LOAN AGREEMENT
                  FIRST NATIONAL BANK OF NEW ENGLAND ("Lender")

                                       AND

                        Mace Security International, Inc.
                                160 Benmont Ave.
                              Bennington, VT 05201


Your request for First National Bank of New England ("LENDER") to extend to you
a loan in the amount of $800,000 with a United States Department of Agriculture
Rural Business Cooperative Service (RBS) (f/k/a Farmers Home Administration,
"USDA") 80.00% Guarantee has been approved subject to the following provisions:

1. Requirements:

      The Borrower shall pay a guaranty fee of 2% of the amount guaranteed
            prior to the disbursement of the loan.

      The Borrower shall execute all instruments and agreements as Lender may
            require in order to document the loan, including:

            1.    Promissory Note;

            2.    Commercial Loan Financial Condition Affidavits;

            3.    Guarantee Agreement;

            4.    Security Agreement(s);

            5.    UCC-1 financing statements;

            6.    And such other instruments and agreements as Lender or
                  Lender's counsel may require in connection herewith.


2. This Authorization is subject to:

      (a)   Receipt by Lender of evidence that there has been no unremedied
            adverse change since the date of the Application, or since any of
            the preceding disbursements, in the financial or any other condition
            of Borrower or Guarantors, which would warrant withholding or not
            making any such disbursement or any further disbursement.

      (b)   The representations made by Borrower and Guarantors in its loan
            application, the requirements or conditions set forth in Lender's
            application form, including the supporting documents thereto, the
            conditions set forth herein and any future conditions imposed by
            Lender (with prior USDA approval).
<PAGE>

3. Terms of Loan:

      (a)   Repayment term, interest rate(s) and maturity.

      NOTE PAYABLE: The undersigned will pay principal and interest by making
      payments in the initial amount of $10,572.06 on the first day of each
      month beginning on March 1, 1998. The undersigned will make these payments
      until they have paid in full all principal and interest and any other sums
      due hereunder. Notwithstanding the foregoing, the entire indebtedness
      evidenced by this Note, including, but not limited to, all outstanding
      principal and accrued and unpaid interest, shall be due and payable in
      full on the tenth (10) anniversary date of this Note.

      The undersigned's initial monthly payments shall be calculated in
      accordance with the full amortization of the loan evidenced by this Note
      by level monthly payments of principal and interest over a ten (10) year
      period at the interest rate applicable on the date hereof. On each
      Adjustment Date (as herein defined), the amount of the monthly payments
      will be adjusted so as to provide for the full amortization of the then
      outstanding principal at the interest rate established at each Adjustment
      Date in level monthly payments of principal and interest over the
      remaining term of the original ten (10) year amortization period.


      Interest Rate

      Interest shall accrue on the outstanding principal amount of this Note at
      a per annum rate of one and one half (1.50) percentage points above the
      Prime Rate on a floating basis. The initial interest rate hereunder is ten
      (10) percent. On April 1, 1998 and on the first day of each July, October,
      January, and April thereafter until all sums due hereunder are paid in
      full (each being referred to as an "Adjustment Date"), the interest rate
      on the unpaid principal balance hereunder shall be adjusted, without
      notice or demand, to a per annum rate of one and one half (1.50)
      percentage points above the Prime Rate in effect on the applicable
      Adjustment Date (or the following business day in the event that such
      Adjustment Date falls on a Saturday, Sunday, or a legal holiday), which
      such rate shall remain in effect until the succeeding Adjustment Date.
      Interest hereunder shall be computed on a daily basis and on the basis of
      a Three Hundred Sixty (360) day year and a thirty (30) day month. The
      undersigned further agrees to pay all taxes levied or assessed on this
      Note or the debt evidenced hereby against the holder of this Note, and
      further agrees to pay all costs, expenses and attorneys' fees incurred in
      any action to collect this Note or to defend, protect, preserve, or
      realize upon or foreclose any mortgage or security agreement securing this
      Note or to protect, defend, preserve, foreclose or sustain the lien of
      said mortgage or security agreement or in any litigation or controversy
      arising from or connected with said mortgage, security agreement, or this
      Note. As used herein, "Prime Rate" shall mean the lowest New York prime
      rate as set forth in the money rate section of the Wall Street Journal (or
      in any successor publication).

