<DOCUMENT>
<TYPE>EX-2.3
<SEQUENCE>4
<FILENAME>dgse8kex23010907.txt
<DESCRIPTION>FORM OF AMENDED & RESTATED COMMERICAL LOAN
<TEXT>

                                                                     Exhibit 2.3

           AMENDED AND RESTATED COMMERCIAL LOAN AND SECURITY AGREEMENT

     THIS IS AN AMENDED AND RESTATED COMMERCIAL LOAN AND SECURITY AGREEMENT made
this ____ day of ___________, 2007 (this "Agreement"), by and between:

     Stanford  International  Bank Ltd., a company  organized  under the laws of
Antigua and Barbuda having its principal office at c/o Stanford  Financial Group
Company, 6075 Poplar Avenue,  Memphis,  Tennessee 38119 (hereinafter referred to
as "Lender"), and Superior Galleries,  Inc., a Delaware corporation with a place
of  business  at  9478  W.  Olympic  Blvd.,  Beverly  Hills,   California  90212
(hereinafter referred to as "Borrower"), with reference to the following facts:

                                    RECITALS
                                    --------

         A.  Pursuant to a  Commercial  Loan and Security  Agreement  originally
dated  October 1, 2003, as amended (the  "Existing  Loan  Agreement"),  Stanford
Financial  Group  Company  ("SFG") has provided  certain  credit  facilities  to
Borrower.  On November  30,  2004,  the Lender was  assigned all of SFG's right,
title and interest in the Existing Loan Agreement and the promissory note issued
thereunder.

         B. Pursuant to the Existing Loan Agreement,  Lender provides Borrower a
revolving  credit  facility of up to Nineteen  Million Eight Hundred  Ninety Two
Thousand Three Hundred and Forty Dollars ($19,892,340).

         C. Borrower and Lender wish to enter into this  Agreement,  which shall
amend  and  restate  the  Existing  Loan  Agreement  in its  entirety  and which
hereinafter  shall  govern the terms and  conditions  under which  Lender  shall
provide credit facilities to Borrower.

     NOW,  THEREFORE,  THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS  (reference
being hereby made to Section 10 below for the definition of certain  capitalized
terms used herein):

     Section 1. The Loans,  Advances,  Interest,  Security  Interest,  Financing
                ----------------------------------------------------------------
Statements, Collateral, Subordinations.
---------------------------------------

     1.1 Loan Authorization

         (a) The First Revolving Loan

         Subject to all the terms and  conditions of this  Agreement,  including
the  preconditions  to loan  advances  as herein  provided  and so long as there
exists no Event of Default  nor any event  which with the  passage of time,  the
giving of notice or both would constitute an Event of Default,  Lender will make
advances to Borrower  (the "First  Revolving  Loan") in an  aggregate  principal
amount outstanding at any time not to exceed the lesser of (i) Five Million Five
Hundred Thousand Dollars ($5,500,000) or (ii) the Borrowing Base. Advances under
the  First  Revolving  Loan  shall be made in  minimum  amounts  of One  Hundred
Thousand Dollars ($100,000) for each advance.  The First Revolving Loan shall be
evidenced  by the  First  Revolving  Loan  Note in the  form of  Schedule  "A-1"
attached  hereto  and made a part  hereof  (referred  to  herein  as the  "First


                                      -1-
<PAGE>

Revolving  Loan Note").  The aforesaid  First  Revolving  Loan Note and advances
thereunder  may be  continued  or extended by mutual  agreement  of the parties;
provided, however, the parties acknowledge that Lender is under no obligation to
extend the term of the First  Revolving  Loan and  whether or not to continue or
extend the term of the First Revolving Loan is in the Lender's sole and absolute
discretion.  Notwithstanding the above provisions, the security interest granted
to Lender in the Collateral as herein defined shall not in any way be limited to
such amount or be  dependent  upon the use to which such funds are put but shall
at all times fully secure the Obligations (as hereinafter defined).

         (b) The Second Revolving Loan

         Subject to all the terms and  conditions of this  Agreement,  including
the  preconditions  to loan  advances  as herein  provided  and so long as there
exists no Event of Default  nor any event  which with the  passage of time,  the
giving of notice or both would constitute an Event of Default,  Lender will make
advances to Borrower  (the "Second  Revolving  Loan") in an aggregate  principal
amount  outstanding at any time not to exceed Six Million Dollars  ($6,000,000).
Advances under the Second Revolving Loan shall be made in minimum amounts of One
Hundred Thousand Dollars ($100,000) for each advance.  The Second Revolving Loan
shall be evidenced by a Second Revolving Loan Note in the form of Schedule "A-2"
attached  hereto  and made a part  hereof  (referred  to herein  as the  "Second
Revolving  Loan Note").  The aforesaid  Second  Revolving Loan Note and advances
thereunder  may be  continued  or extended by mutual  agreement  of the parties;
provided, however, the parties acknowledge that Lender is under no obligation to
extend the term of the Second  Revolving  Loan and whether or not to continue or
extend  the  term of the  Second  Revolving  Loan is in the  Lender's  sole  and
absolute discretion. Notwithstanding the above provisions, the security interest
granted to Lender in the  Collateral (as  hereinafter  defined) shall not in any
way be limited to such amount or be  dependent  upon the use to which such funds
are put but shall at all times  fully  secure the  Obligations  (as  hereinafter
defined).  It is the  specific  intent of the parties  that  advances  under the
Second  Revolving  Loan shall be made without  regard to the Borrowing  Base and
that the entire principal amount of the Second Revolving Loan shall be available
to Borrower.

     1.2 Obligations

         It is specifically agreed by Borrower and Lender that in the event that
further  financial  accommodations of any type,  including,  but not limited to,
letters of credit,  coverage of  overdrafts  and the like,  are now or hereafter
extended by Lender to Borrower,  the parties  intend that this  Agreement  shall
govern any and all such financial accommodations. An extension of the foregoing,
all  advances  now or  hereafter  made by Lender to  Borrower  pursuant  to this
Agreement and/or any of the other Documents or any renewal or extensions thereof
or otherwise,  whether or not evidenced by notes, and all liability  whether now
existing or hereafter arising,  absolute or contingent,  direct or indirect with
respect to or under letters of credit, banker's acceptances or guarantees now or
hereafter  established by Lender pursuant to this  Agreement,  together with all
other  obligations  and  indebtedness  of every  kind and  nature,  whether  now
existing or hereafter arising, absolute or contingent, direct or indirect, under
or pursuant to this  Agreement or any of the other  Documents or  otherwise,  of
Borrower to Lender,  to the extent the same are  outstanding  from time to time,
are sometimes collectively referred to herein as the "Obligations".


                                      -2-
<PAGE>

     1.3 Interest

         All  amounts  outstanding  from time to time under  either of the Notes
shall bear  interest  at a per annum rate equal to a daily  average of the Prime
Rate as reported in the Wall Street Journal.  Upon the occurrence of an Event of
Default,  interest shall accrue for the period of time for which any payment was
due,  during any  applicable  grace or cure period,  and at all times while such
default shall continue at a rate of five percent (5%) per annum greater than the
rate then in effect.  In the event that the total amount of any payment required
under  either of the Notes is not  received by Lender  within  fifteen (15) days
after its due date,  Borrower  shall pay to Lender a late  charge  equal to five
percent (5%) of any such late payment.

     1.4 Repayment

         (a) The First  Revolving  Loan Note and the Second  Revolving Loan Note
shall  provide that the payment of interest  only for the actual  number of days
elapsed in each payment period on the daily outstanding principal balance of the
First Revolving Loan and the Second Revolving Loan,  respectively,  shall be due
and  payable  in  monthly  payments  in  arrears  on the 10th day of each  month
commencing  __________  10, 2007 and  continuing on the tenth (10th) day of each
month  thereafter  until the entire  outstanding  principal  balance and accrued
interest has been paid in full.

         (b) For all advances  under the First  Revolving  Loan,  Borrower shall
repay said advances in full upon  disposition  of the Collateral on the basis of
which such advances were made, with the understanding that  "disposition"  shall
be defined as follows: (i) for auctions,  the settlement date for the auction or
whenever  the  Collateral  is  shipped,  whichever  is  later,  (ii) for  dealer
inventory  financing,  when Borrower receives good funds from the dealer;  (iii)
for  loans to  Borrower  itself,  as  necessary  to  repay  advances  which  are
outstanding in an aggregate amount in excess of the limitations set forth in the
first sentence of Section 1.1(a).

         (c) Notwithstanding  anything herein, the entire outstanding  principal
balance of all advances under the First Revolving Loan and the Second  Revolving
Loan and  accrued  and  unpaid  interest  thereon  shall be due and  payable  on
____________,  2011  unless said  maturity  date shall be extended in writing by
Lender in accordance with this Agreement.

Payment of  principal or interest  shall be deemed  received by Lender only upon
receipt of good funds as determined by Lender.

     1.5 Limitation on Use of Funds

         Borrower  may use advances of proceeds of the Loan only for (a) general
corporate  purposes of Borrower and (b)  Permitted  Inter-Company  Transactions.
Borrower agrees that to the extent any funds are made available to it under this
Agreement,  they shall be used in strict  accordance with the policies set forth
in Schedule  "B" hereof,  and that a material  violation by Borrower of any such
policy,  which  violation is not cured within ten (10) days after written notice
of same is given by Lender to Borrower,  shall be an Event of Default hereunder.
Borrower  shall  certify  to  Lender  quarterly,   on  each  of  the  compliance
certificates  that  Borrower  delivers to Lender  under  clauses (i) and (ii) of
Section  3.5,  that  Borrower  has used the  proceeds  of each  advance  made to
Borrower  hereunder  during the relevant  fiscal quarter for purposes  permitted


                                      -3-
<PAGE>

under this Section 1.5. In addition,  Borrower  hereby  agrees that Lender,  not
more frequently than once each year,  following at least thirty (30) days notice
to Borrower,  shall have the option to engage an independent accounting firm, at
Borrower's expense,  to conduct an independent  compliance audit with respect to
Borrower's obligations hereunder.

     1.6 Security

         As security for the performance of Borrower's  Obligations  pursuant to
this Agreement, and the other Documents,  Borrower hereby mortgages, pledges and
assigns to Lender,  and gives and grants to Lender a security interest in all of
its  right,  title  and  interest  in and to the  items  and  types of  property
described or referred to below, whether now owned or hereafter acquired, and the
proceeds and  products  thereof  (all of which  property is herein  collectively
called the "Collateral"), which security interest has and shall remain first and
prior to all other security  interests therein and which Collateral shall remain
free and clear of all mortgages,  pledges,  security interests,  liens and other
encumbrances  and restrictions on the transfer  thereof,  except as specifically
set forth below and in Schedule "D" attached hereto:

                  (i) Accounts

                  All   accounts  (as  such  term  is  defined  in  the  Uniform
         Commercial Code) of Borrower.

