintain,  preserve and protect its property
used or useful in the conduct of its business, and keep the same in good repair,
working  order and  condition,  and from time to time make, or cause to be made,
all material needful and proper repairs, renewals, replacements, betterments and
improvements thereto so that the business carried on in connection therewith may
be conducted  properly and in accordance  with standards  generally  accepted in
businesses  of a similar  type and size at all times,  and  maintain and keep in
full force and effect all licenses and permits  necessary to the proper  conduct
of its business.

                  2.22. Full Disclosure.  The Loan Documents,  together with the
statements  furnished by or on behalf of the Borrower and each  Guarantor to the
Lender  in  connection  with the  Loan  Documents  do not,  contain  any  untrue
statement  of a material  fact or omit a  material  fact  necessary  to make the
statements  contained  therein  or  herein  not  misleading.  To the


                                       11
<PAGE>

Borrower's  knowledge,  there is no fact which the Borrower or any Guarantor has
not  disclosed to the Lender in writing  which might  reasonably  be expected to
have a Material Adverse Effect.

         3.       Loans.

                  3.1. Advances of Loans.

                       (a)  Advance of Term Loan.  Upon the terms and subject to
the  conditions  of this  Agreement and the other Loan  Documents,  and provided
there has not occurred a Default or Event of Default,  the Lender agrees to make
a term loan (the  "Term  Loan") to the  Borrower  on the  Closing  Date,  in the
principal amount of $960,000.  The Lender will disburse the proceeds of the Term
Loan to the Borrower in accordance  with written  instructions  furnished to the
Lender by the Borrower on or before the Closing Date.

                       (b) Advance of Revolving Credit Loans. Upon the terms and
subject to the  conditions of this Agreement and the other Loan  Documents,  and
provided there has not occurred a Default or Event of Default and Lender has not
demanded  repayment  of the  Revolving  Credit  Loans (as defined  herein)  (and
provided a Default or Event of Default would not occur as a result of the making
of a Revolving Credit Loan),  from time to time upon the request of the Borrower
until the  Revolving  Credit Loan  Maturity  Date,  upon  Lender's  receipt from
Borrower of an Advance  Request,  the Lender may,  in its sole  discretion  make
revolving credit loans  ("Revolving  Credit Loans") to Borrower,  provided that,
after  giving to such Advance  Request,  the total  principal  of all  Revolving
Credit Loans  outstanding shall not exceed the Borrowing Base less all Letter of
Credit  Obligations  less  the  total  value  of  outstanding  Forward  and Spot
transactions. Upon the terms and subject to the conditions of this Agreement and
the other Loan Documents,  and provided that there has not occurred a Default or
Event of Default and Lender has not demanded  repayment of the Revolving  Credit
Loans,  the  outstanding  principal  balance of the  Revolving  Credit Loans may
increase and decrease from time to time,  and Advances  thereunder may be repaid
and  reborrowed,  so long as the  total  principal  balance  of all  outstanding
Revolving  Credit Loans does not at any time exceed the Borrowing  Base less all
Letter of Credit  Obligations  less the total value of  outstanding  Forward and
Spot  transactions.  Should  there occur any  overdraft  of any deposit  account
maintained  by the  Borrower  with the  Lender,  the Lender  may, at its option,
disburse  funds  (whether or not in excess of the  Borrowing  Base) to eliminate
such  overdraft  and such  disbursement  shall be deemed an advance of Revolving
Credit  Loan  proceeds  hereunder  entitled  to all of the  benefits of the Loan
Documents.  Nothing herein shall be deemed an authorization of or consent to the
creation of an overdraft in any account or create any obligations on the part of
the Lender.  The Borrower  shall  immediately  repay to the Lender any amount by
which the principal  amount of Revolving  Credit Loans  outstanding  exceeds the
Borrowing  Base less all Letter of Credit  Obligations  less the total  value of
outstanding  Forward  and Spot  transactions.  All  Advances,  whether or not in
excess of the  Borrowing  Base shall be part of the  Revolving  Credit Loans and
Indebtedness,  shall  bear  interest  as  provided  herein,  shall be payable in
accordance  herewith and shall be entitled to all rights and  security  provided
for herein and in the other Loan  Documents.  In determining the Borrowing Base,
the Lender shall have the right from time to time upon notice to the Borrower to
establish and  re-establish  such reserves as it deems  appropriate  in its sole
credit judgment.

                  NOTWITHSTANDING  ANYTHING  TO THE  CONTRARY  SET FORTH IN THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT,  BORROWER SHALL REPAY ALL REVOLVING CREDIT
LOANS IN FULL  IMMEDIATELY  UPON DEMAND OF LENDER,  REGARDLESS OF WHETHER OR NOT
ANY DEFAULT OR EVENT OF DEFAULT HAS OCCURRED OR IS CONTINUING.

                  3.2. The Notes.  The  obligation  of the Borrower to repay (i)
the Term  Loan  shall be  evidenced  by the term  note in the form of  Exhibit C
hereto (the "Term Note") and, (ii)



                                       12
<PAGE>

the Revolving Credit Loan shall be evidenced by the revolving credit note in the
form of Exhibit D hereto (the "Revolving Credit Note");  in each instance,  duly
executed by the Borrower, dated the Closing Date and payable to the order of the
Lender.

                  3.3.  Notice  and  Manner  of  Borrowing.  Upon the  terms and
subject to the conditions hereof, Borrower shall give Lender irrevocable written
notice  ("Advance  Request") of each proposed Advance not later than 11:00 a.m.,
Miami time,  on the same  Business  Day as such  proposed  borrowing.  Each such
notice shall  include or be  accompanied  by a Borrowing  Base  Certificate  and
specify (i) the date of such  Advance,  which shall be a Business  Day, (ii) the
amount to be Advanced,  and (iii)  containing  such other  information as Lender
shall reasonably  request.  Advance Requests  received after 11:00 a.m. shall be
deemed  received on the next Business Day. Once  delivered,  any Advance Request
shall be  irrevocable.  All  obligations  hereunder  and under  the  other  Loan
Documents shall constitute one general obligation of the Borrower.  The interest
rate  applicable to each of the Adjusted  LIBOR Market Index Rate Loans shall be
adjusted  daily as  applicable  to reflect the LIBOR  Market  Index Rate on such
date.

                  3.4  Interest.  All interest  accrued on any Loan shall be due
and payable on each date when all or any amount of the unpaid principal  balance
of  such  Loan  shall  be  due  (whether  by  maturity,  optional  or  mandatory
prepayment,  acceleration or otherwise). Interest on all Loans shall also be due
and payable in arrears  first  Business  Day of each month.  Except as otherwise
expressly  provided herein,  interest on Revolving Credit Loans shall be payable
at a rate per annum equal to the Adjusted  LIBOR Market Index Rate  (Revolving).
Except as otherwise  expressly provided herein,  interest on the Term Loan shall
be payable at a rate per annum equal to the  Adjusted  LIBOR  Market  Index Rate
(Term).

                  3.5  Repayment  of Loans.  The  principal  amount of the Loans
shall be repaid as follows:

                        (a) Term Loan. Borrower shall repay the principal amount
of the  Term  Loan  in  thirty-six  (36)  consecutive  monthly  installments  of
$26,666.67  on the last day of each  month,  commencing  on  January  31,  2002.
Notwithstanding  anything to the contrary set forth herein, the entire remaining
unpaid principal balance of Term Loan shall be repaid on the earlier of the Term
Loan Maturity Date or the date upon which Borrower's  obligations hereunder have
been accelerated upon the occurrence of an Event of Default.

                        (b)  Revolving  Credit Loans.  Borrower  shall repay the
entire  principal  amount of all  Revolving  Credit Loans  immediately  upon the
earliest of (i) the Revolving  Credit Loan Maturity Date, (ii) the  acceleration
of Borrower's  obligations hereunder upon the occurrence of an Event of Default,
(iii) at such time and to the extent that the amount of  Revolving  Credit Loans
outstanding exceeds the amount permitted hereby or (iv) upon DEMAND by Lender.

                  3.6. Costs, Fees and Expenses.  Costs, fees and expenses which
are  payable  pursuant to this  Agreement  or any other Loan  Document  shall be
payable by Borrower to Lender or Lender's designee upon written demand by Lender
to Borrower.  Borrower  irrevocably  authorizes and directs Lender,  at Lender's
option,  to cause all sums payable  hereunder  or under any Loan  Document to be
paid on the date due by  charging  such  payment  as a  Revolving  Credit  Loan.
Without limiting the generality of the foregoing, all such amounts which are not
paid when due hereunder  shall be  Indebtedness  secured by the  Collateral  and
shall bear interest at the Default Rate.

                  3.7.  Prepayments.  Subject to the terms and conditions of any
Interest Rate Swap Agreement,  Borrower may prepay any Loan in whole at any time
or in part from time to


                                       13
<PAGE>

time on any Business Day by notifying Lender by 9:00 a.m., Miami,  Florida time,
on such Business Day, without penalty or premium; provided, however, that

                        (i) each such  prepayment  shall be  accompanied  by the
          payment  of accrued  interest  to the date of such  prepayment  on the
          amount prepaid and shall  designate  whether it is a payment of a Term
          Loan or a Revolving Credit Loan, and

                        (ii) each partial  prepayment  of any Term Loan shall be
          applied to the remaining  scheduled  payments of principal  prepaid in
          the inverse order of their maturities.

                  Notwithstanding  anything to the  contrary set forth herein or
in any Loan Document,  any prepayment will not affect  Borrower's  obligation to
continue  making  payments in connection  with any Interest Rate Swap Agreement,
which will remain in full force and effect, notwithstanding such prepayment.

                  3.8. Payments and Computations.

                       (a) The Borrower  shall make each payment  hereunder  and
under the Notes not later than 12:00 noon, Miami,  Florida time, on the day when
due in lawful money of the United  States of America to the Lender at its office
at Commercial Loan Payment Center, P.O. Box 740502, Atlanta,  Georgia 30374-0502
or such other address as Lender shall designate from time to time.

                       (b) The Borrower hereby  authorizes the Lender, if and to
the extent  payment is not made when due  hereunder or under any Note, to charge
from time to time against the Borrower's  accounts,  if any, with the Lender any
amount so due.

                       (c) All  computations  of  interest  shall be made by the
Lender on the basis of a year of three  hundred  sixty (360) days for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest is payable.

                       (d)  Whenever  any payment to be made  hereunder or under
any Note  shall be stated to be due on a day other  than a  Business  Day,  such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest.

                  3.9. Facility for Letters of Credit.

                       (a)  Subject to all of the terms and  conditions  of this
Agreement and the other Loan Documents, and provided there does not then exist a
Default or Event of  Default  and  provided  that no Default or Event of Default
would  result from the  issuance  of a Letter of Credit,  the Lender will issue,
upon the Borrower's written request therefor, from time to time on and after the
Closing Date until the  Revolving  Credit Loan Maturity Date or demand by Lender
of repayment of the  Revolving  Credit  Loans,  Trade  Letters of Credit for the
account of the Borrower,  upon the execution of such documents and agreements as
Lender shall require. In no event shall Letter of Credit Obligations outstanding
at any time hereunder exceed  $1,000,000 in the aggregate.  Subject to the terms
and conditions set forth in this Agreement and the other Loan Documents,  Lender
shall be under no  obligation  to issue any  Letter of Credit on the  Borrower's
behalf if, after giving effect to the requested issuance, the sum of outstanding
Revolving  Credit  Loans  plus all Letter of Credit  Obligations  plus the total
value of outstanding  Forward and Spot  transactions  would exceed the Borrowing
Base.