      All payments received by the Lender, at the option of the Lender, shall be
      applied first to any outstanding charges and expenses incurred by the
      Lender in connection with this Note or any documents executed in
      connection with this Note, then to any unpaid and accrued 
<PAGE>

      interest and finally to the outstanding principal due under the Note. The
      undersigned agrees that the interest shall accrue at the foregoing rate on
      unpaid balance before and after maturity, by acceleration or otherwise.

      The Borrower hereby grants to the Lender or Holder hereof a lien and right
      of set-off for all of the Borrower's liabilities to Lender or Holder upon
      and against all of the Borrower's deposits, credits and other property now
      or hereafter in the possession or control of Lender or Holder or in
      transit to it. The Lender or Holder may at any time, after an event of
      default, apply the same or any part thereof to any of the Borrower's
      liabilities to Lender or Holder, whether or not matured at the time of
      such application.

      Holder should give written notice to the undersigned of each increase or
      decrease in the interest (and change in installment amount, if applicable)
      within thirty days after the effective date of each rate adjustment;
      however, the fluctuation of the interest rate is not contingent on whether
      the notice is given.

      Borrower agrees to pay a late charge equal to 5% of the payment amount due
      if such payment is not received within ten days of the due date. Funds
      received from the borrower will be applied first to any outstanding
      charges and expenses incurred by the Lender in connection with this Note
      or any documents executed in connection with this Note, then to any unpaid
      and accrued interest and finally to the outstanding principal due under
      the Note.

      The Borrower agrees that, in addition to other events of default stated in
      the Note or related loan documents, each of the following shall constitute
      an "event of default" under the Note:

            1. Failure of Borrower or any Guarantor to pay or perform any of
            Borrower's or Guarantor's liabilities or obligations to Lender or
            any other interest bearing, secured obligation;

            2. If Borrower or any Guarantor of any obligation of Borrower to
            Lender or Holder shall be in default under any security agreement,
            mortgage or other agreement governing, securing or relating to this
            Loan.

      Use of Proceeds of Loan as follows (show specific uses for which loan is
      authorized):

            1. Approximately $100,000 for the purchase of equipment 

            2. Approximately $150,000 for leasehold improvements to the
               courtyard

            3. Approximately $300,000 for the manufacturing line configuration 

            4. Approximately $170,000 for the Vermont retail store 

            5. Approximately $80,000 for permanent working capital and closing
               costs


      Collateral:

            1.    Assignment of life insurance with acknowledgment of home
                  office on Jon E. Goodrich which shall be decreasing term or
                  existing permanent type 
<PAGE>

                  insurance for $800,000. The proceeds of the life insurance
                  shall be applied at the time of death to repay the outstanding
                  balance of $800,000. Original policy to be retained by Lender.

            2.    The unlimited guarantee of Jon E. Goodrich and the prompt and
                  punctual payment of the debt.

            3.    First security interest in all machinery and equipment,
                  including power driven machinery and equipment
                  (includemvexcludingincludemvexcluding titled motor vehicles),
                  furniture and fixtures, leasehold improvements, now owned, to
                  be acquired with loan proceeds or hereafter acquired together
                  with all replacements thereof, all attachments, accessories,
                  parts and tools belonging thereto or for use in connection
                  therewith and proceeds of the same. UCC SEARCH REQUIRED AFTER
                  RECORDING.

            4.    Third security interest in all inventory and accounts, now
                  owned, to be acquired with loan proceeds or hereafter acquired
                  together with all replacements thereof and proceeds of the
                  same, subject only to a first and second held by Lender for a
                  line of credit in the amount of $250,000 and a commercial term
                  loan in the amount of $1,000.000. UCC SEARCH REQUIRED AFTER
                  RECORDING.


4.    To further induce Lender to make and USDA to guarantee this Loan, Lender
      and USDA impose the following conditions:

      (a)   Execution of all documents required in Item 1 above.

      (b)   Reimbursable Expenses - Borrowers will, on demand, reimburse Lender
            for any and all expenses incurred, or which may be hereafter
            incurred, by Lender from time to time in connection with or by
            reason of Borrowers' application for and the making and
            administration of the Loan.

