EXECUTION COPY


                                  $450,000,000


                                CREDIT AGREEMENT

                          Dated as of October 28, 1999

                                      Among

                      MICROAGE TECHNOLOGY SERVICES, L.L.C.
                                       and
                                 PINACOR, INC.,

                                  AS BORROWERS,

                                 MICROAGE, INC.

                              AS PARENT GUARANTOR,

                  THE INITIAL LENDERS, INITIAL ISSUING BANK AND
                          SWING LINE BANK NAMED HEREIN

          AS INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK,


                                 CITIBANK, N.A.

                              AS COLLATERAL AGENT,

                                 CITIBANK, N.A.

                            AS ADMINISTRATIVE AGENT,

                             IBM CREDIT CORPORATION

                             AS DOCUMENTATION AGENT

                                       and

                       THE CIT GROUP/BUSINESS CREDIT, INC.

                              AS SYNDICATION AGENT
<PAGE>
                               TABLE OF CONTENTS

Section                                                                    Page
-------                                                                    ----

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS


1.01.  Certain Defined Terms                                                  1
1.02.  Computation of Time Periods; Other Definitional Provisions            29
1.03.  Accounting Terms                                                      29


                                   ARTICLE II
           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT
2.01.  The Advances and the Letters of Credit                                30
2.02.  Making the Advances 31
2.03.  Issuance of and Drawings and Reimbursement Under Letters of Credit    34
2.04.  Repayment of Advances                                                 36
2.05.  Termination or Reduction of the Commitments                           38
2.06.  Prepayments                                                           38
2.07.  Interest                                                              39
2.08.  Fees                                                                  40
2.09.  Conversion of Advances                                                41
2.10.  Increased Costs, Etc.                                                 42
2.11.  Payments and Computations                                             43
2.12.  Taxes                                                                 44
2.13.  Sharing of Payments, Etc.                                             46
2.14.  Use of Proceeds                                                       47
2.15.  Defaulting Lenders                                                    47
2.16.  Evidence of Debt                                                      50
2.17.  Increase in the Aggregate Working Capital Commitments                 51

                                   ARTICLE III
             CONDITIONS OF LENDING ANDISSUANCES OF LETTERS OF CREDIT
3.01.  Conditions Precedent to Initial Extension of Credit                   53
3.02.  Conditions Precedent to Each Borrowing, Increase Date, Issuance
       and Increase of Available Amount                                      59
3.03.  Determinations Under Section 3.01                                     60

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES
4.01.  Representations and Warranties of the Borrowers and the
       Parent Guarantor                                                      60

                                    ARTICLE V
              COVENANTS OF THE BORROWERS AND THE PARENT GUARANTOR67
5.01.  Affirmative Covenants                                                 67
5.02.  Negative Covenants                                                    73
5.03.  Reporting Requirements                                                80
5.04.  Financial Covenants                                                   84

                                   ARTICLE VI
                                EVENTS OF DEFAULT
6.01.  Events of Default                                                     86
6.02.  Actions in Respect of the Letters of Credit upon Default              90

                                   ARTICLE VII
                                PARENT GUARANTY
7.01.  Guaranty                                                              90
7.02.  Guaranty Absolute                                                     91
7.03.  Waiver                                                                92
7.04.  Payments Free and Clear of Taxes, Etc.                                93
7.05.  Continuing Guaranty; Assignments                                      94
7.06.  Subrogation                                                           94

                                  ARTICLE VIII
                                   THE AGENTS
8.01.  Authorization and Action                                              96
8.02.  Agents' Reliance, Etc.                                                97
8.03.  Citibank and Affiliates                                               97
8.04.  Lender Party Credit Decision                                          98
8.05.  Indemnification                                                       98
8.06.  Successor Agents                                                      99
8.07.  Other Agents                                                         100

                                   ARTICLE IX
                                  MISCELLANEOUS
9.01.  Amendments, Etc.                                                     100
9.02.  Notices, Etc.                                                        101
9.03.  No Waiver; Remedies                                                  102
9.04.  Costs and Expenses                                                   102
9.05.  Right of Set-off                                                     104
9.06.  Binding Effect                                                       104
9.07.  Assignments and Participations                                       104
9.08.  Execution in Counterparts                                            107
9.09.  No Liability of the Issuing Bank                                     107
9.10.  Release of Collateral                                                108
9.11.  Jurisdiction, Etc.                                                   108
9.12.  Governing Law                                                        108
9.13.  Waiver of Jury Trial                                                 109


SCHEDULES

Schedule I        -   Commitments and Applicable Lending Offices
Schedule II       -   Borrowers' Account
Schedule 4.01(b)  -   Subsidiaries
Schedule 4.01(d)  -   Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(f)  -   Disclosed Litigation
Schedule 4.01(r)  -   Open Years
Schedule 4.01(t)  -   Existing Debt
Schedule 4.01(u)  -   Surviving Debt
Schedule 4.01(v)  -   Owned Real Property
Schedule 4.01(w)  -   Leased Real Property
Schedule 4.01(x)  -   Investments
Schedule 4.01(y)  -   Intellectual Property
Schedule 5.02(a)  -   Liens

EXHIBITS

Exhibit A   -   Form of Promissory Note
Exhibit B   -   Form of Notice of Borrowing
Exhibit C   -   Form of Assignment and Acceptance
Exhibit D   -   Form of Security Agreement
Exhibit E   -   Form of Subsidiary Guaranty
Exhibit F   -   Form of Solvency Certificate
Exhibit G   -   Form of Opinion of Counsel to the Loan Parties
Exhibit H   -   Form of Opinion of Local Counsel
Exhibit I   -   Form of Borrowing Base Certificate
Exhibit J   -   Form of Flooring Letter of Credit
Exhibit K   -   Form of Floor Planning Arrangement Intercreditor Agreement
<PAGE>
                                CREDIT AGREEMENT

                          Dated as of October 28, 1999

     MICROAGE TECHNOLOGY SERVICES,  L.L.C., a Delaware limited liability company
("MTS"),  PINACOR,  INC., a Delaware corporation  ("PINACOR",  and together with
MTS,  the  "BORROWERS"),  MICROAGE,  INC., a Delaware  corporation  (the "PARENT
GUARANTOR"),  the banks,  financial institutions and other institutional lenders
listed on the  signature  pages  hereof as the  Initial  Lenders  (the  "INITIAL
LENDERS"),  the bank listed on the signature pages hereof as the Initial Issuing
Bank  (the  "INITIAL  ISSUING  BANK")  and the Swing  Line Bank (as  hereinafter
defined),  CITIBANK,  N.A. ("CITIBANK"),  as collateral agent (together with any
successor  collateral  agent appointed  pursuant to Article VII, the "COLLATERAL
AGENT"),  IBM CREDIT  CORPORATION,  as documentation  agent (the  "DOCUMENTATION
AGENT"),  THE  CIT  GROUP/BUSINESS  CREDIT,  INC.,  as  syndication  agent  (the
"SYNDICATION  AGENT"), and CITIBANK,  as administrative agent (together with any
successor   administrative   agent  appointed   pursuant  to  Article  VII,  the
"ADMINISTRATIVE  AGENT" and,  together with the Collateral  Agent,  the Document
Agent and the  Syndication  Agent,  the  "AGENTS")  for the Lender  Parties  (as
hereinafter defined), hereby agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     SECTION  1.01.  CERTAIN  DEFINED  TERMS.  As used in  this  Agreement,  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

     "ADMINISTRATIVE  AGENT" has the meaning specified in the recital of parties
to this Agreement.

     "ADMINISTRATIVE  AGENT'S  ACCOUNT" means the account of the  Administrative
Agent maintained by the Administrative  Agent with Citicorp Industrial Credit at
its office at 399 Park Avenue,  New York, New York 10043,  Account No. 38858061,
ABA  021000089,  Attention:  Shawn  Hendrickson,  or such  other  account as the
Administrative Agent shall specify in writing to the Lender Parties.

     "ADVANCE" means a Working Capital Advance, a Swing Line Advance or a Letter
of Credit Advance.

     "AFFILIATE"  means,  as to any Person,  any other Person that,  directly or
indirectly,  controls,  is  controlled  by or is under common  control with such
Person  or is a  director  or  officer  of such  Person.  For  purposes  of this
definition,  the term "control" (including the
<PAGE>
terms  "controlling",  "controlled  by" and "under  common  control  with") of a
Person means the possession, direct or indirect, of the power to vote 5% or more
of the Voting  Stock of such Person or to direct or cause the  direction  of the
management and policies of such Person,  whether through the ownership of Voting
Stock, by contract or otherwise.

     "AGENTS"  has the  meaning  specified  in the  recital  of  parties to this
Agreement.

     "AGREEMENT  VALUE"  means,  for  each  Hedge  Agreement,  on  any  date  of
determination, an amount determined by the Administrative Agent equal to: (a) in
the  case of a Hedge  Agreement  documented  pursuant  to the  Master  Agreement
(Multicurrency-Cross Border) published by the International Swap and Derivatives
Association,  Inc. (the "MASTER  AGREEMENT"),  the amount, if any, that would be
payable by any Loan Party or any of its Subsidiaries to its counterparty to such
Hedge  Agreement,  as if (i) such Hedge Agreement was being  terminated early on
such date of  determination,  (ii) such Loan  Party or  Subsidiary  was the sole
"Affected  Party",  and  (iii)  the  Administrative  Agent  was the  sole  party
determining  such  payment  amount  (with the  Administrative  Agent making such
determination  pursuant to the provisions of the form of Master  Agreement);  or
(b) in the case of a Hedge Agreement traded on an exchange,  the  mark-to-market
value of such Hedge  Agreement,  which will be the unrealized loss on such Hedge
Agreement  to the Loan Party or  Subsidiary  of a Loan Party party to such Hedge
Agreement  determined by the Administrative  Agent based on the settlement price
of such  Hedge  Agreement  on such  date of  determination,  or (c) in all other
cases,  the  mark-to-market  value of such  Hedge  Agreement,  which will be the
unrealized  loss on such Hedge  Agreement to the Loan Party or  Subsidiary  of a
Loan Party party to such Hedge Agreement  determined by the Administrative Agent
as the amount,  if any, by which (i) the present  value of the future cash flows
to be paid by such Loan Party or  Subsidiary  exceeds (ii) the present  value of
the future cash flows to be received by such Loan Party or  Subsidiary  pursuant
to such Hedge  Agreement;  capitalized  terms used and not otherwise  defined in
this  definition  shall  have the  respective  meanings  set  forth in the above
described Master Agreement.

     "APPLICABLE  LENDING OFFICE" means, with respect to each Lender Party, such
Lender  Party's  Domestic  Lending Office in the case of a Base Rate Advance and
such Lender Party's  Eurodollar  Lending Office in the case of a Eurodollar Rate
Advance.

     "APPLICABLE  LETTER OF CREDIT FEE" means a percentage per annum  determined
by reference to the Debt/EBITDA Ratio as set forth below:
<PAGE>
          Debt/EBITDA Ratio             Applicable Letter of Credit Fee
          -----------------             -------------------------------
          LEVEL I
          less than 2.25: 1.0                       1.625%

          LEVEL II
          2.25: 1.0 or greater,
          but less than 2.75: 1.0                   1.875%

          LEVEL III
          2.75: 1.0 or greater,
          but less than 3.25: 1.0                   2.125%

          LEVEL IV
          3.25: 1.0 or greater,
          but less than 3.75: 1.0                   2.375%

          LEVEL V
          3.75: 1.0 or greater,
          but less than 4.25:1.0                    2.625%

          LEVEL VI
          4.25:1.0 or greater                       2.875%

The  Applicable  Letter of Credit Fee shall be  determined  by  reference to the
ratio in effect from time to time; PROVIDED,  HOWEVER, that (A) no change in the
Applicable  Letter of Credit Fee shall be effective  until three  Business  Days
after  the  date on  which  the  Administrative  Agent  receives  the  financial
statements  required to be delivered  pursuant to Section 5.03(b) or (c), as the
case may be,  and a  certificate  of the chief  financial  officer of the Parent
Guarantor  demonstrating  such ratio and (B) the Applicable Letter of Credit Fee
shall be at Level VI until the Parent  Guarantor  has  delivered  the  financial
statements  for the fiscal quarter ended February 1, 2000 and for so long as the
Parent Guarantor has not submitted to the  Administrative  Agent the information
described  in clause (A) of this  proviso  as and when  required  under  Section
5.03(b) or (c), as the case may be.

     "APPLICABLE MARGIN" means a percentage per annum determined by reference to
the Debt/EBITDA Ratio as set forth below:

     Debt/EBITDA Ratio           Base Rate Advances     Eurodollar Rate Advances
     -----------------           ------------------     ------------------------
     LEVEL I
     less than 2.25: 1.0               1.00%                    2.00%

     LEVEL II
     2.25: 1.0 or greater,
     but less than 2.75: 1.0           1.25%                    2.25%

     LEVEL III
     2.75: 1.0 or greater,
     but less than 3.25: 1.0           1.50%                    2.50%

     LEVEL IV
     3.25: 1.0 or greater,
<PAGE>
     but less than 3.75: 1.0           1.75%                    2.75%

     LEVEL V
     3.75: 1.0 or greater,
     but less than 4.25:1.0            2.00%                    3.00%

     LEVEL VI
     4.25:1.0 or greater               2.25%                    3.25%

The  Applicable  Margin for each Advance shall be determined by reference to the
ratio in effect from time to time; PROVIDED,  HOWEVER, that (A) no change in the
Applicable Margin shall be effective until three Business Days after the date on
which the Administrative  Agent receives the financial statements required to be
delivered  pursuant  to  Section  5.03(b)  or (c),  as the  case  may be,  and a
certificate of the chief financial officer of the Parent Guarantor demonstrating
such ratio and (B) the  Applicable  Margin shall be at Level VI until the Parent
Guarantor has delivered the financial  statements  for the fiscal  quarter ended
February 1, 2000 and for so long as the Parent  Guarantor  has not  submitted to
the Administrative Agent the information described in clause (A) of this proviso
as and when required under Section 5.03(b) or (c), as the case may be.

     "APPLICABLE   PERCENTAGE"  means  a  percentage  per  annum  determined  by
reference to the Debt/EBITDA Ratio as set forth below:

     Debt/EBITDA Ratio                 Applicable Percentage
     -----------------                 ---------------------
     LEVEL I
     less than 2.25: 1.0                      0.375%

     LEVEL II
     2.25: 1.0 or greater,
     but less than 2.75: 1.0                  0.375%

     LEVEL III
     2.75: 1.0 or greater,
     but less than 3.25: 1.0                  0.500%

     LEVEL IV
     3.25: 1.0 or greater,
     but less than 3.75: 1.0                  0.500%

     LEVEL V
     3.75: 1.0 or greater,
     but less than 4.25:1.0                   0.500%

     LEVEL VI
     4.25:1.0 or greater                      0.500%

The  Applicable  Percentage  shall be  determined  by  reference to the ratio in
effect  from  time  to  time;  PROVIDED,  HOWEVER,  that  (A) no  change  in the
Applicable  Percentage  shall be effective  until three  Business Days after the
date on  which  the  Administrative  Agent  receives  the  financial  statements
required to be delivered pursuant to Section 5.03(b) or (c), as the case may be,
and a  certificate  of the  chief  financial  officer  of the  Parent
<PAGE>
Guarantor demonstrating such ratio and (B) the Applicable Percentage shall be at
Level VI until the Parent  Guarantor has delivered the financial  statements for
the  fiscal  quarter  ended  February  1,  2000  and for so  long as the  Parent
Guarantor  has  not  submitted  to  the  Administrative  Agent  the  information
described  in clause (A) of this  proviso  as and when  required  under  Section
5.03(b) or (c), as the case may be.

     "ARRANGER" means Salomon Smith Barney Inc.

     "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender Party and an Eligible  Assignee,  and accepted by the Administrative
Agent, in accordance with Section 9.07 and in substantially  the form of Exhibit
C hereto.

     "ASSUMING LENDER" has the meaning specified in Section 2.17(d). "ASSUMPTION
AGREEMENT" has the meaning specified in Section 2.17(d)(ii).

     "AVAILABLE  AMOUNT" of any Letter of Credit means, at any time, the maximum
amount  available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).

     "BASE RATE" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the higher of:

          (a) the rate of interest  announced  publicly by Citibank in New York,
     New York, from time to time, as Citibank's base rate; and

          (b) 1/2 of 1% per annum above the Federal Funds Rate.

     "BASE RATE  ADVANCE"  means an Advance  that bears  interest as provided in
Section 2.07(a)(i).

     "BORROWERS"  has the  meaning  specified  in the recital of parties to this
Agreement.

     "BORROWERS'  ACCOUNT" means the account of the Borrowers  maintained by the
Borrowers  with  Citibank at its office at 399 Park Avenue,  New York,  New York
10043,  with the account  number so  designated  on  Schedule  II, or such other
account as the Borrowers shall specify in writing to the Administrative Agent.

     "BORROWING" means a Working Capital Borrowing or a Swing Line Borrowing.

     "BORROWING BASE CERTIFICATE"  means a certificate in substantially the form
of Exhibit I hereto, duly certified by the chief financial officer of the Parent
Guarantor.

     "BUSINESS  DAY" means a day of the year on which banks are not  required or
authorized by law to close in New York City and, if the applicable  Business Day
relates
<PAGE>
to any Eurodollar Rate Advances,  on which dealings are carried on in the London
interbank market.

     "CAPITAL  EXPENDITURES"  means, for any Person for any period,  the sum of,
without duplication,  (a) all expenditures made, directly or indirectly, by such
Person or any of its  Subsidiaries  during  such  period  for  equipment,  fixed
assets,  real property or  improvements,  or for  replacements or  substitutions
therefor or additions  thereto,  that have been or should be, in accordance with
GAAP,  reflected as additions to property,  plant or equipment on a Consolidated
balance  sheet of such  Person or have a useful  life of more than one year plus
(b) the aggregate  principal  amount of all Debt  (including  Obligations  under
Capitalized   Leases)   assumed  or  incurred  in   connection   with  any  such
expenditures.  For purposes of this definition,  the purchase price of equipment
that is purchased simultaneously with the trade-in of existing equipment or with
insurance proceeds shall be included in Capital  Expenditures only to the extent
of the gross amount of such purchase price less the credit granted by the seller
of such  equipment for the equipment  being traded in at such time or the amount
of such proceeds, as the case may be.

     "CAPITALIZED  LEASES"  means all  leases  that  have been or should  be, in
accordance with GAAP, recorded as capitalized leases.

     "CASH  CONCENTRATION  ACCOUNT"  has the meaning  specified  in the Security
Agreement.

     "CASH EQUIVALENTS"  means any of the following,  to the extent owned by the
Parent  Guarantor or any of its  Subsidiaries  free and clear of all Liens other
than Liens created under the  Collateral  Documents and having a maturity of not
greater  than  180  days  from  the date of  acquisition  thereof:  (a)  readily
marketable  direct  obligations  of the  Government  of the United States or any
agency or instrumentality thereof or obligations  unconditionally  guaranteed by
the full faith and credit of the  Government of the United  States,  (b) insured
certificates  of deposit of or time deposits with any commercial  bank that is a
Lender Party or a member of the Federal Reserve System, issues (or the parent of
which  issues)  commercial  paper  rated as  described  in clause (c) below,  is
organized  under the laws of the  United  States or any  State  thereof  and has
combined  capital and surplus of at least $1 billion or (c) commercial  paper in
an aggregate  amount of no more than  $1,000,000  per issuer  outstanding at any
time,  issued by any  corporation  organized  under the laws of any State of the
United  States and rated at least  "Prime-1" (or the then  equivalent  grade) by
Moody's  Investors  Service,  Inc.  or "A-1" (or the then  equivalent  grade) by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc.

     "CERCLA" means the Comprehensive  Environmental Response,  Compensation and
Liability Act of 1980, as amended from time to time.

     "CERCLIS" means the Comprehensive Environmental Response,  Compensation and
Liability  Information  System maintained by the U.S.  Environmental  Protection
Agency.
<PAGE>
     "CHANGE OF CONTROL" means the  occurrence of any of the following:  (a) any
Person  (other than Jeffrey  McKeever) or two or more Persons  acting in concert
shall have acquired  beneficial  ownership  (within the meaning of Rule 13d-3 of
the Securities  and Exchange  Commission  under the  Securities  Exchange Act of
1934), directly or indirectly, of Voting Stock of the Parent Guarantor (or other
securities  convertible into such Voting Stock)  representing 20% or more of the
combined voting power of all Voting Stock of the Parent Guarantor; or (b) during
any period of up to 24 consecutive  months,  commencing before or after the date
of this Agreement, individuals who at the beginning of such 24-month period were
directors  of the Parent  Guarantor  shall cease for any reason to  constitute a
majority of the board of directors of the Parent Guarantor; or (c) any Person or
two or more  Persons  acting in  concert  shall have  acquired  by  contract  or
otherwise,  or shall have  entered  into a contract or  arrangement  that,  upon
consummation,  will result in its or their acquisition of the power to exercise,
directly or indirectly,  a controlling influence over the management or policies
of the Parent  Guarantor or (d) Jeffrey McKeever shall sell more than 50% of his
ownership  of the  combined  voting  power of the  Voting  Stock  of the  Parent
Guarantor.

     "COLLATERAL" means all "Collateral" referred to in the Collateral Documents
and all other property that is or is intended to be subject to any Lien in favor
of the Collateral Agent for the benefit of the Secured Parties.

     "COLLATERAL  AGENT" has the meaning  specified in the recital of parties to
this Agreement.

     "COLLATERAL DOCUMENTS" means the Security Agreement and any other agreement
that creates or purports to create a Lien in favor of the  Collateral  Agent for
the benefit of the Secured Parties.

     "COMMITMENT"  means a  Working  Capital  Commitment  or a Letter  of Credit
Commitment.

     "COMMITMENT DATE" has the meaning specified in Section 2.17(b).

     "COMMITMENT INCREASE" has the meaning specified in Section 2.17(a).

     "CONFIDENTIAL  INFORMATION" means information that any Loan Party furnishes
to any Agent or any Lender Party in a writing  designated as  confidential,  but
does not include any such information that is or becomes generally  available to
the public or that is or becomes  available  to such Agent or such Lender  Party
from a source other than the Loan Parties.

     "CONSOLIDATED"  refers to the  consolidation of accounts in accordance with
GAAP.
<PAGE>
     "CONSOLIDATING"  refers to the presentation of the  Consolidated  financial
statements of the Parent Guarantor and the Consolidated  financial statements of
each Borrower.

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

     "CONVERSION",  "CONVERT"  and  "CONVERTED"  each refer to a  conversion  of
Advances of one Type into Advances of the other Type pursuant to Section 2.09 or
2.10.

     "DEBT" of any Person means, without duplication for purposes of calculating
financial  ratios,  (a) all  indebtedness of such Person for borrowed money, (b)
all  Obligations  of such Person for the deferred  purchase price of property or
services (other than trade payables not overdue by more than 60 days incurred in
the ordinary  course of such Person's  business),  (c) all  Obligations  of such
Person evidenced by notes, bonds,  debentures or other similar instruments,  (d)
all Obligations of such Person created or arising under any conditional  sale or
other title retention agreement with respect to property acquired by such Person
(even  though  the  rights  and  remedies  of the  seller or lender  under  such
agreement  in the event of default are limited to  repossession  or sale of such
property),  (e) all  Obligations  of such  Person  as lessee  under  Capitalized
Leases, (f) all Obligations of such Person under acceptance, letter of credit or
similar  facilities,  (g) all  Obligations  of such Person to purchase,  redeem,
retire, defease or otherwise make any payment in respect of any capital stock of
or other  ownership or profit interest in such
<PAGE>
Person or any other  Person or any  warrants,  rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at the greater
of its voluntary or involuntary  liquidation  preference plus accrued and unpaid
dividends,  (h) all  Obligations of such Person in respect of Hedge  Agreements,
valued at the Agreement  Value thereof,  (i) all Contingent  Obligations of such
Person and (j) all  indebtedness  and other payment  Obligations  referred to in
clauses  (a) through  (i) above of another  Person  secured by (or for which the
holder  of such Debt has an  existing  right,  contingent  or  otherwise,  to be
secured by) any Lien on property  (including,  without limitation,  accounts and
contract  rights) owned by such Person,  even though such Person has not assumed
or  become  liable  for  the  payment  of such  indebtedness  or  other  payment
Obligations.

     "DEBT/EBITDA  RATIO" means, at any date of determination,  the ratio of (a)
the average  Consolidated  total Debt for Borrowed Money of the Parent Guarantor
and its  Subsidiaries  as at the end of each week ended within the most recently
ended fiscal quarter of the Parent Guarantor for which financial  statements are
required to be delivered to the Lender  Parties  pursuant to Section  5.03(b) or
(c), as the case may be, to (b) Consolidated  EBITDA of the Parent Guarantor and
its  Subsidiaries  for such fiscal quarter and the  immediately  preceding three
fiscal quarters.

     "DEBT  FOR  BORROWED  MONEY"  of any  Person  means  all Debt of the  types
described in clauses (a) through (e) of the definition of "Debt" less amounts on
deposit in the Cash Concentration Account.

     "DEFAULT" means any Event of Default or any event that would  constitute an
Event of Default but for the requirement  that notice be given or time elapse or
both.

     "DEFAULT TERMINATION NOTICE" has the meaning specified in Section 2.01(c).

     "DEFAULTED  ADVANCE"  means,  with respect to any Lender Party at any time,
the  portion of any  Advance  required  to be made by such  Lender  Party to the
Borrowers  pursuant  to Section  2.01 or 2.02 at or prior to such time which has
not been  made by such  Lender  Party  or by the  Administrative  Agent  for the
account of such Lender Party pursuant to Section 2.02(e) as of such time. In the
event that a portion of a Defaulted  Advance  shall be deemed  made  pursuant to
Section  2.15(a),  the  remaining  portion of such  Defaulted  Advance  shall be
considered  a  Defaulted  Advance  originally  required  to be made  pursuant to
Section 2.01 on the same date as the Defaulted Advance so deemed made in part.

     "DEFAULTED AMOUNT" means, with respect to any Lender Party at any time, any
amount required to be paid by such Lender Party to any Agent or any other Lender
Party  hereunder or under any other Loan Document at or prior to such time which
has not been so paid as of such time, including,  without limitation, any amount
required to be paid by such Lender Party to (a) the Swing Line Bank  pursuant to
Section  2.02(b) to purchase a portion of a Swing Line Advance made by the Swing
Line Bank,  (b) the  Issuing  Bank  pursuant  to Section  2.03(c) to  purchase a
portion  of a  Letter  of  Credit  Advance  made by
<PAGE>
the Issuing Bank, (c) the  Administrative  Agent pursuant to Section  2.02(e) to
reimburse  the  Administrative  Agent for the amount of any Advance  made by the
Administrative  Agent for the account of such Lender Party, (d) any other Lender
Party pursuant to Section 2.13 to purchase any  participation  in Advances owing
to such other  Lender  Party and (e) any Agent or the Issuing  Bank  pursuant to
Section 8.05 to reimburse such Agent or the Issuing Bank for such Lender Party's
ratable  share of any amount  required to be paid by the Lender  Parties to such
Agent or the Issuing Bank as provided therein.  In the event that a portion of a
Defaulted Amount shall be deemed paid pursuant to Section 2.15(b), the remaining
portion  of such  Defaulted  Amount  shall  be  considered  a  Defaulted  Amount
originally required to be paid hereunder or under any other Loan Document on the
same date as the Defaulted Amount so deemed paid in part.

     "DEFAULTING  LENDER"  means,  at any time,  any Lender Party that,  at such
time, owes a Defaulted Advance or a Defaulted Amount.

     "DISCLOSED LITIGATION" has the meaning specified in Section 3.01(e).

     "DOMESTIC  LENDING  OFFICE"  means,  with respect to any Lender Party,  the
office of such Lender Party specified as its "Domestic  Lending Office" opposite
its name on  Schedule  I hereto  or in the  Assumption  Agreement  or the in the
Assignment  and  Acceptance  pursuant to which it became a Lender Party,  as the
case may be, or such other  office of such Lender Party as such Lender Party may
from time to time specify to the Borrowers and the Administrative Agent.

     "DOMESTIC SUBSIDIARY" means any Subsidiary other than a Foreign Subsidiary.

     "EBITDA"  means,  for any period,  the sum,  determined  on a  Consolidated
basis, of (a) net income (or net loss), (b) interest expense  (including implied
interest  expenses  incurred under the Receivables  Sales Agreement and flooring
subsidies,  in each case  determined on a basis  consistent with past practice),
(c) income tax expense, (d) depreciation  expense, (e) amortization expense, (f)
extraordinary,  non-recurring,  transactional  or  unusual  losses  deducted  in
calculating  net income  less  extraordinary,  non-recurring,  transactional  or
unusual  gains added in  calculating  net income and (g) any non-cash  expenses,
non-cash  losses or other non-cash  charges  resulting from the writedown in the
valuation  of  any  assets  in  each  case  of  the  Parent  Guarantor  and  its
Subsidiaries,  determined in accordance  with GAAP for such period.  The amounts
referred to in clauses (f) and (g) are agreed to be $152,298,000  and $5,411,000
for the second and third quarters of Fiscal Year 1999, respectively.

     "ELIGIBLE  ASSIGNEE" means (a) with respect to any Facility (other than the
Letter of Credit Facility), (i) a Lender; (ii) an Affiliate of a Lender; (iii) a
commercial  bank  organized  under the laws of the United  States,  or any State
thereof, and having total assets in excess of $2,000,000,000; (iv) a savings and
loan  association or savings bank organized under the laws of the United States,
or any State thereof, and having total assets in excess of $2,000,000,000; (v) a
commercial  bank organized  under the laws of any
<PAGE>
other  country  that is a member of the OECD or has  concluded  special  lending
arrangements  with the  International  Monetary Fund associated with its General
Arrangements to Borrow or of the Cayman Islands,  or a political  subdivision of
any such country,  and having total assets in excess of $2,000,000,000,  so long
as such bank is acting  through a branch or agency  located  in the  country  in
which it is organized  or another  country that is described in this clause (v);
(vi) the  central  bank of any  country  that is a member of the  OECD;  (vii) a
finance company or other  financial  institution or fund (whether a corporation,
partnership,  trust or other  entity) that is engaged in making,  purchasing  or
otherwise  investing in commercial  loans in the ordinary course of business and
having a combined  capital and surplus of at least  $250,000,000  and (viii) any
other  Person  approved by the  Administrative  Agent and,  unless a Default has
occurred and is  continuing at the time any  assignment is effected  pursuant to
Section  9.07,  the  Parent  Guarantor,  such  approval  not to be  unreasonably
withheld or delayed,  and (b) with respect to the Letter of Credit  Facility,  a
Person that is an Eligible  Assignee under  subclause (iii) or (v) of clause (a)
of this  definition and is approved by the  Administrative  Agent and,  unless a
Default has occurred and is  continuing  at the time any  assignment is effected
pursuant  to  Section  9.07,  the  Parent  Guarantor,  such  approval  not to be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that neither any Loan Party
nor any  Affiliate of a Loan Party shall qualify as an Eligible  Assignee  under
this definition.

