EXHIBIT 10.9














                           LOAN AND SECURITY AGREEMENT

                           DATED AS OF MARCH 27, 2002

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                    AS LENDER

                                       AND

                         COMPUTER COMPONENTS CORPORATION

                                   AS BORROWER



























                                       13
<PAGE>
                         INDEX OF EXHIBITS AND SCHEDULES
                         -------------------------------


Schedule A      -   Definitions
Schedule B      -   Lender's and Borrower's Addresses for Notices
Schedule C      -   Letters of Credit
Schedule D      -   Cash Management System
Schedule E      -   Fees and Expenses
Schedule F      -   Schedule of Documents
Schedule G      -   Financial Covenants

Disclosure Schedule  (3.2)     -    Places of Business; Corporate Names
Disclosure Schedule  (3.4(a))  -    Projections
Disclosure Schedule  (3.6)     -    Real Estate
Disclosure Schedule  (3.7)     -    Stock; Affiliates
Disclosure Schedule  (3.9)     -    Taxes
Disclosure Schedule  (3.11)    -    ERISA
Disclosure Schedule  (3.12)    -    Litigation
Disclosure Schedule  (3.13)    -    Intellectual Property
Disclosure Schedule  (3.15)    -    Environmental Matters
Disclosure Schedule  (3.16)    -    Insurance
Disclosure Schedule  (3.18)    -    Contracts (Offset Risk)
Disclosure Schedule  (5(b))    -    Indebtedness
Disclosure Schedule  (5(e))    -    Liens
Disclosure Schedule  (6.1)     -    Actions to Perfect Liens

Exhibit A     - Form of Notice of Revolving Credit Advance
Exhibit B     - Other Reports and  Information
Exhibit C     - Form of  Borrowing  Base  Certificate
Exhibit C-1   - Inventory  Rollforward and Reconcilliation
Exhibit D     - Form of Accounts Payable Analysis
Exhibit E     - Form of Accounts Receivable  Rollforward Analysis
Exhibit F     - Form of Revolving Credit Note
Exhibit G     - [Intentionally Left Blank]
Exhibit H     - Form of Secretarial  Certificate  (Borrower)
Exhibit H-1   - Form of Secretarial Certificate  (Guarantor)
Exhibit I     - Form of Power of Attorney
Exhibit J     - Form of Certificate of Compliance
Exhibit K     - Form of Lockbox  Agreement
Exhibit L     - Form of Landlord's  Waiver and Consent
Exhibit M-1   - [Intentionally  Left Blank]
Exhibit M-2   - [Intentionally Left Blank]
Exhibit N-1   - Form of Guarantee
Exhibit N-1.A - [Intentionally  Left Blank]
Exhibit N-2   - [Intentionally  Left Blank]
Exhibit N-2.A - [Intentionally  Left  Blank]
Exhibit O     - Form of  Opinion  of Counsel to Borrower
Exhibit  P-1  - [Intentionally  Left  Blank]
Exhibit P-2   - [Intentionally  Left Blank]
Exhibit Q     - Form of Standard Payoff Letter
Exhibit R     - Form of U.C.C. Schedule
Exhibit S     - Form of Payment of Proceeds Letter




                                       14
<PAGE>
              TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
-------------------------------------------------------------------------------
REVOLVING CREDIT LOAN
   Maximum Amount:                 $12,000,000
   --------------
   Term:                           3 years
   ----
   Revolving Credit Rate:          Index Rate plus 1.25%
   ---------------------
   Letter of Credit Subfacility:   $250,000
   ----------------------------
   Borrowing Base:                 Eighty-five percent (85%) of the value (as
   --------------                  determined by Lender) of Borrower's Eligible
                                   Accounts; provided that Lender shall reduce
                                   the foregoing percentage by one percentage
                                   point for each percentage point that the
                                   dilution of Borrower's Accounts (calculated
                                   monthly by Lender as the average dilution
                                   over the most recent three months) exceeds
                                   5%; plus
                                       ----
                                   the lesser of (i) $3,000,000 or (ii) the
                                   lesser of (A) eighty-five percent (85%) of
                                   the net orderly liquidation value of
                                   Borrower's Eligible Inventory (as determined
                                   by Lender) and (B) fifty-five percent (55%)
                                   of the lower of cost or market of Borrower's
                                   Eligible Inventory (as determined by Lender).
FEES

   Closing Fee:                    $30,000, $7,500 of which will be due and
   -----------                     payable at closing (against which will be
                                   credited the unused balance, net of expenses,
                                   of the underwriting deposit) and the balance
                                   of which will be due in three installments of
                                   $7,500 each payable on or before the first
                                   day of the next three fiscal quarters of
                                   Borrower after closing.
   Accommodation Fee:              $25,000.
   -----------------
   Collateral Monitoring Fee:      $18,000 per annum, payable in quarterly
   -------------------------       installments of $4,500 each at closing and
                                   quarterly thereafter.

   Unused Line Fee:                0.25% per annum
   ---------------
   Letter of Credit Fee:           2.0% per annum
   --------------------
   Prepayment Fee:                 2.0% in year one; 1.0% year two; and 0.5% in
   --------------                  year three.

The Loans described generally here are established and governed by the terms and
conditions set forth below in this Agreement and the other Loan Documents, and
if there is any conflict between this general description and the express terms
and conditions below or elsewhere in the Loan Documents, such other express
terms and conditions shall control.
--------------------------------------------------------------------------------
                                       15
<PAGE>
This LOAN AND SECURITY AGREEMENT is dated as of March 27, 2002, and agreed to by
and between COMPUTER COMPONENTS CORPORATION,  a Texas corporation  ("Borrower"),
any other Credit Party executing this Agreement,  and GENERAL  ELECTRIC  CAPITAL
CORPORATION, a Delaware corporation ("Lender").

RECITALS

A. Borrower desires to obtain the Loans and other financial  accommodations from
Lender and Lender is willing  to  provide  the Loans and  accommodations  all in
accordance with the terms of this Agreement.

B.  Capitalized  terms used herein shall have the  meanings  assigned to them in
Schedule A and, for purposes of this Agreement and the other Loan Documents, the
rules of  construction  set forth in  Schedule A shall  govern.  All  schedules,
attachments,  addenda and  exhibits  hereto,  or  expressly  identified  to this
Agreement,  are incorporated  herein by reference,  and taken together with this
Agreement, constitute but a single agreement.

AGREEMENT

NOW,  THEREFORE,  in  consideration  of the  premises  and the mutual  covenants
hereinafter contained, the parties hereto agree as follows:

1.       AMOUNT AND TERMS OF CREDIT

1.1      Loans. (a) Subject to the terms and conditions of this Agreement,  from
         -----
the Closing Date and until the Commitment Termination Date (i) Lender agrees (A)
to make available  to Borrower advances (each, a "Revolving Credit Advance") and
(B) to incur Letter of Credit Obligations,  in  an  aggregate outstanding amount
not to exceed the Borrowing Availability,  and (ii)  Borrower may at its request
from  time  to  time  borrow,  repay and reborrow, and may cause Lender to incur
Letter of Credit Obligations,  under this Section 1.1. The Revolving Credit Loan
shall be  evidenced  by, and be repayable in  accordance  with the terms of, the
Revolving Credit Note and this Agreement.

         (b) Borrower  shall request each  Revolving  Credit  Advance by written
notice  to Lender  substantially  in the form of  Exhibit  A (each a "Notice  of
                                                  ----------
Revolving  Credit  Advance") given no later than 11:00 A.M. (New York City time)
on the  Business Day of the proposed  advance.  Lender shall be fully  protected
under this  Agreement in relying upon,  and shall be entitled to rely upon,  (i)
any Notice of Revolving  Credit  Advance  believed by Lender to be genuine,  and
(ii) the assumption that the Persons making electronic requests or executing and
delivering a Notice of Revolving Credit Advance were duly authorized, unless the
responsible  individual acting thereon for Lender shall have actual knowledge to
the contrary.  As an  accommodation to Borrower,  Lender may permit  telephonic,
electronic,  or facsimile requests for a Revolving Credit Advance and electronic
or facsimile transmittal of instructions,  authorizations, agreements or reports
to Lender by Borrower.  Unless Borrower  specifically  directs Lender in writing
not to accept or act upon  telephonic,  facsimile or  electronic  communications
from Borrower, Lender shall have no liability to Borrower for any loss or damage
suffered by Borrower as a result of Lender's honoring of any requests, execution




                                       16
<PAGE>
of any  instructions,  authorizations  or  agreements or reliance on any reports
communicated to it telephonically, by facsimile or electronically and purporting
to have been sent to Lender by Borrower  and Lender shall have no duty to verify
the origin of any such  communication or the identity or authority of the Person
sending it.

         (c) In making any Loan hereunder  Lender shall be entitled to rely upon
the most recent Borrowing Base  Certificate  delivered to Lender by Borrower and
other  information  available to Lender.  Lender shall be under no obligation to
make any  further  Revolving  Credit  Advance or incur any other  Obligation  if
Borrower shall have failed to deliver a Borrowing Base  Certificate to Lender by
the time specified in Section 4.1(b).

         (d)  [Intentionally Left Blank]

         (e)  Letters of Credit.  Subject  to the terms and  conditions  of this
Agreement,  including Schedule C, Borrower shall have the right to request,  and
Lender  agrees to incur,  the Letter of Credit  Obligations  for the  account of
Borrower in accordance with Schedule C.

1.2 Term and Prepayment. (a) Upon the Commitment Termination Date the obligation
    -------------------
of Lender to make Revolving  Credit  Advances and extend other credit  hereunder
shall  immediately  terminate and Borrower shall pay to Lender in full, in cash:
(i) all  outstanding  Revolving  Credit  Advances  and all  accrued  but  unpaid
interest  thereon;  (ii) an  amount  sufficient  to  enable  Lender to hold cash
collateral  as  specified  in  Schedule  C; and (iii)  all other  non-contingent
                               -----------
Obligations due to or incurred by Lender.

         (b) If the Revolving Credit Loan shall at any time exceed the Borrowing
Availability, then Borrower shall immediately repay the Revolving Credit Loan in
the amount of such excess.

         (c) Borrower  shall have the right,  at any time upon thirty (30) days'
prior written notice to Lender to (i) terminate voluntarily  Borrower's right to
receive or benefit from, and Lender's obligation to make and to incur, Revolving
Credit  Advances  and Letter of Credit  Obligations,  and (ii) prepay all of the
Obligations.  The effective  date of  termination  of the Revolving  Credit Loan
specified in such notice shall be the Commitment  Termination  Date. If Borrower
exercises its right of termination and prepayment,  or if Lender's obligation to
make  Loans is  terminated  for any  reason  prior  to the  Stated  Expiry  Date
(including as a result of the  occurrence of a Default),  Borrower  shall pay to
Lender the applicable Prepayment Fee.

1.3 Use of Proceeds.  Borrower  shall use the proceeds of the Loans to refinance
    ---------------
on the Closing  Date  certain  outstanding  Indebtedness  as provided in Section
2.1(b) and for working capital and other general corporate purposes.

1.4 Single Loan.  The  Loans  and  all  of  the other Obligations of Borrower to
    -----------
Lender shall constitute one general obligation of Borrower secured by all of the
Collateral.



                                       17
<PAGE>
1.5  Interest.  (a)  Borrower  shall pay  interest  to  Lender on the  aggregate
     --------
outstanding Revolving Credit Advances at a floating rate equal to the Index Rate
plus one and  one-quarter  percent  (1.25%)  per annum  (the  "Revolving  Credit
Rate").  All  computations  of interest,  and all  calculations of the Letter of
Credit  Fee,  shall be made by Lender on the basis of a three  hundred and sixty
(360) day year,  in each case for the  actual  number of days  occurring  in the
period for which such interest or fee is payable.  Each  determination by Lender
of an interest rate hereunder  shall be conclusive and binding for all purposes,
absent  manifest  error.  In no event will Lender charge interest at a rate that
exceeds the highest rate of interest  permissible  under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.

         (b)  Interest  shall be payable  on the  outstanding  Revolving  Credit
Advances  (i) in arrears for the  preceding  calendar  month on the first day of
each calendar month,  (ii) on the Commitment  Termination Date, and (iii) if any
interest accrues or remains payable after the Commitment  Termination Date, upon
demand by Lender.

         (c)  Effective  upon the  occurrence of any Event of Default and for so
long as any Event of Default shall be continuing,  the Revolving Credit Rate and
the Letter of Credit Fee shall  automatically  be increased by three  percentage
points  (3%)  per  annum  with  respect  to the  Revolving  Credit  Rate and two
percentage  points (2%) per annum with respect to the Letter of Credit Fee (such
increased rates, the "Default Rate"), and all outstanding Obligations, including
unpaid  interest and Letter of Credit Fees,  shall  continue to accrue  interest
from the date of such Event of Default at the Default  Rate  applicable  to such
Obligations.

         (d) If any interest or any other  payment  (including  Unused Line Fees
and Collateral  Monitoring Fees) to Lender under this Agreement  becomes due and
payable on a day other than a Business  Day, such payment date shall be extended
to the next succeeding Business Day and interest thereon shall be payable at the
then applicable rate during such extension.

1.6 Cash  Management  System.  On or prior to the  Closing  Date and  until  the
    ------------------------
Termination  Date,  Borrower  will  establish  and maintain the cash  management
system  described in Schedule D. All payments in respect of the Collateral shall
                     ----------
be made to or deposited in the blocked or lockbox accounts described in Schedule
D in accordance with the terms thereof.                                 --------
-

1.7  Fees.  Borrower agrees to pay to Lender the Fees set forth in Schedule E.
     ----                                                          -----------

1.8 Receipt of Payments.  Borrower  shall make each payment under this Agreement
    -------------------
(not otherwise made pursuant to Section 1.9) without  set-off,  counterclaim  or
deduction  and free and clear of all Taxes not later than  11:00 A.M.  (New York
City time) on the day when due in lawful  money of the United  States of America
in immediately  available funds to the Collection  Account. If Borrower shall be
required  by law to deduct any Taxes from any  payment to Lender  under any Loan
Document,  then the amount  payable to Lender shall be increased so that,  after


                                       18
<PAGE>
making all required deductions, Lender receives an amount equal to that which it
would have received had no such  deductions been made. For purposes of computing
interest  and Fees,  all  payments  shall be deemed  received  by Lender one (1)
Business Day following receipt of immediately  available funds in the Collection
Account. For purposes of determining the Borrowing Availability,  payments shall
be deemed received by Lender upon receipt of immediately  available funds in the
Collection Account.

1.9 Application  and Allocation of Payments.  Borrower  irrevocably  agrees that
    ---------------------------------------
Lender  shall  have the  continuing  and  exclusive  right to apply  any and all
payments  against the then due and payable  Obligations  in such order as Lender
may deem  advisable.  Lender is  authorized  to, and at its option may  (without
prior  notice  or  precondition  and at any time or  times),  but  shall  not be
obligated to, make or cause to be made  Revolving  Credit  Advances on behalf of
Borrower for: (a) payment of all Fees, expenses,  indemnities,  charges,  costs,
principal, interest, or other Obligations owing by Borrower under this Agreement
or any of the other Loan Documents, (b) the payment, performance or satisfaction
of any of Borrower's obligations with respect to preservation of the Collateral,
or (c) any  premium  in  whole  or in part  required  in  respect  of any of the
policies of insurance required by this Agreement, even if the making of any such
Revolving Credit Advance causes the outstanding  balance of the Revolving Credit
Loan to  exceed  the  Borrowing  Availability,  and  Borrower  agrees  to  repay
immediately,  in cash, any amount by which the Revolving Credit Loan exceeds the
Borrowing Availability.

1.10  Accounting.  Lender is  authorized  to record on its books and records the
      ----------
date and amount of each Loan and each  payment  of  principal  thereof  and such
recordation  shall  constitute  prima  facie  evidence  of the  accuracy  of the
information  so recorded.  Lender shall  provide  Borrower on a monthly  basis a
statement and accounting of such recordations but any failure on the part of the
Lender  to keep  any  such  recordation  (or any  errors  therein)  or to send a
statement  thereof to Borrower  shall not in any manner affect the obligation of
Borrower to repay any of the  Obligations.  Except to the extent  that  Borrower
shall,  within  thirty (30) days after such  statement  and  accounting is sent,
notify  Lender in writing of any  objection  Borrower may have thereto  (stating
with particularity the basis for such objection),  such statement and accounting
shall be deemed final,  binding and conclusive  upon Borrower,  absent  manifest
error.

1.11  Indemnity.  Borrower and each other Credit Party  executing this Agreement
      ---------
jointly and severally agree to indemnify and hold Lender and its Affiliates, and
their  respective  employees,   attorneys  and  agents  (each,  an  "Indemnified
Person"),  harmless  from and against any and all suits,  actions,  proceedings,
claims,  damages,  losses,  liabilities  and  expenses  of any  kind  or  nature
whatsoever  (including  attorneys'  fees and  disbursements  and other  costs of
investigation or defense,  including those incurred upon any appeal) that may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit  having  been  extended,  suspended  or  terminated  under this
Agreement  and the  other  Loan  Documents  or with  respect  to the  execution,
delivery,  enforcement,  performance and  administration of, or in any other way
arising out of or relating to, this  Agreement  and the other Loan  Documents or
any other  documents or  transactions  contemplated  by or referred to herein or


                                       19
<PAGE>
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities,  Environmental Liabilities, Taxes and
legal costs and expenses  arising out of or incurred in connection with disputes
between  or  among  any  parties  to any of the  Loan  Documents  (collectively,
"Indemnified  Liabilities"),  except  to the  extent  that any such  Indemnified
Liability is finally  determined  by a court of competent  jurisdiction  to have
resulted  solely from such  Indemnified  Person's  gross  negligence  or willful
misconduct.  NO INDEMNIFIED  PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY CREDIT
PARTY,  ANY SUCCESSOR,  ASSIGNEE OR THIRD PARTY  BENEFICIARY OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY  THROUGH SUCH PARTY, FOR ANY ACT OR FAILURE TO ACT
UNDER  ANY  POWER  OF  ATTORNEY  OR  FOR   INDIRECT,   PUNITIVE,   EXEMPLARY  OR
CONSEQUENTIAL  DAMAGES  THAT MAY BE  ALLEGED AS A RESULT OF CREDIT  HAVING  BEEN
EXTENDED,  SUSPENDED  OR  TERMINATED  UNDER  THIS  AGREEMENT  OR ANY OTHER  LOAN
DOCUMENT  OR AS A RESULT  OF ANY OTHER  TRANSACTION  CONTEMPLATED  HEREUNDER  OR
THEREUNDER.

1.12 Borrowing Base; Reserves.  The Borrowing Base shall be determined by Lender
     ------------------------
(including the  eligibility of Accounts and Inventory)  based on the most recent
Borrowing Base Certificate delivered to Lender in accordance with Section 4.1(b)
and such other information  available to Lender. The Revolving Credit Loan shall
be subject to Lender's continuing right to withhold from Borrowing  Availability
reserves,  and to increase and decrease  such reserves from time to time, if and
to the extent that in Lender's  good faith  credit  judgment  such  reserves are
necessary,  including  to protect  Lender's  interest  in the  Collateral  or to
protect  Lender  against  possible  non-payment  of  Accounts  for any reason by
Account  Debtors  or  possible  diminution  of the  value of any  Collateral  or
possible non-payment of any of the Obligations or for any Taxes or in respect of
any state of facts that could  constitute a Default.  Lender may, at its option,
implement  reserves by designating as ineligible a sufficient amount of Accounts
or Inventory that would otherwise be Eligible Accounts or Eligible Inventory, as
the case  may be,  so as to  reduce  the  Borrowing  Base by the  amount  of the
intended reserves.  In addition to its other rights set forth in this Agreement,
Lender  shall  have the  right to  adjust  the  advance  rate  against  Eligible
Inventory  from time to time based  upon the mix of  Eligible  Inventory  as set
forth in appraisals with respect thereto obtained from time to time by Lender.

2.  CONDITIONS PRECEDENT

2.1 Conditions to the Initial  Loans.  Lender shall not be obligated to make any
    --------------------------------
of the Loans,  or to perform any other  action  hereunder,  until the  following
conditions  have been satisfied in a manner  satisfactory  to Lender in its sole
discretion, or waived in writing by Lender:

         (a) the Loan  Documents  to be  delivered on or before the Closing Date
shall have been duly executed and delivered by the appropriate  parties,  all as
set forth in the Schedule of Documents (Schedule F);
                                        ----------
         (b) all of the obligations of Borrower to Wells Fargo Business  Credit,
Inc. under its financing  documentation  as in effect  immediately  prior to the
Closing Date will be performed and paid in full from the proceeds of the initial
Loans and all Liens upon any of the  property of  Borrower  or any other  Credit
Party in  respect  thereof  shall  have been  terminated  immediately  upon such
payment;


                                       20
<PAGE>
         (c) Lender shall have  received  evidence  satisfactory  to it that the
insurance  policies  provided  for in Section 3.16 are in full force and effect,
together with appropriate  evidence  showing loss payable or additional  insured
clauses or endorsements in favor of Lender as required under such Section;
         (d) as of the Closing Date Net Borrowing Availability shall be not less
than $500,000  after giving effect to the initial  Revolving  Credit Advance and
Letter of Credit  Obligations  (on a pro forma  basis,  with trade  payables and
taxes  being  paid  within  sixty  (60)  days from due date,  and  expenses  and
liabilities   being  paid  in  the  ordinary  course  of  business  and  without
acceleration of sales);
         (e) Lender shall have received an opinion(s) of counsel to the Borrower
with respect to the Loan Documents in form and substance satisfactory to Lender;
and
         (f)  Lender  shall  have  received   satisfactory   vendor   references
(including a reference from PowerTech Industrial).

