Document:

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EXHIBIT 10.10(12)    LOAN AND SECURITY AGREEMENT AND VARIABLE RATE SINGLE
                     PAYMENT NOTE DATED JUNE 24, 2002 BETWEEN FOTOBALL USA, INC.
                     AND COMERICA BANK - CALIFORNIA.

(Comerica Logo)            LOAN AND SECURITY AGREEMENT
                            (ACCOUNTS AND INVENTORY)
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OBLIGOR#               NOTE #                          AGREEMENT DATE

                                                                June 24, 2002
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CREDIT LIMIT           INTEREST RATE                   OFFICER NO./INITIALS

    $5,000,000              Base Rate + 0.50                    49772/SC
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THIS AGREEMENT is entered into on June 24, 2002, between Comerica Bank-
California, a California banking corporation ("Bank") as secured party, whose
headquarters office is 333 West Santa Clara Street, San Jose, California 95113
and Fotoball USA, Inc. ("Borrower"), whose sole place of business is located at
the address set forth below its name on the signature page to this Agreement.
The parties agree as follows:

1.       DEFINITIONS.

1.1      "Accounts" shall mean and includes all presently existing and hereafter
arising accounts, including without limitation all accounts receivable, contract
rights and other forms of right to payment for monetary obligations or
receivables for property sold or to be sold, leased, licensed, assigned or
otherwise disposed of, or for services rendered or to be rendered (including
without limitation all health-care-insurance receivables) owing to Borrower, and
any supporting obligations, credit insurance, guaranties or security therefor,
irrespective of whether earned by performance.

1.2      "Agreement" shall mean and includes this Loan and Security Agreement
(Accounts and Inventory), any concurrent or subsequent rider to this Loan and
Security Agreement (Accounts and Inventory) and any extensions, supplements,
amendments or modifications to this Loan and Security Agreement (Accounts and
Inventory) and/or to any such rider.

1.3      "Bank Expenses" shall mean and includes: all costs or expenses required
to be paid by Borrower under this Agreement which are paid or advanced by Bank;
taxes and insurance premiums of every nature and kind of Borrower paid by Bank;
filing, recording, publication and search fees, appraiser fees, reasonable
auditor fees and costs, and title insurance premiums paid or incurred by Bank in
connection with Bank's transactions with Borrower; costs and expenses incurred
by Bank in collecting the Accounts (with or without suit) to correct any Event
of Default or enforce any provision of this Agreement, or in gaining possession
of, maintaining, handling, preserving, storing, shipping, selling, disposing of,
preparing for sale and/or advertising to sell the Collateral, whether or not a
sale is consummated; costs and expenses of suit incurred by Bank in enforcing or
defending this Agreement or any portion hereof, including, but not limited to,
expenses incurred by Bank in attempting to obtain relief from any stay,
restraining order, injunction or similar process which prohibits Bank from
exercising any of its rights or remedies; and reasonable attorneys' fees and
expenses incurred by Bank in advising, structuring, drafting, reviewing,
amending, terminating, enforcing, defending or concerning this Agreement, or any
portion hereof or any agreement related hereto, whether or not suit is brought.
Bank Expenses shall include Bank's in-house legal charges at reasonable rates.

1.4      "Base Rate" shall mean that variable rate of interest so announced by
Bank at its headquarters office in San Jose, California as its "Base Rate" from
time to time and which serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto.

1.5      "Borrower's Books" shall mean and includes all of Borrower's books and
records including but not limited to minute books; ledgers; records indicating,
summarizing or evidencing Borrower's assets (including, without limitation, the
Accounts), liabilities, business operations or financial condition, and all
information relating thereto, computer programs; computer disk or tape files;
computer printouts; computer runs; and other computer prepared information and
equipment of any kind.

1.6      "Borrowing Base" shall mean the sum of: (1) Eighty percent (80%) of the
net amount of Eligible Accounts after deducting therefrom all payments,
adjustments and credits applicable thereto; and (2) the amount, if any, of the
advances against Inventory agreed to be made pursuant to any Inventory Rider, or
other rider, amendment or modification to this Agreement, that may now or
hereafter be entered into by Bank and Borrower.

1.7      "Cash Flow" shall mean, for any applicable period of determination, the
Net Income (after deduction for income taxes and other taxes of such Person, or
its subsidiaries, determined by reference to income or profits of such Person,
or its subsidiaries) for such period, plus, to the extent deducted in
computation of such Net Income, the amount of depreciation and amortization
expense and the amount of deferred tax liability during such period, all as
determined in accordance with GAAP.

1.8      "Collateral" shall mean and includes all personal property of Borrower,
including without limitation each and all of the following: the Accounts; the
Inventory; the General Intangibles; the Negotiable Collateral; Borrower's Books;
all Borrower's deposit accounts; all Borrower's investment property (including
without limitation securities and securities entitlements); all

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                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

goods, instruments, documents, policies and certificates of insurance, deposits,
money or other personal property of Borrower in which Bank receives a security
interest and which now or later come into the possession, custody or control of
Bank; all Borrower's equipment and fixtures; all additions, accessions,
attachments, parts, replacements, substitutions, renewals, interest, dividends,
distributions or rights of any kind for or with respect to any of the foregoing
(including without limitation any stock splits, stock rights, voting rights and
preferential rights); any supporting obligations for any of the foregoing; and
the products and proceeds of any of the foregoing, including, but not limited
to, proceeds of insurance covering the Collateral, and any and all Accounts,
General Intangibles, Negotiable Collateral, Inventory, equipment, money, deposit
accounts, investment property, equipment, fixtures or other tangible and
intangible property of Borrower resulting from the sale or other disposition of
the Collateral and the proceeds thereof and any supporting obligations or
security therefor and any right to payment thereunder, and including, without
limitation, cash or other property which were proceeds and are recovered by a
bankruptcy trustee or otherwise as a preferential transfer by Borrower.
Notwithstanding anything to the contrary contained herein, Collateral shall not
include any waste or other materials which have been or may be designated as
toxic or hazardous by Bank.

1.9      "Credit" shall mean all Indebtedness, except that Indebtedness arising
pursuant to any other separate contract, instrument, note, or other separate
agreement which, by its terms, provides for a specified interest rate and term.

1.10     "Credit Limit" shall mean Five Million Dollars ($ 5,000,000).

1.11     "Current Assets" shall mean, in respect of a Person and as of any
applicable date of determination, all current assets of such Person that should
be classified as current in accordance with GAAP, including, without limitation;
(a) unrestricted cash, marketable securities, or certificates of deposit; (b)
non-affiliated accounts receivable; (c) United States government securities; (d)
claims against the United States government; and (e) inventories (held for sale
in the ordinary course of business) of such Person.

1.12     "Current Liabilities" shall mean, in respect of a Person and as of any
applicable date of determination, (a) all liabilities of such Person that should
be classified as current in accordance with GAAP, including, without limitation,
any portion of the principal of the Indebtedness under this Agreement classified
as current, plus (b) to the extent not otherwise included, all liabilities of
Borrower to any of its affiliates (including officers, directors, shareholders,
subsidiaries and commonly held companies) whether or not classified as current
in accordance with GAAP.

1.13     "Daily Balance" shall mean the amount determined by taking the amount
of the Credit owed at the beginning of a given day, adding any new Credit
advanced or incurred on such date, and subtracting any payments or collections
which are deemed to be paid and are applied by Bank in reduction of the Credit
on that date under the provisions of this Agreement.

1.14     "Debt" shall mean, as of any applicable date of determination, all
items of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP. In the case of Borrower, the term "Debt" shall include,
without limitation, the Indebtedness.

1.15     "Debt-to-Worth Ratio" shall mean, in respect of a Person and as of any
applicable date of determination, the ratio of (a) the total Debt of such Person
at such time, to (b) the Tangible Effective Net Worth of such Person at such
time.

1.16     "Eligible Accounts" shall mean and includes those Accounts of Borrower
which are due and payable within Sixty (60) days, or less, from the date of
invoice, have been validly assigned to Bank and strictly comply with all of
Borrower's warranties and representations to Bank; but Eligible Accounts shall
not include the following: (a) Accounts with respect to which the account debtor
is an officer, employee, partner, joint venture or agent of Borrower; (b)
Accounts with respect to which goods are placed on consignment, guaranteed sale
or other terms by reason of which the payment by the account debtor may be
conditional; (c) Accounts with respect to which the account debtor is not a
resident of the United States; (d) Accounts with respect to which the account
debtor is the United States or any department, agency or instrumentality of the
United States; (e) Accounts with respect to which the account debtor is any
State of the United States or any city, county, town, municipality or division
thereof; (f) Accounts with respect to which the account debtor is a subsidiary
of, related to, affiliated or has common shareholders, officers or directors
with Borrower; (g) Accounts with respect to which Borrower is or may become
liable to the account debtor for goods sold or services rendered by the account
debtor to Borrower; (h) Accounts not paid by an account debtor within ninety
(90) days from the date of the invoice; (i) Accounts with respect to which
account debtors dispute liability or make any claim, or have any defense,
crossclaim, counterclaim, or offset; (j) Accounts with respect to which any
Insolvency Proceeding is filed by or against the account debtor, or if an
account debtor becomes insolvent, fails or goes out of business; and (k)
Accounts owed by any single account debtor which exceed twenty percent (20%) of
all of the Eligible Accounts, but only to the extend of such amounts which may
exceed twenty percent (20%0 of all of the Eligible Accounts; and (I) Accounts
with a particular account debtor on which over twenty-five percent (25%) of the
aggregate amount owing is greater than ninety (90) days from the date of the
invoice.

1.17     "Event of Default" shall mean one or more of those events described in
Section 7 contained herein below.

1.18     "GAAP" shall mean, as of any applicable period, generally accepted
accounting principles in effect during such period.

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                                                       (ACCOUNTS AND INVENTORY)

1.19     "General Intangibles" shall mean and includes all of Borrower's present
and future general intangibles and other personal property (including without
limitation all payment intangibles, electronic chattel paper, contract rights,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, plans, diagrams, schematics, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, rights to
payment (including without limitation, rights to payment evidenced by chattel
paper, documents or instruments) and other rights under any royalty or licensing
agreements, infringement claims, software (including without limitation any
computer program that is embedded in goods that consist solely of the medium in
which the program is embedded), information contained on computer disks or
tapes, literature, reports, catalogs, insurance premium rebates, tax refunds,
and tax refund claims), other than goods, Accounts, Inventory, Negotiable
Collateral, and Borrowers Books.

1.20     "Indebtedness" shall mean and includes any and all loans, advances,
Letter of Credit Obligations, overdrafts, debts, liabilities (including, without
limitation, any and all amounts charged to Borrower's loan account pursuant to
any agreement authorizing Bank to charge Borrower's loan account), obligations,
lease payments, guaranties, covenants and duties owing by Borrower to Bank of
any kind and description whether advanced pursuant to or evidenced by this
Agreement; by any note or other Instrument; or by any other agreement between
Bank and Borrower and whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due now existing or hereafter
arising, including, without limitation, any interest, fees, expenses, costs and
other amounts owed to Bank that but for the provisions of the United States
Bankruptcy Code would have accrued after the commencement of any Insolvency
Proceeding, and including, without limitation, any debt, liability, or
obligations owing from Borrower to others which Bank may have obtained by
assignment, participation, purchase or otherwise, and further including, without
limitation, all interest not paid when due and all Bank Expenses which Borrower
is required to pay or reimburse by this Agreement, by law, or otherwise.

1.21     "Insolvency Proceeding" shall mean and includes any proceeding or case
commenced by or against Borrower or any of Borrower's account debtors, under any
provisions of the Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law, including, but not limited to assignments for the benefit of
creditors, formal or informal moratoriums, composition or extensions with some
or all creditors, any proceeding seeking a reorganization, arrangement or any
other relief under the Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law.

1.22     "Inventory" shall mean and includes all present and future inventory in
which Borrower has any interest, including, but not limited to, goods held by
Borrower for sale or lease or to be furnished under a contract of service and
all of Borrower's present and future raw materials, work in process, finished
goods (including without limitation any computer program embedded in any of the
foregoing goods and any supporting information provided in connection therewith
that (i) is associated with the goods in such a manner that the program
customarily is considered part of the goods or that (ii) by becoming the owner
of the goods, a person acquires a right to use the program in connection with
the goods), together with any advertising materials and packing and shipping
materials, wherever located and any documents of title representing any of the
above, and any equipment, fixtures or other property used in the storing,
moving, preserving, identifying, accounting for and shipping or preparing for
the shipping of inventory, and any and all other items hereafter acquired by
Borrower by way of substitution, replacement, return, repossession or otherwise,
and all additions and accessions thereto, and the resulting product or mass, and
any documents of title respecting any of the above.

1.23     "Letter of Credit Obligations" shall mean, as of any applicable date of
determination, the sum of the undrawn amount of any letter(s) of credit issued
by Bank upon the application of and/or for the account of Borrower, plus any
unpaid reimbursement obligations owing by Borrower to Bank in respect of any
such letter(s) of credit.

1.24     "Net Income" shall mean the net income (or loss) of a person for any
period of determination, determined in accordance with GAAP but excluding in any
event:

         a.    any gains or losses on the sale or other disposition, not in the
          ordinary course of business, of investments or fixed or capital
          assets, and any taxes on the excluded gains and any tax deductions or
          credits on account on any excluded losses; and

         b.    in the case of Borrower, net earnings of any Person in which
          Borrower has an ownership interest, unless such net earnings shall
          have actually been received by Borrower in the form of cash
          distributions.

1.25     "Negotiable Collateral" shall mean and include all of Borrower's
present and future letters of credit, advises of credit, letter-of-credit
rights, certificates of deposit, notes, drafts, money, documents (including
without limitation all negotiable documents), instruments (including without
limitation all promissory notes), tangible chattel paper or any other similar
property.