     "ELIGIBLE  CASH" means only such cash or Cash  Equivalents of the Borrowers
as is on deposit in the Cash Concentration Account

     "ELIGIBLE  COLLATERAL" means,  collectively,  Eligible Inventory,  Eligible
Receivables and Eligible Cash.

     "ELIGIBLE  INVENTORY"  means only such Inventory of the Loan Parties as the
Administrative  Agent, in its sole discretion,  shall from time to time elect to
consider  Eligible  Inventory for purposes of this Agreement.  The value of such
Inventory shall be determined by the Administrative Agent in its sole discretion
exercised   commercially   reasonably  in  accordance  with  customary  business
practices and taking into consideration,  among other factors, the lowest of its
cost,  its book value  determined  in accordance  with GAAP and its  liquidation
value. The following classes of Inventory shall not be Eligible Inventory:

          (a) Inventory that is obsolete,  unusable or otherwise unavailable for
     sale;

          (b) Inventory with respect to which the representations and warranties
     set forth in the Collateral  Documents applicable to Inventory are not true
     and correct;

          (c)  Inventory  consisting  of  promotional,  marketing,  packaging or
     shipping materials and supplies;
<PAGE>
          (d)  Inventory  that  fails  to  meet  all  standards  imposed  by any
     governmental  agency, or department or division thereof,  having regulatory
     authority over such Inventory or its use or sale;

          (e)  Inventory  that is subject  to any  licensing,  patent,  royalty,
     trademark, trade name or copyright agreement with any third party from whom
     any Loan  Party has  received  notice of a dispute  in  respect of any such
     agreement;

          (f) Inventory located outside the United States;

          (g)  Inventory  that is not in the  possession  of or  under  the sole
     control of the Loan Parties; and

          (h) Inventory in respect of which the Security Agreement, after giving
     effect to the related  filings of financing  statements that have then been
     made, if any, does not or has ceased to create a valid and perfected  first
     priority lien or security interest in favor of the Collateral Agent for the
     benefit of the Secured Parties securing the Secured Obligations.

     "ELIGIBLE  RECEIVABLES"  means only such Receivables of the Loan Parties as
the Administrative Agent, in its sole discretion,  shall from time to time elect
to consider  Eligible  Receivables for purposes of this Agreement.  The value of
such  Receivables  shall be determined by the  Administrative  Agent in its sole
discretion  exercised  commercially  reasonably  in  accordance  with  customary
business  practices and taking into  consideration,  among other factors,  their
book value  determined in accordance with GAAP. Not  withstanding the foregoing,
none of the following classes of Receivables shall be Eligible Receivables:

          (a)  Receivables  that do not arise out of sales of goods or rendering
     of services in the ordinary course of the business of the Loan Parties;

          (b)  Receivables  on terms other than those normal or customary in the
     business of the Loan Parties;

          (c) Receivables owing from any Person that is an Affiliate of any Loan
     Party or any of its Subsidiaries;

          (d)  Receivables  more than 90 days past the original  invoice date or
     more than 60 days past the date due;

          (e) Receivables  owing from any Person from which an aggregate  amount
     of more than 50% of the Receivables owing is more than 60 days past due;
<PAGE>
          (f) Receivables owing from any Person that (i) has disputed  liability
     for any  Receivable  owing from such Person or (ii) has otherwise  asserted
     any  claim,  demand  or  liability  against  any  Loan  Party or any of its
     Subsidiaries, whether by action, suit, counterclaim or otherwise;

          (g)  Receivables  owing  from any  Person  that  shall  take or be the
     subject of any action or proceeding of a type described in Section 6.01(f);

          (h)  Receivables  (i) owing from any Person that is also a supplier to
     or creditor of any Loan Party or (ii)  representing any  manufacturer's  or
     supplier's  credits,  discounts,  incentive  plans or similar  arrangements
     entitling any Loan Party to discounts on future purchase therefrom;

          (i)  Receivables  arising out of sales to account  debtors outside the
     United States;

          (j) Receivables  arising out of sales on a  bill-and-hold,  guaranteed
     sale,  sale-or-return,  sale on approval or consignment basis or subject to
     any right of return, set-off or charge-back;

          (k)  Receivables  owing  from an  account  debtor  that is an  agency,
     department  or  instrumentality  of the United  States or any State thereof
     unless the applicable  Loan Party shall have satisfied the  requirements of
     the  Assignment  of Claims Act of 1940,  as amended,  and any similar State
     legislation and the Administrative  Agent is satisfied as to the absence of
     set-offs,  counterclaims  and other  defenses  on the part of such  account
     debtor;

          (l)   Receivables   the  full  and   timely   payment   of  which  the
     Administrative Agent in its sole discretion believes to be doubtful; and

          (m)  Receivables  in respect of which the  Security  Agreement,  after
     giving effect to the related filings of financing statements that have then
     been made,  if any,  does not or has ceased to create a valid and perfected
     first priority lien or security  interest in favor of the Collateral  Agent
     for the benefit of the Secured Parties securing the Secured Obligations.

     "ENVIRONMENTAL  ACTION"  means any action,  suit,  demand,  demand  letter,
claim,  notice of non-compliance or violation,  notice of liability or potential
liability,  investigation,   proceeding,  consent  order  or  consent  agreement
relating  in any way to any  Environmental  Law,  any  Environmental  Permit  or
Hazardous Material or arising from alleged injury or threat to health, safety or
the  environment,  including,  without  limitation,  (a) by any  governmental or
regulatory authority for enforcement,  cleanup, removal,  response,  remedial or
other actions or damages and (b) by any governmental or regulatory  authority or
third  party  for  damages,   contribution,   indemnification,   cost  recovery,
compensation or injunctive relief.
<PAGE>
     "ENVIRONMENTAL  LAW" means any federal,  state,  local or foreign  statute,
law,  ordinance,  rule,  regulation,  code, order, writ,  judgment,  injunction,
decree or judicial  or agency  interpretation,  policy or  guidance  relating to
pollution or protection of the environment, health, safety or natural resources,
including,   without   limitation,   those   relating  to  the  use,   handling,
transportation,  treatment, storage, disposal, release or discharge of Hazardous
Materials.

     "ENVIRONMENTAL PERMIT" means any permit,  approval,  identification number,
license or other authorization required under any Environmental Law.

     "EQUIPMENT" means all Equipment referred to in Section 1(a) of the Security
Agreement.

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

     "ERISA  AFFILIATE"  means any Person that for purposes of Title IV of ERISA
is a member of the controlled  group of any Loan Party,  or under common control
with any Loan Party,  within the meaning of Section 414 of the Internal  Revenue
Code.

     "ERISA EVENT" means (a)(i) the occurrence of a reportable event, within the
meaning of Section  4043 of ERISA,  with  respect to any Plan  unless the 30-day
notice  requirement  with  respect to such event has been  waived by the PBGC or
(ii) the  requirements  of  Section  4043(b) of ERISA  apply  with  respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and
an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c)
of ERISA is  reasonably  expected to occur with  respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver with respect
to a Plan;  (c) the  provision by the  administrator  of any Plan of a notice of
intent  to  terminate  such  Plan,  pursuant  to  Section  4041(a)(2)  of  ERISA
(including  any such  notice  with  respect to a plan  amendment  referred to in
Section 4041(e) of ERISA);  (d) the cessation of operations at a facility of any
Loan Party or any ERISA  Affiliate  in the  circumstances  described  in Section
4062(e) of ERISA;  (e) the  withdrawal by any Loan Party or any ERISA  Affiliate
from a Multiple  Employer Plan during a plan year for which it was a substantial
employer,  as defined in Section  4001(a)(2) of ERISA;  (f) the  conditions  for
imposition  of a lien  under  Section  302(f) of ERISA  shall have been met with
respect to any Plan;  (g) the adoption of an amendment to a Plan  requiring  the
provision of security to such Plan pursuant to Section 307 of ERISA;  or (h) the
institution  by the PBGC of  proceedings to terminate a Plan pursuant to Section
4042 of ERISA, or the occurrence of any event or condition  described in Section
4042  of  ERISA  that  constitutes  grounds  for  the  termination  of,  or  the
appointment of a trustee to administer, such Plan.
<PAGE>
     "EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D of the
Board of  Governors  of the Federal  Reserve  System,  as in effect from time to
time.

     "EURODOLLAR  LENDING OFFICE" means,  with respect to any Lender Party,  the
office  of such  Lender  Party  specified  as its  "Eurodollar  Lending  Office"
opposite its name on Schedule I hereto or in the Assumption  Agreement or the in
the Assignment and Acceptance pursuant to which it became a Lender Party (or, if
no such office is specified,  its Domestic Lending Office), or such other office
of such Lender  Party as such Lender  Party may from time to time specify to the
Borrowers and the Administrative Agent.

     "EURODOLLAR  RATE" means,  for any Interest  Period for all Eurodollar Rate
Advances comprising part of the same Borrowing, an interest rate per annum equal
to the rate per  annum  obtained  by  dividing  (a) the rate per  annum at which
deposits  in U.S.  dollars are  offered by the  principal  office of Citibank in
London,  England  to prime  banks in the London  interbank  market at 11:00 A.M.
(London time) two Business Days before the first day of such Interest  Period in
an amount  substantially equal to Citibank's  Eurodollar Rate Advance comprising
part of such Borrowing to be outstanding  during such Interest  Period and for a
period equal to such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.

     "EURODOLLAR  RATE ADVANCE" means an Advance that bears interest as provided
in Section 2.07(a)(ii).

     "EURODOLLAR  RATE  RESERVE  PERCENTAGE"  for any  Interest  Period  for all
Eurodollar Rate Advances comprising part of the same Borrowing means the reserve
percentage  applicable  two Business  Days before the first day of such Interest
Period under  regulations  issued from time to time by the Board of Governors of
the  Federal  Reserve  System (or any  successor)  for  determining  the maximum
reserve requirement (including, without limitation, any emergency,  supplemental
or other marginal reserve  requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities  or assets  consisting of or
including  Eurocurrency  Liabilities  (or with respect to any other  category of
liabilities  that  includes  deposits by reference to which the interest rate on
Eurodollar  Rate  Advances is  determined)  having a term equal to such Interest
Period.

     "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

     "EXISTING DEBT" has the meaning specified in Section 4.01(t) hereof.

     "FACILITY" means the Working Capital  Facility,  the Swing Line Facility or
the Letter of Credit Facility.

     "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight  Federal  funds  transactions  with members of the Federal  Reserve
System arranged by
<PAGE>
Federal  funds  brokers,  as  published  for such day (or,  if such day is not a
Business Day, for the next preceding  Business Day) by the Federal  Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such  transactions  received
by the  Administrative  Agent from three  Federal  funds  brokers of  recognized
standing selected by it.

     "FEE LETTER" means the fee letter dated October 28, 1999 between the Parent
Guarantor and the Administrative Agent, as amended.

     "FISCAL  YEAR"  means  a  fiscal  year  of the  Parent  Guarantor  and  its
Consolidated  Subsidiaries  ending on the  Sunday  nearest  to October 31 in any
calendar year.

     "FIXED CHARGE  COVERAGE  RATIO" means,  at any date of  determination,  the
ratio of (a)  Consolidated  EBITDA minus  Capital  Expenditures  to (b) interest
payable  on, and  amortization  of debt  discount  in  respect  of, all Debt for
Borrowed  Money  (including   expenses  incurred  under  the  Receivables  Sales
Agreements and flooring subsidies, in each case determined on a basis consistent
with  past  practice),  in each  case,  of or by the  Parent  Guarantor  and its
Subsidiaries  during  the  applicable  period  most  recently  ended  for  which
financial statements are required to be delivered to the Lender Parties pursuant
to Section 5.03(b) or (c), as the case may be.

     "FLOOR  PLANNING  ARRANGEMENTS"  means  the  (i)  Agreement  for  Inventory
Financing  dated  October 28,  1999  between  IBM Credit  Corporation,  MicroAge
Computer  Centers,  Inc., MTS Holding  Company,  MicroAge  Technology  Services,
L.L.C. and Pinacor,  (ii) Agreement for Wholesale  Financing dated September 25,
1998 between Finova Capital Corporation and Pinacor,  MicroAge Computer Centers,
Inc., and MicroAge,  Inc., and (iii)  inventory  financing  arrangement  between
Hewlett-Packard  Company,  MicroAge,  Inc., MicroAge Computer Centers,  Inc. and
Pinacor for the  purchase  by MicroAge  Computer  Centers,  Inc.  and Pinacor of
inventory  and equipment  bearing the trademark or tradename of  Hewlett-Packard
Company or any of its  Subsidiaries  or Affiliates or manufactured by or sold by
Hewlett-Packard Company or any of its Subsidiaries or Affiliates; as each of the
foregoing  agreements  and  arrangements  may  from  time to  time  be  amended,
supplemented or otherwise  modified as permitted in, and in accordance with, the
terms of this Agreement.

     "FLOORING  LETTER OF CREDIT"  means a Standby  Letter of Credit issued to a
creditor under a Floor Planning Arrangement in substantially the form of Exhibit
J hereto.

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

     "GAAP" has the meaning specified in Section 1.03.

     "GUARANTIES" means the Parent Guaranty and the Subsidiary Guaranty.
<PAGE>
     "GUARANTORS" means the Parent Guarantor and the Subsidiary Guarantors.

     "HAZARDOUS   MATERIALS"   means  (a)   petroleum  or  petroleum   products,
by-products or breakdown products,  radioactive  materials,  asbestos-containing
materials,  polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials  or  substances  designated,  classified  or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

     "HEDGE  AGREEMENTS"  means  interest rate swap,  cap or collar  agreements,
interest rate future or option  contracts,  currency swap  agreements,  currency
future or option contracts and other hedging agreements.

     "HEDGE  BANK" means any Lender  Party or an  Affiliate of a Lender Party in
its capacity as a party to a Secured Hedge Agreement.

     "IMMATERIAL  SUBSIDIARY"  means any Subsidiary of the Parent  Guarantor the
total assets of which do not exceed $25,000.

     "INCREASE DATE" has the meaning specified in Section 2.17(a).

     "INCREASING   LENDER"  has  the  meaning   specified  in  Section  2.17(c).
"INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b).

     "INFORMATION  MEMORANDUM" means the information memorandum dated October 4,
1999 used by the Arranger in connection with the syndication of the Commitments.

     "INITIAL  EXTENSION  OF CREDIT"  means the  earlier to occur of the initial
Borrowing and the initial issuance of a Letter of Credit hereunder.

     "INITIAL ISSUING BANK" has the meaning  specified in the recital of parties
to this Agreement.

     "INITIAL  LENDERS"  has the meaning  specified in the recital of parties to
this Agreement.

     "INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

     "INTERCREDITOR AGREEMENT" has the meaning specified in Section 3.01(a)(xi).

     "INTEREST  PERIOD" means, for each Eurodollar Rate Advance  comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance  or the  date of the  Conversion  of any Base  Rate  Advance  into  such
Eurodollar  Rate Advance,  and ending on the last day of the period  selected by
the Borrowers pursuant to the provisions below and, thereafter,  each subsequent
period commencing on the last day of
<PAGE>
the  immediately  preceding  Interest  Period  and ending on the last day of the
period selected by the Borrowers  pursuant to the provisions below. The duration
of each such  Interest  Period  shall be  (except  as  provided  for in  Section
2.02(c))  one,  two,  three or six months,  as the  Borrowers  may,  upon notice
received  by the  Administrative  Agent not later than 1:00 P.M.  (New York City
time) on the third Business Day prior to the first day of such Interest  Period,
select; PROVIDED, HOWEVER, that:

          (a) the Borrowers  may not select any Interest  Period that ends after
     the Termination Date;

          (b) Interest  Periods  commencing on the same date for Eurodollar Rate
     Advances  comprising  part  of the  same  Borrowing  shall  be of the  same
     duration;

          (c) whenever the last day of any Interest Period would otherwise occur
     on a day other than a Business  Day, the last day of such  Interest  Period
     shall be extended to occur on the next succeeding  Business Day,  PROVIDED,
     HOWEVER,  that, if such extension would cause the last day of such Interest
     Period to occur in the next following  calendar month, the last day of such
     Interest Period shall occur on the next preceding Business Day; and

          (d) whenever the first day of any Interest  Period  occurs on a day of
     an initial  calendar month for which there is no numerically  corresponding
     day in the calendar month that succeeds such initial  calendar month by the
     number of months  equal to the  number of months in such  Interest  Period,
     such Interest  Period shall end on the last Business Day of such succeeding
     calendar month.

     "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
from  time  to  time,  and  the  regulations   promulgated  and  rulings  issued
thereunder.

     "INVENTORY" means all Inventory referred to in Section 1(b) of the Security
Agreement.

     "INVESTMENT"  in any Person means any loan or advance to such  Person,  any
purchase or other  acquisition of any capital stock or other ownership or profit
interest,  warrants,  rights,  options,  obligations or other  securities or the
assets  comprising a division or a business unit or a substantial part or all of
the  business of such  Person,  any capital  contribution  to such Person or any
other  direct  or  indirect  investment  in  such  Person,  including,   without
limitation,  any  acquisition  by way  of a  merger  or  consolidation  and  any
arrangement  pursuant to which the investor incurs Debt of the types referred to
in clause (i) or (j) of the definition of "DEBT" in respect of such Person.

     "ISSUING BANK" means the Initial Issuing Bank and any Eligible  Assignee to
which a Letter of Credit  Commitment  hereunder  has been  assigned  pursuant to
Section 9.07 so long as such Eligible  Assignee  expressly  agrees to perform in
accordance with
<PAGE>
their  terms  all of the  obligations  that by the terms of this  Agreement  are
required  to  be   performed   by  it  as  an  Issuing  Bank  and  notifies  the
Administrative  Agent of its  Applicable  Lending  Office  and the amount of its
Letter  of  Credit  Commitment  (which  information  shall  be  recorded  by the
Administrative Agent in the Register),  for so long as such Initial Issuing Bank
or  Eligible  Assignee,  as the  case may be,  shall  have a  Letter  of  Credit
Commitment.

     "L/C CASH COLLATERAL  ACCOUNT" means the collateral  account with Citibank,
N.A., at its office at 399 Park Avenue, New York, New York 10043, in the name of
the  Collateral  Agent and under the sole control and dominion of the Collateral
Agent.

     "L/C RELATED DOCUMENTS" has the meaning specified in Section 2.04(c)(ii).

     "LENDER PARTY" means any Lender, the Issuing Bank or the Swing Line Bank.

     "LENDERS" means the Initial Lenders, each Assuming Lender that shall become
a party  hereto  pursuant to Section  2.17 and each  Person that shall  become a
Lender hereunder  pursuant to Section 9.07 for so long as such Initial Lender or
Person, as the case may be, shall be a party to this Agreement.

     "LETTER OF CREDIT ADVANCE" means an advance made by the Issuing Bank or any
Lender pursuant to Section 2.03(c).

     "LETTER OF CREDIT AGREEMENT" has the meaning specified in Section 2.03(a).

     "LETTER OF CREDIT  COMMITMENT"  means,  with respect to the Issuing Bank at
any time,  the amount set forth  opposite the Issuing  Bank's name on Schedule I
hereto under the caption  "Letter of Credit  Commitment" or, if the Issuing Bank
has  entered  into one or more  Assignment  and  Acceptances,  set forth for the
Issuing Bank in the Register maintained by the Administrative  Agent pursuant to
Section  9.07(d) as the Issuing  Bank's "Letter of Credit  Commitment",  as such
amount may be reduced at or prior to such time pursuant to Section 2.05.

     "LETTER OF CREDIT  FACILITY"  means,  at any time,  an amount  equal to the
lesser of (a) the amount of the Issuing  Bank's  Letter of Credit  Commitment at
such time and (b)  $150,000,000,  as such  amount  may be reduced at or prior to
such time pursuant to Section 2.05.

     "LETTERS OF CREDIT" has the meaning specified in Section 2.01(c).

     "LIEN" means any lien,  security interest or other charge or encumbrance of
any kind,  or any other type of  preferential  arrangement,  including,  without
limitation,  the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
<PAGE>
     "LOAN DOCUMENTS" means (a) for purposes of this Agreement and the Notes and
any amendment, supplement or modification hereof or thereof, (i) this Agreement,
(ii) the Notes, (iii) the Guaranties, (iv) the Collateral Documents, (v) the Fee
Letter,  (vi) each  Letter  of Credit  Agreement  and (vii)  each  Intercreditor
Agreement and (b) for purposes of the Guaranties  and the  Collateral  Documents
and for all other  purposes  other than for purposes of this  Agreement  and the
Notes,  (i) this  Agreement,  (ii) the  Notes,  (iii) the  Guaranties,  (iv) the
Collateral Documents,  (v) the Fee Letter, (vi) each Letter of Credit Agreement,
(vii) each Secured Hedge Agreement and (viii) each Intercreditor  Agreement,  in
each case as amended.

     "LOAN PARTIES" means the Borrowers and the Guarantors.

     "LOAN VALUE"  means,  with respect to any  Eligible  Collateral,  an amount
equal to (a) with  respect to  Eligible  Receivables,  up to 85% of the value of
Eligible Receivables;  (b) with respect to Eligible Inventory,  up to 75% of the
value of  Eligible  Inventory  less than 90 days old plus up to 50% of  Eligible
Inventory over 90 days old less a liquidation  reserve of  $30,000,000;  and (c)
with respect to Eligible  Cash, up to 99% of the value of Eligible  Cash, or, in
each case, such lower percentage of the value of any item of Eligible Collateral
determined  by  the  Administrative  Agent  in  its  sole  discretion  exercised
commercially reasonably in accordance with customary business practice, PROVIDED
that the Administrative Agent shall give five Business Days notice of any change
in the foregoing percentages.

     "MARGIN STOCK" has the meaning specified in Regulation U.

     "MATERIAL  ADVERSE  CHANGE"  means  any  material  adverse  change  in  the
business,   condition   (financial  or  otherwise),   operations,   performance,
properties or prospects of any of the Parent Guarantor, the Parent Guarantor and
its  Subsidiaries  taken as a whole,  MTS, MTS and its  Subsidiaries  taken as a
whole, Pinacor or Pinacor and its Subsidiaries taken as a whole.

     "MATERIAL  ADVERSE  EFFECT"  means a  material  adverse  effect  on (a) the
business,   condition   (financial  or  otherwise),   operations,   performance,
properties or prospects of any of the Parent Guarantor, the Parent Guarantor and
its  Subsidiaries  taken as a whole,  MTS, MTS and its  Subsidiaries  taken as a
whole,  Pinacor or Pinacor and its Subsidiaries taken as a whole, (b) the rights
and remedies of any Agent or any Lender Party under any Transaction  Document or
(c) the  ability  of any  Loan  Party  to  perform  its  Obligations  under  any
Transaction Document to which it is or is to be a party.

     "MORTGAGES" has the meaning specified in Section 3.01(a)(xvii).

     "MULTIEMPLOYER  PLAN"  means a  multiemployer  plan,  as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
<PAGE>
     "MULTIPLE  EMPLOYER  PLAN"  means a single  employer  plan,  as  defined in
Section  4001(a)(15) of ERISA,  that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA  Affiliates or (b) was so  maintained  and in respect of which any
Loan Party or any ERISA  Affiliate  could have  liability  under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.

     "NET CASH PROCEEDS"  means,  with respect to any sale,  lease,  transfer or
other  disposition of any asset or the incurrence or issuance of any Debt or the
sale or  issuance  of  capital  stock  or other  ownership  or  profit  interest
(including,  without  limitation,  any capital  contribution)  or any securities
convertible  into or exchangeable for capital stock or other ownership or profit
interest or any warrants, rights, options or other securities to acquire capital
stock or other ownership or profit interest by any Person,  the aggregate amount
of cash received from time to time (whether as initial  consideration or through
payment or disposition of deferred consideration) by or on behalf of such Person
in connection  with such  transaction  after  deducting  therefrom only (without
duplication) (a) reasonable and customary closing costs,  brokerage commissions,
underwriting  fees and  discounts,  legal fees,  finder's fees and other similar
fees and commissions, (b) the amount of taxes payable in connection with or as a
result of such  transaction  and (c) the amount of any Debt secured by a Lien on
such asset that,  by the terms of the  agreement or  instrument  governing  such
Debt,  is  required  to be  repaid  upon such  disposition,  in each case to the
extent, but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid to a Person that is not an Affiliate of such
Person or any Loan Party or any  Affiliate  of any Loan  Party and are  properly
attributable  to such  transaction or to the asset that is the subject  thereof;
PROVIDED,  HOWEVER,  that in the case of taxes that are deductible  under clause
(b) above but for the fact that, at the time of receipt of such cash, such taxes
have not been  actually  paid or are not then  payable,  such Loan Party or such
Subsidiary  may deduct an amount  (the  "RESERVED  AMOUNT")  equal to the amount
reserved  in  accordance  with GAAP for such Loan  Party's or such  Subsidiary's
reasonable estimate of such taxes, other than taxes for which such Loan Party or
such Subsidiary is indemnified,  PROVIDED  FURTHER,  HOWEVER,  that, at the time
such  taxes  are paid,  an  amount  equal to the  amount,  if any,  by which the
Reserved  Amount for such taxes  exceeds the amount of such taxes  actually paid
shall  constitute  "Net Cash  Proceeds"  of the type for which  such  taxes were
reserved for all purposes hereunder.

     "NOTE" means a promissory note of the Borrowers payable to the order of any
Lender, in substantially the form of Exhibit A hereto,  evidencing the aggregate
indebtedness to such Lender resulting from the Working Capital Advances,  Letter
of Credit Advances and Swing Line Advances made by such Lender, as amended.

     "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).

     "NOTICE OF ISSUANCE" has the meaning specified in Section 2.03(a).
<PAGE>
     "NOTICE OF RENEWAL" has the meaning specified in Section 2.01(c).

     "NOTICE OF SWING  LINE  BORROWING"  has the  meaning  specified  in Section
2.02(b).

     "NOTICE OF TERMINATION" has the meaning specified in Section 2.01(c). "NPL"
means the National Priorities List under CERCLA.

     "OBLIGATION" means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including,  without limitation, any
liability of such Person on any claim,  whether or not the right of any creditor
to  payment  in  respect  of such  claim is  reduced  to  judgment,  liquidated,
unliquidated,   fixed,  contingent,   matured,  disputed,   undisputed,   legal,
equitable,  secured or unsecured,  and whether or not such claim is  discharged,
stayed or otherwise  affected by any proceeding  referred to in Section 6.01(f).
Without  limiting the generality of the foregoing,  the  Obligations of any Loan
Party under the Loan  Documents  include (a) the  obligation  to pay  principal,
interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees
and  disbursements,  indemnities  and other  amounts  payable by such Loan Party
under any Loan  Document and (b) the  obligation of such Loan Party to reimburse
any amount in respect of any of the foregoing that any Lender Party, in its sole
discretion, may elect to pay or advance on behalf of such Loan Party.

     "OECD" means the Organization for Economic Cooperation and Development.

     "OPEN YEAR" has the meaning specified in Section 4.01(r)(ii).

     "OTHER TAXES" has the meaning specified in Section 2.12(b).

     "PARENT  GUARANTOR" has the meaning  specified in the recital of parties to
this Agreement.

     "PARENT  GUARANTY" means the guaranty of the Parent  Guarantor set forth in
Article VII of this Agreement.

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

     "PERMITTED  LIENS" means such of the following as to which no  enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for  taxes,  assessments  and  governmental  charges  or levies to the
extent not required to be paid under Section 5.01(b);  (b) Liens imposed by law,
such as materialmen's,  mechanics',  carriers',  workmen's and repairmen's Liens
and other  similar  Liens  arising in the ordinary  course of business  securing
obligations  that (i) are not overdue for a period of more than 30 days and (ii)
individually or together with all other Permitted Liens  outstanding on any date
of determination  do not materially  adversely affect the use of the property to
which they relate;  (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
<PAGE>
statutory obligations;  and (d) easements,  rights of way and other encumbrances
on title to real  property  that do not render title to the property  encumbered
thereby unmarketable or materially adversely affect the use of such property for
its present purposes.

     "PERSON"  means  an  individual,  partnership,   corporation  (including  a
business  trust),  limited  liability  company,  joint  stock  company,   trust,
unincorporated  association,  joint venture or other entity,  or a government or
any political subdivision or agency thereof.

     "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

     "PLEDGED DEBT" has the meaning specified in the Security Agreement.

     "PREFERRED  STOCK" means,  with respect to any  corporation,  capital stock
issued by such corporation that is entitled to a preference or priority over any
other capital stock issued by such  corporation  upon any  distribution  of such
corporation's assets, whether by dividend or upon liquidation.

     "PRO RATA  SHARE" of any amount  means,  with  respect to any Lender at any
time,  the product of such amount TIMES a fraction the numerator of which is the
amount of such  Lender's  Working  Capital  Commitment  at such time (or, if the
Commitments  shall have been  terminated  pursuant to Section 2.05 or 6.01, such
Lender's  Working  Capital  Commitment  as in effect  immediately  prior to such
termination)  and the  denominator of which is the Working  Capital  Facility at
such time (or, if the Commitments shall have been terminated pursuant to Section
2.05 or 6.01, the Working  Capital  Facility as in effect  immediately  prior to
such termination).

     "RECEIVABLES"  means all  Receivables  referred  to in Section  1(c) of the
Security Agreement.