2.2 Further  Conditions to the Loans.  Lender shall not be obligated to fund any
    --------------------------------
Loan  (including  the initial  Loans),  if, as of the date thereof:

         (a) any representation or warranty by any Credit Party contained herein
or in any of the other Loan  Documents  shall be untrue or  incorrect as of such
date, except to the extent that any such representation or warranty is expressly
stated to relate to a specific earlier date, in which case, such  representation
and warranty shall be true and correct as of such earlier date; or
         (b) any  event  or  circumstance  that has had or  reasonably  could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
         (c) any Default  shall have  occurred and be continuing or would result
after giving  effect to such Loan;  or
         (d) after giving effect to such Loan, the Revolving Credit  Loan  would
exceed the Borrowing Availability.

The request  and  acceptance  by  Borrower of the  proceeds of any Loan shall be
deemed  to  constitute,  as of the  date of such  request  and the  date of such
acceptance, (i) a representation and warranty by Borrower that the conditions in
this Section 2.2 have been  satisfied and (ii) a restatement by Borrower of each
of the  representations  and  warranties  made by it in any Loan  Document and a
reaffirmation  by Borrower of the granting  and  continuance  of Lender's  Liens
pursuant to the Loan Documents.

3.  REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS

To induce Lender to enter into this  Agreement  and to make the Loans,  Borrower
and each other Credit Party  executing this  Agreement  represent and warrant to
Lender (each of which representations and warranties shall survive the execution
and delivery of this Agreement),  and promise to and agree with Lender until the
Termination Date as follows:

3.1 Corporate  Existence;  Compliance with Law. Each Corporate Credit Party: (a)
    --------------------
is, as of the Closing Date, and will continue to be (i) a  corporation,  limited
liability company or limited partnership, as applicable, duly organized, validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation  or  organization,  (ii) duly qualified to do business and in good

                                       21
<PAGE>
standing in each other  jurisdiction where its ownership or lease of property or
the  conduct of its  business  requires  such  qualification,  except  where the
failure to be so qualified  could not  reasonably be expected to have a Material
Adverse  Effect,  and  (iii)  in  compliance  with all  Requirements  of Law and
Contractual Obligations,  except to the extent failure to comply therewith could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse  Effect;  and (b) has  and  will  continue  to  have  (i) the  requisite
corporate  power and  authority  and the legal  right to  execute,  deliver  and
perform its obligations under the Loan Documents,  and to own, pledge,  mortgage
or  otherwise  encumber  and operate its  properties,  to lease the  property it
operates under lease, and to conduct its business as now, heretofore or proposed
to be conducted,  and (ii) all licenses,  permits,  franchises,  rights, powers,
consents or approvals from or by all Persons or Governmental  Authorities having
jurisdiction  over such Corporate Credit Party that are necessary or appropriate
for the conduct of its business.

3.2  Executive  Offices;  Corporate or Other Names.  (a) Each  Corporate  Credit
     ---------------------------------------------
Party's name as it appears in official filings in the state of its incorporation
or organization,  (b) the type of entity of each Corporate Credit Party, (c) the
organizational identification number issued by each such Credit Party's state of
incorporation  or  organization  or a  statement  that no such  number  has been
issued,   (d)  each   Corporate   Credit  Party's  state  of   organization   or
incorporation,  and (e) the  location of each  Corporate  Credit  Party's  chief
executive office, corporate offices,  warehouses,  other locations of Collateral
and locations  where records with respect to Collateral  are kept  (including in
each case the county of such locations) are as set forth in Disclosure  Schedule
                                                            --------------------
(3.2) and, except as set forth in such Disclosure Schedule,  such locations have
----
not changed during the preceding twelve months.  As of the Closing Date,  during
the prior five  years,  except as set forth in  Disclosure  Schedule  (3.2),  no
                                                --------------------------
Corporate Credit Party has been known as or conducted business in any other name
(including  trade  names).  Each  Corporate  Credit  Party has only one state of
incorporation or organization.

3.3 Corporate  Power;  Authorization;  Enforceable  Obligations.  The execution,
    -----------------------------------------------------------
delivery and  performance by each Credit Party of the Loan Documents to which it
is a party,  and the creation of all Liens provided for herein and therein:  (a)
are and will continue to be within such Credit Party's power and authority;  (b)
have been and will  continue to be duly  authorized  by all  necessary or proper
action;  (c) are not and will not be in violation of any  Requirement  of Law or
Contractual  Obligation  of such Credit  Party (d) do not and will not result in
the creation or imposition of any Lien (other than Permitted  Encumbrances) upon
any of the  Collateral;  and (e) do not and  will not  require  the  consent  or
approval of any  Governmental  Authority or any other Person.  As of the Closing
Date,  each Loan Document  shall have been duly executed and delivered on behalf
of each  Credit  Party  party  thereto,  and each such Loan  Document  upon such
execution  and  delivery  shall be and will  continue  to be a legal,  valid and
binding  obligation of such Credit Party,  enforceable  against it in accordance
with its  terms,  except  as such  enforcement  may be  limited  by  bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.



                                       22
<PAGE>
3.4 Financial  Statements and Projections;  Books and Records. (a) The Financial
    ---------------------------------------------------------
Statements  delivered by Borrower to Lender for its most  recently  ended Fiscal
Year and Fiscal  Month,  are true,  correct and complete and reflect  fairly and
accurately  the  financial  condition  of  Borrower  as of the date of each such
Financial  Statement  in  accordance  with GAAP.  The  Projections  set forth on
Disclosure  Schedule  (3.4(a)) have been  prepared in good faith,  with care and
-----------------------------
diligence and use assumptions that are reasonable under the circumstances at the
time such  Projections  were prepared and as of the date delivered to Lender and
all such assumptions are disclosed in the Projections.

         (b) Borrower and each other Corporate  Credit Party shall keep adequate
Books and Records with respect to the Collateral and its business  activities in
which proper entries,  reflecting all consolidated and  consolidating  financial
transactions, and payments and credits received on, and all other dealings with,
the Collateral, will be made in accordance with GAAP and all Requirements of Law
and on a basis consistent with the Financial Statements.

3.5  Material  Adverse  Change.  Between the date of  Borrower's  most  recently
     -------------------------
audited  Financial  Statements  delivered to Lender and the Closing Date: (a) no
Corporate   Credit   Party  has   incurred  any   obligations,   contingent   or
non-contingent  liabilities,  or liabilities  for Charges,  long-term  leases or
unusual  forward  or  long-term  commitments  that  are  not  reflected  in  the
Projections  delivered  on the  Closing  Date and which  could,  alone or in the
aggregate,  reasonably be expected to have a Material Adverse Effect;  (b) there
has been no material  deviation  from such  Projections;  and (c) no events have
occurred that alone or in the aggregate has had or could  reasonably be expected
to  have a  Material  Adverse  Effect.  No  Requirement  of  Law or  Contractual
Obligation  of any Credit Party has or have had or could  reasonably be expected
to have a Material  Adverse Effect.  No Credit Party is in default,  and to such
Credit Party's knowledge no third party is in default,  under or with respect to
any of its  Contractual  Obligations,  that alone or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.

3.6 Real Estate;  Property.  The real estate listed in Disclosure Schedule (3.6)
    ----------------------
constitutes  all of the real property owned,  leased,  or used by each Corporate
Credit  Party in its  business,  and such  Credit  Party  will not  execute  any
material  agreement or contract in respect of such real estate after the date of
this Agreement  without giving Lender prompt prior written notice thereof.  Each
Corporate  Credit Party holds and will continue to hold good and  marketable fee
simple title to all of its owned real estate,  and good and marketable  title to
all of its other  properties  and  assets,  and valid  and  insurable  leasehold
interests  in all of its  leases  (both  as  lessor  and  lessee,  sublessee  or
assignee),  and none of the properties and assets of any Corporate  Credit Party
are or will be subject to any Liens, except Permitted Encumbrances. With respect
to each of the premises  identified in Disclosure Schedule (3.2) on or prior the
                                       ------------------------
Closing Date a bailee,  landlord or mortgagee agreement acceptable to Lender has
been obtained.





                                       23
<PAGE>
3.7 Ventures,  Subsidiaries and Affiliates;  Outstanding Stock and Indebtedness.
    --------------------------------------
Except as set forth in  Disclosure  Schedule  (3.7),  as of the Closing  Date no
                        --------------------------
Corporate Credit Party has any Subsidiaries,  is engaged in any joint venture or
partnership with any other Person,  or is an Affiliate of any other Person.  All
of the issued and outstanding  Stock of each Corporate  Credit Party  (including
all  rights to  purchase,  options,  warrants  or similar  rights or  agreements
pursuant to which any  Corporate  Credit  Party may be required to issue,  sell,
repurchase  or redeem any of its Stock) as of the Closing  Date is owned by each
of the Stockholders (and in the amounts) set forth in Disclosure Schedule (3.7).
                                                      ------------------------
All outstanding  Indebtedness  of each Corporate  Credit Party as of the Closing
Date is described in Disclosure Schedule (5(b)).
                     -------------------------
3.8 Government  Regulation;  Margin  Regulations.  No Corporate  Credit Party is
    --------------------------------------------
subject to or regulated  under any Federal or state statute,  rule or regulation
that restricts or limits such Person's ability to incur Indebtedness, pledge its
assets,  or to perform its obligations  under the Loan Documents.  The making of
the Loans,  the  application  of the proceeds  and  repayment  thereof,  and the
consummation of the  transactions  contemplated by the Loan Documents do not and
will not violate any  Requirement of Law. No Corporate  Credit Party is engaged,
nor will it engage,  in the  business  of  extending  credit for the  purpose of
"purchasing"  or "carrying"  any "margin  security" as such terms are defined in
Regulation U of the Federal  Reserve  Board as now and hereafter in effect (such
securities  being  referred to herein as "Margin  Stock").  No Corporate  Credit
Party  owns any Margin  Stock,  and none of the  proceeds  of the Loans or other
extensions of credit under this Agreement will be used,  directly or indirectly,
for the  purpose of  purchasing  or  carrying  any Margin  Stock or  reducing or
retiring any Indebtedness that was originally  incurred to purchase or carry any
Margin  Stock.  No  Corporate  Credit  Party will take or permit to be taken any
action that might  cause any Loan  Document  to violate  any  regulation  of the
Federal Reserve Board.

3.9 Taxes;  Charges.  Except as disclosed in Disclosure  Schedule  (3.9) all tax
    ---------------                          --------------------------
returns,  reports and statements  required by any  Governmental  Authority to be
filed by Borrower or any other Credit Party have, as of the Closing  Date,  been
filed and will,  until  the  Termination  Date,  be filed  with the  appropriate
Governmental  Authority  and no tax Lien has been filed against any Credit Party
or any Credit Party's  property.  Proper and accurate amounts have been and will
be  withheld  by  Borrower  and each other  Credit  Party from their  respective
employees for all periods in complete  compliance  with all  Requirements of Law
and  such  withholdings  have  and  will  be  timely  paid  to  the  appropriate
Governmental Authorities. Disclosure Schedule (3.9) sets forth as of the Closing
                          ------------------------
Date those taxable years for which any Credit  Party's tax returns are currently
being audited by the IRS or any other applicable  Governmental Authority and any
assessments  or  threatened  assessments  in  connection  with  such  audit,  or
otherwise  currently  outstanding.  Except as described on  Disclosure  Schedule
(3.9),  none of the Credit Parties or their  respective  predecessors are liable
for any Charges:  (a) under any agreement  (including any tax sharing agreements
or agreement  extending  the period of assessment of any Charges) or (b) to each



                                       24
<PAGE>

Credit  Party's  knowledge,  as a transferee.  As of the Closing Date, no Credit
Party has agreed or been  requested  to make any  adjustment  under IRC  Section
481(a),  by reason of a change in accounting  method or  otherwise,  which could
reasonably be expected to have a Material Adverse Effect.

3.10 Payment of Obligations.  Each Credit Party will pay, discharge or otherwise
     ----------------------
satisfy at or before maturity or before they become delinquent,  as the case may
be, all of its Charges and other  obligations of whatever  nature,  except where
the amount or validity  thereof is  currently  being  contested in good faith by
appropriate  proceedings  and  reserves  in  conformity  with GAAP with  respect
thereto  have been  provided on the books of such  Credit  Party and none of the
Collateral is or could  reasonably be expected to become  subject to any Lien or
forfeiture or loss as a result of such contest.

3.11 ERISA. No ERISA Event has occurred or is reasonably expected to occur that,
     -----
when taken together with all other existing  ERISA Events,  could  reasonably be
expected to result in a liability  of any Credit  Party of more than the Minimum
Actionable  Amount.  Except as  disclosed in  Disclosure  Schedule  (3.11),  the
                                              ---------------------------
present value of all accumulated benefit obligations of the Credit Parties under
each Plan (based on the assumptions  used for purposes of Statement of Financial
Accounting  Standards  No.  87)  did  not,  as of the  date of the  most  recent
Financial  Statements  reflecting such amounts,  exceed the fair market value of
the  assets of such Plan by more than the  Minimum  Actionable  Amount,  and the
present value of all accumulated  benefit  obligations of all underfunded  Plans
(based on the  assumptions  used for purposes of Statement of Financial  Account
Standards  No.  87)  did  not,  as of the  date  of the  most  recent  Financial
Statements  reflecting such amounts,  exceed the fair market value of the assets
of such underfunded Plans by more than the Minimum  Actionable Amount. No Credit
Party or ERISA  Affiliate  has  incurred  or  reasonably  expects  to incur  any
Withdrawal Liability in excess of the Minimum Actionable Amount.

3.12  Litigation.  No  Litigation  is pending or, to the knowledge of any Credit
      ----------
Party,  threatened by or against any Credit Party or against any Credit  Party's
properties  or revenues (a) with respect to any of the Loan  Documents or any of
the transactions contemplated hereby or thereby, or (b) that could reasonably be
expected to have a Material  Adverse  Effect.  Except as set forth on Disclosure
                                                                      ----------
Schedule  (3.12),  as of the  Closing  Date  there is no  Litigation  pending or
---------------
threatened  against any Credit Party that seeks  damages in excess of $50,000 or
injunctive  relief or alleges  criminal  misconduct  of any Credit  Party.  Each
Credit  Party  shall  notify  Lender  promptly in writing  upon  learning of the
existence,  threat or commencement  of any Litigation  against any Credit Party,
any ERISA Affiliate or any Plan or any allegation of criminal misconduct against
any Credit Party.

3.13 Intellectual  Property.  As of the Closing Date, all material  Intellectual
     ----------------------
Property  owned or used by any Corporate  Credit Party is listed,  together with



                                       25
<PAGE>
application or registration  numbers,  where applicable,  in Disclosure Schedule
                                                             -------------------
(3.13).   Each  Corporate  Credit  Party  owns,  or  is  licensed  to  use,  all
-----
Intellectual  Property necessary to conduct its business as currently  conducted
except for such  Intellectual  Property  the  failure of which to own or license
could not  reasonably  be  expected  to have a  Material  Adverse  Effect.  Each
Corporate  Credit Party will  maintain the  patenting  and  registration  of all
Intellectual  Property with the United States Patent and Trademark  Office,  the
United States Copyright Office, or other appropriate  Governmental Authority and
each Corporate  Credit Party will promptly  patent or register,  as the case may
be, all new Intellectual Property and notify Lender in writing five (5) Business
Days prior to filing any such new patent or registration.

3.14  Full  Disclosure.  No  information  contained  in any Loan  Document,  the
      ----------------
Financial  Statements or any written statement  furnished by or on behalf of any
Credit Party under any Loan  Document,  or to induce  Lender to execute the Loan
Documents,  contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements  contained  herein or therein not
misleading in light of the circumstances under which they were made.

3.15 Hazardous Materials.  Except as set forth in Disclosure Schedule (3.15), as
     -------------------                          -------------------------
of the Closing Date, (a) each real property  location owned,  leased or occupied
by each  Corporate  Credit Party (the "Real  Property")  is  maintained  free of
contamination  from any  Hazardous  Material,  (b) no Corporate  Credit Party is
subject to any  Environmental  Liabilities or, to any Credit Party's  knowledge,
potential Environmental Liabilities,  in excess of $50,000 in the aggregate, (c)
no notice has been received by any Corporate  Credit Party  identifying  it as a
"potentially  responsible  party"  or  requesting  information  under  CERCLA or
analogous state statutes, and to the knowledge of any Credit Party, there are no
facts, circumstances or conditions that may result in any Corporate Credit Party
being identified as a "potentially  responsible party" under CERCLA or analogous
state  statutes;  and (d) each  Corporate  Credit  Party has  provided to Lender
copies of all existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in each
case relating to any Corporate  Credit Party.  Each Corporate  Credit Party: (i)
shall comply in all material respects with all applicable Environmental Laws and
environmental permits; (ii) shall notify Lender in writing within seven (7) days
if and when it becomes aware of any Release,  on, at, in, under, above, to, from
or about any of its Real Property;  and (iii) shall promptly forward to Lender a
copy of any order, notice, permit,  application,  or any communication or report
received by it or any other Credit Party in connection with any such Release.

3.16  Insurance.  As of the Closing Date,  Disclosure  Schedule (3.16) lists all
      ---------                            --------------------------
insurance of any nature maintained for current occurrences by Borrower,  as well
as a summary of the terms of such  insurance.  Borrower  shall deliver to Lender
certified  copies and  endorsements to all of its and those of its  Subsidiaries
(a) "All Risk" and business  interruption  insurance policies naming Lender loss
payee, and (b) general  liability and other liability  policies naming Lender as
an additional  insured.  All policies of insurance on real and personal property
will contain an endorsement, in form and substance acceptable to Lender, showing
loss  payable  to Lender  (Form 438 BFU or  equivalent)  and extra  expense  and


                                       26
<PAGE>
business  interruption  endorsements.   Such  endorsement,   or  an  independent
instrument  furnished to Lender,  will provide that the insurance companies will
give  Lender at least  thirty (30) days' prior  written  notice  before any such
policy or policies of insurance  shall be altered or canceled and that no act or
default of  Borrower  or any other  Person  shall  affect the right of Lender to
recover  under such policy or policies of  insurance  in case of loss or damage.
Borrower  shall  direct all  present  and future  insurers  under its "All Risk"
policies of insurance to pay all proceeds payable thereunder directly to Lender.
If any insurance  proceeds are paid by check,  draft or other instrument payable
to Borrower and Lender jointly,  Lender may endorse  Borrower's name thereon and
do such other  things as Lender may deem  advisable  to reduce the same to cash.
Lender  reserves the right at any time,  upon review of Borrower's risk profile,
to require  additional  forms and limits of insurance.  Borrower  shall, on each
anniversary  of the  Closing  Date and from  time to time at  Lender's  request,
deliver to Lender a report by a  reputable  insurance  broker,  satisfactory  to
Lender, with respect to Borrower's insurance policies.

3.17 Deposit and  Disbursement  Accounts.  Attachment I to Schedule D  lists all
     -----------------------------------                   ----------
banks and other financial  institutions at which Borrower or any other Corporate
Credit  Party,   maintains   deposits  and/or  other  accounts,   including  the
Disbursement Account, and such Attachment correctly identifies the name, address
and telephone number of each such  depository,  the name in which the account is
held,  a  description  of the purpose of the account,  and the complete  account
number.

3.18 Accounts and Inventory.  As of the date of each Borrowing Base  Certificate
     ----------------------
delivered to Lender, each Account listed thereon as an Eligible Account shall be
an Eligible Account and all Inventory listed thereon as Eligible Inventory shall
be Eligible  Inventory.  Borrower has not made, and will not make, any agreement
with  any  Account  Debtor  for any  extension  of time for the  payment  of any
Account, any compromise or settlement for less than the full amount thereof, any
release  of any  Account  Debtor  from  liability  therefor,  or  any  deduction
therefrom  except a discount or allowance for prompt or early payment allowed by
Borrower in the  ordinary  course of its  business  consistent  with  historical
practice and as previously  disclosed to Lender in writing.  Disclosure Schedule
                                                             -------------------
(3.18) sets forth each  Contract of the  Borrower  with any Account  Debtor that
-----
gives such Account  Debtor the right (under such  Contract,  under common law or
otherwise) to offset any Accounts for  Borrower's  failure to perform under such
Contract and Borrower  has obtained an offset  waiver for each such  contract in
form and substance  satisfactory to Lender. With respect to the Accounts pledged
as  collateral  pursuant  to any  Loan  Document  (a) the  amounts  shown on all
invoices,  statements  and  reports  that may be  delivered  to the Lender  with
respect  thereto are actually and absolutely  owing to the relevant Credit Party
as indicated  thereon and are not in any way  contingent;  (b) no payments  have
been or shall be made  thereon  except  payments  immediately  delivered  to the
applicable  accounts  described  in  paragraph  1 to Schedule D or the Lender as
required hereunder; and (c) to Borrower's knowledge all Account Debtors have the
capacity to  contract.  Borrower  shall notify  Lender  promptly of any event or
circumstance  that to  Borrower's  knowledge  would cause Lender to consider any
then existing Account or Inventory as no longer constituting an Eligible Account
or Eligible Inventory, as the case may be.


                                       27
<PAGE>
3.19 Conduct  of Business.  Each  Corporate  Credit Party (a) shall  conduct its
     -------------------
business substantially as now conducted or as otherwise permitted hereunder, and
(b) shall at all times maintain,  preserve and protect all of the Collateral and
such  Credit  Party's  other  property,  used or  useful in the  conduct  of its
business and keep the same in good repair, working order and condition and make,
or cause to be made,  all necessary or  appropriate  repairs,  replacements  and
improvements thereto consistent with industry practices.