                                       14
<PAGE>

                       (b) Notwithstanding anything to the contrary set forth in
this Section 3.9,  Lender  shall be under no  obligation  to issue any Letter of
Credit  having a maturity  date or expiry date which is later than the Revolving
Credit Loan  Maturity  Date or which is payable in a currency  other than United
States  Dollars,  Italian  Lira or  Euro-currency  (at such time  Lender  issues
letters of credit generally in Euro-currency).

                       (c) In the event that  Lender  shall make any payment on,
or  pursuant  to, any Letter of Credit,  the  Borrower  shall be  obligated  to,
following notice of such payment by Lender, immediately reimburse Lender for any
such payment.  If the Borrower  does not  reimburse  Lender on the same day that
Lender  provides  such  notice,  the  Lender  shall  have the right (but not the
obligation)  to  make a  Revolving  Credit  Loan  in an  amount  equal  to  such
unreimbursed  portion  of such  payment;  and if Lender  elects not to make such
advance of a Revolving Credit Loan, the entire  unreimbursed amount and fees and
costs shall  continue to be  Indebtedness  secured by the  Collateral  and shall
accrue interest at the Default Rate.

                       (d) In the event that any  Letter of Credit  Obligations,
whether or not then due and payable,  shall for any reason be outstanding on the
date Lender  demands  repayment of the  Revolving  Credit Loans or the Revolving
Credit Loan Maturity  Date, the Borrower will either (i) provide the Lender with
a letter of credit or other guaranty of payment for all then outstanding Letters
of Credit issued by Lender,  satisfactory  to the Lender in its  discretion,  or
(ii) pay to the Lender for the account of Lender cash in an amount  equal to the
maximum  amount then available to be drawn under such Letters of Credit and fees
and costs.  All funds  delivered to the Lender  pursuant to this  subsection (d)
shall be held by Lender for the account of the Borrower.

                       (e) The  Borrower  shall comply with all of the terms and
conditions  imposed  upon the  Borrower  under each  Letter of Credit  Agreement
executed by Borrower.

                       (f) In the event of the Borrower's  failure to pay to the
Lender,  upon demand,  the total amount of liabilities  incurred or sums paid by
the Lender in connection  with any such Letter of Credit,  the Lender shall,  in
addition  to its  rights  under the UCC of the State of  Florida  and under this
Agreement,  be fully  subrogated to the rights of any Beneficiary of the Letters
of Credit with respect to any  obligation  of the  Borrower to such  Beneficiary
discharged with the proceeds of any Letter of Credit

                       (g)  The  Borrower  hereby   unconditionally   agrees  to
reimburse  the  Lender  for the  total  amount  of the sums  paid by  Lender  in
connection  with the  issuance  of any  Letters of Credit or any  additional  or
further liability which may accrue against Lender in connection with the same.

                       (h)  The  Borrower  hereby   unconditionally   agrees  to
indemnify  the  Lender  and hold the Lender  harmless  from any and all  losses,
claims or liabilities  arising from any transactions or occurrences  relating to
Letters  of  Credit  issued  for the  Borrower's  account,  and all  obligations
incurred in connection therewith,  including any loss or claim due to any action
taken or  omitted  by any  Beneficiary  thereof.  The  Borrower's  unconditional
obligation to the Lender shall not be modified or  diminished  for any reason or
in any amount  whatsoever.  The  Borrower  agrees  that any action  taken by the
Lender in connection with a Letter of Credit,  if taken in good faith,  shall be
binding upon the Borrower  and shall not impose any  resulting  liability on the
Lender.

                       (i) In the event that this  Agreement is  terminated  for
any reason by the Borrower or the Lender as herein provided,  the Lender demands
repayment  of the  Revolving  Credit  Loans or there  are any  Letter  of Credit
Obligations  outstanding on the Business Day prior to the Revolving  Credit Loan
Maturity Date, the Lender shall be entitled to charge immediately



                                       15
<PAGE>


the  Borrower's  Revolving  Credit Loan  account  hereunder  or any of its other
accounts with the full amount of any outstanding  Letter of Credit  Obligations,
whether  the  Borrower's  obligations  with  respect  thereto  are  absolute  or
contingent at any time. All funds related to such charge shall be held by Lender
to be applied against Indebtedness. The Lender shall also be entitled to hold an
amount which the Lender may deem  reasonably  necessary to cover possible claims
under any outstanding  Letters of Credit unless and until the Lender is supplied
with an  indemnity  reasonably  satisfactory  to it with respect to any possible
liability  under  such  Letters  of  Credit  or a  release  of  its  liabilities
thereunder.

                       (j) As  additional  consideration  for  Lender's  issuing
Letters of Credit for the account of Borrower,  Borrower agrees to such fees and
costs in connection therewith as Lender specifies.

                       (k) All Trade  Letters  of Credit  shall be used only for
the purpose of supporting Borrower's obligations with respect to the purchase of
Inventory or for any other purpose approved in writing by Lender.

                  3.10. Facility for Foreign Exchange.

                       (a) Subject to all of the terms and  conditions set forth
in this  Agreement and the other Loan Documents and provided that there does not
then exist a Default or Event of Default and  provided  that no Default or Event
of Default  would  result from the  Lender's  purchase of foreign  exchange  for
Borrower,  the Lender shall, upon Borrower's  written request,  purchase foreign
exchange (the "Foreign  Exchange  Subfacility") for the Borrower's use from time
to time on and  after the  Closing  Date and until  the  Revolving  Credit  Loan
Maturity  Date,  upon  Borrower's  execution of such documents and agreements as
Lender may request.

                       (b) The Borrower  may request (i) that the Lender  engage
in spot foreign exchange ("Spot") for a value in U.S. Dollars for the purpose of
hedging currency exposure in connection with the Borrower's  import  activities,
and  (ii)  that  the  Lender  enter  into  forward  foreign  exchange  contracts
("Forward") to hedge currency  exposure in connection with the Borrower's import
activities;  provided,  however,  that  neither the amount of Spot nor amount of
Forward  contracts  shall  exceed  $250,000  in the  aggregate  at any one  time
outstanding unless otherwise agreed to in writing by the Lender.  Subject to the
terms and conditions  set forth in this Agreement and the other Loan  Documents,
Lender  shall  be  under  no  obligation  to  enter  into  any  Spot or  Forward
transactions  on  Borrower's  behalf if,  after giving  effect to the  requested
transaction,  the sum of outstanding  Revolving  Credit Loans plus all Letter of
Credit  Obligations  plus  the  total  value  of  outstanding  Forward  and Spot
transactions would exceed the Borrowing Base.

                       (c) Obligations under Spot transactions  shall be due and
payable by Borrower in U.S. Dollar or foreign currency equivalent, whichever the
case may be,  within  two  Business  Days from the date  Borrower  buys the Spot
foreign exchange (the "Spot Value Date"). Obligations under Forward transactions
shall be due and  payable by the  Borrower  in U.S.  Dollar or foreign  currency
equivalent,  whichever  the case may be, on or prior to the maturity date of the
respective  contract  (the "Forward  Value  Date").  The Spot Value Date and the
Forward Value Date shall be  collectively  referred to hereinafter as the "Value
Date".

                       (d) The Borrower hereby gives the Lender the authority to
make  Revolving  Credit  Loans for all  amounts  due  under the Spot or  Forward
transaction on the Value Date.

                       (e) In the event that any Spot or Forward is  outstanding
on the Revolving  Credit Loan Maturity Date, the Borrower will provide or pay to
the Lender for any



                                       16
<PAGE>

settlement  of  outstanding  Spot or  Forwards  either of the  following:  (i) a
standby  letter of credit  acceptable to the Lender or other guaranty of payment
acceptable  to the  Lender;  or (ii) cash  funds to be  directed  into an escrow
account. The amount required of the Borrower in (i) and (ii) shall be determined
by Lender.  Such  determination  shall be the maximum amount  sufficient for any
settlement of outstanding  Spot or Forwards  engaged in or entered into with the
Borrower.

                       (f) The Borrower agrees that Lender's  internal books and
records,   and  any  other  documents   required  by  Lender  to  evidence  such
indebtedness  shall be conclusive  evidence (absent manifest error) with respect
to all repayments  and repayment  dates and of the  Borrower's  indebtedness  to
Lender under the Foreign Exchange Subfacility.

                       (g)  The  Borrower  hereby   unconditionally   agrees  to
indemnify  the  Lender  and hold the Lender  harmless  from any and all  losses,
claims or liabilities  arising from any transactions or occurrences  relating to
the Foreign Exchange Subfacility,  including any loss or claim due to any action
taken or omitted by any third party which is not an Affiliate of the Lender. The
Borrower's  unconditional  obligation  to the Lender  shall not be  modified  or
diminished for any reason or in any amount whatsoever.  The Borrower agrees that
any  action  taken  by the  Lender  in  connection  with  the  Foreign  Exchange
Subfacility,  if taken in good faith,  shall be binding  upon the  Borrower  and
shall  not  impose  any  resulting   liability  on  the  Lender.   The  Borrower
specifically  acknowledges and agrees that all  transactions  hereunder shall be
undertaken solely on the order of, and at and for the risk of the Borrower.  The
Borrower further  acknowledges and understands that Lender may engage in similar
transactions  for its own  account or  provide  similar  facilities  for its own
customers.  The Borrower  recognizes  and  acknowledges  that Lender may, to the
extent  permitted  by law,  engage in  transactions  and take action for its own
account  or  in  the  performance  of  its  duties  to  other  customers,  which
transactions  or action  may differ  from the  transactions  engaged  in, or the
action  taken  (including,  without  limitation,  the  timing and nature of such
transaction or action) with respect to the Borrower's  account.  Nothing in this
Agreement  shall be deemed to impose upon Lender any  obligation  to cause to be
engaged in, for the Borrower's account or the account of any other customer, any
transaction  which Lender may engage in for its own account or recommend for the
account of any other customer.

         4.       Conditions Precedent to Borrowing.

                  4.1.  Advance.   In  addition  to  any  other  requirement  or
condition  precedent set forth  herein,  Lender shall not be required to make an
initial advance on any Loan,  issue an initial Letter of Credit or engage in any
transactions  under the Foreign Exchange  Subfacility,  unless and until, in the
sole  discretion  of Lender,  each of the following  conditions  shall have been
satisfied:

                       (a) Loan Documents. The Borrower, the Guarantors and each
other  party to any Loan  Documents,  as  applicable,  shall have  executed  and
delivered this Agreement, any Interest Rate Swap Agreement, the Letter of Credit
Agreement,  the Term  Note,  the  Revolving  Credit  Note,  each  Guaranty,  any
subordination  agreements,  all Forms UCC-1,  the Notes and other  required Loan
Documents, all in form and substance satisfactory to the Lender.

                       (b) Supporting Documents.  The Borrower shall cause to be
delivered to the Lender the following documents:

                          (i)  A  copy  of  the   Certificate   or  Articles  of
               Incorporation  of the  Borrower  and  each  Guarantor  and a good
               standing or active  status  certificate  of the Borrower and each
               Guarantor, certified by the Secretary of State of each applicable
               state



                                       17
<PAGE>

               of  organization  and each  state in which  such  corporation  is
               qualified to do business;

                          (ii)  Bylaws  of  the  Borrower  and  each  Guarantor,
               certified by an officer thereof;

                          (iii) Incumbency certificate and certified resolutions
               of the board of  directors  of the  Borrower  and each  Guarantor
               authorizing  the execution,  delivery and performance of the Loan
               Documents to which each is a party;

                          (iv) UCC-11  searches and other Lien searches  showing
               no existing Liens on the  Collateral  other than the Liens of the
               Lender and Permitted  Liens,  or except as approved by the Lender
               in its sole and absolute discretion; and

                          (v) a letter to Borrower's and Guarantors' independent
               accountants,  in form and substance  satisfactory  to the Lender,
               authorizing  such accountants to disclose  information  requested
               from time to time by the Lender with  respect to the Borrower and
               Guarantors to the Lender.

