Document:

<PAGE>   1
                                                                   EXHIBIT 10.18

                     THE CIT GROUP/COMMERCIAL SERVICES, INC.
                           1211 Avenue of the Americas
                            New York, New York 10036

                  $35,000,000 Unsecured Vendor Credit Facility
                                Commitment Letter

                                January 23, 2001

Service Merchandise Company, Inc
7100 Service Merchandise Drive
Brentwood, Tennessee  37027

Attention:    Samuel Cusano
              Chairman, President and Chief Executive Officer

Ladies and Gentlemen:

         You have advised The CIT Group/Commercial Services, Inc. ("CIT") that
Service Merchandise Company, Inc. and certain of its subsidiaries (collectively
"Service"), which have filed voluntary cases under Chapter 11 of the United
States Bankruptcy Code ("Bankruptcy Cases") in the United States Bankruptcy
Court for the Middle District of Tennessee (the "Bankruptcy Court") that remain
pending as of this date, desire that CIT establish a committed line for
unsecured vendor financing to support the Debtors' reorganization. In connection
with the Bankruptcy Cases, Service has obtained committed DIP and exit financing
arrangements, on a secured and, during the chapter 11 cases, secured and DIP
superpriority administrative basis, of at least $600,000,000 (together with any
amendments, modifications, renewals, extensions, and/or replacements thereof,
the "Financing Agreement") which Financing Agreement is currently in full force
and effect with no known defaults thereunder. CIT is pleased to advise you of
its commitment, upon the terms and conditions

<PAGE>   2

set forth in this Commitment Letter, to provide Service with a $35,000,000
unsecured vendor line of credit on a non-superpriority claim basis.

         CIT confirms and commits to the following terms and provisions upon
which it will establish a $35,000,000 revolving line of credit for the benefit
of (a) our factored clients (other than those clients which may be designated to
Service by CIT in writing from time to time) who sell goods to Service (the "CIT
Factored Clients"); and (b) other vendors with respect to other single invoice
and/or series of invoices transactions (the "Other Vendors") who sell goods to
Service, as may be proposed by Service to CIT from time to time (the "CIT
Line"), pursuant to which, subject to the terms, provisions, conditions and
limitations contained herein, CIT would approve and assume the credit risk on
sales by such (i) CIT Factored Clients to Service, all in accordance with, and
subject to, the factoring arrangements between CIT and such CIT Factored Clients
and (ii) Other Vendors to Service with respect to the purchase of accounts
receivable (which purchases may be on a discounting or maturity basis and will
provide for a commission to CIT with respect thereto of up to 1.5%), all of
which shall be mutually acceptable to each of us.

         The CIT Line shall be subject to the following terms, provisions,
conditions and limitations:

1.       The aggregate dollar amount of all such CIT credit approved sales to
         Service (whether by CIT Factored Clients and/or Other Vendors) with
         respect to transactions occurring on and after the effective date of
         the committed line and relating to goods to be delivered to Service on
         and after such effective date shall not exceed $35,000,000 in the
         aggregate at any time;

2.       The CIT Line shall become effective and available for use provided the
         Financing Agreement is then in full force and effect and without any
         declaration of an Event of Default that has not been cured or waived
         as of the effective date of the CIT Line;

3.       The CIT Line shall expire and be of no further force and effect with
         respect to sales made after the date occurring at the earliest of:

         a.       the third anniversary of the effective date of the CIT Line;

         b.       thirty calendar days after the occurrence of an Event of
                  Default under the Financing Agreement that has not been cured
                  or waived in writing

                                        2

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                  prior to the expiration of such thirty-day period and CIT can
                  provide conclusive evidence that it has incurred actual losses
                  with respect to the CIT Line equivalent to 75% of the
                  "Liquidated Damages Amount" (defined below); or

         c.       on the date that the Financing Agreement is terminated by the
                  lenders thereto or otherwise terminates in accordance with its
                  terms.

4.       The approval of any sale and the assumption of the credit risk thereon
         under the CIT Line shall be subject to:

         a.       such sales being on standard industry selling terms, but in no
                  event shall the terms of the sale exceed 60 days;

         b.       no more than $7,500,000 outstanding under the CIT Line (other
                  than amounts disputed by Service in good faith) being past due
                  more than fifteen (15) business days;

         c.       there shall be undrawn availability under the Financing
                  Agreement of at least $25,000,000;

         d.       full releases by Service, and approval of same by a final and
                  non-appealable order of the Bankruptcy Court, releasing CIT,
                  its officers, directors, agents, attorneys and employees (the
                  "CIT Representatives") from any and all liability, however
                  arising, actual or contingent, for any actions or omissions by
                  CIT and/or the CIT Representatives on or before the filing
                  date relating solely to the transactions that are the subject
                  of the letter agreement dated December 31, 1998;

         e.       with respect to Service's purchases from Other Vendors, such
                  approval and assumption shall be subject to execution of a
                  Single Customer Credit Approved Receivables Purchasing
                  Agreement between the Other Vendor and CIT, which agreement
                  shall be in form and substance similar to the agreement
                  annexed hereto as Exhibit A (it being understood that this
                  requirement does not apply to any of the vendors listed in our
                  December 31, 1998 letter to you or as listed on Exhibit B);
                  and

                                        3

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         f.       in the event that at any time there is insufficient
                  availability under the CIT Line to approve all of the orders
                  that have been submitted to CIT for approval and which we are
                  willing to approve thereunder, we will notify Service and,
                  subject to the terms, provisions, conditions and limitations
                  contained herein, we will approve that portion of such orders
                  as Service may reasonably request.

