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                              CREDIT AGREEMENT

                                   among

                          CARSON PRODUCTS COMPANY

                                    and

                     BANQUE INDOSUEZ, NEW YORK BRANCH,

                                 AS AGENT,

                                    and

                   THE LENDING INSTITUTIONS LISTED HEREIN


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


                        Dated as of October 18, 1996

                                    and

                 Amended and Restated as of April 30, 1997


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                                $100,000,000
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-i-
                             TABLE OF CONTENTS


                                                                        Page

SECTION 1. Amount and Terms of Credit......................................3

      1.01. Commitments....................................................3
      1.02. Minimum Amount of Each Borrowing; Maximum Number of
                 Borrowings................................................5
      1.03. Notice of Borrowings...........................................5
      1.04. Disbursement of Funds..........................................6
      1.05. Notes..........................................................7
      1.06. Conversions; Continuations.....................................9
      1.07. Pro Rata Borrowings...........................................10
      1.08. Interest......................................................10
      1.09. Interest Periods..............................................11
      1.10. Special Provisions Governing Reserve Adjusted
                 Eurodollar Loans.........................................13
      1.11. Capital Requirements..........................................18
      1.12. Total Loan Commitments; Limitations on Outstanding
                 Loan Amounts.............................................19
      1.13. Letters of Credit.............................................19
      1.14. Restatement Effective Date; Effect of Restatement.............30

SECTION 2. Commitments....................................................33

      2.01. Voluntary Reduction of Commitments............................33
      2.02. Mandatory Adjustments of Commitments, etc.....................33
      2.03. Commitment Commission.........................................34

SECTION 3. Payments.......................................................35

      3.01. Voluntary Prepayments.........................................35
      3.02. Mandatory Prepayments.........................................36
      3.03. Method and Place of Payment...................................40
      3.04. Net Payments..................................................41

SECTION 4. Conditions Precedent...........................................44

      4.01. Conditions Precedent to Additional Loans......................44
      4.02. Conditions Precedent to All Loans.............................55
      4.03. Conditions Precedent to All Letters of Credit.................57

SECTION 5. Representations, Warranties and Agreements.....................58

      5.01. Corporate Status..............................................58
      5.02. Corporate Power and Authority; Business.......................59
      5.03. No Violation..................................................59
      5.04. Litigation....................................................60
      5.05. Use of Proceeds...............................................60
      5.06. Governmental Approvals, etc...................................61
      5.07. Investment Company Act........................................61
      5.08. Public Utility Holding Company Act............................61
      5.09. True and Complete Disclosure..................................62
      5.10. Acquisition; Purchase Agreements..............................62
      5.11. Financial Condition; Financial Statements; Projections........63
      5.12. Security Interests............................................66
      5.13. Tax Returns and Payments......................................66
      5.14. ERISA.........................................................67
      5.15. Subsidiaries..................................................68
      5.16. Patents, etc..................................................69
      5.17. Compliance with Laws, etc.....................................69
      5.18. Properties....................................................70
      5.19. Securities....................................................70
      5.20. Collective Bargaining Agreements..............................70
      5.21. Indebtedness Outstanding......................................71
      5.22. Environmental Matters.........................................73
      5.23. Environmental Investigations..................................73
      5.24. Fine Products Company.........................................73

SECTION 6. Affirmative Covenants..........................................74

      6.01. Information Covenants.........................................74
      6.02. Books, Records and Inspections................................80
      6.03. Maintenance of Property; Insurance............................81
      6.04. Payment of Taxes..............................................82
      6.05. Corporate Franchises..........................................82
      6.06. Compliance with Statutes, etc.................................82
      6.07. ERISA.........................................................83
      6.08. Performance of Obligations....................................84
      6.09. End of Fiscal Years; Fiscal Quarters..........................84
      6.10. Use of Proceeds...............................................84
      6.11. Equal Security for Loans and Notes; No Further
                 Negative Pledges.........................................84
      6.12. Lender Meeting................................................85
      6.13. Pledge of Additional Collateral...............................85
      6.14. Security Interests............................................86
      6.15. Environmental Events..........................................87
      6.16. New Subsidiaries..............................................88
      6.17. Manufacturing Agreements......................................88

SECTION 7. Negative Covenants.............................................88

      7.01.  Changes in Business..........................................89
      7.02.  Amendments or Waivers of Certain Documents...................89
      7.03.  Liens........................................................89
      7.04.  Indebtedness.................................................92
      7.05.  Advances, Investments and Loans..............................94
      7.06.  Prepayments of Indebtedness; Amendments......................95
      7.07.  Dividends, etc...............................................96
      7.08.  Transactions with Affiliates.................................97
      7.09.  Total Interest Coverage Ratio................................98
      7.10.  Fixed Charge Coverage Ratio..................................98
      7.11.  Leverage Ratio...............................................99
      7.12.  Issuance of Subsidiary Stock.................................99
      7.13.  Disposition of Assets........................................99
      7.14.  Contingent Obligations.......................................103
      7.15.  ERISA........................................................104
      7.16.  Merger and Consolidations....................................105
      7.17.  Sale and Lease-Backs.........................................105
      7.18.  Sale or Discount of Receivables..............................105
      7.19.  Fine Products Company........................................105

SECTION 8.  Events of Default.............................................106

      8.01.  Payments.....................................................106
      8.02.  Representations, etc.........................................106
      8.03.  Covenants....................................................106
      8.04.  Default Under Other Agreements...............................107
      8.05.  Bankruptcy, etc..............................................107
      8.06.  ERISA........................................................108
      8.07.  Security Documents...........................................109
      8.08.  Guarantees...................................................109
      8.09.  Judgments....................................................109
      8.10.  Ownership....................................................110

SECTION 9.  Definitions...................................................112


SECTION 10.  The Agent....................................................149

      10.01.  Appointment................................................149
      10.02.  Delegation of Duties.......................................150
      10.03.  Exculpatory Provisions.....................................150
      10.04.  Reliance by the Agent......................................151
      10.05.  Notice of Default..........................................151
      10.06.  Non-Reliance on Agent and Other Banks......................152
      10.07.  Indemnification............................................153
      10.08.  The Agent in Its Individual Capacity.......................153
      10.09.  Successor Agent............................................153
      10.10.  Resignation by Agent.......................................153

SECTION 11.  Miscellaneous...............................................154

      11.01.  Payment of Expenses, etc...................................154
      11.02.  Right of Setoff............................................155
      11.03.  Notices....................................................156
      11.04.  Benefit of Agreement.......................................157
      11.05.  No Waiver; Remedies Cumulative.............................160
      11.06.  Payments Pro Rata..........................................160
      11.07.  Calculations; Computations.................................161
      11.08.  Governing Law; Submission to Jurisdiction; Venue...........161
      11.09.  Counterparts...............................................162
      11.10.  Effectiveness..............................................162
      11.11.  Headings Descriptive.......................................163
      11.12.  Amendment or Waiver........................................163
      11.14.  Survival...................................................163
      11.15.  Domicile of Loans..........................................164
      11.16.  Waiver of Jury Trial.......................................164
      11.17.  Independence of Covenants..................................164


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ANNEX I        -    List of Banks
ANNEX II       -    Bank Addresses
ANNEX III      -    Schedule of Existing Debt
ANNEX IV       -    Schedule of Subsidiaries
ANNEX V        -    Schedule of Collective Bargaining Agreements
ANNEX VI       -    Summary of Corporate Insurance Policies
ANNEX VII      -    Schedule of Liens
ANNEX VIII     -    List of Mortgaged Real Property
ANNEX IX       -    Schedule of Litigation
ANNEX X        -    Schedule of Consents
ANNEX XI       -    Schedule of Restrictions
ANNEX XII      -    Environmental Matters
ANNEX XIII     -    Taxes
ANNEX XIV      -    Schedule of Intellectual Property
ANNEX XV       -    Schedule of Existing Leases
ANNEX XVI      -    Compliance with Laws
Exhibit A      -    Form of Revolving Note
Exhibit B-1    -    Form of A Term Note
Exhibit B-2    -    Form of B Term Note
Exhibit C-1    -    Form of Opinion of Milbank, Tweed, Hadley & McCloy
Exhibit C-2    -    Form of Local Counsel Opinion
Exhibit D      -    Form of Mortgage
Exhibit E      -    Form of Holdings Guarantee
Exhibit F-1    -    Form of Borrower Securities Pledge Agreement
Exhibit F-2    -    Form of Holdings Securities Pledge Agreement
Exhibit G      -    Form of Borrower Intellectual Property Security
                     Agreement
Exhibit H      -    Form of Borrower General Security Agreement
Exhibit I-1    -    Form of Notice of Assignment
Exhibit I-2    -    Form of Assignment and Assumption Agreement
Exhibit J      -    Form of Notice of Borrowing
Exhibit K      -    Form of Notice of Conversion/Continuation
Exhibit L      -    Form of Officer's Solvency Certificate
Exhibit M      -    Form of Borrowing Base Certificate
Exhibit N      -    Form of Officer's Certificate Regarding Environmental
                     Review
Exhibit O      -    Form of Landlord Lien Assurance Agreement
Exhibit P      -    Form of Consolidated Financial Plan
Exhibit Q      -    Form of Non-U.S. Lender Certificate
Exhibit R      -    Form of Subsidiary Guarantee
Exhibit S      -    Cutex Manufacturing Agreement
Exhibit T      -    Form of AM Manufacturing Agreement


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            AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 18, 1996,
amended as of April 8, 1997 and amended  and  restated as of April 30, 1997 (the
"Agreement"),  among  CARSON  PRODUCTS  COMPANY,  a  Delaware  corporation  (the
"Borrower"),  the  lending  institutions  listed in Annex I (each a "Bank"  and,
collectively,   the  "Banks")  and  the  New  York  branch  of  BANQUE  INDOSUEZ
("Indosuez") as the agent and collateral  agent for the Banks (in such capacity,
the "Agent"). Unless otherwise defined herein, all capitalized terms used herein
and defined in Section 9 are used herein as so defined.

                           W I T N E S S E T H :

            WHEREAS, the Borrower, the Banks and Indosuez, as Agent, are parties
to a Credit  Agreement  dated as of October 18, 1996,  as amended as of April 8,
1997 (the "Existing  Credit  Agreement"),  pursuant to which the Banks initially
made  available to the Borrower a loan facility in an aggregate  amount equal to
$40,000,000  for the purpose of, among other things,  providing a portion of the
financing  to permit the  Borrower to  refinance  existing  indebtedness,  which
refinancing has been completed;

            WHEREAS,  the Existing  Credit  Agreement was amended as of April 8,
1997,  to  increase  the  Existing  B  Term  Loans  in an  aggregate  amount  of
$5,000,000,  to finance the acquisition by the Borrower of certain assets of New
Image  Laboratories,   Inc.,  a  California  corporation  ("New  Image"),  which
acquisition has been completed;

            WHEREAS,  Carson,  Inc.,  a  Delaware  corporation  and  the  parent
corporation of the Borrower ("Holdings"), has entered into a purchase agreement,
dated as of March 27, 1997  (including the exhibits and schedules  thereto,  the
"Cutex Purchase Agreement"), with CONOPCO, Inc. d/b/a CHESEBROUGH-PONDS USA CO.,
a subsidiary of Unilever plc. ("CONOPCO"),  to effect the purchase of all of the
assets  of  the  Cutex  division  of  CONOPCO  (the  "Cutex  Acquisition"),  for
consideration  consisting  of  $37,500,000  cash  (excluding  related  fees  and
expenses) plus the Target  Inventory  Amount of $600,000 (prior to adjustment as
provided in the Cutex Purchase Agreement);

            WHEREAS, Holdings has entered into a repurchase agreement,  dated as
of March 27, 1997  (including  the exhibits  and  schedules  thereto,  the "Jean
Philippe Purchase  Agreement" and,  together with the Cutex Purchase  Agreement,
the  "Purchase  Agreements"),  with Jean Philippe  Fragrances,  Inc., a Delaware
corporation  ("Jean  Philippe" and,  together with CONOPCO,  the "Sellers"),  to
effect the  purchase  of certain  assets of Jean  Philippe  (the "Jean  Philippe
Acquisition" and, together with the Cutex  Acquisition,  the  "Acquisition") for
consideration  consisting  of  $50,000  cash and the value of the  inventory  of
approximately $3,287,853.46;

            WHEREAS,  Holdings  shall  contribute  to the  Borrower  all  assets
acquired by it in the  Acquisition,  and the Borrower  shall pay to Holdings the
cost of the Acquisition;

            WHEREAS,  pursuant to  scheduled  amortizations  under the  Existing
Credit Agreement, there is presently outstanding $13,750,000 principal amount of
Existing A Term Loans, $14,950,000 principal amount of Existing B Term Loans and
$8,736,900.31 principal amount of Existing Revolving Loans;

            WHEREAS, in order to finance the Acquisition, the Borrower wishes to
amend and restate the Existing Credit Agreement in order to, among other things,
(i) increase the Total Commitment by $56,300,000 to $100,000,000,  (ii) increase
the A Term Loan  Facility  by  $11,250,000  (the  "Additional  A Term  Loan") to
$25,000,000,  (iii)  increase  the B Term  Loan  Facility  by  $35,050,000  (the
"Additional B Term Loan") to  $50,000,000  and (iv) increase the Revolving  Loan
Commitment by  $10,000,000  (the  "Additional  Revolving  Loan  Commitment")  to
$25,000,000;

            WHEREAS,  Holdings will execute an amended  Guarantee and an amended
Securities Pledge Agreement,  secured by a pledge of the shares of capital stock
of the Borrower, guaranteeing the Borrower's obligations hereunder;

            WHEREAS,  the  Borrower  will  execute an  amendment  to the Deed to
Secure Debt and an amended  Securities Pledge Agreement,  Intellectual  Property
Security  Agreement and General Security  Agreement,  pledging the assets of the
Borrower as security for its obligations hereunder;

            WHEREAS,  the  Borrower  desires to incur Loans from the Banks,  the
proceeds of which will be applied,  to the extent  necessary,  to consummate the
Acquisition, to provide working capital to the Borrower, to pay certain fees and
expenses  incurred in connection with the Acquisition and for general  corporate
purposes; and

            WHEREAS,  the  Banks  are  willing  to  make  available  the  credit
facilities provided for herein.

            NOW, THEREFORE, IT IS AGREED:

            SECTION 1.  Amount and Terms of Credit.

            1.01.  Commitments.  Subject  to and upon the terms  and  conditions
herein set forth, each Bank severally agrees, in the case of any Borrowing under
the A Term Loan  Facility  or the B Term Loan  Facility,  in each  case,  on the
Closing Date and, in the case of any Borrowing under the Revolving  Portion,  at
any time and from time to time on and after  the  Closing  Date and prior to the
Revolving  Loan  Commitment  Termination  Date,  to make a Loan or  Loans to the
Borrower,  which  Loans shall be drawn under the Loan  Facility  (including  the
Revolving Portion and Term Portion thereof), as set forth below.

            (a) Loans under the Term Portion of the Loan Facility  (each a "Term
      Loan" and,  collectively,  the "Term  Loans") may be made to the  Borrower
      under the A Term Loan Facility  (each an "A Term Loan" and,  collectively,
      the "A Term Loans") or the B Term Loan Facility (each a "B Term Loan" and,
      collectively, the "B Term Loans").

                  (i)  Each  Existing  A Term  Loan  and  Existing  B Term  Loan
            outstanding immediately prior to the Closing Date shall continue and
            remain outstanding.

                 (ii) Each Additional A Term Loan under the A Term Loan Facility
            (A) shall be made to the Borrower as a single drawing on the Closing
            Date, (B) except as hereinafter provided, shall initially be made as
            a Base Rate Loan and, 60 days after the Closing Date or such earlier
            time as the Agent may agree,  shall,  at the option of the Borrower,
            be Base Rate Loans or Reserve Adjusted  Eurodollar  Loans;  provided
            that all Term Loans made by all Banks pursuant to the same Borrowing
            shall,  unless  otherwise   specifically  provided  herein,  consist
            entirely  of Loans of the same Type and (C) shall not exceed for any
            Bank at any time  outstanding the aggregate  principal  amount which
            equals the A Term Loan Commitment of such Bank.

                (iii) Each Additional B Term Loan under the B Term Loan Facility
            (A) shall be made to the Borrower as a single drawing on the Closing
            Date, (B) except as hereinafter provided, shall initially be made as
            a Base Rate Loan and, 60 days after the Closing Date or such earlier
            time as the Agent may agree,  shall,  at the option of the Borrower,
            be Base Rate Loans or Reserve Adjusted  Eurodollar  Loans;  provided
            that all Term Loans made by all Banks pursuant to the same Borrowing
            shall,  unless  otherwise   specifically  provided  herein,  consist
            entirely  of Loans of the same Type and (C) shall not exceed for any
            Bank at any time  outstanding the aggregate  principal  amount which
            equals the B Term Loan Commitment of such Bank.

            (b) Immediately  prior to the Closing Date, the principal  amount of
      all Revolving  Loans of the  outstanding  Loans (the  "Existing  Revolving
      Loans") was $8,736,900.31.  On the Closing Date, the aggregate outstanding
      principal  amount of the Existing  Revolving Loans shall be  automatically
      converted to an equivalent  principal  amount of Revolving Loans hereunder
      and shall be deemed to be Revolving  Loans and  included in the  Revolving
      Loan Commitment for all purposes under this  Agreement,  the Notes and the
      other  Credit  Documents.  Loans under the  Revolving  Portion of the Loan
      Facility  (each a  "Revolving  Loan"  and,  collectively,  the  "Revolving
      Loans")  (i)  shall be made at any time and from time to time on and after
      the Closing Date (including up to an additional  $3,000,000 on the Closing
      Date for purposes of financing the Acquisition and paying related fees and
      expenses;  provided  that the Borrower has utilized the full amount of the
      Total  Term Loan  Commitment  for  financing  the  Acquisition  and paying
      related fees and  expenses)  and prior to the  Revolving  Loan  Commitment
      Termination Date, (ii) except as hereinafter provided,  shall initially be
      Base Rate Loans and, 60 days after the Closing  Date or such  earlier time
      as the Agent may agree, shall, at the option of the Borrower, be Base Rate
      Loans or Reserve Adjusted  Eurodollar  Loans;  provided that all Revolving
      Loans  made by all Banks  pursuant  to the same  Borrowing  shall,  unless
      otherwise  specifically provided herein,  consist entirely of Loans of the
      same  Type,  (iii) may be repaid and  reborrowed  in  accordance  with the
      provisions  hereof,  (iv)  shall  not  exceed  for any  Bank  at any  time
      outstanding  the Revolving  Loan  Commitment of such Bank at such time and
      (v) shall not be made pursuant to a particular  Notice of Borrowing if the
      aggregate  principal  amount of Revolving  Loans then  outstanding,  after
      giving effect to the Revolving Loan requested by such Notice of Borrowing,
      plus the then outstanding  Letters of Credit Usage, after giving effect to
      the issuance of all Letters of Credit subject to outstanding  requests for
      issuance,  would  exceed the lesser of the  Borrower's  Borrowing  Base as
      shown in the  Borrowing  Base  Certificate  that was last  required  to be
      delivered pursuant to Section 6.01 or the Total Revolving Loan Commitment.
      Notwithstanding  anything to the contrary  contained  above, the aggregate
      amount of the Revolving  Loans  outstanding  on the Closing Date shall not
      exceed $8,000,000.

            1.02. Minimum Amount of Each Borrowing; Maximum Number of Borrowings
1.02.  Minimum  Amount of Each  Borrowing;  Maximum  Number of  Borrowings.  The
minimum  aggregate  principal  amount of a Borrowing of Term Loans consisting of
Reserve  Adjusted  Eurodollar  Loans or Base  Rate  Loans  shall be the  Minimum
Borrowing  Amount and, if greater,  shall be in integral  multiples of $100,000;
provided,  however, that the Banks' Term Loan Commitments shall terminate,  on a
pro rata basis,  with respect to any portion of the Total Term Loan  Commitments
not  utilized  by the  Borrower  on the  Closing  Date.  The  minimum  aggregate
principal  amount of a  Borrowing  of  Revolving  Loans  consisting  of  Reserve
Adjusted  Eurodollar  Loans or Base Rate Loans  shall be the  Minimum  Borrowing
Amount  (other than a Borrowing of Base Rate Loans such that the total amount of
Revolving  Loans and  Letters of Credit  Usage to be  outstanding  after  giving
effect to such Borrowing shall be equal to the Total Revolving  Commitment) and,
if greater, shall be in integral multiples of $100,000.  More than one Borrowing
may be incurred on any date; provided that at no time shall there be outstanding
more than 6 Borrowings of Reserve Adjusted Eurodollar Loans.

            1.03.  Notice of Borrowings.  Whenever the Borrower desires that the
Banks make Reserve  Adjusted  Eurodollar Loans under the Revolving Loan Facility
it shall give the Agent at the  Agent's  Office  prior to 10:00  A.M.  (New York
time) at least three Business  Days' prior written notice (or telephonic  notice
promptly  confirmed  in  writing)  of each such  Borrowing  of Reserve  Adjusted
Eurodollar  Loans.  Whenever the Borrower  desires that the Banks make Base Rate
Revolving  Loans on a same-day  basis under the Revolving Loan Facility it shall
give the Agent at the Agent's office prior to 10:00 A.M. (New York time) written
notice  (or  telephonic  notice  promptly  confirmed  in  writing)  of each such
Borrowing of Base Rate Loans. Each such notice,  which shall be substantially in
the  form of  Exhibit  J  hereto  (each  a  "Notice  of  Borrowing"),  shall  be
irrevocable,  shall  be  deemed  a  representation  by  the  Borrower  that  all
conditions  precedent  to such  Borrowing  set forth in  Section  4.02 have been
satisfied and shall specify (i) the aggregate  principal  amount in U.S. dollars
of the  Loans to be made  pursuant  to such  Borrowing,  all of  which  shall be
specified  in such  manner as is  necessary  to comply with all  limitations  on
Revolving   Loans   outstanding   hereunder,   including   without   limitation,
availability  under the Borrowing Base, (ii) the date of Borrowing  (which shall
be a Business Day) and (iii) whether the respective  Borrowing  shall consist of
Base Rate Loans or Reserve  Adjusted  Eurodollar  Loans and, if Reserve Adjusted
Eurodollar Loans, the Interest Period to be initially  applicable  thereto.  The
Agent  shall as  promptly  as  practicable  give each Bank  written  notice  (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing,  of
such Bank's  proportionate share thereof and of the other matters covered by the
Notice of Borrowing.

            1.04.  Disbursement of Funds.  (a) No later than 1:00 P.M. (New York
time) on the date  specified  in each Notice of  Borrowing,  each Bank will make
available  to the  Agent  in New York its pro  rata  portion  of each  Borrowing
requested to be made on such date in the manner provided below.

            (b) Each Bank shall make  available  all amounts it is to fund under
any Borrowing on or after the Closing Date in immediately available funds to the
Agent to the  account  specified  therefor  by the Agent or if no  account is so
specified at the Agent's Office and the Agent will make such funds  available to
the Borrower,  no later than 4:00 P.M. (New York time) on the date  specified in
each Notice of Borrowing, by depositing to the account specified therefor by the
Borrower or if no account is so specified  to its account at the Agent's  Office
the  aggregate of the amounts so made  available in the type of funds  received.
Unless the Agent  shall have been  notified by any Bank prior to the date of any
such Borrowing that such Bank does not intend to make available to the Agent its
portion of the Borrowing or  Borrowings  to be made on such date,  the Agent may
assume that such Bank has made such amount  available  to the Agent on such date
of Borrowing, and the Agent, in reliance upon such assumption,  may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Bank and the Agent has made available same to the Borrower,
the Agent shall be entitled to recover such corresponding amount from such Bank.
If such Bank does not pay such  corresponding  amount forthwith upon the Agent's
demand therefor,  the Agent shall promptly notify the Borrower, and the Borrower
shall upon the Agent's request immediately pay such corresponding  amount to the
Agent.  The  Agent  shall  also be  entitled  to  recover  from such Bank or the
Borrower,  as the case may be, interest on such corresponding  amount in respect
of each day from the date such  corresponding  amount was made  available by the
Agent to the Borrower to the date such corresponding  amount is recovered by the
Agent,  at a rate per annum equal to (x) if paid by such Bank, the Federal Funds
Rate or (y) if paid by the Borrower  (and/or one or more other Credit  Parties),
the then  applicable  rate of interest,  calculated in  accordance  with Section
1.08, for the respective Loans. The Agent shall also be entitled to recover from
any Bank an amount equal to any other  losses  incurred by the Agent as a result
of the  failure  of  such  Bank to  provide  such  amount  as  provided  in this
Agreement.

            (c)  Nothing  herein  shall be deemed to  relieve  any Bank from its
obligation to fulfill its Commitments hereunder or to prejudice any rights which
the  Borrower or any other Credit Party may have against any Bank as a result of
any default by such Bank hereunder.

            1.05.  Notes. (a) The Borrower's  obligation to pay the principal of
and interest on all the Loans made to it by each Bank shall be evidenced  (i) if
Revolving   Loans,  by  a  promissory  note  (each,  a  "Revolving   Note"  and,
collectively, the "Revolving Notes") duly executed and delivered by the Borrower
substantially  in the  form of  Exhibit  A  hereto,  with  blanks  appropriately
completed in conformity  herewith,  and (ii) if Term Loans, by a promissory note
(an "A Term Note" or a "B Term  Note,"  respectively,  as the case may be,  and,
collectively,  the "Term  Notes") duly  executed and  delivered by the Borrower,
substantially  in the form of Exhibits  B-1 and B-2 hereto,  respectively,  each
with blanks appropriately completed in conformity herewith.

            (b) The Revolving Note of the Borrower issued to each Bank shall (i)
be  executed by the  Borrower,  (ii) be payable to the order of such Bank and be
dated the  Closing  Date,  (iii) be in a stated  principal  amount  equal to the
Revolving Loan Commitment of such Bank and be payable in the aggregate principal
amount of the outstanding  Revolving Loans evidenced thereby,  (iv) mature, with
respect to each Loan  evidenced  thereby,  on the Final  Revolving Loan Maturity
Date, (v) be subject to mandatory  prepayment as provided in Section 3.02,  (vi)
bear interest as provided in the  appropriate  clause of Section 1.08 in respect
of the Base Rate Loans and Reserve  Adjusted  Eurodollar  Loans, as the case may
be,  evidenced  thereby and (vii) be entitled to the benefits of this  Agreement
and the other applicable Credit Documents.

            (c) Each of the Term Notes of the Borrower issued to each Bank shall
(i) be executed by the  Borrower,  (ii) be payable to the order of such Bank and
be dated the Closing Date,  (iii) be in a stated principal amount equal to the A
Term Loan Commitment of such Bank or the B Term Loan Commitment of such Bank, as
the case may be, and be payable in the aggregate  principal amount of the A Term
Loans or the B Term Loans evidenced thereby,  (iv) mature,  with respect to each
Loan evidenced  thereby,  on the Final A Term Loan Maturity Date with respect to
the A Term Loans and the Final B Term Loan  Maturity  Date with respect to the B
Term Loans represented  thereby, as the case may be, (v) be subject to mandatory
prepayment  as provided in Section  3.02,  (vi) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and Reserve
Adjusted  Eurodollar  Loans, as the case may be, evidenced  thereby and (vii) be
entitled  to the  benefits of this  Agreement  and the other  applicable  Credit
Documents.

            (d) Each Bank will note on its  internal  records the amount of each
Loan made by it and each  payment  in  respect  thereof  and will,  prior to any
transfer  of  any  of  its  Notes,  endorse  on the  reverse  side  thereof  the
outstanding  principal  amount of Loans evidenced  thereby.  Failure to make any
such notation shall not affect the Borrower's or any Credit Party's  obligations
hereunder  or under the other  applicable  Credit  Documents  in respect of such
Loans.

            1.06.  Conversions  The Borrower shall have the option to convert on
any Business Day commencing on the earlier of receipt of the Agent's approval or
60 days after the Closing Date all or a portion (which portion shall not be less
than the Minimum  Borrowing  Amount) of the outstanding  principal amount of the
Loans owing by the Borrower  pursuant to a single  Portion of the Loan  Facility
into a Borrowing or Borrowings pursuant to such Portion of another Type of Loan,
or to  continue  all or a portion of such  Borrowings  as the same Type of Loan;
provided  that (i) except as  otherwise  provided  in Section  1.10(b),  Reserve
Adjusted  Eurodollar Loans may be converted into Base Rate Loans or continued as
Reserve  Adjusted  Eurodollar  Loans only on the last day of an Interest  Period
applicable  to such  Reserve  Adjusted  Eurodollar  Loans,  (ii) no such partial
conversion of Reserve  Adjusted  Eurodollar  Loans shall reduce the  outstanding
principal  amount of Reserve  Adjusted  Eurodollar Loans under the Loan Facility
(or  Portion  thereof)  made  pursuant  to a single  Borrowing  to less than the
Minimum  Borrowing  Amount,  (iii) one Type of Loan may only be  continued as or
converted  into  Reserve  Adjusted  Eurodollar  Loans if no  Default or Event of
Default is in existence on the date of the conversion, (iv) Borrowings resulting
from conversions or continuations pursuant to this Section 1.06 shall be limited
in amount and number as provided in Section 1.02 and (v) all or a portion of the
outstanding  principal  amount of Base  Rate  Loans  may not be  converted  into
Reserve  Adjusted  Eurodollar  Loans if such Base Rate Loans or portions thereof
will mature within 30 days of such proposed conversion. Each such conversion (or
continuation)  shall be  effected  by the  Borrower  by giving  the Agent at the
Agent's Office prior to 10:00 A.M. (New York time) at least three Business Days'
(or one  Business  Day in the case of a  conversion  into Base Rate Loans) prior
written  notice (or  telephonic  notice  promptly  confirmed in writing) (each a
"Notice of Conversion/Continuation")  specifying the Loans to be so converted or
continued,  the Type of Loans to be converted  into or  continued  and, if to be
converted into or continued as Reserve Adjusted  Eurodollar  Loans, the Interest
Period to be initially applicable thereto. The Agent shall give each Bank notice
as promptly as  practicable  of any such  proposed  conversion  or  continuation
affecting any of its Loans.  Notwithstanding  the foregoing or the provisions of
Section  1.09,  if a Default or Event of Default is in existence on the last day
of  any  Interest  Period  in  respect  of any  Borrowing  of  Reserve  Adjusted
Eurodollar Loans, such Loans may not be continued as Reserve Adjusted Eurodollar
Loans  but  instead  shall be  automatically  converted  on the last day of such
Interest  Period into Base Rate Loans.  If no Notice of  Conversion/Continuation
has been duly delivered with respect to a Reserve Adjusted Eurodollar Loan on or
before  the  third  Business  Day prior to the last day of the  Interest  Period
applicable thereto, such Reserve Adjusted Eurodollar Loan shall be automatically
converted into a Base Rate Loan.

            1.07. Pro Rata Borrowings. All Borrowings under this Agreement shall
be loaned by the Banks pro rata on the basis of their A Term Loan Commitments, B
Term Loan Commitments or Revolving Loan Commitments, as the case may be. No Bank
shall be responsible for any default by any other Bank in its obligation to make
Loans  hereunder and each Bank shall be obligated to make the Loans  provided to
be made by it hereunder,  regardless of the failure of any other Bank to fulfill
its commitments hereunder.

            1.08.  Interest.  (a) The unpaid  principal amount of each Base Rate
Loan shall bear interest from the date of the Borrowing  thereof until  maturity
(whether by  acceleration  or  otherwise)  (or unless  sooner  converted  into a
Reserve  Adjusted  Eurodollar  Loan) at a rate per annum equal to the sum of (i)
the Base  Rate in  effect  from  time to time and (ii) the  applicable  Interest
Margin.

            (b) The unpaid principal amount of each Reserve Adjusted  Eurodollar
Loan shall bear interest from the date of the Borrowing  thereof until  maturity
(whether by  acceleration  or otherwise)  (or unless sooner  converted to a Base
Rate Loan) at a rate per annum equal to the sum of (i) the  relevant  Eurodollar
Rate and (ii) the applicable Interest Margin.

            (c) Overdue  principal and, to the extent  permitted by law, overdue
interest  in respect of each Loan shall bear  interest at a rate per annum equal
to the sum of (i) the  rate of  interest  applicable  to such  Loan and (ii) 2%;
provided  that the amount of the  overdue  principal  of each  Reserve  Adjusted
Eurodollar Loan shall bear interest at the rate of interest  applicable  thereto
plus 2% for the balance of the then current Interest Period.

            (d)  Interest  shall  accrue  from  and  including  the  date of any
Borrowing  to but  excluding  the date of any  repayment  thereof  and  shall be
payable (i) in respect of each Base Rate Loan,  quarterly in arrears on the last
Business Day of each March,  June,  September and December  beginning June 1997;
(ii) in respect of each Reserve Adjusted Eurodollar Loan, in arrears on the last
day of each Interest Period  applicable  thereto and, in the case of an Interest
Period  in  excess  of three  months,  on each  date  occurring  at  three-month
intervals after the first date of such Interest Period;  and (iii) in respect of
each Loan, on any prepayment (on the amount  prepaid),  at maturity  (whether by
acceleration or otherwise) and, after such maturity, on demand.

            (e)  All  computations  of  interest  hereunder  shall  be  made  in
accordance with Section 11.07(b).

            (f) The Agent,  upon determining the interest rate for any Borrowing
of Reserve Adjusted  Eurodollar  Loans for any Interest  Period,  shall promptly
notify the Borrower and the Banks  thereof.  Such  determination  shall,  absent
manifest error, be final, conclusive and binding upon all parties hereto.

            1.09.  Interest Periods.  At the time the Borrower gives a Notice of
Borrowing or Notice of  Conversion/Continuation  in respect of the making of, or
conversion into or continuation of, a Borrowing of Reserve  Adjusted  Eurodollar
Loans,  it shall have the right to elect, by giving the Agent written notice (or
telephonic notice promptly confirmed in writing), the Interest Period applicable
to such Borrowing,  which Interest Period shall, at the option of such Borrower,
be a one,  two,  three or six  month  period.  Notwithstanding  anything  to the
contrary contained above:

            (a) the  initial  Interest  Period  for  any  Borrowing  of  Reserve
      Adjusted  Eurodollar  Loans shall  commence on the date of such  Borrowing
      (including the date of any conversion from a Borrowing of Base Rate Loans)
      and each Interest Period occurring thereafter in respect of such Borrowing
      shall  commence on the date on which the next  preceding  Interest  Period
      expires;

            (b) if any  Interest  Period  relating  to a  Borrowing  of  Reserve
      Adjusted  Eurodollar  Loans  begins  on a  date  for  which  there  is  no
      numerically  corresponding  date  in the  calendar  month  in  which  such
      Interest  Period ends, such Interest Period shall end on the last Business
      Day of such calendar month;

            (c) if any Interest Period would otherwise  expire on a day which is
      not a  Business  Day,  such  Interest  Period  shall  expire  on the  next
      succeeding  Business Day;  provided that if any Interest Period in respect
      of a Reserve  Adjusted  Eurodollar  Loan would  otherwise  expire on a day
      which  is not a  Business  Day but is a day of the  month  after  which no
      further  Business  Day occurs in such month,  such  Interest  Period shall
      expire on the next preceding Business Day;

            (d) no Interest  Period shall extend beyond the Final Revolving Loan
      Maturity  Date (in the case of  Revolving  Loans) or the Final A Term Loan
      Maturity  Date  (in the case of A Term  Loans)  or the  Final B Term  Loan
      Maturity Date (in the case of B Term Loans); and

            (e) no Interest  Period  with  respect to any  Borrowing  of Reserve
      Adjusted  Eurodollar  Loans  shall  extend  beyond any date upon which the
      Borrower thereof is required to make a scheduled payment of principal with
      respect to the Term Loans if, after giving effect to the selection of such
      Interest Period, the aggregate principal amount of A Term Loans and B Term
      Loans  maintained  as Reserve  Adjusted  Eurodollar  Loans  with  Interest
      Periods  ending  after such date of scheduled  payment of principal  would
      exceed  the  amount  of A  Term  Loans  and B  Term  Loans,  respectively,
      permitted to be outstanding after such scheduled payment of principal.

            1.10.  Special Provisions Governing Reserve Adjusted
Eurodollar L1.10. Special Provisions Governing Reserve Adjusted Eurodollar
Loans.  Notwithstanding any other provisions of this Agreement, the
following provisions shall govern with respect to Reserve Adjusted
Eurodollar Loans as to the matters covered:

            (a)  On  an  Interest  Rate  Determination  Date,  the  Agent  shall
      determine (which determination shall, absent demonstrable error, be final,
      conclusive  and binding upon all parties  hereto) the interest  rate which
      shall apply to the Reserve Adjusted Eurodollar Loans for which an interest
      rate is then being determined for the applicable Interest Period and shall
      promptly  give notice  thereof (in writing or by  telephone  confirmed  in
      writing) to the Borrower thereof and to each Bank.

            (b) In the event that (x) in the case of clause (i) below, the Agent
      or (y) in the case of clause  (ii) or (iii)  below,  any Bank  shall  have
      determined  (which  determination  shall,  absent  demonstrable  error, be
      final, conclusive and binding upon all parties hereto):

                  (i) on any date for  determining  the Eurodollar  Rate for any
            Interest  Period that, by reason of any changes  arising on or after
            the  Effective  Date  affecting  the  interbank  eurodollar  market,
            adequate and fair means do not exist for ascertaining the applicable
            interest  rate  on the  basis  provided  for in  the  definition  of
            Eurodollar Rate;

                 (ii) at any time that such Bank shall incur  increased costs or
            reductions  in the amounts  received or  receivable  hereunder  with
            respect to any Reserve  Adjusted  Eurodollar Loans or its obligation
            to make Reserve Adjusted  Eurodollar Loans because of (x) any change
            since the Effective Date  (including  changes  proposed or published
            prior to the Effective  Date) in any  applicable  law,  governmental
            rule,  regulation,  guideline or order (or in the  interpretation or
            administration thereof and including the introduction of any new law
            or governmental rule, regulation,  guideline or order) (such as, for
            example,   but  not  limited  to,  a  change  in  official   reserve
            requirements,  but, in all events, excluding reserves required under
            Regulation  D to  the  extent  included  in the  computation  of the
            Eurodollar  Rate),  including  a change in the basis of  taxation of
            payments to any Bank of the principal of or interest on the Notes or
            any other amounts payable  hereunder (except for changes in the rate
            of tax on, or  determined by reference to, the net income or profits
            of such Bank pursuant to the laws of the jurisdiction in which it is
            organized or in which its  principal  office or  applicable  lending
            office is located or any subdivision  thereof or therein) and/or (y)
            other  circumstances  affecting such Bank, the interbank  eurodollar
            market, or the position of such Bank in such market; or

                (iii) at any time that the making or  continuance of any Reserve
            Adjusted  Eurodollar  Loan has become unlawful by compliance by such
            Bank in good  faith  with any law,  governmental  rule,  regulation,
            guideline  or order (or would  conflict  with any such  governmental
            rule,  regulation,  guideline  or order not  having the force of law
            even though the failure to comply  therewith would not be unlawful),
            or has become  impracticable as a result of a contingency  occurring
            after the Effective Date which materially and adversely  affects the
            interbank eurodollar market;

      then, and in any such event,  the Agent in the case of clause (i) above or
      such Bank in the case of clause (ii) or (iii) above  shall  promptly  give
      notice (by  telephone  confirmed  in writing) in  accordance  with Section
      1.10(h)  hereof to the Borrower of the Loan  affected  and, in the case of
      clause (ii) or (iii) to the Agent, of such determination (which notice the
      Agent shall promptly transmit to each of the other Banks).  Thereafter (x)
      in the case of clause (i) above,  Reserve Adjusted  Eurodollar Loans shall
      no longer be available  until such time as the Agent notifies the Borrower
      and the Banks that the  circumstances  giving  rise to such  notice by the
      Agent  no  longer  exist,  and  any  Notice  of  Borrowing  or  Notice  of
      Conversion/Continuation   given  by  the  Borrower  with  respect  to  the
      borrowing of or  conversion  into (or  continuation  of) Reserve  Adjusted
      Eurodollar  Loans  which  have  not yet  been  incurred  shall  be  deemed
      rescinded  by the  Borrower,  (y) in the case of clause  (ii)  above,  the
      Borrower  shall pay to such Bank,  within 10 Business Days after a written
      demand therefor, such additional amounts (in the form of an increased rate
      of, or a different  method of  calculating,  interest or otherwise as such
      Bank in its reasonable discretion shall determine) as shall be required to
      compensate  such Bank for such  increased  costs or  reductions in amounts
      receivable  hereunder (a written notice pursuant to Section 1.10(h) hereof
      as to  the  additional  amounts  owed  to  such  Bank,  setting  forth  in
      reasonable detail the basis for the calculation thereof,  submitted to the
      Borrower  shall,  absent  demonstrable  error,  be final,  conclusive  and
      binding  upon all  parties  hereto)  and (z) in the case of  clause  (iii)
      above,  the  Borrower  shall take one of the actions  specified in Section
      1.10(c) as promptly as possible and, in any event,  within the time period
      required by law.

            (c) At any  time  that  any  Reserve  Adjusted  Eurodollar  Loan  is
      affected by the circumstances  described in Section  1.10(b)(ii) or (iii),
      the Borrower may (and in the case of a Reserve  Adjusted  Eurodollar  Loan
      affected pursuant to Section 1.10(b)(iii) shall) either (i) if a Notice of
      Borrowing or Notice of Conversion/Continuation has been given with respect
      to the affected  Reserve Adjusted  Eurodollar Loan,  cancel said Notice of
      Borrowing  or  Notice  of  Conversion/Continuation  by  giving  the  Agent
      telephonic notice (confirmed promptly in writing) thereof on the same date
      (if the Borrower has been  notified by not later than 3:00 P.M.,  New York
      time,  or the  next  Business  Day if  otherwise)  that the  Borrower  was
      notified by a Bank pursuant to Section  1.10(b)(ii)  or (iii),  or (ii) if
      the affected Reserve Adjusted Eurodollar Loan is then outstanding, upon at
      least three Business Days' notice to the Agent,  require the affected Bank
      to convert each such  Reserve  Adjusted  Eurodollar  Loan into a Base Rate
      Loan, or prepay such Reserve Adjusted  Eurodollar  Loan;  provided that if
      more than one Bank is affected at any time,  then all affected  Banks must
      be treated  the same  pursuant  to this  Section  1.10(c);  and  provided,
      further, that the Borrower shall compensate any such affected Banks as set
      forth in Section 1.10(f).

