Exhibit 10.2

                          LOAN AND SECURITY AGREEMENT

                                     among

                           PRECISION AUTO CARE, INC.
                            a Virginia corporation,
                              WE JAC CORPORATION,
                            a Delaware corporation,
                              LUBE VENTURES, INC.
                            a Delaware corporation,
                         ROCKY MOUNTAIN VENTURES, INC.
                            a Colorado corporation,
                       ROCKY MOUNTAIN VENTURES, II, INC.
                            a Colorado corporation,
                             MIRACLE PARTNERS, INC.
                            a Delaware corporation,
                             RALSTON CAR WASH, LTD.
                     a Colorado limited liability company,
                             PREMA PROPERTIES, LTD.
                       an Ohio limited liability company,
                            MIRACLE INDUSTRIES, INC.
                              an Ohio corporation,
                                    KBG, LLC
                     a Colorado limited liability company,
                                   PTW, INC.
                           a Washington corporation,
                         NATIONAL 60 MINUTE TUNE, INC.
                           a Washington corporation,
                    HYDRO-SPRAY CAR WASH EQUIPMENT CO., LTD.
                       an Ohio limited liability company,
                         PRECISION TUNE AUTO CARE, INC.
                             a Virginia corporation

                                      and

                                  SIGNET BANK
                         a Virginia banking corporation



                                                               November 12, 1997


<PAGE>


                          LOAN AND SECURITY AGREEMENT

                               TABLE OF CONTENTS

ARTICLE I     Definitions..................................................  3
Section 1.1   Account Debtor...............................................  3
Section 1.2   Accounts, Chattel Paper, Documents,
              Inventory, Equipment, General
              Intangibles, and Instruments.................................  3
Section 1.3   Advance Rates................................................  3
Section 1.4   Advances.....................................................  3
Section 1.5   Affiliate....................................................  3
Section 1.6   Agent........................................................  3
Section 1.7   Agreement....................................................  4
Section 1.8   Assumption Agreement.........................................  4
Section 1.9   Available Funds..............................................  4
Section 1.10  Borrower.....................................................  4
Section 1.11  Business Day.................................................  4
Section 1.12  Collateral...................................................  4
Section 1.13  Deposit Account..............................................  4
Section 1.14  Eligible Receivables.........................................  4
Section 1.15  ERISA........................................................  5
Section 1.16  Event of Default.............................................  5
Section 1.17  Excess Funds.................................................  5
Section 1.18  Item.........................................................  5
Section 1.19  Investment...................................................  5
Section 1.20  Laws.........................................................  5
Section 1.21  Letter of Credit.............................................  5
Section 1.22  Line of Credit...............................................  6
Section 1.23  Line of Credit Note..........................................  6
Section 1.24  Liquidation Costs............................................  6
Section 1.25  Loan.........................................................  6
Section 1.26  Loan Documents...............................................  6
Section 1.27  Obligations..................................................  6
Section 1.28  Permitted Liens..............................................  7
Section 1.29  Person.......................................................  7
Section 1.30  Receivables..................................................  7
Section 1.31  Records......................................................  7
Section 1.32  Subsidiary...................................................  7
Section 1.33  Subordinated Debt............................................  7
Section 1.34  Target Balance...............................................  8
Section 1.35  Tax-Exempt Intermediary......................................  8
ARTICLE II    TERMS AND PURPOSE OF THE LOAN................................  8
Section 2.1   The Line of Credit...........................................  8


<PAGE>


Section 2.1.1 Purpose of the Line of Credit................................  8
Section 2.1.2 Advance Rates................................................  8
Section 2.1.3 Interest Rate; Line of Credit Note...........................  8
Section 2.1.4 Line of Credit Fees.......................................... 10
Section 2.1.5 Advances under the Line of Credit............................ 10
Section 2.1.6 Repayment of the Line of Credit.............................. 12
Section 2.1.7 Prepayment of the Line of Credit............................. 12

ARTICLE III
              SECURITY FOR THE LOAN........................................ 12
Section 3.1   Grant of Security Interest................................... 12
Section 3.2   Proceeds and Products........................................ 13
Section 3.3   Priority of Security Interests............................... 13
Section 3.4   Future Advances.............................................. 13
Section 3.5   Landlord's Waivers........................................... 13

ARTICLE IV    CONDITIONS PRECEDENT......................................... 14
Section 4.1   Required Documents........................................... 14
Section 4.2   Satisfaction of Terms........................................ 14

ARTICLE V     REPRESENTATIONS AND WARRANTIES............................... 15
Section 5.1   Accuracy and Completeness of Information..................... 15
Section 5.2   Non-Existence of Defaults, Etc. ............................. 15
Section 5.3   Litigation................................................... 16
Section 5.4   Liabilities or Adverse Changes............................... 16
Section 5.5   Title to Collateral.......................................... 16
Section 5.6   Use of Loan Proceeds......................................... 16
Section 5.7   Corporate Status............................................. 16
Section 5.8   Validity, Binding Nature,
              and Enforceability of the Loan Documents..................... 16
Section 5.9   Defaults Under Loan Documents................................ 17
Section 5.10  Taxes........................................................ 17
Section 5.11  ERISA........................................................ 17
Section 5.12  Compliance with Laws......................................... 17
Section 5.13  Accuracy of Representations and Warranties................... 17
Section 5.14  Consents, Approvals, and Authorizations...................... 18
Section 5.15  Title to Assets Other Than Collateral........................ 18
Section 5.16  Place of Business............................................ 18
Section 5.17  Additional Business Locations................................ 18
Section 5.18  Other Subsidiaries........................................... 18


                                      -2-

<PAGE>


Section 5.19  Material Contracts and Commitments........................... 19
Section 5.20  Representations as to Receivables............................ 19

ARTICLE VI    AFFIRMATIVE COVENANTS........................................ 19
Section 6.1   Payments..................................................... 20
Section 6.2   Performance.................................................. 20
Section 6.3   Protection of Security....................................... 20
Section 6.4   Insurance.................................................... 20
Section 6.4.1 Casualty Insurance........................................... 20
Section 6.4.2 Liability and Worker's Compensation Insurance................ 20
Section 6.4.3 Other Insurance.............................................. 20
Section 6.5   Collection of Accounts....................................... 21
Section 6.6   Maintenance of Existence..................................... 21
Section 6.7   Notice of Litigation and Proceedings......................... 21
Section 6.8   Performance under Material Contract.......................... 21
Section 6.9   Payment of Indebtedness to Third Persons..................... 21
Section 6.10  Notice of Change of Business Location........................ 21
Section 6.11  Pension Plans................................................ 22
Section 6.12  Maintenance of Assets and Properties......................... 22
Section 6.13  Payment of Taxes............................................. 22
Section 6.14  Further Assurances and Power of Attorney..................... 22
Section 6.15  Advancements................................................. 22
Section 6.16  Maintain Records and Make Available to Bank for Inspection... 23
Section 6.17  Borrowing Base Certificates.................................. 23
Section 6.18  Financial Statements......................................... 24
Section 6.19  Maximum Quarterly Tangible Capital........................... 25
Section 6.20  Minimum Quarterly Tangible Capital........................... 25
Section 6.21  Minimum Annual Cash Flow Coverage............................ 25
Section 6.22  Positive Net Profit.......................................... 25
Section 6.23  Current Ratio................................................ 25
Section 6.24  Capital Expenditures......................................... 26
Section 6.25  Operating Budget............................................. 26
Section 6.26  Depository Banks............................................. 26
Section 6.27  Tax-Exempt Intermediaries.................................... 26

ARTICLE VII   NEGATIVE COVENANTS........................................... 26
Section 7.1   Change of Name, Merger, Sale of Stock Etc. .................. 26
Section 7.2   Sale or Transfer of Assets................................... 27
Section 7.3   Encumbrance of Assets........................................ 27
Section 7.4   Guarantees................................................... 27
Section 7.5   Indebtedness................................................. 27
Section 7.6   Investments.................................................. 27


                                      -3-

<PAGE>


Section 7.7   Loans........................................................ 27
Section 7.8   Dividends.................................................... 27
Section 7.9   Acquisition of Stock or Assets of Third Person............... 27
Section 7.10  Assignment of this Agreement................................. 28

ARTICLE VIII  EVENTS OF DEFAULT............................................ 28
Section 8.1   Failure to Pay............................................... 28
Section 8.2   Failure to Perform........................................... 28
Section 8.3   Failure of Warranty or
              Representation to be True.................................... 28
Section 8.4   Failure to Perform Covenants
              Relating to Collateral....................................... 27
Section 8.5   Failure to Perform Other Covenants........................... 28
Section 8.6   Default Under Loan Documents................................. 28
Section 8.7   Judgments.................................................... 29
Section 8.8   Levy By Secured Creditor..................................... 29
Section 8.9   Failure to Pay Debts to Third Persons........................ 29
Section 8.10  Involuntary Bankruptcy....................................... 29
Section 8.11  Voluntary Bankruptcy......................................... 29
Section 8.12  Termination of Material Contracts............................ 29
Section 8.13  Material Adverse Change...................................... 30
Section 8.14  Impairment of Collateral..................................... 30

ARTICLE IX    RIGHTS AND REMEDIES ON THE OCCURRENCE
              OF AN EVENT OF DEFAULT....................................... 30
Section 9.1   Rights and Remedies.......................................... 30
Section 9.2   Collection of Receivables by the Bank........................ 31
Section 9.3   Sale of Collateral........................................... 32
Section 9.4   Confession of Judgment....................................... 33
Section 9.5   Attorneys' Fees and Expenses................................. 33
Section 9.6   Remedies Cumulative.......................................... 33
Section 9.7   Proof of Sums Due on the Loan................................ 33
Section 9.8   Obligations of the Borrower
              Hereunder Unconditional...................................... 34

ARTICLE X     GENERAL CONDITIONS AND TERMS................................. 34
Section 10.1  Loan Costs................................................... 34
Section 10.2  Incorporation................................................ 34
Section 10.3  Waivers...................................................... 34
Section 10.4  No Third Party Beneficiary Rights............................ 34
Section 10.5  Continuing Obligation of Borrowers........................... 35
Section 10.6  Binding Obligation........................................... 35
Section 10.7  Notices...................................................... 35
Section 10.8  Final Agreement.............................................. 35
Section 10.9  Extensions................................................... 36


                                      -4-

<PAGE>


Section 10.10 Amendment.................................................... 36
Section 10.11 Time......................................................... 36
Section 10.12 Disclosure................................................... 36
Section 10.13 Number, Gender, and Captions................................. 36
Section 10.14 Security Agreement; Photocopies Sufficient................... 36
Section 10.15 Additional Borrowers and Assumption Agreement................ 36
Section 10.16 Joint and Several Liability.................................. 37
Section 10.17 Choice of Law; Waiver of Jury Trial.......................... 37


                                      -5-

<PAGE>


                          LOAN AND SECURITY AGREEMENT


            THIS LOAN AND SECURITY AGREEMENT is made between PRECISION AUTO
CARE, INC., a Virginia corporation ("PAC"), and certain of its subsidiaries
wholly-owned and/or controlled by it, namely, WE JAC CORPORATION, a Delaware
corporation; LUBE VENTURES, INC., a Delaware corporation; ROCKY MOUNTAIN
VENTURES, INC., a Colorado corporation; ROCKY MOUNTAIN VENTURES II, INC., a
Colorado corporation, MIRACLE PARTNERS, INC., a Delaware corporation; RALSTON
CAR WASH, LTD., a Colorado limited liability company; PREMA PROPERTIES, LTD., an
Ohio limited liability company; MIRACLE INDUSTRIES, INC., an Ohio corporation;
KBG, LLC, a Colorado limited liability company; PTW, INC., a Washington
corporation; NATIONAL 60 MINUTE TUNE, INC., a Washington corporation;
HYDRO-SPRAY CAR WASH EQUIPMENT CO., LTD., an Ohio limited liability company;
PRECISION TUNE AUTO CARE, INC., a Virginia corporation (each of the foregoing
and PAC are sometimes hereafter referred to individually as a "Borrower" and
collectively as the "Borrowers"), and SIGNET BANK, a Virginia banking
corporation (the "Bank).

                                    RECITALS

            A. PAC is a holding company which conducts business through its
Subsidiaries (as hereafter defined).

            B. Because of the ownership relation and the other relationships
described hereafter, PAC and all Subsidiaries have requested the Bank to provide
credit upon the terms and conditions stated herein.

            C. PAC is the sole or controlling, direct or indirect, owner of all
of the issued and outstanding capital stock or other equity interests of all of
the Subsidiaries. Each Borrower is a separate legal entity, however, and in
addition to the ownership affiliation, each Borrower will be actively engaged in
interwoven and ongoing business and financial relationships with PAC and the
other Subsidiaries in the conduct of their respective but related businesses.
These relationships include: (a) centralized accounting, data processing,
payroll and other administrative services; (b) the sharing of common
administrative (e.g., legal, accounting, etc.) services; (c) common management
and the utilization of personnel for common services such as purchasing and
administrative services; (d) the purchase and exchange of goods and services
among the Borrowers; (e) PAC will provide substantial financial support to its
Subsidiaries through loans; (f) PAC and a substantial number of the Subsidiaries
will file consolidated federal tax returns; and (g) other contemplated business
accommodations by and between the Borrowers. Because of the affiliation and
inter-relationship of the Borrowers, in law and in fact, and because of the
economic dependence of one on the other, and


<PAGE>


further because each Borrower is joining in the execution hereof for the purpose
of inducing the Bank to enter into this Loan and Security Agreement, each
Borrower promises to pay all Obligations (as hereafter defined) regardless of
which Borrower requested and/or received, directly or indirectly, the proceeds
or benefit of any Loan (as hereafter defined). For purposes of this Loan and
Security Agreement, each Borrower joins as a co-maker, the liability of each
co-maker shall be joint and several for the repayment of all Loans, interest
thereon and all other Obligations, and the performance of all terms, conditions
and provisions of this Loan and Security Agreement. The Loans may be made to one
Borrower for the use and benefit of one or more other Borrowers, and each
Borrower may act as and be the agent of each other Borrower; the Collateral of
each Borrower shall be Collateral for all Obligations arising hereunder,
regardless of which Borrower incurred the Obligations; notice to PAC or any
other Borrower shall constitute notice to all Borrowers; a request for a Loan by
PAC for its use or for the use of another Borrower shall be valid and binding on
all Borrowers. Each Subsidiary designates, constitutes and appoints PAC as its
true and lawful attorney-in-fact to act for and on its behalf under this Loan
and Security Agreement in all respects, and any action taken by PAC with respect
to any Subsidiary shall be binding on both. No action now or hereafter taken by
the Bank for administrative purposes or otherwise, including, without
limitation, recording this transaction on its books and records in the name of
PAC, administering the Loans through one deposit account, collateral account or
other account or accounts, notifying or dealing with one Borrower to the
exclusion of any other shall be, or shall be deemed to be, a waiver or
relinquishment of any right, power or remedy with respect to all Borrowers nor a
release of any Borrower from strict performance and unconditional liability
under this Loan and Security Agreement.

            D. The Borrowers acknowledge that they will benefit from the making
of the Loans, the extension of credit and all join in the execution hereof and
the joint and several undertakings herein to induce the Bank to make the Loans
and continue making the Loans.

            NOW, THEREFORE, in consideration of the premises, the covenants and
agreements of the parties hereafter set forth, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties, intending to be legally bound, agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

            As used in this Loan and Security Agreement, the following terms
shall have the meanings set forth as definitions, unless the specific context
clearly requires a different meaning, and all terms defined in this Article, or
elsewhere herein, shall be capitalized throughout this Loan and Security
Agreement. Terms defined in the Uniform Commercial Code of Maryland or of any
other state in which any portion of

                                      -2-

<PAGE>


the Collateral may be located shall have the meanings ascribed to them therein,
and all financial terms not otherwise defined shall have those meanings as
determined under generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants ("GAAP"). The plural use of
any defined term shall include the singular, and the singular use of any defined
term shall include the plural.

            SECTION 1.1.  ACCOUNT DEBTOR.  The term "Account Debtor" shall
mean any Person who is obligated to pay a Receivable to any Borrower.

            SECTION 1.2. ACCOUNTS, CHATTEL PAPER, DOCUMENTS, INVENTORY,
SECURITIES, EQUIPMENT, GENERAL INTANGIBLES AND INSTRUMENTS. The terms
"Accounts," "Chattel Paper," "Documents," "Inventory," "Securities,"
"Equipment," "General Intangibles" and "Instruments" shall have the same
respective meanings as are given to those terms in the Maryland Uniform
Commercial Code-Secured Transactions, Title 9, Commercial Law Article, Annotated
Code of Maryland, as amended.

            SECTION 1.3. ACQUISITION. The term "Acquisition" shall mean any
acquisition, whether in a single transaction or series of related transactions,
by PAC or any one or more of its Subsidiaries, or any combination thereof, of
(i) all, or substantially all, of the assets, equity or a going business or
division, of any Person, whether through purchase of assets or securities, by
merger or otherwise, (ii) control of at least eighty percent (80%) of the
outstanding securities of an existing corporation ordinarily (and apart from
rights accruing under special circumstances) having the right to vote in the
election of directors, or (iii) control of a greater than eighty percent (80%)
ownership interest in any existing partnership, joint venture or other Person.

            SECTION 1.4. ACQUISITION COSTS. The term "Acquisition Costs" shall
mean, with respect to any Acquisition, the sum (without duplication) of (i) the
amount of cash paid by PAC and its Subsidiaries in connection with such
Acquisition, (ii) the fair market value of all capital stock or other ownership
interests of PAC or any of its Subsidiaries issued or given in connection with
such Acquisition, (iii) the outstanding principal amount of all indebtedness
incurred, assumed or acquired in connection with such Acquisition, (iv) all
additional purchase price amounts in the form of earnouts using pro forma
projections and other contingent obligations assuming satisfaction of the
related contingency, (v) all amounts paid in respect of covenants not to
compete, consulting agreements and other affiliated contracts in connection with
such Acquisition other than bona fide employment and similar agreements not a
part of the allocation of the purchase price, and (vi) the aggregate fair market
value of all other consideration given by PAC and its Subsidiaries in connection
with such Acquisition. All capital expenditures made or projected to be incurred
by PAC or its Subsidiaries within ninety (90) days in connection with any
Acquisition shall be included in the

                                      -3-

<PAGE>


Acquisition Costs attributable to such Acquisition, except for expenditures for
signage and other equipment to standardize the acquired Person's business
activities with the Borrowers.

            SECTION 1.5. ACQUISITION LINE OF CREDIT. The term "Acquisition Line
of Credit" shall mean those Advances, readvances and other credit accommodations
and Loans provided under this Agreement for Acquisitions, as evidenced by the
Acquisition Line of Credit Note, made from time to time in accordance with the
terms of this Agreement.

            SECTION 1.6.  ACQUISITION LINE OF CREDIT NOTE.  The term
"Acquisition Line of Credit Note" shall mean the Consolidated Note.

            SECTION 1.7. ADVANCES. The term "Advances" shall mean each credit to
PAC's Deposit Account based on a request from PAC for borrowing as provided in
Article II herein, or any extension of credit under the Line of Credit or
Acquisition Line of Credit as herein provided, regardless of whether a specific
request has been made therefor.

            SECTION 1.8. AFFILIATE. The term "Affiliate" shall mean any
corporation, including all of the Subsidiaries, partnership, limited liability
company, limited liability partnership or other Person of which more than fifty
percent (50%) of the legal or beneficial ownership interests are held, directly
or indirectly, by PAC or any other Borrower, or which is otherwise controlled,
directly or indirectly, through one or more intermediaries, or both, by PAC.

