EXHIBIT 10(v)


                         LOAN AND SECURITY AGREEMENT

      This LOAN AND SECURITY AGREEMENT is entered into as of the 19th day of
February, 2003 by and between BUSINESS ALLIANCE CAPITAL CORP., a Delaware
corporation (BACC), with its chief executive office located at 214 Carnegie
Center, Suite 302, Princeton, New Jersey 08540 and FARMSTEAD TELEPHONE
GROUP, INC., a Delaware corporation (Borrower), with its chief executive
office located at 22 Prestige Park Circle, East Hartford, Connecticut 06108.

      The parties agree as follows

1.    DEFINITIONS AND CONSTRUCTION

      1.1   Terms. As used in this Agreement, the following terms shall have
the following meanings:

            Accounts means, in addition to the definition of accounts in the
      Code, all presently existing and hereafter arising accounts
      receivable, contract rights, health-care-insurance receivables, and
      all other forms of obligations owing to Borrower arising out of the
      sale, lease, license or assignment of goods or other property, or the
      rendition of services by Borrower, whether or not earned by
      performance, all credit insurance, guaranties, and other security
      therefor, as well as all merchandise returned to or reclaimed by
      Borrower and Borrower's Books relating to any of the foregoing.

            Advances means all loans, advances and other financial
      accommodations by BACC to or on account of the Borrower, including
      those under this Agreement.

            Agreement means collectively this Loan and Security Agreement,
      any concurrent or subsequent rider to this Loan and Security
      Agreement, and any extensions, supplements, amendments, addenda or
      modifications to or in connection with this Loan and Security
      Agreement or any such rider.

            Authorized Officer means any officer or other representative of
      Borrower authorized in a writing delivered to BACC to transact
      business with BACC.

            BACC means Business Alliance Capital Corp., its successors and
      assigns.

            BACC Expenses means all of the following:  costs and expenses
      (whether taxes, assessments, insurance premiums or otherwise) required
      to be paid by Borrower under any of the Loan Documents which are paid
      or advanced by BACC; filing, recording, publication, appraisal and
      search fees paid or incurred by BACC in connection with BACC's
      transactions with Borrower; costs and expenses incurred by BACC in the
      disbursement or collection of funds to or from Borrower or its account
      debtors; charges resulting from the dishonor of checks; costs and
      expenses incurred by BACC to correct any default or enforce any
      provision of the Loan Documents, or in gaining possession of,
      maintaining, handling, preserving, storing, shipping, selling,
      preparing for sale, or advertising to sell the Collateral, or any
      portion thereof, irrespective of whether a sale is consummated; and
      costs and expenses incurred by BACC in enforcing or defending the Loan
      Documents, including, but not limited to, costs and expenses incurred
      in connection with any proceeding, suit, enforcement of judgment, or
      appeal; and BACC's reasonable attorneys' fees and expenses, including
      allocated fees of in-house counsel, incurred in advising, structuring,
      drafting, reviewing, administering, amending, modifying, terminating,
      enforcing, defending, or otherwise representing BACC concerning the
      Loan Documents or the Obligations.

            Borrower's Books means all of Borrower's books and records
      including all of the following:  ledgers; records indicating,
      summarizing, or evidencing Borrower's assets or liabilities, or the
      Collateral; all information relating to Borrower's business operations
      or financial condition; and all computer programs, disk or tape files,
      printouts, runs, or other computer prepared information, and the
      facilities containing such information.


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            Business Day means any day which is not a Saturday, Sunday, or
      other day on which banks in the State of New Jersey are authorized or
      required to close.

            Chattel Paper shall have the same meaning ascribed to such term
      in the Code.

            Code means the New Jersey Uniform Commercial Code, as amended or
      revised from time to time.

            Collateral means all assets of the Borrower, whether now owned
      or existing, or hereafter acquired or arising, and wherever located,
      including, without limitation, all of the following assets, properties
      and interests in property of Borrower,:  all Accounts; all Equipment;
      all General Intangibles; all Chattel Paper; all Inventory; all
      Negotiable Collateral; all Investment Property, all Financial Assets,
      all Letter of Credit Rights, all Supporting Obligations, all Deposit
      Accounts, all money or any assets of Borrower which hereafter come
      into the possession, custody, or control of BACC; all proceeds and
      products, whether tangible or intangible, of any of the foregoing,
      including proceeds of insurance covering any or all of the foregoing,
      and any and all tangible or intangible property resulting from the
      sale, lease, license or other disposition of the foregoing, or any
      portion thereof or interest therein, and all proceeds thereof, and any
      other assets of Borrower which may be subject to a lien in favor of
      BACC.

            Daily Balance means the amount of the Obligations owed at the
      end of a given day.

            Deposit Account shall have the meaning ascribed to such term in
      the Code.

            Documents shall have the meaning ascribed to such term in the
      Code.

            Eligible Accounts means those Accounts created by Borrower in
      the ordinary course of business, which are and at all times shall
      continue to be acceptable to BACC in all respects; provided, however,
      that standards of eligibility may be fixed and revised from time to
      time by BACC in the good faith exercise of BACC's exclusive judgment.
      In determining such acceptability and standards of eligibility, BACC
      may, but need not, rely on agings, reports and schedules of Accounts
      furnished by Borrower, but reliance by BACC thereon from time to time
      shall not be deemed to limit BACC's right to revise standards of
      eligibility at any time as to both Borrower's present and future
      Accounts.  In general, an Account shall not be deemed eligible unless:
      (1) the Account debtor on such Account is and at all times continues
      to be acceptable to BACC in the good faith exercise of its exclusive
      judgement, and (2) such Account complies in all respects with the
      representations, covenants and warranties hereinafter set forth.
      Except in BACC's sole discretion, Eligible Accounts shall not include
      any of the following (a) Accounts which the Account debtor has failed
      to pay within ninety (90) days of invoice date, and all Accounts owed
      by any Account debtor that has failed to pay fifty percent (50%) or
      more of its Accounts owed to Borrower within ninety (90) days of
      invoice date; (b) Accounts with respect to which goods are sold on a
      bill and hold basis or placed on consignment or for a guaranteed sale,
      or which contain other terms by reason of which payment by the Account
      debtor may be conditional; (c) Accounts with respect to which the
      Account debtor is not a resident of the United States unless the
      Account is supported by foreign credit insurance or a letter of
      credit, in both instances satisfactory to and assigned to BACC; (d)
      Accounts with respect to which the Account debtor is the United States
      or any department, agency or instrumentality of the United States, any
      State of the United States or any city, town, municipality or division
      thereof unless all filings have been made under the Federal Assignment
      of Claims Act or comparable state or other statute; (e) Accounts with
      respect to which the Account debtor is an officer, employee or agent
      of, or subsidiary of, related to, affiliated with or has common
      shareholders, officers or directors with Borrower; (f) Accounts with
      respect to which Borrower is or may become liable to the Account
      debtor for goods sold or services rendered by the Account debtor to
      Borrower, but only to the extent of such liability; (g) Accounts with
      respect to an Account debtor whose total obligations to Borrower
      exceed fifteen percent (15%) of all Accounts, to the extent such
      obligations exceed such percentage; (h) Accounts with respect to which
      the Account debtor disputes liability or makes any claim with respect
      thereto, or is subject to any insolvency proceeding, or becomes
      insolvent, fails or goes out of business; (i) the Account arises out
      of a contract or purchase order for which a surety bond was issued on
      behalf of Borrower; (j) Accounts in which BACC does not have first
      priority and exclusive perfected security interest; (k) Accounts where
      the Account debtor is in a jurisdiction for which Borrower is required
      to file a notice of business activities or similar report and Borrower
      has not filed such report within the time period required by
      applicable law; (l) any Account as to which an invoice has not been
      issued to the Account Debtor (m) any Account which represents a
      progress payment on a contract which has not been fully completed by
      Borrower; (n) any Account arising out of Inventory sold to an Account
      debtor and not installed and accepted in writing by such Account
      debtor except for Inventory sold under


<PAGE>  2


      Ship Only Invoices; (o) any Account which has been invoiced to a
      customer of Borrower and which has, at any time while any amount owing
      under such invoice remains outstanding, been invoiced or billed, in
      whole or in part, to Licensor or any other leasing or financing
      company providing funding to Borrower or any of Borrower's customers
      (a "Third Party Obligor") provided further that the invoice to such
      Third Party Obligor, if it is otherwise in compliance with all of the
      terms hereof, may constitute an Eligible Account but provided further
      that at no time shall any sale of goods be evidenced by an invoice to
      such customer and such Third Party Obligor at the same time; or (p)
      any Account arising from Inventory which is rented or leased.

            Eligible Inventory means Inventory purchased by Borrower
      pursuant to a presently existing firm, non-contingent order from a
      customer of Borrower and/or special purchases of Inventory purchased
      at discount prices, all of which is located at Borrower's premises at
      the address set forth above, and is otherwise acceptable to BACC in
      all respects: provided, however, that general criteria for Eligible
      Inventory may be established and revised from time to time by BACC in
      BACC's exclusive judgment. In determining such acceptability and
      standards of eligibility, BACC may, but need not, rely on reports and
      schedules of Inventory furnished to BACC by Borrower, but reliance
      thereon by BACC from time to time shall not be deemed to limit BACC's
      right to revise standards of eligibility at any time.  In general,
      except in BACC's sole discretion, Eligible Inventory shall not include
      work in process, components which are not part of finished goods,
      spare parts, packaging and shipping materials, materials used or
      consumed in Borrower's business, goods returned to, repossessed by, or
      stopped in transit by Borrower, Inventory at the premises of third
      parties or subject to a security interest or lien in favor of any
      third party, bill and hold goods, Inventory which is not subject a
      perfected security interest in favor of BACC, returned and/or
      defective goods, "seconds" and Inventory purchased on consignment,
      Inventory which contains any labels, trademarks, trade names or other
      identifying characteristics which are the properties of third parties
      unless the use of same by Borrower is under a valid license, royalty
      or similar agreement with the owner thereof, in form and substance
      satisfactory to BACC, and which remains in full force and effect, and
      has not been terminated, and such owner thereof has issued in favor of
      BACC an agreement (unless BACC has agreed in its sole discretion to
      waive its requirement of any such agreement), in form and substance
      satisfactory to BACC, allowing BACC to dispose of said items of
      Inventory upon the occurrence of an Event of Default.  With respect to
      Inventory which contains labels, trademarks, trade names or other
      identifying characteristics and which would otherwise qualify as
      Eligible Inventory, if BACC elects in its sole discretion to waive the
      requirement that the owner of such label, trademark, trade name and
      the like be assigned to BACC, BACC may decrease the Inventory Advance
      Rate with respect to such Inventory.  Eligible Inventory shall for the
      purposes of this Agreement be valued at the lower of cost or wholesale
      market value.

