Document:

DATED DECEMBER 14, 1999

                                 CERPLEX LIMITED

                                       and

                            BURDALE FINANCIAL LIMITED

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

                               FACILITY AGREEMENT

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

<PAGE>

                                                    CONTENTS

<TABLE>
<CAPTION>

<S>   <C>                                                                                                    <C>

1.    INTERPRETATION..........................................................................................1
2.    CONDITIONS PRECEDENT...................................................................................14
3.    THE FACILITY...........................................................................................14
4.    RESTRICTIONS ON UTILISATIONS...........................................................................15
5.    UTILISATION OF FACILITIES..............................................................................18
6.    REPAYMENT AND PREPAYMENT...............................................................................22
7.    INTEREST AND COMMISSION................................................................................25
8.    RECEIVABLES, STOCK AND EQUIPMENT.......................................................................26
9.    COLLECTION OF RECEIVABLES..............................................................................33
10.   PAYMENTS AND TAXES.....................................................................................35
11.   INCREASED COSTS........................................................................................37
12.   ILLEGALITY AND MONETARY UNION..........................................................................38
13.   GENERAL REPRESENTATIONS AND WARRANTIES.................................................................39
14.   GENERAL UNDERTAKINGS...................................................................................42
15.   EVENTS OF DEFAULT......................................................................................50
16.   COSTS, EXPENSES AND FEES...............................................................................54
17.   INDEMNITIES............................................................................................56
18.   EVIDENCE OF INDEBTEDNESS...............................................................................58
19.   NOTICES................................................................................................58
20.   WAIVER, REMEDIES CUMULATIVE............................................................................59
21.   INVALIDITY.............................................................................................60
22.   ASSIGNMENT AND PARTICIPATION...........................................................................60
23.   GOVERNING LAW AND JURISDICTION.........................................................................60
24.   GOODS AND DOCUMENTS....................................................................................60
25.   DISCLOSURE OF INFORMATION..............................................................................61
26.   COUNTERPARTS...........................................................................................61
SCHEDULE 1...................................................................................................62
SCHEDULE 2...................................................................................................65
SCHEDULE 3...................................................................................................72

SIGNATORIES..................................................................................................75

</TABLE>

<PAGE>

THIS AGREEMENT is dated                                  1999

BETWEEN:

(1)      CERPLEX  LIMITED  (Registered  in England and Wales No.  2953372)  (the
         "COMPANY"); and

(2)      BURDALE FINANCIAL LIMITED (Registered in England and Wales No. 2656007)
         ("BURDALE").

IT IS AGREED:

1.       INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

         "ACCOUNT  DEBTOR"  means  a  debtor  of the  Company  in  respect  of a
         Receivable.

         "ACCOUNT  BANKS" means each bank at which a Charged Account is held and
         which has been given and has  acknowledged  all notices required by the
         Debenture.

         "ACTUAL DAY OF PAYMENT" in relation to a Purchased Receivable means the
         date on which full payment in respect of that  Purchased  Receivable is
         made into the Blocked  Account by the  relevant  Account  Debtor or the
         Company.

         "ARTICLES" means the Articles of Association of the Company as in force
         at the date of this Agreement.

         "AVAILABILITY  LIMITS"  means the  Receivables  Limit,  the Total Stock
         Availability,  the L/C Limit,  the Forex  Limit and each other limit on
         Utilisations specified in Clause 4.

         "AVAILABILITY  PERIOD" means the period from the opening of business in
         London on the date of this Agreement until:

         (a)  when designated  "PURCHASE" or  "REVOLVING",  close of business in
              London on the date falling five  Business  Days prior to the Final
              Repayment Date;

         (b)  when  designated  "TERM",  close of business in London on the date
              five Business Days from the date of this Agreement;

         or, in each case, such later date as Burdale may agree.

         "AVAILABILITY  RESERVES"  means  such amounts as Burdale may, acting in
         good  faith,  from  time to time  establish  and  revise  in  order  to
         reflect:

         (a)  any events, conditions, or circumstances having a Material Adverse
              Effect; and/or

<PAGE>

         (b)  Burdale's  good faith belief that any report as to  Collateral  or
              financial  information  provided by or on behalf of the Company to
              Burdale is or may have been  incomplete,  inaccurate or misleading
              in any material respect; and/or

         (c)  any  circumstances  which Burdale  determines,  in good faith,  to
              constitute an Event of Default; and/or

         (d)  the full amount of the liabilities at such time which have a right
              imposed  to  provide  for  payment  ranking  or capable of ranking
              senior to or pari passu with the liabilities of the Obligors under
              the Finance Documents under local,  national or supranational law,
              regulation or directive including,  but not limited, to claims for
              debts due to the Inland Revenue, Customs and Excise, contributions
              to social  security,  remuneration  of  employees  or pension fund
              obligations; and/or

         (e)  an Availability Reserve of (pound)600,000 which shall be from time
              to time  applied by Burdale  (and the Company  hereby  irrevocably
              authorises  Burdale to make such  application)  in or towards  all
              payments  due from  Burdale  to First  Union  Corporation  under a
              letter of credit or other  guarantee which is to be issued or made
              available by First Union  Corporation on application in writing by
              the Company to Burdale.

         "BLOCKED  ACCOUNT" means the Company's  account with Barclays Bank plc,
         PO Box 544, 54 Lombard  Street,  London EC3V 9EX,  sort code  20-00-00,
         account number 70066036 (as the same may be redesignated, renumbered or
         renamed  from  time to  time),  or such  other  account  as  previously
         approved by Burdale.

         "BUSINESS  DAY"  means  any day not  being a  Saturday,  Sunday or Bank
         holiday when banks are open for business in London.

         "CASH  REQUEST"  means a request  for  Burdale to pay to the Company an
         amount of unpaid Purchase Price and/or the proceeds of a Revolving Loan
         in substantially the form set out in Schedule 2 Part II.

         "CHARGED ACCOUNTS" means the Blocked Account and the Other Accounts.

         "COLLATERAL"  means any of the assets and  undertaking of the Corporate
         Obligors charged to Burdale pursuant to the Debenture.

         "COMMISSION RATE" means the aggregate of LIBOR and 2% per annum.

         "CONSOLIDATED  TANGIBLE NET WORTH"  means the  aggregate of the amounts
         paid-up or credited as paid-up on the  Company's  issued share  capital
         and the amount of the consolidated  capital and revenue reserves of the
         Borrower  and its  Subsidiaries  all as shown by the balance  sheet and
         profit and loss accounts of the Borrower and its Subsidiaries contained
         in the most recent accounts delivered pursuant to Clause 14(a)(ii), but
         after:

         (a)  deducting any debit balance on such  consolidated  profit and loss
              account;

<PAGE>

         (b)  deducting any amount shown in such  consolidated  balance sheet in
              respect of goodwill and other intangible assets;

         (c)  deducting such part of the share capital or reserves as is, in the
              opinion  of  Burdale  (acting  reasonably),  attributable  to  any
              writing up of book values of any fixed assets;

         (d)  deducting  all  amounts  attributable  to  minority  interests  in
              Subsidiaries;

         (e)  excluding  any sums set aside for taxation and  deducting,  if not
              otherwise taken into account, an estimate (satisfactory to Burdale
              acting  reasonably) of the tax liability  which would arise on the
              sale of the immovable property of the Company and its Subsidiaries
              at its value as shown in such consolidated balance sheet;

         (f)  deducting any amounts  distributed  or proposed to be  distributed
              (other than to the Company or another  Subsidiary)  out of profits
              accrued  prior to the date of such  consolidated  balance sheet to
              the extent that such distribution is not provided for therein; and

         (g)  making such  adjustments  as may be  appropriate in the opinion of
              Burdale  (acting  reasonably)  to reflect any material  variations
              which  shall  have  occurred  since the date of such  consolidated
              balance sheet.

         "CORPORATE OBLIGOR" means each Obligor which is not a natural person.

         "DAILY RATE" means (pound)500 per person per day.

         "DEBENTURE"  means the  debenture  executed  or to be  executed  by the
         Company in favour of Burdale.

         "DEFAULT"  means any Event of  Default  and any  event  which  with the
         giving  of  notice  and/or  lapse of time  and/or  as a  result  of any
         Utilisation  and/or  determination of materiality  and/or fulfilment of
         any condition (or any  combination  of the foregoing) may constitute an
         Event of Default.

         "DEFAULT RATE" means the rate  determined by Burdale to be 3% above the
         Interest Rate from time to time.

         "DILUTION  RATE" means the average  monthly  value of credit  notes and
         non-cash  credits  issued by the Company as a percentage of the average
         monthly value of sales.

         "DOCUMENTS"  means any and all documents  which  represent or relate to
         any Goods and/or the carriage of and/or  possession of and/or ownership
         of and/or title to and/or insurance of and/or warehousing of and/or any
         other dealing in or with any Goods.

         "DOUBLE TAXATION TREATY" means any convention between the government of
         the United Kingdom and any other government for the avoidance of double
         taxation and the  prevention of fiscal evasion with respect to taxes on
         income and capital gains.

<PAGE>

         "ELIGIBLE  FINISHED  GOODS"  means  any  Finished  Goods  which are not
         Ineligible Stock.

         "ELIGIBLE RAW STOCK" means all Raw Stock which is not Ineligible Stock.

         "ELIGIBLE RECEIVABLES" means, at any time, any Receivables at such time
         which are  evidenced  by an  invoice  rendered  by the  Company  to the
         relevant Account Debtors and which are not Ineligible Receivables.

         "ELIGIBLE STOCK" means Eligible Finished Goods and Eligible Raw Stock.

         "END DATE" in  relation  to an L/C means the earlier of the expiry date
         of such L/C and the date on which the L/C is drawn in full.

         "ENCUMBRANCE"   means  any   mortgage   or  deed  of   trust,   pledge,
         hypothecation,  assignment, deposit arrangements,  lien, charge, claim,
         security interest,  easement or encumbrance or preference,  priority or
         other  security  agreement or  preferential  arrangement of any kind or
         nature whatsoever (including, without limitation, any agreement to sell
         or otherwise  dispose of any assets on terms whereby any such asset may
         be leased to or  reacquired  or  acquired  by any  Obligor or any title
         retention  agreement having  substantially  the same economic effect as
         any of the foregoing).

         "EQUIPMENT"  means all the  Company's  present  and  future  equipment,
         machinery,  computers and computer hardware and software (whether owned
         or  licensed),   vehicles,   tools,  furniture  and  fixtures  and  all
         attachments, accessories and property now or in future relating to them
         or used in connection with them and replacements and  substitutions for
         them wherever located.

         "EVENT OF DEFAULT" means any of the events specified in Clause 15.1.

         "EXCHANGE RATE" means the prevailing spot rate of exchange of such bank
         as Burdale may select for the  purpose,  at or around 11.00 a.m. on the
         date on which any  conversion  of  currency  is to be made  under  this
         Agreement.

         "FACILITIES" means the Property Loan Facility,  the Receivables Finance
         Facility and the Revolving Credit Facility.

         "FACILITY LIMIT" means (pound)4,000,000.

         "FINAL REPAYMENT DATE" means 28 February 2001.

         "FINANCE DOCUMENTS" means this Agreement,  the Debenture, the Guarantee
         and/or all other  agreements,  documents  and  instruments  at any time
         executed  and/or  delivered  by any  Obligor or the  Guarantor  (each a
         "FINANCE DOCUMENT").

         "FINANCIAL INDEBTEDNESS" includes:

         (a)  indebtedness  in respect of money borrowed or raised in any manner
              or extended under any facility;

<PAGE>

         (b)  any liability in respect of  instalments  under  conditional  sale
              agreements  or in  respect  of  the  deferred  purchase  price  of
              property  or  services  in respect of which such person is liable,
              contingently or otherwise, as obligor or otherwise;

         (c)  contingent   or   actual   reimbursement   and   counter-indemnity
              obligations   with  respect  to  letters  of  credit  and  similar
              instruments;

         (d)  obligations  under  leases  which  have  been  or  should  be,  in
              accordance with accounting  principles  generally  accepted in the
              United Kingdom, recorded as capital leases;

         (e)  any  liability  under  any  debenture,   bond,  note,  loan  stock
              commercial  paper or other  similar  debt  security  or under  any
              acceptance credit or note purchase facility;

         (f)  any net liability  under any agreement  relating to an interest or
              currency swap, or any other hedging or derivative agreement taking
              into account any permitted netting of obligations;

         (g)  obligations  and  liabilities  of others at any time secured by an
              Encumbrance over any property or asset of such person;

         (h)  liabilities under arrangements  entered into primarily as a method
              of raising  finance  but not shown as a  borrowing  on any balance
              sheet by reason of being contingent, conditional or otherwise; and

         (i)  (without  double  counting)  any  guarantee,  indemnity or similar
              assurance  against  financial loss in respect of the obligation of
              any person in respect of any  Financial  Indebtedness  of the kind
              described in paragraphs (a) to (h) above.

         "FINISHED  GOODS" means, at any time, any finished goods of the Company
         at such time which are  located in England and Wales (or  elsewhere  as
         Burdale may, in its sole discretion, specify to the Company).

         "FINISHED GOODS  AVAILABILITY"  means the Finished Goods  Percentage of
         the Net  Stock  Value  of  Eligible  Finished  Goods  as at the date of
         calculation.

         "FINISHED GOODS PERCENTAGE" means 0%.

         "FOREIGN  CURRENCY"  means any currency  other than  Sterling  which is
         freely available and transferable.

         "FOREX EXPOSURE" in relation to any unmatured Forex  Transaction  means
         the Forex Percentage of such transaction.

         "FOREX LIMIT" means (pound)nil.

         "FOREX PERCENTAGE" means:

<PAGE>

         (a) 10% in relation to Euro and United States Dollars; and

         (b) 20% in relation to all other currencies,

         or in each case,  such higher  percentage  determined by Burdale having
         regard  to  the  nature  of  the  currencies   involved  in  any  Forex
         Transaction.

         "FOREX  REQUEST"  means a request for a  Utilisation  of the  Revolving
         Credit  Facility  for  the  sale  or  purchase  of a  Foreign  Currency
         substantially in the form set out in Schedule 2 Part IV.

         "FOREX  TRANSACTION" means a foreign exchange  transaction entered into
         as a Utilisation of the Revolving Credit Facility.

         "GAAP" means accounting  principles,  standards and practices generally
         accepted in the United Kingdom as in effect from time to time.

         "GOODS" means all produce and goods which are the subject of a purchase
         by the Company and in respect of which any L/C has been issued.

         "GUARANTEE"  means the  guarantee  executed  or to be  executed  by the
         Guarantor  in favour  Burdale with  respect to the  obligations  of the
         Company to Burdale.

         "GUARANTOR" means The Cerplex Group, Inc., a company incorporated under
         the laws of Delaware, U.S.A.

         "ICTA" means the Income and Corporation Taxes Act 1988.

         "INELIGIBLE RECEIVABLES" means any Receivable:

         (a)  which  does not  arise  from the  actual  and bona  fide  sale and
              delivery of goods by the Company or  rendering  of services by the
              Company in the ordinary course of its business which  transactions
              are  completed  in  accordance   with  the  terms  and  provisions
              contained in any documents relating to such transactions;

         (b)  which  remains  fully or partly  unpaid after its Maturity Date or
              such longer period as may be agreed by Burdale;

         (c)  owing by a single Account Debtor if Receivables  representing  50%
              or more of the aggregate  balance owing by such Account  Debtor to
              the  Company  are  not  Eligible  Receivables  by  reason  of  the
              operation of paragraph (b) above;

         (d)  with respect to which the Account  Debtor is a director,  officer,
              employee, Subsidiary or affiliate of the Company;

         (e)  with  respect to which the  Account  Debtor has or has  asserted a
              counterclaim  or has a right of set  off,  to the  extent  of such
              counterclaim or set off;

         (f)  with  respect to which  Burdale  does not have a valid,  equitable
              assignment under the Finance Documents;

<PAGE>

         (g)  as to which  performance  has not been completed by the Company or
              as to which  all  goods  and  services  in  connection  with  such
              Receivable have not been delivered to or performed for the Account
              Debtor or which has not been invoiced or is not fully assignable;

         (h)  with  respect to which the  Account  Debtor is the  subject of any
              bankruptcy or insolvency  proceeding  in any  jurisdiction  or has
              made an  assignment  for the benefit of  creditors or whose assets
              have been conveyed to a receiver, administrator,  trustee or other
              insolvency official;

         (i)  with respect to which the Account  Debtor's  obligation to pay the
              Receivable is conditional upon the Account Debtor's approval or is
              otherwise subject to any repurchase obligation or right of return,
              as  with  sales  made  on  a   bill-and-hold,   guaranteed   sale,
              sale-and-return,   sale  on  approval   (except  with  respect  to
              Receivables in connection  with which Account Debtors are entitled
              to return  goods on the basis of the  quality  of those  goods) or
              consignment basis;

         (j)  with respect to which any of the  representations  and  warranties
              contained in Clause 8.4 proves to be incorrect in any respect;

         (k)  owed by an Account  Debtor  incorporated  or resident  outside the
              United  Kingdom,  unless such  Receivable  is subject to valid and
              enforceable  credit  insurance  payable  to  Burdale  issued by an
              insurer  on  terms  and in an  amount  acceptable  to  Burdale  as
              determined  by it in good faith and the aggregate  invoice  values
              owed by that relevant Account Debtor are within the insured limit;

         (l)  owed by an Account Debtor whose total indebtedness to the Company,
              as  determined  by the Company in good  faith,  exceeds any credit
              limit  set by  Burdale  from  time to time  with  respect  to that
              Account Debtor to the extent such Receivable  breaches that credit
              limit  provided  that any  reduction  in the credit  limit as to a
              particular  Account Debtor will not cause any Receivables owing by
              that  Account  Debtor  as of the  date  of such  reduction  not to
              qualify as Eligible Receivables;

         (m)  where there are  proceedings  or actions  which are  threatened or
              pending  against the Account Debtors with respect to such Accounts
              which  would  result in any  material  adverse  change in any such
              Account Debtor's financial condition;

         (n)  where there are facts,  events or  occurrences  which would impair
              the validity,  enforceability or collectability of that Receivable
              or of  reducing  the amount  payable or  delaying  payment of that
              Receivable.

         "INELIGIBLE  STOCK"  means,  at any time,  in relation to  respectively
         Finished Goods or Raw Stock, any Finished Goods or Raw Stock which:

<PAGE>

         (a)  are obsolete,  slow-moving, not in good condition or not currently
              usable  or  saleable  in the  ordinary  course  of  the  Company's
              business;

         (b)  are  held  at  third  party  premises  but  not  held  subject  to
              Warehouseman Association standard agreement;

         (c)  constitute  materials  over  which  Burdale  does not have a valid
              first ranking fixed or floating charge under the Debenture;

         (d)  constitute  Finished Goods, raw materials or unfinished goods with
              respect  to  which  any of the  warranties  in this  Agreement  in
              relation to Stock proves to be incorrect in any material respect;

         (e)  constitute   consumables   used  in  the  Company's   business  or
              constitutes packaging or shipping materials;

         (f)  constitute returned, damaged or defective materials;

         (g)  are held by the Company as consignee for a third party;

         (h)  are not the  property  of the  Company by virtue of  retention  of
              title or Romalpa provisions in favour of any person;

         (i)  are  spare  parts,   scrap  or  only  semi-finished  or  otherwise
              constitutes work-in-progress;

         (j)  are in transit  outside the Property or such other  property as is
              owned and controlled by the Company or any other Corporate Obligor
              except in cases where they are (i) in transit by the Company or by
              a courier on its behalf from one Property to another  Property and
              the aggregate  value of such Finished Goods or such Raw Stock does
              not at any time exceed the sum  of(pound)10,000 or (ii) in transit
              to the Company and Burdale has in its  possession all originals of
              the bills of lading or other  documents  of title with  respect to
              such  Finished  Goods or such Raw Stock and has  received all such
              agreements  as Burdale  requires in order to perfect first ranking
              fixed or  floating  security  in such  Finished  Goods or such Raw
              Stock and to obtain  possession of such Finished Goods or such Raw
              Stock from any third party having possession of the same; or

         (k)  are  determined in good faith by Burdale as being  unsuitable  for
              forming the basis of a lending  decision as a result of any change
              in  or  introduction  of  or  change  in  the   interpretation  or
              application of any law,  regulation,  treaty or official directive
              or official request having the force of law.

         "INITIAL  VALUATION"  means the  Valuation  of the  Mortgaged  Property
         carried out by a valuer appointed by Burdale prior to today's date.

         "INTEREST ADVANCE" is defined in Clause 10.2(f).

         "INTEREST RATE" means the aggregate of LIBOR and 2.5% per annum.

<PAGE>

         "L/CS"  means  letters  of  credit,   merchandise   purchase  or  other
         guarantees  which are from time to time  either (a) issued or opened by
         Burdale  for the  account of the  Company or (b) with  respect to which
         Burdale has agreed to indemnify  the issuer or guaranteed to the issuer
         the performance by the Company of its obligations to such issuer.

         "L/C EXPOSURE" in relation to any L/C means:

         (a)   if the  proposed  L/C is by way of a letter of credit and for the
               purpose of purchasing Eligible Stock:

         (i)   the face amount of the L/C; LESS

         (ii)  the  Raw  Stock  Percentage  or  the  Finished  Goods  Percentage
               (depending  on the  nature of the  goods)  TIMES the cost of such
               Eligible Stock for which such L/C was drawn; PLUS

         (iii) freight,  taxes,  duty and other amounts which Burdale  estimates
               must be paid in  connection  with such Stock upon arrival and for
               delivery to one of the  Company's  locations  for Eligible  Stock
               within the United Kingdom; and

         (b)   if the proposed  L/C is for any other  purpose an amount equal to
               100% of the face amount of such L/C and all other commitments and
               obligations made or incurred by Burdale with respect to such L/C.

         "L/C  LIMIT" means (pound)nil.

         "L/C REQUEST" means a request for a Utilisation of the Revolving Credit
         Facility  by way of the issue of an L/C in  substantially  the form set
         out in Schedule 2 Part III.

