<PAGE>   1
                                                                   Exhibit 10.17







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                                  HOMEMAX, INC.




                       -----------------------------------                     
                                                                               
                                   $12,000,000                                 
                                                                               
                                CREDIT AGREEMENT                               
                                                                               
                          dated as of February 23, 1998                        
                                                                               
                                                                               
                       -----------------------------------                     


                               NATIONSBANK, N.A.,

                                    as Agent

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<PAGE>   2

                                  SCHEDULES


Schedule I            Addresses for Notices
Schedule II           Commitments and Commitment Percentages
Schedule III          Subsidiaries
Schedule IV           Indebtedness
Schedule V            Liens
Schedule VI           Guarantees
Schedule VII          Existing Investments
Schedule VIII         Acquired Land Parcels


                                   EXHIBITS

Exhibit A             Form of Note
Exhibit B             Form of Parent Guarantee
Exhibit C             Form of Subsidiaries Guarantee
Exhibit D             Form of Joinder Agreement
Exhibit E             Form of HM Services Subordination Agreement
Exhibit F             Form of ZN Net Worth Agreement
Exhibit G             Form of Opinion of Frost & Jacobs LLP
Exhibit H             Officer's Certificate of Compliance
Exhibit I             Form of Assignment and Acceptance
Exhibit J             Form of Notice of Borrowing
Exhibit K             Form of Mortgage



<PAGE>   3



<TABLE>
<S>                                                                                          <C>
    SECTION 1.    DEFINITIONS..................................................................1
          1.1     Defined Terms................................................................1

          1.2     Other Definitional Provisions...............................................11

    SECTION 2.    AMOUNT AND TERMS OF COMMITMENTS.............................................12

          2.1     Commitments.................................................................12

          2.2     Procedure for Borrowing.....................................................13

          2.3     Amortization of Loans.......................................................13

          2.4     Use of Proceeds of Loans....................................................13

    SECTION 3.    PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT; FEES AND PAYMENTS..........13

          3.1     Repayment of Loans; Evidence of Indebtedness................................13

          3.2     Agent's Fees................................................................14

          3.3     Optional Prepayments........................................................14

          3.4     Optional Termination or Reduction of Commitments............................14

          3.5     Mandatory Reduction of Commitments and Prepayments..........................15

          3.6     Application of Prepayments..................................................16

          3.7     Prepayment Premium..........................................................17

          3.8     Minimum Amounts and Maximum Number of Notes.................................17

          3.9     Interest Rates and Payment Dates............................................17

          3.10    Computation of Interest and Fees............................................17

          3.11    Pro Rata Treatment and Payments.............................................18

    SECTION 4.    REPRESENTATIONS AND WARRANTIES..............................................19

          4.1     Financial Condition.........................................................19

          4.2     No Change...................................................................20

          4.3     Disclosure..................................................................20

          4.4     Corporate Existence; Compliance with Law....................................20

          4.5     Corporate Power, Authorization, Enforceable Obligations.....................21

          4.6     No Legal Bar................................................................21

          4.7     No Material Litigation......................................................21

          4.8     No Default..................................................................21

          4.9     Ownership of Property; Liens................................................22

          4.10    Intellectual Property.......................................................22
</TABLE>

                                      -ii-
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<TABLE>
<S>                                                                                          <C>
          4.11    No Burdensome Restrictions..................................................22

          4.12    Taxes.......................................................................22

          4.13    Federal Regulations.........................................................23

          4.14    ERISA.......................................................................23

          4.15    Investment Company Act; Other Regulations...................................23

          4.16    Subsidiaries................................................................24  

          4.17    Acquired Land Parcels.......................................................24

          4.18    Environmental Matters.......................................................24

          4.19    Solvency....................................................................25

          4.20    Guarantees..................................................................25

          4.21    Joinder Agreements..........................................................26 

          4.22    Mortgages...................................................................27

          4.23    HM Services Subordination Agreement.........................................27

          4.24    ZN Net Worth Agreement......................................................27

    SECTION 5.    CONDITIONS PRECEDENT........................................................27

          5.1     Conditions to Initial Extensions of Credit..................................27

          5.2     Conditions to Each Extension of Credit......................................29

    SECTION 6.    AFFIRMATIVE COVENANTS.......................................................32

          6.1     Financial Statements........................................................32

          6.2     Certificates; Other Information.............................................32

          6.3     Payment of Obligations......................................................34

          6.4     Conduct of Business and Maintenance of Existence............................34

          6.5     Maintenance of Property; Insurance..........................................34

          6.6     Inspection of Property; Books and Records; Discussions......................35

          6.7     Notices.....................................................................35
                                                                                                
          6.8     Environmental Laws..........................................................36

          6.9     Further Assurances; Additional Collateral...................................36

          6.10    Additional Subsidiaries.....................................................37

    SECTION 7.    NEGATIVE COVENANTS..........................................................38

          7.1     Financial Condition Covenant (Indebtedness to Net Worth)....................38

          7.2     Limitation on Indebtedness and Preferred Stock..............................38

          7.3     Limitation on Liens.........................................................39
</TABLE>

                                     -iii-
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<TABLE>
<S>                                                                                          <C>
          7.4     Limitation on Guarantee Obligations.........................................39

          7.5     Limitation on Fundamental Changes...........................................40

          7.6     Limitation on Sale of Assets................................................40

          7.7     Limitation on Dividends.....................................................40

          7.8     Limitation on Investments, Loans and Advances...............................41 

          7.9     Limitation on Transactions with Affiliates..................................41

          7.10    Limitation on Sales and Leasebacks..........................................42

          7.11    Limitation on Changes in Fiscal Year........................................42

          7.12    Limitation on Negative Pledge Clauses.......................................42

          7.13    Limitation on Lines of Business.............................................42

    SECTION 8.    EVENTS OF DEFAULT...........................................................43

    SECTION 9.    THE AGENT...................................................................46

          9.1     Appointment.................................................................46

          9.2     Delegation of Duties........................................................47

          9.3     Exculpatory Provisions......................................................47

          9.4     Reliance by Agent...........................................................48

          9.5     Notice of Default...........................................................48

          9.6     Non-Reliance on Agent and Other Lenders.....................................49

          9.7     Indemnification.............................................................49

          9.8     Agent in its Individual Capacity............................................50

          9.9     Successor Agent.............................................................50

    SECTION 10.   MISCELLANEOUS...............................................................50

          10.1    Amendments and Waivers......................................................50

          10.2    Releases of Collateral Security and Guarantee Obligations...................52

          10.3    Notices.....................................................................52

          10.4    No Waiver; Cumulative Remedies..............................................53

          10.5    Survival of Representations and Warranties..................................53

          10.6    Payment of Expenses and Taxes...............................................53

          10.7    Termination.................................................................54

          10.8    Successors and Assigns; Participations and Assignments......................54

          10.9    Adjustments; Set-off........................................................57

          10.10   Counterparts................................................................58
</TABLE>

                                      -iv-
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<TABLE>
<S>                                                                                          <C>
          10.11   Severability................................................................58

          10.12   Integration.................................................................58

          10.13   GOVERNING LAW...............................................................58

          10.14   Submission to Jurisdiction; Waivers.........................................59

          10.15   Acknowledgments.............................................................59

          10.16   WAIVERS OF JURY TRIAL.......................................................60
</TABLE>



                                      -v-

<PAGE>   7


           CREDIT AGREEMENT, dated as of February 23, 1998, among:

           HOMEMAX, INC., (the "BORROWER");

           the banks and other financial institutions from time to time 
               parties to this Agreement, (the "LENDERS"); and

           NATIONSBANK, N.A. as agent (in such capacity, the "AGENT") for 
               the Lenders hereunder.

                                   WITNESSETH:

         WHEREAS, the Borrower has requested that the Lenders make available to
it credit facilities of up to $12,000,000.00 in the aggregate upon the terms,
and subject to the conditions, set forth herein to finance the acquisition and
development of commercial land parcels as permitted by this Agreement;

         WHEREAS, the Agent and the Lenders are willing to provide such
financing to the Borrower only upon the terms and subject to the conditions set
forth herein;

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

SECTION I: DEFINITIONS

          1.1 DEFINED TERMS. As used in this Agreement, the following terms 
shall have the following meanings:

         "ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greater of (i) the Prime Rate in effect on
such day and (ii) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that the Agent is
unable to ascertain the Federal Funds Effective Rate for any reason, including
the inability or failure of the Agent to obtain sufficient quotations in
accordance with the terms thereof, the ABR shall be determined without regard to
clause (ii) of the first sentence of this definition, until the circumstances
giving rise to such inability no longer exist. Any change in the ABR due to a
change in the Prime Rate or Federal Funds Effective Rate shall be effective on
the effective date of such change in the Prime Rate or Federal Funds Effective
Rate, respectively.

         "ACQUIRED LAND PARCEL": all of the interests in the real properties
acquired by the Borrower or a Subsidiary as designated on SCHEDULE VIII and any
interests in real property acquired by the Borrower or any Subsidiary of the
Borrower pursuant to any subsequent acquisition using the proceeds of this
Facility.

         "AGENT": as defined in the preamble to this Agreement.

                                       1
<PAGE>   8

         "AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 5% or more of the securities having ordinary voting power for the election
of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

         "AGGREGATE OUTSTANDING EXTENSIONS OF CREDIT": as to any Lender at any
time, an amount equal to the aggregate principal amount of all Loans made by
such Lender then outstanding.

         "AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.

         "ALTA SURVEY":  as described in subsection 5.2(e).

         "APPLICABLE MARGIN": for each Loan outstanding, the rate per annum of
1.50%.

         "ASSIGNEE":  as defined in subsection 10.8(c).

         "AVAILABLE COMMITMENT": as to any Lender, an amount equal to the
excess, if any, of (a) the Commitment over (b) the Aggregate Outstanding
Extensions of Credit of such Lender.

         "BANK DEFAULT": means (i) the refusal (which has not been retracted) of
a Lender to make available an amount equal to its Lender's Commitment Percentage
of any borrowing or (ii) a Lender having notified the Agent and or the Borrower
that such Lender does not intend to comply with the obligations under subsection
2.1 in the case of either (i) or (ii) above including as a result of the
appointment of a receiver or conservator with respect to such Lender at the
direction or request of any regulatory agency or authority.

         "BORROWING DATE": for each Loan, the date of a requested borrowing
PROVIDED that if such date is not a Business Day then the next succeeding
Business Day.

         "BUSINESS":  as defined in subsection 4.18(b).

         "BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina are authorized or required
by law to close; PROVIDED that, with respect to matters relating to Eurodollar
Loans, the term "BUSINESS DAY" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina or London,
England, are authorized or required by law to close.

         "CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.

         "CASH EQUIVALENTS": (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency

                                      -2-
<PAGE>   9



thereof, (b) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition and overnight bank
deposits of any Lender or of any commercial bank having capital and surplus in
excess of $100,000,000, (c) repurchase obligations of any Lender or of any
commercial bank or investment bank satisfying the requirements of clause (b) of
this definition, having a term of not more than thirty (30) days with respect to
securities issued or fully guaranteed or insured by the United States Government
or any agency thereof, (d) commercial paper issued in the United States which is
rated at least A-1 by S&P or P-1 by Moody's, (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government are
rated at least A by S&P or A by Moody's, (f) securities with maturities of one
year or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or similar
funds which invest substantially exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.

         "CHANGE IN CONTROL": any transaction or group of transactions after
which (A) (i) Allen G. Zaring, III (together with his executors, administrators
or heirs in the event of his death) shall directly or indirectly own less than
twenty-five percent (25%) of Zaring National's issued and outstanding common
stock, or (ii) another Person has acquired beneficial ownership of Zaring
National's issued and outstanding common stock in an amount greater than the
amount owned directly or indirectly in the aggregate by Allen G. Zaring, III
(together with his executors, administrators or heirs in the event of his death)
or (B) Zaring National Corporation shall cease to own ninety-five percent (95%)
of all classes of voting stock of the Borrower.

         "CLOSING DATE": the date on which the conditions precedent set forth in
subsection 5.1 shall be satisfied.

         "CODE": the Internal Revenue Code of 1986, as amended from time to
time.

         "COLLATERAL": all Acquired Land Parcels and improvement thereon as more
fully described in the Security Documents.

         "COMMITMENT": as to any Lender, the obligation of such Lender to make
Loans to the Borrower hereunder in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's name on
SCHEDULE II, as the same may be reduced from time to time pursuant to
subsections 3.4 and 3.5; as to all Lenders collectively, the "COMMITMENTS."

         "COMMITMENT PERCENTAGE": as to any Lender at any date, the percentage
which such Lender's Commitment then constitutes of the aggregate Commitments
(or, at any time after the Commitments shall have expired or terminated, the
percentage which the Aggregate Outstanding Extensions of Credit of such Lender
then constitutes of the Aggregate Outstanding Extensions of Credit of all
Lenders.).

                                      -3-
<PAGE>   10

         "COMMITMENT PERIOD": the period from and including the date hereof to
but not including the Commitment Termination Date or such earlier date on which
the Commitments shall terminate as provided herein.

         "COMMITMENT TERMINATION DATE": the last Business Day of the calendar
month in the month that is twenty-four (24) months following the Closing Date.

         "COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.

         "CONSOLIDATED NET INCOME" or "CONSOLIDATED NET LOSS": for any fiscal
period, the amount which, in conformity with GAAP, would be set forth opposite
the caption "net income" (or any like caption) or "net loss" (or any like
caption, as the case may be, on a consolidated statement of earnings of the
Borrower and its Subsidiaries for such fiscal period.

         "CONSOLIDATED NET WORTH": for any fiscal period, the sum of (a) Capital
Stock and additional paid-in capital plus (b) retained earnings (or minus
accumulated deficits) of the Borrower and its Subsidiaries determined on a
consolidated basis.

         "CONSOLIDATED TANGIBLE NET WORTH": for any fiscal period, the sum of
(a) Consolidated Net Worth MINUS (b) any amounts which would be considered
intangible assets on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date (including without limitation, copyrights, patents,
trademarks, contract rights, development costs and goodwill).

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

         "DEFAULT": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

         "DEFAULTING LENDER": any Lender with respect to which a Bank Default is
in effect.

         "DOLLARS" and "$": dollars in lawful currency of the United States of
America.

         "EBITDA": for any fiscal period for any Person, the Consolidated Net
Income or Consolidated Net Loss, as the case may be, for such fiscal period,
after excluding therefrom the amount of extraordinary gain and restoring thereto
(a) depreciation and amortization, (b) the amount of interest expense of such
Person, determined on a consolidated basis, for such period on the aggregate
principal amount of their consolidated Indebtedness and any fees (including
commitment and administrative fees) with respect to such Indebtedness, (c) the
amount of tax expense of such Person, determined on a consolidated basis for
such period and (d) the aggregate amount of fixed and contingent rentals payable
by the Borrower and its Subsidiaries, determined on a consolidated basis for
such period, with respect to leases of real and personal property.

                                      -4-
<PAGE>   11

         "ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or other Requirements of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning pollution or protection of
the environment (including protection of human health from environmental
hazards), as now or may at any time hereafter be in effect.

         "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.

         "FACILITY":  as provided for in Section 2 hereof.

         "FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it.

         "FINANCING LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.

         "FLOOR PLAN FACILITY": the $33,920,000 facility described in the floor
plan agreement dated as of February 19, 1998 (as amended, supplemented, or
otherwise modified from time to time, the "FLOOR PLAN AGREEMENT") by and among,
the Borrower and its Subsidiaries, the lenders from time to time party thereto
and NationsBank, N.A. Dealer Financial Services Division.

         "GAAP": generally accepted accounting principles in the United States
of America as in effect from time to time.

         "GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

         "GUARANTEE": the collective reference to the Subsidiaries Guarantee,
the Parent Guarantee and each other guarantee from time to time made in favor of
the Agent to secure all or any part of the obligations of the Borrower hereunder
as amended, supplemented or otherwise modified from time to time; collectively,
the "GUARANTEES."

         "GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of the guaranteeing person or another Person (including, without
limitation, any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a

                                      -5-
<PAGE>   12

reimbursement, counter indemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "PRIMARY OBLIGATIONS") of any other third Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person incurred for the
purpose of providing credit support, whether or not contingent, including,
without limiting the generality of the foregoing, any agreement to indemnify or
hold harmless any other Person, any performance bond or other suretyship
arrangement and any other form of assurance against loss, except endorsement of
negotiable instruments or other instruments for deposit or collection in the
ordinary course of business.

         "GUARANTOR":  any Person delivering a Guarantee.

         "HM SERVICES SUBORDINATION AGREEMENT": the Subordination Agreement,
dated as of the date hereof, by and among HomeMax, Inc. and its Subsidiaries and
NationsBank, N.A., substantially in the form of EXHIBIT E, as the same may be
amended, modified or otherwise supplemented from time to time.

         "INDEBTEDNESS": of any Person, at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) the deferred purchase
price of property or services (payable more than six months after the original
purchase date of such property or services), (c) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument, (d)
all obligations of such Person under Financing Leases, (e) all obligations of
such Person in respect of letters of credit and acceptances and letters of
credit issued or created for the account of such Person, (f) all liabilities
secured by any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof, and (g) all
Indebtedness of the types referred to in clauses (a) through (g) above which is
guaranteed directly or indirectly by such Person.

         "INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.

         "INSOLVENT":  pertaining to a condition of Insolvency.

         "INTEREST PAYMENT DATE":  the last Business Day of each calendar month.

         "JOINDER AGREEMENT": the joinder agreement to be executed and delivered
by each Person that subsequent to the Closing Date becomes a Subsidiary,
substantially in the form of EXHIBIT D, as the same may be amended, supplemented
or otherwise modified from time to time.

         "LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), mechanic's lien or
materialman's lien, charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement and any Financing Lease having substantially the same
economic effect as any of the foregoing).