            (d)  Anything  herein  to the  contrary  notwithstanding,  if on any
      Interest Rate Determination Date no Eurodollar Rate is available by reason
      of the  inability  of  the  Agent  to  determine  such  interest  rate  in
      accordance with the definition thereof,  the Agent shall give the Borrower
      and each Bank prompt notice thereof and the Loans  requested to be made as
      Reserve Adjusted Eurodollar Loans shall,  subject to the applicable notice
      requirements, be made as Base Rate Loans.

            (e) Each Bank  agrees  that,  as promptly  as  practicable  after it
      becomes  aware  of the  occurrence  of any  event  or the  existence  of a
      condition that would cause it to be an affected Bank under Section 1.10(b)
      (ii) or (iii),  it will, to the extent not  inconsistent  with such Bank's
      internal policies or any legal or regulatory restrictions,  use reasonable
      efforts to make, fund or maintain the affected Reserve Adjusted Eurodollar
      Loans of such Bank  through  another  lending  office of such Bank if as a
      result thereof the additional  moneys which would otherwise be required to
      be paid in respect of such Loans pursuant to Section  1.10(b)(ii) would be
      materially reduced or the illegality or other adverse  circumstances which
      would otherwise require conversion or prepayment of such Loans pursuant to
      Section  1.10(b)(iii)  would cease to exist, and if, as determined by such
      Bank, in its reasonable discretion,  the making, funding or maintaining of
      such  Loans  through  such  other  lending   office  would  not  otherwise
      materially  adversely  affect such Loans or such Bank. The Borrower hereby
      agrees to pay all  reasonable  expenses  incurred by any Bank in utilizing
      another lending office of such Bank pursuant to this Section 1.10(e).

            (f) The Borrower shall compensate each Bank, within 10 Business Days
      after a written  request by that Bank (which  request shall be accompanied
      by  a  written  notice  pursuant  to  Section  1.10(h)  setting  forth  in
      reasonable detail the basis for the calculation of such amounts),  for all
      reasonable   losses,   expenses  and   liabilities   (including,   without
      limitation,  such factors as any interest  paid by that Bank to lenders of
      funds  borrowed  by it to make or carry its  Reserve  Adjusted  Eurodollar
      Loans and any loss sustained by that Bank in connection with re-employment
      of such funds  (based upon the  difference  between  the amount  earned in
      connection with  re-employment of such funds and the amount payable by the
      Borrower if such funds had been borrowed or remained  outstanding))  which
      that Bank may sustain  with  respect to the  Borrower's  Reserve  Adjusted
      Eurodollar  Loans: (i) if for any reason (other than a default or error by
      that Bank) a Borrowing of any such Reserve  Adjusted  Eurodollar Loan does
      not  occur on a date  specified  therefor  in a Notice of  Borrowing  or a
      Notice of Conversion/Continuation or in a telephonic request for borrowing
      or conversion or continuation,  or a successive Interest Period in respect
      of any such  Reserve  Adjusted  Eurodollar  Loan does not  commence  after
      notice  therefor is given pursuant to Section 1.06, (ii) if any prepayment
      or conversion (as required by Sections 3.01 and 3.02, by  acceleration  or
      otherwise) of any of such Bank's Reserve Adjusted  Eurodollar Loans to the
      Borrower occurs on a date which is not the last day of the Interest Period
      applicable  to that  Loan,  (iii) if any  prepayment  of any  such  Bank's
      Reserve Adjusted  Eurodollar Loans to the Borrower is not made on any date
      specified in a notice of prepayment  given by the  Borrower,  or (iv) as a
      consequence  of any other  failure by the  Borrower  to repay such  Bank's
      Reserve  Adjusted  Eurodollar  Loans to the Borrower  when required by the
      terms of this Agreement.

            (g) Any Bank claiming any  additional  amounts  payable  pursuant to
      this Section 1.10 agrees to use reasonable  efforts  (consistent with such
      Bank's internal policies, legal and regulatory restrictions and commercial
      considerations)  to designate a different  lending office if the making of
      such a designation  would avoid the need for, or reduce the amount of, any
      such additional amounts and would not, in the reasonable  judgment of such
      Bank, be in any way otherwise disadvantageous to such Bank.

            (h) Each Bank shall notify the Borrower of any event occurring after
      the date hereof  entitling such Bank to  compensation  under the foregoing
      paragraphs  of this  Section 1.10 as promptly as  practicable,  but in any
      event within 90 days,  after such Bank obtains actual  knowledge  thereof;
      provided  that if any Bank fails to give such notice  within 90 days after
      it  obtains  actual  knowledge  of such an event,  such Bank  shall,  with
      respect to compensation  payable  pursuant to this Section 1.10 in respect
      of any costs or other  amounts  resulting  from or relating to such event,
      only be  entitled  to payment  under this  Section  1.10 for such costs or
      other  amounts from and after the date 90 days prior to the date that such
      Bank does give such  notice.  Each Bank will  furnish  to the  Borrower  a
      certificate  setting  forth in  reasonable  detail the basis and amount of
      each  request  by such Bank for  compensation  under  this  Section  1.10.
      Determinations by any Bank for purposes of this Section 1.10, including of
      the effect of any regulatory change pursuant to Section 1.10(b)(ii) on its
      costs of maintaining  Loans or its obligation to make Loans, or on amounts
      receivable  by it in  respect of Loans,  and of the  amounts  required  to
      compensate  such  Bank  under  this  Section  1.10,  shall  be  made  on a
      reasonable basis.

            1.11. Capital  Requirements.  If any Bank shall have determined that
the adoption or  effectiveness  after the Effective Date of any applicable  law,
rule or regulation  regarding  capital adequacy,  or any change therein,  or any
change in the  interpretation  or  administration  thereof  by any  governmental
authority,  central bank or comparable agency charged with the interpretation or
administration  thereof,  or  compliance by such Bank or such Bank's parent with
any request or directive  regarding  capital adequacy (whether or not having the
force  of  law)  of any  such  authority,  central  bank  or  comparable  agency
(including in each case any such change  proposed or published prior to the date
hereof),  has or would  have the effect of  reducing  the rate of return on such
Bank's or such Bank's parent's capital or assets as a consequence of such Bank's
obligations  hereunder  to a level  below that  which  such Bank or such  Bank's
parent could have achieved but for such adoption,  effectiveness or change or as
a consequence of an increase in the amount of capital  required to be maintained
by such Bank as a consequence of such Bank's obligations hereunder (including in
each case,  without  limitation,  with respect to any Bank's  Commitment  or any
Loan), then from time to time, within 15 Business Days after demand by such Bank
(with a copy to the Agent),  the Borrower shall pay to such Bank such additional
amount or amounts as will  compensate  such Bank or such Bank's  parent,  as the
case may be, for such reduction.  Each Bank, upon determining in good faith that
any additional  amounts will be payable pursuant to this Section 1.11, will give
prompt written  notice thereof to the Borrower,  which notice shall set forth in
reasonable  detail  the basis of the  calculation  of such  additional  amounts,
although any delay in giving any notice shall not release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section 1.11.

            1.12.  Total  Loan  Commitments;  Limitations  on  Outstanding  Loan
Amounts 1.12. Total Loan  Commitments;  Limitations on Outstanding Loan Amounts.
The original amount of the (i) Total  Commitments is $100,000,000,  (ii) Total A
Term Loan  Commitments is  $25,000,000,  (iii) Total B Term Loan  Commitments is
$50,000,000 and (iv) Total Revolving Loan Commitments is $25,000,000,  including
up to $5,000,000 of Letters of Credit.  Anything  contained in this Agreement to
the  contrary  notwithstanding,  (a) in no event shall the sum of the  aggregate
principal  amount of all outstanding  Term Loans and Revolving Loans of any Bank
at any time exceed such Bank's portion of the Total Commitments, (b) in no event
shall the sum of the aggregate  principal amount of all Term Loans and Revolving
Loans  from all Banks at any time  exceed  the Total  Commitments  and (c) in no
event shall the Total  Utilization of Revolving Loan  Commitments and Letters of
Credit Usage exceed the Total Revolving Loan Commitments.

            1.13. Letters of Credit.

            (A) Letters of Credit.  Subject to the terms and  conditions of this
Agreement  and in  reliance  upon  the  representations  and  warranties  of the
Borrower  set forth  herein and in the other  Credit  Documents,  in addition to
requesting  that the Banks make  Revolving  Loans  pursuant to Section 1.03, the
Borrower may request,  in accordance  with the  provisions of this Section 1.13,
that one or more  Issuing  Banks issue  Letters of Credit for the account of the
Borrower;  provided that (i) the Borrower  shall not request that any Bank issue
any  Letter of Credit and a Bank  shall not be  required  to issue any Letter of
Credit,  if after giving  effect to such  issuance the sum of (a) the Letters of
Credit Usage on the date of such  issuance,  after giving effect to the issuance
of all  Letters of Credit  subject to  outstanding  requests  for  issuance of a
Letter of Credit,  plus (b) the aggregate  principal  amount of Revolving  Loans
then outstanding,  after giving effect to the making of all Revolving Loans then
requested by all outstanding but unfunded Notices of Borrowing, would exceed the
lesser of the Borrower's  Borrowing Base as would be shown in the Borrowing Base
Certificate  that was last required to be delivered  pursuant to Section 6.01 or
the Total Revolving Loan  Commitment then in effect,  (ii) in no event shall any
Issuing Bank issue (w) any Letter of Credit having an expiration date later than
ten (10) Business Days prior to the Final  Revolving Loan Maturity  Date,  after
giving effect to any possible  renewal of such Letter of Credit  pursuant to the
proviso to the following  clause  (ii)(x),  (x) subject to the foregoing  clause
(ii)(w), any Letter of Credit having an expiration date more than one year after
its date of issuance;  provided that,  subject to the foregoing  clause (ii)(w),
this  clause (x) shall not prevent  any  Issuing  Bank from  issuing a Letter of
Credit  containing  a  provision  to the effect  that such Letter of Credit will
automatically  be renewed  annually for a period not to exceed one year, so long
as such  renewable  Letter of Credit  provides  that it shall not at any time be
renewed for an additional year if (I) the Borrower  notifies the Issuing Bank in
writing one Business Day prior to the applicable  renewal date that the Borrower
elects to allow the Letter of Credit to expire  without being  renewed,  or (II)
the Issuing Bank or the Required Banks notify the Borrower in writing,  prior to
the date set forth in such Letter of Credit as the date by which the beneficiary
thereof is to be notified  whether such Letter of Credit is to be renewed,  that
such  Letter of Credit  shall not be so  renewed,  in which case such  Letter of
Credit  shall not be so renewed,  (y) any Letter of Credit,  the initial  stated
amount of which is less than  $5,000,  or (z) any  Letter of Credit (I) which is
governed by laws other than the laws of the State of New York, without regard to
the principles of conflicts of laws, or (II) as to which the  beneficiary is not
required,  by acceptance of the Letter of Credit, to be subject to the exclusive
jurisdiction  of any  competent  state or federal court in the State of New York
with  regard to such Letter of Credit and (iii) the  Borrower  shall not request
that any Issuing Bank issue and no Issuing Bank shall issue any Letter of Credit
if, after giving effect to such issuance and the issuance of all other requested
Letters of Credit,  the then  outstanding  Letters of Credit Usage in respect of
all Letters of Credit  would  exceed  $5,000,000.  The issuance of any Letter of
Credit in  accordance  with the  provisions  of this Section 1.13 shall be given
effect in the calculation of the aggregate  principal  amount of Revolving Loans
outstanding  and the Letters of Credit Usage and shall require the  satisfaction
of each condition set forth in Sections 4.02 and 4.03.

            Immediately  upon the  issuance of each Letter of Credit,  each Bank
other than the Issuing  Bank or Banks shall be deemed to, and hereby  agrees to,
be  irrevocably  obligated  to reimburse  the Issuing  Bank (such  reimbursement
obligation of each Bank in each Letter of Credit being  hereinafter  referred to
as its  "Letter of Credit  Participation")  under such Letter of Credit and each
drawing  thereunder in an amount equal to such Bank's pro rata share (determined
on the basis of such Bank's  Revolving  Loan  Commitment)  of the maximum amount
which is or at any time may become available to be drawn thereunder.

            Each  Letter of Credit may provide  that the  Issuing  Bank may (but
shall not be required to) pay the beneficiary  thereof upon the occurrence of an
Event of Default and the acceleration of the maturity of the Revolving Loans or,
if payment is not then due to the beneficiary,  provide for the deposit of funds
in an  account  to  secure  payment  to the  beneficiary  and that any  funds so
deposited shall be paid to the beneficiary of the Letter of Credit if conditions
to such payment are  satisfied or returned to the Issuing Bank for  distribution
to the Banks (or, if all Obligations  shall have been indefeasibly paid in full,
to the  Borrower) if no payment to the  beneficiary  has been made and the final
date available for drawings under the Letter of Credit has passed.  Each payment
or deposit of funds by an Issuing  Bank as provided in this  paragraph  shall be
treated for all  purposes of this  Agreement  as a drawing  duly honored by such
Issuing Bank under the related Letter of Credit.

            (B) Request for Issuance. Whenever the Borrower desires the issuance
of a Letter of Credit, it shall deliver to the Agent a request for issuance of a
Letter of Credit no later than 1:00 P.M. (New York time) at least three Business
Days,  or such  shorter  period as may be agreed to by any  Issuing  Bank in any
particular  instance,  in advance of the proposed date of issuance.  The request
for issuance with respect to any Letter of Credit shall specify (i) the proposed
date  of  issuance  (which  shall  be a  business  day  under  the  laws  of the
jurisdiction of the Issuing Bank) of such Letter of Credit, (ii) the face amount
of such Letter of Credit, (iii) the expiration date of such Letter of Credit and
(iv) the name and address of the  beneficiary of such Letter of Credit.  As soon
as  practicable  after  delivery  of such  request  for  issuance of a Letter of
Credit,  the  Issuing  Bank for such  Letter of Credit  shall be  determined  as
provided in Section 1.13(C).  Prior to the date of issuance,  the Borrower shall
specify a precise  description  of the  documents  and the verbatim  text of any
certificate  to be presented by the  beneficiary of such Letter of Credit which,
if presented by such  beneficiary  prior to the expiration date of the Letter of
Credit,  would  require the  Issuing  Bank to make  payment  under the Letter of
Credit;  provided  that the  Issuing  Bank,  in its sole  judgment,  may require
changes in any such documents and certificates;  and provided,  further, that no
Letter of Credit shall  require  payment  against a conforming  draft to be made
thereunder  earlier  than 1:00 P.M. in the time zone of the Issuing  Bank on the
Business Day (which  shall be a business day under the laws of the  jurisdiction
of the Issuing Bank) next succeeding the Business Day (which shall be a business
day under the laws of the  jurisdiction  of the Issuing Bank) that such draft is
presented. In determining whether to pay under any Letter of Credit, the Issuing
Bank shall be responsible  only to determine that the documents and certificates
required to be  delivered  under that Letter of Credit have been  delivered  and
that they comply on their face with the  requirements  of that Letter of Credit.
Promptly  after  receipt of a request for issuance of a Letter of Credit and the
determination  of the Issuing Bank thereof,  the Agent shall notify each Bank of
the proposed  issuance,  the identity of the Issuing Bank and the amount of each
other Bank's  respective  participation  therein,  determined in accordance with
Section 1.13(A).

            (C)   Determination of Issuing Bank.

            (1) Upon receipt by the Agent of a request for issuance  pursuant to
Section  1.13(B)  with  respect  to a Letter of  Credit,  in the event the Agent
elects to issue such Letter of Credit,  the Agent shall so notify the  Borrower,
and the Agent shall be the Issuing Bank with respect thereto.  In the event that
the Agent,  in its sole  discretion,  elects not to issue such Letter of Credit,
the Agent shall  promptly so notify the  Borrower,  and the Borrower may request
any other Bank to issue such Letter of Credit.  Each such Bank so  requested  to
issue such Letter of Credit  shall  promptly  notify the  Borrower and the Agent
whether or not, in its sole  discretion,  it has elected to issue such Letter of
Credit, and any such Bank that so elects to issue such Letter of Credit shall be
the Issuing Bank with respect  thereto.  In the event that all other Banks shall
have declined to issue such Letter of Credit, notwithstanding the prior election
of the Agent not to issue such Letter of Credit, the Agent shall be obligated to
issue the Letter of Credit  requested  by the  Borrower and shall be the Issuing
Bank with  respect to such  Letter of Credit.  In no event  shall any Bank be an
Issuing  Bank if such Bank  would  incur  increased  costs  pursuant  to Section
1.13(H)  as a result of being  the  Issuing  Bank,  unless  consented  to by the
Borrower.  No Issuing  Bank shall  issue any Letter of Credit  denominated  in a
currency other than Dollars.

            (2) Each  Issuing Bank that elects to issue a Letter of Credit shall
promptly give written notice to the Agent and each other Bank of the information
required under Sections 1.13(B)(i)-(iv) relating to the Letter of Credit.

            (D) Payments of Amounts Drawn Under Letters of Credit.  In the event
of any  request  for  drawing  under any  Letter  of  Credit by the  beneficiary
thereof,  the Issuing  Bank shall notify the Borrower and the Agent on or before
the date on which such  Issuing  Bank  intends to honor  such  drawing,  and the
Borrower  shall  reimburse such Issuing Bank on the day on which such drawing is
honored  in an  amount in same day funds  equal to the  amount of such  drawing;
provided   that,   anything   contained  in  this   Agreement  to  the  contrary
notwithstanding,  (i) unless the Borrower shall have notified the Agent and such
Issuing Bank prior to 10:00 A.M. (New York time) on the Business Day of the date
of such drawing that the Borrower intends to reimburse such Issuing Bank for the
amount of such drawing  with funds other than the  proceeds of Revolving  Loans,
the  Borrower  shall be deemed to have timely given a Notice of Borrowing to the
Agent  requesting the Banks to make Revolving  Loans that are Base Rate Loans on
the date on which such  drawing  is honored in an amount  equal to the amount of
such  drawing,  and (ii)  subject to  satisfaction  or waiver of the  conditions
specified in Section 4.02,  the Banks shall,  on the date of such drawing,  make
Revolving  Loans  that are Base Rate Loans in the  amount of such  drawing,  the
proceeds  of which  shall be applied  directly  by the Agent to  reimburse  such
Issuing Bank for the amount of such drawing;  and provided  further that if, for
any reason, proceeds of Revolving Loans are not received by such Issuing Bank on
such date in an amount equal to the amount of such drawing,  the Borrower  shall
reimburse  such Issuing Bank, on the Business Day (which shall be a business day
under the laws of the jurisdiction of such Issuing Bank)  immediately  following
the date of such drawing,  in an amount in same day funds equal to the excess of
the amount of such drawing over the amount of such Revolving Loans, if any, that
are so received,  plus accrued  interest on such amount at the rate set forth in
Section 1.13(F)(1)(i).

            (E) Payment by Banks.  In the event that the Borrower  shall fail to
reimburse an Issuing  Bank as provided in Section  1.13(D) in an amount equal to
the amount of any drawing  honored by such Issuing Bank under a Letter of Credit
issued  by it,  such  Issuing  Bank  shall  promptly  notify  each  Bank  of the
unreimbursed amount of such drawing and of such Bank's respective  participation
therein.  Each Bank shall make available to such Issuing Bank an amount equal to
its respective  participation  in same day funds,  at the office of such Issuing
Bank  specified in such notice,  not later than 1:00 P.M. (New York time) on the
Business Day (which  shall be a business day under the laws of the  jurisdiction
of such Issuing Bank) after the date notified by such Issuing Bank. In the event
that any Bank fails to make  available  to such  Issuing Bank the amount of such
Bank's  participation  in such  Letter  of Credit as  provided  in this  Section
1.13(E),  such  Issuing  Bank shall be entitled to recover such amount on demand
from such Bank together with interest at the customary rate set by the Agent for
the  correction of errors among banks for three  Business Days and thereafter at
the Base Rate.  Each Issuing Bank shall  distribute to each other Bank which has
paid all amounts  payable by it under this  Section  1.13(E) with respect to any
Letter of Credit issued by such Issuing Bank such other Bank's pro rata share of
all payments received by such Issuing Bank from the Borrower in reimbursement of
drawings  honored by such  Issuing  Bank under such  Letter of Credit  when such
payments  are  received.  Nothing  in this  Section  1.13(E)  shall be deemed to
relieve any Bank from its obligation to pay all amounts payable by it under this
Section  1.13(E) with respect to any Letter of Credit  issued by an Issuing Bank
or to prejudice  any rights that the Borrower or any other Bank may have against
a Bank as a result of any  default by such Bank  hereunder  and no Bank shall be
responsible  for the failure of any other Bank to pay its pro rata share payable
under this Section 1.13(E).

            (F)   Compensation.

            (1) The Borrower agrees to pay the following  amount with respect to
all Letters of Credit:

            (i) with  respect  to  drawings  made  under any  Letter of  Credit,
      interest,  payable on demand,  on the amount paid by such  Issuing Bank in
      respect of each such  drawing from and  including  the date of the drawing
      through the date such amount is reimbursed by the Borrower  (including any
      such  reimbursement  out of the  proceeds of Revolving  Loans  pursuant to
      Section  1.13(D))  at a rate  which  is equal to the  interest  rate  then
      applicable to Base Rate Loans for the period from the date of such drawing
      to and including the first Business Day after the date of such drawing and
      thereafter  at a rate  equal  to 2% per  annum  in  excess  of the rate of
      interest otherwise payable under this Agreement for Base Rate Loans during
      such period;  provided that if the Banks make a Revolving  Loan on any day
      the  proceeds  of which are to be applied to payment of the amount paid by
      such Issuing Bank,  the Borrower shall not be obligated to pay interest on
      such amount for such day pursuant to this clause (i); and

           (ii) with  respect to the  amendment  or  transfer  of each Letter of
      Credit  and each  drawing  made  thereunder,  documentary  and  processing
      charges in accordance with such Issuing Bank's standard  schedule for such
      charges in effect at the time of such amendment,  transfer or drawing,  as
      the case may be.

            (2) The Borrower agrees to pay to the Agent for distribution to each
Bank in respect of all Letters of Credit  outstanding such Bank's pro rata share
of a commission  equal to 2% per annum of the maximum amount available from time
to time to be drawn under such outstanding Letters of Credit, payable in arrears
on and  through  the  last  day of  each  fiscal  quarter  of the  Borrower  and
calculated on the basis of a 365-day year and the actual number of days elapsed.
Upon the happening and during the  continuance of an Event of Default  described
in Section 8.01, the commission  referred to in the preceding  sentence shall be
4% per annum.

            (3) The  Borrower  agrees to pay to each  Issuing Bank in respect of
each Letter of Credit  issued by each such  Issuing Bank on the date of issuance
an amount  equal to the greater of (A) 1/4% of the maximum  amount  available at
any time to be drawn under such Letter of Credit or (B) $1,500.

            Amounts payable under clauses (1)(i) and (2) of this Section 1.13(F)
shall be paid to the Agent on  behalf of the  Banks.  The Agent  shall  promptly
distribute to each Bank its pro rata share of such amount. Amounts payable under
clauses  (1)(ii) and (3) of this Section  1.13(F)  shall be paid directly to the
Issuing Bank.

            (G)  Obligations  Absolute.   The  obligation  of  the  Borrower  to
reimburse each Issuing Bank for drawings made under the Letters of Credit issued
by it  and  the  obligations  of  the  Banks  under  Section  1.13(E)  shall  be
unconditional  and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances  including,  without limitation,
the following circumstances:

            (1)any lack of validity or enforceability of any Letter of Credit;

            (2)the existence of any claim,  setoff,  defense or other right that
      the Borrower or any Affiliate of the Borrower or any other Person may have
      at any time  against a  beneficiary  or any  transferee  of any  Letter of
      Credit  (or any  persons  or  entities  for whom any such  beneficiary  or
      transferee  may be  acting),  such  Issuing  Bank,  any Bank or any  other
      Person,  whether  in  connection  with this  Agreement,  the  transactions
      contemplated herein or any unrelated transaction;

            (3)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, if not apparent from the documents presented;

            (4)payment  by such Issuing Bank under any Letter of Credit  against
      presentation of a demand, draft or certificate or other document that does
      not comply  with the terms of such Letter of Credit  unless  such  Issuing
      Bank  shall have acted in bad faith or with  willful  misconduct  or gross
      negligence in issuing such payment;

     (5)any other circumstance or happening whatsoever that is similar to any of
the foregoing; or
            (6)the fact that a Default or Event of Default  shall have  occurred
and be continuing.

            (H)  Additional  Payments.  If by reason of (a) any change after the
Effective  Date in  applicable  law,  regulation,  rule,  decree  or  regulatory
requirement or any change in the  interpretation  or application by any judicial
or  regulatory  authority of any law,  regulation,  rule,  decree or  regulatory
requirement  or (b)  compliance  by  any  Issuing  Bank  or any  Bank  with  any
direction,  request or  requirement  (whether or not having the force of law) of
any governmental or monetary authority including, without limitation, Regulation
D:

            (i) such Issuing Bank or any Bank shall be subject to any tax, levy,
      charge or withholding of any nature or to any variation  thereof or to any
      penalty with respect to the  maintenance or fulfillment of its obligations
      under this Section 1.13,  whether  directly or by such being imposed on or
      suffered by such  Issuing  Bank or any Bank;  provided,  however,  that no
      payment  shall be  required  to be made by the  Borrower  pursuant to this
      clause (i) with  respect to changes in the rate of any tax on or  measured
      by the net income of a Bank  (including  any  franchise  or similar tax so
      measured)  pursuant to the income tax laws of the United  States or of the
      jurisdiction in which it is incorporated or organized or the  jurisdiction
      where such Bank's lending office is located;

           (ii) any  reserve,  deposit  or  similar  requirement  is or shall be
      applicable,  imposed or modified in respect of any Letter of Credit issued
      by such Issuing Bank or participations therein purchased by any Bank; or

          (iii)  there  shall be  imposed on such  Issuing  Bank or any Bank any
      other  condition  regarding this Section 1.13, any Letter of Credit or any
      participation therein;

and the result of the foregoing is to directly or  indirectly  increase the cost
to such Issuing Bank or any Bank of issuing, making or maintaining any Letter of
Credit or of purchasing or maintaining any participation  therein,  or to reduce
the amount  receivable in respect thereof by such Issuing Bank or any Bank, then
and in any such case such Issuing Bank or such Bank shall,  after the additional
cost is incurred or the amount received is reduced,  notify the Borrower and the
Borrower  shall pay within 10 Business  Days after  demand such  amounts as such
Issuing Bank or such Bank may specify to be necessary to compensate such Issuing
Bank or such Bank for such  additional  cost or reduced  receipt,  together with
interest on such amount from the date demanded  until payment in full thereof at
a rate per annum  equal at all times to the rate  applicable  to Base Rate Loans
then in effect;  provided  that if any Bank fails to give such notice  within 90
days after it obtains actual knowledge of such an event,  such Bank shall,  with
respect to compensation  payable  pursuant to this Section 1.13(H) in respect of
any costs or other  amounts  resulting  from or relating to such event,  only be
entitled to payment  under this Section  1.13(H) for such costs or other amounts
from and after the date 90 days  prior to the date that such Bank does give such
notice;  and  provided,  further,  that each Bank  agrees  that,  as promptly as
practicable after it becomes aware of the existence of the foregoing conditions,
it will, to the extent not  inconsistent  with such Bank's internal  policies or
any legal or regulatory  restrictions,  use reasonable efforts to issue, make or
maintain the affected Letter of Credit or purchase or maintain any participation
therein  through  another lending office of such Bank if as a result thereof the
additional moneys which would otherwise be required to be paid to compensate for
such  additional  cost or reduced  receipt with respect to such Letter of Credit
pursuant to this Section  1.13(H) would be reduced and if, as determined by such
Bank, in its reasonable discretion,  the issuance, making or maintaining of such
Letter of Credit or the purchasing or maintaining of any  participation  therein
through such other  lending  office  would not  otherwise  materially  adversely
affect  such  Letter of  Credit or such  Bank.  Each  Bank will  furnish  to the
Borrower a certificate  setting forth in reasonable  detail the basis and amount
of each  request  by such Bank for  compensation  under  this  Section  1.13(H).
Determinations  by any Bank for purposes of this Section  1.13(H),  including of
the effect of any regulatory  change pursuant to Section 1.13(H) on its costs of
making  or   maintaining   Letters  of  Credit  (or  purchasing  or  maintaining
participations therein), or on amounts receivable by it in respect of Letters of
Credit,  and of the amounts  required to compensate such Bank under this Section
1.13(H), shall be made on a reasonable basis. A certificate in reasonable detail
as to the amount of such  increased  cost or reduced  receipt,  submitted to the
Borrower  and the Agent by that  Issuing  Bank or any Bank,  as the case may be,
shall, except for demonstrable  error, be final,  conclusive and binding for all
purposes.

            If any Bank shall be entitled to payments  under this Section  1.13,
such Bank,  within a reasonable  time after becoming  entitled to such payments,
shall (unless otherwise  required by a governmental  authority or as a result of
any law, rule,  regulation,  order or similar directive applicable to such Bank)
designate a different  lending office from that initially  selected by such Bank
to which  payments  are to be made  under  this  Agreement  or under any  Credit
Document, if such designation would avoid the need for (or materially reduce the
amount of) such payments and would not, in the  reasonable  opinion of the Bank,
be otherwise disadvantageous to such Bank.

            (I) Indemnification; Nature of Issuing Bank's Duties. In addition to
amounts payable as elsewhere provided in this Section 1.13, without duplication,
the Borrower hereby agrees to protect, indemnify, pay and save each Issuing Bank
harmless  from and against any and all claims,  demands,  liabilities,  damages,
losses,  costs, charges and expenses (including  reasonable  attorneys' fees and
allocated  costs of internal  counsel)  which such  Issuing Bank may incur or be
subject to as a  consequence,  direct or  indirect,  of (i) the  issuance of the
Letters of Credit or (ii) the  failure of such  Issuing  Bank to honor a drawing
under any  Letter of  Credit,  in each case 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 (all such acts or omissions  herein called
"Government Acts").

            As between the Borrower and each Issuing Bank, the Borrower  assumes
all risks of the acts and  omissions  of, or  misuse  of the  Letters  of Credit
issued by such Issuing Bank by, the respective  beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, such Issuing Bank
shall not be responsible:  (i) for the form,  validity,  sufficiency,  accuracy,
genuineness  or  legal  effects  of  any  document  submitted  by any  party  in
connection  with the  application for and issuance of any such Letter of Credit,
even  if it  should  in  fact  prove  to be in  any  or  all  respects  invalid,
insufficient,  inaccurate,  fraudulent  or  forged;  (ii)  for the  validity  or
sufficiency  of any  instrument  transferring  or  assigning  or  purporting  to
transfer  or  assign  any such  Letter  of  Credit  or the  rights  or  benefits
thereunder  or  proceeds  thereof,  in whole or in  part,  that may  prove to be
invalid or ineffective  for any reason;  (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with  conditions  required in order to
draw upon such Letter of Credit;  (iv) for errors,  omissions,  interruptions or
delays in transmission or delivery of any messages,  by mail, cable,  telegraph,
telex or  otherwise,  whether  or not  they are in  cipher;  (v) for  errors  in
interpretation   of  technical  terms;  (vi)  for  any  loss  or  delay  in  the
transmission  or otherwise  of any document  required in order to make a drawing
under  any such  Letter  of Credit  or of the  proceeds  thereof;  (vii) for the
misapplication  by the  beneficiary of any such Letter of Credit of the proceeds
of any  drawing  under such  Letter of Credit;  and (viii) for any  consequences
arising from causes beyond the control of such Issuing Bank, including,  without
limitation,  any Government  Acts.  None of the above shall affect,  impair,  or
prevent the vesting of any of such Issuing Bank's rights or powers hereunder.

            In  furtherance  and extension and not in limitation of the specific
provisions  hereinabove  set forth,  any action  taken or omitted by any Issuing
Bank in  connection  with the  Letters  of Credit  issued  by it or the  related
certificates, if taken or omitted in good faith, shall not put such Issuing Bank
under any resulting liability to the Borrower.

            Notwithstanding  anything to the contrary  contained in this Section
1.13(I),  the Borrower shall have no obligation to indemnify any Issuing Bank or
any Bank in respect of any liability  incurred by such Issuing Bank or such Bank
arising solely out of the gross negligence,  bad faith or willful  misconduct of
such Issuing  Bank or such Bank or out of the wrongful  dishonor by such Issuing
Bank or such Bank of a proper  demand for  payment  under the  Letters of Credit
issued by it.

            1.14.  Restatement Effective Date; Effect of Restatement.
(a)  This Agreement shall become effective as provided in Section 11.10.

            (b)   Upon the effectiveness of this Agreement in accordance
with the terms hereof:

            (i) the terms and conditions of the Existing Credit  Agreement shall
      be restated in their entirety, but only with respect to the rights, duties
      and  obligations  among  the  Agent,  the  Banks,  Holdings  and any other
      Guarantor  and the  Borrower  accruing  from  and  after  the  Restatement
      Effective Date;

           (ii) this  Agreement  shall  not in any way  release  or  impair  the
      rights,  duties,  obligations  or Liens  created  pursuant to the Existing
      Credit  Agreement  or any other  Credit  Document  or affect the  relative
      priorities  thereof,  in each  case to the  extent  in  force  and  effect
      hereunder and thereunder as of the  Restatement  Effective Date and except
      as modified hereby or thereby or by documents,  instruments and agreements
      executed and  delivered in connection  herewith or  therewith,  and all of
      such rights,  duties,  obligations  and Liens are ratified and affirmed by
      the parties hereto;

          (iii)  notwithstanding  any other  provisions of this  Agreement,  all
      indemnification  obligations  of the Borrower  under the  Existing  Credit
      Agreement  and any other Credit  Document  shall survive the execution and
      delivery of this Agreement and shall continue in full force and effect for
      the benefit of the Agent and the Banks;

           (iv) the  obligations  incurred under the Existing  Credit  Agreement
      shall,  to the  extent  outstanding  on the  Restatement  Effective  Date,
      continue to be outstanding under this Agreement and shall not be deemed to
      be paid,  released,  discharged or otherwise satisfied by the execution of
      this  Agreement,  and this  Agreement  shall not be deemed to constitute a
      refinancing, substitution or novation of such obligations;

            (v) all of the outstanding loans under the Existing Credit Agreement
      immediately  prior to the Closing Date of each Bank which shall be a party
      to this  Agreement  (for each such Bank,  such amount,  the "Existing Loan
      Amount")  shall be  automatically  converted  into,  and shall,  as of the
      Closing  Date,  constitute  a portion of, A Term  Loans,  B Term Loans and
      Revolving Loans in the amounts set forth on Annex I hereto;

           (vi) the  execution,  delivery and  effectiveness  of this  Agreement
      shall not operate as a waiver of any right,  power or remedy of any of the
      Banks or the Agent under the Existing Credit  Agreement,  nor constitute a
      waiver of any covenant,  agreement or obligation of the Borrower under the
      Existing  Credit  Agreement,  except to the extent that any such covenant,
      agreement  or  obligation  is no longer set forth in this  Agreement or is
      modified hereby;

          (vii) any and all  references in the Credit  Documents to the Existing
      Credit Agreement shall, without further action of the parties, be deemed a
      reference to the Existing Credit  Agreement as restated by this Agreement,
      and as this  Agreement  shall be further  amended or amended and  restated
      from time to time hereafter; and

         (viii) on the Restatement Effective Date, the Banks holding notes (each
      an  "Existing  Bank" and  together,  the  "Existing  Banks")  executed and
      delivered under the Existing Credit Agreement (the "Existing Notes") shall
      surrender  such Existing Notes to the Borrower or deliver a certificate to
      the Agent certifying that such Existing Notes have been lost and cannot be
      found,  which certificate shall be accompanied by a standard  indemnity by
      such Existing Bank to the Borrower reasonably  acceptable to the Agent and
      the Borrower  with respect to such lost Existing  Notes;  upon the Agent's
      receipt of such Existing Notes or certificate  (and  indemnity)  from each
      Existing  Bank,  as the case may be, and the  Borrower  shall  execute and
      deliver to the Agent for delivery to each Existing Bank (A) an A Term Note
      in the principal  amount of such Existing Bank's A Term Loan Commitment in
      accordance  with the  provisions  of Section  1.01(a)(i)  (including  that
      portion of such Existing Bank's Existing Loan Amount converted into A Term
      Loans pursuant to Section 1.14(b)(v)),  (B) a B Term Note in the principal
      amount of such Existing  Bank's B Term Loan  Commitment in accordance with
      the  provisions  of Section  1.01(a)(i)  (including  that  portion of such
      Existing Bank's Existing Loan Amount  converted into B Term Loans pursuant
      to Section 1.14(b)(v)) and (C) a Revolving Note in the principal amount of
      such Bank's Revolving Loan Commitment in accordance with the provisions of
      Section  1.01(b)  (including that portion of such Existing Bank's Existing
      Loan  Amount   converted   into   Revolving   Loans  pursuant  to  Section
      1.14(b)(v)).

            SECTION 2.  Commitments.

            2.01. Voluntary Reduction of Commitments. Upon at least one Business
Day's prior written notice (or telephonic notice promptly  confirmed in writing)
to the Agent at the  Agent's  Office  (which  notice  the Agent  shall  promptly
transmit  to each of the  Banks),  the  Borrower  shall have the right,  without
premium or penalty,  to terminate the unutilized  portion of the Total Revolving
Loan  Commitments,  in part or in whole;  provided that (x) any such termination
shall  apply to  proportionately  and  permanently  reduce  the  Revolving  Loan
Commitment of each of the Banks and (y) any partial  reduction  pursuant to this
Section 2.01 shall be in the amount of at least $500,000 and integral  multiples
of  $100,000  in  excess  of that  amount;  provided,  further,  that the  Total
Revolving  Loan  Commitments  shall not be  reduced  to an amount  less than the
aggregate Revolving Loans and Letters of Credit Usage then outstanding.

            2.02. Mandatory Adjustments of Commitments, etc..  (a)  The
Total Revolving Loan Commitments shall terminate on the Revolving Loan
Commitment Termination Date.

            (b) The  Total A Term Loan  Commitments  shall  terminate  as to the
amount of any portion of the Total A Term Loan  Commitments  not utilized by the
Borrower on the Closing Date.

            (c) The  Total B Term Loan  Commitments  shall  terminate  as to the
amount of any portion of the Total B Term Loan  Commitments  not utilized by the
Borrower on the Closing Date.

            (d) The Total Term Loan Commitments shall  automatically be reduced,
on a pro rata basis,  between the Total A Term Loan  Commitments and the Total B
Term Loan  Commitments,  by the amount of any reduction of the funding necessary
for the  Acquisition  (excluding  any  purchase  price  adjustments  relating to
working capital of the Borrower, which shall be used to repay Revolving Loans).

            (e) The Total Term Loan Commitments  shall be reduced on the date on
which any payments of principal on the Term Loans are made (other than  pursuant
to Section 3.02(A)(a)) in an aggregate amount equal to such payments.

            (f) Each reduction to the Total A Term Loan Commitments or the Total
B Term Loan  Commitments or termination of the Total Revolving Loan  Commitments
pursuant to this  Section  2.02 shall apply  proportionately  to the A Term Loan
Commitment,  the B Term Loan Commitment or the Revolving Loan Commitment, as the
case may be, of each Bank.

            (g) The  Total  Revolving  Loan  Commitments  shall  be  permanently
reduced in the amount and at the time of any payment on the Loans required to be
applied to the Revolving  Loans or the  Revolving  Loan  Commitment  pursuant to
Section 3.02(B)(a).

            2.03. Commitment Commission.  The Borrower agrees to pay the Agent a
commitment commission ("Commitment Commission") for the account of each Bank for
the period from and including the Closing Date to but not including the date the
Total Revolving Loan Commitments have been terminated,  computed at a rate equal
to 1/4% per annum on the  daily  average  Unutilized  Commitment  of such  Bank.
Accrued  Commitment  Commission  shall be due and payable in arrears on the last
Business Day of each March,  June,  September and December  commencing June 1997
and on the  Revolving  Loan  Commitment  Termination  Date,  based on the actual
number of days elapsed over a year of 360 days.

            SECTION 3.  Payments.

            3.01.  Voluntary  Prepayments.  The Borrower shall have the right to
prepay  Term  Loans and  Revolving  Loans in whole or in part from time to time,
without  premium or penalty,  on the  following  terms and  conditions:  (i) the
Borrower  shall  give  the  Agent  at the  Agent's  Office  written  notice  (or
telephonic  notice  promptly  confirmed  in writing) of its intent to prepay the
Loans,  the  amount of such  prepayment  and,  in the case of  Reserve  Adjusted
Eurodollar Loans, the specific  Borrowing or Borrowings  pursuant to which made,
which  notice  shall be given by the Borrower at least one Business Day prior to
the date of such  prepayment  and which notice shall  promptly be transmitted by
the Agent to each of the Banks;  (ii) each partial  prepayment  of any Borrowing
shall be in an  aggregate  principal  amount of at least  $500,000  and integral
multiples  of  $100,000  in  excess of that  amount;  provided  that no  partial
prepayment  of  Reserve  Adjusted  Eurodollar  Loans made  pursuant  to a single
Borrowing  under  the Loan  Facility  (or  Portion  thereof)  shall  reduce  the
outstanding  Loans made  pursuant to such  Borrowing  to an amount less than the
Minimum Borrowing Amount;  and (iii) Reserve Adjusted  Eurodollar Loans may only
be prepaid  pursuant to this Section 3.01 on the last day of an Interest  Period
applicable thereto.  Voluntary prepayments of Term Loans shall be applied to the
prepayment of the  outstanding  principal  amount of Term Loans pro rata between
the A Term Loans and the B Term Loans.  Voluntary prepayments of Loans under the
A Term Loan  Facility  shall be applied  to the  prepayment  of the  outstanding
principal  amount of A Term  Loans pro rata to all  remaining  Scheduled  A Term
Loans Principal Payments such that each Scheduled A Term Loans Principal Payment
then  remaining  shall be reduced by an amount  equal to the product of (A) such
payment and (B) a fraction of which the numerator is equal to the amount of such
Scheduled A Term Loans  Principal  Payment then remaining and the denominator is
equal to the amount of all Scheduled A Term Loans Principal Payments  remaining.
Voluntary  prepayments  of Loans under the B Term Loan Facility shall be applied
to the prepayment of the outstanding  principal  amount of B Term Loans pro rata
to all  remaining  Scheduled  B Term  Loans  Principal  Payments  such that each
Scheduled B Term Loans  Principal  Payment then remaining shall be reduced by an
amount  equal to the product of (A) such payment and (B) a fraction of which the
numerator  is equal to the  amount  of such  Scheduled  B Term  Loans  Principal
Payment  then  remaining  and the  denominator  is  equal to the  amount  of all
Scheduled B Term Loans Principal Payments remaining.