         "LIBOR" means:

         (a)   the thirty day LIBOR  sterling rate quoted on the first  Business
               Day of each  month in the  Financial  Times,  London  edition  as
               conclusively determined by Burdale; or

         (b)   (if for any reason the Financial Times,  London edition ceases or
               fails to quote such a rate) Burdale's cost of funds from whatever
               source it may reasonably request.

         "LOAN" means:

         (a)   when designated "PROPERTY", the principal amount of the borrowing
               under this  Agreement  from the Property Loan Facility as reduced
               by repayment or prepayment from time to time;

         (b)   when  designated  "REVOLVING",   the  principal  amount  of  each
               borrowing under this Agreement from the Revolving Credit Facility
               (including  all deemed  drawings of Revolving  Loans  pursuant to
               Clause 5.6) as reduced by  repayment or  prepayment  from time to
               time; and

<PAGE>

         (c)   without any such  designation,  the Property  Loan or a Revolving
               Loan as the context  requires,  and  "LOANS"  without any further
               designation  means some or all of the  Property  Loan  and/or the
               Revolving Loans as the context requires.

         "MATERIAL ADVERSE EFFECT" means an effect that results in or causes, or
         has a reasonable  likelihood  of  resulting  in or causing,  a material
         adverse change in any of:

         (a)   the  business,  performance,  operations  or  properties  of  the
               Corporate  Obligors  taken  either  individually  or as a  whole;
               and/or

         (b)   the legality, validity or enforceability of any Finance Document;
               and/or

         (c)   the perfection or priority of the Encumbrances granted to Burdale
               under the Finance Documents; and/or

         (d)   the ability of any Obligor to perform its respective  obligations
               under any of the Finance Documents; and/or

         (e)   the rights and remedies of Burdale under any Finance Document.

         "MATURITY  DATE" means in respect of any  Receivable  the  Business Day
        which is, or  immediately  succeeds the earlier of (i) the date which is
        60 past the due date for  payment  of the  Receivable  and (ii) the date
        which  is 90 days  after  the date of the  invoice  in  respect  of such
        Receivable.

         "MORTGAGED  PROPERTY"  means  any  Property  which is from time to time
        charged in favour of Burdale by way of a first legal mortgage.

         "NET STOCK  VALUE"  means the net value of Stock as  determined  by the
        Company in accordance  with its customary  practices and  procedures (as
        disclosed to Burdale prior to the date of this Agreement and as the same
        may be varied  from time to time with  Burdale's  written  consent)  and
        advised to Burdale from time to time.

         "OBLIGOR"  means the  Company  and any  other  person  (other  than the
        Guarantor)  who  guarantees  and/or  grants  security  for  any  of  the
        Company's indebtedness or other obligations to Burdale at any time.

         "OTHER  ACCOUNTS"  means the bank  accounts of the  Corporate  Obligors
        specified  as Other  Accounts  in the  Debenture  and/or such other bank
        accounts of the  Corporate  Obligors  with Account  Banks as Burdale may
        permit.

         "OUTSTANDING  PURCHASE  PRICE" means the aggregate from time to time of
        the  Purchase  Prices of  Eligible  Receivables  paid to the  Company in
        respect of which  Burdale has not  received  payment  from the  relevant
        Account Debtor or the Company.

         "PAYMENT ACCOUNT" means such account in the name of Burdale,  as may be
        notified to the Company by Burdale from time to time.

<PAGE>

         "PROPERTY" means the Corporate Obligors' freehold, leasehold and rented
        premises  and land  from  time to  time,  wherever  situated  and in any
        jurisdiction.

         "PROPERTY LOAN FACILITY" is defined in Clause 3.1.

         "PURCHASE COMMISSION" is defined in Clause 7.4.

         "PURCHASE DATE" in relation to a Purchased Receivable means the date of
        delivery  of a Purchase  Request  by the  Company  with  respect to such
        Purchased Receivable.

         "PURCHASE  PRICE"  means the  purchase  price to be paid by Burdale for
        Purchased  Receivables  being  80% of the face  value  of each  Eligible
        Receivable to be purchased under the Receivables  Finance  Facility less
        maximum  discounts,  credits and  allowances  of any nature which may be
        taken by or granted to any Account  Debtor or other person in connection
        with  such  Eligible   Receivable  (all  as  determined  by  Burdale  in
        accordance with Clause 5.1(c)).

         "PURCHASE REQUEST" means a Request for a Utilisation of the Receivables
        Finance Facility in substantially the form set out in Schedule 2 Part I.

         "PURCHASED  RECEIVABLE"  means a  Receivable  purchased or agreed to be
        purchased  by Burdale from the Company in  accordance  with the terms of
        this Agreement as evidenced by an invoice rendered by the Company to the
        relevant Account Debtor.

         "QUALIFYING LENDER" means:

         (a)   a bank as defined in Section 840 of ICTA which,  for the purposes
               of Section  349 of ICTA,  is within the charge to United  Kingdom
               corporation tax as regards any interest  received by it under the
               Finance  Documents,  but if that  section is amended or  repealed
               Burdale shall have power after consultation with the Company,  to
               amend this paragraph of this  definition in such manner as it may
               reasonably  determine to ensure that the new definition achieves,
               to  the  extent  possible,  the  same  purposes  as  the  current
               definition  (which amendments shall be binding on Burdale and the
               Company); or

         (b)   a bank,  financial  institution or other lender which is entitled
               to the benefit of a provision in a Double  Taxation Treaty giving
               exemption from United Kingdom taxation on interest which does not
               carry on  business  in the  United  Kingdom  through a  permanent
               establishment  with  which the  indebtedness  under  the  Finance
               Document in respect of which the interest is paid is  effectively
               connected.

         "RAW STOCK" means at any time any raw  materials of the Company at such
         time which are  located in England and Wales (or  elsewhere  as Burdale
         may, in its sole discretion, specify to the Company).

         "RAW  STOCK  AVAILABILITY"  means the Raw Stock  Percentage  of the Net
         Stock Value of Eligible Raw Stock as at the date of calculation.

<PAGE>

         "RAW STOCK PERCENTAGE" means 0%.

         "RECEIVABLE"  means,  at any time,  the  aggregate  present  and future
         obligations  of an Account  Debtor of the  Company  for the  payment of
         money to the Company at such time together  with all connected  rights,
         claims, deposits and payments.

         "RECEIVABLES FINANCE FACILITY" is defined in Clause 3.1.

         "RECEIVABLES  INFORMATION" means the information  regarding Receivables
         provided to Burdale pursuant to Clause 8.

         "RECEIVABLES LIMIT" means (pound)2,000,000.

         "RECEIVER" is defined in the Debenture.

         "REQUEST"  means a  request  substantially  in the  form set out in the
         relevant Part of Schedule 2 for a Utilisation of one of the Facilities.

         "REQUIRED DEDUCTION" is defined in Clause 10.2(f).

         "REVOLVING CREDIT FACILITY" is defined in Clause 3.1.

         "REVOLVING CREDIT LIMIT" means (pound)nil.

         "STERLING" and "(pound)"  means the lawful  currency for the time being
         of the United Kingdom.

         "STOCK" means the Company's stock and inventory at any time which,  for
         the avoidance of doubt,  includes Eligible Stock and any other finished
         goods, raw materials or unfinished goods.

         "SUBSIDIARY"  has the meaning  given to that term by Section 736 of the
         Companies Act 1985 and includes a "Subsidiary  Undertaking"  as defined
         in Section 258 of the Companies Act 1985 (inserted by Section 21 of the
         Companies Act 1989).

         "TAXES" includes all present and future income and other taxes, levies,
         assessments,  deductions,  charges and  withholdings of whatever nature
         together  with  interest,  additions  to tax,  penalties  and  fines in
         relation  to such  items  and "TAX" and  "TAXATION"  will be  construed
         accordingly.

         "TOTAL  STOCK  AVAILABILITY"  means  at  any  time  the  lesser  of (i)
         (pound)nil and (ii) the Raw Stock  Availability plus the Finished Goods
         Availability at such time.

         "UTILISATION"  means a utilisation  of a Facility  under this Agreement
         (with the  delivery  of a Purchase  Request and the payment of Purchase
         Price by  Burdale  pursuant  to a Cash  Request  constituting  separate
         Utilisations of the Receivables Finance Facility).

         "UTILISATION DATE" in relation to a Utilisation means the date on which
         such  Utilisation is made (being in relation to any  Utilisation of the
         Receivables  Finance  Facility,  both the

<PAGE>

         Purchase  Date and the date on which any payment of  Purchase  Price is
         made to the Company pursuant to a Cash Request).

         "VALUATION" means a valuation of the Mortgaged Property  (including the
         Initial  Valuation) carried out by a valuer appointed by Burdale on the
         basis of estimated restricted  realisation value as defined in the then
         current  Statements of Asset  Valuation and Practice and Guidance Notes
         issued by the Royal Institution of Chartered Surveyors.

         "VAT"  means  Value  Added Tax  imposed in the United  Kingdom  and any
         equivalent tax applicable in any European jurisdiction.

1.2      CONSTRUCTION

         (a)   In this  Agreement,  unless the  contrary  intention  appears,  a
               reference to:

               (i)    "ASSETS" includes properties, revenues and rights of every
                      description, both present and future;

               (ii)   an  "AUTHORISATION"  or a "CONSENT"  includes an approval,
                      authorisation,   consent,   exemption,   filing,  licence,
                      registration and resolution, in each case given or made in
                      writing;

               (iii)  financial  statements  or accounts  includes  the notes to
                      such statements or accounts;

               (iv)   a "MONTH" means a calendar month starting on any day;

               (v)    a   "REGULATION"   includes  any   directive,   guideline,
                      regulation,  request  or rule  (whether  or not having the
                      force of law) of any governmental agency, body, department
                      or other regulatory or self-regulatory authority;

               (vi)   an   enactment   (be  it  express  or  implied)   includes
                      references   to  any   amendment,   re-enactment,   and/or
                      legislation  subordinate  to  that  enactment  and/or  any
                      permission of whatever kind given under that enactment;

               (vii)  a Finance  Document or other  document  is a reference  to
                      that  Finance  Document  or  other  document  as  amended,
                      novated, supplemented or replaced (in whole or in part);

               (viii) a "PERSON" includes any individual,  company, corporation,
                      partnership,    firm,    joint    venture,    association,
                      organisation,  trust,  state or state agency (in each case
                      whether or not having separate legal personality);

               (ix)   any party or person  includes  any person  deriving  title
                      from it and any successor, transferee and assignee;

               (x)    a time of day is a reference to London time; and

               (xi)   Clauses and  Schedules are to the clauses of and schedules
                      to this Agreement.

<PAGE>

         (b)   Unless the contrary  intention  appears, a term used in any other
               Finance  Document  or in  any  notice  relating  to  any  Finance
               Document has the same meaning in that Finance  Document or notice
               as in this Agreement.

         (c)   The headings in this Agreement do not affect its interpretation.

         (d)   Save where the context requires otherwise,  words in the singular
               shall import the plural and vice-versa.

2.       CONDITIONS PRECEDENT

2.1      DOCUMENTARY CONDITIONS

         (a)   Subject to Clause (b) below,  the  obligations  of Burdale to the
               Company  under  this  Agreement  are  subject  to  the  condition
               precedent  that Burdale  shall have received all of the documents
               and  evidence  specified  in  Schedule 1 in a form and  substance
               satisfactory to it.

         (b)   The obligations of Burdale to the Company under the Property Loan
               Facility  are subject to the  further  condition  precedent  that
               Burdale  shall have  received all of the  documents  and evidence
               specified  in  Schedule  1  Part  II  in  a  form  and  substance
               satisfactory to it.

2.2      FURTHER CONDITIONS

         The obligations of Burdale in respect of any Utilisation are subject to
         the further conditions  precedent that both on the date of the relevant
         Request and the proposed Utilisation Date:

         (a)   the representations and warranties set out in Clauses 8 and 13 to
               be repeated on such dates are true and correct; and

         (b)   no Default has occurred and remains  outstanding  or would result
               from the making of such Utilisation.

3.       THE FACILITY

3.1      AVAILABLE FACILITIES

         Subject  to  the  terms  of  this  Agreement  and  in  reliance  on the
         representations  and  warranties  set out in Clauses 8 and 13,  Burdale
         agrees to make available to the Company the following facilities:

         (a)   a  Receivables  Finance  Facility  pursuant to which Burdale will
               from  time  to  time  during  the  Purchase  Availability  Period
               purchase  Receivables from the Company (the "RECEIVABLES  FINANCE
               FACILITY");

<PAGE>

         (b)   a revolving credit facility pursuant to which Burdale will during
               the Revolving Availability Period (i) make Revolving Loans to the
               Company up to the Total Stock Availability (ii) issue, or procure
               the issue of,  L/Cs for the  account of the Company and (iii) buy
               or sell  Foreign  Currency  spot and/or for  delivery at a future
               date  on   behalf  of  the   Company   (the   "REVOLVING   CREDIT
               FACILITY");and

         (c)   a term loan facility pursuant to which Burdale will make a single
               Property Loan denominated in Sterling to the Company of up to the
               lesser of 75% of the Initial Valuation of the Mortgaged  Property
               and  (pound)2,200,000  during the Term  Availability  Period (the
               "PROPERTY LOAN FACILITY").

3.2      PURPOSE

         The Company  will use the  Facilities  only for its general  operating,
         U.K. working capital and other proper corporate  purposes and always in
         a manner which is not inconsistent with the Finance Documents.  Without
         affecting  the  obligations  of the Company in any way,  Burdale is not
         obliged to monitor or verify the application of the Facilities.

4.       RESTRICTIONS ON UTILISATIONS

4.1      TERM LOAN

         The  Property  Loan  Facility  must be drawn down in full in one amount
         prior to the expiry of the Term Availability Period.

4.2      REVOLVING LOANS

         No Cash Request may be delivered  which would  involve the drawing of a
         Revolving  Loan  unless  at  the  time  of  delivery   either  (a)  the
         Receivables  Finance  Facility is or would be following the delivery of
         such Cash Request being utilised up to the Receivables Limit or (b) the
         Company  has no  Receivables  with  which to  utilise  the  Receivables
         Finance Facility.

4.3      LETTERS OF CREDIT

         No Request  may be  delivered  for an L/C to be issued  pursuant to the
         Revolving  Credit  Facility  unless  and until the form of L/C has been
         approved by Burdale,  the relevant issuer and the proposed  beneficiary
         of such L/C.

4.4      OVERALL LIMIT

         The aggregate amount of:

         (a) the Property Loan;

         (b) all Revolving Loans;

         (c) Outstanding Purchase Price;

<PAGE>

         (d) all L/C Exposures; and

         (e) all Forex Exposures,

         shall not at any time exceed the Facility Limit.

4.5      SPECIFIC LIMITS

         (a)   RECEIVABLES  FINANCE  FACILITY:  The  Outstanding  Purchase Price
               shall not at any time exceed the Receivables Limit.

         (b)   REVOLVING CREDIT FACILITY: The aggregate amount of:

               (i)   all Revolving Loans;

               (ii)  all L/C Exposures; and

               (iii) all Forex Exposures,

               shall not at any time exceed the Total Stock Availability at such
               time.

         (c)   L/C UTILISATIONS: The aggregate amount of all L/C Exposures shall
               not at any time exceed the L/C Limit.

         (d)   FOREIGN EXCHANGE UTILISATIONS:  The aggregate amount of all Forex
               Exposures shall not at any time exceed the Forex Limit.

         (e)   AVAILABILITY: The aggregate amount of:

               (i)    Outstanding Purchase Price;

               (ii)   all Revolving Loans;

               (iii)  all L/C Exposures; and

               (iv)   all Forex Exposures,

               shall not at any time exceed the sum of:

                      (1)   80% of the face  value of the  Eligible  Receivables
                            less maximum  discounts,  credits and  allowances of
                            any  nature  which may be taken by or granted to any
                            Account  Debtor  or any other  person in  connection
                            with the Eligible Receivables; PLUS

                      (2)   the Total Stock Availability; LESS

                      (3)   the amount of Availability  Reserves  established by
                            Burdale,

                      at such time.

<PAGE>

4.6      PROHIBITION

         No  Utilisation  may be made  by the  Company  which  would  cause  the
         provisions of this Clause 4 to be breached.

4.7      AVAILABILITY LIMITS

         Burdale will compute the  Availability  Limits from time to time and at
         such intervals as it may, at its sole discretion, choose and will, upon
         being  requested  by the Company in writing,  inform the Company of any
         change in any  Availability  Limit and the reason for any such  change.
         For the avoidance of doubt,  Burdale may, in its discretion,  from time
         to time, upon not less than five days prior notice to the Company:

         (a)   reduce the Purchase  Price to the extent that Burdale  determines
               in good faith that the Dilution Rate has increased;

         (b)   reduce the Total Stock  Availability  (or any component of it) to
               the extent that Burdale determines that:

               (i)    the  number of days of the  turnover  of the Stock for any
                      period has changed in any material respect; or

               (ii)   the  liquidation  value  of  the  Eligible  Stock,  or any
                      category of Eligible Stock, has decreased; or

               (iii)  the nature and quality of the Stock has deteriorated; and

         (c)   adjust any Availability Limit to take account of:

               (i)    seasonality  with  respect to Stock and patterns of sales;
                      or

               (ii)   any  reduction  in the Facility  Limit  pursuant to Clause
                      6.7.

         Any determination by Burdale of an Availability  Limit at any time will
         (save in the case of manifest  error) be conclusive  and binding on the
         Company  but  any  such  determination  may at any  time  at  Burdale's
         discretion  (upon Burdale giving written notice  simultaneously  to the
         Company)  be  amended,  qualified  or  superseded  by  a  further  such
         determination.

4.8      BURDALE'S RIGHTS NOT AFFECTED

         In the event that the aggregate amount of Loans,  Outstanding  Purchase
         Price,  L/C  Exposures  and/or  Forex  Exposures  exceeds  the  amounts
         available  under  the  lending  formulas,   the  relevant  Availability
         Limit(s) or the Facility  Limit,  as  applicable,  such event shall not
         limit,  waive  or  otherwise  affect  any  rights  or  Burdale  in that
         circumstance  or on any future  occasions and the Company  shall,  upon
         demand by Burdale,  which may be made at any time or from time to time,
         immediately  repay to Burdale the entire

<PAGE>

         amount of any such  excess(es)  for which  payment is demanded and such
         amount shall be applied by Burdale so as to reduce such excess(es).

4.9      COMPANY'S LOAN ACCOUNT(S)

         Burdale will maintain one or more loan  accounts,  receivable  accounts
         and  foreign  exchange  accounts on its books in which will be recorded
         (a) all Loans,  all Utilisations of the Receivables  Finance  Facility,
         all Utilisations of the Revolving Credit Facility and other liabilities
         of the Company  pursuant to the  Finance  Documents  and details of the
         Collateral,  (b) all  payments  made by or on behalf of the Company and
         (c) all other  appropriate  debits  and  credits  as  provided  in this
         Agreement,   including,   without  limitation,  fees,  charges,  costs,
         expenses and interest.  All entries in such account(s) shall be made in
         accordance with Burdale's customary practices as in effect from time to
         time.

4.10     STATEMENTS

         Burdale will render to the Company each month a statement setting forth
         the balance in the  Company's  loan account,  receivables  accounts and
         foreign  exchange  accounts  maintained  by  Burdale  for  the  Company
         pursuant to the  provisions  of this  Agreement,  including  principal,
         commission, interest, fees, costs and expenses. Each such statement may
         be subject  to  subsequent  adjustment  by  Burdale  but shall,  in the
         absence of manifest error or omission, be considered correct and deemed
         accepted  by the  Company  and will be  conclusively  binding  upon the
         Company as an account stated except to the extent that Burdale receives
         a written  notice from the  Company of any  specific  exception  of the
         Company within 30 days after the date such statement has been mailed by
         Burdale.  Until such times as Burdale  has  rendered  to the  Company a
         written  statement as provided above, the balance in the Company's loan
         accounts,  invoice discount accounts and foreign exchange accounts will
         be prima facie  evidence of the amounts due and owing to Burdale by the
         Company.

5.       UTILISATION OF FACILITIES

5.1      AVAILABILITY OF RECEIVABLES FINANCE FACILITY

         (a)   Subject to the terms of this  Agreement,  the Company shall offer
               to sell its  Receivables to Burdale by delivering to Burdale from
               time to time duly completed  Purchase Requests (together with all
               deeds  and  documents  referred  to in  such  Purchase  Request),
               delivery  of  which   shall   oblige  the  Company  to  sell  the
               Receivables  stated in such  Purchase  Request upon the terms and
               subject to the conditions of this Agreement.

         (b)   A  Purchase  Request  will not be  regarded  as having  been duly
               completed  unless  it is in  substantially  the  form  set out in
               Schedule 2 Part I.

         (c)   As  soon  as  reasonably  practicable  following  delivery  of  a
               Purchase Request,  Burdale shall determine the Purchase Price for
               the Receivables specified in such Purchase Request and will, upon
               being  requested  by the  Company,  advise  the  Company  of such
               determination.

<PAGE>

5.2      UTILISATION  OF  RECEIVABLES  FINANCE  FACILITY  AND  REVOLVING  CREDIT
         FACILITY

         (a)   Subject to the terms of this Agreement, the Company may from time
               to time request that Burdale pay sums to the Company of up to the
               aggregate of (a) the amount of any unpaid  Purchase Price and (b)
               the amount  available  for drawing by way of Revolving  Loan,  by
               delivering  a duly  completed  Cash  Request to Burdale not later
               than  11.00  a.m.  on the  proposed  Utilisation  Date  for  such
               payment.

         (b)   A Cash Request will not be regarded as having been duly completed
               unless it is in substantially the form set out in Schedule 2 Part
               II and, in particular, specifies:

               (i)    the  proposed  Utilisation  Date,  being  a  Business  Day
                      falling during the Purchase Availability Period and/or the
                      Revolving Availability Period (as the case may be);

               (ii)   the amount of the sum to be paid by Burdale  which must be
                      less than or equal to the  aggregate  of  unpaid  Purchase
                      Price  and the  amount  available  for  drawing  by way of
                      Revolving Loan; and

               (iii)  if not already  notified  to  Burdale,  the details of the
                      Other  Account into which the payment is to be made on the
                      Utilisation Date.