                  (ii) Third-Party Owned Inventory

                  All   inventories  of  every  kind  owned  by  third  parties,
         presently existing or hereafter acquired,  wherever located,  including
         all goods intended for auction sale or owned by third parties,  against
         which Borrower has loaned funds and which serve as collateral therefor,
         and  all  contract  rights  with  respect  to any of the  same  and all
         documents representing any of the same, all whether now or hereafter in
         Borrower's  possession  or in  which  Borrower  may  now  have  or  may
         hereafter  acquire any interest,  all whether now existing or hereafter
         arising  (the  "Third-Party-Owned  Inventory").  (For the  avoidance of
         doubt,  the Third-Party  Owned  Inventory  shall not include  inventory
         owned by third parties and consigned to Borrower,  as to which Borrower
         has not  made any  loans to the  consignor  and with  respect  to which
         Borrower has no payment  obligation to the consignor  prior to the sale
         of  such   consigned   inventory.)   The   security   interest  in  the
         Third-Party-Owned  Inventory shall continue in all Collateral described
         in this paragraph (except goods sold as provided in Section 9-307(1) of
         the Uniform  Commercial Code),  notwithstanding  the sale,  exchange or
         other  disposition   hereof  by  Borrower  (sale,   exchange  or  other
         disposition  of any of said  Collateral  is not  authorized  by Lender,
         other than sale in the ordinary course of business).

                  (iii) Borrower-Owned Inventory

                  All  items  of  Borrower's  wholesale  and  retail  inventory,
         presently  existing or hereafter  acquired,  wherever located,  and all
         contract  rights  with  respect  to any of the same  and all  documents
         representing  any of the  same,  all  whether  now  owned or  hereafter
         acquired by Borrower or in which Borrower may now have or may hereafter


                                      -4-
<PAGE>

         acquire any ownership  interest,  all whether now existing or hereafter
         arising (the "Borrower-Owned  Inventory"). The security interest in the
         Borrower-Owned  Inventory shall continue in all Collateral described in
         this  paragraph  (except goods sold as provided in Section  9-307(1) of
         the Uniform  Commercial Code),  notwithstanding  the sale,  exchange or
         other  disposition   hereof  by  Borrower  (sale,   exchange  or  other
         disposition  of any of said  Collateral  is not  authorized  by Lender,
         other than sale in the ordinary course of business).

                  (iv) Notes and Liens

                  All promissory  notes and related loan and security  documents
         relating to or evidencing any loans made by Borrower, whether presently
         existing or hereafter  acquired by Borrower,  or in which  Borrower may
         now have or may  hereafter  acquire  any  interest,  including  without
         limitation,  any ownership interest or security or collateral interest,
         all whether now existing or hereafter arising.

                  (v) Documents

                  All  documents and  instruments  relating to any and all loans
         made by Borrower,  whether presently  existing or hereafter acquired by
         Borrower,  or in which  Borrower may now have or may hereafter  acquire
         any interest,  including without limitation,  any ownership interest or
         security or collateral interest,  all whether now existing or hereafter
         arising.

                  (vi) Records

                  All  books,  records  and  other  documents  of  every  nature
         relating to the above described types of property,  including,  without
         limitation,  all tapes, cards, discs, cassettes,  papers, documents and
         computer  software in the  possession  or control of  Borrower,  or any
         Affiliate of Borrower,  all whether now owned or hereafter  acquired by
         Borrower  or in which  Borrower  now has or may  hereafter  acquire any
         interest,  including  without  limitation,  any  ownership  interest or
         security or collateral interest,  all whether now existing or hereafter
         arising.

                  (vii) Insurance Policies

                  All  rights in, to and under  policies  of  insurance  on said
         Inventory,   including   claims  or  rights  to  payment  and  proceeds
         heretofore or hereafter arising  therefrom,  with respect to the herein
         described  types of  property,  all  whether  now  owned  or  hereafter
         acquired by Borrower or in which Borrower may now have or may hereafter
         acquire any  interest,  including  without  limitation,  any  ownership
         interest or security or collateral  interest,  all whether now existing
         or hereafter arising.

                  (viii) Proceeds and Products

                  All  proceeds  and all  products of all  Collateral  described
         above.


                                      -5-
<PAGE>

     1.7 Financing Statements

         Borrower hereby authorizes Lender to file financing statements pursuant
to the provisions of the Uniform  Commercial Code with respect to the Collateral
in which Lender has been granted a security interest by Borrower pursuant to the
provisions of this Agreement and the other Documents.  Borrower hereby agrees to
execute any and all further  documents deemed  necessary by Lender,  in its sole
discretion,  to perfect its security  interest in the  Collateral and authorizes
the Lender to file any and all further  documents deemed necessary by Lender, in
its sole  discretion,  to perfect  its  interest  in the  Collateral,  including
without limitation, any UCC financing statements.

     1.8 [ Intentionally Omitted. ]

     1.9 Insurance on the Collateral

         Borrower is  contemporaneously  with the execution hereof delivering to
Lender a  Certificate  or  Certificates  of  Insurance  (and shall  deliver  the
originals of the policies referred to herein upon request of Lender), respecting
hazard (including, but not limited to, fire and extended coverage including "all
risk"),  liability,  loss of rental and flood (if any of the Borrower's tangible
assets are located on premises in a special  flood hazard  area),  with coverage
for the fair  market  value at the  time of a loss of the  Collateral  and in an
amount  of at least  Two  Million  ($2,000,000)  Dollars  with no  co-insurance.
Borrower  shall  further be required  to provide  evidence to Lender of adequate
property insurance for all Collateral, which shall list the Lender as loss payee
as its interests may appear.

Section 2. Representations and Warranties
           ------------------------------

     Borrower hereby represents and warrants to Lender that:

     2.1 Incorporation and Qualification

         Borrower is a corporation  duly  organized and validly  existing and in
good standing  under the laws of Delaware,  has the  corporate  power to own its
assets and conduct its business as it is now being conducted and is qualified to
do business in each jurisdiction wherein the nature of the business conducted by
it or the  property  owned or held  under  lease by it make  such  qualification
necessary.

     2.2 Capitalization, Business and Subsidiaries

         Except as disclosed  on Schedule  "F"  attached  hereto and made a part
hereof,  as of the date of this  Agreement,  Borrower  does not own stock of any
other corporation, active or inactive. The information set forth on Schedule "G"
attached hereto with respect to Borrower and as to Borrower's authorized, issued
and outstanding  capital stock,  all of which stock has been duly authorized and
validly issued and is fully paid and non-assessable,  the holders of such stock,
the officers,  the  directors,  the principal and other places of business,  the
place where its  Inventory,  Equipment and Records of its Accounts are kept, and
Borrower's  present business  activities and status, is complete and accurate as
of the  date of this  Agreement.  As of the  date  of this  Agreement,  Borrower


                                      -6-
<PAGE>

neither has a place of business nor maintains or stores any of the Collateral at
any location other than those set forth in Schedule "G" attached hereto.

     2.3 Corporate Authorization

         Borrower has the corporate power to execute, deliver, and carry out the
terms and provisions of this Agreement and the other  Documents to which it is a
party and has taken all  necessary  corporate  and  legal  action  with  respect
thereto (including,  without  limitation,  obtaining any consent of stockholders
required  by law or its  Certificate  of  Incorporation  or  By-Laws),  and this
Agreement  and  such  other  Documents  to which it is a party  have  been  duly
authorized,  executed and delivered by it and  constitute  its valid,  legal and
binding agreement and obligation in accordance with the terms thereof and Lender
is entitled to the benefits thereof in accordance with such terms.

     2.4 Financial Statements

         There have been  furnished to Lender  financial  statements of Borrower
described or referred to in Schedule "H" attached hereto and made a part hereof.
Each such  financial  statement,  including  the  comments  and notes  contained
therein,  fairly  presents the  financial  position of the entity or business to
which  such  statement  applies  at the  date  thereof  and the  results  of its
operations for the period purported to be covered  thereby.  Each such financial
statement has been prepared in conformity  with  Generally  Accepted  Accounting
Principles  applied on a  consistent  basis  throughout  all  periods  involved,
subject,  in  the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments.

     2.5 Indebtedness

         As of the date of this Agreement,  Borrower has no material outstanding
indebtedness except for liabilities  reflected in said financial  statements and
liabilities  incurred since the date thereof to trade  creditors in the ordinary
course of business  and/or  except as  described  or set forth in  Schedule  "I"
attached and made apart hereof and has  performed  and complied  with all of the
terms of such  Indebtedness and all instruments and agreements  relating thereto
and no default  exists as of the date  hereof nor does there  exist any state of
facts which would after notice or lapse of time,  or both,  constitute a default
under or with respect to any such Indebtedness, instruments or agreements.

     2.6 Title to Properties and Assets; Liens, etc.

         Borrower has good and  marketable  title to its  properties and assets,
including,  but not limited to the  Collateral,  free and clear of any mortgage,
pledge,  lien,  lease,  encumbrance  or  charge  other  than  those set forth on
Schedule "J" attached hereto and made a part hereof,  with respect to assets (if
any)  other  than the  Collateral.  No  financing  statement  under the  Uniform
Commercial  Code which  names  Borrower as debtor has been filed in any state or
other  jurisdiction  which  covers the  Collateral  and has not been  terminated
except as set forth on Schedule "J". As of the date of this Agreement,  Borrower
has  not  signed  any  such  financing   statement  or  any  security  agreement
authorizing any mortgagee or secured party thereunder to file any such financing
statement on the  Collateral or its assets  except in connection  herewith or as
set forth on Schedule "J"  attached  hereto.  As of the date of this  Agreement,


                                      -7-
<PAGE>

Borrower is not a consignor or lessee under any  consignment  agreement or lease
agreement, except as described in Schedule "J" attached hereto.

     2.7 Patents, Trademarks, etc.

         Borrower owns or holds  licenses for the use of or has the right to use
all patents,  trademarks,  service  marks,  trade names,  copyrights  and rights
necessary for the conduct of its business as now conducted and as  contemplated,
including  those  identified  in Schedule  "K"  attached  hereto and made a part
hereof.