            3.02. Mandatory Prepayments.

            (A)   Requirements:

            (a) The Borrower shall prepay the  outstanding  principal  amount of
      the A Term Loans, the B Term Loans or the Revolving Loans, as the case may
      be, on any date on which the  aggregate  outstanding  principal  amount of
      such Loans (after giving effect to any other  repayments or prepayments on
      such day together with, in the case of Revolving  Loans,  the  outstanding
      principal amount of Letters of Credit Usage) exceeds the Total A Term Loan
      Commitments, the Total B Term Loan Commitments or the Total Revolving Loan
      Commitments, as the case may be, in the amount of such excess.

            (b) If the aggregate principal amount of outstanding Revolving Loans
      and Letters of Credit Usage exceeds the Borrowing Base as set forth in the
      Borrower's most recent Borrowing Base Certificate required to be delivered
      pursuant to Section 6.01 of this  Agreement  (such  amount is  hereinafter
      referred to as the "Excess"), then the Borrower shall prepay its Revolving
      Loans in a  principal  amount  equal  to such  Excess  no  later  than two
      Business  Days  after the  Borrower  has  delivered,  or was  required  to
      deliver, such Borrowing Base Certificate to the Agent and the Banks.

            (c) The Borrower  shall cause to be paid each Scheduled A Term Loans
      Principal  Payment on the A Term Loans  until the A Term Loans are paid in
      full in the  amounts  and at the  times  specified  in the  definition  of
      Scheduled A Term Loans Principal  Payments to the extent that  prepayments
      have not previously  been applied to such Scheduled A Term Loans Principal
      Payments  (and such  Scheduled A Term Loans  Principal  Payments  have not
      otherwise been reduced) pursuant to the terms hereof.

            (d) The Borrower  shall cause to be paid each Scheduled B Term Loans
      Principal  Payment on the B Term Loans  until all B Term Loans are paid in
      full,  in the  amounts  and at the time  specified  in the  definition  of
      Scheduled B Term Loans Principal  Payments to the extent that  prepayments
      have not previously  been applied to such Scheduled B Term Loans Principal
      Payments  (and such  Scheduled B Term Loans  Principal  Payments  have not
      otherwise been reduced) pursuant to the terms hereof.

            (e)  As  promptly  as  practicable,  but in any  event  within  five
      Business Days of the date of receipt by Holdings,  the Borrower and/or any
      of the Borrower's  Subsidiaries,  as the case may be, of Net Cash Proceeds
      or Net  Financing  Proceeds,  an amount equal to such Net Cash Proceeds or
      Net Financing Proceeds shall be applied as provided in Section 3.02(B)(a);
      provided  that with respect to any Net Cash Proceeds of the sale of equity
      securities of Holdings,  the Borrower or any of its  Subsidiaries,  clause
      (g) of this  Section  3.02(A) will govern and that with respect to any Net
      Cash Proceeds from any  Destruction or Taking,  clause (i) of this Section
      3.02(A) will govern.

            (f) As  promptly  as  practicable,  but in any event  within 90 days
      after the last day of each fiscal year of the  Borrower,  commencing  with
      fiscal  year  1997,  an amount  equal to 50% of Excess  Cash Flow for such
      fiscal year shall be applied as provided in Section 3.02(B)(a).

            (g)  As  promptly  as  practicable,  but in any  event  within  five
      Business Days of the date of the receipt thereof by Holdings, the Borrower
      and/or any of its  Subsidiaries,  an amount  equal to 100% of the proceeds
      received by the  Borrower or Holdings  (including  capital  contributions,
      other than those  referred  to in clauses  (i) and (ii) of this  paragraph
      (g),  received  by  the  Borrower  or any of  its  Subsidiaries)  or  such
      Subsidiary (net of underwriting  discounts and commissions and other costs
      and expenses directly associated  therewith) of the sale after the Closing
      Date of equity  securities  (other  than  proceeds  from the  issuance  of
      capital  stock (i) of Holdings,  the  Borrower or any of its  Subsidiaries
      pursuant to any pension,  stock option,  profit  sharing or other employee
      benefit  plan  or  agreement  of  Holdings,  the  Borrower  or  any of its
      Subsidiaries in the ordinary course of business or (ii) by a Subsidiary to
      another  Subsidiary  or to the  Borrower)  shall be applied as provided in
      Section 3.02(B)(a).

            (h)  As  promptly  as  practicable,  but in any  event  within  five
      Business Days of the date of the receipt thereof by the Borrower or any of
      its Subsidiaries, an amount equal to 100% of any surplus net assets of any
      Pension Plan returned to the Borrower or any of its Subsidiaries  shall be
      applied as provided in Section 3.02(B)(a).

            (i) At the  Agent's  discretion,  on the date of receipt  thereof by
      Holdings, the Borrower and/or any of its Subsidiaries,  an amount equal to
      100%  of  any  proceeds  received  due to  loss,  damage,  destruction  or
      condemnation of or to Assets  (collectively,  "Loss  Proceeds"),  less any
      portion of such proceeds not in excess of $500,000, in the aggregate,  per
      fiscal year to be used for rebuilding,  repairing or replacing  productive
      assets of a kind then used or usable in the  business of the  Borrower and
      its  Subsidiaries  (in each case to the extent  permitted by the Mortgages
      and the  Security  Documents)  within  180 days of  receipt  of such  Loss
      Proceeds  (or such  longer  periods as may be  consented  to by the Agent,
      which consent shall not be  unreasonably  withheld)  shall be delivered by
      Holdings,  the Borrower and/or its Subsidiaries to the Agent to be held by
      the Agent in a cash  collateral  account bearing  interest  payable to the
      Borrower at a rate per annum (meaning 360 days) equal to the Federal Funds
      Rate.  Upon the Borrower's  request,  Agent shall release such proceeds to
      the  Borrower  for  reinvestment,  rebuilding,  repair or  replacement  as
      described  above.  To the extent the  Borrower  fails to use any or all of
      such  released  proceeds for such  rebuilding,  repair or  replacement  of
      assets  within 180 days (or such longer  periods as may be consented to by
      the Agent,  which  consent  shall not be  unreasonably  withheld)  of such
      release, the Borrower shall, at the Agent's discretion,  return the unused
      portion of such  released  funds to the Agent and authorize and direct the
      Agent to apply such proceeds as provided in Section 3.02(B)(a).

            (j)  As  promptly  as  practicable,  but in any  event  within  five
      Business Days of the date of receipt by Holdings,  the Borrower and/or its
      Subsidiaries  of any tax  refund,  an amount  equal to 100% of such refund
      paid to Holdings,  the Borrower  and/or any of its  Subsidiaries  shall be
      applied as provided in Section  3.02(B)(a);  provided  that such refund or
      refunds are not promptly  applied by Holdings,  the Borrower and/or any of
      its Subsidiaries to the payment of future tax liabilities.

            (B)   Application:

            (a)  Prepayments to be applied  pursuant to this Section  3.02(B)(a)
      shall be applied without  penalty or premium (other than Reserve  Adjusted
      Eurodollar Rate breakage costs, if any) as follows: (i) first, to the Term
      Portion,  pro rata between the Scheduled A Term Loans  Principal  Payments
      and the Scheduled B Term Loans  Principal  Payments,  in pro rata order of
      maturity;  and  (ii)  second,  to repay  Revolving  Loans;  provided  that
      prepayments  required by Section  3.02(A)(b) hereof shall be applied first
      to repay Revolving Loans.

            (b) With  respect to each  prepayment  of Loans  required by Section
      3.02(A),  the Borrower  shall give the Agent two Business  Days notice and
      may designate the Types of Loans and the specific  Borrowing or Borrowings
      which are to be prepaid;  provided that (i)(x) Reserve Adjusted Eurodollar
      Loans may be designated for prepayment  pursuant to this Section 3.02 only
      on the  last day of an  Interest  Period  applicable  thereto  unless  all
      Reserve  Adjusted  Eurodollar  Loans with Interest  Periods ending on such
      date of  required  prepayment  and all Base  Rate  Loans  have been or are
      concurrently  being  paid in full  and (y) if any  prepayment  of  Reserve
      Adjusted Eurodollar Loans made pursuant to a single Borrowing shall reduce
      the  outstanding  Loans made pursuant to such  Borrowing to an amount less
      than the Minimum  Borrowing  Amount,  such Borrowing shall  immediately be
      converted into Base Rate Loans; and (ii) each prepayment of any Loans made
      pursuant to a single Borrowing shall be applied pro rata among such Loans.
      In the absence of a designation by the Borrower,  the Agent shall, subject
      to  the  above,  make  such  designation  in  its  sole  discretion.   All
      prepayments  shall  include  payment of accrued  interest on the principal
      amount so  prepaid,  shall be applied to the  payment of  interest  before
      application to principal and shall include amounts payable,  if any, under
      Section 1.10(f).

            3.03.  Method  and  Place  of  Payment.   (a)  Except  as  otherwise
specifically provided herein, all payments under this Agreement shall be made to
the Agent, for the ratable account of the Banks entitled thereto, not later than
1:00 P.M. (New York time) on the date when due and shall be made in  immediately
available  funds in lawful money of the United  States of America to the account
specified  therefor by the Agent or if no account has been so  specified  at the
Agent's Office,  it being  understood that written notice by the Borrower to the
Agent to make a payment from the funds in the Borrower's  account at the Agent's
Office shall  constitute  the making of such payment to the extent of such funds
held in such account.  The Agent will thereafter  cause to be distributed on the
same day (if payment is actually received by the Agent in New York prior to 1:00
P.M. (New York time) on such day) funds  relating to the payment of principal or
interest or fees  ratably to the Banks  entitled to receive any such  payment in
accordance with the terms of this Agreement.  If and to the extent that any such
distribution  shall  not be so made by the  Agent  in full on the  same  day (if
payment is actually  received by the Agent prior to 1:00 P.M. (New York time) on
such day),  the Agent shall pay to each Bank its ratable amount thereof and each
such Bank shall be entitled to receive from the Agent, upon demand,  interest on
such amount at the Federal  Funds Rate for each day from the date such amount is
paid to the Agent until the date the Agent pays such amount to such Bank.

            (b) Any payments under this Agreement which are made by the Borrower
later than 1:00 P.M.  (New York  time)  shall be deemed to have been made on the
next succeeding Business Day. Whenever any payment to be made hereunder shall be
stated  to be due on a day which is not a  Business  Day,  the due date  thereof
shall be extended  to the next  succeeding  Business  Day and,  with  respect to
payments of principal,  interest  shall be payable  during such extension at the
applicable rate in effect immediately prior to such extension,  except that with
respect to Reserve Adjusted Eurodollar Loans, if such next succeeding applicable
Business  Day is not in the same month as the date on which such  payment  would
otherwise be due hereunder or under any Note, the due date with respect  thereto
shall be the next preceding applicable Business Day.

            3.04.  Net  Payments.  (a) Except as  provided  in  Section  3.04(d)
hereof,  all payments by the Borrower  under this  Agreement or under any Credit
Document shall be made without  set-off or  counterclaim  and in such amounts as
may be necessary in order that all such payments (after deduction or withholding
for or on account of any present or future  taxes,  levies,  imposts,  duties or
other charges of whatsoever  nature  imposed by any  government or any political
subdivision or taxing  authority  thereof,  other than any tax on or measured by
the net  income of a Bank  (including  without  limitation  franchise  taxes and
branch profits taxes) pursuant to the laws of the United States or any political
subdivision  thereof or of the  jurisdiction  in which it is incorporated or the
jurisdiction  where such Bank's lending office is located or in which it has any
other  contacts  or  connection  that  would  subject  it  to  taxation  therein
(collectively,  "Taxes")) shall not be less than the amounts otherwise specified
to be paid under this Agreement and/or any Credit Document.  A certificate as to
the  calculation of any additional  amounts payable to a Bank under this Section
3.04 submitted to the Borrower by such Bank shall, absent demonstrable error, be
final,  conclusive  and binding for all purposes upon all parties  hereto.  With
respect to each  deduction or  withholding  for or on account of any Taxes,  the
Borrower  shall  within  30 days  after  it is  required  by law to  remit  such
deduction or withholding to any relevant taxing  authority  furnish to each Bank
such  certificates,  receipts  and other  documents  as may be required  (in the
reasonable judgment of such Bank) to establish any tax credit to which such Bank
may be entitled.

            (b)  Without  prejudice  to the  provisions  of  clause  (a) of this
Section 3.04, and except as provided in Section 3.04(d) hereof,  if any Bank, or
the Agent on its  behalf,  is  required by law to make any payment on account of
Taxes on or in relation to any sum received or receivable  under this  Agreement
and/or the other Credit  Documents by such Bank, or the Agent on its behalf,  or
any  liability  for Tax in respect of any such  payment  is  imposed,  levied or
assessed  against  any  Bank,  or the Agent on its  behalf,  the  Borrower  will
promptly  indemnify such person against such Tax payment or liability,  together
with any interest, penalties and reasonable expenses (including counsel fees and
expenses)  payable or incurred in connection  therewith,  including any Taxes of
any Bank  arising by virtue of payments  under this  clause  (b),  computed in a
manner  consistent  with clause (a) of this Section 3.04. A certificate  by such
Bank,  or the Agent on its  behalf,  as to the  calculation  and  amount of such
payments shall, absent demonstrable error, be final, conclusive and binding upon
all parties hereto for all purposes.

            (c)  (i)  Each  Bank  that  is  organized  under  the  laws  of  any
jurisdiction  other than the United States or any State thereof  (including  the
District of Columbia) (a "Foreign  Bank")  agrees to furnish to the Borrower and
the Agent,  prior to the date it receives  any payment  under this  Agreement or
other  Credit  Documents,  two signed  copies of either  U.S.  Internal  Revenue
Service Form 4224 or U.S.  Internal  Revenue  Service Form 1001 or any successor
form  thereto  (wherein  such  Foreign  Bank  claims  entitlement  to a complete
exemption  from U.S.  federal  withholding  tax on interest paid by the Borrower
hereunder).  Each  Foreign  Bank  that  is  not  a  bank  described  in  Section
881(c)(3)(A) of the Code and cannot deliver U.S.  Internal  Revenue Service Form
1001 entitling it to a complete  exemption from withholding tax or U.S. Internal
Revenue Service Form 4224 pursuant to this Section  3.04(c)(i) agrees to furnish
to the Borrower  and the Agent (x) a  certificate  substantially  in the form of
Exhibit Q hereto and (y) two copies of U.S.  Internal  Revenue Service Form W-8,
or successor form (wherein such Foreign Bank makes the certifications  necessary
to entitle it to a complete  exemption  from United  States  withholding  tax on
interest paid by the Borrower hereunder).

            (ii) In addition,  each Foreign Bank that delivers forms pursuant to
Section 3.04(c)(i) hereof agrees to provide subsequently to the Borrower and the
Agent  additional  signed copies of such forms,  or any successor  forms thereto
(wherein such Bank claims  entitlement  to a complete  exemption from or reduced
rate  of  U.S.  federal  withholding  tax  on  interest  paid  by  the  Borrower
hereunder),  as may be  reasonably  requested  in writing by the Borrower or the
Agent.  A Foreign  Bank shall be required  to furnish a form under this  Section
3.04(c)(ii)  only if it is entitled to claim an exemption from or a reduced rate
of withholding tax under applicable law. A Bank that is not entitled to claim an
exemption from or a reduced rate of withholding under applicable law at the time
that a request to provide  forms is  received  from the  Borrower  or the Agent,
shall so inform the Borrower and the Agent in writing.

            (d) The Borrower  shall not be required to pay any increased  amount
on account of Taxes pursuant to Section  3.04(a) or (b) to any Bank or Agent (i)
to the  extent  that such  Taxes  would not have  been  payable  if the Bank had
furnished a form  (properly and accurately  completed in all material  respects)
which it was otherwise  required to furnish in accordance  with Section  3.04(c)
hereof, (ii) if the Bank was not able to furnish a form (properly and accurately
completed  in all  material  respects)  which  it was  required  to  furnish  in
accordance with Section 3.04(c)(i) hereof, or (iii) if the Bank failed to comply
with applicable  certification,  information,  documentation  or other reporting
requirements concerning the nationality, residence, identity or connections with
the United  States of such Bank if such  compliance  is  required  by statute or
regulation of the United States as a  precondition  to relief or exemption  from
such Taxes.

            (e) With  respect  to any Taxes  imposed on a Bank which are paid or
reimbursed  by the Borrower in  accordance  with the  provisions of this Section
3.04, each Bank receiving the benefit of such payments of Taxes hereby agrees to
pay to the Borrower any amounts  refunded to such Bank  (including  any interest
thereon) which such Bank reasonably determines to be a refund in respect of such
Taxes.

            (f) If any Bank shall be  entitled to  payments  under this  Section
3.04,  such Bank,  within a  reasonable  time after  becoming  entitled  to such
payments,  shall (unless otherwise required by a governmental  authority or as a
result of any law, rule,  regulation,  order or similar directive  applicable to
such Bank) designate a different lending office from that initially  selected by
such Bank to which  payments  are to be made under this  Agreement  or under any
Credit  Document,  if such  designation  would avoid the need for (or materially
reduce the amount of) such payments and would not, in the reasonable  opinion of
such Bank, be otherwise disadvantageous to such Bank.

            SECTION 4.  Conditions Precedent.

            4.01.  Conditions  Precedent to Additional Loans. The obligations of
the Banks to make the Additional Loans to the Borrower hereunder are subject, at
the time of the  making  of each  such  Additional  Loan  (except  as  otherwise
hereinafter indicated), to the satisfaction of the following conditions:

            (A)   Credit Agreement.  The Borrower shall have duly executed
      and delivered this Agreement.

            (B) Officer's  Certificates.  On the Closing  Date,  the Agent shall
      have received (i) a certificate  dated such date signed by an  appropriate
      officer of the Borrower stating that all of the applicable  conditions set
      forth in Sections  4.01(D),  (E),  (F), (I), (K), (L), (N), (P), (Q), (R),
      (S),  (T),  (U),  (V) and (W) (in each  case  disregarding  any  reference
      therein that such condition be deemed satisfactory by the Agent and/or the
      Required  Banks) have been  satisfied  in all material  respects  (without
      giving effect to any materiality or similar exceptions  contained therein)
      or  waived  as of  such  date  and  (ii) a  certificate  with  respect  to
      environmental  matters,  substantially  in the form set forth on Exhibit N
      hereto.

            (C) Opinions of Counsel.  On the Closing Date,  the Agent shall have
      received an opinion or opinions  addressed  to each of the Banks and dated
      the Closing Date,  each in form and substance  satisfactory  to the Agent,
      from (i)  Milbank,  Tweed,  Hadley & McCloy,  counsel to the  Borrower and
      Holdings, which opinion shall address the matters contained in Exhibit C-1
      hereto and (ii) local  Georgia  counsel to the  Borrower,  which  opinions
      shall address the matters contained in Exhibit C-2 hereto.

            (D) Corporate  Proceedings.  All corporate and legal proceedings and
      all  instruments  and  agreements  in  connection  with  the  transactions
      contemplated  by the Credit  Documents  shall be  satisfactory in form and
      substance to the Agent,  and the Agent shall have received all information
      and copies of all certificates, documents and papers, including records of
      corporate proceedings and governmental  approvals, if any, which the Agent
      reasonably  may  have  requested  from  Holdings,  the  Borrower  and  any
      Affiliate  of any thereof in  connection  therewith,  such  documents  and
      papers  where   appropriate  to  be  certified  by  proper   corporate  or
      governmental authorities.  Without limiting the foregoing, the Agent shall
      have received (i) evidence  satisfactory to it that the Board of Directors
      of each of Holdings and the Borrower  shall have approved and  recommended
      the  Acquisition,  (ii) resolutions of the Board of Directors of Holdings,
      the Borrower or any  Affiliate  thereof  approving  and  authorizing  such
      documents  and actions as are  contemplated  hereby in form and  substance
      satisfactory to the Agent including  without  limitation the execution and
      delivery of all Credit Documents,  certified by its corporate secretary or
      an  assistant  secretary  as  being  in  full  force  and  effect  without
      modification or amendment, and (iii) signature and incumbency certificates
      of officers of Holdings,  the Borrower or any Affiliate  thereof executing
      instruments, documents or agreements required to be executed in connection
      with the Acquisition.

            (E)   Consummation  of   Acquisition.   On  the  Closing  Date,  the
      Acquisition  shall be  consummated  concurrently  with the  making  of the
      Additional  Loans  hereunder  and the assets  acquired in the  Acquisition
      shall have been contributed to the Borrower.

            (F)  Manufacturing  Agreements.  On the Closing  Date,  the Borrower
      shall have entered into the Cutex Manufacturing  Agreement, in the form of
      Exhibit S hereto, and, within 30 days after the Closing Date, the Borrower
      shall have entered into the AM Manufacturing  Agreement,  substantially in
      the form of Exhibit T annexed  hereto,  and  reasonably  acceptable to the
      Agent.

            (G)  Organizational  Documentation,  etc. On or prior to the Closing
      Date,  the  Agent  shall  have  received  copies  of a true  and  complete
      certified  copy of the  following  documents  of each of Holdings  and the
      Borrower, the provisions of which shall be reasonably  satisfactory to the
      Agent:

                  (1) Its respective  Certificate of Incorporation,  which shall
            be certified and be accompanied by a good standing  certificate from
            the  Secretary  of State of the State of Delaware or its  respective
            jurisdiction of incorporation  and good standing  certificates  from
            the  jurisdictions  in which it is  qualified  to do  business  as a
            foreign  corporation,  each to be dated a recent  date  prior to the
            Closing Date;

                  (2)   Its respective By-laws, certified as of the
            Closing Date by its corporate secretary.

            (H) Solvency. On the Closing Date, the Banks shall have received the
      Officers'  Solvency  Certificate,  substantially  in the form of Exhibit L
      annexed  hereto,  in  form  and  substance   satisfactory  to  the  Agent,
      supporting the  conclusions  that,  after giving effect to the Acquisition
      and the contemplated  borrowings in connection herewith,  the Borrower and
      its Subsidiaries will not be insolvent,  will not be rendered insolvent by
      the indebtedness  incurred in connection  herewith,  will not be left with
      unreasonably  small  capital  with  which to  engage  in their  respective
      businesses  and  will  not  have  incurred  debts,   including  Contingent
      Obligations,  beyond their respective  abilities to pay such debts as they
      mature.

            (I) Options and  Warrants.  There  shall be no  outstanding  capital
      stock (or right,  option,  warrant or other  arrangement  to acquire  such
      capital stock) of the Borrower, other than that owned by Holdings.

            (J)  Notes.  There  shall have been  delivered  to the Agent for the
      account  of each of the  Banks  the Term  Notes  and the  Revolving  Notes
      executed  by the  Borrower  in the amount and  maturity  and as  otherwise
      provided herein.

            (K)  Certain  Fees.   All  reasonable   costs,   fees  and  expenses
      (including,  without  limitation,  reasonable  legal  fees  and  expenses)
      payable to  Indosuez  by the  Borrower  pursuant  to the letter  agreement
      between Holdings and Indosuez dated March 27, 1997 shall have been paid in
      full  and the  Borrower  shall  have  paid or have  caused  to be paid the
      commitment  and other fees and expenses  (including,  without  limitation,
      reasonable  legal  fees  and  expenses)   contemplated  hereby  and/or  in
      connection  with the other Credit  Documents;  provided that the aggregate
      costs, fees and expenses shall not exceed $4,000,000.

            (L)  Conditions   Relating  to  Mortgaged  Real  Property  and  Real
      Property.  On or prior to the Closing Date, the Borrower shall have caused
      to be  delivered  to the  Agent,  on behalf of the  Banks,  the  following
      documents and instruments:

                  (i) a Mortgage  encumbering  each  Mortgaged  Real Property in
            favor of the  Agent,  as  Collateral  Agent for the  benefit  of the
            Banks,  duly executed and  acknowledged  by the Credit Party that is
            the  owner  of or  holder  of an  interest  in such  Mortgaged  Real
            Property,  and  otherwise  in form for  recording  in the  recording
            office of each political  subdivision where each such Mortgaged Real
            Property is situated,  together with such certificates,  affidavits,
            questionnaires  or returns as shall be required in  connection  with
            the  recording or filing  thereof to create a lien under  applicable
            law,  and  such  UCC-1   financing   statements  and  other  similar
            statements as are contemplated by the counsel opinions  described in
            Section 4.01(C)(ii) in respect of such Mortgage,  all of which shall
            be in form and substance  reasonably  satisfactory to the Agent, and
            any other  instruments  necessary to grant a mortgage lien under the
            laws of any  applicable  jurisdiction,  which Mortgage and financing
            statements  and other  instruments  shall be  effective  to create a
            first priority Lien on such  Mortgaged  Real Property  subject to no
            Liens other than Prior Liens;

                 (ii)  with  respect  to  each  Mortgaged  Real  Property,  such
            consents,  approvals,  amendments,  supplements,  estoppels,  tenant
            subordination  agreements  or  other  instruments  as  necessary  or
            required to consummate the  transactions  contemplated  hereby or as
            shall  reasonably be deemed  necessary by the Agent in order for the
            owner or holder of the fee or leasehold  interest  constituting such
            Mortgaged  Real  Property  to  grant  the Lien  contemplated  by the
            Mortgage with respect to such Mortgaged Real Property;

                (iii) with respect to each Mortgage,  a policy (or commitment to
            issue a  policy)  of title  insurance  insuring  (or  committing  to
            insure) the Lien of such Mortgage as a valid first  mortgage Lien on
            the real property  described therein in an amount not less than 115%
            of the fair market value thereof as determined by appraisal reports,
            which  policies  (or  commitment)  shall  (a) be issued by the Title
            Company, (b) include such reinsurance  arrangements (with provisions
            for direct  access) as shall be reasonably  acceptable to the Agent,
            (c) contain a "tie-in" or "cluster"  endorsement  (if applicable and
            if available  under  applicable  law) (i.e.,  policies  which insure
            against  losses  regardless  of location or  allocated  value of the
            insured  property up to a stated maximum  coverage  amount) and have
            been  supplemented by such  endorsements (or where such endorsements
            are not available, opinions of special counsel reasonably acceptable
            to the Agent to the extent that such  opinions  can be obtained at a
            cost  which is  reasonable  with  respect  to the  value of the Real
            Property subject to such Mortgage) as shall be reasonably  requested
            by the Agent (including, without limitation, endorsements on matters
            relating  to  usury,   first  loss,  last  dollar,   contiguity  (as
            applicable), revolving credit, doing business, zoning, variable rate
            and   so-called    comprehensive   coverage   over   covenants   and
            restrictions) and (d) contain only such exceptions to title as shall
            be Prior Liens or are  otherwise  agreed to by the Agent on or prior
            to the Closing Date with respect to such Mortgaged Real Property;

                 (iv)   with respect to each Mortgaged Real Property, a
            Survey;

                  (v) with respect to each Mortgaged Real Property,  policies or
            certificates  of  insurance  as  required by the  Mortgage  relating
            thereto,  which  policies  or  certificates  shall  comply  with the
            insurance requirements contained in such Mortgage;

                 (vi)  with  respect  to  each  Mortgaged  Real  Property,  UCC,
            judgment and tax lien searches confirming that the personal property
            comprising a part of such  Mortgaged  Real Property is subject to no
            Liens other than Prior Liens;

                (vii)  with  respect  to  each  Mortgaged  Real  Property,  such
            affidavits, certificates, information (including financial data) and
            instruments of indemnification  (including,  without  limitation,  a
            so-called "gap"  indemnification) as shall be required to induce the
            Title  Company to issue the policy or policies (or  commitment)  and
            endorsements contemplated in subparagraph (iii) above;

               (viii) evidence reasonably  acceptable to the Agent of payment by
            the Borrower of all title insurance premiums, search and examination
            charges, survey costs and related charges, mortgage recording taxes,
            fees, charges,  costs and expenses required for the recording of the
            Mortgages and issuance of the title insurance  policies  referred to
            in subparagraph (iii) above;

                 (ix) with  respect  to each Real  Property  or  Mortgaged  Real
            Property,  copies of all  Leases in which a Credit  Party  holds the
            landlord's,  tenant's  or other  interest  and any other  agreements
            relating to possessory  interests in such Real Property or Mortgaged
            Real  Property.  To  the  extent  any of the  foregoing  affect  any
            Mortgaged Real Property,  such Leases shall be reasonably acceptable
            to the Agent; and

                  (x) with respect to each Mortgaged Real Property, an Officers'
            Certificate or other evidence  reasonably  satisfactory to the Agent
            that  as of  the  date  thereof,  to  the  best  of  such  officer's
            knowledge,  there (a) have been  issued and are in effect  valid and
            proper  certificates of occupancy or other local equivalents for the
            use then being made of such  Mortgaged  Real  Property to the extent
            currently  required  by  law  in  the  jurisdiction  in  which  such
            Mortgaged  Real  Property  is  located  which  certificates  if  not
            obtained or maintained would have a material adverse effect upon the
            value  of  the  Mortgaged  Real  Property  and  that  there  is  not
            outstanding  any citation,  violation or similar  notice  indicating
            that such Mortgaged Real Property contains  conditions which are not
            in  compliance  in  all  material   respects  with  local  codes  or
            ordinances  relating  to  building  or  fire  safety  or  structural
            soundness,  (b) has not  occurred any Taking or  Destruction  of any
            Mortgaged  Real  Property  that has not been  repaired  or  restored
            except  as set  forth  therein  and (c) is no  litigation  regarding
            boundary  lines,  encroachment  or possession of any Mortgaged  Real
            Property and no state of facts known to any Credit Party which could
            give rise to any such claim, except as set forth therein.

            (M) Financial Statements,  etc. Prior to the Closing Date, the Agent
      shall have received audited financial statements including a balance sheet
      and  statements  of income  and  shareholders'  equity  and cash  flows of
      Holdings and its  consolidated  Subsidiaries  for the fiscal  period ended
      December 31, 1996,  which audited  financial  statements  shall reflect no
      material  changes  from  the  unaudited  financial  statements  previously
      delivered to the Agent. The Borrower shall have delivered to the Agent pro
      forma  financial   statements  for  the  Borrower  and  its   consolidated
      Subsidiaries  for the fiscal year ended  December 31,  1997,  after giving
      effect  to the  Acquisition,  and  interim  financial  statements  for the
      Borrower and its consolidated  Subsidiaries through February 28, 1997. The
      Borrower  shall have  delivered to the Agent  financial  projections  with
      respect to the  Borrower  for the fiscal  years  ending  December 31, 1998
      through  December 31, 2001,  inclusive,  accompanied by a statement by the
      Borrower  that such  projections  are based on estimates  and  assumptions
      believed by the  Borrower in good faith to be  reasonable  in light of the
      conditions which existed at the time of their preparation as to the future
      financial  performance  of the Borrower,  reasonably  satisfactory  to the
      Agent;  provided,  however,  that in addition to the financial projections
      referred to above,  the  Borrower  shall also have  delivered to the Agent
      financial  projections on a monthly basis for each of the monthly  periods
      from the Closing  Date through  December  31, 1997.  Since the time of the
      preparation of such financial  projections,  no fact or facts have come to
      the attention of the Borrower to cause the Borrower to believe that any of
      the estimates and assumptions on which such  projections are based are not
      reasonable.

            (N)  Insurance.  Set forth on Annex VI is a summary of all insurance
      policies  maintained  by  the  Borrower  and  its  Subsidiaries,  and  the
      insurance  coverage provided for the Borrower and its Subsidiaries by such
      insurance policies shall be reasonably satisfactory to the Agent.

            (O)  Performance  Bonds.  On the  Closing  Date,  the Agent shall be
      reasonably  satisfied  that  the  Borrower  will be able  to  service  and
      maintain any performance bonds that may be required in the ordinary course
      of business on reasonable terms and conditions.

            (P) Indebtedness, etc. On or prior to the Closing Date and except as
      set  forth on  Annex  X, the  Borrower  and its  Subsidiaries  shall  have
      received all  necessary  consents or waivers or amended,  supplemented  or
      otherwise modified, repaid or defeased their outstanding Indebtedness in a
      manner and on terms  reasonably  satisfactory to the Agent such that there
      exists no default or potential  default with respect to such  Indebtedness
      or under any note,  evidence  of  indebtedness,  mortgage,  deed of trust,
      security  document or other agreement  relating to such  Indebtedness  and
      such indentures,  notes,  evidences of indebtedness,  mortgages,  deeds of
      trust or other agreements  relating to such Indebtedness  shall not, other
      than as set forth on Annex XI,  contain any  restriction on the ability of
      the  Borrower  or any of its  Subsidiaries  to enter  into the  Mortgages,
      Pledge  Agreements  or the  granting  of any Lien in favor of the Banks in
      connection  therewith,  or contain any financial covenants,  agreements or
      tests  applicable  to the Borrower or any of its  Subsidiaries.  Annex VII
      sets forth a true list of all Liens other than Permitted  Encumbrances  on
      the property of the Borrower and its Subsidiaries as of the Closing Date.

            (Q)  Management  Agreement and  Employment  Agreements.  Each of the
      Management  Agreement and the Employment  Agreements  shall remain in full
      force and effect and shall be reasonably satisfactory to the Agent.

            (R)  Security  Documents  and  Guarantees.   Any  required  Security
      Documents  (other  than  those   previously   executed  and  delivered  in
      connection with the Existing Credit  Agreement) and Guarantees (other than
      those  previously  executed and delivered in connection  with the Existing
      Credit  Agreement)  shall have been duly  executed  and  delivered  by the
      respective  parties  thereto  and there shall have been  delivered  to the
      Agent (i) certificates representing all Pledged Securities,  together with
      executed  and undated  stock  powers  and/or  assignments  in blank,  (ii)
      evidence  of  the  filing  and  due  execution  of  appropriate  financing
      statements under the provisions of the UCC,  applicable  domestic or local
      laws,  rules or  regulations  in each of the offices  where such filing is
      necessary or appropriate to grant to the Agent, as collateral security for
      the  payment  and  performance  of  the  Obligations  including,   without
      limitation,  the Additional  Loans, a perfected first priority Lien in the
      Collateral  superior  to and prior to the rights of all third  persons and
      subject to no other Liens other than Prior Liens,  (iii) certified  copies
      of Requests for Information (Form UCC-11 or the equivalent), or equivalent
      reports or lien search reports listing all effective financing  statements
      which name any Credit  Party under such  Security  Documents as debtor and
      which are filed in those  jurisdictions  in which any of the Collateral is
      located and the jurisdictions in which each Credit Party's principal place
      of  business  is  located,  none of  which,  except  as set  forth  in the
      applicable  Security  Documents,  shall encumber the Collateral covered or
      intended or purported to be covered by the  Security  Documents,  and (iv)
      evidence that arrangements have been made for the prompt completion of all
      recordings and filings of each Security Document related to Mortgaged Real
      Property  and  delivery  to the  Agent of such  other  security  and other
      documents  as may be  necessary  or, in the  reasonable  opinion of Agent,
      desirable  to perfect the Liens  created,  or  purported or intended to be
      created, by the Security Documents.

            (S)  Consents,  Etc.  All  material  governmental  and  third  party
      approvals  and  consents  (including,  without  limitation,  all  material
      approvals  and  consents  required in  connection  with any  environmental
      statutes,   rules  or  regulations),   if  any,  in  connection  with  the
      transactions  contemplated by the Credit Documents and otherwise  referred
      to herein or therein to be  completed  on or before the Closing Date shall
      have been  obtained  and  remain in  effect,  and all  applicable  waiting
      periods shall have expired without any action being taken by any competent
      authority  which  restrains,  prevents or imposes,  in the judgment of the
      Agent  or the  Required  Banks,  materially  adverse  conditions  upon the
      consummation  of the  Acquisition.  There  shall  not  exist  any  adverse
      judgment,  order,  injunction  or other  restraint  issued  or filed  with
      respect to the making of the Loans  hereunder or the  consummation  of the
      Acquisition.

            (T) Borrowing Base Certificate. Prior to the initial Revolving Loan,
      the Agent and the Banks shall have received and the Agent and the Required
      Banks shall be satisfied  (both as to form and substance) with a pro forma
      Borrowing Base  Certificate  which shall be prepared as of a date prior to
      the Closing Date and which shall  indicate that the Borrowing  Base on the
      Closing  Date will  exceed  the  initial  Borrowings  under the  Revolving
      Portion by not less than $5,000,000.

            (U) Leases.  All Capital Leases and Operating Leases of the Borrower
      outstanding  immediately prior to the Acquisition shall remain outstanding
      after  giving  effect to the  Acquisition,  on terms  satisfactory  to the
      Agent.
            (V) Acquisition  Documents.  All terms of the Acquisition  Documents
      (including,  without  limitation,  the  amount  and form of  consideration
      included in the purchase price and conditions  contained  therein) and any
      amendments thereto shall be in form and substance reasonably  satisfactory
      to the Agent;  and at the Closing Date each of the  conditions to purchase
      contained in the  Acquisition  Documents  shall have been satisfied in all
      material  respects  (or waived in writing,  such  waiver to be  reasonably
      satisfactory to the Agent) to the reasonable satisfaction of the Agent.

            (W)  Conditions  Relating  to  Existing  Security  Documents.   Each
      Security  Document  and  Guarantee  executed  prior to the Closing Date in
      connection with the Existing  Credit  Agreement shall be in full force and
      effect.  With respect to each such Security  Document,  on or prior to the
      Closing Date, the Borrower shall have caused to be delivered to the Agent,
      on behalf of the Banks, the following documents and instruments:

                  (i) an amendment, duly executed by the Borrower, to secure the
            Additional A Term Loans, Additional B Term Loans and Revolving Loans
            pari  passu  with the  Existing  Loans,  and  otherwise  in form and
            substance reasonably satisfactory to the Agent;

                 (ii) all certificates  representing all Pledged  Securities (if
            certificated) listed in such amendments,  together with executed and
            undated stock powers and/or assignments in blank;

                (iii) appropriate  financing statements and statement amendments
            or  comparable  documents  of,  and  executed  by,  the  appropriate
            entities in proper form for filing under the  provisions  of the UCC
            and applicable  domestic or local laws, rules or regulations in each
            of the offices  where such filing is  necessary  or  appropriate  to
            grant or confirm to the Agent a  perfected  first  priority  Lien on
            such  Collateral  superior  to and prior to the  rights of all third
            persons and subject to no other Liens, other than Prior Liens;

                 (iv) certified copies of Requests for Information  (Form UCC-11
            or equivalent), or equivalent reports or lien search reports listing
            all effective  financing  statements or comparable  documents  which
            name any Credit  Party under such  Security  Documents as debtor and
            which  are  filed  in  those  jurisdictions  in  which  any  of  the
            Collateral under such Security Documents is located,  none of which,
            except  as set forth on the  applicable  Security  Documents,  shall
            encumber  the  Collateral  covered or  intended or  purported  to be
            covered by such Security Documents; and

                  (v) evidence of the  completion of all  recordings and filings
            of each  amendment  and  delivery of such other  security  and other
            documents  as may be  necessary  or, in the  opinion  of the  Agent,
            desirable  to  perfect,  or  confirm  the  perfection  of, the Liens
            created,  or  purported  or intended to be created,  by the Security
            Documents.

            The acceptance of the proceeds of each Borrowing of Additional Loans
shall constitute a  representation  and warranty by each Credit Party to each of
the Banks that all of the applicable  conditions  specified  above (in each case
disregarding any reference therein that such condition be deemed satisfactory by
the Agent  and/or the Required  Banks) have been  satisfied or waived as of that
time. All of the  certificates,  legal  opinions and other  documents and papers
referred to in this Section 4.01, unless otherwise specified, shall be delivered
to the Agent at the Agent's  Office (or such other  location as may be specified
by the  Agent)  for  the  account  of  each  of  the  Banks  and  in  sufficient
counterparts for each of the Banks and shall be reasonably  satisfactory in form
and substance to the Agent.

            4.02. Conditions Precedent to All Loans.  The obligation of
the Banks to make all Loans (which term shall not include a conversion or
continuation of a Loan) is subject, at the time of each such Loan, to the
satisfaction of the following conditions:

            (A)  Effectiveness.  This Agreement  shall have become  effective as
      provided in Section 11.10.

            (B) No Default;  Representations and Warranties.  At the time of the
      making of each Loan and also after giving  effect  thereto (i) there shall
      exist no  Default  or Event of Default  and (ii) all  representations  and
      warranties  made by any  Credit  Party  contained  herein  or in the other
      Credit  Documents  in effect at such time shall be true and correct in all
      material respects with the same effect as though such  representations and
      warranties had been made on and as of the date of the making of such Loan,
      unless such  representation  and warranty  expressly  indicates that it is
      being made as of any other  specific  date in which case on and as of such
      other date.

            (C)  Documentation  and  Opinions of  Counsel.  The Agent shall have
      received such documentation and opinion or opinions,  addressed to each of
      the  Banks,  from  counsel  to  each  Credit  Party  as may be  reasonably
      required, with reasonable notice under the circumstances, by, and shall be
      reasonably satisfactory to the Agent, from (i) such counsel to each Credit
      Party as  reasonably  requested  by the Agent and (ii)  appropriate  local
      counsel,  which opinions shall cover such matters as reasonably  requested
      by, and be in form and substance reasonably satisfactory to, the Agent.

            (D) Margin Rules.  On the date of each  Borrowing of Loans,  neither
      the making of any Loan nor the use of the  proceeds  thereof  will violate
      the provisions of Regulation G, T, U or X of the Board of Governors of the
      Federal Reserve System.

