EXHIBIT 10:31
                             BUSINESS LOAN AGREEMENT
<TABLE>
<CAPTION>
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 Principal      Loan Date      Maturity         Loan No    Call   Collatera     Account    Officer    Initials
<S>             <C>           <C>                 <C>                        <C>             <C>
$300,000.00     06-16-99      06-16-2000          ***                        3200548-0401    076
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</TABLE>
    References in the shaded area are for Lender's use only and do not limit
                   the applicability of this document to any
         particular loan or item. Any item above containing *** has been
                     omitted due to text length limitations.
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BORROWER:  Wellington Hall, Limited     LENDER:  Lexington State Bank
           425 John Ward Rd                      One LSB Plaza
           Lexington, NC 27292                   PO Box 867
                                                 Lexington, NC 27292
================================================================================
THIS BUSINESS LOAN AGREEMENT  dated June 16m 1999, is made and executed  between
Wellington Hall, Limited ("Borrower") and Lexington State Bank ("Lender") on the
following terms and  conditions.  Borrower has received prior  commercial  loans
from  Lender or has  applied to Lender for a  commercial  loan or loans or other
financial accommodations,  including those which may be described on any exhibit
or schedule attached to this Agreement ("Loan"). Borrower understands and agrees
that: (A) In granting,  renewing,  or extending any Loan, Lender is relying upon
Borrower's  representations,  warranties,  and  agreements  as set forth in this
Agreement,  and (B) all such Loan shall be and  remain  subject to the terms and
conditions of this Agreement.

TERM. This Agreement shall be effective as of 06-16-1999,  and shall continue in
full force and effect  until  such time as all of  Borrower's  Loans in favor of
Lender  have  been  paid in  full,  in  principal,  interest,  costs,  expenses,
attorneys'  fees, and other fees and charges,  or until such time as the parties
may agree in writing to terminate this Agreement.

     COLLATERAL  RECORDS.  Borrower does not, and at all times therafter  shall,
     keep correct and accurate  records of the Collateral,  all of which records
     shall be  available  to Lender or Lender's  representative  upon demand for
     inspection and copying at any reasonable time. The above is an accurate and
     complete  list of all  locations  at  which  Borrower  keeps  or  maintains
     business records concerning Borrower's collateral.

     COLLATERAL SCHEDULES.  Concurrently with the execution and delivery of this
     Agreement,  Borrower  shall  execute and deliver to Lender  schedules of in
     form and  substance  satisfactory  to the Lender.  Thereafter  supplemental
     schedules shall be delivered according to the following schedule:

CONDITIONS  PRECEDENT TO EACH ADVANCE.  Lender's  obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's  satisfaction of all of the conditions set forth in this
Agreement and this he Related Documents.

     LOAN  DOCUMENTS.  Borrower shall provide to Lender the following  documents
     for the Loan:  (1) the Note' (2)  Security  Agreements  granting  to Lender
     security interests in the Collateral;  (3) financing  statement  perfecting
     Lender's  Security  Interests' (4) evidence of insurance as required below;
     (5) together with all such Related  Documents as Lender may require for the
     Loan;  all in form  and  substance  satisfactory  to  Lender  and  Lender's
     counsel.

     BORROWER'S  AUTHORIZATION.   Borrower  shall  have  provided  in  form  and
     substance  satisfactory  to Lender  properly  certified  resolutions,  duly
     authorizing the execution and delivery of this Agreement,  the Note and the
     Related  Documents.  In addition,  Borrower  shall have provided such other
     resolutions,  authorizations,  documents and  instruments  as Lender or its
     counsel, may require.

     PAYMENT OF FEES AND EXPENSES.  Borrower shall have paid to Lender all fees,
     charges,  and other expenses which are then due and payable as specified in
     this Agreement or any Related Document.

     REPRESENTATIONS  AND  WARRANTIES.  The  representations  and warranties set
     forth in this Agreement,  in the Related Documents,  and in any document or
     certificate delivery to Lender under this Agreement are true and correct.

     NO EVENT OF  DEFAULT.  There  shall not exist at the time of any  Advance a
     condition  which would  constitute an Event of Default under this Agreement
     or under any Related Document.

REPRESENTATIONS  AND WARRANTIES.  Borrower represents AND warrants to Lender, as
of the  date of this  Agreement,  as of the  date of each  disbursement  of loan
proceeds, as of the date of any renewal,  extension or modification of any Loan,
and at all times any Indebtedness exists:

     ORGANIZATION.  Borrower is a  corporation  for profit  which is, and at all
     times shall be duly organized, validly existing, and in good standing under
     and by virtue of the laws of the State of North Carolina.  Borrower is duly
     authorized  to transact  business  in all other sates in which  Borrower is
     doing  business,  having  obtained  all  necessary  filings,   governmental
     licenses and approvals for each state in which Borrower is doing  business.
     Specifically,  Borrower is, and at all times shall be , duly qualified as a
     foreign  corporation in all states in which the failure to so qualify would
     have a material  adverse  effect on its  business or  financial  condition.
     Borrower  has the full power and  authority  to own its  properties  and to
     transact  the  business  in  which it is  presently  engaged  or  presently
     proposes to engage.  Borrower  maintains its  principal  office at 425 John
     Ward Road, Lexington, NC 27292. Unless Borrower has designated otherwise in
     writing,  this is the office at which  Borrower keeps its books and records
     including  its records  concerning  the  Collateral.  Borrower  will notify
     Lender of any  change  in the  location  of  Borrower's  principal  office.
     Borrower  shall do all things  necessary  to  preserve  and to keep in full
     force and effect its  existence,  rights and  privileges,  and shall comply
     with all regulations,  rules, ordinances,  statutes,  orders and decrees of
     any  governmental or  quasi-governmental  authority or court  applicable to
     Borrower and Borrower's business activities.