            Equipment means in addition to the definition of equipment in
      the Code, all of Borrower's present and hereafter acquired equipment,
      machinery, machine tools, motors, furniture, furnishings, fixtures,
      motor vehicles, rolling stock, processors, tools, pans, dies, jigs,
      goods (other than consumer goods or farm products) and any interest in
      any of the foregoing, and all attachments, accessories, accessions,
      replacements, substitutions, additions, and improvements to any of the
      foregoing, wherever located.

            ERISA means the Employee Retirement Income Security Act of 1974,
      as amended, and the regulations thereunder.

            ERISA Affiliate means each trade or business (whether or not
      incorporated and whether or not foreign) which is or may hereafter
      become a member of a group of which Borrower is a member and which is
      treated as a single employer under ERISA Section 4001(b)( 1), or IRC
      Section 414.

            Event of Default means the events specified in Section 8, below.

            Financial Assets shall have the meaning ascribed to such term in
      the Code.

            General Intangibles means in addition to the definition of
      general intangibles in the Code, all of Borrower's present and future
      general intangibles and other personal property (including choses or
      things in action, goodwill, patents, trade names; trademarks, service
      marks, blueprints, drawings, purchase orders, customer lists, monies
      due or recoverable from pension funds, route lists, infringement
      claims, computer programs, computer discs, computer tapes, Borrower's
      Books, literature, reports, catalogs, deposit accounts, insurance
      premium rebates, tax refunds, and tax refund claims) other than goods
      and Accounts.


<PAGE>  3


            Insolvency Proceeding means any proceeding commenced by or
      against any person or entity under any provision of the federal
      Bankruptcy Code, as amended, or under any other state or federal
      insolvency law, including assignments for the benefit of creditors,
      formal or informal moratoria, compositions, or extensions generally
      with its creditors.

            Instruments shall have the meaning ascribed to such term in the
      Code.

            Inventory means, in addition to the definition of inventory in
      the Code, all present and future inventory in which Borrower has any
      interest, including goods held for sale or lease or to be furnished
      under a contract of service, Borrower's present and future raw
      materials, work in process, finished goods, tangible property, stock
      in trade, wares, and materials used in or consumed in Borrower's
      business, goods which have been returned to, repossessed by, or
      stopped in transit by Borrower, packing and shipping materials,
      wherever located, any documents of title representing any of the
      above, and Borrower's Books relating to any of the foregoing.

            Investment Property shall have the meaning ascribed to such term
      in the Code.

            IRC means the Internal Revenue Code of 1986, as amended, and the
      regulations thereunder.

            Letter of Credit Rights shall have the meaning ascribed to such
      term in the Code.

            Letter of Credit shall have the meaning specified in Section 4.6
      hereof.

            Licensor collectively means Avaya, Inc, and/or Lucent
      Technologies, Inc., and their respective successors and assigns.

            Loan Documents means, collectively, this Agreement, any Note or
      Notes, any security agreements, pledge agreements, mortgages, deeds of
      trust or other encumbrances or agreements which secure the
      Obligations, and any other agreement entered into between Borrower and
      BACC or by Borrower in favor of BACC relating to or in connection with
      this Agreement or the Obligations, as each of same may be amended,
      modified, renewed, extended or substituted from time to time.

            Multiemployer Plan means a multiemployer plan as defined in
      ERISA Sections 3(37) or 4001(a)(3) or IRC Section 414(f).

            Negotiable Collateral means all of Borrower's present and future
      letters of credit, notes, drafts, Instruments, Documents, leases, and
      Chattel Paper.

            Note means any promissory note made by Borrower to the order of
      BACC concurrently herewith or at any time hereafter.

            Obligations means all loans, Advances, debts, liabilities
      (including all interest and amounts charged to the Obligations
      pursuant to any agreement authorizing BACC to charge the Obligations),
      obligations, lease payments, guaranties, covenants, and duties owing
      by Borrower to BACC of any kind and description (whether pursuant to
      or evidenced by the Loan Documents or by any other agreement between
      BACC and Borrower, and irrespective of whether for the payment of
      money), whether made or incurred prior to, on, or after the
      Termination Date, direct or indirect, absolute or contingent, due or
      to become due, now existing or hereafter arising, including any debt,
      liability or obligation owing from Borrower to others which BACC may
      obtain by assignment or otherwise, and all interest thereon and all
      BACC Expenses.

            Plan means any plan described in ERISA Section 3(2) maintained
      for employees of Borrower or any ERISA Affiliate, other than a
      Multiemployer Plan.

            Prime Rate means that rate designated by Wachovia Bank, National
      Association, or any successor thereof, from time to time as its prime
      rate, which shall not necessarily constitute its lowest available
      rate.

            Revolving Credit Facility means the revolving credit facility
      provided for in Section 2.1 hereof.


<PAGE>  4


            Ship Only Invoice means any invoice issued by Borrower for
      Inventory sold by Borrower in its normal course of business to a
      customer that does not require Borrower to perform any preparation or
      installation and is due and payable immediately upon receipt of such
      Inventory by Borrower's customer and such invoice is identified to
      BACC as a Ship Only Invoice.

            Supporting Obligation shall have the same meaning ascribed to
      such term in the Code.

            Term means the period from the date of the execution and
      delivery by BACC of this Agreement through and including the later of
      (a) the Termination Date and (b) the payment and performance in full
      of the Obligations.

            Termination Date means (a) February 19, 2004 (the period through
      such date the "Initial Term"), unless such date is extended pursuant
      to Sections 3.1 or 9.1 hereof, and if so extended on one or more
      occasions the last date of the last such extension, or (b) if earlier
      terminated by BACC pursuant to section 9.1 hereof, the date of such
      termination.

            Wachovia means Wachovia Bank, National Association.

      1.2   Construction.  Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular and to the
singular include the plural.  The words hereof, herein, hereby, hereunder,
and similar terms in this Agreement refer to this Agreement as a whole and
not to any particular provision of this Agreement.  Section, subsection,
clause and exhibit references are to this Agreement unless otherwise
specified.  Words importing a particular gender mean and include every other
gender.

      1.3   Accounting Terms.  All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles (GAAP) as in effect from time to time.  When used
herein, the term financial statements shall include the notes and schedules
thereto.

      1.4   Exhibits.  All of the exhibits, addenda or riders attached to
this Agreement shall be deemed incorporated herein by reference.

      1.5   Code.  Any terms used in this Agreement which are defined in
the Code shall be construed and defined as set forth in the Code, unless
otherwise defined herein.

2.    ADVANCES AND TERMS OF PAYMENT

      2.1   Revolving Advances; Advance Limit.  Upon the request of
Borrower, made at any time from and after the date hereof until the
Termination Date, and so long as no Event of Default has occurred and is
continuing, BACC may, in its sole and absolute discretion, make Advances in
an amount up to (a) seventy five percent (75%) of the aggregate outstanding
amount of Eligible Accounts, plus (b) the lesser of (1) twenty five percent
(25%) of the aggregate value of the Eligible Inventory or (2) Two Hundred
Thousand Dollars ($200,000.00) (such lesser of (1) or (2) is hereinafter
referred to as the "Inventory Advance Rate" or (3) thirty percent (30%) of
the aggregate outstanding principal amount of Advances under this Section
2.1 including the Advance in question if made; provided, however, that in no
event shall the aggregate amount of the outstanding Advances under the
Revolving Credit Facility be greater than, at any time, the amount of One
Million Five Hundred Thousand Dollars ($1,500,000.00) (said dollar limit,
the Advance Limit).  BACC may create reserves against, or reduce its advance
percentages based upon Eligible Accounts and/or Eligible Inventory without
declaring an Event of Default if it determines, in its good faith
discretion, that such reserves or reduction are necessary, including,
without limitation, to protect its interest in the Collateral, and/or
diminution in the value of any Collateral, and/or to insure the prospect of
payment by Borrower of its Obligations to BACC are not impaired.  Borrower
acknowledges it has requested that BACC enter into an indemnification
agreement in favor of Wachovia and agrees that any sums paid by BACC to
Wachovia thereunder shall be deemed to be Advances under this Section 2.1.

      2.2   Overadvances.  All Advances shall be added to and be deemed
part of the Obligations when made.  If, at any time and for any reason, the
aggregate amount of the outstanding Advances under the Revolving


<PAGE>  5


Credit Facility exceeds the dollar or percentage limitations contained in
Section 2.1 (an Overadvance) then Borrower shall, upon demand by BACC,
immediately pay to BACC, in cash, the amount of such Overadvance.  Without
affecting Borrower's obligation to immediately repay to BACC the amount of
each Overadvance, Borrower shall pay BACC a fee (the Overadvance Fee) in an
amount to be agreed upon between BACC and Borrower, but not less than Five
Hundred Dollars ($500.00) per occurrence of an Overadvance, plus interest on
the Overadvance amount at the Default Rate set forth below.

      2.3   Authorization to Make Advances.  BACC is hereby authorized to
make the Advances based upon telephonic or other instructions received from
anyone purporting to be an Authorized Officer, or, at the good faith
discretion of BACC, if such Advances are necessary to satisfy any
Obligations.  All requests for Advances shall specify the date on which such
Advance is to be made (which day shall be a Business Day) and the amount of
such Advance.  Requests received after 12:00 p.m. Eastern time on any day
shall be deemed to have been made as of the opening of business on the
immediately following Business Day.  All Advances made under this Agreement
shall be conclusively presumed to have been made to, at the request of, and
for the benefit of Borrower when deposited to the credit of Borrower or
otherwise disbursed in accordance with the instructions of Borrower or in
accordance with the terms and conditions of this Agreement.  Unless
otherwise requested by Borrower, all Advances shall be made by a wire
transfer to the deposit account of Borrower designated on Schedule 2.3
annexed hereto, or such other account as Borrower shall notify BACC in
writing.  Borrower shall pay to BACC a funds transfer fee of Twenty Five
($25.00) Dollars for each Advance but if such Advance is made to Wachovia
such funds transfer fee shall be Twelve ($12.50) Dollars and Fifty Cents.
Said fees shall be payable on the first day of each month of the Term for
all Advances made during the preceding month.