            SECTION 1.9. AGENT. The term "Agent" shall mean PAC as exclusive
agent for all of the Subsidiaries to act for and on behalf of each and all of
them, individually and collectively, to request Advances, receive notices,
accept service of process and take all actions deemed necessary in connection
with this Agreement, the Loan and the Notes.

            SECTION 1.10. AGREEMENT. The term "Agreement" shall mean this Loan
and Security Agreement, as amended, restated, extended or modified from time to
time, together with all attachments and exhibits hereto or thereto.

            SECTION 1.10A. ADJUSTED EBITDA. The term "Adjusted EBITDA" shall
mean as of the end of each fiscal quarter, the consolidated EBITDA of all
Borrowers less any net increase during such fiscal quarter in income
attributable to any receivable, royalty or deposit which is over 90 days past
due (the "Past Due Items"), any franchise, area subfranchise or master license
fees or any other curent year revenue financed by notes or other instruments and
not otherwise included in the Past Due Items, and any other non-cash revenue
items reflected in Consolidated Net Income, however, the amount of the current
bad debt expense and other agreed upon adjustments shall be added to
Consolidated Net Income provided such amount does not exceed the amount of Past
Due Items for such period. For purposes of

                                      -4-

<PAGE>


computing EBITDA for the fiscal quarters ending December 31, 1996, March 31,
1997, June 30, 1997, September 30, 1997, and December 31, 1997, there shall be
an assumed EBITDA $1,000,000 for each of such quarters, except that when PAC
submits a 10Q report to the Securities and Exchange Commission for the quarterly
periods ending September 30, 1997 and December 31, 1997, then the EBITDA as of
the end of such fiscal quarters shall be the actual combined EBITDA of the
Borrowers resulting from their respective operations as of the quarter ending
September 30, 1997, and the EBITDA of the Borrowers as of the quarter ending
December 31, 1997 reflecting operations both prior to and after the Combination,
and the financial information so reported shall be utilized to compute Adjusted
EBITDA for such quarterly periods.

            SECTION 1.11. ANNUALIZED ADJUSTED EBITDA. The term "Annualized
Adjusted EBITDA" shall mean with respect to the Borrowers, on a consolidated
basis and as of the end of each fiscal quarter, the sum of Adjusted EBITDA for
the immediately preceding four fiscal quarters; plus the trailing twelve-month
Adjusted EBITDA of any acquired Subsidiary which becomes a Borrower so long as
the computation of such trailing Adjusted EBITDA can be determined to the Bank's
satisfaction from audited financial statements or other information deemed
reliable by the Bank.

            SECTION 1.12. ANNUALIZED ADJUSTED EBITDAR. The term "Annualized
Adjusted EBITDAR" shall mean with respect to the Borrower, on a consolidated
basis and as of the end of each fiscal quarter, the sum of the Annualized
Adjusted EBITDA for the immediately preceding four fiscal quarters, plus Rent
Expense for such period.

            SECTION 1.12A. ANNUALIZED EBITDA. The term "Annualized EBITDA" shall
mean with respect to the Borrowers on a consolidated basis and as of the end of
each fiscal quarter, the sum of EBITDA for such quarter and for the three fiscal
quarters immediately preceding such quarter, as reported in the Forms 10Q and
10K (as applicable) filed by PAC with the Securities and Exchange Commission.

            SECTION 1.12B. ANNUALIZED EBITDAR. The term "Annualized EBITDAR"
shall mean with respect to the Borrowers on a consolidated basis and as of the
end of each fiscal quarter, the sum of the Annualized EBITDA for the period
ending on such date, plus Rent Expense for such four quarters.


                                      -5-

<PAGE>


            SECTION 1.13. APPLICABLE MARGIN. The term "Applicable Margin" shall
mean, at any time with respect to any Loan, the applicable percentage points as
determined under the following matrix with reference to the ratio of Total
Funded Debt to Annualized EBITDA, each for the most recent fiscal quarter then
ended, calculated as provided below:

                                                APPLICABLE       APPLICABLE
RATIO OF TOTAL FUNDED DEBT TO ANNUALIZED          MARGIN           MARGIN
EBITDA FOR THE QUARTER THEN ENDED              (BASE RATE)      (LIBOR RATE)
----------------------------------------       ------------     ------------
Less than or equal to 3.0 to 1.0 but
greater than 2.5 to 1.0                           0.25%             2.00%

Less than or equal to 2.5 to 1.0 but
greater than 2.0 to 1.0                           0.00%             1.75%

Less than or equal to 2.0 to 1.0 but
greater than 1.5 to 1.0                           0.00%             1.50%

Less than or equal to 1.5 to 1.0                  0.00%             1.25%

[NOTE: THE FOREGOING PROVISIONS OF SECTION 1.13, AS AMENDED, SHALL BECOME
EFFECTIVE COMMENCING WITH THE FISCAL QUARTER ENDING JUNE 30, 1998, AND THE
APPLICABLE MARGIN (LIBOR RATE) SHALL BE (A) 1.25% EFFECTIVE AS OF APRIL 1, 1998,
TO (AND INCLUDING) JUNE 30, 1998, AND (B) 1.75% EFFECTIVE AS OF JULY 1, 1998,
UNTIL CHANGED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1.13, AS AMENDED.]

            SECTION 1.14. ASSUMPTION AGREEMENT. The term "Assumption Agreement"
shall mean an agreement in substantially the form attached hereto as Exhibit B
and made a part hereof in which a corporation or other business entity hereafter
acquired, directly or indirectly, or subsequently created, and which otherwise
qualifies as a Subsidiary, agrees to be bound by the terms of this Agreement and
assumes joint and several liability for repayment of the Notes and all other
Obligations.

            SECTION 1.15. AVAILABLE LOAN AMOUNT. The term "Available Loan
Amount" shall mean the maximum Total Funded Debt permitted at any time under
Section 6.17 (i.e., 3 times Annualized Adjusted EBITDA), less the outstanding
principal balance of all Loans, Outstanding Letter of Credit Obligations and
other outstanding Total Funded Debt.

            SECTION 1.16. BASE RATE. The term "Base Rate" shall mean the
interest rate declared in internal publications by the Bank from time to time as
its

                                      -6-

<PAGE>


prime rate, whether or not such rate is otherwise published or announced. The
Base Rate is not necessarily the lowest rate charged by the Bank to borrowers.

            SECTION 1.17. BORROWER. The term "Borrower" or "Borrowers" shall
mean PAC and all of the additional parties identified on the first page of this
Agreement which are Subsidiaries owned and controlled by PAC, and shall also
include such other Persons hereafter qualifying as a Subsidiary which execute
and deliver to the Bank an Assumption Agreement.

            [NOTE NOTWITHSTANDING THE FACT THAT NONE OF PROMOTORA DE FRANQUICIAS
PRAXIS, S.A. DE C.V., A MEXICAN CORPORATION ("PFP"), OR ANY OF THE "PRAXIS
COMPANIES" AS DEFINED IN THAT CERTAIN SUBSCRIPTION AND STOCK PURCHASE AGREEMENT
MADE AS OF MARCH 31, 1998, BY AND AMONG PAC, PAC MEXICO I AND THE STOCKHOLDERS
OF PFP (THE "PFP PURCHASE AGREEMENT," AND ALL OF SUCH ENTITIES, COLLECTIVELY,
THE "NON-BORROWER MEXICAN SUBSIDIARIES") WILL ENTER INTO AN ASSUMPTION AGREEMENT
AND BECOME A PARTY TO THE LOAN AGREEMENT AS A BORROWER THEREUNDER, THE TERMS
"BORROWER" AND "SUBSIDIARY" AS USED IN THE LOAN AGREEMENT SHALL INCLUDE THE
NON-BORROWER MEXICAN SUBSIDIARIES FOR THE FOLLOWING PURPOSES:

            (A) THE DEFINITIONS OF "ADJUSTED EBITDA," "ANNUALIZED ADJUSTED
EBITDA," "CONSOLIDATED LIABILITIES," "CONSOLIDATED NET INCOME," "CONSOLIDATED
TANGIBLE NET WORTH," "EBITDA," "MATERIAL ADVERSE CHANGE" AND "MATERIAL ADVERSE
EFFECT" IN THE LOAN AGREEMENT; PROVIDED, HOWEVER, THAT THE TRAILING TWELVE-MONTH
ADJUSTED EBITDA OF THE NON-BORROWER MEXICAN SUBSIDIARIES WILL ONLY BE INCLUDED
IN ANNUALIZED ADJUSTED EBITDA IF AND SO LONG AS THE COMPUTATION THEREOF CAN BE
DETERMINED TO THE BANK'S SATISFACTION FROM AUDITED FINANCIAL STATEMENTS OR OTHER
INFORMATION DEEMED RELIABLE BY THE BANK.

            (B) THE REPRESENTATIONS AND WARRANTIES OF THE BORROWERS UNDER
SECTIONS 5.1, 5.2, 5.3, 5.4, 5.10, 5.13, 5.15, 5.17, 5.20 AND 5.25 OF THE LOAN
AGREEMENT;

            (C) THE AFFIRMATIVE COVENANTS OF THE BORROWERS CONTAINED IN SECTIONS
6.4, 6.6, 6.7, 6.8, 6.11, 6.12, 6.13, 6.15, 6.16, 6.17, 6.18 AND 6.19 OF THE
LOAN AGREEMENT; PROVIDED, HOWEVER, THAT (A) FOR PURPOSES OF SUCH SECTIONS THE
COVENANT AND AGREEMENT OF THE BORROWERS WHICH ARE PARTIES TO THE LOAN AGREEMENT
SHALL BE TO CAUSE THE NON-BORROWER MEXICAN SUBSIDIARIES TO COMPLY WITH THE
PROVISIONS THEREOF, AND (B) IT IS UNDERSTOOD AND AGREED THAT THE FISCAL YEAR OF
PAC SHALL END ON JUNE 30 OF EACH YEAR;

            (D) THE NEGATIVE COVENANTS OF THE BORROWERS CONTAINED IN SECTIONS
7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.17 AND 7.18 OF
THE LOAN AGREEMENT; PROVIDED, HOWEVER, THAT (A) FOR PURPOSES OF SUCH


                                      -7-

<PAGE>


SECTIONS THE COVENANT AND AGREEMENT OF THE BORROWERS WHICH ARE PARTIES TO THE
LOAN AGREEMENT SHALL BE NOT TO CAUSE OR PERMIT THE NON-BORROWER MEXICAN
SUBSIDIARIES TO VIOLATE ANY OF THE PROVISIONS THEREOF, AND (B) THE CONTINGENT
OBLIGATIONS OF THE NON-BORROWER MEXICAN SUBSIDIARIES IDENTIFIED IN SCHEDULE 7.5
ATTACHED HERETO AND INCORPORATED BY REFERENCE HEREIN SHALL NOT REPRESENT A
VIOLATION OF THE PROVISIONS OF SUBSECTION 7.5 OF THE LOAN AGREEMENT; AND

            (E) THE EVENTS OF DEFAULT UNDER SECTIONS 8.7, 8.8, 8.9, 8.10, 8.11,
8.12 AND 8.13 OF THE LOAN AGREEMENT.]

            SECTION 1.18. BUSINESS DAY. The term "Business Day" shall mean any
day other than a Saturday, Sunday or legal holiday or days on which banking
institutions are authorized or obligated to close under the laws of the United
States or the State of Maryland.

            SECTION 1.19. CLOSING. The term "Closing" shall mean the closing of
the transactions contemplated by this Agreement, including the execution and
delivery of all Loan Documents, the delivery of all documents, certificates or
other required items of the Borrowers hereunder, and the satisfaction of all
conditions to closing (or the waiver thereof) as provided herein. Closing shall
take place at the offices of Miles & Stockbridge, P.C., 10 Light Street,
Baltimore, Maryland 21201 on November 12, 1997, or at such other place or time
as the parties hereto shall mutually agree.

            SECTION 1.20. COLLATERAL. The term "Collateral" shall mean all of
the tangible and intangible property with respect to which the Borrowers have
granted a security interest or lien to the Bank pursuant to the terms of this
Agreement or any of the other Loan Documents.

            SECTION 1.21. COMBINATION. The term "Combination" shall mean the
reorganization and share exchange to be effected by the Borrowers immediately
prior to the Closing, all in accordance with terms of a Plan of Reorganization
and Agreement for Share Exchange Offers dated as of August 27, 1997 by and among
PAC, WE JAC Corporation, Lube Ventures, Inc., Rocky Mountains Ventures, Inc.,
Prema Properties, Ltd., Miracle Industries, Inc., Miracle Partners, Inc., Rocky
Mountain Ventures II, Inc., Ralston Car Wash, Ltd., and KBG, LLC., as amended by
the First Amendment to Plan of Reorganization and Agreement for Share Exchange
Offers dated as of October 17, 1997.

            SECTION 1.22. COMPLIANCE CERTIFICATE. The term "Compliance
Certificate" shall mean the certificate executed by the chief executive officer
or chief financial officer of PAC and delivered to the Bank at the end of each
fiscal quarter indicating the Borrowers' compliance with all financial covenants
contained herein and the absence of any Event of Default, all in the form as
provided in Exhibit A attached hereto.


                                      -8-

<PAGE>


            SECTION 1.23 CONSOLIDATED LIABILITIES. The term "Consolidated
Liabilities" shall mean, on a consolidated basis, the aggregate liabilities of
the Borrowers, less Subordinated Debt.

            SECTION 1.24. CONSOLIDATED NET INCOME. The term "Consolidated Net
Income" shall mean, for any fiscal period, the net income (or loss) of PAC and
its Subsidiaries, on a consolidated basis and excluding intercompany items, for
such quarter, determined in accordance with GAAP, but excluding as income: (a)
gains on the sale, conversion or other disposition of capital assets, (b) gains
on the acquisition, retirement, sale or other disposition of stock or securities
of PAC or any of its Subsidiaries, (c) gains on the collection of life insurance
proceeds, (d) any write-up of any asset, and (e) any other gain or credit of an
extraordinary nature.

            SECTION 1.24A. CONSOLIDATED NOTE. The term "Consolidated Note" shall
mean the Consolidated, Amended and Restated Revolving and Acquisition Line of
Credit Note dated May 12, 1998, executed by the Borrowers as obligors, in the
principal amount of Twenty-Five Million Dollars ($25,000,000) and payable to the
order of the Bank, and any and all substitutions, extensions, renewals,
amendments, restatements, modifications or replacements thereof.

            SECTION 1.25. CONSOLIDATED TANGIBLE NET WORTH. The term
"Consolidated Tangible Net Worth" shall mean, on a consolidated basis, the
aggregate amount of Borrowers' total assets, exclusive of goodwill, trademarks,
trade names, licenses and such other assets as Bank may determine from time to
time are properly classified as intangible assets, less Consolidated
Liabilities, plus Bank-approved Subordinated Debt, if any.

            SECTION 1.26. DEPOSIT ACCOUNT. The term "Deposit Account" shall mean
PAC's deposit account(s) established and maintained with the Bank for the
benefit of itself and all other Borrowers, or any substitute or additional
account(s), to be utilized as the means of advancing funds under the Line of
Credit or Acquisition Line of Credit.

            SECTION 1.26A.  DOMESTIC ACQUISITION.  The term "Domestic
Acquisition" shall mean any Acquisition which (a) is not a Permitted
Acquisition, and (b) is not a Foreign Acquisition.

            SECTION 1.27. EBITDA. The term "EBITDA" shall mean, with respect to
PAC and its Subsidiaries, on a consolidated basis as of the last day of any
fiscal quarter, the aggregate of (a) Consolidated Net Income for the immediately
preceding fiscal quarter then ended, plus (b) the sum of interest, taxes.
depreciation and amortization (to the extent taken into the calculation of
Consolidated Net Income for such period).


                                      -9-

<PAGE>


            SECTION 1.28.  ERISA.  The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended, and all regulations or
rulings promulgated thereunder.

            SECTION 1.29. EVENT OF DEFAULT. The term "Event of Default" shall
mean the events constituting defaults under this Agreement as set forth in
Article VIII hereof.

            SECTION 1.29A. FOREIGN ACQUISITION. The term "Foreign Acquisition"
shall mean any Acquisition in which the assets or equity interests to be
acquired are of a Person (a) which is organized under the laws of any
jurisdiction other than a state of the United States of America (including the
District of Columbia), or (b) which has more than fifty percent of the value of
its assets located outside of the United States of America.

            SECTION 1.30. TOTAL FUNDED DEBT/ANNUALIZED EBITDA RATIO. The term
"Total Funded Debt/Annualized EBITDA Ratio" shall mean, on a consolidated basis,
as of the end of each fiscal quarter, the ratio of Total Funded Debt to
Annualized EBITDA.

            SECTION 1.31. GOVERNING DOCUMENTS. The term "Governing Documents"
shall mean the articles of incorporation, certificate of incorporation, charter
or other organizational instrument of a corporation, the articles of
organization and operating agreement of a limited liability company, a
partnership or joint venture agreement of any partnership, limited liability
partnership or joint venture, and the by-laws or other rules for the governance
of any such Person.

            SECTION 1.32. LAWS. The term "Laws" shall mean all ordinances,
statutes, rules, regulations, orders, injunctions, writs or decrees of any
government or political subdivision or agency thereof, or any court or similar
authority established by any thereof.

            SECTION 1.33. LETTER OF CREDIT. The term "Letter of Credit" shall
mean any standby or commercial letter of credit which the Bank may, but shall
not be obligated to, now or hereafter issue for the account of a Borrower, and
the term "Outstanding Letter of Credit Obligations" shall mean the aggregate
stated amount of all Letters of Credit at any time outstanding. The issuance of
any Letter of Credit shall be upon such terms and conditions as the Bank may
from time to time reasonably determine, and the terms of any letter of credit
application or other agreement between the Borrower and the Bank in connection
with any Letter of Credit shall govern and control any inconsistent terms
provided herein. The Borrower shall pay any customary or standard costs or fees
imposed by the Bank in connection with the issuance of any Letter of Credit.

            SECTION 1.34. LIBOR RATE. The term, "LIBOR Rate" means a per annum
rate of interest, as determined by the Bank in its sole discretion and


                                      -10-

<PAGE>


changed as of the first day of each month during the term of this Agreement,
equal to the London Interbank Offered Rate (adjusted to reflect the cost of
insurance premiums and reserve requirements as they exist from time to time)
published by Bloomberg or Dow Jones-Telerate, as BBA LIBOR on page 3750 (or by
Reuters Monitor Money Rates Service (LIBO page), if Bloomberg or Dow
Jones-Telerate is not available), or such other page as may replace that page on
that service for the purpose of displaying rates or prices comparable to that
rate (rounded upwards, if necessary, to the next higher 1/100%), for deposits in
U.S. dollars on the first day of each such month, for a period of thirty (30)
days (an "Interest Period"). If more than one such rate appears on such page or
its replacement, LIBOR Rate shall be the arithmetic mean of such rates. In the
event the first day of any such month is not a Business Day, the applicable
LIBOR Rate shall be the rate in effect on the immediately preceding Business
Day.

            SECTION 1.35. LINE OF CREDIT. The term "Line of Credit" shall mean
those Advances, readvances and other credit accommodations and Loans provided
under this Agreement for working capital and other ordinary course working
capital purposes, as evidenced by the Line of Credit Note, made from time to
time in accordance with the terms of this Agreement.

            SECTION 1.36.  LINE OF CREDIT NOTE.  The term "Line of Credit
Note" shall mean the Consolidated Note.

