Document:

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                                                                   Exhibit 10.42

                           LOAN AND SECURITY AGREEMENT

                         EQUINOX BUSINESS CREDIT CORP.,

                                    as Lender

                                       and

                              TITAN PCB EAST, INC.

                                   as Borrower

                               Dated: May 9, 2003

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                                TABLE OF CONTENTS

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1.       (a)....................................................................................................1
         (a)      General Definitions...........................................................................1
         (b)      Accounting Terms.............................................................................12
         (c)      Other Terms..................................................................................12
         (d)      Rules of Construction........................................................................12
2.       Revolving Credit Advances.............................................................................12
3.       Repayment of the Revolving Credit Advances............................................................14
4.       Procedure for Revolving Credit Advances...............................................................14
5.       Interest and Fees.....................................................................................14
         (a)      Interest.....................................................................................14
         (b)      Fees.........................................................................................15
                  (i)      Minimum Loan Fee....................................................................15
                  (ii)     Closing Fee.........................................................................15
                  (iii)    Service Fee.........................................................................15
                  (iv)     Facility Fee........................................................................15
                  (v)      Collateral Monitoring Fee...........................................................16
                  (vi)     Default Loan Fee....................................................................16
                  (vii)    Overadvance Fee.....................................................................16
                  (viii)   Financial Information Default.......................................................16
                  (ix)     Collateral Account Fee..............................................................16
6.       Security Interest.....................................................................................16
7.       Representations, Warranties and Covenants Concerning the Collateral...................................17
8.       Collateral Accounts...................................................................................20
9.       Collection and Maintenance of Collateral..............................................................21
10.      Inspections...........................................................................................21
11.      Financial Reporting...................................................................................21
12.      Additional Representations, Warranties and Covenants..................................................23
13.      Intentionally Omitted.................................................................................28
14.      Further Assurances....................................................................................28
15.      Power of Attorney.....................................................................................28
16.      Term of Agreement.....................................................................................28
17.      Termination of Lien...................................................................................29
18.      Events of Default.....................................................................................29
19.      Remedies..............................................................................................31
20.      Waivers...............................................................................................32
21.      Expenses..............................................................................................33
22.      Assignment By Lender..................................................................................33
23.      No Waiver; Cumulative Remedies........................................................................33
24.      Application of Payments...............................................................................34
25.      Indemnity.............................................................................................34
26.      Revival...............................................................................................34
27.      Notices...............................................................................................34
28.      Governing Law, Jurisdiction and Waiver of Jury Trial..................................................35
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                                                                                                           Page(s)
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29.      Limitation of Liability...............................................................................36
30.      Entire Understanding..................................................................................36
31.      Severability..........................................................................................36
32.      Captions..............................................................................................37
33.      Counterparts; Telecopier Signatures...................................................................37
34.      Construction..........................................................................................37
35.      Publicity.............................................................................................37
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                           LOAN AND SECURITY AGREEMENT

         This  Loan  and  Security  Agreement  is made as of May 9,  2003 by and
between EQUINOX BUSINESS CREDIT CORP., a New Jersey  corporation  ("Lender") and
TITAN PCB EAST, INC., a Delaware corporation ("Borrower").

                                   BACKGROUND

         Borrower has requested that Lender make loans and advances available to
Borrower; and

         Lender has agreed to make such loans and  advances  to  Borrower on the
terms and conditions set forth in this Agreement.

                                    AGREEMENT

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
undertakings and the terms and conditions  contained herein,  the parties hereto
agree as follows:

         1. (a) General Definitions.  When used in this Agreement, the following
terms shall have the following meanings:

              "Account  Debtor" means any Person who is or may be obligated with
respect to, or on account of, an Account,  Chattel Paper or General  Intangibles
(including a Payment Intangible).

              "Accountants" has the meaning given to such term in Section 11(a).

              "Accounts"  means all  "accounts",  as such term is defined in the
UCC, now owned or hereafter acquired by any Person,  including: (a) all accounts
receivable, other receivables,  book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments)  (including
any such  obligations  that may be characterized as an account or contract right
under the UCC);  (b) all of such  Person's  rights in, to and under all purchase
orders or receipts for goods or services; (c) all of such Person's rights to any
goods  represented by any of the foregoing  (including unpaid sellers' rights of
rescission,  replevin,  reclamation  and  stoppage  in  transit  and  rights  to
returned, reclaimed or repossessed goods); (d) all rights to payment due to such
Person for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance  issued or to be issued,  for a secondary
obligation  incurred or to be incurred,  for energy  provided or to be provided,
for the use or hire of a vessel under a charter or other  contract,  arising out
of the use of a credit card or charge card,  or for  services  rendered or to be
rendered by such Person or in connection with any other transaction  (whether or
not yet earned by performance  on the part of such Person);  (e) all Health Care
Insurance Receivables;  and (f) all collateral security of any kind given by any
Account Debtor or any other Person with respect to any of the foregoing.

              "Accounts  Availability"  means  the  amount of  Revolving  Credit
Advances against  Eligible  Accounts Lender may from time to time make available
to Borrower  up to seventy  percent  (70%) of the net face amount of  Borrower's
Eligible Accounts.

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                  "Affiliate"  of any Person means (a) any Person  (other than a
Subsidiary) which,  directly or indirectly,  is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person  described  in clause (a) above.  For  purposes  of this  definition,
control of a Person shall mean the power,  direct or indirect,  (i) to vote five
percent  (5.00%) or more of the securities  having ordinary voting power for the
election of directors of such Person,  or (ii) to direct or cause the  direction
of the management and policies of such Person whether by contract or otherwise.

              "Amortizing  Availability"  means the lesser of (i) $441,330  less
$12,259.17 per month  commencing June 1, 2003 and on the first day of each month
thereafter,  subject  to  adjustment  as  provided  in  Section  7(q)  and  (ii)
commencing July 9, 2003, the amount of Accounts Availability.

              "Ancillary  Agreements"  means  the  Note,  the  Letter  of Credit
Supplement,  each Guaranty  Agreement,  each Validity  Agreement,  each Guaranty
Security Agreement,  each Mortgage, each Subordination  Agreement, and all other
agreements,  instruments,  documents,  mortgages,  pledges,  powers of attorney,
consents, assignments, contracts, notices, security agreements, trust agreements
and guarantees whether heretofore,  concurrently, or hereafter executed by or on
behalf of Borrower or any other Person or delivered to Lender,  relating to this
Agreement or to the transactions contemplated by this Agreement.

         "Applicable  Percentage"  means (i) three percent (3%) from the Closing
Date through May 8, 2004,  (ii) two percent (2%) from May 9, 2004 through May 8,
2005 and (iii) one percent (1%) from May 9, 2005 and thereafter.

              "Books and  Records"  means all  books,  records,  board  minutes,
contracts,  licenses, insurance policies,  environmental audits, business plans,
files,  computer files,  computer discs and other data and software  storage and
media devices,  accounting books and records,  financial  statements (actual and
pro forma),  filings with  Governmental  Authorities and any and all records and
instruments  relating to the Collateral or otherwise necessary or helpful in the
collection thereof or the realization thereupon.

              "Borrowing  Base  Certificate"  means a certificate in the form of
Exhibit A.

              "Business  Day" means a day on which  Lender is open for  business
and that is not a Saturday, a Sunday or other day on which banks are required or
permitted to be closed in the State of New Jersey or the State of Massachusetts.

              "Change of Control" means,  with respect to any Person on or after
the  Closing  Date,  that  any  change  in  the  composition  of  such  Person's
stockholders  as of the  Closing  Date shall  occur  which  would  result in any
stockholder  or  group  acquiring  49.9%  or more of any  class of Stock of such
Person,  or that any  Person  (or  group of  Persons  acting in  concert)  shall
otherwise acquire,  directly or indirectly  (including through Affiliates),  the
power to elect a majority of the board of  directors of such Person or otherwise
direct the management or affairs of such Person by obtaining  proxies,  entering
into voting agreements or trusts, acquiring securities or otherwise.

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         "Chattel  Paper" means all "chattel  paper," as such term is defined in
the UCC, including  electronic chattel paper, now owned or hereafter acquired by
any Person.

         "Closing  Date"  means May 9, 2003 or such  other date as may be agreed
upon by the parties hereto.

         "Collateral" means all of Borrower's property and assets,  whether real
or  personal,  tangible  or  intangible,  and  whether  now  owned or  hereafter
acquired,  or in which it now has or at any time in the future may  acquire  any
right, title or interest including all of the following property in which it now
has or at any time in the future may acquire any right, title or interest:

                (i)    all Inventory;
                (ii)   all Equipment;
                (iii)  all Fixtures;
                (iv)   all General Intangibles; (v) all Accounts;
                (vi)   all Deposit Accounts, other bank accounts and all funds
                       on deposit therein;
                (vii)  all Investment Property;
                (viii) all Stock;
                (ix)   all Chattel Paper;
                (x)    all Letter-of-Credit Rights;
                (xi)   all Instruments;
                (xii)  all commercial tort claims set forth on Exhibit 1(A);
                (xiii) all Books and Records;

              (xiv) all Supporting  Obligations  including letters of credit and
guarantees issued in support of Accounts, Chattel Paper, General Intangibles and
Investment Property;

              (xv) (i) all money,  cash and cash  equivalents  and (ii) all cash
held as cash collateral to the extent not otherwise constituting Collateral, all
other cash or  property  at any time on  deposit  with or held by Lender for the
account of Borrower (whether for safekeeping,  custody, pledge,  transmission or
otherwise); and

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              (xvi) all products  and  Proceeds of all or any of the  foregoing,
tort  claims  and all claims and other  rights to  payment  including  insurance
claims against third parties for loss of, damage to, or destruction of, and (ii)
payments due or to become due under  leases,  rentals and hires of any or all of
the foregoing and Proceeds  payable under, or unearned  premiums with respect to
policies of insurance in whatever form.

         "Collateral  Account"  means an  account  in  Lender's  name  under the
dominion and control of Lender maintained at a financial institution  acceptable
to Lender into which all cash,  checks,  notes,  drafts and other  similar items
relating  to or  constituting  Proceeds  of or  payments  made in respect of any
Collateral shall be deposited.

         "Contract  Rate" means an interest  rate per annum equal to the greater
of (A) eight and one half  percent  (8.50%) or (B) the sum of (i) the Prime Rate
plus (ii) three and one half percent (3.50%).

         "Default"  means any act or event  which,  with the giving of notice or
passage of time or both, would constitute an Event of Default.

         "Default  Rate" means (a) as long as the average  closing  daily unpaid
balance  of all Loans  during  any  calendar  month is equal to or  exceeds  the
Minimum Default Average Monthly Loan Amount,  five percentage points (5.00%) per
annum  above the  applicable  Contract  Rate and Letter of Credit Fee and (b) as
long as the  average  closing  daily  unpaid  balance  of all Loans  during  any
calendar  month is less than the Minimum  Default  Average  Monthly Loan Amount,
seven percentage points (7.00%) per annum above the applicable Contract Rate and
Letter of Credit Fee.

         "Deposit Accounts" means all "deposit accounts" as such term is defined
in the UCC, now or hereafter held in the name of any Person.

         "Documents" means all "documents",  as such term is defined in the UCC,
now owned or hereafter acquired by any Person,  wherever located,  including all
bills of lading, dock warrants,  dock receipts,  warehouse  receipts,  and other
documents of title, whether negotiable or non-negotiable.

         "Eligible  Accounts"  means and includes each Account of Borrower which
conforms to the  following  criteria:  (a)  shipment of the  merchandise  or the
rendition  of  services  has  been  completed;   (b)  no  return,  rejection  or
repossession of the merchandise has occurred;  (c) merchandise or services shall
not have been  rejected or  disputed  by the Account  Debtor and there shall not
have been asserted any offset,  defense or counterclaim;  (d) continues to be in
full  conformity  with the  representations  and warranties  made by Borrower to
Lender with respect thereto;  (e) Lender is, and continues to be, satisfied with
the credit  standing of the  Account  Debtor in relation to the amount of credit
extended;  (f) there are no facts  existing  or  threatened  which are likely to
result in any adverse change in an Account Debtor's financial condition;  (g) is
documented  by an  invoice  acceptable  to  Lender  in its  reasonable  business
judgment and shall not be unpaid more than 90 days from invoice  date;  (h) less
than twenty five  percent  (25%) of the unpaid  amount of invoices due from such
Account  Debtor remain  unpaid more than 90 days from invoice  date;  (i) is not
evidenced by chattel  paper or an  instrument  of any kind with

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respect to or in payment of the Account unless such  instrument is duly endorsed
to and in  possession  of Lender or  represents a check in payment of a Account;
(j) if the Account  Debtor is located  outside of the United  States,  the goods
which gave rise to such Account were shipped  after  receipt by Borrower from or
on behalf of the Account Debtor of an irrevocable letter of credit, assigned and
delivered  to Lender and  confirmed  by a financial  institution  acceptable  to
Lender and is in form and substance  acceptable  to Lender,  payable in the full
amount of the  Account in United  States  dollars at a place of payment  located
within the United States; (k) Lender has a first priority perfected Lien in such
Account and such  Account is not subject to any other Lien other than  Permitted
Liens; (l) does not arise out of transactions with any employee, officer, agent,
director,  stockholder or Affiliate of Borrower; (m) is payable to Borrower; (n)
does not arise out of a bill and hold sale prior to shipment and, if the Account
arises out of a sale to any Person to which Borrower is indebted,  the amount of
such indebtedness,  and any anticipated indebtedness, is deducted in determining
the face amount of such Account; (o) is net of any returns,  discounts,  claims,
credits and  allowances;  (p) if the  Account  arises out of  contracts  between
Borrower  and the  United  States,  any  state,  or any  department,  agency  or
instrumentality  of any of them,  Borrower has so notified  Lender,  in writing,
prior to the creation of such  Account,  and, if Lender so  requests,  there has
been compliance with any governmental notice or approval requirements, including
compliance  with the Federal  Assignment  of Claims Act; (q) is a good and valid
account  representing  an  undisputed  bona fide  indebtedness  incurred  by the
Account  Debtor  therein  named,  for a fixed  sum as set  forth in the  invoice
relating  thereto with respect to an  unconditional  sale and delivery  upon the
stated terms of goods sold by Borrower,  or work, labor and/or services rendered
by Borrower;  (r) the total unpaid  Accounts  from such Account  Debtor does not
exceed twenty percent (20%) of all Eligible Accounts;  (s) does not arise out of
progress  billings  prior to completion of the order;  (t)  Borrower's  right to
payment is absolute and not  contingent  upon the  fulfillment  of any condition
whatsoever;  (u) Borrower is able to bring suit and enforce its remedies against
the Account Debtor through  judicial  process;  (v) does not represent  interest
payments,  late or finance charges or service charges owing to Borrower; and (w)
is otherwise satisfactory to Lender as determined in good faith by Lender in the
reasonable exercise of its discretion.

