CREDIT AND SECURITY AGREEMENT

                         Dated as of ____________, 1998

         FM PRECISION GOLF  MANUFACTURING  CORP., a Delaware  corporation and FM
PRECISION GOLF SALES CORP., a Delaware  corporation  (collectively,  jointly and
severally,  the  "Borrower"),  and NORWEST  BUSINESS  CREDIT,  INC., a Minnesota
corporation (the "Lender"), hereby agree as follows:

                                   Article I.

                                  DEFINITIONS

         SECTION 1.1 DEFINITIONS.  For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:

               (a) the terms defined in this Article have the meanings  assigned
to them in this Article, and include the plural as well as the singular; and

               (b) all  accounting  terms not otherwise  defined herein have the
meanings assigned to them in accordance with GAAP.

                  "Accounts" means all of the Borrower's accounts,  as such term
         is defined  in the UCC,  including  without  limitation  the  aggregate
         unpaid  obligations  of  customers  and other  account  debtors  to the
         Borrower or either of them arising out of the sale or lease of goods or
         rendition  of  services  by the  Borrower  or either of them on an open
         account or deferred payment basis.

                  "Advance" means a Revolving Advance or a Term Advance.

                  "Affiliate" or  "Affiliates"  means the Covenant  Entities and
         any other Person  controlled  by,  controlling  or under common control
         with the Borrower, including (without limitation) any Subsidiary of the
         Borrower.  For purposes of this  definition,  "control," when used with
         respect  to any  specified  Person,  means  the  power  to  direct  the
         management and policies of such Person, directly or indirectly, whether
         through the ownership of voting securities, by contract or otherwise.

                  "Agreement"   means  this  Amended  and  Restated  Credit  and
         Security Agreement,  as amended,  supplemented or restated from time to
         time which replaces the Original Credit Agreement in its entirety.

                  "Availability" means the positive  difference,  if any, of (i)
         the Borrowing  Base and (ii) the sum of (A) the  outstanding  principal
         balance of the Revolving Note and (B) the L/C Amount.

                  "Banking  Day"  means a day other than a  Saturday,  Sunday or
         other  day on which  banks  are  generally  not open  for  business  in
         Phoenix, Arizona.

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                  "Base Rate" means the rate of interest publicly announced from
         time to time by Norwest  Bank  Minnesota as its "base rate" or, if such
         bank ceases to  announce a rate so  designated,  any similar  successor
         rate designated by the Lender.

                  "Book  Net  Worth"  means  the  aggregate  of the  common  and
         preferred   stockholders'   equity  in  the  Borrower,   determined  in
         accordance with GAAP.

                  "Borrowing Base" means, at any time the lesser of:

                  (a) the Maximum Line; or

                  (b) subject to change from time to time in the  Lender's  sole
         discretion, the sum of:

                              (A)       the  lesser  of  (x)  85%  of   Eligible
                                        Accounts, or (y) $4,000,000.00, plus

                              (B)       the  lesser  of  (x)  60%  of   Eligible
                                        Inventory  (exclusive  of  Eligible  Raw
                                        Materials     Inventory),     or     (y)
                                        $3,000,000.00  from  the  date  of  this
                                        Agreement  through January 31, 1999, and
                                        $2,500,000.00 on February 1, 1999 and at
                                        all times thereafter, plus

                              (C)       the  lesser of (x) 50% of  Eligible  Raw
                                        Materials     Inventory,      or     (y)
                                        $3,000,000.00  from  the  date  of  this
                                        Agreement  through January 31, 1999, and
                                        $2,500,000.00 on February 1, 1999 and at
                                        all times thereafter.

                  "Capital  Expenditures"  for a period means any expenditure of
         money for the purchase or construction of assets,  or for  improvements
         or additions  thereto,  which are capitalized on the Borrower's balance
         sheet.
                  "Collateral"  means all of the Borrower's  Equipment,  General
         Intangibles,  Inventory,  Receivables,  all  sums  on  deposit  in  any
         Collateral  Accounts,  and any items in any lockbox;  together with (i)
         all  substitutions  and  replacements  for and  products  of any of the
         foregoing; (ii) proceeds of any and all of the foregoing;  (iii) in the
         case of all  tangible  goods,  all  accessions;  (iv) all  accessories,
         attachments,  parts, equipment and repairs now or hereafter attached or
         affixed  to or used in  connection  with any  tangible  goods;  (v) all
         warehouse receipts, bills of lading and other documents of title now or
         hereafter  covering  such  goods;  and (vi) all sums on  deposit in the
         Special Account.

                  "Collateral Accounts" have the meaning given in the Collateral
         Account Agreements.

                  "Collateral Account Agreements" means  the Collateral  Account
         Agreements of even  date herewith by  and among FMM, FMS, Norwest  Bank
         Arizona and the Lender.

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<PAGE>
                  "Collateral  Assignment of  Trademarks"  means the  Collateral
         Assignment  of  Trademarks  by FMM in favor of the  Lender of even date
         herewith.

                  "Commitment"  means the Lender's  commitment  to make Advances
         and to cause  the  Issuer  to issue  Letters  of  Credit  to or for the
         Borrower's account pursuant to Article II.

                  "Covenant Entities" means  Royal  Grip, Inc., Roxxi, Inc.  and
         Royal Precision, Inc.

                  "Credit  Facility"  means   the  credit  facility  being  made
         available to the Borrower by the Lender pursuant to Article II.

                  "Current  Maturities  of Long  Term  Debt" as of a given  date
         means  the  amount of the  Borrower's  long-term  debt and  capitalized
         leases  which  became due during the  applicable  period  ending on the
         designated date.

                  "Debt"  of any  Person  means  all  items of  indebtedness  or
         liability   which  in  accordance   with  GAAP  would  be  included  in
         determining  total  liabilities as shown on the  liabilities  side of a
         balance  sheet of that  Person as at the date as of which Debt is to be
         determined.  For purposes of  determining a Person's  aggregate Debt at
         any time, "Debt" shall also include the aggregate  payments required to
         be made by such Person at any time under any lease that is considered a
         capitalized lease under GAAP.

                  "Debt Service  Coverage  Ratio" means the ratio of (i) the sum
         of (A)  Funds  from  Operations  and (B)  Interest  Expense  MINUS  (C)
         unfinanced  portion  of  Capital  Expenditures  to (ii)  the sum of (A)
         Current  Maturities of Long Term Debt (actually paid during the period)
         and (B) Interest Expense.

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

                  "Default  Period"  means any period of time  beginning  on the
         first day of any month  during  which a Default or Event of Default has
         occurred  and ending on the date the Lender  notifies  the  Borrower in
         writing that such Default or Event of Default has been cured or waived.

                  "Default Rate" means, with respect to the Revolving  Advances,
         an annual rate equal to two percent  (2%) over the  Revolving  Floating
         Rate,  which rate shall change when and as the Revolving  Floating Rate
         changes and with respect to the Term Advances,  an annual rate equal to
         two percent (2%) over the Term Floating  Rate,  which rate shall change
         when and as the Term Floating Rate changes.

                  "ERISA" means the Employee Retirement  Income Security  Act of
         1974, as amended.

                  "Eligible  Accounts" means all  unpaid  Accounts, net  of  any
         credits, except the following shall not in any event be deemed Eligible
         Accounts:

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<PAGE>
                           (i) That  portion of Accounts  which are 60 days past
                  stated due date or which are unpaid 120 days or more after the
                  invoice date;

                           (ii) That  portion of  Accounts  that is  disputed or
                  subject to a claim of offset or a contra account;

                           (iii) That  portion of Accounts not yet earned by the
                  final   delivery  of  goods  or  rendition  of  services,   as
                  applicable, by the Borrower to the customer;

                           (iv) Accounts owed by any unit of government, whether
                  foreign or domestic  (provided,  however,  that there shall be
                  included in Eligible Accounts that portion of Accounts owed by
                  such units of  government  for which the Borrower has provided
                  evidence  satisfactory to the Lender that (A) the Lender has a
                  first  priority  perfected  security  interest  and  (B)  such
                  Accounts may be enforced by the Lender  directly  against such
                  unit of government under all applicable laws);

                           (v)  Accounts  owed  by  an  account  debtor  located
                  outside the United  States  which are not (A) backed by a bank
                  letter of credit naming the Lender as  beneficiary or assigned
                  to the  Lender,  in the  Lender's  possession  or in a Related
                  Lender's  possession  and  acceptable  to  the  Lender  in all
                  respects, in its sole discretion,  or (B) covered by a foreign
                  receivables  insurance policy  acceptable to the Lender in its
                  sole discretion;

                           (vi)  Accounts  owed  by an  account  debtor  that is
                  insolvent,  the subject of bankruptcy  proceedings or has gone
                  out of business;

                           (vii)  Accounts  owed by a  shareholder,  Subsidiary,
                  Affiliate, officer or employee of the Borrower;

                           (viii)  Accounts  not  subject  to a  duly  perfected
                  security  interest in the Lender's  favor or which are subject
                  to any lien, security interest or claim in favor of any Person
                  other than the Lender including without limitation any payment
                  or performance bond;

                           (ix)  That   portion  of   Accounts   that  has  been
                  restructured, extended, amended or modified;

                           (x)  That  portion  of  Accounts   that   constitutes
                  advertising,  finance  charges,  service  charges  or sales or
                  excise taxes;

                           (xi) Accounts  owed by an  account debtor, regardless
                  of  whether otherwise  eligible, if  20% or more  of the total
                  amount due under Accounts from such debtor is ineligible under
                  clauses (i), (ii) or (ix) above

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<PAGE>
                           (xii)  Accounts  consisting of tooling  charges;  and

                           (xiii) Accounts owed by an account debtor (other than
                  Taylor Made, Callaway  and  Marubeni)  regardless  of  whether
                  otherwise eligible, in excess of 15% of total Accounts.

                           (xiv)  Accounts  owed by  Taylor  Made and  Callaway,
                  regardless of whether otherwise eligible,  in excess of 25% of
                  total Accounts.

                           (xv) Accounts owed by Marubeni, regardless of whether
                  otherwise eligible, in excess of 50% of total Accounts.

                           (xvi)  Accounts  owed  by  Marubeni,   regardless  of
                  whether otherwise eligible, to the extent the aggregate amount
                  of such accounts exceed $500,000.00 of total Accounts.

                           (xvii)  Accounts,  or  portions  thereof,   otherwise
                  deemed ineligible by the Lender in its sole discretion.
 
                          "Eligible Raw Materials Inventory" means that portion
                  of Eligible Inventory consisting of raw materials.

                           "Eligible  Inventory" means all inventory of Borrower
                  valued at weighted  average cost as  determined  in accordance
                  with GAAP; provided,  however, that the following shall not in
                  any event be deemed Eligible Inventory:

                                    (i) Inventory that is: in-transit (exclusive
                           of inventory  in-transit between Premises locations);
                           located  at  any  warehouse  or  other  premises  not
                           approved by the Lender in writing; located outside of
                           the states,  or localities,  as applicable,  in which
                           the Lender has filed financing  statements to perfect
                           a first priority security interest in such inventory;
                           covered by any negotiable or non-negotiable warehouse
                           receipt,  bill of lading or other  document of title;
                           on consignment to or from any other person or subject
                           to any bailment;

                                    (ii) Packaging inventory;

                                    (iii) Work-in-process inventory;

                                    (iv) Inventory that is damaged,  obsolete or
                           not  currently  saleable in the normal  course of the
                           Borrower's operations;

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<PAGE>
                                    (v)   Inventory   that  the   Borrower   has
                           returned,  has attempted to return, is in the process
                           of  returning  or  intends  to return  to the  vendor
                           thereof;

                                    (vi) Inventory that is subject to a security
                           interest  in  favor  of any  Person  other  than  the
                           Lender;

                                    (vii)  Inventory  that does not  consist  of
                           finished grips;

                                    (viii)  Slow-Moving Inventory;

                                    (ix)   Inventory   that  is   subject  to  a
                           licensing agreement,  which licensing agreement would
                           preclude or hinder the Lender from  liquidating  such
                           Inventory in the ordinary course of business; and

                                    (x) Inventory otherwise deemed ineligible by
                           the Lender in its sole discretion.

                  "Environmental  Laws" has the  meaning  specified  in  Section
         5.12.

                  "Equipment"  means all of the  Borrower's  equipment,  as such
         term is defined in the UCC,  whether now owned or  hereafter  acquired,
         including  but  not  limited  to  all  present  and  future  machinery,
         vehicles, furniture, fixtures, manufacturing equipment, shop equipment,
         office  and  recordkeeping  equipment,   parts,  tools,  supplies,  and
         including  specifically (without limitation) the goods described in any
         equipment  schedule or list  herewith  or  hereafter  furnished  to the
         Lender  by  the  Borrower,  and  whether  located  on the  Premises  or
         otherwise.

                  "Event of Default" has the meaning specified in Section 8.1.

                  "FMM" means FM Precision Golf Manufacturing  Corp., a Delaware
         corporation.

                  "FMS"  means  FM  Precision   Golf  Sales  Corp.,  a  Delaware
         corporation.

                  "Funding Date" has the meaning given in Section 2.1.

                  "Funds From  Operations"  for a given  period means the sum of
         (i) Net Income,  (ii)  depreciation  and  amortization,  (iii) deferred
         income taxes,  and (iv) other  non-cash  items,  each as determined for
         such period in accordance with GAAP.

                  "GAAP" means generally accepted accounting principles, applied
         on a basis  consistent  with the  accounting  practices  applied in the
         financial statements described in Section 5.5, except for any change in
         accounting  practices to the extent that, due to a promulgation  of the
         Financial  Accounting  Standards Board changing or implementing any new
         accounting  standard,  the Borrower either (i) is required to implement
         such change, or (ii) for future periods will be required to and for the
         current period may in accordance with

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<PAGE>
         GAAP  implement  such change,  for its  financial  statements  to be in
         conformity  with  GAAP (any such  change  is  herein  referred  to as a
         "Required  GAAP  Change"),  provided that (1) the Borrower  shall fully
         disclose in such financial statements any such Required GAAP Change and
         the  effects of the  Required  GAAP  Change on the  Borrower's  income,
         retained  earnings  or  other  accounts,  as  applicable,  and  (2) the
         Borrower's  financial covenants set forth in Sections 6.12 through 6.15
         and 7.10 shall be adjusted as  necessary to reflect the effects of such
         Required GAAP Change.

                  "General  Intangibles"  means  all of the  Borrower's  general
         intangibles,  as such term is defined in the UCC,  whether now owned or
         hereafter  acquired,  including  (without  limitation)  all present and
         future patents,  patent  applications,  copyrights,  trademarks,  trade
         names,  trade  secrets,  customer  or  supplier  lists  and  contracts,
         manuals, operating instructions,  permits, franchises, the right to use
         the Borrower's name, and the goodwill of the Borrower's business.

                  "Guarantor"   means   Royal   Precision,   Inc.,   a  Delaware
         corporation.

                  "Hazardous Substance" has the meaning given in Section 5.12.

                  "Interest  Expense" means, for a fiscal  year-to-date  period,
         the  Borrower's   total  gross  interest  expense  during  such  period
         (excluding  interest income),  and shall in any event include,  without
         limitation or duplication,  (i) interest expensed (whether or not paid)
         on all  Debt,  (ii)  the  amortization  of debt  discounts,  (iii)  the
         amortization  of all fees payable in connection  with the incurrence of
         Debt to the extent included in interest  expense,  and (iv) the portion
         of any capitalized lease obligation allocable to interest expense.

                  "Inventory"  means all of the  Borrower's  inventory,  as such
         term is defined in the UCC,  whether now owned or  hereafter  acquired,
         whether consisting of whole goods, spare parts or components,  supplies
         or materials,  whether acquired,  held or furnished for sale, for lease
         or under  service  contracts  or for  manufacture  or  processing,  and
         wherever located.

                  "Issuer" means the issuer of any Letter of Credit.

                  "L/C Amount" means the sum of (i) the aggregate face amount of
         any issued and outstanding Letters of Credit and (ii) the unpaid amount
         of the Obligation of Reimbursement.

                  "L/C  Application"  means an  application  and  agreement  for
         letters of credit in a form acceptable to the Issuer and the Lender.

                  "Letter of Credit" has the meaning specified in Section 2.2.

                  "Loan  Documents"  means  this  Agreement,  the  Notes and the
         Security Documents.

                  "Maturity Date" means September 30, 2001.

                  "Maximum  Line"  means  $4,000,000.00,  unless  said amount is
         reduced pursuant to Section 2.12, in which event it means the amount to
         which said amount is reduced.

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<PAGE>
                  "Minimum  Interest  Charge" has the  meaning  given in Section
         2.8(c).

                  "Mortgage Deed" means the Mortgage Deed and Security Agreement
         by FMM in favor of Lender of even date herewith.

                  "Net Income" means for the  applicable  period,  after-tax net
         income from  continuing  operations as  determined  in accordance  with
         GAAP.

                  "Net Loss" means for the applicable period, after-tax net loss
         from continuing operations as determined in accordance with GAAP.