1.26     "Judicial Officer or Assignee" shall mean and includes any trustee,
receiver, controller, custodian, assignee for the benefit of creditors or any
other person or entity having powers or duties like or similar to the powers and
duties of trustee, receiver, controller, custodian or assignee for the benefit
of creditors.

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1.27     "Person" or "person" shall mean and includes any individual,
corporation, partnership, joint venture, firm, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency or other entity.

1.28     "Quick Assets" shall mean, as of any applicable date of determination,
unrestricted cash, certificates of deposit or marketable securities and net
accounts receivable arising from the sale of goods and services, and United
States government securities and/or claims against the United States government
of Borrower and its subsidiaries.

1.29     "Subordinated Debt" shall mean indebtedness of Borrower to third
parties which has been subordinated to the Indebtedness pursuant to a
subordination agreement in form and content satisfactory to Bank.

1.30     "Subordination Agreement" shall mean a subordination agreement in form
satisfactory to Bank making all present and future indebtedness of Borrower
subordinate to the Indebtedness.

1.31     "Tangible Effective Net Worth" shall mean, with respect to any Person
and as of any applicable date of determination, Tangible Net Worth plus
Subordinated Debt.

1.32     "Tangible Net Worth" shall mean, with respect to any Person and as of
any applicable date of determination, the excess of:

         a.     the net book value of all assets of such Person (excluding
          affiliate receivables, patents, patent rights, trademarks, trade
          names, franchises, copyrights, licenses, goodwill, and all other
          intangible assets of such Person) after all appropriate deductions in
          accordance with GAAP (including, without limitation, reserves for
          doubtful receivables, obsolescence, depreciation and amortization),
          over

         b.     all Debt of such Person at such time.

1.33     "Working Capital" shall mean, as of any applicable date of
determination, Current Assets less Current Liabilities.

Any and all terms used in the foregoing definitions and elsewhere in this
Agreement shall be construed and defined in accordance with the meaning and
definition of such terms under and pursuant to the California Uniform Commercial
Code (hereinafter referred to as the "Uniform Commercial Code") as amended,
revised or replaced from time to time. Notwithstanding the foregoing, the
parties intend that the terms used herein which are defined in the Uniform
Commercial Code have, at all times, the broadest and most inclusive meanings
possible. Accordingly, if the Uniform Commercial Code shall in the future be
amended or held by a court to define any term used herein more broadly or
inclusively than the Uniform Commercial Code in effect on the date of this
Agreement, then such term, as used herein, shall be given such broadened
meaning. If the Uniform Commercial Code shall in the future be amended or held
by a court to define any term used herein more narrowly, or less inclusively,
than the Uniform Commercial Code in effect on the date of this Agreement, such
amendment or holding shall be disregarded in defining terms used in this
Agreement.

2.       LOAN AND TERMS OF PAYMENT.

For value received, Borrower promises to pay to the order of Bank such amount,
as provided for below, together with interest, as provided for below.

2.1      Upon the request of Borrower, made at any time and from time to time
during the term hereof, and so long as no Event of Default has occurred, Bank
shall lend to Borrower an amount equal to the Borrowing Base; provided, however,
that the Daily Balance shall not exceed the lesser of either the Credit Limit or
the Borrowing Base, minus (i) all Letter of Credit Obligations and (ii) all
obligations under the Special Sublimit (as defined below). If at any time for
any reason, the amount of Indebtedness owed by Borrower to Bank pursuant to this
Section 2.1 and Section 2.3 of this Agreement is greater than the aggregate
amount available to be drawn under this Section 2.1, Borrower shall immediately
pay to Bank, in cash, the amount of such excess.

2.2      Except as hereinbelow provided, the Credit shall bear interest, on the
Daily Balance owing, at a fluctuating rate of interest equal to the Base Rate
plus one half of one (0.50%) percentage points per annum.

All interest chargeable under this Agreement that is based upon a per annum
calculation shall be computed on the basis of a three hundred sixty (360) day
year for actual days elapsed. The Base Rate as of the date of this Agreement is
four and three fourths (4.75%) per annum. In the event that the Base Rate
announced is, from time to time hereafter, changed, adjustment in the Base Rate
shall be made and based on the Base Rate in effect on the date of such change.
The Base Rate, as adjusted, shall apply to the Credit until the Base Rate is
adjusted again.

All interest payable by Borrower under the Credit shall be due and payable on
the first day of each calendar month during the term of this Agreement. A late
payment charge equal to five percent (5%) of each late payment may be charged on
any payment not received by Bank within ten (10) calendar days after the payment
due date, but acceptance of payment of this

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                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

charge shall not waive any Event of Default under this Agreement. Upon the
occurrence of an Event of Default hereunder, and without constituting a waiver
of any such Event of Default, then during the continuation thereof, at Bank's
option, the Credit shall bear interest, on the Daily Balance owing, at a rate
equal to three percent (3%) per year in excess of the rate applicable
immediately prior to the occurrence of the Event of Default, and such rate of
interest shall fluctuate thereafter from time to time at the same time and in
the same amount as any fluctuation in the rate of interest applicable
immediately prior to any such occurrence.

2.3      Subject to the terms and conditions of this Agreement, Bank agrees to
issue or cause to be issued letters of credit for the account of Borrower during
the term of this Agreement in the aggregate outstanding face amount not to
exceed (i) the lesser of the Credit Limit or the Borrowing Base, minus (ii) the
then outstanding Daily Balance, provided that the Letter of Credit Obligations
shall not in any case exceed Five Hundred Thousand Dollars ($ 500,000). All
letters of credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of standard Letter of Credit Application and Agreement.

The obligation of Borrower to immediately reimburse Bank for drawings made under
letters of credit shall be absolute, unconditional and irrevocable in accordance
with the terms of this Agreement and the Letter of Credit Application and
Agreement with respect to each such letter of credit. Borrower shall indemnify,
defend, protect and hold Bank harmless from any loss, cost, expense, or
liability, including, without limitation, reasonable attorney's fees incurred by
Bank, whether in-house or outside counsel is used, arising out of or in
connection with any letters of credit.

2.4      Subject to the terms and conditions of this Agreement, Bank agrees to
advance to Borrower an amount not to exceed One Million Two Hundred Thousand
Dollars ($1,200,000) (the "Special Sublimit"). The amount available under the
Special Sublimit shall be reduced by Three Hundred Thousand Dollars ($300,000)
on each anniversary of this Agreement.

3.       TERM.

This Agreement shall remain in full force and effect until:

3.1      Terminated by notice, by either party. Notice of such termination shall
[ ]           be effectuated by mailing of a registered or certified letter not
              less than thirty (30) days prior to the effective date of such
              termination, addressed to the other party at the address set forth
              herein and the termination shall be effective as of the date so
              fixed in such notice.

[X]      December 24, 2004, or until terminated by notice by Borrower. Notice of
         such termination by Borrower shall be effectuated by mailing of a
         registered or certified letter not less than thirty (30) days prior to
         the effective date of such termination, addressed to Bank at the
         address set forth herein and the termination shall be effective as of
         the date so fixed in such notice.

Notwithstanding the foregoing, should Borrower be in default of one or more of
the provisions of this Agreement, Bank may terminate this Agreement at any time,
subject to any applicable cure period, without notice. Notwithstanding the
foregoing, should either Bank or Borrower become insolvent or unable to meet its
debts as they mature, or fail, suspend, or go out of business, the other party
shall have the right to terminate this Agreement at any time without notice. On
the date of termination all Indebtedness shall become immediately due and
payable without notice or demand; no notice of termination by Borrower shall be
effective until Borrower shall have paid all Indebtedness to Bank in full.
Notwithstanding termination, until all Indebtedness has been fully satisfied,
Bank shall retain its security interest in all existing Collateral and
Collateral arising thereafter, and Borrower shall continue to perform all of its
obligations.

3.2      After termination and when Bank has received payment in full of
Borrower's Indebtedness to Bank, Bank shall reassign to Borrower all Collateral
held by Bank, and shall execute a termination of all security agreements and
security interests given by Borrower to Bank.

4.       CREATION OF SECURITY INTEREST.

4.1      Borrower hereby grants to Bank a continuing security interest in all
presently existing and hereafter arising Collateral in order to secure prompt
repayment of any and all Indebtedness owed by Borrower to Bank and in order to
secure prompt performance by Borrower of each and all of its covenants and
obligations under this Agreement and otherwise created Bank's security interest
in the Collateral shall attach to all Collateral without further act on the part
of Bank or Borrower. In the event that any Collateral, including proceeds, is
evidenced by or consists of Negotiable Collateral, Borrower, immediately upon
the request of Bank, upon the occurrence of an Event of Default and so long as
such Event of Default is continuing shall (a) endorse or assign such Negotiable
Collateral to Bank, (b) deliver actual physical possession of such Negotiable
Collateral to Bank, and (c) mark conspicuously all of its records pertaining to
such Negotiable Collateral with a legend, in form and substance satisfactory to
Bank (and in the case of Negotiable Collateral consisting of tangible chattel
paper, immediately mark all such tangible chattel paper with a conspicuous
legend in form and substance satisfactory to Bank), indicating that the
Negotiable Collateral is subject to the security interest granted to Bank
hereunder.

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4.2      Bank's security interest in the Accounts shall attach to all Accounts
without further act on the part of Bank or Borrower. Upon request from Bank,
Borrower shall provide Bank with schedules describing all Accounts created or
acquired by Borrower (including without limitation agings listing the names and
addresses of, and amounts owing by date by account debtors), and shall upon the
occurrence of an Event of Default and so long as such Event of Default is
continuing, execute and deliver written assignments of all Accounts to Bank all
in a form acceptable to Bank; provided, however, Borrower's failure to execute
and deliver such schedules and/or assignments shall not affect or limit Bank's
security interest and other rights in and to the Accounts. Together with each
schedule, Borrower shall, upon the occurrence of an Event of Default and so long
as such Event of Default is continuing and upon request of Bank, furnish Bank
with copies of Borrower's customers' invoices or the equivalent, and original
shipping or delivery receipts for all merchandise sold, and Borrower warrants
the genuineness thereof. Upon the occurrence of an Event of Default and so long
as such Event of Default is continuing, Bank or Bank's designee may notify
customers or account debtors of Bank's security interest in the Collateral and
direct such customers or account debtors to make payments directly to Bank, but
unless and until Bank does so or gives Borrower other written instructions,
Borrower shall collect all Accounts for Bank, receive in trust all payments
thereon as Bank's trustee, and, if so requested to do so from Bank, Borrower
shall immediately deliver said payments to Bank in their original form as
received from the account debtor and all letters of credit, advices of credit,
instruments, documents, chattel paper or any similar property evidencing or
constituting Collateral. The receipt of any check or other item of payment by
Bank shall not be considered a payment on account until such check or other item
of payment is honored when presented for payment, in which event, said check or
other item of payment shall be deemed to have been paid to Bank immediately on
the date Bank actually receives such check or other item of payment.

4.3      Bank's security interest in Inventory shall attach to all Inventory
without further act on the part of Bank or Borrower. Upon the occurrence of an
Event of Default and so long as such Event of Default is continuing, Borrower
will at Borrower's expense pledge, assemble and deliver such Inventory to Bank
or to a third party as Bank's bailee; or hold the same in trust for Bank's
account or store the same in a warehouse in Bank's name; or deliver to Bank
documents of title representing said Inventory; or evidence of Bank's security
interest in some other manner acceptable to Bank. Until an Event of Default
under this Agreement or any other Agreement between Borrower and Bank, Borrower
may, subject to the provisions hereof and consistent herewith, sell the
Inventory, but only in the ordinary course of Borrower's business.

4.4      Concurrently with Borrower's execution of this Agreement, and at any
time or times hereafter at the request of Bank, Borrower shall (a) execute and
deliver to Bank security agreements, mortgages, assignments, certificates of
title, affidavits, reports, notices, schedules of accounts, letters of authority
and all other documents that Bank may reasonably request, in form satisfactory
to Bank, to perfect and maintain perfected Bank's security interest in the
Collateral and in order to fully consummate all of the transactions contemplated
under this Agreement, (b) cooperate with Bank in obtaining a control agreement
in form and substance satisfactory to Bank with respect to all deposit accounts,
electronic chattel paper, investment property, and letter-of-credit rights, and
(c) in the event that any Collateral is in the possession of a third party,
Borrower shall join with Bank in notifying such third party of Bank's security
interest and obtaining an acknowledgment from such third party that it is
holding such Collateral for the benefit of Bank. By authenticating or becoming
bound by this Agreement, Borrower authorizes the filing of initial financing
statement(s), and any amendment(s) covering the Collateral to perfect and
maintain perfected Bank's security interest in the Collateral. Upon the
occurrence of an Event of Default, and so long as such Event of Default is
continuing, Borrower hereby irrevocably makes, constitutes and appoints Bank
(and any of Bank's officers, employees or agents designated by Bank) as
Borrower's true and lawful attorney-in-fact with power to sign the name of
Borrower on any security agreement, mortgage, assignment, certificate of title,
affidavit, letter of authority, notice of other similar documents which must be
executed and/or filed in order to perfect or continue perfected Bank's security
interest in the Collateral, and to take such actions in its own name or in
Borrower's name as Bank, in its sole discretion, deems necessary or appropriate
to establish exclusive possession or control (as defined in the Uniform
Commercial Code) over any Collateral of such nature that perfection of Bank's
security interest may be accomplished by possession or control.