5.       In the event that CIT fails to perform any of its obligations under
         this letter agreement and such failure to perform continues for ten
         business days after written notice or occurs on more than three
         occasions during the term of this agreement, CIT shall have no further
         obligation to Service except that CIT shall be obligated to immediately
         pay to Service an amount (the "Liquidated Damages Amount") equivalent
         to the amounts not heretofore paid to Service by CIT under the December
         31, 1998 letter agreement, as supplemented in writing from time to time
         prior to January 10, 1999.

6.       Service agrees to provide CIT with the periodic financial reporting
         package distributed to the lenders under the Financing Agreement not
         more frequently than on a monthly basis which information CIT
         acknowledges constitutes material non-public information and shall be
         kept confidential by CIT pursuant to the separate agreement between the
         parties.

7.       This Agreement shall be subject to approval of the United States
         Bankruptcy Court.

         If the foregoing is acceptable to you, please so indicate by signing
and returning to us the enclosed copy of this letter. If not accepted by you as
herein provided, this commitment shall expire at the close of business on
February 28, 2001. If accepted, the facility offered herein will expire at the
close of business on March 31, 2001, unless the conditions contemplated
hereunder have been fully performed. Upon our receipt from you of an executed
copy of this letter, we will sign below to confirm our acceptance and return a
fully-executed copy to you.

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<PAGE>   5

         Should you have any questions or comments, please feel free to contact
us at any time. We are pleased to be able to support Service's reorganization
through the provision of this facility.

                                    Very truly yours,

                                    THE CIT GROUP/COMMERCIAL SERVICES, INC.

                                    /s/ David Bram
                                    --------------------------------------------
                                    By:  David Bram
                                    Its: Executive Vice President

                                        5

<PAGE>   6

ACKNOWLEDGED AND AGREED TO:

SERVICE MERCHANDISE COMPANY, INC.

/s/ Samuel Cusano
---------------------------------------
By:  Samuel Cusano

Its: Chairman, President and Chief
     Executive Officer

                                    Commitment timely Accepted
                                    This 23rd day of January 2001

                                    THE CIT GROUP/COMMERCIAL SERVICES, INC.

                                    By: /s/ David Bram
                                    --------------------------------------------
                                    David Bram
                                    Executive Vice President

                                        6

<PAGE>   7
                                                                       Exhibit A

                     THE CIT GROUP/COMMERCIAL SERVICES, INC.

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

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

                                     [DATE]

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

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

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

         SINGLE CUSTOMER CREDIT APPROVED RECEIVABLES PURCHASING AGREEMENT

         Re: ______________________________ (the "Customer")

Ladies and Gentlemen:

         This agreement will confirm your and our agreement (the "Agreement")
concerning our performance of certain services and our purchases of certain of
your accounts receivable due from the Customer. Capitalized terms used herein
without definition shall have the meanings ascribed to them in the Guide:

         1. CREDIT APPROVAL. No credit approval is required for orders submitted
in connection with our credit lines established for Service Merchandise Company,
Inc. (the "Customer"). With respect to all other orders, you shall submit any
order for which you seek our credit approval (except for those under credit
lines which may have been established for the Customer) to our Credit Department
either via computer on-line terminal access or, if you are unable to submit your
orders via computer, then by telephone or via telecopier (but, in any event, in
writing). Our credit approval may be withdrawn any time before, but not after,
shipment is made or services are performed and shall be effective only if
shipment is made or services are performed within thirty (30) days from the date
specified in the credit approval, or within thirty (30) days from the date of
our credit approval if no delivery or service performance date is specified
therein. We shall have the right to adjust the Customer's credit lines from time
to time and shall have no liability whatsoever to you or any other person, firm
or

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entity for our not approving, or our withdrawal of approval of, credit to the
Customer in the manner provided in this Agreement.

         You have advised us that your selling terms are not in excess of sixty
(60) days. As to any Approved Receivable, you agree that you will not, without
our prior written consent: (i) change these terms from our existing credit
approval, or extend the maturity date of any invoice; (ii) change the amount
(except for credits you may issue in the normal course of your business and
otherwise in accordance with this Agreement) or shipping dates; or (iii) grant
any other indulgence. In the event you were to do any of these acts without such
concurrence by us, any credit approval and assumption of credit risk by us of
the respective Approved Receivable(s) shall be and become automatically and
immediately, and without any further notice or action by us whatsoever,
withdrawn, null, void and of no effect. You also agreed to issue credit
memoranda promptly (with duplicates to us) upon accepting returns or granting
allowances in connection with any Approved Receivable.

         2. SALE OF APPROVED RECEIVABLES. You hereby sell, assign and transfer
to us as absolute owner all of your Approved Receivables subject to any
Permitted Lien.