                       (c)  Insurance.  The Borrower shall have delivered to the
Lender  satisfactory  evidence of insurance  meeting the requirements of Section
5.3.

                       (d)  Perfection  of  Liens.  UCC-1  financing  statements
executed by the Borrower and each  Guarantor  shall have been duly  executed and
delivered  to  Lender in a form  appropriate  for  recordation  or filing in the
manner and places  required by law to establish,  preserve,  protect and perfect
the interests and rights created or intended to be created by this Agreement and
any  other  Security  Agreement;  and all  taxes,  fees  and  other  charges  in
connection  with the  execution,  delivery  and filing of this  Agreement,  each
Security Agreement and the financing statements shall duly have been paid.

                       (e) Landlord's Waivers;  Mortgagee's  Waivers. The Lender
shall have received, in form and content satisfactory to Lender (i) waivers from
all lessors that might have landlord's  Liens on any Collateral and (ii) waivers
from all  mortgagees of the  Borrower's  and  Guarantors'  premises in which any
Collateral is located.

                       (f) Swap Agreement.  The Borrower shall have executed and
delivered  to the Lender  the  Interest  Rate Swap  Agreement,  if the  Borrower
desires to do so.

                       (g) Taxes and Expenses. All taxes, fees and other charges
in connection with the execution, recordation, filing, registration and delivery
hereof shall have been paid.

                       (h)  Commitment  Fee and  Expenses.  Borrower  shall  pay
Lender at closing a (i) commitment fee of $5,000,  (ii) all reasonable costs and
expenses  incurred  by  Lender  in  connection  herewith,  (iii) an out of state
closing  fee in the amount of $450 and a maritime  closing  fee in the amount of
$580,  and  (iii)  the  fees and  disbursements  of  counsel  to the  Lender  in
connection with this Agreement and the transactions contemplated hereby.

                       (i)  Interim  Financial  Statements.   The  most  current
interim financial statements of Borrower shall have been delivered to Lender and
shall be satisfactory to Lender.



                                       18
<PAGE>

                       (j) SEC  Filings.  All of  Borrower's  filings  with  the
Securities and Exchange  Commission  since  September 30, 2001,  shall have been
received by and shall be satisfactory to Lender.

                       (k) Trade  References.  Borrower shall have provided such
trade and credit  references to Lender as Lender shall  request,  which shall be
satisfactory to Lender.

                  4.2.  Conditions  Precedent  to  Each  Advance  of a  Loan  or
Issuance of a Letter of Credit or Purchasing  Forward  Exchange.  In addition to
any other requirement or condition precedent set forth herein,  Lender shall not
be  required  to make any  advance  of any Loan or issue any Letter of Credit or
enter  into  any Spot or  Forward  transaction  unless  and  until,  in the sole
discretion  of  Lender,  each  of  the  following  conditions  shall  have  been
satisfied:

                       (a) Prior  Conditions.  At or prior to Closing,  Borrower
shall have satisfied (i) all conditions  precedent set forth in Section 4.1, and
(ii) all conditions  precedent set forth  elsewhere in this Agreement and in any
other Loan Document.

                       (b) Advance Request. Borrower shall have delivered to the
Lender an Advance Request and Borrowing Base Certificate and other  information,
in such form and containing such information as Lender shall request.

                       (c) No Default. No Default or Event of Default shall have
occurred  or will occur  upon the making of the  advance,  the  issuance  of the
Letter of Credit in question or enter into any Spot or Forward transaction,  and
Borrower shall have delivered to Lender an officer's  certificate to such effect
which may be incorporated in the advance request.

                       (d)  Correctness of  Representations  and Compliance with
Covenants.  All  representations  and  warranties  made  by  Borrower  and  each
Guarantor  herein or otherwise in writing in connection  herewith  shall be true
and correct in all material  respects  (except  where such  representations  and
warranties are subject to a materiality caveat, in which case they shall be true
and  correct  in  all  respects,  and  except  where  such  representations  and
warranties are made as of a particular  date, in which case,  they shall be true
and correct as of such date) with the same effect as though the  representations
and  warranties  had  been  made on and as of the  proposed  Advance  Date,  and
Borrower  and each  Guarantor  shall  have  delivered  to  Lender  an  officer's
certificate  to such effect which may be  incorporated  in the Advance  Request.
Borrower and each Guarantor shall have complied in all material respects (except
where such  covenants  are subject to a  materially  caveat,  in which case they
shall have been  complied  with in all  respects)  with all of its covenants and
agreements set forth in any Loan Document, and Borrower and each Guarantor shall
have delivered to Lender an officer's  certificate to such effect,  which may be
incorporated in the Advance Request.

                       (e)  No   Injunction,   Etc.   No   action,   proceeding,
investigation,  regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to enjoin,
restrain,  or prohibit,  or to obtain damages in respect of, or which is related
to or arises  out of this  Agreement  or the  consummation  of the  transactions
contemplated hereby, or which, in the Lender's reasonable discretion, would make
it inadvisable to consummate any transactions contemplated by this Agreement.

                       (f) No Adverse Change.  There shall have been no Material
Adverse  Change from such condition as it existed on the date of the most recent
financial  statements of the Borrower  delivered to the Lender prior to the date
hereof, and no Material Adverse Effect shall have occurred.



                                       19
<PAGE>

                       (g) Further  Assurances.  Borrower  shall have  delivered
such further documentation, opinions, certificates, agreements and assurances as
Lender may reasonably require.

                  4.3. Waiver of Conditions  Precedent.  If the Lender makes any
Loan or  issues  any  Letter  of  Credit  or  enters  into any  Forward  or Spot
transaction  hereunder  prior  to the  fulfillment  of  any  of  the  conditions
precedent  set forth in this  Section 4, the making of such Loan or the issuance
of such Letter of Credit  shall  constitute  only an  extension  of time for the
fulfillment of such condition and not a waiver  thereof,  and the Borrower shall
thereafter fulfill each such condition promptly.

         5.       Covenants  of the Borrower.  The Borrower covenants and agrees
that from the date hereof and until payment in full of the  Indebtedness  unless
the Lender shall otherwise  consent in writing,  it will comply,  and will cause
each Guarantor to comply, with the following:

                  5.1. Use of Loan Proceeds.  The proceeds of the Loans shall be
used only to finance  working capital of the Borrower and the  Subsidiaries  and
for the purposes  permitted  herein,  including  the payment of all  outstanding
obligations under the Existing  Facility,  and Borrower shall furnish the Lender
all evidence that it may require with respect to such use.

                  5.2.  Maintenance of Business and  Properties.  Borrower shall
and shall cause each  Guarantor to at all times  maintain,  preserve and protect
all  Collateral  and all the remainder of their  respective  properties  used or
useful in the conduct of their  respective  business,  and keep the same in good
repair, working order and condition,  and from time to time make, or cause to be
made,  all  material  needful  and  proper  repairs,   renewals,   replacements,
betterments  and  improvements  thereto  so  that  the  business  carried  on in
connection  therewith may be conducted properly and in accordance with standards
generally  accepted in businesses  of a similar type and size at all times,  and
maintain and keep in full force and effect all licenses and permits necessary to
the proper conduct of their respective businesses.

                  5.3.  Insurance.  Borrower  shall  maintain  (or  cause  to be
maintained) and pay for insurance upon all  Collateral,  wherever  located,  and
otherwise   covering   casualty,   hazard,   workers'   compensation,   business
interruption,  public  liability  and such other risks (as is  customary  in the
businesses  in which  Borrower or any  Guarantor is engaged) and in such amounts
and with such  insurance  companies as shall be reasonably  satisfactory  to the
Lender and in compliance with law. The Borrower and each Guarantor shall deliver
such  certificates  of insurance  to the Lender with loss  payable  endorsements
naming the Lender as loss payee  thereunder in form  reasonably  satisfactory to
the Lender.  Borrower and each Guarantor shall maintain and pay for insurance in
such  amount,  with  such  companies  and in such  form as shall  be  reasonably
satisfactory to the Lender insuring the Borrower and each Guarantor  against any
claims,  suits,  loss or damages suffered by any Person on any property owned or
leased by the Borrower or any  Guarantor and against such other  casualties  and
contingencies  as is customary in the business in which the Borrower is engaged,
and deliver  such  certificates  of  insurance  to the Lender with  satisfactory
endorsements naming the Lender as additional insured thereunder.  Each policy of
insurance  shall  contain a clause  requiring  the insurer to give not less than
thirty (30) days' prior written notice to the Lender before any  cancellation of
the  policies  for any reason  whatsoever  and a clause that the interest of the
Lender  shall  not be  impaired  or  invalidated  by any act or  neglect  of the
Borrower or any Guarantor or the owner of the property nor by the  occupation of
the premises  wherein such property is located for purposes more  hazardous than
are permitted by said policy.  The Borrower  hereby  directs all insurers  under
such  policies  of  insurance  on the  Collateral  to pay all  proceeds  payable
thereunder  directly to the Lender  following an Event of Default.  The Borrower
hereby irrevocably makes, constitutes and appoints the Lender (and all officers,
employees or agents  designated by the Lender) as the Borrower's true and lawful
attorney (and  agent-in-fact) for the purpose of making,  settling and



                                       20
<PAGE>

adjusting  claims under such  policies of  insurance,  endorsing the name of the
Borrower  on any check,  draft,  instrument  or other  item of  payment  for the
proceeds of such  policies of insurance  and for making all  determinations  and
decisions with respect to such policies of insurance;  provided,  however,  that
such  power  shall not be used  until  after the  occurrence  of and  during the
continuation  of an Event of  Default.  Prior to the  occurrence  of an Event of
Default,  neither the Borrower nor any Guarantor will make, settle or adjust any
material  claim without the prior written  consent of the Lender,  which consent
will not be unreasonably  withheld. If the Borrower fails to obtain and maintain
any of the policies of insurance or to pay any premium in whole or in part, then
the Lender may, at the  Borrower's  expense,  without  waiving or releasing  any
obligation or default by the Borrower hereunder, procure the same, but shall not
be required to do so. All sums so disbursed by the Lender,  including attorneys'
fees, court costs, expenses and other charges related thereto,  shall be payable
on demand by the  Borrower  to the Lender and shall be  additional  Indebtedness
hereunder secured by the Collateral.

                  5.4.  Notice of Default.  Borrower shall provide to the Lender
immediate notice of (a) the occurrence of a Default or an Event of Default,  (b)
any material  threatened or pending  litigation or material  changes in existing
litigation  or any  material  judgment  against the  Borrower,  its assets,  any
Guarantor or the assets of any  Guarantor,  (c) any  material  damage or loss to
property  or  material  labor  controversy  with  respect  to  Borrower  or  any
Guarantor,  (d) any notice from taxing authorities as to claimed deficiencies or
any tax  Lien or any  notice  relating  to  alleged  ERISA  violations,  (e) any
Reportable  Event,  as  defined in ERISA,  (f) any  rejection,  return,  offset,
dispute, loss or other circumstance reasonably likely to have a material adverse
effect on the Collateral (or Lender's Lien or priority  therein) or the Borrower
or  any  Guarantor  or  their  respective  businesses,  operations,  conditions,
properties or prospects, (g) any loss or threatened loss of material licenses or
permits,  (h)  any  notice  of any  material  violation  of  any  law,  rule  or
regulations  and (i) the  occurrence of any event which is reasonably  likely to
have a Material Adverse Effect.

                  5.5.  Inspections.  Borrower and each  Guarantor  shall permit
inspections  of the  Collateral  and the  records  pertaining  thereto,  at such
reasonable times and in such manner as may be reasonably  required by the Lender
and shall further permit such inspection, review and audits of its other records
and its  properties  (with  such  frequency  and at such times as the Lender may
reasonably request) by the Lender as the Lender may reasonably deem necessary or
desirable  from time to time. The  reasonable  cost of such audits,  reviews and
inspections shall be borne by the Borrower.