            (E) Borrowing  Base  Certificate.  The Agent and the Required  Banks
      shall have received and shall be reasonably satisfied (both as to form and
      substance)  with the  Borrowing  Base  Certificate  last  delivered to the
      Banks.

            The  acceptance  of the  proceeds of each  Borrowing  of Loans shall
constitute  a  representation  and  warranty by each Credit Party to each of the
Banks that all of the applicable  conditions  specified in Section 4.02 (in each
case   disregarding  any  reference   therein  that  such  condition  be  deemed
satisfactory  by the Agent  and/or the  Required  Banks) have been  satisfied or
waived.

            All of the  certificates,  legal  opinions and other  documents  and
papers referred to in this Section 4.02,  unless otherwise  specified,  shall be
delivered to the Agent at the Agent's  Office (or such other  location as may be
specified  by the Agent) for the account of each of the Banks and in  sufficient
counterparts  for  each of the  Banks  and  shall  be  satisfactory  in form and
substance to the Agent.

            4.03.  Conditions  Precedent to All Letters of Credit.  The right of
the  Borrower to obtain the  issuance of any Letter of Credit that the  relevant
Issuing Bank determines to issue in its sole discretion  hereunder is subject to
prior or concurrent satisfaction of all of the following conditions:

            (A) Required Documentation. On or prior to the date of issuance of a
      Letter of Credit,  the Agent shall have received,  in accordance  with the
      provisions of Section 1.13(B), a request for issuance with respect to such
      Letter of Credit (the  furnishing by the Borrower of each such request for
      issuance  shall be deemed to constitute a  representation  and warranty of
      the Borrower to the effect that the  conditions  set forth in Section 4.02
      (in each case  disregarding  any reference  therein that such condition be
      deemed  satisfactory by the Agent and/or the Required Banks) are satisfied
      as of the date of delivery and will be  satisfied on the relevant  date of
      issuance),  all other information  specified in Section 1.13(B),  and such
      other  documents as the Issuing Bank may reasonably  require in connection
      with the issuance of such Letter of Credit.

            (B)  Conditions.  On the date of  issuance  of each  such  Letter of
      Credit,  all  conditions  precedent  described  in  Section  4.02 shall be
      satisfied  to the same  extent as though the  issuance  of such  Letter of
      Credit were the making of a Revolving Loan.

            SECTION 5. Representations,  Warranties and Agreements.  In order to
induce the Banks to enter into this Agreement and to make the Loans provided for
herein,  each of Holdings and the Borrower  makes the following  representations
and warranties to, and  agreements  with, the Banks,  all of which shall survive
the execution  and delivery of this  Agreement and the making of the Loans (with
the  execution  and  delivery  of this  Agreement  and the  making  of each Loan
thereafter  being deemed to  constitute a  representation  and warranty that the
matters  specified  in this  Section  5 are true  and  correct  in all  material
respects both before and after giving effect to the  Acquisition and the related
transactions and as of the date of each such Loan unless such representation and
warranty expressly indicates that it is being made as of any specific date):

            5.01.  Corporate  Status.  Each Credit Party (i) is a duly organized
and  validly  existing  corporation  in  good  standing  under  the  laws of the
jurisdiction of its organization; (ii) has the corporate or other organizational
power and  authority  and,  other than as set forth on Annex X, has obtained all
requisite governmental licenses,  authorizations,  consents and approvals to own
and operate its  property and assets and to transact the business in which it is
engaged and presently proposes to engage including, without limitation, those in
compliance  with or required by the  Environmental  Laws except as  described in
Annex XII hereto and except  for those  governmental  licenses,  authorizations,
consents or  approvals  the failure of which to be so obtained  would not have a
Materially  Adverse  Effect and (iii) is duly  qualified and is authorized to do
business and is in good standing in all jurisdictions where it is required to be
so qualified  and where the failure to be so  qualified  would have a Materially
Adverse Effect.

            5.02. Corporate Power and Authority; Business. (a) Each Credit Party
has the  corporate  power and  authority  to execute,  deliver and carry out the
terms and  provisions  of the  Credit  Documents  to which it is a party and has
taken all necessary  corporate  action to authorize the execution,  delivery and
performance  of the Credit  Documents to which it is a party.  Each Credit Party
has duly executed and delivered each Credit  Document to which it is a party and
each such Credit Document constitutes the legal, valid and binding obligation of
such Person enforceable  against such Person in accordance with its terms except
as may be limited  by  bankruptcy,  insolvency,  reorganization,  moratorium  or
similar laws relating to or affecting  creditors' rights generally and except as
such  enforceability  may be limited by the application of general principles of
equity (regardless of whether such  enforceability is considered in a proceeding
in equity or at law).

            (b) Holdings was  incorporated  on May 10, 1995 and  consummated  an
initial  public  offering  of its common  stock on  October  18,  1996;  and the
Borrower was  incorporated as Aminco,  Inc. in Delaware on March 20, 1990. Prior
to the Closing Date,  Holdings will not have engaged in any business or incurred
any liabilities except for activities,  expenses and liabilities incident to its
organization  or its initial  public  offering  and to the  carrying  out of the
transactions contemplated by the Credit Documents and the Acquisiton.

            5.03. No Violation.  Neither the execution,  delivery or performance
by any  Credit  Party  of the  Credit  Documents  to  which  it is a  party  nor
compliance with the terms and provisions  thereof,  nor the  consummation of the
transactions  contemplated  therein (i) will contravene any applicable provision
of any law, statute, rule, regulation,  order, writ, injunction or decree of any
court or  governmental  instrumentality,  (ii) will conflict or be  inconsistent
with or  result in any  breach of any of the  terms,  covenants,  conditions  or
provisions  of, or  constitute a default  under,  or (other than pursuant to the
Security  Documents)  result in the creation or imposition of (or the obligation
to create or impose)  any Lien upon any of the  property or assets of any Credit
Party or its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust,  material  agreement or other material  instrument to which any Credit
Party or its  Subsidiaries  is a party or by which it or any of its  property or
assets  is bound  or to  which it may be  subject  or  (iii)  will  violate  any
provision  of the  charter or by-laws of any Credit  Party or its  Subsidiaries,
except, in each such case, where such  contravention,  conflict,  inconsistency,
breach, default, creation,  imposition,  obligation or violation does not have a
Materially  Adverse Effect. The consummation of the Acquisition and the terms of
the financing in connection  therewith will not conflict or be inconsistent with
or result in any breach of any of the terms, covenants, conditions or provisions
of, or  constitute a default  under,  or result in the creation or imposition of
(or the  obligation  to create  or  impose)  any Lien  (except  pursuant  to the
Security  Documents)  upon any of the  property  or  assets of  Holdings  or the
Borrower or any of their respective  Subsidiaries  pursuant to the terms of, any
indenture,  mortgage,  deed of trust,  material instrument or material agreement
relating to Indebtedness  for borrowed money or the equivalent  thereof or other
material  agreement to which Holdings or the Borrower or any of their respective
Subsidiaries is a party or by which it or any of its property or assets is bound
or to which it may be subject,  except,  in each such case, where such conflict,
inconsistency, breach, default, creation, imposition or obligation does not have
a Materially Adverse Effect.

            5.04.  Litigation.  Except as set  forth on Annex  IX,  there are no
actions,  judgments,  suits or  proceedings  pending  or,  to  Holdings'  or the
Borrower's  knowledge,  threatened in any court of competent  jurisdiction  with
respect to any Credit Party or its Subsidiaries that are, individually or in the
aggregate, likely to have a Materially Adverse Effect.

            5.05. Use of Proceeds.  (a)  All the proceeds of all Term
Loans to be made hereunder shall be utilized to provide a portion of the
financing required to consummate the Refinancing and to pay related fees
and expenses.

            (b) Up to $3,000,000 of the proceeds of Revolving  Loans made on the
Closing  Date may be used by the  Borrower  on the  Closing  Date to  provide  a
portion of the  financing  required to  consummate  the  Acquisition  and to pay
related fees and expenses and the remaining  proceeds of Revolving  Loans may be
utilized to finance the ongoing working capital requirements of the Borrower and
its Subsidiaries and for general corporate purposes.

            (c)  Neither  the making of any Loan  hereunder,  nor the use of the
proceeds  thereof,  will  violate  or be  inconsistent  with the  provisions  of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.

            5.06.  Governmental  Approvals,  etc. No order,  consent,  approval,
license,  authorization,  or validation of, or filing, recording or registration
with, or exemption  by, any third party or any foreign or domestic  Governmental
Authority   (other   than   those   orders,   consents,   approvals,   licenses,
authorizations  or validations  which, if not obtained or made, would not have a
Materially  Adverse  Effect or which have  previously  been obtained or made and
except  for  filings to  perfect  security  interests  granted  pursuant  to the
Security  Documents) is required to authorize or is required in connection  with
(i) the  execution,  delivery  and  performance  of any Credit  Document  or the
transactions contemplated therein or (ii) the legality, validity, binding effect
or  enforceability  of any  Credit  Document.  At the time of the  making of the
Loans, there does not exist any judgment,  order,  injunction or other restraint
issued or filed with  respect to the making of Loans or the  performance  by the
Credit Parties of their obligations under the Credit Documents.

            5.07.  Investment  Company Act.  None of  Holdings,  the Borrower or
their  respective  Subsidiaries  is,  or  will be  after  giving  effect  to the
transactions   contemplated   hereby,  an  "investment  company"  or  a  company
"controlled"  by an "investment  company,"  within the meaning of the Investment
Company Act of 1940, as amended.

            5.08.  Public  Utility  Holding  Company Act. None of Holdings,  the
Borrower or their respective  Subsidiaries is, or will be after giving effect to
the  transactions  contemplated  hereby,  a "holding  company," or a "subsidiary
company" of a "holding  company," or an "affiliate" of a "holding company" or of
a "subsidiary  company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

            5.09. True and Complete  Disclosure.  All factual information (taken
as a  whole)  heretofore  or  contemporaneously  furnished  by or on  behalf  of
Holdings,  the  Borrower  or any of their  Subsidiaries  in  writing to any Bank
(including,   without  limitation,  all  information  contained  in  the  Credit
Documents)  for  purposes  of  or in  connection  with  this  Agreement  or  any
transaction  contemplated  herein is (or was,  on the date of making the Initial
Loans),  and all other such  factual  information  (taken as a whole)  hereafter
furnished  by or on behalf of any such  Person in  writing  to any Bank will be,
true  and  accurate  in all  material  respects  on the  date as of  which  such
information  is dated or certified  and not  incomplete by omitting to state any
material fact necessary to make such  information not misleading at such time in
light of the  circumstances  under  which such  information  was  provided.  The
projections and pro forma financial  information contained in such materials are
based on good faith  estimates  and  assumptions  believed by such Persons to be
reasonable  at the time made.  There is no fact known to any Credit  Party which
has a Materially  Adverse Effect which has not been disclosed  herein or in such
other documents,  certificates and written statements furnished to the Banks for
use in connection with the transactions contemplated hereby.

            5.10.  Acquisition; Purchase Agreements.  (a)  At the Closing
Date, the Acquisition shall concurrently be consummated.

            (b) At the  time of  making  the  Additional  Loans,  all  necessary
governmental and third-party  approvals  (including,  without limitation,  those
pursuant to the HSR Act)  (except as set forth on Annex X hereto) in  connection
with the  transactions  contemplated by the Acquisition  Documents and otherwise
referred to therein  have been or,  prior to the time when  required,  will have
been, obtained and remain in effect, and all applicable waiting periods have or,
prior to the time when required,  will have, expired without, in all such cases,
any action being taken by any competent authority which has a Materially Adverse
Effect on the  transactions  contemplated by the Acquisition  Documents.  At the
time of the making of the  Additional  Loans,  there does not exist any  adverse
judgment,  order,  injunction or other restraint issued or filed with respect to
the transactions  contemplated by the Acquisition Documents and the consummation
of the Acquisition.

            (c) As of the Closing Date,  all  representations  and warranties of
the Borrower and Holdings, as the case may be, and, to the best knowledge of the
Borrower,  of the Sellers  set forth in the  Purchase  Agreements  were true and
correct in all material respects as of the time as of which such representations
and warranties were made and shall be true and correct in all material  respects
as of the Closing Date as if such  representations  and warranties  were made on
and as of such date, unless such representation and warranty expressly indicates
that it is being made as of any other specific date.

            5.11. Financial Condition; Financial Statements; Projections. (a) No
Credit Party is entering into the  arrangements  contemplated  hereby and by the
other Credit Documents, or intends to make any transfer or incur any obligations
hereunder or thereunder  with actual intent to hinder,  delay or defraud  either
present or future creditors. On and as of the Closing Date, on a pro forma basis
after giving  effect to the  Acquisition  and to all  Indebtedness  incurred and
Liens  and  Guarantees  created,  or to be  created,  by each  Credit  Party  in
connection  with the  Acquisition,  (w) the Borrower  does not expect that final
judgments  against any Credit Party in actions for money damages with respect to
pending or  threatened  litigation  will be  rendered  at a time when,  or in an
amount such that, such Credit Party will be unable to satisfy any such judgments
promptly  in  accordance  with their  terms  (taking  into  account  the maximum
reasonable  amount  of such  judgments  in any  such  actions  and the  earliest
reasonable time at which such judgments might be rendered and the cash available
to each Credit Party,  after taking into account all other  anticipated  uses of
the cash of such Credit Party  (including the payments on or in respect of debts
(including  their  Contingent  Obligations));  (x) no  Credit  Party  will  have
incurred or intends to, or believes that it will, incur debts beyond its ability
to pay such debts as such  debts  mature  (taking  into  account  the timing and
amounts of cash to be received by such Credit Party from any source, and amounts
to be payable on or in respect  of debts of such  Credit  Party and the  amounts
referred to in the preceding  clause (w));  (y) each Credit Party,  after taking
into  account  all  other  anticipated  uses of the cash of such  Credit  Party,
anticipates  being  able to pay all  amounts  on or in  respect of debts of such
Credit  Party when such  amounts are  required  to be paid;  and (z) each Credit
Party  will have  sufficient  capital  with  which to conduct  its  present  and
proposed  business  and the  property of such Credit  Party does not  constitute
unreasonably  small  capital  with which to  conduct  its  present  or  proposed
business.  For purposes of this Section  5.11,  "debt" means any  liability on a
claim,  and "claim" means a (i) right to payment  whether or not such a right is
reduced to  judgment,  liquidated,  unliquidated,  fixed,  contingent,  matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment,  whether or not such  right to an  equitable  remedy is reduced to
judgment, fixed, contingent,  matured, unmatured,  disputed, undisputed, secured
or  unsecured.  On the date of each  Borrowing  (and after giving  effect to all
Borrowings  as of such  date),  the  representations  set forth in this  Section
5.11(a)  shall be true and correct  with  respect to each  Credit  Party on such
date.

            (b)  The  Borrower  has  heretofore   delivered  to  the  Banks  the
consolidated  audited  financial  statements  including  a  balance  sheet as at
December 31, 1996 and  statements  of income and  shareholders'  equity and cash
flows of Holdings and its consolidated  Subsidiaries for the fiscal period ended
December 31, 1996.  All the  financial  statements  referred to in the preceding
sentence  were  prepared in  accordance  with GAAP  consistently  applied.  Such
financial statements present fairly, in all material respects,  the consolidated
financial position of the Borrower and its consolidated Subsidiaries for each of
the periods covered thereby.  There has also been delivered the pro forma (after
giving effect to the Acquisition) consolidated balance sheet of the Borrower and
its  consolidated  Subsidiaries  as at December 31, 1996,  which presents a good
faith estimate of the consolidated pro forma financial condition of the Borrower
and its  consolidated  Subsidiaries at the date thereof,  and interim  financial
statements for the Borrower and its consolidated  Subsidiaries  through February
28, 1997. Except as contemplated hereby, since December 31, 1996 (on a pro forma
basis after giving effect to the  Acquisition)  no event or events have occurred
that are likely to have a Materially Adverse Effect.

            (c) There  have  heretofore  been  delivered  to the Banks pro forma
consolidated income projections for the Borrower and its Subsidiaries, pro forma
consolidated balance sheet projections for the Borrower and its Subsidiaries and
pro  forma   consolidated  cash  flow  projections  for  the  Borrower  and  its
Subsidiaries, all for the fiscal years ending December 31, 1997 through December
31, 2001,  inclusive,  as well as such financial  projections on a monthly basis
for each of the monthly periods from the Closing Date through  December 31, 1997
(the "Projected Financial Statements"), which give effect to the Acquisition and
all   Indebtedness  and  Liens  incurred  or  created  in  connection  with  the
Acquisition.  The  Projected  Financial  Statements  are based on estimates  and
assumptions which are believed by the Borrower in good faith to be reasonable in
light of the conditions which existed at the time of their preparation as to the
future financial performance of the Borrower.

            (d) As of the  Closing  Date,  except  as  adequately  reflected  or
reserved against in the financial  statements and the notes thereto described in
Section  5.11(b)  or as set forth in  Annexes  IX,  XII and XVI,  there  were no
liabilities  or  obligations  with respect to  Holdings,  the Borrower or any of
their  respective  Subsidiaries  of any  nature  whatsoever  (whether  absolute,
accrued,  contingent  or  otherwise  and  whether  or  not  due)  which,  either
individually or in the aggregate, would be material to Holdings, the Borrower or
any of their respective Subsidiaries,  except as incurred by any Credit Party in
connection with the  Acquisition.  As of the Closing Date, the Borrower knows of
no basis  for the  assertion  against  Holdings,  the  Borrower  or any of their
respective  Subsidiaries of any liability or obligation of any nature whatsoever
that is not  adequately  reflected  in the  financial  statements  described  in
Section 5.11(b) or (c) or otherwise disclosed herein,  except as incurred by any
Credit Party in connection with the Acquisition,  which,  either individually or
in the aggregate,  could reasonably be expected to be material to Holdings,  the
Borrower or any of their respective Subsidiaries.

            5.12.  Security  Interests.  At all times after the execution of the
Security Documents, as amended by the documents set forth in Section 4.01(W)(i),
the Security  Documents create, in favor of the Collateral Agent for the benefit
of the Banks, as security for the obligations purported to be secured thereby, a
valid and  enforceable  perfected first priority  security  interest in and Lien
upon  all  of  the  Collateral  as  collateral  security  for  the  payment  and
performance of the Obligations,  including,  without limitation,  the Additional
Loans,  superior to and prior to the rights of all third  persons and subject to
no Liens, except Prior Liens applicable to such Collateral.  The mortgagor under
each Mortgage has good and marketable  title to the Mortgaged Real Property free
and clear of all Liens other than Prior Liens and Liens  expressly  permitted by
the applicable Mortgage. The respective pledgor or assignor, as the case may be,
has (or on and after the time it executes the respective Security Document, will
have)  good and  marketable  title to all items of  Collateral  (other  than the
Mortgaged Real Property) covered by such Security Document free and clear of all
Liens  except  Prior  Liens  and Liens  expressly  permitted  by the  applicable
Security Document.  No filings or recordings are required in order to perfect or
confirm the  perfection  of the security  interests  created  under any Security
Document  except for filings or recordings  required in connection with any such
Security Document which shall have been made prior to or contemporaneously  with
the execution and delivery thereof.

            5.13.  Tax Returns and  Payments.  Except as set forth on Annex XIII
hereto,  each Credit  Party has filed all  material  tax returns  required to be
filed by it and has paid all material taxes and assessments  payable by it which
have  become  due,  other  than  those not yet  delinquent  and except for those
contested in good faith and for which adequate  reserves have been  established.
Except as set forth on Annex XIII  hereto,  each Credit  Party has paid,  or has
provided  adequate  reserves (in  accordance  with GAAP) for the payment of, all
material  federal,  state,  local and foreign income taxes  (including,  without
limitation,  franchise taxes based upon income)  applicable for all prior fiscal
years and for the current fiscal year to the date hereof.  The Borrower knows of
no proposed tax assessment  against the Borrower or any of its Subsidiaries that
could  reasonably be expected to have a Materially  Adverse  Effect which is not
being  actively  contested  in good faith by such Person to the extent  affected
thereby  in good  faith  and by  appropriate  proceedings;  provided  that  such
reserves  or other  appropriate  provisions,  if any,  as shall be  required  in
conformity with GAAP shall have been made or provided therefor.

            5.14.  ERISA.  (A) Each Credit Party and its ERISA Affiliates are in
compliance  with all  applicable  provisions  of ERISA and the  regulations  and
published interpretations thereunder with respect to all employee benefit plans,
Pension Plans and  Multiemployer  Plans except for any failures to comply which,
individually or in the aggregate, would not have a Materially Adverse Effect.

            (B) No Termination  Event has occurred or is reasonably  expected to
occur with  respect to any  Pension  Plan which  resulted  or would  result in a
liability to any Credit Party or any ERISA Affiliate.

            (C)  The  sum  of  the  amount  of  unfunded   benefit   liabilities
(determined in accordance with Statement of Financial  Accounting  Standards No.
87)  under all Title IV Plans  (excluding  each  Title IV Plan with an amount of
unfunded benefit liabilities of zero or less) is not more than $2,500,000. As of
the Closing Date, there are no unfunded benefit  liabilities (within the meaning
of Section 4001(a)(18) of ERISA) under any Title IV Plans.

            (D) As of the Closing Date, no Credit Party nor any ERISA  Affiliate
has any  obligation to  contribute  to or any  liability or potential  liability
(including,  but not limited to, actual or potential withdrawal  liability) with
respect to any employee  benefit plan of the type described in Sections 4063 and
4064 of ERISA or in  Section  413(c) of the Code.  Each  Credit  Party and their
ERISA Affiliates have complied in all material respects with the requirements of
ERISA  Section  515 with  respect  to each  Multiemployer  Plan.  The  aggregate
potential  withdrawal  payments,  as determined  in accordance  with Title IV of
ERISA,  of each Credit  Party and their  ERISA  Affiliates  with  respect to all
Multiemployer  Plans does not exceed  $2,500,000.  No Credit Party nor any ERISA
Affiliate has incurred or reasonably  expects to incur any withdrawal  liability
under  Section 4201 et seq. of ERISA to any  Multiemployer  Plan or any employee
benefit  plan of the type  described  in  Sections  4063 and 4064 of ERISA or in
Section 413(c) of the Code.

            (E) No  Credit  Party  nor any  ERISA  Affiliate  has  incurred  any
accumulated  funding  deficiency  (whether  or not waived)  with  respect to any
Pension Plan.

            (F) No  Credit  Party  nor any  ERISA  Affiliate  has or  reasonably
expects to become  subject to a Lien in favor of any Pension Plan under  Section
302(f) or 307 of ERISA or Section 401(a)(29) or 412(n) of the Code.

            (G) Assuming  that no portion of the Loans to be advanced  hereunder
is attributable,  directly or indirectly,  to the assets of any employee benefit
plan, the  execution,  performance  and delivery of the Credit  Documents by any
party thereto will not involve any prohibited  transaction within the meaning of
Section  406 of  ERISA or  Section  4975 of the  Code  for  which  an  exemption
therefrom is not available.

            As  used  in  this  Section  5.14,  the  term  "accumulated  funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code,  and the term  "employee  benefit  plan" has the meaning  specified in
Section 3(3) of ERISA.

            5.15. Subsidiaries.  Annex IV hereto lists each direct and
indirect Subsidiary of Holdings existing on the Closing Date.

            5.16.  Patents,  etc.  Each Credit Party owns or possesses  adequate
licenses or other rights to use all patents,  patent  applications,  trademarks,
trademark applications,  servicemarks,  servicemark  applications,  trade names,
copyrights,  trade  secrets  and  know  how  (collectively,   the  "Intellectual
Property"), including, without limitation, Intellectual Property acquired in the
Acquisition, that are necessary for the operation of their respective businesses
as presently conducted and as proposed to be conducted.  No claim is pending or,
to the best of the  Borrower's  knowledge,  threatened  to the  effect  that the
Borrower or any of its  Subsidiaries  infringes upon the asserted  rights of any
other person under any Intellectual  Property, and to the best of the Borrower's
knowledge  there is no basis  for any such  claim  (whether  or not  pending  or
threatened),  in each case where such claim could reasonably be expected to have
a  Materially  Adverse  Effect.  No  claim  is  pending  or,  to the best of the
Borrower's  knowledge,  threatened  to the  effect  that any  such  Intellectual
Property owned or licensed by the Borrower or any of its  Subsidiaries  or which
the  Borrower  or any of its  Subsidiaries  otherwise  has the  right  to use is
invalid or unenforceable by the Borrower or such Subsidiary, and, to the best of
the Borrower's  knowledge,  there is no basis for any such claim (whether or not
pending  or  threatened),  in each case where such  claim  could  reasonably  be
expected to have a Materially Adverse Effect.

            5.17.  Compliance  with Laws,  etc. Except as set forth in Annex XVI
hereto,  each Credit Party is in material  compliance with all material laws and
regulations,  including  without  limitation  those relating to equal employment
opportunity  and employee safety but excluding  Environmental  Laws (as to which
Section 5.22 is applicable), in all jurisdictions in which it is presently doing
business,  and each Credit Party will comply and cause each of its  Subsidiaries
to comply with all such laws and regulations  which may be imposed in the future
in  jurisdictions  in which it or such  Subsidiary may then be doing business in
each such case other than those the  non-compliance  with which would not have a
Materially Adverse Effect.

            5.18.  Properties.  The Borrower and each of its  Subsidiaries  have
good and marketable  title to and beneficial  ownership of all their  respective
properties  owned  by them,  including  after  the  Closing  Date  all  property
reflected in the most recent  balance sheet  referred to in Section  5.11(b) and
except as sold or otherwise  disposed of since the date of such balance sheet in
the ordinary course of business,  free and clear of all Liens,  other than Prior
Liens and Permitted Encumbrances.  The Borrower and each Subsidiary thereof hold
all material  licenses,  certificates  of  occupancy  or  operation  and similar
certificates and clearances of municipal and other authorities  necessary to own
and  operate the  Mortgaged  Real  Property  in the manner and for the  purposes
currently  operated by such party which if not obtained or maintained would have
a material  adverse effect upon the value of the Mortgaged Real Property.  There
are no actual defaults or defaults  alleged in writing or, to the best knowledge
of the Borrower,  threatened  defaults,  in each case of a material  nature with
respect to any leases of real  property  under which the  Borrower or any of its
Subsidiaries is lessor or lessee.

            5.19.  Securities.  On the  Closing  Date,  the common  stock of the
Borrower and of each  Subsidiary  whose stock is being pledged as of the Closing
Date will be duly  authorized,  issued  and  delivered  and will be fully  paid,
nonassessable  and free of preemptive  rights.  There are not, as of the Closing
Date and  thereafter,  any existing  options,  warrants,  calls,  subscriptions,
convertible  or  exchangeable  securities,  rights,  agreements,  commitments or
arrangements  for any person to acquire any capital stock of the Borrower or any
other securities  convertible into,  exchangeable for or evidencing the right to
subscribe for any such capital stock.
            5.20. Collective Bargaining Agreements.  Set forth on Annex V hereto
is a list and  description  (including  dates of  termination) of all collective
bargaining or similar  agreements  between or applicable to the Borrower and its
Subsidiaries  as of the date hereof and any union,  labor  organization or other
bargaining   agent  in  respect  of  the  employees  of  the  Borrower  and  its
Subsidiaries on the date indicated in Annex V hereto.

            5.21. Indebtedness  Outstanding.  Set forth on Annex III hereto is a
complete list and description of all Indebtedness of Holdings,  the Borrower and
their Subsidiaries  (other than the Loans) that will be outstanding  immediately
after the Closing Date and set forth on Annex III hereto is a complete  list and
description of all Indebtedness of Holdings, the Borrower and their Subsidiaries
that will be repaid,  defeased,  transferred or otherwise terminated on or prior
to the Closing Date.

            5.22.  Environmental  Matters.  (A) Except as set forth in Annex XII
hereto,  each of the Borrower and its Subsidiaries and the properties and assets
used in its businesses  (including the Real  Properties) is in compliance in all
material  respects with all  applicable  Environmental  Laws,  which  compliance
includes, without limitation, the possession of all material licenses,  permits,
registrations    and   other    governmental    authorizations    (collectively,
"Environmental  Authorizations")  required under applicable  Environmental Laws,
and compliance in all material  respects with the terms and conditions  thereof,
and there are no  circumstances  of a nature  which may  materially  prevent  or
interfere with such  compliance in the future.  Except as set forth in Annex XII
hereto,  neither the Borrower nor any of its  Subsidiaries  has been notified by
any  Governmental  Authority  or,  has any  basis  to  believe,  that  any  such
Environmental Authorizations will be modified, suspended or revoked or cannot be
renewed or otherwise  maintained in the ordinary  course of business.  Except as
set forth in Annex XII hereto, in the last five years,  neither the Borrower nor
any  of  its  Subsidiaries  has  received  any  communication,  whether  from  a
Governmental Authority,  citizen group, employee or otherwise, that alleges that
the Borrower or any of its  Subsidiaries or any of the properties or assets used
in  their  respective  businesses  (including  the  Real  Properties)  is not in
compliance with Environmental Laws.

            (B)  Except  as  set  forth  in  Annex  XII  hereto,   there  is  no
Environmental  Notice  that (i) is  pending  or,  to the best  knowledge  of the
Borrower or any of its Subsidiaries,  threatened  against the Borrower or any of
its Subsidiaries or (ii) is pending or, to the best knowledge of the Borrower or
any of its Subsidiaries,  threatened against any Person whose liability for such
Environmental Notice may have been retained or assumed by or could reasonably be
imputed  or  attributed  by  law  or  contract  to  the  Borrower  or any of its
Subsidiaries.

            (C) Except as set forth in Annex XII hereto,  to the best  knowledge
of the  Borrower  and its  Subsidiaries,  there are no past or present  actions,
activities, circumstances, conditions, events or incidents arising out of, based
upon,  resulting  from or relating  to the  operation,  ownership  or use of any
properties  or assets  (including  the Real  Properties)  currently  or formerly
owned,  operated,  leased or used by the Borrower or any of its Subsidiaries (or
any predecessor in interest of any of them), including,  without limitation, the
emission,  discharge, disposal or other release of any Hazardous Materials in or
into the  Environment,  that (i) could  reasonably  be expected to result in the
incurrence of costs in excess of $50,000, individually, under Environmental Laws
or (ii) could  reasonably  be  expected  to form the basis of any  Environmental
Notice  against or with respect to the Borrower or any of its  Subsidiaries,  or
against any person or entity whose  liability for any  Environmental  Notice may
have been  retained  or assumed by or could be imputed or  attributed  by law or
contract to the Borrower or any of its Subsidiaries.

            (D)  Except  as set forth in Annex XII  hereto,  without  in any way
limiting  the  generality  of the  foregoing,  (i)  there  are,  and to the best
knowledge  of the  Borrower  and its  Subsidiaries,  have been,  no  underground
storage tanks,  or related piping,  located on, at or under property  (including
the Real Properties) owned,  operated,  leased or used by the Borrower or any of
its  Subsidiaries  (or any  predecessor in interest of any of them),  (ii) there
are, and, to the best knowledge of the Borrower and its Subsidiaries,  have been
no  polychlorinated  biphenyls  used or  stored  by the  Borrower  or any of its
Subsidiaries,  located on, at or under property  (including the Real Properties)
owned,  operated,  leased or used by the  Borrower  or any of its  Subsidiaries,
(iii)  there are and have been no  properties  (including  the Real  Properties)
currently or formerly owned, operated,  managed,  leased or used by the Borrower
or any of its  Subsidiaries  (or any  predecessor in interest of any of them) at
which Hazardous Materials generated,  used, owned, managed, stored or controlled
by the Borrower or any of its  Subsidiaries  (or any  predecessor in interest of
any  of  them)  may  have  been  disposed  of or  otherwise  released  into  the
Environment  except  such  disposals  or other  releases  which were both (a) in
compliance with  Environmental  Laws and  Environmental  Authorizations  and (b)
could  not  result  in  costs  in  excess  of   $50,000,   individually,   under
Environmental Laws and (iv) there is no friable asbestos contained in or forming
part of any  building,  building  component,  structure  or office  space owned,
operated, leased or used by the Borrower or any of its Subsidiaries.

            (E)  Prior  to the  Closing  Date,  the  Borrower  and  each  of its
Subsidiaries  shall have made all  notifications,  registrations  and filings in
accordance  with  all  applicable  State  and  Local  Real  Property  Disclosure
Requirements,  including, without limitation, the use of forms provided by state
or local agencies,  where such forms exist, whether to the Agent or to, or with,
the state or local agency, provided, that where such notification,  registration
or  filing  was made  to,  or with,  a state  or  local  agency,  a copy of such
notification, registration or filing shall be provided to the Agent prior to the
Closing Date.

            5.23.  Environmental  Investigations.   All  material  environmental
investigations,  studies, audits,  assessments or reviews conducted of which the
Borrower is in  possession  in relation to the current or prior  business of the
Borrower or any  Subsidiary  or any Real  Property or facility now or previously
owned,  operated,  leased,  used or  controlled  by the  Borrower  or any of its
Subsidiaries, including, without limitation those relating to compliance with or
liability under any Environmental  Law, have been delivered to the Agent through
its attorneys, Cahill Gordon & Reindel.

            5.24. Fine Products Company. As of the date of this Agreement and as
of the  Closing  Date,  Fine  Products  Company,  a Georgia  corporation  ("Fine
Products"),  has capital of $145,000  and has no other assets or, to the best of
the  Borrower's  knowledge,  liabilities  of any kind (other than its rights and
obligations  under the purchase  agreement  dated as of February 1, 1994 between
Fine  Products,  Aminco  Delaware and Gilliam Candy Co.,  Inc.,  and certain tax
attributes).  There are no  actions,  claims,  judgments,  suits or  proceedings
pending or, to the  Borrower's  knowledge,  threatened in any court of competent
jurisdiction  with respect to Fine Products and the Borrower is not aware of any
facts or circumstances  which would provide the basis for the assertion  against
Fine Products of any such actions, claims, suits or proceedings.

            SECTION 6. Affirmative Covenants.  The Borrower covenants and agrees
that on the Closing  Date and  thereafter  for so long as this  Agreement  is in
effect and until the  Commitments  have  terminated  and the Loans together with
interest,  fees and all other  Obligations  incurred  hereunder are paid in full
(except as  otherwise  agreed or  consented  to or waived,  in  writing,  by the
Required Banks):

            6.01. Information Covenants.  The Borrower will furnish or
cause to be furnished to the Agent, who will distribute copies to each
Bank:

            (a) As soon as  available  and in any event within 90 days after the
      close of each fiscal year of the Borrower,  the consolidated balance sheet
      of the Borrower and its Subsidiaries as at the end of such fiscal year and
      the related consolidated statements of income, of shareholders' equity and
      of cash flows for such fiscal year, setting forth comparative consolidated
      figures for the  preceding  fiscal year and a report on such  consolidated
      balance sheets and financial  statements by independent  certified  public
      accountants  of recognized  national  standing,  which report shall not be
      qualified as to the scope of audit or as to the status of the Borrower and
      its Subsidiaries as a going concern and shall state that such consolidated
      financial  statements  present  fairly,  in  all  material  respects,  the
      consolidated financial position of the Borrower and its Subsidiaries as at
      the dates  indicated  and the results of their  operations  and their cash
      flows for the periods indicated in conformity with GAAP applied on a basis
      consistent  with  prior  years  (except  for such  changes  with which the
      independent  certified public  accountants  concur) and the examination by
      such  accountants  was conducted in  accordance  with  generally  accepted
      auditing standards.

            (b) As soon as  available  and in any event within 45 days after the
      close of each of the first  three  quarterly  accounting  periods  in each
      fiscal  year  of the  Borrower,  the  consolidated  balance  sheet  of the
      Borrower and its  Subsidiaries as at the end of such quarterly  accounting
      period and the related consolidated statements of income, of shareholders'
      equity and of cash flows for such quarterly  accounting period and for the
      elapsed  portion  of the  fiscal  year  ended  with  the  last day of such
      quarterly  accounting  period,  setting forth in comparative form the same
      information for the corresponding periods of the prior fiscal year.

            (c) As soon as practicable and in any event within 30 days after the
      end of the  month  of  April  1997  and  each  month  thereafter,  (i) the
      consolidated  balance sheet of the Borrower and its Subsidiaries as at the
      end of such period and (ii) the related consolidated  statements of income
      and cash flows of the Borrower  each in the form  customarily  prepared by
      management, in each case for such fiscal month and for the period from the
      beginning of the then current fiscal year to the end of such fiscal month,
      setting  forth  in  comparative   form  the  same   information   for  the
      corresponding  periods of the prior fiscal year (including a comparison of
      such  monthly  financial  results  against  the  budgets  required  to  be
      submitted  pursuant  to  subsection  (e)  hereof,  together  with a  brief
      narrative  discussion and analysis  prepared by management  describing the
      Borrower's results of operations for such fiscal month.

            (d)  Together  with each  delivery of  financial  statements  of the
      Borrower and its Subsidiaries  pursuant to subsection (a) above, a written
      statement by the independent  public accountants giving the report thereon
      (i) stating  that their  audit  examination  has  included a review of the
      terms of Sections  7.04,  7.05,  7.07 (as to the  Borrower  only) and 7.09
      through 7.11  (inclusive)  of this  Agreement as they relate to accounting
      matters but without having  conducted any special  auditing  procedures in
      connection therewith, (ii) stating whether, in connection with their audit
      examination,  any condition or event which  constitutes a Default or Event
      of Default has come to their  attention,  and if such a condition or event
      has come to their attention, specifying the nature and period of existence
      thereof;  provided that such accountants  shall not be liable by reason of
      any failure to obtain  knowledge  of any such  Default or Event of Default
      that would not be disclosed in the course of their audit examination,  and
      (iii)  stating that based on their audit  examination  nothing has come to
      their  attention  which  causes them to believe that as of the end of such
      fiscal year of the Borrower there existed a Default or an Event of Default
      related to the breach of any  covenant set forth in Sections  7.04,  7.05,
      7.07 (as to the Borrower only) and 7.09 through 7.11 (inclusive),  as they
      relate to accounting matters, and if such a condition or event has come to
      their attention, specifying the nature and period of existence thereof and
      what action the  Borrower  has taken,  is taking and proposes to take with
      respect thereto.

            (e)  Within 30 days  after the  commencement  of each  fiscal  year,
      annual budgets of the Borrower and its Subsidiaries,  substantially in the
      form of  Exhibit P hereto,  in  reasonable  detail  for each month of such
      fiscal year, as  customarily  prepared by management for its internal use,
      setting forth, with appropriate discussion, the principal assumptions upon
      which such budgets are based,  and including (i)  forecasted  consolidated
      balance sheets,  consolidated  statements of operations,  of stockholders'
      equity  and of  cash  flows  of the  Borrower  and its  Subsidiaries  on a
      consolidated basis for such periods, (ii) the amount of forecasted capital
      expenditures for such fiscal periods, and (iii) forecasted compliance with
      Sections 7.09-7.11;  provided that if any such forecast indicates that the
      Borrower may not be in compliance  with any provision of this Agreement at
      some future date, such forecast shall not constitute a Default or an Event
      of Default or  anticipatory  or other breach  thereof.  Together with each
      delivery of financial statements pursuant to Section 6.01(c), a comparison
      of the current year to date financial results against the budgets required
      to be submitted pursuant to this subsection (e) shall be presented.

            (f) At the time of the delivery of the financial statements provided
      for in Sections 6.01(a), (b) and (c), a certificate of the chief executive
      officer, chief financial officer,  controller, chief accounting officer or
      other Authorized Officer of the Borrower to the effect that such financial
      statements  are true and  complete in all  material  respects  and that no
      Default or Event of Default exists, or, if any Default or Event of Default
      does exist,  specifying the nature and extent thereof,  which  certificate
      shall,  with respect to the financial  statements  provided for in Section
      6.01(c),  at the time of delivery of such  statements for the months ended
      September 30, December 31, March 31 and June 30,  beginning with the month
      ended June 30, 1997, be accompanied by a Compliance  Certificate in a form
      reasonably acceptable to the Agent setting forth the calculations required
      to establish  whether the Borrower and its Subsidiaries were in compliance
      with the covenants in this  Agreement  (including  without  limitation the
      covenants set forth in Sections 7.09 through 7.11  (inclusive))  as at the
      end of such fiscal period or year, as the case may be.

            (g) Promptly upon receipt thereof, a copy of each annual "management
      letter"  submitted  to the  Borrower  by its  independent  accountants  in
      connection with any annual audit made by them of the books of the Borrower
      or any of its Subsidiaries.

            (h)  Promptly  upon  their   becoming   available,   copies  of  all
      consolidated financial statements,  reports,  notices and proxy statements
      sent or made available  generally by the Borrower or any Subsidiary of the
      Borrower to its  security  holders  (other than to the Borrower or another
      Subsidiary),  of all regular  and  periodic  reports and all  registration
      statements and  prospectuses,  if any, filed by the Borrower or any of its
      Subsidiaries with any securities exchange or with the SEC and of all press
      releases and other statements made available  generally by the Borrower or
      any  Subsidiary  of  the  Borrower  to  the  public  concerning   material
      developments in the business of the Borrower and its Subsidiaries.

            (i) Promptly upon any Senior Officer obtaining  knowledge (w) of any
      condition  or event which  constitutes  a Default or Event of Default,  or
      becoming  aware  that any Bank has given any  written  notice or taken any
      other action with respect to a claimed  Default or Event of Default  under
      this  Agreement,  (x) that any Person has given any written  notice to the
      Borrower or any  Subsidiary of the Borrower or taken any other action with
      respect to a claimed default or event or condition of the type referred to
      in Section  8.04,  or (y) of a material  adverse  change in the  business,
      operations,  properties, assets, nature of assets, condition (financial or
      otherwise)  or prospects of the Borrower and its  Subsidiaries  taken as a
      whole,  an  Officers'  Certificate  specifying  the  nature  and period of
      existence of any such  condition or event,  or specifying the notice given
      or action  taken by such  holder or Person and the nature of such  claimed
      Default, Event of Default, event or condition, or material adverse change,
      and what action the  Borrower  has taken,  is taking and  proposes to take
      with respect thereto.

