Exhibit 10.16

                           Loan and Security Agreement

     This Loan and Security  Agreement (as it may be amended,  this "Agreement")
is entered into on January 21, 2000 between BANC OF AMERICA  COMMERCIAL  FINANCE
CORPORATION,  THROUGH ITS  COMMERCIAL  FUNDING  DIVISION  ("Lender"),  having an
address  at 222  North  LaSalle  Street,  Chicago,  Illinois  60601  and  DANZER
INDUSTRIES, INC. ("Borrower"),  whose chief executive office is located at 17500
York Road, Hagerstown,  MD 21740 ("Borrower's  Address").  The Schedules to this
Agreement are an integral part of this Agreement and are incorporated  herein by
reference.  Terms used, but not defined elsewhere, in this Agreement are defined
in Schedule B.

1.   LOANS AND CREDIT ACCOMMODATIONS.

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

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

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

                                      plus

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

                                      minus

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




<PAGE>



                                      minus

               (iv) the outstanding  balance of all of the monetary  Obligations
                    (excluding   the  Credit   Accommodation   Balance  and  the
                    principal balance of the Term Loan); and

                                      plus

               (v)  the Overadvance Amount, if any, set forth in Section l(g) of
                    Schedule A.

          (b)  Term Loan. On the date of this Agreement,  make (i) an advance to
               Borrower  computed  with  respect  to  the  value  of  Borrower's
               Eligible  Equipment  (the  "Equipment  Advance") in the principal
               amount,  if any, set forth in Section  2(a)(i) of Schedule A, and
               (ii) an advance to Borrower computed with respect to the value of
               Borrower's  Eligible Real Property (the "Real Property  Advance")
               in the principal amount, if any, set forth in Section 2(a)(ii) of
               Schedule A. The Equipment  Advance and the Real Property  Advance
               are collectively referred to as the "Term Loan."

     1.2  Reserves.  Lender  may from time to time  establish  and  revise  such
          reserves  as  Lender  deems   appropriate   in  its  sole   discretion
          ("Reserves") to reflect (i) events, conditions, contingencies or risks
          which  affect or may affect (A) the  Collateral  or its value,  or the
          security interests and other rights of Lender in the Collateral or (B)
          the assets,  business or prospects  of Borrower or any  Obligor,  (ii)
          Lender's  good faith concern that any  Collateral  report or financial
          information  furnished  by or on behalf of  Borrower or any Obligor to
          Lender is or may have been incomplete, inaccurate or misleading in any
          material  respect,   (iii)  any  fact  or  circumstance  which  Lender
          determines in good faith constitutes,  or could constitute,  a Default
          or Event of Default or (iv) any other  events or  circumstances  which
          Lender  determines in good faith make the establishment or revision of
          a Reserve prudent. Without limiting the foregoing, Lender shall (x) in
          the case of each  Credit  Accommodation  issued  for the  purchase  of
          Inventory  (a) which meets the  criteria for  Eligible  Inventory  set
          forth in clauses (i), (ii),  (iii),  (v) and (vi) of the definition of
          Eligible  Inventory,  (b) which is or will be in transit to one of the
          locations  set forth in Section 9(d) of Schedule A, (c) which is fully
          insured in a manner  satisfactory  to Lender  and (d) with  respect to
          which  Lender is in  possession  of all bills of lading  and all other
          documentation  which Lender has  requested,  all in form and substance
          satisfactory  to Lender in its sole  discretion,  establish  a Reserve
          equal to the cost of such Inventory (plus all duties,  freight, taxes,
          insurance,  costs and other  charges  and  expenses  relating  to such
          Credit  Accommodation  or such  Eligible  Inventory)  multiplied  by a
          percentage  equal to 100% minus the Inventory  Advance Rate applicable
          to  Eligible  Inventory  and  (y) in the  case  of  any  other  Credit
          Accommodation issued for any purpose, establish a Reserve equal to the
          full  amount  of such  Credit  Accommodation  plus all costs and other
          charges  and  expenses  relating  to  such  Credit  Accommodation.  In
          addition, (x) Lender shall establish a permanent Reserve in the amount
          set forth in Section  l(f) of Schedule  A, and (y) if the  outstanding
          principal  balance of the Term Loan  advance  with respect to Eligible
          Equipment  exceeds  the  percentage  set forth in  Section  2(a)(i) of
          Schedule A of the appraised value of such Eligible  Equipment,  Lender
          may establish an additional Reserve in the amount of such excess (and,
          for this  purpose,  if payments of principal on the Term Loan advances
          against  Eligible  Equipment  and  Real  Property  are not  calculated
          separately,  payments of  principal  of the Term Loan made by Borrower
          shall be deemed  to apply to the Term Loan  advance  with  respect  to
          Eligible Equipment and Real Property,  respectively,  in proportion to
          the original  principal amounts of such advances).  Lender may, in its
          discretion,  establish  and  revise  Reserves  by  deducting  them  in
          determining  Availability  or by  reclassifying  Eligible  Accounts or
          Eligible Inventory as ineligible.  In no event shall the establishment
          of a Reserve in respect of a particular actual or contingent liability
          obligate  Lender to make advances  hereunder to pay such  liability or
          otherwise obligate Lender with respect thereto.

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

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

     1.5  Minimum  Borrowing.  Subject  to the  terms  and  conditions  of  this
          Agreement,  Borrower agrees to (i) borrow sufficient  amounts to cause
          the outstanding  principal balance of the Loans to equal or exceed, at
          all times prior to the  Maturity  Date,  the  Minimum  Loan Amount set
          forth in Section 4 of Schedule A or pay the Minimum  Borrowing Fee set
          forth in  Section  6 of  Schedule  A; and (ii)  maintain  Availability
          sufficient to enable Borrower to do so.  However,  Lender shall not be
          obligated  to loan  Borrower  the Minimum  Loan  Amount  other than in
          accordance with all of the terms and conditions of this Agreement.

2.   INTEREST AND FEES.

     2.1  Interest. All Loans and other monetary Obligations shall bear interest
          at the  Interest  Rate(s) set forth in Section 3 of Schedule A, except
          where expressly set forth to the contrary in this Agreement or another
          Loan  Document;  provided,  that after the  occurrence  of an Event of
          Default,  all Loans and other monetary  Obligations shall, at Lender's
          option, bear interest at a rate per annum equal to two percent (2%) in
          excess of the rate otherwise  applicable  thereto (the "Default Rate")
          until paid in full  (notwithstanding the entry of any judgment against
          Borrower or the exercise of any other right or remedy by Lender),  and
          all such interest shall be payable on demand.  Changes in the Interest
          Rate  shall be  effective  as of the date of any  change  in the Prime
          Rate.  Notwithstanding  anything  to the  contrary  contained  in this
          Agreement,  the  aggregate  of  all  amounts  deemed  to  be  interest
          hereunder and charged or collected by Lender is not intended to exceed
          the highest  rate  permissible  under any  applicable  law,  but if it
          should,  such interest  shall  automatically  be reduced to the extent
          necessary  to comply  with  applicable  law and Lender  will refund to
          Borrower any such excess interest received by Lender.

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

          (a)  Closing  Fee.  A closing  fee in the  amount set forth in Section
               6(a) of Schedule A, which shall,  be deemed to be fully earned as
               of, and payable on, the date hereof.

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

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

          (d)  Unused  Line  Fee.  An  unused  line  fee at a rate  equal to the
               percentage per annum.  set forth in Section 6(d) of Schedule A of
               the  amount by which the  Maximum  Facility  Amount  exceeds  the
               average daily outstanding  principal balance of the Loans and the
               Credit  Accommodation  Balance during the  immediately  preceding
               month (or part thereof,  which fee shall be payable,  in arrears,
               on the first day of each month so long as any of the  Obligations
               are outstanding and on the Maturity Date.

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

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

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

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

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

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

3.   SECURITY INTEREST.

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

4.   ADMINISTRATION.

     4.1  Lock  Boxes and  Blocked  Accounts.  Borrower  will,  at its  expense,
          establish  (and  revise  from  time  to time as  Lender  may  require)
          collection   procedures   acceptable  to  Lender,   in  Lender's  sole
          discretion,  for the  collection of checks,  wire  transfers and other
          proceeds  of  Accounts  ("Account  Proceeds"),  each may  include  (i)
          directing all Account Debtors to send all such proceeds  directly to a
          post office box  designated  by Lender  either in the name of Borrower
          (but as to which Lender has exclusive  access) or, at Lender's option,
          in the name of Lender (a "Lock  Box") or (ii)  depositing  all Account
          Proceeds   received  by  Borrower  into  one  or  more  bank  accounts
          maintained  in Lender's  name (each,  a "Blocked  Account"),  under an
          arrangement  acceptable to Lender with a depository bank acceptable to
          Lender,  pursuant  to which all  funds  deposited  into  each  Blocked
          Account are to be transferred to Lender in such manner,  and with such
          frequency,  as Lender  shall  specify  or (iii) a  combination  of the
          foregoing.  Borrower  agrees to execute,  and to cause its  depository
          banks to execute,  such Lock Box and Blocked  Account  agreements  and
          other  documentation  as  Lender  shall  require  from time to time in
          connection with the foregoing.

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

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

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

     4.5  Power of Attorney.  Borrower  hereby  grants to Lender an  irrevocable
          power  of  attorney,   coupled  with  an  interest,   authorizing  and
          permitting  Lender  (acting  through any of its  officers,  employees,
          attorneys or agents),  at any time  (whether or not a Default or Event
          of  Default  has  occurred  and is  continuing,  except  as  expressly
          provided below), at Lender's option, but without  obligation,  with or
          without notice to Borrower,  and at Borrower's  expense,  to do any or
          all of the following, in Borrower's name or otherwise:  (i) execute on
          behalf  of  Borrower  any  documents  that  Lender  may,  in its  sole
          discretion,  deem advisable in order to perfect and maintain  Lender's
          security interests in the Collateral,  to exercise a right of Borrower
          or Lender, or to fully consummate all the transactions contemplated by
          this Agreement and the other Loan Documents  (including such financing
          statements  and  continuation  financing  statements,  and  amendments
          thereto, as Lender shall deem necessary or appropriate) and to file as
          a financing  statement  any copy of this  Agreement  or any  financing
          statement  signed by Borrower;  (ii) execute on behalf of Borrower any
          document exercising, transferring or assigning any option to purchase,
          sell or  otherwise  dispose of or lease (as lessor or lessee) any real
          or  personal  property  which  is part of the  Collateral  or in which
          Lender  has an  interest;  (iii)  execute  on behalf of  Borrower  any
          invoices  relating  to any  Accounts,  any draft  against  any Account
          Debtor, any proof of claim in bankruptcy, any notice of Lien or claim,
          and any assignment or  satisfaction  of mechanic's,  materialman's  or
          other  Lien;  (iv)  execute  on behalf of  Borrower  any notice to any
          Account  Debtor;  (v) receive and otherwise take control in any manner
          of any cash or non-cash  items of payment or  proceeds of  Collateral;
          (vi)  endorse  Borrower's  name  on all  checks  and  other  forms  of
          remittances received by Lender; (vii) pay, contest or settle any Lien,
          charge, encumbrance,  security interest and adverse claim in or to any
          of the  Collateral,  or any judgment based thereon,  or otherwise take
          any  action to  terminate  or  discharge  the same;  (viii)  after the
          occurrence of a Default or Event of Default,  grant extensions of time
          to pay,  compromise  claims relating to, and settle Accounts,  Chattel
          Paper and General Intangibles for less than face value and execute all
          releases and other  documents in  connection  therewith;  (ix) pay any
          sums required on account of Borrower's  taxes or to secure the release
          of any Liens  therefor;  (x) pay any amounts  necessary to obtain,  or
          maintain in effect,  any of the  insurance  described in Section 5.12;
          (xi) settle and adjust, and give releases of, any insurance claim that
          relates to any of the Collateral and obtain  payment  therefor;  (xii)
          instruct any third party having  custody or control of any  Collateral
          or books or records  belonging  to, or relating  to,  Borrower to give
          Lender the same rights of access and other rights with respect thereto
          as Lender has under this Agreement; and (xiii) after the occurrence of
          a Default or Event of  Default,  change the  address  for  delivery of
          Borrower's  mail and receive and open all mail  addressed to Borrower.
          Any and all sums paid, and any and all costs,  expenses,  liabilities,
          obligations and reasonable  attorneys'  fees incurred,  by Lender with
          respect  to the  foregoing  shall be added to and  become  part of the
          Obligations, shall be payable: on demand, and shall bear interest at a
          rate  equal to the  highest  interest  rate  applicable  to any of the
          Obligations.  Borrower agrees that Lender's rights under the foregoing
          power of attorney or any of Lender's other rights under this Agreement
          or the other Loan  Documents  shall not be construed to indicate  that
          Lender is in control of the  business,  management  or  properties  of
          Borrower.

     4.6  Disputes.  Borrower  shall  promptly  notify Lender of all disputes or
          claims  relating to Accounts  and Chattel  Paper.  Borrower  will not,
          without  Lender's  prior  written  consent,  compromise  or settle any
          Account or Chattel Paper for less than the full amount thereof,  grant
          any  extension  of time of  payment of any  Account or Chattel  Paper,
          release  (in whole or in part)  any  Account  Debtor  or other  person
          liable for the  payment of any  Account or Chattel  Paper or grant any
          credits, discounts,  allowances,  deductions, return authorizations or
          the like with  respect to any  Account or Chattel  Paper;  except that
          prior to the  occurrence of an Event of Default  Borrower may take any
          of such actions in the ordinary course of its business,  provided that
          Borrower promptly reports the same to Lender.

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

     4.8  Inventory.

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

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

     4.9  Access to Collateral,  Books and Records.  At reasonable times, and on
          one Business Day's notice,  prior to the occurrence of a Default or an
          Event of Default, and at any time and with or without notice after the
          occurrence  of a Default or an Event of Default,  Lender or its agents
          shall  have the  right to  inspect  the  Collateral,  and the right to
          examine  and copy  Borrower's  books and  records.  Lender  shall take
          reasonable steps to keep confidential all information  obtained in any
          such  inspection  or  examination,  but Lender shall have the right to
          disclose any such  information to its auditors,  regulatory  agencies,
          attorneys  and  participants,  and  pursuant to any  subpoena or other
          legal process.  Borrower agrees to give Lender access to any or all of
          Borrowers  premises to enable Lender to conduct such  inspections  and
          examinations. Such inspections and examinations shall be at Borrower's
          expense  and the charge  therefor  shall be $850.00 per person per day
          (or such  higher  amount  as shall  represent  Lender's  then  current
          standard  charge),  plus  reasonable   out-of-pocket   expenses.  Such
          inspections  and  examinations  shall not exceed  nine person days per
          year so long as an Event of Default has not  occurred.  Lender may, at
          Borrower's  expense,  use  Borrower's  personnel,  computer  and other
          equipment,  programs,  printed  output and  computer  readable  media,
          supplies and premises for the collection, sale or other disposition of
          Collateral  to the  extent  Lender,  in  its  sole  discretion,  deems
          appropriate.  Borrower hereby  irrevocably  authorizes all accountants
          and third  parties to disclose  and deliver to Lender,  at  Borrower's
          expense, all financial  information,  books and records,  work papers,
          management reports and other information in their possession regarding
          Borrower.  Borrower  will  not  enter  into  any  agreement  with  any
          accounting  firm,  service  bureau or third party to store  Borrower's
          books or records at any location other than Borrower's Address without
          first  obtaining   Lenders  written  consent  (which  consent  may  be
          conditioned upon such accounting  firm,  service bureau or other third
          party  agreeing to give Lender the same rights with  respect to access
          to books and  records  and  related  rights as Lender  has under  this
          Agreement).

5.   REPRESENTATIONS, WARRANTIES AND COVENANTS.

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

     5.1  Existence and Authority.  Borrower is duly organized, validly existing
          and in  good  standing  under  the  laws  of the  jurisdiction  of its
          incorporation  or formation.  Borrower is qualified and licensed to do
          business in all jurisdictions in which any failure to do so would have
          a material  adverse effect on Borrower.  The  execution,  delivery and
          performance  by Borrower of this  Agreement  and all of the other Loan
          Documents  have  been  duly and  validly  authorized,  do not  violate
          Borrower's articles or certificate of incorporation,  by-laws or other
          organizational documents, or any law or any agreement or instrument or
          any court order which is binding upon Borrower or its property, do not
          constitute  grounds for acceleration of any indebtedness or obligation
          under any  agreement or  instrument  which is binding upon Borrower or
          its  property,  and do not require  the  consent of any  Person.  This
          Agreement  and such other Loan  Documents  have been duly executed and
          delivered by, and are  enforceable  against,  Borrower,  and all other
          Obligors who have signed them,  in  accordance  with their  respective
          terms. Sections 9(g) and 9(h) of Schedule A set forth the ownership of
          Borrower and the names and ownership of Borrower's  Subsidiaries as of
          the date of this Agreement.

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

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

     5.4  Accounts and Chattel Paper. As of each date reported by Borrower,  all
          Accounts  which  Borrower  has  reported  to Lender as being  Eligible
          Accounts  comply in all respects  with the  criteria  for  eligibility
          established  by Lender and in effect at such time.  All  Accounts  and
          Chattel Paper are genuine and in all respects what they purport to be,
          arise  out  of  a   completed,   bona  fide  and   unconditional   and
          non-contingent  sale and delivery of goods or rendition of services by
          Borrower in the ordinary course of its business and in accordance with
          the terms and  conditions of all purchase  orders,  contracts or other
          documents  relating  thereto,  each Account Debtor  thereunder had the
          capacity to contract at the time any contract or other document giving
          rise to  such  Accounts  and  Chattel  Paper  were  executed,  and the
          transactions  giving rise to such  Accounts  and Chattel  Paper comply
          with all applicable laws and governmental rules and regulations.

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

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

     5.7  Financial Condition,  Statements and Reports. All financial statements
          delivered to Lender by or on behalf of Borrower  have been prepared in
          conformity  with GAAP and  completely and fairly reflect the financial
          condition  of  Borrower,  at the  times  and for the  periods  therein
          stated.  Between the last date covered by any such financial statement
          provided  to Lender  and the date  hereof  (or,  with  respect  to the
          remaking of this  representation  in connection with the making of any
          Loan or the providing of any Credit Accommodation,  the date such Loan
          is made or such Credit  Accommodation is provided),  there has been no
          material  adverse  change in the  financial  condition  or business of
          Borrower.  Borrower  is solvent and able to pay its debts as they come
          due,  and has  sufficient  capital  to  carry on its  business  as now
          conducted and as. proposed to be conducted. All schedules, reports and
          other  information and  documentation  delivered by Borrower to Lender
          with respect to the Collateral are, or will be, when delivered,  true,
          correct and complete as of the date  delivered  or the date  specified
          therein.

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

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

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

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

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

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

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

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

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

          (d)  Projections,   Etc.  Such  business   projections,   Availability
               projections, business plans, budgets and cash flow statements for
               Borrower and its  Subsidiaries  as Lender shall request from time
               to time;

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

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

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

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

     5.15 Maintenance  of  Collateral,  Etc.  Borrower  will maintain all of its
          Equipment in good working condition,  ordinary wear and tear excepted,
          and Borrower will riot use the  Collateral  for any unlawful  purpose.
          Borrower win immediately advise Lender in writing of any material loss
          or damage to the Collateral and of any  investigation,  action,  suit,
          proceeding or claim  relating to the Collateral or which may result in
          an  adverse  impact  upon  Borrower's  business,  assets or  financial
          condition.

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

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

     5.18 Negative  Covenants.  Except as set forth in Section 13 of Schedule A,
          Borrower will not, without  Lender's prior written consent,  (i) merge
          or consolidate with another Person, form any new Subsidiary or acquire
          any  interest in any  Person;  (ii)  acquire any assets  except in the
          ordinary  course  of  business  and as  otherwise  permitted  by  this
          Agreement  and  the  other  Loan  Documents;   (iii)  enter  into  any
          transaction  outside the  ordinary  course of  business;  (iv) sell or
          transfer any Collateral or other assets, except that Borrower may sell
          finished goods Inventory in the ordinary  course of its business;  (v)
          make any loans to, or investments in, any Affiliate or other Person in
          the form of money or other  assets;  (vi) incur any debt  outside  the
          ordinary course of business; (vii) guaranty or otherwise become liable
          with respect to the obligations of another party or entity; (viii) pay
          or declare any dividends or other  distributions on Borrower's  stock,
          if Borrower is a corporation  (except for dividends  payable solely in
          capital stock of Borrower) or with respect to any equity interests, if
          Borrower  is not a  corporation;  (ix)  redeem,  retire,  purchase  or
          otherwise acquire,  directly or indirectly,  any of Borrower's capital
          stock or other  equity  interests;  (x) make any change in  Borrower's
          capital structure;  (xi) dissolve or elect to dissolve;  (xii) pay any
          principal  or  interest  on any  indebtedness  owing to an  Affiliate,
          (xiii)  enter into any  transaction  with an  Affiliate  other than on
          arms-length terms; or (xiv) agree to do any of the foregoing.

     5.19 Financial Covenants.

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

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

          (c)  Tangible Net Worth. Borrower will at all times maintain a minimum
               tangible  net worth of at least the  amount  set forth in Section
               8(c) of Schedule A.

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

          (e)  Net Losses.  Borrower will not permit its  cumulative net loss to
               exceed the amount set forth in Section 8(e) of Schedule A.

          (f)  Net Income. Borrower will not permit its cumulative net income to
               be less than the amount set forth in Section 8(f) of Schedule A.

          (g)  Leverage.  Borrower  will  not  permit  the  ratio  of its  total
               liabilities  to its net worth to exceed,  at any time,  the ratio
               set forth in Section 8(g) of Schedule A.

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

     5.20.Year 2000 Compliance Representation. Borrower reasonably believes that
          all  computer  applications  (including  those  of its  suppliers  and
          vendors) that are material to its or any of its Subsidiaries' business
          and  operations  will on a timely  basis be able to  perform  properly
          date-sensitive  functions  for all dates  before and after  January 1,
          2000 (that is, be "Year 2000 compliant"),  except to the extent that a
          failure to do so could not  reasonably  be expected to have a material
          adverse effect on Borrower's  business or on the condition or value of
          the Collateral ("Material Adverse Effect").

6.   RELEASE AND INDEMNITY.

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

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

          (b)  In  connection  with  Credit  Accommodations  or  any  underlying
               transaction,  Lender shall not be responsible  for the conformity
               of  any  goods  to  the  documents  presented,  the  validity  or
               genuineness  of  any  documents,   delay,  default  or  fraud  by
               Borrower,  shippers and/or any other Person. Borrower agrees that
               any action taken by Lender, if taken in good faith, or any action
               taken  by an  issuer  of any  Credit  Accommodation,  under or in
               connection  with any  Credit  Accommodation,  shall be binding on
               Borrower and shall not create any resulting  liability to Lender.
               In  furtherance  thereof,  Lender  shall  have the full right and
               authority to clear and resolve any questions of non-compliance of
               documents, to give any instructions as to acceptance or rejection
               of any documents or goods, to execute for Borrower's  account any
               and  all  applications   for  steamship  or  airway   guaranties,
               indemnities  or delivery  orders,  to grant any extensions of the
               maturity of, time of payment for, or time of presentation of, any
               drafts, acceptances or documents, and to agree to any amendments,
               renewals, extensions,  modifications, changes or cancellations of
               any  of  the   terms  or   conditions   of  any  of  the   Credit
               Accommodations or applications and other documentation pertaining
               thereto.

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

7.   TERM.

     7.1  MATURITY DATE. LENDER'S OBLIGATION TO MAKE LOANS AND TO PROVIDE CREDIT
          ACCOMMODATIONS UNDER THIS AGREEMENT SHALL INITIALLY CONTINUE IN EFFECT
          UNTIL TIRE INITIAL  MATURITY DATE SET FORTH IN SECTION 7 OF SCHEDULE A
          (THE "INITIAL TERM');  PROVIDED, THAT SUCH DATE SHALL AUTOMATICALLY BE
          EXTENDED (THE INITIAL  MATURITY DATE, AS IT MAY BE SO EXTENDED,  BEING
          REFERRED TO AS THE "MATURITY DATE") FOR SUCCESSIVE ADDITIONAL TERMS OF
          THREE  YEARS  EACH  (EACH A "RENEWAL  TERM"),  UNLESS ONE PARTY  GIVES
          WRITTEN  NOTICE TO THE  OTHER,  NOT LESS THAN  SIXTY DAYS PRIOR TO THE
          MATURITY DATE, THAT SUCH PARTY ELECTS NOT TO EXTEND THE MATURITY DATE.
          THIS  AGREEMENT  AND THE OTHER LOAN  DOCUMENTS  AND LENDER'S  SECURITY
          INTERESTS IN AND LIENS UPON THE COLLATERAL,  AND ALL  REPRESENTATIONS,
          WARRANTIES  AND  COVENANTS OF BORROWER  CONTAINED  HEREIN AND THEREIN,
          SHALL REMAIN IN FULL FORCE AND EFFECT  AFTER THE  MATURITY  DATE UNTIL
          ALL OF THE MONETARY OBLIGATIONS ARE INDEFEASIBLY PAID IN FULL.

     7.2  Early  Termination.  Lender's  obligation to make Loans and to provide
          Credit  Accommodations under this Agreement may be terminated prior to
          the  Maturity  Date as  follows:  (i) by  Borrower,  effective  thirty
          business days after written notice of  termination' is given to Lender
          or (ii) by Lender  at any time  after  the  occurrence  of an Event of
          Default, without notice, effective immediately;  provided, that if any
          Affiliate of Borrower is also a party to a financing  arrangement with
          Lender,  no such early  termination  shall be  effective  unless  such
          Affiliate  simultaneously  terminates its financing  arrangement  with
          Lender. If so terminated under this Section 7.2, Borrower shall pay to
          Lender (i) an early  termination fee (the "Early  Termination Fee") in
          the  amount  set forth in  Section  6(h) of  Schedule  A plus (ii) any
          earned but unpaid  Facility  Fee. Such fee shall be due and payable on
          the effective date of termination  and thereafter  shall bear interest
          at a  rate  equal  to  the  highest  rate  applicable  to  any  of the
          Obligations.  In addition,  if Borrower so  terminates  and repays the
          Obligations  without having provided Lender with at least thirty days'
          prior written  notice  thereof,  an additional  amount equal to thirty
          days of  interest at the  applicable  Interest  Rate(s),  based on the
          average outstanding amount of the Obligations for the six month period
          immediately preceding the date of termination.

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

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

8.   EVENTS OF DEFAULT AND REMEDIES.

     8.1  Events of Default. The occurrence of any of the following events shall
          constitute an "Event of Default"  under this  Agreement,  and Borrower
          shall  give  Lender  immediate  written  notice  thereof.  (i)  if any
          warranty,  representation,  statement,  report or certificate  made or
          delivered  to  Lender  by  Borrower  or  any of  Borrower's  officers,
          employees or agents is untrue or misleading; (ii) if Borrower fails to
          pay when  due any  principal  or  interest  on any  Loan or any  other
          monetary  Obligation;  (iii) if  Borrower  breaches  any  covenant  or
          obligation  contained in this  Agreement or any other Loan Document or
          fails to perform any other non-monetary Obligation;  (iv) if any levy,
          assessment,  attachment,  seizure,  lien or encumbrance  (other than a
          Permitted  Lien) is made or  permitted  to exist on all or any part of
          the Collateral;  (v) if one or more judgments aggregating in excess of
          $25,000, or any injunction or attachment, is obtained against Borrower
          or any Obligor  which  remains  unstayed  for more than ten days or is
          enforced;  (vi) the  occurrence  of any  default  under any  financing
          agreement,  security  agreement  or  other  agreement,  instrument  or
          document  executed and delivered by (A) Borrower with, or in favor of,
          any Person  other than  Lender or (B)  Borrower  or any  Affiliate  of
          Borrower  with,  or in favor of,  Lender or any  Affiliate  of Lender;
          (vii)  the  dissolution,  death,  termination  of  existence  in  good
          standing, insolvency or business failure or suspension or cessation of
          business  as usual  of  Borrower  or any  Obligor  (or of any  general
          partner of  Borrower  or any  Obligor if it is a  partnership)  or the
          appointment of a receiver, trustee or custodian for all or any part of
          the  property  of, or an  assignment  for the benefit of  creditors by
          Borrower or any Obligor,  or the  commencement  of any  proceeding  by
          Borrower  or  any  Obligor  under  any   reorganization,   bankruptcy,
          insolvency,   arrangement,   readjustment  of  debt,   dissolution  or
          liquidation law or statute of any  jurisdiction,  now or in the future
          in effect,  or if Borrower  makes or sends a notice of a bulk transfer
          or calls a meeting of its creditors;  (viii) the  commencement  of any
          proceeding  against Borrower or any Obligor under any  reorganization,
          bankruptcy, insolvency, arrangement, readjustment of debt, dissolution
          or  liquidation  law or  statute  of any  jurisdiction,  now or in the
          future  in  effect;  (ix)  the  actual  or  attempted   revocation  or
          termination  of,  or  limitation  or  denial of  liability  upon,  any
          guaranty of the  Obligations,  or any security  document  securing the
          Obligations,  by any  Obligor;  (x) if  Borrower  makes any payment on
          account of any indebtedness or obligation which has been  subordinated
          to  the  Obligations   other  than  as  permitted  in  the  applicable
          subordination  agreement,  or if any Person who has subordinated  such
          indebtedness  or  obligations  attempts  to  limit  or  terminate  its
          subordination  agreement;  (xi) if there -is any actual or  threatened
          indictment  of Borrower or any Obligor  under any criminal  statute or
          commencement   or  threatened   commencement   of  criminal  or  civil
          proceedings  against  Borrower or any  Obligor,  pursuant to which the
          potential penalties or remedies sought or available include forfeiture
          of any  property  of  Borrower  or such  Obligor;  (xii) if there is a
          change in the record or  beneficial  ownership of an aggregate of more
          than  20%  of  the  outstanding   shares  of  stock  of  Borrower  (or
          partnership or membership  interests if it is a partnership or limited
          liability  company),  in one or  more  transactions,  compared  to the
          ownership of outstanding shares of stock (or partnership or membership
          interests)  of  Borrower  as of the date  hereof,  without  the  prior
          written consent of Lender;  (xiii) if there is any change in the chief
          executive officer,  chief operating officer or chief financial officer
          of  Borrower;  (xiv) if an Event of Default  occurs under any Loan and
          Security  Agreement  between  Lender and an Affiliate of Borrower;  or
          (xv) if  Lender  determines  in good  faith  that  the  Collateral  is
          insufficient  to fully secure the  Obligations or that the prospect of
          payment of performance of the Obligations is impaired.

     8.2  Remedies.  Upon  the  occurrence  of any  Default,  and  at  any  time
          thereafter, Lender, at its option, may cease making Loans or otherwise
          extending  credit to Borrower  under this  Agreement or any other Loan
          Document. Upon the occurrence of any Event of Default, and at any time
          thereafter, Lender, at its option, and without notice or demand of any
          kind (all of which are hereby  expressly  waived by Borrower),  may do
          any one or more of the following:  (i) cease making Loans or otherwise
          extending  credit to Borrower  under this  Agreement or any other Loan
          Document;  (ii)  accelerate  and  declare  all  or  any  part  of  the
          Obligations  to  be   immediately   due,   payable  and   performable,
          notwithstanding  any deferred or installment  payments  allowed by any
          instrument  evidencing  or relating to any of the  Obligations;  (iii)
          take  possession  of any or all of the  Collateral  wherever it may be
          found, and for that purpose Borrower hereby authorizes Lender, without
          judicial  process,  to enter onto any of Borrower's  premises  without
          interference to search for, take possession of, keep, store, or remove
          any of the Collateral,  and remain (or cause a custodian to remain) on
          the premises in exclusive control thereof,  without charge for so long
          as Lender  deems it  reasonably  necessary  in order to  complete  the
          enforcement of its rights under this Agreement or any other agreement;
          provided,  that  if  Lender  seeks  to take  possession  of any of the
          Collateral by court process,  Borrower hereby  irrevocably  waives (A)
          any bond and any surety or security  relating  thereto required by law
          as an incident to such possession, (B) any demand for possession prior
          to the  commencement  of any  suit or  action  to  recover  possession
          thereof and (C) any requirement that Lender retain  possession of, and
          not  dispose  of,  any  such  Collateral  until  after  trial or final
          judgment;  (iv)  require  Borrower  to  assemble  any  or  all  of the
          Collateral  and make it  available  to  Lender  at one or more  places
          designated  by Lender which are  reasonably  convenient  to Lender and
          Borrower, and to remove the Collateral to such locations as Lender may
          deem advisable;  (v) complete the processing,  manufacturing or repair
          of any Collateral prior to a disposition thereof and, for such purpose
          and for the  purpose of  removal,  Lender  shall have the right to use
          Borrower's  premises,  vehicles  and  other  Equipment  and all  other
          property without charge;  (vi) sell, lease or otherwise dispose of any
          of  the  Collateral,  in its  condition  at the  time  Lender  obtains
          possession of it or after further manufacturing, processing or repair,
          at one or more public or private sales,  in lots or in bulk, for cash,
          exchange or other  property,  or on credit (a "Sale"),  and to adjourn
          any such  Sale  from  time to time  without  notice  other  than  oral
          announcement  at the time  scheduled  for  Sale  (and,  in  connection
          therewith,  (A) Lender  shall  have the right to conduct  such Sale on
          Borrower's  premises  without  charge,  for such times as Lender deems
          reasonable,  on Lender's  premises,  or elsewhere,  and the Collateral
          need not be located at the place of Sale;  (B) Lender may  directly or
          through any of its Affiliates  purchase or lease any of the Collateral
          at any such public  disposition,  and if permissible  under applicable
          law, at any private  disposition and (C) any Sale of Collateral  shall
          not  relieve  Borrower  of any  liability  Borrower  may  have  if any
          Collateral is defective as to title,  physical  condition or otherwise
          at the  time  of  sale);  (vii)  demand  payment  of and  collect  any
          Accounts,  Chattel Paper, Instruments and General Intangibles included
          in the Collateral and, in connection  therewith,  Borrower irrevocably
          authorizes   Lender  to  endorse  or  sign   Borrower's  name  on  all
          collections,  receipts,  Instruments  and  other  documents,  to  take
          possession of and open mail addressed to Borrower and remove therefrom
          payments  made with  respect  to any item of  Collateral  or  proceeds
          thereof and, in Lender's sole discretion,  to grant extensions of time
          to pay, compromise claims and settle Accounts, General Intangibles and
          the like for less than face  value;  and  (viii)  demand  and  receive
          possession of any of  Borrower's  federal and state income tax returns
          and the books and  records  utilized  in the  preparation  thereof  or
          relating  thereto.  In addition to the  foregoing  remedies,  upon the
          occurrence of any Event of Default  resulting  from a breach of any of
          the financial  covenants set forth in Section 5.19, Lender may, at its
          option, upon not less than ten days' prior notice to Borrower,  reduce
          any or all of the Advance Rates set forth in Section I (b) of Schedule
          A to the extent Lender, in its sole discretion,  deems appropriate. In
          addition to the rights and remedies set forth above, Lender shall have
          all the other  rights  and  remedies  accorded a secured  party  after
          default under the UCC and under all other  applicable  laws, and under
          any other  Loan  Document,  and all of such  rights and  remedies  are
          cumulative and  non-exclusive.  Exercise or partial exercise by Lender
          of one or more of its  rights  or  remedies  shall  not be  deemed  an
          election or bar Lender from subsequent exercise or partial exercise of
          any  other  rights  or  remedies.  The  failure  or delay of Lender to
          exercise any rights or remedies shall not operate as a waiver thereof,
          but all rights and  remedies  shaft  continue in full force and effect
          until all of the  Obligations  have been fully paid and performed.  If
          notice of any sale or other  disposition  of Collateral is required by
          law, notice at least seven days prior to the sale designating the time
          and place of sale in the case of a public sale or the time after which
          any private sale or other disposition is to be made shall be deemed to
          be reasonable  notice,  and Borrower  waives any other notice.  If any
          Collateral  is sold or leased by Lender on credit  terms or for future
          delivery,  the  Obligations  shall not be reduced as a result  thereof
          until payment is collected by Lender.

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

9.   GENERAL PROVISIONS.

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

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

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

     9.4  Waivers.  The  failure  of  Lender  at any time or  times  to  require
          Borrower  to  strictly  comply  with  any of the  provisions  of  this
          Agreement or any other Loan Documents  shall not waive or diminish any
          right  of  Lender  later  to  demand  and  receive  strict  compliance
          therewith.  Any  waiver of any  default  shall not waive or affect any
          other  default,  whether  prior  or  subsequent,  and  whether  or not
          similar.  None of the  provisions of this  Agreement or any other Loan
          Document  shall be deemed to have been waived by any act or  knowledge
          of Lender or its agents or employees,  but only by a specific  written
          waiver  signed by an  authorized  officer of Lender and  delivered  to
          Borrower.  Borrower  waives  demand,  protest,  notice of protest  and
          notice of  default  or  dishonor,  notice of  payment  and  nonpayment
          release,   compromise,   settlement,   extension  or  renewal  of  any
          commercial paper, Instrument,  Account, General Intangible,  Document,
          Chattel  Paper,  Investment  Property  or guaranty at any time held by
          Lender on which Borrower is or may in any way be liable, and notice of
          any  action  taken  by  Lender,  unless  expressly  required  by  this
          Agreement, and notice of acceptance hereof.

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

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

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

     9.8  Benefit of Agreement;  Assignability. The provisions of this Agreement
          shall be  binding  upon and  inure to the  benefit  of the  respective
          successors,  assigns,  heirs,  beneficiaries  and  representatives  of
          Borrower  and  Lender;  provided,  that  Borrower  may not  assign  or
          transfer  any of its rights  under this  Agreement  without-the  prior
          written  consent of Lender,  and any  prohibited  assignment  shall be
          void. No consent by Lender to any  assignment  shall release  Borrower
          from its liability for any of the  Obligations.  Lender shall have the
          right to assign  all or any of its rights  and  obligations  under the
          Loan Documents, and to sell participating interests therein, to one or
          more other  Persons,  and Borrower  agrees to execute all  agreements,
          instruments and documents  requested by Lender in connection with each
          such assignment and participation.

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

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

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

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

Borrower:                                Lender:

Danzer Industries, Inc.                  Banc of America Commercial Finance
                                         Corporation, through its
                                         Commercial Funding Division


By /s/ M.E. Williams                     By /s/ Richard A. Simons
     Its President                       Its Authorized Signatory


<PAGE>


                                   Schedule A

                          Description of Certain Terms

     This  Schedule  is an  integral  part of the  Loan and  Security  Agreement
between  DANZER  INDUSTRIES,   INC.  and  BANC  OF  AMERICA  COMMERCIAL  FINANCE
CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION (the "Agreement").

1.       Loan Limits for Revolving
         Loans:

(a)      Maximum Facility
         Amount:                   $1,750,000

(b)      Advance Rates:

         (i)      Accounts         85%; provided, that if the Dilution
                  Advance Rate:    Percentage exceeds 3%, such advance rate
                                   will be reduced by the number of full or
                                   partial percentage points of such excess.

          (ii)     Inventory
                   Advance                  N/A
                   Rate(s):

                   (A)      Finished
                            goods:          N/A

                   (B)      Raw
                            materials:      N/A

                   (C)      Work in
                            process:        N/A

(c)      Accounts Sublimit:                 N/A

(d)      Inventory Sublimit(s):             N/A

         (i)      Overall sublimit
                  on advances
                  against Eligible
                  Inventory                 N/A

         (ii)     Sublimit on               N/A
                  advances
                  against finished
                  goods

          (iii)   Sublimit on               N/A
                  advances
                  against work in
                  process

(e)      Credit
         Accommodation                      N/A
         Limit:

(f)      Permanent Reserve
         Amount:                            N/A

(g)      Overadvance
         Amount:                            N/A

2.       Loan Limits for Term
         Loan:

(a)      Principal Amount:                  $600,000

         (i)      Equipment                 N/A
                  Advance

         (ii)     Real Property             $600,000
                  Advance:

(b)      Repayment Schedule:

         (i)      Equipment                 N/A
                  Advance:

         (ii)     Real Property    The Real Property Advance shall be repaid
                  Advance:         in equal consecutive monthly installments
                                   amortized over 84 months
                                   payable on the first day of
                                   each calendar month
                                   commencing March 1, 2000,
                                   with the entire unpaid
                                   balance due and payable on
                                   the Maturity Date.

3.       Interest Rates:

(a)      Revolving Loans:          2.25% per annum in excess of the Prime
                                   Rate

(b)      Term Loan:                2.25% per annum in excess of the Prime
                                   Rate

4.       Minimum Loan Amount:      $1,000,000

5.       Maximum Days:

(a)      Maximum days after
         original invoice date
         for Eligible Accounts:    90

(b)      Maximum days after
         original invoice due
         date for Eligible         60
         Accounts:

6.       Fees:

(a)      Closing Fee:              $8,750

(b)      Facility Fee:

         (i)      Initial Term:    0.75% of the Maximum Facility Amount
                                   payable on each anniversary of the date
                                   hereof.

         (ii)     Renewal          0.75% of the Maximum Facility Amount
                  Term(s):         payable on each anniversary of such
                                   renewal.

(c)      Servicing Fee:            N/A

(d)      Unused Line Fee:          0.25% per annum of the excess of the
                                   Maximum Facility Amount over the average
                                   monthly balance of loans outstanding,
                                   payable monthly.
(e)      Minimum Borrowing         The difference between the actual monthly
         Fee:                      average loan balance and the Minimum Loan
                                   Amount multiplied by the Interest Rate.
         (i)      Applicable       Each month
                  period:

         (ii)     Date payable:    The first day of each month.

(f)      Success Fee:              N/A

(g)      Warrants:                 N/A

(h)      Early Termination      5% of the Maximum Facility Amount if
         Fee:                   terminated during the first year of the
                                Term, 4% of the Maximum Facility Amount if
                                terminated during the second year of the Term,
                                3% of the Maximum Facility Amount if terminated
                                during the third year of the Term, and 1 % of
                                the Maximum Facility Amount if terminated
                                during the fourth year of the Term and
                                thereafter prior to the Maturity Date.

         (i)      Fees for letters of credit
                  and other Credit          N/A
                  Accommodations (or
                  guaranties thereof by
                  Lender):

7.       Initial Maturity Date:                      January 21, 2005


8.       Financial Covenants:

         (a)      Capital Expenditure
                  Limitation:                        N/A

         (b)      Minimum Net Worth
                  Requirement:                       N/A

         (c)      Minimum Tangible
                  Net Worth:                         N/A

         (d)      Minimum Working
                  Capital:                           N/A

         (e)      Maximum
                  Cumulative Net Loss:               N/A

         (f)      Minimum Cumulative
                  Net Income:                        N/A

         (g)      Maximum Leverage
                  Ratio:                             N/A

         (h)      Limitation on
                  Purchase Money                     N/A
                  Security Interests:

         (i)      Limitation on
                  Equipment Leases:                  N/A

         (j)      Additional Financial     In the event Borrower's cash losses
                  Covenants:               (defined as: net income plus
                                           depreciation and amortization less
                                           principal payments on debt and
                                           non-financed capital expenditures),
                                           cumulative from the date hereof,
                                           exceed $200,000, Lender may, in its
                                           discretion, reduce the Accounts
                                           Advance Rates and/or declare an
                                           Event of Default.

9.       Borrower Information:

         (a)      Prior Names of
                  Borrower:                Danzer Metal Works Company

         (b)      Prior Trade Names of     Airline Products Company
                  Borrower:

         (c)      Existing Trade Names
                  of Borrower:             Morrison

         (d)      Inventory Locations:     17500 York Road
                                           Hagerstown, MD 21740
         (e)      Other Locations:         N/A

          (f)     Litigation:              N/A

         (g)      Ownership of
                  Borrower:                Global Environmental Holdings, Inc.

         (h)      Subsidiaries (and
                  ownership thereof):      N/A

         (i)      Facsimile Numbers:

         Lender:                           (312) 759-4340
         Borrower:                         (301) 582-0345

         with a copy to Borrower's         Pope & Hughes, P.A.
         counsel:                          29 West Susquehanna Avenue
                                           Towson, Maryland 21204
                                           Att'n.: Mabeth Hudson, Esq.
                                           (410) 494-1658

10.      Description of Real               17500 York Road
         Property:                         Hagerstown, Maryland 21740


11.      Lender's Bank:                    Bank One Chicago


12.      Other Covenants:                  N/A



13.      Exceptions to Negative            N/A
         Covenants:



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

Borrower:                                   Lender:

Danzer Industries, Inc.                     Banc of America Commercial Finance
                                            Corporation, through its
                                            Commercial Funding Division



By /s/ M.E. Williams                        By /s/ Richard A. Simons
     Its President                          Its Authorized Signatory



<PAGE>



                                   Schedule B

                                   Definitions

     This  Schedule  is an  integral  part of the  Loan and  Security  Agreement
between  DANZER  INDUSTRIES,   INC.  and  BANC  OF  AMERICA  COMMERCIAL  FINANCE
CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION (the "Agreement').

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

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

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

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

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

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

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

     "Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.ss.10 1
     et seq.).

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

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

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

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

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

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

     "Credit Accommodation" has the meaning set forth in Section 1. 1(a).

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

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

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

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

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

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

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

     "Eligible  Account" means, at any time of  determination,  an Account which
     satisfies  the  general  criteria  set forth  below and which is  otherwise
     acceptable to Lender  (provided,  that Lender may, in its sole  discretion,
     change the general criteria for  acceptability of Eligible Accounts upon at
     least fifteen  days' prior notice to Borrower).  An Account shall be deemed
     to meet the current general  criteria if (i) neither the Account Debtor nor
     any of its  Affiliates is an  Affiliate,  creditor or supplier of Borrower;
     (ii) it does not remain  unpaid  more than the  earlier to occur of (A) the
     number of days after the original invoice date set forth in Section 5(a) of
     Schedule A or (B) the number of days after the  original  invoice  due date
     set forth in Section  5(b) of Schedule  A; (iii) the Account  Debtor or its
     Affiliates are not past due on other Accounts owing to Borrower  comprising
     more than 25% of all of the  Accounts  owing to  Borrower  by such  Account
     Debtor or its Affiliates;  (iv) all Accounts owing by the Account Debtor or
     its  Affiliates  do not represent  more than 20% of all otherwise  Eligible
     Accounts (provided,  that Accounts which are deemed to be ineligible solely
     by reason of this clause (iv) shall be considered  Eligible Accounts to the
     extent of the amount  thereof  which  does not exceed 20% of all  otherwise
     Eligible Accounts), except as set forth in clause (xviii); (v) no covenant,
     representation or warranty contained in this Agreement with respect to such
     Account (including any of the representations set forth in Section 5.4) has
     been breached;  (vi) the Account is not subject to any contra relationship,
     counterclaim,  dispute or set-off (provided, that Accounts which are deemed
     to be  ineligible  solely by reason of this clause (vi) shall be considered
     Eligible Accounts to the extent of the amount thereof which is not affected
     by such contra relationships,  counterclaims,  disputes or set-offs); (vii)
     the Account  Debtor's chief executive office or principal place of business
     is located in the United  States or  Provinces of Canada which have adopted
     the Personal Property Security Act or a similar act, unless (A) the sale is
     fully backed by a letter of credit,  guaranty or  acceptance  acceptable to
     Lender in its sole  discretion,  and if backed by a letter of credit,  such
     letter of credit has been issued or  confirmed  by a bank  satisfactory  to
     Lender, is sufficient to cover such Account and if required by Lender,  the
     original of such letter of credit has been  delivered to Lender or Lender's
     agent and the issuer thereof  notified of the assignment of the proceeds of
     such  letter of credit to Lender or (B) such  Account  is subject to credit
     insurance  payable to Lender  issued by an  insurer  and on terms and in an
     amount acceptable to Lender;  (viii) it is absolutely owing to Borrower and
     does  not  arise  from  a  sale  on  a   bill-and-hold,   guarantied  sale,
     sale-or-return,  sale-on-approval,  consignment,  retainage  or  any  other
     repurchase  or return  basis or consist of progress  billings;  (ix) Lender
     shall have verified the Account in a mariner  satisfactory  to Lender;  (x)
     the  Account  Debtor is not the  United  States of  America or any state or
     political   subdivision  (or  any  department  agency  or   instrumentality
     thereof), unless Borrower has complied with the Assignment of Claims Act of
     1940 (31 U.S.C. ss. 203 et seq.) or other applicable similar state or local
     law in a manner  satisfactory to Lender; (xi) it is at all times subject to
     Lender's duly perfected,  first priority  security interest and to no other
     Lien  that is not a  Permitted  Lien,  and the  goods  giving  rise to such
     Account  (A) were  not,  at the time of sale,  subject  to any Lien  except
     Permitted  Liens and (B) have been delivered to and accepted by the Account
     Debtor,  or the services giving rise to such Account have been performed by
     Borrower  and  accepted  by the  Account  Debtor;  (xii) the Account is not
     evidenced by Chattel  Paper or an  Instrument  of any kind and has not been
     reduced to judgment;  (xiii) the Account  Debtor's  total  indebtedness  to
     Borrower  does not exceed the amount of any  credit  limit  established  by
     Borrower  or  Lender  and the  Account  Debtor  is  otherwise  deemed to be
     creditworthy  by Lender  (provided,  that  Accounts  which are deemed to be
     ineligible  solely  by  reason  of Us  clause  (xiii)  shall be  considered
     Eligible Accounts to the extent the amount of such Accounts does not exceed
     the lower of such credit limits); (xiv) there are no facts or circumstances
     existing,  or which could  reasonably be anticipated to occur,  which might
     result in any adverse change in the Account Debtor's financial condition or
     impair or delay the  collectibility  of all or any portion of such Account;
     (xv) Lender has been  furnished  with all documents  and other  information
     pertaining to such Account which Lender has requested, or which Borrower is
     obligated to deliver to Lender, pursuant to this Agreement;  (xvi) Borrower
     has not made an  agreement  with the  Account  Debtor to extend the time of
     payment  thereof  beyond the time  periods  set forth in clause (ii) above;
     (xvii)  Borrower  has not  posted a surety or other  bond in respect of the
     contract  under which such  Account  arose;  and (xviii)  accounts due from
     Mobile Tool  International,  Inc. to the extent of the amount thereof which
     does not exceed 25% of all otherwise Eligible  Accounts,  unless insured by
     credit  insurance or alternative  credit  support  acceptable to Lender and
     assigned to Lender.

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

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

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

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

     "Equipment Advance" has the meaning set forth in Section 1.1(b).

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

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

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

     "General  Intangibles"  has the meaning set forth in the UCC,  and includes
     all books and records  pertaining to the  Collateral and other business and
     financial  records  in the  possession  of  Borrower  or any other  Person,
     inventions,  designs, drawings,  blueprints,  patents, patent applications,
     trademarks, trademark applications (other than "intent to use" applications
     until  a  verified   statement  of  use  is  filed  with  respect  to  such
     applications) and the goodwill of the business symbolized  thereby,  names,
     trade names, trade secrets, goodwill, copyrights, registrations,  licenses,
     franchises,  customer lists, security and other deposits,  causes of action
     and other rights in all litigation  presently or hereafter  pending for any
     cause or claim (whether in contract, tort or otherwise),  and all judgments
     now or  hereafter  arising  therefrom,  rights to  purchase or sell real or
     personal property, rights as a licensor or licensee of any kind, royalties,
     telephone numbers,  internet addresses,  proprietary information,  purchase
     orders,  and all insurance  policies and claims  (including life insurance,
     key  man  insurance,  credit  insurance,   liability  insurance,   property
     insurance and other insurance),  tax refunds and claims, letters of credit,
     banker's  acceptances and guaranties,  computer programs,  discs, tapes and
     tape files in the possession of Borrower or any other Person,  claims under
     guaranties,  security  interests  or other  security  held by or granted to
     Borrower,  all rights to indemnification  and all other intangible property
     of every kind and nature.

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

     "Initial Term" has the meaning set forth in Section 7. 1.

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

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

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

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

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

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

     "Loan  Documents" means the Agreement and all notes,  guaranties,  security
     agreements,  certificates,  landlord's  agreements,  Lock  Box and  Blocked
     Account agreements and all other agreements,  documents and instruments now
     or hereafter executed or delivered by Borrower or any Obligor in connection
     with, or to evidence the transactions contemplated by, this Agreement.

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

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

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

     "Material Adverse Effect" has the meaning set forth in Section 5.20.

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

     "Obligations"  means  all  present  and  future  Loans,  advances,   debts,
     liabilities, obligations, guaranties, covenants, duties and indebtedness at
     any time owing by Borrower to Lender,  whether  evidenced by this Agreement
     or any other Loan  Document,  whether  arising from an extension of credit,
     opening of a Credit Accommodation,  guaranty,  indemnification or otherwise
     (including all fees,  costs and other amounts which may be owing to issuers
     of Credit Accommodations and all taxes, duties, freight,  insurance,  costs
     and other  expenses,  costs or amounts  payable in  connection  with Credit
     Accommodations  or  the  underlying  goods),  whether  direct  or  indirect
     (including those acquired by assignment and any  participation by Lender in
     Borrower's  indebtedness owing to others),  whether absolute or contingent,
     whether  due or to become  due,,  and whether  arising  before or after the
     commencement  of a  proceeding  under the  Bankruptcy  Code or any  similar
     statute, including all interest,  charges, expenses, fees, attorney's fees,
     expert witness fees,  audit fees,  letter of credit fees, loan fees,  Early
     Termination  Fees,  Minimum Borrowing Fees and any other sums chargeable to
     Borrower under this Agreement or under any other Loan Document.

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

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

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

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

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

     "Real Property Advance" has the meaning set forth in Section 1.1(b).

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

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

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

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

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

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

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

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

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

     All accounting terms used in this Agreement,  unless  otherwise  indicated,
shall have the meanings  given to such terms in accordance  with GAAP. All other
terms contained in this Agreement,  unless otherwise  indicated,  shall have the
meanings provided by the UCC, to the extent such terms are defined therein.  The
term "including," whenever used in this Agreement, shall mean "including but not
limited to." The singular  form of any term shall  include the plural form,  and
vice versa,  when the context so requires.  References to Sections,  subsections
and  Schedules  are to  Sections  and  subsections  of, and  Schedules  to, this
Agreement.   All  references  to  agreements  and  statutes  shall  include  all
amendments thereto and successor statutes in the case of statutes.

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

Borrower:                                   Lender:

Danzer Industries, Inc.                     Banc of America Commercial Finance
                                            Corporation, through its
                                            Commercial Funding Division


By  /s/ M.E. Williams                       By  /s/ Richard A. Simons
      Its President                         Its Authorized Signatory