                  "Environmental Complaint" shall have the meaning given to such
term in Section 12(f)(iv).

                  "Equipment"  means all  "equipment" as such term is defined in
the UCC,  now owned or  hereafter  acquired  by any  Person,  wherever  located,
including any and all  machinery,  apparatus,  equipment,  fittings,  furniture,
fixtures,  motor  vehicles  and other  tangible  personal  property  (other than
Inventory) of every kind and  description  that may be now or hereafter  used in
such  Person's  operations  or that are owned by such  Person  or in which  such
Person may have an interest,  and all parts,  accessories and accessions thereto
and substitutions and replacements therefor.

                  "ERISA"  shall have the meaning  given to such term in Section
12(g).

                  "Event of Default"  means the  occurrence of any of the events
set forth in Section 18.

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                  "Fixtures" means all "fixtures" as such term is defined in the
UCC, now owned or hereafter acquired by any Person.

                  "Formula  Amount" shall have the meaning given to such term in
Section 2(a).

                  "GAAP"  means  generally   accepted   accounting   principles,
practices  and  procedures  in effect from time to time in the United  States of
America.

                  "General  Intangibles" means all "general intangibles" as such
term is  defined  in the UCC,  now owned or  hereafter  acquired  by any  person
including  all right,  title and interest  that such Person may now or hereafter
have  in or  under  any  contract,  all  Payment  Intangibles,  customer  lists,
Licenses,  Intellectual Property, interests in partnerships,  joint ventures and
other business associations,  permits,  proprietary or confidential information,
inventions  (whether or not  patented  or  patentable),  technical  information,
procedures,  designs,  knowledge,  know-how,  Software, data bases, data, skill,
expertise,  experience,   processes,  models,  drawings,  materials,  Books  and
Records,  Goodwill  (including  the Goodwill  associated  with any  Intellectual
Property),  all  rights  and claims in or under  insurance  policies  (including
insurance for fire,  damage,  loss,  and  casualty,  whether  covering  personal
property,  real property,  tangible rights or intangible  rights, all liability,
life,  key-person,   and  business  interruption  insurance,  and  all  unearned
premiums), uncertificated securities, choses in action, deposit accounts, rights
to  receive  tax  refunds  and other  payments,  rights to  received  dividends,
distributions, cash, Instruments and other property in respect of or in exchange
for pledged Stock and Investment Property, and rights of indemnification.

                  "Goods" means all "goods", as such term is defined in the UCC,
now owned or  hereafter  acquired by any  Person,  wherever  located,  including
embedded  software  to the  extent  included  in  "goods" as defined in the UCC,
manufactured homes,  standing timber that is cut and removed for sale and unborn
young of animals.

                  "Goodwill" means all goodwill,  trade secrets,  proprietary or
confidential information,  technical information,  procedures, formulae, quality
control standards,  designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.

                  "Governmental  Authority" means any nation or government,  any
state or other  political  subdivision  thereof,  and any agency,  department or
other  entity  exercising  executive,   legislative,   judicial,  regulatory  or
administrative functions of or pertaining to government.

                  "Guarantor"  means any  Person  who may  guarantee  payment or
performance of the whole or any part of the Obligations and  "Guarantors"  means
collectively all such Persons.

                  "Guarantor  Security   Agreements"  means  collectively,   all
security agreements,  mortgages,  cash collateral deposit letters,  pledges, and
other agreements which are executed by any Guarantor in favor of Lender.

                  "Guaranty   Agreements"  means   collectively,   the  Guaranty
Agreements which are executed by each Guarantor in favor of Lender.

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                  "Hazardous  Discharge"  shall have the  meaning  given to such
term in Section 12(f)(iv).

                  "Health    Care    Insurance     Receivables"     means    all
"health-care-insurance  receivables"  as such term is  defined  in the UCC,  now
owned or  hereafter  acquired  by any Person  including  an interest in or claim
under a policy of insurance which is a right to payment of a monetary obligation
for health-care good or services provided.

                  "Indemnified Person" shall have the meaning given to such term
in Section 25.

                  "Instruments" means all "instruments", as such term is defined
in the UCC, now owned or  hereafter  acquired by any Person,  wherever  located,
including  all  certificated  securities  and all  promissory  notes  and  other
evidences of indebtedness, other than instruments that constitute, or are a part
of a group of writings that constitute, Chattel Paper.

                  "Intellectual  Property" means any and all Licenses,  patents,
patent registrations, copyrights, copyright registrations, trademarks, trademark
registrations, trade secrets and customer lists.

                  "Intercreditor    Agreement"    means    collectively,     any
intercreditor and subordination agreement accepted by Lender from time to time.

                  "Inventory" means all "inventory",  as such term is defined in
the UCC,  now owned or  hereafter  acquired  by any  Person,  wherever  located,
including all inventory, merchandise, goods and other personal property that are
held by or on behalf of such Person for sale or lease or are furnished or are to
be furnished under a contract of service or that constitute raw materials,  work
in process,  finished  goods,  returned  goods,  or materials or supplies of any
kind,  nature or description  used or consumed or to be used or consumed in such
Person's  business  or in  the  processing,  production,  packaging,  promotion,
delivery or shipping of the same, including all supplies and embedded software.

                  "Investment Property" means all "investment property", as such
term is defined  in the UCC,  now owned or  hereafter  acquired  by any  Person,
wherever located.

                  "Letters of Credit" means any and all  documentary  or standby
letters of credit and guarantees by Lender of letters of credit opened or caused
to be opened by Lender for  Borrower's  account  and any drafts and  acceptances
thereunder.

                  "Letter of Credit Fee" has the  meaning  given to such term in
the Letter of Credit Supplement.

                  "Letter   of  Credit   Obligations"   means  all   outstanding
obligations  incurred  by Lender,  whether  direct or  indirect,  contingent  or
otherwise, due or not due in connection with the issuance or guarantee by Lender
of Letters of Credit or Letters of Guaranty.

                  "Letter of Credit  Supplement"  means the Supplement Letter of
Credit Security Agreement between Borrower and Lender.

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                  "Letters of Guaranty"  means all letters of guarantee  entered
into by Lender for Borrowers account.

                  "Letter-of-Credit  Rights" means "letter-of-credit  rights" as
such term is defined in the UCC, now owned or hereafter  acquired by any Person,
including rights to payment or performance under a letter of credit,  whether or
not such Person,  as beneficiary,  has demanded or is entitled to demand payment
or performance.

                  "License" means any rights under any written  agreement now or
hereafter acquired by any Person to use any trademark,  trademark  registration,
copyright,  copyright  registration  or  invention  for  which  a  patent  is in
existence or other license of rights or interests now held or hereafter acquired
by any Person.

                  "Lien"  means  any  mortgage,  security  deed,  deed of trust,
pledge, hypothecation, assignment, security interest, lien (whether statutory or
otherwise),  charge,  claim or  encumbrance,  or  preference,  priority or other
security  agreement or preferential  arrangement  held or asserted in respect of
any asset of any kind or nature  whatsoever  including any  conditional  sale or
other  title  retention  agreement,  any  lease  having  substantially  the same
economic  effect as any of the  foregoing,  and the filing of, or  agreement  to
give,  any  financing   statement  under  the  UCC  or  comparable  law  of  any
jurisdiction.

                  "Loans" means the Revolving Credit Advances and all extensions
of credit hereunder or under any Ancillary Agreement, including Letter of Credit
Obligations.

                  "Material  Adverse Effect" means a material  adverse effect on
(a) the condition,  operations,  assets,  business or prospects of Borrower, (b)
Borrower's  ability to pay or perform the  Obligations  in  accordance  with the
terms hereof or any Ancillary  Agreement,  (c) the value of the Collateral,  the
Liens on the  Collateral  or the priority of any such Lien or (d) the  practical
realization of the benefits of Lender's rights and remedies under this Agreement
and the Ancillary Agreements.

                  "Maximum Legal Rate" shall have the meaning given to such term
in Section 5(a)(iv).

                  "Maximum Revolving Amount" means $1,200,000.

                  "Minimum Average Monthly Loan Amount" means (a) for the period
commencing on the Closing Date and ending on July 8, 2003,  $600,000 and (b) at
all other times, $900,000.

                  "Minimum Default Average Monthly Loan Amount" means $450,000.

                  "Mortgage" means  collectively,  any mortgage or deed of trust
which is executed in favor of Lender to secure the Obligations.

                  "Note" means the promissory note of Borrower executed in favor
of Lender substantially in the form of Exhibit B.

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                  "Obligations"   means  all   Loans,   all   advances,   debts,
liabilities,  obligations,  covenants and duties owing by Borrower to Lender (or
any corporation  that directly or indirectly  controls or is controlled by or is
under common control with Lender) of every kind and description  (whether or not
evidenced by any note or other  instrument and whether or not for the payment of
money or the  performance or  non-performance  of any act),  direct or indirect,
absolute  or  contingent,  due  or  to  become  due,  contractual  or  tortious,
liquidated or  unliquidated,  whether  existing by operation of law or otherwise
now existing or hereafter  arising  including any debt,  liability or obligation
owing from  Borrower to others which Lender may have  obtained by  assignment or
otherwise and further including all interest (including interest accruing at the
then  applicable rate provided in this Agreement after the maturity of the Loans
and interest  accruing at the then  applicable  rate provided in this  Agreement
after the filing of any  petition  in  bankruptcy,  or the  commencement  of any
insolvency,  reorganization  or like  proceeding,  whether  or not a  claim  for
post-filing or post-petition interest is allowed in such proceeding), charges or
any other  payments  Borrower is required  to make by law or  otherwise  arising
under or as a result of this  Agreement and the Ancillary  Agreements,  together
with all  reasonable  expenses and  reasonable  attorneys'  fees  chargeable  to
Borrower's  account or incurred by Lender in connection with Borrower's  account
whether provided for herein or in any Ancillary Agreement.

                  "Payment  Intangibles" means all "payment intangibles" as such
term is defined  in the UCC,  now owned or  hereafter  acquired  by any  Person,
including,  a General  Intangible  under  which the Account  Debtor's  principal
obligation is a monetary obligation.

                  "Permitted  Liens" means (a) Liens of carriers,  warehousemen,
artisans,  bailees, mechanics and materialmen incurred in the ordinary course of
business securing sums not overdue; (b) Liens incurred in the ordinary course of
business in connection with workmen's  compensation,  unemployment  insurance or
other forms of  governmental  insurance  or  benefits,  relating  to  employees,
securing sums (i) not overdue or (ii) being  diligently  contested in good faith
provided that adequate reserves with respect thereto are maintained on the books
of Borrower in conformity with GAAP; (c) Liens in favor of Lender; (d) Liens for
taxes  (i) not yet due or (ii)  being  diligently  contested  in good  faith  by
appropriate  proceedings,  provided that adequate  reserves with respect thereto
are maintained on the books of Borrower in conformity with GAAP; provided, that,
the Lien shall have no effect on the priority of Liens in favor of Lender or the
value of the  assets  in which  Lender  has a Lien;  (e)  Purchase  Money  Liens
securing  Purchase Money  Indebtedness to the extent permitted in this Agreement
and (f) Liens specified on Exhibit 1(B) hereto.

                  "Person"   means   any   individual,    sole   proprietorship,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization,  association, corporation, limited liability company, institution,
public  benefit  corporation,  entity or  government  (whether  federal,  state,
county, city, municipal or otherwise,  including any instrumentality,  division,
agency, body or department thereof),  and shall include such Person's successors
and assigns.

                  "Prime   Rate"  means  the  "prime  rate"  which  is  normally
published in the "Money Rates" of The Wall Street Journal (Eastern Edition,  New
York  Metro);  provided,  however,  if the Money Rates Column of The Wall Street
Journal  (Eastern  Edition,  New York Metro) ceases to be published or otherwise
does not  designate a "prime rate" as of a Business  Day,  Lender shall have the
right to obtain such  information  from a similar  business  publication  of its
selection.

                                       9
<PAGE>

The Prime  Rate  shall be  increased  or  decreased  as the case may be for each
increase or decrease  in the Prime Rate in an amount  equal to such  increase or
decrease in the Prime Rate;  each  change to be  effective  as of the day of the
change in such rate.

                  "Proceeds"  means  "proceeds",  as such term is defined in the
UCC and, in any event, shall include: (a) any and all proceeds of any insurance,
indemnity,  warranty  or guaranty  payable to Borrower or any other  Person from
time to time with  respect to any  Collateral;  (b) any and all payments (in any
form  whatsoever)  made or due and  payable  to  Borrower  from  time to time in
connection  with  any  requisition,   confiscation,   condemnation,  seizure  or
forfeiture of any Collateral by any governmental body,  governmental  authority,
bureau or agency (or any person acting under color of  governmental  authority);
(c) any claim of Borrower against third parties (i) for past,  present or future
infringement of any  Intellectual  Property or (ii) for past,  present or future
infringement or dilution of any trademark or trademark  license or for injury to
the goodwill associated with any trademark,  trademark registration or trademark
licensed under any trademark  License;  (d) any  recoveries by Borrower  against
third  parties  with  respect  to  any  litigation  or  dispute  concerning  any
Collateral,  including  claims  arising  out of the  loss or  nonconformity  of,
interference  with the use of,  defects  in, or  infringement  of rights  in, or
damage to,  Collateral;  (e) all amounts collected on, or distributed on account
of,  other  Collateral,   including  dividends,   interest,   distributions  and
Instruments  with respect to Investment  Property and pledged Stock; and (f) any
and all other  amounts,  rights to payment or other  property  acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all rights
arising out of Collateral.

                  "Projections"  means the projected balance sheets,  statements
of income and cash flow for Borrower and its  Subsidiaries by month for the next
fiscal year prepared in a manner  consistent with GAAP and accompanied by senior
management's discussion and analysis of such plan.

                  "Purchase  Money  Indebtedness"  means  (a)  any  indebtedness
incurred for the payment of all or any part of the  purchase  price of any fixed
asset,  (b) any  indebtedness  incurred  for the sole  purpose of  financing  or
refinancing  all or any part of the purchase  price of any fixed asset,  and (c)
any renewals,  extensions or refinancings  thereof (but not any increases in the
principal amounts thereof outstanding at that time).