                                      -6-
<PAGE>   13

         "LOANS":  as defined in subsection 2.1.

         "LOAN DOCUMENTS": this Agreement, the Notes, the Guarantees, the HM
Services Subordination Agreement and the Security Documents, and any other
instruments, certificates, agreements or documents delivered or contemplated to
be delivered hereunder or thereunder or in connection herewith or therewith, as
the same may be amended, supplemented or otherwise modified from time to time.

         "LOAN PARTIES": the Borrower and any of its Subsidiaries and Zaring
National Corporation.

         "M.A.I. APPRAISAL":  as described in subsection 5.2(g).

         "MAJORITY LENDERS": at any time Lenders having Commitments (or if
Commitments have terminated, Aggregate Outstanding Extensions of Credit) which
aggregate more than 51% of the sum of the amount of the Commitments of the
Non-Defaulting Lenders (or Aggregate Outstanding Extensions of Credit of the
Non-Defaulting Lenders as the case may be) then in effect, PROVIDED THAT
Majority Lenders shall in no way consist of less than two (2) Lenders.

         "MATERIAL ADVERSE AMOUNT": an amount payable by the Borrower and/or its
Subsidiaries in excess of $100,000 for remedial costs, non-routine compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.

         "MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, financial condition or prospects of the Borrower
and its Subsidiaries taken as a whole, (b) the validity or enforceability of
this or any of the other Loan Documents or (c) the rights or remedies of the
Agent or the Lenders hereunder or under any of the other Loan Documents.

         "MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

         "MATURITY DATE": for each Loan, the date that is five (5) years from
the Borrowing Date of such Loan, or if such date is not a Business Day then the
next succeeding Business Day.

         "MOODY'S": Moody's Investors Service, Inc.

         "MORTGAGE": each mortgage or deed of trust to be executed and delivered
by the Borrower or a Subsidiary, with respect to an Acquired Land Parcel,
substantially in the form of EXHIBIT K as the same may be amended, supplemented
or otherwise modified from time to time.

         "MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

         "NOTE": as defined in subsection 3.1(e), collectively the "Notes".

                                      -7-
<PAGE>   14


         "NOTICE OF BORROWING": means with respect to a request for a borrowing
hereunder, a request in the form of EXHIBIT J hereto, delivered to the Agent by
a Responsible Officer of the Borrower.

         "PARENT GUARANTEE": the Guarantee to be executed and delivered by
Zaring National Corporation, substantially in the form of EXHIBIT B, as the same
may be amended, supplemented or otherwise modified from time to time.

         "PARTICIPANTS": as defined in subsection 10.8(b).

         "PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.

         "PERSON": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other legal entity.

         "PHASE I ENVIRONMENTAL ASSESSMENT": as described in subsection 5.2(f).

         "PLAN": at a particular time, any employee benefit plan or other plan
established, maintained or contributed to by the Borrower or a Commonly
Controlled Entity that is covered by Title IV of ERISA.

         "PRIME RATE": the rate of interest per annum publicly announced from
time to time by the Agent at its principal office as its prime rate on a
particular day in effect for domestic (United States) commercial loans; such
rate is not necessarily intended to be the lowest rate of interest charged by
the Lenders in connection with extensions of credit. Each change in the Prime
Rate shall be effective on the date such change is publicly announced.

         "PRINCIPAL REPAYMENT DATE": for each Loan the date that is thirteen
(13) months from the applicable Borrowing Date PROVIDED that if such date is not
a Business Day then the next preceding Business Day.

         "PROCEEDS": with respect to any Proceeds Event , (a) the gross cash
consideration, and all cash proceeds (as and when received) of non-cash
consideration (including, without limitation, any such cash proceeds in the
nature of principal and interest payments on account of promissory notes or
similar obligations), received by the Borrower and its Subsidiaries in
connection with such Proceeds Event which is required to be repaid at the time
or as a result of such Proceeds Event out of the proceeds thereof.

         "PROCEEDS EVENT": (a) the incurrence by the Borrower or any of its
Subsidiaries of any Indebtedness (other than Indebtedness permitted pursuant to
clauses (a) through (g) of subsection 7.2);

         (b) the issuance or sale of equity securities by the Borrower or any of
its Subsidiaries to any Person, other than (i) the issuance or sale of any
equity securities to the Borrower or any of its Subsidiaries, (ii) the issuance
of Capital Stock upon the sale or exercise of stock options, (iii)

                                      -8-
<PAGE>   15


the issuance and sale of Capital Stock under employee stock purchase plans, (iv)
the issuance and sale of Capital Stock and/or stock options under employee stock
ownership and incentive plans and similar programs or individual arrangements;
(c) the sale, transfer or other disposition by the Borrower or any of its
Subsidiaries of any real or personal, tangible or intangible, property
(including, without limitation, any Capital Stock, but other than inventory
sold, transferred or otherwise disposed of in the ordinary course of business)
of the Borrower or such Subsidiary to any Person (other than to the Borrower or
any of its Subsidiaries); and

         (d) the recovery by the Borrower of amounts owing to it under property
insurance policies.

         "PROPERTIES":  as defined in subsection 4.18(a).

         "REGULATION G": Regulation G of the Board of Governors of the Federal
Reserve System as in effect from time to time.

         "REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.

         "REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

         "REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty (30) day notice period is
waived under subsections .22, .25, .27 or .28 of PBGC Reg. Sec.4043.

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

         "RESPONSIBLE OFFICER": the chief executive officer, the president, any
vice president, the chief financial officer and the treasurer of the Borrower.

         "RESTRICTED PAYMENTS":  as defined in subsection 7.7.

         "S&P": Standard and Poor's Ratings Group, a division of McGraw Hill
Companies Inc.

         "SEC": means the United States Securities and Exchange Commission, or
any Governmental Authority succeeding to any of its principal functions.

         "SECURED OBLIGATIONS": shall be the collective reference to the unpaid
principal of and interest on the Notes and all other obligations and liabilities
(including, without limitation, interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest accruing
at the then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like 

                                      -9-
<PAGE>   16

proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), of the
Borrower to the Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Notes and
the other Loan Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all reasonable fees and disbursements of counsel
to the Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of this Agreement or any other Loan Document).

         "SECURITY DOCUMENTS": the collective reference to the Joinder Agreement
and the Mortgages and all other security documents hereafter delivered to the
Lenders granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and under any of the other
Loan Documents or to secure any guarantee of any such obligations and
liabilities.

         "SENIOR INDEBTEDNESS": Indebtedness of the Borrower or its Subsidiaries
MINUS Subordinated Indebtedness.

         "SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.

         "SUBORDINATED INDEBTEDNESS": any Indebtedness for which the Borrower or
its Subsidiaries are liable that is subordinated to the obligations of the Loan
Parties hereunder on terms and pursuant to documentation containing other terms
(including interest, amortization, covenants and events of default) in form and
substance satisfactory to the Agent.

         "SUBSIDIARIES GUARANTEE": each Guarantee to be executed and delivered
by one or more Subsidiaries, substantially in the form of EXHIBIT C, as the same
may be amended, supplemented or otherwise modified from time to time.

         "SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.

         "TITLE INSURANCE":  as described in subsection 5.2(d).

         "TRANSFEREE":  as defined in subsection 10.8(f).

                                      -10-
<PAGE>   17
  
         "UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.

         "ZN NET WORTH AGREEMENT": the ZN Net Worth Maintenance Guarantee to be
executed and delivered by Zaring National, substantially in the form of EXHIBIT
F, as the same may be amended, supplemented or otherwise modified from time to
time.

         "ZN FACILITY": the $15,000,000 credit facility described in the credit
agreement dated as of February 23, 1998, (as amended, supplemented, or otherwise
modified from time to time the "ZN CREDIT AGREEMENT") by and among Zaring
National Corporation, as borrower, the banks from time to time party thereto and
NationsBank, N.A., as agent for such banks.

              OTHER DEFINITIONAL PROVISIONS

           (a) Unless otherwise specified therein, all terms defined in this
                  Agreement shall have the defined meanings when used in any
                  Notes or any certificate or other document made or delivered
                  pursuant hereto.

           (b) Unless otherwise specified herein, all accounting terms used
                  herein (and in any other Loan Document and any certificate or
                  other document made or delivered pursuant hereto or thereto)
                  shall be interpreted, all accounting determinations shall be
                  made, and all financial statements required to be delivered
                  hereunder shall be prepared, in accordance with GAAP as in
                  effect from time to time.

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

           (d) In  the computation of periods of time from a specified date to a
                  later specified date, the word "from" means "from and
                  including" and the words "to" and "until" each mean "to but
                  excluding". Periods of days referred to in this Agreement
                  shall be counted in calendar days unless Business Days are
                  expressly prescribed. Any period determined hereunder by
                  reference to a month or months or year or years shall end on
                  the day in the relevant calendar month in the relevant year,
                  if applicable, immediately preceding the date numerically
                  corresponding to the first day of such period, PROVIDED, that
                  if such period commences on the last day of a calendar month
                  (or on a day for which there is no numerically corresponding
                  day in the calendar month during which such period is to end),
                  such period shall, unless otherwise expressly required by the
                  other provisions of this Agreement, end on the last day of the
                  calendar month.

                                      -11-
<PAGE>   18

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

   SECTION 2: AMOUNT AND TERMS OF COMMITMENTS

            2.1 Commitments.  Subject to the terms and conditions hereof, each 
                  Lender severally agrees to make one or more loans
                  (individually, a "LOAN" and collectively, the "LOANS")
                  immediately available to the Borrower from time to time during
                  the Commitment Period in writing in an aggregate principal
                  amount at any one time outstanding which does not exceed the
                  Available Commitment. During the Commitment Period, the
                  Borrower may use the Commitments by borrowing, prepaying the
                  Loans, in whole or in part, and reborrowing, all in accordance
                  with the terms and conditions of this Section. Amounts
                  borrowed under this Section and repaid or prepaid after the
                  Commitment Termination Date may not be reborrowed.

                                      -12-
<PAGE>   19

           2.2 PROCEDURE FOR BORROWING.  The Borrower shall deliver to the Agent
                  its irrevocable Notice of Borrowing (which notice must be in
                  writing or by telephone promptly confirmed in writing and must
                  be received by the Agent prior to 11:00 A.M., Charlotte, North
                  Carolina time one (1) Business Day prior to the requested
                  Borrowing Date) requesting that any such Lenders make a Loan
                  on the requested Borrowing Date and specifying the amount of
                  such loan. Upon receipt of any such Notice of Borrowing from
                  the Borrower, the Agent shall promptly notify each Lender
                  thereof. Each Lender will make the amount of its pro rata
                  share of each borrowing available to the Agent for the account
                  of the Borrower at the office of the Agent specified in
                  subsection 10.3 prior to 1:00 P.M., Charlotte, North Carolina
                  time on the Borrowing Date, in funds immediately available to
                  the Agent. Such borrowing will then be made available to the
                  Borrower by the Agent transferring to an account (which shall
                  be maintained for such purpose by the Agent) with the
                  aggregate of the amounts made available to the Agent by the
                  Lenders and in like funds as received by the Agent.

           2.3 AMORTIZATION OF LOANS. The Borrower shall repay the outstanding 
                  principal of each Loan commencing on the applicable Principal
                  Repayment Date in consecutive installments on the last date of
                  each month (or, if such date is not a Business Day, on the
                  immediately preceding Business Day), such installments to be
                  determined based on a fifteen (15) year straight line basis
                  with a balloon payment of any then-outstanding principal
                  amount of each Loan on the Maturity Date of such Loan.

           2.4 USE OF PROCEEDS OF LOANS. The proceeds of the Loans shall be 
                  utilized by the Borrower to finance the acquisition and
                  development of commercial land parcels to display various
                  types of manufactured housing models for sale.

 SECTION 3: PROVISIONS RELATING TO THE EXTENSIONS OF CREDIT;
                            FEES AND PAYMENTS

           3.1 REPAYMENT OF LOANS; EVIDENCE OF INDEBTEDNESS.

           (a) The Borrower hereby unconditionally promises to pay to the Agent
                  for the account of each applicable Lender the principal amount
                  of the Loans on the dates and in the amounts set forth in
                  subsection 2.3 (or the then unpaid principal amount of any
                  such Loan, on the date that any Loan becomes due and payable
                  pursuant to Section 8). The Borrower hereby further agrees to
                  pay interest on the unpaid principal amount of each Loan from
                  time to time outstanding from the date hereof until payment in
                  full thereof at the rates per annum, and on the dates, set
                  forth in subsection 3.9.

           (b) Each Lender shall maintain in accordance with its usual practice
                  an account or accounts evidencing Indebtedness of the Borrower
                  to the Lender resulting

                                      -13-
<PAGE>   20

                  from each loan of such Lender from time to time, including the
                  amounts of principal and interest payable and paid to such
                  Lender from time to time under this Agreement.

           (c) The Agent shall maintain the Register pursuant to subsection
                  10.8(d) and a subaccount therein for each Lender, in which
                  shall be recorded (i) the amount of each Loan made hereunder,
                  (ii) the amount of any principal or interest due and payable
                  or to become due and payable from the Borrower to the Lenders
                  hereunder and (iii) the amount of any sum received by the
                  Agent hereunder from the Borrower.

           (d) The entries made in the Register and the accounts of each Lender
                  maintained pursuant to subsection 10.8(d) shall, to the extent
                  permitted by applicable law, be prima facie evidence of the
                  existence and amounts of the obligations of the Borrower
                  therein recorded; PROVIDED, HOWEVER, that the failure of the
                  Agent or any Lender to maintain the Register or any such
                  account, or any error therein shall not in any manner affect
                  the obligation of the Borrower to repay (with applicable
                  interest) the Loans made to such Borrower by the Lenders in
                  accordance with the terms of this Agreement.

           (e) The Borrower agrees that, upon request of any Lender through the
                  Agent, the Borrower will execute and deliver to such Lender,
                  as applicable, one or more promissory notes of the Borrower
                  evidencing each of the Loans of such Lender, substantially in
                  the form of EXHIBIT A with appropriate insertions as to date
                  and principal amount (a "NOTE").

           3.2 AGENT'S FEES. The Borrower agrees to pay to the Agent, for its
                  own account, such fees as may be agreed from time to time
                  between the Borrower and the Agent, when and as due.

           3.3 OPTIONAL PREPAYMENTS. The Borrower may at any time and from time 
                  to time prepay the Loans, in whole or in part, without premium
                  or penalty, upon at least one (1) Business Day's notice to the
                  Agent (which notice must be received by the Agent prior to
                  11:00 A.M., Charlotte, North Carolina time, on the date upon
                  which such notice is due and shall be irrevocable except in
                  connection with prepayments that are contingent on sales of
                  assets to the extent of such contingency), specifying the date
                  and amount of prepayment. Upon receipt of any such notice the
                  Agent shall promptly notify each Lender thereof. If any such
                  notice is given and not withdrawn prior to the date upon which
                  payment is made, the amount specified in such notice shall be
                  due and payable on the date specified therein, together with
                  any accrued interest and fees to such date on the amount
                  prepaid.

           3.4 OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS. During the 
                  Commitment Period, the Borrower shall have the right, upon not
                  less than three (3) Business Days' notice to the Agent, to
                  terminate the Commitments or,

                                      -14-
<PAGE>   21

                  from time to time, to reduce the amount of the Commitments;
                  PROVIDED that no such termination or reduction shall be
                  permitted with respect to the Commitments (i) to the extent
                  that after giving effect thereto and to any repayments or
                  prepayments of the Loans made on the effective date thereof,
                  the aggregate principal amount of the Loans then outstanding
                  would exceed the Commitments then in effect and (ii) after the
                  date that is three (3) Business Days prior to the Commitment
                  Termination Date. Any such reduction shall be in an amount
                  equal to $500,000 or a whole multiple in excess thereof and
                  shall reduce permanently the affected Commitments then in
                  effect.

          3.5 MANDATORY REDUCTION OF COMMITMENTS AND PREPAYMENTS.

            (a) If at any time during the Commitment Period the Aggregate
                  Extensions of Credit of any Lender exceeds such Lender's
                  available Commitment, the Borrower shall immediately repay the
                  Loans, such repayment to be in an aggregate amount equal to
                  such excess.

            (b) The Borrower shall, as promptly as is practicable (and, in any
                  event, within one (1) Business Day following the receipt
                  thereof), repay the Loans and permanently reduce the
                  Commitments by the amount equal to the aggregate amount of
                  Proceeds received from any Proceeds Event thereof; PROVIDED
                  that with respect to any Proceeds Event described in paragraph
                  (c) of such definition which includes the sale, transfer or
                  disposition by the Borrower of any of its Subsidiaries of any
                  Acquired Land Parcel, the Borrower shall repay the Loans and
                  reduce the Commitments by the amount equal to the greater of
                  (i) the aggregate amount of Proceeds received from such
                  Proceeds Event or (ii) the outstanding amount of the Loan
                  relating to such Acquired Land Parcel.

           (c) Notwithstanding the foregoing, no such repayment and reduction
                  shall be due pursuant to subsection 3.5(b) with respect to any
                  Proceeds Event on account of:

               (i) the sale or other disposition of obsolete, inoperative,
                   surplus or worn out real or personal, tangible or intangible,
                   property (including without limitation, any property which is
                   no longer used or useful in the business of the Borrower or
                   its Subsidiaries) in the ordinary course of business and for
                   fair market value; or

              (ii) the sale, transfer or other disposition by the Borrower or
                   any of its Subsidiaries of any real or personal, tangible or
                   intangible, property of the Borrower and its Subsidiaries, to
                   the extent that the Proceeds from such sale, transfer or
                   other disposition (in the aggregate with the Proceeds from
                   all other sales, transfers and other dispositions occurring
                   during the fiscal

                                      -15-
<PAGE>   22


                     year in which such sale, transfer or other disposition 
                     occurred other than those described in paragraph (i)) is 
                     less than $500,000; or

              (iii)  the recovery by the Borrower of amounts owing to it under
                     property insurance policies except, to the extent that (1)
                     such recoveries exceed the reasonably estimated cost of
                     replacing the property on account of which such amounts 
                     were paid to the Borrower and its Subsidiaries or (2) the
                     Borrower and its Subsidiaries are not diligently proceeding
                     with such replacement.