      (c)   Books, Records, and Reports - Borrowers and Guarantors will at all
            times keep proper books of account in a manner satisfactory to
            Lender and/or USDA. Borrowers and Guarantors hereby authorize Lender
            or USDA to make or cause to be made, at Borrowers or Guarantors'
            expense and in such manner and at such times as Lender or USDA may
            require, (a) inspections and audits of any books, records and papers
            in the custody or control of Borrowers or others, relating to
            Borrower or Guarantors' financial or business conditions, including
            the making of copies thereof and extracts therefrom, and (b)
            inspections and appraisals of any of Borrowers or Guarantors'
            assets.

            Mace Security International, Inc. shall provide an annual fiscal
            year end independent Certified Public Accountant (CPA) audited
            financial statement to the Lender and USDA for the twelve (12) month
            period ending December 31, 1997, and annually thereafter (no later
            than 4 months following the expiration of any such period), along
            with tax returns for the Borrower.
<PAGE>

            Borrowers and Guarantors shall annually provide the Lender and USDA
            with complete copies of their federal tax returns and personal
            financial statements on First National Bank of New England forms.

            Borrowers and Guarantors hereby authorize all Federal, State, and
            municipal authorities to furnish reports of examinations, records,
            and other information from reports, returns, files and records of
            such authorities upon request therefor by Lender or USDA.

      Distributions and Compensation - Borrowers and or Guarantors will not,
            without the prior written consent of Lender (a) if Borrowers and or
            Guarantors are corporations, declare or pay any commercially
            unreasonable dividends or make any commercially unreasonable
            distribution upon its capital stock, or purchase or retire any of
            its capital stock, or consolidate or merge with any other company,
            or give any preferential treatment, make any commercially
            unreasonable advance, directly or indirectly, by way of loan, gift,
            bonus, or otherwise, to any company directly or indirectly,
            controlling or affiliated with or controlled by Borrowers and or
            Guarantors, or any other company, or to any officer, director or
            employee of Borrowers and or Guarantors, or of any such company, (b)
            if Borrowers and or Guarantors is a partnership or individual make
            any distribution of assets of the business of Borrowers and or
            Guarantors, other than reasonable compensation for services, or give
            any preferential treatment, make any commercially unreasonable
            advance, directly or indirectly, by way of loan, gift, bonus, or
            otherwise, to any partner or any of its employees, or to any company
            directly or indirectly controlling or affiliated with or controlled
            by Borrowers and or Guarantors, or any other company.

      Other Provisions:

            1.    Borrowers and or Guarantors are prohibited from assuming
                  liabilities or obligations of others.

            2.    Borrower shall not sell the business without prior approval
                  from the Lender.

            3.    Borrowers and or Guarantors shall not in any way alter its
                  form of business organization without the prior written
                  consent of Lender.

            4.    Borrowers and or Guarantors will not sell, exchange, discard,
                  or otherwise transfer those fixed assets, including real
                  estate, pledged as collateral to the Lender without the prior
                  written consent of the Lender.


Prior to the first disbursement, Lender shall be in receipt of satisfactory
evidence that all applicable taxes have been paid, and all zoning regulations
and all licensing regulations have been complied with regard to the property
being mortgaged.
<PAGE>

Insurance Provisions

            1.    Borrowers shall provide and maintain hazard insurance on all
                  business personal property in such amounts and for such
                  coverage as shall be satisfactory in all respects to Lender.
                  Said insurance shall be maintained for the life of the loan.

                  Policy coverage on real property shall designate Lender as
                  loss payee under a standard or New York loss payee clause and
                  shall provide a minimum to ten (10) days written notice to
                  Lender of cancellation.

