EX-10.4

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                                CREDIT AGREEMENT



                                      among



                                  PEAPOD, INC.





                                       and



                              KONINKLIJKE AHOLD NV





                      ____________________________________


                           Dated as of April 14, 2000

                      ____________________________________


                                   $20,000,000


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<PAGE>

                                TABLE OF CONTENTS


                                                                            Page



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

         1.01     Commitment...................................................1
         1.02     Notice of Borrowing..........................................1
         1.03     Conversions..................................................2
         1.04     Interest.....................................................2
         1.05     Interest Periods.............................................3

SECTION 2.  Commitment.........................................................4

         2.01  [Reserved]......................................................4
         2.02  Voluntary Termination or Reduction of Unutilized Total
                Commitment.....................................................4
         2.03     Mandatory Prepayments and Commitment Reductions..............4

SECTION 3.  Payments...........................................................5

         3.01  Voluntary Prepayments...........................................5
         3.02  Method and Place of Payment.....................................5
         3.03  Net Payments....................................................5

SECTION 4A.  Conditions Precedent to Initial Loans.............................7

         4A.01  Execution of Agreement.........................................7
         4A.02  Fees. .........................................................7
         4A.03  Officer's Certificate..........................................7
         4A.04  Opinions of Counsel............................................7
         4A.05  Adverse Change, etc............................................7
         4A.06  Litigation.....................................................7
         4A.07  Approvals......................................................7
         4A.08  Transaction Documents..........................................8
         4A.09  Previous Bridge Loan; Security Documents.......................8
         4A.10  Security Documents.............................................8
         4A.11  Warrants.......................................................9
         4A.12  Split Pea Software Liquidation.................................9

SECTION 4B.  Conditions Precedent to All Loans.................................9

         4B.01  No Default; Representations and Warranties.....................9
         4B.02  Notice of Borrowing............................................9
         4B.03  Restrictions on Loans..........................................9
         4B.04 Security Documents.............................................10
         4B.05 Second Opinion of Counsel......................................10

SECTION 5.  Representations, Warranties and Agreements........................10

         5.01  Borrower Status................................................10
         5.02  Power and Authority............................................10
         5.03  No Violation...................................................11
         5.04  Litigation.....................................................11
         5.05  Use of Proceeds; Margin Regulations............................11
         5.06  Approvals......................................................11
         5.07  Investment Company Act.........................................11
         5.08  Public Utility Holding Company Act.............................12
         5.09  True and Complete Disclosure...................................12
         5.10  Financial Condition; Financial Statements; Projections, etc....12
         5.11  Security Interests.............................................13
         5.12  Compliance with Statutes, etc..................................13
         5.13  Tax Returns and Payments.......................................13
         5.14  Subsidiaries...................................................13
         5.15  Representations and Warranties in Transaction Documents........14
         5.16  Patents, etc...................................................14

SECTION 6.  Affirmative Covenants.............................................14

         6.01  Information Covenants..........................................14
         6.02  Books, Records and Inspections.................................16
         6.03  Payment of Taxes...............................................16
         6.04  Existence; Franchises..........................................16
         6.05  Compliance with Statutes, etc..................................16
         6.06  Good Repair....................................................17
         6.07  End of Fiscal Years; Fiscal Quarters...........................17
         6.08  Use of Proceeds................................................17
         6.09  Corporate Formalities..........................................17
         6.10  Compliance with Environmental Laws.............................17
         6.11  Performance of Obligations.....................................18

SECTION 7.  Negative Covenants................................................18

         7.01  Business.......................................................18
         7.02  Consolidation, Merger, Sale or Purchase of Assets, etc.........18
         7.03  Liens..........................................................18
         7.04  Indebtedness...................................................20
         7.05  Capital Expenditures...........................................20
         7.06  Advances, Investments and Loans................................20
         7.07  Dividends, etc.................................................20
         7.08  Transactions with Affiliates...................................21
         7.09  Prohibition on Creation of Subsidiaries........................21

SECTION 8.  Events of Default.................................................21

         8.01  Payments.......................................................21
         8.02  Representations, etc...........................................21
         8.03  Covenants......................................................21
         8.04  Default Under Other Agreements.................................21
         8.05  Bankruptcy, etc................................................22
         8.06  Security Documents.............................................22
         8.07  Judgments......................................................22
         8.08  Change of Control..............................................22
         8.09  Transaction Documents..........................................22

SECTION 9.  Definitions.......................................................23


SECTION 10.  Miscellaneous....................................................30

         10.01  Payment of Expenses, etc......................................30
         10.02  Right of Setoff...............................................32
         10.03  Notices.......................................................32
         10.04  Assignments...................................................32
         10.05  No Waiver; Remedies Cumulative................................32
         10.06  Calculations; Computations....................................32
         10.07  GOVERNING LAW; SUBMISSION TO JURISDICTION;
                 VENUE; WAIVER OF JURY TRIAL; WAIVER OF CERTAIN CLAIMS........33
         10.08  Counterparts..................................................34
         10.09  Effectiveness.................................................34
         10.10  Headings Descriptive..........................................34
         10.11  Amendment or Waiver...........................................34
         10.12  Survival......................................................34
<PAGE>

SCHEDULE I         Existing Liens
SCHEDULE 5.04      Litigation
SCHEDULE 5.10(b)   Material Adverse Changes since December 31, 1999


EXHIBIT A          Form of Opinion of Sidley & Austin
EXHIBIT B          Form of Amended and Restated Collateral Assignment of
                    Intellectual Property
EXHIBIT C          Form of Amended and Restated Security Agreement

<PAGE>


     CREDIT  AGREEMENT,  dated as of April  14,  2000,  among  PEAPOD,  INC.,  a
Delaware  corporation (the "Borrower") and Koninklijke  Ahold NV (the "Lender").
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, subject to and upon the terms and conditions set forth herein, the
Lender is willing  to make  available  to the  Borrower  the  credit  facilities
provided for herein;

     NOW, THEREFORE, IT IS AGREED:

     SECTION 1. Amount and Terms of Credit.

     1.01 Commitment. (a) Subject to and upon the terms and conditions set forth
herein, the Lender agrees to make a revolving loan or revolving loans (each such
term loan a "Loan" and together with any revolving loans made pursuant to clause
(i) of this Section 1.01 collectively, the "Loans") to the Borrower, which Loans
(i) shall be incurred by the Borrower  pursuant to one or more drawings,  at any
time and from time to time during the period commencing on the Initial Borrowing
Date and ending on the Maturity Date, (ii) shall, unless the Lender is unable to
determine the  Eurodollar  Rate, at the option of the Borrower,  be incurred and
maintained as and/or converted into Base Rate Loans or Eurodollar  Loans,  (iii)
may be repaid and reborrowed in accordance  with the provisions  hereof and (iv)
shall not exceed the  Commitment in aggregate  principal  amount at any one time
outstanding.

     (b) The Borrower may not (i) incur Loans in excess of $3,000,000 (exclusive
of Loans made to repay the Term Note or other obligations owing to the Lender or
its  Affiliates)  in  principal  amount in any  calendar  month (or such greater
amount as the Lender and the Borrower  shall agree),  (ii) incur Loans more than
four times in any  calendar  month and (iii) incur Loans in excess of the amount
of the budgeted cash flow  requirements  of the Borrower for its  operations for
the two week period  following the Borrowing  thereof,  as set forth in a budget
provided by the Borrower to the Lender and reasonably  acceptable to the Lender;
provided,  however,  it being understood that the Lender shall not object to the
amount of the Borrowing  request on the Second Borrowing Date to the extent such
request is for an amount not to exceed $1,500,000.

     1.02 Notice of Borrowing. (a) Whenever the Borrower desires to incur Loans,
the  Borrower  shall give the Lender at its Notice  Office,  prior to 12:00 Noon
(New York time),  at least three  Business Days' (one Business Day's in the case
of a Borrowing of Base Rate Loans) prior written  notice (or  telephonic  notice
promptly  confirmed in writing) of each Borrowing of Loans to be made hereunder.
Each such notice shall specify (i) the aggregate  principal  amount of the Loans
to be made pursuant to such  Borrowing,  (ii) the date of such Borrowing  (which
shall be a Business Day),  (iii) whether the respective  Borrowing shall consist
of Base  Rate  Loans or (to the  extent  permitted)  Eurodollar  Loans  and,  if
Eurodollar  Loans,  the Interest Period to be initially  applicable  thereto and
(iv) the  proposed  use of the  proceeds of such Loans.  The Notice of Borrowing
will certify that the use of the proceeds of the Loan, and the timing of the use
thereof, are in accordance with the cash flow budget for the following two weeks
provided by the Borrower to the Lender.

     (b) The proceeds of the initial Loans  hereunder shall be applied first (i)
to  repay  all  principal,  accrued  interest  and the  amounts  owing  under or
evidenced by the Term Note or (ii) for the acquisition by the Lender of the Term
Note  (and in the case of such  acquisition,  the  Term  Note  shall  be  deemed
amended,  restated  and  superseded  hereby and the amount paid by the Lender to
acquire the Term Note shall  constitute a Loan  hereunder).  The proceeds of the
Loans  referred  to in this  Section  1.02(b)  shall be  remitted  by the Lender
directly to the holder of the Term Note and the  Borrower  hereby  directs  such
disposition of such proceeds.

     (c) Subject to the terms and  conditions  of this  Agreement  and except as
otherwise  provided in Section  1.02(b) and elsewhere  herein,  the Lender shall
make the proceeds of each requested Loan (other than Loans to repay  obligations
owing to the Lender or its  Affiliates,  which may be applied  directly  to such
obligations)  available  to the  Borrower  by 2:00 p.m.  (New York  time) on the
requested  date  of  such  borrowing  in  immediately  available  funds  to  the
Borrower's account at the Northern Trust Company,  Chicago, Illinois pursuant to
the following wire transfer instructions:  ABA #071000152;  For Credit to 65781;
FBO: Peapod, Inc..

     1.03 Conversions.  The Borrower shall have the option, unless the Lender is
unable to  determine  the  Eurodollar  Rate,  to  convert  on any  Business  Day
occurring on or after the Initial  Borrowing  Date (but in no event may there be
more than one  conversion  in any one  month) all of the  outstanding  principal
amount of Loans made  pursuant to one or more  Borrowings  into a  Borrowing  or
Borrowings  of another  Type of Loan.  In no event may less than all of the Base
Rate Loans be converted to Eurodollar Loans.

     1.04 Interest. (a) The unpaid principal amount of each Base Rate Loan shall
bear interest  from the date of the  Borrowing  thereof until the earlier of (i)
the maturity  (whether by  acceleration or otherwise) of such Base Rate Loan and
(ii) the  conversion  of such Base Rate Loan to a  Eurodollar  Loan  pursuant to
Section  1.03,  at a rate per annum which  shall at all times be the  Applicable
Base Rate Margin plus the Base Rate in effect from time to time.