                  5.6. Financial Information.  Borrower shall maintain its books
and records in  accordance  with GAAP and shall  furnish to Lender the following
periodic information in form reasonably satisfactory to Lender:

                  (a) Within forty-five (45) days after the close of each fiscal
quarter, beginning with the current fiscal quarter,  consolidated balance sheets
of the  Borrower  and  each  Guarantor  as of the  close  of such  quarter,  and
consolidated  statements  of  income  and  cash  flows  (along  with  supporting
schedules  and in detail  reasonably  acceptable to Lender) for such quarter and
for that portion of the fiscal year to date then ended,  prepared in  accordance
with  GAAP  (subject  to  ordinary  course,   non-material  audit  and  year-end
adjustments), applied on a basis consistent with that of the preceding period or
containing  disclosure  of the effect on the  financial  position  or results of
operations  of any  change  in the  application  of  accounting  principles  and
practices during the period, and certified by the Chief Financial Officer of the
Borrower; and within thirty (30) days after the close of each quarter, beginning
with the  current  quarter,  agings of  Accounts  of  Borrower  by invoice  date
(including  summary reports as prepared by Borrower) and an inventory listing of
Borrower,  all in such detail and with such supporting schedules and information
as shall be reasonably required by Lender;



                                       21
<PAGE>

                       (b) Within one  hundred  and twenty  (120) days after the
close of each fiscal year of the Borrower and  Guarantors  audited  consolidated
balance sheets of the Borrower and each Guarantor as of the close of such fiscal
year and audited  consolidated  statements  of income and retained  earnings and
cash flows,  for the fiscal year then ended,  prepared in accordance  with GAAP,
applied on a basis  consistent with the preceding year or containing  disclosure
of the effect on financial position or results of operation of any change in the
application  of accounting  principles  and practices  during the year,  and (i)
accompanied  by a report  thereon  (from  Borrower's  and  Guarantors'  existing
independent  certified  public  accounting firm or another  regional or national
accounting  firm  reasonably  acceptable to Lender),  containing an  unqualified
opinion,  without scope limitations imposed by the Borrower, from such firm, and
(ii) within thirty (30) days after delivery of the financial statements required
under this subsection (b), a copy of each "management letter", if any, from such
accountants to the Borrower and Guarantors in connection with such  accountants'
audit and management-prepared  financial projections with respect to next fiscal
year,  in form and  detail  reasonably  acceptable  to  Lender,  along with such
supporting  schedules and other  information  and  certificates  as Lender shall
reasonably request.

                       (c)  Concurrently  with  the  delivery  of the  financial
statements  described in subsection  (b) above,  a certificate  from the firm of
independent certified public accountants that in making their examination of the
financial  statements  of the  Borrower  and  Guarantors,  no  knowledge  of the
occurrence or existence of any Default or any Event of Default, was disclosed by
their  examination or a statement  specifying the nature and period of existence
of any such condition or event;

                       (d)  Concurrently  with  the  delivery  of the  financial
statements  described in subsections  (a) and (b) above, a certificate  from the
Chief  Financial  Officer of the Borrower  certifying to the Lender on behalf of
Borrower that to the best of his knowledge,  Borrower kept, observed,  performed
and fulfilled each and every covenant, obligation and agreement binding upon the
Borrower  and each  Guarantor  contained  in this  Agreement  and the other Loan
Documents,  and that no Default or Event of Default has  occurred or  specifying
any  such  Default  or  Event  of  Default,  together  with  financial  covenant
compliance  worksheet,  in  form  satisfactory  to the  Lender,  reflecting  the
computation  of the  financial  covenants set forth in Section 5.25 hereof as of
the end of the period covered by such financial statements;

                       (e)  Upon  the  Lender's  written  request,   such  other
information  about the  Collateral or the financial  condition and operations of
the Borrower as the Lender may from time to time reasonably request.  The Lender
may reasonably  require more frequent  rendering of the reports and certificates
described in (a) through (d) above.

                       (f) Within  thirty (30) days of the filing  thereof  with
any  governmental  authority,   Borrower  shall  deliver  to  Lender  copies  of
Borrower's and each Guarantor's federal,  state and local income tax returns, as
applicable.

                       (g) Within  forty-five  (45) days after the close of each
month,   beginning  with  the  current  month,  a  Borrowing  Base   Certificate
substantially  in the form of Exhibit A ("Borrowing  Base  Certificate"),  along
with the latest month-end accounts receivable aging report and within forty-five
(45) days after the close of each quarter beginning with the current quarter,  a
current  inventory  listing,  in each  case  certified  as true and  correct  by
Borrower's Chief Financial Officer.

                       (h) Within two  Business  Days after any report or filing
is made with the Securities and Exchange Commission by Borrower,  a copy of such
report or filing.



                                       22
<PAGE>

                       (i)  Within   two   Business   Days  after  any   written
communication is sent to Borrower's shareholders, a copy of such correspondence.

                  5.7. [INTENTIONALLY OMITTED].

                  5.8.  Liens.  Borrower shall not create or permit to exist any
Liens on any of the Collateral, except Permitted Liens.

                  5.9.  Redemptions.  Neither  Borrower nor any Guarantor  shall
purchase,  redeem or otherwise acquire any stock or other equity interests,  and
neither of them shall declare or pay any dividend or  distribution,  in any case
that would be reasonably likely to cause Borrower to not comply at any time with
Section 5.25.

                  5.10.  Merger,  Sale,  Etc.  Borrower and each Guarantor shall
maintain its corporate existence,  good standing and necessary qualifications to
do business,  and shall not, except as expressly agreed to by Lender in writing,
(i) merge or consolidate with or into any Person or acquire all or substantially
all of the assets of, or any equity  interest  of, any  Person,  (ii) permit any
Person  to  transfer  to it,  directly  or  indirectly,  any of its  issued  and
outstanding stock or securities  (except as permitted in Section 5.11), or (iii)
permit the sale, lease, assignment or other disposition of any Collateral or any
of its or any Guarantor's other assets (other than sales of obsolete or worn-out
Equipment and sales of Inventory in the ordinary  course of business  consistent
with past  practices or other than sales of  Equipment  for less than $50,000 in
the aggregate in any fiscal year).

                  5.11.  Loans,   Guaranties  and  Other  Investments.   Neither
Borrower nor any  Guarantor  shall make or permit to exist any advances or loans
to, or guarantee  or become  contingently  liable,  directly or  indirectly,  in
connection with the obligations, leases, stock or dividends of, or own, purchase
or make any commitment to purchase any stock, bonds, notes,  debentures or other
securities of, or any interest in, or make any capital  contributions to (all of
which are  sometimes  collectively  referred  to herein as  "Investments"),  any
Person except for (a) purchases of direct obligations of the federal government,
(b) deposits in commercial  banks, (c) commercial paper of any U.S.  corporation
having at least an A rating by Moody's  Investors  Service,  Inc.  or Standard &
Poor's Corporation,  (d) endorsement of negotiable instruments for collection in
the  ordinary  course of business,  (e)  advances in the ordinary  course of the
Borrower's  business not in the aggregate in excess of $50,000, or (f) overnight
bank repurchase agreements.

                  5.12.  Change in Business.  Neither Borrower nor any Guarantor
shall,  except as  expressly  agreed to in  writing  by  Lender,  enter into any
business  which is  substantially  different  from the business or businesses in
which it is presently engaged.

                  5.13. Accounts. Neither Borrower nor any Guarantor shall sell,
assign or discount any of its Accounts or Chattel Paper or any promissory  notes
or other  Payment  Intangibles  held by it other than the discount of promissory
notes or other  Payment  Intangibles  in the  ordinary  course of  business  for
collection;  and  Borrower  shall  notify  Lender  promptly  in  writing  of any
discount,  offset or other  deductions  not shown on the face of any  Account of
Borrower or any Guarantor  invoice in excess of $50,000 and any dispute over any
Account in excess of $50,000,  and any information known to Borrower relating to
any  material  adverse  change in any Account  Debtor's  financial  condition or
ability to pay its obligations.



                                       23
<PAGE>

                  5.14.  Transactions  with  Affiliates.  Except as set forth on
Schedule 5.14,  neither Borrower or any Guarantor shall,  directly or indirectly
purchase,  acquire or lease any property  from,  or sell,  transfer or lease any
property  to, or  otherwise  deal with,  in the  ordinary  course of business or
otherwise,  any Affiliate in an aggregate amount  exceeding  $50,000 at any time
outstanding; provided, however, that any acts or transactions prohibited by this
Section 5.14 may be performed or engaged in, after written notice to the Lender,
if upon  terms not less  favorable  to the  Borrower  than if no such  Affiliate
relationship existed.

                  5.15.  No Change in Name or  Offices;  Removal of  Collateral.
Neither Borrower nor any Guarantor shall, (a) change its name or the location of
its chief  executive  office or other  office where books or records are kept or
(b) permit  any  Inventory  or other  tangible  Collateral  to be located at any
location other than as specified on Schedule 2.9.

                  5.16. No Sale,  Leaseback.  Neither Borrower nor any Guarantor
shall enter into any sale-and-leaseback or similar transaction.

                  5.17. Margin Stock. Borrower shall not use any proceeds of any
Loan to purchase or carry any margin stock  (within the meaning of  Regulation U
of the Board of Governors of Federal  Reserve System) or extend credit to others
for the purpose of purchasing or carrying any margin stock.

                  5.18.   Payment  of  Taxes,  Etc.  Neither  Borrower  nor  any
Guarantor shall pay before delinquent all of its debts and taxes except that the
Lender shall not unreasonably  withhold its consent to nonpayment of taxes being
actively  contested in good faith and in accordance  with law (provided that the
Lender  may  require  bonding  or other  assurances  of any  amount in excess of
$50,000).

                  5.19. Comply with ERISA.  Borrower and each Guarantor shall at
all times make  prompt  payment of  contributions  required  to meet the minimum
funding  standards set forth in ERISA with respect to any employee benefit plan;
promptly  after the filing  thereof,  furnish to the Lender copies of any annual
report required to be filed under ERISA in connection with each employee benefit
plan;  not withdraw from  participation  in, permit the  termination  or partial
termination  of, or permit the occurrence of any other event with respect to any
employee  benefit plan that could  result in  liability  to the Pension  Benefit
Guaranty Corporation; notify the Lender as soon as practicable of any Reportable
Event and of any  additional  act or condition  arising in  connection  with any
employee benefit plan which the Borrower  believes might constitute  grounds for
the termination  thereof by the Pension Benefit Guaranty  Corporation or for the
appointment  by the  appropriate  United States  district  court of a trustee to
administer such plan; and furnish to the Lender upon the Lender's request,  such
additional  information  about any employee  benefit  plan as may be  reasonably
requested.

                  5.20. Compliance;  Hazardous Materials. Except as disclosed on
Schedule  2.17,  Borrower  and  each  Guarantor  shall  comply  with  all  laws,
regulations,  ordinances and other legal requirements,  specifically  including,
without  limitation,  ERISA,  all  securities  laws  and all  laws  relating  to
hazardous  materials  and the  environment.  Neither  Borrower nor any Guarantor
shall engage in the storage, manufacture, disposition, processing, handling, use
or  transportation  of any hazardous or toxic materials,  not in compliance with
applicable laws and regulations.

                  5.21.  Subsidiaries.  Neither Borrower nor any Guarantor shall
acquire or form any Subsidiary that would result in a Material Adverse Change.

                  5.22.  Compliance  with  Assignment  Laws.  Borrower  and each
Guarantor shall, if reasonably  required by the Lender,  comply with the Federal
Assignment of Claims Act and


                                       24
<PAGE>
any other  applicable  law relating to assignment  of  government  contracts and
Accounts arising from the performance thereof.