            2.    Prior to first disbursement, the lender must be in receipt of
                  evidence of the kind described below from an independent
                  authoritative source which is sufficient to indicate to the
                  lender that the property is not in a special flood hazard area
                  (SFHA). Property is defined as the asset(s) financed as a part
                  of the USDA financial assistance and/or other collateral
                  deemed necessary by the field office. If such evidence is not
                  provided to the lender, the borrower must obtain, and
                  maintain, a Standard Flood Insurance Policy (SFIP) or other
                  appropriate special flood hazard insurance in amounts and
                  coverages equal to the lesser of (1) the insurable value of
                  the property or (2) the maximum amount of coverage available.
                  Borrower can show that special flood hazard insurance has been
                  acquired by submitting a copy of the policy or providing
                  evidence of premium payment for the appropriate coverage to a
                  licensed insurance agent. Borrower will not be eligible for
                  either any future disaster assistance or USDA business loan
                  assistance if special flood hazard insurance is not maintained
                  as stipulated herein throughout the entire term of this loan.


Corporate Provisions

            1.    Corporate Requirements of Mace Security International, Inc.:

                  Prior to first disbursement on this loan, Mace Security
                  International, Inc. to provide Lender with:

                  (a)   Resolution of Board of Directors

                  (b)   Certificate of Good Standing from the Secretary of
                        State's Office.


Environmental Provisions


            1.    Borrower agrees to comply with all existing and future state
                  and federal regulations governing the handling, storage and
                  use of any and all hazardous, toxic, or otherwise regulated,
                  substances or materials; and further covenants that he will
                  permit no such materials or substances or by 
<PAGE>

                  products or wastes thereof, to be permanently stored at the
                  facility, and that borrower will operate the facility in such
                  a manner that the site will remain free of contaminating
                  materials, wastes, by products or substances.

            2.    Borrower agrees to comply with all existing and future state
                  and federal regulations governing the maintenance and
                  emplacement of underground storage tanks and further covenants
                  that borrower will permit no petroleum base waste or hazardous
                  waste to be stored at the site, and that he will operate the
                  business in such a manner that the site will remain free of
                  such contamination waste.

Miscellaneous Provisions.

            1.    Annual non-financed capital expenditures of Mace Security
                  International, Inc. in aggregate shall be limited to $100,000.

            2.    Borrowers will not, prior to payment in full of the
                  indebtedness evidenced by the Note, without prior written
                  consent of the holder of the Note, pledge, mortgage or
                  otherwise cause or permit to be encumbered in any manner
                  whatsoever any of the Borrowers' property or assets, whether
                  then owned or thereafter acquired, except for prior security
                  interests granted to the lender. However, the holder of the
                  note will permit chattel mortgages on purchased equipment not
                  to exceed $100,000 annually.

            3.    Tangible consolidated net worth of Mace Security
                  International, Inc. shall be at least 10% of tangible assets
                  upon closing of the $800,000 loan and shall be evidenced by a
                  management-prepared pro-forma balance sheet and signed and
                  dated by an appropriate corporate officer to certify its
                  accuracy.

            4.    Mace Security International, Inc.'s current ratio, as defined
                  under generally accepted accounting principles (but excluding
                  from current debt any subordinated debt) shall be at least
                  2.0x, measured annually based on the company's 12/31 fiscal
                  year end CPA-audited financial statements.

            5.    Mace Security International, Inc.'s debt to net worth ratio,
                  as defined under generally accepted accounting principles
                  shall not exceed .35x as measured annually based on the
                  company's 12/31 fiscal year end CPA- audited financial
                  statements.

            6.    Without the prior consent of Lender or USDA, total annual
                  salaries or drawing by Jon E. Goodrich, including bonuses,
                  commissions or other compensation, shall be limited to a base
                  salary of $125,000 per year, with unlimited annual increases,
                  provided only if Mace Security International, Inc. reports a
                  net profit in excess of $100,000 and the Borrower and
                  Guarantor are in compliance with all covenants and the loan
                  agreement. Further, total annual salaries or drawing by
                  Timothy Smith, Kenneth Blakely, Bernard Graney, and Mark
                  Capone, including bonuses, commissions or other compensation,
                  shall be limited to their current base 
<PAGE>

                  salaries of $43,000, $60,000, $63,000, and $90,000 per year
                  respectively. Further, annual subsequent increases in
                  salaries, bonuses, commissions and other compensation paid to
                  Timothy Smith, Kenneth Blakely, and Bernard Graney shall not
                  be permitted if it would result in a net loss for the company
                  for the fiscal year ending December 31st, as defined under
                  generally accepted accounting principals unless the amount of
                  such payment(s) causing a net loss for the Borrower is lent
                  back to the company (after payment of personal taxes) on a
                  fully subordinated basis. Further, annual subsequent increases
                  in salaries, bonuses, commissions and other compensation paid
                  to Timothy Smith, Kenneth Blakely, and Bernard Graney shall
                  not be permitted unless the Borrower and guarantor are in
                  compliance with the loan agreement and loan covenants. A
                  standstill agreement shall be executed in this regard.