     "RECEIVABLES  SALES  AGREEMENT"  means the Purchase  Agreement  dated as of
April  30,  1997,   between  MicroAge  Computer  Centers,   Inc.,   Pinacor  and
NationsCredit Commercial Corporation of America dba MicroAge National Credit.

     "REDEEMABLE" means, with respect to any capital stock or other ownership or
profit interest, Debt or other right or Obligation, any such right or Obligation
that (a) the issuer has undertaken to redeem at a fixed or determinable  date or
dates,  whether  by  operation  of a  sinking  fund or  otherwise,  or upon  the
occurrence  of a condition not solely within the control of the issuer or (b) is
redeemable at the option of the holder.

     "REGISTER" has the meaning specified in Section 9.07(d).

     "REGULATION U" means  Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
<PAGE>
     "RELATED DOCUMENTS" means any intercompany notes issued pursuant to Section
5.02(b)(ii), each agreement included in the Floor Planning Arrangements and each
Flooring Letter of Credit.

     "REQUIRED  LENDERS" means, at any time,  Lenders owed or holding at least a
majority  in interest of the sum of (a) the  aggregate  principal  amount of the
Advances  outstanding at such time and (b) the aggregate Available Amount of all
Letters of Credit  outstanding at such time, or, if no such principal amount and
no Letters of Credit are  outstanding at such time,  Lenders  holding at least a
majority in interest of the aggregate of Working Capital  Commitments  PROVIDED,
HOWEVER,  that if any Lender  shall be a Defaulting  Lender at such time,  there
shall be excluded from the  determination  of Required  Lenders at such time (A)
the  aggregate  principal  amount of the  Advances  owing to such Lender (in its
capacity as a Lender) and  outstanding  at such time, (B) such Lender's Pro Rata
Share of the aggregate  Available Amount of all Letters of Credit outstanding at
such time and (C) the Unused Working  Capital  Commitment of such Lender at such
time. For purposes of this definition,  the aggregate  principal amount of Swing
Line  Advances  owing to the Swing  Line  Bank and of Letter of Credit  Advances
owing to the  Issuing  Bank and the  Available  Amount of each  Letter of Credit
shall be considered to be owed to the Lenders  ratably in accordance  with their
respective Working Capital Commitments.

     "RESPONSIBLE  OFFICER"  means any  officer  of any Loan Party or any of its
Subsidiaries.

     "SECURED HEDGE AGREEMENT"  means any Hedge Agreement  required or permitted
under Article V that is entered into by and between any Loan Party and any Hedge
Bank.

     "SECURED OBLIGATIONS" has the meaning specified in the Security Agreement.

     "SECURED PARTIES" means the Agents, the Lender Parties and the Hedge Banks.

     "SECURITY AGREEMENT" has the meaning specified in Section 3.01(a)(ii).

     "SINGLE  EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(a)(15) of ERISA,  that (a) is maintained for employees of any Loan Party or
any ERISA  Affiliate  and no Person  other than the Loan  Parties  and the ERISA
Affiliates  or (b) was so  maintained  and in respect of which any Loan Party or
any ERISA  Affiliate  could have  liability  under  Section 4069 of ERISA in the
event  such plan has been or were to be  terminated.

     "SOLVENT" and "SOLVENCY"  mean,  with respect to any Person on a particular
date,  that on such date (a) the fair value of the  property  of such  Person is
greater than the total amount of  liabilities,  including,  without  limitation,
contingent  liabilities,  of such Person,  (b) the present fair salable value of
the assets of such  Person is not less than the amount  that will be required to
pay the probable  liability of such Person on its debts as they become  absolute
and  matured,  (c) such Person does not intend to, and does not believe
<PAGE>
that it will,  incur debts or  liabilities  beyond such Person's  ability to pay
such debts and  liabilities as they mature and (d) such Person is not engaged in
business  or a  transaction,  and  is not  about  to  engage  in  business  or a
transaction,  for which such Person's  property would constitute an unreasonably
small  capital.  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.

     "STANDBY  LETTER OF  CREDIT"  means any Letter of Credit  issued  under the
Letter of Credit Facility, other than a Trade Letter of Credit.

     "SUBSIDIARY"  of any  Person  means  any  corporation,  partnership,  joint
venture,  limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding  capital stock having ordinary voting
power  to  elect a  majority  of the  Board  of  Directors  of such  corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation  shall or might have voting power upon the occurrence of any
contingency),  (b) the  interest in the capital or profits of such  partnership,
joint venture or limited  liability  company or (c) the  beneficial  interest in
such trust or estate is at the time directly or  indirectly  owned or controlled
by such Person,  by such Person and one or more of its other  Subsidiaries or by
one or more of such Person's other Subsidiaries.

     "SUBSIDIARY  GUARANTORS" means all Subsidiaries of the Parent Guarantor and
each other  Subsidiary  of any of them that  shall be  required  to execute  and
deliver a guaranty pursuant to Section 5.01(j) or Section 5.01(k).

     "SUBSIDIARY GUARANTY" means a guaranty in substantially the form of Exhibit
E, together with each other guaranty delivered  pursuant to Section 5.01(j),  in
each case as amended,  amended and restated,  supplemented or otherwise modified
from time to time in accordance with its terms.

     "SURVIVING DEBT" has the meaning specified in Section 3.01(c).

     "SWING  LINE  ADVANCE"  means an  advance  made by (a) the Swing  Line Bank
pursuant to Section 2.01(b) or (b) any Lender pursuant to Section 2.02(b).

     "SWING LINE BANK" means Citibank.

     "SWING LINE BORROWING" means a borrowing consisting of a Swing Line Advance
made by the Swing Line Bank pursuant to Section 2.01(b) or the Lenders  pursuant
to Section 2.02(b).

     "SWING LINE FACILITY" has the meaning specified in Section 2.01(b).

     "TAX CERTIFICATE" has the meaning specified in Section 5.03(k)
<PAGE>
     "TAXES" has the meaning specified in Section 2.12(a).

     "TERMINATION  DATE"  means the  earlier of October 31, 2002 and the date of
termination in whole of the Working Capital Commitments and the Letter of Credit
Commitment pursuant to Section 2.05 or 6.01.

     "TRADE  LETTER OF CREDIT"  means any Letter of Credit that is issued  under
the Letter of Credit  Facility for the benefit of a supplier of Inventory to the
Borrowers or any of their  respective  Subsidiaries  to effect  payment for such
Inventory, the conditions to drawing under which include the presentation to the
Issuing  Bank of  negotiable  bills of lading,  invoices  and related  documents
sufficient, in the judgment of the Issuing Bank, to create a valid and perfected
lien on or security  interest in such Inventory,  bills of lading,  invoices and
related documents in favor of the Issuing Bank.

     "TRANSACTION  DOCUMENTS"  means,  collectively,  the Loan Documents and the
Related Documents.

     "TYPE" refers to the distinction  between  Advances bearing interest at the
Base Rate and Advances bearing interest at the Eurodollar Rate.

     "UNUSED WORKING CAPITAL  COMMITMENT"  means,  with respect to any Lender at
any time, (a) such Lender's  Working  Capital  Commitment at such time MINUS (b)
the sum of (i) the aggregate  principal amount of all Working Capital  Advances,
Swing Line  Advances and Letter of Credit  Advances  made by such Lender (in its
capacity as a Lender) and  outstanding  at such time PLUS (ii) such Lender's Pro
Rata  Share of (A) the  aggregate  Available  Amount  of all  Letters  of Credit
outstanding  at such time, (B) the aggregate  principal  amount of all Letter of
Credit  Advances  made by the  Issuing  Bank  pursuant  to Section  2.03(c)  and
outstanding at such time other than any such Letter of Credit Advance which,  at
or prior to such time,  has been  assigned  in part to such  Lender  pursuant to
Section  2.03(c)  and (C) the  aggregate  principal  amount  of all  Swing  Line
Advances made by the Swing Line Bank pursuant to Section 2.01(b) and outstanding
at such time other than any such Swing Line Advance  which,  at or prior to such
time, has been assigned in part to such Lender pursuant to Section 2.02(b).

     "VOTING STOCK" means capital stock issued by a  corporation,  or equivalent
interests  in any other  Person,  the  holders of which are  ordinarily,  in the
absence of  contingencies,  entitled to vote for the election of  directors  (or
persons performing  similar  functions) of such Person,  even if the right so to
vote has been suspended by the happening of such a contingency.

     "WELFARE  PLAN" means a welfare  plan, as defined in Section 3(1) of ERISA,
that is  maintained  for  employees of any Loan Party or in respect of which any
Loan Party could have liability.
<PAGE>
     "WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.

     "WORKING CAPITAL ADVANCE" has the meaning specified in Section 2.01(a).

     "WORKING CAPITAL  BORROWING"  means a borrowing  consisting of simultaneous
Working Capital Advances of the same Type made by the Lenders.

     "WORKING CAPITAL COMMITMENT" means, with respect to any Lender at any time,
(a) the amount set forth  opposite such Lender's name on Schedule I hereto under
the caption "Working Capital Commitment", (b) if such Lender has become a Lender
hereunder  pursuant  to an  Assumption  Agreement,  the amount set forth in such
Assumption  Agreement  or (c) if  such  Lender  has  entered  into  one or  more
Assignment and Acceptances, set forth for such Lender in the Register maintained
by the  Administrative  Agent  pursuant  to  Section  9.07(d)  as such  Lender's
"Working Capital Commitment",  as such amount may be reduced at or prior to such
time pursuant to Section 2.05 or increased pursuant to Section 2.17.

     "WORKING CAPITAL  FACILITY" means, at any time, the aggregate amount of the
Lenders' Working Capital Commitments at such time.

     SECTION 1.02. COMPUTATION OF TIME PERIODS;  OTHER DEFINITIONAL  PROVISIONS.
In this Agreement and the other Loan Documents in the  computation of periods of
time from a specified  date to a later  specified  date,  the word "FROM"  means
"from  and  including"  and  the  words  "TO"  and  "UNTIL"  each  mean  "to but
excluding".  References  in the Loan  Documents to any agreement or contract "AS
AMENDED" shall mean and be a reference to such agreement or contract as amended,
amended and restated,  supplemented  or otherwise  modified from time to time in
accordance with its terms.

     SECTION 1.03.  ACCOUNTING  TERMS.  All  accounting  terms not  specifically
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
financial statements referred to in Section 4.01(g) ("GAAP").
<PAGE>
                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES
                            AND THE LETTERS OF CREDIT

     SECTION  2.01.  THE  ADVANCES  AND THE  LETTERS OF CREDIT.  (a) THE WORKING
CAPITAL  ADVANCES.  Each Lender  severally  agrees,  on the terms and conditions
hereinafter  set forth, to make advances (each a "WORKING  CAPITAL  ADVANCE") to
the  Borrowers  jointly  from time to time on any Business Day during the period
from the date  hereof  until the  Termination  Date in an  amount  for each such
Advance not to exceed such Lender's  Unused Working  Capital  Commitment at such
time.  Each  Working  Capital  Borrowing  shall  be in an  aggregate  amount  of
$5,000,000 or an integral  multiple of  $1,000,000  in excess  thereof and shall
consist of Working Capital Advances made  simultaneously  by the Lenders ratably
according  to their  Working  Capital  Commitments.  Within  the  limits of each
Lender's  Unused  Working  Capital  Commitment in effect from time to time,  the
Borrowers  may borrow under this  Section  2.01(a),  prepay  pursuant to Section
2.06(a) and reborrow under this Section 2.01(a).

     (b) THE SWING LINE  ADVANCES.  The Borrowers may jointly  request the Swing
Line Bank to make,  and the Swing Line Bank may,  if in its sole  discretion  it
elects to do so, make, on the terms and conditions  hereinafter set forth, Swing
Line  Advances to the  Borrowers  jointly  from time to time on any Business Day
during the period  from the date  hereof  until the  Termination  Date (i) in an
aggregate amount not to exceed at any time  outstanding  $50,000,000 (the "SWING
LINE  FACILITY") and (ii) in an amount for each such Swing Line Borrowing not to
exceed the aggregate of the Unused Working Capital Commitments of the Lenders at
such time.  No Swing Line  Advance  shall be used for the purpose of funding the
payment of principal of any other Swing Line Advance.  Each Swing Line Borrowing
shall be in an amount of  $1,000,000  or an  integral  multiple  of  $250,000 in
excess  thereof and shall be made as a Base Rate  Advance.  Within the limits of
the Swing Line Facility and within the limits  referred to in clause (ii) above,
so long as the Swing Line  Bank,  in its sole  discretion,  elects to make Swing
Line  Advances,  the  Borrowers  may borrow  under this Section  2.01(b),  repay
pursuant to Section  2.04(b) or prepay  pursuant to Section 2.06(a) and reborrow
under this Section 2.01(b).

     (c) LETTERS OF CREDIT. The Issuing Bank agrees, on the terms and conditions
hereinafter  set forth, to issue letters of credit (the "LETTERS OF CREDIT") for
the joint account of the Borrowers  from time to time on any Business Day during
the period from the date hereof until 60 days before the Termination  Date in an
aggregate  Available  Amount  (i) for all  Letters  of Credit at any time not to
exceed at any time the lesser of (x) the Letter of Credit  Facility at such time
and (y) the Issuing Bank's Letter of Credit Commitment at such time and (ii) for
each such Letter of Credit not to exceed the Unused Working Capital  Commitments
of the Lenders at such time. No Letter of Credit  (other than a Flooring  Letter
of Credit) shall have an expiration  date (including all rights of the Borrowers
or the beneficiary to require  renewal) later than the earlier of 60 days before
the Termination Date (or, in the case of a Flooring Letter of Credit, later than
five days before the  Termination  Date) and (A) in the case of a Standby Letter
of Credit (other than a Flooring Letter of Credit), six months after the date of
issuance  thereof,  but may by its terms be
<PAGE>
renewable annually upon notice (a "NOTICE OF RENEWAL") given to the Issuing Bank
and the  Administrative  Agent on or prior to any date for notice of renewal set
forth in such  Letter of Credit but in any event at least  three  Business  Days
prior to the date of the proposed  renewal of such Standby  Letter of Credit and
upon  fulfillment of the  applicable  conditions set forth in Article III unless
the Issuing Bank has notified the Borrowers  (with a copy to the  Administrative
Agent)  on or prior to the date for  notice  of  termination  set  forth in such
Letter of Credit but in any event at least 30 Business Days prior to the date of
automatic  renewal of its election not to renew such Standby Letter of Credit (a
"NOTICE OF  TERMINATION")  and (B) in the case of a Trade  Letter of Credit,  60
days after the date of issuance thereof; PROVIDED that the terms of each Standby
Letter of Credit that is automatically  renewable annually shall (x) require the
Issuing Bank that issued such Standby  Letter of Credit to give the  beneficiary
named in such Standby Letter of Credit notice of any Notice of Termination,  (y)
permit such beneficiary, upon receipt of such notice, to draw under such Standby
Letter of Credit prior to the date such Standby Letter of Credit otherwise would
have been  automatically  renewed and (z) not permit the expiration  date (after
giving  effect to any renewal) of such Standby  Letter of Credit in any event to
be extended to a date later than 60 days before the Termination  Date. If either
a Notice of Renewal is not given by the Borrowers or a Notice of  Termination is
given by the Issuing Bank pursuant to the immediately  preceding sentence,  such
Standby  Letter of Credit shall  expire on the date on which it otherwise  would
have been automatically renewed; PROVIDED,  HOWEVER, that even in the absence of
receipt of a Notice of Renewal the Issuing  Bank may in its  discretion,  unless
instructed to the contrary by the  Administrative  Agent or the Borrowers,  deem
that a Notice of Renewal had been timely delivered and in such case, a Notice of
Renewal  shall be deemed to have been so delivered  for all purposes  under this
Agreement.  Each Standby Letter of Credit shall contain a provision  authorizing
the Issuing Bank to deliver to the  beneficiary  of such Letter of Credit,  upon
the  occurrence and during the  continuance of an Event of Default,  a notice (a
"DEFAULT  TERMINATION NOTICE") terminating such Letter of Credit and giving such
beneficiary  15 days to draw such  Letter of  Credit.  Within  the limits of the
Letter of Credit  Facility,  and subject to the limits  referred  to above,  the
Borrowers  may request  the  issuance  of Letters of Credit  under this  Section
2.01(c),  repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section  2.03(c) and request the issuance of  additional  Letters of
Credit under this Section 2.01(c).

     SECTION  2.02.  MAKING THE  ADVANCES.  (a) Except as otherwise  provided in
Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not later
than 1:00 P.M. (New York City time) on the third  Business Day prior to the date
of the proposed  Borrowing in the case of a Borrowing  consisting  of Eurodollar
Rate Advances,  or not later than 12:00 noon (New York City time) on the date of
the  proposed  Borrowing  in the case of a  Borrowing  consisting  of Base  Rate
Advances, by the Borrowers jointly to the Administrative Agent, which shall give
to each Lender prompt notice thereof by telex or telecopier. Each such notice of
a  Borrowing  (a  "NOTICE  OF  BORROWING")  shall  be  by  telephone,  confirmed
immediately in writing,  or telex or telecopier,  in  substantially  the form of
Exhibit B hereto,  specifying  therein the requested (i) date of such Borrowing,
(ii) Facility under which such  Borrowing is to be made,  (iii) Type of Advances
comprising  such Borrowing,  (iv) aggregate  amount of such Borrowing and (v) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. Each Lender shall, before 2:00 P.M. (New York City
time) on the date
<PAGE>
of such  Borrowing,  make  available for the account of its  Applicable  Lending
Office to the  Administrative  Agent at the Administrative  Agent's Account,  in
same day funds,  such Lender's  ratable  portion of such Borrowing in accordance
with the respective Commitments under the applicable Facility of such Lender and
the other Lenders.  After the  Administrative  Agent's receipt of such funds and
upon  fulfillment  of the  applicable  conditions  set forth in Article III, the
Administrative  Agent  will  make  such  funds  available  to the  Borrowers  by
crediting the Borrowers' Account;  PROVIDED,  HOWEVER,  that, in the case of any
Working Capital Borrowing,  the Administrative  Agent shall first make a portion
of such funds equal to the aggregate principal amount of any Swing Line Advances
and Letter of Credit  Advances  made by the Swing Line Bank or the Issuing Bank,
as the case may be, and by any other Lender and  outstanding on the date of such
Working Capital Borrowing, plus interest accrued and unpaid thereon to and as of
such date, available to the Swing Line Bank or the Issuing Bank, as the case may
be, and such other  Lenders for repayment of such Swing Line Advances and Letter
of Credit Advances.

     (b) Each Swing Line Borrowing shall be made on notice, given not later than
1:00 P.M. (New York City time) on the date of the proposed Swing Line Borrowing,
by the Borrowers  jointly to the Swing Line Bank and the  Administrative  Agent.
Each such notice of a Swing Line Borrowing (a "NOTICE OF SWING LINE  BORROWING")
shall be by telephone, confirmed immediately in writing, or telex or telecopier,
specifying therein the requested (i) date of such Borrowing, (ii) amount of such
Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later
than the seventh day after the  requested  date of such  Borrowing).  If, in its
sole discretion,  it elects to make the requested Swing Line Advance,  the Swing
Line Bank will make the amount thereof available to the Administrative  Agent at
the Administrative  Agent's Account, in same day funds. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable  conditions
set forth in  Article  III,  the  Administrative  Agent  will  make  such  funds
available to the Borrowers by crediting  the  Borrowers'  Account.  Upon written
demand by the Swing Line Bank, with a copy of such demand to the  Administrative
Agent,  each other Lender shall purchase from the Swing Line Bank, and the Swing
Line Bank shall sell and assign to each such other Lender,  such other  Lender's
Pro Rata Share of such  outstanding  Swing  Line  Advance as of the date of such
demand, by making available for the account of its Applicable  Lending Office to
the  Administrative  Agent for the account of the Swing Line Bank, by deposit to
the  Administrative  Agent's Account,  in same day funds, an amount equal to the
portion of the  outstanding  principal  amount of such Swing Line  Advance to be
purchased  by such Lender.  Each  Borrower  hereby  agrees to each such sale and
assignment.  Each Lender agrees to purchase its Pro Rata Share of an outstanding
Swing Line Advance on (i) the  Business Day on which demand  therefor is made by
the Swing Line Bank, PROVIDED that notice of such demand is given not later than
1:00 P.M. (New York City time) on such  Business Day or (ii) the first  Business
Day next  succeeding  such  demand if notice of such  demand is given after such
time.  Upon any such  assignment by the Swing Line Bank to any other Lender of a
portion of a Swing Line Advance,  the Swing Line Bank represents and warrants to
such other Lender that the Swing Line Bank is the legal and beneficial  owner of
such  interest  being  assigned  by it,  but  makes no other  representation  or
warranty and assumes no responsibility  with respect to such Swing Line Advance,
the Loan Documents or any Loan Party. If and to the extent that any Lender shall
not  have so made  the  amount  of such  Swing  Line  Advance  available  to the
Administrative  Agent,  such Lender  agrees to pay to the  Administrative  Agent
forthwith on demand such amount
<PAGE>
together  with  interest  thereon,  for each day from the date of  demand by the
Swing Line Bank until the date such amount is paid to the Administrative  Agent,
at the Federal Funds Rate. If such Lender shall pay to the Administrative  Agent
such amount for the  account of the Swing Line Bank on any  Business  Day,  such
amount so paid in respect of  principal  shall  constitute  a Swing Line Advance
made by such Lender on such Business Day for purposes of this Agreement, and the
outstanding  principal  amount of the Swing Line  Advance made by the Swing Line
Bank shall be reduced by such amount on such Business Day.

     (c) Anything in subsection (a) above to the contrary  notwithstanding,  (i)
except as provided below, the Borrowers may not select  Eurodollar Rate Advances
for the initial  Borrowing  hereunder and for the period from the date hereof to
March  31,  2000  (or  such  earlier  date as  shall  be  specified  in its sole
discretion by the Administrative  Agent in a written notice to the Borrowers and
the Lenders) or for any Borrowing if the aggregate  amount of such  Borrowing is
less than  $10,000,000  or if the  obligation of the Lenders to make  Eurodollar
Rate Advances shall then be suspended  pursuant to Section 2.09 or 2.10 and (ii)
Eurodollar  Rate  Advances  may not be  outstanding  as part  of more  than  ten
separate Borrowings; PROVIDED, HOWEVER, the Borrowers may select Eurodollar Rate
Advances for the period from the Initial  Extension of Credit  through  December
31, 1999 if the duration of the Interest Period for such Eurodollar Rate Advance
is one or two weeks and for the period from  December 31, 1999 through March 31,
2000 if the duration of the Interest  Period for such Eurodollar Rate Advance is
one week, two weeks or one month.

     (d) Each Notice of Borrowing  and Notice of Swing Line  Borrowing  shall be
irrevocable and binding on the Borrowers.  In the case of any Borrowing that the
related  Notice of Borrowing  specifies is to be  comprised of  Eurodollar  Rate
Advances,  the Borrowers  shall  indemnify each Lender against any loss, cost or
expense  incurred  by such  Lender as a result of any  failure  to fulfill on or
before the date  specified in such Notice of Borrowing  for such  Borrowing  the
applicable  conditions set forth in Article III, including,  without limitation,
any loss, cost or expense  incurred by reason of the liquidation or reemployment
of  deposits  or other  funds  acquired by such Lender to fund the Advance to be
made by such Lender as part of such Borrowing when such Advance,  as a result of
such failure, is not made on such date.

     (e) Unless the  Administrative  Agent  shall have  received  notice  from a
Lender  prior to the date of any  Borrowing  under a Facility  under  which such
Lender  has a  Commitment  that  such  Lender  will  not make  available  to the
Administrative  Agent  such  Lender's  ratable  portion of such  Borrowing,  the
Administrative Agent may assume that such Lender has made such portion available
to the  Administrative  Agent on the date of such  Borrowing in accordance  with
subsection  (a) of this  Section  2.02  and the  Administrative  Agent  may,  in
reliance upon such  assumption,  make  available to the Borrowers on such date a
corresponding  amount.  If and to the extent that such Lender  shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the  Borrowers  severally  agree  to repay  or pay to the  Administrative  Agent
forthwith on demand such corresponding  amount and to pay interest thereon,  for
each day from the date such amount is made available to the Borrowers  until the
date such amount is repaid or paid to the  Administrative  Agent,  at (i) in the
case of the Borrowers,  the interest rate  applicable at such time under Section
2.07 to Advances comprising such Borrowing
<PAGE>
and (ii) in the case of such  Lender,  the Federal  Funds  Rate.  If such Lender
shall pay to the Administrative Agent such corresponding  amount, such amount so
paid shall  constitute  such Lender's  Advance as part of such Borrowing for all
purposes.

     (f) The  failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its  obligation,  if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be  responsible  for the  failure of any other  Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.

     SECTION 2.03.  ISSUANCE OF AND DRAWINGS AND REIMBURSEMENT  UNDER LETTERS OF
CREDIT.  (a)  REQUEST  FOR  ISSUANCE.  (i) Each  Letter of Credit  other  than a
Flooring Letter of Credit shall be issued upon notice, given not later than 1:00
P.M.  (New York City  time) on the tenth  Business  Day prior to the date of the
proposed  issuance of such  Letter of Credit,  by the  Borrowers  jointly to the
Issuing  Bank,  which  shall give to the  Administrative  Agent and each  Lender
prompt notice thereof by telex or telecopier.  Each such notice of issuance of a
Letter of Credit other than a Flooring Letter of Credit (a "NOTICE OF ISSUANCE")
shall be by telephone, confirmed immediately in writing, or telex or telecopier,
specifying  therein the requested  (A) date of such  issuance  (which shall be a
Business  Day),  (B) Available  Amount of such Letter of Credit,  (C) expiration
date of such Letter of Credit,  (D) name and address of the  beneficiary of such
Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied
by such  application  and agreement for letter of credit as the Issuing Bank may
specify to the  Borrowers for use in connection  with such  requested  Letter of
Credit (a  "LETTER  OF CREDIT  AGREEMENT").  If (x) the  requested  form of such
Letter of Credit is  acceptable to the Issuing Bank in its sole  discretion  and
(y) it has not received  notice of objection to such  issuance from the Required
Lenders,  the Issuing Bank will, upon  fulfillment of the applicable  conditions
set forth in Article III, make such Letter of Credit  available to the Borrowers
at its  office  referred  to in Section  9.02 or as  otherwise  agreed  with the
Borrowers in connection with such issuance.  In the event and to the extent that
the  provisions  of any  Letter of Credit  Agreement  shall  conflict  with this
Agreement, the provisions of this Agreement shall govern.

     (ii) Each Flooring Letter of Credit shall be issued upon notice,  given not
later than 1:00 P.M.  (New York City time) on the second  Business  Day prior to
the date of the proposed  issuance of such Letter of Credit, by the Borrowers to
the Issuing Bank, which shall give to the  Administrative  Agent and each Lender
prompt  notice  thereof by telex or  telecopier.  Each Notice of Issuance  for a
Flooring  Letter of  Credit  shall be by  telephone,  confirmed  immediately  in
writing,  or telex or telecopier,  specifying  therein the requested (A) date of
such issuance (which shall be a Business Day), (B) initial  Available  Amount of
such Letter of Credit, (C) expiration date of such Letter of Credit and (D) name
and address of the beneficiary of such Letter of Credit,  which shall be a party
to a Floor Planning Arrangement and to an Intercreditor Agreement. Each Flooring
Letter of Credit  shall be  substantially  in the form of  Exhibit J hereto  and
shall provide for a variable Available Amount to be determined by reference to a
certificate to be delivered by the Parent Guarantor to the Administrative  Agent
and the Issuing  Bank within two days after the end of each week.  If it has not
received  notice of objection to such  issuance from the Required  Lenders,  the
Issuing Bank will,  upon  fulfillment of the applicable  conditions
<PAGE>
set forth in Article III, make such Flooring  Letter of Credit  available to the
Borrowers at its office referred to in Section 9.02 or as otherwise  agreed with
the Borrowers in connection with such issuance.

     (b) LETTER OF CREDIT  REPORTS.  The Issuing  Bank shall  furnish (A) to the
Administrative  Agent on the first  Business  Day of each week a written  report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous  week,  drawings  during  such week under all Letters of Credit and the
aggregate  Available  Amount of all  Letters of Credit  outstanding  during such
week,  (B) to each  Lender on the  first  Business  Day of each  month a written
report  summarizing  issuance and  expiration  dates of Letters of Credit issued
during the preceding  month and drawings  during such month under all Letters of
Credit and (C) to the Administrative Agent and each Lender on the first Business
Day of each calendar  quarter a written  report  setting forth the average daily
aggregate  Available Amount during the preceding calendar quarter of all Letters
of Credit.

     (c) DRAWING AND  REIMBURSEMENT.  The payment by the Issuing Bank of a draft
drawn  under any Letter of Credit  shall  constitute  for all  purposes  of this
Agreement  the making by the Issuing Bank of a Letter of Credit  Advance,  which
shall be a Base Rate Advance,  in the amount of such draft.  Upon written demand
by the Issuing  Bank,  with a copy of such demand to the  Administrative  Agent,
each Lender shall  purchase  from the Issuing  Bank,  and the Issuing Bank shall
sell and  assign to each  such  Lender,  such  Lender's  Pro Rata  Share of such
outstanding Letter of Credit Advance as of the date of such purchase,  by making
available for the account of its Applicable Lending Office to the Administrative
Agent for the  account of the  Issuing  Bank,  by deposit to the  Administrative
Agent's  Account,  in same day  funds,  an amount  equal to the  portion  of the
outstanding principal amount of such Letter of Credit Advance to be purchased by
such Lender.  Promptly after receipt  thereof,  the  Administrative  Agent shall
transfer  such funds to the Issuing Bank.  Each  Borrower  hereby agrees to each
such sale and  assignment.  Each Lender agrees to purchase its Pro Rata Share of
an outstanding  Letter of Credit Advance on (i) the Business Day on which demand
therefor is made by the  Issuing  Bank,  PROVIDED  that notice of such demand is
given not later than 1:00 P.M.  (New York City time) on such  Business  Day,  or
(ii) the first Business Day next succeeding such demand if notice of such demand
is given after such time.  Upon any such  assignment  by the Issuing Bank to any
Lender of a portion of a Letter of Credit  Advance,  the Issuing Bank represents
and  warrants  to such  other  Lender  that the  Issuing  Bank is the  legal and
beneficial  owner of such interest  being  assigned by it, free and clear of any
liens,   but  makes  no  other   representation   or  warranty  and  assumes  no
responsibility with respect to such Letter of Credit Advance, the Loan Documents
or any Loan Party.  If and to the extent that any Lender  shall not have so made
the amount of such  Letter of Credit  Advance  available  to the  Administrative
Agent, such Lender agrees to pay to the Administrative Agent forthwith on demand
such amount together with interest thereon, for each day from the date of demand
by the  Issuing  Bank until the date such  amount is paid to the  Administrative
Agent,  at the Federal  Funds Rate for its account or the account of the Issuing
Bank, as applicable.  If such Lender shall pay to the Administrative  Agent such
amount for the account of the Issuing Bank on any Business  Day,  such amount so
paid in respect of principal shall constitute a Letter of Credit Advance made by
such  Lender  on such  Business  Day for  purposes  of this  Agreement,  and the
outstanding principal
<PAGE>
amount of the Letter of Credit Advance made by the Issuing Bank shall be reduced
by such amount on such Business Day.