4.5      Borrower shall make appropriate entries in Borrower's Books disclosing
Bank's security interest in the Accounts. Bank (through any of its officers,
employees or agents) shall have the right at any time or times hereafter,
provided that reasonable notice is provided, during Borrower's usual business
hours, or during the usual business hours of any third party having control over
the records of Borrower, to inspect and verify Borrower's Books in order to
verify the amount or condition of, or any other matter, relating to, said
Collateral and Borrower's financial condition. So long as no Event of Default
has occurred and is continuing, Bank shall limit such inspections to one each
twelve-month period.

4.6      Effective only upon the occurrence of an Event of Default and so long
as such Event of Default is continuing, Borrower appoints Bank or any other
person whom Bank may designate as Borrower's attorney-in-fact, with power: to
endorse Borrower's name on any checks, notes, acceptances, money order, drafts
or other forms of payment or security that may come into Bank's possession; to
sign Borrower's name on any invoice or bill of lading relating to any Accounts,
on drafts against account debtors, on schedules and assignments of Accounts, on
verifications of Accounts and on notices to account debtors; to establish a lock
box arrangement and/or to notify the post office authorities to change the
address for delivery of Borrower's mail addressed to Borrower to an address
designated by Bank, to receive and open all mail addressed to Borrower, and to
retain all mail relating to the Collateral and forward all other mail to
Borrower; to send, whether in writing or by telephone, requests for verification
of Accounts; and to do all things necessary to carry out this Agreement.
Borrower ratifies and approves all acts of the attorney-in-fact. Neither Bank
nor its attorney-in-fact will be liable for any acts or omissions or for any
error of judgement or mistake of fact or law. This power being coupled with an
interest, is irrevocable so long as any Accounts in which Bank has a security
interest remain unpaid and until the Indebtedness has been fully satisfied.

                                       6
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

4.7      In order to protect or perfect any security interest which Bank is
granted hereunder, Bank may, in its sole reasonable discretion, discharge any
lien or encumbrance or bond the same, pay any insurance, maintain guards,
warehousemen, or any personnel to protect the Collateral, pay any service
bureau, or, obtain any records, and all costs for the same shall be added to the
Indebtedness and shall be payable on demand.

4.8      Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and
service providers.

5.       CONDITIONS PRECEDENT.

5.1      As a condition precedent to the making of the loans and the extension
of the financial accommodations hereunder, Borrower shall execute, or cause to
be executed, and deliver to Bank, in form and substance satisfactory to Bank and
its counsel, the following:

                  a.     This Agreement and other documents, instruments and
agreements required by Bank;

                  b.     If Borrower is a corporation, limited liability
company, limited partnership or other such entity, certified copies of all
actions taken by Borrower, any grantor of a security interest to Bank to secure
the Indebtedness, authorizing the execution, delivery and performance of this
Agreement and any other documents, instruments or agreements entered into in
connection herewith, and authorizing specific officers to execute and deliver
any such documents, instruments and agreements;

                  c.     If Borrower is a corporation, limited liability
company, limited partnership or other such entity, then a certificate of good
standing showing that Borrower is in good standing under the laws of the state
of its incorporation or formation and certificates indicating that Borrower is
qualified to transact business and is in good standing in any other state in
which it conducts business;

                  d.     If Borrower is a partnership, then a copy of Borrower's
partnership agreement certified by each general partner of Borrower;

                  e.     UCC searches and financing statements, tax lien and
litigation searches, fictitious business statement filings, insurance
certificates, notices or other similar documents which Bank may require and in
such form as Bank may require, in order to reflect, perfect or protect Bank's
first priority security interest in the Collateral and in order to fully
consummate all of the transactions contemplated under this Agreement;

                  f.     Evidence that Borrower has obtained insurance and
acceptable endorsements;

                  g.     Such control agreements from each Person as Bank may
require;

                  h.     Duly executed certificates of title with respect to
that portion of the Collateral that is subject to certificates of title;

                  i.     Such collateral access agreements from each lessor,
warehouseman, bailee, and other Person as Bank may require, duly executed by
each such Person; and

6.       WARRANTIES. REPRESENTATIONS AND COVENANTS.

6.1      If so requested by Bank, Borrower shall, at such reasonable intervals
designated by Bank, during the term hereof execute and deliver a Report of
Accounts Receivable or similar report, in form customarily used by Bank. The
aggregate amount of the Borrowing Base at all times during the effectiveness of
this Agreement shall not be less than the advances made hereunder. Bank shall
have the right to recompute the Borrowing Base in conformity with this
Agreement.

6.2      If any Account is not paid in full by an account debtor within ninety
(90) days from the date of invoice, or an account debtor disputes liability or
makes any claim with respect thereto, or a petition in bankruptcy or other
application for relief under the Bankruptcy Code or any other insolvency law is
filed by or against an account debtor, or an account debtor makes an assignment
for the benefit of creditors, becomes insolvent, fails or goes out of business,
then Bank may deem ineligible any and all Accounts owing by that account debtor,
and reduce the Borrowing Base by the amount thereof. Bank shall retain its
security interest in all Accounts, whether eligible or ineligible, until all
Indebtedness has been fully paid and satisfied. Returns and allowances, if any,
as between Borrower and its customers, will be on the same basis and in
accordance with the usual customary practices of Borrower. Any merchandise which
is returned by an account debtor or otherwise recovered shall be set aside and
Bank shall retain a security interest therein. Borrower shall promptly notify
Bank of all disputes and claims and settle or adjust them on terms approved by
Bank. After an Event of Default hereunder, no discount, credit or allowance
shall be granted to any account debtor by Borrower without Bank's consent. Bank
may, after an Event of Default by Borrower, settle or adjust disputes and claims
directly with account debtors for amounts and upon terms which Bank considers

                                       7
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

advisable, and in such cases Bank will credit Borrower's loan account with only
the net amounts received by Bank in payment of the Accounts, after deducting all
Bank Expenses in connection therewith.

6.3      Borrower warrants, represents, covenants and agrees that:

                  a.     Borrower has good and marketable title to the
Collateral. Bank has and shall continue to have a first priority perfected
security interest in and to the Collateral, except for purchase money liens,.
The Collateral shall at all times remain free and clear of all liens,
encumbrances and security interests (except those in favor of Bank and except
for purchase money liens);

                  b.     All Accounts are and will, at all times pertinent
hereto, be bona fide existing obligations created by the sale and delivery of
merchandise or the rendition of services to account debtors in the ordinary
course of business, free of liens, claims, encumbrances and security interests
(except as held by Bank and except as may be consented to, in writing, by Bank)
and are unconditionally owed to Borrower without defenses, disputes, offsets
counterclaims, rights of return or cancellation, and Borrower shall have
received no notice of actual bankruptcy or insolvency of any account debtor at
the time an Account due from such account debtor is assigned to Bank; and

                  c.     At the time each Account is assigned to Bank, all
property giving rise to such Account shall have been delivered to the account
debtor or to the agent for the account debtor for immediate shipment to, and
unconditional acceptance by, the account debtor. Borrower shall deliver to Bank,
as Bank may from time to time require, delivery receipts, customer's purchase
orders, shipping instructions, bills of lading and any other evidence of
shipping arrangements. Absent such a request by Bank, copies of all such
documentation shall be held by Borrower as custodian for Bank.

6.4      At the time each Eligible Account is assigned to Bank, all such
Eligible Accounts will be due and payable on terms set forth in Section 1.17, or
on such other terms approved in writing by Bank in advance of the creation of
such Accounts and which are expressly set forth on the face of all invoices,
copies of which shall be held by Borrower as custodian for Bank, and no such
Eligible Account will then be past due.

6.5      Borrower shall keep the Inventory only at the following locations: 6740
Cobra Way, San Diego, CA 92121, WorldTrans Services , 10025 Siempre Viva Rd Ste
D, San Diego, Ca 92154 and various inventory vendor locations in Asia as
necessary to produce Borrower's inventory and the owner or mortgagees of the
6740 Cobra Way location is: Chase Terrace, LLC.

                  a.     Borrower, immediately upon demand by Bank therefor,
shall now and from time to time hereafter, at such intervals as are reasonably
requested by Bank, deliver to Bank, designations of Inventory specifying
Borrower's cost of Inventory, the wholesale market value thereof and such other
matters and information relating to the Inventory as Bank may request;

                  b.     All of the Inventory is and shall remain free from all
purchase money or other security interests, liens or encumbrances, except as
held by Bank and except for those granted by Borrower for any purchase money
liens;

                  c.     Borrower does now keep and hereafter at all times shall
keep correct and accurate records itemizing and describing the kind, type,
quality and quantity of the Inventory, its cost therefor and selling price
thereof, and the daily withdrawals therefrom and additions thereto, all of which
records shall be available upon reasonable demand to any of Bank's officers,
agents and employees for inspection and copying which inspections shall be
limited to only one per twelve period so long as no Event of Default has
occurred and is continuing;

                  d.     All Inventory, now and hereafter at all times, shall be
new Inventory of good and merchantable quality free from material defects;

                  e.     Inventory in excess of Two Hundred Fifty Thousand
Dollars ($250,000) is not now and shall not at any time or times hereafter be
located or stored with a bailee, warehouseman or other third party without
Bank's prior written consent, and, in such event, Borrower will concurrently
therewith cause any such bailee, warehouseman or other third party to issue and
deliver to Bank, warehouse receipts in Bank's name evidencing the storage of
Inventory and/or an acknowledgment by such bailee of Bank's prior rights in the
Inventory, in each case in form and substance acceptable to Bank,. In any event,
Borrower shall instruct any third party to hold all such Inventory for Bank's
account subject to Bank's security interests and its instructions; and

                  f.     Bank shall have the right upon demand now and/or at all
times hereafter, during Borrower's usual business hours, after reasonable notice
to inspect and examine the Inventory and to check and test the same as to
quality, quantity, value and condition and Borrower agrees to reimburse Bank for
Bank's reasonable costs and expenses in so doing. So long as no Event of Default
has occurred and is continuing, Bank shall limit such inspections to one each
twelve-month period.

                                       8
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

6.6      Borrower represents, warrants and covenants with Bank that Borrower
will not, without Bank's prior written consent, which consent shall not
unreasonably withheld:

                  a.     Grant a security interest in or permit a lien, claim or
encumbrance upon any of the Collateral to any person, association, firm,
corporation, entity or governmental agency or instrumentality;

                  b.     Permit any levy, attachment or restraint to be made
affecting any of Borrower's assets;

                  c.     Permit any Judicial Officer or Assignee to be appointed
or to take possession of any or all of Borrower's assets;

                  d.     Other than sales of Inventory in the ordinary course of
Borrower's business, to sell, lease, or otherwise dispose of, move, or transfer,
whether by sale or otherwise, any of Borrower's assets except for the sale of
obsolete assets or the sale of assets being replaced by comparable assets;

                  e.     Change its name, the location of its sole place of
business, chief executive office, business structure, corporate identity or
structure, form of organization or the state in which it has been formed or
organized; add any new fictitious names, liquidate, merge or consolidate with or
into any other business organization;

                  f.     Move or relocate any Collateral;

                  g.     Acquire any other business organization or enter into
any transaction not in the usual course of Borrower's business; provided,
however, that Borrower may acquire any other business organization so long as
subsequent to such acquisition or transaction Borrower remains in compliance
with the terms of this Agreement;

                  h.     Make any change in Borrower's financial structure or in
any of its business objectives, purposes or operations which would materially
adversely affect the ability of Borrower to repay Borrower's Indebtedness;

                   i.    Incur any debts outside the ordinary course of
Borrower's business except renewals or extensions of existing debts and interest
thereon;

                   j.    Make loans, advances or extensions of credit to any
Person, except in the ordinary course of business;

                   k.    Guarantee or otherwise, directly or indirectly, in any
way be or become responsible for obligations of any other Person, whether by
agreement to purchase the indebtedness of any other Person, agreement for the
furnishing of funds to any other Person through the furnishing of goods,
supplies or services, by way of stock purchase, capital contribution, advance or
loan, for the purpose of paying or discharging (or causing the payment or
discharge of) the indebtedness of any other Person, or otherwise, except for the
endorsement of negotiable instruments by Borrower in the ordinary course of
business for deposit or collection;

                   l.    Make any payment on account of any Subordinated Debt
except for regularly scheduled payments of interest and principal in accordance
with the provisions of any Subordination Agreement executed by Bank and the
subordinated debt holder, or amend any provision contained in any documentation
relating to any such Subordinated Debt without Bank's prior written consent;

                   m.    (a) Sell, lease, transfer or otherwise dispose of
properties and assets having an aggregate book value of more than Two Hundred
Fifty Thousand Dollars ($250,000) (whether in one transaction or in a series of
transactions) except as to the sale of Inventory in the ordinary course of
business; (b) change its name, consolidate with or merge into any other
corporation, permit another corporation to merge into it, acquire all or
substantially all the properties or assets of any other Person, enter into any
reorganization or recapitalization or reclassify its capital stock, or (c) enter
into any sale-leaseback transaction;

                   n.    Purchase or hold beneficially any stock or other
securities of, or make any investment or acquire any securities or other
interest whatsoever in, any other Person, except for the common stock of the
subsidiaries owned by Borrower on the date of this Agreement and except for
certificates of deposit with maturities of one year or less of United States
commercial banks with capital, surplus and undivided profits in excess of One
Hundred Million Dollars ($100,000,000) and the securities or other direct
obligations of the United States Government maturing within one year from the
date of acquisition thereof; and

                  o.     Allow any fact, condition or event to occur or exist
with respect to any employee pension or profit sharing plans established or
maintained by it which might constitute grounds for termination of any such plan
or for the court appointment of a trustee to administer any such plan.