                  "Norwest  Bank   Minnesota"   means  Norwest  Bank  Minnesota,
         National Association.

                  "Note" means the Revolving  Note or the Term Note, and "Notes"
         means the Revolving Note and the Term Note.

                  "Obligations"  means the Notes and each and every  other debt,
         liability  and  obligation  of every  type and  description  which  the
         Borrower may now or at any time  hereafter  owe to the Lender,  whether
         such debt,  liability or obligation now exists or is hereafter  created
         or incurred,  whether it arises in a  transaction  involving the Lender
         alone or in a transaction  involving  other  creditors of the Borrower,
         and whether it is direct or indirect, due or to become due, absolute or
         contingent, primary or secondary,  liquidated or unliquidated, or sole,
         joint,  several or joint and several, and including  specifically,  but
         not limited to, the Obligation of Reimbursement and all indebtedness of
         the  Borrower  arising  under  this  Agreement,   the  Notes,  any  L/C
         Application  completed  by the  Borrower,  or any other  loan or credit
         agreement or guaranty between the Borrower and the Lender,  whether now
         in effect or hereafter entered into.

                  "Obligation of Reimbursement" has the meaning given in Section
         2.3(a).

                  "Patent   Security   Agreement"  means  the  Patent  Mortgage,
         Assignment and Security Agreement by FMM in favor of the Lender of even
         date herewith.

                  "Permitted Lien" has the meaning given in Section 7.1.

                  "Person" means any individual, corporation, partnership, joint
         venture, limited liability company,  association,  joint-stock company,
         trust,  unincorporated  organization  or  government  or any  agency or
         political subdivision thereof.

                  "Plan" means an employee benefit plan or other plan maintained
         for the Borrower's employees and covered by Title IV of ERISA.

                  "Premises" means all premises where the Borrower  conducts its
         business  and  has  any  rights  of  possession,   including   (without
         limitation)  the  premises  legally  described  in  Exhibit D  attached
         hereto.

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<PAGE>
                  "Real Property" means the real property subject to the lien of
         the Mortgage Deed.

                  "Receivables"  means each and every  right of the  Borrower to
         the  payment of money,  whether  such  right to  payment  now exists or
         hereafter  arises,  whether such right to payment arises out of a sale,
         lease  or other  disposition  of  goods  or  other  property,  out of a
         rendering of services,  out of a loan, out of the  overpayment of taxes
         or other  liabilities,  or  otherwise  arises  under  any  contract  or
         agreement,  whether  such  right to payment is  created,  generated  or
         earned  by the  Borrower  or by  some  other  person  who  subsequently
         transfers such person's interest to the Borrower, whether such right to
         payment is or is not already earned by performance,  and howsoever such
         right to payment may be  evidenced,  together with all other rights and
         interests  (including  all  liens  and  security  interests)  which the
         Borrower may at any time have by law or  agreement  against any account
         debtor or other  obligor  obligated to make any such payment or against
         any property of such account debtor or other obligor; all including but
         not limited to all present and future accounts,  contract rights, loans
         and obligations receivable, chattel papers, bonds, notes and other debt
         instruments, tax refunds and rights to payment in the nature of general
         intangibles.

                  "Reportable  Event"  shall have the  meaning  assigned to that
         term in Title IV of ERISA.

                  "Revolving Advance" has the meaning given in Section 2.1.

                  "Revolving  Floating  Rate"  means an annual rate equal to the
         sum of the Base Rate plus  one-quarter  of one  percent  (.25%),  which
         annual rate shall change when and as the Base Rate changes.

                  "Revolving  Note" means the  Borrower's  revolving  promissory
         note,  payable to the order of the Lender in substantially  the form of
         Exhibit A hereto and any note or notes issued in substitution therefor,
         as the same may  hereafter be amended,  supplemented  or restated  from
         time to time.

                  "Security Documents" means this Agreement,  the Mortgage Deed,
         the Collateral  Account  Agreements,  the Patent Security Agreement and
         any  other  document  delivered  to the  Lender  from  time  to time in
         connection  with the Original  Credit  Agreement,  this Agreement or to
         secure  the  Obligations,   as  the  same  may  hereafter  be  amended,
         supplemented or restated from time to time.

                  "Security Interest" has the meaning given in Section 3.1.

                  "Slow-Moving  Inventory" means any inventory where 100% of the
         like inventory has not turned in the previous twelve (12) months.

                  "Special  Account" means a specified cash  collateral  account
         maintained  by a  financial  institution  acceptable  to the  Lender in
         connection with Letters of Credit, as contemplated by Section 2.4.

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<PAGE>
                  "Subsidiary"  means any  corporation of which more than 50% of
         the  outstanding  shares of capital stock having  general  voting power
         under  ordinary  circumstances  to  elect a  majority  of the  board of
         directors of such  corporation,  irrespective  of whether or not at the
         time  stock of any other  class or  classes  shall  have or might  have
         voting power by reason of the happening of any  contingency,  is at the
         time  directly  or  indirectly  owned by  either  Borrower,  by  either
         Borrower  and one or more other  Subsidiaries,  or by one or more other
         Subsidiaries.

                  "Term Advance" has the meaning specified in Section 2.6.

                  "Term  Floating Rate" means an annual rate equal to the sum of
         the Base Rate plus  three-quarters of one percent (.75%),  which annual
         rate shall change when and as the Base Rate changes.

                  "Term Note" means the Borrower's  promissory note,  payable to
         the order of the Lender in  substantially  the form of Exhibit B hereto
         and any note or notes issued in substitution  therefor, as the same may
         hereafter be amended, supplemented or restated from time to time.

                  "Termination  Date"  means the  earliest  of (i) the  Maturity
         Date,  (ii) the date the Borrower  terminates the Credit  Facility,  or
         (iii) the date the Lender demands payment of the  Obligations  after an
         Event of Default pursuant to Section 8.2.

                  "UCC" means the Uniform Commercial Code as in effect from time
         to time in the state designated in Section 9.13 as the state whose laws
         shall govern this Agreement,  or in any other state whose laws are held
         to govern this Agreement or any portion hereof.

          SECTION 1.2 CROSS  REFERENCES.  All  references  in this  Agreement to
Articles,  Sections  and  subsections,   shall  be  to  Articles,  Sections  and
subsections of this Agreement unless otherwise explicitly specified.

                                   Article II.

                    AMOUNT AND TERMS OF THE CREDIT FACILITY

          SECTION 2.1 REVOLVING  ADVANCES.  The Lender agrees,  on the terms and
subject to the  conditions  herein set forth,  to make  advances to the Borrower
from time to time from the date all of the  conditions  set forth in Section 4.1
are satisfied  (the "Funding  Date") to the  Termination  Date, on the terms and
subject  to the  conditions  herein set forth (the  "Revolving  Advances").  The
Lender  shall have no  obligation  to make a Revolving  Advance if, after giving
effect to such  requested  Revolving  Advance,  the sum of the  outstanding  and
unpaid  Revolving  Advances under this Section 2.1 or otherwise would exceed the
Borrowing  Base  less  the L/C  Amount.  The  Borrower's  obligation  to pay the
Revolving Advances shall be evidenced by the Revolving Note and shall be secured
by the  Collateral  as provided in Article  III.  Within the limits set forth in
this Section 2.1, the Borrower may borrow,  prepay  pursuant to Section 2.12 and
reborrow.  The  Borrower  agrees  to comply  with the  following  procedures  in
requesting Revolving Advances under this Section 2.1:

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<PAGE>
               (a) The Borrower shall make each request for a Revolving  Advance
to the Lender  before  11:00  a.m.  (Phoenix  time) of the day of the  requested
Revolving Advance.  Requests may be made in writing or by telephone,  specifying
the date of the requested Revolving Advance and the amount thereof. Each request
shall be by (i) any officer of either Borrower; or (ii) any person designated as
either Borrower's agent by any officer of either Borrower in a writing delivered
to the Lender; or (iii) any person whom the Lender reasonably  believes to be an
officer of either Borrower or such a designated agent.

               (b) Upon  fulfillment of the  applicable  conditions set forth in
Article IV, the Lender shall  disburse the proceeds of the  requested  Revolving
Advance  by  crediting  the  same  to  the  Borrower's  demand  deposit  account
maintained  with Norwest Bank Arizona,  N.A.  unless the Lender and the Borrower
shall  agree in writing to another  manner of  disbursement.  Upon the  Lender's
request,  the Borrower shall  promptly  confirm each  telephonic  request for an
Advance by executing and delivering an appropriate  confirmation  certificate to
the Lender.  The Borrower  shall repay all Advances  even if the Lender does not
receive such  confirmation and even if the person  requesting an Advance was not
in fact  authorized  to do so. Any request for an  Advance,  whether  written or
telephonic,  shall be deemed to be a  representation  by the  Borrower  that the
conditions  set forth in Section 4.2 have been  satisfied  as of the time of the
request.
          SECTION 2.2  LETTERS OF CREDIT.

               (a) Upon the request of either  Borrower,  the Lender may, in its
sole  discretion,  on the terms and subject to the conditions  herein set forth,
cause an Issuer to issue,  from the Funding Date to the Termination Date, one or
more  irrevocable  standby or documentary  letters of credit (each, a "Letter of
Credit") for the Borrower's  account. In the event Lender elects to issue one or
more Letters of Credit, the aggregate amount at any time outstanding of all such
Letters of Credit shall not exceed the lesser of:

                    (i)  $500,000.00 less the L/C Amount, or

                    (ii) the Borrowing Base less the sum of (A) all  outstanding
and unpaid Revolving Advances, and (B) the L/C Amount. 

Each  Letter of Credit,  if any,  shall be issued  pursuant  to a  separate  L/C
Application  entered  into by the Borrower and the Lender for the benefit of the
Issuer,  completed in a manner  satisfactory  to the Lender and the Issuer.  The
terms and conditions set forth in each such L/C Application shall supplement the
terms and conditions  hereof,  but if the terms of any such L/C  Application and
the terms of this Agreement are inconsistent, the terms hereof shall control.

               (b) No Letter of Credit shall be issued with an expiry date later
than the Termination Date in effect as of the date of issuance.

                                       11
<PAGE>
               (c) Any  request  to cause an  Issuer to issue a Letter of Credit
under this  Section 2.2 shall be deemed to be a  representation  by the Borrower
that the  conditions set forth in Section 4.2 have been satisfied as of the date
of the request.

          SECTION 2.3  PAYMENT  OF  AMOUNTS  DRAWN   UNDER  LETTERS  OF  CREDIT;
OBLIGATION OF REIMBURSEMENT.

                  The Borrower  acknowledges  that the Lender,  as co-applicant,
will be liable  to the  Issuer  for  reimbursement  of any and all  draws  under
Letters  of  Credit  and for all other  amounts  required  to be paid  under the
applicable  L/C  Application.  Accordingly,  the  Borrower  agrees to pay to the
Lender  any  and all  amounts  required  to be paid  under  the  applicable  L/C
Application, when and as required to be paid thereby, and the amounts designated
below, when and as designated:

               (a) The  Borrower  hereby  agrees to pay the  Lender on the day a
draft is  honored  under any Letter of Credit a sum equal to all  amounts  drawn
under such Letter of Credit  plus any and all  reasonable  charges and  expenses
that the  Issuer or the Lender  may pay or incur  relative  to such draw and the
applicable  L/C  Application,  plus  interest on all such  amounts,  charges and
expenses as set forth below (the  Borrower's  obligation to pay all such amounts
is herein referred to as the "Obligation of Reimbursement").

               (b) Whenever a draft is submitted  under a Letter of Credit,  the
Lender  shall  make a  Revolving  Advance  in the  amount of the  Obligation  of
Reimbursement  and shall apply the proceeds of such Revolving  Advance  thereto.
Such Revolving  Advance shall be repayable in accordance  with and be treated in
all other respects as a Revolving Advance hereunder.

               (c) If a draft is  submitted  under a Letter of  Credit  when the
Borrower  is  unable,  because a  Default  Period  then  exists or for any other
reason,  to obtain a Revolving  Advance to pay the Obligation of  Reimbursement,
the  Borrower  shall pay to the  Lender on demand and in  immediately  available
funds,  the amount of the  Obligation of  Reimbursement  together with interest,
accrued  from the date of the draft until  payment in full at the Default  Rate.
Notwithstanding  the Borrower's  inability to obtain a Revolving Advance for any
reason, the Lender is irrevocably authorized,  in its sole discretion, to make a
Revolving  Advance  in an amount  sufficient  to  discharge  the  Obligation  of
Reimbursement and all accrued but unpaid interest thereon.

               (d) The Borrower's  obligation to pay any Revolving  Advance made
under this  Section 2.3,  shall be  evidenced  by Revolving  Note and shall bear
interest as provided in Section 2.8.

          SECTION 2.4 SPECIAL ACCOUNT.  If the Credit Facility is terminated for
any reason  whatsoever  while any Letter of Credit is outstanding,  the Borrower
shall thereupon pay the Lender in immediately available funds for deposit in the
Special Account an amount equal to the L/C Amount.  The Special Account shall be
an  interest  bearing  account  maintained  for  the  Lender  by  any  financial
institution  acceptable to the Lender.  Any interest earned on amounts deposited
in the Special  Account  shall be credited  to the Special  Account.  Amounts on
deposit in the Special  Account may be applied by the Lender at any time or from
time to time to the Obligations in the

                                       12
<PAGE>
Lender's sole discretion, and shall not be subject to withdrawal by the Borrower
so long as the Lender maintains a security interest  therein.  The Lender agrees
to transfer  any balance in the Special  Account to the Borrower at such time as
the Lender is required to release its security  interest in the Special  Account
under applicable law.

          SECTION 2.5 OBLIGATIONS ABSOLUTE.  The Borrower's  obligations arising
under Section 2.3 shall be absolute, unconditional and irrevocable, and shall be
paid  strictly  in  accordance   with  the  terms  of  Section  2.3,  under  all
circumstances   whatsoever,   including   (without   limitation)  the  following
circumstances:

               (a) any lack of  validity  or  enforceability  of any  Letter  of
Credit or any other  agreement  or  instrument  relating to any Letter of Credit
(collectively the "Related Documents");

               (b) any amendment or waiver of or  any consent to departure  from
all or any of the Related Documents;

               (c) the  existence of any claim,  setoff,  defense or other right
which  the  Borrower  may  have at any  time,  against  any  beneficiary  or any
transferee of any Letter of Credit (or any persons or entities for whom any such
beneficiary or any such  transferee  may be acting),  or other person or entity,
whether in connection with this Agreement, the transactions  contemplated herein
or in the Related Documents or any unrelated transactions;

               (d) any  statement  or any  other  document  presented  under any
Letter of Credit proving to be forged,  fraudulent,  invalid or  insufficient in
any respect or any  statement  therein being untrue or inaccurate in any respect
whatsoever;

               (e) payment by or on behalf of the Issuer or the Lender under any
Letter of Credit against  presentation of a draft or certificate  which does not
strictly comply with the terms of such Letter of Credit; or

               (f) any other  circumstance or happening  whatsoever,  whether or
not similar to any of the foregoing.

          SECTION 2.6  TERM ADVANCE.

               (a) The Lender agrees, on the terms and subject to the conditions
herein set forth,  to make a one time  non-revolving  advance to the Borrower in
the amount of $4,300,000.00 (the "Term Advance").

               (b) The  Borrower's  obligation  to pay the Term Advance shall be
evidenced by the Term Note and shall be secured by the Collateral as provided in
Article III.

               (c) The request for the disbursement of the Term Advance shall be
by an individual authorized pursuant to Section 2.1(a).

                                       13
<PAGE>
               (d) Upon  fulfillment of the  applicable  conditions set forth in
Article IV, the Lender shall apply the proceeds of the Term Advance by crediting
the same to the Borrower's  demand deposit  account  specified in Section 2.1(b)
unless the Lender and the Borrower  shall agree in writing to another  manner of
disbursement. Upon the Lender's request, the Borrower shall promptly confirm the
telephonic  request  for  the  Term  Advance  by  executing  and  delivering  an
appropriate  confirmation  certificate  to the  Lender.  The  Borrower  shall be
obligated to repay the Term  Advance  notwithstanding  the  Lender's  failure to
receive  such  confirmation  and   notwithstanding  the  fact  that  the  person
requesting  the same was not in fact  authorized  to do so. The  request for the
Term  Advance,  whether  written  or  telephonic,   shall  be  deemed  to  be  a
representation by the Borrower that the conditions set forth in Section 4.2 have
been satisfied as of the time of the request.

          SECTION 2.7 PAYMENT OF TERM NOTE. The outstanding principal balance of
the Term Note shall be due and payable as follows:

               (a)  Beginning on November 1, 1998,  and on the first day of each
month  thereafter  until  October  1, 1999,  in equal  monthly  installments  of
$99,000.00 and beginning on November 1, 1999, and on the first day of each month
thereafter, in equal monthly installments of $65,000.00;

               (b) On the Termination  Date, the entire unpaid principal balance
of the Term Note, and all unpaid interest accrued thereon, shall in any event be
due and payable.