         3. HANDLING AND COLLECTING RECEIVABLES. You shall continue to collect
payment for each Approved Receivable with payment therefor being remitted
directly to you or as authorized by you. Our obligation to pay you for any
Approved Receivable shall only be as provided in Paragraph 7 below, and only
when all requirements of this Agreement have been satisfied. Our services
hereunder will be provided on a non-notification basis; that is, we will not
communicate with your Customer prior to paying you for an Approved Receivable
without your prior approval except as set forth in Paragraph 2 of the Guide (see
Paragraph 5 of the Guide for information regarding our collection of
Non-Approved Receivables). You will at all times perform your normal accounts
receivable bookkeeping, collection and reporting procedures in connection with
both Approved Receivables and Non-Approved Receivables. In order to maintain our
credit approval in connection with any Approved Receivable (unless we withdraw
or limit our credit approval as permitted by this Agreement), you also agree to
perform the collection and reporting procedures (to the extent permitted by law)
set forth in Paragraph 3 of the Guide. In the event we are required to commence
suit to collect any delinquent Receivable, you agree to cooperate fully with us
and our counsel in prosecuting same. Our Customer is permitted to receive
information reports from us from time to time with respect to all Approved
Receivables acquired by us in connection with the Customer and you agree to
these disclosures.

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         4. FEE. For our services hereunder you agree to pay us a fee of
__________ percent (___%) (not to exceed 1.5%) of the gross face amount of each
Approved Receivable. The fee for our services under this Agreement shall be paid
to us no later than the tenth calendar day of each month for the fees earned by
us and due us for the preceding month. In the event such fees are not paid to us
as required, all credit approvals given by us and any credit risk assumed by us
as to each Approved Receivable for which such applicable fees have not be paid
to us shall automatically, and without any further notice or action by us
whatsoever, be and become withdrawn, null, void and of no effect.

         5. REPRESENTATIONS AND WARRANTIES. You hereby make to us the
representations and warranties contained in Paragraph 4 of Exhibit A. If you
breach any of these representations and warranties, we shall be released from
any credit risk whatsoever on each Approved Receivable which may be involved.

         6. REPORTING AND NOTICES. You will maintain, in form acceptable to us
(in our commercially reasonable judgment), a detailed aging of all Receivables,
payments thereon and of all returns, and you will deliver promptly to us the
information and reporting set forth in Paragraph 8 of Exhibit A. In the event
you fail to provide this information to us within three (3) business days of its
due date and such failure is not cured within two (2) business days of our
written notice to you (with a copy to the Customer), our credit approvals and
assumption of credit losses shall automatically and immediately cease and be
deemed to have been thereupon withdrawn, void, null and of no effect as to all
Approved Receivables. You must promptly notify us if any Approved Receivable is
not timely paid or if you receive information of any adverse change in the
financial condition or business prospects of the Customer. You must notify us
promptly of any matters affecting the value, enforceability or collectibility of
any Approved Receivable. Please see Paragraph 8 of Exhibit A regarding our right
to conduct inspections and verifications regarding the Receivables and returned
merchandise.

         7. PAYMENT OF APPROVED RECEIVABLES. If any undisputed Approved
Receivable remains unpaid for more than thirty (30) days after its due date, and
you shall have delivered to us within ten (10) days thereof a written Request
for Payment of Approved Receivable in the form of Annex B attached to Exhibit A,
with all of the information and documentation therein specified, requesting that
the purchase price of such overdue and unpaid Approved Receivable be paid to
you, we shall promptly (subject to our verification of any such undisputed
Approved Receivable, having been credit approved by us and being overdue and
unpaid) pay to you the Net

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<PAGE>   10

Amount of such Approved Receivable. You agree that when you deliver to us a
Request for Payment of Approved Receivable, you shall be deemed to have thereby
authorized us to collect all other unpaid Receivables. Approved Receivables that
are one hundred (100) days or more past due when submitted on Annex B shall no
longer be Approved Receivables hereunder, and we are thereupon released from any
liability therefor whatsoever.

         Our obligation to remit funds to you for the amount of any Approved
Receivable shall apply only to an Approved Receivable (a) which is free of any
claims, offsets or liens whatsoever, including any Permitted Lien, and (b) where
the inventory and/or service has been received and accepted by the Customer
without return and without dispute or claim as to price, terms, quality,
workmanship, breach of warranty, delivery, quantity or other offset, and (c)
which you shall have sold, assigned and transferred to us as absolute owner all
of your right, title and interest thereto and therein. If an Approved Receivable
for which we have paid you is later determined to have been unpaid by the
Customer for the reasons set forth above, you agree to repurchase such Approved
Receivable from us for the same amount we paid to you therefor (less any
remittances we may have received in connection with such Approved Receivable).
After our payment to you of any Approved Receivable, any and all checks, cash,
notes or other instruments or property received by you with respect to such
Approved Receivable shall be held by you in trust for us, separate from your own
property and funds, and promptly turned over to us. Please see Paragraph 10 of
Exhibit A for additional information regarding returned merchandise.

         8. SPECIAL CUSTOMER PAYMENT APPLICATIONS. In the event you have shipped
inventory in excess of any particular credit approval or credit line for the
Customer, all remittances received from or on behalf of the Customer shall first
be applied to payment of Approved Receivables due from the Customer until paid
in full, and thereafter any excess shall be applied to payment of Non-Approved
Receivables.