     (b) The unpaid principal amount of each Eurodollar Loan shall bear interest
for each  interest  period  thereof  from the date of the  Borrowing  until  the
earlier  of  (i)  maturity  (whether  by  acceleration  or  otherwise)  of  such
Eurodollar  Loan and (ii) the conversion of such  Eurodollar Loan to a Base Rate
Loan at a rate per annum which shall at all times be the  Applicable  Eurodollar
Margin plus the relevant Eurodollar Rate.

     (c) All overdue  principal  and, to the extent  permitted  by law,  overdue
interest in respect of each Loan and any other overdue amount payable  hereunder
shall, in each case, bear interest at a rate per annum equal to the Base Rate in
effect  from  time to time plus the sum of (i) 2% and (ii) the  Applicable  Base
Rate Margin,  provided that no Loan shall bear interest after maturity  (whether
by  acceleration or otherwise) at a rate per annum less than 2% plus the rate of
interest  applicable  thereto at maturity.  Interest  which  accrues  under this
Section 1.04(c) shall be payable on demand.

     (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 monthly in
arrears on the last Business Day of each month and on any repayment,  prepayment
or  conversion  (on the amount  repaid,  prepaid or  converted)  and 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 10.06(b).

     (f) The Lender's  determination of any interest rate shall, absent manifest
error, be final and conclusive and binding on both parties.

     1.05  Interest  Periods.  (a) At the time the  Borrower  gives a notice  of
borrowing or notice of conversion (which must be given three Business Days prior
to the requested  conversion) in respect of the making of, or conversion into, a
Borrowing of  Eurodollar  Loans the Borrower  shall have the right to elect,  by
giving  the  Lender  written  notice  thereof  (or  telephonic  notice  promptly
confirmed in writing),  the Interest Period applicable to such Borrowing,  which
Interest  Period shall,  at the option of the Borrower,  be a one or three month
period. Notwithstanding anything to the contrary contained above:

          (i) the initial  Interest Period for any Borrowing of 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 day
     on which the next preceding Interest Period expires;

          (ii) if any  Interest  Period  begins on a day for  which  there is no
     numerically  corresponding  day in the  calendar  month  at the end of such
     Interest Period, such Interest Period shall end on the last Business Day of
     such calendar month;

          (iii) 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  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; and

          (iv) no Interest Period shall extend beyond the Maturity Date.

     (b) If,  prior to the third  Business  Day prior to the  expiration  of any
Interest  Period,  the Borrower has failed to elect a new Interest  Period to be
applicable to the respective  Borrowing of Eurodollar  Loans as provided  above,
the Borrower  shall be deemed to have elected to convert such  Borrowing  into a
Borrowing of Base Rate Loans effective as of the expiration date of such current
Interest Period.

     SECTION 2. Commitment.

     2.01 [Reserved]

     2.02  Voluntary  Termination or Reduction of Unutilized  Total  Commitment.
Upon at least two  Business  Days' prior  written  notice (or  telephone  notice
promptly  confirmed in writing) to the Lender at its Notice Office, the Borrower
shall  have the  right,  at any time or from time to time,  without  premium  or
penalty, to terminate or partially reduce the unutilized  Commitment in whole or
in part.

     2.03 Mandatory Prepayments and Commitment Reductions.

     (A) Commitment Reductions:

          (a) On the date of receipt  thereof by the  Borrower of Cash  Proceeds
     from any Asset Sale (other than Asset Sales not  exceeding  $250,000 in the
     aggregate  during  the term of this  Agreement),  the  Commitment  shall be
     permanently  reduced  by an amount  equal to 100% of the Net Cash  Proceeds
     from such Asset Sale.

          (b) On the date of the receipt thereof by the Borrower, the Commitment
     shall be  permanently  reduced by an amount  equal to 100% of the  proceeds
     (net of  underwriting  discounts,  commissions and other  reasonable  costs
     associated  therewith)  of  the  incurrence  of  any  Indebtedness  by  the
     Borrower, other than Indebtedness permitted by Section 7.04 as in effect on
     the date hereof.

          (c) On the date of the receipt thereof by the Borrower, the Commitment
     shall  be  permanently  reduced  by an  amount  equal  to 100% of the  cash
     proceeds (net of underwriting  discounts,  commissions and other reasonable
     costs  associated  therewith)  of any sale or issuance of its equity (other
     than the  Preferred  Stock and proceeds from the exercise of options not to
     exceed  $250,000  during  any  fiscal  year) and 100% of any amount of cash
     received  by the  Borrower  in  connection  with  any  contribution  to its
     capital.

          (d) On the date of receipt  thereof by the  Borrower of cash  proceeds
     from any Recovery Event, the Commitment shall be permanently  reduced by an
     amount  equal  to  100%  of the  proceeds  of such  Recovery  Event  (after
     deducting reasonable expenses in realizing such proceeds), provided that if
     the Borrower intends to use such insurance  proceeds or condemnation  award
     to replace or repair  the  affected  property,  the  Borrower  may use such
     proceeds or awards (not exceeding  $500,000 in aggregate  amount during the
     term of this Agreement) to purchase such replacement  property or make such
     repairs  within 30 days after such Recovery  Event and shall deliver to the
     Lender  written  evidence  of the use of such  proceeds  or award  for such
     purpose.

          (e) The  Commitment  shall be  terminated  in full on the  earliest to
     occur of: (i) the Maturity Date,  (ii) if the  shareholders of the Borrower
     disapprove  of the  sale of  shares  pursuant  to the  Securities  Purchase
     Agreement,  45 days  after  such  disapproval,  (iii)  the  fourth  monthly
     anniversary  of the  Effective  Date, if the  shareholders  of the Borrower
     fail, within four months after the Effective Date, to approve or disapprove
     the sale of securities pursuant to the Securities  Purchase  Agreement,  or
     (iv) the fourth monthly  anniversary of the Effective Date, if the purchase
     of all securities  pursuant to the Securities  Purchase  Agreement does not
     occur on or before such fourth monthly anniversary (other than by reason of
     breach by the Purchaser (as defined in the Securities  Purchase  Agreement)
     of its obligation under the Securities Purchase Agreement).

     (B) Repayments and Prepayments:

          (a) If on any date the aggregate outstanding principal amount of Loans
     exceeds the Commitment as then in effect,  the Borrower shall repay on such
     date the principal of Loans in an aggregate amount equal to such excess.

          (b)  Notwithstanding  anything to the contrary contained  elsewhere in
     this  Agreement all then  outstanding  Loans shall be repaid in full on the
     Maturity Date.

          (c) The  outstanding  Loans  shall be  prepaid  with the net  proceeds
     received by the Borrower from the issuance of the Preferred Stock, but such
     prepayment shall not reduce the amount of the Commitment.

     SECTION 3. Payments.

     3.01  Voluntary  Prepayments.  The Borrower  shall have the right to prepay
Loans in whole or in part, without premium or penalty,  from time to time on the
following  terms and  conditions:  the  Borrower  shall give the Lender prior to
12:00  noon (New York  time) at the Notice  Office at least one  Business  Day's
prior written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay the Loans and the amount of such prepayment.

     3.02 Method and Place of Payment. Except as otherwise specifically provided
herein,  all payments under this Agreement shall be made to the Lender not later
than  12:00  P.M.  (New  York  time) on the date  when due and  shall be made in
immediately  available funds and in lawful money of the United States of America
at the Payment  Office.  Any payments under this Agreement  which are made later
than  12:00 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.

     3.03 Net  Payments.  (a) All  payments  made by the  Borrower  will be made
without setoff,  counterclaim  or other defense.  All such payments will be made
free and clear of, and without  deduction  or  withholding  for,  any present or
future taxes, levies,  imposts,  duties,  fees,  assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding,  except as provided in the second succeeding  sentence,  any tax
imposed on or measured  by the net income or net profits of the Lender  pursuant
to the laws of the  jurisdiction in which it is organized or the jurisdiction in
which the principal office or applicable lending office of the Lender is located
or any  subdivision  thereof or therein) and all interest,  penalties or similar
liabilities with respect to such non-excluded taxes,  levies,  imposts,  duties,
fees,  assessments  or other  charges  (all  such  non-excluded  taxes,  levies,
imposts,   duties,  fees,   assessments  or  other  charges  being  referred  to
collectively  as "Taxes").  If any Taxes are so levied or imposed,  the Borrower
agrees to pay the full amount of such Taxes, and such additional  amounts as may
be  necessary  so that every  payment of all amounts  due under this  Agreement,
after  withholding or deduction for or on account of any Taxes, will not be less
than the amount  provided  for herein.  If any amounts are payable in respect of
Taxes pursuant to the preceding  sentence,  the Borrower agrees to reimburse the
Lender, upon the written request of the Lender, for taxes imposed on or measured
by the  net  income  or  profits  of the  Lender  pursuant  to the  laws  of the
jurisdiction  in which the Lender is organized or in which the principal  office
or applicable  lending  office of the Lender is located or under the laws of any
political  subdivision or taxing authority of any such jurisdiction in which the
Lender is  organized  or in which the  principal  office or  applicable  lending
office of the Lender is located and for any  withholding  of taxes as the Lender
shall  determine in good faith are payable by, or withheld from, the Lender,  in
respect of such  amounts so paid to or on behalf of the Lender  pursuant  to the
preceding  sentence  and in respect of any  amounts  paid to or on behalf of the
Lender pursuant to this sentence. The Borrower will furnish to the Lender within
45 days after the date the payment of any Taxes is due  pursuant  to  applicable
law certified copies of tax receipts evidencing such payment by the Borrower or,
if the  relevant  taxing  authority  does not issue  such  receipts,  such other
documents  of payment  as may be  reasonably  satisfactory  to the  Lender.  The
Borrower agrees to indemnify, defend and hold harmless the Lender, and reimburse
the Lender  upon its written  request,  for the amount of any Taxes so levied or
imposed and paid by the Lender and all costs and expenses incurred in connection
with same  including,  without  limitation,  attorney's  fees and  interest  and
penalties on the Taxes.

     (b) Notwithstanding Section 3.03(a), the Borrower shall not be required  to
make any payments to the Lender  pursuant to Section  3.03(a)  unless the Lender
complies with the following certification requirements:

          (i) the  Lender  shall,  no later  than the  Initial  Borrowing  Date,
     deliver to the  Borrower two  accurate  and  complete  signed  originals of
     Internal   Revenue   Service   Form   W-8ECI  or  any   successor   thereto
     (collectively,   "Form  W-8ECI"),  or  two  accurate  and  complete  signed
     originals of Internal Revenue Service Form W-8BEN or any successor  thereto
     (collectively, "Form W-8BEN"), as appropriate, in each case indicating that
     the Lender is on the date of  delivery  thereof  entitled  to  receive  all
     payments  under  this  Agreement  free from  withholding  of United  States
     federal income tax;

          (ii) the Lender shall deliver to the Borrower two further Form W-8ECIs
     or Form W-8BENs, as appropriate,  on or before the date that any such forms
     expire or become obsolete and after the occurrence of any event requiring a
     change in the most recent form  previously  delivered by it to the Borrower
     (other than a change in law that renders such forms  inapplicable  or which
     would prevent the Lender from duly completing and delivering any such form)
     unless the Lender is precluded from delivering such forms; and

          (iii) the Lender shall, to the extent it is legally  entitled to do so
     and  the  same  would  not be  disadvantageous  to it,  promptly  upon  the
     Borrower's  reasonable  request to that effect,  and at the Borrower's cost
     and  expense,   deliver  to  the  Borrower  such  other  forms  or  similar
     documentation  as may be required from time to time by any applicable  law,
     treaty,  rule or regulation  in order to establish  the Lender's  exemption
     from withholding on payments under this Agreement.