         (c)   Payments  made by Burdale  pursuant  to a Cash  Request  shall be
               deemed to be first  payments of any unpaid  Purchase Price to the
               full extent of such  unpaid  Purchase  Price and  second,  to the
               extent of any surplus, to be the drawing of a Revolving Loan.

         (d)   Burdale's  obligation to pay the Purchase Price of any Receivable
               (or  any  unpaid  portion  of it as the  case  may be)  shall  be
               terminated  on the  earlier of the Actual Day of Payment  and the
               Maturity Date of such Receivable.

5.3      L/C UTILISATIONS

         (a)   Subject to the terms of this  Agreement,  the Company may request
               the issue of an L/C by delivering a duly completed L/C Request to
               Burdale  not later  than  11.00 a.m.  at least one  Business  Day
               before the proposed Utilisation Date for that L/C.

         (b)   An L/C Request will not be regarded as having been duly completed
               unless it is  substantially  in the form  attached  in Schedule 2
               Part III and, in particular, specifies:

               (i)    the  proposed  Utilisation  Date,  being  a  Business  Day
                      falling during the Revolving Availability Period;

               (ii)   the amount of the L/C required,  the L/C Exposure of which
                      must be  equal  to or  less  than  the  undrawn/unutilised
                      amount of the  Revolving  Credit  Facility  and within the
                      relevant   Availability   Limits   as  at   the   proposed
                      Utilisation Date;

<PAGE>

               (iii)  if not already  notified  to  Burdale,  the details of the
                      beneficiary, payee or addressee of such L/C.

5.4      GENERAL PROVISIONS REGARDING L/CS

         (a)   Nothing in this  Agreement  shall be deemed or construed to grant
               the  Company  any  right or  authority  to pledge  the  credit of
               Burdale in any manner.  Burdale  shall have no  liability  of any
               kind with  respect to any L/C  provided  by an issuer  other than
               Burdale  unless  Burdale has duly  executed and delivered to such
               issuer the  application  or a  guarantee  or  indemnification  in
               writing with  respect to such L/C. The Company  shall be bound by
               an  interpretation  made in good faith by  Burdale,  or any other
               issuer or  correspondent  under or in connection  with any L/C or
               any  documents,  drafts or  acceptances  in  relation to any L/C,
               notwithstanding that such interpretation may be inconsistent with
               any instructions of the Company.  Burdale shall have the sole and
               exclusive right and authority to, and the Company shall not:

               (i)    at any time an Event of Default exists or has occurred and
                      is continuing:

                      (1)   approve or resolve any  questions of  non-compliance
                            of documents;

                      (2)   give any  instructions as to acceptance or rejection
                            of any documents or goods; or

                      (3)   execute any and all  applications  for  steamship or
                            airway  guarantees,  indemnities or delivery  orders
                            and at all times;

               (ii)   at any time:

                      (1)   grant any  extensions  of the  maturity  of, time of
                            payment for, or time of presentation of, any drafts,
                            acceptances, or documents; and

                      (2)   agree  to  any  amendments,   renewals,  extensions,
                            modifications,  changes or  cancellations  of any of
                            the terms or conditions of any of the  applications,
                            L/Cs,  or  documents,   drafts  or   acceptances  in
                            relation  to  any  L/C  or  any  letters  of  credit
                            included  in the  Collateral.  Burdale may take such
                            actions  either in its own name or in the  Company's
                            name.

         (b)   Any rights, remedies, duties or obligations granted or undertaken
               by the Company to any issuer or  correspondent in any application
               for any L/C,  or any other  agreement  in favour of any issuer or
               correspondence  relating to any L/C, shall be deemed to have been
               granted or  undertaken  by the Company to Burdale.  Any duties or
               obligations undertaken by Burdale to any issuer or correspondence
               in any application for any L/C, or any other agreement by Burdale
               in favour of any issuer or  correspondence  relating  to any L/C,
               shall be deemed to have been undertaken by the Company to Burdale
               and to apply in all respects to the Company.

<PAGE>

         (c)   None of  Burdale,  any L/C  issuer  (or any of  their  respective
               correspondents) or any advising,  negotiating or paying bank with
               respect to any L/C shall be responsible in any way for:

               (i)    the performance by any  beneficiary  under any L/C of that
                      beneficiary's obligations to the Company; or

               (ii)   the form, sufficiency, correctness, genuineness, authority
                      of any person signing or the legal effect of any documents
                      called for under any L/C if such documents appear on their
                      face to be in order.

5.5      FOREX UTILISATIONS

         (a)   Subject to the terms of this Agreement, the Company may request a
               Utilisation of the Revolving  Credit  Facility by way of the sale
               or purchase of Foreign  Currency by  delivering a duly  completed
               Forex  Request to Burdale not later than 11.00 a.m. at least five
               Business  Days before the  proposed  date of the contract for the
               sale or purchase of Foreign Currency.

         (b)   A  Forex  Request  will  not be  regarded  as  having  been  duly
               completed  unless  it is in  substantially  the  form  set out in
               Schedule 2 Part IV and, in particular, specifies:

               (i)    the  proposed  date of effect of the sale or  purchase  of
                      Foreign  Currency  being a Business Day falling during the
                      Revolving Availability Period; and

               (ii)   the  value of the  contract  for the sale or  purchase  of
                      Foreign   Currency   required  and  the  Foreign  Currency
                      required to be purchased which must be such that the Forex
                      Exposure with respect to such  Utilisation when aggregated
                      with all other  Forex  Exposures  is equal to or less than
                      the Forex Limit as at the proposed  Utilisation  Date and,
                      the value of the  transaction  must be in a minimum amount
                      of  (pound)10,000   or  a  higher  integral   multiple  of
                      (pound)5,000  or in such other  amount as  Burdale  may in
                      writing  agree as  calculated  at the Exchange Rate on the
                      date or calculation.

5.6      DEEMED LOANS

         All payments made by Burdale:

         (a)   in  accordance  with  the  terms of any L/C or any  guarantee  or
               indemnity  given by Burdale to the issuer of any L/C (as the case
               may be); and

         (b)   on the maturity of any Forex Transaction,

         shall be deemed to be Revolving Loans to the Company in an amount equal
         to such payment,  drawn down on the date of such payment and subject to
         the  provisions  of this  Agreement  with  respect to  Revolving  Loans
         (including, without limitation, as to interest and repayment).

<PAGE>

5.7      TERM LOAN

         (a)   Subject to the terms of this  Agreement,  the Company may request
               that  the  Property  Loan  be  made  to it by  delivering  a duly
               completed  Request  to Burdale  not later than 11.00 a.m.  on the
               proposed Utilisation Date of such Loan.

         (b)   A Request  for the  Property  Loan will not be regarded as having
               been duly completed  unless it is in  substantially  the form set
               out in Schedule 2 Part V and, in particular, specifies:

               (i)    the  proposed  Utilisation  Date,  being  a  Business  Day
                      falling during the Term Availability Period;

               (ii)   the amount of the Loan which must be equal to or less than
                      the  undrawn  amount of the  Property  Loan  Facility  and
                      within the relevant Availability Limits as at the proposed
                      Utilisation Date;

               (iii)  if not already  notified  to  Burdale,  the details of the
                      Other  Account  into which the proceeds of the Loan are to
                      be paid on the Utilisation Date.

6.       REPAYMENT AND PREPAYMENT

6.1      RECEIVABLES FINANCE FACILITY

         (a)   If in relation to a Purchased  Receivable  Burdale  determines on
               the Maturity Date in respect of such Purchased Receivable that it
               has not  received  payment in  accordance  with Clause 9.1 of the
               full amount of such Purchased  Receivable,  the Company shall, on
               demand  by  Burdale  pay  to  Burdale  an  amount  equal  to  the
               Outstanding Purchase Price of such Purchased Receivable for which
               payment has not been received  PROVIDED THAT this provision shall
               not restrict (nor oblige)  Burdale in any way in or from pursuing
               and  obtaining  payment in respect of such  Purchased  Receivable
               from the Account  Debtors or otherwise  (which  payment  shall be
               made into the Blocked Account) and the Company undertakes that it
               will do all such reasonable acts or things necessary or desirable
               to help Burdale in pursuing and obtaining such payment.

         (b)   Burdale shall be entitled to deduct from payments made by Account
               Debtors and/or the Company into the Blocked Account in respect of
               Purchased  Receivables  the then  Outstanding  Purchase  Price in
               respect of such Purchased  Receivables and the balance  remaining
               after such deduction  shall be applied in accordance  with Clause
               6.2.

6.2      OTHER UTILISATIONS

         Subject as  provided  below all  amounts  standing to the credit of the
         Blocked Account from time to time following the deductions  referred to
         in Clause 6.1(b) shall be applied as follows:

<PAGE>

         (a)   FIRST in repayment  of the  outstanding  principal  amount of any
               Revolving Loans;

         (b)   SECOND in or towards  satisfaction of any amount of principal due
               to be made pursuant to Clauses 6.5 or 6.6;

         (c)   THIRD in payment  of any fees,  costs and  expenses  due from the
               Company to Burdale under the Finance Documents;

         (d)   FOURTH in payment of (i) all amounts of interest due on the Loans
               (including  any deemed  Revolving  Loans  pursuant to Clause 5.6)
               (ii) all Interest Advances and (iii) all Purchase  Commission (or
               in making  provision for Purchase  Commission which will fall due
               for  payment on the last  Business  Day of the  current  calendar
               month);

         (e)   FIFTH in or towards  satisfaction of any other payment obligation
               of the Company under the Finance Documents; and

         (f)   SIXTH to the Company by way of payment into such Other Account as
               the Company may specify to Burdale in writing from time to time.

         Notwithstanding  the above, at all times following the occurrence of an
         Event of Default and whilst the same is continuing, amounts standing to
         the  credit of the  Blocked  Account  shall be  applied  to such of the
         liabilities  of the  Company  under the Finance  Documents  and in such
         order as Burdale may in its absolute discretion determine.

6.3      REUTILISATION

         (a)   RECEIVABLES  FINANCE  FACILITY:  Subject  to the  terms  of  this
               Agreement,  all amounts of Outstanding  Purchase Price  recovered
               and paid to Burdale, may, subject to the terms of this Agreement,
               be  reutilised  as  Utilisations   of  the  Receivables   Finance
               Facility.

         (b)   REVOLVING  CREDIT   FACILITY:   Subject  to  the  terms  of  this
               Agreement,  all Revolving Loans repaid and all amounts  recovered
               and paid to Burdale in relation  to L/Cs and Forex  Transactions,
               may,  subject  to the  terms of this  Agreement,  be  redrawn  or
               reutilised as Utilisations of the Revolving Credit Facility.

6.4      PREPAYMENT - REVOLVING CREDIT/RECEIVABLES FINANCE

         If at any time the  outstanding  Utilisations or any part of them cause
         any Availability Limit to be exceeded then the Company will immediately
         repay such amount of the Revolving  Loans together with cash collateral
         in  respect  of  Outstanding   Purchase  Price  and/or  any  contingent
         obligation of Burdale in relation to any L/C or other  Utilisation,  by
         payment  into  the  Payment  Account  together  with  interest  on  the
         Revolving Loans, to the extent required to ensure  compliance with that
         Availability  Limit and, until such time as that Availability  Limit is
         no  longer   breached,   no  further   Utilisations  may  be  requested
         (including,  for the avoidance of doubt, pursuant to a Cash Request) or
         will, at Burdale's option, be made or issued.

<PAGE>

6.5      REPAYMENT OF TERM LOAN

         Subject to Clause 6.6,  the Company  shall repay the  Property  Loan in
         full  by  equal  monthly  instalments  on  the  basis  of  a  48  month
         amortisation on the first day of each month commencing on the first day
         of the month following  drawdown of the Property Loan and shall pay the
         then outstanding Property Loan in full on the Final Repayment Date.

6.6      PREPAYMENT - TERM LOAN

         (a)   PROPERTY  LOAN:  The Company  shall ensure that the Property Loan
               shall at all times be less than or equal to 75% of the  estimated
               restricted   realisation  value  of  the  Mortgaged  Property  as
               determined in accordance with the then most recent  Valuation and
               shall from time to time on demand by Burdale  prepay  such amount
               of the Property Loan as may be required to ensure compliance with
               this Clause 6.6(a).

         (b)   REDUCTIONS:  Any prepayment of the Property Loan shall be applied
               against  the  repayment  instalments  specified  in Clause 6.5 in
               reverse order of maturity.

6.7      REDUCTION OF FACILITY LIMIT

         At the  request of the  Company  by giving  not less than ten  Business
         Day's prior written notice to Burdale, the Facility Limit may from time
         to time be reduced  provided that on or before the  effective  date for
         such reduction the Company shall pay to Burdale:

         (a)   such amount as may be necessary in prepayment of the Loans and/or
               as  cash  collateral  for   Outstanding   Purchase  Price  and/or
               Burdale's   contingent   obligations  under  any  issued  L/C  or
               unmatured Forex Transaction to ensure that the Company remains in
               compliance  with the  Availability  Limits (as  adjusted  to take
               account of such  reduction  in the  Facility  Limit  pursuant  to
               Clause 4.7); and

         (b)   (subject to paragraph (c) below) a fee  calculated by applying to
               the amount of the reduction the applicable  percentage set out in
               column (2) below:

<TABLE>
<CAPTION>

                                       (1)                                             (2)

                                DATE OF REDUCTION                             APPLICABLE PERCENTAGE
<S>                                                                          <C>

               On or  before  the  first  anniversary  of the                       2%
               first Utilisation Date

               After the first  but on or before  the  second                      1.5%
               anniversary of the first Utilisation Date

</TABLE>

         (c)   in the event that the Company  prepays the Property  Loan in full
               on or before 30 June 2000,  the  Company may (at the same time as
               it makes such  prepayment)  request  that the  Facility  Limit be
               reduced by an amount  not  exceeding  the amount

<PAGE>

               of the Property Loan Facility without  incurring the fee referred
               to in paragraph (b) above with respect to such reduction.

         Any exercise by Burdale of its rights under Clause  15.2(b) and/or 15.3
         and/or the operation of Clause 12.1 shall be deemed for the purposes of
         paragraph  (b)  above to be a  reduction  in the  Facility  Limit in an
         amount equal to the amount of the Facility or Facilities so cancelled.

6.8      FINAL REPAYMENT

         The Company will, on the Final  Repayment  Date, pay to Burdale in full
         all  outstanding  and unpaid  liabilities  under the Finance  Documents
         (whether  by way  of  principal,  interest,  commission,  fees,  costs,
         expenses  or  otherwise)  and shall pay to  Burdale  such  amount as is
         necessary  to provide full cash  collateral  for  Outstanding  Purchase
         Price and any contingent  obligations which Burdale may have in respect
         of any L/C, Forex  Transaction or other outstanding  Utilisation.  Such
         payment  shall be  denominated  in Sterling and will be made by wire or
         other automatic transfer to the Payment Account. If the amounts so paid
         are received in the Payment  Account  later than 1.00 p.m. on the Final
         Repayment  Date then the Company  will pay  interest on such amounts to
         Burdale at the Default Rate until payment has been made in full.

7.       INTEREST AND COMMISSION

7.1      INTEREST

         (a)   The  Company  will  pay  Burdale  interest  on  each  Loan at the
               Interest Rate.

         (b)   Except as otherwise provided in this Agreement,  accrued interest
               on each Loan  shall be paid by the  Company in arrear on the last
               Business Day of each month and on the Final  Repayment  Date. All
               interest accruing on or after the date of any Event of Default or
               the Final Repayment Date shall be payable on demand.

         (c)   Interest  will be  calculated  on the basis of a 365 day year and
               actual days elapsed and will accrue and be  calculated on a daily
               basis.

7.2      INTEREST ON EXPOSURES

         (a)   The Company  will pay to Burdale an amount  equal to the Interest
               Rate applied to:

               (i)    the  L/C Exposure of each L/C from the date of issue until
                      its End Date; and

               (ii)   the Forex Exposure of each unmatured Forex Transaction.

         (b)   Amounts  accrued in accordance  with paragraph (a) above shall be
               paid by the  Company in arrear on the last  Business  Day of each
               month and:

               (i)    the End Date of the relevant L/C; or

<PAGE>

               (ii)   the maturity date of the relevant Forex Transaction,

               as the case may be.

         (c)   Amounts  payable by the Company under paragraph (a) above will be
               calculated on the basis of a 365 day year and actual days elapsed
               and will accrue and be calculated on a daily basis.

7.3      DEFAULT INTEREST

         (a)   Upon the occurrence of an Event of Default and whilst the same is
               continuing unremedied or unwaived,  all amounts outstanding under
               this  Agreement  shall  bear  interest  (both  before  and  after
               judgment) at the Default Rate.

         (b)   Interest at the  Default  Rate will be  compounded  at the end of
               each  period  designated  by Burdale  and will be  determined  by
               Burdale on the first Business Day of each such period.

7.4      PURCHASE COMMISSION

         The  Company  shall  pay to  Burdale  commission  in  respect  of  each
         Purchased  Receivable  at a  rate  equivalent  to the  Commission  Rate
         applied to the Outstanding  Purchase Price for such Receivable from the
         date on which Burdale paid such  Purchase  Price to the Company down to
         the Actual Date of Payment (the "PURCHASE  COMMISSION").  Burdale shall
         calculate the Purchase Commission on a daily basis and it shall be paid
         by the  Company  monthly in arrears  on the last  Business  Day of each
         month.

8.       RECEIVABLES, STOCK AND EQUIPMENT

8.1      DETERMINATION

         Any reasonable  determination by Burdale in good faith of the value or,
         as the  case  may be,  the  face  amount  of any  Receivable  or  other
         Collateral  at any time will  (save in the case of  manifest  error) be
         conclusive and binding on the Company but any such determination may at
         any  time  and  at  Burdale's  discretion  be  amended,   qualified  or
         superseded by a further such determination.

8.2      REPORTING REGARDING RECEIVABLES AND STOCK

         The Company will provide Burdale with the following  documents with all
         amounts  expressed in Sterling and otherwise in a form  satisfactory to
         Burdale:

         (a)   on a daily  basis with a  schedule  of  Receivables,  collections
               received  and credits  issued  and, at any time when  Burdale has
               made  available any amount or financial  accommodation  under the
               Revolving Credit Facility, on a monthly basis with a stock report
               substantially  in the form set out in Schedule 3 Part II together
               with such further  information  regarding  Receivables as Burdale
               may reasonably request;

<PAGE>

         (b)   as soon as practicable and in any event within 15 days of the end
               of each  month  or more  frequently  as  Burdale  may  reasonably
               request:

               (i)    ageings of creditors and  Receivables  with details of all
                      dated invoices; and

               (ii)   at any time when Burdale has made  available any amount or
                      financial   accommodation   under  the  Revolving   Credit
                      Facility, full details of all Stock by category,  location
                      and supplier; and

               (iii)  an analysis of preferential creditors in substantially the
                      form set out in Schedule 3 Part III;

               all in a format to be agreed with Burdale (acting reasonably).

         (c)   promptly from time to time as Burdale may reasonably request:

               (i)    at any time when Burdale has made  available any amount or
                      financial   accommodation   under  the  Revolving   Credit
                      Facility,   copies  of  shipping  and  delivery  documents
                      relating to Stock and Equipment;

               (ii)   at any time when Burdale has made  available any amount or
                      financial   accommodation   under  the  Revolving   Credit
                      Facility, copies of purchase orders, invoices and delivery
                      documents  relating to Stock and  Equipment and ageings of
                      all Receivables paid to the Company, on a monthly basis by
                      invoice date;

               (iii)  full  details  of all  Account  Debtors  (including  their
                      addresses) together with copies of customer statements and
                      credit notes, remittance advices, collection schedules and
                      reports and copies of deposit  slips and all monthly  bank
                      statements  of  the  Company  and  its   Subsidiaries   or
                      statements for such other period as Burdale may require;

               (iv)   such other reports regarding the Collateral as Burdale may
                      reasonably request from time to time;

         (d)   on a daily basis, details of any Receivables which have become or
               are purported to be, by the relevant Account Debtor or otherwise,
               subject  to  any   prohibitions   or  restriction  on  charge  or
               assignment; and

         (e)   immediately  upon  becoming  aware of the  same,  details  of any
               creditor of the Company whose ordinary terms of business  include
               title  retention  provisions  which are not already  specified in
               Schedule 3 Part I.

8.3      REPORTING REGARDING ACCOUNT DEBTORS

         (a)   NOTIFICATION: The Company will notify Burdale promptly of:

               (i)    any material delay in the Company's  performance of any of
                      its  obligations to any Account Debtor or the assertion of
                      any  claims,  offsets,  defences or

<PAGE>

                      counterclaims  by  any  Account  Debtor,  or any  material
                      disputes  with  Account  Debtors,   or  any    settlement,
                      adjustment or compromise of any such matter;

               (ii)   all  material  adverse  information  known to the  Company
                      relating to the financial condition of any Account Debtor;
                      and

               (iii)  any  event  or   circumstance   which,  to  the  Company's
                      knowledge,  would  cause  Burdale  to  consider  any  then
                      existing  Receivables as no longer  constituting  Eligible
                      Receivables.

         (b)   DISPUTES  AND  SETTLEMENTS  WITH  ACCOUNT  DEBTORS:   No  credit,
               discount,  allowance or  extension  or  agreement  for any of the
               foregoing will be granted to any Account Debtor without Burdale's
               consent,  except in the ordinary course of the Company's business
               in accordance with proper practices and policies  operated by the
               Company prior to the date of this Agreement. At any time while an
               Event of Default is  outstanding,  Burdale  will,  at its option,
               have the  exclusive  right to settle,  adjust or  compromise  any
               claim,  offset,  counterclaim  or dispute with any Account Debtor
               and to grant any credits,  discounts or allowances in relation to
               such matters.