      2.4   Interest.

      A.    Except where specified to the contrary in the Loan Documents
interest shall accrue on the Daily Balance of the Obligations at the per
annum rate of one and one half percentage points (1.5%) above the Prime
Rate, but not less than five and three quarters percent (5.75%).  The
Obligations shall, at the option of BACC, from and after the occurrence of
an Event of Default and provided that the Event of Default is not fully
cured within the periods specified in Section 8, and without constituting a
waiver of any such Event of Default, and if the Obligations are not paid in
full by the Termination Date, and without waiving the maturity of the
Obligations on the Termination Date, bear interest at the per annum rate of
five percentage points (5.0%) above the Prime Rate (the "Default Rate").
All interest payable under the Loan Documents shall be computed on the basis
of a three hundred sixty (360) day year for the actual number of days
elapsed on the Daily Balance.  Interest as provided for herein shall
continue to accrue until the Obligations are paid in full.

      B.    The interest rate payable by Borrower under the terms of this
Agreement shall be adjusted in accordance with any change in the Prime Rate
from time to time on the date of any such change.  All interest payable by
Borrower shall be due and payable on the first day of each calendar month
during the Term.  BACC may, at its option, add such interest and all BACC
Expenses to the Obligations, and such amount shall thereafter accrue
interest at the rate then applicable under this Agreement.  Notwithstanding
anything to the contrary contained in the Loan Documents, the minimum
interest payable by Borrower on the Advances shall be calculated on a
minimum daily average loan balance of Two Hundred Fifty Thousand Dollars
($250,000.00).

      C.    In no event shall interest on the Obligations exceed the
highest lawful rate in effect from time to time.  It is not the intention of
the parties hereto to make an agreement which violates any applicable state
or federal usury laws.  In no event shall Borrower pay or BACC accept or
charge any interest which, together with any other charges upon the
principal or any portion thereof, exceeds the maximum lawful rate of
interest allowable under any applicable state or federal usury laws.  Should
any provision of this Agreement or any existing or future Notes or Loan
Documents between the parties be construed to require the payment of
interest or any other fees or charges which could be construed as interest
which, together with any other charges upon the principal or any portion
thereof and any other fees or charges which could be construed as interest,
exceeds the maximum lawful rate of interest, then any such excess shall be
applied to the remaining principal balance of the Obligations, if any, and
the remainder refunded to Borrower.

      D.    Notwithstanding the foregoing, for purposes of this Agreement,
it is the intention of Borrower and BACC that "interest" shall mean, and be
limited to, any payment to BACC which compensates it for


<PAGE>  6


extending credit to Borrower, for making available to Borrower a revolving
credit facility during the term of this Agreement and for any default or
breach by Borrower of a condition upon which credit was extended.  Borrower
and BACC agree that, for the sole purpose of calculating the "interest" paid
by Borrower to BACC, it is the intention of Borrower and BACC that interest
shall mean and include, and be expressly limited to, any interest accrued on
the aggregate outstanding balance of the Obligations during the term hereof
pursuant to Sections 2.4(A) and 2.4(B); and any Overadvance Fee, Facility
Fee and late fees charged to Borrower during the term hereof.  Borrower and
BACC further agree that it is their intention that the following fees shall
not constitute "interest": any Servicing Fees, any Examination Fees, any
attorney fees incurred by BACC, any premiums or commissions attributable to
insurance guaranteeing repayment, finders' fees, credit report fees,
appraisal fees or fees for document preparation or notarization.  To the
extent, however, that New Jersey law excludes from the calculation of
"interest" any fees defined herein as interest, or includes as interest any
fees or other sums which are intended not to constitute interest New Jersey
law shall supersede and prevail and all such interest shall be subject to
paragraph 2.4(C) above.

      2.5   Collection of Accounts. BACC or a BACC designee may, at any
time after the occurrence of an Event of Default which is not fully cured
within the periods specified in Section 8, with or without notice to
Borrower, notify customers or account debtors or other obligors that the
Accounts or other Collateral have been assigned to BACC, and that BACC has a
security interest in them and collect the Accounts and other Collateral
directly, and add the collection costs and expenses to the Obligations, but,
unless and until BACC does so or gives Borrower other written instructions,
Borrower shall notify all account debtors and other obligors to remit
payments on Accounts and other Collateral to a lockbox to be designated by
BACC.  All such payments remitted to the lockbox shall be credited to a
deposit account of BACC and into which account remittances from account
debtors or obligors of other clients of BACC may be credited.  If
notwithstanding said notice Borrower obtains payment on any Account or other
Collateral, including, without limitation, collections under credit card
sales, Borrower shall receive all such payments on Accounts and other
Collateral and other proceeds, including cash, in trust for BACC and
immediately deliver said payments to BACC in their original form as received
from the account debtors or other obligor, together with any necessary
endorsements.

      2.6   Crediting Payments.  The receipt of any item of payment by
BACC shall, for the sole purpose of determining availability under the
revolving credit facility provided for herein, subject to final payment of
such item, be provisionally applied to reduce Obligations on the date of
receipt of such item by BACC, but the receipt of such an item of payment
shall for all other purposes in determining the Daily Balance, including
without limitation for the purpose of calculation of interest on the
Obligations and the calculation of the Servicing Fee, not be deemed to have
been paid to BACC until four (4) Business Days after the date of BACC's
actual receipt of such item of payment.  Notwithstanding anything to the
contrary contained herein, payments received by BACC after 11:00 a.m.
Eastern time shall be deemed to have been received by BACC as of the opening
of business on the immediately following Business Day.

      2.7   Facility Fee.  In consideration of BACC's entering into this
Agreement, Borrower shall pay BACC a facility fee (the Facility Fee) of one
percent (1.0%) of the Advance Limit which shall be paid simultaneous with
the execution hereof, and thereafter on each annual anniversary of the date
hereof a Facility Fee of  one percent (1.0%) of the Advance Limit plus the
then outstanding principal balance of any term loans and Advances other than
under the Revolving Credit Facility.

      2.8   Servicing Fee.  Borrower shall pay BACC a fee (the Servicing
Fee) in an amount equal to one quarter of one percent (0.25%) of the daily
average outstanding balance of the Advances during each month on or before
the first (1st) day of each calendar month in respect of BACC's services for
the preceding calendar month, during the Term, including each Renewal Term,
or so long as the Obligations are outstanding. Notwithstanding anything to
the contrary contained in the Loan Documents, the Servicing Fee shall be
based on a minimum daily average outstanding balance of Advances of Two
Hundred Fifty Thousand Dollars ($250,000.00).


<PAGE>  7


      2.9   Field Examination Fee.  Borrower shall pay BACC a fee (the
Field Examination Fee) in an amount equal to Seven Hundred  Dollars
($700.00) per day per examiner, plus out-of-pocket expenses for each
examination (the Examination) of Borrower's Books or the other Collateral
performed by BACC or its designee.  Notwithstanding the foregoing, provided
no Event of Default exists or Borrower has not made any requests for
Advances beyond the lending parameters set forth herein or other requests
outside of the ordinary course of business, Borrower shall not be obligated
in any year of the Term to pay more than Six Thousand Three Hundred Dollars
($6,300.00), plus out of pocket expenses, for such examination.

      2.10  Late Reporting Fee.  Borrower shall pay to BACC a fee in an
amount equal to Fifty Dollars ($50.00) per document per day for each
Business Day any report, financial statement or schedule required by this
Agreement to be delivered to BACC is past due and such report, financial
statement or schedule is not delivered within two (2) Business Days after
notice by BACC to Borrower (pursuant to paragraph 12 below or
electronically) of such late reporting, in which event such late reporting
fee shall accrue and be payable from the original due date of any such
report, financial statement or schedule.

      2.11  Monthly Statements.  For the convenience of Borrower, BACC
shall render monthly statements to Borrower of all Obligations (but BACC's
failure to render such monthly statements shall not affect the obligations
of Borrower hereunder), including statements of all principal, interest and
BACC Expenses, and Borrower shall have fully and irrevocably waived all
objections to such statements and the contents thereof unless, within thirty
(30) days after receipt, Borrower shall deliver to BACC, by registered,
certified, overnight mail or telecopier as set forth in Section 12 hereof,
written objection to such statement specifying the error or errors, if any,
contained therein.

3.    TERM

      3.1   Term and Renewal Date.  This Agreement shall become effective
upon execution by BACC and continue in full force through the Initial Term
and from year to year thereafter (a "Renewal Term") if BACC, at its option,
in writing agrees to extend the Term for one (1) year from the then
Termination Date, provided that Borrower has not exercised its termination
right in accordance with this Section 3.1.  Borrower may terminate the Term
on the then Termination Date by giving BACC at least thirty (30) days prior
written notice by registered or certified mail, return receipt requested.
In addition, BACC shall have the right to terminate this Agreement
immediately at any time upon the occurrence of an Event of Default.  No such
termination shall relieve or discharge Borrower of its duties, Obligations
and covenants hereunder until all Obligations have been paid and performed
in full, and BACC's continuing security interest in the Collateral shall
remain in effect until the Obligations have been fully and irrevocably paid
and satisfied in cash or cash equivalent.  On the Termination Date of this
Agreement, the Obligations shall be immediately due and payable in full.
Expressly in addition to all rights and remedies available to BACC, if the
term of this Agreement is not renewed and the Obligations are not paid in
full by the Termination Date, then Borrower shall also pay to BACC, as part
of the Obligations, a fee of the lesser of (i) two percent (2.0%) of the
Advance Limit or (ii) five (5%) percent of the amount of the Obligations as
of the Termination Date plus the then outstanding principal balance of any
term loans and Advances other than under the revolving credit facility
provided for in Section 2.1 hereof.

