BUSINESS LOAN AGREEMENT


     This Agreement dated as of July 31, 2001 is between Bank of America,  N.A.
(the "Bank") and National  R.V.  Holdings,  Inc.,  a Delaware  corporation  (the
"Borrower").

1.  LINE OF CREDIT; AMOUNT AND TERMS

                  1.1  Line of Credit Amount.
                       ---------------------

                           (a) During the  availability  period described below,
         the Bank will provide a line of credit to the  Borrower.  The amount of
         the line of  credit  (the  "Commitment")  is  Fifteen  Million  Dollars
         ($15,000,000).

                           (b) This is a revolving line of credit  providing for
         cash advances and letters of credit.  During the  availability  period,
         the Borrower may repay principal amounts and reborrow them.

                           (c) The Borrower agrees not to permit the outstanding
         principal  balance  of  advances  under  the  line of  credit  plus the
         outstanding  amounts of any letters of credit,  including amounts drawn
         on letters of credit and not yet reimbursed to exceed the Commitment.

                  1.2  Availability  Period.  The line of  credit  is  available
between the date of this  Agreement  and August 1, 2002, or such earlier date as
the  availability  may terminate as provided in this Agreement (the  "Expiration
Date").

                  1.3  Interest Rate.
                       -------------

                           (a) Unless the Borrower  elects an optional  interest
         rate as described  below, the interest rate is a rate per year equal to
         the Bank's Prime Rate.

                           (b) The Prime Rate is the rate of  interest  publicly
         announced  from time to time by the Bank as its Prime  Rate.  The Prime
         Rate is set by the Bank based on various factors,  including the Bank's
         costs  and  desired  return,  general  economic  conditions  and  other
         factors,  and is used as a reference point for pricing some loans.  The
         Bank may price loans to its  customers  at,  above,  or below the Prime
         Rate.  Any change in the Prime Rate shall take effect at the opening of
         business on the day specified in the public announcement of a change in
         the Bank's Prime Rate.

                  1.4  Repayment Terms.
                       ---------------

                           (a) The Borrower  will pay interest on August 1, 2001
         and then  monthly  thereafter  until  payment in full of any  principal
         outstanding under this line of credit.

                           (b) The Borrower will repay in full all principal and
         any unpaid  interest or other  charges  outstanding  under this line of
         credit no later than the Expiration  Date.  Any interest  period for an
         optional  interest rate (as described below) shall expire no later than
         the Expiration Date.

                  1.5 Optional  Interest  Rates.  Instead of the  interest  rate
based on the Bank's Prime Rate,  the  Borrower  may elect the optional  interest
rates  listed  below  during  interest  periods  agreed  to by the  Bank and the
Borrower.  The  optional  interest  rates  shall be  subject  to the  terms  and
conditions  described  later in this  Agreement.  Any principal  amount  bearing
interest at an optional rate under this Agreement is referred to as a "Portion."
The following optional interest rates are available:

                           (a)  the LIBOR Rate plus 2.00 percentage points.

                  1.6  Letters of Credit.
                       -----------------

                           (a)  This line of credit may be used for financing:

                                    (i)  standby  letter(s)  of  credit  with  a
                  maximum maturity not to extend beyond the Expiration Date.

                                    (ii) The amount of the  letter(s)  of credit
                  outstanding  at any one time  (including  amounts drawn on the
                  letter(s) of credit and not yet reimbursed) may not exceed Six
                  Million Dollars ($6,000,000).

                           (b)  The Borrower agrees:

                                    (i) any sum  drawn  under a letter of credit
                  may,  at the  option  of the Bank,  be added to the  principal
                  amount outstanding under this Agreement.  The amount will bear
                  interest and be due as described elsewhere in this Agreement.

                                    (ii)  if  there  is  a  default  under  this
                  Agreement,  to immediately  prepay and make the Bank whole for
                  any outstanding letters of credit.

                                    (iii) the  issuance  of any letter of credit
                  and any  amendment  to a letter of credit  is  subject  to the
                  Bank's  written  approval  and  must  be in form  and  content
                  satisfactory  to  the  Bank  and  in  favor  of a  beneficiary
                  acceptable to the Bank.

                                    (iv)  to sign the Bank's Application and
                  Agreement for Standby Letter of Credit.

                                    (v) to pay any  issuance  and/or  other fees
                  that  the Bank  notifies  the  Borrower  will be  charged  for
                  issuing and processing letters of credit for the Borrower.

                                    (vi) to  allow  the  Bank  to  automatically
                  charge its checking  account for applicable  fees,  discounts,
                  and other charges.

                                    (vii) to pay the Bank a  non-refundable  fee
                  equal to 1.25% per annum of the outstanding  undrawn amount of
                  each standby letter of credit,  payable  quarterly in advance,
                  calculated on the basis of the face amount  outstanding on the
                  day the fee is  calculated.  If there is a default  under this
                  Agreement,  at the Bank's option,  the amount of the fee shall
                  be increased to 2.25% per annum, effective starting on the day
                  the Bank provides notice of the increase to the Borrower.

 2.  OPTIONAL INTEREST RATES

                  2.1 Optional Rates.  Each optional interest rate is a rate per
year.  Interest will be paid on the last day of each interest period, and on the
First day of each month during the interest  period.  At the end of any interest
period,  the  interest  rate will  revert to the rate  based on the Prime  Rate,
unless the  Borrower  has  designated  another  optional  interest  rate for the
Portion.  No Portion will be converted to a different  interest  rate during the
applicable  interest  period.  Upon the occurrence of any event of default under
this Agreement,  the Bank may terminate the  availability  of optional  interest
rates for interest periods commencing after the default occurs.

                  2.2  LIBOR Rate.  The election of LIBOR Rates shall be subject
 to the following terms and requirements:
                       ----------

                           (a) The interest  period  during which the LIBOR Rate
         will be one, two, three,  four, five, or six, months.  The first day of
         the interest  period must be a day other than a Saturday or a Sunday on
         which the Bank is open for  business in New York and London and dealing
         in  offshore  dollars  (a  "LIBOR  Banking  Day").  The last day of the
         interest  period and the  actual  number of days  during  the  interest
         period will be determined by the Bank using the practices of the London
         inter-bank market.

                           (b) Each LIBOR Rate Portion will be for an amount not
         less than Five Hundred Thousand Dollars ($500,000).

                           (c)  The  "LIBOR  Rate"  means  the   interest   rate
         determined  by the  following  formula,  rounded  upward to the nearest
         1/100  of  one  percent.  (All  amounts  in  the  calculation  will  be
         determined by the Bank as of the first day of the interest period.)

                        LIBOR Rate =              London Inter-Bank Offered Rate
                                                  ------------------------------
                                                    (1.00 - Reserve Percentage)

         Where,

                                    (i) "London  Inter-Bank  Offered Rate" means
                  the  average  per annum  interest  rate at which  U.S.  dollar
                  deposits would be offered for the applicable  interest  period
                  by major banks in the London  inter-bank  market,  as shown on
                  the   Telerate   Page   3750  (or  any   successor   page)  at
                  approximately  11:00 a.m.  London time two (2) London  Banking
                  Days before the commencement of the interest  period.  If such
                  rate  does  not  appear  on the  Telerate  Page  3750  (or any
                  successor  page),  the rate for that  interest  period will be
                  determined by such alternate method as reasonably  selected by
                  the Bank. A "London  Banking Day" is a day on which the Bank's
                  London  Banking  Center is open for  business  and  dealing in
                  offshore dollars.