          3.6 APPLICATION OF PREPAYMENTS.

             (a)   Any payments of the Loans and reductions of the Commitments
                   made pursuant to subsections 3.3, 3.4, or 3.5 shall be
                   applied to the prepayment of the Loans with such prepayment
                   being applied in inverse order of maturity to the then
                   outstanding installments thereof, PROVIDED that any
                   prepayment made pursuant to subsection 3.5(b) as a result of
                   any sale, transfer or disposition of any Acquired Land Parcel
                   shall be applied (i) FIRST to the Loan relating to such
                   Acquired Land Parcel, (ii) SECOND to any other outstanding
                   Loans hereunder as selected by the Agent in its sole
                   discretion and (iii) THIRD to the repayment of the
                   intercompany indebtedness evidenced by the HM Note (as
                   defined in the ZN Credit Agreement).

             (b)   Any payments of the Loans and reductions of the Commitments
                   made pursuant to subsections 3.3, 3.4, or 3.5 shall not be
                   applied to the prepayment of the Loans of a Defaulting Lender
                   at any time under the Facility when the aggregate amount of
                   Loans of any Non-Defaulting Lender exceeds such
                   Non-Defaulting Lender's Commitment Percentage of all Loans
                   then outstanding.


                                      -16-
<PAGE>   23
            3.7 PREPAYMENT PREMIUM. If, on or before the Commitment Termination
                Date, the Borrower prepays any portion of the Loans with the
                proceeds of a loan from a lender other than the Lenders hereto
                and under the terms of this Agreement, the Borrower shall pay to
                the Agent for the benefit of the Lenders, on or before the date
                of such prepayment, a prepayment premium of 1% on any
                outstanding obligations so repaid.

            3.8 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF NOTES. All borrowings and
                repayments of Loans hereunder shall be in such amounts so that,
                after giving effect thereto, the aggregate principal amount of
                the Loans comprising each Note shall be equal to $500,000 or a
                whole multiple of $250,000 in excess thereof. In no event shall
                there be more than twenty eight (28) Loans outstanding at any
                time.

            3.9 INTEREST RATES AND PAYMENT DATES.

                 (a) Each Loan shall bear interest at a rate per annum equal to
                     the ABR plus the Applicable Margin in effect for such day.

                 (b) If all or a portion of (i) any principal of any Loan, (ii)
                     any interest payable thereon or (iii) any other amount
                     payable hereunder shall not be paid when due (whether at
                     the stated maturity, by acceleration or otherwise), the
                     principal of the Loans and any such overdue interest, or
                     other amount shall bear interest at a rate per annum which
                     is the rate described in paragraph (a) of this subsection
                     plus 2%, in each case from the date of such non-payment
                     until such overdue principal, interest, or other amount is
                     paid in full (as well as after as before judgment).

                 (c) Interest on each Loan shall be payable in arrears on each
                     Interest Payment Date and shall accrue from and including
                     the Borrowing Date of such Loan but excluding the date of
                     repayment thereof, PROVIDED that interest accruing pursuant
                     to paragraph (c) of this subsection shall be payable from
                     time to time on demand.

                 (d) Notwithstanding anything to the contrary contained herein,
                     in no event shall the Borrower be obligated to pay interest
                     in excess of the maximum amount which is chargeable under
                     applicable law.

           3.10 COMPUTATION OF INTEREST AND FEES.

                 (a) Any change in the interest rate on a Loan resulting from a
                     change in the ABR shall become effective as of the opening
                     of business on the day on which such change becomes
                     effective.

                 (b) Each determination of an interest rate by the Agent
                     pursuant to any provision of this Agreement shall be
                     conclusive and binding on the Borrower and 

                                      -17-
<PAGE>   24

                  the Lenders in the absence of manifest error. The Agent shall,
                  at the request of the Borrower, deliver to the Borrower a
                  statement showing the quotations used by the Agent in
                  determining any interest rate pursuant to subsection 3.9(a).

         3.11 PRO RATA TREATMENT AND PAYMENTS.

                 (a) Each borrowing by the Borrower from the Lenders hereunder
                     and any reduction of the Commitments of the Lenders shall
                     be made pro rata according to the respective relevant
                     Commitment Percentages of the Lenders holding obligations
                     in respect of which such amounts were paid. Except as
                     provided in subsection 3.6(a), each payment (including each
                     prepayment) by the Borrower on account of principal of and
                     (subject to the provisions of subsections 3.3, 3.4, 3.5 and
                     3.6) interest on the Loans shall be made pro rata according
                     to the respective outstanding principal amounts of such
                     Loans then held by the Lenders. Except as otherwise set
                     forth herein, all payments (including prepayments) to be
                     made by the Borrower hereunder, whether on account of
                     principal, interest, fees or otherwise, shall be made
                     without set off or counterclaim and shall be made prior to
                     2:00 P.M., Charlotte, North Carolina time, on the due date
                     thereof to the Agent, for the account of the applicable
                     Lenders, at the Agent's office specified in subsection
                     10.3, in Dollars and in immediately available funds. The
                     Agent shall distribute such payments to the Lenders holding
                     obligations on account of which such amounts were paid
                     promptly upon receipt in like funds as received. If any
                     payment hereunder becomes due and payable on a day other
                     than a Business Day, such payment shall be extended to the
                     next succeeding Business Day, and, with respect to payments
                     of principal, interest thereon shall be payable at the then
                     applicable rate during such extension.

                 (b) All such payments shall be applied FIRST to accrued and
                     unpaid fees and expenses payable hereunder, SECOND, to
                     accrued and unpaid interest on the applicable Loan and
                     THIRD, in accordance with subsection 3.6(a), to reduce the
                     outstanding principal balance of such Loan.

                 (c) Unless the Agent shall have been notified in writing by any
                     Lender prior to a borrowing that such Lender will not make
                     the amount that would constitute its relevant Commitment
                     Percentage of such borrowing available to the Agent, the
                     Agent may assume that such Lender is making such amount
                     available to the Agent, and the Agent may, in reliance upon
                     such assumption, make available to the Borrower a
                     corresponding amount. If such amount is not made available
                     to the Agent by the required time on the borrowing date
                     therefor, such Lender shall pay to the Agent, on demand,
                     such amount with interest thereon at a rate equal to the
                     daily average Federal Funds Effective Rate for the period
                     until such Lender

                                      -18-
<PAGE>   25
                     makes such amount immediately available to the Agent. A
                     certificate of the Agent submitted to any Lender shall, to
                     the extent permitted by applicable law, be prima facie
                     evidence of the amounts owing under this subsection 3.11.
                     If such Lender's relevant Commitment Percentage of such
                     borrowing is not made available to the Agent by such Lender
                     within three (3) Business Days of such borrowing date, the
                     Agent shall also be entitled to recover such amount with
                     interest thereon at the rate per annum applicable to Loans
                     hereunder, on demand, from the Borrower.

  SECTION 4: REPRESENTATIONS AND WARRANTIES

                 To induce the Lenders to enter into this Agreement and to make
             the Loans, the Borrower hereby represents and warrants to the Agent
             and each Lender that:

              4.1 FINANCIAL CONDITION. The consolidated balance sheets of the 
                  Borrower and its consolidated Subsidiaries as at September 30,
                  1997 and the related consolidated statements of income and
                  cash flows for the fiscal period ended on such date, copies of
                  which have heretofore been furnished to the Agent, are
                  complete and correct and present fairly in all material
                  respects the consolidated financial condition of the Borrower
                  and its consolidated Subsidiaries as at such date, and the
                  consolidated results of their operations and their
                  consolidated cash flows for the fiscal period then ended. All
                  such financial statements, including the related schedules and
                  notes thereto, have been prepared in accordance with GAAP
                  applied consistently throughout the periods involved (except
                  as approved by such accountants or Responsible Officer, as the
                  case may be, and as disclosed therein). Neither the Borrower
                  nor any of its consolidated Subsidiaries had, at the date of
                  the most recent balance sheet referred to above, any material
                  Guarantee Obligation, contingent liability or liability for
                  taxes, or any long-term lease or unusual forward or long-term
                  commitment, including, without limitation, any interest rate
                  or foreign currency swap or exchange transaction, which is not
                  reflected in the foregoing statements or in the notes thereto.
                  Except to the extent permitted under this Agreement or as
                  disclosed to the Agent prior to the date hereof, or as
                  otherwise separately disclosed to the Agent in writing prior
                  to the date hereof, there has been no sale, transfer or other
                  disposition by the Borrower or any of its consolidated
                  Subsidiaries of any material part of its business or property
                  (including any capital stock of any other Person) material in
                  relation to the consolidated financial condition of the
                  Borrower and its consolidated Subsidiaries at September 30,
                  1997 during the period from September 30, 1997 to and
                  including the date hereof.

                                      -19-
<PAGE>   26

              4.2 NO CHANGE. Since September 30, 1997, there has been no
                  development or event which has had a Material Adverse Effect.

              4.3 DISCLOSURE. No information, schedule, exhibit or report or
                  other document furnished by the Borrower or any of its
                  Subsidiaries to the Agent or any Lender in connection with the
                  negotiation of this Agreement or any other Loan Document (or
                  pursuant to the terms hereof or thereof), as such information,
                  schedule, exhibit or report or other document has been
                  amended, supplemented or superseded by any other information,
                  schedule, exhibit or report or other document later delivered
                  to the same parties receiving such information, schedule,
                  exhibit or report or other document, contained any material
                  misstatement of fact or omitted to state a material fact or
                  any fact necessary to make the statements contained therein,
                  in light of the circumstances when made, not materially
                  misleading.

              4.4 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower
                  and its Subsidiaries (a) is duly organized, validly existing
                  and in good standing under the laws of the jurisdiction of its
                  organization, (b) has the corporate power and authority, and
                  the legal right, to own and operate its property, to lease the
                  property it operates as lessee and to conduct the business in
                  which it is currently engaged, (c) is duly qualified as a
                  foreign corporation and in good standing under the laws of
                  each jurisdiction where its ownership, lease or operation of
                  property or the conduct of its business requires such
                  qualification, except to the extent that all failures to be so
                  qualified could not, in the aggregate, reasonably be expected
                  to have a Material Adverse Effect and (d) is in compliance
                  with all Requirements of Law except to the extent that all
                  failures to comply therewith could not, in the aggregate,
                  reasonably be expected to have a Material Adverse Effect.


                                      -20-
<PAGE>   27

              4.5 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The 
                  Borrower has the corporate power and authority, and the legal
                  right, to make, deliver and perform the Loan Documents to
                  which it is a party and to borrow hereunder and has taken all
                  necessary corporate action to authorize the borrowings on the
                  terms and conditions of this Agreement and any Notes and to
                  authorize the execution, delivery and performance of the Loan
                  Documents to which it is a party. No consent or authorization
                  of, filing with, notice to or other act by or in respect of,
                  any Governmental Authority or any other Person is required in
                  connection with the borrowings hereunder or with the
                  execution, delivery, performance, validity or enforceability
                  of the Loan Documents to which the Borrower is a party. This
                  Agreement has been, and each other Loan Document to which it
                  is a party will be, duly executed and delivered on behalf of
                  the Borrower. This Agreement constitutes, and each other Loan
                  Document to which it is a party when executed and delivered
                  will constitute, a legal, valid and binding obligation of the
                  Borrower enforceable against the Borrower in accordance with
                  its terms, subject to the effects of bankruptcy, insolvency,
                  fraudulent conveyance, reorganization, moratorium and other
                  similar laws relating to or affecting creditors' rights
                  generally, general equitable principles (whether considered in
                  a proceeding in equity or at law) and an implied covenant of
                  good faith and fair dealing.

              4.6 NO LEGAL BAR. The execution, delivery and performance of the
                  Loan Documents to which the Borrower is a party, the
                  borrowings hereunder and the use of the proceeds thereof will
                  not violate any Requirement of Law or Contractual Obligation
                  of the Borrower or of any of its Subsidiaries and will not
                  result in, or require, the creation or imposition of any Lien
                  on any of its or their respective properties or revenues
                  pursuant to any such Requirement of Law or Contractual
                  Obligation.

              4.7 NO MATERIAL LITIGATION. No litigation, investigation or
                  proceeding of or before any arbitrator or Governmental
                  Authority is pending or, to the knowledge of the Borrower,
                  threatened by or against the Borrower or any of its
                  Subsidiaries or against any of its or their respective
                  properties or revenues (a) with respect to any of the Loan
                  Documents or any of the transactions contemplated hereby or
                  thereby, or (b) which could reasonably be expected to have a
                  Material Adverse Effect.

              4.8 NO DEFAULT. Neither the Borrower nor any of its Subsidiaries
                  is in default under or with respect to any of its Contractual
                  Obligations in any respect which could reasonably be expected
                  to have a Material Adverse Effect. No Default or Event of
                  Default has occurred and is continuing.

                                      -21-
<PAGE>   28


              4.9 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its 
                  Subsidiaries has good and marketable title in fee simple to,
                  or a valid leasehold interest in, all its real property, and
                  good title to, or a valid leasehold interest in, all its other
                  property, which is material to the operations of the business
                  of, the Borrower and its Subsidiaries, taken as a whole and
                  none of such property is subject to any Lien except as
                  permitted by subsection 7.3.

             4.10 INTELLECTUAL PROPERTY. The Borrower and each of its
                  Subsidiaries owns, or is licensed to use, all trademarks,
                  trade names, copyrights, technology, know-how and processes
                  necessary for the conduct of its business as currently
                  conducted, except for those for which the failure to own or
                  license could not reasonably be expected to have a Material
                  Adverse Effect (the "INTELLECTUAL PROPERTY"). No claim has
                  been asserted and is pending by any Person challenging or
                  questioning the use of any such Intellectual Property or the
                  validity or effectiveness of any such Intellectual Property
                  which could reasonably be expected to have a Material Adverse
                  Effect, nor does the Borrower know of any valid basis for any
                  such claim. To the best knowledge of the Borrower, the use of
                  such Intellectual Property by the Borrower and its
                  Subsidiaries does not infringe on the rights of any Person,
                  except for such claims and infringements that, in the
                  aggregate, could not reasonably be expected to have a Material
                  Adverse Effect.

             4.11 NO BURDENSOME RESTRICTIONS.  No Requirement of Law applicable
                  to the Borrower or any of its Subsidiaries could reasonably be
                  expected to have a Material Adverse Effect.

             4.12 TAXES. Each of the Borrower and its Subsidiaries has filed or
                  caused to be filed all material tax returns which, to the
                  knowledge of the Borrower, are required to be filed and has
                  paid all taxes shown to be due and payable on said returns or
                  on any assessments made against it or any of its property and
                  all other taxes, fees or other charges imposed on it or any of
                  its property by any Governmental Authority (other than any the
                  amount or validity of which are currently being contested in
                  good faith by appropriate proceedings and with respect to
                  which reserves in conformity with GAAP have been provided on
                  the books of the Borrower or its Subsidiaries, as the case may
                  be); no tax Lien has been filed, other than Liens permitted by
                  subsection 7.3, and, to the knowledge of the Borrower, no
                  claim is being asserted, with respect to any such tax, fee or
                  other charge.

                                      -22-
<PAGE>   29


            4.13  FEDERAL REGULATIONS. No part of the proceeds of any Loans
                  will be used in any manner which would violate, or result in
                  the violation of, Regulation D, Regulation G or Regulation U
                  of the Board of Governors of the Federal Reserve System as now
                  and from time to time hereafter in effect. If requested by any
                  Lender or the Agent, the Borrower will furnish to the Agent
                  and each Lender a statement to the foregoing effect in
                  conformity with the requirements of FR Form G-3 or FR Form U-1
                  referred to in said Regulation G or Regulation U, as the case
                  may be.

             4.14 ERISA. Neither a Reportable Event nor an "accumulated funding
                  deficiency" (within the meaning of Section 412 of the Code or
                  Section 302 of ERISA) has occurred during the five-year period
                  prior to the date on which this representation is made or
                  deemed made with respect to any Plan, and each Plan has
                  complied in all material respects with the applicable
                  provisions of ERISA and the Code. No termination of a Single
                  Employer Plan has occurred, and no Lien in favor of the PBGC
                  or a Plan has arisen, during such five-year period. The
                  present value of all accrued benefits under each Single
                  Employer Plan (based on those assumptions used to fund such
                  Plans) did not, as of the last annual valuation date prior to
                  the date on which this representation is made or deemed made,
                  exceed the value of the assets of such Plan allocable to such
                  accrued benefits. Neither the Borrower nor any Commonly
                  Controlled Entity has had a complete or partial withdrawal
                  from any Multiemployer Plan, and neither the Borrower nor any
                  Commonly Controlled Entity would become subject to any
                  liability under ERISA if the Borrower or any such Commonly
                  Controlled Entity were to withdraw completely from all
                  Multiemployer Plans as of the valuation date most closely
                  preceding the date on which this representation is made or
                  deemed made. No such Multiemployer Plan is in Reorganization
                  or Insolvent. The present value (determined using actuarial
                  and other assumptions which are reasonable in respect of the
                  benefits provided and the employees participating) of the
                  liability of the Borrower and each Commonly Controlled Entity
                  for post retirement benefits to be provided to their current
                  and former employees under Plans which are welfare benefit
                  plans (as defined in Section 3(l) of ERISA) does not, in the
                  aggregate, exceed the assets under all such Plans allocable to
                  such benefits by an amount in excess of $100,000.

