LOAN AGREEMENT


H.E.R.C. Products Incorporated, a Delaware corporation, with its principal
office at 2202 W. Lone Cactus Drive, #15, Phoenix, Arizona 85027 (hereinafter
referred to as ("Borrower"), and InterEquity Capital Partners, L.P., a Delaware
limited partnership, having an office at 220 Fifth Avenue, New York, N.Y. 10001
(hereinafter referred to as "Lender"), hereby enter into this Loan Agreement
("Agreement") dated as of September 15, 1997.
SECTION 1. CERTAIN DEFINITIONS
         1.1   The following terms used in this Agreement will have the meanings
given below:

"Affidavit of Confession of Judgment"     Defined in Section 7.1(c).

"Claims and Expenses"                     Any and all  claims,  lawsuits  of any
                                          kind,  judgments,   losses,   damages,
                                          liabilities,   penalties,   costs  and
                                          reasonable  expenses  arising  out  of
                                          transactions  contemplated  under this
                                          Agreement  or  under  the   Collateral
                                          Documents,  including all "Legal Costs
                                          and Expenses" (defined below) incurred
                                          in connection therewith.

Collateral Documents                      The Notes, the Security Agreement, the
                                          Guaranty,  the Affidavit of Confession
                                          of Judgment,  the Patent and Trademark
                                          Assignment, the Subsidiaries' Security
                                          Agreement  and  the   applicable   UCC
                                          Statements.

EBITDA                                    Earnings   before   interest,   taxes,
                                          depreciation and amortization.

"Event of Default" or default             Defined in Section 13.1.

The "First Note"                          Defined in Section 2.2.

The "First Loan"                          Defined in Section 2.1.

First Loan Amortization  Commencement     March 1, 1998.
Date

The "First Loan Maturity Date"            August 30, 2002.
<PAGE>
Loan covenants

10.1                                      Prompt payment of interest - yes.

10.2.1                                    Net  worth  of $2.6 - yes but  will be
                                          under at year end

          m.         EBIDITA of ($1.4 million) for you - No



                     Son -                              2.2
                     Dep & Amortization                 (.3)
                                                       -----
                                                       $1.9


          n.        Revenues of $6 million - $1 million short
<PAGE>
Fixed Charge Coverage                     Net after tax income plus depreciation
                                          and   amortization   divided   by  all
                                          payments   of    principal    on   any
                                          indebtedness and all cash expenditures
                                          for   capital    expenses    including
                                          capitalized leases.

The "Guaranty"                            The  Guaranty by the  Subsidiaries  of
                                          the Notes.

Interest Coverage                         EBITDA divided by interest  charges on
                                          all    indebtedness    including   the
                                          outstanding Notes.

"Legal Costs and Expenses"                Any and all reasonable attorneys' fees
                                          and  disbursements,  court  costs  and
                                          other litigation expenses.

The "Loans"                               The First  Loan and the  Second  Loans
                                          collectively.

The "Notes"                               The  First  Note and the  Second  Note
                                          collectively.

The Patent and Trademark Assignment       Defined in Section 7.1(b).

"Prepayment Fee"                          Defined in Section 2.3(c)(ii).

The "Second" Loan"                        Defined in Section 3.1.

Second Loan Amortization Commencement     Defined in Section 3.2A(i)
Date

"Second Loan Funding Date"                Defined in Section 3.2A

"The Second Loan Maturity Date"           Defined in Section 3.2A(ii)

The "Second Note"                         Defined in Section 3.2.

Subsidiaries                              H.E.R.C.  Consumer Products,  Inc. and
                                          CCT Corporation which corporations are
                                          wholly owned by Borrower.

Subsidiaries' Security Agreement          Security Agreement by the Subsidiaries
                                          collateralizing the Guaranty.
                                       2
<PAGE>
SECTION 2. THE FIRST LOAN

         2.1  Simultaneously  with the  execution of this  Agreement,  Lender is
making the loan (the "First  Loan") to Borrower in the  principal  amount of Two
Hundred Fifty Thousand US Dollars (US $250,000.00);

         2.2 The First Loan is evidenced by a promissory note ("the First Note")
of the  Borrower in favor of Lender,  which is being  executed  by Borrower  and
delivered  to Lender  contemporaneously  herewith.  A copy of the First  Note is
attached to this Agreement as Exhibit 1.

         2.3 The First Note is payable in accordance  with its provisions  which
include, inter alia;

         (a) interest at the rate of 14% per annum on the unpaid  balance of the
         First  Note  payable in arrears on October 1, 1997 and on the first day
         of each of the next five successive months thereafter;

         (b) commencing April 1, 1998, and continuing  successively on the first
         day of each of the next 52 months  thereafter,  payments of  $6,266.17,
         with a 54th and  final  payment  of  $6,266.14  plus any  other  unpaid
         principal and interest being due and payable on the First Loan Maturity
         Date, each such payment  reflecting  interest at the annual rate of 14%
         (computed  from the  First  Loan  Amortization  Commencement  Date) and
         amortization  of  principal  (based  on  a  54-month   self-liquidating
         schedule);

         (c) the right of Borrower,  exercisable  at any time prior to the First
         Loan  Maturity  Date to prepay all or part (in multiples of $100,000 or
         covering the unpaid balance of the Note) of the unpaid principal amount
         and accrued  interest  thereon of the First Note upon Borrower  giving,
         and Lender receiving:

                  (i) not less than 30 days' prior written  notice of Borrower's
         intention to prepay; and

                  (ii) if the  prepayment  pursuant  to such  notice is received
         after the  expiration  of two years from the date of the First Note, an
         additional  amount (the "Prepayment  Fee") equal to a percentage of the
         then unpaid principal amount (as of the date immediately  prior to such
         prepayment)  of the  First  Note,  such  percentage  to  equal 5% for a
         prepayment received by Lender during the 12-month period beginning upon
         the  expiration  of two  years  from  the  date of the  First  Note and
         declining to 4% for a prepayment received by the Lender during the next
         twelve month period and to 3% for a prepayment received by Lender after
         the expiration of four years from the date of the First Note.
                                       3
<PAGE>
         (d) The principal of the First Note and accrued  interest thereon shall
         become  immediately  due and payable upon the occurrence of an Event of
         Default.

SECTION 3. THE SECOND LOAN

         3.1  Lender  shall  make an  additional  loan  (the  "Second  Loan") to
borrower if drawn down by Borrower in its  discretion  by December 31, 1997 upon
the satisfaction of the conditions set forth in Section 3.3.

         3.2 A. The Second Loan shall be  evidenced  by a  promissory  note (the
"Second  Note") dated the day it is drawn down (the "Second Loan Funding  Date")
and shall be payable in accordance with its provision which shall include, inter
alia:

                  (i) a payment of  interest at the rate of 14% per annum on the
                  unpaid  balance of the Second  Note  payable in arrears on the
                  first day of the month  immediately  following the Second Loan
                  Funding  Date,  and on the  first day of each of the next five
                  (5) successive  months thereafter (the scheduled date on which
                  the last  payment of interest is due as  hereinabove  provided
                  being  referred  to herein as the  "Second  Loan  Amortization
                  Commencement Date");

                  (ii)  commencing  on the first day of the month  following the
                  month in which the Second Loan Amortization  Commencement Date
                  occurs,  and continuing  successively on the first day of each
                  of the next 52 months thereafter, payments of $6,266.17 with a
                  54th and final  payment  of  $6,266.14  plus any other  unpaid
                  principal and interest  payable on the expiration of 54 months
                  after the Second Loan  Amortization  Commencement  Date,  each
                  such  payment  representing  interest  at the  rate of 14% per
                  annum computed from the Second Loan Amortization  Commencement
                  Date and  amortization of principal  (based on a 54-month self
                  liquidating schedule);

                  (iii) the right of  Borrower  to prepay the Second Note on the
                  same terms as permitted  under the First Note,  including  the
                  payment  of a  Prepayment  Fee in the same  amount as would be
                  payable under the First Note if a prepayment of that Note were
                  made at the same time as the  prepayment  is sought to be made
                  of the Second Note.

                  B. Except as indicated  above, the Second Note, which shall be
substantially  in the form attached  hereto as Exhibit 2, shall contain the same
provisions as contained in the First Note.
                                       4
<PAGE>
         3.3 The  obligation  of  Lender  to  make  the  Second  Loan  shall  be
conditioned  on the  satisfaction  of the following  conditions as of the Second
Note Funding Date.

                  (a) Borrower shall be in compliance  with all of its covenants
                  under this Agreement and under the Collateral  Loan Documents,
                  and no Event of Default  hereunder  or  thereunder  shall have
                  occurred  and be then  continuing,  or such  noncompliance  or
                  Event of Default  shall have been waived,  in writing,  by the
                  Lender hereunder,

                  b)  Borrower  shall  have  recorded,  on a  cumulative  basis,
                  revenues and EBITDA for the period (the "Period") from June 1,
                  1997 to the last day of the month  immediately  preceding  the
                  month in which the Second Loan  Funding Date occurs in amounts
                  at least equal to the amounts reflected for such items for the
                  Period on Borrower's  Consolidated  Budget  annexed  hereto as
                  Exhibit 3;

                  (c) All of the warranties and  representations of Borrower set
                  forth  herein  shall be true and correct as of the Second Loan
                  Funding Date to the same effect as if made as of such date;

                  (d)  Subsequent  to June 1,  1997,  the  Borrower  shall  have
                  obtained binding  commitments from its customers (with respect
                  to services  not  theretofore  contracted  for) which by their
                  terms will provide Borrower with $800,000 in revenue.

                  (e)  Borrower's  President  shall have  delivered  to Lender a
                  certificate  certifying to the  fulfillment  of the conditions
                  set  forth in (a),  (b),  (c) and (d) above and in (g) and (i)
                  below;

                  (f) Lender  shall  have  received  an  opinion  of  Borrower's
                  attorneys,  addressed to the Lender  substantially  similar in
                  content  to the  opinion  of  Borrower's  attorneys  given  in
                  connection with the First Loan (a copy of which is attached as
                  Exhibit 10 to this  Agreement) and otherwise  satisfactory  in
                  form, scope and substance to the Lender and its attorneys;

                  (g)  There   shall  be  full   compliance   with  the   rules,
                  regulations,  procedures  and  requirements  of the U.S. Small
                  Business  Administration  as they relate to the Small Business
                  Investment Company program and this transaction;

                  (h) Lender shall have received all documents  required by this
                  Agreement;

                  (i) There shall not have been a material adverse change in the
                  condition  (financial or otherwise) from that  contemplated in
                  this Agreement (whether under Section 9, Section 10.2, Section
                  11 or  otherwise),  or in the business or in the  prospects of
                  Borrower or either of the  Subsidiaries,  it being  understood
                  that  losses   consistent   with  the  operating   projections
                  reflected  on  Borrower's   Consolidated
                                       5
<PAGE>
                  Budget  attached as Exhibit 3 shall not for this reason  alone
                  be regarded as a materially adverse change;

                  (j)  Borrower  shall have  delivered  to Lender a  certificate
                  signed by its  President  setting forth in detail the specific
                  purposes  for which the  proceeds  of the Second  Loan will be
                  applied, it being the understanding that the proceeds will not
                  be used for  equipment  purchases  and  upgrades  of  existing
                  equipment and fulfilling new contracts, unless at least 25% of
                  the  internal  cash  balance of Borrower as at the Second Loan
                  Funding  Date (not  including  the proceeds of the Second Loan
                  and the proceeds from the receivable  financing referred to in
                  Section 11(a)) has been allocated for use for such purposes.

                  (k) Lender at its  request  shall have  received a letter from
                  Paul Pollock,  an associate of Lender,  or such other employee
                  of Lender as Lender  shall  direct,  which letter shall not be
                  unreasonably  withheld,  that  based  solely  on a  review  of
                  Borrower's  consolidated  financial  statements  delivered  to
                  Lender and  discussions  with the Chief  Financial  Officer of
                  Borrower  and  Borrower's   independent  outside  accountants,
                  nothing has come to his attention  that would indicate that as
                  of a date within  five days prior to the Second  Loan  Funding
                  Date  Borrower  is  or is  likely  to be  in  default  of  its
                  financial  representations and covenants contained in Sections
                  9 and 10.2 upon the consummation of the Second Loan.