                  "Purchase  Money  Lien"  means any Lien upon any fixed  assets
that secures the Purchase Money  Indebtedness  related  thereto but only if such
Lien shall at all times be confined  solely to the asset the  purchase  price of
which was financed or refinanced  through the  incurrence of the Purchase  Money
Indebtedness  secured  by such  Lien and only if such  Lien  secures  only  such
Purchase Money Indebtedness.

                  "Revolving  Credit  Advances"  shall have the meaning given to
such term in Section 2(a).

                  "Software" means all "software" as such term is defined in the
UCC,  now owned or  hereafter  acquired by any Person,  including  all  computer
programs  and  all  supporting   information   provided  in  connection  with  a
transaction related to any program.

                                       10
<PAGE>

                  "Stock"  means all  certificated  and  uncertificated  shares,
options,  warrants,   membership  interests,   general  or  limited  partnership
interests,  participation or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting,  including  common stock,  preferred  stock, or any
other  "equity  security" (as such term is defined in Rule 3a11-1 of the General
Rules and  Regulations  promulgated by the  Securities  and Exchange  Commission
under the Securities Exchange Act of 1934).

                  "Subordinated  Debt" means any note,  document,  instrument or
agreement now or any time hereafter  executed and/or  delivered by Borrower with
or in favor of any Subordinated  Lender which evidences the principal,  interest
and other amounts owed by Borrower to such Subordinated Lender.

                  "Subordinated  Lender" means  collectively,  Ventures-National
Incorporated and any other Person who enters into a Subordination Agreement with
Lender with respect to amounts owed by Borrower to such Subordinated Lender.

                  "Subordination    Agreement"    means    collectively,     the
Subordination  Agreement  executed  by the  applicable  Subordinated  Lender and
acknowledged  by  Borrower,  and  any  and all  other  subordination  agreements
accepted by Lender from time to time with respect to indebtedness of Borrower.

                  "Subsidiary" of any Person means a corporation or other entity
whose shares of stock or other ownership  interests having ordinary voting power
(other than stock or other ownership  interests having such power only by reason
of the happening of a contingency)  to elect a majority of the directors of such
corporation,  or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

                  "Supporting Obligations" means all "supporting obligations" as
such term is defined  in the UCC,  including  letters  of credit and  guaranties
issued in support of Accounts,  Chattel Paper,  Documents,  General Intangibles,
Instruments, or Investment Property.

                  "Term"  means the Closing Date  through the  Termination  Date
subject to acceleration  upon the occurrence of an Event of Default hereunder or
other termination hereunder.

                  "Termination Date" means May 9,2006.

                  "UCC" means the Uniform  Commercial Code as the same may, from
time be in effect in the State of New Jersey;  provided, that in the event that,
by  reason  of  mandatory  provisions  of  law,  any or  all of the  attachment,
perfection  or priority of, or remedies  with respect to,  Lender's  Lien on any
Collateral  is  governed  by the  Uniform  Commercial  Code  as in  effect  in a
jurisdiction  other than the State of New Jersey,  the term "UCC" shall mean the
Uniform  Commercial Code as in effect in such other jurisdiction for purposes of
the  provisions  of this  Agreement  relating  to such  attachment,  perfection,
priority or remedies and for purposes of definitions related to such provisions;
provided further,  that to the extent that UCC is used to define any term herein
or in any Ancillary  Agreement and such term is defined differently in different
Articles or  Divisions  of the UCC,  the  definition  of such term  contained in
Article or Division 9 shall govern.

                                       11
<PAGE>

                  "Validity  Agreements" means the Validity Guaranty  Agreements
executed by each Validity Guarantor in favor of Lender.

                  "Validity Guarantor" means Robert E. Ciri and any other Person
who may hereafter execute a Validity  Agreement and "Validity  Guarantors" means
collectively all such Persons.

                  (b)  Accounting  Terms.  Any  accounting  terms  used  in this
Agreement which are not specifically defined shall have the meanings customarily
given  them in  accordance  with GAAP and all  financial  computations  shall be
computed,   unless  specifically   provided  herein,  in  accordance  with  GAAP
consistently applied.

                  (c) Other Terms.  All other terms used in this  Agreement  and
defined in the UCC,  shall  have the  meaning  given  therein  unless  otherwise
defined herein.

                  (d) Rules of Construction. All Schedules, Addenda and Exhibits
hereto or expressly  identified  to this  Agreement are  incorporated  herein by
reference  and  taken  together  with  this  Agreement  constitute  but a single
agreement. The words "herein", hereof" and "hereunder" or other words of similar
import refer to this Agreement as a whole,  including the Exhibits and Schedules
thereto,  as the same may be from time to time  amended,  modified,  restated or
supplemented,  and not to any particular section, subsection or clause contained
in this Agreement.  Wherever from the context it appears appropriate,  each term
stated in either the  singular  or plural  shall  include the  singular  and the
plural,  and pronouns  stated in the masculine,  feminine or neuter gender shall
include  the  masculine,  the  feminine  and the  neuter.  The term  "or" is not
exclusive.  The term  "including" (or any form thereof) shall not be limiting or
exclusive.  All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. All references in
this  Agreement or in the  Schedules to this  Agreement to sections,  schedules,
disclosure schedules, exhibits, and attachments shall refer to the corresponding
sections,  schedules,  disclosure schedules,  exhibits, and attachments of or to
this  Agreement.  All references to any  instruments  or  agreements,  including
references to any of this  Agreement or the Ancillary  Agreements  shall include
any and all  modifications  or amendments  thereto and any and all extensions or
renewals thereof.

         2. Revolving Credit Advances.

         (a)  Subject to the terms and  conditions  set forth  herein and in the
Ancillary Agreements,  Lender may, in its sole discretion, make revolving credit
advances (the "Revolving  Credit Advances") to Borrower from time to time during
the Term which,  in the  aggregate  at any time  outstanding  together  with all
outstanding Letter of Credit Obligations,  will not exceed the lesser of (x) the
Maximum Revolving Amount or (y) an amount equal to the sum of:

                  (i)      Accounts Availability, plus

                  (ii)     Amortizing Availability, minus

                                       12
<PAGE>

                  (iii) such reserves as Lender may  reasonably  deem proper and
necessary  from  time to time,  including  the  outstanding  amount of Letter of
Credit Obligations.

                  The amount derived at any time from Section  2(a)(y)(i),  plus
(ii),  minus  (iii)  shall  be  referred  to  as  the  "Formula   Amount".

                  (b)  Notwithstanding  the limitations set forth above,  Lender
retains the right to lend  Borrower  from time to time such amounts in excess of
such limitations as Lender may determine in its sole discretion.

                  (c)  Borrower  acknowledges  that  the  exercise  of  Lender's
discretionary  rights  hereunder may result during the term of this Agreement in
one  or  more  increases  or  decreases  in  the  advance  percentages  used  in
determining  Accounts  Availability  and Amortizing  Availability,  and Borrower
hereby  consents to any such increases or decreases  which may limit or restrict
advances requested by Borrower.

                  (d) If  Borrower  does not pay any  interest,  fees,  costs or
charges to Lender when due,  Borrower shall thereby be deemed to have requested,
and  Lender  is  hereby  authorized  at its  discretion  to make and  charge  to
Borrower's account, a Revolving Credit Advance to Borrower as of such date in an
amount equal to such unpaid interest, fees, costs or charges.

                  (e) If Borrower at any time fails to perform or observe any of
the covenants  contained in this  Agreement or any Ancillary  Agreement,  Lender
may, but need not,  perform or observe such  covenant on behalf and in the name,
place and stead of Borrower (or, at Lender's option,  in Lender's name) and may,
but need not, take any and all other actions which Lender may deem  necessary to
cure or correct such failure  (including the payment of taxes,  the satisfaction
of Liens,  the performance of obligations  owed to Account  Debtors,  lessors or
other obligors,  the procurement and maintenance of insurance,  the execution of
assignments,  security agreements and financing statements,  and the endorsement
of  instruments).  The amount of all monies  expended and all costs and expenses
(including  attorneys' fees and legal expenses) incurred by Lender in connection
with or as a result of the  performance or observance of such  agreements or the
taking of such  action by Lender  shall be  charged to  Borrower's  account as a
Revolving  Credit Advance and added to the Obligations.  To facilitate  Lender's
performance  or  observance  of such  covenants  of  Borrower  in the event that
Borrower  fails  to do so,  Borrower  hereby  irrevocably  appoints  Lender,  or
Lender's  delegate,   acting  alone,  as  Borrower's  attorney  in  fact  (which
appointment  is coupled with an interest) with the right (but not the duty) from
time to time to create, prepare, complete,  execute, deliver, endorse or file in
the  name  and on  behalf  of  Borrower  any  and  all  instruments,  documents,
assignments,   security  agreements,  financing  statements,   applications  for
insurance and other  agreements and writings  required to be obtained,  executed
delivered  or  endorsed by  Borrower.  Lender  shall  promptly  notify  Borrower
following  the exercise by Lender of any action taken by Lender  pursuant to the
power of attorney  granted to Lender by Borrower  in the  immediately  preceding
sentence;  provided, however, the failure by Lender to provide such notice shall
not limit Lender's  rights under this  Agreement or the Ancillary  Agreements or
result in any liability to Lender.

                  (f) Lender will  account to Borrower  monthly with a statement
of all Loans and other  advances,  charges and  payments  made  pursuant to this
Agreement,  and such account

                                       13
<PAGE>

rendered by Lender shall be deemed final,  binding and conclusive  unless Lender
is notified by Borrower in writing to the  contrary  within  thirty (30) days of
the  date  each  account  was  rendered  specifying  the  item or items to which
objection is made.

                  (g) During the Term, Borrower may borrow,  prepay and reborrow
Revolving  Credit  Advances,  all in  accordance  with the terms and  conditions
hereof.

                  (h) Notwithstanding anything to the contrary contained in this
Agreement Lender shall not incur Letter of Credit  Obligations unless Lender and
Borrower shall have entered into a Letter of Credit Supplement.

         3.  Repayment  of the  Revolving  Credit  Advances.  Borrower  shall be
required  to (a) make a  mandatory  prepayment  hereunder  at any time  that the
aggregate outstanding principal balance of the Revolving Credit Advances made by
Lender to Borrower  hereunder is in excess of the Formula  Amount,  in an amount
equal to such excess,  and (b) repay on the  expiration of the Term (i) the then
aggregate  outstanding  principal  balance of Revolving  Credit Advances made by
Lender to Borrower hereunder together with accrued and unpaid interest, fees and
charges and (ii) all other  amounts  owed Lender  under this  Agreement  and the
Ancillary  Agreements.  Any payments of principal,  interest,  fees or any other
amounts payable  hereunder or under any Ancillary  Agreement shall be made prior
to 11:00 a.m. (New York time) on the due date thereof in  immediately  available
funds.

         4. Procedure for Revolving Credit Advances.  Borrower may by written or
telephonic  notice  request a borrowing of Revolving  Credit  Advances  prior to
10:00 a.m. (New York time) on the Business Day of its request to incur,  on that
day,  a  Revolving  Credit  Advance.  All  Revolving  Credit  Advances  shall be
disbursed from whichever office or other place Lender may designate from time to
time and,  together  with any and all other  Obligations  of Borrower to Lender,
shall be charged to Borrower's  account on Lender's books.  The proceeds of each
Revolving  Credit  Advance made by Lender shall be made available to Borrower on
the Business Day so requested by way of credit to Borrower's  operating  account
maintained  with  such  bank  as  Borrower  designated  to  Lender.  Any and all
Obligations  due and owing  hereunder may be charged to  Borrower's  account and
shall constitute Revolving Credit Advances.

         5. Interest and Fees.

         (a) Interest.

                  (i) Except as modified by Section  5(a)(iii)  below,  Borrower
shall pay  interest  on the unpaid  principal  balance of the Loans for each day
they are outstanding at the Contract Rate.

                  (ii)  Interest  and fees  shall be  computed  on the  basis of
actual days elapsed in a year of 360 days.  Interest shall be payable in arrears
on the last day of each month and upon  termination  of this  Agreement,  or, at
Lender's option, Lender may charge Borrower's account for said interest.

                                       14
<PAGE>

                  (iii)  Effective  upon the  occurrence of any Event of Default
and for so long as any Event of Default shall be  continuing,  the Contract Rate
and the Letter of Credit Fee shall  automatically be increased by the applicable
Default Rate, and all  outstanding  Obligations,  including  unpaid interest and
Letter of Credit Fees,  shall continue to accrue  interest from the date of such
Event of Default at the applicable Default Rate.

                  (iv)  Notwithstanding  the  foregoing,  in no event  shall the
aggregate interest exceed the maximum rate permitted under any applicable law or
regulation, as in effect from time to time (the "Maximum Legal Rate") and if any
provision of this Agreement or Ancillary  Agreement is in  contravention  of any
such law or regulation, interest payable under this Agreement and each Ancillary
Agreement shall be computed on the basis of the Maximum Legal Rate (so that such
interest will not exceed the Maximum Legal Rate) and once the amount of interest
payable  hereunder or under the  Ancillary  Agreements  is less than the Maximum
Legal Rate,  Lender shall not reduce interest payable hereunder or any Ancillary
Agreement  below the amount computed based upon the Maximum Legal Rate until the
aggregate amount of interest paid equals the amount of interest which would have
been payable if the Maximum Legal Rate had not been imposed.

                  (v)  Borrower  shall  pay  principal,  interest  and all other
amounts  payable  hereunder,  or under  any  Ancillary  Agreement,  without  any
deduction whatsoever, including any deduction for any set-off or counterclaim.

         (b) Fees.

                  (i) Minimum Loan Fee. In the event the average  closing  daily
unpaid  balances of all Loans  hereunder  during any calendar month is less than
the Minimum Average Monthly Loan Amount,  Borrower shall pay to Lender a minimum
loan fee at a rate per annum equal to the  Contract  Rate on the amount by which
the Minimum  Average  Monthly Loan Amount  exceeds such  average  closing  daily
unpaid  balances.  Such fee shall be charged to Borrower's  account on the first
day of each month with respect to the prior month.

                  (ii) Closing Fee. Upon execution of this Agreement by Borrower
and Lender, Borrower shall pay to Lender a closing fee in an amount equal to one
and three quarters of one percent (1.75%) of the Maximum Revolving  Amount.  The
closing  fee shall be  deemed  earned  as of the  Closing  Date and shall not be
subject to rebate or proration for any reason.