      3.2   Termination Fee.  If the Term is terminated by BACC upon the
occurrence of an Event of Default that is not cured within the periods set
forth in paragraph 8, or is terminated by Borrower except as provided in
Section 3.1, in view of the impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of BACC's lost profits as a result thereof, Borrower
shall pay BACC upon the effective date of such termination a fee in an
amount equal to:  (a) five percent (5.0%) of the Advance Limit plus the then
outstanding principal balance of any term loans or Advances other than under
the Revolving Credit Facility, if such termination occurs on or prior to
August 19, 2003 ; or (b) four percent (4%) of the Advance Limit plus the
then outstanding principal balance of any term loans or Advances other than
under the Revolving Credit Facility if such termination occurs after August
19, 2003 but before the first (1st) anniversary of the commencement date of
the Initial Term.  During any Renewal Term such Termination Fee shall be
four percent (4%) of the Advance Limited plus the then outstanding principal
balance of any term loans or Advances other than under the Revolving Credit
Facility.  Such fee shall be presumed to be the amount of damages sustained
by BACC as the result of an early termination and Borrower acknowledges that
it is reasonable under the circumstances currently existing.  The fee
provided for in this Section 3.2 shall be deemed included in the
Obligations.


<PAGE>  8


4.    CREATION OF CONTINUING SECURITY INTEREST

      4.1   Grant of Continuing Security Interest.  Borrower hereby
grants to BACC a continuing first priority lien and security interest in all
presently existing and hereafter acquired or arising Collateral in order to
secure prompt repayment of the Obligations and in order to secure prompt
performance by Borrower of each and all of its covenants and Obligations
under the Loan Documents and otherwise.  BACC's continuing security interest
in the Collateral shall attach to all Collateral without further act on the
part of BACC or Borrower.

      4.2   Negotiable Collateral.  In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower shall notify BACC and upon the request of BACC, immediately endorse
and assign such Negotiable Collateral to BACC and deliver physical
possession of such Negotiable Collateral to BACC.

      4.3   Delivery of Additional Documentation Required.  Borrower
shall execute and deliver to BACC concurrently with Borrower's execution and
delivery of this Agreement and at any time thereafter at the request of
BACC, all financing statements, continuation financing statements, fixture
filings, security agreements, chattel mortgages, pledges, assignments,
endorsements of certificates of title, applications for title, affidavits,
reports, notices, schedules of accounts, letters of authority, and all other
documents that BACC may in good faith request, in form satisfactory to BACC,
to perfect and maintain perfected BACC's continuing security interests in
the Collateral and in order to fully consummate all of the transactions
contemplated under the Loan Documents and Borrower hereby authorizes BACC to
file and/or record such financing statements and other documents as BACC
deems necessary to perfect and maintain BACC's continuing security interest
in the Collateral, and agrees any such financing statement may contain an
"all asset" or "all property" description of the Collateral, and Borrower
hereby ratifies any such financing statement or other document heretofore
filed by BACC.  The aforementioned security interest shall end immediately
upon termination of this Agreement and Borrower's full, complete and
irrevocable payment and satisfaction of the Obligations, whereupon BACC
shall make any and all filings that may be required to confirm the release
and elimination of its security interest, in form and substance provided by
BACC.

      4.4   Power of Attorney.  Borrower hereby irrevocably makes,
constitutes and appoints BACC (and any person designated by BACC) as
Borrower's true and lawful attorney-in-fact with power to sign the name of
Borrower on any of the above described documents or on any other similar
documents to be executed, recorded or filed in order to perfect or continue
perfected BACC's continuing security interest in the Collateral.  In
addition, Borrower hereby appoints BACC (and any person designated by BACC)
as Borrower's attorney-in-fact with power to:  (a) sign Borrower's name on
verifications of Accounts and other Collateral, and on notices to Account
debtors; (b) send requests for verification of Accounts and other
Collateral; (c) endorse Borrower's name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come
into BACC's possession; (d) from and after the occurrence of an Event of
Default and provided that such Event of Default is not cured within the
period specified in Section 8, notify the post office authorities to change
the address for delivery of Borrower's mail to an address designated by
BACC, to receive and open all mail addressed to Borrower, and to retain all
mail relating to the Collateral and forward all other mail to Borrower; (e)
from and after the occurrence of an Event of Default and provided that such
Event of Default is not cured within the period specified in Section 8,
make, settle and adjust all claims under Borrower's policies of insurance,
endorse the name of Borrower on any check, draft, instrument or other item
of payment for the proceeds of such policies of insurance and make all
determinations and decisions with respect to such policies of insurance.
The appointment of BACC as Borrower's attorney-in-fact and each and every
one of BACC's rights and powers, being coupled with an interest, is
irrevocable so long as any Accounts in which BACC has a continuing security
interest remain unpaid and until all of the Obligations have been fully
repaid and performed.

      4.5   Right To Inspect.  BACC shall have the right at any time or
times hereafter during Borrower's usual business hours, or during the usual
business hours of any third party having control over Borrower's Books, to
inspect Borrower's Books in order to verify the amount or condition of, or
any other matter relating to, the Collateral or Borrower's financial
condition.  BACC also shall have the right at any time or times hereafter
during Borrower's usual business hours to inspect, examine and appraise the
Inventory, the Equipment and other Collateral and to check and test the same
as to quality, quantity, value and condition.


<PAGE>  9


      4.6   Letter of Credit in Favor of BACC.   As additional security
for the Obligations, Borrower has obtained for the benefit of BACC an
irrevocable standby letter of credit (the Letter of Credit) in the face
amount of Three Hundred Thousand Dollars ($300,000.00) issued by a financial
institution acceptable to BACC in its sole and absolute discretion, which
Letter of Credit shall among other things (i) permit a draw by BACC ninety
(90) days after the occurrence of an Event of Default (but in any event
prior to the expiration date of such Letter of Credit) in an amount not to
exceed the lesser of (a) the total aggregate outstanding amount of the
Obligations or (b) Three Hundred Thousand Dollars ($300,000.00) and (ii)
permit an immediate draw thereunder by BACC, in the full amount available to
be drawn under such Letter of Credit (a "Termination Draw"), upon the
issuance of a notice of non-renewal (or similar notice) of such Letter of
Credit.  The Letter of Credit shall contain such other terms as BACC shall
require in its sole and good faith discretion.  In the event of a
Termination Draw, Borrower shall within three (3) weeks after such draw
replace the Letter of Credit with a substitute Letter of Credit in the
amount and upon all of the terms set forth in this paragraph 4.6 but issued
by a bank acceptable to BACC in its good faith discretion, whereupon, upon
receipt of such substitute Letter of Credit the Termination Draw will be
returned to Borrower.  If such substitute Letter of Credit is not provided
to BACC within such time, BACC shall apply the Termination Draw to reduce
the then outstanding balance of the Obligations.  Thereafter, so long as
this Agreement shall remain in full force and effect, there shall be an
additional reserve under the Advance Limit or under the advance percentages
set forth in paragraph 2.1, in the amount of $300,000.00.

5.    REPRESENTATIONS AND WARRANTIES

      Borrower represents and warrants to BACC the following and
      acknowledges:

      5.1   No Prior Encumbrances; Security Interests. Borrower has good
and marketable title to the Collateral, free and clear of liens, claims,
security interests or encumbrances, except for the security interests to be
satisfied from the proceeds of the first Advances hereunder, the continuing
security interests granted to BACC by Borrower, and those disclosed on
Schedule 5.1 annexed hereto.  Borrower will not create or permit to be
created any security interest, lien, pledge, mortgage or encumbrance on any
Collateral or any of its other assets.  Notwithstanding, if no Event of
Default hereunder shall have occurred, Borrower may grant purchase money
security interests ("PMSI's") in items of new Equipment purchased by
Borrower provided that the aggregate debt secured by such PMSI's outstanding
at any time shall not exceed $750,000.00.

      5.2   Bona Fide Accounts.  All Eligible Accounts represent bona
fide sales or leases of goods and/or services for which Borrower has an
unconditional right to payment and as to which the goods have been delivered
to the customer and/or the services rendered, as applicable.  None of the
Eligible Accounts are subject to any rights of offset, counterclaim,
cancellation or contractual rights of return other than Borrower's present
usual and customary product warranty or return policies.

      5.3   Merchantable Inventory.  All Eligible Inventory is now and at
all times hereafter shall be of good and merchantable quality, free from
defects.

      5.4   Location of Inventory and Equipment.  The Eligible Inventory
and Equipment is not now and shall not at any time or times hereafter be
stored with a bailee, warehouseman, processor, or similar party.  Borrower
shall keep the Inventory and Equipment only at its address set forth on the
first page hereof and at the locations described on Schedule 5.4.

      5.5   Inventory Records.  Borrower now keeps and hereafter at all
times shall keep correct and accurate records itemizing and describing the
kind, type, quality and quantity of the Inventory and Borrower's cost of
said items.

      5.6   Retail Accounts.  No Eligible Accounts arise from the sale of
goods or rendition of services for personal, family or household purposes.

      5.7   Relocation of Chief Executive Office.  The chief executive
office of Borrower and the location of all books and records of Borrower
relating to the Collateral is at the address indicated on the first page of
this Agreement and Borrower will not, without thirty (30) days prior written
notice to BACC and compliance with Section 4.3 hereof, relocate such office.


<PAGE>  10



      5.8   Due Incorporation and Qualification.  Borrower is, and shall
at all times hereafter, be a corporation duly organized and existing under
the laws of the state of its incorporation as set forth on the first page
hereof, and is qualified and licensed to do business and is in good standing
in any state in which the conduct of its business or its ownership of assets
requires that it be so qualified, including without limitation, the State of
Connecticut.

      5.9   Fictitious Name.  Borrower is conducting its business under
the following trade or fictitious name(s) and no others:  [none].  Borrower
has complied with the fictitious name laws of all jurisdictions in which
compliance is required in connection with its use of such name(s).

      5.10  Permits and Licenses.  Borrower holds all licenses, permits,
franchises, approvals and consents required for the conduct of its business
and the ownership and operation of its assets, including without limitation
all licenses, approvals, consents and the like of Licensor to market, sell,
lease and the like of all products of Licensor.