3.20 Further  Assurances.  At  any time and from time to time,  upon the written
     -------------------
request of Lender and at the sole expense of  Borrower,  Borrower and each other
Credit  Party  shall  promptly  and duly  execute  and  deliver any and all such
further  instruments  and documents  and take such further  action as Lender may
reasonably  deem desirable (a) to obtain the full benefits of this Agreement and
the other Loan Documents, (b) to protect,  preserve and maintain Lender's rights
in any Collateral,  or (c) to enable Lender to exercise all or any of the rights
and powers herein granted.

3.21 Brinks Contract.  Prior to entering into any contract with Brinks, Borrower
     ---------------
shall  submit to Lender the final form of such  contract  and such form shall be
satisfactory to Lender in form and substance.

4.   FINANCIAL MATTERS; REPORTS

4.1  Reports and Notices.  From  the  Closing  Date  until the Termination Date,
     -------------------
Borrower shall deliver to Lender:

         (a) within fifteen (15) days following the end of each Fiscal Month, an
aged trial balance by Account Debtor and an Inventory  Perpetual or Physical (as
requested by Lender) and as soon as available but in no event later than fifteen
(15) days following the end of each Fiscal Month, a  reconciliation  of the aged
trial  balance and the  Inventory  Perpetual or Physical (as the case may be) to
the  Borrower's  general  ledger and from the  general  ledger to the  Financial
Statements  for  such  Fiscal  Month   accompanied  by  supporting   detail  and
documentation as Lender may request;

         (b) as  frequently as Lender may request and in any event no later than
fifteen  (15) days  following  the end of each Fiscal  Month,  a Borrowing  Base
Certificate  in the form of Exhibit C as of the last day of the previous  Fiscal
                            ---------
Month  detailing  ineligible  Accounts  and  Inventory  for  adjustment  to  the
Borrowing Base,  certified as true and correct by the Chief Financial Officer of
Borrower or such other officer as is acceptable to Lender;

         (c) within fifteen (15) days following the end of each Fiscal Month, an
Accounts  Payable  Analysis in the Form of Exhibit D (together  with an accounts
                                           ---------
payable aging) and an Accounts  Receivable Roll Forward  Analysis in the Form of
Exhibit E, each certified as true and correct by the Chief Financial  Officer of
---------
Borrower or such other officer as is acceptable to Lender;



                                       28
<PAGE>
         (d) within thirty (30) days following the end of each Fiscal Month, the
Financial  Statements for such Fiscal Month, which shall provide  comparisons to
budget and actual results for the  corresponding  period during the prior Fiscal
Year,  both on a  monthly  and  year-to-date  basis,  and  accompanied  by (i) a
certification  in the form of Exhibit J by the Chief Executive  Officer or Chief
                              ---------
Financial  Officer of Borrower  and Parent that such  Financial  Statements  are
complete and correct, that there was no Default (or specifying those Defaults of
which he or she was aware),  and showing in reasonable  detail the  calculations
used in determining  compliance with the financial  covenants hereunder and (ii)
evidence  satisfactory to Lender (which may include  payment  receipts or wiring
confirmations)  confirming  all dividend  payments made by Borrower  during such
Fiscal  Month the  proceeds  of which  were used to allow  AlphaNet  Hospitality
Systems, Inc. to make payments of its debt;

         (e) within  ninety (90) days  following  the close of each Fiscal Year,
the Financial Statements for such Fiscal Year certified without qualification by
an  independent  certified  accounting  firm  acceptable to Lender,  which shall
provide  comparisons to the prior Fiscal Year, and shall be accompanied by (i) a
statement in reasonable  detail  showing the  calculations  used in  determining
compliance with the financial covenants hereunder, (ii) a report from Borrower's
and  Parent's  accountants  to the effect  that in  connection  with their audit
examination  nothing has come to their attention to cause them to believe that a
Default has occurred or specifying  those Defaults of which they are aware,  and
(iii) any management letter that may be issued;

         (f) not less than  thirty  (30) days prior to the close of each  Fiscal
Year, the  Projections,  which will be prepared by Borrower in good faith,  with
care and  diligence,  and  using  assumptions  that  are  reasonable  under  the
circumstances at the time such Projections are delivered to Lender and disclosed
therein when delivered; and

         (g) all the reports and other information set forth in Exhibit B in the
                                                                ---------
time frames set forth therein.

4.2  Financial  Covenants.  Borrower  shall  not  breach  any of  the  financial
     --------------------
covenants  set forth in Schedule G. For  purposes of Section  7.1, a breach of a
                        ----------
financial  covenant set forth in Schedule G shall be deemed to have  occurred as
                                 ----------
of any date of  determination  by Lender or as of the last day of any  specified
measurement period,  regardless of when the Financial Statements reflecting such
breach are delivered to Lender.

4.3 Other Reports and  Information.  Borrower shall advise Lender  promptly,  in
    ------------------------------
reasonable  detail,  of:  (a)  any  Lien,  other  than  Permitted  Encumbrances,
attaching to or asserted against any of the Collateral or any occurrence causing
a material  loss or decline in value of any  Collateral  and the  estimated  (or
actual, if available) amount of such loss or decline; (b) any material change in
the  composition  of the  Collateral;  and (c) the  occurrence of any Default or
other  event that has had or could  reasonably  be  expected  to have a Material
Adverse Effect.  Borrower shall, upon request of Lender,  furnish to Lender such


                                       29
<PAGE>
other  reports  and  information  in  connection  with  the  affairs,  business,
financial  condition,  operations,  prospects or  management  of Borrower or any
other Credit Party or the  Collateral  as Lender may request,  all in reasonable
detail.

5.  NEGATIVE COVENANTS

Borrower covenants and agrees that, without Lender's prior written consent, from
the Closing Date until the  Termination  Date,  Borrower shall not,  directly or
indirectly, by operation of law or otherwise:

         (a) form any Subsidiary or merge with, consolidate with, acquire all or
substantially  all of the assets or Stock of, or otherwise  combine with or make
any investment in or, except as provided in Section 5(c) below,  loan or advance
to, any Person;

         (b) cancel any debt owing to it or create,  incur,  assume or permit to
exist any Indebtedness,  except: (i) the Obligations, (ii) Indebtedness existing
as of the Closing Date set forth in Disclosure  Schedule  5(b),  (iii)  deferred
taxes, (iv) by endorsement of Instruments or items of payment for deposit to the
general account of Borrower,  (v) for Guaranteed  Indebtedness  incurred for the
benefit of Borrower if the primary  obligation  is permitted by this  Agreement;
and  (vi)  additional   Indebtedness  (including  Purchase  Money  Indebtedness)
incurred after the Closing Date in an aggregate outstanding amount not exceeding
$50,000;

         (c) enter into any lending,  borrowing or other commercial  transaction
with any of its  employees,  directors,  Affiliates  or any other  Credit  Party
(including  upstreaming and downstreaming of cash and intercompany  advances and
payments  by a Credit  Party on  behalf of  another  Credit  Party  that are not
otherwise permitted  hereunder) other than loans or advances to employees in the
ordinary  course of business in an aggregate  outstanding  amount not  exceeding
$50,000;

         (d) make any changes in any of its business  objectives,  purposes,  or
operations that could  reasonably be expected to adversely  affect  repayment of
the  Obligations  or could  reasonably  be expected  to have a Material  Adverse
Effect  or engage in any  business  other  than  that  presently  engaged  in or
proposed  to be engaged in the  Projections  delivered  to Lender on the Closing
Date or amend its charter or by-laws or other organizational documents;

         (e) create or permit any Lien on any of its properties or assets,except
for Permitted Encumbrances;

         (f) sell, transfer,  issue, convey,  assign or otherwise dispose of any
of its assets or  properties,  including its Accounts or any shares of its Stock
or  engage  in  any  sale-leaseback,  synthetic  lease  or  similar  transaction
(provided,  that the  foregoing  shall not  prohibit  the sale of  Inventory  or
obsolete or unnecessary Equipment in the ordinary course of its business);

         (g) change (i) its name as it appears in official  filings in the state
of its incorporation or organization, (ii) its chief executive office, corporate
offices,  warehouses or other Collateral  locations,  or location of its records
concerning the  Collateral,  (iii) the type of legal entity that it is, (iv) its
organization identification number, if any, issued by its state of incorporation


                                       30
<PAGE>
or organization,  or (v) its state of incorporation or organization, or acquire,
lease or use any real estate after the Closing Date without such Person, in each
instance,  giving  thirty (30) days prior written  notice  thereof to Lender and
taking all actions deemed  necessary or  appropriate  by Lender to  continuously
protect and perfect Lender's Liens upon the Collateral;

         (h) establish any depository or other bank account of any kind with any
financial  institution  (other than the  accounts  set forth in  Attachment 1 to
Schedule D) without Lender's prior written consent; or

         (i) make or permit any Restricted Payment; provided,  however, Borrower
                                                    --------   -------
may (A) pay a monthly  management  fee to the Parent of up to $40,000  per month
provided that (1) no Default or Event of Default exists  immediately prior to or
after any such  payment  including,  without  limitation,  a Default or Event of
Default on account of a violation of the Fixed Charge  Coverage  Ratio set forth
in Section 1 of Schedule G and (2) there is at least  $500,000 of Net  Borrowing
Availability immediately after the making of any such payment, (B) a dividend of
$421,000 on the Closing Date provided  that (1) such dividend is wired  directly
by Lender to a designated dividend account at a U.S. bank for the benefit of the
holders of the existing debt of AlphaNet  Hospitality  Systems,  Inc.,  (2) such
designated dividend account (including the disbursement  provisions with respect
thereto) is  satisfactory  to Lender,  (3) AlphaNet  Hospitality  Systems,  Inc.
finalizes  the  restructuring  of its  debt  with  its  existing  lenders,  such
restructuring to be satisfactory to Lender and (4) Borrower shall not be a party
to, or acknowledge the terms of, such  restructuring  and (C) until such time as
the  existing  indebtedness  of AlphaNet  Hospitality  Systems,  Inc.  under its
existing credit facility has been paid in full (without regard to any subsequent
increases in such  indebtedness),  quarterly  dividends  equal to 50% of the Net
Income of Borrower  for any Fiscal  Quarter  provided  that (1) no more than one
dividend  is paid per Fiscal  Quarter,  (2) any such  dividend is paid no sooner
than 30  days  from  Lender's  receipt  of the  financial  statements  delivered
pursuant to Section 4(d) hereof for the month whose end  coincides  with the end
of such Fiscal  Quarter,  (3) the Fixed  Charge  Coverage  Ratio for such Fiscal
Quarter is equal to or greater  than 1.5 to 1.0,  (4) any such  dividend is paid
directly to a designated  dividend account at a U.S. bank for the benefit of the
holders of such existing  indebtedness of AlphaNet Hospitality Systems, Inc. and
are applied to such  indebtedness,  (5) such  dividend  account  (including  the
disbursement provisions with respect thereto) is satisfactory to Lender, and (6)
no Default or Event of Default  exists as of the date of the payment of any such
dividend.

6.  SECURITY INTEREST

6.1 Grant of Security  Interest.  (a) As collateral  security for the prompt and
    ---------------------------
complete  payment and performance of the  Obligations,  each of the Borrower and
any other Credit Party  executing this  Agreement  hereby grants to the Lender a
security interest in and Lien upon all of its property and assets,  whether real
or  personal,  tangible  or  intangible,  and  whether  now  owned or  hereafter
acquired,  or in which it now has or at any time in the future may  acquire  any
right,  title, or interest,  including all of the following property in which it
now has or at any time in the future may acquire any right,  title or  interest:
all Accounts; all Deposit Accounts, other bank accounts and all funds on deposit
therein;  all money, cash and cash  equivalents;  all Stock (other than Stock in


                                       31
<PAGE>
Borrower or AlphaNet  Hospitality Systems,  Inc.); all Investment Property;  all
Goods  (including  Inventory,   Equipment  and  Fixtures);  all  Chattel  Paper,
Documents  and  Instruments;  all Books and  Records;  all  General  Intangibles
(including all Intellectual Property, contract rights, choses in action, Payment
Intangibles  and  Software);   all   Letter-of-Credit   Rights;  all  Supporting
Obligations;  and to the extent  not  otherwise  included,  all  Proceeds,  tort
claims,  insurance claims and other rights to payment not otherwise  included in
the foregoing  and products of all and any of the  foregoing and all  accessions
to,  substitutions  and replacements  for, and rents and profits of, each of the
foregoing but  excluding in all events  Hazardous  Waste (all of the  foregoing,
together with any other  collateral  pledged to the Lender pursuant to any other
Loan Document, collectively, the "Collateral").

         (b)  Borrower,  Lender  and each  other  Credit  Party  executing  this
Agreement agree that this Agreement  creates,  and is intended to create,  valid
and continuing  Liens upon the Collateral in favor of Lender.  Borrower and each
other Credit Party executing this Agreement represents, warrants and promises to
Lender  that:  (i)  Borrower  and each  other  Credit  Party  granting a Lien in
Collateral  has rights in and the power to transfer each item of the  Collateral
upon which it purports to grant a Lien pursuant to the Loan Documents,  free and
clear  of  any  and  all  Liens  or  claims  of  others,  other  than  Permitted
Encumbrances;  (ii) the security  interests  granted pursuant to this Agreement,
upon  completion of the filings and other actions listed on Disclosure  Schedule
                                                            --------------------
(6.1) (which, in the case of all filings and other documents referred to in said
----
Schedule,  have  been  delivered  to the  Lender  in duly  executed  form)  will
constitute valid perfected  security interests in all of the Collateral in favor
of the Lender as security for the prompt and complete payment and performance of
the Obligations, enforceable in accordance with the terms hereof against any and
all creditors of and purchasers  from any Credit Party (other than purchasers of
Inventory in the ordinary  course of business) and such  security  interests are
prior to all other  Liens on the  Collateral  in  existence  on the date  hereof
except for  Permitted  Encumbrances  that have priority by operation of law; and
(iii) no  effective  security  agreement,  mortgage,  deed of  trust,  financing
statement,  equivalent  security or Lien  instrument or  continuation  statement
covering all or any part of the Collateral is or will be on file or of record in
any public office, except those relating to Permitted Encumbrances. Borrower and
each other Credit Party  executing this  Agreement  promise to defend the right,
title and  interest  of Lender in and to the  Collateral  against the claims and
demands of all Persons whomsoever,  and each shall take such actions,  including
(w) all actions necessary to grant Lender "control" of any Investment  Property,
Deposit Accounts,  Letter-of-Credit  Rights or electronic Chattel Paper owned by
such Credit Party,  with any agreements  establishing  control to be in form and
substance  satisfactory  to Lender,  (x) the  prompt  delivery  of all  original
Instruments, Chattel Paper, negotiable Documents and certificated Stock owned by
such Credit Party (in each case, accompanied by stock powers,  allonges or other
instruments  of  transfer  executed  in blank),  (y)  notification  of  Lender's
interest  in  Collateral  at  Lender's  request,  and  (z)  the  institution  of
litigation  against  third  parties as shall be prudent in order to protect  and
preserve each Credit Party's and Lender's  respective  and several  interests in
the  Collateral.  Borrower  (and  any  other  Credit  Party  granting  a Lien in
Collateral)  shall mark its Books and Records  pertaining  to the  Collateral to
evidence the Loan Documents and the Liens granted under the Loan  Documents.  If
any Credit Party retains  possession  of any Chattel  Paper or  Instrument  with


                                       32
<PAGE>
Lender's  consent,  such Chattel Paper and Instruments  shall be marked with the
following legend: "This writing and the obligations  evidenced or secured hereby
are subject to the security  interest of General Electric Capital  Corporation."
Each Credit Party  executing this  Agreement  shall  promptly,  and in any event
within two (2) Business  Days after the same is acquired by it, notify Lender of
any  commercial  tort claim (as  defined in the Code)  acquired by it and unless
otherwise  consented by Lender,  such Credit Party shall enter into a supplement
to this Loan Agreement granting to Lender a Lien in such commercial tort claim.

6.2 Lender's Rights.  (a) Lender may, (i) at any time in Lender's own name or in
    ---------------
the name of Borrower,  communicate with Account  Debtors,  parties to Contracts,
and obligors in respect of  Instruments,  Chattel  Paper or other  Collateral to
verify to Lender's  satisfaction,  the  existence,  amount and terms of, and any
other matter relating to, Accounts,  Payment Intangibles,  Instruments,  Chattel
Paper or other Collateral, and (ii) at any time after a Default has occurred and
is  continuing  and without  prior notice to Borrower or any other Credit Party,
notify Account Debtors and other Persons obligated on any Collateral that Lender
has a security  interest  therein and that  payments  shall be made  directly to
Lender.  Upon the  request  of Lender,  Borrower  shall so notify  such  Account
Debtors and other Persons obligated on any Collateral.  Once any such notice has
been given to any Account  Debtor or other Person  obligated on any  Collateral,
the  affected  Credit  Party shall not give any  contrary  instructions  to such
Account  Debtor or such other Person  without  Lender's  prior written  consent.
Borrower hereby constitutes  Lender or Lender's designee as Borrower's  attorney
with power to endorse Borrower's name upon any notes,  acceptance drafts,  money
orders or other evidences of payment or Collateral.

         (b) Borrower  shall remain liable under each  Contract,  Instrument and
License to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, and Lender shall have no obligation or liability
whatsoever  to any Person under any  Contract,  Instrument  or License  (between
Borrower or any other  Credit  Party and any Person other than Lender) by reason
of or arising out of the execution,  delivery or performance of this  Agreement,
and Lender  shall not be required or  obligated  in any manner (i) to perform or
fulfill any of the obligations of Borrower, (ii) to make any payment or inquiry,
or (iii) to take any action of any kind to  collect,  compromise  or enforce any
performance  or the payment of any amounts that may have been  assigned to it or
to  which it may be  entitled  at any time or  times  under or  pursuant  to any
Contract, Instrument or License.

         (c) Borrower  and each other  Credit Party shall,  with respect to each
owned,  leased,  or controlled  property,  during normal business hours and upon
reasonable  advance  notice  (unless  a  Default  shall  have  occurred  and  be
continuing,  in which event no notice  shall be required  and Lender  shall have
access at any and all times):  (i) provide access to such property to Lender and
any of its officers, employees and agents, as frequently as Lender determines to
be appropriate; (ii) permit Lender and any of its officers, employees and agents
to inspect,  audit and make extracts and copies (or take originals if reasonably
necessary) from all of Borrower's and such Credit Party's Books and Records; and
(iii) permit Lender to inspect, review, evaluate and make physical verifications
and  appraisals of the Inventory and other  Collateral in any manner and through
any medium that Lender  considers  advisable  (provided,  however,  prior to the
                                               --------   -------
occurrence of a Default or Event of Default, Borrower shall only be obligated to


                                       33
<PAGE>
pay for one such  appraisal per year),  and Borrower and such Credit Party agree
to render to Lender,  at  Borrower's  and such Credit  Party's cost and expense,
such clerical and other  assistance as may be reasonably  requested  with regard
thereto.

         (d) After the  occurrence  and  during  the  continuance  of a Default,
Borrower,  at its own expense,  shall cause the certified public accountant then
engaged by  Borrower  to prepare and deliver to Lender at any time and from time
to  time,  promptly  upon  Lender's  request,   the  following  reports:  (i)  a
reconciliation  of all  Accounts;  (ii) an aging of all  Accounts;  (iii)  trial
balances;  and (iv) test  verifications  of such Accounts as Lender may request.
Borrower,  at its own  expense,  shall cause its  certified  independent  public
accountants  to deliver to Lender the results of any physical  verifications  of
all or any portion of the Inventory  made or observed by such  accountants  when
and if such verification is conducted.  Lender shall be permitted to observe and
consult with Borrower's accountants in the performance of these tasks.

6.3 Lender's Appointment as Attorney-in-fact.  On the Closing Date, Borrower and
    ----------------------------------------
each other Credit Party  executing  this  Agreement  shall execute and deliver a
Power of  Attorney  in the form  attached  as Exhibit  I. The power of  attorney
                                              ----------
granted  pursuant to the Power of Attorney and all powers granted under any Loan
Document are powers coupled with an interest and shall be irrevocable  until the
Termination Date. The powers conferred on Lender under the Power of Attorney are
solely to protect Lender's  interests in the Collateral and shall not impose any
duty upon it to exercise  any such  powers.  Lender  agrees not to exercise  any
power or  authority  granted  under  the  Power of  Attorney  unless an Event of
Default has  occurred  and is  continuing.  Borrower and each other Credit Party
executing this Agreement also hereby (i) authorizes Lender to file any financing
statements,  continuation statements or amendments thereto that (x) indicate the
Collateral (1) as all assets of such Credit Party (or any portion of such Credit
Party's assets) or words of similar effect, regardless of whether any particular
asset  comprised  in the  Collateral  falls within the scope of Article 9 of the
Code or such  jurisdiction,  or (2) as being of an equal or lesser scope or with
greater  detail,  and (y)  contain any other  information  required by Part 5 of
Article 9 of the Code for the  sufficiency  or filing  office  acceptance of any
financing statement,  continuation  statement or amendment and (ii) ratifies its
authorization  for Lender to have filed any  initial  financial  statements,  or
amendments  thereto if filed prior to the date  hereof.  Borrower and each other
Credit Party executing this Agreement  acknowledges that it is not authorized to
file any financing statement or amendment or termination  statement with respect
to any  financing  statement  without  the prior  written  consent of Lender and
agrees  that it will not do so  without  the prior  written  consent  of Lender,
subject to such Credit Party's rights under Section 9-509(d)(2) of the Code.

