Document:

EMPLOYMENT AGREEMENT

         AGREEMENT,  dated January 14, 2000,  between Staten Island Savings Bank
(the "Bank"),  a federally  chartered savings bank and a wholly owned subsidiary
of Staten Island Bancorp, Inc. ("Bancorp"), and Ira Hoberman (the "Employee").

         WHEREAS,  the Bank desires to obtain the services of the Employee,  and
the  Employee  desires to provide  such  services to the Bank,  on the terms set
forth in this Agreement;

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
obligations  hereinafter set forth, the parties hereto,  intending to be legally
bound, hereby agree as follows:

1.       Employment and Duties.
         ----------------------

                           (a)    The Bank hereby employs the Employee, and
the  Employee  accepts  employment,  to serve as an officer of the Bank,  and to
perform  such duties as may  reasonably  be assigned to him from time to time by
the Bank's Board of Directors.  Initially, and for a period of not less than one
year from the date hereof, the Employee shall serve as President of First State,
which is a  division  of the  Bank.  Subsequent  to such  one-year  period,  the
Employee  shall  continue  to serve as  President  of the First  State  Division
pursuant to the terms hereof for the  remainder of the Term,  as defined  below;
provided,  however,  that in the event that First State  ceases to be a separate
division of the Bank  subsequent to the one-year  anniversary  hereof,  then the
Employee,  if deemed  appropriate  by the Board of Directors of the Bank,  shall
serve as President of the Bank's Howell, New Jersey division.  In the event that
during the Term hereof the  Employee is not serving as either the  President  of
the First State  Division or the President of the Howell,  New Jersey  division,
the parties shall use their  reasonable  best efforts to mutually agree upon the
Executive's  corporate  title.  The  Employee  shall be  based at First  State's
offices in Howell,  New Jersey,  or such other  place as may be mutually  agreed
upon by the Bank and the Employee.

(b) The  Employee  hereby  agrees  to  perform  such  duties,  to  fulfill  such
responsibilities and to serve the Bank faithfully, industriously and to the best
of his ability, and to devote his best efforts and substantially all of his full
working time and attention to performing his duties under this Agreement.

2.       Term.
         -----
                           This Agreement shall be effective as of January 14,
2000  and,  subject  to the  provisions  of  Section 4  hereof,  the  Employee's
employment  hereunder  shall  continue  until January 14, 2003 (such  three-year
period is hereinafter referred to as the "Term").

<PAGE>

3.       Compensation: Expenses: Benefits
         --------------------------------

                           (a)    As compensation for his services hereunder
in  whatever  capacity  rendered  the  Bank  shall  pay the  employee  a  salary
("Salary"),  payable monthly in advance or in more frequent  installments and at
such times during the month as is customary  with respect to senior  officers of
the Bank, at an annual rate of $350,000.  In addition, as of the date hereof, as
a further inducement to the Employee to enter into this Agreement,  the Bank has
paid  Employee  a  signing  bonus  of  $175,000  (receipt  of  which  is  hereby
acknowledged  by the  Employee).  Such  Salary  shall  continue  to be paid  and
provided,  regardless of any illness or  incapacity of the Employee,  until this
Agreement is terminated.  In addition to his base Salary,  the Employee shall be
entitled to receive such bonuses as may be  determined  from time to time by the
Bank's Board of Directors.

                           (b)    The Employee shall be entitled to
participate in all employee benefit plans generally available from time to time,
to the senior officers of the Bank (subject to the applicable provisions of such
plans)  including,  but not limited to,  Bancorp's  1998 Stock Option  Plan,  as
amended and restated  ("SOP"),  and its 1998  Recognition and Retention Plan, as
amended and restated  ("RRP"),  so long as such benefits  comply with applicable
law (including without limitation the Internal Revenue Code and ERISA).  Service
to First  State  Bancorp  ("FSB")  or First  State Bank  ("First  State") by the
Employee  prior to the date hereof shall be  recognized as service to Bancorp or
the Bank for  purposes  of  eligibility  to  participate  under  the sick  leave
policies,  paid vacation  policies,  and medical,  long term disability and life
insurance plans of Bancorp and the Bank.  However,  notwithstanding  anything to
the contrary herein,  for purposes of determining  eligibility to participate in
and the vesting of benefits  under  Bancorp's  Employee  Stock  Ownership  Plan,
401(k) Plan and defined  benefit  plan,  Bancorp  shall not  recognize  years of
service  with FSB and First  State and the  Employee  will be  treated as a "new
employee" of Bancorp and the Bank for purposes of  determining  eligibility  and
vesting under such plans.  Employee acknowledges that, as of the date hereof, he
has received  options to acquire  25,000 shares of Bancorp common stock pursuant
to the SOP (which shares have been registered  under the Securities Act of 1933,
as amended ("1933 Act"), pursuant to an effective registration statement on Form
S-8) and plan share awards for 25,000 shares of Bancorp common stock pursuant to
the RRP  (which  shares  will not be deemed to be  "restricted  securities,"  as
defined in Rule 144 of the rules and regulations under the 1933 Act).

                           (c)    The Employee shall be entitled to advances
or reimbursement  for his ordinary and necessary  business  expenses incurred in
the performance of his duties hereunder provided that his claims therefore shall
be supported by the  documentation  required by the Bank in accordance  with its
usual  practice.  In  addition,  the  Employee  shall be  entitled to receive an
automobile  allowance  of $750 per month plus the use of a Bank  credit card for
the purchase of gasoline in accordance with the Bank's normal practice.

                           (d)   The Employee shall be entitled to four weeks
of paid vacation per year.

<PAGE>

4.       Termination of Employment.
         --------------------------

                           If any of the following events occur before the
expiration of the Term, Employee's employment with the Bank shall terminate upon
the occurrence of such event:

                           (a)    Employee's death, or any illness, disability
or other incapacity that renders Employee physically unable regularly to perform
his duties  hereunder for a period in excess of ninety (90)  consecutive days or
more than one hundred  eighty  (180) days in any  consecutive  twelve (12) month
period.

                           (b)    Thirty (30) days after the Bank gives
written notice to Employee of his termination if said termination is without
cause.

                           (c)    At any time, by written notice from the Bank
to Employee, if said termination is for cause. For purposes of this Section 4(C)
and Section 4(b),  "cause" is defined as (i) the material  breach by Employee of
any  provision of this  Agreement  (which is not cured  within  thirty (30) days
after written notice to the Employee thereof),  (ii) Employee's  conviction of a
crime  constituting a felony or involving  moral  turpitude,  or (iii) an act by
Employee  of  material   dishonesty  or  fraud  in  connection  with  Employee's
performance of his duties to the Bank.

5.       Severance.
         ----------

                           (a)    In the event Employee's employment is
terminated pursuant to Section 4(c) above, Employee shall not be entitled to any
Salary  or other  severance  benefits  from the Bank  other  than  those  rights
accorded him by law.

                           (b)    In the event Employee's employment is
terminated  pursuant to Sections 4(a) or 4(b) above,  Employee (or his estate or
guardian)  shall be  entitled  to the  continued  receipt  of his Salary for the
remainder of the Term paid as and when otherwise due. The Employee shall also be
entitled to continued coverage under the Bank's group hospitalization and health
insurance  programs  for the  periods  specified  in COBRA  upon  payment by the
Employee of the requisite amounts thereunder.

                           (c)    In the event Employee's employment is
terminated  prior to January 14,  2005,  the Bank shall ensure that the Employee
continues  to become  fully  vested in the stock  options  and  Recognition  and
Retention Plan share awards granted as of the date hereof.

6.       Noncompetition.
         ---------------

                           (a)    At any time during the period of his
employment  hereunder and for an additional  period of two (2) years  thereafter
(such additional two-year period is hereinafter  referred to as the "Non-Compete
Period"), the Employee will not reveal, divulge or make known to any individual,
partnership, joint venture, corporation or other business entity (other than the
Bank or its  affiliates)  or use for the  Employee's  own account  any  customer
lists, trade secrets,

<PAGE>

formulae or any secret or any  confidential  information of any kind ("Protected
Information") used by the Bank or any of its commonly  controlled  affiliates in
the conduct of the Bank's  business  and made known to the Employee by reason of
the Employee's employment with the Bank or any of its affiliates (whether or not
with the  knowledge  or  permission  of the Bank and  whether or not  developed,
devised,  or  otherwise  created  in  whole  or in  part by the  efforts  of the
Employee);  provided,  that Protected  Information shall not include information
that shall  become  known to the public or the trade  without  violation of this
Section 6(a);  and provided,  further,  that the Employee shall not violate this
Section  6(a) if  Protected  Information  is  disclosed  by the  Employee at the
direction  of the Bank in  connection  with the  performance  of the  Employee's
duties or if the Employee is required to provide  Protected  Information  in any
legal proceeding or by order of any court.

                           (b)    During the period of his employment with the
Bank  hereunder  and during  the  Non-Compete  Period,  the  Employee  will not,
directly or indirectly, engage in the business of, or own or control an interest
in (except as a passive investor owning less than two percent (2%) of the equity
securities of a publicly owned company), or act as director, officer or employee
of, or consultant to, any individual, partnership, joint venture, corporation or
other business entity known to the Employee to be directly or indirectly engaged
in banking in any location  within a 10 mile radius of any branch  office of the
Bank located in New Jersey.  The time period during which the  restrictions  set
forth in this  paragraph  apply  shall be  extended by the length of time during
which the Employee violates these restrictions in any respect.

                           (c)    The Employee agrees that during the period
of his  employment  hereunder and during the  Non-Compete  Period,  the Employee
shall not knowingly employ or solicit, encourage or induce any person who at any
time within one year prior to the  Employee's  termination  of employment  shall
have been an employee of the Bank or any of its commonly controlled  affiliates,
to become  employed by or associated  with any  individual,  partnership,  joint
venture,  corporation  or other  business  entity  other than the Bank,  and the
Employee  shall not  knowingly  approach  any such  employee for such purpose or
authorize  or  knowingly  approve  the  taking  of  such  actions  by any  other
individual, partnership, joint venture, corporation, or other business entity or
knowingly assist any such individual, partnership, joint venture, corporation or
other business entity in taking such action.

                           (d)    In consideration of his duties and
obligations hereunder, the Bank shall pay to the Employee the amount of $350,000
on the first day of the Non-Compete Period.

7.       Acknowledgements.
         -----------------

                           (a)    The Employee acknowledges that the
provisions of Section 6 above are reasonable and necessary for the protection of
the Bank and that each provision,  and the period or periods of time, geographic
areas and types and scope of  restrictions  on the activities  specified  herein
are, and are intended to be  divisible.  In the event that any provision of this
Agreement,  including  any  sentence,  clause  or part  hereof,  shall be deemed
contrary to law or invalid or

<PAGE>

unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions shall not be affected,  but shall,  subject to the discretion of such
court,  remain in full  force  and  effect  and any  invalid  and  unenforceable
provisions  shall be deemed,  without  further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.

                           (b)    The Employee acknowledges that the Bank will
be  irrevocably  damaged  if  the  covenants  contained  in  Section  6 are  not
specifically enforced. Accordingly, the Employee agrees that, in addition to any
other  relief to which the Bank may be  entitled  the Bank shall be  entitled to
seek and obtain injunctive relief from a court of competent jurisdiction for the
purposes of  restraining  the Employee from any actual or  threatened  breach of
such covenants.

8.       Representations, Warranties, and Covenants of Employee.
         -------------------------------------------------------

                           The Employee represents, warrants, and covenants to
and  with  the  Bank  that  (a) he is not and  will  not  become  a party to any
agreement, contract or understanding,  whether employment or otherwise, and that
he is not subject to any order,  judgment or decree of any court or governmental
agency,  which would, in any way,  restrict or prohibit him from  undertaking or
performing  his  employment in accordance  with the terms and conditions of this
Agreement and (b) he is of sufficient  physical and mental health to fulfill his
duties, obligations, and responsibilities under the terms of this Agreement.

9.       Miscellaneous.
         --------------

                           (a)    Governing Law.  This Agreement shall be
                                  -------------
governed by and construed in  accordance  with the laws of the State of New York
applicable to agreements made and to be performed in that state.

                           (b)    Notices.  All notices, consents, and other
                                  --------
communications  under this Agreement  shall be in writing and shall be deemed to
have been duly given when (a)  delivered by hand (with receipt  confirmed),  (b)
sent by telex or telecopier  (with receipt  confirmed),  provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee,  if sent by Express Mail, Federal Express,  or other express delivery
service  (receipt  requested),  in each case to the  appropriate  addresses  and
telecopier  number set forth below (or to such other  addresses  and  telecopier
numbers as a party may designate as to itself by notice to the other parties):

<PAGE>

         If to the Employee:

         Ira Hoberman

         with a copy to:
         Lowenstein Sandler PC
         Attn:  Peter H. Ehrenberg, Esq.
         65 Livingston Avenue
         Roseland, New Jersey 07068

         Telecopier No. (973) 597-2351

         If to the Bank:

         Staten Island Savings Bank
         c/o Harry P. Doherty, Chairman
         and Chief Executive Officer
         15 Beach Street
         Staten Island, New York 10304

         Telecopier No.: (718) 727-3794

         with a copy to:

         Elias, Matz, Tiernan & Herrick, L.L.P.
         Attn: Raymond A. Tiernan, Esq.
         734 15th Street, NW
         12th Floor
         Washington, DC 20005

         Telecopier No.: (202) 347-2172

         (c) Entire  Agreement;  Amendment.  This Agreement  shall supersede all
existing  agreements  between the Employee and the Bank relating to the terms of
his employment.  This Agreement may not be amended except by a written agreement
signed by both parties.

         (d) Waiver.  The failure of a party to insist upon strict  adherence to
any term of this  Agreement  on any  occasion  shall not be  considered a waiver
thereof or deprive  that party of the right  thereafter  to insist  upon  strict
adherence to that term or any other term of this Agreement.

<PAGE>

         (e) Assignment.  Subject to the limitations below, this Agreement shall
inure to the  benefit  of and be  binding  upon the  parties  hereto  and  their
respective heirs, representatives, successors, and assigns. This Agreement shall
not be assignable  by the Employee,  and shall be assignable by the Bank only to
any corporation  resulting from the  reorganization,  merger or consolidation of
Bancorp  or the Bank  with any other  corporation  or any  corporation  to which
Bancorp or the Bank may sell all or substantially all of its assets,

                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
  Employment Agreement as of the day and year first above written.

                                        STATEN ISLAND SAVINGS BANK

                                        By:        Harry P. Doherty
                                                   ----------------
                                                   Harry P. Doherty
                                                   Chairman of the Board
                                                   and Chief Executive Officer

                                                   /s/Ira Hoberman
                                                   ---------------
                                                   Ira HobermanCORPORATE RESOLUTION TO BORROW

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Principal      Loan Date     Maturity      Loan No.      Call      Collateral      Account      Officer       Initials
<S>             <C>          <C>            <C>           <C>       <C>             <C>          <C>           <C>
$750,000.00                  04-30-2001                                                           91000
------------------------------------------------------------------------------------------------------------------------
             References in the shaded area are for Lender's use only and do not limit the applicablity
                              of this document to any particular loan or item.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Borrower:  Arc Communications, Inc. (TIN: )     Lender:   Sovereign Bank
           788 Shrewsbury Avenue                          Ocean Office
           Tinton Falls. NJ 07724                         901 W. Park Avenue
                                                          Ocean, NJ 07712

I, the undarsigned Secretary or Asiistant Socratary of Arc Communication*,  Inc.
(the  "Corporation"),  HEREBY  CERTIFY that lhe  Corporalion  is  organized  and
existing  undor  and by  virtue  o1 the  laws of the  State of New  Jarsey  as a
corporation  for profit,  with its principal  oftice at 788  Shrewsbury  Avenue,
Tinton Falls,  NJ 077211,  and is duly  authorized  to transact  business in the
State of New Jersey.

I FURTHER  CERTIFY that at a mooting of the Directors o1 the  Corporation,  duly
called  and  held on  ___________________,  at which a quorum  was  prosent  and
votinci, or by othe, duly authorized corporata action in lieu of a ineeting, the
following rasolutlons were adopted:

BE IT RESOLVED, that any one (1) of the following named officers,  employees, or
agents of this Corporation, whosq actual signatures are shown

 NAME                           POSITION
 ----                           --------
Steven H. Mever                 President

acting for and on behalf of the  Corporation  and as its act and deed be, and he
or she hereby is, authorized and empowered:

     Borrow Money.  To borrow (iwn time to time from Sovereign Bank  ("Lender"),
     on such terms as may be agreed  upon  between the  Corporation  and Lender,
     such sum or sums of money as in his or her  judgment  should be  borroived,
     without limitation.

     Execute  Notes.  To execute  and deliver to Lender the  promissory  note or
     notes, or other evidence of credit  accomodations  of the  Corporation,  on
     Lender's  forms,  at such  rates of  interest  and on such  terms aa may be
     agreed upon,  evidencing the sums of money 30 borrowed or any  indebtedness
     of the Corporation to Lender, and also to execute and deliver to Lender one
     or more renewals, extensions, modifications.  refinancings, consolidations,
     or substitutions for one or more of the notes, any portion of the notes, or
     any other evidence of credit accomodations.

     Grant Security. To mortgage,  pledge, transfer,  endorse,  hypothecate,  or
     otherwise  encumber and deliver to Lender,  as security for the payment of
     any loans or credit  accomodatlons  so obtained,  any  promissory  notes so
     executed  (Including  any  amendments to or  modifications,  renewals,  and
     extensions of such promissory notes), or any other or further indebtedness
     of the  Corporation  to Lender at any time owing,  however the same may be
     evidenced, any property now or hereafter belonging to the Corporation or in
     which the  Corporation  now or hereafter  may have an  interest,  including
     without  limitation all real property and all personal property  (tangible
     or intangible) of the Corporation. Such property may be mortgaged, pledged,
     transferred,  endorsed, hypothacated, or encumbered at the time such loans
     are  obtained or such  indebtedness  is  incurred,  or at any other time or
     times,  and  may be  either  in  addition  to or in  lieu  of any  property
     theretofore mortgaged,  pledged,  transferred,  endorsed,  hypothecated, or
     encumbered.