                  (iii) Service Fee. Borrower shall pay Lender,  in arrears,  on
the first Business Day of each month which occurs prior to the Termination  Date
and on the  Termination  Date, a service fee equal to one-quarter of one percent
(0.25%) of the average  outstanding  amount of Revolving  Credit Advances during
such  immediately  preceding  month or that  portion  of such month in which the
Termination  Date occurs in the event the  Termination  Date occurs prior to the
end of a month.

                  (iv)  Facility  Fee.  Borrower  hereby  agrees to pay Lender a
facility fee in an amount equal to one percent (1.00%) of the Maximum  Revolving
Amount  for each  anniversary  of the  Closing  Date which  occurs  prior to the
Termination Date. The facility fee for the period ending on the Termination Date
shall be deemed  fully  earned on the  Closing  Date and shall be  payable  by a
charge to Borrower's account upon the earlier of each anniversary of the Closing
Date or the termination of this Agreement for any reason.

                                       15
<PAGE>

                  (v) Collateral  Monitoring  Fee. Upon Lender's  performance of
any collateral  monitoring and/or verification  including any field examination,
collateral  analysis  or other  business  analysis,  the need for which is to be
determined  by  Lender  and  which  monitoring  is  undertaken  by Lender or for
Lender's benefit, an amount equal to the established rate by Lender from time to
time (which rate on the  Closing  Date is $850 per person per day),  per person,
for each person  employed to perform such  monitoring  together  with all costs,
disbursements  and expenses  incurred by Lender and the person  performing  such
collateral  monitoring  and/or  verification  shall  be  charged  to  Borrower's
account.

                  (vi)  Default  Loan  Fee.  In the  event  that  following  the
occurrence of an Event of Default the average  closing  daily unpaid  balance of
all Loans during any  calendar  month is less than the Minimum  Default  Average
Monthly Loan Amount,  Borrower  shall pay to Lender a fee equal to $1,000.00 for
each month or portion  thereof that the average  closing daily unpaid balance of
all Loans during any  calendar  month is less than the Minimum  Default  Average
Monthly  Loan  Amount.  Such fee shall be charged to  Borrower's  account on the
first day of each month with respect to the prior month.

                  (vii) Overadvance Fee. Without affecting Borrower's obligation
to immediately  repay any Loans which exceed the amounts  permitted by Section 2
("Overadvances"),  in the  event an  Overadvance  occurs  or is made by  Lender,
Borrower  shall pay  interest on the unpaid  balance of the Loans at the Default
Rate for as long as such Overadvance  remains outstanding and shall pay Lender a
fee in the  amount  of  $1,000.00  for  each  month  or  part  thereof  that  an
Overadvance  exists.  Such fee shall be charged to  Borrower's  account upon the
occurrence of each  Overadvance  and on the first day of each month  thereafter.
(viii) Financial  Information  Default.  Without affecting Lender's other rights
and remedies,  in the event Borrower fails to deliver the financial  information
required by Section 11 on the date required by this  Agreement,  Borrower  shall
pay Lender a fee in the amount of $100.00  per day for each such  failure  until
such failure is cured to Lender's  satisfaction  or waived in writing by Lender.
Such fee shall be charged to Borrower's account upon the occurrence of each such
failure.

                  (ix) Collateral  Account Fee. Borrower agrees to pay to Lender
a fee in connection with the transfer of funds to the Collateral  Account in the
amount of $250.00 per month. Such fee shall be charged to Borrower's  account on
the Closing Date and on the first day of each month thereafter.

         6. Security Interest.

                  (a) To secure the prompt payment to Lender of the Obligations,
Borrower  hereby  assigns,  pledges and grants to Lender a  continuing  security
interest in and Lien upon all of the  Collateral.  All of  Borrower's  Books and
Records  relating to the  Collateral  shall,  until  delivered  to or removed by
Lender,  be kept by Borrower in trust for Lender until all Obligations have been
paid in full. Each confirmatory  assignment schedule or other form of assignment
hereafter  executed by Borrower shall be deemed to include the foregoing  grant,
whether or not the same appears therein.

                                       16
<PAGE>

                  (b) As additional  security for the payment and performance of
the Obligations, Borrower hereby assigns to Lender any and all monies (including
proceeds of  insurance  and refunds of unearned  premiums)  due or to become due
under, and all other rights of Borrower with respect to, any and all policies of
insurance now or at any time  hereafter  covering the Collateral or any evidence
thereof or any  business  records or valuable  papers  pertaining  thereto,  and
Borrower  hereby  directs  the issuer of any such  policy to pay all such monies
directly  to Lender.  At any time,  whether or not a Default or Event of Default
then exists,  Lender may (but need not), in Lender's name or in Borrower's name,
execute and deliver proof of claim, receive all such monies,  endorse checks and
other instruments  representing  payment of such monies,  and adjust,  litigate,
compromise or release any claim against the issuer of any such policy.

                  (c)  Borrower  hereby  (i)  authorizes   Lender  to  file  any
financing  statements,  continuation  statements or amendments  thereto that (x)
indicate  the  Collateral  (1) as all  assets of  Borrower  (or any  portion  of
Borrower's  assets)  or words of  similar  effect,  regardless  of  whether  any
particular asset comprised in the Collateral falls within the scope of Article 9
of the UCC of such jurisdiction,  or (2) as being of an equal or lesser scope or
with greater detail, and (y) contain any other information required by Part 5 of
Article 9 of the UCC for the  sufficiency  or filing  office  acceptance  of any
financing statement,  continuation  statement or amendment and (ii) ratifies its
authorization  for Lender to have filed any  initial  financial  statements,  or
amendments thereto if filed prior to the date hereof. Borrower acknowledges that
it is not authorized to file any financing statement or amendment or termination
statement  with respect to any  financing  statement  without the prior  written
consent of Lender and agrees  that it will not do so without  the prior  written
consent of Lender, subject to Borrower's rights under Section 9-509(d)(2) of the
UCC.

                  (d)  Borrower   hereby   grants  to  Lender  an   irrevocable,
non-exclusive   license   (exercisable   upon  the  occurrence  and  during  the
continuance  of an  Event  of  Default  without  payment  of  royalty  or  other
compensation  to  Borrower)  to  use,   transfer,   license  or  sublicense  any
Intellectual Property now owned, licensed to, or hereafter acquired by Borrower,
and wherever the same may be located,  and  including in such license  access to
all media in which any of the  licensed  items may be  recorded or stored and to
all  computer  and  automatic  machinery  software  and  programs  used  for the
compilation or printout  thereof,  and represents,  promises and agrees that any
such  license  or  sublicense  is not  and  will  not be in  conflict  with  the
contractual  or  commercial  rights of any  third  Person;  provided,  that such
license will  terminate on the  termination of this agreement and the payment in
full of all Obligations.

         7. Representations, Warranties and Covenants Concerning the Collateral.
Borrower represents, warrants (each of which such representations and warranties
shall be deemed repeated upon the making of each request for a Revolving  Credit
Advance  and made as of the  time of each and  every  Revolving  Credit  Advance
hereunder) and covenants as follows:

                  (a) All of the  Collateral  (i) is owned by Borrower  free and
clear of all Liens  (including  any  claims  of  infringement)  except  those in
Lender's  favor and  Permitted  Liens and (ii) is not  subject to any  agreement
prohibiting  the  granting  of a Lien or  requiring  notice of or consent to the
granting of a Lien.

                                       17
<PAGE>

                  (b) Borrower shall not encumber,  mortgage,  pledge, assign or
grant any Lien in any  Collateral  or any of  Borrower's  other assets to anyone
other than Lender and except for Permitted Liens. (c) The Liens granted pursuant
to this  Agreement,  upon  completion of the filings and other actions listed on
Exhibit 7(c) (which, in the case of all filings and other documents  referred to
in said Exhibit, have been delivered to Lender in duly executed form) constitute
valid perfected  security  interests in all of the Collateral in favor of Lender
as  security  for  the  prompt  and  complete  payment  and  performance  of the
Obligations, enforceable in accordance with the terms hereof against any and all
creditors  of and  any  purchasers  from  Borrower  (other  than  purchasers  of
Inventory in the ordinary  course of business) and such  security  interests are
prior to all other  Liens on the  Collateral  in  existence  on the date  hereof
except for Permitted Liens that have priority by operation of law.

                  (d) No effective security agreement,  mortgage, deed of trust,
financing  statement,  equivalent  security or Lien  instrument or  continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Liens.

                  (e)  Borrower  shall  not  dispose  of any  of the  Collateral
whether by sale,  lease or otherwise except for (i) the sale of Inventory in the
ordinary  course  of  business,  and (ii) the  disposition  or  transfer  in the
ordinary  course of business  during any fiscal year of  obsolete  and  worn-out
Equipment  having an  aggregate  fair market  value of not more than $25,000 and
only to the extent  that (x) the  proceeds of any such  disposition  are used to
acquire  replacement  Equipment  which is subject  to  Lender's  first  priority
security  interest  or (y) the  proceeds  of which  are  remitted  to  Lender in
reduction of the Obligations.

                  (f)  Borrower  shall  defend the right,  title and interest of
Lender in and to the  Collateral  against  the claims and demands of all Persons
whomsoever,  and take such actions, including (i) all actions necessary to grant
Lender "control" of any Investment Property, Deposit Accounts,  Letter-of-Credit
Rights or  electronic  Chattel  Paper  owned by  Borrower,  with any  agreements
establishing  control to be in form and substance  satisfactory to Lender,  (ii)
the  prompt  delivery  to Lender of all  original  Instruments,  Chattel  Paper,
negotiable  Documents  and  certificated  Stock owned by Borrower (in each case,
accompanied by stock powers,  allonges or other instruments of transfer executed
in blank),  (iii)  notification  of Lender's  interest in Collateral at Lender's
request,  and (iv) the institution of litigation  against third parties as shall
be prudent in order to protect and preserve  Borrower's and Lender's  respective
and several interests in the Collateral.

                  (g) Borrower shall  promptly,  and in any event within two (2)
Business Days after the same is acquired by it, notify Lender of any  commercial
tort claim (as defined in the UCC) acquired by it and unless otherwise consented
by  Lender,  Borrower  shall  enter  into a  supplement  to this Loan  Agreement
granting to Lender a Lien in such commercial tort claim.

                                       18
<PAGE>

                  (h) If Borrower  retains  possession  of any Chattel  Paper or
Instrument with Lender's  consent,  such Chattel Paper and Instruments  shall be
marked with the following legend: "This writing and the obligations evidenced or
secured hereby are subject to the security  interest of Equinox  Business Credit
Corp."

                  (i) Borrower shall perform all other steps requested by Lender
to create and  maintain in Lender's  favor a valid  perfected  first Lien in all
Collateral subject only to Permitted Liens.

                  (j)  As  of  the  date  of  each  Borrowing  Base  Certificate
delivered to Lender, each Account listed thereon as an Eligible Account shall be
an Eligible  Account.  Borrower  shall notify  Lender  promptly and in any event
within two (2) Business Days after obtaining  knowledge thereof (i) of any event
or circumstance that to Borrower's  knowledge would cause Lender to consider any
then existing Account as no longer constituting an Eligible Account; (ii) of any
material  delay  in  Borrower's  performance  of any of its  obligations  to any
Account  Debtor;  (iii) of any  assertion  by an Account  Debtor of any material
claims, offsets or counterclaims;  (iv) of any allowances, credits and/or monies
granted  by  Borrower  to  any  Account  Debtor;  (v) of  all  material  adverse
information  relating to the financial  condition of an Account Debtor;  (vi) of
any material  return of goods;  and (vii) of any loss,  damage or destruction of
any of the Collateral.

                  (k) All Accounts (i) represent complete bona fide transactions
which require no further act under any  circumstances on Borrower's part to make
such  Accounts  payable by the Account  Debtors,  (ii) to the best of Borrower's
knowledge,  are not  subject to any  present,  future or  contingent  offsets or
counterclaims,  and  (iii) do not  represent  bill and hold  sales,  consignment
sales,  guaranteed  sales,  sale or return or other  similar  understandings  or
obligations  of any Affiliate or Subsidiary of Borrower.  Borrower has not made,
and will not make,  any agreement  with any Account  Debtor for any extension of
time for the payment of any Account,  any compromise or settlement for less than
the full  amount  thereof,  any release of any  Account  Debtor  from  liability
therefor,  or any deduction  therefrom except a discount or allowance for prompt
or early  payment  allowed by Borrower in the  ordinary  course of its  business
consistent  with  historical  practice and as previously  disclosed to Lender in
writing.  Exhibit  7(l) sets forth each  contract of  Borrower  with any Account
Debtor that gives such  Account  Debtor the right  (under such  contract,  under
common  law or  otherwise)  to offset any  Accounts  for  Borrower's  failure to
perform  under such contract and Borrower has obtained an offset waiver for each
such contract in form and substance satisfactory to Lender.

                  (l) Borrower  shall keep and  maintain  the  Equipment in good
operating  condition,  except  for  ordinary  wear and tear,  and shall make all
necessary  repairs  and  replacements  thereof  so that the value and  operating
efficiency  shall at all times be maintained and  preserved.  Borrower shall not
permit any such items to become a Fixture to real estate or  accessions to other
personal property.

                  (m) All  Inventory  manufactured  by  Borrower  in the  United
States of America shall be produced in accordance  with the  requirements of the
Federal Fair Labor Standards Act of 1938, as amended and all rules,  regulations
and orders related thereto or promulgated thereunder.

                                       19
<PAGE>

                  (n) Borrower shall  maintain and keep all of Borrower's  Books
and Records concerning the Collateral at Borrower's  executive offices listed in
Exhibit 12(d).

                  (o) Borrower  shall  maintain and keep the  Collateral  at the
addresses  listed in Exhibit  12(d),  provided,  that  Borrower  may change such
locations or open a new location provided,  that Borrower provides Lender thirty
(30) days prior written  notice of such change or new location and (ii) prior to
such change or opening of a new location it executes and delivers to Lender such
financing  statements  and other  agreements  as Lender may  request,  including
landlord agreements, mortgagee agreements and warehouse agreements, each in form
and substance satisfactory to Lender.

                  (p)  Exhibit   7(p)  lists  all  banks  and  other   financial
institutions at which Borrower  maintains  deposits  and/or other accounts,  and
such Exhibit correctly identifies the name, address and telephone number of each
such  depository,  the name in which the account is held, a  description  of the
purpose of the account,  and the complete  account  number.  Borrower  shall not
establish  any  depository  or other  bank  account  of any  with any  financial
institution  (other than the accounts set forth on Exhibit 7(p) without Lender's
prior written consent.