          SECTION 2.8  INTEREST;  MINIMUM  INTEREST  CHARGE;  DEFAULT  INTEREST;
PARTICIPATIONS;  USURY.  Interest accruing on the Notes shall be due and payable
in arrears on the first day of each month.

               (a)  REVOLVING  NOTE.  Except  as set forth in  Sections  2.8(d),
2.8(f) and 2.8(g), the outstanding principal balance of the Revolving Note shall
bear interest at the Revolving Floating Rate.

               (b) TERM NOTE. Except as set forth in Sections 2.8(d), 2.8(f) and
2.8(g),  the outstanding  principal balance of the Term Note shall bear interest
at the Term Floating Rate.

               (c) MINIMUM INTEREST CHARGE. Notwithstanding the interest payable
pursuant to Section 2.8(a), the Borrower shall pay to the Lender interest of not
less than $15,000.00 per calendar month (the "Minimum  Interest  Charge") during
the term of this  Agreement,  and the Borrower shall pay any deficiency  between
the  Minimum  Interest  Charge and the amount of interest  otherwise  calculated
under  Sections  2.8(a)  and 2.8(e) on the date and in the  manner  provided  in
Section 2.10.

               (d) DEFAULT INTEREST RATE. At any time during any Default Period,
in the Lender's sole  discretion and without waiving any of its other rights and
remedies, the principal of the Advances outstanding from time to time shall bear
interest at the Default Rate, effective for any periods designated by the Lender
from time to time during that Default Period.

                                       14
<PAGE>
               (e)  PARTICIPATIONS.  If any Person shall acquire a participation
in the Advances  under this  Agreement,  the Borrower  shall be obligated to the
Lender to pay the full amount of all interest  calculated under,  along with all
other fees,  charges and other amounts due under this  Agreement,  regardless if
such Person  elects to accept  interest with respect to its  participation  at a
lower  rate than the  Revolving  Floating  Rate or the Term  Floating  Rate,  or
otherwise  elects to accept  less than its pro rata share of such fees,  charges
and other amounts due under this Agreement.

               (f) USURY.  In any event no rate change  shall be put into effect
which would result in a rate  greater  than the highest  rate  permitted by law.
Notwithstanding  anything to the contrary  contained in any Loan  Document,  all
agreements  which  either now are or which shall become  agreements  between the
Borrower and the Lender are hereby  limited so that in no  contingency  or event
whatsoever  shall the total  liability  for  payments in the nature of interest,
additional  interest and other charges exceed the  applicable  limits imposed by
any applicable usury laws. If any payments in the nature of interest, additional
interest and other charges made under any Loan Document are held to be in excess
of the limits imposed by any  applicable  usury laws, it is agreed that any such
amount held to be in excess shall be considered payment of principal  hereunder,
and the  indebtedness  evidenced  hereby shall be reduced by such amount so that
the total liability for payments in the nature of interest,  additional interest
and  other  charges  shall not  exceed  the  applicable  limits  imposed  by any
applicable  usury laws, in  compliance  with the desires of the Borrower and the
Lender.  This  provision  shall never be  superseded or waived and shall control
every other  provision  of the Loan  Documents  and all  agreements  between the
Borrower and the Lender, or their successors and assigns.

               (g) SAVINGS  CLAUSE.  The Borrower  agrees that the interest rate
contracted  for  includes  the  interest  rate set forth  herein  plus any other
charges  or fees set  forth  herein  and  costs and  expenses  incident  to this
transaction  paid by the  Borrower to the extent  that some are deemed  interest
under applicable law.

          SECTION 2.9 FEES.

               (a) UNUSED LINE FEE.  For the  purposes of this  Section  2.9(b),
"Unused  Amount"  means the Maximum  Line reduced by (1)  outstanding  Revolving
Advances  and (2) the L/C Amount.  The  Borrower  agrees to pay to the Lender an
unused line fee at the rate of  one-half  of one percent  (.5%) per annum on the
average daily Unused Amount from the date of this Agreement to and including the
Termination  Date,  due and  payable  monthly in arrears on the first day of the
month and on the Termination Date.

               (b) LETTER OF CREDIT FEES. The Borrower  agrees to pay the Lender
a fee with respect to each Letter of Credit,  if any,  accruing on a daily basis
and computed at the annual rate of three  percent (3%) of the  aggregate  amount
that may then be drawn on all issued and outstanding  Letters of Credit assuming
compliance  with all  conditions for drawing  thereunder  (the  "Aggregate  Face
Amount"), from and including the date of issuance of such Letter of Credit until
such date as such Letter of Credit  shall  terminate by its terms or be returned
to the Lender, due and payable monthly in arrears on the first day of each month
and on the Termination Date.

                                       15
<PAGE>
               (c) LETTER OF CREDIT  ADMINISTRATIVE FEES. The Borrower agrees to
pay the Lender, on written demand, the administrative fees charged by the Issuer
in connection with the honoring of drafts under any Letter of Credit, amendments
thereto, transfers thereof and all other activity with respect to the Letters of
Credit at the  then-current  rates  published  by the Issuer  for such  services
rendered on behalf of customers of the Issuer generally.

               (d) AUDIT FEES. The Borrower hereby agrees to pay the Lender,  on
demand,  audit fees of $60.00 per hour (or Lender's  then  applicable  rate) per
auditor  in  connection  with any  audits or  inspections  by the  Lender of any
collateral  or the  operations  or business of the  Borrower,  together with all
actual out-of-pocket costs and expenses incurred in conducting any such audit or
inspection  (collectively,  "Out-of-Pockets").  So long as there is not any then
existing  Event of Default or Default  Period,  such audit fees shall not exceed
$5,000.00  per audit plus all  applicable  Out-of-Pockets  and  audits  shall be
performed not more frequently  than quarterly.  Lender shall send to Borrower an
invoice  applicable  to such  audit  fees,  out-of-pocket  costs  and  expenses,
provided, however, any failure of Lender to send such invoices shall not relieve
Borrower of its obligations under this Section 2.9(d).

          SECTION 2.10  COMPUTATION OF INTEREST AND FEES;  WHEN INTEREST DUE AND
PAYABLE.  Interest accruing on the outstanding principal balance of the Advances
and fees hereunder  outstanding from time to time shall be computed on the basis
of  actual  number of days  elapsed  in a year of 360  days.  Interest  shall be
payable in arrears on the first day of each month and on the Termination Date.

          SECTION 2.11 [INTENTIONALLY DELETED]

          SECTION 2.12  VOLUNTARY  PREPAYMENT;  REDUCTION  OF THE MAXIMUM  LINE;
TERMINATION OF THE CREDIT FACILITY BY THE BORROWER. Except as otherwise provided
herein,  the Borrower may prepay the Revolving  Advances in whole at any time or
from time to time in part. The Borrower may prepay the Term Advances (other than
in  accordance  with Section 2.7),  terminate the Credit  Facility or reduce the
Maximum  Line at any time if it (i)  gives the  Lender  at least 30 days'  prior
written  notice  and (ii) pays the Lender the  prepayment,  termination  or line
reduction  fees in  accordance  with Section  2.13.  Any  prepayment of the Term
Advances (other than in accordance with Section 2.7) or reduction in the Maximum
Line must be in an amount  not less than  $250,000.00  or an  integral  multiple
thereof.  No  reduction  of the Maximum Line shall in any way effect the Minimum
Interest  Charges.  If the  Borrower  reduces  the  Maximum  Line to  zero,  all
Obligations shall be immediately due and payable. Any partial prepayments of the
Term Note  (other  than in  accordance  with  Section  2.7)  shall be applied to
principal  payments  due and owing in inverse  order of their  maturities.  Upon
termination  of  the  Credit   Facility  and  payment  and  performance  of  all
Obligations, the Lender shall release or terminate the Security Interest and the
Security Documents to which the Borrower is entitled by law.

                                       16
<PAGE>
          SECTION 2.13  TERMINATION,  LINE REDUCTION AND PREPAYMENT FEES; WAIVER
OF TERMINATION, PREPAYMENT aND LINE REDUCTION FEES.

               (a)  TERMINATION  AND LINE REDUCTION FEES. If the Credit Facility
is terminated  for any reason as of a date other than the Maturity  Date, or the
Borrower reduces the Maximum Line, the Borrower shall pay the Lender a fee in an
amount equal to a percentage of the Maximum Line (or the reduction,  as the case
may be) as follows:  (i) three  percent  (3%) if the  termination  or  reduction
occurs on or before the first  anniversary of the Funding Date; (ii) two percent
(2%) if the termination or reduction  occurs after the first  anniversary of the
Funding Date but on or before the second  anniversary  of the Funding Date;  and
(iii) one percent (1%) if the  termination or reduction  occurs after the second
anniversary of the Funding Date.

               (b) PREPAYMENT  FEES. If the Term Note are prepaid for any reason
except in  accordance  with Section 2.7, the Borrower  shall pay to the Lender a
fee in an amount equal to a  percentage  of the amount  prepaid as follows:  (i)
three percent (3%) if prepayment  occurs on or before the first  anniversary  of
the Funding  Date;  (ii) two percent (2%) if  prepayment  occurs after the first
anniversary  of the Funding Date but on or before the second  anniversary of the
Funding Date;  and (iii) one percent (1%) if prepayment  occurs after the second
anniversary of the Funding Date.

               (c) WAIVER OF TERMINATION  AND LINE REDUCTION  FEES. The Borrower
will not be  required  to pay the  termination  fees  otherwise  due under  this
Section 2.13 if such  termination is made because of refinancing by an affiliate
of the Lender.

          SECTION 2.14 MANDATORY  PREPAYMENT.  Without notice or demand,  if the
sum of the outstanding  principal balance of the Revolving Advances plus the L/C
Amount  shall at any time exceed the  Borrowing  Base,  the  Borrower  shall (i)
first,  immediately  prepay the  Revolving  Advances to the extent  necessary to
eliminate such excess;  and (ii) if prepayment in full of the Revolving Advances
is  insufficient  to  eliminate  such excess,  pay to the Lender in  immediately
available  funds for  deposit  in the  Special  Account  an amount  equal to the
remaining excess.  Any payment received by the Lender under this Section 2.14 or
under Section 2.12 may be applied to the Obligations,  in such order and in such
amounts  as the  Lender,  in its  discretion,  may from time to time  determine;
provided that any prepayment under Section 2.12 which the Borrower designates as
a partial prepayment of the Term Note shall be applied to principal installments
of the Term Note in inverse order of maturity.  For each day or portion  thereof
that the Revolving  Advances shall exceed the Borrowing Base, the Borrower shall
pay to the Lender an  overadvance  charge  (which charge shall be in addition to
and not in lieu of any other  interest,  fees or  charges  payable  by  Borrower
hereunder) in the amount of $100.00;  provided however,  that if such day occurs
during a Default Period, the overadvance charge for such day shall be $200.00.

          SECTION  2.15  PAYMENT.  All  payments to the Lender  shall be made in
immediately  available  funds and shall be applied to the  Obligations 1 Banking
Day  after  receipt  by the  Lender.  The  Lender  may  hold  all  payments  not
constituting  immediately  available  funds for two (2)  additional  days before
applying them to the Obligations.  Notwithstanding  anything in Section 2.1, the
Borrower  hereby  authorizes  the Lender,  in its discretion at any time or from
time to time without the Borrower's request and even if the conditions set forth
in Section 4.2 would not be satisfied, to

                                       17
<PAGE>
make a Revolving  Advance in an amount  equal to the portion of the  Obligations
from time to time due and payable.

          SECTION 2.16 PAYMENT ON NON-BANKING  DAYS.  Whenever any payment to be
made  hereunder  shall be stated to be due on a day which is not a Banking  Day,
such payment may be made on the next succeeding  Banking Day, and such extension
of time shall in such case be  included  in the  computation  of interest on the
Advances or the fees hereunder, as the case may be.

          SECTION 2.17 USE OF PROCEEDS.  The Borrower  shall use the proceeds of
Revolving  Advances,  each Letter of Credit,  and the Term  Advances if any, for
ordinary working capital purposes.

          SECTION 2.18 LIABILITY  RECORDS.  The Lender may maintain from time to
time, at its discretion,  liability  records as to the Obligations.  All entries
made on any such record shall be presumed correct until the Borrower establishes
the contrary.  Upon the Lender's demand,  the Borrower will admit and certify in
writing the exact principal  balance of the  Obligations  that the Borrower then
asserts to be outstanding.  Any billing statement or accounting  rendered by the
Lender shall be conclusive and fully binding on the Borrower unless the Borrower
gives the  Lender  specific  written  notice of  exception  within 30 days after
receipt. 

                                  Article III.

                      SECURITY INTEREST; OCCUPANCY; SETOFF

          SECTION 3.1 GRANT OF SECURITY  INTEREST.  The Borrower hereby pledges,
assigns and grants to the Lender a security interest  (collectively  referred to
as the "Security  Interest") in the Collateral,  as security for the payment and
performance of the Obligations.

          SECTION 3.2  NOTIFICATION OF ACCOUNT  DEBTORS AND OTHER OBLIGORS.  The
Lender may at any time (upon the  occurrence  of an Event of Default or during a
Default  Period) notify any account debtor or other person  obligated to pay the
amount due that such right to payment has been  assigned or  transferred  to the
Lender for security and shall be paid directly to the Lender.  The Borrower will
join in giving  such  notice if the  Lender so  requests.  At any time after the
Borrower or the Lender gives such notice to an account  debtor or other obligor,
the Lender may, but need not, in the Lender's  name or in the  Borrower's  name,
(a)  demand,  sue for,  collect or  receive  any money or  property  at any time
payable or receivable on account of, or securing,  any such right to payment, or
grant any  extension to, make any  compromise  or  settlement  with or otherwise
agree to waive,  modify, amend or change the obligations  (including  collateral
obligations)  of any  such  account  debtor  or  other  obligor;  and (b) as the
Borrower's agent and  attorney-in-fact,  notify the United States Postal Service
to change  the  address  for  delivery  of the  Borrower's  mail to any  address
designated by the Lender,  otherwise intercept the Borrower's mail, and receive,
open and  otherwise  handle the  Borrower's  mail,  applying all  Collateral  as
permitted  under this  Agreement  and holding all other mail for the  Borrower's
account or forwarding such mail to the Borrower's last known address.

          SECTION 3.3  ASSIGNMENT OF INSURANCE.  As additional  security for the
payment and

                                       18
<PAGE>
performance of the  Obligations,  the Borrower  hereby assigns to the Lender any
and all monies (including, without limitation, proceeds of insurance and refunds
of unearned  premiums)  due or to become due under,  and all other rights of the
Borrower  with respect to, any and all policies of insurance  now or at any time
hereafter  covering  the  Collateral  or any  evidence  thereof or any  business
records or valuable papers pertaining  thereto,  and the Borrower hereby directs
the issuer of any such policy to pay all such monies directly to the Lender.  At
any time,  whether or not a Default Period then exists, the Lender may (but need
not), in the Lender's name or in the Borrower's name,  execute and deliver proof
of  claim,  receive  all such  monies,  endorse  checks  and  other  instruments
representing payment of such monies, and adjust, litigate, compromise or release
any claim against the issuer of any such policy.

          SECTION 3.4  OCCUPANCY.

               (a) The  Borrower  hereby  irrevocably  grants to the  Lender the
right to take possession of the Premises at any time during a Default Period.

               (b) The  Lender  may  use the  Premises  only to  hold,  process,
manufacture,  sell, use, store, liquidate,  realize upon or otherwise dispose of
goods that are  Collateral  and for other  purposes  that the Lender may in good
faith deem to be related or incidental purposes.

               (c) The  Lender's  right to hold the  Premises  shall  cease  and
terminate  upon  the  earlier  of (i)  payment  in  full  and  discharge  of all
Obligations  and  termination  of  the  Commitment,   and  (ii)  final  sale  or
disposition of all goods constituting  Collateral and delivery of all such goods
to purchasers.

               (d) The Lender  shall not be  obligated to pay or account for any
rent or other  compensation  for the possession,  occupancy or use of any of the
Premises; provided, however, that if the Lender does pay or account for any rent
or  other  compensation  for  the  possession,  occupancy  or  use of any of the
Premises,  the Borrower shall  reimburse the Lender promptly for the full amount
thereof.  In addition,  the Borrower  will pay, or reimburse the Lender for, all
taxes (other than income taxes), fees, duties, imposts,  charges and expenses at
any time  incurred  by or imposed  upon the  Lender by reason of the  execution,
delivery, existence,  recordation,  performance or enforcement of this Agreement
or the provisions of this Section 3.4.

          SECTION 3.5 LICENSE.  Without  limiting the  generality  of any of the
Security  Documents,  the Borrower hereby grants to the Lender a  non-exclusive,
worldwide and royalty-free  license to use or otherwise  exploit all trademarks,
franchises,  trade names, copyrights and patents of the Borrower for the purpose
of selling,  leasing or otherwise  disposing of any or all Collateral during any
Default Period.