                                    (ii) "Reserve Percentage" means the total of
                  the maximum  reserve  percentages for determining the reserves
                  to be maintained by member banks of the Federal Reserve System
                  for  Eurocurrency  Liabilities,  as defined in Federal Reserve
                  Board Regulation D, rounded upward to the nearest 1/100 of one
                  percent.  The percentage  will be expressed as a decimal,  and
                  will  include,  but not be limited  to,  marginal,  emergency,
                  supplemental, special, and other reserve percentages.

                           (d) The Borrower  shall  irrevocably  request a LIBOR
         Rate Portion no later  than12:00  noon San Francisco  time on the LIBOR
         Banking Day  preceding the day on which the London  Inter-Bank  Offered
         Rate will be set, as  specified  above.  For  example,  if there are no
         intervening  holidays or weekend days in any of the relevant locations,
         the  request  must be made at least  three  days  before the LIBOR Rate
         takes effect.

                           (e) The  Borrower  may not  elect a LIBOR  Rate  with
         respect to any principal  amount which is scheduled to be repaid before
         the last day of the applicable interest period.

                           (f) Each prepayment of a LIBOR Rate Portion,  whether
         voluntary, by reason of acceleration or otherwise,  will be accompanied
         by  the  amount  of  accrued  interest  on  the  amount  prepaid  and a
         prepayment fee as described  below.  A "prepayment"  is a payment of an
         amount  on a date  earlier  than the  scheduled  payment  date for such
         amount as required by this Agreement.

                           (g)  The prepayment fee shall be equal to the amount
         (if any) by which:

                                    (i) the additional interest which would have
                  been payable during the interest  period on the amount prepaid
                  had it not been prepaid, exceeds

                                    (ii) the  interest  which  would  have  been
                  recoverable  by the Bank by  placing  the  amount  prepaid  on
                  deposit in the domestic  certificate  of deposit  market,  the
                  eurodollar  deposit market,  or other appropriate money market
                  selected  by the Bank,  for a period  starting  on the date on
                  which  it  was  prepaid  and  ending  on the  last  day of the
                  interest  period for such  Portion (or the  scheduled  payment
                  date for the amount prepaid, if earlier).

                           (h) The Bank  will  have no  obligation  to accept an
         election  for a LIBOR Rate  Portion if any of the  following  described
         events has occurred and is continuing:

                                    (i) Dollar deposits in the principal amount,
                  and for periods equal to the interest period,  of a LIBOR Rate
                  Portion are not available in the London inter-bank market; or

                                    (ii) the  LIBOR  Rate  does  not  accurately
                  reflect the cost of a LIBOR Rate Portion.

3.  FEES AND EXPENSES

                  3.1  Fees.
                       ----

                           (a)  Commitment closing fee.  The Borrower agrees to
         pay to the Bank on the date of this Agreement, a commitment closing fee
         of ($46,875.00).

                           (b) Unused commitment fee. The Borrower agrees to pay
         a fee on any difference between the Commitment and the amount of credit
         it actually  uses,  determined  by the  average of the daily  amount of
         credit  outstanding  during  the  specified  period.  The  fee  will be
         calculated at .25% per year and will be paid on a quarterly  basis. The
         calculation of credit  outstanding  shall include the undrawn amount of
         letters of credit.

         This fee is due on  September  30,  2001 and will  accrue from July __,
         2001 and is payable on the last day of each following quarter until the
         expiration of the availability period.

                           (c)  Waiver  Fee.  If the  Bank,  at its  discretion,
         agrees  to waive or amend  any terms of this  Agreement,  the  Borrower
         will,  at the  Bank's  option,  pay the Bank a fee for each  waiver  or
         amendment  in an amount  advised  by the Bank at the time the  Borrower
         requests the waiver or amendment. Nothing in this paragraph shall imply
         that  the  Bank is  obligated  to  agree  to any  waiver  or  amendment
         requested by the Borrower. The Bank may impose additional  requirements
         as a condition to any waiver or amendment.
                           (d) Late Fee.  To the extent  permitted  by law,  the
         Borrower  agrees  to pay a late  fee in an  amount  not to  exceed  two
         percent (2%) of any payment  that is more than five (5) days late.  The
         imposition  and payment of a late fee shall not  constitute a waiver of
         the Bank's rights with respect to the default.

                  3.2 Expenses.  The Borrower  agrees to promptly repay the Bank
for it's accrued and reasonable out-of-pocket expenses that include, but are not
limited to, filing, recording and search fees, appraisal fees, title report fees
and documentation fees.

                  3.3  Reimbursement Costs.
                       -------------------

                           (a) The  Borrower  agrees to  reimburse  the Bank for
         reasonable  expenses it incurs in the preparation of this Agreement and
         any  agreement or  instrument  required by this  Agreement in excess of
         those  fees and  costs  listed  above.  Expenses  include,  but are not
         limited to, reasonable  attorneys' fees,  including any allocated costs
         of the Bank's in-house counsel.

                           (b) The Borrower agrees to reimburse the Bank for the
         cost  of  periodic  audits  and  appraisals  of the  personal  property
         collateral  securing this Agreement,  at such intervals as the Bank may
         reasonably require but no more frequently than annually except that the
         Bank may conduct audits and appraisals on a basis no more frequent than
         quarterly  upon the  occurrence of an Event of Default.  The audits and
         appraisals  may be performed by employees of the Bank or by independent
         appraisers.

4.  COLLATERAL

                  4.1 Personal Property.  The Borrower's obligations to the Bank
under this Agreement will be secured by personal  property the Borrower now owns
or will own in the future as listed below.  The collateral is further defined in
security  agreement(s)  executed by the  Borrower.  In  addition,  all  personal
property  collateral securing this Agreement shall also secure all other present
and  future  obligations  of the  Borrower  to the  Bank  under  this  Agreement
(excluding  any  consumer  credit  covered by the federal  Truth in Lending law,
unless the Borrower has  otherwise  agreed in  writing).  All personal  property
collateral  securing any other present or future  obligations of the Borrower to
the Bank shall also secure this Agreement.


                           (a)  Accounts as defined in the Uniform Commercial
                  Code .

                  4.2  Personal Property Supporting Guaranty.  The obligations
of the guarantors Country Coach, Inc., an Oregon corporation, and National R.V.
Holding, Inc., a California corporation to the Bank will be secured by personal
property the guarantor now owns or will own in the future as listed below.  The
collateral is further defined in security agreement(s) executed by each
guarantor.

                           (a)  Accounts as defined in the Uniform Commercial
                  Code.

5.  DISBURSEMENTS, PAYMENTS AND COSTS

                  5.1  Requests for Credit

                  Each  request  for an  extension  of  credit  will  be made in
         writing  in a  manner  acceptable  to the  Bank,  or by  another  means
         acceptable to the Bank.

                  5.2  Disbursements and Payments.
                       --------------------------

                           (a) Each payment by the Borrower  will be made at the
         Bank's  banking  center (or other  location)  selected by the Bank from
         time to time; and will be made in immediately  available funds, or such
         other type of funds selected by the Bank.

                           (b) Each disbursement by the Bank and each payment by
         the  Borrower  will  be  evidenced  by  records  kept by the  Bank.  In
         addition, the Bank may, at its discretion, require the Borrower to sign
         one or more promissory notes.

                  5.3  Telephone and Telefax Authorization.
                       -----------------------------------

                           (a)  The  Bank  may  honor   telephone   or   telefax
         instructions  for  advances or  repayments  or for the  designation  of
         optional  interest  rates and  telefax  requests  for the  issuance  of
         letters of credit  given,  or purported to be given,  by any one of the
         individuals  authorized  to  sign  loan  agreements  on  behalf  of the
         Borrower,  or  any  other  individual  designated  by any  one of  such
         authorized signers.