     (d) FAILURE TO MAKE LETTER OF CREDIT ADVANCES. The failure of any Lender to
make the  Letter of Credit  Advance  to be made by it on the date  specified  in
Section  2.03(c) shall not relieve any other Lender of its obligation  hereunder
to make its  Letter of  Credit  Advance  on such  date,  but no Lender  shall be
responsible  for the  failure  of any other  Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.

     SECTION 2.04.  REPAYMENT OF ADVANCES.  (a) WORKING  CAPITAL  ADVANCES.  The
Borrowers shall repay to the Administrative Agent for the ratable account of the
Lenders on the Termination  Date the aggregate  principal  amount of the Working
Capital Advances then outstanding.

     (b) SWING LINE ADVANCES.  The Borrowers  shall repay to the  Administrative
Agent for the account of the Swing Line Bank and each other Lender that has made
a Swing Line Advance the outstanding principal amount of each Swing Line Advance
by each of them on the earlier of the maturity date  specified in the applicable
Notice  of Swing  Line  Borrowing  (which  maturity  shall be no later  than the
seventh day after the  requested  date of such  Borrowing)  and the  Termination
Date.

     (c)  LETTER  OF  CREDIT  ADVANCES.  (i) The  Borrowers  shall  repay to the
Administrative  Agent for the account of the Issuing  Bank and each other Lender
that has made a Letter of  Credit  Advance  on the  earlier  of  demand  and the
Termination  Date the  outstanding  principal  amount  of each  Letter of Credit
Advance made by each of them.

          (ii) The Obligations of the Borrowers under this Agreement, any Letter
of Credit Agreement and any other agreement or instrument relating to any Letter
of Credit shall be unconditional and irrevocable,  and shall be paid strictly in
accordance with the terms of this Agreement, such Letter of Credit Agreement and
such other agreement or instrument under all circumstances,  including,  without
limitation,  the  following  circumstances  (it being  understood  that any such
payment by the  Borrowers  is without  prejudice  to, and does not  constitute a
waiver of, any rights the  Borrowers  might have or might acquire as a result of
the  payment  by the  Issuing  Bank of any  draft  or the  reimbursement  by the
Borrowers thereof):

               (A) any lack of validity or  enforceability of any Loan Document,
          any  Letter of  Credit  Agreement,  any  Letter of Credit or any other
          agreement or instrument  relating thereto (all of the foregoing being,
          collectively, the "L/C RELATED DOCUMENTS");

               (B) any change in the time,  manner or place of payment of, or in
          any other term of, all or any of the  Obligations  of the Borrowers in
          respect of any L/C Related  Document or any other  amendment or waiver
          of or any  consent  to  departure  from all or any of the L/C  Related
          Documents;

               (C) the existence of any claim,  set-off,  defense or other right
          that the Borrowers may have at any time against any beneficiary or any
          transferee  of a Letter of
<PAGE>
          Credit  (or any  Persons  for whom any  such  beneficiary  or any such
          transferee  may be  acting),  the  Issuing  Bank or any other  Person,
          whether in connection  with the  transactions  contemplated by the L/C
          Related Documents or any unrelated transaction;

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

               (E) payment by the Issuing Bank under a Letter of Credit  against
          presentation  of a draft or certificate  that does not strictly comply
          with the terms of such Letter of Credit;

               (F) any exchange,  release or non-perfection of any Collateral or
          other collateral,  or any release or amendment or waiver of or consent
          to departure  from the Guaranties or any other  guarantee,  for all or
          any of the  Obligations of the Borrowers in respect of the L/C Related
          Documents; or

               (G) any other  circumstance or happening  whatsoever,  whether or
          not similar to any of the foregoing,  including,  without  limitation,
          any other  circumstance  that  might  otherwise  constitute  a defense
          available to, or a discharge of, the  Borrowers,  any Guarantor or any
          other guarantor.

     SECTION 2.05.  TERMINATION OR REDUCTION OF THE  COMMITMENTS.  (a) OPTIONAL.
The  Borrowers   may,   upon  at  least  five  Business   Days'  notice  to  the
Administrative  Agent,  terminate in whole or reduce in part the unused portions
of the Letter of Credit  Facility and the Unused  Working  Capital  Commitments;
PROVIDED,  HOWEVER, that each partial reduction of a Facility (i) shall be in an
aggregate  amount of $5,000,000 or an integral  multiple of $1,000,000 in excess
thereof  and (ii) shall be made  ratably  among the Lenders in  accordance  with
their Commitments with respect to such Facility.

     (b)  MANDATORY.  (i) The  Letter of Credit  Facility  shall be  permanently
reduced from time to time on the date of each  reduction in the Working  Capital
Facility  by the  amount,  if any,  by which the  amount of the Letter of Credit
Facility  exceeds the  Working  Capital  Facility  after  giving  effect to such
reduction of the Working Capital Facility.

          (ii) The Swing Line Facility shall be permanently reduced from time to
time on the  date of each  reduction  in the  Working  Capital  Facility  by the
amount,  if any,  by which the amount of the Swing  Line  Facility  exceeds  the
Working  Capital  Facility  after giving effect to such reduction of the Working
Capital Facility.

     SECTION 2.06.  PREPAYMENTS.  (a) OPTIONAL. The Borrowers may, upon at least
one Business  Day's notice in the case of Base Rate Advances and three  Business
Days'  notice  in the case of  Eurodollar  Rate  Advances,  in each  case to the
Administrative Agent stating the proposed date and aggregate principal amount of
the  prepayment,  and if such notice is given the  Borrowers  shall,  prepay the
outstanding  aggregate  principal amount of the Advances  comprising
<PAGE>
part of the same  Borrowing in whole or ratably in part,  together  with accrued
interest  to the  date of such  prepayment  on the  aggregate  principal  amount
prepaid;  PROVIDED,  HOWEVER,  that (x) each partial  prepayment  shall be in an
aggregate  principal amount of $5,000,000 or an integral  multiple of $1,000,000
in excess thereof and (y) if any prepayment of a Eurodollar Rate Advance is made
on a date other than the last day of an Interest  Period for such  Advance,  the
Borrowers shall also pay any amounts owing pursuant to Section 9.04(c).

     (b) MANDATORY.  (i) The Borrowers  shall, on the date of receipt of the Net
Cash  Proceeds by any Loan Party or any of its  Subsidiaries  from (A) the sale,
lease,  transfer or other  disposition of any assets of any Loan Party or any of
its Subsidiaries  (other than any sale, lease,  transfer or other disposition of
assets pursuant to clause (i) or (ii) of Section 5.02(e)), (B) the incurrence or
issuance  by any Loan Party or any of its  Subsidiaries  of any Debt (other than
Debt  incurred  or  issued  pursuant  to  Section  5.02(b))  and (C) the sale or
issuance by any Loan Party or any of its  Subsidiaries  of any capital  stock or
other ownership or profit interest (including,  without limitation,  any capital
contribution), any securities convertible into or exchangeable for capital stock
or other  ownership  or profit  interest or any  warrants,  rights or options to
acquire capital stock or other ownership or profit interest, prepay an aggregate
principal amount of the Advances comprising part of the same Borrowings equal to
the amount of such Net Cash Proceeds.  Each such prepayment  shall be applied as
set forth in clause (iv) below.

          (ii) The Borrowers  shall,  on each Business Day,  prepay an aggregate
principal  amount of the Working  Capital  Advances  comprising part of the same
Borrowings,  the Letter of Credit  Advances and the Swing Line Advances equal to
the  amount by which (A) the sum of the  aggregate  principal  amount of (x) the
Working  Capital  Advances,  (y) the Letter of Credit Advances and (z) the Swing
Line  Advances  then  outstanding  plus the  aggregate  Available  Amount of all
Letters of Credit  then  outstanding  exceeds  (B) the lesser of (x) the Working
Capital Facility and (y) the Loan Value of Eligible  Collateral on such Business
Day MINUS $20,000,000.

          (iii)  The  Borrowers   shall,  on  each  Business  Day,  pay  to  the
Administrative  Agent for deposit in the L/C Cash  Collateral  Account an amount
sufficient to cause the aggregate amount on deposit in such Account to equal the
amount by which the  aggregate  Available  Amount of all  Letters of Credit then
outstanding exceeds the Letter of Credit Facility on such Business Day.

          (iv)  Prepayments  of the Working  Capital  Facility  made pursuant to
clause (i) and (ii)  above  shall be FIRST  applied  to prepay  Letter of Credit
Advances then outstanding  until such Advances are paid in full,  SECOND applied
to prepay Swing Line Advances then  outstanding  until such Advances are paid in
full and THIRD  applied to prepay  Working  Capital  Advances  then  outstanding
comprising part of the same Borrowings until such Advances are paid in full.

          (vi) All prepayments  under this subsection (b) shall be made together
with accrued  interest to the date of such  prepayment on the  principal  amount
prepaid.
<PAGE>
     SECTION 2.07.  INTEREST.  (a) SCHEDULED  INTEREST.  The Borrowers shall pay
interest on the unpaid  principal  amount of each  Advance  owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:

          (i) BASE RATE ADVANCES.  During such periods as such Advance is a Base
Rate  Advance,  a rate per  annum  equal at all times to the sum of (A) the Base
Rate in effect from time to time PLUS (B) the  Applicable  Margin in effect from
time to time,  payable in arrears quarterly on the last day of each March, June,
September  and  December  during  such  periods  and on the date  such Base Rate
Advance shall be Converted or paid in full.

          (ii) EURODOLLAR RATE ADVANCES.  During such periods as such Advance is
a  Eurodollar  Rate  Advance,  a rate per annum  equal at all times  during each
Interest  Period for such Advance to the sum of (A) the Eurodollar Rate for such
Interest  Period for such Advance PLUS (B) the Applicable  Margin in effect from
time to time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months,  on each day that
occurs during such Interest Period every three months from the first day of such
Interest  Period and on the date such Eurodollar Rate Advance shall be Converted
or paid in full.

     (b) DEFAULT INTEREST.  Upon the occurrence and during the continuance of an
Event of Default,  the Borrowers shall pay interest on (i) the unpaid  principal
amount of each  Advance  owing to each  Lender,  payable in arrears on the dates
referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum  required to be paid
on such  Advance  pursuant  to clause  (a)(i) or  (a)(ii)  above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable under the Loan  Documents  that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full,  payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of  interest,  on the Type of  Advance on which  such  interest  has
accrued  pursuant to clause (a)(i) or (a)(ii) above and, in all other cases,  on
Base Rate Advances pursuant to clause (a)(i) above.

     (c)  NOTICE  OF  INTEREST  RATE.  Promptly  after  receipt  of a Notice  of
Borrowing  pursuant  to Section  2.02(a),  a notice of  Conversion  pursuant  to
Section  2.09 or a notice of  selection  of an Interest  Period  pursuant to the
terms of the definition of "Interest  Period",  the  Administrative  Agent shall
give notice to the Borrowers and each Lender of the applicable  Interest  Period
and the  applicable  interest rate  determined by the  Administrative  Agent for
purposes of clause (a)(i) or (a)(ii) above.

     SECTION 2.08. FEES. (a) COMMITMENT FEE. The Borrowers jointly and severally
agree to pay to the  Administrative  Agent  for the  account  of the  Lenders  a
commitment fee, from the date hereof in the case of each Initial Lender and from
the effective date  specified in the  Assumption  Agreement or in the Assignment
and  Acceptance  pursuant  to which it became a Lender in the case of each other
Lender until the Termination Date, payable in arrears on the date of the initial
Borrowing  hereunder,  thereafter quarterly on the last day of each March, June,
<PAGE>
September and December,  commencing  December 31, 1999,  and on the  Termination
Date, at the rate equal to the  Applicable  Percentage  from time to time on the
average daily Unused Working Capital Commitment of such Lender PLUS its Pro Rata
Share of the average daily  outstanding  Swing Line Advances during such quarter
other than any such Swing Line Advances which have been assigned in part to such
Lender pursuant to Section 2.03(c);  PROVIDED,  HOWEVER,  that no commitment fee
shall accrue on any of the  Commitments  of a Defaulting  Lender so long as such
Lender shall be a  Defaulting  Lender.

     (b) LETTER OF CREDIT FEES,  ETC. (i) The  Borrowers  jointly and  severally
agree  to pay to the  Administrative  Agent  for the  account  of each  Lender a
commission,  payable in arrears  quarterly on the last day of each March,  June,
September and December,  commencing  December 31, 1999,  and on the  Termination
Date, on such Lender's Pro Rata Share of the average daily  aggregate  Available
Amount during such quarter of Letters of Credit outstanding from time to time at
the rate equal to the Applicable Letter of Credit Fee from time to time.

          (ii) The Borrowers  shall pay to the Issuing Bank, for its own account
a fronting  fee,  payable in arrears  quarterly  on the last day of each  March,
June,  September  and  December,  commencing  December  31,  1999,  and  on  the
Termination  Date, on the average daily aggregate  Available  Amount during such
quarter of Letters of Credit outstanding from time to time at the rate of 0.375%
per annum.

     (c) AGENTS'  FEES.  The Borrowers  jointly and severally  agree pay to each
Agent  for its own  account  such  fees as may from  time to time be  agreed  in
writing between the Parent Guarantor and such Agent.

     SECTION 2.09.  CONVERSION OF ADVANCES.  (a) OPTIONAL.  The Borrowers may on
any Business Day, upon notice given to the  Administrative  Agent not later than
1:00 P.M.  (New York City time) on the third  Business  Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.07 and 2.10,
Convert  all or any  portion of the  Advances  of one Type  comprising  the same
Borrowing  into  Advances  of  the  other  Type;  PROVIDED,  HOWEVER,  that  any
Conversion  of Eurodollar  Rate  Advances into Base Rate Advances  shall be made
only on the last day of an Interest  Period for such  Eurodollar  Rate Advances,
any Conversion of Base Rate Advances into  Eurodollar  Rate Advances shall be in
an amount not less than the minimum  amount  specified  in Section  2.02(c),  no
Conversion  of any  Advances  shall  result  in more  separate  Borrowings  than
permitted under Section 2.02(c) and each Conversion of Advances  comprising part
of the same Borrowing under any Facility shall be made ratably among the Lenders
in accordance with their  Commitments  under such Facility.  Each such notice of
Conversion shall, within the restrictions  specified above, specify (i) the date
of such  Conversion,  (ii)  the  Advances  to be  Converted  and  (iii)  if such
Conversion  is into  Eurodollar  Rate  Advances,  the  duration  of the  initial
Interest  Period  for  such  Advances.   Each  notice  of  Conversion  shall  be
irrevocable and binding on the Borrowers.

     (b)  MANDATORY.  (i) On the date on which the  aggregate  unpaid  principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or  prepayment  or otherwise,  to less than  $10,000,000,  such Advances
shall automatically Convert into Base Rate Advances.
<PAGE>
          (ii)  If the  Borrowers  shall  fail to  select  the  duration  of any
Interest  Period  for any  Eurodollar  Rate  Advances  in  accordance  with  the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative  Agent will  forthwith so notify the  Borrowers  and the Lenders,
whereupon each such Eurodollar Rate Advance will automatically,  on the last day
of the then existing Interest Period therefor, Convert into a Base Rate Advance.

          (iii) Upon the occurrence  and during the  continuance of any Event of
Default, (x) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(y) the  obligation  of the  Lenders  to  make,  or to  Convert  Advances  into,
Eurodollar Rate Advances shall be suspended.

     SECTION  2.10.  INCREASED  COSTS,  ETC.  (a)  If,  due to  either  (i)  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other  governmental  authority (whether or not having the force of law),
there shall be any  increase in the cost to any Lender Party of agreeing to make
or of making,  funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining or  participating  in Letters of Credit or of
agreeing  to  make  or of  making  or  maintaining  Letter  of  Credit  Advances
(excluding,  for  purposes  of this  Section  2.10,  any  such  increased  costs
resulting  from (x) Taxes or Other Taxes (as to which Section 2.12 shall govern)
and (y) changes in the basis of taxation of overall net income or overall  gross
income by the United  States or by the foreign  jurisdiction  or state under the
laws of which such  Lender  Party is  organized  or has its  Applicable  Lending
Office or any political  subdivision  thereof),  then the Borrowers  jointly and
severally agree from time to time, upon demand by such Lender Party (with a copy
of such demand to the Administrative  Agent), to pay to the Administrative Agent
for the account of such Lender Party additional amounts sufficient to compensate
such Lender Party for such  increased  cost. A  certificate  as to the amount of
such increased cost,  submitted to the Borrowers by such Lender Party,  shall be
conclusive and binding for all purposes, absent manifest error.

     (b) If,  due to either (i) the  introduction  of or any change in or in the
interpretation  of any  law or  regulation  or  (ii)  the  compliance  with  any
guideline  or request  from any  central  bank or other  governmental  authority
(whether  or not having the force of law),  there  shall be any  increase in the
amount of capital  required or expected to be  maintained by any Lender Party or
any corporation  controlling  such Lender Party as a result of or based upon the
existence of such Lender  Party's  commitment to lend or to issue or participate
in  Letters  of  Credit  hereunder  and  other  commitments  of such type or the
issuance or maintenance of or participation in the Letters of Credit (or similar
contingent obligations),  then, upon demand by such Lender Party (with a copy of
such demand to the  Administrative  Agent),  the Borrowers jointly and severally
agree to pay to the  Administrative  Agent for the account of such Lender Party,
from  time  to time  as  specified  by such  Lender  Party,  additional  amounts
sufficient to compensate  such Lender Party in the light of such  circumstances,
to the extent that such Lender  Party  reasonably  determines  such  increase in
capital to be allocable to the  existence of such Lender  Party's  commitment to
lend or to issue  or  participate  in  Letters  of  Credit  hereunder  or to the
issuance  or  maintenance  of or  participation  in any  Letters  of  Credit.  A
certificate  as to such amounts
<PAGE>
submitted to the Borrowers by such Lender Party shall be conclusive  and binding
for all purposes, absent manifest error.

     (c) If, with respect to any Eurodollar Rate Advances,  the Required Lenders
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
for such  Advances  will not  adequately  reflect  the cost to such  Lenders  of
making,  funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrowers and the
Lenders, whereupon (i) each such Eurodollar Rate Advance will automatically,  on
the last day of the then existing Interest Period therefor,  Convert into a Base
Rate  Advance  and (ii) the  obligation  of the  Lenders to make,  or to Convert
Advances  into,   Eurodollar   Rate  Advances  shall  be  suspended   until  the
Administrative   Agent  shall  notify  the  Borrowers  that  such  Lenders  have
determined that the circumstances causing such suspension no longer exist.

     (d)  Notwithstanding  any  other  provision  of  this  Agreement,   if  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation  shall make it unlawful,  or any central  bank or other  governmental
authority  shall  assert that it is unlawful,  for any Lender or its  Eurodollar
Lending  Office to perform its  obligations  hereunder to make  Eurodollar  Rate
Advances or to continue to fund or maintain  Eurodollar Rate Advances hereunder,
then,  on notice  thereof and demand  therefor  by such Lender to the  Borrowers
through  the  Administrative  Agent,  (i)  each  Eurodollar  Rate  Advance  will
automatically, on the last day of the then existing Interest Period therefor or,
if required by applicable law, immediately, Convert into a Base Rate Advance and
(ii) the  obligation  of the  Lenders  to make,  or to  Convert  Advances  into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the  Borrowers  that such Lender has  determined  that the  circumstances
causing such suspension no longer exist.

     SECTION 2.11. PAYMENTS AND COMPUTATIONS.  (a) The Borrowers shall make each
payment hereunder and under the Notes, irrespective of any right of counterclaim
or set-off (except as otherwise  provided in Section 2.15),  not later than 1:00
P.M.  (New  York  City  time)  on the  day  when  due  in  U.S.  dollars  to the
Administrative  Agent at the  Administrative  Agent's Account in same day funds,
with payments being received by the  Administrative  Agent after such time being
deemed  to  have  been  received  on  the  next  succeeding  Business  Day.  The
Administrative Agent will promptly thereafter cause like funds to be distributed
(i) if such  payment by the  Borrowers  is in respect  of  principal,  interest,
commitment  fees or any other  Obligation  then payable  hereunder and under the
Notes to more than one Lender Party,  to such Lender  Parties for the account of
their  respective  Applicable  Lending  Offices  ratably in accordance  with the
amounts of such respective  Obligations  then payable to such Lender Parties and
(ii) if such  payment by the  Borrowers  is in respect  of any  Obligation  then
payable  hereunder to one Lender Party,  to such Lender Party for the account of
its Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon any Assuming Lender becoming a Lender hereunder as
a result of a Commitment Increase pursuant to Section 2.17, and upon the Agent's
receipt of such Lender's  Assumption  Agreement and recording of the information
contained therein in the Register,  from and after the applicable Increase Date,
the Agent  shall  make all  payments  hereunder  and  under any Notes  issued in
connection  therewith in respect of the interest assumed thereby to the Assuming
Lender. Upon its acceptance of an
<PAGE>
Assignment and Acceptance and recording of the information  contained therein in
the Register  pursuant to Section 9.07(d),  from and after the effective date of
such Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender  Party  assignee  thereunder,  and the  parties  to such  Assignment  and
Acceptance  shall make all appropriate  adjustments in such payments for periods
prior to such effective date directly between themselves.

     (b) All  computations  of interest,  fees and Letter of Credit  commissions
shall be made by the Administrative Agent on the basis of a year of 360 days, in
each case for the actual number of days  (including  the first day but excluding
the  last  day)  occurring  in the  period  for  which  such  interest,  fees or
commissions are payable.  Each determination by the  Administrative  Agent of an
interest rate, fee or commission  hereunder  shall be conclusive and binding for
all purposes, absent manifest error.

     (c) Whenever any payment hereunder or under the Notes shall be stated to be
due on a day other than a Business  Day,  such payment shall be made on the next
succeeding  Business  Day,  and such  extension  of time  shall in such  case be
included in the  computation  of payment of interest or  commitment  fee, as the
case may be; PROVIDED,  HOWEVER,  that, if such extension would cause payment of
interest on or  principal  of  Eurodollar  Rate  Advances to be made in the next
following  calendar  month,  such  payment  shall be made on the next  preceding
Business Day.

     (d) Unless the  Administrative  Agent shall have  received  notice from the
Borrowers  prior to the date on which any  payment  is due to any  Lender  Party
hereunder   that  the  Borrowers  will  not  make  such  payment  in  full,  the
Administrative  Agent may assume that the  Borrowers  have made such  payment in
full to the Administrative  Agent on such date and the Administrative Agent may,
in reliance upon such  assumption,  cause to be  distributed to each such Lender
Party on such due date an amount equal to the amount then due such Lender Party.
If and to the extent the  Borrowers  shall not have so made such payment in full
to  the  Administrative  Agent,  each  such  Lender  Party  shall  repay  to the
Administrative  Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon,  for each day from the date such amount is
distributed  to such Lender  Party until the date such Lender  Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.

     SECTION 2.12. TAXES. (a) Any and all payments by the Borrowers hereunder or
under the Notes shall be made, in accordance  with Section 2.11,  free and clear
of and  without  deduction  for any and all  present  or future  taxes,  levies,
imposts, deductions,  charges or withholdings,  and all liabilities with respect
thereto,  EXCLUDING, in the case of each Lender Party and each Agent, taxes that
are imposed on its  overall  net income by the United  States and taxes that are
imposed on its overall net income (and franchise  taxes imposed in lieu thereof)
by the state or foreign  jurisdiction  under the laws of which such Lender Party
or such Agent,  as the case may be, is  organized or any  political  subdivision
thereof  and,  in the case of each Lender  Party,  taxes that are imposed on its
overall net income (and franchise taxes imposed in lieu thereof) by the state or
foreign  jurisdiction  of such Lender Party's  Applicable  Lending Office or any
political  subdivision  thereof (all such non-excluded taxes,  levies,  imposts,
deductions,  charges,
<PAGE>
withholdings and liabilities in respect of payments hereunder or under the Notes
being hereinafter referred to as "TAXES"). If the Borrowers shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Lender Party or any Agent,  (i) the sum payable by the Borrowers
shall be  increased  as may be  necessary  so that after the  Borrowers  and the
Administrative  Agent have made all required  deductions  (including  deductions
applicable to additional sums payable under this Section 2.12) such Lender Party
or such Agent,  as the case may be, receives an amount equal to the sum it would
have received had no such  deductions  been made,  (ii) the Borrowers shall make
all such  deductions and (iii) the Borrowers  shall pay the full amount deducted
to the  relevant  taxation  authority  or other  authority  in  accordance  with
applicable law.

     (b) In  addition,  the  Borrowers  shall pay any  present or future  stamp,
documentary,  excise,  property or similar  taxes,  charges or levies that arise
from any payment made by the Borrowers  hereunder or under the Notes or from the
execution,  delivery or registration  of,  performance  under, or otherwise with
respect  to,  this  Agreement  or the Notes  (hereinafter  referred to as "OTHER
TAXES").

     (c) The  Borrowers  jointly and  severally  agree to indemnify  each Lender
Party and each Agent for and hold them harmless against the full amount of Taxes
and Other  Taxes,  and for the full  amount of taxes of any kind  imposed by any
jurisdiction on amounts  payable under this Section 2.12,  imposed on or paid by
such  Lender  Party  or such  Agent  (as  the  case  may  be) and any  liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto.  This indemnification shall be made within 30 days from
the date such  Lender  Party or such  Agent  (as the case may be) makes  written
demand therefor.

     (d) Within 30 days after the date of any  payment of Taxes,  the  Borrowers
shall furnish to the Administrative Agent, at its address referred to in Section
9.02, the original or a certified copy of a receipt evidencing such payment.  In
the case of any  payment  hereunder  or under  the  Notes by or on behalf of the
Borrowers  through an account or branch  outside  the United  States or by or on
behalf of the  Borrowers by a payor that is not a United States  person,  if the
Borrowers determine that no Taxes are payable in respect thereof,  the Borrowers
shall  furnish,  or shall  cause such payor to  furnish,  to the  Administrative
Agent, at such address,  an opinion of counsel  acceptable to the Administrative
Agent  stating  that  such  payment  is  exempt  from  Taxes.  For  purposes  of
subsections  (d) and (e) of this Section  2.12,  the terms  "UNITED  STATES" and
"UNITED STATES PERSON" shall have the meanings  specified in Section 7701 of the
Internal  Revenue  Code.

     (e) Each Lender Party  organized  under the laws of a jurisdiction  outside
the United States  shall,  on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as
the case may be, and on the date of the Assignment  and  Acceptance  pursuant to
which it becomes a Lender Party in the case of each other Lender Party, and from
time to time  thereafter as requested in writing by the  Borrowers  (but only so
long  thereafter as such Lender Party remains  lawfully able to do so),  provide
each of the  Administrative  Agent and the Borrowers with two original  Internal
Revenue  Service forms 1001 or 4224, as  appropriate,  or any successor or other
form  prescribed by the Internal  Revenue  Service,  certifying that such Lender
Party is exempt from or entitled to a reduced rate of
<PAGE>
United  States  withholding  tax on payments  pursuant to this  Agreement or the
Notes.  If the forms  provided by a Lender  Party at the time such Lender  Party
first  becomes  a party to this  Agreement  indicate  a United  States  interest
withholding  tax rate in excess of zero,  withholding  tax at such rate shall be
considered  excluded from Taxes unless and until such Lender Party  provides the
appropriate forms certifying that a lesser rate applies,  whereupon  withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; PROVIDED, HOWEVER, that if, at the effective date of the
Assignment  and  Acceptance  pursuant to which a Lender Party becomes a party to
this  Agreement,  the Lender  Party  assignor  was  entitled to  payments  under
subsection (a) of this Section 2.12 in respect of United States  withholding tax
with respect to interest paid at such date, then, to such extent, the term Taxes
shall  include  (in  addition  to  withholding  taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any,  applicable with respect to the Lender Party assignee on such date.
If any  form  or  document  referred  to in this  subsection  (e)  requires  the
disclosure of information,  other than information  necessary to compute the tax
payable and information  required on the date hereof by Internal Revenue Service
form  1001  or  4224,  that  the  Lender  Party   reasonably   considers  to  be
confidential,  the Lender Party shall give notice  thereof to the  Borrowers and
shall not be  obligated  to include in such form or document  such  confidential
information.

     (f) For any  period  with  respect  to which a Lender  Party has  failed to
provide the Borrowers  with the  appropriate  form  described in subsection  (e)
above (OTHER THAN if such failure is due to a change in law occurring  after the
date on which a form  originally  was  required  to be  provided or if such form
otherwise is not required under  subsection (e) above),  such Lender Party shall
not be entitled to  indemnification  under subsection (a) or (c) of this Section
2.12  with  respect  to Taxes  imposed  by the  United  States by reason of such
failure;  PROVIDED,  HOWEVER, that should a Lender Party become subject to Taxes
because of its failure to deliver a form required hereunder, the Borrowers shall
take such steps as such  Lender  Party shall  reasonably  request to assist such
Lender Party to recover such Taxes.