6.4 Grant of License to Use Intellectual Property Collateral.  Borrower and each
    --------------------------------------------------------
other  Credit  Party  executing  this  Agreement  hereby  grants  to  Lender  an
irrevocable,  non-exclusive  license (exercisable upon the occurrence and during
the  continuance  of an Event of  Default  without  payment  of royalty or other
compensation  to  Borrower or such Credit  Party) to use,  transfer,  license or
sublicense  any  Intellectual  Property  now owned,  licensed  to, or  hereafter
acquired by Borrower or such Credit Party, and wherever the same may be located,
and  including in such license  access to all media in which any of the licensed


                                       34
<PAGE>
items may be recorded or stored and to all computer  software and programs  used
for the compilation or printout  thereof,  and  represents,  promises and agrees
that any such license or  sublicense is not and will not be in conflict with the
contractual  or  commercial  rights of any  third  Person;  provided,  that such
license will terminate on the Termination Date.

7.  EVENTS OF DEFAULT: RIGHTS AND REMEDIES

7.1 Events of Default. The occurrence of any one or more of the following events
    -----------------
(regardless  of the reason  therefor)  shall  constitute  an "Event of  Default"
hereunder  which  shall be deemed to be  continuing  until  waived in writing by
Lender in accordance with Section 9.3:

         (a) Borrower  shall  fail  to  make  any  payment  in  respect  of  any
Obligations  when due and payable or declared due and payable; or
         (b)  Borrower  or any other  Credit  Party  (whether or not such Credit
Party has signed  this  Agreement)  shall fail or  neglect to  perform,  keep or
observe any of the covenants, promises, agreements, requirements,  conditions or
other terms or provisions  contained in this  Agreement or any of the other Loan
Documents; or
         (c) an event of default shall occur under any Contractual Obligation of
the Borrower or any other Credit Party (other than this  Agreement and the other
Loan Documents),  and such event of default (i) involves the failure to make any
payment  (whether  or not such  payment is blocked  pursuant  to the terms of an
intercreditor  agreement  or  otherwise),  whether  of  principal,  interest  or
otherwise,   and  whether  due  by  scheduled  maturity,   required  prepayment,
acceleration,  demand or otherwise,  in respect of any Indebtedness  (other than
the  Obligations)  of such Person in an aggregate  amount  exceeding the Minimum
Actionable Amount, or (ii) causes (or permits any holder of such Indebtedness or
a trustee to cause) such  Indebtedness,  or a portion  thereof,  in an aggregate
amount exceeding the Minimum Actionable Amount to become due prior to its stated
maturity or prior to its regularly scheduled date of payment; or
         (d) any  representation or warranty in this Agreement or any other Loan
Document,  or in any written  statement  pursuant  hereto or thereto,  or in any
report,  financial  statement  or  certificate  made or  delivered  to Lender by
Borrower or any other  Credit  Party shall be untrue or incorrect as of the date
when  made or  deemed  made,  regardless  of  whether  such  breach  involves  a
representation  or warranty  with  respect to a Credit Party that has not signed
this Agreement; or
         (e) there shall be  commenced  against the Borrower or any other Credit
Party any Litigation  seeking  issuance of a warrant of  attachment,  execution,
distraint or similar process  against all or any substantial  part of its assets
that results in the entry of an order for any such relief that remains  unstayed
or undismissed for thirty (30) consecutive days; or Borrower or any other Credit
Party shall have concealed, removed or permitted to be concealed or removed, any
part of its  property  with  intent  to  hinder,  delay  or  defraud  any of its
creditors or made or suffered a transfer of any of its property or the incurring
of an  obligation  that  may be  fraudulent  under  any  bankruptcy,  fraudulent
transfer or other similar law; or
         (f) a case  or  proceeding  shall  have  been  commenced  involuntarily
against  Borrower  or  any  other  Credit  Party  in a  court  having  competent
jurisdiction  seeking a decree or order: (i) under the United States  Bankruptcy
Code or any other  applicable  Federal,  state or  foreign  bankruptcy  or other
similar law, and seeking either (x) the  appointment  of a custodian,  receiver,


                                       35
<PAGE>
liquidator,  assignee,  trustee or sequestrator  (or similar  official) for such
Person or of any substantial part of its properties,  or (y) the  reorganization
or winding up or liquidation of the affairs of any such Person, and such case or
proceeding shall remain  undismissed or unstayed for sixty (60) consecutive days
or such court shall enter a decree or order  granting the relief  sought in such
case or proceeding;  or (ii) invalidating or denying any Person's right,  power,
or  competence  to enter into or perform any of its  obligations  under any Loan
Document or  invalidating  or denying the  validity  or  enforceability  of this
Agreement  or  any  other  Loan  Document  or  any  action  taken  hereunder  or
thereunder; or
         (g)  Borrower or any other  Credit  Party shall (i)  commence any case,
proceeding or other action under any existing or future law of any jurisdiction,
domestic  or  foreign,  relating  to  bankruptcy,  insolvency,   reorganization,
conservatorship  or  relief of  debtors,  seeking  to have an order  for  relief
entered with  respect to it or seeking  appointment  of a  custodian,  receiver,
liquidator,  assignee,  trustee or sequestrator (or similar  official) for it or
any substantial part of its properties,  (ii) make a general  assignment for the
benefit of creditors, (iii) consent to or take any action in furtherance of, or,
indicating its consent to, approval of, or acquiescence  in, any of the acts set
forth in  paragraphs  (e) or (f) of this  Section 7.1 or clauses (i) and (ii) of
this paragraph (g), or (iv) shall admit in writing its inability to, or shall be
generally unable to, pay its debts as such debts become due; or
         (h) a final judgment or judgments for the payment of money in excess of
the  Minimum  Actionable  Amount  in the  aggregate  shall be  rendered  against
Borrower or any other Credit  Party,  unless the same shall be (i) fully covered
by  insurance  and  the  issuer(s)  of  the   applicable   policies  shall  have
acknowledged  full coverage in writing within fifteen (15) days of judgment,  or
(ii) vacated, stayed, bonded, paid or discharged within a period of fifteen (15)
days from the date of such judgment; or
         (i) any  other  event  shall  have  occurred  that  has  had  or  could
reasonably be expected to have a Material  Adverse  Effect; or (j) any provision
of  any  Loan  Document  shall  for  any  reason  cease to be valid, binding and
enforceable in accordance with its terms,  or  any Lien granted,  or intended by
the  Loan  Documents  to  be  granted,  to  Lender shall cease to be a valid and
perfected Lien having the first priority (or  a  lesser   priority  if expressly
permitted in the Loan  Documents) in any of the  Collateral (or any Credit Party
shall so assert any of the  foregoing);  or
         (k) a  Change  of  Control  shall  have  occurred  with  respect to any
Corporate Credit Party;  or
         (l) an  ERISA  Event shall have  occurred  that,  in the opinion of the
Lender,  when taken  together with all other ERISA Events that have occurred and
are then continuing,  could reasonably be expected to result in liability of any
Credit Party in an aggregate amount exceeding the Minimum Actionable Amount.

7.2 Remedies.  (a) If any Default shall have  occurred and be  continuing,  then
    --------
Lender may terminate or suspend its obligation to make further  Revolving Credit
Advances and to incur additional Letter of Credit Obligations.  In addition,  if
any Event of Default shall have occurred and be continuing,  Lender may, without
notice,  take any one or more of the following  actions:  (i) declare all or any
portion of the Obligations to be forthwith due and payable, including contingent
liabilities  with  respect  to  Letter  of Credit  Obligations,  whereupon  such
Obligations shall become and be due and payable; (ii) require that all Letter of
Credit Obligations be fully cash collateralized pursuant to Schedule C; or (iii)
                                                            ----------


                                       36
<PAGE>
exercise any rights and remedies  provided to Lender under the Loan Documents or
at law or equity, including all remedies provided under the Code; provided, that
upon the  occurrence of any Event of Default  specified in Sections 7.1 (e), (f)
or (g),  the  Obligations  shall  become  immediately  due and payable  (and any
obligation of Lender to make further Loans, if not previously terminated,  shall
immediately be terminated) without declaration, notice or demand by Lender.

         (b) Without limiting the generality of the foregoing, Borrower and each
other Credit  Party  executing  this  Agreement  expressly  agrees that upon the
occurrence  of any Event of  Default,  Lender may  collect,  receive,  assemble,
process,  appropriate and realize upon the Collateral,  or any part thereof, and
may  forthwith  sell,  lease,  assign,  give an option or options to purchase or
otherwise  dispose of and deliver said Collateral (or contract to do so), or any
part thereof,  in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Lender shall have the right upon
any such public  sale,  to the extent  permitted  by law,  to  purchase  for the
benefit of Lender the whole or any part of said  Collateral so sold, free of any
right of equity of redemption,  which right Borrower and each other Credit Party
executing  this  Agreement  hereby  releases.  Such sales may be  adjourned,  or
continued from time to time with or without notice.  Lender shall have the right
to conduct such sales on any Credit Party's premises or elsewhere and shall have
the right to use any Credit  Party's  premises  without rent or other charge for
such  sales or other  action  with  respect to the  Collateral  for such time as
Lender deems necessary or advisable.

         (c) Upon the  occurrence  and  during  the  continuance  of an Event of
Default and at Lender's request,  Borrower and each other Credit Party executing
this Agreement  further agrees, to assemble the Collateral and make it available
to Lender at places that Lender shall reasonably select, whether at its premises
or elsewhere. Until Lender is able to effect a sale, lease, or other disposition
of the  Collateral,  Lender shall have the right to complete,  assemble,  use or
operate the  Collateral  or any part  thereof,  to the extent that Lender  deems
appropriate,  for the purpose of preserving  such Collateral or its value or for
any other  purpose.  Lender  shall have no  obligation  to any  Credit  Party to
maintain or preserve  the rights of any Credit  Party as against  third  parties
with respect to any  Collateral  while such  Collateral is in the  possession of
Lender.  Lender  may,  if it so elects,  seek the  appointment  of a receiver or
keeper to take  possession  of any  Collateral  and to enforce  any of  Lender's
remedies with respect  thereto  without prior notice or hearing.  To the maximum
extent  permitted  by  applicable  law,  Borrower  and each other  Credit  Party
executing this Agreement waives all claims, damages, and demands against Lender,
its  Affiliates,  agents,  and the officers and employees of any of them arising
out of the repossession,  retention or sale of any Collateral except such as are
determined  in a final  judgment by a court of  competent  jurisdiction  to have
arisen solely out of the gross negligence or willful  misconduct of such Person.
Borrower and each other Credit Party  executing this  Agreement  agrees that ten
(10) days' prior  notice by Lender to such Credit Party of the time and place of
any  public  sale or of the time  after  which a private  sale may take place is
reasonable  notification  of such matters.  Borrower and each other Credit Party
shall  remain  liable  for  any  deficiency  if  the  proceeds  of any  sale  or
disposition  of the  Collateral  are  insufficient  to pay all  amounts to which
Lender is entitled.




                                       37
<PAGE>
         (d)  Lender's  rights  and  remedies  under  this  Agreement  shall  be
cumulative  and  nonexclusive  of any other rights and remedies  that Lender may
have under any Loan Document or at law or in equity.  Recourse to the Collateral
shall not be  required.  All  provisions  of this  Agreement  are intended to be
subject to all  applicable  mandatory  provisions of law that may be controlling
and to be  limited,  to the extent  necessary,  so that they do not render  this
Agreement invalid or unenforceable, in whole or in part.

7.3  Waivers  by  Credit  Parties.  Except  as  otherwise  provided  for in this
     ----------------------------
Agreement and to the fullest extent  permitted by applicable  law,  Borrower and
each other Credit Party executing this Agreement waives: (a) presentment, demand
and  protest,  and  notice  of  presentment,  dishonor,  intent  to  accelerate,
acceleration,  protest,  default,  nonpayment,  maturity,  release,  compromise,
settlement,  extension or renewal of any or all Loan Documents,  the Note or any
other notes,  commercial paper,  Accounts,  Contracts,  Documents,  Instruments,
Chattel  Paper and  guaranties  at any time held by Lender on which such  Credit
Party may in any way be liable, and hereby ratifies and confirms whatever Lender
may do in this regard;  (b) all rights to notice and a hearing prior to Lender's
taking  possession  or control of, or to Lender's  replevy,  attachment  or levy
upon, any Collateral or any bond or security that might be required by any court
prior to allowing Lender to exercise any of its remedies; and (c) the benefit of
all  valuation,  appraisal  and exemption  laws.  Borrower and each other Credit
Party executing this Agreement  acknowledges that it has been advised by counsel
of its choices and  decisions  with  respect to this  Agreement,  the other Loan
Documents and the transactions evidenced hereby and thereby.

7.4 Proceeds.  The Proceeds of any sale,  disposition or other  realization upon
    --------
any  Collateral  shall be applied by Lender upon receipt to the  Obligations  in
such order as Lender may deem  advisable in its sole  discretion  (including the
cash  collateralization  of any  Letter  of Credit  Obligations),  and after the
indefeasible payment and satisfaction in full in cash of all of the Obligations,
and after the payment by Lender of any other amount required by any provision of
law,  including  Section  9-608(a)(1)  of the Code (but only  after  Lender  has
received  what  Lender  considers  reasonable  proof  of a  subordinate  party's
security  interest),  the  surplus,  if any,  shall be paid to  Borrower  or its
representatives  or to whomsoever may be lawfully  entitled to receive the same,
or as a court of competent jurisdiction may direct.

8.  SUCCESSORS AND ASSIGNS

Each Loan  Document  shall be  binding  on and  shall  inure to the  benefit  of
Borrower and each other Credit Party executing such Loan Document,  Lender,  and
their respective successors and assigns,  except as otherwise provided herein or
therein.  Neither  Borrower  nor any other  Credit  Party may assign,  transfer,
hypothecate,  delegate or otherwise convey its rights, benefits,  obligations or
duties under any Loan  Document  without the prior  express  written  consent of
Lender.  Any such purported  conveyance by Borrower or such Credit Party without
the prior  express  written  consent of Lender shall be void.  There shall be no
third party  beneficiaries of any of the terms and provisions of any of the Loan
Documents.   Lender   reserves  the  right  at  any  time  to  create  and  sell
participations  in the Loans and the Loan  Documents  and to sell,  transfer  or
assign any or all of its rights in the Loans and under the Loan Documents.



                                       38
<PAGE>
9.  MISCELLANEOUS

9.1 Complete Agreement;  Modification of Agreement. This Agreement and the other
    ----------------------------------------------
Loan  Documents  constitute  the  complete  agreement  between the parties  with
respect  to  the  subject  matter  hereof  and  thereof,   supersede  all  prior
agreements,  commitments,   understandings  or  inducements  (oral  or  written,
expressed or  implied).  No Loan  Document  may be modified,  altered or amended
except by a written  agreement  signed by Lender,  and each other Credit Party a
party to such Loan Document. Borrower and each other Credit Party executing this
Agreement or any other Loan Document shall have all duties and obligations under
this  Agreement and such other Loan Documents from the date of its execution and
delivery, regardless of whether the initial Loan has been funded at that time.

9.2  Expenses.  Borrower  agrees to pay or  reimburse  Lender  for all costs and
     --------
expenses (including the fees and expenses of all counsel, advisors,  consultants
(including  environmental  and management  consultants) and auditors retained in
connection  therewith),  incurred  in  connection  with:  (a)  the  preparation,
negotiation,  execution,  delivery,  performance  and  enforcement  of the  Loan
Documents  and  the  preservation  of any  rights  thereunder;  (b)  collection,
including  deficiency  collections;  (c) the forwarding to Borrower or any other
Person on behalf of Borrower by Lender of the proceeds of any Loan  (including a
wire transfer fee of $25 per wire transfer); (d) any amendment,  waiver or other
modification  with respect to any Loan Document or advice in connection with the
administration  of the  Loans  or the  rights  thereunder;  (e) any  litigation,
dispute,  suit,  proceeding  or action  (whether  instituted  by or between  any
combination of Lender,  Borrower or any other  Person),  and an appeal or review
thereof, in any way relating to the Collateral, any Loan Document, or any action
taken  or any  other  agreements  to be  executed  or  delivered  in  connection
therewith,  whether as a party, witness or otherwise;  and (f) any effort (i) to
monitor the Loans,  (ii) to  evaluate,  observe or assess  Borrower or any other
Credit  Party or the  affairs  of such  Person,  and (iii) to  verify,  protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral.

9.3 No  Waiver.  Neither  Lender's  failure,  at any  time,  to  require  strict
    ----------
performance  by Borrower or any other Credit Party of any  provision of any Loan
Document,  nor Lender's  failure to exercise,  nor any delay in exercising,  any
right, power or privilege hereunder, shall operate as a waiver thereof or waive,
affect or diminish any right of Lender  thereafter to demand  strict  compliance
and performance therewith,. No single or partial exercise of any right, power or
privilege  hereunder shall preclude any other or future exercise  thereof or the
exercise of any other right,  power or privilege.  Any suspension or waiver of a
Default or other provision under the Loan Documents shall not suspend,  waive or
affect any other Default or other provision  under any Loan Document,  and shall
not be  construed  as a bar to any right or remedy that Lender  would  otherwise
have  had  on any  future  occasion.  None  of  the  undertakings,  indemnities,
agreements,  warranties,  covenants and representations of Borrower or any other
Credit Party to Lender contained in any Loan Document and no Default by Borrower
or any other Credit Party under any Loan  Document  shall be deemed to have been
suspended  or waived by  Lender,  unless  such  waiver  or  suspension  is by an
instrument  in  writing  signed by an officer or other  authorized  employee  of
Lender and directed to Borrower  specifying  such suspension or waiver (and then


                                       39
<PAGE>
such waiver shall be effective only to the extent therein  expressly set forth),
and Lender  shall not,  by any act (other  than  execution  of a formal  written
waiver),  delay,  omission  or  otherwise,  be deemed to have  waived any of its
rights or remedies hereunder.

9.4 Severability;  Section Titles. Wherever possible, each provision of the Loan
    -----------------------------
Documents shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of any Loan Document shall be prohibited by
or invalid under  applicable  law, such  provision  shall be  ineffective to the
extent of such prohibition or invalidity,  without invalidating the remainder of
such  provision or the  remaining  provisions of such Loan  Document.  Except as
otherwise  expressly  provided  for in the Loan  Documents,  no  termination  or
cancellation  (regardless  of cause or procedure)  of any financing  arrangement
under the Loan  Documents  shall in any way  affect or impair  the  Obligations,
duties, covenants,  representations and warranties, indemnities, and liabilities
of Borrower or any other  Credit  Party or the rights of Lender  relating to any
unpaid Obligation, (due or not due, liquidated,  contingent or unliquidated), or
any transaction or event occurring prior to such termination, or any transaction
or event,  the  performance  of which is not required until after the Commitment
Termination  Date, all of which shall not terminate or expire,  but rather shall
survive such  termination or  cancellation  and shall continue in full force and
effect until the Termination Date; provided,  that all indemnity  obligations of
the Credit Parties under the Loan Documents shall survive the Termination  Date.
The  Section  titles  contained  in any Loan  Document  are and shall be without
substantive  meaning or content of any kind whatsoever and are not a part of the
agreement between parties hereto.

9.5 Authorized Signature.  Until Lender shall be notified in writing by Borrower
    --------------------
or any other Credit Party to the contrary,  the  signature  upon any document or
instrument  delivered  pursuant hereto and believed by Lender or any of Lender's
officers,  agents,  or  employees  to be that of an officer of  Borrower or such
other Credit Party shall bind Borrower and such other Credit Party and be deemed
to be the act of Borrower or such other Credit Party affixed  pursuant to and in
accordance  with  resolutions  duly adopted by  Borrower's  or such other Credit
Party's Board of Directors, and Lender shall be entitled to assume the authority
of each  signature and authority of the person whose  signature it is or appears
to be unless the person acting in reliance  thereon shall have actual  knowledge
to the contrary.

9.6 Notices.  Except as otherwise provided herein,  whenever any notice, demand,
    -------
request or other communication shall or may be given to or served upon any party
by any other  party,  or  whenever  any party  desires to give or serve upon any
other party any communication with respect to this Agreement, each communication
shall be in writing and shall be deemed to have been  validly  served,  given or
delivered  (a) upon the  earlier  of actual  receipt  and  three (3) days  after
deposit in the United States Mail,  registered or certified mail, return receipt
requested,  with proper postage  prepaid,  (b) upon  transmission,  when sent by
telecopy  or  other  similar  facsimile  transmission  (with  such  telecopy  or
facsimile  promptly  confirmed  by delivery  of a copy by  personal  delivery or
United  States Mail as  otherwise  provided in this  Section  9.6),  (c) one (1)
Business Day after deposit with a reputable  overnight  courier with all charges
prepaid or (d) when hand-delivered, all of which shall be addressed to the party


                                       40
<PAGE>
to be notified and sent to the address or facsimile number indicated in Schedule
                                                                        --------
B or to such other address (or facsimile number) as may be substituted by notice
-
given as herein  provided.  Failure  or delay in  delivering  copies of any such
communication  to any Person  (other  than  Borrower  or Lender)  designated  in
Schedule B to receive copies shall in no way adversely affect the  effectiveness
----------
of such communication.

9.7 Counterparts.  Any  Loan  Document  may be  authenticated  in any  number of
    ------------
separate counterparts by any one or more of the parties thereto, and all of said
counterparts  taken together shall constitute one and the same  instrument.  Any
Loan  Document  may be  authenticated  by  manual  signature,  facsimile  or, if
approved in writing by Lender,  electronic  means, all of which shall be equally
valid.