                  (l) Lender shall have  received  from Borrower an Affidavit of
                  Confession  of  Judgment   relating  to  certain  defaults  of
                  Borrower of the Second Loan, in substantially the same form as
                  Exhibit 7 referred to in Section 7.1(c) herein.

         3.4  Interest   Limitation.   Notwithstanding  any  provision  in  this
Agreement  or the First or Second  Note to the  contrary,  in no event shall the
interest  rate  applicable  to the Loans  exceed that  permitted  by the laws or
governmental  regulations  applicable to the Lender that limit rates of interest
that may be charged or  collected  by the Lender.  If any payment  hereunder  or
under  the First or  Second  Note  shall be found to  constitute  a  payment  of
interest in excess of that permitted under the laws or governmental  regulations
applicable  to the Lender that limit  rates of  interest  that may be charged or
collected  by the  Lender,  then the  amount  of such  excess  payment  shall be
refunded to the Borrower.
                                       6
<PAGE>
SECTION 4. PROCESSING FEE

         4.1 The  Processing  Fee payable by Borrower to Lender is $15,000,  and
has been paid as follows:

         o        $12,500 has heretofore been paid to Lender.

         o        The  final   $2,500  is  being  paid  by  Borrower  to  Lender
                  simultaneously herewith.

SECTION 5. WARRANTS

         5.1 Simultaneously with the Closing hereunder Borrower has delivered to
Lender two Warrants,  Warrant A and Wan-ant B, each to purchase 62,500 shares of
Borrower's  Common Stock,  which Warrants are alike in all respects  except that
the exercise price for Warrant A is $1.18 while the exercise price of the Second
Warrant is $1.475. The exercise price of both Warrants, and the number of shares
covered  thereby.  are subject to adjustment as set forth in the Wan-ants copies
of which are attached hereto as Exhibits 4 and 5.

         5.2 At the closing of the Second Loan  Borrower  will deliver to Lender
two  additional  Warrants  each  providing  for the purchase of 62,500 shares of
Borrower's  Common  Stock.  One of these  Warrants  shall  provide  for the same
exercise  price as  contained  in Warrant  A, and the other  shall have the same
exercise price as contained in Warrant B. Except for their dates of issuance the
Wan-ants to be issued at the Second Loan  Funding  Date shall in all respects be
the same as Warrants A and B, respectively, including their dates of expiration.

         5.3 If,  upon the  expiration  of two years from the date  hereof,  the
outstanding  Loans have not been  prepaid in full by  Borrower,  Borrower  shall
deliver  to Lender  additional  Warrants  identical  to the  Warrants  that were
heretofore  issued to Lender  thereby  doubling the number of Warrants that will
have been issued to Lender hereunder.
                                       7
<PAGE>
SECTION 6. USE OF PROCEEDS

         A. The  proceeds of the Loans will be used by the  Borrower to purchase
pipe cleaning  equipment to secure and fulfill new  industrial  contracts and to
insure its ability to work at multiple  locations  simultaneously and to upgrade
existing  equipment and provide working capital for fulfilling new contracts and
for costs and expenses of Borrower relating to the transactions hereunder.

         B.  Borrower  shall not use the proceeds of either of the Loans for any
purpose contrary to the purposes  contemplated by the Small Business  Investment
Act of 1958, as amended, including any subsequent amendments, or for any purpose
that may be in conflict with any regulations  issued by the U. S. Small Business
Administration as they relate to the Small Business Investment Company program.
Such prohibited uses include:

                  (i) personal use by  shareholders,  officers and  employees of
                  Borrower or the Subsidiaries;

                  (ii) use for any  relending or  reinvesting  purposes,  if the
                  primary business activity of such person involves, directly or
                  indirectly,  providing  funds to others,  the purchase of debt
                  obligations, factoring, or long term leasing of equipment with
                  no provision for maintenance or repair;

                  (iii) use for purchasing any stock in or providing  capital to
                  any small business investment company;

                  (iv) use for making any real estate purchases if a Borrower or
                  a  Subsidiary  as the case may be, is  classified  under Major
                  Group  65 of the  Standard  Industrial  Classification  Manual
                  unless such transaction would otherwise be exempt by virtue of
                  Section   901(c)   of  the   Small   Business   Administration
                  Regulations pertaining to Small Business
                  Investment Companies,

                  (v)  use  for  purposes   contrary  to  the  public  interest,
                  including but not limited to activities which are in violation
                  of law, or inconsistent with free competitive enterprise; or

                  (vi) use for  foreign  investment  and use  outside the United
                  States except as may be permitted under Section 901 (e) of the
                  Small Business Administration  Regulations pertaining to Small
                  Business Investment Companies.
                                       8
<PAGE>
SECTION 7. COLLATERAL

         7.1 The Loans are secured by the following  documents,  which are being
executed and delivered simultaneously with this Agreement:

         (a) a  security  agreement  from  Borrower  in  substantially  the form
         attached hereto as Exhibit 6 granting Lender the security interests set
         forth therein (the "Security Agreement");

         (b) a collateral assignment of all of Borrower's patents and trademarks
         in form  appropriate for recording and satisfactory to Lender's Counsel
         (the "Patent and Trademarks Assignment");

         (c) an Affidavit of  Confession of Judgment  against,  and executed by,
         Borrower in favor of Lender (in the form attached hereto as Exhibit 7);

         (d) UCC-I Financing  Statements  granting Lender a security interest in
         property  of  Borrower  and  the   Subsidiaries  in  form  and  content
         satisfactory to Lender;

         (e) a guaranty of the Notes by the  Subsidiaries in  substantially  the
         form annexed hereto as Exhibit 8 (the "Guaranty"); and

         (f) a Security  Agreement from the  Subsidiaries,  in substantially the
         form annexed  hereto as Exhibit 9  collateralizing  their guaranty (the
         "Subsidiaries' Security Agreement").

         7.2 It is acknowledged  and agreed by Lender that Borrower will seek to
secure a receivable facility in an aggregate amount of up to $1.5 million from a
third party ("Third  Party"),  pursuant to which  Borrower shall sell certain or
all of its  receivables to Third Party. It is further agreed that Borrower shall
be  entitled  to sell such  receivables  to Third  Party and  Lender's  security
interest in Borrower's unsold  receivables and inventory,  to the extent covered
by the  security  interest to be given to Third  Party  ("Third  party  Security
Interest"), shall be subordinate to such Third Party Security Interest. Further,
Lender  hereby  agrees to enter  into  such  intercreditor  agreement  as may be
reasonably requested by Third Party consistent with the provisions herein.

SECTION 8. CLOSING DOCUMENTS

         8.1  Simultaneously  with the execution and delivery of this Agreement,
the First  Loan is being  funded  and  Borrower  is  delivering  to  Lender  the
following "Collateral  Documents",  duly executed and (where required) witnessed
or notarized:

         (a) the First Note;

         (b) the documents set forth in Section 7.1;
                                       9
<PAGE>
         (c) Secretary's  Certificate of Borrower as to resolutions of its Board
         of  Directors  authorizing  (i) the  borrowing  hereunder  and (ii) the
         execution  and  delivery  of  this   Agreement  and  the   transactions
         contemplated hereby and thereby;

         (d)  Opinion  Letter of  Attorneys  for  Borrower  (in form and content
         attached hereto as Exhibit 10).

         8.2 Simultaneously  with the funding of the Second Loan, Borrower shall
deliver or cause to be delivered to Lender,  duly executed and (where  required)
witnessed or notarized,  closing  documents  substantially  similar to the First
Loan Closing Documents.

SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS

         9.1  To  induce  Lender  to  make  the  Loan  hereunder,  the  Borrower
represents, warrants and agrees that;

         (a) Borrower and each Subsidiary validly exists and is in good standing
         under  the laws of their  respective  states  of  incorporation  and is
         qualified to do business in each state where the  ownership of property
         or the nature of the business conducted requires such qualification.

         (b) Borrower has the requisite  corporate  authority and power to enter
         into this Agreement,  to borrow money as contemplated  hereby, to issue
         the Notes and  Warrants  described  herein,  and to execute and deliver
         each of those documents required and described in this Agreement.

         c)  Borrower's  Form 10-KSB for the year ended on December 31, 1996 and
         its Forms 1O-QSB for the quarters ending on March 31, 1997 and June 30,
         1997 are true and correct in all material  respects  and the  financial
         statements  contained therein present fairly the financial  position of
         Borrower and its  Subsidiaries on a consolidated  basis as of the dates
         of their respective  balance sheets included therein and the results of
         their operations for the applicable periods then ended.

         (d) All representations made by Borrower to Lender in this Agreement or
         in any  Collateral  Document  are  true  and  correct  in all  material
         respects as of this date.

         (e) Neither  Borrower nor any  Subsidiary  is a party to, or threatened
         by, any suits,  actions,  claims, or investigations by any governmental
         body or  legal,  administrative  or  arbitration  proceeding  which may
         result,  either  singly or in the  aggregate,  in any material  adverse
         change in the  business,  property  or assets  of the  Borrower  or any
         Subsidiary.

         (f) There are no outstanding orders,  judgments,  writs, injunctions or
         decrees of any court,  governmental  agency,  or  arbitration  tribunal
         which may result,  either singly or in the
                                       10
<PAGE>
         aggregate, in any material adverse change in the business,  property or
         assets of Borrower or any Subsidiary.

         (g) Neither Borrower nor any Subsidiary is a party to, or bound by, any
         contract or  instrument  which would be in breach as a result of any of
         the Loans covered by this Agreement.

         (h) Except to the extent  indicated  below,  neither  Borrower  nor any
         Subsidiary is in breach of, in default  under,  or in violation of, any
         applicable law, decree,  order,  rule or regulation,  or any indenture,
         contract,  agreement,  deed, lease, loan agreement,  commitment,  bond,
         note,  deed of trust,  restrictive  covenant,  license,  instrument  or
         obligation to which it is a party or by which it is bound,  or to which
         any of its assets is  subject,  in each case which  breach,  default or
         violation  would have a material  adverse  effect on  Borrower  and the
         Subsidiaries  taken  as  a  whole,  and  the  execution,  delivery  and
         performance  of this  Agreement and the  Collateral  Documents will not
         constitute any such breach, default or violation, or require consent or
         approval of any court,  governmental  agency, or body, except as may be
         expressly provided herein or shall have been obtained. Borrower and its
         Subsidiaries are currently  delinquent in the payment of obligations in
         an amount less than  $500,000 in the  aggregate.  For  purposes of this
         subparagraph  an obligation  shall be deemed past due and delinquent if
         it has not been paid when due in accordance with the  understanding  of
         the parties to such transaction or, if there is no such  understanding,
         has not  been  paid  within  thirty  (30)  days  after  the  date  such
         obligation  was  incurred.  It is expected  that the  $500,000  maximum
         delinquent   amount  will  be  reduced  by  $100,000  per  month  until
         extinguished.  Consequently,  when this  representation and warranty is
         repeated as a condition to the making of the Second Loan,  the $500,000
         amount shall be deemed reduced to the amount  determined by taking into
         account the reductions as set forth in the preceding sentence.

         (i)  There has not been a  material  adverse  change  in the  condition
         (financial or otherwise) of the Company or the  Subsidiaries  from that
         shown in the Company's financial statements included in its Form 10-QSB
         for the  quarter  ending on June 30,  1997,  it being  understood  that
         losses   consistent  with  the  operating   projections   reflected  in
         Borrower's Consolidated Budget attached as Exhibit 3 shall not for this
         reason alone be regarded as a materially adverse change.

         (j) Borrower is a small  business  concern,  as defined under the Small
         Business  investment Act and  Regulations,  in accordance with SBA Form
         480 thereunder  and  accordingly is entitled to receive the proceeds of
         this Loan.

         (k) There are no liens,  security interests or encumbrances of any kind
         on any of the assets of Borrower or any  Subsidiary  which are intended
         to secure the Notes or the Guaranty other than  immaterial  liens,  and
         Lender shall upon the filing of UCC statements as  appropriate  and the
         recording of the Patent and Trademark Assignment have a first perfected
         security  interest  in all such  assets,  except  for a prior  security
         interest  granted or to be granted by  Borrower  of the type  permitted
         under  Section  11 (a) and  the  security  interest  given  to  bonding
         institutions  to  secure   Borrower's   performance  under  outstanding
         municipal contracts.
                                       11
<PAGE>
         (l) Mr. S. Steven  Carl's  employment  agreement  with the Borrower has
         been amended  effective on the date hereof to eliminate  any  incentive
         bonus based on the revenues of CCT Corporation.

