8-K

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 8-K


                                 CURRENT REPORT



Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.


Date of Report (Date of earliest event reported):  May 10, 1996


                           COSMETIC GROUP U.S.A., INC.
               (Exact name of registrant as specified in charter)


          CALIFORNIA                 0-19227                95-4040591
(State or other jurisdiction       (Commission             (IRS Employer
      of incorporation)           File Number)          Identification No.)


11312 Penrose Street, Sun Valley, California                   91352
  (Address of principal executive offices)                  (Zip Code)


                                 (818) 767-2889
              (Registrant's telephone number, including area code)


                                 Not applicable
          (Former name or former address, if changed since last report)


Item 5.   Other Events.

On May 10, 1996, the Company terminated its Account Purchase and Finance
Agreement with Premium Commercial Services Corporation which provided the
Company with accounts receivable financing. Concurrently, the Company entered
into a new accounts receivable financing relationship with First Community
Financial Corporation, of Phoenix, Arizona ("FCFC").  The new Accounts
Receivable Security Agreement provides for FCFC to advance up to 75% of the
amount of eligible accounts receivables of the Company.  Obligations of the
Company to FCFC shall bear interest at the rate of 16% per annum. This rate can
increase if the Prime Rate exceeds 8.25%.  Further, upon any default, interest
shall accrue on any obligations to FCFC at a rate which is 4% above the rate the
Company was being charged before the default.  The maximum amount which may be
outstanding under the agreement shall not exceed $1,000,000.  Amounts owing to
FCFC are collateralized by substantially all the assets of the Company.

Item 7.   Financial Statements and Exhibits.

     (c)  Exhibits:

     99.2  Accounts Receivable Security Agreement, dated May 10, 1996, between
registrant and First Community Financial Corporation.

     99.3  Guaranty and Subordination Agreement, dated May 10, 1996, between
registrant and First Community Financial Corporation.


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                              Cosmetic Group U.S.A., Inc.


                              /s/  Frank X. McGarvey
                              -----------------------
                              Frank X. McGarvey
                              Chief Financial Officer

Date:  May 24, 1996.

EX-99.2

                     ACCOUNTS RECEIVABLE SECURITY AGREEMENT




DATE:     May 10, 1996

BORROWER:  Cosmetic Group U.S.A., Inc.    FCFC:    FIRST COMMUNITY
           a California corporation                FINANCIAL CORPORATION,
                                                   an Arizona corporation

ADDRESS:   11312 Penrose Street           ADDRESS: 3550 N. Central Avenue
           Sun Valley, California 91352            Suite 102
                                                   Phoenix, Arizona 85012


     Borrower is desirous of obtaining a Credit Facility and other financial
accommodations from FCFC, and FCFC is willing to make such Credit Facility
available to Borrower on the following terms and conditions to be secured by the
Collateral hereinafter described:

     1.   DEFINITIONS.

          1.1  "Accounts" means and includes all presently existing and
hereafter arising accounts, instruments, contract rights, documents, chattel
paper (including security agreements and leases), and all other forms of
obligations owing to Borrower, all guaranties of such Accounts and other
security therefor, the proceeds of such Accounts, all Inventory returned to or
reclaimed by Borrower and the Borrower's Books relating to any of the foregoing.

          1.2  "Agreement" means and includes this Accounts Receivable Security
Agreement, any concurrent or subsequent Rider hereto and any extensions,
supplements, amendments or modifications thereto.

          1.3  "Borrower's Books" means and includes all of Borrower's books and
records including but not limited to: all customer lists and lists of account
debtors; all ledgers; records reflecting, summarizing or evidencing Borrower's
assets, accounts, business operations or financial condition; computer programs,
computer discs, computer printouts, and other computer prepared information and
computer equipment of any kind.

          1.4  "Collateral" means and includes all Accounts, Inventory, money,
deposit accounts, equipment and general intangibles (including tax refunds, and
all trademarks and trade names of Borrower) and any and all other assets of
Borrower in which FCFC now has or hereafter receives a security interest in or
which hereafter come into the possession, custody or control of FCFC, and the
proceeds thereof, including proceeds of insurance covering the Collateral and
the proceeds resulting from the sale, rental, or other disposition of the
Collateral.


          1.5  "Credit Facility" shall mean the revolving lines of credit
granted by FCFC to Borrower and to Arnold Zegarelli Products, Inc.("Zegarelli")
in the aggregate amount of $1,000,000, in accordance with the terms and
conditions set forth in this Agreement and an Accounts Receivable Security
Agreement dated May 10, 1996 between Zegarelli and FCFC (the "Zegarelli Security
Agreement").

          1.6  "Eligible Accounts" means Accounts on selling terms of net 30
days or less, which have been validly assigned to FCFC and strictly comply with
all of Borrower's warranties and representations set forth in this Agreement,
but excluding those Accounts:  (a) which are not paid within 60 days of their
invoice date; (b) which are owed by a single account debtor, if 50% owing by
said account debtor remains unpaid for more than 60 days after its invoice date;
(c) where the total indebtedness owed by an account debtor to Borrower exceed
10% of all Eligible Accounts, with the exception of the following account
debtors: Avon Products, Inc. - 30% concentration limitation: Sally Beauty
Company, Inc. - 25% concentration limitation: Victoria Jackson Cosmetic, Inc.
20% concentration limitation; (d) which represent the sale of goods delivered on
consignment, guaranteed sale or on other conditional terms; (e) which are
subject to any defense, setoff or counterclaim claimed or asserted by the
account debtor; (f) which are evidenced by an instrument; (g) which are owed by
an account debtor who is not a resident of the United States; (h) where the
account debtor is the United States or any department, agency or instrumentality
of the United States, or any state, city, town, municipality or division
thereof; (i) where the account debtor is a subsidiary of, related to, affiliated
or has common shareholders, officers or directors with Borrower; (j) where the
account debtor is an officer, employee or agent of Borrower; (k) which represent
goods sold and/or transferred where possession and/or control is held,
maintained or retained by Borrower (or its agent) for the account of or subject
to further and/or future direction from the account debtor thereof; and (l)
Accounts which are not creditworthy, in the sole opinion of FCFC.

          1.7  "FCFC's Costs" means and includes: filing, recording, publication
and search fees incurred by FCFC relating to Borrower; all costs and expenses
incurred by FCFC in the enforcement of its rights and remedies under this
Agreement, or defending this Agreement or its security interest in the
Collateral; long distance telephone and facsimile charges, the expenses of field
examiners; all expenses for travel, lodging and food incurred by FCFC's
personnel in collecting the Accounts or realizing upon the Collateral; all costs
and expenses incurred in gaining possession of, maintaining, handling,
preserving, storing, repairing, shipping, selling, preparing for sale and
advertising to sell the Collateral, whether or not a sale is consummated; all
expenses involved in fulfilling in whole or in part any purchase order from an
account debtor; and reasonable attorney's fees and expenses incurred by FCFC as
provided for in this Agreement.

          1.8  "Inventory" means and includes all of Borrower's raw materials,
components, work in process, finished merchandise, and packing and shipping
materials, now owned or hereafter acquired, wherever located; all patents,
blueprints and drawings related thereto; all other items hereafter acquired by
Borrower by way of substitution, replacement, return, repossession or otherwise,
and all additions and accessions thereto; and the resulting product or mass, and
any documents of title representing any of the above.