     2.8 Litigation, etc.

         Except as set forth in  Schedule  "L"  attached  hereto and made a part
hereof, as of the date of this Agreement,  there are no actions,  proceedings or
investigations  pending or to the knowledge of Borrower threatened (or any basis
therefor  known to it)  which,  either  in any case or in the  aggregate,  might
result  in any  material  adverse  change  in  Borrower's  business,  prospects,
profits,  properties,  liabilities,  operations,  or  conditions  (financial  or
otherwise),  or which might affect its ability to perform this  Agreement or any
other Documents executed by it.

     2.9 Changes in Condition

         Since the date of the financial  statements referred to in Schedule "H"
there has been no  material  adverse  change,  by reason of any  matter or cause
whatsoever, in Borrower's business, prospects, profits, properties, liabilities,
operations or condition (financial or otherwise).

     2.10 Tax Returns and Payments

         All tax  returns  and  reports  required by law to be filed by Borrower
have been duly  filed or the time for filing  has been  extended  and all taxes,
assessments,  fees and other governmental charges (U.S., foreign, state or local
or  other)  upon  Borrower  or upon any of its  properties,  assets,  income  or
franchises,  which are due and payable have been paid. To the best of Borrower's
knowledge the  provisions on Borrower's  books  respectively,  regarding  income
taxes  for all  fiscal  periods  to date are  adequate  according  to  Generally
Accepted Accounting Principles.

     2.11 Compliance With Instruments, Charter and Law

         Borrower is in full compliance with and is not  in-violation or default
of any term or provision of (a) its charter,  Certificate  of  Incorporation  or
by-laws, if a corporation, (b) any loan agreement, debt instrument,  mortgage or
indenture,  (c) any other material  contract,  agreement or instrument,  (d) any
judgment,  decree or order, nor has it, he or she been notified of any violation
of any statute, rule or regulation including but not limited to the Occupational
Safety and Health Act and the Employee Retirement Income Security Act ("ERISA"),
and the regulations issued by the Department of Environmental Protection and (e)
any licensing or governmental requirement. The execution,  delivery, performance
of, and compliance  with this  Agreement or any of the other  Documents will not
result in any such  violation or default or be in conflict with any such term or
provision or result in the creation of any mortgage, lien, encumbrance or charge


                                      -8-
<PAGE>

upon any of Borrower's  properties or assets except in favor of Lender and there
is no such term or provision which materially adversely affects or in the future
may materially adversely affect its business,  prospects,  profits,  properties,
liabilities,  operations or condition (financial or otherwise) or its ability to
perform this Agreement or any of the other Documents executed by Borrower. As of
the date of this  Agreement,  all  material  contracts,  agreements,  mortgages,
indentures,  instruments,  judgments,  decrees and orders to which Borrower is a
party or which are  effective  against it are listed in  Schedule  "M"  attached
except entered into in the normal course of business.

     2.12 Governmental Consents, etc.

         No consent,  approval or authorization for designation,  declaration or
filing with any governmental authority, federal, foreign or other is required in
connection with the execution and delivery of this Agreement or the Documents or
the consummation of any transaction  contemplated hereby or thereby by Borrower.
While no consent is required by the Securities and Exchange Commission, Borrower
will be required to file a form 8-K, and will comply with such requirements.

     2.13 Solvency

         Borrower is solvent,  having assets of a value which exceeds the amount
of its  liabilities  and is able to and will be able to meet  its  debts as they
mature and has  adequate  capital to conduct the business in which it is engaged
and is about to engage.

     2.14 Change of name, etc.

         As of the date of this  Agreement,  except as set forth on Schedule "N"
attached  hereto and made a part hereof,  Borrower has not within five (5) years
changed its name,  been a party to any  consolidation  or merger  other than the
Merger,  acquired  all or a  substantial  portion of the assets of any Person or
purchased any of its or his assets  included in the Collateral from a Person not
in the business of selling such assets.

     2.15 Full Disclosure

         The financial  statements referred to in Section 2.4 hereof do not, nor
does this Agreement or any Schedule hereto or any other Document, certificate or
statement  furnished to Lender by Borrower in  connection  with this  Agreement,
contain  any  untrue  statement  of a  material  fact or  omit  to  state a fact
necessary  in order to make the  statements  contained  therein  and  herein not
misleading. Borrower is not aware of any fact which materially adversely affects
or in the future may  materially and adversely  affect its business,  prospects,
profits,  properties,   liabilities,   operations  or  condition  (financial  or
otherwise),  or its  ability to perform  this  Agreement  or any other  Document
executed  by it,  which has not been set forth or  referred  to  herein,  in any
report or statement filed by Borrower or Parent with the Securities and Exchange
Commission or in a certificate or statement furnished by Borrower to Lender.


                                      -9-
<PAGE>

     2.16 No Event of Default

         No Event of Default or event or condition that with the passage of time
or giving of notice or both might  become an Event of Default  has  occurred  or
exists.

Section 3. Affirmative Covenants
           ---------------------

         Except with the prior written consent of Lender, Borrower covenants and
agrees that so long as there is outstanding  any portion of the First  Revolving
Loan or the Second  Revolving  Loan, or any agreement of Lender to make advances
to Borrower, it will comply or cause compliance with the following provisions:

3.1  Punctual Payment

         Borrower will duly and punctually pay all principal,  interest, charges
and other items  included in the First  Revolving  Loan or the Second  Revolving
Loan which is owing by it in accordance  with the  provisions  hereof and of the
other Documents.

     3.2 Prompt Payment of Taxes, Mortgages, Leases and Indebtedness

         Borrower  will  promptly  pay and  discharge,  or  cause to be paid and
discharged,  on the date due so as to prevent the accruing of interest  thereon,
all lawful taxes,  assessments,  and governmental charges or levies imposed upon
items of the Collateral  owned by it, or in which it has an interest or upon its
income,  profits,  property or business or of any of its Subsidiaries.  Borrower
will promptly pay or cause to be paid when due (or in conformity  with customary
trade terms) all of its other  Indebtedness  incident to its operations and will
promptly  pay and  perform  all of its  obligations  under  leases  of real  and
personal  property and under material  contracts and will promptly notify Lender
of any default or notice of alleged  default  received  with respect to any such
Indebtedness, lease or contract.

     3.3 Conduct of Business

         Borrower  will do all things  necessary to preserve,  renew and keep in
full force and effect and in good  standing,  its current  corporate  existence,
qualification  and any  franchises,  licenses,  patents,  trademarks  and  items
necessary to continue its business.  It will maintain its  properties and assets
in good order and repair, all in compliance with applicable federal,  state, and
local judgments, decrees, orders, statutes, rules and regulations, including but
not  limited to state and  federal  environmental  regulations  and those of the
Occupational Safety and Health Administration.

     3.4 Insurance

         Borrower will maintain insurance in amounts, coverage and with insurers
satisfactory  to Lender with respect to the Collateral  owned by it, or in which
they have an interest and their other  properties  and business  against loss or
damage to the extent that property of similar character is usually so insured by
other companies engaged in a similar  business.  Without limiting the foregoing,
such  insurance  shall  include  (a)  liability  insurance  in such  amounts and
covering  such  risks  as  Lender  may  reasonably  require,  (b)  all  worker's


                                      -10-
<PAGE>

compensation and other employees' liability insurance as may be required by law,
and  (c)  property  insurance  with  respect  to the  items  of  the  Collateral
constituting  tangible personal  property and fixtures,  and with respect to the
other  properties  both  real  and  personal,  including,  if  necessary,  flood
insurance,  to the full extent of the insurable value thereof, and covering such
risks as Lender may reasonably  require.  All of Borrower's  property  insurance
policies  with respect to the  Collateral  shall  contain  loss  payable  and/or
mortgagee  clauses  in form and  substance  reasonably  satisfactory  to Lender,
naming Lender as loss payee as  appropriate  and providing (i) that all proceeds
thereunder shall be payable to Lender as its interests may appear, and (ii) that
such  insurance  shall not be  affected  by any act or neglect of the insured or
owner of the property  described in said policy,  and (iii) that such policy and
loss payable clause may not be canceled, amended or terminated unless Lender has
received  written  notice  thereof  at  least  thirty  (30)  days'  prior to the
effective date of such  cancellation,  amendment or  termination.  Borrower will
furnish a  certificate  with  respect to the  insurance  at the time which is in
force  pursuant to this  Section  3.4,  specifying  the amount and  character of
coverage,  identifying  the  insurers  and  certifying  as to no  default in the
payment of current  premiums  thereon and will furnish  Lender with  original or
duplicate  original  copies of all  policies.  All  insurance  proceeds  for any
occurrence  or any  series of related  occurrences  which  exceed  Ten  Thousand
Dollars  ($10,000)  and which are  subject  to a  security  interest  under this
Agreement may, upon Lender's request, in Lender's sole and absolute  discretion,
be paid to Lender and shall be  applied  by Lender to the  payment of any of the
principal,  whether  or not  due,  or  interest  or  such  other  obligation  or
Indebtedness which constitutes a part of the Loan as Lender may determine in its
sole  discretion.  Proceeds of Ten Thousand  Dollars  ($10,000) or less shall be
payable to Borrower for general corporate  purposes.  Borrower does hereby grant
Lender  an   Irrevocable   Power  of  Attorney   and   appoint   Lender  as  its
attorney-in-fact (said power of Attorney being coupled with an interest) for the
sole  purpose  of  executing,   negotiating  and  signing  any  drafts,  checks,
instruments or documents to carry out the terms hereof.