         (m) Prior to the date  hereof,  S.  Steven Carl and Shelby Carl and his
         wife, have made equity  investments in Borrower and/or the Subsidiaries
         in an aggregate amount of not less than $1,300,000.

         n) There has not since  December 31, 1996 been any  material  change in
         the ownership or control of Borrower or in the  corporate  structure or
         business of Borrower or any of the Subsidiaries  except as reflected in
         Borrower's  Forms  10-QSB  referred to in Section  9.1(c) and its Proxy
         Statement dated July 8, 1997 (the "Proxy Statement").

         9.2 The representations, warranties and agreements in Section 9.1 apply
to each Loan and shall be deemed to have been made as of the Second Loan Funding
Date by the Borrower to induce Lender to fund the Second Loan.

SECTION 10. CERTAIN AFFIRMATIVE COVENANTS

         10.1 The  covenants  and  agreements  in this  Section 10 apply to each
Loan.

         10.2 While either Note is outstanding,  the Borrower will do and comply
with the following:

         (a)  Borrower  will  promptly  make all payments of the  principal  and
         interest on each Note when due;

         (b)  Borrower  will  comply  with  the  terms  and  conditions  in this
         Agreement and in those contained in each Collateral Document;

         (c) Borrower  will keep  accurate  and  complete  books and records and
         maintain them at its principal  office set forth in the first  sentence
         of the Agreement.

         (d)      Borrower will furnish to Lender:

                  (i) within  ninety (90) days after the end of each fiscal year
                  consolidated and consolidating  balance sheets of Borrower and
                  consolidated and  consolidating  income statements of Borrower
                  showing the financial condition as of the close of such fiscal
                  year and the  results of its  operations  for such fiscal year
                  and consolidated and consolidating statements of shareholders'
                  equity  of  Borrower  and   consolidated   and   consolidating
                  statements  of cash flows of  Borrower.  All of the  foregoing
                  Consolidated   Financial   Statements  to  be  audited  by  an
                  independent certified public
                                       12
<PAGE>
                  accountant   ("CPA")   selected  by  Borrower  and  reasonably
                  acceptable to Lender; it being agreed that Borrower's  current
                  CPAs are acceptable to Lender;

                  (ii) within  forty-five (45) days after the end of each fiscal
                  quarter,  unaudited  consolidated  and  consolidating  balance
                  sheets, income statements,  statements of shareholders' equity
                  and statements of cash flows of Borrower as of the end of such
                  quarterly   period,   prepared  and  certified  by  the  Chief
                  Financial   Officer  of  Borrower  as  presenting  fairly  the
                  financial  condition and results of operations of Borrower and
                  having been prepared in  accordance  with  generally  accepted
                  accounting principles subject to year-end adjustments;

                  (iii) copies of each report of Borrower  filed pursuant to the
                  Securities Exchange Act of 1934,  simultaneous with its filing
                  with the Securities and Exchange Commission.

         (e) For purposes of verifying Borrower's compliance with the provisions
         of this Agreement,  Borrower shall permit any authorized representative
         of Lender and its attorneys  and  accountants  to inspect,  examine and
         make  copies  and  abstracts  of the books of  account  and  records of
         Borrower and the  Subsidiaries  at  reasonable  times and upon five (5)
         business day's notice during normal business hours,  and to inspect the
         collateral given as security for the Loans and the Guaranty;

         (f) Borrower shall notify Lender of (i) litigation involving amounts of
         $25,000.  or more to  which  Borrower  or a  Subsidiary  is a party  by
         mailing to Lender by certified  mail within five (5)  business  days of
         receipt thereof, a copy of the complaint, motion for judgment, or other
         such  pleadings  served on or by Borrower or a Subsidiary  and (ii) any
         litigation  to which  Borrower or a Subsidiary is not a party but which
         could substantially and adversely affect the operation of Borrower's or
         a  Subsidiary's  business  or the  collateral  pledged for this Loan by
         mailing to Lender by certified  mail, a copy of all pleadings  obtained
         by  Borrower  or a  Subsidiary  regarding  such  litigation,  or  if no
         pleadings are obtained,  a letter setting out the facts known about the
         litigation  within five (5) business days of receipt thereof.  Mailings
         under this paragraph shall be addressed to:

                         Abraham Goldstein, Managing Director
                         InterEquity Capital Partners, L.P.
                         220 Fifth Avenue
                         New York, New York 10001

         (g)  Borrower  shall  continue,  and shall  cause the  Subsidiaries  to
         continue, their respective businesses in substantially the same general
         character and manner as conducted as of the date of this  Agreement and
         to  maintain,  preserve and keep,  in all  material  respects all their
         respective properties,  buildings, equipment and fixtures necessary for
         the operation of their respective  businesses in reasonable  repair and
         condition  and  promptly  pay and  discharge  or  cause  to be paid and
         discharged  as and  when  due any  and all  income  taxes,  federal  or
         otherwise,  lawfully  assessed and imposed  upon them,  and any and all
         lawful  taxes,  rates,  levies and  assessments  whatsoever  upon their
         respective properties and every part thereof,
                                       13
<PAGE>
         provided  however that nothing  contained  herein shall be construed as
         prohibiting  Borrower or a Subsidiary from contesting in good faith the
         validity of any such income taxes, federal or otherwise,  or such other
         taxes, rates, levies or assessments;

         (i) Borrower shall defend and cause the  Subsidiaries  to defend at all
         times any claim by a third  party  relating  to the  possession  of, or
         interest in, their respective assets;

         (j) Borrower shall make and cause the Subsidiaries to make all payments
         to  creditors  as shall be  necessary  to  preserve  Lender's  security
         interests in the collateral given to secure the Loans and the Guaranty;

         (k) Borrower  shall execute and deliver and cause the  Subsidiaries  to
         execute and deliver to Lender  either before or after  disbursement  of
         either  Loan,  all  documents  necessary to perfect  Lender's  security
         interests or mortgages in the collateral  given (A) to secure the Loans
         including   (but  not  limited  to)  extensions  of  the  Affidavit  of
         Confession   of   Judgment   referred  to  in  Section  7  and  (B)  to
         collateralize the Guaranty;

         (l) The consolidated net worth of Borrower shall at all times up to and
         including December 30, 1998 exceed  $2,600,000,  and at all times on or
         after December 30, 1998 shall exceed $2,800,000.

         (m) The (i)  consolidated  EBITDA  of  Borrower  for  the  year  ending
         December 31, 1997 shall not result in a loss  greater  than  $1,400,000
         and (ii) the consolidated EBITDA of Borrower for each year beginning on
         or after January 1, 1998 shall exceed $700,000.

         (n) The  Consolidated  Revenues  of  Borrower  for  1997  shall  exceed
         $6,000,000 and for each year thereafter shall exceed $8,500,000.

         (o) The Interest  Coverage for each year  beginning on or after January
         1, 1998 shall be not less than 1.5 to 1.

         (p) The  Fixed  Charge  Coverage  for each year  beginning  on or after
         January 1, 1998 shall be not less than 1.1 to 1.

         (q) The President or Chief Financial Officer of Borrower shall submit a
         semi-annual  certification to Lender that to the best of such officer's
         knowledge and belief,  Borrower is in compliance with all of the terms,
         provisions, conditions and covenants set forth in this Loan Agreement.

         (r) Borrower  shall,  at all times,  keep  reserved  for issuance  that
         number of shares of capital  stock as may be  required  to be issued in
         connection  with the exercise of the  Warrants  issued and to be issued
         hereunder.

         (s) Employment and Non-Compete  Agreements with S. Steven Carl and John
         Johnson and with such other key operating  and  technical  personnel as
         requested  by  Lender,  copies of
                                       14
<PAGE>
         which  have been  delivered  to Lender  shall  remain in full force and
         effect without any modification or amendment thereof.

         (t)  Borrower  shall  maintain  insurance  on the  business  assets  of
         Borrower and key man life  insurance on the lives of S. Steven Carl and
         John  Johnson in the amounts of at least  $500,000 for each such person
         from licensed  carriers,  all in accordance with its current  practice,
         with the  policies  thereon  made payable to Lender as its interest may
         appear.

         (u) Borrower and each Subsidiary  shall comply with all federal,  state
         and local laws, ordinances,  regulations and requirements applicable to
         them and to their respective businesses, including (without limitation)
         federal and state securities laws and zoning laws and ordinances except
         where the failure to so comply would not have a material adverse effect
         on Borrower and the Subsidiaries taken as a whole.

SECTION 11. CERTAIN NEGATIVE COVENANTS

         Until  such date as the Loans are repaid in full,  and except  with the
prior  written   consent  of  Lender  (whose  consent  may  be  refused  without
explanation and without any legal recourse by Borrower), Borrower will not:

         (a) except for a loan up to $1,500,000 from a financial  institution to
         be secured by  Borrower's  accounts  receivable  and inventory on terms
         acceptable to Lender and equipment  leases and purchase  money security
         interests  and  credit  card  obligations  in the  ordinary  course  of
         business,  borrow any money or permit a Subsidiary  to borrow any money
         except  for intra  corporate  borrowings  between  the  Borrower  and a
         Subsidiary or between Subsidiaries.

         (b)  engage or permit a  Subsidiary  to engage in any line of  business
         materially different from those which Borrower and the Subsidiaries are
         now engaged in;

         (c) become,  or permit a Subsidiary to become, a party to any merger or
         consolidation  with any  corporation,  company  or  entity  of any kind
         whatsoever,  or sell  substantially  all of its  assets,  or  otherwise
         liquidate or dispose of its  business,  provided  that  nothing  herein
         shall prevent a merger or sale of assets  between or among Borrower and
         the Subsidiaries;

         (d)  become,   or  permit  a  Subsidiary  to  become,  a  guarantor  of
         obligations of any other person, firm, corporation or entity, except in
         connection with depositing checks and other instruments for the payment
         of money acquired in the normal course of their respective businesses;

         (e) except as otherwise contemplated herein,  transfer,  sell, lease or
         in any other  manner  convey or  permit a  Subsidiary  to so do, to any
         person other than in the ordinary course of its business any equitable,
         beneficial or legal interest in any of the  collateral  securing a Loan
         or the Guaranty;
                                       15
<PAGE>
         (f) except as otherwise  contemplated herein, create or permit to exist
         any mortgage  interest,  pledge,  security  interest,  title  retention
         device, or other  encumbrance in the collateral  securing the Notes and
         the  Guaranty  junior to Lender's  lien or security  interest  thereon,
         except for liens of taxes and  assessments  not delinquent or contested
         in  good  faith,  nonmaterial  liens  for  workman's  compensation  and
         unemployment obligations or those machinery and equipment purchases and
         leases  which  may  arise  in the  ordinary  and  necessary  course  of
         business;

         (g)  knowingly  permit any  judgment  obtained  against  Borrower  or a
         Subsidiary in an amount exceeding $10,000 to remain unpaid for a period
         of thirty (30) days  following the entry thereof,  without  obtaining a
         stay of execution or bonding or causing such judgment to be bonded;

         (h) pay any dividends or make any other  distributions  with respect to
         its capital stock;

         (i) pay any bonus to or  increase  the  salary of any  employee  if the
         effect of such payment would cause a breach of any other representation
         or  covenant  made by Borrower in this  Agreement,  including,  without
         limitation, the covenants set forth in Section 10 of this Agreement;

         (j) increase the salary of and/or pay a bonus to any executive  officer
         of Borrower which in the aggregate  exceed 5% of his  compensation  for
         any year;

         (k) make any payment to any  executive  officer of Borrower for salary,
         bonus or otherwise  (whether or not such salary has been earned or such
         other  payment  is due) if the  effect of such  payment  would  cause a
         breach of any other representation or covenant made by Borrower in this
         Agreement,  including,  without limitation,  the covenants set forth in
         Section 10 of this Agreement; provided that any payment so deferred may
         thereafter  be made to the extent that such  payment  would not cause a
         breach of any other  representation  or covenant  made by  Borrowers in
         this Agreement,  including, without limitation, the covenants set forth
         in this Section or in Section 9 or 10 of this Agreement.