                                       -2-


          1.9  "Obligations" means and includes all loans, advances (whether
evidenced by promissory note(s) or not), indebtedness, liabilities, obligations,
lease payments, guaranties, including the guaranty of the Obligations of
Zegarelli to FCFC, covenants and duties of Borrower to FCFC and all Obligations
of Zegarelli  to FCFC as set forth in that certain Zegarelli Security Agreement
of every kind, nature and description, (whether arising out of this Agreement,
or any other security agreement, mortgage, lease, instrument, document, contract
or similar agreement now or hereafter executed by Borrower and delivered to
FCFC, or by oral agreement or operation of law and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to become
due, liquidated or unliquidated, now existing or hereafter arising, including
without limitation any debt, liability or obligation owing by Borrower to others
which FCFC may have acquired by assignment or otherwise, and further including,
without limitation, all interest and FCFC's Costs which Borrower is required to
pay or reimburse by this Agreement, by law or otherwise.

          1.10 "Prime Rate" means the Prime Rate publicly announced by Bank One,
Phoenix, Arizona, from time to time (which may not necessarily be the lowest
rate charged by such bank to its customers).

          1.11 Any and all terms used in this Agreement shall be construed and
defined in accordance with the meaning and definitions set forth herein or, to
the extent not inconsistent herewith, as such terms are defined in the Arizona
Uniform Commercial Code, as amended from time to time (hereinafter referred to
as the "Code").

     2.   ADVANCES AND CHARGES.

          2.1  Upon request of Borrower, from time to time during the term
hereof, and so long as no event of default hereunder has occurred and Borrower
is in full, faithful and timely compliance with each and all of the covenants,
conditions, warranties, and representations, contained in this Agreement or in
any other agreement between FCFC and Borrower, FCFC agrees to advance Borrower
up to 75% of the amount of Eligible Accounts of Borrower (less discounts,
credits, allowances, service charges, commissions, and freight charges which may
be granted to or taken by the account debtors).  FCFC reserves the right at any
time and from time to time to change the percentage to be advanced to Borrower.

          FCFC is hereby authorized to make said advances based upon telephonic
or other instructions received from anyone listed on the attached signature
letter of Borrower.

          2.2  The Obligations of Borrower to FCFC shall bear interest, for the
actual days outstanding at the rate of 16.00% per annum, computed on the basis
of a 360-day year for actual days elapsed.  This rate is based upon a Prime Rate
of 8.25%, the rate in effect as of this date. In the event of a change in the
Prime Rate from time to time, the rate of interest to be charged to Borrower
shall be correspondingly adjusted as of the date of the Prime Rate change.
Notwithstanding the foregoing, in no event shall the interest rate chargeable
hereunder be less than 16.00% per annum.  Interest is due and payable to FCFC
under this Agreement on the first day


                                       -3-


of each month.  Any interest not paid when due shall become a part of Borrower's
Obligations under this Agreement, and shall thereafter bear interest as provided
herein.

          FCFC shall render statements to Borrower of the Obligations, including
all principal, interest and FCFC's Costs owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and FCFC unless, within thirty (30) days after receipt
thereof by Borrower, Borrower notifies FCFC in writing specifying the error or
errors, if any, contained in any such statements.

          2.3  Upon the default by Borrower under any provision of this
Agreement, and for as long as Borrower is in default, interest shall accrue on
the Obligations from and after such default at a rate of interest which is four
percentage points above the rate which is then being charged.

          2.4  In consideration for establishing the Credit Facility on the
terms and conditions provided for herein, Borrower agrees to pay to FCFC upon
the execution hereof a commitment and funding fee of one and one-half percent (1
1/2%) of the Credit Facility, which shall be deemed earned and non-refundable
upon payment thereof.  In the event that the term of this Agreement is renewed
as provided in paragraph 4 below, Borrower shall pay to FCFC a renewal fee of 1%
of the Credit Facility each year that it is renewed.

          2.5  In order to further induce FCFC to grant the Credit Facility to
Borrower and Zegarelli, Borrower agrees that the minimum amount of interest to
be paid monthly by Borrower and Zegarelli to FCFC, during the original and each
renewal term of this Agreement, shall not be less than $7,500.00 on a combined
basis per month.  Notwithstanding any default by Borrower or Zegarelli, or a
termination of this Agreement or the Zegarelli Security Agreement by FCFC
because of such default, this minimum interest shall be charged to and paid by
Borrower for the unexpired term of this Agreement.  In the event the monthly
interest earned by FCFC on advances made by FCFC to Borrower under this
Agreement is less than the minimum set forth above, Borrower will pay to FCFC
such difference at the same time as such accrued interest is due and payable.

          2.6  It is the intention of the parties hereto that the interest
required to be paid by Borrower to FCFC, plus all charges imposed upon Borrower
hereunder which may be construed by a court of law to be interest, shall not
exceed the maximum rate of interest allowed by the laws of the State of Arizona
and if a court of law construes the same to exceed such maximum rate, then the
excess so determined shall be applied against the principal balance of
Obligations owing to FCFC.


                                       -4-


     3.   CREATION OF SECURITY INTEREST.

          3.1  Borrower hereby grants to FCFC a continuing security interest in
the Collateral to secure the prompt payment and performance by Borrower of all
Obligations under this Agreement or otherwise created.

          3.2  Borrower shall execute and deliver to FCFC concurrently with
Borrower's execution of this Agreement, and at any time or times hereafter at
the request of FCFC, financing statements, continuation statements, security
agreements, mortgages, assignments, certificates of title, affidavits, reports,
notices, schedules of accounts, letters of authority and all other documents
that FCFC may request, in form satisfactory to FCFC, to perfect and maintain
FCFC's security interest in the Collateral and fully comply with this Agreement.
Borrower hereby makes, constitutes and appoints FCFC (and any of FCFC's
officers, employees or agents designated by FCFC) as Borrower's true and lawful
attorney (which shall be irrevocable until all Obligations are fully paid and
satisfied) with power to sign the name of Borrower on any financing statement,
continuation statement, security agreement, mortgage, assignment, certificate of
title, affidavit, letter of authority, or notice or other similar document
necessary to perfect or continue the perfection of FCFC's security interest in
the Collateral.  Borrower shall make appropriate entries in Borrower's Books
disclosing FCFC's security interest in the Accounts.  FCFC (through any of its
officers, employees or agents) shall have the right at any time or times
hereafter during Borrower's usual business hours to inspect the Collateral.

          3.3  To further evidence the security interest of FCFC in the
Accounts, Borrower shall, from time to time, provide FCFC with schedules and
written assignments of its Accounts, in form satisfactory to FCFC.  Borrower's
failure to execute and deliver such schedules and/or assignments shall not
affect or limit FCFC's security interest or any other rights in and to the
Accounts.  Together with each schedule, Borrower shall furnish FCFC with true
and correct copies of Borrower's customers' invoices or the equivalent and
original shipping or delivery receipts for all Inventory sold.

          3.4  FCFC, or its agents, may at any time (and whether or not Borrower
is in default under this Agreement) and without notice thereof to Borrower:  (a)
notify the account debtors of Borrower that the Accounts have been assigned to
FCFC and that FCFC has a security interest therein; (b) direct all account
debtors to make payment of all Accounts to FCFC; (c) demand, collect (by legal
means or otherwise), receive, receipt for, sue for, compromise, adjust, settle
or extend the time for payment of any Account upon such terms as FCFC may
reasonably determine under the circumstances, in its own name or in the name of
Borrower (crediting Borrower's Accounts with only the net amount received by
FCFC in payment of the Accounts, after deducting all FCFC's Costs in connection
therewith); and (d) take control of all proceeds from said Accounts.  In this
regard, Borrower agrees that it will cooperate with FCFC (and execute such forms
or notices as FCFC may request) in notifying the account debtors that the
Accounts have been assigned to FCFC and that FCFC has a security interest
therein.  Until such time as FCFC exercises such right, Borrower shall collect
the Accounts, receiving in trust all proceeds therefrom as FCFC's trustee and
each day deliver said proceeds to FCFC in their


                                       -5-


original form as received from the account debtors, together with a remittance
report, in form satisfactory to FCFC.  The receipt of any check or other item of
payment by FCFC shall not be considered payment to FCFC until such check or
other item of payment is actually paid.  For the purpose of computing the
interest to be charged to Borrower under paragraph 2.2 hereof all checks, and
other items of payment delivered to FCFC from time to time shall be treated as
being paid five business days after the date FCFC actually receives such check
or other item of payment, subject to reversal of entry in the event such
remittance is not paid upon presentment to the drawee bank.  It is further
understood that for the purpose of computing interest to be charged to Borrower,
the amount of any credit balance which Borrower may have with FCFC shall be
treated as an advance by FCFC to Borrower under this Agreement.

