EXHIBIT 10.34

ADVISCO CAPITAL CORP.
LOAN AND SECURITY AGREEMENT

Borrower:         Intelligent Medical Imaging, Inc.

Address:          4360 Northlake Boulevard
                  Palm Beach Gardens, Florida 33410

Date:             April 29, 1999

THIS LOAN AND  SECURITY  AGREEMENT  is entered  into on the above  date  between
ADVISCO  CAPITAL  CORP.  a New York  corporation,  with offices at 210 East 49th
Street,  4th  Floor,  New York,  NY 10017,  as agent  for the  Lenders  (in such
capacity, "Agent"), the lenders named in the Schedule hereto (collectively,  the
"Lenders")  and  the  borrower(s)  named  above  (jointly  and  severally,   the
"Borrower"),  whose  chief  executive  office is  located  at the above  address
("Borrower's  Address").  The Schedule to this Agreement (the "Schedule")  shall
for all  purposes be deemed to be a part of this  Agreement,  and the same is an
integral  part of this  Agreement.  (Definitions  of certain  terms used in this
Agreement are set forth in Section 8 below).

1.     LOANS.

1.1  Loans.  Lenders  will make  loans to  Borrower  (the  "Loans"),  in amounts
determined by Lenders in their sole  discretion,  up to the amounts (the "Credit
Limit")  referred  to in  Section  1.1.1  hereof  and as shown on the  Schedule,
provided  no Default or Event of Default has  occurred  and is  continuing,  and
satisfaction  in each case, or waiver,  of the terms and conditions of borrowing
hereunder.

1.1.1             The Advances.  Each Lender severally  agrees, on the terms and
                  conditions  hereof,  to  make  one  or  more  advances  to the
                  Borrower  from time to time on any  Business  Day  during  the
                  period  from  the  Closing   Date  to,  but   excluding,   the
                  Termination  Date,  in an  aggregate  amount not to exceed the
                  amount at any one time  outstanding  set forth on the Schedule
                  to this  Agreement  giving  effect to the Eligible  Inventory,
                  Eligible  Receivables  and eligible Fixed Assets advance rates
                  set forth therein.

1.2 Interest.  All Loans and all other monetary  Obligations shall bear interest
at the rate  shown on the  Schedule,  except  where  expressly  set forth to the
contrary in this Agreement.  Interest shall be payable monthly,  on the last day
of the month.  Interest  may, in Lender's  discretion,  be charged to Borrower's
loan account,  and the same shall  thereafter  bear interest at the same rate as
the other Loans. Regardless of the amount of Obligations that may be outstanding
from time to time,  Borrower shall pay Lenders minimum  monthly  interest during
the term of this Agreement with respect to all of the Loans based on the minimum
daily loan balance set forth on the Schedule (the "Minimum  Monthly  Interest").
Following a Default or Event of Default,  interest  shall  accrue at the Default
Interest  Rate,  as defined in the Schedule  hereto.  The parties agree that the
Default  Interest Rate shall not be a penalty but is a reasonable  adjustment to
reflect the circumstances of the Loans.

1.3 Fee. Borrower shall pay Lenders the fee(s) shown on the Schedule,  which are
in  addition  to all  interest  and other sums  payable  to Lenders  and are not
refundable.

1.4 Advances.  Notwithstanding anything herein to the contrary, the advance rate
for Loans may be reduced at any time by Agent, in its reasonable  discretion (i)
if a receivable or inventory dilution percentage in excess of five percent (over
amounts reported to Lenders) is confirmed in any field examination  conducted by
or on behalf of Lenders and (ii) reserves may be reasonably  established  at any
time by a Lender in its sole discretion including, without limitation,  reserves
with respect to (x) exposure under foreign exchange contracts, hedging and other
financial instruments and (y) collateral locations for which landlord waiver and
consent  agreements in form and substance  satisfactory to Lenders have not been
obtained.


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1.4.1             The obligations of each Lender to make any advances is subject
                  to the  satisfaction  or each of the conditions  precedent set
                  forth  as  conditions  to  borrowing  hereunder,  and to those
                  specific  conditions  set forth in this  Section  1.4. and the
                  Schedule hereto.

1.4.2             The initial borrowing  consisting of Advances shall be made on
                  notice,  given by the  Borrower  to the Agent  not later  than
                  11:00 A.M.  (EST) on the third  business day prior to the date
                  of the proposed  Borrowing,  pursuant to a Notice of Borrowing
                  in the form set forth in  Exhibit A  hereto.  The Agent  shall
                  give to each  appropriate  Lender,  prompt  notice  thereof by
                  facsimile.  Each appropriate  lender shall,  before 11:00 A.M.
                  (EST) on the Closing  Date make  available  for the account of
                  the domestic  lending  office of the Lender in same day funds,
                  such amount of the  Lender's  ratable  portion of the Advance.
                  After receipt of such funds,  and upon  fulfillment  of all of
                  the conditions of borrowing  hereunder,  Agent shall make such
                  funds available to Borrower.

1.4.3             Each notice of Borrowing  shall be irrevocable  and binding on
                  the Borrower  and, the Borrower  shall  indemnify  each Lender
                  against  any loss,  cost or expense  incurred  by such  Lender
                  solely as a result of any failure by the Borrower to borrow on
                  the  date   specified  in  the  Notice  for  such   Borrowing,
                  including, without limitation, any loss (including anticipated
                  profits),   cost  or  expense   incurred   by  reason  of  the
                  liquidation  or   reemployment  of  deposits  or  other  funds
                  acquired  by such Lender to fund the  advance,  and such event
                  may be deemed by the Lender an Event of Default hereunder.

1.5 Notes. All revolving credit loans made by a Lender to the Borrowers shall be
evidenced by a revolving  credit note,  duly executed on behalf of the Borrower,
dated the Closing Date, in  substantially  the form of Exhibit B annexed hereto,
delivered  and payable to such Lender in a principal  amount equal to its credit
commitment in respect of the Borrowers on such date. The outstanding  balance of
each revolving  credit loan, as evidenced by any such note,  shall mature and be
due and payable on the Termination  Date of the Loan. Each revolving credit note
shall bear interest from its date on the outstanding  principal balance thereof,
as  provided  in Section 1.2 hereof.  Each  lender,  or the Agent,  shall and is
hereby  authorized by the Borrower to,  endorse on the schedule  attached to the
revolving credit note of such Lender an appropriate notation evidencing the date
and amount of each Loan to each Borrower  from such Lender,  as well as the date
and amount of each  payment  and  prepayment  with  respect  thereto,  provided,
however,  that the failure of any person to make such a notation on a note shall
not affect any  obligations  of the Borrower  under such note. Any such notation
shall be  conclusive  and  binding  as to the date and  amount  of such  Loan or
portion  thereof,  or payment or  prepayment  of principal or interest  thereon,
absent manifest error.

2.       SECURITY INTEREST.

2.1  Security  Interest.  To secure the  payment and  performance  of all of the
Obligations when due,  Borrower hereby grants to Lenders a security  interest in
all of  Borrower's  interest in the  following,  whether now owned or  hereafter
acquired,  and wherever located: all of the Borrower's right, title and interest
in, to and under all assets and property, tangible and intangible, of any nature
whatsoever of the Borrower,  including, without limitation,  property, plant and
equipment,  real  estate,  and  rights  under any  contracts;  all  Receivables,
Inventory,  Equipment,  investment property and General Intangibles, (as defined
herein and as such terms are defined under the New York Uniform  Commercial Code
as may from time to time be in effect,) including,  without  limitation,  all of
Borrower's Deposit Accounts,  and all money, and all property now or at any time
in the future in Lender's possession (including claims and credit balances), and
all  proceeds  of any of the  foregoing  (including  proceeds  of any  insurance
policies,  proceeds of proceeds, and claims against third parties), all products
of any of the  foregoing,  and  all  books  and  records  related  to any of the
foregoing  (all of the  foregoing,  together  with all other  property  in which
Lenders  may now or in the future be  granted a Lien or  security  interest,  is
referred to herein, collectively, as the "Collateral").


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3.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER

          In order to induce  Lenders to enter into this  Agreement  and to make
Loans,  Borrower  represents  and  warrants to Lenders as follows,  and Borrower
covenants that the following  representations will continue to be true, and that
Borrower will at all times comply with all of the following covenants:

3.1 Corporate Existence and Authority.  Borrower, if a corporation,  is and will
continue to be, duly organized,  validly existing and in good standing under the
laws of the jurisdiction of its incorporation.  Borrower is and will continue to
be  qualified  and  licensed to do business  in all  jurisdictions  in which any
failure  to do so  would  have  a  material  adverse  effect  on  Borrower.  The
execution, delivery and performance by Borrower of this Agreement, and all other
documents  contemplated hereby (i) have been duly and validly  authorized,  (ii)
are  enforceable  against  Borrower in  accordance  with their terms  (except as
enforcement   may  be  limited  by  equitable   principles  and  by  bankruptcy,
insolvency,  reorganization,  moratorium  or similar laws relating to creditors'
rights generally),  and (iii) do not violate Borrower's  articles or certificate
of incorporation, or Borrower's by-laws, or any law or any material agreement or
instrument  which is binding  upon  Borrower  or its  property,  and (iv) do not
constitute  grounds for acceleration of any material  indebtedness or obligation
under any material agreement or instrument which is binding upon Borrower or its
property.

3.2 Name; Trade Names and Styles.  The name of Borrower set forth in the heading
to this  Agreement  is its correct  name.  Listed on the  Schedule are all prior
names of Borrower and all of Borrower's present and prior trade names.  Borrower
shall give Lenders 30 days' prior  written  notice  before  changing its name or
doing  business  under any other name.  Borrower has  complied,  and will in the
future  comply,  with all laws  relating  to the  conduct  of  business  under a
fictitious business name.

3.3 Place of  Business;  Location  of  Collateral.  The address set forth in the
heading to this Agreement is Borrower's  chief  executive  office.  In addition,
Borrower has places of business and  Collateral is located only at the locations
set forth on the  Schedule.  Borrower  will give  Lenders at least 30 days prior
written  notice before opening any  additional  place of business,  changing its
chief executive office, or moving any of the Collateral to a location other than
Borrower's Address or one of the locations set forth on the schedule.

3.4 Title to Collateral; Permitted Liens. Borrower is now, and will at all times
in the  future be,  the sole  owner of all the  Collateral,  except for items of
Equipment  which are leased by Borrower.  The  Collateral now is and will remain
free and clear of any and all Liens, charges,  security interests,  encumbrances
and adverse  claims,  except for  Permitted  Liens.  Lenders now have,  and will
continue to have, a first-priority  perfected and enforceable  security interest
in all of the Collateral, subject only to the Permitted Liens, and Borrower will
at all times  defend  Lenders and the  Collateral  against all claims of others.
None of the  Collateral  now is or will be affixed to any real  property in such
manner, or with such intent, as to become a fixture, unless such Collateral will
continue to constitute Collateral as a result thereof.  Borrower is not and will
not become a lessee under any real property  lease  pursuant to which the lessor
may obtain any rights in any of the  Collateral and no such lease now prohibits,
restrains,  impairs or will  prohibit,  restrain or impair  Borrower's  right to
remove any  Collateral  from the leased  premises.  Whenever any  Collateral  is
located  upon  premises  in which any third  party has an  interest  (whether as
owner,  mortgagee,  beneficiary  under a deed  of  trust,  Lien  or  otherwise),
Borrower  shall,  whenever  requested by Lenders,  use its best efforts to cause
such third  party to execute  and  deliver to  Lenders,  in form  acceptable  to
Lenders,  such waivers and  subordinations  as Lenders shall  specify,  so as to
ensure that  Lender's  rights in the  Collateral  are, and will  continue to be,
superior to the rights of any such third party. Borrower will keep in full force
and effect,  and will  comply with all the terms of; any lease of real  property
where any of the  Collateral  now or in the future may be located.  The Borrower
shall  duly  execute  and  deliver  all  security  documents,  all  consents  of
third-parties necessary to permit the effective granting of the Liens created in
such agreements,  financing  statements pursuant to the UCC and other documents,
all in form and substance satisfactory to Lenders, as may be reasonably required
by Lenders to grant a valid,  perfected and  enforceable  first priority Lien on
and security interest in the Collateral  (subject only to Permitted Liens).  The
Borrower  shall,  at its sole  cost  and  expense,  cause  all  instruments  and
documents  given as evidence of security  pursuant to this  Agreement to be duly
recorded  and/or filed or otherwise  perfected in all places  necessary,  in the
opinion of  Lenders,  and take such other  actions  as  Lenders  may  reasonably
request, in order to


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perfect  and protect the Liens of Lenders in the  Collateral.  Borrower,  to the
extent  permitted by law and for the purposes of  perfecting  Lender's  security
interest  granted  hereunder,  hereby  authorizes  Lenders to file any financing
statement(s) in respect of any Lien created  pursuant to the security  documents
which may at any time be  required or which,  in the opinion of Lenders,  may at
any time be  desirable  although  the same may have  been  executed  only by the
Borrower,  to sign such  financing  statement on behalf of the Borrower and file
the same, and the Borrower hereby irrevocably  designates  Lenders,  its agents,
representatives  and  designees  as its  agent  and  attorney-in-fact  for  this
purpose.  In the event that any re-recording or re-filing thereof (or the filing
of any statements of continuation  or assignment of any financing  statement) is
required  to  protect  and  preserve  such  Lien,  the  Borrower  shall,  at the
Borrower's  cost and expense,  cause the same to be recorded  and/or re-filed at
the time and in the manner requested by Lenders.

3.5  Maintenance  of  Collateral.  Borrower will maintain the Collateral in good
working  condition,  and Borrower will not use the  Collateral  for any unlawful
purpose.  Borrower will  immediately  advise  Lenders in writing of any material
loss or damage to the Collateral.

3.6 Books and Records.  Borrower has  maintained and will maintain at Borrower's
Address complete and accurate books and records, comprising an accounting system
in accordance with generally accepted accounting principles.