6.7      Borrower represents, warrants, covenants and agrees that:

                                       9
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

                  a.     Borrower's true and correct legal name is that set
forth on the signature page to this Agreement. Except as disclosed in writing to
Bank on or before the date of this Agreement, except for trade names previously
disclosed to Bank in writing, Borrower has not done business under any name
other than that set forth on the signature page to this Agreement;

                  b.     If Borrower is a registered organization that is
organized under the laws of any one of the states comprising the United States
(e.g. corporation, limited partnership, registered limited liability partnership
or limited liability company), and is located (as determined pursuant to the
Uniform Commercial Code) in the state under the laws of which it was organized,
Borrower's form of organization and the state in which it has been organized are
those set forth immediately following Borrower's name on the signature page to
this Agreement;

                  c.     If Borrower is a registered organization organized
under the laws of the United States, and Borrower is located in the state that
United States law designates as its location or, if United States law authorizes
Borrower to designate the state for its location, the state designated by
Borrower, or if neither of the foregoing are applicable, at the District of
Columbia (in each case as determined in accordance with the Uniform Commercial
Code), Borrower's form of organization and the state or district in which it is
located are those set forth immediately following Borrower's name on the
signature page to this Agreement;

6.8      If Borrower is a corporation, Borrower represents, warrants and
covenants as follows:

                  a.     Borrower will not make any distribution or declare or
pay any dividend (in stock or in cash) to any shareholder or on any of its
capital stock, of any class, whether now or hereafter outstanding, or purchase,
acquire, repurchase, or redeem or retire any such capital stock;

                  b.     Borrower is and shall at all times hereafter be a
corporation duly organized and existing in good standing under the laws of the
state of its incorporation and qualified and licensed to do business in
California or any other state in which it conducts its business;

                  c.     Borrower has the right and power and is duly authorized
to enter into this Agreement; and

                  d.     The execution by Borrower of this Agreement shall not
constitute a breach of any provision contained in Borrower's articles of
incorporation or by-laws.

6.9      The execution of and performance by Borrower of all of the terms and
provisions contained in this Agreement shall not result in a breach of or
constitute an Event of Default under any agreement to which Borrower is now or
hereafter becomes a party.

6.10     Borrower shall promptly notify Bank in writing of its acquisition by
purchase, lease or otherwise of any after acquired property of the type included
in the Collateral, with the exception of purchases in the ordinary course of
business.

6.11     All assessments and taxes, whether real, personal or otherwise, due or
payable by, or imposed, levied or assessed against, Borrower or any of its
property have been paid, and shall hereafter be paid in full, before
delinquency. Borrower shall make due and timely payment or deposit of all
federal, state and local taxes, assessments or contributions required of it by
law, and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof. Borrower will make timely payment
or deposit of all F.I.C.A. payments and withholding taxes required of it by
applicable laws, and will upon request furnish Bank with proof satisfactory to
it that Borrower has made such payments or deposit. If Borrower fails to pay any
such assessment, tax, contribution, or make such deposit, or furnish the
required proof, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower
and with respect to which adequate reserves have been set aside on its books,
Bank may, in its sole and absolute discretion and without notice to Borrower,
(I) make payment of the same or any part thereof, or (ii) set up such reserves
in Borrower's loan account as Bank deems necessary to satisfy the liability
therefor, or both. Bank may conclusively rely on the usual statements of the
amount owing or other official statements issued by the appropriate governmental
agency. Each amount so paid or deposited by Bank shall constitute a Bank Expense
and an additional advance to Borrower.

6.12    There are no actions or proceedings pending by or against Borrower
before any court or administrative agency and Borrower has no knowledge of any
pending, threatened or imminent litigation, governmental investigations or
claims, complaints, actions or prosecutions involving Borrower, that would have
a material adverse effect on the business of Borrower or the amount in
controversy is in excess of $750,000, except as heretofore specifically
disclosed in writing to Bank. If any of the foregoing arise during the term of
the Agreement, Borrower shall immediately notify Bank in writing.

6.13     Insurance.

                  a.     Borrower, at its expense, shall keep and maintain its
assets insured against loss or damage by fire, theft, explosion, sprinklers and
all other hazards and risks ordinarily insured against by other owners who use
such properties in similar businesses for the full insurable value thereof.
Borrower shall also keep and maintain business

                                       10
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

interruption insurance and public liability and property damage insurance
relating to Borrower's ownership and use of the Collateral and its other assets.
All such policies of insurance shall be in such form, with such companies, and
in such amounts as may be reasonably satisfactory to Bank. Borrower shall
deliver to Bank certified copies of such policies of insurance and evidence of
the payments of all premiums therefor. All such policies of insurance (except
those of public liability and property damage) shall contain an endorsement in a
form satisfactory to Bank showing Bank as a loss payee thereof, with a waiver of
warranties reasonably satisfactory to Bank and upon the occurrence of an Event
of Default, and so long as it is continuing, Borrower shall direct all insurers
under such policies of insurance to pay all proceeds thereof directly to Bank
and, upon receipt by Bank, shall be applied on account of the Indebtedness owing
to Bank. To secure the payment of the Indebtedness, Borrower grants Bank a
security interest in and to all such policies of insurance (except those of
public liability and property damage) and the proceeds thereof, and Borrower
shall direct all insurers under such policies of insurance to pay all proceeds
thereof directly to Bank. Not withstanding anything contained herein to the
contrary, so long as no Event of Default has occurred and is continuing, Bank
shall direct insurance payments to be paid to Borrower.

                  b.     Upon the occurrence of an Event of Default and so long
as such Event of Default is continuing, Borrower hereby irrevocably appoints
Bank (and any of Bank's officers, employees or agents designated by Bank) as
Borrower's attorney for the purpose of making, selling and adjusting claims
under such policies of insurance, endorsing the name of Borrower on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect to such
policies of insurance. Borrower will not cancel any of such policies without
Bank's prior written consent. Each such insurer shall agree by endorsement upon
the policy or policies of insurance issued by it to Borrower as required above,
or by independent instruments furnished to Bank, that it will give Bank at least
ten (10) days written notice before any such policy or policies of insurance
shall be altered or canceled, and that no act or Event of Default of Borrower,
or any other person, shall affect the right of Bank to recover under such policy
or policies of insurance required above or to pay any premium in whole or in
part relating thereto. Bank, without waiving or releasing any Indebtedness or
any Event of Default, may, but shall have no obligation to do so, obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect to such policies which Bank deems advisable. All sums so
disbursed by Bank, as well as reasonable attorneys' fees incurred by Bank,
whether in-house or outside counsel is used, court costs, expenses and other
charges relating thereto, shall constitute Bank Expenses and are payable on
demand.

6.14     All financial statements and information relating to Borrower dated as
of March 31, 2002 which has been delivered by Borrower to Bank are true and
correct and have been prepared in accordance with GAAP consistently applied.

6.15    Financial Reporting.

                  a.     Borrower at all times hereafter shall maintain a
standard and modern system of accounting in accordance with GAAP consistently
applied with ledger and account cards and/or computer tapes and computer disks,
computer printouts and computer records pertaining to the Collateral which
contain information as may from time to time be requested by Bank, not modify or
change its method of accounting or enter into, modify or terminate any agreement
presently existing, or at any time hereafter entered into with any third party
accounting firm and/or service bureau for the preparation and/or storage of
Borrower's accounting records without the written consent of Bank first obtained
and without said accounting firm and/or service bureau agreeing to provide
information regarding the Accounts and Inventory and Borrower's financial
condition to Bank; permit Bank and any of its employees, officers or agents,
upon reasonable notice, during Borrower's usual business hours, or the usual
business hour of third persons having control thereof, to have access to and
examine all of Borrower's Books relating to the Collateral, Borrower's
Indebtedness to Bank, Borrower's financial condition and the results of
Borrower's operations and in connection therewith, permit Bank or any of its
agents, employees or officers to copy and make extracts therefrom, provided that
such examinations shall be limited to one per twelve month period so long as no
Event of Default has occurred and is continuing..

                  b.     Borrower shall deliver to Bank within forty five (45)
days after the end of each quarter, a company prepared balance sheet, profit and
loss statement and SEC 10Q reports, covering Borrower's monthly operations
during such quarter and deliver to Bank within ninety (90) days after the end of
each of Borrower's fiscal years an audited statement of the financial condition
of Borrower for each such fiscal year, including but not limited to, a balance
sheet, profit and loss statement and SEC 10K report, and any other report
reasonably requested by Bank relating to the Collateral and the financial
condition of Borrower, and a certificate signed by an authorized employee of
Borrower to the effect that to such employees knowledge all reports, statements,
computer disk or tape files, computer printouts, computer runs, or other
computer prepared information of any kind or nature relating to the foregoing or
documents delivered or caused to be delivered to Bank under this subparagraph
are complete, correct in all material respects and fairly present the financial
condition of Borrower and that there exists on the date of delivery to Bank no
condition or event which constitutes a breach or Event of Default under this
Agreement.

                  c.     In addition to the financial statements requested
above, Borrower agrees to provide Bank with the following schedules:

                         (1) Accounts Receivable Agings   on a monthly basis
                                                          within 20 days of
                                                          month end

                         (2) Accounts Payable Agings      on a monthly basis
                                                          within 20 days of
                                                          month end

                                       11
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

                         (3) Borrowing Base Certificate   on a monthly basis;
                                                          and

                         (4) Compliance Certification     on a quarterly basis
                                                          within 45 days of
                                                          month end.

6.16     Borrower shall maintain the following financial ratios and covenants on
a consolidated and non-consolidated basis, which shall be monitored on a
quarterly basis, except as noted below:

                  a.     a ratio of Current Assets to Current Liabilities of not
less than 2.00 to 1.00

                  b.     a ratio of Quick Assets to Current Liabilities of not
less than 1.25 to 1.00

                  c.     a Debt-to-Worth Ratio of not more than 1.00 to 1.00

                  d.     Net Income after taxes of more than $100,000 on a
rolling six-month basis.

                  e.     A ratio of Earnings before Interest and Taxes ("EBIT")
to Interest Expense ("Interest Coverage Ratio") of not less than 2.00 to 1.00.
Calculations to determine Interest the Interest Coverage Ratio shall be made on
a rolling four-quarter basis as of the end of each fiscal quarter. In
determining compliance with this covenant for the year 2002 only, the
year-to-date EBIT and Interest Expense will be multiplied by 4, 2 and 1.33,
respectively, for the quarters ending on March 31, June 30 and September 30 and
then calculated on a rolling four quarter basis beginning with the quarter
ending December 31, 2002.

         All financial covenants shall be computed in accordance with GAAP
 consistently applied except as otherwise specifically set forth in this
 Agreement. All monies due from affiliates (including officers, directors and
 shareholders) shall be excluded from Borrower's assets for all purposes
 hereunder. As used in this Agreement "Current Liabilities" shall include
 amounts outstanding under this Agreement except for amounts outstanding under
 the Special Sublimit.

6.17     Borrower shall promptly supply Bank with such other information
(including tax returns) concerning its financial affairs as Bank may request
from time to time hereafter, and shall promptly notify Bank of any material
adverse change in Borrower's financial condition and of any condition or event
which constitutes a breach of or an event which constitutes an Event of Default
under this Agreement.

6.18     Borrower is now and shall be at all times hereafter solvent and able to
pay its debts (including trade debts) as they mature.

6.19     Borrower shall immediately and without demand reimburse Bank for all
sums expended by Bank in connection with any action brought by Bank to correct
any Event of Default or enforce any provision of this Agreement, including all
Bank Expenses; Borrower authorizes and approves all advances and payments by
Bank for items described in this Agreement as Bank Expenses.

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

6.21     Except as previously explained to Bank with respect to the cash
management accounts of Borrower, Borrower shall keep all of its principal bank
accounts with Bank and shall notify Bank immediately in writing of the existence
of any other bank account, deposit account, or any other account into which
money can be deposited.

6.22     Borrower shall furnish to Bank: (a) as soon as possible, but in no
event later than thirty (30) days after Borrower knows or has reason to know
that any reportable event with respect to any deferred compensation plan has
occurred, a statement of the chief financial officer of Borrower setting forth
the details concerning such reportable event and the action which Borrower
proposes to take with respect thereto, together with a copy of the notice of
such reportable event given to the Pension Benefit Guaranty Corporation, if a
copy of such notice is available to Borrower; (b) promptly after the filing
thereof with the United States Secretary of Labor or the Pension Benefit
Guaranty Corporation, copies of each annual report with respect to each deferred
compensation plan; (c) promptly after receipt thereof, a copy of any notice
Borrower may receive from the Pension Benefit Guaranty Corporation or the
Internal Revenue Service with respect to any deferred compensation plan;
provided, however, this subparagraph shall not apply to notice of general
application issued by the Pension Benefit Guaranty Corporation or the Internal
Revenue Service; and (d) when the same is made available to participants in the
deferred compensation plan, all notices and other forms of information from time
to time disseminated to the participants by the administrator of the deferred
compensation plan.

                                       12
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

6.23     Borrower is now and shall at all times hereafter remain in compliance
in all material respects with all federal, state and municipal laws, regulations
and ordinances relating to the handling, treatment and disposal of toxic
substances, wastes and hazardous material and shall maintain all necessary
authorizations and permits.