                  (q) Upon Lender's  request,  which shall not be more than once
every calendar year (provided that such limitation shall not be effective during
the  occurrence  or  continuance  of any Default or Event of Default),  Borrower
shall  cause,  at least  annually,  an appraisal to be performed by an appraiser
satisfactory to Lender,  of its Equipment and Lender shall have the right in its
sole  discretion  based on such  appraisal to decrease the amount of  Amortizing
Availability  to a sum not greater  than sixty  percent  (60%) of the  knockdown
liquidation  value of the  Equipment  which is  acceptable to Lender in its sole
discretion and on which Lender has a first priority perfected Lien,  amortizable
at a rate to be determined by Lender.

         8. Collateral Accounts.

                  (a) Borrower  will  irrevocably  direct all present and future
Account  Debtors  and other  Persons  obligated  to make  payments  constituting
Collateral  to make such payments  directly to the  Collateral  Account.  All of
Borrower's invoices, account statements and other written or oral communications
directing,  instructing,  demanding  or  requesting  payment  of any  Account of
Borrower or any other amount constituting  Collateral shall conspicuously direct
that all  payments  be made to the  Collateral  Account  and shall  include  the
address for the Collateral  Account.  If,  notwithstanding  the  instructions to
Account Debtors to make payments to the Collateral  Account,  Borrower  receives
any payments,  Borrower shall deposit such payments into the Collateral Account.
Until so  deposited,  Borrower  shall hold all such payments in trust for and as
the property of Lender and shall not  commingle  such  payments  with any of its
other funds or property.  Commencing  sixty (60) days after the Closing Date, to
the extent any Account Debtor does not make a payment directly to the Collateral
Account,  Borrower  shall  pay  Lender a fee equal to five  percent  (5%) of the
amount of such payment not so remitted to the Collateral  Account with a minimum
fee of $25 per payment.

                  (b) All deposits in the  Collateral  Account shall  constitute
Proceeds.  Lender  from  time  to  time  at may  apply  deposited  funds  in the
Collateral Account to the payment of the Obligations,  in any order or manner of
application satisfactory to Lender.

                                       20
<PAGE>

                  (c) All items  deposited in the  Collateral  Account  shall be
subject to final  payment.  If any such item is returned  uncollected,  Borrower
will immediately pay Lender, or, for items deposited in the Collateral  Account,
the bank maintaining such account,  the amount of that item, or such bank at its
discretion may charge any uncollected item to Borrower's  commercial  account or
other account at such bank. Borrower shall be liable as an endorser on all items
deposited  in  the  Collateral  Account,  whether  or not in  fact  endorsed  by
Borrower.

         9. Collection and Maintenance of Collateral.

                  (a)  Lender  may  at  any  time  verify  Borrower's   Accounts
utilizing  an audit  control  company or any other  agent of  Lender.  Lender or
Lender's  designee  may notify  Account  Debtors,  at any time at Lender's  sole
discretion, of Lender's security interest in Accounts, collect them directly and
charge the collection costs and expenses to Borrower's account,  but, unless and
until  Lender  does so or gives  Borrower  other  instructions,  Borrower  shall
collect all  Accounts  for Lender,  receive all  payments  thereon for  Lender's
benefit in trust as Lender's  trustee and immediately  deliver them to Lender in
their original form with all necessary  endorsements  or, as directed by Lender,
deposit such payments as directed by Lender pursuant to Section 8.

                  (b) For  purposes  of  determining  the  balance  of the Loans
outstanding,  Lender will credit  (conditional  upon final  collection) all such
payments to  Borrower's  account upon receipt by Lender of good funds in dollars
of the United  States of America in Lender's  account,  provided,  however,  for
purposes  of  computing   interest  on  the  Obligations,   Lender  will  credit
(conditional upon final  collection) all such payments to Borrower's  account in
the  case of a  payment  in the  form of  federal  funds  or  other  immediately
available funds three (3) Business Days after receipt by Lender of such funds in
dollars of the United  States of America in Lender's  account and in the case of
payments  in any other form five (5)  Business  Days after  receipt by Lender of
good funds in dollars of the United States of America in Lender's  account.  Any
amount  received by Lender after 11:00 a.m.  (New York time) on any Business Day
shall be deemed received on the next Business Day.

         10. Inspections.  At all times during normal business hours and so long
as no Event of Default  shall have occurred and be  continuing  upon  reasonable
notice,  Lender  shall  have the right to (a) have  access to,  visit,  inspect,
review,  evaluate and make physical  verification  and  appraisals of Borrower's
properties and the Collateral, (b) inspect, audit and copy (or take originals if
necessary)  and make  extracts  from  Borrower's  Books and  Records,  including
management  letters  prepared by independent  accountants,  and (c) discuss with
Borrower's principal officers, and independent accountants, Borrower's business,
assets,  liabilities,  financial  condition,  results of operations and business
prospects.  Borrower will deliver to Lender any instrument  necessary for Lender
to obtain records from any service bureau maintaining  records for Borrower.  If
any internally  prepared  financial  information,  including that required under
this  paragraph is  unsatisfactory  in any manner to Lender,  Lender may request
that the Accountant's review the same.

         11.  Financial  Reporting.  Borrower  will  deliver,  or  cause  to  be
delivered,  to Lender each of the  following,  which shall be in form and detail
acceptable to Lender:

                                       21
<PAGE>

                  (a) As soon as available,  and in any event within one hundred
and twenty (120) days after the end of each fiscal year of Borrower,  Borrower's
audited  financial  statements  with  the  unqualified  opinion  of  independent
certified  public  accountants of recognized  standing  selected by Borrower and
acceptable  to Lender (the  "Accountants"),  which annual  financial  statements
shall include Borrower's balance sheet as at the end of such fiscal year and the
related  statements of Borrower's  income,  retained earnings and cash flows for
the fiscal year then ended,  prepared, if Lender so requests, on a consolidating
and consolidated  basis to include any Affiliates,  all in reasonable detail and
prepared in accordance  with GAAP,  together  with (i) copies of all  management
letters  prepared by such  accountants;  (ii) a report signed by the Accountants
stating  that in making  the  investigations  necessary  for said  opinion  they
obtained no knowledge, except as specifically stated, of any Default or Event of
Default;  and (iii) a  certificate  of Borrower's  President or Chief  Financial
Officer stating that such financial  statements have been prepared in accordance
with GAAP and whether or not such officer has knowledge of the occurrence of any
Default or Event of Default  hereunder and, if so, stating in reasonable  detail
the facts with respect thereto;

                  (b) As soon as available,  drafts of the financial  statements
referred to in Section (a) above prepared by Borrower and/or the Accountants;

                  (c) As soon as  available  and in any event  within forty five
(45) days after the end of each month, an  unaudited/internal  balance sheet and
statements of income, retained earnings and cash flows of Borrower as at the end
of and for such month and for the year to date period then ended,  prepared,  if
Lender so requests,  on a consolidating  and  consolidated  basis to include any
Affiliates, in reasonable detail and stating in comparative form the figures for
the  corresponding  date and  periods in the  previous  year,  all  prepared  in
accordance with GAAP, subject to year-end audit adjustments;  and accompanied by
a certificate of Borrower's  President or Chief Financial  Officer,  stating (i)
that such  financial  statements  have been  prepared in  accordance  with GAAP,
subject to year-end audit adjustments,  and (ii) whether or not such officer has
knowledge of the  occurrence  of any Default or Event of Default  hereunder  not
theretofore  reported and remedied and, if so, stating in reasonable  detail the
facts with respect thereto;

                  (d)  Within  ten (10) days after the end of each month or more
frequently if Lender so requests, agings of Borrower's Accounts and its accounts
payable,  a perpetual  Inventory  certification  report,  and a  calculation  of
Borrower's Accounts, Eligible Accounts, Inventory as at the end of such month or
shorter time period;

                  (e) At least  thirty  (30) days before the  beginning  of each
fiscal  year  of  Borrower,   the  Projections,   each  in  reasonable   detail,
representing  Borrower's  good faith  Projections  and  certified by  Borrower's
President  or Chief  Financial  Officer as being the most  accurate  Projections
available  and  identical  to the  Projections  used by  Borrower  for  internal
planning  purposes,  together with such supporting  schedules and information as
Lender may in its discretion require;

                  (f)  Together  with each  request  for a Loan (but in no event
later  than the first  day of each  week) and at such  intervals  as Lender  may
request a Borrowing Base Certificate in the form of Exhibit A as of the last day
of the previous  Borrowing Base  Certificate  detailing  ineligible  Accounts of
adjustment to the Formula Amount, certified as true and correct by the President
or Chief Financial Officer of Borrower;

                                       22
<PAGE>

                  (g)  Together  with each  request  for a Loan (but in no event
later than the first day of each week) and at such other intervals as Lender may
require:  (i) copies of all entries to the sales  journal  and the cash  receipt
journal;  (ii) copies of all credit  memos;  and (iii) copies of all invoices in
excess of five thousand dollars  ($5,000),  together with proof of delivery,  in
each case as and for the immediately preceding week;

                  (h) Promptly following Lender's request, receivable schedules,
copies of invoices to Account Debtors, shipping documents, delivery receipts and
such other material, reports, records or information as Lender may request;

                  (i) Promptly upon their distribution,  copies of all financial
statements,  reports and proxy  statements which Borrower shall have sent to its
stockholders,  promptly  after  the  sending  or filing  thereof,  copies of all
regular and periodic  reports which  Borrower shall file with the Securities and
Exchange Commission or any national securities exchange; and

                  (j)  Borrower  will cause each  Guarantor  to comply  with the
financial reporting requirements set forth in their respective Guaranties.

         12.  Additional  Representations,  Warranties and  Covenants.  Borrower
represents, warrants (each of which such representations and warranties shall be
deemed repeated upon the making of a request for a Revolving  Credit Advance and
made as of the  time of each  Revolving  Credit  Advance  made  hereunder),  and
covenants as follows:

                  (a)  Borrower  is a  corporation  duly  organized  and validly
existing  under  the  laws of the  jurisdiction  of its  incorporation  and duly
qualified and in good standing in every other state or jurisdiction in which the
nature of Borrower's business requires such qualification.

                  (b) The execution,  delivery and performance of this Agreement
and the  Ancillary  Agreements  (i) have been duly  authorized,  (ii) are not in
contravention  of Borrower's  certificate  of  incorporation,  by-laws or of any
indenture,  agreement or  undertaking  to which  Borrower is a party or by which
Borrower is bound and (iii) are within Borrower's corporate powers.

                  (c) This Agreement and the Ancillary  Agreements  executed and
delivered  by Borrower  are  Borrower's  legal,  valid and binding  obligations,
enforceable in accordance with their terms.

                  (d) Exhibit 12(d) sets forth  Borrower's name as it appears in
official  filing  in the  state  of its  incorporation,  the type of  entity  of
Borrower, the organizational identification number issued by Borrower's state of
incorporation  or a statement  that no such number has been  issued,  Borrower's
state of  incorporation,  and the location of Borrower's chief executive office,
corporate offices, warehouses, other locations of Collateral and locations where
records with respect to Collateral  are kept  (including in each case the county
of such  locations)  and,  except  as set  forth  in such  Exhibit  12(d),  such
locations have not changed during the preceding twelve months. As of the Closing
Date,  during  the prior  five  years,  except as set  forth in  Exhibit  12(d),
Borrower  has  not  been  known  as or  conducted  business  in any  other  name
(including  trade  names).  Borrower  has only one  state  of  incorporation  or
organization.

                                       23
<PAGE>

         (e) Borrower will not change (i) its name as it appears in the official
filings in the state of its incorporation,  (ii) the type of legal entity it is,
(iii) its  organization  identification  number,  if any, issued by its state of
incorporation,  (iv) its state of  incorporation or (v) amend its certificate of
incorporation, by-laws or other organizational document.

         (f) (i) Borrower has delivered to Lender all environmental assessments,
audits, reports, permits, licenses and other documents describing or relating in
any way to Borrower's business or its property.

              (ii)  The  operation  of  each  Borrower's  business  is and  will
continue  to be in  compliance  in all  material  respects  with all  applicable
federal,  state and local laws,  rules and  ordinances,  including  to all laws,
rules,  regulations  and orders  relating to taxes,  payment and  withholding of
payroll  taxes,   employer  and  employee   contributions   and  similar  items,
securities, employee retirement and welfare benefits, employee health safety and
environmental matters.

              (iii)  Borrower will establish and maintain a system to assure and
monitor  continued  compliance  with all applicable  environmental  laws,  which
system shall include periodic reviews of such compliance.

              (iv) In the event Borrower  obtains,  gives or receives  notice of
any  release or threat of  release of a  reportable  quantity  of any  hazardous
substances  on its property (any such event being  hereinafter  referred to as a
"Hazardous  Discharge")  or  receives  any  notice  of  violation,  request  for
information or notification that it is potentially responsible for investigation
or  cleanup  of  environmental  conditions  on its  property,  demand  letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or  violation  of any  environmental  laws  affecting  its property or
Borrower's  interest  therein (any of the  foregoing is referred to herein as an
"Environmental Complaint") from any Person or entity, including any Governmental
Authority responsible in whole or in part for environmental matters in the state
in which such property is located or the United States Environmental  Protection
Agency,  then Borrower shall, within seven (7) days, give written notice of same
to Lender  detailing facts and  circumstances  of which Borrower is aware giving
rise to the Hazardous  Discharge or  Environmental  Complaint  and  periodically
inform Lender of the status of the matter. Such information is to be provided to
allow  Lender to protect  its  security  interest in the  Collateral  and is not
intended to create nor shall it create any  obligation  upon Lender with respect
thereto.

              (v) Borrower shall respond promptly to any Hazardous  Discharge or
Environmental  Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid  subjecting  the  Collateral  to any Lien.  If
Borrower  shall  fail  to  respond  promptly  to  any  Hazardous   Discharge  or
Environmental  Complaint  or  Borrower  shall  fail to  comply  with  any of the
requirements of any  environmental  laws, Lender may, but without the obligation
to do so, for the sole purpose of protecting  Lender's  interest in  Collateral:
(A) give such notices or (B) enter onto Borrower's  property (or authorize third
parties to enter onto such

                                       24
<PAGE>

property)  and take such actions as Lender (or such third parties as directed by
Lender) deems reasonably necessary or advisable,  to clean up, remove,  mitigate
or otherwise deal with any such Hazardous Discharge or Environmental  Complaint.
All reasonable costs and expenses  incurred by Lender (or such third parties) in
the exercise of any such rights,  including any sums paid in connection with any
judicial or  administrative  investigation or proceedings,  fines and penalties,
together  with  interest  thereon from the date expended at the Default Rate for
Revolving Credit Advances shall be paid upon demand by Borrower,  and until paid
shall be added to and  become a part of the  Obligations  secured  by the  Liens
created by the terms of this Agreement or any other agreement between Lender and
Borrower.