3.7 Financial Condition, Statements and Reports. All financial statements now or
in the  future  delivered  to  Lenders  have  been,  and  will be,  prepared  in
conformity with generally accepted accounting principles (except, in the case of
unaudited  financial  statements,  for the absence of  footnotes  and subject to
normal  yearend  adjustments)  and now and in the future will fairly reflect the
financial  condition  of  Borrower,  at the  times and for the  periods  therein
stated.  Between the last date covered by any such statement provided to Lenders
and the date hereof,  there has been no material adverse change in the financial
condition, business or prospects of Borrower. The financial statements are based
upon the  information  contained in the books and records of Borrower and fairly
present the financial  condition of Borrower as at the dates thereof and results
of  operations  for the periods  referred  to therein.  Borrower is now and will
after giving effect to the transactions  contemplated hereby will continue to be
Solvent.

3.8 Tax Returns and Payments;  Pension contributions  Borrower has timely filed,
and will timely file, all tax returns and reports required by foreign,  federal,
state and local law,  and  Borrower  has timely  paid,  and will timely pay, all
foreign, federal, state and local taxes, assessments, deposits and contributions
now or in the future owed by Borrower.  Borrower may, however,  defer payment of
any contested taxes set forth on the schedule hereto, provided that Borrower (i)
in good faith  contests  Borrower's  obligation to pay the taxes by  appropriate
proceedings  promptly and diligently  instituted and conducted and (ii) notifies
Lenders in writing of the commencement of, and any material  development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a Lien upon any of the Collateral.  As of the date
hereof;  Borrower is unaware of any claims or  adjustments  proposed  for any of
Borrower's  prior tax years which could result in additional  taxes becoming due
and  payable by  Borrower.  Borrower  has paid,  and shall  continue  to pay all
amounts  necessary to fund all present and future  pension,  profit  sharing and
deferred compensation plans in accordance with their terms, and Borrower has not
and  will not  withdraw  from  participation  in,  permit  partial  or  complete
termination of; or permit the occurrence of any other event with respect to, any
such plan  which  could  result in any  liability  of  Borrower,  including  any
liability to the Pension Benefit  Guaranty  Corporation or its successors or any
other governmental agency. Borrower shall, at all times, utilize the services of
an outside  payroll service  providing for the automatic  deposit of all payroll
taxes payable by Borrower.

3.9 Compliance with Law. Borrower has complied, and will comply, in all material
respects, with all provisions of all material foreign,  federal, state and local
laws and regulations relating to Borrower,  including, but not limited to, those
relating to Borrower's  ownership of real or personal property,  the conduct and
licensing of Borrowers business, and environmental matters.

3.10 Litigation.  Except as disclosed in the Schedule,  there is no claim, suit,
litigation,  proceeding  or  investigation  pending  or (to  best of  Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any  governmental  agency (or any basis  therefor  known to Borrower)  which may
result, either separately or in the aggregate, in any material adverse change in
the financial  condition or business of Borrower,  or in any material impairment
in the ability of Borrower to carry on its  business in  substantially  the same
manner as it is now being  conducted.  Borrower will promptly  inform Lenders in
writing of any claim,  proceeding,  litigation  or  investigation  in the future
threatened or instituted  by or against  Borrower  involving any single claim of
$50,000 or more, or involving $100,000 or more in the aggregate.


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3.11 Use of proceeds.  All proceeds of all Loans shall be used solely for lawful
business  purposes  and as set forth on the  Schedule  hereto.  Borrower  is not
purchasing  or carrying  any "margin  stock" (as defined in  Regulation G of the
Board of Governors of the Federal  Reserve System,  or subsequent  regulatory or
legislative  provisions  with similar effect) and no part of the proceeds of any
Loan will be used to purchase or carry any "margin stock" or to extend credit to
others for the purpose of purchasing or carrying any "margin stock."

3.12 Real Property. Borrower does not own any real property, except as set forth
in the financial statements (the "Real Property").

3.13  Environmental  Matters.  Borrower  and the Real  Property  are in material
compliance with all applicable  federal,  state,  local and foreign laws, rules,
regulations,  codes, ordinances, orders, decrees, directives,  permits, licenses
and  judgments  relating  to  pollution,  contamination  or  protection  of  the
environment  (the  "Environmental   Laws").  The  Borrower  has  obtained,   and
maintained  in full  force and  effect,  all  environmental  permits,  licenses,
certificates  of  compliance,  approvals and other  authorizations  necessary to
conduct its business and own or operate the Real  Property on which its business
is performed (collectively, the "Environmental Permits"). Borrower has conducted
its business in compliance  with all terms and  conditions of the  Environmental
Permits,  other than  immaterial  and  unintentional  deficiencies  which either
singly  or taken as a whole  could  not have a  material  adverse  effect on the
business  or  operations  of  Borrower.  Borrower  has  filed  all  reports  and
notifications  required  to be  filed  under  and  pursuant  to  all  applicable
Environmental Laws. Except as set forth on the Schedule hereto,  Borrower is not
aware of any facts  indicating  that a claim may be made  against  Borrower  for
damages or environmental remediation under any Environmental Laws.

3.14  Subsidiaries.  Borrower does not own any  subsidiaries and is not party to
any joint venture agreement(s).

3.15 Composition Agreements. Borrower has obtained valid and binding composition
agreements  under which the  principal,  interest  and  penalties of any and all
obligations of Borrower to its creditors has been  irrevocably  and  permanently
adjusted  to the  amounts  or in the manner  set forth on the  Schedule  hereto.
Pursuant to the terms of such agreements,  each of the Borrower's  creditors has
agreed (i) to forbear from  exercising any of their rights and remedies  arising
under its  relationship  with Borrower,  under any agreement or understanding or
otherwise  as a result of defaults by Borrower  now in  existence  or  hereafter
occurring  other than as set forth on Schedule  3.15;  (ii) to waive any and all
claims  against  Borrower as a result of any default or breach by Borrower;  and
(iii) to subordinate  any and all  obligations of Borrower to the obligations of
Borrower to Lenders hereunder.

3.16 Absence of  Undisclosed  Liabilities.  Except as reflected in the financial
statements  delivered to Lenders,  Borrower has no liabilities (whether accrued,
absolute,  contingent,  unliquidated or otherwise, whether due or to become due,
whether  known or  unknown,  and  regardless  of when  asserted)  arising out of
transactions or events  heretofore  entered into, or any action or inaction,  or
any state of facts  existing,  with  respect  to or based upon  transactions  or
events heretofore occurring,  except (i) liabilities which have arisen after the
date of the latest balance sheet  delivered to Lenders in the ordinary course of
business  (none  of  which is a  material  uninsured  liability  for  breach  of
contract, breach of warranty, tort, infringement,  claim or lawsuit), or (ii) as
otherwise set forth on the Schedule hereto.

3.17 Evidence of Perfection of Security Interests. As soon as possible after the
Closing  Date,  Borrower  shall deliver to Agent:  (a)  certified  copies of all
financing  statements that name any Borrower as debtor and that are filed in the
jurisdictions required pursuant to this Agreement,  together with copies of such
other  financing  statements  (none of which shall  cover any of the  collateral
purported  to be  covered by this  Agreement),  and (b)  evidence  of filings of
assignment  in form and  substance  satisfactory  to the Agent  with the  United
States  Patent and  Trademark  Office  with  respect to any Patent or  Trademark
Security Agreement contemplated hereunder.


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4.        RECEIVABLES.

4.1 Representations Relating to Receivables. Borrower represents and warrants to
Lenders as follows: Each Receivable with respect to which Loans are requested by
Borrower  shall,  on the date each Loan is  requested  and  made,  represent  an
undisputed  bona fide existing  unconditional  obligation of the Account  Debtor
created by the sale,  delivery,  and  acceptance  of goods or the  rendition  of
services in the ordinary course of Borrower's business.

4.2  Representations  Relating  to  Documents  and  Legal  Compliance.  Borrower
represents  and  warrants to Lenders as  follows:  All  statements  made and all
unpaid  balances  appearing  in  all  invoices,   purchase  orders,   contracts,
instruments and other documents evidencing the Receivables are and shall be true
and correct and all such invoices,  instruments  and other  documents and all of
Borrower's  books and records are and shall be genuine and in all respects  what
they purport to be. All sales and other  transactions  underlying or giving rise
to each Receivable  shall fully comply with all applicable laws and governmental
rules  and  regulations.  All  signatures  and  endorsements  on all  documents,
instruments,  and  agreements  relating  to all  Receivables  are and  shall  be
genuine,  and all such  documents,  instruments  and agreements are and shall be
legally enforceable in accordance with their terms.

4.3 Schedules and Documents  Relating to Receivables.  Borrower shall deliver to
Lenders  transaction  reports and loan requests,  schedules of Receivables,  and
schedules of collections,  all on Lender's  standard forms;  provided,  however,
that  Borrower's  failure to execute  and  deliver  the same shall not affect or
limit  Lender's  security  interest  and  other  rights  in  all  of  Borrower's
Receivables,  nor shall  Lender's  failure to advance or lend against a specific
Receivable  affect or limit Lender's security interest and other rights therein.
Loan  requests  received  after 10:30 AM EST will not be  considered  by Lenders
until the next  Business  Day.  Together  with each such  schedule,  or later if
requested by Lenders,  Borrower shall furnish Lenders with certified copies (or,
at Lender's request,  permit Lenders or its representatives to review originals)
of all  contracts,  orders,  invoices,  and  other  similar  documents,  and all
original shipping  instructions,  delivery receipts,  bills of lading, and other
evidence of delivery,  for any goods the sale or  disposition of which gave rise
to  such  Receivables,  and  Borrower  warrants  the  genuineness  of all of the
foregoing.  Borrower  shall also furnish to Lenders an aged accounts  receivable
trial balance in such form and at such  intervals as Lenders shall  request.  In
addition,  Borrower  shall deliver to Lenders the originals of all  instruments,
chattel paper, security agreements,  guarantees and other documents and property
evidencing  or securing any  Receivables,  upon receipt  thereof and in the same
form as received,  with all necessary  endorsements,  all of which shall be with
recourse. Borrower shall also provide Lenders with copies of all credit memos as
and when requested by Lenders.

4.4  Collection  of  Receivables.  Borrower  shall have the right to collect all
Receivables,  unless and until an Event of Default has occurred.  Borrower shall
hold all payments on, and proceeds  of,  Receivables  in trust for Lenders,  and
Borrower  shall  deliver all such  payments and  proceeds to Lenders  within one
Business Day after receipt by Borrower, in their original form, duly endorsed to
Lenders,  to be  applied  to the  Obligations  in such  order as  Lenders  shall
determine.  Lenders  may,  in its  discretion,  require  that  all  proceeds  of
Collateral  be  deposited  by  Borrower  into a lockbox  account,  or such other
"blocked  account"  as  Lenders  may  specify,  pursuant  to a  blocked  account
agreement in such form as Lenders may specify.  Lenders or its designee  may, at
any time,  notify  Account  Debtors  that  Lenders  has been  granted a security
interest in the  Receivables.  If Lenders consent to the factoring or assignment
of any  Receivables,  the proceeds thereof shall be directed to be paid directly
to Lenders in an amount necessary to pay all Obligations to Lenders at such time
existing.

4.5  Remittance of Proceeds.  All proceeds  arising from the  disposition of any
Collateral  shall be delivered to Lenders  within one Business Day after receipt
by Borrower,  in their original form, duly endorsed to Lenders, to be applied to
the Obligations in such order as Lenders shall  determine.  Borrower agrees that
it will not commingle  proceeds of Collateral with any of Borrower's other funds
or  property,  but will hold such  proceeds  separate  and apart from such other
funds and property and in an express trust for Lenders.  Nothing in this Section
limits the restrictions on disposition of Collateral set forth elsewhere in this
Agreement.


                                     Page 6


<PAGE>


4.6 Disputes.  Borrower shall notify Lenders  promptly of all disputes or claims
relating to Receivables.  Borrower shall not forgive  (completely or partially),
compromise or settle any  Receivable  for less than payment in full, or agree to
do any of the  foregoing,  except that Borrower may do so,  provided  that:  (i)
Borrower does so in good faith,  in a  commercially  reasonable  manner,  in the
ordinary  course  of  business,  and in arm's  length  transactions,  which  are
reported to Lenders on the regular reports provided to Lenders,  (ii) no Default
or Event of Default  has  occurred  and is  continuing;  and (iii)  taking  into
account all such discounts  settlements and forgiveness,  the total  outstanding
Loans  will not  exceed the Credit  Limit.  Lenders  may,  at any time after the
occurrence of an Event of Default,  settle or adjust disputes or claims directly
with  Account  Debtors  for  amounts  and upon  terms  which  Lenders  considers
advisable in its  reasonable  credit  judgment and, in all cases,  Lenders shall
credit  Borrower's Loan account with only the net amounts received by Lenders in
payment of any Receivables.

4.7 Returns. Provided no Event of Default has occurred and is continuing, if any
Account Debtor  returns any Inventory to Borrower in the ordinary  course of its
business,  Borrower  shall  promptly  determine  the reason for such  return and
promptly  issue a credit  memorandum  to the Account  Debtor in the  appropriate
amount.  In the event any attempted  return  occurs after the  occurrence of any
Event of Default,  Borrower  shall (i) hold the returned  Inventory in trust for
Lenders,  (ii)  segregate all returned  Inventory  from all of Borrower's  other
property,  (iii)  conspicuously  label the  returned  Inventory  as  subject  to
Lender's security interest, and (iv) immediately notify Lenders of the return of
any Inventory, specifying the reason for such return, the location and condition
of the  returned  Inventory,  and on  Lender's  request  deliver  such  returned
Inventory to Lenders or render such Inventory to the sole and exclusive  control
of Lender's agent.

4.8  Verification.  Lenders may,  from time to time,  verify  directly  with the
respective  Account Debtors the validity,  amount and other matters  relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or Lenders or such other name as Lenders may choose.

