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                               WELCOME HOME, INC.

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                           LOAN AND SECURITY AGREEMENT

                            Dated: ________ __, 1998

                                   $15,000,000

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                            FLEET CAPITAL CORPORATION

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<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                          Page

<S>              <C>                                                                        <C>
SECTION 1.        CREDIT FACILITY............................................................2
   1.1. Revolving Credit Loans...............................................................2
     1.1.1.      Loans and Reserves..........................................................2
     1.1.2.      Use of Proceeds.............................................................2
   1.2. Letters of Credit; LC Guaranties.....................................................2
     1.2.1.      Request for Letter of Credit................................................2
     1.2.2.      Description of Letters of Credit............................................3
     1.2.3.      Indemnification.............................................................3
     1.2.4.      Lender's Instructions.......................................................3
     1.2.5.      Disbursements...............................................................3
     1.2.6.      Reimbursement Obligation....................................................3
     1.2.7.      Cash Collateral.............................................................4
     1.2.8.      Waiver of Liability.........................................................4
SECTION 2.        INTEREST, FEES AND CHARGES.................................................5
   2.1. Interest. 5
     2.1.1.      Rates of Interest...........................................................5
     2.1.2.      Default Rate of Interest....................................................5
     2.1.3.      Maximum Interest............................................................5
   2.2. Computation of Interest and Fees.....................................................6
   2.3. Commitment Fee.......................................................................6
   2.4. Letter of Credit and LC Guaranty Fees................................................6
   2.5. Unused Line Fee......................................................................6
   2.6. Audit and Appraisal Fees.............................................................6
   2.7. Reimbursement of Expenses............................................................6
   2.8. Bank Charges.........................................................................7
SECTION 3.        LOAN ADMINISTRATION........................................................7
   3.1. Manner of Borrowing Revolving Credit Loans...........................................7
     3.1.1.      Loan Requests...............................................................7
     3.1.2.      Disbursement................................................................8
     3.1.3.      Authorization...............................................................8
     3.1.4.      Eurodollar Loans............................................................8
     3.1.5.      Interest Periods............................................................8
     3.1.6.      Conversion of Base Rate Loans...............................................9
     3.1.7.      Continuation of Eurodollar Loans............................................9
     3.1.8.      Prepayment of Eurodollar Loans..............................................9
     3.1.9.      Indemnification............................................................10
     3.1.10.     Inability to Make Eurodollar Loans.........................................10
   3.2. Payments. 10
     3.2.1.      Principal..................................................................10
     3.2.2.      Interest...................................................................11
     3.2.3.      Costs, Fees and Charges....................................................11

<PAGE>

     3.2.4.      Other Obligations..........................................................11
   3.3. Prepayments of Additional Availability Amount.......................................11
   3.4. Application of Payments and Collections.............................................11
   3.5. All Loans to Constitute One Obligation..............................................11
   3.6. Loan Account........................................................................12
   3.7. Statements of Account...............................................................12
   3.8. Increased Costs.....................................................................12
   3.9. Basis For Determining Interest Rate Inadequate or Unfair............................13
   3.10.  Capital Adequacy..................................................................13
     3.10.1.     Certificate................................................................14
SECTION 4.        TERM AND TERMINATION......................................................14
   4.1. Term of Agreement...................................................................14
   4.2. Termination.........................................................................14
     4.2.1.      Termination by Lender......................................................14
     4.2.2.      Termination by Borrower....................................................14
     4.2.3.      Effect of Termination......................................................14
SECTION 5.        SECURITY INTERESTS........................................................15
   5.1. Security Interest in Collateral.....................................................15
   5.2. Lien Perfection; Further Assurances.................................................16
SECTION 6.        COLLATERAL ADMINISTRATION.................................................16
   6.1. General.  16
     6.1.1.      Location of Collateral.....................................................16
     6.1.2.      Insurance of Collateral....................................................16
     6.1.3.      Protection of Collateral...................................................16
   6.2. Administration of Accounts..........................................................17
     6.2.1.      Records of Accounts........................................................17
     6.2.2.      Intentionally Deleted......................................................17
     6.2.3.      Taxes......................................................................17
     6.2.4.      Account Verification.......................................................17
     6.2.5.      Maintenance of Dominion Account............................................17
     6.2.6.      Collection of Accounts, Proceeds of Collateral.............................18
   6.3. Administration of Inventory.........................................................18
   6.4. Administration of Equipment.........................................................18
     6.4.1.      Records and Schedules of Equipment.........................................18
     6.4.2.      Dispositions of Equipment..................................................18
   6.5. Payment of Charges..................................................................18
SECTION 7.        REPRESENTATIONS AND WARRANTIES............................................18
   7.1. General Representations and Warranties..............................................18
     7.1.1.      Organization and Qualification.............................................19
     7.1.2.      Corporate Power and Authority..............................................19
     7.1.3.      Legally Enforceable Agreement..............................................19
     7.1.4.      Capital Structure..........................................................19
     7.1.5.      Corporate Names............................................................19
     7.1.6.      Business Locations; Agent for Process......................................20
     7.1.7.      Title to Properties; Priority of Liens.....................................20

<PAGE>

     7.1.8.      Accounts...................................................................20
     7.1.9.      Equipment..................................................................20
     7.1.10.     Financial Statements; Fiscal Year..........................................21
     7.1.11.     Full Disclosure............................................................21
     7.1.12.     Solvent Financial Condition................................................21
     7.1.13.     Surety Obligations.........................................................21
     7.1.14.     Taxes......................................................................21
     7.1.15.     Brokers....................................................................22
     7.1.16.     Patents, Trademarks, Copyrights and Licenses...............................22
     7.1.17.     Governmental Consents......................................................22
     7.1.18.     Compliance with Laws.......................................................22
     7.1.19.     Restrictions...............................................................22
     7.1.20.     Litigation.................................................................22
     7.1.21.     No Defaults................................................................23
     7.1.22.     Leases.....................................................................23
     7.1.23.     Pension Plans..............................................................23
     7.1.24.     Trade Relations............................................................23
     7.1.25.     Labor Relations............................................................23
     7.1.26.     Delivery of Subordinated Note..............................................23
   7.2. Continuous Nature of Representations and Warranties.................................24
   7.3. Survival of Representations and Warranties..........................................24
SECTION 8.        COVENANTS AND CONTINUING AGREEMENTS.......................................24
   8.1. Affirmative Covenants...............................................................24
     8.1.1.      Visits and Inspections.....................................................24
     8.1.2.      Notices....................................................................24
     8.1.3.      Financial Statements.......................................................24
     8.1.4.      Landlord and Storage Agreements............................................26
     8.1.5.      Projections................................................................26
     8.1.6.      Recordkeeping..............................................................27
     8.1.7.      Borrowing Base Certificate.................................................27
     8.1.8.      Business and Collateral Locations..........................................27
   8.2. Negative Covenants..................................................................27
     8.2.1.      Mergers; Consolidations; Acquisitions......................................27
     8.2.2.      Loans......................................................................27
     8.2.3.      Total Indebtedness.........................................................27
     8.2.4.      Affiliate Transactions.....................................................28
     8.2.5.      Limitation on Liens........................................................28
     8.2.6.      Subordinated Debt..........................................................29
     8.2.7.      Distributions..............................................................29
     8.2.8.      Capital Expenditures.......................................................29
     8.2.9.      Disposition of Assets......................................................29
     8.2.10.     Stock of Subsidiaries......................................................29
     8.2.11.     Bill-and-Hold Sales, Etc...................................................29
     8.2.12.     Restricted Investment......................................................29
     8.2.13.     Tax Consolidation..........................................................29

<PAGE>

   8.3. Specific Financial Covenants........................................................29
     8.3.1.      Minimum Net Worth..........................................................30
     8.3.2.      Leverage Ratio.............................................................30
     8.3.3.      Cash Flow..................................................................30
SECTION 9.        CONDITIONS PRECEDENT......................................................30
   9.1. Documentation.......................................................................31
   9.2. No Default..........................................................................31
   9.3. Other Loan Documents................................................................31
   9.4. No Litigation.......................................................................31
   9.5. Filings, Registrations and Recordings...............................................31
   9.6. Corporate Proceedings of Borrower...................................................31
   9.7. Incumbency Certificates of Borrower.................................................32
   9.8. Certificates........................................................................32
   9.9. Good Standing Certificates..........................................................32
   9.10.  Legal Opinion.....................................................................32
   9.11.  Fees    ..........................................................................32
   9.12.  Insurance.........................................................................32
   9.13.  Subordinated Note.................................................................32
   9.14.  Payment Instructions..............................................................32
   9.15.  Blocked Accounts..................................................................32
   9.16.  No Adverse Material Change........................................................33
   9.17.  Contract Review...................................................................33
   9.18.  Subordination Agreement...........................................................33
   9.19.  Bankruptcy Court Confirmation.....................................................33
   9.20.  Other.  33
SECTION 10.       EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.........................33
   10.1.  Events of Default.................................................................33
     10.1.1.     Payment of Obligations Note................................................33
     10.1.2.     Misrepresentations.........................................................33
     10.1.3.     Breach of Specific Covenants...............................................33
     10.1.4.     Breach of Other Covenants..................................................34
     10.1.5.     Default Under Security Documents/Other Agreements/Subordinated
                 Note/Subordination Agreement...............................................34
     10.1.6.     Other Defaults.............................................................34
     10.1.7.     Uninsured Losses...........................................................34
     10.1.8.     Adverse Changes............................................................34
     10.1.9.     Insolvency and Related Proceedings.........................................34
     10.1.10.    Business Disruption; Condemnation..........................................34
     10.1.11.    Change of Ownership........................................................35
     10.1.12.    ERISA......................................................................35
     10.1.13.    Challenge to Agreement.....................................................35
     10.1.14.    Criminal Forfeiture........................................................35
     10.1.15.    Judgments..................................................................35
   10.2.  Acceleration of the Obligations...................................................35
   10.3.  Other Remedies....................................................................35

<PAGE>

   10.4.  Remedies Cumulative; No Waiver....................................................37
SECTION 11.       MISCELLANEOUS.............................................................37
   11.1.  Power of Attorney.................................................................37
   11.2.  Indemnity.........................................................................38
   11.3.  Modification of Agreement; Sale of Interest.......................................38
   11.4.  Severability......................................................................38
   11.5.  Successors and Assigns............................................................39
   11.6.  Cumulative Effect; Conflict of Terms..............................................39
   11.7.  Execution in Counterparts.........................................................39
   11.8.  Notice. ..........................................................................39
   11.9.  Lender's Consent..................................................................40
   11.10. Credit Inquiries..................................................................40
   11.11. Time of Essence...................................................................40
   11.12. Entire Agreement..................................................................40
   11.13. Interpretation....................................................................40
   11.14. GOVERNING LAW; CONSENT TO FORUM...................................................40
   11.15. WAIVERS  BY  BORROWER.............................................................41
</TABLE>
<PAGE>
                              *AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

        THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of this
29 day of October, 1998, by and between FLEET CAPITAL CORPORATION ("Lender"), a
Rhode Island corporation with an office at 200 Glastonbury Boulevard,
Glastonbury, Connecticut 06033 and WELCOME HOME, INC. ("Borrower"), a Delaware
corporation with its chief executive office and principal place of business at
309-D Raleigh Street, Wilmington, North Carolina 28412. Capitalized terms used
in this Agreement have the meanings assigned to them in Appendix A, General
Definitions. Accounting terms not otherwise specifically defined herein shall be
construed in accordance with GAAP consistently applied.

SECTION A.     ASSUMPTION

        Lender (successor-in-interest to Shawmut Capital Corporation) and
Borrower are parties to a Loan and Security Agreement dated as of May 30, 1995
(as amended, modified and supplemented from time to time, the "Original Loan
Agreement") pursuant to which Lender agreed to provide certain financial
accommodations to Borrower. On January 21, 1997, Borrower filed a voluntary
petition for reorganization with the United States Bankruptcy Court for the
Southern District of New York (the "Court). In accordance with the terms of a
Financing Order dated February 7, 1997 entered by the Court, Borrower, as a
Debtor-In-Possession ("Welcome Home DIP"), entered into Amendment No. 2 to the
Original Loan Agreement pursuant to which Lender agreed to provide a
post-petition credit facility to Welcome Home DIP. Pursuant to the Bankruptcy
Order dated September 28, 1998 (the "Confirmation Order"), the Court confirmed a
plan of reorganization with respect to Welcome Home DIP. Borrower has requested
that Lender provide Borrower a post-confirmation credit facility on the terms
and conditions set forth in this Agreement and in connection therewith Borrower
hereby (a) assumes in full the payment, discharge, satisfaction and performance
of all obligations, indebtedness and liabilities of Welcome Home DIP to Lender
under the Original Loan Agreement and the Other Agreements and (b) adopts all of
the provisions, terms and conditions contained in the Original Loan Agreement
and the Other Agreements as if the Original Loan Agreement and the Other
Agreements had been entered into between Borrower and Lender.

SECTION B.     AMENDMENT AND RESTATEMENT

        As of the Closing Date, the terms, conditions, covenants, agreements,
representations and warranties contained in the Original Loan Agreement shall be
deemed and hereby are amended and restated in their entirety as follows and the
Original Loan Agreement shall be and hereby is consolidated with and into and
superseded by this Agreement; provided, however, nothing contained in this
Agreement shall impair, limit or affect in any manner whatsoever the Liens
heretofore granted, pledged and/or assigned to Lender as security for Borrower's
obligations under the Original Loan Agreement.

SECTION 1.

<PAGE>


SECTION 2.     CREDIT FACILITY

        Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $15,000,000
available upon Borrower's request therefor, as follows:

        2.1.   Revolving Credit Loans.

               Loans and Reserves. Lender agrees, for so long as no Default or
Event of Default exists, to make Revolving Credit Loans to Borrower from time to
time, as requested by Borrower in the manner set forth in subsection 3.1.1
hereof, up to a maximum principal amount at any time outstanding equal to the
Borrowing Base at such time minus the LC Reserve at such time and such other
reserves, if any. Lender shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lender shall deem necessary or
appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under this subsection 1.1.1, including, without limitation,
with respect to (i) price adjustments, damages, unearned discounts, returned
products or other matters for which credit memoranda are issued in the ordinary
course of Borrower's business; (ii) shrinkage, spoilage and obsolescence of
Inventory; (iii) slow moving Inventory; (iv) other sums chargeable against
Borrower's Loan Account as Revolving Credit Loans under any section of this
Agreement; (v) amounts owing by Borrower to any Person to the extent secured by
a Lien on, or trust over, any Property of Borrower; and (vi) such other matters,
events, conditions or contingencies as to which Lender, in its sole credit
judgment, determines reserves should be established from time to time hereunder.

               Use of Proceeds. The Revolving Credit Loans shall be used solely
for Borrower's general operating capital needs in a manner consistent with the
provisions of this Agreement and all applicable laws.

        Letters of Credit; LC Guaranties. Lender agrees, for so long as no
Default or Event of Default exists and if requested by Borrower, to (i) issue
its, or cause to be issued its Affiliate's, Letters of Credit for the account of
Borrower or (ii) execute LC Guaranties by which Lender or its Affiliate shall
guaranty the payment or performance by Borrower of its reimbursement obligations
with respect to Letters of Credit and letters of credit issued for Borrower's
account by other Persons in support of Borrower's obligations (other than
obligations for the repayment of Money Borrowed), provided that the LC Amount at
any time shall not exceed $500,000. No Letter of Credit or LC Guarantee may have
an expiration date that is after the last day of the Original Term or the then
applicable Renewal Term. Any amounts paid by Lender under any LC Guaranty or in
connection with any Letter of Credit shall be treated as Revolving Credit Loans,
shall be secured by all of the Collateral and shall bear interest and be payable
at the same rate and in the same manner as Revolving Credit Loans.