                  5.23.  Further  Assurances.  Borrower and each Guarantor shall
take such further  action and provide to the Lender such further  assurances  as
may be reasonably  requested by the Lender to ensure  compliance with the intent
of this Agreement and the other Loan Documents.

                  5.24. Withholding Taxes. Borrower and each Guarantor shall pay
as and when due all employee  withholding,  FICA and other payments  required by
federal, state and local governments with respect to wages paid to employees.

                  5.25. Financial  Covenants.  Borrower shall at all times be in
compliance with the following financial covenants:

                       (a) Debt Service  Coverage  Ratio.  As of the last day of
each fiscal year of Borrower, Borrower shall not permit the ratio of (i) the sum
of  consolidated  net  income  after tax for the  fiscal  year then  ended  plus
consolidated  depreciation  and amortization for the fiscal year then ended less
dividends  declared or paid by  Borrower  for the fiscal year then ended to (ii)
current maturities of long-term debt (including capitalized leases and excluding
Revolving Loans) to be less than 1.25 to 1.0; provided, however, that such ratio
shall not be less than 1.00 to 1.0 for the fiscal year 2002 of the Borrower

                       (b) Leverage. Borrower shall not, at any time, permit the
ratio of Consolidated  Total  Liabilities to Consolidated  Tangible Net Worth to
exceed 2.0 to 1.0.

                  5.26.  Lender Account.  Borrower and each Guarantor  shall, at
all times,  maintain with Lender its primary  operating and  depository  account
including cash management accounts.

                  5.27. Fiscal Year; Accounting Method. Neither Borrower nor any
Guarantor  shall change its fiscal year, or change its method of accounting to a
method inconsistent with current practices.

                  5.28. Default on Other  Obligations.  Neither Borrower nor any
Guarantor  shall  default on any material  contract or  obligation  to any other
Person nor shall either of them default in the timely and due performance of any
material  obligation to any other Person relating to  indebtedness  for borrowed
money.

                  5.29.  SEC  Filing.   Borrower  shall  timely  file  with  the
Securities  and  Exchange  Commission  all filings  and reports  required by the
Securities Act of 1933, as amended,  and under applicable law in order for it to
continue to be a public  company,  and no such  filings and reports will contain
any untrue  statement of a material  fact or omit a material  fact  necessary to
make the statement made therein not misleading.

                  5.30. Compliance with Laws. Borrower and each Guarantor shall,
in all material respects, at all times operate their business in accordance with
(and otherwise be in material  compliance  with) all applicable  laws, rules and
regulations.

                  5.31. Chattel Paper.  Neither Borrower,  any Guarantor nor any
of the in  customers  shall  execute  any  security  agreement,  note  or  other
instrument,  agreement or document  evidencing or securing any sale by Borrower,
unless such security agreement, note or other instrument,  agreement or document
constitutes Chattel Paper; and none of Borrower's or any Guarantor's Accounts or
other receivables shall be represented by any security agreement,  note or other
instrument, agreement or document unless it is Chattel Paper.



                                       25
<PAGE>

         6.       Default.

                  6.1. Events of Default. Each of the following shall constitute
an Event of Default:

                       (a) Any  representation  or warranty made by the Borrower
or any Guarantor in any Loan Document or in any certificate or report  furnished
in connection  herewith or therewith  shall have been untrue or incorrect in any
material respect when made (except where such representations and warranties are
subject to a materiality caveat, in which case they shall be true and correct in
all respects,  and except where such  representations and warranties are made as
of a particular date, in which case, they shall be a true and correct as of such
date); or

                       (b) There shall occur any failure by the  Borrower or any
Guarantor in the payment, when due, of any principal of or interest on any Note,
or under any other Loan Document; or Borrower or any Guarantor shall fail to pay
on demand any returned or dishonored  draft,  check or other item which has been
presented to Lender and for which Borrower has received provisional credit; or

                       (c) There shall occur (i) any default by the  Borrower or
any  Guarantor  in the  performance  of any  agreement,  covenant or  obligation
contained  in this  Agreement  or any  other  Loan  Document  not  provided  for
elsewhere  in this  Section 6.1 and such  Default or other  default is not cured
within seven Business Days of notice from Lender,  or (ii) a "Potential Event of
Default" or "Event of Default",  as such terms are defined in the Interest  Rate
Swap Agreement, if an Interest Rate Swap Agreement has been executed; or

                       (d) The  Borrower  or any  Guarantor  shall be in default
under  any Debt  owed to any other  obligee  in an amount in excess of  $50,000,
which default entitles the obligee to accelerate any such Debt or exercise other
remedies with respect thereto; or

                       (e) The Borrower or any Guarantor  shall (i)  voluntarily
liquidate or terminate operations or apply for or consent to the appointment of,
or the taking of possession by, a receiver,  custodian, trustee or liquidator of
Borrower or any Guarantor or of all or of a substantial part of its assets, (ii)
admit in writing its inability,  or be generally unable, to pay its debts as the
debts  become  due,  (iii)  make a general  assignment  for the  benefit  of its
creditors,  (iv) commence a voluntary case under any federal  bankruptcy law (as
now or hereafter in effect),  (v) file a petition  seeking to take  advantage of
any other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition  or adjustment of debts,  or (vi) take any corporate  action for the
purpose of effecting any of the foregoing; or

                       (f) Without  its  application,  approval  or  consent,  a
proceeding  shall be commenced and remain  undismissed or unstayed for more than
sixty (60) days, in any court of competent jurisdiction,  seeking, in respect of
the Borrower or any Guarantor,  any remedy under any federal  bankruptcy law, or
any law pertaining to liquidation,  reorganization,  dissolution, winding-up, or
composition or  readjustment  of debt, or seeking the  appointment of a trustee,
receiver,  liquidator  or the like with respect to the  Borrower,  or any of its
assets or other like relief  under any law relating to  bankruptcy,  insolvency,
reorganization, winding-up, or composition or adjustment of debts; or

                       (g) Any Lien of the Lender  hereunder  or under any other
Security  Agreement  shall not constitute a perfected first priority Lien in the
Collateral thereby encumbered, subject only to Permitted Liens; or



                                       26
<PAGE>

                       (h) A judgment,  writ of  garnishment  or  attachment  in
excess of $50,000 shall be rendered against the Borrower or any Guarantor or any
of their assets and shall remain undischarged, undismissed and unstayed for more
than twenty (20) days; or

                       (i) The Borrower or any Guarantor is enjoined, restrained
or in any way  prevented by the order of any court or  governmental  entity from
conducting any material part of its business; or

                       (j) The  Borrower  or any  Guarantor  shall  cease  to be
Solvent,  or  ceases  to  conduct  any  material  part  of its  business  as now
conducted; or

                       (k) There shall occur any Material Adverse Change; or

                       (l) A notice  of  lien,  levy or  assessment  is filed of
record with respect to all or any portion of the  Borrower's or any  Guarantor's
assets by the  United  States,  or any  department,  agency  or  instrumentality
thereof, or by any state, county,  municipal or other governmental agency, or if
any taxes or debts in excess of $50,000 owing at any time or times  hereafter to
any one of them  becomes a Lien upon the  Collateral  or any other  asset of the
Borrower and the same is not  dismissed,  released,  discharged,  or bonded in a
manner satisfactory to Lender within ten (10) days after the same becomes a Lien
or, in the case of ad valorem  taxes,  prior to the last day when payment may be
made without penalty; or

                       (m) Any of the Loan Documents for any reason ceases to be
in full force and effect or is declared to be null and void,  or the Borrower or
any Guarantor's  denies that it has any further  liability  (including,  but not
limited to any full or partial  repudiation or revocation of any Guaranty) under
any Loan Document to which it is a party, or gives notice to such effect; or

                       (n) The loss,  suspension or revocation of, or failure to
renew,  any  material  license or permit now held or  hereafter  acquired by the
Borrower or any Guarantor's; or

                       (o) The  occurrence of any of the following  events:  (i)
the  happening  of a  Reportable  Event with  respect  to any profit  sharing or
pension  plan of the  Borrower  governed by ERISA  which has a Material  Adverse
Effect;  (ii) the  termination  of any such plan  which has a  Material  Adverse
Effect;  (iii) the  appointment  of a trustee by an  appropriate  United  States
District  Court to  administer  any such plan;  or (iv) the  institution  of any
proceedings by the Pension  Benefit  Guaranty  Corporation to terminate any such
plan or to appoint a trustee to administer any such plan;

                       (p) The occurrence of any material  casualty or damage to
the Collateral; or

                       (q)  William  Steiner  and  Michael  Steiner  and/or  any
Steiner  family  trust  shall  fail to own  (beneficially  and of record) in the
aggregate,  at least  51% of each  outstanding  class and  series of  Borrower's
equity securities (including all securities convertible into equity securities);
or any Person other than Borrower shall own  (beneficially and of record) any of
any Guarantor's  equity  securities  (including all securities  convertible into
equity securities);

                  6.2.  Acceleration  of the  Indebtedness.  Without  in any way
limiting  the right of the  Lender  to  demand  payment  of any  portion  of the
Indebtedness  (a) upon and  after an Event of  Default  (other  than an Event of
Default specified in Subsections 6.1(e) or (f)), all of the Indebtedness may, at
the option of the Lender,  and without  notice or legal  process of any kind, be
declared,  and immediately shall become, due and payable,  and (b) Borrower upon
and after



                                       27
<PAGE>


the occurrence of an Event of Default  specified in  Subsections  6.1(e) or (f),
all of the  Indebtedness  shall  automatically  become due and payable,  without
demand,  notice  or legal  process  of any kind,  anything  in any Note or other
instrument or document evidencing any such Indebtedness or in the Loan Documents
or in any other  agreement  to the contrary  notwithstanding.  If any Default or
Event of Default occurs,  Lender shall have no obligation to make any additional
advances of Loans or issue or accept additional  Letters of Credit or enter into
any further Spot or Forward transactions.

                  6.3.   Default  Rate.  Upon  the  occurrence  and  during  the
continuation of an Event of Default, all of the Indebtedness shall bear interest
at the Default Rate.