4.9 No Liability.  Lenders shall not under any  circumstances  be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable, or
for any error, act, omission,  or delay of any kind occurring in the settlement,
failure to settle,  collection  or failure  to collect  any  Receivable,  or for
settling any Receivable in good faith for less than the full amount thereof, nor
shall  Lenders be deemed to be  responsible  for any of  Borrower's  obligations
under any  contract or agreement  giving rise to a  Receivable.  Nothing  herein
shall,  however,  relieve Lenders from liability for its own gross negligence or
willful misconduct.

5.        ADDITIONAL DUTIES OF THE BORROWER.

5.1 Financial and Other  Covenants.  Borrower shall at all times comply with the
financial and other covenants set forth in the Schedule.

5.2 Insurance.  Borrower shall, at all times insure all of the tangible personal
property  Collateral  and carry such other  business  insurance,  with  insurers
reasonably  acceptable  to  Lenders,  in such form and  amounts as  Lenders  may
reasonably  require,  and Borrower  shall provide  evidence of such insurance to
Lenders,  so that Lenders is satisfied that such insurance is, at all times,  in
full force and effect.  All liability  insurance policies of Borrower shall name
Lenders  as an  additional  insured,  and  all  property  casualty  and  related
insurance  policies of Borrower  shall name Lenders as a loss payee  thereon and
Borrower  shall  cause a  lenders  loss  payee  endorsement  in form  reasonably
acceptable  to Lenders.  Upon  receipt of the  proceeds  of any such  insurance,
Lenders  shall apply such  proceeds in reduction of the  Obligations  as Lenders
shall  determine in its sole  discretion,  except  that,  provided no Default or
Event of Default  has  occurred  and is  continuing,  Lenders  shall  release to
Borrower  insurance  proceeds  with  respect  to  Equipment  totaling  less than
$25,000,  which  shall  be  utilized  by  Borrower  for the  replacement  of the
Equipment  with respect to which the insurance  proceeds were paid.  Lenders may
require reasonable  assurance that the insurance proceeds so released will be so
used. If Borrower fails to provide or pay for any insurance, Lenders may, but is
not obligated to, obtain the same at Borrower's expense. Borrower shall promptly
deliver to Lenders copies of all reports made to insurance companies.


                                     Page 7


<PAGE>


5.3 Reports.  Borrower,  at its expense,  shall provide Lenders with the written
reports set forth in the Schedule,  and such other written  reports with respect
to Borrower  (including  budgets,  sales projections,  operating plans and other
financial documentation), as Lenders shall from time to time reasonably specify.

5.4 Access to Collateral,  Books and Records.  At reasonable  times,  and on one
Business Day's notice,  Lenders, or its agents, shall have the right to inspect,
audit and copy  Borrower's  books and records and the Collateral (the "Audits").
Lenders  shall  take  reasonable  steps to keep  confidential  all  confidential
information  obtained in any Audit, but Lenders shall have the right to disclose
any such information to its auditors,  regulatory agencies,  and attorneys,  and
pursuant  to any  subpoena  or  other  legal  process  The  Audits  shall  be at
Borrower's  expense  and the charge for the Audits  shall be $750 per person per
day (or such higher amount as shall  represent  Lender's  then current  standard
charge for the same), plus reasonable out of pocket expenses.  Borrower will not
enter into any agreement with any accounting firm, service bureau or third party
to store  Borrower's  books or records  at any  location  other than  Borrower's
Address,  without first notifying  Lenders of the same and obtaining the written
agreement from such accounting firm, service bureau or other third party to give
Lenders the same rights with  respect to access to books and records and related
rights as Lenders has under this Loan Agreement.

5.5 Negative  Covenants.  Borrower  shall not,  without  Lender's  prior written
consent,  do any  of the  following:  (i)  merge  or  consolidate  with  another
corporation or entity,  except in a transaction in which (A) the shareholders of
the Borrower  hold at least 50% of the common stock and all other  capital stock
of the surviving corporation immediately after such merger or consolidation, and
(B) the Borrower is the surviving  corporation;  (ii) acquire any assets, except
(A) in the ordinary  course of business,  or (B) in a transaction or a series of
transactions  not  involving  the  payment of an  aggregate  amount in excess of
$5,000 for any single asset or $15,000 in any calendar year (iii) enter into any
other transaction outside the ordinary course of business; (iv) sell or transfer
any Collateral, except for the sale of finished Inventory in the ordinary course
of  Borrower's  business,  and  except  for the  sale of  obsolete  or  unneeded
Equipment in the ordinary  course of business;  (v) store any Inventory or other
Collateral with any  warehouseman  or other third party;  (vi) make any loans of
any  money or other  assets  or  repaid  any past due  amount  to any  vendor or
supplier,  except  (A)  advances  to  vendors or  suppliers  for the  purpose of
completion  of  Inventory  for sale to customers  for which a purchase  order or
contract  for sale has been  obtained  and  approved  by Lender  and (B)  travel
advances, employee relocation loans and other employee loans and advances in the
ordinary course of business not in excess of $1,500 per person;  (vii) incur any
debts,  outside the ordinary  course of  business,  which would have a material,
adverse  effect on Borrower or on the prospect of repayment of the  Obligations;
(viii)  guarantee or otherwise  become liable with respect to the obligations of
another party or entity;  (ix) pay or declare any dividends on Borrower's  stock
(except for dividends payable solely in stock of Borrower);  (x) redeem, retire,
purchase or otherwise acquire,  directly or indirectly,  any of Borrowers stock;
(xi) make any change in Borrower's capital structure which would have a material
adverse  effect on Borrower or on the prospect of repayment of the  Obligations;
(xii) dissolve or elect to dissolve; (xiii) enter into any agreement (other than
this Agreement)  which (A) prohibits the creation or assumption of any Lien upon
any of the Collateral,  including,  without  limitation,  any hereafter acquired
property,  or (B) specifically  prohibits the amendment or other modification of
this Agreement or any other document  contemplated  hereby; or (xiv) directly or
indirectly, (A) prepay, redeem, purchase or retire any indebtedness,  including,
without  limitation,  any  subordinated  indebtedness,  other than  indebtedness
incurred hereunder (B) modify, amend or otherwise alter the terms and provisions
of any subordinated indebtedness;  (C) modify, amend or alter the certificate or
articles  of  incorporation  or  other  constitutive  charter  document  if such
modification,  amendment or alteration could have a material adverse affect upon
the Collateral or the obligations of Borrower to Lenders hereunder. Transactions
permitted by the foregoing  provisions of this Section are only  permitted if no
Default or Event of Default would occur as a result of such transaction.

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


                                     Page 8


<PAGE>


5.7 Indemnity.  Borrower  hereby agrees to indemnify  Agent and Lenders and hold
harmless  Agent  and  Lenders  from  and  against  any  and all  claims,  debts,
liabilities,  demands, obligations,  actions, causes of action, penalties, costs
and expenses (including reasonable attorneys' fees), of every nature,  character
and  description,  which  Agent or Lenders  may  sustain or incur  based upon or
arising out of any of the Obligations,  any actual or alleged failure to collect
and pay over any withholding or other tax relating to Borrower or its employees,
any  relationship  or  agreement  between  Lenders and  Borrower,  any actual or
alleged  failure of Agent or Lenders to comply  with any writ of  attachment  or
other legal process  relating to Borrower or any of its  property,  or any other
matter, cause or thing whatsoever occurred, done, omitted or suffered to be done
by Agent or Lenders  relating to Borrower  or the  Obligations  (except any such
amounts  sustained or incurred as the result of the gross  negligence or willful
misconduct of Lenders).  Notwithstanding  any provision in this Agreement to the
contrary,  the  indemnity  agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes  continue in full force
and effect and be applicable to all of Agent and Lender's  directors,  officers,
employees, agents, attorneys, advisors and representatives

5.8 Further Assurances.  Borrower agrees, at its expense, on request by Lenders,
to execute all documents and take all actions,  as Lenders,  may deem reasonably
necessary or useful in order to perfect and maintain Lender's perfected security
interest in the Collateral,  and in order to fully  consummate the  transactions
contemplated by this Agreement.

6.    TERM.

6.1 Maturity Date.  This Agreement shall continue in full force and effect until
the maturity date set forth on the Schedule (the "Maturity Date" or "Termination
Date").

6.2 Early  Termination.  This Agreement may be terminated  prior to the Maturity
Date as follows:  (i) by Borrower,  effective  three Business Days after written
notice of termination is given to Lenders;  or (ii) by Lenders at any time after
the occurrence of an Event of Default, without notice, effective immediately. If
this  Agreement is  terminated by Borrower or by Lenders under this Section 6.2,
Borrower shall pay to Lenders a termination fee (the "Early Termination Fee") in
the amount shown on the  Schedule.  The Early  Termination  Fee shall be due and
payable on the effective date of termination and thereafter  shall bear interest
at a rate equal to the rate applicable to the Receivable Loans.

6.3 Payment of  Obligations.  On the Maturity  Date or on any earlier  effective
date of  termination,  Borrower  shall pay and perform in full all  Obligations,
whether evidenced by installment  notes or otherwise,  and whether or not all or
any  part of such  Obligations  are  otherwise  then  due and  payable.  Without
limiting the  generality of the  foregoing,  if on the Maturity  Date, or on any
earlier  effective date of  termination,  there are any  outstanding  Letters of
Credit  issued by  Lenders  or  issued  by  another  institution  based  upon an
application,  guarantee,  indemnity or similar agreement on the part of Lenders,
then on such date Borrower shall provide to Lenders cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all  interest,  fees
and cost due or to become  due in  connection  therewith,  to secure  all of the
Obligations  relating  to said  Letters of Credit,  pursuant  to  Lender's  then
standard form cash pledge  agreement.  Notwithstanding  any  termination of this
Agreement,  all of Lender's security  interests in all of the Collateral and all
of the terms and provisions of this  Agreement  shall continue in full force and
effect until all  Obligations  have been paid and  performed  in full;  provided
that,  without  limiting  the fact that Loans are subject to the  discretion  of
Lenders,  Lenders may, in its sole discretion,  refuse to make any further Loans
after termination. No termination shall in any way affect or impair any right or
remedy of  Lenders,  nor  shall any such  termination  relieve  Borrower  of any
Obligation to Lenders, until all of the Obligations have been paid and performed
in  full.  Upon  payment  and  performance  in full of all the  Obligations  and
termination  of this  Agreement,  Lenders  shall  promptly  deliver to  Borrower
termination statements,  requests for re-conveyances and such other documents as
may be required to fully terminate Lender's security interests.

7.        EVENTS  OF  DEFAULT  AND REMEDIES.


                                     Page 9


<PAGE>


7.1 Events of Default.  The  occurrence  of any of the  following  events  shall
constitute an "Event of Default" under this  Agreement,  and Borrower shall give
Lenders   immediate   written  notice  thereof:   (a)  Any  material   warranty,
representation, statement, report or certificate made or delivered to Lenders by
Borrower  or any of  Borrower's  officers,  employees  or agents,  now or in the
future,  shall be untrue or  misleading in a material  respect;  or (b) Borrower
shall  fail to pay  when  due any  Loan or any  interest  thereon  or any  other
monetary Obligation; or (c) the total Loans and other Obligations outstanding at
any time shall exceed the Credit  Limit;  or (d) Borrower  shall fail to deliver
the proceeds of Collateral to Lenders as provided in Section 4.5 above, or shall
fail to give Lenders  access to its books and records or  Collateral as provided
in Section 5.4 above, or shall breach any negative covenant set forth in Section
5.5 above; or (e) Borrower shall fail to comply with the financial covenants (if
any) set forth in the  Schedule or shall fail to perform any other  non-monetary
Obligation  which by its nature cannot be cured;  or (f) Borrower  shall fail to
perform any other non-monetary  Obligation,  which failure is not cured within 5
Business  Days  after the date due;  or (g) Any  levy,  assessment,  attachment,
seizure, Lien or encumbrance (other than a Permitted Lien) is made on all or any
part of the Collateral which is not cured within 10 days after the occurrence of
the same;  or (h) any default or event of default  occurs  under any  obligation
secured by a  Permitted  Lien,  which is not cured  within any  applicable  cure
period or waived in writing by the holder of the Permitted Lien; or (i) Borrower
breaches any material  contract or  obligation,  which has or may  reasonably be
expected to have a material  adverse effect on Borrower's  business or financial
condition; or (j) Dissolution,  termination of existence, insolvency or business
failure of Borrower; or appointment of a receiver, trustee or custodian, for all
or any part of the property of,  assignment  for the benefit of creditors by, or
the  commencement  of any  proceeding  by  Borrower  under  any  reorganization,
bankruptcy,  insolvency,  arrangement,  readjustment  of  debt,  dissolution  or
liquidation law or statute of any jurisdiction,  now or in the future in effect;
or (k) the  commencement of any proceeding  against Borrower or any guarantor of
any  of  the  Obligations  under  any  reorganization,  bankruptcy,  insolvency,
arrangement,  readjustment of debt, dissolution or liquidation law or statute of
any  jurisdiction,  now or in the  future in  effect,  which is not cured by the
dismissal thereof within 30 days after the date commenced;  or (1) revocation or
termination  of or limitation or denial of liability  upon,  any guaranty of the
Obligations  or any  attempt  to do any of the  foregoing,  or  commencement  of
proceedings by any guarantor of any of the  Obligations  under any bankruptcy or
insolvency  law; or (m) revocation or termination of, or limitation or denial of
liability  upon, any pledge of any  certificate of deposit,  securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations,  or any attempt to do any of the foregoing,  or commencement of
proceedings  by or  against  any  such  third  party  under  any  bankruptcy  or
insolvency law; or (n) Borrower makes any payment on account of any indebtedness
or  obligation  which is subject to a  Composition  Agreement  or which has been
subordinated  to the  Obligations,  other than as  permitted  in the  applicable
Composition Agreements as set forth on Schedule 3.14 hereof or if any Person who
has agreed to a  Composition  Agreement or  subordinated  such  indebtedness  or
obligations  terminates or in any way limits his  composition  or  subordination
agreement;  or (o) there shall be a change in the record or beneficial ownership
of an aggregate of more than 20% of the outstanding shares of stock of Borrower,
in one or more transactions,  compared to the ownership of outstanding shares of
stock of  Borrower  in  effect on the date  hereof,  without  the prior  written
consent of Lenders;  or (p) Borrower  shall  generally not pay its debts as they
become due,  or  Borrower  shall  conceal,  remove or  transfer  any part of its
property,  with  intent to hinder,  delay or defraud its  creditors,  or make or
suffer any transfer of any of its  property  which may be  fraudulent  under any
bankruptcy,  fraudulent  conveyance  or  similar  law;  or (q) there  shall be a
material  adverse change in Borrowers  business or financial  condition;  or (r)
Lenders,  acting in good faith and in a commercially  reasonable  manner,  deems
itself  insecure  because of the  occurrence  of an event prior to the effective
date hereof of which Lenders had no knowledge on the  effective  date or because
of the  occurrence of an event on or  subsequent  to the effective  date; or (s)
upon the occurrence of any breach, Default or any Event of Default as such terms
are defined  pursuant  those certain  agreements by and between JNC  Opportunity
Fund and  Borrower  dated as of June 30,  1998  relating  to the  Borrower's  6%
Convertible  Debenture  due June 30,  2002.  Lenders may cease  making any Loans
hereunder  during any of the above cure periods,  and  thereafter if an Event of
Default has occurred.