                           (b) Advances will be deposited in and repayments will
         be withdrawn from the Borrower's  account number  14961-02476,  or such
         other of the Borrower's accounts with the Bank as designated in writing
         by the Borrower.

                           (c) The  Borrower  will  indemnify  and hold the Bank
         harmless from all liability, loss, and costs in connection with any act
         resulting from telephone or telefax  instructions  the Bank  reasonably
         believes are made by any individual  authorized by the Borrower to give
         such  instructions.   This  paragraph  will  survive  this  Agreement's
         termination, and will benefit the Bank and its officers, employees, and
         agents.

                  5.4  Direct Debit (Pre-Billing).
                       --------------------------

                           (a) The Borrower  agrees that the Bank will debit the
         Borrower's  deposit  account number  14961-02476,  or such other of the
         Borrower's  accounts  with the Bank as  designated  in  writing  by the
         Borrower  (the  "Designated  Account")  on the  date  each  payment  of
         principal and interest and any fees from the Borrower  becomes due (the
         "Due Date").

                           (b) Approximately 10 days prior to each Due Date, the
         Bank will mail to the  Borrower a statement of the amounts that will be
         due on that Due Date (the "Billed  Amount").  The  calculation  will be
         made on the  assumption  that no new  extensions  of credit or payments
         will be made  between  the date of the  billing  statement  and the Due
         Date,  and that there will be no  changes  in the  applicable  interest
         rate.

                           (c) The Bank will debit the  Designated  Account  for
         the Billed  Amount,  regardless  of the actual  amount due on that date
         (the "Accrued Amount").  If the Billed Amount debited to the Designated
         Account  differs  from the  Accrued  Amount,  the  discrepancy  will be
         treated as follows:

                                    (i) If the  Billed  Amount  is less than the
                  Accrued  Amount,  the Billed Amount for the following Due Date
                  will  be  increased  by the  amount  of the  discrepancy.  The
                  Borrower  will  not  be in  default  by  reason  of  any  such
                  discrepancy.

                                    (ii) If the  Billed  Amount is more than the
                  Accrued  Amount,  the Billed Amount for the following Due Date
                  will be decreased by the amount of the discrepancy.

         Regardless  of any such  discrepancy,  interest will continue to accrue
         based  on  the  actual   amount  of   principal   outstanding   without
         compounding.  The  Bank  will  not pay  the  Borrower  interest  on any
         overpayment.

                           (d) The Borrower  will maintain  sufficient  funds in
         the Designated  Account to cover each debit. If there are  insufficient
         funds in the  Designated  Account on the date the Bank enters any debit
         authorized by this Agreement, the Bank may reverse the debit.

                  5.5 Banking Days. Unless otherwise provided in this Agreement,
a  banking  day is a day  other  than a  Saturday,  Sunday or other day on which
commercial  banks are authorized to close,  or are in fact closed,  in the state
where the Bank's lending office is located,  and, if such day relates to amounts
bearing  interest  at an  offshore  rate (if  any),  means any such day on which
dealings in dollar  deposits are  conducted  among banks in the offshore  dollar
interbank  market.  All payments and  disbursements  which would be due on a day
which is not a banking day will be due on the next  banking  day.  All  payments
received  on a day which is not a banking  day will be  applied to the credit on
the next banking day.

                  5.6  Taxes.
                       -----

                           (a) If any payments to the Bank under this  Agreement
         are made from outside the United  States,  the Borrower will not deduct
         any foreign  taxes from any payments it makes to the Bank.  If any such
         taxes are  imposed  on any  payments  made by the  Borrower  (including
         payments  under this  paragraph),  the Borrower  will pay the taxes and
         will also pay to the Bank, at the time interest is paid, any additional
         amount which the Bank  specifies as necessary to preserve the after-tax
         yield the Bank would have  received if such taxes had not been imposed.
         The Borrower will confirm that it has paid the taxes by giving the Bank
         official tax receipts (or  notarized  copies)  within  thirty (30) days
         after the due date.

                  5.7  Additional  Costs.  The  Borrower  will pay the Bank,  on
demand,  for the Bank's costs or losses  arising from any statute or regulation,
or any request or requirement of a regulatory  agency which is applicable to all
national  banks or a class of all national  banks.  The costs and losses will be
allocated to the loan in a manner  determined by the Bank,  using any reasonable
method. The costs include the following:

                           (a)  any reserve or deposit requirements; and

                           (b)  any capital requirements relating to the Bank's
                  assets and commitments for credit.

                  5.8 Interest  Calculation.  Except as otherwise stated in this
Agreement,  all  interest and fees,  if any,  will be computed on the basis of a
360-day  year and the  actual  number  of days  elapsed.  This  results  in more
interest  or a  higher  fee than if a  365-day  year is  used.  Installments  of
principal  which are not paid when due under this  Agreement  shall  continue to
bear interest until paid.

                  5.9 Default  Rate.  Upon the  occurrence  of any default under
this Agreement,  principal amounts  outstanding under this Agreement will at the
option of the Bank bear  interest at the Bank's  Prime Rate plus 2.0  percentage
points. This will not constitute a waiver of any default.

                  5.10 Interest  Compounding.  At the Bank's sole option in each
instance,  any  interest,  fees or costs  which are not paid when due under this
Agreement  shall bear  interest  from the due date at the Bank's Prime Rate plus
2.0 percentage points. This may result in compounding of interest.

6.  CONDITIONS

                  The Bank must receive the following items, in form and content
acceptable  to the Bank,  before it is  required  to  extend  any  credit to the
Borrower under this Agreement:

                  6.1 Authorizations.  Evidence that the execution, delivery and
performance  by the  Borrower  and  each  guarantor  of this  Agreement  and any
instrument or agreement required under this Agreement have been duly authorized.

                  6.2  Governing Documents.  A copy of the Borrower's and each
guarantor's articles of incorporation.

                  6.3  Security Agreements. Signed original security agreements,
 assignments which the Bank requires.

                  6.4 Perfection and Evidence of Priority.  Financing statements
(and any collateral in which the Bank requires a possessory  security interest),
together  with  evidence  that the security  interests and liens in favor of the
Bank are valid,  enforceable,  and prior to all  others'  rights and  interests,
except those the Bank consents to in writing.

                  6.5  Environmental Information.  A completed Bank form
Environmental Questionnaire from Borrower and each guarantor, due within 30 days
of the date of this Agreement

                  6.6 Guaranties.  Guaranties signed by Country Coach, Inc., an
Oregon corporation and National R.V. Inc., a California corporation.

                  6.7  Good  Standing.  Certificates  of good  standing  for the
Borrower and for each  guarantor  from its state of formation and from any other
state in which the Borrower and each guarantor is required to qualify to conduct
its business.

                  6.8  Payment  of  Fees.  Payment  of all  accrued  and  unpaid
expenses   incurred  by  the  Bank  as  required  by  the   paragraph   entitled
"Reimbursement Costs."

                  6.9  Other Items.  Any other items that the Bank reasonably
requires.

7.  REPRESENTATIONS AND WARRANTIES

                  When the Borrower signs this Agreement,  and until the Bank is
repaid in full, the Borrower makes the following representations and warranties.
Each  request  for an  extension  of  credit  constitutes  a  renewal  of  these
representations and warranties as of the date of the request:

                  7.1  Organization of Borrower.  The Borrower is duly formed
and existing under the laws of the state where organized.

                  7.2  Authorization.  This  Agreement,  and any  instrument  or
agreement required  hereunder,  are within the Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational papers.