     Execute Security  Documents.  To execute and deliver to Lender the forms of
     mortgage,  deed of trust, pledge agreement,  hypothecation  agreement,  and
     other security  agreements and financing  statements which may be submitted
     by Lender,  and which shall  evidence  the farms and  conditions  under and
     pursuant to which such liens and  encumbrances,  or any of them, are given:
     and also to execute  and deliver to Lender any other  written  instruments,
     any chattel paper, or any other collateral, of any kind or nature, which he
     or she may in his or her discretion deem reasonably  necessary or proper in
     connection with or pertaining to the giving of the liens and encumbrances.

     Negotiate  Items. To draw,  endorse,  and discount with Lender all drafts,
     trade  acceptances,  promissory  notes,  or other evidences of indebtedness
     payable to or belonging to the  Corporation  in which the  Corporation  may
     have an interest,  and either to receive cash for tha same or to cause such
     proceeds to be credited to the account of the Corporation  with Lender,  or
     to cause such other  disposition of the proceeds derived  therefrom as thay
     may deem advisable.

     Further Act. In the case of lines of credit,  to designate  additional or
     alternate  individuals as being authorized to request advances  thereunder,
     and in all oases, to do and perform such other acts and things,  to pay any
     and all fees and costs, and to execute and deliver such other documents and
     agreements.  Including  agreements waiving the right to a trial by jury, as
     he or she may in his or her discretion deem reasonably  necessary or proper
     in order to carry into  effect the  provisions  of these  Resolutions.  The
     following  person or persons  currontly are authorized to request  advances
     and  authorize  payments  under the line of credit  until  Lendar  receives
     written notice of revocation of their authority: Steven H. Meyer, President

BE IT  FURTHER  RESOLVED,  that any and all acts  authorized  pursuant  to these
Resolutions and performed  prior to tha passage ot these  Resolutions are hereby
ratified and  approved,  that these  Resolutions  shall remain in full force and
effect and Lender may rely on these  Resolutions  until written notice of his or
her  revocation  ahall have been  delivered  to and  received by Lender Any such
notice shall not affect any of the  Corporation's  agreements or  commitments in
effect at the time notice is given.

BE IT FURTHER  RESOLVED,  that the Corporation  will notify Lender in writing at
Lender's  address  shown above (or such other  addresses as Lender may designate
from time to time) prior to any (a) change in the name of the  Corporation,  (b)
change in the assumed  business  name(s) of the  Corporation,  (c) change in the
management of the  Corporation,,  (d) change in the  authorized  signer(s),  (e)
conversion of the Corporation to a new or different type of business entity,  or
(f) change in any other aspect ot the  Corporation  that  directly or indirectly
relates to any agreements  between the Corporation and Lender,  No change in the
name of the Corporation will taKe effect until after Lender has been notified.

I FUHTHER  CERTIFY  that the  officer,  omployee,  or agent  named above is duly
elected,  appointed,  or employed by or to the Corporation,  as the case may be,
and occupies the position set opposite the name: that the foregoing  Resolutions
now stand of record on the books of the  Corporation:  and that the  Resolutions
are in full  force  arid  effect  and have not been  modified  or revoked in any
manner whatsoever.
<PAGE>

                         CORPORATE RESOLUTION TO BORROW
Loan No                          (Continued)                              Page 2
--------------------------------------------------------------------------------

IN TESTIMONY  WHEREOF,  I have  hereunto sat my hand and affixed tha seal or the
Corporation on _________________  and attest that the signature set opposite the
names listed above are their genuine signaturea.

                                        CERTIFIED TO AND ATTESTED BY:

  CORPORATE                             X /s/ Ethel Kaplan
                                         -------------------------------------

   SEAL
                                        X
                                         -------------------------------------

NOTE:  In case the  secretary  or other  certifying  officer is  designed by the
foregoing  resolutions as one of the signing  officers,  it is advisable to have
this certificate signed by a second Officer or Director of the Corporation
--------------------------------------------------------------------------------
<PAGE>
                       CORPORATE RESOLUTION TO GUARANTEE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Principal      Loan Date     Maturity      Loan No.      Call      Collateral      Account      Officer       Initials
<S>             <C>          <C>            <C>           <C>       <C>             <C>          <C>           <C>
$750,000.00                  04-30-2001                                                           91000
------------------------------------------------------------------------------------------------------------------------
             References in the shaded area are for Lender's use only and do not limit the applicablity
                              of this document to any particular loan or item.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Borrower:  Arc Communications, Inc. (TIN; )        Lender:    Sovereign BanK
           788 Shrewsbury Avenue                              Ocean Office
           Tinton Falls, NJ 07724                             901 W. Park Avenue
                                                              Ocean NJ 07712
Guarantor: Arc Mesa Educators, Inc.
           788 Shrewsbury Avenue
           Tinton Falls, NJ 07724

I, the undersigned Secretary or Assistant Secretary of Arc Mesa Educators,  Inc.
(the  "Corporation"),  HEREBY  CERTIFY that the  Corporation  is  organized  and
existing   under and by virtue of the laws of the State of New  Jersey  with its
principal office at 788 Shreiivsl.nJry Avenue, Tinton Falls, NJ 07724.

I FURTHER  CERTIFY that at a meeting of the Directors of the  Corporation,  duly
called and held on __________________________, at which a quorum was present and
voting, or by other duly authorized  corporate action in lieu of a meeting,  the
following resolutions were adopted:

BE IT RESOLVED, that any one (1) of the following named officers,  employees, or
agents of this Corporation, whose actual signatures are shown below:

NAME                        POSITION             ACTUAL SIGNATURE
----                        --------             ----------------

Steven H. Meyer             President            X /s/ Steven H. Meyer
                                                  ---------------------

acting for and on behalf of the  Corporation  and as its act and deed be, and he
or she hereby is, authorized and empowered:

     Quaranty.  To  guarantee  or act as  surety  for  loans or othar  financial
     accommodations to Arc  Communications.  Inc from Sovereign BariK ("Lender")
     on such  guarantee  or  surety  terms as may be  agreed  upon  between  the
     officers or  employaes of friis  Corporation  and Lender and in such sum or
     sums of money as in his or har judgment  should bo  guaranteed  or assured,
     without lirnit (the "Guaranty").

     Grant Security. To mortgage,  pledge, transfer,  endorse,  hypothecate,  or
     otherwise encumber and deliver to Lender, as security to the Guaranty,  any
     property now or  hereafter  belonging  to the  Corporation  or in which the
     Corporation  now or  hereafter  may  have an  interest,  including  without
     limitation  all  real  property  and all  personal  property  (tangible  or
     intangible) of the  Corporation.  Such property may be mortgaged,  pledged,
     transferred,  endorsed,  hypothecated, or encumbered at the time such loans
     are  obtained or such  indebtedness  is  incurred,  or at any other time or
     times,  and  may be  either  in  addition  to or in  lieu  of any  property
     theretofore mortgaged,  pledged,  transferred,  endorsed,  hypothecated, or
     encumbered.  The provisions of these Resolutions authorizing or relating to
     the pledge, mortgage, transfer, endorsement,  hypothecation,  granting of a
     security  interest  in,  or in  any  way  encumbering,  the  assets  of the
     Corporation shall include,  without  limitation,  doing so in order to lend
     collateral security for the indebtedness, now or hereafter existing, and of
     any  nature  whatsoever,  of  Arc  Communications,   Inc.  to  Lender.  The
     Corporation  has  considered  the value to itself of lending  collateral in
     support of such indebtedness, and the Corporation represents to Lender that
     the Corporation is benefited by doing so.

     Execute Security  Documents.  To execute and deliver to Lender the forms of
     mortgage,  deed of trust, pledge agreement,  hypothecation  agreement,  and
     other security  agreements and financing  statements which may be submitted
     by Lendar,  and which shall  evidence  the terms and  conditions  under and
     pursuant to which such liens and  encumbrances,  or any of them, are given;
     and also to execute  and deliver to Lender any other  written  instruments,
     any chattel paper, or any other collateral, of any kind or nature, which he
     or she may in his or her discretion deem reasonably  necessary or proper in
     connection with or pertaining to the giving of the liens and encumbrances.

     Further  Acts.  To do and perform such other acts and things and to execute
     and deliver  such other  documents  and  agreements,  including  agreements
     waiving  the  right  to a  trial  by  jury,  as he or shs may in his or her
     discretion  deem  reasonably  necessary  or proper  in order to carry  into
     effect the provisions of these Resolutions.

BE IT FUMTHEH  RESOLVED,  that the Corporation  will notify Lender in writing at
Lender's  address  shown above (or such other  addresses as Lender may designate
from lime to time) prior to any (a) change in tha name of the  Corporation,  (b)
change in the assumed  business  name(s) of the  Corporation,  (c) change in the
managament of the  Corporation,  (d) change in the  authorized  signer(s),  (e)
conversion of the Corporation to a new or different type of business entity,  or
(f) change in any other aspect of the  Corporation  that  directly or indirectly
relates to any agreements  between the Corporation and Lender.  No change in the
name of tha  Corporation  will take effect until after Lender has been notified.

BE IT  FURTHER  RESOLVED,  that any and all acts  authorized  pursuant  to these
Resolutions and performed  prior to the passage of these  Resolutions are hereby
ratified and  approved,  that these  Resolutions  shall remain in full force and
effect and Lender may rely on these  Resolutions  until written notice of his or
her  revocation  shall have been  delivered to and received by Lender.  Any such
notice shall not affect any of the  Corporation's  agreements or  commitments in
effect at the time notice is given.

I FURTHER  CERTIFY  (that the  officer,  employee,  or agent named above is duly
elected,  appointed, or employed by or for the Corporation,  as the case may be,
and occupies the position set opposite the name; that the foregoing  Resolutions
now stand of record on the books of the  Corporation:  and that the  Resolutions
are in full force and effect and have not been modified or revoked in any manner
whatsoever.
<PAGE>
                             BUSINESS LOAN AGREEMENT

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Principal      Loan Date     Maturity      Loan No.      Call      Collateral      Account      Officer       Initials
<S>             <C>          <C>            <C>           <C>       <C>             <C>          <C>           <C>
$750,000.00                  04-30-2001                                                           91000
------------------------------------------------------------------------------------------------------------------------
             References in the shaded area are for Lender's use only and do not limit the applicablity
                              of this document to any particular loan or item.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Borrower:  Arc Communications. Inc. (TIN: )       Lender:  Sovereign Bank
           788 Shrewsbury Avenue                           Ocean Office
           Tinton Falls, NJ 07724                          901 W. Park Avenue
                                                           Ocean, NJ  07712

THIS BUSINESS LOAN AGREEMENT between Arc Communications,  Inc.  ("Borrower") and
Sovernign  Bank  ("Lender")  is made and  executed  on the  following  terms and
conditions.  Borrower has  received  prior  commercial  loans from Lender or has
applied  to  Lender  for  a  commercial   loan  or  loans  and  other  financial
accommodations.  Including  those  which  may be  described  on any  exhibit  or
schedule   attached   to  this   Agreement.   All  such   loans  and   financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement Individually as the "Loan"
and  collectively as the "Loans."  Borrower  understands and agrees that: (a) In
granting,  renewing,  or extending any Loan,  Lender 18 relying upon  Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and  discretion;  and (c) all such Loans shall
be and shall  remain  subject  to the  following  terms and  conditions  or this
Agreement.

TERM. This Agreement  shall ba effective as of  ___________,  and shall continue
thereafter  until all  Indebtedness  of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.

DEFINITIONS.  The following words shall have the following meanings when used in
this  Agreement.  Terms not otherwise  defined in this Agreement  shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar  amounts  shall mean amounts in lawful  money of the United  States of
America.

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

    Borrower.  The word  "Borrower"  means  Arc  Communications,  Inc.  The word
    "Borrower" also includes, as applicable,  all subsidiaries and affiliates of
    Borrower  as  provided  below  in the  paragraph  titled  "Subsidiaries  and
    Affiliates."

    CERCLA.  The word "CERCLA" means the Comprehensive  Environmental  Response,
    Compensation, and Liability Act of 1980. as amended.

    Collateral.  Tha word 'Collateral" means and includes without limitation all
    property and assets granted as collateral  security for a Loan, whether real
    or  personal  property,  whether  granted  directly or  indirectly,  whether
    granted now or in the future,  and whether granted in the form of a security
    Interest,  mortgage,  deed of trust,  assignment,  pledge, chattel mortgage,
    chattel trust,  factor's lien,  equipment  trust,  conditional  sale,  trust
    receipt,   lien,  charge,  lien  or  title  retention  contract,   lease  or
    consignment  intended as a security  device,  or any other  security or lien
    interest whatsoever, whether created by law. contract, or otherwise

    ERISA. The word 'ERISA" (means the Employee  Retirement  Income Security Act
    of 1974, as amended.

    Event of  Default.  The words  "Event of Default"  mean and include  without
    limitation  any of the  Events of  Default  set forth  below in the  section
    titled "EVENTS OF DEFAULT."

    Grantor.  The word "Grantor" means and includes without  limitation each and
    all  of  the  persons  or  entitles  granting  a  Security  Interest  in any
    Collateral for the indebtedness,  including without limitation all Borrowers
    granting such a Security Interest.

    Guarantor.  The word "Guarantor" means and includes without  limitation each
    and all of the guarantors, sureties, and accommodation parties in connection
    with any Indebtedness.

    Indebtedness.  The word "Indebtedness" means and includes without limitation
    all Loans,  together with all other  obligations,  debts and  liabilities of
    Borrower  to  Lender,  or any one or more of them,  as well as all claims by
    Lender  against  Borrower,  or any  one or  more  of  them,  whether  now or
    hereafter  existing,  voluntary or involuntary,  due or not due, absolute or
    contingent,  liquidated  or  unliquidated;  whether  Borrower  may be liable
    individually or jointly with others:  whether Borrower may be obligated as a
    guarantor, surety, or otherwise: whether recovery upon such Indebtedness may
    be or hereafter may become barred by any satute of limitations:  and whether
    such Indebtness may be or hereafter may become otherwise unenforceable.

    Lender. The word "Lender' means Sovereign Bank, its successors and assigns,

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

    Note.  The word "Note"  means and  Includes  without  limitation  Borrower's
    promissory note or notes, if any, evidencing  Borrower's Loan obligations in
    favor of Lender, as well as any substitute,  replacement or refinancing note
    or notes therefor.

    Permitted  Lien.  The words  "Permitted  Liens" mean; (a) liens and security
    interests  securing  Indebtedness owed by Borrower to Lender;  (b) liens for
    taxes, assessments, or similar charges either not yet due or being contested
    in good  faith;  (c)  liens  of  materialmen,  mechanics,  warehousemen,  or
    carriers, or other like liens arising in the ordinary course of business and
    securing obligations which are not yet delinquent:  (d) purchase money liens
    or purchase  money security  interests  upon or in any property  acquired or
    held by Borrower in the ordinary  course of business to secure  indebtedness
    Outstanding  on the date of this Agreement or permitted to be incurred under
    the paragraph of this Agreement titled  "Indebtedness and Liens":  (e) liens
    and security  Interests  which, as of the date of this Agreement,  have been
    disclosed to and approved by the Lender in writing:  and (f) those liens and
    security  interests  which in the aggregate  constitute  an  immaterial  and
    insignificant  monetary  amount with respect to the net value of  Borrower's
    assets.

    Related  Documents.  The words "Related  Documents" mean and include without
    limitation  all  promissory  notes,  credit  agreements,   loan  agreements,
    environmental agreements,  guaranties, security agreements, mortgages, deeds
    of trust, and all other  instruments,  agreements and documents, whether now
    or  hereafter  existing,  executed  in  connoctlon  with  ths  Indebtedness.

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

    Security  Interest.  The words "Security  Interest" mean and include without
    limitation any type of collateral  security,  whether in the form of a lien,
    charge,  mortgage,  deed of trust,  assignment,  pledge,  chattel  mortgage,
    chattel trust,  factor's lien.  equipment  trust,  conditional  sale,  trust
    receipt, lien or title retention contract,  lease or consignment intended as
    a  security  device,  or any other  security  or lien  interest  whatsoever,
    whether created by law, contract, or otherwise.
<PAGE>
IN TESTIMONY  WHEREOF,  I have  hereunto sat my hand and affixed tha seal or the
Corporation on _________________  and attest that the signature set opposite the
names listed above are their genuine signaturea.

                                        CERTIFIED TO AND ATTESTED BY:

  CORPORATE                             X /s/ Ethel Kaplan

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

   SEAL

                                        X

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

NOTE:  In case the  secretary  or other  certifying  officer is  designed by the
foregoing  resolutions as one of the signing  officers,  it is advisable to have
this certificate signed by a second Officer or Director of the Corporation
--------------------------------------------------------------------------------
<PAGE>

                             BUSINESS LOAN AGREEMENT
Loan No                            (Continued)                            Page 2

    SARA. The word "SARA" means the Superfund  Amendments  and  Reauthorization
    Act of 1986 as now of thereafter amended.

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

    Loan  Documents.  Borrower shall provide to Lender in form  satisfactory  to
    Lender the  following  documents  for the Loan:  (a) the Note,  (b) Security
    Agreements  granting to Lender  security  interests in the  Collateral,  (c)
    Financing Statements perfecting Lender's Security Interests; (d) evidence of
    insurance as required below: and (e) any other documents required under this
    Agreement  or by Lender of its counsel,  including  without  limitation  any
    guaranties described below.

    Borrower's Authorization. Borrower shall have provided in form and substance
    satisfactory to Lender properly certified resolutions,  duly authorizing the
    execution  and  delivery  of  this  Agreement,  the  Note  and  the  Related
    Documents, and such other authorizations and other documents and instruments
    as Lender or its counsel, in their sole discretion, may require.