     SECTION 4A.  Conditions  Precedent to Initial Loans.  The obligation of the
Lender to make Loans hereunder on the Initial Borrowing Date is subject,  at the
time of the making of such Loans,  to the  satisfaction of each of the following
conditions:

     4A.01  Execution of Agreement.  On or prior to the Initial  Borrowing Date,
this Agreement shall have become effective as provided in Section 10.09.

     4A.02 Fees. On the Initial  Borrowing Date, the Borrower shall have paid to
the Lender all Fees and expenses (including, without limitation, reasonable fees
and  expenses of counsel)  agreed upon by such parties to be paid on or prior to
such date.

     4A.03  Officer's  Certificate.  On the Initial  Borrowing  Date, the Lender
shall have received a certificate dated such date signed by the President or any
Vice President of the Borrower stating that all of the applicable conditions set
forth in Sections 4A.05, 4A.06, 4A.07, and 4A.08 exist or have been satisfied as
of such date.

     4A.04 Opinions of Counsel.  On the Initial Borrowing Date, the Lender shall
have  received  an  opinion,  addressed  to the  Lender  and dated  the  Initial
Borrowing Date, from Sidley & Austin, special counsel to the Borrower,  covering
the matters contained in Exhibit A, which opinion shall be in form and substance
satisfactory to the Lender.

     4A.05 Adverse Change,  etc. On the Initial  Borrowing  Date,  nothing shall
have  occurred  (and the  Lender  shall  have not  become  aware of any facts or
conditions not previously known) which the Lender shall determine (a) has, or is
reasonably  likely to have, a material  adverse effect on the rights or remedies
of the Lender, or on the ability of the Lender to perform its obligations to the
Borrower,  or (b) has,  or is  reasonably  likely to have,  a  Material  Adverse
Effect.

     4A.06 Litigation. On the Initial Borrowing Date, there shall be no actions,
suits or proceedings pending or threatened (a) with respect to this Agreement or
any other  Document or the  transactions  contemplated  hereby or thereby or (b)
which the Lender  shall  determine  could  reasonably  be expected to (i) have a
Material  Adverse Effect or (ii) have a material adverse effect on the rights or
remedies of the Lender hereunder or under any other Credit Document.

     4A.07  Approvals.  On or prior to the Initial  Borrowing Date, all material
and necessary  governmental and third party approvals intended to be obtained on
or prior to the  Initial  Borrowing  Date in  connection  with the  transactions
contemplated by this Agreement and the other Documents and otherwise referred to
herein or  therein  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  or prevents  such  transactions  or
imposes, in the reasonable judgment of the Lender, materially adverse conditions
upon the consummation of such transactions.  Additionally, there shall not exist
any judgment,  order, injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or notified  prohibiting or
imposing materially adverse conditions upon, or materially  delaying,  or making
economically  unfeasible,  the consummation of the transactions  contemplated by
this  Agreement  and the other  Documents  or  otherwise  referred  to herein or
therein.

     4A.08 Transaction Documents. On or prior to the Initial Borrowing Date, the
Borrower  and an Affiliate  of the Lender  shall have  executed  the  Securities
Purchase Agreement,  and all of the Transaction  Documents required by the terms
of the Securities  Purchase Agreement to then be executed and the Borrower shall
be in compliance with all of its obligations thereunder.

     4A.09 Previous Bridge Loan; Security Documents.  On or prior to the Initial
Borrowing  Date,  all  outstanding  amounts owing under the Term Note shall,  as
provided  in Section  1.02(b),  either be (x) repaid in full,  and all  security
interests and liens relating thereto terminated or assigned to the Lender or (y)
purchased or otherwise obtained by the Lender from such Affiliate (in which case
the Term Note shall be deemed  amended and  restated by this  Agreement,  and be
superseded  hereby).  On the Initial  Borrowing Date, the Borrower shall have no
Indebtedness or preferred stock  outstanding  other than as permitted by Section
7.04.

     4A.10 Security  Documents.  (a) On the Initial Borrowing Date, the Borrower
shall have duly  authorized,  executed  and  delivered  an Amended and  Restated
Security  Agreement  in  the  form  of  Exhibit  C (as  modified,  supplemented,
extended,  renewed, replaced or amended from time to time in accordance with the
terms  hereof  and  thereof,  the  "Security  Agreement")  covering  all  of the
Borrower's collateral described therein, in each case together with:

          (i)  executed   copies  of  financing   statements   (Form  UCC-1)  in
     appropriate  form for filing under the UCC of each  jurisdiction  as may be
     necessary to perfect the security interests  purported to be created by the
     Security Agreement;

          (ii)  certified  copies of Requests  for  Information  or Copies (Form
     UCC-11), or equivalent  reports,  each of recent date listing all effective
     financing statements that name the Borrower as debtor and that are filed in
     the jurisdictions  referred to in clause (i) above, together with copies of
     such other  financing  statements that name the Borrower as debtor (none of
     which shall cover the collateral described in the Security Agreement);

          (iii) evidence of the  completion of all other  recordings and filings
     of, or with respect to, the Security  Agreement as may be necessary  or, in
     the opinion of the Lender,  desirable  to perfect  the  security  interests
     intended  to be  created  by the  Security  Agreement  (including,  without
     limitation,  filings and registrations with respect to copyrights,  patents
     and trademarks); and

          (iv) evidence  that all other actions  necessary or, in the opinion of
     the  Lender,  desirable  to perfect  and  protect  the  security  interests
     purported to be created by the Security Agreement have been taken;

     (b) On the Initial Borrowing Date, the Borrower shall have duly authorized,
executed and delivered a Collateral  Assignment of Intellectual  Property in the
form of Exhibit B (as modified,  supplemented,  extended,  renewed,  replaced or
amended from time to time in accordance  with the terms hereof and thereof,  the
"Intellectual Property Assignment") covering all of the Borrower's  intellectual
property collateral described therein, in each case together with:

          (i) evidence of the  completion of all  recordings  and filings of, or
     with respect to, the Intellectual  Property  Assignment as may be necessary
     or, in the  opinion  of the  Lender,  desirable  to  perfect  the  security
     interests  intended to be created by the Intellectual  Property  Assignment
     (including,  without limitation,  filings and registrations with respect to
     copyrights, patents and trademarks); and

          (ii) evidence  that all other actions  necessary or, in the opinion of
     the  Lender,  desirable  to perfect  and  protect  the  security  interests
     purported to be created by the Intellectual  Property  Assignment have been
     taken.

     4A.11 Warrants. On or prior to the Initial Borrowing Date, the Lender shall
have received warrants exerciseable into 3,566,667 shares of common stock (at an
exercise  price of $3.00 per share and otherwise in the form of Exhibit I to the
Securities Purchase Agreement).

     4A.12 Split Pea  Software  Liquidation.  On or before the second  Borrowing
Date,  Split  Pea  Software,  Inc.  shall  have  been  liquidated  on terms  and
conditions acceptable to the Lender.

     SECTION 4B. Conditions Precedent to All Loans. The obligation of the Lender
to make Loans (including Loans on the Initial Borrowing Date) is subject, at the
time of the  making of each such  Loan,  to the  satisfaction  of the  following
conditions:

     4B.01 No Default;  Representations and Warranties. At the time of each such
Loan and also after giving effect to the  incurrence of Loans on such date,  (i)
there shall exist no Default or Event of Default,  and (ii) all  representations
and warranties  contained  herein and 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 the date
of such Loan (it being understood and agreed that any representation or warranty
which by its terms is made of a specified  date shall be true and correct in all
material respects as of such specified date).

     4B.02  Notice of  Borrowing.  Prior to the making of each Loan,  the Lender
shall have received a notice of borrowing  meeting the  requirements  of Section
1.02.

     4B.03  Restrictions on Loans.  The Borrower shall be in compliance with the
restrictions on the making of Loans described in Section 1.01(b).

     4B.04 Security Documents. The Security Documents shall be in full force and
effect.

     4B.05 Second Opinion of Counsel.  On the Second  Borrowing Date, the Lender
shall have  received  an opinion,  addressed  to the Lender and dated the Second
Borrowing Date, from Sidley & Austin, special counsel to the Borrower,  covering
the  creation  and  perfection  of the  security  interests  under the  Security
Documents,  which  opinion shall be in form and  substance  satisfactory  to the
Lender.

     The  acceptance of the proceeds of each Loan by the Borrower  (occurring on
the Initial Borrowing Date and thereafter) shall constitute a representation and
warranty  by the  Borrower to the Lender that all the  conditions  specified  in
Section 4A (with respect to the Loans on the Initial Borrowing Date) and in this
Section 4B (with respect to Loans on and after the Initial  Borrowing  Date) and
applicable to such Loans exist as of that time. All of the  certificates,  legal
opinions and other  documents and papers  referred to in Sections 4A and in this
Section 4B, unless otherwise specified,  shall be delivered to the Lender at its
Notice Office and shall be in form and substance reasonably  satisfactory to the
Lender.

     SECTION 5. Representations,  Warranties and Agreements.  In order to induce
the  Lender to enter  into this  Agreement  and to make the Loans  provided  for
herein, the Borrower makes the following  representations and warranties to, and
agreements  with,  the Lender,  all of which shall  survive  the  execution  and
delivery of this  Agreement and the making of the Loans (with the  occurrence of
the Effective Date and the incurrence by the Borrower of the Loans  hereunder on
the Initial  Borrowing  Date being  deemed to  constitute a  representation  and
warranty  that the matters  specified  in this Section 5 are true and correct in
all  material  respects  on and as of each such date of such  Loan  unless  such
representation and warranty expressly  indicates that it is being made as of any
specific date, in which case such  representation and warranty shall be true and
correct in all material respects as of such specific date):

     5.01  Borrower  Status.  The Borrower (i) is a duly  organized  and validly
existing  corporation in good standing under the laws of the jurisdiction of its
organization  or formation  and has the power and  authority to own its property
and assets and to transact the business in which it is engaged and (ii) has 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  which,  individually or in the aggregate,  could  reasonably be
expected to have a Material Adverse Effect.