SECTION 12. REPRESENTATION ON BORROWER'S BOARD OF DIRECTORS

         12.1 Upon request of Lender,  Borrower shall cause a person  designated
by Lender,  to be elected to serve as a member of Borrower's  Board of Directors
for so long as either of the Notes remain unpaid.

         12.2 If Lender does not elect to  designate  a nominee for  election to
the Borrower's Board of Directors it shall have the right to send an observer to
all  meetings of the Board in which case it
                                       16
<PAGE>
shall be entitled to receive notice of all Board meetings in the same course and
manner as the directors comprising the Board.

         12.3  Upon the  occurrence,  and  continuation,  for six  months,  of a
default by Borrower of any of its covenants under this Agreement, Borrower shall
at Lender's request cause a second person  designated by Lender to be elected to
its Board of  Directors,  such person to serve as a director  until all defaults
under this Agreement are cured.

SECTION 13. EVENTS OF DEFAULT

         13.1 The  occurrence  of each of the following is an "Event of Default"
or "default" under this Agreement and under each Collateral Document:

         (a)  the  failure  to  make  any   payment   (whether   for   interest,
         amortization,  unpaid principal or otherwise) under this Agreement or a
         Note within ten (10) days after being due;

         (b) the failure of  Borrower to perform,  observe or comply with any of
         the covenants, agreements,  obligations,  requirements or provisions in
         this Agreement or in a collateral Document,  and such failure continues
         for ten (10) days after written notice thereof is given;

         (c) any representation or warranty in this Agreement or in a Collateral
         Document  is  not  true  or  correct  as of  the  date  or  dates  such
         representation is deemed made;

         (d) the failure by a Subsidiary to comply with the Guaranty;

         (e) Borrower or a Subsidiary  shall commit an act of bankruptcy  within
         the  meaning  of  the  Federal   Bankruptcy   code  or  a   bankruptcy,
         receivership, insolvency,  reorganization,  dissolution, liquidation or
         other similar  proceeding shall be instituted by or against Borrower or
         a Subsidiary and in the case of a  non-voluntary  proceeding such party
         consents  thereto or fails to cause such  proceeding to be dismissed or
         discharged within sixty (60) days;

         (f) Except as  described  in Section  9.1(h),  Borrower or a Subsidiary
         shall be in default after expiration of all cure periods on any debt or
         obligation greater than $25,000.00 whether or not secured by any of the
         collateral given to secure a Loan; and

         (g) a judgment or tax lien is filed  against  Borrower or a  Subsidiary
         and it is not paid or  discharged  by bond or otherwise  stayed  within
         thirty (30) days;

         (h)  the  death  or  permanent  disability  of S.  Steven  Carl or John
         Johnson;
                                       17
<PAGE>
         (i) there has occurred since December 31, 1996 a material change in the
         ownership  or control of  Borrower  or in the  corporate  structure  of
         Borrower or any of the  Subsidiaries  except as  reflected in either of
         Borrower's  Forms  1O-QSB  referred  in Section  9.1(c) or in the Proxy
         Statement.

         13.2 Borrower hereby waives  presentment,  demand,  notice of dishonor,
protest or further notice of any kind. As a result,  if any installment or other
sum is not paid when due, Lender does not have to notify Borrower before
enforcing its rights to collect all amounts due.

SECTION 14. IRREGULAR PAYMENT

         14.1 Lender may accept late  payments and partial  payments even though
marked "payment in full" or words of similar  import,  without losing any of its
rights under this Agreement or under the Notes.

SECTION 15. DELAY IN ENFORCEMENT

         15.1 Lender may delay in enforcing its rights under this Agreement or a
Collateral Document without losing or prejudicing such rights.

SECTION 16. NO BROKER

         16.1 Borrower  represents  and warrants to Lender that it has not dealt
with any broker or finder,  whether or not  licensed,  in  connection  with this
Agreement or the loan transactions under this Agreement.

         16.2 Borrower agrees to defend, indemnify and hold harmless Lender from
any and all Claims and Expenses  based on, or arising from,  its  representation
and warranty in Section 16.1.

SECTION 17. LOAN EXPENSES

         17.1  Borrower  agrees  to pay,  promptly  after  demand  is made,  all
reasonable  out-of-pocket  expenses  incurred by Lender in  connection  with the
making, perfection or enforcement of the loan transactions which are the subject
of this  Agreement,  including  (but not  limited  to)  Lender's  legal
                                       18
<PAGE>
fees and disbursements and other miscellaneous expenses.  Borrower has delivered
its check for $7,500 to Lender's counsel Morse,  Zelnick,  Rose & Lander, LLP on
account of legal fees and  disbursements to be incurred by it in connection with
this  transaction  and will  deliver  a check  for the  balance  of its fees and
disbursements   incurred  in  connection   therewith  at  the  Closing   against
presentation of a bill for such service and disbursements.

SECTION 18. NOTICES

         18.1 Unless otherwise  expressly  provided elsewhere in this Agreement,
any notice, request, consent, election, demand or other communication ("notice")
to be given or made by the parties under this  Agreement  must be in writing and
either:

         (a)  delivered by hand,  telecopier  or  overnight  delivery by Federal
         Express or other recognized carrier; or

         (b) sent by certified or registered  mail,  return  receipt  requested,
         postage prepaid.

         18.2 Each notice to be given:

         (a) to Lender, will be addressed to:

                    Abraham Goldstein, Managing Director
                    InterEquity Capital Partners, L.P.
                    220 Fifth Avenue
                    New York, New York 10001

         (b) to  Borrower,  will be  addressed to it at its address set forth in
         the preamble on page 1 of this Agreement.

         18.3 A copy of each  notice  must  be sent  simultaneously  and in like
manner to the following persons:

         (a) (in case of a notice to Lender) to:

                    Morse, Zelnick, Rose & Lander, LLP
                    450 Park Avenue, Suite 902
                    New York, New York 10022
                    Att'n: Howard L. Weinreich, Esq.
                                       19
<PAGE>
         (b) (in the case of a notice to Borrower) to:

                    Graubard, Mollen & Miller
                    600 Third Avenue
                    New York, New York 10016
                    Att'n: David Alan Miller

         18.4  Borrower  and Lender  may,  by notice to the  others,  change the
address to which future notices are to be sent or add or change a person to whom
a notice or a copy of a notice is to be sent.

         18.5 Unless otherwise provided elsewhere in this Agreement, each notice
shall be considered to be given on:

         (a)  the  date  delivered  by hand or  telecopier  (unless  it is not a
         business  day or is not  received  before 5:30 P.M.,  in which case the
         notice shall be  considered  given on the next business day after being
         sent);

         (b) the next business day after being sent by overnight courier;

         (c) the third full business day  following the date of mailing  postage
         prepaid in the United States Mail.

However,  a notice of a change of address  of person  pursuant  to Section  18.4
shall not be deemed given until received.

         18.6 A notice that is mailed must be  deposited  into an official  mail
depository  maintained by the United States Postal Service or (if mailed outside
the United States) by an equivalent postal authority.

         18.7  Failure  to accept a notice is deemed  receipt of it and does not
invalidate the notice or excuse the performance of an obligation.

SECTION 19. ENTIRE AGREEMENT

         19.1  All  prior  and  contemporaneous   statements,   representations,
promises, understandings,  agreements, projections and opinions, whether written
or oral made to each other
                                       20
<PAGE>
with regard to this transaction, are merged in this Agreement and have no effect
unless  they  are  expressly   contained  in  this  Agreement.   This  Agreement
constitutes our entire agreement.

SECTION 20. CHANGES AND WAIVERS

         20.1 A provision  of this  Agreement  will be  considered  to have been
changed  or waived  only if the  change or waiver is  expressly  made in writing
signed by the party to be charged.

         20.2 The failure to insist on strict  performance of any provision will
not mean  that  the  provision  has been  waived  or that  the  right to  insist
thereafter on strict performance of that or any other provision has been waived.

SECTION 21. PARTIES TO COOPERATE

         21.1 Each party will reasonably cooperate with the other to close these
loan transactions.

         21.2 In  furtherance  of such  cooperation,  each  party  will  obtain,
execute and deliver such  documents as are in its  possession or control and are
reasonably  necessary in order to close or effectuate or confirm any  provisions
of this Agreement.

SECTION 22. GOVERNING LAW; VENUE FOR LAWSUITS

         22.1 The laws of the State of New York will govern this  Agreement  and
the  interpretation  and enforcement of its provisions,  without regard to legal
principles of conflict of laws.

         22.2 The parties each hereby agree that any action,  suit or proceeding
under this  Agreement  shall be brought in the State of New York, and each party
hereby submits to the  jurisdiction of the courts of the State of New York (both
State and Federal).  Borrower  hereby  irrevocably  appoints  Messrs.  Graubard,
Mollen & Miller,  600 Third Avenue,  New York,  New York 10016 as its authorized
agent upon whom  process may be served in any such action,  suit or  proceeding.
Borrower  agrees  that  service  of  process  on such  agent with a copy of such
process  delivered to Borrower in the manner  permitted  under  Section 18 shall
constitute  effective  service
                                       21
<PAGE>
upon it Borrower agrees to take any and all actions, including the execution and
filing of all documents and  instruments,  as may be necessary or appropriate to
effect and continue the  appointment of such agent in full force and effect,  or
if  necessary  by reason of any fact or  condition  relating to such  agent,  to
replace  such agent to the  satisfaction  of Lender  and  Borrower  agrees  that
service of process upon such agent or any  replacement  therefore with a copy to
it shall be deemed in every  respect  effective  service  of process in any such
suit, action or proceeding in any such court.

SECTION 23. WAIVER OF JURY TRIAL

         23.1 Each Party  waives the right to a trial by jury in any  litigation
arising under this agreement or under any ancillary document.

         23.2 Any claim for which a jury trial  cannot  legally be waived  shall
not be  asserted  as a  counterclaim  or joined with any lawsuit in which a jury
trial is waived,  unless the  failure to assert it would  prevent the claim from
being made later.

SECTION 24. INVALID PROVISIONS SEVERED

         24.1  The  invalidity  or  unenforceability  of any  provision  of this
Agreement shall not affect the validity of the other provisions,  which shall be
enforced to the fullest extent permitted by law.

SECTION 25. CAPTIONS; EXHIBITS; AND GRAMMAR

         25.1 The paragraph captions are for convenience only. They are not part
of the  text  of  this  Agreement  and  are  not to be  used  to  interpret  its
provisions.

         25.2 All Exhibits to this Agreement are  incorporated  in, and are part
of, this Agreement as fully as though set forth herein.

         25.3 All  references  in this  Agreement  to a  Section,  paragraph  or
Exhibit mean a Section or paragraph of this Agreement or an Exhibit  attached to
this Agreement.
                                       22
<PAGE>
         25.4 The use of the  singular  includes  the  plural and the use of any
gender  includes  any  other  gender  whenever  required  by the  sense  of this
Agreement

SECTION 26. REIMBURSEMENT FOR ENFORCEMENT

         26.1 In the event  Borrower  fails to  perform  any of its  obligations
under this Agreement or under any Collateral  Document,  then Borrower shall pay
any and  all  Claims  and  Expenses  incurred  by the  Lender  in  enforcing  or
establishing its rights hereunder or thereunder.

SECTION 27. NO NEGATIVE CONSTRUCTION AGAINST DRAFTING PARTY

         27.1  The  parties  acknowledge  that  they are  sophisticated  and are
represented by experienced,  knowledgeable attorneys. The parties agree that the
normal  rules of  construction  to resolve  ambiguities  against the party whose
counsel  drafted this Agreement shall not be followed in the  interpretation  of
this Agreement.  Consequently,  no negative inference or interpretation shall be
made by a court in enforcing the provisions of this Agreement against the party
whose attorney drafted this Agreement.

SECTION 28. NO OTHER PARTIES

         The  representations,  warranties and agreements of Borrower  contained
herein are intended solely for the benefit of Lender, and shall confer no rights
hereunder,  whether legal or equitable,  in any other third person, and no other
person shall be entitled to rely thereon.