               Request for Letter of Credit. Borrower may request Lender to
issue or cause to be issued by Bank (or such other financial institution as may
be acceptable to Lender) a Letter of Credit by delivering to Lender the
applicable commercial letter of credit application (the "Letter


                                       2
<PAGE>

of Credit Application"), completed to the reasonable satisfaction of Lender and
such other certificates, documents and other papers and information as Lender
may reasonably request.

               Description of Letters of Credit. Each Letter of Credit shall,
among other things, (i) provide for the payment of sight or time drafts when
presented for honor thereunder in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) have an expiry date
occurring not later than the earlier of (1) the last day of the Original Term or
any Renewal Term or (2) 12 months after such Letter of Credit's date of
issuance. Each Letter of Credit Application and each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any
amendments or revision thereof and, to the extent not inconsistent therewith,
the laws of the State of New York.

               Indemnification. In connection with the issuance or creation of
the LC Guaranties and any Letter of Credit, Borrower hereby indemnifies, saves
and holds Lender harmless from any loss, cost, expense or liability, including,
without limitation, payments made by Lender, and expenses and reasonable
attorneys' fees incurred by Lender arising out of, or in connection with the LC
Guaranties and any Letter of Credit to be issued or created for Borrower except
to the extent any loss, cost, expense or liability is attributable to Lender's
or the Issuing Bank's gross (not mere) negligence or willful misconduct or that
of its correspondents. Borrower shall be bound by Lender's or any Issuing Bank's
regulations and good faith interpretations of any Letter of Credit issued or
created for Borrower's account, although this interpretation may be different
from Borrower's own, and neither Lender, nor the Issuing Bank, nor any of its
correspondents shall be liable for any error, negligence and/or mistakes,
whether of omission or commission, in following Borrower's instructions or those
contained in the LC Guaranties or any Letter of Credit of any modifications,
amendments or supplements thereto or in creating or paying any Letter of Credit
or the LC Guaranties, except for Lender's gross (not mere) negligence or willful
misconduct or that of its correspondents.

               Lender's Instructions. Borrower shall authorize and direct Bank
or any other bank or financial institution which issues a Letter of Credit (an
"Issuing Bank") to name Borrower as the "Account Party" therein and to deliver
to Lender, with a copy to Borrower, all instruments, documents, and other
writings and property received by the Issuing Bank pursuant to the Letter of
Credit or in connection with any acceptance and to accept and rely upon Lender's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit, the Letter of Credit Application therefor or any
acceptance thereof.

               Disbursements. Lender will notify Borrower promptly of any demand
for payment under the LC Guaranties and the presentment for payment under a
Letter of Credit, following receipt by it of notification from the Issuing Bank
of such presentment, together with notice of the date such payment was made. All
disbursements shall be deemed irrevocably to be a request by Borrower for a
Revolving Credit Loan on the date such disbursement was made.

               Reimbursement Obligation. Borrower's obligation to reimburse
Lender under subsection 1.2.5 shall be absolute and unconditional under any and
all circumstances and


                                       3
<PAGE>

irrespective of any setoff, counterclaim or defense to payment which Borrower
may have against Lender, the Issuing Bank or the beneficiary of the Letter of
Credit, including, without limitation, any defense based upon any draft, demand
or certificate or other document presented under the Letter of Credit proving to
be forged, fraudulent, invalid or insufficient, the failure of any disbursement
or payment by the Issuing Bank under the Letter of Credit ("Bank Payment") to
conform to the terms of the Letter of Credit (if, in the Issuing Bank's good
faith opinion such disbursement or Bank Payment is determined to be appropriate
and other than as a consequence of Lender's or the Issuing Bank's gross (not
mere) negligence or willful misconduct) or any non-application or misapplication
by the beneficiary of the proceeds of such disbursement or Bank Payment or the
legality, validity, form, regularity or enforceability of the Letter of Credit.

               Cash Collateral. Upon the occurrence and during the continuation
of any Event of Default, at the option of Lender, Borrower will pay to Lender
cash in an amount equal to the undrawn face amount of the Letters of Credit.
Such cash shall be held by Lender in a cash collateral account (the "Cash
Collateral Account"). The Cash Collateral Account shall be maintained at a bank
designated by Lender, which shall be (i) any domestic commercial bank having
capital and surplus in excess of $100,000,000 or (ii) an Affiliate of Lender, if
an Affiliate of Lender then maintains a presence as a bank in the United States
of America, in the name of Lender as secured party, and shall be under the sole
dominion and control of Lender and subject to the terms of this subsection
1.2.7. Borrower hereby pledges, and grants to Lender a security interest in, all
such cash and other amounts held in the Cash Collateral Account from time to
time and all earnings thereof and proceeds thereon, as security for the payment
of all Obligations. Amounts in the Cash Collateral Account shall be invested in
securities of the type described in clauses (iii), (iv) and (v) of the
definition of Restricted Investments, and interest and earnings on the Cash
Collateral Account shall be the property of Borrower but shall be held in the
Cash Collateral Account as Collateral, provided that Lender shall release from
the Cash Collateral Account and return to Borrower any funds remaining in the
Cash Collateral Account upon satisfaction in full of the Obligations. At such
time when all Events of Default shall have been cured or waived, Lender shall
return any monies then remaining in the Cash Collateral Account. If at any time,
and from time to time, the aggregate amount of the Cash Collateral Account
exceeds the maximum liability, fixed or contingent, of Lender with respect to
the aggregate face amount of all Letters of Credit then issued and outstanding,
Lender shall return any excess to Borrower.

               Waiver of Liability. Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary thereof. Neither
Lender nor any Issuing Bank (except in the event of its own gross (not mere)
negligence or willful misconduct) shall be responsible for:

                      (i) the form, validity, sufficiency, accuracy, genuineness
           or legal effect of the Letter of Credit or any document submitted by
           any party in connection with the application for and issuance of any
           Letter of Credit, even if it should in fact prove to be in any or all
           respects invalid, insufficient, inaccurate, fraudulent or forged;

                      (ii) the form, validity, sufficiency, accuracy,
           genuineness or legal effect


                                       4
<PAGE>

           of any instrument transferring or assigning or purporting to transfer
           or assign the Letter of Credit or the rights or benefits thereunder
           or proceeds thereof in whole or in part, which may prove to be
           invalid or ineffective for any reason;

                      (iii) errors, omissions, interruptions or delays in
           transmission or delivery of any messages by mail, cable, telegraph,
           telex or otherwise; or

                      (iv) any loss or delay in the transmission or otherwise of
           any document or draft required in order to make a disbursement.

None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted Lender hereunder. In furtherance, and not in limitation
or derogation of any of the foregoing, any action taken or omitted to be taken
by the Issuing Bank or Lender in good faith in the absence of gross (not mere)
negligence or willful misconduct, shall be binding upon Borrower and shall not
put the Issuing Bank or Lender, as the case may be, under any resulting
liability therefor.


SECTION 3.     INTEREST, FEES AND CHARGES

        3.1.   Interest.

               Rates of Interest. Interest shall accrue on the principal amount
of Base Rate Loans outstanding at the end of each day (computed on the actual
days elapsed over a year of 360 days) at a fluctuating rate per annum equal to
the Base Rate plus the Applicable Margin with respect to Base Rate Loans. After
the date hereof, the foregoing rate of interest shall be increased or decreased,
as the case may be, by an amount equal to any increase or decrease in the Base
Rate, with such adjustments to be effective as of the opening of business on the
day that any such change in the Base Rate becomes effective. The Base Rate in
effect on the date hereof shall be the Base Rate effective as of the opening of
business on the date hereof, but if this Agreement is executed on a day that is
not a Business Day, the Base Rate in effect on the date hereof shall be the Base
Rate effective as of the opening of business on the last Business Day
immediately preceding the date hereof. Eurodollar Loans shall bear interest on
the principal amount thereof outstanding at the end of each day (computed on the
actual days elapsed over a year of 360 days), at a fluctuating rate per annum
equal to the Eurodollar Rate plus the Applicable Margin.

               Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to 2.0% above the
interest rate otherwise applicable thereto (the "Default Rate").

               Maximum Interest. In no event whatsoever shall the aggregate of
all amounts deemed interest hereunder and charged or collected pursuant to the
terms of this Agreement exceed the highest rate permissible under any law which
a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. If any provisions of this Agreement are in


                                       5
<PAGE>

contravention of any such law, such provisions shall be deemed amended to
conform thereto.

        Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees and unused line fees and collection charges hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed over
a year of 360 days. For the purpose of computing interest hereunder, all items
of payment received by Lender shall be deemed applied by Lender on account of
the Obligations (subject to final payment of such items) on the Business Day of
receipt by Lender of such items in Lender's account located at Fleet National
Bank, Hartford, Connecticut, ABA #011900571, Account #936-933-7579, Reference:
Welcome Home or to such other account as Lender shall designate to Borrower in
writing.

        Commitment Fee. Borrower shall pay to Lender a commitment fee of
$50,000, which shall be fully earned and nonrefundable on the Closing Date and
shall be paid concurrently with the initial Loan hereunder.

        Letter of Credit and LC Guaranty Fees. Borrower shall pay to Lender for
Letters of Credit and LC Guaranties of Letters of Credit, 2.25% per annum of the
aggregate face amount of such Letters of Credit and LC Guaranties outstanding
from time to time during the term of this Agreement, plus all normal and
customary charges associated with the issuance thereof, which fees and charges
shall be deemed fully earned upon issuance of each such Letter of Credit or LC
Guaranty, shall be due and payable on the first Business Day of each month and
shall not be subject to rebate or proration upon the termination of this
Agreement for any reason.

        Unused Line Fee. Borrower shall pay to Lender a fee equal to .25% per
annum of the average monthly amount by which the Total Credit Facility exceeds
the sum of the outstanding principal balance of the Revolving Credit Loans plus
the LC Amount. The unused line fee shall be payable monthly in arrears on the
first day of each calendar month hereafter.

        Audit and Appraisal Fees. Borrower shall pay to Lender audit and
appraisal fees in accordance with Lender's current schedule of fees in effect
from time to time in connection with audits and appraisals of Borrower's books
and records and such other matters as Lender shall deem appropriate, plus all
out-of-pocket expenses incurred by Lender in connection with such audits and
appraisals. Audit fees shall be payable on the first day of the month following
the date of issuance by Lender of a request for payment thereof to Borrower.

        Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender or any Participating
Lender incurs legal or accounting expenses or any other costs or out-of-pocket
expenses in connection with (i) the negotiation and preparation of this
Agreement or any of the other Loan Documents, any amendment of or modification
of this Agreement or any of the other Loan Documents; (ii) the administration of
this Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; (iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (iv) any attempt to enforce any
rights of Lender or any Participating Lender against Borrower or any other
Person which may be obligated


                                       6
<PAGE>

to Lender by virtue of this Agreement or any of the other Loan Documents,
including, without limitation, the Account Debtors; or (v) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral; then all such legal and
accounting expenses, other costs and out of pocket expenses of Lender shall be
charged to Borrower. All amounts chargeable to Borrower under this Section 2.7
shall be Obligations secured by all of the Collateral, shall be payable on
demand to Lender or to such Participating Lender, as the case may be, and shall
bear interest from the date such demand is made until paid in full at the rate
applicable to Revolving Credit Loans constituting Base Rate Loans from time to
time. Borrower shall also reimburse Lender for expenses incurred by Lender in
its administration of the Collateral to the extent and in the manner provided in
Section 6 hereof.

        3.8.   Bank Charges.
  Borrower shall pay to Lender, on demand, any and all fees, costs or expenses
which Lender or any Participating Lender pays to a bank or other similar
institution (including, without limitation, any fees paid by Lender to any
Participating Lender) arising out of or in connection with (i) the forwarding to
Borrower or any other Person on behalf of Borrower, by Lender or any
Participating Lender, of proceeds of Loans made by Lender to Borrower pursuant
to this Agreement and (ii) the depositing for collection, by Lender or any
Participating Lender, of any check or item of payment received or delivered to
Lender or any Participating Lender on account of the Obligations.


SECTION 4.     LOAN ADMINISTRATION

        Manner of Borrowing Revolving Credit Loans. Borrowings under the credit
facility established pursuant to Section 1 hereof shall be as follows:

               4.1.1. Loan Requests.
  A request for a Revolving Credit Loan shall be made, or shall be deemed to be
made, in the following manner: (i) Borrower may give Lender notice of its
intention to borrow, in which notice Borrower shall specify the amount of the
proposed borrowing and the proposed borrowing date, no later than 1:00 p.m. New
York time on the proposed borrowing date, provided, however, that no such
request may be made at a time when there exists an Event of Default; and (ii)
the becoming due of any amount required to be paid under this Agreement, whether
as interest or for any other Obligation, shall be deemed irrevocably to be a
request for a Revolving Credit Loan on the due date in the amount required to
pay such interest or other Obligation. As an accommodation to Borrower, Lender
may permit telephonic requests for Loans and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in writing not to accept or act upon
telephonic or electronic communications from Borrower, Lender shall have no
liability to Borrower for any loss or damage suffered by Borrower as a result of
Lender's honoring of any requests, execution of any instructions, authorizations
or agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrower and Lender
shall have no duty to verify the origin of any such communication or the
authority of the person sending it.

                                       7
<PAGE>

               Disbursement. Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by Lender by
way of direct payment of the relevant interest or other Obligation.

               Authorization. Borrower hereby irrevocably authorizes Lender, in
Lender's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrower to Lender
hereunder.

               Eurodollar Loans. Notwithstanding the provisions of Section
3.1.1, in the event Borrower desires to obtain a Eurodollar Loan, Borrower shall
give Lender prior written irrevocable notice no later than 12:00 noon New York
time on the 3rd Business Day prior to the requested borrowing date specifying
(i) its election to obtain a Eurodollar Loan, (ii) the date of the proposed
borrowing (which shall be a Business Day) and (iii) the amount to be borrowed,
which amount shall be in a minimum amount of $500,000 and may increase in
integral multiples of $100,000. In no event shall Borrower be permitted to have
outstanding at any one time Eurodollar Loans with more than 5 different Interest
Periods.

               Interest Periods. Each interest period of a Eurodollar Loan shall
commence on the date such Eurodollar Loan is made and shall end on the date
which is 1 month, 2 months, 3 months or 6 months later, as may then be requested
by Borrower ("Interest Period") provided that:

                             (i) any Interest Period which would otherwise end
                      on a day which is not a Business Day shall end on the next
                      preceding or succeeding Business Day as is the Bank's
                      custom in the market to which such Eurodollar Loan
                      relates;

                             (ii) there remains a minimum of 1 month in the
                      Original Term (or if this Agreement has been renewed, in
                      the then applicable Renewal Term);

                             (iii) all Interest Periods of the same duration
                      which commence on the same date shall end on the same
                      date;

                             (iv) each Interest Period which commences before,
                      and would


                                       8
<PAGE>

                      otherwise end after the last day of the Original or any
                      Renewal Term shall end on the last day of the Original or
                      any Renewal Term.