     5.02 Power and  Authority.  The  Borrower  has the power and  authority  to
execute,  deliver  and carry out and  perform  the terms and  provisions  of the
Documents to which it is a party and has taken all necessary action to authorize
the execution, delivery and performance of the Documents to which it is a party.
The Borrower  has duly  executed and  delivered  each  Document to which it is a
party and each such Document constitutes the legal, valid and binding obligation
of the Borrower  enforceable in accordance with its terms,  except to the extent
that  the  enforceability  thereof  may be  limited  by  applicable  bankruptcy,
insolvency,  reorganization,  moratorium  or similar  laws  generally  affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).

     5.03 No Violation.  Neither the execution,  delivery and performance by the
Borrower of the  Documents to which it is a party nor  compliance by it 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 the Borrower  pursuant
to the  terms of any  indenture,  mortgage,  deed of trust,  agreement  or other
instrument  to  which  the  Borrower  is a party  or by  which  it or any of its
material  property  or assets  are bound or to which it may be  subject or (iii)
will violate any provision of the  certificate of  incorporation  or by-laws (or
equivalent organizational documents) of the Borrower.

     5.04 Litigation. Except as set forth in Schedule 5.04 hereto, in regards to
which there have been no material  adverse  developments  since April 14,  2000,
there  are no  actions,  suits or  proceedings  pending  or,  to the  Borrower's
knowledge, threatened with respect to any Credit Document or with respect to the
Borrower that are  reasonably  likely to have a Material  Adverse Effect or that
could  reasonably be expected to have a Material Adverse Effect on the rights or
remedies  of the  Lender  or on the  ability  of the  Borrower  to  perform  its
obligations to them hereunder,  under the other Credit Documents to which it is,
or will be, a party.  None of the  litigation  set forth in Schedule  5.04 could
reasonably be expected to have a Material Adverse Effect.

     5.05 Use of  Proceeds;  Margin  Regulations.  (a) The proceeds of all Loans
shall be utilized (i) on the Initial Borrowing Date to effect the refinancing of
the bridge loan described in Section 4A.09 and (ii) after the Initial  Borrowing
Date, for general corporate purposes.

     (b) Neither the making of any Loan  hereunder,  nor the use of the proceeds
thereof,  will be used to purchase or carry any Margin Stock or to extend credit
for the purpose of purchasing  or carrying any Margin Stock.  Neither the making
of any Loan nor the use of the proceeds  thereof will violate or be inconsistent
with the  provisions of  Regulations  T, U or X of the Board of Governors of the
Federal Reserve System.

     5.06 Approvals.  No order,  consent,  approval,  license,  authorization or
validation  of, or filing,  recording or  registration  with (except for filings
that have been  obtained or made on or prior to the Initial  Borrowing  Date and
which  remain  in full  force and  effect on the  Initial  Borrowing  Date),  or
exemption by, any  governmental or public body or authority,  or any subdivision
thereof,  is required to authorize,  or is required in connection  with, (i) the
execution, delivery and performance of any Credit Document or (ii) the legality,
validity, binding effect or enforceability of any such Credit Document.

     5.07 Investment Company Act. The Borrower is not 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. The Borrower is not 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 the Borrower
in writing to the Lender for purposes of or in connection with this Agreement or
any  transaction  contemplated  by the  Documents  is 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  (taken  as a whole)  not  misleading  at such  time in light of the
circumstances under which such information was provided.  There is no fact known
to the Borrower or which would be reasonably  likely to have a Material  Adverse
Effect  which  has  not  been  disclosed  herein  or in  such  other  documents,
certificates  and statements  furnished to the Lender for use in connection with
the transactions contemplated hereby.

     5.10 Financial Condition;  Financial Statements;  Projections,  etc. (a) On
and as of the Initial  Borrowing  Date, on a pro forma basis after giving effect
to the incurrence of Loans and to all Indebtedness incurred, and to be incurred,
and Liens created,  and to be created, by the Borrower in connection  therewith,
(x) the sum of the assets, at a fair valuation, of the Borrower taken as a whole
will exceed its debts,  (y) the Borrower  will not have incurred or intended to,
or believe that they will, incur debts beyond their ability to pay such debts as
such debts mature and (z) the Borrower will not have unreasonably  small capital
with which to conduct its business. For purposes of this Section 5.10(a), "debt"
means any liability on a claim,  and "claim" means (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.  The amount of contingent  liabilities at any
time shall be  computed  as the amount  that,  in the light of all the facts and
circumstances  existing at such time,  represents the amount that can reasonably
be expected to become an actual or matured liability.

     (b) Except as set forth in  Schedule  5.10(b),  since  December  31,  1999,
nothing  has  occurred  that has had or could  reasonably  be expected to have a
Material Adverse Effect.

     (c) On and as of the Initial  Borrowing Date, the budgets,  projections and
pro forma  financial  information  delivered  to the Lender prior to the Initial
Borrowing  Date  have  been  prepared  in good  faith  and  based on  reasonable
assumptions,  and there are no  statements  or  conclusions  in the  budgets and
projections which are based upon or include information known to the Borrower to
be  misleading  in any  material  respect  or which  fail to take  into  account
material  information  known to the  Borrower  regarding  the  matters  reported
therein.  On  the  Initial  Borrowing  Date,  the  Borrower  believes  that  the
Projections  and pro  forma  financial  information  are  reasonable,  it  being
recognized by the Lender,  however, that projections as to future events are not
to be viewed as facts and that the actual  results  during the period or periods
covered by the  Projections  may differ from the projected  results and that the
differences may be material.

     (d) The budgets and  projections  delivered to the Lender after the Initial
Borrowing  Date  (including  each  budget  submitted  pursuant  to  Section 1 in
connection  with a  Borrowing)  will be  prepared  in good  faith  and  based on
reasonable  assumptions,  and there will be no statements or conclusions therein
which are based upon or include  information  then known to the  Borrower  to be
misleading in any material  respect or which fail to take into account  material
information then known to the Borrower regarding the matters reported therein.

     (e) As of the  Initial  Borrowing  Date (i) there  were no  liabilities  or
obligations with respect to the Borrower of a nature (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate,  could reasonably be expected to be material to the Borrower taken as
a whole,  and (ii) the  Borrower  does not know of any basis  for the  assertion
against it of any liability or obligation of any nature whatsoever which, either
individually or in the aggregate, could reasonably be expected to be material to
the Borrower.

     5.11 Security  Interests.  On and after the Initial Borrowing Date, each of
the Security Documents creates, as security for the Obligations  purported to be
secured thereby, a valid and enforceable perfected security interest in and Lien
on all of the Collateral subject thereto, superior to and prior to the rights of
all third  Persons  and  subject  to no other  Liens  (except  (x) to the extent
expressly set forth in the Security Documents and (y) that the Collateral may be
subject to the security interests evidenced by Permitted Liens).

     5.12 Compliance with Statutes,  etc. The Borrower is in compliance with all
applicable statutes,  regulations and orders of, and all applicable restrictions
imposed by, all  governmental  bodies,  domestic  or foreign,  in respect of the
conduct  of its  business  and  the  ownership  of  its  property,  except  such
noncompliances as could not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

     5.13 Tax Returns and Payments. The Borrower has filed all federal and state
income tax returns and all other  material  tax  returns,  domestic and foreign,
required to be filed by it and has paid all federal and state  income  taxes and
all other  material taxes and  assessments  payable by it which have become due,
except for those  contested  in good faith and  adequately  disclosed  and fully
provided for on the  financial  statements  of the Borrower in  accordance  with
GAAP. The Borrower has at all times paid, or has provided  adequate reserves (in
the good faith  judgment of the  management of the Borrower) for the payment of,
all federal,  state and material local and foreign  income taxes  applicable for
all prior  fiscal  years and for the current  fiscal  year to date.  There is no
material action, suit, proceeding, investigation, audit or claim now pending or,
to the knowledge of the Borrower threatened by any authority regarding any taxes
relating to the Borrower. As of the Initial Borrowing Date, the Borrower has not
entered into an agreement or waiver or been requested to enter into an agreement
or waiver  extending  any  statute of  limitations  relating  to the  payment or
collection of taxes of the Borrower, or is aware of any circumstances that would
cause the  taxable  years or other  taxable  periods of the  Borrower  not to be
subject to the normally applicable statute of limitations.

     5.14 Subsidiaries. Borrower has no Subsidiaries.

     5.15 Representations and Warranties in Transaction  Documents.  Each of the
representations  and warranties  contained in the Transaction  Documents is true
and correct (unless such  representation  and warranty shall be true and correct
as of a specific date, in which case such  representation  and warranty shall be
true and correct in all material respects as of such date).

     5.16 Patents, etc. The Borrower possesses all material patents, trademarks,
service  marks,  trade names,  copyrights  and  licenses,  free from  burdensome
restrictions,  that are used for the  operation  of its  business  as  presently
conducted.

     SECTION 6. Affirmative Covenants.  The Borrower hereby covenants and agrees
that as of the Effective Date and thereafter for so long as this Agreement is in
effect and until the  Commitment  has  terminated  and the Loans,  together with
interest,  Fees and all other monetary Obligations incurred hereunder,  are paid
in full:

     6.01 Information Covenants. The Borrower will furnish to the Lender:

          (a)  Annual  Financial  Statements.  Within 90 days after the close of
     each fiscal year of the  Borrower,  the  consolidated  balance sheet of the
     Borrower,  as at the end of such fiscal  year and the related  consolidated
     statements  of income  and  retained  earnings  and of cash  flows for such
     fiscal year, in each case setting forth  comparative  consolidated  figures
     for  the  preceding  fiscal  year,  and in  the  case  of the  consolidated
     financial  statements,  examined  by one  (1) of  the  "Big-5"  independent
     certified public accountants of recognized  national standing whose opinion
     shall  not  be  qualified  as to  the  scope  of  audit,  together  with  a
     certificate  of such  accounting  firm  stating  that in the  course of its
     regular audit of the business of the Borrower, which audit was conducted in
     accordance with generally accepted auditing standards, such accounting firm
     has  obtained no  knowledge  of any  Default or Event of Default  which has
     occurred and is continuing  or, if in the opinion of such  accounting  firm
     such a Default  or Event of  Default  has  occurred  and is  continuing,  a
     statement as to the nature thereof.

          (b) Quarterly  Financial  Statements.  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,  as at the end of such quarterly  accounting
     period and the  related  consolidated  statements  of income  and  retained
     earnings 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,   and  where  applicable,   setting  forth
     comparative  consolidated  figures  for the  related  periods  in the prior
     fiscal year, all of which shall be certified by the chief financial officer
     or controller of the Borrower,  subject to changes resulting from audit and
     normal year-end audit adjustments.

          (c) Monthly Reports.  As soon as practicable,  and in any event within
     30 days after the end of each monthly accounting period of each fiscal year
     of the  Borrower  (other than the last  monthly  accounting  period in such
     fiscal year),  monthly  reports in a form  reasonably  satisfactory  to the
     Lender,  in conformity with the  requirements of the Section 8.2 (a) of the
     Securities Purchase Agreement.