      5.11  Due Authorization.  Borrower has the right and power and is
duly authorized to enter into the Loan Documents to which it is a party,
including without limitation the authorization of its shareholders, if
necessary.

      5.12  Compliance with Articles; Bylaws.  The execution by Borrower
of the Loan Documents to which it is a party does not constitute a breach of
any provision contained in Borrower's Certificate or Articles of
Incorporation or its Bylaws, nor does it constitute an event of default
under any material agreement to which Borrower is now or may hereafter
become a party.

      5.13  Litigation.  Except as set forth on Schedule 5.13, there
are no actions, proceedings or claims pending by or against Borrower,
whether or not before any court or administrative agency and Borrower has no
knowledge or notice of any pending, threatened or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower, except for ongoing collection matters in which Borrower
is the plaintiff.  If any such actions, proceedings or claims presently
exist or arise during the Term, Borrower shall promptly notify BACC in
writing and shall, from time to time, notify BACC of all materials events
relating thereto.

      5.14  Accuracy of Information and No Material Adverse Change in
Financial Statements.  All information furnished by Borrower to BACC and all
statements made by Borrower to BACC, including, without limitation,
information set forth in a loan applications, is true, accurate and complete
in all material respects and does not contain any material misstatement of
fact or omit to state any facts necessary to make the statements or
information contained therein not misleading.  All financial statements
relating to Borrower which have been or may hereafter be delivered to BACC
(i) have been prepared in accordance with GAAP; (ii) fairly present
Borrower's financial condition as of the date thereof and Borrower's results
of operations for the period then ended; and (iii) disclose all material
contingent obligations of Borrower. In addition no material adverse change
in the financial condition of Borrower has occurred since the date of the
most recent of such financial statements.

      5.15  Solvency. Borrower is now, and shall be at all times through
the Term, solvent and able to pay its debts (including trade debts) as they
mature.

      5.16  ERISA.  Neither Borrower or any ERISA Affiliate, nor any
Plan is or has been in violation of any of the provisions of ERISA, any of
the qualification requirements of IRC Section 401(a), or any of the
published interpretations thereof.  No lien upon the assets of Borrower has
arisen with respect to any Plan.  No prohibited transaction within the
meaning of ERISA Section 406 or IRC Section 4975(c) has occurred with
respect to any Plan.  Neither Borrower nor any ERISA Affiliate has incurred
any withdrawal liability with respect to any Multiemployer Plan. Borrower
and each ERISA Affiliate have made all contributions required to be made by
them to any Plan or Multiemployer Plan when due.  There is no accumulated
funding deficiency in any Plan, whether or not waived.

      5.17  Environmental Laws and Hazardous Materials.  Borrower has
complied, and at all times through the Term will comply, with all
Environmental Laws.  Except in compliance with applicable


<PAGE>  11


Environmental Laws, Borrower has not and will not cause or permit any
Hazardous Materials to be located, incorporated, generated, stored,
manufactured, transported to or from, released, disposed of, or used at,
upon, under, or within any premises at which Borrower conducts its business,
or in connection with Borrower's business.  To the best of Borrower's
knowledge, no prior owner or operator of any premises at which Borrower
conducts its business has caused or permitted any of the above to occur at,
upon, under, or within any of the premises.  Borrower will not permit any
lien to be filed against the Collateral or any part thereof under any
Environmental Law, and will promptly notify BACC of any proceeding, inquiry
or claim relating to any alleged violation of any Environmental Law, or any
alleged loss, damage or injury resulting from any Hazardous Material.  BACC
shall have the right to join and participate in, as a party if it so elects,
any legal or administrative proceeding initiated with respect to any
Hazardous Material or in connection with any Environmental Law.  "Hazardous
Material" includes without limitation any substance, material, emission, or
waste which is or hereafter becomes regulated or classified as a hazardous
substance, hazardous material, toxic substance or solid waste under any
Environmental Law, asbestos, petroleum products, urea formaldehyde,
polychlorinated biphenyls (PCBs), radon, and any other hazardous or toxic
substance, material, emission or waste.  Environmental Law means the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, the Resource Conservation and Recovery Act of 1976, the Hazardous
Materials Transportation Act, the Toxic Substances Control Act, the Federal
Occupational Safety and Health Act, the Clean Air Act, the Clean Water Act,
the regulations pertaining to such statutes, and any other safety, health or
environmental statutes, laws, regulations or ordinances of the United States
or of any state, county or municipality in which Borrower conducts its
business or the Collateral is located.

      5.18  Tax Compliance.  Borrower has filed all tax returns required
to be filed by it and has paid all taxes due and payable on said returns and
on any assessment made against it or its assets.

      5.19  Reliance by BACC; Cumulative.  Each warranty, representation
and agreement contained in this Agreement shall be automatically deemed
repeated by Borrower with each request for an Advance and shall be
conclusively presumed to have been relied on by BACC regardless of any
investigation made or information possessed by BACC.  The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements
which Borrower shall now or hereafter give, or cause to be given, to BACC.

      5.20  Use of Proceeds.  The proceeds of the initial Advance will
be used by Borrower for the purposes set forth on Schedule 5.20 annexed
hereto.

6.    AFFIRMATIVE COVENANTS

      Borrower covenants and acknowledges that during the Term Borrower
shall comply with all of the following:

      6.1   Collateral and Other Reports.  At least weekly and
contemporaneously with each request for Advance, Borrower shall execute and
deliver to BACC a Borrowing Base Certificate in form and substance
acceptable to BACC together with copies of supporting materials and proof of
deliveries respecting any Account in excess of Ten Thousand Dollars
($10,000.00) and Borrower shall report to BACC all sales and Accounts
arising since its most recent report to BACC.  At least monthly no later
than the fifteenth (15th) day of each month during the Term, Borrower shall
execute and deliver to BACC a detailed aging of the Accounts, a
reconciliation statement and a summary aging, by vendor, of all accounts
payable of Borrower and any book overdraft.  Borrower shall deliver to BACC,
as BACC may from time to time require, collection reports, sales journals,
invoices, original delivery receipts, customers' purchase orders, shipping
instructions, bills of lading and other documentation respecting shipment
arrangements.  Absent such a request by BACC, copies of all such
documentation shall be held by Borrower as custodian for BACC.


<PAGE>  12


      6.2   Returns.  Returns and allowances, if any, as between Borrower
and any Account debtor, shall be permitted on the same basis and in
accordance with the usual customary practices of Borrower as they exist at
the date of the execution and delivery of this Agreement.  If at any time
prior to the occurrence of an Event of Default any Account debtor returns
any Inventory to Borrower, Borrower shall promptly determine the reason for
such return and, if Borrower accepts such return, issue a credit memorandum
(with a copy to be sent to BACC) in the appropriate amount to such Account
debtor.  Borrower shall promptly notify BACC of all returns and recoveries
and of all disputes and claims involving amounts equal to or greater than
Ten Thousand Dollars ($10,000.00).  Reports of all returns, recoveries,
disputes and claims less than Ten Thousand Dollars ($10,000.00) shall be
submitted weekly.

      6.3   Designation of Inventory.  Borrower shall contemporaneous
with the execution hereof and from time to time hereafter, but not less
frequently than the last Business Day of each week, execute and deliver to
BACC a designation of Inventory specifying the cost of Borrower's raw
materials, work in process and finished goods, and further specifying such
other information as BACC may reasonably request.

      6.4   Financial Statements, Reports, Certificates.  Borrower shall
deliver to BACC:  (a) as soon as available, but in any event within thirty
(30) days after the end of each month during the Term, a balance sheet and
profit and loss statement prepared by Borrower covering Borrower's
operations during such period; and (b) as soon as available, but in any
event within ninety (90) days after the end of each of Borrower's fiscal
years, financial statements of Borrower for each such fiscal period,
"Audited" on an unqualified basis by independent certified public
accountants acceptable to BACC.  Such financial statements shall include a
balance sheet and profit and loss statement, and the accountants' management
letter, if any, and shall be prepared in accordance with GAAP.  Together
with the above, Borrower shall also deliver Borrower's Form 10-Qs, 10-Ks or
8-Ks, if any, as soon as the same become available, and any other report
reasonably requested by BACC relating to the Collateral and the financial
condition of Borrower and a certificate signed by its chief financial
officer to the effect that all reports, statements or computer prepared
information of any kind or nature delivered or caused to be delivered to
BACC under this Section 6.4 fairly present its financial condition and that
there exists on the date of delivery of such certificate to BACC no
condition or event which constitutes an Event of Default.

      6.5   Tax Returns, Receipts.  Borrower shall deliver to BACC copies
of each of its future federal income tax returns, and any amendments
thereto, within thirty (30) days of the filing thereof.  Borrower further
shall promptly deliver to BACC, upon request, satisfactory evidence of
Borrower's payment of all withholding and other taxes required to be paid by
it.

      6.6   Intentionally Omitted.

      6.7   Title to Equipment.  Upon BACC's request, Borrower shall
immediately deliver to BACC, such evidences of ownership of, certificates of
title, or applications for title to any items of Equipment as Borrower may
have in its possession.

      6.8   Maintenance of Equipment.  Borrower shall keep and maintain
the Equipment in good operating condition and repair, normal wear and tear
excepted, to the extent the repair and maintenance of that Equipment is
necessary to the conduct of its business and shall make all necessary
replacements thereto.  Borrower shall not permit any item of Equipment to
become a fixture to real estate or an accession to other property, and the
Equipment is now and shall at all times remain Borrower's personal property.
Nothing in this Section 6.8 shall serve to preclude Borrower from disposing
of any item of Equipment in the ordinary course of its business provided all
proceeds thereof are paid to BACC to reduce the Obligations.

      6.9   Taxes.  All Federal, state and local assessments and taxes,
whether real, personal or otherwise, due or payable by, or imposed, levied
or assessed against Borrower or any of its assets or in connection with
Borrower's business shall hereafter be paid in full, before they become
delinquent or before the expiration of any extension period.  Borrower shall
make due and timely payment or deposit of all federal, state and local
taxes, assessments or contributions required of it by law, and will execute
and deliver to BACC, on demand, appropriate certificates attesting to the
payment or deposit thereof.