     3.5 Accounting Financial Statements and Other Information

         Borrower   will   maintain  a  system  of  accounts   established   and
administered  in  accordance  with  Generally  Accepted  Accounting   Principles
consistently applied. Borrower will deliver or cause to be delivered to Lender:

     Financial Reports
     -----------------

          (i) as soon as available and in any event within  forty-five (45) days
     after the end of each of the first three (3) fiscal quarters of each fiscal
     year of Parent,  consolidated  and  consolidating  financial  statements of
     Parent  and its  Subsidiaries  (including,  after  the  Merger,  Borrower),
     including a balance sheet as of the end of period, and statements of income
     for the  period(s)  that have  been  included  as part of the  consolidated
     financial statement  disclosure of Parent's SEC Form 10-Q filing,  which in
     the case only of the consolidated financial statements of Parent, have been
     reviewed by Parent's  appointed  independent  accounting  firm,  along with
     statements of cash flows for that period.  In connection  with the delivery
     of such quarterly financial statements,  an officer, on behalf of Borrower,
     will provide written  representation that there is no knowledge of an Event
     of  Default  or an event  that with  notice or lapse of time or both  could
     constitute and Even of Default, has occurred and is continuing or if in the
     opinion  of said  individual  an Event  of  Default  or such an  event  has


                                      -11-
<PAGE>

     occurred and is  continuing  a statement  as to the nature  thereof and the
     action which Borrower  proposes to take with respect thereto (the provision
     for such a statement  herein  shall in no way be  construed as a consent to
     the  existence  of such an Event of Default and of the  granting of time to
     cure);

          (ii) as soon as available  and in any event within one hundred  twenty
     (120) days after the end of each  fiscal year of Parent,  consolidated  and
     consolidating financial statements of Parent (including,  after the Merger,
     Borrower),  including a balance sheet as of the end of such fiscal year and
     statements of income for the year(s) that have been included as part of the
     consolidated  financial  statement  disclosure  of  Parent's  SEC Form 10-K
     filing, which in the case only of the consolidated  financial statements of
     Parent,  have been  audited by Parent's  appointed  independent  accounting
     firm, and statements of cash flow for that period.  In connection  with the
     delivery  of such annual  financial  statements,  an officer,  on behalf of
     Borrower, will provide written representation that there is no knowledge of
     an Event of Default  or an event that with  notice or lapse of time or both
     could constitute an Event of Default,  has occurred and is continuing or if
     in the  opinion  of such  accounting  firm  such an  Event of  Default  has
     occurred  and is  continuing,  a statement  as to the nature  thereof  (the
     provisions  for such a statement  herein  shall in no way be construed as a
     consent to the  existence  of such an Event of Default or the  granting  of
     time to cure).

          (iii) within ten (10) days after filing  thereof copies of all federal
     and state income tax returns for Parent.

          (iv) such financial  information  from Borrower as shall reasonably be
     requested by Lender.

          (v) as soon as  reasonably  practicable,  upon  reasonable  request of
     Lender such other data and  information  (financial and otherwise)  bearing
     upon or related to Borrower's financial  condition,  results of operations,
     assets and/or Borrower's  projections of cash flow and profit and loss, all
     as Lender from time to time may reasonably request.

          (vi) within fifteen (15) days after the end of each calendar  month, a
     list of the  Borrower's  aged  accounts  receivable  and a complete list of
     Borrower's  inventory  duly  certified  by the chief  financial  officer of
     Borrower  and  such  other  information  relating  to  Borrower's  accounts
     receivable  as Lender shall  request at such times as Lender shall  request
     upon such  forms and  using  such  procedures  as Lender  shall  reasonably
     require.



     3.6 Inspection

         Borrower  will  permit  Lender and any  authorized  representatives  of
Lender,  at  Lender's  sole  cost and  expense  and upon  reasonable  notice  to
Borrower,  to  visit  and  inspect  any  of  its  offices  or  any of its or his
Affiliates,  including  all  items of  Collateral  and its and  their  books and


                                      -12-
<PAGE>

records,  including  books and records  relating to accounts  receivable (and to
make extracts  therefrom),  and to discuss its and their  affairs,  finances and
accounts,  with its and their  employees with  Borrower's  consent,  all at such
times  during  normal  business  hours and as often and  continuously  as may be
reasonably requested by Lender.

     3.7 Notice of Certain Events and Changes

         As  soon  as  reasonably   practicable  after  becoming  aware  of  any
condition,  event or state of facts which  constitutes an Event of Default under
this  Agreement  or  which,  after  notice  or  lapse of  time,  or both,  would
constitute  an Event of Default,  Borrower  will give  written  notice to Lender
specifying  the nature and period of existence  thereof.  Borrower will promptly
give  Lender  written  notice of any  condition,  event or state of facts  which
causes or may cause material loss or depreciation in the value of the Collateral
and of the commencement or threat of any action, proceeding or investigation, or
the  occurrence  or existence of any other  event,  matter or cause  whatsoever,
which  either in any case or in the  aggregate  results  or might  result in any
material  adverse  change  in  its  business,  prospects,  profits,  properties,
operations  or condition  (financial  or  otherwise).  Borrower will give Lender
written  notice of any change in its place or places of business,  any change of
location  of any item of the  Collateral  having a book value in excess of Fifty
Thousand  Dollars  ($50,000),  except as items of Collateral may be moved in the
ordinary course of business.

     3.8 Application of Proceeds

         Borrower agrees that it will apply the funds provided to it pursuant to
this Agreement in accordance with the terms of this Agreement.  Without limiting
the generality of the foregoing,  Borrower agrees that it will not,  directly or
indirectly, apply any part of such proceeds to the purchasing or carrying of any
"margin  stock"  within the meaning of Regulation U of the Board of Governors of
the Federal Reserve  System,  or for any use which will cause a violation of any
other  regulation of the Board of Governors of the Federal  Reserve System or of
any regulations, interpretations or rulings thereunder.

     3.9 Governmental Notices

         As soon as reasonably  practicable upon the issuance thereof,  Borrower
will  send to  Lender  a copy of all  orders  issued  by any  federal,  state or
municipal  regulatory  authority under any laws or regulations  adopted thereby,
which,  if enforced,  would have a material  adverse  effect upon its  condition
whether financial,  operating, or otherwise, and further,  Borrower will as soon
as  reasonably  practicable  send to  Lender  copies  of all  reports  or  other
materials  filed by it with or issued to it by the U.S.  Securities and Exchange
Commission,  and all  reports,  notices or  statements  sent by  Borrower to its
stockholders.

     3.10 Maintenance of Property and Collateral

         Borrower  shall  maintain its  properties  and the  Collateral  in good
repair,  working  order and  condition  and make all needed and proper  repairs,
renewals, replacements, additions or improvements thereto and immediately notify
Lender of any event causing loss or  depreciation in the value of the Collateral
and the  amount  of  such  loss  or  depreciation.  Borrower  shall  defend  the
Collateral  against all claims and  demands of all persons at any time  claiming
the same or any interest therein, and in the event Lender's security interest in


                                      -13-
<PAGE>

the Collateral or a part thereof would be impaired by an adverse decision, allow
Lender to  contest or defend any such  claim or demand in  Borrower's  name,  at
Borrower's  reasonable cost, charge and expenses,  and pay to Lender upon demand
all costs and expenses,  including without limitation,  attorney's fees incurred
by Lender in connection therewith.

     3.11 Payment of Lender Expenses

         Borrower shall pay to Lender on demand any and all reasonable  expenses
including  attorneys  fees  incurred or expended by Lender in the  collection or
attempted  collection of the  Obligations,  in protecting  and/or  enforcing the
rights of Lender  against  Borrower,  and in  sustaining  and/or  enforcing  the
security interest and other liens, if any, granted to Lender hereunder and under
all related agreements, instruments and documents.

Section 4. Negative Covenants

     Except with the prior express written consent of Lender, Borrower covenants
and agrees  that so long as there is  outstanding  any  portion of either of the
Loans,  or so long as this  Agreement  has not  been  terminated  if there is no
amount outstanding under either of the Loans, it will not:

     4.1 Liens

         Directly or indirectly,  create,  incur,  assume or permit to exist any
mortgage,  lien, charge or encumbrance on or pledge or deposit of or conditional
sale,  lease or other title retention  agreement with respect to any Collateral,
whether  now  owned or  hereafter  acquired,  or be bound by or  subject  to any
agreement or option to do so, provided that the foregoing restrictions shall not
apply to:

         (a) liens for taxes,  assessments or governmental charges or levies the
payment of which is not at the time required by Section 3.2;

         (b) liens incurred or deposits made in the ordinary  course of business
in connection with worker's compensation or unemployment  insurance or to secure
the  performance  of tenders,  statutory  obligations,  surety and appeal bonds,
performance and return-of-money  bonds and other similar obligations  (exclusive
of obligations for the payment of borrowed money);

         (c) liens,  charges  and  encumbrances  related  to the  conduct of its
business  or the  ownership  of its or his  properties  or assets  which are not
incurred in  connection  with the  borrowing of money and which in the aggregate
are not material;

         (d) statutory or common law  possessory  liens for charges  incurred in
the ordinary course of business the payment of which is not yet due;

         (e) the mortgages,  liens and encumbrances  referred to or described in
Schedules "D" and "J" attached hereto;


                                      -14-
<PAGE>

         (f) liens created hereunder;

     4.2 Restrictions on Indebtedness

         Directly or indirectly,  create,  incur,  assume,  guarantee,  agree to
purchase or repurchase,  pay or provide funds in respect of, or otherwise become
or be or remain liable,  contingently,  directly or indirectly,  with respect to
any Indebtedness other than:

         (a) Indebtedness hereunder;

         (b) Current liabilities for trade and other obligations incurred in the
ordinary course of its business not as a result of borrowing;

         (c) presently existing indebtedness  specifically described in Schedule
"I"  attached  hereto,  none of which shall be prepaid  without  Lender's  prior
written consent.

         (d) Indebtedness in respect of endorsements made in connection with the
deposit of items for credit or collection  in the normal and ordinary  course of
business.

     4.3 Restrictions on Investments, Loan, etc.

         Purchase or otherwise  acquire or own any stock or other  securities or
Indebtedness  of any other Person,  or make or permit to be outstanding any loan
or advance or capital contribution to any other Person, other than:

         (a) presently  outstanding loans, advances and investments described in
Schedules "H" and "I" attached hereto;

         (b) Indebtedness of customers for merchandise sold or services rendered
in the ordinary course of business;

         (c) Indebtedness  pursuant to Third Party Loans made in accordance with
the policies listed in Schedule B;

         (d)  investments  in bills or bonds  issued  by the  government  of the
United States of America and/or  Certificates of Deposit issued by a bank having
a net worth of at least Fifty Million Dollars  ($50,000,000)  and/or  securities
issued by and purchased from Lender; and

         (e) Permitted Inter-Company Transactions.

     4.4 Stock Issuance,  Dividends,  Distributions,  Redemptions and Directors'
Fees

         Issue any additional shares of stock, directly or indirectly,  declare,
order,  pay,  make  or  set  apart  any  sum or  property  for  the  redemption,
retirement,  purchase or other acquisition, direct or indirect, of any shares of
its stock of any class now or  hereafter  outstanding  or for the payment of any
dividends on any of such stock, except for Permitted Inter-Company  Transactions
and  quarterly  dividends  payable  concurrently  with  payments to Lender under
Section 9 hereof, or pay any directors' fees.