         (c)   RETURN OF STOCK:  The Company will promptly report to Burdale any
               return of Stock by an Account Debtor where that Stock has a value
               in  excess  of   (pound)50,000.   At  any  time  that  any  Stock
               (irrespective   of  its   value)  is   returned,   reclaimed   or
               repossessed,  the related Receivable will be deemed an Ineligible
               Receivable. In the event any Account Debtor returns Stock when an
               Event of Default  has  occurred  and is  continuing,  the Company
               will, upon Burdale's request:

               (i)    hold the returned Stock on trust for Burdale;

               (ii)   segregate  all  returned  Stock  from  all  of  its  other
                      property;

               (iii)  dispose  of  the  returned   Stock  solely   according  to
                      Burdale's instructions; and

               (iv)   not  issue  any  credits,  discounts  or  allowances  with
                      respect to such  returned  stock without  Burdale's  prior
                      written consent.

8.4      REPRESENTATIONS AND UNDERTAKINGS AS TO RECEIVABLES

         With respect to each Receivable, the Company represents and warrants to
         Burdale that and undertakes to ensure that at all times:

         (a)   the amounts shown on any invoice  delivered to Burdale and in any
               Receivables   Information  delivered  to  Burdale  are  true  and
               complete;

         (b)   no payments have been or will be made on such  Receivable  except
               payments collected by the Company and immediately  transmitted or
               delivered to Burdale or  elsewhere  pursuant to the terms of this
               Agreement;

<PAGE>

         (c)   no credit, discount,  allowance or extension or agreement for any
               of the foregoing  will be granted to any Account Debtor except as
               reported to and agreed by Burdale except for credits,  discounts,
               allowances or extensions  made or given in the ordinary course of
               the Company's  business in accordance  with its proper  practices
               and  policies  operated  prior to today's  date as  disclosed  to
               Burdale in writing;

         (d)   to the best of the  Company's  knowledge,  there are no set-offs,
               deductions,  defences,  counterclaims  or  disputes  existing  or
               asserted  with respect to such  Receivable  except as reported to
               and agreed by Burdale;

         (e)   none of the transactions giving rise to any Receivable breach any
               applicable  law or regulation and all  documentation  relating to
               such  Receivable is legally  enforceable  in accordance  with its
               terms;

         (f)   each  Receivable is genuine,  is and will be in all respects what
               it purports to be, and is not the subject of a court judgment;

         (g)   each Receivable represents  undisputed,  bona fide transaction(s)
               completed in accordance  with the terms and provisions  contained
               in any  documents  delivered  to  Burdale  with  respect  to such
               Receivable;

         (h)   the amounts shown on the relevant  Receivables  Information,  the
               Company's books and records and all invoices and statements which
               may be delivered to Burdale with respect thereto are actually and
               absolutely   owing  to  the  Company  and  are  not  in  any  way
               contingent;

         (i)   to the  best of the  Company's  knowledge,  there  are no  facts,
               events or  occurrences  which in any way impair the  validity  or
               enforceability  of any  such  Receivable  or tend to  reduce  the
               amount  payable  in respect  of such  Receivable  as shown on the
               relevant Receivables Information, the Company's books and records
               and all invoices and statements delivered to Burdale with respect
               to such Receivable;

         (j)   to the best of the Company's knowledge,  all Account Debtors have
               the capacity to contract and are solvent;

         (k)   the  services  furnished  and/or  goods sold  giving rise to each
               Receivable  are not  subject to any  Encumbrance  (except  for an
               Encumbrance which is permitted by Clause 14(p)); and

         (l)   to the best of the Company's knowledge,  there are no proceedings
               or actions which are  threatened  or pending  against any Account
               Debtor which might reasonably be expected to result in a material
               adverse change in such Account Debtor's financial condition.

8.5      VERIFICATION

         Burdale  will  have the  right  from  time to time,  in the name of any
         nominee, to verify the validity, amount or any other matter relating to
         any Receivable or other Collateral,  by mail,  telephone,  facsimile or
         otherwise.

<PAGE>

8.6      RIGHTS AFTER AN EVENT OF DEFAULT

         (a)   DEALING WITH COLLATERAL AND RECEIVABLES: Burdale may, at any time
               that a  Default  has  occurred  and  is  continuing  and  without
               prejudice  to any of its rights  under  Clause 15.2 or  otherwise
               under this Agreement or any other Finance  Document  exercise all
               its rights then exercisable pursuant to the Debenture, including,
               without limitation:

               (i)    extend  the time of  payment  of,  compromise,  settle  or
                      adjust  for  cash,   credit,   return  of  merchandise  or
                      otherwise,  and upon any terms or conditions,  any and all
                      Receivables   or  other   obligations   included   in  the
                      Collateral  and thereby  discharge  or release any Account
                      Debtor or any other party or parties in any way liable for
                      payment of any  Receivable  without  affecting  any of the
                      Receivables, demand or enforce payment of any Receivables,
                      but  without  any duty to do so, and  Burdale  will not be
                      liable  for its  failure  to  enforce  the  payment of any
                      Receivable  nor  for  the  negligence  of  its  agents  or
                      attorneys with respect to any Receivable; and

               (ii)   take whatever  other action Burdale may deem necessary for
                      the protection of its interests in the Collateral.

         (b)   NOTICE TO  DEBTORS:  At any time that a Default  is  outstanding,
               Burdale,  any  Receiver  or their  respective  nominees  may,  at
               Burdale's or  Receiver's  discretion as the case may be do any of
               the following:

               (i)    having given prior notification to the Company, notify any
                      or all  Account  Debtors  that the  Receivables  have been
                      assigned  to  Burdale  and that  payments  in  respect  of
                      Receivables  are to be  redirected  to such  account as is
                      specified by Burdale;

               (ii)   request the Company to give the  notification  referred to
                      in  Clause  8.6(b)(i)  above  and/or  to  ensure  that all
                      invoices and statements in respect of  Receivables  issued
                      to the Account Debtors state the  information  referred to
                      in Clause 8.6(b)(i); and

               (iii)  direct  any or all  relevant  Account  Debtors to make all
                      payments  in respect of  Receivables  direct to Burdale at
                      such account as Burdale may specify.

         (c)   ORIGINALS:  At any time that an Event of Default is  outstanding,
               the  Company  will  deliver  to  Burdale  the  originals  of  all
               documents  evidencing  the  sale  and  delivery  of  goods or the
               performance of services giving rise to any Receivables as Burdale
               may require.

8.7      UNDERTAKINGS REGARDING STOCK

         With respect to the Stock:

<PAGE>

         (a)   the Company will at all times  maintain  perpetual  stock records
               reasonably satisfactory to Burdale,  keeping correct and accurate
               records  itemising and  describing  the kind,  type,  quality and
               quantity  of Stock and  finished  goods,  the  Company's  cost in
               relation to such Stock and daily  withdrawals  from and additions
               to the Stock;

         (b)   the Company will  conduct a physical  count of the Stock at least
               once each year and at any time or times as  Burdale  may  request
               while an Event of Default is outstanding,  and promptly following
               such physical  count will supply  Burdale with a report in a form
               and  containing  such specific  information  as may be reasonably
               satisfactory to Burdale concerning such physical count;

         (c)   the Company  will not remove any Stock from the  Property or such
               other  property  as is owned  and  controlled  by it or any other
               Corporate  Obligor or to or from a public  warehouse  without the
               prior  written  consent of Burdale,  except for sales of Stock in
               the  ordinary  course of the  Company's  trade and except to move
               Stock directly from such property to another location  previously
               agreed to by Burdale;

         (d)   upon  Burdale's  request,  the Company will, at its expense,  not
               more than once in any  twelve  month  period,  but at any time or
               times as  Burdale  may  request  while an  Event  of  Default  is
               outstanding,  deliver or cause to be delivered to Burdale written
               reports or  appraisals  regarding the Stock in form and substance
               acceptable to Burdale and by an appraiser  acceptable to Burdale,
               addressed  to  Burdale  and  upon  which   Burdale  is  expressly
               permitted to rely;

         (e)   the Company will produce,  use, store and maintain the Stock with
               all reasonable care and caution and in accordance with applicable
               standards  relating  to  any  insurance  and in  conformity  with
               applicable laws and regulations;

         (f)   the Company assumes all responsibility and liability arising from
               or relating to the production,  use, sale or other disposition of
               the Stock;

         (g)   in respect of Stock exceeding (pound)10,000 the Company will not,
               without prior notice to Burdale,  sell such Stock to any customer
               on sale or  return,  or on any other  basis  which  entitles  the
               customer to return or may oblige the Company to  repurchase  such
               Stock; and

         (h)   the Company will keep the Stock in good and marketable  condition
               and will not,  without  the prior  written  consent  of  Burdale,
               acquire or accept any consignment Stock.

8.8      UNDERTAKINGS REGARDING EQUIPMENT

         With respect to the Equipment:

         (a)   the Company  will keep the  Equipment  in good order,  repair and
               marketable condition (fair wear and tear excepted);

<PAGE>

         (b)   the Company will use the Equipment with all  reasonable  care and
               caution  and  in  accordance  with  applicable  standards  of any
               insurance  policy  relating to any Equipment and in conformity in
               all material respects with all applicable laws and regulations;

         (c)   the Equipment is and will be used only in the Company's  ordinary
               course of trade and not for any personal use; and

         (d)   the Company assumes all responsibility and liability arising from
               the use of the Equipment.

8.9      BURDALE'S RIGHT TO CURE

         Burdale may, at its option:

         (a)   after giving five days notice to the Company, cure any default by
               the Company under any agreement with an Account Debtor in respect
               of a  Receivable  (other than bona fide  disputes in the ordinary
               course of the  Company's  business  where no Event of Default has
               occurred and is continuing)  or under any other  agreement with a
               third  party  as may be  required  by  Burdale  in good  faith to
               facilitate the collection of the Receivables or to enable Burdale
               to have access to any of the Collateral or any Equipment;

         (b)   after giving five days notice to the Company,  pay or make a bond
               in respect of or appeal any  judgment  entered  into  against the
               Company which, upon execution,  attachment or the exercise of any
               similar  remedy in respect of such  judgment,  would result in an
               Encumbrance  being  imposed  on the  Collateral  or would  impair
               Burdale's ability to obtain possession of, realise or collect any
               of the Collateral;

         (c)   discharge taxes,  Encumbrances or other  encumbrances at any time
               levied on or existing with respect to the Collateral; and

         (d)   pay any amount,  incur any  expense or perform any act  including
               without  limitation  the payment to any  creditors  in respect of
               plant  and/or  machinery,   which,  in  Burdale's  judgment,   is
               necessary or appropriate to reserve,  protect, insure or maintain
               the Collateral and the rights of Burdale with respect to it.

         Burdale may charge any monies so expended or costs so incurred by it to
         the Company's  account,  such amounts to be repayable by the Company on
         demand.  Burdale will be under no obligation to effect any such cure or
         payment or incur any such cost and will not,  by doing so, be deemed to
         have assumed any  obligation  or liability of the Company.  Any payment
         made or other action taken by Burdale under this Clause will be without
         prejudice to any right it may have to assert an Event of Default  under
         this Agreement and to proceed accordingly.

<PAGE>

8.10     ACCESS TO PROPERTY

         From time to time as requested by Burdale on one Business  Day's notice
         except in the case of emergency as  determined  by Burdale (but subject
         to  Clause  16.1(d)  regarding  daily  charge  rates),  at the cost and
         expense of the Company:

         (a)   Burdale,  a  Receiver  or their  respective  nominees  will  have
               complete  access to all of the Company's  Property  during normal
               business  hours and having given prior notice to the Company,  or
               at any time and  without  notice  to the  Company  if an Event of
               Default is outstanding, for the purposes of inspecting, verifying
               and auditing the  Collateral  and all of the Company's  books and
               records;

         (b)   the Company  will  promptly  furnish to Burdale,  any Receiver or
               their  respective  nominees  such copies of or extracts from such
               books  and  records  as  may be  reasonably  requested  from  the
               Company; and

         (c)   Burdale, a Receiver or their respective  nominees may have access
               to, during normal business hours,  and use, such of the Company's
               personnel,  equipment, supplies and Property as may be reasonably
               necessary for the purpose of  inspecting,  verifying and auditing
               the Collateral and all of the Company's  books and records and if
               an  Event of  Default  has  occurred  and is  continuing  for the
               collection of the  Receivables  and the  realisation of the other
               Collateral.

8.11     BURDALE'S DISCLAIMER

         Burdale will not be  responsible  for the  safekeeping  of, any loss or
         damage  to,  any  diminution  in value of or any act or  default of any
         carrier, warehouseman, bailee or other person in relation to the Stock,
         finished goods, Equipment or Receivables.

9.       COLLECTION OF RECEIVABLES

9.1      FLOW OF FUNDS

         Subject to Clause 9.2,  the Company  undertakes  that during the period
         commencing  on the  date of this  Agreement  and  ending  when  all its
         liabilities  under the Finance  Documents have been  discharged in full
         and  Burdale is under no further  obligation  under any of the  Finance
         Documents

         (a)   the  Company  will  collect as agent and  trustee for Burdale all
               Receivables and immediately pay (or procure that payment is made)
               all  amounts due in respect of each  Receivable  into the Blocked
               Account,  provided  however  that until  payment into the Blocked
               Account it will hold all money so received upon trust for Burdale
               and will not  commingle  in any Charged  Account any monies which
               are not Receivables or which are not payable to Burdale;

         (b)   without  prejudice  to the  Company's  obligations  under  Clause
               14(k)(iii),  in the event that any Account Debtor makes a payment
               in respect of Receivables  into another  Charged Account or other
               account which is not the Blocked Account, the Company will ensure
               that  the  amounts   representing   such   payment  are  promptly
               transferred into the Blocked Account and will immediately  direct
               the relevant  Accounts  Debtor to make all future payments to the
               Blocked Account; and
<PAGE>

         (c)   all the transfers and  collections  referred to in paragraphs (a)
               and (b) above shall be carried out daily prior to the  occurrence
               of any Default and  thereafter at such  intervals as Burdale may,
               at its discretion, specify to the Company.

9.2      FAILURE OF DEBENTURE

         In the event that the  Debenture in respect of any Account Bank is not,
         at any time,  effective or is not in full force and effect, the Company
         will  (unless  otherwise  directed by Burdale and without  prejudice to
         Burdale's rights and remedies under the Finance Documents), for so long
         as the  Debenture  is  ineffective  or not in full force and effect and
         ending on the date when all the  liabilities  of the Company  under the
         Finance Documents have been repaid or discharged in full and Burdale is
         under no further obligation under any of the Finance Documents, collect
         as agent and trustee for Burdale all Receivables  which would otherwise
         have been  payable  into the Blocked  Account and  immediately  pay (or
         procure the payment of) all amounts due in respect of those Receivables
         into the Blocked Account.

9.3      NO VARIATION

         The Company will not be entitled to close or vary the  operation of the
         Blocked Account without  Burdale's prior written consent or to withdraw
         moneys from the Blocked  Account other than strictly in accordance with
         the  Finance  Documents  and will take such steps as are  necessary  to
         ensure  that  the  Blocked  Account  is at all  times  operated  by the
         relevant  Account Bank so as to give effect to the arrangements set out
         in the Debenture and will at all times procure that the Blocked Account
         is subject to the Debenture.

9.4      REIMBURSEMENT

         The Company agrees to reimburse  Burdale on demand for any liability of
         Burdale to any Account Bank or any other bank or person involved in the
         transfer  of  funds  to or from  the  Blocked  Account  arising  out of
         Burdale's  payments to or  indemnification  of that bank or person, and
         this   obligation  to  reimburse   shall  survive  the  termination  or
         non-renewal of this Agreement.

9.5      EXCESS AMOUNTS

         Any amounts  received by Burdale from or for the account of the Company
         in excess of the amounts  then due and  payable by the Company  will be
         dealt with in accordance with the terms of Clause 6 and the Debenture.

9.6      TIME OF APPLICATION

         For the  purposes of  calculating  interest in respect of the Loans and
         for calculating any Purchase Commission or commission in respect of the
         Forex Transactions, payments or other funds received by Burdale will be
         applied   (conditional   upon  final  collection)  in  satisfaction  or
         reduction of the Company's  liabilities under the Finance Documents two
         Business Days  following the date of receipt of funds by Burdale in the
         Payment

<PAGE>

         Account.  For the purposes of  calculating  the amount of the Revolving
         Loans  available to the Company,  the  Receivables  Limit and the Forex
         Limit such payments will be applied (conditional upon final collection)
         in  satisfaction  or reduction of the Company's  liabilities  under the
         Finance  Documents  on the  Business  Day of  receipt by Burdale in the
         Payment  Account,  provided  that such  payments  are  received  within
         sufficient  time (in  accordance  with  Burdale's  usual and  customary
         practices as in effect from time to time) to credit the Company's  loan
         and  receivable and foreign  exchange  account on such day, and if not,
         then on the next Business Day.

10.      PAYMENTS AND TAXES

10.1     PAYMENTS

         (a)   Subject to Clause 9, all  payments  to be made by the  Company to
               Burdale  under the  Finance  Documents  will be made on or before
               their due date in Sterling  in cleared  funds for value not later
               than 11.00 a.m. on the day in question to the Payment Account.

         (b)   If any payment under the Finance Documents would otherwise be due
               on a day which is not a Business  Day, it will be due on the next
               succeeding  Business  Day or, if that  Business  Day falls in the
               following month, on the preceding Business Day.

         (c)   If after  receipt by Burdale of any  payment  of, or  proceeds of
               Collateral  applied  to the  payment  of,  any  of the  Company's
               payment  liabilities,  Burdale is required to surrender or return
               such  payment or proceeds to any person for any reason,  then the
               payment  liabilities  intended to be satisfied by such payment or
               proceeds shall be treated as not having been received by Burdale.
               The Company  shall be liable to pay to Burdale,  and  indemnifies
               and holds  Burdale  harmless  for,  the amount of any payments or
               proceeds so  surrendered  or returned.  This Clause 10.1(c) shall
               remain effective notwithstanding any action which may be taken by
               Burdale  in  reliance  upon such  payment  or  proceeds  and will
               survive the termination or non-renewal of this Agreement.

10.2     TAXES

         (a)   Subject  to  Clause  10.2(c),  all Taxes  (other  than Tax on the
               overall net income of Burdale)  due in respect of this  Agreement
               or any amounts paid or payable under the Finance  Documents  will
               be paid by the  Company  when due and in any  event  prior to the
               date on which  penalties  attach to such  Taxes,  and the Company
               will indemnify  Burdale for any cost, loss or liability  incurred
               by Burdale in respect of all such Taxes.

         (b)   Subject to Clause  10.2(c),  all  payments  by the Company of any
               nature under the Finance Documents will be made without regard to
               any equities between the Company and Burdale and in full and free
               and clear of, and without any deduction or  withholding  (whether
               in  respect  of  set-off,  restriction,  counterclaim,  Taxes  or
               otherwise  whatsoever)  unless the  deduction or  withholding  is
               required by law, in which event the Company will:

<PAGE>

               (i)    ensure that the deduction or  withholding  does not exceed
                      the minimum amount legally required;

               (ii)   subject to paragraph (e) below, pay to Burdale (or procure
                      the payment to Burdale of) an additional  amount being the
                      amount  required to procure that the  aggregate net amount
                      received by Burdale will equal the full amount which would
                      have been  received by it had no deduction or  withholding
                      been made  (including,  for the  avoidance  of doubt,  any
                      withholding or deduction on any additional amount paid);

               (iii)  pay to the relevant taxation or other  authorities  within
                      the period for payment  permitted  by the  applicable  law
                      such amount as is required  to be paid in  consequence  of
                      the  deduction  or  withholding  (including,  but  without
                      prejudice to the  generality  of the  foregoing,  the full
                      amount of any deduction or withholding from any additional
                      amount paid  pursuant to paragraph  (ii) above) and supply
                      Burdale  with  written  evidence  that  it  has  made  the
                      appropriate payment; and

               (iv)   indemnify  Burdale  against any costs,  loss or  liability
                      incurred  by it by reason of any failure of the Company to
                      make any  deduction  or  withholding  or by  reason of any
                      increased  payment  not  being  made on the due  date  for
                      payment.

         (c)   If the  Company  has  made an  additional  payment  under  Clause
               10.2(b) in respect  of any Tax and such Tax was not  properly  or
               legally  been  charged  or levied  then  Burdale  will,  upon the
               Company's  request and at the  Company's  expense,  provide  such
               documents to the Company as it may  reasonably  request to enable
               it to contest the imposition of such Tax provided always that the
               provision of such  documents  and the  contesting of the relevant
               Tax liability shall have no reasonable likelihood of resulting in
               any liability for Burdale.

         (d)   If the  Company  has  made an  additional  payment  under  Clause
               10.2(b) in respect of any Tax and Burdale subsequently receives a
               credit,  relief or  allowance  in  respect of that  payment  then
               Burdale  will,  once a year during the term of this  Agreement or
               immediately  after the term of this  Agreement  (if  applicable),
               apply the total amount of such credits,  reliefs or allowances to
               the  reduction  of the  Company's  liabilities  under the Finance
               Document in such manner as it thinks fit (provided  that (A) such
               payment  to  the  Company  does  not  result  in  any  additional
               liability  for  Burdale,   (B)  the  Company  has  made  all  the
               additional  payments due from it under Clause 10.2(b) and (C) the
               Company has  supplied  evidence of such  payments to Burdale) and
               thereafter  account to the Company for any balance.  Burdale will
               use  reasonable  endeavours to obtain a tax credit as referred to
               above  provided  that it will  not be  required  to seek any such
               credit  if that  will  result  in  additional  costs  or legal or
               regulatory  burdens  on it which are deemed by  Burdale,  in good
               faith, to be material.  Burdale shall have an absolute discretion
               as to whether to claim any tax credit and if it does  claim,  the
               extent,  order and manner in which it does so.  Burdale shall not
               be obliged to disclose any information  regarding its tax affairs
               or computations to any other party.