SECTION 29. COUNTERPARTS

         29.1 This Agreement may be signed in  counterparts,  each of which will
be deemed an original  document.  All counterparts  will constitute one document
which may be sufficiently  evidenced by one such  Counterpart.  Each counterpart
will be binding on the signatory to such counterpart  notwithstanding that it is
not signed by both signatories to this Agreement.
                                       23
<PAGE>
SECTION 30. INDEMNIFICATION

         30.1 Borrower indemnifies Lender, its officers,  directors,  principals
and affiliates from and against any Claims and Expenses  incurred or suffered by
them or any of them  arising  out of the  transactions  contemplated  hereunder,
except that this  indemnification  shall not apply to any liability  incurred by
the Lender to the Borrower or to any Person as a result of the gross  negligence
or willful misconduct of the Lender, its officers, directors,  employees, agents
and participating lenders.

SECTION 31. LENDER'S RIGHT TO TRANSFER AND ASSIGN

         31.1 Lender has the right, in its sole and absolute discretion, without
consent or  affecting  the  obligations  of  Borrower,  to  transfer  and assign
participation  interests  in one or both  Notes  given  to it  pursuant  to this
Agreement  together  with its  rights  hereunder  under one or more of the other
Collateral  Documents,  provided  that if  there is more  than  one  participant
(including Lender) then all participants shall designate one party who shall for
all purposes of the transactions  contemplated  under this Agreement act for and
on behalf of all participants.

SECTION 32. SUCCESSORS AND ASSIGNS

         32.1 This Agreement shall bind Borrower and its successors.

         32.2  This  Agreement  shall be  binding  upon and  shall  inure to the
benefit of Lender,  its successors and assigns.  Any reference in this Agreement
to Lender shall include its successors and assigns.
                                       24
<PAGE>
         IN WITNESS  WHEREOF,  Borrower and Lender have executed this  Agreement
and  affixed  their  seals as of the date first above  stated.

(SEAL)                                  H.E.R.C. PRODUCTS INCORPORATED

                                        By: /s/ John P. Johnson
                                           -------------------------


                                        INTEREQUITY CAPITAL PARTNERS, L.P.


                                        By: /s/ [SIGNATURE ILLEGIBLE]
                                           -------------------------
                                       25
<PAGE>
                           Exhibit 3 to Loan Agreement



                H.E.R.C. Products Incorporated and Subsidiaries
                         2202 W. Lone Cactus Drive #15
                               Phoenix, AZ 85027



                                 1997 FORECAST
<PAGE>
HERC PRODUCTS INCORPORATED
                                                   CONSOLIDATED BUDGET 1997
<TABLE>
<CAPTION>
                                              A   C   T   U   A   L     P   R   O   J   E   C   T   E   D
Revenue                                   Jan         Feb        Mar        Apr        May       Jun        Jul
<S>                                    <C>         <C>        <C>        <C>         <C>       <C>       <C>
Sales - PK                               50,570      18,270     33,750     19,000    170,175    113,066   111,260
Sales - PW                               13,234      12,301      8,688      9,639      9,878      9,996    11,937
Sales - WK                               14,657       6,645      5.065      5,100      8,000      4,580     6,395
Sales - CH                               10,685       5,250          0      5,008      5,145      5,187     5,355
Sales - HCP                             164,318     293,309    168,803    111,600    118,779    151,115   147,765
Sales - CCT                              81,758     106.156    100,610    176,953    277,877    266,721    93,520

Total Revenue                           335,222     441,931    316,916    327,300    587,854    550,665   376,232

Cost of Goods Sold

COGS - PK                                23,202      21,982     14,695     44,988    149,254    233,675    68,047
COGS - PW                                 3,319       4,902      2,458      4,145      2,976      2,587     3,165
COGS - WK                                 9,525       1,961      1,902      1,440      2,132      1,190     2,008
COGS - CH                                 1,684         819          0      1,166        872        706       999
COGS - HCP                              139,786     202,406     42,142     68,733     75,433    103,578   102,656
COGS - CCT                               40,132      41,086     55,691     89,649    155,592    149,858    47,616

Total Cost of Goods Sold                217,648     273,156     26,888    210,121    386,259    491,513   224,491

Gross Profit                            117,574     168,775    100,028    117,179    201,595     59,152   151,741
                                        -------     -------    -------    -------    -------     ------   -------
                                             35%         38%        32%        36%        34%        11%       40%

Selling Expenses

Selling Expenses - PK                    25,754      18,328     27,747     21,612     33,979     29,848    26,678
Selling Expenses - PW                     7,280       6,867      6,051      7,906      5,604      6,220     5,624
Selling Expenses - WK                     5,026       5,160      4,476      4,780      4,751      4,531     5,343
Selling Expenses - CH                         0           0          0          0          0          0         0
Selling Expenses - HCP                   44,339      58,449     49,890     47,379     30,874     31,434    39,683
Selling Expenses - CCT                   42,419      49,409     70,917     47,810     54,897     38,394    36,807

Total Selling Expenses                  124,818     138,203    159,081    129,487    130,105    110,427   114,135

General & Administrative Expenses

G&A Expenses - PK                        36,661      32,618     39,654     72,500     29,283     75,149    65,664
G&A Expenses - PW                           155         284        198        112        128        143       139
G&A Expenses - WK                           517         125        325        549        347        130       245
G&A Expenses - CH                             0           0          0          0          0          0         0
G&A Expenses - HCP                          856       7,546     28,920      6,812      3,108      2,690     2,006
G&A Expenses - CCT                       19,172      14,823      9,054     14,823     16,201     14,714    14,616
G&A Expenses - Corporate                148,090     149,748    339,946    109,495    118,849    159,896   153,767

Total G & A Expenses                    205,451     205,144    418,907    204,291    165,916    252,722   236,437

Total SG&A Expenses                     330,269     343,347    577,178    333,778    296,021    363,149   350,572

Other Income Expenses

Interest Income                           4,843      10,038      2,953       (472)     4,275      2,059       200
Interest Expense                         (1,302)       (446)    (2,549)    (1,295)    (3,694)     1,935    (2,525)

Total Other Income/Expense                3,541       9,592        404     (1,767)        581     3,994    (2,325)

Net Income (Loss)                      (209,154)   (164,980)  (476,746)  (218,366)   (93,845)  (300,003) (201,156)
                                       --------    --------   --------   --------    -------   --------  --------
                                         -62.39%     -37.33%   -150.43%    -66.72%    -15.96%    -54.48%   -53.47%



                                       A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

Revenue                                   Aug          Sep          Oct          Nov         Dec             Total
<S>                                     <C>          <C>           <C>         <C>         <C>            <C>
Sales - PK                              129,500      130,000      345,300      115,000     125,000         1,860,591
Sales - PW                               10,000       15,000       15,300       15,000      15,000           145,673
Sales - WK                               10,000       25,000       25,300       20,000      20,000           141,442
Sales - CH                                5,200       10,000       10,300       10,000      10,000            81,830
Sales - HCP                             157,174      172,064      186,355      201,845     216,735         2,090,463
Sales - CCT                             225,000      300,000      150,000       52,626      51,154         1,892,377

Total Revenue                           536,874      652,064      731.955      924,473     437,889         6,219,376

Cost of Goods Sold

COGS - PK                                80,073       89,740      157,071      306,073      83,921         1,272,721
COGS - PW                                 3,200        4,800        4,800        4,800       4,800            45,952
COGS - WK                                 3,400        8,500        8,500        6.800       6,800            54,077
COGS - CH                                 1,768        3,400        3,400        3,400       3,400            21,614
COGS - HCP                               97,088      105,642      114,972      124,302     133,632         1,410,370
COGS - CCT                              128,255      155,023       75,661       33,543      20,055           992,161

Total Cost of Goods Sold                313,783      367,105      364,405      478,918     252,608         3,796,895

Gross Profit                            223,901      284,959      367,550      445,555     185,281         2,422,481
                                        -------      -------      -------      -------     -------         ---------
                                            42%          44%          50%          48%         42%               39%

Selling Expenses

Selling Expenses - PK                    20,855       21,275       24,600       24,600      19,050           294,324
Selling Expenses - PW                     6,343        8,343        6,343        7,843       6,343            80,757
Selling Expenses - WK                    13,264       10,728       10,728       10,328      10,328            89,443
Selling Expenses - CH                         0            0            0            0           0                 0
Selling Expenses - HCP                   42,889       39,088       40,922       40,922      41,267           505,937
Selling Expenses - CCT                   54,938       57,934       27,614       27,614      24,832           547,739

Total Selling Expenses                  138,288      137,313      123,216      111,307     101,819         1,518,200

General & Administrative Expenses

G&A Expenses - PK                        29,253       39,253       39,253       39,253      39,253           537,793
G&A Expenses - PW                           190          190          190          190         190             2,109
G&A Expenses - WK                           525          525          525          525         525             4,863
G&A Expenses - CH                             0            0            0            0           0                 0
G&A Expenses - HCP                          583        3,083          583        1,183         583            57,955
G&A Expenses - CCT                       17,385       13,218       13,218       13,218      13,218           173,660
G&A Expenses - Corporate                107,527      102,420       94,420       94,920      94,420         1,671,497

Total G & A Expenses                    155,463      158,689      148,189      149,289     148,189         2,447,876

Total SG&A Expenses                     293,751      296,002      271,405      260,596     250,008         3,966,077

Other Income Expenses

Interest Income                             200          200          200          200         200            24,896
Interest Expense                         (3,757)      (8,006)     (11,715)     (13,735)    (13,731)          (80,820)

Total Other Income/Expense               (3,557)      (7,806)     (11,515)     (13,535)    (13,531)          (35,924)

Net Income (Loss)                       (74,217)     (18,848)      84,630      171,424     (78,258)       (1,579,520)
                                        -------      -------       ------      -------     -------        ----------
                                         -13.82%       -2.89%       11.58^       18.54%     -17.87%           -25.40%
</TABLE>
<PAGE>
HERC PRODUCTS INCORPORATED
                                       CORPORATE BUDGET 1997
<TABLE>
<CAPTION>
General & Administrative                 A   C   T   U   A   L       P   R   O   J   E   C   T   E   D
                             Jan           Feb          Mar           Apr           May          Jun           Jul
<S>                       <C>           <C>          <C>           <C>           <C>           <C>           <C>
Auto                          796         1,380          952         2,424         1,276         1,410         1,000
Amortization                9,808         9,808        9,808         9,808         9,808        10,980        10,024
Bank Charges                   20           570            1           157           173        12,941        13,700
Depreciation Expense        5,100         5,100        5,100         5,100         5,100        (7,201)        3,050
Dues & Subscriptions        4,000           261          107           962             0           200             0
Education Expenses              0            65          299             0             0             0             0
Meals and Entertainment     1,533           674        2,084         2,621           941         3,021         1,500
Equipment Rental Office     4,193         2,766        2,858           572         2,858         2,858         2,858
401K 10% Match                153             0          655           261           131           394           150
Insurance - Health          6,153         4,927        7,676         4,154         5,051         7,061         6,143
Insurance - Liab./D&O      17,270         6,956       14,330         9,644        12,602        11,940        12,500
Legal & Professional       12,847        26,548       43,218        12,766        24,146        19,194        19,607
Maint. & Repairs Office       927           213          849           678           298           676            54
Moving Expenses                 0             0            0             0             0             0             0
Patent Expenses                 0             0            3             4             0           (39)            0
Payroll Office             11,715        11,251       10,212         9,422        11,263        13,393        12,794
Payroll Officers           37,730        47,542      196,292        13,958        22,708        41,958        34,958
Payroll Support             3,317         3,167        3,217         3,267         3,167         3,345         3,580
Payroll Expenses            8,392         5,606        6,771         6,425         4,568         5,406         4,580
Permits/Licenses/Fees           0             0            0            60             0         4,396            76
Postage                     1,725           884          987         1,491           563         1,576         1,050
Printing                      439           417        2,576           324           821           173         6,000
Rent                        9,841         9,722        9,819         9,755         2,316         9,074         9,074
R & D Expense                   0             0            0         1,035            61             5             0
Supplies Office             3,051         1,688        2,151         1,843           896         3,130         2,000
Telephone                   2,956         3,524        3,733         3,757         4,097         3,135         2,835
Taxes - Other                   0             0        4,151             2            82         1,546            34
Testing Expenses               42             0        3,787           (50)            0             0             0
Travel                      5,465         5,481        7,309         7,657         3,229         8,524         5,000
Utilities                     615             0          801         1,398           692           800         1,200

Total G&A Expenses        148,090       149,748      339,946       109,495       116,849       159,896       153,767

Other Income/Expense

Other Income (Expense)      4,843        10,038        2,953          (472)        4,275         2,059           200
Interest Expense             (798)            0         (905)         (139)       (1,390)       (1,235)       (1,100)

Total Other Income/Expense  4,045        10,038        2,046          (611)        2,885           824          (900)



General & Administrative                 A   C   T   U   A   L       P   R   O   J   E   C   T   E   D

                               Aug           Sep           Oct           Nov           Dec         Total
<S>                         <C>           <C>            <C>           <C>           <C>        <C>
Auto                          1,000         1,000         1,000         1,000         1,000        12,240
Amortization                 10,024        10,024        10,024        10,024        10,024       120,164
Bank Charges                      0             0             0             0             0        27,562
Depreciation Expense          3,050         3,050         3,050         3,050         3,050        36,599
Dues & Subscriptions            100           100           100           100           100         8,030
Education Expenses                0             0             0             0             0           364
Meals and Entertainment       1,700         1,000         1,000         1,500         1,000        16,574
Equipment Rental Office       2,858         2,858         2,858         2,858         2,858        33,253
401K 10% Match                  300           300           300           300           300         3,244
Insurance - Health            5,000         5,000         5,000         5,000         5,000        66,365
Insurance - Liab./D&O        13,750        13,750        13,750        13,750        13,750       153,992
Legal & Professional         13,219        12,200         4,700         4,700         4,700       197,845
Maint. & Repairs Office         500           500           500           500           500         8,195
Moving Expenses                   0             0             0             0             0             0
Patent Expenses                   0             0             0             0             0           (32)
Payroll Office               12,750        11,001        11,001        11,001        11,001       138,804
Payroll Officers             15,334        15,334        15,334        15,334        15,334       471,816
Payroll Support               3,506         3,506         3,506         3,506         3,506        40,590
Payroll Expenses              3,862         3,223         3,223         3,223         3,223        59,701
Permits/Licenses/Fees             0             0             0             0             0         4,532
Postage                         900           900           900           900           900        12,776
Printing                        200           200           200           200           200        11,750
Rent                          9,074         9,074         9,074         9,074         9,074       104,971
R & D Expense                     0             0             0             0             0         1,101
Supplies Office               1,500         1,500         1,500         1,500         1,500        22,259
Telephone                     2,700         2,700         2,700         2,700         2,700        37,537
Taxes - Other                     0             0             0             0             0         5,815
Testing Expenses                  0             0             0             0             0         3,779
Travel                        5,000         4,000         4,000         4,000         4,000        63,665
Utilities                     1,200         1,200           700           700           700        10,006

Total G&A Expenses          107,527       102,420        94,420        94,420        94,420     1,671,497

Other Income/Expense

Other Income (Expense)          200           200           200           200           200        24,896
Interest Expense             (2,315)       (6,587)      (10,280)      (12,305)      (12,305)      (49,339)

Total Other Income/Expense   (2,115)       (6,367)      (10,080)      (12,105)      (12,105)      (24,443)
</TABLE>
<PAGE>
HERC PRODUCTS INCORPORATED
                                                PIPE KLEAN BUDGET 1997

<TABLE>
<CAPTION>
                                              A   C   T   U   A   L     P   R   O   J   E   C   T   E   D
                                Jan         Feb           Mar           Apr          May          Jun           Jul
<S>                           <C>          <C>           <C>         <C>            <C>        <C>             <C>
Net Sales                     50,570       18,270        33,750       19,000       170,175      113,066       111,260


Cost of Goods Sold

Inventory                      3,176        1,305         2,868       16,486        26,556       10,248         3,245
Meals - Operations               567          500             0        2,150         8,229        4,513         9,978
Contract labor                     0          167           287           72        10,717        8,498         7,408
Freight                        3,033        3,108           470        1,219         3,664        8,784         2,345
Insurance - Health               708          628         1,374            0           660          659         4,800
Lab Fees                           0          182             0          936             0            0             0
Maint. & Repairs                   0          716           551            0         5,918       (4,463)          769
Payroll - Operations           9,690        6,902         7,770       12,682        38,664       71,042        29,115
Payroll Expenses                 817          528           589          787         2,846        3,073         2,832
Subcontractors                     0            0             0            0         3,360       30,889        (5,130)
Supplies                         675        4,175           333        1,667        14,341       11,998          1,28
MRU Repairs                      368          150           188        1,925         1,083            0         1,230
Travel - Operations            3,698        1,663           275        2,257        10,602       14,309        23,900
Other                            470        1,852            60        2,448        10,365       49,387       (29,000)
Rentals                            0          106             0        2,359        12,249       24,738        15,300
Total COGS                    23,202       21,982        14,695       44,988       149,254      233,675        68,047

Gross Profit                  27,368       (3,712)       19,055      (25,988)       20,921     (120,609)       43,213
                              ------       ------        ------      -------        ------     --------        ------
                                  54%        -20%            56%       -137%            12%       -107%            39%
Selling Expenses

Advertising                    4,199        1,506         3,034        2,295         5,674          (50)          733
Auto                           2,011          912           778          589         1,026        3,227         1,000
Commissions                        0            0         2,846            0         5,261        4,038         3,338
Consultants                        0            0             0            0             0        1,500             0
Dues & Subscriptions             771            0             0           86           170          225             0
Postage                          482           42            18          467           293          416           300
Insurance - Health             2,123        1,200         1,321        2,043         2,259        1,460         1,777
Payroll - Sales                7,333        9,086         8,635        8,317        11,650       11,650        12,917
Payroll Expenses                 561          636           464          659           969          892           988
Meals & Entertainment            493          184           890          232           244          985           400
Travel                         5,189        4,242         3,914        3,743         4,705        2,187         3,000
Supplies                         117          620           946        2,892         1,647        2,503         2,000
Trade Shows                    2,475         (100)        4,900          289            81          815           225


Total Selling Expenses        25,754       18,326        27,747       21,612        33,979       29,848        26,678



                                      A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

                                 Aug          Sep          Oct          Nov         Dec         Total
<S>                             <C>          <C>          <C>          <C>          <C>       <C>
Net Sales                      129,500      130,000      345,000      615,000      125,000    1,860,591


Cost of Goods Sold

Inventory                        8,650       10,500       21,500       48,500        8,750      161,784
Meals - Operations               2,590        2,600        6,900       12,300        2,500       52,824
Contract labor                   4,745        4,400       12,950       21,050        4,500       74,794
Freight                            778          890        1,980        4,140          775       31,186
Insurance - Health               5,600        5,600        6,350        6,350        6,350       39,079
Lab Fees                           130          130          345          615          125        2,463
Maint. & Repairs                 1,943        1,950        5,175        9,225        18,75       23,659
Payroll - Operations            23,448       23,448       25,948       25,948       25,948      300,535
Payroll Expenses                 1,993        1,993        2,206        2,206        2,206       22,075
Subcontractors                  13,802       22,679       29,268      101,589       15,268      211,724
Supplies                         3,885        3,900       10,350       18,450        3,750       74,782
MRU Repairs                          0            0            0            0            0        4,944
Travel - Operations              3,455        3,650        9,050       17,150        3,375       93,384
Other                            5,170        4,100       14,700       20,100        4,750       84,402
Rentals                          3,885        3,900       10,350       18,450        3,750       95,087
Total COGS                      80,073       89,740      157,071      306,073       83,921    1,272,721

Gross Profit                    49,427       40,260      187,929      308,927       41,079      587,870
                                ------       ------      -------      -------       ------      -------
                                    38%          31%          54%          50%          33%          32%
Selling Expenses

Advertising                          0            0            0            0            0       17,391
Auto                               800          800          800          800          800       13,543
Commissions                      2,580        1,500        7,800        7,800        2,250       37,413
Consultants                        200          200          200          200          200        2,500
Dues & Subscriptions                 0            0            0            0            0        1,252
Postage                            300          300          300          300          300        3,518
Insurance - Health               1,500        1,500        1,500        1,500        1,500       19,683
Payroll - Sales                  9,583        9,583        9,583        9,583        9,583      117,503
Payroll Expenses                   767          767          767          767          767        9,003
Meals & Entertainment              400          400          400          400          400        5,428
Travel                           3,000        3,000        3,000        3,000        3,000       41,980
Supplies                         1,725        1,725          250          250          250       14,925
Trade Shows                          0        1,500            0            0            0       10,185


Total Selling Expenses          20,855       21,275       24,600       24,600       19,050      294,324
</TABLE>
<PAGE>
1997 PIPE KLEAN BUDGET CONTINUED

<TABLE>
<CAPTION>
General Administrative                             A   C   T   U   A   L     P   R   O   J   E   C   T   E   D
                                           Jan         Feb         Mar         Apr         May         Jun         Jul.
<S>                                      <C>         <C>         <C>         <C>         <C>         <C>         <C>
Auto                                      2,878         635       1,602         482         160         760         500
Depreciation                              2,030       2,740       2,740       2,800       2,800      30,483       7,333
Dues & Subscriptions                      4,712           0       1,497          99           0         (25)          0
Education                                     0           0         149           0           0           0           0
Entertainment                               396         383         628         441         435         584         500
Equip. Rental Office                          0           0         102         908         149         354         300
401k expense                                 55           0         233          75          47         110         110
insurance - Health                          899         802       1,223         913         190         850       1,110
Legal Fees                                2,930         178       2,331         357         103       7,881       1,986
Maint. & Repairs Office                       0       1,250         100         371         287           0         150
Moving Expenses                               0           0           0           0           0       2,499           0
Payroll Admin                            12,833      12,833      12,833      12,833      12,708      13,000      13,000
Payroll Expenses                            982        9820         982       1,346         972         994         995
Licenses & Permits                           95         603           0          50         319          50           0
Postage                                     249         112         361         520        (121)        521         335
Printing                                    145       2,634         229           0         560         183           0
Office Rent                                 469         641       2,781       2,619       2,619       2,571       2,619
Research & Development                        0         472           0      45,000         178         260         139
Office Supplies                             594       2,315       2,154        (950)        941       1,468       2,422
Telephone                                 3,252           0       3,292       2,564       3,144       4,813       3,000
Taxes Other                                   0          75           0         675          11        (225)        100
Testing Expenses                          1,146       5,890       2,516         486       1,245       1,045         175
Travel                                    2,996           0       3,395         765       1,932       6,489       3,500
Uncollectible Accounts                        0          73           0           0           0           0      27,000
Utilities                                     0         506         146         604         484         400         400

Total G&A Expense                        36,661      32,618      39,654      72,500      29,283      75,149      65,664

Total SG&A Expenses                      62,415      50,946      67,401      94,112      63,262     104,997      92,342

Other Income (Expense)

Interest Expense                            (47)          0         (52)          0         (45)       (951)     (1,328)



Net Income                              (35,904)    (54,658)    (48,398)   (120,100)    (42,386)   (226,557)    (50,457)
                                        -------     -------     -------    --------     -------    --------     -------
                                         -69.40%    -299.17%    -143.40%    -632.11%     -24.91%    -200.38%     -45.35%


General Administrative                        A   C   T   U   A   L     P   R   O   J   E   C   T   E   D
                                           Aug         Sep          Oct          Nov         Dec        Total
<S>                                      <C>         <C>          <C>          <C>         <C>        <C>
Auto                                        500         500          500          500         500       9,517
Depreciation                              7,333      17,333       17,333       17,333      17,333     127,591
Dues & Subscriptions                        100         100          100          100         100       6,783
Education                                     0           0            0            0           0         149
Entertainment                               500         500          500          500         500       5,867
Equip. Rental Office                        300         300          300          300         300       3,313
401k expense                                110         110          110          110         110       1,180
insurance - Health                        1,100       1,100        1,100        1,100       1,100      11,477
Legal Fees                                1,000       1,000        1,000        1,000       1,000      20,766
Maint. & Repairs Office                      50          50           50           50          50        2,40
Moving Expenses                               0           0            0            0           0       2,499
Payroll Admin                             8,834       8,834        8,834        8,834       8,834     134,210
Payroll Expenses                            707         707          707          707         707      10,787
Licenses & Permits                          100         100          100          100         100       1,014
Postage                                     350         350          350          350         350       4,218
Printing                                    250         250          250          250         250       2,479
Office Rent                               2,619       2,619        2,619        2,619       2,619      29,407
Research & Development                        0           0            0            0           0      46,218
Office Supplies                             300         300          300          300         300       8,601
Telephone                                 2,500       2,500        2,500        2,500       2,500      34,880
Taxes Other                                 100         100          100          100         100       1,061
Testing Expenses                            100         100          100          100         100       7,188
Travel                                    2,000       2,000        2,000        2,000       2,000      34,967
Uncollectible Accounts                        0           0            0            0           0      27,000
Utilities                                   400         400          400          400       4,213

Total G&A Expense                        29,253      39,253       39,253       39,253      39,253     537,793

Total SG&A Expenses                      50,107      60,527       63,852       63,852      58,302     832,117

Other Income (Expense)

Interest Expense                         (1,328)     (1,328)      (1,328)      (1,328)     (1,328)     (9,063)



Net Income                               (2,008)    (21,595)     122,748      243,747     (18,552)   (253,310)
                                         ------     -------      -------      -------     -------    --------
                                          -1.55%     -16,61%        35.58%       39.63%    -14.84$     -13.61%
</TABLE>
<PAGE>
HERC PRODUCTS INCORPORATED
                                                   CCT CORPORATION BUDGET 1997

<TABLE>
<CAPTION>
                                                A   C   T   U   A   L     P   R   O   J   E   C   T   E   D
                                    Jan.          Feb            Mar          Apr            May         Jun            Jul
<S>                                <C>          <C>            <C>          <C>            <C>          <C>           <C>
Sales                              81,758       106,158        100,610      176,953        277,877      266,721       93,520

Cost of Good Sold                  40,132        41,086         55,691       89,649        155,592      149,858       47,616

Gross Profit                       41,626        65,070         44,919       87,304        122,285      116,863       45,904
                                   ------        ------         ------       ------        -------      -------       ------
                                       51%           61%            45%          49%            44%          44%          49%


Selling, General & Admin.

Accounting Fees                       169           111             (9)          56            146          124            0
Advertising                           200             0              0            0              0            0            0
Amortization                          207           207            206          206            207          207          207
Bank Fes                                0             0             21            0              0            0            0
Business Promotion                    628             0            112           11            287          (11)         200
Commissions                         1,000             0          3,164        2,190          2,480        1,784          251
Conferences & Meetings                388           260          1,111          116            575          103          410
Consulting Fees                     2,575         2,500         19,000            2          9,334      (10,533)           0
Depeciation Expenses                  474           474            474          474            474          474          474
Dues & Publications                   370           760          1,525          268            334          145            0
Education & Training                    0             0            108            0              0            0          120
Employee Benefits                   3,083         3,394          1,637        2,269            104        2,430        1,672
Entertainment                         912         1,067            531        1,054            988          646          613
Equip. Rental                           0             0              0            0              0            0           95
Gas & Oil                             144           111            476          385            554           72          748
Insurance Hazard                       90             0             89           90             90           90           90
Insurance Worker's Comp.              102             0              0            0              0            0            0
License Fees                          759            46          1,264          182              0            0            0
Misc. Expense                         196            75            110          515            411           25            0
Office Supplies                     1,475           678            783          830            781          831          337
Outside Services                        0             0             14          (35)         8,868        1,149            0
Payroll Taxes                       3,994         3,103          2,476        2,976          2,481        2,595        2,834
Plant Supplies                          0             0              0            0              0            0            0
Postage                               546         1,029            217          515          1,011          619          110
Printing                               21         2,610            561        3,319         (2,580)         842          467
Professional Services               1,167         1,145             38          (10)             0            0            0
Rent                                    0         1,695          3,390        1,695          1,695        1,695        1,695
Repairs & Maint.                       98           815             98           98            295           98           98
R & D                                   0         1,000          1,000          264            339            0            0
Salaries Admin.                    11,959         6,203          1,137         7,10          8,084        6,797        6,699
Salaries Officers                   7,213         8,620           ,917        7.717          8,117        7,917        7,917
Salaries Sales                     13,092        16,842         22,256       17,598         16,842       18,902       18,902
Mill Taxes                              0             0              0            0              0           52           52
Telephone                           2,336         2,969          1,278        4,001          2,787        1,505        1,505
Travel                              5,108         4,205          5,521        3,958          5,144        3,475        3,475
Utilities                             105            96             92           93             12          122          122
Vehicle Repair                          0             0              0            0              0            0            0
Vehicle Rents                       1,306         1,516          1,174        1,441          1,504        1,455        1,455
Vehicle Reimbursement               1,619         1,996          1,791        2,600          3,186        1,625        1,625
Warehousing Costs                     255           705            409          640         (1,582)          60           60

Total S, G&A Expenses              61,591        64,232         79,971       62,633         71,098       53,108       51,423

Operating Income                  (19,965)          838        (35,052)      24,671         51,187       63,755       (5,519)


Other Income/Expense

Other Income (Expense)               (457)         (446)        (1,592)      (1,156)        (2,259)       4,121          (97)

Total Other Expense                  (457)         (446)        (1,592)      (1,156)        (2,259)       4,121          (97)


Net Income                        (20,422)          392        (36.644)      23,515         48,928       67,876       (5,616)
                                  -------           ---        -------       ------         ------       ------       ------
                                  -24.998%         0.37%        -36.42%       13.29%         17.61%       25.45%       -8.01%




                                                    A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

                                          Aug            Sep            Oct            Nov            Dec          Total
<S>                                     <C>            <C>            <C>             <C>            <C>         <C>
Sales                                   225,000        300,000        150,000         62,628         51,514      1,892,377

Cost of Good Sold                       128,255        155,023         75,661         33,543         20,051        992,161

Gross Profit                             96,745        144,977         74,339         29,085         31,099        900,216
                                         ------        -------         ------         ------         ------        -------
                                             43%            48%            50%            46%            61%            48%


Selling, General & Admin.

Accounting Fees                             120            120            120            120            120          1,197
Advertising                                   0              0              0              0              0            200
Amortization                                207            207            207            207            207          2,482
Bank Fes                                     60             60             50             50             50            291
Business Promotion                          350            400            100            250              0          2,327
Commissions                               4,624          8,996          1,588            970            193         27,240
Conferences & Meetings                    1,500            250            250              0              0          4,963
Consulting Fees                           3,032          3,061          3,010          3,010          3,001         37,992
Depeciation Expenses                        474            474            474            474            474          5,688
Dues & Publications                         125            210            100            100             50          3,987
Education & Training                        225            725            175             75            275          1,703
Employee Benefits                         3,043          3,043          3,043          2,535          2,535         28,788
Entertainment                               760            415            415            340            302          8,043
Equip. Rental                               145            145            120             20             20            545
Gas & Oil                                   805            840            337            332            342          5,146
Insurance Hazard                              0              0              0              0              0            539
Insurance Worker's Comp.                      0              0              0              0              0            102
License Fees                                125            125            125            125            125          2,876
Misc. Expense                               432            812            138            138             20          2,873
Office Supplies                             960            755            755            720            720          9,625
Outside Services                              0              0              0              0              0          7,996
Payroll Taxes                             3,309          3,893          2,975          1,371          1,303         33,310
Plant Supplies                                0              0              0              0              0              0
Postage                                     487            480            355            380            400          6,149
Printing                                    572            307            290          1,627            127          8,163
Professional Services                         0              0              0              0              0          2,349
Rent                                      2,035          2,035          2,035          2,035          2,035         22,040
Repairs & Maint.                             96             96             96             96             96          2,080
R & D                                         0              0              9              0              0          2,603
Salaries Admin.                          11,968          7,801          7,801          7,801          7,801         91,157
Salaries Officers                         5,417          5,417          5,417          5,417          5,417         82,503
Salaries Sales                           18,902         18,902         18,217          7,171          7,171        189,556
Mill Taxes                                1,130          2,267            351              0              0         11,448
Telephone                                 2,780          2,480          2,555            970            970         27,131
Travel                                    4,584          3,640          2,880          1,622          2,020         45,206
Utilities                                   150            150            150            150            150          1,503
Vehicle Repair                              700              0              0              0              0            700
Vehicle Rents                             1,958          1,806          1,376          1,776          1,176         17,693
Vehicle Reimbursement                     1,760          1,750          1,180            650            650         20,431
Warehousing Costs                           300            300            300            300            300          2,774

Total S, G&A Expenses                    72,323         71,152         54,986         40,832         38,050        721,399

Operating Income                         24,422         73,825         19,353        (11,747)        (6,951)       178,817


Other Income/Expense

Other Income (Expense)                     (114)          (111)          (107)          (102)           (98)        (2,418)

Total Other Expense                        (114)          (111)          (107)          (102)           (98)        (2,418)


Net Income                               24,308         73,714         19,246        (11,849)        (7,049)       176,399
                                         ------         ------         ------        -------         ------        -------
                                          10.80%         24.57%         12.83%        -18.92%        -13.78%          9.32%
</TABLE>

<PAGE>
HERC PRODUCTS INCORPORATED
                                              CONSUMER PRODUCTS BUDGET 1997
<TABLE>
<CAPTION>

                                            A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

                                 Jan            Feb          Mar          Apr          May          Jun          Jul
<S>                            <C>            <C>          <C>          <C>          <C>          <C>          <C>
Sales                          202,880        318,392      173,434      114,365      123,515      148,548      144,314
Discounts                       (3,605)        (4,844)      (3,658)      (3,721)      (4,147)      (4,677)      (3,719)
Allowances                     (29,736)       (18,466)           0       (1,568)           0            0            0
Returns                         (5,221)        (1,971)      (4,114)        (907)      (1,927)     (10,601)      (3,001)
Product Claims                       0            198        3,141        3,431        1,338       17,847       10,171

Net Sales                      164,318        293,309      168,803      111,600      118,779      151,115      147,765

Cost of Goods Sold             107,304       156,5583       95,817       52,167       58,601       74,461       75,404
Freight In                           0          2,530        2,614        1,980        2,651        2,639        1,228
Freight Out                     32,036         42,380       39,193       14,400       12,014       24,845       25,735
Warehouse Supplies                 446            913        4,518          186        2,167        1,633          289

Total GOGS                     139,786        202,406      142,142       68,733       75,433      103,578      102,656

Gross Profit                    24,532         90,903       26,661       42,867       43,346       47,537       45,109
                                ------         ------       ------       ------       ------       ------       ------
                                    15%            31%          16%          38%          36%          31%          31%


Selling Expenses

Advertising                     18,074         18,962       17,728       17,999       16,593       18,739       16,612
Auto                               609          1,250          709          952         (434)       1,189          500
Commissions - Reps               7,341         13,790        8,446        5,580       (5,936)       8,289        7,388
Commissions - Sales              2,936          4,466        2,917        1,399        1,542      (12,846)           0
Customer Refunds                    36              0            0            0           47           25          (25)
Insurance - Health               1,082          1,031          989        1,064        1,064        1,082        1,082
Payroll Sales                   11,894         11,542       13,207       13,506       12,792       10,029       10,893
Payroll Expenses                   910            883        1,042        1,033          979        1,413          833
Meals & Entertainment               55            902          486          569         (227)         310          350
Travel                             675          3,548        2,902        3,485        1,529        2,145        1,500
Trade Shows                        727          2,075        1,464        1,792        2,925        1,059          550



Total Selling Expenses          44,339         58,449       49,890       47,379       30,874       31,434       39,683


General & Administrative


Dues & Subscriptions                 0              0          250            0            0          128            0
401k % Match                         0              0          119           16           32           48           50
Licenses & Fees                      0              0          350           62           91          319           77
Legal & Professional                 0            323          148          479        2,623          497          604
Moving Expenses                      0              0       22,000           44       (2,092)           0            0
Postage                            218            625          398          151           68           41           25
Printing                            16             32          271           40           40        1,165           58
Office Supplies                    133           2,46          118          172          496           88          170
Product Development                (42)         3,316        3,672        4,765        1,196            0          704
Telephone                          531            782        1,594        1,083          656          404          318