         9. TERMINATION. Either you or we may terminate this Agreement at any
time by giving the other written notice of termination stating a termination
date not less than sixty (60) days from the date such notice is delivered. This
Agreement continues uninterrupted unless terminated as herein provided.
Notwithstanding the preceding sentences of this Paragraph, we may terminate this
Agreement immediately upon the occurrence of any of the following events:
cessation of your business or the calling of a meeting of your creditors; your
failure to meet your debts generally as they mature; the commencement by or
against you of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceeding under any foreign, federal or state law;
breach by you of any representation, warranty or covenant

                                        4

<PAGE>   11
contained herein; or your failure to pay when due any indebtedness or obligation
owing by you to us whether under this Agreement or any other agreement to which
you and we are parties. We may also terminate this Agreement immediately in the
event that we shall reasonably determine that any material provision of this
Agreement is not enforceable under applicable law or would require any filing
with, or consent or approval by, any governmental authority. Any termination of
this Agreement, however, shall not affect obligations of you or us incurred
hereunder prior to such termination including, without limitation, our
obligation to pay for Approved Receivables arising prior to such termination
date (provided that our assumption of credit risks and losses hereunder shall
cease upon your failure to pay our fees when due or to deliver to us the
information required by this Agreement). If orders in this Agreement are
accepted by us in connection with the Customer's approved credit lines, we may
not terminate this Agreement without the consent of our Customer.

         10. MISCELLANEOUS. You shall pay to us those attorneys' fees and
disbursements incurred by us resulting from our use of outside counsel or
in-house legal department in connection with any modification, waiver, release
or amendment relating to this Agreement.

         TO THE EXTENT PERMITTED BY APPLICABLE LAW, YOU AND WE HEREBY
IRREVOCABLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT. THE VALIDITY,
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL BE DETERMINED AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         This Agreement can be changed only in writing signed by you and us.
This Agreement shall bind and benefit each of your and our respective successors
and assigns; provided, however, that neither you nor we may assign any rights or
obligations hereunder without the prior written consent of the other. Our
failure to delay to exercise any right or remedy hereunder shall not constitute
a waiver thereof, nor bar us from exercising any of our rights or remedies
hereunder at any time, nor shall any course of dealing between you and us change
or modify this Agreement. This Agreement will become effective as of the date
set forth on the first page hereof but only after this Agreement shall have been
accepted by one of our officers in New York, New York, after which we shall
forward to you a fully executed copy for your records.

                                        5

<PAGE>   12

         This Agreement shall become effective only when accepted below by one
of our officers. This Agreement, when accepted, contains the entire agreement
between you and us. There are no verbal agreements between you and us concerning
this Agreement or the subject matter hereof.

ATTEST:
                                    --------------------------------------------

                                    By:
---------------------------------       ----------------------------------------
          Secretary                     Name:
                                               ---------------------------------
                                        Title:
                                               ---------------------------------
(Corporate Seal)

                                    CONSENTED and ACCEPTED this_____ day
                                    of ____________________, 200__.

                                    By:
                                        ----------------------------------------
                                        Name:
                                               ---------------------------------
                                        Title:
                                               ---------------------------------

                                        6

<PAGE>   13
                                    EXHIBIT B

AMISCO - CCFM
Amisco Ind. Ltd.
Artland Trading
B&G Arnold
BIA Cordon Bleu
Boston Warehouse
Braun, Inc.
Commonwealth Packaging Co.
Crown Crafts, Inc.
Decorite
Designers Coll
Farberware
Funai Corp.
Godinger Silver
Hamilton Beach
IHW, Inc.
Imperial Deltah, Inc.
I. Kurgan
JB Research, Inc.
Libbey Glass
Little Tykes
Little Tykes/Rubbermaid
Meyer Corp/Farberware
Meyer Corp U.S.
Minolta Corp.
M. Kamenstein
Noel Joanna, Inc.
Panasonic Home
Playmates Toys, Inc.
Rama Mfg.
Red Calliope
Rival Co.
Royal Rubber
Salton Maxim
Sansung Electronics Amer
Sensormatic Electronics Corp.
Southern Sales & Marketing
Sunshine Jewelers
Toastmaster, Inc.
Pomeroy
Fantom Technology
Hatteras Hammock
Fiskars, et al
Wittenaur
King Co.
O'Sullivan Ind.
L. Powell Co.
Salton Maxim

<PAGE>   14

                      IN THE UNITED STATES BANKRUPTCY COURT
                      FOR THE MIDDLE DISTRICT OF TENNESSEE
                               NASHVILLE DIVISION

In Re:                              )        Case No. 399-02649
                                    )
                                    )        Chapter 11
SERVICE MERCHANDISE COMPANY,        )
         INC., et al.,              )        Judge Paine
                                    )
         Debtors.                   )        Jointly Administered

                        ORDER PURSUANT TO 11 U.S.C.ss. 105
                 AND FED. R. BANKR. P. 9019 AUTHORIZING DEBTORS
                         TO EXECUTE, DELIVER AND PERFORM
                    LETTER AGREEMENT FOR NEW VENDOR FINANCING

