CREDIT AGREEMENT

                            Dated as of June 30, 2000

                                      among

 VIDEO SERVICES CORPORATION, A DELAWARE CORPORATION, AND EACH OF THE DIRECT AND
  INDIRECT SUBSIDIARIES OF VIDEO SERVICES CORPORATION DESIGNATED AS "BORROWERS"
                         IN THE SIGNATURE PAGES HERETO,

                                  as Borrowers,

                   THE OTHER CREDIT PARTIES SIGNATORY HERETO,

                               as Credit Parties,

                            THE LENDERS PARTY HERETO,

                                   as Lenders,

                                       and

                      GENERAL ELECTRIC CAPITAL CORPORATION,

                                  as Term Agent

                                       and

                              Administrative Agent

                                       and

                          KEYBANK NATIONAL ASSOCIATION,

                                as Revolver Agent


<PAGE>
                                      viii



                                TABLE OF CONTENTS

                                                                           Page

1.  AMOUNT AND TERMS OF CREDIT..............................................2

   1.1   Credit Facilities..................................................2

   1.2   Letters of Credit..................................................6

   1.3   Prepayment.........................................................7

   1.4   Use of Proceeds...................................................10

   1.5   Interest and Applicable Margins...................................10

   1.6   Cash Management Systems...........................................14

   1.7   Fees..............................................................14

   1.8   Receipt of Payments...............................................15

   1.9   Application and Allocation of Payments............................15

   1.10  Loan Accounts and Accounting......................................16

   1.11  Indemnity.........................................................17

   1.12  Access............................................................18

   1.13  Taxes.............................................................19

   1.14  Capital Adequacy; Increased Costs; Illegality.....................20

   1.15  Single Loan.......................................................21

   1.16  Pro Rata Treatment................................................21

   1.17  Non-Receipt Of Funds By Applicable Agent..........................21

   1.18  Sharing Of Payments, Etc....... ..................................22

   1.19  Settlement Procedures.............................................23

2.  CONDITIONS PRECEDENT...................................................25

   2.1   Conditions to the Initial Loans...................................25

   2.2   Further Conditions to Each Loan...................................26

<PAGE>

3.  REPRESENTATIONS AND WARRANTIES.........................................27

   3.1   Corporate Existence; Compliance with Law..........................27

   3.2   Executive Offices; FEIN...........................................28

   3.3   Corporate Power, Authorization, Enforceable Obligations...........28

   3.4   Financial Statements and Projections..............................28

   3.5   Material Adverse Effect...........................................29

   3.6   Ownership of Property; Liens......................................30

   3.7   Labor Matters.....................................................30

   3.8   Ventures, Subsidiaries and Affiliates; Outstanding Stock and
         Indebtedness......................................................31

   3.9   Government Regulation.............................................31

   3.10  Margin Regulations................................................31

   3.11  Taxes.............................................................32

   3.12  ERISA.............................................................32

   3.13  No Litigation.....................................................33

   3.14  Brokers...........................................................33

   3.15  Intellectual Property.............................................33

   3.16  Full Disclosure...................................................33

   3.17  Environmental Matters.............................................34

   3.18  Insurance.........................................................35

   3.19  Deposit and Disbursement Accounts.................................35

   3.20  Government Contracts..............................................35

   3.21  Customer and Trade Relations......................................35

   3.22  Agreements and Other Documents....................................35

   3.23  Solvency..........................................................35

   3.24  Year 2000 Representations.........................................36

   3.27  Subordinated Debt.................................................36

   3.27  FCC Compliance....................................................36

<PAGE>

4.  FINANCIAL STATEMENTS AND INFORMATION...................................37

   4.1   Reports and Notices...............................................37

   4.2   Communication with Accountants....................................37

5.  AFFIRMATIVE COVENANTS..................................................37

   5.1   Maintenance of Existence and Conduct of Business..................37

   5.2   Payment of Obligations............................................38

   5.3   Books and Records.................................................38

   5.4   Insurance; Damage to or Destruction of Collateral.................38

   5.5   Compliance with Laws..............................................40

   5.6   Supplemental Disclosure...........................................40

   5.7   Intellectual Property.............................................41

   5.8   Environmental Matters.............................................41

   5.9   Landlords' Agreements, Mortgagee Agreements and Bailee Letters....41

   5.10  Interest Rate/Currency Fluctuations Protection....................42

   5.11  Further Assurances................................................42

   5.12  Agreements With Management........................................42

6.  NEGATIVE COVENANTS.....................................................43

   6.1   Mergers, Subsidiaries, Etc........................................43

   6.2   Investments; Loans and Advances...................................44

   6.3   Indebtedness......................................................44

   6.4   Employee Loans and Affiliate Transactions.........................45

   6.5   Capital Structure and Business....................................46

   6.6   Guaranteed Indebtedness...........................................46

   6.7   Liens.............................................................46

   6.8   Sale of Stock and Assets..........................................47

   6.9   ERISA.............................................................47

   6.10  Financial Covenants...............................................47

   6.11  Hazardous Materials...............................................48

   6.12  Sale-Leasebacks...................................................48

<PAGE>

   6.13  Cancellation of Indebtedness......................................48

   6.14  Restricted Payments...............................................48

   6.15  Change of Corporate Name or Location; Change of Fiscal Year.......48

   6.16  No Impairment of Intercompany Transfers...........................49

   6.17  No Speculative Transactions.......................................49

   6.18  Leases............................................................49

   6.19  Changes Relating to Subordinated Debt.............................49

   6.20  Credit Parties Other Than Borrowers...............................49

   6.21  Limitation On Capital Expenditures................................49

7.  Term...................................................................50

   7.1   Termination.......................................................50

   7.2   Survival of Obligations Upon Termination of Financing Arrangement.50

8.  EVENTS OF DEFAULT: RIGHTS AND REMEDIES.................................50

   8.1   Events of Default.................................................50

   8.2   Remedies..........................................................53

   8.3   Waivers by Credit Parties.........................................54

9.  ASSIGNMENTS AND PARTICIPATIONS.........................................54

   9.1   Assignments And Participations....................................54

10.  SUCCESSORS AND ASSIGNS................................................56

   10.1  Successors and Assigns............................................56

11.  MISCELLANEOUS.........................................................56

   11.1  Complete Agreement; Modification of Agreement.....................56

   11.2  Amendments and Waivers............................................57

   11.3  Fees and Expenses.................................................57

   11.4  No Waiver.........................................................58

   11.5  Remedies..........................................................59

   11.6  Severability......................................................59

   11.7  Conflict of Terms.................................................59

   11.8  Confidentiality...................................................59

   11.9  GOVERNING LAW.....................................................60

   11.10 Notices............ ..............................................61

<PAGE>

   11.11 Section Titles....................................................61

   11.12 Counterparts......................................................61

   11.13 WAIVER OF JURY TRIAL..............................................61

   11.14 Press Releases....................................................62

   11.15 Reinstatement.....................................................62

   11.16 Advice of Counsel.................................................62

   11.17 No Strict Construction............................................62

12. AGENTS.................................................................62

   12.1  Appointment, Powers And Immunities................................62

   12.2  Reliance By Agents................................................63

   12.3  Defaults..........................................................63

   12.4  Rights As A Lender................................................64

   12.5  Indemnification...................................................64

   12.6  Non-Reliance On Agents And Other Lenders..........................64

   12.7  Failure To Act....................................................65

   12.8  Resignation Of Agents.............................................65

   12.9  Consents Under Loan Documents.....................................66

   12.10 Collateral Matters................................................66

13.  CROSS-GUARANTY........................................................66

   13.1  Cross-Guaranty....................................................66

   13.2  Waivers by Borrowers..............................................67

   13.3  Benefit of Guaranty...............................................67

   13.4  Subordination of Subrogation, Etc.................................68

   13.5  Election of Remedies..............................................68

   13.6  Limitation........................................................68

   13.7  Contribution with Respect to Guaranty Obligations.................69

   13.8  Liability Cumulative..............................................70

<PAGE>


                INDEX OF APPENDICES

Exhibit 1.1(a)(i)        -        Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii)       -        Form of Revolving Note
Exhibit 1.1(b)           -        Form of Term Note
Exhibit 1.1(c)(i)        -        Form of Notice of SCIL Loan Advance
Exhibit 1.1(c)(ii)       -        Form of SCIL Note
Exhibit 1.4(e)           -        Form of Notice of Conversion
Exhibit 1.5(e)           -        Form of Notice of Revolving Credit Advance
                                  Conversion
Exhibit A-1              -        Form of Intercreditor Agreement
Exhibit 9.1(b)           -        Form of Assignment Agreement
Schedule 1.3             -        Sources and Uses; Funds Flow Memorandum
Schedule 3.2             -        Executive Offices; FEIN
Schedule 3.4(a)          -        Financial Statements
Schedule 3.4(b)          -        Pro Forma
Schedule 3.4(c)          -        Projections
Schedule 3.4(d)          -        Fair Salable Balance Sheet
Schedule 3.6             -        Real Estate and Leases
Schedule 3.7             -        Labor Matters
Schedule 3.8             -        Ventures, Subsidiaries and Affiliates;
                                  Outstanding Stock and Indebtedness
Schedule A-1             -        Existing Letters of Credit
Schedule 3.11            -        Tax Matters
Schedule 3.12            -        ERISA Plans
Schedule 3.13            -        Litigation
Schedule 3.15            -        Intellectual Property
Schedule 3.17            -        Hazardous Materials
Schedule 3.18                     Insurance
Schedule 3.19            -        Deposit and Disbursement Accounts
Schedule 3.20            -        Government Contracts
Schedule 3.22            -        Material Agreements
Schedule 5.1             -        Trade Names
Schedule 6.3             -        Indebtedness
Schedule 6.4(a)          -        Transactions with Affiliates
Schedule 6.4(c)          -        Compensation Levels
Schedule 6.7             -        Existing Liens
Schedule 6.2             -        Permitted Investments
Schedule 6.18            -        Existing Leases
Schedule 6.20            -        Credit Parties Other Than Borrower
Annex A (Recitals)       -        Definitions
Annex B (Section 1.2)    -        Letters of Credit
Annex C (Section 1.5)    -        Cash Management System
Annex D (Section 2.1(a)) -        Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) -        Financial Statements and Projections-Reporting
Annex F (Section 4.1(b)) -        Collateral Reports
Annex G (Section 6.10)   -        Financial Covenants
Annex H (Section 11.10)  -        Notice Addresses


<PAGE>






         CREDIT  AGREEMENT,  dated  as of June 30,  2000  among  Video  Services
Corporation, a Delaware corporation ("VSC"), and each of its direct and indirect
subsidiaries  designated as "Borrowers" on the signature pages of this Agreement
(each  of  VSC  and  such  entities  are  collectively  referred  to  herein  as
"Borrowers"  and each  individually  as a "Borrower"),  the other credit parties
signatory hereto ("Credit  Parties"),  each of the lenders  signatory hereto and
those  Persons who become  lenders in accordance  with the terms and  conditions
hereof (each, a "Lender" and collectively,  "Lenders"), General Electric Capital
Corporation, a New York corporation ("GE Capital" or, as administrative and term
agent for the Lenders, as the context requires,  together with its successors in
each of such  capacities,  "Term Agent") and KeyBank  National  Association,  as
revolver agent for the applicable  Lenders (together with its successors in such
capacity,  "Revolver  Agent;"  and each of Term  Agent and  Revolver  Agent,  an
"Agent," and collectively "Agents").

                                    RECITALS

         WHEREAS, Borrowers desire that Lenders extend revolving and term credit
facilities to Borrowers of up to  $55,000,000 in the aggregate for the Qualified
Purposes; and

         WHEREAS, Lenders are willing to make certain loans and other extensions
of credit to  Borrowers  of up to such  amount for such  Qualified  Purposes  in
accordance  with the terms and conditions set forth herein and in the other Loan
Documents; and

         WHEREAS, Borrowers desire to secure all of their obligations under this
Agreement and the other Loan Documents by granting to Term Agent for the benefit
of Lender Group  security  interests in and Liens upon all of their existing and
after-acquired personal and real property; and

         WHEREAS,  Guarantors are willing to guaranty all of the  obligations of
Borrowers,  and each Borrower is willing to guaranty all of the  obligations  of
each other  Borrower,  to Agents and Lenders under this  Agreement and the other
Loan Documents; and

         WHEREAS,  VSC is  willing  to pledge to Term  Agent for the  benefit of
Lender Group all of the capital stock of each  Subsidiary of VSC or other Person
with respect to which VSC owns Stock to secure the Obligations; and

         WHEREAS,  capitalized  terms  used in this  Agreement  shall  have  the
meanings ascribed to them in Annex A; and

         WHEREAS,  all  Annexes,   Disclosure  Schedules,   Exhibits  and  other
attachments (collectively, "Appendices") hereto, or expressly identified to this
Agreement,  are incorporated herein by reference,  and, taken together with this
Agreement  including  the  foregoing  Recitals,  shall  constitute  but a single
agreement.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants hereinafter contained,  and for other good and valuable consideration,
the parties hereto agree as follows:

<PAGE>
1.       AMOUNT AND TERMS OF CREDIT

         1.1      Credit Facilities.

                  (a) Revolving  Credit  Facility.  (i) Subject to the terms and
conditions hereof, until the applicable Commitment  Termination Date each of the
applicable  Lenders  severally  agrees  to  make  advances  available  (each,  a
"Revolving  Credit Advance" and  collectively,  the "Revolving Credit Advances")
from time to time in an aggregate principal amount outstanding at any time up to
but not exceeding the Revolving Loan Commitment of such applicable Lender,  less
such Lender's pro rata share (based on the Revolving  Loan  Commitments)  of the
aggregate Letter of Credit  Obligations  outstanding at such time. The aggregate
amount of Revolving Credit Advances outstanding at any time shall not exceed the
aggregate  Revolving  Loan  Commitments,  less the  aggregate  Letter  of Credit
Obligations then outstanding.  Until the applicable Commitment Termination Date,
Borrowers  may from time to time borrow,  repay and reborrow  under this Section
1.1(a); provided,  however, that (x) Borrowers shall not obtain Revolving Credit
Advances,   make  any  conversions   contemplated  in  Section  1.5(e)(ii),   or
voluntarily prepay the Revolving Loan, or any part thereof,  more than two times
in any week for all  such  transactions,  and (y) the  aggregate  amount  of the
Revolving Credit Advances  requested by Borrowers at any one time shall equal no
less than $500,000 or an integral  multiple of $100,000 in excess thereof.  Each
Revolving  Credit  Advance shall be made on notice (each, a "Notice of Revolving
Credit Advance") by Borrower Representative on behalf of the applicable Borrower
to each  Agent  and,  subject  to the terms and  conditions  of this  Agreement,
including, without limitation,  Section 1.19, on the date specified in each such
Notice  of  Revolving  Credit  Advance  for  each  such  borrowing,  each of the
applicable   Lenders  shall  make  available  the  amount  of  Revolving  Credit
Advance(s) to be made by it on such date to Revolver Agent or to such account of
Revolver Agent as Revolver Agent may designate,  in immediately available funds,
for the account of the applicable Borrower. Each such Notice of Revolving Credit
Advance must be given no later than 12:00 noon (New York time) on the date which
is three Business Days prior to the proposed Revolving Credit Advance. Each such
Notice of  Revolving  Credit  Advance  must be given in writing (by  telecopy or
overnight  courier)  substantially in the form of Exhibit  1.1(a)(i),  and shall
include the information  required in such Exhibit, and such other information as
may be required by Revolver Agent.

                         (ii).....Each  Borrower  shall  execute  and deliver to
Term Agent for delivery to each Lender having a Revolving Loan Commitment a note
(totaling the initial  aggregate  Revolving  Loan  Commitments)  to evidence the
aggregate Revolving Loan Commitments.  Each note shall be dated the Closing Date
and shall be substantially in the form of Exhibit  1.1(a)(ii) (each a "Revolving
Note" and, collectively, "Revolving Notes"). Each Revolving Note shall represent
the  obligation of each  Borrower to pay the amount of the  aggregate  Revolving
Loan  Commitments  or, if less,  the aggregate  unpaid  principal  amount of all
Revolving  Credit  Advances  made by the  applicable  Lender  to such  Borrower,
together  with  interest  thereon  as  prescribed  in Section  1.5.  Each of the
Borrowers  under  this  Agreement  shall be  jointly  and  severally  liable  as
co-borrowers  with each other  Borrower for the aggregate  Revolving  Loan.  The
entire  unpaid   balance  of  the  aggregate   Revolving   Loan  and  all  other
noncontingent  Obligations  shall be  immediately  due and  payable in full,  in
immediately  available  funds, on the earlier of (A) 39 months after the Closing
Date, and (B) the date of termination,  pursuant to Section 8.2(b),  of Lenders'
obligations to permit existing Revolving Loans to remain outstanding.

                  (b) Term Loans.  Subject to the terms and  conditions  hereof,
each applicable  Lender  severally agrees to make term loans on the Closing Date
(A) to Borrowers  ("Term Loan A") in the original  principal amount equal to the
Term Loan A  Commitment  of such Lender;  (B) to  Borrowers  ("Term Loan B" and,
together with Term Loan A, "Term Loans" and each individually, a "Term Loan") in
the  original  principal  amount  equal to the Term  Loan B  Commitment  of such
Lender.  Upon payment of the Term Loans, or any portion  thereof,  the principal
amount  so  repaid  may not be  reborrowed.  Each  such  Term  Loan made by each
applicable  Lender shall be evidenced by promissory  notes  substantially in the
form of  Exhibit  1.1(b)  (each,  a "Term  Note"  and,  collectively,  the "Term
Notes"),  and each Borrower shall execute and deliver its respective  Term Notes
to Term  Agent for  delivery  to the  applicable  Lenders.  Each Term Note shall
represent  the  obligation of the  applicable  Borrower to pay the amount of the
applicable Term Loans made to such Borrower,  together with interest  thereon as
prescribed in Section 1.5.

                         (i)......Borrowers  shall pay the  principal  amount of
Term Loan A in thirteen consecutive quarterly installments commencing on July 1,
2000 and on the  first  day of each  three  month  period  thereafter,  all such
payments to be made as follows:

                           Principal Amount
                           ----------------
Payment  Date                                   Payable on Each Payment Date
-------------                                   ----------------------------
July 1, 2000 and on the first day of                  $  1,000,000
each three month period  thereafter
through and including April 1,2003

July 1, 2003                                    Remaining principal balance

                         (ii).....Borrowers  shall pay the  principal  amount of
Term Loan B in twenty-one consecutive quarterly installments  commencing on July
1, 2000 and on the first  day of each  three  month  period  thereafter  (or the
nearest day thereto which is the last day of the applicable  LIBOR Period),  all
such payments to be made as follows:
<PAGE>

                           Principal Amount
                           ----------------
Payment Date                                    Payable on Each Payment Date
------------                                    ----------------------------
July 1, 2000 and on the first day of                  $    112,500
each three month period thereafter
through and including July 1, 2003

October 1, 2003 and January 2, 2004                   $    500,000

April 1, 2004                                         $  1,000,000

July 1, 2004 and on the first day of                  $  1,250,000
each three month period thereafter
through and including April 1, 2005

July 1, 2005                                    Remaining principal balance

                         (iii)....Notwithstanding  the foregoing clauses (i) and
(ii),  the aggregate  outstanding  principal  balance of each of Term Loan A and
Term Loan B shall be due and payable in full in immediately  available  funds on
the applicable Commitment Termination Date, if not sooner paid in full.

                  (c) SCIL  Loans.

                         (i) Subject to the terms and conditions hereof, each of
the applicable  Lenders  severally  agrees to make advances  available  (each, a
"SCIL  Loan  Advance")  from  time  to  time  until  the  applicable  Commitment
Termination Date in an aggregate  principal amount outstanding at any time up to
but not exceeding the SCIL Loan Commitment of such applicable Lender;  provided,
however,  that on the Closing  Date  Borrower  Representative,  on behalf of the
applicable Borrowers, shall only be entitled to request SCIL Loan Advances up to
an aggregate principal amount of $5,000,000, and thereafter until the applicable
Commitment  Termination  Date,  Borrower   Representative,   on  behalf  of  the
applicable  Borrowers,  shall only be entitled to request SCIL Loan  Advances in
amounts and at the times  corresponding  to the required  scheduled  payments of
interest and principal under the Subordinated  Notes, or any prepayment thereof,
to the extent such  interest and principal has actually been paid in cash by the
applicable  Borrower  within one (1) year prior to the date of the making of the
request SCIL Advance.  Upon payment of the SCIL Loan Advance(s),  or any portion
thereof,  the principal  amount so repaid may not be reborrowed.  Each SCIL Loan
Advance  shall be made on notice  (each,  a "Notice  of SCIL Loan  Advance")  by
Borrower  Representative on behalf of the applicable Borrower to Term Agent and,
on the date  specified  in each such  Notice of SCIL Loan  Advance for each such
borrowing,  each of the  applicable  Lenders shall make  available the amount of
SCIL  Loan  Advance(s)  to be made by it on such  date to Term  Agent or to such
account of Term  Agent as Term Agent may  designate,  in  immediately  available
funds,  for the  account of the  applicable  Borrower.  Each Notice of SCIL Loan
Advance must be given no later than 12:00 noon (New York time) on the date which
is three Business Days prior to the proposed SCIL Loan Advance. Each such Notice
of SCIL Loan Advance must be given in writing (by telecopy or overnight courier)
substantially  in  the  form  of  Exhibit  1.1(c)(i),   and  shall  include  the
information  required  in such  Exhibit  and such  other  information  as may be
required by Term Agent.

                         (ii).....Each SCIL Loan Advance made by each applicable
Lender  shall be  evidenced  by a  separate  note  substantially  in the form of
Exhibit 1.1(c)(ii) (each, a "SCIL Note" and,  collectively,  "SCIL Notes"),  and
each applicable  Borrower shall execute and deliver its respective SCIL Notes to
Term Agent for delivery to the applicable Lenders on or prior to the date of the
requested  SCIL Loan Advance.  Each SCIL Note shall  represent the obligation of
the applicable  Borrower to pay the amount of the applicable  SCIL Loan Advances
made by the  applicable  SCIL Lender to such  Borrower,  together  with interest
thereon as prescribed in Section 1.5.

                         (iii)....Borrowers  shall pay the  principal  amount of
the SCIL Loans in 20 consecutive equal quarterly installments commencing on July
1, 2000 and on the first  day of each  three  month  period  thereafter  (or the
nearest day thereto  which is the last day of the  applicable  LIBOR  Period) as
follows:
<PAGE>
                           Principal Amount
                           ----------------

Payment Date                                   Payable on Each Payment Date
------------                                   ----------------------------
July 1, 2000 and on the first day of      $    25,000
each three month period thereafter
through and including April 1, 2005

July 1, 2005 and on the first day of      1/4 of 50% of the remaining principal
each three month period thereafter               balance as of July 1, 2005
through and including April 1, 2006

July 1, 2006 and on the first day of      1/4 of 50% of the remaining principal
each three month period thereafter               balance as of July 1, 2006
through and including April 1, 2007

                         (iv)  ....Notwithstanding  the foregoing  clause (iii),
the aggregate  outstanding  principal balance of all SCIL Loan Advances shall be
due and  payable  in full  in  immediately  available  funds  on the  applicable
Commitment Termination Date if not sooner paid in full.

                  (d)    Reliance   on   Notices;   Appointment    of   Borrower
Representative.  Each Agent and each Lender shall be entitled to rely upon,  and
shall be fully  protected  in  relying  upon,  any  Notice of  Revolving  Credit
Advance,  Notice of SCIL Loan Advance,  Notice of  Conversion or similar  notice
believed by any such Agent or Lender,  as the case may be, to be  genuine.  Each
Agent and each Lender may assume that each Person  executing and delivering such
a notice was duly  authorized  to execute and deliver  such  notice,  unless the
responsible  individual  acting thereon for such Agent or such Lender has actual
knowledge to the  contrary.  Each  Borrower  hereby  designates  VSC  ("Borrower
Representative")  as its representative and agent on its behalf for the purposes
of issuing Notices of Revolving Credit  Advances,  Notices of SCIL Loan Advances
and Notices of Conversion,  giving instructions with respect to the disbursement
of the proceeds of the Loans,  selecting  interest rate options,  requesting the
issuance  of Letters  of Credit,  giving and  receiving  all other  notices  and
consents hereunder or under any of the other Loan Documents and taking all other
actions  (including  in respect of compliance  with  covenants) on behalf of any
Borrower or Borrowers under the Loan Documents.  Borrower  Representative hereby
accepts  such  appointment.  Each Agent and each Lender may regard any notice or
other communication  pursuant to any Loan Document from Borrower  Representative
as a notice or  communication  from all  Borrowers,  and may give any  notice or
communication  required or  permitted  to be given to any  Borrower or Borrowers
hereunder to Borrower  Representative  on behalf of such  Borrower or Borrowers.
Each Borrower agrees that each notice,  election,  representation  and warranty,
covenant,   agreement   and   undertaking   made  on  its  behalf  by   Borrower
Representative  shall be  deemed  for all  purposes  to have  been  made by such
Borrower and shall be binding upon and enforceable  against such Borrower to the
same extent as if the same had been made directly by such Borrower.

                 (e) Non-Funding  Lenders. The failure of any Lender (each such
Lender, a "Non-Funding Lender") to make any Revolving Credit Advance, including,
without  limitation,  in respect of a Letter of Credit Obligation,  or SCIL Loan
Advance required to be made by it hereunder on the date specified therefor shall
not relieve any other Lender (each such other Lender,  an "Other Lender") of its
obligation  to make its  Revolving  Credit  Advance or SCIL Loan Advance on such
date;  but no Other  Lender nor either Agent  (except  solely to the extent such
Agent is a  Non-Funding  Lender)  shall be  responsible  for the  failure of any
Non-Funding  Lender to make any Revolving  Credit  Advance or SCIL Loan Advance,
and no Non-Funding Lender shall have any obligation to either Agent or any Other
Lender by reason of any such failure by such Non-Funding Lender. Notwithstanding
anything set forth herein to the contrary, unless and until a Non-Funding Lender
has cured all funding defaults hereunder, such Non-Funding Lender shall not have
any voting or consent  rights  under or with  respect  to any Loan  Document  or
constitute a "Lender" (or be included in the  calculation of "Required  Lenders"
hereunder)  for any voting or consent  rights  under or with respect to any Loan
Document  nor  have  any  right  to  the  Applicable  Unused  Line  Fee  Margin.
Notwithstanding  anything to the contrary in this Agreement,  each Lender hereby
agrees with each other Lender that no Lender shall exercise any remedies or take
any action to protect or enforce  its rights  arising out of or relating to this
Agreement,  any of the  Notes  or any of the  other  Loan  Documents  (including
exercising  any rights of offset)  without  first  obtaining  the prior  written
consent of  Applicable  Agent and Required  Lenders,  it being the  agreement of
Lenders that any remedies or such action to protect or enforce rights under this
Agreement, any of the Notes or any of the other Loan Documents shall be taken in
concert  and at the  direction  or with the  consent  of  Applicable  Agent  and
Required Lenders and not independently by a single Lender.  Notwithstanding  the
foregoing, any Lender may enforce its right to receive any amount due and unpaid
under any Note held by such Lender, but may not unilaterally  exercise any other
rights under the Loan Documents.

         1.2 Letters of Credit.  Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower  Representative,  on behalf
of the  applicable  Borrower,  shall have the right to request,  and each Lender
agrees to incur,  Letter of Credit Obligations in respect of each Borrower.

         1.3 Prepayment.

                  a)  Voluntary  Prepayments.  Borrowers  may at any  time on at
least five days' prior written notice by Borrower  Representative  to Applicable
Agent (i)  voluntarily  prepay all or part of the Loans other than the Revolving
Loan, provided that such payments are applied in the manner set forth in Section
1.3(c),  or (ii)  voluntarily  reduce the Revolving  Loans or the Revolving Loan
Commitments;  provided,  however,  that  (a) any  such  partial  prepayments  or
reductions  shall be in a minimum  amount of $500,000 and integral  multiples of
$250,000,  in excess of such amount and (b) the Revolving Loan Commitment  shall
not be reduced to an amount less than one hundred and five percent (105%) of the
L/C Sublimit. In addition, Borrowers may at any time on at least ten days' prior
written  notice by Borrower  Representative  to Applicable  Agent  terminate the
Revolving Loan Commitment;  provided, however, that upon such termination of the
Revolving  Loan  Commitment  (or  upon  any  reduction  of  the  Revolving  Loan
Commitment  below  the  aggregate  amount  of  $8,000,000),  all Loans and other
Obligations  shall be  immediately  due and payable in full.  Any such voluntary
prepayment  and  any  such  reduction  or  termination  of  the  Revolving  Loan
Commitments  must be  accompanied  by the payment of the fee required by Section
1.7(c),  if any,  plus  the  payment  of any  LIBOR  funding  breakage  costs in
accordance  with  Section  1.11(b).  Upon any such  repayment  and  reduction or
termination of the Revolving Loan Commitments,  each Borrower's right to request
Revolving  Credit  Advances,  or request  that Letter of Credit  Obligations  be
incurred on its behalf, as the case may be, shall  simultaneously be permanently
reduced or terminated,  as the case may be; provided that a permanent  reduction
of the Revolving  Loan  Commitment  shall not require a  corresponding  pro rata
reduction in the L/C Sublimit. Each notice of partial prepayment shall designate
the  Loans or other  Obligations  to which  such  prepayment  is to be  applied,
provided that any partial  prepayments of the Term Loans made by or on behalf of
any  Borrower  shall be  applied to prepay the  scheduled  installments  of such
Borrower's Term Loans in inverse order of maturity.

                  (b) Mandatory Prepayments.

                         (i)......If at any time the outstanding  balance of any
Loan exceeds the aggregate  Commitments in respect of such Loan, Borrowers shall
immediately  repay the aggregate  outstanding  amount of such Loan to the extent
required to eliminate such excess. If any such excess remains after repayment in
full of the aggregate  outstanding  Revolving Credit  Advances,  Borrowers shall
provide cash  collateral for the Letter of Credit  Obligations in the manner set
forth in Annex B to the extent required to eliminate such excess.

                         (ii)....Immediately upon receipt by any Credit Party of
proceeds  of any asset  disposition  (including  condemnation  proceeds  and any
Allowed Sale, but excluding proceeds of asset dispositions  permitted by Section
6.8 or proceeds of asset dispositions to the extent used to purchase replacement
assets within 120 days of the applicable  asset  disposition),  Borrowers  shall
prepay the Loans in an amount equal to all such proceeds, net of (A) commissions
and other reasonable and customary transaction costs, fees and expenses properly
attributable  to  such  transaction  and  payable  by  Borrowers  in  connection
therewith (in each case, paid to  non-Affiliates),  (B) transfer taxes,  (C) the
amount  necessary  to  discharge  any Liens on such asset that are senior to the
Liens  created  under the Loan  Documents  (to the extent such Liens  constitute
Permitted  Encumbrances  hereunder),  if any, and (D) an appropriate reserve for
income  taxes  in  accordance  with  GAAP  in  connection  therewith.  Any  such
prepayment shall be applied in accordance with clause (c) below.

                         (iii)......If  any Borrower or any  Subsidiary  thereof
issues (A) Stock,  no later than the Business Day  following the date of receipt
of the proceeds thereof,  Borrowers shall prepay the Loans in an amount equal to
50% of such proceeds, or (B) debt securities (other than (x) debt incurred under
Section 6.3(a)(i) and (iv), and (y) Intercompany Notes otherwise permitted under
this Agreement), no later than the Business Day following the date of receipt of
the  proceeds  thereof,  Borrowers  shall prepay the Loans in an amount equal to
100%  of  such  proceeds,  in  each  case,  net of  underwriting  discounts  and
commissions  and other  reasonable  costs,  fees and expenses  actually  paid to
non-Affiliates in connection therewith. Each such prepayment shall be applied in
accordance with clause (c) below.

                         (iv).....Until  the Termination  Date,  Borrowers shall
prepay the  Obligations  on the  earlier of the date which is ten days after (A)
the  date on  which  Borrowers'  annual  audited  Financial  Statements  for the
immediately  preceding Fiscal Year are delivered  pursuant to Annex E or (B) the
date on which such  annual  audited  Financial  Statements  were  required to be
delivered pursuant to Annex E, in an amount equal to 50% of Excess Cash Flow for
the  immediately  preceding  Fiscal Year.  Each prepayment from Excess Cash Flow
paid  pursuant  to this  clause  (iv)  shall  be  allocated  to each  Borrower's
Obligations based upon such Borrower's relative contribution to Excess Cash Flow
and shall be applied in accordance  with clause (c) below.  Each such prepayment
shall be accompanied by a certificate signed by Borrower  Representative's chief
accounting  officer  certifying  the  manner  in which  Excess  Cash  Flow,  the
resulting   prepayment,   and  the  method  of  allocation  to  each  Borrower's
Obligations were calculated,  which  certificate  shall be in form and substance
satisfactory to Term Agent.

                  (c) Application of Prepayments.  Except as otherwise  provided
in Section  1.9: (i) each  prepayment  by a Borrower  made under this  Agreement
shall be applied  first to the Loans and  related  Obligations  extended to such
Borrower in the order set forth in this Subsection 1.9(c) 1.3(c), and thereafter
to the Loans extended to the other Borrowers, pro rata in accordance with clause
(ii) below, or to such Loans of such Borrowers as the Agent, with the consent of
all Lenders,  shall  direct;  and (ii) all such  prepayments  as to any Borrower
shall be applied as follows:  first, to Fees and reimbursable expenses of Agents
then due and payable pursuant to any of the Loan Documents;  second, to Fees and
reimbursable  expenses of Lenders  then due and  payable  pursuant to any of the
Loan Documents;  third, to interest then due and payable on Term Loan A; fourth,
to pay the scheduled  principal  installments of Term Loan A in inverse order of
maturity  until such Loan shall have been  prepaid in full;  fifth,  to interest
then due and  payable  on Term Loan B;  sixth,  to pay the  scheduled  principal
installments  of Term Loan B in inverse order of maturity  until such Loan shall
have been  prepaid in full;  seventh,  to  interest  then due and payable on the
Revolving Loan; eighth, to the principal balance of the Revolving Loan until the
same shall have been paid in full; ninth, to any Letter of Credit Obligations of
Borrowers whether under this Agreement, or otherwise, to provide cash collateral
in respect of Letter of Credit  Obligations  in the manner set forth in Annex B,
until all such Letter of Credit Obligations have been fully cash  collateralized
in the manner set forth in Annex B; tenth,  to interest  then due and payable on
the SCIL Loan; and eleventh,  to the principal  balance  obligations of the SCIL
Loan until the same shall  have been paid in full.  The Term Loan A  Commitment,
the SCIL Loan  Commitment,  and the Term Loan B Commitment,  as the case may be,
shall  be  permanently  reduced  by the  amount  of each  such  prepayment.  The
Revolving Loan Commitments shall not be permanently reduced by the amount of any
such  prepayments,  unless Borrower  Representative on behalf of Borrowers gives
notice  that  Borrowers  are  electing  to  permanently  reduce  the  applicable
Commitment in connection  with the applicable  prepayment.  Notwithstanding  the
foregoing  or  anything  to the  contrary  in this  Agreement  or any other Loan
Document,  each applicable  Lender that has a Term Loan A Commitment may, at any
such Lender's option,  irrevocably  forego the  aforereferenced  prepayment with
respect to Term Loan A and, in such event, any such foregone prepayment shall be
applied to the other  portions  of Term Loan A held by Lenders  not  electing to
forego such  prepayment  ratably in accordance  with the  outstanding  principal
amount of Term Loan A held by such Lenders  respectively.  If all Lenders having
Term Loan A Commitments elect to forego prepayment or if such prepayments are in
excess of the aggregate  accrued  interest and outstanding  principal  amount of
Term Loan A, any such foregone  prepayments  or excess amounts shall be applied,
subject to the  rights of  Lenders  holding  Term Loan B  Commitments  to forego
prepayments  on Term Loan B as  hereafter  set forth,  to Term Loan B ratably in
accordance  with  the  outstanding  principal  amounts  held  by the  applicable
Lenders.  Each  applicable  Lender that has a Term Loan B Commitment may, at any
such Lender's option,  irrevocably  forego the  aforereferenced  prepayment with
respect to Term Loan B and, in such event, any such foregone prepayment shall be
applied to the other  portions  of Term Loan B held by Lenders  not  electing to
forego such  prepayment  ratably in accordance  with the  outstanding  principal
amount of Term Loan B held by such  Lenders.  If all Lenders  having Term Loan B
Commitments  elect to forego  prepayment or if such prepayments are in excess of
the aggregate accrued interest and outstanding  principal amount of Term Loan B,
any  such  foregone  prepayments  or  excess  amounts  shall be  applied  to the
Revolving Loan and the SCIL Loan and outstanding Advances in the order set forth
in  clauses  seventh,  eighth,  ninth  and  tenth of this  Section  1.3(c).  Any
applicable  Lender may  notify  Term Agent and  Borrower  Representative  of its
election  to  irrevocably   forego  its  share  of  any  of  the  aforementioned
prepayments,  in which event such notice  shall be  effective  until such Lender
notifies Term Agent and Borrower  Representative to the contrary. Any applicable
Lender  that  wishes to  decline  receipt  of its  share of any such  prepayment
pursuant to this Section 1.3(c) shall  promptly,  and in any event no later than
2:00 p.m.  (New York time) on the date  following  receipt of its notice of such
prepayment,  notify Term Agent and Borrower Representative of such election. Any
applicable  Lender  that  has not  provided  notice  pursuant  to one of the two
preceding  sentences  prior to the 2:00 p.m. (New York time)  deadline  shall be
assumed to have  elected to accept such  prepayment.  Term Agent shall  promptly
provide, to all such applicable electing Lenders, notice of the principal amount
of the Term Loans that such Lenders have elected to decline.


                  (d)  Application  of  Prepayments  from  Insurance   Proceeds.
Prepayments  from insurance  proceeds in accordance with Section 5.4(c) shall be
applied in accordance with clause (c) above.

                  (e)  Nothing  in  this  Section  1.3  shall  be  construed  to
constitute any Agent's or any Lender's consent to any transaction referred to in
clauses (b)(ii) and (b)(iii) above which is not permitted by other provisions of
this Agreement or the other Loan Documents.

         1.4  Use of Proceeds.   Borrowers shall utilize the proceeds of (i) the
Term Loans and, to the extent  necessary,  the Revolving Loan (and any Letter of
Credit issued pursuant to this Agreement) solely for the Refinancing (and to pay
any related transaction expenses), and (ii) thereafter,  the Revolving Loan, for
the financing of Borrowers' ordinary working capital and general corporate needs
(but  excluding  in any event (A) the  prepayment  of all or any  portion of the
Subordinated Debt, and (B) the making of any Restricted Payment not specifically
permitted by Section 6.14) and the proceeds of the SCIL Loan for the Refinancing
(and  to pay any  related  transaction  expenses)  and to  make  or  finance  or
refinance (but only the extent  permitted under this  Agreement)  scheduled cash
payments of interest and principal as required under the Subordinated  Notes, or
to prepay,  in whole or in part,  the  principal of the  Subordinated  Debt (the
aforementioned  permitted  uses  of  proceeds,   collectively,   the  "Qualified
Purposes").  Disclosure  Schedule  (1.4)  contains a  description  of Borrowers'
sources and uses of funds as of the Closing Date,  including Loans and Letter of
Credit  Obligations  to be  made or  incurred  on that  date,  and a funds  flow
memorandum  detailing  how  funds  from each  source  are to be  transferred  to
particular uses.

         1.5  Interest and Applicable Margins.

                  (a) Borrowers  shall pay interest to Applicable  Agent for the
account of Lenders,  in arrears on each  applicable  Interest  Payment  Date via
electronic  funds,  at the  following  rates:  (i) with respect to the Revolving
Credit Advances,  the applicable  LIBOR Rate plus the Applicable  Revolver LIBOR
Margin per annum, or at the Index Rate plus the Applicable Revolver Index Margin
per annum if  Borrower  Representative  on behalf  of the  applicable  Borrowers
elects to convert the Revolving  Credit  Advances to an Index Rate Loan pursuant
to and in accordance with Section 1.5(e),  (ii) with respect to Term Loan A, the
applicable LIBOR Rate plus the Applicable Term Loan A LIBOR Margin per annum, or
at the Index  Rate plus the  Applicable  Term Loan A Index  Margin  per annum if
Borrower  Representative on behalf of the applicable Borrowers elects to convert
Term Loan A to an Index Rate Loan  pursuant to and in  accordance  with  Section
1.5(e),  (iii) with respect to Term Loan B, the  applicable  LIBOR rate plus the
Applicable  Term Loan B LIBOR  Margin per  annum,  or at the Index Rate plus the
Applicable  Term Loan B Index  Margin per annum if  Borrower  Representative  on
behalf of the  applicable  Borrowers  elects to convert  Term Loan B to an Index
Rate Loan  pursuant  to and in  accordance  with  Section  1.5(e)  and (iv) with
respect to the SCIL Loan,  the applicable  LIBOR rate plus the  Applicable  SCIL
Loan  LIBOR  Margin,  or at the Index Rate plus the  Applicable  SCIL Loan Index
Margin  per  annum  if  Borrower  Representative  on  behalf  of the  applicable
Borrowers  elects to convert the SCIL Loan to an Index Rate Loan pursuant to and
in accordance with Section 1.5(e).


                    The  Applicable  Revolver  LIBOR  Margin  will be 3.25%  per
annum,  the  Applicable  Revolver  Index  Margin  will be 1.25% per  annum,  the
Applicable Term Loan A LIBOR Margin will be 3.25% per annum, the Applicable Term
Loan A Index Margin will be 1.25% per annum,  the  Applicable  Term Loan B LIBOR
Margin will be 3.50% per annum and the Applicable  Term Loan B Index Margin will
be 1.50% per annum. The Applicable L/C Margin will be 3.25%. The Applicable SCIL
Loan LIBOR  Margin will be 4.00%,  plus an  additional  4.00% to accrue  monthly
commencing  on November 1, 2001 (and,  solely  with  respect to such  additional
4.00%  interest  accruing  from and after such date,  payable on the  applicable
Commitment  Termination  Date) per  annum,  and the  Applicable  SCIL Loan Index
Margin will be 2.00% plus an additional  4.00% to accrue  monthly  commencing on
November 1, 2001 (and,  solely with respect to such  additional  4.00%  interest
accruing  from  and  after  such  date,  payable  on the  applicable  Commitment
Termination  Date)  per  annum;  provided,  however,  that if, on or prior to on
November 1, 2001, (A) a portion of Borrowers' assets are sold for cash to a bona
fide third party in an arm's length  transaction  approved in writing in advance
by Term Agent in its sole and absolute  discretion (an "Allowed  Sale"),  (B) no
Default or Event of Default has occurred and is continuing  before giving effect
to such  Allowed  Sale and no Default or Event of Default will occur as a result
of and after giving  effect to such Allowed  Sale,  (C) the net proceeds of such
Allowed Sale are applied to the Loans in accordance  with Section 1.3(c) and the
Term Loan Commitments are thereby automatically reduced to the extent prepaid as
provided in Section 1.3(c) and (D)  Borrowers'  Leverage Ratio on a consolidated
basis is lower  (after  taking into account the Allowed  Sale) than  immediately
preceding the Allowed Sale,  then the Applicable  SCIL Loan LIBOR Margin will be
4.00% per annum and the  Applicable  SCIL Loan  Index  Margin  will be 2.00% per
annum.