7.2 Remedies. Upon the occurrence,  and during the continuance,  of any Event of
Default,  Agent, at its option, and without notice or demand of any kind (all of
which are hereby  expressly  waived by Borrower),  may do any one or more of the
following:  (a) Cease  making Loans or  otherwise  extending  credit to Borrower
under this  Agreement or any other  document or agreement;  (b)  Accelerate  and
declare all or any part of the Obligations to be immediately due,  payable,  and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation;  (c) Take possession of any
or all of the Collateral wherever it may be found, and for that purpose Borrower
hereby authorizes Agent without judicial process to enter onto any of Borrower's
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof,  without charge for so long
as Agent deems it reasonably  necessary in order to complete the  enforcement of
its rights under this Agreement or any other agreement;  provided, however, that
should Agent seek to take  possession of any of the Collateral by Court process,
Borrower  hereby  irrevocably  waives:  (i) any bond and any surety or  security
relating thereto required by any statute, court rule or otherwise as an incident
to such possession;  (ii) any demand for possession prior to the commencement of
any suit or action to recover possession thereof; and (iii) any requirement that
Agent retain  possession of, and not dispose of, any such Collateral until after
trial or final  judgement; 


                                    Page 10


<PAGE>


(d)  Require  Borrower  to  assemble  any or all of the  Collateral  and make it
available to Agent at places designated by Agent which are reasonably convenient
to Agent and Borrower,  and to remove the  Collateral to such locations as Agent
may deem advisable; (e) Complete the processing,  manufacturing or repair of any
Collateral  prior to a  disposition  thereof  and,  for such purpose and for the
purpose  of  removal,  Agent  shall  have the right to use  Borrowers  premises,
vehicles,  hoists,  lifts,  cranes,  equipment  and all other  property  without
charge;  (f) Sell, lease or otherwise  dispose of any of the Collateral,  in its
condition  at  the  time  Agent  obtains  possession  of  it  or  after  further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash,  exchange or other property,  or on credit, and to
adjourn  any  such  sale  from  time to time  without  notice  other  than  oral
announcement  at the time  scheduled  for sale.  Agent  shall  have the right to
conduct such disposition on Borrowers  premises without charge, for such time or
times as Agent deems reasonable,  or on Lender's premises,  or elsewhere and the
Collateral need not be located at the place of  disposition.  Agent may directly
or through any affiliated  company  purchase or lease any Collateral at any such
public  disposition,  and if permissible  under  applicable  law, at any private
disposition.  Any sale or other  disposition  of  Collateral  shall not  relieve
Borrower of any liability Borrower may have if any Collateral is defective as to
title or physical condition or otherwise at the time of sale; (g) Demand payment
of and collect any Receivables  and General  Intangibles  comprising  Collateral
and, in connection therewith,  Borrower irrevocably  authorizes Agent to endorse
or sign  Borrower's  name on all  collections,  receipts,  instruments and other
documents,  to take possession of and open mail addressed to Borrower and remove
therefrom  payments made with respect to any item of the  Collateral or proceeds
thereof and, in Lender's sole  discretion,  to grant  extensions of time to pay,
compromise claims and settle  Receivables and the like for less than face value;
(h)  offset  against  any sums in any of  Borrower's  general,  special or other
Deposit  Accounts  with Agent;  and (i) Demand and receive  possession of any of
Borrower's  federal  and state  income  tax  returns  and the books and  records
utilized  in the  preparation  thereof  or  referring  thereto.  All  reasonable
attorneys' fees, expenses,  costs, liabilities and obligations incurred by Agent
with respect to the foregoing shall be due from the Borrower to Agent on demand.
Agent  may  charge  the same to  Borrower's  loan  account,  and the same  shall
thereafter  bear interest at the same rate as is  applicable  to the  receivable
Loans. Without limiting any of Lender's rights and remedies,  from and after the
occurrence  of any  Event  of  Default,  the  interest  rate  applicable  to the
Obligations shall be increased as provided on the Schedule a part hereof.

7.3  Standards for  Determining  Commercial  Reasonableness.  Borrower and Agent
agree that a sale or other disposition (collectively,  "sale") of any Collateral
which complies with the following  standards will  conclusively  be deemed to be
commercially  reasonable:  (i) Notice of the sale is given to  Borrower at least
five days prior to the sale,  and, in the case of a public  sale,  notice of the
sale is  published  at least five days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted;  (ii) Notice of the
sale describes the collateral in general,  non-specific terms; (iii) The sale is
conducted at a place  designated by Agent,  with or without the Collateral being
present;  (iv) The sale  commences  at any time between 8:00 a.m. and 6:00 p.m.;
(v) Payment of the purchase price in cash or by cashier's check or wire transfer
is required;  (vi) With respect to any sale of any of the Collateral,  Agent may
(but is not obligated to) direct any prospective purchaser to ascertain directly
from Borrower any and all information  concerning the same.  Agent shall be free
to  employ  other  methods  of  noticing  and  selling  the  Collateral,  in its
discretion, if they are commercially reasonable.

7.4 Power of Attorney. Upon the occurrence,  and during the continuance,  of any
Event of Default, without limiting Lender's other rights and remedies,  Borrower
grants to Agent an  irrevocable  power of  attorney  coupled  with an  interest,
authorizing and permitting Agent (acting through any of its employees, attorneys
or agents) at any time, at its option, but without  obligation,  with or without
notice to Borrower, and at Borrower's expense, to do any or all of the following
in  Borrower's  name or  otherwise,  but Agent agrees to exercise the  following
powers in a commercially  reasonable  manner:


                                    Page 11


<PAGE>


(a)  Execute on behalf of  Borrower  any  documents  that Agent may, in its sole
discretion,  deem advisable in order to perfect and maintain  Lender's  security
interest  in the  Collateral,  or in order to  exercise a right of  Borrower  or
Agent, or in order to fully consummate all the transactions  contemplated  under
this  Agreement,  and all other  present and future  agreements;  (b) Execute on
behalf of Borrower any document exercising, transferring or assigning any option
to purchase,  sell or otherwise dispose of or to lease (as lessor or lessee) any
real or personal property which is part of Lender's Collateral or in which Agent
has an interest; (c) Execute on behalf of Borrower, any invoices relating to any
Receivable,  any draft against any Account  Debtor and any notice to any Account
Debtor,  any  proof  of claim  in  bankruptcy,  any  Notice  of  Lien,  claim of
mechanic's,  materialman's  or other Lien,  or  assignment  or  satisfaction  of
mechanic's,  materialman's  or other Lien; (d) Take control in any manner of any
cash or non-cash items of payment or proceeds of Collateral; endorse the name of
Borrower upon any instruments,  or documents,  evidence of payment or Collateral
that may come into Lender's  possession;  (e) Endorse all checks and other forms
of remittances  received by Agent; (f) Pay, contest or settle any Lien,  charge,
encumbrance, security interest and adverse claim in or to any of the Collateral,
or any judgment  based  thereon,  or  otherwise  take any action to terminate or
discharge the same; (g) Grant extensions of time to pay,  compromise  claims and
settle Receivables and General  Intangibles for less than face value and execute
all  releases  and other  documents in  connection  therewith;  (h) Pay any sums
required  on account of  Borrower's  taxes or to secure the release of any Liens
therefor,  or both;  (i) Settle and adjust,  and give releases of, any insurance
claim that relates to any of the  Collateral and obtain  payment  therefor;  (j)
Instruct  any third  party  having  custody  or  control of any books or records
belonging  to, or relating to,  Borrower to give Agent the same rights of access
and other rights with respect thereto as Agent has under this Agreement; and (k)
Take any action or pay any sum required of Borrower  pursuant to this  Agreement
and any other present or future agreements. Any and all reasonable sums paid and
any and all reasonable costs, expenses, liabilities,  obligations and attorneys'
fees  incurred  by Agent  with  respect to the  foregoing  shall be added to and
become part of the Obligations,  and shall be payable on demand Agent may charge
the foregoing to Borrower's loan account and the foregoing shall thereafter bear
interest at the same rate applicable to the Receivable  Loans. In no event shall
Lender's  rights under the foregoing  power of attorney or any of Lender's other
rights under this  Agreement  be deemed to indicate  that Agent is in control of
the business, management or properties of Borrower.

7.5 Application of Proceeds.  All proceeds realized as the result of any sale of
the  Collateral  shall be  applied  by  Agent  first  to the  reasonable  costs,
expenses, liabilities,  obligations and attorneys' fees incurred by Agent in the
exercise of its rights under this Agreement, second to the interest due upon any
of the Obligations, and third to the principal of the Obligations, in such order
as Agent shall  determine in its sole  discretion.  Any surplus shall be paid to
Borrower or other persons legally entitled thereto; Borrower shall remain liable
to Agent for any  deficiency.  If Agent,  in its sole  discretion,  directly  or
indirectly  enters into a deferred payment or other credit  transaction with any
purchaser at any sale of Collateral, Agent shall have the option, exercisable at
any time, in its sole  discretion,  of either  reducing the  Obligations  by the
principal amount of purchase price or deferring the reduction of the Obligations
until the actual receipt by Agent of the cash therefor.

7.6  Remedies  Cumulative.  In addition to the rights and  remedies set forth in
this  Agreement,  Agent shall have all the other rights and remedies  accorded a
secured  party under the New York  Uniform  Commercial  Code and under all other
applicable  laws,  and under any other  instrument  or  agreement  now or in the
future  entered  into  between  Agent and  Borrower,  and all of such rights and
remedies are cumulative and none is exclusive.  Exercise or partial  exercise by
Agent of one or more of its rights or remedies  shall not be deemed an election,
nor bar Agent from subsequent  exercise or partial  exercise of any other rights
or  remedies.  The failure or delay of Agent to exercise  any rights or remedies
shall not  operate  as a waiver  thereof;  but all  rights  and  remedies  shall
continue in full force and effect until all of the  Obligations  have been fully
paid and performed.

7.7 Right of First  Refusal.  The Borrower  shall not,  directly or  indirectly,
without the prior written consent of the Agent, offer, sell, grant any option to
purchase,  or otherwise  dispose of (or announce any offer,  sale,  grant or any
option  to   purchase  or  other   disposition   )  of  any  of  its  equity  or
equity-convertible  securities  in a  transaction  intended  to be exempt or not
subject to  registration  under the  Securities Act of 1933, as amended or place
any senior or subordinated debt ("Placement") for a period of 180 days after the
Closing Date,  except (i) the granting of options granted under any stock option
plan heretofore or hereafter duly adopted by the Company;  (ii) shares of Common
Stock  issued  upon  exercise of any  currently  outstanding  warrants  and upon
conversion of any currently outstanding  convertible securities of the Borrower;
(iii)  securities  which may be issued in  connection  with a joint  venture  or
strategic  alliance,  unless  Borrower  deliver to Agent a written notice of its
intention  which shall  describe in reasonable  detail the terms  proposes,  the
amount and the person with whom  intended  to be  affected  an  attaching a term
sheet relating thereto and Agent shall have not have notified Borrower within 30
days of its  receipt of notice  that it  desires to seek to obtain a  comparable
lender or investor on  substantially  the same terms and conditions as set forth
in such notice.  If Lender's  shall fail to notify the Borrower of its intention
to  enter  into  such  negotiations,  Borrower  shall  be  free to  effect  such
transaction for a period of 45 days  thereafter  after which time Borrower shall
be required to provide additional notification as provided herein.


                                    Page 12


<PAGE>


8.  DEFINITIONS.  As  used in this  Agreement,  the  following  terms  have  the
following meanings:

"Advances" has the meaning set forth in Section 1.1.1 hereof.

"Lender"  means that  lender or lenders  designated  as Lenders set forth on the
Schedule hereto as the Lender or Lenders.

"Account Debtor" means the obligor on a Receivable.

'Affiliate" means, with respect to any Person, a relative, parent,  shareholder,
director,  officer,  or employee of such Person,  or any parent or subsidiary of
such Person,  or any Person  controlling,  controlled by or under common control
with such Person.

"Advances" has the meaning set forth in Section 1.1 hereof.

"Business Day" means a day on which Agent is open for business.

"Closing  Date " means  April 28,  1999 or such later date as the closing of the
loan shall occur.

"Code" means the Uniform  Commercial  Code as adopted and in effect in the State
of New York from time to time.

"Collateral' has the meaning set forth in Section 2.1 above.

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

"Deposit Account" has the meaning set forth in Section 9105 of the Code.