      6.10  Insurance.  Borrower, at its expense, shall keep and
maintain insurance to protect the


<PAGE>  13


Collateral against all risk of loss covered under a Special property form
(If any of the tangible Collateral is located in a flood zone, Borrower must
also have flood insurance.  Borrowers with Collateral in California must
also insure against the peril of earthquakes.)  The coverage shall be
written on a replacement cost basis.  The property limit(s) shall be no less
than those necessary to satisfy the coinsurance requirement contained in the
insurance policy.  The Borrower, at its expense, shall keep and maintain
Business Income Coverage.  The Business Income Coverage shall insure against
loss covered under a Special policy form and be in the amount of at least
$2,000,000.00. All policies insurance business personal property and
business income shall contain a Lender's Loss Payable endorsement in a form
satisfactory to BACC.  All policies insuring real property on which BACC has
a mortgage or other lien shall contain a Mortgagee endorsement in form
satisfactory to BACC.  Either, or both, form(s) shall contain a waiver of
warranties.  All proceeds payable under such policies shall be payable to
BACC and applied to the Obligations.  Borrower shall cause to be delivered
to BACC a properly executed Evidence of Property Insurance form along with a
copy of the Lender's Loss Payable and/or Mortgagee endorsement(s) as
applicable, in advance of the loan closing date and thereafter at least
thirty (30) days (or ten (10) days in the event of expiration for non-
payment or in the event of non-renewal) prior to the expiration date(s) of
the policy(ies).   All Mortgagee and Lender's Loss Payable endorsements
shall contain the following address for notification purposes, or such other
address as BACC may, from time to time, notify Borrower:

      Business Alliance Capital Corp.
      c/o Howe Insurance Group
      P.O. Box 48
      Princeton, New Jersey 08542

      Borrower, at its expense, shall keep and maintain Commercial General
Liability Coverage insuring against all risks relating to or arising from
Borrower's ownership and use of the Collateral and its other assets, its
products, and its operations.  BACC, its directors, officers and employees
shall be named as additional insureds for Commercial General Liability on
Borrower's policy.  Borrower shall cause to be delivered to BACC a properly
executed Certificate of Insurance, containing the required additional
insured wording, before the loan closing and thereafter at least thirty (30)
days (or ten (10) days in the event of expiration for non-payment or in the
event of non-renewal) prior the expiration date of the policy.  Along with
the Certificate of Insurance, Borrower shall also deliver a copy of the
General Liability endorsement whereby BACC, et. al., are added to the policy
as additional insureds.

      All required policies shall be in such form, with such companies and
in such amounts as may be satisfactory to BACC.  All policies shall contain
a 30 day notice for cancellation or non-renewal.  BACC reserves the right to
change insurance specifications at any time.

      6.11  BACC Expenses.  Borrower shall immediately and without
demand reimburse BACC for all BACC Expenses and Borrower hereby authorizes
the payment of such BACC Expenses.

      6.12  Compliance With Law. Borrower shall comply, in all material
respects, with the requirements of all applicable laws, rules, regulations
and orders of governmental authorities relating to Borrower and the conduct
of its business.

      6.13  Accounting System.  Borrower at all times hereafter shall
maintain a standard and modern system of accounting in accordance with GAAP
with ledger and account cards or computer tapes, disks, printouts and
records pertaining to the Collateral containing such information as may from
time to time be requested by BACC.

      6.14  Subsidiaries and Affiliates.  Attached hereto as Schedule
6.14 is a listing of all of Borrower's subsidiaries and affiliates.
Borrower hereby represents and warrants to, and covenants with BACC that
each such subsidiary and affiliate is not in any way conducting business and
is completely inactive.  Borrower further covenants and agrees that each
subsidiary and affiliate shall remain inactive unless such subsidiary or
affiliate complies with the requirements set forth below in this paragraph.
Borrower shall not create any new subsidiary or affiliate without the prior
written approval of BACC given in its sole good faith discretion.  Without
limiting such discretion such consent will only be given provided that such
newly activated subsidiary or affiliate or new subsidiary or affiliate shall
provide a full and unconditional guaranty of the Obligations and shall grant
to BACC a first priority security interest in all of its assets to secure
the Obligations.


<PAGE>  14


7.    NEGATIVE COVENANTS

      Borrower covenants and acknowledges that during the Term Borrower
shall not undertake any of the following without BACC's prior written
consent given or not given in its sole discretion:

      7.1   Extraordinary Transactions and Disposal of Assets.  Enter
into any transaction not in the ordinary and usual course of its business as
conducted on the date hereof, including but not limited to the sale, lease,
disposal, movement, relocation or transfer, whether by sale or otherwise, of
any its assets other than sales of Inventory in the ordinary and usual
course of its business as presently conducted; incur any indebtedness for
borrowed money, or other indebtedness outside the ordinary and usual course
of its business as conducted on the date hereof, except for renewals or
extensions of existing debts permitted by BACC; make any advance or loan to
any third party other than advances made on commissions to employees
("Commission Advances") or loans to employees, which loans shall not exceed
Twenty-Five Thousand Dollars ($25,000.00) in the aggregate outstanding at
any time (the "Permitted Loans") or grant a lien on any of its assets except
(a) in favor of BACC, (b) the continuing security interests, if any, set
forth on Schedule 5.1 or (c) the PMSI's permitted pursuant to Section 5.1.

      7.2   Change Name, etc.  Change its name, business structure,
jurisdiction of incorporation or formation as applicable, or identity, or
add any new fictitious name unless Borrower shall have provided BACC at
least thirty (30) days prior written notice.

      7.3   Merge, Acquire.  Merge, acquire, or consolidate with or into
any other business organization except that Borrower may merge into itself
any wholly owned subsidiary provided Borrower shall have provided thirty
(30) days prior written notice to BACC and Borrower is the surviving entity
and has not changed its name.

      7.4   Guaranty.  Guaranty or otherwise become in any way liable
with respect to the obligations of any third party, except by endorsement of
instruments or items of payment for deposit to the account of Borrower for
negotiation and delivery to BACC.

      7.5   Restructure.  Make any change in its financial structure or
business operations.

      7.6   Prepayments.  Prepay any existing indebtedness owing to any
third party other than trade payables.

      7.7   Change of Ownership.  If the voting control of Borrower shall
be acquired legally and/or beneficially in one or more transactions, by any
third party (including third parties consisting of related persons and/or
affiliated groups) other than George J. Taylor,  Jr. and/or Robert G.
LaVigne.

      7.8   Compensation.  Pay total compensation, including salaries,
withdrawals, fees, bonuses, commissions, drawing accounts, management fees
or other payments, whether direct or indirect, in money or otherwise, during
any fiscal year to its executives, officers, shareholders, affiliates, and
directors (or any relatives of the foregoing) as a group, in excess of that
approved from time to time by Borrower's board of directors provided that
BACC reserves the right to object to such increase in total compensation if
such increase results in an aggregate total compensation amount in excess of
one hundred ten percent (110%) of the highest total compensation paid in any
of the three (3) immediately prior fiscal years to such group.

      7.9   Loans and Advances.  Except for Commission Advances and
Permitted Loans, make any loans, advances or extensions of credit to any
officer, director, executive employee or shareholder of Borrower (or any
relative of any of the foregoing), or to any entity which is a subsidiary
of, related to, affiliated with or has common shareholders, officers or
directors with Borrower.

      7.10  Capital Expenditures.  Make any plant or fixed capital
expenditure, or any commitment therefor, or purchase or lease any real or
personal assets or replacement Equipment in excess of  the aggregate amount
of One Hundred and Fifty Thousand Dollars ($150,000) in  any fiscal year .

      7.11  Consignments of Inventory.  Consign any Inventory to any
third party or obtain any


<PAGE>  15


Inventory on a consignment basis from any third party, except upon good
faith consent of BACC as to such Inventory.

      7.12  Distributions.  Make any distribution or declare or pay any
dividends (in cash or in stock) on, or purchase, acquire, redeem or retire
any of its capital stock, of any class, whether now or hereafter
outstanding.

      7.13  Accounting Methods.  Modify or change its method of
accounting or enter into, modify or terminate any agreement presently
existing or at any time hereafter entered into with any third party for the
preparation or storage of Borrower's records of Accounts and financial
condition without said party agreeing to provide BACC with information
regarding the Collateral or Borrower's financial condition.  Borrower waives
the right to assert a confidential relationship, if any, it may have with
any such third party in connection with any information requested by BACC
hereunder, and agrees that BACC may contact any such party directly in order
to obtain such information.

8.    EVENTS OF DEFAULT

      The occurrence of any one or more of the following events shall
constitute an Event of Default by Borrower hereunder:

      8.1   Failure to Pay.  Borrower's failure to pay when due and
payable, or when declared due and payable, any portion of the Obligations
(whether principal, interest, taxes, BACC Expenses, or otherwise);

      8.2   Failure to Perform.  Borrower's failure to perform, keep or
observe any material term, provision, condition, representation, warranty,
covenant or agreement contained in this Agreement, in any of the Loan
Documents or in any other present or future agreement between Borrower and
BACC;

      8.3   Misrepresentation.  Any material misstatement or
misrepresentation now or hereafter exists in any warranty, representation,
statement, aging or report made to BACC by Borrower or any officer,
employee, agent or director thereof, or if any such warranty,
representation, statement, aging or report is withdrawn by such person;

      8.4   Material Adverse Change.  There is a material adverse change
in Borrower's business or financial condition;

      8.5   Material Impairment.  There is a material impairment of the
prospect of repayment of the Obligations or a material impairment of BACC's
continuing security interests in the Collateral;

      8.6   Levy or Attachment.  Any material portion of Borrower's
assets is attached, seized, subjected to a writ or distress warrant or is
levied upon, or comes into the possession of any judicial officer or
assignee;

      8.7   Insolvency by Borrower.  An Insolvency Proceeding is
commenced by Borrower;

      8.8   Insolvency Against Borrower.  An Insolvency Proceeding is
commenced against Borrower;

      8.9   Injunction Against Borrower.  Borrower is enjoined,
restrained or in any way prevented by court order from continuing to conduct
all or any material part of its business;

      8.10  Government Lien.  A notice of lien, levy or assessment in
excess of $25,000.00 is filed of record with respect to any of Borrower's
assets by the United States Government, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, or any taxes or debts owing at any time hereafter to
any one or more of such entities becomes a lien, whether choate or
otherwise, upon any of Borrower's assets and the same is not paid on the
payment date thereof and removed within thirty (30) days;

      8.11  Judgment.  A judgment in excess of $25,000.00 is entered
against Borrower that is


<PAGE>  16


not paid and discharged and/or stayed pending appeal within thirty (30) days
after such judgement is entered;

      8.12  Default to Third Party.  There is a default in any material
agreement to which Borrower is a party or by which binds Borrower or any of
their assets, including without limitation a default in any agreement
between Borrower and Licensor, including without limitation that certain
License Agreement dated October 1, 1998 by and between Borrower and Lucent
Technologies Inc., that certain Reseller Agreement dated May 31, 2002 by and
between Borrower and Avaya Inc. and any document, instrument or agreement
executed in connection therewith, in furtherance thereof or pursuant
thereto;

      8.13  Subordinated Debt Payments.  Borrower makes any payment on
account of indebtedness which has now or hereafter been subordinated to the
Obligations, except to the extent such payment is allowed under any
subordination agreement entered into with BACC;

      8.14  Letter of Credit.  If the Letter of Credit is (i) limited
in any way, (ii) terminated for any reason, (iii) not renewed or replaced
upon the same terms by an issuer satisfactory to BACC as more particularly
set forth in paragraph 4.6, or (iv) altered without the prior written
consent of BACC.