            (j) (i) Promptly upon any Senior Officer obtaining  knowledge of the
      institution  of, or  written  threat  of, any  action,  suit,  proceeding,
      governmental  investigation or arbitration  against or affecting Holdings,
      the Borrower or any of its  Subsidiaries or any property of Holdings,  the
      Borrower or any of its Subsidiaries not previously disclosed to the Banks,
      which action, suit, proceeding,  governmental investigation or arbitration
      seeks  (or  in  the  case  of  multiple   actions,   suits,   proceedings,
      governmental  investigations  or  arbitrations  arising  out of  the  same
      general  allegations or circumstances  which seek) recovery from Holdings,
      the  Borrower  or any of its  Subsidiaries  aggregating  $500,000  or more
      (exclusive  of claims  covered by  insurance  policies  of  Holdings,  the
      Borrower  or any of its  Subsidiaries  unless the  insurers of such claims
      have  disclaimed  coverage or reserved  the right to disclaim  coverage on
      such  claims),  the  Borrower  shall give notice  thereof to the Banks and
      provide such other  information  as may be reasonably  available to enable
      the Banks and their  counsel to  evaluate  such  matters;  (ii) as soon as
      practicable  and in any event  within 45 days after the end of each fiscal
      quarter,  the Borrower  shall  provide a report to the Banks  covering any
      institution  of, or  written  threat  of, any  action,  suit,  proceeding,
      governmental   investigation  or  arbitration  (not  previously  reported)
      against or affecting Holdings,  the Borrower or any of its Subsidiaries or
      any property of  Holdings,  the  Borrower or any of its  Subsidiaries  not
      previously  disclosed  to  the  Banks,  which  action,  suit,  proceeding,
      governmental  investigation  or  arbitration  seeks  (or  in the  case  of
      multiple  actions,  suits,  proceedings,  governmental  investigations  or
      arbitrations  arising out of the same general allegations or circumstances
      which  seek)  recovery  from   Holdings,   the  Borrower  or  any  of  its
      Subsidiaries  aggregating $250,000 or more (exclusive of claims covered by
      insurance  policies of Holdings,  the Borrower or any of its  Subsidiaries
      unless the  insurers of such claims have  disclaimed  coverage or reserved
      the right to disclaim  coverage on such  claims),  and shall  provide such
      other  information  at such time as may be reasonably  available to enable
      the Banks and their counsel to evaluate such matters; (iii) in addition to
      the  requirements  set  forth  in  clauses  (i) and  (ii) of this  Section
      6.01(j),  the Borrower  upon  request  shall  promptly  give notice of the
      status of any action,  suit,  proceeding,  governmental  investigation  or
      arbitration  covered by a report delivered to the Banks pursuant to clause
      (i) or (ii) above to the Banks and provide such other  information  as may
      be  reasonably  available  to it to enable the Banks and their  counsel to
      evaluate such matters and (iv) promptly upon any Senior Officer  obtaining
      knowledge of any material  dispute in respect of or the institution of, or
      written   threat   of,  any   action,   suit,   proceeding,   governmental
      investigation  or arbitration  in respect of any material  contract of the
      Borrower  or any of its  Subsidiaries,  the  Borrower  shall  give  notice
      thereof to the Banks and shall  provide such other  information  as may be
      reasonably  available  to enable the Banks and their  counsel to  evaluate
      such matters.

            (k)  Within  90 days of the  last  day of  each  fiscal  year of the
      Borrower, a summary report,  substantially in the form of Annex VI hereto,
      outlining  all material  insurance  coverage  maintained as of the date of
      such  report  by the  Borrower  and its  Subsidiaries  and  outlining  all
      material  insurance  coverage planned to be maintained by the Borrower and
      its Subsidiaries in the subsequent fiscal year.

            (l) To the extent  reasonably  requested  by the  Agent,  as soon as
      practicable and in any event within ten Business Days of the later of such
      request  and the  making  of any  such  amendment  or  waiver,  copies  of
      amendments or waivers with respect to  Indebtedness of the Borrower or any
      of its Subsidiaries.

            (m) Within  fifteen  (15) days after the last  Business  Day of each
      month, the Borrower shall deliver to Agent for distribution to each Bank a
      borrowing base certificate in the form of Exhibit M hereto (the "Borrowing
      Base Certificate")  detailing the Borrower's  Eligible Accounts Receivable
      and  Eligible  Inventory  as of the last day of such month,  certified  as
      complete and correct on behalf of the Borrower by a Senior  Officer or any
      other  Authorized  Officer.  In addition,  each Borrowing Base Certificate
      shall  have  attached  to  it  such  additional   schedules  and/or  other
      information as the Agent may reasonably  request. If the Borrower fails to
      deliver any such Borrowing Base Certificate  within  twenty-five (25) days
      after the end of any such month, then the Borrower's  Borrowing Base shall
      be deemed to be $0 until  such time as the  Borrower  shall  deliver  such
      required Borrowing Base Certificate.

            (n) (i) On or prior to the Closing Date and within 90 days after the
      commencement  of each fiscal year,  a complete  and  accurate  list of the
      officers  and  directors  of the  Borrower  and (ii) within 30 days of any
      change  in  personnel  affecting  the  accuracy  of such  list,  a  notice
      specifying such change in personnel.

            (o) With reasonable promptness, such other information and data with
      respect to the Borrower or any of its  Subsidiaries  or any other  similar
      entity in which the Borrower or any Subsidiary has an investment,  as from
      time to time may be reasonably requested by any Bank and may be reasonably
      available to the Borrower.

            (p) The Borrower  shall  deliver to the Agent,  within 15 days after
      filing  with  the  SEC,  copies  of  Holdings'  annual  report  and of the
      information,  documents  and other  reports (or copies of such portions of
      any of the  foregoing as the SEC may by rules and  regulations  prescribe)
      which is filed by Holdings with the SEC pursuant to Section 13 or 15(d) of
      the Exchange Act within the time periods  prescribed  under such rules and
      regulations.  In  addition,  the  Borrower  shall cause  Holdings'  annual
      reports to  shareholders  and any  quarterly  or other  financial  reports
      furnished  by  Holdings  to  shareholders  generally  to be filed with the
      Agent.

            6.02.  Books,  Records and Inspections.  The Borrower will, and will
cause each of its  Subsidiaries  to, keep true books of records and  accounts in
which full and correct entries will be made of all their business  transactions,
and  will   reflect  in  its   financial   statements   adequate   accruals  and
appropriations to reserves,  all in accordance with GAAP. The Borrower will, and
will cause each of its Subsidiaries to, permit,  upon reasonable prior notice to
the chief financial officer,  controller,  chief accounting officer or any other
Authorized Officer of the Borrower,  officers and designated  representatives of
the Agent or any Bank to visit and  inspect any of the  properties  or assets of
the Borrower and any of its  Subsidiaries  in  whomsoever's  possession,  and to
examine the books of account of the  Borrower  and any of its  Subsidiaries  and
discuss the  affairs,  finances  and  accounts of the Borrower and of any of its
Subsidiaries  with, and be advised as to the same by, its and their officers and
independent  accountants  (in  the  presence  of  such  officers),  all at  such
reasonable  times  during  regular  business  hours  and  intervals  and to such
reasonable extent as the Agent or any Bank may reasonably request.

            6.03. Maintenance of Property; Insurance. (a) The Borrower will, and
will cause each of its Subsidiaries to, exercise commercially reasonable efforts
to  maintain  or  cause to be  maintained  in good  repair,  working  order  and
condition  (subject  to  normal  wear  and  tear)  all  properties  used  in its
businesses  and from  time to time  will  make or cause to be made all  repairs,
renewals and  replacements  thereof which the Borrower deems  appropriate in its
commercially  reasonable  judgment and will  maintain and renew as necessary all
licenses,  permits and other clearances necessary in its commercially reasonable
judgment to use and occupy such properties of the Borrower and each  Subsidiary,
as the case may be.

            (b) The Borrower will, and will cause each of its  Subsidiaries  to,
maintain  or  cause to be  maintained,  with  financially  sound  and  reputable
insurers,  insurance with respect to its properties and business against loss or
damage of the kinds  customarily  insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated,  of
such  types  and in  such  amounts  as are  customarily  carried  under  similar
circumstances by such other  corporations to the extent that such types and such
amounts of  insurance  are  available  at  commercially  reasonable  rates.  The
Borrower will, and will cause each of its Subsidiaries to, furnish to each Bank,
upon reasonable request,  information as to the insurance carried,  and will not
cancel any such insurance without the consent of the Required Banks.

            (c) Without  limiting  subsection  6.03(b) above, the Borrower will,
and will cause each of its Subsidiaries to, maintain in full force the insurance
coverages specified in the Mortgages and the other Security Documents.

            6.04.  Payment of Taxes.  The Borrower will pay and  discharge,  and
will cause each of its  Subsidiaries  to pay and discharge,  all material taxes,
assessments  and  governmental  charges  or levies  imposed  upon it or upon its
income or profits, or upon any properties  belonging to it, prior to the date on
which material penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien or charge upon any  properties of the Borrower or any of its
Subsidiaries  or cause a failure or forfeiture of title  thereto;  provided that
neither the Borrower nor any  Subsidiary  shall be required to pay any such tax,
assessment,  charge,  levy or claim that is being contested in good faith and by
proper  proceedings  timely  instituted  and  diligently  conducted  if  it  has
maintained adequate reserves with respect thereto in accordance with GAAP.

            6.05.  Corporate  Franchises.  The Borrower  will do, and will cause
each Subsidiary to do, or cause to be done, all things necessary to preserve and
keep in full force and effect its existence,  rights and authority, except where
such  failure to keep in full force and effect such rights and  authority  would
not have a Materially Adverse Effect.

            6.06.  Compliance  with  Statutes,  etc. The Borrower will, and will
cause each Subsidiary to, comply with all applicable  statutes,  regulations and
orders  of,  and  all  applicable  restrictions  imposed  by,  all  Governmental
Authorities,  in respect of the conduct of its business and the ownership of its
property,  other than  non-compliance  which would not have a Materially Adverse
Effect;  provided that with respect to non-compliance  with  Environmental  Laws
which is disclosed in Annex XII hereto,  the Borrower  will, and will cause each
Subsidiary to, comply with such Environmental Laws as soon as practicable.

            6.07. ERISA.  The Borrower will furnish to the Agent, who will
distribute to each of the Banks:

            (a) promptly upon the Borrower's knowing or having reason to know of
      the  occurrence  of  any  (i)  Termination   Event,  or  (ii)  "prohibited
      transaction,"  within the meaning of Section 406 of ERISA or Section  4975
      of the Code,  in  connection  with any Pension  Plan or any trust  created
      thereunder,  which in the case of all such events  described in clause (i)
      or (ii) results or could  reasonably  be expected to result in a liability
      of a Credit Party or its ERISA  Affiliates  in the  aggregate in excess of
      $200,000, a written notice specifying the nature thereof,  what action the
      Credit Party or its ERISA  Affiliates have taken, are taking or propose to
      take with respect thereto, and, when known, any action taken or threatened
      by  the  Internal   Revenue   Service,   Department  of  Labor,   PBGC  or
      Multiemployer Plan with respect thereto.

            (b) with reasonable  promptness,  copies of (i) all notices received
      by a Credit  Party or any of its  ERISA  Affiliates  of  PBGC's  intent to
      terminate  any Title IV Plan or to have a trustee  appointed to administer
      any Title IV Plan,  the notice of which event is required  pursuant to the
      preceding  paragraph (a); (ii) upon the request of the Agent each Schedule
      B (Actuarial Information) to the annual report (Form 5500 Series) filed by
      a Credit Party or any of its ERISA  Affiliates  with the Internal  Revenue
      Service  with  respect  to each  Pension  Plan  for  which  Schedule  B is
      required;  (iii) upon the request of the Agent,  the most recent actuarial
      valuation  report for each Title IV Plan; and (iv) all notices received by
      the Credit Parties or any of their ERISA  Affiliates  from a Multiemployer
      Plan concerning the imposition or amount of withdrawal  liability pursuant
      to Section 4202 of ERISA,  the notice of which event is required  pursuant
      to the preceding paragraph (a).

            6.08. Performance of Obligations.  The Borrower will, and will cause
each  of its  Subsidiaries  to,  perform  in all  material  respects  all of its
obligations  under the terms of each mortgage,  indenture,  security  agreement,
other debt instrument and material  contract by which it is bound or to which it
is a party, except where such nonperformance would not have a Materially Adverse
Effect.

            6.09. End of Fiscal Years;  Fiscal Quarters.  The Borrower will, for
financial reporting  purposes,  and will cause each of its Subsidiaries to, have
its (i) fiscal  years end on  December  31, and (ii) fiscal  quarters  end on or
about March 31, June 30, September 30 and December 31.

            6.10. Use of Proceeds.  All proceeds of the Term Loans and
Revolving Loans shall be used as provided in Section 5.05.

            6.11.  Equal  Security  for Loans and  Notes;  No  Further  Negative
Pledges 6.11. Equal Security for Loans and Notes; No Further  Negative  Pledges.
(a) If the Borrower or any of its  Subsidiaries  shall create or assume any Lien
upon any of its property or assets,  whether now owned or hereafter acquired and
whether  or not such  property  or assets  constitutes  Collateral,  other  than
Permitted  Encumbrances  (unless  prior  written  consent  to  the  creation  or
assumption  thereof  shall have been  obtained  from the Agent and the  Required
Banks),  it shall  make or cause to be made  effective  provisions  whereby  the
Obligations  will be secured by such Lien  equally and ratably  with any and all
other  Indebtedness  thereby secured as long as any such  Indebtedness  shall be
secured;  provided that this  covenant  shall not be construed as consent by the
Agent and the Required  Banks to any violation by the Borrower of the provisions
of Section 7.03.

            (b) Except with respect to prohibitions  against other  encumbrances
on specific  property  encumbered to secure  payment of particular  Indebtedness
permitted  hereunder  (which  Indebtedness  relates solely to the acquisition or
improvement  of such  specific  property)  neither the  Borrower  nor any of its
Subsidiaries  shall  enter  into  any  agreement  prohibiting  the  creation  or
assumption  of any Lien upon its  properties  or  assets,  whether  now owned or
hereafter acquired.

            6.12. Lender Meeting.  The Borrower will participate in a meeting of
the Banks once  during  each  fiscal  year to be held at a  location  and a time
selected by the  Borrower  and  reasonably  acceptable  to the Agent  unless the
Required  Banks  determine  in  their  sole  discretion  that  such  meeting  is
unnecessary and so inform the Borrower.

            6.13.  Pledge  of  Additional  Collateral.   Concurrently  with  the
execution and delivery by any Subsidiary of a Subsidiary Guarantee, the Borrower
will cause such Subsidiary to take all necessary  action to grant the Collateral
Agent a perfected  first Lien in all of the real and  personal  property of such
Subsidiary (to the extent permitted by applicable law) to secure the payment and
performance of the Obligations and such Subsidiary's obligations and liabilities
under its Subsidiary  Guarantee;  and promptly,  and in any event within 30 days
after  the  acquisition  of assets  of a type  that,  but for the fact that such
assets shall have been acquired after the Closing Date,  would have  constituted
Collateral,  the Borrower will, and will cause each of its Subsidiaries to, take
all necessary  action to grant the  Collateral  Agent a perfected  first Lien in
such newly acquired  assets (such  personal  property and assets of a Subsidiary
executing a Subsidiary  Guarantee and such newly acquired assets are referred to
herein collectively as the "Additional Collateral").  Such action to be taken by
the  Borrower  and the  Subsidiaries  shall  include,  without  limitation,  the
execution and delivery of security  agreements,  and/or supplements thereto, and
other  instruments  and  documents,   all  in  form  and  substance   reasonably
satisfactory  to the  Collateral  Agent,  the  filing of  appropriate  financing
statements under the provisions of the UCC,  applicable  domestic or local laws,
rules or  regulations  in each of the offices  where such filing is necessary or
appropriate,  and the  delivery of such  opinions of counsel with respect to the
foregoing  as the  Collateral  Agent shall  reasonably  require;  provided  this
Section  6.13 shall not apply to any assets  subject  to Liens  permitted  under
Section 7.03(i).  Furthermore,  promptly, and in any event within 30 days, after
the  acquisition  of an interest in Real  Property  within the United States not
held as of the Closing Date (the "Additional Real Property"), the Borrower will,
and will cause such of its Subsidiaries acquiring such an interest to, take such
actions and execute  such  documents  as the Agent shall  reasonably  require to
confirm the Lien of a Mortgage (including,  without limitation,  satisfaction of
the  conditions  set forth in Sections  4.01(C)(ii)  and (L)),  or execute a new
Mortgage,  with respect to such Additional Real Property. All costs and expenses
arising  from any action taken by the Agent or any Bank in  connection  with the
pledge of Additional  Collateral or  Additional  Real Property  pursuant to this
Section 6.13, including, without limitation, reasonable costs of counsel for the
Agent,  shall be payable by the Borrower to the Agent or the Bank incurring such
cost or expense within 10 Business Days after demand  therefor.  All agreements,
instruments and documents executed or delivered pursuant to or in furtherance of
this Section 6.13, and all amendments,  modifications  and  supplements  thereto
from  time to time  entered  into,  are and shall be within  the  definition  of
"Security Documents."

            6.14. Security Interests.  The Borrower will, and will cause each of
its  Subsidiaries to, perform any and all acts and execute any and all documents
(including,  without limitation, the execution,  amendment or supplementation of
any  financing   statement  and  continuation   statement)  for  filing  in  any
appropriate  jurisdiction  under  the  provisions  of the UCC,  local law or any
statute,  rule or regulation of any applicable  domestic  jurisdiction which are
necessary in order to maintain or confirm in favor of the  Collateral  Agent for
the benefit of the Banks a valid and perfected  Lien on the  Collateral  and any
Additional  Collateral as collateral security for the payment and performance of
the Obligations, including, without limitation, the Additional Loans, subject to
no Liens except for Prior Liens and Liens  permitted by the applicable  Security
Documents.  The Borrower shall,  as promptly as practicable  after the filing of
any  financing  statements,  deliver to the Agent  acknowledgment  copies of, or
copies of lien search  reports  confirming the filing of,  financing  statements
duly filed under the UCC of all  jurisdictions  as may be  necessary  or, in the
reasonable  judgment of the Agent,  desirable  to perfect the Lien  created,  or
purported or intended to be created, by each Security Document.

            6.15.  Environmental  Events.  (i) The Borrower will, and will cause
each of its Subsidiaries to, comply with any and all  Environmental  Laws, other
than  non-compliance  which  could  not  reasonably  be  expected  to  result in
liability under any Environmental Laws in excess of $250,000  individually or in
the aggregate with any other liability under any  Environmental  Laws;  provided
that with respect to non-compliance  with  Environmental Laws which is disclosed
in Annex XII hereto,  the Borrower will, and will cause each of its Subsidiaries
to, comply with such Environmental Laws as soon as practicable.

           (ii) The  Borrower  will  promptly  give  notice  to the  Agent  upon
determining  the existence of (a) any violation of any  Environmental  Laws, (b)
any Environmental  Notice or (c) any release or threatened  release of Hazardous
Materials at, on, upon, under or from any of the Real Properties or any facility
or equipment thereat in excess of a reportable quantity or allowable standard or
level under any  Environmental  Laws,  or in a manner  and/or amount which could
reasonably be expected to result in liability under any  Environmental  Laws, in
each case in excess of $250,000  individually or in the aggregate with any other
liability under any Environmental  Laws (other than any such events disclosed in
Annex XII).

          (iii) In the event of the  presence of  Hazardous  Materials on any of
the Real  Properties  which is in  violation  of, or which could  reasonably  be
expected to result in liability under, any  Environmental  Laws, in each case in
excess of $250,000  individually  or in the aggregate  with any other  liability
under any  Environmental  Laws,  the Borrower or any of its  Subsidiaries,  upon
discovery  thereof,  shall take appropriate  steps to initiate and expeditiously
complete  all  response,   corrective  and  other  action   required  under  any
Environmental Laws to mitigate and eliminate any such violation or liability.

           (iv)  Accompanying  each quarterly  Compliance  Certificate  required
under  Section  6.01(f)  hereof,  the Company  shall  include a statement of the
status of each matter  identified  in Annex XII and each matter for which notice
has been given under Section 6.15(ii) hereof indicating the action that has been
taken, additional action required,  and, to the extent practicable,  an estimate
of the  completion  date and future cost for each  matter  until each matter has
been completely addressed.

            6.16. New Subsidiaries.  In addition to its obligations with respect
to Section 6.13, if, after the date hereof, the Borrower or any Subsidiary shall
create or acquire any  Subsidiary,  the Borrower  shall,  concurrently  with the
creation or acquisition of such Subsidiary, (i) cause such Subsidiary to execute
and deliver to the Agent a Subsidiary  Guarantee,  substantially  in the form of
Exhibit R annexed hereto,  guaranteeing the Borrower's Obligations hereunder and
(ii) take all necessary  actions and execute such  agreements,  instruments  and
documents,  including,  without limitation,  stock powers executed in blank, and
deliver  such  opinions  of  counsel  with  respect  thereto,  as the  Agent may
reasonably require to cause all of the capital stock of such Subsidiary owned or
controlled by the Borrower to be pledged to the  Collateral  Agent to secure the
Borrower's  Obligations hereunder such that the Collateral Agent has a valid and
perfected first-priority security interest in such pledged capital stock.

            6.17.  Manufacturing  Agreements.  The Borrower has entered into the
Cutex  Manufacturing  Agreement,  substantially in the form of Exhibit S hereto,
and such  agreement  remains  in full  force and  effect  unless  terminated  in
accordance with its terms.  The Borrower  agrees that,  within 30 days after the
Closing Date, it will enter into the AM Manufacturing  Agreement,  substantially
in the form of Exhibit T hereto, and reasonably acceptable to the Agent.

            SECTION 7. Negative  Covenants.  The Borrower  hereby  covenants and
agrees that as of the Closing Date and  thereafter for so long as this Agreement
is in effect and until the  Commitments  have  terminated and the Loans together
with interest,  fees and all other  Obligations  incurred  hereunder are paid in
full (except as otherwise agreed or consented to or waived,  in writing,  by the
Required Banks):

            7.01. Changes in Business.  Other than asset dispositions  permitted
under  Section  7.13,  the  Borrower  will not,  and will not  permit any of its
Subsidiaries  to,  materially  alter its  businesses  from that conducted by the
Borrower or such  Subsidiary  at the  Closing  Date and the  business  generally
described in Holdings'  Annual Report to Shareholders  and Transition  Report on
Form 10-K for fiscal  period  1996,  and lines of  business  reasonably  related
thereto.

            7.02. Amendments or Waivers of Certain Documents.  The
Borrower will not, and will not permit any of its Subsidiaries to, amend
or otherwise change the terms of any Existing Debt.

            7.03.  Liens.  The  Borrower  will  not,  and  will not  permit  any
Subsidiary to, directly or indirectly, create, incur, assume or permit or suffer
to exist  any Lien upon or with  respect  to any item  constituting  Collateral,
whether now owned or  hereafter  acquired,  except for the Lien of the  Security
Document  relating  thereto,  Prior  Liens  applicable  thereto  and other Liens
expressly  permitted by such Security Document.  The Borrower will not, and will
not permit any of its Subsidiaries to, create,  incur, assume or suffer to exist
any Lien upon or with  respect to any  property or assets of the Borrower or any
Subsidiary which does not constitute  Collateral  whether now owned or hereafter
acquired,  or sell any such property or assets  subject to an  understanding  or
agreement,  contingent  or otherwise,  to repurchase  such property or assets or
assign  any  right to  receive  income,  or file or  permit  the  filing  of any
financing  statement under the UCC or any other similar notice of Lien under any
similar  recording or notice  statute,  except the  following,  which are herein
collectively referred to as "Permitted Encumbrances":

            (a) Liens for taxes,  assessments or governmental  charges or claims
      not yet delinquent or Liens for taxes, assessments or governmental charges
      or claims being contested in good faith and by appropriate proceedings for
      which  adequate   reserves,   as  may  be  required  by  GAAP,  have  been
      established;

            (b) Liens in respect of property or assets of the Borrower or any of
      its  Subsidiaries  imposed by law (i) which were  incurred in the ordinary
      course of business, such as carriers', warehousemen's and mechanics' Liens
      and other similar Liens  arising in the ordinary  course of business,  and
      (x) which do not in the  aggregate  materially  detract  from the value of
      such  property  or assets or  materially  impair  the use  thereof  in the
      operation of the business of the  Borrower or any of its  Subsidiaries  or
      (y) which are being  contested in good faith by  appropriate  proceedings,
      which  proceedings have the effect of preventing the forfeiture or sale of
      the property or asset  subject to such Lien or (ii) which do not relate to
      material  liabilities of the Borrower and its  Subsidiaries  and do not in
      the aggregate materially detract from the value of the property and assets
      of the Borrower and its Subsidiaries taken as a whole;

            (c) Liens in connection  with any attachment or judgment  (including
      judgment or appeal bonds) for amounts of less than  $500,000  individually
      or  less  than  $1,000,000  in the  aggregate  (exclusive  of  any  amount
      adequately  covered by  insurance  as to which the  insurance  company has
      acknowledged  coverage)  unless the judgment it secures  shall,  within 60
      days  after  the entry  thereof,  not have been  discharged  or  execution
      thereof not been stayed pending appeal,  or shall not have been discharged
      within 30 days after the expiration of any such stay;

            (d)  Liens  (other  than any Lien  imposed  by  ERISA)  incurred  or
      deposits  made in the  ordinary  course of  business  in  connection  with
      workers'  compensation,  unemployment  insurance and other types of social
      security, or to secure the performance of tenders,  statutory obligations,
      surety and appeal bonds, bids, leases,  government contracts,  performance
      and return-of-money  bonds and other similar  obligations  incurred in the
      ordinary  course of business  (exclusive of  obligations in respect of the
      payment for borrowed money or the equivalent);

            (e) subject to the  provisions  of Section 7.17 and, with respect to
      any Mortgaged Real Property, to the provisions of any applicable Mortgage,
      (i)  Leases  with  respect  to the assets or  properties  of the  Borrower
      entered  into  in the  ordinary  course  of the  Borrower's  business  and
      subordinate  in all  respects to the Liens  granted and  evidenced  by the
      Security Documents,  (ii) foreign Leases and (iii) Existing Leases and any
      extensions, renewals or replacements thereof;

            (f)  easements,  rights  of  way,  restrictions,  minor  defects  or
      irregularities  in title not interfering in any material  respect with the
      business of the Borrower or any of its  respective  Subsidiaries,  in each
      case  incurred  in the  ordinary  course  of  business  and  which  do not
      materially  impair for its intended purposes the Real Property to which it
      relates;

            (g) zoning and building by-laws and ordinances, municipal bylaws and
      regulations,  and restrictive covenants, which do not materially interfere
      with  the  use of the  subject  property  by  the  Borrower  or any of its
      Subsidiaries as such property is used as of the Closing Date;

            (h)   Liens securing Indebtedness of a Subsidiary owing to the
      Borrower or a Wholly Owned Subsidiary of the Borrower;

            (i) Liens upon real or  tangible  or  intangible  personal  property
      acquired or constructed by the Borrower or its Subsidiaries after the date
      hereof or on such  property or equity  securities  of a Person at the time
      such  Person   becomes  a  Subsidiary  of  the  Borrower  or  any  of  its
      Subsidiaries;  provided  that (i) any such Lien is created  solely for the
      purpose of securing Indebtedness representing, or incurred to finance, the
      cost of the item of property  subject thereto or such Liens existed on the
      date such property or securities  were acquired and were not incurred as a
      result  of or in  anticipation  of such  acquisition,  (ii) the  principal
      amount of the  Indebtedness  secured by such Lien does not exceed  100% of
      the fair value (as  determined  in good faith by the board of directors of
      the Borrower) of the respective property at the time it was so acquired or
      constructed,  (iii) the  Indebtedness  secured by the Lien is not  created
      more  than 180 days  after  the later of the  acquisition,  completion  of
      construction,  repair,  improvement,  addition  or  commencement  of  full
      operation  of the  property  subject to the Lien,  (iv) such Lien does not
      extend to or cover any other property other than such item of property and
      (v) the incurrence of such Indebtedness  secured by such Lien is permitted
      by Section 7.04;

            (j) Liens on any  property  existing as of the date hereof  securing
      Existing Debt and any  refinancing,  extension,  renewal or  rearrangement
      thereof  provided  that such  Lien  does not  extend to or cover any other
      property  other than items of property  encumbered  as of the date hereof;
      and

            (k)   Liens on inventory and receivables in connection with
      the South African Credit Agreement.

            7.04. Indebtedness.  The Borrower will not, and will not
permit any of its Subsidiaries to, contract, create, incur, assume or
suffer to exist any Indebtedness, except:

            (a)   Indebtedness incurred pursuant to the Credit Documents;

            (b)  Existing  Debt  and  any   refinancing,   extension,   renewal,
      rearrangement or replacement thereof;  provided that any such refinancing,
      extension, renewal, rearrangement or replacement of Existing Debt shall be
      on terms  which,  both  taken as a whole and  specifically  as such  terms
      relate  to  the  identity  of  the  obligors,   repayments  of  principal,
      covenants,  events of default and security in property of the debtor,  are
      in each event no less favorable to the Borrower than the correlative terms
      of the Existing Debt;

            (c)   Interest Rate Agreements, if any;

            (d)  $1,000,000 of  Indebtedness  outstanding at any time to finance
      the cost of the acquisition or  construction of real or personal  tangible
      or intangible  property  (including Capital Leases),  and any refinancing,
      extension,  renewal,  rearrangement or replacement thereof;  provided that
      such  Indebtedness  (or the refinancing  thereof) shall not exceed 100% of
      the  fair  value  of such  property;  and  provided,  further,  that  such
      Indebtedness (or the refinancing thereof) is not secured by any Lien other
      than a Lien referred to in clause (i) of Section 7.03;

            (e)   other unsecured Indebtedness not exceeding $1,000,000 in
      the aggregate at any time outstanding;

            (f)   Indebtedness owed to Morningside under the Management
      Agreement;

            (g)  Indebtedness  of  the  Borrower  to any  of  its  Wholly  Owned
      Subsidiaries  or of any Subsidiary to the Borrower or another Wholly Owned
      Subsidiary of the Borrower (but only so long as such  Indebtedness is held
      by the Borrower or its Wholly Owned Subsidiary);

            (h)  Indebtedness in respect of performance  bonds,  return-of-money
      bonds, surety and appeal bonds and other similar  obligations  incurred by
      the  Borrower  or any of  its  Subsidiaries  in  the  ordinary  course  of
      business,  provided such Indebtedness does not exceed $100,000 at any time
      outstanding;

            (i)   Indebtedness of any Subsidiary incurred pursuant to the
      issuance of a Guarantee by such Subsidiary as required by Section
      6.16 of this Agreement; and

            (j)  Indebtedness of Carson Holdings  Limited  pursuant to the South
      African  Credit  Agreement in an amount not  exceeding  the  equivalent of
      US$2,000,000 in the aggregate at any time outstanding;  provided that such
      Indebtedness  is not secured by any Lien other than a Lien  referred to in
      Section 7.03(k).

            7.05.  Advances,  Investments and Loans.  The Borrower will not, and
will not  permit  any of its  Subsidiaries  to,  lend  money or  credit  or make
advances  to any  Person,  or  purchase  or acquire  any stock,  obligations  or
securities of, or any other interest in, or make any capital contribution to any
Person, except:

            (a)   investments in Cash and Cash Equivalents;

            (b)  receivables  owing  to  them  and  advances  to  customers  and
      suppliers,  in each  case if  created,  acquired  or made in the  ordinary
      course of  business  and  payable  or  dischargeable  in  accordance  with
      customary trade terms;

            (c) investments  (including debt obligations) received in connection
      with the  bankruptcy or  reorganization  of suppliers and customers and in
      settlement  of  delinquent   obligations  of,  and  other  disputes  with,
      customers and suppliers arising in the ordinary course of business;

            (d)   investments in and advances to Credit Parties;

            (e)  investments  in any Wholly Owned  Subsidiary of the Borrower or
      another  Subsidiary,  or any Person which, as a result of such investment,
      becomes a Wholly Owned  Subsidiary of the Borrower or another  Subsidiary;
      provided  that such  Wholly  Owned  Subsidiary  is  engaged  in a business
      related to that of the Borrower and its  Subsidiaries  in compliance  with
      Section 7.01;

            (f)  transactions  between the  Borrower and any of its Wholly Owned
      Subsidiaries  and  between  Wholly  Owned  Subsidiaries   permitted  under
      Sections 7.04(g) and 7.08(i);

            (g)  loans  or  advances  made  by the  Borrower  to  its  officers,
      directors and  employees in the ordinary  course of business not to exceed
      $500,000 in the aggregate outstanding at any time;

            (h) investments made as a result of the receipt of non-cash proceeds
      from any Asset Sale made pursuant to and in compliance with Section 7.13;

            (i)   investments in Interest Rate Agreements permitted under
      Section 7.04(c);

            (j)   other investments, loans or advances not to exceed
      $500,000 in the aggregate outstanding at any time;

            (k) loans,  advances  and/or  investments (in each case evidenced by
      notes that shall constitute Pledged  Collateral) by the Borrower in Carson
      Holdings Limited in an amount not to exceed the equivalent of US$2,000,000
      in the aggregate at any one time outstanding; and

            (l)   investments in the Rights Offering in an amount not to
      exceed the equivalent of US$4,500,000 in the aggregate.

            7.06.  Prepayments  of  Indebtedness;   Amendments.  Other  than  in
accordance with Section 3.01, (i) The Borrower will not, and will not permit any
of its  Subsidiaries to make (or give any notice in respect of) any voluntary or
optional  payment  or  prepayment  or  redemption  or  acquisition  for value of
Indebtedness  (including,  without  limitation,  by way of  depositing  with any
trustee with respect thereto money or securities before such Indebtedness is due
for the  purpose of paying such  Indebtedness  when due) or exchange of any such
Indebtedness  or  preferred  stock,  as the case may be, in each case  until all
Obligations under this Agreement have been satisfied in full;  provided that the
Borrower  and any of its  Subsidiaries  may  make  such a  payment,  prepayment,
redemption, acquisition or exchange using the proceeds of Indebtedness permitted
to be incurred by Section 7.04 to refinance or replace such Indebtedness.

           (ii)  The  Borrower  will  not,  and  will  not  permit  any  of  its
Subsidiaries  to:  amend,  modify or  change  any of the  Management  Agreement,
Employment   Agreements,    Manufacturing   Agreements,   the   Certificate   of
Incorporation  (including,  without limitation, by the filing of any certificate
of  designation)  or By-laws of the  Borrower (or of Holdings to the extent such
amendment,  modification  or change is adverse  to the Banks as  Banks),  or any
agreement  entered  into by the  Borrower  (or by  Holdings  to the extent  such
amendment, modification or change is adverse to the Banks as Banks) with respect
to its  capital  stock,  or enter  into any new  agreement  with  respect to the
capital  stock of the Borrower (or of Holdings to the extent such new  agreement
is adverse to the Banks as Banks), in each case without the prior consent of the
Agent.

            7.07. Dividends, etc. The Borrower will not, and will not permit any
of its  Subsidiaries  to, declare or pay any dividends  (other than dividends or
distributions  payable in shares of capital  stock of the Borrower or any of its
Subsidiaries,  other  than  redeemable  stock) or return  any  capital  to,  its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its  stockholders  as such, or redeem,  retire,  purchase or
otherwise acquire, directly or indirectly, for any consideration,  any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
or options or stock  appreciation  rights in respect of any of such shares),  or
make any loans or advances to Affiliates,  or set aside any funds for any of the
foregoing  purposes,  or permit any of its Subsidiaries to purchase or otherwise
acquire for  consideration  any shares of any class of the capital  stock of the
Borrower  or any  other  Subsidiary,  as  the  case  may  be,  now or  hereafter
outstanding (or any options or warrants or stock  appreciation  rights issued by
such  Person  with  respect  to  its  capital  stock)  (all  of  the  foregoing,
"Dividends"),  except that (i) any direct or indirect Subsidiary of the Borrower
may pay Dividends to its parent  corporation  if such parent  corporation is the
Borrower or a Wholly Owned Subsidiary of the Borrower,  (ii) the Borrower or any
Subsidiary of the Borrower may pay to Holdings any amounts  required (x) for the
payment of any taxes  payable (A) by Holdings or (B) by  Holdings,  the Borrower
and/or its Subsidiaries on a consolidated, combined or unitary basis or (y) with
respect to the  purchase  price for the  Acquisition  and related  transactions,
(iii) the Borrower or any of its Subsidiaries may purchase capital stock held by
employees  of the Borrower or any of its  Subsidiaries  pursuant to any employee
stock option or other benefit plan thereof upon the  termination,  retirement or
death of any such employee in accordance with the provisions of any such plan in
an amount not greater than  $250,000 in any  calendar  year;  provided  that the
Borrower may purchase  capital stock pursuant to the  Employment  Agreement with
Dr. Leroy Keith without regard to such limitation;  and (iv) the Borrower or any
of  its  Subsidiaries  may  make  payments  to  Affiliates  pursuant  to  and in
compliance with Section 7.08 hereof.

            7.08. Transactions with Affiliates.  The Borrower will not, and will
not  permit  any  Subsidiary  to,  enter  into  any  transaction  or  series  of
transactions, whether or not in the ordinary course of business, with any holder
of 5% or more of any  class of equity  securities  of the  Borrower  or with any
Affiliate of the Borrower  other than on terms and conditions  substantially  as
favorable  to the  Borrower or such  Subsidiary  as would be  obtainable  by the
Borrower or such Subsidiary at the time in a comparable arm's-length transaction
with a  Person  other  than a  holder  of 5% or  more  of any  class  of  equity
securities  of  the  Borrower  or an  Affiliate;  provided  that  the  foregoing
restrictions shall not apply to (i) transactions between the Borrower and any of
its Wholly  Owned  Subsidiaries  and between  Wholly  Owned  Subsidiaries,  (ii)
transactions between Holdings and the Borrower to the extent otherwise expressly
permitted  under this Agreement,  (iii) payments to Morningside  pursuant to the
Management  Agreement  for  management  services  not to exceed  $350,000 in any
fiscal year, plus reimbursement of reasonable  out-of-pocket  expenses, (iv) the
payment  of  reasonable  fees to  Indosuez  and  its  Affiliates  for  financial
services,  such fees not to exceed  the usual  and  customary  fees for  similar
services,  (v) loans and other  advances  made by the Borrower to its  officers,
directors and employees  permitted  under Section  7.05(g),  (vi) the payment of
customary outside directors' fees,  customary  indemnification  arrangements and
customary  director and officer  liability  insurance  and (vii) the issuance of
capital  stock  of the  Borrower  or any of its  Subsidiaries,  pursuant  to any
pension,  stock  option,  profit  sharing  or  other  employee  benefit  plan or
agreement of the Borrower or any of its  Subsidiaries  in the ordinary course of
business.

            7.09.  Total Interest  Coverage Ratio.  The Borrower will not permit
the ratio of (i)  Consolidated  EBITDA of the Borrower  (for the 12 month period
ending at the end of the most recent  fiscal  quarter of the  Borrower)  to (ii)
annualized  Consolidated  Interest  Expense  for the  Test  Period  (which,  for
purposes of this Section 7.09 only, shall include only Cash interest expense) of
the Borrower  for any Test Period  ending  during any period  listed below to be
less than the ratio set forth opposite such period below:

       Period                                           Ratio
       July 1, 1997 through and including September
          30, 1997..................................    3.00 to 1.00
       October 1, 1997 through and including September  3.50 to 1.00
          30, 1998..................................
       October 1, 1998 and thereafter...............    4.00 to 1.00
            7.10.  Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio of (i)  Consolidated  EBITDAC of the Borrower minus cash taxes paid by the
Borrower  to (ii)  the sum of (A)  Consolidated  Interest  Expense  (which,  for
purposes of this Section 7.10 only, shall include only Cash interest expense) of
the Borrower and (B) the amount of  scheduled  mandatory  payments on account of
principal of Indebtedness  made by the Borrower for any Test Period ending on or
after the following  dates (based on results  beginning July 1, 1997) to be less
than the ratio set forth opposite such dates below:

      Period                                           Ratio

      September 30, 1997 through and
         including September 30, 1998................ 1.00 to 1.00
      October 1, 1998 and thereafter................. 1.10 to 1.00

            7.11.  Leverage Ratio. The Borrower will not permit the ratio of (i)
Indebtedness of the Borrower and its Subsidiaries to (ii) Consolidated EBITDA of
the  Borrower  (for the 12 month  period  ending  at the end of the most  recent
fiscal  quarter of the  Borrower)  for any date ending  during any period listed
below to be more than the ratio set forth opposite such period below:

        Period                                           Ratio
        May 1, 1997 through and including September 30,  4.00 to 1.00
           1997 .................
        October 1, 1997 through and including June 30,   3.50 to 1.00
           1998 .......................
        July 1, 1998 through and including December 31,  3.00 to 1.00
           98......................
        January 1, 1999 and thereafter.........          2.50 to 1.00
            7.12.  Issuance of Subsidiary Stock.  The Borrower will not
and will not permit any of its  Subsidiaries  directly or  indirectly  to issue,
sell,  assign,  pledge or  otherwise  encumber  or dispose of any shares of such
Subsidiaries'  capital stock or other equity securities (or warrants,  rights or
options to acquire  capital  stock or  convertible  securities  or other  equity
securities) of such Subsidiary, except to the Borrower or any other Wholly Owned
Subsidiary  of the  Borrower  (in each case other than  directors'  or nominees'
qualifying  shares or shares of capital  stock  required  to be owned by foreign
nationals under applicable law);  provided,  however,  that nothing contained in
this  Section  7.12 shall  prohibit  the  issuance  of  capital  stock of Carson
Holdings  Limited in accordance  with the terms of the Carson  Holdings  Limited
Share Incentive Trust, as in effect on the date hereof or the Rights Offering.