7.       EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:

                  a.     If Borrower fails or neglects to perform, keep or
observe any term, provision, condition, covenant, agreement, warranty or
representation contained in this Agreement, or any other present or future
document, instrument or agreement between Borrower and Bank, provided, however,
that if any such Event of Default is curable and Borrower has not been given a
prior notice of a breach of the same term or condition, it may be cured by
Borrower within 30 days of the earlier of discovery or notice thereof, or, if
the cure will require more than 30 days, if Borrower immediately initiates steps
that Bank deems in its sole discretion to be sufficient to cure such Event of
Default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical;

                  b.     If any representation, statement, report or certificate
made or delivered by Borrower, or any of its officers, employees or agents to
Bank is not true and correct in all material respects as of the date such
representation, statement, report or certificate is made or delivered;

                  c.     If Borrower fails to pay within five (5) days of when
due and payable or declared due and payable, all or any portion of Borrower's
Indebtedness (whether of principal, interest, taxes, reimbursement of Bank
Expenses, or otherwise);

                  d.     If there is a material impairment of the value or
priority of Bank's security interest in the Collateral;

                  e.     If all or any of Borrower's assets in excess of
$750,000 are attached, seized, subject to a writ or distress warrant, or are
levied upon, or come into the possession of any Judicial Officer or Assignee and
the same are not released, discharged or bonded against within ten (10) days
thereafter;

                  f.     If any Insolvency Proceeding is filed or commenced by
or against Borrower without being dismissed within ten (10) days thereafter or
sixty (60) days in the case of such a proceeding filed against Borrower;

                  g.     If any proceeding is filed or commenced by or against
Borrower for its dissolution or liquidation;

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

                  i.     If a notice of lien, levy or assessment in excess of
Seven Hundred Fifty Thousand Dollars ($750,000) is filed of record with respect
to any or all of Borrower's assets by the United States Government, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other government agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a lien, whether inchoate
or otherwise, upon any or all of Borrower's assets and the same is not paid on
the payment date thereof;

                  j.     If a judgment or other claim in excess of Seven Hundred
Fifty Thousand Dollars ($750,000) becomes a lien or encumbrance upon any or all
of Borrower's assets and the same is not satisfied, dismissed or bonded against
within fifteen (15) business days

                  k.     If Borrower permits a default in any material agreement
to which Borrower is a party with third parties so as to result in an
acceleration of the maturity of Borrower's indebtedness to others in excess of
Two Hundred Fifty Thousand Dollars ($250,000), whether under any indenture,
agreement or otherwise;

                  l.     If Borrower makes any payment on account of
indebtedness which has been subordinated to Borrower's Indebtedness to Bank
except as otherwise permitted under the terms of this Agreement;

                  m.     If any misrepresentation, knowingly made, exists now or
thereafter in any warranty or representation made to Bank by Borrower's Chairman
& CEO, SVP & CFO and/or President & COO, or if any such warranty or
representation is withdrawn by any such officer;

                  n.     If there is a change of ownership or control of fifty
percent (50%) or more of the issued and outstanding stock of Borrower without
prior written consent of Bank; or

                  o.     If any reportable event, which Bank determines
constitutes grounds for the termination of any deferred compensation plan by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer any such plan, shall
have occurred and be continuing thirty (30) days after

                                       13
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

written notice of such determination shall have been given to Borrower by Bank,
or any such Plan shall be terminated within the meaning of Title IV of the
Employment Retirement Income Security Act ("ERISA"), or a trustee shall be
appointed by the appropriate United States District Court to administer any such
plan, or the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any plan and in case of any event described in this Section 7, the
aggregate amount of Borrower's liability to the Pension Benefit Guaranty
Corporation under Sections 4062, 4063 or 4064 of ERISA shall exceed five percent
(5%) of Borrower's Tangible Effective Net Worth.

         Notwithstanding anything contained in Section 7 to the contrary, Bank
         shall refrain from exercising its rights and remedies and Event of
         Default shall thereafter not be deemed to have occurred by reason of
         the occurrence of any of the events set forth in Sections 7.e, 7.f or
         7.j of this Agreement if, within the time period set forth therein from
         the date thereof, the same is released, discharged, dismissed, bonded
         against or satisfied; provided, however, if the event is the
         institution of Insolvency Proceedings against Borrower, Bank shall not
         be obligated to make advances to Borrower during such cure period.

8.       BANK'S RIGHTS AND REMEDIES.

8.1      Upon the occurrence of an Event of Default by Borrower under this
Agreement, Bank may, at its election, without notice of its election and without
demand, do any one or more of the following, all of which are authorized by
Borrower:

                  a.     Declare Borrower's Indebtedness, whether evidenced by
this Agreement, installment notes, demand notes or otherwise, immediately due
and payable to Bank;

                  b.     Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, or any other agreement between
Borrower and Bank;

                  c.     Terminate this Agreement as to any future liability or
obligation of Bank, but without affecting Bank's rights and security interests
in the Collateral, and the Indebtedness of Borrower to Bank;

                  d.     Without notice to or demand upon Borrower, make such
payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires and to make the Collateral available to Bank as
Bank may reasonably designate. Borrower authorizes Bank to enter the premises
where the Collateral is located, take and maintain possession of the Collateral
and the premises (at no charge to Bank), or any part thereof, and to pay,
purchase, contest or compromise any encumbrance, charge or lien which in the
opinion of Bank appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith;

                  e.     Without limiting Bank's rights under any security
interest, Bank is hereby granted, subject to any license or sublicense agreement
to which Borrower may be a party to, a license or other right to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter, or any property or a
similar nature as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral and Borrower's rights under all
licenses and all franchise agreement shall inure to Bank's benefit, and Bank
shall have the right and power to enter into sublicense agreements with respect
to all such rights with third parties on terms acceptable to Bank;

                  f.     Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sales and sell (in the manner provided
for herein) the Inventory;

                  g.     Sell or dispose the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Borrower's premises)
as is commercially reasonable in the opinion of Bank. It is not necessary that
the Collateral be present at any such sale. At any sale or other disposition of
the Collateral pursuant to this Section, Bank disclaims all warranties which
would otherwise be given under the Uniform Commercial Code, including without
limitation a disclaimer of any warranty relating to title, possession, quiet
enjoyment or the like, and Bank may communicate these disclaimers to a purchaser
at such disposition. This disclaimer of warranties will not render the sale
commercially unreasonable;

                  h.     Bank shall give notice of the disposition of the
Collateral as follows:

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

                         (2) The notice shall be personally delivered or
                         mailed, postage prepaid, to Borrower's address
                         appearing in this Agreement, at least ten (10)
                         calendar days before the date fixed for the sale, or
                         at least ten (10) calendar days before the date on or
                         after which the private sale or other disposition is
                         to be made, unless the Collateral is perishable or
                         threatens to decline speedily in

                                       14
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

                         value. Notice to persons other than Borrower claiming
                         an interest in the Collateral shall be sent to such
                         addresses as have been furnished to Bank or as
                         otherwise determined in accordance with Section 9611 of
                         the Uniform Commercial Code; and

                         (3) If the sale is to be a public sale, Bank shall
                         also give notice of the time and place by publishing
                         a notice one time at least ten (10) calendar days
                         before the date of the sale in a newspaper of general
                         circulation in the county in which the sale is to be
                         held; and

                         (4) Bank may credit bid and purchase at any public
                         sale.

                  i.     Borrower shall pay all Bank Expenses incurred in
connection with Bank's enforcement and exercise of any of its rights and
remedies as herein provided, whether or not suit is commenced by Bank;

                  j.     Any deficiency which exists after disposition of the
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third parties,
to Borrower by Bank, or, in Bank's reasonable discretion, to any party who Bank
believes, in good faith, is entitled to the excess pursuant to applicable law or
court order;

                  k.     Without constituting a retention of Collateral in
satisfaction of an obligation within the meaning of 9620 of the Uniform
Commercial Code or an action under California Code of Civil Procedure 726, apply
any and all amounts maintained by Borrower as deposit accounts (as that term is
defined under 9102 of the Uniform Commercial Code) or other accounts that
Borrower maintains with Bank against the Indebtedness;

                  l.     The proceeds of any sale or other disposition of
Collateral authorized by this Agreement shall be applied by Bank first upon all
expenses authorized by the Uniform Commercial Code and all reasonable attorney
fees and legal expenses incurred by Bank, whether in-house or outside counsel is
used, the balance of the proceeds of the sale or other disposition shall be
applied in the payment of the Indebtedness, first to interest, then to
principal, then to remaining Indebtedness and the surplus, if any, shall be paid
over to Borrower or to such other person(s) as may be entitled to it under
applicable law. Borrower shall remain liable for any deficiency, which it shall
pay to Bank immediately upon demand. Borrower agrees that Bank shall be under no
obligation to accept any noncash proceeds in connection with any sale or
disposition of Collateral unless failure to do so would be commercially
unreasonable. If Bank agrees in its sole discretion to accept noncash proceeds
(unless the failure to do so would be commercially unreasonable), Bank may
ascribe any commercially reasonable value to such proceeds. Without limiting the
foregoing, Bank may apply any reasonable discount factor in determining the
present value of proceeds to be received in the future or may elect to apply
proceeds to be received in the future only as and when such proceeds are
actually received in cash by Bank; and

                  m.     The following shall be the basis for any finder of
fact's determination of the value of any Collateral which is the subject matter
of a disposition giving rise to a calculation of any surplus or deficiency under
Section 9615(f) of the Uniform Commercial Code: (i) The Collateral which is the
subject matter of the disposition shall be valued in an "as is" condition as of
the date of the disposition, without any assumption or expectation that such
Collateral will be repaired or improved in any manner; (ii) the valuation shall
be based upon an assumption that the transferee of such Collateral desires a
resale of the Collateral for cash promptly (but no later than 30 days) following
the disposition; (iii) all reasonable closing costs customarily borne by the
seller in commercial sales transactions relating to property similar to such
Collateral shall be deducted including, without limitation, brokerage
commissions, tax prorations, attorney's fees, whether in-house or outside
counsel is used, and marketing costs; (iv) the value of the Collateral which is
the subject matter of the disposition shall be further discounted to account for
any estimated holding costs associated with maintaining such Collateral pending
sale (to the extent not accounted for in (iii) above), and other maintenance,
operational and ownership expenses; and (v) any expert opinion testimony given
or considered in connection with a determination of the value of such Collateral
must be given by persons having at least 5 years experience in appraising
property similar to the Collateral and who have conducted and prepared a
complete written appraisal of such Collateral taking into consideration the
factors set forth above. The "value" of any such Collateral shall be a factor in
determining the amount of proceeds which would have been realized in a
disposition to a transferee other than a secured party, a person related to a
secured party or a secondary obligor under Section 9615(f) of the Uniform
Commercial Code.

8.2      In addition to any and all other rights and remedies available to Bank
under or pursuant to this Agreement or any other documents, instrument or
agreement contemplated hereby, Borrower acknowledges and agrees that (i) at any
time following the occurrence and during the continuance of any Event of
Default, and/or (ii) termination of Bank's commitment or obligation to make
loans or advances or otherwise extent credit to or in favor of Borrower
hereunder, in the event that and to the extent that there are any Letter of
Credit Obligations outstanding at such time, upon demand of Bank, Borrower shall
deliver to Bank, or cause to be delivered to Bank, cash collateral in an amount
not less than such Letter of Credit Obligations, which cash collateral shall be
held and retained by Bank as cash collateral for the repayment of such Letter of
Credit Obligations, together with any and all other Indebtedness of Borrower to
Bank remaining unpaid, and Borrower pledges to Bank and grants to Bank a
continuing first priority security interest in such cash collateral so delivered
to Bank. Alternatively, Borrower shall cause to be delivered to Bank an
irrevocable standby letter of credit issued in favor of Bank by a bank
acceptable to Bank, in its sole discretion, in an amount not less than such
Letter of Credit Obligations, and upon terms acceptable to Bank, in its sole
discretion.

                                       15
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

8.3      Bank's rights and remedies under this Agreement and all other
agreements shall be cumulative. Bank shall have all other rights and remedies
not inconsistent herewith as provided by law or in equity. No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Bank shall constitute a waiver, election or acquiescence by Bank.

9.       TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY. If Borrower fails to
pay promptly when due to another person or entity, monies which Borrower is
required to pay by reason of any provision in this Agreement, Bank may, but need
not, pay the same and charge Borrower's loan account therefor, and Borrower
shall promptly reimburse Bank. All such sums shall become additional
indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral. Any payments made by Bank
shall not constitute (I) an agreement by it to make similar payments in the
future, or (ii) a waiver by Bank of any Event of Default under this Agreement.
Bank need not inquire as to, or contest the validity of, any such expense, tax,
security interest, encumbrance or lien and the receipt of the usual official
notice of the payment thereof shall be conclusive evidence that the same was
validly due and owing. Such payments shall constitute Bank Expenses and
additional advances to Borrower.

10.      WAIVERS.

10.1     Borrower agrees that checks and other instruments received by Bank in
payment or on account of Borrower's Indebtedness constitute only conditional
payment until such items are actually paid to Bank and Borrower waives the right
to direct the application of any and all payments at any time or times hereafter
received by Bank on account of Borrower's Indebtedness and Borrower agrees that
Bank shall have the continuing exclusive right to apply and reapply such
payments in any manner as Bank may deem advisable, notwithstanding any entry by
Bank upon its books.

10.2     Borrower waives demand, protest, notice of protest, notice of an Event
of Default or dishonor, notice of payment and nonpayment, notice of any Event of
Default, nonpayment at maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, documents, instruments,
chattel paper, and guarantees at any time held by Bank on which Borrower may in
any way be liable.

10.3     Bank shall not in any way or manner be liable or responsible for (a)
the safekeeping of the Inventory; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof; or (d) any act or default of any carrier, warehouseman, bailee,
forwarding agency or other person whomsoever. All risk of loss, damage or
destruction of Inventory shall be borne by Borrower.

10.4     Borrower waives the right and the right to assert a confidential
relationship, if any, it may have with any accountant, accounting firm and/or
service bureau or consultant in connection with any information requested by
Bank pursuant to or in accordance with this Agreement, and agrees that a Bank
may contact directly any such accountants, accounting firm and/or service bureau
or consultant in order to obtain such information.

10.5     THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

10.6     In the event that Bank elects to waive any rights or remedies
hereunder, or compliance with any of the terms hereof, or delays or fails to
pursue or enforce any term, such waiver, delay or failure to pursue or enforce
shall only be effective with respect to that single act and shall not be
construed to affect any subsequent transactions or Bank's right to later pursue
such rights and remedies.