"Eligible Inventory" means Inventory which Lenders, in its sole judgment,  deems
eligible for borrowing, based on such considerations as Lenders may from time to
time deem appropriate. Without limiting the fact that the determination of which
Inventory is eligible for  borrowing is a matter of Lender's  discretion  (which
may be fixed and revised  from time to time in the sole  discretion  of Lenders)
Inventory which does not meet the following  requirements  will not be deemed to
be Eligible  Inventory:  Inventory  which (i) consists of finished  goods or raw
material,  in good,  new and  salable  condition  which is not  perishable,  not
obsolete or unmerchantable,  and is not comprised of work in process,  packaging
materials or supplies; (ii) meets all applicable  governmental standards;  (iii)
has been  manufactured  in compliance  with the Fair Labor  Standards  Act; (iv)
conforms in all respects to the warranties and representations set forth in this
Agreement;  (v) is at all  times  subject  to  Lender's  duly  perfected,  first
priority security interest; (vi) is situated at a one of the locations set forth
on the Schedule; and (vii) has not been consigned.


                                    Page 13


<PAGE>


"Eligible  Receivables"  means  Receivables  arising in the  ordinary  course of
Borrower's  business  from the sale of goods,  rendition  of services or royalty
payments   arising  from   licensing   agreements  of  Borrower  to  the  extent
specifically approved by Lenders in writing from time to time, which Lenders, in
its good faith business  judgment,  shall deem eligible for borrowing,  based on
such  considerations as Lenders may from time to time deem appropriate.  Without
limiting the fact that the  determination  of which  Receivable  is eligible for
borrowing  is a matter of  Lender's  discretion  (which may be fixed and revised
from time to time in the sole  discretion of Lenders)  Receivables  which do not
meet the following  requirements will not be deemed to be Eligible  Receivables:
Receivables  which  (i)  arise in the  ordinary  course  of  business;  (ii) all
payments due on the Receivable have been invoiced (and the underlying goods have
been shipped and the payment due on the Receivable is not more than 90 days past
the original  invoice date which date has not been  extended  (iii) the payments
due on more than 50% of all Receivables  from the same customer are less than 90
days past the original invoice date; (iv) the Receivable arose from a completed,
outright and lawful sale of goods, to which title has passed to the customer, by
or on behalf of Borrower;  (v) the  Receivable  is in full  conformity  with the
representations  and warranties  made by the Borrower to Lenders and is free and
clear of all security  interests and Liens of any nature  whatsoever  other than
any  security  interest  deemed to be held by Lenders or Borrower  or  Permitted
Liens;  (vi) the Receivable  constitutes an "account" or "chattel  paper" within
the meaning of the Uniform  Commercial Code of the state in which the Receivable
is  located;  (vii) the  customer  has not  asserted  that the  Receivable,  and
Borrower  is not aware  that the  Receivable  (a) arises out of a bill and hold,
consignment  or progress  billing  arrangement  or (b) is subject to any setoff,
contras, net-out contract, offset, deduction,  dispute, credit,  counterclaim or
other defense arising out of the  transactions  represented by the receivable or
independent  thereof and if the customer has not finally accepted the goods form
the sale out of which the Receivable  arose,  the Borrower is not aware that the
customer  has  objected  to its  liability  thereon  or  returned,  rejected  or
repossessed  any of such goods,  except for complaints made or goods returned in
the ordinary  course of business for which goods of equal or greater  value have
been  shipped  in  return;  (viii) the  customer  is not (A) the  United  States
Government or the government of any state or political  subdivision  thereof, or
any agency or  department  of any thereof or (B) an Affiliate  of the  borrower;
(ix) the customer is a United  States  Person or an obligor in the United States
or, if the customer is not such a person,  the Borrower has purchased  insurance
in form and amounts  satisfactory to Lenders or a letter of credit acceptable to
Lenders has been collaterally  assigned to Lenders;  (x) the Receivable complies
with all material  requirements of all applicable laws and regulations,  whether
Federal,  state or local (including,  without  limitation,  usury laws and laws,
rules and regulations  relating to truth in lending,  fair credit billing,  fair
credit reporting,  equal credit opportunity,  fair debt collection practices and
privacy); (xi) the receivable has not been and is not required to be charged off
or  written  off as  uncollectable  in  accordance  with  GAAP or the  customary
business  practices of the Borrower;  (x) Lenders  possesses a valid,  perfected
first priority  security  interest in such Receivable as security for payment of
the Loans;  and (xii)  Lenders is  satisfied  with the  credit  standing  of the
customer in relation to the amount of credit extended.

"Equipment" means all of Borrower's  present and hereafter  acquired  machinery,
molds, machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures,  motor vehicles,  tools,  parts,  dyes, jigs, goods and other tangible
personal  property (other than Inventory) of every kind and description  used in
Borrower's  operations  or  owned by  Borrower  and any  interest  in any of the
foregoing,   and  all  attachments,   accessories,   accessions,   replacements,
substitutions,  additions  or  improvements  to any of the  foregoing,  wherever
located.

"EST" means Eastern Standard Time.

"Event of  Default"  means any of the events  set forth in  Section  7.1 of this
Agreement.

"Facility" means the Loan as described herein and on the Schedule hereto.

"General  Intangibles"  means all general  intangibles of Borrower,  whether now
owned  or  hereafter  created  or  acquired  by  Borrower,   including,  without
limitation,  all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions,  designs, drawings, blueprints,  patents,
patent  applications,  trademarks  and the goodwill of the  business  symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation  presently  or hereafter  pending for any cause or claim  (whether in
contract,  tort  or  otherwise),  and all  judgments  now or  hereafter  arising
therefrom,  all claims of Borrower against  Lenders,  rights to purchase or sell
real or  personal  property,  rights  as a  licensor  or  licensee  of any kind,
royalties, telephone numbers, proprietary information,  purchase orders, and all
insurance policies and claims (including without limitation life insurance,  key
man insurance,  credit insurance,  liability  insurance,  property insurance and
other insurance,  tax refunds and claims,  computer  programs,  discs, tapes and
tape files,  claims under guaranties,  security interests or other security held
by or  granted  to  Borrower,  all  rights  to  indemnification  and  all  other
intangible property of every kind and nature (other than Receivables).


                                    Page 14


<PAGE>


"Inventory"  means all of  Borrower's  now owned and hereafter  acquired  goods,
merchandise or other personal property,  wherever located,  to be finished under
any contract of service or held for sale or lease (including  without limitation
all raw materials,  work in process,  finished  goods and goods in transit,  and
including without limitation all farm products),  and all materials and supplies
of every kind,  nature and description which are or might be used or consumed in
Borrower's  business  or used  in  connection  with  the  manufacture,  packing,
shipping, advertising,  selling or finishing of such goods, merchandise or other
personal  property,  and all  warehouse  receipts,  documents  of tide and other
documents representing any of the foregoing.

"Loan Documents" means this Agreement and all schedules, documents,  agreements,
certificates and consents required in connection herewith.

"Liens"  means,  with  respect  to any asset,  (i) any  mortgage,  lien  pledge,
encumbrance,  charge or security interest in or on such asset, (ii) the interest
of a vendor or a lessor under any conditional  sale agreement,  capital lease or
other title  retention  agreement  relating to such asset,  (iii) in the case of
securities,  any purchase  option,  call or similar  right or a third party with
respect to such  securities or (iv) any other right of or  arrangement  with any
creditor  to have such  creditor's  claim  satisfied  out of such  assets or the
proceeds therefrom, prior to the general creditors of the owner thereof.

"Maximum Dollar Amount" has the meaning set forth in Section 1 of the Schedule.

"Obligations" means all present and future Loans, advances,  debts, liabilities,
obligations, guaranties, covenants, duties and indebtedness at any time owing by
Borrower to Lenders,  whether  evidenced by this  Agreement or any note or other
instrument or document,  whether arising from an extension of credit, opening of
a letter of credit,  banker's  acceptance,  loan,  guaranty,  indemnification or
otherwise,  whether direct or indirect  (including,  without  limitation,  those
acquired by assignment  and any  participation  by Lenders in  Borrower's  debts
owing to others),  absolute  or  contingent,  due or to become  due,  including,
without limitation,  all interest,  charges,  expenses,  fees,  attorney's fees,
expert witness fees, audit fees,  letter of credit fees,  collateral  monitoring
fees,  closing fees,  facility fees,  termination fees, minimum interest charges
and any other sums  chargeable  to Borrower  under this  Agreement  or under any
other present or future instrument or agreement between Borrower and Lenders.

"Permitted Liens" means the following:  (i) purchase money security interests in
specific items of Equipment;  (ii) leases of specific items of Equipment;  (iii)
Liens for taxes not yet payable;  (iv) additional  security  interests and Liens
consented  to in writing by Lenders,  which  consent  shall not be  unreasonably
withheld;  (v) security  interests being terminated  substantially  concurrently
with  this  Agreement;  (vi)  Liens  of  materialmen,  mechanics,  warehousemen,
carriers, or. other similar Liens arising in the ordinary course of business and
securing  obligations  which  are  not  delinquent;   (vii)  Liens  incurred  in
connection  with the  extension,  renewal  or  refinancing  of the  indebtedness
secured  by Liens of the type  described  above in  clauses  (i) or (ii)  above,
provided  that any  extension,  renewal  or  replacement  Lien is limited to the
property  encumbered  by the  existing  Lien  and the  principal  amount  of the
indebtedness  being extended,  renewed or refinanced  does not increase;  (viii)
Liens in favor of  customs  and  revenue  authorities  which  secure  payment of
customs duties in connection with the  importation of goods;  and (ix) Liens and
obligations  in favor of Lenders.  Lenders will have the right to require,  as a
condition to its consent under  subparagraph  (iv) above, that the holder of the
additional security interest or Lien sign an intercreditor agreement on Lender's
then standard form, acknowledge that the security interest is subordinate to the
security  interest  in favor of  Lenders,  and agree  not to take any  action to
enforce its  subordinate  security  interest so long as any  Obligations  remain
outstanding,  and that Borrower agree that any uncured default in any obligation
secured by the subordinate  security  interest shall also constitute an Event of
Default under this Agreement.


                                     Pag 15


<PAGE>


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

"Receivables"  means all of Borrower's now owned and hereafter acquired accounts
(whether or not earned by performance), royalty payments arising from Borrower's
licensing  agreements,  letters  of  credit,  contract  rights,  chattel  paper,
installments,  securities,  documents and all other forms of  obligations at any
time  owing to  Borrower,  all  guaranties  and  other  security  therefor,  all
merchandise  returned to or repossessed by Borrower,  and all rights of stoppage
in transit  and all other  rights or  remedies  of an unpaid  vendor,  lienor or
secured party.

"Solvent" means (i) the fair value of Borrower's  assets (both at fair valuation
and at  present  fair  salable  value)  is in  excess  of the  total  amount  of
Borrower's liabilities,  including, without limitation,  contingent liabilities;
and (ii)  Borrower  is then able and expects to be able to pay its debts as they
mature  (taking  into  account the timing and amounts of cash to be received and
the amounts to be payable on or in respect of its debts), and (iii) Borrower has
capital  sufficient  to carry on its  business  as  presently  conducted  and as
proposed to be conducted.

"Termination  Date"  means  the date set  forth on the  Schedule  hereto  as the
Termination Date or Maturity Date .

Other Terms.  All  accounting  terms used in this  Agreement,  unless  otherwise
indicated,  shall  have the  meanings  given to such  terms in  accordance  with
generally accepted accounting principles,  consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.

9.    GENERAL PROVISIONS.

9.1 Interest Computation. In computing interest on the Obligations,  all checks,
wire  transfers  and other  items of  payment  received  by  Lenders  (including
proceeds of Receivables  and payment of the Obligations in full) shall be deemed
applied  by Lenders on account  of the  Obligations  three  Business  Days after
receipt by Lenders of  immediately  available  funds,  and,  for purposes of the
foregoing, any such funds received after 10:30 AM EST on any day shall be deemed
received on the next Business Day.  Lenders shall not,  however,  be required to
credit  Borrower's  account  for the  amount  of any  item of  payment  which is
unsatisfactory  to  Lenders  in its sole  discretion,  and  Lenders  may  charge
Borrower's  loan account for the amount of any item of payment which is returned
to  Lenders  unpaid.  In the event any  Default  results in an  increase  in the
interest rate calculable hereunder,  such increase shall be adjusted if required
so that the rate as so adjusted  shall not exceed the maximum rate  permitted by
applicable law.

9.2 Application of Payments. All payments with respect to the Obligations may be
applied,  and in  Lender's  sole  discretion  reversed  and  re-applied,  to the
Obligations,  in such order and manner as Lenders  shall  determine  in its sole
discretion.

9.3 Charges to Accounts.  Lenders may, in its discretion,  require that Borrower
pay monetary  Obligations in cash to Lenders,  or charge them to Borrower's Loan
account,  in which event they will bear interest at the same rate  applicable to
the Loans. Lenders may also, in its discretion,  charge any monetary Obligations
to Borrower's Deposit Accounts maintained with Lenders.

9.4 Monthly Accountings.  Lenders shall provide Borrower monthly with an account
of advances,  charges,  expenses and payments made  pursuant to this  Agreement.
Such account  shall be deemed  correct,  accurate and binding on Borrower and an
account  stated  (except for reverses and  reapplications  of payments  made and
corrections of errors  discovered by Lenders),  unless Borrower notifies Lenders
in writing to the  contrary  within  thirty days after each account is rendered,
describing the nature of any alleged errors or admissions.

9.5 Notices.  All notices to be given under this  Agreement  shall be in writing
and shall be given either personally or by reputable private delivery service or
by regular  first-class  mail,  or  certified  mail  return  receipt  requested,
addressed  to Agent or Lenders  and to Borrower  at the  addresses  shown in the
heading to this Agreement,  or at any other address designated in writing by one
party to the other party.  Notices to Lenders shall be directed to the attention
of Philip A. Newman,  President.  All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered,  or at the expiration
of one  Business  Day  following  delivery to the private  delivery or overnight
service, or two Business Days following the deposit thereof in the United States
mail, with postage prepaid.


                                    Page 16


<PAGE>


9.6 Severability. Should any provision of this Agreement be held by any court of
competent jurisdiction to be void or unenforceable, such defect shall not affect
the remainder of this Agreement, which shall continue in full force and effect.

9.7 Integration. This Agreement and such other written agreements, documents and
instruments as may be executed in connection  herewith are the final, entire and
complete  agreement  between  Borrower and Lenders and  supersede  all prior and
contemporaneous  negotiations and oral  representations  and agreements,  all of
which  are  merged  and  integrated  in  this  Agreement.   There  are  no  oral
understandings  representations  or agreements between the Parties which are not
set forth in this Agreement.

9.8 Waivers.  The failure of Lenders at any time or times to require Borrower to
strictly  comply  with any of the  provisions  of this  Agreement  or any  other
present or future  agreement  between  Borrower  and Lenders  shall not waive or
diminish  any right of Lenders  later to demand and  receive  strict  compliance
therewith.  Any  waiver of any  default  shall  not  waive or  affect  any other
default,  whether prior or subsequent,  and whether or not similar.  None of the
provisions  of  this  Agreement  or any  other  agreement  now or in the  future
executed  by  Borrower  and  delivered  to Lenders  shall be deemed to have been
waived by any act or knowledge of Lenders or its agents or  employees,  but only
by a specific  written  waiver  signed by an  authorized  officer of Lenders and
delivered to Borrower.  Borrower waives demand,  protest,  notice of protest and
notice of  default  or  dishonor,  notice of payment  and  nonpayment,  release,
compromise,   settlement,   extension  or  renewal  of  any  commercial   paper,
instrument,  account, General Intangible,  document or guaranty at any time held
by Lenders on which  Borrower is or may in any way be liable,  and notice of any
action taken by Lenders, unless expressly required by this Agreement.

9.9 No  Liability  for  Ordinary  Negligence.  Neither  Lenders,  nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Lenders shall be liable for any claims,  demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party  through the ordinary  negligence  of Lenders,  or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or  representing  Lenders,  but nothing  herein shall relieve  Lenders from
liability for its own gross negligence or willful misconduct.

9.10 Amendment.  The terms and provisions of this Agreement may not be waived or
amended,  except in a writing executed by Borrower and a duly authorized officer
of Lenders.

9.11 Time of Essence.  Time is of the essence in the  performance by Borrower of
each and every obligation under this Agreement.

9.12 Attorneys Fees, Costs and Charges. Borrower shall reimburse Lenders for all
reasonable attorneys' fees and all filing,  recording,  search, title insurance,
appraisal,  audit, and other reasonable costs incurred by Lenders,  pursuant to,
or in connection  with, or relating to this Agreement  (whether or not a lawsuit
is filed),  including,  but not limited to, any reasonable  attorneys'  fees and
costs Lenders  incurs in order to do the  following:  prepare and negotiate this
Agreement and the documents  relating to this Agreement;  obtain legal advice in
connection with this Agreement or Borrower;  enforce, or seek to enforce, any of
its rights;  prosecute  actions against,  or defend actions by, Account Debtors;
commence,  intervene  in,  or defend  any  action or  proceeding;  initiate  any
complaint to be relieved of the automatic stay in bankruptcy;  file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim; examine,
audit,  copy, and inspect any of the  Collateral or any of Borrower's  books and
records;  protect, obtain possession of, lease, dispose of, or otherwise enforce
Lender's security interest in, the Collateral;  and otherwise  represent Lenders
in any litigation relating to Borrower.  If either Lenders or Borrower files any
lawsuit  against  the  other  predicated  on a  breach  of this  Agreement,  the
prevailing  party in such action  shall be  entitled  to recover its  reasonable
costs and attorneys' fees,  including but not limited to, reasonable  attorneys'
fees and costs incurred in the enforcement of,  execution upon or defense of any
order,  decree,  award or judgment.  Borrower  shall also pay Lender's  standard
charges for returned checks and for wire transfers, in effect from time to time.
All attorneys' fees, costs and charges to which Lenders may be entitled pursuant
to this Paragraph may be charged by Lenders to Borrower's loan account and shall
thereafter bear interest at the same rate as the Receivable Loans.


                                    Page 17


<PAGE>


9.13 Benefit of Agreement.  The  provisions of this  Agreement  shall be binding
upon and inure to the  benefit of the  respective  successors,  assigns,  heirs,
beneficiaries and  representatives of Borrower and Lenders,  provided,  however,
that Borrower may not assign or transfer any of its rights under this  Agreement
without the prior  written  consent of Lenders,  and any  prohibited  assignment
shall be void. No consent by Lenders to any  assignment  shall release  Borrower
from its  liability  for the  Obligations.  This  Agreement  and the  duties and
obligations  contained  herein  shall be solely for the  benefit of the  parties
hereto and no third party beneficiary shall have any rights hereunder as a third
party beneficiary or otherwise.

9.14 Joint and Several Liability.  If Borrower consists of more than one Person,
their  liability  shall be joint and several,  and the  compromise  of any claim
with, or the release of; any Borrower shall not constitute a compromise with, or
a release of, any other Borrower.

9.15  Limitation  of Actions.  Any claim or cause of action by Borrower  against
Lenders, its directors,  officers,  employees, agents, accountants or attorneys,
based upon,  arising  from,  or relating  to this Loan  Agreement,  or any other
present or future document or agreement,  or any other transaction  contemplated
hereby or thereby or relating hereto or thereto,  or any other matter,  cause or
thing whatsoever, occurred, done, omitted or suffered to be done by Lenders, its
directors,  officers,  employees,  agents,  accountants  or attorneys,  shall be
barred  unless  asserted  by  Borrower  by  the  commencement  of an  action  or
proceeding  in a court of  competent  jurisdiction  by the filing of a complaint
within one year  after the first act,  occurrence  or  omission  upon which such
claim or cause of action,  or any part thereof;  is based,  and the service of a
summons  and  complaint  on an  officer  of  Lenders,  or on  any  other  person
authorized  to accept  service on behalf of  Lenders,  within  thirty  (30) days
thereafter.  Borrower  agrees  that such  one-year  period is a  reasonable  and
sufficient time for Borrower to investigate and act upon any such claim or cause
of action.  The one-year period provided herein shall not be waived,  tolled, or
extended except by the written consent of Lenders in its sole  discretion.  This
provision  shall  survive any  termination  of this Loan  Agreement or any other
present or future agreement.

9.16 Paragraph Headings; Construction.  Paragraph headings are only used in this
Agreement for  convenience.  Borrower and Lenders  acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph,  and
the  headings  shall not be used in any  manner to  construe,  limit,  define or
interpret  any  term or  provision  of this  Agreement.  The  term  "including",
whenever used in this Agreement, shall mean "including but not limited to". This
Agreement  has been fully  reviewed  and  negotiated  between the parties and no
uncertainty  or ambiguity in any term or  provision of this  Agreement  shall be
construed strictly against Lenders or Borrower under any rule of construction or
otherwise.

9.17 Mutual  Waiver of Jury Trial.  BORROWER  AND LENDERS  EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING  BASED UPON,  ARISING OUT OF,
OR IN ANY WAY  RELATING  TO,  THIS  AGREEMENT  OR ANY  OTHER  PRESENT  OR FUTURE
INSTRUMENT OR AGREEMENT  BETWEEN LENDERS AND BORROWER,  OR ANY CONDUCT,  ACTS OR
OMISSIONS OF LENDERS OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS,  ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH LENDERS OR BORROWER,  IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

10       THE AGENT AND CO-AGENTS

Authorization  and Action.  Each Lender hereby appoints and authorizes the Agent
and the Co-Agents,  respectively, to take such action as agent on its behalf and
to exercise  such powers and  discretion  under the Loan as are delegated to the
Agent and the Co-Agents,  respectively,  by the terms hereof, together with such
powers as are  reasonably  incidental  thereto.  As to any matters not expressly
provided for by the Loan documents (including,  without limitation,  enforcement
or collection of the debt resulting  from the  advances),  neither the Agent nor
the Co-Agents  shall be required to exercise any  discretion or take any action,
but shall be  required  to act or to  refrain  from  acting  (and shall be fully
protected in so acting or refraining  from acting) upon the  instruction  of the
Majority  Lenders,  and such  instructions  shall be binding  upon all  Lenders;
provided, however, that neither the Agent nor the Co-Agents shall be required to
take any action  which  exposes any of them to liability or which is contrary to
any Loan document or applicable law.


                                    Page 18


<PAGE>


Without limitation of the foregoing, if the Agent receives funds for application
to the Advances in  circumstances  under which the Loan documents do not specify
the  Advances or the  Facility to which such funds are to be applied,  the Agent
may elect to distribute  such Advances to each Lender ratably in accordance with
such Lender's  proportionate  share of all outstanding  Advances,  in payment or
prepayment of such of the outstanding Advances of such Lender as the Agent shall
direct or in reduction of the Facility B Loan first.

Reliance.  Neither the Agent nor any of the Co-Agents or any of their respective
directors,  officers,  agents,  attorneys or  employees  shall be liable for any
action  taken or omitted to be taken by it or them under or in  connection  with
any Loan  documents,  except  for its or their own gross  negligence  or willful
misconduct. Without limitation of the generality of the foregoing, the Agent and
the Co-Agents: (i) may treat the Lender which made any Advances as the holder of
the Debt resulting  therefrom until the Agent receives and accepts an Assignment
and  Acceptance  entered  into by such  Lender,  as  assignor,  and an  Eligible
Assignee,  as assignee;  (ii) may consult with legal counsel  (including counsel
for the Borrower)  independent  public accountants and other experts selected by
the Agent or the  Co-Agents  and shall not be  liable  for any  action  taken or
omitted to be taken in good faith by them in accordance  with the advice of such
counsel, accountants or experts; (iii) make no warranty or representation to any
Lender and shall not be responsible to any Lender for any statements, warranties
or representations made in, or in connection with, any Loan document; (iv) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of any Loan document on the part of
the Borrower or any  guarantor or to inspect the property  (including  the books
and  records)  of the  Borrower  or any of its  Subsidiaries;  (v)  shall not be
responsible'  to  any  Lender  for  the  due  execution,   legality,   validity,
enforceability,  genuineness,  sufficiency  or  value of any  Loan  document  or
collateral  covered  thereby  or any  other  instrument  or  document  furnished
pursuant  thereto;  and (vi) shall incur no liability under or in respect of any
Loan  document  by  acting  upon  any  notice,  consent,  certificate  or  other
instrument  or writing  (which may be by telegram,  cable,  telecopier or telex)
believed  by the Agent or the  Co-Agents  as the case may be, to be genuine  and
signed or sent by the proper party or parties.

Agent, Co-Agents and Affiliates. With respect to its Commitment and the Advances
made by it, the Agent and each  Co-Agent  shall have the same  rights and powers
under the Loan documents as any other Lender and may exercise the same as though
it were not the  Agent or a  Co-Agent;  and the term  Lender or  Lenders  shall,
unless otherwise expressly indicated, include the Agent and each Co-Agent in its
individual  capacity.  The Agent and each Co-Agent and its affiliates may accept
deposits from, lend money to, act as trustee under  indentures of, and generally
engage in any kind of business with the Borrower and any of its subsidiaries and
any person who may do business  with or own  securities  of the  Borrower or any
such  subsidiary,  all as if the Agent or each  Co-Agent were not the Agent or a
Co-Agent and without any duty to account therefor to the Lenders.


                                    Page 19


<PAGE>


Lender Credit Decision.  Each Lender acknowledges that it has, independently and
without reliance upon the Agent or any Co-Agent or any other Lender and based on
the  financial  and  such  other  documents  and  information  as it has  deemed
appropriate,  made its own  credit  analysis  and  decision  to enter  into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance  upon the Agent or any  Co-Agent or any other  Lender and based on such
documents and information as it shall deem appropriate at the time,  continue to
make its own  credit  decisions  in  taking  or not  taking  action  under  this
Agreement and the other Loan Documents.

Indemnification.  The Lenders agree to indemnify the Agent and each Co-Agent (to
the extent not reimbursed by the Borrower),  ratably according to the respective
principal  amounts of the Advances then owing to each of them (or if no Advances
are at the time  outstanding  or if any Advances are then owing to Persons which
are  not  Lenders,   ratably  according  to  the  respective  amounts  of  their
Commitments),  from and against any and all  liabilities,  obligations,  losses,
damages,  penalties1 actions, judgments, suits, costs, expenses or disbursements
of any kind or  nature  whatsoever  which may be  imposed  on,  incurred  by, or
asserted  against the Agent or such  Co-Agent in any way  relating to or arising
out of the Loan  documents  or any action  taken or omitted by the Agent or such
Co-Agent  under any Loan  document1  provided that no Lender shall be liable for
any  portion  of such  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits, costs, expenses or disbursements resulting from the
Agent's or a Co-Agent's gross negligence or willful  misconduct as determined by
a final judgment of a court of competent jurisdiction. Without limitation of the
foregoing,  each Lender agrees to reimburse the Agent and each Co-Agent promptly
upon  demand for its  ratable  share of any  out-of-pocket  expenses  (including
counsel  fees)  incurred by the Agent or such  Co-Agent in  connection  with the
preparation,  execution, delivery,  administration,  modification,  amendment or
enforcement (whether through  negotiations,  legal proceedings or otherwise) of,
or legal  advice  in  respect  of  rights or  responsibilities  under,  the Loan
documents,  or any of them, to the extent that the Agent or such Co-Agent is not
reimbursed for such expenses by the Borrower.

Successor  Administrative  Agent or Co-Agents.  The Agent and any Co-Agent.  may
resign  at any time as Agent or  Co-Agent,  as the case may be,  under  the Loan
documents by giving  written  notice thereof to the Lenders and the Borrower and
may be  removed  as  Agent or  Co-Agent,  as the  case  may be,  under  the Loan
documents  at any  time  with  cause  by the  Majority  Lenders.  Upon  any such
resignation or removal,  the Majority  Lenders shall have the right to appoint a
successor Agent or Co-Agent, as the case may be, under the Loan Documents. If no
successor Agent or Co-Agent, as the case may be, shall have been so appointed by
the Majority Lenders,  and shall have accepted such appointment,  within 30 days
after the retiring Agent's or the Co-Agent's  giving of notice of resignation or
the  Majority  Lenders'  removal of the  retiring  Agent or  Co-Agent,  then the
retiring  Agent or Co-Agent  may, on behalf of the Lenders,  appoint a successor
Agent or  Co-Agent,  as the  case  may be,  which  shall  be a  commercial  bank
organized  under the laws of the United  States of America or any State  thereof
and having a combined  capital  and surplus of at least  $500,000,000.  Upon the
acceptance of any  appointment  as Agent or Co-Agent,  as the case may be, under
the Loan  documents by a successor  Agent or Co-Agent,  as the case may be, such
successor  Agent or Co-Agent shall  thereupon  succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent or Co-Agent,
as the case may be, and the retiring Agent or Co-Agent shall be discharged  from
its duties and obligations under the Loan Documents.  After any retiring Agent's
or Co-Agent's resignation or removal under the Loan documents, the provisions of
this Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent or  co-Agent,  as the case may be, under the Loan
documents.