     ASSUMED  BUSINESS  NAMES.  Borrower has filed or recorded all  documents or
     filings  required by law  relating to all  assumed  business  names used by
     Borrower.  Excluding the name of Borrower, the following is a complete list
     of all assumed business names under which Borrower does business: None.

     AUTHORIZATION.  Borrower's  execution,  delivery,  and  performance of this
     Agreement and all the Related  Documents  have been duly  authorized by all
     necessary  action  by  Borrower  AND  do not  conflict  with,  result  in a
     violation of, or constitute a default under (1) any provision of Borrower's
     articles of incorporation or organization,  or bylaws,  or any agreement or
     other  instrument  binding  upon  Borrower  or (2)  any  law,  governmental
     regulation,  court decree or order  applicable to Borrower or to Borrower's
     properties.

     FINANCIAL INFORMATION.  Each of Borrower's financial statements supplied to
     Lender truly and completely  disclosed Borrower's financial condition as of
     the date of the statement and there has been no material  adverse change in
     Borrower's  financial  condition  subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

     LEGAL EFFECT. This Agreement  constitutes,  AND any instrument or agreement
     Borrower is  required  to give under this  Agreement  when  delivered  will
     constitute,  legal, valid, and binding obligations of Borrower  enforceable
     against Borrower in accordance with respective terms.

     HAZARDOUS SUBSTANCES.  Except as disclosed to and acknowledged by Lender in
     writing,  Borrower  represents  and warrants that: (1) During the period of
     Borrower's  ownership  of  Borrower's  Collateral,  there  has been no use,
     generation,   manufacture,   storage,   treatment,   disposal,  release  or
     threatened  release of any  Hazardous  Substance  by any person on,  under,
     about or from any of he  Collateral.  (2)  Borrower  has no knowledge of or
     reason to believe  that there has been (a) any breach or  violation  of any
     Environmental  Laws;  (b)  any  use,   generation,   anufacture,   storage,
     treatment,  disposal,  release,  or  threatened  release  of any  hazardous
     Substance  on, under,  about or from the  Collateral by any prior owners or
     occupants  of any of  the  Collateral;  or (c)  any  actual  or  threatened
     litigation  or claims of any kind by any person  relating to such  matters.
     (3) Neither Borrower nor any tenant, contractor,  agent or other authorized
     user of any of the  Collateral;  and any such activity shall be e conducted
     in  compliance  with  all  applicable  federal,   state,  and  local  laws,
     regulations, and ordinances,  including without limitation all Environments
     Laws.  Borrower  authorized  Lender  and  its  agents  to  enter  upon  the
     Collateral  to  make  such   inspections  and  tests  as  Lender  may  deem
     appropriate to determine  compliance of the Collateral with this section of
     the  Agreement.  Any  inspections  or  tests  made by  Lender  shall  be at
     Borrower's  expense  and  for  Lender's  purposes  only  and  shall  not be
     construed to create any  responsibility  or liability on the part of Lender
     to Borrower or to any other  person.  The  representations  and  warranties
     contained herein are based on Borrower's due diligence in investigating the
     Collateral for hazardous  waste and hazardous  substances.  Borrower hereby
     (1) releases and waives any future claims  against  Lender for indemnity or
     contribution  in the event  Borrower  becomes  liable for  cleanup or other
     costs under any such laws,  and (2) agrees to indemnify  and hole  harmless
     Lender against any and all claims, losses, liabilities, damages, penalties,
     and  expenses  which Lender may  directly or  indirectly  sustain or suffer
     resulting  from  a  breach  of  this  section  of  the  Agreement  or  as a
     consequence of any use, generation, manufacture, storage, disposal, release
     or threatened  release of a hazardous waste or substance on the properties.
     The provision of this section of the Agreement, including the obligation to
     indemnify,   shall  survive  the  payment  of  the   indebtedness  and  the
     termination,  expiration or satisfaction of this Agreement and shall not be
     affected by Lender's  acquisition of any interest in any of the collateral,
     whether by foreclosure or otherwise.

     LITIGATION AND CLAIMS. No litigation, claim, investigation,  administrative
     proceeding or similar  action  (including  those for unpaid taxes 0 against
     Borrower is pending or  threatened,  and no other event has occurred  which
     may  materially   adversely  affect  Borrower's   financial   condition  or
     properties,  other than litigation,  claims,  or other events, if any, that
     have been disclosed to and acknowledged by Lender in writing.

     TAXES. To the best of Borrower's  knowledge,  all of Borrower's tax returns
     and reports that are or were required to be filed, have been filed, and all
     taxes,  assessments and other governmental  charges have been paid in full,
     except those  presently  being or to be contested by Borrower in good faith
     in the ordinary  course of business and for which  adequate  reserves  have
     been provided.

     INFORMATION.   All  information  heretofore  or  contemporaneous   herewith
     furnished by Borrower to Lender for the purposes of or in  connection  with

<PAGE>

                                                                          Page 2

                             BUSINESS LOAN AGREEMENT
                                   (Continued)
================================================================================

     this  Agreement  or  any  transaction   contemplated  hereby  is,  and  all
     information  hereafter furnished by or on behalf of Borrower to Lender will
     be,  true and  accurate in every  material  respect on the date as of which
     such information is dated or certified;  and none of such information is or
     will be incomplete by omitting to state any material fact necessary to make
     such information not misleading.