            SECTION 1.37. LIQUIDATION COSTS. The term "Liquidation Costs" shall
mean any and all costs and expenses (including reasonable attorneys' fees and
legal expenses) which are incurred by or on behalf of the Bank (a) to enforce
payment of any of the Obligations, (b) to enforce payment of any Receivable
following the occurrence of an Event of Default, whether as against an Account
Debtor, the Borrowers or any surety of any Account Debtor or of any of the
Obligations, (c) in the prosecution or defense of any action growing out of or
connected with the Collateral or any of the Bank's rights therein or thereto,
and (d) in connection with the custody or preservation of the Collateral
following the occurrence of an Event of Default, and the preparation for sale,
sale or other disposition of any Collateral.

            SECTION 1.38. LOAN. The term "Loan" or "Loans" shall mean all monies
advanced under the Line of Credit and Acquisition Line of Credit and the Notes,
including future Advances and readvances, whether now existing or hereafter
arising, including any amendments, extensions, modifications thereto or
replacements or substitutions therefor.

            SECTION 1.39. LOAN DOCUMENTS. The term "Loan Documents" shall mean
all documents executed by the Borrowers in connection with the Loan, including,
but not limited to, this Agreement, the Line of Credit Note, the Acquisition
Line of Credit Note, the Trademark Assignment, the Pledge Agreement,


                                      -11-

<PAGE>


appropriate financing statements and continuation statements, or any amendments,
extensions or modifications thereof or thereto.

            SECTION 1.40. MATERIAL ADVERSE CHANGE. The terms "Material Adverse
Change" or "Material Adverse Effect" shall mean, in the good faith opinion of
the Bank, and subject to any applicable cure or grace periods, a material
adverse effect upon, or a material adverse change in, any of (a) the financial
condition, operations, business or properties of PAC and/or its Subsidiaries,
taken as a whole; (b) the ability of PAC and its Subsidiaries taken as a whole
to perform under any Loan Document or any other material contract to which any
of them are parties; (c) the legality, validity or enforceability of any Loan
Document; (d) the perfection or priority of the liens of the Bank granted under
the Loan Documents or the rights and remedies of the Bank under the Loan
Documents; or (e) the condition or value of any material portion of the
Collateral.

            SECTION 1.41. MATURITY. The term "Maturity" shall mean November 1,
2000, the date on which all Loans and Obligations, all accrued interest, and all
other fees, costs and expenses provided for herein, in the Notes or the other
Loan Documents shall be due and payable, in full, or such earlier date upon
acceleration as provided herein or in the Notes.

            SECTION 1.41A. MAXIMUM LOAN AMOUNT. The term "Maximum Loan Amount"
shall mean Twenty-Five Million Dollars ($25,000,000) minus the amount of the
Outstanding Letter of Credit Obligations.

            SECTION 1.42.  NOTES.  The term "Notes" shall mean the Consolidated
Note.

            SECTION 1.43. OBLIGATIONS. The terms "Obligation" or "Obligations"
shall mean any joint or several obligation of payment or performance by the
Borrowers owing to the Bank, including: (a) any and all sums due to the Bank
under the Loan or otherwise under the terms of this Agreement, the Line of
Credit Note, the Acquisition Line of Credit Note and the Loan Documents; (b) any
and all sums advanced by the Bank to preserve or protect the Collateral and the
value of the Collateral or to preserve, protect, or perfect the Bank's security
interest in the Collateral; (c) Outstanding Letter of Credit Obligations; (d) in
the event of any proceeding to enforce the collection of the Obligations or any
of them, the reasonable expenses of retaking, holding, preparing for sale,
selling or otherwise disposing of or realizing on the Collateral, or of any
exercise by the Bank of the Bank's rights upon the occurrence of an Event of
Default, together with reasonable attorneys' fees, expenses of collection, and
court costs as provided in the Loan Documents; (e) the Liquidation Costs; and
(f) any other indebtedness, overdraft or liability of the Borrowers to the Bank,
whether direct or indirect, joint or several, absolute or contingent, now
existing or hereafter arising.


                                      -12-

<PAGE>


            SECTION 1.44. PERMITTED ACQUISITION. The term "Permitted
Acquisition" shall mean an Acquisition with respect to which the following
conditions are satisfied: (i) the Acquisition Costs of a single transaction
shall not exceed $2,000,000, and the Acquisition Costs of a single transaction
when aggregated with the Acquisition Costs of all other Permitted Acquisitions
in any fiscal year of the Borrowers shall not exceed $6,000,000; (ii) the assets
acquired, or the business of the Person whose stock or ownership interests are
acquired, shall be primarily within the line of business presently conducted by
the Subsidiaries (i.e., the repair and maintenance of motor vehicles and
products, goods or services related thereto); (iii) those Acquisitions that are
structured as asset acquisitions shall be for an entire business, division,
facility, operation or product line of such acquired Person; and (iv) those
Acquisitions that are structured as stock or equity acquisitions shall be
effected through a purchase of no less than eighty percent (80%) of the capital
stock or equity interests of such Person by PAC or a Subsidiary or through a
merger between such Person and a newly-formed direct subsidiary of PAC or a
Subsidiary, as the case may be, so that after giving effect to such merger
eighty percent (80%) of the capital stock or equity interests of the surviving
corporation of such merger is owned by PAC or a Subsidiary. The Acquisition of
Worldwide Drying Systems, Inc. shall constitute a Permitted Acquisition (and the
Acquisition Costs thereof shall not be included in computing the $6,000,000
aggregate limitation stated above) so long as (a) the Acquisition Cost is
approximately $2,700,000, (b) no more than $1,600,000 is advanced as an
Acquisition Loan, (c) closing shall occur within sixty (60) days of the Closing
of the Loans, (d) the Acquisition shall generally be structured as described in
a letter of intent between Worldwide Drying Systems, Inc. and PAC, and (e) no
material event or occurrence, or series of events or occurrences, shall have
happened which would materially affect the projections used by PAC to evaluate
the Acquisition. Notwithstanding the foregoing, in no event shall any Foreign
Acquisition be a Permitted Acquisition.

SECTION 1.45. PERMITTED LIENS. The term "Permitted Liens" shall mean (a) liens
or security interests in favor of the Bank; (b) existing liens described in
Schedule "A" attached hereto and incorporated herein by this reference
(including the "Grimaud Lien" as identified in Exhibit "A"); (c) liens arising
or created in the future with the prior written consent of the Bank or as
otherwise permitted herein; and (d) purchase money security interests in
Equipment which (i) attach concurrently or within ten (10) days after
acquisition thereof, or (ii) are permitted under Section 2.2.10 hereof..
Permitted Liens shall also include:

                  (i) Liens for current taxes, assessments or other governmental
charges that are not delinquent or remain payable without any penalty or that
are being contested in good faith and with due diligence by appropriate
proceedings, provided that all such liens in the aggregate have no Material
Adverse Effect and, if reasonably requested by the Bank, PAC or such


                                      -13-

<PAGE>


Subsidiary has established reserves reasonably satisfactory to the Bank with
respect thereto;

                  (ii) Easements, rights of way, restrictive covenants,
conditions, zoning restrictions and other similar encumbrances on real estate
that do not materially impair the value of the property to which they relate;

                  (iii) Carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like liens arising in the ordinary course of business that
are not overdue for a period of more than thirty (30) days, or, if overdue for
more than thirty (30) days, (i) which are being contested in good faith and by
appropriate proceedings; (ii) for which adequate reserves in accordance with
GAAP have been established on the books of PAC or appropriate Subsidiary; and
(iii) with respect to which the obligations secured thereby are immaterial;

                  (iv) Pledges or deposits in connection with workers'
compensation insurance, unemployment insurance and like matters;

                  (v) Deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; and

                  (vi) Liens in respect of any writ of execution, attachment,
garnishment, judgment or award in an amount less than $100,000, the time for
appeal or petition for rehearing of which shall not have expired, or in respect
of which an appeal or appropriate proceeding for review is being prosecuted in
good faith and a stay of execution pending such appeal or proceeding for review
has been secured.

            SECTION 1.46. PLEDGE AGREEMENT. The term "Pledge Agreement" shall
mean the Pledge Agreement executed and delivered by PAC and WE JAC Corporation
in connection with the granting of a security interest and pledge in the shares
of stock or equity interests of the Subsidiaries which are Borrowers under this
Agreement as of the date hereof, or which subsequently assume the joint and
several Obligations hereunder by the execution and delivery of an Assumption
Agreement. The term "Pledge Agreement" shall also mean any amendment to such
Pledge Agreement wherein PAC subsequently grants a security interest and pledges
the securities of any additional Subsidiary upon its becoming a Borrower.

            SECTION 1.47. PERSON. The term "Person" shall mean any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, joint venture, limited liability company, limited
liability partnership, court, or government or political subdivision or agency
thereof.


                                      -14-

<PAGE>


            SECTION 1.48. RECEIVABLES. As used herein, the term "Receivables"
shall mean all of the Borrowers' Accounts, Instruments, Documents, Chattel
Paper, General Intangibles, notes, notes receivable, royalties, franchise fees,
reimbursements, commissions, fees, choses in action, and all other rights or
entitlements to moneys or property payable by a Person to PAC or any Subsidiary,
now existing or hereafter created or arising, and all cash and non-cash proceeds
and products thereof, and all rights thereto including rights in rejected,
returned or repossessed goods arising from the sale of or providing of goods or
services by the Borrowers.

            SECTION 1.49. RECORDS. The term "Records" shall mean correspondence,
memoranda, tapes, discs, papers, books and other documents or transcribed
information of any type, whether expressed in ordinary or machine language,
maintained by the Borrowers in connection with the Collateral or their business
operations.

            SECTION 1.50. REGULATION G. The term "Regulation G" shall mean
Regulation G of the Board of Governors of the Federal Reserve System, 12 C.F.R.
Part 207, or any successor or other regulation hereafter promulgated by said
Board to replace the prior Regulation G and having substantially the same
function.

            SECTION 1.51. REGULATION U. The term "Regulation U" shall mean
Regulation U promulgated by the Board of Governors of the Federal Reserve
System, 12 C.F.R. Part 221, or any successor or other regulation hereafter
promulgated by said Board to replace the prior Regulation U and having
substantially the same function.

            SECTION 1.52. REGULATION X. The term "Regulation X" shall mean
Regulation X promulgated by the Board of Governors of the Federal Reserve
System, 12 C.F.R. Part 224, or any successor or other regulation hereafter
promulgated by said Board to replace the prior Regulation X and having
substantially the same function.

            SECTION 1.53. RENT EXPENSE. The term "Rent Expense" shall mean, for
any period, all amounts paid, payable or accrued during such period by the
Borrower and its Subsidiaries on a consolidated basis with respect to all
operating leases of real and personal property, excluding intercompany items.

            SECTION 1.54. SELLER DEBT. The term "Seller Debt" shall mean
indebtedness incurred or assumed in connection with a Permitted Acquisition, or
an Acquisition approved by the Bank, as described in Section 2.2.

            SECTION 1.55. SUBSIDIARY. The term "Subsidiary" or, collectively,
the "Subsidiaries", shall include all of the Borrowers named herein except PAC,
and any other corporate or other entity now or hereafter created, acquired or
organized in which at least eighty percent (80%) or more of the voting control
and legal and


                                      -15-

<PAGE>


beneficial equity interests therein is held, directly or indirectly, by PAC or
any other Borrower, or any combination thereof.

            SECTION 1.56. SUBORDINATED DEBT. The term "Subordinated Debt" shall
mean any and all indebtedness and liabilities of PAC or any other Borrower (a)
which has been subordinated to the Loans and the other Obligations pursuant to a
written agreement (including the express written terms of the subordinated
indebtedness instruments) in form and substance acceptable to the Bank, and (b)
has been incurred pursuant to written agreements in form and substance
acceptable to the Bank and, if required by the Bank, such covenants of any of
the Borrowers contained therein have been incorporated herein as may be required
by the Bank.

            SECTION 1.57. TOTAL FUNDED DEBT. The term "Total Funded Debt" shall
mean (a) the aggregate amount of all interest bearing obligations of the
Borrowers, including, without limitation, monies borrowed, Seller Debt, capital
leases, or any indebtedness secured by any lien, security interest or title
retention device (including, without limitation, any amount owed which is
secured by the Grimaud Lien), minus (b) Subordinated Debt.

            SECTION 1.58. TRADEMARK ASSIGNMENT. The term "Trademark Assignment"
shall mean any of the Trademark Assignments executed, delivered and acknowledged
by PAC and other Subsidiaries, assigning unto the Bank a lien upon such
registered trademarks identified therein. All such Trademark Assignments shall
be in form suitable for recordation in the United States Patent and Trademark
Office.

            SECTION 1.59. UNUSED LINE FEE. The term "Unused Line Fee" shall mean
the amounts determined by subtracting the average daily balance of principal
outstanding under the Line of Credit and Acquisition Line of Credit, from
$25,000,000, and multiplying such sums by the fee percentage calculated from the
following matrix with reference to the Total Funded Debt/Annualized EBITDA ratio
for the most recently completed fiscal quarter for which a Compliance
Certificate has been received and approved by the Bank.


RATIO OF TOTAL FUNDED
DEBT FOR THE QUARTER THEN ENDED TO
ANNUALIZED EBITDA                                            FEE PERCENTAGE
-----------------------------------                          --------------
Less than or equal to 3.0 to 1.0 but greater than 2.5
to 1.0                                                           0.30%

Less than or equal to 2.5 to 1.0                                 0.25%



                                      -16-

<PAGE>


                                   ARTICLE II
                         TERMS AND PURPOSE OF THE LOANS

            SECTION 2.1. THE LINE OF CREDIT LOAN. The Bank agrees to make
Advances to PAC under the Line of Credit during the term of this Agreement in an
amount not to exceed the Line of Credit Portion (as hereinafter defined). PAC
shall from time to time advise the Bank in writing of that portion of the
Maximum Loan Amount which it wishes to have allocated to the Line of Credit (the
"Line of Credit Portion"); provided, however, that in no event shall the Line of
Credit Portion exceed the lesser of (a) the Maximum Loan Amount minus the
aggregate outstanding principal amount of Advances under the Acquisition Line of
Credit, and (b) $11,000,000. The obligation of the Borrowers to repay the
Advances under the Line of Credit shall be evidenced by the Consolidated Note.
Subject to the limitations provided herein, the Borrowers may borrow, repay and
reborrow under the Line of Credit and under the Consolidated Note.

                  SECTION 2.1.1. PURPOSE OF THE LINE OF CREDIT. The proceeds of
the Line of Credit Loan shall be used by the Borrowers for the financing of
Receivables, for other general working capital needs, and for the financing of
capital expenditures; PROVIDED, HOWEVER, that proceeds of the Line of Credit
Loan may also be used to pay accrued interest on, and scheduled installments of
principal with respect to Advances outstanding under, the Acquisition Line of
Credit.

                  SECTION 2.1.2. INTEREST RATE. Advances under the Line of
Credit shall bear interest at the Base Rate or LIBOR Rate, plus the Applicable
Margin, as provided in the Line of Credit Note. Interest shall be calculated
based upon a year of 360 days and the actual number of days elapsed. If the
interest is accruing based on a Base Rate index, the applicable rate of interest
on the Line of Credit shall change immediately and automatically with any change
in the Bank's prime rate. If interest is accruing at a LIBOR Rate index, the
LIBOR Rate shall be determined as of the first day of each month. The Line of
Credit shall be evidenced by, and shall be repaid with interest in accordance
with, the provisions of the Line of Credit Note which shall be duly executed and
delivered by the Borrowers to the Bank on the date hereof, and the terms and
conditions of which are incorporated herein by reference. The date and amount of
each Advance made by the Bank and each payment made by the Borrowers shall be
recorded by the Bank on the books and records of the Bank, but any failure to
record such dates or amounts shall not relieve the Borrowers of their obligation
of repayment hereunder or under the Line of Credit Note.

                  SECTION 2.1.3. LINE OF CREDIT FEES. In addition to interest,
the Borrowers shall pay monthly the Unused Line Fee attributable to the Line of
Credit. The Unused Line Fee shall be payable to the Bank on the first day of
each month.


                                      -17-

<PAGE>


                  SECTION 2.1.4. ADVANCES UNDER THE LINE OF CREDIT. Subject to
compliance by the Borrowers with all of the terms and conditions of this
Agreement, the continued satisfactory financial condition of the Borrowers, the
satisfaction of all conditions precedent to the making of Advances hereunder and
the non-existence of any Event of Default or any event, circumstance, act or
omission which with the giving of notice, the passage of time, or both, would
constitute an Event of Default hereunder, upon the request of PAC the Bank shall
lend or make Advances to PAC from time to time as set forth in this Agreement
and all additional agreements of the parties hereafter made concerning the
Deposit Account and the procedures for obtaining Advances, and all amendments,
modifications or substitutions of any of the foregoing. Subsequent to the date
hereof, Bank and PAC contemplate using an automated system of funding overdrafts
as a means of disbursing Loan proceeds as shall be reflected in further
agreements or documents between PAC and the Bank. Presentment of any instrument
against PAC's Deposit Account at the Bank's offices at a time when collected
funds in such Deposit Account are not sufficient to cover such instrument fully
shall constitute a request by PAC and all other Borrowers for an Advance.

                  SECTION 2.1.5. LIMITATION ON BORROWINGS. Notwithstanding
anything to the contrary contained herein, the Borrowers shall not at any time
allow the outstanding principal balance advanced under the Consolidated Note to
exceed the Maximum Loan Amount.

                  SECTION 2.1.6. REPAYMENT OF THE LINE OF CREDIT. The Borrowers
shall pay accrued interest on the outstanding principal balance of the Line of
Credit on the first day of each month, commencing January 1, 1998. The Borrowers
promise to pay to the order of the Bank all principal, accrued interest, all
Unused Line Fees and other costs and expenses arising under the Line of Credit,
this Agreement and all other Obligations, at Maturity; provided, however, that
(a) if at any time the principal amount outstanding under the Line of Credit
exceeds the Line of Credit Portion, then the Borrowers shall immediately pay
over a sum equal to the amount by which such outstanding principal exceeds the
Line of Credit Portion, plus accrued interest to the date of prepayment, and (b)
upon the occurrence of an Event of Default, subject to any applicable grace or
cure period, the entire outstanding and unpaid principal balance of the Line of
Credit Loan, together with the accrued interest thereon to the date of payment,
shall be immediately due and payable at the option of the Bank. Interest shall
be payable monthly following preparation by the Bank of an interest statement
showing interest and the Unused Line Fee due through the end of the monthly
payment period. In the event interest for the final days of any period are
estimated, PAC's Deposit Account shall be debited or credited, as the case may
be, to reflect actual interest due through the end of such period. The Bank
shall automatically debit the PAC's Deposit Account on the due date of, and in
the amount of, the interest and the Unused Line Fee shown to be due on each
monthly statement.


                                      -18-

<PAGE>


                  SECTION 2.1.7. PREPAYMENT OF THE LINE OF CREDIT. The Borrowers
may prepay the Line of Credit in whole or in part at any time and from time to
time without penalty or additional interest. The Line of Credit may be reduced,
from time to time, to a zero balance without affecting the continuing validity
of this Agreement or the continuing security interest and lien of the Bank in
and to the Collateral.

            SECTION 2.2.  THE ACQUISITION LINE OF CREDIT LOAN.

                  SECTION 2.2.1. THE ACQUISITION LINE OF CREDIT LOAN. The Bank
agrees to make Advances to PAC under the Acquisition Line of Credit during the
term of this Agreement in an aggregate principal amount outstanding at any one
time not to exceed the Maximum Loan Amount minus the Line of Credit Portion
established by PAC from time to time. The obligation of the Borrowers to repay
the Advances under the Acquisition Line of Credit shall be evidenced by the
Consolidated Note. Subject to the limitations provided herein, the Borrowers may
borrow, repay and reborrow hereunder and under the Consolidated Note.