<PAGE>

         (e)   The Company  shall not be liable to pay to Burdale any amount for
               taxes imposed by the United  Kingdom  Inland Revenue by virtue of
               Burdale  not being a bank (as  defined by section  840A ICTA) for
               the purposes of Section 349 of ICTA but in such circumstances the
               remaining provisions of this Clause 10.2 shall apply.

         (f)   Where,  pursuant to  paragraph  (e) above,  the  Company  makes a
               deduction  (a  "REQUIRED  DEDUCTION")  in respect of any interest
               payment to Burdale,  the Company shall, on the date on which such
               interest  is due to be paid to  Burdale,  advance  to  Burdale an
               interest free, unsecured loan in an amount equal to the amount of
               such  Required  Deduction (an  "INTEREST  ADVANCE")  repayable in
               accordance with paragraph (g).

         (g)   Each  Interest  Advance shall be repayable by Burdale upon demand
               by the  Company  provided  that no such  demand  may be made  and
               Burdale  shall be  under no  obligation  to  repay  any  Interest
               Advance unless:

               (i)    the  Company  provides  to Burdale a copy of Form CT61 (or
                      any successor  form) in relation to (amongst other things)
                      the Required  Deduction  (and Burdale  shall give all such
                      assistance  as may  reasonably  be necessary to enable the
                      Company to complete such form);

               (ii)   the Company  provides to Burdale  such other  documents as
                      are  required  by  Burdale  to  enable  it to obtain a tax
                      credit for the amount of such Required Deduction; and

               (iii)  the demand specifies that the relevant Interest Advance is
                      to be repaid by  Burdale  by it paying  the amount of such
                      Interest  Advance  to the  Inland  Revenue  in or  towards
                      satisfaction  of the Company's  payment  obligation to the
                      Inland Revenue with respect to the Required Deduction.

         (h)   In the event that the Company  receives any written  notification
               from the Inland Revenue  requiring it to make payments in respect
               of any Required  Deduction  otherwise than in the manner provided
               for in this  Clause  10.2,  then  the  parties  shall  make  such
               amendments to this Clause 10.2 as may be necessary to comply with
               the terms of such notification from the Inland Revenue and so far
               as possible to put the parties in the same position as they would
               have been had the provisions of paragraphs (g) and (h) above been
               implemented.

11.      INCREASED COSTS

11.1     INCREASED COSTS

         If the  result  of any  change in or  introduction  of or change in the
         interpretation  or  application  of  any  law,  regulation,  treaty  or
         official directive or official request (whether or not having the force
         of law but, if not, being of a type with which Burdale is accustomed to
         comply) or  compliance  by  Burdale  with the same  including,  without
         limitation,  those  relating  to  Taxation  (but not Tax on overall net
         income of Burdale),  or any other form of banking or monetary  controls
         is to:

<PAGE>

         (a)   increase the cost to Burdale of entering  into this  Agreement or
               making  or  maintaining  the  Facilities  (or  any  of  them)  or
               maintaining any of its commitments under the Finance Documents;

         (b)   increase the cost to Burdale of funding or having outstanding any
               other amount paid out by it under the Finance Documents;

         (c)   reduce any amount payable to Burdale under the Finance  Documents
               or the effective return on its capital; or

         (d)   result in Burdale making any payment or foregoing any interest or
               other return on or calculated by reference to any amount received
               or receivable by it from the Company under the Finance Documents,

         then and in each such case:

               (i)    Burdale  will notify the Company in writing and provide to
                      the Company reasonable details of such event promptly upon
                      its becoming aware of the same; and

               (ii)   upon demand from time to time by Burdale, the Company will
                      pay to Burdale such amount as is  necessary to  compensate
                      Burdale for such increased cost (or the proportion of such
                      increased  cost  as  is,  in  the  reasonable  opinion  of
                      Burdale,  attributable to its entering into this Agreement
                      or making or  maintaining  the Facilities (or any of them)
                      or   maintaining   any   commitment   under  the   Finance
                      Documents),  reduction,  payment or  foregone  interest or
                      other return.

11.2     CERTIFICATE CONCLUSIVE

         The  certificate  of  Burdale  specifying  the  amount of  compensation
         payable  under Clause 11.1 will, in the absence of manifest  error,  be
         conclusive.  Burdale will provide  calculations  in  reasonable  detail
         showing the calculation of any such amount,  provided that Burdale will
         not be obliged  to reveal  any  information  which is  confidential  to
         Burdale.

12.      ILLEGALITY AND MONETARY UNION

12.1     ILLEGALITY

         In the event  that any  change in or  introduction  of or change in the
         interpretation  or  application  of any  law,  regulation,  treaty,  or
         official directive or official request (whether or not having the force
         of law but, if not, being of a type with which Burdale is accustomed to
         comply) makes it unlawful (or contrary to such directive or request) in
         any jurisdiction applicable to Burdale for Burdale to make available or
         maintain  the  Facilities  (or any of  them) or to give  effect  to its
         obligations  under  the  Finance  Documents,  Burdale  may  give  seven
         Business  Days written  notice to that effect to the Company  whereupon
         the  Facilities  will  be  cancelled  and all  the  provisions  of this

<PAGE>

         Agreement will apply as if the cancellations or terminations had been a
         reduction of the Facility Limit to zero pursuant to Clause 6.7.

12.2     EFFECT OF MONETARY UNION

         If the  country  of any  national  currency  in  which  any  amount  is
         expressed to be payable under this Agreement  participates  in Economic
         and  Monetary  Union in  accordance  with article 109J of the treaty on
         European Union, then:

         (a)   any amount  expressed to be payable under this  Agreement in that
               national  currency shall be made in that national  currency or in
               euro as Burdale may, by not less than three Business Days' notice
               to the Company to that effect, require;

         (b)   any amount so required to be paid in euro shall be converted from
               that national currency at the rate stipulated pursuant to Article
               109L(4) of the Treaty on European Union and payment of the amount
               in  euro  derived  from  such  conversion   shall  discharge  the
               obligation of the relevant  party to pay such  national  currency
               amount in accordance with, and subject to, the Regulation(s) made
               pursuant to Article 109L(4);

         (c)   after consultation with the Company, Burdale shall be entitled to
               make  such  amendments  to this  Agreement  as it may  reasonably
               determine to be  necessary to take account of monetary  union and
               any  consequent  changes in market  practices  (whether as to the
               settlement  or  rounding  of  obligations,   the  calculation  of
               interest or otherwise howsoever).

         Any  amendment  so made to this  Agreement by Burdale shall be promptly
         notified to the Company and shall be binding on the Company.

13.      GENERAL REPRESENTATIONS AND WARRANTIES

13.1     ACKNOWLEDGEMENT AND WARRANTIES

         The Company represents and warrants to Burdale that:

         (a)   INCORPORATION: It, each other Corporate Obligor and the Guarantor
               is duly  incorporated and validly existing with limited liability
               in the case of the Corporate  Obligors  under the laws of England
               and  Wales  and in the case of the  Guarantor  under  the laws of
               Delaware  and has the power to own its property and assets and to
               carry on its business as it is presently conducted;

         (b)   DUE AUTHORITY:  All necessary  corporate,  shareholder  and other
               action has been taken and all  authorisations  and consents  have
               been duly and unconditionally  obtained and are in full force and
               effect and all other  things  required by the laws of England and
               Wales and every  other  applicable  jurisdiction  have been done,
               which in each such case are required:

               (i)    to authorise each  Corporate  Obligor and the Guarantor to
                      carry on its business as it is now being conducted;

<PAGE>

               (ii)   to authorise  each  Obligor and the  Guarantor to execute,
                      deliver  and  perform  its  obligations  under the Finance
                      Documents to which it is party; and

               (iii)  to ensure that the Finance Documents to which each Obligor
                      and the  Guarantor is party will,  when  executed,  create
                      legal, valid and binding  obligations upon such Obligor or
                      the  Guarantor  (as  the  case  may  be)   enforceable  in
                      accordance  with their terms  (subject  to laws  affecting
                      creditors' rights generally).

         (c)   NO   CONTRAVENTION:   The  execution  and  delivery  of  and  the
               performance by each Obligor and the Guarantor of its  obligations
               under the Finance Documents to which it is party will not:

               (i)    contravene  or  constitute a default  under any  provision
                      contained in any  agreement,  instrument,  law,  judgment,
                      order, licence, permit or consent by which such Obligor or
                      the Guarantor (as the case may be) is or any of the assets
                      of such Obligor or the  Guarantor (as the case may be) are
                      bound or affected; or

               (ii)   conflict   with  the   constitutional   documents  of  any
                      Corporate Obligor or the Guarantor.

         (d)   LITIGATION:   No  litigation,   arbitration   or   administrative
               proceeding  or claim which would have by itself or together  with
               any other such proceedings or claims a Material Adverse Effect is
               current  or  pending  or,  to the  best of the  knowledge  of the
               Company,  threatened  against any Obligor or the Guarantor or any
               Obligor's or the Guarantor's assets.

         (e)   PARI PASSU:  The  obligations  of each Obligor and the  Guarantor
               under the  Finance  Documents  rank and will  rank at least  pari
               passu with all other  unsecured,  unsubordinated  obligations  of
               such Obligor or the Guarantor (as the case may be).

         (f)   MATERIAL  DISCLOSURES:  All information furnished by or on behalf
               of any  Obligor  and the  Guarantor  in  writing  to  Burdale  in
               connection with the Finance  Documents is true and correct in all
               material  respects  as of the date such  information  is dated or
               certified and does not omit any material  information  and is not
               misleading.  No event or  circumstance  has occurred which has or
               could  reasonably be expected to have a Material  Adverse  Effect
               which has not been fully and accurately disclosed to Burdale.

         (g)   INFORMATION:  All financial  statements  and management and other
               accounts and all other  information of whatsoever nature supplied
               to  Burdale  in  writing  by or on behalf of any  Obligor  or the
               Guarantor are true and accurate in all material  respects and not
               misleading.

         (h)   ENCUMBRANCES: Other than an Encumbrance which does not contravene
               Clause  14(p),  none of the assets of any  Corporate  Obligor are
               affected by any Encumbrance  and no Corporate  Obligor is a party
               to, nor is it or any of its assets

<PAGE>

               bound by, any order, agreement or  instrument  under  which  such
               person is, or in certain  events   may be,  required  to  create,
               assume or permit to arise any Encumbrance.

         (i)   NO GUARANTEES:  No Obligor has given any guarantee,  indemnity or
               assurance  in respect of  financial  loss of any kind  whatsoever
               other than to Burdale.

         (j)   NO  SUBSIDIARIES:  The  Company  does not  have any  Subsidiaries
               except as disclosed  in writing to Burdale  prior to today's date
               or as consented to by Burdale in accordance with Clause 14(e).

         (k)   INSURANCES: Each Corporate Obligor has taken out and there are in
               full force and effect all  insurances  (placed  with  insurers of
               substance  and  repute)  (i) as would  normally  be  effected  by
               persons   carrying   on   businesses,   and  having  the  assets,
               liabilities and responsibilities, of a similar nature to those of
               such  Corporate  Obligor and (ii) as are necessary to comply with
               the insurance  obligations  set forth in the Debenture and Clause
               14(m)  respectively and no Corporate Obligor is aware of any fact
               or circumstance which might render any of such insurances void or
               voidable at the option of the insurers.

         (l)   OWNERSHIP OF ASSETS:

               (i)    Each Corporate Obligor is the beneficial owner or licensee
                      of all material patents, trademarks, service-marks, logos,
                      design  rights,   tradenames,   trade  secrets,  know-how,
                      copyrights,  licences and other rights with respect to the
                      foregoing (together the "INTELLECTUAL PROPERTY") which are
                      necessary  for the  operation of its business as presently
                      conducted  by  it  and,  to  the  best  of  the  Company's
                      knowledge, no product, process, method, substance, part or
                      other material  currently sold or intended for sale by any
                      Corporate  Obligor or  employed by any  Corporate  Obligor
                      infringes  the  intellectual  property of any other person
                      and,  to  the  best  of  its  knowledge,   no  dispute  or
                      litigation   is  pending  or  threatened  as  regards  the
                      intellectual property of any Corporate Obligor.

               (ii)   The Corporate Obligors are the beneficial owner of all the
                      Collateral free from all Encumbrances (except as permitted
                      by Clause 14(p)) and other third party rights or interests
                      except  for  hire  purchase  and  lease  purchase   assets
                      disclosed  in writing to and  consented  to by Burdale and
                      such  Collateral is capable of being  disposed of by it to
                      Burdale by way of security or otherwise so that good title
                      to it, free of any claim or encumbrance,  can be passed to
                      Burdale.

         (m)   DEFAULT: No Event of Default has occurred and is continuing.

         (n)   FINANCIAL STATEMENTS:  The latest audited financial statements of
               each  Corporate  Obligor  (i)  have  been  reported  upon  by its
               auditors  without  qualification,  (ii)  have  been  prepared  in
               accordance  with GAAP as required by Clause 14(f) and give a true
               and fair view of the results of the  operations of such

<PAGE>

               Corporate Obligor and its assets and liabilities for the relevant
               period and of the state of the such Corporate  Obligor's  affairs
               at  the  relevant  date,  and  (iii)  in  particular,  accurately
               disclose   or  reserve   against  all   liabilities   (actual  or
               contingent),  and  there  has  been  no  change  in  the  assets,
               financial  condition or prospects of such Corporate Obligor since
               the date of those  financial  statements such that such Corporate
               Obligor  may  reasonably  be expected to be unable to perform and
               comply with any one or more of its material obligations under any
               of the Finance Documents.

         (o)   BANK  ACCOUNTS:  All  the  accounts  maintained  or  used  by any
               Corporate Obligor at any bank or financial  institution as at the
               date of this Agreement  have been included  within the definition
               of Charged Accounts.

         (p)   VALUATION:

               (i)    All information provided by or on behalf of any Obligor to
                      the valuer for the  purposes of the  Valuation is accurate
                      in all material respects and, to the best of its knowledge
                      and  belief  after  having  made  all  due  enquiries,  no
                      information  has been  omitted by it which would make that
                      information misleading in any material respect;

               (ii)   To the best of the  Company's  knowledge  and  belief  and
                      after  having  made all due  enquiries,  there has been no
                      change to the information  provided  pursuant to paragraph
                      (i) above in relation to the  Valuation  between the dates
                      such information was provided and today's date; and

               (iii)  No  information  has been  withheld  by it from the valuer
                      which to the best of its knowledge and belief after having
                      made all due enquiries, may be material to the Valuation.

         (q)   YEAR  2000   COMPLIANCE:   The  computer   equipment   (including
               peripheral  equipment)  and/or computer  software  presently used
               and/or  owned by the Company  (together  the  "SYSTEMS")  has the
               ability  properly to recognise and perform its intended  function
               and  will  not  suffer  any  adverse  effect  on  account  of any
               inability to recognise any date prior to, on or after 31 December
               1999 or on account of it treating  any date prior to, on or after
               31 December 1999 other than as the specific date in question.

13.2     REPETITION

         The representations and warranties in Clauses 8 and 13.1 will be deemed
         to be repeated by the Company on each date a Request is  submitted  and
         on each  Utilisation  Date and on each date an interest  payment is due
         under the Finance  Documents as if made with reference to the facts and
         circumstances existing on each such date.

14.      GENERAL UNDERTAKINGS

         The Company undertakes to Burdale that:

<PAGE>

         (a)   PROVISION OF ACCOUNTS AND  SHAREHOLDER  INFORMATION:  The Company
               will deliver to Burdale,  in each case copies  certified as true,
               complete and up-to-date by the finance director of the Company:

               (i)    as soon as  practicable  and in any event  within 120 days
                      from the end of each relevant  financial year  (commencing
                      with the Company's financial year ending immediately after
                      the  date of this  Agreement),  copies  of each  Corporate
                      Obligor's   audited  (and   consolidated   if  applicable)
                      accounts for that year prepared in accordance  with Clause
                      14(f)  together  with  copies  of  any  letters  from  the
                      auditors to management in connection with such accounts;

               (ii)   as soon as  practicable  and in any  event  within 30 days
                      from the end of each monthly management  accounting period
                      and in each case in a format satisfactory to Burdale, full
                      individual  and, if applicable,  consolidated  accounts in
                      each case  prepared  in Sterling in respect of that period
                      including  Stock figures and  valuations for that month, a
                      breakdown  of  the  value  and  identity  of  preferential
                      creditors  for that  month  and  details  of all input and
                      output VAT at the end of each VAT Quarter;

               (iii)  copies of all notices,  circulars,  reports and statements
                      sent to any Corporate Obligor's  shareholders or creditors
                      generally  (or any class of them) at the same time as they
                      are made available to such shareholders or creditors; and

               (iv)   such  further   information   relating  to  the  financial
                      condition or  operations  of it or any  Corporate  Obligor
                      which  Burdale  may  reasonably  require  at such  time as
                      Burdale may reasonably require it.

               Without  prejudice  to the  foregoing  provisions  of this Clause
               14(a),  Burdale  will  be  entitled  to  monitor  the  operations
               (financial  and  otherwise) of the  Corporate  Obligors and if so
               requested  every such company will provide such  information  and
               afford such assistance to Burdale as it may reasonably require.

         (b)   AUTHORISATIONS:   It  will  ensure  that  the  Obligors  and  the
               Guarantor   maintain  in  full  force  and  effect  all  relevant
               authorisations  (governmental  and otherwise  including  exchange
               control authorisations)  necessary,  and will promptly obtain and
               procure that all other Obligors and the Guarantor will obtain any
               further  authorisation which may become necessary,  to enable any
               Obligor or the  Guarantor  (as the case may be) to perform all of
               the  transactions  contemplated  by the Finance  Documents and to
               carry on its business.

         (c)   DEFAULT:  It will notify Burdale forthwith upon becoming aware of
               the occurrence of any Default and will provide  Burdale with full
               details  of any  steps  which  it is  taking,  or is  considering
               taking, in order to remedy or mitigate the effect of the Default.

         (d)   AMALGAMATIONS:  It will not,  and will  procure that no Corporate
               Obligor will,  amalgamate,  merge or consolidate with or into any
               corporation   or  other   person  or

<PAGE>

               be  the  subject  of  any  reconstruction  except with  the prior
               written consent of Burdale.

         (e)   NATURE OF BUSINESS  AND  ACQUIRING  SUBSIDIARIES:  It will ensure
               that each of its  Subsidiaries is an Obligor and that there is no
               material  change in the nature of its business or the business of
               any of its  Subsidiaries.  It will  not  create  or  acquire  any
               Subsidiary  after  today's  date  except  with the prior  written
               consent  of  Burdale  (which  consent  shall not be  unreasonably
               withheld  and  which   consent  may  be  subject  to   conditions
               including,  without  limitation,  a requirement that the relevant
               Subsidiary becomes an Obligor and grants security to Burdale in a
               form  satisfactory  to Burdale but on terms no more  onerous than
               those comprised in the Debenture).

         (f)   ACCOUNTING POLICIES AND TAX FILINGS: It will and will ensure that
               each Corporate Obligor will:

               (i)    prepare all accounts and financial information required by
                      Clause 14(a) in a consistent  manner,  in accordance  with
                      GAAP and in compliance with the Companies Act 1985;

               (ii)   ensure that all such  accounts and  financial  information
                      present a true and fair view of the financial condition of
                      the relevant  Corporate  Obligor  individually  and (where
                      consolidation is required) as a group as a whole

               (iii)  promptly  file all tax returns and  declarations  required
                      from it by the United  Kingdom Inland  Revenue,  Customs &
                      Excise  and other  competent  taxation  and/or  regulatory
                      authorities in the United Kingdom; and

               (iv)   duly pay all  taxes,  contributions  and  levies  lawfully
                      required of it by such authorities.

         (g)   DISPOSALS:  It will  not,  and  will  procure  that no  Corporate
               Obligor will, sell, transfer, lease, lend or otherwise dispose of
               or cease to exercise direct control over the whole or any part of
               its or their present or future  undertakings,  assets or revenues
               and whether by one or a series of transactions whether related or
               not,  save that the  restriction  contained  in this Clause 14(g)
               will  not  apply  to  the  following  transactions  (but  without
               prejudice to the proprietary  and security rights  conferred upon
               Burdale under the Debenture):

               (i)    the disposal of Stock in the  ordinary  course of trading;
                      or

               (ii)   the  application of cash in the purchase or acquisition of
                      goods and services in the ordinary course of trading or in
                      any manner not prohibited by any of the Finance Documents;
                      or

               (iii)  the disposal of obsolete assets where the proceeds of sale
                      (if any) are paid into the Blocked Account; or
<PAGE>

               (iv)   the sale of the  Mortgaged  Property  in  existence  as at
                      today's date at or above the Initial  Valuation  where the
                      proceeds of sale are  applied  first in  repayment  of the
                      Property  Loan  and  second  are  paid  into  the  Blocked
                      Account; or

               (v)    any  disposal of any  Equipment  on arms length  terms the
                      proceeds of which do not exceed(pound)5,000 PROVIDED THAT:

                      (1)   such proceeds,  when aggregated with the proceeds of
                            all  other   such   disposals   permitted   by  this
                            sub-clause   (v),   do  not  at  any   time   exceed
                            (pound)50,000  during  the  next  succeeding  twelve
                            month period; and

                      (2)   all such  proceeds of sale are paid into the Blocked
                            Account.

               (vi)   any  disposal  in respect of which  Burdale  has given its
                      prior written consent.

         (h)   ACQUISITIONS:  It will not,  and will  procure  that no Corporate
               Obligor will,  except in the ordinary course of trade acquire any
               business,  undertaking or assets of any kind  whatsoever  save as
               permitted by Clause 14(d).

         (i)   INTRA-GROUP  ARRANGEMENTS:  It will not, and will procure that no
               Corporate Obligor will, without obtaining Burdale's prior written
               consent:

               (i)    pay any dividend or make any other  distribution of any of
                      its  assets to its  shareholders  or any of them or prepay
                      any inter-company indebtedness borrowed from any member of
                      the Company's group; or

               (ii)   pay  any  other  moneys,   whether  by  way  of  interest,
                      management fees or otherwise howsoever,  to any affiliate,
                      subsidiary or any shareholder, director or employee except
                      for  payments in the  ordinary  course of, and pursuant to
                      the reasonable requirements of, trading and on arms length
                      commercial terms; or

               (iii)  redeem any of its ordinary or preference share capital.