     SECTION 2.13. SHARING OF PAYMENTS, ETC. If any Lender Party shall obtain at
any time any payment (whether  voluntary,  involuntary,  through the exercise of
any right of  set-off,  or  otherwise,  other than as a result of an  assignment
pursuant to Section 9.07) (a) on account of Obligations  due and payable to such
Lender Party hereunder and under the Notes at such time in excess of its ratable
share (according to the proportion of (i) the amount of such Obligations due and
payable to such Lender  Party at such time to (ii) the  aggregate  amount of the
Obligations due and payable to all Lender Parties  hereunder and under the Notes
at such time) of payments on account of the  Obligations  due and payable to all
Lender  Parties  hereunder  and under the Notes at such time obtained by all the
Lender Parties at such time or (b) on account of Obligations  owing (but not due
and payable) to such Lender Party  hereunder and under the Notes at such time in
excess of its ratable share  (according  to the  proportion of (i) the amount of
such  Obligations  owing to such Lender Party at such time to (ii) the aggregate
amount of the Obligations  owing (but not due and payable) to all Lender Parties
hereunder  and under the  Notes at such  time) of  payments  on  account  of the
Obligations  owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall  forthwith  purchase from the other Lender  Parties such
<PAGE>
interests or participating interests in the Obligations due and payable or owing
to them,  as the case may be, as shall be  necessary  to cause  such  purchasing
Lender Party to share the excess  payment  ratably with each of them;  PROVIDED,
HOWEVER,  that  if all or any  portion  of such  excess  payment  is  thereafter
recovered  from such  purchasing  Lender  Party,  such  purchase from each other
Lender Party shall be  rescinded  and such other Lender Party shall repay to the
purchasing  Lender Party the purchase price to the extent of such Lender Party's
ratable  share  (according to the  proportion of (i) the purchase  price paid to
such  Lender  Party to (ii) the  aggregate  purchase  price  paid to all  Lender
Parties) of such recovery  together with an amount equal to such Lender  Party's
ratable  share  (according  to the  proportion  of (i) the  amount of such other
Lender Party's required repayment to (ii) the total amount so recovered from the
purchasing  Lender Party) of any interest or other amount paid or payable by the
purchasing  Lender  Party in  respect  of the total  amount so  recovered.  Each
Borrower agrees that any Lender Party so purchasing a participation from another
Lender Party pursuant to this Section 2.13 may, to the fullest extent  permitted
by law, exercise all its rights of payment (including the right of set-off) with
respect to such  participation  as fully as if such Lender Party were the direct
creditor of the Borrowers in the amount of such participation.

     SECTION 2.14.  USE OF PROCEEDS.  The proceeds of the Advances and issuances
of Letters of Credit shall be available (and each Borrowers agrees that it shall
use such  proceeds  and Letters of Credit)  solely to pay  transaction  fees and
expenses,  refinance  certain  Existing Debt,  provide  working  capital for the
Borrowers and their respective Subsidiaries and for general business purposes.

     SECTION 2.15.  DEFAULTING LENDERS.  (a) In the event that, at any one time,
(i) any Lender Party shall be a Defaulting  Lender,  (ii) such Defaulting Lender
shall owe a Defaulted  Advance to the Borrowers and (iii) the Borrowers shall be
required to make any payment  hereunder  or under any other Loan  Document to or
for the account of such Defaulting Lender, then the Borrowers may, so long as no
Default  shall occur or be  continuing  at such time and to the  fullest  extent
permitted by applicable  law, set off and otherwise  apply the Obligation of the
Borrowers to make such payment to or for the account of such  Defaulting  Lender
against the obligation of such Defaulting Lender to make such Defaulted Advance.
In the event that,  on any date,  the  Borrowers  shall so set off and otherwise
apply its  obligation  to make any such payment  against the  obligation of such
Defaulting  Lender to make any such Defaulted  Advance on or prior to such date,
the amount so set off and otherwise  applied by the Borrowers  shall  constitute
for all purposes of this  Agreement  and the other Loan  Documents an Advance by
such  Defaulting  Lender  made on the date of such  setoff  under  the  Facility
pursuant to which such Defaulted  Advance was  originally  required to have been
made  pursuant  to Section  2.01.  Such  Advance  shall be  considered,  for all
purposes of this Agreement, to comprise part of the Borrowing in connection with
which such Defaulted Advance was originally  required to have been made pursuant
to Section 2.01,  even if the other Advances  comprising such Borrowing shall be
Eurodollar  Rate Advances on the date such Advance is deemed to be made pursuant
to this subsection (a). The Borrowers shall notify the  Administrative  Agent at
any  time  the  Borrowers  exercises  its  right  of  set-off  pursuant  to this
subsection (a) and shall set forth in such notice (A) the name of the Defaulting
Lender and the Defaulted  Advance required to be made by such Defaulting  Lender
and (B) the amount set off and  otherwise  applied in respect of such  Defaulted
<PAGE>
Advance  pursuant to this subsection (a). Any portion of such payment  otherwise
required to be made by the  Borrowers  to or for the account of such  Defaulting
Lender which is paid by the Borrowers, after giving effect to the amount set off
and otherwise applied by the Borrowers pursuant to this subsection (a), shall be
applied by the  Administrative  Agent as specified in  subsection  (b) or (c) of
this Section 2.15.

     (b) In the event  that,  at any one time,  (i) any Lender  Party shall be a
Defaulting  Lender,  (ii) such Defaulting Lender shall owe a Defaulted Amount to
any Agent or any of the other Lender Parties and (iii) the Borrowers  shall make
any payment  hereunder  or under any other Loan  Document to the  Administrative
Agent for the account of such Defaulting Lender,  then the Administrative  Agent
may,  on its  behalf or on  behalf of such  other  Agents or such  other  Lender
Parties and to the fullest  extent  permitted by applicable  law,  apply at such
time  the  amount  so  paid  by the  Borrowers  to or for  the  account  of such
Defaulting  Lender to the  payment of each such  Defaulted  Amount to the extent
required  to pay such  Defaulted  Amount.  In the event that the  Administrative
Agent shall so apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Administrative  Agent shall constitute
for all purposes of this Agreement and the other Loan Documents payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by the
Administrative   Agent  shall  be  retained  by  the  Administrative   Agent  or
distributed  by the  Administrative  Agent to such  other  Agents or such  other
Lender  Parties,  ratably in  accordance  with the  respective  portions of such
Defaulted Amounts payable at such time to the  Administrative  Agent, such other
Agents and such other Lender  Parties and, if the amount of such payment made by
the Borrowers shall at such time be  insufficient  to pay all Defaulted  Amounts
owing at such time to the Administrative Agent, such other Agents and such other
Lender Parties, in the following order of priority:

               (i) FIRST, to the Agents for any Defaulted  Amounts then owing to
          them,  in their  capacities as such,  ratably in accordance  with such
          respective Defaulted Amounts then owing to the Agents;

               (ii) SECOND,  to the Issuing Bank and the Swing Line Bank for any
          Defaulted  Amounts then owing to them,  in their  capacities  as such,
          ratably in  accordance  with such  respective  Defaulted  Amounts then
          owing to the Issuing Bank and the Swing Line Bank; and

               (iii)  THIRD,  to any  other  Lender  Parties  for any  Defaulted
          Amounts then owing to such other Lender Parties, ratably in accordance
          with such respective Defaulted Amounts then owing to such other Lender
          Parties.

Any  portion  of such  amount  paid by the  Borrowers  for the  account  of such
Defaulting  Lender  remaining,  after giving effect to the amount applied by the
Administrative  Agent pursuant to this  subsection  (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
<PAGE>
     (c) In the event  that,  at any one time,  (i) any Lender  Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted  Amount and (iii) the  Borrowers,  any Agent or any other  Lender
Party shall be required to pay or distribute  any amount  hereunder or under any
other Loan Document to or for the account of such  Defaulting  Lender,  then the
Borrowers  or such Agent or such other Lender Party shall pay such amount to the
Administrative  Agent to be held by the  Administrative  Agent,  to the  fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest  extent  permitted by applicable  law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with Citibank,  in the name and under the control of the  Administrative  Agent,
but subject to the provisions of this  subsection  (c). The terms  applicable to
such account,  including the rate of interest payable with respect to the credit
balance of such account from time to time,  shall be Citibank's  standard  terms
applicable to escrow accounts  maintained with it. Any interest credited to such
account  from time to time shall be held by the  Administrative  Agent in escrow
under, and applied by the  Administrative  Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative  Agent shall, to
the fullest  extent  permitted  by  applicable  law,  apply all funds so held in
escrow from time to time to the extent  necessary to make any Advances  required
to be made by such  Defaulting  Lender  and to pay any  amount  payable  by such
Defaulting   Lender  hereunder  and  under  the  other  Loan  Documents  to  the
Administrative  Agent or any other Lender  Party,  as and when such  Advances or
amounts  are  required  to be made or paid and,  if the amount so held in escrow
shall at any time be  insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:

               (i) FIRST,  to the Agents for any amounts then due and payable by
          such Defaulting Lender to them hereunder, in their capacities as such,
          ratably in  accordance  with such  amounts then due and payable to the
          Agents;

               (ii) SECOND,  to the Issuing Bank and the Swing Line Bank for any
          amounts then due and payable to them hereunder, in their capacities as
          such,  by such  Defaulting  Lender,  ratably in  accordance  with such
          amounts  then due and payable to the  Issuing  Bank and the Swing Line
          Bank;

               (iii) THIRD,  to any other Lender Parties for any amount then due
          and payable by such  Defaulting  Lender to such other  Lender  Parties
          hereunder, ratably in accordance with such respective amounts then due
          and payable to such other Lender Parties; and

               (iv) FOURTH, to the Borrowers for any Advance then required to be
          made  by  such  Defaulting  Lender  to  the  Borrowers  pursuant  to a
          Commitment of such Defaulting Lender.

In the event that any Lender Party that is a  Defaulting  Lender  shall,  at any
time,  cease to be a  Defaulting  Lender,  any funds held by the  Administrative
Agent in  escrow  at such  time  with  respect  to such  Lender  Party  shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender  Party to the  Obligations  owing to such Lender Party at such
<PAGE>
time under this  Agreement  and the other Loan  Documents  ratably in accordance
with the respective amounts of such Obligations outstanding at such time.

     (d) The rights and remedies against a Defaulting  Lender under this Section
2.15 are in addition to other rights and remedies  that the  Borrowers  may have
against such  Defaulting  Lender with respect to any Defaulted  Advance and that
any Agent or any Lender  Party may have  against  such  Defaulting  Lender  with
respect to any Defaulted Amount.

     SECTION  2.16.  EVIDENCE OF DEBT.  (a) Each Lender Party shall  maintain in
accordance  with its usual  practice  an  account  or  accounts  evidencing  the
indebtedness  of the Borrowers to such Lender Party  resulting from each Advance
owing to such Lender Party from time to time, including the amounts of principal
and interest  payable and paid to such Lender Party from time to time hereunder.
Each Borrower agrees that upon notice by any Lender Party to the Borrowers (with
a copy  of  such  notice  to the  Administrative  Agent)  to the  effect  that a
promissory  note or other evidence of indebtedness is required or appropriate in
order for such  Lender  Party to  evidence  (whether  for  purposes  of  pledge,
enforcement  or otherwise)  the Advances owing to, or to be made by, such Lender
Party,  the Borrowers  shall promptly  execute and deliver to such Lender Party,
with a copy to the  Administrative  Agent, a Note in  substantially  the form of
Exhibit  A hereto,  payable  to the order of such  Lender  Party in a  principal
amount  equal to the  Working  Capital  Commitment  of such  Lender  Party.  All
references  to Notes in the Loan  Documents  shall mean  Notes,  if any,  to the
extent issued hereunder. (b) The Register maintained by the Administrative Agent
pursuant to Section  9.07(d) shall include a control  account,  and a subsidiary
account for each Lender  Party,  in which  accounts  (taken  together)  shall be
recorded (i) the date and amount of each Borrowing made  hereunder,  the Type of
Advances  comprising  such Borrowing and, if  appropriate,  the Interest  Period
applicable thereto,  (ii) the terms of each Assumption  Agreement and Assignment
and  Acceptance  delivered  to and  accepted  by it,  (iii)  the  amount  of any
principal  or interest  due and  payable or to become due and  payable  from the
Borrowers  to each  Lender  Party  hereunder,  and  (iv) the  amount  of any sum
received  by the  Administrative  Agent from the  Borrowers  hereunder  and each
Lender Party's share thereof.

     (c) Entries made in good faith by the Administrative  Agent in the Register
pursuant to  subsection  (b) above,  and by each Lender  Party in its account or
accounts pursuant to subsection (a) above,  shall be PRIMA FACIE evidence of the
amount of  principal  and  interest due and payable or to become due and payable
from the Borrowers  to, in the case of the  Register,  each Lender Party and, in
the case of such account or accounts,  such Lender Party,  under this Agreement,
absent manifest error; PROVIDED, HOWEVER, that the failure of the Administrative
Agent or such Lender  Party to make an entry,  or any  finding  that an entry is
incorrect,  in the  Register  or such  account  or  accounts  shall not limit or
otherwise affect the obligations of the Borrowers under this Agreement.

     SECTION 2.17.  INCREASE IN THE AGGREGATE WORKING CAPITAL  COMMITMENTS.  (a)
The Borrowers may, at any time prior to the  Termination  Date, with the consent
of the Administrative Agent (not to be unreasonably withheld),  request that the
aggregate amount of the Working Capital Commitments be increased by an amount of
$5,000,000  or an integral  multiple
<PAGE>
of $1,000,000 in excess  thereof (each a "COMMITMENT  INCREASE") to be effective
as of a date that is at least 90 days prior to the  scheduled  Termination  Date
then in effect (the  "INCREASE  DATE") as specified in the related notice to the
Administrative Agent; PROVIDED, HOWEVER that (i) in no event shall the aggregate
amount of the Commitment  Increases  exceed  $50,000,000 and (ii) on the date of
any  request by the  Borrowers  for a  Commitment  Increase  and on the  related
Increase  Date,  the  applicable  conditions  set forth in Article  III shall be
satisfied.

     (b) The Administrative  Agent shall promptly notify such Eligible Assignees
as it shall  identify of a request by the Borrowers  for a Commitment  Increase,
which notice shall include (i) the proposed amount of such requested  Commitment
Increase,  (ii) the proposed  Increase  Date and (iii) the date by which Lenders
wishing to participate in the Commitment  Increase must commit to an increase in
the amount of their  respective  Working Capital  Commitments  (the  "COMMITMENT
DATE"). The requested  Commitment Increase shall be allocated among the Eligible
Assignees  willing to participate  therein in such amounts as are agreed between
the Borrowers and the Administrative Agent.

     (c) Promptly following each Commitment Date, the Administrative Agent shall
notify the Borrowers as to the amount,  if any, by which the Eligible  Assignees
are willing to  participate  in the  requested  Commitment  Increase;  PROVIDED,
HOWEVER,  that the Working  Capital  Commitment of each such  Eligible  Assignee
shall be in an amount of  $5,000,000  or an integral  multiple of  $1,000,000 in
excess thereof.

     (d) On each Increase Date, each Eligible Assignee that is not prior to such
date a Lender  hereunder  and  accepts an offer to  participate  in a  requested
Commitment  Increase in  accordance  with Section  2.17(c)  (each such  Eligible
Assignee, an "ASSUMING LENDER") shall become a Lender party to this Agreement as
of such  Increase  Date and the  Working  Capital  Commitment  of each  Eligible
Assignee  that prior to such date is a and  accepts an offer to  participate  in
such a  requested  Commitment  Increase  (an  "INCREASING  LENDER")  shall be so
increased (or  established)  by such amount as of such Increase Date;  PROVIDED,
HOWEVER,  that the  Administrative  Agent shall have  received on or before such
Increase Date the following, each dated such date:

               (i) (A) certified copies of resolutions of the Board of Directors
          of each of the  Borrowers  or the  Executive  Committee  of such Board
          approving the Commitment Increase and the corresponding  modifications
          to this Agreement,  (B) a consent executed by each Guarantor approving
          the Commitment  Increase and the  corresponding  modifications to this
          Agreement and (C) an opinion of counsel for the  Borrowers  (which may
          be in-house counsel), in substantially the form of Exhibit G hereto;

               (ii) an assumption  agreement from each Assuming Lender,  if any,
          in  form  and  substance   satisfactory   to  the  Borrowers  and  the
          Administrative Agent (each an "ASSUMPTION  AGREEMENT"),  duly executed
          by such Eligible Assignee, the Administrative Agent and the Borrowers;
          and
<PAGE>
               (iii) confirmation from each Increasing Lender of the increase in
          the amount of its Working Capital Commitment in a writing satisfactory
          to the Borrowers and the Administrative Agent.

On each Increase  Date,  upon  fulfillment  of the  conditions  set forth in the
immediately preceding sentence of this Section 2.17(d), the Administrative Agent
shall notify the Lenders (including,  without limitation,  each Assuming Lender)
and the Borrowers, on or before 1:00 P.M. (New York City time), by telecopier or
telex,  of the  occurrence  of the  Commitment  Increase  to be effected on such
Increase  Date and shall record in the Register  the relevant  information  with
respect to each Increasing Lender and each Assuming Lender on such date.

                                   ARTICLE III

                            CONDITIONS OF LENDING AND
                         ISSUANCES OF LETTERS OF CREDIT

     SECTION  3.01.  CONDITIONS  PRECEDENT TO INITIAL  EXTENSION OF CREDIT.  The
obligation  of each Lender to make an Advance or of the Issuing  Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the  satisfaction  of the following  conditions  precedent  before or
concurrently with the Initial Extension of Credit:

          (a) The Administrative  Agent shall have received on or before the day
     of the  Initial  Extension  of Credit  the  following,  each dated such day
     (unless  otherwise  specified),  in form and substance  satisfactory to the
     Administrative  Agent  (unless  otherwise  specified)  and  (except for the
     Notes) in sufficient copies for each Lender Party:

               (i) The Notes  payable to the order of the  Lenders to the extent
          requested in accordance with Section 2.16.

               (ii) A security  agreement in substantially the form of Exhibit D
          hereto  (together  with each other  security  agreement  and  security
          agreement  supplement  delivered pursuant to Section 5.01(j),  in each
          case as amended, the "SECURITY AGREEMENT"), duly executed by each Loan
          Party, together with:

                    (A) certificates representing the Pledged Shares referred to
               therein accompanied by undated stock powers executed in blank and
               instruments evidencing the Pledged Debt indorsed in blank,

                    (B)  acknowledgment  copies of proper financing  statements,
               duly  filed on or  before  the day of the  Initial  Extension  of
               Credit  under the Uniform  Commercial  Code of all  jurisdictions
               that the Administrative  Agent may deem necessary or desirable in
               order to  perfect  and  protect  the  first  priority  liens  and
               security interests created under the
<PAGE>
               Security  Agreement,  covering  the  Collateral  described in the
               Security Agreement,

                    (C) completed  requests for information,  dated on or before
               the  date  of  the  Initial  Extension  of  Credit,  listing  the
               financing  statements  referred  to in  clause  (B) above and all
               other effective  financing  statements filed in the jurisdictions
               referred  to in  clause  (B) above  that  name any Loan  Party as
               debtor, together with copies of such other financing statements,

                    (D) evidence of the  completion of all other  recordings and
               filings of or with  respect to the  Security  Agreement  that the
               Administrative  Agent may deem necessary or desirable in order to
               perfect and protect the Liens created thereby,

                    (E) evidence of the  insurance  required by the terms of the
               Security Agreement,

                    (F) copies of the  Assigned  Agreements  referred  to in the
               Security  Agreement,  together with a consent to such assignment,
               in substantially the form of Exhibit B to the Security Agreement,
               duly  executed by each party to such  Assigned  Agreements  other
               than the Loan Parties,

                    (G) the Pledged Account Letters  referred to in the Security
               Agreement, duly executed by each Pledged Account Bank referred to
               in the Security Agreement, and

                    (H) evidence  that all other action that the  Administrative
               Agent may deem  necessary  or  desirable  in order to perfect and
               protect the first priority liens and security  interests  created
               under the Security  Agreement has been taken (including,  without
               limitation,  receipt  of  duly  executed  payoff  letters,  UCC-3
               termination  statements and  landlords'  and bailees'  waiver and
               consent agreements).

               (iii) A guaranty  in  substantially  the form of Exhibit E hereto
          (together with each other guaranty and guaranty  supplement  delivered
          pursuant to Section 5.01(j), in each case as amended,  the "SUBSIDIARY
          GUARANTY"), duly executed by each Subsidiary Guarantor.

               (iv)  Certified  copies  of  the  resolutions  of  the  Board  of
          Directors of each Loan Party approving the  transactions  contemplated
          by the Transaction Documents and each Transaction Document to which it
          is  or is to  be a  party,  and  of  all  documents  evidencing  other
          necessary  corporate or other action and  governmental and other third
          party approvals and consents, if any, with respect to
<PAGE>
          the  transactions  contemplated by the Transaction  Documents and each
          Transaction Document to which it is or is to be a party.

               (v) A copy of a  certificate  of the  Secretary  of  State of the
          jurisdiction  of  organization of each Loan Party (other than any Loan
          Party that is an Immaterial  Subsidiary or Foreign Subsidiary),  dated
          reasonably  near  the  date  of  the  Initial   Extension  of  Credit,
          certifying  (A) as to a true and  correct  copy of the charter of such
          Loan  Party and each  amendment  thereto on file in his office and (B)
          that (1) such  amendments are the only amendments to such Loan Party's
          charter  on file in his  office,  (2)  such  Loan  Party  has paid all
          franchise  taxes to the  date of such  certificate  and (C) such  Loan
          Party is duly  organized and in good standing or presently  subsisting
          under the laws of the State of the jurisdiction of its organization.

               (vi) A copy of a  certificate  of the  Secretary  of State of the
          jurisdiction  of  organization of each Loan Party (other than any Loan
          Party that is an Immaterial  Subsidiary or Foreign Subsidiary),  dated
          reasonably near the date of the Initial  Extension of Credit,  stating
          that such Loan Party is duly  qualified  and in good  standing in such
          State and has filed all  annual  reports  required  to be filed to the
          date of such certificate.

               (vii) A certificate of each Loan Party,  signed on behalf of such
          Loan Party by its  President or a Vice  President and its Secretary or
          any Assistant  Secretary,  dated the date of the Initial  Extension of
          Credit (the statements made in which  certificate shall be true on and
          as of the date of the Initial  Extension of Credit),  certifying as to
          (A) the  absence of any  amendments  to the charter of such Loan Party
          since the date of the Secretary of State's certificate  referred to in
          Section 3.01(a)(v),  (B) a true and correct copy of the bylaws of such
          Loan Party as in effect on the date on which the resolutions  referred
          to in Section  3.01(a)(iv) were adopted and on the date of the Initial
          Extension of Credit,  (C) the due  incorporation  and good standing or
          valid existence of such Loan Party under the laws of the  jurisdiction
          of its  organization,  and  the  absence  of any  proceeding  for  the
          dissolution  or  liquidation  of such Loan  Party (D) the truth of the
          representations  and  warranties  contained  in the Loan  Documents as
          though made on and as of the date of the Initial  Extension  of Credit
          and  (E)  the  absence  of any  event  occurring  and  continuing,  or
          resulting  from the Initial  Extension of Credit,  that  constitutes a
          Default.

               (viii) A certificate  of the Secretary or an Assistant  Secretary
          of each Loan Party  certifying  the names and true  signatures  of the
          officers  of such  Loan  Party  authorized  to sign  each  Transaction
          Document to which it is or is to be a party and the other documents to
          be delivered hereunder and thereunder.

               (ix)  Certified  copies of each of the  Related  Documents,  duly
          executed by the parties thereto and in form and substance satisfactory
          to the
<PAGE>
          Lender Parties,  together with all  agreements,  instruments and other
          documents  delivered in  connection  therewith  as the  Administrative
          Agent shall request.

               (x)  Certificates in  substantially  the form of Exhibit F hereto
          attesting to the  Solvency of each Loan Party after  giving  effect to
          the transactions  contemplated by the Transaction Documents,  from its
          chief financial officer.

               (xi)  An   Intercreditor   Agreement,   in  form  and   substance
          satisfactory  to  the  Lender  Parties  (as  amended,  to  the  extent
          permitted  under the Loan  Documents,  or replaced in accordance  with
          Section  5.02(b)(iii)(I)  the  "INTERCREDITOR  AGREEMENT"),  among the
          Collateral Agent, the applicable  Borrower and each respective secured
          creditor of such Borrower, duly executed by each such secured creditor
          of such Borrower and such Borrower.

               (xii) Such financial,  business and other  information  regarding
          each Loan Party and its  Subsidiaries as the Lender Parties shall have
          requested,  including, without limitation,  information as to possible
          contingent   liabilities,   tax   matters,    environmental   matters,
          obligations  under  Plans,  Multiemployer  Plans  and  Welfare  Plans,
          collective   bargaining   agreements  and  other   arrangements   with
          employees, audited annual financial statements dated November 1, 1998,
          interim  financial  statements dated the end of the most recent fiscal
          quarter for which financial statements are available (or, in the event
          the Lender  Parties' due diligence  review  reveals  material  changes
          since such financial statements,  as of a later date within 45 days of
          the day of the  Initial  Extension  of  Credit),  pro forma  financial
          statements  as to the  Parent  Guarantor  and  forecasts  prepared  by
          management of the Parent Guarantor, in form and substance satisfactory
          to the Lender Parties,  of balance sheets,  income statements and cash
          flow  statements on a monthly  basis for the first year  following the
          day of the Initial Extension of Credit and on an annual basis for each
          year thereafter until the Termination Date.

               (xiii)  A  letter,  in form  and  substance  satisfactory  to the
          Administrative     Agent,     from    the    Parent    Guarantor    to
          PricewaterhouseCoopers   LLC,   its   independent   certified   public
          accountants,  advising such accountants that the Agents and the Lender
          Parties  have been  authorized  to  exercise  all rights of the Parent
          Guarantor  to  require  such  accountants  to  disclose  any  and  all
          financial  statements and any other  information of any kind that they
          may have with respect to the Parent Guarantor and its Subsidiaries and
          directing such  accountants  to comply with any reasonable  request of
          any Agent or any Lender Party for such information.

               (xiv)  Evidence  of  insurance  naming  the  Collateral  Agent as
          additional  insured and loss payee with such responsible and reputable
          insurance companies or associations,  and in such amounts and covering
          such  risks,  as is  satisfactory  to the Lender  Parties,  including,
          without limitation, business interruption insurance.
<PAGE>
               (xv)  Certified  copies of each  employment  agreement  and other
          compensation arrangement with each executive officer of any Loan Party
          or any of its Subsidiaries.

               (xvi) A Notice of Borrowing or Notice of Issuance, as applicable,
          and a Borrowing Base Certificate  relating to the Initial Extension of
          Credit.

               (xvii) Deeds of trust, trust deeds and mortgages in substantially
          the form of Exhibit E hereto and  covering  the  properties  listed on
          Schedule 4.01(t) (together with each other mortgage delivered pursuant
          to Section  5.01(j),  in each case as amended,  amended and  restated,
          supplemented  or otherwise  modified  from time to time in  accordance
          with their terms, the  "MORTGAGES"),  duly executed by the appropriate
          Loan  Party,   together   with  evidence  that  all  action  that  the
          Administrative  Agent  may deem  necessary  or  desirable  in order to
          create valid first and subsisting  Liens on the property  described in
          the Mortgages has been taken.

               (xviii) A  favorable  opinion of Snell & Wilmer,  counsel for the
          Loan Parties,  in substantially the form of Exhibit G hereto and as to
          such other  matters as any Lender  Party  through  the  Administrative
          Agent may reasonably request.

               (xix) A favorable  opinion of Lionel,  Sawyer & Collins,  Ballard
          Spahr  Andrews  &  Ingersoll,   Schumaker,  Loop  and  Kendrick,  LLP,
          Winstead, Sechrest & Minick, P.C., local counsel to the Lender Parties
          in Nevada, New Jersey, Ohio and Texas, respectively,  in substantially
          the form of  Exhibit  H hereto  and as to such  other  matters  as any
          Lender Party through the Administrative Agent may reasonably request.

          (b) The Lender Parties shall be satisfied with the legal structure and
     capitalization  of each Loan Party and each of its Subsidiaries the capital
     stock  of  which  Subsidiaries  is  being  pledged  pursuant  to  the  Loan
     Documents,  including the terms and  conditions of the charter,  bylaws and
     each class of capital stock or other equity interest of each Loan Party and
     each such  Subsidiary and of each agreement or instrument  relating to such
     structure or capitalization.

          (c) The Lender  Parties  shall be satisfied  that all  Existing  Debt,
     other than the Debt  identified on Schedule  4.01(u) hereto (the "SURVIVING
     DEBT"),  has  been  prepaid,  redeemed  or  defeased  in full or  otherwise
     satisfied and  extinguished  and that all such  Surviving  Debt shall be on
     terms and conditions satisfactory to the Lender Parties.

          (d)  Before  giving  effect to the  transactions  contemplated  by the
     Transaction  Documents  and except as disclosed  in the Parent  Guarantor's
     quarterly  report  on Form  10-Q for the  quarter  ended  August 1, 1999 or
     otherwise  disclosed  to the Lender  Parties  in
<PAGE>
     writing  prior to the date  hereof,  there shall have  occurred no Material
     Adverse Change since November 1, 1998.

          (e) There shall exist no action,  suit,  investigation,  litigation or
     proceeding  affecting any Loan Party or any of its Subsidiaries  pending or
     threatened  before any court,  governmental  agency or arbitrator  that (i)
     would be reasonably likely to have a Material Adverse Effect other than the
     matters  described on Schedule 4.01(f) hereto (the "DISCLOSED  LITIGATION")
     or (ii) purports to affect the legality,  validity or enforceability of any
     Transaction  Document or the consummation of the or the other  transactions
     contemplated  by the  Transaction  Documents,  and there shall have been no
     adverse change in the status,  or financial effect on any Loan Party or any
     of its  Subsidiaries,  of the Disclosed  Litigation  from that described on
     Schedule 4.01(f) hereto.

          (f) All governmental and third party consents and approvals  necessary
     in  connection  with  the  transactions  contemplated  by  the  Transaction
     Documents  shall  have  been  obtained   (without  the  imposition  of  any
     conditions  that are not acceptable to the Lender Parties) and shall remain
     in effect;  and no law or regulation shall be applicable in the judgment of
     the  Lender  Parties,  in each case that  restrains,  prevents  or  imposes
     materially  adverse  conditions upon the  transactions  contemplated by the
     Transaction   Documents  or  the  rights  of  the  Loan  Parties  or  their
     Subsidiaries  freely to transfer or otherwise  dispose of, or to create any
     Lien on, any properties now owned or hereafter acquired by any of them.