                  SECTION 2.2.2. PURPOSE OF THE ACQUISITION LINE OF CREDIT. The
proceeds of the Acquisition Line of Credit Loan shall be used by PAC or
designated Borrowers for the financing of Permitted Acquisitions and other
Acquisitions approved by the Bank. Notwithstanding the foregoing, following the
conclusion of each quarterly accounting period of PAC, any Advance made during
such quarterly period under the Line of Credit for the purpose of financing
capital expenditures may be reallocated under the Acquisition Line of Credit if
PAC shall request such reallocation in writing within ten (10) Business Days
following the conclusion of such quarterly period. Each requested reallocation
shall be treated as a request for an Advance under the Acquisition Line of
Credit and subject to the repayment provisions of Section 2.2.6 hereof, and to
the extent any reallocation requires that the Line of Credit Portion to be
reduced, such reduction shall occur without the need of a separate request by
PAC therefor.

                  SECTION 2.2.3. INTEREST RATE. Advances under the Acquisition
Line of Credit shall bear interest at the Base Rate or LIBOR Rate, plus the
Applicable Margin, as provided in the Acquisition Line of Credit Note.Interest
shall be calculated based upon a year of 360 days and the actual number of days
elapsed. If the interest is accruing based on a Base Rate index, the applicable
rate of interest on the Acquisition Line of Credit shall change immediately and
automatically with any change in the Base Rate. If interest is accruing at a
LIBOR Rate index, the applicable rate of interest shall be determined as of the
first day of each month. The Acquisition Line of Credit shall be evidenced by,
and shall be repaid with interest in accordance with, the provisions of the
Acquisition Line of Credit Note which shall be duly executed and delivered by
the Borrowers to the Bank on the date hereof, and the terms and conditions of
which are incorporated herein by reference. The date and amount of each Advance
made by the Bank and


                                      -19-

<PAGE>


each payment made by the Borrowers shall be recorded by the Bank on the books
and records of the Bank, but any failure to record such dates or amounts shall
not relieve the Borrowers of their obligation of repayment hereunder or under
the Acquisition Line of Credit Note.

                  SECTION 2.2.4. LINE OF CREDIT FEES. In addition to interest,
the Borrowers shall pay monthly the Unused Line Fee attributable to the
Acquisition Line of Credit. The Unused Line Fee shall be payable to the Bank on
the first day of each month.

                  SECTION 2.2.5. ADVANCES UNDER THE LINE OF CREDIT. Subject to
compliance by the Borrowers with all of the terms and conditions of this
Agreement, including (a) the continued satisfactory financial condition of the
Borrowers, (b) the satisfaction of all conditions precedent to the making of
Advances hereunder, (c) the non-existence of any Event of Default or any event,
circumstance, act or omission which with the giving of notice, the passage of
time, or both, would constitute an Event of Default hereunder, and (d) no Event
of Default would arise upon the consummation of the acquisition. PAC may request
and the Bank may lend or make Advances to PAC from time to time as set forth in
this Agreement.

                  SECTION 2.2.6. REPAYMENT OF THE ACQUISITION LINE OF Credit.
The Borrowers promise to pay to the order of the Bank all principal, accrued
interest, all Unused Line Fees and other costs and expenses arising under the
Acquisition Line of Credit, this Agreement and all other Obligations, at
Maturity. Interest on all outstanding Advances under the Acquisition Line of
Credit Note shall be payable on the first day of each month, commencing January
1, 1998, and the outstanding principal balance of each Advance under the
Acquisition Line of Credit shall be repaid in consecutive equal monthly
principal installments commencing in the month following the month in which such
Advance was made and extending over a term not to exceed sixty (60) months, as
elected by PAC at the time such Advance is requested; provided, however, that
(a) in the absence of any requested repayment term by PAC, the repayment term
shall be sixty (60) months, (b) if at any time the principal amount outstanding
under the Acquisition Line of Credit exceeds the maximum amount permitted under
Section 2.2.1 hereof, then the Borrowers shall immediately pay over a sum equal
to the amount by which such outstanding principal exceeds such amount, plus
accrued interest to the date of prepayment, which shall be applied as a
prepayment of the Advance under the Acquisition Line of Credit most recently
extended, (c) all principal, plus interest and other sums due under the
Acquisition Line of Credit shall be absolutely due and payable at Maturity, and
(d) upon the occurrence of an Event of Default, subject to any applicable grace
or cure period, the entire outstanding and unpaid principal balance of the
Acquisition Line of Credit Loan, together with the accrued interest thereon to
the date of payment, shall be immediately due and payable at the option of the
Bank. No single Advance under the Acquisition Line of Credit shall be in an
amount of less than $25,000. Interest shall be payable monthly following


                                      -20-

<PAGE>


preparation by the Bank of an interest statement showing interest and the Unused
Line Fee due through the end of the monthly payment period. In the event
interest for the final days of any period are estimated, PAC's Deposit Account
shall be debited or credited, as the case may be, to reflect actual interest due
through the end of such period. The Bank shall automatically debit the PAC's
Deposit Account on the due date of, and in the amount of, the interest and the
Unused Line Fee shown to be due on each monthly statement.

                  SECTION 2.2.7. PREPAYMENT OF THE ACQUISITION LINE OF Credit.
The Borrowers may prepay the Acquisition Line of Credit in whole or part at any
time and from time to time without penalty or additional interest. The Line of
Credit may be reduced, from time to time, to a zero balance without affecting
the continuing validity of this Agreement or the continuing security interest
and lien of the Bank in and to the Collateral.

                  SECTION 2.2.8. PROCEDURE FOR PERMITTED ACQUISITIONS. Not less
than two (2) Business Days following any Acquisition purporting to be a
Permitted Acquisition, PAC shall notify the Bank of such Acquisition and provide
a term sheet or other summary description of the material terms thereof. Within
thirty (30) days after the closing of each Permitted Acquisition, PAC shall
deliver or cause to be delivered to the Bank (v) a copy of the fully executed
acquisition agreements, certified as true and complete by an authorized officer
of PAC, (w) copies of Uniform Commercial Code financing statement, judgment,
suit and tax lien searches, demonstrating that the assets of the new Subsidiary
(or the assets being purchased, if applicable) are free and clear of all liens
and security interests, other than Permitted Liens, (x) those Assumption
Agreements, Amendment to Pledge Agreements, resolutions, certificates and
agreements identified in Section 10.15 hereof, (y) the original shares of stock
or other evidences of the equity interests to be pledged (if any), endorsed in
blank or accompanied with executed undated stock powers, or such other evidence
of the perfection of the Bank's security interest therein as the Bank may
reasonably require, and (z) such opinions of counsel to the Borrowers with
respect to the documents identified in clause (x) above, financing statements,
insurance certificates (to the extent not covered by certificates previously
delivered), assignments of trademarks and other documents and agreements as the
Bank may reasonably require.

                  SECTION 2.2.9.  PROCEDURE FOR DOMESTIC AND FOREIGN
ACQUISITIONS.

                        (a)   Any Domestic Acquisition may only be made with
the Bank's written approval. Not less than seven (7) days prior to the Bank
making its decision whether to grant or withhold such approval, PAC shall
deliver to the Bank in writing (i) a detailed description of the material terms
of such Acquisition, (ii) not less than two years of historical financial
statements of the business being acquired in form and substance acceptable to
the Bank (which may, subject to


                                      -21-

<PAGE>


Bank's reasonable discretion, be internally prepared if audited or
accountant-prepared financial statements are not available), (iii) projected
income statements and balance sheets with respect to the business to be acquired
for the one-year period following consummation of the acquisition, (iv) not less
than one year of the most recent tax returns for the business being acquired,
and (v) calculations certified by the chief executive officer or chief financial
officer of PAC that if such Acquisition had been effected on the last day of the
last fiscal quarter of PAC for which financial statements are available, the
Borrowers would have been in compliance with all financial covenants, and that a
good faith projection indicates that the Borrowers will continue to be in
compliance with the financial covenants for the twelve-month fiscal period
following the acquisition; provided, however, that for the purpose of
determining whether the Borrowers would have been in compliance with all
financial covenants as of the last day of the last fiscal quarter of PAC for
which financial statements are available, no credit or other allowance shall be
made for EBITDA of the business being acquired. Prior to (or concurrently with)
the closing of any Domestic Acquisition which has been approved by the Bank, PAC
shall have delivered or caused to have been delivered to the Bank, in form and
substance acceptable to the Bank, each of those items identified in clauses
(v)-(z) of Section 2.2.8 above; provided, however, that if delivery of the items
identified in clause (y) of Section 2.2.8 cannot feasibly be accomplished prior
to (or concurrently with) the closing of any Acquisition, such items may be
provided no later than three (3) Business Days following such Acquisition.

                        (b)   The procedure for making a Foreign Acquisition
shall be identical to the procedure for making a Domestic Acquisition as
provided in Section 2.2.9(a) above except that (i) the Bank shall be given not
less than thirty (30) days prior written notice of each Foreign Acquisition
(which notice shall include the location(s) of the proposed Target and its
assets) prior to making its decision whether to grant or withhold its approval
of such Acquisition, (ii) PAC shall provide or cause to be provided to the Bank
all of the information described in clauses (i)-(v) of Section 2.2.9(a) above
with respect to each Proposed Foreign Acquisition as soon as it becomes
available to PAC, and in any event not less than fifteen (15) days prior to
making the Bank making its decision whether to grant or withhold its approval of
such Acquisition, (iii) to the extent reasonably necessary to avoid material
adverse tax consequences to the Borrowers or any new Subsidiary being formed or
acquired in connection with such Acquisition (the "Foreign Subsidiary"),
notwithstanding the provisions of Section 10.15 hereof, (x) the Foreign
Subsidiary shall not be required to become liable for repayment of the
Obligations or to grant a security interest in any of its properties to secure
the Obligations (but shall for such other purposes as the Bank may prescribe be
considered to be a "Borrower" hereunder), and (y) the Borrowers shall not be
required to pledge all of the shares of stock or other equity interests of the
Foreign Subsidiary, and shall instead cause the lesser of (1) 65% of the
outstanding shares of each class of such stock or other equity interests, or (2)
all of such stock or other equity interests owned by the Borrowers to be pledged
pursuant to a pledge agreement in form and substance


                                      -22-

<PAGE>


acceptable to the Bank, and (iv) the Borrowers shall cause to be delivered to
the Bank, prior to or concurrently with the making of the initial Advance with
respect to such Acquisition, an opinion of counsel practicing under the laws of
the jurisdiction under which the Foreign Subsidiary was formed with respect to
the enforceability of such pledge agreement and the validity and perfection of
the liens and security interests granted pursuant thereto.

                  SECTION 2.2.10. SELLER DEBT. The Bank anticipates that the
Borrowers will use Seller Debt in making Acquisitions. Seller Debt may be
take-back financing of the Seller(s) of the Person being acquired (the
"Target"), or liabilities of such Person which the Borrower intends to assume in
connection with the Acquisition. The Seller Debt shall be permitted in all
Permitted Acquisitions so long as the Seller Debt is unsecured. Notwithstanding
the foregoing, (a) with the prior written approval of the Bank (not to be
unreasonably withheld) the Seller Debt may be secured in whole or in part by a
first priority lien on any real estate being acquired by the Borrowers in such
Acquisition, and (b) Borrowers may assume liabilities of the Target consisting
of purchase money indebtedness secured by a purchase money security interest or
finance lease encumbering Equipment being acquired in such Acquisition if (i)
either (A) such assumed liabilities are accruing interest at a substantially
favorable rate as compared to the rate of interest accruing on the Loans, or (B)
prepayment of such assumed liabilities is either prohibited or would require the
payment of a substantial penalty, and (ii) no Event of Default (and no event
which, with the giving of notice or lapse of time (or both) would be an Event of
Default) shall have occurred and be continuing either immediately prior to or
immediately after such assumption of liabilities. In the case of any other
Acquisitions, the Bank reserves the right to approve, or disapprove, the terms
of any such Acquisition, including specifically, without limitation, the terms
of any contemplated Seller Debt.

            SECTION 2.3.  COMMITMENT FEE.  In addition to the Unused Line
Fees, the Borrower shall pay to the Bank a commitment fee in the amount of
$40,000, payable at Closing.

                                  ARTICLE III
                             SECURITY FOR THE LOANS

            The repayment of the Loans, the satisfaction of the Obligations, and
the full, complete and absolute performance by the Borrower of each of the terms
and conditions of this Agreement, the Line of Credit Note, the Acquisition Line
of Credit Note, the other Loan Documents and all other Obligations, direct or
indirect, owing to the Bank shall be secured by the following:

            SECTION 3.1. GRANT OF SECURITY INTEREST. PAC and each other Borrower
hereby jointly and severally assign to the Bank, all of the Borrowers' right,
title, and interest in and to, and grant to the Bank a continuing first priority


                                      -23-

<PAGE>


lien security interest (subject only to any Permitted Lien) in and to, the
following tangible and intangible assets owned by the Borrowers, wherever
located, whether now owned or hereafter acquired by the Borrowers, together with
all substitutions therefor, and replacements and renewals thereof:

            (a)   Accounts (including all Receivables);
            (b)   Inventory;
            (c)   Chattel Paper;
            (d)   Documents;
            (e)   General Intangibles (including trademarks, tradenames,
                  patents, copyrights and the goodwill associated therewith, and
                  all rights to payments due from franchisees of whatever
                  nature);
            (f)   Instruments;
            (g)   Equipment;
            (h)   Securities (including the capital stock of all Subsidiaries);
                  and
            (i)   All Records relating to or pertaining to any of the above.

In addition to the previously described kinds and types of property of the
Borrowers, the Borrowers hereby assign, transfer and set over to the Bank all of
the Borrowers' right, title and interest in and to, and grant to the Bank a
continuing security interest in all amounts that may be owing at any time and
from time to time by the Bank to the Borrowers in any capacity, including, but
not limited to, any balance or share belonging to any Borrower of any deposit or
other account with the Bank, which security interest shall be independent of and
in addition to any right of set-off which the Bank may possess.

            SECTION 3.2. PROCEEDS AND PRODUCTS. The Bank's security interest
provided for herein shall apply to all cash and non-cash proceeds, including but
not limited to insurance proceeds, and the products of the Collateral.

            SECTION 3.3. PRIORITY OF SECURITY INTERESTS. The security interests
granted by the Borrowers to the Bank pursuant to this Agreement and at the time
of any Advance hereunder shall be a first priority lien security interest in the
Collateral subject to no other security interest or lien except Permitted Liens.
The Collateral shall secure the payment and performance of all Obligations
hereunder.

            SECTION 3.4. REAL ESTATE. The Bank reserves the right to secure the
Loans and Obligations by deeds of trust or mortgages on any real estate, or
interests in real estate, now or hereafter owned by PAC or the Borrowers,
subject to any Permitted Liens. PAC shall reasonably attempt to give written
notice to the Bank at least thirty (30) days in advance of any possible purchase
or acquisition of real estate, or any contemplated Acquisition where the real
estate of the Target is a substantial asset. Such notice shall also provide the
Bank with relevant information as to the value, size, current use and past use
of the real property, and the physical condition of any improvements. No
Borrower shall commence


                                      -24-

<PAGE>


construction of any significant improvement (with a cost in excess of One
Hundred Thousand Dollars ($100,000)), on any real property owned or hereafter
acquired without giving similar notice at least thirty (30) days in advance to
the Bank.

            SECTION 3.5. FUTURE ADVANCES. The security interests granted by the
Borrowers shall secure all current and all future Advances made by the Bank to
the extent such current and future Advances constitute Loans or Obligations, and
the Bank may advance or readvance upon repayment by the Borrowers of all or any
portion of the sums loaned to the Borrowers and any such advancement or
readvancement shall be fully secured by the security interests created by this
Agreement.

            SECTION 3.6. TRADEMARK ASSIGNMENTS. The Borrowers shall assign and
grant a security interest and lien upon all federally registered trademarks,
tradenames, service marks, copyrights, and patents now or hereafter existing,
and applications therefor, including specifically, without limitation, the
trademarks identified in the Trademark Assignments to be executed and delivered
at Closing.

            SECTION 3.7. LANDLORD'S WAIVERS. At the request of the Bank, at any
time and from time to time, PAC and/or any Borrower requested by the Bank shall
provide to the Bank appropriate landlords' waivers, in form and content
satisfactory to the Bank, for the location of PAC's or any other Borrower's
chief executive office where its or their original entry books of account are
maintained, and such other locations as may be determined from time to time by
the Bank, which landlords' waivers shall acknowledge the Bank's priority lien
security interest in the Collateral and shall contain an express subordination
of any rights which the landlord might attempt to assert against such Collateral
to the rights of the Bank.

                                   ARTICLE IV
                              CONDITIONS PRECEDENT

            All duties and obligations of the Bank hereunder are specifically
subject to the full satisfaction of the conditions precedent set forth in this
Article IV as follows:

            SECTION 4.1.  REQUIRED DOCUMENTS.  The Borrowers shall deliver to
the Bank prior to or at Closing hereunder the following:

            (a) A certified (as of the date of the closing) copy of resolutions
of each Borrower (i) authorizing the execution, delivery and performance of the
Loan Documents; and (ii) stating the incumbency and containing the signatures of
the officers of each Borrower executing the Loan Documents;

            (b) A Certificate of Good Standing, as of a current date, issued by
the Secretaries of State or other appropriate governmental authorities of the
states where


                                      -25-

<PAGE>


each Borrower is incorporated or organized, and in which any Borrower is
qualified to do business as a foreign corporation, evidencing the good standing
of each Borrower in the respective jurisdictions;

            (c) A certified copy of the Governing Documents or other
organizational instruments of each Borrower, including all amendments thereto;

            (d) Proof of current insurance coverages required by this Agreement,
including delivery of certificates or duplicate policies as the Bank may direct;

            (e)    Duly executed Line of Credit Note;

            (f)    Duly Executed Acquisition Line of Credit Note;

            (g) Duly executed Financing Statements in form and number suitable
for recordation;

            (h)    Duly executed and acknowledged Trademark Assignment;

            (i) Duly executed Pledge Agreements and delivery of all "Pledged
Securities" as defined therein, duly endorsed in blank;

            (j) Duly executed Landlord's Waivers if requested by the Bank;

            (k) True copies of all leases of properties where the Collateral
(including Records) are maintained;

            (l) An opinion of Borrowers' counsel to and for the benefit of the
Bank as to the due execution, enforceability and validity of the Loan Documents,
in form satisfactory to the Bank and its counsel;

            (m) Payment of the Forty Thousand Dollar ($40,000) commitment fee to
the Bank;

            (n) Resolutions, signature cards and other administrative documents
necessary to establish the Deposit Account(s) and any other bank accounts;

            (o) A listing of all accounts with financial institutions as
provided in Section 6.20;

            (p) The final Form S-1 submitted to the Securities and Exchange
Commission;


            (q) Closing certificates, executed by the chief executive office or
chief financial officer, as to such matters and in such form as requested by the
Bank;


                                      -26-

<PAGE>


            (r) Such other  requirements as are set forth in this Agreement or
in the Loan Documents; and

            (s) Such other items as the Bank may reasonably require.