          (d) Budgets. No later than the end of each fiscal year of the Borrower
     commencing  after  the date  hereof,  a cash  flow  budget  by month of the
     Borrower for the following fiscal year in reasonable detail satisfactory to
     the Lender.

          (e)  Officer's  Certificates.  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  financial  officer of the Borrower to the effect
     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,  in the case of the certificate delivered pursuant to Sections
     6.01(a) and (b),  shall set forth the  calculations  required to  establish
     whether the Borrower was in compliance  with the provisions of Section 7.05
     as at the end of such fiscal quarter or year, as the case may be.

          (f) Notice of Default or Litigation. Promptly, and in any event within
     five Business Days after the Borrower obtains knowledge thereof,  notice of
     (x) the occurrence of any event which  constitutes a Default or an Event of
     Default,  which  notice  shall  specify the nature  thereof,  the period of
     existence  thereof  and what  action  the  Borrower  proposes  to take with
     respect thereto or (y) the  commencement of or any significant  development
     in any litigation or governmental  proceeding  pending against the Borrower
     which is likely to have a  Material  Adverse  Effect or is likely to have a
     material  adverse  effect on the  ability of the  Borrower  to perform  its
     obligations  hereunder,  under any other Credit Document or any Transaction
     Document.

          (g) Auditors'  Reports.  Promptly upon receipt thereof, a copy of each
     final  report or  "management  letter"  submitted  to the  Borrower  by its
     independent  accountants in connection with any annual,  interim or special
     audit made by it of the books of the Borrower.

          (h) Other Reports and Filings.  Promptly  after the filing or delivery
     thereof, copies of all financial information,  proxy materials and reports,
     if any, which the Borrower shall publicly file with the SEC.

          (i)  Environmental  Matters.  Promptly  after any senior or  executive
     officer of the Borrower obtains knowledge thereof, notice of one or more of
     the following  environmental  matters,  unless such  environmental  matters
     could  not,   individually   or  when   aggregated   with  all  other  such
     environmental  matters,  be reasonably  expected to have a Material Adverse
     Effect:

               (i) any pending or  threatened  Environmental  Claim  against the
          Borrower  or any  Real  Property  owned,  leased  or  operated  by the
          Borrower;

               (ii) any  condition  or  occurrence  on or arising  from any Real
          Property owned, leased or operated by the Borrower that (a) results in
          noncompliance by the Borrower with any applicable Environmental Law or
          (b) could reasonably be expected to form the basis of an Environmental
          Claim against the Borrower or any such Real Property;

               (iii) any condition or  occurrence  on any Real  Property  owned,
          leased or operated by the Borrower  that could  reasonably be expected
          to cause such Real Property to be subject to any  restrictions  on the
          ownership,  occupancy,  use or transferability by the Borrower of such
          Real Property under any Environmental Law; and

               (iv) the taking of any removal or remedial  action in response to
          the actual or alleged  presence of any Hazardous  Material on any Real
          Property owned,  leased or operated by the Borrower as required by any
          Environmental Law or any governmental or other administrative  agency;
          provided,  that in any event the Borrower  shall deliver to the Lender
          all  notices   received  by  the  Borrower  from  any   government  or
          governmental  agency under,  or pursuant to, CERCLA which identify the
          Borrower as potentially  responsible  parties for remediation costs or
          which  otherwise  notify the  Borrower of  potential  liability  under
          CERCLA.  All such  notices  shall  describe in  reasonable  detail the
          nature of the claim, investigation,  condition,  occurrence or removal
          or remedial action and the Borrower's response thereto.

          (j) Other  Information.  From time to time, such other  information or
     documents (financial or otherwise) as the Lender may reasonably request.

     6.02  Books,  Records and  Inspections.  The  Borrower  will  permit,  upon
reasonable notice to the Borrower,  officers and designated  representatives  of
the Lender to visit and inspect any of the  properties or assets of the Borrower
in whomsoever's possession,  and to examine the books of account of the Borrower
and discuss the affairs,  finances and  accounts of the  Borrower  with,  and be
advised as to the same by, its and their officers and  independent  accountants,
all at such reasonable times and intervals and to such reasonable  extent as the
Lender may desire.

     6.03  Payment of Taxes.  The  Borrower  will pay and  discharge  all 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 penalties  attach thereto,  and all lawful claims which, if unpaid,  might
become a Lien not  otherwise  permitted  pursuant to Section 7.03 or charge upon
any properties of the Borrower, provided that the Borrower shall not be required
to pay any such tax, assessment,  charge, levy or claim which is being contested
in good faith and by proper  proceedings  if payment of same is not a  condition
precedent to being able to contest same and, if not such a condition,  if it has
maintained adequate reserves with respect thereto in accordance with GAAP.

     6.04 Existence;  Franchises.  The Borrower will do or cause to be done, all
things  necessary to preserve  and keep in full force and effect its  existence,
material rights, franchises,  licenses, patents and authority, provided that any
transaction   permitted  by  Section  7.02  or  any  failure  which  would  not,
individually  or in the  aggregate,  have a  Material  Adverse  Effect  will not
constitute a breach of this Section 6.04.

     6.05  Compliance  with  Statutes,  etc.  The  Borrower  will  comply in all
material respects with all applicable statutes  (including,  without limitation,
all  applicable   Environmental  Laws),  regulations  and  orders  of,  and  all
applicable  restrictions  imposed  by,  all  governmental  bodies,  domestic  or
foreign,  in respect of the conduct of its  business  and the  ownership  of its
property except for such  non-compliance  which could not reasonably be expected
to have a Material  Adverse Effect or could not reasonably be expected to have a
material  adverse  effect  on  the  ability  of  the  Borrower  to  perform  its
obligations under any Credit Document and/or Transaction Document to which it is
a party.

     6.06 Good Repair. The Borrower will ensure that its material properties and
equipment used or useful in its business in whomsoever's possession they may be,
are kept, in all material respects, in good repair, working order and condition,
normal wear and tear excepted.

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

     6.08 Use of  Proceeds.  All proceeds of the Loans shall be used as provided
in Section 5.05.

     6.09 Corporate  Formalities.  The Borrower will satisfy customary corporate
formalities,   including  the  holding  of  regular  board  of  directors'   and
shareholders' meetings and the maintenance of corporate offices and records.

     6.10 Compliance with Environmental  Laws. (a) The Borrower will comply with
all  Environmental  Laws applicable to the ownership or use of its Real Property
now or  hereafter  owned,  leased  or  operated  by  the  Borrower  except  such
non-compliances  as could not,  individually or in the aggregate,  reasonably be
expected to have a Material Adverse Effect, and will promptly pay or cause to be
paid all costs and expenses  incurred in connection  with such  compliance,  and
will keep or cause to be kept all such Real Property free and clear of any Liens
imposed  pursuant to such  Environmental  Laws.  The Borrower will not generate,
use,  treat,  store,  release or  dispose  of, or permit  the  generation,  use,
treatment,  storage,  Release or disposal  of  Hazardous  Materials  on any Real
Property  now or  hereafter  owned,  leased  or  operated  by the  Borrower,  or
transport or permit the  transportation  of  Hazardous  Materials to or from any
such Real Property,  except for Hazardous  Materials  generated,  used, treated,
stored, released or disposed of at any such Real Properties in compliance in all
material respects with all applicable Environmental Laws and reasonably required
in  connection  with the  operation,  use and  maintenance  of the  business  or
operations of the Borrower.

     (b) At any time that the Borrower  gives  notice to the Lender  pursuant to
Section  6.01(i),  then at the  reasonable  written  request of the Lender,  the
Borrower will provide,  at the sole expense of the  Borrower,  an  environmental
site assessment report concerning any Real Property owned, leased or operated by
the Borrower,  prepared by an environmental  consulting firm reasonably approved
by the Lender, indicating the presence or absence of Hazardous Materials and the
potential  cost of any  removal  or  remedial  action  in  connection  with such
Hazardous Materials on such Real Property.  If the Borrower fails to provide the
same within  ninety (90) days after such request was made,  the Lender may order
the same,  the cost of which shall be borne by the  Borrower,  and the  Borrower
shall  grant and hereby  grant to the Lender and its agents  access to such Real
Property and specifically grant the Lender an irrevocable non-exclusive license,
subject  to the  rights of  tenants,  to  undertake  such an  assessment  at any
reasonable  time upon  reasonable  notice to the  Borrower,  all at the sole and
reasonable expense of the Borrower.

     6.11  Performance  of  Obligations.  The  Borrower  will perform all of its
obligations under the terms of each material  agreement,  contract or instrument
by which  it is  bound,  except  such  non-performances  as  could  not,  either
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

     SECTION 7. Negative  Covenants.  The Borrower  hereby  covenants and agrees
that as of the Effective Date and thereafter for so long as this Agreement is in
effect and until the  Commitment  has  terminated  and the Loans,  together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:

     7.01 Business. The Borrower will not engage (directly or indirectly) in any
business other than the type of business in which the Borrower is engaged on the
Effective Date and reasonable extensions thereof.

     7.02  Consolidation,  Merger, Sale or Purchase of Assets, etc. The Borrower
will not  wind  up,  liquidate  or  dissolve  its  affairs,  or  enter  into any
transaction of merger or  consolidation,  or sell or otherwise dispose of all or
any part of its property or assets (other than inventory in the ordinary  course
of business), or enter into any sale-leaseback transactions,  or purchase, lease
or  otherwise  acquire  all or any part of the  property or assets of any Person
(other than purchases of inventory in the ordinary course of business), or agree
to do any of the foregoing at any future time,  except that the following  shall
be permitted:

          (a) Capital  Expenditures  to the extent  within the  limitations  set
     forth in Section 7.05;

          (b) the  investments,  acquisitions  and transfers or  dispositions of
     properties permitted pursuant to Section 7.06;

          (c) the Borrower  may lease (as lessee)  real or personal  property in
     the  ordinary  course of business  (so long as such lease does not create a
     Capitalized  Lease  Obligation not otherwise  permitted by Section 7.04(b);
     and

          (d) the transactions contemplated by the Transaction Documents.