                  7.3 Enforceable  Agreement.  This Agreement is a legal,  valid
and binding  agreement  of the  Borrower,  enforceable  against the  Borrower in
accordance with its terms, and any instrument or agreement  required  hereunder,
when  executed  and  delivered,  will be  similarly  legal,  valid,  binding and
enforceable.

                  7.4 Good  Standing.  In each state in which the Borrower  does
business,  it is properly licensed,  in good standing,  and, where required,  in
compliance with fictitious name statutes.

                  7.5  No Conflicts.  This Agreement does not conflict with any
law, agreement, or obligation by which the Borrower is bound.

                  7.6 Financial Information. All financial and other information
that has been or will be supplied to the Bank is  sufficiently  complete to give
the Bank accurate  knowledge of the Borrower's (and any  guarantor's)  financial
condition,  including all material contingent liabilities. Since the date of the
most recent financial statement provided to the Bank, there has been no material
adverse change in the business condition  (financial or otherwise),  operations,
properties or prospects of the Borrower (or any guarantor).

                  7.7 Lawsuits.  There is no lawsuit, tax claim or other dispute
pending or  threatened  against the Borrower  which,  if lost,  would impair the
Borrower's financial condition or ability to repay the loan, except as have been
disclosed in writing to the Bank.

                  7.8 Collateral.  All collateral  required in this Agreement is
owned by the grantor of the security  interest  free of any title defects or any
liens or interests of others.

                  7.9 Permits,  Franchises.  The Borrower possesses all permits,
memberships,  franchises,  contracts  and licenses  required  and all  trademark
rights, trade name rights, patent rights and fictitious name rights necessary to
enable it to conduct the business in which it is now engaged.

                  7.10  Other Obligations.  The Borrower is not in default on
any obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

                  7.11  Tax Matters.  The Borrower has no knowledge of any
pending assessments or adjustments of its income tax for any year and all taxes
due have been paid.

                  7.12  No Event of Default. There is no event which is, or with
notice or lapse of time or both would be, a default under this Agreement.

                  7.13 Insurance.  The Borrower has obtained,  and maintained in
effect, the insurance coverage required in the "Covenants"  section 8.20 of this
Agreement.

                  7.14  ERISA Plans.
                        -----------

                           (a) Each Plan (other than a multiemployer plan) is in
         compliance in all material  respects with the applicable  provisions of
         ERISA,  the Code and other federal or state law. Each Plan has received
         a favorable determination letter from the IRS and to the best knowledge
         of the  Borrower,  nothing has  occurred  which would cause the loss of
         such qualification. The Borrower has fulfilled its obligations, if any,
         under the minimum funding  standards of ERISA and the Code with respect
         to each Plan,  and has not incurred any  liability  with respect to any
         Plan under Title IV of ERISA.

                           (b)  There  are  no  claims,   lawsuits   or  actions
         (including  by any  governmental  authority),  and  there  has  been no
         prohibited  transaction  or violation of the  fiduciary  responsibility
         rules,  with respect to any Plan which has resulted or could reasonably
         be expected to result in a material adverse effect.

                           (c)  With respect to any Plan subject to Title IV of
         ERISA:

                                    (i)  No reportable event has occurred under
                  Section 4043(c) of ERISA for which the PBGC requires 30-day
                  notice.

                                    (ii) No action by the  Borrower or any ERISA
                  Affiliate  to  terminate  or  withdraw  from any Plan has been
                  taken and no notice  of  intent to  terminate  a Plan has been
                  filed under Section 4041 of ERISA.

                                    (iii)  No  termination  proceeding  has been
                  commenced  with respect to a Plan under Section 4042 of ERISA,
                  and no event has  occurred  or  condition  exists  which might
                  constitute grounds for the commencement of such a proceeding.

                           (d)  The following terms have the meanings indicated
         for purposes of this Agreement:

                                    (i) "Code" means the  Internal  Revenue Code
                  of 1986, as amended from time to time.

                                    (ii)  "ERISA" means the Employee Retirement
                  Income Security Act of 1974, as amended from time to time.

                                    (iii) "ERISA  Affiliate"  means any trade or
                  business  (whether or not  incorporated)  under common control
                  with the Borrower  within the meaning of Section 414(b) or (c)
                  of the Code.

                                    (iv)  "PBGC" means the Pension Benefit
                  Guaranty Corporation.

                                    (v) "Plan" means a pension,  profit-sharing,
                  or stock bonus plan intended to qualify  under Section  401(a)
                  of the Code,  maintained or  contributed to by the Borrower or
                  any ERISA Affiliate,  including any multiemployer  plan within
                  the meaning of Section 4001(a)(3) of ERISA.

                  7.15 Location of Borrower.  The  Borrower's  place of business
(or, if the Borrower has more than one place of  business,  its chief  executive
office) is located at the address listed under the Borrower's  signature on this
Agreement.

                  7.16  Environmental  Matters.  The  Borrower  (a)  is  not  in
violation of any health,  safety, or environmental  law or regulation  regarding
hazardous  substances  and  (b) is not the  subject  of any  claim,  proceeding,
notice,  or  other  communication  regarding  hazardous  substances.  "Hazardous
substances" means any substance, material or waste that is or becomes designated
or regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar
designation or regulation  under any federal,  state or local law (whether under
common law,  statute,  regulation or  otherwise)  or judicial or  administrative
interpretation of such, including without limitation petroleum or natural gas.

8.  COVENANTS

                  The Borrower agrees, so long as credit is available under this
Agreement and until the Bank is repaid in full:

                  8.1 Use of  Proceeds.  To use the  proceeds of the credit only
for (I) working capital,  (ii)  acquisitions,  (iii) capital  expenditures  (iv)
general  corporate  purposes,  or (v) the issuance of performance  and financial
standby  letters of credit for  general  business  purposes  including  worker's
compensation.

                  8.2 Financial Information.  To provide the following financial
information and statements in form and content  acceptable to the Bank, and such
additional information as requested by the Bank from time to time:

                           (a) Within  120 days of the  Borrower's  fiscal  year
         end, the Borrower's annual financial  statements certified and dated by
         an  authorized  financial  officer  of the  Borrower.  These  financial
         statements must be audited (with an unqualified  opinion)by a Certified
         Public  Accountant  acceptable  to the Bank.  The  statements  shall be
         prepared on a consolidated and  consolidating  basis. The consolidating
         schedules may be Borrower prepared.

                           (b) Within 30 days of the period's  end(excluding the
         last month of each fiscal quarter),  the Borrower's  monthly  financial
         statements.  These financial  statements may be Borrower prepared.  The
         statements shall be prepared on a consolidated and consolidating basis.

                           (c) Within 55 days of the period's end (excluding the
         Fourth Fiscal Quarter),  the Borrower's quarterly financial statements.
         These statements shall be prepared on a consolidated and  consolidating
         basis.

                           (d) Promptly,  upon sending or receipt, copies of any
         management letters and correspondence  relating to management  letters,
         sent or received by the Borrower to or from the Borrower's auditor, or,
         if no management letter is prepared, a letter from such auditor stating
         that no deficiencies  were noted that would otherwise be addressed in a
         management letter.

                           (e) Copies of the Borrower's Form 10-K Annual Report,
         Form 10-Q  Quarterly  Report and Form 8-K Current Report within 30 days
         after the date of filing with the Securities and Exchange Commission.