          SECTION  3.6  FINANCING  STATEMENT.  A carbon,  photographic  or other
reproduction  of this  Agreement or of any  financing  statements  signed by the
Borrower is sufficient as a financing  statement and may be filed as a financing
statement in any state to perfect the security  interests  granted  hereby.  For
this purpose, the following information is set forth:

                                       19
<PAGE>
                  Name and address of Debtors:

                  FM Precision Golf Manufacturing Corp.
                  535 Migeon Avenue
                  Torrington, Connecticut  06790
                  Federal Tax Identification No. 06 1453898

                  FM Precision Golf Sales Corp.
                  535 Migeon Avenue
                  Torrington, Connecticut  06790
                  Federal Tax Identification No. 06 1453897

                  Name and address of Secured Party:

                  Norwest Business Credit, Inc.
                  Norwest Tower, Mail Station 9025
                  3300 North Central Avenue
                  Phoenix, Arizona  85012-2501

          SECTION 3.7  SETOFF.  The  Borrower  agrees that the Lender may at any
time or from time to time, at its sole discretion and without demand and without
notice to anyone,  setoff any  liability  owed to the  Borrower  by the  Lender,
whether or not due,  against any  Obligation,  whether or not due. In  addition,
each other Person holding a participating interest in any Obligations shall have
the right to appropriate  or setoff any deposit or other  liability then owed by
such  Person  to the  Borrower,  whether  or not due,  and apply the same to the
payment  of said  participating  interest,  as fully as if such  Person had lent
directly to the Borrower the amount of such participating interest.

                                  Article IV.

                             CONDITIONS OF LENDING

          SECTION 4.1  CONDITIONS  PRECEDENT TO THE INITIAL  REVOLVING  AND TERM
ADVANCES AND THE INITIAL LETTER OF CREDIT.  The Lender's  obligation to make the
initial Revolving Advance,  cause to be issued any Letter of Credit, or make the
one time  disbursement  of the Term  Advance  hereunder  shall be subject to the
condition  precedent  that the Lender shall have received all of the  following,
each in form and substance satisfactory to the Lender:

               (a) This Agreement, properly executed by the Borrower.

               (b) The Revolving  Note and the Term Note,  properly  executed by
the Borrower.

               (c) A true and  correct  copy of any and all leases  pursuant  to
which  the  Borrower  is  leasing  the  Premises,  together  with  a  landlord's
disclaimer and consent (and Memorandum thereof) with respect to each such lease.

                                       20
<PAGE>
               (d) Current  searches of appropriate  filing offices showing that
(i) no state or federal  tax liens have been filed and remain in effect  against
the Borrower, (ii) no financing statements or assignments of patents, trademarks
or copyrights  have been filed and remain in effect against the Borrower  except
those financing statements and assignments of patents,  trademarks or copyrights
relating  to  Permitted  Liens or to liens  held by Persons  who have  agreed in
writing  that upon  receipt of proceeds of the  Advances,  they will deliver UCC
releases  and/or  terminations  and  releases  of such  assignments  of patents,
trademarks or copyrights  satisfactory  to the Lender,  and (iii) the Lender has
duly filed all financing  statements necessary to perfect the Security Interest,
to the extent the Security Interest is capable of being perfected by filing.

               (e) A certificate of the Secretary or Assistant Secretary of each
of FMM and FMS certifying as to (i) the resolutions of the Borrower's  directors
and,  if  required,  shareholders,   authorizing  the  execution,  delivery  and
performance of the Loan Documents, (ii) the articles of incorporation and bylaws
of each of FMM and FMS,  and  (iii) the  signatures  of the  officers  or agents
authorized  to execute  and deliver the Loan  Documents  and other  instruments,
agreements and certificates,  including  Advance requests,  on behalf of each of
FMM and FMS.

               (f)  Evidence  that  each  of FMM and  FMS is  duly  licensed  or
qualified to transact business in all  jurisdictions  where the character of the
property  owned or leased or the nature of the business  transacted  by it makes
such licensing or qualification necessary.

               (g) A certificate of an officer of each of FMM and FMS confirming
the representations and warranties set forth in Article V.

               (h) An opinion of  counsel to each of FMM and FMS,  addressed  to
the Lender, together with the results of a litigation search or searches showing
all actions or proceedings where each of FMM and FMS is a defendant or involving
a claim against the Borrower.

               (i) the Collateral  Assignment of Trademarks properly executed by
Borrower.

               (j) A guaranty, properly executed by Guarantor, pursuant to which
Guarantor  unconditionally  guarantees  the  full  and  prompt  payment  of  all
Obligations.

               (k)  Evidence  from  the  Borrower  satisfactory  to  the  Lender
establishing  the amount of the  Borrowing  Base and a request  for a  Revolving
Advance from the Borrower in an amount such that the minimum Availability of the
Borrower  after such Advance (the "Initial  Advance") and payment of all fees of
the Lender required hereunder shall be not less than $750,000.00.

               (l) An opinion of counsel to Guarantor, addressed to the Lender.

               (m) Payment of the fees and  commissions  due through the date of
the Initial Advance or Letter of Credit under Section 2.9 and expenses  incurred
by the Lender  through such date and  required to be paid by the Borrower  under
Section 9.7,  including  all legal  expenses  incurred  through the date of this
Agreement.

                                       21
<PAGE>
               (n) The Patent Security Agreement properly executed by Borrower.

               (o) The Collateral  Assignment of Trademarks properly executed by
Borrower.

               (p) The Mortgage Deed properly executed by Borrower.

               (q) Current  certificates  issued by the  Secretaries of State of
Delaware and Connecticut  certifying that FMM and FMS are in compliance with all
applicable organizational requirements of such States.

               (r)  Management  Support  Agreements in favor of Lender  properly
executed by Tom Schneider, Ronald L. Chalmers and Kevin Neill.

               (s) Assignment with respect to Letter of Credit proceeds properly
executed by Borrower and Norwest Bank Arizona.

               (t) Such other documents as the Lender in its sole discretion may
require.

          SECTION  4.2  CONDITIONS  PRECEDENT  TO ALL  ADVANCES  AND  LETTERS OF
CREDIT.  The Lender's  obligation to make each Advance or to cause the Issuer to
issue any Letter of Credit shall be subject to the further conditions  precedent
that on such date:

               (a) the representations and warranties contained in Article V are
correct on and as of the date of such Advance or issuance of Letter of Credit as
though  made  on  and  as  of  such  date,   except  to  the  extent  that  such
representations and warranties relate solely to an earlier date; and

               (b) no event has occurred and is continuing, or would result from
such Advance or the issuance of such Letter of Credit, as the case may be, which
constitutes a Default or an Event of Default.

                                   Article V.

                         REPRESENTATIONS AND WARRANTIES

          The Borrower represents and warrants to the Lender as follows:

          SECTION 5.1  CORPORATE  EXISTENCE  AND POWER;  NAME;  CHIEF  EXECUTIVE
OFFICE;  INVENTORY AND EQUIPMENT LOCATIONS;  TAX IDENTIFICATION NUMBER. FMM is a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of  Delaware  and is duly  licensed or  qualified  to transact
business in all  jurisdictions  where the  character  of the  property  owned or
leased or the nature of the business  transacted  by it makes such  licensing or
qualification  necessary.  FMS  is  a  corporation  duly  incorporated,  validly
existing and in good  standing  under the laws of the State of Delaware,  and is
duly licensed or qualified to transact business in all  jurisdictions  where the
character of the property owned or leased or the nature of the business

                                       22
<PAGE>
transacted by it makes such licensing or qualification  necessary.  The Borrower
has all requisite  power and authority,  corporate or otherwise,  to conduct its
business,  to own its properties and to execute and deliver,  and to perform all
of its obligations under, the Loan Documents. During its existence, the Borrower
has done business  solely under the names set forth in Schedule 5.1 hereto.  The
Borrower's  chief executive office and principal place of business is located at
the  addresses  set forth in  Schedule  5.1  hereto,  and all of the  Borrower's
records  relating to its business or the  Collateral  are kept at said location.
All  Inventory  and Equipment is located at that location or at one of the other
locations set forth in Schedule 5.1 hereto.  The Borrower's  tax  identification
number is correctly set forth in Section 3.6 hereto.

          SECTION  5.2  AUTHORIZATION  OF  BORROWING;  NO  CONFLICT AS TO LAW OR
AGREEMENTS. The execution,  delivery and performance by the Borrower of the Loan
Documents  and the  borrowings  from  time  to time  hereunder  have  been  duly
authorized by all necessary corporate action and do not and will not (i) require
any consent or approval of the  stockholders  of either FMM or FMS; (ii) require
any  authorization,  consent or approval  by, or  registration,  declaration  or
filing  with,  or notice to, any  governmental  department,  commission,  board,
bureau,  agency or  instrumentality,  domestic or foreign,  or any third  party,
except such authorization, consent, approval, registration,  declaration, filing
or notice as has been obtained,  accomplished or given prior to the date hereof;
(iii) violate any provision of any law, rule or regulation  (including,  without
limitation,  Regulation  X of the  Board of  Governors  of the  Federal  Reserve
System) or of any order,  writ,  injunction or decree presently in effect having
applicability to either FMM or FMS or of the articles of incorporation or bylaws
of  either  FMM or FMS;  (iv) to the  best of  Borrower's  knowledge  after  due
inquiry,  result in a breach of or  constitute a default  under any indenture or
loan or credit agreement or any other material agreement, lease or instrument to
which either FMM or FMS 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
mortgage,  deed of trust,  pledge,  lien,  security  interest or other charge or
encumbrance  of any  nature  (other  than the  Security  Interest)  upon or with
respect to any of the properties  now owned or hereafter  acquired by either FMM
or FMS.

          SECTION 5.3 LEGAL AGREEMENTS. This Agreement constitutes and, upon due
execution by the Borrower,  the other Loan Documents will  constitute the legal,
valid and binding obligations of FMM and FMS, enforceable against FMM and FMS in
accordance with their respective terms.

          SECTION 5.4 SUBSIDIARIES.  Except as set forth in Schedule 5.4 hereto,
neither Borrower has Subsidiaries.

          SECTION 5.5 FINANCIAL  CONDITION;  NO ADVERSE CHANGE. The Borrower has
heretofore  furnished to the Lender consolidated audited financial statements of
Royal  Precision,  Inc. for its fiscal year ended May 31, 1998 and  consolidated
unaudited financial statements for the fiscal year-to-date period ended July 31,
1998 and those statements fairly present the Borrower's  financial  condition on
the dates  thereof  and the  results  of its  operations  and cash flows for the
periods then ended and were prepared in accordance with GAAP except for footnote
disclosures  and  year  end  adjustments.  Since  the  date of the  most  recent
financial  statements to the date of this Agreement,  there has been no material
adverse change in the Borrower's business, properties or condition (financial or
otherwise).

                                       23
<PAGE>
          SECTION 5.6 LITIGATION.  To the best of Borrower's knowledge after due
inquiry,  there  are  no  actions,  suits  or  proceedings  pending  or,  to the
Borrower's knowledge,  threatened against or affecting either Borrower or any of
their Affiliates or the properties of either Borrower or any of their Affiliates
before any court or governmental department,  commission,  board, bureau, agency
or instrumentality,  domestic or foreign,  which, if determined adversely to the
Borrower or any of its Affiliates,  would have a material  adverse effect on the
financial  condition,  properties  or  operations  of the Borrower or any of its
Affiliates.

          SECTION 5.7 REGULATION U. Neither  Borrower is engaged in the business
of  extending  credit for the purpose of  purchasing  or carrying  margin  stock
(within the meaning of  Regulation  U of the Board of  Governors  of the Federal
Reserve  System),  and no part of the  proceeds of any  Advance  will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.

          SECTION  5.8  TAXES.  To the best of  Borrower's  knowledge  after due
inquiry,  the Borrower and its Affiliates  have paid or caused to be paid to the
proper  authorities  when due all federal,  state and local taxes required to be
withheld  by each of them.  The  Borrower  and its  Affiliates  have  filed  all
federal,  state and local tax returns  which to the knowledge of the officers of
the Borrower or any Affiliate, as the case may be, are required to be filed, and
the Borrower and its Affiliates have paid or caused to be paid to the respective
taxing  authorities  all  taxes as shown on said  returns  or on any  assessment
received by any of them to the extent such taxes have become due.

          SECTION  5.9 TITLES AND LIENS.  The  Borrower  has clear and  absolute
title to all  Collateral  described in the  collateral  reports  provided to the
Lender and all other  Collateral,  properties and assets reflected in the latest
financial  statements referred to in Section 5.5 and all proceeds thereof,  free
and clear of all mortgages,  security interests, liens and encumbrances,  except
for Permitted Liens. No financing  statement naming the Borrower as debtor is on
file in any office except to perfect only Permitted Liens.

          SECTION 5.10 PLANS. Except as disclosed to the Lender in writing prior
to the date hereof,  neither Borrower nor any of their  Affiliates  maintains or
has  maintained  any Plan.  Neither  Borrower nor any Affiliate has received any
notice or has any knowledge to the effect that it is not in full compliance with
any of the  requirements  of  ERISA.  No  Reportable  Event  or  other  fact  or
circumstance which may have an adverse effect on the Plan's tax qualified status
exists in connection with any Plan. Neither Borrower nor any of their Affiliates
has:

               (a) Any  accumulated  funding  deficiency  within the  meaning of
ERISA; or

               (b) Any  liability  or knows of any fact or  circumstances  which
could result in any liability to the Pension Benefit Guaranty  Corporation,  the
Internal  Revenue  Service,  the  Department  of  Labor  or any  participant  in
connection with any Plan (other than accrued  benefits which or which may become
payable to participants or beneficiaries of any such Plan).

                                       24
<PAGE>
          SECTION  5.11  DEFAULT.   The  Borrower  is  in  compliance  with  all
provisions of all agreements,  instruments,  decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which  could  have a  material  adverse  effect on the  Borrower's  financial
condition, properties or operations.

          SECTION 5.12  ENVIRONMENTAL MATTERS.

          (A) DEFINITIONS.  As used in this Agreement, the following terms shall
have the following meanings:

                    (i) "Environmental  Law" means any federal,  state, local or
other  governmental  statute,  regulation,  law or  ordinance  dealing  with the
protection of human health and the environment.

                    (ii) "Hazardous Substances" means pollutants,  contaminants,
hazardous substances, hazardous wastes, petroleum and fractions thereof, and all
other  chemicals,  wastes,  substances and materials  listed in, regulated by or
identified in any Environmental Law.

               (b) To the Borrower's best  knowledge,  there are not present in,
on or under the Premises any Hazardous Substances in such form or quantity as to
create any liability or  obligation  for either the Borrower or the Lender under
common law of any jurisdiction or under any Environmental  Law, and no Hazardous
Substances have ever been stored, buried, spilled, leaked,  discharged,  emitted
or  released  in, on or under the  Premises  in such a way as to create any such
liability,  except for those Hazardous  Substances  identified in the April 1996
Phase II Environmental Site Assessment of the Premises by GZA  GeoEnvironmental,
Inc. with respect to which Brunswick  Corporation is contractually  obligated to
remediate.

               (c) To the  Borrower's  best  knowledge,  the  Borrower  has  not
disposed of  Hazardous  Substances  in such a manner as to create any  liability
under any Environmental Law.

               (d)  There  are no  requests,  claims,  notices,  investigations,
demands, administrative proceedings, hearings or litigation, relating in any way
to the Premises or the  Borrower,  alleging  liability  under,  violation of, or
noncompliance  with  any  Environmental  Law or any  license,  permit  or  other
authorization issued pursuant thereto that have not been appropriately  resolved
to the satisfaction of the  administrative  agency having  jurisdiction over the
matter.

               (e) To the Borrower's best knowledge,  the Borrower's  businesses
are  and  have  in the  past  always  been  conducted  in  accordance  with  all
Environmental Laws and all licenses,  permits and other authorizations  required
pursuant to any  Environmental  Law and  necessary  for the lawful and efficient
operation of such  businesses are in the  Borrower's  possession and are in full
force and effect. No permit required under any Environmental Law is scheduled to
expire  within 12 months  (other than those that are renewed on an annual basis)
and there is no threat known to the Borrower that any such permit currently held
by Borrower will be withdrawn, terminated, limited or materially changed.

               (f) To the Borrower's best knowledge,  the Premises is not listed
on the

                                       25
<PAGE>
National Priorities List, the Comprehensive Environmental Response, Compensation
and Liability  Information  System or any similar federal,  state or local list,
schedule, log, inventory or database.

               (g) The  Borrower  has  delivered  to  Lender  all  environmental
assessments in Borrower's possession or which Borrower has knowledge of, audits,
reports, permits, licenses and other documents describing or relating in any way
to the  Premises or  Borrower's  businesses  (while  under the  ownership of the
Borrower).

          SECTION  5.13   SUBMISSIONS   TO  LENDER.   All  financial  and  other
information provided to the Lender by or on behalf of the Borrower in connection
with the Borrower's  request for the credit  facilities  contemplated  hereby is
true and correct in all material respects and, as to projections,  valuations or
proforma  financial  statements,  present  a  good  faith  opinion  as  to  such
projections, valuations and proforma condition and results.