11.      ONE CONTINUING LOAN TRANSACTION. All loans and advances heretofore, now
or at any time or times hereafter made by Bank to Borrower under this Agreement
or any other agreement between Bank and Borrower, shall constitute one loan
secured by Bank's security interests in the Collateral and by all other security
interests, liens, encumbrances heretofore, now or from time to time hereafter
granted by Borrower to Bank.

Notwithstanding the above, (i) to the extent that any portion of the
Indebtedness is a consumer loan, that portion shall not be secured by any deed
of trust or mortgage on or other security interest in Borrower's principal
dwelling which is not a purchase money security interest as to that portion,
unless expressly provided to the contrary in another place, or (ii) if Borrower
(or any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure the loan
and any other Indebtedness of Borrower (or any of them), unless expressly
provided to the contrary in another place.

12.      NOTICES. Unless otherwise provided in this Agreement, all notices or
demands by either party on the other relating to this Agreement shall be in
writing and sent by regular United States mail, postage prepaid, properly
addressed to Borrower or to Bank at the addresses stated in this Agreement, or
to such other addresses as Borrower or Bank may from time to time specify to the
other in writing. Requests to Borrower by Bank hereunder may be made orally.

                                       16
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

13.      AUTHORIZATION TO DISBURSE. Bank is hereby authorized to make loans and
advances hereunder upon telephonic or other instructions received from the
Chairman and Chief Executive Officer, the President and Chief Operating Officer
or the SVP and Chief Financial Officer, or at the discretion of Bank if said
loans and advances are necessary to meet any Indebtedness of Borrower to Bank.
Bank shall have no duty to make inquiry or verify the authority of any such
individuals, and Borrower shall hold Bank harmless from any damage, claims or
liability by reason of Bank's honor of, or failure to honor, any such
instructions.

14.      PAYMENTS. Borrower hereby authorizes Bank to deduct the full amount of
any interest, fees, costs, or Bank Expenses due under this Agreement and not
paid or collected when due in accordance with the terms and conditions hereof
from any account maintained by Borrower with Bank. Should there be insufficient
funds in any such account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower; provided, however,
that Bank shall not be obligated to advance funds to cover any such payment.

15.      DESTRUCTION OF BORROWER'S DOCUMENTS. Any documents, schedules, invoices
or other papers delivered to Bank, may be destroyed or otherwise disposed of by
Bank six (6) months after they are delivered to or received by Bank, unless
Borrower requests, in writing, the return of the said documents, schedules,
invoices or other papers and makes arrangements, at Borrower's expense, for
their return.

16.      CHOICE OF LAW. The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined according to the laws of the
State of California. The parties agree that all actions or proceedings arising
in connection with this Agreement shall be tried and litigated only in the state
and federal courts in the Northern District of California or the County of Santa
Clara.

17.      GENERAL PROVISIONS.

17.1     This Agreement shall be binding and deemed effective when executed by
Borrower and accepted and executed by Bank at its headquarters office.

17.2     This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrower
may not assign this Agreement or any rights hereunder without Bank's prior
written consent and any prohibited assignment shall be absolutely void. No
consent to an assignment by Bank shall release Borrower from its obligations to
Bank. Bank may assign this Agreement and its rights and duties hereunder. Bank
reserves the right to sell, assign, transfer, negotiate or grant participations
in all or any part of, or any interest in Bank's rights and benefits hereunder.
In connection therewith, Bank may disclose all documents and information which
Bank now or hereafter may have relating to Borrower or Borrower's business.

17.3     Paragraph headings and paragraph numbers have been set forth herein for
convenience only; unless the contrary is compelled by the context, everything
contained in each paragraph applies equally to this entire Agreement. Unless the
context of this Agreement clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, and the
term "including" is not limiting. The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.

17.4     Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against Bank or Borrower, whether under any rule of
construction or otherwise; on the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.

17.5     Each provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.

17.6     This Agreement cannot be changed or terminated orally. This Agreement
contains the entire agreement of the parties hereto and supersedes all prior
agreements, understandings, representations, warranties and negotiations, if
any, related to the subject matter hereof, and none of the parties shall be
bound by anything not expressed in writing.

17.7     The parties intend and agree that their respective rights, duties,
powers, liabilities, obligations and discretions shall be performed, carried
out, discharged and exercised reasonably and in good faith.

                                       17
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

IN WITNESS WHEREOF, the parties hereto have caused this Loan and Security
Agreement (Accounts and Inventory) to be executed as of the date first
hereinabove written.

<TABLE>
<CAPTION>
                                                    BORROWER:
<S>                                                 <C>
Accepted and effective as of: June 24, 2002,        Fotoball USA, Inc.,
at Bank's Headquarters Office                       a Delaware corporation

                                                    By:     /s/ Thomas R. Hillebrandt
                                                            -------------------------

COMERICA BANK-CALIFORNIA,                           Name:   Thomas R. Hillebrandt
a California banking corporation                            ---------------------

                                                    Title:  Sr. Vice President & Chief Financial Officer
                                                            --------------------------------------------

By:      /s/ Stephen M. Cusato                      By:
         ---------------------                              ----------------------------

Name:    Stephen M. Cusato                          Name:
         -----------------                                  ----------------------------

Title:   Sr. Vice President                         Title:
         ------------------                                 ----------------------------

Address for Notices:                                Address for Notices:

333 Santa Clara Street                              6740 Cobra Way
San Jose, CA                                        San Diego, CA  92121
                                                    (858) 909-9900
</TABLE>

                                       18
<PAGE>

                        VARIABLE RATE-SINGLE PAYMENT NOTE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Amount               Note Date           Maturity Date           Tax Identification #
<S>                  <C>                <C>                      <C>
$1,200,000.00        June 24, 2002       December 24, 2004       33-0614889
----------------------------------------------------------------------------------------
</TABLE>

On the Maturity Date, as stated above, for value received, the undersigned
promise(s) to pay to the order of Comerica Bank-California ("Bank"), at any
office of the Bank in the State of California, One Million Two Hundred Thousand
and no/100 Dollars (U.S.) with interest from the date of this Note at a per
annum rate equal to the Bank's base rate from time to time in effect plus 0.500
% per annum until maturity, whether by acceleration or otherwise, or until
Default, as later defined, and after that at a default rate equal to the rate of
interest otherwise prevailing under this Note plus 3% per annum (but in no event
in excess of the maximum rate permitted by law). The Bank's "base rate" is that
annual rate of interest so designated by the Bank and which is changed by the
Bank from time to time. Interest rate changes will be effective for interest
computation purposes as and when the Bank's base rate changes. Interest shall be
calculated for the actual number of days the principal is outstanding on the
basis of a 360-day year if this Note evidences a business or commercial loan or
a 365-day year if a consumer loan. Accrued interest on this Note shall be
payable on either (i) X the Maturity Date or (ii) the
day of each                         commencing, until the  Maturity  Date when
all amounts outstanding under this Note shall be due and payable in full. If the
frequency of interest payments is not otherwise specified, accrued interest on
this Note shall be payable monthly on the first day of each month. If any
payment of principal or interest under this Note shall be payable on a day other
than a day on which the Bank is open for business, this payment shall be
extended to the next succeeding business day and interest shall be payable at
the rate specified in this Note during this extension. A late payment charge
equal to 5% of each late payment may be charged on any payment not received by
the Bank within 10 calendar days after the payment due date, but acceptance of
payment of this charge shall not waive any Default under this Note.

This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time in the possession of the Bank and by any other
collateral, rights and properties described in each and every deed of trust,
mortgage, security agreement, pledge, assignment and other security or
collateral agreement which has been, or will at any time(s) later be, executed
by any (or all) of the undersigned to or for the benefit of the Bank
(collectively "Collateral").

If the undersigned (i) fail(s) to pay any of the Indebtedness when due, by
maturity, acceleration or otherwise, or fail(s) to pay any Indebtedness owing on
a demand basis upon demand; or (ii) fail(s) to comply with any of the terms or
provisions of any agreement between the undersigned (or any of them) and the
Bank; or (iii) become(s) insolvent or the subject of a voluntary or involuntary
proceeding in bankruptcy, or a reorganization, arrangement or creditor
composition proceeding, (if a business entity) cease(s) doing business as a
going concern, or (if a corporation or a limited liability company) is the
subject of a dissolution, merger or consolidation; or (a) if any warranty or
representation made by any of the undersigned in connection with this Note or
any of the Indebtedness shall be discovered to be untrue or incomplete in any
material respect; or (b) if there is any termination, notice of termination, or
breach of any pledge, collateral assignment or subordination agreement relating
to all or any part of the Indebtedness; or (c) if there is any failure by any of
the undersigned or any guarantor to pay when due any of its indebtedness (other
than to the Bank) or in the observance or performance of any term, covenant or
condition in any document evidencing, securing or relating to such indebtedness;
or (d) if there is filed or issued a levy or writ of attachment or garnishment
or other like judicial process in excess of Seven Hundred Fifty Thousand Dollars
($750,000) upon the undersigned (or any of them) or any of the Collateral,
including without limit, any accounts of the undersigned (or any of them), then
the Bank, upon the occurrence of any of these events (each a "Default"), may at
its option and without prior notice to the undersigned (or any of them), declare
any or all of the Indebtedness to be immediately due and payable
(notwithstanding any provisions contained in the evidence of it to the
contrary), sell or liquidate all or any portion of the Collateral, set off
against the Indebtedness any amounts owing by the Bank to the undersigned (or
any of them), charge interest at the default rate provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the rights
and remedies granted to the Bank by any agreement with the undersigned (or any
of them) or given to it under applicable law. All payments under this Note shall
be in immediately available United States funds, without setoff or counterclaim.

This Note shall bind the undersigned, and the undersigned's respective heirs,
personal representatives, successors and assigns.

The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices, and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or
right to discharge available under Section 3-605 of the California Uniform
Commercial Code and waive(s) all other suretyship defenses or right to
discharge. The undersigned agree(s) that the Bank has the right to sell, assign,
or grant participations, or any interest, in any or all of the Indebtedness, and
that, in connection with this right, but without limiting its ability to make
other disclosures to the full extent allowable, the Bank may disclose all
documents and information which the Bank now or later has relating to the
undersigned or the Indebtedness. The undersigned agree(s) that the Bank may
provide information relating to this Note or to the undersigned to the Bank's
parent, affiliates, subsidiaries and

                                        1
<PAGE>

service providers.

The undersigned agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal expenses
and reasonable attorney fees, whether inside or outside counsel is used, whether
or not the suit is instituted and, if suit is instituted, whether at the trial
court level, appellate level, in a bankruptcy, probate or administrative
proceeding or otherwise) incurred in collecting or attempting to collect this
Note or incurred in any other matter or proceeding relating to this Note.

The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by an officer of the Bank expressly stating that the
writing constitutes an amendment, waiver or modification of the terms of this
Note. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, indorser and other party signing
this Note in a similar capacity. If any provision of this Note is unenforceable
in whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE IS MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

The maximum interest rate shall not exceed the highest applicable usury ceiling.

THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

See Addendum to Variable Rate-Single Payment Note attached hereto and made a
part hereof.

         INITIAL HERE ____________

Fotoball USA, Inc.

<TABLE>
<CAPTION>

<S>                                            <C>
By: /s/Thomas R. Hillebrandt                   Its: Sr. Vice President and Chief Financial Officer
    ----------------------------------------------------------------------------------------------
    SIGNATURE OF                                                          TITLE
</TABLE>

                                       2<PAGE>

                              ALLTRISTA CORPORATION
                      1998 LONG-TERM EQUITY INCENTIVE PLAN
                (AS AMENDED AND RESTATED AS OF NOVEMBER 8, 2001)
                                    ARTICLE I
                            ESTABLISHMENT AND PURPOSE

    Section 1.01. Establishment and Term of Plan. Alltrista Corporation, an
Indiana corporation ("Alltrista" or the "Company"), has established the
Alltrista Corporation 1998 Long-Term Equity Incentive Plan (the "Plan"),
effective as of January 1, 1998, subject to the approval of the Plan at the next
Annual Meeting of Shareholders of Alltrista Corporation by the holders of a
majority of the shares of Alltrista common stock entitled to vote at that
meeting.

    Section 1.02. Purpose. The Plan is designed to promote the interests of
Alltrista Corporation (the "Company"), its subsidiaries, and its shareholders by
providing stock-based incentives to selected key employees and Non-Employee
Directors who are expected to contribute materially to the success of the
Company and its subsidiaries. The purpose of the Plan is to provide a means of
rewarding outstanding performance and to provide an opportunity to increase the
personal ownership interest of its key employees and Non-Employee Directors in
the continued success of the Company. The Company believes that the Plan will
assist its efforts to attract and retain quality employees and Non-Employee
Directors.
                                   ARTICLE II
                                   DEFINITIONS

     Section 2.01. Definitions. When capitalized in this Plan, unless the
context otherwise requires:

     (a)   "Award" means a grant made to a Participant pursuant to Article VI of
           this Plan.

     (b)   "Award Agreement" means a written instrument between the Company and
           a Participant evidencing an Award and prescribing the terms,
           conditions, and restrictions applicable to the Award.

     (c)   "Board of Directors" means the Board of Directors of Alltrista
           Corporation as constituted at any time.