                  (b) If any  payment on any Loan  becomes  due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding  Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.

                  (c) All  computations  of Fees calculated on a per annum basis
and of  interest  shall be made by  Applicable  Agent on the  basis of a 360-day
year,  in each case for the actual  number of days  occurring  in the period for
which such  interest  and Fees are payable.  The Index Rate shall be  determined
each day based upon the Index Rate as in effect each day. Each  determination by
Applicable  Agent of an interest  rate  hereunder  shall be  conclusive,  absent
manifest error.

                  (d) So long as an Event of Default  shall have occurred and be
continuing  under Sections  8.1(a),  (h) or (i) and without the necessity of any
notice from any Agent or any Lender to any Credit Party, or so long as any other
Default or Event of Default  shall have occurred and be  continuing,  and at the
election of Term Agent and Required  Lenders  confirmed  by written  notice from
Term Agent to Borrower  Representative,  the interest and other rates applicable
to the Loans and the  applicable  L/C Margin  shall be increased by 2% per annum
above such rates otherwise  applicable  hereunder (the "Default Rate"),  and all
outstanding  Obligations  shall bear interest at the Default Rate  applicable to
such  Obligations.  Interest and Letter of Credit fees at the Default Rate shall
accrue  from the  initial  date of such  Default or Event of Default  until that
Default or Event of Default is cured or waived and shall be payable upon demand.

                  (e) So long as no  Default  or Event  of  Default  shall  have
occurred and be continuing,  and subject to the additional  conditions precedent
set forth in Section 2.2:

                         (i)Borrower  Representative on behalf of the applicable
Borrowers  shall  have the  option on the 120th  day after the  Closing  Date to
convert  collectively  (but not individually) the Term Loans and SCIL Loans from
LIBOR Loans to Index Rate Loans,  subject to payment of LIBOR  breakage costs in
accordance  with  Section  1.11(b)  if  such  conversion  is made  prior  to the
expiration  of the LIBOR Period  applicable  thereto.  Any such election must be
made by 12:00 noon (New York time) on the fifth  Business  Day prior to the date
on which Borrower Representative on behalf of the applicable Borrowers wishes to
convert the Term Loans and SCIL Loans from LIBOR  Loans to Index Rate Loans.  If
no election is received  with  respect to the Term Loans and SCIL Loans by 12:00
noon (New York time) on such fifth Business Day prior to the 120th day after the
Closing Date (or if a Default or an Event of Default  shall have occurred and be
continuing or if the  additional  conditions  precedent set forth in Section 2.2
shall not have been  satisfied),  then the Term  Loans and SCIL Loans may not be
converted to Index Rate Loans;  provided,  however,  that if the 120th day after
the  Closing  Date is not the  last day of any  applicable  LIBOR  Period,  then
Borrower  may make such  election  to convert the Term Loans and SCIL Loans from
LIBOR Loans to Index Rate Loans on such fifth  Business Day prior to the nearest
day preceding or succeeding the 120th day after the Closing Date which preceding
or succeeding day is the last day of any such applicable LIBOR Period.  Borrower
Representative  must make such  election  to  convert by notice to Term Agent in
writing,  by telecopy or overnight courier pursuant to a written notice (each, a
"Notice of Conversion") in substantially the form of Exhibit 1.5(e).

                         (ii)Borrower   Representative,   on   behalf   of   the
applicable  Borrowers may elect at any time and from time to time to convert one
or more Revolving  Credit  Advances from LIBOR Rate Loans to Index Rate Loans by
giving  the  Revolver  Agent  irrevocable  notice  thereof  (each,  a "Notice of
Revolving Credit Advance Conversion"), specifying the amount to be so converted,
provided,  that any such  conversion  shall  only be made on the last day of the
LIBOR Period  applicable to each such Revolving  Credit  Advance  constituting a
LIBOR Rate  Loan.  In  addition,  the  Borrowers  may elect from time to time to
convert a Revolving Credit Advance  constituting Index Rate Loans to one or more
new LIBOR Rate Loans or to convert any one or more existing  Revolving  Advances
constituting  a LIBOR  Rate Loan to one or more new  Revolving  Credit  Advances
constituting  a LIBOR Rate Loan,  by giving the  Revolver  Agent an  irrevocable
Notice of Revolving  Credit Advance  Conversion,  specifying the amount to be so
converted  and the initial  LIBOR  Period  relating  thereto.  Revolving  Credit
Advances may be converted  pursuant to this  Section  1.5(e)(ii)  in whole or in
part,  provided  that the amount to be  converted  to a LIBOR  Rate  Loan,  when
aggregated  with  any  Revolving  Credit  Advance  to be made  on  such  date in
accordance  with  Section  1.1(a) and having the same LIBOR Period as such first
Revolving  Credit  Advance,  shall  equal no less than  $500,000  or an integral
multiple of $100,000 in excess  thereof.  Each such Notice of  Revolving  Credit
Advance Conversion must be given no later than 12:00 noon (New York time) on the
date  which is three  Business  Days  prior to the  proposed  conversion  of the
Revolving  Credit  Advance.   Each  such  Notice  of  Revolving  Credit  Advance
Conversion  must  be  given  in  writing  (by  telecopy  or  overnight  courier)
substantially  in the form of Exhibit 1.5(e),  and shall include the information
required  in such  Exhibit,  and such other  information  as may be  required by
Revolver Agent. The Revolver Agent shall promptly provide the applicable Lenders
with notice of each such election

                         (iii)Notwithstanding anything to the contrary contained
herein, (A) any conversion of a Revolving Credit Advance from an Index Rate Loan
to a LIBOR  Rate Loan shall only be made on a LIBOR  Business  Day,  and (B) any
conversion of an existing  Revolving Credit Advance from a LIBOR Rate Loan to an
Index  Rate  Loan  shall  only be  made  on the  last  day of the  LIBOR  Period
applicable thereto.

                         (iv)Each  such  conversion  shall be  effected  by each
applicable  Lender by applying  the proceeds of the new Index Rate Loan or LIBOR
Rate Loan,  as the case may be, to the  existing  Revolving  Credit  Advance (or
portion thereof) being converted.

                         (v)Notwithstanding  anything in this  Agreement  to the
contrary,  upon the  occurrence  and during the  continuance  of a Default or an
Event of  Default,  the  Borrowers  shall have no right to elect to convert  any
existing  Revolving  Credit  Advance  which is an Index Rate Loan to a new LIBOR
Rate Loan or to convert any  existing  LIBOR Rate Loan to a new LIBOR Rate Loan.
In such event, such Index Rate Loan shall be automatically continued as an Index
Rate Loan or such LIBOR Rate Loan shall be  automatically  converted to an Index
Rate Loan on the last day of the LIBOR  Period  applicable  to such  LIBOR  Rate
Loan, as the case may be.

                         (vi)Notwithstanding   any  other   provision   of  this
Agreement or any other Loan Document:

                              (A) If the Borrowers  shall have failed to elect a
LIBORRate Loan in connection with any borrowing of new Revolving Credit Advances
or  expiration of a LIBOR Period with respect to any existing  Revolving  Credit
Advance which is a LIBOR Rate Loan, the amount of the Revolving  Credit Advances
subject to such borrowing or such existing  Revolving  Credit Advance which is a
LIBOR Rate Loan shall  thereafter be an Index Rate Loan until such time, if any,
as the Borrower  Representative,  on behalf of the applicable  Borrowers,  shall
elect a new LIBOR Rate Loan pursuant to this Section 1.5(e),

                              (B) The Borrowers shall not be permitted to select
any Revolving  Credit Advance the Interest Period in respect of which ends later
than the Commitment Termination Date for the Revolving Loan.

                              (C) The  Borrowers  shall not be permitted to have
more than five (5) LIBOR  Rate Loans in respect  of  Revolving  Credit  Advances
outstanding at any one time.

                              (D) The provisions set forth in clauses 1.5(e)(ii)
through (vi) are applicable  only to the Revolving Loan and Borrowers shall have
no interest rate  conversion  rights in respect of any other  Obligations  other
than as set forth in clause (i) of Subsection 1.5(e)

                  (f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if the rate of interest payable  hereunder exceeds the highest rate
of interest  permissible under law (the "Maximum Lawful Rate"),  then so long as
the Maximum  Lawful  Rate would be so  exceeded,  the rate of  interest  payable
hereunder shall be equal to the Maximum Lawful Rate; provided,  however, that if
at any time thereafter the rate of interest  payable  hereunder is less than the
Maximum Lawful Rate,  Borrowers shall continue to pay interest  hereunder at the
Maximum Lawful Rate until such time as the total interest received by Lenders is
equal to the total interest which would have been received had the interest rate
payable  hereunder  been (but for the operation of this clause (f)) the interest
rate payable  since the Closing Date as  otherwise  provided in this  Agreement.
Thereafter,  interest  hereunder shall be paid at the rate(s) of interest and in
the manner provided in Sections  1.5(a) through (e) above,  unless and until the
rate of interest  again exceeds the Maximum  Lawful Rate,  and at that time this
clause (f) shall again apply.  In no event shall the total interest  received by
Lenders  pursuant to the terms hereof exceed the amount which  Lenders  lawfully
could have received had the interest due hereunder been  calculated for the full
term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is calculated
pursuant to this  paragraph,  such interest  shall be calculated at a daily rate
equal to the Maximum  Lawful  Rate  divided by the number of days in the year in
which such  calculation  is made.  If,  notwithstanding  the  provisions of this
Section  1.5(f),  Lenders  have  received  interest  hereunder  in excess of the
Maximum Lawful Rate,  Lenders shall, to the extent  permitted by applicable law,
promptly apply such excess in the order  specified in Section 1.9 and thereafter
shall refund any excess to  Borrowers,  or as a court of competent  jurisdiction
may otherwise order.

         1.6 Cash Management Systems. On or prior to the Closing Date, Borrowers
will establish and will maintain until the Termination Date, the cash management
systems described on Annex C (the "Cash Management Systems").

         1.7 Fees.

                  (a) Borrowers  shall  pay to Term Agent,  a Closing Fee in the
amount set forth in, and in accordance with the terms and provisions of, the Fee
Agreement. Borrowers agree to pay the Revolver Agent the fees, in the amount and
at the time set  forth in a letter  dated the date of this  Agreement,  from the
Revolver Agent and Summit Bank to the Borrower Representative.

                  (b) As additional  compensation  for the  applicable  Lenders'
Revolving Loan  Commitments and SCIL Loan  Commitments  (except in the case of a
Non-Funding  Lender to the extent set forth in Section 1.1(e)),  as the case may
be,  Borrowers  agree  to pay to  Applicable  Agent  for  the  benefit  of  such
applicable Lenders, in arrears, on the first Business Day of each month prior to
the applicable  Commitment  Termination  Date and on the  applicable  Commitment
Termination  Date, a fee for Borrowers'  non-use of available funds in an amount
equal to (i) in the case of the Revolving Loan,  0.50% per annum  (calculated on
the basis of a 360 day year for actual days elapsed) of the  difference  between
(x) the aggregate  Revolving Loan  Commitments  (as the same may be reduced from
time to time) and (y) the average for the period of the daily closing balance of
the aggregate Revolving Loan outstanding during the period for which such fee is
due and (ii) in the case of the SCIL Loan,  0.50% per annum  (calculated  on the
basis of a 360 day year for actual days elapsed) of the  difference  between (A)
the  aggregate  SCIL Loan  Commitments  (as the same may be reduced from time to
time) and (B) the  average  for the period of the daily  closing  balance of the
SCIL Loans outstanding  during the period for which such fee is due (each of the
foregoing, an "Applicable Unused Line Fee Margin).

                  (c) If  Borrowers  (i)prepay  all or any  portion  of the Term
Loans,  (ii) reduce or terminate the Revolving Loan  Commitments or (iii) to the
extent  permitted  under this  Agreement  prepay all or any  portion of the SCIL
Loans or reduce or, to the extent permitted under this Agreement,  terminate the
SCIL Loan Commitments,  whether  voluntarily or involuntarily and whether before
or after acceleration of the Obligations,  Borrowers shall simultaneously pay to
Term  Agent  for  the  benefit  of  the  Lenders,   as  liquidated  damages  and
compensation for the costs of being prepared to make funds available  hereunder,
an amount determined by multiplying the Applicable Percentage (as defined below)
by (i) in the event of a prepayment,  the principal amount of the Loans prepaid,
and (ii) in the event of a commitment reduction,  the amount of the reduction of
the Revolving Loan Commitments or SCIL Loan Commitments,  as the case may be. As
used herein, the term "Applicable  Percentage" shall mean 1.0%, in the case of a
prepayment on or prior to October 31, 2001, and nil thereafter.  Notwithstanding
the foregoing,  no prepayment fee shall be payable by Borrowers upon a voluntary
prepayment  made in accordance  with Section 1.3(a) (but only up to an aggregate
amount of $15,000,000 as to all such  prepayments  and solely to the extent that
such prepayments are applied to the applicable  Loans as provided  therein) or a
mandatory  prepayment  made  pursuant  to  Section  1.3(b) or  Section  1.14(c);
provided,  however,  that Borrowers do not permanently reduce the Revolving Loan
Commitments or SCIL Loan  Commitments  upon any such prepayment and, in the case
of prepayments made pursuant to Section 1.3(b)(ii) or Section  1.3(b)(iii),  the
transaction  giving rise to the  applicable  prepayment  is expressly  permitted
under Section 6.

         1.8 Receipt of Payments.  Borrowers  shall make each payment under this
Agreement  not  later  than 2:00  p.m.  (New  York  time) on the day when due in
immediately  available funds in Dollars.  For purposes of computing interest and
Fees and  determining  Net Borrowing  Availability  as of any date, all payments
shall be deemed  received on the day of receipt of immediately  available  funds
therefor prior to 2:00 p.m. (New York time).  Payments  received after 2:00 p.m.
(New York time) on any Business Day shall be deemed to have been received on the
following  Business  Day.  All  payments of  principal,  interest  and fees with
respect to the Revolving Loan and the Revolving Loan Commitment, all Fees due to
the Revolver Agent under Section  1.7(a),  all payments in respect of Letters of
Credit and all indemnity payments for the account of the Revolver Agent shall be
made to the Revolver Agent for the benefit of the applicable parties hereto. All
other payments  shall be made to the Term Agent for its account or  distribution
to the party entitled thereto, as the case may be.

         1.9 Application and Allocation of Payments.

                  (a) So long as no Default or   Event  of  Default  shall  have
occurred and be continuing,  (i) payments matching specific  scheduled  payments
then  due  shall  be  applied  to  those  scheduled  payments;   (ii)  voluntary
prepayments shall be applied as determined by Borrower  Representative,  subject
to the provisions of Section 1.3(c)(ii);  and (iii) mandatory  prepayments shall
be applied as set forth in Sections 1.3(c) and (d). If an Activation  Notice has
been sent in accordance  with the  provisions of Annex C and no Event of Default
has occurred and is continuing, Term Agent (or, if any Revolving Loan balance is
outstanding or the Revolving Loan Commitments have not been terminated, Revolver
Agent) shall apply amounts swept into the Collection Account in the same manner.
As to each other payment, and as to all payments made when a Default or Event of
Default  shall have  occurred  and be  continuing  or following  the  applicable
Commitment  Termination Date, each Borrower hereby  irrevocably waives the right
to direct the application of any and all payments  received from or on behalf of
such  Borrower,  and each  Borrower  hereby  irrevocably  agrees that Agents and
Lenders  shall  have the  continuing  exclusive  right to apply any and all such
payments  against the  Obligations  of  Borrowers as  Applicable  Agent may deem
advisable,  notwithstanding any previous entry by Applicable Agent or applicable
Lenders in the  applicable  Loan  Account or any other  books and  records.  The
absence  of a  specific  determination  by both  Agents  and all  Lenders to the
contrary,  payments  shall be  applied to  amounts  then due and  payable in the
following  order:  first,  to Fees of Agents and Agents'  expenses  reimbursable
hereunder;  second,  to Fees  of  Lenders  and  Lenders'  expenses  reimbursable
hereunder;  third, to interest on the Revolving Loans and Term Loans, ratably in
proportion to the interest  accrued as to each such Loan;  fourth,  to principal
payments of the Revolving  Loan and Term Loans,  and to provide cash  collateral
for Letter of Credit  Obligations in the manner described in Annex B, ratably to
the  aggregate  combined  principal  balance  of each such Loan and  outstanding
Letter of Credit  Obligations;  fifth,  to interest on the SCIL Loan;  sixth, to
principal on the SCIL Loan;  and last,  to all other  Obligations  to the extent
reimbursable under Section 11.3.

                  (b) So long as no Event of Default  shall have occurred and be
continuing,  either Agent is authorized to, and at its sole election may, charge
to the  Revolving  Loan balance on behalf of each  Borrower and cause to be paid
all Fees, expenses,  Charges,  costs (including insurance premiums in accordance
with Section  5.4(a)) and interest and  principal  (other than  principal of the
Revolving  Loan) due and owing by Borrowers  under this  Agreement or any of the
other Loan Documents if and to the extent any Borrower fails to promptly pay any
such amounts as and when due;  provided that immediately after each such change,
Net Borrowing Availability shall not be less than $1.00. To the extent permitted
by law,  any  charges  so made  shall  constitute  part  of the  Revolving  Loan
hereunder.

         1.10 Loan Accounts and Accounting.  The Revolver Agent shall maintain a
loan  account  on its books to record all  Revolving  Credit  Advances,  and all
payments of principal, interest and fees paid to the Revolver Agent with respect
thereto. The Term Agent shall maintain a loan account on its books to record the
Term Loans and all SCIL Loan Advances,  all payments of principal,  interest and
fees paid to the Term  Agent  with  respect  thereto,  and all other  debits and
credits as provided  in this  Agreement  with  respect to the Loans or any other
Obligations.  All  entries  in the  applicable  Loan  Account  shall  be made in
accordance with Applicable Agent's customary  accounting  practices as in effect
from time to time.  The balance in the applicable  Loan Account,  as recorded on
Applicable  Agent's most recent  printout or other written  statement,  shall be
presumptive  evidence of the amounts due and owing to the applicable  Lenders by
each Borrower, absent manifest error; provided,  however, that any failure to so
record or any error in so  recording  shall not limit or  otherwise  affect  any
Borrower's  duty to pay the  Obligations.  Upon request (but not more frequently
than  monthly),  Applicable  Agent shall  render to Borrower  Representative  an
accounting of  transactions  with respect to the Loans setting forth the balance
of  the  applicable   Loan  Account  as  to  each  Borrower.   Unless   Borrower
Representative notifies Applicable Agent in writing of any objection to any such
accounting  (specifically  describing the basis for such  objection),  within 30
days  after the date  thereof,  each and every such  accounting  shall be deemed
final,  binding and conclusive  upon Borrowers in all respects as to all matters
reflected therein, absent manifest error. Only those items expressly objected to
in such notice shall be deemed to be disputed by Borrowers.

         1.11 Indemnity.

                  (a) Each Credit Party that is a signatory hereto shall jointly
and severally  indemnify  and hold harmless each Agent,  each Lender and each of
their  respective  Affiliates,  and  each  such  Person's  respective  officers,
directors,   employees,   attorneys,   agents  and  representatives   (each,  an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, costs, damages,  losses,  liabilities and expenses (including reasonable
attorneys' fees and  disbursements  and other costs of investigation or defense,
including  those  incurred  upon any appeal) which may be instituted or asserted
against  or  incurred  by any such  Indemnified  Person as the  result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the  administration  of such credit,  and in connection with,
relating  to or  arising  out of the  transactions  contemplated  hereunder  and
thereunder and any actions or failures to act in connection therewith, including
any and all  Environmental  Liabilities and legal costs and expenses arising out
of,  relating to or incurred in connection  with  disputes  between or among any
parties to any of the Loan Documents other than disputes solely between or among
one or more of the Lenders or the  Agents,  which have not arisen as a result of
any  act or  omission  by one or  more  of  the  Credit  Parties  (collectively,
"Indemnified  Liabilities");  provided,  however,  that no Credit Party shall be
liable for any  indemnification  to an Indemnified Person to the extent that any
such suit, action,  proceeding,  claim, cost, damage, loss, liability or expense
results from that Indemnified  Person's gross negligence or willful  misconduct.
NO  INDEMNIFIED  PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY
LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON
OR ANY OTHER  PERSON  ASSERTING  CLAIMS  DERIVATIVELY  THROUGH  SUCH PARTY,  FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN  EXTENDED,  SUSPENDED OR TERMINATED  UNDER ANY LOAN
DOCUMENT  OR AS A RESULT  OF ANY OTHER  TRANSACTION  CONTEMPLATED  HEREUNDER  OR
THEREUNDER.

                  (b) To induce  Lenders to provide the LIBOR Rate option on the
terms provided  herein,  if (i) any LIBOR Loans are repaid or converted in whole
or in part prior to the last day of any  applicable  LIBOR Period  (whether that
repayment or conversion  is made pursuant to any provision of this  Agreement or
any other Loan Document or is the result of acceleration, by operation of law or
otherwise); (ii) any Borrower shall default in payment when due of the principal
amount of or interest on any LIBOR Loan;  (iii) any  Borrower  shall  default in
making any borrowing of or conversion  of the  applicable  Index Rate Loans into
LIBOR Loans after Borrower  Representative  has given notice requesting the same
in accordance  herewith;  or (iv) any Borrower shall fail to make any prepayment
of a LIBOR  Loan after  Borrower  Representative  has given a notice  thereof in
accordance  herewith,  Borrowers shall jointly and severally  indemnify and hold
harmless  each Agent and each Lender  from and  against  all  losses,  costs and
expenses  resulting or arising from any of the foregoing.  Such  indemnification
shall include any loss  (including  loss of margin) or expense  arising from the
reemployment of funds obtained by it or from fees payable to terminate  deposits
from which such funds were obtained,  including, without limitation, any and all
applicable  damages  and costs  provided  in Section  1.14.  For the  purpose of
calculating  amounts payable to Lenders under this subsection,  Lenders shall be
deemed to have actually funded the relevant LIBOR Loan through the purchase of a
deposit  bearing  interest at the LIBOR Rate in an amount equal to the amount of
that LIBOR Loan and having a maturity  comparable to the relevant  LIBOR Period;
provided, however, that Lenders may fund each of their respective LIBOR Loans in
any manner any such  Lender  sees fit,  and the  foregoing  assumption  shall be
utilized only for the calculation of amounts payable under this subsection. This
covenant shall survive the  termination of this Agreement and the payment of the
Notes and all other amounts payable hereunder.  As promptly as practicable under
the circumstances,  Applicable Agent shall provide Borrower  Representative with
its written calculation of all amounts payable pursuant to this Section 1.11(b),
and such  calculation  shall be binding on the parties  hereto  unless  Borrower
Representative  shall  object in  writing  within ten  Business  Days of receipt
thereof, specifying the basis for such objection in detail.
          1.12    Access.

                  (a) Each Credit Party shall,  during  normal  business  hours,
from time to time upon one  Business  Day's prior  notice and as  frequently  as
Applicable Agent determines to be appropriate:  (i) provide Applicable Agent and
any of its officers, employees and agents access to its properties,  facilities,
advisors and employees (including  officers) and to the Collateral,  (ii) permit
Applicable  Agent,  and any of its officers,  employees and agents,  to inspect,
audit and make  extracts from such Credit  Party's books and records,  and (iii)
permit  Applicable  Agent,  and any of its officers,  employees  and agents,  to
inspect,  review,  evaluate  and  make  test  verifications  and  counts  of the
Accounts,  Inventory and other  Collateral of any Credit Party.  If a Default or
Event of Default shall have occurred and be continuing or if access is necessary
to preserve or protect the  Collateral as determined by Applicable  Agent,  each
such Credit  Party shall  provide  such access at all times and without  advance
notice.  Furthermore, so long as any Event of Default shall have occurred and be
continuing,  each Credit  Party shall  provide  Applicable  Agent and any of its
officers,  employees and agents with access to its suppliers and customers. Each
Credit Party shall make  available  to Lender and its counsel,  as quickly as is
possible under the  circumstances,  originals or copies of all books and records
which Applicable Agent may request. Each Credit Party shall deliver any document
or  instrument  necessary  for  Applicable  Agent,  as it may from  time to time
request,  to  obtain  records  from any  service  bureau or other  Person  which
maintains records for such Credit Party, and shall maintain duplicate records or
supporting  documentation on media,  including computer tapes and discs owned by
such Credit Party.

                  (b) Borrowers shall pay Applicable Agent a Fee of $650 per day
per individual  (plus all  out-of-pocket  costs and expenses) in connection with
Applicable Agent's field examinations  permitted under Section 1.12(a) above and
Section 4(c) of the Security Agreement;  provided,  however,  that so long as no
Event of Default shall have occurred and be continuing,  Borrowers  shall not be
obligated for such Fees for more than four (4) field  examinations in any Fiscal
Year.

         1.13     Taxes.

                  (a) Any and all payments by each Borrower hereunder (including
any payments made pursuant to Section 13),  under the Notes,  or under any other
Loan  Document)  shall be made, in accordance  with this Section 1.13,  free and
clear of and without  deduction for any and all present or future Taxes.  If any
Borrower  shall be required by law to deduct any Taxes from or in respect of any
sum payable  hereunder  (including  any sum  payable  pursuant to Section 13) or
under the Notes,  (i) the sum  payable  shall be  increased  as much as shall be
necessary  so that after making all required  deductions  (including  deductions
applicable to additional sums payable under this Section 1.13)  Applicable Agent
and each Lender  receives an amount equal to the sum it would have  received had
no such deductions been made, (ii) such Borrower shall make such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within 30 days after the date
of any payment of Taxes,  Borrower  Representative  shall  furnish to Applicable
Agent the original or a certified copy of a receipt evidencing payment thereof.

                  (b) Each Credit Party that is a signatory hereto shall jointly
and severally  indemnify (for avoidance of doubt,  which  indemnification  shall
survive  indefinitely)  and, within ten days of demand therefor,  pay Applicable
Agent  for the  full  amount  of  Taxes  (including  any  Taxes  imposed  by any
jurisdiction  on amounts  payable  under this Section  1.13) paid by  Applicable
Agent or any  Lender,  and any  liability  (including  penalties,  interest  and
expenses) arising  therefrom or with respect thereto,  whether or not such Taxes
were correctly or legally asserted.

                  (c) Each  Lender  organized  under the laws of a  jurisdiction
outside the United States (a "Foreign  Lender") as to which  payments to be made
under  this  Agreement  or  under  the  Notes  are  exempt  from  United  States
withholding  tax under an  applicable  statute  or tax treaty  shall  provide to
Borrower and Agent a properly  completed and executed IRS Form 4224 or Form 1001
or other applicable form,  certificate or document  prescribed by the IRS or the
United  States  certifying  as to  such  Foreign  Lender's  entitlement  to such
exemption  (a  "Certificate  of  Exemption").  Any foreign  Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent prior to becoming a Lender  hereunder.  No foreign Person may
become a Lender  hereunder if such Person is unable to deliver a Certificate  of
Exemption.

         1.14  Capital  Adequacy;  Increased Costs; Illegality.(a) If Applicable
Agent or any  Lender  shall have  determined  that the  adoption  after the date
hereof  of  any  law,  treaty,   governmental  (or   quasi-governmental)   rule,
regulation,  guideline or order regarding capital adequacy, reserve requirements
or similar  requirements or compliance by Applicable Agent or any Lender (or any
holding  company  thereof)  with any  request  or  directive  regarding  capital
adequacy,  reserve requirements or similar  requirements  (whether or not having
the force of law),  in each  case,  adopted  after the  Closing  Date,  from any
central bank or other Governmental  Authority increases or would have the effect
of  increasing  the amount of capital,  reserves  or other funds  required to be
maintained by such party and thereby reducing the rate of return on such party's
capital  or  increasing  the  cost  of  making  or  maintaining  any  Loan  as a
consequence of its obligations hereunder, then Borrowers shall from time to time
upon demand by Applicable  Agent pay to Applicable  Agent for the benefit of the
applicable  Persons in Lender Group additional  amounts sufficient to compensate
such Persons for such reduction (taking into  consideration  their policies with
respect to capital  adequacy).  A certificate as to the amount of such reduction
and showing  the basis of the  computation  thereof  submitted  by the  affected
Person in Lender Group to Borrower Representative shall be final, conclusive and
binding for all purposes, absent manifest error.

                  (b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation  thereof) or (ii) the
compliance  with  any  guideline  or  request  from  any  central  bank or other
Governmental  Authority  (whether or not having the force of law),  in each case
adopted after the Closing  Date,  there shall be any increase in the cost to any
Lender of  agreeing to make or making,  funding or  maintaining  any Loan,  then
Borrowers  shall from time to time,  upon  demand by  Applicable  Agent,  pay to
Applicable Agent for the benefit of such Lender additional amounts sufficient to
compensate  such Lender for such increased  cost. A certificate as to the amount
of such increased  cost,  submitted to Borrower  Representative  by such Lender,
with a copy to Applicable  Agent,  shall be conclusive  and binding on Borrowers
for all purposes, absent manifest error. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances  referred to above which
would result in any such increased  cost,  such Lender shall,  to the extent not
inconsistent with such Lender's internal  policies of general  application,  use
reasonable  commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrowers pursuant to this Section 1.14(b).

                  (c) Notwithstanding anything to the contrary contained herein,
if the  introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to  continue to fund or  maintain  any LIBOR  Loan,  then,
unless such  Lender is able to make or to  continue to fund or to maintain  such
LIBOR Loan at another branch or office of such Lender without,  in such Lender's
opinion,  adversely  affecting it or its Loans or the income obtained therefrom,
on notice  thereof  and demand  therefor by  Applicable  Agent or such Lender to
Borrower  Representative,  (i) the obligation of such Lender to agree to make or
to make or to continue to fund or maintain LIBOR Loans shall  terminate and (ii)
each Borrower shall forthwith  prepay in full all outstanding  LIBOR Loans owing
by such Borrower to such Lender,  together with interest accrued thereon, unless
Borrower  Representative  on behalf of such Borrower,  within five Business Days
after the  delivery of such notice and  demand,  converts  all such Loans into a
Loan bearing interest based on the Index Rate.

         1.15  Single  Loan.  Subject  to the terms and  conditions  of the Loan
Documents,  all  Loans  (including,  without  limitation,  all  Letter of Credit
Obligations)  to Borrowers  and all of the other  Obligations  of each  Borrower
arising under this Agreement and the other Loan Documents  shall  constitute one
general obligation of Borrowers secured by all of their Collateral.

         1.16  Pro Rata  Treatment.  Except  to the  extent  otherwise  provided
herein,  (a) each Loan shall be incurred and made by the Lenders which have made
a Commitment for such Loan, and each payment of the Fees pursuant to Section 1.7
or elsewhere in this  Agreement  shall be made for the accounts of such Lenders,
pro rata according to the amounts of their  respective  Commitments with respect
to such Loan, (b) each payment or prepayment by any Borrower of principal of any
Loan shall be made to Applicable Agent for the account of the applicable Lenders
ratably in accordance with the respective  unpaid principal amounts of such Loan
held by such  Lenders,  and (c) each  payment of interest by any Borrower on any
Loan shall be made to Applicable Agent for the account of the applicable Lenders
ratably in  accordance  with the  amounts of  interest on such Loan then due and
payable to such Lenders.

         1.17  Non-Receipt Of Funds By Applicable Agent. Unless Applicable Agent
shall have been  notified by any Lender or the  applicable  Borrower  (in either
case,  "Payor")  prior to the date on which  such  Payor is to make  payment  to
Applicable  Agent of (in the case of any  Lender)  the  proceeds  of a Revolving
Credit  Advance or SCIL Loan Advance to be made by such Lender  hereunder or (in
the case of the  applicable  Borrower)  a payment  to  Applicable  Agent for the
account of one or more  Lenders  hereunder  (any such  payment by any such Payor
being herein  called the  "Required  Payment"),  which notice shall be effective
upon receipt by  Applicable  Agent,  that such Payor does not intend to make the
Required  Payment to  Applicable  Agent,  Applicable  Agent may assume  that the
Required  Payment has been made and may, in reliance upon such  assumption  (but
shall not be required  to),  make the amount  thereof  available to the intended
recipient(s)  on such date and, if such Payor has not in fact made the  Required
Payment to Applicable  Agent, the recipient(s) of such payment shall, on demand,
repay to Applicable  Agent the amount so made  available  together with interest
thereon in respect  of each day  during the period  commencing  on the date (the
"Advance Date") such amount was so made available by Applicable  Agent until the
date  Applicable  Agent  recovers such amount,  at a rate per annum equal to the
Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to
make such payment, Applicable Agent shall be entitled to recover such amount, on
demand, from such Payor, together with interest as aforesaid; provided, however,
that if neither  the  recipient(s)  nor such  Payor  shall  return the  Required
Payment to Applicable Agent within three Business Days of the Advance Date, then
retroactively to the Advance Date, such Payor and the recipient(s) shall each be
obligated to pay interest on the Required Payment as follows:

                  (a) if the Required  Payment  shall  represent a payment to be
made by the applicable  Borrower to Lenders,  such Borrower and the recipient(s)
shall (without duplication) each be obligated  retroactively to the Advance Date
to pay interest in respect of the Required  Payment at the Default Rate (and, in
case the  recipient(s)  shall return the Required  Payment to Applicable  Agent,
without  limiting the  obligation of the  applicable  Borrower  hereunder to pay
interest to such  recipient(s)  at the Default  Rate in respect of the  Required
Payment); and

                  (b) if the  Required  Payment  shall  represent  proceeds of a
Revolving  Credit  Advance  or SCIL Loan  Advance  to be made by the  applicable
Lenders to the applicable Borrower, such Payor and the applicable Borrower shall
(without duplication) each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the rate of interest provided for
such Required  Payment  pursuant  hereto (and, in case the  applicable  Borrower
shall return the Required  Payment to  Applicable  Agent,  without  limiting any
claim such Borrower may have against Payor in respect of the Required Payment).

Nothing in this Section  1.17 or  elsewhere in this  Agreement or the other Loan
Documents shall be deemed to require Applicable Agent to advance funds on behalf
of any  Lender or to relieve  any  Lender  from its  obligation  to fulfill  its
Revolving Loan Commitment or its SCIL Loan Commitment hereunder, as the case may
be, or to prejudice any rights that the applicable Borrower may have against any
Lender as a result of any default by any Lender hereunder.

         1.18     Sharing Of Payments, Etc.

                  (a) Each  Borrower  agrees  that,  in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim any Lender may
otherwise  have,  each Lender shall be entitled,  at such  Lender's  option (but
subject,  as between Lenders,  to the provisions of Section  1.1(e)),  to offset
balances held by it for the account of such  Borrower at any of its offices,  in
Dollars or any other  currency,  against any  principal of or interest on any of
such  Lender's  pro rata portion of any Loan  (including  any  Revolving  Credit
Advances or SCIL Loan Advances deemed made by such Lender under Section 1.17) or
any other amount payable to such Lender hereunder or under any of the other Loan
Documents,  that is not paid when due  (regardless  of whether such balances are
then due to the applicable  Borrower),  in which case such Lender shall promptly
notify Borrower Representative and Applicable Agent thereof; provided,  however,
that such Lender's  failure to give such notice shall not affect the validity of
any such offset.

                  (b) If any Lender shall  obtain from any  Borrower  payment of
any  principal  of or  interest  on any Loan owing to it or payment of any other
amount under this  Agreement or any Note held by it or any other Loan  Document,
through the exercise of any right of setoff,  banker's lien or  counterclaim  or
similar  right or  otherwise  (other  than  from  Applicable  Agent as  provided
herein),  and, as a result of such  payment,  such Lender shall have  received a
greater pro rata percentage of the principal of or interest on such Loan or such
other amounts then due from the applicable  Borrower to such Lender hereunder or
thereunder than the pro rata percentage of such obligation received by any other
Lender,  such overpaid  Lender shall  promptly pay to  Applicable  Agent for the
benefit of the applicable  Lenders the amount of such excess, and simultaneously
purchase  from such other Lenders a  participation  in (or, if and to the extent
specified by such Lender,  direct interests in) such Loan or such other amounts,
respectively,  owing to such other Lenders (or interest due thereon, as the case
may be) in such amounts,  and make such other  adjustments  from time to time as
shall be equitable,  to the end that all Lenders shall share the benefit of such
excess  payment  (net of any  expenses  that may be  incurred  by such Lender in
obtaining or preserving  such excess  payment) pro rata in  accordance  with the
unpaid  principal  of and  interest  on any  such  Loan or such  other  amounts,
respectively,  owing to such Lenders. Amounts received by Applicable Agent under
this Section  1.18(b) shall be treated as a payment by the  applicable  Borrower
under Section 1.8. To such end, all Lenders shall make  appropriate  adjustments
among themselves (by the resale of any  participation or direct interest sold or
otherwise) if such payment is rescinded or must otherwise be restored.

                  (c) Each Borrower  agrees that any Lender so purchasing such a
participation  or direct  interest may  exercise,  in a manner  consistent  with
Section 1.18(b), all rights of set-off,  banker's lien,  counterclaim or similar
rights with respect to such participation or direct interest as fully as if such
Lender were a direct holder of the applicable Loan or other amounts, as the case
may be,  owing to such  Lender  in the  amount of such  participation  or direct
interest.

                  (d)  Nothing  contained  herein  shall  require  any Lender to
exercise  any right as against  the  applicable  Borrower as  described  in this
Section  1.18,  or shall affect the right of any Lender to exercise,  and retain
the  benefits  of  exercising,   any  such  right  with  respect  to  any  other
indebtedness   or  obligation  of  such  Borrower.   If,  under  any  applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff or right as against any  Borrower to which this Section 1.18
applies,  such Lender shall,  to the extent  practicable,  assign such rights to
Term Agent for the benefit of Lender Group in accordance  with this Section and,
in any event,  exercise its rights in respect of such secured  claim in a manner
consistent with the rights of Lenders  entitled under this Section 1.18 to share
in the benefits of any recovery on such secured claims.

         1.19     Settlement Procedures.

                  (a) The balance of any Revolving Loan may fluctuate during any
week from Revolver Agent's  distribution of funds to, and receipt of funds from,
Borrowers.  In order to minimize the  frequency  of  transfers of funds  between
Revolver Agent and Lenders,  Revolving  Credit  Advances may be made by Revolver
Agent (but  Revolver  Agent shall have no  obligation  to do so) and payments in
respect  thereof will be settled  according to the  procedures set forth in this
Section  1.19.  Notwithstanding  these  procedures,   each  applicable  Lender's
obligation  to fund its  portion of any  Revolving  Credit  Advance  made to any
Borrower will commence on the date such Revolving  Credit Advance is made.  Such
payments will be made by each Lender without  setoff,  counterclaim or reduction
of any kind.

                  (b) Notwithstanding anything to the contrary contained in this
Agreement,  Revolver  Agent may elect,  at its sole  option,  to fund the entire
amount of any Revolving Credit Advance  requested by any Borrower.  In the event
Revolver  Agent makes such  election,  such  Revolving  Credit  Advance  made by
Revolver Agent shall be deemed,  and shall constitute,  as of the date of making
thereof, a Revolving Credit Advance made by each of the applicable Lenders in an
amount equal to each such applicable  Lender's pro rata share thereof,  and each
such  applicable  Lender  shall be  obligated,  regardless  of  whether  or not,
subsequent to the making by the Revolver  Agent of a Revolving  Credit  Advance,
any  Default  or Event of Default  shall have  occurred  or be  continuing,  any
representation  or  warranty  set  forth  in  any  Loan  Document  is  false  or
misleading,  any  conditions  precedent for borrowing are satisfied or any other
reason  whatsoever,  to deliver to Revolver  Agent such share of such  Revolving
Credit Advance on the Weekly  Settlement  Date in accordance  with the procedure
for weekly  settlement set forth in Section 1.19(c) or as otherwise  provided in
Section  1.19(d).  Notwithstanding  anything to the  contrary  contained in this
Agreement,  for  purposes  of  calculating  interest  payable  to any Lender (i)
Revolver  Agent  shall be deemed a  "Lender"  with  respect  to any  outstanding
Revolving  Credit  Advances  funded by  Revolver  Agent,  and (ii) the amount of
Revolving  Credit Advances of any applicable  Lender that are outstanding on any
day shall be equal to the amount of such applicable  Lender's  Revolving  Credit
Advances  outstanding  on such day (A) excluding any Revolving  Credit  Advances
that have been  funded  entirely by  Revolver  Agent with  respect to which such
applicable Lender has not funded its pro rata share and (B) including  Revolving
Credit Advances of such applicable Lender which have been repaid by Borrowers to
Revolver  Agent but not yet  received by such  applicable  Lender from  Revolver
Agent.

                  (c) Each  applicable  Lender shall settle with Revolver Agent,
upon Revolver  Agent's  request,  on the third  Business Day of each week (or on
such other day of the week as may be  designated  from time to time by  Revolver
Agent)  in each  successive  week (the  "Weekly  Settlement  Date"),  on the net
Revolving  Credit  Advances  and  payments  made  since  the  date  of the  last
settlement.  On each Weekly Settlement Date, prior to 12:00 noon (New York time)
Revolver  Agent shall  notify each  applicable  Lender by telephone or by telex,
telecopy or other form of teletransmission, of such applicable Lender's pro rata
share of the outstanding Revolving Credit Advances and the amount of the payment
necessary  to adjust  such  applicable  Lender's  outstanding  Revolving  Credit
Advances to such  applicable  Lender's pro rata share of such  Revolving  Credit
Advances as of such Weekly Settlement Date (on a net basis,  taking into account
any funds in the applicable  Collection  Account which Revolver Agent determines
are  available).  Any such  payment  shall be made by the party  from which such
payment is due to the other party,  in same day funds,  not later than 2:00 p.m.
(New York time) on such Weekly  Settlement Date. If any applicable Lender shall,
for any reason, not settle with Revolver Agent within one Business Day after the
Weekly  Settlement Date, such overpaid Lender agrees to pay, and Borrowers agree
to repay to Revolver Agent forthwith on demand, the amount due Revolver Agent on
such Weekly  Settlement  Date,  together with interest thereon for each day from
such Weekly Settlement Date until the day such amount is paid to Revolver Agent,
at the Federal Funds Rate for each day after the date of demand that such amount
remains  unpaid.  If such Lender shall pay to Revolver Agent such  corresponding
amount,  such amount so paid shall  constitute  such Lender's  Revolving  Credit
Advance  and,  if both such  Lender and  Borrowers  shall have paid and  repaid,
respectively,  such corresponding amount, then Revolver Agent shall promptly pay
over to Borrower Representative such corresponding amount in same day funds, but
Borrowers shall remain obligated for all interest thereon.