    Payment of Fees and Expenses.  Borrower  shall have paid to Lender all fees,
    charges,  and other  expenses which are than due and payable as specified in
    this Agreement or any Related Document.

    Representations and Warranties. The representations and warranties set forth
    in  this  Agreement,  in the  Related  Documents,  and in  any  document  or
    certificate delivered to Lender under this Agreement are true and correct,

    No Event of  Default.  There  shall not  exist at the time of any  advance a
    condition which would constitute an Event of Default under this Agreement,

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

    Organization.  Borrower is a corporation  which is duly  organized,  validly
    existing, and in good standing under the laws of the State of New Jersey and
    is validly  existing and in good standing in all states in which Borrower is
    doing  business.  Borrower  has the  full  power  and  authority  to own its
    properties and to transact the  businesses in which it is presently  engaged
    or  presently  proposes  to engage.  Borrower  also is duly  qualified  as a
    foreign  corporation  and is in good  standing  in all  states  in which the
    failure to so qualify would have a material adverse effect on its businesses
    or financial condition.

    Authorization.  The execution,  delivery,  and performance of this Agreement
    and all  Related  Documents  by  Borrower,  to the  extent  to be  executed.
    delivered  or  performed  by  Borrower,  have  been duly  authorized  by all
    necessary action by Borrower;  do not require the consent or approval of any
    other person, regulatory authority or governmental body; and do not conflict
    with,  result in a  violation  of,  or  constitute  a default  under (a) any
    provision of its articles of incorporation or  organization,  or bylaws,  or
    any  agreement or other  instrument  binding  upon  Borrower or (b) any law,
    governmental regulation, court decree, or order applicable to Borrower.

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

    Legal Effect.  This Agreement  constitutes,  and any instrument or agreement
    required  hereunder to be given by Borrower when delivered will  constitute,
    legal,  valid  and  binding  obligations  of  Borrower  enforceable  against
    Borrower in accordance with their respective terms.

    Properties.  Except  as  contemplated  by this  Agreement  or as  previously
    disclosed in Borrower's  financial statements or in writing to Lender and as
    accepted  by  Lender,  and  except  for  property  tax  liens  for taxes not
    presently  due and  payable.  Borrower  owns  and has  good  title to all of
    Borrower's properties free and clear of all Security Interests,  and has not
    executed any security  documents  or financing  statements  relating to such
    properties.  All of Borrower's  properties  are titled in  Borrower's  legal
    name, and Borrower has not used, or filed a financing  statement  under, any
    other name for at least the last five (5) years.

    Hazardous  Substances.  The terms "hazardous waste,' "hazardous  substance,"
    "disposal,"  "release,' and "threatened release," as used in this Agreement,
    shall  have the same  meanings  as set forth in the  "CERCLA."  "SARA,"  the
    Hazardous Materials Transportation Act, 49 U.S.C, Section 1801, et seq., the
    Resource Conservation and Recovery Act. 42 U.S.C. Section 6901, et seq., the
    New Jersey Industrial Site Recovery Act, NJSA Section 13:1K-6 ("ISRA"),  the
    New Jersey Spill Compensation and Control Act, NJSA 58:10-23.11,  el seq. or
    other  applicable  state or Federal  laws,  rules,  or  regulations  adopted
    pursuant to any of the foregoing. Except as disclosed to and acknowledged by
    Lender in writing,  Borrower  represents  and warrants  that: (a) During the
    period of Borrower's  ownership of that  properties,  there has been no use,
    generation, manufacture, storage, treatment, disposal, release or threatened
    release of any hazardous  waste or substance by any person on, under,  about
    or from any of the  properties,  (b) Borrower has no knowledge of, or reason
    to  believe  that  there  has  been (i) any  use,  generation,  manufacture,
    storage.  treatment,   disposal,  release,  or  threatened  release  of  any
    hazardous waste or substance on, under,  about or from the properties by any
    prior owners or occupants  of any of the  properties,  or (ii) any actual or
    threatened  litigation or claims of any kind by any person  relating lo such
    matters.  (c) Neither  Borrower nor any tenant,  contractor,  agent or other
    authorized user of any of the properties shall use.  generate,  manufacture,
    store,  treat,  dispose of, or release any hazardous  waste or substance on.
    under,  about or from any of the properties:  and any such activity shall be
    conducted in compliance with all applicable federal,  state, and local laws,
    regulations,  and  ordinances,  including  without  limitation  those  laws,
    regulations and ordinances  described above.  Borrower authorizes Lender and
    its agents to enter upon the properties to make such  Inspections  and tests
    as Lender may deem  appropriate  to determine  compliance of the  properties
    with this section of the Agreement.  Any inspections or tests made by Lender
    shall be at Borrower's  expense and for Lender's purposes only and shall not
    be construed to create any responsibility or liability on the part of Lender
    to Borrower  or lo any other  person.  The  representations  and  warranties
    contained herein are based on Borrower's due diligence in investigating  the
    properties for hazardous waste and hazardous substances. Borrower hereby (a)
    releases  and waives any  future  claims  against  Lender for  indemnity  or
    contribution in the event Borrower becomes liable for cleanup or other costs
    under any such laws,  and (b) agrees to Indemnify and hold  harmless  Lender
    against any and all claims, losses,  liabilities,  damages,  penalties,  and
    expenses which Lender may directly or indirectly sustain or suffer resulting
    from a breach of this section of the  Agreement or as a  consequence  of any
    use,  generation,  manufacture,  storage,  disposal,  release or  threatened
    release of a hazardous waste or substance on the properties.  The provisions
    of this section of the  Agreement,  including  the  obligation to Indemnify,
    shall  survive  the  payment  of the  indebtedness  and the  termination  or
    expiration  of  this  Agreement  and  shall  not  be  affected  by  Lender's
    acquisition of any interest in any of the properties, whether by foreclosure
    or otherwise.

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

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

    Lien Priority.  Unless otherwise  previously disclosed to London in writing.
    Borrower  has not  entered  into  or  grants  any  Security  Agreements,  or
    permitted the filing or attachment of any Security Interests on or affecting
    any of the Collateral directly or indirectly securing repayment of
<PAGE>
                             BUSINESS LOAN AGREEMENT
Loan No                            (Continued)                            Page 2

     Borrower's  Loan and  Note,  that  would be prior or that may in any way be
     superior  to  Lender's  Security  Interests  and  rights  in  and  to  such
     Collateral.

     Binding Effect. This Agreement,  the Note. all Security Agreements directly
     or indirectly securing repayment of Borrower's Loan and Note and all of the
     related  Documents  are binding  upon  Borrower as well as upon  Borrower's
     successors,  representatives  and assigns,  and are legally  enforceable in
     accordance with their respective terms.

     Commercial  Purpose.  Borrower  intends to use the Loan proceeds solely for
     business or commercial related purposes.

     Employee Benefit Plans. Each employee benefit plan as to which Borrower may
     have any liability  compiles in a}\ material  respects with all  applicable
     requirements  o< law and  regulations,  and  (i) no  Reportable  Event  nor
     Prohibited  Transaction  (as defined in ER13A) has occurred  with rasped to
     any such  plan,  (ii)  Borrower  has not  withdrawn  from any such  plan or
     initiated  steps to do so, (iii) no steps have been taken to terminate  any
     such plan.  and (iv)  there are no  unfunded  liabilities  other than those
     previously disclosed lo Lender in writing.

     Location of Borrower"s  Offices and Records.  Borrower's place of business,
     or Borrower's Chief executive  office,  if Borrower has more than one place
     of business,  Is located at 788 Shrewsbury Avenue,  Tinton Falls. NJ 07724.
     Unless  Borrower has designated  otherwise in writing this location is also
     the office or offices  where  Borrower  keeps its  records  concerning  the
     Collateral.

     Year 2000.  Borrower  warrants and represents that all software utilized In
     the conduct of Borrower's  business will have appropriate  capabilities and
     compatibility  for operation to handle  calendar  dates failing on or after
     January 1, 2000, and all information  pertaining to such calendar dates, in
     the  same  manner  and with the same  functionality  as the  software  does
     respecting  calendar dates falling on or before December 31, 1999. Further.
     Borrower  warrants and  represents  that the  data-related  user  interface
     functions, data-fields, and data-related program instructions and functions
     of the software include the indication of the century,

     Information.  All  information  heretofore  or  contemporaneously  herewith
     furnished by Borrower to Lender for the purposes of or in  connection  with
     this  Agreement  or  any  transaction   contemplated  hereby  is,  and  all
     information hereafter furnished by or on behalf of Borrower to Lender will
     be, the and accurate in every material respect on the date as of which such
     information is dated or certified,  and none of such Information is or will
     be incomplete by omitting lo slate any material fact necessary to make such
     information not misleading.

     Survival of Representation and Warranties.  Borrower understands and agrees
     that Lender, without independent  investigation,  is relying upon the above
     representations  and  warranties  in extending  Loan  Advances to Borrower.
     Borrower further agrees that the foregoing  representations  and warranties
     shall be  continuing  in nature  and shall  remain in full force and effect
     until such time as Borrower's  Indebtedness shall be paid in full, or until
     this Agreement shall be terminated in the manner provided above,  whichever
     is the last to occur-

AFFIRMATIVE  COVENANTS.  Borrower  covenants and agrees with Lender that,  while
this Agreement Is in effect, Borrower will:

     Litigation.  Promptly inform Lender in writing of (a) all material  adverse
     changes in  Borrower's  financial  condition,  and (b) all existing and all
     threatened litigation, claims,  investigations,  administrative proceedings
     or  similar  actions  affecting  Borrower  or  any  Guarantor  which  could
     materially  affect the  financial  condition  of Borrower or the  financial
     condition of any Guarantor.

     Financial  Records.  Maintain  its books and  records  in  accordance  with
     generally accepted  accounting  principles,  applied on a consistent basis,
     and permit Lender to examine and audit  Borrower's books and records at all
     reasonable times.

     Additional information. Furnish such additional information and statements,
     lists of assets  and  liabilities,  agings  of  receivables  and  payables,
     inventory schedules,  budgets,  forecasts,  <ax returns, and other reports
     with respect to Borrower's  financial  condition and business Operations as
     Lender may request from time to time,

     Insurance.  Maintain  fire  and  other  risk  insurance,  public  liability
     insurance,  and such other  insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts,  coverages and with
     Insurance companies reasonably acceptable to Lender. Borrower, upon request
     of  Lender,  will  deliver  to  Lender  from time to time the  policies  or
     certificates  of  insurance  in  term  satisfactory  to  Lender,  Including
     stipulations that Coverages will not be cancelled or diminished  without at
     least  thirty (30) days' prior  written  notice to Lender.  Each  insurance
     policy also shall include an  endorsement  providing that coverage in favor
     of Lender will not be  impaired in any way by any act,  omission or default
     of Borrower or any other person.  In connection with all policies  covering
     assets in which  Lender  holds or is  offered a security  interest  for the
     Loans,  Borrower  will  provide  Lender  with  such loss  payable  or other
     endorsements as Lender may require.

     Insurance Reports.  Furnish lo Lender,  upon request of Lender,  reports on
     each  existing  insurance  policy  showing such  Information  as Lender may
     reasonably  request,  including without  limitation the following:  (a) the
     name of the insurer:  (b) the risks Insured,  (c) the amount of the policy;
     (d) the properties  insured;  (e) the than current  property  values on the
     basis of which  insurance has been obtained,  and the manner of determining
     those values, and (f) the expiration date of the policy. In addition,  upon
     request of Lender  (however not more often than  annually),  Borrower  will
     have  an  independent  appraiser  satisfactory  to  Lender  determined,  as
     applicable,  the actual cash value or replacement  cost of any  Collateral.
     The cost of such appraisal shall be paid by Borrower.

     Guaranties.  Prior to disbursement of any Loan proceeds,  furnish  executed
     guaranties of the Loans in favor of Lender, executed by the guarantor named
     below,  on  Lander's  forms,  and in the  amount  and under the  conditions
     spelled out in those guaranties.

             Guarantor                                Amount
             ---------                                ------
             Arc Mesa Educators, Inc.                 Unlimited

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

     Loan  Proceeds.  Use all Loan proceeds  solely for the following  specific
     purposes: Working Capital.

     Taxes, Charges and Liens, Pay and discharge when due all of Us indebtedness
     and  obligations,  inciting  without  limitation  all  assessments,  taxes,
     govermental charges,  levies and liens, of every kind and nature, imposed
     upon Borrower or its properties,  income, or profits,  prior to the date on
     which penalties would attach, and all lawful claims that. if unpaid,  might
     become a lien or  charge  upon any of  Borrower's  properties.  income,  or
     profits.  Provided  however,  Borrower  will  not be  required  to pay  and
     discharge any such assessment, lax, charge, levy, lien or claim so long as
     (a)  the  legality  of the  same  shall  be  contested  in  good  faith  by
     appropriate  proceedings,  and (b) Borrower  shall have  established on its
     books  adequate  reserves with respect to such contested  assessment.  tax.
     charge,  levy,  lien,  or  claim  in  accordance  with  generally  accepted
     accounting  practices  Borrower,  upon  demand of Lender,  will  furnish to
     Lender  evidence of payment o1 the  assessments,  taxes,  charges,  levies,
     liens and claims and will authorize the appropriate  governmental  official
     to deliver to Lender at any time a written  statement  of any  assessments,
     taxes,  charges,  liens,  liens and claims against Borrower's  properties,
     income, or profits.

     Performance.  Perform and comply with all terms, conditions, and provisions
     set  forth  in this  Agreement  and in the  Related  Documents  in a timely
     manner,  and promptly notify Lender it Borrower learns of the occurrence of
     any event which  constitutes  an Event of Default  under this  Agreement or
     under any of the Related Documents.

     Operations.  Maintain executive and management personnel with substantially
     the same qualifications and experience as the present executive
<PAGE>
                             BUSINESS LOAN AGREEMENT
Loan No                            (Continued)                            Page 4

     and management personnel; provide written notice to Lender of any change in
     executive  and  management  personnel:  conduct Its  business  affairs in a
     reasonable  and  prudent  manner  and in  compliance  with  all  applicable
     federal,  state and  municipal  laws,  ordinances,  rules  and  regulations
     respecting its properties,  charters, businesses and operations,  including
     without limitation, compliance with the Americans With Disabilities Act and
     with all minimum  funding  standards  and other  requirements  of ERISA and
     other laws applicable to Borrower's employee benefit plans.

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

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

     Environmental Compliance and Reports. Borrower shall comply in ail respects
     with all environmental  protection federal, state and local laws, statutes,
     regulations and ordinances: not cause or permit to exist, as a result of an
     intentional or  unintentional  action or omission on Us part or on the part
     of any third  party,  on property  owned and/or  occupied by Borrower,  any
     environmental  activity where damage may result to the environment,  unless
     such  environmental  activity  is pursuant  to and in  compliance  with the
     conditions of a permit issued by the  appropriate  federal,  state or local
     governmental authorities: shall furnish to Lender promptly and In any event
     within  thirty  (30)  days  after  receipt  thereof  a copy of any  notice,
     summons, lien. citation,  directive, letter or other communication from any
     governmental  agency  or  Instrumentality  concerning  any  intentional  or
     unintentional  action or omission on Borrower's part in connection with any
     environmental  activity  whether or not there is damage to the  environment
     and/or other natural resources.

     Additional Assurances.  Make, execute and deliver to Lender such promissory
     notes,   mortgages,   deeds  of  trust,   security  agreements,   financing
     statements,  instruments,  documents and other  agreements as Lender or its
     attorneys  may  reasonably  request to evidence and secure the Loans and to
     perfect all Security Interests.

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

     Indebtedness  and Liens.  (a) Except for trade debt  incurred in the normal
     course  of  business  and  indebtedness  to  Lender  contemplated  by  this
     Agreement,  create,  incur  or  assume  indebtedness  for  borrowed  money,
     including capital leases,  (b) except 63 allowed as a Permitted Lien, sell,
     transfer, mortgage, assign, pledge, lease, grant a security interest in, or
     encumber  any of  Borrower's  assets,  or (c)  sell  with  recourse  any of
     Borrower's accounts, except to Lender.

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

     Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
     assets,  (b)  purchase,  create  or  acquire  any  interest  in  any  other
     enterprise  or entity,  or (c) incur any  obligation as surety or guarantor
     other than in the ordinary course of business.

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

REQUEST  FOR  FINANCIALS.  Borrower  and  Guarantor(5)  agree to provide  signed
financial  Statements  in a form  satisfactory  to the Lender within ninety (90)
days of fiscal year end and lax returns within fifteen (15) days of filing on an
annual basis.  Failure to provide updated  financial  statements and tax returns
shall be considered as a defaulted of the Note.

LINE OF CREDIT RENEWAL. This Line of Credit is subject to annual review. Renewal
will  be  based  on  Lender's  ongoing  satisfaction  with  Borrowers  financial
condition

RIGHT OF 3ETOFF- Borrower grants to Lender a contractual  security  interest In,
and hereby  assigns,  conveys,  delivers,  pledges,  and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's  accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts  held jointly with someone else and all accounts  Borrower may open
In the  future,  excluding  however  all IRA and Keogh  accounts,  and all trust
accounts for which the grant of a security  interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the Indebtedness against any and all such accounts.

EVENTS OF DEFAULT.  Each of the following  shall  constitute an Event of Default
under this Agreement:

     Default on  Indebtedness.  Failure of Borrower to make any payment when due
     on the Loans

     Other  Defaults.  Failure of  Borrower  or any Grantor to comply with or to
     performing  when due any other  term,  obligation,  covenant  or  condition
     contained in this Agreement or in any of the Related Documents,  or failure
     of  Borrower  to comply  with or to  perform  any other  term,  obligation.
     covenant or condition  contained In arty other agreement between Lender and
     Borrower.