9.8 Time of the Essence.  Time  is  of  the  essence  for  performance  of   the
    -------------------
Obligations under the Loan Documents.

9.9 GOVERNING LAW. THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER THE LOAN
    -------------
DOCUMENTS  SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE  WITH,
THE LAWS OF THE STATE OF NEW YORK  APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE,  WITHOUT REGARD TO THE  PRINCIPLES  THEREOF  REGARDING  CONFLICTS OF
LAWS.

9.10  SUBMISSION TO  JURISDICTION;  WAIVER OF JURY TRIAL.  (A) BORROWER AND EACH
      --------------------------------------------------
OTHER CREDIT PARTY  EXECUTING THIS  AGREEMENT  HEREBY CONSENT AND AGREE THAT THE
STATE OR FEDERAL COURTS LOCATED IN NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND SUCH CREDIT PARTY
AND LENDER PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO
ANY MATTER  ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS;  PROVIDED,  THAT LENDER,  BORROWER AND SUCH CREDIT PARTY  ACKNOWLEDGE
THAT ANY  APPEALS  FROM  THOSE  COURTS  MAY HAVE TO BE HEARD BY A COURT  LOCATED
OUTSIDE OF NEW YORK; AND FURTHER PROVIDED,  THAT NOTHING IN THIS AGREEMENT SHALL
BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER  JURISDICTION TO COLLECT THE OBLIGATIONS,  TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF LENDER.  BORROWER  AND EACH OTHER  CREDIT PARTY
EXECUTING  THIS  AGREEMENT  EXPRESSLY  SUBMIT  AND  CONSENT  IN  ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER AND
SUCH CREDIT PARTY HEREBY WAIVE ANY OBJECTION THAT IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER AND EACH
OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY WAIVE PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE
THAT  SERVICE  OF SUCH  SUMMONS,  COMPLAINT  AND  OTHER  PROCESS  MAY BE MADE BY
REGISTERED OR CERTIFIED  MAIL  ADDRESSED TO BORROWER OR SUCH CREDIT PARTY AT THE
ADDRESS SET FORTH IN SCHEDULE B OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL
                     ----------
BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S OR SUCH CREDIT PARTY'S ACTUAL
RECEIPT  THEREOF  OR THREE (3) DAYS  AFTER  DEPOSIT  IN THE U.S.  MAILS,  PROPER
POSTAGE PREPAID.

                                       41
<PAGE>
         (B) THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT,
TORT, OR OTHERWISE BETWEEN LENDER, BORROWER AND ANY CREDIT PARTY ARISING OUT OF,
CONNECTED WITH,  RELATED OR INCIDENTAL TO THE RELATIONSHIP  ESTABLISHED  BETWEEN
THEM IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

9.11 Press Releases.  Neither any Credit Party nor any of its Affiliates will in
     --------------
the future issue any press release or other public  disclosure using the name of
General  Electric  Capital  Corporation  or its  affiliates or referring to this
Agreement or the other Loan  Documents  without at least two (2) Business  Days'
prior notice to Lender and without the prior  written  consent of Lender  unless
(and only to the extent  that) such Credit  Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with Lender before issuing such press release or other public disclosure.

9.12  Reinstatement.  This  Agreement  shall  continue  to be  effective,  or be
      -------------
reinstated, as the case may be, if at any time payment of all or any part of the
Obligations  is  rescinded  or must  otherwise be returned or restored by Lender
upon the insolvency, bankruptcy,  dissolution,  liquidation or reorganization of
Borrower or any other Credit Party,  or  otherwise,  all as though such payments
had not been made.

IN WITNESS WHEREOF,  this Loan and Security  Agreement has been duly executed as
of the date first written above.

                         COMPUTER COMPONENTS CORPORATION



                         By:
                            ---------------------------
                         Name:
                         Title:

                         By:
                            ----------------------------
                         Name:
                         Title:


                         GENERAL ELECTRIC CAPITAL CORPORATION



                         By:
                            ----------------------------
                         Name:
                              --------------------------
                         Title:
                               -------------------------





                                       42
<PAGE>
                            SCHEDULE A - DEFINITIONS

Capitalized terms used in this Agreement and the other Loan Documents shall have
(unless  otherwise  provided  elsewhere  in this  Agreement or in the other Loan
Documents) the following respective meanings:

"Account  Debtor"  shall mean any Person  who is or may  become  obligated  with
respect to, or on account of, an Account,  Chattel  Paper or General  Intangible
(including a Payment Intangible).

"Accounts"  means all "accounts," as such term is defined in the Code, now owned
or hereafter  acquired by any Person,  including:  (i) all accounts  receivable,
other  receivables,  book debts and other forms of obligations (other than forms
of obligations  evidenced by Chattel Paper or  Instruments)  (including any such
obligations which may be characterized as an account or contract right under the
Code);  (ii) all of such Person's rights in, to and under all purchase orders or
receipts for goods or services;  (iii) all of such Person's  rights to any goods
represented  by  any of the  foregoing  (including  unpaid  sellers'  rights  of
rescission,  replevin,  reclamation  and  stoppage  in  transit  and  rights  to
returned,  reclaimed or  repossessed  goods);  (iv) all rights to payment due to
such Person for Goods or other  property  sold,  leased,  licensed,  assigned or
otherwise  disposed of, for a policy of insurance issued or to be issued,  for a
secondary  obligation  incurred or to be incurred or to be incurred,  for energy
provided or to be  provided,  for the use or hire of a vessel under a charter or
other  contract,  arising out of the use of a credit card or charge card, or for
services  rendered or to be rendered  by such Person or in  connection  with any
other transaction  (whether or not yet earned by performance on the part of such
Person), and (v) all health care insurance receivables;  and (vi) all collateral
security  of any kind  given by any  Account  Debtor  or any other  Person  with
respect to any of the foregoing.

"Accounts Payable Analysis" means a certificate in the form of Exhibit D

"Accounts  Receivable Roll Forward  Analysis" means a certificate in the form of
Exhibit E.

"Affiliate"  means,  with  respect to any Person:  (i) each other  Person  that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian  or other  fiduciary,  five  percent  (5%) or more of the Stock  having
ordinary  voting power for the  election of directors of such Person;  (ii) each
other Person that  controls,  is controlled  by or is under common  control with
such Person or any  Affiliate  of such  Person;  or (iii) each of such  Person's
officers,  directors,  joint  venturers  and  partners.  For the purpose of this
definition,  "control"  of a Person  shall  mean  the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of its  management or
policies,  whether  through the ownership of voting  securities,  by contract or
otherwise.

"Agreement" means this Agreement including all appendices, exhibits or schedules
attached or otherwise  identified  thereto,  restatements and  modifications and
supplements  thereto,  and any  appendices,  exhibits or schedules to any of the
foregoing,  each  as  effect  at the  time  such  reference  becomes  operative;
provided, that except as specifically set forth in this Agreement, any reference
to the Disclosure Schedules to this Agreement shall be deemed a reference to the
Disclosure  Schedules as in effect on the Closing Date or in a written amendment
thereto executed by Borrower and Lender.

                                       43
<PAGE>
"Books  and  Records"  means  all  books,  records,  board  minutes,  contracts,
licenses,  insurance  policies,  environmental  audits,  business plans,  files,
computer  files,  computer  discs and other data and software  storage and media
devices,  accounting  books and records,  financial  statements  (actual and pro
forma),  filings  with  Governmental  Authorities  and any and all  records  and
instruments relating to the Collateral or Borrower's business.

"Borrower"  means  the  Person  identified  as  such  in the  preamble  of  this
Agreement.

"Borrowing  Availability"  means,  at any time,  the  lesser of (i) the  Maximum
Amount or (ii) the Borrowing  Base, in each case less  reserves  established  by
Lender from time to time.

"Borrowing Base" means at any time an amount equal to the sum at such time of:

         (a) eighty-five percent (85%) of the value (as determined by Lender) of
Borrower's  Eligible  Accounts;  provided that Lender shall reduce the foregoing
percentage by one percentage  point for each percentage  point that the dilution
of Borrower's  Accounts  (calculated  monthly by Lender as the average  dilution
over the most recent three months) exceeds 5%; plus

         (b) the lesser of (i) $3,000,000 or (ii) the lesser of (A)  eighty-five
percent  (85%)  of the net  orderly  liquidation  value of  Borrower's  Eligible
Inventory  (as  determined  by Lender) and (B)  fifty-five  percent (55%) of the
lower of cost or market of  Borrower's  Eligible  Inventory  (as  determined  by
Lender).

"Borrowing Base Certificate" means a certificate in the form of Exhibit C.

"Brinks" means Brinks Home Security, Inc.

"Business Day" means any day that is not a Saturday,  a Sunday or a day on which
banks are required or permitted to be closed in the State of New York.

"Capital  Expenditures"  means all payments or accruals (including Capital Lease
Obligations)  for  any  fixed  assets  or  improvements  or  for   replacements,
substitutions  or  additions  thereto,  that have a useful life of more than one
year and that are required to be capitalized under GAAP.

"Capital  Lease"  means,  with respect to any Person,  any lease of any property
(whether  real,  personal or mixed) by such Person as lessee that, in accordance
with GAAP,  either would be required to be  classified  and  accounted  for as a
capital lease on a balance sheet of such Person or otherwise  would be disclosed
as such in a note to such balance  sheet,  other than,  in the case of Borrower,
any such lease under which Borrower is the lessor.

"Capital Lease Obligation"  means, with respect to any Capital Lease, the amount
of the obligation of the lessee  thereunder that, in accordance with GAAP, would
appear on a balance  sheet of such  lessee in respect of such  Capital  Lease or
otherwise be disclosed in a note to such balance sheet.

"Cash Collateral Account" has the meaning assigned to it in Schedule C.




                                       44
<PAGE>
"Change of Control"  means,  with  respect to any Person on or after the Closing
Date, that any change in the composition of such Person's stockholders as of the
Closing  Date  shall  occur  which  would  result  in any  stockholder  or group
acquiring 49.9% or more of any class of Stock of such Person, or that any Person
(or group of Persons acting in concert)  shall  otherwise  acquire,  directly or
indirectly (including through Affiliates),  the power to elect a majority of the
Board of Directors of such Person or otherwise  direct the management or affairs
of such Person by obtaining proxies,  entering into voting agreements or trusts,
acquiring securities or otherwise.

"Charges" means all Federal,  state, county, city, municipal,  local, foreign or
other  governmental  taxes  (including  taxes  owed to PBGC at the  time due and
payable), levies, customs or other duties, assessments,  charges, liens, and all
additional charges, interest,  penalties,  expenses, claims or encumbrances upon
or relating to (i) the Collateral,  (ii) the  Obligations,  (iii) the employees,
payroll, income or gross receipts of any Credit Party, (iv) the ownership or use
of any assets by any Credit Party, or (v) any other aspect of any Credit Party's
business.

"Chattel Paper" means all "chattel  paper," as such term is defined in the Code,
including  electronic  chattel  paper,  now owned or  hereafter  acquired by any
Person.

"Closing  Date" means the Business  Day on which the  conditions  precedent  set
forth in  Section 2 have been  satisfied  or  specifically  waived in writing by
Lender, and the initial Loan has been made.

"Closing Fee" has the meaning assigned to it in Schedule E.

"Code" means the Uniform  Commercial Code as the same may, from time to time, be
in effect in the State of New York; provided,  that in the event that, by reason
of mandatory  provisions  of law, any or all of the  attachment,  perfection  or
priority of, or remedies  with respect to,  Lender's  Lien on any  Collateral is
governed by the Uniform  Commercial  Code as in effect in a  jurisdiction  other
than the State of New York,  the term "Code"  shall mean the Uniform  Commercial
Code as in effect in such other  jurisdiction  for purposes of the provisions of
this Agreement relating to such attachment, perfection, priority or remedies and
for purposes of definitions related to such provisions;  provided further,  that
to the  extent  that the Code is used to define  any term  herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code,  the  definition  of such term  contained  in Article or Division 9
shall govern.

"Collateral" has the meaning assigned to it in Section 6.1.

"Collection  Account"  means that  certain  account of  Lender,  account  number
50-232-854  in the name of  GECC-CAF  Depository  at Bankers  Trust  Company,  1
Bankers Trust Plaza, New York, New York, ABA number 021-001-033.

"Commitment  Termination Date" means the earliest of (i) the Stated Expiry Date,
(ii) the date Lender's  obligation  to advance  funds is terminated  pursuant to
Section 7.2, and (iii) the date of  indefeasible  prepayment in full by Borrower
of the Obligations in accordance with the provisions of Section 1.2(c).




                                       45
<PAGE>
"Contracts"  means all the contracts,  undertakings,  or agreements  (other than
rights  evidenced by Chattel Paper,  Documents or Instruments) in or under which
any Person may now or hereafter have any right, title or interest, including any
agreement  relating to the terms of payment or the terms of  performance  of any
Account.

"Contractual  Obligation" means as to any Person,  any provision of any security
issued by such Person or of any agreement,  instrument,  or other undertaking to
which such Person is a party or by which it or any of its property is bound.

"Copyright  License"  means  rights  under any  written  agreement  now owned or
hereafter  acquired by any Person  granting  the right to use any  Copyright  or
Copyright registration.

"Copyrights"  shall mean all of the following now owned or hereafter  adopted or
acquired by any Person:  (i) all  copyrights  in any original work of authorship
fixed in any tangible medium of expression,  now known or later  developed,  all
registrations  and  applications  for registration of any such copyrights in the
United States or any other  country,  including  registrations,  recordings  and
applications,  and supplemental  registrations,  recordings, and applications in
the United  States  Copyright  Office;  and (ii) all Proceeds of the  foregoing,
including license royalties and proceeds of infringement suits, the right to sue
for past, present and future  infringements,  all rights  corresponding  thereto
throughout the world and all renewals and extensions thereof.

"Corporate  Credit  Party"  means  any  Credit  Party  that  is  a  corporation,
partnership or limited liability company.

"Credit Party" means Borrower, and each other Person (other than Lender) that is
or may become a party to this Agreement or any other Loan Document.

"Default" means any Event of Default or any event that, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.

"Default Rate" has the meaning assigned to it in Section 1.5(c).

"Deposit  Accounts" means all "deposit  accounts" as such term is defined in the
Code, now or hereafter held in the name of any Person.

"Documents"  means all  "documents,"  as such term is defined  in the Code,  now
owned or hereafter acquired by any Person, wherever located, including all bills
of lading, dock warrants, dock receipts, warehouse receipts, and other documents
of title, whether negotiable or non-negotiable.

"EBITDA"  means,  for any  period,  the Net Income  (Loss) of  Borrower  and its
Subsidiaries  on a consolidated  basis for such period,  plus interest  expense,
income tax expense, amortization expense, depreciation expense and extraordinary
losses  and  minus  extraordinary  gains,  in each  case,  of  Borrower  and its
Subsidiaries  on a consolidated  basis for such period  determined in accordance
with GAAP to the extent included in the determination of such Net Income (Loss).

"Eligible  Accounts" means as at the date of determination,  all Accounts of the
Borrower except any Account:




                                       46
<PAGE>
      (a) that  does not  arise  from the  sale of goods or the  performance  of
          services by Borrower in the ordinary course of Borrower's business;
      (b) upon which (i) Borrower's  right to receive payment is not absolute or
          is contingent upon the fulfillment of any condition whatsoever or (ii)
          Borrower is not able to bring suit or  otherwise  enforce its remedies
          against the Account Debtor through judicial process;
      (c) against   which  any   defense,   counterclaim   or  setoff,   whether
          well-founded or otherwise, is asserted or which is a "contra" Account;
      (d) that is not a true and correct  statement of a bona fide  indebtedness
          incurred in the amount of the Account for merchandise sold or services
          performed  and  accepted by the  Account  Debtor  obligated  upon such
          Account;
      (e) with  respect to which an  invoice,  acceptable  to Lender in form and
          substance, has not been sent;
      (f) that is not owned by  Borrower or is subject to any right,  claim,  or
          interest of another Person, other than the Lien in favor of Lender;
      (g) that arises from a sale to or performance of services for an employee,
          Affiliate,  Subsidiary or  Stockholder of Borrower or any other Credit
          Party,  or an entity  which has  common  officers  or  directors  with
          Borrower or any other Credit Party;
      (h) that is the  obligation  of an Account  Debtor that is the Federal (or
          local) government or a political  subdivision  thereof,  unless Lender
          has agreed to the contrary in writing and  Borrower has complied  with
          the Federal  Assignment of Claims Act of 1940 (or the state equivalent
          thereof, if any) with respect to such obligation;
      (i) that is the  obligation  of an  Account  Debtor  located  in a foreign
          country  unless  such  Account is  supported  by a letter of credit in
          which  Lender has a first  priority  perfected  security  interest  by
          possession or credit insurance acceptable to Lender (and naming Lender
          as loss payee);
      (j) that is the obligation of an Account Debtor to whom Borrower is or may
          become  liable  for goods sold or  services  rendered  by the  Account
          Debtor to  Borrower,  to the extent of  Borrower's  liability  to such
          Account Debtor;
      (k) that  arises  with   respect  to  goods  which  are   delivered  on  a
          cash-on-delivery  basis or placed on  consignment,  guaranteed sale or
          other terms by reason of which the  payment by the Account  Debtor may
          be conditional;
      (l) that is an  obligation  for  which the total  unpaid  Accounts  of the
          Account  Debtor exceed 20% of the  aggregate of all  Accounts,  to the
          extent of such excess (or 15% of the aggregate  outstanding  Revolving
          Credit Advances in the case of Schumacher);
      (m) that is not paid  within 60 days from its due date or 90 days from its
          invoice date or that are Accounts of an Account  Debtor if 50% or more
          of the Accounts  owing from such Account  Debtor  remain unpaid within
          such time periods (or are Accounts of Schumacher if 25% or more of the
          Accounts owing from Schumacher remain unpaid within 60 days from their
          respective invoice dates);
      (n) is an  obligation of an Account  Debtor that has  suspended  business,
          made a general  assignment for the benefit of creditors,  is unable to
          pay its debts as they  become due or as to which a  petition  has been
          filed (voluntary or involuntary) under any law relating to bankruptcy,
          insolvency, reorganization or relief of debtors;
      (o) that arises from any bill-and-hold or other sale of goods which remain
          in Borrower's possession or under Borrower's control;


                                       47
<PAGE>
      (p) as  to  which  Lender's  interest  therein  is  not a  first  priority
          perfected security interest;
      (q) to the extent that such Account  exceeds any credit limit  established
          by Lender in Lender's good faith credit judgment;
      (r) as to which any of Borrower's representations or warranties pertaining
          to Accounts are untrue;
      (s) that represents interest payments, late or finance charges, or service
          charges owing to Borrower; or
      (t) that is not  otherwise  acceptable  in the good  faith  discretion  of
          Lender,  provided,  that  Lender  shall  have the right to create  and
          adjust eligibility standards and related reserves from time to time in
          its good faith credit judgment.

      In  addition  to  the foregoing  exclusions set forth in subparagraphs (a)
through  (t) above,  no  Account of the  Borrower  from  Schumacher  shall be an
"Eligible  Account"  unless the invoice with respect  thereto  reflects  "Direct
Shipment" and "FOB Hong Kong" or applicable  shipping port and is accompanied by
all marine shipping  documentation  (or if such  documentation is not available,
contact information for shipping line for verification of shipment).

"Eligible Inventory" means as at the date of determination, all Inventory of the
         Borrower,  except any  Inventory  that:
      (a) is not  subject to a first  priority  perfected  security  interest of
          Lender  or is not  owned by  Borrower  free and clear of all Liens and
          rights of others (except the Liens in favor of Lender);
      (b) is  not  located  on  premises  owned  or  operated  by  Borrower  and
          referenced in Disclosure Schedule (3.2),
      (c) is not located on premises where the aggregate amount of all Inventory
          (valued at cost) of such  Borrower  located  thereon  is greater  than
          $100,000;
      (d) is located on premises with respect to which Lender has not received a
          landlord or  mortgagee  letter  acceptable  in form and  substance  to
          Lender;
      (e) is in transit;
      (f) is covered by a negotiable document of title, unless such document and
          evidence of  acceptable  insurance  covering  such  Inventory has been
          delivered to Lender,
      (g) in  Lender's  good faith  credit  judgment,  is  obsolete,  unsalable,
          shopworn,  damaged,  unfit for further  processing,  is of substandard
          quality  or is not of good and  merchantable  quality,  free  from any
          defects;
      (h) consists of (i) discontinued  items, (ii) slow-moving or  excess items
          held in inventory, or (iii) used items held for resale;
      (i) does not consist of raw materials or finished goods;
      (j) does not meet all  standards  imposed by any  Governmental  Authority,
          including with respect to its  production,  acquisition or importation
          (as the case may be);
      (k) is  placed  by  Borrower  on   consignment  or  held  by  Borrower  on
          consignment from another Person;
      (l) is held for rental or lease by or on behalf of Borrower;
      (m) is produced in violation of the Fair Labor  Standards  Act and subject
          to the "hot goods"  provisions  contained  in 29  U.S.C.ss.215  or any
          successor statute or section;
      (n) in any way fails to meet or violates any warranty,  representation  or
          covenant contained in this Agreement or any other Loan Document;


                                       48
<PAGE>
      (o) is subject to any licensing, patent, royalty, trademark, trade name or
          copyright agreement with any third parties;
      (p) requires the consent of any Person for the completion of  manufacture,
          sale or other  disposition  of such  Inventory by Lender  following an
          Event of Default and such completion,  manufacture or sale constitutes
          a breach or default under any contract or agreement to which  Borrower
          is a party or to which such Inventory is or may become subject; or
      (q) is not otherwise  acceptable  in the good faith  discretion of Lender,
          provided,  that  Lender  shall  have the  right to create  and  adjust
          eligibility  standards  and related  reserves from time to time in its
          good faith credit judgment.