                  Upon the motion, dated February 1, 2001 (the "Motion"),1 of
Service Merchandise Company, Inc. ("Service Merchandise") and 31 of its
affiliates (the "Affiliate Debtors"), debtors and debtors-in-possession in the
above-captioned cases (Service Merchandise and the Affiliate Debtors
collectively, the "Debtors"), pursuant to 11 U.S.C. ss. 105 and Fed. R. Bankr.
P. 9019, for entry of an order (the "Order") authorizing the Debtors to execute,
deliver and perform that certain Letter Agreement between the Debtors and CIT
Group/Commercial Services, Inc. ("CIT"), as more fully described in the Motion;
and it appearing that the relief requested is in the best interest of the
Debtors, their estates, creditors and other parties in interest and is a proper
exercise of the Debtors' business judgment; all parties in interest having been
heard or having had the opportunity to be heard and no objections having been
filed with the Court with respect to the Motion; it appearing that good and
sufficient notice of the Motion having been given and that no other or further
notice of the Motion or of the entry of this Order

---------------
        1        Capitalized terms used herein and not otherwise
                 defined shall have the meanings ascribed to them in
                 the Motion.

<PAGE>   15

need be provided; upon the entire record herein; and good and sufficient cause
appearing therefor, it is hereby

         ORDERED, ADJUDGED AND DECREED THAT:

                  1.       The Motion is granted.

                  2.       The Debtors' business judgment to enter into the
Commitment Letter is approved.

                  3.       The Debtors are authorized to perform all duties,
responsibilities and agreements required under the Commitment Letter. CIT and
the Debtors are authorized to agree to such amendments, modifications and
supplements to the form of Single Customer Credit Approved Receivables Purchase
Agreement appended as Exhibit A to the Commitment Letter as shall be mutually
acceptable to CIT and the Debtors or reasonably required to implement the
administration and mechanics of the transactions contemplated by the Commitment
Letter including, without limitation, the implementation of CIT's usual and
customary Statement of Additional Procedures, Terms and Conditions with
appropriate annexes, provided that such amendments, modifications, supplements,
procedures and annexes: (a) shall not be inconsistent with the Commitment
Letter; (b) shall not include any additional economic remuneration to CIT other
than as disclosed in the Motion; (c) shall be ministerial in nature so as to
facilitate administration of the CIT Line by CIT, compliance by CIT and the
Debtors with the terms of the Committee Letter and the provision of period
reporting information concerning the CIT Line to the Debtors; and (d) shall not
restrict utilization of the CIT Line by vendors as provided for in the
Commitment Letter.

                  4.       CIT and the CIT Representatives shall be and hereby
are released from any and all liability, however arising, actual or contingent,
for any actions or omissions by CIT

                                       2
<PAGE>   16

or the CIT Representatives on or before March 15, 1999 relating solely to the
transactions that are the subject of the letter agreements dated as of December
31, 1998, as amended, including, without limitation, any avoidance or breach of
contract claims.

                  5.       This Order shall survive and remain in full force and
effect notwithstanding dismissal, conversion of, appointment of a trustee in or
confirmation of a plan of reorganization in these chapter 11 cases. The Court
shall retain jurisdiction to enforce the terms of this order.

                  6.       In the event that the Debtors cease to operate their
business in the ordinary course or abandon their plans to reorganize the
Debtors' businesses as a going concern, the administrative claim with respect to
approved receivables, if any, of CIT under the Commitment Letter shall be paid
in full no later than sixty (60) days following the allowance of such claim
which shall be determined by the Court promptly following such event.

                  7.       Notwithstanding Rule 6004(g) of the Federal Rules of
Bankruptcy Procedure, this order shall take effect immediately upon its entry.

         ENTER this _____ day of February, 2001.

                                             /s/ George C. Paine II
                                             -----------------------------------
                                             Judge George C. Paine II
                                             Untied States Bankruptcy Judge

APPROVED FOR ENTRY:

/s/ Sheldon M. Francis
-----------------------------
Paul G. Jennings
Beth A. Dunning
BASS, BERRY & SIMS PLC
315 Deaderick St. Suite 2700
Nashville, TN 37238-0002

                                       3
<PAGE>   17

Tel: (615) 742-6200
Fax: (615) 742-6293

         and

John Wm. Butler, Jr.
George N. Panagakis
SKADDEN, ARPS, SLATE
         MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606-1285
Tel: (312) 407-0700
Fax: (312) 407-0411

Alesia Ranney-Marinelli
SKADDEN, ARPS, SLATE
         MEAGHER & FLOM (ILLINOIS)
Four Times Square
New York, NY 10036-6522
Tel: (212) 735-3000
Fax: (212) 735-2000

Attorneys for Debtors and
Debtors-in-Possession

                                       4<PAGE>   1
                                                                     EXHIBIT 4.8

                               WARRANT CERTIFICATE

THE WARRANT REPRESENTED BY THIS CERTIFICATE (THE "WARRANT") HAS BEEN (I)
ACQUIRED FOR INVESTMENT AND (II) ISSUED AND SOLD IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
APPLICABLE STATE SECURITIES LAWS. THE WARRANT, AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF, CANNOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED, OTHER THAN
PURSUANT TO (I) AN EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION THAT
IS OTHERWISE IN COMPLIANCE WITH THE ACT AND (II) EVIDENCE REASONABLY
SATISFACTORY TO THE ISSUER OF COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL
SECURITIES LAWS. THE ISSUER SHALL BE ENTITLED TO RELY UPON AN OPINION OF COUNSEL
SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH SUCH LAWS.