                  6.4. Rights and Remedies. Upon and after the occurrence of any
Event of Default,  the Lender  shall have,  in addition to all other  rights and
remedies  which the  Lender  may have  under  this  Agreement,  the  other  Loan
Documents,  and applicable law, the following rights and remedies,  all of which
may be exercised with or without further notice to the Borrower:  (a) all of the
rights and remedies of a secured  party under  applicable  law; (b) to foreclose
the Liens created under this Agreement and the other Loan Documents or under any
other agreement relating to the Collateral,  by any available judicial procedure
or without judicial process;  (c) to enter any premises where the Collateral may
be located,  through  self-help  and without  judicial  process,  without  first
obtaining a final judgment or giving the Borrower  notice and  opportunity for a
hearing  on the  validity  of the  Lender's  claim,  for the  purpose  of taking
possession or removing the same; and/or (d) to sell, assign, lease, or otherwise
dispose of the Collateral or any part thereof, either at public or private sale,
in lots  or in  bulk,  for  cash,  on  credit  or  otherwise,  with  or  without
representations or warranties, and upon such terms as shall be acceptable to the
Lender,  in its sole discretion,  and the Lender may bid or become the purchaser
at any such  public  sale,  free  from any right of  redemption  which is hereby
expressly waived by the Borrower,  and the Lender shall have the option to apply
or be credited  with the amount of all or any part of the  Indebtedness  against
the purchase price bid by the Lender at any such sale. The Borrower  agrees that
the Lender has no obligation to preserve rights to the Collateral  against prior
Persons or to marshall any Collateral for the benefit of any Person.  The Lender
is  hereby  granted  a  license  or other  right  to use,  without  charge,  the
Borrower's  labels,  patents,  copyrights,  rights  of use of  any  name,  trade
secrets, trade names,  trademarks,  and advertising matter, or any property of a
similar nature, as it pertains to the Collateral,  in completing  production of,
advertising for sale, and selling any Collateral and the Borrower's rights under
all licenses and franchise  agreements shall inure to the Lender's benefit;  and
in each instance, Lender shall only utilize such license after the occurrence of
an Event of Default.  In addition,  the Borrower agrees that in the event notice
is necessary under  applicable law, written notice mailed to the Borrower in the
manner specified herein five (5) days prior to the date of public sale of any of
the  Collateral  or prior to the date  after  which  any  private  sale or other
disposition  of the  Collateral  will  be  made  shall  constitute  commercially
reasonable  notice to the Borrower.  Upon the occurrence of an Event of Default,
the Lender  shall also have the right to seek the  appointment  of a receiver to
take possession of and operate and dispose of Borrower's assets. The Lender may,
at any time during the  continuance  of an Event of Default,  and at  Borrower's
expense,  employ and maintain  custodians at the  Borrower's  premises who shall
have full  authority to protect  Lender's  interests.  Upon the  occurrence  and
during the  continuation  of an Event of Default,  the Borrower  authorizes  the
Lender to collect and set-off and apply  against the  Indebtedness  when due any
cash or deposit accounts in its possession, and any refund of insurance premiums
or any insurance proceeds payable on account of the loss or damage to any of the
Collateral  and  irrevocably  appoints  the  Lender as its  attorney-in-fact  to
endorse any check or draft or take other action  necessary to obtain such funds.
All or any part of the  Collateral  may be  liquidated  and sold by  Lender  for
failure of Borrower to pay any of the Indebtedness, regardless of whether any of
the Loans have been  accelerated or whether the Interest Rate Swap Agreement has
been  terminated  early.  Notwithstanding  anything  to the  contrary  set forth
herein,  Collateral  may be  liquidated  upon



                                       28
<PAGE>

Borrower's failure to pay any Indebtedness on a timely basis, whether or not any
acceleration  has  occurred  or  the  Interest  Rate  Swap  Agreement  has  been
terminated early.

                  6.5.  Application of Proceeds.  After an Event of Default, the
net cash proceeds  resulting from the collection,  liquidation,  sale,  lease or
other  disposition  of the  Collateral  shall be applied  first to the  expenses
(including  all  reasonable  attorneys'  fees) of  retaking,  holding,  storing,
processing  and preparing for sale,  selling,  collecting,  liquidating  and the
like, and then to the satisfaction of all Indebtedness. The Borrower irrevocably
waives  the  right  to  direct  the  application  of any  and all  payments  and
collections  at any time or times  hereafter  received  by the Lender from or on
behalf of the Borrower,  and the Borrower does hereby irrevocably agree that the
Lender shall have the continuing exclusive right to apply and to reapply any and
all such payments and collections received at any time or times hereafter by the
Lender or its agent  against  the  Indebtedness  which is due and payable at the
time of such application,  in such manner as the Lender, in its sole discretion,
may determine, notwithstanding any entry by the Lender upon any of its books and
records.  The Borrower shall be liable to the Lender and shall pay to the Lender
on demand  any  deficiency  which  may  remain  after  such  sale,  disposition,
collection  or  liquidation  of the  Collateral.  The Lender  shall remit to the
Borrower  or the  Person  entitled  thereto  any  surplus  remaining  after  all
Indebtedness  have been paid in full.  If any of the  Collateral  shall  require
repairs,  maintenance,  preparation  or the  like,  or is in  process  or  other
unfinished state, the Lender shall have the right, but shall not be obligated to
perform such  repairs,  maintenance,  preparation,  processing  or completion of
manufacturing  for the purpose of putting the same in such  saleable form as the
Lender  shall deem  appropriate,  but the Lender shall have the right to sell or
dispose of the  Collateral  without such  processing.  The Borrower will, at the
Lender's  request,  assemble  all the  Collateral  and make it  available to the
Lender at places  which the  Lender  may  select,  whether  at  premises  of the
Borrower or  elsewhere,  and will make  available to the Lender all premises and
facilities of the Borrower for the purpose of the Lender's taking  possession of
the Collateral or of removing or putting the Collateral in saleable form.

                  6.6.  Appointment  of  the  Lender  as the  Borrower's  Lawful
Attorney.  The Borrower hereby irrevocably  designates,  makes,  constitutes and
appoints the Lender (and all Persons designated by the Lender) as the Borrower's
true and lawful  attorney (and  agent-in-fact)  and the Lender,  or the Lender's
agent,  may, upon and after the  occurrence  and during the  continuation  of an
Event of Default,  in the  Borrower's or the Lender's  name: (i) exercise all of
the  Borrower's  rights and remedies  with respect to the Accounts and the other
Collateral;  (ii)  take  control,  in any  manner,  of any  item of  payment  or
proceeds;  (iii) prepare,  file and sign the Borrower's name on a proof of claim
in bankruptcy or similar document  against any Account Debtor;  (iv) do all acts
and things necessary, in the Lender's sole discretion, to fulfill the Borrower's
obligations under this Agreement;  (v) endorse the name of the Borrower upon any
of the items of payment or  proceeds  referred to herein and deposit the same to
the account of the Lender on account of the Indebtedness;  (vi) endorse the name
of the Borrower upon any chattel paper, document,  instrument,  invoice, freight
bill, bill of lading or similar  document or agreement  relating to the Accounts
or  Inventory;  (vii)  use the  Borrower's  stationery  and sign the name of the
Borrower  to  verifications  of the  Accounts  and  notices  thereof  to Account
Debtors;  and (viii) use the  information,  recorded on or contained in any data
processing equipment and computer hardware and software relating to the Accounts
and  Inventory to which the  Borrower has access.  All acts of the Lender or its
designee,  except the Lender's or its  designees'  acts of gross  negligence  or
willful  misconduct,  taken pursuant to this Section 6.6 are hereby ratified and
confirmed  and the  Lender or its  designee  shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or law.

                  6.7. Collections; The Lender's Right to Notify Account Debtors
and to Endorse  Borrower's Name.  Borrower hereby authorizes Lender (i) upon the
occurrence and during the  continuation of a Default or an Event of Default,  to
open  Borrower's  mail and collect  any and all



                                       29
<PAGE>

amounts due to Borrower  from  Account  Debtors;(ii)  after the  occurrence  and
during the  continuation of a Default or an Event of Default,  notify any or all
Account  Debtors that the Accounts  have been assigned to Lender and that Lender
has a security interest  therein;  and (iii) after the occurrence and during the
continuation of a Default or an Event of Default, direct such Account Debtors to
make all payments due from them to Borrower upon the Accounts directly to Lender
or to a lock box designated by Lender.  Lender shall promptly  furnish  Borrower
with a copy of any such notice  sent and  Borrower  hereby  agrees that any such
notice may be sent on  Borrower's  stationery,  in which  event  Borrower  shall
co-sign such notice with Lender.  Borrower  irrevocably  makes,  constitutes and
appoints  Lender  (and all  Persons  designated  by Lender for that  purpose) as
Borrower's true and lawful attorney (and  agent-in-fact)  to endorse  Borrower's
name on any  checks,  notes,  drafts or any  other  payment  relating  to and/or
proceeds  of the  Collateral  which  come into  either  Lender's  possession  or
control.

         7.       Security Agreement; Collateral.

                  7.1. Security Interest.

                       (a) As security  for the payment and  performance  of any
and all of the  Indebtedness  and the  performance of all other  obligations and
covenants of the Borrower hereunder and under the other Loan Documents, absolute
or contingent,  now existing or hereafter arising,  which are now, or may at any
time or times  hereafter  be owing by the  Borrower to the Lender,  the Borrower
hereby  pledges  and  assigns  to the  Lender  and gives and grants the Lender a
continuing and general  security  interest in and Lien upon and right of set-off
against,  all right,  title and  interest of the Borrower in and to the Borrower
Collateral,  whether now owned or hereafter acquired by the Borrower;  provided,
however,  that  notwithstanding  anything to the  contrary  herein,  none of the
Borrower's obligations hereunder shall be secured by real property.

                       (b) At the Lender's request, the Borrower shall cause the
execution  and  delivery  to  the  Lender,  in  form  and  substance  reasonably
satisfactory  to  the  Lender,  of all  such  agreements,  documents,  financing
statements and other writings reasonably  requested by the Lender to perfect and
maintain the perfection  and priority of its security  interests in and Liens on
the Borrower  Collateral and to consummate the other  transactions  contemplated
hereby,  and the  Borrower  shall pay all  filing  fees and  documentary  stamp,
intangible and similar taxes in connection  therewith.  The Borrower irrevocably
designates the Lender as its attorney-in-fact to effectuate the foregoing.

                       (c)  Except  as  herein or by  applicable  law  otherwise
expressly provided,  the Lender shall not be obligated to exercise any degree of
care in connection with any Borrower Collateral,  to take any steps necessary to
preserve any rights in any of the Borrower  Collateral or to preserve any rights
therein  against prior parties.  No  segregation  or specific  allocation by the
Lender of specified  items of Borrower  Collateral  against any liability of the
Borrower  shall  waive  or  affect  any Lien  against  other  items of  Borrower
Collateral or any of the Lender's options, powers or rights under this Agreement
or otherwise arising.

                       (d) All  collateral  which  the  Lender  may at any  time
acquire from any other  source as security  for the payment of any  Indebtedness
shall constitute  cross-collateral for all Indebtedness without apportionment or
designation as to particular Indebtedness, and all Indebtedness shall be secured
by all  such  collateral;  and the  Lender  shall  have the  right,  in its sole
discretion,  to determine  the order in which its rights in or remedies  against
such  collateral  are  to be  exercised  and  which  types  or  portions  of the
collateral are to be proceeded  against and the order of application of proceeds
of Borrower Collateral against particular Indebtedness.

                  7.2. Inspection of Collateral. The Borrower hereby irrevocably
consents  to any act by the Lender or its agents in entering  upon any  premises
for the  purposes of either




                                       30
<PAGE>

(i)  following  reasonable  prior  notice to Borrower  inspecting  the  Borrower
Collateral and making extracts from and copies of any books and records relating
thereto during regular business hours or (ii) taking  possession of the Borrower
Collateral at any time following the occurrence and during the  continuation  of
an Event of Default;  and the Borrower hereby waives its right to assert against
the Lender or its agents any claim based upon  trespass or any similar  cause of
action for entering  upon any  premises  where the  Borrower  Collateral  may be
located.  Following the  occurrence and during the  continuation  of an Event of
Default,   the  Borrower   irrevocably   consents  to  the  Lender's  requesting
information  pertaining  to the  Borrower  from any Person  and to the  Lender's
verifying such or any other information  pertaining to the Borrower,  including,
but not limited to the amount, quality, existence, quantity, value and condition
of any Account or any other Borrower Collateral.

                  7.3. Other Rights. The Borrower  authorizes the Lender without
affecting either the Borrower's or the Lender's  obligations  hereunder or under
any  other  Loan  Document  from  time to time to take  from any  party and hold
additional  collateral or guaranties for the payment of the  Indebtedness or any
part thereof, and to exchange, enforce, substitute or release such collateral or
guaranty of payment of the  Indebtedness  or any part  thereof and to release or
substitute  any endorser or guarantor or any party who has given any Lien on any
collateral as security for the payment of the  Indebtedness  or any part thereof
or any party in any way obligated to pay the Indebtedness or any part thereof.

                  7.4. Tangible Collateral;  Inventory. No Inventory,  Equipment
or other tangible  Borrower  Collateral  shall be commingled  with, or become an
accession  to or part of,  any  property  of any  other  Person  so long as such
property is Collateral.  No tangible Borrower  Collateral is or shall be allowed
to  become  a  fixture.   No  tangible  Collateral  shall  be  stored  with  any
warehouseman, bailee or similar party.