               Conversion of Base Rate Loans. Provided that no Event of Default
has occurred which is then continuing, Borrower may, on any Business Day,
convert any Base Rate Loan into a Eurodollar Loan. If Borrower desires to
convert a Base Rate Loan, Borrower shall give Lender not less than 3 Business
Days' prior written notice (prior to 12:00 noon New York time on such Business
Day), specifying the date of such conversion and the amount to be converted.
Each conversion into or conversion of a Eurodollar Loan shall be in a minimum
principal amount of $500,000 and may increase in integral multiples of $100,000
in excess thereof. After giving effect to any conversion of Base Rate Loans to
Eurodollar Loans, Borrower shall not be permitted to have outstanding at any one
time Eurodollar Loans with more than 5 different Interest Periods.

               Continuation of Eurodollar Loans. Borrower shall have the right
on 3 Business Days' prior irrevocable written notice given to Lender by Borrower
to (i) subject to the provisions of Section 3.1.8, continue any Eurodollar Loan
into a subsequent Interest Period of the same or a different permitted duration,
in each case subject to the satisfaction of the following conditions:

                             (i) in the case of a continuation of less than all
                      Eurodollar Loans, the Eurodollar Loans continued shall
                      each be in a minimum principal amount of $500,000 and may
                      increase in integral multiples of $100,000 in excess
                      thereof;

                             (ii) accrued interest on a Eurodollar Loan (or
                      portion thereof) being continued shall be paid by Borrower
                      at the time of continuation; and

                             (iii) no Eurodollar Loan (or portion thereof) may
                      be continued as a Eurodollar Loan if an Event of Default
                      has occurred which is then continuing or if, after giving
                      effect to such continuation, Borrower shall have
                      outstanding more than 3 separate Eurodollar Loans in the
                      aggregate.

        If Borrower shall fail to give timely notice of its election to continue
any Eurodollar Loan or portion thereof as provided above, or if such
continuation shall not be permitted, such Eurodollar Loan or portion thereof,
unless such Loan shall be repaid, shall automatically be converted into a Base
Rate Loan at the end of the Interest Period then in effect with respect to such
Eurodollar Loan.

               Prepayment of Eurodollar Loans. Subject to the provisions of
subsection 3.1.9 and Section 4.2, Borrower may prepay any Loan in whole at any
time or in part from time to time, without premium or penalty provided that a
Eurodollar Loan not prepaid on the last Business Day of the then current
Interest Period with respect thereto shall be subject to Section 3.1.9. Borrower
shall specify the date of prepayment of Loans which are Eurodollar Loans and the
amount of Eurodollar Loans to be prepaid. In the event that any prepayment of a
Eurodollar


                                       9
<PAGE>

Loan is made on a date other than the last Business Day of the then current
Interest Period with respect thereto, Borrower shall indemnify Lender therefor
in accordance with subsection 3.1.9 hereof.

               Indemnification. Borrower shall indemnify Lender and hold Lender
harmless from and against any and all losses or expenses that Lender may sustain
or incur as a consequence of any prepayment or any default by Borrower in the
payment of the principal of or interest on any Eurodollar Loan or failure by
Borrower to complete a borrowing of, a prepayment of or conversion of or to a
Eurodollar Loan after notice thereof has been given, including (but not limited
to) any interest payable by Lender to lenders of funds obtained by it in order
to make or maintain its Eurodollar Loans hereunder, and any other loss or
expense incurred by Lender by reason of the liquidation or reemployment of
deposits or other funds acquired by Lender to make, continue, convert into or
maintain, a Eurodollar Loan.

               Inability to Make Eurodollar Loans. Notwithstanding any other
provision hereof, if any applicable law, treaty, regulation or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for Lender (for purposes of this subsection 3.1.10, the term "Lender"
shall include Lender and the office or branch where Lender or any corporation or
bank controlling Lender makes or maintains any Eurodollar Loans) to make or
maintain its Eurodollar Loans, or if with respect to any Interest Period, Lender
is unable to determine the Eurodollar Rate relating thereto, or adverse or
unusual conditions in or changes in applicable law relating to the London
Eurodollar interbank market make it, in the reasonable judgment of Lender,
impracticable, to fund therein any of the Eurodollar Loans or make the projected
Eurodollar Rate unreflective of the actual costs of funds therefor to Lender,
the obligation of Lender to make Eurodollar Loans hereunder shall forthwith be
suspended during the pendency of such circumstances and Borrower shall, if any
affected Eurodollar Loans are then outstanding, promptly upon request from
Lender, convert such affected Eurodollar Loans into Base Rate Loans.

        Payments. Except where evidenced by notes or other instruments issued or
made by Borrower to Lender specifically containing payment provisions which are
in conflict with this Section 3.2 (in which event the conflicting provisions of
said notes or other instruments shall govern and control), the Obligations shall
be payable as follows:

               Principal. Principal payable on account of Revolving Credit Loans
shall be payable by Borrower to Lender immediately upon the earliest of (i) the
receipt by Lender or Borrower of any proceeds of any of the Collateral, to the
extent of said proceeds, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of the
Obligations, or (iii) termination of this Agreement pursuant to Section 4
hereof; provided, however, that if an Overadvance shall exist at any time,
Borrower shall, on demand, repay the Overadvance.

                                       10
<PAGE>

               Interest. Interest accrued on the Revolving Credit Loans shall be
due on the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations or
(iii) termination of this Agreement pursuant to Section 4 hereof.

               Costs, Fees and Charges. Costs, fees and charges payable pursuant
to this Agreement shall be payable by Borrower as and when provided in Section 2
hereof, to Lender or to any other Person designated by Lender in writing.

               Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is later.

        Prepayments of Additional Availability Amount. Borrower shall be
permitted to prepay the outstanding amount of the Loans in connection with a
permanent reduction of the Additional Availability Amount, so long as (a)
Availability plus the amount of such payment shall not be less than $2,000,000
immediately after giving effect to and for the thirty consecutive day period
immediately preceding the making of such payment and (b) no Default or Event of
Default shall be in existence at the time of and immediately after giving effect
to each such payment, in an amount not to exceed 50% of Excess Cash Flow for
each Fiscal Year commencing with the Fiscal Year ending December 31, 1999. Any
such prepayment shall be made not later than 150 days after the end of each
Fiscal Year and shall be applied to permanently reduce the Additional
Availability Amount.

        Application of Payments and Collections. All items of payment received
by Lender by 1:00 P.M., New York time, on any Business Day shall be deemed
received on that Business Day. All items of payment received after 1:00 P.M.,
New York time, on any Business Day shall be deemed received on the following
Business Day. Borrower irrevocably waives the right to direct the application of
any and all payments and collections at any time or times hereafter received by
Lender from or on behalf of Borrower, and Borrower does hereby irrevocably agree
that Lender shall have the continuing exclusive right to apply and reapply any
and all such payments and collections received at any time or times hereafter by
Lender or its agent against the Obligations, in such manner as Lender may deem
advisable, notwithstanding any entry by Lender upon any of its books and
records. If as the result of collections of Accounts as authorized by subsection
6.2.6 hereof a credit balance exists in the Loan Account, such credit balance
shall not accrue interest in favor of Borrower, but shall be available to
Borrower at any time or times for so long as no Default or Event of Default
exists. Such credit balance shall not be applied or be deemed to have been
applied against the Obligations except that Lender may, at its option, offset
such credit balance against any of the Obligations upon and after the occurrence
of an Event of Default.

        All Loans to Constitute One Obligation. The Loans shall constitute one
general Obligation of Borrower, and shall be secured by Lender's Lien upon all
of the Collateral.

                                       11
<PAGE>

        Loan Account. Lender shall enter all Loans as debits to the Loan Account
and shall also record in the Loan Account all payments made by Borrower on any
Obligations and all proceeds of Collateral which are finally paid to Lender, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrower.

        Statements of Account. Lender will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrower unless Lender is notified by Borrower in writing to the contrary
within 30 days of the date each accounting is mailed to Borrower. Such notice
shall only be deemed an objection to those items specifically objected to
therein.

        Increased Costs. In the event that any change, after the date of this
Agreement, in any applicable law or treaty, or in the interpretation or
application thereof, or compliance by Lender with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other regulatory authority, shall:

                      (i) (1) subject Lender to any tax with respect to this
               Agreement (other than (a) any tax based on or measured by net
               income or otherwise in the nature of a net income tax, including,
               without limitation, any franchise tax or any similar tax based on
               capital, net worth or comparable basis for measurement and (b)
               any tax collected by a withholding on payments and which neither
               is computed by reference to the net income of the payee nor is in
               the nature of an advance collection of a tax based on or measured
               by the net income of the payee) or (2) change the basis of
               taxation of payments to Lender of principal, fees, interest or
               any other amount payable hereunder or under any Loan Documents
               (other than in respect of (a) any tax based on or measured by net
               income or otherwise in the nature of a net income tax, including,
               without limitation, any franchise tax or any similar tax based on
               capital, net worth or comparable basis for measurement and (b)
               any tax collected by a withholding on payments and which neither
               is computed by reference to the net income of the payee nor is in
               the nature of an advance collection of a tax based on or measured
               by the net income of the payee);

                      (ii) impose, modify or hold applicable any reserve (except
               any reserve taken into account in the determination of the
               applicable Eurodollar Rate), special deposit, assessment or
               similar requirement against assets held by, or deposits in or for
               the account of, advances or loans by, or other credit extended
               by, any office of Lender, including (without limitation) pursuant
               to Regulation D of the Board of Governors of the Federal Reserve
               System; or

                      (iii) impose on Lender or the London interbank eurodollar
               market any other condition with respect to any Loan Document;

and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or


                                       12
<PAGE>

maintaining its Loans hereunder by an amount that Lender deems to be material or
to reduce the amount of any payment (whether of principal, interest or
otherwise) in respect of any of the Loans by an amount that Lender deems to be
material, then, in any such case, Borrower shall promptly pay Lender, upon its
demand and certification not later than 60 days following its receipt of notice
of the imposition of such increased costs, such additional amount as will
compensate Lender for such additional cost or such reduction, as the case may
be, to the extent Lender has not otherwise been compensated, with respect to a
particular Loan, for such increased cost as a result of an increase in the Base
Rate. An officer of Lender shall determine the amount of such additional cost or
reduced amount using reasonable averaging and attribution methods and shall
certify the amount of such additional cost or reduced amount to Borrower, which
certification shall include a written explanation of such additional cost or
reduction to Borrower. Such certification shall be conclusive absent manifest
error. If Lender claims any additional cost or reduced amount pursuant to this
Section 3.8, then Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different lending office or to file any
certificate or document reasonably requested by Borrower if the making of such
designation or filing would avoid the need for, or reduce the amount of, any
such additional cost or reduced amount and would not, in the sole discretion of
Lender, be otherwise disadvantageous to Lender.

        Basis For Determining Interest Rate Inadequate or Unfair. In the event
that Lender shall have determined that:

                      (i) reasonable means do not exist for ascertaining the
               Eurodollar Rate for any Interest Period; or

                      (ii) Dollar deposits in the relevant amount and for the
               relevant maturity are not available in the London interbank
               eurodollar market with respect to a proposed Eurodollar Loan, or
               a proposed conversion of a Base Rate Loan into a Eurodollar Loan;

Lender shall give Borrower prompt written, telephonic or telegraphic notice of
the determination of such effect. If such notice is given, (i) any such
requested Eurodollar Loan shall be made as a Base Rate Loan, unless Borrower
shall notify Lender no later than 12:00 noon (New York time) 3 Business Days
prior to the date of such proposed borrowing, that the request for such
borrowing shall be cancelled or made as an unaffected type of Eurodollar Loan,
and (ii) any Base Rate Loan which was to have been converted to an affected type
of Eurodollar Loan shall be continued as or converted into a Base Rate Loan, or,
if Borrower shall notify Lender, no later than 12:00 noon (New York time) 3
Business Days prior to the proposed conversion, shall be maintained as an
unaffected type of Eurodollar Loan.

        Capital Adequacy. In the event that Lender shall have determined that
any applicable law or guideline regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the


                                       13
<PAGE>

rate of return on Lender's capital as a consequence of its obligations hereunder
to a level below that which Lender could have achieved but for such adoption,
change or compliance (taking into consideration Lender's policies with respect
to capital adequacy) by an amount deemed by Lender to be material, then, from
time to time, upon written demand (which demand shall be accompanied by a
certification demonstrating the calculation of such amounts in reasonable
detail) by Lender, Borrower shall pay to Lender such additional amount or
amounts as will compensate Lender for such reduction. In determining such amount
or amounts, Lender may use any reasonable averaging or attribution methods. The
protection of this Section 3.10 shall be available to Lender regardless of any
possible contention of invalidity or inapplicability with respect to the
applicable law or condition.

               Certificate. A certificate of an officer of Lender setting forth
such amount or amounts as shall be necessary to compensate Lender pursuant to
Section 3.10 hereof and the reasons therefor when delivered to Borrower shall be
conclusive absent manifest error.


SECTION 5.     TERM AND TERMINATION

        Term of Agreement. Subject to Lender's right to cease making Loans to
Borrower upon or after the occurrence of any Default or Event of Default, this
Agreement shall be in effect for a period of 5 years from the date hereof,
through and including October 29, 2003 (the "Original Term"), and this Agreement
shall automatically renew itself for one-year periods thereafter (the "Renewal
Terms"), unless terminated as provided in Section 4.2 hereof.

        5.2.   Termination.

               Termination by Lender. Upon at least 90 days prior written notice
to Borrower, Lender may terminate this Agreement as of the last day of the
Original Term or the then current Renewal Term and Lender may terminate this
Agreement without notice upon or after the occurrence of an Event of Default.

               Termination by Borrower. Upon at least 90 days prior written
notice to Lender, Borrower may, at its option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrower has
paid all of the Obligations in immediately available funds and all Letters of
Credit and LC Guaranties have expired or have been cash collateralized to
Lender's satisfaction. Any notice of termination given by Borrower shall be
irrevocable unless Lender otherwise agrees in writing, and Lender shall have no
obligation to make any Loans or issue or procure any Letters of Credit or LC
Guaranties on or after the termination date stated in such notice. Borrower may
elect to terminate this Agreement in its entirety only. No section of this
Agreement or type of Loan available hereunder may be terminated singly.

               Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Lender shall retain its Liens in the


                                       14
<PAGE>

Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrower has paid the Obligations to
Lender, in full, in immediately available funds, together with the applicable
termination charge, if any. Notwithstanding the payment in full of the
Obligations, Lender shall not be required to terminate its security interests in
the Collateral unless, with respect to any loss or damage Lender may incur as a
result of dishonored checks or other items of payment received by Lender from
Borrower or any Account Debtor and applied to the Obligations, Lender shall, at
its option, (i) have received a written agreement, executed by Borrower and by
any Person whose loans or other advances to Borrower are used in whole or in
part to satisfy the Obligations, indemnifying Lender from any such loss or
damage; or (ii) have retained such monetary reserves and Liens on the Collateral
for such period of time as Lender, in its reasonable discretion, may deem
necessary to protect Lender from any such loss or damage.


SECTION 6.     SECURITY INTERESTS

        Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing security interest and Lien upon all of Borrower's assets, including
all of the following Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:

                      (i)    Accounts;

                      (ii)   Inventory;

                      (iii)  Equipment;

                      (iv)   General Intangibles;

                      (v)    All Investment Property (as defined in the Code);

                      (vi) All monies and other Property of any kind now or at
               any time or times hereafter in the possession or under the
               control of Lender or a bailee or Affiliate of Lender;

                      (vii) All accessions to, substitutions for and all
               replacements, products and cash and non-cash proceeds of (i)
               through (vi) above, including, without limitation, proceeds of
               and unearned premiums with respect to insurance policies insuring
               any of the Collateral; and

                      (viii) All books and records (including, without
               limitation, customer lists, credit files, computer programs,
               print-outs, and other computer materials and records) of Borrower
               pertaining to any of (i) through (vii) above.