                                      -15-
<PAGE>

     4.5 Sale of Assets and Collateral,  Consolidation, Merger or Acquisition of
         Assets

         Directly  or  indirectly,  sell,  abandon or  otherwise  dispose of the
Collateral or any part thereof,  except for sales and  consignments of Inventory
in the ordinary course of Borrower's business, or replacement with Collateral of
like value and quality,  or directly or  indirectly  sell,  abandon or otherwise
dispose of all or any portion of its properties or assets or, except pursuant to
the Merger, consolidate with or merge into any other corporation,  or permit any
other  corporation  to  consolidate  with or merge into it or  acquire  all or a
substantial  portion  of the assets of  another  Person or form or  acquire  any
Subsidiary.

     4.6 Transactions With Affiliates

         Enter  into  any  transaction  with  any  Affiliate  other  than in the
ordinary  course of business  and on terms not less  favorable to it than are at
the  time  available  to  it  from  any  Non-Affiliate,   except  for  Permitted
Inter-Company Transactions and as otherwise authorized by this Agreement.

     4.7 Partnerships, Joint Ventures, Other Businesses

         Create  or  participate  in  the  creation  of any  partnership,  joint
venture,  corporation,  or  other  entity  (including  but  not  limited  to any
subsidiaries)  or engage  in any  business  other  than the  business  presently
conducted by it, except in the ordinary course of business.

     4.8 Subordinate Debt Payments

         Pay  principal  or interest  on  Subordinate  Debt  (present or future)
except as authorized in this Agreement.

     4.9 Expenditures for Capital Assets

         Make any expenditure for capital assets (other than for routine repairs
and  maintenance  which are not required to be capitalized  as  hereinafter  set
forth)  unless,  immediately  after giving effect  thereto the aggregate  amount
expended or to be expended on account of all such  expenditures  by the Borrower
in any fiscal year commencing with the current fiscal year of Borrower would not
exceed the amount of One Hundred  Thousand  Dollars  ($100,000).  The  following
shall be  deemed  to be  expenditures  for  capital  assets  as  subject  to the
limitations of this Section 4.10:

         (a) Expenditures for acquisition,  major repairs and maintenance which,
in accordance with generally accepted  accounting  principles,  are or should be
capitalized, and

         (b) All lease  rentals and other amounts  payable under leases  entered
into after the date hereof  whether "true  leases" or finance  leases other than
renewals and  extensions of leasing  existing on the date hereof and all amounts
payable under contracts or arrangements for the purchase of property for payment
of the purchase price for such property as deferred in whole or in part.


                                      -16-
<PAGE>

     4.10 Changes in Locations, Name, etc.

         Borrower  shall give written notice as soon as  practicable,  and shall
take such  steps as Lender may deem  necessary  or  advisable  to  continue  the
perfection and priority of the security interest granted pursuant hereto,  prior
to taking any of the following  actions:  (i) changing the location of its chief
executive  office;  (ii) permitting any Inventory to be kept at a location other
than that  specified  in Schedule G; (iii)  changing  its name,  existence  as a
corporation,  jurisdiction of incorporation or formation, or corporate structure
to such an extent that any  financing  statement  filed by Lender in  connection
with this Agreement would become seriously misleading.

Section 5. Events of Default
           -----------------

     If any one or more of the  following  events  ("Events of  Default")  shall
occur:

         (a) If Borrower  shall fail to make payment of any part or  installment
of principal or interest on any advance made under either of the Loans or on any
other Obligations when any such payment shall be due and payable, whether at any
stated maturity or by demand, acceleration or otherwise; or

         (b) If Borrower shall be in default in the performance of or compliance
with any other term,  covenant or condition  applicable  to it contained in this
Agreement  or contained  in any other  Documents,  and shall have failed to cure
such  default  for thirty  (30) days after  receipt of written  notice  from the
Lender.

         (c) If any  representation or warranty made by or on behalf of Borrower
in this Agreement or in the Schedules  hereto, or in any of the other Documents,
or in connection with the transactions  contemplated hereby and thereby shall be
false or incorrect in any material respect; or

         (d) If Borrower  shall default in the payment of any  Indebtedness  for
borrowed  money,  including,  but not  limited  to,  the  indebtedness  which is
referred to in Schedule "I" attached hereto or shall default with respect to any
of the terns of any evidence of such  Indebtedness  or of any indenture or other
agreement  relating thereto,  or if Borrower shall commit any material breach or
be in default under any contract set forth in Schedule "M" attached hereto; or

         (e) If Borrower  shall make an assignment for the benefit of creditors,
or shall admit in writing an inability to pay debts as they become due, or shall
file a voluntary  petition in bankruptcy,  or shall be adjudicated a bankrupt or
insolvent,  or shall  file  any  petition  or  answer  seeking  for  itself  any
reorganization,    arrangement,    composition,    readjustment,    liquidation,
dissolution,  or similar  relief  under any  present or future  statute,  law or
regulation,  or  shall  file any  answer  admitting  or  shall  fail to deny the
material  allegations  of a petition  filed  against it for any such relief,  or
shall  seek or  consent  to or  acquiesce  in the  appointment  of any  trustee,
receiver  or  liquidator  of  itself  or of all or any  substantial  part of its
properties,  or its  directors  or majority  stockholders  shall take any action
looking to its dissolution or liquidation, or it shall cease doing business as a
going concern; or


                                      -17-
<PAGE>

         (f)  If,  within  ninety  (90)  days  after  the  commencement  of  any
proceeding   against   Borrower   seeking   any   reorganization,   arrangement,
composition, readjustment,  liquidation, dissolution or similar relief under any
present or future statute,  law or regulation,  such  proceeding  shall not have
been dismissed,  or if, within ninety (90) days after the  appointment,  without
its consent or acquiescence of any trustee,  receiver or liquidator of itself or
himself or of all or any substantial  part of its properties,  such  appointment
shall not have been vacated;

         (g) If an event of default  shall occur under a Third Party Loan and is
continuing or an event which  pursuant to the provisions of the Third Party Loan
Documents  with the lapse of time and/or notice  specified  therein would become
such an event of default has occurred and is continuing;

then,  and in any such event,  in addition to its rights and remedies under this
Agreement,  the other  Documents  and any other  instruments,  Lender may at its
option  declare  the Notes and the  Obligations  or any  portion  thereof  to be
immediately due and payable,  whereupon the same shall forthwith mature together
with interest accrued thereon and together with any and all costs of collection,
including,  but not limited to,  reasonable  attorney's  fees without notice and
without presentment, demand or protest, all of which are hereby waived.

Section 6. Payment Terms.

     Payment of all sums due hereunder  shall become due and shall be payable on
__________, 2011. Borrower shall make each payment of principal of, and interest
on, the Loans and of fees and all other amounts  payable by Borrower  under this
Agreement, in good funds no later than 5:00 p.m. (Eastern time) on the date when
due and payable,  without condition or deduction for any counterclaim,  defense,
recoupment or setoff, in Federal or other funds immediately  available to Lender
at its address  referred  to herein and in the Note.  All  payments  received by
Lender after 5:00 p.m.  (Eastern  time) shall be deemed to have been received by
Lender on the next  succeeding  Business  Day.  If the date for any  payment  of
principal is extended by operation of law or otherwise,  interest thereon at the
then applicable rate,  shall be payable for such extended time.  Notwithstanding
the foregoing,  upon the occurrence and continuance of an Event of Default,  all
sums due hereunder  shall, at the option of the Lender,  become  immediately due
and payable upon written notice to Borrower.

Section 7. Remedies, Provisions re: Collateral, etc.

     In the event of an  occurrence  of an Event of  Default  which has not been
cured or waived  within thirty (30) days after notice from Lender to Borrower of
such occurrence, Lender:

         (a) may  proceed  to protect  and  enforce  its rights if Lender  deems
necessary  to do so by  suit  in  equity,  action  at law or  other  appropriate
proceedings,  whether for the specific  performance  of any agreement  contained
herein or in any other Document, or for an injunction against a violation of any
of the terms hereof or thereof, or in aid of the exercise of any right, power or
remedy granted thereby or by law, equity or otherwise.

         (b)  without  limitation  of any  rights  and  remedies  of Lender as a
secured party under the Uniform  Commercial  Code and any rights or remedies set


                                      -18-
<PAGE>

forth in any of the Documents, Lender shall have all of the following rights and
remedies with respect to the Collateral or any portion thereof:

                  (i)  Lender  may,  at any time and from time to time,  with or
         without   judicial  process  and  the  aid  or  assistance  of  others,
         reasonably  enter upon any premises in which any of the  Collateral may
         be located and,  without  resistance or interference by Borrower,  take
         possession of the  Collateral  and/or dispose of any part or all of the
         Collateral on any such premises;  and/or  require  Borrower to assemble
         and make available to Lender at the expense of Borrower any part or all
         of the  Collateral  at any place or time  designated by Lender which is
         reasonably convenient to Borrower and Lender; and/or remove any part or
         all of the  Collateral  from  any  premises  on  which  any part may be
         located for the purpose of effecting sale or other disposition  thereof
         and/or sell, resell,  lease,  assign and deliver,  grant options for or
         otherwise dispose of any or all of the Collateral in its then condition
         or following any commercially reasonable preparation or processing,  at
         public or private sale or proceedings, by one or more contracts, in one
         or more parcels, at the same or different times, with or without having
         the  Collateral  at the  place of sale or other  disposition,  for cash
         and/or  credit and upon any  reasonable  and customary  terms,  at such
         place(s) and time(s) and to such Persons as Lender shall deem best, all
         without  demand  for   performance  or  any  notice  or   advertisement
         whatsoever,  except  that the  owner of the  items to be sold  shall be
         given fifteen (15) business  days' written notice of the place and time
         of any public sale or of the time after which any private sale or other
         intended disposition is to be made, which notice Borrower hereby agrees
         shall be reasonable notice thereof. If any of the Collateral is sold by
         Lender upon credit or for future  delivery,  Lender shall not be liable
         for the  failure  of the  purchaser  to pay for same and in such  event
         Lender may resell  such  Collateral.  Lender may buy any part or all of
         the  Collateral  at any  public  sale  and if  any  part  or all of the
         Collateral is of a type customarily  sold in a recognized  market or is
         of the type which is the  subject  of widely  distributed  in  standard
         price  quotations  Lender may buy at private  sale and may make payment
         therefor by application of all or a part of either Loan.