                  7.5.  The  Lender's  Payment of Claims  Asserted  Against  the
Collateral. In the event a Lien, other than a Permitted Lien, is asserted by any
Person  against the  Collateral  and if the Lender has given Borrower five days'
prior  written  notice and Borrower has failed to either (i) satisfy the Lien or
(ii) cause the Lien to be transferred to a bond  acceptable to the Lender,  then
the Lender may at any time after such five-day period in its discretion  without
waiving or releasing  any  obligation,  liability or duty of the Borrower  under
this  Agreement,  the other Loan  Documents  or any Default or Event of Default,
pay,  acquire  and/or accept an  assignment  of such Lien.  All sums paid by the
Lender in respect thereof and all costs, fees and expenses,  including,  without
limitation,  attorneys' fees,  court costs,  expenses and other charges relating
thereto,  which are incurred by the Lender on account thereof, shall be payable,
upon demand, by the Borrower to the Lender and shall be additional  Indebtedness
hereunder secured by the Collateral.

         8.       Term of Agreement.

                  8.1.  Term  and  Right  to  Terminate.  Subject  to the  other
provisions herein, and without prejudice to the Lender's right to DEMAND payment
of any and all Revolving  Credit Loans at any time or times,  the  provisions of
this  Agreement  shall continue in full force and effect until December 30, 2004
(the "Term").  Notwithstanding any term herein to the contrary or any other term
in any of the other Loan  Documents,  the Borrower and the Lender agree that all
Indebtedness   hereunder   shall  be  payable  in  accordance  with  Section  3.
Notwithstanding  any  provision to the contrary set forth in any Loan  Document,
the Lender may terminate the financing arrangements under this Agreement and the
Notes at any time,  upon notice to Borrower  but  without  legal  process of any
kind,  upon the occurrence and during the  continuation  of an Event of Default;
provided,  however,  that the  Lender  shall  retain the right to payment of the
Indebtedness in accordance with Section 3.



                                       31
<PAGE>

                  8.2. Effect of Termination. Without limiting the generality of
the other  provisions  regarding  Default and acceleration  hereunder,  upon the
effective date of termination,  all  Indebtedness to the Lender,  whether or not
incurred under this Agreement  (and  notwithstanding  any term of any other Loan
Document), shall become immediately due and payable,  including, but not limited
to, all Indebtedness (contingent or otherwise) with respect to any Interest Rate
Swap  Agreement  and all Letters of Credit and  Forward  and Spot  transactions.
Notwithstanding  any  provision  to the  contrary  in  any  Loan  Document,  and
notwithstanding  any such  termination,  the obligations of the Borrower and the
rights,  remedies and Liens of the Lender hereunder and under each Loan Document
shall remain in full force and effect until the Indebtedness is indefeasibly and
finally  paid and  discharged  in full and all Letters of Credit and Forward and
Spot  transactions  and the Interest Rate Swap Agreement have been terminated or
canceled  and Lender is released  from all  liability in  connection  therewith;
provided,  however,  that  Lender  shall  promptly  release  its  Liens  in  the
Collateral upon the  indefeasible and final payment and discharge in full of all
Indebtedness.

         9.       Miscellaneous.

                  9.1.  Rights and  Remedies  Cumulative;  Non-Waiver;  Etc. The
enumeration  of the Lender's  rights and remedies set forth in this Agreement is
not  intended to be  exhaustive  and the  exercise by the Lender of any right or
remedy shall not  preclude the exercise of any other rights or remedies,  all of
which shall be cumulative, and shall be in addition to any other right or remedy
given hereunder,  under the Loan Documents or under any other agreement to which
the Borrower and the Lender are now or hereafter  become  parties,  or which may
hereafter exist in law or in equity or by suit or otherwise. No delay or failure
to take  action on the part of the  Lender in  exercising  any  right,  power or
privilege  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any  such  right,  power or  privilege  preclude  other or  further
exercise thereof or the exercise of any other right, power or privilege or shall
be  construed  to be a waiver of any  Event of  Default.  No  course of  dealing
between the Borrower and the Lender or the Lender's employees shall be effective
to change,  modify or discharge any provision of this Agreement or to constitute
a waiver of any Event of Default.  The Lender shall not, under any circumstances
or in any event whatsoever,  have any liability for any error, omission or delay
of any kind  occurring in the  liquidation  of the Collateral or for any damages
resulting  therefrom except damages directly  attributable to the Lender's gross
negligence or willful misconduct.

                  9.2.   Survival   of    Representations;    Reinstatement   of
Indebtedness. All covenants, agreements,  representations and warranties made by
Borrower or any Guarantor in connection herewith shall survive the making of the
Loans hereunder and the delivery of the Notes,  and shall continue in full force
and effect so long as any  Indebtedness  is  outstanding.  The Borrower  further
agrees that to the extent that the  Borrower  makes a payment or payments to the
Lender,  which  payment  or  payments  or  any  part  thereof  are  subsequently
invalidated,  declared  to be  fraudulent  or  preferential,  set  aside  and/or
required  to be repaid to a  trustee,  receiver  or any  other  party  under any
bankruptcy,  insolvency or similar state or federal law, common law or equitable
cause,  then, to the extent of such payment or repayment,  the  Indebtedness  or
part  thereof  intended to be satisfied  shall be revived and  continued in full
force and effect as if such payment had not been received by the Lender.

                  9.3.   Expenses;   Indemnification.   Whether   or   not   the
transactions  contemplated by this Agreement shall be consummated,  the Borrower
will pay or  reimburse  the  Lender  upon  demand  for all  reasonable  expenses
(including,  without  limitation,  reasonable  attorneys' and paralegals'  fees,
costs and expenses)  incurred or paid by the Lender in connection  with: (a) the
preparation,  execution  and  delivery  of  this  Agreement  or the  other  Loan
Documents;  (b) charges for  examiners,  auditors  or similar  Persons  whom the
Lender may engage with respect to rendering  opinions  concerning the Borrower's
or any  Guarantor's  financial  condition  and the  condition  and  value of the
Collateral in accordance with the terms hereof; (c) any arbitration,




                                       32
<PAGE>

litigation,  contest, dispute, suit, proceeding,  enforcement or action (whether
instituted  by the  Lender  or the  Borrower  or any  other  Person)  in any way
relating to the Collateral,  this Agreement or the other Loan Documents,  or the
Borrower's  business  or  affairs;  (d) any attempt to enforce any rights of the
Lender  against the  Borrower or any other  Person which may be obligated to the
Lender by virtue  of this  Agreement  or the  other  Loan  Documents,  including
without  limitation,  the Account Debtors;  (e) any attempt to inspect,  verify,
protect,  collect,  sell,  liquidate or otherwise  dispose of the  Collateral in
accordance with the terms hereof;  (f) the filing and recording of all documents
required  by the  Lender  to  perfect  the  Lender's  Liens  in the  Collateral,
including  without  limitation,  any  documentary  stamp tax or any other  taxes
incurred  because  of such  filing  or  recording;  (g) all  costs  incurred  in
connection with any lockbox; and (h) all costs of modifying or amending any Loan
Document.  The Borrower  shall  indemnify and hold the Lender  harmless from and
against any and all  finder's or  brokerage  fees and  commissions  which may be
payable in connection with the transactions contemplated by this Agreement other
than any fees or commissions of finders or brokers engaged by the Lender. If the
Borrower  should fail to pay any tax or other amount  required by this Agreement
to be paid or which may be necessary to protect or preserve  any  Collateral  or
the Borrower's or Lender's interests  therein,  the Lender may make such payment
and the amount  thereof  shall be payable on demand,  shall bear interest at the
Default  Rate  from the date of  demand  until  paid and  shall be  deemed to be
Indebtedness  entitled  to the benefit and  security of the Loan  Documents.  In
addition,  the Borrower agrees to pay and save the Lender  harmless  against any
liability for payment of any state documentary stamp taxes,  intangible taxes or
similar taxes (including  interest or penalties,  if any) and fees which may now
or hereafter be determined to be payable with respect to the execution, delivery
or  recording  of any  Loan  Document  or the  making  of any  Advance,  whether
originally  thought to be due or not, and  regardless  of any mistake of fact or
law on the part of the Lender or the Borrower with respect to the  applicability
of such tax or fee. The provisions of this Section 9.3 shall survive  payment in
full of the Loans and termination of this Agreement.

                  9.4. Notices.  Any notice or other communication  hereunder to
any party hereto shall be by hand delivery,  facsimile transmission,  nationally
recognized  overnight  courier for next  business day delivery or  registered or
certified mail and unless otherwise provided herein shall be deemed to have been
received when  delivered  personally or three days after deposit in such mail or
with  such  courier  postage  prepaid,  addressed  to the  party at its  address
specified below (or at any other address that the party may hereafter specify to
the other parties in writing):

         The Lender:                First Union National Bank
                                    Portfolio Management Group
                                    4299 N.W. 36th Street, 4th Floor
                                    Miami Springs, Florida 33166
                                    Fax: (305) 883-4198

         With a copy to:            Stearns Weaver Miller Weissler
                                    Alhadeff & Sitterson, P.A.
                                    Suite 2200
                                    150 West Flagler Street
                                    Miami, Florida  33130
                                    Attention: Stuart D. Ames, Esquire
                                    Fax:  (305) 789-3395

         The Borrower:              Dryclean USA, Inc.
                                    290 68th Street
                                    Miami, Florida 33138


                                       33
<PAGE>

                                    Fax : (305) 751-4903
                                    Attn: Michael Steiner

                  9.5.  Successors and Assigns.  This Agreement shall be binding
upon and shall inure to the benefit of the  Borrower  and the Lender,  and their
respective successors and assigns; provided that the Borrower may not assign any
of its  rights or duties  hereunder  without  the prior  written  consent of the
Lender and any such assignment  made without such consent will be void.  Nothing
in this Agreement or any other Loan Document  shall prohibit or restrict  Lender
from pledging or assigning the Loan Documents,  including the Collateral, to any
Federal Reserve Bank in accordance with applicable law.

                  9.6. Counterparts; Construction; Gender. This Agreement may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original and all of which when taken together shall constitute but one
and the same instrument. Any telecopied version of a signature shall be deemed a
manually  executed and delivered  original.  This  Agreement  shall be construed
without any presumption that it be construed  against the party causing it to be
drafted.  All references in this Agreement or any of the other Loan Documents to
the  masculine,  feminine or neuter gender shall include all such genders unless
the context clearly indicates otherwise. Each representation, warranty, covenant
and agreement set forth in any Loan Document  shall be construed  independently.
The parties  acknowledge  that a Default or an Event of Default  shall be deemed
continuing  until  cured,  as  determined  by  Lender  in  accordance  with this
Agreement or any other Loan Document.

                  9.7. Powers.  All powers of attorney granted to the Lender are
coupled  with  an  interest  and  are  irrevocable  until  all  indebtedness  is
irrevocably paid in full and Lender has no further obligations hereunder.

                  9.8.  Approvals.  If this Agreement  calls for the approval or
consent of the Lender,  such approval or consent may be given or withheld in the
sole credit judgment of the Lender.