      In  addition  to  the foregoing  exclusions set forth in subparagraphs (a)
through (q) above,  no  Inventory  of Borrower  shall be Eligible  Inventory  if
Borrower has not occupied a new or additional  warehouse facility  (satisfactory
to Lender) within 90 days from the date of this Agreement.

"Environmental  Laws"  means  all  Federal,  state  and  local  laws,  statutes,
ordinances  and  regulations,  now or hereafter  in effect,  and in each case as
amended  or  supplemented  from time to time,  and any  applicable  judicial  or
administrative  interpretation thereof relating to the regulation and protection
of human  health,  safety,  the  environment  and natural  resources  (including
ambient air, surface water,  groundwater,  wetlands,  land surface or subsurface
strata, wildlife, aquatic species and vegetation).

"Environmental     Liabilities"    means    all    liabilities,     obligations,
responsibilities,  remedial actions,  removal costs, losses, damages of whatever
nature,  costs and expenses  (including all reasonable fees,  disbursements  and
expenses of counsel,  experts and  consultants  and costs of  investigation  and
feasibility  studies),  fines,  penalties,  sanctions and interest incurred as a
result of any claim, suit, action or demand of whatever nature by any Person and
which relate to any health or safety condition regulated under any Environmental
Law,  environmental  permits  or in  connection  with  any  Release,  threatened
Release, or the presence of a Hazardous Material.

"Equipment" means all "equipment" as such term is defined in the Code, now owned
or hereafter  acquired by any Person,  wherever  located,  including any and all
machinery,  apparatus,  equipment, fittings, furniture, fixtures, motor vehicles
and other tangible  personal  property  (other than Inventory) of every kind and
description  that may be now or hereafter  used in such  Person's  operations or
which are owned by such Person or in which such Person may have an interest, and
all parts, accessories and accessions thereto and substitutions and replacements
therefor.

"ERISA"  means  the  Employee  Retirement  Income  Security  Act of 1974 (or any
successor   legislation  thereto),  as  amended  from  time  to  time,  and  any
regulations promulgated thereunder.

"ERISA  Affiliate"  means any trade or business  (whether  or not  incorporated)
that,  together with any Credit  Party,  is treated as a single  employer  under
Section  414(b),  (c),  (m) or (o) of the IRC,  or,  solely for the  purposes of
Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer
under Section 414 of the IRC.




                                       49
<PAGE>
"ERISA Event" shall mean (a) any "reportable  event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived);  (b) the existence  with
respect  to any Plan of an  "accumulated  funding  deficiency"  (as  defined  in
Section 412 of the IRC or Section 302 of ERISA),  whether or not waived; (c) the
filing  pursuant to Section  412(b) of the IRC or Section  303(d) of ERISA of an
application  for a waiver of the minimum  funding  standard  with respect to any
Plan;  (d) the  incurrence  by any Credit  Party or any ERISA  Affiliate  of any
liability  under Title IV of ERISA with respect to the  termination of any Plan;
(e) the receipt by any Credit  Party or any ERISA  Affiliate  from the PBGC or a
plan  administrator of any notice relating to an intention to terminate any Plan
or to appoint a trustee to administer any Plan; (f) the incurrence by any Credit
Party or any ERISA  Affiliate of any liability with respect to any withdrawal or
partial  withdrawal from any Plan or  Multiemployer  Plan; or (g) the receipt by
any Credit  Party or any ERISA  Affiliate  of any notice,  or the receipt by any
Multiemployer  Plan from any Credit Party or any ERISA  Affiliate of any notice,
concerning  the  imposition of Withdrawal  Liability or a  determination  that a
Multiemployer  Plan is, or is expected to be,  insolvent  or in  reorganization,
within the meaning of Title IV of ERISA.

"Event of Default" has the meaning assigned to it in Section 7.1.

"Fees" means the fees due to Lender as set forth in Schedule E.

"Financial   Statements"  means  the  consolidated  and   consolidating   income
statement,  balance  sheet and  statement  of cash  flows of (i) Parent and (ii)
Borrower and its Subsidiaries,  in each case internally prepared for each Fiscal
Month, and audited for each Fiscal Year, prepared in accordance with GAAP.

"Fiscal Month" means any of the monthly accounting periods of Borrower.

"Fiscal Quarter" means any of the quarterly accounting periods of Borrower.

"Fiscal Year" means the 12 month period of Borrower  ending  December 31 of each
year.  Subsequent  changes of the fiscal year of  Borrower  shall not change the
term "Fiscal Year" unless Lender shall consent in writing to such change.

"Fixed Charge Coverage Ratio" means, for any period,  the ratio of the following
for  Borrower  and  its  Subsidiaries  on a  consolidated  basis  determined  in
accordance with GAAP: (a) EBITDA for such period less Capital  Expenditures  for
such period which are not financed  through the  incurrence of any  Indebtedness
(excluding  the  Revolving  Credit Loan) to (b) the sum of (i) interest  expense
paid or accrued in respect of any  Indebtedness  during such  period,  plus (ii)
taxes to the extent  accrued or  otherwise  payable  with respect to such period
plus (iii) regularly  scheduled payments of principal paid or that were required
to be paid on Funded Debt  (excluding  the  Revolving  Credit  Loan) during such
period plus (iv) dividends or other  distributions  paid to Stockholders  during
such period.

"Fixtures"  means all  "fixtures" as such term is defined in the Code, now owned
or hereafter acquired by any Person.

"Funded Debt" means, for any Person, all of such Person's  Indebtedness which by
the terms of the agreement governing or instrument  evidencing such Indebtedness
matures  more than one year from,  or is directly  or  indirectly  renewable  or


                                       50
<PAGE>
extendible  at the option of such  Person  under a  revolving  credit or similar
agreement  obligating  the lender or lenders to extend  credit  over a period of
more  than one  year  from,  the date of  creation  thereof,  including  current
maturities of long-term debt,  revolving credit,  and short-term debt extendible
beyond one year at the option of such Person.

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

"General  Intangibles" means all "general  intangibles," as such term is defined
in the Code, now owned or hereafter acquired by any Person, including all right,
title and interest  that such Person may now or  hereafter  have in or under any
Contract,  all  Payment  Intangibles,  customer  lists,  Licenses,  Intellectual
Property,   interests  in  partnerships,   joint  ventures  and  other  business
associations,  permits,  proprietary  or  confidential  information,  inventions
(whether or not  patented or  patentable),  technical  information,  procedures,
designs,  knowledge,  know-how,  software,  data bases, data, skill,  expertise,
experience,  processes, models, drawings, materials, Books and Records, Goodwill
(including the Goodwill associated with any Intellectual  Property),  all rights
and claims in or under insurance policies (including insurance for fire, damage,
loss, and casualty, whether covering personal property, real property,  tangible
rights or intangible  rights,  all  liability,  life,  key-person,  and business
interruption insurance, and all unearned premiums),  uncertificated  securities,
choses in action,  deposit  accounts,  rights to receive  tax  refunds and other
payments,  rights to receive  dividends,  distributions,  cash,  Instruments and
other  property in respect of or in exchange  for pledged  Stock and  Investment
Property, and rights of indemnification.

"Goods"  means all  "goods,"  as such term is defined in the Code,  now owned or
hereafter acquired by any Person, wherever located,  including embedded software
to the extent  included in "goods" as defined in the Code,  manufactured  homes,
standing timber that is cut and removed for sale and unborn young of animals.

"Goodwill"  means all  goodwill,  trade  secrets,  proprietary  or  confidential
information,  technical  information,   procedures,  formulae,  quality  control
standards,   designs,  operating  and  training  manuals,  customer  lists,  and
distribution agreements now owned or hereafter acquired by any Person.

"Governmental  Authority"  means any  nation or  government,  any state or other
political  subdivision  thereof,  and any  agency,  department  or other  entity
exercising  executive,  legislative,   judicial,  regulatory  or  administrative
functions of or pertaining to government.

"Guaranteed Indebtedness" means, as to any Person, any obligation of such Person
guaranteeing any indebtedness,  lease,  dividend,  or other obligation ("primary
obligations")  of any  other  Person  (the  "primary  obligor")  in any  manner,
including any obligation or arrangement of such guaranteeing  Person (whether or
not contingent): (i) to purchase or repurchase any such primary obligation; (ii)
to advance or supply  funds (a) for the  purchase or payment of any such primary
obligation or (b) to maintain  working  capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance  sheet
condition of the primary  obligor;  (iii) to purchase  property,  securities  or
services  primarily  for the purpose of assuring  the owner of any such  primary
obligation of the ability of the primary obligor to make payment of such primary
obligation;  or (iv) to indemnify the owner of such primary  obligation  against
loss in respect thereof.

                                       51
<PAGE>
"Guarantor"  means each  Person that  executes a guaranty  or a support,  put or
other similar  agreement in favor of Lender in connection with the  transactions
contemplated by this Agreement.

"Guaranty"  means any agreement to perform all or any portion of the Obligations
on behalf of Borrower or any other  Credit  Party,  in favor of, and in form and
substance satisfactory to, Lender,  together with all amendments,  modifications
and supplements  thereto, and shall refer to such Guaranty as the same may be in
effect at the time such reference becomes operative.

"Hazardous Material" means any substance, material or waste that is regulated by
or forms the basis of liability now or hereafter under, any Environmental  Laws,
including  any  material or  substance  that is (a) defined as a "solid  waste,"
"hazardous  waste,"  "hazardous  material,"  "hazardous  substance,"  "extremely
hazardous  waste,"  "restricted  hazardous waste,"  "pollutant,"  "contaminant,"
"hazardous  constituent,"  "special  waste," "toxic  substance" or other similar
term or phrase under any  Environmental  Laws,  (b) petroleum or any fraction or
by-product  thereof,   asbestos,   polychlorinated  biphenyls  (PCB's),  or  any
radioactive substance.

"Hazardous  Waste"  has  the  meaning  ascribed  to such  term  in the  Resource
Conservation and Recovery Act (42 U.S.C.ss.ss. 6901 et. seq.).

"Indebtedness"  of any Person  means:  (i) all  indebtedness  of such Person for
borrowed  money or for the  deferred  purchase  price of  property  or  services
(including reimbursement and all other obligations with respect to surety bonds,
letters of credit and  bankers'  acceptances,  whether or not  matured,  but not
including  obligations  to trade  creditors  incurred in the ordinary  course of
business and not more than  forty-five (45 days past due);  (ii) all obligations
evidenced  by  notes,  bonds,  debentures  or  similar  instruments;  (iii)  all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreements  with  respect to property  acquired by such Person  (even
though the rights and remedies of the seller or lender  under such  agreement in
the event of default are limited to repossession or sale of such property); (iv)
all  Capital  Lease  Obligations;  (v) all  Guaranteed  Indebtedness;  (vi)  all
Indebtedness  referred to in clauses (i), (ii), (iii), (iv) or (v) above secured
by (or  for  which  the  holder  of such  Indebtedness  has an  existing  right,
contingent  or  otherwise,  to be  secured  by) any  Lien  upon  or in  property
(including  accounts and contract rights) owned by such Person, even though such
Person has not assumed or become  liable for the  payment of such  Indebtedness;
(vii) the Obligations; and (viii) all liabilities under Title IV of ERISA.

"Indemnified  Liabilities" and "Indemnified Person" have the respective meanings
assigned to them in Section 1.11.

"Index Rate" means the latest  month-end  published  Prime Lending  Rate,  which
normally is published in the "Money  Rates"  section of The Wall Street  Journal
(or if such rate ceases to be so published,  as quoted from such other generally
available and recognizable source as Lender may select). The Index Rate shall be
determined (i) on the first Business Day  immediately  prior to the Closing Date
and (ii)  thereafter,  on the  last  Business  Day of each  calendar  month  for
calculation of interest for the following month.





                                       52
<PAGE>
"Instruments"  means all "instruments," as such term is defined in the Code, now
owned or  hereafter  acquired by any Person,  wherever  located,  including  all
certificated  securities  and  all  promissory  notes  and  other  evidences  of
indebtedness,  other than instruments that constitute,  or are a part of a group
of writings that constitute, Chattel Paper.

"Intellectual  Property"  means  any  and  all  Licenses,  Patents,  Copyrights,
Trademarks, trade secrets and customer lists.

"Inventory"  means all  "inventory,"  as such term is defined  in the Code,  now
owned or  hereafter  acquired by any Person,  wherever  located,  including  all
inventory, merchandise, goods and other personal property that are held by or on
behalf of such Person for sale or lease or are  furnished or are to be furnished
under a contract of service or that  constitute raw materials,  work in process,
finished goods,  returned goods or materials or supplies of any kind,  nature or
description used or consumed or to be used or consumed in such Person's business
or in the processing,  production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.

"Investment  Property" means all "investment  property," as such term is defined
in the Code, now owned or hereafter acquired by any Person, wherever located.

"IRC" and "IRS" mean  respectively,  the  Internal  Revenue Code of 1986 and the
Internal Revenue Service, and any successors thereto.

"Lender" means General Electric  Capital  Corporation and, if at any time Lender
shall decide to assign or  syndicate  all or any of the  Obligations,  such term
shall include such assignee or such other members of the syndicate.

"Letters of Credit" means any and all  documentary or standby  letters of credit
issued at the  request  and for the  account of  Borrower  for which  Lender has
incurred Letter of Credit Obligations.

"Letter of Credit Fee" has the meaning assigned to it in Schedule E.

"Letter of Credit Obligations" means all outstanding  obligations (including all
duty,  freight,  taxes,  costs,  insurance  and any other  charges and expenses)
incurred by Lender, whether direct or indirect,  contingent or otherwise, due or
not due, in connection with the issuance or guarantee,  by Lender or another, of
Letters of Credit, all as further set forth in Schedule C.

"Letter-of-Credit  Rights"  means  "letter-of-credit  rights"  as  such  term is
defined in the Code,  now owned or hereafter  acquired by any Person,  including
rights to payment or performance  under a letter of credit,  whether or not such
Person,  as  beneficiary,  has  demanded  or is  entitled  to demand  payment or
performance.

"License"  means any Copyright  License,  Patent License,  Trademark  License or
other  license of rights or  interests  now held or  hereafter  acquired  by any
Person.

"Lien"  means  any   mortgage,   security   deed  or  deed  of  trust,   pledge,
hypothecation,  assignment,  deposit arrangement,  lien, charge, claim, security
interest,  security title, easement or encumbrance,  or preference,  priority or
other  security  agreement  or  preferential  arrangement  of any kind or nature


                                       53
<PAGE>
whatsoever  (including  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  perfecting  a
security interest under the Code or comparable law of any jurisdiction).

"Litigation" means any claim, lawsuit,  litigation,  investigation or proceeding
of or before any arbitrator or Governmental Authority.

"Loan Documents" means this Agreement, the Note, the Financial Statements,  each
Guaranty, the Power of Attorney, the Lock Box Account Agreements,  and the other
documents  and  instruments  listed in Schedule F, and all security  agreements,
mortgages and all other documents, instruments, certificates, and notices at any
time  delivered by any Person (other than Lender) in connection  with any of the
foregoing.

"Loans"  means  the  Revolving  Credit  Loan,  including  the  Letter  of Credit
Obligations.

"Lock Box Account" and "Lock Box Account  Agreement" have the meanings  assigned
to such terms in Schedule D.

"Material  Adverse Effect" means: a material adverse effect on (a) the business,
assets, operations, prospects or financial or other condition of Borrower or any
other  Credit Party or the  industry  within which  Borrower or any other Credit
Party  operates,  (b) Borrower's or any other Credit  Party's  ability to pay or
perform the Obligations under the Loan Documents to which such Credit Party is a
party in accordance with the terms thereof, (c) the Collateral or Lender's Liens
on the  Collateral or the priority of any such Lien, or (d) Lender's  rights and
remedies under this Agreement and the other Loan Documents.

"Maximum Amount" means $12,000,000.

"Minimum Actionable Amount" means $50,000.

"Multiemployer Plan" means a "multiemployer plan," as defined in Section 4001(a)
(3) of ERISA, to which  Borrower,  any other Credit Party or any ERISA Affiliate
is  making,  is  obligated  to  make,  has  made  or  been  obligated  to  make,
contributions on behalf of participants who are or were employed by any of them.

"Net Borrowing  Availability" means at any time the Borrowing  Availability less
the Revolving Credit Loan.

"Net Income  (Loss)"  means with  respect to any Person and for any period,  the
aggregate  net  income (or loss)  after  taxes of such  Person for such  period,
determined in accordance with GAAP.

"Note" means the Revolving Credit Note.

"Notice of Revolving  Credit Advance" has the meaning  assigned to it in Section
1.1(b).

"Obligations" means all loans,  advances,  debts, expense  reimbursement,  fees,
liabilities,  and obligations for the performance of covenants,  tasks or duties
or for payment of monetary  amounts  (whether  or not such  performance  is then
required or  contingent,  or amounts are  liquidated or  determinable)  owing by


                                       54
<PAGE>
Borrower and any other Credit Party to Lender, of any kind or nature, present or
future,  whether or not  evidenced by any note,  agreement or other  instrument,
whether  arising  under any of the Loan  Documents or under any other  agreement
between  Borrower,  such Credit Party and Lender,  and all  covenants and duties
regarding such amounts.  This term includes all principal,  interest  (including
interest  accruing at the then  applicable rate provided in this Agreement after
the  maturity of the Loans and  interest  accruing at the then  applicable  rate
provided in this Agreement  after the filing of any petition in  bankruptcy,  or
the commencement of any insolvency,  reorganization or like proceeding,  whether
or not a claim for  post-filing  or  post-petition  interest  is allowed in such
proceeding),  Fees,  Charges,  expenses,  attorneys'  fees  and  any  other  sum
chargeable to Borrower  under any of the Loan  Documents,  and all principal and
interest due in respect of the Loans and all  obligations and liabilities of any
Guarantor under any Guaranty.

"Parent" means Tech Electro Industries, Inc.

"Patent License" means rights under any written agreement now owned or hereafter
acquired by any Person granting any right with respect to any invention on which
a Patent is in existence.

"Patents"  means all of the following in which any Person now holds or hereafter
acquires any interest:  (i) all letters patent of the United States or any other
country,  all  registrations  and recordings  thereof,  and all applications for
letters   patent  of  the  United  States  or  any  other   country,   including
registrations,  recordings  and  applications  in the United  States  Patent and
Trademark  Office or in any similar office or agency of the United  States,  any
State or  Territory  thereof,  or any  other  country;  and  (ii) all  reissues,
continuations, continuations-in-part or extensions thereof.

"Payment Intangibles" means all "payment intangibles" as such term is defined in
the Code, now owned or hereafter acquired by any Person.

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

"Permitted  Encumbrances" means the following encumbrances:  (i) Liens for taxes
or assessments or other governmental  Charges or levies,  either not yet due and
payable or to the extent that  nonpayment  thereof is  permitted by the terms of
Section  3.10;  (ii) pledges or deposits  securing  obligations  under  worker's
compensation,  unemployment insurance,  social security or public liability laws
or similar  legislation;  (iii)  pledges or  deposits  securing  bids,  tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business;  (iv)
deposits  securing  public or statutory  obligations  of any Credit  Party;  (v)
inchoate and unperfected workers',  mechanics',  or similar liens arising in the
ordinary  course of  business so long as such Liens  attach  only to  Equipment,
fixtures or real estate;  (vi)  carriers',  warehousemans',  suppliers' or other
similar possessory liens arising in the ordinary course of business and securing
indebtedness  not yet due and payable in an outstanding  aggregate amount not in
excess of $25,000 at any time so long as such Liens  attach  only to  Inventory;
(vii) deposits of money securing, or in lieu of, surety, appeal or customs bonds
in proceedings to which any Credit Party is a party; (viii) zoning restrictions,
easements,  licenses, or other restrictions on the use of real property or other
minor  irregularities in title (including  leasehold title) thereto,  so long as
the same do not materially  impair the use, value, or marketability of such real


                                       55
<PAGE>
estate; (ix) Purchase Money Liens securing Purchase Money Indebtedness (or rent)
to the extent  permitted under Section  5(b)(vi);  (x) Liens in existence on the
Closing Date as disclosed on Disclosure Schedule 5(e) provided that no such Lien
is spread to cover additional  property after the Closing Date and the amount of
Indebtedness  secured  thereby  is not  increased.;  and (xi)  Liens in favor of
Lender securing the Obligations.

"Person"  means  any  individual,  sole  proprietorship,   partnership,  limited
liability  partnership,   joint  venture,  trust,  unincorporated  organization,
association, corporation, limited liability company, institution, public benefit
corporation,  entity  or  government  (whether  Federal,  state,  county,  city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof), and shall include such Person's successors and assigns.

"Plan" means any employee pension benefit plan (other than a Multiemployer Plan)
subject  to the  provisions  of Title IV of ERISA or  Section  412 of the IRC or
Section  302 of ERISA,  and in respect  of which any  Credit  Party or any ERISA
Affiliate  is (or, if such plan were  terminated,  would under  Section  4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

"Prepayment Fee" means the prepayment fee specified in Schedule E.