         (j)   AUDITS  BY  BURDALE:  It will  permit  Burdale  or its  appointed
               representatives  or agents at the Company's expense to conduct an
               audit  of its  financial  records,  systems  and  forecasts  on a
               quarterly  basis  or,   following  a  Default  at  more  frequent
               intervals   as  Burdale  may   stipulate   and  will  afford  all
               co-operation  to  Burdale  and its  representatives  or agents to
               enable such audit to take place.

         (k)   INCURRING INDEBTEDNESS:

               (i)    LOANS:  It will not,  and will  procure  that no Corporate
                      Obligor  will,   enter  into  or  have   outstanding   any
                      arrangements   whatsoever   with  any  bank  or  financial
                      institution  (other than Burdale) or  corporation or other
                      person for the provision to it or any Corporate Obligor of
                      any loan or other form of financial  accommodation  except
                      for (A) normal trade credit  granted to it in the ordinary
                      course  of  its  trade  and  (B)  Financial   Indebtedness
                      incurred in

<PAGE>

                      respect of  equipment,  vehicle and  operating  leases and
                      hire  purchase  transactions  entered into in the ordinary
                      course of its trade  where the total  value of such leases
                      and  transactions  for the  Corporate  Obligors as a whole
                      does not exceed the (pound)50,000 at any one time PROVIDED
                      THAT:

                      (1)    in the case of  Financial  Indebtedness  under  (B)
                             above, the relevant Corporate Obligor may only make
                             regularly   scheduled  payments  of  principal  and
                             interest  in  respect  of  such   indebtedness   in
                             accordance  with  the  terms  of the  agreement  or
                             instrument   evidencing  or  giving  rise  to  such
                             indebtedness as in effect on today's date;

                      (2)    in the case of  Financial  Indebtedness  under  (B)
                             above,  the relevant  Corporate  Obligor shall not,
                             directly or indirectly (I) amend,  modify, alter or
                             change  the  terms  of  such  indebtedness  or  any
                             agreement, document or instrument relating to it as
                             in effect on today's date or (II)  redeem,  retire,
                             defease,   purchase  or   otherwise   acquire  such
                             indebtedness,  or set aside or otherwise deposit or
                             invest any sums for such purpose; and

                      (3)    in each case, the relevant  Corporate Obligor shall
                             furnish  to  Burdale  all  notices  or  demands  in
                             connection with such  indebtedness  either received
                             by the relevant Corporate Obligor or on its behalf,
                             promptly  after  receipt,  or sent by the  relevant
                             Corporate  Obligor or on its  behalf,  concurrently
                             with sending, as the case may be.

               (II)   MAKING  LOANS:  It will  not,  and  will  procure  that no
                      Corporate  Obligor  will,  make  any  loans  or  financial
                      accommodation available to any person except for the grant
                      of  normal  trade  credit  in the  ordinary  course of its
                      trade; and

               (III)  BANK  ACCOUNTS:  It will  not,  and will  procure  that no
                      Corporate  Obligor  will,  open or maintain any account of
                      any type with any bank or financial  institution providing
                      like services other than the Charged Accounts.

         (l)   NO  GUARANTEES:  It will not,  and will procure that no Corporate
               Obligor will, give any guarantee,  indemnity or assurance against
               financial loss of any kind  whatsoever  provided that it may give
               an indemnity  or  assurance  in the ordinary  course if its trade
               where such  indemnity  or  assurance is not, or is not in respect
               of, Financial Indebtedness.

         (m)   INSURANCE:  It will, and will procure that each Corporate Obligor
               will:

               (i)    observe  and  perform  all  obligations  as  to  insurance
                      imposed upon it in a lease relating to any of the Property
                      and  supply to  Burdale  such  proof as it may  reasonably
                      require  that it has so  complied  and will apply any sums
                      received  pursuant  to such  insurance  as required by any
                      relevant lease;

               (ii)   as regards  all its assets  and  property  of any kind and
                      businesses  arrange and  maintain in full force and effect
                      insurances   (including   consequential   loss,   business
                      interruption  and  public  liability  and damage and other
                      insurances

<PAGE>

                      usually  maintained by companies carrying on the same type
                      of business  as its own  business)  with such  insurers as
                      Burdale   approves   and  on  such  terms   (including   a
                      requirement  that the relevant  insurer must give at least
                      30  days'   prior   written   notice  to  Burdale  of  any
                      cancellation or reduction of insurance  cover) and in such
                      amounts as Burdale may reasonably require and is customary
                      for an enterprise  engaged in the same or similar business
                      and in the same or similar  localities  and  against  such
                      risks as Burdale shall reasonably request and will procure
                      that Burdale's  interest is noted on all policies relating
                      to insurances so arranged in such manner as Burdale may in
                      its  absolute  discretion  require  and,  as  regards  all
                      policies   relating  to  the  Collateral,   will  use  all
                      reasonable  endeavours  to ensure that Burdale is named as
                      sole loss payee (but  without  having any  obligation  for
                      premiums)  and as joint  insured in  relation to all those
                      policies ensure that every policy of insurance  contains a
                      standard mortgagee clause, whereby such insurance will not
                      be invalidated, vitiated or avoided as against a mortgagee
                      in the event of any  misrepresentation,  act,  neglect  or
                      failure to disclose  on the part of the  insured  provided
                      that where the insurers  will not agree such terms,  terms
                      acceptable to Burdale in Burdale's absolute discretion are
                      agreed  and will  supply  to  Burdale  copies  of all such
                      policies of insurance and all endorsements and renewals of
                      such policies;

               (iii)  duly  and  punctually  pay  all  premiums  in  respect  of
                      insurances  required to be arranged  and/or  maintained in
                      accordance with this Clause 14(m) and not do or omit to do
                      any act, matter or thing whereby any such insurance may be
                      or becomes  void or voidable at the option of the insurers
                      or settle any claim in respect of those insurances without
                      the prior written consent of Burdale,  such consent not to
                      be unreasonably withheld or delayed;

               (iv)   it shall  comply  with,  enforce  and not waive,  release,
                      terminate  or vary  (or  agree  so to do) any  obligations
                      arising under all policies of insurance and in particular,
                      but   without   limitation,   it  shall   notify   Burdale
                      immediately  upon  receiving  notice from any insurer that
                      the details of any  insurance  policy are to change in any
                      way and upon receiving notice from any insurer terminating
                      any insurance policies;

               (v)    in the event that it receives from any insurer notice that
                      such insurer is  terminating  any  insurance  policy,  the
                      Company shall use all reasonable  endeavours to enter into
                      an  agreement  on  substantially  the same  terms as those
                      contained in the original insurance policy with such other
                      insurer as  approved by Burdale and to the extent that the
                      same  terms  or  substantially  the  same  terms  are  not
                      available  from the insurer,  such terms as are acceptable
                      to Burdale in its absolute  discretion,  to take effect on
                      or  before  the  expiry of such  notice  and shall use all
                      reasonable  endeavours  to procure that such insurer gives
                      to  Burdale  such  acknowledgements  and  undertakings  in
                      relation  to this  Deed  as  Burdale  may in its  absolute
                      discretion require;

               (vi)   indemnify  Burdale  fully  forthwith  at a minimum  of the
                      Daily Rate upon demand for any and all costs and  expenses
                      incurred by Burdale  from time to time in  obtaining  from
                      time to time a report or  reports or an audit or

<PAGE>

                      audits on the  adequacy of the  insurances  referred to in
                      Clause 14(m)(ii) above from an insurance adviser appointed
                      by Burdale;

               (vii)  produce to Burdale on request  copies of all  policies and
                      all receipts for the current  premiums with respect to the
                      insurance; and

               (viii) immediately give notice to Burdale of any occurrence which
                      gives  rise,  or might  give  rise,  to a claim  under any
                      policy of insurance.

               If  the  Company  at  any  time  fails  to  perform  any  of  its
               obligations contained in this Clause, Burdale may effect or renew
               such  insurance  as  Burdale  thinks  fit and the  Company  shall
               reimburse Burdale for the costs thereby incurred on demand.

         (n)   INSURANCE MONIES:

               (i)    The Company  shall apply all monies  received by virtue of
                      any  insurance  relating  to the  whole or any part of the
                      Collateral  in making good,  or in  recouping  expenditure
                      incurred in making good, any loss or damage or, if Burdale
                      in its  discretion so requires,  towards  discharge of the
                      Company's liabilities under the Finance Documents.

               (ii)   The  Company  shall  ensure  that all such  monies  as are
                      referred to in Clause 14(n)(i) which are not paid directly
                      by the insurers to Burdale  shall be held by the recipient
                      upon trust for  Burdale  and be applied by the  Company in
                      accordance with Clause 14(n)(i).

         (o)   MATERIAL  ADVERSE EFFECT:  It will notify Burdale  forthwith upon
               becoming aware of the  occurrence of any event which  constitutes
               or could  reasonably  be expected  to produce a Material  Adverse
               Effect.

         (p)   NEGATIVE PLEDGE:  It will not, and will procure that no Corporate
               Obligor will,  create or permit to subsist any Encumbrance on the
               whole or any part of the  present or future  assets,  property or
               undertaking  (including,  without limitation,  the Collateral) of
               itself or any such Corporate Obligor, except for the following:

               (i)    liens securing obligations which arise by operation of law
                      in the ordinary  course of trading of the relevant  entity
                      and which are not more than 30 days overdue;

               (ii)   Encumbrances  arising out of title retention provisions in
                      a  supplier's  terms  and  conditions  of  supply of goods
                      acquired in the ordinary  course of business and which are
                      specified  in  Schedule  3 Part I or which  are  otherwise
                      notified to Burdale and consented to by it; and

               (iii)  Encumbrances arising under the Finance Documents.

         (q)   TRANSACTIONS  SIMILAR TO SECURITY:  Except with the prior written
               consent  of  Burdale,  it will  not,  and  will  procure  that no
               Corporate Obligor will:

<PAGE>

               (i)   sell or otherwise  dispose of a significant  portion of its
                     Collateral  on terms  whereby such  Collateral is or may be
                     leased to or re-acquired or acquired by it or any Corporate
                     Obligor or any of their respective related entities; or

               (ii)  sell, charge, factor, discount, assign or otherwise dispose
                     of any of its Receivables or purport to do so other than in
                     favour of Burdale,

               but   any   transaction   which  is  expressly  permitted  by the
               exceptions  to Clause  14(p)  will  not,  for  the  avoidance  of
               doubt, be prohibited by this Clause 14(q).

         (r)   MAINTENANCE OF STATUS AND  FRANCHISES:  It will, and will procure
               that each Corporate Obligor will:

               (i)    do all  such  things  as are  necessary  to  maintain  its
                      corporate existence; and

               (ii)   ensure  that it has the  right  and is duly  qualified  to
                      conduct   its   business  as  it  is   conducted   in  all
                      jurisdictions  in which it  operates  and will  obtain and
                      maintain  all  franchises  and  rights  necessary  for the
                      conduct of its business.

         (s)   FINANCIAL YEAR END AND CHANGE OF AUDITORS:  Except with the prior
               written consent of Burdale,  it will not alter its financial year
               end from that  applicable  at the date of this  Agreement  and it
               will procure at all times a firm of auditors  which is acceptable
               to Burdale.

         (t)   TAXES:  It will  promptly pay all Taxes as and when they fall due
               (other than in circumstances  where such Taxes are the subject of
               a dispute  being  carried  on  properly  and in good faith by the
               Company where written  details of such dispute have been supplied
               to Burdale (if  requested,  Burdale  having been  notified of the
               dispute)  or,  in  the  case  of  PAYE  and  National   Insurance
               contributions,  within any permitted grace period or, in the case
               of any other taxes,  in  accordance  with any other  arrangements
               agreed with the Inland Revenue or other taxing authority.

         (u)   RETENTION OF TITLE: It will promptly inform Burdale in writing if
               any  creditor of the  Company or any  Corporate  Obligor  imposes
               retention of title provisions as part of its conditions of supply
               to the Company or such Corporate Obligor.

         (v)   CHANGE  OF NAME:  It will not  change  its  name  without  giving
               Burdale 30 days' prior  written  notice of the  proposed new name
               and  will  supply  a  copy  of  the   relevant   certificate   of
               incorporation  on change of name to Burdale as soon as it becomes
               available.

         (w)   NEW COLLATERAL  LOCATIONS:  It will not (and will procure that no
               Corporate  Obligor will) open any new location  within the United
               Kingdom  without  giving Burdale 30 days' prior written notice of
               the new location and  executing  and  delivering  to Burdale such
               access  agreements,  landlord  waivers  and  other  documents  as
               Burdale may  reasonably  require in order to protect its interest
               in the Collateral.

         (x)   STAMP  DUTY:  It will  promptly  pay any  liability  incurred  in
               respect of any stamp,  registration  and  similar Tax which is or
               becomes payable in connection with the

<PAGE>

               entry   into,   registration,    performance,    enforcement   or
               admissibility  in  evidence of any  Finance  Document  and/or any
               amendment,  supplement or waiver of any Finance Document.  In the
               event  of  any  breach  of  this   warranty  the  Company   shall
               immediately  pay to  Burdale  by way of  liquidated  damages  the
               amount of any liability  that Burdale may incur as a result of or
               by reference to the Company's  delay in paying or omission to pay
               any such Tax.

         (y)   MINIMUM NET WORTH:  Consolidated  Tangible Net Worth shall not be
               less than (pound)900,000.

15.      EVENTS OF DEFAULT

15.1     DEFAULT

         Each of the events specified below constitutes an Event of Default:

         (a)   PAYMENT DEFAULT: Any Obligor or the Guarantor fails to pay on its
               due date any amount payable by it under the Finance  Documents at
               the  place and in the  currency  in which it is  expressed  to be
               payable  or,  where  such  failure  is  due  to  a  technical  or
               administrative  failure  within the banking  system (which is not
               attributable  to the relevant  Obligor or the  Guarantor  (as the
               case may be)), within two Business Days of such due date.

         (b)   BREACH OF OTHER OBLIGATIONS:

               (i)    Any  Obligor  fails  to  observe  or  perform  any  of its
                      obligations or undertakings under, or there is a breach of
                      any of Clauses 14(k), 14(m), 14(n) or 14(p).

               (ii)   Any Obligor or the  Guarantor  fails to observe or perform
                      any of its  obligations or  undertakings  under any of the
                      Finance  Documents (other than those referred to in Clause
                      15.1(a) or 15.1(b)(i))  and, where such failure is capable
                      of remedy,  such Obligor or the Guarantor (as the case may
                      be) fails to remedy the same within ten  Business  Days of
                      the Company becoming aware of such breach.

         (c)   MISREPRESENTATION:   Any   representation  or  warranty  made  or
               repeated in connection with any Finance  Document or delivered by
               or for any Obligor or the Guarantor  under or in connection  with
               any Finance Document is incorrect in any material respect.

         (d)   INVALIDITY: Any provision of any of the Finance Documents is not,
               or is alleged by any Obligor or the  Guarantor  not to be binding
               on or  enforceable  against  any  Obligor  or  the  Guarantor  or
               effective to create any security intended to be created by it.

<PAGE>

         (e)   CROSS-DEFAULT:

               (i)    Any    Financial     Indebtedness     of    any    Obligor
                      exceeding(pound)50,000   (or  its   equivalent   in  other
                      currencies) in aggregate is not paid when due.

               (ii)   An event of default  howsoever  described occurs under any
                      document relating to Financial Indebtedness of any Obligor
                      exceeding   (pound)50,000  (or  its  equivalent  in  other
                      currencies).

               (iii)  Any Encumbrance  securing Financial  Indebtedness over any
                      asset of any Obligor becomes enforceable.

               (iv)   An amount  exceeding  (pound)50,000  in aggregate  owed to
                      trade  creditors  of  the  Company   remains   outstanding
                      following  the  expiry  of any  relevant  customary  trade
                      credit period.

         (f)   CREDITORS' PROCESS:  Any attachment,  sequestration,  distress or
               execution  affects any asset of any Obligor and is not discharged
               within 14 days.

         (g)   APPOINTMENT OF RECEIVERS AND MANAGERS:

               (i)   Any liquidator, trustee in bankruptcy,  judicial custodian,
                     compulsory  manager,  receiver,   administrative  receiver,
                     administrator  or the like is  appointed  in respect of any
                     Obligor or the Guarantor or any part of its assets.

               (ii)  The  directors of any  Corporate  Obligor or the  Guarantor
                     request  the  appointment  of  a  liquidator,   trustee  in
                     bankruptcy,   judicial   custodian,   compulsory   manager,
                     receiver,  administrative  receiver,  administrator  or the
                     like.

               (iii) Any other steps are taken to enforce any  Encumbrance  over
                     any part of the assets of any Obligor or the Guarantor.

         (h)   INSOLVENCY:

               (i)   Any  Obligor  or the  Guarantor  is, or is  deemed  for the
                     purposes of any law to be,  unable to pay its debts as they
                     fall due or to be insolvent, or admits inability to pay its
                     debts as they fall due.

               (ii)  Any Obligor or the Guarantor  suspends  making  payments on
                     all or any class of its debts or  announces an intention to
                     do so, or a moratorium is declared in respect of any of its
                     indebtedness.

               (iii) Any  Obligor  or the  Guarantor,  by  reason  of  financial
                     difficulties,  begins  negotiations with one or more of its
                     creditors with a view to the  readjustment  or rescheduling
                     of any of its indebtedness.

<PAGE>

         (i)   INSOLVENCY PROCEEDINGS:

               (i)   Any step  (including  petition,  proposal  or  convening  a
                     meeting) is taken with a view to a composition,  assignment
                     or  arrangement  with any  creditors  of any Obligor or the
                     Guarantor.

               (ii)  A meeting  of any  Corporate  Obligor or the  Guarantor  is
                     convened for the purpose of considering  any resolution for
                     (or  to   petition   for)   its   winding-up   or  for  its
                     administration or any such resolution is passed.

               (iii) Any person  presents a petition for the  winding-up  or for
                     the  administration or for the bankruptcy of any Obligor or
                     the Guarantor  unless (other than in the case of a petition
                     for  administration)  the relevant Obligor or the Guarantor
                     (as the case may be) can demonstrate to the satisfaction of
                     Burdale (acting  reasonably) that the relevant  petition is
                     frivolous, vexatious or an abuse of process of the court or
                     that it relates to a claim to which the relevant Obligor or
                     the Guarantor (as the case may be) has a good defence which
                     it is diligently pursuing.

               (iv)  An order for the winding-up or administration or bankruptcy
                     of any Obligor or the Guarantor is made.

               (v)   Any other step (including petition, proposal or convening a
                     meeting)  is  taken  with  a view  to  the  rehabilitation,
                     administration,   custodianship,  liquidation,  winding-up,
                     dissolution  or  bankruptcy of any Obligor or the Guarantor
                     or any other insolvency or analogous  proceedings involving
                     any such person  unless,  in the case of a petition  (other
                     than in the  case of a  petition  for  administration)  the
                     relevant  Obligor or the Guarantor (as the case may be) can
                     demonstrate  to  the   satisfaction   of  Burdale   (acting
                     reasonably)  that  the  relevant   petition  is  frivolous,
                     vexatious  or an abuse of  process  of the court or that it
                     relates  to a claim to which the  relevant  Obligor  or the
                     Guarantor  (as the case may be) has a good defence which it
                     is diligently pursuing.

         (j)   LIKE PROCEEDINGS: There occurs, in relation to any Obligor or the
               Guarantor,  any event anywhere  which, in the opinion of Burdale,
               appears to correspond  with any of those  mentioned in paragraphs
               (f), (g), (h) or (i) above.

         (k)   CESSATION OF BUSINESS:  Any  Corporate  Obligor or the  Guarantor
               ceases,  or threatens to cease,  to carry on all or a substantial
               part of its business.

         (l)   AUTHORISATIONS:  Any authorisation,  approval,  consent, licence,
               exemption,   filing,   registration   or  notarisation  or  other
               requirement  necessary to enable any Obligor or the  Guarantor to
               comply with any of its obligations under the Finance Documents or
               for  Burdale  to enter  into this  Agreement  and make  available
               and/or  maintain  the  Facilities  or any of them is  revoked  or
               withheld  or does not  remain  in full  force  and  effect  or is
               materially and adversely modified.

<PAGE>

         (m)   SEIZURE:  The conduct of the business of any Corporate Obligor is
               wholly or substantially  curtailed by any seizure or intervention
               by or on behalf of any authority.

         (n)   UNLAWFULNESS:  It is or becomes  unlawful  for any Obligor or the
               Guarantor  to perform  any of its  obligations  under the Finance
               Documents.

         (o)   CHANGE OF CONTROL:  Any single person or group of persons  acting
               in concert (as defined in the City Code on Takeovers and Mergers)
               not having  control of the Company  directly or  indirectly as at
               today's date,  acquires or agrees to acquire  control (as defined
               in Section 416 of the Income and  Corporation  Taxes Act 1988) of
               the Company.

         (p)   MATERIAL  ADVERSE  EFFECT:  An event or series  of events  occurs
               which  in  Burdale's  reasonable  opinion  constitutes  or  could
               reasonably be expected to constitute a Material Adverse Effect.

         (q)   CHARGED ACCOUNT ARRANGEMENTS:

               (i)    Any Account Bank  repudiates  or purports to terminate the
                      arrangements set out in the Debenture  unless, in relation
                      to an Other  Account,  the  Company has within 15 Business
                      Days of such repudiation or purported  termination  closed
                      the relevant Other Account and opened another account with
                      a bank  which  has been  given  and has  acknowledged  all
                      notices required by the Debenture; or

               (ii)   A cash-sweep or payment required to be made by any Account
                      Bank under any Finance  Document from a Charged Account is
                      not made in the amount and manner required; or

               (iii)  The Company has not,  prior to 31st January  2000,  closed
                      all Other  Accounts at HSBC Bank plc (or any member of the
                      HSBC group,  including  without  limitation,  Midland Bank
                      PLC) and  opened  replacement  bank  accounts  with a bank
                      which is  satisfactory  to Burdale  and such bank has been
                      given and has  acknowledged  all  notices  required by the
                      Debenture.