          3.5  Borrower authorizes FCFC and FCFC shall have the right at any
time or times to verify the Accounts by mail, telephone, or otherwise in the
name of Borrower or FCFC. In addition, Borrower authorizes FCFC to obtain
information from Borrower's suppliers and customers and, in this regard,
Borrower waives any right or claim against any such supplier or customer for
furnishing information to FCFC.

          3.6  Borrower shall promptly provide FCFC with all information
relating to the financial condition of any account debtor, and shall notify FCFC
of the rejection of goods by any account debtor, delay in the delivery of goods,
or any returns or recoveries of goods, nonperformance of contracts, or the
assertion by an account debtor of any claim, offset or counterclaim, and the
settlement or adjustment of any dispute or claim with an account debtor on terms
approved by FCFC.

          3.7  Borrower agrees to keep all goods returned by any account debtor
and all goods repossessed or stopped in transit by Borrower, segregated from
other property of Borrower, holding the same as trustee for FCFC, until
otherwise directed in writing by FCFC.

          3.8  Borrower does hereby irrevocably designate, make, constitute and
appoint FCFC, and any agent of FCFC, as Borrower's true and lawful attorney,
with power, without notice to Borrower, and at such time or times (except as
otherwise provided herein) as FCFC may, in its sole election, determine, in
Borrower's or FCFC's name and at Borrower's expense, to:

               (a)  Endorse Borrower's name on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
FCFC's possession.

               (b)  Exercise all of Borrower's rights and remedies with respect
to the collection of Accounts.

               (c)  Sign Borrower's name on any invoice, freight bill or bill of
lading relating to any Account, on any draft against an account debtor, on any
schedule assignment of Accounts, verification of Accounts or on any notice to
account debtors.


                                       -6-


               (d)  Prepare, file and sign Borrower's name on any proof of claim
in bankruptcy or similar document against an account debtor.

               (e)  Prepare, file and sign Borrower's name on any notice of
lien, claim of mechanic's lien or similar document or waiver or satisfaction
thereof in connection with an Account.

               (f)  Execute any other documents which may facilitate the
collection, liquidation or disposition of the Collateral.

          FCFC shall not be obligated to do any of the acts or exercise any of
the powers hereinabove authorized, but, if FCFC elects to collect said Accounts,
do any such act or exercise any of the foregoing powers, it may do so in any
manner or means as it may determine, and shall not be liable to Borrower for any
error in judgment or mistake of fact or law, excepting willful misconduct or bad
faith.  This power, being coupled with an interest, is irrevocable until all
Obligations of Borrower to FCFC are fully paid and satisfied.  All acts by or on
behalf of FCFC pursuant hereto are hereby ratified and approved by Borrower.

     4.   TERM.  This Agreement shall have a term of one year(s) from the date
hereof and shall be automatically renewed from year to year, unless terminated
by either party on the anniversary date of this Agreement by written notice to
this effect given not less than 30 days prior to said anniversary date.
Notwithstanding the foregoing, Borrower may terminate this Agreement at any time
prior to the anniversary date of this Agreement, by giving written notice to
FCFC to this effect not less than 30 days prior to the effective date of such
termination, provided that Borrower pays to FCFC on the date of termination all
Obligations of Borrower to FCFC, including the minimum amount of interest
required to be paid by Borrower to FCFC during the remainder of the original or
renewal term of this Agreement, as provided in paragraph 2.5 above.  In the
event Borrower defaults in the performance of any provision of this Agreement,
FCFC may, at its election, terminate this Agreement at any time, without notice.
On the date of termination, all Obligations, including but not limited to,
obligations arising by reason of the termination of this Agreement, shall become
immediately due and payable without notice or demand.  Notwithstanding such
termination, until all Obligations have been fully satisfied, FCFC shall retain
its security interest in all existing Collateral and Collateral arising
thereafter, and Borrower shall continue to turn over all collections from the
Accounts to FCFC.  It is understood and agreed that if Borrower has given notice
of termination, pursuant to the provisions of this paragraph, and fails to pay
all Obligations to FCFC on the specified date, or within 10 days thereafter,
then this Agreement shall be automatically renewed for an additional one year
term.

     5.   REPRESENTATIONS AND WARRANTIES.  Until all Obligations of Borrower to
FCFC have been fully paid and satisfied, Borrower does hereby warrant and
represent that:

          (a)  If Borrower is a corporation or a limited liability company, it
is duly organized and is and all times hereinafter will be in good standing
under the laws of the state of


                                       -7-


its incorporation and is duly qualified and in good standing in every other
state in which the nature of its business requires such qualification.

          (b)  Borrower is the true and lawful owner of the Collateral and has
the right, power and authority to grant a security interest therein to FCFC.

          (c)  Borrower's chief place of business (or if it has more than one
place of business its chief executive office) and the office where Borrower's
Books are kept is at Borrower's address as set forth in this Agreement.

          (d)  Borrower is not doing business and has not done business during
the last six years under any trade name or style, except its name as set forth
in this Agreement.

          (e)  The execution, delivery and performance hereof does not
constitute a default under any indenture, agreement or undertaking to which
Borrower is now or hereafter a party or by which it is or will be bound and, if
Borrower is a corporation or a limited liability company, the same are within
Borrower's corporate powers, have been duly authorized and are not in
contravention of its articles, bylaws, or operating agreement.

          (f)  All financial statements and information relating to Borrower or
any guarantor of Borrower's Obligations or with respect to the Accounts which
have been or may hereafter be delivered by Borrower to FCFC are true and correct
in all material respects and have been prepared in accordance with generally
accepted accounting principles consistently applied, and there has not been any
material adverse change in the financial condition of Borrower or any guarantor
since the last submission of such financial information to FCFC.

          (g)  There are no actions or proceedings pending by or against
Borrower or any guarantor of Borrower's Obligations in any court or
administrative agency and Borrower has no knowledge of any pending, threatened
or imminent litigation, governmental investigation or claim, complaint, action
or prosecution involving Borrower or any guarantor of Borrower, except as may
have been specifically disclosed in writing to FCFC and if any of the foregoing
arise during the term of this Agreement, Borrower shall immediately notify FCFC
in writing with respect thereto.

          (h)  Borrower has duly filed all federal, state and other governmental
tax returns which it is required by law to file and that all taxes and other
sums which may be due to the United States, any state or other governmental
authority have been fully paid and that Borrower now has and shall hereafter
maintain reserves adequate in amount to fully pay all such tax liabilities which
may hereafter accrue.

          (i)  All assessments and taxes whether real, personal or otherwise due
and payable by or imposed, levied or assessed against Borrower or any of its
assets have been paid and shall hereafter be paid in full before delinquency.
Borrower shall make due and timely payment or deposit of all federal, state and
local taxes, assessments or contributions required of it by law (including
timely payment or deposit of all F.I.C.A. payments and withholding taxes)


                                       -8-


and will execute and deliver to FCFC on demand appropriate certificates
attesting to the payment or deposit thereof.