NO. 2                                                             JUNE 16, 1999

                   VOID AFTER 5:00 P.M. EASTERN STANDARD TIME
                                ON JUNE 30, 2009
                             (THE "EXPIRATION DATE")

                          PROACTIVE TECHNOLOGIES, INC.

                               WARRANT CERTIFICATE

         THIS CERTIFIES THAT, for value received, GALLAND, KHARASCH, GREENBERG,
FELLMAN AND SWIRSKY, P.C., is the owner of a Warrant that, subject to the terms
of this Warrant Certificate, entitles the Holder to purchase up to Four Hundred
Thousand (400,000) fully paid and non-assessable shares (the "Shares") of the
common stock, $0.04 par value per share (the "Common Stock"), of Proactive
Technologies, Inc., a Delaware corporation (the "Company"), as described in
paragraph 6 below, at the purchase price of seventy-five cents ($0.75) per share
(the "Exercise Price") upon presentation and surrender of this Warrant
Certificate with the Form of Election to Purchase attached hereto, duly
executed, at any time prior to the Expiration Date.

         1.       REGISTRATION. The Warrant has been numbered and registered in
a warrant register (the "Warrant Register"). The Company shall treat the Holder
of the Warrant as set forth in the Warrant Register as the owner in fact thereof
for all purposes. The Company is not liable for any registration or transfer of
any Warrant that is registered or any Warrant that will become registered in the
name of a fiduciary or its nominee unless the Company has actual knowledge that
a fiduciary or its nominee is committing a breach of trust by requesting such
registration or transfer or has actual knowledge of such facts that its
participation therein amounts to bad faith.
<PAGE>   2

         2.       RIGHT TO PIGGYBACK. If the Company shall determine to register
any of its securities either for its own account or the account of a security
holder or holders exercising their respective demand registration rights, other
than a registration relating solely to employee benefit plans, or a registration
relating solely to a Rule 145 transaction, or a registration on any registration
form that does not permit secondary sales, the Company will:

         (a)      promptly give to the Holder written notice thereof, including
                  notice deadlines; and

         (b)      use its best efforts to include in such registration (and any
                  related filing or qualification under applicable blue sky
                  laws), except as set forth in Section 3 below, and in any
                  underwriting involved therein, all the securities granted
                  under this Warrant Certificate ("Unregistered Securities")
                  specified in a written request or requests, made by the Holder
                  and received by the Company within seven (7) days after the
                  written notice from the Company described in clause (a) above
                  is mailed or delivered by the Company. Such written request
                  may specify all or a part of the Holder's Unregistered
                  Securities granted but no less than 25% of the Holder's
                  Unregistered Securities.

         3.       UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holder as a part of the written notice given
pursuant to Section 2(a). In such event, the right of the Holder to registration
pursuant to this Section 3 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Unregistered Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders of securities of the Company with registration
rights to participate therein distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected by the Company.

         Notwithstanding any other provision of this Section 3, if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Unregistered Securities from, or limit the number of Unregistered Securities to
be included in, the registration and underwriting. The Company shall so advise
the Holder of securities if requesting registration, and the number of shares of
securities that are entitled to be included in the registration and underwriting
shall be allocated first to the Company for securities being sold for its own
account and thereafter in proportionate fractions to the number of shares
presented by all holders. If any person does not agree to the terms of any such
underwriting, he shall be excluded therefrom by written notice from the Company
or the underwriter. Any Unregistered Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.

         If shares are so withdrawn from the registration and if the number of
shares of securities to be included in such registration was previously reduced
as a result of marketing factors, the Company shall then offer to all persons
who have retained the right to include securities in the registration the right
to include additional securities in the registration in an aggregate amount
equal to the number of shares so withdrawn, with such shares to be allocated
among the persons

                                       2
<PAGE>   3
requesting additional inclusion in proportionate fractions to the number of
shares presented by all holders.

         4.       EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
Section 3 hereof shall be borne by the Company. All Selling Expenses relating to
securities so registered shall be borne by the Holder and other holders of such
securities pro rata on the basis of the number of shares of securities so
registered on their behalf.

         5.       TRANSFER OF WARRANT. The Warrant is transferable on the books
of the Company only upon delivery of the Warrant to the Company, duly endorsed
by the Holder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official certified copy thereof, shall be
deposited with the Company. Should an executor, administrator, guardian or other
legal representative of a Holder effect such a transfer, then duly authenticated
evidence of its authority must be produced and may be required to be deposited
with the Company in its discretion. Upon any registration of transfer, the
Company agrees to deliver a new Warrant or Warrants to the persons entitled
thereto. Notwithstanding the foregoing, the Company has no obligation to
transfer the name of the Holder on its books to any person, unless the Holder
furnishes the Company evidence of compliance with the Act, in accordance with
the provisions of Section 9 hereof.