                           (f)  Within  the  period(s)  provided  in (a) and (c)
         above, a compliance certificate of the Borrower signed by an authorized
         financial officer of the Borrower setting forth (i) the information and
         computations  (in sufficient  detail) to establish that the Borrower is
         in  compliance  with all  financial  covenants at the end of the period
         covered  by the  financial  statements  then being  furnished  and (ii)
         whether there existed as of the date of such  financial  statements and
         whether  there  exists as of the date of the  certificate,  any default
         under this  Agreement and, if any such default  exists,  specifying the
         nature  thereof and the action the  Borrower is taking and  proposes to
         take with respect thereto.

                           (g) Within 30 days after the  Borrower's  fiscal year
         end,  Borrower's  financial  projections and budget,  including capital
         expenditures, for the following fiscal year.

                           (h)  Promptly  upon the  Bank's  request,  such other
         books, records,  statements,  lists of property and accounts,  budgets,
         forecasts or reports as to the Borrower and as to each guarantor of the
         Borrower's obligations to the Bank as the Bank may request.

                  8.3  Tangible Net Worth.  To maintain on a consolidated basis
Tangible Net Worth equal to at least the sum of the following:

         (a)      One hundred five million dollars ($105,000,000); plus
         (b)      the  sum of 50% of net  income  after  income  taxes  (without
                  subtracting losses) earned in each quarterly accounting period
                  commencing after March 31, 2001; plus
         (c)      the net proceeds from any equity securities issued for cash
    after the date of this Agreement.

"Tangible net worth" means the value of the Borrower's  total assets  (including
leaseholds and leasehold  improvements and reserves against assets but excluding
goodwill, patents,  trademarks,  trade names, organization expense,  unamortized
debt  discount and expense,  capitalized  or deferred  research and  development
costs, deferred marketing expenses,  and other like intangibles,  and monies due
from  affiliates,  officers,  directors,  employees,  shareholders,  members  or
managers of the Borrower) less total  liabilities,  including but not limited to
accrued and deferred  income taxes,  but excluding  the  non-current  portion of
Subordinated Liabilities.

"Subordinated  Liabilities"  means  liabilities  subordinated  to the Borrower's
obligations  to the  Bank  in a  manner  acceptable  to  the  Bank  in its  sole
discretion.

                  8.4 Profitability. Not to incur on a consolidated basis, a net
loss  before  taxes and  extraordinary  items in any two  consecutive  quarterly
accounting periods.

                  8.5  Minimum EBITDA .  To maintain on a consolidated basis
EBITDA indicated for each cumulative period specified below:

                           Period                                Minimum EBITDA

                           From April 1, 2001
                           through June 30, 2001                    $1,000,000

                           From April 1, 2001
                           through September 30, 2001               $3,250,000

                           From April 1, 2001
                           through December 31, 2001                $6,000,000

                           From January 1, 2002
                           through March 31, 2002                   $3,000,000

 "EBITDA"  means  net  income,  less  income  or  plus  loss  from  discontinued
operations and  extraordinary  items,  plus income taxes, plus interest expense,
plus depreciation, depletion, amortization and other non-cash charges.

                  8.6 Minimum Liquidity. To have immediately available liquidity
of at least  twenty  million  dollars  ($20,000,000)  (i) on the date of closing
immediately  following  the  closing of each and every stock  redemption  of the
Borrower,  and (ii) on the date 30 days  following the date of closing,  of each
and  every  stock  redemption  of the  Borrower.  Borrower  shall,  on the dates
provided in (i) and (ii) provide the Bank with a compliance  certificate  of the
Borrower  signed by an authorized  financial  officer of the  Borrower,  setting
forth the information and computations (in sufficient  detail) to establish that
the Borrower is in compliance with this financial covenant.

"Liquidity"  means and shall be composed of cash,  marketable  securities and/or
availability under the Commitment.

                  8.7 Capital  Expenditures.  Not to spend or incur  obligations
(including  the total  amount of any capital  leases) for more than Five Million
Dollars ($5,000,000) in the period from July 1, 2001 to June 30, 2002 to acquire
fixed assets.

                  8.8 Other Debts.  Not to have  outstanding or incur any direct
or contingent  liabilities or capital lease obligations (other than those to the
Bank),  or become  liable  for the  liabilities  of others,  without  the Bank's
written consent. This does not prohibit:

                           (a)  Acquiring goods, supplies, or merchandise on
         normal trade credit.

                           (b)  Endorsing negotiable instruments received in the
         usual course of business.

                           (c)  Obtaining surety bonds in the usual course of
         business.

                           (d)  Liabilities and capital leases in existence on
         the date of this Agreement disclosed in writing to the Bank.

                           (e) Additional  debts and lease  obligations  for the
         acquisition of fixed assets, to the extent permitted  elsewhere in this
         Agreement.

                           (f)  Additional  debts  and  lease   obligations  for
         business  purposes  which,  together  with the  debts  permitted  under
         subparagraph(s) (a) through (e), above, do not exceed a total principal
         amount of one million Dollars ($1,000,000) outstanding at any one time.

                  8.9  Other Liens.  Not to create, assume, or allow any
security interest or lien (including judicial liens) on property the Borrower
now or later owns, except:

                           (a)  Liens and security interests in favor of the
          Bank.

                           (b)  Liens for taxes not yet due.

                           (c)  Liens outstanding on the date of this Agreement
          disclosed in writing to the Bank.

                           (d)  Additional  purchase  money  security  interests
         inequipment  or other  personal  property fixed assets or real property
         acquired  after  the date of this  Agreement,  if the  total  principal
         amount of debts  secured by such  liens  does not  exceed  one  million
         Dollars ($1,000,000) at any one time.

                  8.10 Loans and Investments.  Not to have any existing, or make
any new,  loans or other  extensions  of  credit  to,  or  investments  in,  any
individual or entity,  or make any capital  contributions  or other transfers of
assets to, any individual or entity, except for:

                           (a)  extensions  of credit in the nature of  accounts
         receivable or notes receivable  arising from the sale or lease of goods
         or  services  in the  ordinary  course of  business  to  non-affiliated
         entities.

                           (b)  investments in any of the following:

                                    (i)  certificates of deposit;

                                    (ii)  U.S. treasury bills and other
                  obligations of the federal government;

                                    (iii)    readily    marketable    securities
                  (including  commercial  paper, but excluding  restricted stock
                  and  stock  subject  to  the  provisions  of  Rule  144 of the
                  Securities  and  Exchange  Commission)  rated at least  "A" by
                  Standard  &  Poor's  or at  least  "A"  by  Moody's  Investors
                  Service, Inc.;

                  8.11  Notices to Bank.  To promptly notify the Bank in writing
of:

                           (a) any lawsuit  over Five hundred  thousand  Dollars
        ($500,000) against the Borrower (or any guarantor).

                           (b)  any substantial dispute between the Borrower (or
         any guarantor) and any government authority.

                           (c) any event of default under this Agreement, or any
         event which,  with notice or lapse of time or both, would constitute an
         event of default.

                           (d) any material adverse change in the Borrower's (or
         any   guarantor's)   business   condition   (financial  or  otherwise),
         operations, properties or prospects, or ability to repay the credit.

                           (e)  any  change  in  the  Borrower's   name,   legal
         structure, place of business, or chief executive office if the Borrower
         has more than one place of business.