     7.03 Liens. The Borrower will not create,  incur, assume or suffer to exist
any Lien upon or with  respect  to any  property  or assets of any kind (real or
personal, tangible or intangible) of the Borrower 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
(including sales of accounts  receivable or notes with recourse to the Borrower)
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;  provided  that the  provisions  of this
Section 7.03 shall not prevent the creation, incurrence, assumption or existence
of the following  (with such Liens  described  below being herein referred to as
"Permitted Liens"):

          (a) Liens for taxes,  assessments or governmental charges or rules not
     yet due or Liens for taxes,  assessments or  governmental  charges or rules
     being  contested  in good faith and by  appropriate  proceedings  for which
     adequate  reserves  (in the good faith  judgment of the  management  of the
     Borrower) have been established in accordance with GAAP;

          (b) Liens in respect of property or assets of the Borrower  imposed by
     law which were  incurred  in the  ordinary  course of  business  and do not
     secure  indebtedness for borrowed money, such as carriers',  warehousemen's
     and mechanics' Liens,  statutory  landlord's 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 taken as a whole 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;

          (c) Liens  created by or pursuant to the  Security  Documents or other
     Liens in favor of the Lender;

          (d) Liens in existence on the Initial Borrowing Date which are listed,
     and the property subject thereto described,  in Schedule I, but only to the
     respective  date,  if any,  set forth in such  Schedule I for the  removal,
     replacement and termination of any such Liens, plus renewals, replacements,
     refinancings  and  extensions  of such  Liens to the  extent  set  forth on
     Schedule I;

          (e) Liens arising from judgments,  decrees or attachments (or securing
     of appeal bonds with respect thereto) in circumstances  not constituting an
     Event of Default  under  Section  8.09,  provided  that no cash or property
     (other than  proceeds  of  insurance  payable by reason of such  judgments,
     decrees or  attachments) is deposited or delivered to secure any respective
     judgment or award, or any appeal bond in respect  thereof,  the fair market
     value of which exceeds $10,000;

          (f) 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 bonds
     (other than 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), provided that the aggregate amount of deposits
     at any time pursuant to this clause (f) shall not exceed $25,000;

          (g)   easements,   rights-of-way,   restrictions,   minor  defects  or
     irregularities  in title and other  similar  charges  or  encumbrances  not
     interfering  in any  material  respect  with the  ordinary  conduct  of the
     business of the Borrower; and

          (h) Liens arising from UCC financing  statements  regarding  operating
     leases and Liens securing  Capitalized Lease Obligations  permitted by this
     Agreement.

     7.04 Indebtedness. The Borrower will not contract, create, incur, assume or
suffer to exist any Indebtedness, except:

          (a)  Indebtedness  incurred  pursuant to this  Agreement and the other
     Credit Documents;

          (b) Capitalized  Lease  Obligations of the Borrower  provided that the
     aggregate amount of Indebtedness incurred pursuant to this clause (b) after
     the date hereof shall not exceed $400,000 at any time; and

          (c) A letter of credit in a stated amount not to exceed $1,200,000.

     7.05 Capital Expenditures. The Borrower will not incur Capital Expenditures
in any fiscal year of the Borrower in excess of the lesser of (i)  $2,000,000 or
(ii) the  amount  set forth in the most  recent  cash flow  budget for such year
provided by the Borrower to the Lender and acceptable to the Lender.

     7.06 Advances,  Investments and Loans.  The Borrower will not,  directly or
indirectly,  lend  money or give  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 other Person, or purchase
or own a futures contract or otherwise become liable for the purchase or sale of
currency  or other  commodities  at a future  date in the  nature  of a  futures
contract,   or  hold  cash  or  Cash  Equivalents  (each  of  the  foregoing  an
"Investment" and, collectively,  "Investments"), except that the following shall
be permitted:

          (a) the Borrower may acquire and hold accounts  receivables  owing it,
     if created or acquired in the  ordinary  course of business  and payable or
     dischargeable in accordance with customary trade terms;

          (b) loans and advances to employees in an aggregate  principal  amount
     not to exceed $100,000 at any time outstanding shall be permitted; and

          (c) the  Borrower  may hold cash in deposit  accounts in the  ordinary
     course of business and Cash  Equivalents  provided that so long as any Loan
     is  outstanding  such  cash and Cash  Equivalents  may not be in  excess of
     $500,000 (other than such cash and Cash Equivalents  representing  proceeds
     of a Loan pending the application thereof).

     7.07  Dividends,  etc. The Borrower will not authorize,  declare or pay any
dividends (other than dividends payable solely in capital stock of the Borrower)
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 a  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 set aside any funds for any of the
foregoing  purposes,  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"),  other than
payments of Dividends on the Preferred Stock.

     7.08  Transactions  with  Affiliates.  The Borrower will not enter into any
transaction or series of transactions  after the Initial  Borrowing Date whether
or not in the ordinary  course of business,  with any Affiliate of the Borrower;
provided,  that the  foregoing  restrictions  shall not apply to (i) advances to
employees  of the  Borrower to the extent  permitted  by Section  7.06(b),  (ii)
employment  arrangements  (including  arrangements made with respect to bonuses)
entered  into in the  ordinary  course of  business,  or (iii) the  transactions
contemplated by the Transaction Documents.

     7.09  Prohibition  on Creation of  Subsidiaries.  The Borrower shall not be
permitted to establish, create or acquire any Subsidiary or Subsidiaries.

     SECTION 8. Events of Default.  Upon the  occurrence 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 any Loan or (ii)  default,  and such default  shall  continue
unremedied  for three or more Business  Days, in the payment after notice of any
interest on the Loans or any Fees or any other amounts owing  hereunder or under
any other Credit Document; or

     8.02 Representations,  etc. Any representation,  warranty or statement made
by the  Borrower  herein  or in  any  other  Document  or in  any  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; or

     8.03  Covenants.  The Borrower shall (a) default in the due  performance or
observance  by it of any  term,  covenant  or  agreement  contained  in  Section
6.01(e)(x) or Section 7, or (b) default in the due  performance or observance by
it of any term,  covenant or agreement  (other than those referred to in Section
8.01,  8.02 or clause (a) of this Section 8.03)  contained in this Agreement and
such default shall  continue  unremedied for a period of 10 days after notice to
the Borrower by the Lender; or

     8.04 Default Under Other Agreements.  (a) The Borrower shall (i) default in
any payment with respect to any Indebtedness (other than the Obligations) beyond
the  period  of  grace,  if  any,  applicable  thereto  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 the Borrower 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,  provided
that it shall not  constitute a Default or an Event of Default  pursuant to this
Section 8.04 unless the principal  amount of any one issue of such  Indebtedness
exceeds $250,000 in the aggregate; or

     8.05  Bankruptcy,  etc.  The  Borrower  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 the Borrower and
the petition is not  controverted  within 30 days, or is not dismissed within 60
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 the Borrower;  or the Borrower 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 the  Borrower;  or there is
commenced against the Borrower any such proceeding which remains undismissed for
a period of 60 days; or the Borrower is  adjudicated  insolvent or bankrupt;  or
any order of relief or other  order  approving  any such case or  proceeding  is
entered;  the Borrower  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 days;  or the  Borrower  makes a general  assignment  for the
benefit of creditors;  or any corporate  action is taken by the Borrower for the
purpose of effecting any of the foregoing; or

     8.06  Security  Documents.  At any time after the  execution  and  delivery
thereof,  any of the  Security  Documents  shall  cease to be in full  force and
effect,  or  shall  cease to give the  Lender  the  Liens,  rights,  powers  and
privileges  purported to be created thereby  superior to and prior to the rights
of all third Persons  (except as permitted by Section  7.03),  and subject to no
other Liens (except as permitted by Section 7.03), or the Borrower shall default
in the due  performance or observance of any term,  covenant or agreement on its
part to be performed or observed pursuant to any such Security Document and such
default  shall  continue  beyond  the  period  of  grace,  if any,  specifically
applicable thereto pursuant to the terms of such Security Document; or

     8.07  Judgments.  One or more judgments or decrees shall be entered against
the Borrower  involving a liability in the aggregate  (not paid or fully covered
by a reputable  and solvent  insurance  company) and such  judgments and decrees
either shall be final and non-appealable or shall not be vacated,  discharged or
stayed or bonded pending  appeal for any period of 30 consecutive  days, and the
aggregate amount of all such judgments equals or exceeds $250,000; or

     8.08 Change of Control. A Change of Control shall occur; or

     8.09 Transaction Documents. The Borrower shall default in the observance or
performance  in any  material  respect of any  Transaction  Document;  provided,
however if such  default is capable of being cured such  default  shall not have
been remedied within 30 days of such default;

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Lender may by written notice to the Borrower, take
any or all of the  following  actions,  without  prejudice  to the rights of the
Lender,  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 the Borrower,  the
result  which  would  occur upon the  giving of written  notice by the Lender as
specified  in clauses (i) and (ii) below shall occur  automatically  without the
giving of any such notice): (i) declare the Commitment terminated, whereupon the
Commitment shall forthwith terminate immediately;  (ii) declare the principal of
and any  accrued  interest  in  respect of all Loans and all  Obligations  owing
hereunder 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 the Borrower; and (iii) enforce any or all of the Liens and
security interests created pursuant to the Security Documents.

     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:

     "Affiliate"  shall  mean,  with  respect to any  Person,  any other  Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person),  controlled by, or under direct or indirect common
control with such Person.  A Person shall be deemed to control a corporation  if
such Person possesses,  directly or indirectly, the power (i) to vote 5% 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.  Notwithstanding  the  foregoing,  for
purposes  of this  Agreement,  neither  the Lender nor its  Affiliates  shall be
deemed Affiliates of the Borrower.

     "Agreement" shall mean this Credit Agreement,  as the same may be from time
to time modified, amended and/or supplemented.

     "Applicable Base Rate Margin" shall mean 2.00%.

     "Applicable Eurodollar Margin" shall mean 3.00%.

     "Asset  Sale"  shall mean the sale,  transfer or other  disposition  by the
Borrower to any Person of any asset of the Borrower (other than sales, transfers
or other  dispositions  (i) in the  ordinary  course of business of inventory or
(ii)  made in  connection  with the  purchase  by the  Borrower  of  replacement
equipment pursuant to Section 2.11(c) of the Security Agreement in an amount not
exceeding $500,000 during the term of this Agreement).

     "Bankruptcy Code" shall have the meaning provided in Section 8.05.

     "Base  Rate" at any time shall mean the higher of (i) the rate which is 1/2
of 1% in excess of the Federal Funds Rate and (ii) the Prime Lending Rate.

     "Base  Rate  Loan"  shall  mean each  Loan  bearing  interest  at the rates
provided in Section 1.04(a).

     "Borrower"  shall  have  the  meaning  provided  in the  preamble  of  this
Agreement.

     "Borrowing"  shall mean the  incurrence of one Type of Loan by the Borrower
from the Lender on a given date (or resulting from conversions on a given date).

     "Business  Day"  shall mean (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  Boston,  Massachusetts  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, 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 U.S. dollar deposits in the interbank Eurodollar market.

     "Capital  Expenditures"  shall mean,  for any period,  the aggregate of all
expenditures  (whether paid in cash or accrued as  liabilities  and including in
all  events  all  amounts  expended  or  capitalized  under  Capital  Leases but
excluding any amount representing  capitalized  interest) by the Borrower during
that period that, in conformity with GAAP, are or are required to be included in
the property,  plant or equipment reflected in the consolidated balance sheet of
the Borrower.

     "Capital  Lease" as  applied  to any  Person,  shall  mean any lease of any
property  (whether real,  personal or mixed) by that Person as lessee which,  in
conformity  with GAAP,  is accounted for as a capital lease on the balance sheet
of that Person.