              (vi) Borrower  shall defend and  indemnify  Lender and hold Lender
harmless  from and  against all loss,  liability,  damage and  expense,  claims,
costs, fines and penalties,  including  attorney's fees, suffered or incurred by
Lender  under  or on  account  of any  environmental  laws,  including,  without
limitation, the assertion of any Lien thereunder,  with respect to any Hazardous
Discharge,  the  presence  of  any  hazardous  substances  affecting  Borrower's
property, whether or not the same originates or emerges from Borrower's property
or any contiguous real estate,  including any loss of value of the Collateral as
a result of the foregoing except to the extent such loss, liability,  damage and
expense is attributable to any Hazardous Discharge resulting from actions on the
part of Lender. Borrower's obligations under this Section 12(f) shall arise upon
the  discovery  of  the  presence  of any  hazardous  substances  on  Borrower's
property,  whether or not any federal,  state, or local environmental agency has
taken or threatened any action in connection  with the presence of any hazardous
substances.  Borrower's  obligation  and the  indemnifications  hereunder  shall
survive the termination of this Agreement;

              (vii) For purposes of Section 12(f),  all references to Borrower's
property shall be deemed to include all of Borrower's right,  title and interest
in and to all owned and/or leased premises.

              (viii) Based upon the Employee  Retirement  Income Security Act of
1974 ("ERISA"),  and the regulations and published  interpretations  thereunder:
(i)  Borrower  has not  engaged  in any  Prohibited  Transactions  as defined in
Section 406 of ERISA and Section 4975 of the Internal  Revenue Code, as amended;
(ii) Borrower has met all applicable minimum funding  requirements under Section
302 of ERISA in respect of its plans;  (iii)  Borrower  has no  knowledge of any
event or occurrence which would cause the Pension Benefit  Guaranty  Corporation
to  institute  proceedings  under Title IV of ERISA to  terminate  any  employee
benefit plan(s);  (iv) Borrower has no fiduciary  responsibility for investments
with  respect  to any plan  existing  for the  benefit  of  persons  other  than
Borrower's  employees;  and  (v)  Borrower  has  not  withdrawn,  completely  or
partially,  from any multi-employer  pension plan so as to incur liability under
the Multiemployer Pension Plan Amendments Act of 1980.

         (g)  Borrower is  solvent,  able to pay its debts as they  mature,  has
capital sufficient to carry on its business and all businesses in which Borrower
is about to engage and the fair saleable  value of its assets  (calculated  on a
going concern basis) is in excess of the amount of its liabilities.

                                       25
<PAGE>

         (h) There is no pending or threatened litigation,  action or proceeding
which involves the possibility of having a Material Adverse Effect.

         (i) All balance sheets and income  statements which have been delivered
to Lender fairly,  accurately and properly state Borrower's  financial condition
on a basis consistent with that of previous  financial  statements and there has
been no material adverse change in Borrower's  financial  condition as reflected
in such  statements  since the date thereof and such  statements  do not fail to
disclose  any fact or facts  which  might  have a  Material  Adverse  Effect  on
Borrower's financial condition.

         (j) Borrower  possesses all of the Intellectual  Property  necessary to
conduct its  business.  There has been no  assertion  or claim of  violation  or
infringement with respect to any Intellectual Property. Exhibit 12(j) sets forth
all Intellectual Property of Borrower.

         (k) Borrower will pay or discharge when due all taxes,  assessments and
governmental  charges or levies  imposed upon Borrower or any of the  Collateral
unless such amounts are being diligently  contested in good faith by appropriate
proceedings  provided  that (i)  adequate  reserves  with  respect  thereto  are
maintained on the books of Borrower in conformity with GAAP and (ii) the related
Lien shall have no effect on the priority of the Liens in favor of Lender or the
value of the assets in which Lender has a Lien.

         (l)  Borrower  will  promptly  inform  Lender in  writing  of:  (i) the
commencement  of all  proceedings  and  investigations  by or before  and/or the
receipt of any notices from, any  governmental or  nongovernmental  body and all
actions and proceedings in any court or before any arbitrator  against or in any
way concerning any event which might singly or in the aggregate, have a Material
Adverse Effect;  (ii) any amendment of Borrower's  certificate of incorporation,
by-laws, certification of formation, operating agreement or other organizational
document;  (iii) any  change  which  has had or might  have a  Material  Adverse
Effect; (iv) any Event of Default or Default; (v) any default or any event which
with the passage of time or giving of notice or both would  constitute a default
under any agreement for the payment of money to which  Borrower is a party or by
which  Borrower or any of Borrower's  properties may be bound which would have a
Material  Adverse  Effect and (vii) any change in  Borrower's  name or any other
name used in its business.

         (m) Borrower will not (i) create,  incur, assume or suffer to exist any
indebtedness  (exclusive of trade debt) whether  secured or unsecured other than
Borrower's  indebtedness  to Lender and as set forth on Exhibit  12(m)  attached
hereto and made a part  hereof;  (ii)  cancel  any debt  owing to it;  (iii) not
assume,  guarantee,  endorse or otherwise become directly or contingently liable
in connection with any  obligations of any other Person,  except the endorsement
of  negotiable  instruments  by Borrower  for deposit or  collection  or similar
transactions  in the ordinary  course of business;  (iv)  directly or indirectly
declare,  pay or make any dividend or  distribution on any class of its Stock or
apply any of its funds, property or assets to the purchase,  redemption or other
retirement of any Stock of Borrower; (v) purchase or hold beneficially any Stock
or other securities or evidences of indebtedness of, make or permit to exist any
loans or advances to, or make any investment or acquire any interest  whatsoever
in, any other Person,  including any partnership or joint venture, except travel
advances or loans to Borrower's  officers and employees not exceeding at any one
time an  aggregate  of $5,000;  (vi)

                                       26
<PAGE>

create or permit to exist any Subsidiary, other than any Subsidiary in existence
on the date hereof and listed in Exhibit  12(m);  (vii)  directly or indirectly,
prepay any indebtedness (other than to Lender), or repurchase, redeem, retire or
otherwise acquire any indebtedness;  (viii) enter into any merger, consolidation
or other  reorganization  with or into any  other  Person  or  acquire  all or a
portion  of the  assets or Stock of any  Person or  permit  any other  Person to
consolidate  with or merge  with it;  (ix)  materially  change the nature of the
business in which it is  presently  engaged;  (x) change its fiscal year or make
any changes in  accounting  treatment  and  reporting  practices  without  prior
written  notice to Lender  except as  required  by GAAP or in the tax  reporting
treatment or except as required by law; (xi) enter into any transaction with any
employee,  director or Affiliate,  except in the ordinary  course on arms-length
terms;  (xii) bill Accounts  under any name except the present name of Borrower;
(xiii) directly or indirectly,  redeem, redeem, repurchase,  retire or otherwise
acquire or make any payment or  distribution  with  respect to the  Subordinated
Debt except to the extent  permitted  pursuant to the  applicable  Subordination
Agreement;  or (xiv) change or modify the terms of any Subordinated Debt (or any
indenture or agreement in connection therewith).

         (n) All Projections of Borrower's  performance  prepared by Borrower or
at Borrower's  direction and delivered to Lender will represent,  at the time of
delivery to Lender,  Borrower's  best  estimate of Borrower's  future  financial
performance and will be based upon assumptions  which are reasonable in light of
Borrower's past performance and then current business conditions.

         (o) None of the proceeds of the Loans  hereunder  will be used directly
or indirectly to "purchase" or "carry"  "margin stock" or to repay  indebtedness
incurred to "purchase" or "carry" "margin stock" within the respective  meanings
of each of the quoted terms under  Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect.

         (p)  Borrower  will  bear  the full  risk of loss  from any loss of any
nature  whatsoever  with respect to the  Collateral.  At Borrower's own cost and
expense in amounts and with carriers  acceptable to Lender,  Borrower  shall (i)
keep all its  insurable  properties  and  properties in which it has an interest
insured against the hazards of fire,  flood,  sprinkler  leakage,  those hazards
covered by extended  coverage  insurance  and such other  hazards,  and for such
amounts,  as is customary in the case of companies engaged in businesses similar
to Borrower's including business interruption insurance; (ii) maintain insurance
in such amounts as is customary in the case of companies  engaged in  businesses
similar to Borrower's  insuring against larceny,  embezzlement or other criminal
misappropriation  of insured's  officers and  employees who may either singly or
jointly  with  others at any time have access to the assets or funds of Borrower
either directly or through Governmental  Authority to draw upon such funds or to
direct  generally the  disposition  of such assets;  (iii)  maintain  public and
product  liability  insurance  against  claims  for  personal  injury,  death or
property damage suffered by others; (iv) maintain all such worker's compensation
or  similar  insurance  as may be  required  under  the  laws  of any  state  or
jurisdiction  in which  Borrower is engaged in business;  and (v) furnish Lender
with (x) copies of all policies and evidence of the maintenance of such policies
at least thirty (30) days before any expiration  date, (y)  endorsements to such
policies naming Lender as  "co-insured" or "additional  insured" and appropriate
loss payable endorsements in form and substance

                                       27
<PAGE>

satisfactory to Lender, naming Lender as loss payee, and (z) evidence that as to
Lender the insurance coverage shall not be impaired or invalidated by any act or
neglect of Borrower  and the insurer  will  provide  Lender with at least thirty
(30) days notice prior to  cancellation.  Borrower  shall instruct the insurance
carriers  that in the event of any loss  thereunder,  the  carriers  shall  make
payment for such loss to lender and not to Borrower and Lender  jointly.  If any
insurance  losses  are  paid by  check,  draft or other  instrument  payable  to
Borrower and Lender jointly,  Lender may endorse  Borrower's name thereon and do
such  other  things as Lender  may deem  advisable  to reduce  the same to cash.
Lender is hereby authorized to adjust and compromise claims. All loss recoveries
received by Lender upon any such insurance may be applied to the Obligations, in
such order as Lender in its sole discretion shall  determine.  Any surplus shall
be paid by Lender to  Borrower or applied as may be  otherwise  required by law.
Any deficiency thereon shall be paid by Borrower to Lender, on demand.

         13. Intentionally Omitted.

         14.  Further  Assurances.  At any time and from time to time,  upon the
written  request of Lender and at the sole expense of Borrower,  Borrower  shall
promptly and duly execute and deliver any and all such further  instruments  and
documents  and take such further  action as Lender may request (a) to obtain the
full benefits of this  Agreement and the Ancillary  Agreements,  (b) to protect,
preserve and maintain Lender's rights in the Collateral and under this Agreement
or any  Ancillary  Agreement,  or (c) to enable Lender to exercise all or any of
the rights and powers herein granted or any Ancillary Agreement.

         15. Power of Attorney.  Borrower  hereby  appoints  Lender or any other
Person whom Lender may  designate  as  Borrower's  attorney,  with power to: (a)
endorse Borrower's name on any checks, notes, acceptances,  money orders, drafts
or other forms of payment or security  that may come into  Lender's  possession;
(b) sign  Borrower's  name on any  invoice  or bill of  lading  relating  to any
Accounts, drafts against Account Debtors, schedules and assignments of Accounts,
notices  of  assignment,   financing   statements  and  other  public   records,
verifications of Accounts and notices to or from Account Debtors; (c) verify the
validity, amount or any other matter relating to any Account by mail, telephone,
telegraph or otherwise with Account  Debtors;  (d) execute customs  declarations
and such other documents as may be required to clear Inventory  through Customs;
(e) do all things necessary to carry out this Agreement, any Ancillary Agreement
and all related  documents;  and (f) on or after the occurrence and continuation
of an Event of Default, notify the post office authorities to change the address
for  delivery of  Borrower's  mail to an address  designated  by Lender,  and to
receive,  open and  following  taking a  reasonable  period  of time  under  the
circumstances  dispose  of all  mail  addressed  to  Borrower.  Borrower  hereby
ratifies and approves all acts of the attorney.  Neither Lender nor the attorney
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law. This power,  being coupled with an interest,  is  irrevocable so
long as Lender has a security interest and until the Obligations have been fully
satisfied.

         16.  Term of  Agreement.  Any  obligation  of Lender to make  Loans and
extend their  financial  accommodations  under this  Agreement or any  Ancillary
Agreement  shall  continue in full force and effect until the  expiration of the
Term. The  termination of the Agreement  shall not affect any of Lender's rights
hereunder or any Ancillary Agreement and the provisions hereof and thereof shall
continue to be fully operative until all  transactions  entered into,  rights or

                                       28
<PAGE>

interests  created and the  Obligations  have been  disposed  of,  concluded  or
liquidated.  The Termination Date shall be automatically extended for successive
periods of two (2) years each unless  Borrower shall have provided Lender with a
written notice of termination,  at least sixty (60) days prior to the expiration
of the  Termination  Date or any  renewal  of the  Termination  Date.  Upon  any
extension  of the  Termination  Date or any  renewal  of the  Termination  Date,
Borrower  shall pay Lender an extension fee in an amount equal to the product of
(a) the Maximum  Revolving Amount times (b) one percent (1.0%).  Notwithstanding
the  foregoing,  Lender shall  release its security  interests at any time after
thirty (30) days notice upon payment to it of all  Obligations if Borrower shall
have (a)  provided  Lender with an executed  release of any and all claims which
Borrower may have or thereafter  have under this Agreement  and/or any Ancillary
Agreement  and (b) paid to Lender an early payment fee in an amount equal to the
product  of (i)  the  Applicable  Percentage  multiplied  by  (ii)  the  Maximum
Revolving Amount; such fee being intended to compensate Lender for its costs and
expenses incurred in initially  approving this Agreement or extending same. Such
early  payment  fee shall also be due and  payable by  Borrower  to Lender  upon
termination  of this  Agreement  by Lender after the  occurrence  of an Event of
Default.

         17.  Termination  of Lien.  The  Liens  and  rights  granted  to Lender
hereunder and any Ancillary  Agreements  and the financing  statements  filed in
connection  herewith  or  therewith  shall  continue  in full force and  effect,
notwithstanding  the  termination of this Agreement or the fact that  Borrower's
account may from time to time be temporarily in a zero or credit position, until
(a) all of the Obligations of Borrower have been paid or performed in full after
the  termination  of this  Agreement or Borrower has executed a payoff letter in
form  and  substance  and  on  terms  and  conditions  satisfactory  to  Lender.
Accordingly,  Borrower  waives  any  rights  which it may have  under the UCC to
demand the filing of termination statements with respect to the Collateral,  and
Lender shall not be required to send such termination statements to Borrower, or
to file them with any filing  office,  unless and until this  Agreement  and the
Ancillary  Agreements  shall have been terminated in accordance with their terms
and all Obligations paid in full in immediately available funds.