                                    Page 20


<PAGE>


Majority Lender. As used herein,  "Majority Lenders" means, at any time, Lenders
holding  at least  51% of the sum of (a) the  then  aggregate  unpaid  principal
amount of all outstanding  advances and (b) the then aggregate  unused amount of
the commitments.

Collateral  Holder.  (a) Except for action expressly  required of the Collateral
holder hereunder and under the Collateral documents, the Collateral holder shall
in all cases be fully  justified  in refusing to act  hereunder  and  thereunder
unless it shall be  further  indemnified  to its  satisfaction  by the  Lenders,
proportionately  in accordance with the Obligations then due and payable to each
of them against any and all  liability and expense that may be incurred by it by
reason taking or continuing to take any such action.

(b) Except as expressly  provided  herein,  the Collateral  holder shall have no
duty to take any  affirmative  steps with respect to the  collection  of amounts
payable in respect of the  Collateral.  The  Collateral  holder  shall  incur no
liability as a result of any private sale of the Collateral.

(c) The Lenders hereby consent, and agree upon written request by the Collateral
holder to execute  and  deliver  such  instruments  and other  documents  as the
Collateral holder may deem desirable to confirm such consent,  to the release of
the liens and security  interests in the  Collateral,  including  any release in
connection with any sale, transfer or other disposition of the Collateral or any
part thereof in accordance with the Loan documents.

(d) The Collateral  holder shall be deemed to have exercised  reasonable care in
the  custody  and  preservation  of the  Collateral.  in its  possession  if the
Collateral  is  accorded  treatment   substantially  equal  to  that  which  the
Collateral holder accords its own property, it being understood that none of the
Collateral holder, any Lender shall have  responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders
or other  matters  relative  to any  Collateral,  whether or not the  Collateral
holder or any has or is deemed to have knowledge of such matters,  or (b) taking
any necessary  steps to preserve  rights against any parties with respect to any
Collateral.


                                    Page 21


<PAGE>

          AGENT:

          ADVISCO CAPITAL CORP.

                  By: /s/ Philip A.  Newman
                  -------------------------------------
                  Name:    Philip A.  Newman, President

          BORROWER:

          INTELLIGENT MEDICAL IMAGING, INC.

                  By: /s/ Tyce Fitzmorris
                  -------------------------------------
                  Name:    Tyce Fitzmorris, President

          LENDERS:

          ADVISCO CAPITAL CORP.

                  By: /s/ Philip A.  Newman
                  -------------------------------------
                  Name:    Philip A.  Newman, President




<PAGE>




                                                                EXHIBIT A TO THE
                                                                CREDIT AGREEMENT

                           FORM OF NOTICE OF BORROWING
                                      Date:

Advisco  Capital Corp., as  Administrative  Agent for the Lenders parties to the
Credit Agreement referred to below

210 East 49th Street
Fourth Floor
New York, NY 10017

Gentlemen:

                The  undersigned  refers to the  Credit  Agreement,  dated as of
April __, 1999 among the Agent, certain Lenders named thereto, and Borrower (the
"Credit  Agreement",  the terms  defined  therein  being used  herein as therein
defined), and hereby gives you notice, irrevocably,  pursuant to Section 1.4. of
the Credit Agreement that the undersigned  hereby requests a Borrowing under the
Credit  Agreement,  and in that  connection  sets  forth  below the  information
relating to such  Borrowing  (the  Proposed B  Borrowing  as required by Section
1.4.1 (b) of the Credit Agreement:

(i)               The Business Day of the Proposed Borrowing is _________, l999.

(ii)              The aggregate amount of the Proposed Borrowing is $___________

(iii)             The Advances  comprising  the Proposed  Borrowing are required
                  for purposes permitted under the Credit Agreement and pursuant
                  to documentation attached hereto.

(iv)              Attached  hereto  is a true  and  correct  copy of a  purchase
                  order,  equipment,  inventory list,  receivable aging or other
                  permitted  basis  pursuant  to  which  this  Borrowing  Notice
                  relates.

The undersigned  hereby certifies that the following  statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing,  before and
after giving effect to such Proposed  Borrowing  and to the  application  of the
proceeds therefrom as though made on and as of such date:

(A)               the  representations  and warranties of the Borrower contained
                  herein, or made in connection with, the Loan Documents and the
                  Related Documents to which it is, or will be, a party are true
                  and correct in all material respects; and

(B)               no event has occurred and is continuing,  or would result from
                  such  Proposed  Borrowing  or  from  the  application  of  the
                  proceeds  therefrom,  which constitutes a Default or and Event
                  of Default.

(C)               no Collateral  underlying the Loan for which the Borrowing has
                  been requested has heretofore been mortgaged,  pledged, liened
                  or assigned to any third party,  and Lender shall  continue to
                  have a  perfected  first  priority  security  interest  in all
                  orders, equipment, inventory,  receivables, proceeds and other
                  items the  subject of this  request  and  pursuant to the Loan
                  Agreement.

I HEREBY CERTIFY THE FOREGOING TO BE TRUE AND CORRECT:

                                                        
                                                        -----------------------
                                                     By:     Tyce Fitzmorris
                                                     Title:  President


<PAGE>


                                                                       EXHIBIT B

                          FORM OF REVOLVING CREDIT NOTE

$2,000,000                                                         APRIL --,1999

FOR VALUE  RECEIVED,  the  undersigned,  Intelligent  Medical  Imaging,  Inc., a
Florida  corporation  ("the  "Borrower"),  hereby promise to pay to the order of
Advisco Capital Corporation (the "Lender") at the office of the Lender, 210 East
49th Street,  Fourth  Floor,  New York, NY 10017,  ATT:  Philip A. Newman on the
Termination Date as defined in the Loan and Security Agreement dated as of April
__, 1999, among the Agent,  Borrower, and the Lenders named therein (as the same
may be amended,  modified or  supplemented  from time to time in accordance with
its terms,  the "Credit  Agreement  ") or earlier as provided  for in the Credit
Agreement,  the lesser of the principal sum of two million  dollars and no cents
($2,000,000)  or the  aggregate  unpaid  principal  amount  of all  Loans to the
Borrower  from the  Lender  pursuant  to the terms of the Credit  Agreement,  in
lawful money of the United States of America in immediately available funds, and
to pay interest from the date hereof on the principal amount hereof from time to
time  outstanding,  in like funds, at said office,  at a rate or rates per annum
and  payable on such  dates as  determined  pursuant  to the terms of the Credit
Agreement.

The Makers promise to pay interest, on demand, on any overdue principal and fees
and, to the extent  permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Credit Agreement.

The Makers hereby waive diligence,  presentment,  demand,  protest and notice of
any  kind  whatsoever.  The  non-exercise  by the  holder  of any of its  rights
hereunder in any  particular  instance  shall not constitute a waiver thereof in
that or any subsequent instance.

      All borrowings  evidenced by this Note and all payments and prepayments of
the principal  hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on the schedule attached hereto and made a part
hereof,  or on a continuation  thereof which shall be attached hereto and made a
part  hereof,  or  otherwise  recorded by such holder in its  internal  records;
provided, however, that the failure of the holder hereof to make such a notation
or any error in such a notation shall not in any manner affect the obligation of
the Makers to make  payments of principal  and interest in  accordance  with the
terms of this Note and the Credit Agreement.

This Note is one of the Notes referred to in the Credit Agreement,  which, among
other things,  contains  provisions for the  acceleration of the maturity hereof
upon the happening of certain events,  for optional and mandatory  prepayment of
the  principal  hereof  prior to the  maturity  hereof and for the  amendment or
waiver of certain  provisions  of the Credit  Agreement,  all upon the terms and
conditions  therein  specified.  THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND  GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (OTHER THAN THE  CONFLICTS OF
LAWS  PRINCIPLES  THEREOF)  AND ANY  APPLICABLE  LAWS OF THE  UNITED  STATES  OF
AMERICA.

                         INTELLIGENT MEDICAL IMAGING INC

                                           By
                                             -----------------------------------
                                           Name:
                                           Title:


<PAGE>


                                                                               
ADVISCO CAPITAL CORP.

SCHEDULE TO LOAN AND SECURITY AGREEMENT

Borrower:         Intelligent Medical Imaging, Inc.

Address:          4360 Northlake Boulevard
                  Palm Beach Gardens, Florida 33410

Date:             April __, 1999

This  Schedule  forms an integral part of the Loan and Security  Agreement  (the
"Agreement") dated as of April __, 1999 between ADVISCO CAPITAL CORP. a New York
corporation,  with  offices at 210 East 49th  Street,  4th Floor,  New York,  NY
10017, as agent for the Lenders (in such capacity,  "Agent"),  the lenders named
in this Schedule  (collectively,  the "Lenders") and the borrower(s) named above
(jointly and severally, the "Borrower"), whose chief executive office is located
at the above address ("Borrower's Address").

1.       CREDIT LIMIT

         (SECTION 1.1):

Name of Lender                      Facility            Address
Advisco Capital Corp. ("Advisco")   2,000,000           210 East 49th Street
                                                        4th Floor
                                                        New York, NY 10017
                                                        Att:  Philip A. Newman

ADVANCES SHALL BE SUBJECT TO THE FOLLOWING ADDITIONAL TERMS AND CONDITIONS:

Loans (secured bridge loan) in an amount not to exceed the lesser of (i) a total
of $2,000,000 at any one time outstanding (the "Maximum Dollar Amount"), or (ii)
the sum of (1), (2), (3) and (4) below;

                                   (1)      Loans (the "Receivable Loans") in an
                                   amount up to 80% of the amount of  Borrower's
                                   domestic Eligible  Receivables (as defined in
                                   Section 8 of the Agreement), and up to 65% of
                                   the  amount of  Borrower's  selected  foreign
                                   Eligible  Receivables  which in no event  are
                                   more than 90 days old from  original  invoice
                                   date. Without limiting the foregoing:

                                   a.   foreign  Receivables  may be  considered
                                        Eligible  Receivables (subject to all of
                                        the other  criteria  herein)  if (i) the
                                        Receivable is due from an account debtor
                                        which has a verifiable  credit  history,
                                        (ii) the  account  debtor  is a  foreign
                                        subsidiary  of  a  large  United  States
                                        company  with  a   demonstrated   credit
                                        history,  (iii) the account debtor has a
                                        Dun  &  Bradstreet   rating  of  3A2  or
                                        better,  (iv) the account is backed by a
                                        letter of credit  assigned to Lenders or
                                        (v) the account is insured by  insurance
                                        acceptable  to and  assigned to Lenders,
                                        but all such foreign  accounts  shall be
                                        acceptable  in the  sole  discretion  of
                                        Lenders, and;

                                   b.   Receivables  owing from  _______N/A_____
                                        shall not be Eligible Receivables.

                                  (2)   Loans  (the  "Inventory  Loans")  in  an
                                   amount not to exceed the lesser of:

                                        (a) up to 40% of eligible  raw  material
                                        and 40% of  eligible  finished  goods of
                                        Borrower's    Eligible   Inventory   (as
                                        defined in Section 8 of the  Agreement),
                                        calculated  at  the  lower  of  cost  or
                                        liquidation  value and  determined  on a
                                        first-in, first-out basis, or

                                        (b)      $1,000,000.

                                   (3)  Loans (the  "Fixed  Asset  Loans") in an
                                        amount  not to exceed  the lesser of 40%
                                        of  the  orderly  liquidation  value  of
                                        tangible fixed assets, calculated at the
                                        lower of cost or liquidation value.

         Proceeds  of all Loans  shall be used  solely and  exclusively  for the
completion of work in process  inventory,  creation of new HSM inventory and for
such other costs and  expenses  related to the  foregoing as are approved by the
Lenders.  Proceeds  of the  Loans  may  also be used  for the  payment  of rent,
utilities  and other  costs and  expenses as each are  contained  in an approved
budget submitted for approval and approved by Lenders in advance. Borrower shall
promptly   following   the  Closing   Date  submit  for  approval  its  proposed
expenditures  budget for the following  month and shall  thereafter  update such
budget from time to time.  Lender shall  approve such budget or advise  Borrower
that budget has not been approved promptly following receipt thereof.


                                     Page 2


<PAGE>




2.       INTEREST
         INTEREST RATE
         (SECTION 1.2):

FACILITY  ADVANCES  SHALL BE  SUBJECT  TO THE  FOLLOWING  ADDITIONAL  TERMS  AND
CONDITIONS:

                                        A  rate  equal  to one  and  one-quarter
                                        percent   (1.25%)   per   month  of  the
                                        outstanding   loan   balance,    payable
                                        monthly in arrears.

                                        One-half  of  one  percent   (0.5%)  per
                                        month,  of  the  unused  portion  of the
                                        Facility, payable monthly, in arrears.

2.       FEES

         (SECTION 1.3):

THE LOAN SHALL BE SUBJECT TO THE FOLLOWING ADDITIONAL TERMS AND CONDITIONS:

                  Commitment Fee:       Upon  the  signing  of the  Committment,
                                        $20,000.

                  Points:               Three (3) points on the Facility  amount
                                        payable  to  Agent as  follows:  Two (2)
                                        points  payable to Agent upon signing of
                                        the Loan  Agreement  (one Point of which
                                        represents  the  Commitment   Fee);  the
                                        balance on the Funding Date of the Loan.