     "Capitalized  Lease  Obligations" as applied to any Person,  shall mean 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.

     "Cash  Equivalents"  shall mean, as to any Person, (i) securities issued or
directly and fully  guaranteed  or insured by the United States or any agency or
instrumentality  thereof  (provided that the full faith and credit of the United
States is pledged in support  thereof)  having  maturities  of not more than six
months from the date of acquisition,  (ii) marketable direct  obligations issued
by any state of the United States or any political subdivision of any such state
or any public  instrumentality  thereof maturing within six months from the date
of acquisition  thereof and, at the time of  acquisition,  having one of the two
highest ratings  obtainable  from either  Standard & Poor's Ratings  Services or
Moody's  Investors  Service,  Inc.,  (iii) Dollar  denominated time deposits and
certificates of deposit of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company having, a long-term  unsecured debt
rating of at least "A" or the equivalent  thereof from Standard & Poor's Ratings
Services or "A2" or the equivalent thereof from Moody's Investors Service,  Inc.
with maturities of not more than six months from the date of acquisition by such
Person, (iv) repurchase  obligations with a term of not more than seven days for
underlying  securities  of the types  described in clause (i) above entered into
with any bank meeting the  qualifications  specified in clause (iii) above,  (v)
commercial paper issued by any Person incorporated in the United States rated at
least A-1 or the equivalent  thereof by Standard & Poor's Ratings Services or at
least P-1 or the equivalent  thereof by Moody's Investors  Service,  Inc. and in
each case  maturing  not more than six months after the date of  acquisition  by
such Person and (vi)  investments  in money  market funds  substantially  all of
whose assets are comprised of  securities of the types  described in clauses (i)
through (v) above.

     "Cash  Proceeds"  shall mean, with respect to any Asset Sale, the aggregate
cash payments  (including any cash received by way of deferred  payment pursuant
to a note receivable  issued in connection with such Asset Sale, but only as and
when so received) received by the Borrower from such Asset Sale.

     "CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq.

     "Change  of  Control"  shall  mean (i) any Person or group (as such term is
used  under  the  Exchange  Act)  of  Persons  (other  than  the  Lender  or its
Affiliates) owns  (beneficially or of record) more than 15% of the voting equity
interest  in  the  Borrower's  capital  stock,  assuming  the  exercise  of  all
securities  exercisable,  convertible or exchangeable  for or into common equity
interests  held by such  Person  or  group,  and (ii)  during  any  period of 12
consecutive  calendar  months after the Effective  Date,  individuals who at the
beginning  of such period  constituted  the Board of  Directors  of the Borrower
(together  with any new directors  whose  election by such Board of Directors or
whose  nomination for election by the  stockholders or members,  as the case may
be, of the Borrower was approved by a vote of a majority of the  directors  then
still in office who were either  directors  at the  beginning  of such period or
whose election or nomination for election was previously so approved)  cease for
any reason to constitute a majority of such Board of Directors then in office.

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time, and the regulations promulgated and rulings issued thereunder.  Section
references  to the  Code  are to the  Code,  as in  effect  at the  date of this
Agreement  and  any  subsequent  provisions  of the  Code,  amendatory  thereof,
supplemental thereto or substituted therefor.

     "Commitment"  shall  mean  $20,000,000,  as  the  same  may be  reduced  or
terminated pursuant to Sections 2.02, 2.03 or 8.

     "Contingent  Obligations"  shall mean, as to any Person,  any obligation of
such Person  guaranteeing  or intending 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.  The amount of any
Contingent  Obligation  shall be deemed to be an amount  equal to 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"  shall mean this Agreement and, after the execution and
delivery thereof  pursuant to the terms of this Agreement,  each of the Security
Documents and any documents executed in connection therewith.

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

     "Dividends" shall have the meaning provided in Section 7.07.

     "Documents" shall mean and include the Credit Documents and the Transaction
Documents.

     "Effective Date" shall have the meaning provided in Section 10.09.

     "Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions,  suits, demands,  demand letters,  directives,  claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any  Environmental  Law or any permit issued,  or any approval given,
under any such  Environmental  Law  (hereafter,  "Claims"),  including,  without
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement,  cleanup, removal,  response,  remedial or other actions or damages
pursuant to any applicable  Environmental Law, and (b) any and all Claims by any
third party  seeking  damages,  contribution,  indemnification,  cost  recovery,
compensation or injunctive relief in connection with alleged injury or threat of
injury to health,  safety or the  environment  due to the  presence of Hazardous
Materials.

     "Environmental  Law"  shall  mean  any  Federal,  state,  foreign  or local
statute, law, rule, regulation,  ordinance, code, guideline,  written policy and
rule of common law now or hereafter  in effect and in each case as amended,  and
any judicial or administrative interpretation thereof, including any judicial or
administrative  order, consent decree or judgment,  relating to the environment,
employee  health  and  safety  or  Hazardous   Materials,   including,   without
limitation,  CERCLA;  RCRA; the Federal Water  Pollution  Control Act, 33 U.S.C.
Section 1251 et seq.; the Toxic Substances  Control Act, 15 U.S.C.  Section 2601
et seq.;  the Clean Air Act, 42 U.S.C.  Section 7401 et seq.;  the Safe Drinking
Water Act, 42 U.S.C.  Section 3803 et seq.;  the Oil  Pollution  Act of 1990, 33
U.S.C.   Section  2701  et  seq.;  the  Emergency  Planning  and  the  Community
Right-to-Know  Act of 1986,  42  U.S.C.  Section  11001 et seq.;  the  Hazardous
Material Transportation Act, 49 U.S.C. Section 1801 et seq. and the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; and any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended from time to time, and the  regulations  promulgated  and rulings issued
thereunder.  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.

     "Eurodollar  Loans"  shall  mean each Loan  bearing  interest  at the rates
provided in Section 1.04(b).

     "Eurodollar  Rate" shall mean with respect to any  Borrowing of  Eurodollar
Loans for any Interest  Period,  the rate appearing on Page 3750 of the Telerate
Service  (or on any  successor  or  substitute  page  of  such  Service,  or any
successor  to  or  substitute  for  such  Service,   providing  rate  quotations
comparable  to  those  currently  provided  on such  page of  such  Service,  as
determined by the Lender from time to time for purposes of providing  quotations
of interest rates applicable to dollar deposits in the London interbank  market)
at  approximately  11:00  a.m.,  London  time,  two  Business  Days prior to the
commencement  of such Interest  Period,  as the rate for dollar  deposits with a
maturity comparable to such Interest Period.

     "Event of Default" shall have the meaning provided in Section 8.

     "Exchange Act" shall mean the Securities  Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

     "GAAP" shall mean generally  accepted  accounting  principles in the United
States  of  America  as in  effect  on the  date of  this  Agreement;  it  being
understood and agreed that  determinations  in accordance with GAAP for purposes
of Section 7.09,  including  defined terms as used therein,  are subject (to the
extent provided therein) to Section 10.06(a).

     "Hazardous  Materials" shall mean (a) any petroleum or petroleum  products,
radioactive  materials,  asbestos in any form that is or could  become  friable,
urea  formaldehyde  foam  insulation,   transformers  or  other  equipment  that
contained electric fluid containing levels of  polychlorinated  biphenyls and/or
radon gas; (b) any chemicals,  materials or substances defined as or included in
the  definition  of  "hazardous   substances,"   "hazardous  waste,"  "hazardous
materials,"  "extremely  hazardous waste," "restricted  hazardous waste," "toxic
substances,"  "toxic  pollutants,"  "contaminants," or "pollutants," or words of
similar meaning and regulatory effect,  under any applicable  Environmental Law;
and (c) any  other  chemical,  material  or  substance,  exposure  to  which  is
prohibited, limited or regulated by any governmental authority.

     "Indebtedness"  of any Person  shall  mean,  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, (iii) the face amount of all
letters  of  credit  issued  for  the  account  of  such  Person  and,   without
duplication,  all drafts drawn  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, (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 net obligations of such Person
under  interest rate hedging  agreements and similar  derivatives  agreement and
(viii) all  Contingent  Obligations of such Person,  provided that  Indebtedness
shall not include trade payables,  deferred revenue, taxes and accrued expenses,
in each case arising in the ordinary course of business.

     "Initial  Borrowing  Date"  shall  mean the date  upon  which  the  initial
Borrowing of Loans occurs.

     "Intellectual  Property  Assignment"  shall have the meaning  specified  in
Section 4A.10(b).

     "Interest  Expense"  shall mean,  for any period,  total  interest  expense
(including  that  attributable to Capital Leases in accordance with GAAP) of the
Borrower on a consolidated basis with respect to all outstanding Indebtedness of
the Borrower, including, without limitation, all capitalized interest.

     "Interest  Period"  with  respect  to any  Eurodollar  Loan  shall mean the
interest period applicable thereto, as determined pursuant to Section 1.05.

     "Investment" shall have the meaning provided in Section 7.06.

     "Leasehold"  of any Person shall mean all of the right,  title and interest
of such  Person as lessee or  licensee  in, to and under  leases or  licenses of
land, improvements and/or fixtures.

     "Lender" shall have the meaning provided in the preamble of this Agreement.

     "Lien" shall mean any mortgage,  pledge,  security  interest,  encumbrance,
lien  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" shall have the meaning provided in Section 1.01.

     "Margin Stock" shall have the meaning provided in Regulation U.

     "Material  Adverse  Effect"  shall  mean a material  adverse  effect on the
business,  property, assets,  liabilities,  operations,  condition (financial or
otherwise) or prospects of the Borrower.

     "Maturity Date" shall mean April 14, 2003.

     "Net Cash  Proceeds"  shall mean,  with respect to any Asset Sale, the Cash
Proceeds  resulting  therefrom  net of  reasonable  expenses of sale  (including
payment of principal,  premium and interest of other Indebtedness secured by the
assets the subject of the Asset Sale and  required  to be, and which is,  repaid
under the terms thereof as a result of such Asset Sale),  and incremental  taxes
paid or payable as a result thereof.

     "Net Income"  shall mean,  for any period,  the net income (or loss) of the
Borrower on a  consolidated  basis for such period taken as a single  accounting
period determined in conformity with GAAP, provided that there shall be excluded
the  income (or loss) of any Person in which any other  Person  (other  than the
Borrower) has a joint interest,  except to the extent of the amount of dividends
or other distributions  actually paid to the Borrower by such Person during such
period.

     "Notice  Office"  shall  mean the office of the  Lender  designated  to the
Borrower in writing from time to time.

     "Obligations"  shall mean all amounts,  direct or indirect,  contingent  or
absolute, of every type or description,  and at any time existing,  owing to the
Lender pursuant to the terms of this Agreement or any other Credit Document.

     "Payment  Office"  shall mean the office of the  Lender  designated  to the
Borrower in writing from time to time.

     "Permitted Liens" shall have the meaning provided in Section 7.03.