             4.15 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower is
                  not an "investment company", or a company "controlled" by an
                  "investment company", within the meaning of the Investment
                  Company Act of 1940, as amended. The Borrower is not subject
                  to regulation under any Federal or State statute or regulation
                  (other than Regulation X of the Board of Governors of the
                  Federal Reserve System) which limits its ability to incur
                  Indebtedness under this Agreement or other Loan Documents.

                                      -23-
<PAGE>   30
             4.16 SUBSIDIARIES, SCHEDULE III hereto (as amended, supplemented or
                  otherwise modified from time to time to reflect the creation
                  or acquisition of new Subsidiaries subsequent to the Closing
                  Date), sets forth all of the Subsidiaries of the Borrower at
                  the date hereof, together with the ownership and jurisdiction
                  of each.

             4.17 ACQUIRED LAND PARCELS, SCHEDULE VIII hereto sets forth all
                  the Acquired Land Parcels as of the date hereof, together with
                  the ownership and location of each.

             4.18 ENVIRONMENTAL MATTERS.

                  (a) The facilities and properties owned, leased or operated by
                      the Borrower or any of its Subsidiaries (the "PROPERTIES")
                      do not contain, and have not previously contained, any
                      Materials of Environmental Concern in amounts or
                      concentrations which (i) constitute or constituted a
                      violation of, or (ii) could reasonably be expected to give
                      rise to liability under, any Environmental Law except
                      insofar as such violation or liability or any aggregation
                      thereof, is not reasonably likely to result in the payment
                      of a Material Adverse Amount;

                  (b) the Properties and all operations at the Properties are in
                      compliance in all respects with all applicable
                      Environmental Laws, and there is no contamination at or
                      under (or, to the knowledge of the Borrower, about) the
                      Properties or violation of any Environmental Law with
                      respect to the Properties or the business operated by the
                      Borrower or any of its Subsidiaries (the "BUSINESS")
                      except insofar as such violation or failure to be in
                      compliance or contamination, or any aggregation thereof,
                      is not reasonably likely to result in the payment of a
                      Material Adverse Amount;

                  (c) neither the Borrower nor any of its Subsidiaries has
                      received any notice of violation, alleged violation,
                      non-compliance, liability or potential liability regarding
                      compliance with Environmental Laws with regard to any of
                      the Properties or the Business, nor does the Borrower have
                      knowledge that any such notice will be received or is
                      being threatened, except insofar as such notice or
                      threatened notice, or any aggregation thereof, does not
                      involve a matter or matters that is or are reasonably
                      likely to result in the payment of a Material Adverse
                      Amount;

                  (d) Materials of Environmental Concern have not been
                      transported or disposed of from the Properties in
                      violation of, or in a manner or to a location which could
                      reasonably be expected to give rise to liability under,
                      any Environmental Law, nor have any Materials of
                      Environmental Concern been generated, treated, stored or
                      disposed of at, on or under any of the Properties in
                      violation of, or in a manner that could reasonably be
                      expected to give rise to liability under, any applicable
                      Environmental Law,

                                      -24-
<PAGE>   31
                      except insofar as any such violation or liability referred
                      to in this paragraph, or any aggregation thereof, is not
                      reasonably likely to result in the payment of a Material
                      Adverse Amount;

                  (e) no judicial proceeding or governmental or administrative
                      action is pending or, to the knowledge of the Borrower,
                      threatened, under any Environmental Law to which the
                      Borrower, any of its Subsidiaries is or will be named as a
                      party with respect to the Properties or the Business, nor
                      are there any consent decrees or other decrees, consent
                      orders, administrative orders or other orders, or other
                      administrative or judicial requirements outstanding under
                      any Environmental Law which are binding upon Borrower or
                      any of its Subsidiaries with respect to the Properties or
                      the Business, except insofar as such proceeding, action,
                      decree, order or other requirement, or any aggregation
                      thereof, is not reasonably likely to result in the payment
                      of a Material Adverse Amount; and

                  (f) there has been no release or threat of release of
                      Materials of Environmental Concern at or from the
                      Properties, or arising from or related to the operations
                      of the Borrower or any Subsidiary in connection with the
                      Properties or otherwise in connection with the Business,
                      in violation of or in amounts or in a manner that could
                      reasonably give rise to liability under Environmental
                      Laws, except insofar as any such violation or liability
                      referred to in this paragraph, or any aggregation thereof,
                      is not reasonably likely to result in a payment of a
                      Material Adverse Amount.

             4.19 SOLVENCY. The aggregate value of all of the tangible and
                  intangible assets of the Borrower and its Subsidiaries on a
                  consolidated basis, at a fair valuation, exceeds the total
                  liabilities of the Borrower and its Subsidiaries on a
                  consolidated basis (including contingent, subordinated,
                  unmatured and unliquidated liabilities). The Borrower and its
                  Subsidiaries have the ability to pay their respective debts as
                  they mature and do not have unreasonably small capital with
                  which to conduct their respective businesses. For purposes of
                  this subsection 4.19, the "fair valuation" of such assets is
                  the price at which the assets would change hands between a
                  willing buyer and a willing seller, both being adequately
                  informed of the relevant facts, and neither being under any
                  compulsion to buy or to sell.

             4.20 GUARANTEES. The provisions of each Guarantee are effective to 
                  create a legal, valid, binding and enforceable guarantee of
                  the obligations described therein, except as enforceability
                  may be limited by bankruptcy, insolvency, reorganization,
                  moratorium or similar laws affecting the enforcement of
                  creditors' rights generally and by general equitable
                  principles.

                                      -25-
<PAGE>   32


             4.21 JOINDER AGREEMENTS. Each Joinder Agreement constitutes a 
                  legal, valid and binding obligation of the Loan Party who is a
                  party thereto, enforceable against it in accordance with its
                  terms, except as enforceability may be limited by bankruptcy,
                  insolvency, reorganization, moratorium or similar laws
                  affecting the enforcement of creditors' rights generally and
                  by general equitable principles.


                                      -26-
<PAGE>   33



             4.22 MORTGAGES.

                  (a) The provisions of each Mortgage are effective to create a
                      legal, valid and binding obligation of the Loan Party
                      party thereto, enforceable against such party in
                      accordance with its terms, except as enforceability may be
                      limited by bankruptcy, insolvency, reorganization,
                      moratorium or similar laws affecting the enforcement of
                      creditors' rights generally and by general equitable
                      principles.

                  (b) Upon recordation and filing by the Agent (and, after the
                      Closing Date, any additional recordation or filings
                      required to be made pursuant to the Loan Documents) each
                      Mortgage will constitute a valid, perfected first priority
                      mortgage lien on the real property (as described therein)
                      enforceable as such against all creditors of any Mortgagor
                      and any Persons purporting to purchase any such Collateral
                      from the Loan Party who is mortgagee with respect thereto.

             4.23 HM SERVICES SUBORDINATION. The HM Services Subordination 
                  Agreement constitutes a legal, valid, binding and enforceable
                  obligation of the third parties thereto, enforceable against
                  each such party in accordance with its terms, except as 
                  enforceability may be limited by bankruptcy, insolvency,
                  reorganization, moratorium or similar laws affecting the
                  enforcement of creditors' rights generally and by general
                  equitable principles.

             4.24 ZN NET WORTH AGREEMENT. The ZN Net Worth Agreement constitutes
                  a legal, valid, binding and enforceable obligation of Zaring
                  National, enforceable against it in accordance with its terms,
                  except as enforceability may be limited by bankruptcy,
                  insolvency, reorganization, moratorium or similar laws
                  affecting the enforcement of creditors' rights generally and
                  by general equitable principles.

   SECTION 5: CONDITIONS PRECEDENT

              5.1 CONDITIONS TO INITIAL EXTENSIONS OF CREDIT. The agreement of
                  each Lender to make the initial extension of credit requested
                  to be made by it is subject to the satisfaction, immediately 
                  prior to or concurrently with the making of such extension of
                  credit on the Closing Date, of the following conditions 
                  precedent:

                  (a) LOAN DOCUMENTS. The Agent shall have received (i) this
                      Agreement, executed and delivered by a duly authorized
                      officer of the Borrower, (ii) the Note (to the extent so
                      requested by any Lender), executed and delivered by a duly
                      authorized officer of the Borrower, (iii) each
                      Subsidiaries Guarantee, executed and delivered by a duly
                      authorized officer of the party thereto, (iv) each
                      Security Document executed and delivered by a duly
                      authorized


                                      -27-
<PAGE>   34
                      officer of the party thereto, (v) the HM Services
                      Subordination Agreement, executed and delivered by a duly
                      authorized officer of each party thereto, and, (vi) the ZN
                      Net Worth Agreement, executed and delivered by a duly
                      authorized officer of the party thereto.

                  (b) AGREEMENTS. The Agent shall have received true and correct
                      copies, certified as to authenticity by the Borrower, of
                      such documents or instruments as may be reasonably
                      requested by the Agent.

                  (c) CLOSING CERTIFICATE OF BORROWER. The Agent shall have
                      received a certificate of the President or any Vice
                      President and the Secretary or an Assistant Secretary of
                      the Borrower, dated the Closing Date, (i) attaching the
                      Charter and By-Laws of the Borrower, (ii) attaching the
                      resolutions of the Board of Directors of the Borrower with
                      respect to the transactions contemplated hereby, (iii)
                      certifying that such resolutions have not been amended,
                      modified, revoked or rescinded as of the date of such
                      certificate and (iv) certifying as to the incumbency and
                      signature of the officers of the Borrower executing any
                      Loan Document; such certificate (and the attachments
                      thereto) shall be in form and substance satisfactory to
                      the Agent.

                  (d) CLOSING CERTIFICATE OF LOAN PARTIES. The Agent shall have
                      received a certificate of the President or any Vice
                      President and the Secretary or an Assistant Secretary of
                      each Loan Party (other than the Borrower), dated the
                      Closing Date, (i) attaching the Charter and By-Laws of
                      such Loan Party, (ii) attaching the resolutions of the
                      Board of Directors of such Loan Party with respect to the
                      transactions contemplated hereby to which it is a party,
                      (iii) certifying that the such resolutions have not been
                      amended, modified, revoked or rescinded as of the date of
                      such certificate and (iv) certifying as to the incumbency
                      and signature of the officers of such Loan Party executing
                      any Loan Document; such certificate (and the attachments
                      thereto) shall be in form and substance satisfactory to
                      the Agent.

                  (e) CORPORATE STRUCTURE. The Agent shall be satisfied with the
                      corporate and legal structure and capitalization of the
                      Loan Parties, including the terms and conditions of the
                      charter, bylaws and each class of Capital Stock of the
                      Loan Parties and of each agreement or instrument relating
                      to such structure or capitalization.

                  (f) FEES. The Borrower shall have paid the accrued fees and
                      expenses owing hereunder or in connection herewith
                      (including, without limitation, accrued fees and
                      disbursements of counsel to the Agent), to the extent that
                      such fees and expenses have been presented for payment a
                      reasonable time prior to the Closing Date.

                                      -28-
<PAGE>   35


                  (g) LEGAL OPINION. The Agent shall have received, with a
                      counterpart for each Lender, the executed legal opinion of
                      Frost & Jacobs, LLP., counsel to the Borrower and the
                      other Loan Parties, substantially in the form of EXHIBIT
                      G. Such legal opinion shall cover such other matters
                      incident to the transactions contemplated by this
                      Agreement as the Agent may reasonably require.

                  (h) ACTIONS TO PERFECT LIENS. The Agent shall have received
                      such duly executed financing statements on form UCC-1 as
                      may be necessary or, in the reasonable opinion of the
                      Agent, desirable to perfect the Liens created by the
                      Security Documents.

                  (i) LIEN SEARCHES. The Agent shall have received the results
                      of a recent search by a Person reasonably satisfactory to
                      the Agent, of the Uniform Commercial Code, judgment and
                      tax lien filings which may have been filed with respect to
                      personal property of the Borrower, and the results of such
                      search shall be reasonably satisfactory to the Agent.

                  (j) REVIEW OF OPERATIONS. The Agent shall have completed a
                      review of the operations of the Loan Parties (including,
                      without limitation, an on-site review of the financial
                      statements, financial reporting and computer systems and
                      inventory, receivables, and equipment by the Agent), each
                      in scope, and with results, satisfactory to the Agent;
                      without limiting the generality of the foregoing, the
                      Agent shall have been given such access to the management,
                      records, books of account, schedules, projections,
                      contracts and properties of each Loan Party as it shall
                      have requested.

                  (k) INSURANCE. The Agent shall have received evidence in form
                      and substance satisfactory to the Agent of the existence
                      of the insurance required under subsection 6.5.

                  (l) BUSINESS PLAN AND PROJECTIONS. The Agent shall have
                      received a business plan with projections in scope and
                      form satisfactory to the Agent.

                  (m) ADDITIONAL ITEMS. The Agent shall have received such other
                      opinions or documents as the Agent or the Majority Lenders
                      through the Agent may reasonably request.

              5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
                  Lender to make any extension of credit requested to be made by
                  it on any date (including, without limitation, its initial
                  extension of credit) is subject to the satisfaction of the
                  following conditions precedent:

                  (a) REPRESENTATIONS AND WARRANTIES. Each of the
                      representations and warranties made by the Borrower and
                      each other Loan Party in or pursuant to the

                                      -29-
<PAGE>   36
                      Loan Documents shall be true and correct in all material
                      respects on and as of such date as if made on and as of
                      such date.

                  (b) NO DEFAULT. No Default or Event of Default shall have
                      occurred and be continuing on such date or after giving
                      effect to the extensions of credit requested to be made on
                      such date.

                  (c) LTV RATIO. The LTV Ratio of each Lender shall be no
                      greater than fifty percent (50%) after giving effect to
                      the extensions of credit requested to be made on such
                      date. "LTV RATIO" shall mean the ratio of (i) the
                      Commitment Percentage of such Lender with respect to such
                      Loan to (ii) the lesser of (A) the actual cost of the
                      Acquired Land Parcel or (B) the appraised value of the
                      Acquired Land Parcel, each as determined by the Agent in
                      its sole discretion.

                  (d) TITLE INSURANCE. The Agent shall have received a mortgagee
                      title insurance policy issued by a title insurer
                      satisfactory to the Agent in amounts satisfactory to the
                      Agent and assuring the Agent that the Mortgage is a valid
                      and enforceable first priority mortgage Lien on the
                      respective Acquired Land Parcel, free and clear of all
                      defects and encumbrances except Liens permitted pursuant
                      to subsection 7.3 ("TITLE INSURANCE"). Such Title
                      Insurance shall be in form and substance satisfactory to
                      the Agent and (i) shall include (to the extent available
                      in the respective jurisdiction of each Acquired Land
                      Parcel) endorsements for future advances under this
                      Agreement, the Notes and the Mortgages, and for such other
                      matters that the Agent in its discretion may request, (ii)
                      shall not include an exception for mechanic's liens, and
                      (iii) shall provide for affirmative insurance as the Agent
                      in its discretion may request.

                  (e) ALTA SURVEYS. The Agent shall have received an ALTA Survey
                      of the respective Acquired Land Parcel, showing all
                      improvements thereon, prepared in accordance with the
                      current standards for "Land Title Surveys" of the American
                      Title Association and the American Congress on Surveying
                      and Mapping, in form and substance satisfactory to the
                      Agent, dated a recent date, certified and acceptable to
                      the Agent.

                  (f) PHASE I ENVIRONMENTAL ASSESSMENT. If the aggregate
                      outstanding Loans of all the Lenders (including any such
                      Loans to be made on the requested Borrowing Date) made in
                      connection with any Acquired Land Parcel are equal to, or
                      greater than $100,000, the Agent shall have received a
                      Phase I Environmental Assessment to the respective
                      Acquired Land Parcel in form and substance satisfactory to
                      the Agent and dated a recent date acceptable to the Agent.
                      The Agent shall forward a copy thereof to each Lender.

                  (g) APPRAISAL. If the aggregate outstanding Loans of all of
                      the Lenders (including any such Loans to be made on the
                      requested Borrowing Date) made in 

                                      -30-
<PAGE>   37
                      connection with any Acquired Land Parcel are equal to, or
                      greater than $250,000, the Agent shall have received an
                      M.A.I. Appraisal to the respective Acquired Land Parcel in
                      form and substance satisfactory to the Agent and dated a
                      recent date acceptable to the Agent. The Agent shall
                      forward a copy thereof to each Lender.

                  (h) SUBDIVISION, ZONING, TAX PARCEL, ETC. The Agent shall have
                      received evidence acceptable to it with respect to any
                      Acquired Land Parcel that such property: (i) consists of
                      one or more separate subdivided parcels, (ii) is currently
                      zoned to permit its intended use, (iii) is a separate tax
                      map parcel, (iv) has access to a dedicated public street,
                      road or highway, (v) is not located in a flood plain or
                      flood prone area.

                  (i) INSURANCE. The Agent shall have received evidence in form
                      and substance satisfactory to the Agent of the existence
                      of the insurance required under subsection 6.5 for each
                      additional Acquired Land Parcel.

                  (j) ADDITIONAL ITEMS. The Agent shall have received such other
                      approvals, opinions or documents as the Agent or the
                      Majority Lenders through the Agent may reasonably request.

         Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date thereof that the
applicable conditions contained in this subsection 5.2 have been satisfied.


                                      -31-
<PAGE>   38



    SECTION 6: AFFIRMATIVE COVENANTS

               The Borrower hereby agrees that, so long as the Commitments 
       remain in effect or any amount is owing to any Lender or the Agent 
       hereunder or under any other Loan Document, the Borrower shall and 
       (except in the case of delivery of financial information and reports
       and notices) shall cause each of its Subsidiaries to:

             6.1  FINANCIAL STATEMENTS. Furnish to the Agent and to each Lender:

                  (a) as soon as available, but in any event within one hundred
                      twenty (120) days after the end of each fiscal year of the
                      Borrower, a copy of the consolidated balance sheet of the
                      Borrower and its consolidated Subsidiaries as at the end
                      of such year and the related consolidated statements of
                      income and retained earnings and of cash flows for such
                      year, setting forth in each case in comparative form the
                      figures for the previous year, reported on without a
                      "going concern" or like qualification or exception, or
                      qualification arising out of the scope of the audit, by
                      independent certified public accountants of nationally
                      recognized standing.