                  (d) As an alternative to the weekly settlement provided for in
Section  1.19(c),  Revolver  Agent may  elect,  at its sole  option,  to use the
following  same day  settlement  procedure for  borrowings  of Revolving  Credit
Advances:  prior to 12:00  noon (New York  time),  on any date  specified  for a
borrowing of a Revolving Credit Advance in a Notice of Revolving Credit Advance,
Revolver  Agent may notify  each  applicable  Lender by  telephone  or by telex,
telecopy or other form of  teletransmission,  of the requested  Revolving Credit
Advance.  Not later than 2:00 p.m.  (New York time) on the date of such proposed
Revolving Credit Advance each applicable Lender shall make available to Revolver
Agent,  in same day funds,  to such account of Revolver  Agent as Revolver Agent
may designate,  such Lender's pro rata share of such Revolving  Credit  Advance.
Notwithstanding  the foregoing,  to the extent that there are available funds in
the  applicable  Collection  Account,  Revolver  Agent may, at Revolver  Agent's
discretion,  notify each applicable Lender that such Lender's obligation to make
such  Lender's  pro rata share of such  Revolving  Credit  Advance  available to
Revolver Agent in same day funds as provided in the preceding  sentence shall be
satisfied  to the  extent  of its  pro  rata  share  out of  such  funds  in the
applicable  Collection  Account, or such portion of such funds as Revolver Agent
shall indicate are to be applied to fund such Revolving Credit Advance.

2.       CONDITIONS PRECEDENT

         2.1 Conditions to the Initial  Loans.  No Agent nor any Lender shall be
obligated to make any Loan or Advance or incur any Letter of Credit  Obligations
on the Closing Date, or to take, fulfill, or perform any other action hereunder,
until the following  conditions have been satisfied,  in Applicable Agent's sole
discretion, or waived in writing by Applicable Agent:

                  (a)  Credit  Agreement;  Loan  Documents.  This  Agreement  or
counterparts  hereof  shall  have been  duly  executed  by,  and  delivered  to,
Borrowers,  the other Credit Parties, Agents and Lenders, and Agents and Lenders
shall have received such documents,  instruments,  agreements and legal opinions
or  solvency  opinions  as  Agents  and  Lenders  shall  reasonably  request  in
connection  with the  transactions  contemplated by this Agreement and the other
Loan  Documents,  including all those listed in the Closing  Checklist  attached
hereto as Annex D, each in form and substance satisfactory to Agents.

                  (b)  Repayment of Prior Lender  Obligations;  Satisfaction  of
Outstanding L/Cs etc. Agents shall have received a fully executed  original of a
pay-off letter  satisfactory  to Lender  confirming that all of the Prior Lender
Obligations  will be repaid in full from the  proceeds  of the Term  Loans,  the
initial Revolving Credit Advance and the initial SCIL Loan Advance and all Liens
upon any of the property of Borrowers or any of their  Subsidiaries  in favor of
Prior  Lenders  shall be  terminated  by Prior  Lenders  immediately  upon  such
payment; (ii) all letters of credit, bankers acceptances and/or other contingent
obligations,  issued  or  guaranteed  by  Prior  Lender  shall  have  been  cash
collateralized,  supported  by a guaranty of Lender or  supported by a Letter of
Credit issued pursuant to Annex B, as mutually agreed upon by Lender,  Borrowers
and Prior Lender,  and (iii) the  Borrowers,  the Agents,  and the Lenders shall
have  executed  and  delivered  a  closing   statement  in  form  and  substance
satisfactory  to all of the Agents and the Lenders  irrevocably  authorizing and
directing  the payoff of the Prior Lender  Obligations  and covering  such other
matters as the Term Agent may require in its sole discretion.

                  (c)  Approvals.  Agents shall have  received (i)  satisfactory
evidence  that the Credit  Parties  have  obtained  all  required  consents  and
approvals of all Persons,  including all requisite Governmental Authorities,  to
the  execution,  delivery and  performance  of this Agreement and the other Loan
Documents and the consummation of the Related  Transactions or (ii) an officer's
certificate  from an officer of Borrower  Representative  in form and  substance
satisfactory  to  Agents  affirming  that  no such  consents  or  approvals  are
required.

                  (d)  Payment  of  Fees.  Borrowers  shall  have  paid the Fees
required to be paid on the  Closing  Date and shall have  reimbursed  Agents and
Lenders for all fees, costs and expenses of closing  presented as of the Closing
Date.

                  (e)  Capital  Structure:   Other  Indebtedness.   The  capital
structure of each Credit Party and the terms and conditions of all  Indebtedness
of each Credit Party shall be acceptable  to Term Agent in its sole  discretion.

                  (f)  Consummation of Related  Transactions.  Agents shall have
received fully  executed  copies of each of the Related  Transactions  Documents
(other  than in  respect of Allowed  Sales)  each of which  shall be in form and
substance  satisfactory  to Agents and their  respective  counsel.  The  Related
Transactions  shall have been  consummated  in accordance  with the terms of the
Related Transactions Documents.

                  (g) Due Diligence. Agents shall have completed their legal due
diligence, and shall have, in their respective sole discretion,  determined that
the results  thereof are  acceptable.  Without  limiting the  generality  of the
foregoing,  with respect to each Credit Party, the corporate structure,  capital
structure,  terms and  conditions of all  Indebtedness,  material  contracts and
lease  contracts,  all  organizational  and  operational  documents  (including,
articles or certificates of incorporation or organization,  bylaws,  partnership
agreements, operating agreements, shareholder agreements and any other governing
documents)  and  any  tax  effects   resulting  from  any  of  the  transactions
contemplated  under the Agreement or any other Loan Document shall be acceptable
to Agents in their respective sole discretion.

                  (h)   Representations,    Warranties   and   Covenants.    All
representations  and  warranties  by any  Credit  Party  contained  in the  Loan
Documents  shall be true,  complete and  correct,  and all  covenants  and other
agreements of any Credit Party  contained in the Loan Documents  shall have been
complied with in full.

                  (i)  Commitments  of Other Lenders.  Lenders  acceptable to GE
Capital shall have  committed,  on terms  acceptable to GE Capital,  to fund the
Commitments  in an aggregate  amount equal to or greater than  $15,000,000.

         2.2      Further Conditions to Each Loan. No Agent nor any Lender shall
be  obligated to fund any Loan or convert or cause the  conversion  of any Index
Rate Loan to a LIBOR  Loan or incur any Letter of Credit  Obligation,  if, as of
the date thereof:

                  (a) Any  representation  by or  warranty  of any Credit  Party
contained  herein  or in  any of the  other  Loan  Documents  shall  be  untrue,
incomplete  or  incorrect  as of such  date,  except  to the  extent  that  such
representation  or warranty  expressly relates to an earlier date and except for
changes therein expressly permitted or expressly contemplated by this Agreement;

                  (b) Any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof;

                  (c) Any Default or Event of Default shall have occurred and be
continuing or would result after giving effect to any Loan (or the incurrence of
any Letter of Credit Obligations); or

                  (d) After giving  effect to any Advance (or the  incurrence of
any Letter of Credit Obligations),  (i) the outstanding  principal amount of the
aggregate  applicable Loan would exceed the aggregate  Commitments in respect of
such Loan.

The request and  acceptance  by any  Borrower of the  proceeds of any Loan,  the
incurrence of any Letter of Credit  Obligations,  or the  conversion of any Loan
into an Index Rate Loan, as the case may be, shall be deemed to  constitute,  as
of the date of such request or acceptance or  conversion,  (i) a  representation
and warranty by each Credit Party that the  conditions  in this Section 2.2 have
been  satisfied  and (ii) a  reaffirmation  by Borrowers  of the  cross-guaranty
provisions  set forth in Section 13 and of the granting and  continuance of Term
Agent's  Liens  for the  benefit  of Lender  Group  pursuant  to the  Collateral
Documents.

3.       REPRESENTATIONS AND WARRANTIES

         To  induce  Lenders  to make the  Loans,  to  incur  Letter  of  Credit
Obligations,  and to induce  Agents to undertake  their  respective  obligations
hereunder and under the other Loan Documents,  the Credit Parties executing this
Agreement,  jointly  and  severally,  make  the  following  representations  and
warranties  to each Agent and each  Lender with  respect to all Credit  Parties,
each and all of which representations and warranties shall survive the execution
and delivery of this Agreement.

         3.1 Corporate Existence;  Compliance with Law. Each Credit Party (a) is
a corporation  duly organized,  validly  existing and in good standing under the
laws of its  jurisdiction  of  incorporation;  (b) is duly  qualified to conduct
business and is in good standing in each other  jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification,
except  where the  failure to be so  qualified  would not result in  exposure to
losses,  damages or  liabilities  in excess of  $50,000;  (c) has the  requisite
corporate  power and authority and the legal right to own,  pledge,  mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its  business as now,  heretofore  and proposed to be
conducted; (d) subject to specific representations regarding Environmental Laws,
has all licenses,  permits,  consents or approvals  from or by, and has made all
filings with, and has given all notices to, all Governmental  Authorities having
jurisdiction, to the extent required for such ownership,  operation and conduct;
(e) is in compliance  with its charter and bylaws (or, in the case of any Credit
Party that is a limited liability  company,  its operating  agreement);  and (f)
subject  to  specific   representations   set  forth  herein   regarding  ERISA,
Environmental  Laws,  tax and other laws, is in compliance  with all  applicable
provisions of law,  except where the failure to comply,  individually  or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

         3.2  Executive  Offices;  FEIN.  As of the  Closing  Date,  the current
location of each Credit Party's chief  executive  office and principal  place of
business is set forth in Disclosure  Schedule  (3.2) and none of such  locations
have  changed  within the 12 months  preceding  the Closing  Date.  In addition,
Disclosure  Schedule (3.2) lists the federal employer  identification  number of
each Credit Party.

         3.3  Corporate  Power,  Authorization,   Enforceable  Obligations.  The
execution,  delivery and  performance by each Credit Party of the Loan Documents
to which it is a party and the  creation of all Liens  provided  for therein (a)
are within such Person's  corporate (or limited  liability  company) power;  (b)
have been duly  authorized  by all  necessary  or proper  corporate  (or limited
liability  company) and  shareholder  (or limited  liability  company  member or
manager) action; (c) do not contravene any provision of such Person's charter or
bylaws (or, in the case of any Credit Party that is a limited liability company,
its operating agreement); (d) do not violate any law or regulation, or any order
or decree of any court or  Governmental  Authority;  (e) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
or permit the  acceleration  of any  performance  required  by,  any  indenture,
mortgage,  deed of trust,  lease,  agreement or other  instrument  to which such
Person is a party or by which such Person or any of its  property is bound;  (f)
do not result in the creation or imposition of any Lien upon any of the property
of such Person other than Liens in favor of Term Agent for the benefit of Lender
Group  pursuant  to the Loan  Documents;  and (g) do not  require the consent or
approval  of any  Governmental  Authority  or any  other  Person,  except  those
referred to in Section 2.1(c),  all of which will have been duly obtained,  made
or complied  with prior to the Closing  Date.  On or prior to the Closing  Date,
each of the Loan  Documents  shall have been duly executed and delivered by each
Credit Party thereto and each such Loan Document shall then  constitute a legal,
valid and binding  obligation  of such Credit  Party  enforceable  against it in
accordance with its terms.

         3.4 Financial  Statements and  Projections.  Except for the Projections
and  the  Fair  Salable  Balance  Sheet,  all  Financial  Statements  concerning
Borrowers and their respective Subsidiaries which are referenced below have been
prepared in accordance  with GAAP  consistently  applied  throughout the periods
covered  (except as  disclosed  therein and except,  with  respect to  unaudited
Financial  Statements,  for the absence of footnotes and normal  year-end  audit
adjustments) and present fairly in all material respects the financial  position
of the Persons  covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.

                  (a) The following  Financial  Statements  attached hereto
as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:

                         (i)....The   audited   consolidated  and  consolidating
balance  sheets at June 30, 1998 and 1999 and the related  statements  of income
and cash flows of  Borrowers  and their  Subsidiaries  for the Fiscal Years then
ended, certified by Ernst & Young LLP.

                         (ii)....The  unaudited balance sheet(s) at December 31,
1999 and the  related  statement(s)  of income and cash flows of  Borrowers  and
their Subsidiaries for the Fiscal Quarter then ended.

                  (b) Pro Forma. The Pro Forma delivered on the date hereof
and attached  hereto as Disclosure  Schedule  (3.4(b)) was prepared by Borrowers
giving pro forma effect to the Related Transactions,  was based on the unaudited
consolidated   and   consolidating   balance   sheets  of  Borrowers  and  their
Subsidiaries  dated December 31, 1999, and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with GAAP.

                  (c) Projections.  The Projections delivered on the date hereof
and  attached  hereto as  Disclosure  Schedule  (3.4(c))  have been  prepared by
Borrowers in light of the past  operations  of their  businesses,  but including
future payments of known  contingent  liabilities  reflected on the Fair Salable
Balance Sheet,  and reflect  projections  for the five year period  beginning on
June 30,  1999 on a  quarterly  basis for the first  year and on a  year-by-year
basis  thereafter.  The  Projections  are based upon  estimates and  assumptions
stated  therein,  all of which  Borrowers  believe to be reasonable  and fair in
light of current  conditions and current facts known to Borrowers and, as of the
Closing Date,  reflect  Borrowers'  good faith and  reasonable  estimates of the
future  financial  performance  of Borrowers and their  Subsidiaries  and of the
other information projected therein for the period set forth therein.

                  (d) Fair Salable Balance Sheet. The Fair Salable Balance Sheet
delivered on the date hereof and attached hereto as Disclosure Schedule (3.4(d))
was  prepared  by  Borrowers  on the same  basis as the Pro Forma,  except  that
Borrowers'  assets are set forth therein at their fair salable values on a going
concern  basis and the  liabilities  set forth  therein  include all  contingent
liabilities  of Borrowers  stated at the  reasonably  estimated  present  values
thereof.

         3.5  Material  Adverse  Effect.  Between  June 30, 1999 and the Closing
Date,  (a)  no  Credit  Party  has  incurred  any  obligations,   contingent  or
non-contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term  commitments  which are not  reflected in the Pro Forma and
which,  alone  or in the  aggregate,  could  reasonably  be  expected  to have a
Material Adverse Effect, (b) no contract, lease or other agreement or instrument
has been entered into by any Credit Party or has become  binding upon any Credit
Party's assets and no law or regulation  applicable to any Credit Party has been
adopted which has had or could reasonably be expected to have a Material Adverse
Effect,  and (c) no Credit  Party is in default  and to the best of each  Credit
Party's  knowledge  no third party is in default  under any  material  contract,
lease or other  agreement or instrument,  which alone or in the aggregate  could
reasonably be expected to have a Material Adverse Effect.  Between June 30, 1999
and the Closing Date no event has  occurred,  which alone or together with other
events,  could  reasonably be expected to have a Material  Adverse  Effect.

         3.6  Ownership of Property;  Liens.  As of the Closing  Date,  the real
estate ("Real  Estate") listed on Disclosure  Schedule (3.6)  constitutes all of
the real property owned,  leased,  subleased,  or used by any Credit Party. Each
Credit Party owns good and  marketable fee simple title to all of its owned real
estate, and valid and marketable  leasehold  interests in all of its leased Real
Estate,  all as described on Disclosure  Schedule (3.6),  and copies of all such
leases or a summary of the terms  thereof  satisfactory  to Term Agent have been
delivered to Term Agent.  Disclosure  Schedule (3.6) further  describes any Real
Estate with respect to which any Credit Party is a lessor, sublessor or assignor
as of the Closing Date. Each Credit Party also has good and marketable title to,
or valid leasehold  interests in, all of its personal  properties and assets. As
of the Closing Date,  none of the  properties and assets of any Credit Party are
subject to any Liens other than Permitted Encumbrances,  and there are no facts,
circumstances  or  conditions  known to any Credit  Party that may result in any
Liens  (including Liens arising under  Environmental  Laws) other than Permitted
Encumbrances.  Each Credit Party has received all deeds,  assignments,  waivers,
consents,  non-disturbance and recognition or similar agreements,  bills of sale
and other  documents,  and has duly effected all  recordings,  filings and other
actions  necessary to establish,  protect and perfect such Credit Party's right,
title and  interest  in and to all such Real  Estate  and other  properties  and
assets. Disclosure Schedule (3.6) also describes any purchase options, rights of
first refusal or other similar contractual rights pertaining to any Real Estate.
As of the  Closing  Date,  no  portion  of any Credit  Party's  Real  Estate has
suffered  any  material  damage  by fire or other  casualty  loss  which has not
heretofore  been repaired and restored in all material  respects to its original
condition or otherwise  remedied.  As of the Closing Date, all material  permits
required  to have been  issued or  appropriate  to enable the Real  Estate to be
lawfully  occupied and used for all of the purposes for which they are currently
occupied and used have been lawfully issued and are in full force and effect.

         3.7 Labor  Matters.  As of the  Closing  Date (a) no  strikes  or other
material labor  disputes  against any Credit Party are pending or, to any Credit
Party's  best  knowledge,  threatened;  (b) hours  worked by and payment made to
employees of each Credit Party comply with the Fair Labor Standards Act and each
other federal,  state,  local or foreign law applicable to such matter;  (c) all
payments  due from any Credit Party for  employee  health and welfare  insurance
have been paid or accrued as a liability on the books of such Credit Party;  (d)
except as set forth in Disclosure  Schedule (3.7), no Credit Party is a party to
or  bound  by  any  collective  bargaining   agreement,   management  agreement,
consulting  agreement or any employment  agreement (and true and complete copies
of any agreements  described on Disclosure Schedule (3.7) have been delivered to
Agents);  (e) there is no organizing activity involving any Credit Party pending
or, to any Credit Party's best knowledge, threatened by any labor union or group
of employees;  (f) there are no  representation  proceedings  pending or, to any
Credit Party's best  knowledge,  threatened  with the National  Labor  Relations
Board,  and no labor  organization or group of employees of any Credit Party has
made a pending demand for recognition; and (g) except as set forth in Disclosure
Schedule  (3.7),  there are no  complaints  or charges  against any Credit Party
pending or, to the best  knowledge of any Credit  Party,  threatened to be filed
with any  Governmental  Authority  or  arbitrator  based on,  arising out of, in
connection  with,  or otherwise  relating to the  employment or  termination  of
employment of any individual by any Credit Party.

         3.8  Ventures,  Subsidiaries  and  Affiliates;  Outstanding  Stock  and
Indebtedness.  Except as set forth in Disclosure Schedule (3.8), no Credit Party
has any  Subsidiaries,  is engaged in any joint venture or partnership  with any
other  Person,  or is an  Affiliate of any other  Person.  All of the issued and
outstanding  Stock of each  Credit  Party other than VSC is owned by each of the
stockholders and in the amounts set forth on Disclosure  Schedule (3.8), and all
holders of five percent (5%) or more of the issued and outstanding  Stock of VSC
are  listed,  together  with the  amount of Stock held by each such  Person,  on
Disclosure  Schedule 3.8. There are no outstanding rights to purchase,  options,
warrants or similar rights or agreements  pursuant to which any Credit Party may
be  required  to issue,  sell,  repurchase  or redeem  any of its Stock or other
equity  securities or any Stock or other equity  securities of its Subsidiaries.
All  outstanding  Indebtedness  of each Credit  Party as of the Closing  Date is
described in Section 6.3  (including  Disclosure  Schedule  (6.3)).  None of the
Credit  Parties  other  than  Borrowers  has any assets  (except  stock of their
Subsidiaries)  or  any  Indebtedness  or  Guaranteed  Indebtedness  (except  the
Obligations).

         3.9 Government  Regulation.  No Credit Party is an "investment company"
or an "affiliated  person" of, or "promoter" or "principal  underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940 as  amended.  No Credit  Party is  subject to  regulation  under the Public
Utility  Holding  Company Act of 1935,  the Federal Power Act, in either case as
amended,  or any other  federal or state  statute  that  restricts or limits its
ability to incur  Indebtedness  or to perform  its  obligations  hereunder.  The
making of the Loans by Lenders to  Borrowers,  the  incurrence  of the Letter of
Credit  Obligations  on behalf of  Borrowers,  the  application  of the proceeds
thereof and repayment  thereof and the consummation of the Related  Transactions
will not violate any  provision of any such statute or any rule,  regulation  or
order issued by the Securities and Exchange Commission.

         3.10  Margin  Regulations.  No  Credit  Party is  engaged,  nor will it
engage,  principally or as one of its important  activities,  in the business of
extending  credit for the  purpose of  "purchasing"  or  "carrying"  any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other  extensions  of credit  under this  Agreement
will be used, directly or indirectly,  for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness which
was  originally  incurred to purchase or carry any Margin Stock or for any other
purpose  which might cause any of the Loans or other  extensions of credit under
this  Agreement  to be  considered  a "purpose  credit"  within  the  meaning of
Regulation T, U or X of the Federal  Reserve Board. No Credit Party will take or
permit to be taken any action which might cause any Loan Document to violate any
regulation of the Federal Reserve Board.

         3.11  Taxes.  All  tax  returns,  reports  and  statements,   including
information returns,  required by any Governmental  Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late  charge may be added  thereto  for  nonpayment  thereof  (or any such fine,
penalty,  interest,  late  charge or loss has been paid),  excluding  Charges or
other amounts  being  contested in accordance  with Section  5.2(b).  Proper and
accurate  amounts have been  withheld by each Credit  Party from its  respective
employees for all periods in full and complete  compliance  with all  applicable
federal,  state,  local and foreign law, and such  withholdings have been timely
paid to the respective Governmental Authorities. Disclosure Schedule (3.11) sets
forth as of the Closing Date those  taxable  years for which any Credit  Party's
tax  returns  are  currently  being  audited by the IRS or any other  applicable
Governmental   Authority  and  any  assessments  or  threatened  assessments  in
connection  with such  audit,  or  otherwise  currently  outstanding.  Except as
described on Disclosure  Schedule (3.11),  no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or other document
extending,  or having the effect of  extending,  the  period for  assessment  or
collection  of any  Charges.  None of the Credit  Parties  and their  respective
predecessors  are liable for any Charges (a) under any agreement  (including any
tax sharing  agreements)  or (b) to each Credit  Party's  best  knowledge,  as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any  adjustment  under  IRC  Section  481(a),  by  reason of a change in
accounting method or otherwise, which could have a Material Adverse Effect.

         3.12     ERISA.

                  (a) Disclosure Schedule (3.12) lists and separately identifies
all Title IV Plans, Multiemployer Plans, ESOPs and Retiree Welfare Plans. Copies
of all such listed Plans,  together with a copy of the latest form 5500 for each
such Plan,  have been  delivered to Agents and  Lenders.  Except with respect to
Multiemployer  Plans,  each  Qualified  Plan has been  determined  by the IRS to
qualify under  Section 401 of the IRC, and the trusts  created  thereunder  have
been determined to be exempt from tax under the provisions of Section 501 of the
IRC, and nothing has occurred  which would cause the loss of such  qualification
or tax-exempt status. Each Plan is in compliance with the applicable  provisions
of ERISA and the IRC,  including the filing of reports required under the IRC or
ERISA. No Credit Party or ERISA Affiliate has failed to make any contribution or
pay any amount due as required  by either  Section 412 of the IRC or Section 302
of ERISA or the terms of any such Plan.  No Credit Party or ERISA  Affiliate has
engaged in a prohibited  transaction,  as defined in Section 4975 of the IRC, in
connection with any Plan, which would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 4975 of the IRC.

                  (b) Except as set forth in Disclosure  Schedule  (3.12) (i) no
Title IV Plan has any Unfunded Pension  Liability;  (ii) no ERISA Event or event
described  in Section  4062(e)  of ERISA  with  respect to any Title IV Plan has
occurred or is reasonably  expected to occur; (iii) there are no pending,  or to
the best knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal  course),  sanctions,  actions or  lawsuits,  asserted or
instituted  against any Plan or any Person as  fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA  Affiliate has incurred or  reasonably  expects to
incur any  liability  as a result of a  complete  or partial  withdrawal  from a
Multiemployer  Plan;  (v)  within  the last  five  years  no Title IV Plan  with
Unfunded  Pension  Liabilities has been  transferred  outside of the "controlled
group" (within the meaning of Section  4001(a)(14) of ERISA) of any Credit Party
or ERISA  Affiliate;  and (vi) no  liability  under  any  Title IV Plan has been
satisfied with the purchase of a contract from an insurance  company that is not
rated AAA by the  Standard & Poor's  Rating  Group or the  equivalent  rating by
another nationally recognized rating agency.

         3.13  No Litigation.  No action, claim, lawsuit, demand,  investigation
or  proceeding  is now pending or, to the best  knowledge  of any Credit  Party,
threatened against any Credit Party before any Governmental  Authority or before
any arbitrator or panel of arbitrators (collectively,  "Litigation"),  (a) which
challenges any Credit Party's right or power to enter into or perform any of its
obligations  under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which
has a  reasonable  risk of being  determined  adversely  to any Credit Party and
which, if so determined,  could have a Material  Adverse  Effect.  Except as set
forth  on  Disclosure  Schedule  (3.13),  as of the  Closing  Date  there  is no
Litigation  pending or  threatened  which seeks damages in excess of $100,000 or
injunctive relief or alleges criminal misconduct of any Credit Party.

         3.14 Brokers.  No broker or finder acting on behalf of any Credit Party
(other than People's  Capital and Leasing  Corp.)  brought about the  obtaining,
making or closing of the Loans or the Related Transactions,  and no Credit Party
has any obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.

         3.15 Intellectual  Property.  As of the Closing Date, each Credit Party
owns or has rights to use all  Intellectual  Property  necessary  to continue to
conduct its  business  as now or  heretofore  conducted  by it or proposed to be
conducted by it, and each Patent,  Trademark,  Copyright  and License is listed,
together with application or registration numbers, as applicable,  in Disclosure
Schedule  (3.15)  hereto.  Each Credit  Party  conducts its business and affairs
without  infringement of or interference  with any Intellectual  Property of any
other  Person,  nor, to the best  knowledge of each Credit  Party,  do any other
Person's  activities  constitute   infringement  of  or  interference  with  any
Intellectual Property of any Credit Party.

         3.16 Full Disclosure.  No information contained in this Agreement,  any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other  reports from time to time  delivered  hereunder or any written
statement  furnished  by or on  behalf of any  Credit  Party to any Agent or any
Lender  pursuant to the terms of this  Agreement  contains  or will  contain any
untrue  statement  of a material  fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the  circumstances  under which they were made. The Liens granted to
Term Agent for the benefit of Lender Group pursuant to the Collateral  Documents
will  at all  times  be  fully  perfected  first  priority  Liens  in and to the
Collateral  described therein (except those Liens in favor of Term Agent for the
benefit of Lender  Group with  respect  to the SCIL Loan,  which  shall be fully
perfected second priority  Liens),  subject,  as to priority,  only to Permitted
Encumbrances with respect to the Collateral other than Accounts.

         3.17     Environmental Matters.

                  (a) Except as set forth in Disclosure  Schedule (3.17),  as of
the  Closing  Date:  (i) the  Real  Estate  is free of  contamination  from  any
Hazardous Material except for such contamination that would not adversely impact
the value or  marketability  of such Real  Estate and which  would not result in
Environmental  Liabilities which could reasonably be expected to exceed $25,000;
(ii) no Credit  Party has caused or suffered  to occur any Release of  Hazardous
Materials  on, at, in, under,  above,  to, from or about any of its Real Estate;
(iii) the Credit Parties are and have been in compliance with all  Environmental
Laws,  except for such  noncompliance  which  would not result in  Environmental
Liabilities  which could  reasonably  be expected  to exceed  $25,000;  (iv) the
Credit Parties have  obtained,  and are in compliance  with,  all  Environmental
Permits  required by  Environmental  Laws for the operations of their respective
businesses as presently  conducted or as proposed to be conducted,  except where
the failure to so obtain or comply  with such  Environmental  Permits  would not
result in Environmental Liabilities which could reasonably be expected to exceed
$25,000, and all such Environmental  Permits are valid,  uncontested and in good
standing;  (v) no Credit Party is involved in  operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could  reasonably  be  expected  to  exceed  $25,000,  and no  Credit  Party has
permitted  any current or former tenant or occupant of the Real Estate to engage
in any such operations;  (vi) there is no Litigation arising under or related to
any Environmental Laws,  Environmental Permits or Hazardous Material which seeks
damages,  penalties, fines, costs or expenses in excess of $25,000 or injunctive
relief,  or which alleges  criminal  misconduct  by any Credit  Party;  (vii) no
notice has been received by any Credit Party  identifying  it as a  "potentially
responsible  party" or requesting  information  under CERCLA or analogous  state
statutes,  and, to the best knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified
as a "potentially  responsible  party" under CERCLA or analogous state statutes;
and (viii) the Credit  Parties  have  provided to Agents  copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental  Liabilities,  in each case relating to any
Credit Party.

                  (b) Each Credit Party hereby  acknowledges  and agrees that no
Agent nor any Lender (i) is now, or has ever been, in control of any of the Real
Estate or any Credit  Party's  affairs,  nor (ii) has the  capacity  through the
provisions of the Loan  Documents or otherwise to influence  any Credit  Party's
conduct with respect to the  ownership,  operation or  management  of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.

         3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
of any nature  maintained,  as of the Closing Date,  for current  occurrences by
each Credit Party, as well as a summary of the terms of each such policy.

         3.19 Deposit and  Disbursement  Accounts.  Disclosure  Schedule  (3.19)
lists all  banks and other  financial  institutions  at which any  Credit  Party
maintains  deposits  or other  accounts as of the Closing  Date,  including  any
Disbursement  Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository,  the name in which the account is held,
a description of the purpose of the account, and the complete account number.

         3.20 Government  Contracts.  Except as set forth in Disclosure Schedule
(3.20),  as of the Closing  Date,  no Credit Party is a party to any contract or
agreement with any  Governmental  Authority and no Credit  Party's  Accounts are
subject to the Federal  Assignment of Claims Act, as amended (31 U.S.C.  Section
3727) or any similar state or local laws.

         3.21 Customer and Trade Relations. As of the Closing Date, there exists
no actual or, to the best knowledge of any Credit Party,  threatened termination
or cancellation  of, or any material  adverse  modification or change in (a) the
business  relationship  of any  Credit  Party  with  any  customer  or  group of
customers  whose  purchases (or revenues  derived by such Credit Party from such
customer or group of customers) during the preceding 12-month period caused them
to be ranked among the ten largest  customers of such Credit  Party;  or (b) the
business  relationship  of any Credit  Party with any  supplier  material to its
operations.

         3.22  Agreements  and Other  Documents.  As of the Closing  Date,  each
Credit Party has  provided to Agents or their  respective  counsel  accurate and
complete  copies (or summaries) of all of the following  agreements or documents
to which such Credit Party is subject and each of which are listed on Disclosure
Schedule (3.22): (a) supply agreements and purchase agreements not terminable by
such Credit Party within 60 days following  written notice issued by such Credit
Party and  involving  transactions  in excess of $1,000,000  per annum,  (b) any
lease of Equipment  having a remaining  term of one year or longer and requiring
aggregate rental and other payments in excess of $25,000 per annum, (c) licenses
and permits held by the Credit Parties, the absence of which could be reasonably
likely  to  have  a  Material  Adverse  Effect,  (d)  instruments  or  documents
evidencing  Indebtedness of such Credit Party and any security  interest granted
by such Credit Party with respect  thereto,  and (e)  instruments and agreements
evidencing the issuance of any equity securities, warrants, rights or options to
purchase equity securities of such Credit Party.

         3.23 Solvency. Both before and after giving effect to (a) the Loans and
Letter of Credit  Obligations to be made or extended on the Closing Date or such
other date as Loans and Letter of Credit  Obligations  requested  hereunder  are
made,  (b) the  disbursement  of the  proceeds  of such  Loans  pursuant  to the
instructions   of  Borrower   Representative,   (c)  the   Refinancing  and  the
consummation of the other Related  Transactions  and (d) the payment and accrual
of all transaction costs in connection with the foregoing,  each Credit Party is
Solvent and shall be Solvent through the Termination Date.

         3.24  Year  2000  Representations.  No  Credit Party  has any Year 2000
Problems.

         3.25  Subordinated  Debt.  As  of  the  Closing  Date,  Borrowers  have
delivered to Agents and Lenders a complete and correct copy of the  Subordinated
Notes   (including   all   schedules,   exhibits,    amendments,    supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith).  The applicable Borrowers have the corporate power and
authority to incur the  Indebtedness  evidenced by the  Subordinated  Notes. The
subordination  provisions of the Subordinated Notes are enforceable  against the
holders  of  the  Subordinated   Notes  by  each  Agent  and  each  Lender.  All
Obligations,  including the  Obligations to pay principal of and interest on the
Loans and the  Letter  of Credit  Obligations,  constitute  Senior  Indebtedness
entitled  to the  benefits  of the  subordination  provisions  contained  in the
Subordinated  Notes.  The principal of and interest on the Notes,  all Letter of
Credit  Obligations and all other  Obligations will constitute  "senior debt" as
that or any similar term is or may be used in any other instrument evidencing or
applicable to any other Subordinated Debt. Each Borrower  acknowledges that each
Lender is entering  into this  Agreement  and is extending  the  Commitments  in
reliance upon the  subordination  provisions of the Subordinated  Notes and this
Section 3.25.

         3.26  FCC Compliance.

                  (a) Each of the  Borrowers,  as  applicable, are in compliance
in all material respects with the Communications Act.

                  (b) No Borrower has any knowledge of any investigation, notice
of apparent liability,  violation, forfeiture or other order or complaint issued
by or  before  the FCC,  or of any other  proceedings  (other  than  proceedings
relating to the wireless  communications  industries generally) of or before the
FCC, which could reasonably be expected to have a Material Adverse Effect.

                  (c) No event  has  occurred  which  (i)  results  in, or after
notice or lapse of time or both would result in, revocation, suspension, adverse
modifications,  non-renewal, impairment, restriction or termination of, or order
of  forfeiture  with  respect  to, any FCC  License in any  respect  which could
reasonably  be expected  to have a Material  Adverse  Effect or (ii)  affects or
could  reasonably  be  expected in the future to affect any of the rights of any
applicable  Borrower  under any FCC License held by such Borrower in any respect
which could reasonably be expected to have a Material Adverse Effect.

                  (d) Each applicable Borrower has duly filed in a timely manner
all  material  filings  reports,   applications,   documents,   instruments  and
information  required to be filed by it under the  Communications  Act,  and all
such filings were when made true, correct and complete in all material respects.

                  (e) None of the  Borrowers has any reason to believe that each
FCC License of the  Borrowers,  as  applicable,  or any  Subsidiary  will not be
renewed in the ordinary course.

4.       FINANCIAL STATEMENTS AND INFORMATION

         4.1      Reports and Notices.

                  (a) Each Credit Party  executing this Agreement  hereby agrees
that from and after the  Closing  Date and until the  Termination  Date it shall
deliver to Agents and each Lender the Financial Statements, notices, Projections
and other  information at the times,  to the Persons and in the manner set forth
in Annex E.

                  (b) Each Credit Party  executing this Agreement  hereby agrees
that from and after the Closing Date and until the  Termination  Date,  it shall
deliver to Agents and each Lender the  Collateral  Reports at the times,  to the
Persons and in the manner set forth in Annex F.

         4.2 Communication  with  Accountants.  Each Credit Party executing this
Agreement  authorizes  Agents  and  Lenders  to  communicate  directly  with its
independent  certified  public  accountants,  including  Ernst & Young LLP,  and
authorizes  and shall instruct  those  accountants  and advisors to disclose and
make available to Agents and Lenders any and all Financial  Statements and other
supporting  financial  documents,  schedules  and  information  relating to such
Credit Party (including copies of any issued management letters) with respect to
the business, financial condition and other affairs of such Credit Party.

5.       AFFIRMATIVE COVENANTS

         Each Credit Party executing this Agreement jointly and severally agrees
as to all  Credit  Parties  that from and after  the date  hereof  and until the
Termination Date:

         5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall (a) do or cause to be done all things  necessary  to preserve  and keep in
full force and effect its corporate existence and its rights (including, without
limitation,  any rights under or pursuant to licenses issued to any Credit Party
by the FCC) and  franchises,  other than any rights or franchises no longer used
or useful in connection with any Credit Party's  business and having no monetary
value as Collateral,  upon  reasonable  prior written  notice to the Agent,  (b)
obtain all  necessary and  appropriate  third party and  Governmental  Authority
waivers and consents,  (c) continue to conduct its business substantially as now
conducted  or as  otherwise  permitted  hereunder,  (d) at all  times  maintain,
preserve  and  protect  all of its assets and  properties  used or useful in the
conduct of its  business,  and keep the same in good repair,  working  order and
condition in all material respects (taking into consideration  ordinary wear and
tear)  and  from  time to time  make,  or cause to be  made,  all  necessary  or
appropriate  repairs,  replacements  and  improvements  thereto  consistent with
industry  practices and (e) transact  business only in such  corporate and trade
names as are set forth in Disclosure  Schedule (5.1), or as permitted by Section
6.15.

         5.2      Payment of Obligations.

                  (a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged when due all Charges payable by it,
including  (i) Charges  imposed upon it, its income and  profits,  or any of its
property  (real,  personal or mixed) and all Charges with respect to tax, social
security and unemployment  withholding  with respect to its employees,  and (ii)
lawful claims for labor, materials,  supplies and services or otherwise,  before
any thereof shall become past due.

                  (b)  Each  Credit  Party  may  in  good  faith   contest,   by
appropriate  proceedings,  the  validity or amount of any Charges  described  in
Section 5.2(a);  provided,  however,  that (i) adequate reserves with respect to
such contest are  maintained  on the books of such Credit  Party,  in accordance
with GAAP,  (ii) no Lien shall be imposed to secure payment of such Charges that
is superior to any of the Liens  securing  the  Obligations  and such contest is
maintained  and  prosecuted  continuously  and with  diligence  and  operates to
suspend collection or enforcement of such Charges,  (iii) none of the Collateral
becomes  subject to forfeiture  or loss as a result of such  contest,  (iv) such
Credit Party shall promptly pay or discharge  such  contested  Charges or claims
and all additional charges, interest,  penalties and expenses, if any, and shall
deliver to Agents evidence  acceptable to Agents of such compliance,  payment or
discharge,  if such  contest is  terminated  or  discontinued  adversely to such
Credit Party or the  conditions  set forth in this Section  5.2(b) are no longer
met,  and (v) no  Agent  has  advised  Borrowers  in  writing  that  such  Agent
reasonably believes that nonpayment or nondischarge thereof could have or result
in a Material Adverse Effect.

         5.3 Books and Records.  Each Credit Party shall keep adequate books and
records  with  respect  to its  business  activities  in which  proper  entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial  Statements  attached as Disclosure Schedule
(3.4(a)).

         5.4      Insurance; Damage to or Destruction of Collateral.

                  (a) The Credit Parties shall,  at their sole cost and expense,
maintain the insurance  policies  described on Disclosure  Schedule (3.18) as in
effect on the date hereof or otherwise in form and in amounts and with  insurers
acceptable  to Term Agent,  and the Credit  Parties shall require that each such
insurer  provide  Term Agent with at least 30 days prior  written  notice of the
termination  or  cancellation  of  any  such  insurance  policy  or  replacement
therefor.  If any  Credit  Party at any time or times  hereafter  shall  fail to
obtain or maintain any of the insurance  policies  required  above or to pay all
premiums relating thereto, Term Agent may at any time or times thereafter obtain
and maintain  such  insurance  policies and pay such premiums and take any other
action with respect thereto which Term Agent deems advisable; provided, however,
that Term Agent shall have no obligation to obtain or maintain insurance for any
Credit Party or pay any premiums therefor;  provided,  further, however, that if
Term Agent does obtain or maintain any such insurance, neither any Agent nor any
Lender  shall be deemed to have waived any  Default or Event of Default  arising
from any Credit Party's  failure to obtain or maintain such insurance or pay any
premiums  therefor.  Any and all sums so disbursed,  including  attorneys' fees,
court costs and other  charges  related  thereto,  shall be payable on demand by
Borrowers to Term Agent and shall be additional Obligations hereunder secured by
the Collateral.

                  (b) Term Agent  reserves the right at any time upon any change
in any Credit Party's risk profile (including any change in the type of business
or  product  mix  maintained  by any  Credit  Party  or any laws  affecting  the
potential liability of such Credit Party) to require additional forms and limits
of  insurance  to, in Term  Agent's  opinion,  adequately  protect  Term Agent's
interest for the benefit of Lender Group in all or any portion of the Collateral
and to ensure that each Credit  Party is  protected  by insurance in amounts and
with  coverage  customary  for its  industry.  If requested by Term Agent,  each
Credit  Party  shall  deliver  to Term  Agent  from  time to time a report  of a
reputable  insurance  broker,  satisfactory  to Term Agent,  with respect to its
insurance policies.