                                       15
<PAGE>

        Lien Perfection; Further Assurances. Borrower shall execute such UCC-1
financing statements as are required by the Code and such other instruments,
assignments or documents as are necessary to perfect Lender's Lien upon any of
the Collateral and shall take such other action as may be required to perfect or
to continue the perfection of Lender's Lien upon the Collateral. Unless
prohibited by applicable law, Borrower hereby authorizes Lender to execute and
file any such financing statement on Borrower's behalf. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof. At Lender's request, Borrower shall also promptly execute or cause to
be executed and shall deliver to Lender any and all documents, instruments and
agreements deemed necessary by Lender to give effect to or carry out the terms
or intent of the Loan Documents.


SECTION 7.     COLLATERAL ADMINISTRATION

        7.1.   General.

               Location of Collateral. All Collateral, other than Inventory in
transit and motor vehicles, will at all times be kept by Borrower and its
Subsidiaries at one or more of the business locations set forth in Exhibit 6.1.1
hereto and shall not, without the prior written approval of Lender, be moved
therefrom except, prior to an Event of Default and Lender's acceleration of the
maturity of the Obligations in consequence thereof, for (i) sales of Inventory
in the ordinary course of business; and (ii) removals in connection with
dispositions of Equipment that are authorized by subsection 6.4.2 hereof.
Borrower may update Exhibit 6.1.1 from time to time to add additional locations
in the continental United States by giving Lender 15 days prior written notice
thereof and executing such additional UCC-1 financing statements and taking such
other actions as Lender may reasonably request to perfect and protect its
security interest on Collateral situated at such locations.

               Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrower shall deliver the originals of such policies to Lender with
satisfactory lender's loss payable endorsements, naming Lender as sole loss
payee, assignee or additional insured, as appropriate. Each policy of insurance
or endorsement shall contain a clause requiring the insurer to give not less
than 30 days prior written notice to Lender in the event of cancellation of the
policy for any reason whatsoever and a clause specifying that the interest of
Lender shall not be impaired or invalidated by any act or neglect of Borrower or
the owner of the Property or by the occupation of the premises for purposes more
hazardous than are permitted by said policy. If Borrower fails to provide and
pay for such insurance, Lender may, at its option, but shall not be required to,
procure the same and charge Borrower therefor. Borrower agrees to deliver to
Lender, promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies.

               Protection of Collateral. All expenses of protecting, storing,
warehousing,


                                       16
<PAGE>

insuring, handling, maintaining and shipping the Collateral, any and all excise,
property, sales, and use taxes imposed by any state, federal, or local authority
on any of the Collateral or in respect of the sale thereof shall be borne and
paid by Borrower. If Borrower fails to promptly pay any portion thereof when
due, Lender may, at its option, but shall not be required to, pay the same and
charge Borrower therefor. Lender shall not be liable or responsible in any way
for the safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral is in
Lender's actual possession) or for any diminution in the value thereof, or for
any act or default of any warehouseman, carrier, forwarding agency, or other
person whomsoever, but the same shall be at Borrower's sole risk.

        7.2.   Administration of Accounts.

               7.2.1. Records of Accounts.

               Borrower shall keep accurate and complete records of its Accounts
and all payments and collections thereon and shall, upon Lender's request
therefor, submit to Lender on such periodic basis as Lender shall request a
sales and collections report for the preceding period, in form satisfactory to
Lender.

               Intentionally Deleted.

               Taxes. If an Account includes a charge for any tax payable to any
governmental taxing authority, Lender is authorized, in its sole discretion, to
pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefor, provided, however, that Lender shall
not be liable for any taxes to any governmental taxing authority that may be due
by Borrower.

               Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or otherwise. Borrower
shall cooperate fully with Lender in an effort to facilitate and promptly
conclude any such verification process.

               Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender. Borrower
shall issue to any such banks an irrevocable letter of instruction directing
such banks to deposit all payments or other remittances received in the lockbox
to the Dominion Account for application on account of the Obligations. All funds
deposited in the Dominion Account shall immediately become the property of
Lender and Borrower shall obtain the agreement by such banks in favor of Lender
to waive any offset rights against the funds so deposited. Lender assumes no
responsibility for such lockbox arrangement, including, without limitation, any
claim of accord and satisfaction or release with respect to deposits accepted by
any bank thereunder.

                                       17
<PAGE>

               Collection of Accounts, Proceeds of Collateral. All proceeds of
Collateral received by Borrower, shall be held as Lender's property by Borrower
as trustee of an express trust for Lender's benefit and Borrower shall
immediately deposit same in kind in the Dominion Account. Lender retains the
right at all times after the occurrence of a Default or an Event of Default to
notify Account Debtors that Accounts have been assigned to Lender and to collect
Accounts directly in its own name and to charge the collection costs and
expenses, including attorneys' fees to Borrower.

        7.3.   Administration of Inventory.
  Borrower shall keep accurate and complete records of its inventory. Borrower
shall furnish to Lender Inventory reports in form and detail satisfactory to
Lender at such times as Lender may request, but at least once each week, not
later than Wednesday of such week. Borrower shall conduct a physical inventory
no less frequently than annually and shall provide to Lender a report based on
each such physical inventory promptly thereafter, together with such supporting
information as Lender shall request.

        7.4.   Administration of Equipment.

               Records and Schedules of Equipment. Borrower shall use its
reasonable efforts to keep accurate records itemizing and describing the kind,
quantity and value of its Equipment and all dispositions made in accordance with
subsection 6.4.2 hereof, and upon Lender's request therefor shall furnish Lender
with a current schedule containing the foregoing information.

               Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $100,000 or less, provided, that, all proceeds thereof are
remitted to Lender for application to the Loans, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind, function and value, provided that the replacement Equipment shall be
acquired prior to or concurrently with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens, and Borrower shall have
given Lender at least 5 days prior written notice of such disposition.

        Payment of Charges. All amounts chargeable to Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Revolving Credit Loans constituting Base Rate
Loans from time to time.


SECTION 8.     REPRESENTATIONS AND WARRANTIES

        General Representations and Warranties. To induce Lender to enter into
this Agreement


                                       18
<PAGE>

and to make advances hereunder, Borrower warrants, represents and covenants to
Lender that:

               Organization and Qualification. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit 7.1.1 hereto and in all other states and jurisdictions where
the character of its Properties or the nature of its activities make such
qualification necessary.

               Corporate Power and Authority. Borrower is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and each of
the other Loan Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Loan Documents have been
duly authorized by all necessary corporate action and do not and will not (i)
require any consent or approval of the shareholders of Borrower; (ii) contravene
Borrower's charter, articles or certificate of incorporation or by-laws; (iii)
violate, or cause Borrower to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award in effect having applicability to Borrower; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower is a party or by which it
or its Properties may be bound or affected; or (v) result in, or require, the
creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by Borrower.

               Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding obligation of Borrower enforceable against it in accordance with its
respective terms.

               Capital Structure. Exhibit 7.1.4 hereto states (i) the correct
name of each of the Subsidiaries of Borrower, its jurisdiction of incorporation
and the percentage of its Voting Stock owned by Borrower, (ii) the name of each
of Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of Borrower and each Subsidiary of Borrower and (iv) the number of authorized,
issued and treasury shares of Borrower and each Subsidiary of Borrower. Borrower
has good title to all of the shares it purports to own of the stock of each of
its Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. Except as set forth on Exhibit 7.1.4, there are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of Borrower or any of its Subsidiaries. There are no outstanding
agreements or instruments binding upon any of Borrower's shareholders relating
to the ownership of its shares of capital stock.

               Corporate Names. Neither Borrower nor any of its Subsidiaries has
been known as or used any corporate, fictitious or trade names except those
listed on Exhibit 7.1.5 hereto. Except as set forth on Exhibit 7.1.5, neither
Borrower nor any of its Subsidiaries has been the


                                       19
<PAGE>

surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.

               Business Locations; Agent for Process. Each of Borrower's and its
Subsidiaries' chief executive office and other places of business are as listed
on Exhibit 7.1.6 hereto. Except as shown on Exhibit 7.1.6, no Inventory is
stored with a bailee, warehouseman or similar party, nor is any Inventory
consigned to any Person.

               Title to Properties; Priority of Liens. Except as set forth on
Exhibit 7.1.7, each of Borrower and its Subsidiaries has good, indefeasible and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and good title to all of the
Collateral and all of its other Property, in each case, free and clear of all
Liens except Permitted Liens. Borrower has paid or discharged all lawful claims
which, if unpaid, might become a Lien against any of Borrower's Properties that
is not a Permitted Lien. The Liens granted to Lender under Section 5 hereof are
first priority Liens, subject only to Permitted Liens.

               Accounts. Unless otherwise indicated in writing to Lender, with
respect to each Account:

                      (i) It is genuine and in all respects what it purports to
               be, and it is not evidenced by a judgment;

                      (ii) It arises out of a completed, bona fide sale and
               delivery of goods or rendition of services by Borrower in the
               ordinary course of its business and in accordance with the terms
               and conditions of all purchase orders, contracts or other
               documents relating thereto and forming a part of the contract
               between Borrower and the Account Debtor;

                      (iii) Such Account, and Lender's security interest
               therein, is not, and will not (by voluntary act or omission of
               Borrower) be in the future, subject to any offset, Lien,
               deduction, defense, dispute, counterclaim or any other adverse
               condition except for disputes resulting in returned goods where
               the amount in controversy is deemed by Lender to be immaterial,
               and each such Account is absolutely owing to Borrower and is not
               contingent in any respect or for any reason; and

                      (iv) Borrower has made no agreement with any Account
               Debtor thereunder for any extension, compromise, settlement or
               modification of any such Account or any deduction therefrom,
               except discounts or allowances which are granted by Borrower in
               the ordinary course of its business for prompt payment and which
               are reflected in the calculation of the net amount of each
               respective invoice related thereto.

               Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating


                                       20
<PAGE>

efficiency of the Equipment shall be maintained and preserved, reasonable wear
and tear excepted.

               8.1.10.Financial Statements; Fiscal Year.

                      (a) The balance sheets of Borrower as of December 31,
1997, and the related statements of income, changes in stockholder's equity, and
changes in financial position for the periods ended on such dates, have been
prepared in accordance with GAAP, and present fairly the financial position of
Borrower at such dates and the results of Borrower's operations for such
periods. Since July 31, 1998, there has been no material change in the
condition, financial or otherwise, of Borrower and no change in the aggregate
value of Equipment and real Property owned by Borrower, except changes in the
ordinary course of business, none of which individually or in the aggregate has
been materially adverse. The fiscal year of Borrower and each of its
Subsidiaries ends on December 31 of each year.

                      (b) The twelve-month cash flow projections of Borrower and
its projected balance sheets as of the Closing Date, copies of which are annexed
hereto as Exhibit 7.1.10(c) (the "Closing Projections") were prepared by the
Chief Financial Officer of Borrower, are based on underlying assumptions which
provide a reasonable basis for the projections contained therein and reflect
Borrower's judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period.

               Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which Borrower has failed to disclose to
Lender in writing which materially affects adversely or, so far as Borrower can
now foresee, will materially affect adversely the Properties, business,
prospects, profits or condition (financial or otherwise) of Borrower or any of
its Subsidiaries or the ability of Borrower or its Subsidiaries to perform this
Agreement or the other Loan Documents.

               Solvent Financial Condition. Each of Borrower and its
Subsidiaries is now and, after giving effect to the Loans to be made and the
Letters of Credit and LC Guaranties to be issued hereunder, at all times will
be, Solvent.

               Surety Obligations. Neither Borrower nor any of its Subsidiaries
is obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.

               Taxes. Borrower's federal tax identification number is
56-1379322. The federal tax identification number of each of Borrower's
Subsidiaries is shown on Exhibit 7.1.14 hereto. Borrower and each of its
Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all taxes, assessments, fees, levies and other governmental charges
upon it, its income and Properties as


                                       21
<PAGE>

and when such taxes, assessments, fees, levies and charges that are due and
payable, unless and to the extent any thereof are being actively contested in
good faith and by appropriate proceedings and Borrower maintains reasonable
reserves on its books therefor. The provision for taxes on the books of Borrower
and its Subsidiaries are adequate for all years not closed by applicable
statutes, and for its current fiscal year.

               Brokers. Except as set forth on Exhibit 7.1.15, there are no
claims for brokerage commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.

               8.1.16.Patents, Trademarks, Copyrights and Licenses.
  Each of Borrower and its Subsidiaries owns or possesses all the patents,
trademarks, service marks, trade names, copyrights and licenses necessary for
the present and planned future conduct of its business without any known
conflict with the rights of others. All such patents, trademarks, service marks,
tradenames, copyrights, licenses and other similar rights are listed on Exhibit
7.1.16 hereto.

               8.1.17.Governmental Consents.
  Each of Borrower and its Subsidiaries has, and is in good standing with
respect to, all governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises necessary to continue to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it.

               Compliance with Laws. Each of Borrower and its Subsidiaries has
duly complied with, and its Properties, business operations and leaseholds are
in compliance in all material respects with, the provisions of all federal,
state and local laws, rules and regulations applicable to Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business and
there have been no citations, notices or orders of noncompliance issued to
Borrower or any of its Subsidiaries under any such law, rule or regulation. Each
of Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance with all federal,
state and local laws, rules and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. ss. 201 et
seq.), as amended.

               8.1.19.Restrictions.
Except as expressly set forth in the Plan of Reorganization, neither Borrower
nor any of its Subsidiaries is a party or subject to any contract, agreement, or
charter or other corporate restriction, which materially and adversely affects
its business or the use or ownership of any of its Properties. Neither Borrower
nor any of its Subsidiaries is a party or subject to any contract or agreement
which restricts its right or ability to incur Indebtedness, other than as set
forth on Exhibit 7.1.19 hereto, none of which prohibit the execution of or
compliance with this Agreement or the other Loan Documents by Borrower or any of
its Subsidiaries, as applicable.

               Litigation. Except as set forth on Exhibit 7.1.20 hereto, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or

                                       23
<PAGE>


affecting Borrower or any of its Subsidiaries, or the business, operations,
Properties, prospects, profits or condition of Borrower or any of its
Subsidiaries. Neither Borrower nor any of its Subsidiaries is in default with
respect to any order, writ, injunction, judgment, decree or rule of any court,
governmental authority or arbitration board or tribunal.

               No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or Borrower's
performance hereunder, constitute a Default or an Event of Default. Neither
Borrower nor any of its Subsidiaries is in default, and no event has occurred
and no condition exists which constitutes, or which with the passage of time or
the giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed.

               Leases. Exhibit 7.1.22(A) hereto is a complete listing of all
capitalized leases of Borrower and its Subsidiaries and Exhibit 7.1.22(B) hereto
is a complete listing of all operating leases of Borrower and its Subsidiaries.
Each of Borrower and its Subsidiaries is in full compliance with all of the
terms of each of its respective capitalized and operating leases.

               Pension Plans. Except as disclosed on Exhibit 7.1.23 hereto,
neither Borrower nor any of its Subsidiaries has any Plan. Borrower and each of
its Subsidiaries is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of Borrower or any of its Subsidiaries exists in connection with any
Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal liability
in connection with a Multiemployer Plan.

               Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and except as expressly set forth in the Plan of
Reorganization, there exists no present condition or state of facts or
circumstances which would materially affect adversely Borrower or any of its
Subsidiaries or prevent Borrower or any of its Subsidiaries from conducting such
business after the consummation of the transaction contemplated by this
Agreement in substantially the same manner in which it has heretofore been
conducted.

               Labor Relations. Except as described on Exhibit 7.1.25 hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower's or any of
its Subsidiaries' employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.

               Delivery of Subordinated Note. Lender has received a complete
copy of the Subordinated Note and all amendments thereto, waivers relating
thereto and other side letters or agreements affecting the terms thereof. The
Subordinated Note has not been amended or supplemented, no default has occurred
thereunder nor have any of the provisions thereof been


                                       23
<PAGE>

waived, except pursuant to a written agreement or instrument which has
heretofore been delivered to Lender. The transactions contemplated by the
Subordinated Note have been consummated on the terms and conditions set forth
therein and in accordance with all applicable law.

        Continuous Nature of Representations and Warranties. Each representation
and warranty contained in this Agreement and the other Loan Documents shall be
continuous in nature and shall remain accurate, complete and not misleading at
all times during the term of this Agreement, except for changes in the nature of
Borrower's or its Subsidiaries' business or operations that would render the
information in any exhibit attached hereto either inaccurate, incomplete or
misleading, so long as Lender has consented to such changes or such changes are
expressly permitted by this Agreement.

        Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.


SECTION 9.     COVENANTS AND CONTINUING AGREEMENTS

        Affirmative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that,
unless otherwise consented to by Lender in writing, it shall:

               Visits and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Properties of Borrower and each of its
Subsidiaries, inspect, audit and make extracts from its books and records, and
discuss with its officers, its employees and its independent accountants,
Borrower's and each of its Subsidiaries' business, assets, liabilities,
financial condition, business prospects and results of operations.

               Notices. Promptly notify Lender in writing of the occurrence of
any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.

               Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions; and cause to be prepared and furnished to Lender the
following (all to be prepared in accordance with GAAP applied on a consistent
basis, unless Borrower's certified public accountants concur in any change
therein and such change is disclosed to Lender and is consistent with GAAP):

                      (i) not later than 120 days after the close of each fiscal
               year of Borrower, unqualified audited Financial Statements of
               Borrower as of the end of


                                       24
<PAGE>

               such year which shall provide comparisons to the financial
               statements for the immediately preceding fiscal year, certified
               by Ernst & Young LLP or such other independent certified public
               accountants of recognized standing selected by Borrower but
               acceptable to Lender (except for a qualification for a change in
               accounting principles with which the accountant concurs);

                      (ii) not later than 30 days after the end of each month
               hereafter, including the last month of Borrower's fiscal year,
               unaudited interim balance sheets, statements of income and
               stockholders' equity and cash flow of Borrower as of the end of
               such month which shall provide comparisons to the financial
               statements for the immediately preceding month and of the portion
               of Borrower's financial year then elapsed certified by the
               principal financial officer of Borrower as prepared in accordance
               with GAAP and fairly presenting the financial position and
               results of operations of Borrower for such month and period
               subject only to changes from audit and year-end adjustments and
               except that such statements need not contain notes;

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

                      (iv) promptly after the filing thereof, copies of any
               annual report to be filed with the Pension Benefit Guaranty
               Corporation (the "PBGC") or ERISA in connection with each Plan;
               and

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

               Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.3, Borrower shall forward to
Lender a copy of the accountants' letter to Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Lender a certificate of the aforesaid certified
public accountants certifying to Lender that, based upon their examination of
the financial statements of Borrower performed in connection with their
examination of said financial statements, they are not aware of any Default or
Event of Default, or, if they are aware of such Default or Event of Default,
specifying the nature thereof, and acknowledging, in a manner satisfactory to
Lender, that they are aware that Lender is relying on such financial statements
in making its decisions with respect to the Loans. Concurrently with the
delivery of the financial statements described in clauses (i) and (ii) of this
subsection 8.1.3, or more frequently if requested by Lender, Borrower shall
cause to be prepared and furnished to Lender a Compliance Certificate in the
form of


                                       25
<PAGE>

Exhibit 8.1.3 hereto executed by the Chief Financial Officer of Borrower.

               Landlord and Storage Agreements.Immediately upon (a) Lender's
request therefor with respect to premises utilized by Borrower on or prior to
the Closing Date and (b) Borrower's entering into any lease or warehouse
agreement with respect to any additional premises utilized by Borrower after the
Closing Date (each, an "Additional Location"), provide Lender with copies of all
agreements between Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory and/or Equipment
may, from time to time, be kept. With respect to each Additional Location,
Borrower shall use its best efforts to cause the landlord or warehouseman, as
applicable, of each such location to deliver to Lender, prior to Borrower's
entering into any lease or warehouse agreement with respect to such Additional
Location, a landlord waiver or warehouseman's waiver, as applicable, acceptable
in all respects to Lender.

               Projections. No later than 30 days after to the end of each
fiscal year of Borrower, deliver to Lender, Projections of Borrower for the
forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by
month.

               9.1.6. 


                                       26
<PAGE>

Recordkeeping. Maintain at all times a perpetual inventory tracking system which
tracks Borrower's inventory by unit designation, price point and location, such
system to be satisfactory to Lender.

               9.1.8. Borrowing Base Certificate.
  Deliver to Lender on Wednesday of each week a fully completed Borrowing Base
Certificate as for the last day of the immediately preceding week, in form and
substance satisfactory to Lender.

               9.1.9. Business and Collateral Locations.
Deliver to Lender on the last day of each December, March, June and September
during the term of this Agreement a schedule of all of Borrower's business and
Collateral locations.

        Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that,
unless Lender has first consented thereto in writing, it will not:

               Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary of Borrower to merge or consolidate, with any Person; nor
acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Properties of any Person.

               Loans. Make, or permit any Subsidiary of Borrower to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.

               Total Indebtedness. Create, incur, assume, or suffer to exist, or
permit any Subsidiary of Borrower to create, incur or suffer to exist, any
Indebtedness, except:

                      (i) Obligations owing to Lender;

                      (ii) Subordinated Debt as evidenced by the Subordinated
               Note as in effect on the date of this Agreement;

                      (iii) Indebtedness of any Subsidiary of Borrower to
               Borrower;

                      (iv) accounts payable to trade creditors and current
               operating expenses (other than for Money Borrowed) which are not
               aged more than 360 days from billing date or more than 45 days
               from the due date, in each case incurred in the ordinary course
               of business and paid within such time period, unless the same are
               being actively contested in good faith and by appropriate and
               lawful proceedings; and Borrower or such Subsidiary shall have
               set aside such reserves, if any, with respect thereto as are
               required by GAAP and deemed adequate by Borrower or such
               Subsidiary and its independent accountants;

                      (v) Obligations to make lease payments pursuant to the
               terms of any lease to which Borrower or any Subsidiary of
               Borrower is a party;

                                       27
<PAGE>

                      (vi)   Permitted Purchase Money Indebtedness;

                      (vii) contingent liabilities arising out of endorsements
               of checks and other negotiable instruments for deposit or
               collection in the ordinary course of business; and

                      (viii) Indebtedness not included in paragraphs (i) through
               (vii) above which does not exceed at any time, in the aggregate,
               the sum of $100,000

               Affiliate Transactions. Enter into, or be a party to, or permit
any Subsidiary of Borrower to enter into or be a party to, any transaction with
any Affiliate of Borrower or stockholder, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms which are fully disclosed to Lender
and are no less favorable to Borrower than would obtain in a comparable arm's
length transaction with a Person not an Affiliate or stockholder of Borrower or
such Subsidiary.

               Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:

                      (i) Liens at any time granted in favor of Lender;

                      (ii) Liens for taxes (excluding any Lien imposed pursuant
               to any of the provisions of ERISA) not yet due, or being
               contested in the manner described in subsection 7.1.14 hereto,
               but only if in Lender's judgment such Lien does not adversely
               affect Lender's rights or the priority of Lender's Lien in the
               Collateral;

                      (iii) Liens arising in the ordinary course of Borrower's
               business by operation of law or regulation, but only if payment
               in respect of any such Lien is not at the time required and such
               Liens do not (1) have any effect on the priority of the Liens in
               favor of Lender and (2) in the aggregate, materially detract from
               the value of the Property of Borrower or materially impair the
               use thereof in the operation of Borrower's business;

                      (iv) Purchase Money Liens securing Permitted Purchase
               Money Indebtedness;

                      (v) Liens securing Indebtedness of one of Borrower's
               Subsidiaries to Borrower or another such Subsidiary;

                      (vi) any interest of a lessor under any lease entered into
               by Borrower in the ordinary course of its business, which such
               interest covers only the assets so leased;

                                       28
<PAGE>

                      (vii) such other Liens as appear on Exhibit 8.2.5 hereto;
               and

                      (viii) such other Liens as Lender may hereafter approve in
               writing.

               Subordinated Debt. Make, or permit any Subsidiary of Borrower to
make, any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt;
provided, however, so long as no Default or Event of Default shall then be in
existence, Borrower shall be permitted to make (a) regularly scheduled payments
of interest as set forth on the Closing Date in the Subordinated Note and (b) on
and after January 1, 2000, regularly scheduled payments of principal as set
forth on the Closing Date in the Subordinated Note.

               Distributions. Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions, except purchases, not to exceed
an aggregate amount at any time in excess of $100,000, of Borrower's capital
stock from Borrower's terminated officers, provided that at the time of and
immediately after giving effect to each such purchase no Event of Default shall
have occurred and be continuing.

               Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which are not made on fair and
reasonable terms and which are not reasonably related to the business conducted
or proposed to be conducted by Borrower.

               Disposition of Assets. Sell, lease or otherwise dispose of any
of, or permit any Subsidiary of Borrower to sell, lease or otherwise dispose any
of, its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder, (ii) a transfer of Property to Borrower by a Subsidiary of
Borrower or (iii) dispositions expressly authorized by this Agreement.

               Stock of Subsidiaries. Permit any of its Subsidiaries to issue
any additional shares of its capital stock except director's qualifying shares.

               Bill-and-Hold Sales, Etc. Make a sale to any customer on a
bill-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.

               Restricted Investment. Make or have, or permit any Subsidiary of
Borrower to make or have, any Restricted Investment.

               Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower.

        Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented


                                       29
<PAGE>

to by Lender in writing, it shall:

               Minimum Net Worth. Maintain at all times a Minimum Net Worth
during the periods set forth below of at least the amount set forth below
opposite the applicable period:

               Period                                         Amount
               ------                                         ------

               Closing Date - November 30, 1998                    $ 0

               December 1, 1998 - December 31, 1998         $2,000,000

               January 1, 1999 - March 31, 1999             $1,000,000

               April 1, 1999 - September 30, 1999            $ 750,000

               October 1, 1999 - November 30, 1999          $1,000,000

               December 1, 1999 - December 31, 1999         $3,000,000

               January 1, 2000 - November 30, 2000          $2,000,000

               December 1, 2000 - December 31, 2000         $4,000,000

               January 1, 2001 - November 30, 2001          $3,000,000

               December 1, 2001 - December 31, 2001         $5,000,000

               January 1, 2002 - November 30, 2002          $4,000,000

               December 1, 2002 - December 31, 2002         $6,000,000

               January 1, 2003 and at all times thereafter  $5,000,000


               Leverage Ratio. Maintain a Leverage Ratio at the end of each
Fiscal Quarter with respect to the four (4) Fiscal Quarters then ended of not
greater than (a) 3:00 to 1:00 for the three months ending December 31, 1998, (b)
3:00 to 1:00 for the six months ending March 31, 1999, (c) 4:00 to 1:00 for the
nine months ending June 30, 1999, (d) 4:25 to 1:00 for the twelve months ending
September 30, 1999 and (e) 3:00 to 1:00 for each Fiscal Quarter ending after
September 30, 1999; provided, however, with respect to all Fiscal Quarters
ending prior to September 30, 1999, solely for purposes of determining the
Leverage Ratio under this subsection 8.3.2, EBITDA shall be calculated on an
annualized cumulative basis through the applicable Fiscal Quarter end.

               Cash Flow.Maintain Cash Flow of not less than (a) $2,000,000 for
the three months ending December 31, 1998, (b) $1,000,000 for the six months
ending March 31, 1999, (c) $500,000 for the nine months ending June 30, 1999,
(d) $500,000 for the twelve months ended September 30, 1999 and (e) $500,000 for
each fiscal quarter ending after September 30, 1999 (calculated in each case on
a rolling twelve month basis). In the event Borrower makes any payments under
the Subordinated Note in accordance with the terms of subsection 8.2.6 hereof
("Permitted Subordinated Debt Payments"), then, solely for purposes of
calculating Cash Flow under this subsection 8.3.3, the Permitted Subordinated
Debt Payments actually made during any period shall be included as an addition
item in the calculation of Cash Flow for such period.


SECTION 10.    CONDITIONS PRECEDENT

                                       30
<PAGE>

        Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other sections of this Agreement, Lender shall not be required to make
any Loan under this Agreement unless and until each of the following conditions
has been and continues to be satisfied:

        Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel.

        No Default.  No Default or Event of Default shall exist.

        Other Loan Documents. Each of the conditions precedent set forth in the
other Loan Documents shall have been satisfied.

        No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement, the Subordinated Note or the consummation of the transactions
contemplated hereby or thereby. In addition, (i) no litigation, investigation or
proceeding before or by any arbitrator or governmental body shall be continuing
or threatened against Borrower or against the officers or directors of Borrower
which if adversely determined, could, in the reasonable opinion of Lender, have
a Material Adverse Effect on Borrower; and (ii) no injunction, writ, restraining
order or other order of any nature materially adverse to Borrower or the conduct
of its business or inconsistent with the due consummation of the transactions
shall have been issued by any governmental body.

        Filings, Registrations and Recordings. Each document (including, without
limitation, any Uniform Commercial Code financing statement) required by this
Agreement, any related agreement or under law or reasonably requested by Lender
to be filed, registered or recorded in order to create, in favor of Lender, a
perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, and Lender
shall have received an acknowledgment copy, or other evidence satisfactory to
it, of each such filing, registration or recordation and satisfactory evidence
of the payment of any necessary fee, tax or expense relating thereto.

        Corporate Proceedings of Borrower. Lender shall have received a copy of
the resolutions in form and substance reasonably satisfactory to Lender, of the
Board of Directors of Borrower authorizing (i) the execution, delivery and
performance of this Agreement and all other Loan Documents (collectively the
"Documents") and (ii) the granting by Borrower of the security interests in and
liens upon the Collateral, in each case certified by an authorized officer of
Borrower as of the Closing Date; and, such certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded as of the date of such


                                       31
<PAGE>

certificate.

        Incumbency Certificates of Borrower. Lender shall have received a
certificate of an authorized officer of Borrower, dated the Closing Date, as to
the incumbency and signature of the officers of Borrower executing this
Agreement or any other Loan Document, any certificate or other documents to be
delivered by it pursuant hereto, together with evidence of the incumbency of
such authorized officer.

        Certificates. Lender shall have received a copy of the Articles or
Certificate of Incorporation of Borrower, and all amendments thereto, certified
by the Secretary of State or other appropriate official of its jurisdiction of
incorporation together with copies of the By-Laws of Borrower and all agreements
of Borrower's shareholders certified as accurate and complete by an authorized
officer of Borrower.