                  (ii)  Lender  shall apply the cash  proceeds  from any sale or
         other disposition of the Collateral  first, to the reasonable  expenses
         of  retaking,   holding,  preparing  for  sale,  selling,  leasing  and
         otherwise  disposing of such Collateral,  and to reasonable  attorneys'
         fees and all legal expenses,  travel and other expenses which are to be
         paid or reimbursed to Lender  pursuant  hereto or pursuant to the other
         Documents,   second,  to  all  accrued   interest,   fees  and  charges
         outstanding with respect to the Loans,  third, to all other outstanding
         portions of the Loans,  fourth,  if there is any surplus,  to any other
         secured parties having an interest in the Collateral known to Lender in
         accordance with their interests, and fifth, if there is any surplus, to
         Borrower;  provided,  however,  that Borrower  shall remain liable with
         respect to unpaid portions of the Loans.

                  (iii)  Any  of the  proceeds  of the  Collateral  received  by
         Borrower after demand by Lender for repayment of all or any part of the
         Loans, shall not be commingled with any other of its property but shall
         be segregated,  held by Borrower in trust as the exclusive  property of
         Lender, and it will immediately deliver to Lender the identical checks,
         monies, or other proceeds of Collateral.


                                      -19-
<PAGE>

                  (iv)  At its  option,  Lender  may pay  for  insurance  on the
         Collateral and taxes, assessments or other charges which Borrower fails
         to pay in  accordance  with the  provisions  hereof  or of any  related
         agreement,  instrument  or  document  and may  discharge  any  security
         interest or lien upon the  Collateral.  No such payment or discharge of
         any such  security  interest  or lien shall be deemed to  constitute  a
         waiver by Lender of the  violation  of any  covenant  by  Borrower as a
         result of  Borrower's  failure to make any such  payment or  Borrower's
         suffering of any such  security  interest or lien.  Any payment made or
         expense  incurred by Lender pursuant to this or any other provisions of
         this Agreement  shall be added and become a part of the  Obligations of
         Borrower to Lender, shall bear interest at a rate per annum as provided
         for in the Notes, and shall be payable on demand.

Section 8. Cumulative Remedies; No Waivers, etc.

     No right,  power or remedy  granted to Lender in this  Agreement  or in the
other Documents is intended to be exclusive, but each shall be cumulative and in
addition to any other rights,  powers or remedies referred to in this Agreement,
in the other Documents or otherwise available to Lender at law or in equity, and
the  exercise  or  beginning  of  exercise  by Lender of any one or more of such
rights,  powers  or  remedies,  shall not  preclude  the  simultaneous  or later
exercise by Lender of any or all of such other  rights,  powers or remedies.  No
waiver  by,  nor any  failure  or delay on the part of Lender in any one or more
instances  to  insist  upon  strict  performance  or  observance  of one or more
covenants or conditions  hereof,  or of the other Documents shall in any way be,
or be construed to be, a waiver thereof or to prevent  Lender's  rights to later
require the strict performance or observance of such covenants or conditions, or
otherwise prejudice Lender's rights, powers or remedies.

Section 9. Partial Invalidity, Waivers

         (a) If any term or  provision  of this  Agreement  or any of the  other
Documents or the application thereof to any Person or circumstance shall, to any
extent,  be  invalid  or  unenforceable  by reason of any  applicable  law,  the
remainder of this Agreement and the other Documents, or application of such term
or provision to Persons or circumstances other than those as to which it is held
invalid  or  unenforceable,  shall not be  affected  thereby,  and each term and
provision  of this  Agreement  and the  other  Documents  shall be valid  and be
enforced to the fullest  extent  permitted by law. To the full extent,  however,
that the provisions of any such  applicable  law may be waived,  they are hereby
waived by Borrower to the end that this Agreement and the other  Documents shall
be deemed to be valid and binding  obligations  enforceable  in accordance  with
their terms.

         (b) To the extent  permitted by applicable law,  Borrower hereby waives
presentment,  demand, protest, notice of protest, notice of default or dishonor,
notice of payments and non-payments, or of any default.

         (c) BORROWER  HEREBY WAIVES ALL RIGHTS TO NOTICE,  JUDICIAL  HEARING OR
PRIOR COURT ORDER TO WHICH IT MIGHT  OTHERWISE  HAVE THE RIGHT UNDER ANY FEDERAL
OR STATE STATUTE OR REGULATION IN CONNECTION WITH THE OBTAINING BY LENDER OF ANY


                                      -20-
<PAGE>

PREJUDGMENT  REMEDY  BY  REASON OF THIS  AGREEMENT,  OR BY REASON OF  BORROWER'S
OBLIGATIONS OR ANY RENEWALS OR EXTENSIONS OF THE SAME.  BORROWER ALSO WAIVES ANY
AND ALL OBJECTION WHICH IT MIGHT OTHERWISE ASSERT,  NOW OR IN THE FUTURE, TO THE
EXERCISE OR USE BY LENDER OF ANY RIGHT OF SET-OFF,  REPOSSESSION OR SELF HELP AS
MAY PRESENTLY EXIST UNDER STATUTE OR COMMON LAW.

Section 10. Definitions

     As used herein, the following terms have the following meanings:

     Account Debtor: means a Person who is obligated on an account.

     Agreement: this Amended and Restated Loan and Security Agreement, as it may
be amended, amended and restated, renewed or supplemented from time to time.

     Affiliate: with reference to any Person, any director,  officer or employee
of such Person, any corporation, association, firm or other entity in which such
Person has a direct or indirect  substantial interest or by which such Person is
directly or  indirectly  controlled  or is under direct or indirect  substantial
common  control with such  Person.  For  purposes of this  Agreement,  Borrower,
Parent and the Parent Subsidiaries are Affiliates of one another.

     Bankruptcy Code: Title 11 of the United States Code (11 U.S.C.  Section 101
et seq.), as amended from time to time, or any successor statute.

     Borrower: the meaning specified on page 1.

     Borrowing  Base: as of any date, an amount equal to the sum of: (a) seventy
percent (70%) of Eligible  Accounts on such date, plus (b) seventy percent (70%)
of the value of Eligible Inventory,  based upon the lower of cost (computed on a
first-in-first-out  basis),  fair market value or orderly  liquidation  value as
determined by Lender.

     Borrowing  Base  Certificate:  a  certificate  in the form of Schedule  "O"
attached hereto.

     Collateral: the meaning specified in Section 1.6.

     Documents:  this Agreement,  the Notes,  all collateral  assignments of the
notes and liens described in Section 1.6(a)(iv), all UCC-1 Financing Statements,
and all other agreements, documents and instruments heretofore, now or hereafter
executed  and  delivered  pursuant to this  Agreement  or pursuant to any of the
aforesaid documents.

     Eligible  Accounts:  all accounts of Borrower  that are deemed by Lender in
the exercise of its sole and absolute discretion to be eligible for inclusion in
the  calculation  of the  Borrowing  Base net of any and all  interest,  finance
charges, sales tax, fees, returns,  discounts,  claims, credits, charges, contra
accounts, exchange contracts or other allowances,  offsets and rights of offset,
deductions, counterclaims, disputes, rejections, shortages or other defenses and
all credits  owed or allowed by Borrower  upon any of its  accounts  and further
reduced by the aggregate amount of all reserves,  limits and deductions provided


                                      -21-
<PAGE>

for in this definition and elsewhere in this Agreement.  Eligible Accounts shall
not include the following:

     (a)  accounts  which  remain  unpaid  more than ninety (90) days past their
invoice dates;

     (b)  accounts  which are not due and payable  within  sixty (60) days after
their invoice dates;

     (c) accounts  owing by a single  Account  Debtor if twenty percent (20%) or
more of the  aggregate  balance  owing  by said  Account  Debtor  is  ineligible
pursuant to clauses (a) or (b) above;

     (d) accounts with respect to which the obligation of payment by the Account
Debtor is or may be conditional  for any reason  whatsoever  including,  without
limitation,  accounts arising with respect to goods that were (i) not sold on an
absolute  basis,  (ii)  sold on a bill  and hold  sale  basis,  (iii)  sold on a
consignment sale basis, (iv) sold on a guaranteed sale basis, (v) sold on a sale
or return basis, or (vi) sold on the basis of any other similar understanding;

     (e) accounts with respect to which the Account  Debtor is not a resident or
citizen of, or otherwise  located in, the continental  United States of America,
or with respect to which the Account Debtor is not subject to service of process
in the continental United States of America,  unless such accounts are backed in
full by  irrevocable  letters  of  credit  or  insurance  in form and  substance
satisfactory  to Lender  issued  or  confirmed  by a  domestic  commercial  bank
acceptable to Lender;

     (f) accounts with respect to which the Account  Debtor is the United States
of America or any other federal  governmental body unless such accounts are duly
assigned to Lender in compliance with all applicable  governmental  requirements
(including, without limitation, the Federal Assignment of Claims Act of 1940, as
amended, if applicable);

     (g)  accounts  with  respect to which  Borrower  is or may be liable to the
Account Debtor for goods sold or services  rendered by such Account Debtor,  but
only to the extent of such liability to such Account Debtor;

     (h)  accounts  with respect to which the goods giving rise thereto have not
been shipped and  delivered to and accepted as  satisfactory  by the  applicable
Account  Debtor or with  respect to which the  services  performed  giving  rise
thereto  have not been  completed  and accepted as  satisfactory  by the Account
Debtor thereon;

     (i)  accounts  which are not  invoiced  within  thirty  (30) days after the
shipment and  delivery to and  acceptance  by said  Account  Debtor of the goods
giving rise thereto or the performance of the services giving rise thereto;

     (j) accounts which are not subject to a first priority  perfected  security
interest in favor of Lender;

     (k) that  portion of an account  balance  owed by a single  Account  Debtor
which exceeds fifteen percent (15%) of total accounts  otherwise deemed eligible
hereunder; and


                                      -22-
<PAGE>

     (l)  accounts  with  respect to which the Account  Debtor is located in any
state requiring the filing of a Notice of Business  Activities Report or similar
report in order to permit a Borrower to seek judicial  enforcement in such state
of payment of such account, unless such Borrower has qualified to do business in
such state or has filed a Notice of  Business  Activities  Report or  equivalent
report for the then current year.