     Default In Favor Of Third Parties.  Should  Borrower or any Grantor default
     under any loan, extension of credit, security agreement,  purchase or sales
     agreement, or any other agreement, In favor of any other creditor or person
     that may materially affect any of Borrower's  property or Borrower's or any
     Grantor's   ability  to  repay  the  Loans  or  perform  (heir   respective
     obligations under this Agreement or any of the Related Documents.

     False  Statements.  Any  warranty,  representation  or  statements  made or
     furnished  to Lender by or on behalf o( Borrower or any Grantor  under this
     Agreement or the Related  Documents is false or  misleading in any material
     respect at the time made or furnished or becomes false or misleading
--------------------------------------------------------------------------------
MISSING TEXT --- BAD COPY --- MISSING TEXT --- BAD COPY --- MISSING TEXT --- BAD
--------------------------------------------------------------------------------
     to Change the party's  address.  To the extent permitted by applicable law,
     if there is more than one Borrower,  notice to any Borrower will constitute
     notice to all  Borrowers.  For notice  purposes.  Borrower will keep Lender
     informed at all times of Borrower's current address(es)).

     No Joint Venture or  Partnership.  The  relationship of Borrower and Lendor
     created by this Agreement is strictly that of  debtor-creditor  and nothing
     contained  in this  Agreement or in any of the Related  Documents  shall be
     deemed or construed to create a partnership or joint venture
<PAGE>
                             BUSINESS LOAN AGREEMENT
Loan No                            (Continued)                            Page 5

     at any timing thereafter.

     Defective Collateralization. This Agreement or any of the Relatad Documents
     ceases to be in full force and affect  (including  failure of any  Security
     Agreement to create a valid and  perfected  Security  Interest) at any time
     and  for  any  reason.

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

     Creditor  or  Forfeiture   Proceedings.   Commencement  of  foreclosure  Or
     forfeiture   proceedings,   whether  by  judicial  proceeding,   self-help,
     repossession or any other method, by any creditor of Borrower, any creditor
     of any Grantor against any collateral securing the Indebtedness,  or by any
     governmental agency. This includes a garnishment, attachment, or levy on or
     of any of Borrower's deposit accounts with Lender.  However,  this Event of
     Default  shall not apply if there is a good faith  dispute by  Borrower  or
     Grantor,  as the case may be, as to the validity or  reasonableness  of the
     claim which is the basis of the creditor or forfeiture  proceeding,  and if
     Borrower  or  Grantor  gives  Lender  written  notice  of the  creditor  or
     (forfeiture  proceeding  and  furnishes  reserves  or a surety bond for the
     creditor or forfeiture proceeding satisfactory to Lender.

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

     Change In Ownership.  Any change in ownership of twenty-five  percent (25%)
     or more of the common stock of Borrower,

     Adverse Change.  A material  adverse change occurs in Borrower's  financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

     Insecurity. Lender, in good faith, deems itself insecure.

     Right to Cure. If any default,  other than a Default on  Indebtedness,  is
     Curable and if Borrower or Grantor,  as the case may be, has not been given
     a notice of a similar default within the preceding  twelve (12) months,  it
     may be cured (and no Event of Default  will have  occurred)  if Borrower or
     Grantor,  as the case may he, after  receiving  written notice from Lender
     demanding  cure of such default:  (a) cures the default within fifteen (15)
     days: or (b) If the cure requires more than fifteen (15) days.  immediately
     initiates  steps which  Lender  deems in  Lender's  sole  discretion  to be
     sufficient to ours the default and  thereafter  continues and completes all
     reasonable and necessary steps sufficient to produce  compliance as soon as
     reasonably practical.

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

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part of
this Agreement'

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

     Applicable  Law. This Agreement has been  deliver--i to Lender and accepted
     by Lender  In the  State of New  Jersey.  If there Is a  lawsuit.  Borrower
     agree* upon Lender'* request to submIt to the Jurisdiction of the courts of
     Ocean County, the State of New Jersey. Lender and Borrower hereby waive the
     right to any Jury trial in any action,  proceeding, or counterclaim brought
     by either Lender or Borrower  against the Other.  This  Agreement  shall be
     removed by and construed in  accordance  with the law of the State of New
     Jersey,

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

     Consent to Loan  Participation.  Borrower  agrees and  consents lo Lender's
     sale or  transfer,  whether  now or  later,  of one or  more  participation
     Interests  in the  Loans  to one or more  purchasers,  whether  related  or
     unrelated to Lender. Lender may provide, without any limitation whatsoever.
     to any one or more purchasers, or potential purchasers,  any information or
     knowledge Lender may have about Borrower or about any other matter relating
     lo the Loan,  and Borrower  hereby waives any rights to privacy to may have
     with  respect  to such  matters  Borrower  additionally  waives any and all
     notices of sale of participation  Interests,  as well as all notices of any
     repurchase of such participation interests. Borrower also agrees that the
     purchasers of any such  participation  interests  will be considered as the
     absolute owners of such interests in the Loans and will have all the rights
     granted under the participation agreement or agreements governing the sale
     of such  participation  interests.  Borrower  further  waives all rights of
     offset  or  counterclaim  that it may have now or later  against  Lender or
     against any purchaser of such a participation  interest and unconditionally
     agrees  that  either  Lender  or  such  purchaser  may  enforce  Borrower's
     obligation under the Loans irrespective of the failure or insolvency of any
     holder of any  interest  in the Loans.  Borrower  further  agrees  that the
     purchaser of any such  participation  interests  may enforce its  Interests
     irrespective  of any  personal  claims or defenses  that  Borrower may have
     against Lender.

     Costs and  Expenses.  Borrower  agrees to pay upon  demand all of  Lender's
     expenses,   including  without  limitation  attorneys'  fees,  incurred  in
     connection with the preparation,  execution, enforcement,  modification and
     collection of this Agreement of in connection  with the Loans made pursuant
     to this  Agreement.  Lender may pay someone  else to help collect the Loans
     and to enforce  this  Agreement,  and Borrower  will pay that amount.  This
     includes,  subject to any limits under applicable law. Lender's  attorneys'
     fees and  Lender's  legal  expenses,  whether  or not  there is a  lawsuit,
     including attorneys' fees for bankruptcy proceedings (including efforts to
     modify  or vacate  any  automatic  stay or  injunctions,  appeals,  and any
     anticipated posl-judgment collection services.  Borrower also will pay any
     court costs, in addition lo all other sums provided by law.

     Notices.  All notices  required to be given under this  Agreement  shall be
     given in writing,  may be sent by telefacsimile  (unless otherwise required
     by law), and shall be effective  when actually  delivered or when deposited
     with a nationally  recognized  overnight courier or deposited In the united
     States mail, first class,  postage prepaid,  addressed lo the party to whom
     the notice is lo be given at the address shown above.  Any party may change
     its address for  notices  under this  Agreement  by giving  formal  written
     notice to the other parties,  specifying  that the purpose of the notice is
     to change the party's  address.  To the extent permitted by applicable law,
     if there is more than one Borrower,  notice to any Borrower will constitute
     notice to all  Borrowers.  For notice  purposes,  Borrower will keep Lender
     informed at all times of Borrower's current address(es).

     No Joint Venture or  Partnership.  The  relationship o) Borrower and Lender
     created by this Agreement is strictly that of debtor-creditor, and nothing
     contained  in this  Agreement or in any o( the Related  Documents  shall be
     deemed or construed to) create a partnership or joint venture
<PAGE>
                             BUSINESS LOAN AGREEMENT
Loan No                            (Continued)                            Page 6

     between Borrower and Lender.

     Severablity.  If a court of competent  jurisdiction  finds any provision of
     (his  Agreement  to be  invalid  or  unenforceable  as  to  any  person  or
     circumstance,  such  finding  shall not render  that  provision  invalid or
     unenforceable as to any other persons or  circumstances.  If feasible,  any
     such  offending  provision  shall be deemsd to ba modified to be within the
     limits of enforceability or validity:  however,  if the offending provision
     cannot be so  modified,  if shall be stricken and all other  provisions  of
     this Agreement in all other respects shall remain valid and enforceable.

     Subsidiaries  and Affiliates of Borrower.  To the extent the context of any
     provisions  of this  Agreement  makes  it  appropriate,  including  without
     limitation   any representation,  warranty or covenant, the word "Borrower"
     as used herein shall include all subsidiaries and affiliates of Borrower.
     Notwithstanding  the foregoing however,  under no circumstances  shall this
     Agreement  be  construed  to  require   Lender  to make  any  Loan or other
     financial  accommodation  to  any  subsidiary  of  affiliate  of  Borrower,

     Successors  and Assigns.  All covanants and  agreements  contained by or on
     behalf of Borrower shall bind its successors and assigns and shall inure to
     the benefit of Lender,  its  successors  and assigns.  Borrower  shall not,
     however,  have the right to assign its rights  under this  Agreement or any
     interest therein, without the prior written consent of Lender.

     Survival. All warranties,  representations,  and covenants made by Borrower
     in this Agreement or in any  certificate or other  instrument  delivered by
     Borrower to Lender under this  Agreement  shall be  considered to have bean
     relied upon of Lender and will  survive the making of the Loan and delivery
     to Lender of the Related Documents, regardless of any investigation made by
     Lender or on Lender's behalf.

     Time is of the Essence.  Time is of the essence in frie performance of this
     Agreement.

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

BORROWER  ACKNOWLEDGES  HAVING READ ALL THE  PROVISIONS  OF THIS  BUSINESS  LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF _____
____.

BORROWER:

Arc Communications, Inc.

By:  /s/ Steven H. Meyer                        (SEAL)
   --------------------------------
   Steven H. Meyer, President

ATTEST:

/s/ Ethel Kaplan                                (CORPORATE SEAL)
-----------------------------------
Secretary or Assistant Secretary

LENDER:

Sovereign Bank

By:
   --------------------------------
   Authorized Officer
<PAGE>

PROMISSORY NOTE

                         CORPORATE RESOLUTION TO BORROW

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Principal      Loan Date     Maturity      Loan No.      Call      Collateral      Account      Officer       Initials
<S>             <C>          <C>            <C>           <C>       <C>             <C>          <C>           <C>
$750,000.00                  04-30-2001                                                           91000
------------------------------------------------------------------------------------------------------------------------
             References in the shaded area are for Lender's use only and do not limit the applicablity
                              of this document to any particular loan or item.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Borrower:  Arc Communications, Inc. (TIN: )    Lender: Sovereign Bank
           788 Shrewsbury Avenue                       Ocean Office
           Tinton Falls, NJ 07724                      901 W. Park Avenue
                                                       Ocean, NJ 07712

Principal Amount: $750,000.00     Initial Rate:  10.000%    Date of Note:_______

PROMISE  TO  PAY.  Arc  Communications,  Inc.  ("Borrower")  promises  to pay to
Sovereign  Bank  ("Lender"),  or order,  In lawful money of the United States of
America,  the principal  amount of Seven Hundred Fifty Thousand & 00/100 Dollars
($750,000.00)  or so much as may be  outstanding,  together with Interest on the
unpaid  outstanding  principal  balance  of  each  advance.  Interest  shall  be
calculated  from the  date of each  advance  until  repayment  of each  advance.
Borrower also promises to pay all applicable fee and expenses.

PAYMENT. Borrower will pay this loan In one payment of all outstanding principal
plus all accrued unpaid Interest or) April 30, 2001. In addition,  Borrower will
pay regular  monthly  payments of accrued unpaid interest  beginning  August 25,
2000, and all subsequent Interest payment* are due on the same day of each month
alerr  that.  The annual  interest  rate for this Note is  computed on a 365/3SO
basis; that 13. by applying the ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, applied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at
Lender's  address shown above or at such other place as Lender may designated in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest,  then to principal,  and any remaining
amount lo any unpaid collection costs and late charges.

VARIABLE INTEREST RATE. The interest rate on this Note is subJect to change from
time lo time  based on  changes in an index  which Is  Lender's  Prime Rate (the
"Index"),  This is the rate of interest announced from time to time by Lender as
its "Prime Rate" or "Prime  Landing  Rate.' This rate of interest Is  determined
from time lo time by Lender as a means of pricing  some loans to its  customers,
and it is neither  tied to any  extemal  rate of  interest  or index nor does it
necessarily  reflect the lowest rate of interact  actually  charged by Lender to
any  particular  class or  category  of  customers  of Lender  Lender  will tell
Borrower the current Index rate upon Borrower's  request.  Borrower  understands
that  Lender may make loans  based on other  rates as well.  The  interest  rate
change will not occur more often than each DAY.  The Index  currently  is 9.500%
per annum.  The Interest rate to be applied to the unpaid  principal  balance of
this Note will be at a rate of 0.500 percentage points over the Index, resulting
In an Initial rate of 10.000% per annum. NOTICE: Under no circumstances will the
interest  rate on this Note be more than the maximum rate allowed by  applicable
law.

PREPAYMENT.  Borrower  may pay  without  penalty all or a portion of fria amount
owed earlier than it is due. Early payment will not. un)es5 agreed to by Lender
in  writing,  relieve  Borrower  of  Borrower's  obligation  to continue to make
payments of accrued  unpaid  Interest.  Rather,  they will reduce the  principal
balance due.

LATE  CHARGE,  If a payment  is 15 days or more late,  Borrower  will be charged
5.000% of the  unpaid  portion of the  regularly  scheduled  payment.  This late
charge  Shall be paid to Lender by  Borrower  for the purpose of  defraying  the
expanse Incident lo the handling of the delinquent payment.

DEFAULT.  Borrower  will be In  default  if any of the  following  happens:  (a)
Borrower  (ails to make any payment when due.  (b)  Borrower  breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other lein,  obligation,  covenant, or condition contained In this Note
or any  agreernent  related  to this  Note,  or in any other  agreement  or loan
Borrower  has with Lender (c) Borrower  defaults  under any loan,  extension of
credit,  security  agreement.  purchase  or  saJas  agreernent,  or any  other
agreement,  in favor of any other creditor or person that may materially  affact
any of Borrower's  property or Borrower's  ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents,  (d) Any
representation  or  slatament  made or  furnished  to Lender by  Borrower  or on
Borrower's  behalf is false or misleading in any material  respect either now or
at the time made or furnished,  (e) Borrower  bacomes  Insolvent,  a receiver is
appointed for any part of Borrower's  property,  Borrower makes an  assignment
for the benefit of creditors,  or any proceeding is commenced either by Borrower
or against  Borrower under any  bankruptcy or Insolvency  laws, (f) Any creditor
tries to take any of  Borrower's  property  on or In which  Lender has a lien or
security  interest.  This includes a garnishment of or levy on any of Borrower's
accounts  with  Lender,  (g)  Any  guarantor  dies  or any of the  other  events
described in this default  section occurs with respect lo arty guarantor of (his
Note. (h) A material adverse change occurs in Borrower's financial condition, or
Lender  believes the prospect of payment or performance of the  Indebtedness  i9
impaired, (i) Lender in good faith deeds itself insecure.

If any default, other than a default in payment, if curable and if Borrower has
not been given a notice of a breach of the same  provision  of this Note  within
the preceding twelve (12) months,  it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender demanding
cure of such default: (a) cures the default within fifteen (15) days; or (b) If
the cure requires more than fifteen (15) days, immediately initiates steps which
Lender deems In Lender's  sole  discretion  to be sufficient lo cure the default
and  thereafter  continues  and  completes all  reasonable  and necessary  steps
sufficient  to produce  compliance  as soon as reasonably  practical.

LENDER'S  RIGHTS.  Upon default,  Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest  irnmediately  due, without
notice, and then Borrower will pay that amount. Upon default,  including failure
to pay upon final maturity,  Lender, at its option, may also, if permitted under
applicable  law,  increase  the  variable  interest  rate on this  Note to 3.500
percentage  points over the Index. The Interest rate will not exceed the maximum
rate  permitted by applicable  law.  Lender may hire or pay someone else to help
collect this Note if Borrower  does not pay  Borrower  also will pay Lender that
amount.  This includes,  subject to any limits under  applicable  law.  Lender's
attorneys'  fees and Lender's legal expenses  whether or not there is a lawsuit,
including   attorneys'  lees  and  legal  expenses  or  bankruptcy   proceedings
(including  efforts  to modify  or vacate  any  automatic  stay or  injunction),
appeals,  and  any  anticipated   post-judgment   collection  services.  If  not
prohibited  by  applicable  law,  Borrower  also  will pay any court  costs,  in
addition  to all other sums  provided  by law.  The Note has been  delivered  to
Lender  and  accepted  by  Lender.  In the  State of New  Jersey.  If there is a
lawsuit. Borrower agreed upon Lender's requalifing to submit to the Jurisdiction
of the court of Ocean  County,  the State of New  Jersey.  Lender  and  Borrower
hereby  with  the  right  to any  Jury  trial  In  any  action,  proceeding,  or
countarclaim  brought by other Lender or Borrower  against the other.  This Note
shall be governed by and construed In  accordance  with tha laws of the State of
New Jersey.

RIGHT OF SETOFF.  Borrower grants to Lender a contractual  security interest in,
and hereby  assigns,  conveys,  delivers,  pledges,  and transfers to Lender all
Borrower's right, title and inlaresi In and to, Borrower's  accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with sorneons else and all accounts  Borrower may open
In the  future,  exeludiniJ  however all IRA and Keogh  accounts,  and all trust
accounts for which tha grant of a security  interest would be prohibited by law.
Borrower authorizes Lender, to lhs extant permitted by applicable law. to charge
or setoff all sums owing on this Note against any and all such accounts,

COLLATERAL This Note is secured by UCC's filed with the New Jersey  Secretary of
State  and  Monmouth  County  Clerks  office;  Corporate  guarantee  of Arc Mesa
Educators. Inc.