        Good Standing Certificates. Lender shall have received good standing
certificates for Borrower dated not more than 30 days prior to the Closing,
issued by the Secretary of State or other appropriate official of Borrower's
jurisdiction of incorporation and each jurisdiction where the conduct of
Borrower's business activities or the ownership of its properties necessitates
qualification.

        Legal Opinion. Lender shall have received the executed legal opinion of
Butler, Fitzgerald & Potter in form and substance satisfactory to Lender, each
of which shall cover such matters incident to the transactions contemplated by
this Agreement and related agreements as Lender may reasonably require.

        Fees. Lender shall have received all fees payable to Lender on or prior
to the Closing Date pursuant to this Agreement.

        Insurance. Lender shall have received in form and substance satisfactory
to Lender certified copies of Borrower's casualty insurance policies, together
with loss payable endorsements on Lender's standard form of loss payee
endorsement naming Lender as loss payee, and certified copies of Borrower's
liability insurance policies, together with endorsements naming Lender as a
co-insured.

        Subordinated Note. Lender shall have received in form and substance
satisfactory to Lender a final executed copy of the Subordinated Note, and all
related agreements, documents and instruments as in effect on the Closing Date
and the transactions contemplated by such documentation shall be consummated
concurrently with the making of the initial Loans.

        Payment Instructions. Lender shall have received written instructions
from Borrower directing the application of proceeds of the initial Revolving
Credit Loans made pursuant to this Agreement.

        Blocked Accounts. Lender shall have received duly executed agreements
establishing the Blocked Accounts with financial institutions acceptable to
Lender for the collection or servicing


                                       32
<PAGE>

of the Receivables and proceeds of the Collateral.

        No Adverse Material Change. (i) Since July 31, 1998, there shall have
occurred (x) no material adverse change in the condition, financial or
otherwise, operations, properties or prospects of Borrower, (y) no material
damage or destruction to any of the Collateral nor any material depreciation in
the value thereof and (z) no event, condition or state of facts which could
reasonably be expected to have a Material Adverse Effect on Borrower and (ii) no
representations made or information supplied to Lender shall have been proven to
be inaccurate or misleading in any material respect.

        Contract Review. Lender shall have reviewed all material contracts of
Borrower including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be reasonably satisfactory in
all material respects to Lender.

        Subordination Agreement. Lender shall have received, in form and
substance satisfactory to Lender and its counsel, a duly executed copy of the
Subordination Agreement.

        10.19. Bankruptcy Court Confirmation.
Lender shall have received, in form and substance satisfactory to Lender and its
counsel, the final and non-appealable Confirmation Order which shall have been
entered by the Court.

        Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated hereby shall be satisfactory in form and substance to Lender and
its counsel.


SECTION 11.    EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

        Events of Default. The occurrence of one or more of the following events
shall constitute an "Event of Default":

               Payment of Obligations Note. Borrower shall fail to pay any of
the Obligations on the due date thereof (whether due at stated maturity, on
demand, upon acceleration or otherwise).

               Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower in this Agreement, any of the other Loan Documents or any
instrument, certificate or financial statement furnished in compliance with or
in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.

               Breach of Specific Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 6.1.1, 6.2,
8.1.1, 8.1.3, 8.2 or 8.3 hereof on the date that Borrower is required to
perform, keep or observe such covenant.

                                       33
<PAGE>

               Breach of Other Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Lender's satisfaction within
15 days after the sooner to occur of Borrower's receipt of notice of such breach
from Lender or the date on which such failure or neglect first becomes known to
any officer of Borrower.

               Default Under Security Documents/Other Agreements/Subordinated
Note/Subordination Agreement. Any event of default shall occur under, or
Borrower shall default in the performance or observance of any term, covenant,
condition or agreement contained in, any of the Security Documents, the Other
Agreements, the Subordinated Note or the Subordination Agreement and such
default shall continue beyond any applicable grace period.

               Other Defaults. There shall occur any default or event of default
on the part of Borrower under any agreement, document or instrument to which
Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) having an
aggregate outstanding principal balance in excess of $100,000 (the "Basket") if
the payment or maturity of such Indebtedness is accelerated in consequence of
such event of default or demand for payment of such Indebtedness is made;
provided, however, notwithstanding the Basket, any default or event of default
in respect of the Subordinated Debt shall constitute an Event of Default
hereunder.

               Uninsured Losses. Any material loss, theft, damage or destruction
of any of the Collateral not fully covered (subject to such deductibles as
Lender shall have permitted) by insurance.

               Adverse Changes. There shall occur any material adverse change in
the financial condition or business prospects of Borrower.

               Insolvency and Related Proceedings. Borrower shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against Borrower under
the Bankruptcy Code (if against Borrower, the continuation of such proceeding
for more than 30 days), or Borrower or shall make any offer of settlement,
extension or composition to its respective unsecured creditors generally.

               Business Disruption; Condemnation. There shall occur a cessation
of a substantial part of the business of Borrower, or any Subsidiary of Borrower
for a period which significantly affects Borrower's capacity to continue its
business, on a profitable basis; or Borrower or any Subsidiary of Borrower shall
suffer the loss or revocation of any license or permit now held or hereafter
acquired by Borrower or such Subsidiary which is necessary to the continued or
lawful operation of its business; or Borrower or any Subsidiary of Borrower
shall be enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement


                                       34
<PAGE>

pursuant to which Borrower or any Subsidiary of Borrower leases, uses or
occupies any Property shall be canceled or terminated prior to the expiration of
its stated term; or any part of the Collateral shall be taken through
condemnation or the value of such Property shall be impaired through
condemnation.

               Change of Ownership. At any time, any Person other than Jordan
Industries, singly or together with the Affiliates of Jordan Industries, shall
own or control, beneficially or of record, more than fifty percent (50%) of the
issued and outstanding capital stock of Borrower.

               ERISA. A Reportable Event shall occur which Lender, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the PBGC of any Plan or for the appointment by the appropriate
United States district court of a trustee for any Plan, or if any Plan shall be
terminated or any such trustee shall be requested or appointed, or if Borrower
or any Subsidiary of Borrower is in "default" (as defined in Section 4219(c)(5)
of ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's or such Subsidiary's complete or partial withdrawal from such Plan.

               Challenge to Agreement. Borrower or any Subsidiary of Borrower,
or any Affiliate of any of them, shall challenge or contest in any action, suit
or proceeding the validity or enforceability of this Agreement, or any of the
other Loan Documents, the legality or enforceability of any of the Obligations
or the perfection or priority of any Lien granted to Lender.

               Criminal Forfeiture. Borrower or any Subsidiary of Borrower shall
be criminally indicted or convicted under any law that could lead to a
forfeiture of any Property of Borrower or any Subsidiary of Borrower.

               Judgments. Any money judgment, writ of attachment or similar
process is filed against Borrower or any Subsidiary of Borrower or any of their
respective Property if the aggregate outstanding amount thereof is in excess of
$100,000.

        Acceleration of the Obligations. Without in any way limiting the right
of Lender to demand payment of any portion of the Obligations payable on demand
in accordance with Section 3.2 hereof, upon or at any time after the occurrence
of an Event of Default, all or any portion of the Obligations shall, at the
option of Lender and without presentment, demand protest or further notice by
Lender, become at once due and payable and Borrower shall forthwith pay to
Lender, the full amount of such Obligations, provided, that upon the occurrence
of an Event of Default specified in subsection 10.1.9 hereof, all of the
Obligations shall become automatically due and payable without declaration,
notice or demand by Lender.

        Other Remedies. Upon and after the occurrence of an Event of Default,
Lender shall have and may exercise from time to time the following rights and
remedies:

               10.3.1.All of the rights and remedies of a secured party under
the Code or under other applicable law, and all other legal and equitable rights
to which Lender may be entitled, all


                                       35
<PAGE>

of which rights and remedies shall be cumulative and shall be in addition to any
other rights or remedies contained in this Agreement or any of the other Loan
Documents, and none of which shall be exclusive.

               10.3.2.The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Lender at a place designated by Lender which is
reasonably convenient to both parties, and (ii) enter any premises where any of
the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Lender for storage thereof).

               10.3.3.The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that 10 days written
notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after allowing
five (5) Business Days for collection, first to the costs, expenses and
attorneys' fees incurred by Lender in collecting the Obligations, in enforcing
the rights of Lender under the Loan Documents and in collecting, retaking,
completing, protecting, removing, storing, advertising for sale, selling and
delivering any Collateral, second to the interest due upon any of the
Obligations; and third, to the principal of the Obligations. If any deficiency
shall arise, Borrower shall remain liable to Lender therefor.

               10.3.4.Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit.

               10.3.5.Lender may, at its option, require Borrower to deposit
with Lender funds equal to the LC Amount and, if Borrower fails to promptly make
such deposit, Lender may advance such amount as a Revolving Credit Loan (whether
or not an Overadvance is created thereby). Any such deposit or advance shall be
held by Lender as a reserve to fund future payments on such LC Guaranties and
future drawings against such Letters of Credit. At such time as all LC
Guaranties have been paid or terminated and all Letters of Credit have been
drawn upon or expired, any amounts remaining in such reserve shall be applied
against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.

                                       36
<PAGE>

        Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule given to Lender or contained in any other agreement between Lender and
Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained. The failure
or delay of Lender to require strict performance by Borrower of any provision of
this Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies, but all such requirements, Liens, rights, powers,
and remedies shall continue in full force and effect until all Loans and all
other Obligations owing or to become owing from Borrower to Lender shall have
been fully satisfied. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Lender and directed to Borrower.


SECTION 12.    MISCELLANEOUS

        Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:

               11.1.1.At such time or times upon or after the occurrence of a
Default or an Event of Default as Lender or said agent, in its sole discretion,
may determine, endorse Borrower's name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Lender or under Lender's control.

               11.1.2.At such time or times upon or after the occurrence of a
Default or an Event of Default as Lender or its agent in its sole discretion may
determine: (i) demand payment of the Accounts from the Account Debtors, enforce
payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of Borrower's rights and remedies with respect to the collection of
the Accounts; (ii) settle, adjust, compromise, discharge or release any of the
Accounts or other Collateral or any legal proceedings brought to collect any of
the Accounts or other Collateral; (iii) sell or assign any of the Accounts and
other Collateral upon such terms, for such amounts and at such time or times as
Lender deems advisable; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in


                                       37
<PAGE>

connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrower's obligations under this Agreement.

        Indemnity. Borrower hereby indemnifies Lender and holds Lender harmless
from and against any liability, loss, damage, suit, action or proceeding ever
suffered or incurred by Lender (including reasonable attorneys fees and legal
expenses) as the result of Borrower's failure to observe, perform or discharge
Borrower's duties hereunder. In addition, Borrower shall defend Lender against
and save it harmless from all claims of any Person with respect to the
Collateral. Without limiting the generality of the foregoing, these indemnities
shall extend to any claims asserted against Lender by any Person under any
Environmental Laws or similar laws by reason of Borrower's or any other Person's
failure to comply with laws applicable to solid or hazardous waste materials or
other toxic substances. Notwithstanding any contrary provision in this
Agreement, the obligation of Borrower under this Section 11.2 shall survive the
payment in full of the Obligations and the termination of this Agreement.

        Modification of Agreement; Sale of Interest. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were a "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignments. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower and its Subsidiaries to any
potential participant or assignee.

        Severability. Wherever possible, each provision of this Agreement shall
be interpreted in


                                       38
<PAGE>

such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

        Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.

        Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.

        Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same
agreement.

        Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:

               If to Lender:           FLEET CAPITAL CORPORATION
                                       200 Glastonbury Boulevard
                                       Glastonbury, Connecticut 06033
                                       Attention: Northeast Loan Administrator
                                       Facsimile No: (860) 657-7759

               With a copy to:         HAHN & HESSEN LLP
                                       350 Fifth Avenue
                                       New York, New York 10118
                                       Attention: Daniel J. Krauss, Esq.
                                       Facsimile No: (212) 594-7167

               If to Borrower:         WELCOME HOME, INC.
                                       309-D Raleigh Street
                                       Wilmington, North Carolina 28412


                                       39
<PAGE>

                                       Attention: Chief Financial Officer
                                       Facsimile No: (910) 791-4945

               With copies to:         Butler, Fitzgerald & Potter P.C.
                                       1155 Avenue of the Americas
                                       New York, New York 10036
                                       Attention: Raymond Fitzgerald, Esq.
                                       Facsimile No: (212) 302-4988

               and                     JORDAN INDUSTRIES, INC.
                                       1751 Lake Cook Road
                                       Deerfield, Illinois 60015
                                       Attention:    Gordon Nelson
                                       Facsimile No: (847) 267-3470

or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender.

        Lender's Consent. Whenever Lender's consent is required to be obtained
under this Agreement, any of the Other Agreements or any of the Security
Documents as a condition to any action, inaction, condition or event, Lender
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional collateral
security for the Obligations, the payment of money or any other matter.

        Credit Inquiries. Borrower hereby authorizes and permits Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrower or any of its Subsidiaries.

        Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.

        12.12. Entire Agreement.
  This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.

        12.13. Interpretation.
  No provision of this Agreement or any of the other Loan Documents shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.

        GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS


                                       40
<PAGE>

BEEN NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE
IN NEW YORK, NEW YORK. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK: PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK,
THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
NEW YORK. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR
LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT
SITTING IN THE STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.

        WAIVERS BY BORROWER. BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING


                                       41
<PAGE>

OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL: (II) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER LENDER MAY DO IN THIS REGARD; (III) NOTICE PRIOR TO TAKING POSSESSION
OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY
ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (IV)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (V) NOTICE OF
ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER.
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

        IN WITNESS WHEREOF, this Agreement has been duly executed in New York,
New York, on the day and year specified at the beginning of this Agreement.


ATTEST:                             WELCOME HOME, INC.
                                            ("Borrower")

_______________________________     By:__________________________
Title                               Name:________________________
[CORPORATE SEAL]                    Title:_______________________


                                    ACCEPTED IN NEW YORK, NEW YORK:

                                    FLEET CAPITAL CORPORATION
                                    ("Lender")


                                    By:_____________________________
                                    Name:___________________________
                                    Title:__________________________


                                       42
<PAGE>



                                       43
<PAGE>

                               GENERAL DEFINITIONS

        When used in the Amended and Restated Loan and Security Agreement dated
as of October 29, 1998, by and between Fleet Capital Corporation ("Lender") and
Welcome Home, Inc. ("Borrower"), the following terms shall have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):

        Account Debtor - any Person who is or may become obligated under or on
account of an Account.

        Accounts - all accounts, contract rights, chattel paper, instruments and
documents, whether now owned or hereafter created or acquired by Borrower or in
which Borrower now has or hereafter acquires any interest.

        Additional Availability Amount - $2,000,000, subject to reduction in
accordance with the terms of Section 3.3 of the Agreement.