                           (f) any actual contingent liabilities of the Borrower
         (or any  guarantor),  and any such  contingent  liabilities  which  are
         reasonably  foreseeable,  where such  liabilities  are in excess of one
         hundred million Dollars ($100,000,000) in the aggregate.

                           (h)  the  receipt  of  any  notice  or  communication
         regarding (i) any  threatened or pending  investigation  or enforcement
         action by any  governmental  authority  or any other claim  relating to
         health,  safety,  the  environment,  or any hazardous  substances  with
         regard to the Borrower's  property,  activities,  or operations or (ii)
         any belief or suspicion of the Borrower that hazardous substances exist
         on or under the Borrower's real property.

                  8.12  Books and Records.  To maintain adequate books and
records.

                  8.13  Audits.  To allow the Bank and its agents to inspect the
Borrower's  properties and examine,  audit, and make copies of books and records
during  normal  business  hours  and  upon  reasonable  notice.  If  any  of the
Borrower's properties,  books or records are in the possession of a third party,
the  Borrower  authorizes  that third  party to permit the Bank or its agents to
have  access to  perform  inspections  or audits  and to  respond  to the Bank's
requests for information concerning such properties, books and records.

                  8.14  Compliance with Laws. To comply with the laws (including
any fictitious  name statute),  regulations,  and orders of any government  body
with authority over the Borrower's business.

                  8.15  Preservation of Rights.  To maintain and preserve all
rights, privileges, and franchises the Borrower now has.

                  8.16 Maintenance of Properties. To make any repairs, renewals,
or replacements to keep the Borrower's properties in good working condition.

                  8.17 Perfection of Liens. To help the Bank perfect and protect
its security  interests and liens,  and reimburse it for related costs it incurs
to protect its security interests and liens.

                  8.18  Cooperation.  To take any action reasonably requested by
 the Bank to carry out the intent of this Agreement.

                  8.19  General  Business   Insurance.   To  maintain  insurance
satisfactory  to the Bank as to amount,  nature and  carrier  covering  property
damage  (including  loss  of  use  and  occupancy)  to  any  of  the  Borrower's
properties,  public  liability  insurance  including  coverage  for  contractual
liability, product liability and workers' compensation,  and any other insurance
which is usual for the Borrower's business.

                  8.20  Additional Negative Covenants.  Not to, without the
Bank's written consent:
                           (a)  engage in any business activities substantially
         different from the Borrower's present business.

                           (b)  liquidate or dissolve the Borrower's business.

                           (c) enter into any  consolidation,  merger,  or other
         combination,  or become a partner in a partnership, a member of a joint
         venture,  or a member  of a limited  liability  company  provided  that
         Borrower may merge a wholly-owned subsidiary onto itself.

                           (d) except with respect to  transactions  with wholly
         owned subsidiaries of the Borrower,  sell, assign,  lease,  transfer or
         otherwise  dispose of any assets for less than fair  market  value,  or
         enter into any  agreement to do so,  except  used,  worn-out or surplus
         equipment, all in the ordinary course of business.

                           (e) except with respect to  transactions  with wholly
         owned subsidiaries of the Borrower,  sell, assign,  lease,  transfer or
         otherwise  dispose of all or a substantial  any part of the  Borrower's
         business or the Borrower's assets.

                           (f)  acquire or purchase a business or its assets

                           (g)  voluntarily suspend its business for more than
         14 days in any 360 day period.

                  8.21  Bank as Principal Depository.  To maintain the Bank as
its principal depository bank, including for the maintenance of business, cash
management, operating and administrative deposit accounts.

                  8.22  ERISA Plans.  With respect to a Plan subject to Title IV
of ERISA, to give prompt written notice to the Bank of:

                           (a)  The occurrence of any reportable event under
         Section 4043(c) of ERISA for which the PBGC requires 30-day notice.

                           (b) Any action by the Borrower or any ERISA Affiliate
         to  terminate  or  withdraw  from a Plan or the filing of any notice of
         intent to terminate under Section 4041 of ERISA.

                           (c) The  commencement  of any proceeding with respect
         to a Plan under Section 4042 of ERISA.

                  8.23 Compliance with Environmental  Requirements.  With regard
to the Borrower's and each guarantor's property,  activities,  or operations, to
comply  with the  recommendations  of any  qualified  environmental  engineer or
orders or directions  issued by any governmental  authority  relating to health,
safety, the environment,  or any hazardous  substances including those orders or
directives  requiring  the  investigation,  clean-up,  or removal  of  hazardous
substances.

9.  HAZARDOUS SUBSTANCES

                  9.1 Indemnity  Regarding  Hazardous  Substances.  The Borrower
will  indemnify  and hold  harmless the Bank from any loss or liability the Bank
incurs in connection  with or as a result of this  Agreement,  which directly or
indirectly arises out of the use, generation, manufacture,  production, storage,
release,  threatened  release,  discharge,  disposal  or presence of a hazardous
substance.  This  indemnity  will apply whether the  hazardous  substance is on,
under or about the Borrower's  property or operations or property  leased to the
Borrower.  The  indemnity  includes  but  is  not  limited  to  attorneys'  fees
(including the reasonable estimate of the allocated cost of in-house counsel and
staff).  The indemnity extends to the Bank, its parent,  subsidiaries and all of
their directors, officers, employees, agents, successors, attorneys and assigns.

                  9.2 Definition of Hazardous Substances. "Hazardous substances"
means  any  substance,  material  or  waste  that is or  becomes  designated  or
regulated as "toxic,"  "hazardous,"  "pollutant," or  "contaminant" or a similar
designation or regulation  under any federal,  state or local law (whether under
common law,  statute,  regulation or  otherwise)  or judicial or  administrative
interpretation of such,  including without limitation  petroleum or natural gas.
This indemnity will survive repayment of the Borrower's obligations to the Bank.

10.  DEFAULT

                  If any of the following events occurs,  the Bank may do one or
more of the  following:  declare  the  Borrower  in  default,  stop  making  any
additional  credit available to the Borrower,  and require the Borrower to repay
its entire debt  immediately  and without prior  notice.  If an event of default
occurs under the paragraph  entitled  "Bankruptcy,"  below,  with respect to the
Borrower,   then  the  entire  debt   outstanding   under  this  Agreement  will
automatically be due immediately.

                  10.1  Failure to Pay.  The Borrower fails to make a payment
under this Agreement within Five (5) days after the date when due.

                  10.2  Lien Priority.  The Bank fails to have an enforceable
first lien on or security interest in any property given as security for this
Agreement (or any guaranty).

                  10.3  False Information.  The Borrower or any guarantor or any
party pledging collateral to the Bank (each an "Obligor") has given the Bank
false or misleading information or representations.

                  10.4  Bankruptcy.  The  Borrower  (or  any  Obligor)  files  a
bankruptcy petition, a bankruptcy petition is filed against the Borrower (or any
Obligor) or the  Borrower (or any Obligor)  makes a general  assignment  for the
benefit of creditors.

                  10.5  Receivers.  A receiver or similar  official is appointed
for a substantial portion of the Borrower's (or any Obligor's) business,  or the
business is terminated, or any Obligor is liquidated or dissolved.

                  10.6  Lawsuits.  Any lawsuit or lawsuits are filed against the
Borrower  (or any  Obligor) in an  aggregate  amount of Two Million Five Hundred
Thousand  Dollars  ($2,500,000)  or more in  excess of any  insurance  coverage,
provided that the insurer has issued a letter of  responsibility  for payment up
to the amount of insurance coverage.