     LIEN PRIORITY.  Unless otherwise previously disclosed to Lender in writing,
     Borrower  has not  entered  into or granted  any  Security  Agreements,  or
     permitted  the  filing  or  attachment  of  any  Security  interests  on or
     affecting any of the Collateral  directly or indirectly  securing repayment
     of Borrower's  Loan and Note, that would be prior or that may in any way be
     superior  to  Lender's  Security  interests  and  rights  in  and  to  such
     Collateral.

     BINDING EFFECT. this Agreement,  the Note all Security Agreements (if any),
     and all Related Documents are binding upon the signers thereof,  as well as
     upon  their  successors,  representatives  and  assigns,  and  are  legally
     enforceable in accordance with their respective terms.

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that,
so long as this Agreement remains in effect, Borrower will:

     NOTICES OF CLAIMS AND LITIGATION.  Promptly inform Lender in writing of (1)
     all material adverse change sin Borrower's financial condition, and (2) all
     existing   and   all   threatened   litigation,   claims,   investigations,
     administrative  proceedings or similar  actions  affecting  Borrower or any
     Guarantor which could materially affect the financial condition of Borrower
     of financial condition or any Guarantor.

     FINANCIAL RECORDS.  Maintain its books and records in accordance with GAAP,
     applied  on a  consistent  basis,  and permit  Lender to examine  and audit
     Borrower's books and records at all reasonable times.

     FINANCIAL STATEMENTS. Furnish Lender with the following:

          (1) ANNUAL  STATEMENTS.  As soon as  available,  but in no event later
          than ninety (90) days after the end of each  fiscal  year.  Borrower's
          balance sheet and income  statement  for the year ended,  audited by a
          certified public accountant satisfactory to Lender.

          (2) INTERIM  STATEMENTS.  As soon as available,  but in no event later
          than ninety (90) days after the end of each fiscal quarter, Borrower's
          balance  sheet and profit  and loss  statement  for the period  ended,
          audited by a certified public accountant satisfactory to Lender.

     All Financial reports required to be provided under this Agreement shall be
     prepared  in  accordance  with GAAP,  applied on a  consistent  basis,  and
     certified by Borrower as being true and correct.

     ADDITION INFORMATION.  Furnish such additional  information and statements,
     as Lender ,may request from time to time.

     INSURANCE.  Maintain  fire  and  other  risk  insurance,  public  liability
     insurance,  and such other insurance as Lender may required with respect to
     Borrower's properties and operations, in form, amounts,  coverages and with
     insurance companies acceptable to Lender. Borrower, upon request of Lender,
     will delivery to Lender from time to time the policies or  certificates  of
     insurance  in form  satisfactory  to Lender,  including  stipulations  that
     coverages will not be canceled or diminished without at least ten (10) days
     prior written notice to Lender. Each insurance policy also shall include an
     endorsement providing that coverage in favor of Lender will not be impaired
     in any way by any act, omission or default of Borrower or any other person.
     In connection with all policies covering assets in which Lender holds or is
     offered a security  interest for the Loans,  Borrower  will provide  Lender
     with such  lender's  loss  payable  or other  endorsements  as  Lender  may
     require.

     INSURANCE  REPORTS.  Furnish o Lender,  upon request of Lender,  reports on
     each  existing  insurance  policy  showing such  information  as Lender may
     reasonably  request,  including without  limitation the following:  (1) the
     name of the insurer;  (2) the risks insured;  (3) the amount of the policy;
     (4) the properties  insured;  (5) the then current  property  values on the
     basis of which  insurance has been obtained,  and the manner of determining
     those values and (6) the expiration date of the policy.  In addition,  upon
     reuqest of Lender  (however not more often than  annually),  Borrower  will
     have  an  independent  appraiser  satisfactory  to  Lender  determine,   as
     applicable,  the actual cash value or replacement  cost of any  Collateral.
     The cost of such appraisal shall be paid by Borrower.

     OTHER  AGREEMENTS.  Comply  with all  terms  and  conditions  of all  other
     agreements,  whether now or hereafter  existing,  between  Borrower and any
     other  party and notify  Lender  immediately  in writing of any  default in
     connection with any other such agreements.

     LOAN  PROCEEDS.  Use all  Loan  proceeds  solely  for  Borrower's  business
     operations,  unless  specifically  consented  to the  contrary by Lender in
     writing.

     TAXES,   CHARGES  AND  LIENS.  Pay  and  discharge  when  due  all  of  its
     indebtedness and obligations, including without limitation all assessments,
     taxes,  governmental  charges,  levies and liens, of every kind and nature,
     imposed upon Borrower or its properties,  income, or profits,  prior to the
     date on which  penalties  would  attach,  and all lawful  claims  that,  if
     unpaid,  might become a lien or charge upon any of  Borrower's  properties,
     income, or profits.

     PERFORMANCE.  Perform  and  comply,  in a timely  manner,  with all  terms,
     conditions,  and  provisions  set forth in this  Agreement,  in the Related
     Documents, and in all other instruments and agreements between Borrower and
     Lender.  Borrower shall notify Lender Immediately in writing of any default
     in connection with any agreement.

     OPERATIONS.  Maintain executive and management personnel with substantially
     the  same  qualifications  and  experience  as the  present  executive  and
     management  personnel;  provide  written  notice to Lender of any change in
     executive  and  management  personnel;  conduct its  business  affairs in a
     reasonable and prudent manner.