        Adjusted Net Earnings From Operations - with respect to any fiscal
period, means the net earnings (or loss) after provision for income taxes for
such fiscal period of Borrower and its Subsidiaries on a Consolidated basis, as
reflected on the Consolidated financial statement of Borrower and its
Subsidiaries supplied to Lender pursuant to subsection 8.1.3 of the Agreement,
but excluding:

               (i)    any gain or loss arising from the sale of capital assets;

               (ii)   any gain arising from any write-up of assets;

               (iii) earnings of any Subsidiary of Borrower accrued prior to the
        date it became a Subsidiary;

               (iv) earnings of any corporation or Person, substantially all the
        assets of which have been acquired in any manner by Borrower, realized
        by such corporation or Person prior to the date of such acquisition;

               (v) net earnings of any business entity (other than a Subsidiary
        of Borrower) in which Borrower has an ownership interest unless such net
        earnings shall have actually been received by Borrower in the form of
        cash distributions;

               (vi) any portion of the net earnings of any Subsidiary of
        Borrower which for any reason is unavailable for payment of dividends to
        Borrower;

               (vii) the earnings of any Person to which any assets of Borrower
        shall have been sold, transferred or disposed of, or into which Borrower
        shall have merged, or been a party to any consolidation or other form of
        reorganization, prior to the date of such

<PAGE>

        transaction;

               (viii) any gain arising from the acquisition of any Securities of
        Borrower; and

               (ix) any gain or non cash loss arising from extraordinary or
        non-recurring items.

        Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.

        Agreement - the Amended and Restated Loan and Security Agreement
referred to in the first sentence of this Appendix A, all Exhibits thereto and
this Appendix A.

        Applicable Margin - on the Closing Date the rate per annum set forth
under the relevant column heading below:

                      Base Rate Loans                     Eurodollar Loans
                      ---------------                     ----------------

                      1.25%                               3.25%

provided that following delivery to Agent of Borrower's Financial Statements
(commencing with Borrower's Financial Statements for the 1999 Fiscal Year), the
Applicable Margin shall be subject to change as of the day Lender receives such
Financial Statements based upon the Fixed Charge Coverage Ratio for the Fiscal
Year then ended (so long as (i) such Financial Statements are delivered on or
before the Required Delivery Date therefor and (ii) no Event of Default shall
have occurred and be continuing) to the rates set forth below under the relevant
column heading:

Fixed Charge Coverage Ratio             Eurodollar Loans    Base Rate Loans
---------------------------             ----------------    ---------------

Less than 2.00 to 1.00                       3.25%               1.25%
Greater than or equal to 2.00 to 1.00        3.00%               1.00%
but less than 2.25 to 1.00
Greater than or equal to 2.25 to 1.00        2.75%               0.75%
but less than 2.25 to 1.00
Greater than or equal to 2.50 to 1.00        2.50%               0.50%
but less than 2.75 to 1.00
Greater than 2.75 to 1.00                    2.25%               0.25%

        Availability - the amount of money which Borrower is entitled to borrow
from time to time as Revolving Credit Loans, such amount being the difference
derived when the sum of the principal amount of Revolving Credit Loans then
outstanding (including any amounts which

<PAGE>

Lender may have paid for the account of Borrower pursuant to any of the Loan
Documents and which have not been reimbursed by Borrower) and the LC Amount is
subtracted from the Borrowing Base. If the amount outstanding is equal to or
greater than the Borrowing Base, Availability is 0.

        Bank - Fleet National Bank.

        Bank Payment - as defined in Section 1.2.6 of the Agreement.

        Base Rate - the rate of interest announced or quoted by Bank from time
to time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if such prime
rate for commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the Base
Rate.

        Base Rate Loans - any Loans bearing interest computed by reference to
the Base Rate.

        Borrower - Welcome Home, Inc., a Delaware corporation.

        Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:

               (i)    $15,000,000; or

               (ii)   an amount equal to:

                      (a) 65%, of the value of Eligible Inventory calculated on
               the basis of the lower of cost or market on a first-in, first-out
               basis;

                      PLUS

                      (b)    the Additional Availability Amount;

                      PLUS

                      (c)    the Special Advance Amount.

        Borrowing Base Certificate - means the form of certificate supplied to
Lender by Borrower and used by Borrower to request Loans, a copy of the present
form of which is annexed as Exhibit B.

        Business Day - means, with respect to Eurodollar Loans, any day on which
commercial banks are open for domestic and international business including
dealings in Dollar deposits in London, England and New York, New York and with
respect to all other Loans, any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of

<PAGE>

New York or is a day on which banking institutions located in such state are
closed.

        Capital Expenditures - expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.

        Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

        Cash Collateral Account - as defined in subsection 1.2.7 of the
Agreement.

        Cash Flow - for any fiscal period, means (i) EBITDA minus (ii)
non-financed Capital Expenditures for such period minus (iii) the sum of the
aggregate payments of regularly schedule principal with respect to Indebtedness
for Money Borrowed (other than the Revolving Credit Loans) made during such
period minus (iv) Borrower's interest expense for such period and minus (v) cash
taxes paid by Borrower during such period..

        Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or the
initial Letter of Credit or LC Guaranty is issued under the Agreement.

        Closing Projections - as defined in subsection 7.1.10(c) of the
Agreement.

        Code - the Uniform Commercial Code as adopted and in force in the State
of New York, as from time to time in effect.

        Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.

        Confirmation Order - as defined in Section A of the Agreement.

        Court - as defined in Section A of the Agreement.

        Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets shown
on a balance sheet at such date in accordance with GAAP except that amounts due
from Affiliates and investments in Affiliates shall be excluded therefrom.

        Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.

        Default Rate - as defined in subsection 2.1.2 of the Agreement.
<PAGE>

        Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.

        Dollar - and the sign $ shall mean lawful money of the United States of
America.

        Dominion Account - a special account of Lender established by Borrower
pursuant to the Agreement at a bank selected by Borrower, but acceptable to
Lender in its reasonable discretion, and over which Lender shall have sole and
exclusive access and control for withdrawal purposes.

        EBIT - with respect to any fiscal period, the sum of Adjusted Net
Earnings From Operations before interest expense and taxes for said period as
determined in accordance with GAAP.

        EBITDA - with respect to any fiscal period, the sum of Adjusted Net
Earnings From Operations before interest expense, taxes, depreciation and
amortization for said period as determined in accordance with GAAP.

        Eligible Inventory - such Inventory of Borrower (other than packaging
materials and supplies) which Lender, in its sole credit judgment, deems to be
Eligible Inventory. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if:

               (i) it is not raw material, finished goods, or work-in-process
        that is, in Lender's opinion, readily marketable in its current form; or

               (ii)   it is not in good, new and saleable condition; or

               (iii)  it is slow-moving, obsolete or unmerchantable; or

               (iv) it does not meet all standards imposed by any governmental
        agency or authority; or

               (v) it does not conform in all respects to the warranties and
        representations set forth in the Agreement; or

               (vi) it is not at all times subject to Lender's duly perfected,
        first priority security interest and no other Lien except a Permitted
        Lien; or

               (vii) it is not situated at a location in compliance with the
        Agreement or is in transit.

        Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters.

<PAGE>

        Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or hereafter
acquired by Borrower and wherever located, and all parts, accessories and
special tools and all increases and accessions thereto and substitutions and
replacements therefor.

        ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.

        Eurodollar Loan - any Loan bearing interest computed by reference to the
Eurodollar Rate.

        Eurodollar Rate - for any Eurodollar Loan, for the then current Interest
Period relating thereto, the rate per annum equal to the quotient of (a) LIBOR,
divided by (b) a number equal to 1.00 minus the aggregate of the rates
(expressed as a decimal) of reserve requirements current on the day that is 2
Business Days prior to the beginning of the Interest Period (including without
limitation basic, supplemental, marginal and emergency reserves) under any
regulation promulgated by the Board of Governors of the Federal Reserve System
(or any other governmental authority having jurisdiction over the Bank) as in
effect from time to time, dealing with reserve requirements prescribed for
Eurocurrency funding including any reserve requirements with respect to
"Eurocurrency liabilities" under Regulation D of the Board of Governors of the
Federal Reserve System.

        Event of Default - as defined in Section 10.1 of the Agreement.

        Excess Cash Flow - with respect to any fiscal period of Borrower, the
amount derived by adding to Adjusted Net Earnings From Operations for such
fiscal period depreciation and amortization for such fiscal period and
subtracting from such sum regularly scheduled payments of principal on
Indebtedness for Money Borrowed and Capital Expenditures which are not financed
for such fiscal period.

        Financial Statement - the audited balance sheets, statements of income
and stockholder's equity and cash flow of Borrower for each Fiscal Year.

        Fiscal Quarter - each quarterly accounting period during any Fiscal
Year.

        Fiscal Year - the 12 month accounting period commencing January 1 and
ending December 31 of each year.

        Fixed Charge Coverage Ratio - for any period, the ratio of (i) (A)
EBITDA of Borrower on a Consolidated Basis for such period minus (B) actual
unfinanced Capital Expenditures of Borrower during such period minus (C) cash
taxes actually paid during such period to (ii) the sum of the aggregate of
payments of interest and regularly scheduled principal with respect to

<PAGE>

Indebtedness for Money Borrowed (other than the Revolving Credit Loans) made
during such period.

        GAAP - generally accepted account principles in the United States of
America in effect from time to time.

        General Intangibles - all personal property of Borrower (including
things in action other than goods, Accounts, chattel paper, documents,
instruments and money, whether now owned or hereafter created or acquired by
Borrower.

        Indebtedness - as applied to a Person means, without duplication

               (i) all items which in accordance with GAAP would be included in
        determining total liabilities as shown on the liability side of a
        balance sheet of such Person as at the date as of which Indebtedness is
        to be determined, including, without limitation, Capitalized Lease
        Obligations,

               (ii) all obligations of other Persons which such Person has
        guaranteed,

               (iii) all reimbursement obligations in connection with letters of
        credit or letter of credit guaranties issued for the account of such
        Person, and

               (iv) in the case of Borrower (without duplication), the
        Obligations.

        Interest Period - as defined in subsection 3.1.5 of the Agreement.

        Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired including, but not limited to, all goods intended for sale or lease by
Borrower, or for display or demonstration; all work in process; all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such goods or otherwise
used or consumed in Borrower's business; and all documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by Borrower.

        Issuing Bank - as defined in Section 1.2.4 of the Agreement.

        Jordan Industries - Jordan Industries, Inc., an Illinois corporation
having an office located at Arbor Lake Center, Suite 500, 1751 Lake Cook Road,
Deerfield, Illinois 60015.

        LC Amount - at any time, the aggregate undrawn face amount of all
Letters of Credit and LC Guaranties then outstanding.

        LC Reserve - at any time, the sum of (i) 35% of the aggregate undrawn
face amount of all documentary Letters of Credit

<PAGE>

and LC Guaranties in respect of documentary Letters of Credit then outstanding,
plus (ii) 100% of the aggregate undrawn face amount of all standby Letters of
Credit and LC Guaranties in respect of standby Letters of Credit then
outstanding.

        LC Guaranty - any guaranty pursuant to which Lender or any Affiliate of
Lender shall guaranty the payment or performance by Borrower of its
reimbursement obligation under any letter of credit.

        Lender - the meaning ascribed to such term in the Preamble to the
Agreement and shall include each person which is a transferee, successor or
assign of Lender.

        Letter of Credit - any letter of credit issued by Lender or any of
Lender's Affiliates for the account of Borrower.

        Letter of Credit Application - as defined in Section 1.2.1 of the
Agreement.

        Leverage Ratio - for any period, the ratio of (i) Senior Debt to (ii)
EBITDA for such period.

        LIBOR - for any Eurodollar Loan for the then current Interest Period,
the rate of interest equal to the average (rounded upwards, if necessary to the
nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Bank in the London interbank
eurodollar market as at or about 2:00 P.M. New York time 2 Business Days prior
to the beginning of such Interest Period, for delivery on the first day of such
Interest Period, and in an amount approximately equal to the amount of such
Eurodollar Loan for a period approximately equal to such Interest Period.

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

        Loan Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.

        Loan Documents - the Agreement, the Other Agreements and the Security
Documents.

        Loans - all loans and advances of any kind made by Lender pursuant to
the Agreement.

        Material Adverse Effect - any material adverse effect on the business,
properties or condition (financial or otherwise) or prospects of Borrower and
its Subsidiaries, taken as a whole.

<PAGE>

        Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any such
case arising from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of Borrower under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by Borrower.

        Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.

        Net Worth - at a particular date, all amounts which would be included
under shareholders' equity (including preferred stock whether or not categorized
as part of shareholders' equity in accordance with GAAP) on a balance sheet of
Borrower determined in accordance with GAAP as at such date.

        Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from Borrower to Lender of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Agreement or any of the
other Loan Documents or otherwise whether direct or indirect (including those
acquired by assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired.

        Original Loan Agreement - as defined in Section A to the Agreement.

        Original Term - as defined in Section 4.1 of the Agreement.

        Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other third
party and delivered to Lender in respect of the transactions contemplated by the
Agreement.

        Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans plus the LC Amount exceeds the Borrowing Base.

        Participating Lender - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement and who
shall have entered into a participation agreement in form and substance
satisfactory to Lender.

        PBGC - as defined in subsection 8.1.3(iv) of the Agreement.

<PAGE>

        Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of
the Agreement.

        Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrower at the time
outstanding, does not exceed $500,000. For the purposes of this definition, the
principal amount of any Purchase Money Indebtedness consisting of capitalized
leases shall be computed as a Capitalized Lease Obligation.

        Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.

        Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.

        Plan of Reorganization - the Second Amended Plan of Reorganization of
Welcome Home, Inc. and Jordan Industries, Inc., dated September 28, 1998 filed
with the United States Bankruptcy Court for the Southern District of New York in
Case Number 97-B-40370.

        Pro Forma Financial Statement as defined in subsection 7.1.10(c) of the
Agreement.

        Projections - Borrower's forecasted Consolidated (a) balance sheets, (b)
profit and loss statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

        Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

        Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within 10 days prior to or after the acquisition of any fixed
assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.

        Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.

        Renewal Terms - as defined in Section 4.1 of the Agreement.

        Required Delivery Date - each date required by Section 8.1.3(i) for
delivery of an annual

<PAGE>

Financial Statement.

        Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.

        Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:

               (i) investments in one or more Subsidiaries of Borrower to the
        extent existing on the Closing Date;

               (ii)   Property to be used in the ordinary course of business;

               (iii) Current Assets arising from the sale of goods and services
        in the ordinary course of business of Borrower and its Subsidiaries;

               (iv) investments in direct obligations of the United States of
        America, or any agency thereof or obligations guaranteed by the United
        States of America, provided that such obligations mature within one year
        from the date of acquisition thereof;

               (v) investments in certificates of deposit maturing within one
        year from the date of acquisition issued by a bank or trust company
        organized under the laws of the United States or any state thereof
        having capital surplus and undivided profits aggregating at least
        $100,000,000;

               (vi) investments in commercial paper given the highest rating by
        a national credit rating agency and maturing not more than 270 days from
        the date of creation thereof; and

               (vii) purchases of Borrower's capital stock from terminated
        officers of Borrower permitted by Section 8.2.7 of the Agreement.

        Revolving Credit Loan - a Loan made by Lender as provided in Section 2.1
of the Agreement.

        Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.

        Security Documents - all instruments, documents and agreements now or at
any time hereafter securing the whole or any part of the Obligations.

        Senior Debt - for any period, the then outstanding (a) Obligations plus
(b) Capitalized Lease Obligations.

        Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is

<PAGE>

greater than the amount required to pay all of such Person's Indebtedness
(including contingent debts), (ii) is able to pay all of its Indebtedness as
such Indebtedness matures and (iii) has capital sufficient to carry on its
business and transactions and all business and transactions in which it is about
to engage.

        Special Advance Amount - (a) $1,000,000 during the period commencing on
the Closing Date and ending on December 31, 1998, (b) $1,000,000 during the
period commencing on April 1, 1999 and ending on September 30, 1999, (c)
$500,000 during the period commencing on October 1, 1999 and ending on December
31, 1999 and (d) $0 on and after January 1, 2000.