Total G & A Expense                856          7,546       28,920        8,812        3,108        2,690        2,006

Total SG&A Expenses             45,195         85,995       78,810       54,191       33,982       34,124       41,689

Net Profit                     (20,663)        24,908      (52,149)     (11,324)       9,365       13,413        3,420
                               -------         ------      -------      -------        -----       ------        -----
                                -12.58%          8.49%      -30.89%      -10.15%        7.88%        8.88%        2.31%




                                                 A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

                                       Aug            Sep            Oct            Nov            Dec           Total
<S>                                  <C>            <C>            <C>            <C>            <C>          <C>
Sales                                155,000        170,000        185,000        200,000        215,000      2,150,446
Discounts                             (1,771)        (1,943)        (2,114)        (2,286)        (2,475)       (38,943)
Allowances                             3,500          3,500          3,500          3,500          3,500        (32,270)
Returns                                 (192)          (192)          (192)          (192)          (192)       (28,702)
Product Claims                           638            699            761            823            885         39,931

Net Sales                            157,174        172,064        186,955        201,845        216,735      2,090,463

Cost of Goods Sold                    82,048         89,998         97,948        105,898        113,848      1,110,078
Freight In                                 0              0              0              0              0         13,642
Freight Out                           14,725         15,300         16,650         18,000         19,350        274,628
Warehouse Supplies                       314            344            374            404            433         12,022

Total GOGS                            97,088        105,642        114,972        124,302        133,632      1,410,370

Gross Profit                          60,087         66,422         71,983         77,543         83,104        680,093
                                      ------         ------         ------         ------         ------        -------
                                          38%            39%            39%            38%            38%            33%


Selling Expenses

Advertising                           16,667         16,667         16,667         16,667         16,667        208,042
Auto                                     500            500            500            500            500          7,275
Commissions - Reps                     7,025          7,770          8,514          9,259         10,003         87,470
Commissions - Sales                        0              0              0              0              0            414
Customer Refunds                          50             50             50             50             50            333
Insurance - Health                     1,082          1,082          1,082          1,082          1,082         12,804
Payroll Sales                         10,893         10,893         10,893         10,893         10,893        138,328
Payroll Expenses                         871            871            871            871            871         11,450
Meals & Entertainment                    200            200            200            200            200          3,445
Travel                                 4,000          1,000          1,000          1,000          1,000         23,784
Trade Shows                            1,600              0              0            400              0         12,592



Total Selling Expenses                42,889         39,033         39,778         40,922         41,267        505,937


General & Administrative


Dues & Subscriptions                       0              0              0              0              0            378
401k % Match                              50             50             50             50             50            515
Licenses & Fees                            0              0              0              0              0            899
Legal & Professional                       0              0              0              0              0          4,674
Moving Expenses                            0              0              0              0              0         19,952
Postage                                  208            208            208            208            208          2,566
Printing                                   0              0              0            600              0          2,222
Office Supplies                          125            125            125            125            125          4,270
Product Development                        0          2,500              0              0              0         16,111
Telephone                                200            200            200            200            200          6,368


Total G & A Expense                      583          3,083            583          1,183            583         57,955

Total SG&A Expenses                   43,472         42,117         40,361         42,106         41,850        563,892

Net Profit                            16,614         24,305         31,621         35,437         41,253        116,201
                                      ------         ------         ------         ------         ------        -------
                                       10.57%         14.13%          6.91%         17.58%         19.03%          5.56%
</TABLE>

<PAGE>
HERC PRODUCTS INCORPORATED
                                                WELL KLEAN BUDGET 1997
<TABLE>
<CAPTION>
                                          A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

                         Jan.   Feb.    Mar.    Apr.    May.    Jun.    Jul.    Aug.   Sep.    Oct.    Nov.     Dec.        Total
<S>                     <C>    <C>     <C>     <C>     <C>     <C>     <C>    <C>     <C>     <C>     <C>      <C>         <C>
Sales                   4,657  6,645   5,065   5,100   6,000   4,580   6,395  10,000  25,000  25,000  20,000   20,000      148,442


Cost of Goods Sold      9,525  1,961    1902   1,440   2,132   1,109   2,008   3,400   8,500   8,500   6,800   6,8005       54,077


Gross Profit            5,132  4,684   3,163    3,60   3,868   3,471   4,387   6,660  16,500  16,500  13,200   13,200       94,365
                        -----  -----   -----    ----   -----   -----   -----   -----  ------  ------  ------   ------       ------
                           35%    70%     62%     72%     64%     76%     69%     55%     66%     66%     66%     66^          64$
Selling Expenses

Advertising               904      0       0     163       0     150       0     733     733     733     733      733        4,882
Auto                        0    376     167     317     186      11     410     400     400     400     400      400        3,467
Consultant Fees             0      0       0       0       0       0       0       0       0       0       0        0            0
Payroll - Sales         3,000  3,000   3,000   3,000   3,000   3,000   3,000   7,000   4,000   4,000   4,000    4,000       44,000
Payroll Expenses          230    242     246     248     271     251     237     560     320     320     320      320        3,565
Commissions                 0    161     211     236     541     287     191     800   2,000   2,000   1,600    1,600        9,627
Trade Shows                 0    101       0       0       0       0     212     250     250     250     250      250        1,563
Travel                    260    659     216     175     130     283     670   2,000   2,000   2,000   2,000    2,000       12,393
Postage                    68      0      41      28       0      11      50     200     200     200     200      200        1,198
Insurance - Health        564    481     498     498     498     498     498     996     500     500     500      500        6,531
Meals & Entertainment       0    140      97     115      45      40      75     250     250     250     250      250        1,762
Supplies                    0      0       0      80       0       0      75      75      75      75      75      455

Total Selling Expenses  5,026  5,160   4,476   4,780   4,751   4,531   5,343  13,264  10,728  10,728  10,328   10,328       89,443


General &
Administrative

401K 10% Match              0      0       0       0       0       0       0       0       0       0       0        0            0
Dues & Subscriptions      464      0       0       0       0       0       0       0       0       0       0        0          464
Employee Benefits           0      0       0       0       0       0       0       0       0       0       0        0            0
Equipment Rental            0      0       0       0       0       0       0       0       0       0       0        0            0
Legal & Prof.               0      0     235     102       0       0       0       0       0       0       0        0          337
License & Permits           0      0       0       0       0       0       0       0       0       0       0        0            0
Postage                     0     41       0       0       0      26      87       0       0       0       0        0          154
Printing                    0      0       0       0       0       0       0      25      25      25      25       25          125
R & D Expense               0      0       0     277     200       0       0       0       0       0       0        0          477
Taxes Other                 0      0       0       0       0       0       0       0       0       0       0        0            0
Telephones                 53     84      90     170     147     104     158     500     500     500     500      500        3,306


Total G & A Expenses      517    125     325     549     347     130     245     525     525     525     525      525        4,863

Total SG&A Expenses     5,543  5,285   4,801   5,329   5,098   4,661   5,588  13,789  11,253  11,253  10,853   10,853       94,306



Net Profit               (411)  (601) (1,638) (1,669) (1,230) (1,190) (1,201) (7,189)  5,247   5,247   2,347    2,347           59
                        -----  -----   -----  ------  ------  ------  ------  ------  ------  ------  ------   ------       ------
                           -3%    -9%    -32%    -33%    -21%    -26%    -19%    -72%     21%     21%     12%      12%           0%
</TABLE>
<PAGE>
HERC PRODUCTS INCORPORATED
                                                PROCESS WATER BUDGET 1997
<TABLE>
<CAPTION>
                                        A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

                        Jan.    Feb.    Mar.    Apr.    May     Jun.    Jul.    Aug.   Sep.     Oct.  Nov.    Dec.         Total
<S>                    <C>     <C>     <C>     <C>     <C>     <C>     <C>    <C>     <C>     <C>    <C>     <C>          <C>
Sales                  13,234  12,301  8,688   9,639   9,878   9,996   11,937 10,000  15,000  15,000 15,000  15,000       145,673


Cost of Goods Sold      3,319   4,902  2,458   4,145   2,976   2,587    3,165  3,200   4,800   4,800  4,800   4,800        45,952


Gross Profit            9,915   7,399  6,230   5,494   6,902   7,409    8,772  6,800  10,200  10,200 10,200  10,200        99,721
                        -----   -----  -----   -----   -----   -----    -----  -----  ------  ------ ------  ------        ------
                           75%     60%    72%     57%     70%     74%      73%    68%     68%     68%    68%     68%           68%

Selling Expenses

Advertising                 0       0      0     193    (193)      0        0      0   2,000       0      0       0         2,000
Auto                      520     611      0     130       0     271      150    250     250     250    250     250         2,932
consulting Fees             0       0      0       0       0       0        0      0       0       0      0       0             0
Dues & Subscriptions      375       0      0       0       0       0        0      0       0       0      0       0           375
Freight & Postage           3      31      8      29       0      24       31     50      50      50     50      50           376
Insurance - Health        495     495    512     512     512     511      512    512     512     512    512     512         6,109
Meals & Entertainment     215     424    149     468       0     205      125    125     125     125    125     125         2,211
Payroll Expenses          306     306    306     306     306     306      306    306      30     306    306     306         3,672
Payroll Sales           4,000   4,000  4,000   4,000   4,000   4,000    4,000  4,000   4,000   4,000  4,000   4,000        48,000
Supplies                   84     242      0      41       0      85        0    100     100     100    100     100           952
Trade Shows                 0       0      0      60     979       0        0      0       0       0  1,500       0         2,539
Travel                  1,282     748  1,076   2,167       0     818      500  1,000   1,000   1,000  1,000   1,000        11,591


Total Selling Expenses  7,280   6,857  6,051   7,906   5,604   6,220    5,624  6,343   8,343   6,343  7,843   6,343        80,757

General &
Administrative

401K Expense               10       0     50      20      10      60       40     40      40      40     40      40           390
Dues & Subscriptions        0       0      0       0       0       0        0      0       0       0      0       0             0
Employee Benefits           0       0      0       0       0       0        0      0       0       0      0       0             0
Printing                    0       0      0       0      12       0        0      0       0       0      0       0            12
Supplies                   11       0      0       0       0       0        7      0       0       0      0       0            18
Taxes Other                 0       0      0       0       0       0        0      0       0       0      0       0             0
Telephone                 134     284    148      92     106      83       92    150     150     150    150     150         1,689


Total G&A Expenses        155     284    198     112     128     143      139    190     190     190    190     190         2,109

Total SG&A Expenses     7,435   7,141  6,249   8,018   5,732   6,363    5,763  6,533   8,533   6,533  8,033   6,533        82,866


Net Profit              2,480     258    (19) (2,524)  1,170   1,046    3,009    267   1,667   3,667  2,167   3,667        16,855
                        -----     ---    ---  ------   -----   -----    -----    ---   -----   -----  -----   -----        ------
                           19%      2%     0%   -26%      12%     10%     255      3%     11%     24%    14%     24%           12%
</TABLE>
<PAGE>
HERC PRODUCTS INCORPORATED

                                           CHLORID BUDGET 1997
<TABLE>
<CAPTION>
                                           A   C   T   U   A   L     P   R   O   J   E   C   T   E   D

                       Jan     Feb.    Mar.    Apr.     May.    Jun.    Jul.    Aug.    Sep.    Oct.     Nov.     Dec.      Total
<S>                  <C>      <C>        <C>  <C>      <C>     <C>     <C>     <C>    <C>     <C>      <C>      <C>        <C>
Sales                10,685   5,250      0    5,008    5,145   5,187   5,355   5,200  10,000  10,000   10,000   10,000     81,830

Cost of Goods Sold    1,684     819      0    1,166      872     706     999   1,768   3,400   3,400    3,400    3,400     21,614

Gross Profit          9,001   4,431      0    3,842    4,273   4,481   4,356   3,432   6,600   6,600    6,600    6,600     60,216

Net Profit            9,001   4,431      0    3,842    4,273   4,481   4,356   3,432   6,600   6,600    6,600    6,600     60,216
                      -----   -----   ----    -----    -----   -----   -----   -----   -----   -----    -----    -----     ------
                      84.24%  84.40%  0.00%   76.72%   83.05%  86.39%  81.34%  66.00%  66.00%  66.00%   66.00%   66.00%     73.59%
</TABLE>