          (g)  The  Lender   Parties  shall  have   completed  a  due  diligence
     investigation  of the Parent  Guarantor and its  Subsidiaries in scope, and
     with results,  satisfactory to the Lender  Parties,  and nothing shall have
     come to the attention of the Lender  Parties  during the course of such due
     diligence  investigation  to lead  them to  believe  that  the  Information
     Memorandum  was or has become  misleading,  incorrect or  incomplete in any
     material  respect;  without  limiting the generality of the foregoing,  the
     Lender  Parties  shall  have been  given  such  access  to the  management,
     records, books of account, contracts and properties of the Parent Guarantor
     and its Subsidiaries as they shall have requested.

          (h) The  Borrowers  shall have paid all accrued fees of the Agents and
     the  Lender  Parties  and all  reasonable  accrued  expenses  of the Agents
     (including  the  reasonable  accrued  fees and  expenses  of counsel to the
     Administrative Agent and local counsel to the Lender Parties).

          (i) The Lender Parties shall be satisfied with the Parent  Guarantor's
     and each Borrower's management.

          (j) The  Borrowers  shall  have  entered  into  one or more  committed
     inbound  inventory  flooring  arrangements  for an  amount  not  less  than
     $250,000,000 and for a term ending no earlier than the Termination Date and
     with  terms and  conditions  satisfactory  to the Lender  Parties,  and the
     Lender  Parties  shall be satisfied  with the terms and  conditions of each
     other inbound inventory  flooring  arrangement to which any Loan Party is a
     party.
<PAGE>
     SECTION  3.02.  CONDITIONS  PRECEDENT  TO EACH  BORROWING,  INCREASE  DATE,
ISSUANCE AND INCREASE OF AVAILABLE AMOUNT. The obligation of each Lender to make
an Advance  (other than a Letter of Credit Advance made by the Issuing Bank or a
Lender  pursuant to Section  2.03(c) and a Swing Line  Advance  made by a Lender
pursuant to Section  2.02(b)) on the occasion of each  Borrowing  (including the
initial  Borrowing)  and the obligation of the Issuing Bank to issue a Letter of
Credit  (including the initial  issuance),  renew a Letter of Credit or increase
the Available Amount of a Flooring Letter of Credit,  the right of the Borrowers
to request a Swing Line Borrowing and each Commitment  Increase shall be subject
to the  further  conditions  precedent  that  on the  date  of  such  Borrowing,
issuance,  renewal or increase (a) the following  statements  shall be true (and
each of the giving of the applicable  Notice of Borrowing,  Notice of Swing Line
Borrowing,  Notice of  Issuance,  Notice of  Renewal,  request  for  increase in
Available  Amount or request for  Commitment  Increase and the acceptance by the
Borrowers of the  proceeds of such  Borrowing or of such Letter of Credit or the
renewal of such Letter of Credit shall constitute a representation  and warranty
by the  Borrowers  that both on the date of such  notice and on the date of such
Borrowing,  issuance,  renewal or increase or such Increase Date such statements
are true):

               (i) the  representations  and  warranties  contained in each Loan
          Document  are correct on and as of such date,  before and after giving
          effect to such  Borrowing,  issuance,  renewal or increase  and to the
          application  of the  proceeds  therefrom,  as though made on and as of
          such date other than any such  representations  or warranties that, by
          their  terms,  refer to a  specific  date  other than the date of such
          Borrowing,  issuance,  renewal or  increase,  in which case as of such
          specific date;

               (ii) no Default has occurred and is  continuing,  or would result
          from  such  Borrowing,  issuance,  renewal  or  increase  or from  the
          application of the proceeds therefrom; and

               (iii) for each Working Capital Advance or Swing Line Advance made
          by the Swing Line Bank or  issuance or renewal of any Letter of Credit
          or increase in the  Available  Amount of a Flooring  Letter of Credit,
          (A)  the sum of the  Loan  Values  of the  Eligible  Collateral  MINUS
          $20,000,000  exceeds (B) the aggregate principal amount of the Working
          Capital  Advances  PLUS  Swing  Line  Advances  PLUS  Letter of Credit
          Advances to be outstanding PLUS the aggregate  Available Amount of all
          Letters  of  Credit  to be  outstanding  after  giving  effect to such
          Advance,  issuance,  renewal or  increase,  respectively;

and (b) the  Administrative  Agent  shall have  received  such other  approvals,
opinions or documents as any Lender Party through the  Administrative  Agent may
reasonably request.

     SECTION  3.03.   DETERMINATIONS   UNDER  SECTION  3.01.   For  purposes  of
determining  compliance  with the  conditions  specified in Section  3.01,  each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or  satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for
<PAGE>
the  transactions  contemplated by the Loan Documents shall have received notice
from such Lender Party prior to the Initial  Extension of Credit  specifying its
objection  thereto  and  if  the  Initial  Extension  of  Credit  consists  of a
Borrowing, such Lender Party shall not have made available to the Administrative
Agent such Lender Party's ratable portion of such Borrowing.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     SECTION  4.01.  REPRESENTATIONS  AND  WARRANTIES  OF THE  BORROWERS AND THE
PARENT GUARANTOR. Each Borrower and the Parent Guarantor represents and warrants
as follows:

          (a)  Each  Loan  Party  and  each  of its  Subsidiaries  (i)  is  duly
     organized,  validly  existing  and in good  standing  under the laws of the
     jurisdiction  of its  organization,  (ii) is duly  qualified  as a  foreign
     corporation,   foreign  limited   liability   company  or  foreign  limited
     partnership,  as the  case  may be,  and in  good  standing  in each  other
     jurisdiction in which it owns or leases property or in which the conduct of
     its  business  requires it to so qualify or be  licensed  and (iii) has all
     requisite  power  and  authority   (including,   without  limitation,   all
     governmental  licenses,  permits and other  approvals)  to own or lease and
     operate its properties and to carry on its business as now conducted and as
     proposed to be conducted.

          (b) Set forth on Schedule  4.01(b)  hereto is a complete  and accurate
     list of all Subsidiaries of each Loan Party,  showing as of the date hereof
     (as to each such  Subsidiary)  the  jurisdiction of its  organization,  the
     number of shares of each class of capital stock authorized,  and the number
     outstanding,  on the date  hereof  and the  percentage  of the  outstanding
     shares of each such class owned (directly or indirectly) by such Loan Party
     and the number of shares  covered  by all  outstanding  options,  warrants,
     rights of conversion or purchase and similar rights at the date hereof. All
     of the outstanding  capital stock of all of each Loan Party's  Subsidiaries
     has been validly issued, is fully paid and  non-assessable  and is owned by
     such Loan  Party or one or more of its  Subsidiaries  free and clear of all
     Liens,  except  those  created  under  the  Collateral  Documents.

          (c) The execution, delivery and performance by each Loan Party of each
     Transaction  Document  to  which  it  is  or is  to  be a  party,  and  the
     consummation of the transactions contemplated by the Transaction Documents,
     are within  such Loan  Party's  powers,  have been duly  authorized  by all
     necessary  corporate or other action,  and do not (i) contravene  such Loan
     Party's  charter  or  bylaws,  (ii)  violate  any  law,  rule,   regulation
     (including,  without limitation,  Regulation X of the Board of Governors of
     the Federal Reserve System),  order, writ,  judgment,  injunction,  decree,
     determination or award,  (iii) conflict with or result in the breach of, or
     constitute a default or require any payment to be made under, any contract,
     loan  agreement,  indenture,  mortgage,  deed  of  trust,  lease  or  other
     instrument  binding on or affecting any Loan Party, any of its Subsidiaries
     or any of their  properties  or (iv) except for the Liens created under the
     Loan Documents, result
<PAGE>
     in or require the creation or  imposition  of any Lien upon or with respect
     to any of the properties of any Loan Party or any of its  Subsidiaries.  No
     Loan  Party or any of its  Subsidiaries  is in  violation  of any such law,
     rule, regulation, order, writ, judgment,  injunction, decree, determination
     or award or in  breach of any such  contract,  loan  agreement,  indenture,
     mortgage, deed of trust, lease or other instrument, the violation or breach
     of which could be reasonably likely to have a Material Adverse Effect.

          (d) No  authorization or approval or other action by, and no notice to
     or filing with, any governmental  authority or regulatory body or any other
     third party is required for (i) the due execution,  delivery,  recordation,
     filing or  performance  by any Loan Party of any  Transaction  Document  to
     which  it  is or  is  to  be a  party,  or  for  the  consummation  of  the
     transactions  contemplated by the Transaction Documents,  (ii) the grant by
     any Loan  Party of the  Liens  granted  by it  pursuant  to the  Collateral
     Documents,  (iii) the  perfection or maintenance of the Liens created under
     the Collateral  Documents  (including the first priority nature thereof) or
     (iv) the  exercise by any Agent or any Lender Party of its rights under the
     Loan Documents or the remedies in respect of the Collateral pursuant to the
     Collateral Documents,  except for the authorizations,  approvals,  actions,
     notices and filings listed on Schedule  4.01(d)  hereto,  all of which have
     been duly obtained, taken, given or made and are in full force and effect.

          (e) This Agreement has been, and each other Transaction  Document when
     delivered  hereunder  will have been,  duly  executed and delivered by each
     Loan Party party  thereto.  This  Agreement is, and each other  Transaction
     Document when  delivered  hereunder  will be, the legal,  valid and binding
     obligation of each Loan Party party thereto,  enforceable against such Loan
     Party in accordance with its terms,  except as such  enforceability  may be
     limited  by  the   effect  of  any   applicable   bankruptcy,   insolvency,
     reorganization,  moratorium  or similar  law  affecting  creditors'  rights
     generally.

          (f) There is no action, suit, investigation,  litigation or proceeding
     affecting  any  Loan  Party  or  any  of its  Subsidiaries,  including  any
     Environmental Action, pending or threatened before any court,  governmental
     agency or arbitrator that (i) would be reasonably likely to have a Material
     Adverse  Effect (other than the Disclosed  Litigation)  or (ii) purports to
     affect the legality, validity or enforceability of any Transaction Document
     or the  consummation  of the  transactions  contemplated by the Transaction
     Documents, and there has been no adverse change in the status, or financial
     effect  on any Loan  Party  or any of its  Subsidiaries,  of the  Disclosed
     Litigation from that described on Schedule 4.01(f) hereto.

          (g) The  Consolidated  balance sheets of the Parent  Guarantor and its
     Subsidiaries  as  at  November  1,  1998,  and  the  related   Consolidated
     statements of income and Consolidated statement of cash flows of the Parent
     Guarantor and its Subsidiaries for the fiscal year then ended,  accompanied
     by an unqualified opinion of PricewaterhouseCoopers LLC, independent public
     accountants,  and the Consolidated and Consolidating  balance sheets of the
     Parent Guarantor and its Subsidiaries as at August 1, 1999, and the related
     Consolidated and Consolidating statements of income and
<PAGE>
     Consolidated  statement  of cash  flows  of the  Parent  Guarantor  and its
     Subsidiaries  for the nine months then ended,  duly  certified by the chief
     financial  officer  of the  Parent  Guarantor,  copies  of which  have been
     furnished to each Lender Party,  fairly  present,  subject,  in the case of
     said balance sheet as at August 1, 1999, and said  statements of income and
     cash flows for the nine months then ended,  to year-end audit  adjustments,
     the  Consolidated  and  Consolidating  financial  condition  of the  Parent
     Guarantor and its  Subsidiaries as at such dates and the  Consolidated  and
     Consolidating  results  of  operations  of the  Parent  Guarantor  and  its
     Subsidiaries  for the periods ended on such dates,  all in accordance  with
     generally  accepted  accounting  principles  applied on a consistent basis,
     and, except as disclosed in the Parent Guarantor's quarterly report on Form
     10-Q for the quarter  ended  August 1, 1999 or  otherwise  disclosed to the
     Lender Parties in writing prior to the date hereof, since November 1, 1998,
     there has been no Material Adverse Change.

          (h) The Consolidated and Consolidating pro forma balance sheets of the
     Parent  Guarantor and its  Subsidiaries  as at September 30, 1999,  and the
     related  Consolidated and  Consolidating pro forma statements of income and
     cash  flows of the Parent  Guarantor  and its  Subsidiaries  for the eleven
     months then ended,  certified by the chief financial  officer of the Parent
     Guarantor, copies of which have been furnished to each Lender Party, fairly
     present the Consolidated and Consolidating pro forma financial condition of
     the  Parent  Guarantor  and  its  Subsidiaries  as at  such  date  and  the
     Consolidated  and  Consolidating  pro forma  results of  operations  of the
     Parent Guarantor and its Subsidiaries for the period ended on such date, in
     each case giving effect to the transactions contemplated by the Transaction
     Documents, all in accordance with GAAP.

          (i) The  Consolidated  and  Consolidating  forecasted  balance sheets,
     statements of income and  statements of cash flows of the Parent  Guarantor
     and its  Subsidiaries  delivered to the Lender Parties  pursuant to Section
     3.01(a)(xvi)  or 5.03  were  prepared  in good  faith  on the  basis of the
     assumptions  stated therein,  which  assumptions  were fair in light of the
     conditions  existing  at the  time  of  delivery  of  such  forecasts,  and
     represented, at the time of delivery, the Parent Guarantor best estimate of
     its future financial performance.

          (j)  Neither the  Information  Memorandum  nor any other  information,
     exhibit or report  furnished by or on behalf of any Loan Party to any Agent
     or any Lender Party in connection  with the  negotiation and syndication of
     the Loan Documents or pursuant to the terms of the Loan Documents contained
     any untrue statement of a material fact or omitted to state a material fact
     necessary to make the statements made therein not misleading.

          (k) No Loan Party is engaged in the business of  extending  credit for
     the purpose of purchasing or carrying Margin Stock,  and no proceeds of any
     Advance or drawings  under any Letter of Credit will be used to purchase or
     carry any Margin  Stock or to extend  credit to others  for the  purpose of
     purchasing or carrying any Margin Stock.
<PAGE>
          (l)  Neither  any  Loan  Party  nor  any  of  its  Subsidiaries  is an
     "investment  company,"  or an  "affiliated  person"  of, or  "promoter"  or
     "principal  underwriter"  for, an  "investment  company," as such terms are
     defined in the Investment Company Act of 1940, as amended. Neither any Loan
     Party nor any of its Subsidiaries is a "holding company",  or a "subsidiary
     company" of a "holding  company",  or an "affiliate" of a "holding company"
     or of a  "subsidiary  company"  or a "holding  company",  as such terms are
     defined int he Public  Utility  Holding  Company  Act of 1935,  as amended.
     Neither  the making of any  Advances,  nor the  issuance  of any Letters of
     Credit,  nor the  application  of the proceeds or repayment  thereof by the
     Borrowers,  nor the consummation of the other transactions  contemplated by
     the  Transaction  Documents,  will violate any provision of any such Act or
     any rule,  regulation or order of the  Securities  and Exchange  Commission
     thereunder.

          (m) Neither any Loan Party nor any of its  Subsidiaries  is a party to
     any indenture,  loan or credit agreement or any lease or other agreement or
     instrument or subject to any charter or corporate restriction that would be
     reasonably likely to have a Material Adverse Effect.

          (n) All filings and other  actions  necessary  or desirable to perfect
     and  protect the  security  interest in the  Collateral  created  under the
     Collateral Documents have been duly made or taken and are in full force and
     effect,  and the  Collateral  Documents  create in favor of the  Collateral
     Agent for the benefit of the  Secured  Parties a valid and,  together  with
     such filings and other actions,  perfected first priority security interest
     in the Collateral, securing the payment of the Secured Obligations, and all
     filings and other  actions  necessary  or  desirable to perfect and protect
     such security interest have been duly taken. The Loan Parties are the legal
     and beneficial  owners of the Collateral free and clear of any Lien, except
     for the liens and security  interests  created or permitted  under the Loan
     Documents.

          (o) Each Loan Party (other than each Loan Party that is an  Immaterial
     Subsidiary) is, individually and together with its Subsidiaries, Solvent.

          (p) (i) No ERISA Event has occurred or is reasonably expected to occur
     with respect to any Plan.

               (ii) Neither any Loan Party nor any ERISA  Affiliate has incurred
          or is  reasonably  expected to incur any  Withdrawal  Liability to any
          Multiemployer Plan.

               (iii)  Neither  any Loan Party nor any ERISA  Affiliate  has been
          notified   by  the   sponsor  of  a   Multiemployer   Plan  that  such
          Multiemployer Plan is in reorganization or has been terminated, within
          the meaning of Title IV of ERISA,  and no such  Multiemployer  Plan is
          reasonably  expected  to be  in  reorganization  or to be  terminated,
          within the meaning of Title IV of ERISA.
<PAGE>
               (iv) Schedule B (Actuarial Information) to the most recent annual
          report  (Form 5500  Series)  for each Plan,  copies of which have been
          filed with the Internal  Revenue  Service and  furnished to the Lender
          Parties,  is complete  and  accurate  and fairly  presents the funding
          status of such Plan,  and since the date of such  Schedule B there has
          been no material adverse change in such funding status.

          (q) (i) The  operations  and properties of each Loan Party and each of
     its  Subsidiaries  comply  in all  material  respects  with all  applicable
     Environmental Laws and Environmental  Permits, all past non-compliance with
     such Environmental Laws and Environmental Permits has been resolved without
     ongoing  obligations  or costs,  and no  circumstances  exist that would be
     reasonably likely to (A) form the basis of an Environmental  Action against
     any Loan Party or any of its  Subsidiaries or any of their  properties that
     could have a Material  Adverse  Effect or (B) cause any such property to be
     subject to any restrictions on ownership, occupancy, use or transferability
     under any Environmental Law.

               (ii)  To  the  best  of the  Borrowers'  knowledge,  none  of the
          properties  currently or formerly  owned or operated by any Loan Party
          or any of its  Subsidiaries  is listed or proposed  for listing on the
          NPL or on the CERCLIS or any analogous foreign, state or local list or
          is adjacent to any such property; there are no and never have been any
          underground or aboveground storage tanks or any surface  impoundments,
          septic tanks, pits, sumps or lagoons in which Hazardous  Materials are
          being  or have  been  treated,  stored  or  disposed  on any  property
          currently  owned  or  operated  by  any  Loan  Party  or  any  of  its
          Subsidiaries  or,  to the  best  of  its  knowledge,  on any  property
          formerly   owned  or  operated  by  any  Loan  Party  or  any  of  its
          Subsidiaries;  there is no asbestos or asbestos-containing material on
          any property  currently  owned or operated by any Loan Party or any of
          its  Subsidiaries;  and  to the  best  of  the  Borrowers'  knowledge,
          Hazardous Materials have not been released,  discharged or disposed of
          on any property  currently  or formerly  owned or operated by any Loan
          Party or any of its Subsidiaries in violation of Environmental Laws.

               (iii)  Neither  any Loan  Party  nor any of its  Subsidiaries  is
          undertaking,  and has not completed,  either  individually or together
          with other  potentially  responsible  parties,  any  investigation  or
          assessment  or remedial or response  action  relating to any actual or
          threatened  release,  discharge or disposal of Hazardous  Materials in
          violation of  Environmental  Laws at any site,  location or operation,
          either  voluntarily  or pursuant to the order of any  governmental  or
          regulatory authority or the requirements of any Environmental Law; and
          all Hazardous Materials  generated,  used, treated,  handled or stored
          at, or  transported  to or from,  any  property  currently or formerly
          owned or  operated by any Loan Party or any of its  Subsidiaries  have
          been  disposed  of in a manner not  reasonably  expected  to result in
          material liability to any Loan Party or any of its Subsidiaries.

          (r) (i) Each Loan Party and each of its  Subsidiaries  and  Affiliates
     has filed,  has caused to be filed or has been  included in all tax returns
     (Federal,  state,  local and
<PAGE>
     foreign)  required to be filed and has paid all taxes  shown  thereon to be
     due, together with applicable interest and penalties.

               (ii) Set  forth on  Schedule  4.01(r)  hereto is a  complete  and
          accurate  list,  as of the date  hereof,  of each taxable year of each
          Loan  Party  and each of its  Subsidiaries  and  Affiliates  for which
          Federal  income  tax  returns  have  been  filed  and  for  which  the
          expiration of the applicable  statute of limitations for assessment or
          collection  has not occurred by reason of  extension or otherwise  (an
          "OPEN YEAR").

               (iii) The  aggregate  unpaid  amount,  as of the date hereof,  of
          adjustments to the Federal income tax liability of each Loan Party and
          each of its  Subsidiaries  and  Affiliates  proposed  by the  Internal
          Revenue Service with respect to Open Years does not exceed $7,500,000.
          No issues have been raised by the Internal  Revenue Service in respect
          of Open Years that, in the  aggregate,  would be reasonably  likely to
          have a Material Adverse Effect.

               (iv) The  aggregate  unpaid  amount,  as of the date  hereof,  of
          adjustments to the state, local and foreign tax liability of each Loan
          Party and its Subsidiaries and Affiliates proposed by all state, local
          and foreign  taxing  authorities  (other  than  amounts  arising  from
          adjustments to Federal income tax returns) does not exceed $7,500,000.
          No issues  have been raised by such taxing  authorities  that,  in the
          aggregate,  would be  reasonably  likely  to have a  Material  Adverse
          Effect.

          (s) Neither the business nor the  properties  of any Loan Party or any
     of its Subsidiaries are affected by any fire, explosion,  accident, strike,
     lockout or other labor dispute, drought, storm, hail, earthquake,  embargo,
     act of God or of the public enemy or other casualty (whether or not covered
     by insurance)  that would be reasonably  likely to have a Material  Adverse
     Effect.

          (t) Set forth on Schedule  4.01(t)  hereto is a complete  and accurate
     list of all Existing Debt (other than  Surviving  Debt),  showing as of the
     date hereof the principal amount outstanding thereunder.

          (u) Set forth on Schedule  4.01(u)  hereto is a complete  and accurate
     list of all  Surviving  Debt,  showing as of the date hereof the  principal
     amount  outstanding  or, in the case of a revolving  credit  facility,  the
     aggregate amount of the commitments  thereunder,  the maturity date thereof
     and the amortization schedule therefor.

          (v) Set forth on Schedule  4.01(v)  hereto is a complete  and accurate
     list  of  all  real  property  owned  by  any  Loan  Party  or  any  of its
     Subsidiaries,  showing as of the date hereof the street address,  county or
     other  relevant  jurisdiction,  state,  record owner and book and estimated
     fair value thereof. Each Loan Party or such Subsidiary has good, marketable
     and insurable fee simple title to such real property, free and clear of all
     Liens, other than Liens created or permitted by the Loan Documents.
<PAGE>
          (w) Set forth on Schedule  4.01(w)  hereto is a complete  and accurate
     list of all leases of real  property  under  which any Loan Party or any of
     its  Subsidiaries  is the lessee,  showing as of the date hereof the street
     address,  county or other relevant  jurisdiction,  state,  lessor,  lessee,
     expiration  date and annual  rental  cost  thereof.  Each such lease is the
     legal, valid and binding  obligation of the lessor thereof,  enforceable in
     accordance with its terms.

          (x) Set forth on Schedule  4.01(x)  hereto is a complete  and accurate
     list of all Investments  held by any Loan Party or any of its  Subsidiaries
     on the date  hereof,  showing as of the date hereof the amount,  obligor or
     issuer and maturity, if any, thereof.

          (y) Set forth on Schedule  4.01(y)  hereto is a complete  and accurate
     list of all patents, trademarks, trade names, service marks and copyrights,
     and all applications  therefor and licenses thereof,  of each Loan Party or
     any of its Subsidiaries,  showing as of the date hereof the jurisdiction in
     which registered, the registration number, the date of registration and the
     expiration date.

          (z) The Parent  Guarantor has (i) initiated a review and assessment of
     all  material  business  areas  within  its and  each of its  Subsidiaries'
     business and operations (including those affected by suppliers, vendors and
     customers)  that  could be  adversely  affected  by the risk that  computer
     applications  used by the Parent  Guarantor or any of its  Subsidiaries (or
     suppliers,  vendors and  customers)  may be unable to recognize and perform
     properly date-sensitive  functions involving certain dates prior to and any
     date after  December 31, 1999 (the "YEAR 2000  PROBLEM"),  (ii) developed a
     plan and timetable for  addressing  the Year 2000 Problem on a timely basis
     and (iii) to date, implemented that plan in accordance with such timetable.
     Based on the  foregoing,  the Parent  Guarantor  believes that all computer
     applications (including those of its suppliers, vendors and customers) that
     are material to its or any of its Subsidiaries' business and operations are
     reasonably  expected  on a  timely  basis  to be able to  perform  properly
     date-sensitive  functions  for all dates  before and after  January 1, 2000
     ("YEAR 2000 COMPLIANT"), except to the extent that a failure to do so could
     not reasonably be expected to have a Material Adverse Effect.

          (aa) The Parent Guarantor has, independently and without reliance upon
     the  Administrative  Agent or any Lender Party and based on such  documents
     and information as it has deemed appropriate,  made its own credit analysis
     and decision to enter into the Parent Guaranty and each other Loan Document
     to  which  it is  or  is  to be a  party,  and  the  Parent  Guarantor  has
     established  adequate  means  of  obtaining  from  each  Loan  Party  on  a
     continuing basis information  pertaining to, and is now and on a continuing
     basis will be completely familiar with, the business,  condition (financial
     or otherwise),  operations,  performance,  properties and prospects of such
     Loan Party.
<PAGE>
                                    ARTICLE V

               COVENANTS OF THE BORROWERS AND THE PARENT GUARANTOR

     SECTION 5.01.  AFFIRMATIVE  COVENANTS.  So long as any Advance or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment hereunder, each Borrower and the Parent Guarantor will:

          (a)  COMPLIANCE  WITH  LAWS,  ETC.  Comply,  and  cause  each  of  its
     Subsidiaries to comply, in all material respects, with all applicable laws,
     rules,   regulations  and  orders,  such  compliance  to  include,  without
     limitation,  compliance with ERISA and the Racketeer Influenced and Corrupt
     Organizations Chapter of the Organized Crime Control Act of 1970.

          (b) PAYMENT OF TAXES,  ETC. Pay and  discharge,  and cause each of its
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all taxes,  assessments and governmental charges or levies imposed upon
     it or upon its property and (ii) all lawful claims that,  if unpaid,  might
     by law become a Lien upon its property; PROVIDED, HOWEVER, that neither the
     Parent  Guarantor nor any of its  Subsidiaries  shall be required to pay or
     discharge any such tax, assessment, charge or claim that is being contested
     in  good  faith  and by  proper  proceedings  and as to  which  appropriate
     reserves  are  being  maintained,  unless  and  until  any  Lien  resulting
     therefrom  attaches to its  property  and becomes  enforceable  against its
     other creditors.

          (c) COMPLIANCE WITH ENVIRONMENTAL  LAWS. Comply, and cause each of its
     Subsidiaries  and all lessees and other Persons  operating or occupying its
     properties  to  comply,  in all  material  respects,  with  all  applicable
     Environmental  Laws and Environmental  Permits;  obtain and renew and cause
     each of its  Subsidiaries  to obtain  and renew all  Environmental  Permits
     necessary for its operations and properties; and conduct, and cause each of
     its  Subsidiaries  to  conduct,  any  investigation,  study,  sampling  and
     testing,  and  undertake  any  cleanup,  removal,  remedial or other action
     necessary to remove, mitigate and clean up all Hazardous Materials from any
     of its properties, in accordance with the requirements of all Environmental
     Laws; PROVIDED,  HOWEVER,  that neither the Parent Guarantor nor any of its
     Subsidiaries  shall be required to  undertake  any such  cleanup,  removal,
     remedial  or other  action to the extent  that its  obligation  to do so is
     being  contested in good faith and by proper  proceedings  and  appropriate
     reserves are being maintained with respect to such circumstances.

          (d)  MAINTENANCE  OF  INSURANCE.  Maintain,  and  cause  each  of  its
     Subsidiaries  to  maintain,   insurance  with   responsible  and  reputable
     insurance companies or associations in such amounts and covering such risks
     as is usually carried by companies engaged in similar businesses and owning
     similar  properties in the same general areas in which the Parent Guarantor
     or such Subsidiary operates.
<PAGE>
          (e) PRESERVATION OF LEGAL EXISTENCE,  ETC. Preserve and maintain,  and
     cause each of its  Subsidiaries  to preserve and maintain,  its  existence,
     legal  structure,  legal name,  rights  (charter and  statutory),  permits,
     licenses, approvals, privileges and franchises; PROVIDED, HOWEVER, that the
     Parent  Guarantor  and  its  Subsidiaries  may  consummate  any  merger  or
     consolidation  permitted  under Section  5.02(d) and PROVIDED  FURTHER that
     neither the Parent Guarantor nor any of its Subsidiaries  shall be required
     to preserve any right, permit, license, approval, privilege or franchise if
     the Board of Directors of the Parent  Guarantor  or such  Subsidiary  shall
     determine  that the  preservation  thereof  is no longer  desirable  in the
     conduct of the business of the Parent Guarantor or such Subsidiary,  as the
     case  may be,  and  that the loss  thereof  is not  disadvantageous  in any
     material  respect to the Parent  Guarantor,  such  Subsidiary or the Lender
     Parties.

          (f) VISITATION  RIGHTS.  At any reasonable  time and from time to time
     and after  providing at least two Business Days prior written  notice if no
     Default shall have occurred and be continuing,  permit any of the Agents or
     any of the  Lender  Parties or any agents or  representatives  thereof,  to
     examine  and make  copies of and  abstracts  from the  records and books of
     account of, and visit the  properties  of, the Parent  Guarantor and any of
     its Subsidiaries,  and to discuss the affairs, finances and accounts of the
     Parent Guarantor and any of its Subsidiaries  with any of their officers or
     directors and with their independent certified public accountants.

          (g)  KEEPING OF BOOKS.  Keep,  and cause each of its  Subsidiaries  to
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial  transactions and the assets and business of
     the Parent  Guarantor and each such Subsidiary in accordance with generally
     accepted accounting principles in effect from time to time.

          (h) MAINTENANCE OF PROPERTIES,  ETC. Maintain and preserve,  and cause
     each of its  Subsidiaries  to maintain and preserve,  all of its properties
     that are used or useful in the  conduct  of its  business  in good  working
     order and condition, ordinary wear and tear excepted.