            SECTION 4.2. COMBINATION AND INITIAL PUBLIC OFFERING. The making of
the Loans and effectiveness of this Agreement are expressly conditioned upon the
satisfactory completion of the Combination and a satisfactory initial public
offering of common stock of PAC which are contemplated to occur immediately
preceding the Closing. If, for any reason, (a) the Combination does not occur in
the manner described to the Bank; or (b) the initial public offering does not
occur or does not raise a net amount of at least Nineteen Million Dollars
($19,000,000) after accounting for issuance costs (including all professional
fees incurred in the initial public offering) to be paid from the proceeds
thereof; or (c) any event or happening occurs in connection with the initial
public offering or the Combination which would have a Material Adverse Effect on
the business to be conducted by PAC and the Subsidiaries, the prospects for
repayment of the Loans, or the quality and character of the Collateral, then the
Bank's obligations hereunder shall cease and become void and there shall exist
no duty on the part of the Bank to make any loans or otherwise perform under
this Agreement or any of the Loan Documents.

            SECTION 4.3. SATISFACTION OF TERMS. At the time of each Advance, or
any readvance or other credit extended hereunder, the Borrowers shall have
complied with all of the terms and conditions hereof, all representations and
warranties shall be true and accurate in all material respects as of such date
(other than changes occurring in the ordinary course of business and not in
violation of this Agreement), and no Event of Default shall have occurred and be
continuing.

            SECTION 4.4. CLOSING. The express conditions of Closing described
above shall be strictly interpreted and no obligation on the part of the Bank
shall arise unless and until all conditions are satisfied or waived, in the sole
discretion of the Bank.

                                   ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

            To induce the Bank to make the Loans and enter into this Agreement,
PAC represents and warrants as to the business and affairs of itself and, to its
knowledge, all Subsidiaries, and each Subsidiary represents and warrants as to
its business and affairs, and all Borrowers acknowledge the Bank's justifiable
reliance upon the accuracy of the matters set forth below as of the date hereof
and at the time of each Advance under the Line of Credit and Acquisition Line of
Credit:


                                      -27-

<PAGE>


            SECTION 5.1. ACCURACY AND COMPLETENESS OF INFORMATION. All
information, documents, reports, statements, financial statements, and data
submitted by or on behalf of the Borrower in connection with the Loan, or in
support thereof, are true, accurate, and complete in all material respects and
contain no knowingly false, incomplete or misleading statements or omit any
material information.

            SECTION 5.2. NON-EXISTENCE OF DEFAULTS, ETC. Except to the extent
disclosed to the Bank by the Borrower, the Borrower is not in material default
with respect to any of its existing indebtedness, and the making and performance
of this Agreement and the Loan Documents will not immediately, or with the
passage of time, the giving of notice, or both: (a) violate the provisions of
any Governing Document of the Borrower, violate any Laws which would impair the
Collateral or the Bank's lien and security interest therein or result in a
material default under any material contract, agreement, or instrument to which
the Borrower is a party or by which the Borrower or its property is bound; or
(b) result in the creation or imposition of any security interest in, or lien or
encumbrance upon, any of the assets of the Borrower, except in favor of the Bank
or the holders of Permitted Liens.

            SECTION 5.3. LITIGATION. Except to the extent disclosed in Schedule
"E" attached hereto, there is no action, suit, investigation, or proceeding
pending or, to the best knowledge and belief of the Borrower, threatened against
the Borrower, which if adversely determined could reasonably be expected to have
a material adverse effect on the Borrower.

            SECTION 5.4. LIABILITIES OR ADVERSE CHANGES. The Borrower has no
direct or contingent material liability or indebtedness, other than such
indebtedness as is secured by a Permitted Lien, which is known to the Borrower
and not previously disclosed to the Bank, nor does the Borrower know of or
expect any Material Adverse Change in the assets, liabilities, properties,
business, or condition, financial or otherwise, of the Borrower.

            SECTION 5.5. TITLE TO COLLATERAL. The Borrower has good and
marketable title to all of the existing Collateral and will have good and
marketable title to all of the Collateral hereafter acquired, subject in each
case to Permitted Liens. The Bank's liens described herein shall constitute
first priority lien security interests, subject to Permitted Liens and except as
otherwise disclosed to the Bank.

            SECTION 5.6. FIRST PRIORITY LIENS. Upon the proper filing of all
financing statements, the Trademark Assignments and other recordings
contemplated herein in the jurisdictions and locations identified by Borrower to
Bank, or, in the case of the Pledge Agreement, the possession by the Bank of
certificates evidencing the Pledged Securities, the Loan Documents are and will
be effective to create in favor of the Bank, a valid and enforceable first
priority perfected security


                                      -28-

<PAGE>


interest in and lien upon all right, title and interest of PAC and its
Subsidiaries in the Collateral described therein, subject only to Permitted
Liens.

            SECTION 5.7.  USE OF LOAN PROCEEDS.  The Borrower shall use the
proceeds of the Loan only for the purposes represented to the Bank and as set
forth in this Agreement.

            SECTION 5.8. STATUS. The Borrower is a corporation or a limited
liability company, as the case may be, validly organized and existing under the
Laws of the state of its incorporation or organization and its operations and
affairs have been effectively and validly commenced. The Borrower has qualified
to do business as a foreign corporation or limited liability company, as the
case may be, in all states where the ownership of its properties or conduct of
its business requires qualification. The Borrower has the power to own its
properties, conduct its business and affairs, and enter into the Loan and
perform the Obligations. The Borrower's entry into the Loan with the Bank has
been validly and effectively approved by its Board of Directors, shareholders,
members or as may be required by its Governing Documents or applicable Law. All
copies of the Governing Documents and corporate resolutions of the Borrower
shown to the Bank are true, accurate, and complete and no action has been taken
in derogation or abrogation thereof. The Borrower has not changed its name, been
the surviving corporation in a merger, acquired any business, or conducted
business under any trade name, except as referenced in Schedule "B" attached
hereto and incorporated herein by this reference. No Borrower has changed the
county and state in which its chief executive office is located within the last
five (5) years.

            SECTION 5.9.  FINANCIAL STATEMENTS.

            (a) PAC has heretofore furnished to Bank copies of financial
statements for Precision Tune Auto Care, Inc. (a Subsidiary of WE JAC
Corporation and a Borrower hereunder) and other Borrowers. The financial
statements have been prepared in accordance with GAAP (subject, with respect to
the unaudited financial statements, to the absence of notes required by GAAP and
to normal year-end audit adjustments) and present fairly the financial position
of such Subsidiaries and the consolidated results of operations of the
Subsidiaries for the periods then ended. Except as fully reflected in the most
recent Financial Statements and the notes thereto, as of the Closing Date, and
taking into account the Loans to be made on the Closing Date and the other
transactions contemplated by the Loan Documents, there will be no material
liabilities or obligations with respect to PAC or any of its Subsidiaries of any
nature whatsoever (whether absolute, contingent or otherwise and whether or not
due). Since the date of the most recent financial statements, there has been no
Material Adverse Change, and no Material Adverse Change is threatened or
reasonably likely to occur. Neither PAC nor any of its Subsidiaries has directly
or indirectly declared, ordered, paid, made or set apart any amounts or


                                      -29-

<PAGE>


property for any dividend, share acquisition or other distribution, or agreed to
do so, except as contemplated in the Combination.

            (b) PAC has prepared, and has heretofore furnished to the Bank
copies of, annual projected balance sheets and statements of income and cash
flows of PAC and its Subsidiaries for the three-year period commencing on the
date set forth therein (the "Projections"). In the opinion of PAC's management,
the assumptions used in preparation of the Projections were reasonable when made
and will be reasonable as of the Closing. The Projections have been prepared in
good faith by the executive and financial personnel of PAC in light of the
historical financial performance of the Subsidiaries and the financial and
operating condition of the Subsidiaries at the time prepared, give effect to the
transactions contemplated by the Loan Documents and, in the opinion of PAC's
management, represent, as of Closing, a reasonable estimate of the future
performance and financial condition of PAC and its Subsidiaries, subject to the
uncertainties and approximations inherent in any projections and without
representation or warranty that such projected performance and financial
condition will actually be achieved.

            SECTION 5.10.  SOLVENCY.  PAC and each of its Subsidiaries is,
and PAC and its Subsidiaries, on a consolidated basis are, (i) solvent, and
(ii) after giving effect to the transactions contemplated hereby, will be
solvent.

            SECTION 5.11. VALIDITY, BINDING NATURE, AND ENFORCEABILITY OF THE
LOAN DOCUMENTS. The Loan Documents executed by the Borrower are the valid and
binding obligations of the Borrower, fully enforceable against the Borrower in
accordance with their terms.

            SECTION 5.12. DEFAULTS UNDER LOAN DOCUMENTS. There is not currently
existing any action, event, or condition which would constitute an Event of
Default on the part of Borrower under this Agreement or of the Borrower under
any other Loan Document, and no action, event or condition has occurred and is
continuing to occur which, with notice or the passage of time, or both, would
constitute a default by the Borrower under any provision of this Agreement or by
the Borrower under any other Loan Document.

            SECTION 5.13. TAXES. The Borrower has: (a) filed all federal, state
and local tax returns and other reports which are required by Law to be filed
prior to the date hereof; (b) paid or caused to be paid all taxes, assessments
and other governmental charges that are due and payable prior to the date
hereof, except where the same are being contested in good faith by appropriate
proceedings with adequate reserves therefor having been set aside; and (c) made
adequate provision for the payment of such taxes, assessments or other charges
accruing but not yet payable. The Borrower has no knowledge of any deficiency or
additional assessment in a materially important amount in connection with any
taxes, assessments or charges not provided for on the Borrower's books of
account or reflected in the Borrower's


                                      -30-

<PAGE>


financial statements, nor is the Borrower under audit by any federal, state or
local tax authority in connection with any material tax obligations.

            SECTION 5.14.  ERISA.

            (a) Schedule "C" lists, as of the Closing, all employee benefit
plans within the meaning of Section 3(3) of ERISA maintained or sponsored by PAC
or, to the knowledge of PAC, any of its Subsidiaries or to which PAC or, to the
knowledge of PAC, any of its Subsidiaries is obligated to contribute (the
"Plans") and separately identifies all Qualified Plans (as defined below) and
all multiemployer plans within the meaning of Section 3(37) of ERISA with
respect to which PAC or, to the knowledge of PAC, any of its Subsidiaries is a
participating employer ("Multiemployer Plan"). PAC will at the request of the
Bank deliver true and correct copies of all such Plans to the Bank.

            (b) To the knowledge of PAC, each such Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Internal Revenue
Code and other federal or state law, including, to the knowledge of PAC, all
requirements under the Internal Revenue Code or ERISA for filing reports (which
are true and correct in all material respects as of the date filed).

            (c) The form of each Plan intended to be qualified under Section
401(a) of the Internal Revenue Code ("Qualified Plan") to the knowledge of PAC
qualifies under Section 401(a) of the Internal Revenue Code, and the trusts
created thereunder are, to the knowledge of PAC, exempt from tax under the
provisions of Section 501(a) of the Internal Revenue Code, and to the knowledge
of PAC nothing has occurred that would cause the loss of such qualification or
tax-exempt status.

            (d) There is no outstanding liability under Title IV of ERISA with
respect to any Plan maintained or sponsored by PAC or, to the knowledge of PAC,
its Subsidiaries (as to which PAC or any of its Subsidiaries is or may be
liable), nor with respect to any Plan to which PAC or, to the knowledge of PAC,
any of its Subsidiaries (wherein PAC or any of its Subsidiaries is or may be
liable) contributes or is obligated to contribute which would have a Material
Adverse Effect.

            (e) To the knowledge of PAC, none of the Qualified Plans subject to
Title IV of ERISA has any unfunded benefit liability as defined in Section
4001(a)(18) of ERISA (as to which PAC or any of its Subsidiaries is or may be
liable) which would have a Material Adverse Effect.

            (f) PAC and, to the knowledge of PAC, its Subsidiaries have complied
in all material respects with the applicable notice and continuation coverage
requirements of Section 4980B of the Internal Revenue Code.

            (g) No event has occurred or is reasonably expected to occur with
respect to any Plan maintained or sponsored by PAC or any of its Subsidiaries or
to


                                      -31-

<PAGE>


which PAC or any of its Subsidiaries is obligated to contribute which would
constitute a "reportable event" within the meaning of Section 4043(c) of ERISA
(excluding a reportable event for which the notice requirement has been waived
by the PBGC) otherwise affect the tax qualification of any Qualified Plans, or
result in a deficiency in any required contributions which would have a Material
Adverse Effect.

            (h) As of the Closing Date, there are no pending or, to the
knowledge of PAC, threatened claims, actions or lawsuits, other than routine
claims for benefits in the usual and ordinary course, asserted or instituted
against (i) any Plan maintained or sponsored by PAC and, to the knowledge of
PAC, its Subsidiaries or their assets, or (ii) any fiduciary with respect to any
Plan for which PAC or, to the knowledge of PAC, any of its Subsidiaries may be
directly or indirectly liable, through indemnification obligations or otherwise
which would have a Material Adverse Effect.

            (i) Neither PAC nor, to the knowledge of PAC, any of its
Subsidiaries has incurred or, to the knowledge of PAC, reasonably expects to
incur (i) any liability (and no event has occurred that, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan or (ii) any
liability under Title IV of ERISA (other than premiums due and not delinquent
under Section 4007 of ERISA) with respect to a Plan which would have a Material
Adverse Effect.

            (j) Neither PAC nor, to the knowledge of PAC, any of its
Subsidiaries has engaged, directly or indirectly, in a nonexempt prohibited
transaction (as defined in Section 4975 of the Internal Revenue Code or Section
406 of ERISA) in connection with any Plan that has a Material Adverse Effect.

            SECTION 5.15. ASSETS FOR CONDUCT OF BUSINESS. PAC and each of its
Subsidiaries possesses adequate assets, licenses, patents, copyrights,
trademarks and trade names necessary to continue to conduct its business
substantially as heretofore conducted without any material conflict with the
rights of other Persons.

            SECTION 5.16. TRADEMARKS. Schedule D sets forth a true and complete
list of all registered patents, trademarks, trade names and copyrights owned by
the Borrower, or for which applications are pending (the "Intellectual
Property"). Each of the federal registrations pertaining to the Intellectual
Property owned by the Borrower is valid and in full force and effect, and all
required filings in connection with such registrations have been properly made
and all required fees have been paid. The Borrower owns, or has the right to use
pursuant to valid and effective agreements, all Intellectual Property and no
claims are pending against the Borrower by any person with respect to the use of
any Intellectual Property or challenging or questioning the validity or
effectiveness of any license or agreement relating to the same, and the current
use by the Borrower of the Intellectual Property does not infringe on the rights
of any third party.


                                      -32-

<PAGE>


            SECTION 5.17. COMPLIANCE WITH LAWS. Except as otherwise disclosed to
the Bank, Borrower has complied in all material respects with all applicable
Laws with respect to: (a) any restrictions, specifications, or other
requirements pertaining to products that the Borrower sells or to the services
it performs; (b) the conduct of its business; and (c) the use, maintenance, and
operation of the real and personal properties owned or leased by it in the
conduct of its business. The Borrower has, and shall continue to, comply with
all laws, ordinances, rules, regulations, guidelines, orders and decrees in
regard to safety and the disposal of toxic wastes and hazardous materials.

            SECTION 5.18. ACCURACY OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty by the Borrower contained herein or in any
certificate or other document furnished by the Borrower pursuant hereto contains
any untrue statement of material fact or omits to state a material fact
necessary to make such representation or warranty not misleading in light of the
circumstances under which it was made.

            SECTION 5.19. CONSENTS, APPROVALS, AND AUTHORIZATIONS. Each consent,
approval or authorization of, or filing, registration or qualification with, any
Person which is required to be obtained or effected by the Borrower in
connection with the execution and delivery of this Agreement and the Loan
Documents, or the undertaking or performance of any obligation hereunder or
thereunder, has been duly obtained or effected.

            SECTION 5.20. TITLE TO ASSETS OTHER THAN COLLATERAL. The Borrower
has good and marketable title to all of its material assets, subject to no
security interest, encumbrance, lien, or claim of any Person other than the
Bank, holders of Permitted Liens and lessors under true operating leases.

            SECTION 5.21. MARGIN SECURITIES. Neither PAC nor any of its
Subsidiaries owns any "margin stock" within the meaning of Regulation U. None of
the proceeds of the Loans will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin stock, maintaining, reducing or retiring
any indebtedness that was originally incurred to purchase or carry margin stock
or for any other purpose that would violate Regulation G, Regulation U,
Regulation T or Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System, as the same may be in effect from time to time.

            SECTION 5.22. PLACE OF BUSINESS. The Borrowers' respective chief
executive offices, principal places of business, and only places of business
where their respective original entry Records are kept, are located at the
address(es) set forth in Schedule "B" attached hereto and incorporated herein by
this reference.

            SECTION 5.23.  ADDITIONAL BUSINESS LOCATIONS. The Borrower
maintains other business locations as set forth in Schedule "B" attached
hereto where Collateral is stored.


                                      -33-

<PAGE>


            SECTION 5.24. OTHER SUBSIDIARIES. As used herein, the term
"Subsidiaries" means those companies (other than PAC) which have executed this
Agreement and assumed the joint and several Obligations hereunder and under the
Notes, and which are, directly or indirectly, owned and controlled by PAC,
whether directly or through an intermediary which is a Subsidiary. The term
"Subsidiaries" may also include additional parties who subsequently execute
Assumption Agreements and become parties to this Agreement and joint and several
obligors under the Notes. PAC may now or hereafter own and/or control other
business entities, and may in the future create, form or acquire other such
subsidiaries which are not now, and will not in the future be, a "Borrower" as
such term is defined and used herein and in the Notes. PAC shall notify the
Bank, in writing, of any such non-borrowing Affiliate hereafter created, formed
or acquired. PAC and all other Borrowers now or hereafter existing represent and
covenant that none of the non-borrowing Affiliates shall receive any direct
benefit from the Loans.

            SECTION 5.25. MATERIAL CONTRACTS AND COMMITMENTS. Except as
previously disclosed in writing to the Bank: (a) the Borrower is not in material
default under any binding Material Contract of any kind; and (b) to the best of
Borrower's knowledge, all parties to any Material Contract binding upon the
Borrower have complied in all material respects with the provisions of such
Material Contract. As used in this Section 5.25, the term "Material Contract"
shall mean any contract or commitment for consideration in excess of Two Hundred
Fifty Thousand Dollars ($250,000).

            SECTION 5.26.  ENVIRONMENTAL MATTERS.

            (a) Except as disclosed in the Phase I Environmental Surveys for
each of the Borrower-owned real properties, copies of which were delivered to
the Bank, (i) no Hazardous Substances are unlawfully stored or otherwise
unlawfully located on the business premises of PAC or its Subsidiaries, and
neither PAC nor any of its Subsidiaries has contaminated, nor to the
Subsidiaries knowledge has any other Person contaminated, any part of the
business premises of PAC or its Subsidiaries, including the groundwater located
thereon and thereunder, with any Hazardous Substance during the ownership,
occupancy or operation thereof by PAC or any of its Subsidiaries; (ii) there
have been no releases of Hazardous Substances in violation of any environmental
Law by PAC or any of its Subsidiaries, or to its Subsidiaries' knowledge by any
other Person, on any real estate previously owned by the Subsidiaries; (iii) to
the Subsidiaries' knowledge, there are no underground storage tanks situated on
the business premises of PAC or its Subsidiaries; and (iv) to the knowledge of
the Subsidiaries, neither PAC nor any of its Subsidiaries has ever sent
Hazardous Substances to a site which, pursuant to any environmental Law, (1) has
been placed on the "National Priorities List" or "CERCLIS List" of hazardous
waste sites (or any similar state list), or (2) which is subject to a claim, an
administrative order or other request to take "removal" or "remedial" action (as
defined under environmental Laws) or to pay for the costs of cleaning up such a
site; and


                                      -34-

<PAGE>


            (b) All activities and operations of PAC and each of its
Subsidiaries comply in all material respects with the requirements of all
applicable environmental Laws of all governmental authorities having
jurisdiction over PAC or any of its Subsidiaries or its properties, and neither
PAC nor any of its Subsidiaries is involved in any suit or proceeding or has
received any written notice from any governmental agency alleging that PAC or
any of its Subsidiaries is a responsible party with respect to a release of
Hazardous Substances or has received written notice of any claims from any
person or entity relating to property damages or personal injuries from exposure
to Hazardous Substances.