"Proceeds"  means  "proceeds,"  as such term is defined in the Code and,  in any
event,  shall  include:  (i) any and all proceeds of any  insurance,  indemnity,
warranty or guaranty  payable to Borrower or any other Credit Party from time to
time with  respect to any  Collateral;  (ii) any and all  payments  (in any form
whatsoever)  made or due and payable to Borrower or any other  Credit Party from
time to time in connection  with any  requisition,  confiscation,  condemnation,
seizure or forfeiture of any  Collateral by any  governmental  body,  authority,
bureau or agency (or any person acting under color of  governmental  authority);
(iii) any claim of Borrower or any other Credit Party  against third parties (a)
for past, present or future infringement of any Intellectual Property or (b) for
past,  present or future  infringement or dilution of any Trademark or Trademark
License or for injury to the goodwill  associated with any Trademark,  Trademark
registration  or  Trademark  licensed  under  any  Trademark  License;  (iv) any
recoveries  by Borrower or any other Credit  Party  against  third  parties with
respect to any litigation or dispute concerning any Collateral, including claims
arising  out of the  loss or  nonconformity  of,  interference  with the use of,
defects  in, or  infringement  of rights in, or damage to,  Collateral;  (v) all
amounts collected on, or distributed on account of, other Collateral,  including
dividends,  interest,  distributions  and Instruments with respect to Investment
Property  and  pledged  Stock;  and (vi) any and all  other  amounts,  rights to
payment or other property  acquired upon the sale, lease,  license,  exchange or
other disposition of Collateral and all rights arising out of Collateral.

"Projections"  means as of any date the consolidated and  consolidating  balance
sheet,  statements  of income and cash flow for  Borrower  and its  Subsidiaries
(including  forecasted Capital Expenditures and Net Borrowing  Availability) (i)
by month for the next  Fiscal  Year,  and (ii) by year for the  following  three
Fiscal  Years,  in each  case  prepared  in a manner  consistent  with  GAAP and
accompanied by senior management's discussion and analysis of such plan.

"Purchase  Money  Indebtedness"  means  (i) any  Indebtedness  incurred  for the
payment of all or any part of the purchase  price of any fixed  asset,  (ii) any
Indebtedness  incurred for the sole purpose of financing or  refinancing  all or


                                       56
<PAGE>
any part of the  purchase  price of any fixed  asset,  and  (iii) any  renewals,
extensions  or  refinancings  thereof (but not any  increases  in the  principal
amounts thereof outstanding at that time).

"Purchase  Money Lien" means any Lien upon any fixed  assets  which  secures the
Purchase Money  Indebtedness  related thereto but only if such Lien shall at all
times be confined  solely to the asset the purchase  price of which was financed
or refinanced through the incurrence of the Purchase Money Indebtedness  secured
by  such  Lien  and  only  if  such  Lien  secures  only  such  Purchase   Money
Indebtedness.

"Real Property" has the meaning assigned to it in Section 3.15.

"Release"  means  as to any  Person,  any  release,  spill,  emission,  leaking,
pumping, injection, deposit, disposal,  discharge,  dispersal, dumping, leaching
or migration of Hazardous Materials in the indoor or outdoor environment by such
Person,  including  the movement of Hazardous  Materials  through or in the air,
soil, surface water, ground water or property.

"Requirement  of Law" means as to any  Person,  the  Certificate  or Articles of
Incorporation and By-Laws or other organizational or governing documents of such
Person,  and  any  law,  treaty,  rule  or  regulation  or  determination  of an
arbitrator or a court or other Governmental Authority, in each case binding upon
such  Person  or any of its  property  or to  which  such  Person  or any of its
property is subject.

"Restricted  Payment"  means:  (i) the declaration or payment of any dividend or
the  incurrence of any liability to make any other  payment or  distribution  of
cash or other  property  or assets on or in respect of  Borrower's  or any other
Credit Party's Stock;  (ii) any payment or  distribution  made in respect of any
subordinated  Indebtedness of Borrower or any other Credit Party in violation of
any subordination or other agreement made in favor of Lender;  (iii) any payment
on  account of the  purchase,  redemption,  defeasance  or other  retirement  of
Borrower's  or any  other  Credit  Party's  Stock or  Indebtedness  or any other
payment or  distribution  made in respect of any  thereof,  either  directly  or
indirectly; other than (a) that arising under this Agreement or (b) interest and
principal,  when due without acceleration or modification of the amortization as
in effect on the Closing Date, under  Indebtedness  (not including  subordinated
Indebtedness,  payments of which shall be permitted only in accordance  with the
terms of the relevant subordination agreement made in favor of Lender) described
in Disclosure Schedule (5(b)) or otherwise permitted under Section 5(b)(vi);  or
(iv)  any  payment,  loan,  contribution,  or other  transfer  of funds or other
property  to  any  Stockholder  of  such  Person  which  is  not  expressly  and
specifically  permitted in this Agreement;  provided,  that no payment to Lender
shall constitute a Restricted Payment.

"Revolving Credit Advance" has the meaning assigned to it in Section 1.1(a).

"Revolving Credit Loan" means at any time the sum of (i) the aggregate amount of
Revolving Credit Advances then outstanding, plus (ii) the total Letter of Credit
Obligations  incurred  by Lender and  outstanding  at such time,  plus (iii) the
amount of accrued  but unpaid  interest  thereon  and Letter of Credit Fees with
respect thereto.



                                       57
<PAGE>
"Revolving  Credit Note" means the promissory note of Borrower dated the Closing
Date, substantially in the form of Exhibit F.

"Revolving Credit Rate" has the meaning assigned to it in Section 1.5(a).

"Schumacher" means Schumacher Electric Corp.

"Software"  means all  "software" as such term is defined in the Code, now owned
or hereafter  acquired by any Person,  including  all computer  programs and all
supporting  information provided in connection with a transaction related to any
program.

"Stated Expiry Date" means March 27, 2005.

"Stock" means all certificated and  uncertificated  shares,  options,  warrants,
membership interests, general or limited partnership interests, participation or
other  equivalents  (regardless  of  how  designated)  of or  in a  corporation,
partnership,  limited  liability  company or equivalent entity whether voting or
nonvoting,  including  common  stock,  preferred  stock,  or any  other  "equity
security"  (as such term is  defined  in Rule  3a11-1 of the  General  Rules and
Regulations  promulgated  by the Securities  and Exchange  Commission  under the
Securities Exchange Act of 1934).

"Stockholder" means each holder of Stock of Borrower or any other Credit Party.

"Subsidiary"  means, with respect to any Person, (i) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting power
to elect a majority of the board of directors of such corporation  (irrespective
of whether, at the time, Stock of any other class or classes of such corporation
shall  have or  might  have  voting  power by  reason  of the  happening  of any
contingency)  is  at  the  time,  directly  or  indirectly,   owned  legally  or
beneficially by such Person and/or one or more  Subsidiaries of such Person,  or
with  respect to which any such  Person has the right to vote or  designate  the
vote of 50% or more of such Stock whether by proxy, agreement,  operation of law
or otherwise,  and (ii) any  partnership or limited  liability  company in which
such Person or one or more  Subsidiaries  of such Person has an equity  interest
(whether  in  the  form  of  voting  or  participation  in  profits  or  capital
contribution)  of more than 50% or of which any such Person is a general partner
or manager or may exercise the powers of a general partner or manager.

"Supporting  Obligations"  means all  "supporting  obligations"  as such term is
defined  in the Code,  including  letters  of credit  and  guaranties  issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.

"Tangible Net Worth" means,  with respect to any Person,  at any date, the total
assets (excluding any assets attributable to any issuances by such Person of any
Stock after the Closing Date and  excluding  any  intangible  assets)  minus the
total  liabilities,  in each case,  of such  Person at such date  determined  in
accordance with GAAP.

"Taxes" means taxes, levies, imposts, deductions,  Charges or withholdings,  and
all liabilities with respect thereto,  excluding taxes imposed on or measured by
the net income of Lender.



                                       58
<PAGE>
"Termination  Date" means the date on which all Obligations under this Agreement
are indefeasibly  paid in full, in cash (other than amounts in respect of Letter
of Credit  Obligations  if any, then  outstanding,  provided that Borrower shall
have funded such amounts in cash in full into the Cash Collateral Account),  and
Borrower shall have no further right to borrow any moneys or obtain other credit
extensions or financial accommodations under this Agreement.

"Trademark  License"  means  rights  under any  written  agreement  now owned or
hereafter  acquired by any Person  granting  any right to use any  Trademark  or
Trademark registration.

"Trademarks"  means all of the  following  now  owned or  hereafter  adopted  or
acquired  by any Person:  (i) all  trademarks,  trade  names,  corporate  names,
business names,  trade styles,  service marks,  logos,  other source or business
identifiers,  prints and labels on which any of the  foregoing  have appeared or
appear,  designs and general  intangibles of like nature (whether  registered or
unregistered) all registrations and recordings thereof,  and all applications in
connection therewith,  including all registrations,  recordings and applications
in the United  States Patent and  Trademark  Office or in any similar  office or
agency of the  United  States,  any  State or  Territory  thereof,  or any other
country or any political subdivision thereof:  (ii) all reissues,  extensions or
renewals thereof; and (iii) all goodwill associated with or symbolized by any of
the foregoing.



"Transaction Summary" means the Transaction Summary set forth in the Recitals to
this Agreement.


"Unused Line Fee" has the meaning assigned to it in Schedule E.

"Withdrawal  Liability" means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such  Multiemployer  Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

Any accounting  term used in this  Agreement or the other Loan  Documents  shall
have, unless otherwise  specifically  provided therein,  the meaning customarily
given  such  term  in  accordance  with  GAAP,  and all  financial  computations
thereunder shall be computed, unless otherwise specifically provided therein, in
accordance  with  GAAP  consistently  applied;   provided,  that  all  financial
covenants and  calculations  in the Loan  Documents  shall be made in accordance
with GAAP as in effect on the Closing  Date  unless  Borrower  and Lender  shall
otherwise  specifically agree in writing. That certain items or computations are
explicitly  modified by the phrase "in accordance  with GAAP" shall in no way be
construed to limit the foregoing.  All other  undefined  terms contained in this
Agreement  or the other  Loan  Documents  shall,  unless the  context  indicates
otherwise,  have the  meanings  provided  for by the Code.  The words  "herein,"
"hereof"  and  "hereunder"  or  other  words  of  similar  import  refer to this
Agreement as a whole,  including the exhibits and schedules thereto, as the same
may from  time to time be  amended,  modified  or  supplemented,  and not to any
particular section, subsection or clause contained in this Agreement.

For  purposes of this  Agreement  and the other Loan  Documents,  the  following
additional rules of construction shall apply, unless  specifically  indicated to


                                       59
<PAGE>
the contrary:  (a) wherever from the context it appears  appropriate,  each term
stated in either the  singular  or plural  shall  include the  singular  and the
plural;  (b) the term "or" is not exclusive;  (c) the term  "including"  (or any
form thereof) shall not be limiting or exclusive; (d) all references to statutes
and related  regulations  shall include any amendments of same and any successor
statutes  and  regulations;  and  (e)  all  references  to  any  instruments  or
agreements, including references to any of the Loan Documents, shall include any
and all  modifications  or  amendments  thereto  and any and all  extensions  or
renewals thereof.
















































                                       60
<PAGE>
                                   Schedule B
                   LENDER'S AND BORROWER'S ADDRESS FOR NOTICES



Lender's Address

Name:         General Electric Capital Corporation

Address:      4601 Charlotte Park Drive, Suite 200

              Charlotte, North Carolina  28217
Attn:         Computer Components Corporation Account Manager

Telephone:    (704) 679-6200

Facsimile:    (704) 679-6272



Borrower's Address

Name:         Computer Components Corporation

Address:      4300 Wiley Post Road
              Addison, Texas  75001

Attn:         Chief Financial Officer

Telephone:    (972) 239-0271

Facsimile:    (972) 239-7155
























                                       61
<PAGE>
                         SCHEDULE C - LETTERS OF CREDIT

1. Lender agrees,  subject to the terms and conditions hereinafter set forth, to
incur  Letter of Credit  Obligations  in respect of the  issuance  of Letters of
Credit  issued on terms  acceptable  to Lender  and  supporting  obligations  of
Borrower  incurred in the ordinary  course of Borrower's  business,  in order to
support the payment of  Borrower's  inventory  purchase  obligations,  insurance
premiums,  or utility or other operating  expenses and obligations,  as Borrower
shall  request by written  notice to Lender  that is received by Lender not less
than five  Business  Days prior to the  requested  date of  issuance of any such
Letter of Credit; provided, that: (a) that the aggregate amount of all Letter of
                  --------
Credit  Obligations  at any one time  outstanding  (whether  or not then due and
payable) shall not exceed $250,000; (b) no Letter of Credit shall have an expiry
date which is later than the Stated  Expiry Date or one year  following the date
of issuance  thereof;  and (c) Lender shall be under no  obligation to incur any
Letter of Credit  Obligation  if after giving  effect to the  incurrence of such
Letter of Credit Obligation,  the Net Borrowing  Availability would be less than
zero. The maximum  amount payable in respect of each Letter of Credit  requested
by Borrower  will be  guaranteed  by Lender in favor of the  issuing  bank under
terms of a separate agreement between Lender and the issuing bank. Borrower will
enter into an  application  and  agreement  for such  Letter of Credit  with the
issuing bank selected by Lender (which may be an Affiliate of Lender).  The bank
that issues any Letter of Credit  pursuant to this Agreement shall be determined
by Lender in its sole discretion.

2. The notice to be provided to Lender  requesting  that Lender  incur Letter of
Credit Obligations shall be in the form of a Letter of Credit application in the
form customarily  employed by the issuing bank,  together with a written request
by  Borrower  and the bank that  Lender  approve  Borrower's  application.  Upon
receipt of such notice  Lender shall  establish a reserve  against the Borrowing
Availability  in the  amount of 100% of the face  amount of the Letter of Credit
Obligation  to be  incurred.  Approval by Lender in the written form agreed upon
between  Lender and the issuing  bank (a) will  authorize  the bank to issue the
requested Letter of Credit, and (b) will conclusively establish the existence of
the Letter of Credit Obligation as of the date of such approval.

3. In the event that Lender  shall make any payment on or pursuant to any Letter
of Credit Obligation,  Borrower shall be unconditionally  obligated to reimburse
Lender therefor, and such payment shall then be deemed to constitute a Revolving
Credit  Advance.  For  purposes  of  computing  interest  under  Section  1.5, a
                                                                 ------------
Revolving  Credit Advance made in satisfaction of a Letter of Credit  Obligation
shall be deemed to have been made as of the date on which the issuer or endorser
makes the related payment under the underlying Letter of Credit.

4. In the event that any Letter of Credit  Obligations,  whether or not then due
or payable,  shall for any reason be outstanding  on the Commitment  Termination
Date,  Borrower  will  either  (a) cause the  underlying  Letter of Credit to be
returned and canceled and each  corresponding  Letter of Credit Obligation to be
terminated,  or (b) pay to Lender,  in immediately  available  funds,  an amount
equal to 105% of the maximum amount then available to be drawn under all Letters
of Credit not so returned and  canceled to be held by Lender as cash  collateral
in an account  under the  exclusive  dominion  and  control of Lender (the "Cash
Collateral Account").


                                       62
<PAGE>
5. In the  event  that  Lender  shall  incur any  Letter of Credit  Obligations,
Borrower  agrees to pay the  Letter of Credit Fee to Lender as  compensation  to
Lender for incurring such Letter of Credit  Obligations.  In addition,  Borrower
shall reimburse Lender for all fees and charges paid by Lender on account of any
such Letters of Credit or Letter of Credit Obligations to the issuing bank.

6.  Borrower's  Obligations  to Lender  with  respect to any Letter of Credit or
Letter of Credit  Obligation shall be evidenced by Lender's records and shall be
absolute,  unconditional and irrevocable and shall not be affected,  modified or
impaired  by (a) any lack of  validity  or  enforceability  of the  transactions
contemplated  by or  related  to such  Letter  of  Credit  or  Letter  of Credit
Obligation;  (b) any amendment or waiver of or consent to depart from all or any
of the terms of the  transactions  contemplated  by or related to such Letter of
Credit or Letter of Credit Obligation;  (c) the existence of any claim, set-off,
defense or other right which Borrower or any other Credit Party may have against
Lender, the issuer or beneficiary of such Letter of Credit, or any other Person,
whether in  connection  with this  Agreement,  any other Loan  Document  or such
Letter of Credit  or the  transactions  contemplated  thereby  or any  unrelated
transactions;  or (d) the fact that any draft, affidavit,  letter,  certificate,
invoice,  bill of lading  or other  document  presented  under or  delivered  in
connection  with such Letter of Credit or any other  Letter of Credit  proves to
have been  forged,  fraudulent,  invalid or  insufficient  in any respect or any
statement therein proves to have been untrue or incorrect in any respect.

7. In addition to any other  indemnity  obligations  which  Borrower may have to
Lender under this  Agreement  and without  limiting  such other  indemnification
provisions,  Borrower hereby agrees to indemnify  Lender from and to hold Lender
harmless  against any and all claims,  liabilities,  losses,  costs and expenses
(including,  attorneys'  fees and  expenses)  which  Lender may (other than as a
result of its own gross negligence or willful misconduct) incur or be subject to
as a consequence,  directly or indirectly,  of (a) the issuance of or payment of
or failure to pay under any Letter of Credit or Letter of Credit  Obligation  or
(b) any suit,  investigation or proceeding as to which Lender is or may become a
party as a consequence, directly or indirectly, of the issuance of any Letter of
Credit,  the  incurring of any Letter of Credit  Obligation or any payment of or
failure  to pay under any Letter of Credit or Letter of Credit  Obligation.  The
obligations of Borrower under this  paragraph  shall survive any  termination of
this Agreement and the payment in full of the Obligations.

8. Borrower  hereby  assumes all risks of the acts,  omissions or misuse of each
Letter  of Credit  by the  beneficiary  or issuer  thereof  and,  in  connection
therewith,  Lender shall not be responsible  (a) for the validity,  sufficiency,
genuineness  or legal effect of any document  submitted in  connection  with any
drawing  under  any  Letter of  Credit  even if it  should in fact  prove in any
respect to be invalid,  insufficient,  inaccurate, untrue, fraudulent or forged;
(b) for the validity or sufficiency of any instrument  transferring or assigning
or  purporting  to  transfer  or assign  any  Letter of Credit or any  rights or
benefits  thereunder or any proceeds  thereof,  in whole or in part,  even if it
should prove to be invalid or ineffective for any reason; (c) for the failure of
any issuer or beneficiary of any Letter of Credit to comply fully with the terms
thereof,  including the conditions  required in order to effect or pay a drawing
thereunder;   (d)  for  any  errors,  omissions,   interruptions  or  delays  in
transmission or delivery of any messages, by mail, telecopy, telex or otherwise;
(e) for any loss or delay in the  transmission  or  otherwise of any document or
draft required in order to make a drawing under any Letter of Credit; or (f) for
any consequences arising from causes beyond the direct control of Lender.

                                       63
<PAGE>
                          SCHEDULE D - CASH MANAGEMENT

Borrower agrees to establish,  and to maintain,  until the Termination Date, the
cash management system described below:

1.  Borrower:  (i) shall not (and shall not permit any of its  Subsidiaries  to)
open or maintain any deposit,  checking,  operating  or other bank  account,  or
similar money handling  account,  with any bank or other  financial  institution
except for those accounts  identified in Attachment I hereto (to include a petty
cash account not to exceed $5,000 during any Fiscal Month, a payroll account not
to exceed an amount equal to one regular  payroll at any time and local accounts
for retail locations (the "Local  Accounts") to be swept daily into the Lock Box
Accounts);  and (ii) shall not close or permit to be closed any of the  accounts
listed in  Attachment I hereto,  in each case  without  Lender's  prior  written
           ------------
consent, and then only after Borrower has implemented  agreements with such bank
or financial institution and Lender acceptable to Lender.

2. Commencing on the Closing Date and until the Termination Date, Borrower shall
cause to be deposited  directly (or  indirectly  through the Local Accounts with
respect  to the  retail  locations)  all cash,  checks,  notes,  drafts or other
similar  items  relating to or  constituting  proceeds  of or  payments  made in
respect  of any and all  Collateral  into  lock  boxes or lock box  accounts  in
Borrower's or Lender's name (collectively, the "Lock Box Accounts") set forth in
paragraph 1 of Attachment I hereto.             -----------------
               ------------

3. On or before the Closing  Date,  each bank at which the Lock Box Accounts are
held  shall have  entered  into  tri-party  lock box  agreements  (the "Lock Box
                                                                        --------
Account Agreements") with Lender and Borrower,  in form and substance acceptable
------------------
to Lender.  Each such Lock Box  Account  Agreement  shall  provide,  among other
things,  that (a) such bank  executing such agreement has no rights of setoff or
recoupment  or any other claim  against  such Lock Box  Account,  other than for
payment  of  its  service  fees  and  other  charges  directly  related  to  the
administration  of such  account,  and (b) such bank  agrees to sweep on a daily
basis all amounts in the Lock Box Account to the Collection Account.

4. On the Closing Date, (a) the lock box and blocked account  arrangements shall
immediately  become  operative  at the banks at which the Lock Box  Accounts are
maintained,  and (b) amounts  outstanding  under the Revolving  Credit Loan (for
purposes of the Borrowing  Availability)  shall be reduced through daily sweeps,
by wire transfer, of the Lock Box Accounts into the Collection Account. Borrower
acknowledges  that it shall have no right to gain access to any of the moneys in
the Lock Box Accounts until after the Termination Date.