                  (b) as soon as available, but in any event not later than
                      forty-five (45) days after the end of each fiscal quarter
                      of the Borrower, the unaudited consolidated balance sheets
                      of the Borrower and its consolidated Subsidiaries as at
                      the end of such quarter and the related unaudited
                      consolidated statements of income and retained earnings
                      and of cash flows of the Borrower and its consolidated
                      Subsidiaries for such quarter and the portion of the
                      Borrower's fiscal year through the end of such quarter,
                      setting forth in comparative form the figures for the
                      previous year, certified by a Responsible Officer as being
                      fairly stated in all material respects (subject to normal
                      year-end audit adjustments);

               all such financial statements shall be complete and correct in
       all material respects and shall be prepared in reasonable detail and in
       accordance with GAAP applied consistently throughout the periods
       reflected therein and with prior periods (except as approved by such
       accountants or officer, as the case may be, and disclosed therein).

              6.2  CERTIFICATES; OTHER INFORMATION. Furnish to the Agent and to 
                   each Lender:

                  (a) concurrently with the delivery of the financial statements
                      referred to in subsection 6.1(a), a certificate of the
                      independent certified public accountants reporting on such
                      financial statements stating whether in the course of
                      conducting its annual audit they became aware of any
                      Default or Event of Default pertaining to accounting
                      matters and, if so, the nature of such Default or Event of
                      Default;

                  (b) concurrently with the delivery of the financial statements
                      referred to in subsections 6.1(a) and (b), a certificate
                      of a Responsible Officer

                                      -32-
<PAGE>   39


                      substantially in the form of EXHIBIT H (i) stating that,
                      to the best of such Officer's knowledge, during such 
                      period (A) no Subsidiary has been formed or acquired 
                      without complying with this Agreement and the requirements
                      of subsection 6.10 with respect thereto, (B) neither the
                      Borrower nor any of its Subsidiaries has changed its name,
                      its principal place of business, its chief executive
                      office or the location of any material item of tangible
                      Collateral without complying with the requirements of this
                      Agreement and the Security Documents with respect thereto,
                      (C) no Acquired Land Parcel contains Materials of
                      Environmental Concern, and (D) the Borrower has observed
                      or performed all of its covenants and other agreements,
                      and satisfied every condition, contained in this Agreement
                      and the other Loan Documents to be observed, performed or
                      satisfied by it, and that such Officer has obtained no
                      knowledge of any Default or Event of Default except as
                      specified in such certificate and (ii) setting forth the
                      computations used by the Borrower in determining (as of
                      the end of such fiscal period) compliance with the
                      covenant contained in subsection 7.1;

                  (c) not later than one hundred twenty (120) days after the end
                      of each fiscal year of the Borrower, a copy of the
                      projections by the Borrower of the operating budget and
                      cash flow budget of the Borrower and its Subsidiaries for
                      the succeeding fiscal year as adopted by the Board of
                      Directors of the Borrower, such projections to be
                      accompanied by a certificate of a Responsible Officer to
                      the effect that such projections have been prepared on the
                      basis of assumptions believed by the Borrower to be
                      reasonable;

                  (d) concurrently with the delivery of the accountants'
                      certificates referred to in subsection 6.2(a), any comment
                      letter submitted by such accountants to management as of
                      that date;

                  (e) concurrently with the delivery of the projections referred
                      to in subsection 6.2(c), the consolidated financial plan
                      and financial forecasts as customarily prepared by the
                      management of the Borrower for internal use;

                  (f) as  soon as available, but in any event (i) not later than
                      one hundred twenty (120) days after the end of each fiscal
                      year of the Borrower, a copy of all financial statements
                      and regular, periodical or special reports that the
                      Borrower may make to, or file with, the SEC on an annual
                      basis and (ii) not later than forty-five (45) days after
                      the end of each fiscal quarter of the Borrower, a copy of
                      all financial statements and regular, periodical or
                      special reports that the Borrower may make to, or file
                      with, the SEC on a quarterly basis; and

                  (g) promptly, such additional financial and other information
                      as any Lender may from time to time reasonably request.

                                      -33-
<PAGE>   40
              6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at
                  or before maturity in accordance with customary terms or
                  before they become delinquent or in default, as the case may
                  be, all of its material obligations of whatever nature, except
                  where the amount or validity thereof is then being contested
                  in good faith by appropriate proceedings and reserves in
                  conformity with GAAP with respect thereto have been provided
                  on the books of the Borrower or its Subsidiaries, as the case
                  may be.

              6.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
                  engage in business of the same general type as now conducted
                  by it and preserve, renew and keep in full force and effect
                  its corporate existence and take all reasonable action to
                  maintain all rights, privileges and franchises necessary (in
                  the reasonable judgment of the Borrower) desirable in the
                  normal conduct of its business except as otherwise permitted
                  pursuant to subsection 7.13; comply with all Contractual
                  Obligations and Requirements of Law except to the extent that
                  failure to comply therewith could not, in the aggregate, be
                  reasonably expected to have a Material Adverse Effect.

              6.5 MAINTENANCE OF PROPERTY; INSURANCE.

                  (a) Keep all material property useful and necessary in its
                      business in good working order and condition; maintain
                      with financially sound and reputable insurance companies
                      insurance policies insuring all its material property
                      against loss by fire, explosion, theft and such other
                      casualties as may be reasonably satisfactory to the Agent
                      such policies to be in at least such form amounts and
                      having coverage against at least such risks as are
                      customarily insured against in the same general area by
                      companies engaged in the same or a similar business as may
                      be reasonably satisfactory to the Agent with losses
                      payable to the Borrower and the Agent, as their respective
                      interests may appear;

                  (b) Each insurance policy described in subsection 6.5(a) shall
                      (i) contain endorsements, in form satisfactory to each
                      Lender, (ii) name the Agent, as an insured party, (iii)
                      provide that no cancellation, material reduction in amount
                      or material change in coverage thereof shall be effective
                      until at least thirty (30) days after receipt by the Agent
                      of written notice thereof and (iv) be reasonably
                      satisfactory in all other respect to the Agent. In the
                      event of any termination or notice of non-payment by any
                      insurer with respect to any policy or any lapse in the
                      coverage thereunder, the Borrower shall cause such insurer
                      to give prompt written notice to each Lender of the
                      occurrence of such termination, nonpayment or lapse.

                  (c) The Borrower shall deliver to the Agent a report of a
                      reputable insurance broker with respect to such

                                      -34-
<PAGE>   41
                     insurance in each calendar year and such supplemental 
                     reports with respect thereto as the Agent may from time to
                     time reasonably request.

              6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
                  proper books of records and accounts in which full, true and
                  correct entries in conformity with GAAP and all Requirements
                  of Law shall be made of all dealings and transactions in
                  relation to its business and activities; permit
                  representatives of the Agent or any Lender to visit and
                  inspect any of its properties and examine and make abstracts
                  from any of its books and records at any reasonable time (upon
                  reasonable advance notice when no Default or Event of Default
                  has occurred and is continuing) and, with respect to the
                  Agent, as often as may reasonably be desired or, with respect
                  to any Lender other than the Agent, not more than once per
                  calendar year at the expense of such Lender (or, if an Event
                  of Default has occurred and is continuing, at any reasonable
                  time and as often as may be desired at the expense of the
                  Borrower), and to discuss the Business, operations, properties
                  and financial and other condition of the Borrower and its
                  Subsidiaries with officers and employees of the Borrower and
                  its Subsidiaries and with its independent certified public
                  accountants.

              6.7 NOTICES. Promptly after a Responsible Officer of Borrower
                  obtains knowledge thereof, give notice to the Agent (who shall
                  give prompt notice thereof to the Lenders) of:

                  (a) the occurrence of any Default or Event of Default;

                  (b) any (i) default or event of default under any Contractual
                      Obligation of the Borrower or any of its Subsidiaries or
                      (ii) litigation, investigation or proceeding which may
                      exist at any time between the Borrower or any of its
                      Subsidiaries and any Governmental Authority, which in
                      either case, if not cured or if adversely determined, as
                      the case may be, could reasonably be expected to have a
                      Material Adverse Effect;

                  (c) any litigation or proceeding affecting the Borrower or any
                      of its Subsidiaries in which the amount involved is
                      $100,000 or more and not covered by insurance or in which
                      injunctive or similar relief is sought which could have a
                      Material Adverse Effect;

                  (d) the following events, as soon as possible and in any event
                      within thirty (30) days after the Borrower knows or has
                      reason to know thereof: (i) the occurrence or expected
                      occurrence of any Reportable Event with respect to any
                      Plan that is an employee pension benefit plan (as defined
                      in Section 3(2) of ERISA), a failure to make any required
                      contribution to a Plan, the creation of any Lien in favor
                      of the PBGC or a Plan that is an employee pension benefit
                      plan (as defined in Section 3(2) of ERISA) or any
                      withdrawal from, or the termination, Reorganization or
                      Insolvency of, any


                                      -35-
<PAGE>   42


                      Multiemployer Plan or (ii) the institution of proceedings
                      or the taking of any other action by the PBGC or the 
                      Borrower or any Commonly Controlled Entity or any 
                      Multiemployer Plan with respect to the withdrawal from, or
                      the terminating, Reorganization or Insolvency of, any Plan
                      that is an employee pension benefit plan (as defined in
                      Section 3(2) of ERISA);

                  (e) the acquisition or creation of any Subsidiary which has
                      Capital Stock that is directly or indirectly owned by the
                      Borrower or any Subsidiary;

                  (f) any Lien (other than any Liens permitted under this
                      Agreement) or any other event that could reasonably be
                      expected to have a Material Adverse Effect on the
                      aggregate value of the Collateral or on the security
                      interest created by this Agreement or any other Loan
                      Document; and

                 each notice pursuant to this subsection 6.7 shall be 
            accompanied by a statement of a Responsible Officer setting forth
            details of the occurrence referred to therein and stating what
            action the Borrower proposes to take with respect thereto.

             6.8  ENVIRONMENTAL LAWS.

                  (a) Comply with, and use reasonable efforts to ensure
                      compliance by all tenants and subtenants, if any, with,
                      all applicable Environmental Laws and obtain and comply
                      with and maintain, and use reasonable efforts to ensure
                      that all tenants and subtenants obtain and comply with and
                      maintain, any and all licenses, approvals, notifications,
                      registrations or permits required by applicable
                      Environmental Laws, except to the extent that failure to
                      do so could not be reasonably expected to have a Material
                      Adverse Effect.

                  (b) Conduct and complete all investigations, studies, sampling
                      and testing, and all remedial, removal and other actions
                      required under Environmental Laws and promptly comply in
                      all material respects with all lawful orders and
                      directives of all Governmental Authorities regarding
                      Environmental Laws, except to the extent that failure to
                      so conduct, complete or comply could not reasonably be
                      expected to have a Material Adverse Effect and except to
                      the extent that the same are being contested in good faith
                      by appropriate proceedings and the pendency of such
                      proceedings could not be reasonably expected to have a
                      Material Adverse Effect.

            6.9 FURTHER ASSURANCES; ADDITIONAL COLLATERAL.

                  (a) Upon the request of the Agent, promptly perform or cause
                      to be performed any and all acts and execute or cause to
                      be executed any and all documents (including, without
                      limitation, financing statements and continuation
                      statements) (i) for filing under the provisions of the
                      Uniform Commercial Code or any other Requirement of Law
                      which are necessary or reasonably

                                      -36-
<PAGE>   43
                      advisable to maintain in favor of the Agent, for the
                      benefit of the Lenders, Liens on the Collateral that are
                      duly perfected in accordance with all applicable
                      Requirements of Law, and (ii) for the continuation and 
                      maintenance of Title Insurance which are necessary or 
                      reasonably advisable to maintain such Title Insurance in
                      favor of the Agent, for the benefit of the Lenders.

                  (b) Upon request of the Agent, promptly provide such documents
                      and legal opinions in respect of any aspect or consequence
                      of the transactions contemplated hereby as the Agent shall
                      reasonably request.

              6.10 ADDITIONAL SUBSIDIARIES.

                  (a) With respect to any Person that, subsequent to the Closing
                      Date, becomes a Subsidiary promptly (i) cause such new
                      Subsidiary to become a party to the Subsidiaries Guarantee
                      and HM Services Subordination Agreement pursuant to
                      documentation which is in form and substance satisfactory
                      to the Agent, execute and deliver such amendments to this
                      Agreement and the other Loan Documents as requested by the
                      Agent to reflect the existence of such new Subsidiary and
                      (iii) if so requested by the Agent, deliver to the Agent
                      legal opinions relating to the matters described in
                      clauses (i) and (ii) immediately preceding, which opinions
                      shall be in form and substance, and from counsel,
                      reasonably satisfactory to the Agent.

                  (b) With respect to any Person that, subsequent to the Closing
                      Date, becomes a Subsidiary, promptly cause such new
                      Subsidiary to (i) take all actions necessary or advisable
                      to cause the Lien created by the relevant Security
                      Document, if any, to be duly perfected in accordance with
                      all applicable Requirements of Law, including, without
                      limitation, the filing of recording requirements in such
                      jurisdictions as may be requested by the Agent and (ii)
                      deliver to the Agent legal opinions relating to the
                      matters described in clauses (i) and (ii) immediately
                      preceding, which opinions shall be in form and substance,
                      and from counsel, reasonably satisfactory to the Agent.


                                      -37-
<PAGE>   44



SECTION 7:    NEGATIVE COVENANTS

         The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agent hereunder or under any
other Loan Document, the Borrower shall not, and (except with respect to
subsection 7.1) shall not permit any of its Subsidiaries to, directly or
indirectly:

        7.1   FINANCIAL CONDITION COVENANT (INDEBTEDNESS TO NET WORTH). Permit
                  on the last day of the fiscal year ending December 31, 1998
                  and thereafter on the last day of any fiscal quarter of the
                  Borrower, the ratio of (i) Senior Indebtedness to (ii) the sum
                  of Consolidated Tangible Net Worth plus Subordinated
                  Indebtedness, to be greater than 3.00 to 1.00.

        7.2   LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK. Create, incur, 
                  assume or suffer to exist any Indebtedness or preferred stock
                  (other than preferred stock which, by its terms, does not
                  require the payment of any cash dividends thereon or
                  redemption/reimbursement obligations or impose any cash
                  penalties (other than accrual of dividends on unpaid
                  dividends) for the failure to declare cash dividends thereon),
                  except:

        (a)   Indebtedness of the Borrower under this Agreement;

        (b)   current trade liabilities incurred in the ordinary course of 
                  business;

        (c)   Indebtedness of any Subsidiary to the Borrower or any other
                  Subsidiary, which has executed the following: Subsidiaries
                  Guarantee, the HM Services Subordination Agreement and as
                  applicable, a Mortgage pursuant to subsection 6.10 of this
                  Agreement;

        (d)   Indebtedness outstanding on the date hereof and listed on SCHEDULE
                  V and any refinancings, refundings, renewals or extensions
                  thereof in an amount not to exceed the then current principal
                  amount thereof;

        (e)   Indebtedness of a corporation which becomes a Subsidiary after the
                  date hereof, PROVIDED that (i) such Indebtedness existed at
                  the time such corporation became a Subsidiary and was not
                  created in anticipation thereof and (ii) immediately after
                  giving effect to the acquisition of such corporation by the
                  Borrower no Default or Event of Default shall have occurred
                  and be continuing; and

        (f)   additional Indebtedness not exceeding in aggregate principal 
                  amount at any one time outstanding $500,000; and

        (g)   Guarantee Obligations permitted pursuant to subsection 7.4.

                                      -38-
<PAGE>   45


        7.3   LIMITATION ON LIENS. Create, incur, assume or suffer to exist
                  any Lien upon any of its property (including but not limited
                  to subordinate deeds of trusts or mortgages), assets or
                  revenues, whether now owned or hereafter acquired, except for:

        (a)   Liens for taxes not yet due or which are being contested in good
                  faith by appropriate proceedings, PROVIDED that adequate
                  reserves with respect thereto are maintained on the books of
                  the Borrower or its Subsidiaries, as the case may be, in
                  conformity with GAAP;

        (b)   carriers', warehousemen's, mechanics', materialmen's, repairmen's
                  or other like Liens arising in the ordinary course of business
                  for sums which are not overdue for a period of more than
                  ninety (90) days or which are being contested in good faith by
                  appropriate proceedings;

        (c)   pledges or deposits in connection with workers' compensation,
                  unemployment insurance and other social security legislation
                  and deposits securing liability to insurance carriers under
                  insurance or self-insurance arrangements;

        (d)   easements, rights-of-way, restrictions and other similar
                  encumbrances incurred in the ordinary course of business
                  which, in the aggregate, are not substantial in amount and
                  which do not in any case materially detract from the value of
                  the property subject thereto or materially interfere with the
                  ordinary conduct of the business of the Borrower or such
                  Subsidiary;

        (e)   Liens in existence on the date hereof listed on SCHEDULE VI,
                  securing Indebtedness permitted by subsection 7.2(d), PROVIDED
                  that no such Lien is spread to cover any additional property
                  after the date hereof and that the amount of Indebtedness
                  secured thereby is not increased; and

        (f)   Liens on the property or assets of a corporation which becomes a
                  Subsidiary after the date hereof securing Indebtedness
                  permitted by subsection 7.2(e), PROVIDED that (i) such Liens
                  existed at the time such corporation became a Subsidiary and
                  were not created in anticipation thereof, (ii) any such Lien
                  is not spread to cover any additional property or assets of
                  such corporation after the time such corporation becomes a
                  Subsidiary, and (iii) the amount of Indebtedness secured
                  thereby is not increased.