                  10.7  Judgments.  Any  judgments  or  arbitration  awards  are
entered against the Borrower (or any Obligor),  or the Borrower (or any Obligor)
enters  into  any  settlement  agreements  with  respect  to any  litigation  or
arbitration, in an aggregate amount of Two Million Five Hundred Thousand Dollars
($2,500,000)  or more in excess of any  insurance  coverage,  provided  that the
insurer  has issued a letter of  responsibility  for payment up to the amount of
insurance coverage.

                  10.8  Government Action.  Any government authority takes
action that the Bank believes materially adversely affects the Borrower's (or
any Obligor's) financial condition or ability to repay.

                  10.9  Material  Adverse  Change.  A  material  adverse  change
occurs,  or is reasonably  likely to occur, in the Borrower's (or any Obligor's)
business  condition   (financial  or  otherwise),   operations,   properties  or
prospects,  or ability to repay the credit;  or the Bank  determines  that it is
insecure for any other reason.

                  10.10 Cross-default. Any default occurs under any agreement in
connection  with  any  credit  the  Borrower  (or  any  Obligor)  or  any of the
Borrower's related entities or affiliates has obtained from anyone else or which
the  Borrower  (or any  Obligor) or any of the  Borrower's  related  entities or
affiliates  has  guaranteed  in the  amount  of Five  Hundred  Thousand  Dollars
($500,000)  or more in the  aggregate  where such  default  remains  uncured for
fourteen (14) days.

                  10.11  Default  under Related  Documents.  Any default  occurs
under any guaranty,  subordination agreement, security agreement, deed of trust,
mortgage,  or other  document  required by or delivered in connection  with this
Agreement or any such document is no longer in effect, or any guarantor purports
to revoke or disavow the guaranty.

                  10.12 Other Bank Agreements.  The Borrower (or any Obligor) or
any of the Borrower's  related entities or affiliates fails to meet any material
conditions  of, or fails to  perform  any  material  obligation  under any other
agreement  the  Borrower  (or  any  Obligor)  or any of the  Borrower's  related
entities or affiliates  has with the Bank or any  affiliate of the Bank.  If, in
the Bank's opinion, the breach is capable of being remedied, the breach will not
be considered  an event of default  under this  Agreement for a period of thirty
(30) days after the date on which the Bank gives written notice of the breach to
the Borrower;  provided,  however, that the Bank will not be obligated to extend
any additional credit to the Borrower during that period.

                  10.13 ERISA  Plans.  Any one or more of the  following  events
occurs  with  respect  to a Plan of the  Borrower  subject to Title IV of ERISA,
provided such event or events could  reasonably be expected,  in the judgment of
the Bank,  to subject the  Borrower  to any tax,  penalty or  liability  (or any
combination of the  foregoing)  which,  in the aggregate,  could have a material
adverse effect on the financial condition of the Borrower:

                           (a) A  reportable  event shall  occur  under  Section
4043(c) of ERISA with respect to a Plan.

                           (b)  Any  Plan   termination   (or   commencement  of
         proceedings to terminate a Plan) or the full or partial withdrawal from
         a Plan by the Borrower or any ERISA Affiliate.

                  10.14 Other Breach Under Agreement. The Borrower fails to meet
the conditions of, or fails to perform any  obligation  under,  any term of this
Agreement  not  specifically  referred to in this  Article.  This  includes  any
failure or  anticipated  failure by the  Borrower to comply  with any  financial
covenants  set forth in this  Agreement,  whether  such  failure is evidenced by
financial statements delivered to the Bank or is otherwise known to the Borrower
or the Bank. If, in the Bank's opinion, the breach is capable of being remedied,
the breach will not be considered an event of default under this Agreement for a
period of thirty (30) days after the date on which the Bank gives written notice
of the  breach to the  Borrower;  provided,  however,  that the Bank will not be
obligated to extend any additional credit to the Borrower during that period.

11.  ENFORCING THIS AGREEMENT; MISCELLANEOUS

                  11.1 GAAP.  Except as otherwise stated in this Agreement,  all
financial  information  provided to the Bank and all financial covenants will be
made under generally accepted accounting principles, consistently applied.

Except as otherwise  stated in this Agreement,  all financial  covenants will be
calculated  based on the  Borrower's  business,  excluding  personal  assets and
liabilities.

                  11.2  California Law.  This Agreement is governed by
California law.

                  11.3 Successors and Assigns.  This Agreement is binding on the
Borrower's and the Bank's successors and assignees.  The Borrower agrees that it
may not assign this  Agreement  without the Bank's prior  consent.  The Bank may
sell  participations  in  or  assign  this  loan,  and  may  exchange  financial
information  about  the  Borrower  with  actual  or  potential  participants  or
assignees;  provided  that such actual or  potential  participants  or assignees
shall agree to treat all financial information  exchanged as confidential.  If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrower.

                  11.4  Arbitration and Waiver of Jury Trial.

                           (a) This  paragraph  concerns the  resolution  of any
         controversies  or claims  between the  Borrower  and the Bank,  whether
         arising in contract,  tort or by statute,  including but not limited to
         controversies  or  claims  that  arise out of or  relate  to:  (i) this
         Agreement  (including any renewals,  extensions or  modifications);  or
         (ii) any document related to this Agreement (collectively a "Claim").

                           (b) At the request of the  Borrower or the Bank,  any
         Claim shall be resolved by binding  arbitration in accordance  with the
         Federal Arbitration Act (Title 9, U. S. Code) (the "Act"). The Act will
         apply even though this  Agreement  provides  that it is governed by the
         law of a specified state.

                           (c)  Arbitration  proceedings  will be  determined in
         accordance  with the Act, the  applicable  rules and procedures for the
         arbitration of disputes of JAMS or any successor thereof ("JAMS"),  and
         the terms of this  paragraph.  In the event of any  inconsistency,  the
         terms of this paragraph shall control.

                           (d) The arbitration shall be administered by JAMS and
         conducted in any U. S. state where real or tangible  personal  property
         collateral  for  this  credit  is  located  or  if  there  is  no  such
         collateral,  in  California.  All  Claims  shall be  determined  by one
         arbitrator;   however,   if  Claims   exceed   Five   Million   Dollars
         ($5,000,000),  upon the  request  of any  party,  the  Claims  shall be
         decided by three arbitrators.  All arbitration  hearings shall commence
         within ninety (90) days of the demand for  arbitration and close within
         ninety  (90) days of  commencement  and the award of the  arbitrator(s)
         shall be issued  within  thirty (30) days of the close of the  hearing.
         However,  the  arbitrator(s),  upon a showing of good cause, may extend
         the  commencement  of the  hearing for up to an  additional  sixty (60)
         days. The  arbitrator(s)  shall provide a concise written  statement of
         reasons for the award.  The  arbitration  award may be submitted to any
         court having jurisdiction to be confirmed and enforced.

                           (e) The  arbitrator(s)  will  have the  authority  to
         decide whether any Claim is barred by the statute of  limitations  and,
         if so, to dismiss the  arbitration  on that basis.  For purposes of the
         application  of the statute of  limitations,  the service on JAMS under
         applicable  JAMS  rules of a notice of Claim is the  equivalent  of the
         filing of a lawsuit. Any dispute concerning this arbitration  provision
         or  whether  a  Claim  is   arbitrable   shall  be  determined  by  the
         arbitrator(s).  The  arbitrator(s)  shall have the power to award legal
         fees pursuant to the terms of this Agreement.