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

          (k)  With respect to all Collateral, FCFC's security interest therein
is now and shall hereafter at all times constitute a perfected, choate, and
first security interest in the Collateral, except for equipment as reflected in
the UCC search performed by Capitol Document Services, Inc. dated April 26, 1996
as set for in Exhibit "A" attached hereto, and is not now and will not hereafter
become subordinate or junior to the security interest, lien, encumbrance or
claim of any person.

          (l)  All information furnished to FCFC at any time by or on behalf of
Borrower was, and will be when furnished, true, complete and correct in all
material respects.

          (m)  With respect to each Account now and from time to time hereafter
created:

               (i)  It is genuine, in all respects what it purport to be and
     represents a bona fide, existing, valid and legally enforceable
     indebtedness of the account debtor named therein, payable in the amount,
     time and manner stated in the invoice therefor, and is absolutely owing to
     Borrower and not contingent for any reason.

              (ii)  The delivery receipt and invoice therefor represents bona
     fide sale in the ordinary course of Borrower's business, represents the
     kind, quality and quantity of the goods or services described therein, and
     that the goods or services described herein have been completely delivered,
     installed or performed and at the time of delivery or installation have
     been accepted by the account debtor without condition.

             (iii)  No payments have been or shall be made thereon, except
     payments which are turned over to FCFC by Borrower.

              (iv)  There is no setoff, counterclaim or dispute existing or
     asserted with respect to the Account and Borrower has not made any
     agreement with the account debtor thereof for any deduction or discount of
     the sum payable thereunder, except regular discounts allowed by Borrower in
     the ordinary course of its business for prompt payment.

               (v)  The goods sold or transferred or the services rendered as
     evidenced by the Account are not subject to any lien, claim, encumbrance or
     security interest, except that of FCFC.

              (vi)  Borrower has no knowledge of the insolvency of the account
     debtor or of any action or proceeding involving the account debtor under
     any federal or state debtor's relief statute.


                                       -9-


             (vii)  Borrower has no knowledge of any fact or circumstance which
     would impair the validity or collectibility of the Account.

            (viii)  Borrower has not made any assignment of the Account or
     granted a security interest in the Account to any other party other than
     FCFC.

              (ix)  All of Borrower's Books, and all records and documents
     relating to the Account are and will be genuine and in all respects what
     they purport to be, and accurately reflect the amounts owing or to be owing
     at maturity by the account debtor.

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

     6.   AFFIRMATIVE COVENANTS.  Until all Obligations of Borrower to FCFC are
fully paid and satisfied, Borrower will:

          (a)  At all times fully comply with all federal, state and local laws,
rules, orders or regulations pertaining to the conduct of its business,
including, but not limited to all applicable federal, state and local
environmental laws and regulations relating to the storage, usage and disposal
of hazardous substances or toxic chemicals by Borrower in its business.  In this
regard, Borrower agrees to defend, indemnify and hold FCFC harmless for and
against any and all costs, claims, demands, damages including attorneys fees,
court costs, and investigatory and laboratory fees which FCFC may suffer or
incur in connection with any such violation which indemnification shall survive
the termination of this Agreement.

          (b)  Maintain Borrower's Books at the address set forth in this
Agreement (which is Borrower's place of business or, if it has more than one
place of business, its chief executive office) and will not, without prior
written notice to FCFC relocate its place of business (or if it has more than
one place of business, its chief executive office) or without prior written
consent of FCFC move Borrower's Books outside the State of California.

          (c)  Maintain a standard and modern system of accounting in accordance
with generally accepted accounting principles which contain such information as
may be requested by FCFC, and permit FCFC or any of its agents, during
Borrower's usual business hours or during the usual business hours of any third
party having control over the records of Borrower, to have access to and have
the right to examine all of Borrower's Books and in connection therewith and
permit FCFC or any of its agents to copy and make extracts therefrom.

          (d)  Promptly furnish to FCFC such records, data and other information
with respect to the financial condition of Borrower, the Collateral and any
guarantor, as FCFC may


                                      -10-


request from time to time, and deliver to FCFC within 90 days after the end of
each Borrower's fiscal year, a detailed report in form satisfactory to FCFC
containing a statement of the financial condition and operation of Borrower for
each such fiscal year, and within 20 days, after demand by FCFC, deliver to FCFC
copies of any financial report or statement prepared by or for Borrower.  Each
such statement and report shall be reviewed or compiled by an independent CPA
or, with the consent of FCFC, prepared by an authorized officer of Borrower that
such report, statement or document delivered or caused to be delivered to FCFC
is complete, correct and thoroughly presents the financial condition of Borrower
and that on the date of said certification no event or condition exists which
constitutes a breach or event of default under this Agreement.

          (e)  Allow FCFC to possess, remove to FCFC's premises or the premises
of any agent of FCFC, copies of Borrower's Books, for so long as FCFC may desire
in connection with the enforcement of FCFC's rights under this Agreement.

          (f)  Notify FCFC of any material adverse change in Borrower's
financial condition.

          (g)  Make timely payment or deposit of all taxes (including F.I.C.A.
payments and deposits of withholding taxes) and assessments required to be paid
by Borrower and deliver to FCFC, as requested, evidence of such payment or
deposit.

          (h)  Pay all rent when due and otherwise abide by the terms under
which Borrower leases or occupies the premises at which the Collateral is
located; if Borrower fails to do so, FCFC may, without any obligation, pay such
rent and any sum so paid shall be part of FCFC's Costs, secured by the
Collateral and payable on demand.

          (i)  Cause to be paid all amounts necessary to fund, in accordance
with their terms, all pension plans presently in existence or hereafter created
and Borrower will not withdraw from participation in, permit the termination or
partial termination of, or permit the occurrence of any other event with respect
to any deferred compensation plan maintained for the benefit of its employees
under circumstances that could result in liability to the Pension Benefit
Guarantee Corporation, or any of its successors or assigns, or to the entity
which provides funds for such deferred compensation plan.

          (j)  Maintain a working capital ratio of 1.25:1 and a net worth at
least equal to  90% of that set forth in the financial statements of Borrower
dated March 31, 1996.

          (k)  Maintain itself in good standing in all jurisdictions in which
Borrower is doing business, and at the request of FCFC, furnish to FCFC evidence
of its good standing in all such jurisdictions.

          (l)  Maintain all Collateral at the address set forth in this
Agreement or at: 10318 Norris Street, Pacoima, California 91331 and will not,
without prior written notice to


                                      -11-


FCFC, move said Collateral to any other address in the state of California, or,
without FCFC's prior written approval, move said Collateral outside the state of
California.

          (m)  Promptly deliver to FCFC all documents and instruments relating
to the Collateral, including invoices, original orders, shipping documents,
delivery receipts, as FCFC may request from time to time.

          (n)  Furnish to FCFC daily or less frequently as FCFC shall permit
from time to time, written schedules and reports of the status of Borrower's
Accounts in such form as shall be required by FCFC.

          (o)  On request of FCFC, execute and deliver to FCFC any and all
additional documents which FCFC may request from time to time to evidence the
advances made hereunder or the security interest granted hereby.

     7.   NEGATIVE COVENANTS.  Until all Obligations of Borrower to FCFC are
fully paid and satisfied, Borrower will not, without the prior written consent
of FCFC:

          (a)  Grant a security interest in the Accounts or the Inventory or
permit a lien, claim or encumbrance to be imposed on any of the Collateral.

          (b)  Sell, lease, rent or otherwise dispose of, move, transfer or
relocate outside the State of California, whether by sale or otherwise, any of
Borrower's assets, including the Collateral, but excluding Inventory which may
be sold, leased, or otherwise disposed of in the ordinary course of Borrower's
business, provided that FCFC shall nevertheless continue to have a security
interest in the proceeds thereof.

          (c)  Permit any Collateral to become affixed to real property, become
an accession to any property or be used in violation of any applicable law,
regulation or policy of insurance.