         6.       PERIOD OF EXERCISE. The Exercise Price and the number of
Shares issuable upon exercise of the Warrant are subject to adjustment upon the
occurrence of certain events, pursuant to the provisions of Section 11 hereof.
No rights to purchase Shares hereunder shall arise until the Board of Directors
of the Company approves the grant of this Warrant and, after such approval, this
Warrant shall be exercisable for the Shares up to the Expiration Date. This
Warrant shall expire and no longer be exercisable on and after 5:00 p.m., June
30, 2009.

         7.       EXERCISE OF WARRANT. The rights represented by this Warrant
may be exercised by the Holder in whole or in part (but not as to a fractional
Share), by surrendering the Warrant to the Company or its duly authorized agent,
with the Form of Election to Purchase, a copy of which is attached hereto, duly
completed and signed, and upon paying to the Company the Exercise Price, as may
be adjusted in accordance with the provisions of Section 11 hereof, for the
number of Shares for which this Warrant is exercised. Payment of such Exercise
Price may be made (a) in cash; or (b) by certified check, bank draft or drawn
postal, express money order payable to the order of the Company. Upon the
surrender of this Warrant, payment of the Exercise Price as described above and
payment of all tax obligations as described in Section 8 below, the Company
agrees to cause to be issued and delivered with all reasonable dispatch to or
upon the written order of the registered Holder and (subject to receipt of
evidence of compliance with the Act in accordance with the provisions of Section
12 hereof) in such name or names as such registered Holder may designate, a
certificate or certificates for the number of full Shares so purchased upon the
exercise of such Warrant, together with cash, as provided in Section 13 hereof,
in respect of any fractional Share otherwise issuable upon such surrender. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such Shares as of the date of surrender of this Warrant, payment of
the Exercise Price as described above and payment of all tax obligations as
described in Section 8 hereof; provided, however, that if, at the date of
surrender of this Warrant and payment of the Exercise Price and taxes the
transfer books for the

                                       3
<PAGE>   4
Common Stock or other class of stock purchasable upon the exercise of this
Warrant shall be closed, the certificates for the Shares for which this Warrant
is exercised shall be issuable as of the date on which such books shall next be
opened (whether before, on or after the Expiration Date) and until such date the
Company shall be under no duty to deliver any certificates for such Shares; and
provided further, however, that the transfer books shall not be closed at any
one time for a period longer than twenty (20) consecutive calendar days unless
otherwise required by law.

         8.       PAYMENT OF TAXES. The Holder agrees to pay all documentary
stamp taxes (whether federal, state or local) attributable to the exercise of
this Warrant and the issuance of Shares upon such exercise by delivery of cash
or a certified check payable to the Company in the amount of all such taxes. In
addition, as a condition to the exercise of the Warrant, the Company may require
the Holder to pay or reimburse the Company for any taxes which the Company
determines are required to be withheld in connection with the grant or any
exercise of this Warrant. Such payment or reimbursement shall be in the manner
set forth in this Section 8.

         9.       MUTILATED OR MISSING WARRANTS. Should this Warrant be
mutilated, lost, stolen or destroyed, the Company may, in its discretion, issue
and deliver in exchange and substitution for, and upon cancellation of, the
mutilated Warrant, or in lieu of and substitution for the lost, stolen or
destroyed Warrant, a new Warrant of like tenor representing an equivalent right
or interest. The Company shall issue and deliver such new Warrant only upon
receipt of evidence reasonably satisfactory to the Company, if requested, of
such loss, theft or destruction of such Warrant and a reasonable indemnity.
Applicants for such substitute Warrants also shall comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.

         10.      RESERVATION OF COMMON STOCK, ETC. The Company has reserved out
of the authorized and unissued shares of the Common Stock a number of shares
sufficient to provide for the exercise of the rights of purchase represented by
this Warrant. The transfer agent for the Common Stock (the "Transfer Agent") and
every subsequent Transfer Agent for any shares of the Common Stock issuable upon
the exercise of any of the rights of purchase aforesaid are hereby irrevocably
authorized and directed at all times until the Expiration Date to reserve such
number of authorized and unissued shares of the Common Stock as shall be
required for such purpose. The Company will supply such Transfer Agent with duly
executed stock certificates for such purposes. Any Warrant surrendered in the
exercise of the rights hereby evidenced shall be cancelled, and such cancelled
Warrant shall constitute sufficient evidence of the number of Shares that have
been issued upon the exercise of such Warrant. No shares of Common Stock shall
be subject to reservation concerning any Warrant not exercised on or prior to
the Expiration Date.

         11.      ADJUSTMENTS OF WARRANT PRICE AND NUMBER AND KIND OF SHARES.
The Exercise Price and the number and kind of securities purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of the following events subsequent to the date hereof.