                                        In the event the Borrower  elects not to
                                        fund the loan for any reason whatsoever,
                                        Agent  shall be entitled to a fee of one
                                        percent (1%) of the gross loan amount in
                                        addition to the initial  Commitment  Fee
                                        of $20,000.

                                        Five year  Warrants to purchase  100,000
                                        shares of Common  Stock of  Borrower  at
                                        100% of the Fair  Market  Value  thereof
                                        (average  of the  average  high  and low
                                        trading  prices  for the 5 trading  days
                                        immediately  preceding  the execution of
                                        the Loan documents).

                                        All fees  shall be deemed  earned on the
                                        Closing Date.


                                     Page 3


<PAGE>


                  Administrative Fee:       None.

                  Early Termination Fee
                  (Section 6.2):            None.

4.       MATURITY DATE

         (SECTION 6.1):

                                        Twelve  months   following  the  Closing
                                        Date.

5.       REPORTING
         (SECTION 5.3):

                                        Borrower  shall  provide  Agent with the
                                        following:

                                        1.  Monthly  Receivable  aging,  aged by
                                        invoice date,  within ten days after the
                                        end of each month.

                                        2. Monthly accounts payable aging,  aged
                                        by invoice date, and outstanding or held
                                        check  registers  within  ten days after
                                        the end of each month.

                                        3. Monthly  perpetual  inventory reports
                                        for the Inventory  valued on a first-in,
                                        first-out  basis at the lower of cost or
                                        market  (in  accordance  with  generally
                                        accepted     accounting      principles)
                                        including, without limitation, a list of
                                        consigned  inventory by product,  dollar
                                        value and identity of the consignee,  or
                                        such  other  inventory  reports  as  are
                                        reasonably   requested  by  Agent,   all
                                        within  ten days  after  the end of each
                                        month.

                                        4. Monthly internally prepared financial
                                        statements, as soon as available, and in
                                        any event  within  thirty days after the
                                        end of each month.

                                        5.   Quarterly   financial    statements
                                        together with  Borrower's IOQ filed with
                                        the Securities and Exchange Commission ,
                                        if prepared,  as soon as available,  and
                                        in any  event  within  forty  five  days
                                        after the end of each fiscal quarter.

                                        6. Quarterly  customer lists,  including
                                        customer   name,   address,   and  phone
                                        number.

                                        7. Annual audited financial  statements,
                                        together with the  Borrower's  10K filed
                                        with   the    Securities    &   Exchange
                                        Commission,  if  prepared,  as  soon  as
                                        available,  and in any  event  within 90
                                        days  following  the  end of  Borrower's
                                        fiscal year,  certified  by  independent
                                        certified public accountants  acceptable
                                        to Agent.


                                     Page 4


<PAGE>



                                        8. Copies of all supply and distribution
                                        contracts and all intellectual  property
                                        licensing contracts within 10 days after
                                        Borrower's receipt thereof.

6.       BORROWER INFORMATION:

                  Prior Names of Borrower
                  (Section 3.2):        None

                  Prior Trade Names of Borrower
                  (Section 3.2):        None

                  Existing Trade Names of Borrower
                  (Section 3.2):        None

                  Other Locations and Addresses

                  (Section 3.3):        No other domestic locations

                  Material Litigation
                  (Section 3.10):       Diasys

                  Diasys  Corporation (as  described in  From  10K for the  year
                  ended 12/31/98)

                  Environmental Conditions
                  (Section 3.13):       None.

                  Composition Agreements Required:

                  (Section 3.15):       JNC  Opportunity  Fund Ltd.  Convertible
                                        Debenture  due June 30, 2001.  Waiver of
                                        acceleration  right and collection  from
                                        Borrower  in event of  default a long as
                                        Obligations    remain   outstanding   to
                                        Lenders hereunder.

                                        Secured    Promissory   Note   ($178,280
                                        original  principal amount) due December
                                        29, 1998 (Edwards & Angel LLP).

                                        Secured    Promissory   Note   ($257,213
                                        original  principal  amount) due October
                                        2, 1998 (Edwards & Angel LLP).

                  Permitted Liens:

                                        Permitted   Liens   shall   consist   of
                                        agreements  with  George   Merkelson  or
                                        assignee   with   respect  to  equipment
                                        purchase orders with BC Biomedical,  UNC
                                        and El  Camino  representing  in total 3
                                        HSM and 3 Micro  21  (200)  machines  to
                                        which Lender  consents..  Borrower shall
                                        not  request  any  advances  from Lender
                                        with  respect  to  such   agreements  or
                                        equipment   or   receivables   resulting
                                        therefrom.  The  proceeds  of such sales
                                        shall continue to constitute  Collateral
                                        hereunder.


                                     Page 5


<PAGE>


7.       OTHER CONDITIONS AND COVENANTS

          (SECTION 5.1):

Without limiting any other term or condition  herein,  in no event shall Lenders
have any obligations under this Agreement,  including without limitation to make
any  Advances  under  the  Agreement  unless  and  until  each of the  following
conditions  have been  satisfied  as of the Closing Date or such later date as a
borrowing notice for an advance is received:

                                        a.   Satisfactory   completion   of  due
                                        diligence,  including  financial review,
                                        including  but not limited to appraisals
                                        of  plant   and   equipment,   audit  of
                                        accounts receivable, review of financial
                                        statements,  forecasts and  projections;
                                        valuation of  intangibles  and other due
                                        diligence  as  deemed   appropriate   by
                                        Agent.

                                        b.    Continuing    accuracy    of   all
                                        representations,  warranties,  covenants
                                        and agreements.

                                        c.  Borrower   shall  provide   evidence
                                        satisfactory   to  Agent  of  settlement
                                        and/or  other  agreements  with  secured
                                        creditors   and   unsecured   and  trade
                                        creditors,  in a  form  satisfactory  to
                                        Agent. Agent shall provide assistance in
                                        securing   settlement   of  the  secured
                                        creditors claims and the trade debts.

                                        d.  Borrower  shall  provide  Agent with
                                        audited/certified  financial  statements
                                        for the year ended  December  31,  1998;
                                        and   quarterly   financial   statements
                                        within  forty-five  (45)  days  of  each
                                        calendar quarter.

                                        e. Borrower  shall  provide  evidence of
                                        hazard  and  liability  insurance.   The
                                        insurance  must be for an  amount  to be
                                        determined  prior  to  closing,  from an
                                        insurance carrier acceptable to Agent.


                                     Page 6


<PAGE>


                                        f.  Borrower  shall  have  incurred  and
                                        shall incur no  additional  debt without
                                        the  prior  written  approval  of Agent,
                                        except  debts  occurring in the ordinary
                                        course of business.

                                        g. There shall have been and shall be no
                                        changes in senior management without the
                                        written consent of Agent.

                                        h. The loan  shall  be  without  cost to
                                        Agent;  Borrower  assumes  liability for
                                        and will pay all  reasonable  costs  and
                                        expenses   required   to   satisfy   the
                                        conditions hereof, and the making of the
                                        loan.

                                        i. Borrower  shall have a minimum excess
                                        lending   availability   of   at   least
                                        $200,000  after  accounting  for Agent's
                                        initial funding.

                                        j. Omitted.

                                        k. The Borrower shall have established a
                                        lockbox   in  favor  of  Agent  for  the
                                        collection of remittances.  The Borrower
                                        shall agree to procedures  acceptable to
                                        Lenders  for  collection  and deposit of
                                        funds  to  an  account   controlled   by
                                        Lenders which shall constitute  Lender's
                                        Collateral from which operating funds in
                                        accordance with approved budgets will be
                                        disbursed to Borrower  from time to time
                                        during  all times  that any  Obligations
                                        are owing to Lenders.

                                        l.  Agent  shall  have a first  priority
                                        lien   on  all   assets   of   Borrower,
                                        including,  but not  limited  to account
                                        receivable,  inventory, work in process,
                                        furniture,     fixtures    and    office
                                        equipment,  real estate, if any, and all
                                        other   assets,    both   tangible   and
                                        intangible.

                                        m. All taxes shall be currently paid.

                                        n.  Agent  shall  have   received   such
                                        composition      or       subordinations
                                        (standstills and collateral waivers) and
                                        other documents, agreements and opinions
                                        as may be  required by Agent in form and
                                        substance  acceptable  to  Agent  in its
                                        sole   discretion   including,   without
                                        limitation,  from JNC Opportunity  Fund,
                                        Ltd. and from Edwards & Angell LLP


                                     Page 7


<PAGE>


                                        o. Use of  proceeds of the Loan shall be
                                        limited  to (a)  purchase  of parts  and
                                        labor to complete  inventory  to satisfy
                                        pending  purchase  orders in hand on the
                                        Closing Date ($ ______) ; (b) settlement
                                        of unpaid  vender claims  ($_____);  (c)
                                        unpaid salary for  terminated  employees
                                        ($______) and (d) Fees and closing costs
                                        ($_____).  Loan proceeds will be paid at
                                        closing in accordance  with the required
                                        use of proceeds herein.  Notwithstanding
                                        the  foregoing,  no payments of expenses
                                        or liabilities  shall be made during the
                                        time any Obligations are outstanding and
                                        prior to termination of the Loan without
                                        the  prior  consent  of  Lenders,   such
                                        consent  to be  evidenced  by a  written
                                        approved   budget   or   other   written
                                        acknowledgement  that the Lender's  have
                                        determined  the payment to be consistent
                                        with the purposes of the Loan.

                                        p. All documentation,  including without
                                        limitation,   those   relating   to  any
                                        subordination,  composition  or deferral
                                        agreements  and  convertible  securities
                                        shall be reasonably  satisfactory to the
                                        Agent.

                                        q. The corporate and legal structure and
                                        capitalization  of the  Borrower and its
                                        subsidiaries,  the terms and  conditions
                                        of  all  charters  and  bylaws  of  each
                                        Borrower  and its  subsidiaries  and all
                                        agreements and  instruments  relating to
                                        such structure and  capitalization,  and
                                        the terms, conditions and amounts of all
                                        capital  stock of the Borrower  shall be
                                        satisfactory to the Agent.

                                        r. All fees and expenses shall have been
                                        paid,  including the reasonable fees and
                                        expenses  of  counsel  to the  Agent and
                                        Lenders   in    connection    with   the
                                        preparation,  execution  and delivery of
                                        this Agreement,  any other loan document
                                        and the consummation of the transactions
                                        contemplated hereby and thereby.


                                     Page 8


<PAGE>


                                        s. There shall have occurred no material
                                        adverse    change   in   the   business,
                                        condition   (financial  or   otherwise),
                                        performance,  operations,  properties or
                                        prospects of any Borrower.

                                        t. There shall exist no default or event
                                        of default  under any loan  agreement to
                                        which  Borrower  is a party,  whether or
                                        not  subordinate  to Lender's  loan, and
                                        the  representations  and  warranties of
                                        the Borrower therein and herein shall be
                                        true  and   correct   in  all   material
                                        respects.

                                        u.  No  change  of  control  shall  have
                                        occurred  or  been  proposed  and  Agent
                                        shall be satisfied  with the  management
                                        structure  of Borrower in all  respects,
                                        including key personnel.

                                        v. There  shall be  received:  Notice of
                                        Borrowing, executed security agreements,
                                        acknowledgement  of  receipt  copies  of
                                        proper Financing Statements (required or
                                        desirable in the opinion of the Agent to
                                        perfect the security interests and liens
                                        in the  Collateral),  and evidence  that
                                        all other  actions  necessary or, in the
                                        reasonable   opinion   of   the   Agent,
                                        desirable  or  required  to perfect  and
                                        protect the security  interest and liens
                                        have been taken,  incumbency certificate
                                        with    certified    copies   of   Board
                                        resolutions  approving the  transactions
                                        contemplated  hereby,  deeds  of  trust,
                                        mortgages  or  similar   documents,   if
                                        applicable, on Borrower's real property,
                                        copies  of  all   financial   statements
                                        certified by the chief financial officer
                                        as   well  as  all   current   financial
                                        statements  as filed  with  the  SEC,  a
                                        favorable opinion of counsel  acceptable
                                        to   Agent,   in  form   and   substance
                                        satisfactory   to  Agent.  in  its  sole
                                        discretion,    and    such    additional
                                        documents or  certificates  as Agent may
                                        reasonably  require  in order to certify
                                        the    continuing    accuracy   of   the
                                        representations,      warranties     and
                                        continuing     conformity    with    the
                                        conditions of borrowing hereunder


                                     Page 9


<PAGE>


                                        w.   Lender   shall   have  no   funding
                                        obligation  hereunder  unless  and until
                                        composition   agreements   referred   to
                                        above, with acceptable  modifications to
                                        any security  interests related thereto,
                                        have been obtained and are in effect.

Borrower shall comply with the following additional covenants:

                                        Borrower  shall  at  all  times  have  a
                                        minimum    Tangible    Net   Worth   (as
                                        determined    by   generally    accepted
                                        accounting   principles)   of   _n/a___.
                                        "Tangible  Net  Worth"  shall mean as of
                                        any   particular   date,    consolidated
                                        stockholders  equity,  plus subordinated
                                        debt,  if any, less  goodwill,  patents,
                                        trademarks,    copyrights,   franchises,
                                        formulas,    leaseholds,     non-compete
                                        agreements,  engineering plans, deferred
                                        tax benefits and organization costs.

                                        Borrower  shall  notify Agent in writing
                                        of the  expiration or termination of any
                                        supply contract,  distribution  contract
                                        or   intellectual   property   licensing
                                        contract,  all within one  business  day
                                        thereof.


<PAGE>




                                        Permitted Liens shall include assignment
                                        of Purchase  Orders for two HSM machines
                                        constituting  work-in-process  to George
                                        Merkelson, or assignee, and the proceeds
                                        therefrom in connection  with an advance
                                        of  $200,000  to  Borrower on such terms
                                        and  conditions  as  are  acceptable  to
                                        Borrower  and not in violation of any of
                                        the terms of the Loan hereunder.

Borrower:

          By:
             --------------------------------
          Name:

Agent:

          ADVISCO CAPITAL CORP.

          By:
            ---------------------------------
          Name:   Philip A. Newman, President