        7.4   LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
                  suffer to exist any Guarantee Obligation, except:

        (a)   Guarantee Obligations in existence on the date hereof and listed
                  on SCHEDULE VII;

                                      -39-
<PAGE>   46

        (b)   guarantees made by the Borrower of obligations of any of its 
                  Subsidiaries, which obligations are otherwise permitted under
                  this Agreement; and

        (c)   guarantees made by Subsidiaries of the Borrower of obligations of
                  the Borrower or any of its other Subsidiaries, which
                  obligations are otherwise permitted under this Agreement.

        7.5   LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger, 
                  consolidation or amalgamation, or liquidate, wind up or
                  dissolve itself (or suffer any liquidation or dissolution), or
                  convey, sell, lease, assign, transfer or otherwise dispose of,
                  all or substantially all of its property, business or assets,
                  except:

        (a)   any Subsidiary of the Borrower may be merged or consolidated with
                  or into the Borrower (PROVIDED that the Borrower shall be the
                  continuing or surviving corporation) or with or into any one
                  or more wholly owned Subsidiaries of the Borrower (PROVIDED
                  that the wholly owned Subsidiary or Subsidiaries shall be the
                  continuing or surviving corporation);

        (b)   any wholly owned Subsidiary may sell, lease, transfer or otherwise
                  dispose of any or all of its assets (upon voluntary
                  liquidation or otherwise) to the Borrower or any other wholly
                  owned Subsidiary of the Borrower; and

        (c)   any Subsidiary of the Borrower may enter into any transaction
                  permitted by subsection 7.5 or 7.6.

        7.6   LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign, 
                  transfer or otherwise dispose of any of its property, business
                  or assets (including, without limitation, receivables and
                  leasehold interests but, in the case of the Borrower,
                  excluding the sale of Capital Stock or other securities of the
                  Borrower), whether now owned or hereafter acquired, or, in the
                  case of any Subsidiary, issue or sell any shares of such
                  Subsidiary's Capital Stock to any Person other than the
                  Borrower or any wholly owned Subsidiary, except:

        (a)   the sale or other disposition of obsolete or worn out property
                  (including, without limitation, any property which is no
                  longer used or useful in the business of the Borrower and its
                  Subsidiaries) in the ordinary course of business and for fair
                  market value; and

        (b)   the sale or transfer of inventory (including, without limitation,
                  "out-of-date" and "less than first quality" inventory) in the
                  ordinary course of business.

        7.7   LIMITATION ON DIVIDENDS. Declare or pay any dividend on, or make 
                  any payment on account of, or set apart assets for a sinking
                  or other analogous fund for, the purchase, redemption,
                  defeasance, retirement or other 

                                      -40-
<PAGE>   47

                  acquisition of, any shares of any class of Capital Stock of
                  the Borrower or any warrants or options to purchase any such
                  Stock, whether now or hereafter outstanding, or make any other
                  distribution in respect thereof, either directly or
                  indirectly, whether in cash or property or in obligations of
                  the Borrower or any Subsidiary (such declarations, payments,
                  setting apart, purchases, redemptions, defeasances,
                  retirements, acquisitions and distributions being herein
                  called "RESTRICTED PAYMENTS").

        7.8   LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
                  loan, extension of credit or capital contribution to, or
                  purchase any stock, bonds, notes, debentures or other
                  securities of or any assets constituting a business unit of,
                  or make any other investment in, any Person, except:

        (a)   extensions of trade credit in the ordinary course of business;

        (b)   investments in Cash Equivalents;

        (c)   loans and advances to employees of the Borrower or its 
                  Subsidiaries for travel, entertainment and relocation expenses
                  in the ordinary course of business;

        (d)   investments in existence on the date hereof which are described 
                  on SCHEDULE VIII hereof;

        (e)   the Borrower may make intercompany loans and advances to its
                  wholly owned Subsidiaries which have executed the following:
                  Subsidiaries Guarantee, the HM Services Subordination
                  Agreement and as applicable, a Mortgage pursuant to subsection
                  6.10 of this Agreement; and

        (f)   other advances, loans and extensions of credit in an aggregate 
                  amount not to exceed $500,000.

        7.9   LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any 
                  transaction, including, without limitation, any purchase,
                  sale, lease or exchange of property or the rendering of any
                  service, with any Affiliate unless such transaction is (a)
                  otherwise permitted under this Agreement, (b) in the ordinary
                  course of the Borrower's or such Subsidiary's business and (c)
                  upon fair and reasonable terms no less favorable to the
                  Borrower or such Subsidiary, as the case may be, than it would
                  obtain in a comparable arm's length transaction with a Person
                  which is not an Affiliate.

                                      -41-
<PAGE>   48


        7.10  LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
                  with any Person providing for the leasing by the Borrower or
                  any Subsidiary of real or personal property which has been or
                  is to be sold or transferred by the Borrower or such
                  Subsidiary to such Person or to any other Person to whom funds
                  have been or are to be advanced by such Person on the security
                  of such property or rental obligations of the Borrower or such
                  Subsidiary.

        7.11  LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of 
                  the Borrower to end on a day other than December 31.

        7.12  LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any Person
                  any agreement, other than this Agreement, purchase money
                  mortgages, Financing Leases and other similar fixed asset
                  financings permitted by this Agreement (in which cases, any
                  prohibition or limitation shall only be effective against the
                  assets financed thereby), which prohibits or limits the
                  ability of the Borrower or any of its Subsidiaries to create,
                  incur, assume or suffer to exist any Lien upon any of its
                  property, assets or revenues, whether now owned or hereafter
                  acquired.

        7.13  LIMITATION ON LINES OF BUSINESS. Enter into any business, either
                  directly or through any Subsidiary, except for (a) the
                  businesses and businesses of a similar type in which the
                  Borrower and its Subsidiaries are engaged on the date hereof
                  and (b) other activities relating thereto.


                                      -42-
<PAGE>   49



SECTION 8:    EVENTS OF DEFAULT

         If any of the following events shall occur and be continuing:

        (a)   The Borrower shall fail to pay any principal of any Loan when due
                  in accordance with the terms hereof or any other Loan
                  Document, or the Borrower shall fail to pay any interest on
                  any Loan, or any other amount payable hereunder or any other
                  Loan Document, within five (5) Business Days after any such
                  interest or other amount becomes due in accordance with the
                  terms thereof or hereof; or

        (b)   Any representation or warranty made or deemed made by the Borrower
                  or any other Loan Party herein or in any other Loan Document
                  or which is contained in any certificate, document or
                  financial or other statement furnished by it at any time under
                  or in connection with this Agreement or any such other Loan
                  Document shall prove to have been incorrect in any material
                  respect on or as of the date made or deemed made; or

        (c)   The Borrower or any other Loan Party shall default in the
                  observance or performance of any agreement contained in
                  Section 7 or any negative covenant contained in any other Loan
                  Document; or

        (d)   The Borrower or any other Loan Party shall default in the
                  observance or performance of any other agreement contained in
                  this Agreement or any other Loan Document (other than as
                  provided in paragraphs (a) through (c) of this Section 8), and
                  such default shall continue unremedied for a period of thirty
                  (30) days; or

        (e)   The Borrower or any other Loan Party shall (i) default in any
                  payment of principal of or interest of any Indebtedness (other
                  than the Loans) or in the payment of any Guarantee Obligation,
                  beyond the period of grace (not to exceed sixty (60) days), if
                  any, provided in the instrument or agreement under which such
                  Indebtedness or Guarantee Obligation was created; or (ii)
                  default in the observance or performance of any other
                  agreement or condition relating to any such Indebtedness or
                  Guarantee Obligation or contained in any instrument or
                  agreement evidencing, securing or relating thereto, or any
                  other event shall occur or condition exist, the effect of
                  which default or other event or condition is to cause, or to
                  permit the holder or holders of such Indebtedness or
                  beneficiary or beneficiaries of such Guarantee Obligation (or
                  a trustee or Agent on behalf of such holder or holders or
                  beneficiary or beneficiaries) to cause, with the giving of
                  notice or the passage of time if required, such Indebtedness
                  to become due prior to its stated maturity or such Guarantee
                  Obligation to become payable; PROVIDED, HOWEVER, that no
                  Default or Event of Default shall exist under this paragraph
                  unless the aggregate amount of Indebtedness and/or Guarantee
                  Obligations in respect of which any default or other event or

                                      -43-
<PAGE>   50

                  condition referred to in this paragraph shall have occurred
                  shall be equal to at least $500,000; or

        (f)   An  Event of Default shall have occurred and be continuing under,
                  and as defined in, the Floor Plan Facility; or

        (g)   (i) The Borrower or any other Loan Party shall commence any case,
                  proceeding or other action (A) under any existing or future
                  law of any jurisdiction, domestic or foreign, relating to
                  bankruptcy, insolvency, reorganization or relief of debtors,
                  seeking to have an order for relief entered with respect to
                  it, or seeking to adjudicate it a bankrupt or insolvent, or
                  seeking reorganization, arrangement, adjustment, winding-up,
                  liquidation, dissolution, composition or other relief with
                  respect to it or its debts, or (B) seeking appointment of a
                  receiver, trustee, custodian, conservator or other similar
                  official for it or for all or any substantial part of its
                  assets, or the Borrower or any Subsidiary shall make a general
                  assignment for the benefit of its creditors; or (ii) there
                  shall be commenced against the Borrower or any Subsidiary any
                  case, proceeding or other action of a nature referred to in
                  clause (i) above which (A) results in the entry of an order
                  for relief or any such adjudication or appointment or (B)
                  remains undismissed, undischarged or unbonded for a period of
                  thirty (30) days; or (iii) there shall be commenced against
                  the Borrower or any Subsidiary any case, proceeding or other
                  action seeking issuance of a warrant of attachment, execution,
                  distraint or similar process against all or any substantial
                  part of its assets which results in the entry of an order for
                  any such relief which shall not have been vacated, discharged,
                  or stayed or bonded pending appeal within thirty (30) days
                  from the entry thereof, or (iv) the Borrower or any Subsidiary
                  shall take any action in furtherance of, or indicating its
                  consent to, approval of, or acquiescence in, any of the acts
                  set forth in clause (i), (ii), or (iii) above; or (v) the
                  Borrower or any Subsidiary shall generally not, or shall be
                  unable to, or shall admit in writing its inability to, pay its
                  debts as they become due; or

        (h)   (i) Any Person shall engage in any "prohibited transaction" (as
                  defined in Section 406 of ERISA or Section 4975 of the Code)
                  involving any Plan, (ii) any "accumulated funding deficiency"
                  (as defined in Section 302 of ERISA), whether or not waived,
                  shall exist with respect to any Plan or any Lien in favor of
                  the PBGC or a Plan shall arise on the assets of the Borrower
                  or any Commonly Controlled Entity, (iii) a Reportable Event
                  shall occur with respect to, or proceedings shall commence to
                  have a trustee appointed, or a trustee shall be appointed, to
                  administer or to terminate, any Single Employer Plan, which
                  Reportable Event or commencement of proceedings or appointment
                  of a trustee is, in the reasonable opinion of the Majority
                  Lenders, likely to result in the termination of such Plan for
                  purposes of Title IV of ERISA, (iv) any


                                      -44-
<PAGE>   51


                  Single Employer Plan shall terminate for purposes of Title IV
                  of ERISA, (v) the Borrower or any Commonly Controlled Entity
                  shall, or in the reasonable opinion of the Majority Lenders is
                  likely to, incur any liability in connection with a withdrawal
                  from, or the Insolvency or Reorganization of, a Multiemployer
                  Plan or (vi) any other adverse event or condition shall occur
                  or exist with respect to a Plan; and in each case in clauses
                  (i) through (vi) above, such event or condition, together with
                  all other such events or conditions, if any, could reasonably
                  be expected to involve an aggregate amount of liability to the
                  Borrower or any Subsidiary in excess of $500,000; or

        (i)   One or more judgments or decrees shall be entered against the
                  Borrower or any other Loan Party involving in the aggregate a
                  liability (not paid or fully covered by insurance) of $500,000
                  or more and all such judgments or decrees shall not have been
                  vacated, discharged, stayed or bonded pending appeal within
                  thirty (30) days from the entry thereof; or

        (j)   (i) any of the Security Documents shall cease, for any reason
                  (other than a partial or full release in accordance with the
                  terms thereof), to be in full force and effect or the Borrower
                  or any other Loan Party which is a party to any of the
                  Security Documents shall so assert, (ii) the Lien created by
                  any of the Security Documents shall cease to be enforceable
                  and of the same effect and priority purported to be created
                  thereby, (iii) any Guarantee shall cease, for any reason, to
                  be in full force and effect or any Guarantor shall so assert,
                  (iv) the HM Services Subordination Agreement shall cease, for
                  any reason, to be in full force and effect or the Creditor or
                  any Debtor shall so assert or (v) the ZN Net Worth Agreement
                  shall cease, for any reason, to be in full force and effect or
                  Zaring National Corporation shall so assert; or

        (k)   Any Change in Control shall occur;

then, and in any such event, (i) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) of this Section 8 with respect to the
Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (ii) if such
event is any other Event of Default, either or both of the following actions may
be taken: (A) with the consent of the Majority Lenders, the Agent may, or upon
the request of the Majority Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (B) with the consent of the Majority Lenders,
the Agent may, or upon the request of the Majority Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this 

                                      -45-
<PAGE>   52


Section 8, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.

SECTION 9:    THE AGENT

        9.1   APPOINTMENT. (a) Each Lender hereby irrevocably designates and
                  appoints NationsBank, N.A. as the Agent of such Lender under
                  this Agreement and the other Loan Documents, and each such
                  Lender irrevocably authorizes the Agent, in such capacity, to
                  take such action on its behalf under the provisions of this
                  Agreement and the other Loan Documents and to exercise such
                  powers and perform such duties as are expressly delegated to
                  the Agent by the terms of this Agreement and the other Loan
                  Documents, together with such other powers as are reasonably
                  incidental thereto. Notwithstanding any provision to the
                  contrary elsewhere in this Agreement, the Agent shall not have
                  any duties or responsibilities, except those expressly set
                  forth herein, or any fiduciary relationship with any Lender,
                  and no implied covenants, functions, responsibilities, duties,
                  obligations or liabilities shall be read into this Agreement
                  or any other Loan Document or otherwise exist against the
                  Agent.

                                      -46-
<PAGE>   53

        9.2   DELEGATION OF DUTIES. The Agent may execute any of its duties 
                  under this Agreement and the other Loan Documents by or
                  through administrative agents or attorneys-in-fact and shall
                  be entitled to advice of counsel concerning all matters
                  pertaining to such duties. The Agent shall not be responsible
                  for the negligence or misconduct of any administrative agents
                  or attorneys-in-fact selected by it with reasonable care.

        9.3   EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
                  directors, employees, administrative agents, attorneys-in-fact
                  or Affiliates shall be (i) liable for any action lawfully
                  taken or omitted to be taken by it or such Person under or in
                  connection with this Agreement or any other Loan Document
                  (except for its or such Person's own gross negligence or
                  willful misconduct) or (ii) responsible in any manner to any
                  of the Lenders for any recitals, statements, representations
                  or warranties made by the Borrower or any officer thereof
                  contained in this Agreement or any other Loan Document or in
                  any certificate, report, statement or other document referred
                  to or provided for in, or received by the Agent under or in
                  connection with, this Agreement or any other Loan Document or
                  for the value, validity, effectiveness, genuineness,
                  enforceability or sufficiency of this Agreement or any other
                  Loan Document or for any failure of the Borrower to perform
                  its obligations hereunder or thereunder. The Agent shall not
                  be under any obligation to any Lender to ascertain or to
                  inquire as to the observance or performance of any of the
                  agreements contained in, or conditions of, this Agreement or
                  any other Loan Document, or to inspect the properties, books
                  or records of the Borrower.

                                      -47-
<PAGE>   54

        9.4   RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall
                  be fully protected in relying, upon any Note, writing,
                  resolution, notice, consent, certificate, affidavit, letter,
                  telecopy, telex or teletype message, statement, order or other
                  document or conversation believed by it to be genuine and
                  correct and to have been signed, sent or made by the proper
                  Person or Persons and upon advice and statements of legal
                  counsel (including, without limitation, counsel to the
                  Borrower), independent accountants and other experts selected
                  by the Agent. Without limiting the foregoing or the obligation
                  of the Borrower to confirm in writing any telephonic notice
                  permitted to be given hereunder, the Agent may prior to
                  receipt of written confirmation act without liability upon the
                  basis of such telephonic notice, believed by the Agent in good
                  faith to be from a Responsible Officer or Borrower. The Agent
                  may deem and treat the payee of any Note as the owner thereof
                  for all purposes unless a written notice of assignment,
                  negotiation or transfer thereof shall have been filed with the
                  Agent. The Agent shall be fully justified in failing or
                  refusing to take any action under this Agreement or any other
                  Loan Document unless it shall first receive such advice or
                  concurrence of the Majority Lenders as it deems appropriate or
                  it shall first be indemnified to its satisfaction by the
                  Lenders against any and all liability and expense which may be
                  incurred by it by reason of taking or continuing to take any
                  such action. The Agent shall in all cases be fully protected
                  in acting, or in refraining from acting, under this Agreement
                  and the other Loan Documents in accordance with a request of
                  the Majority Lenders, and such request and any action taken or
                  failure to act pursuant thereto shall be binding upon all the
                  Lenders and all future holders of the Loans.

        9.5   NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
                  or notice of the occurrence of any Default or Event of Default
                  hereunder unless the Agent has received notice from a Lender
                  or the Borrower referring to this Agreement, describing such
                  Default or Event of Default and stating that such notice is a
                  "notice of default". In the event that the Agent receives such
                  a notice, the Agent shall give notice thereof to the Lenders.
                  The Agent shall take such action with respect to such Default
                  or Event of Default as shall be reasonably directed by the
                  Majority Lenders; PROVIDED that unless and until the Agent
                  shall have received such directions, the Agent may (but shall
                  not be obligated to) take such action, or refrain from taking
                  such action, with respect to such Default or Event of Default
                  as it shall deem advisable in the best interests of the
                  Lenders.