            7.13. Disposition of Assets. (A) The Borrower will not, and will not
permit any of its Subsidiaries to, dispose of all or any part of its interest in
any asset,  except that the Borrower and its  Subsidiaries may sell or otherwise
dispose of assets so long as either (i) such sales are  approved by the Required
Banks (subject to the  provisions of Section 11.12 hereof);  (ii) such sales are
for at least the fair market  value of such assets and the  aggregate  amount of
such asset sales is less than  $500,000 in any 12-month  period and, in any such
case, the Borrower or such Subsidiary complies with the mandatory prepayment and
Commitment reduction  provisions herein and, in the case of Collateral,  so long
as the  conditions  to the  release of  Collateral  described  herein and in the
applicable  Security Documents are met; (iii) such sales are of inventory and in
the ordinary course of business;  (iv) such sales or other  dispositions are (A)
of  equipment  that has  become  worn out,  obsolete  or  damaged  or  otherwise
unsuitable or no longer  needed for use in  connection  with the business of the
Borrower or any of its  Subsidiaries or should be replaced,  as the case may be,
in each  case as  determined  in good  faith by the  board of  directors  of the
Borrower or its Subsidiary, as the case may be, (B) for at least the fair market
value of such equipment,  (C) not in excess of $100,000 individually or $250,000
per year in the  aggregate  for sales of such  equipment and (D) the proceeds of
the  sales  of such  equipment  are  used  within  90 days of such  sales to (1)
purchase equipment used in substantially  similar lines of business or (2) repay
Indebtedness  under this Credit Agreement pursuant to Sections 3.01 or 3.02; (v)
such sales or other dispositions do not exceed $50,000  individually and are for
at least the fair market value of such assets or as to such other  dispositions,
the likely  amount of net sales  proceeds  that would be realized upon a sale of
such  assets  is such  that a sale  of such  assets  is not,  in the  reasonable
judgment of the Borrower, economically practicable but such other disposition is
otherwise of commercial  value to the  Borrower;  provided that in no case shall
sales  pursuant to this clause (v) exceed an aggregate of $100,000 in any fiscal
year, and in the case of Collateral, so long as the conditions to the release of
Collateral  described herein and in the applicable  Security  Documents are met;
(vi) such sales consist of the licensing or  sublicensing  of the  Borrower's or
any  of its  Subsidiaries'  Intellectual  Property  in the  ordinary  course  of
business; or (vii) such sales are of equity securities under any stock option or
other  benefit plan  available to the  employees or directors of the Borrower or
any of its Subsidiaries.

            The consideration received by the Borrower and its Subsidiaries from
each sale of assets permitted by subsections (i) and (ii) above, other than with
respect to such sales involving  consideration  of not more than $100,000 in the
aggregate in any fiscal year,  shall be payable by the purchaser in whole within
15 days of such sale and at least 70% of the consideration  from each sale shall
consist of Cash or Cash  Equivalents.  Any non-cash  proceeds  received from the
sale of assets  constituting  Collateral  shall be  pledged  pursuant  to and in
accordance  with  the  applicable   Security   Documents  and  shall  constitute
Collateral.

            (B) Upon  compliance  with the  conditions  in  subsection A of this
Section 7.13, the Release Conditions and the Partial Release Conditions (each as
hereinafter defined),  the Borrower shall be entitled to receive from Collateral
Agent  an  instrument  in form  and  substance  reasonably  satisfactory  to the
Borrower (each, a "Release"), releasing the Lien of the Mortgage with respect to
all or any  portion  of a  Mortgaged  Real  Property  (each,  a  "Released  Real
Property").  The  Borrower  shall  exercise  its rights  under  this  Section by
delivering to Collateral Agent a notice (each, a "Release Notice"),  which shall
refer to this Section,  describe with  particularity  the proposed Released Real
Property  and be  accompanied  by (i) four  counterparts  of the  Release  fully
executed and acknowledged by all necessary  parties other than Collateral Agent,
(ii) executed counterparts of UCC termination  statements necessary to terminate
the  Lien  of  the  applicable  Mortgage  and  (iii)  an  Officer's  Certificate
certifying  that no  Default or Event of Default  shall  have  occurred  and the
parties  executing any and all documents in connection  with the Release  (other
than Collateral Agent) were duly authorized to do so (collectively, the "Release
Conditions").  In the event the proposed Released Property consists of less than
all of the Mortgaged  Real Property  subject to a single  Mortgage,  the Partial
Release  Conditions  must be  satisfied in order for the Borrower to receive the
Release.

            (C) Collateral Agent's obligation to deliver a Release in respect of
less than all of the Mortgaged Real Property  subject to a single Mortgage shall
be contingent  upon the  satisfaction  of the conditions in subsection A of this
Section  7.13 and the Release  Conditions  as well as the  following  conditions
(collectively, the "Partial Release Conditions"):

            (i) following the sale, transfer or other disposition of and release
      of the  Lien of the  applicable  Mortgage  with  respect  to the  proposed
      Released Real Property,  the remaining  Mortgaged Real Property shall have
      utility  services  and  access  to  public  roads,  rail  spurs  and other
      transportation  structures  sufficient  and  necessary  in the  reasonable
      opinion of the  Borrower  for the  continued  use of such  Mortgaged  Real
      Property in the manner utilized prior to the Release;

           (ii)  following  the  sale,  transfer  or  other  disposition  of the
      proposed  Released Real  Property,  the remaining  Mortgaged Real Property
      shall  comply  in all  material  respects  with  applicable  laws,  rules,
      regulations and ordinances relating to environmental  protection,  zoning,
      land use, configuration and building and workplace safety (except for such
      non-compliance  which has been  previously  consented to by the Collateral
      Agent);

          (iii)  following  the  sale,  transfer  or  other  disposition  of the
      proposed Released Real Property, the value of the remaining Mortgaged Real
      Property shall not be less than the value of such remaining Mortgaged Real
      Property  prior  to the  Release  due to  such  sale,  transfer  or  other
      disposition;

           (iv) the Title Company shall be prepared to issue an  endorsement  to
      the Banks' title insurance  policy relating to the Mortgaged Real Property
      confirming  that after the proposed  release,  the Lien of the  applicable
      Mortgage continues  unimpaired as a first priority Lien upon the remaining
      Mortgaged Real Property subject only to Prior Liens, those Liens permitted
      by the Mortgage or previously consented to by the Collateral Agent;

            (v) the Borrower  shall cause to have been  delivered to  Collateral
      Agent a Survey  reasonably  acceptable to the Agent of the Mortgaged  Real
      Property  remaining  after the proposed  Released  Real  Property has been
      released; and

           (vi) the Borrower  shall cause to have been  delivered to  Collateral
      Agent an Officer's Certificate certifying that the conditions set forth in
      subsections (i) through (v) have been satisfied.

            (D) Collateral Agent shall execute,  acknowledge (if applicable) and
deliver to the Borrower  counterparts  of the documents  described in subsection
B(i) and (ii) within 10 Business  Days after  receipt by  Collateral  Agent of a
Release  Notice  provided that the Release  Conditions  and the Partial  Release
Conditions (if applicable) have been satisfied.  The Borrower shall (i) execute,
deliver,  obtain and record such  instruments  as Collateral  Agent may require,
including,  without  limitation,  amendments  to the Security  Documents or this
Agreement   and,  (ii)  deliver  to  Collateral   Agent  such  evidence  of  the
satisfaction  of the Release  Conditions and the Partial  Release  Conditions as
Collateral  Agent may  require  and (iii)  cause the Title  Company to issue the
endorsement  referred to in  subsection  C(iv).  The  Borrower  shall  reimburse
Collateral  Agent,  Agent and the Banks upon demand for all reasonable  costs or
expenses  incurred in connection with any actions taken pursuant to this Section
7.13.

            7.14.  Contingent Obligations.  The Borrower will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create
or become or be liable with respect to any Contingent Obligation except:

            (i)   guarantees resulting from endorsement of instruments for
      deposit or collection in the ordinary course of business;

           (ii)   Interest Rate Agreements, if any;

          (iii)   obligations arising as a direct consequence of the
      Acquisition including, without limitation, pursuant to the Cutex
      Manufacturing Agreement;

           (iv)   obligations with respect to the Indebtedness permitted
      to be incurred under Section 7.04; and

            (v)   other Contingent Obligations not to exceed $250,000
      outstanding at any one time.

            7.15.  ERISA.  The Credit Parties will not, and will not
permit any of their ERISA Affiliates to:

            (i) engage in any  transaction in connection with which the Borrower
      or any of its ERISA Affiliates could be subject to either a tax imposed by
      Section 4975(a) of the Code or the  corresponding  civil penalty  assessed
      pursuant to Section  502(i) of ERISA,  which  penalties  and taxes for all
      such  transactions  could  reasonably  be expected  to be in an  aggregate
      amount in excess of $500,000;

           (ii) permit to exist any accumulated funding deficiency,  for which a
      waiver has not been  obtained  from the  Internal  Revenue  Service,  with
      respect to any Pension Plan;

          (iii)  permit  to  exist  any  failure  to make  contributions  or any
      unfunded  benefits  liability  which creates,  or with the passage of time
      would create,  a statutory lien or  requirement to provide  security under
      ERISA or the Code in favor of the PBGC or any Pension Plan,  Multiemployer
      Plan or other entity;

           (iv)  permit the sum of the amount of  unfunded  benefit  liabilities
      (determined in accordance with Statement of Financial Accounting Standards
      No.  87) under all Title IV Plans  (excluding  each  Title IV Plan with an
      amount  of  unfunded  benefit  liabilities  of zero  or  less)  to  exceed
      $2,500,000 for a period in excess of twelve months; or

            (v) fail to make any  payment to any  Multiemployer  Plan that it or
      any  of  its  ERISA   Affiliates  may  be  required  to  make  under  such
      Multiemployer  Plan, any agreement relating to such Multiemployer Plan, or
      any law pertaining thereto.
            As  used  in  this  Section  7.15,  the  term  "accumulated  funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "amount of unfunded benefit  liabilities" has the meaning
specified in Section 4001(a)(18) of ERISA.

            7.16.  Merger  and  Consolidations.  No Credit  Party  will merge or
consolidate  with or into any other entity;  provided that any Subsidiary of the
Borrower may be merged or  consolidated  with or into (i) the  Borrower,  if the
Borrower  is the  continuing  or  surviving  corporation  or (ii) any other such
Subsidiary,  if the  continuing  or  surviving  corporation  is a  Wholly  Owned
Subsidiary of the Borrower.

            7.17.  Sale and  Lease-Backs.  The  Borrower  will not, and will not
permit any of its Subsidiaries to, directly or indirectly,  become or thereafter
remain  liable as lessee or as  guarantor  or other  surety with  respect to the
lessee's  obligations  under any lease,  whether an Operating Lease or a Capital
Lease, of any property  (whether real or personal or mixed) whether now owned or
hereafter  acquired,  (i) which the Borrower or any of its Subsidiaries has sold
or  transferred  or is to sell or  transfer to any other  Person  (other than in
connection  with  the  Acquisition)  or (ii)  which  the  Borrower  or any  such
Subsidiary  intends  to use for  substantially  the same  purpose  as any  other
property  which has been or is to be sold or  transferred by the Borrower or any
such  Subsidiary to any Person in connection  with such lease, if in the case of
clause  (i) or (ii)  above,  such  sale  and  such  lease  are  part of the same
transaction  or a series of  related  transactions  or such sale and such  lease
occur with one year of each other or are with the same other Person.

            7.18.  Sale or Discount of  Receivables.  The Borrower will not, nor
will it permit any of its  Subsidiaries to, sell, with or without  recourse,  or
discount  (other  than  in  connection  with  trade  discounts  or  arrangements
necessitated  by the  creditworthiness  of the other party,  in each case in the
ordinary course of business consistent with past practice) or otherwise sell for
less than the face value thereof,  notes receivable or accounts  receivable owed
to it by its third party customers or suppliers.

            7.19.  Fine  Products  Company.  The Borrower will not, and will not
permit any Subsidiary to,  transfer any cash or other property to Fine Products,
other than  transfers of cash in amounts  needed to enable Fine  Products to pay
amounts not to exceed  $25,000 in the aggregate then required to be paid by Fine
Products to Persons that are not  Affiliates of the Borrower.  The Borrower will
not permit Fine Products to engage in any business activity.

            SECTION 8.  Events of Default.  Upon the occurrence and during
the continuance of any of the following specified events (each an "Event
of Default"):

            8.01.  Payments.  The Borrower shall (i) default in the payment when
due of any principal of the Loans, (ii) default, and such default shall continue
for two or more  Business  Days,  in the payment when due of any interest on the
Loans or under any other Credit  Document or (iii) fail to pay any other amounts
owing hereunder for five Business Days after receiving notice thereof; or

            8.02.   Representations,   etc.  Any  representation,   warranty  or
statement made or deemed made by operation of Section 4.01,  4.02 or 4.03 by any
Credit Party herein or in any other Credit Document or in any written  statement
or certificate  delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made by operation of Section 4.01, 4.02 or 4.03; or

            8.03.  Covenants.  Any  Credit  Party  shall (a)  default in the due
performance or observance by it of any term,  covenant or agreement contained in
Section  6.11,  6.13,  6.14,  6.16 or  Section  7 hereof or  Section  1.1 of any
Mortgage or (b) default in the due  performance or observance by it of any other
term, covenant or agreement contained in this Agreement or any Security Document
and such default shall continue  unremedied for a period of at least thirty days
(or, in the case of Section  6.15(iii),  five  Business  Days) after the date of
such default; or

            8.04. Default Under Other Agreements. (a) Any Credit Party shall (i)
default in any payment with respect to any Indebtedness (other than Obligations)
having a principal amount of $500,000 or more individually or $1,000,000 or more
in the  aggregate,  for all Credit  Parties and their  Subsidiaries,  beyond the
period of grace,  if any,  provided in the  instrument or agreement  under which
such  Indebtedness  was created or (ii) default in the observance or performance
of any agreement or condition  relating to any such Indebtedness or contained in
any instrument or agreement  evidencing,  securing or relating  thereto,  or any
other event shall occur or condition exist, the effect of which default or other
event or  condition  is to cause,  or to permit  the  holder or  holders of such
Indebtedness  (or a trustee  or agent on behalf of such  holder or  holders)  to
cause any such  Indebtedness to become due prior to its stated maturity;  or (b)
any such Indebtedness of any Credit Party or any of its respective  Subsidiaries
shall be declared to be due and payable, or required to be prepaid other than by
a regularly scheduled required prepayment, prior to the stated maturity thereof;
or

            8.05.  Bankruptcy,  etc. Any Credit Party shall commence a voluntary
case  concerning  itself  under  Title 11 of the  United  States  Code  entitled
"Bankruptcy,"  as now or  hereafter  in effect,  or any  successor  thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against any Credit Party
or any of its Subsidiaries and the petition is not controverted  within 20 days,
or is not dismissed for a period of 60 consecutive  days, after  commencement of
the case; or a custodian (as defined in the  Bankruptcy  Code) is appointed for,
or takes charge of, all or substantially all of the property of any Credit Party
or any of its  Subsidiaries;  or any  Credit  Party  or any of its  Subsidiaries
commences any other proceeding under any reorganization, arrangement, adjustment
of debt,  relief of debtors,  dissolution,  insolvency or liquidation or similar
law of any  jurisdiction  whether  now or  hereafter  in effect  relating to any
Credit  Party or any of its  Subsidiaries;  or there is  commenced  against  any
Credit  Party or any of its  Subsidiaries  any  such  proceeding  which  remains
undismissed  for a period of 60 consecutive  days; or any Credit Party or any of
its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order  approving  any such case or  proceeding  is entered  and  continues
unstayed for a period of 60 consecutive  days; or any Credit Party or any of its
Subsidiaries  suffers any appointment of any custodian or the like for it or any
substantial  part of its  property to continue  undischarged  or unstayed  for a
period of 60  consecutive  days; or any Credit Party or any of its  Subsidiaries
makes a general assignment for the benefit of creditors; or any corporate action
is taken by any  Credit  Party or any of its  Subsidiaries  for the  purpose  of
effecting any of the foregoing; or

            8.06. ERISA. (i) Any "reportable event" as described in Section 4043
of ERISA or the  regulations  thereunder  (excluding  those events for which the
requirement  for notice has been waived by regulation by the PBGC), or any other
event or condition,  which the Required Banks determine  constitutes  reasonable
grounds under Section 4042 of ERISA for the  termination of any Title IV Plan by
the PBGC or for the appointment by the appropriate  United States District Court
of a trustee to administer  or liquidate any Title IV Plan shall have  occurred;
or

           (ii)   A trustee shall be appointed by a United States District
Court to administer any Title IV Plan; or

          (iii) The PBGC shall  institute  proceedings to terminate any Title IV
Plan or to appoint a trustee to administer any Title IV Plan; or

           (iv) A  Credit  Party or any of its  ERISA  Affiliates  shall  become
liable to the PBGC or any other party under Section 4062,  4063, 4064 or 4069 of
ERISA with respect to any Title IV Plan; or

            (v)   A Credit Party or any of its ERISA Affiliates shall
become liable to any Multiemployer Plan under Section 4201 et seq. of
ERISA;

if the sum of each of such  Credit  Party's  and its ERISA  Affiliates'  various
liabilities (such liabilities to include,  without limitation,  any liability to
the PBGC or to any other party under Section 4062,  4063,  4064 or 4069 of ERISA
with respect to any Title IV Plan,  or to any  Multiemployer  Plan under Section
4201 et seq. of ERISA) which the Required Banks  determine  could  reasonably be
expected  to be incurred as a result of such  events  listed in  subclauses  (i)
through (v) above exceeds $1,000,000; or

            8.07. Security Documents. Any Security Document shall cease to be in
full force and effect,  or shall cease to give the  Collateral  Agent the Liens,
rights,  powers and privileges  purported to be created thereby, in favor of the
Collateral  Agent,  superior to and prior to the rights of all third Persons and
subject to no Liens other than Prior Liens and Liens expressly  permitted by the
applicable  Security Document or any judgment creditor having a Lien against any
item of  Collateral  shall  commence  legal  action  to  foreclose  such Lien or
otherwise exercise its remedies against any item of Collateral; or

            8.08.  Guarantees.  Any  Guarantee or any  provisions  thereof shall
cease to be in full force or effect in all material  respects,  or the Guarantor
thereunder  or Person  acting by or on behalf of such  Guarantor  shall  deny or
disaffirm  such  Guarantor's  obligations  under such Guarantee or the Guarantor
shall default in the due  performance  or  observance  of any term,  covenant or
agreement on its part to be performed or observed pursuant to such Guarantee; or

            8.09.  Judgments.  One or more judgments or decrees shall be entered
against any Credit  Party or any of its  Subsidiaries  involving a liability  of
$500,000 or more in the case of any one such judgment or decree or $1,000,000 or
more in the aggregate for all such  judgments and decrees for all Credit Parties
and their  Subsidiaries  (in  either  case in excess of the  amount  covered  by
insurance as to which the insurance  company has acknowledged  coverage) and any
such  judgments or decrees  shall not have been vacated,  discharged,  stayed or
bonded  pending  appeal  for a period  of 60  consecutive  days  from the  entry
thereof; or

            8.10.  Ownership.  (i) Holdings shall own less than 100% (on a fully
diluted  basis) of the issued and  outstanding  capital  stock of the  Borrower,
other than securities  issued in the ordinary course of business under any stock
option or other  benefit  plan  available  to the  employees or directors of the
Borrower or any of its Subsidiaries (each of clauses (i), (ii) and (iii) of this
Section 8.10 a "Change of Control Event"); or

           (ii) (x) DNL  Partners,  Limited  Partnership,  together with the DNL
Affiliates, in the aggregate,  cease to own or control at least more than 50% of
the Total  Voting  Power of  Holdings,  or (y) in the event  that DNL  Partners,
Limited  Partnership  distributes to its partners  (pursuant to the terms of its
partnership  agreement)  all of the  capital  stock  of  Holdings  owned  by DNL
Partners,  Limited Partnership,  if, following such distribution,  DNL Partners,
Limited Partnership,  together with the DNL Affiliates, in the aggregate,  cease
to own or  control  at least  33-1/3%  of the Total  Voting  Power of  Holdings;
provided that, for purposes of the calculations  made pursuant to this paragraph
(ii)  (I) in the  event  any  shares  of Class B Common  Stock of  Holdings  are
converted  into either shares of Class A Common Stock or Class C Common Stock of
Holdings  (in any  combination),  then all such  shares of Class A Common  Stock
and/or Class C Common Stock  issued upon such  conversion  shall be excluded and
(II) in the event shares of capital  stock of Holdings are issued by Holdings as
consideration in whole or in part for the  acquisition,  directly or indirectly,
of another  entity and the  Aggregate  Market  Value of such  shares of stock so
issued is more than  $25,000,000,  then all shares of capital  stock of Holdings
issued in connection with such  acquisition  shall be excluded.  For purposes of
the foregoing  proviso the term  "Aggregate  Market Value" means (a) the average
closing price per share of the relevant  class of Holdings  capital stock during
the  ten  consecutive  trading  day  period  preceding  the  tenth  trading  day
immediately  preceding  the closing  date of the  acquisition  transaction  with
respect to which such shares are to be issued, times (b) the number of shares of
such class of capital stock issued by Holdings in such acquisition  transaction.
The closing  price for any day shall be the last reported sale price regular way
or, in case no such  reported  sale takes place on such day,  the average of the
closing bid and asked  prices  regular way for such day, in each case (1) on The
New York Stock  Exchange as reported on the NYSE  composite  tape as reported in
The Wall  Street  Journal or another  newspaper  of general  circulation  in the
Borough of Manhattan,  City of New York, New York customarily  published on each
business  day or (2) if the relevant  shares of capital  stock are not listed on
The New York Stock Exchange,  on the principal national  securities  exchange on
which the  relevant  shares of capital  stock of Holdings are listed or to which
such  shares are  admitted to trading or (3) if the  relevant  shares of capital
stock are not listed or admitted to trading on a national  securities  exchange,
in the over-the-counter market as reported by NASDAQ or any comparable system or
(4) if the  relevant  shares  of  capital  stock  are not  listed on NASDAQ or a
comparable system, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this paragraph, the
current  market  price per  share  shall be the fair  market  value  thereof  as
determined in good faith by the Board of Directors of the Company;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be  continuing,  the Agent  shall,  upon the  written  request of the
Required  Banks,  by  written  notice  to the  Borrower,  take any or all of the
following  actions,  without prejudice to the rights of the Agent or any Bank to
enforce  its claims  against  the  Borrower,  except as  otherwise  specifically
provided for in this Agreement  (provided that if an Event of Default  specified
in Section 8.05 shall occur,  with respect to any Credit Party, the result which
would  occur  upon the  giving of written  notice by the Agent as  specified  in
clauses (i) and (ii) below shall occur  automatically  without the giving of any
such  notice):  (i)  declare the Total  Commitments  terminated,  whereupon  the
Commitment of each Bank shall  forthwith  terminate  immediately and any accrued
and unpaid Commitment  Commission shall forthwith become due and payable without
any other notice of any kind; (ii) declare the principal of and accrued interest
in respect of all Loans and all  Obligations  owing  hereunder and thereunder to
be,  whereupon  the  same  shall  become,  forthwith  due  and  payable  without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby waived by each Credit Party;  and/or (iii) enforce,  as Collateral  Agent
(or direct the Collateral Agent to enforce),  any or all of the remedies created
pursuant to the Security Documents. If an Event of Default is cured or waived in
accordance with the terms of the Agreement, it ceases (or is waived, pursuant to
the terms, and to the extent, of such waiver).

            SECTION 9.  Definitions.  As used herein,  the following terms shall
have the  meanings  herein  specified  unless the  context  otherwise  requires.
Defined terms in this Agreement  shall include in the singular number the plural
and in the plural the singular:

            "A Term Loan" has the meaning provided in Section 1.01(a).

            "A Term Loan  Commitment"  means,  with  respect to each  Bank,  the
amount set forth opposite such Bank's name on Annex I hereto  directly below the
column entitled "Commitments -- A Term," as the same may be reduced from time to
time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.

            "A Term Loan Facility" means the Loan Facility evidenced by
the Total A Term Loan Commitments.

            "A Term Note" has the meaning provided in Section 1.05(a).

            "Account"  means  all of the  "accounts"  of the  Borrower  and  its
Subsidiaries (as that term is defined in Section 9-106 of the Uniform Commercial
Code as in effect in the State of New York) whether or not such Account has been
earned  by  performance,  whether  now  existing  or  existing  in  the  future,
including,  without limitation, all (i) accounts receivable,  including, without
limitation,  all accounts  created by or arising from all of the  Borrower's and
its  Subsidiaries'  sales of goods or  rendition  of  services or  licensing  or
subleasing of any of the Borrower's and its Subsidiaries' Intellectual Property;
(ii) unpaid seller's rights  (including  rescission,  replevin,  reclamation and
stopping  in transit)  relating to the  foregoing  or arising  therefrom;  (iii)
rights to any goods represented by any of the foregoing,  including  returned or
repossessed  goods;  (iv) reserves and credit  balances held by the Borrower and
its  Subsidiaries  with respect to any such  accounts  receivable or any account
debtor;  (v)  guarantees  or  collateral  for  any of the  foregoing;  and  (vi)
insurance policies or rights relating to any of the foregoing.

            "Acquisition" has the meaning set forth in the recitals hereto.

            "Acquisition Documents" means each of the Purchase Agreements
and each of the Manufacturing Agreements.

            "Additional A Term Loan" has the meaning set forth in the
recitals hereto.

            "Additional B Term Loan" has the meaning set forth in the
recitals hereto.

            "Additional Collateral" has the meaning provided in
Section 6.13.

            "Additional Loans" means, collectively,  the Additional A Term Loan,
the Additional B Term Loan and the Revolving Loans.

            "Additional Real Property" has the meaning provided in
Section 6.13.

            "Additional Revolving Loan Commitment" has the meaning set
forth in the recitals hereto.

            "Additional Term Loans" means,  collectively,  the Additional A Term
Loan and the Additional B Term Loan.

            "Affiliate"  means with  respect  to any  Person,  any other  Person
directly or indirectly  controlling  (including but not limited to all directors
and  executive  officers  of such  Person),  controlled  by, or under  direct or
indirect common control with such Person; provided that neither Indosuez nor any
Affiliate of Indosuez  shall be deemed to be an Affiliate of any Credit Party. A
Person  shall be  deemed to  control  a  corporation  for the  purposes  of this
definition if such Person  possesses,  directly or indirectly,  the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such  corporation,  whether  through the ownership of
voting securities, by contract or otherwise.

            "Agent"  means  Indosuez,  or any  successor  thereto  appointed  in
accordance  herewith,  in its  capacity  as agent and  collateral  agent for the
Banks.

            "Agent's  Office"  means the  office of the  Agent  located  at 1211
Avenue of the  Americas,  7th Floor,  New York,  New York  10036,  or such other
office in New York as the Agent may  hereafter  designate  in writing as such to
the other parties hereto.

            "Agreement" means this Amended and Restated Credit Agreement, as the
same may after its execution be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.

            "AM Manufacturing Agreement" means the manufacturing agreement to be
entered  into  within 30 days  after the  Closing  Date by the  Borrower  and AM
Cosmetics,  Inc., relating to the manufacturing by AM Cosmetics, Inc. of certain
products for the Borrower.

            "Asset Sale" means the sale,  transfer or other disposition,  to the
extent  consummated after the Closing Date, (x) by Holdings of the Securities of
the Borrower  held by it to any Person or (y) by the Borrower or any  Subsidiary
of the  Borrower  to any Person  other  than the  Borrower  or any Wholly  Owned
Subsidiary  of the  Borrower  of any asset of the  Borrower  or such  Subsidiary
(other than, in each such case, (i)  transactions  included in the definition of
Net Financing  Proceeds,  (ii) the issuance of equity securities under any stock
option or other  benefit  plan  available  to the  employees or directors of the
Borrower  or  any  of  its  Subsidiaries,   (iii)  sales,   transfers  or  other
dispositions of inventory in the ordinary course of business and/or of equipment
that has become worn out,  obsolete  or damaged or  otherwise  unsuitable  or no
longer needed for use in connection  with the business of the Borrower or any of
its  Subsidiaries  or  should be  replaced,  as the case may be, in each case as
determined  in good  faith by the  board of  directors  of the  Borrower  or its
Subsidiary, as the case may be, effected in compliance with Section 7.13A(iv) or
(v), and (iv) sales or other dispositions pursuant to Section 7.13A(v),  (vi) or
(vii).

            "Authorized  Officer"  means any senior  officer of the  Borrower or
Holdings,  as the case may be, designated as such in writing to the Agent by the
Borrower or Holdings, as the case may be, to the extent reasonably acceptable to
the Agent.

            "B Term Loan" has the meaning provided in Section 1.01(a).

            "B Term Loan  Commitment"  means,  with  respect to each  Bank,  the
amount set forth opposite such Bank's name on Annex I hereto  directly below the
column entitled  "Commitments -- B Term" as the same may be reduced from time to
time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.

            "B Term Loan Facility" means the Loan Facility evidenced by
the Total B Term Loan Commitments.

            "B Term Note" has the meaning provided in Section 1.05(a).

            "Bank" has the meaning provided in the first paragraph of this
Agreement and in Section 11.04.

            "Bankruptcy Code" has the meaning provided in Section 8.05.

            "Base  Rate" means the higher of (x) 1/2% per annum in excess of the
Federal Funds Rate and (y) the rate which the Agent  announces from time to time
as its prime lending  rate,  as in effect from time to time.  The rate the Agent
announces as its prime lending rate is a reference rate and does not necessarily
represent  the lowest or best rate actually  charged to any customer.  The Agent
may make commercial loans or other loans at rates of interest at, above or below
the rate it announces as its prime lending rate.

            "Base Rate Loan" means each Loan bearing  interest based on the Base
Rate as provided in Section 1.08(a).

            "Borrower" means Carson Products Company, a Delaware
corporation.

            "Borrower  General  Security  Agreement"  means the Borrower General
Security  Agreement  substantially  in the form of Exhibit H hereto,  except for
such changes  therein as shall have been  approved by the Agent and the Required
Banks, as the same may after its execution be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.

            "Borrower   Intellectual  Property  Security  Agreement"  means  the
Borrower Intellectual  Property Security Agreement  substantially in the form of
Exhibit G hereto, except for such changes therein as shall have been approved by
the Agent  and the  Required  Banks,  as the same may  after  its  execution  be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.

            "Borrower  Pledge  Agreement" means the Borrower  Securities  Pledge
Agreement  substantially  in the form of  Exhibit  F-1  hereto,  except for such
changes therein as shall have been approved by the Agent and the Required Banks,
as the same may  after its  execution  be  amended,  supplemented  or  otherwise
modified from time to time in accordance with the terms thereof and hereof.

            "Borrowing"  means the incurrence  pursuant to a Notice of Borrowing
and the Loan Facility of one Type of Loan by a Borrower from all of the Banks on
a pro rata  basis on a given  date (or  resulting  from  conversions  on a given
date), having in the case of Reserve Adjusted Eurodollar Loans the same Interest
Periods.

            "Borrowing  Base" means an amount equal to the sum of (i) 80% of the
Eligible Accounts Receivable and (ii) 50% of the Eligible Inventory.

            "Borrowing Base Certificate" has the meaning provided in
Section 6.01.

            "Business  Day" means (i) for all purposes  other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in The City of New York or Savannah,  Georgia a legal  holiday or a day on which
banking  institutions  are  authorized by law or other  governmental  actions to
close and (ii) with  respect to all notices  and  determinations  in  connection
with,  and payments of principal and interest on,  Reserve  Adjusted  Eurodollar
Loans, any day which is a Business Day described in clause (i) and which is also
a day for  trading by and  between  banks in Dollar  deposits  in the  interbank
eurodollar market.

            "Capital  Lease"  of any  Person  means  any  lease of any  property
(whether real,  personal or mixed) by that Person as lessee which, in conformity
with GAAP,  is, or is required to be,  accounted  for as a capital  lease on the
balance  sheet of that  Person,  together  with any  renewals of such leases (or
entry into new leases) on substantially similar terms.

            "Capitalized  Lease Obligations" of any Person means all obligations
under  Capital  Leases of such  Person or any of its  Subsidiaries  in each case
taken at the amount  thereof  accounted for as  liabilities  in accordance  with
GAAP.

            "Carson Holdings Limited" means a South African subsidiary of
the Borrower.

            "Carson  Holdings  Limited  Share  Incentive  Trust" means the trust
pursuant to which certain  additional  shares of common stock of Carson Holdings
Limited may be issued from time to time.

            "Cash" means money, currency or a credit balance in a Deposit
Account.

            "Cash Equivalents" means (i) securities issued or directly and fully
guaranteed  or  insured  by the  United  States  of  America  or any  agency  or
instrumentality  thereof  (provided that the full faith and credit of the United
States of America is pledged in support  thereof) having  maturities of not more
than one year from the date of acquisition,  (ii) marketable direct  obligations
issued by any State of the United  States of America or any local  government or
other  political  subdivision  thereof rated (at the time of acquisition of such
security)  at least  AA by  Standard  &  Poor's  Ratings  Group  ("S&P")  or the
equivalent  thereof  by  Moody's  Investors  Service,  Inc.  ("Moody's")  having
maturities  of not more than one year from the date of  acquisition,  (iii) U.S.
dollar   denominated  time  deposits,   certificates  of  deposit  and  bankers'
acceptances  of (x) any Bank,  (y) any domestic  commercial  bank of  recognized
standing  having capital and surplus in excess of  $250,000,000  or (z) any bank
whose  short-term  commercial  paper rating (at the time of  acquisition of such
security) by S&P is at least A-1 or the  equivalent  thereof or by Moody's is at
least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in each
case with  maturities of not more than six months from the date of  acquisition,
(iv)  commercial  paper and  variable or fixed rate notes  issued by any Bank or
Approved  Bank or by the  parent  company  of any  Bank  or  Approved  Bank  and
commercial  paper and  variable  rate  notes  issued by, or  guaranteed  by, any
industrial or financial  company with a short-term  commercial  paper rating (at
the time of  acquisition  of such  security)  of at least A-1 or the  equivalent
thereof  by S&P  or at  least  P-1 or the  equivalent  thereof  by  Moody's,  or
guaranteed by any industrial company with a long-term  unsecured debt rating (at
the time of  acquisition  of such  security)  of at  least AA or the  equivalent
thereof by S&P or the  equivalent  thereof by Moody's and in each case  maturing
within one year after the date of  acquisition,  (v) repurchase  agreements with
any Bank or any primary dealer in U.S. government securities maturing within one
year from the date of acquisition  that are fully  collateralized  by investment
instruments that would otherwise be Cash Equivalents; provided that the terms of
such repurchase  agreements  comply with the guidelines set forth in the Federal
Financial  Institutions  Examination  Council  Supervisory  Policy -- Repurchase
Agreements of Depository  Institutions  With Securities  Dealers and Others,  as
adopted by the  Comptroller  of the  Currency  on  October  31,  1985,  and (vi)
investments  in money  market  mutual  funds,  all of the  assets  of which  are
invested in  securities  and  instruments  of the types set forth in clauses (i)
through (iv) above.

            "Certificate of Incorporation" means the respective
certificates of incorporation of Holdings or the Borrower.

            "Change of Control" has the meaning provided in Section 8.10.

            "Closing  Date" means the date on or before  April 30, 1997 on which
the Additional Loans are made and the consummation of the Acquisition occurs.

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

            "Collateral" means all of the Pledged Collateral, Pledged Securities
and Mortgaged  Real Property and all Additional  Collateral and Additional  Real
Property to the extent not otherwise included in any of the foregoing.

            "Collateral Agent" means Indosuez in its capacity as
collateral agent for the Banks.

            "Collective Bargaining Agreement" means the Collective
Bargaining Agreement set forth in Annex V.

            "Commercial  Letter of Credit" means any letter of credit or similar
instrument  issued for the account of the  Borrower for the purpose of providing
the primary payment  mechanism in connection with the purchase of any materials,
goods or services by the  Borrower or any of its  Subsidiaries  in the  ordinary
course of business of the Borrower or such Subsidiaries.

            "Commitment"  means,  with respect to each Bank,  such Bank's A Term
Loan Commitment, B Term Loan Commitment and Revolving Loan Commitment.

            "Commitment Commission" has the meaning provided in
Section 2.03.

            "Compliance  Certificate"  means a  certificate  issued  pursuant to
Section  6.01(f)  signed  by  a  chief  financial  officer,   controller,  chief
accounting officer or other Authorized Officer of the Borrower.

            "CONOPCO" has the meaning set forth in the recitals hereto.

            "Consolidated  Amortization  Expense" for any Person means,  for any
period,  the  consolidated  amortization  expense of such Person for such period
(including  amortization of any step-up in value of Inventory or other assets as
may be required by purchase accounting),  determined on a consolidated basis for
such Person and its Subsidiaries in conformity with GAAP.

            "Consolidated  Capital  Expenditures"  of any Person means,  for any
period, the aggregate gross increase during that period, in the property,  plant
or equipment reflected in the consolidated  balance sheet of such Person and its
consolidated  Subsidiaries,  in conformity with GAAP, but excluding expenditures
made in connection with the  replacement,  substitution or restoration of assets
(i) to the extent  financed from insurance  proceeds paid on account of the loss
of or damage to the assets  being  replaced  or  restored,  (ii) with  awards of
compensation  arising from the taking by eminent domain or  condemnation  of the
assets  being  replaced  or (iii) with  regard to  equipment  that is  purchased
simultaneously  with  the  trade-in  of  existing  equipment,  fixed  assets  or
improvements,  the  credit  granted  by the  seller  of such  equipment  for the
trade-in  of  such  equipment,  fixed  assets  or  improvements;  provided  that
Consolidated  Capital Expenditures shall in any event include the purchase price
paid in connection with the acquisition of any other Person  (including  through
the purchase of all of the capital  stock or other  ownership  interests of such
Person or through merger or  consolidation) to the extent allocable to property,
plant and equipment.

            "Consolidated  Compensation  Expense" for any Person means,  for any
period,  the  consolidated  compensation  expense incurred by such Person during
such period (x) in connection with long-term incentive compensation arrangements
entered  into  by  such  Person  or any of its  consolidated  Subsidiaries  with
officers and  employees of such Person or any  consolidated  Subsidiary  of such
Person prior to the  consummation of the Holdings IPO and (y) in connection with
issuances  of  shares  of  the  capital  stock  of  such  Person  or  any of its
consolidated Subsidiaries to directors, officers and/or employees of such Person
or  any of its  consolidated  Subsidiaries  prior  to  the  consummation  of the
Holdings  IPO, in each such case  determined  on a  consolidated  basis for such
Person and its consolidated Subsidiaries in conformity with GAAP.

            "Consolidated  Current Assets" means,  with respect to any Person as
at any  date  of  determination,  the  total  assets  of  such  Person  and  its
consolidated  Subsidiaries which may properly be classified as current assets on
a consolidated balance sheet of such Person and its Subsidiaries  (provided that
with respect to the Borrower,  there shall be added to such amount the amount of
LIFO  reserve  as  reflected  in the then  most  recent  consolidated  financial
statements  of the  Borrower  delivered  by the  Borrower  pursuant  to  Section
6.01(a), (b) and (c)), all as determined on a consolidated basis for such Person
and its consolidated Subsidiaries in accordance with GAAP.

            "Consolidated Current Liabilities" means, with respect to any Person
as at any date of  determination,  the total  liabilities of such Person and its
consolidated   Subsidiaries   which  may  properly  be   classified  as  current
liabilities  (other  than the current  portion of any Loans and of any  Existing
Indebtedness)   on  a  consolidated   balance  sheet  of  such  Person  and  its
consolidated Subsidiaries in accordance with GAAP.

            "Consolidated  Depreciation  Expense" for any Person means,  for any
period,  the consolidated  depreciation  expense of such Person for such period,
determined  on a  consolidated  basis  for  such  Person  and  its  consolidated
Subsidiaries in conformity with GAAP.

            "Consolidated  EBITDA" for any Person  means,  for any  period,  the
difference  between  (A)  the  sum  of  the  amounts  for  such  period  of  (i)
Consolidated Net Income, (ii) Consolidated Interest Expense,  (iii) Consolidated
Tax  Expense,   (iv)  Consolidated   Depreciation   Expense,   (v)  Consolidated
Compensation Expense and (vi) Consolidated Amortization Expense less (B) the sum
of the amounts for such period of (i) interest  income,  (ii) net gains on sales
of assets to the extent  included in  Consolidated  Net  Income,  whether or not
extraordinary  (excluding  sales in the ordinary  course of business)  and other
extraordinary  gains,  as  adjusted  for the  impact of the  application  of the
last-in,  first-out  (LIFO)  method of valuing  inventory  (to the  extent  such
adjustments are non-Cash),  which adjustment is made by (x) adding to the sum in
clause (A) above the amount of LIFO provision for such period, if any, which had
the effect of  decreasing  the  Consolidated  Net Income of the Borrower and its
Subsidiaries  for such  period or (y)  adding to the sum in clause (B) above the
amount  of LIFO  recovery  for such  period,  if any,  which  had the  effect of
increasing the  Consolidated Net Income of the Borrower and its Subsidiaries for
such period,  and (iii) for the Borrower  only,  non-cash  compensation  expense
related  to and in  connection  with the chief  executive  officer's  Employment
Agreement,  all as  determined on a  consolidated  basis for such Person and its
consolidated Subsidiaries in accordance with GAAP.

            "Consolidated  EBITDAC"  for  any  Person  means,  for  any  period,
Consolidated EBITDA for such period minus Consolidated  Capital Expenditures for
such period.

            "Consolidated  Interest  Expense"  for  any  Person  means,  for any
period,  the sum of (x) total interest expense  (including that  attributable to
Capital Leases in accordance with GAAP) and (y) total cash dividends paid on any
preferred  stock,  in each  case  of  such  Person  and  its  Subsidiaries  on a
consolidated  basis with respect to all outstanding  Indebtedness  and preferred
stock of such Person and its Subsidiaries,  including,  without limitation,  all
commissions,  discounts  and other fees and charges owed with respect to letters
of credit  and  bankers'  acceptance  financing,  but  excluding,  however,  any
amortization of deferred  financing  costs,  all as determined on a consolidated
basis for such Person and its consolidated Subsidiaries in accordance with GAAP.
For purposes of clause (y) above, dividend requirements shall be increased to an
amount  representing  the pretax  earnings  that would be required to cover such
dividend requirements;  accordingly, the increased amount shall be equal to such
dividend requirements  multiplied by a fraction,  the numerator of which is such
dividend  requirement  and the  denominator  of which is 1 minus the  applicable
actual combined Federal, state, local and foreign income tax rate of such Person
and its subsidiaries  (expressed as a decimal), on a consolidated basis, for the
fiscal year immediately preceding the date of the transaction giving rise to the
need to calculate Consolidated Interest Expense.