            7.    All debt due officers, related parties, and guarantors shall
                  be fully subordinated to FNB and remain at standstill until
                  all debt due to FNB is paid in full.

            8.    Opinion Letter of Borrower's Counsel.

            9.    Mace Security International, Inc.'s debt service coverage
                  ratio, as defined as earnings before interest and taxes plus
                  depreciation, amortization, less taxes and non-financed
                  capital expenditures, and dividends, divided by total annual
                  debt service should be at a minimum 1.25x, and shall be
                  tested, beginning December 31, 1998, on an annual basis based
                  on the Company's FYE. Should the $250M line of credit with FNB
                  not be drawn, the interest payments will not be included in
                  debt service.

      Parties Affected - This Agreement shall be binding upon Borrower and
      Borrower's successors and assigns and guarantors and their successors and
      assigns. No provision stated herein shall be waived without the prior
      written consent of USDA. The Loan shall be administered as provided in the
      USDA Lenders Agreement. The terms and conditions of this Loan Agreement
      shall survive the loan closing and shall not be merged into the loan
      documentation notwithstanding any provisions to the contrary contained
      herein. In the event any provision(s) of this Loan Agreement conflicts
      with any provision(s) of the loan documentation, including the Security
      Agreement by and between Borrower and Lender dated September 25, 1997, as
      amended, the provision(s) of this Loan Agreement shall control.


FIRST NATIONAL BANK OF NEW ENGLAND

--------------------------------------------------------------------------
By: Michael T. Mancuso, V.P.                                     Date


Borrower and guarantors hereby agree to the conditions imposed herein and
further agrees that the terms and conditions herein are for the benefit of, and
may be enforced by, Lender and 
<PAGE>

USDA. This Authorization and Loan Agreement and amendments constitute the Loan
Agreement between Lender and Borrower.

--------------------------------------------------------------------------
Borrower: Mace Security International, Inc.                      Date
          duly authorized representative


--------------------------------------------------------------------------
Guarantor:  Jon E. Goodrich                                      Date
<PAGE>

                          FIRST AMENDMENT TO TERM NOTE

      This First Amendment to the Commercial Term Promissory Note described
below is made as of the ___ day of February, 1998 by and between MACE SECURITY
INTERNATIONAL INC., whose principal place of business is located at 160 Benmont
Avenue, Bennington, Vermont 05201 (the "Borrower"), and FIRST NATIONAL BANK OF
NEW ENGLAND, a banking corporation with a usual place of business at One
Commercial Plaza, Hartford, Connecticut (the "Lender").

      Reference is made to a certain Commercial Term Promissory Note given by
Borrower to Lender in the original principal amount of $800,000.00, dated
September 25, 1997 (the "Note"). The U.S. Department of Agriculture Rural
Business Cooperative Service ("RBS") is prepared to issue a guaranty to Lender
for a portion of the loan evidenced by the Note, and the Borrower and the Lender
desire to amend the terms of the Note in certain respects, as hereinafter
described. In furtherance of the foregoing and for mutual consideration received
and acknowledged, the parties hereto agree as follows:

      1. Definition of Terms. All other terms not otherwise defined herein shall
have the same meanings as set forth in the Note.

      2. Amendment to Interest Adjustment Date. The second subparagraph of
Paragraph 1 entitled Interest is hereby deleted in its entirety and the
following language is inserted in its place:

      "The interest rate may be adjusted on the first day of April, 1998, and on
the first day of each July, October, January and April thereafter (or the
following business day in the event that such date falls on a Saturday, Sunday,
or holiday) until all sums due hereunder are paid in full without notice or
demand (each such day being referred to as an "Adjustment Date"), which rate
shall remain in effect until the succeeding Adjustment Date.