15.2     ACTION ON DEFAULT

         Upon the  occurrence  of any Event of  Default  and  whilst the same is
         continuing, and without prejudice to any of Burdale's rights under this
         Agreement, Burdale may, by notice to the Company:

         (a)   declare that an Event of Default has occurred; and/or

         (b)   declare that the  Facilities  or any of them shall be  cancelled,
               whereupon  the  Facilities  or such of them  (as the case may be)
               shall be so cancelled and all fees (including  without limitation
               pursuant to Clause 6.7(b))  payable in relation to the Facilities
               or such of them (as the case may be) shall become immediately due
               and payable; and/or

<PAGE>

         (c)   declare  that some or all of the  Loans,  together  with  accrued
               interest and all other amounts  accrued,  be immediately  due and
               payable, whereupon they shall become immediately due and payable;
               and/or

         (d)   declare  that some or all of the  Loans,  together  with  accrued
               interest  and all other  amounts  accrued,  be payable on demand,
               whereupon they shall immediately become payable on demand (and in
               the event of any such demand those Loans,  such interest and such
               other amounts shall be immediately due and payable); and/or

         (e)   declare  that the  Company  shall  forthwith  pay or procure  the
               payment to Burdale of a sufficient sum to cover the amount of all
               Outstanding  Purchase Price and/or any contingent  obligations of
               Burdale  under  any   outstanding   L/Cs  and/or  any  contingent
               obligation of Burdale under any Forex Transaction,  whereupon the
               same shall become  immediately  due and payable  and,  once paid,
               shall be held by  Burdale  in an  interest  bearing  account  for
               application against such Outstanding Purchase Price or contingent
               obligation (as the case may be),  provided that any sum remaining
               after settling such payments shall be applied first in settlement
               of any other  amounts  then due and payable to Burdale  under the
               Finance  Documents  and,  subject to that,  any balance  shall be
               promptly  repaid to the Company or other  person  entitled to the
               balance.

15.3     APPOINTMENT OF INSOLVENCY OFFICER

         If  any  liquidator,   trustee  in  bankruptcy,   judicial   custodian,
         compulsory manager, receiver, administrative receiver, administrator or
         any other insolvency  officer is appointed in respect of any Obligor or
         any part of its assets  (whether on the application or with the consent
         of Burdale or  otherwise)  then  Burdale  may (with or without it first
         having exercised any of its other rights under the Finance  Documents),
         by notice to the  Company,  declare  that the fee  specified  in Clause
         6.7(b) be immediately due and payable or, at Burdale's option,  payable
         upon demand as if the  Facility  Limit at such time had been reduced to
         zero,  whereupon such fee shall become  immediately  due and payable or
         payable on demand (as the case may be).

16.      COSTS, EXPENSES AND FEES

16.1     INITIAL AND GENERAL COSTS

         The Company  shall pay to Burdale on demand the amount of all costs and
         expenses (including legal fees and VAT) incurred by it:

         (a)   in the  negotiation,  preparation,  printing and execution of the
               Finance Documents (including any Finance Documents executed after
               today's date);

         (b)   in relation to any  amendment,  waiver,  consent or suspension of
               rights  requested  by or on behalf of any  Obligor  relating to a
               Finance Document;

<PAGE>

         (c)   in remitting loan proceeds, collecting cheques and other items of
               payment,  and establishing and maintaining the Charged  Accounts,
               together with  Burdale's  associated  and  customary  charges and
               fees;

         (d)   as out-of-pocket  expenses and costs from time to time (including
               prior to  today's  date)  during  the  course of  periodic  field
               examinations of the Collateral and the Company's operations, plus
               a daily charge at the Daily Rate for  Burdale's  examiners in the
               field and office for up to four such periodic field  examinations
               in any 12 month  period  prior to a Default  and for any other or
               additional  field  examinations  on and after the occurrence of a
               Default.

16.2     VALUATIONS

         (a)   Immediately upon demand, the Company shall pay the costs of:

               (i)    the Initial Valuation; and

               (ii)   any Valuation under Clause 16.2(b).

         (b)   Burdale may request a Valuation:

               (i)    once in each period of 12 months commencing  today's date;
                      and

               (ii)   at any time if a Default is outstanding.

         (c)   Burdale  may  also  call for a  Valuation  at any time at its own
               cost.

16.3     ENFORCEMENT COSTS

         The Company  shall pay to Burdale on demand the amount of all costs and
         expenses (including legal fees and VAT) incurred by it in:

         (a)   the enforcement of, or the  preservation of any rights under, any
               Finance Document; or

         (b)   investigating any Default.

16.4     FEES

         (a)   FACILITY  FEE: The Company  will pay to Burdale  today a facility
               fee equal to 1% on the amount of the Facility Limit.

         (b)   ANNUAL FEE: The Company  will pay to Burdale on each  anniversary
               of today's date an annual fee of(pound)13,200.

         (c)   COMMITMENT  FEE: The Company will pay to Burdale a commitment fee
               computed  at the rate of 0.375%  on the daily  undrawn/unutilised
               balance of the Facility  Limit.  Accrued  Commitment Fee shall be
               payable monthly in arrears from today's date and also on the date
               on which all the Facilities are terminated.  Commitment fee

<PAGE>

               shall accrue from day to day and be  calculated on the basis of a
               365 day year and for the actual number of days elapsed.

         (d)   MONITORING  FEE: The Company will pay to Burdale a monitoring fee
               of(pound)3,500  quarterly in advance with the first payment to be
               made on today's date.

         (e)   L/C FEE: The Company will pay to Burdale a fee equal to 0.25% per
               month on the face  amount  of each L/C  issued  at the  Company's
               request in respect of the period between the date of issue of the
               L/C and the End Date of such L/C. The fee shall be  calculated on
               the basis of a 365 day year and shall be paid  monthly in arrears
               and on the End Date of such L/C.

17.      INDEMNITIES

17.1     CURRENCY INDEMNITY

         If any amount payable by any Obligor under or in connection with any of
         the Finance  Documents is received by Burdale in a currency  other than
         that  agreed to be payable  under the Finance  Documents,  whether as a
         result of any judgment or order or other  enforcement,  the liquidation
         or  bankruptcy  of any Obligor or  otherwise  howsoever  and the amount
         produced  by  converting  the  currency  so  received  into the  agreed
         currency is less than the relevant amount of the agreed currency,  then
         the Company will as an independent obligation indemnify Burdale for the
         deficiency and any loss sustained as a result.  Such conversion will be
         made at the  Exchange  Rate,  on such  date  and in such  market  as is
         determined by Burdale as being most favourable for such conversion. The
         Company will in addition pay the costs of such conversion.

17.2     FOREIGN EXCHANGE INDEMNITY

         The Company will  indemnify and hold Burdale  harmless from and against
         any and all losses, claims,  damages,  liabilities,  costs and expenses
         which  Burdale  may  suffer  or incur  in  connection  with  any  Forex
         Transaction and any documents, drafts or financial information relating
         to such Forex Transaction,  including,  but not limited to, any losses,
         claims,  damages,  liabilities,  costs and  expenses  due to any action
         taken by any counterparty with respect to any Forex Transaction, except
         for any such losses, claims, damages,  liabilities,  costs and expenses
         suffered or incurred by Burdale as a result of its gross  negligence or
         wilful  misconduct  as  determined  pursuant to a final  non-appealable
         order of a court of  competent  jurisdiction.  The Company  assumes all
         risks with respect to the acts or omissions of any  counterparty to any
         Forex Transaction and for such purposes the counterparty will be deemed
         the Company's  agent.  The Company assumes all risks for, and agrees to
         pay,  all foreign and local  taxes,  duties and levies  relating to any
         transaction pursuant to the Forex Transactions or any documents, drafts
         or  financial  information  relating  to such  Forex  Transaction.  The
         Company  releases and holds Burdale harmless from and against any acts,
         waivers, errors, delays or omissions, whether caused by the Company, by
         any  counterparty or otherwise with respect to or relating to any Forex
         Transaction.  The  provisions  of this  Clause  17.2 will  survive  the
         discharge  of  the  liabilities  of  the  Obligors  under  the  Finance
         Documents.

<PAGE>

17.3     OTHER INDEMNITIES

         The  Company  will  indemnify  Burdale  on demand  against  any loss or
         liability which Burdale incurs as a result of:

         (a)   the occurrence of any Default;

         (b)   any payment of principal or other amount being  received from any
               source otherwise than on its due date under this Agreement;

         (c)   any   Utilisation  not  being  effected  after  the  Company  has
               delivered a Request in respect of such Utilisation  other than as
               a result of Burdale's negligence or default;

         (d)   any prepayment or provision of cash collateral by the Company not
               being made in accordance with the terms of this Agreement;

         (e)   the issue of the  letter of credit or  guarantee  by First  Union
               Corporation  referred to in sub-clause  (e) of the  definition of
               "AVAILABILITY RESERVE" in Clause 1.1 of this Agreement.

         In each case the Company's liability includes (without  limitation) any
         loss of margin or  anticipated  profits  or other  loss or  expense  on
         account  of funds  borrowed,  contracted  for or  utilised  to fund any
         amount  payable  under  any  Finance  Document  and on  account  of any
         security given by Burdale in relation to those funds and in relation to
         any amount repaid or prepaid in relation to any Finance Document.

17.4     STAMP DUTY

         Immediately  upon demand,  the Company shall pay and indemnify  Burdale
         against any liability it incurs for any stamp,  registration or similar
         tax or duty (and any applicable  penalties) which is or becomes payable
         because of the entry into,  performance  or  enforcement of any Finance
         Document.

17.5     GENERAL PROVISIONS REGARDING INDEMNITIES

         The following provisions apply to each of the indemnities  contained in
         Clauses 17.1 to 17.4 inclusive (the "INDEMNITIES"):

         (a)   Each of the  Indemnities  will  remain in full  force and  effect
               until  such time as all  amounts to which  such  Indemnities  are
               expressed to relate have been paid in full. The  Indemnities  are
               additional to and not instead of any security or other  guarantee
               or indemnity at any time existing in favour of any person.

         (b)   Any  settlement  or  discharge  of  any  claim  under  any of the
               Indemnities  will be  conditional  upon no payment made under the
               Indemnities  being avoided or set aside or ordered to be refunded
               by  virtue  of  any  provision  of  any  enactment   relating  to
               bankruptcy, insolvency or liquidation.

<PAGE>

         (c)   The  obligations  arising  under  the  Indemnities  will  not  be
               impaired by any circumstances  which but for this provision would
               impair such obligations including:

               (i)    any time, indulgence,  concession,  releases,  discharges,
                      renewals,  waivers or consents at any time or from time to
                      time given to any person;

               (ii)   any amendment, waiver or alteration made in respect of any
                      Finance Document;

               (iii)  the  making or  absence  of any  demand on any  person for
                      payment  or  performance  of  any  obligations,   and  the
                      application  of any monies at any time  received  from any
                      person;

               (iv)   the enforcement, perfection or protection of or absence of
                      enforcement,  perfection  or  protection  of any security,
                      guarantee or undertaking;

               (v)    the release,  taking,  giving or abstaining from taking of
                      any security, guarantee or undertaking;

               (vi)   the  winding-up,   insolvency,   amalgamation,  merger  or
                      consolidation  of or  the  making  of any  arrangement  or
                      composition  with or for the benefit of  creditors  by any
                      person (or the commencement of any of the foregoing);

               (vii)  the illegality,  invalidity or  unenforceability of or any
                      defect in any  provision  of any  Finance  Document or any
                      liabilities  or  obligations  created or  expressed  to be
                      created under any Finance Document; or

               (viii) any person  ceasing or  refraining  from giving  credit or
                      making loans or advances to, accepting composition from or
                      otherwise   dealing  with  any  person  or  any  security,
                      guarantee or undertaking.

         (d)   The  Company  will not by virtue of any  payment  made  under the
               Indemnities  claim  any  right of  subrogation,  contribution  or
               indemnity  against  any  person  for so long  as any sum  remains
               payable or capable of becoming  payable  under this  Agreement or
               any of the other Finance Documents.

18.      EVIDENCE OF INDEBTEDNESS

         In any proceedings  relating to any Finance  Document a statement as to
         any amount due to Burdale  under this  Agreement  which is certified as
         being  correct by an officer of Burdale will in the absence of manifest
         error  be  conclusive  evidence  that  such  amount  is in fact due and
         payable.

19.      NOTICES

19.1     DELIVERY AND RECEIPT

<PAGE>

         All notices  pertaining to this Agreement  shall be given in writing or
         facsimile and shall be deemed to be given as follows:

         (a)   if in writing, when delivered; and

         (b)   if by facsimile, when received,

         save that any notice  delivered  or  received on a  non-working  day or
         after  business  hours shall be deemed to be given on the next  working
         day at the place of delivery or receipt.

19.2     ADDRESSES

         (a)   The Company's address and facsimile number for notices are:

               76 Bilton Way
               Enfield
               Middlesex
               EN3 7EP

               Facsimile no:                     0208 443 8750
               For the attention of:             Finance Director

               or such as the Company may notify to Burdale by not less than  10
               days' notice.

         (b)   Burdale's address and facsimile number for notices are:

               53 Queen Anne Street
               London W1M 0HP

               Facsimile no:                     0171 935 5445
               For the attention of:             Company Secretary

               or such as Burdale may notify to the Company by not less than  10
               days' notice.

20.      WAIVER, REMEDIES CUMULATIVE

         The rights of Burdale under the Finance Documents:

         (a)   may be exercised as often as necessary;

         (b)   are  cumulative and not exclusive of its rights under the general
               law; and

         (c)   may be waived only in writing and specifically.

         Delay  in  exercising or  non-exercise of any right shall not be deemed
         to be a waiver of that right.

<PAGE>

21.      INVALIDITY

         If any of the provisions of this Agreement  become invalid,  illegal or
         unenforceable in any respect under any law, the validity,  legality and
         enforceability  of the  remaining  provisions  will  not in any  way be
         affected or impaired.

22.      ASSIGNMENT AND PARTICIPATION

22.1     ASSIGNMENT

         The Finance Documents shall be binding upon and inure to the benefit of
         and be  enforceable  by  Burdale,  the  Company  and  their  respective
         successors  and  assigns,  except  that the  Company may not assign its
         rights under any Finance  Document.  Burdale  may,  after notice to the
         Company,  assign its rights and delegate any or all of its  obligations
         under the Finance Documents.

22.2     TRANSFER BY BURDALE

         Burdale may at any time assign, transfer or offer participations in all
         or a  proportion  of all its rights and  obligations  under the Finance
         Documents to any  Qualifying  Lender  provided  that on an  assignment,
         novation or  transfer  to a bank (as defined by section  840A ICTA) for
         the purpose of section 349 ICTA, the provisions of Clauses 10.2(f), (g)
         and (h) shall not apply.

23.      GOVERNING LAW AND JURISDICTION

23.1     GOVERNING LAW

         This  Agreement  will be governed by and construed in  accordance  with
         English law.

23.2     JURISDICTION

         For the benefit of Burdale,  the  Company  irrevocably  agrees that the
         courts of England will have  non-exclusive  jurisdiction  to settle any
         disputes  which may arise out of or in connection  with this  Agreement
         and that accordingly any suit,  action or proceeding  arising out of or
         in connection with this Agreement may be brought in such courts.

23.3     PROCESS AGENT

         For the  benefit  of  Burdale,  the  Company  irrevocably  accepts  its
         appointment as the Guarantor's agent for service of process pursuant to
         the terms of the Guarantee.

24.      GOODS AND DOCUMENTS

24.1     PLEDGE

         All Goods and  Documents  are hereby and shall upon  despatch  from the
         supplier of any Goods be deemed to be pledged by the Company to Burdale
         and the Goods and the  proceeds of all  insurances  in relation to them
         and all sales of them and all of the

<PAGE>

         Company's  rights  as  unpaid  seller  of them  shall  be a  continuing
         security  for  the  payment  and  discharge  in  full  of  all  of  the
         obligations of the Company under the Finance Documents.

24.2     PERFECTION OF PLEDGE

         Burdale  shall be  entitled at its option to obtain  possession  of the
         Goods in order to perfect  the pledge  made by Clause  24.1 and in this
         regard the Company assigns to Burdale its right,  title and interest in
         and to the  Documents  and all claims and rights  arising from them and
         the Company  irrevocably and  unconditionally  authorises Burdale to do
         all such things as may be necessary to clear the Goods, take possession
         of  them  and  realise  the  Goods  in  reduction   of  the   Company's
         indebtedness  to Burdale  and in this  regard the  Company  irrevocably
         appoints  Burdale acting through any one of Burdale's  directors as the
         Company's  agent to sign all such  documents  and do all such things on
         the  Company's  behalf  as may  be  necessary  to  give  effect  to the
         provisions of this Clause 24.2.

24.3     TRUST RECEIPTS

         The Goods and the  Documents  shall only be  released to the Company by
         Burdale  against  receipt by Burdale of a duly  executed  trust receipt
         from the Company in Burdale's standard form (from time to time) and if,
         for any  reason,  no such trust  receipt is  executed by the Company in
         respect of any Goods or  Documents,  such Goods or  Documents  shall be
         deemed to be subject to a trust receipt in such form.

24.4     SEPARATION

         The Company undertakes to keep the Documents and the Goods separate and
         distinct from any other bills of lading, documents of title or goods.

25.      DISCLOSURE OF INFORMATION

         Burdale may  disclose to any person with whom it is  proposing to enter
         into (or has  entered  into)  any kind of  assignment  or  transfer  in
         relation to this  Agreement any  information  concerning the Company as
         Burdale may in its discretion think fit, and may advertise or publicise
         in  such  publications  and  to  such  persons  as  Burdale  may in its
         discretion  think fit such  particulars of this  transaction as Burdale
         may in its absolute discretion deem appropriate.

26.      COUNTERPARTS

         This Agreement may be executed in any number of counterparts and all of
         such  counterparts  taken together will be deemed to constitute one and
         the same instrument.

This  Agreement has been entered into on the date stated at the beginning of the
Agreement.

<PAGE>

                                   SCHEDULE 1
                              CONDITIONS PRECEDENT
                                     PART I

AUTHORISATIONS

1.         A certified copy of the  memorandum  and articles of association  and
           certificate of incorporation and all certificates of incorporation on
           change of name (or any equivalent  constitutional  documents) of each
           Corporate Obligor and the Guarantor.

2.         A certified  copy of a  resolution  of the board of directors of each
           Corporate  Obligor and the  Guarantor  approving  each of the Finance
           Documents to which it is a party and the transactions contemplated by
           each of such Finance  Documents and authorising a specified person or
           persons to execute  each of the  Finance  Documents  (as a deed where
           necessary)   and  to  give  all  notices,   requests,   instructions,
           certificates  and other  documents to Burdale in connection with such
           Finance Documents.

3.         A  director's  certificate  executed by a director of each  Corporate
           Obligor and the Guarantor:

           (a)   certifying that all corporate action of such Corporate  Obligor
                 or the  Guarantor (as the case may be) required to enable it to
                 enter into,  execute and perform each of the Finance  Documents
                 to  which  it is a  party  and to  authorise  the  transactions
                 contemplated therein has been taken;

           (b)   setting out the specimen  signatures of those persons  referred
                 to in 2 above; and

           (c)   certifying  that  utilisation  of the Facility  Limit would not
                 cause any borrowing limit binding on it to be exceeded.

4.         A certified copy of all other resolutions, authorisations, approvals,
           consents and licences  (corporate,  official or otherwise  (including
           exchange control consents)) necessary or desirable for the entry into
           and  performance  of the Finance  Documents to which each Obligor and
           the Guarantor is party and/or for the  enforceability and validity of
           such Finance Documents.

5.         A telephone and facsimile indemnity.

DOCUMENTS AND SECURITY

6.         The Finance  Documents duly executed by each party to them (excluding
           Burdale).

7.         A certified copy of each notice required to be despatched pursuant to
           the Debenture.

8.         Acknowledgements  from all recipients of the notices referred to in 7
           above as required  by the  Debenture  or  agreement  by the  relevant
           recipient of the form of acknowledgement to be given by it.

<PAGE>

9.         Evidence of the level and extent of the  insurance of the Company and
           that  Burdale is stated as loss payee and joint  insured and that the
           insurance  policies  comply  with  the  requirements  of the  Finance
           Documents.

10.        Details of the amounts standing to the credit of each Charged Account
           as at, or immediately prior to, today's date.

WAIVERS AND CONSENTS

11.        All waivers,  releases,  terminations  and other documents as Burdale
           may request to evidence  and effect the  termination  of any existing
           financing  arrangements  of each  Corporate  Obligor  with any  other
           lender and the  termination  and release by any such other lenders of
           any  and all of  its/their  interests  pursuant  to  their  financing
           arrangements with each Corporate Obligor.

12.        All consents,  waivers,  acknowledgements  and other  agreements from
           third persons which Burdale may deem  necessary or desirable in order
           to permit,  protect and perfect the security interests granted by the
           Corporate Obligors to Burdale including, without limitation,  waivers
           by  lessors,  owners  or  mortgagees,   processors,   warehousers  or
           consignees  of any  security  interests,  or other  claims which such
           persons may have in relation to the Collateral.

AVAILABILITY LIMIT INFORMATION

13.        A schedule of Receivables  and all such other  information as Burdale
           requires  pursuant  to Clause 4 in order to  determine  the amount of
           Eligible Receivables as at today's date.

14.        Such  information  as Burdale may require in order to determine  each
           Availability Limit for the purposes of Clause 4.

15.        Burdale having determined the Availability  Limits pursuant to Clause
           4 to apply as from today's date.

16.        The Initial Valuation.

17.        Evidence  satisfactory  to Burdale  that  there has been no  material
           adverse change in the business,  operations,  profits or prospects of
           the Company since the field examinations  carried out by or on behalf
           of Burdale.