          SECTION 5.14  FINANCING  STATEMENTS.  The Borrower has provided to the
Lender signed financing statements sufficient when filed to perfect the Security
Interest and the other  security  interests  created by the Security  Documents.
When such  financing  statements  are filed in the offices  noted  therein,  the
Lender will have a valid and perfected  security  interest in all Collateral and
all other  collateral  described in the Security  Documents  which is capable of
being perfected by filing financing statements.  None of the Collateral or other
collateral covered by the Security Documents is or will become a fixture on real
estate, unless a sufficient fixture filing is in effect with respect thereto.

          SECTION  5.15  RIGHTS TO  PAYMENT.  Each right to payment in excess of
$500.00  and each  instrument,  document,  chattel  paper  and  other  agreement
constituting  or  evidencing  Collateral  or  other  collateral  covered  by the
Security  Documents is (or, in the case of all future  Collateral  or such other
collateral,  will be when  arising or issued)  the valid,  genuine  and  legally
enforceable obligation,  subject to no defense,  setoff or counterclaim,  of the
account  debtor or other  obligor  named  therein or in the  Borrower's  records
pertaining thereto as being obligated to pay such obligation. 

                                  Article VI.

                        BORROWER'S AFFIRMATIVE COVENANTS

          So long as the Obligations shall remain unpaid, or the Credit Facility
shall  remain   outstanding,   the  Borrower  will  comply  with  the  following
requirements, unless the Lender shall otherwise consent in writing:

          SECTION 6.1 REPORTING  REQUIREMENTS.  The Borrower  will  deliver,  or
cause to be delivered,  to the Lender each of the  following,  which shall be in
form and detail acceptable to the Lender:

               (a) as soon as available,  and in any event within 120 days after
the end of each  fiscal  year of the  Borrower  consolidated  and  consolidating
audited financial statements of

                                       26
<PAGE>
FMM,  FMS and the  Covenant  Entities  with the  unqualified  opinion  of Arthur
Andersen, L.L.P. or such other independent certified public accountants selected
by the Borrower and acceptable to the Lender,  which annual financial statements
shall  include  the  consolidated  balance  sheet of FMM,  FMS and the  Covenant
Entities  as at the  end of  such  fiscal  year  and  the  related  consolidated
statements of income, retained earnings and cash flows, all in reasonable detail
and  prepared in  accordance  with GAAP applied on a basis  consistent  with the
accounting  practices applied in the financial statements referred to in Section
5.5 hereof,  together with a report signed by such  accountants  stating that in
making the investigations necessary for said opinion they obtained no knowledge,
except as specifically  stated, of any Default or Event of Default hereunder and
all relevant facts in reasonable detail to evidence, and the computations as to,
whether or not the Borrower is in compliance with the  requirements set forth in
Sections 6.12 through 6.15 and Section 7.10 hereof;

               (b) as soon as  available  and in any event  within 25 days after
the end of each  month,  a  consolidated  unaudited/internal  balance  sheet and
statements  of income and retained  earnings of FMM and FMS as at the end of and
for such month and for the year to date  period  then  ended,  prepared,  if the
Lender so requests,  on a consolidating  and  consolidated  basis to include the
Covenant Entities and any other Affiliates,  in reasonable detail and stating in
comparative  form the  figures  for the  corresponding  date and  periods in the
previous year, all prepared in accordance  with GAAP,  subject to year-end audit
adjustments;  and  accompanied by a certificate of the Vice President of Finance
or any  other  officer  of each of FMM and  FMS,  substantially  in the  form of
Exhibit C hereto stating (i) that such financial  statements  have been prepared
in accordance  with GAAP,  subject to year-end audit  adjustments and footnotes,
(ii) whether or not such officer has knowledge of the  occurrence of any Default
or Event of Default hereunder not theretofore  reported and remedied and, if so,
stating  in  reasonable  detail the facts with  respect  thereto,  and (iii) all
relevant facts in reasonable  detail to evidence,  and the  computations  as to,
whether or not the Borrower is in compliance with the  requirements set forth in
Sections 6.12 through 6.15 and 7.10;

               (c)  within 15 days  after the end of each  month,  agings of the
Borrower's  accounts  receivable  and  its  accounts  payable  and an  inventory
certification report as at the end of such month;

               (d) at least 30 days before the  beginning of each fiscal year of
the Borrower,  the projected balance sheets and income statements for each month
of such year, each in reasonable detail,  representing the Borrower's good faith
projections  and certified by the  Borrower's  Vice  President of Finance or any
other officer as being the most accurate projections  available and identical to
the projections used by the Borrower for internal  planning  purposes,  together
with  such  supporting  schedules  and  information  as  the  Lender  may in its
discretion require;

               (e) immediately after the commencement thereof, notice in writing
of all litigation and of all proceedings  before any  governmental or regulatory
agency  affecting  the  Borrower of the type  described in Section 5.12 or which
seek a monetary recovery against the Borrower in excess of $25,000.00;

               (f) as promptly as  practicable  (but in any event not later than
five business

                                       27
<PAGE>
days) after an officer of the Borrower  obtains  knowledge of the  occurrence of
any breach, default or event of default under any Security Document or any event
which  constitutes  a  Default  or Event of  Default  hereunder,  notice of such
occurrence,  together with a detailed statement by a responsible  officer of the
Borrower  of the steps  being  taken by the  Borrower to cure the effect of such
breach, default or event;

               (g) as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know that any  Reportable  Event with respect to
any Plan has occurred, the statement of the Borrower's Vice President of Finance
setting  forth  details as to such  Reportable  Event and the  action  which the
Borrower  proposes to take with  respect  thereto,  together  with a copy of the
notice of such Reportable Event to the Pension Benefit Guaranty Corporation;

               (h) as soon as  possible,  and in any event  within 10 days after
the Borrower fails to make any quarterly  contribution  required with respect to
any Plan under Section 412(m) of the Internal  Revenue Code of 1986, as amended,
the statement of the Borrower's  Vice President of Finance setting forth details
as to such  failure  and the action  which the  Borrower  proposes  to take with
respect thereto,  together with a copy of any notice of such failure required to
be provided to the Pension Benefit Guaranty Corporation;

               (i) promptly upon knowledge  thereof,  notice of (i) any disputes
or claims by the Borrower's customers in excess of $20,000.00; (ii) credit memos
in  excess  of  $20,000.00;  (iii) any goods  returned  to or  recovered  by the
Borrower  valued in excess of  $20,000.00;  and (iv) any  change in the  persons
constituting the Borrower's officers and directors;

               (j) promptly  upon  knowledge  thereof,  notice of any loss of or
material  damage to any Collateral or other  collateral  covered by the Security
Documents or of any  substantial  adverse change in any Collateral or such other
collateral or the prospect of payment thereof;

               (k) promptly  upon their  distribution,  copies of all  financial
statements,  reports and proxy  statements which the Borrower shall have sent to
its stockholders;

               (l) promptly after the sending or filing  thereof,  copies of all
regular and periodic  reports which the Borrower  shall file with the Securities
and Exchange Commission or any national securities exchange;

               (m)  daily  copies  of all  invoices  in  excess  of  $10,000.00,
together with all shipping documentation applicable thereto;

               (n) promptly upon  knowledge  thereof,  notice of the  Borrower's
violation of any law, rule or regulation,  the  non-compliance  with which could
materially  and  adversely  affect  the  Borrower's  business  or its  financial
condition; and

               (o) from time to time,  with reasonable  promptness,  any and all
receivables schedules, collection reports, deposit records, equipment schedules,
copies of invoices to account debtors,  shipment documents and delivery receipts
for goods sold, and such other material,  reports, records or information as the
Lender may request.

                                       28
<PAGE>
          SECTION  6.2  BOOKS  AND  RECORDS;  INSPECTION  AND  EXAMINATION.  The
Borrower will keep accurate books of record and account for itself pertaining to
the Collateral and pertaining to the Borrower's business and financial condition
and such other matters as the Lender may from time to time request in which true
and complete entries will be made in accordance with GAAP and, upon the Lender's
request,  will permit any  officer,  employee,  attorney or  accountant  for the
Lender to audit,  review,  make  extracts from or copy any and all corporate and
financial  books  and  records  of the  Borrower  at all times  during  ordinary
business  hours,  to send and discuss  with account  debtors and other  obligors
requests for  verification  of amounts owed to the Borrower,  and to discuss the
Borrower's affairs with any of its directors, officers, employees or agents. The
Borrower will permit the Lender,  or its  employees,  accountants,  attorneys or
agents, to examine and inspect any Collateral,  other collateral  covered by the
Security  Documents  or any other  property  of the  Borrower at any time during
ordinary business hours.

          SECTION 6.3 ACCOUNT VERIFICATION.  The Lender may at any time and from
time to time send or require the Borrower to send requests for  verification  of
accounts or notices of assignment  to account  debtors and other  obligors.  The
Lender may also at any time and from time to time telephone  account debtors and
other obligors to verify accounts.

          SECTION 6.4 COMPLIANCE WITH LAWS.

               (a) The  Borrower  will  (i)  comply  with  the  requirements  of
applicable laws and regulations,  the non-compliance with which would materially
and adversely  affect its business or its  financial  condition and (ii) use and
keep the Collateral,  and require that others use and keep the Collateral,  only
for lawful  purposes,  without  violation  of any  federal,  state or local law,
statute or ordinance.

               (b) Without  limiting the  foregoing  undertakings,  the Borrower
specifically  agrees that it will comply with all applicable  Environmental Laws
and obtain and comply with all permits,  licenses and similar approvals required
by any Environmental Laws, and will not generate,  use, transport,  treat, store
or  dispose  of any  Hazardous  Substances  in such a manner  as to  create  any
liability  or  obligation  under  the  common  law  of any  jurisdiction  or any
Environmental Law.

          SECTION 6.5 PAYMENT OF TAXES AND OTHER  CLAIMS.  The Borrower will pay
or discharge,  when due, (a) all taxes,  assessments  and  governmental  charges
levied or imposed  upon it or upon its income or  profits,  upon any  properties
belonging to it  (including,  without  limitation,  the  Collateral)  or upon or
against the creation,  perfection or continuance of the Security Interest, prior
to the date on which penalties attach thereto, (b) all federal,  state and local
taxes  required  to be  withheld  by it,  and (c) all  lawful  claims for labor,
materials and supplies  which,  if unpaid,  might by law become a lien or charge
upon any  properties of the Borrower;  provided,  that the Borrower shall not be
required  to pay any  such  tax,  assessment,  charge  or  claim  whose  amount,
applicability  or  validity  is being  contested  in good  faith by  appropriate
proceedings  and so long as the  Collateral  and Lender's lien thereon is not in
any manner  impaired  by any  enforcement  remedy  available  to the tax levying
entity during the period of such contest.

                                       29
<PAGE>
          SECTION 6.6 MAINTENANCE OF PROPERTIES.

               (a) The Borrower will keep and maintain the Collateral, the other
collateral  covered by the Security  Documents  and all of its other  properties
necessary or useful in its business in good condition,  repair and working order
(normal wear and tear excepted) and will from time to time replace or repair any
worn, defective or broken parts; provided, however, that nothing in this Section
6.6 shall prevent the Borrower from  discontinuing the operation and maintenance
of any of its properties if such  discontinuance  is, in the Lender's  judgment,
desirable in the conduct of the Borrower's  business and not  disadvantageous in
any material respect to the Lender.

               (b) The Borrower will defend the Collateral against all claims or
demands of all persons  (other than the Lender)  claiming the  Collateral or any
interest therein.

               (c) The Borrower will keep all  Collateral  and other  collateral
covered by the  Security  Documents  free and clear of all  security  interests,
liens and encumbrances except Permitted Liens.

          SECTION  6.7  INSURANCE.  The  Borrower  will  obtain and at all times
maintain  insurance with insurers believed by the Borrower to be responsible and
reputable,  in such  amounts and against  such risks as may from time to time be
required by the Lender, but in all events in such amounts and against such risks
as is usually  carried by  companies  engaged  in  similar  business  and owning
similar  properties  in the same general  areas in which the Borrower  operates.
Without limiting the generality of the foregoing, the Borrower will at all times
keep all tangible Collateral insured against risks of fire (including  so-called
extended  coverage),  theft,  collision  (for  Collateral  consisting  of  motor
vehicles) and such other risks and in such amounts as the Lender may  reasonably
request, with any loss payable to the Lender to the extent of its interest,  and
all policies of such insurance shall contain a lender's loss payable endorsement
for the Lender's  benefit  acceptable  to the Lender.  All policies of liability
insurance required hereunder shall name the Lender as an additional insured.

          SECTION 6.8 PRESERVATION OF EXISTENCE. Each Borrower will preserve and
maintain  its  existence  and  all  of its  rights,  privileges  and  franchises
necessary or desirable in the normal  conduct of its business and shall  conduct
its business in an orderly, efficient and regular manner.

          SECTION 6.9 DELIVERY OF INSTRUMENTS,  ETC. Upon request by the Lender,
the  Borrower  will  promptly  deliver to the Lender in pledge all  instruments,
documents and chattel papers constituting Collateral,  duly endorsed or assigned
by the Borrower.

                                       30
<PAGE>
          SECTION 6.10 COLLATERAL ACCOUNTS.

               (a) Each Borrower agrees to deposit in its respective  Collateral
Accounts or, at the Lender's option, to deliver to the Lender all collections on
Accounts,   contract   rights,   chattel  paper  and  other  rights  to  payment
constituting  Collateral  (but not the  proceeds  of any loan to  Borrower  as a
borrower  made by any party other than Lender and  permitted  under the terms of
this Agreement),  and all other cash proceeds of Collateral,  which the Borrower
may receive immediately upon receipt thereof,  in the form received,  except for
the Borrower's endorsement when deemed necessary.  Until delivered to the Lender
or  deposited  in the  Collateral  Accounts,  all  proceeds  or  collections  of
Collateral shall be held in trust by the Borrower for and as the property of the
Lender and shall not be  commingled  with any funds or property of the Borrower.
Amounts  deposited in the Collateral  Accounts shall not bear interest and shall
not be subject to  withdrawal  by the  Borrower,  except  after full payment and
discharge of all Obligations.  All such collections shall constitute proceeds of
Collateral and shall not constitute  payment of any Obligation.  Collected funds
from the  Collateral  Accounts  shall be  transferred  to the  Lender's  general
account,  and the Lender may deposit in its general account or in the Collateral
Accounts any and all collections received by it directly from the Borrower.  The
Lender may commingle  such funds with other  property of the Lender or any other
person.  The Lender or the Borrower shall, after allowing two Banking Days after
deposit in the Collateral  Accounts,  deposit such funds to the Lender's Account
No. 00-28-995 at Norwest Bank Minnesota, NA. The Lender from time to time at its
discretion shall, after allowing (i) one Banking Day after direct deposit in the
Lender's Account No.  00-28-995 at Norwest Bank Minnesota,  NA, and/or (ii) such
later date as may be required for collection, apply such funds to the payment of
any and all Obligations,  in any order or manner of application  satisfactory to
the Lender.  All items  delivered to the Lender or  deposited in the  Collateral
Accounts  shall be  subject  to final  payment.  If any  such  item is  returned
uncollected,  the  Borrower  will  immediately  pay the  Lender,  or,  for items
deposited in the Collateral  Accounts,  the bank maintaining  such account,  the
amount of that item, or such bank at its discretion  may charge any  uncollected
item to the Borrower's  commercial account or other account.  The Borrower shall
be liable as an  endorser on all items  deposited  in the  Collateral  Accounts,
whether or not in fact endorsed by the Borrower.

               (b) If a Default or Default  Period exists and upon demand of the
Lender, the Borrower shall establish one or more lockbox accounts as directed by
the Lender with such banks or depository  institutions  as shall be satisfactory
to the  Lender  and shall  irrevocably  direct all  present  and future  Account
Debtors and other Persons obligated to make payments constituting  Collateral to
make such  payments  directly to such  lockbox  account.  All of the  Borrower's
invoices, account statements and other written or oral communications directing,
instructing,  demanding or requesting payment of any Account or any other amount
constituting  Collateral shall conspicuously direct that all payments be made to
such lockbox and shall include such lockbox  address or addresses.  All payments
received in such lockbox accounts shall be processed to the Collateral Accounts.

               (c) Amounts  deposited in the Collateral  Accounts shall not bear
interest and shall not be subject to withdrawal  by the  Borrower,  except after
full payment and discharge of all Obligations.