                                      -48-
<PAGE>   55

        9.6   NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender expressly 
                  acknowledges that neither the Agent nor any of its officers,
                  directors, employees, administrative agents, attorneys-in-fact
                  or Affiliates has made any representations or warranties to it
                  and that no act by the Agent hereinafter taken, including any
                  review of the affairs of the Borrower, shall be deemed to
                  constitute any representation or warranty by the Agent to any
                  Lender. Each Lender represents to the Agent that it has,
                  independently and without reliance upon the Agent or any other
                  Lender, and based on such documents and information as it has
                  deemed appropriate, made its own appraisal of and
                  investigation into the business, operations, property,
                  financial and other condition and creditworthiness of the
                  Borrower and made its own decision to make its Loans hereunder
                  and enter into this Agreement. Each Lender also represents
                  that it will, independently and without reliance upon the
                  Agent or any other Lender, and based on such documents and
                  information as it shall deem appropriate at the time, continue
                  to make its own credit analysis, appraisals and decisions in
                  taking or not taking action under this Agreement and the other
                  Loan Documents, and to make such investigation as it deems
                  necessary to inform itself as to the business, operations,
                  property, financial and other condition and creditworthiness
                  of the Borrower. Except for notices, reports and other
                  documents expressly required to be furnished to the Lenders by
                  the Agent hereunder, the Agent shall not have any duty or
                  responsibility to provide any Lender with any credit or other
                  information concerning the business, operations, property,
                  condition (financial or otherwise), prospects or
                  creditworthiness of the Borrower which may come into the
                  possession of the Agent or any of its officers, directors,
                  employees, administrative agents, attorneys-in-fact or
                  Affiliates.

        9.7   INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
                  capacity as such (to the extent not reimbursed by the Borrower
                  and without limiting the obligation of the Borrower to do so),
                  ratably according to their respective Commitment Percentages
                  in effect on the date on which indemnification is sought (such
                  Commitment Percentages to be determined as if there are no
                  Defaulting Lenders), from and against any and all liabilities,
                  obligations, losses, damages, penalties, actions, judgments,
                  suits, costs, expenses or disbursements of any kind whatsoever
                  which may at any time (including, without limitation, at any
                  time following the payment of the Loans) be imposed on,
                  incurred by or asserted against the Agent in any way relating
                  to or arising out of, the Commitments, this Agreement, any of
                  the other Loan Documents or any documents contemplated by or
                  referred to herein or therein or the transactions contemplated
                  hereby or thereby or any action taken or omitted by the Agent
                  under or in connection with any of the foregoing; PROVIDED
                  that no Lender shall be liable for the payment of any portion
                  of such liabilities, obligations, losses, damages, penalties,
                  actions, judgments,


                                      -49-
<PAGE>   56

                  suits, costs, expenses or disbursements resulting solely from
                  the Agent's gross negligence or willful misconduct. To the
                  extent that any Lender would be required to indemnify the
                  Agent pursuant to this subsection 9.7 but for the fact that it
                  is a Defaulting Lender, such Defaulting Lender shall not be
                  entitled to receive any portion of any payment or other
                  distribution hereunder until each other Lender shall have been
                  reimbursed for the excess, if any, of the aggregate amount
                  paid by such Lender under this subsection 9.7 over the
                  aggregate amount that such Lender would have been obligated to
                  pay had such first Lender not been a Defaulting Lender. The
                  agreements in this subsection 9.7 shall survive the payment of
                  the Loans and all other amounts payable hereunder. The
                  agreements in this subsection 9.7 shall survive the payment of
                  the Loans and all other amounts payable hereunder.

        9.8   AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and each of its 
                  respective Affiliates may make loans to, accept deposits from
                  and generally engage in any kind of business with the Borrower
                  as though the Agent were not the Agent hereunder and under the
                  other Loan Documents. With respect to its Loans made or
                  renewed by it and any Note issued to it, the Agent shall have
                  the same rights and powers under this Agreement and the other
                  Loan Documents as any Lender and may exercise the same as
                  though it were not the Agent, and the terms "Lender" and
                  "Lenders" shall include the Agent in its respective individual
                  capacity.

        9.9   SUCCESSOR AGENT. The Agent may resign as Agent upon ten (10) days'
                  notice to the Lenders and Borrower. If the Agent shall resign
                  as Agent under this Agreement and the other Loan Documents,
                  then the Majority Lenders shall appoint from among the Lenders
                  a successor Agent for the Lenders, which successor Agent
                  (PROVIDED that it shall have been approved by the Borrower),
                  shall succeed to the rights, powers and duties of the Agent
                  hereunder. Effective upon such appointment and approval, the
                  term "Agent" shall mean such successor Agent, and the former
                  Agent's rights, powers and duties as Agent shall be
                  terminated, without any other or further act or deed on the
                  part of such former Agent or any of the parties to this
                  Agreement or any holders of the Loans. After any retiring
                  Agent's resignation as Agent, the provisions of this Section 9
                  shall inure to its benefit as to any actions taken or omitted
                  to be taken by it while it was Agent under this Agreement and
                  the other Loan Documents.

SECTION 10:   MISCELLANEOUS

        10.1  AMENDMENT AND WAIVERS. Neither this Agreement nor any other Loan 
                  Document, nor any terms hereof or thereof, may be amended,
                  supplemented or modified except in accordance with the
                  provisions of this subsection 10.1. The Majority Lenders may,
                  or, with the written consent of 


                                      -50-
<PAGE>   57

                  the Majority Lenders, the Agent may, from time to time, (a)
                  enter into with the Borrower written amendments, supplements
                  or modifications hereto and to the other Loan Documents for
                  the purpose of adding any provisions to this Agreement or the
                  other Loan Documents or changing in any manner the rights of
                  the Lenders or of the Borrower hereunder or thereunder or (b)
                  waive, on such terms and conditions as the Majority Lenders or
                  the Agent, as the case may be, may specify in such instrument,
                  any of the requirements of this Agreement or the other Loan
                  Documents or any Default or Event of Default and its
                  consequences; PROVIDED, HOWEVER, that no such waiver and no
                  such amendment, supplement or modification shall:

           (i) reduce the amount or extend the scheduled date of maturity of any
                  Loan or of any installment thereof, or reduce the stated rate
                  of any interest or fee payable hereunder or extend the
                  scheduled date of any payment thereof or increase the amount
                  or extend the expiration date of any Lenders' Commitments, in
                  each case without the consent of each Non-Defaulting Lender
                  directly affected thereby;

          (ii) amend, modify or waive any provision of this subsection 10.1 or
                  reduce the percentage specified in the definition of Majority
                  Lenders, or consent to the assignment or transfer by the
                  Borrower of any of its rights and obligations under this
                  Agreement and the other Loan Documents, in each case without
                  the written consent of all the Non-Defaulting Lenders;

         (iii) consent to the assignment or transfer by the Borrower of any of
                  its rights and obligations under this Agreement and the other
                  Loan Documents, in each case without the written consent of
                  all the Non-Defaulting Lenders;

          (iv) take any action having the effect of releasing any of the
                  material collateral or material guarantee obligations provided
                  for in any Guarantee or Security Document, in each case
                  without the written consent of the Non-Defaulting Lenders;

           (v) amend, modify or waive any provision of Section 9 without the
                  written consent of the then Agent.

Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders (including Defaulting Lenders) and shall be
binding upon the Borrower, the Lenders (including Defaulting Lenders), the Agent
and all future holders of the Loans. In the case of any waiver, the Borrower,
the Lenders (including Defaulting Lenders) and the Agent shall be restored to
their former positions and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.

                                      -51-
<PAGE>   58

        10.2  RELEASES OF COLLATERAL SECURITY AND GUARANTEE OBLIGATIONS. 
                  Notwithstanding anything to the contrary contained herein or
                  in any Loan Document, upon request of the Borrower, the Agent
                  shall (without any notice to or vote or consent of any Lender)
                  take any action which has the effect of releasing any
                  collateral security and/or guarantee obligations provided for
                  in any Loan Document to the extent necessary to permit the
                  consummation of any Proceeds Event or any asset dispositions
                  permitted by subsection 7.6; PROVIDED that (unless the
                  Majority Lenders shall otherwise consent) the Proceeds of any
                  Proceeds Event are applied in the manner contemplated by
                  subsection 3.5 (if so required).

        10.3  NOTICES. Unless otherwise expressly provided herein, all notices,
                  requests and demands to or upon the respective parties hereto
                  to be effective shall be in writing (including by facsimile
                  transmission) and, unless otherwise expressly provided herein,
                  shall be deemed to have been duly given or made (a) in the
                  case of delivery by hand, when delivered, (b) in the case of
                  delivery by mail, three (3) days after being deposited in the
                  mails, postage prepaid, or (c) in the case of delivery by
                  facsimile transmission, when sent and receipt has been
                  confirmed, addressed as follows in the case of the Borrower
                  and the Agent, and as set forth in SCHEDULE I in the case of
                  the other parties hereto, or to such other address as may be
                  hereafter notified by the respective parties hereto:

The Borrower:
                      HomeMax, Inc.
                      11300 Cornell Park Drive
                      Cincinnati, Ohio  45242
                      Attention: Ronald G. Gratz, V.P. and C.F.O.
                      Telecopy: (513) 489-2667
                      Phone:  (513) 489-8849

WITH A COPY TO:
                      Frost & Jacobs, LLP.
                      2500 PNC Center
                      201 East Fifth Street
                      Cincinnati, Ohio  45202
                      Attention:  Richard J. Erickson, Esq.
                      Telecopy:  (513) 651-6981
                      Phone:  (513) 651-6880

The Agent:
                      NationsBank, N.A.
                      6610 Rockledge Drive
                      6th Floor
                      Bethesda, Maryland  20817
                      Attention: Karen H. Morgan, Vice President
                      Telecopy: 301-571-9093

                                      -52-
<PAGE>   59

                      Phone: 301-571-9049

WITH A COPY TO:
                      Shaw, Pittman, Potts & Trowbridge
                      2300 N Street, N.W.
                      Washington, D.C.  20037
                      Attention: M. David Krohn, Esq.
                      Telecopy: (212) 603-6801
                      Phone:  (212) 603-6824

PROVIDED that any notice, request or demand to or upon the Agent pursuant to
subsection 2.2, 3.3, or 3.4 shall not be effective until received.

        10.4  NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
                  delay in exercising on the part of the Agent or any Lender,
                  any right, remedy, power or privilege hereunder or under the
                  other Loan Documents shall operate as a waiver thereof; nor
                  shall any single or partial exercise of any right, remedy,
                  power or privilege hereunder preclude any other or further
                  exercise thereof or the exercise of any other right, remedy,
                  power or privilege. The rights, remedies, powers and
                  privileges herein provided are cumulative and not exclusive of
                  any rights, remedies, powers and privileges provided by law.

        10.5  SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations 
                  and warranties made hereunder, in the other Loan Documents and
                  in any document, certificate or statement delivered pursuant
                  hereto or in connection herewith shall survive the execution
                  and delivery of this Agreement and the making of the Loans
                  hereunder.

        10.6  PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay 
                  or reimburse the Agent for all of its reasonable out-of-pocket
                  costs and expenses incurred in connection with the
                  development, preparation and execution of any amendment,
                  supplement or modification to, this Agreement and the other
                  Loan Documents and any other documents prepared in connection
                  herewith or therewith, and the consummation and administration
                  of the transactions contemplated hereby and thereby,
                  including, without limitation, the reasonable fees and
                  disbursements of counsel to the Agent, (b) to pay or reimburse
                  each Lender and the Agent for all its costs and expenses
                  incurred in connection with the enforcement or preservation of
                  any rights under this Agreement, the other Loan Documents and
                  any such other documents, including, without limitation, the
                  reasonable fees and disbursements of counsel to each Lender
                  and of counsel to the Agent, (c) to pay, indemnify, and hold
                  each Lender and the Agent harmless from, any and all recording
                  and filing fees and any and all liabilities with respect to,
                  or resulting from any delay in paying, stamp, excise and other
                  taxes, if any, which may be payable or determined to be
                  payable in connection with

                                      -53-
<PAGE>   60

                  the execution and delivery of, or consummation or
                  administration of any of the transactions contemplated by, or
                  any amendment, supplement or modification of, or any waiver or
                  consent under or in respect of, this Agreement, the other Loan
                  Documents and any such other documents, and (d) to pay,
                  indemnify, and hold each Lender and the Agent harmless from
                  and against any and all other liabilities, obligations,
                  losses, damages, penalties, actions, judgments, suits, costs,
                  expenses or disbursements of any kind or nature whatsoever
                  with respect to the execution, delivery, enforcement,
                  performance and administration of this Agreement, the other
                  Loan Documents or the use of the proceeds of the Loans and any
                  such other documents, including, without limitation, any of
                  the foregoing relating to the violation of, noncompliance with
                  or liability under, any Environmental Law applicable to the
                  operations of the Borrower, any of its Subsidiaries or any of
                  the Properties (all the foregoing in this clause (d),
                  collectively, the "indemnified liabilities"), PROVIDED that
                  the Borrower shall have no obligation hereunder to the Agent
                  or any Lender with respect to indemnified liabilities to the
                  extent arising from the gross negligence or willful misconduct
                  of the Agent or such Lender. The agreements in this subsection
                  10.6 shall survive repayment of the Loans and all other
                  amounts payable hereunder.

        10.7  TERMINATION. This Agreement shall terminate upon the termination
                  of all Commitments and the irrevocable repayment in full of
                  the aggregate outstanding principal amount of the Loans,
                  accrued interest thereon, and all fees and expenses and other
                  amounts due and payable at such time under any of the Loan
                  documents; PROVIDED that all indemnities set forth herein
                  including, without limitation, in subsections 9.7 and 10.6
                  shall survive such termination.

        10.8  SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.

          (a) This Agreement shall be binding upon and inure to the benefit of
                  the Borrower, the Lenders, the Agent and their respective
                  successors and assigns, except that the Borrower may not
                  assign or transfer any of its rights or obligations under this
                  Agreement without the prior written consent of each Lender.

          (b) Any Lender may, in the ordinary course of its commercial banking
                  business and in accordance with applicable law, at any time
                  sell to one or more banks or other financial institutions
                  ("PARTICIPANTS") participating interests in any Loan owing to
                  such Lender, any Commitment of such Lender or any other
                  interest of such Lender hereunder and under the other Loan
                  Documents; PROVIDED that, in the case of any such sale to an
                  additional bank or financial institution, (x) the aggregate
                  principal amount of the Loan (or, prior to the Closing Date,
                  Commitment) being sold is not less

                                      -54-
<PAGE>   61


                  than $3,000,000 (or such lesser amount as may be agreed to by
                  the Agent) and (y) the aggregate principal amount of the Loan
                  (or, prior to the Closing Date, Commitment) remaining with the
                  selling Lender is not less than $3,000,000 (or such lesser
                  amount as may be agreed to by the Agent). In the event of any
                  such sale by a Lender of a participating interest to a
                  Participant, such Lender's obligations under this Agreement
                  shall remain unchanged, such Lender shall remain solely
                  responsible for the performance thereof, such Lender shall
                  remain the holder of any such Loan for all purposes under this
                  Agreement and the other Loan Documents, and the Borrower and
                  the Agent shall continue to deal solely and directly with such
                  Lender in connection with such Lender's rights and obligations
                  under this Agreement and the other Loan Documents. No Lender
                  shall be entitled to create in favor of any Participant, in
                  the participation agreement pursuant to which such
                  Participant's participating interest shall be created or
                  otherwise, any right to vote on, consent to or approve any
                  matter relating to this Agreement or any other Loan Document
                  except for those specified in clauses (i) and (ii) of the
                  proviso to subsection 10.1. The Borrower agrees that if
                  amounts outstanding under this Agreement are due or unpaid, or
                  shall have been declared or shall have become due and payable
                  upon the occurrence of an Event of Default, each Participant
                  shall, to the maximum extent permitted by applicable law, be
                  deemed to have the right of setoff in respect of its
                  participating interest in amounts owing under this Agreement
                  to the same extent as if the amount of its participating
                  interest were owing directly to it as a Lender under this
                  Agreement, PROVIDED that, in purchasing such participating
                  interest, such Participant shall be deemed to have agreed to
                  share with the Lenders the proceeds thereof as fully as if it
                  were a Lender hereunder.

          (c) Any Lender may, in the ordinary course of its commercial banking
                  business and in accordance with applicable law, at any time
                  and from time to time assign to any Lender or any affiliate
                  thereof or, with the consent of the Borrower and the Agent
                  (which in each case shall not be unreasonably withheld), to an
                  additional bank or financial institution (an "ASSIGNEE") all
                  or any part of its rights and obligations under this Agreement
                  and the other Loan Documents pursuant to an Assignment and
                  Acceptance, substantially in the form of EXHIBIT I, executed
                  by such Assignee, such assigning Lender (and, in the case of
                  an Assignee that is not then a Lender or an affiliate thereof,
                  by the Borrower and the Agent) and delivered to the Agent for
                  its acceptance and recording, PROVIDED that, in the case of
                  any such assignment to an additional bank or financial
                  institution, (x) the aggregate principal amount of the Loan
                  (or, prior to the Closing Date, Commitment) being assigned is
                  not less than $3,000,000 (or such lesser amount as may be
                  agreed to by the Borrower and the Agent) and (y) if such
                  assignment is of less than all of the rights and obligations
                  of the assigning Lender, the aggregate principal amount of the
                  Loan (or, prior to


                                      -55-
<PAGE>   62

                  the Closing Date, Commitment) remaining with the assigning
                  Lender is not less than $3,000,000 (or such lesser amount as
                  may be agreed to by the Borrower and the Agent). Upon such
                  execution, delivery, acceptance and recording (and the payment
                  of the registration and processing fee described in clause (e)
                  below), from and after the effective date determined pursuant
                  to such Assignment and Acceptance, (x) the Assignee thereunder
                  shall be a party hereto and, to the extent provided in such
                  Assignment and Acceptance, have the rights and obligations of
                  a Lender hereunder with a Commitment as set forth therein, and
                  (y) the assigning Lender thereunder shall, to the extent
                  provided in such Assignment and Acceptance, be released from
                  its obligations under this Agreement (and, in the case of an
                  Assignment and Acceptance covering all or the remaining
                  portion of the Lenders' rights and obligations under this
                  Agreement, such assigning Lender shall cease to be a party
                  hereto). Notwithstanding any provision of this paragraph (c)
                  of this subsection, the consent of the Borrower shall not be
                  required for any assignment which occurs at any time when any
                  of the events described in subsection 8(g) shall have occurred
                  and be continuing.