          (d)  Permit any levy, or attachment to be made on any of Borrower's
assets.

          (e)  Permit any receiver, trustee, custodian, assignee for the benefit
of creditors or any other person or entity having similar powers or duties to be
appointed or to take possession of any or all of Borrower's assets.

          (f)  Change its corporate or trade name, business structure, corporate
identity or structure, do business under any additional trade name, or
liquidate, merge or consolidate with or into any other business organization.

          (g)  Not Used.

          (h)  Not Used.


                                      -12-


          (i)  Enter into any transaction or incur any debts not in the usual
course of Borrower's business.

          (j)  Guarantee or otherwise become in any way liable with respect to
the obligations of any person except by endorsement of instruments or items of
payment for deposit to the account of Borrower or which are transmitted or
turned over to FCFC on account of Borrower's Obligations.

          (k)  Pay or declare any dividends upon Borrower's capital stock.

          (l)  Not Used.

          (m)  Make any distribution of Borrower's property or assets.

          (n)  Increase the compensation (including contributions to any
retirement plan) of Alfred E. Booth, Jr,, Frank X. McGarvey or Judith E.
Zegarelli which presently is $190,000, $115,000 and $155,000, respectively.

          (o)  Make any advance, loan, contribution or payment of money (other
than compensation for personal services), goods or credit to, or guarantee any
obligation of any subsidiary (other than Arnold Zegarelli Products, Inc.),
affiliate or parent corporation, or any officer, shareholder or employee, or
cause or permit any such advance, loan, contribution or guarantee to be made by
any subsidiary (other than Arnold Zegarelli Products, Inc.) corporation other
than the guaranty executed in connection herewith with this Agreement. FCFC will
allow the Borrower to make advances, loans, contributions or payments of money
up to $10,000 individually and $20,000 in the aggregate.  Any amounts in excess
of these limitations will require the prior written consent of FCFC.

     8.   INSURANCE.  Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, and all other hazards and risks
ordinarily insured against by owners in similar businesses for the full
insurable value thereof, business interruption insurance and public liability
and property damage insurance relating to Borrower's ownership and use of its
assets. All such policies of insurance shall be in such form, with such
companies and in such amounts as may be satisfactory to FCFC.  Borrower shall
deliver to FCFC certified copies of such policies of insurance and evidence of
the payment of all premiums therefor.  All such policies of insurance (except
those of public liability and property damage) shall contain an endorsement in a
form satisfactory to FCFC showing FCFC as the loss payee.  All proceeds payable
thereunder shall be payable to FCFC and upon receipt by FCFC shall, at FCFC's
option, be applied on the account of Borrower's Obligations, whether or not then
due, or to the repair or replacement of the Collateral.  To secure the payment
of Borrower's Obligations, Borrower grants FCFC a security interest in and to
all such policies of insurance (except those of public liability and property
damage) and the proceeds thereof, and Borrower shall direct all insurers under
such policies of insurance to pay all proceeds thereof directly to FCFC.
Borrower hereby irrevocably appoints FCFC (and any of FCFC's officers, employees
or agents designated by FCFC) as Borrower's


                                      -13-


attorney for the purpose of making, settling and adjusting claims under such
policies of insurance, endorsing the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect to such
policies of insurance.  Each such insurer shall agree, by endorsement upon the
policy or policies of insurance issued by it to Borrower as required above, or
by independent instruments furnished to FCFC, that it will give FCFC at least 10
days written notice before any such policy or policies of insurance shall be
altered or cancelled, and that no act of Borrower or any other person or the
default hereunder by Borrower, shall affect the right of FCFC to recover under
such policy or policies of insurance.  FCFC, without waiving or releasing any
Obligations or default by Borrower hereunder, may, but shall have no obligation
to do so, obtain and maintain such policies of insurance and pay such premiums
and take any other action with respect to such policies which FCFC deems
advisable.  All sums so disbursed by FCFC, as well as reasonable attorneys fees,
court costs, expenses and other charges relating thereto, shall be a part of
FCFC's Costs, secured by the Collateral and payable on demand.

     9.   EVENTS OF DEFAULT.  The occurrence of any one or more of the following
shall constitute an event of default by Borrower under this Agreement ("Events
of Default"):

          (a)  Borrower fails to pay when due and payable or declared to be due
and payable, any of Borrower's Obligations (whether of principal, interest,
taxes, reimbursement of FCFC's Costs, or otherwise).

          (b)  Borrower fails or neglects to perform, keep or observe any term,
provision, condition, or covenant contained in this Agreement, or any other
present or future agreement between Borrower and FCFC.

          (c)  Any representation, statement, report or certificate made or
delivered by Borrower, or any of its officers or agents, (either individually or
as an officer or agent of Borrower) to FCFC proves to be untrue or incorrect in
any material respect.

          (d)  Any Collateral cannot be located within five days after FCFC
makes demand upon Borrower to inspect the same or any Collateral has been moved
outside the State of California, without the consent of FCFC.

          (e)  There is a material impairment in the prospect of repayment of
Borrower's Obligations or a material impairment in the value of the Collateral
or that the priority of FCFC's security interest in the Collateral is contested.
By way of clarification, but not by way of limitation, examples of a "material
impairment,"  would include:

          (1)  The collection of the Accounts during any thirty (30) day period
               substantially diminishes as compared with the previous thirty-day
               period.

          (2)  Accounts receivable turnover substantially increases within a
               thirty (30) day period as compared with the previous thirty-day
               period.


                                      -14-


          (3)  Borrower's financial statement reflects a deficit net worth.

          (4)  Borrower sustains a net operating loss for two consecutive
               months.

          (5)  Borrower uses a substantial amount of funds from the business for
               a non-business purpose.

          (f)  Any of Borrower's assets are attached, seized, or are levied
upon, and the same are not released, discharged or bonded against within ten
days thereafter.

          (g)  Any proceeding under the Bankruptcy Act is filed by or against
Borrower.

          (h)  A notice of lien, levy or assessment is filed of record with
respect to any or all of Borrower's assets by the United States Government, or
any department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, or if any taxes or debts owing at any
time hereafter to any one or more of such entities becomes a lien, whether
choate or otherwise, upon any or all of the Borrower's assets and the same is
not paid on the payment date thereof.

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

          (j)  Borrower ceases normal business operations.

          (k)  A material portion of the Collateral is stolen, damaged or
destroyed.

          (l)  A judgment or other claim becomes a lien or encumbrance upon any
or all of Borrower's assets and the same is not satisfied, dismissed or bonded
against within 10 days thereafter.

          (m)  If any of Borrower's records are prepared and kept by an outside
computer service at any time during the term of this Agreement, and said
computer service fails to provide FCFC with any requested information or
financial data pertaining to the Collateral, Borrower's financial condition or
the results of Borrower's operations.

          (n)  If there is a default in any agreement to which Borrower is a
party with third parties resulting in a right by such third parties to
accelerate the maturity of any indebtedness of Borrower to such third party.

          (o)  Borrower makes any payment on account of indebtedness which has
been subordinated to Borrower's Obligations to FCFC, without FCFC's consent, or
if any person subordinating such indebtedness terminates or in any way limits
his subordination.


                                      -15-


          (p)  The chief executive officer of Borrower dies, or is no longer
associated with the Borrower in that capacity.

          (q)  Any guarantor of Borrower's Obligations dies, or if any such
guarantor terminates or in any way limits his obligations under his guaranty.

          (r)  Arnold Zegarelli Products, Inc. fails to pay any indebtedness,
liabilities or obligations or perform or observe any covenants contained in the
Accounts Receivable Security Agreement executed between Arnold Zegarelli
Products, Inc. and FCFC dated May 10, 1996, or any representation contained
therein fails to be true in any material respect.