     COMPLIANCE   WITH   GOVERNMENTAL   REQUIREMENTS.   Comply  with  all  laws,
     ordinances,   and  regulations,   now  or  hereafter  in  effect,   of  all
     governmental   authorities   applicable   to  the  conduct  of   Borrower's
     properties, business, and operations, and to be the use or occupancy of the
     Collateral,  including without limitation,  the Americans with Disabilities
     Act.  Borrower  may  contest  in good  faith  any such law,  ordinance,  or
     regulation  and  withhold  compliance  during  any  proceeding,   including
     appropriate  appeals,  so long as Borrower has  notified  Lender in writing
     prior to  doing  so and so long as,  in  Lender's  sole  opinion,  Lender's
     interest in the Collateral are not jeopardized. Lender may require Borrower
     to post  adequate  security  or surety  bond,  reasonable  satisfactory  to
     Lender, to protect Lender's interest.

     INSPECTION.  Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral  for the Loan or Loans and Borrower's  other
     properties and to examine or audit Borrower's books,  accounts, and records
     and to make copies and memoranda of Borrower's books, accounts and records.
     If Borrower now or at any time hereafter  maintains any recourse (including
     without  limitation   computer  generated  records  and  computer  software
     programs for the  generation of such records) in the  possession of a third
     party,  Borrower upon request of Lender,  shall notify such party to permit
     Lender free access to such records at all  reasonable  times and to provide
     Lender  with  copies  of any  records  it may  request,  all at  Borrower's
     expense.

     COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide Lender
     at least  annually and at the time of each  disbursement  of Loan proceeds,
     with a certificate executed by Borrower's chief financial officer, or other
     officer or person acceptable to Lender, certifying that the representations
     and  warranties  set forth in this Agreement are true and correct at of the
     date of the certificate and further  certifying that, as of the date of the
     certificate, no Event of Default exists under this Agreement.

     ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
     with any and all  Environmental  Laws;  not cause or permit to exist,  as a
     result of an intentional or unintentional  action or omission on Borrower's
     part or on the part of any third party,  on property owned and/or  occupied
     by  Borrower,  any  environmental  activity  where damage may result to the
     environment,  unless  such  environmental  activity  is  pursuant to and in
     compliance  with the  conditions  of a  permit  issued  by the  appropriate
     federal, state or local governmental authorities; shall furnish to Borrower
     promptly and in any event within thirty (30) days after  receipt  thereof a
     copy of any notice,  summons,  lien, citation,  directive,  letter or other
     communication from any governmental  agency or  instrumentality  concerning
     any intentional or  unintentional  action or omission on Borrower's part in
     connection with any environmental activity whether or not here is damage to
     the environment and/or other natural resources.

     ADDITIONAL ASSURANCES.  Make, execute and deliver to Lender such promissory
     notes,  mortgages,  deeds  of  trust,  security  agreements,   assignments,
     financing statements, instruments, documents and other agreements as Lender
     or its  attorneys may  reasonably  request to evidence and secure the lOans
     and to perfect all security interest.

LENDER'S  EXPENDITURES.  If any action or  proceeding  is  commenced  that would
materially  affect  Lender's  interest in the  Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents,  including
but not limited to  Grantor's  failure to  discharge or pay when due any amounts
Grantor is  required to  discharge  or pay under this  Agreement  or any Related
Documents,  Lender on Grantor's  behalf may (but shall not be obligated to) take
any  action  that  Lender  deems  appropriate,  including  but  not  limited  to
discharging or paying all taxes,  liens,  security  interest,  encumbrances  and
other  claims,  at any time  levied or placed on the  Collateral  and paying all
costs  for  insuring,   maintaining  and  preserving  the  Collateral  all  such
expenditures  incurred  or paid by  Lender  for such  purposes  will  then  bear
interest at the rate  charged  under the Note form the date  incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option,  will (A) be payable on demand, (B)
be added to the balance of the Note and be apportioned among and be payable with
any  installment  payments  to  become  due  during  either  (1) the term of any
applicable  insurance  policy,  (2) the  remaining  term of the Note,  or (3) be
treated  as a  balloon  payment  which  will be due and  payable  at the  Note's
maturity.  The Collateral also will secure payment of these amounts.  Such right
shall be in  addition to all other  right san  remedies  to which  Lender may be
entitled upon Default

NEGATIVE  COVENANTS.  Borrower  covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

     INDEBTEDNESS  AND LIENS.  (1) Except for trade debt  incurred in the normal
     course  of  business  and  indebtedness  to  Lender  contemplated  by  this

<PAGE>

                                                                          Page 3

                             BUSINESS LOAN AGREEMENT
                                   (Continued)
================================================================================

     Agreement,  create,  incur  or  assume  indebtedness  for  borrowed  money,
     including capital leases, (2) sell,  transfer,  mortgage,  assign,  pledge,
     lease,  grant a security  interest in, or encumber any of Borrower's assets
     (except as allowed as Permitted  Liens),  or (3) sell with  recourse any of
     Borrower's accounts, except to Lender.

     TRANSFER  AND LIENS.  Fail to  continue  to own all of  Borrower's  assets,
     except for routine  transfers,  use or depletion in the ordinary  course of
     Borrower's business.  Borrower agrees not to create or grant to any person,
     except Lender, any lien,  security interest,  encumbrance,  cloud on title,
     mortgage,  ledge or similar interest in any of Borrower's property, even in
     the ordinary  course of Borrower's  business.  Borrower agrees not to sell,
     convey, grant, lease, give,  contribute,  assign, or otherwise transfer any
     of Borrower's assets except for sales of inventory or lease of goods in the
     ordinary course of Borrower's business.