          (d) The Agent, on behalf of the Borrower, shall maintain at the
                  address of the Agent referred to in subsection 10.3 a copy of
                  each Assignment and Acceptance delivered to it and a register
                  (the "REGISTER") for the recordation of the names and
                  addresses of the Lenders and the Commitments of, and principal
                  amounts of the Loans owing to, each Lender from time to time.
                  The entries in the Register shall, to the extent permitted by
                  applicable law, be prima facie evidence of the existence and
                  amounts therein recorded. The Borrower, the Agent and the
                  Lenders may (and, in the case of any Loan or other obligation
                  hereunder not evidenced by a Note, shall) treat each Person
                  whose name is recorded in the Register as the owner of a Loan
                  or other obligation hereunder as the owner thereof for all
                  purposes of this Agreement and the other Loan Documents,
                  notwithstanding any notice to the contrary. Any assignment of
                  any Loan or other obligation hereunder not evidenced by a Note
                  shall be effective only upon appropriate entries with respect
                  thereto being made in the Register. The Register shall be
                  available for inspection by the Borrower or any Lender at any
                  reasonable time and from time to time upon reasonable prior
                  notice.

          (e) Upon its receipt of an Assignment and Acceptance executed by an
                  assigning Lender and an Assignee (and, in the case of an
                  Assignee that is not then a Lender or an affiliate thereof, by
                  the Borrower and the Agent), together with payment to the
                  Agent of a registration and processing fee of $2,500, the
                  Agent shall (i) promptly accept such Assignment and Acceptance
                  and (ii) on the effective date determined pursuant thereto
                  record the information contained therein in the Register and
                  give notice of such 

                                      -56-
<PAGE>   63

                  acceptance and recordation to the Lenders and the Borrower;
                  PROVIDED that no such fee shall be payable with respect to any
                  assignment from an assigning Lender to an affiliate thereof.

          (f) The Borrower authorizes each Lender to disclose to any Participant
                  or Assignee (each, a "TRANSFEREE") and any prospective
                  Transferee any and all financial information in such Lenders'
                  possession concerning the Borrower and its Affiliates which
                  has been delivered to such Lender by or on behalf of the
                  Borrower pursuant to this Agreement or which has been
                  delivered to such Lender by or on behalf of the Borrower in
                  connection with such Lenders' credit evaluation of the
                  Borrower and its Affiliates prior to becoming a party to this
                  Agreement.

          (g) For avoidance of doubt, the parties to this Agreement acknowledge
                  that the provisions of this subsection 10.8 concerning
                  assignments of Loans and Notes relate only to absolute
                  assignments and that such provisions do not prohibit
                  assignments creating security interests, including, without
                  limitation, any pledge or assignment by a Lender of any Loan
                  or Note to any Federal Reserve Bank in accordance with
                  applicable law.

        10.9  ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITED LENDER")
                  at any time shall receive any payment of all or part of its
                  Loans, or interest thereon, or receive any collateral in
                  respect thereof (whether voluntarily or involuntarily, by
                  set-off, pursuant to events or proceedings of the nature
                  referred to in subsection 8(g), or otherwise), in a greater
                  proportion than any such payment to or collateral received by
                  any other Lender, if any, in respect of such other Lenders'
                  Loans, or interest thereon, such benefited Lender shall
                  purchase for cash from the other Lenders such portion of each
                  such other Lenders' Loans, or shall provide such other Lenders
                  with the benefits of any such collateral, or the proceeds
                  thereof, as shall be necessary to cause such benefited Lender
                  to share the excess payment or benefits of such collateral or
                  proceeds ratably with each of the Lenders, and if after taking
                  into account such sharing the benefited Lender continues to
                  have access to addition funds of or collateral granted by the
                  Borrower for application on account of its debt, then the
                  benefited Lender shall use such funds or collateral to reduce
                  debt of the Borrower held by it and share such payments and
                  the benefits of such collateral with the other Lenders;
                  PROVIDED, HOWEVER, that if all or any portion of such excess
                  payment or benefits is thereafter recovered from such
                  benefited Lender, such purchase shall be rescinded, and the
                  purchase price and benefits returned, to the extent of such
                  recovery, but without interest. The Borrower agrees that each
                  Lender so purchasing a portion of another Lenders' Loans or
                  may exercise all rights of payment (including, without
                  limitation, rights of set-off) with respect to such portion as
                  fully as if such Lender were the direct holder of such
                  portion.

                                      -57-
<PAGE>   64


                           (b) In addition to any rights and remedies of the
                  Lenders provided by law, each Lender shall have the right,
                  without prior notice to the Borrower, any such notice being
                  expressly waived by the Borrower to the extent permitted by
                  applicable law, upon any amount becoming due and payable by
                  the Borrower hereunder (whether at the stated maturity, by
                  acceleration or otherwise) to set-off and appropriate and
                  apply against such amount any and all deposits (general or
                  special, time or demand, provisional or final), in any
                  currency, and any other credits, indebtedness or claims, in
                  any currency, in each case whether direct or indirect,
                  absolute or contingent, matured or unmatured, at any time held
                  or owing by such Lender or any branch, agency or (to the
                  extent permitted by applicable law) banking affiliate thereof
                  to or for the credit or the account of the Borrower. Each
                  Lender agrees promptly to notify the Borrower and the Agent or
                  any Lender after any such set-off and application made by such
                  Lender, PROVIDED that the failure to give such notice shall
                  not affect the validity of the set-off and application.

        10.10 COUNTERPARTS. This Agreement may be executed by one or more of
                  the parties to this Agreement on any number of separate
                  counterparts (including by facsimile transmission), and all of
                  said counterparts taken together shall be deemed to constitute
                  one and the same instrument. A set of the copies of this
                  Agreement signed by all the parties shall be lodged with the
                  Borrower and the Agent.

        10.11 SEVERABILITY. Any provision of this Agreement which is prohibited
                  or unenforceable in any jurisdiction shall, as to such
                  jurisdiction, be ineffective to the extent of such prohibition
                  or unenforceability without invalidating the remaining
                  provisions hereof, and any such prohibition or
                  unenforceability in any jurisdiction shall not invalidate or
                  render unenforceable such provision in any other jurisdiction.

        10.12 INTEGRATION. This Agreement and the other Loan Documents represent
                  the agreement of the Borrower, the Agent and the Lenders with
                  respect to the subject matter hereof, and there are no
                  promises, undertakings, representations or warranties by the
                  Agent or any Lender relative to subject matter hereof not
                  expressly set forth or referred to herein or in the other Loan
                  Documents.

        10.13 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF 
                  THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
                  INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF OHIO.

                                      -58-
<PAGE>   65

        10.14 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby 
                  irrevocably and unconditionally:

        (a)   submits for itself and its property in any legal action or
                  proceeding relating to this Agreement and the other Loan
                  Documents to which it is a party, or for recognition and
                  enforcement of any judgment in respect thereof, to the
                  non-exclusive general jurisdiction of the Courts of the State
                  of Ohio, the courts of the United States of America for the
                  Sixth Circuit, and appellate courts from any thereof,

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

        (c)   agrees that service of process in any such action or proceeding
                  may be effected by mailing a copy thereof by registered or
                  certified mail (or any substantially similar form of mail),
                  postage prepaid, to the Borrower at its address set forth in
                  subsection 10.3 or at such other address of which the Lenders
                  shall have been notified pursuant thereto;

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

        (e)   waives, except in the case of extreme bad faith (and otherwise to
                  the maximum extent not prohibited by law), any right it may
                  have to claim or recover in any legal action or proceeding
                  referred to in this subsection 10.14 any special, exemplary,
                  punitive or consequential damages.

        10.15 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:

        (a)   it has been advised by counsel in the negotiation, execution and
                  delivery of this Agreement and the other Loan Documents;

        (b)   neither the Agent nor any Lender has any fiduciary relationship
                  with or duty to the Borrower arising out of or in connection
                  with this Agreement or any of the other Loan Documents, and
                  the relationship between Agent and Lenders, on the one hand,
                  and the Borrower, on the other hand, in connection herewith is
                  solely that of debtor and creditor; and

        (c)   no joint venture is created hereby or by the other Loan Documents
                  or otherwise exists by virtue of the transactions contemplated
                  hereby among the Borrower and the Lenders.

                                      -59-
<PAGE>   66

        10.16 WAIVERS OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY 
                  APPLICABLE LAW, THE BORROWER, THE AGENT AND THE LENDERS HEREBY
                  IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
                  LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
                  OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.


                                     -60-

<PAGE>   67



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

                                             HOMEMAX, INC.
                                             as Borrower

                                             By:  /s/ Matthew S. Massarelli
                                                ----------------------------
                                                  Matthew S. Massarellli
                                                  Executive Vice President

                                             NATIONSBANK, N.A.
                                             as Agent and a Lender

                                             By: /s/ Karen H. Morgan
                                                ----------------------------
                                                  Karen H. Morgan
                                                  Vice President

                                             STAR BANK, N.A.
                                             as a Lender

                                             By: /s/ William J. Hronek
                                                ----------------------------
                                                  William J. Hronek
                                                  Vice President

                                      -61-
<PAGE>   68




                                                                      SCHEDULE I

                         LENDERS; ADDRESSES FOR NOTICES


1.       NATIONSBANK, N.A.
         6610 Rockledge Drive
         6th Floor
         Bethesda, MD  20817
         Attention: Karen H. Morgan, Vice President
         Telecopy: 301-571-9093
         Phone: 301-571-9049

2.       STAR BANK, N.A.
         425 Walnut Street
         ML 8160, 8th Floor
         Cincinnati, OH  45201
         Attention:  William J. Hronek, Vice President
         Telecopy:  513-632-2068
         Telephone:  513-632-4917

<PAGE>   69



                                                                     SCHEDULE II

                     COMMITMENTS AND COMMITMENT PERCENTAGES


       Lender                  Commitment         Commitment
       ------                                     Percentage
                                                  ----------

NATIONSBANK, N.A.              $6,000,000            50%
STAR BANK, N.A.                $6,000,000            50%




<PAGE>   70






                                                                    SCHEDULE III

                                  HOMEMAX, INC.
                                  SUBSIDIARIES

<TABLE>
<CAPTION>
     NAME                                 STATUS         JURISDICTION OF INCORPORATION   OWNERSHIP PERCENTAGE
     -----------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>                             <C>
     HomeMax Indiana, LLC               Guarantor                  Indiana                       99%

     HomeMax Kentucky, LLC              Guarantor                  Kentucky                      99%

     HomeMax North Carolina, Inc.       Guarantor               North Carolina                   100%

     HomeMax South Carolina, Inc.       Guarantor               South Carolina                   100%

     HomeMax Tennessee, Inc.            Guarantor                 Tennessee                      100%

     HM Properties, Inc.                Guarantor                  Delaware                      100%

     HM Services, Inc.                  Guarantor                  Delaware                      100%
</TABLE>


<PAGE>   71



                                                                     SCHEDULE IV

                                  INDEBTEDNESS

                                  HOMEMAX, INC.

                                 LONG TERM DEBT
                             As Of February 23, 1998

<TABLE>
<CAPTION>
ENTITY                ISSUE TYPE        BANK           ISSUE            MATURITY         RATE               AMOUNT
                                                       DATE             DATE
------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>               <C>           <C>             <C>               <C>                <C>
HomeMax, Inc.         Promissory Note   NationsBank,   02/19/1998       02/28/2001       Eurodollar Rate    $33,920,000.00
                                        N.A. Agent                                       of ABR
HomeMax               Promissory Note   NationsBank,   02/19/1998       02/28/2001       Eurodollar Rate    $33,920,000.00
Indiana, LLC                            N.A. Agent                                       of ABR
HomeMax               Promissory Note   NationsBank,   02/19/1998       02/28/2001       Eurodollar Rate    $33,920,000.00
Kentucky, LLC                           N.A. Agent                                       of ABR
HomeMax               Promissory Note   NationsBank,   02/19/1998       02/28/2001       Eurodollar Rate    $33,920,000.00
Ohio, Inc.                              N.A. Agent                                       of ABR
HomeMax               Promissory Note   NationsBank,   02/19/1998       02/28/2001       Eurodollar Rate    $33,920,000.00
North Carolina, Inc.                    N.A. Agent                                       of ABR
HomeMax               Promissory Note   NationsBank,   02/19/1998       02/28/2001       Eurodollar Rate    $33,920,000.00
South Carolina, Inc.                    N.A. Agent                                       of ABR
HomeMax               Promissory Note   NationsBank,   02/19/1998       02/28/2001       Eurodollar Rate    $33,920,000.00
Tennessee, Inc.                         N.A. Agent                                       of ABR
</TABLE>




<PAGE>   72



                                                                      SCHEDULE V

                                      LIENS

HOMEMAX, INC.:

UCC-1 filings for furniture and computer equipment leased from CLG, Inc. and
Colonial Pacific Leasing Corporation.



THE LIENS DESCRIBED BELOW APPLY TO THE FOLLOWING ENTITIES:

HomeMax, Inc.

HomeMax Indiana, LLC

HomeMax Kentucky, LLC

HomeMax North Carolina, Inc.

HomeMax South Carolina, Inc.

HomeMax Ohio, Inc.

HomeMax Tennessee, Inc.

HM Properties, Inc.

HM Services, Inc.

UCC-1 filings for all inventory together with any and all accounts, chattel
paper, documents, equipment, general intangibles and all proceeds and products
of any and all of the foregoing.

Such liens are the result of security agreements delivered to NationsBank, N.A.,
as agent for itself and the other lenders (collectively, "Lenders") under the
Floor Plan Agreement between HomeMax, Inc., HomeMax Indiana, LLC, HomeMax
Kentucky, LLC, HomeMax North Carolina, Inc., HomeMax South Carolina, Inc.,
HomeMax Ohio, Inc. and HomeMax Tennessee, Inc. (collectively, "Borrowers") and
Lenders dated February 19, 1998.



See Attachment 1 to Schedule V


<PAGE>   73



         ATTACHMENT 1 TO SCHEDULE V
<TABLE>
<CAPTION>
-------------------------------------- ---------------------------- ----------------------------- -------------------
               LESSOR                        NATURE OF LEASE                ITEMS LEASED              UCC FILING
-------------------------------------- ---------------------------- ----------------------------- -------------------
<S>                                    <C>                          <C>                            <C>
CLG                                    Equipment Lease Agreement    Misc. computer equipment             Yes
Inc.                                   dated 8/22/97 and            Modular office furniture
3001 Spring Forest Road    Raleigh,    supplements
N.C. 27616
-------------------------------------- ---------------------------- ----------------------------- -------------------
Colonial Pacific Leasing Company       Master Equipment Lease         Modular Office Equipment           Yes
P.O. Box 120102                        dated 9/22/97 and Addendums
Portland, Oregon 97281
-------------------------------------- ---------------------------- ----------------------------- -------------------
</TABLE>






<PAGE>   74








                                                                     SCHEDULE VI

                                  HOMEMAX, INC.

                                   GUARANTEES
                                   ----------




HomeMax,Inc. HomeMax Indiana, LLC 
HomeMax Kentucky, LLC 
HomeMax Ohio, Inc.
HomeMax North Carolina, Inc.
HomeMax South Carolina, Inc.
HomeMax Tennessee, Inc.
HM Properties, Inc.
HM Services, Inc.

EACH OF THE ENTITIES LISTED ABOVE HAS DELIVERED THE FOLLOWING GUARANTEES:

1)   Guarantee of $33,920,000 loan dated February 19, 1998 delivered to
     NationsBank, as agent for itself and the other lenders (collectively,
     "Lenders"), under the Floor Plan Agreement between HomeMax, Inc., HomeMax
     Indiana, LLC, HomeMax Kentucky, LLC, HomeMax Ohio, Inc., HomeMax North
     Carolina, Inc., HomeMax South Carolina, Inc., and HomeMax Tennessee, Inc.
     (collectively, "Borrowers") and Lenders dated February 19, 1998.

2) Guarantee of $15,000,000 loan dated February 23, 1998 delivered to
NationsBank, as agent for itself and the other lenders (collectively,
"Lenders"), under the Credit Agreement between Zaring National Corporation and
Lenders dated February 23, 1998.




<PAGE>   75




                                                                    SCHEDULE VII

                              EXISTING INVESTMENTS

ENTITY                                            INVESTMENT
------                                            ----------
HomeMax, Inc.                                     Subsidiaries
HomeMax Indiana, LLC                              N/A
HomeMax Kentucky, LLC                             N/A
HomeMax North Carolina, Inc.                      N/A
HomeMax Ohio, Inc.                                N/A
HomeMax South Carolina, Inc.                      N/A
HomeMax Tennessee, Inc.                           N/A


<PAGE>   76







                                                                   SCHEDULE VIII

                              ACQUIRED LAND PARCELS





                                      none



                                      -70-