                           (f) This  paragraph  does not  limit the right of the
         Borrower or the Bank to: (i) exercise self-help  remedies,  such as but
         not  limited  to,  setoff;   (ii)  initiate   judicial  or  nonjudicial
         foreclosure  against any real or personal  property  collateral;  (iii)
         exercise any  judicial or power of sale rights,  or (iv) act in a court
         of law to  obtain  an  interim  remedy,  such  as but not  limited  to,
         injunctive relief, writ of possession or appointment of a receiver,  or
         additional or supplementary remedies.

                           (g) The procedure  described  above will not apply if
         the  Claim,  at the time of the  proposed  submission  to  arbitration,
         arises  from or relates to an  obligation  to the Bank  secured by real
         property.  In this case, both the Borrower and the Bank must consent to
         submission of the Claim to arbitration.  If both parties do not consent
         to arbitration, the Claim will be resolved as follows: The Borrower and
         the Bank will  designate  a referee (or a panel of  referees)  selected
         under  the  auspices  of JAMS in the same  manner  as  arbitrators  are
         selected in JAMS administered  proceedings.  The designated  referee(s)
         will be  appointed by a court as provided in  California  Code of Civil
         Procedure Section 638 and the following  related sections.  The referee
         (or the presiding referee of the panel) will be an active attorney or a
         retired  judge.  The  award  that  results  from  the  decision  of the
         referee(s)  will be entered as a judgment  in the court that  appointed
         the referee,  in accordance  with the provisions of California  Code of
         Civil Procedure Sections 644 and 645.

                           (h) The filing of a court  action is not  intended to
         constitute a waiver of the right of the Borrower or the Bank, including
         the  suing  party,  thereafter  to  require  submittal  of the Claim to
         arbitration.

                           (i) By agreeing to binding  arbitration,  the parties
         irrevocably and voluntarily waive any right they may have to a trial by
         jury in respect of any Claim. Furthermore, without intending in any way
         to limit this  agreement to  arbitrate,  to the extent any Claim is not
         arbitrated,  the parties  irrevocably and  voluntarily  waive any right
         they  may  have to a  trial  by jury in  respect  of such  Claim.  This
         provision is a material  inducement for the parties  entering into this
         Agreement.

                  11.5 Severability;  Waivers.  If any part of this Agreement is
not enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights,  even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default.  Any consent or waiver under this Agreement must be
in writing.

                  11.6  Administration Costs.  The Borrower shall pay the Bank
for all reasonable costs incurred by the Bank in connection with administering
this Agreement.

                  11.7  Attorneys'  Fees. The Borrower shall  reimburse the Bank
for any reasonable  costs and attorneys' fees incurred by the Bank in connection
with the  enforcement  or  preservation  of any  rights or  remedies  under this
Agreement and any other  documents  executed in connection  with this Agreement,
and in connection with any amendment,  waiver,  "workout" or restructuring under
this  Agreement.  In the  event of a  lawsuit  or  arbitration  proceeding,  the
prevailing  party is entitled to recover costs and  reasonable  attorneys'  fees
incurred in connection with the lawsuit or arbitration proceeding, as determined
by the  court or  arbitrator.  In the  event  that any case is  commenced  by or
against the Borrower under the Bankruptcy Code (Title 11, United States Code) or
any similar or  successor  statute,  the Bank is  entitled to recover  costs and
reasonable  attorneys'  fees  incurred by the Bank related to the  preservation,
protection,  or enforcement of any rights of the Bank in such a case. As used in
this  paragraph,  "attorneys'  fees" includes the allocated  costs of the Bank's
in-house counsel.

                  11.8  One Agreement.  This Agreement and any related security
or other agreements required by this Agreement, collectively:

                           (a)  represent the sum of the understandings and
         agreements between the Bank and the Borrower concerning this credit;

                           (b)  replace any prior oral or written agreements
         between the Bank and the Borrower concerning this credit; and

                           (c) are  intended by the Bank and the Borrower as the
         final, complete and exclusive statement of the terms agreed to by them.

In the event of any conflict  between this  Agreement  and any other  agreements
required by this Agreement, this Agreement will prevail.

                  11.19  Indemnification.  The Borrower will  indemnify and hold
the Bank harmless from any loss, liability, damages, judgments, and costs of any
kind relating to or arising  directly or indirectly out of (a) this Agreement or
any document  required  hereunder,  (b) any credit  extended or committed by the
Bank to the Borrower hereunder,  and (c) any litigation or proceeding related to
or arising out of this Agreement,  any such document,  or any such credit.  This
indemnity  includes  but  is not  limited  to  attorneys'  fees  (including  the
allocated cost of in-house  counsel).  This  indemnity  extends to the Bank, its
parent, subsidiaries and all of their directors,  officers,  employees,  agents,
successors, attorneys, and assigns. This indemnity will survive repayment of the
Borrower's  obligations to the Bank. All sums due to the Bank hereunder shall be
obligations of the Borrower, due and payable immediately without demand.

                  11.10 No Future Commitment. The Borrower acknowledges that the
Bank has made no commitment to extend any  additional  credit to the Borrower or
to continue the credit  provided  hereunder  after this Agreement  expires or is
terminated as provided herein.

                  11.11 Notices.  Unless otherwise provided in this Agreement or
in another  agreement  between the Bank and the Borrower,  all notices  required
under this Agreement shall be personally  delivered or sent by first class mail,
postage prepaid, or by overnight courier, to the addresses on the signature page
of this  Agreement,  or sent by  facsimile  to the  fax  numbers  listed  on the
signature  page,  or to such other  addresses  as the Bank and the  Borrower may
specify from time to time in writing.  Notices and other  communications sent by
(a) first class mail shall be deemed  delivered on the earlier of actual receipt
or on the fourth business day after deposit in the U.S. mail,  postage  prepaid,
(b) overnight  courier  shall be deemed  delivered on the next business day, and
(c) telecopy shall be deemed delivered when transmitted.

                  11.12  Headings.   Article  and  paragraph  headings  are  for
reference  only and  shall not  affect  the  interpretation  or  meaning  of any
provisions of this Agreement.

                  11.13 Counterparts.  This Agreement may be executed in as many
counterparts  as  necessary  or  convenient,  and by the  different  parties  on
separate  counterparts  each of  which,  when so  executed,  shall be  deemed an
original  but all  such  counterparts  shall  constitute  but  one and the  same
agreement.

                  11.14 Prior Agreement  Superseded.  This Agreement  supersedes
the Business Loan  Agreement  entered into as of March 11, 1999 between the Bank
of America  National  Trust and Savings  Association  and the Borrower,  and any
credit  outstanding  thereunder  shall be deemed to be  outstanding  under  this
Agreement.














This Agreement is executed as of the date stated at the top of the first page.


Bank of America, N.A.                             National R.V. Holdings, Inc.,
                                                     a Delaware corporation

By: /s/ Helen Wilson                          By: /s/ Bradley C. Albrechtsen
    -----------------                             ----------------------------
Typed Name:  Helen Wilson                    Typed Name: Bradley C. Albrechtsen
Title: Senior Vice President                 Title: Chief Financial Officer


Inland Empire Regional Commercial Banking    By_________________________
Office, #1496                                Typed Name:_________________
3650 14th Street, Second Floor               Title:________________________
Riverside, CA 92501

Facsimile:  909/781-1595                     Address where notice to the
                                             Borrower are to be sent:
                                             3411 N. Perris Blvd.
                                             Perris, CA 92571
                                             Facsimile: 909/943-6117


                                             With Copies to
                                             Heller, Ehrman White &
                                             McAuliffe LLP
                                             714 Fifth Avenue
                                             New York, New York 10022-3194
                                             Attention: Stephen M. Davis