        Subordinated Debt - Indebtedness of Borrower that is subordinated to the
Obligations in a manner satisfactory to Lender including, without limitation,
the Indebtedness under the Subordinated Note.

        Subordinated Note - the Subordinated Note dated October __, 1998 in the
principal amount of $800,000 made by Jordan Industries in favor of Borrower.

        Subordination Agreement - the Subordination Agreement dated October __,
1998 between Lender and Jordan Industries.

        Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting Stock
at the time of determination.

        Total Credit Facility - $15,000,000.

        Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

        Week - the time period commencing with a Monday and ending on the
following Monday.

               OTHER TERMS. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by the Code to
the extent the same are used or defined therein.

               CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.

<PAGE>

                                LIST OF EXHIBITS


Exhibit B             Borrowing Base Certificate
Exhibit 6.1.1         Borrower's and each Subsidiary's Business Locations
Exhibit 7.1.1         Jurisdictions in which Borrower and each Subsidiary is
                      Authorized to do Business
Exhibit 7.1.4         Capital Structure of Borrower; Shareholders' Agreements
Exhibit 7.1.5         Corporate Names
Exhibit 7.1.6         Business Locations; Agent for Process
Exhibit 7.1.7         Title to Properties; Priority of Liens
Exhibit 7.1.10(C)     Projections
Exhibit 7.1.13        Surety Obligations
Exhibit 7.1.14        Tax Identification Numbers of Subsidiaries
Exhibit 7.1.15        Broker Fees
Exhibit 7.1.16        Patents, Trademarks, Copyrights and Licenses
Exhibit 7.1.19        Contracts Restricting Borrower's Right to Incur Debts
Exhibit 7.1.20        Litigation
Exhibit 7.1.22(A)     Capitalized Leases
Exhibit 7.1.22(B)     Operating Leases
Exhibit 7.1.23        Pension Plans
Exhibit 7.1.25        Labor Contracts
Exhibit 8.1.3         Compliance Certificate
Exhibit 8.2.5         Permitted Liens

<PAGE>
                                    EXHIBIT B

                           BORROWING BASE CERTIFICATE
<PAGE>
                                  EXHIBIT 6.1.1

                               BUSINESS LOCATIONS


1.      Borrower currently has the following business locations, and no others:

        Chief Executive Office:

        Other Locations:



2.      Borrower maintains its books and records relating to Accounts and
        General Intangibles at:



3.      Borrower has had no office, place of business or agent for process
        located in any county other than as set forth above, except:




4.      Each Subsidiary currently has the following business locations, and no
        others:

        Chief Executive Office:

        Other Locations:



5.      Each Subsidiary maintains its books and records relating to Accounts and
        General Intangibles at:



6.      Each Subsidiary has had no office, place of business or agent for
        process located in any county other than as set forth above, except:


<PAGE>



7.      The following bailees, warehouseman, similar parties and consignees hold
        inventory of Borrower or one of its Subsidiaries:

<TABLE>
<CAPTION>
================================== ======================= ========================= ====================
    Name and Address of Party      Nature of Relationship    Amount of Inventory     Owner of Inventory
---------------------------------- ----------------------- ------------------------- --------------------
<S>                                <C>                     <C>                       <C>
---------------------------------- ----------------------- ------------------------- --------------------

---------------------------------- ----------------------- ------------------------- --------------------

---------------------------------- ----------------------- ------------------------- --------------------

================================== ======================= ========================= ====================
</TABLE>


<PAGE>

                                  EXHIBIT 7.1.1

                         JURISDICTIONS IN WHICH BORROWER
                              AND ITS SUBSIDIARIES
                          ARE AUTHORIZED TO DO BUSINESS


               Name of Entity                                    Jurisdictions

<PAGE>

                                  EXHIBIT 7.1.4

                                CAPITAL STRUCTURE

1.      The classes and number of authorized shares of Borrower and each
        Subsidiary and the record owner of such shares are as follows:

Borrower:


<TABLE>
<CAPTION>
======================= ========================== =========================== ==========================
    Class of Stock          Number of Shares             Record Owners             Number of Shares
                         Issued and Outstanding                                 Authorized but Unissued
----------------------- -------------------------- --------------------------- --------------------------
<S>                     <C>                        <C>                         <C>
----------------------- -------------------------- --------------------------- --------------------------

----------------------- -------------------------- --------------------------- --------------------------

----------------------- -------------------------- --------------------------- --------------------------

======================= ========================== =========================== ==========================
</TABLE>

Subsidiaries:

<TABLE>
<CAPTION>
======================= ========================== =========================== ==========================
    Class of Stock          Number of Shares             Record Owners             Number of Shares
                         Issued and Outstanding                                 Authorized but Unissued
----------------------- -------------------------- --------------------------- --------------------------
<S>                     <C>                        <C>                         <C>
----------------------- -------------------------- --------------------------- --------------------------

----------------------- -------------------------- --------------------------- --------------------------

----------------------- -------------------------- --------------------------- --------------------------

======================= ========================== =========================== ==========================
</TABLE>



2.      The number, nature and holder of all other outstanding Securities of
        Borrower and each Subsidiary are as follows:

<PAGE>

3.      The correct name and jurisdiction of incorporation of each Subsidiary of
        Borrower and the percentage of its issued and outstanding shares owned
        by Borrower are as follows:

<TABLE>
<CAPTION>
===================================== =================================== ===============================
                Name                    Jurisdiction of Incorporation          Percentage of Shares
                                                                                Owned by Borrower
------------------------------------- ----------------------------------- -------------------------------
<S>                                   <C>                                 <C>
------------------------------------- ----------------------------------- -------------------------------

------------------------------------- ----------------------------------- -------------------------------

===================================== =================================== ===============================
</TABLE>


4.      The name of each of Borrower's corporate or joint venture Affiliates and
        the nature of the affiliation are as follows:

<PAGE>

                                  EXHIBIT 7.1.5

                             CORPORATE NAMES/MERGERS

1.      Borrower's correct corporate name, as registered with the Secretary of
        State of the Commonwealth of Massachusetts, is: Welcome Home, Inc.



2.      In the conduct of its business, Borrower has used the following names:



3.      Each Subsidiaries' correct corporate name, as registered with the
        Secretary of State of the State of its incorporation, is:


4.      In the conduct of its business, each Subsidiary has used the following
        names:


5.      Mergers:


<PAGE>


                                  EXHIBIT 7.1.7

                     TITLE TO PROPERTIES; PRIORITY OF LIENS


<PAGE>


                                 EXHIBIT 7.1.13

                               SURETY OBLIGATIONS


<PAGE>


                                 EXHIBIT 7.1.14

                   TAX IDENTIFICATION NUMBERS OF SUBSIDIARIES


                      Subsidiary                                        Number
                      ----------                                        ------


<PAGE>


                                 EXHIBIT 7.1.15

                                   BROKER FEES


<PAGE>


                                 EXHIBIT 7.1.16

                  PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES


1.      Borrower's and its Subsidiaries' patents:

<TABLE>
<CAPTION>
======================= ===================== ==================== ===================== ================
                                                   Status in       Federal Registration   Registration
        Patent                 Owner             Patent Office              Number              Date
----------------------- --------------------- -------------------- --------------------- ----------------
<S>                     <C>                   <C>                  <C>                   <C>
----------------------- --------------------- -------------------- --------------------- ----------------

----------------------- --------------------- -------------------- --------------------- ----------------

======================= ===================== ==================== ===================== ================


2. Borrower's and its Subsidiaries' trademarks:


======================= ===================== ==================== ===================== ================
                                                   Status in       Federal Registration   Registration
      Trademark                Owner           Trademark Office             Number              Date
----------------------- --------------------- -------------------- --------------------- ----------------

----------------------- --------------------- -------------------- --------------------- ----------------

----------------------- --------------------- -------------------- --------------------- ----------------

======================= ===================== ==================== ===================== ================


3. Borrower's and its Subsidiaries' copyrights:


======================= ===================== ==================== ===================== ================
                                                   Status in       Federal Registration   Registration
      Copyrights               Owner           Copyright Office             Number              Date
----------------------- --------------------- -------------------- --------------------- ----------------

----------------------- --------------------- -------------------- --------------------- ----------------

----------------------- --------------------- -------------------- --------------------- ----------------

======================= ===================== ==================== ===================== ================
</TABLE>

<PAGE>


4.      Borrower's and its Subsidiaries' licenses (other than routine business
        licenses, authorizing them to transact business in local jurisdictions):

<TABLE>
<CAPTION>
============================ ========================== ========================== ======================
      Name of License            Nature of License              Licensor              Term of License
---------------------------- -------------------------- -------------------------- ----------------------
<S>                          <C>                        <C>                        <C>
---------------------------- -------------------------- -------------------------- ----------------------

---------------------------- -------------------------- -------------------------- ----------------------

============================ ========================== ========================== ======================
</TABLE>


<PAGE>


                                 EXHIBIT 7.1.19

              CONTRACTS RESTRICTING BORROWER'S RIGHT TO INCUR DEBTS


        Contracts that restrict the right of Borrower to incur Indebtedness:

<TABLE>
<CAPTION>
============================ ========================== ========================== ======================
     Title of Contract          Identity of Parties       Nature of Restriction      Term of Contract
     -----------------          -------------------       ---------------------      ----------------
---------------------------- -------------------------- -------------------------- ----------------------
<S>                          <C>                        <C>                        <C>
---------------------------- -------------------------- -------------------------- ----------------------

---------------------------- -------------------------- -------------------------- ----------------------

============================ ========================== ========================== ======================
</TABLE>

<PAGE>
                                 EXHIBIT 7.1.20

                                   LITIGATION


1. Actions, suits, proceedings and investigations pending against Borrower or
any Subsidiary:


<TABLE>
<CAPTION>
=========================== ========================== ========================== =======================
     Title of Action            Nature of Action          Complaining Parties        Jurisdiction or
                                                                                         Tribunal
--------------------------- -------------------------- -------------------------- -----------------------
<S>                         <C>                        <C>                        <C>
--------------------------- -------------------------- -------------------------- -----------------------

--------------------------- -------------------------- -------------------------- -----------------------

=========================== ========================== ========================== =======================
</TABLE>


2.      The only threatened actions, suits, proceedings or investigations of
        which Borrower or any Subsidiary is aware are as follows:


<PAGE>

                                EXHIBIT 7.1.22(A)

                               CAPITALIZED LEASES


Borrower and its Subsidiaries have the following capitalized leases:


<TABLE>
<CAPTION>
============================ ========================== ========================== ======================
          Lessee                      Lessor                  Term of Lease          Property Covered
---------------------------- -------------------------- -------------------------- ----------------------
<S>                          <C>                        <C>                        <C>
---------------------------- -------------------------- -------------------------- ----------------------

---------------------------- -------------------------- -------------------------- ----------------------

============================ ========================== ========================== ======================
</TABLE>



<PAGE>


                                EXHIBIT 7.1.22(B)

                                OPERATING LEASES

Borrower and its Subsidiaries have the following operating leases:


<TABLE>
<CAPTION>
============================ ========================== ========================== ======================
          Lessee                      Lessor                  Term of Lease          Property Covered
---------------------------- -------------------------- -------------------------- ----------------------
<S>                          <C>                        <C>                        <C>
---------------------------- -------------------------- -------------------------- ----------------------

---------------------------- -------------------------- -------------------------- ----------------------

============================ ========================== ========================== ======================
</TABLE>

<PAGE>
                                 EXHIBIT 7.1.23

                                  PENSION PLANS

Borrower and its Subsidiaries have the following Plans:

<TABLE>
<CAPTION>
======================================================= =================================================
                        Party                                             Type of Plan
------------------------------------------------------- -------------------------------------------------
<S>                                                     <C>
Borrower
------------------------------------------------------- -------------------------------------------------

------------------------------------------------------- -------------------------------------------------
[Subsidiaries]
------------------------------------------------------- -------------------------------------------------

======================================================= =================================================
</TABLE>

<PAGE>

                                 EXHIBIT 7.1.25

              COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES


1.      Borrower and its Subsidiaries are parties to the following collective 
bargaining agreements:

<TABLE>
<CAPTION>
===================================== =================================== ===============================
         Type of Agreement                         Parties                      Term of Agreement
------------------------------------- ----------------------------------- -------------------------------
<S>                                   <C>                                 <C>
------------------------------------- ----------------------------------- -------------------------------

------------------------------------- ----------------------------------- -------------------------------

------------------------------------- ----------------------------------- -------------------------------

===================================== =================================== ===============================
</TABLE>


2. Material grievances, disputes of controversies with employees are as follows:

<TABLE>
<CAPTION>
======================================================= =================================================
                   Parties Involved                       Nature of Grievance, Dispute or Controversy
------------------------------------------------------- -------------------------------------------------
<S>                                                     <C>
------------------------------------------------------- -------------------------------------------------

------------------------------------------------------- -------------------------------------------------

------------------------------------------------------- -------------------------------------------------

======================================================= =================================================


3.      Threatened strikes, work stoppages and asserted pending demands for
        collective bargaining are as follows:


======================================================= =================================================
                   Parties Involved                                     Nature of Matter
------------------------------------------------------- -------------------------------------------------

------------------------------------------------------- -------------------------------------------------

------------------------------------------------------- -------------------------------------------------

------------------------------------------------------- -------------------------------------------------

======================================================= =================================================
</TABLE>

<PAGE>


                                  EXHIBIT 8.1.3

                             COMPLIANCE CERTIFICATE

                               WELCOME HOME, INC.
                              309-D Raleigh Street
                        Wilmington, North Carolina 28412



                                                        __________________, 19__




Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, Connecticut 06033

        The undersigned, the chief financial officer of Welcome Home, Inc., a
Delaware corporation ("Borrower"), gives this certificate to Fleet Capital
Corporation ("Lender") in accordance with the requirements of subsection 8.1.3
of that certain Loan and Security Agreement dated ___________ ___, 1998, between
Borrower and Lender ("Loan Agreement"). Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed
to them in the Loan Agreement.

        1. Based upon my review of the balance sheets and statements of income
of Borrower for the [fiscal year] [month] ending __________________, 19__,
copies of which are attached hereto, I hereby certify that:

               (a)    Net Worth is $____________;

               (b)    Leverage Ratio is ___ to 1.0;

               (c)    Fixed Charge Coverage Ratio is ____ to 1;

               (d)    Adjusted Net Earnings From Operations for the period was
$_______________; and

               (e)    Excess Cash Flow is $_____________.

        2.     No Default exists on the date hereof, other than: ______________
________________________________________________ [if none, so state]; and


<PAGE>

        3. No Event of Default exists on the date hereof, other than __________
____________________________________________________ [if none, so state].

        4. The balance sheets, statements of income and stockholder's equity and
cash flow attached hereto were prepared in accordance with GAAP and fairly
present the financial position and results of operations, the assets,
liabilities, and net worth income of Borrower as of the date thereof subject
only to changes from audit and year-end adjustments and the absence of notes.

                                Very truly yours,


                                -------------------------------
                                Chief Financial Officer

<PAGE>

                                  EXHIBIT 8.2.5

                                 PERMITTED LIENS


<TABLE>
<CAPTION>
=================================================== =====================================
                   Secured Party                               Nature of Lien
--------------------------------------------------- -------------------------------------
<S>                                                    <C>
--------------------------------------------------- -------------------------------------

--------------------------------------------------- -------------------------------------

--------------------------------------------------- -------------------------------------

=================================================== =====================================
</TABLE>