            "Consolidated Net Income" for any Person means, for any period,  the
net income (or loss) of such Person and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined on a consolidated
basis for such Person and its consolidated Subsidiaries in conformity with GAAP;
provided  that  there  shall be  excluded  (i) the income (or loss) of any other
Person (other than consolidated  Subsidiaries of such Person) in which any third
Person (other than such Person or any of its  consolidated  Subsidiaries)  has a
joint  interest,  except to the  extent  of the  amount  of  dividends  or other
distributions  actually paid to such Person or any of its  Subsidiaries  by such
other Person  during such period,  (ii) the income (or loss) of any other Person
accrued prior to the date it becomes a consolidated Subsidiary of such Person or
is  merged  into or  consolidated  with such  Person or any of its  consolidated
Subsidiaries or such other Person's assets are acquired by such Person or any of
its  consolidated  Subsidiaries,  and  (iii)  the  income  of  any  consolidated
Subsidiary  of such  Person to the  extent  that the  declaration  or payment of
dividends  or similar  distributions  by that  consolidated  Subsidiary  of that
income is not at the time  permitted by operation of the terms of its charter or
any  agreement,   instrument,   judgment,   decree,   order,  statute,  rule  or
governmental regulation applicable to that consolidated Subsidiary.

            "Consolidated Tax Expense" for any Person means, for any period, the
consolidated  tax  expense  of such  Person  for such  period,  determined  on a
consolidated  basis  for  such  Person  and  its  consolidated  Subsidiaries  in
conformity with GAAP.

            "Contingent   Obligations"   means,   as  to  any  Person,   without
duplication, any obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary  obligor") in any manner,  whether directly or
indirectly,  including,  without  limitation,  any  obligation  of such  Person,
whether or not  contingent,  (a) to purchase any such primary  obligation or any
property  constituting  direct or indirect security therefor,  (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 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)  otherwise to assure or hold
harmless the owner of such primary  obligation  against loss in respect thereof;
provided,  however,  that the  term  Contingent  Obligation  shall  not  include
endorsements  of instruments for deposit or collection in the ordinary course of
business  and amounts  that are  permitted  by Section  7.14.  The amount of any
Contingent  Obligation  shall be  deemed to be an  amount  equal to the  maximum
amount that such Person may be obligated to expend pursuant to the terms of such
Contingent  Obligation or, if such Contingent  Obligation is not so limited, the
stated or determinable amount of the primary obligation in respect of which such
Contingent  Obligation  is made or, if not stated or  determinable,  the maximum
reasonably  anticipated  liability in respect  thereof  (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.

            "Credit  Documents" means (i) this Agreement,  (ii) each Note, (iii)
each Guarantee and (iv) each Security Document.

            "Credit Party" means at all times Holdings and the Borrower and each
Subsidiary of the Borrower that pledges any stock, grants any Lien or issues any
Guarantee pursuant to any Credit Document.

            "Cutex  Manufacturing  Agreement" means the manufacturing  agreement
dated as of April 30, 1997  between  the  Borrower  and CONOPCO  relating to the
manufacture by CONOPCO of certain products for the Borrower.

            "Cutex Purchase Agreement" has the meaning set forth in the
recitals hereto.

            "Default"  means any event,  act or  condition  which with notice or
lapse of time, or both, would constitute an Event of Default.

            "Destruction" has the meaning assigned to that term in each
Mortgage.

            "Dividends" has the meaning provided in Section 7.07.

            "DNL Affiliates" means Vincent A. Wasik, S. Garrett
Stonehouse, Lawrence E. Bathgate, II and Morningside, in each case
together with Affiliates thereof, any member of the immediate family of
any of the foregoing, or any trust or foundation for the benefit of any of
the foregoing.

            "Dollars" means United States Dollars.

            "Effective Date" has the meaning provided in Section 11.10.

            "Eligible  Accounts  Receivable" means, as at any applicable date of
determination, the aggregate face amount of the Borrower's and its Subsidiaries'
Accounts  included  in  clause  (i)  of  the  definition  of  Account  hereunder
(excluding  any  Accounts  set  forth  in  clauses  (ii)  through  (vi)  of such
definition),  without duplication,  in each case less (without  duplication) the
aggregate  amount of all reserves,  limits and  deductions  with respect to such
Accounts  set  forth  below  and  less  the  aggregate  amount  of all  returns,
discounts,  claims, rebates, offsets, credits, charges (including warehouseman's
charges) and  allowances  of any nature with respect to such  Accounts  (whether
issued, owing, granted or outstanding).  Unless otherwise approved in writing by
the Agent in its sole discretion, no individual Account shall be deemed to be an
Eligible Account Receivable if:

            (a)   the Borrower or its Subsidiary does not have legal and
      valid title to the Account; or

            (b) the Account is not the valid,  binding  and legally  enforceable
      obligation of the account debtor subject,  as to  enforceability,  only to
      (i)  applicable  bankruptcy,  insolvency,  reorganization,  moratorium  or
      similar  laws at the  time  in  effect  affecting  the  enforceability  of
      creditors'  rights  generally and (ii)  judicial  discretion in connection
      with the remedy of specific performance and other equitable remedies; or

            (c)   the Account arises out of a sale made by the Borrower to
      an Affiliate of the Borrower; or

            (d) the Account or any  portion  thereof is unpaid more than 90 days
      after the original  invoice date, with respect to Accounts the invoice for
      which  provides  that  payment  is due in 60 days or less from the date of
      such invoice; or

            (e) the  Account  is  unpaid  more than 30 days  after the  original
      payment due date,  with respect to Accounts the invoice for which provides
      that  payment  is due more  than 60 days  from  the date of such  invoice;
      provided, however, that the aggregate amount of all invoices providing for
      payment more than 60 days from the date of the invoice that may constitute
      Eligible Accounts  Receivable shall not exceed 7 1/2% in face value of all
      Accounts of the Borrower and its Subsidiaries  then outstanding at any one
      time; or

            (f) such Account,  when  aggregated  with all other  Accounts of the
      same account debtor (or any Affiliate thereof),  exceeds twenty percent in
      face value of all  Accounts  of the  Borrower  and its  Subsidiaries  then
      outstanding, to the extent of such excess; or

            (g) (i) the  account  debtor for such  Account is also a creditor of
      the  Borrower,  to the extent of the amount  owed by the  Borrower  to the
      account  debtor,  (ii) the  Account is subject to any claim on the part of
      the account debtor  disputing  liability under such Account in whole or in
      part,  to the  extent of the amount of such  dispute or (iii) the  Account
      otherwise  is or is  reasonably  likely to become  subject to any right of
      setoff or any counterclaim, claim or defense by the account debtor, to the
      extent of the amount of such setoff or counterclaim, claim or defense; or

            (h) the account  debtor for such  Account has  commenced a voluntary
      case under the federal  bankruptcy  laws, as now  constituted or hereafter
      amended, or made an assignment for the benefit of creditors or if a decree
      or order for relief has been entered by a court having jurisdiction in the
      premises in respect of the account debtor in an involuntary case under the
      federal  bankruptcy laws, as now constituted or hereafter  amended,  or if
      any other  petition  or other  application  for relief  under the  federal
      bankruptcy laws has been filed by or against the account debtor, or if the
      account debtor has failed,  suspended  business,  ceased to be solvent, or
      consented to or suffered a receiver,  trustee,  liquidator or custodian to
      be appointed for it or for all or a  significant  portion of its assets or
      affairs; or

            (i) the Agent  does not have a valid and  perfected  first  priority
      security  interest  in such  Account  (subject  only to a tax  lien  being
      contested in good faith and by  appropriate  proceedings  and permitted by
      Section 7.03(a)); or

            (j)  the  sale  to the  account  debtor  for  such  Account  is on a
      consignment, sale on approval, guaranteed sale or sale-and-return basis or
      pursuant to any written  agreement  requiring  repurchase or return (other
      than return  arrangements  in the ordinary  course of business  consistent
      with the past business practices of the Borrower); or

            (k)  such  Account  is  from an  account  debtor  (or any  Affiliate
      thereof)  and  fifty  percent  (50%) or  more,  in face  amount,  of other
      Accounts from either such account debtor or any Affiliate  thereof are due
      or unpaid for more than 90 days after the original invoice date; or

            (l) fifty percent (50%) or more, in face amount,  of other  Accounts
      from the same  account  debtor for such  Account  are not deemed  Eligible
      Accounts Receivable hereunder; or

            (m)   the account debtor for such Account is a foreign
      Governmental Authority; or

            (n) such Account is an Account a security interest in which would be
      subject to the Federal  Assignment  of Claims Act of 1940,  as amended (31
      U.S.C. ss. 3727 et seq.), unless (i) such Account, together with all other
      Eligible  Accounts a security  interest  in which would be subject to such
      Act, does not exceed 7 1/2% in face value of all Eligible  Accounts of the
      Borrower and its Subsidiaries then  outstanding,  or (ii) the Borrower has
      assigned the Account to the Agent in  compliance  with the  provisions  of
      such Act; or

            (o) the account debtor for such Account is outside the United States
      or  Canada  or  incorporated  in or  conducting  substantially  all of its
      business in any jurisdiction located outside the United States, unless the
      sale is (i) on letter of credit or sight  draft,  guaranty  or  acceptance
      terms,  consistent  with past business  practices of the Borrower,  not to
      exceed 5% in face value of all  Eligible  Accounts of the Borrower and its
      Subsidiaries  then outstanding or (ii) such Account is otherwise  approved
      by and reasonably acceptable to the Agent; or

            (p) the  Agent  determines  in good  faith  in  accordance  with its
      internal  credit  policies  that such Account may not be paid by reason of
      the account debtor's financial inability to pay; provided,  however,  that
      any Account  referred  to in this  clause (p) shall not become  ineligible
      until the Agent shall have given the Borrower five Business  Days' advance
      notice of such determination; or

            (q) the goods  giving rise to such  Account have not been shipped or
      the services  giving rise to such  Account have not been  performed by the
      Borrower or the Account otherwise does not represent a final sale; or

            (r) such Account does not comply in all material  respects  with all
      applicable legal requirements,  including,  where applicable,  the Federal
      Consumer  Credit  Protection  Act,  the  Federal  Truth in Lending Act and
      Regulation Z of the Board of Governors of the Federal Reserve  System,  in
      each case as amended.

            In addition to the foregoing,  Eligible Accounts Receivable includes
such Accounts as the Borrower  requests and that the Agent  approves in advance,
in writing and in its sole  discretion  (or if the  aggregate  face amount to be
approved  exceeds  $750,000 at any one time,  the approval of the Required Banks
has been obtained in writing).

            "Eligible  Assignee" means (i) a commercial bank organized under the
laws of the United  States,  or any State  thereof,  and having  total assets in
excess of  $500,000,000;  (ii) a savings and loan  association  or savings  bank
organized under the laws of the United States, or any State thereof,  and having
total  assets in  excess of  $250,000,000;  (iii) a finance  company,  insurance
company or other  financial  institution  organized under the laws of the United
States,  or any State  thereof,  that is  engaged  in  purchasing  or  otherwise
investing in commercial  loans in the ordinary course of business,  having total
assets  in  excess  of  $100,000,000;  or (iv) an  entity  managed  by a Bank or
Affiliate of a Bank;  provided that the  Commitment  held by such entity is less
than  $20,000,000;  and,  in each  such  case,  which  is  otherwise  reasonably
acceptable to the Borrower.

            "Eligible  Inventory" means (A) the gross amount of Inventory of the
Borrower and its Subsidiaries,  valued at the lower of cost (on a FIFO basis) or
market,  which (i) is owned  solely by the Borrower or its  Subsidiary  and with
respect to which the Borrower or its Subsidiary  has good,  valid and marketable
title;  (ii) is stored  on  property  that is either  (a) owned or leased by the
Borrower or its  Subsidiary  or (b) owned or leased by a  warehouseman  that has
contracted  with the  Borrower  or its  Subsidiary  to store  Inventory  on such
warehouseman's  property (provided that, with respect to Inventory contracted to
be stored on property leased by the Borrower or its Subsidiary,  the Borrower or
its Subsidiary shall deliver to the Agent immediately following the execution of
such  storage  contract a  Landlord  Lien  Assurance  and,  with  respect to the
Inventory stored on property owned or leased by a warehouseman,  the Borrower or
its Subsidiary shall deliver to the Agent acknowledgment  agreements executed by
such warehouseman);  (iii) is subject to a valid, enforceable and first priority
Lien in favor of the Agent (subject to a tax lien being  contested in good faith
and by appropriate proceedings and permitted by Section 7.03(a), and except with
respect to Eligible Inventory stored at sites described in clause (ii)(b) above,
for Liens for normal and customary warehouseman charges); (iv) is located in the
United States; and (v) is not, in the reasonable judgment of the Agent, obsolete
or slow moving in relation to customary industry  practice,  and which otherwise
conforms to the  requirements  for  eligibility  contained in clauses (i) - (iv)
hereof;  (B) less the amount of any goods returned or rejected by the Borrower's
or its Subsidiaries' customers and goods in transit to third parties (other than
to the Borrower's or its  Subsidiaries'  agents or warehousemen that comply with
clause  (A)(ii)(b)  above);  and (C) less the amount of any reserves for special
order goods and market value  declines in  accordance  with GAAP. In addition to
the foregoing, Eligible Inventory shall include such items of the Borrower's and
its  Subsidiaries'  Inventory as the Borrower  shall  request and that the Agent
approves in advance,  in writing and in its sole discretion (or if the aggregate
amount to be  approved  exceeds  $500,000 at any one time,  the  approval of the
Required Banks has been obtained).

            "Employment  Agreements" means the employment agreements between the
Borrower and (i) Joyce Roche, dated as of June 7, 1995, as amended,  (ii) Dennis
E. Smith, dated as of June 7, 1995, as amended,  and (iii) Dr. Leroy Keith dated
as of August 23, 1995, as amended.

            "Environment" shall mean any surface water,  ground water,  drinking
water  supply,  land surface or  subsurface  strata or ambient air and includes,
without limitation, any indoor location.

            "Environmental Authorizations" has the meaning provided in
Section 5.22.

            "Environmental  Laws"  shall  mean all  federal,  state,  local  and
foreign laws, codes, regulations, ordinances, requirements,  directives, orders,
common law, and administrative or judicial  interpretations  thereof that may be
enforced by any  Governmental  Authority or court,  relating to  pollution,  the
protection of human health, the protection of the Environment,  or the emission,
discharge,  disposal  or  other  release  or  threatened  release  of  Hazardous
Materials in or into the Environment.

            "Environmental Notice" shall mean any written notice or claim by any
Governmental  Authority  or other third  party  alleging  liability  (including,
without limitation,  potential liability for investigatory costs, cleanup costs,
governmental costs, compliance costs or harm, injuries or damages to any person,
property or natural resources,  or any fines or penalties) arising out of, based
upon, resulting from or relating to any Environmental Law.

            "ERISA" means the Employee  Retirement  Income Security Act of 1974,
as amended from time to time.  Section  references to ERISA are to ERISA,  as in
effect at the date of this  Agreement  and any  subsequent  provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.

            "ERISA  Affiliate"  means any entity,  whether or not  incorporated,
which is under common  control or would be  considered a single  employer with a
Credit  Party within the meaning of Section  414(b),  (c) or (m) of the Code and
regulations  promulgated  under those  sections or within the meaning of section
4001(b) of ERISA and regulations promulgated under that section.

            "Eurodollar  Rate" means with respect to each Interest  Period for a
Reserve  Adjusted  Eurodollar  Loan, (i) the arithmetic  average (rounded to the
nearest 1/100 of 1%) of the offered  quotation to leading banks in the interbank
Eurodollar  market by each of the  Reference  Banks for dollar  deposits in such
Reference  Bank of  amounts  in same day  funds  comparable  to the  outstanding
principal amount of the Reserve  Adjusted  Eurodollar Loan for which an interest
rate is then being determined with maturities  comparable to the Interest Period
to be applicable to such Eurodollar Loan,  determined as of 10:00 A.M. (New York
time) on the date which is two Business Days prior to the  commencement  of such
Interest  Period  divided (and rounded upward to the next whole multiple of 1/16
of 1%) by (ii) a percentage  equal to 100% minus the then stated maximum rate of
all  reserve  requirements   (including,   without  limitation,   any  marginal,
emergency,  supplemental,  special or other  reserves)  applicable to any member
bank of the Federal  Reserve  System in respect of  Eurocurrency  liabilities as
defined  in  Regulation  D (or  any  successor  category  of  liabilities  under
Regulation  D);  provided that if any Reference  Bank fails to provide the Agent
with its aforesaid rate,  then the Eurodollar Rate shall be determined  based on
the rate or rates  provided to the Agent by a bank  designated  by the  Required
Banks and reasonably approved by the Borrower.

            "Event of Default" has the meaning provided in Section 8.

            "Excess Cash Flow" means,  without  duplication,  for any Person for
any period for which  such  amount is being  determined,  (i)  Consolidated  Net
Income,  minus (ii) any amount  which is both (x) included in  Consolidated  Net
Income and (y) required to be applied to the prepayment of the Loans pursuant to
Section  3.02(A),  plus  (minus)  (iii) the amount of  depreciation,  depletion,
amortization  of  intangibles,   deferred  taxes  and  other  non-cash  expenses
(revenues)  which,  pursuant to GAAP, were deducted  (added) in determining such
Consolidated Net Income of such Person minus (plus) (iv) additions  (reductions)
to  working  capital  for  such  period  (i.e.,  the  increase  or  decrease  in
Consolidated Current Assets (excluding Cash or Cash Equivalents which are either
Net Cash  Proceeds  or Net  Financing  Proceeds  required  to be  applied to the
prepayment of the Loans  pursuant to Section  3.02(A)(e) of such Person from the
beginning  to the end of such  period)  of such  Person  minus the  increase  or
decrease  in  Consolidated   Current   Liabilities)  minus  (v)  the  amount  of
Consolidated  Capital Expenditures that are paid other than from the proceeds of
borrowings in such period minus (vi) Scheduled A Term Loans Principal  Payments,
Scheduled B Term Loans Principal Payments and voluntary prepayments of Loans not
subject to  reborrowing  made during such period.  For purposes of the foregoing
and without duplication, Consolidated Net Income will exclude (x) all net losses
on the sale of capital assets or out of the ordinary  course of business and (y)
all write-downs of capital assets.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            "Existing A Term Loans"  means  Loans  outstanding  under the A Term
Loan Facility immediately prior to the Closing Date.

            "Existing B Term Loans"  means  Loans  outstanding  under the B Term
Loan Facility immediately prior to the Closing Date.

            "Existing Bank and Existing Banks" have the meaning provided
in Section 1.14(b)(viii).

            "Existing Credit Agreement" has the meaning set forth in the
recitals hereto.

            "Existing Debt" means the Indebtedness of the Borrower and its
Subsidiaries set forth on Annex III.

            "Existing Leases" means the Leases of the Borrower and its
Subsidiaries set forth on Annex XV.

            "Existing Loan Amount" has the meaning provided in Section
1.14(b)(v).

            "Existing Notes" has the meaning provided in Section
1.14(b)(viii).

            "Existing Revolving Loans" means Loans outstanding under the
Revolving Loan Commitment immediately prior to the Closing Date.

            "Federal  Funds Rate" means on any one day the  weighted  average of
the rate on overnight  Federal  funds  transactions  with members of the Federal
Reserve  System only  arranged by Federal  funds brokers as published as of such
day by the Federal  Reserve Bank of New York, or if not so  published,  the rate
then used by leading banks in extending overnight loans to other leading banks.

            "Final A Term Loan Maturity Date" means the last Business Day
of March, 2002.

            "Final B Term Loan Maturity Date" means the last Business Day
of March, 2004.

            "Final Revolving Loan Maturity Date" means the last Business
Day of March, 2002.

            "Financing Proceeds" means the cash (other than Net Cash Proceeds or
proceeds of any sale,  transfer or other disposition of assets excluded from the
definition of "Asset Sale" by the exceptions  contained therein) received by the
Borrower  and/or  any of its  Subsidiaries,  directly  or  indirectly,  from any
financing  transaction of whatever kind or nature,  including without limitation
from any  incurrence  of  Indebtedness,  any  mortgage  or pledge of an asset or
interest therein (including a transaction which is the substantial equivalent of
a mortgage or pledge),  from the sale of tax  benefits,  from a lease to a third
party and a pledge of the lease payments due thereunder to secure  Indebtedness,
from a joint venture  arrangement,  from an exchange of assets and a sale of the
assets received in such exchange,  or any other similar arrangement or technique
whereby the  Borrower or any of its  Subsidiaries  obtains Cash in respect of an
asset, net of direct costs associated  therewith.  Financing  Proceeds shall not
include any amounts with respect to (i) the  incurrence  or  refinancing  of the
Total  Revolving  Loan  Commitment,   (ii)  the  incurrence  or  refinancing  of
Indebtedness  permitted  by  Sections  7.04(a),  (b),  (c) and (d)  effected  in
accordance   with  the  applicable   provisions  of  such  Sections,   or  (iii)
transactions  between  any  of the  Borrower,  Holdings  and  any  Wholly  Owned
Subsidiaries of the Borrower.

            "Fine Products" has the meaning provided in Section 5.24.

            "FIRREA"  means  the  Financial  Institutions  Reform,   Recovery  &
Enforcement  Act of  1989,  as  amended  from  time to time,  and any  successor
statute.

            "Foreign Bank" has the meaning provided in Section 3.04(c).

            "GAAP" means generally accepted accounting  principles in the United
States of America as in effect on the Effective  Date, it being  understood  and
agreed that  determinations  in accordance with GAAP for purposes of Sections 5,
6, 7 and 8 and all defined terms as used in this Agreement,  are subject (to the
extent provided therein) to Section 11.07(a).

            "General  Security  Agreements"  means  and  includes  the  Borrower
General Security Agreement and any other general security  agreements  delivered
pursuant to Section 6.13 or 6.14.

            "Government Acts" has the meaning provided in Section 1.13(I).

            "Governmental Authority" means any federal, state, local, foreign or
other   governmental  or  administrative   (including   self-regulatory)   body,
instrumentality,  department  or agency or any court,  tribunal,  administrative
hearing body, arbitration panel, commission,  or other similar dispute-resolving
panel or body including,  without limitation, those governing the regulation and
protection of the  Environment,  whether now or hereafter in  existence,  or any
officer or official thereof.

            "Guarantee" means and includes, once executed and delivered, each of
the Holdings Guarantee and each Subsidiary Guarantee.

            "Guarantor" for purposes of this Agreement means, individually, each
of Holdings and each Subsidiary which executes a Subsidiary Guarantee.

            "Hazardous  Materials"  means  all  pollutants,   contaminants,   or
chemical, industrial, hazardous or toxic materials, substances,  constituents or
wastes,   including,   without  limitation,   asbestos  or   asbestos-containing
materials,  polychlorinated  biphenyls and  petroleum,  oil, or petroleum or oil
products, derivatives or constituents,  including, without limitation, crude oil
or any fraction thereof.

            "Holdings" means Carson, Inc., a Delaware corporation.

            "Holdings  Guarantee" means the Holdings Guarantee  substantially in
the form of  Exhibit  E  hereto,  except  for such  changes  as shall  have been
approved  by the  Agent  and the  Required  Banks,  as the  same may  after  its
execution be amended,  supplemented  or otherwise  modified from time to time in
accordance with the terms thereof and hereof.

            "Holdings IPO" means the initial public  offering of common stock of
Holdings, consummated on October 18, 1996.

            "Holdings  Pledge  Agreement" means the Holdings  Securities  Pledge
Agreement  substantially  in the form of  Exhibit  F-2  hereto,  except for such
changes therein as shall have been approved by the Agent and the Required Banks,
as the same may  after its  execution  be  amended,  supplemented  or  otherwise
modified from time to time in accordance with the terms thereof and hereof.

            "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

            "Indebtedness"  of any Person means,  without  duplication,  (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets  or  services  which in  accordance  with  GAAP  would be shown on the
liability  side  of the  balance  sheet  of  such  Person,  other  than  current
liabilities  in  respect  of  the   foregoing,   liabilities   for   accumulated
postretirement  benefit  obligations and liabilities for deferred  compensation,
(iii) the face  amount of all  letters of credit  issued for the account of such
Person and, without  duplication,  all drafts drawn and unpaid thereunder,  (iv)
all Indebtedness of a second Person secured by any Lien on any property owned by
such first  Person,  whether or not such  Indebtedness  has been assumed by such
first Person,  (v) all Capitalized  Lease  Obligations of such Person,  (vi) all
obligations  of such  Person  to pay a  specified  purchase  price  for goods or
services  whether or not delivered or accepted,  i.e.,  take-or-pay  and similar
obligations, (vii) all obligations of such Person under Interest Rate Agreements
and (viii) all Contingent Obligations of such Person; provided that Indebtedness
shall not include  trade  payables,  accrued  expenses,  accrued  dividends  and
accrued income taxes, in each case arising in the ordinary course of business.

            "Indosuez" means Banque Indosuez, New York Branch.

            "Initial Bank" means a Bank that was an original signatory to
this Agreement.

            "Initial Loans" means such Loans made under the Existing
Credit Agreement.

            "Intellectual Property" has the meaning provided in Section
5.16.

            "Intellectual  Property Security  Agreements" means and includes the
Borrower  Intellectual  Property Security  Agreement and any other  intellectual
property security agreements delivered pursuant to Section 6.13 or 6.14.

            "Interest  Margin" means, in respect of (i) Base Rate Loans that are
(a) A Term Loans, 0.50%, (b) B Term Loans, 1.00% and (c) Revolving Loans, 0.50%;
and (ii) Reserve Adjusted Eurodollar Loans that are (a) A Term Loans, 2.00%, (b)
B Term Loans,  2.50% and (c) Revolving Loans,  2.00%;  provided that on or after
April 30, 1998,  upon the  Borrower's  delivery of a Compliance  Certificate  in
compliance  with Section  6.01(f),  the Interest  Margin with respect to Reserve
Adjusted  Eurodollar  Loans and Base Rate Loans shall be reduced by the rate per
annum set forth below until the next such Compliance Certificate is delivered or
required to be  delivered  if the  leverage  ratio of the  Borrower  pursuant to
Section 7.11 is as follows:


Total Ratio of Consolidated
Indebtedness to Consolidated             Reduction in Per Annum
EBITDA______________________             Rate of Interest Margin

                                          A Term    Revolver
Below 2.00:1.00 but equal to or in         .25%       .25%
excess of 1.50:1.00
Below 1.50:1.00                            .50%       .50%

;  provided,  however,  that in the  event  that (i) the ratio  described  above
exceeds 2.00:1.00 or (ii) the Compliance Certificate required by Section 6.01(f)
is not  delivered  as  required,  none of the  reductions  set forth above shall
apply.

            "Interest  Period"  means,  with  respect  to any  Reserve  Adjusted
Eurodollar Loan, the interest period applicable  thereto, as determined pursuant
to Section 1.09.

            "Interest Rate  Agreement"  means any interest rate swap  agreement,
interest  rate cap  agreement,  interest  rate collar  agreement,  interest rate
futures  contract,  interest rate option contract or other similar  agreement or
arrangement  to which the Borrower is a party,  designed to protect the Borrower
or any of its Subsidiaries against fluctuations in interest rates.

            "Interest Rate  Determination  Date" means each date for calculating
the Eurodollar  Rate for purposes of determining the interest rate in respect of
an Interest  Period.  The Interest Rate  Determination  Date shall be the second
Business Day prior to the first day of the related Interest Period for a Reserve
Adjusted Eurodollar Loan.

            "Inventory"  means  all of the  inventory  of the  Borrower  and its
Subsidiaries (on a consolidated basis) including without limitation: (i) all raw
materials,  work  in  process,  parts,  components,   assemblies,  supplies  and
materials used or consumed in the business of the Borrower and its Subsidiaries;
(ii) all goods, wares and merchandise,  finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service;  and
(iii)  all  goods  returned  or  repossessed  by  the  Borrower  or  any  of its
Subsidiaries.

            "Issuing Bank" means the Bank that agrees or is otherwise  obligated
to issue a Letter of Credit, determined as provided in Section 1.13(C).

            "Jean Philippe Purchase Agreement" has the meaning set forth
in the recitals hereto.

            "Landlord Lien Assurance"  means,  with respect to any Real Property
leased by the Borrower or any of its  Subsidiaries  for use as a retail facility
or for the  storage  of  Inventory,  either  (i) an  agreement  executed  by the
landlord of such Real Property  substantially in the form of Exhibit O hereto or
(ii) a legal opinion or other evidence, in each case reasonably  satisfactory to
the Agent, that the laws of the jurisdiction or jurisdictions  applicable to the
lease and the retail or storage  facility  do not give rise to any Lien in favor
of the landlord with respect to Inventory located at such facility.

            "Lease" means any lease,  sublease,  franchise  agreement,  license,
occupancy or concession agreement.

            "Letter of Credit" or "Letters of Credit"  means (i) Standby  Letter
or Letters of Credit and (ii)  Commercial  Letter or Letters of Credit,  in each
case,  issued or to be issued by Issuing  Banks for the account of the  Borrower
pursuant to Section 1.13.

            "Letter of Credit Participation" has the meaning provided in
Section 1.13(A).

            "Letters of Credit  Usage" means,  as at any date of  determination,
the sum of (i) the maximum  aggregate  amount that is or at any time  thereafter
may become  available  under all Letters of Credit  then issued and  outstanding
plus (ii) the aggregate  amount of all drawings  under Letters of Credit honored
by all Issuing Banks and not theretofore  reimbursed by the Borrower;  provided,
however,  the Letters of Credit  Usage of an Issuing  Bank shall be deemed to be
only such  portion of the  Letters of Credit  Usage of such  Issuing  Bank which
other Banks have not bought by participation pursuant to Section 1.13(A).

            "Lien" means any mortgage,  pledge, security interest,  encumbrance,
lien,  claim,  hypothecation,  assignment  for  security  or  charge of any kind
(including any agreement to give any of the foregoing,  any conditional  sale or
other title retention agreement or any lease in the nature thereof).

            "Loan" means each and every Term Loan or Revolving Loan.

            "Loan Facility" means the credit facility evidenced by the
Total Term Loan Commitments and the Total Revolving Loan Commitments.

            "Loss Proceeds" has the meaning provided in Section 3.02(A)(i).

            "Management  Agreement"  means the management  assistance  agreement
between Morningside and the Borrower dated as of August 23, 1995, as amended.

            "Manufacturing Agreements" means, collectively, the Cutex
Manufacturing Agreement and the AM Manufacturing Agreement.

            "Materially  Adverse Effect" means, (i) with respect to Holdings and
the Borrower and its  Subsidiaries,  any materially  adverse effect (both before
and after giving effect to the  Acquisition  and the  financing  thereof and the
other  transactions   contemplated  hereby)  with  respect  to  the  operations,
business, properties, assets, liabilities (contingent or otherwise) or financial
condition or prospects of Holdings and the Borrower and its Subsidiaries,  taken
as a whole, or (ii) any fact or circumstance  (whether or not the result thereof
would be covered by insurance) as to which singly or in the aggregate there is a
reasonable likelihood of (w) a materially adverse change described in clause (i)
with  respect to Holdings  and the  Borrower  and its  Subsidiaries,  taken as a
whole,  (x) the inability of any Credit Party to perform in any material respect
its  Obligations  hereunder  or the  inability  of the Banks to  enforce  in any
material  respect  their  rights  purported  to  be  granted  hereunder  or  the
Obligations (including realizing on the Collateral), or (y) a materially adverse
effect on the ability to effect  (including  hindering or unduly  delaying)  the
Acquisition  and  the  other  transactions  contemplated  hereby  on  the  terms
contemplated hereby and thereby.

            "Minimum Borrowing Amount" means $100,000.

            "Morningside"  means  Morningside  Capital Group, LLC, a Connecticut
limited liability company.

            "Mortgage"  means a term loan and revolving credit mortgage (or deed
of trust or deed to  secure  debt,  as the case may be),  assignment  of  rents,
security  agreement  and fixture  filing  creating  and  evidencing  a Lien on a
Mortgaged Real Property,  which shall be  substantially in the form of Exhibit D
hereto,  containing such schedules and including such additional  provisions and
other  deviations  from such  Exhibit  as shall be  necessary  to  conform  such
document to applicable or local law or as shall be customary under applicable or
local law and which shall be dated the date of delivery  thereof and made by the
owner (fee or  leasehold,  as the case may be) of the  Mortgaged  Real  Property
described  therein for the benefit of the  Collateral  Agent,  as mortgagee  (or
beneficiary,  as the case may be),  assignee and secured party,  as the same may
after its execution be amended,  supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof.

            "Mortgaged  Real  Property"  means each Real Property  designated on
Annex VIII which shall be subject to a Mortgage.

            "Multiemployer  Plan"  means a  "multiemployer  plan" as  defined in
Section  4001(a)(3)  of ERISA with  respect to which any Credit  Party or any of
their  respective  ERISA  Affiliates  is or has been  required to  contribute or
otherwise may have liability.

            "Net Award" has the meaning assigned to that term in each
Mortgage.

            "Net Cash Proceeds" means:

            (a) with  respect to any Asset Sale,  the  aggregate  cash  payments
      received  by  Holdings,   the  Borrower   and/or  any  of  the  Borrower's
      Subsidiaries,  as the case may be,  from such  Asset  Sale,  net of direct
      expenses of sale, net of taxes (including income taxes and transfer taxes)
      and net of repayment of  Indebtedness  or Capitalized  Leases in each case
      secured by a Lien on the asset subject to such Asset Sale;  provided that,
      with respect to taxes,  expenses  shall only  include  taxes to the extent
      that  taxes  are  payable  in cash  in the  current  year  or in the  next
      succeeding year with respect to the current year as a result of such Asset
      Sale; and

            (b) with respect to any Taking or Destruction,  the Net Award or Net
      Proceeds,  as applicable,  resulting therefrom,  to be applied as Net Cash
      Proceeds  under this  Agreement  pursuant  to the  provisions  of Sections
      1.13.3 and 1.13.4 of the Mortgages;

provided, further, that Net Cash Proceeds shall not include any amounts or items
included in the  definition  of  Financing  Proceeds or Net  Financing  Proceeds
(including in any proviso appearing therein).

            "Net Financing  Proceeds"  means Financing  Proceeds,  net of direct
expenses of the transaction and net of taxes (including  income taxes) currently
paid or payable in cash as a result  thereof in the current  year or in the next
succeeding  year with respect to the current year as a result of the transaction
generating Net Financing Proceeds.

            "Net Proceeds" has the meaning assigned to that term in each
Mortgage.

            "New Image" has the meaning set forth in the recitals hereto.

            "Note" means any Revolving Note or Term Note.

            "Notice of Borrowing" has the meaning provided in Section 1.03.

            "Notice of Conversion/Continuation" has the meaning provided
in Section 1.06.

            "Obligations" means all amounts,  direct or indirect,  contingent or
absolute, of every type or description,  and at any time existing,  owing to the
Agent or any Bank  pursuant to the terms of this  Agreement  or any other Credit
Document or secured by any of the Security Documents.

            "Officers'  Certificate"  means,  as applied to any  corporation,  a
certificate  executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice  Presidents and by its Chief
Financial  Officer or its  Treasurer or any Assistant  Treasurer;  provided that
every  Officers'  Certificate  with  respect  to  compliance  with  a  condition
precedent to the making of any Loan hereunder shall include (i) a statement that
the  officers  making  or  giving  such  Officers'  Certificate  have  read such
condition and any  definitions or other  provisions  contained in this Agreement
relating  thereto,  (ii) a statement  that, in the opinion of the signers,  they
have made or have  caused to be made such  examination  or  investigation  as is
necessary  to enable  them to express an  informed  opinion as to whether or not
such condition has been complied  with, and (iii) a statement as to whether,  in
the opinion of the signers, such condition has been complied with.
            "Officers'  Solvency   Certificate"  means  the  Officers'  Solvency
Certificate in the form set forth as Exhibit L hereto.

            "Operating  Lease" of any Person,  shall mean any lease  (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) by such Person as Lessee which is
not a Capital Lease.

            "Partial Release Conditions" has the meaning provided in
Section 7.13(C).

            "PBGC" means the Pension Benefit  Guaranty  Corporation  established
pursuant to Section 4002 of ERISA, or any successor thereto.

            "Pension  Plan" means any pension plan as defined in Section 3(2) of
ERISA (other than a Multiemployer Plan) which is or has been maintained by or to
which  contributions  are or  have  been  made  by any  Credit  Party  or  their
respective  ERISA Affiliates or as to which any Credit Party or their respective
ERISA Affiliates may have liability.

            "Permitted Encumbrances" has the meaning provided in Section
7.03.

            "Person" means any  individual,  partnership,  joint venture,  firm,
corporation,   association,  trust  or  other  enterprise  or  any  Governmental
Authority.

            "Pledge   Agreements"   means  and  includes  the  Holdings   Pledge
Agreement,  the Borrower Pledge Agreement,  and any securities pledge agreements
(including,  without  limitation,  any  supplements  or amendments to any of the
foregoing) delivered pursuant to Section 6.13, 6.14 or 6.16.

            "Pledged  Collateral" means all the Pledged Collateral as defined in
each  of the  General  Security  Agreements  and in  the  Intellectual  Property
Security Agreements.

            "Pledged  Securities"  means all the securities and other collateral
in which a security  interest  is  purported  to be granted to the Agent for the
benefit  of the  Banks  by each of the  Pledge  Agreements,  including,  without
limitation, all Pledged Collateral as defined therein.

            "Portion" means the Term Portion or the Revolving Portion.

            "Prior Liens" means Liens which,  pursuant to the  provisions of any
Security Document, are or may be superior to the Lien of such Security Document.

            "Projected Financial Statements" has the meaning provided in
Section 5.11(c).

            "Purchase Agreements" means, collectively, the Cutex Purchase
Agreement and the Jean Philippe Purchase Agreement.

            "Real Property" means all right,  title and interest of the Borrower
or any of its Subsidiaries (including, without limitation, any leasehold estate)
in and to a parcel of real property owned, leased or operated by the Borrower or
any of its  Subsidiaries  together  with, in each case, all of the Borrower's or
such  Subsidiaries'  right,  title and interest in and to all  improvements  and
appurtenant fixtures, equipment, personal property, easements and other property
and rights incidental to the ownership, lease or operation thereof.

            "Release" has the meaning provided in Section 7.13(B).

            "Release Conditions" has the meaning provided in Section
7.13(B).

            "Release Notice" has the meaning provided in Section 7.13(B).

            "Released Real Property" has the meaning provided in Section
7.13(B).

            "Reference Banks" means Indosuez, Chase Bank and Citibank, N.A.

            "Regulation  D" means  Regulation D of the Board of Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.

            "Regulation  G" means  Regulation G of the Board of Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.

            "Regulation  T" means  Regulation T of the Board of Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.

            "Regulation  U" means  Regulation U of the Board of Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.

            "Regulation  X" means  Regulation X of the Board of Governors of the
Federal  Reserve  System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.

            "Required Banks" means at any time (i) Banks holding at least 51% of
the Total  Commitments  held by Banks (or, if the Total  Commitments  shall have
been  terminated,  Banks holding at least 51% of the outstanding  Loans) or (ii)
two Banks if there are only two Banks holding 100% of the Total  Commitments and
at least one of such Banks holds an aggregate Commitment of at least $5,000,000;
provided that for the purposes of Section 4, the requirement  that any document,
agreement,  certificate or other writing is to be  satisfactory  to the Required
Banks shall be satisfied if (x) such document,  agreement,  certificate or other
writing was delivered in its final form to the Banks prior to the Effective Date
(or if amended or modified thereafter,  the Agent has reasonably determined such
amendment or  modification  not to be material),  (y) such document,  agreement,
certificate or other writing is  satisfactory to the Agent and (z) Banks holding
more than  33-1/3% of the Total  Commitments  held by Banks have not objected in
writing to such document,  agreement,  certificate or other writing to the Agent
prior to the Closing Date.

            "Reserve Adjusted  Eurodollar Loan" means each Loan bearing interest
based on the Eurodollar Rate as provided in Section 1.08(b).

            "Restatement Effective Date" has the meaning provided in
Section 11.10.

            "Restoration" has the meaning assigned to that term in each
Mortgage.

            "Revolving Loan  Commitment"  means,  with respect to each Bank, the
amount set opposite such Bank's name on Annex I hereto directly below the column
entitled "Commitments -- Revolver," as the same may be reduced from time to time
pursuant to Sections 2.01, 3.02 and/or 8.

            "Revolving Loan Commitment Termination Date" means the
Business Day immediately preceding the Final Revolving Loan Maturity Date.

            "Revolving Loans" has the meaning provided in Section 1.01(b).

            "Revolving Note" has the meaning provided in Section 1.05(a).

            "Revolving  Portion"  means,  at any time,  the  portion of the Loan
Facility evidenced by the Total Revolving Loan Commitments.

            "Rights Offering" means the offering on or about June 1997 by Carson
Holdings Limited to its shareholders of rights to acquire  additional  shares of
common stock on a pro rata basis.

            "Scheduled A Term Loans Principal  Payments" means,  with respect to
the  principal  payments  on the A Term Loans on the last  Business  Day of each
month set forth below, the U.S. dollar amount set forth opposite thereto:

                                         Scheduled A Term Loan
            Date                         Principal Payment
            June 1997                             $  625,000
            September 1997                           625,000
            December 1997                            625,000
            March 1998                               625,000
            June 1998                                625,000
            September 1998                           625,000
            December 1998                            625,000
            March 1999                               625,000
            June 1999                              1,562,500
            September 1999                         1,562,500
            December 1999                          1,562,500
            March 2000                             1,562,500
            June 2000                              1,562,500
            September 2000                         1,562,500
            December 2000                          1,562,500
            March 2001                             1,562,500
            June 2001                              1,875,000
            September 2001                         1,875,000
            December 2001                          1,875,000
            March 2002                             1,875,000
            "Scheduled B Term Loans Principal Payments" means, with
respect to the principal payments on the B Term Loans on the last Business
Day of each month set forth below, the U.S. dollar amount set forth
opposite thereto:

                                         Scheduled B Term Loan
            Date                         Principal Payment
            June 1997                             $  125,000
            September 1997                           125,000
            December 1997                            125,000
            March 1998                               125,000
            June 1998                                125,000
            September 1998                           125,000
            December 1998                            125,000
            March 1999                               125,000
            June 1999                                125,000
            September 1999                           125,000
            December 1999                            125,000
            March 2000                               125,000
            June 2000                                125,000
            September 2000                           125,000
            December 2000                            125,000
            March 2001                               125,000
            June 2001                                125,000
            September 2001                           125,000
            December 2001                            125,000
            March 2002                               125,000
            June 2002                              5,937,500
            September 2002                         5,937,500
            December 2002                          5,937,500
            March 2003                             5,937,500
            June 2003                              5,937,500
            September 2003                         5,937,500
            December 2003                          5,937,500
            March 2004                             5,937,500

            "SEC" means the Securities and Exchange Commission or any
successor thereto.