            (c) As used herein, "Hazardous Substance" means any substances or
materials (i) that are or become defined as hazardous wastes, hazardous
substances, pollutants, contaminants or toxic substances under any environmental
Law; (ii) that are toxic, explosive, corrosive, flammable, infectious,
radioactive, mutagenic or otherwise hazardous and are or become regulated by any
governmental authority; (iii) the presence of which requires investigation or
remediation under any environmental Law or common law; or (iv) that contain,
without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude
oil, nuclear fuel, natural gas or synthetic gas.

            SECTION 5.27. GRIMAUD LIEN. PAC will perform all obligations which
are secured by the Grimaud Lien in a timely manner, including specifically,
without limitation, the payment of all subfranchisor fees within ten (10) days
of receipt, and in no event shall any payments owing Grimaud and secured by the
Grimaud Lien exceed in the aggregate at any one time the sum of $100,000. PAC
shall notify the Bank in writing of any material disputes, or possible disputes,
promptly upon having actual knowledge of a material dispute, or the possibility
thereof. PAC shall use its best efforts in the ordinary conduct of its business
to (a) avoid any enforcement action of the Grimaud Lien, and (b) terminate the
Grimaud Lien.

            SECTION 5.28. YEAR 2000. All of the material computer software,
computer firmware, computer hardware (whether general or special purpose) and
other similar or related items of automated, computerized and/or software
systems(s) that are used or relied on by Borrower or any Subsidiary in the
conduct of its business will not malfunction, will not cease to function, will
not generate incorrect data, and will not produce incorrect results when
processing, providing and/or receiving (i) date-related data into and between
the twentieth and twenty-first centuries, and (ii) date-related data in
connection with any valid date in the twentieth and twenty-first centuries.

As used above in this Article V, the singular "Borrower" shall mean each
Borrower (except PAC) for itself, and PAC for and on behalf of itself and all
other Borrowers (except representations of PAC on behalf of its Subsidiaries
shall be to PAC's knowledge).


                                      -35-

<PAGE>


                                   ARTICLE VI
                             AFFIRMATIVE COVENANTS

            PAC for itself and all other Borrowers, and each Subsidiary for
itself, covenants and agrees, during the term of this Agreement and while any
Obligations are outstanding and unpaid, to do and perform the following:

            SECTION 6.1.  PAYMENTS.  All Obligations shall be paid in full
when and as due, time being of the essence.

            SECTION 6.2. PERFORMANCE. Except in any instance where a cure period
is applicable or otherwise provided by the Bank, all Obligations shall be fully
and completely performed, when and as required, time being of the essence.

            SECTION 6.3.  PROTECTION OF SECURITY.  The value of the
Collateral shall at all times be protected and preserved.

            SECTION 6.4.  INSURANCE.  The Borrower shall obtain and maintain
the following insurance coverages:

                  SECTION 6.4.1. CASUALTY INSURANCE. The Borrower shall obtain
and maintain during the term of the Loan for all of its assets and properties,
both real, personal, and mixed, including but not limited to the Collateral,
fire and extended coverage casualty insurance. Such insurance shall be written
in amounts satisfactory to the Bank and sufficient to prevent any co-insurance
liability (which amount shall be the full insurable value). The Bank shall be
supplied with a certificate of insurance and/or duplicate originals or copies of
the aforementioned insurance policies and paid receipts evidencing payment of
the premiums due on the same. The aforementioned policies shall be endorsed so
as to make them noncancellable unless thirty (30) days prior notice of
cancellation is provided to the Bank. The Borrower shall give the Bank prompt
notice of any material loss covered by such casualty insurance.

                  SECTION 6.4.2. LIABILITY AND WORKER'S COMPENSATION INSURANCE.
The Borrower shall obtain and maintain during the term of the Loan public
liability and property damage insurance in such amounts, with insurance
companies, and upon policy forms reasonably acceptable to and approved by the
Bank. The Borrower shall obtain and maintain during the term of the Loan,
workers' compensation insurance, in such amounts, with insurance companies, and
in forms reasonably acceptable to and approved by the Bank. The Borrower, on
request, shall supply the Bank with copies of the liability and worker's
compensation insurance policies and receipts evidencing the payment of premiums
due thereon or, alternatively, certificates from the insurance companies
certifying to the existence of policies, summarizing the terms of the policies,
and indicating the payment of premiums due thereon.


                                      -36-

<PAGE>


                  SECTION 6.4.3. OTHER INSURANCE. The Borrower shall also
maintain such other forms of insurance as may be customary or prudent for
businesses of the type carried on by each Borrower or as may be required by the
Bank from time to time as determined in its reasonable discretion.

            SECTION 6.5. COLLECTION OF ACCOUNTS. The Borrower shall collect its
Accounts only in the ordinary course of business unless written permission to
the contrary is obtained from the Bank.

            SECTION 6.6. MAINTENANCE OF EXISTENCE. The Borrower shall take all
necessary actions to preserve its existence, franchises and good standing in its
state of incorporation or organization and in any other state where
qualification as a foreign corporation or organization is required, and shall
comply with all present and future Laws applicable in the operation and conduct
of business, and all material agreements to which it is subject.

            SECTION 6.7. NOTICE OF LITIGATION AND PROCEEDINGS. The Borrower
shall give (a) notice to the Bank within fifteen (15) calendar days of any
litigation or proceeding in which it is a party if an adverse decision (i) would
require it to pay more than Two Hundred Thousand Dollars ($200,000) or deliver
assets the value of which equals or exceeds such sum (whether or not the claim
is considered to be covered by insurance), or (ii) could, when aggregated with
all other litigation in which any Borrower is a party, cause any one or more
Borrowers to pay more than Five Hundred Thousand Dollars ($500,000) if an
adverse decision were rendered; and (b) immediate notice to the Bank of the
institution of any other suit or proceeding which might have a Material Adverse
Effect on the Collateral, the Borrower's operations, financial condition,
property or business.

            SECTION 6.8. PAYMENT OF INDEBTEDNESS TO THIRD PERSONS. The Borrower
shall pay when and as due, or within applicable grace periods, all material
indebtedness due third Persons, except when the amount thereof is being
contested in good faith by appropriate proceedings and with adequate reserves
therefor being set aside by the Borrower.

            SECTION 6.9. NOTICE OF CHANGE OF BUSINESS LOCATION. The Borrower
shall notify the Bank thirty (30) days in advance of: (a) any change in the
location of its existing offices or places of business; (b) the establishment of
any new, or the discontinuance of any existing, place of business; and (c) any
change in or addition to the location of the place where Records are kept.

            SECTION 6.10. PENSION PLANS. The Borrower shall: (a) fund all of its
defined benefit plans within the meaning of Section 3(35) of ERISA in accordance
with, and in amounts not less than required by, the minimum funding standards of
Section 302 of ERISA; (b) furnish the Bank promptly, upon request, with copies
of all reports or other statements filed with the United States Department of
Labor or the Internal Revenue Service with respect to any employee benefit plans
governed by


                                      -37-

<PAGE>


ERISA; and (c) promptly advise the Bank of the occurrence of any "reportable
event" within the meaning of Section 4043(c) of ERISA (excluding a reportable
event for which the notice requirement has been waived by the Pension Benefit
Guarantee Corporation) or a non-exempt "prohibited transaction" within the
meaning of Section 406 of ERISA and Section 4975 of the Internal Revenue Code
with respect to any employee benefit plans governed by ERISA.

            SECTION 6.11. MAINTENANCE OF ASSETS AND PROPERTIES. The Borrower
shall maintain its material assets and property, real, personal, and mixed, in
good condition and repair, normal wear and tear excepted, and shall pay and
discharge or cause to be paid and discharged when due, the cost of repairs to or
maintenance of the same, and shall pay or cause to be paid all rental or
mortgage payments due on any real estate used or owned by the Borrower.

            SECTION 6.12. PAYMENT OF TAXES. The Borrower shall pay or cause to
be paid when and as due, without interest or penalty, all taxes, assessments and
charges or levies imposed upon it or on any of its property or which it is
required to withhold and pay over to any taxing authority or which it must pay
on its income, except where contested in good faith by appropriate proceedings
with adequate reserves therefor having been set aside by it. The Borrower shall
pay or cause to be paid all such taxes, assessments, charges or levies forthwith
whenever foreclosure on any lien that attaches appears imminent (or provide
security therefor).

            SECTION 6.13. FURTHER ASSURANCES AND POWER OF ATTORNEY. The Borrower
agrees to execute such other and further documents, including, without
limitation, promissory notes, security agreements, agreements, financing
statements, continuation statements, and the like as may from time to time in
the reasonable opinion of the Bank be deemed necessary, proper, or convenient,
to perfect, confirm, establish, reestablish, continue, or complete the security
interest in the Collateral and the purposes and intentions of this Agreement as
provided herein, it being the intention of the Borrower to hereby provide a full
and absolute warranty of further assurance to the Bank. Upon the written request
of the Bank that the Borrower execute any such document and the failure of the
Borrower to so execute any such document within ten (10) days, or at any time
and from time to time upon the occurrence and during the continuance of any
Event of Default, as the case may be, the Borrower hereby irrevocably and
automatically appoints the Bank as the Borrower's attorney-in-fact to execute
any such document in the Borrower's name and on the Borrower's behalf and such
power of attorney shall constitute a power of attorney coupled with an interest
and be irrevocable.

            SECTION 6.14. ADVANCEMENTS. If the Borrower should fail to perform
any of the affirmative covenants contained in this Article within any grace or
cure period as herein provided, or if the Borrower should fail to protect or
preserve the Collateral or the status and priority of the security interest of
the Bank in the Collateral, the Bank may make Advances to perform the same on
behalf of the


                                      -38-

<PAGE>


Borrower. Bank shall endeavor to give notice prior to advancements; provided
that failure to give notice shall not affect Borrowers' liability therefor. All
sums so advanced shall be deemed to be an Advance made pursuant to the Line of
Credit and immediately upon advancement become secured by the security interests
created by this Agreement and the terms and provisions of this Agreement and all
of the applicable Loan Documents, and shall become part of the principal amount
owed to the Bank with interest to be assessed at the applicable rate thereon.
The Borrower shall repay on demand all sums so advanced on the Borrower's
behalf, plus any reasonable expenses or costs incurred by the Bank, including
reasonable attorney's fees, with interest thereon at the highest rate provided
for in the applicable Loan Documents from the date of advancement. The
provisions of this Section shall not be construed to prevent the institution of
the rights and remedies of the Bank upon the occurrence of an Event of Default
by the Borrower. The contrary notwithstanding, the authorization contained in
this Section shall impose no duty or obligation on the Bank to perform any
action or make any Advance on behalf of the Borrower and is for the sole benefit
and protection of the Bank.

            SECTION 6.15. MAINTAIN RECORDS AND MAKE AVAILABLE TO BANK FOR
INSPECTION. The Borrower shall maintain Records pertaining to the Collateral and
the conduct and operation of its business, in such detail, form and scope as the
Bank shall from time to time require. During normal business hours, the Bank and
its duly authorized representatives shall have full access to, and the right to
audit, check, inspect and make abstracts and copies from, such Records. The Bank
or the Bank's agents may enter upon any of the Borrower's premises from time to
time during normal business hours for the purpose of inspecting the Collateral
and any and all such Records. The Bank may send verifications of Receivables to
Account Debtors and may confer and correspond with other creditors of the
Borrower. Upon the occurrence and during the continuation of an Event of
Default, the Bank may enter the business premises and take possession of and
remove any or all such Records, or copies thereof, provided, however, such
Records or copies shall be at all times available to the Borrower. All audits,
examinations and inspections shall be performed at the Borrower's expense.

            SECTION 6.16.  FINANCIAL STATEMENTS.  PAC and the other Borrowers
shall furnish the Bank:

            (a)   INTENTIONALLY OMITTED

            (b)   INTENTIONALLY OMITTED

            (c)   INTENTIONALLY OMITTED

            (d) As soon as practicable and in any event within thirty (30) days
after the close of each fiscal year of PAC, beginning with the current fiscal
year, an annual operating budget and capital budget prepared on a quarterly
basis for PAC


                                      -39-

<PAGE>


and its Subsidiaries on a consolidated basis, in form and detail reasonably
acceptable to the Bank;

            (e) Promptly upon receipt thereof, copies of any management letters
or other reports submitted to PAC or its Subsidiaries by its independent
certified public accountants in connection with its examination of or
preparation of financial statements for PAC or its Subsidiaries.

            (f) Copies of all Forms 10Q and 10K reports filed with the
Securities and Exchange Commission shall be delivered to the Bank within ten
(10) days after the filing thereof, together with a Compliance Certificate of
the chief executive officer or chief financial officer of PAC stating whether
any Event of Default (or any event which, with the giving of notice or passage
of time (or both) would be an Event of Default) has occurred and is continuing,
and if so, all relevant facts with respect thereto, together with those
calculations required to demonstrate compliance with the financial covenants set
forth in Sections 6.17 through 6.19 hereof, inclusive. The Borrower covenants
and agrees to timely file its Forms 10Q and 10K with the Securities and Exchange
Commission.

            (g) Copies of all proxy statements and other material reports or
statements filed with the Securities and Exchange Commission (or the National
Association of Securities Dealers) or any other governmental agency including,
without limitation, the Environmental Protection Agency and the Occupational
Safety and Health Administration shall be delivered to the Bank within ten (10)
days of the date such proxy statements are sent to stockholders or reports or
statements are sent to the governmental or regulatory authority.

            (h) Such other information as the Bank may, from time to time,
request.

            SECTION 6.17. TOTAL FUNDED DEBT/ANNUALIZED EBITDA RATIO. The
Borrowers shall maintain on a consolidated basis as of the end of each fiscal
quarter, commencing with the fiscal quarter ending June 30, 1998, a Total Funded
Debt/Annualized EBITDA Ratio of less than 3.0 to 1.0.

            SECTION 6.18. CONSOLIDATED LIABILITIES TO TANGIBLE NET WORTH RATIO.
The Borrowers shall maintain on a consolidated basis a ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth of (a) less than 3.5 to 1.0 at
all times from June 30, 1998, to (but excluding) December 31, 1998, and (b) less
than 2.5 to 1.0 commencing December 31, 1998, and at all times thereafter.

            SECTION 6.19. ANNUALIZED EBITDAR. The Borrowers shall maintain on a
consolidated basis as of the end of each fiscal quarter, commencing with the
fiscal quarter ending June 30, 1998, a ratio of (a) Annualized EBITDAR to (b)
interest expense, plus Rent Expense, plus current maturities of long-term
indebtedness and capital leases, of greater than 1.5 to 1.0.


                                      -40-

<PAGE>


            SECTION 6.20. DEPOSITORY BANKS. PAC and each Subsidiary shall
maintain its primary depository banking relation with the Bank (unless
unreasonably inconvenient). PAC shall provide the Bank with the names and
addresses of all financial institutions where it and each Subsidiary maintains
any depository, brokerage, investment or other accounts, the account number of
all such accounts, and such information shall be supplemented as depository
accounts are established or discontinued throughout the term of this Agreement.
Notwithstanding the foregoing, Promotora de Franquicias Praxis, S.A. de C.V., a
Mexican corporation ("PFP"), and each of the "Praxis Companies" as defined in
that certain Subscription and Stock Purchase Agreement made as of March 31,
1998, by and among PAC, Precision Auto Care Mexico I, S. de R.L. de C.V. and the
stockholders of PFP (PFP and each of the Praxis Companies, collectively, the
"Non-Borrower Mexican Subsidiaries") shall maintain their primary depository
banking relationships with one of the following financial institutions: Banco
Serfin, Banco Nationale de Mexico or Bancomer.

As used above in this Article VI, the singular "Borrower" shall mean each
Borrower (except PAC) for itself, and PAC for and on behalf of itself and all
other Borrowers.

                                  ARTICLE VII
                               NEGATIVE COVENANTS

            PAC for itself and all other Borrowers, and each other Borrower for
itself, covenants and agrees during the term of this Agreement and while any
Obligations are outstanding and unpaid not to do or to permit to be done or to
occur any of the acts or events set forth below:

            SECTION 7.1. CHANGE OF NAME, MERGER, SALE OF STOCK, ETC. Except as
expressly permitted herein, liquidate, wind up or dissolve, or enter into any
consolidation, merger, or other combination, or agree to do any of the
foregoing; PROVIDED, HOWEVER, that:

            (a) any Subsidiary may merge or consolidate with another Person so
long as (i) the Person surviving such merger or consolidation is a Subsidiary,
and (ii) immediately after giving effect thereto, no Event of Default would
exist; and

            (b) Neither PAC or any Subsidiary shall change its name without ten
(10) days' prior written notice to, and the approval of, the Bank, such approval
not to be unreasonably withheld. No Subsidiary shall issue any additional stock
unless issued to PAC, without the Bank's written consent, such consent not to be
unreasonably withheld.

            SECTION 7.2. SALE OR TRANSFER OF ASSETS. Sell, lease, transfer,
convey or otherwise dispose of any of its assets or property, including, without
limitation, the Collateral, except for (i) sales of inventory in the ordinary
course of business; (ii) the


                                      -41-

<PAGE>


sale of worn out or obsolete equipment for fair market value or the exchange of
used or obsolete equipment for replacement equipment; (iii) the sale of
permitted temporary or overnight investments; (iv) sales or dispositions of
assets or property having a fair market value of less than $250,000 on an annual
aggregate basis; and (v) any sale, lease, transfer or conveyance from one
Subsidiary to another Subsidiary or to PAC, or from PAC to any Subsidiary, for
less than fair consideration, PROVIDED that, immediately after giving effect
thereto, no Event of Default would exist.

            SECTION 7.3. ENCUMBRANCE OF ASSETS. Create, assume or suffer to
exist any deed of trust, mortgage or encumbrance, lien (including a lien of
attachment, judgment or execution) or security interest (including the interest
of a conditional seller of goods), securing a charge or obligation, in or on any
of its property, real or personal, whether now owned or hereafter acquired,
except for Permitted Liens.

            SECTION 7.4. TRANSACTIONS WITH RELATED PARTIES. Except as provided
herein, directly or indirectly make any loan or advance to, or purchase, assume
or guarantee any indebtedness to or from, any of its officers, directors,
stockholders or Affiliates, or subcontract any operations to any Affiliate, or
enter into any other transaction with any Affiliate, except (a) in the ordinary
course of and pursuant to the reasonable requirements of business, and (b) upon
fair and reasonable terms no less favorable to PAC or such Subsidiary than would
apply in a comparable arm's-length transaction with a Person not an Affiliate.

            SECTION 7.5. GUARANTEES. Without the prior written consent of the
Bank, the Borrower shall not become liable, directly or indirectly, as guarantor
or otherwise for any obligation of any other Person, except for (a) the
endorsement of checks, drafts, instruments or commercial paper for deposit or
collection in the ordinary course of business; (b) the guaranty by PAC of
payment and performance with respect to the obligations of the Subsidiaries; and
(c) the guaranty by PAC of ordinary course of business obligations of any
Subsidiary.