         18. Events of Default.  The  occurrence  of any of the following  shall
constitute an Event of Default:

              (a)  failure  to  make  payment  of any of  the  Obligations  when
required hereunder;

              (b)  failure to pay any taxes when due unless such taxes are being
contested  in good faith by  appropriate  proceedings  and with respect to which
adequate reserves have been provided on Borrower's books;

              (c) (i) failure to perform under and/or  committing  any breach of
paragraphs 3, 7, 9, 11, 12(d),  12(e),  12(g),  12(l),  12(m),  12(n), 12(o) and
12(p) of this Agreement or  (ii)failure  to perform under and/or  committing any
breach of this  Agreement  or any  Ancillary  Agreement  or any other  agreement
between  any  Borrower  and  Lender  (other  than  those set forth in clause (i)
immediately  above or otherwise  covered by another clause of this paragraph 18)
and such breach is not  remediable,  if remediable,  continues  unremedied for a
period of ten (10)  Business  Days  after the date on which  Lender  shall  have
notified Borrowing Agent of such breach;

                                       29
<PAGE>

              (d) the  occurrence  of a  default  under any  agreement  to which
Borrower is a party with third parties which has a Material Adverse Effect;

              (e) any  representation,  warranty or  statement  made by Borrower
hereunder,  in any Ancillary Agreement,  any certificate,  statement or document
delivered  pursuant to the terms hereof,  or in connection with the transactions
contemplated by this Agreement  should at any time be false or misleading in any
material respect;

              (f) if any Guarantor or Validity  Guarantor attempts to terminate,
challenges the validity of, or its liability under any Guaranty  Agreement,  any
Guarantor  Security  Agreement  or any Validity  Agreement or if any  individual
Guarantor or Validity  Guarantor  shall die and  Borrower  shall fail to provide
Lender with a replacement  Guarantor acceptable to Lender within forty five (45)
days of such occurrence or if any other Guarantor shall cease to exist;

              (g) should any  Guarantor  default  in its  obligations  under any
Guaranty  Agreement,  any Guarantor Security Agreement or any Validity Guarantor
or if any proceeding shall be brought to challenge the validity,  binding effect
of any Guaranty  Agreement,  or any Guarantor Security Agreement or any Validity
Guaranty,   or  should  any   Guarantor   or  Validity   Guarantor   breach  any
representation,  warranty or covenant contained in any Guaranty  Agreement,  any
Validity  Agreement or any Guarantor  Security  Agreement or should any Guaranty
Agreement  or  Guarantor  Security  Agreement  cease to be a valid,  binding and
enforceable obligation;

              (h) an attachment  or levy is made upon any of  Borrower's  assets
having an aggregate value in excess of $1,000, or a judgment is rendered against
Borrower  or any of  Borrower's  property  involving  a  liability  of more than
$1,000, which shall not have been vacated, discharged,  stayed or bonded pending
appeal within thirty (30) days from the entry thereof;

              (i)  any  material  change  in  Borrower's  condition  or  affairs
(financial  or  otherwise)  which in Lender's  commercially  reasonable  opinion
impairs the Collateral or the ability of Borrower to perform its Obligations;

              (j) any Lien created  hereunder or under any  Ancillary  Agreement
for any reason ceases to be or is not a valid and perfected  Lien having a first
priority interest;

              (k) if Borrower shall (i) apply for, consent to or suffer to exist
the  appointment  of, or the taking of  possession  by, a  receiver,  custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) make a general  assignment  for the benefit of creditors,  (iii) commence a
voluntary  case  under  the  federal  bankruptcy  laws (as now or  hereafter  in
effect),  (iv) be  adjudicated  a  bankrupt  or  insolvent,  (v) file a petition
seeking to take  advantage of any other law providing for the relief of debtors,
(vi)  acquiesce  to, or fail to have  dismissed,  within  thirty (30) days,  any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;

              (l) Borrower shall admit in writing its inability, or be generally
unable to pay its debts as they  become due or cease  operations  of its present
business;

                                       30
<PAGE>

              (m) any Subsidiary or any Guarantor  shall (i) apply for,  consent
to or  suffer to exist  the  appointment  of,  or the  taking  possession  by, a
receiver,  custodian, trustee or liquidator of itself or of all or a substantial
part of its  property,  (ii) admit in writing  its  inability,  or be  generally
unable,  to pay its debts as they become due or cease  operations of its present
business,  (iii) make a general  assignment  for the benefit of creditors,  (iv)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect),  (v) be  adjudicated a bankrupt or  insolvent,  (vi) file a petition
seeking to take  advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed,  within forty five (45) days, any
petition filed against it in any involuntary  case under such bankruptcy laws or
(viii) take any action for the purpose of effecting any of the foregoing;

              (n) Borrower  directly or indirectly  sells,  assigns,  transfers,
conveys,  or  suffers  or permits  to occur any sale,  assignment,  transfer  or
conveyance  of any  assets  of  Borrower  or any  interest  therein,  except  as
permitted herein;

              (o) Borrower fails to operate in the ordinary course of business;

              (p) Lender  shall in good faith deem itself  insecure or unsafe or
shall fear diminution in value, removal or waste of the Collateral;

              (q) a  default  by  Borrower  in the  payment,  when  due,  of any
principal of or interest on any  indebtedness  for money  borrowed  which is not
cured within any applicable grace period;

              (r) the  occurrence  of a Change of  Control or a change in senior
management of Borrower;

              (s) the  indictment  of  Borrower,  any officer of Borrower or any
Guarantor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceeding against Borrower, any officer of Borrower or any
Guarantor  pursuant to which statute or proceeding  penalties or remedies sought
or  available  include  forfeiture  of any of the  property  of  Borrower or any
Guarantor; or

              (t) Borrower  shall take or  participate in any action which would
be  prohibited   under  the  provisions  of  any   Subordination   Agreement  or
Intercreditor  Agreement or make any payment on the  Subordinated  Debt that any
Person  was not  entitled  to receive  under the  provisions  of the  applicable
Subordination Agreement or Intercreditor Agreement.

         19.  Remedies.  Upon the occurrence of an Event of Default  pursuant to
Section 18(k) herein,  all Obligations  shall be immediately due and payable and
this Agreement shall be deemed terminated;  upon the occurrence and continuation
of any other of the  Events of  Default,  Lender  shall have the right to demand
repayment in full of all  Obligations,  whether or not otherwise  due. Until all
Obligations  have been  fully  satisfied,  Lender  shall  retain its Lien in all
Collateral.  Lender shall have, in addition to all other rights provided herein,
the  rights and  remedies  of a secured  party  under the UCC,  and under  other
applicable  law,  all other legal and  equitable  rights to which  Lender may be
entitled, including the right to take immediate possession of the Collateral, to
require Borrower to assemble the Collateral,  at Borrower's

                                       31
<PAGE>

expense,  and to make it  available  to Lender at a place  designated  by Lender
which is reasonably  convenient to both parties and to enter any of the premises
of Borrower or wherever the Collateral  shall be located,  with or without force
or process of law,  and to keep and store the same on said  premises  until sold
(and if said premises be the property of Borrower, Borrower agrees not to charge
Lender for storage  thereof),  and the right to apply for the  appointment  of a
receiver  for  Borrower's  property.  Further,  Lender may, at any time or times
after default by Borrower, sell and deliver all Collateral held by or for Lender
at public or private sale for cash, upon credit or otherwise, at such prices and
upon such terms as Lender,  in Lender's  sole  discretion,  deems  advisable  or
Lender may otherwise recover upon the Collateral in any commercially  reasonable
manner as Lender,  in its sole discretion,  deems advisable.  The requirement of
reasonable  notice  shall be met if such  notice is mailed  postage  prepaid  to
Borrower at Borrower's  address as shown in Lender's records,  at least ten (10)
days before the time of the event of which notice is being given.  Lender may be
the purchaser at any sale, if it is public.  In connection  with the exercise of
the foregoing  remedies,  Lender is granted  permission to use all of Borrower's
trademarks,  tradenames,  tradestyles,  patents, patent applications,  licenses,
franchises and other  proprietary  rights which are used in connection  with (a)
Inventory  for the purpose of disposing of such  Inventory and (b) Equipment for
the purpose of completing the manufacture of unfinished  goods.  The proceeds of
sale  shall be  applied  first to all  costs  and  expenses  of sale,  including
attorneys'  fees, and second to the payment (in whatever order Lender elects) of
all Obligations  (including the cash  collateralization  of any Letter of Credit
Obligations). After the indefeasible payment and satisfaction in full in cash of
all of the  Obligations,  and after the  payment  by Lender of any other  amount
required by any provision of law, including Section  9-608(a)(1) of the UCC (but
only after  Lender has  received  what Lender  considers  reasonable  proof of a
subordinate  party's security  interest),  the surplus, if any, shall be paid to
Borrower or its  representatives  or to  whosoever  may be lawfully  entitled to
receive the same, or as a court of competent  jurisdiction may direct.  Borrower
shall remain liable to Lender for any deficiency.  In addition to all other sums
due to Lender,  Borrower  shall pay Lender,  for costs and expenses  incurred by
Lender for internal collection efforts of Lender to obtain or enforce payment of
Accounts, an amount equal to fifteen percent (15%) of the net face amount of any
Accounts collected.

         20. Waivers.  To the full extent permitted by applicable law,  Borrower
waives (a) presentment, demand and protest, and notice of presentment, dishonor,
intent to accelerate,  acceleration,  protest,  default,  nonpayment,  maturity,
release,  compromise,  settlement,  extension  or  renewal of any or all of this
Agreement and the Ancillary  Agreements  or any other notes,  commercial  paper,
Accounts, Contracts, Documents, Instruments, Chattel Paper and guaranties at any
time held by Lender  on which  Borrower  may in any way be  liable,  and  hereby
ratifies and confirms  whatever Lender may do in this regard;  (b) all rights to
notice and a hearing  prior to Lender's  taking  possession or control of, or to
Lender's  replevy,  attachment  or levy  upon,  any  Collateral  or any  bond or
security  that  might be  required  by any  court  prior to  allowing  Lender to
exercise any of its remedies; and (c the benefit of all valuation, appraisal and
exemption laws. Borrower acknowledges that it has been advised by counsel of its
choices and decisions with respect to this Agreement,  the Ancillary  Agreements
and the transactions evidenced hereby and thereby.

                                       32
<PAGE>

         21. Expenses.  Borrower shall pay all of Lender's  out-of-pocket  costs
and  expenses,  including  reasonable  fees and  disbursements  of  counsel  and
appraisers,  in connection with the preparation,  execution and delivery of this
Agreement and the Ancillary  Agreements,  and in connection with the prosecution
or defense of any action,  contest,  dispute,  suit or proceeding concerning any
matter in any way arising out of, related to or connected with this Agreement or
any Ancillary Agreement.  Borrower shall also pay all of Lender's fees, charges,
out-of-pocket costs and expenses, including reasonable fees and disbursements of
counsel and appraisers,  in connection with (a) the  preparation,  execution and
delivery of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by this Agreement or the Ancillary
Agreements,  (b) Lender's  obtaining  performance of the Obligations  under this
Agreement  and any  Ancillary  Agreement,  including,  but not  limited  to, the
enforcement or defense of Lender's security interests, assignments of rights and
Liens  hereunder  as valid  perfected  security  interests,  (c) any  attempt to
inspect,  verify, protect,  collect, sell, liquidate or otherwise dispose of any
Collateral,  (d) any  appraisals  or  re-appraisals  of any  property  (real  or
personal)  pledged to Lender by Borrower as Collateral  for, or any other Person
as security for, Borrower's  Obligations  hereunder and (e) any consultations in
connection with any of the foregoing. Borrower shall also pay Lender's customary
bank  charges for all bank  services  (including  wire  transfers)  performed or
caused to be  performed  by Lender  for  Borrower  at  Borrower's  request or in
connection with Borrower's loan account with Lender. All such costs and expenses
together with all filing,  recording and search fees, taxes and interest payable
by  Borrower  to Lender  shall be  payable on demand and shall be secured by the
Collateral.  If any tax by any Governmental Authority is or may be imposed on or
as a result of any  transaction  between  Borrower and Lender which Lender is or
may be required to withhold or pay, Borrower agrees to indemnify and hold Lender
harmless in respect of such taxes,  and Borrower will repay to Lender the amount
of any such  taxes  which  shall be  charged to  Borrower's  account;  and until
Borrower  shall furnish  Lender with  indemnity  therefor (or supply Lender with
evidence  satisfactory to it that due provision for the payment thereof has been
made),  Lender may hold  without  interest  any balance  standing to  Borrower's
credit and Lender shall retain its Liens in any and all Collateral.

         22.  Assignment  By  Lender.  Lender  may  assign  any  or  all  of the
Obligations together with any or all of the security therefor and any transferee
shall  succeed  to all of  Lender's  rights  with  respect  thereto.  Upon  such
transfer, Lender shall be released from all responsibility for the Collateral to
the extent same is assigned to any transferee. Lender may from time to time sell
or otherwise  grant  participations  in any of the Obligations and the holder of
any such  participation  shall,  subject to the terms of any  agreement  between
Lender and such holder,  be entitled to the same benefits as Lender with respect
to any  security  for the  Obligations  in which such  holder is a  participant.
Borrower  agrees  that each  such  holder  may  exercise  any and all  rights of
banker's lien, set-off and counterclaim with respect to its participation in the
Obligations as fully as though Borrower were directly indebted to such holder in
the amount of such participation.

         23. No Waiver;  Cumulative Remedies.  Failure by Lender to exercise any
right,  remedy or option under this  Agreement,  any Ancillary  Agreement or any
supplement  hereto or thereto or any other agreement between Borrower and Lender
or delay by Lender in  exercising  the same,  will not  operate as a waiver;  no
waiver by Lender will be effective  unless it is in writing and then only to the
extent  specifically  stated.  Lender's rights and remedies under this

                                       33
<PAGE>

Agreement and the Ancillary  Agreements  will be cumulative and not exclusive of
any other right or remedy which Lender may have.

         24. Application of Payments.  Borrower  irrevocably waives the right to
direct the  application  of any and all payments at any time or times  hereafter
received by Lender from or on Borrower's behalf and Borrower hereby  irrevocably
agrees  that  Lender  shall  have the  continuing  exclusive  right to apply and
reapply any and all  payments  received at any time or times  hereafter  against
Borrower's  Obligations  hereunder  in such manner as Lender may deem  advisable
notwithstanding any entry by Lender upon any of Lender's books and records.