      Holder should give written notice to the undersigned of each increase or
decrease in the interest within thirty days after the effective date of each
rate adjustment; however, the fluctuation of the interest rate is not contingent
on whether such notice is given."

      3. Reference to Loan Agreement. Subparagraph (d) of Paragraph 7 entitled
Events of Default is hereby amended by inserting the following language after
"Note," in the third line thereof: "including but not limited to a certain Loan
Agreement by and among Lender, Borrower, and Jon E. Goodrich as Guarantor, dated
February __, 1998."

      4. Other Terms and Conditions Unchanged. The Borrower and the Lender agree
that all other terms and conditions of the Note shall remain unchanged and in
full force and effect and all other terms and conditions are hereby ratified and
confirmed.

      Executed as a sealed instrument as of the date first written above.

WITNESS:                                MACE SECURITY INTERNATIONAL, INC.


                                        By
----------------------------------        --------------------------------

                                              its duly authorized:


                                   Page 1 of 2
<PAGE>

WITNESS:                                FIRST NATIONAL BANK OF NEW ENGLAND

                                        By:
----------------------------------        --------------------------------

                                              Its


                                  Page 2 of 2
<PAGE>

                      FIRST AMENDMENT TO SECURITY AGREEMENT

      This First Amendment to the Security Agreement described below is made
this ______ day of February, 1998 by and between MACE SECURITY INTERNATIONAL,
INC., whose principal place of business is located at 160 Benmont Avenue,
Bennington, Vermont 05201 (the "Debtor"), and FIRST NATIONAL BANK OF NEW
ENGLAND, a corporation organized and existing under and by virtue of the laws of
the United States of America, with its office at One Commercial Plaza, Hartford,
Connecticut (the "Secured Party").

      The Debtor and the Secured Party are parties to a Security Agreement
September 25, 1997, pursuant to which the Debtor grants to the Secured Party a
security interest in certain Collateral as defined and more particularly
described therein (the "Security Agreement"). The U.S. Department of Agriculture
Rural Business Cooperative Service ("RBS") is prepared to issue a guaranty to
Lender for a portion of the obligations secured by the Security Agreement, and
the Debtor and the Secured Party desire to amend the terms of the Security
Agreement in certain respects, as hereinafter described. In furtherance of the
foregoing and for mutual consideration received and acknowledged, the parties
hereto agree as follows:

      1. Definition of Terms. All terms not otherwise defined herein shall have
the same meanings as set forth in the Security Agreement.

      2. Financing Agreements. Section III(F) of the Security Agreement, which
defines "Financing Agreements", is hereby amended by deleting the semi-colon (;)
at the end thereof and inserting the following language: ", as amended by a
certain First Amendment to Term Note by and between Debtor and Secured party
dated February _____, 1998, and that certain Loan Agreement by and among Lender,
Borrower, and Jon E. Goodrich as Guarantor, dated February _____, 1998 (the
"Loan Agreement")."

      3. Schedule 6(f). Schedule 6(f) of the Security Agreement is hereby
deleted in its entirety, and replaced with the Schedule 6(f) attached hereto and
made a part hereof.

      4. Schedule 6(f)(1). Schedule 6(f)(1) of the Security Agreement is hereby
deleted in its entirety.

      5. Confirmation of Continued Validity and Priority of Lien. The Debtor and
the Secured Party agree that the lien and priority of the security interest
granted pursuant to the Security Agreement in and to the Collateral shall not be
affected by this First Amendment.

      6. Other Terms and Conditions Unchanged. The Debtor and the Secured Party
agree that all other terms and conditions of the Security Agreement shall remain
unchanged and in full force and in effect and all such other terms and
conditions are hereby ratified and confirmed.

      Executed as a sealed instrument as of the date first written above.


                                       MACE SECURITY INTERNATIONAL, INC.
                                       (Debtor)


                                       By:
                                          ------------------------------
                                            Its duly authorized:
<PAGE>

                                       FIRST NATIONAL BANK OF NEW
                                       ENGLAND


                                       By:
------------------------------            ------------------------------
Witness
                                            its


                                      -2-
<PAGE>

                                  Schedule 6(f)

                       Financial Covenants / Requirements


See the Loan Agreement and the other Financing Agreements.


                                      -3-