     (d)   "Change In Control" means the first to occur of the following events:

           (i)  any "person," as such term is used in Sections 13(d) and 14(d)
                of the Securities Exchange Act of 1934, as amended (the
                "Exchange Act") (other than the Company, any trustee or other
                fiduciary holding securities under an employee benefit plan of
                the Company or any Subsidiary of the Company, or any company
                owned, directly or indirectly, by the shareholders of the
                Company in substantially the same proportions as

                                        1
<PAGE>

                their ownership of stock of the Company), is or becomes the
                "beneficial owner" (as defined in Rule 13d-3 under the Exchange
                Act), directly or indirectly, of securities of the Company
                representing 30 percent or more of the combined voting power of
                the Company's then outstanding securities;

           (ii) at any time during any period of two consecutive years,
                individuals who at the beginning of such period constitute the
                Board and any new director (other than a director whose initial
                assumption of office in connection with an actual or threatened
                election contest, including but not limited to a consent
                solicitation, relating to the election of directors of the
                Company, including but not limited to Messrs. Martin E. Franklin
                and Ian G.H. Ashken) whose election by the Board or nomination
                for election by the Company's stockholders was approved by a
                vote of at least two-thirds (2/3) of the directors at the
                beginning of the period or whose election or nomination for
                election was previously so approved, cease for any reason to
                constitute at least a majority thereof;

           (iii)the stockholders of the Company approve a merger or
                consolidation of the Company with any other company, other than
                (1) a merger or consolidation which would result in the voting
                securities of the Company outstanding immediately prior thereto
                continuing to represent (either by remaining outstanding or by
                being converted into voting securities of the surviving entity)
                more than 50 percent of the combined voting power of the voting
                securities of the Company or such surviving entity outstanding
                immediately after such merger or consolidation or (2) a merger
                or consolidation effected to implement a recapitalization of the
                Company (or similar transaction) in which no person acquires 50
                percent or more of the combined voting power of the Company's
                then outstanding securities; or

           (iv) the stockholders of the Company approve a plan of complete
                liquidation of the Company or an agreement for the sale or
                disposition by the Company of all or substantially all of the
                Company's assets.

     (e)   "Code" means the Internal Revenue Code of 1986, as amended.

     (f)   "Committee" means a committee consisting of two or more non-employee
           directors (within the meaning of Rule 16b-3 of the 1934 Securities
           Exchange Act) designated by the Board of Directors.

     (g)   "Common Share" means a share of common stock of Alltrista
           Corporation.

     (h)   "Common Shares Outstanding" means the total number of Common Shares
           outstanding as reflected in the Company's financial statements as of
           the most recent fiscal year-end.

     (i)   "Company" means Alltrista Corporation.

                                        2
<PAGE>

     (j)   "Director" means a director of the Company.

     (k)   "Director Option" means a right to purchase Common Shares granted to
           a Director pursuant to Article VII.

     (l)   "Disabled" or "Disability" means a permanent disability as defined in
           the applicable long-term disability plan of the Company; except that
           "Disabled" or "Disability" with respect to Director Options shall
           mean total and permanent disability as defined in Section 22(e)(3) of
           the Code.

     (m)   "Employee" means any individual employed by the Company or any of its
           Subsidiaries, including officers and Employees who are members of the
           Board of Directors of the Company or any of its Subsidiaries.

     (n)   "Fair Market Value" of Common Shares means the value of the Common
           Shares determined by the Committee, or pursuant to rules established
           by the Committee on a basis consistent with regulations under the
           Code.

     (o)   "Incentive Stock Options" means stock options which qualify under and
           meet the requirements of Section 422 of the Code.

     (p)   "Non-Employee Director" means any Director of the Company who is not
           an Employee of the Company or any of its Subsidiaries.

     (q)   "Non-Qualified Stock Options" means stock options which do not
           qualify under or meet the requirements of Section 422 of the Code.

     (r)   "Participant" means any person to whom an Award has been granted
           under this Plan.

     (s)   "Plan" means this Alltrista Corporation 1998 Long-Term Equity
           Incentive Plan authorized by the Board of Directors at its meeting
           held on January 30, 1998, as such Plan from time to time may be
           amended as herein provided.

     (t)   "Restricted Stock" means an Award of Common Shares that are
           nontransferable and are subject to a substantial risk of forfeiture.

     (u)   "Retirement" means, in the case of an Employee, the termination of
           all employment with the Company and its subsidiaries for any reason
           other than death after the day on which the employee has attained age
           55. Retirement means, in the case of a Non-Employee Director,
           termination of all service as a Director for any reason other than
           death or Total Disability after the Director has reached age 70.

     (v)   "Rule 16b-3" means Rule 16b-3 under the Securities Exchange Act of
           1934, as amended.

                                        3
<PAGE>

     (w)   "Stock Appreciation Right" has the meaning given to it in Section
           6.02(b).

     (x)   "Stock Equivalent Unit" means an Award that is valued by reference to
           the value of Common Shares.

     (y)   "Stock Options" means the Incentive Stock Options and the
           Non-Qualified Stock Options issued pursuant to the Plan.

     (z)   "Subsidiary" means any company (other than the Company) in an
           unbroken chain of companies beginning with the Company if, at the
           date of grant, each of the companies other than the last company in
           the unbroken chain owns stock possessing 50 percent or more of the
           total combined voting power of all classes of stock in one of the
           other companies in such chain.

                                   ARTICLE III
                                 ADMINISTRATION

    Section 3.01. Administrative Committee. The Plan shall be administered by
the Committee, which shall serve at the pleasure of the Board of Directors. The
Committee shall have full authority to administer the Plan, including authority
to interpret and construe any provision of the Plan and to adopt such rules and
regulations for administering the Plan as it may deem necessary to comply with
the requirements of the Plan or any applicable law.

    Section 3.02. Powers of the Committee. The Committee shall, subject to the
terms of this Plan, have the authority to: (i) select the eligible employees who
shall receive Awards, (ii) grant Awards (other than Director Options), (iii)
determine the types and sizes of Awards to be granted to employees, (iv)
determine the terms, conditions, vesting periods, and restrictions applicable to
Awards (other than Director Options), (v) adopt, alter, and repeal
administrative rules and practices governing this Plan, (vi) interpret the terms
and provisions of this Plan and any Awards granted under this Plan, (vii)
prescribe the forms of any Award Agreements or other instruments relating to
Awards, and (viii) otherwise supervise the administration of this Plan. The
Committee may delegate any of its authority to any other person or persons that
it deems appropriate with respect to awards granted to employees who are not
officers of the Company.

    Section 3.03. Actions of the Committee. All actions taken and all
interpretations and determinations made in good faith by the Committee, or made
by any other person or persons to whom the Committee has delegated authority,
shall be final and binding upon all Participants, the Company, and all other
interested persons. All decisions by the Committee shall be made with the
approval of not less than a majority of its members. Members of the Committee
who are eligible for Awards may vote on any matters affecting the administration
of the Plan or the grant of any Awards pursuant to the Plan, except that no such
member shall act upon the granting of an Award to himself; but any such member
may be counted in determining the existence of a quorum of the Committee.

                                        4
<PAGE>

                                   ARTICLE IV
                                   ELIGIBILITY

    Section 4.01. Employees. Any employee of the Company or any of its
Subsidiaries who, in the judgment of the Committee serves the Company or a
Subsidiary in a key executive, administrative, professional, or technical
capacity, shall be eligible for the grant of Awards (other than Director
Options). The selection of the employees to receive Awards (other than Director
Options) shall be within the discretion of the Committee. More than one Award
may be granted to the same employee.

    Section 4.02. Non-Employee Directors. All Non-Employee Directors are
eligible for the grant of Director Options, as provided in Section 7 of this
Plan. Non-Employee Directors are not, however, eligible for the grant of any
Awards other than Director Options.

                                    ARTICLE V
                      SHARES SUBJECT TO AWARDS; ADJUSTMENT

    Section 5.01. Number of Common Shares. The shares subject to the Awards and
other provisions of the Plan shall be the Company's authorized, but unissued, or
reacquired Common Shares. The aggregate number of Common Shares that may be
subject to Awards granted under this Plan shall not exceed 581,383, or 437,040,
being the number of shares under the Plan net of shares issued and outstanding.
No employee of the Company may receive options or stock appreciation rights
covering more than 400,000 Common Shares in any calendar year.

    The assumption of awards granted by an organization acquired by the Company,
or the grant of Awards under this Plan in substitution for any such awards,
shall not reduce the number of Common Shares available for the grant of Awards
under this Plan. Common Shares subject to an Award that is forfeited,
terminated, or canceled without having been exercised (other than Common Shares
subject to a Stock Option that is canceled upon the exercise of a related Stock
Appreciation Right) shall again be available for grant under this Plan, subject
to the limitations noted in the foregoing paragraph of this Section 5.01.

    Section 5.02. Adjustment. In the event of any change in the Common Shares by
reason of a merger, consolidation, reorganization, recapitalization, or similar
transaction, or in the event of a stock split-up, spin-off, split-off, stock
dividend, or distribution to shareholders (other than normal cash dividends),
the Committee shall adjust the number and class of shares that may be issued
under this Plan, the aggregate number of Common Shares that may be issued under
the Plan upon the exercise of Incentive Stock Options, the number and class of
shares subject to outstanding Awards, the exercise price applicable to
outstanding Awards, and the Fair Market Value of the Common Shares and other
value determinations applicable to outstanding Awards, as appropriate. All
determinations made by the Committee with respect to adjustments under this
Section 5.02 shall be conclusive and binding for all purposes of the Plan.

                                        5
<PAGE>

                                   ARTICLE VI
                                     AWARDS

    Section 6.01. Grant of Awards. Awards authorized under this Article VI may
be granted pursuant to another incentive program which incorporates by reference
the terms and conditions of this Plan. Awards may be granted singly or in
combination or tandem with other Awards. Awards may also be granted in
replacement of, or in substitution for, other awards granted by the Company
whether or not such other awards were granted under this Plan; without limiting
the foregoing, if a Participant pays all or part of the exercise price or taxes
associated with an Award by the transfer of Common Shares or the surrender of
all or part of an Award (including the Award being exercised), the Committee
may, in its discretion, grant a new Award to replace the Common Shares that were
transferred or the Award that was surrendered. The Company may assume awards
granted by an organization acquired by the Company or may grant Awards in
replacement of, or in substitution for, any such awards.

     Section 6.02. Types of Awards. Awards may include, but are not limited to,
the following:

        (a) Director Option. A right to purchase Common Shares granted to a
    Director pursuant to Article VII of this Plan.

        (b) Stock Appreciation Right. A right to receive a payment, in cash or
    Common Shares, equal to the excess of (A) the Fair Market Value, or other
    specified valuation, of a specified number of Common Shares on the date the
    right is exercised over (B) the Fair Market Value, or other specified
    valuation, on the date the right is granted, all as determined by the
    Committee. The right may be conditioned upon the occurrence of certain
    events, such as a Change In Control, or may be unconditional, as determined
    by the Committee.

        (c) Stock Award. An Award that is made in Common Shares, Restricted
    Stock, or Stock Equivalent Units or that is otherwise based on, or valued in
    whole or in part by reference to, the Common Shares. All or part of any
    Stock Award may be subject to conditions, restrictions, and risks of
    forfeiture, as and to the extent established by the Committee. Stock Awards
    may be based on the Fair Market Value of the Common Shares, or on other
    specified values or methods of valuation, as determined by the Committee.

        (d) Stock Option. A right to purchase a specified number of Common
    Shares, during a specified period, and at a specified exercise price, all as
    determined by the Committee. A Stock Option may be an Incentive Stock Option
    or a Non-Qualified Stock Option. In addition to the terms, conditions,
    vesting periods, and restrictions established by the Committee in the Award
    Agreement, Incentive Stock Options must comply with the requirements of
    Section 422 of the Code, Section 6.03(f), and this Article VI.

    Section 6.03. Term and Conditions of Awards; Agreements. Awards granted
under the Plan shall be evidenced by a written agreement ("Award Agreement")
executed by the Company and the Participant, which shall contain such terms and
be in such form as the Committee may from time to time approve, subject to the
following limitations and conditions;

                                        6
<PAGE>

        (a) Number of Shares. The Award Agreement shall state, as appropriate,
    the type and total number of shares (i) granted, (ii) with respect to which
    Stock Appreciation Rights or Stock Equivalent Units are granted, and/or
    (iii) with respect to which Stock Options are granted.

        (b) Award Prices. The Award Agreement shall state, as applicable, the
    price per share of the Common Shares with respect to which Stock Options are
    issued and the Fair Market Value or other appropriate valuation of Common
    Shares with respect to which Stock Appreciation Rights are issued. The price
    or other value shall be determined by the Committee. For Incentive Stock
    Options, the exercise price shall satisfy all of the requirements of the
    Code and of Section 6.03(f) of this Plan.

        (c) Payment of Exercise Price; Deferral. The exercise price of a Stock
    Option (other than an Incentive Stock Option), Director Option, Stock
    Appreciation Right, and any Stock Award for which the Committee has
    established an exercise price may be paid in cash, by the transfer of Common
    Shares, by the surrender of all or part of an Award (including the Award
    being exercised), or by a combination of these methods, as and to the extent
    permitted by the Committee. The exercise price of an Incentive Stock Option
    may be paid in cash, by the transfer of Common Shares, or by a combination
    of these methods, as and to the extent permitted by the Committee at the
    time of grant, but may not be paid by the surrender of all or part of an
    Award. The Committee may prescribe any other method of paying the exercise
    price that it determines to be consistent with applicable law and the
    purpose of this Plan.

        With the approval of the Committee, the delivery of the Common Shares,
    cash, or any combination thereof subject to an Award (other than Director
    Options) may be deferred, either in the form of installments or a single
    future delivery. The Committee may also permit selected Participants to
    defer the payment of some or all of their Awards, as well as other
    compensation, in accordance with procedures established by the Committee to
    assure that the recognition of taxable income is deferred under the Code.
    Deferred amounts may, to the extent permitted by the Committee, be credited
    as cash or Stock Equivalent Units. The Committee may also establish rules
    and procedures for the crediting of interest on deferred cash payments and
    dividend equivalents on Awards.