     Eligible Inventory: as at any date of determination, all inventory owned by
and in the  possession  of Borrower and located in the United  States of America
that  Lender,  in its sole and  absolute  discretion,  deems to be eligible  for
borrowing  purposes.  Without  limiting the generality of the foregoing,  unless
otherwise agreed by Lender, the following is not Eligible Inventory:

     (a) work-in-process;

     (b)  finished  goods which do not meet the  specifications  of the purchase
order for such goods;

     (c)  inventory  with respect to which  Lender does not have a valid,  first
priority and fully perfected security interest;

     (d) inventory  with respect to which there exists any security  interest or
lien in favor of any Person other than Lender;

     (e) packaging and shipping materials, products and labels;

     (f) inventory that is obsolete;

     (g)  inventory  produced in violation of the Fair Labor  Standards  Act, in
particular provisions contained in Title 29 U.S.C. 215 (a)(i); and

     (h) inventory  located at a location for which Lender does not have a valid
landlord's or  warehouseman's  waiver or  subordination  on terms and conditions
acceptable  to  Lender  in its sole  discretion  and  inventory  located  at any
location other than those listed on Schedule "G".

     Financial Statements:  the reports,  statements and other information to be
delivered to Lender pursuant to Section 3.5.

     First Revolving Loan: the meaning specified in Section 1.1(a).

     First Revolving Loan Note: the meaning specified in Section 1.1(a).

     Generally Accepted  Accounting  Principles:  generally accepted  accounting
principles and practices in the United States of America, consistently applied.

     Indebtedness:  as  applied  to a Person,  (a) all  items,  except  items of
capital stock or of surplus or of unappropriated retained earnings or of amounts
accrued for deferred  income taxes if in compliance  with Section 3.2,  which in
accordance with Generally  Accepted  Accounting  Principles would be included in
determining  total liabilities as shown on the liability side of a balance sheet
of such person as at the date of which Indebtedness is to be determined, (b) all


                                      -23-
<PAGE>

indebtedness secured by any mortgage, pledge, lease, lien or conditional sale or
other title retention  agreement existing on any property or asset owned or held
by such person subject thereto, whether or not such indebtedness shall have been
assumed,  and (c) all  indebtedness  of others which such Person has directly or
indirectly guaranteed,  endorsed, discounted or agreed contingently or otherwise
to purchase or  repurchase  or  otherwise  acquire,  or in respect of which such
Person has  agreed to supply or advance  funds  (whether  by way of loan,  stock
purchase,  capital  contribution  or  otherwise)  or otherwise to become  liable
directly or indirectly with respect thereto.

     Lender: the meaning specified on page 1.

     Loans:  collectively,  the First  Revolving  Loan and the Second  Revolving
Loan.

     Merger:  the merger of DGSE Merger Corp., a Delaware  corporation  ("Merger
Corp.") and wholly-owned  subsidiary of Parent, with and into Borrower, by which
Borrower  shall become a  wholly-owned  Subsidiary  of Parent,  on the terms and
conditions set forth in that certain Amended and Restated  Agreement and Plan of
Merger and  Reorganization,  dated as of January 6, 2007,  by and among  Parent,
Merger Corp., Borrower and the stockholder agent named therein.

     Notes: collectively, the First Revolving Loan Note and the Second Revolving
Loan Note.

     Obligations: the meaning specified in Section 1.2.

     Parent:  DGSE  Companies,  Inc., a Nevada  corporation  and,  following the
consummation of the Merger, the sole stockholder of Borrower.

     Parent Subsidiary: a Subsidiary of Parent other than Borrower.

     Permitted Inter-Company  Transaction:  a cash dividend or distribution made
by Borrower to Parent in  accordance  with any  applicable  restrictions  of the
General Corporation Law of the State of Delaware or a loan by Borrower to Parent
or to a Parent  Subsidiary,  in each case with the proceeds of advances  made by
Lender to Borrower under the First Revolving Loan or the Second  Revolving Loan,
provided that:

         (a) Parent has  executed and  delivered to Lender a limited  continuing
guaranty of the Obligations,  in form and substance  reasonably  satisfactory to
Lender,  covering an amount of the  Obligations not to exceed the sum of (x) the
aggregate  amount of all such  dividends or  distributions  to Parent,  less all
amounts  contributed  by Parent  to  Borrower  as  capital  in  return  for such
dividends or distributions,  and (y) the aggregate outstanding principal balance
of all such inter-company loans to Parent or any Parent Subsidiary; and

         (b) Parent has executed and delivered to Lender a security agreement in
form and substance reasonably  satisfactory to Lender,  pursuant to which Parent
has  granted  Lender  a  second-priority   security  interest  in  all  Stanford
Collateral  (as defined in the  Intercreditor  Agreement,  dated as of July ___,
2006, entered into by and between Texas Capital Bank,  National  Association,  a


                                      -24-
<PAGE>

national banking association Lender ("TCB"), Lender and Parent), subject only to
the first-priority security interest of TCB.

     Person: a corporation,  an association, a partnership,  an organization,  a
business,  an individual or a government or political subdivision thereof or any
governmental agency.

     Second Revolving Loan: the meaning specified in Section 1.1(b).

     Second Revolving Loan Note: the meaning specified in Section 1.1(b).

     Subsidiary:  with  reference  to any  Person,  a  corporation,  or  similar
association  or  entity of which not less  than a  majority  of the  outstanding
shares of the class or  classes  of stock,  have by the terms  thereof  ordinary
voting power to elect a majority of the directors,  managers or trustees of such
corporation,  association  or  entity,  of  which  are  at  the  time  owned  or
controlled,  directly or  indirectly,  by such Person or by a Subsidiary of such
Person.

     Third Party Loan  Documents:  all  agreements,  documents  and  instruments
heretofore,  now or hereafter executed and delivered pursuant to any Third Party
Loans made by Borrower.

     Uniform Commercial Code: the Uniform Commercial Code as in effect from time
to time in the State of Texas,  including,  without  limitation,  any amendments
thereto which are effective after the date hereof.

Section 11. Expenses
            --------

     Borrower  agrees to indemnify and save Lender  harmless from, and to pay or
reimburse Lender for, all reasonable charges,  costs,  damages,  liabilities and
expenses,  including,  without limitation,  reasonable  attorneys' fees, if any,
incurred by Lender in defending or protecting  the security  interests and liens
granted  pursuant to this Agreement or the other  Documents,  or the priority of
any thereof,  or in the  performance of any obligation of Borrower in connection
with the  Collateral  or in the attempted  enforcement  or  enforcement  of this
Agreement or the other Documents,  or in the collection or attempted  collection
of any of the  obligations  owing under any thereof,  or in the  realization  or
attempted realization upon the Collateral.

Section 12. Further Assurances; Possession of Collateral; Custodians
            --------------------------------------------------------

     Borrower  will  deliver  to  Lender  such  financing  statements  and other
instruments  constituting  or  evidencing  items  of  the  Collateral  as may be
reasonably  requested by Lender to better assure it with respect to the security
interests  granted to it pursuant to this Agreement and the other Documents.  To
the extent  permitted by applicable law,  Borrower hereby  authorizes  Lender to
file,  in the name of Borrower,  financing  statements  which Lender in its sole
discretion  deems  necessary to further perfect the security  interests  granted
under this Agreement and the other Documents.

Section 13. Survival of Agreements, Representations and Warranties etc.
            -----------------------------------------------------------

     All agreements,  representations and warranties contained herein or made in
writing  by or on  behalf  of  Borrower,  in  connection  with the  transactions
contemplated  hereby shall survive the execution and delivery of this  Agreement


                                      -25-
<PAGE>

and the other  Documents  shall  survive any  investigation  at any time made by
Lender and any disposition of the Loans by Lender and, to the extent applicable,
shall be deemed to be made a new by each of them  each time an  advance  is made
pursuant hereto or pursuant to the other Documents.  All statements contained in
any  certificate  or other  instrument  delivered  by or on behalf  of  Borrower
pursuant hereto or in connection with the transactions contemplated hereby shall
be deemed representations and warranties made hereunder.

Section 14. Failure to Perform
            ------------------

     If Borrower  shall fail to observe or perform any of the covenants  hereof,
Lender may pay such reasonable amount or incur reasonable  liabilities to remedy
or  attempt  to  remedy  any  such  failure,  and all  such  payments  made  and
liabilities  incurred  shall be for the  account  of  Borrower  and  shall be in
Lender's  sole  discretion  or  shall  be  withdrawn  from  Borrower's  accounts
maintained with Lender.

Section 15. Notices, etc.
            -------------

     All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to be duly  delivered  upon actual  receipt if by
facsimile,  email or over night  courier,  and five (5) days after mailing if by
first class registered mail, return receipt requested

         (a) if to Lender:

             Lender:          Stanford International Bank Ltd.
                              No. 11 Pavilion Drive, St. John's,
                              Antigua, West Indies
                              Attn:  James M. Davis, Chief Financial Officer
                              Facsimile: (901) 680-5265
                              Email:  MDavis@StanfordEagle.com

             with a copy to:

                              Adorno & Yoss LLP
                              225 Ponce de Leon Boulevard, Suite 400
                              Coral Gables, FL 33134
                              Attn: Seth P. Joseph, Esq.
                              Facsimile: (305) 460-1422
                              Email: SPJ@Adorno.com

         or at such  other  address  as may have been  furnished  in  writing by
         Lender to Borrower; or

         (b) if to Borrower:

             Borrower:        Superior Galleries, Inc.
                              9478 W. Olympic Blvd.
                              Beverly Hills, California 90212
                              Attn:  Chief Executive Officer
                              Facsimile:  (310) 203-0496
                              Email:


                                      -26-
<PAGE>

             with a copy to:

                              DGSE Companies, Inc.
                              2817 Forest Lane
                              Dallas, TX  75234
                              Attn:  Dr. L.S. Smith
                              Facsimile:  (972) 772-3093
                              Email:  LSSmith1@ClassicNet.net

             with an additional copy to:

                              Sheppard, Mullin, Richter & Hampton, LLP
                              12275 El Camino Real, Suite 200
                              San Diego, California  92130-2006
                              Attn:  John J. Hentrich, Esq.
                              Facsimile:  (858) 509-3691
                              Email:  JHentrich@SheppardMullin.com

         or at such  other  address  as may have been  furnished  in  writing by
         Borrower to Lender.

Section 16. Amendments and Waivers
            ----------------------

         Neither this Agreement nor any other Document nor any term hereof or
thereof may be changed, waived, discharged or terminated except by a writing
signed by the party to be charged.

Section 17. Term
            ----

     The term of this Agreement and the other  Documents  shall be from the date
hereof and  continue  until all  amounts  due  hereunder  are paid in full.  Any
expiration  or  termination  of this  Agreement  shall not  affect any rights of
Lender  under  this  Agreement  or under the other  Documents  and upon any such
expiration or  termination  Borrower  shall be obligated to forthwith pay all of
the Loans and Borrower  shall  continue to be bound by all of the  provisions of
this Agreement until all of the Loans shall have been paid in full.