            "SEC  Regulation  D" means  Regulation  D as  promulgated  under the
Securities Act, as the same may be in effect from time to time.

            "Securities"  means any stock,  shares,  voting trust  certificates,
bonds, debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible,  subordinated or otherwise, or in general any
instruments  commonly known as  "securities"  or any  certificates  of interest,
shares or participations  in temporary or interim  certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Security  Documents"  means  each  of  the  Mortgage,   the  Pledge
Agreements,  the Borrower General Security Agreement,  the Intellectual Property
Security  Agreement and any other documents utilized to pledge as Collateral for
the Obligations any property or assets of whatever kind or nature.

            "Senior  Officer" means any of the chief  executive  officer,  chief
financial  officer,   controller,  chief  accounting  officer,  chief  operating
officer, treasurer or any executive vice president of the Borrower.

            "South African Credit Agreement" means a South African inventory and
receivables facility between Carson Holdings Limited and a South African bank of
up to the  equivalent of  US$2,000,000  dollars,  which shall be  nonrecourse to
Holdings  and its  Subsidiaries  other than Carson  Holdings  Limited and Carson
Products  (Proprietary)  Limited and which shall be reasonably acceptable to the
Agent.

            "Standby  Letter of Credit"  means any  standby  letter of credit or
similar   instrument   issued  for  the  purpose  of  supporting   (i)  workers'
compensation  liabilities of the Borrower or any of its  Subsidiaries,  (ii) the
obligations of third-party  insurers of the Borrower or any of its  Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third-party insurers
to obtain such  letters of credit,  or (iii)  performance,  payment,  deposit or
surety obligations of the Borrower or any of its Subsidiaries if required by law
or governmental  rule or regulation or in accordance with custom and practice in
the industry.

            "State and Local Real Property  Disclosure  Requirements"  means any
state or local laws requiring  notification  of the buyer of real  property,  or
notification,  registration,  or filing  to or with any  state or local  agency,
prior to, concurrent with or following the sale of any real property or transfer
of control of an establishment,  of the actual or threatened presence or release
into the environment,  or the use, disposal,  or handling of Hazardous Materials
on, at,  under,  or near the real property to be sold or the  establishment  for
which control is to be transferred.

            "Subsidiary"  of any Person means and  includes (i) any  corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary  voting power to elect a majority of the directors of such  corporation
(irrespective  of  whether  or not at the time  stock of any 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 owned by such Person  directly or
indirectly  through  Subsidiaries and (ii) any partnership,  association,  joint
venture or other  entity in which such  Person  directly or  indirectly  through
Subsidiaries has more than a 50% equity interest at the time.

            "Subsidiary  Guarantee"  means each guarantee  substantially  in the
form of Exhibit R hereto,  executed and  delivered by a Subsidiary in accordance
with the terms  hereof,  except for such changes as shall have been  approved by
the Agent,  as the same may after its  execution  be  amended,  supplemented  or
otherwise  modified  from time to time in  accordance  with the terms hereof and
thereof;  provided,  however,  that  (subject  to  change if  applicable  law is
modified from that in effect on the Closing Date),  Carson Holdings  Limited and
its subsidiaries shall not be required to execute a Subsidiary Guarantee.

            "Survey"  means a survey of any  Mortgaged  Real  Property  (and all
improvements  thereon):  (i)  prepared  by a surveyor  or  engineer  licensed to
perform surveys in the state where such Mortgaged Real Property is located, (ii)
dated (or  redated)  not earlier  than six months  prior to the date of delivery
thereof unless there shall have occurred within six months prior to such date of
delivery any exterior  construction on the site of such Mortgaged Real Property,
in which event such survey shall be dated (or redated)  after the  completion of
such  construction or if such  construction  shall not have been completed as of
such date of delivery,  not earlier than 20 days prior to such date of delivery,
(iii) certified by the surveyor (in a manner reasonably acceptable to the Agent)
to the Agent and the Title  Company and (iv)  complying in all respects with the
minimum  detail  requirements  of the American  Land Title  Association  as such
requirements are in effect on the date of preparation of such survey.

            "Taking" has the meaning assigned to that term in each
Mortgage.

            "Target Inventory Amount" means $600,000.

            "Taxes" has the meaning provided in Section 3.04.

            "Term Loans" has the meaning provided in Section 1.01(a).

            "Term Notes" has the meaning provided in Section 1.05(a).

            "Term Portion"  means, at any time, the portion of the Loan Facility
evidenced by the Total Term Loan Commitments.

            "Termination  Event"  means (i) a  "reportable  event"  described in
Section 4043 of ERISA or in the  regulations  thereunder  (excluding  events for
which the requirement for notice of such reportable event has been waived by the
PBGC) with  respect  to a Title IV Plan,  or (ii) the  withdrawal  of any Credit
Party or any of their  respective ERISA Affiliates from a Title IV Plan during a
plan  year in  which it was a  "substantial  employer"  as  defined  in  Section
4001(a)(2)  of ERISA,  or (iii) the filing of a notice of intent to  terminate a
Title IV Plan or the  treatment of a Title IV Plan  amendment  as a  termination
under Section 4041 of ERISA,  or (iv) the institution of proceedings by the PBGC
to  terminate a Title IV Plan or to appoint a trustee to  administer  a Title IV
Plan,  or (v) any other event or  condition  which might  constitute  reasonable
grounds under Section 4042 of ERISA for the  termination  of, or the appointment
of a trustee to  administer,  any Title IV Plan, or (vi) the complete or partial
withdrawal  (within  the  meaning of Sections  4203 and 4205,  respectively,  of
ERISA) of any Credit Party or any of their  respective  ERISA  Affiliates from a
Multiemployer  Plan,  or (vii) the  insolvency  or  reorganization  (within  the
meaning of Sections 4245 and 4241, respectively, of ERISA) or termination of any
Multiemployer Plan, or (viii) the failure to make any payment or contribution to
any Pension  Plan or  Multiemployer  Plan or the making of any  amendment to any
Pension Plan which could result in the  imposition of a lien or the posting of a
bond or other security.

            "Test Period" means the shorter of (i) the four consecutive complete
fiscal  quarters  of the  Borrower  then  last  ended or (ii) the  period of all
complete fiscal quarters of the Borrower since the Closing Date.

            "Title  Company"  means  Ticor Title  Insurance  or such other title
insurance  or  abstract  company  as  shall  be  selected  by the  Borrower  and
reasonably acceptable to the Required Banks.

            "Title IV Plan" means any Pension Plan described in Section  4021(a)
of ERISA, and not excluded under Section 4021(b) of ERISA.

            "Total A Term  Loan  Commitments"  means  the sum of the A Term Loan
Commitments of each of the Banks.

            "Total B Term  Loan  Commitments"  means  the sum of the B Term Loan
Commitments of each of the Banks.

            "Total Commitments" means the sum of the Total Term Loan
Commitments and the Total Revolving Loan Commitments.

            "Total  Revolving Loan  Commitments"  means the sum of the Revolving
Loan Commitments of each of the Banks.

            "Total  Term  Loan  Commitments"  means  the sum of the A Term  Loan
Commitments and the B Term Loan Commitments of each of the Banks.

            "Total Utilization of Revolving Loan Commitments" means, at any date
of  determination,  the sum of the aggregate  principal  amount of all Revolving
Loans then outstanding.

            "Total  Voting Power" means the total  combined  voting power in the
election of directors of all shares of capital stock then outstanding.

            "Type" of Loan means either a Base Rate Loan or a Reserve
Adjusted Eurodollar Loan.

            "UCC" means the Uniform Commercial Code as in effect in the State of
New York or any other applicable jurisdiction in the United States.

            "Unutilized Commitment" for any Bank at any time means, on and after
the Closing Date, the unutilized  Revolving Loan Commitment of such Bank,  after
taking into effect the Letters of Credit Usage.

            "Wholly Owned Subsidiary" of any Person means any Subsidiary of such
Person to the extent all of the capital  stock or other  ownership  interests in
such Subsidiary,  other than directors' or nominees' qualifying shares or shares
of capital stock required to be owned by foreign nationals under applicable law,
is owned directly or indirectly by such Person.

            "Written" or "in writing" means any form of written communication or
a communication by means of telex, telecopier device, telegraph or cable.

            SECTION 10.  The Agent.

            10.01.  Appointment.  Each Bank hereby  irrevocably  designates  and
appoints  Indosuez as Agent (such term to include the Agent acting as Collateral
Agent or in any other  representative  capacity under any other Credit Document)
of such Bank to act as specified  herein and in the other Credit  Documents  and
each such Bank hereby  irrevocably  authorizes  the Agent to take such action on
its behalf under the provisions of this Agreement and the other Credit Documents
and to exercise such powers and perform such duties as are  expressly  delegated
to the Agent by the terms of this  Agreement  and the  other  Credit  Documents,
together with such other powers as are reasonably  incidental thereto. The Agent
agrees to act as such upon the express conditions  contained in this Section 10.
Notwithstanding  any provision to the contrary elsewhere in this Agreement,  the
Agent shall not have any duties or responsibilities,  except those expressly set
forth herein or in the other Credit  Documents,  or any  fiduciary  relationship
with any Bank, and no implied covenants,  functions,  responsibilities,  duties,
obligations or liabilities  shall be read into this Agreement or otherwise exist
against the Agent.  The provisions of this Section 10 are solely for the benefit
of the Agent and the Banks, and no Credit Party shall have any rights as a third
party  beneficiary of any of the provisions  hereof. In performing its functions
and duties  under  this  Agreement,  the Agent  shall act solely as agent of the
Banks and does not assume and shall not be deemed to have assumed any obligation
or relationship of agency or trust with or for any Credit Party.

            10.02. Delegation of Duties. The Agent may execute any of its duties
under this  Agreement  or any other  Credit  Document  by or  through  agents or
attorneys-in-fact  and shall be  entitled  to advice of counsel  concerning  all
matters  pertaining to such duties.  The Agent shall not be responsible  for the
negligence or misconduct of any agents or attorneys-in-fact  selected by it with
reasonable care except to the extent otherwise required by Section 10.03.

            10.03.  Exculpatory  Provisions.  Neither  the  Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any  action  lawfully  taken or omitted to be taken by it or such
Person  under or in  connection  with  this  Agreement  (except  for its or such
Person's own gross negligence or willful  misconduct) or (ii) responsible in any
manner to any of the  Banks for any  recitals,  statements,  representations  or
warranties  by the  Borrower,  any  Subsidiary  of the  Borrower or any of their
respective  officers  contained in this Agreement,  any other Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in  connection  with,  this  Agreement  or any
other  Document or for any  failure of the  Borrower  or any  Subsidiary  of the
Borrower  or any  of  their  respective  officers  to  perform  its  obligations
hereunder or thereunder. The Agent shall not be under any obligation to any Bank
to ascertain or to inquire as to the  observance  or  performance  of any of the
agreements  contained in, or conditions  of, this  Agreement,  or to inspect the
properties,  books or records of the Borrower or any Subsidiary of the Borrower.
The  Agent  shall  not  be  responsible  to  any  Bank  for  the  effectiveness,
genuineness,  validity,  enforceability,  collectibility  or sufficiency of this
Agreement  or any  Credit  Document  or  for  any  representations,  warranties,
recitals  or  statements  made  herein or therein or made in any written or oral
statement  or in  any  financial  or  other  statements,  instruments,  reports,
certificates  or  any  other  documents  in  connection  herewith  or  therewith
furnished  or made by the Agent to the Banks or by or on behalf of the  Borrower
to the  Agent or any Bank or be  required  to  ascertain  or  inquire  as to the
performance or observance of any of the terms, conditions, provisions, covenants
or  agreements  contained  herein or therein or as to the use of the proceeds of
the Loans or of the  existence or possible  existence of any Default or Event of
Default.

            10.04.  Reliance by the Agent.  The Agent shall be entitled to rely,
and shall be fully  protected in relying,  upon any note,  writing,  resolution,
notice, consent, certificate,  affidavit, letter, cablegram, telegram, telecopy,
telex or teletype  message,  statement,  order or other document or conversation
believed by it to be genuine and to have been signed, sent or made by the proper
Person or Persons and upon advice and  statements of legal  counsel  (including,
without limitation,  counsel to the Credit Parties), independent accountants and
other  experts  selected  by the Agent.  The Agent shall be fully  justified  in
failing or refusing to take any action under this  Agreement or any other Credit
Document  unless  it shall  first  receive  such  advice or  concurrence  of the
Required  Banks as it deems  appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or  continuing  to take any such action.  The
Agent shall in all cases be fully  protected in acting,  or in  refraining  from
acting, under this Agreement and the other Credit Documents in accordance with a
request of the Required Banks (or to the extent specifically provided in Section
11.12,  all the Banks),  and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks.

            10.05.  Notice of  Default.  The  Agent  shall not be deemed to have
knowledge  of the  occurrence  of any Default or Event of Default,  other than a
default in the payment of principal or interest on the Loans hereunder unless it
has  received  notice  from a Bank or the  Borrower  or any other  Credit  Party
referring  to this  Agreement,  describing  such Default or Event of Default and
stating that such notice is a "notice of  default".  In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the Banks.
The Agent  shall  take such  action  with  respect  to such  Default or Event of
Default as shall be reasonably  directed by the Required  Banks;  provided that,
unless and until the Agent shall have  received such  directions,  the 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 interests of the Banks.

            10.06.  Non-Reliance  on Agent and Other Banks.  Each Bank expressly
acknowledges  that  neither  the  Agent  nor  any  of its  officers,  directors,
employees, agents, attorneys-in-fact or affiliates have made any representations
or warranties to it and that no act by the Agent  hereinafter  taken,  including
any review of the affairs of the  Borrower or any  Subsidiary  of the  Borrower,
shall be deemed to constitute any representation or warranty by the Agent to any
Bank. Each Bank represents to the Agent that it has,  independently  and without
reliance  upon the Agent or any other  Bank,  and  based on such  documents  and
information  as it  has  deemed  appropriate,  made  its  own  appraisal  of and
investigation into the business,  assets,  operations,  property,  financial and
other  conditions,  prospects  and  creditworthiness  of the  Borrower  and  its
Subsidiaries  and made its own  decision to make its Loans  hereunder  and enter
into this Agreement and the other agreements contemplated hereby. Each Bank also
represents that it will,  independently  and without  reliance upon the Agent or
any other Bank,  and based on such  documents and  information  as it shall deem
appropriate at the time,  continue to make its own credit  analysis,  appraisals
and decisions in taking or not taking action under this  Agreement,  and to make
such  investigation  as it deems  necessary to inform itself as to the business,
assets,  operations,  property,  financial and other  conditions,  prospects and
creditworthiness  of the  Borrower  and its  Subsidiaries.  Except for  notices,
reports and other documents  expressly  required to be furnished to the Banks by
the Agent  hereunder,  the Agent  shall not have any duty or  responsibility  to
provide any Bank with any credit or other  information  concerning the business,
operations,  assets,  property,  financial  and other  conditions,  prospects or
creditworthiness  of the Borrower or any of its Subsidiaries which may come into
the  possession  of the  Agent  or any of its  officers,  directors,  employees,
agents, attorneys-in-fact or affiliates.

            10.07.  Indemnification.  The Banks agree to indemnify  the Agent in
its  capacity as such or in any other  representative  capacity  under any other
Credit  Document  ratably  according to their  aggregate  Commitments,  from and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits, costs,  reasonable expenses or disbursements of any
kind whatsoever which may at any time  (including,  without  limitation,  at any
time  following the payment of the  Obligations)  be imposed on,  incurred by or
asserted  against the Agent in its  capacity  as such in any way  relating to or
arising out of this  Agreement or any other Credit  Document,  or any  documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Agent under or in connection with
any of the  foregoing,  but only to the extent that any of the  foregoing is not
paid by the Borrower or any of its Subsidiaries or any Guarantor;  provided that
no Bank  shall be liable to the Agent for the  payment  of any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses  or  disbursements  resulting  solely  from the  Agent's  gross
negligence or willful  misconduct.  If any indemnity  furnished to the Agent for
any  purpose  shall,  in the  opinion of the Agent,  be  insufficient  or become
impaired,  the  Agent  may call  for  additional  indemnity  and  cease,  or not
commence,  to do the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 10.07 shall survive the payment of all
Obligations.

            10.08.  The  Agent in Its  Individual  Capacity.  The  Agent and its
Affiliates may make loans to, accept  deposits from and generally  engage in any
kind of business with the Borrower, its Subsidiaries and other Affiliates of the
Borrower as though the Agent were not the Agent  hereunder.  With respect to the
Loans made by it and all Obligations  owing to it, the Agent shall have the same
rights and powers under this  Agreement as any Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks" shall include the
Agent in its individual capacity.

            10.09.  Successor  Agent.  Upon the acceptance of any appointment as
Agent  hereunder  by a successor  Agent,  the term  "Agent"  shall  include such
successor  agent  effective  upon its  appointment,  and the  resigning  Agent's
rights,  powers and duties as Agent  shall be  terminated,  without any other or
further  act or deed on the part of such  former  Agent or any of the parties to
this Agreement.  After the retiring Agent's resignation  hereunder as Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.

            10.10.  Resignation  by Agent.  (A) The Agent  may  resign  from the
performance  of all its functions and duties  hereunder at any time by giving 30
Business  Days'  prior  written  notice  to the  Borrower  and the  Banks.  Such
resignation  shall take  effect  upon the  acceptance  by a  successor  Agent of
appointment  pursuant  to  subsections  B and C below or as  otherwise  provided
below.

            (B) Upon any such notice of resignation  of the Agent,  the Required
Banks shall appoint a successor Agent acceptable to the Borrower and which shall
be  an  incorporated  bank  or  trust  company  or  other  qualified   financial
institution with operations in the United States and total assets of at least $1
billion.

            (C) If a  successor  Agent shall not have been so  appointed  within
said 30  Business  Day  period,  the  resigning  Agent  with the  consent of the
Borrower  shall then appoint a successor  Agent (which shall be an  incorporated
bank or trust company or other qualified  financial  institution with operations
in the United States and total assets of at least $1 billion) who shall serve as
Agent until such time, if any, as the Required  Banks appoint a successor  Agent
as provided above.

            (D) If no successor Agent has been appointed  pursuant to subsection
B or C by the 30th  Business Day after the date such notice of  resignation  was
given by the resigning Agent,  such Agent's  resignation  shall become effective
and the  Required  Banks  shall  thereafter  perform  all the  duties  of  Agent
hereunder  until such time,  if any, as the Required  Banks  appoint a successor
Agent as provided above.

            SECTION 11.  Miscellaneous.

            11.01. Payment of Expenses, etc. The Borrower agrees to: (i) whether
or not the transactions herein contemplated are consummated,  pay all reasonable
out-of-pocket   costs  and  expenses  of  the  Agent  in  connection   with  the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents  and  instruments  referred  to therein  (subject  to the terms of the
letter  agreement  dated March 27,  1997) and any  amendment,  waiver or consent
relating  thereto  (including,  without  limitation,  the  reasonable  fees  and
disbursements  of Cahill  Gordon & Reindel and local  counsel  issuing  opinions
pursuant to Section 4.01(C)) with prior notice to the Borrower of the engagement
of any counsel and of each of the Banks in connection  with the  enforcement  of
the Credit  Documents  and the  documents  and  instruments  referred to therein
(including, without limitation, the reasonable fees and disbursements of counsel
for each of the Banks) with prior  notice to the Borrower of the  engagement  of
any counsel;  (ii) pay and hold each of the Banks  harmless from and against any
and all present and future  stamp and other  similar  taxes with  respect to the
foregoing  matters and save each of the Banks  harmless from and against any and
all  liabilities  with respect to or resulting from any delay or omission (other
than to the  extent  attributable  to such  Bank) to pay such  taxes;  and (iii)
indemnify  Agent,  Collateral  Agent and each  Bank,  its  officers,  directors,
employees,  representatives  and  agents  from  and hold  each of them  harmless
against any and all losses, liabilities, claims, damages or expenses (including,
without limitation, any and all losses, liabilities, claims, damages or expenses
arising  under  Environmental  Laws except  with  regard to any  losses,  costs,
damages or expenses under Environmental Laws arising from or relating to acts or
omissions  occurring  after the Agent or any Bank  takes  possession  of,  uses,
operates,  manages, controls or sells the Mortgaged Property provided,  however,
that such exception shall apply only to the extent such losses,  costs,  damages
or  expenses  arise  solely  from the gross  negligence,  bad  faith or  willful
misconduct  of the Agent or any Bank or of the  agents of the Agent or any Bank)
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation,  litigation or other proceeding (whether
or not  any  Bank  is a party  thereto)  related  to the  entering  into  and/or
performance  of any  Credit  Document  or the use of the  proceeds  of any Loans
hereunder  or the  Acquisition  or the  consummation  of any other  transactions
contemplated  in  any  Credit  Document,   including,  without  limitation,  the
reasonable  fees and  disbursements  of counsel  incurred in connection with any
such  investigation,  litigation  or other  proceeding  (but  excluding any such
losses,  liabilities,  claims,  damages or  expenses  to the extent  incurred by
reason of the gross negligence, bad faith or willful misconduct of the Person to
be indemnified).

            11.02.  Right of Setoff.  In addition to any rights now or hereafter
granted under  applicable law or otherwise,  and not by way of limitation of any
such  rights,  upon the  occurrence  and during the  continuance  of an Event of
Default,  each  Bank is  hereby  authorized  at any  time or from  time to time,
without presentment,  demand,  protest or other notice of any kind to any Credit
Party or to any other Person,  any such notice being hereby expressly waived, to
set off and to appropriate  and apply any and all deposits  (general or special)
and any other  Indebtedness  at any time held or owing by such Bank  (including,
without  limitation,  by branches and agencies of such Bank wherever located) to
or for the credit or the account of any Credit  Party  against and on account of
the  Obligations  and  liabilities  of such Credit Party to such Bank under this
Agreement  or  under  any of the  other  Credit  Documents,  including,  without
limitation,  all interests in Obligations of such Credit Party purchased by such
Bank  pursuant  to  Section  11.06(b),  and all other  claims  of any  nature or
description  arising out of or connected with this Agreement or any other Credit
Document,  irrespective  of  whether or not such Bank shall have made any demand
hereunder.

            11.03.  Notices.  Except as otherwise expressly provided herein, all
notices and other  communications  provided  for  hereunder  shall be in writing
(including  telegraphic,  telex,  telecopier or cable communication) and mailed,
telegraphed,  telexed,  telecopied,  cabled or  delivered,  if to the  Borrower,
Carson Products Company,  64 Ross Road,  Savannah,  GA 31405,  Attention:  Chief
Financial Officer,  with a copy to Morningside Capital Group, LLC, 1 Morningside
Drive,  North, Suite 200, Westport,  CT 06880,  Attention:  President,  or if to
another  Credit Party,  to its address  specified in the other  relevant  Credit
Documents,  as the case may be;  if to the  Agent or any  Bank,  at its  address
specified  for the Agent or such  Bank on Annex II  hereto;  or,  at such  other
address  as shall be  designated  by any party in a written  notice to the other
parties  hereto.  All  such  notices  and  communications  shall,  when  mailed,
telegraphed,  telexed,  telecopied,  or cabled or sent by overnight courier,  be
effective  two days after being  deposited in the mails,  when  delivered to the
telegraph company,  cable company or overnight  courier,  as the case may be, or
when sent by telex or telecopier,  except that notices and communications to the
Agent shall not be effective until received by the Agent.

            11.04.  Benefit of Agreement.  (a) This  Agreement  shall be binding
upon and inure to the benefit of and be enforceable by the parties  hereto,  all
future  holders of the  Notes,  and their  respective  successors  and  assigns;
provided  that no Credit  Party  may  assign or  transfer  any of its  interests
hereunder without the prior written consent of the Banks; and provided, further,
that the rights of each Bank to transfer,  assign or grant participations in its
rights and/or obligations  hereunder shall be limited as set forth below in this
Section  11.04;  provided  that nothing in this Section  11.04 shall  prevent or
prohibit  any Bank from (i) pledging  its Loans  hereunder to a Federal  Reserve
Bank in support of borrowings  made by such Bank from such Federal  Reserve Bank
and (ii) granting  participations in or assignments of such Bank's Loans,  Notes
and/or  Commitments  hereunder to its parent  company and/or to any Affiliate of
such  Bank  that is at least  50%  owned  by such  Bank or its  parent  company;
provided, however, that any such assignment or participation shall not result in
the  Borrower  paying  additional  amounts  as of the  time of  such  assignment
pursuant to Section 1.10(e), 1.11, 1.13 or 3.04.

            (b) Each  Bank  shall  have the right to  transfer,  assign or grant
participations  in  all  or  any  part  of its  remaining  Loans,  Notes  and/or
Commitments  hereunder on the basis set forth below in this clause (b).  Subject
to Section 11.04(c) hereof, each Bank may furnish any information concerning the
Borrower  in the  possession  of such Bank from  time to time to  assignees  and
participants (including prospective assignees and participants).

            (A)  Assignments.  Each Bank,  with the written consent of the Agent
      and the Borrower,  which consent shall not be unreasonably withheld, which
      shall be  evidenced  on the notice in the form of Exhibit I-1 hereto,  may
      assign pursuant to an Assignment  Agreement  substantially  in the form of
      Exhibit I-2 hereto all or a portion of its Loans, Notes and/or Commitments
      hereunder  pursuant  to  this  clause  (b)(A)  to  one  or  more  Eligible
      Assignees;  provided  that any such  assignment  pursuant  to this  clause
      (b)(A) shall not result in the Borrower  paying  additional  amounts as of
      the time of such  assignment  pursuant to Section  1.10(e),  1.11, 1.13 or
      3.04. Any assignment  pursuant to this clause (b)(A) will become effective
      five  Business Days after the Agent's  receipt of (i) a written  notice in
      the form of Exhibit I-1 hereto from the  assigning  Bank and the  Eligible
      Assignee  and (ii) a  processing  and  recordation  fee of $2,500 from the
      assigning  Bank in  connection  with the Agent's  recording  of such sale,
      assignment, transfer or negotiation;  provided that such fee shall only be
      payable if the assignment is between a Bank and an Eligible  Assignee that
      is not a Bank prior to the assignment.  The Borrower shall issue new Notes
      to the Eligible  Assignee in conformity with Section 1.05 and the assignor
      shall return the old Notes to the Borrower.  Upon the effectiveness of any
      assignment in accordance  with this clause (b)(A),  the Eligible  Assignee
      will  become a "Bank" for all  purposes  of this  Agreement  and the other
      Credit Documents and, to the extent of such assignment, the assigning Bank
      shall  be  relieved  of its  obligations  hereunder  with  respect  to the
      Commitments  being  assigned.  The Agent  shall  maintain  at its  address
      specified in Annex II hereto a copy of each Assignment Agreement delivered
      to and  accepted by it and a register  in which it shall  record the names
      and addresses of the Banks and the Commitment of, and principal  amount of
      the Loans  owning to,  each Bank from time to time (the  "Register").  The
      entries in the Register  shall be conclusive and binding for all purposes,
      absent demonstrable  error, and the Borrower,  the Agent and the Banks may
      treat  each  Person  whose  name is  recorded  in the  Register  as a Bank
      hereunder  for all  purposes  of this  Agreement.  The  Register  shall be
      available for  inspection  by the  Borrower,  the Agent or any Bank at any
      reasonable time and from time to time upon reasonable prior notice.

            (B)  Participations.   Each  Bank  may  transfer,  grant  or  assign
      participations  in all or any  part of such  Bank's  Loans,  Notes  and/or
      Commitments  hereunder  pursuant  to this  clause  (b)(B)  to any  Person;
      provided that (i) such Bank shall remain a "Bank" for all purposes of this
      Agreement and the transferee of such participation  shall not constitute a
      Bank hereunder and (ii) no participant under any such participation  shall
      have rights to approve any amendment to or waiver of this Agreement or any
      other Credit  Document except to the extent such amendment or waiver would
      (x) change the scheduled final maturity date of any of the Loans, Notes or
      Commitments in which such  participant is  participating or (y) reduce the
      principal  amount,  interest rate or fees  applicable to any of the Loans,
      Notes or  Commitments  in  which  such  participant  is  participating  or
      postpone  the  payment  of any  interest  or  fees or (z)  release  all or
      substantially  all of the  Collateral;  and  provided,  further  that  any
      participation pursuant to this Section 11.04(b)(B) shall not result in the
      Borrower paying  additional  amounts as of the time of such  participation
      pursuant to Section  1.10(e),  1.11, 1.13 or 3.04. In the case of any such
      participation,  the  participant  shall  not have any  rights  under  this
      Agreement or any of the other Credit Documents (the  participant's  rights
      against the granting Bank in respect of such participation to be those set
      forth in the agreement with such Bank creating such participation) and all
      amounts  payable by the Borrower  hereunder shall be determined as if such
      Bank had not sold such participation; provided that such participant shall
      be considered to be a "Bank" for purposes of Sections 11.02 and 11.06(b).

            (c) The Agent and the Banks agree to keep confidential (and to cause
their respective officers,  directors,  employees, agents and representatives to
keep  confidential)  all information,  materials and documents  furnished to the
Agent or any Bank (the "Information").  Notwithstanding the foregoing, the Agent
and each Bank shall be  permitted  to  disclose  Information  (i) to such of its
officers, directors,  employees, agents and representatives as need to know such
Information  in connection  with its  participation  in any of the  transactions
contemplated hereby or the administration of this Agreement;  (ii) to the extent
required by applicable  laws and regulations or by any subpoena or similar legal
process,  or requested by any  governmental  agency or  authority;  (iii) to the
extent such Information (A) becomes publicly available other than as a result of
a breach of this Agreement or any other  confidentiality  agreement with respect
thereto,  (B) becomes available to the Agent or such Bank on a  non-confidential
basis  from a  source  other  than  Holdings,  the  Borrower,  or  any of  their
respective   subsidiaries,    officers,   directors,    employees,   agents   or
representatives   or  (C)  was  available  to  the  Agent  or  such  Bank  on  a
non-confidential  basis prior to its disclosure to the Agent or such Bank by the
Borrower,  Holdings or any of their respective subsidiaries;  (iv) to the extent
the  Borrower,  Holdings  or any of their  respective  subsidiaries  shall  have
consented to such disclosure in writing;  (v) in connection with the sale of any
Collateral pursuant to the provisions of any of the Security Documents;  or (vi)
pursuant to Section 11.04(b) hereof;  provided that prior to any such disclosure
under Section 11.04(b),  each prospective Eligible Assignee or participant shall
enter into a written  agreement  with the  assigning or selling Bank to preserve
the  confidentiality  of any Information to the extent set forth in this Section
11.04(c).

            11.05. No Waiver;  Remedies  Cumulative.  No failure or delay on the
part of the  Agent or any  Bank in  exercising  any  right,  power or  privilege
hereunder  or under any other Credit  Document and no course of dealing  between
any Credit  Party and the Agent or any Bank shall  operate as a waiver  thereof;
nor shall any  single or partial  exercise  of any right,  power,  or  privilege
hereunder  or under any other  Credit  Document  preclude  any other or  further
exercise  thereof  or the  exercise  of any  other  right,  power  or  privilege
hereunder or thereunder.  The rights and remedies herein expressly  provided are
cumulative  and not  exclusive of any rights or remedies  which the Agent or any
Bank would  otherwise  have.  No notice to or demand on any Credit  Party in any
case shall entitle any Credit Party to any other or further  notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or the Banks to any other or further action in any circumstances  without notice
or demand.

            11.06.  Payments Pro Rata.  (a) The Agent agrees that promptly after
its receipt of each  payment from or on behalf of any Credit Party in respect of
any  Obligations of such Credit Party,  it shall  distribute such payment to the
Banks pro rata based upon their  respective  shares,  if any, of the Obligations
with respect to which such payment was received.

            (b) Each of the Banks agrees that,  if it should  receive any amount
hereunder  (whether by voluntary payment,  by realization upon security,  by the
exercise  of the right of setoff or  banker's  lien,  by  counterclaim  or cross
action,  by  the  enforcement  of any  right  under  the  Credit  Documents,  or
otherwise)  which is  applicable to the payment of the principal of, or interest
on, the Loans,  of a sum which with respect to the related sum or sums  received
by other  Banks is in a greater  proportion  than the total of such  Obligations
then owed and due to such Bank bears to the total of such  Obligations then owed
and due to all of the Banks  immediately  prior to such receipt,  then such Bank
receiving  such excess  payment  shall  purchase  for cash  without  recourse or
warranty from the other Banks an interest in the  Obligations  of the respective
Credit  Party to such  Banks in such  amount as shall  result in a  proportional
participation  by all of the Banks in such amount;  provided  that if all or any
portion of such  excess  amount is  thereafter  recovered  from such Bank,  such
purchase  shall be rescinded  and the purchase  price  restored to the extent of
such recovery, but without interest.

            11.07. Calculations;  Computations.  (a) The financial statements to
be  furnished  to the  Banks  pursuant  hereto  shall  be made and  prepared  in
accordance  with GAAP  consistently  applied  throughout  the  periods  involved
(except as set forth in the notes  thereto or as otherwise  disclosed in writing
by the Borrower to the Banks);  provided that, except as otherwise  specifically
provided herein, all computations  determining  compliance with Sections 5, 6, 7
and 8 and all  definitions  used in this Agreement for any purpose shall utilize
accounting  principles and policies in effect at the time of the preparation of,
and  in  conformity  with  those  used  to  prepare,  the  historical  financial
statements delivered to the Banks pursuant to Section 4.01(M).

            (b) All computations of interest and fees hereunder shall be made on
the actual  number of days elapsed over a year of 365 days;  provided,  however,
that all  computations  of interest  on Reserve  Adjusted  Eurodollar  Loans and
Commitment  Commission shall be made on the actual number of days elapsed over a
year of 360 days.

            11.08.  Governing Law;  Submission to Jurisdiction;  Venue. (a) This
Agreement  and the rights and  obligations  of the  parties  hereunder  shall be
construed  and  enforced in  accordance  with and be governed by the laws of the
State of New York  applicable  to  contracts  made  and to be  performed  wholly
therein.  Any legal action or proceeding  with respect to this  Agreement or any
other  Credit  Document may be brought in the courts of the State of New York or
of the United  States for the Southern  District of New York,  and, by execution
and delivery of this Agreement, each Credit Party hereby irrevocably accepts for
itself  and in respect  of its  property,  generally  and  unconditionally,  the
non-exclusive  jurisdiction of the aforesaid  courts.  Each Credit Party further
irrevocably  consents to the service of process out of any of the aforementioned
courts in any such  action or  proceeding  by the  mailing of copies  thereof by
registered or certified mail, postage prepaid, to the respective Credit Party at
its address  for  notices  pursuant  to Section  11.03,  such  service to become
effective  15 days after such  mailing.  Each Credit  Party  hereby  irrevocably
appoints the Borrower and such other persons as may hereafter be selected by the
Borrower  irrevocably  agreeing  in writing to serve as its agent for service of
process in respect of any such action or proceeding. Nothing herein shall affect
the  right  of the  Agent  or any  Bank to serve  process  in any  other  manner
permitted by law or to commence legal  proceedings or otherwise  proceed against
any Credit Party in any other jurisdiction.

            (b) Each Credit Party hereby  irrevocably waives any objection which
it may now or  hereafter  have to the  laying  of venue of any of the  aforesaid
actions or  proceedings  arising out of or in connection  with this Agreement or
any other Credit Document  brought in the courts referred to in clause (a) above
and hereby  further  irrevocably  waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.

            11.09. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
shall together  constitute one and the same  instrument.  A set of  counterparts
executed by all the parties  hereto  shall be lodged with the  Borrower  and the
Agent.

            11.10.  Effectiveness.  This Agreement shall become effective on the
date (the  "Restatement  Effective  Date") on which the Borrower and each of the
Banks shall have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Agent at the Agent's Office or, in the case
of the Banks,  shall have given to the Agent telephonic  (confirmed in writing),
written,  telex or telecopy notice  (actually  received) at such office that the
same has been signed and mailed to it. The Agent will give the Borrower and each
Bank prompt written notice of the occurrence of the Restatement Effective Date.

            11.11.  Headings Descriptive.  The headings of the several
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.

            11.12.  Amendment or Waiver.  Neither this  Agreement  nor any other
Credit  Document  nor any  terms  hereof  or  thereof  may be  changed,  waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Borrower and the Required Banks;  provided that no such
change,  waiver,  discharge or  termination  shall,  without the consent of each
affected Bank and the Agent, (i) extend the scheduled final maturity date of any
Loan, or any portion  thereof,  or reduce the rate or extend the time of payment
of interest thereon or fees or reduce the principal amount thereof,  or increase
the  Commitments  of any Bank over the amount  thereof  then in effect (it being
understood  that a waiver of any  Default or Event of Default or of a  mandatory
reduction in the Total  Commitment shall not constitute a change in the terms of
any  Commitment of any Bank),  (ii) release all or a substantial  portion of the
Collateral  or  Guarantees   (except  as  expressly   permitted  by  the  Credit
Documents),  (iii)  amend,  modify or waive any  provision of this  Section,  or
Section 1.10, 1.11, 3.04, Section 8, 10.07, 11.01, 11.02, 11.04, 11.06, 11.07(b)
or 11.12,  (iv) reduce any  percentage  specified in, or otherwise  modify,  the
definition of Required Banks or (v) consent to the assignment or transfer by any
Credit  Party of any of its rights and  obligations  under  this  Agreement.  No
provision of Section 10 may be amended without the consent of the Agent.

            11.14.  Survival.  All indemnities set forth herein including,
without limitation, in Section 1.11, 3.04, 10.07 or 11.01 shall survive
the execution and delivery of this Agreement and the making of the Loans,
the repayment of the Obligations and the termination of the Total
Commitments.

            11.15. Domicile of Loans. Each Bank may transfer and carry its Loans
at, to or for the account of any branch office,  subsidiary or affiliate of such
Bank; provided, however, that any such transfer shall not result in the Borrower
paying  additional  amounts as of the time of such transfer  pursuant to Section
1.10(e), 1.11, 1.13 or 3.04.

            11.16.  Waiver of Jury Trial.  Each of the parties to this Agreement
hereby irrevocably waives all right to a trial by jury in any action, proceeding
or  counterclaim  arising  out of or  relating  to this  Agreement,  the  Credit
Documents or the transactions contemplated hereby or thereby.

            11.17.  Independence of Covenants.  All covenants hereunder shall be
given  independent  effect so that if a  particular  action or  condition is not
permitted  by any of such  covenants,  the fact that it would be permitted by an
exception to, or be otherwise  within the limitation of, another  covenant shall
not avoid the  occurrence  of a Default or an Event of Default if such action is
taken or condition exists.



<PAGE>


============================================================================

============================================================================

            IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  a
counterpart  of this  Agreement to be duly executed and delivered as of the date
first above written.



                             CARSON PRODUCTS COMPANY


                                    By:
                                         Name:
                                         Title:



<PAGE>


              Credit Agreement  among Carson Products  Company,  Banque Indosuez
                and the Banks listed herein.


                                    BANQUE INDOSUEZ, NEW YORK BRANCH
                          as Agent and Collateral Agent


                                    By:
                                         Name:
                                         Title:


                                    By:
                                         Name:
                                         Title:


                          INDOSUEZ CAPITAL FUNDING II,
                                      LIMITED

                              By: INDOSUEZ CAPITAL,
                              as Portfolio Advisor


                                    By:
                                    Title:


                          INDOSUEZ CAPITAL FUNDING III,
                                      LIMITED

                              By: INDOSUEZ CAPITAL,
                              as Portfolio Advisor


                                    By:
                                    Title:





<PAGE>


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============================================================================




                                                                     ANNEX I




List of Banks                                       Commitments
                                       Revolver       A Term         B Term
Banque Indosuez, New York Branch     $25,000,000   $20,989,583   $46,268,750
Indosuez Capital Funding II, Limited $   --        $4,010,417    $   --
Indosuez Capital Funding III,        $   --        $   --        $3,731,250
Limited

Assignment Banks                                    Commitments





<PAGE>


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                                    -2-
============================================================================



                                                                    ANNEX II



                          Agent and Bank Addresses


Banque Indosuez, New York Branch
1211 Avenue of the Americas
7th Floor
New York, New York  10036


Indosuez Capital Funding II, Limited
1211 Avenue of the Americas
7th Floor
New York, New York  10036


Indosuez Capital Funding III, Limited
1211 Avenue of the Americas
7th Floor
New York, New York  10036




<PAGE>


                              Assignment Banks





<PAGE>


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                                                                   ANNEX III



                               Existing Debt





<PAGE>


============================================================================

============================================================================










                                                                    ANNEX IV


                                Subsidiaries




<PAGE>


============================================================================

============================================================================










                                                                     ANNEX V


                      Collective Bargaining Agreements




<PAGE>


============================================================================

============================================================================










                                                                    ANNEX VI


                                 INSURANCE




<PAGE>


============================================================================

============================================================================







DRAFT:  10/18/96                                             AWP:07640093.20


                                                                   ANNEX VII


                                   Liens




<PAGE>


============================================================================

============================================================================










                                                                  ANNEX VIII


                          Mortgaged Real Property




<PAGE>


============================================================================

============================================================================










                                                                    ANNEX IX


                                 Litigation




<PAGE>


============================================================================

============================================================================










                                                                     ANNEX X


                                  Consents




<PAGE>


============================================================================

============================================================================










                                                                    ANNEX XI


                                Restrictions




<PAGE>


============================================================================

============================================================================







DRAFT:  10/18/96                                             AWP:07640093.20


                                                                   ANNEX XII



                           Environmental Matters




<PAGE>


============================================================================

============================================================================










                                                                  ANNEX XIII


                                   Taxes




<PAGE>


============================================================================

============================================================================




                                                                   ANNEX XIV



                     Schedule of Intellectual Property