     CONTINUITY   OF   OPERATIONS.   (1)  Engage  in  any  business   activities
     substantially  different than those in which  Borrower is present  engaged,
     (2) cease operations,  liquidate,  merge, transfer,  acquire or consolidate
     with any other  entity,  change  its name,  dissolve  or  transfer  or sell
     Collateral out of the ordinary course of business, or (3) pay any dividends
     on Borrower's stock (other than dividends payable in its stock),  provided,
     however that notwithstanding the foregoing, but only so long as no Event of
     Default has occurred and is  continuing or would result form the payment of
     dividends,  if Borrower is a "Subchapter S Corporation"  (as defined in the
     Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends
     on its stock to its shareholders  form time to time in amounts necessary to
     enable the  shareholders to pay income taxes and make estimated  income tax
     payments to satisfy  their  liabilities  under  federal and state law which
     arise  solely  from  their  status  as   Shareholders  of  a  Subchapter  S
     Corporation  because of their  ownership of share of Borrower's  stock , or
     purchase or retire any of  Borrower's  outstanding  share or alter or amend
     Borrower's capital structure.

     LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest in or advance money or
     assets,  (2)  purchase,  create  or  acquire  any  interest  in  any  other
     enterprise  or entity,  or (3) incur any  obligation as surety or guarantor
     other than in the ordinary course of business.

     CESSATION OF ADVANCES.  If Lender has made any  commitment to make any Loan
     to Borrower,  whether  under this  Agreement or under any other  agreement,
     Lender shall have no  obligation  to make Loan advances or to disburse Loan
     Advances or to disburse  Loan proceeds if: (1) Borrower or any guarantor is
     in  default  under  the  terms  of  this  Agreement  or any of the  Related
     Documents or any other  agreement  that  Borrower or any Guarantor has with
     Lender; (2) Borrower or any Guarantor dies, becomes  incompetent or becomes
     insolvent,  files a petition in  bankruptcy or similar  proceedings,  or is
     adjudged  a  bankrupt;  (3)  there  occurs a  material  adverse  change  in
     Borrower's  financial   condition,   in  the  financial  condition  of  any
     Guarantor,  or in the value of any Collateral securing any Loan; or (4) any
     Guarantor seeks,  claims or otherwise  attempts to limit,  modify or revoke
     such Guarantor's guaranty of the Loan or any other loan with Lender; or (5)
     Lender in good faith deems itself insecure, even though no Event of Default
     shall have occurred.

RIGHT OF SETOFF.  Borrower grants to Lender a contractual  security interest in,
and hereby  assigns,  conveys,  delivers,  pledges and transfers to Lender,  all
Borrower's  right,  title and interest in and to all  Borrower's  accounts  with
Lender (whether  checking,  savings,  or some other account).  This includes all
accounts Borrower may open in the future. However, this does not include any IRA
or Keogh  accounts,  or any trust  accounts  for  which  the  grant of  security
interest would be prohibited by law. Borrower  authorizes  Lender, to the extent
permitted  by  applicable  law,  to  charge  or  setoff  all  sums  owing on the
indebtedness against any and all such accounts.

     DEFAULT.  Each of the following shall  constitute an event of default under
     this Agreement.

     PAYMENT  DEFAULT.  Borrower  fails to make any payment  when due under this
     Loan.

     OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
     obligation,  covenant or condition contained in this Agreement or in any of
     the Related  Documents  or to comply with to perform any term,  obligation,
     covenant or condition  contained in any other agreement  between Lender and
     Borrower.

     FALSE  STATEMENTS.  Any  warranty,  representation  or  statement  made  or
     furnished  to  Lender  by  Borrower  or on  Borrower's  behalf  under  this
     Agreement,  the Note or the Related Documents is false or misleading in any
     material  respect,  either now or at the time made or  furnished or becomes
     false or misleading at any time thereafter.

     INSOLVENCY.  The  dissolution or  termination of Borrower's  existence as a
     going business,  the insolvency of Borrower,  the appointment of a received
     for any part of  Borrower's  property,  any  assignment  for the benefit of
     creditors,  any  type  of  creditor  workout,  or the  commencement  of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
     ceases to be in full force and effect  including  failure of any collateral
     document to create a valid and perfected  security interest or lien) at any
     time and for any reason.

     CREDITOR  OR  FORFEITURE   PROCEEDINGS.   Commencement  of  foreclosure  or
     forfeiture   proceedings,   whether  by  judicial  proceeding,   self-help,
     repossession  or any other  method,  by any  creditor or Borrower or by any
     governmental agency against any collateral securing the loan. This includes
     a garnishment of any of Borrower's  accounts  including  deposit  accounts,
     with Lender.  However,  this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or  reasonableness of the
     claim which is the basis of the creditor or  forfeiture  proceeding  and if
     Borrower  gives  Lender  written  notice  of  the  creditor  or  forfeiture
     proceeding  and  deposits  with  Lender  monies  or a  surety  bond for the
     creditor or forfeiture proceeding, in an amount determine by Lender, in its
     sole discretion, as being inadequate reserve or bond

     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
     to any  guarantor  of any of the  indebtedness  or any  Guarantor  dies  or
     becomes  incompetent,  or revokes or disputes the validity of, or liability
     under, any guaranty of the indebtedness.  In the event of death, Lender, at
     its option,  may,  but shall not be  required  to,  permit the  guarantor's
     estate to assume unconditionally the obligations arising under the guaranty
     in a manner  satisfactory  to Lender,  and,  in doing so, cure any Event of
     Default.

     CHANGE IN OWNERSHIP.  Any change in ownership of twenty-five  (25%) or more
     of the common stock of Borrower.

     ADVERSE CHANGE.  A material  adverse change occurs in Borrower's  financial
     condition,  or Lender  believes the prospect of payment or  performance  of
     this Loan is impaired.

     INSECURITY. Lender in good faith believes itself secure.

     RIGHT TO CURE.  If any default,  other than a default in  indebtedness,  is
     curable and if Borrower or Grantor,  as the case may be, has not been given
     of a similar  default  within the preceding  twelve (12) months,  it may be
     cured (and no Event of Default will have  occurred) if Borrower or Grantor,
     as the case may be after  receiving  written  notice from Lender  demanding
     cure of such default: (1) cure the default within fifteen (15) days; or (2)
     if the cure  requires  more than  fifteen (15) days,  immediately  initiate
     steps which Lender deems in Lender's  sole  discretion  to be sufficient to
     cure the default and  thereafter  continue and complete all  reasonable and
     necessary  steps  sufficient  to produce  compliance  as soon as reasonably
     practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related  Documents,  all commitments
and  obligations of Lender under this Agreement or the Related  Documents or any
other  agreement  immediately  will terminate  (including any obligation to make
further  Loan  Advances  or   disbursements),   and  at  Lender's  option,   all
indebtedness  immediately will become due and payable, all without notice of any
kind to  Borrower,  except  that in the case of an Event of  Default of the type
described in the "insolvency""  subsection  above,  such  acceleration  shall be
automatic and not optional. In addition,  Borrower shall have all the rights and
remedies  provided in the Related  Documents or available at law, in equity,  or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and  remedies   shall  be  cumulative   and  may  be  exercised   singularly  or
concurrently.  Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy,  and an election to make  expenditures or to take action to
perform an obligation of Borrower's or of any Grantor shall not affect  Lender's
right to declare a default and to exercise its rights and remedies.

MISCELLANEOUS  PROVISIONS.  The following  miscellaneous provision are a part of
this Agreement:

     AMENDMENTS.   This   Agreement,   together  with  any  Related   Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement.  No alteration of or amendment to this
     Agreement  shall be  effective  unless  given in writing  and signed by the
     party or  parties  sought  to be  charged  or bound  by the  alteration  or
     amendment.

     ATTORNEYS'  FEES:  EXPENSES.  Borrower  agrees  to pay upon  demand  all of
     Lender's  costs  and  expenses,  including  Lender's  attorneys'  fees  and
     Lender's legal  expenses,  incurred in connection  with the  enforcement of
     this  Agreement.  Lender may hire or pay someone  else to help enforce this
     Agreement,   and  Borrower  shall  pay  the  costs  and  expenses  of  such
     enforcement.  Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit,  including  attorneys' fees and
     legal expenses for bankruptcy  proceedings  (including efforts to modify or
     vacate any automatic  stay or  injunction),  appeals,  and any  anticipated
     post-judgement  collection services.  Grantor also shall pay all court cost
     and such additional fees as may be directed by the court.

     CAPTION  HEADINGS.  Caption  headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the  provisions
     of this Agreement.

     CONSENT TO LOAN  PARTICIPATION.  Borrower  agrees and  consents to Lender's
     sale or  transfer,  whether  now or  later,  of one or  more  participation
     interest  in the  Loan  to one  or  more  purchasers,  whether  related  or
     unrelated o Lender.  Lender may provide,  without any limitation whosoever,
     to any one or more purchasers, or potential purchasers,  any information or
     knowledge Lender may have about Borrower or about any other matter relating
     to the Loan and Borrower  hereby waives any rights to privacy  Borrower may
     have with respect to such matters. Borrower additionally waives any and all
     notices of sale of  participation  interests,  as well as all notice so any
     repurchase of such interest and

<PAGE>

                                                                          Page 4

                             BUSINESS LOAN AGREEMENT
                                   (Continued)
================================================================================

     agrees  that the  purchasers  of any such  participation  interest  will be
     considered as the absolute owner of such interest in the Loan and will have
     all the rights  granted  under the  participation  agreement or  agreements
     governing the sale of such participation interests. Borrower further waives
     all rights of offset or  counterclaim  that it may have now or late against
     Lender or  against  any  purchaser  of such a  participation  interest  and
     unconditionally  agrees that  either  Lender or such  purchase  may enforce
     Borrower's  obligation  under  the  Loan  irrespective  of the  failure  or
     insolvency  of any holder of any  interest  in the Loan.  Borrower  further
     agrees that the purchase of any such  participation  interests  may enforce
     its interest  irrespective of any personal claims or defenses that Borrower
     may have against Lender.

     GOVERNING LAW. THIS  AGREEMENT WILL BE GOVERNED BY,  CONSTRUED AND ENFORCED
     IN ACCORDANCE WITH FEDERAL LAW AND THE LAWS OF THE STATE OF NORTH CAROLINA.
     THIS AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF NORTH CAROLINA.

     NO WAIVER BY LENDER.  Lender  shall not be deemed to have waived any rights
     under this  AGreement  unless such waiver is given in writing and signed by
     Lender.  No delay or omission on the part of Lender in exercising any right
     shall  operate  as a waiver of such right or any other  right.  A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right  otherwise to demand strict  compliance  with that
     provision  or any other  provision  of this  Agreement.  No prior waiver by
     Lender,  nor any course of dealing between Lender and Borrower,  or between
     Lender and any Grantor, shall constitute a waiver of any of Lender's rights
     or of any of  Borrower's  or any  Grantor's  obligations  as to any  future
     transactions.  Whenever  the  consent  of Lender  is  required  under  this
     agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required  and in all cases such  consent  may be granted or withheld in the
     sole discretion of Lender.

     NOTICES.  Any notice  required  to be given under this  Agreement  shall be
     given in writing,  and shall be effective  when  actually  delivered,  when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally  recognized  overnight courier,  or, if mailed,
     when  deposited  in the United  States  mail,  as first class  certified or
     registered mail postage  prepaid,  directed to the addresses shown near the
     beginning of this  Agreement.  Any party may change its address for notices
     under this  Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice  purposes,  Borrower agrees to keep Lender informed at all times
     of Borrower's  current address.  Unless  otherwise  provided or required by
     law,  if there is more than one  Borrower,  any notice g given by Lender to
     any Borrower is deemed to be notice given to all Borrower.

     SEVERABILITY.  If a court of competent  jurisdiction finds any provision of
     this  Agreement  to  be  illegal,  invalid,  or  unenforceable  as  to  any
     circumstance,  that finding shall not make the offending provision illegal,
     invalid,  or unenforceable as to any other circumstance.  If feasible,  the
     offending  provision shall be considered modified so that it becomes legal,
     valid and enforceable. If the offending provision cannot be so modified, it
     shall be considered deleted from this AGreement.  Unless otherwise required
     by law, the illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the  legality,validity or enforceability of
     any other provision of this Agreement.

     SUBSIDIARIES  AND AFFILIATES OF BORROWER.  To the extent the contest of any
     provisions  of this  Agreement  makes  it  appropriate,  including  without
     limitation any representation, warranty or covenant, the word "Borrower" as
     used in this  Agreement  shall include all of Borrower's  subsidiaries  and
     affiliates.  Notwithstanding the foregoing however,  under no circumstances
     shall this  Agreement be  construed  to require  Lender to make any Loan or
     other  financial   accommodation  to  any  of  Borrower's  subsidiaries  or
     affiliates.

     SUCCESSORS  AND ASSIGNS.  All covenants and  agreements  contained by or on
     behalf of Borrower shall inure Borrower's  successors and assigns and shall
     inure to the benefit of Lender, its successors and assigns.  Borrower shall
     not  however,  , have the  right to assign  Borrower's  rights  under  this
     Agreement  or any interest  therein,  without he prior  written  consent of
     Lender.

     SURVIVAL OF REPRESENTATION AND WARRANTIES.  Borrower  understand and agrees
     that in extending Loan Advances,  Lender is relying on all representations,
     warranties,  and  covenants  made by Borrower in this  Agreement  or in any
     certificate or other instrument  delivered by Borrower to Lender under this
     Agreement or the Related Documents. Borrower further agrees that regardless
     of any investigation made by Lender, all such  representations,  warranties
     and  covenants  will survive the extension of Loan Advances and delivery to
     Lender of the Related Documents,  shall be e continuing in nature, shall be
     deemed made and redated by Borrower at the time each Loan  Advance is made,
     and shall  remain in full  force and effect  until such time as  Borrower's
     indebtedness  shall  be paid in  full,  or until  this  Agreement  shall be
     terminate in the manner provided above, whichever is the last to occur.

     TIME IS OF THE ESSENCE.  Time is of the essence in the  performance of this
     Agreement.

DEFINITIONS.  The following capitalized words and terms shall have the following
meanings  when  used  in  this  Agreement.  Unless  specifically  stated  to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America.  Words and terms used in he singular shall include
the  plural,  and the plural  shall  include  the  singular,  as the context may
require.  Words and terms not otherwise defined in this Agreement shall have the
meanings  attributed to such terms in the Uniform  Commercial  Code.  Accounting
words and terms not otherwise  defined in this Agreement shall have the meanings
assigned to them in accordance with generally  accepted account principles as in
effect on the date of this Agreement:

     ADVANCE.  The word "Advance" means a disbursement of Loan funds made, or to
     be made,  to  Borrower  or on  Borrower's  behalf  on a line of  credit  or
     multiple advance basis under the terms and conditions of this Agreement.

     AGREEMENT.  The word " Agreement"  means this Business Loan  Agreement,  as
     this Business Loan  Agreement may be amended or modified from time to time,
     together  with all exhibits and  schedules  attached to this  Business Loan
     Agreement from time to time.

     BORROWER.  The word " Borrower" means  Wellington  Hall,  Limited,  and all
     other persons and entities signing the Note in whatever capacity.

     COLLATERAL. The word "Collateral:  means all property and assets granted as
     collateral security for a Loan, whether real or personal property,  whether
     granted directly or indirectly,  whether granted now or in the future,  and
     whether granted in the form of a security  interest,  mortgage,  collateral
     mortgage, deed of trust, assignment, pledge, chattel mortgage, crop pledge,
     chattel  mortgage,  collateral  chattel mortgage,  chattel trust,  factor's
     lien, equipment trust,  conditional sale, trust receipt, lien, charge, lien
     or title retention contract lease or consignment  intended as as a security
     device, or any other security or lien interest whatsoever,  whether created
     by law, contract, or otherwise..

     DEFAULT.  The word "Default"  means the Default set forth in this Agreement
     in the section titled "Default".

     ENVIRONMENTAL  LAWS. The words " Environmental Laws' mean any and all state
     and federal and local statutes,  regulations and ordinances relating to the
     protection of human health or the environment, including without limitation
     the Comprehensive Environmental Response,  Compensation,  and Liability Act
     of 1980,  as amended,  42 U.S.C.  Section  9601,  et seq.  ("CERCLA"),  the
     Superfund  Amendments and  Reauthorization  Act of 1986,  Pub. L No. 99-499
     ("SARA"),  the Hazardous Materials  Transportation  Act, 49 U.S.C.  Section
     1801,  et seq.,  the  Resource  Conservation  and  REcover  Act, 42 U.S.C..
     Section 6901, et seq., or other  applicable state or federal laws, rules or
     regulations adopted pursuant thereto.

     EVENT OF DEFAULT.  The words  "Event of Default"  mean any of the events of
     default  set  forth  in  this  Agreement  in the  Default  section  of this
     Agreement.

     GAAP. The word "GAAP" means generally accepted accounting principles.

     GRANTOR.  The word "Grantor"  means each and all of the persons or entities
     granting a Security  Interest  in any  Collateral  for the Loan,  including
     without limitation all Borrowers granting such a security Interest.

     GUARANTOR.   The  word  "Guarantor"   means  any  guarantor,   surety,   or
     accommodation party of any or all of the Loan.

     GUARANTY.  The word "Guaranty"  means the guaranty for Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     INDEBTEDNESS.  The word "indebtedness" means the indebtedness  evidenced by
     the  Note or  Related  Documents,  including  all  principal  and  interest
     together  with all other  indebtedness  and costs  and  expenses  for which
     Grantor  irresponsible  under this  Agreement  or under any of the  Related
     Documents.In  addition,  and without  limitation,  the term  "Indebtedness"
     includes all amounts  identified in the Revolving Line of Credit and Future
     Advances paragraphs as contained in one or more of the Related Documents.

     LENDER.  the word "Lender" means  Lexington  State Bank, its successors and
     assigns.

     LOAN. The word "Loan" means any and all loans and financial  accommodations
     from lender to  Borrower  whether now or  hereafter  existing,  and however
     evidenced,   including   without   limitation  those  loans  and  financial
     accommodations  described  herein or  described  on any exhibit or schedule
     attached to this Agreement from time to time.

     NOTE.  The word "Note" means the Note executed by Borrower in the principal
     amount of $300,000.00  dated June 16, 1999,  together with all renewals of,
     extensions of,  modifications of, re financings of,  consolidations of, and
     substitutions for the note or credit agreement.

     PERMITTED LIENS.  The words  "Permitted  Liens' Mean (1) liens and security
     interests  securing  indebtedness owed by Borrower to Lender; (2) liens for
     taxes,  assessments,  or  similar  charges  either  not  yet  due or  being
     contested in good faith; (3) lines of materialmen, mechanics, warehousemen,
     or carriers, or other like liens arising in the ordinary course of business
     and securing  obligations which are not yet delinquent;  (4) purchase money
     liens or purchase money security  interest upon or in any property acquired
     or  held  by  Borrower  in the  ordinary  course  of  business  top  secure
     indebtedness  outstanding  on the date of this Agreement or permitted to be
     incurred under the paragraph of this  Agreement  titled  "Indebtedness  and
     Liens",  (5) liens and  security  interests  which,  as of the date of this
     Agreement,  have been  disclosed  to and approved by the Lender in writing;
     and  (6)  those  liens  and  security  interests  which  in  the  aggregate
     constitute an immaterial and insignificant  monetary amount with respect to
     the new value of Borrower's assets.

<PAGE>

                                                                          Page 5

                             BUSINESS LOAN AGREEMENT
                                   (Continued)
================================================================================

     RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements,  environmental agreements,  guaranties,
     security  agreements,   mortgages,   deeds  of  trust,  security  d  deeds,
     collateral mortgages, and all other instruments,  agreements and documents,
     whether now or hereafter existing, executed connection with the Loan.

     SECURITY AGREEMENT. The words "Security Agreement' mean and include without
     limitation   any    agreements,    promises,    covenants,    arrangements,
     understandings  or other  agreements,  whether created by law,  contract or
     otherwise,  evidencing,  governing,  representing,  or  creating a Security
     Interest.

     SECURITY INTEREST. The words "Security Interest" means, without limitation,
     any and all types of collateral security, present and future whether in the
     form of a lien,  charge,  encumbrance,  mortgage,  deed of trust,  security
     deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
     mortgage,  chattel trust, factor's lien, equipment trust, conditional sale,
     trust  receipt,  lien or title  retention  contract,  lease or  consignment
     intended  as a  security  device or any  other  security  or lien  interest
     whatsoever whether created by law, contract or otherwise.

BORROWER  HAS READ AND  UNDERSTOOD  ALL THE  PROVISIONS  OF THIS  BUSINESS  LOAN
AGREEMENT AND AGREES TO ITS TERMS.  THIS AGREEMENT IS DATED JUNE 16, 1999.  THIS
AGREEMENT  IS GIVEN UNDER SEAL AND IT IS  INTENDED  THAT THIS  AGREEMENT  IS AND
SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

BORROWER:                               ATTEST: /s/ William W. Woodruff
                                                --------------------------------
                                                William W. Woodruff, Secretary

WELLINGTON HALL, LIMITED                         (CORPORATE SEAL)

By: /s/ Hoyt M. Hackney, Jr.  (Seal)    By: /s/ William W. Woodruff       (Seal)
    --------------------------              ------------------------------
    Hoyt M. Hackney, Jr. President of       William W. Woodruff, Secretary of
    Wellington Hall, Limited                Wellington Hall, Limited

LENDER:

LEXINGTON STATE BANK

X /s/                                   [Corporate Seal]
  ----------------------------
  Authorized Signer

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