         (a)      In case the Company shall (i) pay a dividend in shares of its
                  capital stock or make a distribution in shares of its capital
                  stock (whether of the Common Stock or of any other class of
                  capital stock), (ii) subdivide its outstanding Common Stock
                  into a greater number of shares or (iii) combine its
                  outstanding Common Stock into a smaller number of shares, then
                  the number of Shares (calculated immediately

                                       4
<PAGE>   5
                  prior to such change) shall be increased or decreased, as the
                  case may be, in direct proportion to the increase or decrease
                  in the total number of shares of Common Stock of the Company
                  by reason of such change, and the Exercise Price of the Shares
                  after such change shall, in the case of an increase in the
                  number of shares of Common Stock, be proportionately reduced,
                  and, in case of a decrease in the total number of shares of
                  Common Stock, be proportionately increased. An adjustment made
                  pursuant to this Paragraph (a) of this Section 11 shall become
                  effective immediately after the record date for determining
                  stockholders entitled to receive such dividend or distribution
                  in the case of a dividend or distribution in shares of the
                  Company's capital stock and shall become effective immediately
                  after the effective date in the case of a subdivision,
                  combination or reclassification. If, as a result of an
                  adjustment made pursuant to this Paragraph (a) of this Section
                  11, the Holder shall become entitled to receive shares of two
                  or more classes of capital stock of the Company, the Board of
                  Directors of the Company (whose determination shall be
                  conclusive) shall in good faith determine the allocation of
                  the adjusted exercise price between or among shares of such
                  classes of capital stock.

         (b)      No adjustment in the Exercise Price shall be required unless
                  and until such adjustments would require an increase or
                  decrease of at least five cents ($0.05) in such price;
                  provided, however, that any adjustments that by reason of this
                  Paragraph (b) of this Section 11 are not required to be made
                  shall be carried forward and taken into account in any
                  subsequent adjustment. All calculations under this Section 11
                  shall be made to the nearest cent or to the nearest whole
                  Share, as the case may be.

         (c)      If at any time as a result of any adjustment made pursuant to
                  Paragraph (a) of this Section 11, the Holder of this Warrant
                  shall become entitled to receive any shares of the Company's
                  capital stock other than Common Stock, then the number of such
                  other shares receivable upon exercise of this Warrant shall be
                  subject to adjustment from time to time in a manner and on
                  terms as nearly equivalent as practicable to the provisions
                  concerning the Common Stock contained in Paragraphs (a)
                  through (c), inclusive, of this Section 11.

         (d)      Irrespective of any adjustments in the Exercise Price or the
                  number or kind of Shares or shares of other capital stock of
                  the Company or of others purchasable upon exercise of this
                  Warrant, any warrants theretofore or thereafter issued may
                  continue to express the same price and number and kind of
                  Shares or shares of other capital stock of the Company as are
                  stated in such warrants when initially issued.

         12.      REGISTRATION UNDER THE SECURITIES ACT OF 1933. Neither this
Warrant nor the Shares have been registered under the Act in reliance on
exemption from such registration requirements provided by Section 4(2) of the
Act and Regulation D promulgated thereunder, and under exemptions provided by
applicable state securities laws. The Holder, by its acceptance hereof,
covenants and agrees that it will not transfer or dispose of this Warrant or any
of the Shares except pursuant to (a) an effective registration statement filed
under the Act or (b) an opinion of counsel, reasonably satisfactory to counsel
for the Company, that an exemption from

                                       5
<PAGE>   6
the registration requirements under the Act and applicable state securities laws
is available and otherwise in accordance with the conditions set forth in
Section 5 hereof.

         13.      FRACTIONAL INTERESTS. No fractional shares of the Common Stock
will be issued upon the exercise of this Warrant or any future Warrants issued
in replacement hereof, but in lieu thereof a cash payment will be made to the
Holder.

         14.      RIGHTS OF WARRANT HOLDERS. No Holder of this Warrant
Certificate shall be entitled to vote or receive dividends or be deemed the
Holder of Common Stock or any other securities of the Company that may at any
time be issuable upon the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder hereof, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issue of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise, until
this Warrant shall have been exercised and the Common Stock purchasable upon the
exercise hereof shall have become deliverable to such Holder.

                             [Signatures Next Page]

                                       6
<PAGE>   7
         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
under seal and delivered as of the date and year first written above.

                                       PROACTIVE TECHNOLOGIES, INC.

                                       BY:   /s/  C.B. Lance
                                            -----------------------------------
                                            PRESIDENT

[CORPORATE SEAL]

Attest:  /s/  Judy Gordon
       -----------------------------
         Secretary

                                       7
<PAGE>   8
                          FORM OF ELECTION TO PURCHASE

TO:      Proactive Technologies, Inc.
         3343 Peachtree Road, N.E.
         Suite 530
         Atlanta, Georgia  30326

         Pursuant to the Warrant Certificate (herein called the "Certificate"),
dated as of June 16, 1999, granted by Proactive Technologies, Inc. (the
"Company") to Galland, Kharasch, Greenberg, Fellman and Swirsky, P.C.("GKGFS").
GKGFS hereby gives notice that it elects to exercise the warrant granted under
the Certificate with respect to ______ shares of the common stock of the Company
as of the date on which this notice is delivered to the Company, and accordingly
hereby agrees to purchase such shares at the price and on the terms established
under the Certificate. Full payment for such shares is enclosed. Such payment
consists of:

         __________                 Cash
         __________                 Check

         GKGFS hereby represents and warrants that it is purchasing such shares
for investment purposes only and not with a view to distribution or resale.

         GKGFS hereby agrees that the warrant granted under the Certificate
shall be deemed to have been exercised to the extent specified in this notice on
the exercise date below the authorizing signature, and GKGFS hereby warrants
that on such date this notice was delivered to the Company.

                                                  Sincerely,

                                                  -----------------------------
                                                  Title:

DATED:
      -------------------------

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