        (d) Issuance of Shares and Compliance with Securities Laws. The Company
    may postpone the issuance and delivery of certificates representing shares
    until (a) the admission of such shares to listing on any stock exchange on
    which shares of the Company of the same class are then listed and (b) the
    completion of such registration or other qualification of such shares under
    any state or federal law, rule, or regulation as the Company shall determine
    to be necessary or advisable, which registration or other qualification the
    Company shall use its best efforts to complete; provided, however, a person
    purchasing shares pursuant to the Plan has no right to require the Company
    to register the Common Shares under federal or state securities laws at any
    time. Any person purchasing shares pursuant to the Plan may be required to
    make such representations and furnish such information as may, in the
    opinion of counsel for the Company, be appropriate to permit the Company, in
    light of the existence or

                                        7
<PAGE>

    non-existence with respect to such shares of an effective registration under
    the Securities Act of 1933, as amended, or any similar state statute, to
    issue the shares in compliance with the provisions of those or any
    comparable acts.

        (e) Rights as a Shareholder. Unless otherwise provided by the Board of
    Directors or the Committee, a Participant shall have rights as a shareholder
    with respect to shares covered by an Award, including voting rights or
    rights to dividends, only upon the date of issuance of a certificate to him
    and, if payment is required, only after such shares are fully paid.

        (f) Incentive Stock Options. To the extent any Award granted pursuant to
    this Plan contains an Incentive Stock Option, the following limitations and
    conditions shall apply to such Incentive Stock Option and the Award
    Agreement relating thereto in addition to the terms and conditions provided
    herein:

               (i)    Price. The price of an Incentive Stock Option shall be an
                      amount per share not less than the Fair Market Value per
                      share of the Common Shares on the date of granting of the
                      option. In the case of Incentive Stock Options granted to
                      an employee of the Company who is a 10% Shareholder, the
                      option price shall be an amount per share not less than
                      one hundred ten percent (110%) of the Fair Market Value
                      per share of the Common Shares on the date of the granting
                      of the Incentive Stock Option.

               (ii)   Exercise Period. Unless terminated earlier pursuant to
                      other terms and provisions of the Award Agreement, the
                      term of each Incentive Stock Option shall expire within
                      the period prescribed in the agreement relating thereto,
                      which shall not be more than five (5) years from the date
                      the Incentive Stock Option is granted, if the Participant
                      is a 10% Shareholder, and not more than ten (10) years
                      from the date the Incentive Stock Option is granted, if
                      the Participant is not a 10% Shareholder.

               (iii)  Limitation on Grants. No Incentive Stock Option shall be
                      granted under this Plan after January 30, 2008.

               (iv)   Limitation on Transferability. No Incentive Stock Option
                      shall be assignable or transferable except by will or
                      under the laws of descent and distribution. During the
                      lifetime of a Participant, the Incentive Stock Option
                      shall be exercisable only by the Participant and may not
                      be transferred or assigned pursuant to a qualified
                      domestic relations order.

               (v)  Maximum Exercise Rule. The aggregate Fair Market Value
                    (determined at the time the option is granted) of the shares
                    with respect to which Incentive Stock Options are
                    exercisable for the first time by an employee during any
                    calendar year under all such plans of the Company and any
                    parent or subsidiary corporation of the Company shall not
                    exceed One Hundred Thousand Dollars ($100,000).

                                        8
<PAGE>

         (g) Termination of Awards Under Certain Conditions. The Committee may
      cancel any unexpired, unpaid, or deferred Awards at any time, if the
      Participant is not in compliance with all applicable provisions of this
      Plan or with any Award Agreement or if the Participant, whether or not he
      or she is currently employed by the Company, engages in any of the
      following activities without the prior written consent of the Company:

               (i)  Directly or indirectly renders services to or for an
                    organization, or engages in a business that is, in the
                    judgment of the Committee, in competition with the Company.

               (ii) Discloses to anyone outside of the Company, or uses for any
                    purpose other than the Company's business, any confidential
                    or proprietary information or material relating to the
                    Company, whether acquired by the Participant during or after
                    employment with the Company.

    The Committee may, in its discretion and as a condition to the exercise of
an Award, require a Participant to acknowledge in writing that he or she is in
compliance with all applicable provisions of this Plan and of any Award
Agreement and has not engaged in any activities referred to in clauses (i) and
(ii) above.

         (h) Nontransferability. Unless otherwise determined by the Committee
      and provided in the Award Agreement, (i) no Award granted under this Plan
      may be transferred or assigned by the Participant to whom it is granted
      other than by will, pursuant to the laws of descent and distribution, or
      pursuant to a qualified domestic relations order, and (ii) an Award
      granted under this Plan may be exercised, during the Participant's
      lifetime, only by the Participant or by the Participant's guardian or
      legal representative

    Section 6.04. Election to Defer Grant or Receipt of Award. Notwithstanding
any provision herein to the contrary, the Committee may provide, in any Award
Agreement or in any program granting Awards under this Plan, that the
Participant may elect to defer receipt of the Award as provided in the Award
Agreement or program.

                                        9
<PAGE>

                                   ARTICLE VII
                                DIRECTOR OPTIONS

      Section 7.01.     Grant of Director Options.

         (a) Administration. A committee formed by only those Directors other
     than Non-Employee Directors shall have full authority to administer
     Director Options, including authority to require that any Non-Employee
     Director sign an Award Agreement as a condition of receiving a Director
     Option.

         (b) Granting of Director Options. Each individual serving as a
     Non-Employee Director on April 30 in any year after 1998 shall
     automatically receive a Director Option, effective on such date.

     Section 7.02. Number of Common Shares Subject to Each Director Option. Each
Director Option shall entitle the Non-Employee Director the right to purchase
1,000 Common Shares on the terms and conditions specified herein.

     Section 7.03. Exercise Price. The exercise price of the Common Shares
subject to each Director Option shall be the Fair Market Value of the Common
Shares at the date of grant.

     Section 7.04. Date Director Options Become Exercisable. Unless otherwise
established by the Board of Directors, each Director Option shall become
exercisable in full twelve months after the date of grant; provided, however,
all Director Options shall become exercisable in full (i) upon a Change in
Control, (ii) in accordance with the terms of Section 7.06, or (iii) upon
attainment by the Non-Employee Director of age 70.

     Section 7.05. Expiration Date. Unless terminated earlier pursuant to the
terms of this Plan, each Director Option shall terminate, and the right of the
holder to purchase Common Shares upon exercise of the Director Option shall
expire, at the close of business on the tenth anniversary date of the date of
grant

     Section 7.06. Continuous Service as a Director. No Director Option may be
exercised unless the Non-Employee Director to whom the Director Option was
granted has continued to be a Non-Employee Director from the time of grant
through the time of exercise, except as provided in Section 7.04 and this
Section 7.06.

         (a) Termination. If the service in office of a Non-Employee Director is
     terminated for any reason other than those set forth in Section 7.06(b) and
     7.06(c) hereof, the holder of the Director Option may exercise the Director
     Option only within the 30-day period immediately following such termination
     and only to the extent such Director Option was exercisable at the date of
     such termination.

         (b) Retirement or Disability. If the service in office of a
     Non-Employee Director is terminated due to the Retirement or Disability of
     the Non-Employee Director, then the Non-

                                       10
<PAGE>

     Employee Director, or his legal representative if he becomes incapacitated,
     shall have the right to exercise the Director Option in full prior to the
     earlier of (i) twelve months after the date of the Non-Employee Director's
     Retirement or Disability and (ii) the expiration of the Director Option.

         (c) Death. If the service in office of a Non-Employee Director is
     terminated due to the death of the Non-Employee Director, the Non-Employee
     Director's estate, executor, administrator, personal representative, or
     beneficiary shall have the right to exercise the Director Option in full
     prior to the earlier of (i) twelve months after the date of the
     Non-Employee Director's death and (ii) the expiration of the Director
     Option.

         (d) Employed by Company. If a Non-Employee Director ceases to be a
     Non-Employee Director by reason of his or her employment by the Company,
     the Director Option granted to that Non-Employee Director shall be treated
     the same as Stock Options held by employees and shall continue to be
     exercisable prior to the expiration of the Director Option, subject to the
     limitations on exercise following termination of employment established by
     the Committee pursuant to Article IX of this Plan.

                                ARTICLE VIII
                          TAX WITHHOLDING OBLIGATIONS

     Prior to the payment of an Award, the Corporation may withhold, or require
a Participant to remit to the Corporation, an amount sufficient to pay any
federal, state, and local withholding taxes associated with the Award. The
Committee may, in its discretion and subject to such rules as the Committee may
adopt, permit a Participant to pay any or all withholding taxes associated with
the Award in cash, by the transfer of Common Shares, by the surrender of all or
part of an Award (including the Award being exercised), or by a combination of
these methods

                                   ARTICLE IX
                            TERMINATION OF EMPLOYMENT

     Section 9.01. Termination of Employment. Unless the Committee provides
otherwise in the Award Agreement, if a Participant's employment with the Company
or a Subsidiary terminates for any reason other than Retirement, Disability, or
death of the Participant, he may, but only within the 30-day period immediately
following such termination of employment and in no event later than the
expiration date specified in the Award Agreement, exercise his Award to the
extent that he was entitled to exercise at the date of such termination. The
transfer of an employee from the employ of the Company to a Subsidiary, or vice
versa, or from one Subsidiary to another Subsidiary shall not be deemed a
termination of employment for purpose of the Plan.

     Section 9.02. Retirement or Disability. Unless the Committee provides
otherwise in the Award Agreement, if a Participant's employment with the Company
or any Subsidiary terminates due to Retirement or Disability, he may, but only
within the two-year period immediately following such termination of employment
and in no event later than the expiration date

                                       11
<PAGE>

specified in the Award Agreement, exercise his Award to the extent that he was
entitled to exercise it at the date of such termination. Unless the Committee
provides otherwise in the Award Agreement, if the Award being exercised under
this paragraph is an Incentive Stock Option, it may be exercised as such only
during the three-month period immediately following such Retirement or
Disability and in no event later than the expiration date specified in the Award
Agreement. During the remainder of the two-year period (or, if shorter, the
exercise period specified in the Award Agreement), the option may be exercised
as a Non-Qualified Stock Option.

     Section 9.03. Death. Unless the Committee provides otherwise in the Award
Agreement, if a Participant dies (whether prior to or after termination of
employment) while he is entitled to exercise an Award, it may be exercised
within the twelve-month period immediately following the Participant's death by
the person or persons to whom his rights to it shall pass by his will or by the
applicable laws of descent and distribution; provided, however, that no such
Award may be exercised after the expiration date specified in the Award
Agreement. Unless the Committee provides otherwise in the Award Agreement, if
the Award being exercised under this paragraph is an Incentive Stock Option, it
may be exercised as such only during the three-month period immediately
following the Participant's death and in no event later than the expiration date
specified in the Award Agreement. During the remainder of such twelve-month
period (or, if shorter, the exercise period specified in the Award Agreement),
the option may be exercised as a Non-Qualified Stock Option.

                                    ARTICLE X
                                CHANGE IN CONTROL

     Unless and to the extent the terms and conditions of a change in control
agreement between the Company and a Participant provide otherwise, in the event
of a Change In Control of the Company, unless and to the extent otherwise
determined by the Board of Directors, (i) all Stock Appreciation Rights, Stock
Options, and other Stock Purchase Rights then outstanding will become fully
exercisable as of the date of the Change In Control, and (ii) all restrictions
and conditions applicable to Restricted Stock and other Stock Awards will be
deemed to have been satisfied as of the Date of the Change In Control. Any such
determination by the Board of Directors that is made after the occurrence of a
Change In Control will not be effective unless a majority of the Directors then
in office were in office at the beginning of a period of 24 consecutive months
and the determination is approved by a majority of such Directors.

                                   ARTICLE XI
                            AMENDMENT OF PLAN, AWARDS

     Section 11.01. Amendment, Suspension, or Termination of this Plan. The
Board of Directors may from time to time amend, suspend, or terminate this Plan
at any time and, in accordance with such amendments, may thereupon change terms
and conditions of any Awards not theretofore issued. Shareholder approval for
any such amendment will be required only to

                                       12
<PAGE>

the extent necessary to satisfy the rules of the New York Stock Exchange, or any
national exchange on which the Common Shares are listed, or to satisfy any
applicable federal or state law or regulation.

     Section 11.02. Amendment of Outstanding Awards. The Committee may, in its
discretion, amend the terms of any Award (other than a Director Option),
prospectively or retroactively, but no such amendment may impair the rights of
any Participant without his or her consent. Shareholder approval for any such
amendment will be required only to the extent necessary to satisfy the rules of
the New York Stock Exchange, or any national exchange on which the Common Shares
are listed, or to satisfy any applicable federal or state law or regulation. The
Committee may, in whole or in part, waive any restrictions or conditions
applicable to, or accelerate the vesting of, any Award (other than a Director
Option).

                                  ARTICLE XII
                                 MISCELLANEOUS

     Section 12.01. Governing Law. The interpretation, validity, and enforcement
of this Plan will, to the extent not otherwise governed by the Code or the
securities laws of the United States, be governed by the laws of the State of
Indiana.

     Section 12.02. Rights of Employees. Nothing in this Plan will confer upon
any Participant the right to continued employment by the Company or limit in any
way the Company's right to terminate any Participant's employment at will.

                                  ARTICLE XIII
                               PAYMENTS TO A TRUST

     The Committee is authorized, but is not required, to cause to be
established one or more trusts to which the Committee may make payments of
amounts due or to become due to Participants in this Plan.

                                       13

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