          (i)  TRANSACTIONS  WITH  AFFILIATES.  Conduct,  and cause  each of its
     Subsidiaries to conduct,  all  transactions  otherwise  permitted under the
     Loan  Documents  with any of their  Affiliates  on terms  that are fair and
     reasonable and no less favorable to the Parent Guarantor or such Subsidiary
     than it would obtain in a comparable arm's-length transaction with a Person
     not an Affiliate.

          (j) COVENANT TO GUARANTEE OBLIGATIONS AND GIVE SECURITY.  Upon (x) the
     request of the  Collateral  Agent  following the  occurrence and during the
     continuance  of a Default,  (y) the  formation  or  acquisition  of any new
     direct or indirect Subsidiaries by any Loan Party or (z) the acquisition of
     any property by any Loan Party,  and such property,  in the judgment of the
     Collateral  Agent,  shall not  already  be  subject  to a  perfected  first
<PAGE>
     priority security interest in favor of the Collateral Agent for the benefit
     of the  Secured  Parties,  then the  Borrowers  shall,  in each case at the
     Borrowers' expense:

               (i)  in  connection  with  the  formation  or  acquisition  of  a
          Subsidiary, within 10 days after such formation or acquisition,  cause
          each such  Subsidiary,  and cause each direct and  indirect  parent of
          such  Subsidiary  (if it has not already done so), to duly execute and
          deliver to the Collateral Agent a guaranty or guaranty supplement,  in
          form and substance satisfactory to the Collateral Agent,  guaranteeing
          the other Loan Parties' obligations under the Loan Documents,

               (ii) within 10 days after such request, formation or acquisition,
          furnish to the Collateral Agent a description of the real and personal
          properties of the Loan Parties and their  respective  Subsidiaries  in
          detail satisfactory to the Agent,

               (iii)   within  15  days  after  such   request,   formation   or
          acquisition,  duly execute and deliver, and cause each such Subsidiary
          and each direct and indirect  parent of such Subsidiary (if it has not
          already done so) to duly execute and deliver,  to the Collateral Agent
          mortgages,  pledges,  assignments,  security agreement supplements and
          other security  agreements,  as specified by and in form and substance
          satisfactory  to the  Collateral  Agent,  securing  payment of all the
          Obligations  of the  applicable  Loan Party,  such  Subsidiary or such
          parent,  as the case may be, under the Loan Documents and constituting
          Liens on all such properties,

               (iv) within 30 days after such request, formation or acquisition,
          take,  and cause  such  Subsidiary  or such  parent to take,  whatever
          action (including, without limitation, the recording of mortgages, the
          filing of Uniform Commercial Code financing  statements and the giving
          of  notices)  may be  necessary  or  advisable  in the  opinion of the
          Collateral   Agent  to  vest  in  the  Collateral  Agent  (or  in  any
          representative  of the  Collateral  Agent  designated by it) valid and
          subsisting  Liens on the  properties  purported  to be  subject to the
          mortgages,  pledges,  assignments,  security agreement supplements and
          security  agreements  delivered  pursuant  to  this  Section  5.01(j),
          enforceable against all third parties in accordance with their terms,

               (v) within 60 days after such request,  formation or acquisition,
          deliver to the  Collateral  Agent,  upon the request of the Collateral
          Agent in its sole  discretion,  a signed copy of a favorable  opinion,
          addressed to the Collateral  Agent and the other Secured  Parties,  of
          counsel for the Loan Parties  acceptable to the Collateral Agent as to
          the matters contained in clauses (i), (iii) and (iv) above, as to such
          guaranties,  guaranty  supplements,   pledges,  assignments,  security
          agreement  supplements and security  agreements being legal, valid and
          binding   obligations  of  each  Loan  Party  thereto  enforceable  in
          accordance  with  their  terms  and as to such  other  matters  as the
          Collateral Agent may reasonably request,
<PAGE>
               (vi) as promptly as practicable after such request,  formation or
          acquisition,  deliver, upon the request of the Collateral Agent in its
          sole  discretion,  to the Collateral Agent with respect to each parcel
          of real  property  owned or held by the entity  that is the subject of
          such request,  formation or  acquisition  title  reports,  surveys and
          engineering,  soils and other reports,  and  environmental  assessment
          reports,  each  in  scope,  form  and  substance  satisfactory  to the
          Collateral Agent, PROVIDED,  HOWEVER, that to the extent that any Loan
          Party or any of its Subsidiaries  shall have otherwise received any of
          the  foregoing  items with respect to such real  property,  such items
          shall,  promptly  after  the  receipt  thereof,  be  delivered  to the
          Collateral Agent,

               (vii)  upon  the  occurrence  and  during  the  continuance  of a
          Default,  promptly  cause to be deposited  any and all cash  dividends
          paid  or  payable  to it or any of its  Subsidiaries  from  any of its
          Subsidiaries from time to time into the Cash Collateral  Account,  and
          with  respect to all other  dividends  paid or payable to it or any of
          its Subsidiaries from time to time,  promptly execute and deliver,  or
          cause such Subsidiary to promptly execute and deliver, as the case may
          be, any and all further  instruments and take or cause such Subsidiary
          to take,  as the case may be, all such other action as the  Collateral
          Agent may deem  necessary or desirable in order to obtain and maintain
          from and after the time such  dividend is paid or payable a perfected,
          first priority lien on and security interest in such dividends, and

               (viii) at any time and from time to time,  promptly  execute  and
          deliver any and all further  instruments  and  documents  and take all
          such  other  action  as the  Collateral  Agent may deem  necessary  or
          desirable in obtaining  the full  benefits  of, or in  perfecting  and
          preserving  the  Liens  of,  such  guaranties,   mortgages,   pledges,
          assignments, security agreement supplements and security agreements.

          (k) FURTHER ASSURANCES. (i) Promptly upon request by any Agent, or any
     Lender Party through the Administrative  Agent,  correct, and cause each of
     its Subsidiaries promptly to correct, any material defect or error that may
     be  discovered in any Loan  Document or in the  execution,  acknowledgment,
     filing or recordation thereof, and

               (ii)  Promptly  upon  request by any Agent,  or any Lender  Party
          through the Administrative Agent, do, execute,  acknowledge,  deliver,
          record, re-record, file, re-file, register and re-register any and all
          such further acts, deeds, conveyances, pledge agreements, assignments,
          financing   statements   and   continuations   thereof,    termination
          statements, notices of assignment, transfers, certificates, assurances
          and other  instruments  as any Agent,  or any Lender Party through the
          Administrative  Agent,  may  reasonably  require  from time to time in
          order to (A)  carry  out more  effectively  the  purposes  of the Loan
          Documents,  (B) to the fullest  extent  permitted by  applicable  law,
          subject  any  Loan  Party's  or any of its  Subsidiaries'  properties,
          assets,  rights or interests to the Liens now or hereafter intended to
          be covered by any of the Collateral Documents, (C) perfect and
<PAGE>
          maintain  the  validity,  effectiveness  and  priority  of  any of the
          Collateral  Documents  and any of the  Liens  intended  to be  created
          thereunder and (D) assure, convey, grant, assign, transfer,  preserve,
          protect  and confirm  more  effectively  unto the Secured  Parties the
          rights  granted  or now or  hereafter  intended  to be  granted to the
          Secured Parties under any Loan Document or under any other  instrument
          executed in connection  with any Loan Document to which any Loan Party
          or any of its  Subsidiaries is or is to be a party,  and cause each of
          its Subsidiaries to do so.

          (l) PERFORMANCE OF RELATED DOCUMENTS.  Perform and observe,  and cause
     each of its  Subsidiaries  to  perform  and  observe,  all of the terms and
     provisions  of each  Related  Document to be  performed  or observed by it,
     maintain each such Related Document in full force and effect,  enforce such
     Related Document in accordance with its terms, take all such action to such
     end as may be from time to time requested by the Administrative  Agent and,
     upon request of the Administrative  Agent, make to each other party to each
     such Related Document such demands and requests for information and reports
     or for action as any Loan Party or any of its  Subsidiaries  is entitled to
     make under such Related Document.

          (m)  COMPLIANCE  WITH  TERMS  OF  LEASEHOLDS.  Make all  payments  and
     otherwise perform all obligations in respect of all leases of real property
     to which the Parent Guarantor or any of its  Subsidiaries is a party,  keep
     such  leases in full force and effect and not allow such leases to lapse or
     be  terminated  or any  rights  to renew  such  leases to be  forfeited  or
     cancelled, notify the Administrative Agent of any default by any party with
     respect to such leases and cooperate with the  Administrative  Agent in all
     respects to cure any such default, and cause each of its Subsidiaries to do
     so.

          (n) CASH  CONCENTRATION  ACCOUNT;  L/C CASH  COLLATERAL  ACCOUNT.  (i)
     Maintain,  and  cause  each of its  Subsidiaries  to  maintain,  main  cash
     concentration with Citibank and lockbox accounts into which all proceeds of
     Collateral  are paid with one or more banks  acceptable  to the  Collateral
     Agent that have accepted the  assignment of such accounts to the Collateral
     Agent for the  benefit of the  Secured  Parties  pursuant  to the  Security
     Agreement.

               (ii)  Establish and maintain a L/C Cash  Collateral  Account upon
          the Collateral Agent's request.

          (o)  INTEREST  RATE  HEDGING.  Enter into prior to April 1, 2000,  and
     maintain  at all times  thereafter,  interest  rate Hedge  Agreements  with
     Persons acceptable to the Administrative  Agent, covering a notional amount
     of not less  than  $100,000,000  and  providing  for such  Persons  to make
     payments  thereunder for a period of no less than three years to the extent
     of increases in interest  rates greater than 3% above the weighted  average
     Eurodollar Rate on the date hereof.
<PAGE>
          (p) CONDITIONS SUBSEQUENT.

               (i)  Use  its  best   efforts   promptly   to   deliver   to  the
          Administrative  Agent  within 60 days after the Initial  Extension  of
          Credit,  in form  and  substance  satisfactory  to the  Administrative
          Agent,  landlord  consents and bailee letters from such Persons as the
          Administrative  Agent may request,  providing the Administrative Agent
          with the right to  receive  notice  of  default  under the  applicable
          lease,  the right to repossess  such  Inventory at any time,  and such
          other rights as may be  reasonably  acceptable  to the  Administrative
          Agent; and

               (ii)  within  30 days  after the  Initial  Extension  of  Credit,
          evidence that counterparts of the Mortgages have been duly recorded in
          all filing or recording offices that the Administrative Agent may deem
          necessary or desirable in order to create a valid first and subsisting
          Lien on the property described therein in favor of the Secured Parties
          and that all filing and recording taxes and fees have been paid.

     SECTION  5.02.  NEGATIVE  COVENANTS.  So long as any  Advance  or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment hereunder, neither any Borrower nor the Parent Guarantor will, at any
time:

          (a) LIENS,  ETC. Create,  incur,  assume or suffer to exist, or permit
     any of its  Subsidiaries to create,  incur,  assume or suffer to exist, any
     Lien  on or  with  respect  to  any  of its  properties  of  any  character
     (including,  without  limitation,  accounts) whether now owned or hereafter
     acquired,  or sign or  file  or  suffer  to  exist,  or  permit  any of its
     Subsidiaries  to sign or  file  or  suffer  to  exist,  under  the  Uniform
     Commercial Code of any jurisdiction,  a financing  statement that names the
     Parent Guarantor or any of its Subsidiaries as debtor, or sign or suffer to
     exist, or permit any of its  Subsidiaries  to sign or suffer to exist,  any
     security  agreement  authorizing any secured party  thereunder to file such
     financing  statement,  or  assign,  or permit  any of its  Subsidiaries  to
     assign, any accounts or other right to receive income, except:

               (i) Liens created under the Loan Documents;

               (ii) Permitted Liens;

               (iii) Liens existing on the date hereof and described on Schedule
          5.02(a) hereto;

               (iv)  Liens  arising  in  connection  with   Capitalized   Leases
          permitted  under Section  5.02(b)(iii)(B);  PROVIDED that no such Lien
          shall  extend to or cover any  Collateral  or  assets  other  than the
          assets subject to such Capitalized Leases;
<PAGE>
               (v) Liens arising in connection with Floor Planning Arrangements;

               (vi) Liens securing Debt permitted under Section 5.02(b)(iii)(E);
          and

               (vii)   Liens    securing    Debt    permitted    under   Section
          5.02(b)(iii)(H).

          (b) DEBT. Create,  incur,  assume or suffer to exist, or permit any of
     its  Subsidiaries to create,  incur,  assume or suffer to exist,  any Debt,
     except:

               (i) in the  case of the  Borrowers,  Debt  in  respect  of  Hedge
          Agreements  designed to hedge against  fluctuations  in interest rates
          incurred  in the  ordinary  course of  business  and  consistent  with
          prudent business  practice with the aggregate  Agreement Value thereof
          not to exceed $10,000,000 at any time outstanding;

               (ii) in the case of any Subsidiary of any Borrower,  Debt owed to
          such  Borrower  or to a  wholly  owned  Subsidiary  of such  Borrower,
          PROVIDED that, in each case,  such Debt (x) shall  constitute  Pledged
          Debt, (y) shall be on terms acceptable to the Administrative Agent and
          (z)  shall be  evidenced  by  promissory  notes in form and  substance
          satisfactory to the  Administrative  Agent and such  promissory  notes
          shall be  pledged  as  security  for the  Obligations  under  the Loan
          Documents of the holder thereof and delivered to the Collateral  Agent
          pursuant to the terms of the Security Agreement; and

               (iii) in the case of the Loan Parties,

                    (A) Debt under the Loan Documents,

                    (B)  Capitalized  Leases  not to  exceed  in  the  aggregate
               $25,000,000 at any time outstanding,

                    (D) the Surviving Debt,

                    (E) Debt secured by a mortgage on the real property  located
               at 1330 West Southern,  Tempe,  Arizona in an aggregate principal
               amount not to exceed $15,000,000,

                    (F)  indorsement  of negotiable  instruments  for deposit or
               collection  or similar  transactions  in the  ordinary  course of
               business,

                    (G) Debt under the Floor Planning Arrangements,

                    (H) Debt under inventory flooring arrangements provided by a
               manufacturer  of computer  equipment,  secured by  inventory  and
               equipment   bearing   the   trademark   or   tradename   of  such
               manufacturer,  provided  that
<PAGE>
               (x) such manufacturer has entered into an intercreditor agreement
               with  the  Administrative  Agent  in  substantially  the  form of
               Exhibit K hereto and (y) the aggregate  principal  amount of such
               Debt shall not exceed $100,000,000; and

                    (I)  Debt  extending  the  maturity  of ,  or  refunding  or
               refinancing,  in whole or in part,  Debt described in clauses (D)
               and (G) (other than the Floor  Planning  Arrangement to which IBM
               Credit Corporation is a party) above, PROVIDED that (1) the terms
               of any such extending,  refunding or refinancing Debt, and of any
               agreement entered into and of any instrument issued in connection
               therewith, are otherwise permitted by the Loan Documents, (2) the
               terms  relating  to  principal  amount,  amortization,  maturity,
               collateral  (if  any)  and  subordination  (if  any),  and  other
               material terms taken as a whole, of any such extending, refunding
               or refinancing Debt, and of any agreement entered into and of any
               instrument issued in connection therewith,  are no less favorable
               in any material respect to the Loan Parties or the Lender Parties
               than the terms of any agreement or instrument  governing the Debt
               being  extended,  refunded or  refinanced  and the interest  rate
               applicable to such extending  refunding or refinancing  Debt does
               not exceed the then  applicable  market interest rate, (3) in the
               case  of  any  Surviving  Debt,  the  principal  amount  of  such
               Surviving Debt shall not be increased above the principal  amount
               thereof   outstanding   immediately   prior  to  such  extension,
               refunding  or  refinancing  and  (4) in  the  case  of any  Floor
               Planning  Arrangement,  the creditors  thereof shall have entered
               into  Intercreditor  Agreements with the Collateral Agent and the
               applicable  Borrower  that are no less  favorable in any material
               respect to the Loan Parties or the Lender  Parties than the terms
               of the Intercreditor  Agreement entered into with the creditor of
               such Floor  Planning  Arrangement  being  extended,  refunded  or
               refinanced.

          (c)  CHANGE  IN  NATURE  OF  BUSINESS.  Make,  or  permit  any  of its
     Subsidiaries  to make, any material change in the nature of its business as
     carried on at the date hereof.

          (d) MERGERS,  ETC. Merge into or consolidate with any Person or permit
     any Person to merge into it, or permit  any of its  Subsidiaries  to do so,
     except that any  Subsidiary  of any Borrower may merge into or  consolidate
     with any other  Subsidiary of such Borrower,  PROVIDED that, in the case of
     any such  merger or  consolidation,  the  Person  formed by such  merger or
     consolidation  shall  be  a  wholly  owned  Subsidiary  of  such  Borrower;
     PROVIDED,  HOWEVER,  that in each case,  immediately  after  giving  effect
     thereto,  no event shall occur and be continuing that constitutes a Default
     and, in the case of any such merger to which any Borrower is a party,  such
     Borrower is the surviving corporation.

          (e) SALES, ETC., OF ASSETS. Sell, lease, transfer or otherwise dispose
     of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
     dispose of, any assets, or
<PAGE>
     grant any option or other right to purchase, lease or otherwise acquire any
     assets  other  than  Inventory  to be sold in the  ordinary  course  of its
     business, except:

               (i) sales of Inventory in the ordinary course of its business;

               (ii) sales of Receivables in the ordinary  course of its business
          pursuant to the Receivables Sales Agreement;

               (iii) sales of assets for cash and for fair value in an aggregate
          amount not to exceed $10,000,000 in any Fiscal Year; and

               (iv) the sale of any real property listed on Schedule 4.01(v) for
          cash and for fair value in a sale-leaseback transaction or otherwise;

         PROVIDED that in the case of sales of assets  pursuant to clauses (iii)
         and (iv) above, the Borrowers shall, on the date of receipt by any Loan
         Party or any of its  Subsidiaries  of the Net Cash  Proceeds  from such
         sale,  prepay the Advances  pursuant to, and in the amount and order of
         priority set forth in, Section 2.06(b)(i), as specified therein.

          (f)  INVESTMENTS IN OTHER PERSONS.  Make or hold, or permit any of its
     Subsidiaries to make or hold, any Investment in any Person, except,

               (i) Investments by the Parent  Guarantor and its  Subsidiaries in
          their Subsidiaries outstanding on the date hereof;

               (ii) loans and advances to  employees  in the ordinary  course of
          the business of the Parent Guarantor and its Subsidiaries as presently
          conducted in an aggregate  principal  amount not to exceed $500,000 at
          any time outstanding;

               (iii) Investments by the Parent Guarantor and its Subsidiaries in
          Cash  Equivalents  in an  aggregate  principal  amount  not to  exceed
          $5,000,000 at any time outstanding;

               (iv)  Investments  existing on the date hereof and  described  on
          Schedule 4.01(x) hereto;

               (v)  Investments by the Borrowers in Hedge  Agreements  permitted
          under Section 5.02(b)(i)(A);

               (vi) Investments  consisting of intercompany Debt permitted under
          Section 5.02(b)(ii); and

               (vii) Investments in Subsidiaries not existing on the date hereof
          that are formed with an initial  capitalization of $1,000,000 or less,
          PROVIDED that the
<PAGE>
          aggregate  Investments  permitted  under this  clause  (vii) shall not
          exceed $5,000,000 in any Fiscal Year.

          (g)  RESTRICTED  PAYMENTS.  Declare  or pay any  dividends,  purchase,
     redeem,  retire,  defease or otherwise acquire for value any of its capital
     stock or any warrants, rights or options to acquire such capital stock, now
     or hereafter  outstanding,  return any capital to its stockholders as such,
     make any distribution of assets, capital stock, warrants,  rights, options,
     obligations or securities to its  stockholders as such or issue or sell any
     capital  stock or any  warrants,  rights or options to acquire such capital
     stock,  or permit any of its  Subsidiaries  to do any of the  foregoing  or
     permit any of its  Subsidiaries  to purchase,  redeem,  retire,  defease or
     otherwise  acquire for value any capital  stock of the Parent  Guarantor or
     any  warrants,  rights or options to acquire such capital stock or to issue
     or sell any  capital  stock or any  warrants,  rights or options to acquire
     such capital stock,  except that, so long as no Default shall have occurred
     and be continuing at the time of any action described in clause (i) or (ii)
     below or would result therefrom:

               (i) the Parent  Guarantor  may (A) declare and pay  dividends and
          distributions payable only in common stock of the Parent Guarantor and
          (B) except to the extent the Net Cash Proceeds thereof are required to
          be applied  to the  prepayment  of the  Advances  pursuant  to Section
          2.06(b), purchase, redeem, retire, defease or otherwise acquire shares
          of its capital stock with the proceeds received contemporaneously from
          the issue of new shares of its  capital  stock with equal or  inferior
          voting powers, designations, preferences and rights,

               (ii) any  Subsidiary of any Borrower may (A) declare and pay cash
          dividends to such  Borrower and (B) declare and pay cash  dividends to
          any other Loan Party of which it is a Subsidiary,  (iii) the Borrowers
          may pay cash  dividends  or  otherwise  transfer  funds to the  Parent
          Guarantor or MicroAge  Computer Centers,  Inc. for operating  expenses
          incurred in the normal  course of business by the Parent  Guarantor or
          MicroAge  Computer  Centers,  Inc. or paid by the Parent  Guarantor or
          MicroAge  Computer  Centers,  Inc.  on behalf of the  Borrowers.  Such
          expenses  include all payroll and benefits costs for all  Subsidiaries
          of the Parent Guarantor,  telephone,  travel, rent and other occupancy
          costs, professional expenses, including consulting,  audit, accounting
          and legal  expenses,  corporate  insurance  expenses,  data processing
          costs and other operating expenses.

               (iv) the  Parent  Guarantor  and the  Borrowers  may issue  stock
          options to the directors and employees of such Loan Party.

          (h) AMENDMENTS OF CONSTITUTIVE DOCUMENTS.  Amend, or permit any of its
     Subsidiaries to amend,  its certificate of incorporation or bylaws or other
     constitutive documents in any material respect.
<PAGE>
          (i)  ACCOUNTING  CHANGES.  Make  or  permit,  or  permit  any  of  its
     Subsidiaries  to make or permit,  any change in (i) accounting  policies or
     reporting  practices,  except as required by generally accepted  accounting
     principles or (ii) Fiscal Year.

          (j) PREPAYMENTS,  ETC., OF DEBT. Prepay, redeem, purchase,  defease or
     otherwise satisfy prior to the scheduled maturity thereof in any manner, or
     make any  payment in  violation  of any  subordination  terms of, any Debt,
     except (i) the  prepayment of the Advances in accordance  with the terms of
     this  Agreement  and (ii)  regularly  scheduled or required  repayments  or
     redemptions of Surviving Debt, or amend, modify or change in any manner any
     term or condition of any Surviving Debt, or permit any of its  Subsidiaries
     to do any of the  foregoing  other than to prepay  any Debt  payable to any
     Borrower.

          (k)  AMENDMENT,  ETC., OF RELATED  DOCUMENTS.  Cancel or terminate any
     Related  Document or consent to or accept any  cancellation  or termination
     thereof, amend, modify or change in any manner any term or condition of any
     Related Document or give any consent, waiver or approval thereunder,  waive
     any  default  under or any breach of any term or  condition  of any Related
     Document,  agree in any  manner to any  other  amendment,  modification  or
     change of any term or condition  of any Related  Document or take any other
     action in connection with any Related  Document that would impair the value
     of the interest or rights of any Loan Party thereunder or that would impair
     the rights or  interests  of any Agent or any Lender  Party,  or  otherwise
     amend  Sections 2.1, 9.2 or 10 of the  Agreement  for  Inventory  Financing
     dated as of October 28, 1999  between IBM Credit  Corporation,  MTS Holding
     Company,  MicroAge Computer Centers,  Inc., MicroAge  Technology  Services,
     L.L.C.  and Pinacor,  or Section  I(A) or (B) of  Attachment A thereto , or
     permit any of its Subsidiaries to do any of the foregoing.

          (m) NEGATIVE  PLEDGE.  Enter into or suffer to exist, or permit any of
     its   Subsidiaries  to  enter  into  or  suffer  to  exist,  any  agreement
     prohibiting or conditioning the creation or assumption of any Lien upon any
     of its  property or assets  except (i) in favor of the  Secured  Parties or
     (ii) in  connection  with (A) any  Surviving  Debt and (B) any  Capitalized
     Lease permitted by Section  5.02(b)(iii)(C)  solely to the extent that such
     Capitalized Lease prohibits a Lien on the property subject thereto.

          (n)  PARTNERSHIPS,  ETC.  Become a general  partner in any  general or
     limited  partnership or joint venture, or permit any of its Subsidiaries to
     do so, other than any  Subsidiary  the sole assets of which  consist of its
     interest in such partnership or joint venture.

          (o)   SPECULATIVE   TRANSACTIONS.   Engage,   or  permit  any  of  its
     Subsidiaries to engage, in any transaction  involving  commodity options or
     futures contracts or any similar speculative transactions.

          (p) CAPITAL  EXPENDITURES.  Make, or permit any of its Subsidiaries to
     make, any Capital  Expenditures
<PAGE>
     that would cause the aggregate of all such Capital Expenditures made by the
     Parent  Guarantor  and its  Subsidiaries  in any period set forth  below to
     exceed the amount set forth below for such period:

                    Period                                           Amount
                    ------                                           ------

     Fiscal Quarter ended January 31, 2000                        $ 7,400,000
     Two Fiscal Quarters ended April 30, 2000                     $14,800,000
     Three Fiscal Quarters ended July 31, 2000                    $22,200,000
     Four Fiscal Quarters ended October 31, 2000                  $29,600,000
     Fiscal Quarter ended January 31, 2001                        $ 9,300,000
     Two Fiscal Quarters ended April 30, 2001                     $18,600,000
     Three Fiscal Quarters ended July 31, 2001                    $27,900,000
     Four Fiscal Quarters ended October 31, 2001                  $36,200,000
     Fiscal Quarter ended January 31, 2002                        $11,300,000
     Two Fiscal Quarters ended April 30, 2002                     $22,600,000
     Three Fiscal Quarters ended July 31, 2002                    $33,900,000
     Four Fiscal Quarters ended October 31, 2002                  $45,200,000

          (q)  FORMATION  OF  SUBSIDIARIES.  Organize  or invest,  or permit any
     Subsidiary  to  organize  or invest,  in any new  Subsidiary  other than as
     permitted by Section 5.02(f) (vii).

          (r) LIMITATION ON PAYMENT RESTRICTIONS. Enter into or suffer to exist,
     or permit any  Subsidiary  to enter into or suffer to exist,  any agreement
     limiting the ability of any of its Subsidiaries to declare or pay dividends
     or other  distributions  in respect of its  capital  stock or make loans or
     advances  to, or  otherwise  transfer  assets to or invest  in,  the Parent
     Guarantor or any  Subsidiary  of the Parent  Guarantor  (whether  through a
     covenant restricting  dividends,  loans, asset transfers or investments,  a
     financial covenant or otherwise), except the Loan Documents.

     SECTION 5.03. REPORTING  REQUIREMENTS.  So long as any Advance or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment  hereunder,  the Parent  Guarantor will furnish to the Agents and the
Lender Parties:

          (a) DEFAULT  NOTICE.  As soon as possible  and in any event within two
     days after the  occurrence  of each  Default or any event,  development  or
     occurrence  reasonably  likely to have a Material Adverse Effect continuing
     on the date of such statement,  a statement of the chief financial  officer
     of the Parent  Guarantor  setting  forth  details of such  Default  and the
     action  that the  Parent  Guarantor  has  taken and  proposes  to take with
     respect thereto.

          (b) ANNUAL FINANCIALS. As soon as available and in any event within 90
     days after the end of each Fiscal  Year,  a copy of the annual audit report
     for such year for the  Parent  Guarantor  and its  Subsidiaries,  including
     therein  Consolidated  balance  sheets  of the  Parent  Guarantor  and  its
     Subsidiaries as of the end of such Fiscal Year and Consolidated  statements
     of  income  and a  Consolidated  statement  of  cash  flows  of the
<PAGE>
     Parent  Guarantor and its  Subsidiaries  for such Fiscal Year, in each case
     accompanied   by  an  opinion   acceptable  to  the  Required   Lenders  of
     PricewaterhouseCoopers  LLC or  other  independent  public  accountants  of
     recognized standing acceptable to the Required Lenders, together with (i) a
     certificate of such  accounting  firm to the Lender Parties stating that in
     the course of the regular audit of the business of the Parent Guarantor and
     its  Subsidiaries,  which audit was  conducted by such  accounting  firm in
     accordance with generally accepted auditing standards, such accounting firm
     has obtained no knowledge that a Default has occurred and is continuing, or
     if, in the opinion of such  accounting  firm, a Default has occurred and is
     continuing,  a statement as to the nature thereof,  (ii) a schedule in form
     satisfactory to the  Administrative  Agent of the computations used by such
     accountants in determining,  as of the end of such Fiscal Year,  compliance
     with the covenants contained in Section 5.04, PROVIDED that in the event of
     any change in GAAP used in the  preparation of such  financial  statements,
     the Parent Guarantor shall also provide, if necessary for the determination
     of compliance with Section 5.04, a statement of  reconciliation  conforming
     such financial  statements to GAAP, (iii)  Consolidating  balance sheets of
     the Parent  Guarantor  and the  Borrowers as of the end of such Fiscal Year
     and  Consolidating  statements  of  income  and cash  flows  of the  Parent
     Guarantor and the Borrowers for such Fiscal Year, all in reasonable  detail
     and duly certified by the chief financial  officer of the Parent  Guarantor
     as having been prepared in accordance  with GAAP and (iv) a certificate  of
     the chief financial officer of the Parent Guarantor stating that no Default
     has  occurred  and is  continuing  or, if a  default  has  occurred  and is
     continuing,  a statement  as to the nature  thereof and the action that the
     Parent Guarantor has taken and proposes to take with respect thereto.