MISCELLANEOUS

18.        Evidence that the total amount available for Utilisation  immediately
           following  the  proposed  initial  Utilisations  shall  be at a level
           acceptable to Burdale.

19.        Any fees due and costs to be met  pursuant  to Clause 16 having  been
           paid.

20.        Satisfactory  results to all final  company  searches  in relation to
           each Corporate Obligor.

<PAGE>

21.        Legal opinion from Delaware counsel to the Company in relation to the
           Guarantor's execution of the Guarantee.

22.        Copies of such other deeds, documents,  consents or authorities as it
           requires  having  regard  to the  transactions  contemplated  by this
           Agreement and the reasonable  requirements  of Burdale to protect its
           interests as a lender.

                                     PART II

PROPERTY

1.         All title  documents  for the Property or a letter to Burdale from BT
           undertaking  to deliver all such title  documents on receipt of funds
           due to it.

2.         An effective discharge of all mortgages,  charges and liens affecting
           the Property  including  completed  forms and fees for all  resultant
           registration formalities.

3.         Appropriate   Land   Registry   application   forms  duly   completed
           accompanied by all necessary Land Registry fees.

4.         Satisfactory  results  to all  priority  searches  and  Land  Charges
           searches in relation to the  Property and the security to be provided
           over it by the Debenture.

5.         A certificate of title to the Property prepared by Matthew,  Arnold &
           Baldwin and addressed to Burdale.

6.         An  Environmental  report in relation to the  Property  addressed  to
           Burdale.

7.         Copies of such other deeds, documents,  consents or authorities as it
           requires  having  regard  to the  transactions  contemplated  by this
           Agreement and the reasonable  requirements  of Burdale to protect its
           interests as a lender.

<PAGE>

                                   SCHEDULE 2

                        PART I - FORM OF PURCHASE REQUEST

Date:                o

To:                  Burdale Financial Limited
                     53 Queen Anne Street
                     LONDON W1M 0HP

Attention:           Company Secretary

Dear Sirs,

FACILITY AGREEMENT DATED O 1999 (THE "FACILITY AGREEMENT")

We refer to the Facility Agreement, terms defined in which have the same meaning
when used in this Purchase Request.

1.         We wish to sell to  Burdale  on or before o or such later date as the
           Company  agrees with Burdale (the  "PURCHASE  DATE") the  Receivables
           numbered  assignment o amounting to (pound)o details of which are set
           out in the  attached  Schedule,  initialled  on  each  page  for  the
           purposes of identification.

2.         We hold the invoice strictly to your order and agree to supply it, or
           a copy  (certified  by an officer  of the  Company  or  otherwise  as
           Burdale may from time to time approve) together with certified copies
           of relevant shipping documents in respect of such Receivables,  and a
           copy of our irrevocable instructions to the Account Debtor to pay the
           full invoice amount of the relevant  Receivable  (without  deduction,
           withholding or set off) at maturity to the Blocked Account, forthwith
           upon your request.

3.         We further confirm that the relevant  Receivables offered are readily
           identifiable from the books of the Company.

           [TO BE INSERTED IN FIRST PURCHASE REQUEST ONLY]

4.         [In addition to the offer made in paragraph 1 above,  we hereby offer
           to sell to you all future Receivables  (during the continuance of the
           Facility  Agreement)  subject to the terms of the Facility  Agreement
           (including  in relation to the  calculation  of the Purchase  Price).
           This offer together with the offer made in paragraph 1 above shall be
           regarded  as a  single  composite  offer  which  may be  accepted  or
           rejected in its entirety  but not in part only.  Your  acceptance  of
           this offer shall be  demonstrated  by the payment to us of any amount
           of  Purchase  Price  in  relation  to the  Receivables  described  in
           paragraph 1 above.]

We confirm  that no Event of Default has  occurred  and is  continuing  or would
result from Burdale  purchasing the Receivables  offered and we are not aware of
any Default  which has not already been notified to you. We also confirm that no
Availability  Limit  will be  breached  as a result of

<PAGE>

Burdale  purchasing  the  Receivables  offered and all the  representations  and
warranties in Clauses 8 and 13 of the Facility Agreement which are to be made or
repeated as at the date of this Purchase Request are true and correct.

The terms of the Agreement shall apply to this Purchase Request.

Yours faithfully

for and on behalf of
CERPLEX LIMITED

                                    SCHEDULE

           INVOICE NO             ACCOUNT DEBTOR                 INVOICE DATE

<PAGE>

                         PART II - FORM OF CASH REQUEST

Date:                o

To:                  Burdale Financial Limited
                     53 Queen Anne Street
                     LONDON W1M 0HP

Attention:           Company Secretary

Dear Sirs,

FACILITY AGREEMENT DATED O 1999 (THE "FACILITY AGREEMENT")

We refer to the Facility Agreement, terms defined in which have the same meaning
when used in this Cash Request.

Pursuant  to the  terms  of  Clause  5.2,  we  wish  you to pay to us the sum of
(pound)o as follows:

(a)        Utilisation Date:              o

(b)        Payment Instructions:          Please credit the following account:

                                          Account Name:        o
                                          Bank:                o Bank plc
                                          Branch:              o Branch
                                          Account No:          o
                                          Sort Code:oo-oo-oo

We confirm  that no Event of Default has  occurred  and remains  outstanding  or
would result from the requested  Utilisation  being made and we are not aware of
any Default  which has not already been notified to you. We also confirm that no
Availability Limit would be breached by the making of the requested  Utilisation
and that all the representations and warranties in Clauses 8 and 13 which are to
be made or repeated as at the date of this Cash Request are true and correct.

Yours faithfully

for and on behalf of
CERPLEX LIMITED

<PAGE>

                         PART III - FORM OF L/C REQUEST

Date:                o

To:                  Burdale Financial Limited
                     53 Queen Anne Street
                     LONDON W1M 0HP

Attention:           Company Secretary

Dear Sirs,

FACILITY AGREEMENT DATED O 1999 (THE "FACILITY AGREEMENT")

We refer to the Facility Agreement, terms defined in which have the same meaning
when used in this L/C Request.

We wish to have [state type of L/C]  opened for our account  under the  Facility
Agreement as follows:

(a)        Issue Date:                              o

(b)        Expiry Date:                             o

(c)        Requested Amount:                        o

(d)        Beneficiary:                             o

(e)        Beneficiary's bank account:              o

(f)        Concerning:                              [Reference   the   agreement
                                                    under  which  the  liability
                                                    arises,  describe its nature
                                                    and quantify it]

We confirm  that no Event of Default has  occurred  and is  continuing  or would
result from the requested  Utilisation and we are not aware of any Default which
has not already been notified to you. We also confirm that no Availability Limit
will  be  breached  as a  result  of  the  requested  Utilisation  and  all  the
representations  and  warranties  in Clauses 8 and 13 of the Facility  Agreement
which are to be made or repeated as at the date of this L/C Request are true and
correct.

Yours faithfully

for and on behalf of
CERPLEX LIMITED

<PAGE>

                         PART IV - FORM OF FOREX REQUEST

Date:                o

To:                  Burdale Financial Limited
                     53 Queen Anne Street
                     LONDON W1M 0HP

Attention:           Company Secretary

Dear Sirs,

FACILITY AGREEMENT DATED O 1999 (THE "FACILITY AGREEMENT")

We refer to the Facility Agreement, terms defined in which have the same meaning
when used in this Forex Request.

We wish you to make  available a Utilisation  pursuant to the  Revolving  Credit
Facility by executing a contract for the [sale/purchase] of Foreign Currency:

(a)        Spot/forward (Date):

(b)        Foreign Currency:

(c)        Amount:

We confirm  that no Event of Default has  occurred  and is  continuing  or would
result from the requested  Utilisation and we are not aware of any Default which
has not already been notified to you. We also confirm that no Availability Limit
will be  breached  as a result  of the  requested  Utilisation  and that all the
representations  and  warranties  in Clauses 8 and 13 of the Facility  Agreement
which are to be made or repeated  as at the date of this Forex  Request are true
and correct.

Yours faithfully

for and on behalf of
CERPLEX LIMITED

<PAGE>

                       PART V - FORM OF TERM LOAN REQUEST

Date:                o

To:                  Burdale Financial Limited
                     53 Queen Anne Street
                     LONDON W1M 0HP

Attention:           Company Secretary

Dear Sirs,

FACILITY AGREEMENT DATED O 1999 (THE "FACILITY AGREEMENT")

We refer to the Facility Agreement, terms defined in which have the same meaning
when used in this Request.

We wish to draw the Property Loan as follows:

(a)        Amount:                                  (pound)o

(b)        Utilisation Date:                        o

(c)        Payment Instructions:                    Please  credit the following
                                                    account:

                                                    Account Name:     o
                                                    Bank:             o Bank plc
                                                    Branch:           o Branch
                                                    Account No:       o
                                                    Sort Code:        oo-oo-oo

We confirm  that no Event of Default has  occurred  and remains  outstanding  or
would result from the requested  Utilisation  being made and we are not aware of
any Default  which has not already been notified to you. We also confirm that no
Availability  Limit will be breached by the making of the requested  Utilisation
and that all the  representations  and  warranties  in  Clauses  8 and 13 of the
Facility  Agreement  which  are to be made or  repeated  as at the  date of this
Request are true and correct.

Yours faithfully

for and on behalf of
CERPLEX LIMITED

<PAGE>

                                   SCHEDULE 3

                              PART I - STOCK REPORT

                           [On letterhead of Company]

To:        Burdale Financial Limited,
           53 Queen Anne Street,
           LONDON W1M 0HP.

STOCK REPORT CERTIFICATION:               No. o

This report,  including  any attached  perpetual  stock,  stock status report or
similar reports, if any, and/or the information set forth below, as the case may
be, is  delivered  to Burdale  Financial  Limited  ("BURDALE")  pursuant  to the
facility  agreement  dated o 1999 between  ourselves (the "COMPANY") and Burdale
(as amended from time to time, the "FACILITY  AGREEMENT"),  in particular Clause
8.2(a) of the Facility Agreement.

The Company represents and warrants to Burdale that the information  included as
part of this report is complete and correct, the values of the stock included as
part of this report have been  determined in a manner  consistent with the prior
reports  previously  furnished to Burdale pursuant to the Finance  Documents (as
defined in the  Facility  Agreement),  all of the stock  included in the amounts
referred to as part of this report is owned  exclusively by the Company free and
clear of any claims, security interests or other encumbrances except the Company
on consignment or approval.  The Company acknowledges that the loans made to the
Company by Burdale are based upon Burdale's reliance on the information included
as part of this report and all  representations  and warranties  with respect to
stock in the Finance  Documents are  applicable to the stock referred to as part
of this report and shall be deemed  made by the  Company  again to Burdale as of
the date of this report.  The  reliance by Burdale on this report  should not be
deemed  to limit  the right of  Burdale  to  establish  or  revise  criteria  of
eligibility as to the stock or to otherwise  limit,  impair or affect the rights
of Burdale under the Finance Documents.

                                      By:

                                      Title:

                                      Date:

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

1.         Beginning stock balance
           as of o                                          ___________________

2.         Add:      Stock purchase/processed
                     for the month(s) of o                  ___________________

3.         Subtotal                                         ___________________

<PAGE>

4.         Gross sales for the month(s)
           for the month(s) of o                            ___________________

5.         Percentage of gross sales
           represented by materials                 o%

6.         Product of item 4 times
           item 5 above                                    (___________________)

7.         Ending Stock balance as
           of o                                            (___________________)

<PAGE>

                     PART II - PREFERENTIAL CREDITOR LISTING

To:                  Burdale Financial Limited
                     53 Queen Anne Street
                     LONDON W1M 0HP

Attention:           Company Secretary

Dear Sirs,

As at the month ended o preferential creditors were as follows:

                                 (pound)               Period           Due Date

Wages & Salary

PAYE/NIC

VAT

Corporation Tax

Other (Please specify)

                                 ___________________
Total                            ___________________

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

Payments during the month ended o were as follows:

                                       (pound)           Period         Due Date

Wages & Salary

PAYE/NIC

VAT

Corporation Tax

Other (Please specify)

                               ___________________
Total                          ___________________

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

I certify that the information contained in this report is correct:

Signature:....................................

Name:..........................................                Date:

<PAGE>

                                   SIGNATORIES

THE COMPANY:

CERPLEX LIMITED

By:        /S/ TE CHARLES MINCHIN
           ----------------------
           TE CHARLES MINCHIN
           as attorney

BURDALE:

BURDALE FINANCIAL LIMITED

By:Exhibit 4(a)

                              IVC INDUSTRIES, INC.

                    NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

      1. Purpose. The purpose of the IVC Industries, Inc. Non-Employee
Directors' Stock Option Plan (the "Plan") is to provide an incentive to the
non-employee directors (the "Non-Employee Directors") of IVC Industries, Inc., a
Delaware corporation (the "Company"), in order to encourage them to remain in
the service of the company as directors and contribute to the Company's success,
by granting them nonqualified stock options ("Options").

      2. Administration. (a) The Plan shall be administered by the Board of
Directors.

      (b) It shall be the duty of the Board to administer the Plan in accordance
with its terms and provisions. Subject to the express provisions of the Plan,
the Board shall have the power and authority to interpret the Plan, the Options
and the Option Agreements (as defined herein), to adopt such rules and
regulations for the administration, interpretation and application of the Plan
as are consistent therewith, and to interpret, amend or revoke any such rules
and regulations.

      (c) The Board shall act by a majority of its members in attendance at a
meeting at which a quorum is present or by a memorandum or other written
instrument signed by all members of the Board.

      (d) All expenses and liabilities incurred by members of the Board in
connection with the administration of the Plan shall be borne by the Company.
The Board may employ attorneys, consultants, accountants, appraisers, brokers or
other persons. The Board shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Board in good faith shall be final and binding upon
all persons, including the Non-Employee Directors to whom Options have been
granted (the "Optionees"). No member of the Board shall be personally liable for
any action, determination or interpretation with respect to the Plan or the
Options, made in good faith, and all members of the Board shall be fully
protected by the Company in respect of any such action, determination or
interpretation.

      3. Stock Subject to the Plan. The stock to be made the subject of any
Option granted hereunder shall be shares of the common stock of the Company, par
value $.08 per share (the "Stock"), whether authorized and unissued or treasury
stock, and the total number of shares of Stock for which Options may be granted
under the Plan shall not exceed, in the aggregate, 125,000 shares, subject to
adjustment in accordance with the provisions of Section 11 hereof.

      4. Grant of Options. (a) As of September 1 of each year, each Non-Employee
Director shall be granted an Option to purchase 3,125 shares of Stock; provided,
however, that, if a Non-Employee Director shall become a Non-Employee Director
subsequent to September 1 of such fiscal year, on the first day on which he
shall become a Non-Employee Director, he shall be granted an Option to purchase
the number of shares of Stock equal to the product of 3,125 and the fraction the
numerator of which shall be the number of full months remaining in such fiscal
year and the denominator of which shall be 12.

      (b) The Board may grant additional Options, in such amounts and at such
times as the Board may determine, to Non-Employee Directors who perform services
for the Company.

      (c) Each Option granted to a Non-Employee Director shall be evidenced by a
written agreement in such form and containing such provisions not inconsistent
with the Plan as the Board shall from time to time approve (the "Option
Agreement") and which, in the case of Options granted pursuant to Section 4(b)
hereof, need not be identical in respect of each Optionee.

      5. Exercise Price. The exercise price (the "Exercise Price") of an Option
shall be the fair market value per share of Stock covered by the Option at the
time that the Option is granted. For purposes of this Section 5, the fair market
value per share of Stock as of a particular date shall mean, unless otherwise
determined by the Board, the

<PAGE>

closing price per share of Stock as reported on the National Association of
Securities Dealers Automated Quotation Small-Cap System, for the last preceding
date on which a sale was reported.

      6. Option Period. Each Option shall expire on such date as shall be
determined by the Board, but not later than ten years from the date such Option
was granted.

      7. Exercise of Options. (a) Each Option will be exercisable in accordance
with the terms of the Optionee's Option Agreement, as determined in the sole
discretion of the Board.

      (b) Each Option, to the extent vested, may be exercised in whole or in
part at any time prior to its expiration or termination, by written notice of
such exercise to the Secretary of the Company, which notice shall specify the
number of shares of Stock as to which such Option is being exercised.
Notwithstanding the foregoing, no Option may be exercised prior to the date the
Plan is approved by the shareholders of the Company.

      8. Payment for Stock. (a) The aggregate purchase price of Stock issued
upon the exercise of any Option shall be paid in full on the date of exercise.
Payment shall be made either in cash or in such other consideration as the Board
deems appropriate, including, but not limited to, Stock already owned by the
Optionee or Stock to be acquired by the Optionee upon exercise of Options having
a total fair market value, as determined by the Board, equal to the aggregate
purchase price, or a combination of cash and Stock having a total fair market
value, as so determined, equal to the aggregate purchase price.

      (b) Upon the exercise of an Option, the Company shall have the right to
require the Optionee to pay the amount of any taxes which the Company may be
required to withhold with respect to such transaction, provided that the Board
may permit an Optionee to elect, pursuant to such rules as the Board may
establish, to have the Company reduce the number of shares that otherwise would
be issued upon such exercise by the fair market value, as determined by the
Board, of the number of shares necessary to accomplish such withholding; and
provided further that the Board may impose such restrictions and conditions on
the payment of any withholding obligation as may be required to satisfy
applicable regulatory requirements.

      9. Termination of Employment. (a) In the event the Board does not nominate
an Optionee for re-election as a director, such Optionee will be entitled to
exercise such Optionee's Options for a period of 90 days following the date the
Optionee shall cease to serve as a director.

      10. In the event (i) an Optionee voluntarily terminates his service as a
director of the Company or (ii) an Optionee shall die or become disabled (within
the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986) while the
Optionee is serving as a director of the Company, such Optionee will be entitled
to exercise such Optionee's Options until such Options otherwise expire in
accordance with the terms of the Option Agreement.

      (a) In the event that an Optionee's service as a director with the Company
is terminated by the Company for cause under Delaware law, such Optionee's right
to exercise his Options shall thereupon terminate and all of such Optionee's
Options, whether or not vested, shall be rendered null and void and shall become
unexercisable.

      11. Nontransferability. No Option shall be transferable other than by will
or the laws of descent and distribution; provided, however, that the Board, in
its sole discretion, may provide in the Option Agreement that the Optionee may
transfer, without consideration, all or a portion of his Option to his children,
grandchildren or spouse, to trusts for his or their benefit and to partnerships
in which he or they are the only parties. No permitted transfer so effected
shall be effective to bind the Company unless the Company has been furnished
with written notice thereof and such evidence as the Board may deem reasonably
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of the Plan.

      12. Stock Adjustments. (a) If the outstanding shares of Stock are
increased, decreased or changed into, or exchanged for, a different number or
kind of shares or securities of the Company through a reorganization or merger
in which the Company is the surviving entity, or through a combination,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation or otherwise, an appropriate adjustment shall be made in the
number and kind of shares that may be issued pursuant to Options. Any such
adjustment, however, shall be made without

                                       2
<PAGE>

change in the total payment, if any, applicable to the portion of an Option not
exercised but with a corresponding adjustment in the price for each share.

      (b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
the Plan shall terminate, and any outstanding Options shall terminate and be
forfeited. Notwithstanding the foregoing, the Board may provide in connection
with, or in contemplation of, any such transaction for any or all of the
following alternatives (separately or in combinations): (i) for the assumption
by the successor corporation of the Options theretofore granted or the
substitution by such corporation for such Options of awards covering the stock
of the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; (ii) for
the continuance of the Plan by the successor corporation in which event the Plan
and the Options theretofore granted shall continue in the manner and under the
terms so provided; or (iii) for the payment in cash or shares of Stock in lieu
of and in complete satisfaction of such Options.

      (c) In adjusting Options to reflect the changes described in this Section
11, or in determining that no such adjustment is necessary, the Board may rely
upon the advice of independent counsel and accountants of the Company, and the
determination of the Board shall be conclusive. No fractional shares of Stock
shall be issued under the Plan on account of any such adjustment.

      13. No Rights as a Shareholder. An Optionee or a permitted transferee of a
Option shall have no rights as a shareholder with respect to any Stock covered
by his or its Option until such Optionee or a permitted transferee shall have
become the holder of record of such Stock.

      14. Amendment and Termination. (a) The Board may at any time terminate or
suspend the Plan (or any part hereof) and the Board may amend or modify the Plan
(or any part hereof); provided, however, if an amendment would (i) materially
increase the benefits accruing to Optionees, (ii) increase the aggregate number
of shares of Stock which may be issued under the Plan or to any individual or
(iii) modify the requirements of eligibility for participation in the Plan, the
amendment shall be approved by the Company's shareholders.

      (b) Notwithstanding the foregoing, no amendment, suspension or termination
of the Plan shall, without the consent of the holder of the Option, alter or
impair any rights or obligations under any Option theretofore granted or
awarded.

      15. Investment Purpose. At the time of exercise of any Option, the Company
may, if it shall deem it necessary or desirable for any reason, require the
Optionee to represent in writing to the Company that it is such Optionee's then
intention to acquire the Stock for investment and not with a view to the
distribution thereof.

      16. Right to Terminate Service as a Director. Nothing contained herein or
in any Option Agreement shall restrict the right of the Company to terminate the
service as a director of any Optionee at any time.

      17. Governing Law. The Plan shall be governed by the laws of the State of
Delaware without regard to the conflicts of law principles thereof.

      18. Effective Date. The Plan shall be effective upon approval of the
shareholders of the Company. In the event that the Plan is not approved by the
shareholders of the Company prior to the first anniversary of the approval of
the Plan by the Board, the Plan and the Options granted hereunder shall be void
and of no force or effect.

      19. Term of the Plan. Unless previously terminated by the Board, the Plan
shall terminate on March 16, 2008, and no Options shall be granted thereafter.
Such termination shall not affect any Option previously granted.

                                       3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00000-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00000-of-00352.parquet"}]]