                  9.9.  Indemnification  of the  Lender.  From and at all  times
after the date of this  Agreement,  and in addition to all of the Lender's other
rights and remedies against the Borrower, the Borrower agrees to hold the Lender
harmless from, and to indemnify the Lender against, all losses,  damages,  costs
and  expenses  (including,   but  not  limited  to,  reasonable  attorneys'  and
paralegals'  fees, costs and expenses)  incurred or paid by the Lender,  whether
direct, indirect or consequential, as a result of or arising from or relating to
any suit, action or proceeding by any Person,  whether  threatened or initiated,
asserting a claim for any legal or equitable remedy against any Person under any
statute or  regulation,  including,  but not  limited  to, any  federal or state
securities or tax laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the  negotiation,  preparation,  execution or
performance of, or the financing  transactions  contemplated  by, this Agreement
and the other Loan Documents or the Lender's furnishing of funds to the Borrower
pursuant   to  this   Agreement;   provided,   however,   that   the   foregoing
indemnification  shall not protect the Lender from loss, damage, cost or expense
directly  attributable to the Lender's willful  misconduct or gross  negligence.
All of the foregoing losses,  damages, costs and expenses of the Lender shall be
payable by the Borrower upon demand by the Lender, as the case may be, and shall
be additional Indebtedness hereunder secured by the Collateral.

                  9.10.  Waivers by the Borrower.  Except as otherwise  provided
for in this Agreement,  the Borrower waives (a) presentment,  demand and protest
and notice of presentment, protest, non-payment, maturity and all other notices;
(b) notice prior to taking  possession or control of the  Collateral or any bond
or security which might be required by any court prior to allowing the Lender to
exercise any of its remedies; and (c) the benefit of all valuation,



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<PAGE>

appraisement  and exemption  laws.  The Borrower  consents to all  extensions of
time,  renewals  and  postponements  of time of payment with respect to any Loan
Document  from time to time prior to or after the end of the Term or any Default
or Event of Default,  without  notice,  consent or  consideration  to any of the
foregoing.

                  9.11. Lawful Charges;  Late Charge.  Notwithstanding  anything
herein to the  contrary,  if at any time the  interest  rate  applicable  to the
Loans,  together  with all fees,  charges and other amounts which are treated as
interest on the Loans under applicable law (collectively  the "Charges"),  shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender in accordance with applicable
law,  the rate of interest  payable in respect of the Loans,  together  with all
Charges payable in respect  thereof,  shall be limited to the Maximum Rate, and,
to the extent  lawful,  the interest and Charges that would have been payable in
respect of the Loans but were not payable as a result of the  operation of these
provisions shall be cumulated and the interest and Charges payable to the Lender
in respect of other  Indebtedness  or periods shall be increased  (but not above
the Maximum Rate therefor) until such cumulated  amount,  together with interest
thereon at the Adjusted  LIBOR Market Index Rate  (Revolving)  or Adjusted LIBOR
Market Rate Index (Term),  as applicable,  to the date of repayment,  shall have
been  received by the Lender.  A late charge of five percent (5%) of any payment
required  hereunder  shall be imposed on each and every  payment,  including the
final payment due hereunder,  not received by the Lender within 10 days after it
is due.  The late  charge is not a  penalty,  but  liquidated  damages to defray
administrative  and related  expenses due to such late payment.  The late charge
shall be  immediately  due and payable and shall be paid by the  Borrower to the
Lender  without  notice or demand.  This  provision for a late charge is not and
shall not be deemed a grace  period,  and Lender has no  obligation  to accept a
late payment.  Further,  the acceptance of a late payment shall not constitute a
waiver of any Default or other default then existing or thereafter arising under
any Loan Document.

                  9.12.  Amendment.  This Agreement and the other Loan Documents
cannot be amended,  changed,  discharged  or terminated  orally,  but only by an
instrument in writing signed by the Lender and the Borrower.

                  9.13.  Severability.  In the  event  any  one or  more  of the
provisions  contained in this Agreement or in any other Loan Document  should be
held invalid,  illegal or unenforceable in any respect,  the validity,  legality
and  enforceability  of the remaining  provisions  contained  herein and therein
shall not in any way be affected or impaired thereby. The parties shall endeavor
in  good-faith  negotiations  to replace the invalid,  illegal or  unenforceable
provisions with valid  provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

                  9.14.   Entire   Agreement.   This  Agreement  and  the  other
documents, certificates and instruments referred to herein constitute the entire
agreement  between the parties and  supersede  and rescind any prior  agreements
relating to the subject matter hereof.  In the event of any conflict between the
terms of any other Loan Document and the terms of this  Agreement,  the terms of
this Agreement shall govern.

                  9.15. Separate Legal Counsel. Borrower and each Guarantor have
been  represented  by its own  legal  counsel  (and not that of the  Lender)  in
connection with the negotiation and documentation of the Loan Documents.

                  9.16.  Right of  Setoff.  If an Event of  Default  shall  have
occurred and be continuing, the Lender is hereby authorized at any time and from
time to time, to the fullest  extent  permitted by law, to set off and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other  indebtedness  at any time owing by the



                                       35
<PAGE>

Lender to or for the credit or the  account of the  Borrower  against any of and
all the  obligations  of the  Borrower  now or  hereafter  existing  under  this
Agreement and other Loan  Documents,  irrespective  of whether or not the Lender
shall have made any demand under this Agreement or such other Loan Documents and
although such obligations may be unmatured.  The rights of the Lender under this
Section  9.16 are in  addition to other  rights and  remedies  (including  other
rights of setoff) which the Lender may have.

                  9.17.  Arbitration;  Preservation  and Limitation of Remedies.
Upon demand of any party hereto, whether made before or after institution of any
judicial proceeding, any dispute, claim or controversy arising out of, connected
with or  relating to this  Agreement  or any other Loan  Documents  ("Disputes")
between  parties to this Agreement  shall be resolved by binding  arbitration as
provided herein.  Institution of a judicial proceeding by a party does not waive
the right of that party to demand arbitration  hereunder.  Disputes may include,
without limitation, tort claims, counterclaims,  disputes as to whether a matter
is subject to arbitration,  claims brought as class actions, claims arising from
Loan  Documents  executed in the future,  or claims  arising out of or connected
with the transaction reflected by this Agreement. Arbitration shall be conducted
under and governed by the Commercial  Financial Disputes  Arbitration Rules (the
"Arbitration  Rules") of the American  Arbitration  Association  (the "AAA") and
Title 9 of the U.S.  Code.  All  arbitration  hearings shall be conducted in the
city in which the office of Lender first stated above is located.  The expedited
procedures  set  forth in Rules 51 et seq.  of the  Arbitration  Rules  shall be
applicable  to  claims of less  than  $1,000,000.  All  applicable  statutes  of
limitation shall apply to any Dispute.  A judgment upon the award may be entered
in any court  having  jurisdiction.  The panel  from which all  arbitrators  are
selected  shall be  comprised  of  licensed  attorneys.  The  single  arbitrator
selected for expedited procedure shall be a retired judge from the highest court
of general  jurisdiction,  state or federal, of the state where the hearing will
be conducted or if such person is not available to serve, the single  arbitrator
may be a licensed  attorney.  Notwithstanding  the foregoing,  this  arbitration
provision  does not apply to disputes under or related to the Interest Rate Swap
Agreement.  Notwithstanding  the preceding binding arbitration  provisions,  the
parties agree to preserve,  without diminution,  certain remedies that any party
hereto may employ or exercise  freely,  independently  or in connection  with an
arbitration  proceeding or after an arbitration  action is brought.  The parties
shall  have the  right to  proceed  in any court of  proper  jurisdiction  or by
self-help to exercise or prosecute the following  remedies,  as applicable:  (i)
all rights to foreclose  against any real or personal property or other security
by exercising a power of sale granted under Loan  Documents or under  applicable
law or by judicial  foreclosure and sale,  including a proceeding to confirm the
sale;  (ii) all  rights  of  self-help  including  peaceful  occupation  of real
property and collection of rents,  set-off,  and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief,  sequestration,  garnishment,  attachment,  appointment  of receiver and
filing  an  involuntary  bankruptcy  proceeding;  and (iv)  when  applicable,  a
judgment by  confession  of judgment.  Preservation  of these  remedies does not
limit the power of an arbitrator to grant similar remedies that may be requested
by a party in a Dispute.  The parties agree that they shall not have a remedy of
punitive or exemplary  damages against the other in any Dispute and hereby waive
any right or claim to punitive or  exemplary  damages they have now or which may
arise in the  future in  connection  with any  Dispute  whether  the  Dispute is
resolved by arbitration or judicially.

                  9.18.  GOVERNING LAW;  JURISDICTION AND VENUE;  WAIVER OF JURY
TRIAL.   SUBJECT  TO  THE  TERMS  OF  SECTION  9.17,  THIS  AGREEMENT  SHALL  BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF
THE STATE OF  FLORIDA.  SUBJECT  TO THE TERMS OF  SECTION  9.17,  AS PART OF THE
CONSIDERATION  FOR NEW VALUE THIS DAY RECEIVED,  THE BORROWER HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN DADE



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<PAGE>

COUNTY,  STATE OF FLORIDA,  AND CONSENTS  THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED OR CERTIFIED  MAIL DIRECTED TO THE BORROWER AT THE ADDRESS  STATED IN
SECTION 9.4 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER
OF ACTUAL  RECEIPT  THEREOF  OR THREE DAYS  AFTER  DEPOSIT IN THE UNITED  STATES
MAILS, PROPER POSTAGE PREPAID. SUBJECT TO THE TERMS OF SECTION 9.17, EACH OF THE
BORROWER AND THE LENDER HEREBY IRREVOCABLY AND  UNCONDITIONALLY  WAIVES TRIAL BY
JURY IN ANY SUIT OR  PROCEEDING  ARISING OUT OF OR RELATED TO THIS  AGREEMENT OR
THE OTHER LOAN  DOCUMENTS.  SUBJECT TO THE TERMS OF SECTION  9.17,  THE BORROWER
WAIVES ANY OBJECTION  WHICH THE BORROWER MAY HAVE BASED ON LACK OF  JURISDICTION
OR IMPROPER VENUE OR FORUM NON  CONVENIENS TO ANY SUIT OR PROCEEDING  INSTITUTED
BY THE LENDER UNDER THIS  AGREEMENT OR THE OTHER LOAN  DOCUMENTS IN ANY STATE OR
FEDERAL COURT LOCATED  WITHIN DADE COUNTY,  FLORIDA AND CONSENTS TO THE GRANTING
OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. SUBJECT
TO THE TERMS OF SECTION  9.17,  NOTHING IN THIS  SECTION  9.18 SHALL  AFFECT THE
RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW
OR AFFECT THE RIGHT OF THE LENDER TO BRING ANY ACTION OR PROCEEDING  AGAINST THE
BORROWER  OR ITS  PROPERTY  IN THE  COURTS OF ANY OTHER  JURISDICTION  WHICH HAS
JURISDICTION OVER THE BORROWER OR ITS PROPERTY.  SUBJECT TO THE TERMS OF SECTION
9.17, THIS PROVISION IS A MATERIAL  INDUCEMENT FOR THE LENDER TO ENTER INTO THIS
AGREEMENT  AND THE OTHER  LOAN  DOCUMENTS,  MAKE THE LOANS AND  EXTEND THE OTHER
FINANCIAL ACCOMMODATIONS CONTEMPLATED HEREUNDER AND THEREUNDER.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.


                                         DRYCLEAN USA, INC.



                                         By:  /s/ Michael Steiner, Pres.
                                              ----------------------------------
                                              Michael Steiner, President




                                         FIRST UNION NATIONAL BANK,
                                         a national banking association



                                         By:  /s/ Steve Leth
                                              ----------------------------------
                                              Steve Leth, Vice President



                                       37
<PAGE>


                               INDEX OF SCHEDULES



         Schedule 1.1      Permitted Liens

         Schedule 2.8      Affiliates' Assets

         Schedule 2.9      Locations

         Schedule 2.17     Environmental Compliance

         Schedule 5.14     Affiliated Transactions



                                INDEX OF EXHIBITS


         Exhibit A         Borrowing Base Certificate

         Exhibit B         Intentionally omitted

         Exhibit C         Term Note

         Exhibit D         Revolving Credit Note