          SECTION 6.11  PERFORMANCE  BY THE LENDER.  If the Borrower at any time
fails to

                                       31
<PAGE>
perform or observe any of the foregoing  covenants  contained in this Article VI
or  elsewhere  herein,  and if such failure  shall  continue for a period of ten
calendar days after the Lender gives the Borrower  written notice thereof (or in
the case of the agreements contained in Sections 6.5, 6.7 and 6.10,  immediately
upon the  occurrence  of such  failure,  without  notice or lapse of time),  the
Lender may, but need not,  perform or observe such covenant on behalf and in the
name,  place and stead of the  Borrower  (or,  at the  Lender's  option,  in the
Lender's  name) and may, but need not,  take any and all other actions which the
Lender may reasonably deem necessary to cure or correct such failure (including,
without  limitation,   the  payment  of  taxes,  the  satisfaction  of  security
interests, liens or encumbrances, the performance of obligations owed to account
debtors or other obligors,  the  procurement  and maintenance of insurance,  the
execution of assignments,  security agreements and financing statements, and the
endorsement of instruments);  and the Borrower shall thereupon pay to the Lender
on  demand  the  amount  of all  monies  expended  and all  costs  and  expenses
(including reasonable attorneys' fees and legal expenses) incurred by the Lender
in  connection  with or as a result of the  performance  or  observance  of such
agreements  or the taking of such action by the Lender,  together  with interest
thereon from the date  expended or incurred at the Floating  Rate. To facilitate
the Lender's  performance or observance of such  covenants of the Borrower,  the
Borrower  hereby  irrevocably  appoints the Lender,  or the  Lender's  delegate,
acting alone, as the Borrower's  attorney in fact (which  appointment is coupled
with an interest) with the right (but not the duty) from time to time to create,
prepare,  complete,  execute, deliver, endorse or file in the name and on behalf
of the  Borrower  any  and all  instruments,  documents,  assignments,  security
agreements,   financing   statements,   applications  for  insurance  and  other
agreements and writings required to be obtained, executed, delivered or endorsed
by the Borrower under this Section 6.11.

          SECTION 6.12 DEBT SERVICE COVERAGE RATIO. The Borrower  covenants that
FMM,  FMS and the  Covenant  Entities  shall,  as of the last day of each fiscal
quarter, on and after November 30, 1998, maintain a consolidated average minimum
debt service  coverage ratio (based upon the period set forth below) as follows:

Quarter Ending                                  Debt Service  Coverage  Ratio
--------------                                  ------------------------------
November  30, 1998                         0.001 to 1 based upon the immediately
                                           preceding  six month  period

February  28, 1999                         0.001 to 1 based upon the immediately
                                           preceding nine month period

May 31, 1999                               .5 to 1 based upon the immediately 
                                           preceding twelve month period

August 31, 1999                            .75 to 1 based upon the immediately  
                                           preceding  three month  period

November  30, 1999                         .75 to 1 based upon the immediately 
                                           preceding six month period

February 28, 2000                          .85 to 1 based upon the immediately  
                                           preceding nine month period

May 31, 2000 and each May 31               1.05 to 1 based upon the immediately
thereafter                                 preceding  twelve  month period

August  31, 2000 and each August 31        1.05  to 1 based upon the immediately
thereafter                                 preceding twelve month period

November 30, 2000 and each November 30     1.05 to 1 based upon the immediately
thereafter                                 preceding twelve month period

February 28, 2001 and each February 28     1.05 to 1 based upon the immediately 
thereafter                                 preceding twelve month period

                                       32
<PAGE>

                  The debt service coverage ratio shall be calculated  according
to the following formula:

             Funds From Operations + Interest Expense - Unfinanced
                         Portion of Capital Expenditures
             -----------------------------------------------------
                       Current Maturities Long-Term Debt
              (actually paid during the period) + Interest Expense

          SECTION 6.13 NET WORTH.  The Borrower  covenants  that,  as of May 31,
1998 FMM, FMS and the Covenant Entities had an aggregate  consolidated Net Worth
of $14,327,322.00.  The Borrower covenants that the said aggregate  consolidated
Net Worth as of the end of each future fiscal  quarter end shall increase by not
less than (or in the event a decrease is allowed, decrease by not more than) the
amounts set forth below as measured from the immediately  preceding  fiscal year
ending aggregate consolidated Net Worth.

          Quarter Ending                        Net Worth Increase (Decrease)
          --------------                        -----------------------------
                                                
          November 30, 1998                     ($500,000.00)
                                                
          February 28, 1999                     ($300,000.00)
                                                
          May 31, 1999                           $400,000.00
                                                
          August 31, 1999 and each August 31    
          thereafter                             $0.00
                                                
          November 30, 1999 and each            
          November 30 thereafter                ($300,000.00)
                                                
          February  28, 2000 and each           
          February 28 thereafter                ($100,000.00)
                                                
          May 31, 2000 and each May 31           $600,000.00
          thereafter                            
                                             
          SECTION 6.14 NET INCOME.  The Borrower  covenants  that beginning with
the fiscal quarter ending  November 30, 1998, and continuing each fiscal quarter
thereafter,  FMM,  FMS and the  Covenant  Entities  shall  achieve an  aggregate
consolidated  Net Income of at least (or, in the event a Net Loss is allowed for
such fiscal quarter, a Net Loss of not more than) the amount set forth below for
each fiscal quarter as measured from the immediately  preceding fiscal year end.

          Quarter Ending                        Net Worth Increase (Decrease)
          --------------                        -----------------------------
          November 30, 1998                     ($500,000.00)
                                                
          February 28, 1999                     ($300,000.00)
                                                
          May 31, 1999                           $400,000.00
                                                
          August 31, 1999 and each August 31    
          thereafter                             $0.00
                                                
          November 30, 1999 and each            ($300,000.00)
          November 30 thereafter                

                                       33
<PAGE>
          February 28, 2000 and each            ($100,000.00)
          February 28 thereafter                
                                                
          May 31, 2000 and each May 31           $600,000.00
          thereafter                             
                                                
          SECTION 6.15 STOP LOSS.  The Borrower  covenants  that  beginning with
September,  1998 and  continuing  for each month  thereafter,  FMM,  FMS and the
Covenant Entities shall not achieve an aggregate consolidated Net Loss in excess
of the amounts  set forth below for each month as measured  from the last day of
the immediately preceding month.

          Month                               Maximum Net Loss
          -----                               ----------------
          August of each year                 $400,000.00
 
          September of each year              $150,000.00

          October of each year                $200,000.00
 
          November of each year               $100,000.00

          December of each year               $250,000.00

          January of each year                 $50,000.00

          February of each year                     $0.00

          March of each year                        $0.00

          April of each year                        $0.00

          May of each year                          $0.00

          June of each year                         $0.00

          July of each year                         $0.00

                                  Article VII.

                               NEGATIVE COVENANTS

          So long as the Obligations shall remain unpaid, or the Credit Facility
shall remain  outstanding,  the Borrower agrees that, without the Lender's prior
written consent:

          SECTION 7.1 LIENS.  The Borrower  will not create,  incur or suffer to
exist any mortgage,  deed of trust, pledge, lien, security interest,  assignment
or transfer upon or of any of its assets,  now owned or hereafter  acquired,  to
secure  any  indebtedness;   EXCLUDING,  HOWEVER,  from  the  operation  of  the
foregoing, the following (collectively, "Permitted Liens"):

               (a) in the case of any of the  Borrower's  property  which is not
Collateral or other collateral  described in the Security Documents,  covenants,
restrictions,  rights,  easements and minor irregularities in title which do not
materially  interfere  with the  Borrower's  business or operations as presently
conducted;

               (b) mortgages, deeds of trust, pledges, liens, security interests
and  assignments  in  existence  on the date hereof and listed in  Schedule  7.1
hereto, securing indebtedness

                                       34
<PAGE>
for borrowed money permitted under Section 7.2;

               (c) the  Security  Interest  and  liens  and  security  interests
created by the Security Documents; and

               (d)  purchase  money  security   interests  relating  to  Capital
Expenditures  (and which  attach  only to the assets  acquired  by such  Capital
Expenditures)  made  after the date of this  Agreement  by the  Borrower  or any
Affiliate so long as the Borrower is in, and  maintains,  compliance  with every
other provision of this Agreement.

          SECTION 7.2 INDEBTEDNESS.  The Borrower will not incur, create, assume
or permit to exist any  indebtedness  or  liability  on account of  deposits  or
advances or any  indebtedness  for borrowed money or letters of credit issued on
the  Borrower's  behalf,  or any other  indebtedness  or liability  evidenced by
notes, bonds, debentures or similar obligations, except:

               (a) indebtedness arising hereunder;

               (b)  indebtedness of the Borrower in existence on the date hereof
and listed in Schedule 7.2 hereto;

               (c)  indebtedness  relating to liens permitted in accordance with
Section 7.1; and

               (d) indebtedness permitted pursuant to Section 7.19.

          SECTION 7.3  GUARANTIES.  The  Borrower  will not  assume,  guarantee,
endorse or otherwise  become directly or contingently  liable in connection with
any obligations of any other Person, except:

               (a) the endorsement of negotiable instruments by the Borrower for
deposit  or  collection  or  similar  transactions  in the  ordinary  course  of
business;

               (b)  guaranties,  endorsements  and other  direct  or  contingent
liabilities in connection with the obligations of other Persons, in existence on
the date hereof and listed in Schedule 7.2 hereto; and

               (c) indemnifications arising in the ordinary course of business.

          SECTION 7.4 INVESTMENTS AND SUBSIDIARIES.

               (a) The Borrower will not purchase or hold beneficially any stock
or other securities or evidences of indebtedness of, make or permit to exist any
loans or advances to, or make any investment or acquire any interest  whatsoever
in,  any  other  Person,  including  specifically  but  without  limitation  any
partnership or joint venture, except:

                                       35
<PAGE>
                    (i) investments  in direct  obligations of the United States
of America or any agency or instrumentality thereof whose obligations constitute
full  faith and credit  obligations  of the  United  States of America  having a
maturity of one year or less, commercial paper issued by U.S. corporations rated
"A-1" or "A-2" by  Standard  & Poors  Corporation  or "P-1" or "P-2" by  Moody's
Investors  Service or certificates of deposit or bankers'  acceptances  having a
maturity  of one year or less issued by members of the  Federal  Reserve  System
having  deposits in excess of  $100,000,000  (which  certificates  of deposit or
bankers'  acceptances  are  fully  insured  by  the  Federal  Deposit  Insurance
Corporation);
                    (ii) travel advances or loans to the Borrower's officers and
employees not exceeding at any one time an aggregate of $75,000.00; and

                    (iii)  advances  in the form of progress  payments,  prepaid
rent not exceeding 2 months or security deposits.

                    (iv)  loans,  advances  or any  other  credits  at any  time
disbursed and outstanding  after the date of this Agreement shown on the balance
sheet  of  Borrower  granted  to the  Covenant  Entities  not to  exceed  in the
aggregate (i)  $1,500,000.00  through the first  anniversary date of the Funding
Date, (ii) $2,250,000.00 after the first anniversary of the Funding Date through
the second  anniversary of the Funding Date, and (iii)  $3,000,000.00  after the
second anniversary of the Funding Date through the Termination Date.

                    (v)  payments to the  Covenant  Entities so long as they are
expensed  in  accordance  with  GAAP,  and  appear on all  statements  of income
required pursuant to Section 6.1

               (b)  The  Borrower  will  not  create  or  permit  to  exist  any
Subsidiary, other than the Subsidiar(y)(ies) in existence on the date hereof and
listed in Schedule 5.4.

          SECTION  7.5  DIVIDENDS.   Except  for  dividends  payable  solely  to
Guarantor for actual operating expenses of Guarantor,  Borrower will not declare
or pay any  dividends  (other  than  dividends  payable  solely  in stock of the
Borrower)  on any  class of its  stock or make any  payment  on  account  of the
purchase, redemption or other retirement of any shares of such stock or make any
distribution in respect thereof, either directly or indirectly.

          SECTION  7.6  SALE OR  TRANSFER  OF  ASSETS;  SUSPENSION  OF  BUSINESS
OPERATIONS.  The Borrower will not sell,  lease,  assign,  transfer or otherwise
dispose of (i) the stock of any  Subsidiary,  (ii) all or a substantial  part of
its assets,  or (iii) any  Collateral  or any interest  therein  (whether in one
transaction or in a series of  transactions)  to any other Person other than the
sale of  Inventory in the  ordinary  course of business and will not  liquidate,
dissolve or suspend  business  operations.  The Borrower  will not in any manner
transfer  any  property  without  prior or present  receipt of full and adequate
consideration.

          SECTION 7.7 CONSOLIDATION AND MERGER; ASSET ACQUISITIONS. The Borrower
will not consolidate  with or merge into any Person,  or permit any other Person
to merge into it, or acquire (in a transaction analogous in purpose or effect to
a  consolidation  or merger)  all or  substantially  all the assets of any other
Person.

                                       36
<PAGE>
          SECTION 7.8 SALE AND  LEASEBACK.  The Borrower will not enter into any
arrangement,  directly or indirectly, with any other Person whereby the Borrower
shall sell or  transfer  any real or  personal  property,  whether  now owned or
hereafter acquired, and then or thereafter rent or lease as lessee such property
or any part thereof or any other property which the Borrower  intends to use for
substantially  the same  purpose  or  purposes  as the  property  being  sold or
transferred.

          SECTION 7.9 RESTRICTIONS ON NATURE OF BUSINESS.  The Borrower will not
engage in any line of business materially  different from that presently engaged
in by the Borrower and will not purchase,  lease or otherwise acquire assets not
related to its business.

          SECTION 7.10 CAPITAL  EXPENDITURES.  During each fiscal year, FMM, FMS
and  the  Covenant  Entities  will  not  incur  or  contract  to  incur  Capital
Expenditures in the aggregate of more than  $2,000,000.00.  In addition,  during
the 1999 fiscal  year,  FMM,  FMS and the  Covenant  Entities  will not incur or
contract  to  incur  Capital  Expenditures  paid  with  working  capital  in the
aggregate  of more than  $1,750,000.00.  In  addition,  during  each fiscal year
thereafter,  FMM,  FMS and the Covenant  Entities  will not incur or contract to
incur Capital  Expenditures  paid with working  capital in the aggregate of more
than $850,000.00.

          SECTION  7.11  ACCOUNTING.  The  Borrower  will not adopt any material
change in  accounting  principles  other than as required by GAAP.  The Borrower
will not adopt, permit or consent to any change in its fiscal year.

          SECTION 7.12 DISCOUNTS,  ETC. The Borrower will not, after notice from
the Lender  during the  existence  of any Default  Period,  grant any  discount,
credit or  allowance  to any  customer  of the  Borrower or accept any return of
goods  sold,  or at any time  (whether  before or after  notice from the Lender)
modify,  amend,  subordinate,  cancel or terminate the obligation of any account
debtor or other obligor of the Borrower.

          SECTION 7.13 DEFINED  BENEFIT  PENSION  PLANS.  The Borrower  will not
adopt,  create,  assume or become a party to any defined  benefit  pension plan,
unless disclosed to the Lender pursuant to Section 5.10.

          SECTION 7.14 OTHER DEFAULTS.  The Borrower will not permit any breach,
default or event of default to occur under any note, loan agreement,  indenture,
lease,  mortgage,  contract for deed,  security  agreement or other  contractual
obligation binding upon the Borrower.

          SECTION 7.15 PLACE OF BUSINESS;  NAME.  The Borrower will not transfer
its chief executive  office or principal place of business,  or move,  relocate,
close or sell any business  location.  The Borrower will not permit any tangible
Collateral  or any records  pertaining  to the  Collateral  to be located in any
state or area in which,  in the event of such  location,  a financing  statement
covering  such  Collateral  would be  required  to be, but has not in fact been,
filed in order to perfect the Security  Interest.  The Borrower  will not change
its name.

          SECTION 7.16 ORGANIZATIONAL DOCUMENTS. The Borrower will not amend its
certificate of incorporation, articles of incorporation or bylaws.

                                       37
<PAGE>
          SECTION  7.17  SALARIES.  The  Borrower  will  not  pay  excessive  or
unreasonable   salaries,   bonuses,   commissions,   consultant  fees  or  other
compensation;  or increase the salary,  bonus,  commissions,  consultant fees or
other compensation of any director in a director capacity, officer or any member
of their families,  by more than 20% in any one year, either individually or for
all such  persons in the  aggregate,  or pay any such  increase  from any source
other than profits earned in the year of payment.

          SECTION 7.18 ISSUANCE OF STOCK/LOSS  OF VOTING  CONTROL.  The Borrower
will not issue or sell any stock of the Borrower.  The Borrower shall not permit
or suffer to occur any transfer,  assignment, pledge or other disposition of any
or all of the issued and  outstanding  stock of the Borrower so as to materially
change the voting control of the Borrower.

          SECTION  7.19  PAYMENTS  TO  AFFILIATES.  Neither  FMM nor FMS  shall,
without the express written  consent of Lender,  which consent may be granted or
withheld in Lender's sole  discretion,  make any transfer,  conveyance,  loan or
payment of any kind to FMS (from FMM), FMM (from FMS) to any Covenant  Entity or
to any other  Affiliates  (i) in the  aggregate in excess of  $1,500,000.00  per
fiscal year, or (ii) which is not for fair and adequate consideration.