            SECTION 7.6. INDEBTEDNESS. The Borrower shall not incur, create,
assume, or permit to exist any indebtedness except: (a) the Loan; (b) existing
secured indebtedness previously disclosed to the Bank; (c) unsecured trade
indebtedness incurred in the ordinary course of business; (d) indebtedness
secured by a Permitted Lien; (e) Subordinated Debt, if approved by the Bank; (g)
intercompany debt among the Borrowers; and (h) Seller Debt.

            SECTION 7.7. CONTINGENT OBLIGATIONS. Create, incur, assume or suffer
to exist any contingent obligation other than: (a) endorsements of instruments
or items of payment for deposit or collection in the ordinary course of
business; (b) contingent obligations incurred pursuant to the Loan Documents;
(c) contingent obligations consisting of the indemnification by PAC or any of
its Subsidiaries of (i) the officers, directors, employees and agents of PAC or
such Subsidiary, to the


                                      -42-

<PAGE>


extent permissible under the Law of the jurisdiction in which PAC or such
Subsidiary is organized, (ii) commercial banks, investment bankers and other
independent consultants or professional advisors pursuant to agreements relating
to the underwriting of PAC's or such Subsidiary's securities or the rendering of
banking or professional services to PAC or such Subsidiary, and (iii) landlords,
licensors, licensees and other parties pursuant to agreements entered into in
the ordinary course of business by PAC or such Subsidiary; (d) customary
indemnification obligations of PAC and its Subsidiaries incurred in connection
with Permitted Acquisitions or other Acquisitions approved by the Bank; (e)
unsecured amounts payable under earnouts and other contingent obligations in a
Permitted Acquisition, or in any other Acquisition if approved by and if
requested by Bank, subordinated on terms acceptable to the Bank, whether or not
earned or matured; (f) contingent obligations consisting of warranties,
indemnities and guaranties regarding copyright and trademark infringement and
other matters approved by the Bank given to customers in the ordinary course of
business consistent with past practices; (g) Letter of Credit Obligations; (h)
guarantees by any Borrower or any Subsidiaries of obligations of PAC or its
subsidiaries under leases permitted hereunder; and (i) guarantees by PAC or any
of its Subsidiaries of any other indebtedness permitted under Section 7.6.

            SECTION 7.8. INVESTMENTS. Directly or indirectly, purchase, own,
invest in or otherwise acquire any capital stock, evidence of indebtedness or
other obligation or security or any interest whatsoever in any other Person, or
make or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any other Person, or become a
partner or joint venturer in any partnership or joint venture, or consummate an
Acquisition, or make a commitment or otherwise agree to do any of the foregoing,
other than: (a) cash investments; (b) loans and advances to employees not to
exceed in the aggregate $100,000; (c) Accounts owing to PAC or any of its
Subsidiaries created in the ordinary course of business and payable in
accordance with customary terms prevailing in the industry; (d) prepaid expenses
incurred in the ordinary course of business; (e) existing investments in
corporations or limited liability companies that are Subsidiaries as of the date
hereof; (f) investments in Subsidiaries and Permitted Acquisitions or other
Acquisitions approved by the Bank; (g) investments in and loans to Persons which
do not constitute Subsidiaries; PROVIDED, HOWEVER, that the aggregate amount of
all investments in and loans to any single Person shall not exceed $100,000 at
any time, and the aggregate amount of all investments in and loans to all
Persons which do not constitute Subsidiaries shall not exceed $200,000 at any
time; (h) investments by any Borrower under any swap agreement or hedging device
relating to the indebtedness incurred under this Agreement; PROVIDED that the
notional amount of all such swap agreements at any time shall not exceed the
maximum principal amount of the Loan at such time; (i) loans or advances from a
Subsidiary to PAC or to another Subsidiary, or from PAC to a Subsidiary, (i)
short-term loans to franchisees from time to time, however, such loans in the
aggregate shall not exceed Four Hundred Thousand Dollars ($400,000) without the
Bank's prior written consent; and (j) creation of a


                                      -43-

<PAGE>


subsidiary for the sole purpose of effecting an Acquisition. A Permitted
Acquisition or an Acquisition approved by the Bank shall not be deemed an
investment violative of this covenant.

            SECTION 7.9. DIVIDENDS. Without the written consent of the Bank, PAC
shall not pay any dividends, nor shall PAC or the Subsidiaries make any
distributions of cash or property to purchase, redeem, retire or otherwise
acquire any shares of stock or equity interests of PAC or the Subsidiaries,
except for stock dividends or stock splits or any other corporate distribution
which does not involve cash or tangible property.

            SECTION 7.10. ACQUISITION OF STOCK OR ASSETS OF THIRD PERSON. Except
as may be otherwise permitted under Section 7.8 hereof, neither PAC nor any of
the Subsidiaries shall acquire stock or equity interests of any other Person, or
the assets of any third person, except for temporary investments permitted in
this Agreement and Permitted Acquisitions or Acquisitions approved by the Bank.

            SECTION 7.11. SALE AND LEASEBACK. Enter into any arrangement with
any Person (other than PAC or any of its Subsidiaries) providing for the leasing
by PAC or any of its Subsidiaries of any asset that has been sold or transferred
by PAC or such Subsidiary to such Person.

            SECTION 7.12. NEW BUSINESS. Engage in any business other than
businesses primarily within the line of business presently conducted by the
Subsidiaries or make any material change in any of its business objectives,
purposes and operations that would be reasonably likely to materially adversely
affect the repayment of the Loans and Obligations.

            SECTION 7.13.  SUBSIDIARIES.  Except as otherwise permitted by
the terms of this Agreement, create or acquire any new Subsidiary.

            SECTION 7.14. TRANSACTIONS AFFECTING THE COLLATERAL. Enter into any
transaction that will have, or could reasonably be expected to have, a
Materially Adverse Effect on the Collateral or the ability of the Borrowers to
repay any of the Loans and Obligations.

            SECTION 7.15. HAZARDOUS WASTES. Permit any Hazardous Substances, the
removal of which is required or the maintenance of which is restricted,
prohibited or penalized by any governmental authority, to be unlawfully brought
onto or located on any real property owned or, to the extent PAC or any of its
Subsidiaries is in possession or control of same, leased by PAC or any of its
Subsidiaries, except in material compliance with all applicable environmental
Laws; and if any Hazardous Substance is brought or found located thereon in
material violation of any applicable environmental Laws, it shall be immediately
removed, with proper disposal, and all required environmental cleanup procedures
shall be diligently undertaken pursuant to all such environmental Laws, and the
obligations hereunder with respect to any


                                      -44-

<PAGE>


such materials brought or located thereon while PAC or any of its Subsidiaries
owned or leased any such real property shall survive any foreclosure of the
deeds of trust or mortgages. EACH BORROWER HEREBY ACKNOWLEDGES THAT ALL
HAZARDOUS WASTE HANDLING PRACTICES AND ENVIRONMENTAL PRACTICES AND PROCEDURES
ARE THE SOLE RESPONSIBILITY OF PAC AND ITS SUBSIDIARIES. PAC FURTHER
ACKNOWLEDGES THAT THE BANK IS NOT AN ENVIRONMENTAL CONSULTANT, ENGINEER,
INVESTIGATOR OR INSPECTOR OF ANY TYPE WHATSOEVER.

            SECTION 7.16. FISCAL YEAR. Change its fiscal year from a
twelve-month period ending June 30; PROVIDED, HOWEVER, that it is understood and
agreed that the fiscal year of any Person subject to the provisions hereof which
is organized under the laws of Mexico shall be a calendar year.

            SECTION 7.17. AMENDMENTS; PREPAYMENTS OF INDEBTEDNESS, ETC. (a)
Amend in any material respect its certificate, or articles of incorporation or
articles of organization without thirty (30) days' prior written notice; or (b)
make any payment or prepayment with respect to any Subordinated Debt, whether
principal, interest or otherwise, which is not permitted under the terms of the
applicable instrument of subordination.

            SECTION 7.18. NO INCONSISTENT TRANSACTIONS OR AGREEMENTS. Enter into
any transaction or agreement, or enter into any amendment or other modification
to any currently existing agreement, that by its terms prohibits or materially
restricts the ability of the Borrowers to pay the principal of or interest on
the Loans and all other Obligations.

            SECTION 7.19. ASSIGNMENT OF THIS AGREEMENT. Borrower may not assign
or attempt to assign this Agreement; provided, however, that PAC shall be
permitted to add additional Subsidiaries as Borrowers hereunder in accordance
with the procedures set forth in Section 10.15, the terms of any Assumption
Agreement and the approval of the Bank.

            SECTION 7.20.  EQUITY OWNERSHIP; CERTIFICATES.  Cause or permit
(a) any of the Persons identified in Exhibit C attached hereto and
incorporated herein to own legal and beneficial title to less than the
interest(s) indicated in such Exhibit in each of the Persons identified
therein, or (b) any of the member interests in PAC Mexican Holding Company
LLC, or any of the partnership or other equity interests in Precision Auto
Care Mexico II, S. de R.L. de C.V. or Precision Auto Care Mexico I, S. de
R.L. de C.V. to be evidenced by any certificate or other writing
("Certificate") unless such Certificate(s) shall have been delivered to the
Bank, together with such executed instruments of transfer and assignment as
the Bank may require.


                                      -45-

<PAGE>


As used above in this Article VII, the singular "Borrower" shall mean each
Borrower (except PAC) for itself, and PAC for and on behalf of itself and all
other Borrowers.

                                  ARTICLE VIII
                               EVENTS OF DEFAULT

            The occurrence of any of the following events or circumstances by or
with respect to PAC or any other Borrower and the expiration of any applicable
cure or grace period shall constitute "Events of Default" hereunder and shall
entitle the Bank to exercise the Bank's rights and remedies under Article IX
hereof:

            SECTION 8.1. FAILURE TO PAY. The failure by the Borrowers to pay any
Obligation, which failure shall not be cured or discharged within a period of
five (5) days after the same becomes due and payable.

            SECTION 8.2. FAILURE TO PERFORM. The failure of the Borrowers to
perform or observe any Obligation (which failure is not specifically enumerated
in this Article VIII as an Event of Default).

            SECTION 8.3. FAILURE OF WARRANTY OR REPRESENTATION TO BE TRUE. The
failure of any representation or warranty provided in this Agreement to be true
and accurate in all material respects, and to continue to be true and accurate
in all material respects at all times while any of the Obligations remain
outstanding or unsatisfied.

            SECTION 8.4.  FAILURE TO PERFORM COVENANTS RELATING TO
COLLATERAL. The failure by the Borrowers to perform or observe any covenant
or agreement with respect to the Collateral.

            SECTION 8.5. FAILURE TO PERFORM OTHER COVENANTS. The failure by the
Borrowers to perform or observe any covenant provided in this Agreement, other
than one specifically enumerated in this Article VIII as an Event of Default.

            SECTION 8.6. DEFAULT UNDER LOAN DOCUMENTS. A breach of or default by
the Borrower under the terms, covenants, and conditions set forth in any other
Loan Document, which is not cured within any applicable cure or grace period.

            SECTION 8.7. JUDGMENTS. The Borrowers shall suffer final judgments
for payment of money aggregating in excess of Two Hundred Fifty Thousand Dollars
($250,000) during any calendar year and shall not discharge the same within a
period of thirty (30) days unless, pending further proceedings, the Borrowers
post a supersedes bond or execution has been effectively stayed.

            SECTION 8.8. LEVY BY SECURED CREDITOR. A secured or judgment
creditor of any Borrower shall obtain possession, or attempt to obtain
possession, of


                                      -46-

<PAGE>


any of the Collateral with a value in excess of Fifty Thousand Dollars ($50,000)
by any means, including, but without limitation, levy, distraint, replevin or
self-help.

            SECTION 8.9. FAILURE TO PAY DEBTS TO THIRD PERSONS. The Borrowers
shall (a) fail to pay any indebtedness of any material nature due any
third-party and such failure shall continue beyond any applicable grace period,
or (b) suffer to exist any other event of default under any agreement binding
upon any Borrower regardless of whether default is actually declared thereunder,
and such other event of default shall continue beyond any applicable grace
period, unless, in either event, the Borrower is diligently contesting such
obligation in good faith and adequate reserves are maintained therefor.

            SECTION 8.10. INVOLUNTARY BANKRUPTCY. The commencement of a
proceeding before a court having jurisdiction against or with respect to any
Borrower in an involuntary case under the federal bankruptcy Laws or any state
insolvency or similar Laws seeking: (a) the liquidation of any Borrower, (b) a
reorganization of any Borrower or the Borrower's business and affairs, or (c)
the appointment of a receiver, liquidator, assignee, custodian, trustee, or
similar official for any Borrower or any of the Borrower's property including,
but not limited to, the Collateral, which proceeding is not dismissed within
thirty (30) days.

            SECTION 8.11. VOLUNTARY BANKRUPTCY. The commencement by any Borrower
of a voluntary case under the federal bankruptcy Laws or any state insolvency or
similar Laws or the consent by any Borrower to the appointment for taking
possession by a receiver, liquidate, assignee, custodian, trustee, or similar
official for the Borrower or any of the Borrower's property including, but not
limited to, the Collateral, or the making by Borrower of any assignment for the
benefit of creditors or the failure by Borrower generally to pay its debts as
they become due either as to the amount of such debts or the number of such
debts.

            SECTION 8.12. TERMINATION OF MATERIAL CONTRACTS. The termination,
cancellation or other cessation during any twelve (12) month period of any
Material Contract or Material Contracts which, in the aggregate, eliminate
future projected revenues in excess of One Million Dollars ($1,000,000), except
for termination arising because of the expiration or termination of a franchise
agreement which has been fully performed.

            SECTION 8.13.  MATERIAL ADVERSE CHANGE.  Any Material Adverse
Change shall occur.

            SECTION 8.14. IMPAIRMENT OF COLLATERAL. Any event or series of
events shall occur which the Bank deems, in good faith and in its sole
discretion, to impair the Collateral or other security for the Loan or otherwise
threaten the value thereof, and which adversely affects the prospects of
repayment of the Loan.


                                      -47-

<PAGE>


            SECTION 8.15. CURE. Notwithstanding anything above contained in this
Article VIII, the Borrowers shall have a period of thirty (30) days from the
occurrence of an Event of Default specified in Sections 6.6, 6.7, 6.9, 6.10,
6.11 and 6.20, and ten (10) days with respect to an Event of Default under
Section 6.16, to cure such default (nothing herein shall be deemed a 10-day
extension to deliver financial information.) Any occurrence constituting an
Event of Default under Section 6.02 which is specifically identified in one of
the foregoing mentioned Sections shall be subject to cure as above provided.
Such cure period may, in the Bank's sole discretion, be extended if such cure is
diligently being pursued and such continuing Event of Default does not
substantially impair the prospects of repayment of the Loans. Nothing herein
contained shall limit the continuing obligation of the Borrower to notify the
Bank of any Event of Default and the Borrower's actions to cure such default
within the period above stated.

In every such event which is not cured within the applicable cure period, if
any, the Bank shall have no further obligation to make any additional Advances
under the Line of Credit or Acquisition Line of Credit, and the Bank may declare
all Obligations immediately due and payable. All such Events of Default and
remedies are in addition to any such rights and remedies set forth in the other
Loan Documents.

                                   ARTICLE IX
                    RIGHTS AND REMEDIES UPON THE OCCURRENCE
                             OF AN EVENT OF DEFAULT

            SECTION 9.1. RIGHTS AND REMEDIES. In addition to all other rights
and remedies provided by Law and the Loan Documents, the Bank, upon the
occurrence of any Event of Default or upon Maturity, and subject to any
applicable grace or cure period, may:

            (a) Refuse to make further Advances or readvances under the Line of
Credit and/or Acquisition Line of Credit;

            (b) Require the Borrowers to deposit all collected Receivables and
cash proceeds of the Collateral, including all Accounts and General Intangibles,
at the Bank or a financial institution designated by the Bank and in an account
or accounts under the exclusive control of the Bank, with all such deposits to
be applied against Obligations outstanding under the Line of Credit Loan or
Acquisition Line of Credit Loan as the Bank determines;

            (c) Accelerate, call due and demand the immediate payment of the
unpaid principal balance of the Loans and Notes, and all accrued interest and
other sums due as of the date of default;

            (d) Foreclose any security interest, lien, assignment, or pledge
created by any Loan Document or this Agreement;


                                      -48-

<PAGE>


            (e) Confess judgment or file suit against the Borrowers, or on any
one of them, on the Notes;

            (f) File suit against the Borrowers or any one of them, on this
Agreement, or under any other Loan Document;

            (g) Seek specific performance or injunctive relief to enforce
performance of the undertakings, duties, and agreements provided in the Loan
Documents, whether or not a remedy at law exists or is adequate;

            (h) Exercise any rights of a secured creditor under the Maryland
Uniform Commercial Code-Secured Transactions, Title 9, Commercial Law Article,
Annotated Code of Maryland, as amended, or any other applicable version of the
Uniform Commercial Code, including the right to take possession of the
Collateral without the use of judicial process and the right to require the
Borrower to assemble the Collateral at such place as the Bank may specify; and

            (i) Set-off any amounts in any account or represented by any
certificate with any Bank in the name of any Borrower or in which any Borrower
has an interest.

            SECTION 9.2. COLLECTION OF RECEIVABLES BY THE BANK. The Bank, at any
time or from time to time following the occurrence of an Event of Default which
is a continuing Event of Default, may terminate the Borrowers' authority to
collect the Receivables and may exercise any or all of the rights contained in
this Section 9.2. Upon such a termination of the Borrowers' authority, the Bank
shall have the right to send a notice of assignment or notice of the Bank's
security interest to any and all Account Debtors or any third party holding or
otherwise concerned with any of the Collateral, and thereafter the Bank shall
have the sole right to collect the Receivables and take possession of the
Collateral and Records relating thereto. All of the Bank's reasonable collection
expenses, including Liquidation Costs, shall be charged to the Borrowers'
account and added to the Obligations. If the Bank is collecting the Receivables
as provided, the Bank shall have the right to receive, endorse, assign and
deliver in the Bank's name or the Borrowers' name any and all checks, drafts and
other instruments for the payment of money relating to the Receivables, and the
Borrowers hereby waive notice of presentment, protest and non-payment of any
instrument so endorsed. If the Bank is collecting the Receivables directly as
above provided, the Borrowers hereby individually and collectively, jointly and
severally, constitute and appoint the Bank and/or the Bank's designee, as the
Borrowers' attorney-in-fact with power with respect to the Receivables: (a) to
endorse the Borrowers' name upon any notes, acceptances, checks, drafts, money
orders or other evidences of payment of Collateral that may come into the Bank's
or designee's possession; (b) to sign the Borrowers' name on any invoice
relating to any of the Receivables, drafts against Account Debtors, assignments
and verifications of Receivables and notices to Account Debtors; (c) to notify
the Post Office authorities to


                                      -49-

<PAGE>


change the address for delivery of mail addressed to the Borrowers; (d) to
receive and open all mail addressed to the Borrowers and accept checks, drafts,
money orders or other evidences of payment, or correspondence relating in any
way to a Receivable or other Collateral (all other items of mail shall be
delivered or made available to PAC); and (e) to do all other acts and things
necessary, proper, or convenient to carry out the terms, conditions, purposes
and intent of this Agreement. All good faith acts of the Bank as such attorney
are hereby ratified and approved, and such attorney or designee shall not be
liable for any acts of omission or commission other than acts of gross
negligence or intentional wrongdoing, nor for any error of judgment or mistake
of fact or law exercised in accordance with this Agreement. The power of
attorney hereby granted, being coupled with an interest, is irrevocable while
any of the Obligations remain unpaid. The Bank or attorney may, without notice
to or consent from the Borrowers, sue upon or otherwise collect, extend the time
of payment of or compromise or settle for cash, credit or otherwise upon any
terms, any of the Receivables or any securities, instruments or insurances
applicable thereto or release any obligor thereon. The Bank or attorney does
not, by anything herein or in any assignment or otherwise, assume any of the
Borrower's obligations under any contract or agreement assigned to the Bank, and
the Bank or attorney shall not be responsible in any way for the performance by
the Borrowers of any of the terms and conditions thereof.