         25.  Indemnity.  Borrower  agrees to indemnify  and hold Lender and its
affiliates,  and their  respective  employees,  attorneys and agents  (each,  an
"Indemnified  Person"),  harmless  from and against any and all suits,  actions,
proceedings,  claims, damages,  losses,  liabilities and expenses of any kind or
nature whatsoever  (including  attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified  Person as
the result of credit having been  extended,  suspended or terminated  under this
Agreement or any of the Ancillary  Agreements or with respect to the  execution,
delivery,  enforcement,  performance and  administration of, or in any other way
arising out of or relating to, this Agreement,  the Ancillary  Agreements or any
other documents or transactions contemplated by or referred to herein or therein
and any actions or failures to act with respect to any of the foregoing,  except
to the extent that any such  indemnified  liability is finally  determined  by a
court of competent  jurisdiction to have resulted  solely from such  Indemnified
Person's gross negligence or willful misconduct.  NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE  OR LIABLE TO BORROWER  OR TO ANY OTHER  PARTY OR TO ANY  SUCCESSOR,
ASSIGNEE  OR THIRD  PARTY  BENEFICIARY  OR ANY  OTHER  PERSON  ASSERTING  CLAIMS
DERIVATIVELY   THROUGH  SUCH  PARTY,  FOR  INDIRECT,   PUNITIVE,   EXEMPLARY  OR
CONSEQUENTIAL  DAMAGES  WHICH MAY BE ALLEGED AS A RESULT OF CREDIT  HAVING  BEEN
EXTENDED,  SUSPENDED  OR  TERMINATED  UNDER  THIS  AGREEMENT  OR  ANY  ANCILLARY
AGREEMENT  OR AS A RESULT OF ANY OTHER  TRANSACTION  CONTEMPLATED  HEREUNDER  OR
THEREUNDER.

         26. Revival.  Borrower further agrees that to the extent Borrower makes
a payment or payments to Lender,  which  payment or payments or any part thereof
are subsequently  invalidated,  declared to be fraudulent or  preferential,  set
aside  and/or  required  to be repaid to a trustee,  receiver or any other party
under any bankruptcy act, state or federal law,  common law or equitable  cause,
then, to the extent of such payment or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.

         27. Notices.  Any notice or request  hereunder may be given to Borrower
or Lender at the  respective  addresses  set forth below or as may  hereafter be
specified in a notice designated as a change of address under this Section.  Any
notice or request  hereunder  shall be given by  registered  or certified  mail,
return receipt requested,  hand delivery,  overnight mail or telecopy (confirmed
by mail).  Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when  delivered to any officer of the party to whom it
is  addressed,  in

                                       34
<PAGE>

the case of those by mail or  overnight  mail,  deemed to have been  given  when
deposited in the mail or with the overnight mail carrier,  and, in the case of a
telecopy, when confirmed.

          Notices shall be provided as follows:

          If to Lender:             Equinox Business Credit Corp.
                                    120 Wood Avenue South, Suite 515
                                    Iselin, New Jersey 08830
                                    Attention:  Allen H. Vogel
                                    Telephone:  (732) 635-9800
                                    Telecopier:  (732) 635-1111

          with a copy to:           Loeb & Loeb LLP
                                    345 Park Avenue
                                    New York, New York 10154
                                    Attention:  Miriam L. Cohen, Esq.
                                    Telephone: (212) 407-4000
                                    Telecopier: (212) 407-4990

          If to Borrower:           Titan PCB East, Inc.
                                    2 Industrial Way
                                    Amesbury, Massachusetts 01913
                                    Attention:  Robert E. Ciri
                                    Telephone:  978-388-5740
                                    Telecopier:  978-388-3940

          With a copy to:           Mirick, O'Connell De Mallie & Lougee, LLP
                                    100 Front Street
                                    Worcester, Massachusetts 01608-1477
                                    Attention: Joseph H. Baldiga, Esq.
                                    Telephone: (508) 791-8500
                                    Telecopier: (508) 791-8502

         28.  Governing  Law,  Jurisdiction  and Waiver of Jury Trial.  (a) THIS
AGREEMENT  AND THE ANCILLARY  AGREEMENTS  SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW JERSEY  APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE.

              (b) BORROWER  HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS  LOCATED IN NEW  JERSEY  SHALL HAVE  EXCLUSIVE  JURISDICTION  TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER  PERTAINING TO THIS
AGREEMENT OR ANY OF THE ANCILLARY  AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS  AGREEMENT OR ANY OF THE ANCILLARY  AGREEMENTS;  PROVIDED,  THAT
LENDER AND BORROWER  ACKNOWLEDGE  THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW JERSEY;  AND FURTHER  PROVIDED,  THAT
NOTHING IN THIS  AGREEMENT  SHALL

                                       35
<PAGE>

BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER  JURISDICTION TO COLLECT THE OBLIGATIONS,  TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF LENDER. BORROWER EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH  JURISDICTION  IN ANY  ACTION OR SUIT  COMMENCED  IN ANY SUCH
COURT,  AND BORROWER  HEREBY WAIVES ANY  OBJECTION  WHICH IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION,  IMPROPER VENUE OR FORUM NON CONVENIENS. BORROWER
HEREBY  WAIVES  PERSONAL  SERVICE OF THE SUMMONS,  COMPLAINT  AND OTHER  PROCESS
ISSUED IN ANY SUCH  ACTION OR SUIT AND  AGREES  THAT  SERVICE  OF SUCH  SUMMONS,
COMPLAINT  AND  OTHER  PROCESS  MAY BE  MADE BY  REGISTERED  OR  CERTIFIED  MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 27 AND THAT SERVICE SO
MADE SHALL BE DEEMED  COMPLETED  UPON THE EARLIER OF BORROWER'S  ACTUAL  RECEIPT
THEREOF  OR THREE (3) DAYS  AFTER  DEPOSIT  IN THE U.S.  MAILS,  PROPER  POSTAGE
PREPAID.

              (c) THE PARTIES  DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION,  SUIT, OR  PROCEEDING  BROUGHT TO RESOLVE
ANY DISPUTE,  WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LENDER AND
BORROWER  ARISING  OUT  OF,  CONNECTED  WITH,   RELATED  OR  INCIDENTAL  TO  THE
RELATIONSHIP  ESTABLISHED  BETWEEN THEM IN CONNECTION WITH THIS  AGREEMENT,  ANY
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED THERETO.

         29. Limitation of Liability. Borrower acknowledges and understands that
in order to assure repayment of the Obligations hereunder Lender may be required
to exercise  any and all of Lender's  rights and remedies  hereunder  and agrees
that neither Lender nor any of Lender's agents shall be liable for acts taken or
omissions made in connection herewith or therewith except for actual bad faith.

         30. Entire  Understanding.  This Agreement and the Ancillary Agreements
contain the entire  understanding  between Borrower and Lender and any promises,
representations,  warranties or guarantees  not herein  contained  shall have no
force and effect unless in writing, signed by Borrower's and Lender's respective
officers.  Neither this Agreement, the Ancillary Agreements,  nor any portion or
provisions  thereof may be changed,  modified,  amended,  waived,  supplemented,
discharged,  cancelled or terminated  orally or by any course of dealing,  or in
any manner  other than by an  agreement  in  writing,  signed by the party to be
charged.

         31. Severability. Wherever possible each provision of this Agreement or
the Ancillary  Agreements shall be interpreted in such manner as to be effective
and valid under  applicable  law, but if any provision of this  Agreement or the
Ancillary Agreements shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
thereof.

                                       36
<PAGE>

         32. Captions. All captions are and shall be without substantive meaning
or content of any kind whatsoever.

         33. Counterparts; Telecopier Signatures. This Agreement may be executed
in one or more counterparts,  each of which shall constitute an original and all
of  which  taken  together  shall  constitute  one and the same  agreement.  Any
signature delivered by a party via telecopier transmission shall be deemed to be
any original signature hereto.

         34.  Construction.  The  parties  acknowledge  that each  party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any  ambiguities  are to be resolved  against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

         35.  Publicity.  Borrower hereby  authorizes Lender to make appropriate
announcements of the financial  arrangement entered into by and between Borrower
and Lender,  including,  without  limitation,  announcements  which are commonly
known as tombstones, in such publications and to such selected parties as Lender
shall in its sole and absolute discretion deem appropriate.

                           [Signature Page to Follow]

<PAGE>

         IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.

                                  TITAN PCB EAST, INC.

                                  By: /s/ Robert E. Ciri
                                      ----------------------------------------
                                      Name: Robert E. Ciri
                                      Title: President

                                  EQUINOX BUSINESS CREDIT CORP.

                                  By: /s/ Allen H Vogel
                                      ----------------------------------------
                                      Name: Allen H Vogel
                                      Title: President

                                       37
<PAGE>

                                    EXHIBITS

Exhibit 1(A) - Commercial  Tort Claims
Exhibit 1(B) - Permitted  Liens
Exhibit 7(c) - Actions for  Perfection
Exhibit  7(l) - Offset Risk
Exhibit 7(q) - Bank Accounts Exhibit 12(d)

Official Name

Type of Entity: Corporation

State of Incorporation or Organization: Delaware

Organization   Identification  Number  Issued  by  State  of  Incorporation  [Or
Statement that no such number has been issued]

Chief Executive Office     County/State  [be sure to include names of counties]
----------------------     ------------

Locations of Inventory and other Collateral County/State  [be sure to include
                                                           names of counties]

[other corporate names or trade names if any]

Exhibit 12(j) - Licenses, Patents, Trademarks and Copyrights

Exhibit 12(m) - Permitted Indebtedness; Existing Subsidiaries

<PAGE>

                                   Exhibit A

                           Borrowing Base Certificate

<PAGE>

                                   Exhibit B

                             Form of Promissory Note<PAGE>

                                                                   Exhibit 10.43

                                 PROMISSORY NOTE

$1,200,000                                                           May 9, 2003

         This  Promissory Note (this "Note") is executed and delivered under and
pursuant to the terms of that certain Loan and  Security  Agreement  dated as of
the date hereof (as amended,  modified,  supplemented  or restated  from time to
time,  the "Loan  Agreement")  by and between  Titan PCB East,  Inc., a Delaware
corporation   ("Borrower"),   and  Equinox  Business  Credit  Corp.  ("Lender").
Capitalized  terms not otherwise defined herein shall have the meanings ascribed
thereto in the Loan Agreement.

         FOR VALUE RECEIVED,  Borrower promises to pay to the order of Lender at
its offices  located at 120 Wood Avenue  South,  Suite 515,  Iselin,  New Jersey
08830, Attention: Allen H. Vogel or at such other place as the holder hereof may
from time to time designate to Borrower in writing:

         (i) the  principal  sum of ONE MILLION TWO HUNDRED  THOUSAND AND 00/100
DOLLARS  ($1,200,000),  or if different from such amount,  the unpaid  principal
balance  of Loans  as may be due and  owing  from  time to time  under  the Loan
Agreement,  payable in accordance  with the  provisions  of the Loan  Agreement,
subject to  acceleration  upon the  occurrence  of an Event of Default under the
Loan  Agreement,  or earlier  termination of the Loan Agreement  pursuant to the
terms thereof; and

         (ii)  interest on the  principal  amount of this Note from time to time
outstanding,  payable at the  applicable  Contract Rate in  accordance  with the
provisions of the Loan  Agreement.  Upon and after the occurrence of an Event of
Default, and during the continuation  thereof,  interest shall be payable at the
applicable Default Rate. In no event,  however,  shall interest hereunder exceed
the maximum interest rate permitted by law.

         This Note is the Note referred to in the Loan Agreement and is secured,
inter  alia,  by the  liens  granted  pursuant  to the  Loan  Agreement  and the
Ancillary Agreements,  is entitled to the benefits of the Loan Agreement and the
Ancillary  Agreements,  and is  subject  to all of  the  agreements,  terms  and
conditions therein contained.

         This Note may be voluntarily prepaid, in whole or in part, on the terms
and conditions set forth in the Loan Agreement.

         If an Event of Default under Section 18(k) of the Loan Agreement  shall
occur, then this Note shall immediately become due and payable,  without notice,
together with attorneys' fees if the collection hereof is placed in the hands of
an attorney to obtain or enforce payment  hereof.  If any other Event of Default
shall occur under the Loan Agreement or any of the Ancillary Agreements which is
not cured within any applicable grace period, then this Note may, as provided in
the Loan  Agreement,  be declared to be  immediately  due and  payable,  without
notice, together with attorneys' fees, if the collection hereof is placed in the
hands of an attorney to obtain or enforce payment hereof.

<PAGE>

         This Note shall be governed by and  construed  in  accordance  with the
laws of the State of New Jersey.

         To the fullest extent permitted by applicable law, Borrower waives: (a)
presentment, demand and protest, and notice of presentment,  dishonor, intent to
accelerate,  acceleration,  protest,  default,  nonpayment,  maturity,  release,
compromise,  settlement,  extension or renewal of any or all of the Obligations,
the Loan Agreement,  this Note or any other Ancillary Agreement;  (b) all rights
to notice and a hearing prior to Lender's taking possession or control of, or to
Lender's  replevy,  attachment  or levy  upon,  the  Collateral  or any  bond or
security  that  might be  required  by any  court  prior to  allowing  Lender to
exercise any of its remedies;  and (c) the benefit of all  valuation,  appraisal
and exemption laws.

         Borrower  acknowledges  that  this  Note  is  executed  as  part  of  a
commercial  transaction  and that the proceeds of this Note will not be used for
any personal or consumer purpose.

         Borrower agrees to pay to Lender all fees and expenses described in the
Loan Agreement and the Ancillary Agreements.

                                      TITAN PCB EAST, INC.

                                      By: /s/ Robert E. Ciri
                                          ----------------------------------
                                          Name: Robert E. Ciri
                                          Title: President

                                       2
<PAGE>

STATE OF Massachusets               )
         ---------------------------
                                    :  ss.:
COUNTY OF Woruster                  )
          --------------------------

         On the 20 day of May, 2003, before me personally came Robert E Ciri, to
me  known,  who  being by me duly  sworn,  did  depose  and say that s/he is the
President  of Titan PCB  East,  Inc.,  the  corporation  described  in and which
executed the foregoing instrument;  and that s/he was authorized to sign her/his
name thereto by order of the board of directors of said corporation.

                                          /s/ Glen Mair
                                          ------------------------------
                                          Notary Public

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