          (s)  Borrower defaults in paying any sum required to be paid pursuant
to that certain Guaranty dated May 10, 1996, of the indebtedness, liabilities or
obligations of Arnold Zegarelli Products, Inc. to FCFC.

     10.  FCFC'S RIGHTS AND REMEDIES.

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

               (a)  Declare any or all of Borrower's Obligations, whether
evidenced by note(s), or otherwise, immediately due and payable.

               (b)  Terminate this Agreement, but without affecting FCFC's
rights and security interests in the Collateral, and the Obligations of Borrower
to FCFC.

               (c)  Cease making advances to or for benefit of Borrower under
the Credit Facility or reduce the Credit Facility.

               (d)  Continue making advances to Borrower in such amounts as FCFC
may determine, in its sole discretion, without waiving any default by Borrower
under this Agreement.

               (e)  Proceed to collect the Accounts, pursuant to A.R.S. Section
47-9502, and, in this regard, notify the post office authorities to change the
address for delivery of Borrower's


                                      -16-


mail to an address designated by FCFC, and receive, open and distribute all mail
addressed to Borrower, retaining all mail relating to Collateral and forwarding
all other mail to Borrower.

               (f)  Exercise any and all of the rights accruing to a secured
party under the Code and any other applicable law.

               (g)  Enter, with or without process of law, upon any premises
where the Collateral is or believed by FCFC to be located, using all necessary
force to accomplish the same without committing a breach of the peace Borrower
hereby waives all claims for damages or otherwise due to, arising from or
connected with such entry and/or seizure); and:

               (i)  Take possession of said premises and of the Collateral
     located therein;

              (ii)  Place a custodian in exclusive control of said premises and
     of any of the Collateral located therein;

             (iii)  Remove from the premises the Collateral (and any of
     Borrower's Books, materials and supplies) in any way relating to the
     Collateral or useful by FCFC in enforcing its rights hereunder;

              (iv)  Remain upon said premises and use the same (together with
     said Borrower's Books, materials and supplies) for the purpose of
     collecting the Collateral and/or preparing the Collateral for disposition
     and/or disposing of the Collateral.

               (h)  Make (without any obligation to do so) any payment and take
such action as FCFC considers necessary or reasonable to protect or preserve the
Collateral or its security interest therein, including paying, purchasing,
contesting or compromising any encumbrance, charge or lien which, in the opinion
of FCFC, interferes with the enforcement of its security interests or the
liquidation or disposition of the Collateral.

               (i)  Require Borrower to assemble the Collateral and, at
Borrower's expense, deliver the same to FCFC or to a third party as FCFC's
bailee at a place or places to be designated by FCFC which is reasonably
convenient to the parties.

               (j)  Ship, reclaim, recover, store, finish, maintain, repair and
prepare for sale the Collateral.

               (k)  Sell the Collateral (whether or not the Collateral is
present at any such sale) in its then condition, or after further manufacturing,
processing or preparation thereof (utilizing, in connection therewith, without
charge or liability to FCFC therefor, any of Borrower's assets), at either
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrower's premises) as is commercially reasonable, in the opinion of FCFC.  In
such event, FCFC shall


                                      -17-


(unless notice has been waived after default pursuant to the provisions of the
Code) give notice to Borrower in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Collateral, the time after which the private sale or
other disposition is to be made, at least five days before the date fixed for
the sale, or at least five days before the date after which the private sale or
other disposition is to be made, unless the Collateral is perishable or
threatens to decline speedily in value.  FCFC may purchase all or any portion of
the Collateral at any public sale.

               (l)  Seek temporary or permanent injunctive relief without the
necessity of proving actual damages, as no remedy at law will provide adequate
relief to FCFC and, in this regard, the bond which FCFC may be required to post
shall be no more than $500.00.

               (m)  Require Borrower to pay all FCFC's Costs incurred in
connection with FCFC's enforcement and exercise of any of its rights and
remedies as herein provided, whether or not suit is commenced by FCFC.

Any deficiency which exists after disposition of the Collateral, as provided
above, shall be due and payable by Borrower upon demand, with any excess to be
paid by FCFC to Borrower.

     10.2 FCFC's rights and remedies under this Agreement and all other
agreements shall be cumulative and may be exercised simultaneously or
successively, in such order as FCFC shall determine.  In addition, FCFC shall
have all other rights and remedies not inconsistent herewith as provided by law
or in equity.  No exercise by FCFC of one right or remedy shall be deemed an
election, and no waiver by FCFC of any default on Borrower's part shall be
deemed a continuing waiver.  No delay by FCFC shall constitute a waiver,
election or acquiescence by it.

     11.  TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY.

          If Borrower fails to pay any assessments, taxes, contributions, or
make any deposits, or furnish any required proof thereof as set forth in
paragraph 6(g) hereof or in any other provision of this Agreement, FCFC may, in
its sole and absolute discretion and without notice to Borrower (a) make payment
of the same or any part thereof, or (b) set up such reserves in Borrower's
account as FCFC deems necessary to satisfy the liability therefor, or both.  If
Borrower fails to promptly pay when due to any other person or entity, any sum
which Borrower is required to pay by reason of any provision in this Agreement,
FCFC may, but is not obligated to, advance any sums which it deems appropriate
for the protection or preservation of the Collateral or its security interest
therein, and the amount so advanced by FCFC shall bear interest at the highest
rate provided for in paragraph 2.3 above, and shall constitute FCFC's Costs,
payable on demand, and shall be secured by the Collateral.  Any payment made by
FCFC shall not constitute (a) an agreement by it to make similar payments in the
future, or (b) a waiver by FCFC of any default under this Agreement.  FCFC need
not contest nor inquire as to the validity of any such expense, tax, security
interest, encumbrance or lien, and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing.


                                      -18-


     12.  WAIVERS BY BORROWER.

          12.1 FCFC shall not be deemed to have waived any provision of this
Agreement, or any right or remedy which it may have hereunder, or at law or
equity, unless such waiver is in writing and signed by FCFC.

          12.2 Borrower waives the right to direct the application of any
payments at any time or times received by FCFC on account of Borrower's
Obligations and Borrower agrees that FCFC shall have the continuing exclusive
right to apply and reapply such payments in any manner as FCFC may deem
advisable.

          12.3 Except as otherwise provided for in this Agreement, Borrower
waives demand, protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, documents, instruments, chattel paper and guaranties at any
time held by FCFC on which Borrower may in any way be liable.

          12.4 Failure or delay by FCFC in exercising or enforcing any right,
power, privilege, lien, option or remedy hereunder shall not operate as a waiver
thereof and a waiver by FCFC of any default by Borrower under this Agreement
shall not be construed to create any right or expectation of future waiver of
any subsequent breach or default by Borrower under this Agreement.

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

          12.6 Borrower waives (to the extent the same may be lawfully waived):
any and all causes of action and claims which it may now or ever have against
FCFC for failing to protect any Collateral in its possession, or failing to
collect or sell any of the Collateral, notwithstanding the effect of such
possession, collection or sale upon the business of Borrower.  In addition,
Borrower hereby releases FCFC of and from (a) any and all liabilities or
penalties for failure of FCFC to perfect or maintain the priority of its
security interest or to comply with any statutory or other requirement imposed
on FCFC; and (b) any error of judgment or mistake of fact or law.

          12.7 In the event FCFC seeks to obtain possession of any of the
Collateral by replevin or other judicial process, Borrower hereby waives (a) any
bond or security required to be posted by any statute, court rule or otherwise
as an incident to such possession and (b) any demand for possession of the
Collateral prior to the commencement of any suit or action to recover possession
thereof.


                                      -19-


          12.8 Borrower waives any right to trial by jury in any action or
proceeding relating to this Agreement or any transactions hereunder.

     13.  NOTICES.

          Unless otherwise provided in this Agreement, all notices, demands or
other communications to either party shall be in writing and shall be mailed,
telecopied or communicated by means of facsimile transmission (followed by a
mailed or delivered hard copy), or delivered by hand or courier service, at
their respective addresses set forth in this Agreement, or at such other
addresses as shall be designated by such party in a written notice to the other
party.  All notices and other communications shall be effective on three
business days after deposit in the mail (postage prepaid in the case of mail),
upon telecopy or other facsimile transmission or upon hand delivery.

     14.  DESTRUCTION OF BORROWER'S DOCUMENTS.

          Any documents, schedules, invoices or other papers delivered to FCFC,
may be destroyed or otherwise disposed of by FCFC five months after they are
delivered to or received by FCFC, unless Borrower requests, in writing, the
return of the said documents, schedules, invoices or other papers and makes
arrangements, at Borrower's expense, for their return.

     15.  RELEASE.

     At such time as all Obligations of Borrower to FCFC shall have been fully
paid and satisfied and Borrower and all guarantors of Borrower's obligations
execute a release acknowledging that Borrower does not have any claims against
FCFC and provides FCFC with an appropriate indemnity indemnifying FCFC for any
remittances for which Borrower has received credit and which are not paid, FCFC
shall release its security interest in the Collateral and deliver to Borrower an
appropriate termination statement.

     16.  GENERAL PROVISIONS.

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

          16.2 If at any time or times hereafter FCFC employs counsel for advice
or other representation (a) with respect to any of the Collateral or this
Agreement, (b) to represent FCFC in any litigation, contest, dispute, suit or
proceeding or to commence, defend, or intervene or to take any other action in
or with respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by FCFC, Borrower or any other party) in any way relating to any of
the Collateral, this Agreement or Borrower's affairs, (c) to protect, collect,
lease, sell, take possession of or liquidate any of the Collateral, (d) to
attempt to enforce any security interest of FCFC in any of the Collateral or (e)
to enforce any rights of FCFC against Borrower or against any other


                                      -20-


person which may be obligated to FCFC by virtue of this Agreement including
Borrower's account debtors, then, in any of the foregoing events, all of the
reasonable attorneys' fees arising from such services and all expenses, costs
and charges in any way arising in connection therewith or relating thereto shall
constitute a part of FCFC's Costs secured by the Collateral and be payable on
demand.

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

          16.4 The validity of this Agreement, its construction, interpretation
and enforcement, and the rights of the parties hereunder and concerning the
Collateral, shall be determined under and according to the laws of Arizona.  In
any litigation involving FCFC and Borrower, Borrower does hereby irrevocably
submit itself to the process, jurisdiction and venue of the courts of the State
of Arizona, Maricopa County or to the process, jurisdiction and venue of the
U.S. District Court for Arizona for the purposes of suit, action or other
proceedings arising out of or relating to this Agreement or the subject matter
hereof, and without limiting the generality of the foregoing, hereby waives and
agrees not to assert by way of motion, defense or otherwise in any such suit,
action or proceeding any claim that Borrower is not personally subject to the
jurisdiction of such courts, that such suit, action or proceeding is brought in
an inconvenient forum or that the venue of such suit, action or proceeding is
improper.

          16.5 The provisions of this Agreement are independent of and separate
from each other.  If any provision hereof shall for any reason be held invalid
or unenforceable, it is the intent of the parties that such invalidity or
unenforceability shall not affect the validity or unenforceability of any other
provision hereof and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.

          16.6 Paragraph headings and paragraph numbers have been set forth
herein for convenience only; unless the contrary is compelled by the context,
everything contained in each paragraph applies equally to this entire Agreement.

          16.7 This Agreement cannot be changed or terminated orally.  All prior
agreements, understandings, representations, warranties, and negotiations, if
any, are merged into this Agreement.

          16.8 FCFC shall have the right, without the consent of or notice to
Borrower to grant participation interests in the Credit Facility and in this
regard may provide the participant with any and all information with respect to
Borrower and the Credit Facility.  In addition, FCFC may assign this Agreement
and its rights and duties hereunder at any time, without the consent


                                      -21-


of or notice to Borrower.  This Agreement shall inure to the benefit of FCFC,
its successors and assigns.  Borrower may not assign this Agreement or any
rights hereunder, without FCFC's prior written consent and any such assignment
shall be void and of no effect whatsoever.  No consent to any assignment by FCFC
shall, without the written consent of FCFC, release Borrower or any guarantor of
its Obligations to FCFC.

          16.9 This Agreement shall inure to the benefit of FCFC and any
successors or assigns of FCFC, including any participant in the Credit Facility.
This Agreement shall bind and inure to the benefit of the respective successors
and assigns of each of the parties; however, Borrower may not assign this
Agreement or any rights hereunder without FCFC's prior written consent and any
prohibited assignment shall be absolutely void.  No consent to any assignment by
FCFC shall release Borrower or any guarantor of its Obligations to FCFC.  FCFC
may assign this Agreement and its rights and duties hereunder.


     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed at Phoenix, Arizona, as of the date written above.

FCFC:                                   BORROWER:

FIRST COMMUNITY FINANCIAL
CORPORATION, an Arizona                 Cosmetic Group U.S.A., Inc.
corporation                             ----------------------------
                                        a California corporation



By: /s/ James C. Adamany                By: /s/ Alfred E. Booth, Jr.
   ------------------------                -------------------------
      James C. Adamany                         Alfred E. Booth, Jr.

Title:  President                       Title:  CEO


                                        By: /s/ Frank X. McGarvey
                                           -------------------------
                                               Frank X. McGarvey

                                        Title: President



                                     -22-

EX-99.3

                           GUARANTY AND SUBORDINATION



IN ORDER TO INDUCE First Community Financial Corporation, an Arizona corporation
("FCFC"), to enter into that certain Accounts Receivable Security Agreement, as
well as any Riders which may be attached thereto (the "Agreements"), all dated
May 10, 1996, with Arnold Zegarelli Products, Inc. ("Borrower"), and in
consideration of any credit, advances or financial accommodations now or
hereafter granted to or on behalf of Borrower, the undersigned and each of them
("Guarantors") do hereby jointly and severally unconditionally guarantee the
full and prompt payment of all Obligations (as that term is defined in the
Agreements) due or to become due, whether created or incurred before or after
default, absolute or contingent, now existing or hereafter created or arising
out of said Agreements or any other agreement, now or hereafter executed between
Borrower and FCFC as and when the same become due and payable, as well as the
due performance of each and all terms, covenants and conditions contained in
said Agreements, in any other agreement now or hereafter executed between
Borrower and FCFC, or in any supplements or amendments thereto, and further
Guarantors do hereby jointly and severally indemnify FCFC and agree to hold it
harmless against all obligations, demands, losses or other liabilities and
expenses, including attorneys' fees, by whomsoever asserted, suffered, incurred
or paid by FCFC arising out of or in any way related to any transactions under
said Agreements or otherwise.  In the event of any default by Borrower in the
payment of any sums or performance of any Obligations arising out of the
Agreements to FCFC, Guarantors, jointly and severally, agree to pay and perform
the same on demand.

     Guarantors, and each of them, jointly and severally, agree that: (a) this
guaranty shall be continuing and absolute and shall not be affected or impaired
by any modification, extension or amendment of the Agreements or of any
agreement now or hereafter executed between Borrower and FCFC, nor by any
modification, extension of time for the payment of, forbearance, settlement,
release, surrender, exchange or discharge of any obligation herein guaranteed,
or any collateral therefor, or the extension of additional credit after default
or the release of any security after default, whether material or otherwise, nor
by the death or release of any of the Guarantors; and (b) the liability of each
Guarantor hereunder is direct and unconditional and may be enforced without
requiring FCFC first to exercise, enforce, or exhaust any right or remedy
against Borrower, any other Guarantor or collateral, and shall continue in full
force and effect until all Obligations of Borrower to FCFC shall have been fully
paid, satisfied and performed.  Each Guarantor acknowledges receipt of separate
consideration for the execution of this Guaranty.

     Each Guarantor hereby waives:  (a) notice of acceptance hereof, notice of
extensions of credit from time to time by FCFC to Borrower, presentment for
payment, demand, protest, notice of dishonor, notice of default, notice of
nonpayment and all other notices to which the Guarantors might otherwise be
entitled, (b) any defense which the Guarantors may have by reason of any defense
which Borrower may have against FCFC other than payment and performance of all
Obligations of Borrower to FCFC, (c) any and all right to assert against FCFC
any claims or


                                        1


defenses based upon any failure of FCFC to furnish to Guarantors any information
or facts relating to the ability of Borrower to pay and to perform Borrower's
Obligations under the Agreements, (d) all defenses, counterclaims and setoffs of
any kind or nature in connection with the validity and/or enforceability of this
Guaranty arising directly or indirectly from the nonperfection, insufficiency,
invalidity or nonenforceability of the Agreements, (e) any and all right to
assert against FCFC any claim or defense based upon any election of remedies by
FCFC, which in any manner impairs, affects, reduces, releases or extinguishes
Guarantors' subrogation rights or Guarantors' right to proceed against Borrower
for reimbursement or any other rights of Guarantors against Borrower or against
any other person or security, and (f) any right, title or interest, whether by
subrogation or otherwise, in any collateral however or whenever assigned to FCFC
until all Obligations of Borrower to FCFC have been fully paid, satisfied and
performed; and (g) all defenses by reason of any extensions of time given by
FCFC to Borrower, any failure of FCFC to pursue Borrower or Borrower's property
or to resort to other Security, guarantees or remedies.  Guarantors agree that
FCFC shall be under no obligation to marshall any assets in favor of Guarantors
or any of them, or against or in payment of any or all of the indebtedness of
Borrower to FCFC.

     If Borrowers or any of the Guarantors should at any time become insolvent,
or make as assignment of the benefit of creditors, or if a petition in
bankruptcy or any insolvency or reorganization proceedings be commenced by or
against Borrower or any of the Guarantors, all obligations of each Guarantor
shall, at the option of FCFC, forthwith become due and payable without notice.

          Guarantors hereby subordinate the payment of  all present and future
indebtedness of Borrower to Guarantors or any of them to the payment of any and
all Obligations of Borrower to FCFC, and Guarantors hereby subordinate all
present and future interest of Guarantors, and any of them, in and to any and
all property and assets now owned or hereafter acquired by Borrower. Guarantors
agree that they shall not demand, sue for, take, receive payment of, conveyance
of or any transfer of (including the grant of a security or security interest)
money, property or assets of Borrower, without the prior written consent of
FCFC.  Guarantors agree that in the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by operation of law
or otherwise, of all or any part of the assets of Borrower among its creditors,
or upon any indebtedness of Borrower, accruing by reason of the liquidation,
dissolution or other winding up of Borrower, or by reason of any foreclosure or
execution sale, or receivership, insolvency or bankruptcy proceedings, or
proceedings for reorganization or readjustment of Borrower or its properties, or
otherwise, then in any such event, FCFC shall be preferred in the payment of its
claims over any claims of any Guarantors against Borrower or any of its assets
or properties, and the Obligations owing to FCFC shall be first paid and
satisfied in full before any payment or distribution of any kind or character,
whether in cash, property or securities, shall be made to Guarantors or any of
them.  Guarantors represent that no indebtedness of Borrower to Guarantors is or
shall be evidenced by negotiable instruments unless any existing negotiable
instrument has been endorsed and delivered to FCFC and unless any future
negotiable instrument shall be endorsed and delivered to FCFC forthwith upon
execution thereof.  As security for this


                                        2


guaranty, Guarantors do hereby assign, transfer and set over to FCFC all
indebtedness of Borrower to Guarantors with full power of attorney to make,
present, file and vote proofs of claims and to receive and collect any and all
dividends or other payments incident to any liquidation, bankruptcy,
receivership or assignment for the benefit of creditors of Borrower.  This
power, being coupled with an interest, is irrevocable until all Obligations of
Borrower to FCFC are paid in full.  Nothing herein shall be construed as an
undertaking on the part of FCFC to make any loan to Borrower.

     Guarantors hereby represent that they were not induced to give this
Guaranty by the fact that there are or may be other guarantors either under this
instrument or otherwise.  FCFC shall have the right to seek recourse against
Guarantors to the full extent provided for herein and in any other document or
instrument evidencing obligations of Guarantors to FCFC, and against Borrower,
to the full extent provided for in any agreement between FCFC and Borrower.  No
election to proceed in one form of action or proceeding, or against any party,
or on any obligation, shall constitute a waiver of FCFC's right to proceed in
any other form of action or proceeding or against other parties, unless FCFC has
expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by FCFC against Borrower
under any document or instrument evidencing or securing the Obligations of
Borrower to FCFC shall serve to diminish the liability of Guarantors except to
the extent FCFC realizes payment of such action or proceeding, notwithstanding
the effect of any such action or proceeding upon Guarantors' right of
subrogation against Borrower.  Guarantors are fully aware of the financial
condition of the Borrower.  Guarantors deliver this Guaranty and Subordination
based solely upon their own independent investigation and in no part upon any
representation or statement of FCFC with respect thereto.  Guarantors are in a
position to and hereby assume full responsibility for obtaining any additional
information concerning Borrower's financial condition as Guarantors may deem
material to their obligations hereunder and Guarantors are not relying upon, nor
expecting FCFC to furnish them any information in FCFC's possession concerning
Borrower's financial condition.  By acceptance hereof, FCFC and Guarantors agree
that Guarantors hereby knowingly accept the full range of risk encompassed
within a contract of "continuing guaranty" which risk includes, but without
limitation, the possibility that Borrower will contract additional indebtedness
for which Guarantors may be liable hereunder after Borrower's financial
condition or ability to pay its lawful debts when they fall due has deteriorated
and Guarantors understand that the amount of the Obligations may be increased or
decreased and the ratios of the Obligations to collateral may be changed
adversely to Guarantors at the sole discretion of FCFC.

     This Guaranty may be terminated as to any Guarantor only as of the
anniversary of the effective date of said Agreement by giving FCFC sixty (60)
days prior written notice by registered or certified mail; such termination
shall be applicable only to transactions having their inception after the
effective date of said termination and shall not affect the rights and
obligations arising out of transactions having their inception prior to such
date.  Neither the death, incompetency, bankruptcy, receivership, release of, or
revocation by any Guarantor shall affect the continuing liability of any of the
Guarantors remaining hereunder.


                                        3


     The Guarantors agree to pay all expenses incurred by FCFC in connection
with the enforcement of its right under this Guaranty, including, but not
limited to, court costs, collection charges and attorneys' fees.

     This Guaranty shall be binding upon the respective heirs, representatives,
successors and assigns of each Guarantor and shall inure to FCFC its successors,
assigns and affiliates.

     This Guaranty is delivered and made in and shall be construed pursuant to
the laws of the State of Arizona.


     IN WITNESS WHEREOF, the undersigned do hereby jointly and severally execute
this Guaranty and Subordination this 10th day of May, 1996..


Cosmetic Group U.S.A., Inc.



By: /s/ Alfred E. Booth Jr.                  11312 Penrose Street
   ------------------------                  Sun Valley, California 91352
     Alfred E. Booth, Jr.                                        Address
Its:  CEO


By: /s/ Frank X. McGarvey
   ------------------------
     Frank X. McGarvey

Its: President


                                        4