            SECTION 9.3. SALE OF COLLATERAL. In addition to any other remedy
provided herein, upon the occurrence of any Event of Default and subject to any
applicable grace or cure period, the Bank may immediately, without
advertisement, sell in a commercially reasonable manner at public or private
sale or otherwise realize upon the whole or any part of the Collateral, or any
interest which the Borrowers may have therein. After deducting from the proceeds
of sale or other disposition of the Collateral all reasonable expenses,
including all reasonable expenses for legal services, the Bank shall apply such
proceeds toward the satisfaction of the Obligations in any order or manner as
the Bank may determine. Any remainder of the proceeds after satisfaction in full
of the Obligations shall be distributed as required by applicable Law. Written
notice of any sale or other disposition shall be given to PAC and any other
Borrower whose property is being sold at least ten (10) days before the time of
any intended public sale or of the time after which any intended private sale or
other disposition of the Collateral is to be made, which the Borrowers hereby
agree shall be reasonable notice of such sale or other disposition. The
Borrowers agree to assemble, or to cause to be assembled, at the Borrowers' own
expense, the Collateral at such place or places as the Bank shall designate. At
any such sale or other disposition, the Bank may, to the extent permissible
under applicable Law, purchase the whole or any part of the Collateral, free
from any right of redemption on the part of the Borrower, which right is hereby
waived and released. The Borrowers waive the right, if any, to have the
Collateral marshaled upon a sale. Without limiting the generality of any of the
rights and remedies conferred upon the Bank under this Section, the Bank may, to
the full extent permitted by applicable Law: (a) peacefully enter upon the
premises of the


                                      -50-

<PAGE>


Borrowers, exclude therefrom the Borrowers or any entity connected therewith,
and take immediate possession of the Collateral, either personally or by means
of a receiver appointed by a court of competent jurisdiction, using all
necessary permitted force to do so; (b) at the Bank's option, use, operate,
manage, and control the Collateral in any lawful manner (but without any
obligation to continue the business operations of the Borrower); (c) collect and
receive all rents, income, revenue, earnings, issues, and profits therefrom; and
(d) maintain, preserve, alter or remove the Collateral as the Bank may determine
in its sole discretion. The Borrower shall indemnify and save harmless the Bank
and its agents, employees, officers and directors, for any action or inaction
taken in connection therewith, except for acts or omissions of gross negligence
or intentional misconduct.

            SECTION 9.4. CONFESSION OF JUDGMENT. Upon the occurrence of a
default under this Agreement, each of the Borrowers, individually and
collectively, jointly and severally, authorize any attorney admitted to practice
before any court of record in the United States, on behalf of itself and any or
all of the other Borrowers, to then confess judgment before any clerk or judge
against PAC and any or all of the Subsidiaries in the full amount due under this
Agreement, the Notes, and all other Obligations, plus attorneys' fees equal to
fifteen percent (15%) of all amounts due, or $50,000 whichever is less. Such
attorneys' fees shall relate solely to services in connection with the action or
actions relating to the confession of judgment, and shall not diminish or alter
the Borrowers' obligations to pay actual reasonable legal expenses of the Bank
as herein provided and all Liquidation Costs. Each Borrower consents to the
jurisdiction of, and agrees that venue shall be proper in, the Circuit Court for
any County or the City of Baltimore, Maryland, and the United States District
Court for the District of Maryland, if diversity of citizenship or other
jurisdictional basis exists; and if such confession occurs in the Commonwealth
of Virginia, the Borrowers, individually, collectively, jointly and severally,
constitute and appoint Keith M. Northern and Gregory A. Baugher, or any vice
president of Bank their true and lawful attorney-in-fact for them, or in the
name of any one or more of them, to confess judgment in the Circuit Court for
Arlington County, Virginia, or in the Circuit Court for Loudoun County,
Virginia. Each Borrower expressly waives, summons and other process and the
benefit of any and every statute, ordinance or rule of court which may be
lawfully waived conferring upon any Borrower any right or privilege of
exemption, stay of execution, or supplementary proceedings, or other relief from
the enforcement or immediate enforcement of a judgment or related proceedings on
a judgment. The authority and power to appear for and enter judgment against any
Borrower shall not be extinguished by any judgment entered pursuant hereto; such
authority and power may be exercised on one or more occasions from time to time,
in the same or different jurisdictions, as often as the holder shall deem
necessary or advisable until all sums due under this Agreement have been paid in
full.

            SECTION 9.5. ATTORNEYS' FEES AND EXPENSES. The Borrower shall pay
all Liquidation Costs and/or reasonable attorneys' fees and expenses which the
Bank


                                      -51-

<PAGE>


may incur as a result of the happening of an Event of Default, even if judgment
is not obtained or confessed and the Event of Default is cured and the Loan is
placed in good standing.

            SECTION 9.6. REMEDIES CUMULATIVE. The rights and remedies provided
in this Agreement or in the Loan Documents or under applicable Law shall be
cumulative and the exercise of any particular right or remedy shall not preclude
the exercise of any other rights or remedies in addition to, or as an
alternative of, such right or remedy.

            SECTION 9.7. PROOF OF SUMS DUE ON THE LOAN. In any action or
proceeding brought by the Bank to collect the sums owed on the Loan, an
affidavit made under oath by an officer of the Bank setting forth the unpaid
balance of principal, and any accrued interest, default interest, and late
charges owed on the Loan and the Unused Line Fee shall be presumed correct and
shall be admissible in evidence for the purpose of establishing the truth of
what it asserts.

            SECTION 9.8. OBLIGATIONS OF THE BORROWER HEREUNDER Unconditional.
The payment and performance of the Obligations shall be the absolute and
unconditional duty and obligation of the Borrowers, and shall be independent of
any defense or any rights of set-off, recoupment or counterclaim which any
Borrower might otherwise have against the Bank, and the Borrowers shall pay
absolutely net the payments of principal, interest and the Unused Line Fee to be
made on account of the Loan and all other payments required hereunder, free of
any deductions and without abatement, diminution or set-off, and until such time
as the Obligations have been fully paid and performed, the Borrowers: (a) will
not suspend or discontinue any payments provided for herein in the Notes; (b)
will perform and observe all of the Borrowers' other covenants and agreements
contained in the Loan Documents, including without limitation, making all
payments required to be made to the Bank; and (c) will not terminate or attempt
to terminate the Loan Documents for any cause.

                                   ARTICLE X
                          GENERAL CONDITIONS AND TERMS

            SECTION 10.1. LOAN COSTS. The Loan and all transactions relating
thereto and provided for herein shall be made at no cost to the Bank and all
costs including, without limitation, the Bank's counsel fees, recordation costs,
costs of documentary stamps, photocopying expense, appraisals, lien searches,
travel expenses for the Bank's agents, employees, and counsel, and all other
reasonable out-of-pocket expenses shall be paid by the Borrowers, whether
incurred prior to or after closing, such that the subject transactions shall be
cost free to the Bank.

            SECTION 10.2. INCORPORATION. The terms and conditions of the Loan
Documents are incorporated by reference and made a part hereof as if fully set
forth


                                      -52-

<PAGE>


herein. In the event of any inconsistencies between this Agreement and any other
Loan Document, the terms and conditions of this Agreement shall govern and
control.

            SECTION 10.3. WAIVERS. The Bank may at any time or from time to time
waive all or any of its rights under this Agreement or any other Loan Document,
but any waiver or indulgence by the Bank at any time or from time to time shall
not constitute, unless specifically so expressed by the Bank in writing (except
to the extent an express waiver need not be in writing under the provisions of
another Section of this Agreement), a future waiver of performance or exact
performance by the Borrower.

            SECTION 10.4. NO THIRD PARTY BENEFICIARY RIGHTS. No Person not a
party to this Agreement shall have any benefit hereunder nor have third party
beneficiary rights as a result of this Agreement or any other Loan Documents,
nor shall any party be entitled to rely on any actions or in actions of the Bank
or its agents, all of which are done for the sole benefit and protection of the
Bank .

            SECTION 10.5. CONTINUING OBLIGATION OF BORROWERS. The terms,
conditions, and covenants set forth herein and in the Loan Documents shall
survive closing and shall constitute a continuing obligation of the Borrowers
during the course of the transaction contemplated herein. The obligations of the
Borrowers and all Collateral granted under this Agreement shall remain valid and
in effect so long as any Obligation is outstanding, unpaid or unsatisfied
between the Borrowers and the Bank.

            SECTION 10.6. BINDING OBLIGATION. This Agreement shall be binding
upon and inure to the benefit of the Borrowers and their successors and
permitted assigns, and the Bank and its successors and assigns. Notwithstanding
the foregoing, the Bank agrees that in the absence of an Event of Default which
has not been cured (if such Event of Default is subject to cure), this Agreement
shall not be assigned, in whole or in part, without (90) days notice to PAC, and
the Bank shall advise PAC as to the selection of an assignee.

            SECTION 10.7. NOTICES. Any notice required or permitted by or in
connection with this Agreement or any other Loan Document shall be in writing
and made by hand delivery, by certified mail, return receipt requested, postage
prepaid, or by overnight courier for next Business Day delivery, addressed to
the party at the appropriate address set forth below or to such other address as
may be hereafter specified by written notice by any party, and shall be
considered given as of the date of hand delivery, as of three (3) days after the
date of mailing, or the date specified for delivery with an overnight courier
service, independent of the date of actual delivery, as the case may be:


                                      -53-

<PAGE>


            IF TO THE BANK:

            Signet Bank
            4th Floor
            Seven Saint Paul Street
            Baltimore, Maryland 21202
            Attention:  Warren F. Boutilier, Vice President
            Telephone:  (410) 625-6336
            Telefax:    (410) 625-6365

            IF TO PAC (WHICH CONSTITUTES NOTICE TO ALL BORROWERS):

            Precision Auto Care, Inc.
            748 Miller Drive, S.E.
            Leesburg, Virginia  20175
            Attention:  Chief Financial Officer
            Telephone:  (703) 777-9095
            Telefax:    (703) 779-0137

            SECTION 10.8. FINAL AGREEMENT. This Agreement and the Loan Documents
contain the final and entire agreement and understanding of the parties, and any
terms and conditions not set forth in this Agreement or the Loan Documents are
not a part of this Agreement and the understanding of the parties hereof.

            SECTION 10.9. EXTENSIONS. The payment of the Obligations hereunder
may be extended, from time to time, without impairing or otherwise affecting the
liability of the Borrowers, any endorser, guarantor or other party liable
hereunder or under any Loan Document, or the continuing security interest in the
Collateral provided herein.

            SECTION 10.10.  AMENDMENT.  This Agreement may be amended,
modified or altered only in writing signed by the party to be bound by the
amendment, modification or alteration.

            SECTION 10.11.  TIME.  Time is of the essence of this Agreement.

            SECTION 10.12.  DISCLOSURE.  The Bank may disclose financial
information concerning the Borrowers to any other financial institution which
may share, participate or join in the Loan.

            SECTION 10.13. NUMBER, GENDER, AND CAPTIONS. As used herein, the
singular shall include the plural and the plural may refer to only the singular.
The use of any gender shall be applicable to all genders. The captions contained
herein are for purposes of convenience only and are not a part of this
Agreement.


                                      -54-

<PAGE>


            SECTION 10.14. SECURITY AGREEMENT; PHOTOCOPIES SUFFICIENT. This
Agreement shall constitute a security agreement as described in Section
9-105(1)(1) of the Maryland Uniform Commercial Code - Secured Transactions,
Title 9, Commercial Law Article, Annotated Code of Maryland, as amended. A
carbon, photographic, photocopy or other reproduction of this Agreement shall be
sufficient as a financing statement.

            SECTION 10.15. ADDITIONAL BORROWERS AND ASSUMPTION AGREEMENT,
AMENDMENT TO PLEDGE. Subject to the provisions of Section 2.2.9(b) hereof, any
Subsidiary created or acquired by PAC or the Subsidiaries shall join as parties
to this Agreement and assume all Obligations hereunder and under the
Consolidated Note. Any new Borrower shall deliver such additional resolutions,
certificates and agreements as the Bank may from time to time reasonably require
to grant liens or security interests to the Bank or for such other purposes.
Subject to the provisions of Section 2.2.9(b) hereof, contemporaneously with the
execution of an Assumption Agreement, PAC (or a Subsidiary if applicable) shall
execute and deliver to the Bank such written agreements as the Bank may require
pursuant to which PAC (or such Subsidiary) shall pledge and grant a first
priority security interest to the Bank in the shares of stock or other equity
interests of such new Borrower which are held by PAC (or such Subsidiary) to
further secure the Loan and all other Obligations.

            SECTION 10.16. JOINT AND SEVERAL LIABILITY. The Obligations of the
Borrowers hereunder are joint and several. All Persons which hereafter become
Subsidiaries and Borrowers by virtue of executing and delivering an Assumption
Agreement shall assume jointly and severally liability for all Obligations then
existing or thereafter created and arising hereunder and under the Notes. Each
Borrower shall have a right of contribution to obtain reimbursement from each
other Borrower for any payment made by such Borrower in respect of the
Obligations to the extent that such payment exceeds the benefit realized by such
Borrower under the Loan. Any right of contribution among the Borrowers which
arises as a result of payments made in respect of the Obligations under this
Agreement or the other Loan Documents shall be subordinate in all respect to the
Bank's right to receive payment in full of the Obligations. The Borrowers
acknowledge and agree that the right of contribution set forth above shall not
in any event be construed in a manner inconsistent with the joint and several
liability of each of the Borrowers for the repayment of all Obligations. PAC and
each of its Subsidiaries is, and PAC and its Subsidiaries, on a consolidated
basis are, (i) solvent, and (ii) after giving effect to the transactions
contemplated hereby, will be solvent.

            SECTION 10.17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS
AGREEMENT SHALL BE DEEMED TO HAVE BEEN EXECUTED, DELIVERED AND ACCEPTED IN THE
STATE OF MARYLAND AND SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE


                                      -55-

<PAGE>


INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
MARYLAND; PROVIDED THAT EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH
LETTER OF CREDIT OR, IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM
CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO
MATTERS NOT GOVERNED THEREBY, THE INTERNAL LAWS OF THE STATE OF THE DOMICILE OF
THE ISSUING BANK. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED,
THE BORROWERS HEREBY CONSENT TO THE JURISDICTION OF ANY STATE COURT WITHIN
BALTIMORE CITY OF BALTIMORE COUNTY, MARYLAND OR ANY FEDERAL COURT LOCATED WITHIN
THE NORTHERN DISTRICT OF THE STATE OF MARYLAND FOR ANY PROCEEDING INSTITUTED
HEREUNDER OR UNDER ANY OF THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY
PROCEEDING TO WHICH THE BANK AND ANY BORROWER IS A PARTY, INCLUDING ANY ACTIONS
BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BANK OR THE
BORROWER. THE BORROWER IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE
RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER
WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER
VENUE OR FORUM NON CONVENIENCE TO THE CONDUCT OF ANY SUCH PROCEEDING. THE
BORROWERS CONSENT THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED
MAIL DIRECTED TO ANY SUCH BORROWER AT ITS ADDRESS SET FORTH HEREIN, AND SERVICE
SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER
POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.

            10.18. WAIVER OF JURY TRIAL. EACH PARTY HEREBY EXPRESSLY WAIVES ANY
RIGHT TO A TRIAL BY A JURY IN ANY SUIT, ACTION OR PROCEEDING INSTILLED IN
CONNECTION WITH THIS AGREEMENT, THE LOAN OR THE OBLIGATIONS.


                                      -56-

<PAGE>


            IN WITNESS WHEREOF, the Bank and the Borrowers execute and seal this
Agreement on this 12th day of November, 1997, with the specific intention that
this Agreement constitute a document under seal.

WITNESS/ATTEST:                     SIGNET BANK


                                    By:                                (SEAL)
________________________                 _______________________________
                                         Warren F. Boutilier
                                         Vice President


                                    PRECISION AUTO CARE, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                    WE JAC CORPORATION


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                    LUBE VENTURES, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                    ROCKY MOUNTAIN VENTURES, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                      -58-

<PAGE>


                                    ROCKY MOUNTAIN VENTURES II, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                    MIRACLE PARTNERS, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                    RALSTON CAR WASH, LTD.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         Manager


                                    PREMA PROPERTIES, LTD.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         General Manager


                                    MIRACLE INDUSTRIES, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                      -58-

<PAGE>


                                    KBG, LLC


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         Manager


                                    PTW, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                    NATIONAL 60 MINUTE TUNE, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                    HYDRO-SPRAY CAR WASH
                                    EQUIPMENT CO., LTD.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         Authorized Manager


                                    PRECISION TUNE AUTO CARE, INC.


                                    By:                                (SEAL)
________________________                 _______________________________
                                         John F. Ripley
                                         President and CEO


                                      -59-

<PAGE>


                                ACKNOWLEDGMENTS


STATE OF MARYLAND, CITY/COUNTY OF ___________________, TO WIT:

            I HEREBY CERTIFY that on this 12th day of November, 1997, before me,
the undersigned Notary Public, personally appeared Warren F. Boutilier, who
acknowledged himself to be the Vice President of Signet Bank, a Virginia banking
corporation, known to me (or satisfactorily proved) to be the person who
executed the foregoing Loan and Security Agreement and acknowledged that he,
being authorized so to do, executed the same for the purposes therein contained
as the duly authorized Vice President of Signet Bank, by signing the name of
Signet Bank by himself as Vice President.

            IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                    __________________________________
                                    Notary Public


My Commission Expires:


______________________


                                      -60-

<PAGE>


STATE OF ____________, CITY/COUNTY OF _________________, TO WIT:

            I HEREBY CERTIFY that on this 12th day of November, 1997, before me,
the undersigned, a Notary Public of the State aforesaid, personally appeared
John F. Ripley, who acknowledged himself to be the President and CEO of
Precision Auto Care, Inc., a Virginia corporation; WE JAC Corporation, a
Delaware corporation; Lube Ventures, Inc., a Delaware corporation; Rocky
Mountain Ventures, Inc., a Colorado corporation; Rocky Mountain Ventures II,
Inc., a Colorado corporation, Miracle Partners, Inc., a Delaware corporation;
Miracle Industries, Inc., an Ohio corporation; PTW, Inc., a Washington
corporation; National 60 Minute Tune, Inc., a Washington corporation; Precision
Tune Auto Care, Inc. a Virginia corporation; and the Manager of Ralston Car
Wash, Ltd., a Colorado limited liability company; and the General Manager of
Prema Properties, Ltd., an Ohio limited liability company; the Manager of KBG,
LLC, a Colorado limited liability company; the Authorized Manager of Hydro-Spray
Car Wash Equipment Co., Ltd., an Ohio limited liability company; and that he, as
such President and CEO, Manager, General Manager and Authorized Manager being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing the name of each of the corporations and limited liability
companies by himself as President and CEO, Manager, General Manager and
Authorized Manager, respectively.

            IN WITNESS WHEREOF, I hereunto set my hand and official seal.




                                    __________________________________
                                    Notary Public


My Commission Expires:


______________________



                                      -61-