      8.15  Change in Management.  If George J. Taylor, Jr., ceases for
any reason to be a director of Borrower and/or Robert G. LaVigne ceases to
be actively engaged in the management of Borrower;

      8.16  ERISA Violation.  A prohibited transaction within the
meaning of ERISA Section 406 or IRC Section 1975(c) shall occur with respect
to a Plan which could have a material adverse effect on the financial
condition of Borrower; any lien upon the assets of Borrower in connection
with any Plan shall arise; Borrower or any ERISA Affiliate shall completely
or partially withdraw from a Multiemployer Plan and such withdrawal could,
in the opinion of BACC, have a material adverse effect on the financial
condition of Borrower.  Borrower or any of its ERISA Affiliates shall fail
to make full payment when due of all amounts which Borrower or any of its
ERISA Affiliates may be required to pay to any Plan or any Multiemployer
Plan as one or more contributions thereto; Borrower or any of its ERISA
Affiliates creates or permits the creation of any accumulated funding
deficiency, whether or not waived; the voluntary or involuntary termination
of any Plan which termination could, in the opinion of BACC, have a material
adverse effect on the financial condition of Borrower or Borrower shall fail
to notify BACC promptly and in any event within ten (l0) days of the
occurrence of an event which constitutes an Event of Default under this
clause or would constitute an Event of Default upon the exercise of BACC's
judgment; or

      8.17  Loss of License, etc.  If any material license, permit,
distributor, franchise or similar agreement, necessary for the continued
operation of Borrower's ordinary course of business is revoked, suspended or
terminated, including without limitation any material license, permit,
dealer agreement provided by Licensor to Borrower or any of its affiliates
or subsidiaries.

      8.18  SEC Actions.  If there shall be any investigation by the
United States Security and Exchange Commission ("SEC") alleging any form of
material violation of any securities law or if trading in Borrower's capital
stock shall be suspended by the SEC for any reason other than (i) force
majeure, (ii) delisting solely as a result of low trading prices or (iii)
other reason not directly related to the actions of the Borrower and not
restored within one (1) Business Day unless such suspension is at the
request of Borrower not related to such SEC action.

      8.19  Business Suspension.  If Borrower shall suspend or go out of
business.

      Notwithstanding anything contained in this Section 8 to the contrary,
BACC shall refrain from exercising its rights and remedies and an Event of
Default shall not be deemed to have occurred by reason of the occurrence of
any of the events set forth in Sections 8.6 or 8.8 hereof if, within ten
(10) days from the date thereof, the same is released, discharged,
dismissed, bonded against or satisfied; provided, however, BACC shall not be
obligated to make Advances to Borrower during such period.


<PAGE>  17


9.      BACC'S RIGHTS AND REMEDIES

      9.1   Rights and Remedies. From and after the occurrence of an
Event of Default and provided that the Event of Default is not cured within
the period specified in Section 8, upon the occurrence of an Event of
Default, BACC may, at its election, without notice of such election and
without demand, do any one or more of the following:

            (a)   Declare all Obligations, whether evidenced by the Loan
      Documents or otherwise, immediately due and payable in full:

            (b)   Cease advancing money or extending credit to or for the
      benefit of Borrower under the Loan Documents or under any other
      agreement between Borrower and BACC;

            (c)   Terminate this Agreement as to any future liability or
      obligation of BACC, but without affecting BACC's rights and security
      interest in the Collateral and without affecting the Obligations;

            (d)   Settle or adjust disputes and claims directly with
      Account debtors for amounts and upon terms which BACC considers
      advisable and, in such cases, BACC will credit the Obligations with
      the net amounts received by BACC in payment of such disputed Accounts,
      after deducting all BACC Expenses;

            (e)   Cause Borrower to hold all returned Inventory in trust
      for BACC, segregate all returned Inventory from all other property of
      Borrower or in Borrower's possession and conspicuously label said
      returned Inventory as the property of BACC;

            (f)   Without notice to or demand upon Borrower, make such
      payments and do such acts as BACC considers necessary or reasonable to
      protect its security interest in the Collateral.  Borrower shall
      assemble the Collateral if BACC so requires and deliver or make the
      Collateral available to BACC at a place designated by BACC.  Borrower
      authorizes BACC to enter any premises where the Collateral is located,
      to take and maintain possession of the Collateral, or any part of it,
      and to pay, purchase, contest or compromise any encumbrance, charge or
      lien which in BACC's determination appears to be prior or superior to
      its security interest and to pay all expenses incurred in connection
      therewith;

            (g)   Ship, reclaim, recover, store, finish, maintain,
      repair, prepare for sale, lease, license or other disposition,
      advertise for sale, lease, license or other disposition, and sell,
      lease, license or otherwise dispose (in the manner provided for herein
      or in the Code) the Collateral.  BACC is hereby granted a license or
      other right to use, without charge, Borrower's labels, patents,
      copyrights, rights of use of any name, trade secrets, trade names,
      trademarks, service marks, and advertising matter, or any asset of a
      similar nature, pertaining to the Collateral, in completing the
      production of, advertising for sale, lease, license or other
      disposition, and sale, lease, license or other disposition of the
      Collateral.  Borrower's rights under all licenses and all franchise
      agreements shall inure to BACC's benefit;

            (h)   Sell, lease, license or otherwise dispose of the
      Collateral at either a public or private proceeding, or both, by way
      of one or more contracts or transactions, for cash or on terms, in
      such manner and at such places (including Borrower's premises) as BACC
      determines is commercially reasonable.  It is not necessary that the
      Collateral be present at any such sale;

            (i)   BACC shall give notice of the disposition of the
      Collateral as follows:

                  (1)   To Borrower and each holder of a security
            interest in the Collateral who has filed with BACC a written
            request for notice, a notice in writing of the time and place of
            public sale or other disposition or, if the sale or other
            disposition is a private sale or some other disposition other
            than a public sale is to be made, then the time on or after
            which the private sale or other disposition is to be made;

                  (2)   The notice hereunder shall be personally
            delivered or mailed, postage prepaid, to Borrower as provided in
            Section 12 hereof, at least ten (10) calendar days before the
            date fixed for the sale or other disposition, or at least ten
            (10) calendar days before the date on or after which the private
            sale or other


<PAGE>  18


            disposition is to be made, unless the Collateral is perishable
            or threatens to decline speedily in value.  Notice to persons
            other than Borrower claiming an interest in the Collateral shall
            be sent to such addresses as they have furnished to BACC;

            (j)   BACC may credit bid and purchase at any public sale:

            (k)   Any deficiency that exists after disposition of the
      Collateral, as provided herein, shall be immediately paid by Borrower.
      Any excess will be remitted without interest by BACC to the party or
      parties legally entitled to such excess; and

            (l)   In addition to the foregoing, BACC shall have all
      rights and remedies provided by law (including those set forth in the
      Code) and any rights and remedies contained in any Loan Documents and
      all such rights and remedies shall be cumulative.

      9.2   No Waiver.  No delay on the part of BACC in exercising any
right, power or privilege under any Loan Document shall operate as a waiver,
nor shall any single or partial exercise of any right, power or privilege
under such Loan Documents or otherwise, preclude other or further exercise
of any such right, power or privilege.

10.   TAXES AND EXPENSES REGARDING THE COLLATERAL.

      If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums or otherwise) due to third persons or entities, or fails
to make any deposits or furnish any required proof of payment or deposit, or
fails to perform any of Borrower's other covenants under any of the Loan
Documents, then in its discretion and without prior notice to Borrower, BACC
may do any or all of the following:  (a) make any payment which Borrower has
failed to pay or any part thereof; (b) set up such reserves in Borrower's
loan account as BACC deems necessary to protect BACC from the exposure
created by such failure; (c) obtain and maintain insurance policies of the
type described in Section 6.10 hereof and take any action with respect to
such policies as BACC deems prudent; or (d) take any other action deemed
necessary to preserve and protect its interests and rights under the Loan
Documents.  Any payments made by BACC shall not constitute:  (a) an
agreement by BACC to make similar payments in the future or (b) a waiver by
BACC of any Event of Default.  BACC need not inquire as to, or contest the
validity of, any such expense, tax, security interest, encumbrance or lien
and the receipt of notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.

11.   WAIVERS

      11.1  Demand, Protest.  Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, and notice of nonpayment at maturity and acknowledges
that BACC may compromise, settle or release, without notice to Borrower, any
Collateral and/or guaranties at any time held by BACC.  Borrower hereby
consents to any extensions of time of payment or partial payment at, before
or after the Termination Date.

      11.2  No Marshaling.  Borrower, on its own behalf and on behalf of
its successors and assigns hereby expressly waives all rights, if any, to
require a marshaling of assets by BACC or to require that BACC first resort
to some portion(s) of the Collateral before foreclosing upon, selling or
otherwise realizing on any other portion thereof.