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under
this Note may be requested orally by Borrower or by an authorized
<PAGE>
                                PROMISSORY NOTE
Loan No                           (Continued)                             Page 2

person.  Lender may, but need not, require requests be confirmed in writing. All
communications,  instructions, or diroctions by talophona or otherwise to Lender
are to be directed to Lender's office shown abovo. Tha following party or panles
ara  authorized  io  request  advances  under  the line of credrt  until  Lender
faceivos  from  Borrowar  at Lender's  address  shown  above  written  notice of
revocation of their authority: Sleven H. Meyer, Prealdant. Borrower agraes lo 1~
liable tor all surns either: (a) advanced in accordance with tha instructions of
an authorized person or (b) credited to any of Borfower's  accounts with Lender.
The unpaid principal  balance owing on this Note at any time may ba evidaneed by
endorsements  on thre Note Of by  Lender's  internal  records,  including  daily
computer print-outs.  Landor will have no obligation lo advance funds under lhis
Mole if: (a)  Borrower or any  guarantor  is in dofault  under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender,  including
any agreement mado in connection  with tho signing of this Note: (b) Borrowar or
any guarantor  ceases doing bu5iness or is insolvent;  (c) any guarantor  seeks,
claims or  otherwise  attempts  lo limit,  modify  or  ravoke  such  guarantor's
guarantee of this Note or any other loan with  Lendor:  (d) Borrowor has applied
(unds provided pursuant to this Note tor purposes other than those authorized by
Landar: or (a) Lender in good faith deems Itself insecura under this Note or any
other agreement  between Lender and Borrower.

REQUEST  FOR  PINANCIALS.  Borrower  and  Ouaranlor(s)  agree to provide  signed
financial  statements  in a form  satisfactory  lo the Lender within ninety (90)
days of fiscal year end and tax returns within fifteen (15) days of filing on an
annual basis.  Failure to provide updated  financial  statements and tax raturns
shall be considered as a default of the Note.

LINE OF CREDIT RENEWAL. This Line of Credit is subject to annual reviaw. Renewal
will be  based  on  Lender's  ongoing  satisfaction  with  Borrower's  financial
condition.

GENERAL  PROVISIONS.  Lender may delay or forgo  entorcing  any of its rights or
remedies under this Note without losing them.  Borrower and any other person who
signs,  guarantees or endorses this Note,  to the extent  allowed by law,  waiva
presentmeni,  demand foi  payrnarit,  protest and notice of  dishonor.  Upon any
change in the terms of this  Note.  and  unless  otherwise  oxpressly  slated in
writing,   no  party  who  signs  this  Note,   whather  as  maker.   guarantor,
accommodation  maker or endorser,  shall ba ralaasad  from  liability.  All such
parties agree that Lender may renew or extend  (repeatedly and for any length of
time) this loan, or release any party or gueraMor Of collateral; or impair, fail
to realize upon or perfect  Lendsr's  security  interest in (he collateral;  and
lake any other  action  deemed  necessary  by Lender  without  the consent of or
notice lo anyone.  All such  parlies also agree that Lender may modify this loan
without  tha  consent of or notice to anyone  other than the party with whom the
modification is made.

PRIOR TO SIGNING THIS NOTE,  BORROWER MEAD AND  UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE,  INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.

BORROWER:

Arc Communications, Inc.

By:  /s/ Steven H. Meyer                        (SEAL)
   --------------------------------
   Steven H. Meyer, President

ATTEST:

/s/ Ethel Kaplan                                (CORPORATE SEAL)
-----------------------------------
Secretary or Assistant Secretary

LENDER:

Sovereign Bank

By:
   --------------------------------
   Authorized Officer
<PAGE>

                     DISBURSEMENT REQUEST AND AUTHORIZATION

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Principal      Loan Date     Maturity      Loan No.      Call      Collateral      Account      Officer       Initials
<S>             <C>          <C>            <C>           <C>       <C>             <C>          <C>           <C>
$750,000.00                  04-30-2001                                                           91000
------------------------------------------------------------------------------------------------------------------------
             References in the shaded area are for Lender's use only and do not limit the applicablity
                              of this document to any particular loan or item.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Borrower:  Arc Commumcation, Inc. (TIN: )       Lender:  Sovereign Bank
           788 Shrewsbury Avenue                         Ocean Office
           Tinton Falls, NJ 07724                        901 W. Park Avenue
                                                         Ocean, NJ 07712

LOAN TYPE. This is a Variable Rate (0.500% ovw Sovereign Bank, making an initial
rate of 10.000%), Revolving Line of Credit Loan to a Corporation for $750,000.00
due on April 30, 2001.

PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:

           [_] Personal, Family or Household Purposes.
           [_] Personal Investment.
           [_] Acquire Equipment for Business or Commercial Purposes.
           [x} Business, Agricultural and All Other.

SPECIFIC PURPOSE. The specific purpose of this loan is: Working Capital.

DISBURSEMENT  INSTRUCTIONS.  Borrower  understands that no loan proceeds will be
disburse  until  all of  Lender's  conditions  For  making  the loan  have  been
satisfied. Please disburse the loan proceeds of $750.000.00 as follows:

Amount paid to Borrower directly:                     $0.00

Undisbursed Funds                               $750,000.00
                                                -----------
Note Principal:                                 $750.000.00

CHARGES  PAID IN  CASH.  Borrower  has paid or will  pay in cash as agreed  that
following charges:

Prepaid Financa Charges Paid in Cash:

Other Charges Paid in Casti:                    $  0.00
       $350,00 Documentation Fee
                                                $350.00
Total ChargM Paid In Cash;                      -------
                                                $350.00

AUTOMATIC  PAYMENTS.  Borrowar hereby authorizes Lender  automatically to deduct
from  Borrowers  account  numbered  ____________________  the amount ot any loan
payrnent.  If the funds in the account ars  insufficient  to cover any  payment,
Lender shall not be obligated to advance funds to cover the payment. At any time
and for any  reason.  Borrower  or Lender may  voluntarily  terminate  Automatic
Payments.

LIEN RELEASE FEES. In addition to all other  charges,  Borrower  agrees,  to the
extent  not  prohibitad  by law,  to pay all  governmental  fees for  release of
Lender's security interest in collateral  securing this loan.  Borrower will pay
these fees at the time lien or liens are released.

FINANCIAL  CONDITION.  BY SIGNING THIS  AUTHORIZATION,  BORROWER  REPRESENTS AND
WARRANTS TO LENDER THAT THE  INFORMATION  PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED  IN  BORROWER'S  MOST RECENT  FINANCIAL  STATEMENT TO LENDER.  THIS
AUTHORIZATION IS DATED _________________.

BORROWER:

Arc Communications, Inc.

By:  /s/ Steven H. Meyer                        (SEAL)
   --------------------------------
   Steven H. Meyer, President

ATTEST:

/s/ Ethel Kaplan                                (CORPORATE SEAL)
-----------------------------------
Secretary or Assistant Secretary

LENDER:

Sovereign Bank

By:
   --------------------------------
   Authorized Officer
<PAGE>

COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Principal      Loan Date     Maturity      Loan No.      Call      Collateral      Account      Officer       Initials
<S>             <C>          <C>            <C>           <C>       <C>             <C>          <C>           <C>
$750,000.00                  04-30-2001                                                           91000
------------------------------------------------------------------------------------------------------------------------
             References in the shaded area are for Lender's use only and do not limit the applicablity
                              of this document to any particular loan or item.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Borrower:  Arc Communicationi, Inc. (TIN: )
                788 Shrewsbury Avenue
                Tinton Falls, NJ 07724

Guarantor: Arc Mesa Educators, Inc.
               788 ShrftwabLiry Avenue
               Tinton Falls,  N.J 07724

Lender:    Soveraign Bank
               Ocean Office
               901 W. Park Avenue
               Ocean, NJ 07712

AMOUNT OF GUARANTY. The amount Of this Guaranty is Unlimited.

CONTINUING  UNLIMITED GUARANTY.  For good and valuable  consideration,  Arc Mesa
Educators.  Inc.  ("Guarantor")  absolutely and  unconditionally  guarantees and
promises to pay to Sovereign  Bank  ("Lender") or its order,  in legal tender of
the United States of America, the indebtedness as that term is defined below) of
Arc Communications,  Inc. ("Borrower") to Lender on the terms and conditions set
forth in this  Guaranty.  Under this  Guaranty,  the  liability  of Guarantor Is
unlirnited and the obligations of Guarantor are continuing.

DEFINITIONS.  The following words shall have the following moanings when used in
this Guaranty:

   Borrower. The word "Borrower" means Arc Communications, Inc..

   Guarantor. The word "Guarantor" means Are Mesa Educators, Inc..

   Guaranty.  The word "Guaranty"  means this Guaranty mado by Guarantor for the
   benefit of Lender dated

   Indebtedness- The word "Indebtedness" is used in its most comprehensive sense
   and means and Includes any and all of  Borrower's  liabilities,  obligations,
   debts,  and indebtedness to Lender,  now existing or hereinafter  incurred or
   created, including, without limitation, all loans, advances, interest, costs,
   debts, overdraft indebtedness,  credit card indebtedness,  lease obligations,
   other  obligations,  and  liabililies  of Borrower,  or any of them,  and any
   present or future judgments against Borrower, or any of them; and whether any
   such indebtedness is voluntarily or involuntarily  incurred,  due or not due,
   absolute  or   contingent,   liquidated   or   unliquidated,   determined  or
   undeterniined;  whether  Borrower may ba Ilable  individually or jointly with
   others,  or primarily  or  secondarily,  or as  guarantor or surety;  whether
   recovery on the  Indebtedness  may be or may become  barred or  unenforceabia
   against  Borrowar  for any reason  whatsoever:  and whether the  Indebtedness
   arises  from  transactions  which may be  voidable  on  account  of  infancy,
   Insanity, ultra vires, or otherwise.

   Lender.  The word "Lender" means  Sovereign Bank. its successors and assigns,
   Related  Documents.  The words "Belatod  Documents"  mean and include without
   limitation  all  promissory  notes,   credit  agreements,   loan  agreements,
   environmental agreements,  guaranties, security aareements,  mortgages, deeds
   of trust, and all other instruments,  agreements  and documents,  whether now
   or hereafter existing, executed in connection with the Indebtedness.

MAXIMUM LIABILITY. The maxlinum liability of Guarantor under this Guaranty shall
be unlimited.

NATURE OF GUARANTY.  Guarantor's liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains in force,  Guarantor  intends to
guarantee at all times the performance  and prompt payment when due,  whether at
maturity or earlier by reason of acceleration or otherwise, of all indebtedness.
Accordingly,  no payments made upon the Indebtedness  will discharge or diminish
the continuing liability of Guarantor in connection with any rarnaining portions
of the Indebtedness or any of the Indetitedness  which subsequently arises or is
thereafter incurred or contracted.

DURATION OF GUARANTY.  This  Guaranty  will take effect when  received by Lender
without the necessity of any acceptanco by Lender, or any notice to Guarantor or
to Borrower,  and will continue in full force until all Indebtedness Incurred or
contracted  before receipt by Lender of any notice of revocation shall have been
fully and finally  paid and  satisfied  and all other  obligations  of Guarantor
under this  Guaranty  shall have bean  pertormed in full If Guarantor  elects la
revoke this Guaranty,  Guarantor may only do so in writing.  Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at the address
of Lender  listed above or such other place as Lender may  designate in writing.
Written  revocation  of  this  Guaranty  will  apply  only  to  advances  or new
Indebtedness  created  after  actual  receipt by Lender of  Guarantor's  written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not  include  Indebtedness  whtoh at the time of  notice of  revocation  is
contingent,  unliquidated,  undatermined  or not due  and  which  later  becomes
absolute,  liquidated,  determined  or due.  This Guaranty will conlinue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to  receipt  of  Guarantor's   written  notice  of  revocation,   including  any
extensions,  renewals,  substitutions or rnodifiuations of the Indebtedness. All
renewals.  extensions,  substitutions,  and  modifications of Itie  Indebtedness
granted after Guarantor's revocation,  are contemplated under this Guaranty and.
specifically will not be considered to be new Indebtedness.  This Guaranty shall
bind ttie estate of Guarantor as to  Indebtedness  created both before and after
the death or incapacity of  Guarantor,  regardless of Lender's  actual notice of
Guarantor's   death.   Subject  to  the  toreGOing,   Guarantor's   executor  or
administrator or other legal  representative  may temninate this Guaranty in the
same  manner  in which  Guarantor  might  have  terminated  It and with the same
effect.  Release of any other guarantor or tenriination ot any other guaranty of
the  Indebtedness  shall not  affect  the  liability  of  Guarantor  under  this
Guaranty.  A revocation received by Lander from any one or more Guarantors shall
not affect the liability of any ramaining Guarantors under this Guaranty.  It is
anticipated that fluctuatlona rnay occur in the aggragale amount of Indebtedness
covered by this  Guaranty,  and it is  specifically  acknowledged  and agreed by
Guarantor that reductlona in the arnourtt of Indebtedness,  even to zero dollars
($0.00),  prior to written  revocation of this  Guaranty by Gugrantor  *hall not
constitute  a  termination  of this  Guaranty.  This  Guaranty  l<< binding upon
Guarantor and Guarantor'*  heirs,  successors and assigns so long as any of th<<
guaranteed   Indebtedness  remains  unpaid  and  even  though  the  Indebtedness
guarantood may from time to time be zero dolfan ($0.00),

GUARANTOR'S  AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation  hereof,  without notice or demand and without lessening
Guarantor's  liability  under  this  Guaranty,  from time to time:  (a) prior to
revocation  as set  lorth  above,  to make  one or more  additional  securad  or
unsacured loans to Borrower,  to lease equipment or other goods lo Borrower,  or
otherwise to extend  additional  credit to Borrower:  (b) to alter,  compromise,
renew,  extand,  accelerate,  or otherwise change one or more times the time for
payment  or other  terms  of the  Indebtedness  or any pan of the  Indebtedness,
including  Increases and  decreases of the rate of Interest on the  Indebtednws;
cxton>>lon<<rnay  be repoated and may be for longer than the original loan term:
(c) to  take  and  hold  security  tor  tha  payment  of  thia  Guaranty  or the
Indebtedness,  and exchange, enforce, waive, subordinate,  fall or decide not to
perfect, and retease any>>uch security,  with or without the substitution of new
collateral; (d) to release,  substitute,  agree not to sue, or deal with any one
or more of Borrower's sureties,  endorsers,  or other guarantors an any terms or
In any  manner  Lender  rnay  choose;  (e)  to  determine  how,  when  and  what
application  of payments and credits shall be made on the  indebtedness,  (f) to
apply such  security and direct the order or manner of sale  thereat.  Including
without  limitation,  any  nonjudiclal  sale  permitted  by  the  terms  ol  the
controlling security agreement or deed of trust, as Lender in its
<PAGE>

COMMERCIAL GUARANTY
Loan No                                                              (Continued)

discretion may determina; (g) to sell, transfer, asaign, or grant participations
in all or any part of the  Indebtedness;  and (h) to  assign  or  transfer  this
Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no  representations  or agreements of any kind have been made to
Guarantor  which would  limit or qualify In any way the terms ol this  Guaranty:
(b) this  Guaranty is executed at  Borrower's  request and not at the request of
Landsr;  (c)  Guarantor  has full power,  right and authority to enter into this
Guaranty,  (d) the provisions ol this Guaranty do not conflict with or result in
a default under any agreement or other instrument  binding upon Guarantor and do
not  result  in a  violation  of any  law,  regulation,  court  decree  or order
applicable to Guarantor:  (e) Guarantor has not and will not,  without the prior
written consent of Lender. sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially  all of Guarantor's  assets, Or any
interest therein;  (f) upon Lender's  rsquast,  Guarantor will provido to Lender
financial and credit  information  in (orm  acceptable  to Lender,  and all such
financial  information  which  currently  has  been.  and all  future  financial
Information  which will be provided to Lender is and will be true and correct in
all material respects and fairly present the financial condition of Guarantor as
of the dates the  financial  information  is provided:  (g) no material  adverse
change has occurred in  Guarantor's  financial  condition  since the data of the
most recent  financial  statements  provided to Lender and no event has oceurrad
which may matarially adversely affect Guarantor's  financial  condition:  (h) no
litigation,  claim,  investigation,  administrative proceeding or similar action
(including  those for unpaid taxes) aBainst  Guarantor is pending or threatened;
(i) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower:  and (j) Guarantor has  established  adequate  means of obtaining from
Borrower  on a  continuing  basis  information  regarding  Borrower's  financial
condition.  Guarantor agroes to keep adequately  informed from such means of any
facts,  events, or circumstancos which might in any way affect Guarantor's risks
under this Guaranty,  and Guarantor  further  agrees that,  absent a request for
Information,  Lender  shall have no  obligation  to  disclose to  Guarantor  any
information  or documents  acquired by Lander in the course ol its  relationship
with Borrower.