          SECTION 7.20  MANAGEMENT  CONTROL.  The  Borrower  shall not permit or
suffer to occur any change in its current  executive  management  personnel (Tom
Schneider, Ronald L. Chalmers and Kevin Neill).


                                 Article VIII.

                     EVENTS OF DEFAULT, RIGHTS AND REMEDIES

          SECTION  8.1 EVENTS OF  DEFAULT.  "Event of  Default",  wherever  used
herein, means any one of the following events:

               (a)  Default in the payment of the  Obligations  when they become
due and payable;

               (b) Failure to pay when due any amount  specified  in Section 2.3
relating  to the  Borrower's  Obligation  of  Reimbursement,  or  failure to pay
immediately  when due or upon  termination  of the Credit  Facility  any amounts
required to be paid for deposit in the Special Account under Section 2.4 or;

               (c)  Default in the  payment of any fees,  commissions,  costs or
expenses required to be paid by the Borrower under this Agreement;

               (d) Default in the  performance,  or breach,  of any  covenant or
agreement of the Borrower  contained in this Agreement  other than a covenant or
agreement  which  is  specifically  dealt  with  in  this  Section  8.1  and the
continuance thereof for a period of 5 days after the actual knowledge thereof by
an executive  officer of either  Borrower or receipt of written  notice  thereof
from the Lender; or

                                       38
<PAGE>
               (e) Any of FMM,  FMS or any  Covenant  Entity  shall be or become
insolvent,  or admit in writing  its  inability  to pay its or his debts as they
mature,  or make an assignment for the benefit of creditors;  or any of FMM, FMS
or any  Covenant  Entity  shall apply for or consent to the  appointment  of any
receiver,  trustee, or similar officer for it or for all or any substantial part
of its property; or such receiver, trustee or similar officer shall be appointed
without the  application or consent of FMM, FMS or any Covenant  Entity,  as the
case  may be;  or any of FMM,  FMS or a  Covenant  Entity  shall  institute  (by
petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization,  arrangement,  readjustment of debt, dissolution, liquidation or
similar  proceeding  relating to it under the laws of any  jurisdiction;  or any
such  proceeding  shall be instituted  (by petition,  application  or otherwise)
against  FMM, FMS or any  Covenant  Entity and shall not be dismissed  within 60
calendar  days; or any judgment,  writ,  warrant of  attachment,  garnishment or
execution or similar  process  shall be issued or levied  against a  substantial
part of the property of FMM, FMS or any Covenant Entity; or

               (f) A  petition  shall be filed by or against  (which  when filed
against shall not be dismissed  within 60 calendar  days) any of FMM, FMS or any
Covenant  Entity under the United  States  Bankruptcy  Code naming FMM or FMS as
debtor; or

               (g) Any  representation  or warranty made by the Borrower in this
Agreement,  by  Guarantor in any  guaranty  delivered  to the Lender,  or by the
Borrower (or any of its  officers) or Guarantor in any  agreement,  certificate,
instrument or financial statement or other statement  contemplated by or made or
delivered  pursuant to or in connection with this Agreement or any such guaranty
shall prove to have been  incorrect  in any  material  respect when deemed to be
effective;

               (h) The rendering  against either FMM or FMS of a final judgment,
decree  or order  for the  payment  of money in  excess  of  $25,000.00  and the
continuance of such judgment,  decree or order unsatisfied and in effect for any
period of 30 consecutive days without a stay of execution;

               (i) A default under any bond,  debenture,  note or other evidence
of indebtedness of either Borrower owed to any Person other than the Lender,  or
under  any  indenture  or other  instrument  under  which any such  evidence  of
indebtedness  has been issued or by which it is governed,  or under any lease of
any of the Premises,  and the expiration of the applicable  period of grace,  if
any, specified in such evidence of indebtedness,  indenture, other instrument or
lease;

               (j) Any  Reportable  Event,  which the Lender  determines in good
faith  might  constitute  grounds  for the  termination  of any  Plan or for the
appointment  by the  appropriate  United States  District  Court of a trustee to
administer any Plan, shall have occurred and be continuing 30 days after written
notice to such effect shall have been given to the Borrower by the Lender;  or a
trustee shall have been appointed by an appropriate United States District Court
to administer any Plan; or the Pension Benefit Guaranty  Corporation  shall have
instituted  proceedings  to  terminate  any  Plan or to  appoint  a  trustee  to
administer any Plan; or the Borrower shall have filed for a distress termination
of any Plan under Title IV of ERISA;  or the Borrower  shall have failed to make
any  quarterly  contribution  required  with  respect to any Plan under  Section
412(m) of the
                                       39
<PAGE>
Internal Revenue Code of 1986, as amended,  which the Lender  determines in good
faith may by itself,  or in  combination  with any such failures that the Lender
may determine are likely to occur in the future,  result in the  imposition of a
lien on the Borrower's assets in favor of the Plan;

               (k) An event of default  shall occur under any Security  Document
or under any other security agreement,  mortgage,  deed of trust,  assignment or
other instrument or agreement securing any obligations of the Borrower hereunder
or under any note;

               (l) An event of default  shall occur under that  certain  Amended
and Restated Credit and Security  Agreement of even date herewith by and between
Lender, Royal Grip, Inc. and Roxxi, Inc. (the "RG Credit Agreement"),  as the RG
Credit  Agreement  may  from  time to time be  modified,  amended  or  restated.
Borrower  hereby  acknowledges  that it shall have no right to approve  any such
modifications, amendments or restatements;

               (m)  An  event  of  default   shall  occur  under  any  document,
instrument or agreement  executed  from time to time in  connection  with the RG
Credit Agreement (collectively, the "RG Security Documents"), as the RG Security
Documents  may from time to time be  modified,  amended  or  restated.  Borrower
hereby   acknowledges   that  it  shall  have  no  right  to  approve  any  such
modifications, amendments or restatements;

               (n) Either  Borrower  shall  liquidate,  dissolve,  terminate  or
suspend its business operations or otherwise fail to operate its business in the
ordinary  course,  or sell all or substantially  all of its assets,  without the
Lender's prior written consent;

               (o) Either Borrower shall fail to pay, withhold, collect or remit
any tax or tax deficiency when due (other than any tax deficiency which is being
contested  in good faith and by proper  proceedings  and for which it shall have
set aside on its books  adequate  reserves  therefor)  or notice of any state or
federal tax liens shall be filed or issued;

               (p) Any event of default shall occur (and not be cured within the
prescribed cure period) under the  Manufacturing  Agreement or the Capital Lease
Agreement; or

               (q) Default in the payment of any amount owed by the  Borrower to
the Lender other than any indebtedness arising hereunder;

               (r) Any Guarantor shall  repudiate,  purport to revoke or fail to
perform any such  Guarantor's  obligations  under such  Guarantor's  guaranty in
favor of the Lender, any Guarantor shall cease to validly exist;

               (s) Any event or circumstance  with respect to the Borrower shall
occur such that the Lender  shall  believe  in good faith that the  prospect  of
payment of all or any part of the Obligations or the performance by the Borrower
under the Loan  Documents  is impaired  or any  material  adverse  change in the
business or financial condition of the Borrower shall occur.

               (t) Any breach, default or event of default by or attributable to
any Affiliate under any agreement between such Affiliate and the Lender.

                                       40
<PAGE>
          SECTION 8.2 RIGHTS AND REMEDIES. During any Default Period, the Lender
may exercise any or all of the following rights and remedies:

               (a) the  Lender  may,  by notice  to the  Borrower,  declare  the
Commitment to be terminated, whereupon the same shall forthwith terminate;

               (b) the  Lender  may,  by notice  to the  Borrower,  declare  the
Obligations  to be forthwith due and payable,  whereupon all  Obligations  shall
become  and be  forthwith  due  and  payable,  without  presentment,  notice  of
dishonor,  protest  or  further  notice of any kind,  all of which the  Borrower
hereby expressly waives;

               (c) the Lender may,  without  notice to the  Borrower and without
further  action,  apply any and all money owing by the Lender to the Borrower to
the payment of the Obligations;

               (d) the Lender may make demand upon the Borrower  and,  forthwith
upon such demand,  the Borrower will pay to the Lender in immediately  available
funds for deposit in the  Special  Account  pursuant  to Section  2.14 an amount
equal to the aggregate maximum amount available to be drawn under all Letters of
Credit then  outstanding,  assuming  compliance  with all conditions for drawing
thereunder;

               (e) the Lender may  exercise  and  enforce any and all rights and
remedies  available  upon default to a secured  party under the UCC,  including,
without limitation,  the right to take possession of Collateral, or any evidence
thereof,  proceeding  without judicial process or by judicial process (without a
prior hearing or notice thereof, which the Borrower hereby expressly waives) and
the right to sell,  lease or otherwise  dispose of any or all of the Collateral,
and,  in  connection  therewith,  the  Borrower  will  on  demand  assemble  the
Collateral  and make it available to the Lender at a place to be  designated  by
the Lender which is reasonably convenient to both parties;

               (f) the Lender may  exercise  and enforce its rights and remedies
under the Loan Documents; and

               (g) the  Lender  may  exercise  any  other  rights  and  remedies
available to it by law or agreement.  Notwithstanding  the  foregoing,  upon the
occurrence of an Event of Default described in subsections (e) or (f) of Section
8.1, the Obligations shall be immediately due and payable  automatically without
presentment, demand, protest or notice of any kind.

          SECTION 8.3 CERTAIN NOTICES. If notice to the Borrower of any intended
disposition of Collateral or any other  intended  action is required by law in a
particular  instance,  such notice shall be deemed  commercially  reasonable  if
given (in the manner specified in Section 9.3) at least ten calendar days before
the date of intended disposition or other action.

                                       41
<PAGE>
                                  Article IX.

                                 MISCELLANEOUS

          SECTION 9.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay by the
Lender in exercising any right,  power or remedy under the Loan Documents  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
such right,  power or remedy preclude any other or further  exercise  thereof or
the exercise of any other right,  power or remedy under the Loan Documents.  The
remedies  provided in the Loan Documents are cumulative and not exclusive of any
remedies provided by law.

          SECTION 9.2 AMENDMENTS, ETC. No amendment,  modification,  termination
or waiver of any  provision of any Loan  Document or consent to any departure by
the Borrower  therefrom or any release of a Security Interest shall be effective
unless  the same shall be in writing  and  signed by the  Lender,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific  purpose for which given. No notice to or demand on the Borrower in any
case shall  entitle  the  Borrower  to any other or further  notice or demand in
similar or other circumstances.

          SECTION 9.3 ADDRESSES FOR NOTICES, ETC.

               (a) Except as otherwise  expressly  provided herein, all notices,
requests, demands and other communications provided for under the Loan Documents
shall be in writing and shall be (i)  personally  delivered,  (ii) sent by first
class  United  States  mail,  (iii)  sent  by  overnight   courier  of  national
reputation,  or  (iv)  transmitted  by  telecopy,  in  each  case  addressed  or
telecopied  to the  party to whom  notice  is  being  given  at its  address  or
telecopier number as set forth below:

                  If to FMM or FMS:

                  c/o FM Precision Golf Manufacturing Corp.
                  535 Migeon Avenue
                  Torrington, Connecticut  06790
                  Telecopier: (602) 627-0271
                  Attention: Tom Schneider

                  If to the Lender:

                  Norwest Business Credit, Inc.
                  Norwest Tower, Mail Station 9025
                  3300 North Central Avenue
                  Phoenix, Arizona  85012-2501
                  Telecopier: (602) 263-6215
                  Attention: Clif Moschnik

or,  as to each  party,  at such  other  address  or  telecopier  number  as may
hereafter be designated by

                                       42
<PAGE>
such party in a written notice to the other party  complying as to delivery with
the  terms of this  Section.  All such  notices,  requests,  demands  and  other
communications  shall be deemed to have been given on (a) the date  received  if
personally  delivered,  (b) when deposited in the mail if delivered by mail, (c)
the date sent if sent by overnight  courier,  or (d) the date of transmission if
delivered by telecopy, except that notices or requests to the Lender pursuant to
any of the provisions of Article II shall not be effective until received by the
Lender.
               (b) A copy of each notice to Borrower shall also be sent to:

                  Mr. Ken Warren
                  5920 Cromdale #1
                  Dublin, Ohio  43017
                  Telecopier:  (614) 766-1974

                  The copies of notices  sent in  accordance  with this  Section
9.3(b) are  informational  and are not  required in order for the notices  given
pursuant to Section 9.3(a) above to be effective.

          SECTION 9.4 FURTHER  DOCUMENTS.  The  Borrower  will from time to time
execute and deliver or endorse any and all instruments,  documents, conveyances,
assignments,  security agreements, financing statements and other agreements and
writings  that the Lender may  reasonably  request in order to secure,  protect,
perfect or enforce the Security  Interest or the Lender's  rights under the Loan
Documents  (but any  failure to request or assure  that the  Borrower  executes,
delivers  or  endorses  any such item shall not  affect or impair the  validity,
sufficiency or enforceability  of the Loan Documents and the Security  Interest,
regardless  of  whether  any such  item was or was not  executed,  delivered  or
endorsed in a similar context or on a prior occasion).

          Section 9.5 COLLATERAL.  This Agreement does not contemplate a sale of
accounts,  contract  rights or chattel  paper,  and,  as  provided  by law,  the
Borrower is entitled to any surplus and shall remain liable for any  deficiency.
The  Lender's  duty of care with respect to  Collateral  in its  possession  (as
imposed by law) shall be deemed  fulfilled  if it exercises  reasonable  care in
physically keeping such Collateral,  or in the case of Collateral in the custody
or possession of a bailee or other third person,  exercises  reasonable  care in
the  selection  of the bailee or other  third  person,  and the Lender  need not
otherwise preserve, protect, insure or care for any Collateral. The Lender shall
not be obligated  to preserve  any rights the  Borrower  may have against  prior
parties,  to realize on the  Collateral  at all or in any  particular  manner or
order or to apply any cash proceeds of the Collateral in any particular order of
application.

          Section 9.6 COSTS AND EXPENSES.  The Borrower  agrees to pay on demand
all costs and expenses, including (without limitation) attorneys' fees, incurred
by the Lender in  connection  with the  Obligations,  this  Agreement,  the Loan
Documents,  any Letters of Credit,  and any other document or agreement  related
hereto or thereto, and the transactions  contemplated hereby,  including without
limitation  all such costs,  expenses and fees incurred in  connection  with the
negotiation,  preparation,  execution, amendment,  administration,  performance,
collection  and  enforcement  of the  Obligations  and all  such  documents  and
agreements and the creation, perfection, protection,  satisfaction,  foreclosure
or enforcement of the Security Interest.

                                       43
<PAGE>
          Section 9.7 INDEMNITY. In addition to the payment of expenses pursuant
to Section 9.7, FMM and FMS, jointly and severally,  agree to indemnify,  defend
and hold harmless the Lender, and any of its participants,  parent corporations,
subsidiary corporations,  affiliated corporations,  successor corporations,  and
all present and future officers, directors,  employees,  attorneys and agents of
the  foregoing  (the  "Indemnitees")  from  and  against  any of  the  following
(collectively, "Indemnified Liabilities"):

                    (i)  any  and  all  transfer   taxes,   documentary   taxes,
assessments  or  charges  made by any  governmental  authority  by reason of the
execution and delivery of the Loan Documents or the making of the Advances;

                    (ii) any claims,  loss or damage to which any Indemnitee may
be subjected if any  representation or warranty contained in Section 5.12 proves
to be incorrect  in any respect or as a result of any  violation of the covenant
contained in Section 6.4(b); and

                    (iii)  any  and  all  other  liabilities,  losses,  damages,
penalties,  judgments,  suits,  claims, costs and expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of  counsel)  in  connection  with the  foregoing  and any other  investigative,
administrative or judicial proceedings,  whether or not such Indemnitee shall be
designated  a party  thereto,  which may be imposed on,  incurred by or asserted
against any such  Indemnitee,  in any manner  related to or arising out of or in
connection  with the making of the Advances and the Loan Documents or the use or
intended use of the proceeds of the Advances. 

If any investigative,  judicial or administrative proceeding arising from any of
the foregoing is brought against any Indemnitee, upon such Indemnitee's request,
the  Borrower,  or counsel  designated by the Borrower and  satisfactory  to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the  Indemnitee,  at the Borrower's sole costs and
expense.  Each  Indemnitee will use its best efforts to cooperate in the defense
of any  such  action,  suit  or  proceeding.  If the  foregoing  undertaking  to
indemnify,  defend and hold harmless may be held to be unenforceable  because it
violates any law or public  policy,  the Borrower  shall  nevertheless  make the
maximum  contribution to the payment and satisfaction of each of the Indemnified
Liabilities  which is permissible  under  applicable law. The obligations of FMM
and FMS under this Section 9.8 shall survive the  termination  of this Agreement
and the discharge of the Borrower's other obligations hereunder.