                  (c) Each Credit Party shall deliver to Term Agent, in form and
substance  satisfactory  to Term Agent,  endorsements  to (i) all "All Risk" and
business  interruption  insurance  naming  Term  Agent as sole  loss  payee  and
additional insured,  and (ii) all general liability and other liability policies
naming Term Agent as additional  insured.  Each Credit Party irrevocably  makes,
constitutes  and  appoints  Term Agent (and all  officers,  employees  or agents
designated by Term Agent), so long as any Default or Event of Default shall have
occurred and be continuing or the anticipated insurance proceeds exceed $25,000,
as such  Credit  Party's  true and  lawful  agent and  attorney-in-fact  for the
purpose of making, settling and adjusting claims under such "All Risk" insurance
policies,  endorsing the name of such Credit Party on any check or other item of
payment for the  proceeds of such "All Risk"  insurance  policies and for making
all  determinations  and  decisions  with  respect to such "All Risk"  insurance
policies. Term Agent shall have no duty to exercise any rights or powers granted
to it pursuant to the foregoing power-of-attorney. Borrower Representative shall
promptly notify Term Agent of any loss, damage, or destruction to the Collateral
in the amount of $150,000 or more,  whether or not covered by  insurance.  After
deducting from such proceeds the expenses, if any, incurred by Term Agent in the
collection  or  handling  thereof,  Term Agent may,  at its  option,  apply such
proceeds to the reduction of the  Obligations in accordance with Section 1.3(d);
provided,  however,  that in the case of insurance  proceeds  pertaining  to any
Credit Party that is not a Borrower,  such  insurance  proceeds shall be applied
ratably to all of the Loans  owing by each  Borrower;  or Term Agent may, at its
option,  permit or require the applicable Credit Party to use such money, or any
part  thereof,  to  replace,  repair,  restore or rebuild  the  Collateral  in a
diligent and expeditious  manner with materials and workmanship of substantially
the same quality as existed before the loss,  damage or  destruction.  If and so
long as no  Default  or  Event  of  Default  shall  have  then  occurred  and be
continuing,  notwithstanding the foregoing,  if the casualty giving rise to such
insurance  proceeds would not reasonably be expected to have a Material  Adverse
Effect and such insurance proceeds do not exceed $250,000 in the aggregate, Term
Agent and Lenders shall permit the applicable Credit Party to replace,  restore,
repair or rebuild the  property;  provided,  however,  that if such Credit Party
shall not have  completed or entered into binding  agreements  to complete  such
replacement, restoration, repair or rebuilding within 180 days of such casualty,
Term Agent and Lenders may apply such insurance  proceeds to the  Obligations in
accordance with Section 1.3(d); provided,  further, however, that in the case of
insurance proceeds  pertaining to any Credit Party that is not a Borrower,  such
insurance  proceeds  shall be applied  ratably to all of the Loans owing by each
Borrower.  All insurance proceeds which are to be made available to any Borrower
to  replace,  repair,  restore or  rebuild  the  Collateral  shall be applied by
Revolver Agent and Lenders to reduce the  outstanding  principal  balance of the
Revolving  Loan of such  Borrower  (which  application  shall  not  result  in a
permanent   reduction  of  the  Revolving  Loan   Commitments)   and  upon  such
application,  Revolver  Agent  shall  establish  a reserve in the amount of such
proceeds so applied.  All insurance  proceeds made available to any Credit Party
(that is not a Borrower) to replace, repair, restore or rebuild Collateral shall
be deposited in a cash  collateral  account  under the control of Term Agent for
the benefit of the Lender Group. Thereafter,  such funds shall be made available
to that Credit Party to provide funds to replace, repair, restore or rebuild the
Collateral  as follows:  (A) Borrower  Representative  shall request a Revolving
Credit  Advance  or a release  from the cash  collateral  account be made to the
applicable  Credit Party in the amount requested to be released;  (B) so long as
the conditions  set forth in Section 2.2 have been met, the  applicable  Lenders
shall make such Revolving Credit Advance or the applicable Lenders shall release
such funds from the cash  collateral  account;  and (C) in the case of insurance
proceeds  applied  against the  Revolving  Loan,  the reserve  established  with
respect  to such  insurance  proceeds  shall be  reduced  by the  amount of such
Revolving Credit Advance. To the extent not used to replace,  repair, restore or
rebuild the Collateral,  such insurance  proceeds shall be applied in accordance
with Section 1.3(d);  provided,  however, that in the case of insurance proceeds
pertaining to any Credit Party that is not a Borrower,  such insurance  proceeds
shall be applied ratably to all of the Loans owing by each Borrower.

         5.5  Compliance  with Laws.  Each Credit  Party  shall  comply with all
federal,  state,  local  and  foreign  laws and  regulations  applicable  to it,
including those relating to patent, copyright,  trademark,  licensing, ERISA and
labor matters and Environmental  Laws and Environmental  Permits,  except to the
extent that the failure to comply,  individually or in the aggregate,  could not
reasonably be expected to have a Material Adverse Effect.

         5.6 Supplemental  Disclosure.  From time to time as may be requested by
Term Agent (which request will not be made more  frequently  than once each year
absent the occurrence and continuance of a Default or an Event of Default),  the
Credit  Parties  shall  supplement  each  Disclosure  Schedule  hereto,  or  any
representation herein or in any other Loan Document,  with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would  have  been  required  to be set  forth or  described  in such  Disclosure
Schedule or as an  exception  to such  representation  or which is  necessary to
correct any information in such Disclosure Schedule or representation  which has
been rendered  inaccurate  thereby (and, in the case of any  supplements  to any
Disclosure  Schedule,  such Disclosure Schedule shall be appropriately marked to
show the changes made therein);  provided,  however, that (a) no such supplement
to any such Disclosure Schedule or representation shall be or be deemed a waiver
of any Default or Event of Default resulting from the matters disclosed therein,
except as consented to by  Applicable  Agent in writing;  and (b) no  supplement
shall be required as to representations and warranties that relate solely to the
Closing Date.

         5.7      Intellectual  Property.  Each  Credit  Party will  conduct its
business  and  affairs  without   infringement  of  or  interference   with  any
Intellectual Property of any other Person in any material respect.

         5.8 Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its  operations  and keep and maintain
its Real Estate in  compliance  with all  Environmental  Laws and  Environmental
Permits other than noncompliance  which could not reasonably be expected to have
a Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response  actions which are appropriate or necessary to maintain the
value  and  marketability  of  the  Real  Estate  or to  otherwise  comply  with
Environmental  Laws  and  Environmental  Permits  pertaining  to  the  presence,
generation,  treatment, storage, use, disposal, transportation or Release of any
Hazardous  Material on, at, in, under,  above, to, from or about any of its Real
Estate;  (c) notify Term Agent and  Lenders  promptly  after such  Credit  Party
becomes aware of any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real Estate which is
reasonably  likely to result in Environmental  Liabilities in excess of $25,000;
and (d) promptly forward to Term Agent and Lenders a copy of any order,  notice,
request for information or any  communication  or report received by such Credit
Party in  connection  with any such  violation  or Release  or any other  matter
relating  to  any  Environmental  Laws  or  Environmental   Permits  that  could
reasonably  be  expected  to result in  Environmental  Liabilities  in excess of
$25,000, in each case whether or not the Environmental  Protection Agency or any
Governmental  Authority has taken or threatened to take any action in connection
with any such violation,  Release or other matter. If Term Agent at any time has
a reasonable basis to believe that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Environmental Liability
arising  thereunder,  or a Release of  Hazardous  Materials  on, at, in,  under,
above,  to, from or about any of its Real  Estate,  which,  in each case,  could
reasonably be expected to have a Material Adverse Effect, then each Credit Party
shall,  upon Term  Agent's  written  request (i) cause the  performance  of such
environmental audits including subsurface sampling of soil and groundwater,  and
preparation of such environmental  reports,  in each case at Borrowers' expense,
as Term Agent may from time to time reasonably request, which audits and reports
shall be conducted by reputable  environmental  consulting  firms  acceptable to
Lender and shall be in form and substance  reasonably  acceptable to Term Agent,
and (ii)  permit  Term Agent or its  representatives  to have access to all Real
Estate for the purpose of conducting  such  environmental  audits and testing as
Term  Agent  deems  appropriate,  including  subsurface  sampling  of  soil  and
groundwater.  Borrowers  shall reimburse Term Agent for the costs of such audits
and  tests  and the  same  will  constitute  a part of the  Obligations  secured
hereunder.

         5.9 Landlords'  Agreements,  Mortgagee  Agreements and Bailee  Letters.
Each Credit Party shall obtain a landlord's  agreement,  mortgagee  agreement or
bailee  letter,  as  applicable,  from the  lessor of each  leased  property  or
mortgagee of owned  property or with respect to any warehouse or other  location
where Collateral is located, which letter or agreement shall contain a waiver or
subordination of all Liens or claims that the landlord,  mortgagee or bailee may
assert  against the Inventory or Collateral at that location and which letter or
agreement  shall  otherwise be satisfactory in form and substance to Term Agent.
After the Closing Date,  no real property or warehouse  space shall be leased or
acquired  by any Credit  Party and no  Inventory  shall be shipped to any Person
under arrangements  established after the Closing Date without the prior written
consent of Term Agent, or unless and until a satisfactory  landlord or mortgagee
agreement or bailee letter, as appropriate,  shall first have been obtained with
respect to such  location.  Each Credit Party shall (i) timely and fully pay and
perform its  obligations  under all leases and other  agreements with respect to
each  leased  location or public  warehouse  where any  Collateral  is or may be
located,  and (ii)  provide  Term  Agent with a copy of any  notice,  including,
without  limitation,  any notice of a  default,  in respect of any such lease or
other agreement,  it may receive from time to time, immediately upon its receipt
of any such notice.

         5.10 Interest  Rate/Currency  Fluctuations  Protection.  On December 1,
2000,  and at all times  thereafter  through the  Commitment  Termination  Date,
Borrowers  shall  enter  into and  maintain  interest  rate cap,  swap or collar
agreements,  or other agreements or arrangements  designed to provide protection
against  fluctuations in interest rates or  fluctuations in foreign  currencies,
which shall be on terms, for periods and with counter parties acceptable to Term
Agent, and by which Borrowers are protected  against increases in interest rates
or fluctuations in foreign  currencies from and after the date of such contracts
as to a notional  amount of not less than 50% of the total  aggregate  amount of
the Loans that are LIBOR Loans.

         5.11 Further  Assurances.  Each Credit Party  executing  this Agreement
agrees that it shall and shall cause each other  Credit Party to, at such Credit
Party's expense and upon request of Applicable  Agent, duly execute and deliver,
or cause to be duly executed and  delivered,  to  Applicable  Agent such further
instruments and do and cause to be done such further acts as may be necessary or
proper  in the  reasonable  opinion  of  Applicable  Agent  to  carry  out  more
effectively  the  provisions  and  purposes of this  Agreement or any other Loan
Document.

         5.12  Agreements  With  Management.   Each  Credit  Party  will  obtain
employment agreements,  confidentiality agreements, stock repurchase agreements,
and non-compete  agreements  reasonably  satisfactory to Term Agent from each of
its officers and from other members of senior  management  which are  identified
from  time to time  by  Term  Agent;  Agents  acknowledge  that  the  agreements
heretofore  received by them in respect of the existing senior management of the
Borrowers are reasonably satisfactory to the Agents.

6.       NEGATIVE COVENANTS

         Each Credit Party executing this Agreement jointly and severally agrees
as to all  Credit  Parties  that  from and  after  the  date  hereof  until  the
Termination Date:

         6.1  Mergers,  Subsidiaries,  Etc. No Credit  Party  shall  directly or
indirectly,  by  operation  of  law  or  otherwise,  (a)  form  or  acquire  any
Subsidiary,  or (b) merge with,  consolidate with,  acquire all or substantially
all of the assets or capital stock of, or otherwise combine with or acquire, any
Person.

         6.2  Investments;  Loans and  Advances.  Except as otherwise  expressly
permitted  by this  Section  6, or if set  forth as a  Permitted  Investment  on
Schedule (6.2) (but without any renewal,  modification  extension or increase at
any time hereafter) no Credit Party shall make or permit to exist any investment
in,  or make,  accrue  or permit to exist  loans or  advances  of money to,  any
Person,  through the direct or indirect lending of money,  holding of securities
or otherwise,  except that (a) Borrowers may hold investments comprised of notes
payable,  or stock or other securities issued by Account Debtors to any Borrower
pursuant to  negotiated  agreements  with respect to  settlement of such Account
Debtor's  Accounts in the ordinary course of business,  so long as the aggregate
amount of such Accounts so settled by Borrowers  does not exceed  $100,000;  (b)
each Credit Party may maintain its existing  investments in its  Subsidiaries as
of the  Closing  Date;  and  (c) so  long as Term  Agent  has not  delivered  an
Activation  Notice and no Default or Event of Default shall have occurred and be
continuing and there is no outstanding Revolving Loan balance and subject to the
receipt of  applicable  Control  Letters in the form of Exhibit  6.2 in favor of
Term Agent for the benefit of Lender Group, Term Agent's satisfaction  therewith
or otherwise subject to a perfected first priority security interest in favor of
Term  Agent  for the  benefit  of  Lender  Group,  and so long  as  Borrower  is
maintaining adequate cash on hand in its reasonable business judgment, Borrowers
may  make   investments  in  (i)  marketable   direct   obligations   issued  or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition  thereof,  (ii) commercial
paper  maturing  no more than one year  from the date of  creation  thereof  and
currently  having the highest rating  obtainable  from either  Standard & Poor's
Ratings Group or Moody's Investors Service, Inc., (iii) certificates of deposit,
maturing  no more than one year  from the date of  creation  thereof,  issued by
commercial  banks  incorporated  under the laws of the United States of America,
each having  combined  capital,  surplus and undivided  profits of not less than
$300,000,000  and  having  a  senior  unsecured  rating  of "A" or  better  by a
nationally  recognized  rating agency (an "A Rated Bank"),  (iv) time  deposits,
maturing  no more than 30 days from the date of  creation  thereof  with A Rated
Banks and (v) mutual funds that invest solely in one or more of the  investments
described  in clauses (i)  through  (iv) above;  and (e) other  investments  not
exceeding $100,000 in the aggregate at any time outstanding.

         6.3      Indebtedness.

                  (a) Except for the existing  intercompany  Indebtedness  among
the Borrowers described in Disclosure Schedule 6.3 (which Indebtedness shall not
be renewed,  extended, or modified at any time hereafter), no Credit Party shall
create,  incur,  assume or permit to exist  any  Indebtedness,  except  (without
duplication) (i) Indebtedness  secured by purchase money security  interests and
Capital  Leases  permitted in clause (c) of Section 6.7,  (ii) the Loans and the
other  Obligations,  (iii) unfunded pension fund and other employee benefit plan
obligations  and liabilities to the extent they are permitted to remain unfunded
under  applicable  law,  (iv)  existing  Indebtedness  described  in  Disclosure
Schedule (6.3) and refinancings  thereof or amendments or modifications  thereof
which do not have the  effect of  increasing  the  principal  amount  thereof or
changing the amortization  thereof (other than to extend the same) and which are
otherwise  on terms and  conditions  no less  favorable  to any Credit  Party or
Lenders,  as determined by Term Agent, than the terms of the Indebtedness  being
refinanced,  amended or modified, (v) Indebtedness  specifically permitted under
Section 6.1, and (vi) Indebtedness consisting of intercompany loans and advances
made  by VSC to any  other  Borrower  or  made  by any  other  Borrower  to VSC;
provided,  however,  that (A) each Borrower shall have executed and delivered to
VSC and VSC shall have  executed and  delivered to each other  Borrower,  on the
Closing Date, a demand note (collectively, the "Intercompany Notes") to evidence
any such intercompany  Indebtedness  owing at any time by or from VSC from or to
such other Borrowers,  which  Intercompany  Notes shall be in form and substance
satisfactory  to  Term  Agent  and,  together  with  the  notes  evidencing  the
intercompany Indebtedness described in Disclosure Schedule 6.3, shall be pledged
and  delivered  to Term Agent for the  benefit of Lender  Group  pursuant to the
applicable  Pledge  Agreement  or Security  Agreement as  additional  collateral
security for the  Obligations;  (B) each  applicable  Borrower  shall record all
intercompany  transactions on its books and records in a manner  satisfactory to
Term Agent;  (C) the  obligations of each Borrower  under any such  Intercompany
Notes shall be subordinated  to the Obligations of such Borrower  hereunder in a
manner satisfactory to Term Agent; (D) at the time any such intercompany loan or
advance is made by any Borrower to any other  Borrower  and after giving  effect
thereto, each such Borrower shall be Solvent; (E) no Default or Event of Default
would  occur  and  be  continuing  after  giving  effect  to any  such  proposed
intercompany loan or advance; (F) in the case of any intercompany  Indebtedness,
such  indebtedness  to any Borrower shall not exceed the  respective  amount set
forth in the  applicable  Intercompany  Note of such  Borrower,  and  (iii)  the
aggregate  amount  of all  outstanding  intercompany  advances  from  VSC to all
Borrowers  outstanding  at any  time  shall  not  exceed  the  Revolving  Credit
Commitment;  and (G) the recipient of such intercompany  loans or advances shall
be creditworthy, as determined by Term Agent in its sole discretion.


                  (b) No Credit Party shall, directly or indirectly, voluntarily
purchase,  redeem, defease or prepay any principal of, premium, if any, interest
or other  amount  payable  in respect  of any  Indebtedness,  other than (i) the
Obligations,  (ii) Indebtedness secured by a Permitted  Encumbrance if the asset
securing such Indebtedness has been sold or otherwise  disposed of in accordance
with Sections  6.8(b) or (c),  (iii)  Indebtedness  incurred in connection  with
intercompany  loans or advances  permitted under Section 6.3(a) above,  and (iv)
other Indebtedness (excluding Subordinated Debt) not in excess of $100,000.

                  (c) No Credit Party shall,  directly or indirectly,  (i) issue
any  preferred  equity  securities or (ii) be or become liable in respect of any
obligation  (contingent or otherwise) to purchase,  redeem,  retire,  acquire or
make any other  payment in respect  of any  shares of equity  securities  of any
Credit Party or any option, warrant or other right to acquire any such shares of
equity securities, except as permitted under Section 6.14.

         6.4      Employee Loans and Affiliate Transactions.

                  (a) Except as otherwise  expressly permitted in this Section 6
with  respect to  Affiliates,  no Credit Party shall enter into or be a party to
any transaction with any other Credit Party or any Affiliate,  officer, director
or  employee  thereof,  except in the  ordinary  course of and  pursuant  to the
reasonable  requirements  of such  Credit  Party's  business  and upon  fair and
reasonable  terms that are no less  favorable to such Credit Party than would be
obtained  in a  comparable  arm's  length  transaction  with  a  Person  not  an
Affiliate,  officer,  director or employee of such Credit Party. In addition, if
any such  transaction  or series of related  transactions  involves  payments in
excess of $100,000 in the  aggregate,  the terms of these  transactions  must be
disclosed  in advance to Term Agent.  All such  transactions  existing as of the
date hereof are described on Disclosure Schedule (6.4(a)).

                  (b) No Credit  Party shall enter into any lending or borrowing
transaction  with any  employees  of any  Credit  Party,  except  loans to their
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel expenses, relocation costs and similar
purposes  up to a maximum  of  $50,000  to any  employee  and up to a maximum of
$100,000 in the aggregate at any one time outstanding.

                  (c) No Credit  Party  shall  increase  the direct or  indirect
aggregate  compensation  (excluding  stock options) of persons  constituting the
executive officers of the Borrowers, taken as a whole, by more than 5% per annum
in excess of the current compensation level for those employees, expressed as an
aggregate dollar amount, and set forth in Disclosure Schedule (6.4(c)).

         6.5 Capital Structure and Business.  No Credit Party shall (a) make any
changes in any of its business objectives, purposes or operations which could in
any  way  adversely  affect  the  repayment  of the  Loans  or any of the  other
Obligations  or could  reasonably  be  expected  to have or result in a Material
Adverse  Effect,  (b) make any change in its capital  structure  as described on
Disclosure  Schedule  (3.8),  including  the  issuance  of any  shares of Stock,
warrants or other securities convertible into Stock or any revision of the terms
of its  outstanding  Stock (other than  pursuant to a public  offering of common
stock by VSC in which the  proceeds  of such sale of Stock  are  applied  as set
forth in Section 1.3(b)(iii), or in the respect of the exercise of stock options
issued  to  employees  and  officers  of VSC in the  ordinary  course  of  VSC's
business)  or (c) amend its  charter  or  bylaws  (or,  in the case of a limited
liability  company,  its operating  agreement) in a manner which would adversely
affect any Agent or any Lender or such Credit  Party's  duty or ability to repay
the  Obligations.  No Credit Party shall  engage in any business  other than the
businesses currently engaged in by it or businesses reasonably related thereto.

         6.6  Guaranteed  Indebtedness.  No Credit  Party shall  create,  incur,
assume or permit to exist any Guaranteed  Indebtedness except (a) by endorsement
of  instruments  or items of payment for  deposit to the general  account of any
Credit Party,  and (b) for Guaranteed  Indebtedness  incurred for the benefit of
any other Credit Party if the primary obligation is expressly  permitted by this
Agreement.

         6.7 Liens.  No Credit Party shall  create,  incur,  assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets  (whether now owned or hereafter  acquired)  except for (a)  Permitted
Encumbrances,  (b) Liens in  existence  on the date  hereof  and  summarized  on
Disclosure   Schedule  (6.7),  (c)  Liens  created  after  the  date  hereof  by
conditional sale or other title retention agreements  (including Capital Leases)
or in connection with purchase money  Indebtedness with respect to Equipment and
Fixtures  acquired  by any  Credit  Party in the  ordinary  course of  business,
involving the incurrence of an aggregate  amount of purchase money  Indebtedness
and Capital Lease  Obligations of not more than  $15,000,000  outstanding at any
one time for all such Liens (provided,  however,  that such Liens attach only to
the assets subject to such purchase money debt and such Indebtedness is incurred
within six  months  following  such  purchase  and does not  exceed  100% of the
purchase price plus any associated  installation  costs of the subject  assets),
and  (d)  other  Liens  securing  Indebtedness  not  exceeding  $100,000  in the
aggregate  at any time  outstanding,  so long as such Liens do not attach to any
Accounts or Inventory.  In addition, no Credit Party shall become a party to any
agreement,  note, indenture or instrument, or take any other action, which would
prohibit  the  creation of a Lien on any of its  properties  or other  assets in
favor of Term Agent for the benefit of Lender Group as additional collateral for
the  Obligations,   except  operating  leases,  Capital  Leases  (including  any
promissory notes and security agreements  specifically  relating to such Capital
Leases or  Licenses  which  prohibit  Liens  upon the  assets  that are  subject
thereto.

         6.8  Sale of Stock  and  Assets.  Except  as set  forth  in  Disclosure
Schedule  (6.8),  other than the  Allowed  Sale,  no Credit  Party  shall  sell,
transfer,  convey, assign or otherwise dispose of any of its properties or other
assets,  including  the capital Stock of any of its  Subsidiaries  (whether in a
public or a private offering or otherwise) or any of their Accounts,  other than
(a) the sale or lease of Inventory in the ordinary  course of business,  and (b)
the  sale,  transfer,  conveyance  or other  disposition  by a  Credit  Party of
Equipment, Fixtures or Real Estate that are obsolete or no longer used or useful
in such Credit Party's business and having a value not exceeding $500,000 in any
single  transaction  or  $1,000,000  in the aggregate in any Fiscal Year and (c)
other Equipment and Fixtures having a value not exceeding $200,000 in any single
transaction or $500,000 in the aggregate in any Fiscal Year. With respect to any
disposition of assets or other properties  permitted  pursuant to clause (b) and
clause (c) above,  Term  Agent  agrees on  reasonable  prior  written  notice to
release  its  Liens for the  benefit  of  Lender  Group on such  assets or other
properties  in order to  permit  the  applicable  Credit  Party to  effect  such
disposition  and shall  execute  and  deliver  to  Borrower  Representative,  at
Borrowers' expense,  appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrower Representative.

         6.9  ERISA. No Credit Party  shall,  or shall cause or permit any ERISA
Affiliate  to,  cause or  permit  to occur an event  which  could  result in the
imposition  of a Lien under  Section  412 of the IRC or  Section  302 or 4068 of
ERISA or cause or permit to occur an ERISA  Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.

         6.10  Financial  Covenants.   Borrowers  shall  not  breach  or fail to
comply with any of the Financial Covenants (the "Financial Covenants") set forth
in Annex G.

         6.11  Hazardous  Materials.  No Credit  Party  shall  cause or permit a
Release of any Hazardous  Material on, at, in, under,  above,  to, from or about
any of the Real Estate where such Release  would (a) violate in any respect,  or
form the basis for any Environmental  Liabilities  under, any Environmental Laws
or  Environmental  Permits  or (b)  otherwise  adversely  impact  the  value  or
marketability  of any of the Real  Estate or any of the  Collateral,  other than
such  violations  or  Environmental  Liabilities  which could not  reasonably be
expected to have a Material Adverse Effect.

         6.12  Sale-Leasebacks.   No Credit  Party  shall  engage  in any  sale-
leaseback, synthetic lease or similar transaction involving any of its assets.

         6.13  Cancellation  of  Indebtedness.  No Credit Party shall cancel any
claim or debt owing to it, except for reasonable  consideration negotiated on an
arm's-length  basis and in the ordinary  course of its business  consistent with
past practices.

         6.14  Restricted  Payments.  No Credit Party shall make any  Restricted
Payment,  except (a) intercompany  loans and advances  between  Borrowers to the
extent  permitted  by Section 6.3 above,  (b)  dividends  and  distributions  by
Subsidiaries of any Borrower paid to such Borrower, (c) employee loans permitted
under Section 6.4(b) above,  and (d) regularly  scheduled  payments of principal
and interest and any prepayments  with respect to the  Subordinated  Debt to the
extent permitted hereunder;  provided,  however, that (i) no Default or Event of
Default  shall have  occurred  and be  continuing  or would  result after giving
effect to any payment pursuant to clause (d) above, (ii) Borrowers  collectively
shall have Net Borrowing Availability of at least $2,000,000 after giving effect
to any  payment  pursuant  to clause  (d)  above;  and  (iii) the  timing of the
payments  referred to in clause (d) above shall be set at dates which permit the
delivery of Financial  Statements necessary to determine current compliance with
the financial covenants set forth in Annex G prior to each payment.

         6.15 Change of Corporate  Name or Location;  Change of Fiscal Year.  No
Credit Party shall (a) change its corporate name, transact business in any trade
name or (b) change its chief  executive  office,  principal  place of  business,
corporate  offices or  warehouses  or locations at which  Collateral  is held or
stored,  or the location of its records  concerning the Collateral,  in any case
without  at least 30 days  prior  written  notice to Term  Agent and after  Term
Agent's  written  acknowledgment  that any reasonable  action  requested by Term
Agent in connection therewith, including to continue the perfection of any Liens
in favor of Term Agent for the benefit of Lender  Group in any  Collateral,  has
been completed or taken; provided,  however, that any such new location shall be
in the  continental  United States.  Without  limiting the foregoing,  no Credit
Party shall change its name, identity or corporate structure in any manner which
might make any financing or continuation  statement filed in connection herewith
seriously  misleading  within the meaning of Section 9-402(7) of the Code or any
other then applicable provision of the Code, except upon prior written notice to
Term Agent and after Term Agent's  written  acknowledgment  that any  reasonable
action  requested by Term Agent in connection  therewith,  including to continue
the  perfection  of any Liens in favor of Term  Agent for the  benefit of Lender
Group in any  Collateral,  has been  completed  or taken.  No Credit Party shall
change its Fiscal Year.

         6.16 No Impairment  of  Intercompany  Transfers.  No Credit Party shall
directly  or  indirectly  enter  into or be or  become  bound by any  agreement,
instrument,  indenture or other  obligation  (other than this  Agreement and the
other Loan Documents) which could directly or indirectly  restrict,  prohibit or
require the consent of any Person with  respect to the payment of  dividends  or
distributions  or the making or repayment of intercompany  loans by a Subsidiary
of any Borrower to any Borrower,  from VSC to any other Borrower, or to VSC from
any other Borrower.

         6.17 No Speculative  Transactions.  No Credit Party shall engage in any
transaction   involving   commodity   options,   futures  contracts  or  similar
transactions,  except  solely to hedge  against  fluctuations  in the  prices of
commodities  owned or  purchased  by it and the  values  of  foreign  currencies
receivable  or payable by it and  interest  swaps,  caps or  collars;  provided,
however,  that  Borrowers may undertake  the  transactions  described in Section
5.10.

         6.18  Leases.  Except as set forth on Schedule  6.18,  no Credit  Party
shall  enter into any  operating  lease for  Equipment  or Real  Estate,  if the
aggregate of all such operating lease payments payable in any year for Borrowers
and their Subsidiaries on a consolidated basis would exceed $500,000.

         6.19  Changes  Relating to  Subordinated  Debt.  No Credit  Party shall
change  or  amend  the  terms of any  Subordinated  Debt  (or any  indenture  or
agreement in connection  therewith)  if the effect of such  amendment is to: (a)
increase the interest rate on such Subordinated  Debt; (b) change the dates upon
which payments of principal or interest are due on such  Subordinated Debt other
than to extend such dates; (c) change any default or event of default other than
to delete or make less  restrictive any default  provision  therein,  or add any
covenant with respect to such  Subordinated  Debt;  (d) change the redemption or
prepayment  provisions of such  Subordinated Debt other than to extend the dates
therefor or to reduce the premiums  payable in connection  therewith;  (e) grant
any security or collateral to secure payment of such  Subordinated  Debt; or (f)
change or amend any other  term if such  change or  amendment  would  materially
increase the obligations of the obligor or confer additional  material rights to
the holder of such  Subordinated Debt in a manner adverse to any Credit Party or
any Agent or any Lender.

         6.20 Credit  Parties Other Than  Borrowers.  None of the Credit Parties
other than Borrowers and the Persons set forth on Disclosure Schedule 6.20 shall
engage in any trade or  business,  or own any assets  (other than Stock of their
Subsidiaries) or incur any Indebtedness or Guaranteed  Indebtedness  (other than
the Obligations).

         6.21  Limitation  On  Capital  Expenditures.  Credit  Parties,   in the
aggregate,  shall not utilize  more than  $6,000,000  during any Fiscal Year for
Capital Expenditures.

 7.      TERM

         7.1 Termination.  Notwithstanding  anything to the contrary herein, the
financing  arrangements  contemplated  hereby  shall  be  in  effect  until  the
applicable Commitment  Termination Date, upon which date the Loans and all other
Obligations shall be automatically due and payable in full.

         7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any Commitments under this
Agreement  shall  in any way  affect  or  impair  the  obligations,  duties  and
liabilities  of the  Credit  Parties  or the  rights of any Agent or any  Lender
relating to any unpaid portion of the Loans or any other Obligations, due or not
due,  liquidated,  contingent  or  unliquidated  or  any  transaction  or  event
occurring  prior  to  such  termination,   or  any  transaction  or  event,  the
performance  of which is required after the  applicable  Commitment  Termination
Date.  Except as  otherwise  expressly  provided  herein  or in any  other  Loan
Document,   all   undertakings,    agreements,    covenants,    warranties   and
representations  of or binding  upon the Credit  Parties,  and all rights of any
Agent or any Lender, all as contained in the Loan Documents, shall not terminate
or expire,  but rather shall survive any such  termination or  cancellation  and
shall continue in full force and effect until the  Termination  Date;  provided,
however,  that  in  all  events  the  provisions  of  Section  11,  the  payment
obligations  under Section 1.13 and Section 1.14, and the indemnities  contained
in the Loan Documents shall survive the Termination Date.

8.       EVENTS OF DEFAULT: RIGHTS AND REMEDIES

         8.1  Events  of  Default. The  occurrence  of any  one or  more  of the
following events  (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:

                  (a) Any  Borrower  (i) fails to make any payment of  principal
of, or  interest  on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse any Agent or
any  Lender  for any  amount  reimbursable  hereunder  or under any  other  Loan
Document  within  ten  days  following   Applicable   Agent's  demand  for  such
reimbursement or payment of such amounts.

                  (b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the  provisions  of Sections  1.4,  1.6,  5.4 or 6, or any of the
provisions set forth in Annexes C or G, respectively.

                  (c) Any Credit Party shall fail or neglect to perform, keep or
observe any of the  provisions of Section 4 or any provisions set forth in Annex
E or Annex F, respectively,  and the same shall remain unremedied for three days
or more.

                  (d) Any Credit Party shall fail or neglect to perform, keep or
observe  any other  provision  of this  Agreement  or of any of the  other  Loan
Documents  (other than any provision  embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for 20 days or more.

                  (e) A default or breach shall occur under any other agreement,
document or  instrument  to which any Credit Party is a party which is not cured
within any applicable grace period,  and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness  (other than
the Obligations) of any Credit Party in excess of $250,000 in the aggregate,  or
(ii) causes,  or permits any holder of such  Indebtedness or a trustee to cause,
Indebtedness  or a portion  thereof in excess of  $250,000 in the  aggregate  to
become  due prior to its stated  maturity  or prior to its  regularly  scheduled
dates of payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.

                  (f)  Any representation  or  warranty  herein  or in any  Loan
Document or in any written statement, report, financial statement or certificate
made or  delivered  to any Agent or any Lender by any Credit Party or by Liberty
Livewire is untrue,  incomplete  or incorrect in any material  respect as of the
date when made or deemed made.

                  (g) Assets of any Credit  Party  with a fair  market  value of
$100,000 or more shall be attached,  seized,  levied upon or subjected to a writ
or distress  warrant,  or come within the  possession of any receiver,  trustee,
custodian  or assignee for the benefit of creditors of any Credit Party and such
condition continues for 30 days or more.

                  (h) A case or proceeding shall have been commenced against any
Credit Party  seeking a decree or order in respect of any Credit Party (i) under
Title 11 of the United States Code, as now constituted or hereafter amended,  or
any other applicable federal,  state or foreign bankruptcy or other similar law,
(ii)  appointing  a  custodian,  receiver,  liquidator,   assignee,  trustee  or
sequestrator  (or similar  official) for any Credit Party or of any  substantial
part  of  any  such  Person's  assets,  or  (iii)  ordering  the  winding-up  or
liquidation  of the  affairs of any Credit  Party,  and such case or  proceeding
shall  remain  undismissed  or unstayed  for 60 days or more or such court shall
enter a decree or order granting the relief sought in such case or proceeding.

                  (i) Any Credit Party (i) shall file a petition  seeking relief
under  Title 11 of the United  States  Code,  as now  constituted  or  hereafter
amended, or any other applicable  federal,  state or foreign bankruptcy or other
similar law,  (ii) shall fail to contest in a timely and  appropriate  manner or
shall consent to the  institution of proceedings  thereunder or to the filing of
any such petition or to the appointment of or taking  possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
any Credit Party or of any substantial part of any such Person's  assets,  (iii)
shall  make an  assignment  for the  benefit of  creditors,  (iv) shall take any
corporate  action in furtherance of any of the foregoing,  or (v) shall admit in
writing its inability to, or shall be generally unable to, pay its debts as such
debts become due.

                  (j) A final  judgment or judgments for the payment of money in
excess of $250,000 in the  aggregate at any time  outstanding  shall be rendered
against any Credit Party and the same shall not,  within 30 days after the entry
thereof,  have been  discharged or execution  thereof  stayed or bonded  pending
appeal,  or shall not have been  discharged  prior to the expiration of any such
stay.

                  (k) Any material  provision of any Loan Document shall for any
reason cease to be valid,  binding and  enforceable in accordance with its terms
(or any Credit Party shall challenge the  enforceability of any Loan Document or
shall assert in writing,  or engage in any action or inaction  based on any such
assertion,  that any provision of any of the Loan  Documents has ceased to be or
otherwise is not valid,  binding and  enforceable in accordance with its terms),
or any security  interest  created under any Loan  Document  shall cease to be a
valid  and  perfected  first  priority  security  interest  or Lien  (except  as
otherwise permitted herein or therein) in any of the Collateral  purported to be
covered thereby.

                  (l)  Any Change of Control shall occur.

                  (m)  Any  event  shall  occur,   whether  or  not  insured  or
insurable,  as a  result  of  which  revenue-producing  activities  cease or are
substantially  curtailed at any facility of Borrowers generating more than 5% of
Borrowers'  consolidated  revenues for the Fiscal Year preceding such event, and
such cessation or curtailment continues for more than 30 days.

                  (n) Any default or breach by any  Borrower  shall occur and be
continuing  under  or with  respect  to any  Subordinated  Note or the  relevant
landlord or other  applicable  Person shall  declare a default or breach,  which
could  have  the  effect  of  terminating  the  applicable  Borrower's  right to
possession of the premises  subject of (i) the lease of real property located at
1111 Lincoln Road, Miami Beach, Florida, by and between The Post Edge, Inc., dba
Manhattan  Transfer-Miami,  as lessee and Uccello Immobilien GMBH, as lessor, or
(ii) any of all of: the leases of real property located at 535 Fifth Avenue, New
York, New York, by and between Manhattan Transfer/Edit,  Inc., as lessee and 535
Owners LLC, as landlord,  and Cabana Corp.  and Video Services  Corporation,  as
lessees, and 535 Owners LLC, as lessor, respectively, or (iii) any or all of the
leases for real property located at 545 Fifth Avenue, New York, New York, by and
between Waterfront Communications Corporation, as lessee, and 545 Owners LLC, as
lessor,  and Manhattan  Transfer/Edit,  Inc., as lessee,  and 545 Owners LLC, as
lessor, respectively.

                  (o) The  Intercreditor  Agreement  shall (except in accordance
with its terms), in whole or in part, terminate,  cease to be effective or cease
to be the legally  valid,  binding  and  enforceable  obligation  of the parties
sought to be  charged,  or any Person  fails to comply with (or takes any action
inconsistent  with) any term of the  Intercreditor  Agreement  shall  fail to be
enforceable by the Term Agent or any applicable Lender purported to be benefited
thereby; or any other Person shall,  directly or indirectly,  disavow or contest
in  any   respect  (i)  the   effectiveness,   validity,   binding   nature  and
enforceability  of the  Intercreditor  Agreement  or (ii)  that any of the terms
contained in the Intercreditor Agreement exist for the benefit of the Term Agent
and the Lenders, to the extent entitled to enforce such terms.

                  (p) the subordination provisions contained in the Subordinated
Notes,  or  any  of  them,  or  in  respect  of  any  other   Subordinated  Debt
(collectively,  the "Subordination Provisions"), shall fail to be enforceable by
the Agents,  or either of them, or any Lender which has not  effectively  waived
the benefits  thereof,  or the principal of, and accrued  interest owing on, the
Loans or any of the other Obligations shall fail to constitute  "Senior Debt" or
other  similar  designation  (as defined or so  designated  in the  Subordinated
Notes,  or any of  them,  or  any  other  applicable  document,  instrument,  or
agreement  evidencing  the  Subordinated  Debt);  or the  Borrower or any of its
Subsidiaries,  or any other Person  shall,  directly or  indirectly,  disavow or
contest in any manner (i) the  effectiveness,  validity or enforceability of any
of the Subordination Provisions,  (ii) that any of such Subordination Provisions
exist for the benefit of each of the Agents and the  Lenders,  or (iii) that all
payments of  principal  or interest  with  respect to the  Subordinated  Debt or
realized from the  liquidation of any property of the Borrowers shall be subject
to any of such Subordination  Provisions; or any of the Subordination Provisions
shall,  in whole or in part,  terminate,  cease to be  effective  or cease to be
legally valid, binding and enforceable obligations of any subordinated lender or
any subordinated  lender fails to comply with (or takes any action  inconsistent
with) any term of the Subordination Provisions.

         8.2      Remedies.

                  (a) If any Default or Event of Default shall have occurred and
be continuing,  Applicable Agent may, and shall upon written request of Required
Lenders, without notice, (i) suspend the Revolving Loan facility with respect to
further  Revolving  Credit  Advances  and/or the incurrence of further Letter of
Credit  Obligations,  and/or  suspend  the SCIL Loan  facility  with  respect to
further SCIL Loan Advances,  whereupon any further  Revolving  Credit  Advances,
Letter of Credit  Obligations  and/or  SCIL Loan  Advances,  as the case may be,
shall be made or extended in the applicable  Lenders' sole discretion so long as
such Default or Event of Default is continuing; provided, however, that all Fees
shall remain due and payable and (ii)  increase the rate of interest  applicable
to the Loans and Letter of Credit Fees to the Default Rate.

                  (b) If  any  Event  of  Default  shall  have  occurred  and be
continuing,  Term Agent may, and shall upon written request of Required Lenders,
without  notice,  (i)  terminate  the  Revolving  Loan  facility with respect to
further  Revolving  Credit  Advances  or  Letter of  Credit  Obligations  and/or
terminate  the SCIL Loan  facility  with respect to further SCIL Loan  Advances,
(ii) declare all or any portion of the Obligations, including all or any portion
of any Loan to be  forthwith  due and  payable,  and require  that the Letter of
Credit Obligations be cash collateralized as in the manner set forth in Annex B,
all without presentment,  demand,  protest or further notice of any kind, all of
which are expressly  waived by each  Borrower and each other Credit  Party;  and
(iii)  exercise  any rights and  remedies  provided  to any Agent and any Lender
under the Loan  Documents  and/or at law or in equity,  including  all  remedies
provided under the Code;  provided,  however,  that without the prior consent of
the Required  Lenders,  Term Agent shall neither  accelerate the maturity of any
portion of the Obligations unless it is concurrently accelerating the maturities
of all of the other  Obligations,  nor terminate  either of the  Revolving  Loan
facility or the SCIL Loan  facility  with  respect to further  Revolving  Credit
Advances or SCIL Loan  Advances,  as  applicable,  unless the other  facility is
concurrently  terminated as to further  advances;  provided,  further,  upon the
occurrence of an Event of Default specified in Sections 8.1(g),  (h) or (i), the
Revolving Loan facility and SCIL Loan facility  shall be immediately  terminated
and all of the Obligations,  including the aggregate  Revolving Loan, Term Loans
and SCIL Loan,  respectively,  shall become  immediately due and payable without
declaration,  presentment,  notice  or  demand  by any  Person.  Notwithstanding
anything  to the  contrary  contained  in this  Agreement,  the  termination  in
accordance  with this  Agreement of the Revolving Loan facility or the SCIL Loan
facility in advance of the  acceleration  of the maturities of any or all of the
Obligations  shall be with  reservation  of the right at any time  thereafter to
accelerate such maturities in accordance with the terms of this Agreement.

         8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party irrevocably  waives (including
for purposes of Section 13): (a)  presentment,  demand and protest and notice of
presentment,  dishonor, notice of intent to accelerate,  notice of acceleration,
protest,  default,  nonpayment,   maturity,  release,  compromise,   settlement,
extension or renewal of any or all commercial paper, accounts,  contract rights,
documents,  instruments,  chattel  paper and  guaranties at any time held by any
Agent or any  Lender on which any  Credit  Party may in any way be  liable,  and
hereby  ratifies and  confirms  whatever any such Agent or Lender may do in this
regard,  (b) all  rights to notice  and a hearing  prior to any  Agent's  or any
Lender's  taking  possession  or control of, or to any  Agent's or any  Lender's
replevy,  attachment or levy upon,  the Collateral or any bond or security which
might be  required  by any court  prior to  allowing  any Agent or any Lender to
exercise any of its remedies,  and (c) the benefit of all valuation,  appraisal,
marshaling and exemption laws.

9.       ASSIGNMENTS AND PARTICIPATIONS

         9.1      Assignments And Participations.

                  (a) Each Lender may resell (through syndication, assignment or
a  participation)  all or a portion  of its rights  and  obligations  under this
Agreement (including all or a portion of any of its Commitments under the Loans)
to any  Person;  provided,  however,  that any such  resale  must be in  minimum
amounts of  $4,000,000  and  $1,000,000  increments  in excess of such  minimum;
provided,  further,  however, that if the applicable Lender's Commitment is less
than $4,000,000, such Commitment may be sold, but only if and to the extent that
such sale is for the full amount of such Commitment.

                  (b) In the case of an  assignment  by any  Lender  under  this
Section 9.1, the  purchaser  shall have, to the extent of such  assignment,  the
same rights, benefits and obligations as it would have had if it were a "Lender"
hereunder.  Upon  execution by the  assignor  and the assignee of an  Assignment
Agreement in substantially the form of Exhibit 9.1(b),  payment by such assignee
to such  assignor of an amount equal to the purchase  price agreed  between such
assignor  and  assignee   and   delivery  to   Applicable   Agent  and  Borrower
Representative  of an executed copy of such Assignment  Agreement  together with
payment to Applicable  Agent of a processing fee of $4,000,  such assignee shall
have, to the extent of such assignment  (unless otherwise provided for therein),
the same rights and  benefits  as it would have if it were a "Lender"  hereunder
and the assignor shall be, to the extent of such  assignment  (unless  otherwise
provided  therein)  released from its  obligations  under this  Agreement.  Each
Borrower hereby  acknowledges and agrees that any such assignment will give rise
to a direct  obligation  of such  Borrower to the assignee and that the assignee
shall be  considered  to be a  "Lender"  hereunder  and  under  the  other  Loan
Documents. In all instances, each Lender's liability to make any of the Advances
shall be several  and not joint and shall be limited to such  Lender's  pro rata
share thereof.  Upon any such assignment,  each Borrower, at such Borrower's own
expense,  shall  execute and deliver to  Applicable  Agent,  in exchange for the
surrendered  Note of assignor Lender, a new Note to the order of assignee Lender
in an amount equal to the Commitment  assumed by such assignee  Lender,  and, if
assignor Lender has retained a portion of such Commitment hereunder,  a new Note
to the order of assignor Lender in an amount equal to such retained  Commitment.
Such Notes shall be dated the Closing Date and shall otherwise be in the form of
the Notes replaced  thereby.  The Notes surrendered to Applicable Agent shall be
returned by Applicable Agent to Borrower Representative marked "canceled."

                  (c) Each Lender may sell  participations in all or any part of
any of its Revolving  Credit  Advances,  SCIL Loan Advances or the Term Loans or
any portion of any Commitment to any other Person;  provided,  however, that (i)
all amounts  payable by any Borrower  hereunder  shall be  determined as if such
Lender had not sold such  participation  and such Lender shall remain a "Lender"
for all purposes under this  Agreement,  (ii) any such grant of a  participation
will be made in compliance with all applicable  state or Federal laws, rules and
regulations,  (iii) any such  participation  shall be divided pro rata among the
participating  Lender's share of the applicable Loan, and (iv) such Lender shall
not grant any  participation  under which the  participant  shall have rights to
approve any  amendment  to or waiver of this  Agreement  or the Loan  Documents,
except to the  extent  such  amendment  or waiver  would  (A)  extend  the final
maturity   date  for  payment  of  the  Loan  in  which  such   participant   is
participating,  (B) reduce the interest  rate or the amount of principal or Fees
applicable  to the Loan in  which  such  participant  is  participating,  or (C)
release all or substantially all of the Collateral related therewith,  except as
expressly provided herein. In those cases in which a Lender grants rights to its
participants  to approve any  amendment  to or waiver of this  Agreement  or the
other Loan Documents  respecting the matters  described in the foregoing clauses
(A) through (C) of this Section 9.1(c),  the relevant  participation  agreements
shall provide for a voting mechanism whereby holders of a majority of the amount
of  the  participating  Lender's  portion  of  the  Loan,  as  the  case  may be
(irrespective of whether held by such Lender or participated), shall control the
vote for all of such participating  Lender's portion of the Loan. In the case of
any  participation,  the  participant  shall  not have  any  rights  under  this
Agreement or any of the other Loan Documents entered into in connection herewith
(the  participant's  rights against such Lender in respect of such participation
to be those set forth in the  participation or other agreement  executed by such
Lender and the  participant  relating  thereto)  and all amounts  payable to any
Lender  hereunder  shall be  determined  as if such  Lender  had not  sold  such
participation.

                  (d) Except as  otherwise  provided  in this  Section  9.1,  no
Lender shall, as between any Borrower and any such Lender, be relieved of any of
its  obligations  hereunder  as a result of any sale,  assignment,  transfer  or
negotiation of, or granting of a  participation  in, all or any part of any Loan
or  other  Obligations  owed  to  such  Lender.  Any  Lender  permitted  to sell
assignments  and  participations  under this  Section  9.1 may,  subject to this
Section  9.1,  furnish  any  information  concerning  any  Credit  Party  in the
possession  of that  Lender  from  time to time to  assignees  and  participants
(including  prospective  assignees and participants).  Unless and until Borrower
Representative  receives written notice of the assignment of any interest in the
Loans, the applicable  Borrower may treat the Lenders theretofore acting as such
as "Lenders" hereunder and shall be protected in making any payment hereunder in
reliance on the absence of such notice.

                  (e) Each  Borrower  shall assist any Lender  permitted to sell
assignments  or  participations  under  this  Section  9.1  in  whatever  manner
reasonably  necessary  in order to  enable  or  effect  any such  assignment  or
participation,  including the execution and delivery of any and all  agreements,
notes and other documents and  instruments as shall be reasonably  requested and
the preparation  and delivery of  informational  materials,  appraisals or other
documents for, and the  participation  of relevant  management in meetings with,
potential assignees or participants.  Each Borrower (or Borrower Representative,
on behalf of such  Borrower)  shall certify the  correctness,  completeness  and
accuracy of all  descriptions of such Borrower and its affairs  contained in any
selling  materials  and all  information  provided  by it and  included  in such
materials or shall provide all necessary additions and corrections thereto.

10.      SUCCESSORS AND ASSIGNS

         10.1  Successors  and  Assigns.  This  Agreement  and  the  other  Loan
Documents  shall be binding  on and shall  inure to the  benefit of each  Credit
Party,  each Agent,  each  Lender and each of their  respective  successors  and
assigns (including,  in the case of any Credit Party, a debtor-in-possession  on
behalf of such Credit Party), except as otherwise provided herein or therein. No
Credit Party may assign,  transfer,  hypothecate or otherwise convey its rights,
benefits,  obligations  or  duties  hereunder  or under  any of the  other  Loan
Documents  without the prior express written consent of Applicable Agent and the
Required  Lenders.  Any such purported  assignment,  transfer,  hypothecation or
other  conveyance by any Credit Party without the prior express  written consent
of Applicable  Agent shall be null and void ab initio.  The terms and provisions
of this  Agreement  are for the  purpose of  defining  the  relative  rights and
obligations of each Credit Party, each Agent and each Lender with respect to the
transactions  contemplated  hereby,  and  no  Person  shall  be  a  third  party
beneficiary  of any of the terms and  provisions of this Agreement or any of the
other Loan Documents.

11.      MISCELLANEOUS

         11.1 Complete Agreement;  Modification of Agreement. The Loan Documents
constitute the complete  agreement among the parties with respect to the subject
matter hereof and thereof and may not be modified, altered or amended, except as
set forth in Section  11.2  below.  Any  letter of  interest,  proposal  letter,
commitment letter or fee letter between or among any Credit Party,  either Agent
and any Lender or any of their  respective  affiliates  predating this Agreement
and relating to a financing of  substantially  similar  form,  purpose or effect
shall be superseded by this Agreement.

         11.2 Amendments and Waivers.  Neither this Agreement nor any other Loan
Document  nor any of the terms or  provisions  hereof or thereof may be changed,
waived,  discharged  or  terminated  unless such  change,  waiver,  discharge or
termination is in writing signed by Required Lenders; provided, however, that no
such change, waiver, discharge or termination shall, without the consent of each
affected Lender and Applicable Agent, (a) extend the scheduled final maturity of
any Loan, or any portion thereof or any scheduled installment thereof, or reduce
the rate or amount,  or extend the time of payment of, any interest  (other than
as a result  of  waiving  the  applicability  of any  post-Default  increase  in
interest  rates)  or Fees  payable  under  the Loan  Documents,  or  reduce  the
principal  amount  of any Loan or  reimbursement  obligation,  or  increase  any
Commitment  of such  Lender  over the  amount  thereof  then in effect (it being
understood  that a waiver of any Default  shall not  constitute  a change in the
terms of any Revolving Loan  Commitment of any applicable  Lender),  (b) release
Collateral  or the  liability  of any Borrower or any  Guarantor  under the Loan
Documents (except as expressly permitted by the Loan Documents),  (c) change any
provision of the Loan  Documents  that would have the effect of altering (i) the
several nature of the Lenders' obligations thereunder, (ii) the pro rata sharing
and  allocation  of advances and payments set forth in the Loan  Documents,  (d)
amend, modify or waive any provision of this Section 11.2, or Sections 1.3, 1.5,
1.9, 1.13,  1.14, 10.1 11.3 or 12.5, (e) reduce any percentage  specified in, or
otherwise  modify,  the  definition of Required  Lenders,  or (f) consent to the
assignment  or transfer by any Credit Party of any of its rights or  obligations
under this  Agreement,  or (g) waive any  requirement  set forth in Section 2.1,
provided further that no such agreement shall amend,  modify or otherwise affect
the rights or duties of any Agent hereunder without the prior written consent of
such Agent.

                  Upon  indefeasible  payment in full in cash and performance of
all of the Obligations  (other than  indemnification  Obligations  under Section
1.13),  termination of the  Commitments and a release of all claims against each
Agent and each Lender, and so long as no suits, actions  proceedings,  or claims
are pending or threatened  against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, Term Agent shall deliver
to Borrower Representative  termination statements,  mortgage releases and other
documents  necessary or appropriate to evidence the  termination of the Liens in
favor of Term Agent for the  benefit  of Lender  Group  securing  payment of the
Obligations.

        11.3 Fees and Expenses.  Borrowers shall, on the date of this Agreement,
reimburse each Agent for all out-of-pocket  expenses incurred in connection with
the  preparation,  review and  negotiation of the Loan Documents  (including the
reasonable fees and expenses of their respective special loan counsel, advisors,
consultants and auditors  retained in connection with the Loan Documents and the
Related  Transactions  and advice in connection  therewith) and shall  reimburse
each Agent for all such expenses  hereafter  arising.  Borrowers shall, no later
than five Business Days after written notice  thereof,  reimburse each Agent and
each Lender for all fees,  costs and expenses,  including the  reasonable  fees,
costs and expenses of counsel or other  advisors  (including  environmental  and
management  consultants  and  appraisers)  for  advice,   assistance,  or  other
representation in connection with:

                  (a) the  forwarding to Borrowers or any other Person on behalf
of Borrowers of the proceeds of the Loans;

                  (b) any amendment,  modification or waiver of, or consent with
respect  to, any of the Loan  Documents  or Related  Transactions  Documents  or
advice in connection with the administration of the credit provided hereunder or
its rights hereunder or thereunder;

                  (c) any  litigation,  contest,  dispute,  suit,  proceeding or
action (whether  instituted by any Agent, any Lender,  any Borrower or any other
Person) in any way relating to the Collateral,  any of the Loan Documents or any
other agreement to be executed or delivered in connection therewith or herewith,
whether as a party,  witness, or otherwise,  including any litigation,  contest,
dispute,  suit, case, proceeding or action, and any appeal or review thereof, in
connection  with a case  commenced by or against any or all of the  Borrowers or
any other  Person that may be  obligated to any Agent or any Lender by virtue of
the Loan  Documents;  including any such  litigation,  contest,  dispute,  suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default;

                  (d) any  attempt to enforce  any  remedies of any Agent or any
Lender  against any or all of the Credit Parties or any other Person that may be
obligated  to any Agent or any  Lender  by virtue of any of the Loan  Documents,
including  any such  attempt to enforce  any such  remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default;

                  (e) any   work-out or  restructuring  of the Loans  during the
pendency of one or more Events of Default;

                  (f) efforts  to (i)  monitor   the  Loans or any of the  other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective  affairs,  and (iii) verify,  protect,  evaluate,  assess,  appraise,
collect,  sell,  liquidate  or  otherwise  dispose  of any  of  the  Collateral;
including,  as to each of clauses  (a)  through (f) of this  Section  11.3,  all
reasonable attorneys' and other professional and service providers' fees arising
from  such  services,   including   those  in  connection   with  any  appellate
proceedings,  and all expenses,  costs,  charges and other fees incurred by such
counsel and others in any way or respect  arising in connection with or relating
to any of the events or actions described in this Section 11.3 shall be payable,
on demand,  by  Borrowers to Agents.  Without  limiting  the  generality  of the
foregoing,  such expenses,  costs, charges and fees may include: fees, costs and
expenses  of  accountants,   attorneys,   environmental  advisors,   appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses;  photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges;  telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection  with the  performance  of such legal or
other advisory services.

         11.4 No Waiver.  Any failure by any Agent or any Lender, at any time or
times,  to require strict  performance by the Credit Parties of any provision of
this  Agreement and any of the other Loan Documents  shall not waive,  affect or
diminish  any  right of any Agent or any  Lender  thereafter  to  demand  strict
compliance and  performance  therewith.  Any suspension or waiver of an Event of
Default shall not suspend,  waive or affect any other Event of Default,  whether
the same is prior or  subsequent  thereto and whether the same or of a different
type.  None  of  the  undertakings,   agreements,   warranties,   covenants  and
representations  of any Credit Party  contained in this  Agreement or any of the
other Loan  Documents  and no  Default  or Event of Default by any Credit  Party
shall be  deemed to have been  suspended  or waived by any Agent or any  Lender,
unless such waiver or suspension is by a written instrument signed by an officer
or other authorized  employee of applicable Agent or applicable  Lender,  as the
case may be, and directed to Borrower Representative  specifying such suspension
or waiver.

         11.5 Remedies. Each Agent's and each Lender's rights and remedies under
this  Agreement  shall be cumulative  and  nonexclusive  of any other rights and
remedies which  applicable  Agent or applicable  Lender may have under any other
agreement, including the other Loan Documents, by operation of law or otherwise.
Recourse to the Collateral shall not be required.

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

         11.7 Conflict of Terms.  Except as otherwise provided in this Agreement
or any of the other Loan  Documents  by  specific  reference  to the  applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict  with,  or  inconsistent  with,  any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.

         11.8  Confidentiality.  Each  Agent  and  each  Lender  agrees  to  use
commercially  reasonable  efforts  (equivalent to the efforts such Agent or such
Lender  applies  to  maintaining  the  confidentiality  of its own  confidential
information) to maintain as confidential all confidential  information  provided
to it by the Credit Parties and designated as  confidential  for a period of two
years  following  receipt  thereof,  except  that any  Agent or any  Lender  may
disclose such  information  (a) to Persons  employed or engaged by such Agent or
such Lender in evaluating, approving, structuring or administering the Loans and
the  Commitments,  (b) to any bona fide  assignee or  participant  or  potential
assignee or participant that has agreed to comply with the covenant contained in
this Section 11.8 (and any such bona fide assignee or  participant  or potential
assignee or participant  may disclose such  information  to Persons  employed or
engaged by them as described in clause (a) above),  (c) as required or requested
by any Governmental  Authority or reasonably believed by the applicable Agent or
Lender,  as the case may be, to be  compelled by any court  decree,  subpoena or
legal or administrative  order or process, (d) as, on the advice (which need not
be in writing) of applicable Agent's or applicable Lender's counsel, required by
law, (e) in  connection  with the exercise of any right or remedy under the Loan
Documents or in  connection  with any  Litigation to which  applicable  Agent or
applicable Lender is a party, or (f) which ceases to be confidential  through no
fault of applicable Agent or applicable Lender.

         11.9 GOVERNING LAW.  EXCEPT AS OTHERWISE  EXPRESSLY  PROVIDED IN ANY OF
THE LOAN  DOCUMENTS  (AND IN ANY  SUCH  CASE,  STRICTLY  LIMITED  TO THE  EXTENT
PROVIDED), IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,  VALIDITY AND
PERFORMANCE,  THE LOAN DOCUMENTS AND THE  OBLIGATIONS  SHALL BE GOVERNED BY, AND
CONSTRUED  AND  ENFORCED IN  ACCORDANCE  WITH,  THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS  MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAW
OF THE UNITED  STATES OF AMERICA.  EACH CREDIT PARTY HEREBY  CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS  LOCATED IN NEW YORK COUNTY,  CITY OF NEW YORK,
NEW YORK SHALL HAVE EXCLUSIVE  JURISDICTION  TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES  BETWEEN OR AMONG ANY OF THE  PARTIES TO THIS  AGREEMENT  OR ANY OF THE
OTHER  LOAN  DOCUMENTS  OR TO ANY  MATTER  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;  PROVIDED,  HOWEVER,  THAT EACH OF
THE PARTIES HERETO  ACKNOWLEDGES  THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED  OUTSIDE OF NEW YORK COUNTY,  CITY OF NEW YORK,  NEW
YORK; PROVIDED, FURTHER, HOWEVER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO  PRECLUDE  ANY AGENT OR ANY LENDER  FROM  BRINGING  SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY
OTHER  SECURITY  FOR THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT  OR OTHER COURT
ORDER IN FAVOR OF ANY AGENT OR ANY LENDER.  EACH CREDIT PARTY EXPRESSLY  SUBMITS
AND CONSENTS IN ADVANCE TO SUCH  JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT,  AND EACH CREDIT PARTY HEREBY  WAIVES ANY  OBJECTION  WHICH SUCH
CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL  JURISDICTION,  IMPROPER VENUE
OR FORUM NON  CONVENIENS  AND HEREBY  CONSENTS TO THE  GRANTING OF SUCH LEGAL OR
EQUITABLE  RELIEF AS IS DEEMED  APPROPRIATE  BY SUCH COURT.  EACH  CREDIT  PARTY
HEREBY  WAIVES  PERSONAL  SERVICE OF THE SUMMONS,  COMPLAINT  AND OTHER  PROCESS
ISSUED IN ANY SUCH  ACTION OR SUIT AND  AGREES  THAT  SERVICE  OF SUCH  SUMMONS,
COMPLAINT  AND  OTHER  PROCESS  MAY BE  MADE BY  REGISTERED  OR  CERTIFIED  MAIL
ADDRESSED  TO SUCH  CREDIT  PARTY AT THE  ADDRESS  SET  FORTH IN ANNEX H OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
SUCH CREDIT PARTY'S  ACTUAL  RECEIPT  THEREOF OR THREE DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.

         11.10  Notices.  Except as otherwise  provided  herein,  whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or  other  communication  shall or may be  given  to or  served  upon any of the
parties by any other parties,  or whenever any of the parties desires to give or
serve upon any other parties any  communication  with respect to this Agreement,
each such notice,  demand,  request,  consent,  approval,  declaration  or other
communication  shall be in  writing  and shall be  deemed  to have been  validly
served,  given or  delivered  (a) upon the  earlier of actual  receipt and three
Business Days after  deposit in the United States Mail,  registered or certified
mail,  return  receipt  requested,   with  proper  postage  prepaid,   (b)  upon
transmission,  when sent by telecopy  or other  similar  facsimile  transmission
(with such  telecopy or  facsimile  promptly  confirmed by delivery of a copy by
personal  delivery or United  States Mail as otherwise  provided in this Section
11.10),  (c) one Business Day after deposit with a reputable  overnight  courier
with all charges prepaid or (d) when delivered,  if hand-delivered by messenger,
all of which  communications  shall be addressed to the party to be notified and
sent to the address or  facsimile  number  indicated on Annex H or to such other
address (or facsimile  number) as may be  substituted  by notice given as herein
provided.  The giving of any notice required  hereunder may be waived in writing
by the party  entitled to receive  such notice.  Failure or delay in  delivering
copies of any notice, demand, request, consent,  approval,  declaration or other
communication  to any Person (other than Borrower  Representative,  any Agent or
any Lender)  designated  on Annex H to receive  copies shall in no way adversely
affect the effectiveness of such notice,  demand,  request,  consent,  approval,
declaration or other communication.

         11.11  Section  Titles.  The Section  titles and Table of Contents  and
Index of  Appendices  contained  in this  Agreement  are and  shall  be  without
substantive  meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

         11.12 Counterparts. This Agreement may be transmitted by telecopier and
executed  in  any  number  of  separate   counterparts,   each  of  which  shall
collectively  and separately  constitute  one  agreement.  This Agreement may be
executed by facsimile signature.

         11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL  TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE  STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN  ARBITRATION  RULES),  THE PARTIES  DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH  APPLICABLE  LAWS.  THEREFORE,  TO
ACHIEVE  THE BEST  COMBINATION  OF THE  BENEFITS OF THE  JUDICIAL  SYSTEM AND OF
ARBITRATION, EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,  WHETHER SOUNDING IN
CONTRACT,  TORT OR  OTHERWISE,  BETWEEN OR AMONG ANY  AGENT,  ANY LENDER AND ANY
CREDIT PARTY ARISING OUT OF,  CONNECTED  WITH,  RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP  ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

         11.14 Press Releases. Each Credit Party executing this Agreement agrees
that neither it nor its  Affiliates  will in the future issue any press releases
or other public  disclosure  using the name of GE Capital or its  Affiliates  or
referring  to  this   Agreement,   the  other  Loan  Documents  or  the  Related
Transactions  Documents  without at least two Business  Days' prior notice to GE
Capital and without the prior written  consent of GE Capital unless (and only to
the extent  that) such Credit  Party or Affiliate is required to do so under law
and then,  in any event,  such Credit  Party or  Affiliate  will consult with GE
Capital  before  issuing  such press  release or other public  disclosure.  Each
Credit  Party  consents to the  publication  by Agents of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement.  Agents reserve the right to provide to industry trade  organizations
information  necessary and customary for inclusion in league table  measurements
with Borrowers' consent which shall not be unreasonably withheld or delayed.

         11.15  Reinstatement.  This  Agreement  shall  remain in full force and
effect and continue to be  effective  should any petition be filed by or against
any Borrower  for  liquidation  or  reorganization,  should any Borrower  become
insolvent or make an assignment  for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's  assets,  and shall continue to be effective or to be reinstated,  as
the case may be, if at any time payment and performance of the  Obligations,  or
any part  thereof,  is,  pursuant to  applicable  law,  rescinded  or reduced in
amount,  or must  otherwise  be  restored  or  returned  by any  obligee  of the
Obligations,  whether as a "voidable  preference,"  "fraudulent  conveyance," or
otherwise,  all as though such payment or performance  had not been made. In the
event that any payment, or any part thereof, is rescinded,  reduced, restored or
returned,  the  Obligations  shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

         11.16 Advice of Counsel.  Each of the parties hereto represents to each
other party hereto that it has discussed this Agreement and,  specifically,  the
provisions of Sections 11.9 and 11.13, with its counsel.

         11.17 No Strict  Construction.  The parties  hereto  have  participated
jointly in the  negotiation  and  drafting  of this  Agreement.  In the event an
ambiguity or question of intent or interpretation  arises,  this Agreement shall
be construed as if drafted  jointly by the parties  hereto and no presumption or
burden of proof shall arise favoring or  disfavoring  any party by virtue of the
authorship of any provisions of this Agreement.

12.      AGENTS

         12.1 Appointment, Powers And Immunities. Each Lender hereby irrevocably
appoints and authorizes GE Capital to act as its  administrative and term agent,
which  duties shall  include  acting as the  collateral  agent in respect of the
Revolving Loan, the Term Loans, SCIL Loan, and all other Obligations,  on behalf
of the Lender Group, and each applicable Lender hereby irrevocably  appoints and
authorizes  KeyBank to act as its revolver agent,  under the Loan Documents with
such powers as are specifically delegated to each such Agent by the terms of the
Loan  Documents,  together with such other powers as are  reasonably  incidental
thereto. Each Agent (which term as used in this sentence and in Section 12.5 and
the first  sentence  of Section  12.6 hereof  shall  include  reference  to each
Agent's  respective  affiliates  and  their  own and  each of  their  respective
Affiliates' officers, directors,  employees and agents) (a) shall have no duties
or  responsibilities  except those  expressly set forth in this Agreement and in
the other Loan Documents, nor shall any Agent, by reason of any Loan Document or
otherwise,  be a  trustee  or  fiduciary  for  any  Lender,  (b)  shall  not  be
responsible  to any  Lender for any  recitals,  statements,  representations  or
warranties contained in this Agreement or in any other Loan Document,  or in any
certificate or other document referred to or provided for in, or received by any
of them  under,  any Loan  Document or for the value,  validity,  effectiveness,
genuineness,  enforceability  or  sufficiency  of any Loan Document or any other
document referred to or provided for herein or therein or for any failure by any
Credit Party or any other Person to perform any of its obligations  under any of
the Loan  Documents,  (c) shall not be  required  to  initiate  or  conduct  any
litigation or collection proceedings under any of the Loan Documents,  (d) shall
not be  responsible to any Lender for any action taken or omitted to be taken by
it under any Loan Document or under any other document or instrument referred to
or provided for herein or therein or in connection herewith or therewith, except
for its own gross  negligence  or willful  misconduct,  as determined by a final
judgment of a court of competent jurisdiction.  Each Agent may employ agents and
attorneys-in-fact,  and neither Agent shall be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
Each  Agent may deem and treat the payee of any  applicable  Note as the  holder
thereof for all purposes hereof,  unless and until a notice of the assignment or
transfer thereof shall have been filed with such Agent.

         12.2 Reliance By Agents.  Each Agent shall be entitled to rely upon any
certification,  notice or other  communication  (including any  communication by
telephone,  telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper  Person or
Persons,   and  upon  advice  and  statements  of  legal  counsel,   independent
accountants  and other  experts  selected by such  Agent.  As to any matters not
expressly  provided for by any Loan  Document,  each Agent shall in all cases be
fully protected in acting, or in refraining from acting, under any Loan Document
in accordance with instructions given by Required Lenders or all Lenders,  as is
required in such  circumstance,  and such  instruction  of such  Lenders and any
action taken or failure to act pursuant thereto shall be binding on all Lenders.

         12.3 Defaults.  No Agent shall be deemed to have knowledge or notice of
the  occurrence  of a Default  (other than the  non-payment  of  principal of or
interest on the  Revolving  Loan or Fees) or Event of Default  unless such Agent
has received  notice from a Lender or Borrower  Representative  specifying  such
Default  which  states that such notice is a "Notice of  Default."  In the event
that any Agent receives such a notice of the occurrence of a Default, such Agent
shall give prompt  notice  thereof to Lenders (and shall give each Lender prompt
notice of each such  non-payment).  Applicable  Agent shall  (subject to Section
12.7)  take such  action  with  respect  to such  Default or Event of Default as
shall,  consistent  with the terms of the  Agreement,  be  directed  by Required
Lenders; provided, however, that unless and until such Agent shall have received
such  directions,  such  Agent  may (but  shall not be  obligated  to) take such
action,  or refrain  from taking such  action,  with  respect to such Default or
Event of Default as it shall deem  advisable  in the best  interest  of Lenders,
except to the extent that this Agreement  expressly requires that such action be
taken,  or not be taken,  only with the  consent  or upon the  authorization  of
Required Lenders or all Lenders, as is required in such circumstance.

         12.4 Rights As A Lender. In the event that GE Capital (or any successor
acting as Term Agent and/or  Administrative  Agent) or KeyBank (or any successor
acting as Revolver Agent) shall become a Lender  hereunder,  with respect to any
Commitment, any Revolving Credit Advance, the SCIL Loan or any SCIL Loan Advance
or any Term Loan, it (or such  successor)  shall have the same rights and powers
hereunder as any other Lender and may exercise  such rights and powers as though
it were not acting as an Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates,  include each Agent in its individual capacity.
GE Capital (and any successor acting as Term Agent and/or  Administrative Agent)
or KeyBank  (or any  successor  acting as Revolver  Agent) and their  respective
affiliates may (without having to account therefor to any Lender) lend money to,
make investments in and generally engage in any kind of business with the Credit
Parties (and any of their  Subsidiaries  or Affiliates) as if it were not acting
as an Agent,  and GE Capital  and KeyBank and their  respective  Affiliates  may
accept fees and other  consideration  from the Credit  Parties  for  services in
connection  with this  Agreement or otherwise  without having to account for the
same to any Lender.

         12.5 Indemnification. Each Lender agrees to indemnify and hold harmless
each Agent (to the extent not  reimbursed  by Borrowers  hereunder,  and without
limiting the obligations of Borrowers  hereunder) ratably in accordance with the
aggregate  principal  amount of the Loans  held by  Lenders  (or,  if no amounts
thereof are at the time outstanding, ratably in accordance with their respective
Commitments),  from and  against any and all  claims,  causes of action,  costs,
expenses or  liabilities of any kind and nature  whatsoever  that may be imposed
on,  incurred by or asserted  against  each or either  Agent  (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 Loan  Document  or any other  documents  or
instruments contemplated by or referred to herein or therein or the transactions
contemplated  hereby or thereby (including the costs and expenses that Borrowers
are obligated to pay hereunder) 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  arise from the gross
negligence or willful  misconduct of the party to be indemnified,  as determined
by a final judgment of a court of competent jurisdiction.

        12.6  Non-Reliance On Agents And Other Lenders.  Each Lender agrees that
it has, independently and without reliance on any Agent or any other Lender, and
based on such documents and  information as such Lender has deemed  appropriate,
made its own credit analysis of the Credit Parties and independently  decided to
enter into this Agreement and that it will,  independently  and without reliance
upon any Agent or any other Lender,  and based on such documents and information
as it shall deem appropriate at the time,  continue to make its own analysis and
decisions  in taking or not taking  action  under this  Agreement  or any of the
other Loan  Documents.  No Agent shall be required to keep itself informed as to
the  performance  or observance by any Credit Party of this  Agreement or any of
the other Loan  Documents  or any other  document  referred to or  provided  for
herein or therein or to inspect the  properties or books of the Credit  Parties.
Each Agent will use its respective  reasonable  efforts to provide  Lenders with
any  information  received by it from Borrowers which is required to be provided
to Lenders  hereunder,  and with any notice of a Default  received by such Agent
from Borrowers and any notice of a Default delivered by such Agent to Borrowers;
provided,  however,  that no Agent shall be liable to any Lender for any failure
to do so, except to the extent that such failure is attributable to such Agent's
gross negligence or willful  misconduct,  as determined by a final judgment of a
court of  competent  jurisdiction,  and the party to whom such  notice was to be
provided demonstrates actual damages resulting from such failure. No Agent shall
have any duty or  responsibility  to provide any Lender with any other credit or
other information concerning the affairs, financial condition or business of the
Credit Parties (or any of their affiliates) that may come into the possession of
such Agent or of any of its affiliates, nor to update or correct any information
previously  given  which  becomes  incorrect  or  which  such  Agent  learns  is
incorrect.

         12.7 Failure To Act.  Except for actions  expressly  required of Agents
hereunder and under the other Loan  Documents,  each Agent shall in all cases be
fully  justified in failing or refusing to act hereunder and  thereunder  unless
the  applicable  Agent shall  receive  further  assurances  to their  respective
satisfaction  from Lenders of their  indemnification  obligations  under Section
12.5 hereof against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action.

         12.8  Resignation Of Agents.  Subject to the appointment and acceptance
of  successor  Agents as  provided  below,  any Agent may  resign at any time by
giving notice thereof to each other Agent, Lenders and Borrower  Representative.
Upon any such resignation,  Required Lenders shall have the right to appoint its
successor  Agent. If no successor Agent shall have been so appointed by Required
Lenders nor shall any Person have accepted such appointment within 30 days after
the retiring Agent gives notice of resignation,  then the retiring Agent may, on
behalf  of  Lenders,  appoint  a  successor  Agent  that  shall  be a  financial
institution  with a  combined  capital  and  surplus  or net  worth  of at least
$100,000,000.  Upon the acceptance of any appointment as an Agent hereunder by a
successor  Agent,  such successor  Agent shall  thereupon  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.  After any retiring  Agent's  resignation  hereunder as an Agent, the
provisions of this Section 12 shall continue in effect for such retiring Agent's
benefit in respect of any actions  taken or omitted to be taken by it while such
retiring Agent was acting as an Agent.

         12.9 Consents  Under Loan  Documents.  Except as otherwise  provided in
Section 11.1 and Section 11.2 with respect to this Agreement,  Applicable  Agent
may, with the prior consent of Required Lenders (but not otherwise),  consent to
any  modification,  supplement  or  waiver  under  any  of the  Loan  Documents;
provided, however, that without the prior consent of each Lender, no Agent shall
(except as provided herein or in the Collateral  Documents) release any material
portion of the  Collateral or otherwise  terminate any Lien under any Collateral
Document  with respect to any material  portion of the  Collateral,  or agree to
additional  obligations  being secured by such  Collateral,  except that no such
consent shall be required, and Term Agent is hereby authorized and instructed to
release  any Lien in favor of itself for the  benefit of Lender  Group  covering
Collateral  (a)  which  is the  subject  of a  disposition  permitted  hereunder
(including  the Allowed  Sale),  (b) which  secures  Indebtedness  to the extent
permitted  under Section 6.3, or (c) the value of which does not exceed  $50,000
in any Fiscal Year.

         12.10    Collateral Matters.

                  (a)  Except  as  otherwise  expressly  provided  for  in  this
Agreement,  no Agent shall have any  obligation  whatsoever to any Lender or any
other Person to investigate,  confirm or assure that the Collateral exists or is
owned by any  Credit  Party or is cared  for,  protected  or insured or has been
encumbered,  or whether any  particular  reserves are  appropriate,  or that the
Liens  granted to Term Agent for the benefit of Lender  Group herein or pursuant
hereto  have been  properly or  sufficiently  or  lawfully  created,  perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any  particular  manner  or under any duty of care,  disclosure  or
fidelity,  or to continue  exercising,  any of the rights authorities and powers
granted or available to the applicable  Agent in any of the Loan  Documents,  it
being  understood and agreed that (i) in respect of the Collateral,  or any act,
omission  or event  related  thereto,  each Agent may act in any  manner  deemed
appropriate, in its respective sole discretion,  given such Agent's own interest
in the  Collateral  as a Lender  and (ii) that no Agent  shall  have any duty or
liability whatsoever to any other Lender, other than liability for its own gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.

                  (b) Each Lender hereby appoints each other Lender as its agent
for the purpose of perfecting  Term Agent's Lien for the benefit of Lender Group
in assets which, in accordance with Article 9 of the Code, can be perfected only
by possession.  Should any Lender (other than an Agent) obtain possession of any
such Collateral, such Lender shall notify Applicable Agent thereof and, promptly
upon  Applicable  Agent's  request  therefor,  shall deliver such  Collateral to
Applicable Agent or in accordance with Applicable Agent's instructions.

13.      CROSS-GUARANTY

         13.1 Cross-Guaranty.  Each Borrower hereby agrees that such Borrower is
jointly  and  severally  liable  for,  and hereby  absolutely,  irrevocably  and
unconditionally  guarantees  to each Agent and each Lender and their  respective
successors and assigns, the full and prompt payment (whether at stated maturity,
by  acceleration  or otherwise)  and  performance  of, all  Obligations  owed or
hereafter owing to any Agent or any Lender by each other Borrower, regardless of
whether, pursuant to the Loan Documents, such Borrower is a "borrower" under the
Obligation  in  question.  Each  Borrower  agrees that its  guaranty  obligation
hereunder  is a  continuing  guaranty  of  payment  and  performance  and not of
collection,  that its obligations  under this Section 13 shall not be discharged
until payment and performance in full of the Obligations has occurred,  and that
its  obligations  under this  Section 13 shall be  absolute  and  unconditional,
irrespective of, and unaffected by:

                  (a) the genuineness,  validity, regularity,  enforceability or
         any future  amendment of, or change in, this Agreement,  any other Loan
         Document or any other  agreement,  document or  instrument to which any
         Borrower is or may become a party;

                  (b) the  absence  of any  action  to  enforce  this  Agreement
         (including this Section 13) or any other Loan Document or the waiver or
         consent  by  any  Agent  or  any  Lender  with  respect  to  any of the
         provisions thereof;

                  (c) the  existence,  value or  condition  of,  or  failure  to
         perfect its Lien  against,  any  security  for the  Obligations  or any
         action,  or the  absence of any  action,  by any Agent or any Lender in
         respect thereof (including the release of any such security);

                  (d) the insolvency of any Credit Party; or

                  (e) any other action or  circumstances  which might  otherwise
         constitute  a legal or  equitable  discharge  or defense of a surety or
         guarantor,   including,  without  limitation,  any  impairment  of  the
         Collateral, or any part thereof.

Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.

         13.2 Waivers by Borrowers. Each Borrower expressly waives all rights it
may have now or in the future under any statute,  or at common law, or at law or
in equity, or otherwise,  to compel any Agent or any Lender to marshal assets or
to proceed in respect of the Obligations  guaranteed hereunder against any other
Credit  Party,  any other  party or against  any  security  for the  payment and
performance of the Obligations before proceeding  against,  or as a condition to
proceeding against, such Borrower. It is agreed between and among each Borrower,
each Agent and each Lender that the foregoing  waivers are of the essence of the
transaction  contemplated  by this  Agreement  and the other Loan  Documents and
that, but for the provisions of this Section 13 and such waivers, each Agent and
each Lender would decline to enter into this Agreement.

         13.3 Benefit of Guaranty.  Each Borrower  agrees that the provisions of
this  Section 13 are for the  benefit of each Agent and each  Lender and each of
their respective  successors,  transferees,  endorsees and assigns,  and nothing
herein  contained  shall impair,  as between or among any other Borrower and any
Agent and any Lender,  the  obligations  of such other  Borrower  under the Loan
Documents.

         13.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
contrary  in this  Agreement  or in any other Loan  Document,  and except as set
forth  in  Section  13.7,  each  Borrower   hereby   expressly  and  irrevocably
subordinates  to  payment  of the  Obligations  any and all  rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off  and  any  and all  defenses  available  to a  surety,  guarantor  or
accommodation  co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower  acknowledges and agrees that this subordination is intended
to benefit  each Agent and each Lender and shall not limit or  otherwise  affect
such Borrower's  liability  hereunder or the  enforceability of this Section 13,
and that each Agent and each Lender and each of their successors and assigns are
intended  third party  beneficiaries  of the waivers and agreements set forth in
this Section 13.4.

         13.5  Election  of  Remedies.  If any Agent or any  Lender  may,  under
applicable law,  proceed to realize its benefits under any of the Loan Documents
giving any Agent or any Lender a Lien upon any Collateral,  whether owned by any
Borrower  or  by  any  other  Person,  either  by  judicial  foreclosure  or  by
non-judicial sale or enforcement,  any such Agent or any such Lender may, at its
sole option,  determine  which of its  remedies or rights it may pursue  without
affecting  any of its rights and  remedies  under  this  Section  13. If, in the
exercise  of any of its  rights  and  remedies,  any Agent or any  Lender  shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment  against  any  Borrower  or any other  Person,  whether  because of any
applicable  laws pertaining to "election of remedies" or the like, each Borrower
hereby  consents  to such action by any such Agent or any such Lender and waives
any claim  based upon such  action,  even if such action by such Agent or Lender
shall result in a full or partial loss of any rights of  subrogation  which each
Borrower  might  otherwise  have had but for such  action by such  Agent or such
Lender.  Any election of remedies  which  results in the denial or impairment of
the right of any Agent or any Lender to seek a deficiency  judgment  against any
Borrower shall not impair any other Borrower's obligation to pay the full amount
of the  Obligations.  In the  event  any  Agent or any  Lender  shall bid at any
foreclosure  or trustee's  sale or at any private  sale  permitted by law or the
Loan Documents,  such Agent or Lender may bid all or less than the amount of the
Obligations  and the amount of such bid need not be paid by such Agent or Lender
but shall be credited against the Obligations.  The amount of the successful bid
at any such  sale,  whether  any Agent or any  Lender or any other  party is the
successful bidder,  shall be conclusively  deemed to be the fair market value of
the  Collateral,  and the  difference  between such bid amount and the remaining
balance of the Obligations shall be conclusively  deemed to be the amount of the
Obligations  guaranteed under this Section 13,  notwithstanding that any present
or future law or court  decision or ruling may have the effect of  reducing  the
amount of any deficiency  claim to which any Agent or any Lender might otherwise
be entitled but for such bidding at any such sale.

         13.6  Limitation.   Notwithstanding   any  provision  to  the  contrary
contained  herein,  each  Borrower's  liability  under  this  Section  13 (which
liability  is in any event in  addition  to amounts  for which such  Borrower is
liable under Section 1) shall be limited to a maximum  aggregate amount equal to
the greatest amount that would not render such Borrower's  obligations hereunder
subject to avoidance as a fraudulent  transfer or conveyance  any  provisions of
applicable state law, in each case after giving effect to all other  liabilities
of such Borrower,  contingent or otherwise,  that are relevant under the Section
548 of Title 11 of the United States Code or any  provisions  of any  applicable
state Uniform  Fraudulent  Transfer Act,  Uniform  Fraudulent  Conveyance Act or
similar statute or common law. (specifically excluding, however, any liabilities
of such Borrower (a) in respect of intercompany  debt owed or owing to any other
Borrower or Affiliates of any other  Borrower to the extent that such debt would
be discharged in an amount equal to the amount paid by such Borrower  under this
Section 13 and (b) under any guarantee of senior  unsecured debt or Indebtedness
subordinated in right of payment to the Obligations,  which guarantee contains a
limitation  as to maximum  amount  similar to that set forth in this Section 13,
pursuant  to which the  liability  of such  Borrower  under  this  Section 13 is
included in the  liabilities  taken into  account in  determining  such  maximum
amount) and after giving effect as assets to the value (as determined  under the
applicable  provisions  of Section 548 of Title 11 of the United  States Code or
any provisions of any applicable state Uniform Fraudulent  Transfer Act, Uniform
Fraudulent  Conveyance  Act or similar  statute or common  law) of any rights to
subrogation,  contribution,  reimbursement,  indemnity or similar rights of such
Borrower pursuant to applicable law or any agreement  providing for an equitable
allocation  among such Borrower and other  Affiliates  of any other  Borrower of
obligations arising under guarantees by such parties.

         13.7     Contribution with Respect to Guaranty Obligations.

                  (a) To the extent that any Borrower shall make a payment under
this Section 13 (a "Guarantor  Payment") of all or any of the Obligations (other
than Loans made to that Borrower for which it is primarily liable) which, taking
into account all other Guarantor  Payments then previously or concurrently  made
by any other  Borrower,  exceeds the amount which such Borrower would  otherwise
have paid if each Borrower had paid the aggregate  Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's "Allocable Amount"
(as defined below), as determined  immediately prior to such Guarantor  Payment,
bore to the aggregate  Allocable  Amounts of each of the Borrowers as determined
immediately  prior to the  making of such  Guarantor  Payment,  then,  following
indefeasible  payment in full in cash of the  Obligations and termination of the
Commitments,  such  Borrower  shall be  entitled  to  receive  contribution  and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.

                  (b) As of any date of determination, the "Allocable Amount" of
any Borrower  shall be equal to the maximum amount of the claim which could then
be recovered  from such Borrower  under this Section 13 without  rendering  such
claim  voidable or avoidable  under Section 548 of Title 11 of the United States
Code or under any  applicable  state Uniform  Fraudulent  Transfer Act,  Uniform
Fraudulent Conveyance Act or similar statute or common law.

                  (c) This Section 13.7 is intended  only to define the relative
rights of  Borrowers  and nothing set forth in this  Section 13.7 is intended to
nor shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this  Agreement,  including  Section  13.1.  Nothing  contained in this
Section  13.7 shall limit the  liability  of any  Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest,  Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.

                  (d)  The  parties  hereto   acknowledge  that  the  rights  of
contribution  and  indemnification  hereunder  shall  constitute  assets  of the
Borrower to which such contribution and indemnification is owing.

                  (e) The rights of the  indemnifying  Borrowers  against  other
Credit  Parties under this Section 13.7 shall be  exercisable  upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.

         13.8  Liability  Cumulative.  The  liability  of  Borrowers  under this
Section 13 is in addition to and shall be  cumulative  with all  liabilities  of
each  Borrower to any Agent and any Lender  under this  Agreement  and the other
Loan  Documents  to  which  such  Borrower  is a  party  or in  respect  of  any
Obligations  or obligation of any other  Borrower,  without any limitation as to
amount,  unless the  instrument  or agreement  evidencing or creating such other
liability specifically provides to the contrary.

                            [signature page follows]

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

                           BORROWERS:

                           VIDEO SERVICES CORPORATION
                                 as Borrower, Borrower Representative and
                                 Credit Party

/s/ Michael E. Faribourne  Video Services Corporation
Michael E. Fairbourne      Senior Vice President - Administration

/s/ Michael E. Fairbourne  AF Associates Inc.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  AFA Products Group, Inc.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  Audio Plus Video International, Inc.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  Atlantic Satellite Communications, Inc.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  Cabana Corp.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  International Post Finance Limited
Michael E. Fairbourne      President

/s/ Michael E. Fairbourne  International Post Leasing Limited
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  Manhattan Transfer/Edit, Inc.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  The Post Edge, Inc.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Faribourne  Video Rentals, Inc.
Michael E. Fairbourne      Vice President - Administration

                           CREDIT PARTIES:

/s/ Michael E. Fairbourne  IPL 235 Corp.
Michael E. Fairbourne      President

/s/ Michael E. Fairbourne  VSC EXPRESS COURIER, INC.
Michael E. Fairbourne      Vice President - Administration

/s/ Michael E. Fairbourne  VSC CORPORATION
Michael E. Fairbourne      Vice President - Administration

                           GENERAL ELECTRIC CAPITAL CORPORATION, as Term Agent
/s/ Ann Naegele            Vice President - Risk Manager
Ann Naegele

                           KEYBANK NATIONAL ASSOCIATION, as Revolver Agent
/s/ Craig Kineade          Vice President
Craig Kineade


Term Loan A Commitment: $5,000,000         GENERAL ELECTRIC CAPITAL CORPORATION,
Term Loan B Commitment: $15,000,000                as Lender
Revolving Loan Commitment $5,000,000
SCIL Loan Commitment: $10,000,000

/s/ Ann Naegele                            Vice President - Risk Manager
Ann Naegele


Term Loan A Commitment: $6,000,000         KEYBANK NATIONAL ASSOCIATION,
Revolving Loan Commitment: $6,000,000              as Lender

/s/ Craig Kineade                          Vice President
Craig Kineade


Term Loan A Commitment: $4,000,000         SUMMIT BANK,
Revolving Loan Commitment: $4,000,000             as Lender

/s/ Andrew DeTullio                        Vice President
Andrew DeTullio

<PAGE>


                               ANNEX A (Recitals)

                                       to

                                CREDIT AGREEMENT

                                   DEFINITIONS

         Capitalized  terms  used  in the  Loan  Documents  shall  have  (unless
otherwise  provided  elsewhere in the Loan  Documents) the following  respective
meanings and all Section references in the following  definitions shall refer to
Sections of the Agreement:

         "A Rated Bank" shall have the meaning set forth in Section 6.2.

         "Account  Debtor" shall mean any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account.

         "Accounts"  shall mean all  "accounts,"  as such term is defined in the
Code,  now owned or  hereafter  acquired by any Credit  Party and, in any event,
including (a) all accounts receivable,  other receivables,  book debts and other
forms of  obligations  (other  than forms of  obligations  evidenced  by Chattel
Paper,  Documents or Instruments) now owned or hereafter received or acquired by
or belonging or owing to any Credit Party,  whether arising out of goods sold or
services  rendered  by it or from  any  other  transaction  (including  any such
obligations which may be characterized as an account or contract right under the
Code),  (b) all of each  Credit  Party's  rights  in, to and under all  purchase
orders or receipts now owned or hereafter  acquired by it for goods or services,
(c) all of each Credit  Party's  rights to any goods  represented  by any of the
foregoing (including unpaid sellers' rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all  monies  due or to become due to any  Credit  Party  under all  purchase
orders and  contracts  for the sale of goods or the  performance  of services or
both by such Credit Party or in connection with any other  transaction  (whether
or not yet  earned  by  performance  on the part of such  Credit  Party)  now or
hereafter  in  existence,  including  the right to receive the  proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.

         "Activation Event" and "Activation  Notice" shall have the meanings set
forth in Annex C.

         "Advance Date" shall have the meaning set forth in Section 1.17.

         "Advances"  shall mean Revolving Credit Advances or SCIL Loan Advances,
as the context requires.

         "Affiliate"  shall mean,  with  respect to any Person,  (a) each Person
that, directly or indirectly,  owns or controls,  whether beneficially,  or as a
trustee,  guardian or other fiduciary,  10% or more of the Stock having ordinary
voting power in the election of directors of such Persons,  (b) each Person that
controls,  is controlled by or is under common control with such Person, and (c)
each of such Person's officers, directors, joint venturers and partners. For the
purposes of this  definition,  "control" of a Person shall mean the  possession,
directly or  indirectly,  of the power to direct or cause the  direction  of its
management or policies,  whether through the ownership of voting securities,  by
contract  or  otherwise;  provided,  however,  that the term  "Affiliate"  shall
specifically exclude Lenders.

         "Agent"  and  "Agents"  shall  have  the  meanings  set  forth  in  the
introductory paragraph of this Agreement.

         "Agreement"  shall mean the Credit  Agreement  dated as of April  [__],
2000 by and among Borrowers, the other Credit Parties named therein, Lenders and
Agents,  as amended from time to time,  together  with all  Annexes,  Disclosure
Schedules,  Exhibits and other attachments thereto, each as amended from time to
time.

         "Allocable  Amount"  shall have the  meaning  assigned to it in Section
13.7(b).

         "Allowed Sale" shall have the meaning assigned to it in Section 1.5(a).

         "Annexes" shall mean the annexes  denominated as Annexes A through H in
the Index of Appendices.

         "Appendices"  shall have the meaning  assigned to it in the Recitals to
the Agreement.

         "Applicable Agent" shall mean Term Agent,  except in matters related to
the  administration  of or  specifically  arising out of the Revolving  Loan, in
which case it shall mean Revolver Agent.

         "Applicable L/C Margin" shall mean the per annum fee, from time to time
in effect,  payable with respect to outstanding  Letter of Credit Obligations as
determined by reference to Section 1.5(a).

         "Applicable  Margins" means,  collectively,  the applicable L/C Margin,
the Applicable Unused Line Fee Margin, the Applicable Revolver LIBOR Margin, the
Applicable  Revolver Index Margin,  the Applicable Term Loan A LIBOR Margin, the
Applicable  Term Loan A Index Margin,  the Applicable  Term Loan B LIBOR Margin,
the Applicable  Term Loan B Index Margin,  the Applicable SCIL Loan LIBOR Margin
and the Applicable SCIL Loan Index Margin.

         "Applicable  Revolver  Index Margin" shall mean the per annum  interest
rate  margin  from time to time in effect and  payable in  addition to the Index
Rate  applicable  to the  Revolving  Loan, as determined by reference to Section
1.5(a) of the Agreement.

         "Applicable  Revolver  LIBOR Margin" shall mean the per annum  interest
rate from time to time in effect  and  payable  in  addition  to the LIBOR  Rate
applicable to the Revolving  Loan, as determined by reference to Section  1.5(a)
of the Agreement.

         "Applicable  SCIL Loan Index Margin" shall mean the per annum  interest
rate from time to time in effect  and  payable  in  addition  to the Index  Rate
applicable to the SCIL Loan, as determined by reference to Section 1.5(a) of the
Agreement.

         "Applicable  SCIL Loan LIBOR Margin" shall mean the per annum  interest
rate from time to time in effect  and  payable  in  addition  to the LIBOR  Rate
applicable to the SCIL Loan, as determined by reference to Section 1.5(a) of the
Agreement.

         "Applicable Term Loan A Index Margin" shall mean the per annum interest
rate from time to time in effect  and  payable  in  addition  to the Index  Rate
applicable to Term Loan A, as  determined by reference to Section  1.5(a) of the
Agreement.

         "Applicable Term Loan A LIBOR Margin" shall mean the per annum interest
rate from time to time in effect  and  payable  in  addition  to the LIBOR  Rate
applicable to Term Loan A, as  determined by reference to Section  1.5(a) of the
Agreement.

         "Applicable Term Loan B Index Margin" shall mean the per annum interest
rate from time to time in effect  and  payable  in  addition  to the Index  Rate
applicable to Term Loan B, as  determined by reference to Section  1.5(a) of the
Agreement.

         "Applicable Term Loan B LIBOR Margin" shall mean the per annum interest
rate from time to time in effect  and  payable  in  addition  to the LIBOR  Rate
applicable to Term Loan B, as  determined by reference to Section  1.5(a) of the
Agreement.

         "Applicable  Unused Line Fee Margin" shall mean the per annum fee, from
time to time in effect,  payable in respect of  Borrowers'  non-use of committed
funds  pursuant to Section  1.6(b),  which fee is  determined  by  reference  to
Section 1.5(a).

         "Borrower Accounts" shall have the meaning assigned to it in Annex C.

         "Borrower  Representative"  shall mean VSC in its  capacity as Borrower
Representative pursuant to the provisions of Section 1.1(d).

         "Borrowers" and "Borrower" shall have the respective  meanings assigned
thereto in the Recitals to the Agreement.

         "Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are  required or  permitted  to be closed in the State of New
York and, in reference  to LIBOR  Loans,  shall mean any such day that is also a
LIBOR Business Day.

         "Capital  Expenditures"  shall mean,  with  respect to any Person,  all
expenditures  (by the expenditure of cash or the incurrence of  Indebtedness) by
such Person during any measuring  period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.

         "Capital  Lease" shall mean,  with respect to any Person,  any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP,  would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.

         "Capital  Lease  Obligation"  shall mean,  with  respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in  accordance  with GAAP,  would  appear on a balance  sheet of such  lessee in
respect of such Capital Lease.

         "Cash  Management  Systems"  shall have the  meaning  assigned to it in
Section 1.6.

         "Change  of  Control"  shall  mean (a) the  acquisition  of  ownership,
directory  or  indirectly,  beneficially  or of  record,  by any Person or group
(within the meaning of the Securities  Exchange Act of 1934 and the rules of the
Securities  and  Exchange  Commission  thereunder),  of equity  interests in VSC
representing more than 40% of either the aggregate  ordinary voting power or the
aggregate  equity  value  represented  by  the  issued  and  outstanding  equity
interests  in VSC;  (b) the  occupation  of a majority of the seats  (other than
vacant  seats) on the board of  directors of VSC by Persons who were neither (i)
nominated by the board of  directors  of VSC nor (ii)  appointed by directors so
nominated,  on the effective date of this Agreement; or (c) the failure of Louis
H.  Siracusano to remain  employed as Chief  Executive  Officer of VSC, and with
substantially  the same  responsibilities  as those existing on the date of this
Agreement.

         "Charges"  shall mean all  federal,  state,  county,  city,  municipal,
local,  foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and  payable),  levies,  assessments,  charges,  liens,  claims  or
encumbrances  upon or relating to (a) the Collateral,  (b) the Obligations,  (c)
the employees,  payroll,  income or gross receipts of any Credit Party,  (d) any
Credit Party's  ownership or use of any  properties or other assets,  or (e) any
other aspect of any Credit Party's business.

         "Chattel Paper" shall mean any "chattel paper," as such term is defined
in the Code,  now owned or  hereafter  acquired  by any Credit  Party,  wherever
located.

         "Closing Date" shall mean June 7, 2000.

         "Closing Checklist" shall mean the schedule,  including all appendices,
exhibits or schedules  thereto,  listing certain documents and information to be
delivered in connection  with the  Agreement,  the other Loan  Documents and the
transactions  contemplated  hereunder and thereunder,  substantially in the form
attached hereto as Annex D.

         "Code"  shall mean the Uniform  Commercial  Code as the same may,  from
time to time,  be  enacted  and in effect  in the  State of New York;  provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the  attachment,  perfection or priority of Term Agent's Lien for the benefit
of Lender Group in any Collateral is governed by the Uniform  Commercial Code as
enacted and in effect in a  jurisdiction  other than the State of New York,  the
term "Code" shall mean the Uniform  Commercial  Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions hereof relating to
such attachment,  perfection or priority and for purposes of definitions related
to such provisions.

         "Collateral" shall mean the property covered by the Security Agreement,
the Mortgages and the other Collateral Documents and any other property, real or
personal,  tangible or intangible,  now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of Term
Agent for the benefit of Lender Group to secure the Obligations.

         "Collateral  Documents" shall mean the Security  Agreement,  the Pledge
Agreements,  the Guaranties,  the Mortgages,  the Patent Security Agreement, the
Trademark Security  Agreement,  the Copyright Security Agreement and all similar
agreements  entered  into  guaranteeing  payment  of,  or  granting  a Lien upon
property as security for payment of, the Obligations.

         "Collateral  Reports"  shall  mean  the  reports  with  respect  to the
Collateral referred to in Annex F.

         "Collection  Account"  shall mean that  certain  account of Term Agent,
account number  502-328-54 in the name of Term Agent at Bankers Trust Company in
New York, New York, or such other account as Term Agent shall specify.

         "Commitment"  shall mean,  as to each  Lender,  the sum of each of such
Lender's  Revolving  Loan  Commitment,   Term  Loan  Commitment  and  SCIL  Loan
Commitment,  and "Commitments" shall mean the sum of all such Commitments of all
Lenders which shall,  in the  aggregate,  be $55,000,000 on the Closing Date, as
such  amounts  may be  reduced,  amortized  or  adjusted  from  time  to time in
accordance with the Agreement.

         "Commitment  Termination  Date"  shall  mean  (i)  in the  case  of the
Revolving  Loan,  the earliest of (A) 39 months after the Closing Date,  (B) the
date of termination of Lenders'  obligations to make Revolving  Credit  Advances
and/or incur Letter of Credit  Obligations or permit existing Revolving Loans to
remain  outstanding  pursuant to Section 8.2(b) and (C) the date of indefeasible
payment  in  full  by  Borrowers  of  all  Revolving  Credit  Advances  and  the
cancellation and return (or stand-by  guarantee) of all Letters of Credit or the
cash collateralization of all Letters of Credit Obligations pursuant to Annex B,
and the  permanent  reduction of the Revolving  Loan  Commitment to zero Dollars
($0),  (ii) in the case of Term Loan A, the  earliest of (A) 39 months after the
Closing Date, (B) the date of termination of Lenders'  obligations to permit the
existing Term Loan A to remain  outstanding  pursuant to Section 8.2(b), and (C)
the date of  indefeasible  payment in full by Borrowers of Term Loan A, (iii) in
the case of Term Loan B, the earliest of (A) 63 months  after the Closing  Date,
(B) the date of termination of Lenders'  obligations to permit the existing Term
Loan B to  remain  outstanding  pursuant  to  Section  8.2(b),  (C) the  date of
indefeasible  payment in full by  Borrowers  of Term Loan B, and (D) the Working
Capital Termination Date, and (iv) in the case of the SCIL Loan, the earliest of
(A) 84 months after the Closing Date,  (B) the date of  termination  of Lenders'
obligations to permit the existing SCIL Loans to remain outstanding  pursuant to
Section 8.2(b), and (C) the Working Capital Termination Date.

         "Communications  Act"  means the  Communications  Act of 1934,  and any
similar  or  successor  Federal  statute,  and the  rules  and  regulations  and
published policies of the FCC thereunder,  all as amended and as the same may be
in effect from time to time.

         "Compliance Certificate" shall have the meaning assigned to it in Annex
E.

         "Concentration Accounts" shall have the meaning assigned to it in Annex
C.

         "Contracts"  shall mean all "contracts," as such term is defined in the
Code,  now owned or  hereafter  acquired  by any  Credit  Party,  in any  event,
including  all  contracts,   undertakings,  or  agreements  (other  than  rights
evidenced  by Chattel  Paper,  Documents or  Instruments)  in or under which any
Credit Party may now or hereafter have any right,  title or interest,  including
any agreement  relating to the terms of payment or the terms of  performance  of
any Account.

         "Control  Letter" means a letter  agreement  between Agents and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit  Party,  (ii) a securities  intermediary  with respect to
securities, whether certificated or uncertificated,  securities entitlements and
other  financial  assets held in a securities  account in the name of any Credit
Party,  (iii) a futures  commission  merchant or clearing  house with respect to
commodity  accounts and commodity  contracts held by any Credit Party,  whereby,
among other things,  the issuer,  securities  intermediary or futures commission
merchant  disclaims any security  interest in the applicable  financial  assets,
acknowledges  the Liens of Term Agent for the  benefit  of Lender  Group on such
financial assets, and agrees to follow the instructions or entitlement orders of
Term Agent without further consent by the affected Credit Party.

         "Copyright  License"  shall  mean  any  and all  rights  now  owned  or
hereafter  acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.

         "Copyright  Security  Agreements"  shall  mean the  Copyright  Security
Agreements  made in favor of Term Agent for the benefit of Lender  Group by each
applicable Credit Party.

         "Copyright" or  "Copyrights"  shall mean all of the following now owned
or  hereafter  acquired  by any Credit  Party:  (a) all  copyrights  and General
Intangibles of like nature (whether  registered or  unregistered),  now owned or
existing or hereafter  adopted or acquired,  all  registrations  and  recordings
thereof,   and  all   applications  in  connection   therewith,   including  all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States,  any state or territory
thereof, or any other country or any political  subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

         "Credit Parties" shall mean VSC, each other Borrower, and each of their
respective Subsidiaries.

         "Current  Assets" shall mean,  with respect to any Person,  all current
assets of such Person as of any date of  determination  calculated in accordance
with GAAP, but excluding cash, cash equivalents and debts due from Affiliates.

         "Current  Liabilities"  shall mean,  with  respect to any  Person,  all
liabilities  which  should,  in  accordance  with GAAP, be classified as current
liabilities,  and in any event shall include all Indebtedness  payable on demand
or within one year from any date of determination without any option on the part
of the obligor to extend or renew beyond such year,  all accruals for federal or
other taxes based on or measured by income and payable within such year, and the
current  portion of  long-term  debt  required to be paid  within one year,  but
excluding,  in the case of Borrowers,  the outstanding  principal balance of the
Revolving Loan.

         "Default"  shall  mean any event  which,  with the  passage  of time or
notice or both, would, unless cured or waived, become an Event of Default.

         "Default Rate" shall have the meaning assigned to it in Section 1.5(d).

         "Disbursement  Accounts" shall have the meaning assigned to it on Annex
C.

         "Disclosure  Schedules" shall mean the Schedules  prepared by Borrowers
and  denominated  as  Disclosure  Schedules  1.4  through  6.7 in the  Index  of
Appendices.

         "Documents"  shall mean any "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.

         "Dollars"  or "$" shall mean lawful  currency  of the United  States of
America.

         "EBITDA" shall mean,  with respect to any Person for any fiscal period,
an amount equal to (a)  consolidated  net income of such Person for such period,
minus (b) the sum of (i) income tax credits,  (ii) interest  income,  (iii) gain
from extraordinary  items for such period,  (iv) any aggregate net gain (but not
any  aggregate net loss) during such period  arising from the sale,  exchange or
other  disposition of capital assets by such Person (including any fixed assets,
whether  tangible or  intangible,  all inventory  sold in  conjunction  with the
disposition  of fixed  assets and all  securities),  and (v) any other  non-cash
gains which have been added in determining consolidated net income, in each case
to the extent  included in the  calculation of  consolidated  net income of such
Person for such period in accordance  with GAAP, but without  duplication,  plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense,  (iii)
loss from  extraordinary  items for such  period,  (iv) the  amount of  non-cash
charges (including depreciation and amortization) for such period, (v) amortized
debt  discount  for such  period,  and  (vi)  the  amount  of any  deduction  to
consolidated  net  income  as the  result  of any  grant to any  members  of the
management  or the board of directors of such Person of any Stock,  in each case
to the extent  included in the  calculation of  consolidated  net income of such
Person for such period in accordance  with GAAP,  but without  duplication.  For
purposes  of  this  definition,   the  following  items  shall  be  excluded  in
determining  consolidated net income of a Person: (A) the income (or deficit) of
any other Person  accrued  prior to the date it became a  Subsidiary  of, or was
merged  with  or  consolidated  into,  such  Person  or  any  of  such  Person's
Subsidiaries;  (B) the income (or  deficit)  of any other  Person  (other than a
Subsidiary) in which such Person has an ownership interest, except to the extent
any such income has  actually  been  received by such Person in the form of cash
dividends or distributions;  (C) the undistributed earnings of any Subsidiary of
such  Person to the extent  that the  declaration  or payment  of  dividends  or
similar  distributions  by such  Subsidiary is not at the time  permitted by the
terms of any  contractual  obligation or  requirement  of law applicable to such
Subsidiary;  (D) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued during
such period; (E) any write-up of any asset; (F) any net gain from the collection
of the proceeds of life  insurance  policies;  (G) any net gain arising from the
acquisition  of  any  securities,  or the  extinguishment,  under  GAAP,  of any
Indebtedness,  of such Person,  (H) in the case of a successor to such Person by
consolidation  or merger or as a transferee of its assets,  any earnings of such
successor prior to such consolidation, merger or transfer of assets, and (I) any
deferred  credit  representing  the excess of equity in any  Subsidiary  of such
Person  at the  date of  acquisition  of such  Subsidiary  over the cost to such
Person of the investment in such  Subsidiary.  For purposes of this  definition,
items not included in  calculating  consolidated  net income with respect to any
Person shall not be subtracted in  determining  EBITDA for such Person and items
not excluded in calculating  consolidated  net income with respect to any Person
shall not be added in  determining  EBITDA  for such  Person.  For  purposes  of
calculating the Leverage Ratio,  EBITDA shall be adjusted on a consistent  basis
to give effect to all sales, transfers and other dispositions made by the Credit
Parties during the relevant measurement period as if such sales,  transfers,  or
dispositions had occurred on the first day of such period.

         "Environmental  Laws" shall mean all applicable  federal,  state, local
and foreign laws, statutes, ordinances, codes, rules, standards and regulations,
now or hereafter  in effect,  and in each case as amended or  supplemented  from
time to time,  and any  applicable  judicial  or  administrative  interpretation
thereof,  including any applicable  judicial or  administrative  order,  consent
decree,  order or  judgment,  imposing  liability or standards of conduct for or
relating  to  the  regulation  and  protection  of  human  health,  safety,  the
environment  and  natural  resources  (including  ambient  air,  surface  water,
groundwater,  wetlands,  land surface or subsurface  strata,  wildlife,  aquatic
species  and   vegetation).   Environmental   Laws  include  the   Comprehensive
Environmental   Response,   Compensation,   and   Liability   Act  of  1980  (42
U.S.C.ss.ss.9601  et seq.) ("CERCLA");  the Hazardous  Materials  Transportation
Authorization Act of 1994 (49  U.S.C.ss.ss.5101  et seq.);  the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.ss.136 et seq.);
the Solid Waste Disposal Act (42 U.S.C.ss.ss. 6901 et seq.); the
Toxic Substance Control Act (15 U.S.C.ss.ss.2601 et seq.); the Clean Air Act (42
  U.S.C.ss.ss.7401  et seq.); the Federal Water Pollution Control
Act (33  U.S.C.ss.ss.1251  et seq.);  the  Occupational  Safety  and  Health Act
(29  U.S.C.ss.ss.651  et seq.);  and the Safe Drinking Water Act
(42  U.S.C.ss.ss.  300(f) et seq.),  each as from time to time amended,  and any
 and all regulations  promulgated  thereunder,  and all analogous
state,  local and  foreign  counterparts  or  equivalents  and any  transfer  of
ownership notification or approval statutes.

         "Environmental Liabilities" shall mean, with respect to any Person, all
liabilities,  obligations,  responsibilities,  response,  remedial  and  removal
costs,  investigation and feasibility study costs, capital costs,  operation and
maintenance costs, losses, damages,  punitive damages, property damages, natural
resource  damages,  consequential  damages,  treble damages,  costs and expenses
(including  all  fees,  disbursements  and  expenses  of  counsel,  experts  and
consultants),  fines, penalties,  sanctions and interest incurred as a result of
or related to any claim,  suit, action,  investigation,  proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability,  criminal or civil statute or common law, including any arising under
or related to any Environmental  Laws,  Environmental  Permits, or in connection
with any Release or  threatened  Release or  presence  of a  Hazardous  Material
whether  on,  at, in,  under,  from or about or in the  vicinity  of any real or
personal property.

         "Environmental    Permits"   shall   mean   all   permits,    licenses,
authorizations,   certificates,  approvals  or  registrations  required  by  any
Governmental Authority under any Environmental Laws.

         "Equipment"  shall mean all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any  event,  including  all such  Credit  Party's  machinery  and  equipment,
including processing  equipment,  conveyors,  machine tools, data processing and
computer  equipment with software and peripheral  equipment (other than software
constituting  part  of  the  Accounts),  and  all  engineering,  processing  and
manufacturing  equipment,  office  machinery,   furniture,   materials  handling
equipment,  tools,  attachments,  accessories,  automotive equipment,  trailers,
trucks, forklifts,  molds, dies, stamps, motor vehicles, rolling stock and other
equipment  of every kind and nature,  trade  fixtures and fixtures not forming a
part of real property, all whether now owned or hereafter acquired, and wherever
situated,  together  with all  additions and  accessions  thereto,  replacements
therefor,  all parts therefor,  all  substitutes for any of the foregoing,  fuel
therefor, and all manuals,  drawings,  instructions,  warranties and rights with
respect thereto,  and all products and proceeds thereof and condemnation  awards
and insurance proceeds with respect thereto.

         "ERISA" shall mean the Employee  Retirement Income Security Act of 1974
(or any successor  legislation  thereto),  as amended from time to time, and any
regulations promulgated thereunder.

         "ERISA  Affiliate"  shall mean,  with respect to any Credit Party,  any
trade or business (whether or not incorporated) which, together with such Credit
Party,  are treated as a single employer within the meaning of Sections  414(b),
(c), (m) or (o) of the IRC.

         "ERISA Event" shall mean, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA  Affiliate from a
Title IV Plan  subject to Section  4063 of ERISA  during a plan year in which it
was a substantial  employer,  as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial  withdrawal of any Credit Party or any ERISA  Affiliate from
any  Multiemployer  Plan;  (d) the filing of a notice of intent to  terminate  a
Title  IV Plan or the  treatment  of a plan  amendment  as a  termination  under
Section 4041 of ERISA;  (e) the  institution of proceedings to terminate a Title
IV Plan or  Multiemployer  Plan by the PBGC; (f) the failure by any Credit Party
or ERISA  Affiliate to make when due required  contributions  to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition  which might  reasonably  be expected to  constitute  grounds
under  Section 4042 of ERISA for the  termination  of, or the  appointment  of a
trustee  to  administer,  any  Title  IV Plan or  Multiemployer  Plan or for the
imposition  of  liability  under  Section  4069 or  4212(c)  of  ERISA;  (h) the
termination  of a  Multiemployer  Plan  under  Section  4041A  of  ERISA  or the
reorganization  or  insolvency  of a  Multiemployer  Plan under  Section 4241 of
ERISA; (i) the loss of a Qualified Plan's qualification or tax exempt status; or
(j) the termination of a Plan described in Section 4064 of ERISA.

         "ESOP" shall mean a Plan which is intended to satisfy the  requirements
of Section 4975(e)(7) of the IRC.

         "Event of  Default"  shall have the  meaning  assigned to it in Section
8.1.

         "Excess Cash Flow" shall mean, without duplication, with respect to any
Fiscal Year of Borrowers and their  Subsidiaries,  consolidated  net income plus
(a)  depreciation,  amortization  and Interest Expense to the extent deducted in
determining  consolidated net income,  plus decreases or minus increases (as the
case may be) (b) in Working Capital,  minus (c) Capital Expenditures during such
Fiscal Year  (excluding the financed  portion  thereof and excluding any Capital
Expenditures in such Fiscal Year to the extent in excess of the amount permitted
to be made in such  Fiscal Year  pursuant  to clause (a) of Annex G),  minus (d)
Interest  Expense  paid or  accrued  (excluding  any  original  issue  discount,
interest  paid in kind or amortized  debt  discount,  to the extent  included in
determining  Interest Expense) and scheduled  principal payments paid or payable
in respect of Funded Debt, plus or minus (as the case may be), (e) extraordinary
gains or losses  which are cash items not  included  in the  calculation  of net
income,  minus (f) mandatory  prepayments  paid in cash pursuant to Section 1.3,
other than mandatory prepayments made pursuant to Sections 1.3(b)(i), 1.3(b)(iv)
or 1.3(d), plus (g) taxes deducted in determining consolidated net income to the
extent not paid for in cash. For purposes of this definition,  "Working Capital"
means Current Assets less Current Liabilities.

         "Exhibits"  shall mean the Exhibits  denominated  as Exhibit  1.1(a)(i)
through 9.1(b) in the Index to Appendices.

         "Existing Letters of Credit" shall mean the letters of credit issued by
KeyBank in favor of the Borrowers listed, in the amounts specified,  in Schedule
A-1.

         "FCC" means the Federal Communications Commission, or any other similar
or successor agency of the Federal  government  administering the Communications
Act.

         "FCC  License"  means any  license  operating  permit or other grant of
authority  issued by the FCC in connection with the operation of the business of
any Borrower, now held or hereafter acquired by any Borrowers.

         "Fair  Salable  Balance  Sheet" shall mean a balance sheet of Borrowers
prepared in accordance with Section 3.4(d).

         "Federal  Funds Rate" shall mean, for any day, a floating rate equal to
the weighted average of the rates on overnight Federal funds  transactions among
members of the Federal Reserve System, as determined by Term Agent.

         "Federal  Reserve  Board"  means the Board of  Governors of the Federal
Reserve System, or any successor thereto.

         "Fee Agreement" shall mean the fee agreement between the Credit Parties
and GE Capital dated as of the Closing Date.

         "Fees" shall mean any and all fees payable to Agents or Lenders, as the
context requires,  pursuant to the Agreement,  the Fee Agreement,  or any of the
other Loan Documents.

         "Financial  Covenants" shall have the meaning set forth in Section 6.10
and are as set forth in Annex G.

         "Financial  Statements"  shall mean the consolidated and  consolidating
income  statements,  statements  of cash flows and balance  sheets of the Credit
Parties delivered in accordance with Section 3.4 of the Agreement and Annex E to
the Agreement.

         "Fiscal  Month"  shall mean any of the  monthly  accounting  periods of
Borrowers.

         "Fiscal Quarter" shall mean any of the quarterly  accounting periods of
Borrowers,  ending on  September  30,  December 31, March 31 and June 30 of each
year.

         "Fiscal  Year"  shall  mean any of the  annual  accounting  periods  of
Borrowers ending on June 30 of each year.

         "Fixed  Charges" shall mean,  with respect to any Person for any fiscal
period,  (a) the aggregate of all Interest  Expense paid or accrued  during such
period  other  than in  respect  of the SCIL Note and  accrued  interest  on the
Subordinated  Notes,  plus (b) scheduled  payments of principal  with respect to
Indebtedness  during  such  period  (other  than  payments  with  respect to the
Subordinated  Notes,  to the extent  funded with SCIL Loan  Advances),  plus (c)
Capital Expenditures during such period, plus (d) cash Taxes.

         "Fixed Charge  Coverage  Ratio" shall mean,  with respect to any Person
for any fiscal period, the ratio of EBITDA to Fixed Charges.

         "Fixtures"  shall  mean any  "fixtures"  as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.

         "Funded Debt" shall mean, with respect to any Person,  all Indebtedness
for borrowed money evidenced by notes, bonds,  debentures,  or similar evidences
of  Indebtedness  and which by its terms  matures more than one year from, or is
directly or indirectly  renewable or extendible at such Person's  option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit  over a period of more than one year from the date of  creation  thereof,
and  specifically   including   Capital  Lease   Obligations,   synthetic  lease
obligations,   current  maturities  of  long-term  debt,  revolving  credit  and
short-term debt extendible beyond one year at the option of the debtor, and also
including,  in the case of Borrowers,  the Obligations and, without duplication,
Guaranteed  Indebtedness  consisting  of  guaranties  of  Indebtedness  of other
Persons.

         "GAAP"  shall mean  generally  accepted  accounting  principles  in the
United States of America as in effect on the Closing Date, consistently applied,
as such term is further defined in Annex G to the Agreement.

         "General  Intangibles"  shall mean any "general  intangibles,"  as such
term is  defined  in the Code,  now owned or  hereafter  acquired  by any Credit
Party,  and, in any event,  including all right,  title and interest  which such
Credit Party may now or hereafter  have in or under any  Contract,  all customer
lists, Licenses, Copyrights,  Trademarks, Patents, and all applications therefor
and reissues,  extensions or renewals thereof,  rights in Intellectual Property,
interests  in  partnerships,  joint  ventures and other  business  associations,
licenses,  permits,  copyrights,  trade  secrets,  proprietary  or  confidential
information,  inventions  (whether  or not  patented or  patentable),  technical
information,  procedures,  designs, knowledge,  know-how,  software, data bases,
data, skill, expertise,  experience,  processes, models, drawings, materials and
records,  goodwill  (including  the goodwill  associated  with any  Trademark or
Trademark  License),  all  rights  and  claims  in or under  insurance  policies
(including  insurance  for fire,  damage,  loss and casualty,  whether  covering
personal  property,  real property,  tangible rights or intangible  rights,  all
liability,  life, key man and business interruption insurance,  and all unearned
premiums),  uncertificated  securities,  choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification,  all books and records, correspondence,  credit files, invoices
and other papers, including, without limitation, all tapes, cards, computer runs
and other papers and  documents in the  possession  or under the control of such
Credit Party or any computer  bureau or service company from time to time acting
for such Credit Party.

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

         "Guaranteed  Indebtedness" shall mean, as to any Person, any obligation
of  such  Person  guaranteeing  any  indebtedness,  lease,  dividend,  or  other
obligation  ("primary  obligations") of any other Person (the "primary obligor")
in any manner,  including any  obligation or  arrangement  of such Person (a) to
purchase or  repurchase  any such primary  obligation,  (b) to advance or supply
funds (i) for the purchase or payment of any such primary  obligation or (ii) to
maintain  working  capital or equity capital of the primary obligor or otherwise
to maintain  the net worth or solvency or any  balance  sheet  condition  of the
primary obligor, (c) to purchase property,  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 (d) to
indemnify the owner of such primary  obligation against loss in respect thereof.
The amount of any Guaranteed  Indebtedness  at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary  obligation in respect of which such  Guaranteed  Indebtedness is
made and (y) the maximum amount for which such Person may be liable  pursuant to
the terms of the instrument embodying such Guaranteed  Indebtedness;  or, if not
stated or determinable,  the maximum reasonably  anticipated liability (assuming
full performance) in respect thereof.

         "Guaranties" shall mean, collectively, each Subsidiary Guaranty and any
other guaranty  executed by any Guarantor in favor of Term Agent for the benefit
of Lender Group in respect of the Obligations.

         "Guarantor  Payment"  shall have the meaning  assigned to it in Section
13.7(a).

         "Guarantors"  shall mean each  Subsidiary  of each  Borrower,  and each
other Person,  if any, which executes a guarantee or other similar  agreement in
favor of Term  Agent for the  benefit  of Lender  Group in  connection  with the
transactions contemplated by the Agreement and the other Loan Documents.

         "Hazardous Material" shall mean any substance,  material or waste which
is  regulated by or forms the basis of liability  now or  hereafter  under,  any
Environmental Laws,  including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely   hazardous  waste,"  "restricted   hazardous  waste,"   "pollutant,"
"contaminant,"  "hazardous  constituent,"  "special waste," "toxic substance" or
other similar term or phrase under any Environmental  Laws, (b) petroleum or any
fraction or by-product thereof, asbestos,  polychlorinated biphenyls (PCB's), or
any radioactive substance.

         "Indebtedness"  of any Person  shall mean without  duplication  (a) all
indebtedness  of such Person for  borrowed  money or for the  deferred  purchase
price of property  the payment  for which is  deferred  six months or more,  but
excluding  obligations  to trade  creditors  incurred in the ordinary  course of
business that are not overdue by more than six months unless being  contested in
good faith, (b) all  reimbursement and other obligations with respect to Letters
of Credit (or other  letters of credit,  bankers'  acceptances  and surety bonds
(but without  implying such other letters or credit or bankers'  acceptances are
permitted under this  Agreement)),  whether or not matured,  (c) all obligations
evidenced  by  notes,  bonds,   debentures  or  similar  instruments,   (d)  all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreement  with  respect to property  acquired  by such Person  (even
though the rights and remedies of the seller or lender  under such  agreement in
the event of default are limited to repossession or sale of such property),  (e)
all Capital Lease  Obligations  and the present value  (discounted  at the Index
Rate as in  effect on the  Closing  Date) of future  rental  payments  under all
synthetic leases, (f) all obligations of such Person under commodity purchase or
option  agreements or other commodity price hedging  arrangements,  in each case
whether  contingent  or matured,  (g) all  obligations  of such Person under any
foreign exchange contract,  currency swap agreement,  interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from  fluctuations  in currency  values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred
to above  secured  by (or for  which  the  holder  of such  Indebtedness  has an
existing right,  contingent or otherwise,  to be secured by) any Lien upon or in
property or other assets (including  accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (i) the Obligations.

         "Indemnified  Liabilities"  shall have the  meaning  assigned  to it in
Section 1.10.

         "Indemnified Person" shall have the meaning set forth in Section 1.10.

         "Index  Rate"  shall  mean,  for any day, a floating  rate equal to the
higher of (a) the rate  publicly  quoted  from  time to time by The Wall  Street
Journal  as the  "base  rate on  corporate  loans at  large  U.S.  money  center
commercial  banks" (or, if The Wall Street Journal ceases quoting a base rate of
the type  described,  the highest per annum rate of  interest  published  by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected  Interest Rates" as the Bank prime loan rate or its  equivalent),  and
(b) the Federal  Funds Rate plus 50 basis  points per annum.  Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.

         "Index Rate Loan" shall mean any Loan bearing  interest by reference to
the Index Rate.

         "Instruments"  shall mean any  "instrument," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event,  including all certificated  securities,  all certificates of
deposit, and all notes and other, without limitation, evidences of indebtedness,
other than  instruments  that  constitute,  or are a part of a group of writings
that constitute, Chattel Paper.

         "Intellectual  Property"  shall  mean  any and all  Licenses,  Patents,
Copyrights, Trademarks, trade secrets and customer lists.

         "Intercompany  Notes" shall have the meaning  assigned to it in Section
6.3.

         "Intercreditor   Agreement"  shall  mean  that  certain   Intercreditor
Agreement dated on or about the date of this Agreement,  by and between the Term
Agent  and  People's  Capital  and  Leasing  Corp.,  as  amended,   modified  or
supplemented from time to time.

         "Interest  Coverage  Ratio" shall mean,  with respect to any Person for
any period, the ratio of EBITDA to Interest Expense.

         "Interest   Determination  Date"  shall  mean  the  last  Business  Day
immediately  prior to the  effectiveness  of a conversion  election  whereby the
Loans are  converted  from LIBOR  Loans to Index Rate Loans in  accordance  with
Section 1.4(e).

         "Interest  Expense"  shall  mean,  with  respect  to any Person for any
fiscal  period,  interest  expense  (whether  cash or  non-cash)  of such Person
determined in accordance  with GAAP for the relevant  period ended on such date,
including, in any event, (a) interest expense with respect to any Funded Debt of
such  Person  and  interest  expense  for the  relevant  period  that  has  been
capitalized  on the  balance  sheet of such  Person,  and (b)  imputed  interest
expense with respect to any  synthetic  leases  referred to in clause (e) of the
defined term "Indebtedness.".

         "Interest  Payment  Date" means (a) as to any Index Rate Loan,  July 1,
2000 and the first Business Day of each three month period thereafter, (b) as to
any LIBOR Loan, the last day of the applicable LIBOR Period; provided,  however,
if applicable, that in the case of any LIBOR Period greater than three months in
duration, interest shall be payable at three month intervals and on the last day
of such LIBOR Period; and provided,  further,  however, that, in addition to the
foregoing,  each of (x) the date  upon  which all of the  Commitments  have been
terminated  and  the  Loans  have  been  paid in  full  and  (y) the  applicable
Commitment  Termination  Date shall be deemed to be an "Interest  Payment  Date"
with respect to any interest which is then accrued under the Agreement.

         "Inventory"  shall mean any "inventory," as such term is defined in the
Code, now or hereafter owned or acquired by any Credit Party,  wherever located,
and in any event  including  inventory,  merchandise,  goods and other  personal
property which are held by or on behalf of any Credit Party for sale or lease or
are  furnished  or are to be  furnished  under a contract of  service,  or which
constitute raw materials, work in process or materials used or consumed or to be
used  or  consumed  in  such  Credit  Party's  business  or in  the  processing,
production,  packaging,  promotion,  delivery or shipping of the same, including
other supplies.

         "Investment  Property"  shall  have the  meaning  ascribed  thereto  in
Section 9-115 of the Code in those  jurisdictions  in which such  definition has
been  adopted and shall  include (i) all  securities,  whether  certificated  or
uncertificated,   including  stocks,  bonds,   interests  in  limited  liability
companies,  partnership  interests,  treasuries,  certificates  of deposit,  and
mutual  fund  shares;  (ii) all  securities  entitlements  of any Credit  Party,
including  the  rights of any Credit  Party to any  securities  account  and the
financial  assets held by a securities  intermediary in such securities  account
and any free credit balance or other money owing by any securities  intermediary
with respect to that account;  (iii) all securities  accounts held by any Credit
Party;  (iv) all  commodity  contracts  held by any  Credit  Party;  and (v) all
commodity accounts held by any Credit Party.

         "IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.

         "IRS"  shall  mean  the  Internal  Revenue  Service,  or any  successor
thereto.

         "KeyBank" shall mean KeyBank National Association.

         "L/C Issuer" shall mean KeyBank, its successors and assigns.

         "Lender"  and  "Lenders"  shall  have  the  meanings  set  forth in the
introductory paragraph of this Agreement and Section 12.4.

         "Lender  Group" shall mean,  collectively,  Term Agent,  Administrative
Agent,  Revolver  Agent,  each  Lender,  and  their  respective  successors  and
permitted assigns.

         "Letter of Credit Fee" shall have the meaning  assigned to such term in
Annex B.

         "Letter of Credit  Obligations" shall mean all outstanding  obligations
incurred by the L/C Issuer at the request of  Borrower  Representative,  whether
direct or indirect,  contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by L/C Issuer with respect
to any Letter of Credit.  The amount of such Letter of Credit  Obligations shall
equal the  maximum  amount  which may be  payable  by L/C  Issuer  thereupon  or
pursuant thereto.

         "Letters of Credit" shall mean standby letters of credit issued for the
account of any Borrower by any L/C Issuer,  and bankers'  acceptances  issued by
any Borrower,  for which the L/C Issuer and the applicable Lenders have incurred
Letter of Credit Obligations, and shall include, without limitation the Existing
Letters of Credit.

         "Leverage   Ratio"  shall  mean,  with  respect  to  Borrowers,   on  a
consolidated   basis,   the  ratio  of  (a)  Funded  Debt  as  of  any  date  of
determination,  to (b) EBITDA  for the  12-month  period  ending on that date of
determination.

         "LIBOR  Business  Day" shall mean a Business  Day on which banks in the
city  of  London  are  generally   open  for   interbank  or  foreign   exchange
transactions.

         "LIBOR Loan" shall mean a Loan or any portion thereof bearing  interest
by reference to the LIBOR Rate.

         "LIBOR Period" shall mean,  with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower  Representative pursuant
to the Agreement and ending one, two or three months thereafter,  as selected by
Borrower  Representative's  irrevocable notice to Agents as set forth in Section
1.4(e);  provided,  however,  that the  foregoing  provision  relating  to LIBOR
Periods is subject to the following:

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

                  (f) any LIBOR Period that would  otherwise  extend  beyond the
         Commitment  Termination Date shall end two LIBOR Business Days prior to
         such date;

                  (g) any LIBOR Period pertaining to a LIBOR 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 Period) shall end on the last LIBOR Business Day of a
         calendar month;

                  (h) Borrower  Representative  shall select LIBOR Periods so as
          not to require a payment  or  prepayment  of any LIBOR  Loan  during a
          LIBOR Period for such Loan; and

                  (i) Borrower Representative shall select LIBOR Periods so that
         there shall be no more than five  separate  LIBOR Loans in existence at
         any one time.

          "LIBOR  Rate"  shall mean for each LIBOR  Period,  a rate of  interest
         determined by Term Agent equal to:

                  (a) the offered rate for deposits in United States Dollars for
         the  applicable  LIBOR Period which appears on Telerate Page 3750 as of
         11:00 a.m.,  London  time,  on the second full LIBOR  Business Day next
         preceding the first day of each such LIBOR Period  (unless such date is
         not a Business  Day, in which event the next  succeeding  Business  Day
         will be used); divided by

                  (b) a number  equal to 1.0 minus the  aggregate  (but  without
         duplication) of the rates (expressed as a decimal  fraction) of reserve
         requirements  in effect on the day  which is two  LIBOR  Business  Days
         prior  to  the  beginning  of  such  LIBOR  Period   (including  basic,
         supplemental,  marginal and emergency reserves under any regulations of
         the  Board  of  Governors  of  the  Federal  Reserve  system  or  other
         governmental authority having jurisdiction with respect thereto, as now
         and from time to time in effect) for  Eurocurrency  funding  (currently
         referred  to as  "Eurocurrency  liabilities"  in  Regulation  D of such
         Board)  which are  required  to be  maintained  by a member bank of the
         Federal Reserve System.

                  If such  interest  rates  shall  cease  to be  available  from
         Telerate  News Service,  the LIBOR Rate shall be  determined  from such
         financial  reporting  service or other information as shall be mutually
         acceptable to Term Agent and Borrower Representative.

         "License" shall mean any Copyright License,  Patent License,  Trademark
License,  FCC License,  or other  license  operating  permit,  or other grant of
authority  of rights or interests  now held or hereafter  acquired by any Credit
Party.

         "Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment,   deposit  arrangement,  lien,  charge,  claim,  security  interest,
easement or encumbrance, or preference,  priority or other security agreement or
preferential  arrangement of any kind or nature whatsoever  (including any lease
or title retention agreement,  any financing lease having substantially the same
economic  effect as any of the  foregoing,  and the filing of, or  agreement  to
give, any financing  statement  perfecting a security interest under the Code or
comparable law of any jurisdiction).

         "Litigation" shall have the meaning assigned to it in Section 3.13.

         "Liberty Livewire" shall mean Liberty Livewire Corporation,  a Delaware
corporation.

         "Liberty Livewire Guaranty" shall mean the guaranty of Liberty Livewire
in favor of the Term Agent, for the benefit of the Lenders,  of the Obligations,
delivered  to the Term Agent when and as  contemplated  in that  certain  letter
agreement  dated the date of this  Agreement,  by and among the Lender Group and
the Credit  Parties,  which guaranty is the form of the Guaranty  annexed to the
letter agreement, with appropriate insertions therein.

         "Loan Account" means each loan account authorized by Section 1.10.

         "Loan  Documents"  shall mean the Agreement,  the Notes, the Collateral
Documents, the Liberty Livewire Guaranty, and all other agreements, instruments,
documents  and  certificates  identified in the Closing  Checklist  executed and
delivered  to, or in favor of, any Agent or any Lender and  including  all other
pledges, powers of attorney, consents, assignments,  contracts, notices, and all
other written  matter  whether  heretofore,  now or hereafter  executed by or on
behalf of any Credit Party,  or any employee of any Credit Party,  and delivered
to any Agent or any Lender in connection with the Agreement or the  transactions
contemplated  hereby.  Any reference in the Agreement or any other Loan Document
to a "Loan  Document"  shall  include  all  appendices,  exhibits  or  schedules
thereto,  and all amendments,  restatements,  supplements or other modifications
thereto,  and shall refer to such  Agreement as the same may be in effect at any
and all times such reference becomes operative.

         "Loans" shall mean,  collectively,  the Revolving  Loan, the Term Loans
and the SCIL Loans,  and  including,  for the  avoidance of doubt,  any Advances
relating  thereto,  and "Loan" shall mean any of the  foregoing,  as the context
requires.

         "Material  Adverse Effect" shall mean a material  adverse effect on (a)
the business, assets,  operations,  prospects or financial or other condition of
(i) any Borrower or (ii) the Credit Parties taken as a whole, (b) any Borrower's
ability to pay any of the Loans or any of the other  Obligations  in  accordance
with the terms of the Agreement or the other Loan Documents,  (c) the Collateral
or Term Agent's  Liens for the benefit of Lender Group on the  Collateral or the
priority of such Liens,  or (d) any Agent's or any Lender's  rights and remedies
under  the  Agreement  and  the  other  Loan  Documents.  Without  limiting  the
foregoing,  any event or occurrence  adverse to one or more Credit Parties which
results or could  reasonably  be expected to result in costs or  liabilities  or
loss of revenues,  individually or in the aggregate,  to any Credit Party in any
30-day  period in excess of  $750,000 as of any date of  determination  shall be
deemed to have had Material Adverse Effect.

         "Mortgaged  Properties"  shall have the meaning assigned to it in Annex
D.

         "Mortgages" shall mean each of the mortgages, deeds of trust, leasehold
mortgages,  leasehold deeds of trust,  collateral assignments of leases or other
real estate security  documents  delivered by any Credit Party to Term Agent for
the benefit of Lender Group with  respect to the  Mortgaged  Properties,  all in
form and substance satisfactory to Term Agent.

         "Multiemployer  Plan" shall mean a  "multiemployer  plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make, has made or been obligated to make,  contributions
on behalf of participants who are or were employed by any of them.

         "Net Borrowing Availability" shall mean as of any date of determination
(a) as to all Borrowers,  the aggregate  Revolving Loan Commitments less the sum
of (x) the Letter of Credit  Obligations  and (y) the aggregate  Revolving  Loan
then outstanding to all Borrowers.

         "Non-Funding  Lender"  shall  have the  meaning  set  forth in  Section
1.1(e).

         "Notes"  shall mean the  Revolving  Notes,  the Term Notes and the SCIL
Notes, collectively.

         "Notice of Conversion" shall have the meaning assigned to it in Section
1.5(e).

         "Notice of Default"  shall have the  meaning  assigned to it in Section
12.3.

         "Notice of Revolving Credit Advance" shall have the meaning assigned to
it in Section 1.1(a)(i).

         "Notice of Revolving Credit Advance  Conversion" shall have the meaning
assigned to it in Section 1.5(e)(ii).

         "Notice of SCIL Loan Advance" shall have the meaning  assigned to it in
Section 1.1(c)(i).

         "Obligations" shall mean all loans,  advances,  debts,  liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary   amounts  (whether  or  not  such  performance  is  then  required  or
contingent,  or such amounts are liquidated or determinable) owing by any Credit
Party to any Agent or any Lender,  and all covenants and duties  regarding  such
amounts, of any kind or nature,  present or future,  whether or not evidenced by
any note,  agreement or other instrument,  arising under the Agreement or any of
the other Loan Documents. This term includes all principal,  interest (including
all interest which accrues after the  commencement  of any case or proceeding in
bankruptcy  after the  insolvency  of, or for the  reorganization  of any Credit
Party,  whether or not allowed in such  proceeding),  Fees,  Charges,  expenses,
attorneys'  fees and any other sum  chargeable  to any  Credit  Party  under the
Agreement or any of the other Loan Documents.

         "Other Lender" shall have the meaning set forth in Section 1.1(e).

         "Patent  License"  shall mean rights  under any written  agreement  now
owned or hereafter  acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.

         "Patent Security  Agreements" shall mean the Patent Security Agreements
made in favor of Term Agent for the benefit of Lender  Group by each  applicable
Credit Party.

         "Patents" shall mean all of the following in which any Credit Party now
holds or hereafter  acquires any interest:  (a) all letters patent of the United
States or any other country,  all registrations and recordings thereof,  and all
applications  for  letters  patent of the  United  States or any other  country,
including registrations, recordings and applications in the United States Patent
and Trademark  Office or in any similar  office or agency of the United  States,
any State or Territory  thereof,  or any other  country,  and (b) all  reissues,
continuations, continuations-in-part or extensions thereof.

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

         "Permitted  Encumbrances"  shall mean the following  encumbrances:  (a)
Liens for taxes or  assessments  or other  governmental  Charges not yet due and
payable or being contested pursuant to Section 5.2(b) but only to the extent and
for so long as such  Charges  are not  required to be paid or  satisfied  as set
forth therein;  (b) pledges or deposits of money securing statutory  obligations
under workmen's compensation,  unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges
or deposits of money securing bids, tenders, contracts (other than contracts for
the  payment of money) or leases to which any Credit  Party is a party as lessee
made in the ordinary course of business;  (d) inchoate and unperfected workers',
mechanics' or similar liens arising in the ordinary course of business,  so long
as such Liens attach only to Equipment,  Fixtures or Real Estate; (e) carriers',
warehousemen's,  suppliers'  or other  similar  possessory  liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $50,000 at any time,  so long as such Liens  attach only
to Inventory;  (f) deposits securing,  or in lieu of, surety,  appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not  constituting  an Event of Default under Section  8.1(j);  (h)
zoning restrictions,  easements,  licenses,  or other restrictions on the use of
any Real  Estate or other minor  irregularities  in title  (including  leasehold
title) thereto,  so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereinafter created
Liens in favor of Term  Agent for the  benefit of Lender  Group.;  and (j) Liens
expressly permitted under clauses (b) and (c) of Section 6.7 of the Agreement.

         "Person" shall mean any individual,  sole proprietorship,  partnership,
joint venture, trust,  unincorporated  organization,  association,  corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal,  local, foreign,
or  otherwise,   including  any  instrumentality,   division,  agency,  body  or
department thereof).

         "Plan" shall mean, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA,  which any Credit Party maintains,  contributes to or has
an  obligation  to  contribute  to on  behalf  of  participants  who are or were
employed by any Credit Party.

         "Pledge  Agreement"  shall  mean  each  Pledge  Agreement  of even date
herewith  executed by the applicable Credit Party in favor of Term Agent for the
benefit of Lender Group, pledging all Stock of its Subsidiaries, if any, and all
Intercompany Notes owing to or held by it.

         "Prior Lender" shall mean,  collectively,  KeyBank National Association
and Summit Bank.

         "Prior Lender  Obligations"  shall mean those  obligations set forth on
Disclosure Schedule (1.3).

         "Proceeds"  shall mean  "proceeds," as such term is defined in the Code
and,  in any event,  shall  include (a) any and all  proceeds of any  insurance,
indemnity,  warranty or guaranty  payable to any Credit  Party from time to time
with  respect to any of the  Collateral,  (b) any and all  payments (in any form
whatsoever)  made or due and  payable to any  Credit  Party from time to time in
connection  with  any  requisition,   confiscation,   condemnation,  seizure  or
forfeiture of all or any part of the  Collateral by any  Governmental  Authority
(or any Person acting under color of governmental  authority),  (c) any claim of
any  Credit  Party  against  third  parties  (i) for  past,  present  or  future
infringement  of any  Patent or Patent  License,  or (ii) for past,  present  or
future infringement or dilution of any Copyright,  Copyright License,  Trademark
or  Trademark  License,  or for  injury  to the  goodwill  associated  with  any
Trademark or Trademark  License,  (d) any recoveries by any Credit Party against
third parties with respect to any  litigation or dispute  concerning  any of the
Collateral,  and (e) any and all other amounts from time to time paid or payable
under  or in  connection  with  any  of  the  Collateral,  upon  disposition  or
otherwise.

         "Pro Forma" means the unaudited  consolidated and consolidating balance
sheet of Borrowers and their  Subsidiaries as of March 31, 1999 after giving pro
forma effect to the Related Transactions.

         "Projections"  means  Borrowers'  and  their  Subsidiaries'  forecasted
consolidated  and  consolidating  (a)  balance  sheets;   (b)  profit  and  loss
statements;  (c) cash flow statements;  and (d) capitalization  statements,  all
prepared on a  Subsidiary  by  Subsidiary  or division  by  division  basis,  if
applicable, and otherwise consistent with the historical Financial Statements of
Borrowers and their Subsidiaries,  together with appropriate  supporting details
and a statement of underlying assumptions.

         "Public  Offering"  shall mean a firm  underwritten  public offering of
common  stock  registered  on form S-1, S-2 or S-3 under the  Securities  Act of
1933, as amended, by a nationally  recognized investment banking firm, and after
giving  effect to which the issuer shall be qualified  for listing on the NASDAQ
National Market, the American Stock Exchange or the New York Stock Exchange.

         "Qualified   Plan"   shall  mean  a  Plan  which  is   intended  to  be
tax-qualified under Section 401(a) of the IRC.

         "Real Estate" shall have the meaning assigned to it in Section 3.6.

         "Refinancing"  shall mean the  repayment  in full by  Borrowers  of the
Prior Lender Obligations on the Closing Date.

         "Related  Transactions"  means each borrowing under the Revolving Loan,
the Term Loans and the SCIL Loan, the Refinancing, the Allowed Sale, the payment
of all fees,  costs and expenses  associated  with all of the  foregoing and the
execution and delivery of all of the Related Transactions Documents.

         "Related  Transactions  Documents"  shall mean the Loan Documents,  the
Subordinated Notes, and any documents or instruments executed in connection with
the Allowed Sale.

         "Release" shall mean any release,  threatened release, spill, emission,
leaking,  pumping, pouring,  emitting,  emptying,  escape,  injection,  deposit,
disposal,  discharge,  dispersal,  dumping,  leaching or  migration of Hazardous
Material  in the  indoor or  outdoor  environment,  including  the  movement  of
Hazardous Material through or in the air, soil,  surface water,  ground water or
property.

         "Required  Lenders"  shall mean, at any time, (i) all of the Lenders or
(ii) no less  than two  unaffiliated  Lenders  holding  more than 66 2/3% of the
aggregate Commitments of all Lenders at such time.

         "Restricted  Payment" shall mean (a) the  declaration or payment of any
dividend  or the  incurrence  of any  liability  to make any  other  payment  or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other  retirement of a Person's  Stock or any other  payment or  distribution
made in respect  thereof,  either  directly  or  indirectly,  (c) any payment or
prepayment of principal of, premium, if any, or interest,  fees or other charges
on or with respect to, and any  redemption,  purchase,  retirement,  defeasance,
sinking fund or similar  payment and any claim for  rescission  with respect to,
any Subordinated Debt; (d) any payment made to redeem,  purchase,  repurchase or
retire,  or to obtain the surrender  of, any  outstanding  warrants,  options or
other rights to acquire Stock of such Person now or hereafter  outstanding;  (e)
any  payment of a claim for the  rescission  of the  purchase or sale of, or for
material  damages  arising  from the  purchase  or sale of,  any  shares of such
Person's Stock or of a claim for reimbursement,  indemnification or contribution
arising out of or related to any such claim for damages or  rescission;  (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder  of such Person other than payment of  compensation  in the ordinary
course of business to stockholders who are employees of such Person; and (g) any
payment of management fees (or other fees of a similar nature) by such Person to
any Stockholder of such Person or their Affiliates.

         "Retiree  Welfare  Plan"  shall  mean,  at any  time,  a Plan that is a
"welfare plan" as defined in Section 3(2) of ERISA, that provides for continuing
coverage or benefits for any  participant  or any  beneficiary  of a participant
after such  participant's  termination  of employment,  other than  continuation
coverage  provided  pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant.

         "Revolver  Agent" shall have the meaning set forth in the  introductory
paragraph of this Agreement.

         "Revolving  Credit  Advance"  shall have the meaning  assigned to it in
Section 1.1(a)(i).

         "Revolving  Loan" shall mean, as the context may require,  at any time,
the sum of (i) the aggregate amount of Revolving Credit Advances  outstanding to
any  Borrower  or to all  Borrowers  plus  (ii) the  aggregate  Letter of Credit
Obligations incurred on behalf of any Borrower or all Borrowers.

         "Revolving Loan Commitment"  shall mean, as to each applicable  Lender,
the  Commitment of such Lender to make  Revolving  Credit  Advances to Borrowers
and/or  incur  Letter of Credit  Obligations  pursuant to Section  1.1(a) in the
aggregate  principal  amount  outstanding  not to exceed  the  amount  set forth
opposite  such  Lender's name on the  signature  page of this  Agreement,  which
Commitments, in the aggregate, shall be $15,000,000 on the Closing Date, as such
amount may be  adjusted,  if at all,  from time to time in  accordance  with the
Agreement.

         "Revolving  Note"  shall  have the  meaning  assigned  to it in Section
1.1(a)(ii).

         "SCIL Loan" shall mean,  as the context may require,  at any time,  the
aggregate  amount of SCIL Loan  Advances  outstanding  to any Borrower or to all
Borrowers.

         "SCIL Loan  Advance"  shall have the meaning  assigned to it in Section
1.1(c)(i).

         "SCIL  Loan  Commitment"  shall  mean  as  to  each  SCIL  Lender,  the
commitment  of such SCIL Lender to make the SCIL Loan to  Borrowers  pursuant to
Section 1.1(c) in a principal amount equal to the amount set forth opposite such
Lender's name on the signature page of this Agreement,  which  commitments shall
be $10,000,000 in the aggregate on the Closing Date.

         "SCIL  Note"  shall  have  the  meaning   assigned  to  it  in  Section
1.1(c)(ii).

         "Security  Agreement"  shall mean the  Security  Agreement of even date
herewith entered into among Term Agent and each Credit Party that is a signatory
thereto.

         "Solvent" shall mean, with respect to any Person on a particular  date,
that on such date (a) the fair value of the  property  of such Person is greater
than the total amount of liabilities,  including contingent liabilities, of such
Person;  (b) the present fair salable  value of the assets of such Person is not
less than the amount that will be required to pay the probably liability of such
Person on its debts as they become  absolute and  matured;  (c) such Person does
not intend to, and does not believe  that it will,  incur  debts or  liabilities
beyond such Person's  ability to pay as such debts and liabilities  mature;  and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or  transaction,  for which such  Person's  property  would
constitute an unreasonably small capital.  The amount of contingent  liabilities
(such as litigation,  guarantees and pension plan liabilities) at any time shall
be computed  as the amount  which,  in light of all the facts and  circumstances
existing at the time,  represents the amount which can be reasonably be expected
to become an actual or matured liability.

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

         "Subordinated Debt" shall mean the Indebtedness of VSC evidenced by the
Subordinated Notes.

         "Subordinated   Notes"  shall  mean  those  certain  4.00%  Convertible
Subordinated   Notes  dated  May  4,  1995  and  due  May  4,  2003,  issued  by
International  Post  Limited  in  an  aggregate  original  principal  amount  of
$5,778,500,  including  such  obligations  subject  of that  certain  Settlement
Agreement and Release  between Barbara  D'Ambrogio,  David  D'Ambrogio,  and VSC
(f/k/a  International  Post  Limited),  dated  as of  December  9,  1999,  which
Settlement  Agreement  supersedes the obligations set forth in the $2,540,000 ET
Partnership  4% Convertible  Subordinated  Note dated May 4, 1995 and due May 4,
2003.

         "Subsidiary"   shall  mean,  with  respect  to  any  Person,   (a)  any
corporation  of which an  aggregate  of more than 50% of the  outstanding  Stock
having  ordinary  voting  power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such  corporation  shall have or might have voting power by reason
of the happening of any  contingency)  is at the time,  directly or  indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person,  or with  respect  to which  any such  Person  has the  right to vote or
designate  the vote of 50% or more of such Stock  whether  by proxy,  agreement,
operation of law or  otherwise,  and (b) any  partnership  or limited  liability
company in which such Person or one or more  Subsidiaries  of such Person  shall
have an interest  (whether in the form of voting or  participation in profits or
capital  contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner.

         "Subsidiary  Guaranty" shall mean the Subsidiary  Guaranty of even date
herewith executed by each Subsidiary of each Borrower in favor of Term Agent for
the benefit of Lender Group.

         "Taxes"  shall mean  taxes,  levies,  imposts,  deductions,  Charges or
withholdings,  and all liabilities with respect thereto, excluding taxes imposed
on or  measured  by the net income of GE Capital by the State of New York or the
State of Connecticut  or, in the case of any other Lender,  by the  jurisdiction
under the law of which such Lender is  organized  or any  political  subdivision
thereof,  and,  as to  each  of the  foregoing,  by the  United  States  federal
government.

         "Term  Agent"  shall  have the  meaning  set forth in the  introductory
paragraph to this Agreement.

         "Term Loan" shall have the meaning assigned to it in Section 1.1(b)(i).

         "Term Loan A Commitment" shall mean, as to each Lender,  the commitment
of such Lender to make Term Loan A to Borrowers  pursuant to Section 1.1(b) in a
principal  amount equal to the amount set forth  opposite  such Lender's name on
the signature page of this Agreement,  which commitments shall be $15,000,000 in
the aggregate on the Closing Date.

         "Term Loan B Commitment" shall mean, as to each Lender,  the commitment
of such Lender to make Term Loan B to Borrowers  pursuant to Section 1.1(b) in a
principal  amount equal to the amount set forth  opposite  such Lender's name on
the signature page of this Agreement,  which commitments shall be $15,000,000 in
the aggregate on the Closing Date.

         "Term Note" shall have the meaning assigned to it in Section 1.1(b)(i).

         "Termination  Date"  shall  mean the date on which the Loans  have been
indefeasibly  repaid in full and all other  Obligations  under the Agreement and
the other Loan  Documents  have been  completely  discharged  and any  remaining
Letter of Credit Obligations have been cash  collateralized,  canceled or backed
by stand-by  Letters of Credit in accordance with Annex B, and none of Borrowers
shall have any further right (whether or not any  conditions  therefor have been
satisfied)  to borrow any  monies,  or cause any Letters of Credit to be issued,
under the Agreement.

         "Third  Party  Interactives"  shall  mean  any  suppliers  of  material
services  upon  which  the  Credit  Parties  rely to  conduct  their  respective
operations,  including, but not limited to, contract central monitoring stations
and contract invoice printers.

         "Title IV Plan" shall mean an employee pension benefit plan, as defined
in Section 3 (2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA,  and which any  Credit  Party or ERISA  Affiliate  maintains,
contributes  to or has an obligation to contribute to on behalf of  participants
who are or were employed by any of them.

         "Trademark  License" shall mean rights under any written  agreement now
owned or hereafter  acquired by any Credit  Party  granting any right to use any
Trademark.

         "Trademark  Security  Agreements"  shall  mean the  Trademark  Security
Agreements made in favor of Lender by each applicable Credit Party.

         "Trademarks"  shall mean all of the  following  now owned or  hereafter
acquired by any Credit Party: (a) all trademarks,  trade names, corporate names,
business names,  trade styles,  service marks,  logos,  other source or business
identifiers,  prints and labels on which any of the  foregoing  have appeared or
appear,  designs and general  intangibles of like nature (whether  registered or
unregistered),  now owned or  existing or  hereafter  adopted or  acquired,  all
registrations  and  recordings  thereof,  and  all  applications  in  connection
therewith,  including  registrations,  recordings and applications in the United
States  Patent and  Trademark  Office or in any similar  office or agency of the
United  States,  any state or  territory  thereof,  or any other  country or any
political subdivision thereof; (b) all reissues, extensions or renewals thereof;
and (c) all goodwill associated with or symbolized by any of the foregoing.

         "Unfunded  Pension  Liability"  shall mean, at any time,  the aggregate
amount,  if any, of the sum of (a) the amount by which the present  value of all
accrued  benefits  under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA,  all determined as of the most recent  valuation date for each such
Title IV Plan using the  actuarial  assumptions  for funding  purposes in effect
under  such  Title  IV Plan,  and (b) for a period  of five  years  following  a
transaction  which might reasonably be expected to be covered by Section 4069 of
ERISA,  the  liabilities  (whether or not accrued)  that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.

         "Weekly  Settlement  Date"  shall have the meaning set forth in Section
1.18(c).

         "Working Capital  Termination  Date" means the date, if any, 39 or more
months  after the  Closing  Date upon which the  Borrowers  shall fail to have a
committed working capital line of credit  (including,  without  limitation,  the
Revolving Loan  Commitment) in an amount equal to not less than $15,000,000 from
a nationally  recognized bank, financial institution or finance company on terms
and conditions  either (i) substantially no less favorable to the Borrowers than
the terms and conditions  applicable to the Revolving Loan  Commitment,  or (ii)
reasonably acceptable to the Term Agent.

         "Year 2000 Assessment" shall mean a comprehensive written assessment of
the nature and extent of each Credit  Party's  Year 2000  Problems and Year 2000
Date-Sensitive  Systems/Components,  including,  without  limitation,  Year 2000
Problems regarding data exchanges with Third Party Interactives.

         "Year 2000 Corrective Actions" shall mean, as to each Credit Party, all
actions  necessary to eliminate  such  Person's Year 2000  Problems,  including,
without  limitation,  computer code  enhancements  and  revisions,  upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination of
such  enhancements,  revisions,  upgrades  and  replacements  with  Third  Party
Interactives.

         "Year 2000  Corrective  Plan" shall mean,  with  respect to each Credit
Party,  a  comprehensive  plan  to  eliminate  all of  its  Year  2000  Problems
including,  without limitation (i) computer code enhancements or revisions, (ii)
upgrades or replacements of Year 2000 Date-Sensitive  Systems/Components,  (iii)
test and validation procedures,  (iv) an implementation time line and budget and
(v)  designation  of specific  employees who will be  responsible  for planning,
coordinating and implementing  each phase or subpart of the Year 2000 Corrective
Plan.

         "Year  2000  Date-Sensitive  System/Component"  shall  mean,  as to any
Person, any system software, network software, applications software, data base,
computer file, embedded microchip,  firmware or hardware that accepts,  creates,
manipulates, sorts, sequences,  calculates, compares or outputs calendar-related
data accurately;  such systems and components shall include, without limitation,
mainframe computers, file server/client systems, computer workstations, routers,
hubs,  other  network-related  hardware,  and other  computer-related  software,
firmware or hardware and information processing and delivery systems of any kind
and  telecommunications  systems and other communications  processors,  security
systems, alarms, elevators and HVAC systems.

         "Year 2000 Implementation Testing" shall mean, as to each Credit Party,
(i) the  performance  of test and  validation  procedures  regarding  Year  2000
Corrective  Actions  on a  unit  basis  and on a  system-wide  basis;  (ii)  the
performance of test and validation procedures regarding data exchanges among the
Credit Parties' Year 2000 Date-Sensitive  Systems/Components  and data exchanges
with  Third  Party  Interactives,  and (iii) the design  and  implementation  of
additional  Corrective Actions, the need for which has been demonstrated by test
and validation procedures.

         "Year 2000  Problems"  shall mean,  with respect to each Credit  Party,
limitations  on the capacity or  readiness of any such Credit  Party's Year 2000
Date-Sensitive  Systems/Components  to accurately  accept,  create,  manipulate,
sort,  sequence,  calculate,  compare or output calendar date  information  with
respect to calendar year 1999 or any  subsequent  calendar year  beginning on or
after January 1, 2000 (including  leap year  computations),  including,  without
limitation,   exchanges   of   information   among   Year  2000   Date-Sensitive
Systems/Components  of the Credit Parties and exchanges of information among the
Credit Parties and Year 2000  Date-Sensitive  Systems/Components  of Third Party
Interactives and functionality of peripheral  interfaces,  firmware and embedded
microchips.

         All other undefined terms contained in any of the Loan Documents shall,
unless the context  indicates  otherwise,  have the meanings provided for by the
Code as in effect in the  State of New York to the  extent  the same are used or
defined therein. Unless otherwise specified,  references in the Agreement or any
of the  Appendices  to a Section,  subsection  or clause refer to such  Section,
subsection or clause as contained in the Agreement. The words "herein," "hereof"
and  "hereunder"  and other words of similar  import refer to the Agreement as a
whole, including all Annexes,  Exhibits and Schedules, as the same may from time
to  time  be  amended,  restated,  modified  or  supplemented,  and  not  to any
particular Section,  subsection or clause contained in the Agreement or any such
Annex, Exhibit or Schedule.

         Wherever from the context it appears  appropriate,  each term stated in
either the  singular or plural shall  include the  singular and the plural,  and
pronouns  stated in the  masculine,  feminine or neuter gender shall include the
masculine,  feminine and neuter genders.  The words "including",  "includes" and
"include"  shall be deemed to be  followed  by the words  "without  limitation";
references to Persons  include their  respective  successors and assigns (to the
extent and only to the extent  permitted by the Loan  Documents) or, in the case
of governmental  Persons,  Persons  succeeding to the relevant functions of such
Persons;  and all references to statutes and related  regulations  shall include
any amendments of the same and any successor statutes and regulations.  Whenever
any  provision in any Loan  Document  refers to the  knowledge  (or an analogous
phrase) of any Credit Party, such words are intended to signify that such Credit
Party has actual  knowledge or awareness of a particular fact or circumstance or
that such Credit Party,  if it had exercised  reasonable  diligence,  would have
known or been aware of such fact or circumstance.

                                       B-6
<PAGE>


                              ANNEX B (Section 1.2)

                                       to

                                CREDIT AGREEMENT

                  (a) Issuance.   Subject  to the  terms and  conditions  of the
Agreement,  upon  the  request  by  Borrower  Representative  on  behalf  of the
applicable  Borrower and for such  Borrower's  account of the Revolver Agent and
the L/C Issuer,  the L/C Issuer  agrees to issue  Letters of Credit from time to
time prior to the Commitment Termination Date with respect to the Revolving Loan
for such Borrower's account; provided, however, that the aggregate amount of all
such Letter of Credit  Obligations  outstanding at any one time shall not at any
time  exceed  the  lesser  of (i) One  Million  Dollars  ($1,000,000)  (the "L/C
Sublimit"),  or (ii) the Revolving Loan Commitment less the aggregate  principal
balance of the Revolving  Credit  Advances then  outstanding.  No such Letter of
Credit shall have an expiry date which is more than one year  following the date
of issuance thereof, and L/C Issuer shall be under no obligation to incur Letter
of Credit  Obligations  in respect of any Letter of Credit having an expiry date
which is later than the Commitment Termination Date.

                  (b) Revolving Credit Advances Automatic. In the event that the
L/C  Issuer  shall  make any  payment  on or  pursuant  to any  Letter of Credit
Obligation,  such payment  shall then be deemed  automatically  to  constitute a
Revolving Credit Advance to the applicable  Borrower under Section 1.1(a) of the
Agreement  regardless  of  whether  a Default  or Event of  Default  shall  have
occurred and be continuing any  representation or warranty set forth in any Loan
Document is false or misleading, any conditions precedent therefor are satisfied
of any other  reason  whatsoever  (but  subject to any then  applicable  payment
obligations under this Agreement and the other Loan Documents).

                  (c) Participation by Applicable Lenders.

                         (i) Each applicable Lender hereby  unconditionally  and
          irrevocably,   severally   (and  not   jointly)   takes  an  undivided
          participating  interest in the obligations of the L/C Issuer under and
          in  connection  with each  Letter of Credit in an amount  equal to the
          percentage of such Lender's Revolving Loan Commitment to the aggregate
          Revolving Loan  Commitment (the "Revolver  Commitment  Percentage") of
          the amount of such Letter of Credit.  In the event that the  Revolving
          Loan  Commitment  has been  reduced  to zero or been  terminated,  the
          Revolver  Commitment  Percentage  shall be based on the Revolving Loan
          Commitment  immediately  prior to such reduction or termination as the
          case may be. Each applicable  Lender shall be liable to the Issuer for
          its Revolver Commitment  Percentage of the unreimbursed amount of each
          draft drawn and honored under each Letter of Credit.  Each  applicable
          Lender  shall also be liable for an amount equal to the product of its
          Revolver  Commitment  Percentage  and any amounts paid by the Borrower
          pursuant to this Agreement and Annex B that are subsequently rescinded
          or  avoided,   or  must  otherwise  be  restored  or  returned.   Such
          liabilities   shall  be  unconditional   and  without  regard  to  the
          occurrence of any Default or Event of Default or the compliance by the
          Borrowers,  or any of them,  with any of their  obligations  under the
          Loan Documents or any other reason whatsoever.

                         (ii) The L/C Issuer shall promptly  notify the Revolver
          Agent,  and the Revolver  Agent will promptly  notify each  applicable
          Lender (which notice shall be promptly  confirmed in writing),  of the
          date and the amount of each  draft  paid  under each  Letter of Credit
          with  respect to which a Revolving  Advance is being made  pursuant to
          part (b) of this Annex B, and  forthwith  upon receipt of such notice,
          each such Lender shall make  available  to the Revolver  Agent for the
          account of the L/C Issuer its Revolver  Commitment  Percentage  of the
          amount of such  Revolving  Advance at the office of the Revolver Agent
          specified in Section  11.10,  in lawful money of the United States and
          in  immediately  available  funds,  before 4:00 p.m.,  on the day such
          notice was given by the  Revolver  Agent,  if such notice was given by
          the Agent at or prior to 12:00  noon,  on such day,  and before  12:00
          noon, on the next  Domestic  Business Day, if such notice was given by
          the Revolver  Agent after 12:00 noon, on such day. The Revolver  Agent
          shall deliver the payment made by each  applicable  Lender pursuant to
          the  immediately  preceding  sentence to the L/C Issuer  promptly upon
          receipt  thereof in like funds as  received.  Each  applicable  Lender
          shall  indemnify  and hold  harmless  the  Revolver  Agent and the L/C
          Issuer from and against  any and all  losses,  liabilities  (including
          liabilities for penalties),  actions, suits, judgments, demands, costs
          and  expenses  (including  reasonable  attorneys'  fees  and  expenses
          payable  to the L/C  Issuer as the  issuer of the  relevant  Letter of
          Credit)  resulting from any failure on the part of such Lender to pay,
          or from any delay in paying the Revolver  Agent any amount such Lender
          is required to pay in accordance  with this Annex B (except in respect
          of losses, liabilities or other obligations suffered by the L/C Issuer
          to  the  extent   resulting  from  the  gross  negligence  or  willful
          misconduct of the L/C Issuer).

                         (iii)  Whenever the Revolver Agent is reimbursed by the
          Borrowers,  for the account of the L/C Issuer, for any payment under a
          Letter of Credit and such payment relates to an amount previously paid
          by a Lender in respect of its Revolver  Commitment  Percentage  of the
          amount of such payment under such Letter of Credit, the Revolver Agent
          will pay over such  payment to such Lender (i) before 4:00 p.m. on the
          day such payment  from the  applicable  Borrower is received,  if such
          payment is  received  at or prior to 12:00  noon on such day,  or (ii)
          before 12:00 noon on the next  succeeding  Domestic  Business  Day, if
          such payment from such  Borrower is received  after 12:00 noon on such
          day.

                  (d)......Cash Collateral. If Borrowers are required to provide
cash collateral for any Letter of Credit  Obligations  pursuant to the Agreement
prior to the relevant Commitment Termination Date, each Borrower will pay to the
Revolver   Agent  cash  or  cash   equivalents   acceptable   to  Lender  ("Cash
Equivalents") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable  Letter of Credit  outstanding for the benefit of
such Borrower.  Such amounts or Cash  Equivalents  shall be held by the Revolver
Agent in a cash collateral account (the "Cash Collateral Account") maintained at
a bank or financial  institution  acceptable to the Revolver Agent (which may be
the Revolver  Agent).  The Cash  Collateral  Account shall be in the name of the
applicable  Borrower and shall be pledged to, and subject to the control of, the
Revolver  Agent, in a manner  satisfactory to the Revolver Agent.  Each Borrower
hereby pledges and grants to the Revolver Agent, for the benefit of the Lenders,
a  security  interest  in all such funds and Cash  Equivalents  held in the Cash
Collateral  Account from time to time and all proceeds thereof,  as security for
the payment of all  amounts  due in respect of the Letter of Credit  Obligations
and other  Obligations,  whether or not then due. The Agreement,  including this
Annex B, shall constitute a security agreement under applicable law.

                  If any Letter of Credit  Obligations,  whether or not then due
and payable,  shall for any reason be outstanding on the Commitment  Termination
Date,  Borrowers  shall  either (i)  provide to Revolver  Agent cash  collateral
therefor in the manner described above, or (ii) cause all such Letters of Credit
and guaranties thereof to be canceled and returned, or (iii) deliver to Revolver
Agent a stand-by  letter (or  letters)  of credit in  guaranty of such Letter of
Credit  Obligations,  which  stand-by  letter (or letters) of credit shall be of
like  tenor and  duration  as, and in an amount  equal to 105% of the  aggregate
maximum amount then available to be drawn under,  the Letters of Credit to which
such outstanding  Letter of Credit  Obligations  relate and shall be issued by a
Person,  and shall be subject to such terms and conditions,  as are satisfactory
to the Revolver Agent in its sole discretion.

                  From  time  to  time  after  funds  or  Cash  Equivalents  are
deposited in the Cash  Collateral  Account by any  Borrower,  whether  before or
after the Commitment  Termination  Date,  Revolver Agent may apply such funds or
Cash Equivalents then held in the Cash Collateral  Account to the payment of any
amounts,  in such order as Revolver Agent may elect, as shall be or shall become
due and payable by such  Borrower to Revolver  Agent with respect to such Letter
of Credit Obligations of such Borrower and, upon the satisfaction in full of all
Letter of Credit  Obligations of such Borrower,  to any other Obligations of any
Borrower then due and payable.

                  No  Borrower  nor any Person  claiming on behalf of or through
any  Borrower  shall  have  any  right  to  withdraw  any of the  funds  or Cash
Equivalents  held  in  the  Cash  Collateral  Account,   except  that  upon  the
termination of all Letter of Credit  Obligations  and the payment of all amounts
payable by Borrowers to Lender in respect  thereof,  any funds  remaining in the
Cash Collateral Account shall be applied to other Obligations when due and owing
and upon payment in full of such Obligations, any remaining amount shall be paid
to Borrowers or as otherwise required by law.

                  (e) Fees and Expenses.  Borrowers agree to pay (i) to Revolver
Agent,  as  compensation  to Lenders for Letter of Credit  Obligations  incurred
hereunder,  (x) all costs and  expenses  incurred  by Lender on  account of such
Letter of Credit Obligations,  and (y) for each month during which any Letter of
Credit Obligation shall remain  outstanding,  a fee (the "Letter of Credit Fee")
in an amount  equal to the  Applicable  L/C  Margin  from time to time in effect
multiplied by the maximum  amount  available from time to time to be drawn under
the  applicable  Letter of Credit.  Such fee shall be paid to Revolver  Agent in
arrears on the first day of each month.  In addition,  Borrower shall pay to any
L/C Issuer,  on demand,  such fees  (including all per annum fees),  charges and
expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance,
amendment,  transfer and payment of such Letter of Credit or  otherwise  payable
pursuant to the application and related documentation under which such Letter of
Credit is issued.

                  (f)......Request   for   Incurrence   of   Letter   of  Credit
Obligations.  Borrower  Representative shall give the Revolver Agent and the L/C
Issuer at least three (3) Business  Days prior  written  notice  requesting  the
incurrence of any Letter of Credit  Obligation,  specifying the date such Letter
of Credit  Obligation is to be incurred,  identifying  the  beneficiary  and the
Borrower to which such Letter of Credit  Obligation  relates and  describing the
nature of the transactions proposed to be supported thereby. The notice shall be
accompanied  by the form of the Letter of Credit  (which shall be  acceptable to
the L/C Issuer) to be guarantied and, to the extent not previously  delivered to
Lender,  copies  of all  agreements  between  any  Borrower  and the L/C  issuer
pertaining  to the  issuance  of  Letters of  Credit.  Notwithstanding  anything
contained  herein to the  contrary,  Letter of Credit  applications  by Borrower
Representative  and  approvals  by  Lender  and the L/C  Issuer  may be made and
transmitted  pursuant to electronic codes and security  measures mutually agreed
upon and  established by and among Borrower  Representative,  the Revolver Agent
and the L/C Issuer.

                  (g)......Obligation  Absolute.  The obligation of Borrowers to
reimburse  the L/C Issuer for payments made with respect to any Letter of Credit
Obligation shall be absolute,  unconditional and irrevocable,  without necessity
of  presentment,  demand,  protest or other  formalities.  Such  obligations  of
Borrowers  shall be paid strictly in accordance  with the terms hereof under all
circumstances, including the following circumstances:

                         (i)  any  lack of  validity  or  enforceability  of any
          Letter of Credit or the  Agreement or the other Loan  Documents or any
          other agreement;

                         (ii) the  existence of any claim,  set-off,  defense or
          other right which any Borrower or any of their  respective  Affiliates
          may at any time have against a  beneficiary  or any  transferee of any
          Letter  of  Credit  (or any  Persons  or  entities  for  whom any such
          transferee may be acting), Letter of Credit Issuer, Revolver Agent, or
          any other Person, whether in connection with the Agreement, the Letter
          of  Credit,  the  transactions  contemplated  herein or therein or any
          unrelated  transaction  (including any underlying  transaction between
          any Borrower or any of their respective Affiliates and the beneficiary
          for which the Letter of Credit was procured);

                         (iii)  any  draft,  demand,  certificate  or any  other
          document  presented  under any Letter of Credit  proving to be forged,
          fraudulent,  invalid or  insufficient  in any respect or any statement
          therein being untrue or inaccurate in any respect;

                         (iv)  payment by Revolver  Agent  (except as  otherwise
          expressly  provided in paragraph  (g)(ii)(C)  below) or any L/C Issuer
          under any Letter of Credit or guaranty thereof against presentation of
          a demand, draft or certificate or other document which does not comply
          with the terms of such Letter of Credit or such guaranty;

                         (v) any other  circumstance  or  happening  whatsoever,
          which is similar to any of the foregoing; or

                         (vi) the fact  that a  Default  or an Event of  Default
          shall have occurred and be continuing.

                  (h)......Indemnification; Nature of Revolver Agent's Duties.

                         (i)  In  addition  to  amounts   payable  as  elsewhere
          provided  in the  Agreement,  Borrowers  hereby  agree  to pay  and to
          protect,  indemnify, and save Revolver Agent, Letter of Credit Issuer,
          and the Lenders harmless from and against any and all claims, demands,
          liabilities,  damages,  losses, costs, charges and expenses (including
          attorneys'  fees  and  allocated  costs  of  internal  counsel)  which
          Revolver Agent, Letter of Credit Issuer,  and/or the Lenders may incur
          or be  subject to as a  consequence,  direct or  indirect,  of the (A)
          issuance  of any  Letter  of Credit or  guaranty  thereof,  or (B) the
          failure  of  Revolver  Agent or any L/C  Issuer to honor a demand  for
          payment under any Letter of Credit or guaranty  thereof as a result of
          any act or omission,  whether rightful or wrongful,  of any present or
          future de jure or de facto  government or Governmental  Authority,  in
          each case  other  than to the  extent  solely as a result of the gross
          negligence or willful  misconduct of Revolver Agent,  Letter of Credit
          Issuer, and/or the Lenders, or any of them (as finally determined by a
          court of competent jurisdiction).

                         (ii)  As  between  the  Revolver  Agent,   Lenders  and
          Borrowers, Borrowers assume all risks of the acts and omissions of, or
          misuse  of any  Letter of Credit  by  beneficiaries  of any  Letter of
          Credit. In furtherance and not in limitation of the foregoing,  to the
          fullest extent permitted by law, neither Revolver Agent nor any Lender
          shall  be  responsible:  (A)  for  the  form,  validity,  sufficiency,
          accuracy,  genuineness  or legal effect of any document  issued by any
          party in  connection  with the  application  for and  issuance  of any
          Letter of Credit,  even if it should in fact prove to be in any or all
          respects invalid, insufficient,  inaccurate, fraudulent or forged; (B)
          for the validity or  sufficiency  of any  instrument  transferring  or
          assigning or  purporting to transfer or assign any Letter of Credit or
          the rights or benefits  thereunder or proceeds thereof, in whole or in
          part, which may prove to be invalid or ineffective for any reason; (C)
          for failure of the beneficiary of any Letter of Credit to comply fully
          with conditions  required in order to demand payment under such Letter
          of Credit;  provided  that,  in the case of any  payment by L/C Issuer
          under any Letter of Credit or guaranty  thereof,  L/C Issuer  shall be
          liable to the extent  such  payment was made solely as a result of its
          gross  negligence or willful  misconduct  (as finally  determined by a
          court of competent  jurisdiction)  in determining  that the demand for
          payment  under such Letter of Credit or guaranty  thereof  complies on
          its face with any  applicable  requirements  for a demand for  payment
          under  such  Letter of Credit or  guaranty  thereof;  (D) for  errors,
          omissions,  interruptions or delays in transmission or delivery of any
          messages, by mail, cable,  telegraph,  telex or otherwise,  whether or
          not they be in cipher;  (E) for errors in  interpretation of technical
          terms;  (F) for any loss or delay in the  transmission or otherwise of
          any document  required in order to make a payment  under any Letter of
          Credit or guaranty  thereof or of the  proceeds  thereof;  (G) for the
          credit of the  proceeds of any  drawing  under any Letter of Credit or
          guaranty  thereof;  and (H) for any  consequences  arising from causes
          beyond the control of Revolver Agent,  Letter of Credit Issuer, or any
          Lender. None of the above shall affect, impair, or prevent the vesting
          of any of Lender's rights or powers hereunder or under the Agreement.

                         (iii) Nothing contained herein shall be deemed to limit
          or to expand any waivers,  covenants or indemnities  made by Borrowers
          in  favor of any L/C  Issuer  in any  letter  of  credit  application,
          reimbursement  agreement or similar document,  instrument or agreement
          between or among Borrowers and such L/C Issuer.

                                       C-3
<PAGE>


                              ANNEX C (Section 1.5)

                                       to

                                CREDIT AGREEMENT

                             CASH MANAGEMENT SYSTEMS

                  Each  Borrower  shall,  and shall cause its  Subsidiaries  to,
establish and maintain the Cash Management Systems described below:

                  (a)......On   or  before  the  Closing   Date  and  until  the
Termination Date, each Borrower shall (i) establish lock boxes ("Lock Boxes") at
one or more of the banks  set forth on  Disclosure  Schedule  (3.19),  and shall
request in writing and otherwise take such  reasonable  steps to ensure that all
Account Debtors forward  payment  directly to such Lock Boxes,  and (ii) deposit
and cause its Subsidiaries to deposit or cause to be deposited promptly,  and in
any  event no later  than the  first  Business  Day  after  the date of  receipt
thereof, all cash, checks,  drafts or other similar items of payment relating to
or constituting  payments made in respect of any and all Collateral  (whether or
not  otherwise  delivered to a Lock Box) into bank  accounts in such  Borrower's
name or any such Subsidiary's name  (collectively,  the "Borrower  Accounts") at
banks set forth on Disclosure Schedule (3.19) (each, a "Relationship  Bank"). On
or before the Closing Date, each Borrower shall have established a concentration
account  in its name  (each a  "Concentration  Account"  and  collectively,  the
"Concentration  Accounts") at the bank or banks which shall be designated as the
Concentration  Account bank for each such Borrower on Disclosure Schedule (3.19)
(each a  "Concentration  Account  Bank"  and  collectively,  the  "Concentration
Account Banks"), which banks shall be satisfactory to Agents.

                  (b)......On  or before the Closing Date (or such later date as
Agents shall consent to in writing),  each Concentration Account Bank, each bank
where a Disbursement  Account is located and all other Relationship Banks, shall
have entered into  blocked  account  agreements  with Agents and  Borrowers  and
Subsidiaries thereof, as applicable, in form and substance acceptable to Agents,
which shall become  operative on or prior to the Closing Date. Each such blocked
account  agreement  shall  provide,  among other  things,  that (i) all items of
payment  deposited  in  such  account  and  proceeds  thereof  deposited  in the
applicable   Concentration   Account   are  held  by  such   bank  as  agent  or
bailee-in-possession  for Agents as their respective  interests appear, (ii) the
bank executing such agreement has no rights of setoff or recoupment or any other
claim  against such  account,  as the case may be, other than for payment of its
service fees and other charges  directly related to the  administration  of such
account and for  returned  checks or other items of payment,  and (iii) from and
after the Closing Date (A) with respect to banks at which a Borrower  Account is
located,  such  bank  agrees,  from  and  after  the  receipt  of a  notice  (an
"Activation Notice") from Agents (which Activation Notice may be given by Agents
at any time at which (1) a Default or Event of Default  shall have  occurred and
be continuing, (2) Agents reasonably believe based upon information available to
them that a Default  or an Event of  Default  is  likely  to occur;  (3)  Agents
reasonably  believe  that an event or  circumstance  which is  likely  to have a
Material Adverse Effect has occurred,  or (4) Agents have reasonable  grounds to
question  the  integrity  of  any  Borrower's  Cash  Management  Systems  or any
Borrower's  compliance  with  the  provisions  of  this  Annex  C or  any  other
provisions of the Loan Documents to the extent  related to such Cash  Management
Systems  (any of the  foregoing  being  referred  to  herein  as an  "Activation
Event")),  to forward  immediately all amounts in each Borrower  Account to such
Borrower's  Concentration  Account  Bank and to  commence  the  process of daily
sweeps from such Borrower Account into the applicable  Concentration Account and
(B) with respect to each  Concentration  Account Bank, such bank agrees from and
after the receipt of an Activation  Notice from Agents upon the occurrence of an
Activation Event, to immediately  forward all amounts received in the applicable
Concentration  Account to the Collection  Account through daily sweeps from such
Concentration  Account  into the  Collection  Account.  From and  after the date
Agents  have  delivered  an  Activation  Notice to any bank with  respect to any
Borrower Account(s),  no Borrower shall, or shall cause or permit any Subsidiary
thereof to,  accumulate or maintain cash in disbursement or payroll  accounts as
of any date of  determination  in  excess  of checks  outstanding  against  such
accounts  as of  that  date  and  amounts  necessary  to  meet  minimum  balance
requirements.

                  (c)......So  long  as no  Default  or  Event  of  Default  has
occurred and is continuing,  Borrowers may amend  Disclosure  Schedule (3.19) to
add or replace a Relationship  Bank, Lock Box or Borrower  Account or to replace
any Concentration Account or any Disbursement Account;  provided,  however, that
(i) Agents  shall have  consented  in writing in advance to the  opening of such
account  or Lock Box with the  relevant  bank and (ii)  prior to the time of the
opening of such account or Lock Box, the applicable Borrower or the Subsidiaries
thereof,  as  applicable,  and such bank shall have  executed  and  delivered to
Agents a blocked account  agreement among Agents and Borrowers and  Subsidiaries
thereof, in form and substance satisfactory to Agents. Borrowers shall close any
of their accounts (and  establish  replacement  accounts in accordance  with the
foregoing  sentence)  promptly  and in any event  within 30 days of notice  from
Agents  that the  creditworthiness  of any bank  holding an account is no longer
acceptable in Agents' reasonable judgment,  or as promptly as practicable and in
any event within 60 days of notice from Agents that the  operating  performance,
funds  transfer  or  availability  procedures  or  performance  with  respect to
accounts or lockboxes of the bank  holding  such  accounts or Agents'  liability
under any blocked  account  agreement with such bank is no longer  acceptable in
Agents' reasonable judgment.

                  (d)......The  Lock  Boxes,  Borrower  Accounts,   Disbursement
Accounts and the Concentration Accounts shall be cash collateral accounts,  with
all cash,  checks and other similar  items of payment in such accounts  securing
payment of the Loans and all other  Obligations,  and in which each Borrower and
each Subsidiary  thereof shall have granted a Lien to Term Agent for the benefit
of Lender Group pursuant to the Security Agreement.

                  (e)......All amounts deposited in the Collection Account shall
be deemed received by Term Agent in accordance with Section 1.8 of the Agreement
and shall be applied (and  allocated)  by Applicable  Agent in  accordance  with
Section 1.9 of the Agreement.  In no event shall any amount be so applied unless
and until such amount shall have been credited in immediately available funds to
the Collection Account.

                  Each  Borrower may  maintain,  in its name, an account (each a
"Disbursement Account" and collectively,  the "Disbursement Accounts") at a bank
acceptable to Revolver Agent into which  applicable  Lender shall,  from time to
time,  deposit  proceeds of  Revolving  Credit  Advances  made to such  Borrower
pursuant to Section 1.1 for use by such Borrower  solely in accordance  with the
provisions of Section 1.4.

                  (g)......Borrowers  shall  and  shall  cause  its  Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with such Borrower (each a "Related Person") to (i) hold in trust for Term Agent
for the  benefit of Lender  Group all  checks,  cash and other  items of payment
received by Borrowers or any such Related  Person,  and (ii) within one Business
Day after receipt by Borrowers or any such Related Person of any checks, cash or
other items or payment,  deposit the same into a Borrower  Account of Borrowers.
Borrowers and each Related Person thereof acknowledges and agrees that all cash,
checks or items of payment constituting  proceeds of Collateral are the property
of Term Agent for the benefit of Lender Group. All proceeds of the sale or other
disposition of any Collateral,  shall be deposited  directly into the applicable
Borrower Accounts.

                                       D-5
<PAGE>

                            ANNEX D (Section 2.1(a))

                                       to

                                CREDIT AGREEMENT

                    SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS

In addition to, and not in limitation  of, the  conditions  described in Section
2.1 of the Agreement,  pursuant to Section  2.1(a),  the following items must be
received by Term Agent in form and  substance  satisfactory  to Term Agent on or
prior to the Closing Date (each  capitalized term used but not otherwise defined
herein shall have the meaning ascribed thereto in Annex A to the Agreement):

          A. Appendices.  All Appendices to the Agreement, in form and substance
satisfactory to Term Agent.

          B. Revolving Notes, Term Notes and SCIL Notes. Duly executed originals
of the Revolving Notes, Term Notes and SCIL Notes, each dated the Closing Date.

          C.  Security  Agreement.  Duly  executed  originals  of  the  Security
Agreement, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto.

          D.  Insurance.  Satisfactory  evidence  that  the  insurance  policies
required by Section 5.4 are in full force and effect,  together with appropriate
evidence showing loss payable or additional insured clauses or endorsements,  as
requested by Term Agent, in favor of Term Agent for the benefit of Lender Group.

          E.  Security Interests and Code Filings.

                  (a)......Evidence  satisfactory  to Term Agent that Term Agent
for the  benefit  of  Lender  Group  has a valid and  perfected  first  priority
security interest in the Collateral,  including (i) such documents duly executed
by each Credit Party  (including  financing  statements under the Code and other
applicable  documents  under the laws of any  jurisdiction  with  respect to the
perfection  of Liens) as Term Agent may request in order to perfect its security
interests for the benefit of Lender Group in the  Collateral  and (ii) copies of
Code search reports  listing all effective  financing  statements  that name any
Credit Party as debtor, together with copies of such financing statements,  none
of which  shall  cover the  Collateral,  except for those  relating to the Prior
Lender Obligations (all of which shall be terminated on the Closing Date).

                  (b)......Evidence   satisfactory  to  Term  Agent,   including
copies, of all UCC-1 and other financing statements filed in favor of any Credit
Party  with  respect  to  each  location,  if any,  at  which  Inventory  may be
consigned.

                  (c)......Control    Letters    from   (i)   all   issuers   of
uncertificated  securities and financial assets held by each Borrower,  (ii) all
securities intermediaries with respect to all securities accounts and securities
entitlements  of each  Borrower,  and (iii) all  futures  commission  agents and
clearing  houses  with  respect to all  commodities  contracts  and  commodities
accounts held by any Borrower.


          F. Payoff Letter;  Termination  Statements.  Copies of a duly executed
payoff letter, in form and substance  satisfactory to Term Agent, by and between
all parties to the Prior Lender loan documents  evidencing  repayment in full of
all Prior  Lender  Obligations,  together  with (a)  UCC-3 or other  appropriate
termination  statements,  in form  and  substance  satisfactory  to Term  Agent,
manually  signed by each Prior Lender  releasing  all liens of Prior Lender upon
any of the personal  property of each Credit Party,  and (b)  termination of all
blocked account  agreements,  bank agency agreements or other similar agreements
or  arrangements or arrangements in favor of any Prior Lender or relating to the
Prior Lender Obligations.

          G. Intellectual Property Security Agreements.  Duly executed originals
of Trademark  Security  Agreements,  Copyright  Security  Agreements  and Patent
Security Agreements, each dated the Closing Date and signed by each Credit Party
which owns  Trademarks,  Copyrights or Patents,  as applicable,  all in form and
substance  satisfactory to Term Agent, together with all instruments,  documents
and agreements executed pursuant thereto.

          H. Subsidiary  Guaranties.  Guaranties executed by and each direct and
indirect Subsidiary of VSC that is not a Borrower in favor of Term Agent for the
benefit of Lender Group.

          I. Initial Notices of Revolving  Credit Advance and SCIL Loan Advance.
Duly executed  originals of a Notice of Revolving  Credit  Advance and Notice of
SCIL Loan Advance, dated the Closing Date, with respect to the initial Revolving
Credit  Advance and the initial  SCIL Loan  Advance to be  requested by Borrower
Representative on the Closing Date.

          J.  Letter  of  Direction.  Duly  executed  originals  of a letter  of
direction from Borrower  Representative  addressed to Term Agent with respect to
the  disbursement  on the Closing  Date of the proceeds of the Term Loan and the
initial Revolving Credit Advance and the initial SCIL Loan Advance.

          K.  Cash  Management  System;  Blocked  Account  Agreements.  Evidence
satisfactory to Term Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been  established and are currently
being  maintained  in the manner set forth in such Annex C, together with copies
of duly executed  blocked account and lock box agreements,  satisfactory to Term
Agent, with the banks as required by Annex C.

          L. Charter and Good Standing. For each Credit Party, such Person's (a)
charter and all amendments thereto,  (b) good standing  certificates  (including
verification of tax status) in its state of incorporation  and (c) good standing
certificates   (including  verification  of  tax  status)  and  certificates  of
qualification  to conduct business in each  jurisdiction  where its ownership or
lease of property or the conduct of its business  requires  such  qualification,
each  dated a  recent  date  prior to the  Closing  Date  and  certified  by the
applicable Secretary of State or other authorized Governmental Authority.

          M. Bylaws and  Resolutions.  For each Credit Party,  (a) such Person's
bylaws,  together  with  all  amendments  thereto  and (b)  resolutions  of such
Person's  Board of Directors and  stockholders,  approving and  authorizing  the
execution,  delivery and  performance of the Loan Documents to which such Person
is a party and the transactions to be consummated in connection therewith,  each
certified  as of the Closing  Date by such  Person's  corporate  secretary or an
assistant  secretary  or  equivalent  Person as being in full  force and  effect
without any modification or amendment.

          N.  Incumbency  Certificates.  For each Credit  Party,  signature  and
incumbency certificates of the officers of each such Person executing any of the
Loan  Documents,  certified  as of the Closing Date by such  Person's  corporate
secretary  or an  assistant  secretary  or  equivalent  Person  as  being  true,
accurate, correct and complete.

          O. Opinions of Counsel. Duly  executed  originals of opinions of Piper
Marbury Rudnick & Wolfe LLP,  counsel for the Credit Parties,  together with any
local  counsel  opinions  requested  by Term Agent,  each in form and  substance
satisfactory  to Lender  and its  counsel,  dated  the  Closing  Date,  and each
accompanied  by a letter  addressed  to such  counsel  from the Credit  Parties,
authorizing  and directing such counsel to address its opinion to each Agent and
each Lender and to include in such  opinion an express  statement  to the effect
that Lender is authorized to rely on such opinion.

          P. Pledge  Agreements.  Duly executed  originals of each of the Pledge
Agreements  accompanied by (as applicable) (a) share  certificates  representing
all of the outstanding Stock being pledged pursuant to such Pledge Agreement and
stock powers for such share certificates  executed in blank and (b) the original
Intercompany Notes and other instruments  evidencing  Indebtedness being pledged
pursuant to such Pledge Agreement, duly endorsed in blank.

          Q. Accountants'  Letters.  A letter from the Credit  Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit  Parties to  communicate  with Agents and Lenders in accordance  with
Section 4.2, and a letter from such auditors acknowledging each Agent's and each
Lender's reliance on the auditor's certification of past Financial Statements.

          R. Appointment  of Agent for Service.  An  appointment of Corporation
Service Company as each Credit Party's agent for service of process.

          S. Officer's Certificate. Term Agent shall have received duly executed
originals of a certificate of the Chief Executive  Officer and Chief  Accounting
Officer of Borrower Representative,  dated the Closing Date, stating that, since
June 30, 1999 (a) no event or condition has occurred or is existing  which could
reasonably be expected to have a Material Adverse Effect;  (b) there has been no
material adverse change in the industry in which any Borrower  operates;  (c) no
Litigation  has been  commenced  which,  if  successful,  would  have a Material
Adverse Effect or could  challenge any of the  transactions  contemplated by the
Agreement  and the  other  Loan  Documents;  (d) there  have been no  Restricted
Payments made by any Credit Party;  and (e) there has been no material  increase
in liabilities,  liquidated or contingent, and no material decrease in assets of
any Borrower or any of its Subsidiaries.

          T. Waivers.  Term Agent  shall have  received  landlord  waivers  and
consents,  bailee  letters  and  mortgagee  agreements  in  form  and  substance
satisfactory  to Term Agent,  in each case as required  pursuant to Section 5.9.

          U. Mortgages. Mortgages covering all of the Real Estate (the "Mortgage
Properties")  together  with: (a) title  insurance  policies,  current  as-built
surveys, zoning letters and certificates of occupancy, in each case satisfactory
in form and substance to Term Agent, in its sole  discretion;  (b) evidence that
counterparts  of the  Mortgages  have been  recorded in all places to the extent
necessary or  desirable,  in the  judgment of Term Agent,  to create a valid and
enforceable  first  priority  lien (subject to Permitted  Encumbrances)  on each
Mortgaged  Property in favor Term Agent for the  benefit of Lender  Group (or in
favor of such other trustee as may be required or desired under local law);  and
(c) an  opinion of counsel  in each  state in which any  Mortgaged  Property  is
located in form and substance and from counsel  satisfactory  to Term Agent.  V.
Subordination and Intercreditor  Agreements.  Term Agent shall have received any
and all  subordination  or intercreditor  agreements,  all in form and substance
reasonably  satisfactory  to Term Agent, in its sole  discretion,  as Term Agent
shall have deemed  necessary or appropriate  with respect to any Indebtedness of
any Credit Party, including, without limitation, the Subordinated Notes.

          W. Environmental  Reports.  Term  Agent  shall have  received  Phase I
Environmental  Site Assessment  Reports,  consistent  with American  Society for
Testing  and  Materials   (ASCM)   Standard  E  1527-94  and  applicable   state
requirements,  on all of the Real  Estate,  dated no more than 6 months prior to
the Closing Date,  prepared by environmental  engineers  satisfactory to Lender,
all in form and substance  satisfactory to Term Agent,  in its sole  discretion;
and Term Agent shall have further received such  environmental  review and audit
reports,  including  Phase II  reports,  with  respect to the Real Estate of any
Credit  Party as Term  Agent  shall  have  requested,  and Term  Agent  shall be
satisfied,  in its sole discretion,  with the contents of all such environmental
reports.  Term Agent shall have received letters  executed by the  environmental
firms preparing such environmental  reports, in form and substance  satisfactory
to Term Agent, authorizing Agents and Lender to rely on such reports.

          X.  Appraisals.  Term Agent shall have  received  appraisals as to all
Equipment,  each of which shall be in form and  substance  satisfactory  to Term
Agent.

          Y.  Audited  Financials; Financial  Condition. Term Agent  shall have
received Borrowers' final audited Financial Statements for the Fiscal Year ended
June 30, 1999, audited by Ernst & Young LLP, and Borrowers  unaudited  Financial
Statements for the Fiscal  Quarter ended December 31, 1999.  Each Borrower shall
have provided Term Agent with its current operating  statements,  a consolidated
and  consolidating  balance  sheet and  statement of cash flows,  the Pro Forma,
Projections  and Fair  Salable  Balance  Sheet  with  respect  to such  Borrower
certified by the Chief  Financial  Officer of Borrower  Representative,  in each
case in form and substance  satisfactory to Term Agent,  and Term Agent shall be
satisfied, in its sole discretion,  with all of the foregoing.  Term Agent shall
have further received a certificate of the Chief Executive  Officer or the Chief
Financial  Officer  of  Borrower  Representative,  based on such Pro  Forma  and
Projections,  to the effect  that (a) each  Borrower  will be  Solvent  upon the
consummation of the transactions  contemplated  herein; (b) the Pro Forma fairly
presents the  financial  condition of each such  Borrower as of the date thereof
after giving effect to the transactions  contemplated by the Loan Documents; (c)
the Projections are based upon estimates and assumptions stated therein,  all of
which  Borrower  Representative  believes to be reasonable  and fair in light of
current conditions and current facts known to Borrower Representative and, as of
the Closing Date,  reflect Borrower  Representative's  good faith and reasonable
estimates of it the future  financial  performance and of the other  information
projected therein for the period set forth therein; (d) the Fair Salable Balance
Sheet  was  prepared  on the  same  basis as the Pro  Forma,  except  that  each
Borrowers'  assets are set forth therein at their fair salable values on a going
concern  basis and the  liabilities  set forth  therein  include all  contingent
liabilities  of Borrowers  stated at the  reasonably  estimated  present  values
thereof;  and (e) containing such other  statements with respect to the solvency
of each such Borrower and matters related thereto as Term Agent shall request.

          Z. Other Documents. Such other certificates,  documents and agreements
respecting any Credit Party as Term Agent may, in its sole discretion, request.
                                       E-3

<PAGE>
                            ANNEX E (Section 4.1(a))

                                       to

                                CREDIT AGREEMENT

                  FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING

                  Borrowers shall deliver or cause to be delivered to Term Agent
the following:

                  (a)......Monthly  Financials.  Within 30 days after the end of
each  Fiscal  Month,   financial   information  regarding  Borrowers  and  their
Subsidiaries,   certified   by  the  Chief   Accounting   Officer  of   Borrower
Representative,  consisting  of  consolidated  and  consolidating  (i) unaudited
statements of income for such Fiscal Month,  setting forth in  comparative  form
the  figures  for the  corresponding  period in the prior  year and the  figures
contained in the  Projections  for such Fiscal Year,  all prepared in accordance
with GAAP (subject to normal  year-end  adjustments);  and (ii) a summary of the
outstanding  balance of all Intercompany Notes as of the last day of that Fiscal
Month.  The   certification   of  the  Chief  Accounting   Officer  of  Borrower
Representative  shall be that (i) such financial  information presents fairly in
accordance  with GAAP  (subject to normal  year-end  adjustments);  and (ii) any
other  information  presented  is true,  correct and  complete  in all  material
respects,  and that there was no Default or Event of Default in  existence as of
such  time or, if a Default  or Event of  Default  shall  have  occurred  and be
continuing,  describing  the nature  thereof and all efforts  undertaken to cure
such Default or Event of Default;

                  (b)......Quarterly Financials. Within 45 days after the end of
each  Fiscal  Quarter,  consolidated  and  consolidating  financial  information
regarding  Borrowers and their  Subsidiaries,  certified by the Chief Accounting
Officer of Borrower Representative, including (i) unaudited balance sheets as of
the close of such Fiscal  Quarter and the related  statements of income and cash
flow for that  portion of the Fiscal  Year ending as of the close of such Fiscal
Quarter and (ii)  unaudited  statements of income and cash flows for such Fiscal
Quarter,  in each case  setting  forth in  comparative  form the figures for the
corresponding  period  in the  prior  year  and  the  figures  contained  in the
Projections  for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments). Such financial information shall be accompanied
by (A) a Compliance  Certificate  in respect of each of the financial  covenants
set  forth  on  Annex  G  which  is  tested  on a  quarterly  basis  and (B) the
certification of the Chief Accounting  Officer of Borrower  Representative  that
(i) such financial  information presents fairly in accordance with GAAP (subject
to normal year-end  adjustments) the financial  position,  results of operations
and  statements  of cash flows of Borrowers  and their  Subsidiaries,  on both a
consolidated and  consolidating  basis, as at the end of such Fiscal Quarter and
for the period then ended, (ii) any other information presented is true, correct
and complete in all material  respects and that there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default  shall
have occurred and be  continuing,  describing the nature thereof and all efforts
undertaken  to cure such  Default or Event of Default.  In  addition,  Borrowers
shall deliver to Lender,  within 45 days after the end of each Fiscal Quarter, a
management  discussion  and analysis  which includes a comparison of performance
for that Fiscal Quarter to the corresponding period in the prior year;

                  (c)......Operating  Plan. As soon as available,  but not later
than 30 days after the end of each Fiscal  Year,  an annual  operating  plan for
each  Borrower,  approved by the Board of  Directors of such  Borrower,  for the
following  year,  which  will  include  a  statement  of  all  of  the  material
assumptions on which such plan is based,  will include  quarterly balance sheets
and a monthly  budget for the following  year and will  integrate  sales,  gross
profits,  operating  expenses,  operating profit,  cash flow projections and Net
Borrowing  Availability  projections  ,all  prepared  on the same  basis  and in
similar detail as that on which operating  results are reported (and in the case
of cash flow  projections,  representing  management's  good faith  estimates of
future financial  performance  based on historical  performance),  and including
plans for personnel, Capital Expenditures and facilities;

                  (d)......Annual Audited Financials.  Within 120 days after the
end of each Fiscal Year,  audited  Financial  Statements for Borrowers and their
Subsidiaries on a consolidated and (unaudited)  consolidating basis,  consisting
of balance sheets and statements of income and retained earnings and cash flows,
setting  forth in  comparative  form in each case the figures  for the  previous
Fiscal Year,  which  Financial  Statements  shall be prepared in accordance with
GAAP,  certified  without  qualification,  by an  independent  certified  public
accounting  firm of national  standing or otherwise  acceptable to Lender.  Such
Financial  Statements  shall  be  accompanied  by (i) a  statement  prepared  in
reasonable detail showing the calculations  used in determining  compliance with
each of the  financial  covenants  set forth on Annex G, (ii) a report from such
accounting firm to the effect that, in connection with their audit  examination,
nothing has come to their  attention  to cause them to believe that a Default or
Event of Default  has  occurred  (or  specifying  those  Defaults  and Events of
Default  that they  became  aware  of),  it being  understood  that  such  audit
examination   extended   only  to   accounting   matters  and  that  no  special
investigation  was made with  respect to the  existence of Defaults or Events of
Default,  (iii) the annual letters to such  accountants in connection with their
audit  examination  detailing  contingent  liabilities  and material  litigation
matters,  and (iv) the  certification  of the Chief  Executive  Officer or Chief
Accounting  Officer of  Borrowers  that all such  Financial  Statements  present
fairly in accordance with GAAP the financial position, results of operations and
statements of cash flows of Borrowers and their  Subsidiaries  on a consolidated
and  consolidating  basis,  as at the end of such year and for the  period  then
ended, and that there was no Default or Event of Default in existence as of such
time or, if a Default or Event of Default shall have occurred and be continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default;

                  (e)......Management  Letters.  Within five Business Days after
receipt thereof by any Credit Party, copies of all management letters, exception
reports or similar  letters or reports  received by such  Credit  Party from its
independent certified public accountants;

                  (f)......Default  Notices. As soon as practicable,  and in any
event within five Business  Days after an executive  officer of any Borrower has
actual  knowledge of the  existence  of any  Default,  Event of Default or other
event which has had a Material Adverse Effect,  telephonic or telecopied  notice
specifying  the  nature of such  Default  or Event of  Default  or other  event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day;

                  (g)......SEC  Filings and Press Releases.  Promptly upon their
becoming available,  copies of: (i) all Financial Statements,  reports,  notices
and proxy statements made publicly available by any Credit Party to its security
holders;  (ii) all regular and periodic reports and all registration  statements
and prospectuses, if any, filed by any Credit Party with any securities exchange
or with the Securities and Exchange  Commission or any  governmental  or private
regulatory  authority;  and (iii) all press releases and other  statements  made
available  by any Credit  Party to the  public  concerning  material  changes or
developments in the business of any such Person;

                  (h)......Subordinated  Debt  and  Equity  Notices.  As soon as
practicable,  copies of all material  written  notices  given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within two Business Days after any Credit Party obtains knowledge of any matured
or unmatured event of default with respect to any Subordinated  Debt,  notice of
such event of default;

                  (i)......Supplemental Schedules.  Supplemental disclosures, if
any, required by Section 5.6 of the Agreement;

                  (j)......Litigation.  Promptly upon learning thereof,  written
notice of any Litigation  commenced or threatened  against any Credit Party that
(i) seeks damages in excess of $100,000,  (ii) seeks injunctive relief, (iii) is
asserted  or  instituted  against  any Plan,  its  fiduciaries  or its assets or
against any Credit Party or ERISA  Affiliate in connection  with any Plan,  (iv)
alleges  criminal  misconduct by any Credit Party,  (v) alleges the violation of
any law  regarding,  or seeks  remedies in connection  with,  any  Environmental
Liabilities or (vi) involves any product recall;

                  (k)......Insurance Notices. Disclosure of losses or casualties
required by Section 5.4 of the Agreement;

                  (l)......Lease  Default  Notices.  Copies  of (i)  any and all
default notices  received under or with respect to any leased location or public
warehouse where Collateral is located,  and (ii) such other notices or documents
relating to such leased  locations or public  warehouses or otherwise in respect
of the Collateral as Term Agent may request in its reasonable discretion; and

                  (m)......Lease  Amendments.  To  Term  Agent,  copies  of  all
material  amendments  to real  estate  leases  specify  real  estate  leases  of
particular concern.

                  (n)......Other  Documents.  Such  other  financial  and  other
information  respecting  any Credit Party's  business or financial  condition as
Term Agent shall, from time to time, request.

                                       F-1
<PAGE>


                            ANNEX F (Section 4.1(b))

                                       to

                                CREDIT AGREEMENT

                               COLLATERAL REPORTS

                  Borrowers shall deliver or cause to be delivered to Applicable
Agent the following:

                  (a)......Upon  either Term  Agent's  request,  and in no event
less  frequently than five Business Days after the end of each Fiscal Month with
respect to each Borrower,  a monthly trial balance showing Accounts  outstanding
aged from  invoice due date as follows:  1 to 30 days,  31 to 60 days,  61 to 90
days  and  91  days  or  more,   accompanied  by  such  supporting   detail  and
documentation   as  shall  be  requested  by  either  Agent  in  its  reasonable
discretion.

                  (b)......At  the  time of  delivery  of  each  of the  monthly
Financial  Statements  delivered  pursuant to Annex E, a  reconciliation  of the
Accounts  trial balance of each Borrower to such  Borrower's  general ledger and
monthly Financial  Statements  delivered  pursuant to such Annex E, in each case
accompanied by such supporting detail and documentation as shall be requested by
Lender in its reasonable discretion;

                  (c)......At  the time of delivery of each of the  quarterly or
annual  Financial  Statements  delivered  pursuant  to Annex E, (i) a listing of
government  contracts  of each  Borrower  subject to the Federal  Assignment  of
Claims Act of 1940; and (ii) a list of any  applications for the registration of
any Patent,  Trademark or Copyright  with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency which
any Credit Party thereof has filed in the prior Fiscal Quarter;

                  (d)......Each  Borrower, at its own expense,  shall deliver to
Revolver  Agent the results of each physical  verification,  if any,  which such
Borrower or any of its Subsidiaries may in their discretion have made, or caused
any other  Person to have made on their  behalf,  of all or any portion of their
Inventory  (and,  if a Default or an Event of Default shall have occurred and be
continuing,  each Borrower shall,  upon the request of Revolver Agent,  conduct,
and deliver the results of, such physical  verifications  as Revolver  Agent may
require);

                  (e)......Each  Borrower, at its own expense,  shall deliver to
either  Agent such  appraisals  of its assets as either Agent may request at any
time after the occurrence and during the continuance of a Default or an Event of
Default,  such  appraisals  to be  conducted  by an  appraiser,  and in form and
substance, satisfactory to either Agent; and

                  (f)......Such  other reports,  statements and  reconciliations
with  respect to the  Collateral  of any or all Credit  Parties as either  Agent
shall from time to time request in its reasonable discretion.

                                       G-4


                             ANNEX G (Section 6.10)

                                       to

                                CREDIT AGREEMENT

                               FINANCIAL COVENANTS

                  Borrowers  shall not breach or fail to comply  with any of the
following financial  covenants,  each of which shall be calculated in accordance
with GAAP consistently applied:

                  (a)......Maximum  Capital  Expenditures.  Borrowers  and their
Subsidiaries on a consolidated basis shall not make Capital  Expenditures during
the  following  periods  that  exceed in the  aggregate  the  amounts  set forth
opposite each of such periods:

Period Maximum Capital  Expenditures per Period Each Fiscal Year commencing with
the Fiscal Year ending $6,000,000 March 31, 2000.

                  (b)......Minimum  Fixed Charge Coverage  Ratio.  Borrowers and
their  Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter  set forth  below,  a Fixed  Charge  Coverage  Ratio for (i) the  Fiscal
Quarter  ended June 30,  2000,  the 3 month  period then ended;  (ii) the Fiscal
Quarter  ended  September  30, 2000,  the 6 month  period then ended;  (iii) the
Fiscal Quarter ended December 31, 2000, the 9 month period then ended;  and (iv)
each fiscal Quarter thereafter,  the 12-month period then ended, in each case of
not less than 1.00 to 1.00.

                  (c)......Minimum EBITDA. Borrowers and their Subsidiaries on a
consolidated  basis  shall  have,  at the end of each  Fiscal  Quarter set forth
below, EBITDA for the 12-month period then ended of not less than the following:

Measurement Period Ending                                    EBITDA
-------------------------                                    ------
June 30, 2000                                                $13,693,000
September 30, 2000                                           $14,131,000
December 31, 2000                                            $14,238,000
March 31, 2001                                               $14,344,000
June 30, 2001                                                $14,450,000
September 30, 2001                                           $14,556,000
December 31, 2001                                            $14,663,000
June 30, 2002                                                $14,875,000
September 30, 2002                                           $14,981,000
December 31, 2002                                            $15,088,000
March 31, 2003                                               $15,194,000
June 30, 2003                                                $15,300,000
September 30, 2003                                           $15,529,000
December 31, 2003                                            $15,762,500
June 30, 2004                                                $16,000,000

<PAGE>

The last day of each successive Fiscal Quarter $16,000,000,  plus the cumulative
sum of $250,000  commencing  September  30, 2004,  for each Fiscal  Quarter that
elapsed on the relevant date of determination since June 30, 2004.

                  (d)......Maximum   Leverage   Ratio.   Borrowers   and   their
Subsidiaries  on a  consolidated  basis  shall  have,  at the end of each Fiscal
Quarter  set forth  below,  a Leverage  Ratio as of the last day of such  Fiscal
Quarter and for the 12-month period then ended of not more than the following:

Measurement Period                                           Ratio
------------------                                           -----
June 30, 2000                                                4.0 to 1.0
September 30, 2000                                           3.7 to 1.0
December 31, 2000                                            3.6 to 1.0
March 31, 2001                                               3.7 to 1.0
June 30, 2001                                                3.5 to 1.0
September 30, 2001                                           3.4 to 1.0
December 31, 2001                                            3.2 to 1.0
June 30, 2002                                                3.1 to 1.0
September 30, 2002                                           3.0 to 1.0
December 31, 2002                                            2.8 to 1.0
March 31, 2003                                               2.9 to 1.0
June 30, 2003                                                2.6 to 1.0
September 30, 2003 and on the last day of                    2.5 to 1.0
each Fiscal Quarter thereafter

                  (f).......Minimum Interest Coverage Ratio. Borrowers and their
Subsidiaries  on a  consolidated  basis  shall  have at the  end of each  Fiscal
Quarter set forth below, an Interest Coverage Ratio for the 12-month period then
ended of not less than the following:

June 30, 2000                                                2.9 to 1.0
September 30, 2000                                           2.9 to 1.0
December 31, 2000                                            2.9 to 1.0
March 31, 2001                                               3.0 to 1.0
June 30, 2001                                                3.0 to 1.0
September 30, 2001                                           3.1 to 1.0
December 31, 2001                                            3.1 to 1.0
March 31, 2002                                               3.2 to 1.0
June 30, 2002                                                3.3 to 1.0
September 30, 2002                                           3.3 to 1.0
December 31, 2002                                            3.4 to 1.0
March 31, 2003                                               3.5 to 1.0
June 30, 2003                                                3.6 to 1.0
September 30, 2003                                           3.7 to 1.0
December 31, 2003                                            3.8 to 1.0
March 31, 2004,                                              4.0 to 1.0


       And  on the last day of each  Fiscal Quarter  thereafter unless otherwise
specifically  provided  herein,  any accounting term used in the Agreement shall
have the meaning  customarily  given such term in accordance  with GAAP, and all
financial  computations  hereunder  shall be  computed in  accordance  with GAAP
consistently applied. That certain items or computations are explicitly modified
by the phrase "in  accordance  with GAAP" shall in no way be  construed to limit
the  foregoing.  If any  "Accounting  Changes" (as defined below) occur and such
changes  result  in a change  in the  calculation  of the  financial  covenants,
standards  or terms  used in the  Agreement  or any other  Loan  Document,  then
Borrowers  and Lender  agree to enter into  negotiations  in order to amend such
provisions of the Agreement so as to equitably  reflect such Accounting  Changes
with the desired  result that the criteria for  evaluating  the  Borrowers'  and
their Subsidiaries'  financial condition shall be the same after such Accounting
Changes as if such Accounting  Changes had not been made.  "Accounting  Changes"
means (a) changes in accounting  principles  required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American  Institute of Certified  Public  Accountants (or successor
thereto  or any agency  with  similar  functions),  (b)  changes  in  accounting
principles  concurred in by any Borrower's  certified  public  accountants;  (c)
purchase  accounting  adjustments  under A.P.B. 16 or 17 and EITF 88-16, and the
application  of the accounting  principles set forth in FASB 109,  including the
establishment of reserves pursuant thereto and any subsequent reversal (in whole
or in part) of such reserves;  and (d) the reversal of any reserves  established
as a result of purchase accounting  adjustments.  All such adjustments resulting
from expenditures made subsequent to the Closing Date (including  capitalization
of costs and  expenses  or payment of  pre-Closing  Date  liabilities)  shall be
treated as expenses in the period the expenditures are made and deducted as part
of the calculation of EBITDA in such period.  If Lender and Borrowers agree upon
the required  amendments,  then after appropriate  amendments have been executed
and the underlying  Accounting Change with respect thereto has been implemented,
any  reference to GAAP  contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the  implementation of such Accounting Change. If
Lender and Borrowers  cannot agree upon the required  amendments  within 30 days
following  the  date  of  implementation  of any  Accounting  Change,  then  all
Financial  Statements  delivered and all calculations of financial covenants and
other  standards and terms in  accordance  with the Agreement and the other Loan
Documents shall be prepared, delivered and made without regard to the underlying
Accounting Change.

                                       H-2
<PAGE>



                             ANNEX H (Section 11.10)

                                       to

                                CREDIT AGREEMENT

NOTICE ADDRESSES

(A)      If to Term Agent, at

         General Electric Capital Corporation
         10 S. LaSalle, Suite 2800
         Chicago, Illinois  60603
         Attention:  Ann E. Naegele,
         Assistant Vice President-Risk Manager
         Telecopier:  (312) 419-4600
         Telephone:  (312) 419-4604

         and

         General Electric Capital Corporation
         401 Merritt Seven, 2nd Floor
         Norwalk, Connecticut  06856
         Attention: Counsel/Capital Funding, Inc.
         Attention:  David R. Huet, Esquire
         Telecopier:  (203) 703-1777
         Telephone:  (203) 357-3159

         with a copy to

         Stroock & Stroock & Lavan LLP
         2029 Century Park East, 16th Floor
         Los Angeles, California  90067-3086
         Attention:  Gregory A. Bray, Esquire
         Telecopier : (310) 556-5959
         Telephone : (310) 556-5831

(B)      If to Revolver Agent, at
         KeyBank National Association


         Attention: ----------------
         Telecopier ----------------
         Telephone: ----------------

(C)      If to any Borrower, to Borrower Representative at

         Video Services Corporation
         240 Pegasus Avenue
         Northvale, New Jersey  07647-1904
         Attention: Louis H. Siracusano
         Telecopier:  (201) 784-9779
         Telephone:  (201) 767-1000

         With a copy to:
         Piper Marbury Rudnick & Wolfe LLP
         1251 Avenue of the Americas
         New York, New York 10020
         Attention: James T. Seery, Esq.
         Telecopier:  (212) 835-6001
         Telephone:  (212) 835-6030