GUARANTOR'S  WAIVERS.  Except as prohibited by applicable law,  Guarantor waives
any right to require  Lender (a) to continue  lending  money or to extend  other
credit to Borrower; (b) to make any presentment,  protest,  demand, or notice of
any kind,  including  notice of any  nonpayment  of the  indebtedness  or of any
nonpayment  related to any  collateral,  or notice of any action or nonaction on
the part of  Borrower,  Lender,  any surety,  endorser,  or other  guarantor  in
connection  with the  Indebtedness  or in connection with the creation of new or
additional  loans or  obligations:  (c) to  resort  for  paymant  or to  proceed
directly  or at  once  against  any  person,  including  Borrower  or any  other
guarantor:  (d) to procoed  directly  against or exhaust any collateral  held by
Lender from  Borrower,  any other  guarantor,  or any other parson:  (e) to give
notice of the terms,  time,  and place of any public or private sale of personal
property  security  held by Lender  from  Borrower  or to comply  with any other
applicable  provisions of the Uniform  Commercial  Code; (f) to pursue any other
remedy within  Lender's powor: or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor  also waives any and all rights or  defenses  arising by reason of (a)
any "one  action" or  "anti-defioiency"  law or any other law which may  prevent
Lander from  bringing  any action,  including  a claim for  deficiency,  against
Guarantor,   before  or  after  Lender's   commencemont  or  completion  of  any
foreclosure action, either judicially or by exercise of a power of sale: (b) any
election of remedies by Lender  which  destroys or otherwise  adversely  affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement,  including without  limitation,  any loss of rights Guarantor
may  suffer  by reason  of any law  limiting,  qualifying,  or  discharging  the
Indebtedness;  (c) any  disability  or other  defense of Borrower,  of any other
guarantor,  or of any other person,  or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the indebtedness: (d) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness:  (e) any
statute  of  limitations,  if at any time any  action or suit  brought by Lender
against Guarantor is commenced there is outstanding  Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations;  or (f) any
defenses  given to guarantors at law or in equity other than actual  payment and
performance  of the  Indebtedness.  If  payment  is  made by  Borrower,  whether
voluntarily  or  otherwise,  or by any  third  party,  on the  indebtedness  and
thereafter  Lender is forced to remit the amount of that  payment to  Borrower's
trustee  in  bankruptcy  or to any  similar  person  under any  federal or state
bankruptcy  law or law for the  relief of  debtors,  lha  Indebtedness  shall be
considered  unpaid for the purpose of enforcement  of this  Guaranty-  Guarantor
further  waives and agrees not to assert or claim at any time any  deductions to
the amount guaranteed under this Guaranty for any claim of setoff, counterclaim,
counter demand, recoupment or similar right, whether such claim, demand or right
may be asserted by the Borrower, The Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and  consequences  and that, under the  circurnstances,  the
waivers are  reasonable  and not  contrary to public  policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waivar shall be effective only to the extent permitted by law or public policy.

LENDER'S  RIGHT OF SETOFF.  In  addition  to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law. Lender shall have, with respect to Guarantor's  obligations to Lender under
this  Guaranty  and to the  extent  permitted  by law,  a  contractual  security
interest  in and a right  of  setoff  against,  and  Guarantor  hereby  assigns,
conveys,  delivers,  pledges,  and transfers to Lender all of Guarantor's right,
title  and  interest  in and lo,  all  deposits,  monays,  securities  and other
property of Guarantor  now or hereafter in the  possession of or on deposit with
Lender,  whether held in a general or special  account cr deposit,  whether held
jointly  with  someone  else,  or whether  held for  safekeeping  or  otherwise,
excluding  however  all IRA.  Keogh,  and trust  accounts.  Every such  security
interest and right of setoft may be exercised  without  demand upon or notice to
Guarantor.  No security interest or right of setoff shall be deemed to have been
waived by any act or conduct on the pail of Lender or by any neglect to exercise
Such right of setoff or to enforce such security  interest or by any delay in so
doing.  Every right of setoff and security interest shall continue in full force
and effect  until  such right of setoff or  security  interest  is  specifically
waived or released by an instrument in writing executed by Lender.

SUBORDINATION  OF  BORROWER'S  DEBTS TO  GUARANTOR.  Guarantor  agrees  that the
Indebtedness of Borrower to Lender,  whether now existing or hereafter  created,
shall be prior to any claim that  Guarantor  may now have or  hereafter  acquire
against Borrower,  whether or not Borrower becomes  insolvent.  Guarantor hereby
expressly  subordinates any claim Guarantor may have against Borrower,  upon any
account  whatsoever,  to any claim that Lender may now or hereaKer  have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower,  through bankruptcy, by an assignment for the benefit of creditors, by
voluntary  liquidation,  or otherwise,  the assets of Borrower applicable to the
payment of the claims of both Lender and  Guarantor  shall be paid to Lender and
shall be first  applied by Lander to the  Indebtedness  of  Borrower  to Lender.
Guarantor  does hereby  assign to Lender all claims which it may have or acquire
against  Borrower or againsi any assignee or trustee in  bankruptcy of Borrower;
provided  however,  that such assignment shall be affective only for the purpose
of assuring lo Lander full payment in legal tender of the Indebtedness if Lender
so requests,  any notes or credit  agreements  now or hereafter  evidencing  any
debts or obligations of Borrower to Guarantor  shall bemarked with a legend that
the same are subject to this Guaranty and shall be delivered to Lender.

FURTHER  ASSURANCES.  Guarantor agrees, and Lender hereby is authorized,  in the
name of Guarantor,  from time to time to execute and file  financing  statements
and continuation statements and to execute such other documents and to take such
other actions as Lender dooms necessary or appropriate to perfect,  preserve and
enforce its rights under this Guaranty.

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part of
this Guaranty:  Amendments.  This Guaranty, together wilh any Related Documents,
constitutes  the entire  understanding  and  agreement  of the parties as to the
matters  set forth in this  Guaranty.  No  alteration  of or  amendment  to this
Guaranty shall be effective  unless given in writing and signod by trie parly or
parties sought to be charged or bound by the alteration or amendment,
<PAGE>

                               COMMEHCIAL GUARANTY
Loan No                                                              (Continued)

Applicable  Law- This  Guaranty  has bean  dallvered  to Lender and  accepted by
Lender in tha State of New Jeraey. If there is a lawsuit,  Guarantor agrees upon
Lender's  request to submit to the  jurisdiction  of the courts of Ocean County,
State of New Jersey.  Lander and  Guarantor  hereby waive that right to any jury
trial in any action,  proceeding,  or  counterclaim  brought by either Lender or
Guarantor against the other. This Guaranty shall be governed by and construed in
accordance with the laws of the State of New Jersey.

Attorneys'  Fees;  Expense.  Guarantor agrees to pay upon demand all of Lender's
costs and  expenses,  including  attorneys'  fees and  Lenders  legal  expenses,
incurred in connection  with the  enforcement of this  Guaranty.  Lender may pay
someone else to help enforce this  Guaranty,  and Guarantor  shall pay the costs
and expenses of such enforcement.  Costs and expenses include Lender's attomays'
fees and legal expenses whether or not there is a lawsuit,  including attorneys'
feos and legal expenses tor  bankruptcy  procoadings  (and including  efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services.  Guarantor also shall pay all court costs and
such additional fees as may be directed by the court.

Notice. All notices required to be given by either party to the other under this
Guaranty shall be in writing,  may be sent by  telefacsimile  (unlass  otherwise
required by taw),  and,  except for  revocation  notices by Guarantor,  shall be
effective when actually delivered or when deposited with a nationally recognizad
overnight  courier,  or when  deposited in the United  States mail,  first class
postage prepaid, addressed to the party to whom (he notice is to ba given at the
address shown above or to such olher  addresses as either party may designate to
lha other in writing all revocation notices by Guarantor shall bo in writing and
shall be effective only upon delivery to Lender as provided above in the section
titled  "DURATION OF GUARANTY." If there is more than one  Guarantor,  notice to
any Guarantor will  constitute  notice to all Guarantors.  For notice  purposes.
Guarantor  agrees to keep Lender  informed at all times of  Guarantor's  current
address.

Interpretation. In all cases where there is more than one Borrower or Guarantor,
then all words used in this  Guaranty  in the  singular  shall be deemed to have
been used in the plural where the context and construction so require, and where
there is more than one Borrower  named in this Guaranty or when this Guaranty is
executed  by more than one  Guarantor,  the  words  "Borrower"  and  "Guarantor-
respectively  shall mean all and any one or more of them. The words 'Guarantor,"
'Borrower," and "Lender" include the heirs, succassors, assigns, and transferaas
of each of them- Caption headings in this Guaranty are for convenience  purposes
only  and are not to be used to  interpret  or  define  tha  provisions  of this
Guaranty,  If a court of  competent  jurisdiction  finds any  provision  of this
Guaranty to be invalid or unenforceable  as lo any person or circumstance,  such
finding shall not render that provision invalid or unenforceable as to any other
persons or  circumstances,  and all  provisions  of this  Guaranty  in all other
respects shall remain valid and  enforceable.  If any one or more of Borrower or
Guarantor are  corporations or  partnerships,  It is not necessary for Lender to
inquire into the powers of Borrower or Guarantor or of the officers,  directors,
partners,  or  agents  acting  or  purporting  to act on their  behalf,  and any
Indebtedness  made or created in reliance  upon the  professed  exercise of such
powers shall be guaranteed under this Guaranty.

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

REQUEST  FOR  FINANCIALS.  Borrower  and  Guarantors)  agrea to  provide  signed
financial  statements  in a form  satisfactory  to the Lender within ninety (90)
days of fiscal year end and tax returns within fifteen (15) days of filing on an
annual basis.  Failure to provide updated  financial  statements and tax returns
shall ba considered as a default of the Note.

EACH UNDERSIGNED  GUARANTOR  ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION,  EACH GUARANTOR  UNDERSTANDS THAT
THIS  GUARANTY IS  EFFECTIVE  UPON  GUARANTOR'S  EXECUTION  AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE  UNTIL  TERMINATED IN THE
MANNER  SET  FORTH IN THE  SECTION  TITLED  -DURATION  OF  GUARANTY."  NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY

GURANTOR:

Arc Mesa Educators, Inc.

By: _____________________ (SEAL)

    Steven H. Mayer, President

Signed, acknowledged and delivered in the presence of:

x ___________________________
  Witness

x ____________________________
  Witness
<PAGE>
COMMERCIAL SECURITY AGREEMENT

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
 Principal      Loan Date     Maturity      Loan No.      Call      Collateral      Account      Officer       Initials
<S>             <C>          <C>            <C>           <C>       <C>             <C>          <C>           <C>
$750,000.00                  04-30-2001                                                           91000
------------------------------------------------------------------------------------------------------------------------
             References in the shaded area are for Lender's use only and do not limit the applicablity
                              of this document to any particular loan or item.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Borrower:  Arc Communications, Inc. (TIN: )     Lender:   Sovereign Bank
           788 Shrewsbury Avenue                          Ocean Office
           Tinton Falls. NJ 07724                         901 W. Park Avenue
                                                          Ocean, NJ 07712

THIS COMMERCIAL  SECURITY AGREEMENT is entered into between Arc  Communtcationa.
Inc. (referred to below as 'Grantor");  and Sovereign Bank (referred to below as
"Lender").  For  valuable  consideration,  Grantor  grants to Lender a  security
interest in the  Collatarel  to aecure the  Indebtedness  and agrees that Lender
shall have the rights stated in this Agreement  with respect to the  Collateral,
in addition to all other rights which Lendor may hava by law.

DEFINITIONS.  The following words shall have the following meanings when used in
this  Agreement.  Terms not otherwise  defined in this Agreement  shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar  amounts  shall mean amounts in lawful  money of the United  States of
America.

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

   Collateral.  The word "Collateral" means the following  described property of
Grantor,  whether  now owned or  hereafter  acquired,  whether  now  existing or
hereafter arising, and wherever located

        Accounts Receivables

In addition, the word "Collateral" means all the following. whether now owned or
hereafter  acquired,  whather now  existing or hereafter  arising,  and wherever
located:

          (a) All attachments,  accessions, accessories, tools, parts, supplies,
        increases,  and additions to and all  replacements of and  substitutions
        for any properly described above.

          (b) All products and produce of any of the property  described in this
        Collataral section.

          (c) All accounts,  general  intangibles,  instruments,  rents, moniea.
        payments,  and all other rights,  arising out of a sale, lease, or other
        disposition of any of the property described in this Collateral section.

          (d)  All  proceeds  (including  Insurance  proceeds)  from  the  sale,
        destruction, loss, or other disposition of any of the property described
        in this Collateral section.

          (e) Ail records and data relating to any of the property  described in
        this Collateral section,  whether in the form of a writing,  photograph,
        microfilm,  microfiche,  or  electronic  media,  together  with  all  of
        Grantor's  right,  title,  and interest in and to all computer  software
        required to utilize,  create,  maintain, and process any such records or
        data on electronic media,

Event of  Default-  The  words  "Event  of  Default"  mean and  include  without
limitation  any of the Events of Default set forth  below in the section  titled
"Events of Default."

Grantor.  The word "Grantor" means Arc Communications,  Inc., its successors and
assigns

Guarantor.  The word "Guarantor" means and includes without  limitation each and
all of the guarantors,  sureties,  and accommodation  parties in connection with
the  Indebtedness.

Indebtedness.  The word "Indebtedness"  means the indebtedness  evidenced by the
Note, including all principal and interest, together with all other indebtedness
and costs and expenses for which Grantor is responsible  under this Agreement or
under any of the Related Documents.

Lender. Tha word "Lender" means Sovereign Bank, its successors and assigns.

Note. The word "Note" maans the note or credit agreeent dated __.___________, in
the principal  amount of $750,000.00  from Arc  Communications.  Inc. to Lender,
together with all renewals of, extensions of, modificatlons of, refinancings of,
consolidations of and substitutions for the note or credit agreement.

Related  Documents.  The words  "Related  Documents"  mean and  include  without
limitation  all  promissory   notes,   credit   agreemenis,   loan   agreements,
environmental agreements,  guaranties, security agreements,  mortgages, deeds of
trust,  and all other  instruments,  agreements  and  documents,  whether now or
hereafter existing, executed in connection with the Indebtedness.

RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest in
and hereby assigns, conveys,  delivers,  pledges, and transfers all of Grantor's
right,  title and interest in and to  Grantor's  accounts  with Lender  (whether
checking,  savings, or some other account),  including all accounts held jointly
with someone else and all  accounts  Grantor may open in the future,  excluding,
however, all IRA and Keogh accounts,  and all trust accounts for which the grant
of a security interest would be prohibited by law. Grantor authorizes Lender, to
the extent  permitted by  applicable  law, to charge or setoff all  indebtedness
against any and all such accounts.

OBLIGATIONS OF GRANTOR. Qrantor warrants and covenants to Lender as follows:

   Perfection of Security  Interest.  Grantor  agrees to execute such  financing
statements and to take whatever other actions are requested by Lender to perfect
and  continue  Lender's  security  interest in the  Collataral.  Upon request of
Lender,  Grantor will deliver to Lender any and all of the documents  evidencing
or constituting the Collateral, and Grantor will note Lender's Interest upon any
and all  chattel  paper if not  delivered  to Lender for  possession  by Lender,
Grantor  hereby  appoints  Lender as its  irrevocable  attorney-in-fact  for the
purpose of  executing  any  documents  necessary  to perfect or to continue  the
security interest granted in this Agreement. Lender may at any time, and without
further  authorization  from  Grantor,  file a  carbon,  photographic  or  other
reproduction  of any  financing  statement  or of  this  Agreement  for use as a
financing  statement.  Grantor  will  reimburse  Lender for all expenses for the
perfection and the continuation of the perfection of Lenders  sacurity  interest
in the  Collateral.  Grantor  promptly  will notify  Lender before any change in
Grantor's  name  including any change to the assumed  business names of Grantor.
Thti is a continuing  Security agreement and will continue in effect even though
all or any part of the indebtendess is paid in full and even though for a period
of time Grantor may not be indebted to Lender.

   No Violation.  The execution and delivery of this  Agreement will not violate
any law or agreement  governing  Grantor or to which Grantor ia a party, and its
certificate or articles of incorporation  and bylaws do not prohibit any term or
condition of this Agreement.
<PAGE>

                         COMMERCIAL SECURITY AGREEMENT
 Loan No                                                             (Continued)

Enforceability of Collateral. To the extent the Collateral consists of accounts,
chattel  paper,  or  general  intangibles,  tha  Collateral  is  enforceable  in
accordance  with its terms,  is  genuine,  and  complies  with  applicable  laws
concerning  form,  content  and manner of  preparation  and  execution,  and all
persons  appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral.

Location of the  Collateral.  Grantor,  upon request of Lender,  will deliver to
Lender  in form  satisfactory  to  Lender  a  schedule  of real  properties  and
Collateral  locations  relating  to  Grantor's  operations,   including  without
limitation  the  following;  (a) all real property  owned or being  purchased by
(Grantor:  (b) all real  property  being  rented or leased by  Grantor;  (c) all
storage facilities owned, rented,  leased, or being used by Grantor; and (d) all
other properties  where Collateral is or may be located.  Except in the ordinary
course  of its  business.  Grantor  shall not  remove  the  Collateral  from its
existing locations without the prior written consent of Lender.

Removal of  Collateral-  Grantor shall keep the Collateral (or to the extent the
Collateral  consists  of  intangible  property  such as  accounts,  the  recorda
concerning the  Collateral) at Grantor's  address shown above,  or at such other
locations as are  acceptable  to Lender,  Except in the  ordinary  course of its
business,  including  the  sales of  inventory.  Grantor  shall not  remove  the
Collateral  from its existing  locations  without the prior  written  consent of
Lender. To the extent that the Collateral consists of vehicles,  or other titled
property.  Grantor  shall not take or permit  any  action  which  would  require
application for  certificates of title for the vehicles outside the State of New
Jersey, without the prior written consent of Lender.

Transactions  Involving  Collateral.  Except  for  inventory  sold  or  accounts
collected in the ordinary course of Grantor's business, Grantor shall not selll,
offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor
is not in default under this Agreement. Grantor may selll inventory, but only in
the ordinary course of its business and only to buyers who qualify as a buyer in
the  ordinary  course of business.  A sale in the  ordinary  course of Grantor's
business does not include a transfer in partial or total  satisfaction of a debt
or any bulk sale.  Grantor  shall not pledge,  mortgage,  encumber or  otherwise
permit the Collateral to be subject to any lien. security interest, encumbrance,
or charge,  other than the security  interest  provided  for in this  Agreement,
without the prior written consent of Lender.  This includes  security  interests
even if junior in right to the security  interests granted under this Agreement.
Unless waived by Lender,  all proceeds  (from any  disposition of the Collateral
(for  whatever  reason)  shall be held in trust  for  Lender  and  shall  not be
commingled with any other funds;  provided  however,  this requirement shall not
constitute  consent by Lender to any sale or other  disposition.  Upon  receipt,
Grantor shall immediately deliver any such proceeds to Lender

Title.  Grantor  represents  and  warrants  to  Lender  that it  holds  good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement.  No financing  statement  covering any of
tha  Collateral  is on file in any public  office other than those which reflect
the  security  interest  created  by  this  Agreement  or to  which  Lender  has
specifically  consented.  Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.