          Section 9.8 PARTICIPANTS. The Lender and its participants, if any, are
not partners or joint venturers,  and the Lender shall not have any liability or
responsibility  for any obligation,  act or omission of any of its participants.
All rights and powers specifically  conferred upon the Lender may be transferred
or delegated to any of the Lender's participants, successors or assigns.

          Section 9.9 EXECUTION IN  COUNTERPARTS.  This Agreement and other Loan
Documents may be executed in any number of  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 instrument.

                                       44
<PAGE>
          SECTION  9.10  BINDING   EFFECT;   ASSIGNMENT;   COMPLETE   AGREEMENT;
EXCHANGING  INFORMATION.  The Loan Documents  shall be binding upon and inure to
the benefit of the Borrower and the Lender and their  respective  successors and
assigns,  except that the Borrower shall not have the right to assign its rights
thereunder or any interest  therein without the Lender's prior written  consent.
This  Agreement,  together with the Loan  Documents,  comprises the complete and
integrated  agreement of the parties on the subject matter hereof and supersedes
all prior  agreements,  written or oral, on the subject matter  hereof.  Without
limiting the Lender's right to share information  regarding the Borrower and its
Affiliates  with the  Lender's  participants,  accountants,  lawyers  and  other
advisors,  the  Lender,  Norwest  Corporation,   and  all  direct  and  indirect
subsidiaries of Norwest  Corporation,  may exchange any and all information they
may have in their possession regarding the Borrower and its Affiliates,  and the
Borrower  waives any right of  confidentiality  it may have with respect to such
exchange of such information.

          SECTION  9.11  SEVERABILITY  OF  PROVISIONS.  Any  provision  of  this
Agreement  which is  prohibited or  unenforceable  shall be  ineffective  to the
extent  of  such  prohibition  or  unenforceability   without  invalidating  the
remaining provisions hereof.

          SECTION 9.12 HEADINGS.  Article and Section headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

          SECTION 9.13 GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF JURY TRIAL.
The Loan  Documents  shall be governed by and construed in  accordance  with the
substantive  laws  (other  than  conflict  laws) of the State of  Arizona.  This
Agreement  shall be governed by and construed in accordance with the substantive
laws (other than  conflict  laws) of the State of  Arizona.  The parties  hereto
hereby (i) consents to the personal jurisdiction of the state and federal courts
located in the State of  Arizona,  County of  Maricopa  in  connection  with any
controversy  related to this  Agreement;  (ii) waives any argument that venue in
any such forum is not convenient,  (iii) agrees that any litigation initiated by
the Lender or the Borrower in connection  with this  Agreement or the other Loan
Documents  shall be venued in either  the  Superior  Court of  Maricopa  County,
Arizona,  or the United States  District  Court,  District of Arizona;  and (iv)
agrees that a final  judgment in any such suit,  action or  proceeding  shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other  manner  provided by law.  THE PARTIES  WAIVE ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.

                                       45
<PAGE>
                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed by their respective  officers thereunto duly authorized
as of the date first above written.
                                        FM PRECISION GOLF MANUFACTURING
                                            CORP., INC., a Delaware corporation



                                        By __________________________________

                                         Its ________________________________


                                        FM PRECISION GOLF SALES CORP.,
                                             a Nevada corporation



                                        By __________________________________

                                         Its ________________________________



                                        NORWEST BUSINESS CREDIT, INC., a
                                            Minnesota corporation



                                        By __________________________________

                                         Its ________________________________

                                       46
<PAGE>
                        Table of Exhibits and Schedules

           Exhibit A              Form of Revolving Note

           Exhibit B              Form of Term Note

           Exhibit C              Compliance Certificate

           Exhibit D              Premises

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

           Schedule 5.1           Trade Names, Chief Executive Office, Principal
                                  Place of Business, and Locations of Collateral

           Schedule 5.4           Subsidiaries

           Schedule 7.1           Permitted Liens

           Schedule 7.2           Permitted Indebtedness and Guaranties


                                       47
<PAGE>
                                      Exhibit A to Credit and Security Agreement

                                 REVOLVING NOTE
$4,000,000.00                                                   Phoenix, Arizona

                                                              ____________, 1998

                  For  value  received,  the  undersigned,   FM  PRECISION  GOLF
MANUFACTURING CORP., a Delaware corporation,  and FM PRECISION GOLF SALES CORP.,
a Delaware corporation (collectively, jointly and severally, "Borrower"), hereby
jointly and severally  promise to pay on the  Termination  Date under the Credit
Agreement  (defined below),  to the order of NORWEST  BUSINESS  CREDIT,  INC., a
Minnesota corporation (the "Lender"), at its main office in Phoenix, Arizona, or
at any other place designated at any time by the holder hereof,  in lawful money
of the  United  States  of  America  and in  immediately  available  funds,  the
principal sum of FOUR MILLION and N0/100  Dollars  ($4,000,000.00)  or, if less,
the aggregate  unpaid  principal  amount of all  Revolving  Advances made by the
Lender to the Borrower under the Credit Agreement  (defined below) together with
interest on the principal amount  hereunder  remaining unpaid from time to time,
computed on the basis of the actual  number of days elapsed and a 360-day  year,
from the date hereof until this Note is fully paid at the rate from time to time
in effect under the Credit and Security  Agreement of even date herewith (as the
same may hereafter be amended,  supplemented  or restated from time to time, the
"Credit  Agreement")  by and between the Lender and the Borrower.  The principal
hereof and interest accruing thereon shall be due and payable as provided in the
Credit  Agreement.  This Note may be prepaid only in accordance  with the Credit
Agreement.

                  This Note is issued  pursuant,  and is subject,  to the Credit
Agreement,  which provides,  among other things, for acceleration  hereof.  This
Note is the  Revolving  Note referred to in the Credit  Agreement.  This Note is
secured,  among other things,  pursuant to the Credit Agreement and the Security
Documents as therein defined, and may now or hereafter be secured by one or more
other  security  agreements,  mortgages,  deeds of trust,  assignments  or other
instruments or agreements.

                  Both entities  constituting  the Borrower  hereby  jointly and
severally  agree to pay all costs of collection,  including  attorneys' fees and
legal expenses in the event this Note is not paid when due, whether or not legal
proceedings are commenced.

Revolving Note                         A-1
<PAGE>
                  Presentment  or other demand for  payment,  notice of dishonor
and protest are expressly waived.
                                       FM PRECISION GOLF MANUFACTURING 
                                         CORP., a Delaware corporation



                                       By __________________________________

                                        Its ________________________________


                                       FM PRECISION GOLF SALES CORP.,
                                           a Nevada corporation



                                       By __________________________________

                                        Its ________________________________


Revolving Note                         A-2
<PAGE>
                                      Exhibit B to Credit and Security Agreement

                                   TERM NOTE

$4,300,000.00                                                   Phoenix, Arizona

                                                              ____________, 1998

                  For  value  received,  the  undersigned,   FM  PRECISION  GOLF
MANUFACTURING CORP., a Delaware corporation,  and FM PRECISION GOLF SALES CORP.,
a Delaware corporation (collectively, jointly and severally, "Borrower"), hereby
jointly and severally  promise to pay on the  Termination  Date under the Credit
Agreement  (defined below),  to the order of NORWEST  BUSINESS  CREDIT,  INC., a
Minnesota corporation (the "Lender"), at its main office in Phoenix, Arizona, or
at any other place designated at any time by the holder hereof,  in lawful money
of the  United  States  of  America  and in  immediately  available  funds,  the
principal  sum of FOUR  MILLION,  THREE  HUNDRED  THOUSAND  and  NO/100  Dollars
($4,300,000.00)  or, if less, the aggregate  unpaid principal amount of all Term
Advances made by the Lender to the Borrower under the Credit Agreement  (defined
below) together with interest on the principal amount hereunder remaining unpaid
from time to time,  computed on the basis of the actual  number of days  elapsed
and a 360-day  year,  from the date hereof  until this Note is fully paid at the
rate from time to time in effect under the Credit and Security Agreement of even
date  herewith (as the same may hereafter be amended,  supplemented  or restated
from time to time,  the  "Credit  Agreement")  by and between the Lender and the
Borrower.  The principal  hereof and interest  accruing thereon shall be due and
payable as provided in the Credit  Agreement.  This Note may be prepaid  only in
accordance with the Credit Agreement.

                  This Note is issued  pursuant,  and is subject,  to the Credit
Agreement,  which provides,  among other things, for acceleration  hereof.  This
Note is the Term Note referred to in the Credit Agreement. This Note is secured,
among other things,  pursuant to the Credit Agreement and the Security Documents
as therein  defined,  and may now or  hereafter  be secured by one or more other
security agreements, mortgages, deeds of trust, assignments or other instruments
or agreements.

                  Both entities  constituting  the Borrower  hereby  jointly and
severally  agree to pay all costs of collection,  including  attorneys' fees and
legal expenses in the event this Note is not paid when due, whether or not legal
proceedings are commenced.

Term Note                              B-1
<PAGE>
                  Presentment  or other demand for  payment,  notice of dishonor
and protest are expressly waived.
                                         FM PRECISION GOLF MANUFACTURING 
                                           CORP., a Delaware corporation



                                         By __________________________________

                                          Its ________________________________


                                         FM PRECISION GOLF SALES CORP.,
                                              a Delaware corporation



                                         By __________________________________

                                          Its ________________________________




Term Note                              B-2
<PAGE>
                                      Exhibit C to Credit and Security Agreement

                             COMPLIANCE CERTIFICATE


To:               ______________________
                  Norwest Business Credit, Inc.

Date:             ______________________

Subject:          ______________________
                  Financial Statements


                  In accordance with our Credit and Security  Agreement dated as
of ____________________ (the "Credit Agreement"),  attached are the consolidated
financial  statements of FM Precision Golf Manufacturing  Corp. and FM Precision
Golf Sales Corp. (the "Borrower") and the Covenant Entities and the year-to-date
period then ended (the "Current Financials"). All terms in this certificate have
the meanings given in the Credit Agreement.

                  I certify that the Current  Financials  have been  prepared in
accordance with GAAP, subject to year-end audit adjustments,  and fairly present
the financial condition of the Borrower as of the date thereof.

                  Events of Default.  (Check one):
                  ------------------  

                           ___ The  undersigned  does not have  knowledge of the
                  occurrence  of a Default or Event of Default  under the Credit
                  Agreement.

                           ___ The  undersigned  has knowledge of the occurrence
                  of a Default  or Event of Default  under the Credit  Agreement
                  and  attached  hereto is a statement of the facts with respect
                  to thereto.

                  FINANCIAL COVENANTS.  I further hereby certify as follows:

                           ___ The Reporting Date does not correspond to the end
                  of the Borrower's fiscal quarters,  hence I am completing only
                  paragraphs ___ below.

                           ___ The Reporting Date  corresponds to the end of one
                  of the Borrower's  fiscal quarters,  hence I am completing all
                  paragraphs below.

                           1. MINIMUM DEBT SERVICE COVERAGE  RATIO.  Pursuant to
                  Section  6.12 of  the  Credit  Agreement,  for the  applicable
                  period ending on the  Reporting  Date, the Borrower's and  the
                  Covenant Entities'  consolidated Debt  Service Coverage  Ratio
                  was ___ to 1.00,  which ____  satisfies  ____ does not satisfy
                  the requirement that such ratio be no less than ____ to 1.00.


Compliance Certificate                 C-1
<PAGE>
                           2. MINIMUM NET WORTH. Pursuant to Section 6.13 of the
                  Credit Agreement, as of the Reporting Date, the Borrower's and
                  Covenant   Entities'   consolidated   Book   Net   Worth   was
                  $_______________,  which ____  satisfies ____ does not satisfy
                  the   requirement   that  such   amounts   be  not  less  than
                  $_______________ on the Reporting Date.

                           3.  MINIMUM NET INCOME.  Pursuant to Section  6.14 of
                  the Credit Agreement, as of the Reporting Date, the Borrower's
                  and Covenant Entities' aggregate Net Income for the applicable
                  period  was  $___________,  which ___  satisfies  ___ does not
                  satisfy  the  requirement  that such  amounts be not less than
                  $______ on the Reporting Date.

                           4. STOP LOSS.  Pursuant to Section 6.15 of the Credit
                  Agreement, as of the Reporting Date, the Borrower and Covenant
                  Entities achieved an aggregate Net Loss of $__________,  which
                  _____ satisfies  _____ does not satisfy the  requirement  that
                  such  amount be not more  than  $__________  on the  Reporting
                  Date.

                           5. CAPITAL EXPENDITURES.  Pursuant to Section 7.10 of
                  the Credit  Agreement,  for the year-to-date  period ending on
                  the Reporting Date, the Borrower has expended or contracted to
                  expend  during the fiscal year ending  December 31, 199_,  for
                  Capital   Expenditures,   $__________  in  the  aggregate  and
                  $_________  for  Capital  Expenditures  paid for with  working
                  capital  which  ____  satisfies  ____  does  not  satisfy  the
                  requirement that such expenditures not exceed $2,000,000.00 in
                  the aggregate and  $800,000.00 for Capital  Expenditures  paid
                  for with working capital during the fiscal year ended December
                  31, 199_, and each fiscal year thereafter.

                           6. SALARIES.  As of the  Reporting Date, the Borrower
                  ____ is ____ is  not  in  compliance with  Section 7.17 of the
                  Credit Agreement concerning salary increases.

                  Officers                    Percentage Increase
                  --------                    -------------------


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

                  --------------------------- -------------------------------
                 (To be completed within 30 days of any officer salary increase)

                           7. PAYMENTS TO  AFFILIATES.  Pursuant to Section 7.19
                  of the Credit Agreement, for the year-to-date period ending on
                  the Reporting  Date,  FMM and FMS have in the  aggregate  made
                  transfers,  conveyances, loans and  payments to  Affiliates in
                  the amount  of  $_________ which ____ satisfies ____ does  not
                  satisfy   the   requirement   that  such   amount  not  exceed
                  $1,500,000.00 in the aggregate during any fiscal year.


Compliance Certificate                 C-2
<PAGE>
                  Attached hereto are all relevant facts in reasonable detail to
evidence,  and the  computations of the financial  covenants  referred to above.
These computations were made in accordance with GAAP.

                                          FM PRECISION GOLF MANUFACTURING
                                             CORP., INC., a Delaware corporation



                                          By __________________________________

                                           Its ________________________________


                                          FM PRECISION GOLF SALES CORP.,
                                               a Nevada corporation



                                          By __________________________________

                                           Its ________________________________




Compliance Certificate                 C-3
<PAGE>

                                      Exhibit D to Credit and Security Agreement

                                    PREMISES

                  The Premises referred to in the Credit and Security  Agreement
are legally described as follows:

Lot 1 and that  part of Lot 3,  REYWEST  SCOTTSDALE  AIRPARK  CORPORATE  CENTER,
according to Book 307 of Maps, page 3, records of Maricopa County, Arizona;

        BEGINNING at the most Southerly corner of Lot 3;
        thence North 57(degree)48'05" East 15.95 feet along the Southeasterly
             line of Lot 3 to the most Westerly corner of Lot 2;
        thence North 32(degree)11'55" West parallel to the Southwesterly line of
             Lot 3 205 feet more or less to the Northwesterly line of Lot 3;
        thence South 43(degree)55'22" West along the Northwesterly line of Lot 3
             16 feet more or less to the most Westerly corner of Lot 3;
        thence South 32(degree)11'55" East 201.34 feet along the Southwesterly
             line of Lot 3 to the POINT OF BEGINNING.



<PAGE>
                                             Schedule 5.1 to Credit and Security
                                             Agreement

Trade Names, Chief Executive Office,  Principal Place of Business, and Locations
of Collateral

                                  TRADE NAMES
                                      None

               CHIEF EXECUTIVE OFFICE/PRINCIPAL PLACE OF BUSINESS

               FM Precision Golf                535 Migeon Avenue
               Manufacturing Corp.:             Torrington, Connecticut  06790

               FM Precision Golf                535 Migeon Avenue
               Sales Corp.                      Torrington, Connecticut  06790




                    OTHER INVENTORY AND EQUIPMENT LOCATIONS

                                      None
<PAGE>
                                             Schedule 5.4 to Credit and Security
                                             Agreement


                                  SUBSIDIARIES

                            FMS is a subsidiary FMM




<PAGE>
                                             Schedule 7.1 to Credit and Security
                                             Agreement


                                PERMITTED LIENS

CREDITOR      COLLATERAL      JURISDICTION      FILING DATE      FILING NO.
--------      ----------      ------------      -----------      ----------







                                      NONE

<PAGE>
                                             Schedule 7.2 to Credit and Security
                                             Agreement

                     PERMITTED INDEBTEDNESS AND GUARANTIES

                                  Indebtedness

Creditor          Principal          Maturity          Monthly        Collateral
--------          ---------          --------          -------        ----------
                   Amount              Date            Payment 
                   ------              ----            ------- 
                                                  


                                       None




                                   Guaranties
                                   ----------

Primary Obligor         Amount and Description of        Beneficiary of Guaranty
---------------         -------------------------        -----------------------
                          Obligation Guaranteed
                          ---------------------



                                      None