     "Person"  shall mean any  individual,  partnership,  joint  venture,  firm,
corporation,  limited liability company, association,  trust or other enterprise
or any  government  or  political  subdivision  or  any  agency,  department  or
instrumentality thereof.

     "Preferred  Stock" shall mean the Preferred Stock purchased by an Affiliate
of the Lender  pursuant to the  Securities  Purchase  Agreement.

     "Prime  Lending  Rate"  shall mean the rate  which  Bankers  Trust  Company
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes.

     "RCRA" shall mean the Resource  Conservation  and Recovery Act, as amended,
42 U.S.C. Section 6901 et seq.

     "Real  Property"  of any  Person  shall  mean all of the  right,  title and
interest of such Person in and to land,  improvements  and  fixtures,  including
Leaseholds.

     "Recovery  Event"  shall  mean  the  receipt  by the  Borrower  of any cash
insurance  proceeds or condemnation  award payable (i) by reason of theft, loss,
physical  destruction  or damage or any other  similar event with respect to any
property  or asset  of the  Borrower  (including  without  limitation,  business
interruption insurance), or (ii) by reason of any condemnation,  taking, seizing
or similar event with respect to any property or asset of the Borrower.

     "Regulation  T, U and X" shall mean  Regulations T, U and 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.

     "SEC" shall mean the Securities  and Exchange  Commission and any successor
thereto.

     "Second Borrowing Date" shall mean the date upon which the second Borrowing
of Loans occurs.

     "Securities  Purchase  Agreement" shall mean the Purchase  Agreement by and
between the Borrower and the Lender, dated as of April 14, 2000.

     "Security Agreement" shall have the meaning provided in Section 4A.10(b).

     "Security Documents" shall mean the Security Agreement and the Intellectual
Property Assignment.

     "Service  Agreement"  shall have the  meaning  provided  in the  Securities
Purchase Agreement.

     "Subsidiary" of any Person shall mean and include (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. Unless otherwise
expressly  provided,   all  references  herein  to  "Subsidiary"  shall  mean  a
Subsidiary of the Borrower.

     "Taxes" shall have the meaning provided in Section 3.03.

     "Term Note" shall mean the note dated April 5th,  2000 made by the Borrower
to the order of BEW, Inc., an affiliate of the Lender.

     "Transaction  Documents" shall mean the Securities  Purchase  Agreement and
any other document or instrument entered into in connection therewith, including
without  limitation the Preferred  Stock and all other  Documents (as defined in
the Securities Purchase Agreement).

     "Type" shall mean any type of Loan  determined with respect to the interest
option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.

     "UCC" shall mean the  Uniform  Commercial  Code,  as in effect from time to
time in the relevant jurisdiction.

     SECTION 10. Miscellaneous.

     10.01 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  Lender  in  connection  with  the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents  and  instruments  referred  to therein and any  amendment,  waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements  of White & Case  LLP) and of the  Lender 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 the  Lender);  (ii) pay and hold the Lender  harmless  from and
against  any and all  present  and  future  stamp and other  similar  taxes with
respect to the foregoing  matters and save the Lender  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 the  Lender) to pay such taxes;  and
(iii) indemnify the Lender, its officers, directors, employees,  representatives
and agents (each an  "Indemnified  Person")  from and hold each of them harmless
against  any  and  all  losses,   liabilities,   claims,   damages  or  expenses
(collectively  "Indemnified  Liabilities")  incurred  by  any of  them  (whether
asserted by the Borrower or  otherwise) as a result of, or arising out of, or in
any way related to, or by reason of, (a) any investigation,  litigation or other
proceeding  (whether  or not the  Lender  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  consummation  of  any  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 (i) any such
losses,  liabilities,  claims,  damages or  expenses  to the extent  incurred by
reason  of the  gross  negligence  or  willful  misconduct  of the  Person to be
indemnified,  (ii) the reimbursement of amounts paid by an Indemnified Person on
any  final,  non-appealable  judgment  in  the  Borrower's  favor  against  such
Indemnified  Person  by  a  court  of  competent  jurisdiction,   or  (iii)  the
reimbursement of amounts paid by an Indemnified  Person seeking  indemnification
in any settlement of any claim constituting Indemnified Liabilities with a party
other than the Borrower which was effected by an Indemnified  Person without the
prior consent of the Borrower, unless either (x) the Borrower has had reasonable
opportunity  to defend such  Indemnified  Person  against such claim and has not
promptly  and  diligently   prosecuted   such  defense  by  counsel   reasonably
satisfactory  to such  Indemnified  Person  or (y) the  Borrower  has  failed to
provide  evidence  reasonably  satisfactory  to the  Lender  of  the  Borrower's
financial ability to satisfy its indemnity  obligations  hereunder in respect of
such claim) or (b) the actual or alleged presence of Hazardous  Materials in the
air,  surface  water,  groundwater,  surface or  subsurface of any Real Property
owned  or at  any  time  operated  by the  Borrower,  the  generation,  storage,
transportation or disposal of Hazardous Materials at any location whether or not
owned or operated by the Borrower, the non-compliance of any Real Property owned
or at any time  operated by the  Borrower  with  federal,  state and local laws,
regulations, and ordinances (including applicable permits thereunder) applicable
to any such Real  Property,  or any  Environmental  Claim  asserted  against the
Borrower or any such Real Property, including, in each case, without limitation,
the reasonable fees and disbursements of counsel and other consultants  incurred
in connection with any such  investigation,  litigation or other proceeding (but
excluding  any losses,  liabilities,  claims,  damages or expenses to the extent
incurred by reason of the gross  negligence or willful  misconduct of the Person
to be indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless the Lender set forth in the  preceding  sentence  may be  unenforceable
because it is violative of any law or public policy, the Borrower shall make the
maximum  contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.

     10.02 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,  if an Event of Default then exists,  the Lender is hereby authorized at
any time or from time to time,  without  presentment,  demand,  protest or other
notice of any kind to the Borrower 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 the Lender to or for the credit or the account of the Borrower  against
and on account of the  Obligations and liabilities of the Borrower to the Lender
under this Agreement or under any of the other Credit  Documents,  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 the
Lender  shall have made any demand  hereunder  and  although  said  Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.

     10.03 Notices.  Except as otherwise  expressly provided herein, all notices
and other  communications  provided for hereunder shall be in writing (including
facsimile communication) and mailed, faxed or delivered (a) if to the Lender, at
its address  specified as the Notice Office and (b) if to the  Borrower,  at the
address  specified next to the signature of the Borrower below. All such notices
and  communications  shall not be effective  until received by the Lender or the
Borrower,  as the case may be.  Each party  hereto may, by a notice to the other
party in  accordance  herewith,  specify a  different  address for notices to it
hereunder.

     10.04  Assignments.  This Agreement  shall be binding upon and inure to the
benefit of and be enforceable  by the  respective  successors and assigns of the
parties hereto; provided,  however, that the Borrower may not assign or transfer
any of its rights or obligations hereunder without the consent of the Lender.

     10.05 No Waiver;  Remedies  Cumulative.  No failure or delay on the part of
the Lender in exercising  any right,  power or privilege  hereunder or under any
other  Credit  Document  and no course of dealing  between the  Borrower and the
Lender  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 Lender would  otherwise  have. No notice to or demand on the
Borrower in any case shall  entitle the Borrower to any other or further  notice
or demand in similar or other circumstances or constitute a waiver of the rights
of the Lender to any other or further action in any circumstances without notice
or demand.

     10.06  Calculations;  Computations.  (a)  The  financial  statements  to be
furnished to the Lender pursuant hereto shall be made and prepared in accordance
with GAAP,  as in effect on the Initial  Borrowing  Date,  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  Lender),  provided  that
except as otherwise  specifically provided herein, all computations  determining
compliance with Section 7.09,  including  definitions used therein shall utilize
accounting  principles and policies in accordance with GAAP, as in effect on the
Initial Borrowing Date.

     (b) All  computations  of interest and fees hereunder  shall be made on the
basis of a year of 360 days for the actual number of days  (including  the first
day but excluding the last day)  occurring in the period for which such interest
or fees are payable.

     10.07  GOVERNING LAW;  SUBMISSION TO  JURISDICTION;  VENUE;  WAIVER OF JURY
TRIAL;  WAIVER OF  CERTAIN  CLAIMS.  (a) THIS  AGREEMENT  AND THE  OTHER  CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.  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,  THE BORROWER  HEREBY  IRREVOCABLY  ACCEPTS FOR
ITSELF  AND IN RESPECT  OF ITS  PROPERTY,  GENERALLY  AND  UNCONDITIONALLY,  THE
JURISDICTION OF THE AFORESAID  COURTS.  THE BORROWER HEREBY FURTHER  IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION  OVER THE BORROWER,  AND
AGREES NOT TO PLEAD OR CLAIM,  IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS  AGREEMENT OR ANY OTHER  CREDIT  DOCUMENT  BROUGHT IN ANY OF THE  AFORESAID
COURTS,  THAT ANY SUCH COURT LACKS JURISDICTION OVER THE BORROWER.  THE BORROWER
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 BORROWER,  AT
ITS ADDRESS  FOR  NOTICES  PURSUANT  TO SECTION  10.03,  SUCH  SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER  IRREVOCABLY  WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING  COMMENCED  HEREUNDER OR UNDER
ANY OTHER  CREDIT  DOCUMENT  THAT  SERVICE OF PROCESS  WAS IN ANY WAY INVALID OR
INEFFECTIVE.  NOTHING  HEREIN  SHALL  AFFECT  THE  RIGHT OF THE  LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.

     (b) THE BORROWER 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.

     (c) 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 OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

     (d) THE  BORROWER  AGREES THAT IT WILL NOT ASSERT  AGAINST THE LENDER,  AND
HEREBY  WAIVES,  ANY CLAIM FOR  CONSEQUENTIAL,  INCIDENTAL,  SPECIAL OR PUNITIVE
DAMAGES IN  CONNECTION  WITH THIS  AGREEMENT,  OR ANY OTHER  CREDIT  DOCUMENT OR
TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     10.08  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
Lender.

     10.09 Effectiveness. This Agreement shall become effective on the date (the
"Effective Date") on which each of the Borrower and the Lender shall have signed
a counterpart hereof (whether the same or different counterparts) and shall have
delivered  (including by way of facsimile  device) the same to the Lender at its
Notice Office.

     10.10  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.

     10.11  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 Lender.

     10.12  Survival.  All  indemnities  set  forth  herein  including,  without
limitation,  in Section  10.01 shall  survive the  execution  and  delivery  and
termination of this Agreement and the making and repayment of the Loans.

                                      * * *


<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.


Address:                                             PEAPOD, INC.
9933 Woods Drive
Skokie, IL 60077
fax no.: (847) 583-9494
Attention:  Andrew Parkinson                         By:________________________
                                                        Name:
                                                        Title:



                                                     KONINKLIJKE AHOLD NV


                                                     By:________________________
                                                        Name:
                                                        Title: