SECOND AMENDED AND RESTATED

                          CREDIT AND SECURITY AGREEMENT

                                   dated as of

        November 21, 2002 and amended and restated as of January 2, 2004

                                      among

                   COLUMBUS MCKINNON CORPORATION, as Borrower,

                         LARCO INDUSTRIAL SERVICES LTD,

                           COLUMBUS MCKINNON LIMITED,

                          THE GUARANTORS NAMED HEREIN,

                   THE LENDERS PARTY HERETO FROM TIME TO TIME,

               FLEET CAPITAL CORPORATION, as Administrative Agent

                     FLEET NATIONAL BANK, as Issuing Lender,

          CONGRESS FINANCIAL CORPORATION (CENTRAL), Syndication Agent,

           MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL LYNCH BUSINESS
                 FINANCIAL SERVICES INC., as Documentation Agent

                                       and

                       FLEET SECURITIES, INC., as Arranger






<PAGE>


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT.....................1
ARTICLE 1. Definitions........................................................2
         1.1.   DEFINED TERMS.................................................2
         1.2.   CLASSIFICATION OF LOANS AND BORROWINGS.......................42
         1.3.   TERMS GENERALLY..............................................43
         1.4.   ACCOUNTING TERMS; GAAP.......................................43
         1.5.   JOINT AND SEVERAL OBLIGATIONS; DESIGNATED
                  FINANCIAL OFFICERS.........................................43
ARTICLE 2.  The Credits......................................................45
         2.1.   REVOLVING LOANS..............................................45
         2.2.   TERM LOAN....................................................48
         2.3.   CONVERSION OPTIONS...........................................51
         2.4.   DOMESTIC LETTERS OF CREDIT AND FOREIGN LETTERS OF CREDIT.....53
         2.5.   LOANS AND BORROWINGS; FUNDING OF BORROWINGS..................58
         2.6.   EXPIRATION, TERMINATION OR REDUCTION OF COMMITMENTS..........60
         2.7.   PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
                  SET-OFFS; COLLECTION.......................................61
         2.8.   PREPAYMENT OF LOANS..........................................66
         2.9.   FEES.........................................................69
         2.10.  INCREASED COSTS..............................................70
         2.11.  TAXES; SETOFF; ETC...........................................71
         2.12.  MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS...............73
         2.13.  CHANGE IN DOMESTIC BORROWING BASE, CANADIAN BORROWING
                  BASE AND TERM LOAN BORROWING BASE..........................73
         2.14  CANADIAN FACILITY.............................................74
ARTICLE 3.  Guarantee by Guarantors..........................................75
         3.1.   THE GUARANTEE................................................75
         3.2.   OBLIGATIONS UNCONDITIONAL....................................75
         3.3.   REINSTATEMENT................................................76
         3.4.   SUBROGATION..................................................77
         3.5.   REMEDIES.....................................................77
         3.6.   INSTRUMENT FOR THE PAYMENT OF MONEY..........................77
         3.7.   CONTINUING GUARANTEE.........................................77
         3.8  GENERAL LIMITATION ON AMOUNT OF OBLIGATIONS GUARANTEED.........78
ARTICLE 4.  The Collateral...................................................78
         4.1.   GRANT OF SECURITY INTEREST...................................78
         4.2.   SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF
                  THE CREDIT PARTIES.........................................80
         4.3.   COLLECTION OF PROCEEDS OF ACCOUNTS RECEIVABLE................87
         4.4.   FIXTURES, ETC................................................90
         4.5.   RIGHT OF AGENT TO DISPOSE OF COLLATERAL, ETC.................90
         4.6.   RIGHT OF AGENT TO USE AND OPERATE COLLATERAL, ETC............90
         4.7.   PROCEEDS OF COLLATERAL.......................................91
         4.8.   RELATION TO COLLATERAL DOCUMENTS.............................91


                                     - i -

<PAGE>

         4.9.   MARSHALLING..................................................92
ARTICLE 5.  Representations and Warranties...................................93
         5.1.   ORGANIZATION; POWERS.........................................93
         5.2.   AUTHORIZATION; ENFORCEABILITY................................93
         5.3.   GOVERNMENTAL APPROVALS; NO CONFLICTS.........................93
         5.4.   FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE...............94
         5.5.   PROPERTIES....................................................95
         5.6.   LITIGATION AND ENVIRONMENTAL MATTERS..........................96
         5.7.   COMPLIANCE WITH LAWS AND AGREEMENTS...........................98
         5.8.   INVESTMENT AND HOLDING COMPANY STATUS.........................98
         5.9.   TAXES.........................................................98
         5.10.  ERISA.........................................................98
         5.11.  DISCLOSURE....................................................99
         5.12.  CAPITALIZATION................................................99
         5.13.  SUBSIDIARIES..................................................99
         5.14.  MATERIAL INDEBTEDNESS, LIENS AND AGREEMENTS..................100
         5.15.  FEDERAL RESERVE REGULATIONS..................................101
         5.16.  SOLVENCY.....................................................101
         5.17.  FORCE MAJEURE................................................101
         5.18.  ACCOUNTS RECEIVABLE..........................................101
         5.19.  LABOR AND EMPLOYMENT MATTERS.................................102
         5.20.  BANK ACCOUNTS................................................103
         5.21.  OBLIGATIONS AS SENIOR DEBT...................................103
         5.22.  SENIOR SUBORDINATED NOTE DOCUMENTS AND SENIOR NOTE
                   DOCUMENTS.................................................103
         5.23.   CERTAIN TRANSACTIONS........................................104
ARTICLE 6.  Conditions.......................................................104
         6.1.   CLOSING DATE.................................................104
         6.2.   EACH EXTENSION OF CREDIT.....................................109
ARTICLE 7.  Affirmative Covenants............................................110
         7.1.   FINANCIAL STATEMENTS AND OTHER INFORMATION...................110
         7.2.   NOTICES OF MATERIAL EVENTS...................................113
         7.3.   EXISTENCE; CONDUCT OF BUSINESS...............................114
         7.4.   PAYMENT OF OBLIGATIONS.......................................114
         7.5.   MAINTENANCE OF PROPERTIES; INSURANCE.........................114
         7.6.   BOOKS AND RECORDS; INSPECTION RIGHTS.........................115
         7.7.   FISCAL YEAR..................................................116
         7.8.   COMPLIANCE WITH LAWS.........................................116
         7.9.   USE OF PROCEEDS..............................................116
         7.10.  CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES..................116
         7.11.  ERISA........................................................116
         7.12.  ENVIRONMENTAL MATTERS; REPORTING AND ASSESSMENTS.............117
         7.13.  MATTERS RELATING TO ADDITIONAL REAL PROPERTY
                  COLLATERAL.................................................117
         7.14.  CASH DEPOSITS/BANK ACCOUNTS..................................118
         7.15.  NEW GUARANTORS...............................................119
         7.16.  PUNCTUAL PAYMENT.............................................119
         7.17.  FURTHER ASSURANCES...........................................119
         7.18.  POST-CLOSING COVENANTS.......................................119


                                     - ii -

<PAGE>

ARTICLE 8.  Negative Covenants...............................................120
         8.1.   INDEBTEDNESS.................................................121
         8.2.   LIENS........................................................122
         8.3.   CONTINGENT LIABILITIES.......................................123
         8.4.   FUNDAMENTAL CHANGES; ASSET SALES.............................123
         8.5.   INVESTMENTS; HEDGING AGREEMENTS..............................125
         8.6.   RESTRICTED JUNIOR PAYMENTS...................................126
         8.7.   TRANSACTIONS WITH AFFILIATES.................................126
         8.8.   RESTRICTIVE AGREEMENTS; RESTRICTIONS ON NEGATIVE
                  PLEDGES AND UPSTREAM LIMITATION............................127
         8.9.   SALE-LEASEBACK TRANSACTIONS..................................127
         8.10.  CERTAIN FINANCIAL COVENANTS..................................127
         8.11.  LINES OF BUSINESS............................................129
         8.12.  OTHER INDEBTEDNESS...........................................129
         8.13.  MODIFICATIONS OF CERTAIN DOCUMENTS; DESIGNATION
                  OF SENIOR DEBT.  ..........................................129
         8.14.  INTENTIONALLY OMITTED........................................129
         8.15.  COLUMBUS MCKINNON FINANCE CORPORATION........................129
ARTICLE 9.  Events of Default................................................130
         9.1.   EVENTS OF DEFAULT............................................130
         9.2.   DISTRIBUTION OF COLLATERAL PROCEEDS..........................134
         9.3.   RECEIVERSHIP.................................................134
ARTICLE 10.  The Agent.......................................................135
         10.1.   APPOINTMENT AND AUTHORIZATION...............................135
         10.2.   AGENT'S RIGHTS AS LENDER....................................136
         10.3.   DUTIES AS EXPRESSLY STATED..................................136
         10.4.   RELIANCE BY AGENT...........................................137
         10.5.   ACTION THROUGH SUB-AGENTS...................................137
         10.6.   RESIGNATION OF AGENT AND APPOINTMENT OF
                   SUCCESSOR AGENT...........................................137
         10.7.   LENDERS' INDEPENDENT DECISIONS..............................138
         10.8.   INDEMNIFICATION.............................................138
         10.9.   CONSENTS UNDER OTHER LOAN DOCUMENTS.........................139
         10.10.  DELINQUENT LENDERS..........................................139
         10.11.  ELECTRONIC COMMUNICATIONS...................................139
ARTICLE 11.  Miscellaneous...................................................140
         11.1.   NOTICES.....................................................140
         11.2.   WAIVERS; AMENDMENTS.........................................141
         11.3.   EXPENSES; INDEMNITY: DAMAGE WAIVER..........................143
         11.4.   SUCCESSORS AND ASSIGNS......................................146
         11.5.   SURVIVAL....................................................151
         11.6.   COUNTERPARTS; INTEGRATION; REFERENCES TO AGREEMENT;
                   EFFECTIVENESS.............................................152
         11.7.   SEVERABILITY................................................152
         11.8.   RIGHT OF SETOFF.............................................152
         11.9.   SUBORDINATION BY CREDIT PARTIES.............................153
         11.10.  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
                   OF PROCESS................................................154
         11.11.  WAIVER OF JURY TRIAL........................................154


                                    - iii -

<PAGE>

         11.12.  HEADINGS AND DRAFTING.......................................155
         11.13.  CONFIDENTIALITY.............................................155
ARTICLE 12.  SECOND AMENDMENT AND RESTATEMENT................................156
         12.1. ..............................................................156
         12.2.   ADDITIONAL REPRESENTATIONS, RATIFICATIONS AND
                   ACKNOWLEDGMENTS AS OF THE SECOND AMENDMENT AND
                   RESTATEMENT EFFECTIVE DATE................................156
         12.3.   ADDITIONAL COVENANT AS OF THE SECOND AMENDMENT
                   AND RESTATEMENT EFFECTIVE DATE............................156




























                                     - iv -


<PAGE>



            SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

         THIS SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT dated as
of November  21,  2002 and amended and  restated as of January 2, 2004 is by and
among COLUMBUS  MCKINNON  CORPORATION,  a New York corporation (the "BORROWER"),
LARCO INDUSTRIAL SERVICES LTD, a business  corporation  organized under the laws
of the Province of Ontario,  COLUMBUS MCKINNON LIMITED,  a business  corporation
organized  under the laws of Canada,  the Guarantors  named herein,  the lenders
from time to time party hereto,  FLEET CAPITAL  CORPORATION,  as  Administrative
Agent,  FLEET NATIONAL BANK, as Issuing  Lender and FLEET  SECURITIES,  INC., as
Arranger.

         WHEREAS,  the Borrower has previously  entered into that certain Credit
Agreement  dated  as of  March  31,  1998  (as  amended,  the  "ORIGINAL  CREDIT
AGREEMENT"),  among the Borrower,  the lenders named therein, and Fleet National
Bank, as Agent;

         WHEREAS,  pursuant  to  a  certain  Assignment  and  Acceptance,  dated
November 21, 2002 (the "ASSIGNMENT"),  among the Borrower,  the lenders party to
the Original Credit Agreement, the Administrative Agent and the Lenders party to
the Existing  Credit  Agreement  (as defined  below),  (i) the lenders under the
Original Credit Agreement have assigned to the Lenders under the Existing Credit
Agreement the outstanding  loans and other obligations under the Original Credit
Agreement and (ii) the Agent under the Original Credit Agreement has assigned to
the Administrative  Agent hereunder all of its liens,  security  interests,  and
collateral security under the Original Credit Agreement; and

         WHEREAS,  the  Borrower,  Larco  Industrial  Services  Ltd,  a business
corporation  organized  under  the laws of the  Province  of  Ontario,  Columbus
McKinnon Limited, a business corporation organized under the laws of Canada, the
Guarantors  named therein,  the lenders from time to time party  thereto,  Fleet
Capital  Corporation,  as Administrative  Agent, Fleet National Bank, as Issuing
Lender and Fleet  Securities,  Inc., as Arranger.  have previously  entered into
that certain  Amended and Restated  Credit and Security  Agreement,  dated as of
November 21, 2002 (as amended, by the First Amendment,  dated as of June 5, 2003
and the  Second  Amendment,  dated as of July 21,  2003,  the  "EXISTING  CREDIT
AGREEMENT"),  which Existing Credit Agreement  amended and restated the Original
Credit  Agreement  and,  together with the Loan  Documents (as defined  therein)
evidenced the rights,  obligations,  liens,  security interests,  and collateral
security assigned pursuant to the Assignment.

         WHEREAS,  immediately  prior to the Second  Amendment  and  Restatement
Effective  Date  (defined  below),  certain of the Lenders party to the Existing
Credit  Agreement have assigned their rights and obligations  under the Existing
Credit  Agreement  to  certain of the other  Lenders  pursuant  to that  certain
Assignment and Acceptance, dated January 2, 2004.


<PAGE>

         WHEREAS,  it is the  intention and desire of the parties that the loans
and other  obligations  under the  Existing  Credit  Agreement  be  amended  and
restated as set forth herein such that the obligations of the Credit Parties and
the  rights,  liens,   security  interests,   and  collateral  security  of  the
Administrative  Agent and the Lenders thereunder shall hereafter be evidenced by
this Agreement and the other Loan Documents referred to herein.

         NOW,  THEREFORE,  the parties  agree that,  effective  as of the Second
Amendment and Restatement Effective Date, the Existing Credit Agreement shall be
amended and restated as set forth herein.

         The parties hereto agree as follows:

                                   ARTICLE 1.
                                   DEFINITIONS

         1.1. DEFINED TERMS. As used in this Agreement, the following terms have
the meanings specified below:

         "ACCOUNTS  RECEIVABLE/LOAN  RECONCILIATION  REPORT" means a certificate
signed by a Designated  Financial  Officer in substantially  the form of EXHIBIT
B-3 hereto.

         "ACCUMULATED  OTHER  COMPREHENSIVE  GAIN (OR LOSS)" means  "accumulated
other comprehensive gain (or loss)" as defined under GAAP.

         "ADDITIONAL  MORTGAGE"  has  the  meaning  assigned  to  such  term  in
subsection 7.13(a).

         "ADDITIONAL  MORTGAGED  PROPERTY" means any Real Property Asset that is
now owned or leased,  or hereinafter  acquired or leased, by the Credit Parties,
on which the Agent determines to acquire a Mortgage following the Closing Date.

         "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in
a form supplied by the Agent.

         "ADVANCE  REQUEST"  means a  written  request  signed  by a  Designated
Financial  Officer for a Borrowing in  accordance  with  subsection  2.1(b),  in
substantially  the  form of  EXHIBIT  B-4  annexed  hereto  or such  other  form
acceptable to the Agent.

         "AFFILIATE"  means, with respect to a specified Person,  another Person
that  Controls or is  Controlled  by or is under common  Control with the Person
specified.  Notwithstanding  anything herein to the contrary,  in no event shall
the Agent or any Lender be considered an "Affiliate" of any Credit Party.

         "AGENT"  means  Fleet  Capital   Corporation   in  its   capacities  as
administrative agent for the Lenders hereunder.

         "AGENT'S OFFICE" means One Federal Street, Boston, Massachusetts 02110.


                                       2

<PAGE>


         "AGREEMENT"  means  this  Amended  and  Restated  Credit  and  Security
Agreement,  including the Schedules  and Exhibits  hereto,  as from time to time
amended and supplemented in accordance with the term hereof.

         "APPLICABLE  MARGIN"  means,  for any Type of Loans (a) for the Initial
Payment Period (as defined below) the following percentages per annum:


----------------------------------------------------------------------------
                         APPLICABLE MARGIN (% PER ANNUM)
----------------------------------------------------------------------------
                              REVOLVING LOANS             TERM LOANS
------------------------- ------------------------ -------------------------
              SENIOR
             LEVERAGE        LIBOR      BASE RATE     LIBOR       BASE RATE
  LEVEL       RATIO        RATE LOANS     LOANS     RATE LOANS      LOANS
--------- --------------- ------------ ----------- ------------ ------------
    I        >=3.00:1        3.00%        1.75%       3.50%        2.25%
--------- --------------- ------------ ----------- ------------ ------------
   II      => 2.00:1 and     2.75%        1.50%       3.25%        2.00%
              <3.00:1
--------- --------------- ------------ ----------- ------------ ------------
   III       < 2.00:1        2.50%        1.25%       3.00%        1.75%
--------- --------------- ------------ ----------- ------------ ------------


and (b) for any Payment Period (as defined below) other than the Initial Payment
Period, the respective rates indicated below for Loans of such Type opposite the
applicable  Senior  Leverage Ratio  indicated below (or as provided in the final
paragraph of this definition, for part of a Payment Period):


----------------------------------------------------------------------------
                         APPLICABLE MARGIN (% PER ANNUM)
----------------------------------------------------------------------------
                              REVOLVING LOANS             TERM LOANS
------------------------- ------------------------ -------------------------
              SENIOR
             LEVERAGE        LIBOR      BASE RATE     LIBOR      BASE RATE
  LEVEL        RATIO       RATE LOANS     LOANS     RATE LOANS     LOANS
--------- --------------- ------------ ----------- ------------ ------------

     I       =>3.00:1        2.75%        1.50%       3.25%        2.00%
--------- --------------- ------------ ----------- ------------ ------------
    II     => 2.50:1 and     2.50%        1.25%       3.00%        1.75%
              <3.00:1
--------- --------------- ------------ ----------- ------------ ------------
    III    => 2.00:1 and     2.25%        1.00%       2.75%        1.50%
              <2.50:1
--------- --------------- ------------ ----------- ------------ -------------
   IV        < 2.00:1        2.00%        .75%        2.50%        1.25%
--------- --------------- ------------ ----------- ------------ ------------


         For purposes hereof, a "PAYMENT PERIOD" means (i) initially, the period
commencing  on the  Second  Amendment  and  Restatement  Effective  Date  to and
including  the third  Business  Day after the date of delivery of the  financial


                                       3

<PAGE>

statements required by subsection 7.1(b) and the Compliance Certificate required
by subsection 7.1(e) for the fiscal period of the Credit Parties ended March 31,
2004 (the "INITIAL PAYMENT PERIOD"), and (ii) thereafter,  the period commencing
on the day  immediately  succeeding  the last day of the prior Payment Period to
but not including  the third  Business Day after the earlier of (x) the due date
of the next Compliance  Certificate  required to be delivered by the Borrower to
the Agent pursuant to subsection  7.1(e)  concurrently  with the delivery by the
Borrower of the financial  statements  required by subsection 7.1(b), or (y) the
date of the actual receipt by the Agent of such Compliance Certificate.  Subject
to and in accordance with the final paragraph of this definition, the Applicable
Margin  shall be  effective  for each  Payment  Period (or in the  circumstances
described in the final paragraph of this  definition,  such portion of a Payment
Period).

         The Applicable Margin for any Payment Period shall be determined on the
basis of the  Compliance  Certificate  required  to be  delivered  to the  Agent
pursuant to subsection 7.1(e)  concurrently with the delivery by the Borrower of
the corresponding  financial  statements required by subsection 7.1(b),  setting
forth,  among other things, a calculation of the Senior Leverage Ratio as at the
last day of the fiscal quarter immediately preceding such Payment Period.

         Anything  in  this  Agreement  to  the  contrary  notwithstanding,  the
Applicable Margin shall be the rates applicable to Level I in the table above if
the Compliance Certificate required to be delivered by subsection 7.1(e) and the
financial statements required by subsection 7.1(b),  respectively,  shall not be
delivered  within three (3) Business  Days after the same shall be due (but only
with respect to the portion of such Payment Period prior to the delivery of such
certificate).

         "APPLICABLE  PERCENTAGE"  means the percentage of the total Commitments
or Loans of all Classes  hereunder  represented by the aggregate  amount of such
Lender's Commitments or Loans of all Classes hereunder.

         "APPLICABLE  RECIPIENT"  has  the  meaning  assigned  to  such  term in
subsection 2.7(f).

         "APPRAISED  VALUE"  means the fair  market  value of any Real  Property
Assets  determined  by  the  most  recent  appraisal  performed  by a  qualified
independent appraiser, in form and substance acceptable to the Agent.

         "APPROVED  FUND" means,  with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised  by the same  investment  advisor as such  Lender or by an
Affiliate of such investment advisor.

         "APPROVED  RESTRUCTURING  CHARGES"  means  cash  restructuring  charges
incurred by the Borrower and/or its Subsidiaries and approved by the Agent up to
an amount not to exceed $4,500,000 in the aggregate from the Closing Date to the
second  anniversary of the Closing Date (of which no more than $2,300,000  shall
be paid in cash by the Borrower and/or its Subsidiaries  from September 30, 2002
through  March 31,  2003);  PROVIDED  however,  no more than  $2,000,000 in cash


                                       4

<PAGE>

restructuring  charges  for any one  facility,  plant  or other  Property  shall
constitute Approved Restructuring Charges.

         "ARRANGER" means Fleet Securities, Inc.

         "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance  entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 11.4),  and accepted by the Agent,  in the form of EXHIBIT E
annexed  hereto or any other form approved by the Agent which  complies with the
provisions of Section 11.4.

         "ASSIGNMENTS  OF MORTGAGE"  means the several  Assignments of Mortgage,
made in favor the Agent,  upon certain of the Real Property Assets of the Credit
Parties set forth in SCHEDULE 1.1, in the form and  substance  acceptable to the
Agent.

         "ASSIGNMENT OF SECURITY INTEREST IN COPYRIGHTS" means the Assignment of
Security Interest in Copyrights, made by Fleet National Bank, as Agent under the
Original  Credit  Agreement,  in favor of the Agent,  in the form and  substance
acceptable to the Agent.

         "ASSIGNMENTS  OF  SECURITY  INTEREST  IN  PATENTS"  means  the  several
Assignments  of Security  Interest in Patents,  made by Fleet  National Bank, as
Agent under the Original  Credit  Agreement,  in favor of the Agent, in the form
and substance acceptable to the Agent.

         "ASSIGNMENTS  OF  SECURITY  INTEREST IN  TRADEMARKS"  means the several
Assignments of Security Interest in Trademarks,  made by Fleet National Bank, as
Agent under the Original  Credit  Agreement,  in favor of the Agent, in the form
and substance acceptable to the Agent.

         "AUDUBON  EUROPE" means Audubon Europe S.A.R.L,  a company duly founded
and validly existing under the laws of Luxembourg.

         "AVAILABLE  FUNDS" means all deposits in the Controlled  Accounts which
have been made by 2:00 p.m., Boston,  Massachusetts  time, on a Business Day, or
such later time as the Agent and the Cash  Management  Bank shall have expressly
consented to.

         "BASE  RATE"  means  the  higher  of (i) the  variable  annual  rate of
interest so  designated  from time to time by Fleet  National Bank as its "prime
rate",  such rate being a reference rate and not  necessarily  representing  the
lowest or best rate being  charged to any  customer,  and (ii)  one-half  of one
percent (1/2%) above the Federal Funds  Effective Rate. For the purposes of this
definition,  "Federal Funds Effective Rate" shall mean for any day, the rate per
annum equal to the  weighted  average of the rates on  overnight  federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next  preceding  Business Day) by the Federal  Reserve Bank of New York,
or, if such rate is not so  published  for any day that is a Business  Day,  the
average of the  quotations  for such day on such  transactions  received  by the


                                       5

<PAGE>


Agent from three funds  brokers of  recognized  standing  selected by the Agent.
Changes in the Base Rate  resulting  from any changes in Fleet  National  Bank's
"prime rate" shall take place immediately without notice or demand of any kind.

         "BOARD" means the Board of Governors of the Federal  Reserve  System of
the United States of America.

         "BORROWER" means Columbus McKinnon Corporation, a New York corporation.

         "BORROWING"  means Loans of a particular  Class of the same Type, made,
converted or continued on the same date and, in the case of LIBOR Rate Loans, as
to which a single LIBOR Interest Period is in effect.

         "BORROWING BASE CERTIFICATE" means a certificate signed by a Designated
Financial  Officer  certifying  the amount of the  Domestic  Borrowing  Base and
Canadian  Borrowing Base as of the date set forth therein,  in substantially the
form of EXHIBIT B-1 hereto.

         "BUSINESS  DAY" means any day that is not a  Saturday,  Sunday or other
day on which  commercial  banks  in  Boston,  Massachusetts  are  authorized  or
required by law to remain closed;  PROVIDED that, when used in connection with a
LIBOR Rate Loan,  the term  "BUSINESS  DAY" shall also  exclude any day on which
banks are not open for dealings in U.S. dollar deposits in the London  interbank
market.

         "CANADIAN  BORROWERS" means,  collectively,  Larco Industrial  Services
Ltd., a business corporation organized under the laws of the Province of Ontario
and Columbus McKinnon Limited, a business  corporation  organized under the laws
of Canada.

         "CANADIAN  BORROWING  AMOUNT"  means  the  least  of (i)  the  Canadian
Borrowing  Base, (ii) the Canadian  Sublimit and (iii) the Dollar  Equivalent of
all loans and other advances outstanding under the Canadian Facility.".

         "CANADIAN  BORROWING  BASE" means,  at the  relevant  time of reference
thereto,  an amount  determined  by the Agent by  reference  to the most  recent
Borrowing Base  Certificate  delivered to the Agent and the Lenders  pursuant to
subsection 7.1(f) which is equal to the Dollar Equivalent sum of:

          (a)  85% of Eligible Accounts of the Canadian Borrowers, PLUS

          (b)  40% of the  lower  of cost  or  fair  market  value  of  Eligible
               Inventory of the Canadian Borrowers;  PROVIDED,  that in no event
               shall the SUM of (i) the amount of the  Domestic  Borrowing  Base
               comprised of Eligible  Inventory of the Borrower and its Domestic
               Subsidiaries  which are  Guarantors,  plus (ii) the amount of the
               Canadian  Borrowing Base  comprised of Eligible  Inventory of the
               Canadian Borrowers,  exceed $25,000,000 at any time, PLUS


                                       6

<PAGE>

          (c)  60% of the Appraised  Value of the Canadian Real Property,  MINUS

          (d)  the Environmental Reserve allocable to the Canadian Borrowing
               Base (in the Agent's discretion);  MINUS

          (e)  reserves  for  foreign  exchange  and  interest  rate  derivative
               exposure  and  such  other  reserves  as the  Agent  in its  sole
               discretion shall deem  appropriate  from time to time,  including
               without  limitation,  such  reserve  for  amounts  owing  by  any
               Canadian  Borrower to any Person to the extent  secured by a Lien
               on,  or trust  over,  any  Property  of such  Canadian  Borrower,
               including Prior Claims, landlord, bailee and customs claims which
               are not  subordinated to the  satisfaction of Agent, and Eligible
               Inventory  of  such  Canadian   Borrower  subject  to  rights  of
               suppliers under Section 81.1 of the Bankruptcy and Insolvency Act
               (Canada);

The  Canadian  Borrowing  Base shall be  calculated  in U.S Dollars and Canadian
dollars. In determining the Canadian Borrowing Base from time to time, the Agent
may, but shall not be required  to, rely upon  reports or analyses  generated by
the    Borrower     (including,     without    limitation,     Borrowing    Base
Certificates/Collateral  Update  Certificates) and reports or analyses generated
by or on  behalf  of the  Agent  or any  Lender  or by  third  party  collateral
examination.  Notwithstanding  anything to the  contrary set forth  herein,  the
Agent may in its sole  discretion at any time and from time to time,  subject to
subsections  11.2(b)(xi))  and  (b)(xii),  adjust the  percentages  of  Eligible
Accounts or Eligible  Inventory,  change  eligibility  criteria contained in the
definitions  of  Eligible  Accounts  or Eligible  Inventory,  and change  and/or
establish reserves (such reserves to be standard and customary for facilities of
this nature) taken in respect of Eligible  Inventory and Eligible  Accounts from
time to time  based  upon the  results  of any  appraisals  or other  sources of
information  which demonstrate in the Agent's  reasonable  judgment based on due
inquiry a change in the  collectability  of accounts  receivable of the Canadian
Borrowers  and/or the  marketability or composition of inventory of the Canadian
Borrowers  and/or  other  market  changes  affecting  the value of  accounts  or
inventory comprising the Canadian Borrowing Base.

         "CANADIAN  COMMITMENT  LETTER"  means that certain  Commitment  Letter,
between the  Canadian  Lender and the Canadian  Borrowers  pursuant to which the
Canadian  Lender  has  agreed to  provide a  revolving  credit  facility  to the
Canadian Borrowers.

         "CANADIAN  EXCESS  AMOUNT"  means,  as of  any  date  of  determination
thereof,  an amount in Dollars equal to the result of (a) the Dollar  Equivalent
of all loans and other advances  outstanding  under the Canadian  Facility MINUS
the Canadian Borrowing Base.

         "CANADIAN  FACILITY" means the facility provided by the Canadian Lender
to the Canadian Borrowers, subject to Section 2.14 hereof.


                                       7

<PAGE>

         "CANADIAN INTERCREDITOR AGREEMENT" means an intercreditor agreement, in
form and substance satisfactory to the Agent, between the Agent and the Canadian
Lender, with respect to the Canadian Facility.

         "CANADIAN LENDER" means The Bank of Nova Scotia, a chartered bank under
the laws of Canada, or such other or successor  lender(s)  approved by the Agent
that shall be providing the Canadian Facility to the Canadian Borrowers.

         "CANADIAN  LETTER OF CREDIT" has the  meaning  assigned to such term in
subsection 2.14(a).

         "CANADIAN   LOAN   DOCUMENTS"   means,   collectively,   the   Canadian
Intercreditor  Agreement,  Debentures,  the  Canadian  Security  Agreement,  the
Canadian Patent and Trademark  Agreements,  the Canadian  Commitment Letter, the
Canadian  Letter of Credit and all other  instruments  and documents,  including
without  limitation  PPSA  financing  statements,  and the like,  required to be
executed or delivered pursuant to this Agreement or any Canadian Loan Document.

         "CANADIAN REAL PROPERTY" means the real property located at 107 and 445
Brook Road North, Coburg,  Ontario, Canada K9A 9W5 and 863 and 871 Arvin Avenue,
Hamilton,  Ontario, L8E SN8 and owned by the Canadian Borrowers, so long as such
property shall be subject to a First Priority Lien in favor of the Agent.

         "CANADIAN PATENT AND TRADEMARK AGREEMENTS" means the several patent and
trademark agreements,  made by the Credit Parties in favor of the Agent, in form
and substance satisfactory to the Agent.

         "CANADIAN SECURITY AGREEMENT" means the security agreement, made by the
Credit Parties in favor of the Agent, to be governed by Ontario law, in form and
substance satisfactory to the Agent.

         "CANADIAN SUBLIMIT" has the meaning assigned to such term in subsection
2.14(a).

         "CAPITAL  EXPENDITURES" means, for any period, the sum for the Borrower
and its consolidated  Subsidiaries  (determined on a consolidated  basis without
duplication  in accordance  with GAAP) of the aggregate  amount of  expenditures
made or liabilities  incurred during such period (including the aggregate amount
of  Capital  Lease  Obligations  incurred  during  such  period)  to  acquire or
construct fixed assets, plant and equipment  (including  renewals,  improvements
and  replacements,  but excluding  repairs)  computed in  accordance  with GAAP;
PROVIDED  that such term shall not include any such  expenditures  in connection
with any replacement or repair of Property affected by a Casualty Event.

         "CAPITAL LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital


                                       8

<PAGE>

leases on a balance  sheet of such  Person  under  GAAP,  and the amount of such
obligations  shall be the  capitalized  amount thereof  determined in accordance
with GAAP.

         "CAPITAL  STOCK"  means  (a)  with  respect  to any  Person  that  is a
corporation, any and all shares, interests,  participations or other equivalents
(however  designated and whether or not voting) of corporate stock, and (b) with
respect  to any  Person  that is not a  corporation,  any  and all  partnership,
membership  or other equity  interests of such Person and any and all  warrants,
rights or options to purchase any of the foregoing.

         "CASH MANAGEMENT BANK" means Fleet National Bank.

         "CASUALTY EVENT" means, with respect to any Property of any Person, any
loss of or damage to, or any  condemnation or other taking of, such Property for
which such Person or any of its Subsidiaries  receives  insurance  proceeds,  or
proceeds of a condemnation award or other compensation.

         "CHANGE IN LAW" means (a) the adoption of any law,  rule or  regulation
after the Closing  Date,  (b) any change after the Closing Date in any law, rule
or  regulation  or  in  the   interpretation  or  application   thereof  by  any
Governmental  Authority or (c)  compliance  by any Lender or the Issuing  Lender
(or, for purposes of subsection 2.10(b), by any lending office of such Lender or
by such  Lender's  or the Issuing  Lender's  holding  company,  if any) with any
request,  guideline or directive (whether or not having the force of law), other
than a request or directive to comply with any law, rule or regulation in effect
on the Closing  Date,  of any  Governmental  Authority  made or issued after the
Closing Date.

         "CHANGE OF CONTROL" means each occurrence of any of the following:

         (a)      during any period of two consecutive years,  individuals who
at the  beginning  of such  period  constituted  the Board of  Directors  of the
Borrower  (together  with any new  directors  whose  election  by such  Board of
Directors or whose  nomination for election by the  shareholders of the Borrower
was  approved by a vote of at least a majority of the  directors of the Borrower
then still in office who were either  directors at the beginning of such period,
or whose election or nomination for election was previously  approved) cease for
any reason to constitute a majority of the Board of Directors of the Borrower;

         (b)      any  Person or group of persons (within the meaning of Section
13 or 14 of the Securities  Exchange Act of 1934) shall have acquired beneficial
ownership  (within the meaning of Rule 13d-3  promulgated  by the Securities and
Exchange  Commission  under said Act),  directly or  indirectly,  of twenty-five
percent  (25%)  or  more of the  outstanding  shares  of  Capital  Stock  of the
Borrower;

         (c)      the  Borrower  shall cease to have  beneficial  ownership  (as
defined in Rule 13d-3 under the Exchange  Act) of 100% of the  aggregate  voting
power of the Capital  Stock of each other  Credit  Party,  free and clear of all
Liens (other than any Liens granted hereunder and Permitted Liens);


                                       9

<PAGE>


         (d)      except  as   permitted  hereunder,   (i)  any   Credit   Party
consolidates with or merges into another entity or conveys,  transfers or leases
all or substantially all of its properties and assets to another Person, or (ii)
any entity  consolidates  with or merges into any Credit Party in a  transaction
pursuant to which the  outstanding  voting Capital Stock of such Credit Party is
reclassified  or  changed  into or  exchanged  for  cash,  securities  or  other
property, other than any such transaction described in this clause (ii) in which
either (A) in the case of any such transaction involving the Borrower, no Person
or group  (within the  meaning of Section  13(d)(3)  of the  Exchange  Act) has,
directly or indirectly,  acquired  beneficial  ownership of more than 25% of the
aggregate outstanding voting Capital Stock of the Borrower or (B) in the case of
any such  transaction  involving  a Credit  Party other than the  Borrower,  the
Borrower has beneficial  ownership of 100% of the aggregate  voting power of all
Capital Stock of the resulting, surviving or transferee entity; or

         (e)     a "Change of Control" shall occur under the Senior Subordinated
Note Indenture or the Senior Note Indenture.

         "CLASS" when used in reference  to any Loan,  Borrowing or  Commitment,
refers to whether such Loan,  the Loans  comprising  such Borrowing or the Loans
that the a Lender  holding such  Commitment is obligated to make,  are Revolving
Loans, or a Term Loan.

         "CLOSING  DATE"  means  November  21,  2002,  the  closing  date of the
Existing Credit Agreement.

         "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

         "COLLATERAL"  means all of the  property  and assets and all  interests
therein and proceeds thereof now owned or hereafter acquired by any Credit Party
upon which a Lien is granted or  purported to be granted by such Credit Party as
security for all or any part of the Obligations.

         "COLLATERAL  DOCUMENT"  means  any  Patent  Agreement,   any  Trademark
Agreement,  any  Assignment of Security  Interest in Patents,  any Assignment of
Security  Interest  in  Trademarks,  any  Assignment  of  Security  Interest  in
Copyright,  any Pledge Agreement,  any Assignment of Mortgage, any Mortgage, any
Copyright Mortgage, any Lockbox Agreement,  any Control Agreement,  any Canadian
Patent and Trademark Agreement,  any Canadian Security Agreement,  and all other
instruments and documents,  including without  limitation any Uniform Commercial
Code financing  statements,  and the like,  required to be executed or delivered
pursuant to this Agreement or any Collateral Document.

         "COLLATERAL  UPDATE  CERTIFICATE"  means  a  certificate  signed  by  a
Designated  Financial Officer,  in substantially the form of EXHIBIT B-2 annexed
hereto.

         "COMMITMENTS"  means (a) for all  Lenders,  the  aggregate of the Total
Revolving  Credit  Commitment and Total Term Loan  Commitment,  and (b) for each


                                       10

<PAGE>

Lender the aggregate of such Lender's  Revolving Credit Commitment and Term Loan
Commitment.

         "COMPLIANCE  CERTIFICATE"  means a  certificate  signed by a Designated
Financial  Officer,  in substantially the form of EXHIBIT D annexed hereto,  (a)
certifying  as to whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken with
respect   thereto,   (b)  setting   forth   reasonably   detailed   calculations
demonstrating  compliance  with Section 8.10, and (c) stating whether any change
in GAAP or in the application thereof has occurred since the date of the audited
financial  statements  referred  to in Section  5.4 and,  if any such change has
occurred,  specifying  the  effect of such  change on the  financial  statements
accompanying such certificate.

         "CONTINGENT   OBLIGATION"  means,  with  respect  to  any  Person,  any
obligation   of  such  Person   guaranteeing   or  intended  to  guarantee   any
Indebtedness,  leases, dividends or other obligations ("primary obligations") of
any other  Person (the  "primary  obligor") in any manner,  whether  directly or
indirectly,  including, without limitation, (a) the direct or indirect guaranty,
endorsement  (other than for  collection  or deposit in the  ordinary  course of
business),  co-making,  discounting  with recourse or sale with recourse by such
Person  of the  obligation  of a primary  obligor,  (b) the  obligation  to make
take-or-pay or similar  payments,  if required,  regardless of nonperformance by
any other party or parties to an agreement,  (c) any  obligation of such Person,
whether or not  contingent,  (i) to purchase any such primary  obligation or any
property  constituting direct or indirect security therefor,  (ii) to advance or
supply funds (A) for the purchase or payment of any such primary  obligation  or
(B) to maintain  working  capital or equity  capital of the  primary  obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property,  assets,  securities or services primarily for the purpose of
assuring the owner of any such primary  obligation of the ability of the primary
obligor to make payment of such primary  obligation or (iv)  otherwise to assure
or hold harmless the holder of such primary  obligation  against loss in respect
thereof;  PROVIDED,  however,  that the term "Contingent  Obligation"  shall not
include any product warranties extended in the ordinary course of business.  The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or  determinable  amount of the primary  obligation with respect to which
such  Contingent  Obligation  is made (or, if less,  the maximum  amount of such
primary  obligation for which such Person may be liable pursuant to the terms of
the  instrument  evidencing  such  Contingent  Obligation)  or, if not stated or
determinable,  the maximum reasonably anticipated liability with respect thereto
(assuming such Person is required to perform thereunder),  as determined by such
Person in good faith.

         "CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through  the  ability to  exercise  voting  power,  by  contract  or  otherwise.
"CONTROLLING" and "CONTROLLED" have meanings  correlative  thereto. A Person who
owns  or  holds  Capital  Stock,   beneficial   interests  or  other  securities
representing  five  percent  (5%) or more of the Total  Voting  Power of another
Person shall be deemed, for purposes of this Agreement,  to "control" such other
Person.


                                       11

<PAGE>

         "CONTROL  AGREEMENT" means, with respect to any Controlled  Account, an
agreement  in  accordance  with  subsection   4.3(b),   in  form  and  substance
satisfactory  to the Agent,  executed and delivered by the Credit  Parties,  the
depository  institution at which such  Controlled  Account is maintained and the
Agent on the Closing Date and  thereafter  in  accordance  with Section 7.14, as
such agreement may be amended,  supplemented or otherwise  modified from time to
time.

         "CONTROLLED   ACCOUNT"  has  the  meaning  assigned  to  such  term  in
subsection 4.3(a).

         "CONVERSION  REQUEST" means a notice given by the Borrower to the Agent
of the  Borrower's  election  to convert or continue a Loan in  accordance  with
Section 2.3.

         "COPYRIGHTS"  means all  copyrights,  whether  statutory or common law,
owned by or assigned to the Credit Parties,  and all exclusive and  nonexclusive
licenses to the Credit  Parties from third  parties or rights to use  copyrights
owned by such third parties,  including,  without limitation, the registrations,
applications and licenses listed on SCHEDULE 5.5 hereto,  along with any and all
(a) renewals and extensions thereof, (b) income, royalties,  damages, claims and
payments now and hereafter due and/or payable with respect  thereto,  including,
without   limitation,   damages  and  payments  for  past,   present  or  future
infringements   thereof,  (c)  rights  to  sue  for  past,  present  and  future
infringements   thereof,  and  (d)  foreign  copyrights  and  any  other  rights
corresponding thereto throughout the world.

         "COPYRIGHT MORTGAGE" means any Memorandum of Grant of Security Interest
in Copyrights,  made by the applicable Credit Party in favor of the Agent and in
substantially the form of EXHIBIT I.

         "CREDIT  PARTIES"   means  the U.S.  Credit  Parties  and the  Canadian
Borrowers.


         "DEBENTURE"  means any debenture made by a Credit Party in favor of the
Agent,  for the  benefit  of the Agent and the  Lenders,  in form and  substance
satisfactory to the Agent, securing the Obligations.

         "DEFAULT"  means any event or condition  which  constitutes an Event of
Default or which  upon  notice,  lapse of time or both  would,  unless  cured or
waived, become an Event of Default.

         "DELINQUENT  LENDER" has the  meaning  assigned to such term in Section
10.10.

         "DESIGNATED  FINANCIAL OFFICER" means an individual holding one or more
of the  following  offices  with the  Borrower  or  otherwise  having  executive
responsibilities  for financial matters and listed in SCHEDULE 1.5 hereto: chief
financial officer, principal accounting officer, treasurer,  assistant treasurer
or controller.

         "DETERMINED  VALUE" means,  at the relevant time of reference  thereto,
the appraised  value of Eligible  Fixed Assets on an orderly  liquidation  basis
determined by the most recent appraisal thereof conducted pursuant to subsection


                                       12

<PAGE>

7.6. To the extent that any  Eligible  Fixed  Asset is  encumbered  by a lien or
encumbrance  which is a Permitted Lien not securing the Obligations,  the amount
of the Indebtedness  secured by such lien or encumbrance  shall be deducted from
the value  determined in accordance with the immediately  preceding  sentence of
this definition of "Determined Value".

         "DISCLOSED  MATTERS" means the actions,  suits and  proceedings and the
environmental matters disclosed in SCHEDULE 5.6.

         "DISPOSITION" means any transaction, or series of related transactions,
pursuant  to  which  any  Person  or  any of its  Subsidiaries  sells,  assigns,
transfers or otherwise  disposes of any property or assets (whether now owned or
hereafter  acquired)  to any other  Person,  in each  case,  whether  or not the
consideration therefor consists of cash, securities or other assets owned by the
acquiring  Person,  excluding  any sales of inventory in the ordinary  course of
business on ordinary business terms.

         "DOLLAR  EQUIVALENT" means, on any particular date, with respect to any
amount  denominated  in U.S.  Dollars,  such  amount of U.S.  Dollars,  and with
respect to any amount  denominated  in a currency other than U.S.  Dollars,  the
amount (as conclusively  ascertained by the Agent absent manifest error) of U.S.
Dollars  which could be  purchased by the Agent with such amount or currency (in
accordance with its normal banking practices) in the applicable foreign currency
deposit  markets with such amount of such  currency at the spot rate of exchange
prevailing at or about 11:00 a.m. (Boston time) on such date.

         "DOMESTIC  BORROWING  BASE" means,  at the  relevant  time of reference
thereto,  an amount  determined  by the Agent by  reference  to the most  recent
Borrowing Base  Certificate  delivered to the Agent and the Lenders  pursuant to
subsection 7.1(f) which is equal to the sum of:

          (a)  85%  of  Eligible  Accounts  of the  Borrower  and  its  Domestic
               Subsidiaries which are Guarantors, PLUS

          (b)  40% of the  lower  of cost  or  fair  market  value  of  Eligible
               Inventory of the Borrower and its Domestic Subsidiaries which are
               Guarantors,  PROVIDED,  that in no event shall the SUM of (i) the
               amount of the  Domestic  Borrowing  Base  comprised  of  Eligible
               Inventory of the Borrower and its Domestic Subsidiaries which are
               Guarantors  PLUS (ii) the amount of the Canadian  Borrowing  Base
               comprised of Eligible Inventory of the Canadian Borrowers, exceed
               $25,000,000 at any time, MINUS

          (c)  the  Environmental  Reserve  allocable to the Domestic  Borrowing
               Base (in the Agent's discretion); MINUS

          (d)  reserves  for  foreign  exchange  and  interest  rate  derivative
               exposure  and  such  other  reserves  as the  Agent  in its  sole
               discretion shall deem appropriate from time to time.


                                       13

<PAGE>


         In determining the Domestic Borrowing Base from time to time, the Agent
may, but shall not be required  to, rely upon  reports or analyses  generated by
the Borrower  (including,  without  limitation,  Borrowing Base Certificates and
Collateral  Update  Certificates)  and  reports or analyses  generated  by or on
behalf of the  Agent or any  Lender or by third  party  collateral  examination.
Notwithstanding  anything to the contrary set forth herein, the Agent may in its
sole  discretion  at any time and from  time to  time,  subject  to  subsections
11.2(b)(xi))  and (b)(xii),  adjust the  percentages of Eligible  Accounts or of
Eligible Inventory,  change eligibility criteria contained in the definitions of
Eligible Accounts or Eligible  Inventory,  and change and/or establish  reserves
(such reserves to be standard and customary for facilities of this nature) taken
in respect of Eligible  Inventory and Eligible  Accounts from time to time based
upon the  results  of any  appraisals  or other  sources  of  information  which
demonstrate in the Agent's reasonable  judgment based on due inquiry a change in
the  collectability  of accounts  receivable  of the  Borrower  or any  Domestic
Subsidiary  and/or the marketability or composition of inventory of the Borrower
or any Domestic  Subsidiary  and/or other market changes  affecting the value of
accounts or inventory comprising the Domestic Borrowing Base.

         "DOMESTIC EXCESS  AVAILABILITY"  means, as of any date of determination
thereof, the result of:

         (a)      Domestic Gross Availability at such time, MINUS

         (b)      Domestic Revolving Credit Exposure at such time, MINUS

         (c)      the Canadian Excess Amount at such time.

         "DOMESTIC GROSS  AVAILABILITY"  means,  as of any date of determination
thereof, the lesser of:

         (a)      the Domestic Borrowing Base at such time, and

         (b)      the Domestic Revolving Credit Commitment at such time.

         "DOMESTIC LC DISBURSEMENTS"  means a payment made by the Issuing Lender
pursuant to a Domestic Letter of Credit.

         "DOMESTIC LC EXPOSURE"  means,  at any time, the sum of (a) 100% of the
aggregate  undrawn amount of all outstanding  standby and  documentary  Domestic
Letters of Credit at such time, plus (b) the aggregate amount of all Domestic LC
Disbursements  that have not yet been reimbursed by or on behalf of the Borrower
at such time.

         "DOMESTIC  LETTERS OF CREDIT" has the meaning  assigned to such term in
subsection 2.4(a)(i).

         "DOMESTIC  REVOLVING CREDIT  COMMITMENT"  means, at any time, the Total
Revolving  Credit  Commitment at such time,  MINUS the Dollar  Equivalent of the
aggregate amount available to be drawn under the Canadian Letter of Credit.


                                       14

<PAGE>

         "DOMESTIC  REVOLVING  CREDIT  EXPOSURE"  means,  at any time, the Total
Revolving  Credit Exposure MINUS the Dollar  Equivalent of the aggregate  amount
available to be drawn under the Canadian Letter of Credit.

         "DOMESTIC  SUBSIDIARY"  means,  at  any  time,  any  Subsidiary  of the
Borrower  organized  under the laws of the United States of America or any State
thereof, including any Subsidiary of the Borrower listed in SCHEDULE 1.6 hereto.

         "DRAWDOWN DATE" means the date on which any Revolving Loan or Term Loan
is made or is to be made,  and the date on which any Revolving Loan is converted
or continued in accordance with Section 2.3.

         "EBITDA" means,  for any period and without  duplications,  (a) the net
income of the Borrower and its Subsidiaries  (determined on a consolidated basis
in  accordance  with GAAP) for such period,  PLUS (b) to the extent  deducted in
calculating net income without  duplication (i) income taxes accrued during such
period,   (ii)  Interest  Expense  during  such  period,   (iii)   depreciation,
amortization and other Non-Cash  Charges accrued for such period,  (iv) Approved
Restructuring  Charges incurred during such period, (v) only for the purposes of
the  calculation  of EBITDA for any period  ending on or prior to  December  31,
2004, up to $1,250,000,  in actual cash losses  incurred by the Borrower and its
Subsidiaries  during such period in connection with the dispostion of the Lister
Chain & Forge  division of the  Borrower  and (vi) only for the  purposes of the
calculation of EBITDA for any period ending on or prior to December 31, 2004, up
to  $2,000,000,  in  actual  cash  losses  incurred  by  the  Borrower  and  its
Subsidiaries  during  such  period  in  connection  with the  dispostion  of the
Positech division of the Borrower, MINUS (c) to the extent such items were added
in calculating net income (i) extraordinary gains during such period, (ii) gains
from any Casualty  Event,  Disposition,  or discontinued  operation  during such
period, and (iii) interest and other income (excluding interest and other income
related to CM Insurance Company, Inc.) during such period.

         "ELECTRONIC  COMMUNICATIONS"  has the meaning  assigned to such term in
Section 10.11.

         "ELIGIBLE ACCOUNTS" means (a) the aggregate face amount of the accounts
receivable  outstanding and owed to any Credit Party as determined in accordance
with GAAP  consistently  applied and as entered on the books and records of such
Credit Party in the ordinary  course of the business  operations  of such Credit
Party,  MINUS (b) without  duplication,  the  aggregate  amount of any  returns,
discounts (which may, at the Agent's option,  be calculated on the shortest term
offered by such  Credit  Party),  claims,  credits,  debit  memoranda,  customer
deposits, chargebacks, contra accounts, allowances or excise taxes of any nature
(whether issued,  owing, granted or outstanding),  and which satisfy each of the
requirements set forth below:

                  (i) the subject goods have been sold and/or services have been
         rendered on an absolute  sale basis and on an open account  basis to an
         account  debtor  which  is not (A) a  Governmental  Authority  or other
         Person such that the  Assignment  of Claims Act (or other similar legal
         or regulatory  requirement) would apply to the pledge of receivables of


                                       15

<PAGE>

         such account debtor, unless the Assignment of Claims Act (or such other
         legal  or  regulatory  requirement)  has  been  complied  with  to  the
         satisfaction of the Agent or (B) an Affiliate of such Credit Party;

                  (ii) an  invoice  (in form  and  substance  acceptable  to the
         Agent)  has been sent to the  applicable  account  debtor  and bears an
         invoice  date  contemporaneous  with or later  than the date of sale of
         such goods or rendering of such service;

                  (iii) the account receivable does not arise from a sale to the
         account debtor on a  bill-and-hold,  guaranteed  sale,  sale-or-return,
         sale-on-assignment,   sale-on-appraisal,   consignment   or  any  other
         repurchase or return basis;

                  (iv) the  account  is not  evidenced  by  chattel  paper or an
         instrument of any kind, and has not been reduced to judgment;

                  (v) the account  debtor is not insolvent or the subject of any
         bankruptcy or insolvency proceedings of any kind;

                  (vi) the account debtor is credit worthy and not  experiencing
         financial  difficulties  that could  affect the  collectability  of the
         account;

                  (vii) the account debtor is an entity organized under the laws
         of one of the United  States or one of the  provinces  of Canada  whose
         main office is also located within the United States  including  Puerto
         Rico as within the United States or Canada,  or, if the account  debtor
         is not such an entity organized and located within the United States or
         Canada,  the  account  is  supported  by a letter of  credit  issued or
         confirmed  by a  bank  acceptable  to  the  Agent  or by  other  credit
         enhancements,  in each case in form and substance  satisfactory  to the
         Agent;

                  (viii)  the  account   receivable   is  a  valid  and  legally
         enforceable  obligation  of the account  debtor  thereunder,  it is not
         subject to recoupment,  offset (other than discount for prompt payment)
         or other defense on the part of such account  debtor or to any claim on
         the part of such account debtor denying liability thereunder;

                  (ix) the account  receivable is not subject to any Lien of any
         kind except for the Lien of the Agent securing the  obligations of such
         Credit Party under this Agreement and the Liens permitted hereunder;

                  (x) the account  receivable  has not remained  outstanding  in
         whole or in part for more  than  sixty  (60)  days  after  the due date
         (invoiced in accordance  with the Borrower's  usual and customary terms
         as in effect on the Closing Date);


                                       16

<PAGE>

                  (xi)  the  account   receivable   does  not  arise  out  of  a
         transaction  (direct or  indirect)  with an employee,  officer,  agent,
         director or  stockholder  of such Credit Party or any Affiliate of such
         Credit Party;

                  (xii) the  account  receivable  is not owing  from an  account
         debtor from whom fifty  percent  (50%) or more of the dollar  amount of
         all accounts receivable are deemed ineligible under clause (x) above;

                  (xii) the account receivable  constitutes  Collateral in which
         the Agent has a First  Priority Lien securing the  Obligations  of such
         Credit Party under this Agreement;

                  (xiv) such  Credit  Party has not made an  agreement  with the
         account  debtor to extend the time of payment  of the  subject  account
         receivable;

                  (xv) the account  debtor is not located in  Minnesota  (or any
         other  jurisdiction  which adopts a statute or other  requirement  with
         respect to which any Credit  Party that  obtains  business  from within
         such  jurisdiction or is otherwise subject to such  jurisdiction's  tax
         law must file a "Business Activity Report" (or other applicable report)
         or make any  other  required  filings  in a timely  manner  in order to
         enforce its claims in such jurisdiction's  courts or arising under such
         jurisdiction's laws); PROVIDED, that accounts receivable which would be
         Eligible  Accounts  but  for  the  terms  of  this  clause  (xv)  shall
         nonetheless be deemed to be Eligible  Accounts if such Credit Party has
         filed a "Business  Activity Report" (or other  applicable  report) with
         the  applicable  state  office or is  qualified  to do business in such
         jurisdiction and, at the time the account  receivable was created,  was
         qualified to do business in such  jurisdiction  or had on file with the
         applicable state office a current "Business  Activity Report" (or other
         applicable report);

                  (xvi) the account  receivable is (x) with respect  to accounts
         receivable included in the Domestic Borrowing Base,  denominated in U.S
         Dollars  and (y) with  respect to accounts  receivable  included in the
         Canadian Borrowing Base, denominated in Canadian Dollars;

                  (xvii) the account receivable  does not consist  of a progress
         billing or an excess billing;

PROVIDED,  however,  that  (A) the  Agent  may in its  sole  discretion  exclude
particular  accounts  from the  definition  of Eligible  Accounts and may impose
additional and/or more restrictive  eligibility or valuation criteria than those
set forth above as preconditions  for any account to be deemed to be an Eligible
Account  hereunder,  and (B) an account deemed to be an Eligible  Account at any
one  point in time may be  excluded  by the  Agent in its sole  discretion  at a
future point in time.

         "ELIGIBLE  FIXED ASSETS" means the machinery and equipment (i) owned by
the Borrower and its Domestic Subsidiaries which are Guarantors, (ii) located in
the  United  States of  America,  (iii) in which the  Agent  shall  have a First
Priority Lien, (iv) which are properly insured in accordance with the provisions


                                       17

<PAGE>

of Section 7.5,  and (v) which are listed on that  certain  schedule of Eligible
Fixed Assets attached to the Term Loan Borrowing Base  Certificate  delivered to
the Agent on or prior to the Closing Date.

         "ELIGIBLE INVENTORY" means finished goods, semi-finished goods, and raw
materials  and  component  parts  inventory   (exclusive  of  work  in  process,
packaging,  supplies, machinery and tooling) of any Credit Party recorded on the
books and records of such Credit  Party in the  ordinary  course of the business
operations of such Credit Party valued on a first in first out basis (net of the
LIFO reserve  maintained  by the Borrower and its  Subsidiaries  with respect to
such inventory) at the lower of (a) the fair market value of such inventory,  or
(b) the cost of such inventory (net of all positive cost reserves  maintained by
the  Borrower and its  Subsidiaries  with respect  thereto,  including,  without
limitation,  the purchase price variance reserve, the absorption reserve and the
price reserve), which inventory satisfies each of the following requirements:

                  (i) is in good and merchantable condition;

                  (ii)  meets all  standards  imposed by any  government  agency
         having   regulatory   authority  over  such  goods  and/or  their  use,
         manufacture and/or sale;

                  (iii) has been  physically  received  in (A) with  respect  to
         inventory  included in the Domestic  Borrowing  Base,  the  continental
         United  States by the  Borrower  or a  Domestic  Subsidiary  which is a
         Guarantor  or (B) with  respect to  inventory  included in the Canadian
         Borrowing Base,  Canada by a Canadian  Borrower,  and, in each case, is
         located  at a facility  owned or leased by such  Credit  Party,  is not
         in-transit, and is not subject to advance payment by such Credit Party;
         PROVIDED that no inventory located at a leased facility shall be deemed
         to be  "Eligible  Inventory"  hereunder  unless  the  landlord  of such
         facility shall have entered into an agreement  satisfactory in form and
         substance  to the  Agent  acknowledging  the  Liens  of the  Agent  and
         granting the Agent unrestricted access to such inventory;

                  (iv) is currently  held for sale and currently  salable in the
         normal course of the business operations, or, as respects raw materials
         or  semi-finished  goods,  is  incorporated  or  is  being  held  to be
         incorporated  in customer  products  being  produced or provided by any
         Credit Party;

                  (v) does not constitute returned (unless suitable for resale),
         excess, obsolete, unsaleable, shopworn, seconds, used, damaged or unfit
         inventory;

                  (vi)  is  not  accounted  for  in  the  obsolescence   reserve
         maintained by any Credit Party;  has not remained in the  possession of
         such  Credit  Party for more than  twenty-four  (24)  months or has not
         otherwise  been  determined  by the  Agent  in its sole  discretion  to
         constitute slow-moving inventory;


                                       18

<PAGE>


                  (vii)  is not  subject  to a sale to an  account  debtor  on a
         bill-and-hold,   guaranteed  sale,  sale-or-return,   sale-on-approval,
         consignment or any other repurchase or return basis;

                  (viii) is not  subject to any Lien of any kind  except for the
         Lien of the Agent securing  Obligations  under this Agreement and other
         Liens permitted hereunder;

                  (ix) has not been sold to any Credit Party; and

                  (x)  constitutes  Collateral  in which  the  Agent has a First
         Priority Lien securing the Obligations;

PROVIDED,  however, that (A) the aggregate amount of Eligible Inventory shall be
computed  net of (I) the  Inventory  Accounting  Variance  Reserve and (II) such
reserves for slow moving and other ineligible  inventory as the Agent shall deem
appropriate,  (B) the Agent may in its sole discretion  exclude particular items
of inventory from the definition of Eligible Inventory and may impose additional
and/or more restrictive  eligibility or valuation  criteria than those set forth
above as  preconditions  for any item of  inventory  to be deemed to be Eligible
Inventory  hereunder,  and (C) inventory deemed to be Eligible  Inventory at any
one  point in time may be  excluded  by the  Agent in its sole  discretion  at a
future point in time.

         "ENVIRONMENTAL ACTIONS" means any complaint, summons, citation, notice,
directive, order, claim, litigation,  investigation,  judicial or administrative
proceeding,   judgment,  letter  or  other  communication  from  any  Person  or
Governmental Authority involving violations of Environmental Laws or Releases of
Hazardous  Materials  (i) from any assets,  properties  or  businesses  owned or
operated by any Credit Party or any of its  Subsidiaries  or any  predecessor in
interest;  (ii) from  adjoining  properties  or  businesses;  or (iii)  onto any
facilities which received Hazardous  Materials  generated by any Credit Party or
any of its Subsidiaries or any predecessor in interest.

         "ENVIRONMENTAL  LAWS"  means  all  applicable  laws,  licenses,  rules,
regulations,  codes, ordinances,  orders, decrees,  judgments,  injunctions,  or
binding  agreements  issued,  promulgated  or entered  into by any  Governmental
Authority,  relating in any way to the environment,  preservation or reclamation
of natural  resources,  the  management,  release or  threatened  release of any
Hazardous   Material  or  to  health  and  safety  matters,   including  without
limitation,   the  Resource   Conservation   and  Recovery  Act  ("RCRA"),   the
Comprehensive Environmental Response,  Compensation and Liability Act of 1980 as
amended  ("CERCLA"),  the Superfund  Amendments and  Reauthorization Act of 1986
("SARA"),  the Federal  Clean Water Act,  the Federal  Clean Air Act,  the Toxic
Substances Control Act and all local, state and federal laws and regulations now
or  hereafter  in effect and  applicable  relating to the  presence,  abatement,
removal, disposal, transportation or treatment of materials containing asbestos.

         "ENVIRONMENTAL  LIABILITIES"  means all liabilities,  Remedial Actions,
monetary obligations,  contingent or otherwise  (including,  without limitation,


                                       19

<PAGE>

any liability  for damages,  losses,  punitive  damages,  consequently  damages,
treble  damages,  costs  and  expense  of  environmental   remediation,   fines,
penalties, sanctions,  indemnities or interest incurred as a result of any claim
or demand by any Governmental Authority or any third party), of any Credit Party
directly  or  indirectly  resulting  from or  based  upon (a)  violation  of any
Environmental Law, (b) the presence, generation, use, handling,  transportation,
storage,  treatment or disposal of any Hazardous Materials,  (c) exposure to any
Hazardous Materials,  (d) the spill,  leaking,  pumping,  pouring,  discharging,
injecting,  disposing,  dumping,  escaping, release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or other
consensual  arrangement  pursuant to which  liability is assumed or imposed with
respect to any of the foregoing.

         "ENVIRONMENTAL  PERMITS"  has the  meaning  assigned  to  such  term in
Section 7.12(a).

         "ENVIRONMENTAL RESERVE" means a reserve established by the Agent in its
sole discretion for the abatement or remediation of Hazardous Materials on or at
any of the Real Property Assets. The Agent may, in its discretion,  allocate all
or any portion of the Environmental  Reserve to the Domestic Borrowing Base, the
Canadian Borrowing Base and the Term Loan Borrowing Base.

         "EQUITY RIGHTS" means, with respect to any Person,  any  subscriptions,
options,  warrants,  commitments,  preemptive  rights or  agreements of any kind
(including any  stockholders'  or voting trust  agreements)  for the issuance or
sale of, any additional  shares of Capital Stock of any class, or partnership or
other ownership interests of any type in, such Person or securities  convertible
into any of the foregoing.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended,   and  any  successor  statute  of  similar  import,   and  regulations
thereunder, in each case, as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.

         "ERISA   AFFILIATE"  means  any  trade  or  business  (whether  or  not
incorporated)  that,  together with the Credit  Parties,  is treated as a single
employer  within the meaning of Sections  414(b),  (c),  (m) or (o) of the Code.
Notwithstanding  the  foregoing,  for  purposes  of any  liability  related to a
Multiemployer Plan under Title IV of ERISA, the term "ERISA Affiliate" means any
trade or business that, together with the Credit Parties, is treated as a single
employer within the meaning of Section 4001(b) of ERISA.

         "ERISA  EVENT" means (a) a  "reportable  event",  as defined in Section
4043 of  ERISA  or the  regulations  issued  thereunder  for  which  the  notice
requirement  has not been  waived  with  respect to any  Pension  Plan,  (b) the
existence  with  respect  to  any  Pension  Plan  of  an  "accumulated   funding
deficiency"  (as  defined in Section  412 of the Code or Section  302 of ERISA),
whether or not waived,  (c) the filing pursuant to Section 412(d) of the Code or
Section  303(d) of ERISA of an application  for a waiver of the minimum  funding
standard  with respect to any Pension  Plan,  (d) the  incurrence  by any Credit
Party or any ERISA  Affiliate  of any  liability  under  Title IV of ERISA  with


                                     - 20 -

<PAGE>

respect to the  termination  of any Pension Plan,  (e) the receipt by any Credit
Party or any ERISA Affiliate from the PBGC or plan  administrator  of any notice
relating to an intention to  terminate  any Pension Plan or Pension  Plans or to
appoint a trustee to  administer  any  Pension  Plan,  or (f) the receipt by any
Credit  Party or any  ERISA  Affiliate  of any  notice,  or the  receipt  by any
Multiemployer Plan from any Credit Party or any ERISA Affiliate of any notice of
Withdrawal  Liability or a  determination  that a  Multiemployer  Plan is, or is
expected to be, insolvent or in  reorganization,  within the meaning of Title IV
of ERISA.

         "EVENT OF  DEFAULT"  has the  meaning  assigned to such term in Section
9.1.

         "EXCESS  CASH FLOW"  means,  with respect to any Person for any period,
(a) Net Income of such Person and its Subsidiaries for such period, PLUS (b) all
non-cash items of such Person and its  Subsidiaries  deducted in determining Net
Income  for  such  period,  LESS (c) the sum of (i) all  non-cash  items of such
Person  and its  Subsidiaries  added to the  calculation  of Net Income for such
period,  (ii) all  scheduled  cash  principal  payments  on the Term  Loans  and
Revolving  Loans (only to the extent that the  Revolving  Credit  Commitment  is
permanently  reduced by the amount of such payments) made during such period and
all scheduled  prepayments  of other  Indebtedness  of such Person or any of its
Subsidiaries  during  such  period to the  extent  such  other  Indebtedness  is
permitted to be incurred, and such payments are permitted to be made, under this
Agreement and (iii) the cash portion of Capital Expenditures made by such Person
and its Subsidiaries during such period to the extent permitted to be made under
this Agreement.

         "EXCLUDED  TAXES"  means,  with respect to the Agent,  any Lender,  the
Issuing Lender or any other recipient of any payment to be made by or on account
of any Obligation hereunder, (a) income, net worth or franchise taxes imposed on
(or measured by) its net income or net worth by the United States of America, or
by the  jurisdiction  under the laws of which such  recipient is organized or in
which its  principal  office is located or, in the case of any Lender,  in which
its  lending  office is located  or in which it is taxable  solely on account of
some  connection  other than the  execution,  delivery  or  performance  of this
Agreement  or the  receipt of income  hereunder,  (b) any branch  profits  taxes
imposed by the United  States of America or any similar tax imposed by any other
jurisdiction  in which the  Borrower is located and (c) in the case of a Foreign
Lender,  any  withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign  Lender  becomes a party to this Agreement or is
attributable  to such  Foreign  Lender's  failure or  inability  to comply  with
subsection 2.11(e), except to the extent that such Foreign Lender's assignor (if
any) was entitled, at the time of assignment, to receive additional amounts from
the  Borrower  with  respect to such  withholding  tax  pursuant  to  subsection
2.11(a).

         "EXISTING  CREDIT  AGREEMENT" has the meaning  assigned to such term in
the Recital.

         "EXISTING  INDEBTEDNESS"  means (i)  Indebtedness of the Credit Parties
existing  as of the Closing  Date which was repaid in full with the  proceeds of
the  Loans  made by the  Lenders  and the  Tranche B Loans  (as  defined  in the


                                       21

<PAGE>

Existing Credit Agreement) on the Closing Date including  Indebtedness under the
Existing Credit Facility and (ii) Indebtedness of the Credit Parties existing as
of the Closing Date which is permitted to remain  outstanding  after the Closing
Date under Section 8.1 and is listed on SCHEDULE 8.1 hereto.

         "EXISTING  LETTERS OF CREDIT" means those certain  existing  letters of
credit set forth on SCHEDULE 1.7 hereto.

         "EXTRAORDINARY RECEIPTS" means any cash received by the Borrower or any
of its  Subsidiaries  not in the ordinary course of business (and not consisting
of  proceeds  described  in  subsections  2.8(b)(i),   (ii)  or  (iii)  hereof),
including,  without limitation,  (a) foreign,  United States, state or local tax
refunds, (b) pension plan reversions,  (c) proceeds of insurance, (d) judgments,
proceeds of settlements or other  consideration  of any kind in connection  with
any cause of action, (e) condemnation awards (and payments in lieu thereof), (f)
indemnity payments (g) any purchase price adjustment received in connection with
any purchase  agreement  and (h) proceeds  from notes payable to the Borrower or
such Subsidiary.

         "FASB" means Financial Accounting Standards Board.

         "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
(rounded  upwards,  if  necessary,  to the  next  1/100  of 1%) of the  rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged by Federal funds brokers,  as published on the next succeeding Business
Day by the  Federal  Reserve  Bank  of New  York,  or,  if  such  rate is not so
published for any day that is a Business Day, the average (rounded  upwards,  if
necessary,  to the  next  1/100 of 1%) of the  quotations  for such day for such
transactions  received  by  the  Agent  from  three  Federal  funds  brokers  of
recognized standing selected by it.

         "FEE  LETTER"  has the  meaning  assigned  to such  term in  subsection
2.9(a).

         "FIRST PRIORITY"  means,  with respect to any Lien created or purported
to be created in any Collateral hereunder or pursuant to any Loan Document, that
such Lien is the most senior Lien to which such Collateral, is subject.

         "FIXED CHARGE  COVERAGE  RATIO" means,  for any Reference  Period,  the
ratio of (a) (i)  EBITDA for such  Reference  Period  MINUS  (ii) the  aggregate
amount of all Capital  Expenditures during such Reference Period MINUS (iii) the
aggregate  amount paid,  or required to be paid (without  duplication),  in cash
(but in no event less than zero in the  aggregate)  in  respect  of the  current
portion of all  income  taxes for such  Reference  Period to (b) the sum for the
Borrower  and its  Subsidiaries  (determined  on a  consolidated  basis  without
duplication in accordance  with GAAP),  of (i) the aggregate  amount of Interest
Expense  for  such  Reference  Period  (net of the  sum of (A) the PIK  interest
accrued  during  such  Reference  Period in respect  of the  Tranche B Loans (as
defined in the Existing Credit Agreement), plus (B) the amortization during such
Reference  Period of financing costs incurred in connection with this Agreement,
the Existing Credit Agreement, the Tranche B Financing Agreements (as defined in
the Existing Credit Agreement),  the Senior  Subordinated Note Indenture and the
Senior Note  Indenture)  and (ii) the  aggregate  amount of regularly  scheduled


                                       22

<PAGE>

payments of principal in respect of Indebtedness  for borrowed money  (including
the principal component of any payments in respect of Capital Lease Obligations)
paid or required to be paid during such Reference Period.

         "FLEET" means Fleet Capital Corporation in its capacity as a Lender.

         "FOREIGN LC  DISBURSEMENT"  means a payment made by the Issuing  Lender
pursuant to a Foreign Letter of Credit, and shall include the Canadian Letter of
Credit.

         "FOREIGN  LC  EXPOSURE"  means,  at any  time,  the  sum of the  Dollar
Equivalent  amounts  of  (a)  100%  of  the  aggregate  undrawn  amount  of  all
outstanding standby and documentary Foreign Letters of Credit at such time, PLUS
(b) the aggregate amount of all Foreign LC Disbursements  that have not yet been
reimbursed by or on behalf of any Credit Party at such time.

         "FOREIGN LENDER" means any Lender that is organized under the laws of a
jurisdiction  other than that in which the Borrower is located.  For purposes of
this  definition,  the United  States of  America,  each State  thereof  and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "FOREIGN  LETTERS OF CREDIT" has the  meaning  assigned to such term in
subsection 2.4(a)(ii), and shall include the Canadian Letter of Credit.

         "FOREIGN OFFICE" means,  with respect to any Lender,  an office of such
Lender located outside of the United States of America.

         "FOREIGN  SUBSIDIARY"  means any  Subsidiary of the Borrower  organized
under the laws of any  jurisdiction  other than the United  States of America or
any State thereof.

         "GAAP" means generally  accepted  accounting  principles in effect from
time to time in the United States,  applied on a consistent basis, PROVIDED that
for the purpose of Section 8.10 hereof and the definitions used therein,  "GAAP"
shall mean  generally  accepted  accounting  principles in effect on the Closing
Date  and  consistent  with  those  used  in the  preparation  of the  financial
statements  of the Borrower and its  Subsidiaries,  PROVIDED,  further,  that if
there  occurs  after the  Closing  Date any  change in GAAP that  affects in any
respect the  calculation of any covenant  contained in Section 8.10 hereof,  the
Agent  and  the  Borrower  shall  negotiate  in  good  faith  amendments  to the
provisions of this  Agreement  that relate to the  calculation  of such covenant
with the  intent of having  the  respective  positions  of the  Lenders  and the
Borrower  after  such  change in GAAP  conform  as nearly as  possible  to their
respective  positions as of the Closing Date and, until any such amendments have
been agreed upon, the covenants in Section 8.10 hereof shall be calculated as if
no such change in GAAP has occurred.

         "GOVERNMENTAL  AUTHORITY"  means the government of the United States of
America,  Canada, any other nation or any political subdivision thereof, whether
federal,  provincial,  state or local, and any agency,  department,  commission,


                                       23

<PAGE>

board, bureau, authority, instrumentality,  regulatory body, court, central bank
or other entity exercising executive, legislative,  judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

         "GUARANTEE" means a guarantee,  an endorsement,  a contingent agreement
to purchase or to furnish funds for the payment or maintenance  of, or otherwise
to be or become  contingently liable under or with respect to, the Indebtedness,
other  obligations,  net worth,  working capital or earnings of any Person, or a
guarantee of the payment of dividends or other  distributions  upon the stock or
equity interests of any Person,  or an agreement to purchase,  sell or lease (as
lessee or lessor) property, products,  materials, supplies or services primarily
for the  purpose  of  enabling  a  debtor  to  make  payment  of  such  debtor's
obligations  or an agreement to assure a creditor  against loss,  and including,
without  limitation,  causing a bank or other  financial  institution to issue a
letter of credit or other similar  instrument for the benefit of another Person,
but excluding  endorsements  for collection or deposit in the ordinary course of
business.  The terms  "GUARANTEE" and  "GUARANTEED"  used as a verb shall have a
correlative meaning. The amount of any Guarantee shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligations in respect
of which such Guarantee is made or, if not stated or  determinable,  the maximum
reasonably  anticipated  liability in respect  thereof  (assuming such Person is
required to perform thereunder).

         "GUARANTOR"  means  (i)  the  Borrower,  (ii)  each  Subsidiary  of the
Borrower listed as a "Guarantor" on the signature  pages hereto,  and (iii) each
other  Person  which  becomes a Guarantor  hereunder  after the Closing  Date by
complying with the requirements of Section 7.15.

         "HAZARDOUS MATERIALS" means all explosive or radioactive  substances or
wastes  and all  hazardous  or toxic  substances,  wastes  or other  pollutants,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials,  polychlorinated  biphenyls,  radon gas, infectious or medical wastes
and all  other  substances  or  wastes of any  nature,  in each  case  regulated
pursuant to any Environmental Laws.

         "HEDGING  AGREEMENT"  means any  interest  rate  protection  agreement,
foreign currency  exchange  agreement,  commodity price protection  agreement or
other interest or currency exchange rate or commodity price hedging arrangement.

         "INDEBTEDNESS" means, with respect to any Person,  without duplication,
(a) all  indebtedness  and other  obligations of such Person for borrowed money;
(b) all  obligations  of such Person for the  deferred  purchase or  acquisition
price of  Property  or services  (other  than trade  payables  which are not for
borrowed  money) or other  accounts  payable  (including  accrued  expenses  and
deferred taxes)  incurred in the ordinary  course of such Person's  business and
not  outstanding for more than 90 days after the date such payable was created);
(c) all  obligations  of such Person  evidenced by bonds,  debentures,  notes or
other similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (d) all reimbursement, payment or
other  obligations  and  liabilities of such Person created or arising under any
conditional  sales or other title  retention  agreement with respect to property


                                       24

<PAGE>

used and/or acquired by such Person,  even though the rights and remedies of the
lessor,  seller and/or lender  thereunder may be limited to repossession or sale
of such property;  (e) all Capital Lease Obligations or Synthetic Leases of such
Person;  (f) all obligations and liabilities,  contingent or otherwise,  of such
Person,  in respect of letters  of credit,  acceptances  or similar  instruments
issued or accepted by banks and other financial  institutions for the account of
such  Person;  (g)  all  obligations  and  liabilities,  calculated  on a  basis
satisfactory  to the Agent and in  accordance  with accepted  practice,  of such
Person in respect of Hedging  Agreements;  (h) all Contingent  Obligations;  (i)
liabilities  incurred  under  Title IV of ERISA with  respect to any plan (other
than a  Multiemployer  Plan)  covered  by Title IV of ERISA and  maintained  for
employees  of  such  Person  or any  of its  ERISA  Affiliates;  (j)  Withdrawal
Liability  incurred  under ERISA by such  Person or any of its ERISA  Affiliates
with respect to any Multiemployer  Plan; and (k) all obligations  referred to in
clauses (a) through (j) of this  definition of another Person secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured by) a Lien upon  property  owned by such Person,  even
though  such  Person has not  assumed or become  liable for the  payment of such
Indebtedness.  The  Indebtedness of any Person shall include the Indebtedness of
any partnership of or joint venture in which such Person is a general partner or
a joint venturer.

         "INDEMNIFIED  TAXES" means all Taxes other than (a) Excluded  Taxes and
Other Taxes and (b) amounts  constituting  penalties  or interest  imposed  with
respect to Excluded Taxes or Other Taxes.

         "INTERCREDITOR  AGREEMENT" means the Intercreditor Agreement,  dated as
of July 22, 2003,  among the Borrower,  the Agent and the Senior Note  Indenture
Trustee.

         "INTERCOMPANY  INDEBTEDNESS"  has the meaning  assigned to such term in
Section 11.9.

         "INTEREST EXPENSE" means, for any period, the sum, without duplication,
for the Borrower and its  Subsidiaries  (determined on a  consolidated  basis in
accordance  with  GAAP),  of the  following:  (a) all  interest  in  respect  of
Indebtedness  accrued or paid during such period  (whether or not actually  paid
during such period),  PLUS (b) the net amounts payable (or MINUS the net amounts
receivable) in respect of Hedging Agreements accrued during such period (whether
or not actually paid or received during such period) excluding  reimbursement of
legal fees and other similar  transaction costs and excluding  payments required
by  reason of the  early  termination  of  Hedging  Agreements  in effect on the
Closing Date, PLUS (c) all fees,  including  letter of credit fees and expenses,
(but excluding  reimbursement of legal fees),  incurred  hereunder and under the
Tranche B Financing Agreements (as defined in the Existing Credit Agreement) and
the Senior Note Indenture during such period.

         "INTEREST  PAYMENT DATE" means (a) as to any Base Rate Loan,  the first
day of each calendar month with respect to interest accrued during the preceding
calendar month with respect to such Base Rate Loan; and (b) as to any LIBOR Rate


                                       25

<PAGE>

Loan, the earlier of (i) the last day of the Interest Period for such LIBOR Rate
Loan and (ii) the first day of each  calendar  month with  respect  to  interest
accrued during the preceding calendar month.

         "INTEREST  PERIOD" means, with respect to each Revolving Loan or all or
any relevant portion of the Term Loan, (a) initially,  the period  commencing on
the Drawdown  Date of such Loan and ending on the last day of one of the periods
set forth  below,  as  selected  by the  Borrower  in an  Advance  Request or as
otherwise  required by the terms of this  Agreement  (i) for any Base Rate Loan,
the last day of the calendar  month;  and (ii) for any LIBOR Rate Loan, 1, 2, 3,
or 6 months;  and (b) thereafter,  each period commencing on the last day of the
next preceding  Interest Period applicable to such Revolving Loan or all or such
portion  of the Term Loan and ending on the last day of one of the  periods  set
forth above, as selected by the Borrower in a Conversion Request;  PROVIDED that
all of the foregoing  provisions relating to Interest Periods are subject to the
following:

                  (a) if any  Interest  Period with respect to a LIBOR Rate Loan
         would  otherwise  end on a day that is not a LIBOR  Business  Day, that
         Interest Period shall be extended to the next succeeding LIBOR Business
         Day unless the  result of such  extension  would be to carry such LIBOR
         Interest Period into another  calendar month, in which event such LIBOR
         Interest Period shall end on the  immediately  preceding LIBOR Business
         Day;

                  (b) if any  Interest  Period with  respect to a Base Rate Loan
         would end on a day that is not a Business  Day,  that  Interest  Period
         shall end on the next succeeding Business Day;

                  (c) if the  Borrower  shall fail to give notice as provided in
         Section  2.3,  the  Borrower  shall  be  deemed  to  have  requested  a
         conversion of the affected  LIBOR Rate Loan to a Base Rate Loan and the
         continuance  of all Base Rate  Loans as Base Rate Loans on the last day
         of the then current Interest Period with respect thereto;

                  (d) any Interest  Period  relating to any LIBOR Rate Loan that
         begins on the last LIBOR  Business Day of a calendar month (or on a day
         for which there is no  numerically  corresponding  day in the  calendar
         month at the end of such LIBOR  Interest  Period) shall end on the last
         LIBOR  Business Day of a calendar  month;  and (e) any Interest  Period
         that would  otherwise  extend beyond the Maturity Date shall end on the
         Maturity Date.

         "INVENTORY  ACCOUNTING  VARIANCE RESERVE" means a reserve in the amount
of 5.5% of the total value of all  Eligible  Inventory  of the  Borrower and its
Subsidiaries;  PROVIDED however, the Inventory Accounting Variance Reserve shall
be equal to zero if, and for so long as, the  Borrower  can  demonstrate  to the
satisfaction of the Agent that the variance  between actual inventory values and


                                       26

<PAGE>

general ledger inventory  values of the Borrower and its  Subsidiaries  does not
exceed 3.0% of the total value of all Eligible Inventory of the Borrower and its
Subsidiaries.

         "INVESTMENT"  means, for any Person:  (a) the acquisition  (whether for
cash,  Property,  services or securities or otherwise) of Capital Stock,  bonds,
notes,  debentures,  partnership,  limited  liability company or other ownership
interests or other  securities  of any other Person or any agreement to make any
such acquisition (including, without limitation, any "short sale" or any sale of
any  securities  at a time when  such  securities  are not  owned by the  Person
entering into such short sale);  (b) the making of any deposit with, or advance,
loan or other  extension of credit to, any other Person  (including the purchase
of Property  from  another  Person  subject to an  understanding  or  agreement,
contingent or otherwise,  to resell such Property to such Person,  but excluding
any such advance, loan or extension of credit representing the purchase price of
inventory or supplies  sold by such Person in the  ordinary  course of business,
PROVIDED  that in no  event  shall  the  term of any such  inventory  or  supply
advance,  loan or extension of credit exceed 180 days); or (c) the entering into
of  any  Guarantee  of,  or  other   contingent   obligation  with  respect  to,
Indebtedness  or other  liability of any other Person and (without  duplication)
any amount committed to be advanced, lent or extended to such Person.

         "IP  COLLATERAL"  means,  collectively,   the  Collateral  relating  to
intellectual  property rights of the Credit Parties hereunder or under any other
Loan Document.

         "ISSUING  LENDER" means Fleet National Bank, an affiliate of the Agent,
in its capacity as an issuer of Letters of Credit hereunder.

         "LANDLORD'S  WAIVER AND CONSENT"  means,  with respect to any Leasehold
Property,  a letter,  certificate or other instrument in writing from the lessor
under  the  related  lease,  in the  form  approved  by the  Agent  in its  sole
discretion.

         "LC DISBURSEMENT"  means any Domestic LC Disbursement or any Foreign LC
Disbursement.

         "LC  GUARANTY"  means a guaranty  or  indemnity  in form and  substance
satisfactory  to the Agent and the  Issuing  Lender  pursuant to which the Agent
shall  guarantee  the payment or  performance  by the Borrower and each Canadian
Borrower of its reimbursement obligations in respect of Letters of Credit.

         "LEASEHOLD  PROPERTY" means any leasehold  interest of any Credit Party
as lessee  under  any  lease of real  property,  other  than any such  leasehold
interest designated from time to time by the Agent in its sole discretion as not
being  required  to be  included  in the  Collateral  and not being of  material
importance to the business or operations of the Credit Parties.

         "LENDERS" means the Persons listed on SCHEDULE 2.1 (including,  without
limitation,  the Issuing  Lender) and any other  Person that shall have become a
party  hereto  pursuant to an  Assignment  and  Acceptance,  other than any such
Person  that  ceases  to  be a  party  hereto  pursuant  to  an  Assignment  and
Acceptance.


                                       27

<PAGE>


         "LETTER  OF  CREDIT"  means any  Domestic  Letter of Credit or  Foreign
Letter of Credit issued  hereunder  and includes,  except as expressly set forth
herein, the Canadian Letter of Credit.

         "LIBOR  LENDING  OFFICE"  means  initially,  the office of such  Lender
designated as such by notice to the Borrower;  thereafter,  such other office of
such Lender, if any, that shall be making or maintaining LIBOR Rate Loans.

         "LIBOR  RATE" means,  for any  Interest  Period with respect to a LIBOR
Rate Loan, the rate of interest equal to (i) the rate determined by the Agent at
which  Dollar  deposits  for such LIBOR  Interest  Period are  offered  based on
information  presented on Telerate Page 3750 as of 11:00 a.m. London time on the
second LIBOR Business Day prior to the first day of such LIBOR Interest  Period,
divided by (ii) a number equal to 1.00 minus the  Eurocurrency  Reserve Rate. If
the  rate  described  above  does  not  appear  on the  Telerate  System  on any
applicable  interest  determination  date,  the  LIBOR  Rate  shall  be the rate
(rounded  upward,  if  necessary,  to the  nearest one  hundred-thousandth  of a
percentage point),  determined on the basis of the offered rates for deposits in
U.S.  Dollars for a period of time  comparable to such LIBOR Rate Loan which are
offered by four  major  banks in the London  interbank  market at  approximately
11:00 a.m.  London time, on the second LIBOR Business Day prior to the first day
of such Interest Period as selected by the Agent. The principal London office of
each of the four major  London banks will be requested to provide a quotation of
its Dollar deposit  offered rate. If at least two such  quotations are provided,
the rate for that date will be the arithmetic mean of the  quotations.  If fewer
than two  quotations  are provided as requested,  the rate for that date will be
determined on the basis of the rates quoted for loans in U.S. Dollars to leading
European banks for a period of time  comparable to such Interest  Period offered
by major banks in New York City at approximately  11:00 a.m. New York City time,
on the second LIBOR Business Day prior to the first day of such Interest Period.
In the event that the Agent is unable to obtain any such  quotation  as provided
above,  it will be  considered  that  LIBOR Rate  pursuant  to a LIBOR Rate Loan
cannot be determined.

         "LIBOR RATE LOANS" means Loans bearing interest calculated by reference
to the LIBOR Rate.

         "LIEN" means any mortgage,  deed of trust,  pledge,  lien (statutory or
otherwise),  security  interest,  hypothecation,  charge or other encumbrance or
security  or  preferential  arrangement  of  any  nature,   including,   without
limitation,  any conditional  sale or title retention  arrangement,  any capital
lease and any assignment, deposit arrangement or financing lease intended as, or
having the same effect as any of the foregoing.

         "LOAN DOCUMENTS" means this Agreement,  the Revolving Credit Notes, the
Term  Notes,  the  Collateral  Documents,  the Fee  Letter,  the  Canadian  Loan
Documents, the LC Guaranty, the Intercreditor Agreement and other instruments or
documents  delivered  or to be  delivered  from  time to time  pursuant  to this
Agreement,  as the same may be  supplemented  and  amended  from time to time in
accordance with their respective terms.


                                       28

<PAGE>


         "LOANS" means the Revolving Loans and the Term Loan.

         "LOCKBOX" has the meaning assigned to such term in subsection 4.3(a).

         "LOCKBOX  AGREEMENT"  means,  with respect to any Lockbox of the Credit
Parties,  an  agreement  in  accordance  with  subsection  4.3(b),  in form  and
substance  satisfactory  to the  Agent,  executed  and  delivered  by the Credit
Parties, the depository  institution at which such Lockbox is maintained and the
Agent on the Closing Date, as such  agreement  may be amended,  supplemented  or
otherwise modified from time to time.

         "MA UCC" means the  Uniform  Commercial  Code as in effect from time to
time in the Commonwealth of Massachusetts.

         "MATERIAL ADVERSE EFFECT" means a material adverse effect on any of (a)
the operations, business, assets, properties, condition (financial or otherwise)
or  prospects of the Borrower or the Credit  Parties  taken as a whole,  (b) the
ability of any Credit Party to pay or perform any of its obligations  under this
Agreement or the other Loan Documents to which it is a party,  (c) the legality,
validity or enforceability of this Agreement or any other Loan Document, (d) the
rights and remedies of the Agent or any Lender under this Agreement or any other
Loan Document, or (e) the validity, perfection or priority of a Lien in favor of
the  Agent for the  benefit  of the  Lenders  on any of the  Collateral  with an
aggregate fair market value in excess of $100,000.

         "MATERIAL  INDEBTEDNESS"  means  Indebtedness  (other than the Loans or
Letters of Credit), including, without limitation, obligations in respect of one
or  more  Hedging  Agreements,   in  an  aggregate  principal  amount  exceeding
$1,000,000.  For purposes of determining Material  Indebtedness,  the "principal
amount" of the  obligations  of any Person in respect of a Hedging  Agreement at
any time shall be the maximum  aggregate  amount  (giving  effect to any netting
agreements) that such Person would be required to pay if such Hedging  Agreement
were terminated at such time.

         "MATERIAL  LEASEHOLD  PROPERTY" means a Leasehold  Property  reasonably
determined  by the Agent to be of material  value as  Collateral  or of material
importance to the operations of the Credit Parties and as to which the aggregate
amount of all rents payable during any fiscal year exceeds $100,000.

         "MATERIAL  OWNED  PROPERTY" means any real property owned by any Credit
Party that is  reasonably  determined  by the Agent to be of  material  value as
Collateral or of material importance to the operations of the Credit Parties.

         "MATERIAL RENTAL  OBLIGATIONS"  means obligations of the Credit Parties
to pay rent under any one or more  operating  leases with respect to any real or
personal  property that is material to the business of the Credit Parties and as
to which the  aggregate  amount of all rents  payable  during  any  fiscal  year
exceeds $100,000.

         "MATURITY DATE" means March 31, 2007.


                                       29

<PAGE>

         "MORTGAGED  PROPERTY" means, at any time of determination,  any and all
real  property  owned or leased by the  Credit  Parties  that are  subject  to a
Mortgage  in favor of the Agent for the  benefit of the  Lenders  and the Agent,
including without limitation the Properties listed on SCHEDULE 1.1.

         "MORTGAGES"  means,  collectively,  the  several  security  instruments
(whether  designated  as a deed of  trust  or a  mortgage,  leasehold  mortgage,
assignment of leases and rents or by any similar  title)  executed and delivered
by any Credit  Party,  in such form as may be  approved by the Agent in its sole
and  reasonable  discretion,  in each case with such  changes  thereto as may be
recommended by the Agent's local counsel based on local laws or customary  local
practices,  with respect to the Real Property Assets owned or leased by a Credit
Party,  in each case as such  security  instrument  or amendment may be amended,
supplemented or otherwise modified from time to time.

         "MULTIEMPLOYER  PLAN" means a multiemployer  plan as defined in Section
4001(a)(3) of ERISA.

         "NET CASH PAYMENTS" means,

                  (a) with respect to any Casualty Event,  the aggregate  amount
         of  cash   proceeds  of  insurance,   condemnation   awards  and  other
         compensation  received by the  Borrower or any of its  Subsidiaries  in
         respect of such Casualty Event net of (i) reasonable  expenses incurred
         by the Borrower or any of its Subsidiaries in connection  therewith and
         (ii)  contractually  required  repayments of Indebtedness to the extent
         secured by any senior Lien  permitted by Section 8.2 on any asset,  and
         (iii) any income and transfer  taxes  payable by the Borrower or any of
         its Subsidiaries in respect of such Casualty Event;

                  (b) with respect to any  Disposition,  the aggregate amount of
         all cash payments  received by the Borrower or any of its  Subsidiaries
         directly or indirectly in connection with such Disposition,  whether at
         the time of such Disposition or after such  Disposition  under deferred
         payment  arrangements  or  Investments  entered  into  or  received  in
         connection with such  Disposition,  net of (i) the amount of any legal,
         title, transfer and recording tax expenses,  commissions and other fees
         and  expenses  payable by the  Borrower or any of its  Subsidiaries  in
         connection therewith, (ii) any Federal, state and local income or other
         Taxes  payable by the Borrower or any of its  Subsidiaries  as a result
         thereof,  and  (iii)  any  repayments  by  the  Borrower  or any of its
         Subsidiaries of  Indebtedness  to the extent that such  Indebtedness is
         secured by any senior Lien  permitted  by Section 8.2 on any asset that
         is the subject of such  Disposition and the transferee of (or holder of
         a Lien on) such property requires that such Indebtedness be repaid as a
         condition to the purchase of such property,  and (iv) any repayments by
         the Borrower or any of its Subsidiaries to minority stockholders if and
         to the extent permitted hereby; and


                                       30

<PAGE>

                  (c) with respect to any incurrence of Indebtedness or offering
         of Capital Stock, the aggregate amount of all cash proceeds received by
         the  Borrower  or any of its  Subsidiaries  therefrom  less all  legal,
         underwriting  and similar  fees and  expenses  incurred  in  connection
         therewith;

         in each case of clause (a), (b) and (c) to the extent,  but only to the
         extent,  that the amounts so deducted are (x) actually paid to a Person
         that, except in the case of reasonable  out-of-pocket  expenses, is not
         an Affiliate of such Person or any of its Subsidiaries and (y) properly
         attributable  to such  transaction  or to the asset that is the subject
         thereof.

         "NET INCOME" means, with respect to any Person for any period,  the net
income (loss) of such Person and its Subsidiaries for such period, determined on
a  consolidated  basis and in  accordance  with  GAAP,  but  excluding  from the
determination of Net Income (without  duplication) (a) any  extraordinary or non
recurring   gains  or  losses  or  gains  or  losses  from   Dispositions,   (b)
restructuring  charges, (c) effects of discontinued  operations and (d) interest
income (excluding interest income from CM Insurance Company, Inc.).

         "NET WORTH" means, as of any date of determination  thereof, the sum of
Total Assets MINUS (a) Total Liabilities,  PLUS (b) non-cash goodwill impairment
charges  recorded  after the Closing Date in accordance  with FASB Statement No.
142,  and MINUS (c) the  balance in the  Accumulated  Other  Comprehensive  Gain
(Loss) equity account.

         "NON-CASH CHARGES" means, with respect to any calculation of net income
for any period, all non-cash  extraordinary  losses and charges deducted in such
calculation  (as  determined in accordance  with GAAP  (excluding  inventory and
account receiveable write-downs and charge-offs), including, without limitation,
non-cash  recognition  of unrealized  declines in the market value of marketable
securities  recorded in accordance  with FASB Statement No. 115,  non-cash asset
impairment  charges  recorded in accordance with FASB Statement No. 142 and FASB
Statement No. 144, and non-cash restructuring charges.

         "OBLIGATIONS"  means all  indebtedness,  obligations and liabilities of
any of the Borrower and its  Subsidiaries to any of the Lenders,  the Agent, the
Cash  Management  Bank, and the Issuing Lender,  individually  or  collectively,
existing on the Closing Date or arising thereafter, direct or indirect, joint or
several,   absolute  or   contingent,   matured  or  unmatured,   liquidated  or
unliquidated,  secured or  unsecured,  arising by contract,  operation of law or
otherwise,  arising or incurred  under this  Agreement  or any of the other Loan
Documents or in respect of any of the Loans, the Notes, the Letters of Credit or
other  instruments  at any  time  evidencing  any  thereof,  including,  without
limitation,  the aggregate  outstanding principal balance of and all interest on
the Loans made by the Lenders to the Borrower  (including any interest  accruing
after the  commencement  of any  proceeding by or against the Borrower under the
federal  bankruptcy  laws,  as  now  or  hereafter  constituted,  or  any  other
applicable federal or state bankruptcy, insolvency or other similar law, and any
other  interest  that  would  have  accrued  but  for the  commencement  of such
proceeding,  whether or not any such interest is allowed as a claim  enforceable


                                       31

<PAGE>

against the Borrower in any such proceeding),  and all reimbursement obligations
in respect of Letters  of  Credit,  (ii) all LC  Disbursements,  (iii) all fees,
costs,  charges,  expenses and other  obligations from time to time owing to the
Lenders,  the Issuing  Lender,  the Cash  Management  Bank, the Agent, or any of
their Affiliates by the Credit Parties or any of their Subsidiaries hereunder or
under any other Loan Document, and (iv) all overdraft obligations,  fees, costs,
charges,  expenses and other obligations from time to time owing to the Lenders,
the  Issuing  Lender,  the Cash  Management  Bank,  the  Agent,  or any of their
Affiliates by the Credit Parties or any of their  Subsidiaries in respect of any
Hedging  Agreement,  cash  management  agreement  (including ACH  transactions),
operating or deposit  account,  or other banking  product from time to time made
available to the Credit Parties or any of their  Subsidiaries by the Agent,  the
Issuing  Lender,  the  Cash  Management  Bank  or any  Lender  or  any of  their
Affiliates;  PROVIDED  that,  with respect to any such amounts under this clause
(iv) owing to a Lender or any of its Affiliates  (other than the Cash Management
Bank,  the Agent and their  Affiliates),  the Agent  shall  have given its prior
written  approval to the  inclusion  of such amounts as  Obligations  hereunder.
Notwithstanding  the foregoing,  it is expressly  agreed that the Obligations of
the Canadian  Borrowers  hereunder and under the other Loan  Documents  shall be
limited to all indebtedness,  obligations and liabilities arising or incurred in
respect of the  Canadian  Facility,  the  Canadian  Letter of Credit (and all LC
Disbursements in respect thereof), and all overdraft  obligations,  fees, costs,
charges,  expenses and other obligations with respect to the Canadian  Facility,
and the Canadian Letter of Credit,  from time to time owing to the Lenders,  the
Issuing Lender, or the Agent.

         "OPTIONAL  CURRENCY"  means any of the  following  currencies:  Mexican
peso,  Canadian dollars,  Danish crowns,  or the "Euro",  Japanese yen or United
Kingdom pounds sterling.

         "ORIGINAL  CREDIT  AGREEMENT" has the meaning  assigned to such term in
the Recitals.

         "OTHER TAXES" means any and all present or future stamp or  documentary
taxes or any other excise or property  taxes,  charges or similar levies arising
from any payment made hereunder or from the  execution,  delivery or enforcement
of, or otherwise with respect to, this  Agreement and the other Loan  Documents,
PROVIDED that there shall be excluded from "Other Taxes" all Excluded Taxes.

         "PATENT AGREEMENT" means any Patent Collateral  Assignment and Security
Agreement,  made by any Credit Party in favor of the Agent and, in substantially
the form of EXHIBIT H or in form and substance acceptable to the Agent.

         "PATENTS"  means all  patents  issued  or  assigned  to and all  patent
applications  made by the Credit  Parties and, to the extent that the grant of a
security interest does not cause a breach or termination  thereof, all exclusive
and nonexclusive  licenses to the Credit Parties from third parties or rights to
use patents owned by such third  parties,  including,  without  limitation,  the
patents,  patent applications and licenses listed on SCHEDULE 5.5 hereto,  along
with any and all (a) inventions and improvements  described and claimed therein,
(b) reissues,  divisions,  continuations,  extensions and  continuations-in-part


                                       32

<PAGE>

thereof, (c) income,  royalties,  damages, claims and payments now and hereafter
due  and/or  payable  under  and  with  respect  thereto,   including,   without
limitation,  damages and payments for past or future infringements  thereof, (d)
rights to sue for past, present and future  infringements  thereof,  and (e) any
other rights corresponding thereto throughout the world.

         "PBGC" means the Pension Benefit Guaranty  Corporation or any successor
thereto.

         "PENSION  PLAN" means any Plan that is a defined  benefit  pension plan
subject to the  provisions  of Title IV of ERISA or  Section  412 of the Code or
Section  302 of ERISA,  and in respect  of which any  Credit  Party or any ERISA
Affiliate  is (or, if such plan were  terminated,  would under  Section  4069 of
ERISA be deemed to be) an  "employer"  as defined  in Section  3(5) of ERISA and
with respect to any Canadian Borrower, all pension and retirement plans relating
to  the  current  and  former  employees  of  such  Canadian  Borrower,  whether
registered or unregistered, funded or unfunded and written or oral.

         "PERMITTED  ASSET SALE  PREPAYMENT"  means a  prepayment  of the Senior
Notes  or  the  Senior   Subordinated  Notes  from  the  Net  Cash  Payments  of
Dispositions of Specified Assets, in an aggregate  cumulative  amount,  from and
after  the  Second  Amendment  and  Restatement  Effective  Date,  not to exceed
$35,000,000,  PROVIDED  THAT (A)  such  prepayments  are made  from the Net Cash
Payments of a Disposition  of Specified  Assets  pursuant to Section  8.4(b)(vi)
within one year of the date of such  Disposition,  (B) at the time of the making
of such prepayment,  the Credit Parties project that they shall be in compliance
with  each  of the  financial  covenants  set  forth  in  Section  8.10  for two
consecutive quarters immediately following the date of such proposed prepayment,
calculated  on a pro forma basis giving effect to the making of such payment and
shall,  not more than  thirty (30) days prior to making  such  prepayment,  have
provided the Agent with a Compliance Certificate  demonstrating such compliance,
(C) at the time of the  making  of such  prepayment,  the  amount  of Term  Loan
Borrowing Base shall be at least two hundred percent (200%) of the amount of the
Term Loan, (D) Domestic Excess Availability, calculated as at the end of each of
the three  months  prior to the making of such  prepayment  on a pro forma basis
giving  effect  to  such  prepayment  and all  accrued  interest  on the  Senior
Subordinated  Notes and the Senior Notes, shall be not less than $15,000,000 and
the Agent  shall,  not more than  thirty  (30) days  prior to the making of such
prepayment,  have received a Borrowing Base Certificate  demonstrating same; (E)
the Agent shall be satisfied  that each of the foregoing  calculations  are true
and correct and shall be satisfied that the minimum Domestic Excess Availability
thresholds  required have been and will be satisfied assuming the Credit Parties
are honoring accounts payable in accordance with their usual and customary terms
and (F)  immediately  after  the  making  of such  prepayment,  Domestic  Excess
Availability,  giving  effect  to  such  prepayment,  shall  be  not  less  than
$15,000,000.

         "PERMITTED INVESTMENTS" means:

         (a) direct obligations of, or obligations the principal of and interest
on which are unconditionally  guaranteed by, the United States of America (or by


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<PAGE>

any agency thereof to the extent such  obligations  are backed by the full faith
and credit of the United States of America),  in each case  maturing  within one
year from the date of acquisition thereof;

         (b)  investments in commercial  paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit  rating  obtainable  from  Standard  and Poor's  Ratings  Service or from
Moody's Investors Service, Inc.;

         (c) investments in certificates  of deposit,  banker's  acceptances and
time  deposits  maturing  within 180 days from the date of  acquisition  thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic  office of any commercial  bank organized  under the
laws of the United  States of America or any State  thereof which has a combined
capital and surplus and undivided profits of not less than $250,000,000;

         (d) fully collateralized  repurchase agreements with a term of not more
than 30 days for securities  described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;

         (e) advances,  loans and extensions of credit to any director,  officer
or employee of the Credit Parties,  if the aggregate  outstanding  amount of all
such advances,  loans and extensions of credit (excluding travel advances in the
ordinary  course  of  business)  does  not  at any  time  exceed  $500,000;

         (f)  investments  in money  market  mutual  funds that are rated AAA by
Standard & Poor's Rating Service; and

         (g) stocks, bonds, funds, covered call options,  cash equivalents,  and
cash included in the  portfolio of  Investments  owned by CM Insurance  Company,
Inc. under the  investment  objective of "Aggressive  Growth/  Moderate  Income"
using the following asset guidelines: cash, 0% to 20%; bonds, 0% to 30%; stocks,
70% to 90%; other, 0% to 20%; in each case,  invested at the discretion of Fleet
Investment Advisors, Inc. and Gold-K Securities, Inc.

         "PERMITTED LIENS" has the meaning set forth in Section 8.2.

         "PERSON"  means any  natural  person,  corporation,  limited  liability
company, trust, joint venture, association,  joint-stock company, unincorporated
organization, partnership, Governmental Authority or other enterprise or entity.

         "PLAN"  means any  employee  benefit plan within the meaning of Section
3(3) of ERISA in which any Credit Party or any ERISA  Affiliate is an "employer"
as defined in Section 3(5) of ERISA or any employee benefit plan established and
maintained  by, or for the benefit of such  Credit  Party for the benefit of its
respective  employee,  including,  but  not  limited  to,  any  Pension  Plan or
Multiemployer Plan.


                                       34

<PAGE>

         "PLEDGE  AGREEMENT" means any pledge agreement,  between a Credit Party
and the Agent, in  substantially  the form of EXHIBIT F or in form and substance
satisfactory to the Agent.

         "POST-DEFAULT  RATE"  means a rate of  interest  per annum equal to the
Base Rate PLUS the Applicable Margin PLUS two percent (2%).

         "PRIOR  CLAIMS" means all Liens created by applicable  law (in contrast
with Liens  voluntarily  granted)  which rank or are capable of ranking prior or
pari passu with any Agent's Lien (or the  applicable  equivalent  of such Liens)
against all or part of the Collateral of the Canadian  Borrowers,  including for
amounts owing for vacation pay, employee deductions and contributions, goods and
services  taxes,   sales  taxes,   realty  taxes,   business   taxes,   workers'
compensation, pension plan or fund obligations and overdue rents (to the extent,
in the case of rents, that such rents are not already the subject of a reserve).

         "PROPERTY"  means  any  interest  of any kind in  property  or  assets,
whether real, personal or mixed, and whether tangible or intangible.

         "PROPRIETARY   RIGHTS"  has  the  meaning  assigned  to  such  term  in
subsection 5.5(b).

         "PTO"  means the  United  States  Patent  and  Trademark  Office or any
successor or substitute office in which filings are necessary or, in the opinion
of  the  Agent,  desirable  in  order  to  create  or  perfect  Liens  on any IP
Collateral.

         "REAL PROPERTY ASSET" means, at any time of determination,  any and all
real property owned or leased by the Credit Parties.

         "REFERENCE  PERIOD" means, as of any date of determination,  the period
of four (4)  consecutive  fiscal  quarters of the Borrower and its  Subsidiaries
ending on such  date,  or if such  date is not a fiscal  quarter  end date,  the
period of four (4) consecutive fiscal quarters most recently ended (in each case
treated as a single accounting period).

         "REGISTER" has the meaning assigned to such term in Section 11.4.

         "REGISTERED  PROPRIETARY  RIGHTS" has the meaning assigned to such term
in subsection 5.5(c).

         "REIMBURSEMENT  OBLIGATION"  has the  meaning  assigned to such term in
subsection 2.4(e).

         "RELATED  PARTIES" means,  with respect to any specified  Person,  such
Person's Affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's Affiliates.

         "RELEASE"  means any spilling,  leaking,  pumping,  pouring,  emitting,
emptying,  discharging,   injecting,  escaping,  leaching,  seeping,  migrating,
dumping or disposing of any Hazardous  Material  (including  the  abandonment or
discarding of barrels,  containers and other closed  receptacles  containing any


                                       35

<PAGE>

Hazardous Material) into the indoor or outdoor environment,  including,  without
limitation,  the movement of Hazardous  Materials through or in the ambient air,
soil, surface or ground water, or property.

         "REMEDIAL  ACTION"  means all  actions  taken to (a) clean up,  remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous  Materials  in the  indoor or  outdoor  environment;  (b)  prevent  or
minimize a Release or threatened  Release of Hazardous  Materials so they do not
migrate or endanger or  threaten  to  endanger  public  health or welfare or the
indoor  or  outdoor   environment;   (c)   perform   pre-remedial   studies  and
investigations and post-remedial  operation and maintenance  activities;  or (d)
perform any other actions authorized by 42 U.S.C. ss. 9601.

         "REQUIRED  LENDERS"  means,  as of any date, any combination of Lenders
the sum of whose aggregate  Revolving  Credit  Commitments (or, if the Revolving
Credit Commitments have been terminated,  whose outstanding  Revolving Loans and
risk associated with  outstanding  Letters of Credit) and outstanding  principal
amounts under the Term Loan constitute at least  fifty-one  percent (51%) of the
sum of the Total  Revolving  Credit  Commitment  (or,  if the  Revolving  Credit
Commitments  have been  terminated,  the total  outstanding  Revolving Loans and
Letters of Credit) and the total  outstanding  principal  amounts under the Term
Loan.

         "RESET  DATE"  has  the  meaning  assigned  to  such  term  in  Section
2.7(b)(ii).

         "RESTRICTED   JUNIOR   PAYMENT"   means  (i)  any   dividend  or  other
distribution, direct or indirect, on account of any shares of any class of stock
of, or other equity interest in, any Credit Party or any of its Subsidiaries now
or hereafter outstanding, except a dividend payable solely in shares of stock or
other equity interests, (ii) any redemption, retirement, sinking fund or similar
payment,  purchase or other  acquisition for value,  direct or indirect,  of any
shares of any class of stock of, or other  equity  interest in, any Credit Party
or any of its Subsidiaries now or hereafter outstanding,  (iii) any payment made
to retire, or to obtain the surrender of, any outstanding  warrants,  options or
other  rights to  acquire  shares  of any  class of stock  of,  or other  equity
interest  in, any Credit Party or any of its  Subsidiaries,  (iv) any payment or
prepayment  of principal  of,  premium,  if any, or interest  on, or  redemption
purchase,  retirement,  defeasance  (including  economic  or legal  defeasance),
sinking fund or similar  payment with respect to the Senior  Subordinated  Notes
and/or any intercompany Indebtedness owing by the Borrower or any Guarantor, and
(v) any  payment  made  to any  Affiliates  of any  Credit  Party  or any of its
Subsidiaries  in respect of  management,  consulting or other  similar  services
provided to any Credit Party or any of its Subsidiaries.

         "RESTRICTIVE  AGREEMENTS"  has the  meaning  assigned  to such  term in
subsection 5.13(b).

         "REVOLVING  CREDIT  AVAILABILITY  PERIOD"  means  the  period  from and
including the Closing Date to but excluding the earlier of (a) the Maturity Date


                                       36

<PAGE>

and  (b)  the  date of  termination  of the  Revolving  Credit  Commitments,  as
terminated by the Borrower  pursuant to Section 2.6 or by the Agent  pursuant to
Section 9.1.

         "REVOLVING CREDIT  COMMITMENT"  means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to acquire  participations
in Letters of Credit hereunder,  as such commitment may be (a) reduced from time
to time  pursuant to Sections 2.6 and 2.8, or reduced or increased  from time to
time pursuant to assignments by or to such Lender  pursuant to Section 11.4. The
initial maximum amount of each Lender's Revolving Credit Commitment is set forth
on SCHEDULE  2.1, or in the  Assignment  and  Acceptance  pursuant to which such
Lender shall have assumed its Revolving Credit Commitment, as applicable.

         "REVOLVING  CREDIT COMMITMENT  PERCENTAGE"  means, with respect to each
Lender,  the  percentage  set forth on  SCHEDULE  2.1  hereto  as such  Lender's
percentage of the Total Revolving Credit Commitment.

         "REVOLVING  CREDIT EXPOSURE"  means,  with respect to any Lender at any
time, the sum of the  outstanding  principal  amount of such Lender's  Revolving
Loans at such  time and such  Lender's  Applicable  Percentage  of the  Total LC
Exposure at such time.

         "REVOLVING CREDIT NOTES" means the promissory  notes,  substantially in
the form of EXHIBIT A-1 annexed  hereto,  issued by the Borrower in favor of the
Lenders.

         "REVOLVING  LOAN" means a Loan made pursuant to subsection  2.1(a) that
utilizes the Revolving Credit Commitments.

         "SECOND AMENDMENT AND RESTATEMENT EFFECTIVE DATE " means, the time when
the conditions for the closing of this Agreement,  specified in Section 12.1 are
satisfied.

         "SENIOR NET FUNDED  INDEBTEDNESS"  means, at any time of determination,
the sum of Total Funded  Indebtedness  MINUS the principal  amount of the Senior
Subordinated  Notes  outstanding  at such  time  MINUS  all  cash on hand of the
Borrower and its Domestic Subsidiaries at such time.

         "SENIOR  LEVERAGE  RATIO"  means as at any date of  determination,  the
ratio of (a) Senior Net Funded Indebtedness of the Borrower and its Subsidiaries
outstanding  on such date to (b) the EBITDA for the  Reference  Period  ended on
such date.

         "SENIOR  NOTE  DOCUMENTS"  means the  Senior  Notes,  the  Senior  Note
Indenture and all other  documents  executed and  delivered  with respect to the
Senior Notes or Senior Note  Indenture,  in each case, in form delivered to, and
approved by, the Agent."

         "SENIOR NOTE INDENTURE"  means the Indenture dated as of July 22, 2003,
between the Borrower and the Senior Note Indenture  Trustee,  as in effect as of


                                       37

<PAGE>

the date hereof and as thereafter  amended from time to time in accordance  with
the provisions hereof.

         "SENIOR  NOTE  INDENTURE   TRUSTEE"  means  U.S.  Bank  Trust  National
Association,  or  any  successor  thereto  as  trustee  under  the  Senior  Note
Indenture.

         "SENIOR  NOTES"  means the  Senior  Secured  Notes,  due  2010,  issued
pursuant to the Senior Note Indenture, as such notes may be modified, supplement
or amended from time to time in accordance with the provisions hereof.

         "SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Note
Indenture,  the Senior  Subordinated Notes and all other documents,  instruments
and agreements executed and delivered in connection with the Senior Subordinated
Notes,  in each case, as the same shall,  subject to the terms and conditions of
this Agreement,  be amended,  supplemented  or otherwise  modified and in effect
from time to time.

         "SENIOR  SUBORDINATED  NOTE  INDENTURE"  means  the  Columbus  McKinnon
Corporation  Series A and  Series B 8 1/2%  Senior  Subordinated  Notes Due 2008
Indenture,  dated as of March  31,  1998 (as  supplemented  by the  Supplemental
Indenture,  dated as of March 31, 1998, the Second Supplemental Indenture, dated
as of February 12, 1999, the Third Supplemental Indenture,  dated as of March 1,
1999, the Fourth Supplemental Indenture, dated as of November 1, 1999, the Fifth
Supplemental  Indenture,  dated as of April 4, 2002 and the  Sixth  Supplemental
Indenture,  dated as of August 5, 2002),  between the Borrower,  as issuer,  and
State  Street  Bank and Trust  Company,  N.A.,  as  trustee,  as the same shall,
subject to the terms and  conditions  of this  Agreement,  be  further  amended,
supplemented or otherwise modified and in effect from time to time.

         "SENIOR   SUBORDINATED  NOTES"  means  the  Borrower's  8  1/2%  senior
subordinated  notes due 2008  issued  pursuant to the Senior  Subordinated  Note
Indenture,  as the same  shall,  subject  to the  terms and  conditions  of this
Agreement,  be amended,  supplemented  or otherwise  modified and in effect from
time to time.

         "SETTLEMENT" means the making or receiving of payments,  in immediately
available funds, by the Lenders,  to the extent necessary to cause each Lender's
actual share of the  outstanding  amount of Revolving Loans (after giving effect
to any Advance Request) to be equal to such Lender's Revolving Credit Commitment
Percentage  of the  outstanding  amount of such  Revolving  Loans (after  giving
effect  to any  Advance  Request),  in any case  where,  prior to such  event or
action, the actual share is not so equal.

         "SETTLEMENT  DATE" has the meaning  assigned to such term in subsection
2.5(d).

         "SETTLEMENT  LOAN" has the meaning  assigned to such term in subsection
2.5(e).


                                       38

<PAGE>

         "SPECIAL  COUNSEL"  means  Bingham  McCutchen  LLP, in its  capacity as
special counsel to Fleet Capital Corporation, as Agent.

         "SPECIFIED ASSETS" means the assets primarily related to the businesses
of (i) Societe  D'Exploitation  Des Raccords  Gautier,  (i) the  American  Lifts
division of Yale Industrial  Products,  Inc., (iii) the Duff-Norton  division of
Yale Industrial Products,  Inc., (iv) the Positech division of the Borrower, (v)
the Lister Chain & Forge division of the Borrower, (vi) the CM Shredder division
of the Borrower, (vii) Univeyor A/S and (viii) Larco Industrial Services Ltd.

         "SUBSIDIARY"  means,  with  respect  to any  Person  at any  date,  any
corporation,  limited or general partnership,  limited liability company, trust,
estate, association,  joint venture or other business entity (i) the accounts of
which  would  be  consolidated  with  those  of such  Person  in  such  Person's
consolidated  financial statements if such financial statements were prepared in
accordance  with  GAAP or (ii) of which  more  than  50% of (A) the  outstanding
Capital Stock having (in the absence of contingencies)  ordinary voting power to
elect a  majority  of the  board of  directors  or other  managing  body of such
Person,  (B) in the case of a  partnership  or limited  liability  company,  the
interest  in the  capital or profits of such  partnership  or limited  liability
company or (C) in the case of a trust,  estate,  association,  joint  venture or
other entity,  the  beneficial  interest in such trust,  estate,  association or
other entity  business  is, at the time of  determination,  owned or  controlled
directly or  indirectly  through  one or more  intermediaries,  by such  Person.
References  herein  to  "SUBSIDIARIES"   shall,   unless  the  context  requires
otherwise, be deemed to be references to Subsidiaries of the Borrower.

         "SYNTHETIC LEASE" means, any lease of goods or other property,  whether
real or  personal,  which is treated as an  operating  lease under GAAP and as a
loan or financing for U.S. income tax purposes.

         "TAXES" means any and all taxes, levies, imposts,  duties,  deductions,
charges, fees, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any Governmental Authority.

         "TERM  LOAN"  means the term loan made or to be made by the  Lenders to
the  Borrower  on  the  Closing  Date  in  the  aggregate  principal  amount  of
$33,000,000 pursuant to Section 2.2.

         "TERM LOAN  BORROWING  BASE" means,  at the relevant  time of reference
thereto,  an amount determined by the Agent by reference to the most recent Term
Loan Borrowing Base Certificate  delivered to the Agent and the Lenders pursuant
to subsection 7.1(i) which is equal to the lesser of:

         (a)      $33,000,000 and

         (b)      the sum of:


                                       39

<PAGE>


                  (i)      80% of the Determined  Value of Eligible Fixed Assets
                           owned by the Borrower  and its Domestic  Subsidiaries
                           which are Guarantors, PLUS,

                  (ii)     60% of the Appraised Value of the Term Loan Borrowing
                           Base  Properties  A  owned  by the  Borrower  and its
                           Domestic Subsidiaries which are Guarantors, PLUS,

                  (iii)    70% of the Appraised Value of the Term Loan Borrowing
                           Base  Properties  B  owned  by the  Borrower  and its
                           Domestic Subsidiaries which are Guarantors; MINUS,

                  (iv)     the Environmental  Reserve allocable to the Term Loan
                           (in the Agent's discretion).

         "TERM LOAN BORROWING BASE CERTIFICATE"  means a certificate signed by a
Designated  Financial  Officer  certifying the amount of the Term Loan Borrowing
Base as of the date set forth therein,  in substantially the form of EXHIBIT B-5
hereto.

         "TERM LOAN BORROWING BASE PROPERTIES A" means the Mortgaged  Properties
(together with their current Appraised Values) listed in SCHEDULE 1.1 - PART A.

         "TERM LOAN BORROWING BASE PROPERTIES B" means the Mortgaged  Properties
(together with their current Appraised Values) listed in SCHEDULE 1.1 - PART B.

         "TERM  LOAN  COMMITMENT"  means,  with  respect  to  each  Lender,  the
commitment  of such Lender to fund its portion of the Term Loan to the  Borrower
on the Closing Date. The initial amount of each Lender's Term Loan Commitment is
set forth on SCHEDULE 2.1.

         "TERM NOTES" means the promissory  notes,  substantially in the form of
EXHIBIT A-2 annexed  hereto,  issued by the Borrower in favor of the Lenders and
evidencing the Term Loan.

         "TITLE INSURANCE COMPANY"  means Chicago Title Insurance Company.

         "TITLE  POLICY" means in relation to each Mortgaged  Property,  an ALTA
standard form title insurance policy issued by the Title Insurance Company (with
such reinsurance or co-insurance as the Agent may require,  any such reinsurance
to be with direct  access  endorsements)  in such amount as may be determined by
the Agent insuring the priority of the Mortgage of such  Mortgaged  Property and
that the Borrower or one of its  Subsidiaries  holds marketable fee simple title
to such Mortgaged Property,  subject only to the encumbrances  permitted by such
Mortgage and which shall not contain exceptions for mechanics liens,  persons in
occupancy  or  matters  which  would  be shown  by a  survey  (except  as may be
permitted  by such  Mortgage),  shall not insure  over any matter  except to the
extent that any such  affirmative  insurance is  acceptable  to the Agent in its
sole discretion,  and shall contain such endorsements and affirmative  insurance
as the Agent in its  discretion  may require,  including  but not limited to (a)


                                       40

<PAGE>

comprehensive endorsement,  (b) variable rate of interest endorsement, (c) usury
endorsement, (d) revolving credit endorsement, (e) tie-in endorsement, (f) doing
business endorsement and (g) ALTA form 3.1 zoning endorsement.

         "TOTAL ASSETS" means the sum of (a) all assets  ("CONSOLIDATED  BALANCE
SHEET ASSETS") of the Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP, PLUS (b) without  duplication,  all assets leased
by the Borrower or any of its  Subsidiaries  as lessee under any Synthetic Lease
to the extent that such assets would have been consolidated balance sheet assets
had the Synthetic Lease been treated for accounting  purposes as a Capital Lease
Obligation.

         "TOTAL FUNDED INDEBTEDNESS" means, with respect to the Borrower and its
Subsidiaries,  the sum,  without  duplication,  of (a) the  aggregate  amount of
Indebtedness of the Borrower and its  Subsidiaries  determined on a consolidated
basis in  accordance  with GAAP,  relating to (i) the  borrowing of money or the
obtaining of credit, including the issuance of notes or bonds, (ii) the deferred
purchase  price of assets  (other than trade  payables  incurred in the ordinary
course of  business),  (iii) in respect of any  Synthetic  Leases or any Capital
Lease Obligations,  and (iv) the maximum drawing amount of all letters of credit
outstanding,  plus (b)  Indebtedness  of the type  referred  to in clause (a) of
another Person guaranteed by the Borrower or any of its Subsidiaries.

         "TOTAL GROSS AVAILABILITY" means at any time, the lesser of (a) the sum
of (i) the Domestic Borrowing Base at such time PLUS (ii) the Canadian Borrowing
Amount at such time and (b) the Total Revolving Credit Commitment at such time.

         "TOTAL  LIABILITIES"  means all  liabilities  of the  Borrower  and its
Subsidiaries  determined on a  consolidated  basis in  accordance  with GAAP and
classified  as such on the  consolidated  balance  sheet of the Borrower and its
Subsidiaries  and all other  Indebtedness of the Borrower and its  Subsidiaries,
whether or not so classified.

         "TOTAL LC  EXPOSURE"  means the sum of the Domestic LC Exposure and the
Foreign LC Exposure.

         "TOTAL  REVOLVING  CREDIT  COMMITMENT"  means the sum of the  Revolving
Credit  Commitments  of the  Lenders,  as in effect  from  time to time.  On the
Closing Date, the Total Revolving Credit Commitment was equal to $67,000,000. On
the Second Amendment and Restatement  Effective Date, the Total Revolving Credit
Commitment is equal to $50,000,000.

         "TOTAL  REVOLVING  CREDIT  EXPOSURE" means the total  Revolving  Credit
Exposures of all of the Lenders.

         "TOTAL TERM LOAN COMMITMENT" means the sum of the Term Loan Commitments
of the Lenders,  as in effect from time to time. On the Closing Date,  the Total
Term Loan  Commitment  was equal to  $33,000,000.  On the Second  Amendment  and
Restatement  Effective  Date,  the  Total  Term  Loan  Commitment  is  equal  to
$8,321,428.60.

         "TOTAL  VOTING  POWER"  means,  with  respect to any Person,  the total
number of votes which holders of securities  having the ordinary  power to vote,
in the  absence  of  contingencies,  are  entitled  to cast in the  election  of
directors of such Person.


                                       41

<PAGE>

         "TRADEMARK  AGREEMENT"  means any  Trademark  Collateral  Security  and
Pledge  Agreement,  made by the any Credit  Party in favor of the Agent and,  in
substantially  the form of EXHIBIT G or in form and substance  acceptable to the
Agent.

         "TRADEMARKS" means all trademarks  (including  service marks),  federal
and state trademark  registrations  and applications made by the Credit Parties,
common  law  trademarks  and trade  names  owned by or  assigned  to the  Credit
Parties,  all registrations and applications for the foregoing and all exclusive
and  nonexclusive  licenses from third parties of the right to use trademarks of
such  third  parties,   including,   without   limitation,   the  registrations,
applications,  unregistered  trademarks,  service  marks and licenses  listed on
SCHEDULE 5.5 hereto,  along with any and all (a) renewals  thereof,  (b) income,
royalties,  damages and  payments  now and  hereafter  due and/or  payable  with
respect thereto, including, without limitation, damages, claims and payments for
past or future  infringements  thereof,  (c) rights to sue for past, present and
future   infringements   thereof,   and  (d)   foreign   trademarks,   trademark
registrations,  and trade name applications for any thereof and any other rights
corresponding thereto throughout the world.

         "TYPE"  when  used in  reference  to any Loan or  Borrowing,  refers to
whether  the rate of  interest  on such Loan,  or on the Loans  comprising  such
Borrowing, is determined by reference to the LIBOR Rate or the Base Rate.

         "U.S. CREDIT PARTIES" means the Borrower and all Guarantors.

         "U.S.  DOLLARS"  or $ means  lawful  currency  of the United  States of
America.

         "WHOLLY  OWNED  SUBSIDIARY"  means,  with  respect to any Person at any
date, any corporation,  limited liability company,  partnership,  association or
other entity of which securities or other ownership interests  representing 100%
of the equity or ordinary voting power (other than directors' qualifying shares)
or, in the case of a partnership, 100% of the general partnership interests are,
as of such date, directly or indirectly owned, controlled or held by such Person
or one or more Wholly  Owned  Subsidiaries  of such Person or by such Person and
one or more Wholly Owned Subsidiaries of such Person.

         "WITHDRAWAL  LIABILITY"  means liability to a  Multiemployer  Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         1.2.  CLASSIFICATION  OF LOANS AND  BORROWINGS.  For  purposes  of this
Agreement,  Loans may be classified and referred to by Class (e.g., a "Revolving
Loan" or "Term  Loan") or by Type  (e.g.,  a "Base Rate  Loan" or a "LIBOR  Rate
Loan") or by Class and Type (e.g., a "LIBOR Rate Revolving Loan" or a "Base Rate
Revolving  Loan").  In similar  fashion,  (i)  Borrowings  may be classified and
referred to by Class, by Type and by Class and Type, and (ii) Commitments may be
classified and referred to by Class.


                                       42

<PAGE>


         1.3.  TERMS  GENERALLY.  The  definitions  of terms  herein shall apply
equally to the  singular  and plural  forms of the terms  defined.  Whenever the
context may require,  any pronoun  shall  include the  corresponding  masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed  by the phrase  "without  limitation".  The word "will"
shall be  construed  to have the same  meaning  and effect as the word  "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement,  instrument or other document  herein shall be construed as referring
to such  agreement,  instrument or other  document as from time to time amended,
supplemented  or  otherwise  modified  (subject  to  any  restrictions  on  such
amendments,  supplements or modifications  set forth herein),  (b) any reference
herein to any Person shall be construed to include such Person's  successors and
assigns, (c) the words "herein", "hereof" and "hereunder",  and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any  particular  provision  hereof,  (d)  all  references  herein  to  Articles,
Sections,  Exhibits  and  Schedules  shall be construed to refer to Articles and
Sections of, and Exhibits and  Schedules  to, this  Agreement  and (e) the words
"asset" and  "property"  shall be  construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties of any
kind whatsoever, including cash, securities, accounts and contract rights.

         1.4.  ACCOUNTING  TERMS;  GAAP.  Unless  otherwise  expressly  provided
herein,  each  accounting term used herein shall have the meaning given it under
GAAP applied on a basis  consistent  with those used in preparing  the financial
statements of the Borrower and its Subsidiaries.

         1.5.  JOINT AND SEVERAL OBLIGATIONS; DESIGNATED FINANCIAL OFFICERS.

                  (a) Each of the Credit Parties is accepting  joint and several
         liability hereunder and under the other Loan Documents in consideration
         of the  financial  accommodations  to be provided by the Lenders  under
         this  Agreement,  for the mutual benefit,  directly and indirectly,  of
         each of the Credit Parties and in  consideration of the undertakings of
         each other Credit Party to accept joint and several  liability  for the
         Obligations.

                  (b) Each of the Credit Parties, jointly and severally,  hereby
         irrevocably  and  unconditionally  accepts,  not merely as a surety but
         also as a co-debtor,  joint and several liability with the other Credit
         Parties  with  respect to the  payment  and  performance  of all of the
         Obligations  (including,  without  limitation,  any Obligations arising
         under this Section 1.5),  it being the intention of the parties  hereto
         that all of the Obligations shall be the joint and several  Obligations
         of each of the Credit Parties without  preferences or distinction among
         them.


                                       43

<PAGE>


                  (c) If and to the extent that any of the Credit  Parties shall
         fail to make any payment with respect to any of the  Obligations as and
         when due or to perform any of the  Obligations  in accordance  with the
         terms  thereof,  then in each such event the other Credit  Parties will
         make such payment with respect to, or perform, such Obligation.

                  (d) The  Obligations  of each of the Credit  Parties under the
         provisions of this Section 1.5 constitute full recourse  Obligations of
         each of the Credit Parties enforceable against each such corporation to
         the full  extent of its  properties  and  assets,  irrespective  of the
         validity,  regularity or  enforceability of this Agreement or any other
         circumstance whatsoever.

                  (e) Except as otherwise  expressly provided in this Agreement,
         each of the Credit  Parties  hereby  waives notice of acceptance of its
         joint  and  several  liability,  notice of any Loans  made  under  this
         Agreement,  notice of any  action at any time  taken or  omitted by the
         Lenders under or in respect of any of the Obligations,  and, generally,
         to the extent  permitted by  applicable  law, all demands,  notices and
         other formalities of every kind in connection with this Agreement. Each
         of the Credit  Parties  hereby  assents  to, and waives  notice of, any
         extension  or  postponement  of the time for the  payment of any of the
         Obligations,  the acceptance of any payment of any of the  Obligations,
         the acceptance of any partial payment thereon,  any waiver,  consent or
         other  action or  acquiescence  by the  Lenders at any time or times in
         respect of any default by any of the Credit Parties in the  performance
         or satisfaction of any term,  covenant,  condition or provision of this
         Agreement,  any and all other indulgences  whatsoever by the Lenders in
         respect  of  any  of  the  Obligations,   and  the  taking,   addition,
         substitution or release,  in whole or in part, at any time or times, of
         any security for any of the  Obligations or the addition,  substitution
         or release, in whole or in part, of any of the Credit Parties.  Without
         limiting the  generality of the  foregoing,  each of the Credit Parties
         assents to any other action or delay in acting or failure to act on the
         part of the  Lenders  with  respect to the failure by any of the Credit
         Parties to comply with any of its  respective  Obligations,  including,
         without  limitation,  any failure  strictly or diligently to assert any
         right or to pursue any remedy or to comply fully with  applicable  laws
         or regulations thereunder,  which might, but for the provisions of this
         Section 1.5, afford grounds for  terminating,  discharging or relieving
         any of the  Credit  Parties,  in  whole  or in  part,  from  any of its
         Obligations  under this Section 1.5, it being the  intention of each of
         the Credit  Parties that, so long as any of the  Obligations  hereunder
         remain  unsatisfied,  the Obligations of such Credit Parties under this
         Section 1.5 shall not be discharged except by performance and then only
         to the  extent  of such  performance.  The  Obligations  of each of the
         Credit  Parties  under  this  Section  1.5 shall not be  diminished  or
         rendered unenforceable by any winding up, reorganization,  arrangement,
         liquidation,  re-construction or similar proceeding with respect to any
         of the Credit Parties or the Lenders.  The joint and several  liability
         of the Credit Parties hereunder shall continue in full force and effect
         notwithstanding  any  absorption,  merger,  amalgamation  or any  other
         change  whatsoever in the name,  membership,  constitution  or place of
         formation of any of the Credit Parties or the Lender.


                                       44

<PAGE>

                  (f) The  provisions  of this  Section  1.5  are  made  for the
         benefit of the Lenders and their  successors  and  assigns,  and may be
         enforced in good faith by them from time to time  against any or all of
         the Credit  Parties  as often as the  occasion  therefor  may arise and
         without  requirement  on the part of the Lender first to marshal any of
         their  claims or to  exercise  any of their  rights  against  any other
         Credit Party or to exhaust any  remedies  available to them against any
         other  Credit  Party  or to  resort  to any  other  source  or means of
         obtaining  payment of any of the Obligations  hereunder or to elect any
         other remedy. The provisions of this Section 1.5 shall remain in effect
         until all of the Obligations  shall have been paid in full or otherwise
         fully satisfied. If at any time, any payment, or any part thereof, made
         in respect of any of the Obligations, is rescinded or must otherwise be
         restored or returned by the Lenders upon the insolvency,  bankruptcy or
         reorganization  of  any  of  the  Credit  Parties,  or  otherwise,  the
         provisions of this Section 1.5 will  forthwith be reinstated in effect,
         as though such payment had not been made.

                  (g)  Notwithstanding  the foregoing or any other  provision of
         this  Agreement,  it is  expressly  agreed  that the joint and  several
         liability of any Canadian  Borrower  hereunder and under the other Loan
         Documents shall be limited to the Obligations of the Canadian Borrowers
         and no Canadian  Borrower shall otherwise be liable for the Obligations
         of any other  Credit  Party  hereunder  other  than the other  Canadian
         Borrower.

                  (h) Any notice, request, waiver, consent or other action made,
         given or taken by any Credit Party shall bind all Credit Parties.

                  (i) Each Credit Party hereby authorizes each of the Designated
         Financial  Officers  listed in SCHEDULE  1.5 hereto to act as agent for
         each  Credit  Party and to execute and deliver on behalf of each Credit
         Party such notices, requests, waivers, consents, certificates and other
         documents,  and to take any and all actions required or permitted to be
         delivered  or taken by any Credit  Party  hereunder.  The  Borrower may
         replace any of the Designated Financial Officers listed in SCHEDULE 1.5
         hereto  or  add  any  additional   Designated   Financial  Officers  by
         delivering written notice to the Agent specifying the names of each new
         Designated  Financial Officer and the offices held by each such Person.
         Each  Credit  Party  hereby  agrees  that any such  notices,  requests,
         waivers, consents, certificates and other documents executed, delivered
         or sent by any  Designated  Financial  Officer of the  Borrower and any
         such actions taken by any Designated  Financial Officer of the Borrower
         shall bind each Credit Party.

                                   ARTICLE 2.

                                   THE CREDITS

         2.1.  REVOLVING LOANS.

                  (a)  REVOLVING  CREDIT  COMMITMENTS.  Subject to the terms and
         conditions set forth herein, each Lender agrees to make Revolving Loans


                                       45

<PAGE>

         to  the  Borrower  from  time  to  time  during  the  Revolving  Credit
         Availability  Period in an  aggregate  principal  amount  that will not
         result in such Lender's  Revolving Credit Exposure exceeding the lesser
         of (i) such Lender's  Revolving Credit Commitment at such time and (ii)
         an amount equal to such  Lender's  Applicable  Percentage of the sum of
         the (A)  Domestic  Borrowing  Base at such time  PLUS (B) the  Canadian
         Borrowing  Amount at such time;  PROVIDED  that the Domestic  Revolving
         Credit  Exposure plus the Canadian  Excess Amount shall not at any time
         exceed the Domestic Gross Availability. Within the foregoing limits and
         subject to the terms and conditions set forth herein,  the Borrower may
         borrow, prepay and reborrow Revolving Loans.

                  (b) FUNDING OF REVOLVING  LOANS. To request the funding of any
         Revolving Loan  hereunder,  the Borrower shall deliver to the Agent, an
         Advance  Request in  substantially  the form of Exhibit B-4 hereto,  by
         facsimile or electronic  mail  transmission,  not later than 1:00 p.m.,
         Boston,  Massachusetts  time,  (i) two (2)  Business  Days prior to the
         proposed  Drawdown  Date of any Base Rate Loan and (ii) three (3) LIBOR
         Business  Days prior to the  proposed  Drawdown  Date of any LIBOR Rate
         Loan.  Each such request shall specify (i) the principal  amount of the
         Revolving  Loan  requested,  (ii) the  proposed  Drawdown  Date of such
         Revolving Loan, (ii) the Interest Period for such Revolving Loan, (iii)
         the  Type  of  such   Revolving   Loan  and  (iv)  the  Domestic  Gross
         Availability  as  set  forth  in  the  most  recent  Collateral  Update
         Certificate/Borrowing  Base Certificate  delivered to Lender.  Promptly
         following  receipt  of an  Advance  Request  in  compliance  with  this
         subsection  2.1(b),  the Agent shall  advise each Lender of the details
         thereof and of the amount of such Lender's Revolving Loan to be made as
         part of the requested Borrowing,  and PROVIDED that no Default or Event
         of Default  shall  have  occurred  and be  continuing  or shall  result
         therefrom,  on the date such Advance Request is delivered to the Agent,
         the Lenders  shall make a Revolving  Loan to the Borrower in accordance
         with the terms of  Section  2.5 in an amount  equal to the  amount  set
         forth in such  Advance  Request.  Each  Advance  Request  shall be in a
         minimum  aggregate  amount of  $1,000,000  or an  integral  multiple of
         $100,000 in excess thereof.

                  (c) INTEREST ON REVOLVING LOANS.

                           (i) Subject to clause (iv) of this subsection 2.1(d),
                  each  Revolving  Loan  which is a Base  Rate Loan  shall  bear
                  interest  for the period  commencing  with the  Drawdown  Date
                  thereof and ending on the last day of the calendar  month with
                  respect  thereto at the rate per annum  equal to the Base Rate
                  plus the Applicable  Margin with respect to Base Rate Loans as
                  in effect from time to time.

                           (ii)  Subject  to  clause  (iv)  of  this  subsection
                  2.1(d),  each  Revolving Loan which is a LIBOR Rate Loan shall
                  bear interest for the period commencing with the Drawdown Date
                  thereof and ending on the last day of the LIBOR Rate  Interest
                  Period  with  respect  thereto  at the rate equal to the LIBOR


                                       46

<PAGE>

                  Rate  determined for such LIBOR Rate Interest  Period PLUS the
                  Applicable  Margin  with  respect  to LIBOR  Rate  Loans as in
                  effect from time to time.

                           (iii) The  Borrower  promises to pay interest on each
                  Revolving  Loan in arrears on each Interest  Payment Date with
                  respect thereto.

                           (iv)  Notwithstanding  the foregoing,  if there shall
                  occur and be continuing any Event of Default, the principal of
                  all Revolving Loans  hereunder,  at the option of the Agent or
                  Required Lenders, shall bear interest at the Post-Default Rate
                  during the period  beginning on the date such Event of Default
                  first occurred and ending on the date such Event of Default is
                  cured or waived. All interest accrued at the Post-Default Rate
                  shall be payable on demand.  All accrued interest on Revolving
                  Loans shall be payable upon expiration of the Revolving Credit
                  Availability  Period. All interest and fees hereunder shall be
                  computed on the basis of a year of 360 days,  and in each case
                  shall  be  payable  for the  actual  number  of  days  elapsed
                  (including the first day but excluding the last day).

                  (d) REPAYMENT OF REVOLVING LOANS. The Borrower unconditionally
         promises  to pay to the Agent for the  account of each  Lender the then
         unpaid  principal  amount  of  such  Lender's  Revolving  Loans  on the
         Maturity  Date.  In addition,  if following  any reduction in the Total
         Revolving Credit Commitment or at any other time the Domestic Revolving
         Credit  Exposure  plus the  Canadian  Excess  Amount  shall  exceed the
         Domestic Gross Availability,  the Borrower shall first, repay Revolving
         Loans in an aggregate amount equal to such excess, and second,  provide
         cash  collateral  for the Total LC Exposure as specified in  subsection
         2.4(h) in an aggregate amount equal to 105% of such excess.

                  (e) LOAN  ACCOUNTS.  Each Lender shall  maintain in accordance
         with its usual practice an account  evidencing the  indebtedness of the
         Borrower to such Lender resulting from each Revolving Loan made by such
         Lender,  including  the amounts of principal  and interest  payable and
         paid to such  Lender  from  time to time  hereunder.  The  Agent  shall
         maintain accounts in which it shall record the amount of each Revolving
         Loan made hereunder, the amount of any principal, interest, fees and/or
         expenses due and payable or to become due and payable from the Borrower
         to each  Lender  hereunder  and the amount of any sum  received  by the
         Agent  hereunder for the account of the Lenders and each Lender's share
         thereof.  The  entries  made in the  account  maintained  by the  Agent
         pursuant to this subsection 2.1(e) shall be prima facie evidence of the
         existence and amounts of the  obligations  recorded  therein;  PROVIDED
         that the  failure of the Agent to  maintain  such  account or any error
         therein shall not in any manner  affect the  obligation of the Borrower
         to repay  the  Revolving  Loans in  accordance  with the  terms of this
         Agreement.


                                       47

<PAGE>

                  (f)  REVOLVING  CREDIT NOTE.  Prior to the Closing  Date,  the
         Borrower shall prepare,  execute and deliver to each Lender a Revolving
         Credit Note in the principal  amount of such Lender's  Revolving Credit
         Commitment. Thereafter, the Revolving Loans of each Lender evidenced by
         such  Revolving  Credit Note and  interest  thereon  shall at all times
         (including after assignment pursuant to Section 11.4) be represented by
         one or more  promissory  notes in such form payable to the order of the
         payee named therein.

         2.2.  TERM LOAN.

                  (a)  FUNDING  OF THE  TERM  LOAN.  Subject  to the  terms  and
         conditions set forth herein,  each Lender agrees to fund its portion of
         the Term Loan in the full  amount of its Term  Loan  Commitment  on the
         Closing Date.  Principal amounts of the Term Loan that have been repaid
         or prepaid may not be reborrowed.

                  (b)  INTEREST  ON THE TERM  LOAN.  The  outstanding  principal
         amount of the Term Loan shall bear interest during each Interest Period
         relating to all or any portion of the Term Loan at the following rates:

                           (i) To the extent that all or any portion of the Term
                  Loan bears  interest  during such Interest  Period at the Base
                  Rate, the Term Loan or such portion shall bear interest during
                  such  Interest  Period at the rate per annum equal to the Base
                  Rate plus the  Applicable  Margin with  respect to portions of
                  Term Loans  consisting  of Base Rate  Loans as in effect  from
                  time to time.

                           (ii) To the  extent  that all or any  portion  of the
                  Term Loan bears  interest  during such Interest  Period at the
                  LIBOR Rate,  the Term Loan or such portion shall bear interest
                  during such Interest Period at the rate per annum equal to the
                  LIBOR  Rate  determined  for  such  Interest  Period  plus the
                  Applicable  Margin  with  respect  to  portions  of Term Loans
                  consisting of LIBOR Rate Loans as in effect from time to time.

                           (iii) The  Borrower  promises to pay  interest on the
                  Term  Loan or any  portion  thereof  outstanding  during  each
                  Interest  Period in  arrears  on each  Interest  Payment  Date
                  applicable to such Interest Period.

                           (iv)  Notwithstanding  the foregoing,  if there shall
                  occur and be continuing any Event of Default,  the outstanding
                  principal balance of the Term Loan, at the option of the Agent
                  or Required  Lenders,  shall bear interest at the Post-Default
                  Rate  during  the period  beginning  on the date such Event of
                  Default  first  occurred  and ending on the date such Event of
                  Default  is cured  or  waived.  All  interest  accrued  at the
                  Post-Default  Rate shall be payable  on demand.  All  interest
                  hereunder  shall  be  computed  on the  basis of a year of 360


                                       48

<PAGE>

                  days,  and in each case shall be payable for the actual number
                  of days elapsed  (including  the first day but  excluding  the
                  last day).

                           (c)  REPAYMENT  OF  TERM  LOAN  The  Borrower  hereby
                  unconditionally  promises  to pay to the Agent for the account
                  of the Lenders the  outstanding  principal  amount of the Term
                  LOAN on each  principal  payment  date set forth  below in the
                  aggregate  principal  amount set forth opposite such principal
                  payment date:


         ------------------------------ ---------------------------------------
         PRINCIPAL PAYMENT DATE         AMOUNT
         ------------------------------ ---------------------------------------
         April 1, 2003                  $1,178,571.40
         ------------------------------ ---------------------------------------
         July 1, 2003                   $1,178,571.40
         ------------------------------ ---------------------------------------
         October 1, 2003                $1,178,571.40
         ------------------------------ ---------------------------------------
         January 1, 2004                $   500,000.00
         ------------------------------ ---------------------------------------
         April 1, 2004                  $   500,000.00
         ------------------------------ ---------------------------------------
         July 1, 2004                   $   500,000.00
         ------------------------------ ---------------------------------------
         October 1, 2004                $   500,000.00
         ------------------------------ ---------------------------------------
         January 1, 2005                $   500,000.00
         ------------------------------ ---------------------------------------
         April 1, 2005                  $   500,000.00
         ------------------------------ ---------------------------------------
         July 1, 2005                   $   500,000.00
         ------------------------------ ---------------------------------------
         October 1, 2005                $   500,000.00
         ------------------------------ ---------------------------------------
         January 1, 2006                $   500,000.00
         ------------------------------ ---------------------------------------
         April 1, 2006                  $   500,000.00
         ------------------------------ ---------------------------------------
         July 1, 2006                   $   500,000.00
         ------------------------------ ---------------------------------------
         October 1, 2006                $   500,000.00
         ------------------------------ ---------------------------------------
         January 1, 2007                $   500,000.00
         ------------------------------ ---------------------------------------
         March 31, 2007                 remaining  unpaid  principal  balance
                                        of  the Term Loan
         ------------------------------ ---------------------------------------


                                       49

<PAGE>

         If at any  time the sum of the  outstanding  amount  of the  Term  Loan
         exceeds  the  Term  Loan  Borrowing   Base,  then  the  Borrower  shall
         immediately pay the amount of such excess to the Agent, for the ratable
         benefit of the Lenders.

                  (d) LOAN  ACCOUNTS.  Each Lender shall  maintain in accordance
         with its usual practice an account  evidencing the  indebtedness of the
         Borrower  to such  Lender in respect of the Term  Loan,  including  the
         amounts of principal and interest  payable and paid to such Lender from
         time to time hereunder.  The Agent shall maintain  accounts in which it
         shall record the amount of each Lender's  portion of the Term Loan made
         hereunder,  the amount of any  principal or interest due and payable or
         to become due and payable  from the  Borrower to each Lender  hereunder
         and the  amount  of any sum  received  by the Agent  hereunder  for the
         account of the Lenders and each  Lender's  share  thereof.  The entries
         made in the account maintained by the Agent pursuant to this subsection
         2.2(d) shall be prima facie  evidence of the  existence  and amounts of
         the  obligations  recorded  therein;  PROVIDED  that the failure of the
         Agent to maintain  such account or any error  therein  shall not in any
         manner affect the  obligation of the Borrower to repay the Term Loan in
         accordance with the terms of this Agreement.

                  (e) TERM NOTE.  Prior to the Closing Date,  the Borrower shall
         prepare,  execute  and  deliver  to  each  Lender  a Term  Note  in the
         principal  amount of such  Lender's Term Loan  Commitment.  Thereafter,
         such Lender's  portion of the Term Loan evidenced by such Term Note and
         interest  thereon  shall  at  all  times  (including  after  assignment
         pursuant  to Section  11.4) be  represented  by one or more  promissory
         notes in such form payable to the order of the payee named therein.

         2.3.  CONVERSION OPTIONS.

                  (a)  CONVERSION  TO  DIFFERENT  TYPE OF  REVOLVING  LOAN.  The
         Borrower  may  elect  from  time  to time to  convert  any  outstanding
         Revolving Loan to a Revolving  Loan of another Type,  PROVIDED that (a)
         with respect to any such conversion of a LIBOR Rate Loan to a Base Rate
         Loan,  the Borrower shall give the Agent at least two (2) Business Days
         prior  written  notice of such  election;  (b) with respect to any such
         conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrower shall
         give the Agent at least  three (3) LIBOR  Business  Days prior  written
         notice of such election;  (c) with respect to any such  conversion of a
         LIBOR Rate Loan into a Base Rate Loan,  such  conversion  shall only be
         made on the last day of the Interest  Period with  respect  thereto and
         (d) no Revolving  Loan may be converted into a LIBOR Rate Loan when any
         Default or Event of Default has occurred and is continuing. On the date
         on which  such  conversion  is being made each  Lender  shall take such
         action as is  necessary  to transfer its  Revolving  Credit  Commitment
         Percentage of such  Revolving  Loans to its Domestic  Lending Office or
         its  LIBOR  Lending  Office,  as the  case  may be.  All or any part of
         outstanding  Revolving  Loans  of  any  Type  may be  converted  into a
         Revolving  Loan of another Type as provided  herein,  PROVIDED that any
         partial  conversion  shall  be  in an  aggregate  principal  amount  of


                                       50

<PAGE>

         $1,000,000  or  a  whole  multiple  thereof.  Each  Conversion  Request
         relating to the  conversion  of a  Revolving  Loan to a LIBOR Rate Loan
         shall be irrevocable by the Borrower.

                  (b) CONTINUATION OF TYPE OF REVOLVING LOAN. Any Revolving Loan
         of any Type may be continued as a Revolving  Loan of the same Type upon
         the expiration of an Interest Period with respect thereto by compliance
         by the Borrower  with the notice  provisions  contained  in  subsection
         2.3(a);  PROVIDED that no LIBOR Rate Loan may be continued as such when
         any Default or Event of Default has  occurred  and is  continuing,  but
         shall be automatically converted to a Base Rate Loan on the last day of
         the  first  Interest   Period   relating   thereto  ending  during  the
         continuance of any Default or Event of Default of which officers of the
         Agent active upon the Borrower's account have actual knowledge.  In the
         event that the  Borrower  fails to provide any such notice with respect
         to the  continuation  of any LIBOR  Rate Loan as such,  then such LIBOR
         Rate Loan shall be  automatically  converted to a Base Rate Loan on the
         last day of the first Interest Period relating thereto. The Agent shall
         notify  the  Lenders  promptly  when  any  such  automatic   conversion
         contemplated by this subsection 2.3(b) is scheduled to occur.

                  (c) LIBOR RATE  LOANS.  Any  conversion  to or from LIBOR Rate
         Loans shall be in such amounts and be made  pursuant to such  elections
         so that, after giving effect thereto, the aggregate principal amount of
         all LIBOR Rate Loans having the same Interest  Period shall not be less
         than $1,000,000 or a whole multiple of $100,000 in excess  thereof.  No
         more than five (5) LIBOR Borrowings  having different  Interest Periods
         may be outstanding at any time.

                  (d) ALTERNATE RATE OF INTEREST.  If prior to the  commencement
         of any Interest Period for a LIBOR Borrowing,  (i) the Agent determines
         (which  determination  shall be conclusive  absent manifest error) that
         adequate and reasonable  means do not exist for  ascertaining the LIBOR
         Rate for such LIBOR  Interest  Period,  (ii) if such  Borrowing is of a
         particular Class of Loans, the Agent is advised by the Required Lenders
         with respect to the Revolving Loans or Terms Loans, as the case may be,
         that the LIBOR Rate for such Interest  Period will not  adequately  and
         fairly reflect the cost to such Lenders of making or maintaining  their
         Loans of such Class included in such LIBOR  Borrowing,  or (iii) if the
         Agent or any  Lender  shall  have  determined  in good  faith that as a
         result of any Change in Law it is unlawful or impossible for any Lender
         to make or maintain  any LIBOR  Borrowing;  then in each case the Agent
         shall give notice  thereof to the Borrower and the affected  Lenders by
         telephone or telecopy as promptly as practicable  thereafter and, until
         the Agent notifies the Borrower and such Lenders that the circumstances
         giving rise to such notice no longer exist, (x) any Advance  Conversion
         Request  for  LIBOR  Rate  Loans  submitted  by the  Borrower  shall be
         automatically  withdrawn  and shall be deemed a request for a Base Rate
         Loan, (y) each LIBOR Rate Loan will  automatically,  on the last day of
         the then current Interest Period relating  thereto,  become a Base Rate
         Loan,  and (z) the  obligations of the Lenders to make LIBOR Rate Loans
         shall be suspended until the Agent  determines  that the  circumstances


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<PAGE>

         giving rise to such  suspension  no longer  exist,  whereupon the Agent
         shall so notify the  Borrower and the  Lenders;  PROVIDED  that if as a
         result of a Change in Law the Lenders are prohibited  from  maintaining
         any  outstanding  LIBOR  Borrowing,  upon  notice  from the Agent,  the
         Borrower shall  immediately  (A) convert such LIBOR Borrowing to a Base
         Rate  Borrowing,  or (B) repay such LIBOR  Borrowing in full,  together
         with all  interest  accrued  thereon  and all fees  and  other  amounts
         payable  to the  Lenders  hereunder  (in  either  case,  subject to the
         provisions  of  subsection  2.3(e) of this  Agreement  with  respect to
         redeployment costs).

                  (e) BREAK FUNDING PAYMENTS. In the event of (i) the payment of
         any  principal of any LIBOR Rate Loan other than on the last day of the
         LIBOR Interest Period applicable  thereto  (including as a result of an
         Event of  Default),  (ii) the  conversion  of any LIBOR Rate Loan other
         than on the last day of the  Interest  Period  applicable  thereto,  or
         (iii) the failure to borrow, convert, continue or prepay any LIBOR Rate
         Loan on the date  specified  in any notice  delivered  pursuant  hereto
         (regardless  of whether such notice is permitted to be revocable and is
         revoked in accordance herewith),  then, in any such event, the Borrower
         shall   compensate   each  Lender  for  the  loss,   cost  and  expense
         attributable  to such event (the  "BREAKAGE  COSTS"),  as determined by
         such Lender in a manner  consistent with its customs and practices.  In
         the event that any Lender is entitled to receive compensation  pursuant
         to this subsection  2.3(e),  such Lender shall deliver a certificate to
         the  Borrower  setting  forth the amount or amounts that such Lender is
         entitled to receive, and the Borrower shall pay such Lender such amount
         or amounts within three (3) days after receipt of such certificate.
















                                       52


<PAGE>

         2.4. DOMESTIC LETTERS OF CREDIT AND FOREIGN LETTERS OF CREDIT.


                  (a) COMMITMENT TO ISSUE DOMESTIC LETTERS OF CREDIT AND FOREIGN
         LETTERS OF CREDIT AND LC GUARANTY.

                           (i)  Subject  to the terms and  conditions  set forth
                  herein,  the  Borrower may request the issuance of a letter of
                  credit in U.S.  currency (the "DOMESTIC LETTER OF CREDIT") for
                  its  own  account  and/or  for  the  account  of  any  of  its
                  Subsidiaries  by the Issuing  Lender,  in a form acceptable to
                  the Issuing  Lender,  at any time and from time to time during
                  the Revolving Credit Availability Period;  PROVIDED,  however,
                  that, after giving effect to such request, (a) the Domestic LC
                  Exposure shall not, at any time,  exceed  $12,000,000  and (b)
                  the  Domestic  Revolving  Credit  Exposure  plus the  Canadian
                  Excess   Amount   shall  not   exceed   the   Domestic   Gross
                  Availability.  Domestic  Letters  of Credit  issued  hereunder
                  shall   constitute   utilization   of  the  Revolving   Credit
                  Commitments.  In the event of any  inconsistency  between  the
                  terms  and  conditions  of this  Agreement  and the  terms and
                  conditions  of any form of  letter of  credit  application  or
                  other agreement  submitted by the Borrower to, or entered into
                  by the  Borrower  with,  the  Issuing  Lender  relating to any
                  Domestic  Letter of Credit,  the terms and  conditions of this
                  Agreement shall control.

                           (ii)  Subject to the terms and  conditions  set forth
                  herein,  the  Borrower may request the issuance of a letter of
                  credit in an Optional  Currency (a "FOREIGN LETTER OF CREDIT")
                  for its own  account  and/or  for  the  account  of any of its
                  Subsidiaries  by the Issuing  Lender,  in a form acceptable to
                  the Issuing  Lender,  at any time and from time to time during
                  the Revolving Credit Availability Period;  PROVIDED,  however,
                  that,  after  giving  effect to such  request,  (a) the Dollar
                  Equivalent  of  the  Foreign  LC  Exposure  (exclusive  of the
                  Canadian Letter of Credit) shall not exceed  $5,000,000 at any
                  one time and (b) the Domestic  Revolving  Credit Exposure plus
                  the Canadian Excess Amount shall not exceed the Domestic Gross
                  Availability.  Foreign  Letters  of  Credit  issued  hereunder
                  (exclusive  of the Canadian  Letter of Credit to the extent of
                  the Canadian  Borrowing Base) shall constitute  utilization of
                  the Domestic Revolving Credit Commitments in the amount of the
                  Dollar  Equivalent  of such Foreign  Letter of Credit.  In the
                  event of any inconsistency between the terms and conditions of
                  this  Agreement  and the terms and  conditions  of any form of
                  letter of credit  application or other agreement  submitted by
                  the Borrower to, or entered  into by the  Borrower  with,  the
                  Issuing Lender  relating to any Foreign Letter of Credit,  the
                  terms and conditions of this Agreement shall control.

                           (iii) The Agent agrees,  on behalf of the Lenders and
                  in  reliance  upon the  agreement  of the Lenders set forth in
                  this  subsection  2.4(d)  and  upon  the  representations  and
                  warranties of the Credit Parties  contained  herein,  to enter
                  into an LC  Guaranty  with the  Issuing  Lender to support the
                  reimbursement  obligations of the Borrower with respect to any


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<PAGE>

                  Letter of Credit and the  Canadian  Borrowers  with respect to
                  the Canadian Letter of Credit.

                  (b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN
         CONDITIONS.  Subject to Section  2.14,  to request  the  issuance  of a
         Letter  of  Credit  (or  the  amendment,  renewal  or  extension  of an
         outstanding  Letter of  Credit),  the  Borrower  shall  deliver  to the
         Issuing  Lender and the Agent by electronic  or facsimile  transmission
         (at  least  two  (2)  Business  Days  prior  to the  requested  date of
         issuance,   amendment,   renewal  or  extension)  a  letter  of  credit
         application  and  reimbursement  agreement in the form  required by the
         Issuing Lender. A Letter of Credit shall be issued, amended, renewed or
         extended only if (and upon issuance, amendment, renewal or extension of
         each Letter of Credit,  the Borrower  shall be deemed to represent  and
         warrant that), after giving effect to such issuance, amendment, renewal
         or extension (i) the Domestic LC Exposure at such time shall not exceed
         $12,000,000  and the Dollar  Equivalent  of the  Foreign LC Exposure at
         such time (exclusive of the Canadian Letter of Credit) shall not exceed
         $5,000,000,  as the case may be and (ii) the Domestic  Revolving Credit
         Exposure plus the Canadian  Excess Amount at such time shall not exceed
         the Domestic Gross Availability.  Any Letter of Credit issued, amended,
         renewed or extended  hereunder  shall  provide for the payment of sight
         drafts for honor thereunder when presented in accordance with the terms
         thereof and when accompanied by the documents described therein.

                  (c)  EXPIRATION  DATE.  Each  Letter  of Credit  shall  expire
         (without  giving  effect  to any  extension  thereof  by  reason  of an
         interruption  of  business) at or prior to the close of business on the
         earlier  of (i) the date 365 days,  in the case of  standby  Letters of
         Credit,  or 180 days,  in the case of  documentary  Letters  of Credit,
         after the date of the  issuance  of such  Letter of Credit  (or, in the
         case of any  renewal or  extension  thereof,  365 days or 180 days,  as
         applicable,  after such renewal or  extension)  PROVIDED  that any such
         standby Letter of Credit may provide for automatic  extensions  thereof
         to a date not later than 365 days beyond its current  expiration  date,
         and (ii) the date that is five (5) or,  if  confirmed  by a  confirmer,
         thirty (30),  Business  Days prior to the Maturity  Date.  No Letter of
         Credit may be extended beyond the date that is five Business Days prior
         to the Maturity Date.

                  (d)      PARTICIPATIONS.

                           (i) By the  issuance  of a Letter  of  Credit  (or an
                  amendment to a Letter of Credit increasing the amount thereof)
                  by the Issuing  Lender,  and without any further action on the
                  part of the Issuing  Lender,  the Issuing Lender hereby grants
                  to each  Lender,  and each  Lender  hereby  acquires  from the
                  Issuing Lender, a participation in such Letter of Credit equal
                  to such Lender's Applicable Percentage of the aggregate amount
                  available  to  be  drawn  under  such  Letter  of  Credit.  In
                  consideration and in furtherance of the foregoing, each Lender
                  hereby  absolutely  and  unconditionally  agrees to pay to the
                  Agent,  for the account of the Issuing  Lender,  such Lender's


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<PAGE>

                  Applicable  Percentage  of  each LC  Disbursement  made by the
                  Issuing  Lender and not reimbursed by the Borrower on the date
                  due as provided in subsection  2.4(e), or of any reimbursement
                  payment  required  to be  refunded  to the  Borrower  for  any
                  reason.

                           (ii) By the issuance of the LC Guaranty by the Agent,
                  and without any further  action on the part of the Agent,  the
                  Agent  hereby  grants to each Lender,  and each Lender  hereby
                  acquires from the Agent,  a  participation  in the LC Guaranty
                  equal to such Lender's Applicable  Percentage of the aggregate
                  amount  guaranteed  under  the LC  Guaranty.  In the event the
                  Agent is required  to make any  payment to the Issuing  Lender
                  under the LC  Guaranty,  each  Lender  hereby  absolutely  and
                  unconditionally agrees to pay to the Agent, for the account of
                  the Issuing  Lender,  such Lender's  Applicable  Percentage of
                  each such payment made by the Agent and not  reimbursed by the
                  Borrower  or  the  Canadian  Borrowers,  as  the  case  may be
                  pursuant to subsection 2.4(e), or of any reimbursement payment
                  required to be refunded to the  Borrower  for any reason,  and
                  each  Lender  severally  agrees  that it shall  be  absolutely
                  liable,  without  regard to the  occurrence  of any Default or
                  Event of Default or any other condition precedent  whatsoever,
                  to the  extent  of such  Lender's  Applicable  Percentage,  to
                  reimburse the Agent on demand for such payment.

                  (e)  REIMBURSEMENT.  If the Issuing  Lender  shall make any LC
         Disbursement  in respect of a Letter of Credit or the Agent  shall make
         any payment under the LC Guaranty, the Borrower and/or, with respect to
         the Canadian Letter of Credit, the Canadian Borrowers,  shall reimburse
         (each, a  "REIMBURSEMENT  OBLIGATION") the Issuing Lender in respect of
         such LC  Disbursement or the Agent in respect of such payment under the
         LC Guaranty, as the case may be, by paying to the Agent for the account
         of the  Issuing  Lender or to the Agent with  respect  to such  payment
         under  the LC  Guaranty,  an amount  in U.S.  Dollars  equal to such LC
         Disbursement  (or the Dollar  Equivalent of such LC Disbursement in the
         case of a Letter of  Credit  issued in an  Optional  Currency)  or such
         payment  under the LC  Guaranty  not  later  than  1:00  p.m.,  Boston,
         Massachusetts  time,  on (i) the  Business Day that the Borrower or any
         Canadian  Borrower  receives  notice  of such LC  Disbursement  or such
         payment  under the LC  Guaranty,  if such notice is  received  prior to
         11:00  a.m.,  Boston,  Massachusetts  time,  or (ii) the  Business  Day
         immediately  following  the  day  that  the  Borrower  or any  Canadian
         Borrower  receives such notice, if such notice is not received prior to
         such time,  PROVIDED  that,  subject to the conditions to borrowing set
         forth herein,  payment of each such  Reimbursement  Obligation shall be
         made  through  the  automatic  funding of a Base Rate  Borrowing  in an


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<PAGE>

         amount equal to the amount of such  Reimbursement  Obligation,  and the
         Borrower  hereby  irrevocably  authorizes and directs the Agent to take
         such actions as may be necessary to effectuate  such automatic  funding
         of such Base Rate Borrowings. To the extent that any such Reimbursement
         Obligation  is  paid  through  the  automatic  funding  of a Base  Rate
         Borrowing,  the  Borrower's  obligation  to make such payment  shall be
         discharged  and replaced by the resulting Base Rate  Borrowing.  If the
         Borrower  cannot  satisfy the  conditions to borrowing set forth herein
         such that the payment of any  Reimbursement  Obligation  cannot be made
         through  the  automatic  funding  of a Base Rate  Borrowing  and/or the
         Borrower or any Canadian  Borrower shall fail, for any reason,  to make
         such  payment  when due,  the Agent  shall  notify  each  Lender of the
         applicable LC Disbursement and/or such payments made by the Agent under
         the LC Guaranty,  the  unreimbursed  portion  thereof and such Lender's
         Applicable  Percentage  thereof.  Promptly  following  receipt  of such
         notice,  each  Lender  shall  pay to the  Agent  in  U.S.  Dollars  its
         Applicable   Percentage   of  the   unreimbursed   portion  of  the  LC
         Disbursement  and/or  any  payments  made  by the  Agent  under  the LC
         Guaranty, in the same manner as provided in Section 2.5 with respect to
         Loans made by such Lender  (and  Section 2.5 shall apply to the payment
         obligations  of the Lenders,  treating  each such payment as a Loan for
         this  purpose),  and the Agent shall promptly pay to the Issuing Lender
         the  amounts so  received by it from the  Lenders.  Promptly  following
         receipt by the Agent of any payment  from the  Borrower or any Canadian
         Borrower  pursuant to this paragraph,  the Agent shall  distribute such
         payment to the Issuing  Lender or, to the extent that the Lenders  have
         made  payments  pursuant to this  paragraph  to purchase  participation
         interests in the LC Disbursement  and/or the LC Guaranty,  then to such
         Lenders  and the Issuing  Lender as their  interests  may  appear.  Any
         payment  made by a Lender  pursuant  to this  paragraph  to  purchase a
         participation  interest in any LC Disbursement or any LC Guaranty shall
         not  constitute  a Loan and  shall  not  relieve  the  Borrower  or any
         Canadian  Borrower of its obligation to reimburse such LC  Disbursement
         or any  payment  made  by the  Agent  under  the LC  Guaranty.  For the
         avoidance  of doubt,  all  Reimbursement  Obligations  with  respect to
         Domestic  Letters of Credit or Foreign  Letters of Credit,  as the case
         may be, shall be paid in U.S. Dollars. The Borrower shall indemnify and
         hold  harmless the Issuing  Lender and the Agent for any loss,  cost or
         expense  incurred  by such  Persons  as a result  of any  change in the
         currency  exchange rate  occurring  during the period  between the date
         that  the  Issuing  Lender  makes  payment  on  any  Letter  of  Credit
         denominated in an Optional  Currency and/or the Agent makes any payment
         of the LC Guaranty with respect to any Letter of Credit  denominated in
         an Optional  Currency and the date on which the Issuing  Lender  and/or
         the Agent receives final  reimbursement  in U.S. Dollars for the Dollar
         Equivalent of the amount of such payment.

                  (f)  OBLIGATIONS  ABSOLUTE.  The  Borrower's  and the Canadian
         Borrowers'  obligations  to reimburse LC  Disbursements  or any payment
         made by the Agent under the LC  Guaranty,  as  provided  in  subsection
         2.4(e) shall be absolute,  unconditional and irrevocable,  and shall be
         performed strictly in accordance with the terms of this Agreement under
         any and all  circumstances  whatsoever and irrespective of (i) any lack
         of  validity  or  enforceability  of any  Letter  of  Credit  or the LC
         Guaranty,  or any term or  provision  therein,  (ii) any draft or other
         document  presented  under a Letter of  Credit  proving  to be  forged,
         fraudulent  or invalid in any respect or any  statement  therein  being
         untrue or  inaccurate  in any  respect,  (iii)  payment by the  Issuing


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<PAGE>

         Lender to the beneficiary under a Letter of Credit against presentation
         of a draft or other  document  that does not  comply  with the terms of
         such  Letter  of  Credit  and (iv)  any  other  event  or  circumstance
         whatsoever  (other than gross  negligence or willful  misconduct of the
         Issuing Lender),  whether or not similar to any of the foregoing,  that
         might,  but for the provisions of this Section 2.4,  constitute a legal
         or equitable discharge of the Borrower's obligations hereunder.

                  (g) INTERIM  INTEREST.  If the Issuing Lender and/or the Agent
         shall  make any LC  Disbursement  in  respect  of any  Letter of Credit
         and/or any payment in respect of the LC Guaranty , and if the  Borrower
         cannot  satisfy the  conditions to borrowing set forth herein such that
         payment  of  the  Reimbursement   Obligation  resulting  from  such  LC
         Disbursement  or with respect to the LC Guaranty cannot be made through
         the  automatic  funding  of a Base Rate  Borrowing,  then,  unless  the
         Borrower or the Canadian Borrowers, as applicable, shall reimburse such
         LC  Disbursement  or such payment made by the Agent with respect to the
         LC Guaranty in full on the date such LC Disbursement or such payment is
         made, the unpaid amount thereof shall bear interest,  for each day from
         and including the date such LC  Disbursement or such payment is made to
         but excluding the date that the Borrower or the Canadian Borrowers,  as
         applicable,  reimburses such LC  Disbursement  or such payment,  at the
         rate per annum then  applicable to Base Rate Loans;  PROVIDED  that, if
         the  Borrower  or  any  Canadian  Borrower,  as  applicable,  fails  to
         reimburse  such LC  Disbursement  or such  payment when due pursuant to
         subsection  2.4(e),  then interest  calculated at the Post-Default Rate
         shall accrue on the unpaid amount thereof. Interest accrued pursuant to
         this  paragraph  shall be for the account of the Issuing  Lender or the
         Agent,  as the case may be, except that  interest  accrued on and after
         the date of payment by any Lender  pursuant to subsection  2.4(e) shall
         be for the account of such Lender to the extent of such payment.

                  (h) CASH COLLATERALIZATION.  If either (i) an Event of Default
         shall occur and be continuing and the Borrower receives notice from the
         Agent or the Required Lenders  demanding the deposit of cash collateral
         pursuant to this  paragraph,  or (ii) the Borrower shall be required to
         provide  cash  collateral  in the amount  equal to 105% of the Total LC
         Exposure pursuant to subsections  2.1(d) or 2.8(b),  the Borrower shall
         immediately  deposit  with the Agent an amount in cash equal to, in the
         case of an Event of Default, the Total LC Exposure as of such date PLUS
         any accrued and unpaid  interest  thereon and any letter of credit fees
         incurred  thereunder  accrued or to be accrued  and, in the case of any
         cash collateral  required to be provided pursuant to subsections 2.1(d)
         or 2.8(b),  the amount required under subsections  2.1(d) or 2.8(b), as
         the case may be;  PROVIDED  that the  obligation  to deposit  such cash
         collateral shall become effective  immediately,  and such deposit shall
         become  immediately due and payable,  without demand or other notice of
         any kind,  upon the  occurrence  of any Event of Default  described  in
         clause (g) or (h) of Section  9.1.  Such  deposit  shall be held by the
         Agent as  collateral  in the first  instance  for the Total LC Exposure


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<PAGE>

         under  this  Agreement  and  thereafter  for the  payment  of any other
         obligations of the Credit Parties hereunder.

         2.5.  LOANS AND BORROWINGS; FUNDING OF BORROWINGS.

                  (a) LOANS AND  BORROWINGS.  Each  Loan of a  particular  Class
         shall be made as part of a Borrowing  consisting of Loans of such Class
         made  by the  Lenders  ratably  in  accordance  with  their  respective
         Commitments  of such Class.  The failure of any Lender to make any Loan
         required  to be made by it shall not  relieve  any other  Lender of its
         obligations hereunder; PROVIDED that the Commitments of the Lenders are
         several  and no Lender  shall be  responsible  for any  other  Lender's
         failure to make Loans as required herein.

                  (b) FUNDING OF BORROWINGS. Each Lender shall make each Loan to
         be made by it hereunder on the proposed  date thereof by wire  transfer
         of immediately available funds by 2:00 p.m., Boston, Massachusetts time
         to the  account of the Agent most  recently  designated  by it for such
         purpose  by  notice to the  Lenders.  The  Agent  will make such  Loans
         available  to  the  Borrower  by  promptly  crediting  the  amounts  so
         received,  in like  funds,  to one or  more  accounts  of the  Borrower
         maintained with the Agent; PROVIDED that Revolving Base Rate Loans made
         to finance the reimbursement of an LC Disbursement  under any Letter of
         Credit as provided  in  subsection  2.4(e) or any  payment  made by the
         Agent  under  the LC  Guaranty  shall be  remitted  by the Agent to the
         Issuing Lender.

                  (c)  AGENT'S  ASSUMPTION  THAT EACH  LENDER  WILL MAKE  LOANS.
         Unless the Agent shall have received  notice from a Lender prior to the
         proposed date of any Borrowing that such Lender will not make available
         to the  Agent  such  Lender's  share of such  Borrowing,  the Agent may
         assume that such Lender has made such share  available  on such date in
         accordance  with paragraph (b) of this Section 2.5 and may, in reliance
         upon such  assumption,  make available to the Borrower a  corresponding
         amount.  In such  event,  if a Lender has not in fact made its share of
         the applicable  Borrowing  available to the Agent,  then the applicable
         Lender and the Borrower  agree to pay to the Agent  forthwith on demand
         such corresponding  amount with interest thereon, for each day from and
         including  the date such amount is made  available  to the Borrower but
         excluding  the date of  payment  to the  Agent,  at the  Federal  Funds
         Effective Rate. If such Lender pays such amount to the Agent, then such
         amount shall constitute such Lender's Loan included in such Borrowing.

                  (d) SETTLEMENT.  In order to facilitate the  administration of
         the Loans  under this  Agreement,  the Agent and  Lenders  agree  (such
         agreement  shall not be for the benefit of or enforceable by the Credit
         Parties) that settlement among them with respect to the Revolving Loans
         may take place on a periodic basis (but not less  frequently  than once
         each week) on dates  determined  from time to time by the Agent (each a
         "SETTLEMENT  DATE"),  which may occur before or after the occurrence or
         during the  continuance  of any  Default or Event of  Default.  On each
         Settlement  Date,  payment  shall be made by or to each  Lender  in the


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<PAGE>

         manner  provided  herein and in accordance  with the settlement  report
         delivered by the Agent to the Lenders  with respect to such  Settlement
         Date so that, as of each Settlement Date and after giving effect to the
         transactions to take place on such  Settlement  Date, each Lender shall
         hold its Applicable  Percentage of all outstanding  Revolving Loans and
         its Applicable Percentage of the Total LC Exposure.

                  (e) SETTLEMENT LOANS.  Between Settlement Dates, the Agent may
         but shall not be  obligated  to advance (or may request that one of its
         Affiliates  advance),  to the  Borrower  out of the  Agent's  (or  such
         Affiliate's)  own funds up to $7,500,000 in the aggregate of Borrowings
         that are Base  Rate  Revolving  Loans  requested  or  deemed  requested
         pursuant to this Agreement (any such  Borrowing  funded  exclusively by
         the Agent or its Affiliate  being referred to as a "SETTLEMENT  LOAN").
         Each  Settlement  Loan shall  constitute a Revolving Loan hereunder and
         shall  be  subject  to  all  of  the  terms,  conditions  and  security
         applicable to other Revolving  Loans,  except that all payments thereon
         shall be  payable  to the Agent (or its  Affiliate)  solely for its own
         account.  The obligation of the Borrower to repay such Settlement Loans
         to the Agent (or its  Affiliate)  shall be  evidenced by the records of
         the Agent and need not be evidenced by any  promissory  note. The Agent
         shall not (and  shall not  permit  any of its  Affiliates  to) make any
         Settlement  Loan if (i) the Agent shall have  received  written  notice
         from any Lender that one or more of the applicable conditions precedent
         set forth in Sections  6.1 or 6.2 hereof will not be  satisfied  on the
         requested  funding date of the  applicable  Borrowing or (ii) the Agent
         has actual  knowledge  that the  requested  Borrowing  would exceed the
         limitations  set forth in  Section  2.1 on the  funding  date.  On each
         Settlement  Date, or, if earlier,  upon demand by the Agent for payment
         thereof, the then outstanding Settlement Loans shall be immediately due
         and payable. The Borrower shall be deemed to have requested Loans to be
         made  on  each  Settlement  Date  in  the  amount  of  all  outstanding
         Settlement Loans and the proceeds of such Loans shall be applied to the
         repayment of such Settlement  Loans. The Agent shall notify the Lenders
         of the  outstanding  balance  of the Loans  prior to 1:00 p.m.  (Boston
         time) on each  Settlement  Date and each Lender shall  deposit with the
         Agent an amount  equal to its  Applicable  Percentage  of the amount of
         Revolving  Loans deemed  requested in immediately  available  funds not
         later than 3:00 p.m. (Boston time) on such Settlement Date, and without
         regard to whether any Default or Event of Default  exists or any of the
         conditions in Sections 6.1 or 6.2 are not satisfied.  If any Settlement
         Loan is not repaid on the due date thereof, then on the second Business
         Day after the Agent's  request each Lender (other than the Agent in its
         capacity as a Lender) shall purchase a  participating  interest in such
         Settlement Loan in an amount equal to its Applicable Percentage of such
         Settlement Loan by transferring to the Agent, in immediately  available
         funds, the amount of such  participation,  without  duplication for any
         payment  previously  made. The proceeds of Settlement Loans may be used
         solely for purposes for which Loans generally may be used in accordance
         with this Agreement. If any amounts received by the Agent in respect of
         any  Settlement  Loans are later required to be returned or paid by the
         Agent  to  the  Borrower  or  their   respective   representatives   or


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         successors-in-interest,   whether  by  court   order,   settlement   or
         otherwise,  the other Lenders shall,  upon demand by the Agent,  pay to
         the Agent for its own account,  an amount equal to each other  Lender's
         Applicable  Percentage  of all such amounts  required to be returned by
         the Agent.

         2.6.  EXPIRATION, TERMINATION OR REDUCTION OF COMMITMENTS.

                  (a)  EXPIRATION  OF  REVOLVING  CREDIT   COMMITMENTS.   Unless
         previously  terminated,  (i) the  Revolving  Credit  Commitments  shall
         expire at the close of business on the Maturity Date, and (ii) the Term
         Loan Commitments  shall terminate  immediately after the funding of the
         Term Loan on the Closing Date.

                  (b) REDUCTION OF REVOLVING  CREDIT  COMMITMENTS.  The Borrower
         may at any time and  from  time to time  reduce  the  Revolving  Credit
         Commitments;  PROVIDED that (i) each reduction of the Revolving  Credit
         Commitments  shall be in an amount that is at least equal to $1,000,000
         or any greater multiple of $1,000,000,  and (ii) the Borrower shall not
         reduce the Revolving Credit  Commitments if, after giving effect to any
         concurrent  repayment,  the Domestic  Revolving  Credit  Exposure would
         exceed the Domestic  Revolving  Credit  Commitment.  The Borrower shall
         notify  the  Agent of any  election  to  reduce  the  Revolving  Credit
         Commitment at least five (5) Business Days prior to the effective  date
         of such reduction,  specifying the effective date thereof.  Each notice
         of reduction of the Revolving  Credit  Commitment shall be irrevocable.
         Each reduction of the Revolving  Credit  Commitment  shall be permanent
         and shall be made ratably  among the Lenders in  accordance  with their
         respective Revolving Credit Commitments.

                  (c)  OPTIONAL  TERMINATION  OF REVOLVING  CREDIT  COMMITMENTS.
         Subject to the provisions of subsection 2.6(d), the Borrower shall have
         the right at any time to terminate  the Revolving  Credit  Commitments.
         The Borrower  shall  notify the Agent of any election to terminate  the
         Revolving Credit Commitments under this subsection 2.6(c) in writing at
         least  five  (5)  Business  Days  prior to the  effective  date of such
         termination,  specifying  the effective  date  thereof.  Each notice of
         termination of the Revolving Credit  Commitments  shall be irrevocable.
         Any termination of the Revolving Credit Commitments shall be permanent.

                  (d) TERMINATION FEE. In connection with any termination of the
         Revolving Credit  Commitments,  the Borrower shall (i) repay the entire
         principal  balance  of, and all  accrued  interest  and fees owing with
         respect to, the Revolving Loans and the Term Loans, and (ii) pay to the
         Agent,  for the account of each Lender,  a termination fee equal to the
         product  of (A) the  sum of (x) the  average  amount  of the  Revolving
         Credit  Commitments during the twelve (12) months preceding the date of
         termination  (or,  if  such  termination  occurs  prior  to  the  first
         anniversary of the Closing Date,  during the period between the Closing
         Date and the date of  termination),  and (y) the average  amount of the
         aggregate  outstanding  principal  balance of the Term Loan  during the
         twelve  months   preceding  the  date  of  termination   (or,  if  such


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         termination  occurs prior to the first anniversary of the Closing Date,
         during the period between the Closing Date and the date of termination)
         MULTIPLIED  by (B) the  applicable  termination  percentage  set  forth
         below:


         ------------------------------------------------ ----------------------
                       Period during which                      Applicable
                     TERMINATION DATE OCCURS              TERMINATION PERCENTAGE
         ------------------------------------------------ ----------------------

         Prior to the first anniversary of the
         Closing Date                                               1.0%
         -------------------------------------------------- --------------------

         On or after the first  anniversary of the
         Closing Date but prior to the second
         anniversary of the Closing Date                            0.5%
         -------------------------------------------------- --------------------

         From and after the second anniversary of
         the  Closing Date                                            0%
         -------------------------------------------------- --------------------

         2.7.  PAYMENTS  GENERALLY;  PRO RATA  TREATMENT;  SHARING OF  SET-OFFS;
         COLLECTION.

                  (a)  PAYMENTS   GENERALLY.   The  Borrower  and  the  Canadian
         Borrowers  shall be obligated to make each payment  required to be made
         by the  Borrower  or  such  Canadian  Borrower  hereunder  (whether  of
         principal,  interest,  fees or  reimbursement of LC  Disbursements,  or
         otherwise) prior to 1:00 p.m. Boston,  Massachusetts  time, on the date
         when due, in immediately  available  funds,  in U.S.  Dollars,  without
         set-off or  counterclaim.  Any amounts  received after such time on any
         date  may,  in the  discretion  of the  Agent,  be  deemed to have been
         received  on  the  next   succeeding   Business  Day  for  purposes  of
         calculating  interest thereon.  All payments shall be made to the Agent
         at its offices in Boston, Massachusetts,  except that payments pursuant
         to Sections 2.4, 2.10,  2.11, 11.3 and subsection  2.3(e) shall be made
         directly to the Persons  entitled  thereto.  The Agent shall distribute
         any such payments received by it for the account of any other Person to
         the appropriate  recipient promptly following receipt thereof,  and the
         Borrower  and the  Canadian  Borrowers  shall have no  liability in the
         event timely or correct  distribution  of such payments is not so made.
         If any payment  shall be due on a day that is not a Business  Day,  the
         date for payment shall be extended to the next succeeding Business Day,
         and, in the case of any payment  accruing  interest,  interest  thereon
         shall be  payable  for the  period of such  extension.  Notwithstanding
         anything to the contrary set forth herein, subject to the conditions to
         the  funding of  Revolving  Loans set forth  herein,  all  payments  of
         interest,  fees and any other amounts due to be paid by the Borrower or
         any Canadian  Borrower  hereunder  shall be made through the  automatic
         funding of Base Rate Revolving Loans in amounts equal to the amounts of
         such interest,  fees or other amounts due to be paid by the Borrower or
         such Canadian  Borrower  hereunder,  and the Borrower and each Canadian
         Borrower  hereby  irrevocably  authorizes and directs the Agent to take
         such actions as may be necessary to effectuate  such automatic  funding
         of Base Rate Revolving  Loans,  and, upon funding of any such Base Rate


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<PAGE>

         Revolving Loan, the Borrower's and each Canadian Borrower's  obligation
         to make such payment shall be discharged  and replaced by the resulting
         Base Rate  Revolving  Loan.  The  Borrower and each  Canadian  Borrower
         expressly  acknowledges  and agrees that (i) the Agent may, in its sole
         discretion,  effectuate  the  automatic  funding  of a  Revolving  Loan
         pursuant to this subsection 2.7(a) even though at the time of, or after
         giving  effect to, the  funding of such  Revolving  Loans the  Domestic
         Revolving Credit Exposure exceeds the Domestic Gross Availability,  and
         (ii) if any one or more of the  conditions  to the funding of Revolving
         Loans  cannot  be  satisfied  and the  Agent,  in its sole  discretion,
         refuses to fund a Base Rate Revolving  Loan in an amount  sufficient to
         satisfy  the  amount  of  any  interest,  fees  or  other  amounts  due
         hereunder,  the  Borrower  and  such  Canadian  Borrower  shall  remain
         obligated  to pay the  full  amount  of such  interest,  fees or  other
         amounts as and when the same shall become due.

                  (b) CURRENCY MATTERS.

                           (i) U.S.  Dollars  are the  currency  of account  and
                  payment for each and every sum at any time due from the Credit
                  Parties hereunder.  No payment to the Agent, any Lender or the
                  Issuing  Lender  (whether under any judgment or court order or
                  otherwise)  shall  discharge  the  obligation  or liability in
                  respect  of which it was made  unless  and  until the Agent or
                  such  Lender  shall  have  received  payment  in  full in U.S.
                  Dollars in which such  obligation  or liability  was incurred,
                  and to the extent that the amount of any such  payment  shall,
                  on actual  conversion  into U.S.  Dollars,  fall short of such
                  obligation or liability actual or contingent expressed in U.S.
                  Dollars,  the Borrower  shall  indemnify and hold harmless the
                  Agent, the Issuing Lender or such Lender,  as the case may be,
                  with respect to the amount of the shortfall.

                           (ii) Not later  than 1:00 p.m.  (Boston  time) on the
                  last  Business Day of each  calendar  month (the  "CALCULATION
                  DATE") or such  other  date as the Agent may from time to time
                  specify,  the Agent shall  determine the Dollar  Equivalent of
                  Total LC Exposures as of such date.  The Dollar  Equivalent so
                  determined  shall become  effective on the first  Business Day
                  immediately  following such determination (a "RESET DATE") and
                  shall remain effective until the next succeeding Reset Date.

                           (iii) If, on any Reset Date, the Dollar Equivalent of
                  the aggregate  outstanding  amount of all Revolving  Loans and
                  Total LC Exposure  exceeds the Total Gross  Availability,  for
                  three (3) or more  consecutive  Business  Days (but only as to
                  the Reset Date),  then the Borrower  shall repay or prepay the
                  Revolving  Loans  in  accordance  with  this  Agreement  in an
                  aggregate  principal  amount such that,  after  giving  effect
                  thereto,  the aggregate  outstanding amount (expressed in U.S.
                  Dollars)  of all  Revolving  Loans PLUS Total LC  Exposure  no
                  longer exceeds the Total Gross Availability.


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<PAGE>


                           (iv) If on any Reset Date,  the Dollar  Equivalent of
                  the Foreign LC Exposure  (exclusive of the Canadian  Letter of
                  Credit)   exceeds   $5,000,000,   then  the   Borrower   shall
                  immediately  upon demand provide cash  collateral to the Agent
                  in the amount of such excess.

                  (c) PREPAYMENTS OF REVOLVING LOANS PRIOR TO EVENT OF DEFAULT.

                           (i)   CREDIT  FOR  FUNDS   RECEIVED.   Prior  to  the
                  occurrence  of an Event of  Default,  (A) all  funds  and cash
                  proceeds in the form of money,  checks and like items received
                  in the Controlled  Account  maintained at the Cash  Management
                  Bank as contemplated  by Section 4.3(a) shall be credited,  on
                  the same Business Day on which the Agent  determines that good
                  collected funds have been received,  and, prior to the receipt
                  of good collected  funds,  on a provisional  basis until final
                  receipt of good collected  funds,  and applied as contemplated
                  by subsection  2.7(c)(ii),  (B) all funds and cash proceeds in
                  the form of a wire transfer received in the Controlled Account
                  maintained  at the Cash  Management  Bank as  contemplated  by
                  Section  4.3(a) shall be credited on the same  Business Day as
                  the Agent's  receipt of such amounts (or up to such later date
                  as the Agent  determines  that good collected  funds have been
                  received),   and  applied  as   contemplated   by   subsection
                  2.7(c)(ii), and (C) all funds and cash proceeds in the form of
                  an  automated   clearing  house   transfer   received  in  the
                  Controlled  Account  maintained at the Cash Management Bank as
                  contemplated by Section 4.3(a) shall be credited,  on the next
                  Business Day following the Agent's receipt of such amounts (or
                  up to  such  later  date as the  Agent  determines  that  good
                  collected   funds  have  been   received),   and   applied  as
                  contemplated  by  subsection  2.7(c)(ii).  For purposes of the
                  foregoing provisions of this subsection  2.7(c)(i),  the Agent
                  shall not be deemed to have  received  any such  funds or cash
                  proceeds on any day unless  received by the Agent  before 1:00
                  p.m.   (Boston  time)  on  such  day.  The  Borrower   further
                  acknowledges and agrees that any such  provisional  credits or
                  credits in respect of wire or automatic  clearing  house funds
                  transfers shall be subject to reversal if final  collection in
                  good funds of the related  item is not  received  by, or final
                  settlement of the funds  transfer is not made in favor of, the
                  Agent in accordance with the Agent's customary  procedures and
                  practices  for  collecting   provisional  items  or  receiving
                  settlement of funds transfers.

                           (ii)  APPLICATION  OF PAYMENTS.  Prior to an Event of
                  Default,  funds received in the Controlled  Account maintained
                  at the Cash  Management Bank as contemplated by Section 4.3(a)
                  and for  which  the  Borrower  has  received  credit  shall be
                  applied as follows:

                                    (A)  first,  to pay  amounts  then  due  and
                           payable under this Agreement, the Notes and the other
                           Loan  Documents   (including,   without   limitation,
                           pursuant to Section 2.8);


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<PAGE>


                                    (B) second,  to reduce  Revolving Loans made
                           by the Agent  pursuant to  subsection  2.5(e) and for
                           which Settlement has not then been made;

                                    (C) third,  to reduce  Revolving Loans which
                           are Base Rate Loans;

                                    (D) fourth,  to reduce Revolving Loans which
                           are LIBOR Rate Loans;

                                    (E) fifth, to reduce the Term Loan; and

                                    (F)  sixth,  to  the  Borrower's   operating
                           account maintained with the Cash Management Bank.

                           All  prepayments  of the Revolving  Loans pursuant to
                  this  subsection  2.7(c) shall be subject to the provisions of
                  Section 2.3(e) and shall be allocated among the Lenders making
                  such Revolving Loans, in proportion, as nearly as practicable,
                  to the respective  unpaid  principal  amount of such Revolving
                  Loans outstanding,  with adjustments to the extent practicable
                  to equalize any prior  payments or  repayments  not exactly in
                  proportion.

                           Prior to the  occurrence of an Event of Default,  the
                  Borrower may elect to avoid the Breakage Costs associated with
                  any  prepayment  of LIBOR Rate Loans by providing to the Agent
                  cash in an amount sufficient to cash  collateralize such LIBOR
                  Rate Loans,  but in no event  shall the  Borrower be deemed to
                  have paid such LIBOR Rate Loans  until such cash has been paid
                  to the Agent for  application  to such Libor Rate  Loans.  The
                  Agent may elect to cause such cash  collateral to be deposited
                  into  either (i) a cash  collateral  account  pursuant  to the
                  terms of a cash collateral  agreement executed by the Borrower
                  and the Agent and in form and  substance  satisfactory  to the
                  Agent  or  (ii)  a   Controlled   Account   with   appropriate
                  instructions  prohibiting  the  Borrower's  withdrawal of such
                  funds so long as they  remain  cash  collateral.  In each such
                  case, the Borrower  agrees to execute and deliver to the Agent
                  such instruments and documents,  including Uniform  Commercial
                  Code financing  statements and agreements with any third party
                  depository banks, as the Agent may request.

                  (d) APPLICATION OF PAYMENTS AFTER EVENT OF DEFAULT.  After the
         occurrence  and during the  continuance  of an Event of Default,  funds
         received in the Controlled  Account  maintained at the Cash  Management
         Bank as  contemplated  by Section 4.3(a) and for which the Borrower has
         received credit and proceeds of Collateral  received by the Agent shall
         be applied as set forth in Section 9.2.


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<PAGE>


                  (e) PRO RATA TREATMENT. If any Lender shall, by exercising any
         right of  set-off  or  counterclaim  or  otherwise,  obtain  payment in
         respect  of any  principal  of or  interest  on any  of its  Loans  (or
         participations  in LC  Disbursements)  (other than pursuant to Sections
         2.4,  2.10 or 2.11),  resulting in such Lender  receiving  payment of a
         greater proportion of the aggregate  principal amount of its Loans (and
         participations in LC  Disbursements)  and accrued interest thereon than
         the proportion of such amounts  received by any other Lender,  then the
         Lender  receiving such greater  proportion  shall purchase (for cash at
         face value)  participations  in the Loans (and LC Disbursements) of the
         other  Lenders  to the  extent  necessary  so that the  benefit of such
         payments shall be shared by all the Lenders  ratably in accordance with
         the  aggregate  amount of  principal  of and accrued  interest on their
         respective Loans (and  participations  in LC  Disbursements);  PROVIDED
         that  (i) if any  such  participations  are  purchased  and  all or any
         portion  of  the  payment  giving  rise  thereto  is  recovered,   such
         participations  shall be rescinded and the purchase  price  restored to
         the extent of such recovery,  without  interest  unless the Lender from
         which such payment is recovered is required to pay interest thereon, in
         which case each Lender returning funds to such Lender shall pay its pro
         rata share of such interest,  and (ii) the provisions of this paragraph
         shall not be construed to apply to any payment  obtained by a Lender as
         consideration  for the assignment of or sale of a participation  in any
         of its Loans (or participations in LC Disbursements) to any assignee or
         participant,  other than to any Credit Party or any of its Subsidiaries
         or  Affiliate  thereof (as to which the  provisions  of this  paragraph
         shall apply). The Borrower consents to the foregoing and agrees, to the
         extent they may effectively do so under applicable law, that any Lender
         acquiring a participation  pursuant to the foregoing  arrangements  may
         exercise against the Borrower rights of set-off and  counterclaim  with
         respect to such  participation as fully as if such Lender were a direct
         creditor of the Borrower in the amount of such participation.

                  (f)  AGENT'S  ASSUMPTION  THAT  BORROWER  WILL MAKE  PAYMENTS.
         Unless the Agent shall have received  notice from the Borrower prior to
         the date on which any  payment  is due to the Agent for the  account of
         the Lenders or the Issuing  Lender  entitled  thereto (the  "APPLICABLE
         RECIPIENT") hereunder that the Borrower will not make such payment, the
         Agent may assume that the  Borrower  has made such payment on such date
         in  accordance  herewith  and may,  in reliance  upon such  assumption,
         distribute to the  Applicable  Recipient the amount due. In such event,
         if the Borrower has not in fact made such payment, then each Applicable
         Recipient  severally  agrees to repay to the Agent  forthwith on demand
         the amount so  distributed to such  Applicable  Recipient with interest
         thereon,  for each  day from and  including  the date  such  amount  is
         distributed to it to but excluding the date of payment to the Agent, at
         the Federal Funds Effective Rate.

                  (g) LENDER'S FAILURE TO MAKE PAYMENT. If any Lender shall fail
         to make any payment  required to be made by it pursuant to  subsections
         2.4(d), 2.4(e), 2.5(c) or 2.7(d), then the Agent may, in its discretion
         (notwithstanding  any  contrary  provision  hereof),  apply any amounts


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         thereafter  received  by the  Agent or the  account  of such  Lender to
         satisfy such Lender's  obligations under such subsection until all such
         unsatisfied obligations are fully paid.

         2.8.  PREPAYMENT OF LOANS.

                  (a) OPTIONAL PREPAYMENTS OF LOANS. The Borrower shall have the
         right at any time and from time to time to prepay the  Revolving  Loans
         in  whole or in  part,  subject  to prior  notice  in  accordance  with
         subsection  2.8(c) in the case of LIBOR Rate Loans,  and subject to the
         payment  of  any  amounts  due  under  subsection  2.3(e)  and,  if the
         Revolving  Credit  Commitment is  terminated,  subsection  2.6(d).  The
         Borrower  shall  have the  right  at any time and from  time to time to
         prepay the Term Loan in whole or in part,  subject  to prior  notice in
         accordance  with  subsection  2.8(c) and  subject to the payment of any
         amounts due under subsection  2.3(e) and, if the Term Loan is repaid in
         full,  subsection 2.6(d), and PROVIDED that each such prepayment of the
         Term Loan shall be in an amount  that is at least  equal to $500,000 or
         any greater multiple of $100,000.

                  (b) MANDATORY PREPAYMENTS. The Borrower shall be obligated to,
         and shall,  make  prepayments  of the Loans  hereunder  (and reduce the
         Revolving Credit Commitments hereunder) as follows:

                           (i)   INCURRENCE  OF  DEBT.   Without   limiting  the
                  obligation  of the  Borrower  to  obtain  the  consent  of the
                  Required   Lenders  to  any  incurrence  of  Indebtedness  not
                  otherwise  permitted  hereunder,  the Borrower agrees,  on the
                  closing of any incurrence of  Indebtedness  by the Borrower or
                  any of its  Subsidiaries  (other than  Indebtedness  permitted
                  pursuant to Section  8.1) to prepay the Loans  hereunder  (and
                  provide cash  collateral for Total LC Exposure as specified in
                  subsection  2.4(h)),  and  the  Revolving  Credit  Commitments
                  hereunder  shall be subject to automatic  reduction,  upon the
                  date of  such  incurrence  of  Indebtedness,  in an  aggregate
                  amount  equal to 100% of the  amount of the Net Cash  Payments
                  from such incurrence of Indebtedness  received by the Borrower
                  and its  Subsidiaries,  such  prepayment  and  reduction to be
                  effected  in  each  case  in the  manner  and  to  the  extent
                  specified in subsection 2.8(c) below.

                           (ii) SALE OR OFFERING  OF  SECURITIES.  The  Borrower
                  agrees  on the  closing  of any  offering  or sale  of  equity
                  securities  by the  Borrower  or any of its  Subsidiaries,  to
                  prepay the Loans  hereunder  (and provide cash  collateral for
                  Total LC Exposure as specified in subsection 2.4(h)), upon the
                  date of such sale or offering of  securities,  in an aggregate
                  amount equal to 100% of the amount of Net Cash  Payments  from
                  such offering of  securities  received by the Borrower and its
                  Subsidiaries,  and such prepayment to be effected in each case
                  in the manner and to the extent specified in subsection 2.8(c)
                  below.

                           (iii) SALE OF ASSETS. Without limiting the obligation
                  of the Borrower or any Canadian  Borrower (as the case may be)


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<PAGE>

                  to  obtain  the  consent  of  the  Required   Lenders  to  any
                  Disposition not otherwise  permitted  hereunder,  the Borrower
                  agrees,  on the date of any Disposition by the Borrower or any
                  of its Subsidiaries  (other than Dispositions  permitted under
                  (A) Section  8.4(b)(v) of assets not  comprising the Term Loan
                  Borrowing  Base or Canadian  Borrowing Base to the extent that
                  the  aggregate  Net Cash  Payments  received  therefrom do not
                  exceed  $500,000 and (B) Section  8.4(b)(vii)),  to prepay the
                  Loans  hereunder  (and  provide cash  collateral  for Total LC
                  Exposure as specified in subsection 2.4(h)),  upon the date of
                  such Disposition  (except as provided below),  in an aggregate
                  amount  equal to 100% of the amount of such Net Cash  Payments
                  from such  Disposition  received by the Borrower or any of its
                  Subsidiaries  upon the  date of such  Disposition  (except  as
                  provided  below),  and such  prepayment to be effected in each
                  case in the manner and to the extent  specified in  subsection
                  2.8(c)  below,  PROVIDED  THAT,  the  Borrowers  shall  not be
                  required  to prepay  the Loans with the Net Cash  Payments  of
                  Dispositions  of  Specified  Assets  permitted  under  Section
                  8.4(b)(vi)  so  long  as  the  Net  Cash  Payments  from  such
                  Dispositions  are used for a Permitted Asset Sale  Prepayment,
                  PROVIDED FURTHER THAT to the extent that the Net Cash Payments
                  from such  Dispositions are not applied  immediately to prepay
                  the Senior Notes or the Senior Subordinated Notes, as the case
                  may be,  such  Net  Cash  Payments  shall,  at the time of the
                  Disposition, be applied to prepay the Revolving Loans.

                           (iv) EXTRAORDINARY  RECEIPTS. Upon the receipt by any
                  Credit Party or any of its  Subsidiaries of any  Extraordinary
                  Receipts,  the Borrower  shall make a prepayment  to the Loans
                  (and  provide  cash   collateral  for  Total  LC  Exposure  as
                  specified in  subsection  2.4(h)),  and such  prepayment to be
                  effected  in  each  case  in the  manner  and  to  the  extent
                  specified  in  subsection  2.8(c)  below in an amount equal to
                  100% of such  Extraordinary  Receipts,  net of any  reasonable
                  expenses incurred in collecting such  Extraordinary  Receipts;
                  PROVIDED,  that in the case of insurance  proceeds received in
                  connection  with a  Casualty  Event with  respect to  Property
                  having an aggregate market value less than $1,500,000, so long
                  as, at the time of receipt and use of such insurance proceeds,
                  no Event of Default shall have occurred and be continuing, the
                  Credit  Parties  shall  be  entitled  to  use  such  insurance
                  proceeds (in an amount not in excess of  $1,500,000) to repair
                  or replace  the  Property  affected  by such  Casualty  Event,
                  PROVIDED,  further,  that (A)  until so used,  such  insurance
                  proceeds  shall be deposited  into a cash  collateral  account
                  (and  when  so  deposited   such   insurance   proceeds  shall
                  constitute  Collateral for the Obligations then  outstanding),
                  (B) such  insurance  proceeds  may be used solely to repair or
                  replace the  Property  that was the  subject of such  Casualty
                  Event with other Property of the same type, (C) such insurance
                  proceeds  must be used and such  Property  must be repaired or
                  replaced  within 180 days  after the date of receipt  thereof,
                  and (D) upon the occurrence  and during the  continuance of an
                  Event of  Default  or after  such 180 day  period  shall  have


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                  expired,  such insurance  proceeds,  if not so used,  shall be
                  applied  to the  prepayment  of Loans  and  cover for Total LC
                  Exposure as provided in this subsection 2.8(c).

                           (v)  EXCESS  CASH  FLOW.  (A) Within ten (10) days of
                  delivery  to the  Agent  and the  Lenders  of  audited  annual
                  financial statements pursuant to Section 7.1(a)(i), commencing
                  with  the  delivery  to  the  Agent  and  the  Lenders  of the
                  financial  statements for the fiscal year ended March 31, 2004
                  or, if such  financial  statements  are not  delivered  to the
                  Agent and the Lenders on the date such statements are required
                  to be delivered pursuant to Section 7.01(a)(i),  ten (10) days
                  after the date such statements are required to be delivered to
                  the Agent and the Lenders pursuant to Section 7.01(a)(i),  the
                  Borrower  shall  make a  prepayment  in the  manner and to the
                  extent specified in subsection 2.8(c) below in an amount equal
                  to 50% of the  Excess  Cash  Flow  of  the  Borrower  and  its
                  Subsidiaries for such fiscal year.

                           (vi) EXCESS CASH AND  PERMITTED  INVESTMENTS.  In the
                  event  that the  aggregate  amount  of the cash and  Permitted
                  Investments  of the  Credit  Parties  and  their  Subsidiaries
                  (excluding  investments  permitted  under  clause  (g)  of the
                  definition  of  Permitted  Investments)  exceeds  at any  time
                  $1,500,000,  the Borrower shall  immediately make a prepayment
                  of the Loans in the  manner  and to the  extent  specified  in
                  subsections  2.8(a) or (c)  below in an  amount  equal to such
                  excess.

                  (c) APPLICATION OF PREPAYMENTS.

                           (i)  Upon  receipt  of Net  Cash  Payments  from  the
                  Disposition  of, or  Casualty  Event  relating  to,  any asset
                  comprising the Canadian Borrowing Base or otherwise owned by a
                  Canadian  Borrower,  100% of such Net Cash  Payments from such
                  Disposition  or such Casualty Event shall be applied to reduce
                  the  Canadian  Facility  with  a  permanent  reduction  in the
                  commitment  under the  Canadian  Facility and in the amount of
                  the Canadian Letter of Credit.

                           (ii) In the  event  of any  mandatory  prepayment  of
                  Loans pursuant to subsections 2.8(b) other than as provided in
                  subsection  2.8(c)(i),   the  proceeds  shall  be  applied  as
                  follows:  FIRST, if such prepayment is made at a time when any
                  part of the Term Loan  remains  outstanding,  such  prepayment
                  shall be applied  to the  repayment  of the Term  Loan,  to be
                  shared and applied  ratably among the Lenders in proportion to
                  the outstanding  amount of the Term Loan owing to each Lender,
                  and applied  against the remaining  scheduled  installments of
                  the Term Loan in the inverse  order of  maturity;  and SECOND,
                  after the Term Loan has been repaid in full, the amount of any
                  mandatory  prepayment  shall be  applied,  to repay  Revolving
                  Loans,  and, to provide cash  collateral for Total LC Exposure
                  as  specified  in  Section  2.4(h),  and with a  corresponding


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                  permanent  reduction in the Revolving  Credit  Commitments and
                  corresponding increase in the Domestic Prepayment Reserve.

                  With respect to any mandatory  prepayment of LIBOR Rate Loans,
         such mandatory prepayment shall be subject to subsection 2.3(e)."

                  (d)  NOTIFICATION OF CERTAIN  PREPAYMENTS.  The Borrower shall
         notify the Agent by telephone  (confirmed by telecopy) of any voluntary
         prepayment  of the Term Loan or any LIBOR Rate Loan not later than 1:00
         p.m., Boston,  Massachusetts  time, three Business Days before the date
         of  such  prepayment.  The  Borrower  shall  notify  the  Agent  of any
         mandatory  prepayment  of  the  Loans  pursuant  to  subsection  2.8(b)
         hereunder as soon as practicable. Each such notice shall be irrevocable
         and shall specify the prepayment date and the principal  amount of each
         Borrowing or portion thereof to be prepaid.  Promptly following receipt
         of any such notice relating to a Borrowing,  the Agent shall advise the
         Lenders of the contents thereof.

                  (e)  PREPAYMENTS  ACCOMPANIED BY INTEREST.  All prepayments of
         the Term Loan shall be accompanied by accrued interest through the date
         of prepayment.

         2.9.  FEES.

                  (a) FEES.  The Borrower shall pay to the Agent for the account
         of each  Lender and the Agent,  fees and  expenses in the amount and at
         the times specified in the Fee Letter.

                  (b) UNUSED FEE.  The  Borrower  shall pay to the Agent for the
         account of each Lender unused fees in respect of the  Revolving  Credit
         Commitments,  in an  aggregate  amount  equal to the product of (x) the
         rate per annum equal to one-half of one percent  (1/2%),  MULTIPLIED BY
         (y) the daily average unused amounts of the respective Revolving Credit
         Commitment of such Lender during the period from and including the date
         on which the  Closing  Date shall  occur to but  excluding  the date on
         which the Revolving Credit Commitments  terminate.  Accrued unused fees
         shall be payable  monthly in arrears on the first day of each month and
         on the date on which the Revolving Credit  Commitments  terminate.  All
         unused  fees shall be  computed  on the basis of a year of 360 days and
         shall be payable for the actual number of days elapsed  (including  the
         first day but excluding the last day).

                  (c) LETTER OF CREDIT FEES.  The  Borrower  shall pay the Agent
         through the Agent's  Treasury  and  International  Services  Group with
         respect to Letters of Credit issued hereunder the following fees:

                           (i)  with  respect  to each  standby  or  documentary
                  Letter of Credit and the LC Guaranty issued hereunder,  to the
                  Agent for the accounts of the Lenders a participation fee with
                  respect to their  participations  in such Letters of Credit or
                  LC Guaranty  which fee shall  accrue at a rate per annum equal


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                  to (x) the  Applicable  Margin  with  respect  to  LIBOR  Rate
                  Revolving Loans  MULTIPLIED BY (y) the average daily amount of
                  outstanding  Letters  of Credit  during  the  period  from and
                  including  the Closing Date to but  excluding the later of the
                  date on which  there  shall no longer be any Letters of Credit
                  outstanding hereunder;

                           (ii) with  respect  to each  documentary  or  standby
                  Letter of Credit issued  hereunder,  to the Issuing Lender,  a
                  fronting fee equal to 0.25% per annum of the available  amount
                  of each  Letter of  Credit,  along with the  Issuing  Lender's
                  standard fees with respect,  but not limited, to the issuance,
                  amendment,  renewal  or  extension  of any Letter of Credit or
                  processing of drawings thereunder;

                           (iii)  Accrued  fees for  Letters of Credit  shall be
                  computed  on the  basis  of a year of 360  days  and  shall be
                  payable for the actual number of days elapsed  (including  the
                  first day but  excluding  the last day),  and shall be payable
                  monthly  in  arrears on the first day of each month and on the
                  date the Revolving Credit Commitments terminate, or such other
                  date as the Agent or the Issuing  Lender may from time to time
                  specify,  commencing on the first such date to occur after the
                  Closing Date,  PROVIDED that any such fees accruing  after the
                  date on which the Revolving Credit Commitments terminate shall
                  be payable on demand.

                  (d) All fees payable hereunder shall be paid on the dates due,
         in immediately available funds. Fees paid shall not be refundable under
         any circumstances,  absent manifest error in the determination thereof,
         and unless  otherwise  agreed by the  Agent,  all fees shall be paid in
         U.S. Dollars.

         2.10.  INCREASED COSTS.

                  (a) If any Change in Law shall:

                           (i) impose,  modify or deem  applicable  any reserve,
                  special  deposit or  similar  requirement  against  assets of,
                  deposits  with or for the account of, or credit  extended  by,
                  any Lender or the Issuing Lender; or

                           (ii)  impose on any Lender or the  Issuing  Lender or
                  the London interbank market any other condition affecting this
                  Agreement  or LIBOR  Rate  Loans  made by such  Lender  or any
                  Letter of Credit or participation therein;

                  and the result of any of the  foregoing  shall be to  increase
         the cost to such  Lender of making or  maintaining  any LIBOR Rate Loan
         (or of maintaining its obligation to make any such Loan) or to increase
         the cost to such  Lender or the  Issuing  Lender of  participating  in,
         issuing or maintaining  any Letter of Credit or to reduce the amount of


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         any sum  received or  receivable  by such Lender or the Issuing  Lender
         hereunder  (whether  of  principal,  interest or  otherwise),  then the
         Borrower will pay to such Lender or the Issuing Lender, as the case may
         be, such additional amount or amounts as will compensate such Lender or
         the  Issuing  Lender,  as the case may be,  for such  additional  costs
         incurred or reduction suffered.

                  (b) If any Lender or the Issuing Lender reasonably  determines
         that any Change in Law regarding capital requirements has or would have
         the  effect of  reducing  the rate of return  on such  Lender's  or the
         Issuing  Lender's  capital or on the  capital of such  Lender's  or the
         Issuing  Lender's  holding  company,  if any, as a consequence  of this
         Agreement or the Loans made by, or  participations in Letters of Credit
         held by, such  Lender,  or the Letters of Credit  issued by the Issuing
         Lender,  to a level below that which such Lender or the Issuing  Lender
         or such  Lender's or the Issuing  Lender's  holding  company could have
         achieved  but for such Change in Law (taking  into  consideration  such
         Lender's  or the Issuing  Lender's  policies  and the  policies of such
         Lender's  or the  Issuing  Lender's  holding  company  with  respect to
         capital adequacy), then from time to time the Borrower will pay to such
         Lender  or the  Issuing  Lender,  as the case may be,  such  additional
         amount or amounts as will compensate such Lender or the Issuing Lender,
         or such Lender's or the Issuing Lender's holding company,  for any such
         reduction suffered.

                  (c) A certificate  of a Lender or the Issuing  Lender  setting
         forth the amount or amounts  necessary to compensate such Lender or the
         Issuing Lender or its holding company, as the case may be, as specified
         in  subsections  2.10(a) or 2.10(b)  above  shall be  delivered  to the
         Borrower  and shall be  conclusive  so long as it reflects a reasonable
         basis for the calculation of the amounts set forth therein and does not
         contain any manifest  error.  The Borrower shall pay such Lender or the
         Issuing Lender the amount shown as due on any such  certificate  within
         10 days after receipt thereof.

                  (d)  Failure or delay on the part of any Lender or the Issuing
         Lender to demand  compensation  pursuant to this Section 2.10 shall not
         constitute a waiver of such Lender's or the Issuing  Lender's  right to
         demand  such  compensation;  PROVIDED  that the  Borrower  shall not be
         required to compensate a Lender or the Issuing Lender  pursuant to this
         Section 2.10 for any increased  costs or reductions  incurred more than
         six months prior to the date that such Lender or the Issuing Lender, as
         the case may be, notifies the Borrower of the Change in Law giving rise
         to such  increased  costs or  reductions  and of such  Lender's  or the
         Issuing Lender's  intention to claim  compensation  therefor;  PROVIDED
         further that, if the Change in Law giving rise to such increased  costs
         or  reductions  is  (i)  retroactive  and  (ii)  occurred  within  such
         six-month  period,  then the six-month  period referred to above may be
         extended to include the period of retroactive effect thereof, but in no
         event any period prior to the Closing Date.

         2.11.  TAXES; SETOFF; ETC.


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                  (a) Any and all  payments by or on account of any  Obligations
         of the  Borrower  and the Canadian  Borrowers  hereunder  shall be made
         without  recoupment,  setoff or counterclaim  and free and clear of and
         without  deduction for any Indemnified  Taxes or Other Taxes;  PROVIDED
         that if the  Borrower  or any  Canadian  Borrower  shall be required to
         deduct any  Indemnified  Taxes or Other Taxes from such payments,  then
         (i) the sum  payable  shall be  increased  as  necessary  so that after
         making all required  deductions  (including  deductions  applicable  to
         additional sums payable under this Section 2.11) the Agent,  any Lender
         or the Issuing  Lender (as the case may be) receives an amount equal to
         the sum it would have received had no such  deductions  been made, (ii)
         the Borrower or such Canadian  Borrower shall make such  deductions and
         (iii) the Borrower or such Canadian  Borrower shall pay the full amount
         deducted to the  relevant  Governmental  Authority in  accordance  with
         applicable law.

                  (b) In addition, the Borrower and the Canadian Borrowers shall
         pay  all  Other  Taxes  to  the  relevant  Governmental   Authority  in
         accordance with applicable law.

                  (c) The Borrower and each Canadian  Borrower  shall  indemnify
         the Agent,  each  Lender and the Issuing  Lender,  within 10 days after
         written demand therefor,  for the full amount of any Indemnified  Taxes
         or Other Taxes (including  Indemnified  Taxes or Other Taxes imposed or
         asserted on or attributable to amounts payable under this Section 2.11)
         paid by the Agent,  such Lender or the Issuing Lender,  as the case may
         be  (and  any  penalties,  interest  and  reasonable  expenses  arising
         therefrom  or with  respect  thereto  during  the  period  prior to the
         Borrower  or such  Canadian  Borrower,  as the case may be  making  the
         payment  demanded  under  this  paragraph  (c)),  whether  or not  such
         Indemnified  Taxes or Other Taxes were correctly or legally  imposed or
         asserted by the relevant  Governmental  Authority.  A certificate as to
         the amount of such  payment or  liability  delivered to the Borrower or
         any  Canadian  Borrower,  as the case may be by a Lender or the Issuing
         Lender,  or by the Agent on its own  behalf or on behalf of a Lender or
         the Issuing Lender shall be conclusive absent manifest error.

                  (d) As soon as  practicable  after any payment of  Indemnified
         Taxes or Other  Taxes by the  Borrower  or any  Canadian  Borrower to a
         Governmental  Authority,  the Borrower or such Canadian  Borrower shall
         deliver  to the Agent the  original  or a  certified  copy of a receipt
         issued by such Governmental  Authority  evidencing such payment, a copy
         of the return  reporting such payment or other evidence of such payment
         reasonably satisfactory to the Agent.

                  (e) Any Foreign  Lender that is entitled to an exemption  from
         or  reduction of  withholding  tax under the law of a  jurisdiction  in
         which the Borrower or any Canadian  Borrower is located,  or any treaty
         to which such  jurisdiction is a party,  with respect to payments under
         this Agreement shall deliver to the Borrower or such Canadian  Borrower
         (with  a copy  to the  Agent),  at the  time  or  times  prescribed  by


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         applicable law or reasonably requested by the Borrower or such Canadian
         Borrower, such properly completed and executed documentation prescribed
         by  applicable  law as will  permit such  payments  to be made  without
         withholding or at a reduced rate.

         2.12.  MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.

                  (a) DESIGNATION OF A DIFFERENT  LENDING OFFICE.  If any Lender
         requests  compensation  under  Section  2.10,  or if  the  Borrower  is
         required to pay any additional amount to any Lender or any Governmental
         Authority for the account of any Lender  pursuant to Section 2.11, then
         such  Lender  shall use  reasonable  efforts to  designate  a different
         lending office for funding or booking its Loans hereunder, or to assign
         its  rights  and  obligations  hereunder  to  another  of its  offices,
         branches  or  Affiliates,  if, in the  judgment  of such  Lender,  such
         designation or assignment (i) would eliminate or reduce amounts payable
         pursuant to Section 2.10 or 2.11, as the case may be, in the future and
         (ii) would not subject such Lender to any material unreimbursed cost or
         expense and would not otherwise be  disadvantageous to such Lender. The
         Borrower  hereby  agrees  to pay  all  reasonable  costs  and  expenses
         incurred  by any  Lender in  connection  with any such  designation  or
         assignment.

                  (b)   REPLACEMENT   OF   LENDERS.   If  any  Lender   requests
         compensation  under Section 2.10, or if any Borrower is required to pay
         any additional  amount to any Lender or any Governmental  Authority for
         the account of any Lender  pursuant to Section  2.11,  or if any Lender
         defaults in its obligation to fund Loans  hereunder,  then the Borrower
         may, at its sole expense and effort, upon notice to such Lender and the
         Agent, require such Lender to assign and delegate, without recourse (in
         accordance  with and subject to the  restrictions  contained in Section
         11.4, all its interests, rights and obligations under this Agreement to
         an assignee that shall assume such  obligations  (which assignee may be
         another Lender, if a Lender accepts such assignment); PROVIDED that (i)
         the Borrower shall have received the prior written consent of the Agent
         and the  Issuing  Lender,  which  consents  shall not  unreasonably  be
         withheld or delayed, (ii) such Lender shall have received payment of an
         amount   equal  to  the   outstanding   principal  of  its  Loans  (and
         participations in LC Disbursements),  accrued interest thereon, accrued
         fees and all other amounts  payable to it hereunder,  from the assignee
         (to the extent of such  outstanding  principal and accrued interest and
         fees) or the Borrower  (in the case of all other  amounts) and (iii) in
         the case of any such assignment resulting from a claim for compensation
         under Section 2.10 or payments  required to be made pursuant to Section
         2.11, such  assignment will result in a reduction in such  compensation
         or payments. A Lender shall not be required to make any such assignment
         and  delegation  if,  prior  thereto,  as a result  of a waiver by such
         Lender or  otherwise,  the  circumstances  entitling  the  Borrower  to
         require such assignment and delegation cease to apply.

         2.13. CHANGE IN DOMESTIC  BORROWING BASE,  CANADIAN  BORROWING BASE AND
TERM LOAN BORROWING BASE. The Domestic Borrowing Base and the Canadian Borrowing
Base shall be determined  monthly (or at such other interval as may be specified


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pursuant to  subsection  7.1) by the Agent by  reference to the  Borrowing  Base
Certificate,  commercial  finance and collateral  audit reports,  the Collateral
Update Certificate or Accounts  Receivable/Loan  Reconciliation Report delivered
to the  Lenders  and the Agent  pursuant  to  subsection  7.1(g).  The Term Loan
Borrowing  Base shall be determined  from time to time by the Agent by reference
to the  appraisals  or  reappraisals  of Eligible  Fixed Assets or Real Property
Assets  delivered  to the Lenders  and the Agent  pursuant  to  subsection  7.1,
respectively  and other  information  obtained by or provided to the Agent.  The
Agent shall give to the  Borrower  written  notice of any change in the Domestic
Borrowing Base, Canadian Borrowing Base or Term Loan Borrowing Base, as the case
may be determined by the Agent.  Such notice shall be effective upon its receipt
by the Borrower.

         2.14  CANADIAN FACILITY.

                  (a) On, and from time to time  after,  the Closing  Date,  the
         Agent  shall,  subject to the terms and  conditions  set forth  herein,
         cause the Issuing  Lender to issue for the account of the  Borrower and
         the Canadian  Borrowers,  and for the benefit of the Canadian Lender, a
         letter of credit (the "CANADIAN LETTER OF CREDIT") in the original face
         amount of $6,000,000  U.S.  Dollars or the Canadian  Dollar  equivalent
         thereof  (the  "CANADIAN  SUBLIMIT").  The face amount of the  Canadian
         Letter of Credit and the  Canadian  Sublimit are subject to change from
         time upon the  agreement  of the  Borrower,  the Agent and the  Issuing
         Lender; PROVIDED however, the Canadian Sublimit may not be increased by
         more than $2,000,000 without the prior consent of the Required Lenders.

                  (b) The  Canadian  Lender  and the  Canadian  Borrowers  shall
         execute  and deliver a  commitment  letter  (the  "CANADIAN  COMMITMENT
         LETTER"),  pursuant to which the Canadian Lender shall agree to lend to
         the Canadian Borrowers and the Canadian Borrowers may borrow, repay and
         reborrow  from time to time  between the Closing  Date and the Maturity
         Date upon notice pursuant to the Canadian  Commitment Letter, such sums
         as are  requested by the Canadian  Borrowers up to a maximum  aggregate
         amount  outstanding  (after giving effect to all amounts  requested) at
         any one time equal to Canadian  Sublimit;  PROVIDED  that (after giving
         effect to all  amounts  requested  under  the  Canadian  Facility)  the
         Domestic  Revolving  Credit  Exposure  plus the Canadian  Excess Amount
         shall not at any time exceed the Domestic Gross Availability. The Agent
         shall have the right pursuant to the Canadian Commitment Letter and the
         Canadian Intercreditor  Agreement to limit from time to time the amount
         of loans and other  extensions  of credit  which may be advanced by the
         Canadian Lender to the Canadian Borrowers.

                  (c) The  Obligations of the Canadian  Borrowers to the Issuing
         Lender,  the Agent and the Lenders in respect of the Canadian Letter of
         Credit,  shall be (i)  guaranteed  by the Borrower  and the  Guarantors
         pursuant to the Guarantee and (ii) secured by a First  Priority Lien in
         favor of the Agent,  for the benefit of the  Lenders and the Agent,  on
         all  tangible  and  intangible  property  and  assets of such  Canadian


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         Borrowers, wherever located, whether now owned or existing or hereafter
         acquired or arising,  together with any and all  additions  thereto and
         replacements therefor and proceeds and products thereof, as further set
         forth in the Canadian Loan Documents.

                                   ARTICLE 3.

                             GUARANTEE BY GUARANTORS

         3.1. THE GUARANTEE. The Guarantors hereby guarantee to each Lender, the
Issuing  Lender and the Agent and their  respective  successors  and assigns the
prompt payment in full when due (whether at stated maturity,  by acceleration or
otherwise) as well as the performance, of all of the Obligations. The Guarantors
hereby further agree that if the Borrower or any Canadian Borrower,  as the case
may be,  shall  fail to pay in full when due  (whether  at stated  maturity,  by
acceleration  or otherwise) or perform any of its  Obligations,  the  Guarantors
will promptly pay or perform the same,  without any demand or notice whatsoever,
all of which are  expressly  waived by the Guarantor and that in the case of any
extension of time of payment or renewal of any of the Obligations, the same will
be promptly paid in full when due (whether at extended maturity, by acceleration
or  otherwise)  or perform in  accordance  with the terms of such  extension  or
renewal.  Payments by the  Guarantors  hereunder may be required by the Agent on
any number of occasions.

         3.2. OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors under
Section  3.1  are  absolute  and   unconditional   irrespective  of  the  value,
genuineness, validity, regularity or enforceability of this Agreement, the other
Loan  Documents  or any other  agreement  or  instrument  referred  to herein or
therein,  or any substitution,  release or exchange of any other guarantee of or
security for any of the  Obligations,  and, to the fullest  extent  permitted by
applicable  law,  irrespective of any other  circumstance  whatsoever that might
otherwise  constitute a legal or  equitable  discharge or defense of a surety or
guarantor,  it being the intent of this Section 3.2 that the  obligations of the
Guarantors  hereunder  shall be  absolute  and  unconditional  under any and all
circumstances.  Without  limiting the generality of the foregoing,  it is agreed
that the  occurrence  of any one or more of the  following  shall  not  alter or
impair the liability of the Guarantors hereunder which shall remain absolute and
unconditional as described above:

                  (i) at any time or from time to time,  without  notice to such
         Guarantors, the time for any performance of, place or manner of payment
         or  compliance  with  any  of  the   Obligations   shall  be  extended,
         compromised,  renewed, modified or such performance or compliance shall
         be waived, as the case may be;

                  (ii)  the  maturity  of  any  of  the  Obligations   shall  be
         accelerated, or any of the Obligations shall be modified,  supplemented
         or amended in any  respect,  or any right  hereunder or under the other
         Loan Documents or any other agreement or instrument  referred to herein
         or  therein  shall  be  waived  or any  other  guarantee  of any of the


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         Obligations or any security  therefor shall be released or exchanged in
         whole or in part or otherwise dealt with;

                  (iii) the adequacy of any rights which the Agent or any Lender
         may have  against any  collateral  security or other means of obtaining
         repayment of any of the Obligations;

                  (iv) any lien or security interest granted to, or in favor of,
         the Agent,  the Issuing Lender or any Lender or Lenders as security for
         any of the Obligations shall fail to be perfected, any rights which the
         Agent,  the Issuing  Lender or any Lender or Lenders might have in such
         Collateral  shall  have  failed to be  preserved  or any  substitution,
         exchange,   surrender,   release,  loss  or  destruction  of  any  such
         collateral security;

                  (v) the  addition,  substitution  or  release of any entity or
         other Person  primarily or secondarily  liable for any  Obligation;  or
         (vi) any act or  omission  which  might in any  manner or to any extent
         vary the risk of such  Guarantor or  otherwise  operate as a release or
         discharge of such Guarantor, all of which may be done without notice to
         such Guarantor.

         The  Guarantors   hereby   expressly   waive   promptness,   diligence,
presentment,  demand  of  payment,  protest  and  all  notices  whatsoever,  any
requirement  that the Agent, the Issuing Lender or any Lender exhaust any right,
power or remedy  or  proceed  against  the  Borrower  or any  Canadian  Borrower
hereunder or under the other Loan Documents or any other agreement or instrument
referred  to herein or  therein,  or against  any other  Person  under any other
guarantee of, or security for, any of the Obligations and all defenses which may
be available by virtue of any valuation,  stay,  moratorium law or other similar
law now or hereafter in effect. The Guarantors expressly and knowingly waive all
suretyship  defenses  which might  otherwise  accrue  without their  Obligations
hereunder and under the other Loan Documents.

         To the fullest extent permitted by law, each Guarantor hereby expressly
waives any and all rights or defenses  arising by reason of (A) any "one action"
or  "anti-deficiency"  law which would otherwise prevent the Agent or any Lender
from bringing any action,  including  any claim for a deficiency,  or exercising
any  other  right or  remedy  (including  any right of  set-off),  against  such
Guarantor  before  or  after  the  Agent's  or  such  Lender's  commencement  or
completion of any foreclosure action,  whether judicially,  by exercise of power
of sale or  otherwise,  or (B) any  other  law  which  in any  other  way  would
otherwise require any election of remedies by the Agent or any Lender.

         3.3.  REINSTATEMENT.  The  obligations  of the  Guarantors  under  this
Article 3 shall be  automatically  reinstated  if and to the extent that for any
reason any payment by or on behalf of the Borrower or any  Canadian  Borrower in
respect of its  Obligations  is rescinded  or must be otherwise  restored by any
holder of any of its  Obligations,  whether  as a result of any  proceedings  in


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bankruptcy or  reorganization  or otherwise,  and each Guarantor  agrees that it
will  indemnify the Agent,  the Issuing Lender and each Lender on demand for all
reasonable costs and expenses  (including fees and expenses of counsel) incurred
by the  Agent,  any  Lender  or the  Issuing  Lender  in  connection  with  such
rescission or  restoration,  including  any such costs and expenses  incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent  transfer or similar  payment  under any  bankruptcy,  insolvency  or
similar law.

         3.4.  SUBROGATION.  Until such time as the Obligations  shall have been
indefeasibly  paid in full, each of the Guarantors shall not exercise and hereby
waives all rights of subrogation,  reimbursement,  restitution,  contribution or
otherwise  whether arising by contract or operation of law  (including,  without
limitation, any such right arising under the Federal Bankruptcy Code of 1978, as
amended) or by reason of any payment by it  pursuant to the  provisions  of this
Article 3 and further  agrees with the Borrower and the Canadian  Borrowers  for
the  benefit  of  each  creditor  of the  Borrower  and the  Canadian  Borrowers
(including,  without limitation,  the Agent, the Issuing Lender and each Lender)
that any such payment by it shall  constitute a contribution  of capital by such
Guarantor to the Borrower or the  Canadian  Borrowers,  as the case may be. Each
Guarantor will not prove any claim in  competition  with the Agent or any Lender
in  respect  of  any  payment   hereunder  in  any  bankruptcy,   insolvency  or
reorganization  case or  proceedings  of any nature.  The  Guarantors  waive any
benefit of and any right to participate in any collateral  security which may be
held by the Agent or any Lender.

         3.5. REMEDIES. The Guarantors agree that, as between the Guarantors and
the  Lenders,  the  Obligations  of the Borrower  and/or the Canadian  Borrowers
hereunder may be declared to be forthwith due and payable as provided in Section
9.1 (and shall be deemed to have  become  automatically  due and  payable in the
circumstances   provided   in  Section   9.1)  for   purposes   of  Section  3.1
notwithstanding  any  stay,  injunction  or other  prohibition  preventing  such
declaration (or such Obligations from becoming automatically due and payable) as
against the  Borrower or any Canadian  Borrower  and that,  in the event of such
declaration (or such Obligations  being deemed to have become  automatically due
and payable),  such Obligations  (whether or not due and payable by the Borrower
or any Canadian  Borrower) shall forthwith become immediately due and payable by
the Guarantors for purposes of Section 3.1.

         3.6. INSTRUMENT FOR THE PAYMENT OF MONEY. Each of the Guarantors hereby
acknowledges  that the guarantee in this Article 3 constitutes an instrument for
the  payment of money,  and  consents  and agrees  that the Agent,  the  Issuing
Lender,  or any Lender,  at its sole  option,  in the event of a dispute by such
Guarantor  in the payment of any moneys due  hereunder,  shall have the right to
summary  judgment or such other  expedited  procedure as may be available  for a
suit on a note or other instrument for the payment of money.

         3.7.  CONTINUING  GUARANTEE.  The  guarantee  in  this  Article  3 is a
continuing guarantee, and shall apply to all Obligations whenever arising.


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         3.8 GENERAL  LIMITATION  ON AMOUNT OF  OBLIGATIONS  GUARANTEED.  In any
         action or proceeding involving any state or non-U.S.  corporate law, or
         any state or Federal or non-U.S. bankruptcy, insolvency, reorganization
         or other law  affecting  the  rights  of  creditors  generally,  if the
         obligations of the Guarantors under Section 3.1 would otherwise be held
         or determined to be void, invalid or unenforceable,  or subordinated to
         the  claims of any other  creditors,  on  account  of the amount of its
         liability  under Section 3.1 or if such  obligations  under Section 3.1
         would constitute or result in a violation of any applicable  fraudulent
         conveyance  or  similar  law  of  any  relevant   jurisdiction,   then,
         notwithstanding any other provision hereof to the contrary,  the amount
         of such liability shall,  without any further action by the Guarantors,
         any Lender, Agent or other Person, be automatically limited and reduced
         to the highest amount that is valid and enforceable and, as applicable,
         not be  subordinated  to the claims of other creditors as determined in
         such action or proceeding.

                                   ARTICLE 4.

                                 THE COLLATERAL

         4.1.  GRANT OF SECURITY  INTEREST.  As collateral  security for due and
punctual  payment and performance of all of its  Obligations,  each Credit Party
hereby pledges and assigns to the Agent, and grants to the Agent for the ratable
benefit  of the  Lenders,  the  Issuing  Lender and the Cash  Management  Bank a
continuing  security  interest  in and  lien on,  all  tangible  and  intangible
property and assets of such Credit Party, wherever located, whether now owned or
existing or hereafter  acquired or arising,  together with any and all additions
thereto  and   replacements   therefor  and   proceeds   and  products   thereof
(collectively  referred  to for  purposes  of this  Article 4 as  "COLLATERAL"),
including, without limitation the property described below:

                  (a) all tangible and intangible  personal property,  including
         without limitation all present and future goods,  inventory (including,
         without limitation,  all merchandise,  raw materials,  work in process,
         finished goods and supplies),  machinery,  equipment,  motor  vehicles,
         rolling stock, tools, furniture,  fixtures, office supplies, computers,
         computer  software  and  associated  equipment,  whether  now  owned or
         hereafter  acquired,   including,   without  limitation,  all  tangible
         personal  property used in the operation of the business of such Credit
         Party;

                  (b) all rights  under all present  and future  authorizations,
         permits,  licenses and franchises  issued,  granted or licensed to such
         Credit Party for the operation of its business;

                  (c) all Patents of such Credit Party;

                  (d) all Trademarks of such Credit Party;

                  (e) all Copyrights of such Credit Party;


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                  (f) the entire  goodwill of business of such Credit  Party and
         all other  general  intangibles  (including  know-how,  trade  secrets,
         customer  lists,  proprietary  information,  inventions,  domain names,
         methods,  procedures  and  formulae)  connected  with  the  use  of and
         symbolized  by any Patents,  Trademarks  or  Copyrights  of such Credit
         Party;

                  (g) all rights under all present and future vendor or customer
         contracts  and  all  franchise,   distribution,   design,   consulting,
         construction,  engineering,  management  and  advertising  and  related
         agreements;

                  (h) all rights under all present and future leases of real and
         personal property; and

                  (i)  all   other   personal   property,   including,   without
         limitation,    all    present    and   future    accounts    (including
         health-care-insurance  receivables),  accounts  receivable,  cash, cash
         equivalents,  deposits, deposit accounts, loss carry back, tax refunds,
         insurance claims and proceeds, premiums, rebates and refunds, choses in
         action,  commercial  tort claims,  securities and all other  investment
         property,  partnership interests,  limited liability company interests,
         contracts,  contract  rights,  rights to the payment of money,  general
         intangibles (including without limitation, all payment intangibles, all
         customer and advertiser mailing lists, intellectual property,  patents,
         copyrights,  trademarks,  trade  secrets,  trade names,  domain  names,
         goodwill,  customer lists, advertiser lists, catalogs and other printed
         materials,  publications,  indexes, lists, data and other documents and
         papers relating thereto, blueprints,  designs, charts, and research and
         development,  whether on paper, recorded  electronically or otherwise),
         all  websites   (including  without  limitation,   all  content,   HTML
         documents,  audiovisual  material,  software,  data,  hardware,  access
         lines, connections,  copyrights,  trademarks, patents and trade secrets
         relating to such websites) and domain names, any information  stored on
         any medium, including electronic medium, related to any of the personal
         property  of such Credit  Party,  all  financial  books and records and
         other books and records  relating,  in any manner,  to the  business of
         such Credit  Party,  all  proposals  and cost  estimates  and rights to
         performance,  all  instruments  and  promissory  notes,  documents  and
         chattel  paper  (whether  tangible  or  electronic),   and  all  debts,
         obligations and liabilities in whatever form owing to such Credit Party
         from any person, firm or corporation or any other legal entity, whether
         now existing or  hereafter  arising,  now or  hereafter  received by or
         belonging  or  owing  to such  Credit  Party;  and all  guaranties  and
         security therefor, and all letters of credit rights (whether or not the
         letter  of credit  is  evidenced  by a  writing)  and other  supporting
         obligations in respect of such debts, obligations and liabilities.

Any of the  foregoing  terms  which are  defined  in the MA UCC  shall  have the
meaning  provided in the MA UCC, as amended and in effect from time to time,  as
supplemented and expanded by the foregoing.


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<PAGE>

         4.2.  SPECIAL  REPRESENTATIONS,  WARRANTIES AND COVENANTS OF THE CREDIT
         PARTIES.  Each Credit Party hereby  warrants and covenants to the Agent
         and the Lenders that:

                  (a) Such Credit Party has  delivered to the Agent a Perfection
         Certificate  in  substantially  the  form  of  EXHIBIT  C  hereto.  All
         information  set forth in such  Perfection  Certificate  is,  except as
         disclosed to and  approved by the Agent  and/or the Lenders,  complete,
         true and correct in all material  respects and there has been no change
         in any of such  information  since  the  date on which  the  Perfection
         Certificate was signed by such Credit Party.

                  (b)  No  Credit   Party  will  change  its   jurisdiction   of
         organization,  type of organization or other legal structure, principal
         or any other place of business,  or the location of any Collateral from
         the locations set forth in the Perfection Certificate delivered by such
         Credit  Party,  or make any change in its name or conduct its  business
         operations under any fictitious  business name or trade name,  without,
         in any such case,  at least thirty (30) days' prior  written  notice to
         the Agent;  PROVIDED  that the inventory of such Credit Party may be in
         the possession of  manufacturers  or processors in any  jurisdiction in
         which all  necessary UCC  financing  statements  have been filed by the
         Agent and with respect to which the Agent has received  waiver  letters
         from all landlords,  warehousemen  and processors in form and substance
         acceptable to the Agent.

                  (c) Each Credit Party  represents  and warrants to the Lenders
         and the Agent as follows:  (i) except for the security interest created
         by this  Agreement  and other Liens  permitted  hereunder,  there is no
         financing statement,  security agreement, chattel mortgage, real estate
         mortgage or other document  filed or recorded with any filing  records,
         registry or other public office, that purports to cover, affect or give
         notice of any present or possible future Lien on any assets or property
         of the Credit Parties or any rights relating thereto,  (ii) such Credit
         Party is the owner of or has other  rights in or power to transfer  the
         Collateral,  free from any right or claim of any Person or any  adverse
         lien,  except for the security  interest  created by this Agreement and
         other  Liens  permitted   hereunder,   (iii)  none  of  the  Collateral
         constitutes,  or  is  the  proceeds  of,  "farm  products"  as  defined
         inss.9-102(a)(34)  of the MA UCC,  (iv) none of the account  debtors or
         other  Persons  obligated on any of the  Collateral  is a  Governmental
         Authority  covered  by the  Federal  Assignment  of Claims  Act or like
         federal,  state or local statute or rule in respect of such  Collateral
         and (v) such Credit  Party has at all times  operated  its  business in
         compliance  with all  applicable  provisions  of the federal Fair Labor
         Standards  Act,  as  amended,  and with all  applicable  provisions  of
         federal,  state and local  statutes  and  ordinances  dealing  with the
         control, shipment, storage or disposal of Hazardous Materials.

                  (d) Each Credit Party covenants with the Lenders and the Agent
         that,  such  Credit  Party  shall  defend its rights in the  Collateral
         against all claims and demands of all Persons at any time  claiming the
         same  or any  interests  therein  adverse  to the  Agent  or any of the
         Lenders.


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<PAGE>


                  (e) Each Credit Party  represents  and warrants to the Lenders
         and the Agent that all  filings,  assignments,  pledges and deposits of
         documents or instruments have been made and all other actions have been
         taken  that are  necessary  or  advisable,  under  applicable  law,  to
         establish and perfect the Agent's security  interest in the Collateral.
         The  Collateral  and the Agent's  rights with respect to the Collateral
         are not subject to any setoff, claims, withholdings or other defenses.

                  (f) Except for  Collateral  that is obsolete or no longer used
         in their business,  the Credit Parties will keep the Collateral in good
         order and repair  (normal wear  excepted)  and will not use the same in
         violation  of law or any  policy  of  insurance  thereon  and  keep the
         Collateral  adequately  insured  at all  times in  accordance  with the
         provisions  of Section 7.5. The Credit  Parties will pay promptly  when
         due all taxes,  assessments,  governmental  charges and levies upon the
         Collateral  or  for  its  use  or  operation,   except  for  taxes  and
         assessments  permitted  to be  contested  as provided  in Section  7.4.
         Following  the  occurrence  and during the  continuance  of an Event of
         Default,  the Agent may at its option  discharge  any taxes or Liens to
         which any  Collateral  is at any time  subject  (other  than  Permitted
         Liens),  and may,  upon the  failure of the Credit  Parties to do so in
         accordance  with this Agreement,  purchase  insurance on any Collateral
         and pay for the repair,  maintenance or preservation  thereof, and each
         Credit Party  agrees to reimburse  the Agent on demand for any payments
         or  expenses  incurred  by the  Agent or the  Lenders  pursuant  to the
         foregoing  authorization and any unreimbursed  amounts shall constitute
         Obligations for all purposes hereof.

                  (g) The Agent may from time to time  request  and each  Credit
         Party shall deliver copies of all customer lists and vendor lists.

                  (h) Each Credit Party hereby irrevocably authorizes the Agent,
         at any  time  and  from  time to  time,  to  file  in any  jurisdiction
         financing  statements  and  amendments  thereto  that (i)  indicate the
         Collateral  (x) as all assets of such Credit  Party or words of similar
         effect,  regardless  of whether any  particular  asset falls within the
         scope of Article 9 of the MA UCC or such other  jurisdiction  or (y) as
         being of an equal or lesser scope or with greater detail and (ii) which
         contain  any  other  information  required  by  Article 9 of the MA UCC
         (including  Part 5  thereof)  for  the  sufficiency  or  filing  office
         acceptance of any financing  statement or amendment,  including whether
         (A) any Credit Party is an  organization,  the type of organization and
         any organization  identification number issued to such Credit Party and
         (B) in the case of a financing  statement  filed as a fixture filing or
         indicating Collateral as as-extracted collateral or timber to be cut, a
         sufficient  description  of the real  property to which the  Collateral
         relates.  The Credit  Parties agree to furnish any such  information to
         the Agent  promptly upon  request.  Each Credit Party also ratifies its
         authorization  for the Agent to have  filed in any  Uniform  Commercial
         Code jurisdiction any like initial  financing  statements or amendments
         thereto if filed prior to the Closing Date.


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                  (i) Each Credit  Party agrees that it will join with the Agent
         in  executing  and, at its own expense  file and refile,  or permit the
         Agent  to file  and  refile  such  financing  statements,  continuation
         statements and other documents (including,  without limitation,  Patent
         Agreements,  Trademark Agreements,  Copyright Mortgages and licenses to
         use  software  and other  property  protected  by  copyright),  in such
         offices  (including,  without  limitation,  the PTO, the United  States
         Copyright Office, and appropriate state patent, trademark and copyright
         offices),  as the Agent may reasonably  deem necessary or  appropriate,
         wherever required or permitted by law, in order to perfect and preserve
         the rights and interests  granted to the Agent in the Collateral.  Each
         Credit Party will give the Agent notice of each office at which records
         of such Credit Party  pertaining to all intangible  items of Collateral
         are  kept.  Except  as may be  provided  in such  notice,  the  records
         concerning  all  intangible  Collateral  are  and  will  be kept at the
         address shown in the respective Perfection  Certificate for such Credit
         Party as the principal place of business of such Credit Party.

                  (j) The Credit  Parties are the sole and  exclusive  owners of
         the websites and domain names listed on SCHEDULE 4.2(J) hereto and have
         registered  such domain  names with all  applicable  authorities  which
         provides  for the  exclusive  use by the Credit  Parties of such domain
         names.  The websites do not contain any material,  the  publication  of
         which may result in (a) the  violation of rights of any Person or (b) a
         right of any  Person  against  the  publisher  or  distributor  of such
         material.

                  (k) The Credit Parties shall, annually by the end of the first
         fiscal  quarter  following the previous  fiscal year,  provide  written
         notice to the Agent of all  applications  for  registration of Patents,
         Trademarks or Copyrights,  to the extent such applications  exist, made
         during the preceding  calendar  year. The Credit Parties shall file and
         prosecute  diligently all  applications  for  registration  of Patents,
         Trademarks  or  Copyrights  now or  hereafter  pending  that  would  be
         necessary  to the  business  of the  Credit  Parties  to which any such
         applications  pertain,  and  to do all  acts,  in  any  such  instance,
         necessary  to  preserve  and  maintain  all  rights in such  registered
         Patents,  Trademarks or Copyrights  unless such Patents,  Trademarks or
         Copyrights are not material to the business of the Credit  Parties,  as
         reasonably determined by the Credit Parties consistent with prudent and
         commercially  reasonable  business  practices.  Any and all  costs  and
         expenses incurred in connection with any such actions shall be borne by
         the Credit Parties.  Except in accordance with prudent and commercially
         reasonable business practices, the Credit Parties shall not abandon any
         right to file a  Patent,  Trademark  or  Copyright  application  or any
         pending  Patent,  Trademark or Copyright  application or any registered
         Patent,  Trademark or Copyright, in each case material to its business,
         without the consent of the Agent.

                  (l) The domain name servers used in connection with the domain
         names  of  the  Credit  Parties  and  all  other  relevant  information
         pertaining to such domain names, and the  administrative  contacts used
         in connection with the registration of such domain names are identified


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         on SCHEDULE  4.2 hereto.  No Credit  Party will change such domain name
         servers  without 10 days' prior written notice to the Agent.  No Credit
         Party  will  cause  a  change  in  the  identity  of  any  domain  name
         administrative  contact  without 10 days' prior  written  notice to the
         Agent.

                  (m) If any Credit  Party is, now or at any time  hereafter,  a
         beneficiary  under a letter of  credit in the face  amount in excess of
         $100,000,  such Credit Party shall  promptly  notify the Agent  thereof
         and, at the request and option of the Agent,  such Credit  Party shall,
         pursuant to an  agreement  in form and  substance  satisfactory  to the
         Agent,  either (i)  arrange for the issuer and any  confirmer  or other
         nominated  Person of such letter of credit to consent to an  assignment
         to the Agent of the  proceeds  of the letter of credit or (ii)  arrange
         for the Agent to become  the  transferee  beneficiary  of the letter of
         credit, with the Agent agreeing, in each case, that the proceeds of the
         letter of credit are to be applied by the Agent against the Obligations
         as provided in this Agreement.

                  (n) To the extent any Credit Party  shall,  now or at any time
         hereafter,  hold or acquire any promissory note or other  instrument or
         tangible  chattel paper (the principal  amount of which is greater than
         $100,000),  such Credit Party will promptly  notify the Lender  thereof
         and, at the request and option of the Lender, such Debtor will endorse,
         assign and deliver such promissory note or other instrument or tangible
         chattel  paper  to the  Lender  to be  held  as  Collateral  hereunder,
         together  with such  instruments  of  transfer  or  assignment  thereof
         reasonably satisfactory in form and substance to the Lender.

                  (o) If any Credit Party shall,  now or at any time  hereafter,
         hold or acquire any  certificated  securities,  such Credit Party shall
         forthwith   endorse,   assign  and  deliver  the  same  to  the  Agent,
         accompanied by such instruments of transfer or assignment duly executed
         in blank as the Agent may from time to time specify; PROVIDED, however,
         except with respect to entities which are disregarded entities for U.S.
         income tax  purposes,  such  Credit  Party  shall only be  required  to
         endorse,  assign and deliver  shares  representing  sixty-five  percent
         (65%) of the Capital Stock of such Credit  Party's  first-tier  Foreign
         Subsidiaries. If any securities now or hereafter acquired by any Credit
         Party are  uncertificated  and are issued to such  Credit  Party or its
         nominee  directly  by the  issuer  thereof,  such  Credit  Party  shall
         promptly  notify the Agent  thereof  and,  at the  Agent's  request and
         option,  pursuant to an agreement in form and substance satisfactory to
         the  Agent,  either  (i)  cause the  issuer to agree to comply  without
         further consent of such Credit Party or such nominee,  at any time with
         instructions from the Agent as to such securities,  or (ii) arrange for
         the Agent to become  the  registered  owner of the  securities.  If any
         securities, whether certificated or uncertificated, or other investment
         property now or hereafter acquired by any Credit Party are held by such
         Credit  Party or its  nominee  through  a  securities  intermediary  or
         commodity  intermediary,  such Credit Party shall  promptly  notify the
         Agent  thereof and, at the Agent's  request and option,  pursuant to an
         agreement in form and substance  satisfactory to the Agent,  either (A)


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         cause such  securities  intermediary  or (as the case may be) commodity
         intermediary  to agree to comply,  in each case without further consent
         of such  Credit  Party or such  nominee,  at any time with  entitlement
         orders  or  other  instructions  from  the  Agent  to  such  securities
         intermediary as to such securities or other investment property, or (as
         the case may be) to apply  any  value  distributed  on  account  of any
         commodity   contract  as  directed  by  the  Agent  to  such  commodity
         intermediary,  or  (B)  in  the  case  of  financial  assets  or  other
         investment property held through a securities intermediary, arrange for
         the  Agent to  become  the  entitlement  holder  with  respect  to such
         investment property, with such Credit Party being permitted,  only with
         the consent of the Agent,  to exercise  rights to withdraw or otherwise
         deal with such investment  property.  The Agent agrees with each Credit
         Party  that the  Agent  shall not give any such  entitlement  orders or
         instructions or directions to any such issuer,  securities intermediary
         or  commodity  intermediary,  and shall not withhold its consent to the
         exercise of any  withdrawal  or dealing  rights by such  Credit  Party,
         unless an Event of Default has  occurred and is  continuing,  or, after
         giving  effect  to  any  such  investment  and  withdrawal  rights  not
         otherwise permitted by the Loan Documents,  would occur. The provisions
         of this paragraph shall not apply to any financial assets credited to a
         securities account for which the Agent is the securities intermediary.

                  (p) For each deposit account or other accounts that any Credit
         Party,  now or at any time hereafter,  opens or maintains (other than a
         deposit  account  for  which the Agent is the  depositary  bank),  such
         Credit Party shall, at the Agent's  request and option,  pursuant to an
         agreement in form and substance  satisfactory to the Agent,  either (i)
         cause the  depositary  bank or such  Person to agree to comply  without
         further  consent of such Credit  Party,  at any time with  instructions
         from the Agent to such  depositary  bank or such Person  directing  the
         disposition  of funds  from  time to time  credited  to or held in such
         deposit  account or other account,  as the case may be, or (ii) arrange
         for the Agent to become the  customer of the  depositary  bank or other
         Person with respect to the deposit account or other account,  with such
         Credit Party being  permitted,  only with the consent of the Agent,  to
         exercise  rights to withdraw  funds from such deposit  account or other
         account.  The  provisions  of this  paragraph  shall not apply to (A) a
         deposit  account for which the Agent is in automatic  control,  (B) any
         deposit accounts  specially and exclusively  used for payroll,  payroll
         taxes  and  other  employee  wage and  benefit  payments  to or for the
         benefit of such  Credit  Party's  salaried  employees,  (C) the deposit
         accounts or other accounts listed on SCHEDULE  4.2(P),  and (D) deposit
         accounts or local bank  accounts not subject to the Agent's  control so
         long as (x) the aggregate  amount of funds on deposit in all such local
         bank accounts does not exceed $500,000, and (y) the aggregate amount of
         funds on  deposit  in any  such  local  bank  account  does not  exceed
         $50,000.

                  (q) No Credit  Party  holds any  commercial  tort  claims,  as
         defined  in  Article  9 of the  MA  UCC,  except  as  indicated  in the
         Perfection Certificates. If any of the Credit Parties shall at any time
         acquire a  commercial  tort  claim,  such Credit  Party shall  promptly
         notify the Lender in a writing signed by such Credit Party of the brief
         details  thereof  and grant to the  Lender in such  writing a  security


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         interest  therein and in the  proceeds  thereof,  all upon the terms of
         this  Agreement,  with  such  writing  to  be  in  form  and  substance
         reasonably satisfactory to the Lender.

                  (r) If any Collateral is, now or at any time hereafter, in the
         possession of a bailee,  the Credit Parties shall  promptly  notify the
         Agent thereof and, at the Agent's  request and option,  shall  promptly
         obtain  an  acknowledgement  from the  bailee,  in form  and  substance
         satisfactory  to the Agent,  that the bailee holds such  Collateral for
         the benefit of the Agent and such bailee's agreement to comply, without
         further consent of such Credit Party, at any time with  instructions of
         the Agent as to such  Collateral.  The Agent  agrees  with each  Credit
         Party  that the Agent  shall not give any such  instructions  unless an
         Event of Default has  occurred and is  continuing  or would occur after
         taking into account any action by such Credit Party with respect to the
         bailee.

                  (s) If any Credit Party,  now or at any time hereafter,  holds
         or  acquires  an  interest  in  any  electronic  chattel  paper  or any
         "transferable  record,"  as that term is defined in Section  201 of the
         federal  Electronic  Signatures in Global and National Commerce Act, or
         inss.16 of the Uniform Electronic  Transactions Act as in effect in any
         relevant  jurisdiction,  such Credit  Party shall  promptly  notify the
         Agent  thereof and, at the request and option of the Agent,  shall take
         such  action as the Agent may  reasonably  request to vest in the Agent
         control,  underss.9-105 of the MA UCC, of such electronic chattel paper
         or control  under Section 201 of the federal  Electronic  Signatures in
         Global and  National  Commerce Act or, as the case may be, ss.16 of the
         Uniform   Electronic   Transactions  Act,  as  so  in  effect  in  such
         jurisdiction,  of such transferable  record. The Agent agrees with each
         Credit  Party  that the Agent  will  arrange,  pursuant  to  procedures
         satisfactory  to the  Agent  and so long as such  procedures  will  not
         result in the Agent's  loss of control,  for such Credit  Party to make
         alterations  to the  electronic  chattel paper or  transferable  record
         permitted under  UCCss.9-105 or, as the case may be, Section 201 of the
         federal  Electronic  Signatures  in Global and  National  Commerce  Act
         orss.16 of the Uniform Electronic  Transactions Act, unless an Event of
         Default has occurred and is continuing or would occur after taking into
         account any action by such Credit Party with respect to such electronic
         chattel paper or transferable record.

                  (t) If any Credit Party has accounts  receivable in respect of
         which the account  debtor is located in Minnesota,  the Credit  Parties
         represent  and warrant that the  applicable  Credit Party has filed and
         shall file all  legally-required  Notice of Business Activities Reports
         and comparable reports with the appropriate Governmental Authorities.

                  (u) Each Credit Party further agrees,  upon the request of the
         Agent and at the Agent's  option,  to take any and all other actions as
         the Agent may  determine to be necessary or useful for the  attachment,
         perfection  and first  priority  of,  and the  ability  of the Agent to
         enforce,   the  Agent's  security  interest  in  any  and  all  of  the
         Collateral,  including,  without limitation, (i) executing,  delivering


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         and,  where  appropriate,  filing  financing  statements and amendments
         relating  thereto,  certificates  and other documents or instruments as
         may be  necessary  to enable  the Agent to perfect or from time to time
         renew  the  security  interest  granted  hereby  or by any  other  Loan
         Document  under the MA UCC,  to the  extent,  if any,  that such Credit
         Party's  signature  thereon is required  therefor,  including,  without
         limitation,   such  financing   statements   and  amendments   thereto,
         certificates  and other  documents  as may be  necessary  to  perfect a
         security interest in any additional  Collateral  hereafter  acquired by
         such Credit  Party or in any  replacements  or proceeds  thereof,  (ii)
         causing  the  Agent's  name  to  be  noted  as  secured  party  on  any
         certificate  of title for a titled good if such notation is a condition
         to  attachment,  perfection  or priority of, or ability of the Agent to
         enforce,  the  Agent's  security  interest  in such  Collateral,  (iii)
         complying  with any  provision of any statute,  regulation or treaty of
         the  United  States  as to  any  Collateral  if  compliance  with  such
         provision is a condition to  attachment,  perfection or priority of, or
         ability of the Agent to enforce,  the Agent's security interest in such
         Collateral,  (iv) obtaining governmental and other third party waivers,
         consents  and  approvals,  in form and  substance  satisfactory  to the
         Agent,  including,  without  limitation,  any consent of any  licensor,
         lessor or other Person obligated on Collateral,  (v) obtaining  waivers
         from mortgagees and landlords in form and substance satisfactory to the
         Agent and (vi) taking all actions under any earlier  versions of the MA
         UCC or under any other law, as reasonably determined by the Agent to be
         applicable in any relevant MA UCC or other jurisdiction,  including any
         foreign jurisdiction.

                  (v) Each Credit  Party  authorizes  and appoints the Agent and
         any officer or agent thereof,  with full power of substitution,  as its
         true and  lawful  attorney-in-fact  with  full  irrevocable  power  and
         authority in the place and stead of such Credit Party or in the Agent's
         own name, for the purpose of carrying out the terms of this  Agreement,
         to take  any and all  appropriate  action  and to  execute  any and all
         documents and instruments that may be necessary or useful to accomplish
         the purposes of this Agreement and,  without limiting the generality of
         the  foregoing,  hereby gives said  attorneys  the power and right,  on
         behalf of such Credit Party, without notice to or assent by such Credit
         Party,  to do the  following:  (i) upon the  occurrence  and during the
         continuance  of an  Event of  Default,  generally  to  sell,  transfer,
         pledge,  make any agreement with respect to or otherwise  dispose of or
         deal with any of the  Collateral in such manner as is  consistent  with
         the MA UCC and as fully and  completely  as though  the Agent  were the
         absolute  owner  thereof  for all  purposes,  and to do, at the  Credit
         Parties'  expense,  at any  time,  or from  time to time,  all acts and
         things which the Agent deems  necessary or useful to protect,  preserve
         or  realize  upon the  Collateral  and the  Agent's  security  interest
         therein,  in order to effect the intent of this Agreement,  all no less
         fully and effectively as any Credit Party might do, including,  without
         limitation, (A) the filing and prosecuting of registration and transfer
         applications with the appropriate  federal,  state or local agencies or
         authorities  with  respect to  trademarks,  copyrights  and  patentable
         inventions and processes, (B) upon written notice to such Credit Party,
         the exercise of voting rights with respect to voting securities,  which


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         rights may be exercised, if the Agent so elects, with a view to causing
         the  liquidation of assets of the issuer of any such securities and (C)
         the execution,  delivery and recording,  in connection with any sale or
         other disposition of any Collateral,  of the endorsements,  assignments
         or other  instruments  of  conveyance  or transfer with respect to such
         Collateral;   and  (ii)  to  the  extent  that  such   Credit   Party's
         authorization  given in this subsection 4.2 (v) is not  sufficient,  to
         file such financing  statements  with respect  hereto,  with or without
         such Credit  Party's  signature,  or a photocopy  of this  Agreement in
         substitution  for  a  financing  statement,   as  the  Agent  may  deem
         appropriate  and to execute in such Credit  Party's name such financing
         statements and amendments thereto and continuation statements which may
         require such Credit Party's signature.  To the extent permitted by law,
         each  Credit  Party  hereby  ratifies  all that  said  attorneys  shall
         lawfully  do or  cause  to be done by  virtue  hereof.  This  power  of
         attorney is a power  coupled with an interest and is  irrevocable.  The
         powers  conferred  on the Agent  hereunder  are solely to  protect  the
         interests of the Agent and the Lenders in the  Collateral and shall not
         impose any duty upon the Agent to exercise any such  powers.  The Agent
         shall be accountable only for the amounts that it actually  receives as
         a result of the exercise of such powers,  and neither it nor any of its
         officers,  directors,  employees or agents shall be  responsible to any
         Credit Party for any act or failure to act,  except for the Agent's own
         gross  negligence  or  willful  misconduct  as  determined  by a  final
         judgment of a court of competent jurisdiction.

         4.3.  COLLECTION OF PROCEEDS OF ACCOUNTS RECEIVABLE.

                  (a) On or before the Closing Date,  the Credit  Parties (other
         than the  Canadian  Borrowers)  shall (i) direct  all of their  account
         debtors and other obligors to make all payments on accounts  receivable
         of such Credit Parties  directly to post office boxes (each a "LOCKBOX"
         and  collectively  the  "LOCKBOXES")  under  the  control  of the  Cash
         Management  Bank and/or such other  financial  institutions as shall be
         acceptable to the Agent,  (ii)  establish  accounts (each a "CONTROLLED
         ACCOUNT" and  collectively  the  "CONTROLLED  ACCOUNTS") in the Agent's
         name for the  benefit of the  Borrower  with the Cash  Management  Bank
         and/or such other financial  institutions as shall be acceptable to the
         Agent,  into which all  payments  received  in the  Lockboxes  shall be
         deposited,  and into which such Credit Parties will immediately deposit
         all payments  made for  inventory or services  sold or rendered by such
         Credit  Parties and  received by such Credit  Parties in the  identical
         form in which such payments were made,  whether by cash or check, (iii)
         (A) to cause each financial  institution other than the Cash Management
         Bank  with  which  a  Lockbox  and/or   Controlled   Account  has  been
         established  to,  enter  into  a  Lockbox   Agreement   and/or  Control
         Agreement,  as  applicable,  confirming  that the amounts on deposit in
         such Lockbox and/or Controlled Account, as applicable, are the property
         of and are under the  control  of the  Agent,  and that such  financial
         institution  has no right to setoff  against such Lockbox or Controlled
         Account or  against  any other  account  maintained  by such  financial
         institution  into which the  contents  of such  Controlled  Account are
         transferred,  and (B) to direct such financial institution to cause all
         funds held in such Lockbox and/or  Controlled  Account to be wired,  or


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         otherwise  transferred  in  immediately  available  funds  in a  manner
         satisfactory  to the Agent,  no less  frequently than once each day to,
         and only to, a Controlled  Account with the Cash  Management  Bank, and
         (iv) to cause each of their  Subsidiaries and Affiliate,  and any other
         Person acting for or in concert with such Credit  Parties that receives
         any monies,  checks,  notes, drafts or other payments relating to or as
         proceeds of accounts receivable or any Collateral,  to receive and hold
         such items in trust for, and as the sole and exclusive property of, the
         Agent and,  immediately upon receipt  thereof,  shall remit the same or
         cause  the  same to be  remitted  in hand to the  Controlled  Accounts;
         PROVIDED that, for purposes of  administrative  convenience,  the Agent
         may in its reasonable discretion,  permit such Credit Parties from time
         to time to maintain  one or more  accounts  with one or more  financial
         institutions  other than the Cash Management Bank and with such maximum
         cash balances as the Agent deems appropriate, and for which such Credit
         Parties  may, at the  discretion  of the Agent,  be  permitted  to have
         direct access.  All funds received in the Controlled Account maintained
         at the Cash  Management Bank as contemplated by this Section 4.3(a) and
         for  which  the  Borrower  has  received  credit  shall be  applied  in
         accordance with such subsection 2.7(c).

                  (b) On or before the  Closing  Date,  each  Canadian  Borrower
         shall (i) direct all of their  account  debtors  and other  obligors to
         make all  payments on accounts  receivable  of such  Canadian  Borrower
         directly to the operating account (the "NS ACCOUNT")  maintained by the
         Canadian  Lender and/or such other  financial  institutions as shall be
         acceptable  to the  Agent;  (ii)  cause  each of its  Subsidiaries  and
         Affiliates,  and any other  Person  acting for or in concert  with such
         Canadian Borrower that receives any monies,  checks,  notes,  drafts or
         other  payments  relating to or as proceeds of accounts  receivable  of
         such  Canadian  Borrower,  to receive and hold such items in trust for,
         and as the sole and exclusive  property of, the Agent and,  immediately
         upon  receipt  thereof,  to  remit  the  same or  cause  the same to be
         remitted in hand to the NS Account. The Credit Parties acknowledge that
         upon  receipt by the Canadian  Lender of written  notice from the Agent
         that an Event of Default has occurred and is  continuing,  the Canadian
         Lender  shall  have  the  right  and  obligation  to  comply  with  any
         instructions  originated by the Agent directing disposition of funds in
         such  accounts  without  further  consent  of any  Credit  Party.  Each
         Canadian Borrower agrees to enter into a Lockbox  Agreement,  a Control
         Agreement or a blocked  account  agreement with the Canadian Lender and
         the Agent, as the Agent may reasonably  request.  All funds received in
         the NS Account for which the  Borrower  has  received  credit  shall be
         applied in the manner specified in subsection 2.8(c).

                  (c) Each Credit Party  acknowledges  that the Cash  Management
         Bank is an affiliate of the Agent and that the Cash Management Bank and
         the Agent are parties to cash  management  agreements that confirm that
         the Agent has  dominion  and  control  over all  accounts of the Credit
         Parties or the Agent  maintained by the Cash  Management  Bank, and all
         funds from time to time held in such accounts.  The Borrower, the Agent
         and the Cash Management Bank hereby agree that the Cash Management Bank
         shall comply with any  instructions  originated by the Agent  directing


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         disposition of funds in such accounts  without  further  consent of the
         Borrower.   Each  Credit  Party  agrees  to  enter  into  such  Lockbox
         Agreements and Control Agreements with the Cash Management Bank and the
         Agent as the Agent may reasonably request.

                  (d) The Credit Parties agree to pay all reasonable fees, costs
         and expenses which the Credit Parties incur in connection  with opening
         and  maintaining a Lockbox and  Controlled  Account.  All of such fees,
         costs and  expenses  which  remain  unpaid  pursuant  to any Lockbox or
         Control  Agreement  with the Credit  Parties,  to the extent same shall
         have  been  paid  by  the  Agent  hereunder,   shall  constitute  Loans
         hereunder,  shall be payable to the Agent by the  Credit  Parties  upon
         demand,  and, until paid,  shall bear interest at the highest rate then
         applicable to Loans  hereunder.  All checks,  drafts,  instruments  and
         other  items of payment or  proceeds  of  Collateral  delivered  to the
         Canadian Lender, the Agent or the Cash Management Bank in kind shall be
         endorsed by the Credit Parties,  to the Agent, and, if that endorsement
         of any such item shall not be made for any reason, the Canadian Lender,
         the  Agent and the Cash  Management  Bank are each  hereby  irrevocably
         authorized to endorse the same on behalf of the Credit Parties. For the
         purpose of this subsection 4.3(d), each Credit Party irrevocably hereby
         makes,  constitutes and appoints the Agent (and all Persons  designated
         by the Agent for that purpose, including,  without limitation, the Cash
         Management  Bank and the Canadian  Lender) as such Credit  Party's true
         and lawful attorney and  agent-in-fact  (i) to endorse the name of such
         Credit Party upon said items of payment  and/or  proceeds of Collateral
         of the Credit Parties and upon any chattel paper, document, instrument,
         invoice  or similar  document  or  agreement  relating  to any  account
         receivable of the Credit Parties or goods pertaining  thereto;  (ii) to
         take control in any manner of any item of payment or proceeds  thereof;
         (iii) to have  access to any  lockbox or postal box into which any mail
         of the Credit Parties is deposited;  and (iv) open and process all mail
         addressed to the Credit Parties and deposited therein.

                  (e) The Agent  (and all  Persons  designated  by the Agent for
         such purpose, including,  without limitation, the Cash Management Bank)
         may, at any time and from time to time after the  occurrence and during
         the  continuance  of an  Event  of  Default,  whether  before  or after
         notification  to any  account  debtor and  whether  before or after the
         maturity  of any of the  Obligations,  (i)  enforce  collection  of any
         accounts receivable or contract rights of the Credit Parties by suit or
         otherwise;  (ii)  exercise all of the rights and remedies of the Credit
         Parties  with  respect to  proceedings  brought to collect any accounts
         receivable; (iii) surrender, release or exchange all or any part of any
         accounts  receivable of the Credit Parties,  or compromise or extend or
         renew for any period  (whether or not longer than the original  period)
         any indebtedness thereunder; (iv) sell or assign any account receivable
         of the Credit Parties upon such terms, for such amount and at such time
         or times as the Agent deems advisable;  (v) prepare,  file and sign the
         names of the  Credit  Parties  on any proof of claim in  bankruptcy  or
         other  similar  document  against  any  account  debtor  indebted on an


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         account  receivable of the Credit  Parties;  and (vi) do all other acts
         and things  which are  necessary,  in the Agent's sole  discretion,  to
         fulfill the  Obligations of the Credit Parties under this Agreement and
         to allow the Agent to collect the accounts  receivable.  In addition to
         any other provision  hereof or in any of the other Loan Documents,  the
         Agent  may at any  time on or  after  the  occurrence  of an  Event  of
         Default, at the sole expense of the Credit Parties,  notify any parties
         obligated on any of the accounts  receivable  of the Credit  Parties to
         make payment  directly to the Agent of any amounts due or to become due
         thereunder.

         4.4.  FIXTURES,  ETC. It is the  intention  of the parties  hereto that
(except for Collateral located on any Mortgaged Property) none of the Collateral
shall become fixtures and each Credit Party will take all such reasonable action
or actions as may be necessary to prevent any of the  Collateral  from  becoming
fixtures.  Without  limiting the generality of the foregoing,  each Credit Party
will, if requested by the Agent, use commercially  reasonable  efforts to obtain
waivers of Liens, in form  satisfactory  to the Agent,  from each lessor of real
property  on which any of the  Collateral  is or is to be  located to the extent
requested by the Agent.

         4.5. RIGHT OF AGENT TO DISPOSE OF COLLATERAL,  ETC. Upon the occurrence
and during the continuance of any Event of Default, subject to the provisions of
the MA UCC or other  applicable  law,  the  Agent  shall  have the right to take
possession of the Collateral and, in addition  thereto,  the right to enter upon
any  premises on which the  Collateral  or any part  thereof may be situated and
remove the same therefrom.  The Agent may require the Credit Parties to make the
Collateral  (to the extent  the same is  moveable)  available  to the Agent at a
place to be designated by the Agent or transfer any  information  related to the
Collateral to the Agent by electronic  medium.  The Agent may in its  discretion
require any Credit Party to assemble all or any part of the  Collateral  at such
location  or  locations  within  the  jurisdiction(s)  of  such  Credit  Party's
principal  office(s)  or at such  other  locations  as the Agent may  reasonably
designate.  Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Agent will
give the Credit  Parties at least  seven (7) days' prior  written  notice of the
time and place of any public sale thereof or of the time after which any private
sale or any other  intended  disposition  thereof is to be made. Any such notice
shall be deemed to meet any  requirement  hereunder or under any  applicable law
(including  the MA UCC) that  reasonable  notification  be given of the time and
place of such sale or other disposition.  In addition,  each Credit Party waives
any and all  rights  that it may have to a  judicial  hearing  in advance of the
enforcement of any of the Agent's rights and remedies hereunder.

         4.6.  RIGHT OF  AGENT  TO USE AND  OPERATE  COLLATERAL,  ETC.  Upon the
occurrence and during the  continuance  of any Event of Default,  subject to the
provisions of the MA UCC or other applicable law, the Agent shall have the right
and power (a) to take  possession of all or any part of the  Collateral,  and to
exclude the Credit  Parties and all Persons  claiming  under the Credit  Parties
wholly or partly therefrom,  and thereafter to hold, store, and/or use, operate,
manage and control  the same,  and (b) to grant a license to use, or cause to be
granted a license to use, any or all of the Patents,  Trademarks  and Copyrights
(in the case of Trademarks,  along with the goodwill associated therewith),  but


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subject to the terms of any licenses.  Upon any such taking of  possession,  the
Agent may,  from time to time,  at the expense of the Credit  Parties,  make all
such repairs,  replacements,  alterations,  additions and improvements to and of
the  Collateral  as the Agent may deem proper.  In any such case the Agent shall
have the right to manage and control the Collateral and to carry on the business
and to exercise all rights and powers of the Credit  Parties in respect  thereto
as the Agent shall deem  proper,  including  the right to enter into any and all
such  agreements  with respect to the  operation of the  Collateral  or any part
thereof as the Agent may see fit; and the Agent shall be entitled to collect and
receive all rents, issues,  profits, fees, revenues and other income of the same
and every part thereof.  Such rents, issues,  profits,  fees, revenues and other
income  shall be  applied  to pay the  expenses  of holding  and  operating  the
Collateral  and of  conducting  the business  thereof,  and of all  maintenance,
repairs, replacements,  alterations, additions and improvements, and to make all
payments  which the  Agent may be  required  or may elect to make,  if any,  for
taxes, assessments,  insurance and other charges upon the Collateral or any part
thereof, and all other payments which the Agent may be required or authorized to
make under any provision of this Agreement (including legal costs and reasonable
attorneys'  fees).  The Agent shall apply the  remainder of such rents,  issues,
profits, fees, revenues and other income as provided in Section 4.7.

         4.7.  PROCEEDS OF COLLATERAL.  After deducting all reasonable costs and
expenses of collection, storage, custody, sale or other disposition and delivery
(including  reasonable  legal costs and  attorneys'  fees) and all other charges
against the Collateral, the Agent shall apply the residue of the proceeds of any
such sale or disposition to the  Obligations in accordance with the terms hereof
and any  surplus  shall be  returned  to the Credit  Parties or to any Person or
party lawfully entitled thereto. In the event the proceeds of any sale, lease or
other  disposition  of  the  Collateral  are  insufficient  to  pay  all  of the
Obligations  in full,  the Credit  Parties  will be liable  for the  deficiency,
together  with  interest  thereon  at the  Post-Default  Rate,  and the cost and
expenses of collection of such deficiency, including (to the extent permitted by
law),   without   limitation,   reasonable   attorneys'   fees,   expenses   and
disbursements.

         4.8. RELATION TO COLLATERAL DOCUMENTS. The provisions of this Agreement
supplement the  provisions of any real estate  mortgage or deed of trust granted
by any Credit Party to the Agent,  for the benefit of the Lenders and the Agent,
and which secures the payment or performance of any of the Obligations.  Nothing
contained in any such real estate  mortgage or deed of trust shall derogate from
any of the rights or remedies of the Agent or any of the Lenders  hereunder.  In
addition,  to the provisions of this Agreement  being so read and construed with
any such mortgage or deed of trust,  the provisions of this  Agreement  shall be
read and construed with the Collateral Documents referred to below in the manner
so indicated.

                  (a) PLEDGE AGREEMENTS. Concurrently herewith each Credit Party
         is  executing  and  delivering  to the  Agent,  for the  benefit of the
         Lenders and the Agent, a Pledge Agreement pursuant to which such Credit
         Party is  pledging  to the Agent (a) 100% of the shares of the  Capital
         Stock  of its  Domestic  Subsidiary  or  Subsidiaries,  and/or  Audubon


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         Europe,  as the case may be, (b) 65% of the shares of the Capital Stock
         of its Foreign  Subsidiary or Subsidiaries  (other than Audubon Europe)
         and (c) all  promissory  notes held by or payable to such Credit Party.
         Such pledge shall be governed by the terms of such pledge agreement and
         not  by  the  terms  of  this  Agreement.

                  (b) TRADEMARK  AND PATENT  AGREEMENTS.  Concurrently  herewith
         each Credit Party is executing  and  delivering  to the Agent,  for the
         benefit of the  Lenders  and the Agent,  a  Trademark  Agreement  and a
         Patent  Agreement  pursuant to which such Credit  Party is assigning to
         the Agent,  for the  benefit  of the  Lenders  and the  Agent,  certain
         Collateral  consisting of  trademarks,  service marks and trademark and
         service  mark  rights,  patent and  patent  rights,  together  with the
         goodwill appurtenant thereto. The provisions of the Trademark Agreement
         and the Patent  Agreement are  supplemental  to the  provisions of this
         Agreement,  and nothing  contained  in the  Trademark  Agreement or the
         Patent  Agreement  shall derogate from any of the rights or remedies of
         the Agent or any of the Lenders hereunder. Neither the delivery of, nor
         anything contained in, the Trademark  Agreement or the Patent Agreement
         shall be  deemed to  prevent  or  postpone  the time of  attachment  or
         perfection of any security interest in such Collateral created hereby.

                  (c)  COPYRIGHT  MORTGAGES,  ETC.  Concurrently  herewith  each
         Credit Party is also  executing and  delivering  to the Agent,  for the
         benefit of the  Lenders  and the  Agent,  for  recording  in the United
         States Copyright Office (the "COPYRIGHT  OFFICE") a Memorandum of Grant
         of Security  Interest in Copyrights.  Such Credit Party  represents and
         warrants  to the  Lenders  and the Agent that such  Copyright  Mortgage
         identifies all now existing material copyrights and other rights in and
         to all material  copyrightable works of such Credit Party,  identified,
         where applicable, by title, author and/or Copyright Office registration
         number and date.  Each  Credit  Party  represents  and  warrants to the
         Lenders and the Agent that it has  registered  all material  copyrights
         with the Copyright  Office,  as identified in such Copyright  Mortgage.
         Each Credit Party  covenants,  promptly  following  such Credit Party's
         acquisition  thereof,  to provide to the Agent like  identifications of
         all  material  copyrights  and  other  rights  in and  to all  material
         copyrightable  works  hereafter  acquired  by  such  Credit  Party,  to
         register such copyrights  with the Copyright  Office and to execute and
         deliver to the Agent,  for the benefit of the Lenders and the Agent,  a
         supplemental Memorandum of Grant of Security Interest in Copyrights, in
         form and substance  satisfactory  to the Agent,  for the benefit of the
         Lenders and the Agent, modified to reflect such subsequent acquisitions
         and registrations.

         4.9. MARSHALLING. Neither the Agent nor any Lender shall be required to
marshal any present or future collateral  security (including but not limited to
the Collateral)  for, or other  assurances of payment of, the Obligations or any
of them or to resort to such collateral  security or other assurances of payment
in any particular  order, and all of the rights and remedies of the Agent or any
Lender  hereunder  and of the Agent or any Lender in respect of such  collateral
security and other  assurances of payment shall be cumulative and in addition to


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all other rights and remedies,  however existing or arising.  To the extent that
it lawfully may, each Credit Party hereby agrees that it will not invoke any law
relating to the  marshalling of collateral  which might cause delay in or impede
the enforcement of the Agent's rights and remedies under this Agreement or under
any other  instrument  creating or evidencing  any of the  Obligations  or under
which any of the  Obligations is outstanding or by which any of the  Obligations
is secured or payment thereof is otherwise  assured,  and, to the extent that it
lawfully  may, such Credit Party hereby  irrevocably  waives the benefits of all
such laws.

                                   ARTICLE 5.

                         REPRESENTATIONS AND WARRANTIES

         Each Credit Party  represents and warrants to the Lenders,  the Issuing
Lender and the Agent, as to itself and each other Credit Party, that:

         5.1.  ORGANIZATION;  POWERS.  Each of the Borrower and its Subsidiaries
has been duly formed or organized  and is validly  existing and in good standing
under the laws of its  jurisdiction of  organization  or formation.  Each of the
Borrower and its  Subsidiaries  has all requisite  power to own its property and
authority  to  carry  on  its  business  as  now   conducted  and  as  presently
contemplated,  and is qualified  to do business in, and is in good  standing and
duly authorized to do business in, every  jurisdiction  where such qualification
is  required,  except where the failure to have such power or authority or to be
so qualified or in good standing,  individually  or in the aggregate,  could not
reasonably be expected to have a Material Adverse Effect.

         5.2. AUTHORIZATION;  ENFORCEABILITY. The borrowing of the Loans and the
grant of security  interests pursuant to the Loan Documents are within the power
and authority of the Borrower and each of its Subsidiaries,  as applicable,  and
have been duly  authorized by all  necessary  action on the part of the Borrower
and each of its Subsidiaries,  as applicable.  This Agreement and the other Loan
Documents have been duly authorized,  executed and delivered by the Borrower and
each of its Subsidiaries,  as applicable and constitute legal, valid and binding
obligations  of the  Borrower  and  each  of its  Subsidiaries,  as  applicable,
enforceable in accordance  with their  respective  terms,  subject to applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or other  laws  affecting
creditors'  rights  generally  and  subject  to  general  principles  of equity,
regardless of whether considered in a proceeding in equity or at law.

         5.3. GOVERNMENTAL APPROVALS;  NO CONFLICTS.  The borrowing of the Loans
and the grant of the security  interests  pursuant to the Loan  Documents (a) do
not require any consent or approval  of,  registration  or filing  with,  or any
other action by, any Governmental Authority which has not been obtained,  except
as disclosed on SCHEDULE 5.3, (b) will not violate any applicable law, policy or
regulation  or  the  organizational  documents  of  the  Borrower  or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any material term of any indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries, or any of their
assets,  or give rise to a right thereunder to require any payment to be made by


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the Borrower or any of its Subsidiaries, and (d) except for the Liens created by
the Loan Documents, will not result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Subsidiaries.

         5.4.  FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.

                  (a) The Credit Parties have heretofore  delivered to the Agent
         and the Lenders the following financial statements:

                           (i) the consolidated balance sheets and statements of
                  operations   and   cash   flows  of  the   Borrower   and  its
                  Subsidiaries,  as of and for the fiscal  years ended March 31,
                  2000,  March  31,  2001,  and  March  31,  2002,  audited  and
                  accompanied by an opinion of the Borrower's independent public
                  accountants;

                           (ii) the  unaudited  consolidated  balance  sheet and
                  statements  of  operations  and cash flows of the Borrower and
                  its Subsidiaries, as of and for the fiscal year-to-date period
                  ended September 30, 2002,  certified by a Designated Financial
                  Officer  that such  financial  statements  fairly  present the
                  financial condition of the Borrower and its Subsidiaries as at
                  such date and the results of the  operations  of the  Borrower
                  and its  Subsidiaries  for the  period  ended on such date and
                  that all such  financial  statements,  including  the  related
                  schedules and notes thereto have been prepared in all material
                  respects  in   accordance   with  GAAP  applied   consistently
                  throughout  the  periods  involved,  except  as  disclosed  on
                  SCHEDULE 5.4; and

                           (iii)  the  projected  consolidated  balance  sheets,
                  statements of operations and cash flows,  for the Borrower and
                  its  Subsidiaries  for the fiscal  years  ended March 31, 2003
                  through March 31, 2007.

                  Except as disclosed on SCHEDULE 5.4, such financial statements
         (except for the projections)  present fairly, in all material respects,
         the  respective   consolidated   financial   position  and  results  of
         operations  and  cash  flows  of the  respective  entities  as of  such
         respective dates and for such periods in accordance with GAAP,  subject
         to year-end audit  adjustments and the absence of footnotes in the case
         of  such  unaudited  or pro  forma  statements.  The  projections  were
         prepared by the  Borrower  in good faith and were based on  assumptions
         that were reasonable when made.

                  (b) Except as disclosed on SCHEDULE 5.4,  since  September 30,
         2002,  there  has been no  material  adverse  change  in the  business,
         assets,  operations  or  condition,  financial  or  otherwise,  of  the
         Borrower and its Subsidiaries  from that set forth in the September 30,
         2002 financial  statements  referred to in clause (ii) of paragraph (a)
         above.

                  (c) Neither the  Borrower nor any of its  Subsidiaries  has on
         the Closing Date any  contingent  liabilities,  liabilities  for taxes,
         unusual  forward or long-term  commitments or unrealized or anticipated


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         losses from any unfavorable commitments in each case that are material,
         except as referred to or  reflected  or provided  for in the  financial
         statements  described  in this  Section 5.4 or in SCHEDULE  5.4 annexed
         hereto, or as otherwise permitted pursuant to this Agreement.

                  (d) SCHEDULE  5.4(D) hereto contains the calculation of EBITDA
         and other financial  information,  including  restructuring charges for
         the fiscal  quarters ending March 31, 2002, June 30, 2002 and September
         30, 2002.

         5.5.  PROPERTIES.

                  (a) Each of the  Borrower  and its  Subsidiaries  has good and
         marketable  title to, or valid,  subsisting and  enforceable  leasehold
         interests  in, all of its  Properties  material  to its  business.  All
         machinery and equipment of each of the Borrower and its Subsidiaries is
         in good operating condition and repair, and all necessary  replacements
         of and repairs  thereto have be made so as to preserve and maintain the
         value and operating efficiency of such machinery and equipment.

                  (b) Set forth on SCHEDULE 5.5 hereto is a complete list of all
         Patents,  Trademarks and Copyrights.  The Borrower and its Subsidiaries
         own, or are licensed to use, all Patents, Trademarks and Copyrights and
         other intellectual  property material to their business  (collectively,
         the "PROPRIETARY RIGHTS"), and to the knowledge of the Borrower and its
         Subsidiaries,   the  use  thereof  by  the   Borrower  or  any  of  its
         Subsidiaries  does not  infringe  upon the rights of any other  Person,
         except  for  any  such  infringements  that,  individually  or  in  the
         aggregate,  could not reasonably be expected to have a Material Adverse
         Effect.

                  (c) SCHEDULE 5.5 clearly  identifies  all Patents,  Trademarks
         and Copyrights that have been duly registered in, filed in or issued by
         the PTO or the United States Register of Copyrights (collectively,  the
         "REGISTERED  PROPRIETARY  Rights").  The Registered  Proprietary Rights
         have been  properly  maintained  and  renewed  in  accordance  with all
         applicable  provisions  of law and  administrative  regulations  in the
         United States,  as applicable.  The Borrower and its Subsidiaries  have
         taken  commercially   reasonable  steps  to  protect  their  Registered
         Proprietary   Rights  and  to  maintain  the   confidentiality  of  all
         Proprietary Rights that are not generally in the public domain.

                  (d)  As of the  Closing  Date,  SCHEDULE  5.5  annexed  hereto
         contains a true,  accurate and complete  list of (i) all Real  Property
         Assets,  whether  owned or leased,  and (ii) all leases,  subleases  or
         assignments  of leases  (together with all  amendments,  modifications,
         supplements,  renewals or  extensions  of any thereof)  affecting  each
         Leasehold  Property,  regardless  of whether the Borrower or any of its
         Subsidiaries  is the  landlord  or tenant  (whether  directly  or as an
         assignee  or  successor  in  interest)  under such  lease,  sublease or
         assignment.  Except as specified in SCHEDULE 5.5, each agreement listed
         in clause (ii) of the immediately  preceding  sentence is in full force


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         and effect and neither the Borrower nor any of its Subsidiaries has any
         knowledge  of  any  default   that  has  occurred  and  is   continuing
         thereunder,  and each such agreement  constitutes the legal,  valid and
         binding  obligation  of the Borrower and each of its  Subsidiaries,  as
         applicable,   enforceable   against  the   Borrower  and  each  of  its
         Subsidiaries,  as applicable,  in accordance with its terms,  except as
         enforcement may be limited by bankruptcy,  insolvency,  reorganization,
         moratorium  or similar laws relating to or limiting  creditors'  rights
         generally or by equitable principles.

         5.6.  LITIGATION AND ENVIRONMENTAL MATTERS.

                  (a)  Except  as  set  forth  on  SCHEDULE  5.6,  there  are no
         Environmental  Actions  of any  kind by or  before  any  arbitrator  or
         Governmental  Authority  pending  against or, to the  knowledge  of the
         Borrower and its  Subsidiaries,  threatened  against or  affecting  the
         Borrower or any of its Subsidiaries  that (i) if adversely  determined,
         could have a Material  Adverse Effect or (ii) relates to this Agreement
         or any other Loan Document or any  transaction  contemplated  hereby or
         thereby.

                  (b) The Borrower and its Subsidiaries have taken all necessary
         steps to  investigate  the past and present  condition and usage of the
         Real Property  Assets and the operations  conducted  thereon and, based
         upon such diligent investigation,  have determined, except as set forth
         on SCHEDULE 5.6, that:

                           (i) none of the  Borrower,  its  Subsidiaries  or any
                  operator of the Real  Property  Assets  currently  or formerly
                  owned,  leased  or  operated  by  the  Borrower,  any  of  its
                  Subsidiaries or any  predecessor-in-interest or any operations
                  thereon are in violation or alleged violation, in any material
                  respect, of any Environmental Laws;

                           (ii) neither the Borrower nor any of its Subsidiaries
                  has become subject to any Environmental Liabilities and do not
                  know of any basis for any Environmental  Liabilities,  in each
                  case, which would have a Material Adverse Effect;

                           (iii)   neither   the   Borrower   nor   any  of  its
                  Subsidiaries   has  received   notice  from  any  third  party
                  including, without limitation, any Governmental Authority, (A)
                  that  any one of them has been  identified  by a  Governmental
                  Authority   as   a   potentially   responsible   party   under
                  Environmental Law; (B) that the Borrower,  its Subsidiaries or
                  any  predecessor-in-interest  has  generated,  transported  or
                  disposed  of any  Hazardous  Materials  at any site at which a
                  Governmental Authority has conducted or has ordered a party to
                  conduct a Remedial  Action,  removal or other response  action
                  pursuant to any Environmental Law; or (C) that the Borrower or
                  any of its  Subsidiaries  is or shall be a named  party to any
                  Environmental   Action   arising  out  of  any  third  party's
                  incurrence of costs,  expenses,  losses or damages of any kind
                  whatsoever  in  connection   with  the  Release  of  Hazardous
                  Materials;


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                           (iv)  (A) no  portion  of the  Real  Property  Assets
                  currently  or  formerly  owned,  leased  or  operated  by  the
                  Borrower  or any of its  Subsidiaries  has  been  used for the
                  generation,  handling,  processing,  storage  or  disposal  of
                  Hazardous   Materials  except  in  material   accordance  with
                  applicable  Environmental  Laws;  and no  underground  tank or
                  other underground  storage receptacle for Hazardous  Materials
                  is  located  on  any  portion  of  the  Real  Property  Assets
                  currently  or  formerly  owned,  leased  or  operated  by  the
                  Borrower or any of its Subsidiaries;  (B) in the course of any
                  activities   conducted   by  the   Borrower   or  any  of  its
                  Subsidiaries  or  operators  of its  properties,  no Hazardous
                  Materials  have been  generated  or are being used on the Real
                  Property  Assets  currently  or  formerly  owned,   leased  or
                  operated by the Borrower or any of its Subsidiaries  except in
                  material  accordance with applicable  Environmental  Laws; (C)
                  there  have  been  no  Releases  (i.e.  any  past  or  present
                  releasing,  spilling,  leaking,  pumping,  pouring,  emitting,
                  emptying,  discharging,   injecting,  escaping,  disposing  or
                  dumping) or  threatened  Releases of Hazardous  Materials  on,
                  upon,  into or from the  properties  of the Borrower or any of
                  its Subsidiaries, which Releases would have a material adverse
                  effect  on the  value of any of the Real  Property  Assets  or
                  adjacent properties; (D) to the best knowledge of the Borrower
                  and its Subsidiaries,  there have been no generation, storage,
                  disposal or Releases on, upon,  from or into any real property
                  in the  vicinity  of any of the Real  Property  Assets  which,
                  through soil or groundwater contamination, may have come to be
                  located on, and which would have a material  adverse effect on
                  the value of, any Real  Property  Asset;  and (E) in addition,
                  any Hazardous Materials that have been generated on any of the
                  Real Property Assets  currently or formerly  owned,  leased or
                  operated  by the  Borrower,  any of  its  Subsidiaries  or any
                  predecessor-in-interest  have been transported offsite only by
                  carriers  having  an  identification   number  issued  by  any
                  Governmental  Authority,   treated  or  disposed  of,  to  the
                  knowledge of the Borrower or any of its Subsidiaries,  only by
                  treatment or disposal facilities  maintaining valid permits as
                  required   under   applicable    Environmental   Laws,   which
                  transporters  and  facilities  have been and are,  to the best
                  knowledge of the Borrower and its  Subsidiaries,  operating in
                  material   compliance   with  such   permits  and   applicable
                  Environmental Laws; and

                           (v) none of the Borrower,  its Subsidiaries or any of
                  the  Real  Property  Assets  are  subject  to  any  applicable
                  Environmental  Law  requiring  the  performance  of  Hazardous
                  Material site  assessments,  or the removal or  remediation of
                  Hazardous   Materials,   or  the   giving  of  notice  to  any
                  Governmental  Authority or the  recording or delivery to other
                  Persons of an environmental  disclosure  document or statement
                  by  virtue  of  the   transactions   set  forth   herein   and
                  contemplated hereby, or as a condition to the recording of any
                  Mortgage  or to the  effectiveness  of any other  transactions
                  contemplated hereby.


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                  (c) Since the  Closing  Date,  there has been no change in the
         status of the Disclosed Matters that, individually or in the aggregate,
         has had, or materially  increased the likelihood of having,  a Material
         Adverse Effect.

         5.7.  COMPLIANCE  WITH  LAWS AND  AGREEMENTS.  Except  as set  forth on
SCHEDULE  5.7,  each  of  the  Borrower  and  its  Subsidiaries  is in  material
compliance with all laws,  decrees,  judgments,  licenses,  rules,  regulations,
policies, permits, approvals and orders of any Governmental Authority applicable
to it, its property or the  operation of its business and all material  terms of
indentures, agreements and other instruments binding upon it or its property.

         5.8.  INVESTMENT AND HOLDING COMPANY  STATUS.  Neither the Borrower nor
any  of its  Subsidiaries  is (a) an  "investment  company",  or an  "affiliated
company" or a "principal underwriter" of an "investment company", as defined in,
or subject to regulation under, the Investment  Company Act of 1940, as amended,
(b) a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate"  of a "holding  company",  as defined  in, or subject to  regulation
under, the Public Utility Holding Company Act of 1935, as amended or (c) a "bank
holding company" as defined in, or subject to regulation under, the Bank Holding
Company Act of 1956, as amended.

         5.9.  TAXES.  Except as set forth on SCHEDULE 5.9, each of the Borrower
and its  Subsidiaries  has  timely  made,  filed or  caused  to be filed all Tax
returns,  declarations  and reports  required to have been filed or made and has
paid or caused to be paid all Taxes required to have been paid by it, except (a)
as of the  Closing  Date,  Taxes  that  are  being  contested  in good  faith by
appropriate  proceedings,  so long as  such  contest  operates  to  suspend  the
enforcement  of  compliance   therewith,   the  collection  thereof  and/or  the
imposition of any penalty,  fine or Lien with respect thereto, and for which the
Borrower or any of its Subsidiaries has set aside on its books adequate reserves
with respect thereto in accordance with GAAP, which reserves shall be acceptable
to Agent and (b) after the Closing Date, as permitted by Section 7.4.  There are
no unpaid Taxes in any material amount claimed to be due by the taxing authority
of any  jurisdiction,  and none of the  officers  of the  Borrower or any of its
Subsidiaries knows of any basis for any such claim.

         5.10. ERISA. Except as set forth on SCHEDULE 5.10, neither the Borrower
nor any of its  Subsidiaries  has any Pension Plans. No ERISA Event has occurred
or is  reasonably  expected  to occur  with  respect  to any Plan.  Neither  the
Borrower nor any of its  Subsidiaries  has a present  intention to terminate any
Pension Plan (except in connection with the transactions  described in Schedules
8.4(b)  and  8.4(c)),  with  respect  to  which  the  Borrower  or  any  of  its
Subsidiaries  would incur a cost of more than  $100,000 to terminate  such Plan,
including  amounts required to be contributed to fund such Plan upon termination
thereof and all costs and  expenses  associated  therewith,  including,  without
limitation,  attorneys' and actuaries' fees and expenses in connection with such
termination  and  reasonable  expenses  and  settlement  or  judgment  costs and
attorneys' fees and expenses in connection  with any litigation  related to such
termination.


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<PAGE>

         5.11.  DISCLOSURE.  As of  the  Closing  Date,  the  Borrower  and  its
Subsidiaries  have disclosed to the Agent all material  agreements,  instruments
and  corporate  or  other  restrictions  to  which  the  Borrower  or any of its
Subsidiaries  is subject after the Closing Date,  and all other matters known to
the Borrower or any of its Subsidiaries, that, individually or in the aggregate,
could   reasonably  be  expected  to  have  a  Material   Adverse  Effect.   The
organizational structure of the Borrower and its Subsidiaries is as set forth on
SCHEDULE 5.12 annexed hereto. The information,  reports,  financial  statements,
exhibits and  schedules  furnished at or prior to the Closing Date in writing by
or on behalf of the Borrower  and its  Subsidiaries  to the Agent in  connection
with the  negotiation,  preparation  or delivery of this Agreement and the other
Loan  Documents or included  herein or therein or delivered  pursuant  hereto or
thereto,  on the Closing  Date,  when taken as a whole do not contain any untrue
statement of material fact or omit to state any material fact  necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not materially  misleading.  All written information  furnished after
the Closing Date by the Borrower  and its  Subsidiaries  to the Agent and/or the
Lenders in connection  with this  Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby will be true, complete and accurate
in  every  material  respect,  or (in the  case  of pro  forma  information  and
projections) prepared in good faith based on reasonable assumptions, on the date
as of which such  information is stated or certified.  There is no fact known to
the Borrower or any of its  Subsidiaries  that could  reasonably  be expected to
have a Material Adverse Effect that has not been disclosed  herein, in the other
Loan  Documents  or  in  a  report,  financial  statement,   exhibit,  schedule,
disclosure  letter or other writing furnished to the Agent for use in connection
with the transactions contemplated hereby or thereby.

         5.12. CAPITALIZATION. As of the Closing Date, the capital structure and
ownership  of the  Subsidiaries  of the  Borrower  are  correctly  described  on
SCHEDULE 5.12. As of the Closing Date, the  authorized,  issued and  outstanding
Capital  Stock of the  Borrower  and each of its  Subsidiaries  consists  of the
Capital  Stock  described  on  SCHEDULE  5.12,  all of which is duly and validly
issued and  outstanding,  fully paid and  nonassessable.  Except as set forth on
SCHEDULE  5.12,  as of the Closing  Date,  (x) there are no  outstanding  Equity
Rights with  respect to the Borrower or any of its  Subsidiaries  and, (y) there
are no  outstanding  obligations of the Borrower or any of its  Subsidiaries  to
repurchase, redeem, or otherwise acquire any shares of Capital Stock of or other
interest  in the  Borrower  or  any  of its  Subsidiaries,  nor  are  there  any
outstanding  obligations  of the  Borrower  or any of its  Subsidiaries  to make
payments  to any  Person,  such as "phantom  stock"  payments,  where the amount
thereof is calculated with reference to the fair market value or equity value of
the Borrower or any of its Subsidiaries.

         5.13.  SUBSIDIARIES.

                  (a) Set forth on SCHEDULE  5.13 is a complete and correct list
         of all  Subsidiaries  of the  Credit  Parties as of the  Closing  Date,
         together  with,  for each  such  Subsidiary,  (i) the  jurisdiction  of
         organization  of such  Subsidiary,  (ii) each Person holding  ownership
         interests  in such  Subsidiary  and (iii) the  nature of the  ownership



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         interests  held by each such Person and the  percentage of ownership of
         such  Subsidiary  represented  by such ownership  interests.  Except as
         disclosed in SCHEDULE  5.13,  (x) each Credit Party and its  respective
         Subsidiaries  owns,  free and  clear of all  Liens  (other  than  Liens
         permitted  hereunder),  and has the  unencumbered  right to  vote,  all
         outstanding  ownership  interests in each Person shown to be held by it
         in SCHEDULE 5.13, (y) all of the issued and  outstanding  Capital Stock
         of each such Person organized as a corporation is validly issued, fully
         paid and nonassessable  and (z) there are no outstanding  Equity Rights
         with respect to such Person.

                  (b) Except as set forth on  SCHEDULE  8.8,  as of the  Closing
         Date,  neither the Borrower nor any of its  Subsidiaries  is subject to
         any indenture,  agreement,  instrument or other arrangement  containing
         any  provision  of the type  described  in  Section  8.8  ("RESTRICTIVE
         AGREEMENTS"),  other  than any such  provision  the effect of which has
         been unconditionally, irrevocably and permanently waived.

                  (c) Each of the Domestic Subsidiaries (other than CM Insurance
         Company, Inc.) is a Guarantor and a Credit Party hereunder.

         5.14.  MATERIAL INDEBTEDNESS, LIENS AND AGREEMENTS.

                  (a) SCHEDULE 5.14 hereto contains a complete and correct list,
         as of the Closing Date, of any  Indebtedness or any extension of credit
         (or  commitment  for any  extension of credit) to, or guarantee by, the
         Borrower or any of its Subsidiaries in an amount in excess of $100,000,
         and the  aggregate  principal  or face amount  outstanding  or that may
         become  outstanding  with  respect  thereto is  correctly  described on
         SCHEDULE 5.14.

                  (b) SCHEDULE 5.14 hereto contains a complete and correct list,
         as of the Closing  Date, of each Lien (other than the Liens in favor of
         the  Agent)  securing  Indebtedness  of any  Person  and  covering  any
         property of the Borrower or any of its Subsidiaries,  and the aggregate
         Indebtedness  secured  (or which may be  secured) by each such Lien and
         the Property  covered by each such Lien is  correctly  described in the
         appropriate part of SCHEDULE 5.14.

                  (c) SCHEDULE 5.14 hereto contains a complete and correct list,
         as of the Closing Date, of each contract and  arrangement  to which the
         Borrower  or any of its  Subsidiaries  is a  party  for  which  breach,
         nonperformance,  cancellation or failure to renew would have a Material
         Adverse Effect other than purchase  orders made in the ordinary  course
         of business and subject to customary terms.

                  (d) To the extent  requested  by the Agent,  true and complete
         copies of each  agreement  listed on the  appropriate  part of SCHEDULE
         5.14 have been  delivered to the Agent,  together with all  amendments,
         waivers and other modifications thereto. All such agreements are valid,
         subsisting,  in full force and effect,  are currently  binding and will
         continue to be binding upon the  Borrower and each of its  Subsidiaries
         that is a party thereto and, to the best  knowledge of the Borrower and


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         its Subsidiaries,  binding upon the other parties thereto in accordance
         with their terms.  The Borrower and its Subsidiaries are not in default
         under  any  such  agreements,  the  occurrence  of which  could  have a
         Material Adverse Effect.

         5.15. FEDERAL RESERVE REGULATIONS.  Neither the Borrower nor any of its
Subsidiaries is engaged principally or as one of its important activities in the
business of extending  credit for the purpose of purchasing  or carrying  margin
stock  (as  defined  in  Regulation  U of the  Board).  The  making of the Loans
hereunder,  the use of the  proceeds  thereof as  contemplated  hereby,  and the
security arrangements contemplated by the Loan Documents, will not violate or be
inconsistent with any of the provisions of Regulations T, U, or X of the Board.

         5.16.  SOLVENCY.  As of the Closing Date and after giving effect to the
initial Loans hereunder and the  consummation of the  transactions  contemplated
hereby and by the Senior Note Documents:

                  (a) the aggregate  value of all properties of the Borrower and
         its  Subsidiaries  at  their  present  fair  saleable  value on a going
         concern  basis  (i.e.,  the  amount  that  may  be  realized  within  a
         reasonable  time,  considered  to be six  months  to one  year,  either
         through collection or sale at the regular market value,  conceiving the
         latter as the amount that could be obtained for such properties  within
         such period by a capable and diligent  businessman  from an  interested
         buyer who is willing to purchase  under ordinary  selling  conditions),
         exceed  the  amount  of  all  the  debts  and  liabilities   (including
         contingent,  subordinated,  unmatured and unliquidated  liabilities) of
         the Borrower and its Subsidiaries;

                  (b)  the  Borrower  and  its  Subsidiaries   will  not,  on  a
         consolidated  basis,  have an unreasonably  small capital with which to
         conduct their business operations as heretofore conducted; and

                  (c)  the  Borrower  and  its  Subsidiaries  will  have,  on  a
         consolidated  basis,  sufficient  cash flow to enable them to pay their
         debts as they mature.

         5.17.  FORCE MAJEURE.  Since  September 30, 2002, none of the business,
properties and other assets of the Borrower and its  Subsidiaries is affected by
any fire or other  casualty,  strike,  lockout or other labor trouble,  embargo,
sabotage,  confiscation,  contamination,  riot, civil  disturbance,  activity of
armed  forces or act of God that has or could  reasonably  be expected to have a
Material Adverse Effect.

         5.18.  ACCOUNTS  RECEIVABLE.  The Agent may rely, in determining  which
accounts receivable are Eligible Accounts, on all statements and representations
made by the Credit  Parties with  respect to such  accounts  receivable.  Unless
otherwise indicated to the Agent in writing:

                  (a) Each  account  receivable  is genuine and in all  respects
         what it purports to be, and it is not evidenced by a judgment;


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                  (b) Each account  receivable  arises out of a completed,  bona
         fide sale and  delivery of goods or  rendition  of services by a Credit
         Party in the ordinary course of its business and in accordance with the
         terms  and  conditions  of all  purchase  orders,  contracts  or  other
         documents  relating  thereto and forming a part of the contract between
         such Credit  Party and the account  debtor,  and, in the case of goods,
         title to the goods has  passed  from the  Credit  Party to the  account
         debtor;

                  (c)  Each  account  receivable  is  for  a  liquidated  amount
         maturing  as  stated in the  duplicate  invoice  covering  such sale or
         rendition  of  services,  a copy of  which  has  been  furnished  or is
         available to the Agent;

                  (d) Each account receivable, and the Agent's security interest
         therein,  is not,  and will not (by  voluntary  act or  omission of the
         Credit  Parties)  be in  the  future,  subject  to  any  offset,  Lien,
         deduction,   defense,  dispute,   counterclaim  or  any  other  adverse
         condition  except for disputes  resulting  in returned  goods where the
         amount in controversy is deemed by the Agent to be immaterial, and each
         such  account  receivable  is  absolutely  owing  to one of the  Credit
         Parties and is not contingent in any respect or for any reason;

                  (e) No Credit  Party has made any  agreement  with any account
         debtor for any extension, compromise, settlement or modification of any
         account  receivable or any  deduction  therefrom,  except  discounts or
         allowances  which are  granted  by the Credit  Parties in the  ordinary
         course of their  businesses  for prompt payment and which are reflected
         in the calculation of the net amount of each respective invoice related
         thereto  and are  reflected  in the  Borrowing  Base  Certificates  and
         Collateral Update Certificates furnished to the Agent hereunder;

                  (f) To the best knowledge of the Credit  Parties,  the account
         debtor  under each account  receivable  had the capacity to contract at
         the time any  contract  or other  document  giving  rise to an  account
         receivable was executed and such account debtor is not insolvent; and

                  (g) To the best knowledge of the Credit Parties,  there are no
         proceedings  or actions  which are  threatened  or pending  against any
         account  debtor which might result in any  material  adverse  change in
         such account debtor's financial  condition or the collectability of any
         account receivable.

         5.19.  LABOR AND EMPLOYMENT MATTERS.

                  (a) Except as set forth on SCHEDULE 5.19, (A) to the knowledge
         of the Borrower or any of its Subsidiaries, no employee of the Borrower
         or any of its  Subsidiaries  is represented by a labor union,  no labor
         union has been certified or recognized as a representative  of any such
         employee,  and  the  Borrower  and its  Subsidiaries  do not  have  any
         obligation under any collective bargaining agreement or other agreement
         with any labor union or any  obligation  to  recognize or deal with any
         labor  union,  and  there  are no such  contracts  or other  agreements


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<PAGE>

         pertaining to or which  determine the terms or conditions of employment
         of any employee of the Borrower or any of its Subsidiaries;  (B) to the
         knowledge  of the  Borrower  or any of its  Subsidiaries,  there are no
         pending  or   threatened   representation   campaigns,   elections   or
         proceedings;  (C)  the  Borrower  and  its  Subsidiaries  do  not  have
         knowledge of any strikes,  slowdowns or work  stoppages of any kind, or
         threats  thereof,  and no such activities  occurred during the 24-month
         period  preceding the Closing Date; (D) neither the Borrower nor any of
         its  Subsidiaries  has engaged in, admitted  committing or been held to
         have committed any unfair labor  practice;  and (E) to the knowledge of
         the Borrower or any of its Subsidiaries,  there are no controversies or
         grievances  between the Borrower or any of its  Subsidiaries and any of
         its employees or  representatives  thereof;  in each case,  which would
         have a Material Adverse Effect.

                  (b) Except as set forth on SCHEDULE 5.19, the Borrower and its
         Subsidiaries have at all times complied in all material  respects,  and
         are in  material  compliance  with,  all  applicable  laws,  rules  and
         regulations   respecting   employment,   wages,  hours,   compensation,
         benefits,  and  payment and  withholding  of taxes in  connection  with
         employment.

                  (c) Except as set forth on SCHEDULE  5.19, to the knowledge of
         the  Borrower  or  any  of  its  Subsidiaries,  the  Borrower  and  its
         Subsidiaries  have at all times  complied  with,  and are in compliance
         with,   all  applicable   laws,   rules  and   regulations   respecting
         occupational  health and safety,  whether now existing or  subsequently
         amended or enacted,  including,  without  limitation,  the Occupational
         Safety & Health  Act of 1970,  29 U.S.C.  Section  651 et seq.  and the
         state  analogies  thereto,  all as amended or  superseded  from time to
         time, and any common law doctrine relating to worker health and safety,
         except for  noncompliance  which  could not  reasonably  be expected to
         have, individually or in the aggregate, a Material Adverse Effect.

         5.20. BANK ACCOUNTS.  SCHEDULE 5.20 lists all banks and other financial
institutions  at  which  the  Borrower  and each of its  Subsidiaries  maintains
deposits  and/or  other  accounts  as of the  Closing  Date,  and such  Schedule
correctly identifies the name and address of each depository,  the name in which
the  account is held,  a  description  of the  purpose of the  account,  and the
complete account number.

         5.21.  OBLIGATIONS AS SENIOR DEBT. The  Obligations  constitute  Senior
Debt (as  defined in the Senior  Subordinated  Note  Indenture)  and  Designated
Senior Debt (as defined in the Senior Subordinated Note Indenture). As such, all
of the  Obligations  (and the Agent and Lenders) are entitled to the benefits of
each  of  the  subordination  and  other  provisions  contained  in  the  Senior
Subordinated  Note  Indenture  which are available in respect of Senior Debt and
Designated  Senior  Debt  (and  to  the  holders  thereof),  and  each  of  such
subordination  and other  provisions is in full force and effect and enforceable
in accordance with its terms.

         5.22. SENIOR SUBORDINATED NOTE DOCUMENTS AND SENIOR NOTE DOCUMENTS. The
Credit Parties have heretofore furnished to the Agent true, complete and correct
copies of each of the Senior  Subordinated  Note  Documents  and the Senior Note


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Documents  (including  schedules,  exhibits  and  annexes  thereto).  The Senior
Subordinated Note Documents and the Senior Note Documents have not been amended,
supplemented or modified,  and constitute the complete  understanding  among the
parties  thereto in respect of the matters  and  transactions  covered  thereby,
except for amendments  thereto  delivered to, and approved by the Agent. Each of
the Senior  Subordinated Note Documents and the Senior Note Documents is in full
force and effect,  and neither the  Borrower nor any of its  Subsidiaries  is in
default under any of such documents.

         5.23.  CERTAIN  TRANSACTIONS.  Except  for  arm's  length  transactions
pursuant to which the Borrower or any of its Subsidiaries  makes payments in the
ordinary  course of business upon terms no less  favorable  than the Borrower or
any of its Subsidiaries  could obtain from third parties,  none of the officers,
directors,  or employees of the Borrower or any of its Subsidiaries is presently
a party to any transaction with the Borrower or any of its  Subsidiaries  (other
than for services as employees, officers and directors), including any contract,
agreement or other  arrangement  providing for the  furnishing of services to or
by,  providing for rental of real or personal  property to or from, or otherwise
requiring payments to or from any officer,  director or such employee or, to the
knowledge of the Borrower, any corporation,  partnership,  trust or other entity
in which any officer,  director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.

                                   ARTICLE 6.

                                   CONDITIONS

         6.1.  CLOSING DATE.  The  obligations  of the Lenders to make Revolving
Loans,  of the  Lenders to make Term Loans,  and of the Issuing  Lender to issue
Letters of Credit  hereunder shall not become  effective until the date on which
each of the following  conditions  is satisfied  (or waived in  accordance  with
Section 11.2):

                  (a) CORPORATE  ACTION.  All corporate action necessary for the
         valid execution,  delivery and performance by the Credit Parties of the
         Loan  Documents  shall  have  been  duly  and  effectively  taken,  and
         satisfactory evidence thereof shall have been provided to the Agent.

                  (b) LOAN DOCUMENTS, ETC. Each of the Loan Documents shall have
         been  duly and  properly  authorized,  executed  and  delivered  by the
         respective  parties  thereto and shall be in full force and effect in a
         form satisfactory to the Agent.

                  (c) SENIOR  SUBORDINATED  NOTE DOCUMENTS.  Certified copies of
         the Senior  Subordinated Note Documents as amended and in effect on the
         Closing Date shall have been delivered to the Agent.

                  (d) TRANCHE B LOAN DOCUMENTS.  Certified copies of the Tranche
         B Loan  Documents  (as defined in the  Existing  Credit  Agreement)  as
         amended and in effect on the Closing Date shall have been  delivered to
         the Agent.


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                  (e)  ORGANIZATIONAL  STRUCTURE.  The corporate  organizational
         structure, capitalization and ownership of the Credit Parties, shall be
         as set forth on SCHEDULES 5.12 and 5.13 annexed hereto. The Agent shall
         have had the  opportunity to review,  and shall be satisfied  with, the
         Credit Parties' state and federal tax  assumptions,  and the ownership,
         capital, organization and structure of the Credit Parties.

                  (f) OFFICER'S  CERTIFICATE;  GOOD STANDING  CERTIFICATES.  The
         Agent shall have received  from each Credit Party a  certificate  as to
         the  good  standing  of each  from  the  Secretary  of  State  or other
         appropriate official of the jurisdiction of its organization,  dated no
         earlier than November 1, 2002.  The Agent shall also have received from
         each Credit Party a certificate of an authorized officer certifying the
         following  attachments  thereto:  (a) a  copy  of  its  certificate  or
         articles  of  incorporation,   partnership  agreement  or  constitutive
         documents,  in each case as amended to date, certified by the Secretary
         of State or  other  appropriate  official  of the  jurisdiction  of its
         organization, (b) a true and correct copy of its by-laws, including all
         amendments  thereto,  as applicable  (c) a true and correct copy of the
         resolutions  of its board of  directors  authorizing  the  transactions
         contemplated  under this Agreement and under the other Loan  Documents.
         Such Officer's Certificate shall also give the name and bear a specimen
         signature of each  individual  who shall be authorized  (i) to sign the
         Loan Documents, to which such Credit Party is a party on behalf of such
         Credit  Party;  (ii) to make an  Advance  Request  and a request  for a
         Letter of Credit, as applicable;  and (iii) to give notices and to take
         other action on such Credit  Party's behalf under the Loan Documents to
         which such Credit Party is a party.

                  (g) EXISTENCE AND GOOD STANDING. The Agent shall have received
         such  documents and  certificates  as the Agent or Special  Counsel may
         reasonably  request  relating to the  organization,  existence and good
         standing of each Credit Party,  the  authorization  of the transactions
         contemplated  hereby and any other legal matters relating to the Credit
         Parties,  this Agreement or the other Loan  Documents,  all in form and
         substance reasonably satisfactory to the Agent and Special Counsel.

                  (h)  SECURITY  INTERESTS IN PERSONAL  AND REAL  PROPERTY.  The
         Agent shall have received  evidence  satisfactory to it that the Credit
         Parties  shall  have  taken or  caused  to be taken  all such  actions,
         executed and  delivered or caused to be executed and delivered all such
         agreements, documents and instruments and made or caused to be made all
         such filings and  recordings  (other than filings or  recordings  to be
         made by the Agent on or after the Closing  Date) that may be  necessary
         or, in the opinion of the Agent,  desirable in order to create in favor
         of the  Agent,  for the  benefit of the  Lenders,  valid and (upon such
         filing and recording)  perfected First Priority  security  interests in
         the entire  personal  and real  property  Collateral  and the  Canadian
         Collateral.

                  (i) LEASES;  LANDLORD'S  WAIVERS AND CONSENTS.  In the case of
         each  Material  Leasehold  Property  existing as of the  Closing  Date,


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         copies of the lease, and all amendments thereto, between the applicable
         Credit Party and the landlord or tenant party thereto,  together with a
         Landlord's  Waiver and Consent with respect  thereto and where required
         by the terms of any lease, the consent of the mortgagee,  ground lessor
         or other party.

                  (j)  ENVIRONMENTAL  REPORTS.  The Agent  shall  have  received
         reports  and  other   information,   in  form,   scope  and   substance
         satisfactory to the Agent, regarding  environmental matters relating to
         such Real  Property  Assets as the Agent shall  require,  which reports
         shall  include  Phase I and/or Phase II  environmental  assessments  as
         specified by the Agent for each such Real Property Asset, which conform
         to the ASTM Standard Practice for Environmental  Site Assessments,  and
         the Agent shall be satisfied with the results of such reports and other
         information.   Such   reports   shall  be  conducted  by  one  or  more
         environmental  consulting firms  reasonably  satisfactory to the Agent.
         The Credit Parties shall deliver a similar  satisfactory  environmental
         assessment prior to the acquisition of any future Real Property Asset.

                  (k)  EVIDENCE  OF  INSURANCE.  The Agent  shall have  received
         certificates  from  the  Credit  Parties'  insurance  brokers  that all
         insurance required to be maintained  pursuant to Section 7.5 is in full
         force and effect and that the Agent on behalf of the  Lenders  has been
         named as  additional  insured  or loss payee  thereunder  to the extent
         required under Section 7.5.

                  (l)    NECESSARY    GOVERNMENTAL    PERMITS,    LICENSES   AND
         AUTHORIZATIONS  AND  CONSENTS;  ETC.  The  Credit  Parties  shall  have
         obtained all other permits, licenses,  authorizations and consents from
         all other  Governmental  Authorities  and all consents of other Persons
         with respect to Material  Indebtedness,  Liens and material  agreements
         listed on SCHEDULE 5.14 (and so identified  thereon) annexed hereto, in
         each  case that are  necessary  or  advisable  in  connection  with the
         transactions  contemplated  by the  Loan  Documents,  and  each  of the
         foregoing  shall be in full force and  effect,  in each case other than
         those the failure to obtain or maintain which,  either  individually or
         in the  aggregate,  would not reasonably be expected to have a Material
         Adverse  Effect.  No action,  request for stay,  petition for review or
         rehearing,  reconsideration  or  appeal  with  respect  to  any  of the
         foregoing   shall  be  pending,   and  the  time  for  any   applicable
         Governmental  Authority  to take action to set aside its consent on its
         own motion shall have expired.

                  (m) TRANCHE B FINANCING.  On or prior to the Closing Date, the
         Agent shall have  received  evidence  that the Tranche B Financing  (as
         defined in the Existing Credit  Agreement)  shall have been consummated
         and that the Borrower has received net cash proceeds from the Tranche B
         Financing in an aggregate  amount of not less than $65,000,000 and that
         the Borrower has  deposited  such net cash  proceeds into an account of
         the Borrower maintained with the Cash Management Bank.

                  (n)  EXISTING  INDEBTEDNESS;   LIENS.  The  Agent  shall  have
         received evidence that all principal, interest, and other amounts owing


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         in respect of all Existing  Indebtedness  of the Credit  Parties (other
         than  Indebtedness  permitted to remain  outstanding in accordance with
         Section 8.1 hereof) will be repaid in full as of the Closing Date,  and
         that with respect to all Indebtedness  permitted to remain  outstanding
         in  accordance  with  Section  8.1  hereof,  any  defaults or events of
         default   existing  as  of  the  Closing  Date  with  respect  to  such
         Indebtedness will be cured or waived immediately  following the funding
         of the initial Loans. The Agent shall have received evidence that as of
         the Closing Date,  the Property of the Credit Parties is not subject to
         any  Liens  (other  than  Liens  permitted  to  remain  outstanding  in
         accordance with Section 8.2 hereof).

                  (o) FINANCIAL  STATEMENTS;  PROJECTIONS.  The Agent shall have
         received the certified financial statements and projections referred to
         in Section 5.4 hereof and the same shall not be  inconsistent  with the
         information previously provided to the Agent.

                  (p)  FINANCIAL  OFFICER  CERTIFICATE.  The  Agent  shall  have
         received  a  certificate,  dated  the  Closing  Date  and  signed  by a
         Designated Financial Officer, confirming compliance with the conditions
         set forth in paragraphs (a) and (b) of Section 6.2 on the Closing Date.

                  (q) NO MATERIAL  ADVERSE CHANGE.  There shall have occurred no
         material adverse change (in the reasonable opinion of the Agent) in the
         businesses,  operations, properties (including tangible properties), or
         conditions (financial or otherwise),  assets,  liabilities or income of
         the Credit Parties, taken as a whole, since September 30, 2002.

                  (r) OPINION OF COUNSEL TO CREDIT PARTIES. The Agent shall have
         received  favorable written opinions  (addressed to the Agent and dated
         the Closing Date) of

                           (i) Opinion of Phillips,  Lytle, Hitchcock,  Blaine &
                  Huber LLP,  special  counsel to the Credit  Parties,  covering
                  such matters  relating to the Credit Parties,  this Agreement,
                  the other  Loan  Documents  or the  transactions  contemplated
                  hereby as the Agent shall reasonably request;

                           (ii) Opinion of Hodgson Russ LLP, bond counsel to the
                  Credit Parties regarding the Senior Indenture Notes;

                           (iii)  Opinion  of  Blake,  Cassels  &  Graydon  LLP,
                  Canadian local counsel to the Canadian Borrowers;

                           (iv) Opinion of Shook, Hardy & Bacon L.L.P., Missouri
                  local counsel to Audubon West, Inc. and LICO Steel, Inc.;

                           (v) Opinion of Brune & Neff,  Oklahoma  local counsel
                  to Crane Equipment & Service, Inc.;


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                           (vi) Opinion of Linklaters  Loesch,  Luxembourg local
                  counsel to Audubon Europe;

                           (vii) Opinion of Theodore Hadzi-Antich, environmental
                  counsel to the Credit Parties; and

                           (viii) Opinion of Timothy R. Harvey,  Manager - Legal
                  Affairs of the Borrower.

                  (s)  BORROWING  BASE AND  COLLATERAL  UPDATE  CERTIFICATES.  A
         Designated  Financial  Officer shall have executed and delivered to the
         Agent a  Collateral  Update  Certificate  substantially  in the form of
         EXHIBIT B-2 annexed hereto,  which Collateral Update  Certificate shall
         show  Domestic   Excess   Availability   under  the  Revolving   Credit
         Commitments  of not less than  $15,000,000  (after giving effect to the
         payment of all sums and expenses, the issuance of all Letters of Credit
         and the  funding  of all  Loans to be paid,  issued  or  funded  on the
         Closing Date).

                  (t) LOCKBOX  ACCOUNTS/CONTROLLED  ACCOUNTS. The Credit Parties
         shall have established  such Lockbox  Accounts and Controlled  Accounts
         with the Cash Management Bank and such other financial  institutions as
         may be approved by the Agent as required in accordance with Section 4.3
         hereof,  and shall have  entered into all Lockbox  Agreements,  Control
         Agreements  and/or blocked  account  agreements as shall be required by
         the Agent.

                  (u)  COMMERCIAL  FINANCE  EXAMINATION.  The Agent  shall  have
         received  and be  satisfied  with the results of a  commercial  finance
         examination  of the  accounts  receivable  and  inventory of the Credit
         Parties.

                  (v) INVENTORY APPRAISAL.  The Agent shall have received and be
         satisfied  with the results of an  appraisal  of the  inventory  of the
         Credit Parties.

                  (w)  APPRAISAL.  The Agent shall have  received MAI  Appraisal
         dated as of a recent  date for each of the  Eligible  Fixed  Assets and
         Real Property Assets in form and substance satisfactory to the Agent.

                  (x)  SOLVENCY  CERTIFICATE.  The Agent shall have  received an
         officer's  certificate  of the Borrower dated as of the Closing Date as
         to the  solvency of the  Borrower and its  Subsidiaries  following  the
         consummation of the  transactions  contemplated  herein and in form and
         substance satisfactory to the Agent.

                  (y) TITLE  INSURANCE.  The Agent  shall have  received a Title
         Policy  covering each Mortgaged  Property (or commitments to issue such
         policies,  with all  conditions to issuance of the Title Policy deleted
         by an authorized  agent of the Title Insurance  Company)  together with
         proof of payment of all fees and premiums for such  policies,  from the


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         Title  Insurance  Company  and in  amounts  satisfactory  to the Agent,
         insuring the interest of the Agent and each of the Lenders as mortgagee
         under the Mortgages.

                  (z) FEES AND EXPENSES.  The Agent and the Issuing Lender shall
         have received all fees and other amounts due and payable to such Person
         and Special Counsel at or prior to the Closing Date, including,  to the
         extent invoiced, reimbursement or payment of all out-of-pocket expenses
         required to be reimbursed or paid by the Borrower hereunder.

                  (aa)  OTHER  DOCUMENTS.  The Agent  shall  have  received  all
         material contracts, instruments, opinions, certificates, assurances and
         other  documents  as the Agent or any Lender or Special  Counsel  shall
         have reasonably requested and the same shall be reasonably satisfactory
         to each of them.

         6.2. EACH  EXTENSION OF CREDIT.  The  obligation of each Lender and the
Canadian  Lender to make a Loan on the  occasion  of any  Borrowing,  and of the
Issuing Lender to issue, amend, renew or extend any Letter of Credit, is subject
to the satisfaction of the following conditions:

                  (a)  REPRESENTATIONS  AND WARRANTIES.  The representations and
         warranties  of each Credit  Party set forth in this  Agreement  and the
         other Loan Documents shall be true and correct in all material respects
         on and as of the date of such Borrowing, or (as applicable) the date of
         issuance,  amendment,  renewal or  extension  of such Letter of Credit,
         both  before  and after  giving  effect  thereto  and to the use of the
         proceeds  thereof  (or,  if any  such  representation  or  warranty  is
         expressly  stated  to  have  been  made  as of a  specific  date,  such
         representation or warranty shall be or have been true and correct as of
         such  specific  date and  PROVIDED  that,  to the  extent any change in
         circumstances   expressly   permitted  by  this  Agreement  causes  any
         representation and warranty set forth herein to no longer be true, such
         representation  and warranty  shall be deemed  modified to reflect such
         change in circumstances).

                  (b) PROCEEDINGS  AND DOCUMENTS.  All proceedings in connection
         with the  transactions  contemplated by this Agreement,  the other Loan
         Documents   and  all  other   documents   incident   thereto  shall  be
         satisfactory  in substance  and in form to the Lenders and to the Agent
         and the Agent's Special  Counsel,  and the Lenders,  the Agent and such
         counsel  shall  have  received  all  information  and such  counterpart
         originals or  certified or other copies of such  documents as the Agent
         may reasonably request.

                  (c) NO DEFAULTS.  At the time of, and immediately after giving
         effect to, such  Borrowing,  or (as  applicable)  the date of issuance,
         amendment,  renewal or extension  of such Letter of Credit,  no Default
         shall have occurred and be continuing.


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                                   ARTICLE 7.

                              AFFIRMATIVE COVENANTS

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit  shall have expired or  terminated  and all LC
Disbursements shall have been reimbursed, each Credit Party covenants and agrees
with the Agent and the Lenders that:

         7.1.  FINANCIAL  STATEMENTS AND OTHER  INFORMATION.  The Credit Parties
will furnish to the Agent and each Lender:

                  (a) as soon as available and in any event within 90 days after
         the end of each fiscal year of the Borrower and its Subsidiaries:

                           (i)  consolidated  and  consolidating  statements  of
                  operations and cash flows of the Borrower and its Subsidiaries
                  for  such  fiscal  year  and  the  related   consolidated  and
                  consolidating   balance   sheets  of  the   Borrower  and  its
                  Subsidiaries as at the end of such fiscal year,  setting forth
                  in  each   case  in   comparative   form   the   corresponding
                  consolidated  and  consolidating  figures  for  the  preceding
                  fiscal year,  and  consolidated  statements  of  shareholders'
                  equity for such fiscal year, and

                           (ii)  an  opinion  of  independent  certified  public
                  accountants of recognized  national standing (without a "going
                  concern" or like  qualification  or exception  and without any
                  qualification  or  exception  as to the  scope of such  audit)
                  stating that the consolidated financial statements referred to
                  in the  preceding  clause (i) fairly  present in all  material
                  respects the consolidated  financial  condition and results of
                  operations of the Borrower and its  Subsidiaries as at the end
                  of, and for, such fiscal year in accordance with GAAP.

                  (b) as soon as available and in any event within 45 days after
         the end of each fiscal quarter of the Borrower and its Subsidiaries:

                           (i)  consolidated  and  consolidating  statements  of
                  operations  and the  consolidated  statements of cash flows of
                  the Borrower and its  Subsidiaries for such fiscal quarter and
                  for the period from the  beginning  of the  respective  fiscal
                  year to the  end of  such  fiscal  quarter,  and  the  related
                  consolidated and consolidating  balance sheets of the Borrower
                  and its  Subsidiaries  as at the end of such  period,  setting
                  forth  in each  case in  comparative  form  the  corresponding
                  consolidated and  consolidating  figures for the corresponding
                  period in the  preceding  fiscal year,  and the  corresponding
                  figures for the budgets (except with respect to  consolidating
                  balance sheets) most recently  delivered to the Agent for such
                  period, and


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                           (ii) a certificate of a Designated Financial Officer,
                  which  certificate  shall  state  that said  consolidated  and
                  consolidating   financial   statements   referred  to  in  the
                  preceding  clause (i) fairly present in all material  respects
                  the consolidated financial condition and results of operations
                  of the Borrower and its Subsidiaries, consistently applied, as
                  at the end  of,  and  for,  such  period  (subject  to  normal
                  year-end audit  adjustments  and the omission of footnotes) in
                  accordance with GAAP;

                  (c) as soon as available and in any event within 30 days after
         the end of each of the  first  11  months  in each  fiscal  year of the
         Borrower and its Subsidiaries:

                           (i)  consolidated  statements of operations  and cash
                  flows of the Borrower and its  Subsidiaries for such month and
                  for the period from the  beginning  of the  respective  fiscal
                  year to the end of such month,  and the  related  consolidated
                  balance sheets of the Borrower and its  Subsidiaries as at the
                  end of such period,  setting forth in each case in comparative
                  form   the   corresponding   consolidated   figures   for  the
                  corresponding  period in the  preceding  fiscal year,  and the
                  corresponding  figures for the budgets most recently delivered
                  to the Agent for such period, and

                           (ii) a certificate of a Designated Financial Officer,
                  which certificate shall state that said consolidated financial
                  statements  referred  to in the  preceding  clause  (i) fairly
                  present in all material  respects the  consolidated  financial
                  condition  and results of  operations  of the Borrower and its
                  Subsidiaries, consistently applied, as at the end of, and for,
                  such period (subject to normal year-end audit  adjustments and
                  the omission of footnotes) in accordance with GAAP;

                  (d) as soon as available and in any event within 30 days after
         the beginning of each fiscal year of the Borrower and its Subsidiaries,
         statements of budgeted  consolidated and  consolidating  income and the
         consolidated  statements  of  cash  flows  for  the  Borrower  and  its
         Subsidiaries  for each  fiscal  month  in such  period  and a  budgeted
         consolidated  balance sheet of the Borrower and its  Subsidiaries as of
         the last day of each fiscal  month in such  period,  and the  projected
         Domestic Excess Availability as of the last day of each fiscal month in
         such  period,  together  with  supporting  assumptions  which  shall be
         reasonable  when made, all prepared in good faith in reasonable  detail
         and consistent with the Borrower's past practices in preparing  budgets
         and otherwise reasonably satisfactory in scope to the Agent;

                  (e) as soon as  available  and in any event (i) within 90 days
         after  the end of each  fiscal  year,  a  Compliance  Certificate  duly
         executed by a Designated  Financial  Officer with respect to the annual
         financial  statements  delivered  pursuant to subsection  (a)(i) above,
         (ii)  within  45  days  after  the end of each  fiscal  quarter  of the
         Borrower and its Subsidiaries,  a Compliance  Certificate duly executed


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         by a  Designated  Financial  Officer  with  respect  to  the  quarterly
         financial  statements delivered pursuant to subsection 7.1(b)(i) above,
         and (iii)  within 30 days  after  the end of each  fiscal  month of the
         Borrower and its Subsidiaries,  a Compliance  Certificate duly executed
         by a Designated Financial Officer with respect to the monthly financial
         statements delivered pursuant to subsection 7.1(c)(i) above;

                  (f) as soon as  available  and in any event no later than 1:00
         p.m.  (Boston time) on Wednesday of each week (or, if such day is not a
         Business  Day, on the  preceding  Business  Day)(or  with such  greater
         frequency  as the Agent  may  reasonably  request),  a  Borrowing  Base
         Certificate in the form attached hereto as EXHIBIT B-1, with respect to
         the  Collateral  of the  Borrower  as of the close of  business  on the
         previous  Friday  (or,  if  such  day is  not a  Business  Day,  on the
         preceding   Business  Day)  (PROVIDED  that  inventory  and  the  total
         ineligible  accounts may be  calculated  as of the close of business on
         the last Business Day of the previous month),  together with such other
         information  relating to the  Collateral as the Agent shall  reasonably
         request, and accompanied by such supporting detail and documentation as
         the Agent shall reasonably request;

                  (g) as soon as available  and in any event within  thirty (30)
         days after the end of each  month  with  respect to such month (or more
         frequently if requested by the Agent), (i) a Borrowing Base Certificate
         in the form  attached  hereto as EXHIBIT B-1 (ii) a  Collateral  Update
         Certificate  in the form  attached  hereto  as  EXHIBIT  B-2,  (iii) an
         Accounts  Receivable/Loan  Reconciliation  Report in the form  attached
         hereto  as  EXHIBIT  B-3,  (iv) a  summary  of  inventory  by type  and
         location,  (v) an accounts  receivable aging report (which report shall
         contain  amounts  denominated  in U.S.  Dollars),  and (vi) such  other
         information  relating to the  Collateral as the Agent shall  reasonably
         request,  in each  case,  accompanied  by such  supporting  detail  and
         documentation as the Agent shall reasonably request;

                  (h) as soon as  available  and in any event no later than 1:00
         p.m.  (Boston time) on each day that the Borrower makes any request for
         any Borrowing hereunder, an Advance Request in the form attached hereto
         as EXHIBIT B-4;

                  (i) as soon as  available  and in any  event no later  than 45
         days after the last Business Day of each calendar quarter,  a Term Loan
         Borrowing Base  Certificate in the form attached hereto as EXHIBIT B-5,
         together  with an updated list of Eligible  Fixed Assets and such other
         information  relating to the Term Loan Borrowing Base Collateral as the
         Agent shall  reasonably  request,  and  accompanied by such  supporting
         detail and documentation as the Agent shall reasonably request;

                  (j) as soon as available and in any event within ten (10) days
         after the end of each month (or more  frequently  if  requested  by the
         Agent),  a rolling  thirteen  (13) week  cash flow  projection,  of the
         Borrower  and its  Subsidiaries  in a form  and in such  details  as is


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<PAGE>

         reasonably  satisfactory  to the  Agent,  updating  the prior cash flow
         projection  and, for prior  periods  ending up to one week prior to the
         date of the report,  showing  actual  performance  and any variances of
         actual performance from projected performance;

                  (k) promptly upon receipt  thereof,  copies of all  management
         letters and accountants'  letters  received by the Credit Parties;  (l)
         promptly after submission to any Governmental Authority,  all documents
         and information furnished to such Governmental  Authority in connection
         with any investigation of any Credit Party other than routine inquiries
         by such Governmental Authority;

                  (m) as soon as possible  and in any event within five (5) days
         after execution,  receipt or delivery  thereof,  copies of any material
         notices that any Credit Party  executes or receives in connection  with
         any Material Indebtedness  (including,  without limitation,  the Senior
         Subordinated Notes and the Senior Notes);

                  (n) as soon as possible  and in any event within five (5) days
         after execution,  receipt or delivery  thereof,  copies of any material
         notices that any Credit Party  executes or receives in connection  with
         the  sale or other  Disposition  of the  Capital  Stock  of,  or all or
         substantially all of the assets of, any Credit Party;

                  (o) promptly  after the sending or filing  thereof,  copies of
         all statements, reports and other information any Credit Party sends to
         any holders of its Indebtedness or its securities or files with the SEC
         or any national (domestic or foreign) securities exchange; and

                  (p)  promptly  following  any  request  therefor,  such  other
         information  regarding the operations,  business  affairs and financial
         condition of the Credit  Parties,  or compliance with the terms of this
         Agreement, as the Agent or any Lender may reasonably request.

         7.2. NOTICES OF MATERIAL EVENTS. The Credit Parties will furnish to the
Agent and each Lender prompt written notice of the following:

                  (a) the  occurrence  of any Default  hereunder or under any of
         the Senior Subordinated Note Documents or Senior Note Documents;

                  (b)  the  filing  or  commencement  of  any  action,  suit  or
         proceeding  by or  before  any  arbitrator  or  Governmental  Authority
         against or affecting  any Credit Party or Affiliate (i) with respect to
         any claim in excess of $100,000 or (ii) that, if adversely  determined,
         could reasonably be expected to have a Material Adverse Effect;

                  (c) the  occurrence  of any ERISA Event related to the Plan of
         any Credit  Party or  knowledge  after due  inquiry of any ERISA  Event
         related to a Plan of any other ERISA Affiliate that,  alone or together


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         with any other ERISA Events that have  occurred,  could  reasonably  be
         expected to result in liability  of the Credit  Parties in an aggregate
         amount exceeding $100,000; and

                  (d) any other  development  that has, or could  reasonably  be
         expected to have, a Material Adverse Effect.

Each notice delivered under this Section 7.2 shall be accompanied by a statement
of a  Designated  Financial  Officer  setting  forth the details of the event or
development  requiring  such notice and any action taken or proposed to be taken
with respect thereto.

         7.3.  EXISTENCE;  CONDUCT OF  BUSINESS.  The  Borrower  and each of its
Subsidiaries  shall do or cause to be done all  things  necessary  to  preserve,
renew and keep in full  force and  effect its legal  existence  and the  rights,
licenses,  permits,  privileges  and  franchises  material to the conduct of its
business;   PROVIDED  that  the   foregoing   shall  not  prohibit  any  merger,
consolidation,  liquidation,  dissolution or any  discontinuance or sale of such
business permitted under Section 8.4.

         7.4. PAYMENT OF OBLIGATIONS.  The Borrower and each of its Subsidiaries
shall pay its obligations,  including Tax liabilities, in an amount in excess of
$100,000 before the same shall become delinquent or in default, except where (a)
the validity or amount  thereof is being  contested in good faith by appropriate
proceedings,  so long as such  contest  operates to suspend the  enforcement  of
compliance  therewith,  the  collection  thereof  and/or the  imposition  of any
penalty,  fine or Lien with respect thereto and (b) such Person has set aside on
its books adequate  reserves with respect thereto in accordance with GAAP, which
reserves shall be acceptable to Agent.

         7.5. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower and each of its
Subsidiaries shall (a) keep and maintain all property material to the conduct of
its  business  in good  working  order  and  condition,  ordinary  wear and tear
excepted,  and (b) maintain  insurance,  with  financially  sound and  reputable
insurance companies,  as may be required by law and such other insurance in such
amounts  and  against  such risks as are  customarily  maintained  by  companies
engaged  in the same or  similar  businesses  operating  in the same or  similar
locations,  including,  without  limitation,  business  interruption and product
liability  insurance.  Such insurance shall be in such minimum amounts that such
Person  will  not be  deemed  a  co-insurer  under  applicable  insurance  laws,
regulations  and policies and otherwise  shall be in such amounts,  contain such
terms,  be in  such  forms  and  be  for  such  periods  as  may  be  reasonably
satisfactory to the Agent. Without limiting the generality of the foregoing, the
Borrower and each of its  Subsidiaries  will  maintain or cause to be maintained
replacement  value casualty  insurance on the Collateral  under such policies of
insurance,  in each case with such insurance  companies,  in such amounts,  with
such  deductibles,  and  covering  such  terms  and  risks  as are at all  times
satisfactory to the Agent in its commercially  reasonable judgment.  All general
liability and other liability  policies with respect to the Credit Parties shall
name  the  Agent  for  the  benefit  of the  Lenders  as an  additional  insured
thereunder  as its  interests  may appear,  and all  business  interruption  and


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casualty  insurance  policy shall contain a loss payable clause or  endorsement,
satisfactory  in form and  substance to the Agent,  that names the Agent for the
benefit of the Lenders as the loss payee  thereunder.  All policies of insurance
shall  provide  for at least 30 days  prior  written  notice to the Agent of any
modifications or cancellation of such policy.

         7.6. BOOKS AND RECORDS; INSPECTION RIGHTS. The Borrower and each of its
Subsidiaries  shall keep proper books of record and account in which entries are
made of all dealings and transactions in relation to its business and activities
which fairly record such  transactions and activities.  The Borrower and each of
its Subsidiaries shall permit any representatives designated by the Agent or any
Lender to visit and inspect its  properties,  to examine and make  extracts from
its  books  and  records,  to  conduct  audits,  physical  counts,   valuations,
appraisals or examinations  and  verifications  (whether by internal  commercial
finance  examiners or  independent  auditors) of all Collateral and the Borrower
and each of its Subsidiaries, and to discuss its affairs, finances and condition
with its officers and  independent  accountants at any  reasonable  times and as
frequently as the Agent deems appropriate;  PROVIDED that, so long as no Default
has occurred and is continuing, (x) all such visits shall be on reasonable prior
notice,  at reasonable  times during  regular  business  hours and (y) the Agent
shall not conduct commercial finance  examinations more than once in any 180 day
period;   and  PROVIDED  further  that  after  the  occurrence  and  during  the
continuance  of any  Default,  the  Agent  and  the  Lenders  may  visit  at any
reasonable times. The Borrower shall reimburse the Agent and the Lenders for all
examination and inspections costs, internal costs at the Agent's customary rates
in  effect  from  time to time,  plus all  out-of-pocket  expenses  incurred  in
connection  with  such  audits,  physical  counts,  valuations,   appraisals  or
examinations.   Each  of  the  Credit  Parties  authorizes  the  Agent  and,  if
accompanied by the Agent,  the Lenders to communicate  directly with such Credit
Party's independent certified public accountants and authorizes such accountants
to disclose to the Agent and the Lenders any and all  financial  statements  and
other  supporting  financial  documents  and schedules  including  copies of any
management letters with respect to the business,  financial  condition and other
affairs of the Borrower or any of its Subsidiaries. At the request of the Agent,
each  Credit  Party  shall  deliver  a  letter  addressed  to  such  accountants
instructing  them to comply with the  provisions of this Section 7.6. The Credit
Parties,  in consultation  with the Agent, will arrange for a meeting to be held
at least once every year (and after the occurrence and during the continuance of
a Default,  more frequently,  if requested by the Agent or the Required Lenders)
with the Lenders and the Agent hereunder at which the business and operations of
the Credit  Parties are discussed.  The Credit  Parties will permit  independent
appraisers  and  environmental  consultants  selected  by the Agent to visit the
properties of the Credit Parties and perform  appraisals and examinations of the
machinery,  equipment  and Real  Property  Assets of the Credit  Parties at such
times and with such frequencies as the Agent shall reasonably request,  PROVIDED
that, so long as no Default has occurred and is continuing,  the Agent shall not
request that the  equipment  or Real  Property  Assets of the Credit  Parties be
appraised or examined by  independent  appraisers or  environmental  consultants
more frequently than once every year, commencing on the first anniversary of the
Closing Date and  PROVIDED  further  that,  such  appraisals  shall only include
inventory if the  inclusion of the inventory of any Credit Party in the Domestic
Borrowing  Base or in the Canadian  Borrowing  Base, at any time in the one year


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period prior to such  appraisal,  was necessary in order than the Borrower would
be in compliance  with the borrowing  limitations  contained in Section 2.1. The
Borrower  shall  reimburse  the Agent and the  Lenders  for all fees,  costs and
expenses charged by such independent  appraisers and  environmental  consultants
for each such appraisal and examination.

         7.7. FISCAL YEAR. To enable the ready and consistent  determination  of
compliance with the covenants set forth in Section 8.10 hereof, the Borrower and
each of its  Subsidiaries  shall  maintain their current fiscal year and current
method of  determining  the last day of the first three fiscal  quarters in each
fiscal year.

         7.8.  COMPLIANCE  WITH LAWS. The Borrower and each of its  Subsidiaries
shall  comply  in all  material  respects  with (i) all  permits,  licenses  and
authorizations,  including, without limitation,  environmental permits, licenses
and authorizations,  issued by a Governmental  Authority,  (ii) all laws, rules,
regulations and orders including, without limitation, Environmental Laws, of any
Governmental  Authority  and (iii)  all  contractual  obligations,  in each case
applicable to it or its property.

         7.9. USE OF  PROCEEDS.  The proceeds of the Loans will be used only for
(i) the refinancing and repayment of Existing  Indebtedness  and of Indebtedness
in respect of the Senior  Note  Documents,  (ii) fees and  expenses  incurred in
connection  with the  transactions  contemplated by this Agreement and (iii) for
general corporate and working capital purposes of the Credit Parties. No part of
the proceeds of any Loan will be used,  whether directly or indirectly,  for any
purpose  that  entails  a  violation  of any of the  Regulations  of the  Board,
including Regulations T, U and X.

         7.10. CERTAIN OBLIGATIONS  RESPECTING  SUBSIDIARIES.  Each Credit Party
will, and will cause each of its  Subsidiaries to, take such action from time to
time as shall be  necessary  to ensure  that the  percentage  of the  issued and
outstanding shares of Capital Stock of any class or character owned by it in any
of its Subsidiaries on the Closing Date is not at any time decreased, other than
by reason of transfers to another Credit Party.

         7.11. ERISA. The Credit Parties (a) will maintain, and cause each ERISA
Affiliate to maintain,  each Plan in material  compliance with the provisions of
such Plan and all applicable  requirements of ERISA and of the Code and with all
applicable  rulings and regulations  issued under the provisions of ERISA and of
the Code and (b) will not and, to the extent authorized,  will not permit any of
the ERISA  Affiliates to (i) engage in any transaction  with respect to any Plan
which would subject any Credit Party to either a civil penalty assessed pursuant
to Section  502(i) of ERISA or a tax imposed by Section  4975 of the Code,  (ii)
fail to make full payment when due of all amounts which, under the provisions of
any  Plan,  any  Credit  Party or any  ERISA  Affiliate  is  required  to pay as
contributions thereto, or permit to exist any accumulated funding deficiency (as
such term is  defined  in  Section  302 of ERISA and  Section  412 of the Code),
whether or not waived,  with  respect to any Pension  Plan or (iii) fail to make
any payments to any Multiemployer Plan that any Credit Party or any of the ERISA
Affiliates  may be  required  to  make  under  any  agreement  relating  to such
Multiemployer Plan or any law pertaining thereto.


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         7.12.  ENVIRONMENTAL MATTERS; REPORTING AND ASSESSMENTS.

                  (a) The Credit Parties will observe and comply in all material
         respects  with,  and cause each of their  Subsidiaries  to observe  and
         comply in all material  respects with, all  Environmental  Laws and all
         permits and authorizations  issued by any Governmental  Authority under
         Environmental Law (collectively,  "ENVIRONMENTAL  PERMITS"). The Credit
         Parties will give the Agent prompt  written notice of (a) any presence,
         Release or threat of Release of any Hazardous  Materials at or from any
         Real  Property  Asset,  (b) any actual or alleged  violation  as to any
         Environmental Law or Environmental  Permit by any Credit Party, (c) the
         commencement  of any  Environmental  Action or Remedial Action or other
         communication to it or of which it has knowledge,  or with the exercise
         of due diligence,  should have had knowledge  regarding the presence or
         suspected  presence  of any  Hazardous  Material  at, on about,  under,
         within or in connection  with any Real Property  Asset or any migration
         thereof from or to such Real Property  Asset,  (d) the discovery of any
         occurrence  or  condition  on any  real  property  adjoining  or in the
         vicinity of any Real Property Asset that could cause such Real Property
         Asset  or  any  part  thereof  to be  subject  to any  restrictions  on
         ownership, occupancy,  transferability, or use, or subject the owner or
         any  Person  having any  interest  in such Real  Property  Asset to any
         liability,  penalty, or disability under any Environmental Law, and (e)
         the receipt of any notice or discovery of any information regarding any
         actual,  alleged, or potential Release,  disposal or any other presence
         or existence of any Hazardous  Material at, on, about,  under,  within,
         near or in connection with any Real Property Asset; in each case, which
         (x) would have a material adverse effect on any  Environmental  Permits
         held by any Credit  Party,  (y) will,  or is likely to, have a Material
         Adverse  Effect,  or (z) will  require a material  expenditure  by such
         Credit Party to cure such alleged problem or violation.

                  (b) The  Agent  may,  from  time to  time,  in its  reasonable
         discretion,  obtain one or more environmental  assessments or audits of
         any Real Property  Asset prepared by a  hydrogeologist,  an independent
         engineer or other qualified  consultant or expert approved by the Agent
         to evaluate or confirm (a) whether any Hazardous  Materials are present
         in the soil, sediment, air or water at such Real Property Asset and (b)
         whether the use and operation of such Real Property Asset complies with
         all  Environmental  Laws;  PROVIDED  that,  so long as no  Default  has
         occurred  and is  continuing,  the  Agent  shall not  request  any such
         environmental  assessments  or audits of any Real  Property  Asset more
         frequently  than once every other year.  Environmental  assessments may
         include,  without limitation,  detailed visual inspections of such Real
         Property  Asset,  including any and all storage  areas,  storage tanks,
         drains,  dry wells and leaching areas,  and the taking of soil samples,
         surface water samples and ground water  samples,  as well as such other
         investigations or analyses as the Agent deems  appropriate.  Subject to
         Section 7.6 all such  environmental  assessments shall be conducted and
         made at the sole expense of the Borrower.

         7.13.  MATTERS RELATING TO ADDITIONAL REAL PROPERTY COLLATERAL.


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                  (a) In the event that any Credit  Party  acquires any Material
         Owned Property  after the Closing Date that the Agent  determines is an
         Additional Mortgaged Property or in the event that the Agent determines
         that any Real Property Asset existing on the Closing Date has become an
         Additional  Mortgaged  Property  after the Closing  Date,  the Borrower
         shall deliver to the Agent, as soon as practicable  after the Agent has
         notified the Borrower  that such Real  Property  Asset is an Additional
         Mortgaged Property, fully executed and notarized Mortgages ("ADDITIONAL
         MORTGAGES"),  in proper form for recording in all appropriate places in
         all  applicable   jurisdictions,   encumbering   the  interest  of  the
         applicable Credit Party in such Additional Mortgaged Property, together
         with mortgagee title insurance  policies or commitments  therefor,  and
         copies of all surveys,  deeds, title exception documents,  flood hazard
         certificates  and other documents as the Agent may reasonably  require,
         together  with  copies of all deeds  with  respect  to such  Additional
         Mortgaged Property.

                  (b) In the event that any Credit  Party  enters into any lease
         with respect to any Material Leasehold Property after the Closing Date,
         the Borrower  shall  deliver to the Agent copies of the lease,  and all
         amendments  thereto,  between  the  Credit  Party and the  landlord  or
         tenant,  together  with a  Landlord's  Waiver and Consent  with respect
         thereto and where required by the terms of any such lease,  the consent
         of the mortgagee, ground lessor or other party.

                  (c) If requested by the Agent, the Credit Parties shall permit
         an independent  real estate appraiser  satisfactory to the Agent,  upon
         reasonable  notice,  to visit  and  inspect  any  Additional  Mortgaged
         Property for the purpose of  preparing an appraisal of such  Additional
         Mortgaged  Property  satisfying the requirements of all applicable laws
         and  regulations  (in each case to the extent  required under such laws
         and regulations as determined by the Agent in its sole discretion).

         7.14. CASH  DEPOSITS/BANK  ACCOUNTS.  The Credit Parties shall take all
actions necessary to maintain,  preserve and protect the rights and interests of
the Agent with respect to all cash deposits of the Credit  Parties and all other
proceeds of Collateral and shall not, without the Agent's prior written consent,
open any deposit or other bank account,  or instruct any account  debtor to make
payment to any account other than to an established  dominion  account,  Lockbox
Account or other Controlled Account under the Agent's control;  PROVIDED that so
long as no Default or Event of Default  shall have  occurred and be  continuing,
the Credit Parties shall be permitted to maintain (i) payroll accounts and other
accounts not subject to the Agent's  control so long as the aggregate  amount of
funds on  deposit  in all such  payroll  accounts  does  not  materially  exceed
estimated payroll for the next payroll period,  and (ii) local bank accounts not
subject to the Agent's  control so long as (x) the aggregate  amount of funds on
deposit in all such local bank  accounts does not exceed  $500,000,  and (y) the
aggregate  amount of funds on deposit in any such  local bank  account  does not
exceed $50,000.


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         7.15.  NEW  GUARANTORS.  The Credit  Parties  will cause each  Domestic
Subsidiary created,  acquired or otherwise existing on or after the Closing Date
to immediately become a Guarantor and a Credit Party hereunder and shall execute
and deliver,  and cause such Domestic  Subsidiary to execute and deliver, to the
Agent, for the benefit of the Agent and the Lenders, all such Loan Documents and
other documents,  and take all such actions,  and cause such Domestic Subsidiary
to take  all  such  actions,  as may be  required  by the  Agent  in  connection
therewith.

         7.16. PUNCTUAL PAYMENT. The Credit Parties will duly and punctually pay
or cause to be paid the principal and interest on the Loans,  all  Reimbursement
Obligations,  all used fees, all letter of credit fees incurred  hereunder,  and
all other amounts provided for in this Agreement and the other Loan Documents to
which the Borrower or any of its Subsidiaries is a party, all in accordance with
the terms of this Agreement and such other Loan Documents.

         7.17. FURTHER ASSURANCES.  The Credit Parties will, and will cause each
of their Subsidiaries to, take such action and execute, acknowledge and deliver,
at their sole cost and expense, such agreements,  instruments or other documents
as the  Agent  may  require  from  time to time in order  (a) to carry  out more
effectively the purposes of this Agreement and the other Loan Documents,  (b) to
subject to valid and perfected Liens any of the Collateral or any other property
of any Credit  Party and its  Subsidiaries,  (c) to  establish  and maintain the
validity  and  effectiveness  of any of the  Loan  Documents  and the  validity,
perfection and First Priority of the Liens intended to be created  thereby,  and
(d) to better assure, convey, grant, assign, transfer and confirm unto the Agent
and each Lender the rights now or  hereafter  intended to be granted to it under
this Agreement or any other Loan Document.

         7.18.  POST-CLOSING COVENANTS.

         (a) The  Credit  Parties  will,  within  20 days of the  Closing  Date,
deliver  to the Agent a pledge and  security  agreement,  in form and  substance
satisfactory to the Agent, duly executed by certain of the Credit Parties,  with
respect to the pledge of the common stock of each of the following  Subsidiaries
of such Credit Parties:

                  (i) Societe d'Exploitation des Raccords Gautier;

                  (ii)  Univeyor  Electronic  A/S;

                  (iii) Columbus McKinnon de Mexico, S.A. de C.V.; and

                  (iv) Yale Industrial Products GmbH.


         (b) The  Credit  Parties  will,  within  20 days of the  Closing  Date,
deliver  to the Agent an  opinion  from each of the  following  counsel  to such
Credit  Parties,  in form and substance  satisfactory  to the Agent,  as to such
matters as the Agent may reasonably request:

                  (i) Stephen d'Errico, French counsel to Societe d'Exploitation
         des Raccords Gautier;


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                  (ii) Advokatfirmaet Borge Nielsen,  Danish counsel to Univeyor
         Electronic A/S;

                  (iii) Enrique Lumen,  Mexican counsel to Columbus  McKinnon De
         Mexico, S.A. de C.V.; and

                  (iv) Donahue & Partners LLP, German counsel to Yale Industrial
         Products GmbH.

         (c) The Credit Parties will,  within 90 days of the Closing Date,  take
such  actions as may be necessary to cause the Agent's lien on each titled motor
vehicle  (the fair market  value of which is greater than $5,000) of such Credit
Parties to be noted on all  certificates  of title with respect to such vehicle,
including without  limitation filing  applications for new certificates of title
with respect thereto.

         (d) The Credit Parties will, and will cause each of their Subsidiaries,
within 14 days of the  Closing  Date,  to  consummate  each of the  transactions
contemplated  in Schedule 8.4(c) with respect to each of Spreckels Land Company,
Inc.,  Spreckels  Development Company,  Inc., Spreckels Water Company,  Inc. and
Spreckels Consolidated Industries, Inc.


         7.19.    INTENTIONALLY OMITTED.

7.20.    INTENTIONALLY OMITTED.

         7.21.  FINANCIAL  REPORTING  FOR FISCAL YEAR ENDED MARCH 31, 2003.  The
Borrower shall deliver to the Lenders and the Agent financial statements for the
fiscal  year  ended  March 31,  2003  which  are  substantially  similar  to the
financial  statements  attached to Form 8-K filed with the U.S.  Securities  and
Exchange Commission on May 20, 2003.

         7.22. SENIOR NOTE DOCUMENTS.  The Credit Parties will not, and will not
permit any of their  Subsidiaries  to, enter into, or be or become bound by, any
Senior Note  Document,  or any  amendment  thereto,  without  the prior  written
consent of the Agent.

                                   ARTICLE 8.

                               NEGATIVE COVENANTS

         Until the  Commitments  have expired or terminated and the principal of
and interest on each Loan and all fees payable  hereunder have been paid in full
and  all  Letters  of  Credit  shall  have  expired  or  terminated  and  all LC
Disbursements shall have been reimbursed, each Credit Party covenants and agrees
with the Agent and the Lenders that:


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         8.1. INDEBTEDNESS. The Credit Parties will not, and will not permit any
of their  Subsidiaries  to,  create,  incur,  assume  or  permit  to  exist  any
Indebtedness,  except:

                  (a)  Indebtedness  created  hereunder  and under the  Canadian
         Facility;

                  (b)  Existing  Indebtedness  on the Closing  Date which is set
         forth in  SCHEDULE  8.1 and has been  designated  on such  schedule  as
         Indebtedness that will remain outstanding  following the funding of the
         initial Loans, and any extension,  renewal, refunding or replacement of
         any such  Indebtedness;  PROVIDED,  however,  that (i) such  extension,
         renewal,  refunding  or  replacement  is pursuant to terms that are not
         less  favorable to the Credit Parties and the Lenders than the terms of
         the Indebtedness being extended, renewed, refunded or replaced and (ii)
         after  giving  effect  to  such   extension,   renewal,   refunding  or
         replacement,  the amount of such  Indebtedness  is not greater than the
         amount of Indebtedness outstanding immediately prior to such extension,
         renewal, refunding or replacement;

                  (c)  Intercompany  loans among the Borrower and Credit Parties
         which are Guarantors;  PROVIDED, that (i) the Investment  corresponding
         to such  Indebtedness is permitted  pursuant  Section 8.5 hereof,  (ii)
         such  intercompany  loan is evidenced by a promissory  note, (iii) such
         promissory  note  is  pledged  to  the  Agent  pursuant  to  the  terms
         hereunder, and (iv) there are no restrictions whatsoever on the ability
         of the applicable Credit Party to repay such loan;

                  (d) Guarantees permitted under section 8.3;

                  (e)  Indebtedness  of any Foreign  Subsidiary  of the Borrower
         (other than the Canadian Borrowers) in an aggregate amount for all such
         Indebtedness not to exceed the local currency equivalent (as determined
         by  the  Agent  from  time  by  reference  to  the  Exchange  Rate)  of
         $20,000,000 in the aggregate at any one time outstanding; PROVIDED that
         (i) the proceeds of such  Indebtedness  are transferred to the Borrower
         and  applied  to  the  repayment  of the  Revolving  Loans,  (ii)  such
         Indebtedness is incurred solely by such Foreign Subsidiary,  (iii) such
         Indebtedness is either  unsecured or secured only by the assets of such
         Foreign Subsidiary, and (iv) no guaranty or other credit support of any
         kind is  provided by any Person  (including,  without  limitation,  any
         Credit Party) of or for such  Indebtedness or any holder  thereof;  and
         PROVIDED,  further, that the Borrower shall notify the Agent in writing
         in advance prior to permitting any such Foreign Subsidiary to incur any
         Indebtedness under this Section 8.1(e); and

                  (f)  Indebtedness  of the Borrower in an  aggregate  principal
         amount not to exceed  $125,000,000,  evidenced by or incurred under the
         Senior Note Documents.


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<PAGE>


         8.2.  LIENS.  The Credit  Parties  will not, and will not permit any of
their Subsidiaries to, create,  incur, assume or permit to exist any Lien on any
Property or asset now owned or  hereafter  acquired by it, or assign or sell any
income or revenues (including  accounts  receivable) or rights in respect of any
thereof,  except (the  following  being  called  "PERMITTED  LIENS"):

                  (a)  Liens   created   hereunder  and  under  the  other  Loan
         Documents;

                  (b) any Lien on any  property  or asset  of any  Credit  Party
         existing on the Closing Date and set forth in SCHEDULE 8.2  (excluding,
         however, following the making of the initial Loans hereunder, the Liens
         in favor of any Person other than the Agent securing  Indebtedness  not
         designated  on said  schedule  as  Indebtedness  to remain  outstanding
         following the funding of the initial  Loans),  but not the extension of
         coverage  thereof  to other  property  or the  extension  of  maturity,
         refinancing or other  modification of the terms thereof or the increase
         of the Indebtedness secured thereby;

                  (c) Liens  imposed by any  Governmental  Authority  for Taxes,
         assessments or charges in respect of obligations  not yet delinquent or
         in the case of Taxes and assessments on Properties other than Mortgaged
         Properties  not exceeding  $250,000 in the aggregate  more than 90 days
         overdue  which are being  contested  in good  faith and by  appropriate
         proceedings,   so  long  as  such  contest   operates  to  suspend  the
         enforcement of compliance with and/or collection  thereof,  and so long
         as adequate  reserves with respect  thereto are maintained on the books
         of the  applicable  Credit  Party in  accordance  with  GAAP and  which
         reserves shall be acceptable to the Agent;

                  (d)   landlords',   carriers',   warehousemen's,   mechanics',
         materialmen's, repairmen's or other like Liens on Properties other than
         Mortgaged  Properties,  and vendors' Liens imposed by statute or common
         law not securing the repayment of Indebtedness, arising in the ordinary
         course of  business  which are not overdue for a period of more than 60
         days or which  are being  contested  in good  faith and by  appropriate
         proceedings, promptly initiated and diligently conducted, and a reserve
         or other  appropriate  provision,  if any, as shall be required by GAAP
         shall have been made therefor,  and so long as such contest operates to
         suspend the enforcement of compliance with and/or  collection  thereof,
         and  Liens   securing   judgments   (including,   without   limitation,
         pre-judgment  attachments)  the  existence of which do not result in an
         Event of Default under Section 9.1(j) hereof;

                  (e)  pledges  or   deposits   under   worker's   compensation,
         unemployment  insurance  and  other  social  security  legislation  and
         pledges or deposits to secure the performance of bids,  tenders,  trade
         contracts (other than for borrowed  money),  leases (other than capital
         leases),  utility purchase obligations,  statutory obligations,  surety
         and appeal bonds,  performance  bonds and other  obligations  of a like
         nature incurred in the ordinary course of business;


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(f)      encumbrances on any Real Property Asset other than a Mortgaged Property
         consisting of easements, rights-of-way, zoning restrictions, easements,
         licenses,  restrictions and other similar encumbrances  incurred in the
         ordinary  course of  business,  restrictions  on the use of Property or
         minor  imperfections in title thereto which, in the aggregate,  are not
         material  in amount,  and which do not,  in the  aggregate,  materially
         detract  from  the  value of such  Real  Property  Asset or  materially
         interfere  with the  ordinary  conduct  of the  business  of any Credit
         Party;

                  (g) Liens  consisting of bankers'  liens and rights of setoff,
         in each  case,  arising by  operation  of law,  and Liens on  documents
         presented in letter of credit drawings;

                  (h)  the  replacement,   extension  or  renewal  of  any  Lien
         permitted  by clauses  (b) and (g) of this  Section  8.2 upon or in the
         same  property  theretofore  subject  thereto  in  connection  with the
         replacement,  extension or renewal  (without  increase in the amount or
         any change in any direct or  contingent  obligor)  of the  Indebtedness
         secured thereby; and

                  (i) second  priority  Liens on the  Collateral in favor of the
         Senior Note  Indenture  Trustee under any of the Senior Note  Documents
         which are subject to the Intercreditor Agreement and junior in priority
         to the Liens in favor of the Agent under the Loan Documents.

         8.3. CONTINGENT LIABILITIES.  The Credit Parties will not, and will not
permit  any of  their  Subsidiaries  to,  Guarantee  the  Indebtedness  or other
obligations  of any  Person,  or  Guarantee  the payment of  dividends  or other
distributions upon the stock of, or the earnings of, any Person, except:

                  (a)  endorsements  of  negotiable  instruments  for deposit or
         collection or similar transactions in the ordinary course of business;

                  (b)  Guarantees and letters of credit in effect on the Closing
         Date which are disclosed in SCHEDULE 8.1, and any replacements  thereof
         in amounts not exceeding such Guarantees;

                  (c) obligations in respect of Letters of Credit; and

                  (d) guarantees  issued pursuant to the terms of this Agreement
         and the Senior Note Documents.

         8.4.  FUNDAMENTAL CHANGES; ASSET SALES.

                  (a) The Credit  Parties  will not,  and will not permit any of
         their  Subsidiaries  to,  enter  into  any  transaction  of  merger  or
         consolidation or amalgamation, or liquidate, wind up or dissolve itself
         (or suffer any  liquidation  or  dissolution),  except  that any Credit
         Party  may,  so long as no  Default  or Event  of  Default  shall  have
         occurred or be  continuing or result  therefrom,  be merged or combined


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         with or into any  other  Credit  Party,  PROVIDED  that if such  merger
         involves  the  Borrower  or a  Guarantor,  (x)  the  Borrower  or  such
         Guarantor  shall be the  surviving  entity and (y) no Change of Control
         shall result therefrom. The Credit Parties will not form any Subsidiary
         without the prior written consent of the Agent. The Credit Parties will
         not acquire any  business or  property  from,  or Capital  Stock of, or
         other equity  interests  in, or be a party to any  acquisition  of, any
         Person  except for  purchases  of property  to be used in the  ordinary
         course of business, Investments permitted under Section 8.5 and Capital
         Expenditures.

                  (b) The Credit  Parties  will not,  and will not permit any of
         their  Subsidiaries  to,  convey,  sell,  lease,  transfer or otherwise
         dispose  (including any Disposition) of, in one transaction or a series
         of  transactions,  any part of their business or property,  whether now
         owned or hereafter acquired (including, without limitation, receivables
         and leasehold interests), except:

                           (i)   obsolete    property    (including    leasehold
                  interests),  tools or  equipment  no longer  used or useful in
                  their business, or worn out or in need of replacement and that
                  are replaced  with assets of  reasonably  equivalent  value or
                  utility  or which are  otherwise  productive  or useful in the
                  conduct of such Credit Party's business;

                           (ii) any inventory or other property sold or disposed
                  of in the ordinary course of business and on ordinary business
                  terms;

                           (iii)  sales  of  property  from a  Credit  Party  to
                  another Credit Party permitted pursuant to Section 8.7;

                           (iv) sales by the Borrower or any of its Subsidiaries
                  of assets  listed on SCHEDULE  8.4(B)  hereto in the aggregate
                  amount for all such sales not to exceed  $5,000,000 so long as
                  (A) no  Default  or  Event  of  Default  has  occurred  and is
                  continuing  or would  result  from the sale of any such asset,
                  (B)  each  such  sale is on  arm's-length  terms  for fair and
                  reasonable  consideration,  (C)  not  less  than  85%  of  the
                  proceeds  from any such  sale is in the form of cash,  (D) the
                  Net Cash  Payments  received  from each such sale are not less
                  than,   with   respect   to  each  such   asset,   the  amount
                  corresponding  to such asset set forth on such SCHEDULE 8.4(B)
                  and (E) the Net Cash Payments of each such sale are applied in
                  accordance with Section 2.8;

                           (v) sales by the Borrower or any of its  Subsidiaries
                  of any  other  assets  so long as (A) no  Default  or Event of
                  Default has  occurred and is  continuing  or would result from
                  the sale of such asset, (B) such sale is on arm's-length terms
                  for fair and reasonable  consideration,  (C) not less than 85%
                  of the proceeds from such sale is in the form of cash, (D) the
                  Net Cash Payments are applied in accordance  with Section 2.8,
                  and (E) the  aggregate  fair  market  value of all such assets
                  sold during any calendar year does not exceed $500,000;


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                           (vi) sales by the Borrower or any of its Subsidiaries
                  of any Specified  Assets so long as (A) no Default or Event of
                  Default has  occurred and is  continuing  or would result from
                  the  sale of such  asset,  (B) such  sale is an  arm's  length
                  transaction  for fair and  reasonable  consideration,  (C) not
                  less  than 85% of the sale  proceeds  from such sale is in the
                  form of cash,  (D) the terms and conditions of such sale shall
                  have been  disclosed  to, and approved by, the  Administrative
                  Agent  and (E) the Net Cash  Payments  of each  such  sale are
                  applied in accordance with Section 2.8;

                           (vii)  the  sale by the  Borrower  of a  parking  lot
                  located at 234 Fillmore  Avenue,  Tonawanda,  New York,  which
                  parking lot is described in that certain Mortgage,  Assignment
                  of Leases and Rents,  Security  Agreement and Fixture  Filing,
                  dated November 21, 2002, by the Borrower to the Administrative
                  Agent as "Parcel B", to J.W.  Carney,  Inc., so long as (A) no
                  Default or Event of Default has occurred and is  continuing or
                  would result from the sale of such asset,  (B) such sale is on
                  arm's-length  terms  and is for a  purchase  price of not less
                  than  $38,500,  less  commission,   legal  and  other  closing
                  expenses and (C) not less than 85% of the  proceeds  from such
                  sale is in the form of cash;

                  (c) Notwithstanding anything to the contrary contained in this
         Section  8.4,  so long as no  Default  or Event of  Default  shall have
         occurred or be continuing or would result therefrom, the Credit Parties
         shall be permitted to consummate the transactions described on SCHEDULE
         8.4(C).

         8.5.  INVESTMENTS; HEDGING AGREEMENTS.

                  (a) The Credit  Parties  will not,  and will not permit any of
         their  Subsidiaries  to,  make or  permit  to  remain  outstanding  any
         Investment, except:

                           (i) Investments consisting of Guarantees permitted by
                  Section 8.3;

                           (ii)   Investments   by  the   Borrower   and/or  its
                  Subsidiaries in the Borrower or any Guarantor;

                           (iii)   Investments   of  the  Borrower   and/or  its
                  Subsidiaries in any of the Borrower's  Subsidiaries  which are
                  not Domestic Subsidiaries;  PROVIDED that the aggregate amount
                  of such  Investments  made  after  the  Closing  Date does not
                  exceed $1,000,000;

                           (iv)  Investments  existing on the  Closing  Date and
                  described on SCHEDULE 8.5;

                           (v) Permitted Investments; and


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                           (vi) Checking and deposit accounts with banks used in
                  the ordinary course of business.

                  (b) The Credit  Parties  will not,  and will not permit any of
         their  Subsidiaries  to, enter into any Hedging  Agreement,  other than
         Hedging Agreements entered into in the ordinary course of business with
         the prior  written  consent of the Agent to hedge or mitigate  risks to
         which the Credit  Parties are exposed in the conduct of their  business
         or the management of their liabilities.

         8.6. RESTRICTED JUNIOR PAYMENTS.  The Credit Parties will not, and will
not permit any of their  Subsidiaries,  to declare or make any Restricted Junior
Payment at any time, other than:

                  (a) payments of dividends or  management  fees by a Subsidiary
         of the Borrower to the Borrower or another  wholly-owned  Subsidiary of
         the Borrower;

                  (b) payments of dividends and distributions  payable solely in
         common stock of such Person;

                  (c)  so  long  as  no  Default  shall  have  occurred  and  be
         continuing  and no  Default  shall be  caused  thereby,  (i)  regularly
         scheduled  payments  of  interest  (but not  principal  or  premium) in
         respect  of the  Senior  Subordinated  Notes  on the  dates  and in the
         amounts set forth in the  applicable  Subordinated  Debt  Documents and
         (ii)  prepayments  of principal  in respect of the Senior  Subordinated
         Notes,   provided  that  such  prepayments  are  Permitted  Asset  Sale
         Prepayments.

                  (d) payments with respect to any  intercompany  loan permitted
         under Section 8.1(c).

         8.7.  TRANSACTIONS  WITH AFFILIATES.  Except as expressly  permitted by
this  Agreement,  the Credit  Parties will not, and will not permit any of their
Subsidiaries to, directly or indirectly (a) make any Investment in an Affiliate;
(b) transfer,  sell,  lease,  assign or otherwise  dispose of any property to an
Affiliate;  (c) merge into or  consolidate  with an  Affiliate,  or  purchase or
acquire  property  from an  Affiliate;  or (d) enter into any other  transaction
directly  or  indirectly  with or for the  benefit of an  Affiliate  (including,
without limitation,  guarantees and assumptions of obligations of an Affiliate);
PROVIDED that:

                           (i) any Affiliate who is an individual may serve as a
                  director, officer, employee or consultant of any Credit Party,
                  receive  reasonable  compensation  for his or her  services in
                  such capacity and benefit from  Permitted  Investments  to the
                  extent specified in clause (e) of the definition thereof;

                           (ii) the Credit  Parties  may engage in and  continue
                  the  transactions  with or for the benefit of Affiliates which


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<PAGE>

                  are  described  in SCHEDULE 8.7 or are referred to in Sections
                  8.5  or  8.6  (but  only  to  the  extent  specified  in  such
                  Sections); and

                           (iii) the Credit  Parties may engage in  transactions
                  with  Affiliates  in the ordinary  course of business on terms
                  which are no less  favorable to the Credit  Parties than those
                  likely to be obtained in an arms' length transaction between a
                  Credit Party and a non-affiliated third party.

         8.8.  RESTRICTIVE  AGREEMENTS;  RESTRICTIONS  ON  NEGATIVE  PLEDGES AND
UPSTREAM  LIMITATION.  The Credit  Parties  will not, and will not permit any of
their  Subsidiaries  to, directly or indirectly,  enter into, incur or permit to
exist any agreement or other arrangement (other than this Agreement,  the Senior
Note  Indenture  and the other Loan  Documents)  that  prohibits,  restricts  or
imposes any condition  upon (a) the ability of any such Person to create,  incur
or  permit  to exist any Lien upon any of its  property  or  assets,  or (b) the
ability of such Person to pay dividends or other  distributions  with respect to
any shares of its Capital  Stock or other  equity  interests or to make or repay
loans or advances to any other Person or to Guarantee  the  Indebtedness  of any
other Person;  PROVIDED that (i) the foregoing  shall not apply to  restrictions
and  conditions   imposed  by  law,  (ii)  the  foregoing  shall  not  apply  to
restrictions and conditions  existing on the Closing Date identified on SCHEDULE
8.8 (but  shall  apply to any  extension  or  renewal  of, or any  amendment  or
modification  expanding the scope of, any such restriction or condition),  (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in  agreements  relating to the sale of stock or assets of a Subsidiary  pending
such  sale,  provided  such  restrictions  and  conditions  apply  only  to  the
Subsidiary that is to be sold and such sale is permitted hereunder,  (iv) clause
(a) of the foregoing shall not apply to  restrictions  or conditions  imposed by
any agreement  relating to secured  Indebtedness  permitted by this Agreement if
such  restrictions  or conditions  apply only to the property or assets securing
such  Indebtedness,  and (v)  clause  (a) of the  foregoing  shall  not apply to
customary   provisions  in  leases  and  other  contracts   (excluding   license
agreements) restricting the assignment thereof.

         8.9.  SALE-LEASEBACK  TRANSACTIONS.  No  Credit  Party  or  any  of its
Subsidiaries  will directly or indirectly,  enter into any arrangements with any
Person whereby such Person shall sell or transfer (or request  another Person to
purchase) any property, real, personal or mixed, used or useful in its business,
whether  now owned or  hereafter  acquired,  and  thereafter  rent or lease such
property from any Person.

         8.10.  CERTAIN FINANCIAL COVENANTS.
(a)      CAPITAL EXPENDITURES.  The Borrower will not make, or permit any of its
         Subsidiaries to make, Capital  Expenditures during any Reference Period
         ending  during  any  fiscal  year set  forth in the table  below,  that
         exceed,  in the  aggregate,  the amounts set forth opposite such fiscal
         year:


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         ---------------------------------------------------- -----------------
                      FISCAL YEAR MAXIMUM AMOUNT
         ---------------------------------------------------- -----------------
                           2003 Fiscal Year                       $6,000,000
         ---------------------------------------------------- -----------------
                           2004 Fiscal Year                       $8,000,000
         ---------------------------------------------------- -----------------
           2005 Fiscal Year and each Fiscal Year thereafter      $10,000,000
         ---------------------------------------------------- -----------------

                  (b) MAXIMUM  SENIOR  LEVERAGE  RATIO.  The Borrower  shall not
         permit the Senior Leverage Ratio for any Reference Period ending on the
         date set  forth in the  table  below,  to  exceed  the  ratio set forth
         opposite such date in such table:

         ---------------------------------------------- ------------------------
                          PERIOD                                  RATIO
         ---------------------------------------------- ------------------------
             Closing Date through March 31, 2003              3.25 to 1.00
         ---------------------------------------------- ------------------------
                    June 30, 2003                             4.25 to 1.00
         ---------------------------------------------- ------------------------
          September 30, 2003 through March 31, 2004           4.65 to 1.00
         ---------------------------------------------- ------------------------
          June 30, 2004 through September 30, 2004            4.25 to 1.00
         ---------------------------------------------- ------------------------
          December 31, 2004 through March 31, 2005            4.00 to 1.00
         ---------------------------------------------- ------------------------
               June 30, 2005 and each fiscal
                 quarter ending thereafter                    3.75 to 1.00
         ---------------------------------------------- ------------------------

                  (c) FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit
         the Fixed Charge  Coverage  Ratio for any  Reference  Period to be less
         than 1.00 to 1.00.

                  (d) MINIMUM NET WORTH. The Borrower shall not permit Net Worth
         at any time  during a period set forth in the table  below,  to be less
         than the amounts set forth opposite such date in such table:

         -------------------------------------------- -------------------------
                              PERIOD                      MINIMUM AMOUNT
         -------------------------------------------- -------------------------
           Closing Date through March 31, 2004               $72,500,000
         -------------------------------------------- -------------------------
           June 30, 2004 through September 30, 2004          $74,500,000
         -------------------------------------------- -------------------------
             December 31, 2004 and each fiscal
                 quarter ending thereafter                   $76,500,000
         -------------------------------------------- -------------------------


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<PAGE>

                  (e) MINIMUM EBITDA OF THE U.S.  CREDIT  PARTIES.  The Borrower
         shall not permit the EBITDA  attributable  to the U.S.  Credit Parties,
         for any Reference Period to be less than $25,000,000.

         8.11. LINES OF BUSINESS. The Borrower will not, and will not permit any
of its Subsidiaries to, engage to any substantial extent in any line or lines of
business  activity other than (i) the types of businesses  engaged in by them as
of the Closing Date and businesses  substantially related thereto, and (ii) such
other lines of business as may be consented  to by the Required  Lenders and the
Agent.

         8.12.  OTHER  INDEBTEDNESS.  The Borrower will not, and will not permit
any of its Subsidiaries to, purchase,  redeem,  retire or otherwise  acquire for
value, or set apart any money for a sinking,  defeasance or other analogous fund
for the purchase,  redemption,  retirement or other  acquisition of, or make any
voluntary payment or prepayment of the principal of or interest on, or any other
amount  owing in respect of any Senior Notes or any Senior  Subordinated  Notes,
except to the extent permitted by Section 8.6.

         8.13.  MODIFICATIONS OF CERTAIN DOCUMENTS;  DESIGNATION OF SENIOR DEBT.
The Borrower will not, and will not permit any of its  Subsidiaries  to, consent
to any amendment or  modification  of or supplement to any of the  provisions of
any  documents or agreements  evidencing  or governing  the Senior  Subordinated
Notes, any other Existing Indebtedness,  or the Senior Notes. The Credit Parties
will designate the Credit Agreement and the Obligations hereunder as "Designated
Senior  Debt"  under  the  Senior  Subordinated  Note  Indenture,  and  will not
designate  any other  Indebtedness  other than the Senior  Notes as  "Designated
Senior Debt" under the Senior Subordinated Note Indenture.

         8.14.  INTENTIONALLY OMITTED.

         8.15.  COLUMBUS  MCKINNON FINANCE  CORPORATION.  Except as set forth in
Section 5.24 the Borrower and each of its Subsidiaries  will not permit Columbus
McKinnon Finance  Corporation to own any asset,  incur any liabilities or engage
in any business or  activity.  The Borrower  will not permit  Columbus  McKinnon
Limited to make,  or Columbus  McKinnon  Finance  Corporation  to  receive,  any
payment  in respect  of that  certain  intercompany  promissory  note  issued by
Columbus McKinnon Limited and made to Columbus  McKinnon Finance  Corporation in
the  aggregate   face  amount  of   C$3,750,000,   other  than  a  payment  made
substantially  contemporaneously  with either (a) the  amalgamation  of Columbus
McKinnon  Finance  Corporation  into a Credit  Party or (b) the  liquidation  of
Columbus McKinnon Finance  Corporation and the distribution of all of its assets
to a Credit Party.


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<PAGE>


                                   ARTICLE 9.

                                EVENTS OF DEFAULT

         9.1. EVENTS OF DEFAULT.  The occurrence of any of the following  events
shall be deemed to constitute an "EVENT OF DEFAULT" hereunder:

                  (a) the Credit  Parties  shall  fail to pay to the Agent,  the
         Issuing Lender,  the Canadian  Lender,  the Cash Management Bank or the
         Lenders,  any principal of or interest on any Loan or any Reimbursement
         Obligation in respect of any LC Disbursement or any other Obligation of
         the Credit  Parties to the Agent,  the  Issuing  Lender,  the  Canadian
         Lender,  the Cash  Management  Bank or the Lenders  when the same shall
         become due and  payable,  whether at the due date  thereof or at a date
         fixed for prepayment thereof, by acceleration of such due or prepayment
         date, or otherwise;

                  (b) any  representation  or warranty made or deemed made by or
         on behalf of any Credit Party or any of its  Subsidiaries in connection
         with this  Agreement,  any of the other Loan Documents or any amendment
         or  modification  hereof or  thereof,  or in any  report,  certificate,
         financial  statement  or other  document  furnished  pursuant  to or in
         connection with this Agreement,  any of the other Loan Documents or any
         amendment or modification  hereof or thereof,  shall prove to have been
         incorrect in any material respect when made or deemed made;

                  (c) the  Credit  Parties  (i) shall fail to observe or perform
         any  covenant,  condition or agreement  contained in Sections 7.1, 7.2,
         7.5, 7.6, 7.9, 7.10, 7.12, 7.14, 7.15, 7.16, 7.20, 7.22 or in Article 8
         (it being expressly  acknowledged  and agreed that any Event of Default
         resulting  from the  failure of the Credit  Parties at any  measurement
         date to satisfy any financial  covenant set forth in Section 8.10 shall
         not  be  deemed  to be  "cured"  or  remedied  by the  Credit  Parties'
         satisfaction of such financial  covenant at any subsequent  measurement
         date) or (ii) shall fail to  observe  or  perform  any other  covenant,
         condition or agreement  contained in Sections 7.3, 7.4, 7.7, 7.8, 7.11,
         7.13,  or 7.17,  and such  failure  described in this clause (ii) shall
         continue  unremedied  for a period of 10 days after the  earlier of (x)
         the date on which any officer of any Credit  Party knows or should have
         known of such  failure  or (y) the date the  Borrower  receives  notice
         thereof from the Agent;

                  (d) the  Borrower  or any of its  Subsidiaries  shall  fail to
         observe or perform any  covenant,  condition or agreement  contained in
         this Agreement  (other than those  specified in clauses (a), (b) or (c)
         of this Section 9.1) or any other Loan Document, and such failure shall
         continue  unremedied  for a period of 20 days after the  earlier of (x)
         the date on which any officer of any Credit  Party knows or should have
         known of such  failure  or (y) the date the  Borrower  receives  notice
         thereof from the Agent;

                  (e) the Borrower or any of its Subsidiaries shall fail to make
         any payment (whether of principal, interest or otherwise and regardless


                                      130
<PAGE>

         of  amount) in respect of any  Material  Indebtedness  or any  Material
         Rental  Obligation,  when and as the same shall become due and payable,
         after giving effect to any grace period with respect thereto;

                  (f) any event or condition  occurs that results in (i) (A) any
         Material  Indebtedness  of the  Borrower  or  any  of its  Subsidiaries
         becoming  due prior to its  scheduled  maturity,  (B) that  enables  or
         permits  (with or without  the  giving of notice,  the lapse of time or
         both) the holder or holders of any Material Indebtedness or any trustee
         or agent on its or their behalf to cause such Material  Indebtedness to
         become due, or to require the  prepayment,  repurchase,  redemption  or
         defeasance thereof,  prior to its scheduled  maturity,  or (C) requires
         the Borrower or any of its Subsidiaries to offer to repay,  repurchase,
         redeem, or defease such Material  Indebtedness,  or (ii) the lease with
         respect to any Material Rental Obligation of the Borrower or any of its
         Subsidiaries being terminated prior to its scheduled expiration date or
         that  enables or permits  (with or  without  the giving of notice,  the
         lapse of time or both) the  counterparty  to such  lease to cause  such
         lease to be terminated prior to its scheduled expiration date;

                  (g)  an  involuntary  proceeding  shall  be  commenced  or  an
         involuntary   petition   shall  be  filed   seeking  (i)   liquidation,
         reorganization or other relief in respect of the Borrower or any of its
         Subsidiaries  or its debts,  or of a  substantial  part of its  assets,
         under  any   Federal,   state  or   foreign   bankruptcy,   insolvency,
         receivership  or  similar  law now or  hereafter  in effect or (ii) the
         appointment   of  a   receiver,   trustee,   custodian,   sequestrator,
         conservator  or  similar  official  for  the  Borrower  or  any  of its
         Subsidiaries or for a substantial part of its assets,  and, in any such
         case,  such  proceeding or petition shall continue  undismissed  for 60
         days or an order or decree  approving or ordering any of the  foregoing
         shall be entered;

                  (h)  the  Borrower  or  any  of  its  Subsidiaries  shall  (i)
         voluntarily  commence  any  proceeding  or file  any  petition  seeking
         liquidation, reorganization or other relief under any Federal, state or
         foreign  bankruptcy,  insolvency,  receivership  or similar  law now or
         hereafter  in effect,  (ii) consent to the  institution  of, or fail to
         contest in a timely and appropriate  manner, any proceeding or petition
         described in clause (g) of this Article,  (iii) apply for or consent to
         the  appointment  of  a  receiver,  trustee,  custodian,  sequestrator,
         conservator  or  similar  official  for  the  Borrower  or  any  of its
         Subsidiaries  or for a  substantial  part of its  assets,  (iv) file an
         answer  admitting the material  allegations of a petition filed against
         it in any  such  proceeding,  (v)  make a  general  assignment  for the
         benefit  of  creditors  or (vi)  take any  action  for the  purpose  of
         effecting any of the foregoing;

                  (i)  the  Borrower  or any of its  Subsidiaries  shall  become
         unable,  admit in  writing or fail  generally  to pay its debts as they
         become due;

                  (j) a final judgment or judgments for the payment of money (x)
         in excess of $1,000,000 in the aggregate (exclusive of judgment amounts
         fully covered by insurance where the insurer has admitted  liability in


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<PAGE>

         respect  of  such  judgment)  or (y) in  excess  of  $1,000,000  in the
         aggregate (regardless of insurance coverage),  shall be rendered by one
         or  more  courts,  administrative  tribunals  or  other  bodies  having
         jurisdiction  over the Borrower or any of its Subsidiaries and the same
         shall  not be  discharged  (or  provision  shall  not be made  for such
         discharge),  bonded,  or a  stay  of  execution  thereof  shall  not be
         procured,  within  60 days  from  the  date of  entry  thereof  and the
         Borrower or  relevant  Subsidiary  shall not,  within said period of 90
         days, or such longer  period  during which  execution of the same shall
         have been stayed,  appeal therefrom and cause the execution  thereof to
         be stayed during such appeal;

                  (k) an ERISA Event shall have occurred that, in the reasonable
         opinion of the Required  Lenders,  when taken  together  with all other
         ERISA Events that have occurred, could reasonably be expected to have a
         Material Adverse Effect;

                  (l) there shall occur any Change of Control;

                  (m) any of the  following  shall occur:  (i) the Liens created
         hereunder  or under the other Loan  Documents  shall at any time (other
         than  by  reason  of  the  Agent  relinquishing  such  Lien)  cease  to
         constitute  valid  and  perfected  Liens  on  any  Collateral  with  an
         aggregate  fair market value in excess of $100,000 which is intended to
         be covered  thereby;  (ii) except for expiration in accordance with its
         respective  terms,  any Loan  Document  shall  for  whatever  reason be
         terminated, or shall cease to be in full force and effect; or (iii) the
         enforceability  of any Loan Document shall be contested by the Borrower
         or any of its Subsidiaries;

                  (n) there shall occur any loss theft, damage or destruction of
         any   Collateral  not  fully  covered   (subject  to  such   reasonable
         deductibles as the Agent shall have approved) by insurance which has or
         could reasonably be expected to have a Material Adverse Effect;

                  (o) any Guarantor shall assert that its obligations  under any
         Loan Document shall be invalid or unenforceable;

                  (p) there  shall  occur any  material  adverse  change (in the
         opinion  of the  Agent)  on  the  businesses,  operations,  properties,
         conditions  (financial or otherwise),  assets,  liabilities,  income or
         prospects of the Borrower and its Subsidiaries; or

                  (q)  the  Canadian  Lender  shall  make a  drawing  under  the
         Canadian Letter of Credit;

                  (r) any Credit  Party  shall be liable  for any  Environmental
         Liabilities  payment of which  could  reasonably  be expected to have a
         Material Adverse Effect;

                  (s) any bank at which any deposit account, Controlled Account,
         or  Lockbox  Account of any Credit  Party is  maintained  shall fail to


                                      132
<PAGE>

         comply with any of the terms of any deposit account agreement,  Control
         Agreement, Lockbox Agreement or similar agreement to which such bank is
         a party or any securities intermediary, commodity intermediary or other
         financial institution at any time in custody,  control or possession of
         any  investment  property of any Credit Party shall fail to comply with
         any of the terms of any investment  property control agreement to which
         such Person is a party;

                  (t) any Credit  Party is  enjoined,  restrained  or in any way
         prevented by the order of any court or any Governmental  Authority from
         conducting  all or any  material  part of its  business  for more  than
         fifteen (15) days;

                  (u) any cessation of a substantial part of the business of any
         Credit Party for a period which  materially  and adversely  affects the
         ability of such Person to continue its business on a profitable basis;

                  (v) the loss,  suspension  or  revocation  of, or  failure  to
         renew,  any  license or permit now held or  hereafter  acquired  by any
         Credit Party, if such loss, suspension,  revocation or failure to renew
         could reasonably be expected to have a Material Adverse Effect;

                  (w) the indictment, or the threatened indictment of any Credit
         Party  under  any  criminal  statute,  or  commencement  or  threatened
         commencement of criminal or civil proceedings against any Credit Party,
         pursuant to which  statute or  proceedings  the  penalties  or remedies
         sought or available include forfeiture to any Governmental Authority of
         any material portion of the property of such Person; or

                  (x) a "Default" or an "Event of Default"  shall have  occurred
         under the Senior Note Indenture;

then,  and in every such event  (other than an event  described in clause (g) or
(h) of this Section 9.1), and at any time  thereafter  during the continuance of
such event,  the Agent may, and at the request of the Required Lenders shall, by
notice to the Borrower, take any or all of the following actions, at the same or
different times:  (i) terminate the  Commitments,  and thereupon the Commitments
shall  terminate  immediately,  (ii) notify the  Borrower  that the  outstanding
principal  of the Loans  shall  bear  interest  at the  Post-Default  Rate,  and
thereupon  the  outstanding  principal  of the Loans shall bear  interest at the
Post-Default  Rate,  (iii)  declare  the Loans  then  outstanding  to be due and
payable in whole (or in part,  in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and thereupon
the  principal  of the Loans so declared to be due and  payable,  together  with
accrued  interest thereon and all fees and other  Obligations,  shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind,  all of which are hereby  waived by the Credit  Parties,  (iv) require
that the Borrower  deposit with the Agent cash  collateral  for all  outstanding
Letters of Credit,  and (v) the Agent,  the Issuing Lender,  the Cash Management
Bank and the  Lenders  may  exercise  all of the  rights  as  secured  party and
mortgagee hereunder or under the other Loan Documents;  and in case of any event


                                      133
<PAGE>

with  respect to the  Credit  Parties or any of its  Subsidiaries  described  in
clause (g) or (h) of this  Section  9.1,  the  Commitments  shall  automatically
terminate,  the principal of the Loans then outstanding shall automatically bear
interest at the Post-Default  Rate, the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other  Obligations shall
automatically  become due and  payable,  and the  Borrower  shall  provide  cash
collateral  in  accordance  with Section  2.4(h)  without  presentment,  demand,
protest  or other  notice of any kind,  all of which  are  hereby  waived by the
Credit Parties,  and the Agent, the Issuing Lender, the Cash Management Bank and
the Lenders  shall be  permitted  to exercise  such rights as secured  party and
mortgagee hereunder or under the other Loan Documents to the extent permitted by
applicable law.

         9.2.  DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
the occurrence or during the continuance of any Default or Event of Default, the
Agent or any Lender,  as the case may be, receives any monies in connection with
the  enforcement  of  any  Loan  Document,  or  otherwise  with  respect  to the
realization  upon any of the  Collateral,  such monies shall be distributed  for
application as follows:

                  (a)  First,  to the  payment  of,  or (as the case may be) the
         reimbursement  of the Agent for or in respect of all reasonable  costs,
         expenses,  disbursements  and losses which shall have been  incurred or
         sustained by the Agent in connection with the collection of such monies
         by the Agent, for the exercise,  protection or enforcement by the Agent
         of all or any of the rights,  remedies,  powers and  privileges  of the
         Agent under this  Agreement  or any of the other Loan  Documents  or in
         respect of the  Collateral  or in support of any  provision of adequate
         indemnity  to the Agent  against  any Taxes or liens which by law shall
         have,  or may  have,  priority  over the  rights  of the  Agent to such
         monies;

                  (b)  Second,  to  all  other  Obligations  in  such  order  or
         preference as the Required  Lenders may determine;  PROVIDED,  however,
         that (i)  distributions  shall be made (A) PARI PASSU among Obligations
         with respect to fees payable to the Agent,  the Issuing  Lender and all
         other Obligations and (B) with respect to each type of Obligation owing
         to the Lenders, such as interest,  principal,  fees and expenses, among
         the Lenders  PRO RATA,  and (ii) the Agent may in its  discretion  make
         proper  allowance to take into account any Obligations not then due and
         payable;

                  (c) Third,  upon  payment  and  satisfaction  in full or other
         provisions  for  payment in full  satisfactory  to the  Lenders and the
         Agent of all of the  Obligations,  to the  payment  of any  obligations
         required to be paid pursuant to ss.9-608(a)(1)(C) or 9-615(a)(3) of the
         Uniform  Commercial  Code of the  Commonwealth  of  Massachusetts;  and
         (d)Fourth,  the excess, if any, shall be returned to the Borrower or to
         such other Persons as are entitled thereto.

         9.3. RECEIVERSHIP.  Without limiting the generality of the foregoing or
limiting  in any way the rights of the Agent or the Lenders  hereunder  or under
the other Loan Documents or otherwise  under  applicable  law, at any time after


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<PAGE>

(i) the entire  principal  balance of any Loan shall have become due and payable
(whether at maturity,  by  acceleration  or otherwise)  and (ii) the Agent shall
have provided to the Borrower not less than ten (10) days' prior written  notice
of its  intention to apply for a receiver,  the Agent shall be entitled to apply
for and have a  receiver  appointed  under  state or  federal  law by a court of
competent  jurisdiction in any action taken by the Agent to enforce the Lenders'
and the Agent's rights and remedies hereunder and under the other Loan Documents
in order to manage, protect,  preserve, sell and otherwise dispose of all or any
portion of the  Collateral  and  continue  the  operation of the business of the
Credit  Parties,  and to collect all revenues and profits  thereof and apply the
same to the  payment of all  expenses  and other  charges of such  receivership,
including the compensation of the receiver,  and to the payment of the Loans and
other fees and expenses due hereunder and under the Loan  Documents as aforesaid
until a sale or other  disposition of such Collateral  shall be finally made and
consummated. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH CREDIT PARTY HEREBY
IRREVOCABLY  CONSENTS TO AND WAIVES ANY RIGHT TO OBJECT TO OR OTHERWISE  CONTEST
THE  APPOINTMENT OF A RECEIVER AS PROVIDED  ABOVE.  EACH CREDIT PARTY (I) GRANTS
SUCH  WAIVER AND CONSENT  KNOWINGLY  AFTER  HAVING  DISCUSSED  THE  IMPLICATIONS
THEREOF WITH COUNSEL, (II) ACKNOWLEDGES THAT (A) THE UNCONTESTED RIGHT TO HAVE A
RECEIVER APPOINTED FOR THE FOREGOING  PURPOSES IS CONSIDERED  ESSENTIAL BY AGENT
IN CONNECTION  WITH THE  ENFORCEMENT  OF THE LENDERS' AND THE AGENT'S RIGHTS AND
REMEDIES HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS,  AND (B) THE AVAILABILITY
OF SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES WAS A MATERIAL
FACTOR IN  INDUCING  THE  LENDERS TO MAKE THE LOANS TO THE  BORROWER;  AND (III)
AGREES  TO  ENTER  INTO  ANY AND  ALL  STIPULATIONS  IN ANY  LEGAL  ACTIONS,  OR
AGREEMENTS  OR  OTHER  INSTRUMENTS  IN  CONNECTION  WITH  THE  FOREGOING  AND TO
COOPERATE FULLY WITH THE AGENT AND THE LENDERS IN CONNECTION WITH THE ASSUMPTION
AND  EXERCISE  OF  CONTROL  BY THE  RECEIVER  OVER  ALL OR  ANY  PORTION  OF THE
COLLATERAL.  THE LENDERS AND AGENT  ACKNOWLEDGE  AND AGREE THAT  NOTHING IN THIS
SECTION  9.2  SHALL BE  DEEMED  TO  CONSTITUTE  A WAIVER  OF THE RIGHT OF CREDIT
PARTIES TO FILE FOR  PROTECTION  UNDER TITLE 11 OF THE UNITED STATES CODE AT ANY
TIME.

                                   ARTICLE 10.

                                    THE AGENT

         10.1.  APPOINTMENT  AND  AUTHORIZATION.  Each  of the  Lenders  and the
Issuing Lender hereby irrevocably appoints the Agent as its agent and authorizes
the Agent to take such actions on its behalf and to exercise  such powers as are
delegated  to the  Agent  by the  terms of this  Agreement  and the  other  Loan
Documents,  together with such actions and powers as are  reasonably  incidental
thereto.Without  limiting the generality of the  foregoing,  each of the Lenders
and the  Issuing  Lender  hereby  (a)  authorizes  the  Agent to enter  into the
Intercreditor Agreement on its behalf and consents and agrees to be bound by the


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terms therein,  (b) authorizes the Agent to release,  from time to time, certain
of the  Collateral in connection  with any sale or other  disposition  of assets
permitted  hereunder,  and (c)  authorizes the Agent to take such actions at any
time to  enforce  such  Lender's  rights  hereunder  and under  the  other  Loan
Documents.  The Agent shall be the  "representative" of the Lenders for purposes
of its designation as a secured party on all security filings.

         10.2.   AGENT'S  RIGHTS  AS  LENDER.  The  Lender  or  other  financial
institution  serving as the Agent or the Issuing Lender hereunder shall have the
same rights and powers in its capacity as a Lender hereunder as any other Lender
and may exercise the same as though it were not the Agent or the Issuing Lender,
and such  institution and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with any Credit Party or any of its
Subsidiaries  or other  Affiliate  thereof  as if it were  not the  Agent or the
Issuing Lender hereunder.

         10.3.  DUTIES AS  EXPRESSLY  STATED.  Neither the Agent nor the Issuing
Lender shall have any duties or obligations  except those expressly set forth in
this Agreement and the other Loan Documents.  Without limiting the generality of
the foregoing,  (a) neither the Agent nor the Issuing Lender shall be subject to
any  fiduciary  or other  implied  duties,  regardless  of whether a Default has
occurred and is  continuing,  (b) neither the Agent nor the Issuing Lender shall
have any duty to take any  discretionary  action or exercise  any  discretionary
powers,  except discretionary  rights and powers expressly  contemplated by this
Agreement  and the other  Loan  Documents  that the Agent or  Issuing  Lender is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as is required hereunder with respect to such action),
and (c) except as expressly  set forth  herein and in the other Loan  Documents,
neither the Agent nor the Issuing  Lender  shall have any duty to  disclose,  or
shall be liable for the failure to  disclose,  any  information  relating to any
Credit Party or any of their respective  Subsidiaries that is communicated to or
obtained by the financial institution serving as the Agent or the Issuing Lender
or any of its  Affiliates or Approved  Funds in any capacity.  Neither the Agent
nor the Issuing  Lender  shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or  percentage  of the Lenders as is  required  hereunder  with  respect to such
action) or all of the Lenders if  expressly  required,  or in the absence of its
own gross  negligence or willful  misconduct.  Neither the Agent nor the Issuing
Lender shall be deemed to have  knowledge of any Default other than a Default of
the types specified in Section 9.1(a) unless and until written notice thereof is
given to the Agent or the Issuing  Lender by the  Borrower or a Lender,  and the
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement,  warranty or  representation  made in, or in connection with,
this  Agreement  or  the  other  Loan  Documents,   (ii)  the  contents  of  any
certificate,  report or other document  delivered  hereunder or under any of the
other  Loan  Documents  or  in  connection  herewith  of  therewith,  (iii)  the
performance or observance of any of the covenants,  agreements or other terms or
conditions  set forth herein or in any other Loan  Document,  (iv) the validity,
enforceability,  effectiveness or genuineness of this Agreement,  the other Loan
Documents  or  any  other  agreement,   instrument  or  document,   or  (v)  the
satisfaction of any condition set forth in Article 6 or elsewhere herein,  other
than to confirm receipt of items expressly required to be delivered to the Agent


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or the Issuing Lender. Neither the Agent nor the Issuing Lender shall, except to
the extent the Agent expressly  instructed by the Required  Lenders with respect
to collateral security hereunder and under the other Loan Documents, be required
to initiate or conduct any  litigation  or collection  proceedings  hereunder or
under any other Loan Document;  PROVIDED,  however,  that the Agent shall not be
required to take any action  which  exposes the Agent to personal  liability  or
which is contrary to the Loan Documents or applicable law.

         10.4.  RELIANCE  BY AGENT.  The Agent and the Issuing  Lender  shall be
entitled to rely upon,  and shall not incur any liability for relying upon,  any
notice, request, certificate,  consent, statement, instrument, document or other
writing  believed  by it to be  genuine  and to have been  signed or sent by the
proper Person. The Agent and the Issuing Lender also may rely upon any statement
made to it orally or by  telephone  and  believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon. The Agent and the
Issuing Lender may consult with legal counsel, independent accountants and other
experts  selected  by it, and shall not be liable  for any  action  taken or not
taken by it in accordance  with the advice of any such counsel,  accountants  or
experts. The Agent and the Issuing Lender shall be fully justified in failing or
refusing  to take any action  under this  Agreement  or any other Loan  Document
unless it shall first receive such advice or concurrence of the Required Lenders
(or, if so specified by this Agreement,  all Lenders) as it deems appropriate or
it shall first be indemnified to its satisfaction by the Lenders against any and
all  liability  and  expense  which may be incurred by it by reason of taking or
continuing  to take any such  action (it being  understood  that this  provision
shall not  release  the Agent from  performing  any action  with  respect to the
Borrower  expressly required to be performed by it pursuant to the terms hereof)
under this  Agreement.  The Agent and the Issuing  Lender  shall in all cases be
fully protected in acting,  or in refraining  from acting,  under this Agreement
and the other  Loan  Documents  in  accordance  with a request  of the  Required
Lenders (or, if so specified by this Agreement,  all Lenders),  and such request
and any action  taken or failure to act pursuant  thereto  shall be binding upon
all the Lenders and all future holders of the Loans.

         10.5. ACTION THROUGH  SUB-AGENTS.  The Agent and the Issuing Lender may
perform any and all of its duties,  and  exercise  its rights and powers,  by or
through any one or more sub-agents appointed by the Agent or the Issuing Lender.
The Agent and the Issuing  Lender and any such sub-agent may perform any and all
its duties and exercise its rights and powers through its Related  Parties.  The
exculpatory  provisions  of the  preceding  paragraphs  shall  apply to any such
sub-agent and to the Related Parties of the Agent and the Issuing Lender and any
such  sub-agent,  and  shall  apply to its  activities  in  connection  with the
syndication of the credit  facilities  provided for herein as well as activities
of the Agent or the Issuing Lender.

         10.6.  RESIGNATION OF AGENT AND APPOINTMENT OF SUCCESSOR AGENT. Subject
to the  appointment  and  acceptance of a successor  Agent,  as provided in this
paragraph,  the  Agent may  resign at any time by  notifying  the  Lenders,  the
Issuing Lender and the Credit Parties.  Upon any such resignation,  the Required
Lenders  shall have the right,  in  consultation  with the  Credit  Parties,  to


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appoint a successor  Agent.  If no successor  shall have been so  appointed  and
shall have accepted such  appointment  within 30 days after such retiring  Agent
gives notice of its resignation,  then such retiring Agent may, on behalf of the
Lenders and the Issuing Lender, appoint a successor Agent, which shall be a bank
with an office in Boston,  Massachusetts  or New York, New York, or an Affiliate
of any such bank. Upon the acceptance of its appointment as Agent hereunder,  by
a successor,  such  successor  shall  succeed to and become  vested with all the
rights,  powers,  privileges and duties of the retiring Agent,  and the retiring
Agent shall be discharged  from its duties and  obligations  hereunder and under
the other Loan Documents.  The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor  unless  otherwise  agreed
between the Borrower and such successor. After an Agent's resignation hereunder,
the provisions of this Article and Section 11.3 shall continue in effect for the
benefit of such retiring  Agent,  its  sub-agents and their  respective  Related
Parties in respect  of any  actions  taken or omitted to be taken by any of them
while it was acting as Agent.

         10.7. LENDERS' INDEPENDENT DECISIONS.  Each Lender acknowledges that it
has,  independently  and without  reliance upon the Agent, the Issuing Lender or
any other Lender and based on such  documents and  information  as it has deemed
appropriate,  made its own  credit  analysis  and  decision  to enter  into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance  upon the Agent,  the Issuing  Lender or any other  Lender and based on
such documents and  information as it shall from time to time deem  appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement and the other Loan Documents,  any related  agreement or any
document  furnished  hereunder  or  thereunder.  Except as  explicitly  provided
herein, neither the Agent nor the Issuing Lender has any duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other  information  with  respect  to such  operations,  business,  property,
condition  or   creditworthiness,   whether  such  information  comes  into  its
possession  on or before the first  Event of Default or at any time  thereafter.
Neither  the Agent nor the  Issuing  Lender  shall be deemed a trustee  or other
fiduciary on behalf of any party.

         10.8.  INDEMNIFICATION.  Each  Lender  agrees  to  indemnify  and  hold
harmless the Agent and the Issuing  Lender (to the extent not  reimbursed  under
Section 11.3, but without limiting the obligations of the Borrower under Section
11.3),  ratably  in  accordance  with  the  aggregate  principal  amount  of the
respective Commitments of and/or Loans and Total LC Exposure held by the Lenders
(or, if all of the Commitments shall have been terminated or expired, ratably in
accordance  with the  aggregate  outstanding  amount  of the  Loans and Total LC
Exposure held by the Lenders),  for any and all liabilities  (including pursuant
to any Environmental Law),  obligations,  losses, damages,  penalties,  actions,
judgments, deficiencies, suits, costs, expenses (including the fees and expenses
of  attorneys,  consultants,  appraisers,  examiners,  and  other  professionals
engaged by the Agent in connection with this Agreement and/or the administration
of the credit facilities  contemplated  hereby) or disbursements of any kind and
nature  whatsoever that may be imposed on,  incurred by or asserted  against the
Agent or the  Issuing  Lender  (including  by any  Lender)  arising out of or by
reason of any  investigation  in or in any way relating to or arising out of any


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Loan Document or any other documents  contemplated by or referred to therein for
any action taken or omitted to be taken by the Agent or the Issuing Lender under
or in  respect  of any of the Loan  Documents  or other  such  documents  or the
transactions  contemplated  thereby  (including  the costs and expenses that the
Borrower is obligated to pay under  Section 11.3) or the  enforcement  of any of
the terms hereof or thereof or of any such other  documents;  PROVIDED  HOWEVER,
that no Lender  shall be liable for any of the  foregoing to the extent they are
determined  by a court of competent  jurisdiction  in a final and  nonappealable
judgment to have resulted from the gross negligence or willful misconduct of the
party to be  indemnified.  The  agreements  set forth in this Section 10.8 shall
survive the payment of all Loans and other obligations hereunder and shall be in
addition to and not in lieu of any other indemnification agreements contained in
any other Loan Document.

         10.9. CONSENTS UNDER OTHER LOAN DOCUMENTS. Except as otherwise provided
in this  Agreement and the other Loan  Documents,  the Agent may, with the prior
consent  of  the  Required   Lenders  (but  not   otherwise),   consent  to  any
modification, supplement or waiver under any of the other Loan Documents.

         10.10.  DELINQUENT  LENDERS.  Notwithstanding  anything to the contrary
contained in this Agreement or any of the other Loan Documents,  any Lender that
fails  to make  available  to the  Agent  its pro  rata  share of any Loan or to
purchase  any  participation  in any Letter of Credit  as,  when and to the full
extent required by the provisions of this Agreement,  shall be deemed delinquent
(a "DELINQUENT  LENDER") and shall be deemed a Delinquent Lender until such time
as such  delinquency is satisfied.  A Delinquent  Lender shall be deemed to have
assigned  any and all  payments  due to it from the Credit  Parties,  whether on
account of outstanding Loans, unpaid Reimbursement  Obligations,  interest, fees
or otherwise,  to the remaining  nondelinquent  Lenders for  application to, and
reduction  of, their  respective  pro rata shares of all  outstanding  Loans and
unpaid  Reimbursement  Obligations.  The Delinquent Lender hereby authorizes the
Agent to distribute such payments to the nondelinquent  Lenders in proportion to
their   respective  pro  rata  shares  of  all  outstanding   Loans  and  unpaid
Reimbursement Obligations. A Delinquent Lender shall be deemed to have satisfied
in full a delinquency  when and if, as a result of  application  of the assigned
payments to all outstanding  Loans and unpaid  Reimbursement  Obligations of the
nondelinquent   Lenders,   the  Lenders'  respective  pro  rata  shares  of  all
outstanding Loans and unpaid Reimbursement Obligations have returned to those in
effect  immediately  prior to such  delinquency and without giving effect to the
nonpayment causing such delinquency.

         10.11. ELECTRONIC  COMMUNICATIONS.  The Credit Parties hereby authorize
and request the Agent,  the Cash  Management  Bank,  the  Canadian  Lender,  the
Issuing  Lender  or any of  their  Affiliates  to act on  instructions  given by
telephone, telegraph, telefax, cable, wireless, telex, telecopy, electronic mail
or other similar  electronic means of communication  (collectively,  "ELECTRONIC
COMMUNICATIONS")  from  an  authorized  representative  of  such  Credit  Party,
including  but  not  limited  to  instructions  relating  to  the  issuance  and
processing of letters of credit and  collection  transactions  and other similar
trade  finance  products,  the execution of foreign  exchange  contracts and the
directing the payment of moneys and transfers, deposits or withdrawals of funds,
coins,  precious  metals,  securities and other  valuable  assets from or to any


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account  maintained by the Agent, the Cash Management Bank, the Canadian Lender,
the Issuing  Lender or such  Affiliate as  contemplated  under this Agreement on
behalf of such Credit Party.  Each Credit Party further  authorizes  and directs
the Agent, Cash Management Bank, Canadian Lender, Issuing Lender or any of their
Affiliates  to  respond  to any  inquiry  made  through  any  of the  Electronic
Communications  relating to the status of any account  maintained  by the Agent,
the Cash  Management  Bank,  the  Canadian  Lender,  the Issuing  Lender or such
Affiliate as  contemplated  under this  Agreement.  Each of the Agent,  the Cash
Management  Bank,  the  Canadian  Lender,  the  Issuing  Lender  or any of their
Affiliates, any branch or agency thereof and its respective directors,  officers
and employees shall not be liable for any error, delay,  damage,  claim or other
loss,  expense  or cost  arising  out of any  instruction  given  by  Electronic
Communications.   All  such  risks  are  assumed  by  the  Credit  Parties.  All
instructions  sent by telex shall contain the Credit  Parties'  answerback.  The
certifications, authorizations, directions and any restrictions contained herein
will continue until the Agent,  the Cash Management Bank, the Canadian Lender or
the Issuing Lender actually  receive written notice of any change or revocation.
The Agent,  the Cash Management Bank, the Canadian Lender and the Issuing Lender
shall have the right to refuse any instructions  through any of  above-mentioned
Electronic communications, in its/their discretion.

                                   ARTICLE 11.

                                  MISCELLANEOUS

         11.1. NOTICES.  Except in the case of notices and other  communications
expressly permitted to be given by telephone or in a manner set forth in Section
10.11,  all notices and other  communications  provided  for herein  shall be in
writing and shall be delivered by hand or overnight  courier service,  mailed by
certified or registered mail or sent by telephonic facsimile (fax), as follows:

                  (a) if to any Credit Party, to Columbus McKinnon  Corporation,
         140 John James Audubon  Parkway,  Amherst,  New York 14228,  Attention:
         Robert L.  Montgomery,  Jr.,  Executive Vice  President,  Telephone no.
         (716) 689-5405 and Fax no. (716) 689-5598 with a copy to Phillips Lytle
         LLP, 3400 HSBC Center, Buffalo, New York 14203-2887, Attention: Raymond
         H.  Seitz,  Esq.,  Telephone  No.:  (716)  847-7065  and Fax no.  (716)
         852-6100;

                  (b) if to the Agent, to Fleet Capital Corporation, One Federal
         Street, Mail Stop MA DE 10307X, Boston, Massachusetts 02110, Attention:
         Daniel P. Corcoran,  Jr. Telephone no. (617) 654-1163 and Fax no. (617)
         654-1167,  with a copy to Bingham  McCutchen  LLP, 150 Federal  Street,
         Boston, MA 02110,  Attention:  Matthew F. Furlong,  Telephone no. (617)
         951-8904 and Fax no. (617) 951-8736;

                  (c) if to any Lender  (including  Fleet in its capacity as the
         Issuing  Lender),  to it at its  address  (or fax  number) set forth on
         Schedule 2.1; and


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                  (d) if to the Senior Note Indenture Trustee, as required under
         the Intercreditor  Agreement,  at U.S. Bank Trust National Association,
         Corporate Trust Services,  100 Wall Street,  16th Floor,  New York, New
         York, 10005, Attention: Cheryl Clarke, Telephone no. (212) 361-6159.

Any party  hereto  may change its  address or fax number for  notices  and other
communications  hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

         11.2.  WAIVERS; AMENDMENTS.

                  (a) No failure or delay by the Agent, the Issuing Lender,  the
         Canadian Lender,  the Cash Management Bank or the Lenders in exercising
         any right or power  hereunder  shall operate as a waiver  thereof,  nor
         shall any single or partial exercise of any such right or power, or any
         abandonment  or  discontinuance  of  steps to  enforce  such a right or
         power,  preclude any other or further  exercise thereof or the exercise
         of any other right or power.  The rights and remedies of the Agent, the
         Issuing Lender,  the Cash Management Bank and the Lenders hereunder and
         under the other Loan  Documents are cumulative and are not exclusive of
         any rights or remedies that they would otherwise have. No waiver of any
         provision of this  Agreement or consent to any  departure by any Credit
         Party or Subsidiary  therefrom  shall in any event be effective  unless
         the same shall be permitted by paragraph (b) of this Section 11.2,  and
         then such waiver or consent  shall be  effective  only in the  specific
         instance  and for the purpose for which  given.  Without  limiting  the
         generality  of the  foregoing,  the making of a Loan or  issuance  of a
         Letter of Credit  shall not be  construed  as a waiver of any  Default,
         regardless of whether the Agent,  any Lender or the Issuing  Lender may
         have had notice or knowledge of such Default at the time.

                  (b) Neither this Agreement nor any other Loan Document nor any
         provision  hereof or thereof may be waived,  amended or modified except
         pursuant to an agreement or agreements  in writing  entered into by the
         Borrower and the Required Lenders or by the Borrower and the Agent with
         the written  consent of the  Required  Lenders and the Agent;  PROVIDED
         that no such agreement shall:.

                           (i) increase the Commitment of any Lender without the
                  written consent of such Lender and the Agent;

                           (ii)  reduce  the  principal  amount  of any  Loan or
                  Reimbursement  Obligation  or  reduce  the  rate  of  interest
                  thereon (other than the decision not to charge, or to cease to
                  charge,  Post-Default  Interest),  or reduce any fees  payable
                  hereunder, without the written consent of each Lender affected
                  thereby;

                           (iii)  postpone the scheduled  date of payment of the
                  principal  amount  of any  Loan  or  Reimbursement  Obligation


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                  (which  excludes  mandatory  prepayments of the Loans required
                  under Section 2.8(b)),  or any interest  thereon,  or any fees
                  payable  hereunder,  or reduce the amount of,  waive or excuse
                  any such  payment,  change the maturity  date of any Loan,  or
                  postpone the scheduled  date of expiration of any  Commitment,
                  or extend the ultimate expiration date of any Letter of Credit
                  beyond the Maturity Date,  without the written consent of each
                  Lender affected thereby;

                           (iv) change  subsection 2.8(c) in a manner that would
                  alter the  application  of prepayments  thereunder,  or change
                  subsections  2.7(c),  (d) or (e) in a manner  that would alter
                  the pro rata sharing of payments required thereby,  without in
                  each case the written consent of each Lender;

                           (v) alter the rights or  obligations  of the Borrower
                  to prepay Loans  (other than  mandatory  prepayments  of Loans
                  under  subsection  2.8(b)) without the written consent of each
                  Lender;

                           (vi)  change any of the  provisions  of this  Section
                  11.2 or the  definition  of  "Required  Lenders"  or any other
                  provision  hereof  specifying  the  number  or  percentage  of
                  Lenders  required  to  waive,   amend  or  modify  any  rights
                  hereunder  or  under  any  other  Loan  Document  or make  any
                  determination  or grant any consent  hereunder or  thereunder,
                  without the written consent of each Lender;

                           (vii)  release  all  or  substantially   all  of  the
                  Guarantors from their  obligations in respect of its Guarantee
                  under  Article 3 or release  all or  substantially  all of the
                  Collateral  (or  terminate  any Lien  with  respect  thereto),
                  except as expressly  permitted in this Agreement,  without the
                  written consent of each Lender;

                           (viii)   waive  any  of  the   conditions   precedent
                  specified  in Section 6.1 without the written  consent of each
                  Lender and the Agent;

                           (x) subordinate the Loans to any other Indebtedness;

                           (xi) increase the  percentage  of Eligible  Accounts,
                  Eligible  Inventory  or Appraised  Value of the Canadian  Real
                  Property (as  applicable)  in the  calculation of the Canadian
                  Borrowing  Base or the Domestic  Borrowing  Base,  without the
                  written consent of each Lender; or

                           (xii) amend the  definitions  of "Domestic  Borrowing
                  Base" or "Canadian Borrowing Base" or of any definition of any
                  component thereof, such that more credit would be available to
                  the  Borrower  or the  Canadian  Borrowers,  based on the same
                  assets,  as would have been  available  to the Borrower or the
                  Canadian  Borrowers  immediately  prior to such amendment,  it
                  being understood,  however,  that: the foregoing shall not (A)
                  limit  the  adjustment  by the  Agent  of any  reserve  in the


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                  Agent's  administration of the Loans as otherwise permitted by
                  this Agreement or (B) prevent the Agent, in its administration
                  of  the  Loans,  from  restoring  any  component  of  Domestic
                  Borrowing  Base  or  Canadian  Borrowing  Base  or  Term  Loan
                  Borrowing Base which had been lowered by the Agent back to the
                  value of such component,  as stated in this Agreement or to an
                  intermediate value;

PROVIDED further that no such agreement shall amend,  modify or otherwise affect
the rights or duties of the Agent or the Issuing  Lender  hereunder  without the
prior written consent of the Agent or the Issuing Lender, as the case may be.

         11.3.  EXPENSES; INDEMNITY: DAMAGE WAIVER.

                  (a) The Credit Parties  jointly and severally agree to pay, or
         reimburse the Agent or the Lenders, as applicable,  for paying, (i) all
         reasonable  out-of-pocket  expenses  incurred  by  the  Agent  and  its
         Affiliates, including the reasonable fees, charges and disbursements of
         Special  Counsel  and  any  local  counsel,   in  connection  with  the
         syndication  of  the  credit  facilities   provided  for  herein,   the
         preparation  of this  Agreement  and the other  Loan  Documents  or any
         amendments,  modifications  or  waivers  of the  provisions  hereof  or
         thereof (whether or not the transactions contemplated hereby or thereby
         shall be consummated),  or the  administration or interpretation of the
         Loan  Documents  and  other  instruments   mentioned  herein  (ii)  all
         reasonable  out-of-pocket  expenses  incurred by the Issuing  Lender in
         connection  with the issuance,  amendment,  renewal or extension of any
         Letter  of Credit  or any  demand  for  payment  thereunder,  (iii) all
         out-of-pocket   expenses   (including  without  limitation   reasonable
         attorneys'  fees and costs,  which  attorneys  may be  employees of the
         Agent,  the Issuing Lender,  the Canadian  Lender,  the Cash Management
         Bank or any Lender, and reasonable consulting,  accounting,  appraisal,
         investment banking and similar  professional fees and charges) incurred
         by the  Agent,  the  Issuing  Lender,  the  Canadian  Lender,  the Cash
         Management Bank or any Lender,  including the fees, costs,  charges and
         disbursements  of any counsel for the Agent,  the Issuing  Lender,  the
         Canadian Lender,  the Cash Management Bank or any Lender, in connection
         with (A) the  enforcement  or  protection of their rights in connection
         with this  Agreement  and the other  Loan  Documents,  including  their
         rights under this Section 11.3, or in connection with the Loans made or
         Letters of Credit issued  hereunder,  including in connection  with any
         workout,  restructuring or negotiations in respect thereof, and (B) any
         litigation,   proceeding  or  dispute  whether  arising   hereunder  or
         otherwise,   in  any  way  related  to  any  Lender's  or  the  Agent's
         relationship  with the  Borrower or any of its  Subsidiaries,  (iv) all
         reasonable  fees,  expenses and  disbursements of the Agent incurred in
         connection with UCC and other  collateral  security  searches,  UCC and
         other collateral  security  filings,  intellectual  property  searches,
         intellectual  property  filings or mortgage  recordings,  (v) any fees,
         costs,  expenses and bank charges,  including bank charges for returned
         checks,   incurred  by  the  Agent  or  the  Cash  Management  Bank  in
         establishing,   maintaining  or  handling  agency  accounts,  lock  box


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         accounts  and  other   accounts  for  the  collection  of  any  of  the
         Collateral,  (vi) all Other Taxes levied by any Governmental  Authority
         in respect of this  Agreement or any of the other Loan Documents or any
         other document  referred to herein or therein and all costs,  expenses,
         Taxes,  assessments  and other charges  incurred in connection with any
         filing, registration,  recording or perfection of any security interest
         contemplated  by any Loan  Document or any other  document  referred to
         therein.  The Agent shall be entitled to pay any of the foregoing  fees
         and  expenses  by causing the debit of any  account  maintained  by the
         Borrower or any of its Subsidiaries with the Agent, the Cash Management
         Bank, or any other  institution with which the Agent shall have entered
         into an agency account agreement.

                  (b)  The  Credit  Parties   jointly  and  severally  agree  to
         indemnify the Agent, the Issuing Lender,  the Canadian Lender, the Cash
         Management  Bank,  each  Lender  and each  Related  Party of any of the
         foregoing  Persons  (each such  Person  being  called an  "INDEMNITEE")
         against,   and  hold  each  Indemnitee   harmless  from,  any  and  all
         Environmental Costs, losses, claims,  damages,  liabilities and related
         expenses,  including the fees, charges and disbursements of any counsel
         for any  Indemnitee  and  settlement  costs,  incurred  by or  asserted
         against any Indemnitee of every nature and character arising out of, in
         connection  with,  or as a result of (i) the  execution  or delivery of
         this Agreement, the other Loan Documents or any agreement or instrument
         contemplated  hereby,  the  performance  by the parties hereto of their
         respective  obligations  hereunder or thereunder or the consummation of
         the  transactions   contemplated   hereby  or  any  other  transactions
         contemplated  hereby or thereby (other than breaches by the Agent,  the
         Issuing  Lender,  the Canadian  Lender,  the Cash  Management Bank or a
         Lender),  (ii) any Loan or Letter of Credit or the  actual or  proposed
         use of the  proceeds  therefrom  (including  any refusal by the Issuing
         Lender to honor a demand  for  payment  under a Letter of Credit if the
         documents  presented  in  connection  with such demand do not  strictly
         comply with the terms of such  Letter of  Credit),  (iii) any actual or
         alleged  presence,   disposal,   escape,  seepage,  leakage,  spillage,
         discharge,   emission,  Release  or  threatened  Release  of  Hazardous
         Materials  on or from any  property  owned,  leased or  operated by any
         Credit Party or any of its Subsidiaries, or any Environmental Liability
         related  in any  way to any  Credit  Party  or any of its  Subsidiaries
         (including,   without  limitation,   remediation,   removal,  response,
         abatement, restoration, cleanup, legal, investigative, monitoring costs
         and related costs, the costs of removal, transportation and disposal of
         any and all  Hazardous  Materials  from all or any  portion of any Real
         Property Asset, costs required to take necessary precautions to protect
         against the release of Hazardous  Materials at, on, in,  about,  under,
         within,  near or in connection with the Real Property Assets in or into
         the air, soil,  surface water,  ground water, or soil vapor, any public
         domain,  or any  surrounding  areas,  and costs incurred to comply,  in
         connection  with all or any portion of the Real Property  Assets,  with
         all  applicable  laws with  respect to Hazardous  Materials),  (iv) the
         reversal or withdrawal of any provisional  credits granted by the Agent
         upon the transfer of funds from lock box,  bank  agency,  concentration
         accounts or otherwise under any cash management  arrangements  with any


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         Credit Party or in connection  with the  provisional  honoring of funds
         transfers,  checks  or  other  items,  (v)  any  action  taken  by such
         Indemnitee in accordance with instructions  given to such Indemnitee by
         Electronic  Communications,  whether arising out of any  investigation,
         litigation  or proceeding  brought by such Credit  Party,  by others on
         behalf of such Credit Party,  by any third party or by any  successors,
         or assigns such Credit Party and  notwithstanding the fact that (A) the
         instructions  received by such Indemnitee might have been  unauthorized
         by such Credit Party or (B) such Indemnitee  might have  misinterpreted
         said instructions or made any other error, mistake or omission,  absent
         gross  negligence  or  willful  misconduct,   or  (vi)  any  actual  or
         prospective claim  (including,  but not limited to, claims with respect
         to wrongful death, personal injury or damage to property),  litigation,
         investigation,  Environmental  Actions or proceeding relating to any of
         the foregoing,  whether based on contract, tort or any other theory and
         regardless of whether any Indemnitee is a party thereto,  including any
         actual or alleged  infringement  of any patent,  copyright,  trademark,
         service  mark or similar  right of any Credit  Party  comprised  in the
         Collateral;   PROVIDED  that  such  indemnity  shall  not,  as  to  any
         Indemnitee,  be  available  to the  extent  that such  losses,  claims,
         damages,  liabilities or related  expenses are determined by a court of
         competent  jurisdiction  by final and  nonappealable  judgment  to have
         resulted  from the  gross  negligence  or  willful  misconduct  of such
         Indemnitee.

                  (c) To the  extent  that the  Credit  Parties  fail to pay any
         amount  required to be paid by them to the Agent under paragraph (a) or
         (b) of this Section 11.3,  each Lender  severally  agrees to pay to the
         Agent such Lender's  Applicable  Percentage  (determined as of the time
         that the  applicable  unreimbursed  expense  or  indemnity  payment  is
         sought) of such unpaid  amount.  To the extent that the Credit  Parties
         fail  to pay any  amount  required  to be  paid by them to the  Issuing
         Lender under  paragraph  (a) or (b) of this Section  11.3,  each Lender
         severally agrees to pay to the Issuing Lender such Lender's  Applicable
         Percentage (determined as of the time that the applicable  unreimbursed
         expense or indemnity payment is sought) of such unpaid amount.

                  (d) TO THE EXTENT  PERMITTED BY  APPLICABLE  LAW,  NONE OF THE
         CREDIT PARTIES SHALL ASSERT,  AND EACH CREDIT PARTY HEREBY WAIVES,  ANY
         CLAIM AGAINST ANY INDEMNITEE,  ON ANY THEORY OF LIABILITY, FOR SPECIAL,
         INDIRECT,  CONSEQUENTIAL  OR PUNITIVE  DAMAGES (AS OPPOSED TO DIRECT OR
         ACTUAL DAMAGES)  ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF,
         THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY AGREEMENT OR INSTRUMENT
         CONTEMPLATED HEREBY OR THEREBY,  THE TRANSACTIONS  CONTEMPLATED HEREBY,
         ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF.

                  (e) All amounts due under this  Section  11.3 shall be payable
         promptly after written demand therefor.


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                  (f) In the  event  that any  investigation,  site  monitoring,
         containment, clean-up, removal, transportation,  disposal, restoration,
         reporting,  or sampling  with respect to  Hazardous  Materials or soil,
         water,  tanks,  drums or other  materials  which  contain or  contained
         Hazardous   Materials  (a  "REMEDIAL  WORK")  is  necessary  under  any
         applicable  local,  state or federal law or  regulation,  any  judicial
         order,  or by any  governmental  or  non-governmental  entity or Person
         because of, or in  connection  with,  the  current or future  presence,
         suspected  presence,  release or suspected release or threat of release
         of Hazardous Materials in or into the air, soil, ground water,  surface
         water or soil vapor at, on,  about,  under,  within,  near,  from or in
         connection with any Real Property Asset (or any portion  thereof),  the
         Credit Parties shall promptly commence,  or cause to be commenced,  and
         thereafter diligently prosecute to completion,  all such Remedial Work.
         All Remedial Work shall be performed by licensed contractors  qualified
         to perform such work under applicable federal, state and local law. All
         Environmental  Costs related to such Remedial Work shall be paid by the
         Credit Parties including, without limitation,  reasonable Environmental
         Costs incurred by any  Indemnitee in connection  with the monitoring or
         review of such Remedial Work by the Indemnitee or a third party engaged
         by  Indemnitee.  In the event the Credit Parties shall fail to promptly
         commence, or cause to be commenced,  or fail to diligently prosecute to
         completion,  such  Remedial  Work,  the  Agent  may,  but  shall not be
         required  to,  cause  such  Remedial  Work  to  be  performed  and  all
         Environmental Costs shall become an Environmental Liability hereunder.

         11.4.  SUCCESSORS AND ASSIGNS.

                  (a) The provisions of this Agreement shall be binding upon and
         inure  to the  benefit  of the  parties  hereto  and  their  respective
         successors and assigns  permitted  hereby,  except that no Credit Party
         may  assign or  otherwise  transfer  any of its  rights or  obligations
         hereunder  without  the prior  written  consent of each  Lender and the
         Agent (and any attempted  assignment  or transfer  without such consent
         shall  be null and  void).  Nothing  in this  Agreement,  expressed  or
         implied,  shall be construed to confer upon any Person  (other than the
         parties  hereto,  their  respective  successors  and assigns  permitted
         hereby and, to the extent expressly  contemplated  hereby,  the Related
         Parties of the Agent, the Issuing Lender, the Canadian Lender, the Cash
         Management Bank and the Lenders) any legal or equitable  right,  remedy
         or claim under or by reason of this  Agreement.

                  (b) Each  Lender may at any time and from time to time  assign
         to one or more assignees all or a portion of its rights and obligations
         under  this  Agreement  (including  all or a portion  of the  Revolving
         Credit Commitment and the Loans at the time owing to it); PROVIDED that
         for any assignment:

                           (i) except in the case of an  assignment  to a Lender
                  prior to such  assignment  or an Affiliate of such a Lender or
                  an Approved  Fund (in which case,  the  assignee  and assignor
                  Lenders shall give notice of the assignment to the Agent), the


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                  Borrower and the Agent (and,  in the case of an  assignment of
                  all or a portion of a Commitment  or any Lender's  obligations
                  in respect of its Total LC Exposure,  the Issuing Lender) each
                  must give its prior written consent to such assignment  (which
                  consent  shall  not  be  unreasonably  withheld,   delayed  or
                  conditioned),

                           (ii) except in the case of an  assignment to a Lender
                  or an Affiliate or Approved  Fund of a Lender or an assignment
                  of the  entire  remaining  amount  of the  assigning  Lender's
                  aggregate Commitments, the aggregate amount of the Commitments
                  of the  assigning  Lender  subject  to  each  such  assignment
                  (determined as of the date the Assignment and Acceptance  with
                  respect to such  assignment  is  delivered to the Agent) shall
                  not be less than $5,000,000  unless the Borrower and the Agent
                  otherwise consent,

                           (iii) each Lender shall assign its  Revolving  Credit
                  Commitment,  Revolving  Loans,  and  Term  Loan  in  the  same
                  proportions, such that after giving effect to such assignment,
                  the Assignor's  Applicable  Percentage of the Revolving Credit
                  Commitments  and  Revolving  Loans  shall  be the  same as the
                  Assignor's Applicable Percentage of the outstanding Term Loan,
                  and the  Assignee's  Applicable  Percentage  of the  Revolving
                  Credit  Commitments  and Revolving  Loans shall be the same as
                  the Assignee's  Applicable  Percentage of the outstanding Term
                  Loan,

                           (iv) the parties to each assignment shall execute and
                  deliver to the Agent an Assignment and Acceptance, and, unless
                  such  assignment  is to a Lender or its  Affiliate or Approved
                  Fund,  shall pay a processing and  recordation  fee of $3,500,
                  and

                           (v) the assignee,  if it shall not be a Lender, shall
                  deliver to the Agent an Administrative Questionnaire;

                  PROVIDED  further that any consent of the  Borrower  otherwise
         required  under this  paragraph  shall not be  required  if an Event of
         Default has occurred and is continuing or in the event of an assignment
         to an existing Lender.

                  (c) Upon acceptance and recording pursuant to paragraph (e) of
         this Section 11.4,  from and after the effective date specified in each
         Assignment and  Acceptance,  the assignee  thereunder  shall be a party
         hereto and, to the extent of the interest  assigned by such  Assignment
         and Acceptance,  have the rights and obligations of a Lender under this
         Agreement,  and the assigning Lender thereunder shall, to the extent of
         the interest  assigned by such Assignment and  Acceptance,  be released
         from its  obligations  under  this  Agreement  (and,  in the case of an
         Assignment and Acceptance covering all of the assigning Lender's rights
         and obligations  under this Agreement,  such Lender shall cease to be a
         party  hereto but shall  continue  to be  entitled  to the  benefits of


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         Sections 2.10,  2.11 and 11.3 and subsection  2.3(e)).  Notwithstanding
         anything therein to the contrary, no Approved Fund shall be entitled to
         receive any  greater  amount  pursuant  to  Sections  2.10 and 2.11 and
         subsection  2.3(e) than the transferor  Lender would have been entitled
         to receive in respect of the  assignment  effected  by such  transferor
         Lender had no  assignment  occurred.  Any  assignment  or transfer by a
         Lender of rights or  obligations  under  this  Agreement  that does not
         comply with  paragraph  (b) of this  Section  11.4 shall be treated for
         purposes of this Agreement as a sale by such Lender of a  participation
         in such rights and obligations in accordance with paragraph (f) of this
         Section.

                  (d) The  Agent,  acting  for this  purpose  as an agent of the
         Borrower, shall maintain at one of its offices in Boston, Massachusetts
         a copy of each Assignment and Acceptance delivered to it and a register
         for the recordation of the names and addresses of the Lenders,  and the
         Commitment of, and principal  amount of the Loans and LC  Disbursements
         owing to,  each Lender  pursuant to the terms  hereof from time to time
         (the "REGISTER").  The entries in the Register shall be conclusive, and
         the Borrower,  the Agent,  the Issuing Lender and the Lenders may treat
         each  Person  whose name is recorded  in the  Register  pursuant to the
         terms hereof as a Lender  hereunder for all purposes of this Agreement,
         notwithstanding notice to the contrary. The Register shall be available
         for  inspection by the Borrower,  the Issuing  Lender and any Lender or
         the Agent, at any reasonable time and from time to time upon reasonable
         prior notice.

                  (e)  Upon  its  receipt  of a duly  completed  Assignment  and
         Acceptance  executed by an assigning  Lender and an assignee,  together
         with each Note subject to such  assignment,  the  assignee's  completed
         Administrative  Questionnaire  (unless the assignee  shall already be a
         Lender  hereunder),  the processing and  recordation fee referred to in
         paragraph  (b) of this  Section  11.4 and any  written  consent to such
         assignment  required by paragraph (b) of this Section  11.4,  the Agent
         shall accept such  Assignment and  Acceptance,  record the  information
         contained therein in the Register and give prompt notice thereof to the
         Borrower  and  the  Lenders  (other  than  the  assigning  Lender).  No
         assignment  shall be effective for purposes of this Agreement unless it
         has been recorded in the Register as provided in this paragraph. Within
         five (5) Business Days after receipt of such notice,  the Borrower,  at
         its own expense,  shall  execute and deliver to the Agent,  in exchange
         for each surrendered  Note, a new Note to the order of such assignee in
         an amount equal to the amount assumed by such assignee pursuant to such
         Assignment  and  Acceptance  and, if the assigning  Lender has retained
         some portion of its obligations  hereunder,  a new Note to the order of
         the  assigning  Lender in an amount equal to the amount  retained by it
         hereunder.  Such new Notes shall provide that they are replacements for
         the surrendered Notes, shall be in an aggregate  principal amount equal
         to the aggregate  principal amount of the surrendered  Notes,  shall be
         dated the effective  date of such  Assignment  and Acceptance and shall
         otherwise be in substantially the form of the assigned Notes.


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                  (f) Any Lender  may,  without  the consent of or notice to the
         Borrower,  the Agent or the Issuing Lender,  sell participations to one
         or more banks or other entities (a  "PARTICIPANT")  in all or a portion
         of such Lender's rights and obligations under this Agreement (including
         all or a  portion  of its  Commitments  and  the  Loans  owing  to it);
         PROVIDED that (i) such Lender's  obligations under this Agreement shall
         remain unchanged,  (ii) such Lender shall remain solely  responsible to
         the other parties hereto for the  performance of such  obligations  and
         (iii) the Borrower, the Agent, the Issuing Lender and the other Lenders
         shall  continue  to deal  solely  and  directly  with  such  Lender  in
         connection  with  such  Lender's  rights  and  obligations  under  this
         Agreement. Any agreement or instrument pursuant to which a Lender sells
         such a  participation  shall  provide that such Lender shall retain the
         sole right to enforce  this  Agreement  and to approve  any  amendment,
         modification  or waiver of any  provision of this  Agreement;  PROVIDED
         that such  agreement  or  instrument  may provide that such Lender will
         not,  without the consent of the  Participant,  agree to any amendment,
         modification  or waiver  described  in the  first  proviso  to  Section
         11.2(b), or in Section 11.2(c), that affects such Participant.  Subject
         to paragraph  (g) of this Section 11.4,  the Borrower  agrees that each
         Participant shall be entitled to the benefits of Sections 2.10 and 2.11
         and subsection 2.3(e) to the same extent as if it were a Lender and had
         acquired its interest by  assignment  pursuant to paragraph (b) of this
         Section 11.4.

                  (g) A Participant shall not be entitled to receive any greater
         payment  under  Section 2.10 or 2.11 than the  applicable  Lender would
         have been entitled to receive with respect to the participation sold to
         such  Participant,  unless  the  sale  of  the  participation  to  such
         Participant  is made  with the  Borrower's  prior  written  consent.  A
         Participant  that would be a Foreign  Lender if it were a Lender  shall
         not be entitled to the  benefits of Section 2.11 unless the Borrower is
         notified  of the  participation  sold  to  such  Participant  and  such
         Participant  agrees,  for the benefit of the  Borrower,  to comply with
         subsection 2.11(e) as though it were a Lender.

                  (h) Any  Lender  may at any time  pledge or assign a  security
         interest in all or any portion of its rights  under this  Agreement  to
         secure  obligations  of such  Lender,  including  any  such  pledge  or
         assignment to a Federal  Reserve Bank, and this Section shall not apply
         to any such pledge or assignment of a security interest;  PROVIDED that
         no such pledge or  assignment  of a security  interest  shall release a
         Lender from any of its  obligations  hereunder or  substitute  any such
         assignee for such Lender as a party hereto.

                  (i)   Anything   in  this   Section   11.4  to  the   contrary
         notwithstanding,  no Lender may assign or  participate  any interest in
         any  Loan  held  by it  hereunder  to any  Credit  Party  or any of its
         Affiliates or Subsidiaries without the prior consent of each Lender and
         the Agent.

                  (j) A Lender may furnish any information concerning any Credit
         Party or any of its  Subsidiaries in the possession of such Lender from
         time to time  to  assignees  and  participants  (including  prospective
         assignees and  participants) subject,   however,  to and so long as the


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         recipient  agrees in writing to be bound by, the  provisions of Section
         11.13. In addition,  the Agent may furnish any  information  concerning
         any Credit  Party,  any of its  Subsidiaries,  or any  Affiliate in the
         Agent's possession to any Affiliate of the Agent, subject,  however, to
         the  provisions of Section  11.13.  The Credit Parties shall assist any
         Lender in effectuating any assignment or participation pursuant to this
         Section 11.4  (including  during  syndication)  in whatever manner such
         Lender reasonably deems necessary,  including participation in meetings
         with prospective transferees.

                  (k) If any  assignee  Lender  is an  Affiliate  of the  Credit
         Parties, then any such assignee Lender shall have no right to vote as a
         Lender  hereunder or under any of the other Loan Documents for purposes
         of  granting  consents  or  waivers  or for  purposes  of  agreeing  to
         amendments or other  modifications  to any of the Loan Documents or for
         purposes of making  requests to the Agent  pursuant to Section 9.1, and
         the  determination  of the Required  Lenders  shall for all purposes of
         this  Agreement and the other Loan  Documents be made without regard to
         such assignee  Lender's  interest in any of the Loans or  Reimbursement
         Obligations. If any Lender sells a participating interest in any of the
         Loans  or  Reimbursement   Obligations  to  a  Participant,   and  such
         Participant  is any Credit Party or an Affiliate of such Credit  Party,
         then such transferor Lender shall promptly notify the Agent of the sale
         of such participation.  A transferor Lender shall have no right to vote
         as a Lender  hereunder  or under any of the other  Loan  Documents  for
         purposes of granting consents or waivers or for purposes of agreeing to
         amendments  or  modifications  to  any  of the  Loan  Documents  or for
         purposes of making requests to the Agent pursuant to Section 9.1 to the
         extent  that such  participation  is  beneficially  owned by any Credit
         Party or any Affiliate of such Credit Party,  and the  determination of
         the Required  Lenders shall for all purposes of this  Agreement and the
         other Loan  Documents  be made  without  regard to the interest of such
         transferor  Lender in the  Loans or  Reimbursement  Obligations  to the
         extent of such participation.

                  (l) Notwithstanding anything to the contrary contained in this
         subsection  11.4,  any  Lender  (a  "GRANTING  LENDER")  may grant to a
         special  purpose  funding  vehicle (an "SPC") of such Granting  Lender,
         identified  as such in  writing  from  time  to time  delivered  by the
         Granting  Lender to the Agent and the  Credit  Parties,  the  option to
         provide  to such  Credit  Party  all or any part of any Loan  that such
         Granting  Lender  would  otherwise  be obligated to make to such Credit
         Party  pursuant to this  Agreement,  PROVIDED  that (i) nothing  herein
         shall  constitute  a commitment  to make any Loan by any SPC,  (ii) the
         Granting   Bank's   obligations   under  this  Agreement  shall  remain
         unchanged,  (iii) the Granting  Lender  should retain the sole right to
         enforce this  Agreement and to approve any amendment,  modification  or
         waiver of any provision of this Agreement and (iv) if an SPC elects not
         to exercise  such option or otherwise  fails to provide all or any part
         of such Loan, the Granting  Lender shall be obligated to make such Loan
         pursuant to the terms hereof.  The making of a Loan by an SPC hereunder
         shall utilize the Commitment of the Granting Lender to the same extent,


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         and as if,  such Loan  were made by the  Granting  Lender.  Each  party
         hereto  hereby  agrees  that no SPC  shall be  liable  for any  expense
         reimbursement,  indemnity  or  similar  payment  obligation  under this
         Agreement  (all  liability  for which shall  remain  with the  Granting
         Lender).  In  furtherance  of the  foregoing,  each party hereto hereby
         agrees  (which   agreement   shall  survive  the  termination  of  this
         Agreement)  that,  prior to the date that is one year and one day after
         the  later  of (i)  the  payment  in  full  of all  outstanding  senior
         indebtedness  of any  SPC and  (ii)  the  Maturity  Date,  it will  not
         institute  against,  or join any other Person in  instituting  against,
         such SPC any  bankruptcy,  reorganization,  arrangement,  insolvency or
         liquidation  proceedings or similar  proceedings  under the laws of the
         United   States  of  America  or  any  State   thereof.   In  addition,
         notwithstanding  anything to the contrary  contained in this subsection
         11.4(l),  any SPC may (i) with  notice  to, but  (except  as  specified
         below)  without the prior  written  consent of, any Credit Party or the
         Agent and without paying any  processing fee therefor,  assign all or a
         portion of its interests in any Loans to its Granting  Lender or to any
         financial  institutions  (consented  to by the Agent and, so long as no
         Default or Event of Default has occurred and is continuing, such Credit
         Party,  which consents shall not be  unreasonably  withheld or delayed)
         providing  liquidity and/or credit  facilities to or for the account of
         such  SPC to  fund  the  Loans  made  by  such  SPC or to  support  the
         securities  (if any)  issued  by such SPC to fund  such  Loans and (ii)
         disclose on a confidential basis any non-public information relating to
         its Loans (other than financial  statements referred to in Sections 5.4
         or 7.1) to any rating agency,  commercial paper dealer or provider of a
         surety, guarantee or credit or liquidity enhancement to such SPC. In no
         event  shall any Credit  Party be  obligated  to pay to an SPC that has
         made a Loan any greater  amount than such Credit  Party would have been
         obligated to pay under this  Agreement if the Granting  Lender had made
         such Loan. An amendment to this subsection  11.4(l) without the written
         consent of an SPC shall be ineffective  insofar as it alters the rights
         and obligations of such SPC.

         11.5.  SURVIVAL.   All  covenants,   agreements,   representations  and
warranties made by the Credit Parties and  Subsidiaries  herein and in the other
Loan  Documents,  and in the  certificates  or other  instruments  delivered  in
connection  with or pursuant  to this  Agreement  and the other Loan  Documents,
shall be  considered  to have been relied upon by the other  parties  hereto and
shall survive the  execution  and delivery of this  Agreement and the other Loan
Documents  and the making of any Loans and  issuance  of any  Letters of Credit,
regardless  of any  investigation  made by any such other party or on its behalf
and  notwithstanding  that the Agent,  the Issuing Lender or any Lender may have
had notice or knowledge of any Default or incorrect  representation  or warranty
at the time any credit is extended  hereunder,  and shall continue in full force
and effect so long as the  principal  of or any accrued  interest on any Loan or
any fee or any other  Obligation  payable under this Agreement or the other Loan
Documents is outstanding  and unpaid or any Letter of Credit is outstanding  and
so long as the  Commitments  have not expired or  terminated.  The provisions of
Sections 2.10,  2.11,  10.3,  and 11.4 and  subsection  2.3(e) shall survive and
remain  in  full  force  and  effect  regardless  of  the  consummation  of  the
transactions  contemplated hereby, the repayment of the Loans, the expiration or


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termination of the Letters of Credit and the  Commitments or the  termination of
this Agreement or any other Loan Document or any provision hereof or thereof.

         11.6.    COUNTERPARTS;    INTEGRATION;    REFERENCES    TO   AGREEMENT;
EFFECTIVENESS.  This Agreement may be executed in counterparts (and by different
parties  hereto on different  counterparts),  each of which shall  constitute an
original,  but all of  which  when  taken  together  shall  constitute  a single
contract.  This  Agreement,  the other Loan  Documents  and any separate  letter
agreements  with respect to fees payable to the Agent or its counsel  constitute
the entire contract among the parties  relating to the subject matter hereof and
supersede any and all previous agreements and  understandings,  oral or written,
relating to the subject matter hereof. Whenever there is a reference in any Loan
Document  or UCC  Financing  Statement  to the "CREDIT  AGREEMENT"  to which the
Agent,  the Lenders and the Credit Parties are parties,  such reference shall be
deemed to be made to this Agreement among the parties hereto. Except as provided
in Section 6.1, this  Agreement  shall become  effective when it shall have been
executed by the Agent and when the Agent shall have received counterparts hereof
which,  when taken  together,  bear the  signatures of each of the other parties
hereto,  and  thereafter  shall be binding  upon and inure to the benefit of the
parties  hereto and their  respective  successors  and  assigns.  Delivery of an
executed  counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.

         11.7. SEVERABILITY. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction,  be
ineffective  to the extent of such  invalidity,  illegality or  unenforceability
without  affecting the validity,  legality and  enforceability  of the remaining
provisions hereof; and the invalidity of a particular  provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

         11.8.  RIGHT OF SETOFF.  Each Credit Party hereby  grants to the Agent,
the Cash  Management  Bank and each Lender that from time to time  maintains any
deposit  accounts,  holds or controls  any funds,  collateral  or  property,  or
otherwise  becomes  indebted  to the Credit  Parties a security  interest in all
deposits (general or special, time or demand, provisional or final) and funds at
any time held and other  indebtedness  at any time owing by the Agent,  the Cash
Management  Bank or any Lender to or for the credit or the account of any Credit
Party as security for the Obligations,  and the Credit Parties hereby agree that
if an Event of Default shall have  occurred and be  continuing,  the Agent,  the
Cash Management Bank and each Lender are hereby  authorized at any time and from
time to time, to the fullest  extent  permitted by law, to set off and apply any
and all deposits (general or special,  time or demand,  provisional or final) or
other funds, securities or other property of the Credit Parties at any time held
and other  indebtedness at any time owing by the Agent, the Cash Management Bank
or such Lender to or for the credit or the account of any Credit  Party  against
any and all of the Obligations,  irrespective of whether or not the Agent or the
Lenders shall have made any demand under this  Agreement and although any of the
Obligations may be unmatured.  The rights of the Agent, the Canadian Lender, the
Cash  Management Bank and each Lender under this Section 11.8 are in addition to
any other  rights and  remedies  (including  other  rights of setoff)  which the


                                      152
<PAGE>

Agent,  the Cash Management Bank or any such Lender may have. ANY AND ALL RIGHTS
TO REQUIRE  THE CASH  MANAGEMENT  BANK OR ANY LENDER TO  EXERCISE  ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER  COLLATERAL  WHICH  SECURES THE  OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH  DEPOSITS,  CREDITS
OR OTHER  PROPERTY OF ANY CREDIT  PARTY ARE HEREBY  KNOWINGLY,  VOLUNTARILY  AND
IRREVOCABLY WAIVED. Each of the Lenders agree with each other Lender that (a) if
an amount to be set off is to be applied to  Indebtedness of any Credit Party to
such Lender, other than Indebtedness  evidenced by the Notes held by such Lender
or constituting Reimbursement Obligations owed to such Lender, such amount shall
be applied ratably to such other Indebtedness and to the Indebtedness  evidenced
by all such Notes held by such Lender or constituting  Reimbursement Obligations
owed to such Lender, and (b) if such Lender shall receive from any Credit Party,
whether by  voluntary  payment,  exercise of the right of setoff,  counterclaim,
cross  action,  enforcement  of the claim  evidenced  by the  Notes  held by, or
constituting  Reimbursement  Obligations  owed to,  such  Lender by  proceedings
against such Credit Party at law or in equity or by proof thereof in bankruptcy,
reorganization,  liquidation, receivership or similar proceedings, or otherwise,
and shall  retain  and  apply to the  payment  of the Note or Notes  held by, or
Reimbursement  Obligations  owed to,  such  Lender  any  amount in excess of its
ratable  portion of the payments  received by all of the Lenders with respect to
the Notes held by, and  Reimbursement  Obligations  owed to, all of the Lenders,
such Lender will make such disposition and  arrangements  with the other Lenders
with respect to such excess, either by way of distribution, PRO TANTO assignment
of claims,  subrogation or otherwise as shall result in each Lender receiving in
respect  of the  Notes  held by it or  Reimbursement  Obligations  owed it,  its
proportionate payment as contemplated by this Agreement; PROVIDED that if all or
any part of such excess payment is thereafter  recovered from such Lender,  such
disposition and  arrangements  shall be rescinded and the amount restored to the
extent of such recovery, but without interest.

         11.9.  SUBORDINATION BY CREDIT PARTIES. The Credit Parties hereby agree
that all present and future  Indebtedness  of any Credit Party to another Credit
Party ("INTERCOMPANY  INDEBTEDNESS") shall be subordinate and junior in right of
payment and  priority to the  Obligations,  and each Credit  Party agrees not to
make, demand,  accept or receive any payment in respect of any present or future
Intercompany Indebtedness,  including,  without limitation, any payment received
through the exercise of any right of setoff, counterclaim or cross claim, or any
collateral  therefor,  unless and until such time as the Obligations  shall have
been indefeasibly paid in full;  PROVIDED that, so long as no Default shall have
occurred and be continuing  and no Default shall be caused  thereby,  the Credit
Parties may make and receive such payments as shall be customary in the ordinary
course of the  Credit  Parties'  business.  If,  notwithstanding  the  foregoing
sentence,  any Credit  Party  shall  collect,  enforce or receive any amounts in
respect of such indebtedness while any Obligations are still  outstanding,  such
amounts  shall be  collected,  enforced  and  received by such  Credit  Party as
trustee  for the  Lenders  and the Agent and be paid over to the Agent,  for the
benefit of the Lenders  and the Agent,  on account of the  Obligations,  without
affecting  in any manner the  liability  of such  Credit  Party  under the other


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<PAGE>

provisions of this Agreement.  Without in any way limiting the foregoing, in the
event  of  any  insolvency  or  bankruptcy  proceedings,  or  any  receivership,
liquidation,  reorganization,  dissolution or other similar proceedings relative
to any Credit  Party or to its  businesses,  properties  or assets,  the Lenders
shall be entitled to receive payment in full of all of the  Obligations,  before
any Credit  Party  shall be  entitled  to receive  any payment in respect of any
present or future Intercompany Indebtedness.

         11.10.  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

                  (a) This Agreement  shall be construed in accordance  with and
         governed by the law of The Commonwealth of Massachusetts.

                  (b) Each party hereto hereby  irrevocably and  unconditionally
         submits, for itself and its property, to the nonexclusive  jurisdiction
         of the courts of The  Commonwealth of  Massachusetts  and of the United
         States  District  Court  for the  District  of  Massachusetts,  and any
         appellate court from any thereof,  in any action or proceeding  arising
         out of or relating to this  Agreement or the other Loan  Documents,  or
         for recognition or enforcement of any judgment, and each of the parties
         hereto hereby irrevocably and unconditionally agrees that all claims in
         respect of any such action or proceeding may be heard and determined in
         such  Massachusetts  court (or, to the extent permitted by law, in such
         Federal court). Each of the parties hereto agrees that a final judgment
         in any  such  action  or  proceeding  shall  be  conclusive  and may be
         enforced in other jurisdictions by suit on the judgment or in any other
         manner  provided by law.  Nothing in this  Agreement  shall  affect any
         right that the Agent, the Issuing Lender, the Canadian Lender. the Cash
         Management Bank or any Lender may otherwise have to bring any action or
         proceeding  relating to this Agreement  against any Credit Party or any
         of  its   Subsidiaries   or  its   properties  in  the  courts  of  any
         jurisdiction.

                  (c) Each party hereto hereby  irrevocably and  unconditionally
         waives, to the fullest extent it may legally and effectively do so, any
         objection  which it may now or hereafter have to the laying of venue of
         any suit,  action or  proceeding  arising  out of or  relating  to this
         Agreement  or the other  Loan  Documents  in any court  referred  to in
         paragraph (b) of this Section 11.10.  Each of the parties hereto hereby
         irrevocably waives, to the fullest extent permitted by law, the defense
         of  an  inconvenient  forum  to  the  maintenance  of  such  action  or
         proceeding in any such court.

                  (d)  Each  party to this  Agreement  irrevocably  consents  to
         service of process in the manner  provided for notices in Section 11.1.
         Nothing in this  Agreement  will  affect the right of any party to this
         Agreement to serve process in any other manner permitted by law.

         11.11.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES,  TO THE
FULLEST EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING  DIRECTLY OR INDIRECTLY  ARISING OUT OF OR RELATING


                                      154
<PAGE>

TO THIS  AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY  (WHETHER BASED ON
CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES  THAT NO
REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,  SEEK
TO  ENFORCE  THE  FOREGOING  WAIVER AND (B)  ACKNOWLEDGES  THAT IT AND THE OTHER
PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS  AGREEMENT  BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11.

         11.12.  HEADINGS  AND  DRAFTING.  Article and Section  headings and the
Table of Contents used herein are for  convenience  of reference  only,  are not
part of this  Agreement  and shall not affect the  construction  of, or be taken
into consideration in interpreting,  this Agreement.  Each of the parties hereto
agrees that no party hereto shall be deemed to be the drafter of this Agreement.

         11.13.  CONFIDENTIALITY.   Each  Lender  agrees  to  keep  confidential
information  obtained  by it  pursuant  hereto  and  the  other  Loan  Documents
confidential in accordance with Lender's customary  practices and agrees that it
will only use such information in connection with the transactions  contemplated
by this  Agreement  and not disclose any of such  information  other than (a) to
such  Lender's  employees,  representatives,   directors,  attorneys,  auditors,
agents,  professional  advisors,  trustees or Affiliates  who are advised of the
confidential nature of such information or to any direct or indirect contractual
counterparty in swap agreements or such contractual counterparty's  professional
advisor (so long as such  contractual  counterparty or  professional  advisor to
such  contractual  counterparty  agrees  to be bound by the  provisions  of this
Section  11.13),  (b) to the extent such  information  presently is or hereafter
becomes available to such Lender on a non-confidential  basis from any source of
such information that is in the public domain at the time of disclosure,  (c) to
the extent disclosure is required by law (including  applicable securities law),
regulation,  subpoena or judicial order or process (PROVIDED that notice of such
requirement  or order shall be promptly  furnished to the  Borrower  unless such
notice is legally  prohibited)  or  requested  or required by bank,  securities,
insurance or investment  company  regulators  or auditors or any  administrative
body or commission to whose jurisdiction such Lender may be subject,  (d) to any
rating  agency  to the  extent  required  in  connection  with any  rating to be
assigned  to such  Lender,  (e) to  assignees  or  participants  or  prospective
assignees  or  participants  who  agree to be bound  by the  provisions  of this
Section  11.13,  (f) to the extent  required in connection  with any  litigation
between  any  Credit  Party and any  Lender  with  respect  to the Loans or this
Agreement and the other Loan Documents or (g) with the Borrower's  prior written
consent.  Notwithstanding  anything herein to the contrary,  the  Administrative
Agent and each Lender (and any of their respective employees, representatives or
other  agents) may disclose to any and all persons,  without  limitation  of any
kind, any information with respect to U.S. federal income tax treatment and U.S.
federal  income tax structure of the  transactions  contemplated  hereby and all
materials  of any kind  (including  opinions  or other  tax  analyses)  that are
provided  to the  Administrative  Agent  or such  Lender  relating  to such  tax
treatment and tax structure.


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<PAGE>

                                   ARTICLE 12.

                        SECOND AMENDMENT AND RESTATEMENT

         12.1.  THIS  AGREEMENT  SHALL BECOME  EFFECTIVE  UPON THE EXECUTION AND
DELIVERY BY THE REPRESENTATIVE PARTIES HERETO.

         12.2. ADDITIONAL REPRESENTATIONS,  RATIFICATIONS AND ACKNOWLEDGMENTS AS
OF THE SECOND AMENDMENT AND RESTATEMENT EFFECTIVE DATE.

                  (a) As of the Second Amendment and Restatement Effective Date,
         each Credit Party  represents and warrants to the Lenders,  the Issuing
         Lender and the Agent,  as to itself and each other Credit  Party,  that
         the  representations  and warranties  contained in Section 5 herein are
         true  and  correct  at and as of the  date  made  and as of the  Second
         Amendment and Restatement  Effective Date,  except to the extent (i) of
         changes resulting from  transactions  contemplated or permitted by this
         Agreement,   as  amended  and  restated  herein,  and  the  other  Loan
         Documents, (ii) of changes occurring in the ordinary course of business
         that singly or in the aggregate are not  materially  adverse,  (iii) of
         changes  disclosed  to and  approved by the Agent and/or the Lenders or
         (iv) that such  representations  and warranties  relate expressly to an
         earlier date.

                  (b) As of the Second Amendment and Restatement Effective Date,
         the Credit Parties  hereby ratify and confirm all of their  Obligations
         to the Lenders, including, without limitation, the Loans, the Notes and
         the other Loan  Documents,  and the Credit  Parties hereby affirm their
         absolute  and   unconditional   promise  to  pay  to  the  Lenders  all
         Obligations  under this Agreement.  Each Guarantor hereby  acknowledges
         and consents to this  Agreement,  as amended and restated  hereby,  and
         agrees that its  Guarantee  remains in full force and effect,  and each
         such Guarantor  confirms and ratifies all of its Guarantee  obligations
         under this Agreement and the other Loan  Documents.  The Credit Parties
         hereby confirm that the Obligations or Guarantee obligations under this
         Agreement,  as the case may be, are and remain secured pursuant to this
         Agreement  and the  Collateral  Documents  and  pursuant  to all  other
         instruments and documents  executed and delivered by such Credit Party,
         as security for the  Obligations  or Guarantee  obligations  under this
         Agreement, as the case may be.

                  (c) The Loan  Documents  and all  documents,  instruments  and
         agreements  related  thereto are hereby  ratified and  confirmed in all
         respects as of the Second Amendment and Restatement  Effective Date and
         shall continue in full force and effect.

         12.3.  ADDITIONAL  COVENANT AS OF THE SECOND  AMENDMENT AND RESTATEMENT
EFFECTIVE DATE.


                                      156
<PAGE>

                  The   Borrower   shall  pay  all  fees  and  expenses  of  the
         Administrative  Agent  in  connection  with  the  preparation  of  this
         Agreement and the transactions contemplated hereby, including,  without
         limitation,  the fees and  expenses  of counsel  to the  Administrative
         Agent.

                  [Remainder of page intentionally left blank]


























                                      157

<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed by their  respective  authorized  officers as of the day and year
first above written.

                                       BORROWER
                                       --------


                                       COLUMBUS MCKINNON CORPORATION

                                       By: /S/ Robert L. Montgomery
                                           -------------------------------
                                       Name:   Robert L. Montgomery
                                       Title:  Executive Vice President


                                       CANADIAN BORROWERS
                                       ------------------

                                       LARCO INDUSTRIAL SERVICES LTD

                                       By: /S/ Robert L. Montgomery
                                           -------------------------------
                                       Name:   Robert L. Montgomery
                                       Title:  Treasurer


                                       COLUMBUS MCKINNON LIMITED

                                       By: /S/ Robert L. Montgomery
                                           -------------------------------
                                       Name:   Robert L. Montgomery
                                       Title:  Assistant Treasurer


                                       GUARANTORS
                                       ----------

                                       YALE INDUSTRIAL PRODUCTS, INC.

                                       By: /S/ Robert L. Montgomery
                                           -------------------------------
                                       Name:   Robert L. Montgomery
                                       Title:  Treasurer


                                       CRANE EQUIPMENT & SERVICE, INC.

                                       By: /S/ Robert L. Montgomery
                                           -------------------------------
                                       Name:   Robert L. Montgomery
                                       Title:  Treasurer


<PAGE>


                                       AUDUBON WEST, INC.

                                       By: /S/ Robert L. Montgomery
                                           -------------------------------
                                       Name:   Robert L. Montgomery
                                       Title:  Treasurer


                                       AUDUBON EUROPE S.A.R.L.

                                       By: /S/ Robert L. Montgomery
                                           -------------------------------
                                       Name:   Robert L. Montgomery
                                       Title:  Manager



<PAGE>


                                       AGENT

                                       FLEET CAPITAL CORPORATION,
                                       as Administrative Agent

                                       By: /S/ Daniel P. Corcoran, Jr.
                                           -------------------------------
                                       Name:   Daniel P. Corcoran, Jr.
                                       Title:  Senior Vice President




<PAGE>


                                       ISSUING LENDER

                                       FLEET NATIONAL BANK,
                                       as Issuing Lender

                                       By: /S/ Daniel P. Corcoran, Jr.
                                           -------------------------------
                                       Name:   Daniel P. Corcoran, Jr.
                                       Title:  Authorized Officer


                                       CASH MANAGEMENT BANK

                                       FLEET NATIONAL BANK,
                                       as Cash Management Bank

                                       By: /S/ Daniel P. Corcoran, Jr.
                                           -------------------------------
                                       Name:   Daniel P. Corcoran, Jr.
                                       Title:  Authorized Officer




<PAGE>


                                       LENDER

                                       FLEET CAPITAL CORPORATION

                                       By: /S/ Daniel P. Corcoran, Jr.
                                           -------------------------------
                                       Name:   Daniel P. Corcoran, Jr.
                                       Title:  Senior Vice President




<PAGE>


                                       LENDER

                                       CITIZENS BANK OF PENNSYLVANIA

                                       By: /S/ Don Cmar
                                           ----------------------------
                                       Name:   Don Cmar
                                       Title:  Vice President



<PAGE>


                                       LENDER

                                       CONGRESS FINANCIAL CORPORATION (CENTRAL)


                                       By: /S/ Vicky Geist
                                           ----------------------------
                                       Name:   Vicky Geist
                                       Title:  Vice President



<PAGE>


                                       LENDER

                                       MANUFACTURERS AND TRADERS TRUST COMPANY


                                       By: /S/ Jeffrey P. Kenefick
                                           ----------------------------
                                       Name:   Jeffrey P. Kenefick
                                       Title:  Vice President


<PAGE>


                                       LENDER

                                       MERRILL LYNCH CAPITAL, A DIVISION OF
                                       MERRILL LYNCH BUSINESS FINANCIAL
                                       SERVICES INC.


                                       By: /S/ Nicola Richards
                                           ----------------------------
                                       Name:   Nicola Richards
                                       Title:  Assistant Vice President