Section 18. Conditions Precedent
            --------------------

     18.1 The  obligation of Lender to make the Loans and advances to be made by
it hereunder is subject to the following conditions precedent;

         (a) Approval of Lender Counsel

         All legal  matters  incident to the  transactions  hereby  contemplated
shall be satisfactory to counsel for Lender.


                                      -27-
<PAGE>

         (b) Proof of Corporate Action

         Lender shall have received  certified  copies of all  corporate  action
taken by Borrower to authorize the execution and delivery of this  Agreement and
the Notes and Loans hereunder, and such other documents as Lender or its counsel
shall reasonably request.

         (c) Corporate Documents and Opinions

         Borrower is furnishing to Lender a certificate  of good standing of the
state of its  incorporation,  resolutions,  incumbency  certificates,  and other
documents which Borrower  acknowledges are being relied upon by Lender, and such
other  documents are to be in the form and of the content as may be satisfactory
to Lender and its counsel.

         (d) Loan Documents

         Receipt  by Lender of the  Notes  fully  executed  by  Borrower,  UCC-1
Financing Statements in form satisfactory for filing with the Delaware Secretary
of State and other material documents required by Lender.

         (e) Insurance

         Receipt by Lender of the  policies  of  insurance  in  compliance  with
Section 1.9.

         (f) Opinion of Counsel

         Lender shall have received from counsel to Borrower a written  opinion,
reasonably satisfactory to Lender.

         (g) Representations and Warranties

         The Representations and Warranties  contained in Section 2 herein shall
be true on and as of the date of closing.

         (h) Collateral

         Receipt by Lender of any of the Collateral  where  possession by Lender
is necessary to perfect its security interest therein.

         (i) Merger

         Lender shall have  received  satisfactory  evidence that the Merger has
been consummated.

         (j) Parent Approval

         Lender shall have received  satisfactory  written approval by Parent of
the terms and provisions of this Agreement and the other Documents.


                                      -28-
<PAGE>

     18.2 The  obligation  of the Lender to make each  subsequent  advance to be
made by it hereunder is subject to the conditions precedent that:

         (a) No Event of Default

         No Event of Default  specified in Section 5 hereof,  and no event which
pursuant to the  provisions  of Section 5 with the lapse of time  and/or  notice
specified  therein  would  become such an Event of Default,  has occurred and is
continuing; and

         (b) No Material Adverse Change

         There has been no material adverse change in the consolidated financial
condition of Borrower and its consolidated subsidiaries; and

         (c) Representations and Warranties

         The Representations and Warranties  contained in Section 2 are true and
correct.

Lender  shall  have  received  a  certificate  of the CEO  and  CFO of  Borrower
certifying  as of the date of the current  advance  that (i) no Event of Default
specified in Section 5 hereof exists or is continuing,  (ii) no material  change
has taken place with regard to its financial  condition as represented to Lender
and (iii) the  Representations  and Warranties  contained in Section 2 are still
true and correct.

     18.3 By  delivering  the  Notes  and each  other  Document  to  Lender  and
receiving the Loans and advances,  Borrower  represents that no Event of Default
specified in Section 5 hereof  exists or is continuing  and no material  adverse
change has taken place with regard to its financial  condition as represented to
Lender.

     18.4 Loan Administration.

         Advances made under the Loans shall be as follows:

         (a) A request for an advance  shall be made by Borrower  giving  Lender
notice of its intention to borrow,  in which notice  Borrower  shall specify the
amount of the proposed  borrowing,  whether such  proposed  borrowing  will be a
borrowing under this First Revolving Loan or the Second  Revolving Loan, and the
proposed  borrowing date, not later than 2:00 p.m. Eastern time one (1) business
day  prior to the  proposed  borrowing  date;  provided,  however,  that no such
request may be made at a time when there exists an Event of Default.

         (b) In the  case  of  each  request  for an  advance  under  the  First
Revolving Loan, Borrower shall deliver to Lender,  concurrently with delivery of
the notice of borrowing required by clause (a) of this Section 18.4, a Borrowing
Base  Certificate  executed by Borrower  and prepared as of a date not more than
thirty (30) business days prior to the date of such requested advance.

         (c) Borrower hereby  authorizes Lender to disburse the proceeds of each
revolving credit advance  requested by wire transfer to such bank account as may


                                      -29-
<PAGE>

be agreed upon by Borrower and Lender from time to time or elsewhere if pursuant
to written direction from Borrower.

         (d) All revolving  credit advances and other extensions of credit to or
for the benefit of Borrower shall constitute one general  Obligation of Borrower
and shall be secured by Lender's lien upon all of the Collateral.

         (e) Lender  shall enter all  revolving  credit  advances as debits to a
loan  account in the name of Borrower and shall also record in said loan account
all payments made by Borrower on any  Obligations and all proceeds of Collateral
which are  indefeasibly  paid to Lender,  and may record therein,  in accordance
with customary accounting practice, other debits and credits, including interest
and all charges and expenses properly  chargeable to Borrower.  All payments and
collections  shall be applied  first to fees,  costs and  expenses due and owing
under the  Documents,  then to interest due and owing under the  Documents,  and
then to principal outstanding under the Loan.

         (f) Lender will  account to Borrower  monthly  with a statement  of the
Loans, charges and payments made pursuant to this Agreement, and such accounting
rendered by Lender shall be deemed final,  binding and conclusive  upon Borrower
unless  Lender is notified by Borrower in writing to the contrary  within thirty
(30) days of the date each accounting is mailed to Borrower.  Such notices shall
be deemed an objection to those items specifically objected to therein.

         (g) Borrower shall  establish one or more bank accounts for deposits of
advances  made under the Loans and for  deposits  of  repayments  of Third Party
Loans,  and shall  assign such  accounts to Lender.  Borrower  shall not deposit
advances from Lender or repayments  from borrowers  under Third Party Loans into
any other accounts.

Section 19. Setoff.
            -------

     Borrower hereby gives Lender a security interest in, and a right of set-off
for the Loans  upon or  against,  all the  deposits,  credits,  Collateral,  and
property of Borrower, now or hereafter in the possession or control of Lender or
in transit to it.  Lender may at any time apply or set-off the same, or any part
thereof, to either of the Loans even though unmatured.

Section 20. Miscellaneous
            -------------

         (a) This Agreement and each other document  granting  Lender a security
interest in the  Collateral  is a security  agreement  within the meaning of the
Uniform  Commercial Code. Where any provision in this Agreement refers to action
to be taken by any Person, or which such Person is prohibited from taking,  such
provision  shall  be  applicable  whether  such  action  is  taken  directly  or
indirectly by such Person. To the extent there is any inconsistency  between the
terms of this Agreement and any of the other  Documents,  this  Agreement  shall
control.  All of the terms of this  Agreement and the other  Documents  shall be
binding upon and inure to the benefit of and be  enforceable  by the  respective
heirs, executors, administrators,  successors and assigns of the parties hereto,
whether so  expressed  or not, and by any other holder or holders at the time of
the  Loan or any  part  thereof.  The  headings  in this  Agreement  are for the
purposes of reference  only and shall not limit or  otherwise  affect any of the
terms hereof.  This  Agreement may be executed in two (2) or more  counterparts,


                                      -30-
<PAGE>

each of which shall be deemed an original,  and by the several parties hereto in
separate  counterparts,  but all of which together shall  constitute one and the
same instrument.

         (b) This  Agreement  is between  the Lender and the  Borrower  only and
shall not be relied upon by any third party.  Without  limiting  the  foregoing,
Lender shall have no liability to any third party  whatever  (including  without
limitation  Borrower or anyone conducting business with any of the foregoing) in
the event Lender for any reason and at any time  determines  not to advance sums
under the Notes  and/or for any reason or otherwise  exercises  its rights under
this Agreement and/or the other Documents.

         (c) Subject to Section  552(a) of the  Bankruptcy  Code,  the  security
interests  granted hereby extends to the Collateral,  whether acquired before or
after the commencement of a case under the Bankruptcy Code.

Section 21. CHOICE OF LAW; CONSENT TO JURISDICTION.
            ---------------------------------------

     THIS  AGREEMENT  AND THE NOTES  SHALL BE  GOVERNED  BY,  AND  CONSTRUED  IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,  WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE  PRINCIPLES OF CONFLICTS OF LAWS.  IF ANY ACTION  ARISING OUT OF THIS
AGREEMENT  OR THE NOTES IS  COMMENCED BY LENDER IN THE STATE COURTS OF THE STATE
OF TEXAS OR IN THE U.S.  DISTRICT  COURT  FOR THE  NORTHERN  DISTRICT  OF TEXAS,
BORROWER  HEREBY  CONSENTS  TO THE  JURISDICTION  OF ANY SUCH  COURT IN ANY SUCH
ACTION AND TO THE LAYING OF VENUE IN THE STATE OF TEXAS. ANY PROCESS IN ANY SUCH
ACTION SHALL BE DULY SERVED IF MAILED BY REGISTERED MAIL,  POSTAGE  PREPAID,  TO
BORROWER AT THE ADDRESS  DESCRIBED IN SECTION 15 HEREOF.  ANY MATTERS  AFFECTING
THE  ENFORCEMENT  OR   INTERPRETATION  OF  LENDER'S  SECURITY  INTEREST  IN  THE
COLLATERAL  SHALL (TO THE  EXTENT  NOT  GOVERNED  BY TEXAS LAW  PURSUANT  TO THE
AGREEMENT SET FORTH HEREIN) BE GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE
LAWS OF THE STATE OF DELAWARE OR CALIFORNIA, AS APPLICABLE.

         [Rest of page intentionally left blank; signature page follows]









                                      -31-
<PAGE>

     IN WITNESS WHEREOF,  each of the parties hereto has executed this Agreement
on the day first above mentioned.

SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:

                                                BORROWER:
                                                Superior Galleries, Inc.


                                                BY:
-----------------------------------                -----------------------------
                                                   Name:
                                                   Title:

                                                LENDER
                                                Stanford Financial Group Company


                                                BY: /s/ James M. Davis
-----------------------------------                -----------------------------
                                                   James M. Davis
                                                   Its Chief Financial Officer















                                      -32-
<PAGE>

                COMMERCIAL LOAN AND SECURITY AGREEMENT SCHEDULES

[ TO COME ]
</TEXT>
</DOCUMENT>