      11.3  BACC's Non-Liability for Inventory or Equipment or for
Protection of Rights.  So long as BACC complies with its obligations, if
any, under Section 9-207 of the Code, BACC shall not in any way or manner be
liable or responsible for:  (a) the safekeeping of the Inventory or
Equipment; (b) any loss or damage thereto occurring or arising in any manner
or fashion from any cause; (c) any diminution in the value thereof; or (d)
any act or default of any carrier, warehouseman, bailee, forwarding agency
or other person whomsoever.  All risk of loss, damage or destruction of the
Inventory or Equipment shall be borne by Borrower.  BACC shall have no
obligation to protect any rights of Borrower against any person obligated on
any Collateral

      11.4  Limitation of Damages.  In any action or other proceeding
under this Agreement,


<PAGE>  19


each party waives the right to seek any indirect, consequential or punitive
damages from the other.

12.   NOTICES

      Unless otherwise provided herein, all consents, waivers, notices or
demands by any party relating to the Loan Documents shall be in writing and
(except for financial statements and other informational documents which may
be sent by first-class mail, postage prepaid) shall be telecopied (followed
up by a mailing), personally delivered or sent by registered or certified
mail, postage prepaid, return receipt requested, or by receipted overnight
delivery service to Borrower or to BACC, as the case may be, at their
addresses set forth below

      If to Borrower:    Farmstead Telephone Group, Inc.
                         22 Prestige Park Circle
                         East Harford, Connecticut 06108
                         Attn:      Robert G. LaVigne, Executive Vice
                                    President and Chief Operating Officer
                         Fax #      (860) 610-6001

      If to BACC:        Business Alliance Capital Corp.
                         214 Carnegie Center, Suite 302
                         Princeton, New Jersey 08540
                         Attn:      General Counsel
                         Fax #      (609) 514-1137

      Any party may change the address at which it is to receive notices
hereunder by notice in writing in the foregoing manner given to the other.
All notices or demands sent in accordance with this Section 12 shall be
deemed received on the earlier of the date of actual receipt or five (5)
calendar days after the deposit thereof in the mail or on the date
telecommunicated if telecopied.

13.   DESTRUCTION OF BORROWER'S DOCUMENTS

      All documents, schedules, invoices, agings or other papers delivered
to BACC may be destroyed or otherwise disposed of by BACC four (4) months
after they are delivered to or received by BACC, unless Borrower requests,
in writing, the return of the said documents, schedules. invoices or other
papers and makes arrangements, at Borrower's expense, for their return.

14.   GENERAL PROVISIONS

      14.1  Effectiveness.  This Agreement shall be binding and deemed
effective when executed by Borrower and executed and delivered by BACC.

      14.2  Successors and Assigns.  This Agreement shall bind and inure
to the benefit of the respective successors and assigns of each of the
parties; provided, however, that Borrower may not assign this Agreement or
any rights hereunder and any prohibited assignment shall be absolutely void.
No consent to an assignment by BACC shall release Borrower from its
Obligations.  Without notice to or the consent of Borrower, BACC may assign
this Agreement and its rights and duties hereunder and BACC reserves the
right to sell, assign, transfer, negotiate or grant participations in all or
any part of, or any interest in BACC's rights and benefits hereunder.  In
connection therewith, BACC may disclose all documents and information which
BACC now or hereafter may have relating to Borrower or Borrower's business.
Borrower and BACC do not intend any of the benefits of the Loan Documents to
inure to any third party, and no third party shall be a third party
beneficiary hereof or thereof.

      14.3  Section Headings.  Headings and numbers have been set forth
herein for convenience only.

      14.4  Interpretation.  Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against BACC or Borrower,
whether under any rule of construction or otherwise.  On the


<PAGE>  20


contrary, this Agreement has been reviewed by each party and shall be
construed and interpreted according to the ordinary meaning of the words
used so as to fairly accomplish the purposes and intentions of the parties
hereto.

      14.5  Severability of Provisions.  Each provision of this
Agreement shall be severable from every other provision of this Agreement
for the purpose of determining the legal enforceability of such provision.

      14.6  Amendments in Writing.  This Agreement cannot be changed or
terminated orally.  This Agreement is the entire agreement between the
parties with respect to the matters contained herein.  This Agreement
supersedes all prior agreements, understandings and negotiations, if any,
all of which are merged into this Agreement.

      14.7  Counterparts.  This Agreement may be executed in any number
of counterparts each of which, when executed and delivered, shall be deemed
to be an original and all of which, when taken together, shall constitute
but one and the same Agreement.

      14.8  Indemnification.  Borrower hereby indemnifies, protects,
defends and saves harmless BACC and any member, officer, director, official,
agent, employee and attorney of BACC, and their respective heirs, successors
and assigns (collectively, the "Indemnified Parties"), from and against any
and all losses, damages, expenses or liabilities of any kind or nature and
from any suits, claims or demands, including reasonable counsel fees
incurred in investigating or defending such claim, suffered by any of them
and caused by, relating to, arising out of, resulting from, or in any way
connected with the Loan Documents and the transactions contemplated therein
or the Collateral (unless caused by the gross negligence or willful
misconduct of the Indemnified Parties) including, without limitation:  (a)
losses, damages, expenses or liabilities sustained by BACC in connection
with any environmental cleanup or other remedy required or mandated by any
Environmental Law; (b) any untrue statement of a material fact contained in
information submitted to BACC by Borrower or the omission of any material
fact necessary to be stated therein in order to make such statement not
misleading or incomplete; (c) the failure of Borrower to perform any
obligations required to be performed by Borrower under the Loan Documents;
and (d) the ownership, construction, occupancy, operations, use and
maintenance of any of Borrower's assets.  The provisions of this paragraph
14.8 shall survive termination of this Agreement and the other Loan
Documents.

      14.9. Joint and Several Obligations; Dealings with Multiple
Borrowers.  If more than one person or entity is named as Borrower
hereunder, all Obligations, representations, warranties, covenants and
indemnities set forth in the Loan Documents to which such person or entity
is a party shall be joint and several.  BACC shall have the right to deal
with any individual of any Borrower with regard to all matters concerning
the rights and obligations of BACC and Borrower hereunder and pursuant to
applicable law with regard to the transactions contemplated under the Loan
Documents.  All actions or inactions of the officers, managers, members
and/or agents of any Borrower with regard to the transactions contemplated
under the Loan Documents shall be deemed with full authority and binding
upon all Borrowers hereunder.  Each Borrower hereby appoints each other
Borrower as its true and lawful attorney-in-fact, with full right and power,
for purposes of exercising all rights of such person hereunder and under
applicable law with regard to the transactions contemplated under the Loan
Documents.  The foregoing is a material inducement to the agreement of BACC
to enter into this Agreement and to consummate the transactions contemplated
hereby.  The Borrowers represents they are operated as part of one
consolidated business entity and are directly dependent upon each other for
an in connection with their respective business activities financial
resources.  Each Borrower will receive a direct economic and financial
benefit from the Obligations incurred under this Agreement and the
incurrence of such Obligations is in the best interests of each Borrower.


<PAGE>  21


15.   CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

      THE VALIDITY OF THE LOAN DOCUMENTS, THEIR CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL
BE DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THE LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE COURTS LOCATED IN THE COUNTY OF MERCER, STATE OF NEW JERSEY, THE
FEDERAL COURTS WHOSE VENUE INCLUDES THE STATE OF NEW JERSEY, OR AT THE SOLE
OPTION OF BACC, IN ANY OTHER COURT IN WHICH BACC SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY.  BORROWER AND BACC EACH WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY
PROCEEDING UNDER THE LOAN DOCUMENTS OR RELATING TO THE DEALINGS OF BORROWER
AND BACC AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON
CONVENIENS" OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 15.

      BORROWER ACKNOWLEDGES THAT THIS AGREEMENT EVIDENCES A COMMERCIAL
TRANSACTION AND THAT IT COULD, UNDER CERTAIN CIRCUMSTANCES HAVE THE RIGHT
UNDER CHAPTER 903a, AS FROM TIME TO TIME AMENDED, OF THE CONNECTICUT GENERAL
STATUTES, SUBJECT TO CERTAIN LIMITATIONS, TO NOTICE OF AND HEARING ON THE
RIGHT OF BACC TO OBTAIN A PREJUDGMENT REMEDY, SUCH AS ATTACHMENT,
GARNISHMENT AND/OR REPLEVIN, UPON COMMENCING ANY LITIGATION AGAINST
BORROWER.  NOTWITHSTANDING, BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE,
JUDICIAL HEARING OR PRIOR COURT ORDER TO WHICH IT MIGHT OTHERWISE HAVE THE
RIGHT UNDER SAID CHAPTER 903a, AS FROM TIME TO TIME AMENDED, OR UNDER ANY
OTHER STATE OR FEDERAL STATUTE OR CONSTITUTION IN CONNECTION WITH THE
OBTAINING BY BACC OF ANY PREJUDGMENT REMEDY BY REASON OF THIS AGREEMENT, OR
BY REASON OF BORROWER'S OBLIGATIONS OR ANY RENEWALS OR EXTENSIONS OF THE
SAME.  BORROWER ALSO WAIVES ANY AND ALL OBJECTIONS WHICH IT MIGHT OTHERWISE
ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE OR USE BY BACC OF ANY RIGHT OF
SETOFF, REPOSSESSION OR SELF  HELP AS MAY PRESENTLY EXIST UNDER THE STATUTE
OR COMMON LAW.  The provisions of this paragraph shall be governed by,
construed and enforced in accordance with the laws of the State of
Connecticut.

      Borrower and BACC have executed and delivered this Agreement as of the
date first above written.

                                  FARMSTEAD TELEPHONE GROUP, INC.
                                  a Delaware corporation

                                  Signed by:       /s/ Robert G. LaVigne
                                  Print Name:      Robert G. LaVigne
                                  Title/Capacity:  Executive Vice President
                                                   and Chief Financial
                                                   Officer


                                  BUSINESS ALLIANCE CAPITAL CORP.
                                  a Delaware corporation

                                  Signed by:
                                  Print Name:
                                  Title/Capacity:


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