Collateral  Schedules  and  Locations.  Insofar as the  Collateral  consists  of
inventory,  Grantor shall deliver to Lender,  as often as Lender shall  require,
such lists,  descriptions,  and  designations  of such  Collateral as Lender may
require to identify the nature,  extent,  and location of such Collateral,  Such
information  shall be  submitted  for  Grantor and each of its  subsidiaries  or
related  companies.

Maintenance  and Inspection of  Collateral.  Grantor shall maintain all tangible
Collateral in good condition and repair Grantor will not commit or permit damage
to or destruction of the  Collateral or any part of the  Collateral.  Lender and
its designated representatives and agents shall have the right at all reasonable
times to examine,  inspect,  and audit the Collateral wherever located.  Grantor
shall  immediately  notify Lender of all cases involving the return,  rejection,
repossession,  loss or damage of or to any Collateral: of any request for credit
or adjustment or of any othar  dispute  arising with respect to the  Collateral;
and generally of all happenings and events affecting the Collateral or the value
or the amount of the Collateral.

Taxes,  Assessments and Liens. Grantor will pay when due all taxes,  assessments
and liens upon the Collateral,  its use or operation,  upon this Agreement, upon
any promissory  note or notes  evidencing the  Indebtedness,  or upon any of the
other  Related  Documents  Grantor may withhold any such payment or may elect to
contest  any  lien  if  Grantor  is in  good  faith  conducting  an  appropriate
proceeding to contest the obligation to pay and so long as Lender's  interest in
the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is
subjected to a lien which is not discharged  within  fifteen (15) days.  Grantor
shall  daposit with Lender cash,  a  sufficient  corporate  surety bond or other
security  satisfactory  to Lender  in an  amount  adequate  to  provide  for the
discharge of the lien plus any interest, costs, attorneys' fees or other charges
that could accrue as a result of foreclosure or sale of the  Collateral.  In any
contest  Grantor  shall  defend  itself and Lender and shall  satisfy  any final
adverse judgment before enforcement  against the Collateral.  Grantor shall name
Lender as an additional  obligee under any surety bond  furnished in the contest
proceedings.

Compliance With  Governmental  Requirementa.  Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law, ordinanca
or  regulation  and  withhold   compliance  during  any  proceeding,   including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.

Hazardous Substances.  Grantor represents and warrants that the Collateral never
has been,  and  never  will be so long as this  Agreement  remains a lien on the
Collateral,  used  for the  generation,  manufacture,  storage,  transportation,
treatment,  disposal,  release or threatened  release of any hazardous waste or
substance,  as those  terms  are  defined in the  Comprehensive  Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq.  ("CERCLA"),  the Superfund  Amendments and Reauthorization Act of
1986, Pub, L. No. 99-499 ("SARA"),  tha Hazardous Materials  Transportation Act.
49 U.S.C. Section 1801, et seq., the Resource  Conservation and Recovery Act. 42
U.S.C.  Section 6901, et seq. the New Jersey  Industrial Site Recovery Act, NJSA
Section 13:1K-6 (ISRA"), tha New Jersey Spill Compensation and Control Act, NJSA
58:10-2311,  et seq,,  or other  applicable  state or Federal  laws,  rules,  or
regulations  adopted  pursuant  to any of the  foregoing.  The terms  "hazardous
waste"  and  "hazardous  substance"  shall  also  include,  without  limitation,
petroleum and petroleum  by-products or any fraction  thereof and asbestos,  The
representations  and  warranties  contained  herein are based on  Grantor's  due
diligence in  investigating  the Collateral for hazardous wastes and substances.
Grantor  hereby (a) releases  and waives any future  claims  against  Lender for
Indemnity or  contribution  in the event Grantor  becomes  liable for cleanup or
other costs under any such laws,  and (b) agrees to indemnify  and hold harmless
Lender  against  any and all claims and losses  resulting  from a breach of this
provision of this  Agreement.  This  obligation  to indemnify  shall survive the
payment of the Indebtedness and the satisfaction of this Agreement.

Maintanance of Casualty Iniurance.  Grantor shall procure and maintain all risks
insurance,  including  without  limitation  fire,  theft and liability  coverage
together  with such other  insurance  as Lender may require  with respect to the
Collateral,  in form,  amounts,  coverages  and basis  reasonably  acceptable to
Lender and Issued by a company or  companies  reasonably  acceptable  to Lender.
Grantor,  upon  request of Lender,  will deliver to Lender from time to time the
policies or certificates of Insurance in form satisfactory to Lender,  including
stipulations that coverages will not be cancelled or diminished without at least
thirty  (30)  days'  prior  written  notice  to  Lender  and not  including  any
disclaimer  of the insurer's  liability for failure to give such a notice.  Each
insurance  policy also shall Include an endorsernant  providing that coverage in
favor of Lender will not be impaired in any way by any act,  omission or default
of Grantor or any other person.  In connection with all policies covering assets
in which  Lender holds or is offered a security  interest,  Grantor will provide
Lender with such loss payable or other  endorsements  as Lender may requira.  If
Grantor at any time fails to obtain or maintain any insurance as required  under
this Agreement, Lender may (but shall not bo obligated to) obtain such insurance
as  Louder  deems  appropriate,  including  if it so  chooses  "single  interest
insurance," which will cover only Lender's interest in the Collateral.
<PAGE>
                          COMMERCIAL SECURITY AGREEMENT
     Loan No                                                         (Continued)

Application of Insurance  Proceeds.  Grantor shall promptly notify Lender of any
loss or damage to the Collateral. Lender may make proof of loss if Grantor fails
to do so within fifteen (15) days of the Casualty, all proceeds at any insurance
on the Collateral,  including accrued proceeds thereon,  shall be held by Lender
as part of the  Collateral.  If Lender  consents to repair or replacement of the
damaged or  destroyed  Collateral,  Lender  shall,  upon  satisfactory  proof of
expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost
of repair or rastoration. If Lender does not consent to repair or replacement of
the Collateral,  Lender shall retain a sufficient  amount of the proceeds to pay
all of the  Indebtedness,  and shall pay the  balance to Grantor.  Any  proceeds
which have not been  disbursed  within six (6) months  after  their  receipt and
which Grantor has not committed to the repair or  restoration  of the Collateral
shall be used to prepay the Indebtedness.

lnsurance  Reerves.  Lender may require Grantor to maintain with Lender reserves
for payment of insurance  premiums,  which  reserves shall be created by monthly
payments  from Grantor of a sum estimated by Lender to be sufficient to produce,
at least  fifteen (15) days before the premium due date,  amounts at least equal
to the  insurance  premiums to be paid.  If fifteen (15) days befare  payment is
due,  the  reserve  funds are  insufficient,  Grantor  shall upon demand pay any
deficiency  to Lender.  The  reserve  funds shall be held by Lender as a general
deposit and shall  constitute a  non-interest-bearing  account  which Lender may
satisfy by payment of the Insurance  premiums  required to be paid by Grantor as
they become due.  Lender does not hold the reserve  funds in trust for  Grantor,
and Lender is not the agent of Grantor  for  paymant of the  insurance  premiums
required to ba paid by Grantor.  The  responsibility hor the payment of premiums
shall remain Grantor's sole responsibility.

Insurance  Reporta.  Grantor,  upon request of Lender,  shall  furnish to Lender
reports on each existing policy of insurance  showing such Information as Lender
may reasonably  request Including the following;  (a) the name of the insurer;
(b) the risks insured:  (c) the amount of the policy:  (d) the property insured;
(e) the then current value on the basis of which insurance has been obtained and
the manner of determining that value; and (f) the expiration date of the policy.
In addition,  Grantor shall upon request by Lender  (however not more often than
annually) have an independent  appraiser  satisfactory to Lender  determine,  as
applicable, the cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of the
tangible  personal property and beneficial use of all the Collateral and may use
it in any lawful  manner not  inconsistent  with this  Agreement  or the Related
Documents,  provided that Grantor's right to possession and beneficial use shall
not apply to any  Collateral  where  possession  of the  Collateral by Lender is
required by law to perfect Lender's  security  interest in such  Collateral.  If
Lender at any time has possession of any Collateral,  whether betore or after an
Event of Default,  Lender shall be deemed to have exercised  reasonable  care in
the custody and  preservation  of the Collateral if Lender takes such action for
that purpose as Grantor shall request or as Lender, in Lender's sole discretion,
shall deem appropriate under the circumstances, but failure to honor any request
by Grantor shall not of itself be deemed to be a failure to exercise  reasonable
care.  Lender shall not be required to Lake any steps  necessary to preserve any
rights in the  Collateral  against prior  parties,  nor to protect,  preserve or
maintain any security interest given to secure the Indebtedness.

EXPENDITURES  BY LENDER.  If not  discharged  or paid when due,  Lender may (but
shall  not  bo  obligated  to)  discharge  or pay  any  amounts  required  to be
dischargod or paid by Grantor under this Agreement, including without limitation
all taxes,  liens,  security Interests,  encumbrances,  and other claims, at any
time  levied or  placed on the  Collateral.  Lender  also may (but  shall not ba
obligated  to) pay all  costs  for  insuring,  maintaining  and  preserving  the
Collateral.  All such expenditures  incurred or paid by Lender for such purposes
will  then  bear  interest  at the rate  charged  under  tha Note  from the date
incurred  or paid by  Lender  to the  date of  repayment  by  Grantor.  All such
expenses shall become a part of the Indebtedness  and, at Lender's option,  will
(a) be  payable  on  demand,  (b) be  added  to the  balance  of the Note and be
apportioned  among and be payable  with any  installment  payments to become due
during  either  (i) the  term of any  applicable  insurance  policy  or (ii) the
remaining term of the Note. or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity.  This Agreement also will secure payment
of these  amounts.  Such  right  shall be in  addition  to all other  rights and
remedias to which  Lender may be  entitled  upon the  occurrence  of an Event of
Default.

EVENTS OF DEFAULT.  Each of the following  shall  constitute an Event ot Default
undar this Agreement:

   Default on  indebtedness.  Failure o( Grantor to make any payment when due on
   the Indebtedness.

   0ther  Dafault.  Failure of Grantor  lo comply  with or to perform  any other
   term, obligation, covenant or condition contained in this Agreement or in any
   of the  Related  Documents  or in any  other  agreemant  between  Lender  and
   Grantor.

   Default In Favor of Third  Parties.  Should  Borrower or any Grantor  default
   under any loan,  extension of cradit,  security agreement,  purchase or sales
   agreement,  or any other agreement,  in favor of any other creditor or person
   that may  materially  affect any of Borrower's  property or Borrower's or any
   Grantor's ability to repay the Loans or perform their respective  obligations
   under this Agreement or any of the Related Documents..

   False Statements. Any warranty, representation or statement made or furnished
   to Lender by or on behalf of Grantor  under this  Agreement,  the Note or the
   Related Documents is false or misleading in any material respect,  either now
   or at the time made or furnished.

   Defective  Collaterallzatlon.  This Agreement or any of the Related Documenis
   ceases to be in full force and effect  (including  failure of any  collateral
   documants to create a valid and perfected  security  interest or lien) at any
   time and for any reason.

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

   Creditor or Forefeiture Procedings. Commencement of foreclosure or forfeiture
   proceedings, whether by judicial proceeding,  self-help,  repossession or any
   other  method,  by any  creditor  of  Grantor or by any  governmental  agency
   against the  Collateral or any other  collateral  securing the  Indebtedness.
   This includes a garnishment ot any of Grantor's deposit accounts with Lender.
   However,  this  Event of  Default  shall not  apply if there is a good  faith
   dispute by Grantor as to the validity or reasonableness of the claim which is
   the basis of the  creditor  or  forfeiture  proceeding  and if Grantor  gives
   Lender written  notice of the creditor or forfeiture  proceeding and deposits
   with  Lerider  monies  or a  surety  bond  for  the  creditor  or  forfeiture
   proceeding,  in an amount  determined by Lender,  in its sole discretion,  as
   being an adequate reserve or bond for the dispute.

   Events Affecting  Guarantor.  Any of the preceding events occurs with respect
   to any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
   incompetent, Lender, at its Option, may, but shall not be required to, permit
   the Guarantor's  estate to assume  unconditionally  the  obligations  arising
   under the guaranty in a manner satisfactory to Lender, and, in doing so, cure
   the Event of Default.

   Adverse  Change.  A material  adverse  change  occurs in Grantor's  financial
   condition,  or Lender  believes the prospect of payment or performance of the
   Indebtedness is impaired.

   Insecurity. Lender, in good faith, deems itself insecure.

   Right to Cure.  If any  default,  other  than a Default on  indebtedness,  is
   curable and if Grantor  has not been given a prior  notice of a breach of the
   same  provision of this  Agreement,  it may be cured (and no Event of Default
   will have) occurred) If Grantor,  after Lender sends written notice demanding
   Cure of such default, (a) cures the default within fifteen (15) days; or (b).
   if the cure requires more than fifteen (15) days, immediately initiates steps
   which Lender deems in Lender's  sole  discretion to be sufficient to cure the
   default and  thereafter  continues and completes all reasonable and necessary
   steps sufficient to produce compliance as soon as reasonably practical.

   RIGHTS AND  REMEDIES ON  DEFAULT.  If an Event of Default  occurs  under this
   Agreement, at any time thereaftor, Lender shall have all the rights of
<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
                                   (Continued)
Loan No                                                                   page 4
--------------------------------------------------------------------------------

 A secured party under the New Jersey Uniform  Commercial  Code. In addition and
 without  limitation.  Lender  may  exercise  arty one or more of the  following
 rights and remedies

        Accelerate  Indebtedness.  Lender may declare  the entire  Indebtedness,
        including  any  prepayment  penalty,  which Grantor would be required to
        pay, Immediately Clue and payable, without notice.

        Assemble Collateral. Lender may require Grantor to deliver to Lender all
        or any portion of the Collateral and any and all  certificates  of title
        and other  documents  relating  in the  Collateral  Lender  may  require
        Grantor to assemble the  Collateral and make it available lo Lender at a
        place to be designated  by Lender.  Lender also shall have full power to
        enter upon the property of Grantor to take  possession of and remove the
        Collateral.  If the Collateral  contains other goods not covered by this
        Agreement at the time of  repossession.  Grantor  agrees Lender may take
        such other  goods,  provided  that Lender  makes  reasonable  efforts to
        return them to Grantor after repossession.

        Sell the  Collateral.  Lender  shall  have  full  power to sell,  lease,
        transfer,  or otherwise deal with the Collateral or proceeds  thereof In
        Its own name or that of  Grantor.  Lender  may sell  the  Collateral  at
        public  auction or private  sale.  Unless the  Collateral  threatens  lo
        decline  speedily  In  value  or  is of a  type  customarily  sold  on a
        recognized  market,  Lender will give Grantor  reasonable  notice of the
        time after which any private sale or any other  intended  disposition of
        the  Collateral Is to be made.  The  requirements  o< reasonabia  notice
        shall be met if such  notice is given at least ten (10) days  before the
        time  of  the  sale  or  disposition.   All  expenses  relating  to  the
        disposition of the Collateral, including without limitation the expenses
        of  retaking,  holding,  insuring,  preparing  for sale and  selling the
        Collateral,  shall  become a part of the  Indebtedness  secured  by this
        Agreement and shall be payable on demand, with Interest at the Note rate
        from date of expenditure until repaid.

        Appoint  Receiver.  To the extent  permitted by applicable  law.  Lender
        shall have the following  rights and remedies  regarding the appointment
        of a receiver,  (a) Lender may have a receiver  appointed  as a manor of
        right,  (b) the  receiver  may be an  employee  of Lender  and may serve
        without  bond,  and (c) all fees of the receiver and his or her attorney
        shall  become part of the  Indebtedness  secured by this  Agreement  and
        shall be payable on demand,  with Interest at the Note rate from date of
        expenditure until repaid.

        Collect  Revenues,  Apply  Account.  Lender,  either itself or through a
        receiver, may collect the payments, rents, income, and revenues from the
        Collateral.  Lender  may at any  time  in its  discretion  transfer  any
        Collateral  into its own name or that of its  nominee  and  receive  the
        payments,  rents,  income,  and revenues there from and ho)d the same as
        security for the Indebtedness or apply it to payment of the indebtedness
        In such  order of  preference  as Lender may  determine.  Insofar as the
        Collateral  consists  of  accounts,   general   intangibles,   insurance
        policies,  Instruments,  chattel  paper,  chooses in action,  or similar
        property,  Lender may demand, collect, receipt for, settle,  compromise,
        adjust, sue for,  foreclose,  or realize on the Collateral as Lender may
        determine,  whether or not Indebtedness or Collateral!  is then due. For
        these  purposes.  Lender  may,  on behalf of and In the name of Grantor,
        receive,  open and dispose of mail  addressed  to  iSrantor:  change any
        address to which mail and  payments are to be sent;  and endorse  notes,
        checks, drafts, money orders,  documents of title, instruments and items
        pertaining  to  payment,  shipment,  or  storage of any  Collateral.  To
        facilitate collection, Lender may notify account debtors and obligors on
        any Collateral lo make payments directly to Lender.

        Other Rights and Remedies, Lender shall have all the rights and remedies
        of a secured  creditor  under the  provisions of the Uniform  Commercial
        Code,  as may be amended from time to time.  In  addition.  Lender shall
        have and may  exercise  any or all other rights and remedies it may have
        available at law, in equity, or otherwise.

        Cumulative  Remedies*.  All of  Lender's  rights and  remedies,  whether
        evidenced  by this  Agreement  or the Related  Documents or by any other
        writing,  shall  be  cumulative  and  may  be  exercised  singularly  or
        concurrently.  Election by Lender to pursue any remedy shall not exclude
        pursuit of any other remedy,  and an election to make  expenditure or to
        take action to perform an obligation  of Grantor  under this  Agreement,
        after Grantor's  failure to perform,  shall not affect Lender's right to
        declare a default and to exercise its remedies.

        MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a
        part of this Agreement;

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

        Applicable Law. This Agreement has been delivered to Lender and accepted
        by Lender in the State of New  Jersey.  If there is a  lawsuit.  Grantor
        agrees upon Lender's request to submit to the jurisdiction of the courts
        of the State of New Jersey. Lender and Grantor hereby waive the right to
        any jury trial In any action,  proceeding,  or  counterclaim  brought by
        either  Lender or Grantor  against the other.  This  Agreement  shall be
        governed by and  construed in  accordance  with the laws of the Stat8 of
        New Jersey.

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

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

        Notices.  All notices required to be given under this Agreement shall be
        given  in  writing,  may be  sent  by  telefacsimile  (unless  otherwise
        required by law), and shall be effective when actually delivered or when
        deposited with a nationally recognized overnight courier or deposited in
        the United Stales mail, first class,  postage prepaid,  addressed to the
        party to whom the notice is to be given at the address shown above.  Any
        party may change its address for notices under this  Agreement by giving
        formal written notice to the other parties,  specifying that the purpose
        of the notice is to change the party's address.  To the extent permitted
        by  applicable  law,  if there is more than one  Grantor,  notice to any
        Grantor will  constitute  notice to all Grantors.  For notice  purposes.
        Grantor  will keep  Lender  informed at all times of  Grantor's  current
        address(es).

        No Joint Venture or Partnership. The relationship of Grantor arid Lender
        created by this  Agreement  is  strictly  that of  debtor-creditor,  and
        nothing  contained in this Agreement or in any of the Related  Documents
        shall be deemed or construed to create a  partnership  o" Joint  venture
        between Grantor and Lender.

        Power of Attorney. Grantor hereby appoints Lender as its true and lawful
        attomey-in-fact,  irrevocably, with full power of substitution to do the
        following: (a) to demand, collect, receive, receipt for, sue and recover
        all sums of money or other  property  which may now or hereafter  become
        clue,  owing or payable from the  Collateral,  (b) to execute,  sign and
        endorse any and all claims,  instruments,  receipts,  checks,  drafts or
        warrants  issued  in  payment  for  the  Collateral:  (c) to  settle  or
        compromise any and all claims arising under the Collateral,  and, in the
        place and stead of  Grantor,  to execute  and  deliver  Its  release and
        settlement (or the claim; and (d) to file any claim or claims or to take
        any action or institute or take part In any  proceedings,  either in its
        own  name  or in  the  name  of  Grantor,  or  otherwise,  which  in the
        discretion of Lender may seem to be necessary or  advisable.  This power
        is given as security  for the  Indebtedness,  and the  authority  hereby
        conferred is and shall be irrevocable and shall remain in full force and
        effect until renounced by Lender.

        Severabitity.  if a court of competent  jurisdiction finds any provision
        of this Agreement to be invalid or unenforceable as to any person or
<PAGE>
>

                         COMMERCIAL SECURITY AGREEMENT
                                   (Continued)

Loan No                                                                   Page 5
--------------------------------------------------------------------------------

        circumstance,  such finding shall not render that  provision  invalid or
        unenforceable as to any other persons or circumstances. If feasible, any
        such offending  provision shall be deemed to be modfied to be within the
        limits  of  enforceability  or  validity;   however,  if  the  offending
        provision  cannot be 30  modified,  it shall be  stricken  and all other
        provisions of this  Agreement in all other  respects  shall remain valid
        and enforceable.

        Successor  Interests.  Subject  to the  limitations  set forth  above on
        transfer of the  Collateral,  this  Agreement  shall be binding upon and
        inure to the benefit of the parties, their successors and assigns,

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

GRANTOR  ACXNOWLEDQES HAVING HEAD ALL THE PROVISIONS OF TMIS COMMERCIAL SECURITY
AGREEMENT   AND   GRANTOR    AGHEES   TO   ITS   TERMS.    THIS   AGREEMENT   IS
DATED_____________________________.

GRANTOR:

Arc Communications, Inc.

By:  /s/ Steven H. Meyer, President    (SEAL)
     -------------------------------
     Steven H. Meyer, President

 ATTEST

 /s/                                            ( Corporate Seal )
-------------------------------------
 Secretary or Assistant Secretary

LENDER:
Sovereign Bank

By:
  -------------------------------------------
Authorized Officer

<PAGE>

<TABLE>
<CAPTION>
<S>                                             <C>                                                          <C>

This FINANCING STATEMENT IS presented to a filing  officer for filing                                      Maturity date (if any):
pursuant to the Uniform Commercial Code.
------------------------------------ ---------- -------------------------------------------------------  ---------------------------
FOR OFFICE USE ONLY                             Debtor(s) Name (Last Name, First) Complete Address           Maturity date (if any)
                                                                                                            ----------------------

                                                  Arc Conimunications, lnc.                              ---------------------------
                                                  788 Shrewsbury Avenue                                      FOR OFFICE USE ONLY
                                                  Tinton Falls, NJ 07724

                                                -------------------------------------------------------
                                                Secured Party(ies) and Complete Address

                                                  Sovereign Bank
                                                  901 W. Park Avenue
                                                  Ocean, NJ 07712

                                                -------------------------------------------------------
                                                Assignee(s) of Secured Party and Complete Address

------------------------------------------------------------------------------------------------------------------------------------
This Financing Statement covers the following types (or items) of property:

Accounts  Receivables:  whether  any of the  foregoing  is owned now or acquired
later; all accessions,  additions,  replacements,  and substitutions relating to
any of the foregoing;  all records of any kind relating to any of the foregoing;
all proceeds  relating to any of the  foregoing  (including  insurance,  general
intangibles and accounts proceeds).

This Financing Statement is to be recorded in the real estate records.

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

When collateral is copy or fixtures complete this portion of form
a. Description of real estate (Sufficient to identify property)

b. Name and complete address of record owner.

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

a. (X) Proceeds of Collateral are also covered.    b. (X) Products of Collateral are also covered.       No. of additional sheets
                                                                                                         presented ( )
------------------------------------------------------------------------------------------------------------------------------------

(   ) Filed with Register of Deeds and Mortgages of ____________________________ County.                  (X)  Secretary of State

(   ) Filed with County Clerk___________________________________________________ County.

------------------------------------------------------------------------------------------------------------------------------------
      Signature(s) of Debtor(s)                                                  Signature(s) of Secured Party(ies) or Assignee(s)

                             TERMIMATION STATEMENT

This statement of termination of financing is presented to a Filing Officer for filing pursuant of the Uniform Commercial Code. The
secured Party certifies that the Secured Party no longer claims a security interest under the fiancing statemtne bearing the file
number above

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

Dated:                             20
      ----------------------------     ------                                   ----------------------------------------------------
                                                                                 (signature(s) of Secured Party or Assignee or
                                                                                  Record-Not valid until signed)

FILING OFFICER COPY -- This form of statement is approved by the Secretary of State of New Jersey.
STANDARD FORM  UNIIFORM COMMERCIAL CODE--FORM UCC-1. (Rev. 9/81)

                                       2

</TABLE>

<TABLE>
<CAPTION>
<S>                                             <C>                                                          <C>

This FINANCING STATEMENT IS presented to a filing  officer for filing pursuant to the Uniform Commercial Code.
------------------------------------ ---------- -------------------------------------------------------  ---------------------------
FOR OFFICE USE ONLY                             Debtor(s) Name (Last Name, First) Complete Address           Maturity date (if any)
                                                                                                            ----------------------

(Maturity data (it any):                          Arc Conimunications, lnc.                              ---------------------------
                                                  788 Shrewsbury Avenue                                      FOR OFFICE USE ONLY
                                                  Tinton Falls, NJ 07724

                                                -------------------------------------------------------
                                                Secured Party(ies) and Complete Address

                                                  Sovereign Bank
                                                  901 W. Park Avenue
                                                  Ocean, NJ 07712

                                                -------------------------------------------------------
                                                Assignee(s) of Secured Party and Complete Address

------------------------------------------------------------------------------------------------------------------------------------
This Financing Statement covers the following types (or items) of property:

Accounts  Receivables:  whether  any of the  foregoing  is owned now or acquired
later; all accessions,  additions,  replacements,  and substitutions relating to
any of the foregoing;  all records of any kind relating to any of the foregoing;
all proceeds  relating to any of the  foregoing  (including  insurance,  general
intangibles and accounts proceeds).

This Financing Statement is to be recorded in the real estate records.

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

When collateral is copy or fixtures complete this portion of form
a. Description of real estate (Sufficient to identify property)

b. Name and complete address of record owner.

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

a. (X) Proceeds of Collateral are also covered.    b. (X) Products of Collateral are also covered.       No. of additional sheets
                                                                                                         presented ( )
------------------------------------------------------------------------------------------------------------------------------------

(   ) Filed with Register of Deeds and Mortgages of ____________________________ County.                  (X)  Secretary of State

(   ) Filed with County Clerk___________________________________________________ County.

------------------------------------------------------------------------------------------------------------------------------------
      Signature(s) of Debtor(s)                                                  Signature(s) of Secured Party(ies) or Assignee(s)

/s/ Steven H. Meyer
------------------------------------------------------------------------------------------------------------------------------------
Steven H. Meyer, President                                                                       Sovereign Bank

FILING OFFICER COPY -- This form of statement is approved by the Secretary of State of New Jersey.
STANDARD FORM  UNIIFORM COMMERCIAL CODE--FORM UCC-1. (Rev. 9/81)

                                       1

</TABLE>

<TABLE>
<CAPTION>
<S>                                             <C>                                                      <C>

This FINANCING STATEMENT IS presented to a filing  officer for filing                                    Maturity date (if any):
pursuant to the Uniform Commercial Code.
------------------------------------ ---------- -------------------------------------------------------  ---------------------------
FOR OFFICE USE ONLY                             Debtor(s) Name (Last Name, First) Complete Address           Maturity date (if any)
                                                                                                            ----------------------

                                                  Arc Conimunications, lnc.                              ---------------------------
                                                  788 Shrewsbury Avenue                                      FOR OFFICE USE ONLY
                                                  Tinton Falls, NJ 07724

                                                -------------------------------------------------------
                                                Secured Party(ies) and Complete Address

                                                  Sovereign Bank
                                                  901 W. Park Avenue
                                                  Ocean, NJ 07712

                                                -------------------------------------------------------
                                                Assignee(s) of Secured Party and Complete Address

------------------------------------------------------------------------------------------------------------------------------------
This Financing Statement covers the following types (or items) of property:

Accounts  Receivables:  whether  any of the  foregoing  is owned now or acquired
later; all accessions,  additions,  replacements,  and substitutions relating to
any of the foregoing;  all records of any kind relating to any of the foregoing;
all proceeds  relating to any of the  foregoing  (including  insurance,  general
intangibles and accounts proceeds).

This Financing Statement is to be recorded in the real estate records.

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

When collateral is copy or fixtures complete this portion of form
a. Description of real estate (Sufficient to identify property)

b. Name and complete address of record owner.

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

a. (X) Proceeds of Collateral are also covered.    b. (X) Products of Collateral are also covered.       No. of additional sheets
                                                                                                         presented ( )
------------------------------------------------------------------------------------------------------------------------------------

(   ) Filed with Register of Deeds and Mortgages of ____________________________ County.                  (X)  Secretary of State

(   ) Filed with County Clerk___________________________________________________ County.

------------------------------------------------------------------------------------------------------------------------------------
      Signature(s) of Debtor(s)                                                  Signature(s) of Secured Party(ies) or Assignee(s)

                             TERMIMATION STATEMENT

This statement of termination of financing is presented to a Filing Officer for filing pursuant of the Uniform Commercial Code. The
secured Party certifies that the Secured Party no longer claims a security interest under the fiancing statemtne bearing the file
number above

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

Dated:                             20
      ----------------------------     ------                                   ----------------------------------------------------
                                                                                 (signature(s) of Secured Party or Assignee or
                                                                                  Record-Not valid until signed)

FILING OFFICER COPY -- This form of statement is approved by the Secretary of State of New Jersey.
STANDARD FORM  UNIIFORM COMMERCIAL CODE--FORM UCC-1. (Rev. 9/81)

                                       2

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                              <C>                                                     <C>

This FINANCING STATEMENT IS presented to a filing  officer for filing                       Maturity date (if any):
pursuant to the Uniform Commercial Code.
------------------------------------ ---------- -------------------------------------------------------  ---------------------------
FOR OFFICE USE ONLY                             Debtor(s) Name (Last Name, First) Complete Address           Maturity date (if any)
                                                                                                            ----------------------

                                                  Arc Conimunications, lnc.                              ---------------------------
                                                  788 Shrewsbury Avenue                                      FOR OFFICE USE ONLY
                                                  Tinton Falls, NJ 07724

                                                -------------------------------------------------------
                                                Secured Party(ies) and Complete Address

                                                  Sovereign Bank
                                                  901 W. Park Avenue
                                                  Ocean, NJ 07712

                                                -------------------------------------------------------
                                                Assignee(s) of Secured Party and Complete Address

------------------------------------------------------------------------------------------------------------------------------------
This Financing Statement covers the following types (or items) of property:

Accounts  Receivables:  whether  any of the  foregoing  is owned now or acquired
later; all accessions,  additions,  replacements,  and substitutions relating to
any of the foregoing;  all records of any kind relating to any of the foregoing;
all proceeds  relating to any of the  foregoing  (including  insurance,  general
intangibles and accounts proceeds).

This Financing Statement is to be recorded in the real estate records.

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

When collateral is copy or fixtures complete this portion of form
a. Description of real estate (Sufficient to identify property)

b. Name and complete address of record owner.

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

a. (X) Proceeds of Collateral are also covered.    b. (X) Products of Collateral are also covered.       No. of additional sheets
                                                                                                         presented ( )
------------------------------------------------------------------------------------------------------------------------------------

(   ) Filed with Register of Deeds and Mortgages of ____________________________ County.                  (X)  Secretary of State

(   ) Filed with County Clerk___________________________________________________ County.

------------------------------------------------------------------------------------------------------------------------------------
      Signature(s) of Debtor(s)                                                  Signature(s) of Secured Party(ies) or Assignee(s)

/s/ Steven H. Meyer
------------------------------------------------------------------------------------------------------------------------------------
Steven H. Meyer, President                                                                       Sovereign Bank

FILING OFFICER COPY -- This form of statement is approved by the Secretary of State of New Jersey.
STANDARD FORM  UNIIFORM COMMERCIAL CODE--FORM UCC-1. (Rev. 9/81)

                                       3

</TABLE>

<PAGE>

This FINANCING STATEMENT IS presented to a filing officer for filing pursuant to
the Uniform Commercial Code.

<TABLE>
<CAPTION>
<S>                                             <C>                                                          <C>

------------------------------------ ---------- -------------------------------------------------------  ---------------------------
FOR OFFICE USE ONLY                             Debtor(s) Name (Last Name, First) Complete Address           Maturity date (if any)
                                                                                                            ----------------------

(Maturity data (it any):                          Arc Conimunications, lnc.                              ---------------------------
                                                  788 Shrewsbury Avenue                                      FOR OFFICE USE ONLY
                                                  Tinton Falls, NJ 07724

                                                -------------------------------------------------------
                                                Secured Party(ies) and Complete Address

                                                  Sovereign Bank
                                                  901 W. Park Avenue
                                                  Ocean, NJ 07712

                                                -------------------------------------------------------
                                                Assignee(s) of Secured Party and Complete Address

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

                                       4

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                            <C>                                                       <C>

This FINANCING STATEMENT IS presented to a filing  officer for                                          (Maturity data (it any):
filing pursuant to the Uniform Commercial Code.
------------------------------------ ---------- -------------------------------------------------------  ---------------------------
FOR OFFICE USE ONLY                             Debtor(s) Name (Last Name, First) Complete Address           Maturity date (if any)
                                                                                                            ----------------------

                                                  Arc Conimunications, lnc.                              ---------------------------
                                                  788 Shrewsbury Avenue                                      FOR OFFICE USE ONLY
                                                  Tinton Falls, NJ 07724

                                                -------------------------------------------------------
                                                Secured Party(ies) and Complete Address

                                                  Sovereign Bank
                                                  901 W. Park Avenue
                                                  Ocean, NJ 07712

                                                -------------------------------------------------------
                                                Assignee(s) of Secured Party and Complete Address

------------------------------------------------------------------------------------------------------------------------------------
This Financing Statement covers the following types (or items) of property:

Accounts  Receivables:  whether  any of the  foregoing  is owned now or acquired
later; all accessions,  additions,  replacements,  and substitutions relating to
any of the foregoing;  all records of any kind relating to any of the foregoing;
all proceeds  relating to any of the  foregoing  (including  insurance,  general
intangibles and accounts proceeds).

This Financing Statement is to be recorded in the real estate records.

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

When collateral is copy or fixtures complete this portion of form
a. Description of real estate (Sufficient to identify property)

b. Name and complete address of record owner.

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

a. (X) Proceeds of Collateral are also covered.    b. (X) Products of Collateral are also covered.       No. of additional sheets
                                                                                                         presented ( )
------------------------------------------------------------------------------------------------------------------------------------

(   ) Filed with Register of Deeds and Mortgages of ____________________________ County.                  (X)  Secretary of State

(   ) Filed with County Clerk___________________________________________________ County.

------------------------------------------------------------------------------------------------------------------------------------
      Signature(s) of Debtor(s)                                                  Signature(s) of Secured Party(ies) or Assignee(s)

/s/ Steven H. Meyer
------------------------------------------------------------------------------------------------------------------------------------
Steven H. Meyer, President                                                                       Sovereign Bank

FILING OFFICER COPY -- This form of statement is approved by the Secretary of State of New Jersey.
STANDARD FORM  UNIIFORM COMMERCIAL CODE--FORM UCC-1. (Rev. 9/81)

                                       5

</TABLE>

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