5. Borrower may maintain, in its name, accounts (the "Disbursement Accounts") at
                                                      ---------------------
a bank or banks acceptable to Lender into which Lender shall, from time to time,
deposit  proceeds of Revolving  Credit Advances made pursuant to Section 1.1 for
use  solely  in  accordance  with the  provisions  of  Section  1.3.  All of the
Disbursement  Accounts  as of the  Closing  Date are  listed in  paragraph  2 of
Attachment I hereto.



                                       64
<PAGE>
6. Upon the  request of Lender,  Borrower  shall  forward to Lender,  on a daily
basis, evidence of the deposit of all items of payment received by Borrower into
the Lock Box Accounts  and copies of all such checks and other  items,  together
with a statement  showing the application of those items relating to payments on
Accounts to outstanding  Accounts and a collection report with regard thereto in
form and substance satisfactory to Lender.



















































                                       65
<PAGE>
                           ATTACHMENT I TO SCHEDULE D
                           --------------------------

LIST OF BANK ACCOUNTS


   1.   Lock Box Accounts.
        -----------------


   2.   Disbursement Accounts.
        ---------------------


   3.   Petty Cash Account (not to exceed $5,000)
        ------------------


   4.   Payroll Account (not to exceed one regular payroll).
        ---------------


   5.   Retail Location Accounts (to be swept daily into the Lock Box Accounts)
        ------------------------

































                                       66
<PAGE>
                                SCHEDULE E - FEES

1.  UNUSED  LINE  FEE:  For each day from the  Closing  Date,  and  through  and
including the  Termination  Date, an amount equal to the Maximum Amount less the
Revolving  Credit Loan for such day multiplied by 0.25%, the product of which is
then divided by 360. The Unused Line Fee for each month (except for the month in
which the Termination  Date occurs) is payable on the first day of each calendar
month  following the Closing Date;  the final monthly  installment of the Unused
Line Fee is payable on the Termination Date.  Notwithstanding the foregoing, any
unpaid  Unused  Line  Fee is  immediately  due  and  payable  on the  Commitment
Termination Date.

2.  LETTER OF CREDIT  FEE:  For each day for which  Lender  maintains  Letter of
Credit Obligations  outstanding,  an amount equal to the amount of the Letter of
Credit Obligations  outstanding on such day, multiplied by 2.00%, the product of
which is then  divided by 360.  The Letter of Credit Fee incurred for each month
is  payable  at the  same  time  each  payment  of the  Unused  Line Fee is due.
Notwithstanding  the  foregoing,  any unpaid Letter of Credit Fee is immediately
due and payable on the Commitment Termination Date.

3. CLOSING FEE;  COLLATERAL  MONITORING  FEE: A fully earned and  non-refundable
closing  fee of $30,000  (the  "Closing  Fee"),  $7,500 of which will be due and
payable on the Closing Date (against which will be credited the unused  balance,
net of expenses, of the underwriting deposit paid by Borrower to Lender) and the
balance of which will be due in three $7,500  installments  payable on or before
the first day of the next  three  Fiscal  Quarters  of  Borrower  following  the
Closing Date. A fully earned and  non-refundable  collateral  monitoring  fee of
$18,000 per annum,  payable  quarterly in advance in quarterly  installments  of
$4,500  each on the  Closing  Date and on the first day of each  Fiscal  Quarter
thereafter.

4. PREPAYMENT FEE:
An amount equal to the Maximum Amount multiplied by:
         2.0% if Lender's  obligation to make further  Revolving Credit Advances
or incur additional Letter of Credit  Obligations is terminated  (voluntarily by
Borrower,  upon  Default or  otherwise)  on or after the Closing  Date and on or
before the first  anniversary  of the Closing  Date,  payable on the  Commitment
Termination Date;
         1.0% if Lender's  obligation to make further  Revolving Credit Advances
or incur additional Letter of Credit  Obligations is terminated  (voluntarily by
Borrower,  upon Default or otherwise) after the first anniversary of the Closing
Date and on or before the second anniversary of the Closing Date, payable on the
Commitment Termination Date; or
         0.5% if Lender's  obligation to make further  Revolving Credit Advances
or incur additional Letter of Credit  Obligations is terminated  (voluntarily by
Borrower, upon Default or otherwise) after the second anniversary of the Closing
Date and on or before Stated Expiry Date, payable on the Commitment  Termination
Date.

Borrower  acknowledges  and agrees that (i) it would be difficult or impractical
to  calculate  Lender's  actual  damages  from  early  termination  of  Lender's
obligation to make further Revolving Credit Advances and incur additional Letter
of Credit  Obligations for any reason pursuant to Section 1.2(c) or Section 7.2,
(ii) the  Prepayment  Fees provided above are intended to be fair and reasonable
approximations  of such damages,  and (iii) the Prepayment Fees are not intended
to be penalties.

                                       67
<PAGE>
5. AUDIT FEES: Borrower will reimburse Lender at the rate of $750 per person per
day, plus out of pocket expenses,  for the audit reviews, field examinations and
collateral  examinations  conducted by Lender;  provided,  however, prior to the
occurrence of a Default or Event of Default,  Borrower's obligation to reimburse
Lender  for  field  examinations  shall  be  limited  to up to  four  (4)  field
examinations in any twelve month period.

6. ACCOMMODATION  FEE:  A fully earned and  non-refundable  accommodation fee of
$25,000 which will be due and payable on the Closing Date.
















































                                       68
<PAGE>
                                   Schedule F
                              SCHEDULE OF DOCUMENTS

The  obligation  of Lender to make the  initial  Revolving  Credit  Advances  is
subject to  satisfaction  of the  condition  precedent  that  Lender  shall have
received the following,  each,  unless otherwise  specified below or the context
otherwise requires,  dated the Closing Date, in form and substance  satisfactory
to Lender and its counsel, unless the context otherwise requires or as otherwise
specified below:

PRINCIPAL LOAN DOCUMENTS
1.  Agreement. The Loan and Security Agreement duly executed by Borrower.
    ----------
2.  Revolving Credit Note. A duly executed Revolving Credit Note to the order of
    ---------------------
    Lender.
3.  Borrowing Base Certificate.  An  original  Borrowing  Base  Certificate duly
    --------------------------
    executed by a responsible officer of Borrower.
4.  Notice of Revolving Credit Advance.  An  original Notice of Revolving Credit
    ----------------------------------
    Advance duly executed by a responsible officer of Borrower.

COLLATERAL  DOCUMENTS.
1.  Acknowledgment  Copies of Financing  Statements.  Acknowledgement  copies of
    -----------------------------------------------
    proper Financing  Statements (Form UCC-l) (the "Financing  Statements") duly
    filed under the Code, or chattel mortgages duly filed under other applicable
    law, of all  jurisdictions as may be necessary or, in the opinion of Lender,
    desirable to perfect Lender's Lien created on the Collateral.
2.  Other Evidence of Filing and  Perfection.  Certified  copies of Requests for
    ----------------------------------------
    Information (Form UCC-11), or other evidence satisfactory to Lender, listing
    all effective financing  statements or chattel mortgages which name Borrower
    (under its present name,  any previous  name or any trade or doing  business
    name) as debtor  and which are  filed in the  jurisdictions  referred  to in
    paragraph (a) above, together with copies of such other financing statements
    (none of which shall cover the Collateral).
3.  Intellectual  Property  Documents.  Agreements  relating to the  granting to
    ---------------------------------
    Lender of a security  interest in  Intellectual  Property of Borrower to the
    extent applicable in a form suitable for filing with the appropriate Federal
    or State filing office.
4.  Other  Recordings  and  Filings.  Evidence  of the  completion  of all other
    -------------------------------
    recordings and filings  (including  UCC-3  termination  statements and other
    Lien release documentation) as may be necessary or, in the opinion of and at
    the request of Lender, desirable to perfect Lender's Lien on the Collateral.
5.  Power of Attorney. The Power of Attorney duly executed by Borrower.
    -----------------
6.  Pledge Agreements. Duly executed pledge agreements and related documentation
    -----------------
    regarding the pledge by Borrower of all of its bank accounts.




                                       69
<PAGE>
THIRD PARTY AGREEMENTS.
1.  Landlord  Consents.  Unless otherwise  agreed to in writing by Lender,  duly
    ------------------
    executed  landlord  waivers  and  consents  from  the  landlords  of  all of
    Borrower's  leased locations where Collateral is held, in each case, in form
    and substance satisfactory to Lender.
2.  Cash Management  System.  Duly executed Lock Box Account Agreements (if any)
    -----------------------
    and the Concentration Account Agreement and, if required by Lender,  pledged
    account  agreements in respect of the Disbursement  Accounts as contemplated
    by Schedule D.
3.  Guaranty. Duly executed Guaranty by Parent.
    --------

DOCUMENTS DELIVERED BY BORROWER.
1.  Secretary Certificates. A Secretary Certificates in the form of Exhibit H to
    ----------------------
    the  Agreement  duly  completed  and executed by the  Secretary of Borrower,
    together with all  attachments  thereto and a Secretary  Certificate  in the
    form of Exhibit H-1 to the  Agreement  duly  completed  and  executed by the
    Secretary of Parent together with all attachments thereto.
2.  Environmental Audit. Copies of all existing environmental reviews and audits
    -------------------
    and other information pertaining to actual or potential environmental claims
    relating to the Collateral and Borrower as Lender may require.
3.  Financial Statements and Projections. Copies of the Financial Statements and
    ------------------------------------
    Projections,  which Projections shall include a capital  expenditures budget
    for Borrower in form and substance satisfactory to Lender.
4.  Insurance  Policies.  Copies of insurance policies described in Section 3.16
    -------------------
    together with evidence showing loss payable or additional insured clauses or
    endorsements in favor of Lender.
5.  Existing Lease  Agreements.  Copies of any existing real property leases and
    --------------------------
    equipment  leases to which  Borrower  is a party and any other  document  or
    instrument  evidencing  or relating to existing  Indebtedness  of  Borrower,
    together with all certificates,  opinions,  instruments,  security documents
    and other documents relating thereto,  all of which shall be satisfactory in
    form and substance to Lender, certified by an authorized officer of Borrower
    as true, correct and complete copies thereof.















                                       70
<PAGE>
                                   Schedule G
                               FINANCIAL COVENANTS

1. Fixed Charge Coverage Ratio. Borrower and its Subsidiaries on a consolidated
   ---------------------------
basis shall have at the end of each month (commencing with the month ending
March 31, 2002) a Fixed Charge Coverage Ratio of not less than 1:50:1 (in each
case computed for the three monthly periods then ending).

2 Minimum Tangible Net Worth. Borrower and its Subsidaries on a consolidated
  --------------------------
basis shall have at the end of each Fiscal Quarter, Tangible Net Worth of not
less than the amount of Tangible Net of Borrower and its Subsidiaries as of the
first day of such Fiscal Quarter plus (if positive) 100% of Net Income for such
Fiscal Quarter.

3. Capital Expenditures. Borrower and its Subsidiaries on a consolidated basis
   --------------------
shall not make aggregate Capital Expenditures, other than Capital Expenditures
financed through the incurrence of Indebtedness (excluding the Revolving Credit
Loan), in any Fiscal Year in excess of $ 250,000 (calculated on a non-cumulative
basis).

4. Net Borrowing Availability. At all times after the Closing Date Borrower
   --------------------------
shall maintain Net Borrowing Availability of at least $500,000.































                                       71
<PAGE>
GUARANTEE

         GUARANTEE,  dated  as of              ,  2002,  made  by  TECH  ELECTRO
                                 --------------
INDUSTRIES,  INC.  (the  "Guarantor"),  in favor  of  GENERAL  ELECTRIC  CAPITAL
                          ---------
CORPORATION,  as Lender  (the  "Lender")  under the Loan  Agreement  referred to
                                ------
below.

                              W I T N E S S E T H:
                              --------------------
         WHEREAS, pursuant to the Loan and Security Agreement dated as of even
date herewith (as the same may be amended, supplemented or otherwise modified
from time to time, the "Loan Agreement") between Computer Components Cororation
                        --------------
(the "Borrower") and Lender, the Lender has agreed to make extensions of credit
      --------
to the Borrower upon the terms and subject to the conditions set forth therein;

         WHEREAS, it is a condition precedent to the effectiveness of the Loan
Agreement that the Guarantor guarantee payment and performance of the Borrower's
obligations under the Loan Agreement and the other Loan Documents;

         WHEREAS, the Guarantor owns directly or indirectly all or substantially
all of the issued and outstanding stock of the Borrower.

         NOW, THEREFORE, to induce the Lender to enter into the Loan Agreement
and to induce the Lender to make its extensions of credit to the Borrower under
the Loan Agreement and for other consideration the receipt and sufficiency of
which is hereby acknowledged, the Guarantor hereby agrees with the Lender as
follows:

         1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
            -------------
the Loan Agreement and used herein shall have the meanings given to them in the
Loan Agreement.

         (b) As used herein, "Obligations" shall mean all loans, advances,
                              -----------
debts, expense reimbursement, fees, liabilities, and obligations, for the
performance of covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent, or amounts are
liquidated or determinable) owing by Borrower and any other Credit Party to
Lender, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, whether arising under any of the Loan
Documents or under any other agreement between Borrower, such Credit Party and
Lender, and all covenants and duties regarding such amounts. This term includes
all principal, interest (including interest accruing at the then applicable rate
provided in the Loan Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in the Loan Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), Fees, Charges, expenses,



                                       72
<PAGE>
attorneys' fees and any other sum chargeable to Borrower under any of the Loan
Documents, and all principal and interest due in respect of the Loans and all
obligations and liabilities of the Guarantor under this Guarantee.

         (c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a whole and
not to any particular provision of this Guarantee, and section and paragraph
references are to this Guarantee unless otherwise specified.

         (d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

         2. Guarantee. (a) The Guarantor hereby unconditionally and irrevocably
            ---------
guarantees to the Lender and its successors, indorsees, transferees and assigns,
the prompt and complete payment and performance by the Borrower when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations.

         (b) The Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Lender in enforcing, or obtaining advice of counsel
in respect of, any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting against,
the Guarantor under this Guarantee.

         (c) The Guarantor agrees that the Obligations may at any time and from
time to time exceed the amount of the liability of the Guarantor hereunder
without impairing this Guarantee or affecting the rights and remedies of the
Lender hereunder.

         (d) No payment or payments made by the Borrower, any other guarantor or
any other Person or received or collected by the Lender from the Borrower, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Guarantor hereunder which
shall, notwithstanding any such payment or payments, other than payments made by
the Guarantor in respect of the Obligations or payments received or collected
from the Guarantor in respect of the Obligations, remain liable for the
Obligations hereunder until the Obligations are indefeasibly paid in full.

         (e) The Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Lender on account of its liability
hereunder, it will notify the Lender in writing that such payment is made under
this Guarantee for such purpose.

         3. No Subrogation. Notwithstanding any payment or payments made by the
            --------------
Guarantor hereunder or any set-off or application of funds of the Guarantor by
the Lender, the Guarantor shall not be entitled to be subrogated to any of the
rights of the Lender against the Borrower or any other guarantor or any
collateral security or guarantee or right of offset held by the Lender for the
payment of the Obligations, nor shall the Guarantor seek or be entitled to seek
any contribution or reimbursement from the Borrower or any other Person in


                                       73
<PAGE>
respect of payments made by the Guarantor hereunder until all amounts owing to
the Lender by the Borrower on account of the Obligations are indefeasibly paid
in full. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
indefeasibly paid in full, such amount shall be held by the Guarantor in trust
for the Lender, segregated from other funds of the Guarantor and shall forthwith
upon receipt by the Guarantor, be turned over to the Lender in the exact form
received by the Guarantor (duly indorsed by the Guarantor to the Lender, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as the Lender may elect.

         4. Amendments, etc. with respect to the Obligations; Waiver of Rights.
            ------------------------------------------------------------------
The Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Guarantor and without notice to or further
assent by the Guarantor, any demand for payment of any of the Obligations made
by the Lender may be rescinded and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Lender, and the Loan Agreement and the other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Lender) may
deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. The Lender
shall not have any obligation to protect, secure, perfect or insure any Lien at
any time held by it as security for the Obligations or for this Guarantee or any
property subject thereto. When making any demand hereunder against the
Guarantor, the Lender may, but shall be under no obligation to, make a similar
demand on the Borrower or any other guarantor, and any failure by the Lender to
make any such demand or to collect any payments from the Borrower or any such
other guarantor or any release of the Borrower or such other or guarantor shall
not relieve the Guarantor of the obligations or liabilities hereunder, and shall
not impair or affect the rights and remedies, express or implied, or as a matter
of law, of the Lender against the Guarantor. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.

         5. Guarantee Absolute and Unconditional. The Guarantor waives any and
            ------------------------------------
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Lender upon this Guarantee
or acceptance of this Guarantee, and the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Guarantee; and all dealings
between the Borrower and the Guarantor, on the one hand, and the Lender on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or the Guarantor with respect to the Obligations. The
Guarantor understands and agrees that this Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of the Loan Agreement, or any
other Loan Document, any of the Obligations or any other collateral security


                                       74
<PAGE>
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Lender (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by the Borrower against the Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against any Guarantor, the Lender
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against the Borrower or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Lender to pursue such other rights or remedies
or to collect any payments from the Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower or any such other Person or any
such collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Lender against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Lender, and its successors, indorsees, transferees and assigns, until all
the Obligations and the obligations of the Guarantor under this Guarantee shall
have been satisfied by indefeasible payment in full in cash.

         6. Reinstatement. This Guarantee shall continue to be effective, or be
            -------------
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.

         7. Payments. The Guarantor hereby guarantees that payments hereunder
            --------
will be paid to the Lender without set-off or counterclaim in U.S. Dollars at
the office of the Lender located at 4601 Charlotte Park Drive, Suite 200,
Charlotte, North Carolina 28217.

         8. Representations and Warranties. The Guarantor hereby represents and
            ------------------------------
warrants that:

         (a) it has the power and authority and the legal right and capacity to
execute and deliver, and to perform its obligations under, this Guarantee and
has taken all necessary action to authorize its execution, delivery and
performance of this Guarantee;

         (b) this Guarantee constitutes a legal, valid and binding obligation of
the Guarantor enforceable in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and



                                       75
<PAGE>
other similar laws relating to or affecting the enforcement of creditors' rights
generally, general equitable principles and an implied covenant of good faith
and fair dealing;

         (c) the execution, delivery and performance of this Guarantee will not
violate any provision of any Requirement of Law or Contractual Obligation of the
Guarantor and will not result in or require the creation or imposition of any
Lien on any of the properties or revenues of the Guarantor pursuant to any
Requirement of Law or Contractual Obligation of the Guarantor;

         (d) no consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, any shareholder or creditor of the Guarantor) is required in
connection with the execution, delivery, performance, validity or enforceability
of this Guarantee;

         (e) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Guarantor, threatened by or against the Guarantor or against any of its
properties or revenues (1) with respect to this Guarantee or any of the
transactions contemplated hereby, (2) which could have a material adverse effect
on the business, property, or financial or other condition of the Guarantor;

         (f) the statements concerning the financial condition and net worth of
Guarantor previously provided to the Lender are true and correct; there is no
event, fact, circumstance or condition known to Guarantor which is inconsistent
with such statements or is required to be disclosed in order to cause such
statements not to be misleading.

         The Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Guarantor on the date of each borrowing
by the Borrower under the Loan Agreement on and as of such date of borrowing as
though made hereunder on and as of such date.

         9. Notices. All notices, requests and demands to or upon the Lender or
            -------
the Guarantor to be effective shall be in writing (or by telex, fax or similar
electronic transfer) and shall be deemed to have been duly given or made (1)
when delivered by hand or (2) if given by mail, when deposited in the mails by
certified mail, return receipt requested, or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:

         (a) if to the Lender, at its address or transmission number for notices
provided in the Loan Agreement; and

         (b) if to the Guarantor, at its address or transmission number for
notices set forth under its signature below.

         The Lender, and the Guarantor may change their respective addresses and
transmission numbers for notices by notice in the manner provided in this
Section.





                                       76
<PAGE>
         10. Severabilility. Any provision of this Guarantee which is prohibited
             --------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         11. Integration. This Guarantee represents the agreement of the
             -----------
Guarantor with respect to the subject matter hereof and there are no promises or
representations by the Lender relative to the subject matter hereof not
reflected herein.

         12. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of
             -----------------------------------------------------
the terms or provisions of this Guarantee may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Guarantor
and the Lender, provided that any provision of this Guarantee may be waived by
the Lender in a letter or agreement executed by the Lender or by telex or
facsimile transmission from the Lender.

         (b) The Lender shall not by any act (except by a written instrument
pursuant to paragraph 12(a) hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Lender would otherwise have on any future occasion.

         (c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

         13. [Intentionally left blank].

         14. Section Headings. The section headings used in this Guarantee are
             ----------------
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.

         15. Successors and Assigns. This Guarantee shall be binding upon the
             ----------------------
successors and assigns of the Guarantor and shall inure to the benefit of the
Lender and its successors and assigns.

         16. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
             -------------
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.




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<PAGE>
         17. Submission to Jurisdiction; Waivers. The Guarantor hereby
             -----------------------------------
irrevocably and unconditionally:

         (a) submits for itself and its property in any legal action or
proceeding relating to this Guarantee or any other Loan Document to which it is
a party, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America located in the state of New
York, and appellate courts from any thereof;

         (b) consents that any such action or proceeding may be brought in such
courts and waives trial by jury and any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

         (c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Guarantor at its
address set forth under its signature below or at such other address of which
the Lender shall have been notified pursuant to Section 9; and

         (d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction.































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<PAGE>
         IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered as of the day and year first above written.


                                TECH ELECTRO INDUSTRIES, INC.



                                By:
                                   --------------------------------------------

                                Name:
                                     ------------------------------------------

                                Address for Notices:
                                =============================









































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