          (c) QUARTERLY FINANCIALS. As soon as available and in any event within
     45 days after the end of each of the first  three  quarters  of each Fiscal
     Year, Consolidated and Consolidating balance sheets of the Parent Guarantor
     and its  Subsidiaries  as of the end of such quarter and  Consolidated  and
     Consolidating  statements  of income and a  Consolidated  statement of cash
     flows  of  the  Parent  Guarantor  and  its  Subsidiaries  for  the  period
     commencing  at the end of the previous  fiscal  quarter and ending with the
     end of such fiscal quarter and Consolidated and Consolidating statements of
     income and a Consolidated  statement of cash flows of the Parent  Guarantor
     and its Subsidiaries  for the period  commencing at the end of the previous
     Fiscal Year and ending with the end of such quarter,  setting forth in each
     case in comparative form the  corresponding  figures for the  corresponding
     period of the  preceding  Fiscal Year,  all in  reasonable  detail and duly
     certified  (subject to year-end audit  adjustments)  by the chief financial
     officer of the Parent  Guarantor as having been prepared in accordance with
     GAAP,  together  with (i) a  certificate  of said  officer  stating that no
     Default has occurred and is continuing or, if a Default has occurred and is
     continuing,  a statement  as to the nature  thereof and the action that the
     Parent  Guarantor  has taken and proposes to take with respect  thereto and
     (ii) a schedule in form  satisfactory  to the  Administrative  Agent of the
     computations  used by the Parent  Guarantor in determining  compliance with
     the covenants  contained in Section 5.04, PROVIDED that in the event of any
     change in GAAP used in the  preparation of such financial  statements,  the
     Parent Guarantor shall also provide,  if necessary for the
<PAGE>
     determination   of   compliance   with   Section   5.04,   a  statement  of
     reconciliation conforming such financial statements to GAAP.

          (d) MONTHLY  FINANCIALS.  As soon as available and in any event within
     30 days after the end of each month,  a  Consolidated  balance sheet of the
     Parent  Guarantor  and its  Subsidiaries  as of the end of such  month  and
     Consolidated  and  Consolidating  statements  of income and a  Consolidated
     statement of cash flows of the Parent  Guarantor and its  Subsidiaries  for
     the period  commencing at the end of the previous month and ending with the
     end of such month and Consolidated and  Consolidating  statements of income
     and a Consolidated  statement of cash flows of the Parent Guarantor and its
     Subsidiaries  for the period  commencing at the end of the previous  Fiscal
     Year and ending with the end of such month,  setting  forth in each case in
     comparative form the corresponding  figures for the corresponding  month of
     the preceding  Fiscal Year, all in reasonable  detail and duly certified by
     the chief financial officer or controller of the Parent Guarantor.

          (e) ANNUAL  FORECASTS.  As soon as available and in any event no later
     than 45 days  after the end of each  Fiscal  Year,  forecasts  prepared  by
     management  of  the  Parent   Guarantor,   in  form   satisfactory  to  the
     Administrative  Agent, of balance sheets,  income  statements and cash flow
     statements  on a monthly  basis for the Fiscal Year  following  such Fiscal
     Year and on an  annual  basis for each  Fiscal  Year  thereafter  until the
     Termination Date.

          (f) LITIGATION. Promptly after the commencement thereof, notice of all
     actions, suits, investigations, litigation and proceedings before any court
     or  governmental   department,   commission,   board,  bureau,   agency  or
     instrumentality,  domestic or foreign,  affecting  any Loan Party or any of
     its  Subsidiaries  of the type described in Section  4.01(f),  and promptly
     after the occurrence thereof, notice of any adverse change in the status or
     the financial  effect on any Loan Party or any of its  Subsidiaries  of the
     Disclosed Litigation from that described on Schedule 4.01(f) hereto.

          (g) SECURITIES REPORTS.  Promptly after the sending or filing thereof,
     copies of all proxy statements,  financial  statements and reports that any
     Loan Party or any of its Subsidiaries sends to its stockholders, and copies
     of  all  regular,  periodic  and  special  reports,  and  all  registration
     statements,  that any Loan Party or any of its Subsidiaries  files with the
     Securities and Exchange  Commission or any governmental  authority that may
     be substituted therefor, or with any national securities exchange.

          (h) CREDITOR REPORTS. Promptly after the furnishing thereof, copies of
     any statement or report  furnished to any holder of Debt  securities of any
     Loan  Party  or of any of its  Subsidiaries  pursuant  to the  terms of any
     indenture,  loan or credit or similar agreement and not otherwise  required
     to be furnished to the Lender Parties  pursuant to any other clause of this
     Section 5.03.

          (i) AGREEMENT  NOTICES.  Promptly upon receipt thereof,  copies of all
     notices,  requests and other documents received by any Loan Party or any of
     its  Subsidiaries  under
<PAGE>
     or pursuant  to any Related  Document  or  instrument,  indenture,  loan or
     credit or similar  agreement  regarding or related to any breach or default
     by any party  thereto or any other event that could  materially  impair the
     value of the interests or the rights of any Loan Party or otherwise  have a
     Material Adverse Effect and copies of any amendment, modification or waiver
     of any provision of any Related Document or instrument,  indenture, loan or
     credit or  similar  agreement  and,  from time to time upon  request by the
     Administrative  Agent,  such information and reports  regarding the Related
     Documents and such instruments,  indentures and loan and credit and similar
     agreements as the Administrative Agent may reasonably request.

          (j) REVENUE AGENT REPORTS. Within 10 days after receipt, copies of all
     Revenue Agent Reports (Internal Revenue Service Form 886), or other written
     proposals of the  Internal  Revenue  Service,  that  propose,  determine or
     otherwise  set  forth  positive  adjustments  to  the  Federal  income  tax
     liability of the affiliated group (within the meaning of Section 1504(a)(1)
     of the  Internal  Revenue  Code) of which the Parent  Guarantor is a member
     aggregating $3,000,000 or more.

          (k) TAX CERTIFICATES.  Promptly, and in any event within five Business
     Days after the due date  (with  extensions)  for  filing the final  Federal
     income tax return in respect of each taxable  year, a  certificate  (a "TAX
     Certificate"),  signed by the President or the chief  financial  officer or
     controller of the Parent  Guarantor,  stating that the Parent Guarantor has
     paid to the Internal  Revenue  Service or other taxing  authority  the full
     amount that the Parent  Guarantor  is required to pay in respect of Federal
     income tax for such year.

          (l) ERISA. (i) ERISA EVENTS AND ERISA REPORTS. (A) Promptly and in any
     event within 10 days after any Loan Party or any ERISA  Affiliate  knows or
     has reason to know that any ERISA Event has  occurred,  a statement  of the
     chief financial officer of the Parent Guarantor describing such ERISA Event
     and the action,  if any,  that such Loan Party or such ERISA  Affiliate has
     taken and  proposes  to take with  respect  thereto and (B) on the date any
     records,  documents or other information must be furnished to the PBGC with
     respect  to any Plan  pursuant  to  Section  4010 of ERISA,  a copy of such
     records, documents and information.

               (ii) PLAN  TERMINATIONS.  Promptly  and in any event  within  two
          Business  Days  after  receipt  thereof by any Loan Party or any ERISA
          Affiliate,  copies of each notice from the PBGC stating its  intention
          to terminate any Plan or to have a trustee appointed to administer any
          Plan.

               (iii)  MULTIEMPLOYER  PLAN  NOTICES.  Promptly  and in any  event
          within five Business  Days after receipt  thereof by any Loan Party or
          any ERISA Affiliate from the sponsor of a Multiemployer  Plan,  copies
          of each notice  concerning (A) the imposition of Withdrawal  Liability
          by any such Multiemployer Plan, (B) the reorganization or termination,
          within  the  meaning of Title IV of ERISA,  of any such  Multiemployer
          Plan or
<PAGE>
          (C) the amount of liability incurred, or that may be incurred, by such
          Loan  Party or any  ERISA  Affiliate  in  connection  with  any  event
          described in clause (A) or (B).

               (iv) PLAN ANNUAL  REPORTS.  Promptly  and in any event  within 30
          days after the  filing  thereof  with the  Internal  Revenue  Service,
          copies of each Schedule B (Actuarial Information) to the annual report
          (Form 5500 Series) with respect to each Plan.

          (m)  ENVIRONMENTAL   CONDITIONS.   Promptly  after  the  assertion  or
     occurrence  thereof,  notice of any Environmental  Action against or of any
     noncompliance  by any  Loan  Party  or any of  its  Subsidiaries  with  any
     Environmental Law or Environmental Permit that could reasonably be expected
     to have a Material Adverse Effect.

          (n) REAL  PROPERTY.  As soon as  available  and in any event within 30
     days after the end of each Fiscal  Year, a report  supplementing  Schedules
     4.01(v) and 4.01(w)  hereto,  including an  identification  of all real and
     leased  property  disposed  of by  the  Parent  Guarantor  or  any  of  its
     Subsidiaries during such Fiscal Year, a list and description (including the
     street address, county or other relevant jurisdiction, state, record owner,
     book value thereof, and in the case of leases of property,  lessor, lessee,
     expiration  date and  annual  rental  cost  thereof)  of all real  property
     acquired or leased during such Fiscal Year and a description  of such other
     changes in the  information  included in such Schedules as may be necessary
     for such Schedules to be accurate and complete.

          (o)  INSURANCE.  As soon as available  and in any event within 30 days
     after the end of each  Fiscal  Year,  a report  summarizing  the  insurance
     coverage  (specifying  type,  amount and  carrier)  in effect for each Loan
     Party and its  Subsidiaries  and containing such additional  information as
     any Agent,  or any Lender  Party  through  the  Administrative  Agent,  may
     reasonably specify.

          (p) BORROWING BASE CERTIFICATE.  As soon as available and in any event
     no later than the close of business on  Wednesday of each week, a Borrowing
     Base Certificate, as at the end of the immediately preceding Monday of such
     week,  certified by the chief financial officer,  executive vice president,
     controller, treasurer or assistant treasurer of the Parent Guarantor.

          (q) OTHER INFORMATION. Such other information respecting the business,
     condition (financial or otherwise), operations,  performance, properties or
     prospects of any Loan Party or any of its Subsidiaries as any Agent, or any
     Lender  Party  through  the  Administrative  Agent,  may from  time to time
     reasonably request.

     SECTION  5.04.  FINANCIAL  COVENANTS.  So long as any  Advance or any other
Obligation of any Loan Party under any Loan Document  shall remain  unpaid,  any
Letter of  Credit  shall be  outstanding  or any  Lender  Party  shall  have any
Commitment hereunder, the Parent Guarantor will:
<PAGE>
          (a) DEBT TO EBITDA RATIO. Maintain at all times a Debt/EBITDA Ratio of
     not more than the amount set forth below for each period set forth below:

                        Period                                 Ratio
                        ------                                 -----

     Four Fiscal Quarters ended January 31, 2000             6.70:1.00
     Four Fiscal Quarters ended April 30, 2000               5.20:1.00
     Four Fiscal Quarters ended July 31, 2000                5.10:1.00
     Four Fiscal Quarters ended October 31, 2000             4.60:1.00
     Four Fiscal Quarters ended January 31, 2001             3.80:1.00
     Four Fiscal Quarters ended April 30, 2001               3.60:1.00
     Four Fiscal Quarters ended July 31, 2001                3.40:1.00
     Four Fiscal Quarters ended October 31, 2001             3.40:1.00
     Four Fiscal Quarters ended January 31, 2002             3.40:1.00
     Four Fiscal Quarters ended April 30, 2002               3.40:1.00
     Four Fiscal Quarters ended July 31, 2002                3.30:1.00

          (b) FIXED CHARGE COVERAGE RATIO.  Maintain at all times a Fixed Charge
     Coverage  Ratio of not less than the ratio set forth  below for each period
     set forth below:

                        Period                                 Ratio
                        ------                                 -----

     Fiscal Quarter ended April 30, 2000                     1.00:1.00
     Two Fiscal Quarters ended July 31, 2000                 1.10:1.00
     Three Fiscal Quarters ended October 31, 2000            1.20:1.00
     Four Fiscal Quarters ended January 31, 2001             1.20:1.00
     Four Fiscal Quarters ended April 30, 2001               1.25:1.00
     Four Fiscal Quarters ended July 31, 2001                1.25:1.00
     Four Fiscal Quarters ended October 31, 2001             1.25:1.00
     Four Fiscal Quarters ended January 31, 2002             1.25:1.00
     Four Fiscal Quarters ended April 30, 2002               1.25:1.00
     Four Fiscal Quarters ended July 31, 2002                1.25:1.00

          (c)  MINIMUM  EBITDA.  Maintain  at all  times  EBITDA  of the  Parent
     Guarantor and its Subsidiaries not less than the amount set forth below for
     each period set forth below:

                      Period                                    Amount
                      ------                                    ------

     Fiscal Quarter ended January 31, 2000                   $  7,000,000
     Two Fiscal Quarters ended April 30, 2000                $ 26,000,000
<PAGE>
     Three Fiscal Quarters ended July 31, 2000               $ 47,000,000
     Four Fiscal Quarters ended October 31, 2000             $ 70,000,000
     Four Fiscal Quarters ended January 31, 2001             $ 85,000,000
     Four Fiscal Quarters ended April 30, 2001               $ 90,000,000
     Four Fiscal Quarters ended July 31, 2001                $ 95,000,000
     Four Fiscal Quarters ended October 31, 2001             $ 95,000,000
     Four Fiscal Quarters ended January 31, 2002             $ 95,000,000
     Four Fiscal Quarters ended April 30, 2002               $100,000,000
     Four Fiscal Quarters ended July 31, 2002                $105,000,000

                                   ARTICLE VI

                                EVENTS OF DEFAULT

     SECTION 6.01. EVENTS OF DEFAULT. If any of the following events ("EVENTS OF
DEFAULT") shall occur and be continuing:

          (a) (i) the  Borrowers  shall fail to pay any principal of any Advance
     when the same shall become due and payable or (ii) the Borrowers shall fail
     to pay any  interest on any  Advance,  or any Loan Party shall fail to make
     any other payment under any Loan  Document,  in each case under this clause
     (ii) within five days after the same becomes due and payable; or

          (b) any  representation  or warranty made by any Loan Party (or any of
     its officers)  under or in connection with any Loan Document shall prove to
     have been incorrect in any material respect when made; or

          (c) the  Parent  Guarantor  or any  Borrower  shall fail to perform or
     observe any term, covenant or agreement contained in Section 2.14, 5.01(e),
     (f), (i), (j), or (o), 5.02, 5.03 or 5.04; or

          (d) any Loan Party  shall fail to perform or observe  any other  term,
     covenant  or  agreement  contained  in any Loan  Document on its part to be
     performed or observed if such failure shall remain  unremedied  for 15 days
     after the earlier of the date on which
<PAGE>
     (A) a  Responsible  Officer  becomes  aware of such  failure or (B) written
     notice  thereof shall have been given to the Parent  Guarantor by any Agent
     or any Lender Party; or

          (e) any Loan  Party or any of its  Subsidiaries  shall fail to pay any
     principal of, premium or interest on or any other amount payable in respect
     of any Debt that is outstanding  in a principal  amount (or, in the case of
     any Hedge  Agreement,  an Agreement  Value) of at least  $7,500,000  either
     individually or in the aggregate (but excluding Debt outstanding hereunder)
     of such Loan Party or such  Subsidiary  (as the case may be), when the same
     becomes  due  and  payable   (whether  by  scheduled   maturity,   required
     prepayment,  acceleration,  demand or  otherwise),  and such failure  shall
     continue  after the  applicable  grace  period,  if any,  specified  in the
     agreement  or  instrument  relating to such Debt;  or any other event shall
     occur or condition  shall exist under any agreement or instrument  relating
     to any  such  Debt,  if  the  effect  of  such  event  or  condition  is to
     accelerate,  or to permit the acceleration of, the maturity of such Debt or
     otherwise to cause, or to permit the holder thereof to cause,  such Debt to
     mature;  or any  such  Debt  shall be  declared  to be due and  payable  or
     required  to be prepaid or redeemed  (other  than by a regularly  scheduled
     required prepayment or redemption),  purchased or defeased,  or an offer to
     prepay, redeem, purchase or defease such Debt shall be required to be made,
     in each case prior to the stated maturity thereof; or

          (f) any Loan Party or any of its  Subsidiaries  (other  than such Loan
     Party or such Subsidiary that is an Immaterial  Subsidiary) shall generally
     not pay its debts as such debts  become  due, or shall admit in writing its
     inability to pay its debts  generally,  or shall make a general  assignment
     for the benefit of creditors;  or any proceeding  shall be instituted by or
     against  any Loan Party or any of its  Subsidiaries  (other  than such Loan
     Party or such  Subsidiary  that is an  Immaterial  Subsidiary)  seeking  to
     adjudicate it a bankrupt or insolvent, or seeking liquidation,  winding up,
     reorganization, arrangement, adjustment, protection, relief, or composition
     of it or its debts under any law  relating  to  bankruptcy,  insolvency  or
     reorganization  or relief of debtors,  or seeking the entry of an order for
     relief or the appointment of a receiver, trustee, or other similar official
     for it or for any substantial  part of its property and, in the case of any
     such  proceeding  instituted  against it (but not instituted by it) that is
     being  diligently  contested  by it in good faith,  either such  proceeding
     shall remain  undismissed or unstayed for a period of 30 days or any of the
     actions sought in such proceeding (including, without limitation, the entry
     of an order for relief against, or the appointment of a receiver,  trustee,
     custodian or other similar  official for, it or any substantial part of its
     property) shall occur; or any Loan Party or any of its Subsidiaries  (other
     than such Loan Party or such Subsidiary  that is an Immaterial  Subsidiary)
     shall take any  corporate or other  action to authorize  any of the actions
     set forth above in this subsection (f); or

          (g) any judgments or orders,  either individually or in the aggregate,
     for the payment of money in excess of $7,500,000  shall be rendered against
     any Loan  Party  or any of its  Subsidiaries  and  either  (i)  enforcement
     proceedings shall have been commenced by any creditor upon such judgment or
     order or (ii) there shall be any period of 10
<PAGE>
     consecutive  days during which a stay of  enforcement  of such  judgment or
     order, by reason of a pending appeal or otherwise,  shall not be in effect;
     or

          (h) any  non-monetary  judgment or order shall be rendered against any
     Loan Party or any of its Subsidiaries  that is reasonably  likely to have a
     Material  Adverse  Effect,  and there shall be any period of 15 consecutive
     days during  which a stay of  enforcement  of such  judgment  or order,  by
     reason of a pending appeal or otherwise, shall not be in effect; or

          (i) any provision of any Loan Document after delivery thereof pursuant
     to  Section  3.01 or  5.01(j)  shall for any  reason  cease to be valid and
     binding on or  enforceable  against any Loan Party party to it, or any such
     Loan Party shall so state in writing; or

          (j) any Collateral Document after delivery thereof pursuant to Section
     3.01 or 5.01(j)  shall for any reason  (other  than  pursuant  to the terms
     thereof)  cease to create a valid and perfected  first priority lien on and
     security interest in the Collateral purported to be covered thereby; or

          (k)  Jeffrey  McKeever  shall at any time for any  reason  cease to be
     active in the management of the Parent Guarantor; or

          (l) a Change of Control shall occur; or

          (m) any ERISA Event shall have occurred with respect to a Plan and the
     sum  (determined  as of the date of  occurrence of such ERISA Event) of the
     Insufficiency of such Plan and the Insufficiency of any and all other Plans
     with respect to which an ERISA Event shall have occurred and then exist (or
     the liability of the Loan Parties and the ERISA Affiliates  related to such
     ERISA  Event)  exceeds  $7,500,000;  or

          (n) any Loan Party or any ERISA  Affiliate shall have been notified by
     the  sponsor  of a  Multiemployer  Plan  that  it has  incurred  Withdrawal
     Liability to such  Multiemployer  Plan in an amount that,  when  aggregated
     with all other amounts  required to be paid to  Multiemployer  Plans by the
     Loan Parties and the ERISA Affiliates as Withdrawal  Liability  (determined
     as of the  date of  such  notification),  exceeds  $7,500,000  or  requires
     payments exceeding $3,000,000 per annum; or

          (o) any Loan Party or any ERISA  Affiliate shall have been notified by
     the  sponsor of a  Multiemployer  Plan that such  Multiemployer  Plan is in
     reorganization  or is being  terminated,  within the meaning of Title IV of
     ERISA, and as a result of such  reorganization or termination the aggregate
     annual  contributions  of the Loan Parties and the ERISA  Affiliates to all
     Multiemployer  Plans that are then in  reorganization  or being  terminated
     have  been  or will be  increased  over  the  amounts  contributed  to such
     Multiemployer  Plans  for  the  plan  years  of  such  Multiemployer  Plans
     immediately  preceding  the  plan  year in  which  such  reorganization  or
     termination occurs by an amount exceeding $7,500,000;
<PAGE>
then, and in any such event, the Administrative  Agent (i) shall at the request,
or may with the consent,  of the Required  Lenders,  by notice to the Borrowers,
declare the  Commitments  of each Lender Party and the obligation of each Lender
Party to make Advances (other than Letter of Credit Advances by the Issuing Bank
or a Lender  pursuant  to Section  2.03(c)  and Swing Line  Advances by a Lender
pursuant to Section  2.02(b)) and of the Issuing Bank to issue Letters of Credit
to be terminated,  whereupon the same shall forthwith terminate,  and (ii) shall
at the request, or may with the consent, of the Required Lenders,  (A) by notice
to the Borrowers,  declare the Notes, all interest thereon and all other amounts
payable under this  Agreement  and the other Loan  Documents to be forthwith due
and payable,  whereupon the Notes,  all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further  notice of any kind,  all of which are hereby  expressly  waived by each
Borrower,  (B) by notice to each party required under the terms of any agreement
in  support  of which a Standby  Letter of Credit is  issued,  request  that all
Obligations  under such  agreement  be declared to be due and payable and (C) by
notice  to the  Issuing  Bank,  direct  the  Issuing  Bank to  deliver a Default
Termination Notice to the beneficiary of each Standby Letter of Credit issued by
it, and the  Issuing  Bank  shall  deliver  such  Default  Termination  Notices;
PROVIDED,  HOWEVER,  that in the event of an actual or deemed  entry of an order
for relief with respect to any Borrower under the Federal  Bankruptcy  Code, (x)
the  Commitments of each Lender Party and the obligation of each Lender Party to
make  Advances  (other than Letter of Credit  Advances by the Issuing  Bank or a
Lender  pursuant to Section 2.03(c) and Swing Line Advances by a Lender pursuant
to Section  2.02(b))  and of the Issuing  Bank to issue  Letters of Credit shall
automatically  be terminated  and (y) the Notes,  all such interest and all such
amounts shall automatically become and be due and payable,  without presentment,
demand,  protest  or any notice of any kind,  all of which are hereby  expressly
waived by each Borrower.

     SECTION 6.02. ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON DEFAULT.  If
any Event of Default shall have occurred and be continuing,  the  Administrative
Agent may,  or shall at the request of the  Required  Lenders,  irrespective  of
whether it is taking any of the actions  described in Section 6.01 or otherwise,
make demand upon the Borrowers to, and forthwith  upon such demand the Borrowers
will,  pay to the  Collateral  Agent on behalf of the Lender Parties in same day
funds at the Collateral Agent's office designated in such demand, for deposit in
the L/C Cash  Collateral  Account,  an amount equal to the  aggregate  Available
Amount  of  all  Letters  of  Credit  then  outstanding.  If  at  any  time  the
Administrative  Agent or the Collateral  Agent determines that any funds held in
the L/C Cash Collateral  Account are subject to any right or claim of any Person
other than the Agents  and the Lender  Parties or that the total  amount of such
funds is less than the aggregate  Available Amount of all Letters of Credit, the
Borrowers  will,  forthwith  upon  demand  by the  Administrative  Agent  or the
Collateral  Agent,  pay to the  Collateral  Agent,  as  additional  funds  to be
deposited and held in the L/C Cash  Collateral  Account,  an amount equal to the
excess of (a) such  aggregate  Available  Amount  over (b) the  total  amount of
funds,  if  any,  then  held  in  the  L/C  Cash  Collateral  Account  that  the
Administrative  Agent or the Collateral Agent, as the case may be, determines to
be free and clear of any such right and claim. Upon the drawing of any Letter of
Credit for which funds are on deposit in the L/C Cash Collateral  Account,  such
funds shall be applied to reimburse the Issuing Bank or Lenders,  as applicable,
to the extent permitted by applicable law.
<PAGE>
                                   ARTICLE VII

                                 PARENT GUARANTY

     SECTION 7.01. GUARANTY. (a) The Parent Guarantor hereby unconditionally and
irrevocably  guarantees  the  punctual  payment  when due,  whether at scheduled
maturity or on any date of a required  prepayment or by acceleration,  demand or
otherwise, of all Obligations of each Loan Party now or hereafter existing under
the  Loan   Documents,   (including,   without   limitation,   any   extensions,
modifications,  substitutions,  amendments  or  renewals  of  any  or all of the
foregoing Obligations),  whether direct or indirect, absolute or contingent, and
whether for principal,  interest,  fees, expenses or otherwise (such Obligations
being the  "GUARANTEED  OBLIGATIONS"),  and  agrees to pay any and all  expenses
(including,  without limitation,  reasonable counsel fees and expenses) incurred
by the Administrative  Agent or the Lender Parties in enforcing any rights under
this Guaranty or any other Loan  Documents.  Without  limiting the generality of
the foregoing, the Parent Guarantor's liability shall extend to all amounts that
constitute  part of the  Guaranteed  Obligations  and would be owed by each Loan
Party to the Administrative Agent or any Lender Party under or in respect of the
Loan Documents but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
any Loan Party.

          (b) The Parent Guarantor hereby unconditionally and irrevocably agrees
     that  in the  event  any  payment  shall  be  required  to be  made  to the
     Administrative  Agent or any Lender Party under this  Guaranty or any other
     guaranty,  the Parent  Guarantor  will  contribute,  to the maximum  extent
     permitted by law,  such  amounts to each other  guarantor so as to maximize
     the aggregate amount paid to the Administrative Agent or any Lender Parties
     under or in respect of the Loan Documents.

     SECTION 7.02. GUARANTY ABSOLUTE.  The Parent Guarantor  guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents,  regardless of any law,  regulation or order now or hereafter in
effect in any  jurisdiction  affecting  any of such  terms or the  rights of the
Administrative  Agent,  the  Administrative  Agents or the Lenders  with respect
thereto.  The  Obligations  of the  Parent  Guarantor  under this  Guaranty  are
independent of the Guaranteed  Obligations or any other  Obligations of any Loan
Party under the Loan Documents,  and a separate action or actions may be brought
and  prosecuted   against  the  Parent   Guarantor  to  enforce  this  Guaranty,
irrespective  of whether any action is brought  against any  Borrower or whether
any  Borrower  is joined in any such  action or actions.  The  liability  of the
Parent  Guarantor  under  this  Guaranty  shall  be  irrevocable,  absolute  and
unconditional  irrespective  of, and the  Parent  Guarantor  hereby  irrevocably
waives any defenses it may now or  hereinafter  have in any way relating to, any
or all of the following:

          (a) any lack of validity or enforceability of any Loan Document or any
     agreement or instrument relating thereto;
<PAGE>
          (b) any change in the time,  manner or place of payment  of, or in any
     other  term  of,  all or any of the  Guaranteed  Obligations  or any  other
     Obligations of any other Loan Party under the Loan Documents,  or any other
     amendment or waiver of or any consent to departure  from any Loan Document,
     including,  without limitation,  any increase in the Guaranteed Obligations
     resulting  from the  extension of additional  credit to any  Borrower,  the
     Parent Guarantor or any of their Subsidiaries or otherwise;

          (c) any taking, exchange, release or non-perfection of any collateral,
     or any taking,  release or  amendment  or waiver of or consent to departure
     from any other guaranty, for all or any of the Guaranteed Obligations;

          (d) any manner of application of collateral,  or proceeds thereof,  to
     all or any of the  Guaranteed  Obligations,  or any manner of sale or other
     disposition of any collateral for all or any of the Guaranteed  Obligations
     or any other  Obligations  of any other Loan Party under the Loan Documents
     or any other assets of any Borrower,  the Parent  Guarantor or any of their
     Subsidiaries;

          (e) any change, restructuring or termination of the corporate or other
     legal structure or existence of any Borrower,  the Parent  Guarantor or any
     of their Subsidiaries;

          (f) any  failure of the  Administrative  Agent or any Lender  Party to
     disclose  to any Loan  Party  any  information  relating  to the  business,
     condition (financial or otherwise), operations,  performance, properties or
     prospects  of any Loan Party now or hereafter  known to the  Administrative
     Agent or any Lender  Party (the  Parent  Guarantor  waiving any duty on the
     part of the  Administrative  Agent or any  Lender  Party to  disclose  such
     information); or

          (h) any other circumstance (including, without limitation, any statute
     of  limitations) or any existence of or reliance on any  representation  by
     the  Administrative   Agent  or  any  Lender  Party  that  might  otherwise
     constitute a defense  available to, or a discharge  of, any  Borrower,  the
     Parent Guarantor or any other guarantor or surety.

This Guaranty shall  continue to be effective or be reinstated,  as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must  otherwise be returned by the  Administrative  Agent or any Lender Party
upon the insolvency,  bankruptcy or reorganization  of any Borrower,  the Parent
Guarantor or any of their Subsidiaries or otherwise,  all as though such payment
had not been made.

     SECTION 7.03. WAIVER. (a) The Parent Guarantor hereby  unconditionally  and
irrevocably waives  promptness,  diligence,  notice of acceptance,  presentment,
demand for performance, notice of nonperformance, default, acceleration, protest
or  dishonor  and  any  other  notice  with  respect  to any  of the  Guaranteed
Obligations and this Guaranty and any requirement that the Administrative  Agent
or any Lender Party protect,  secure, perfect or insure any Lien or any property
subject  thereto or exhaust any right or take any action  against any Loan Party
or any other Person or any Collateral.
<PAGE>
          (b) The Parent Guarantor hereby unconditionally and irrevocably waives
     any right to revoke this  Guaranty and  acknowledges  that this Guaranty is
     continuing  in nature and applies to all  Guaranteed  Obligations,  whether
     existing now or in the future.

          (c) The Parent Guarantor hereby unconditionally and irrevocably waives
     (i) any  defense  arising by reason of any claim or  defense  based upon an
     election of remedies by the  Administrative  Agent or any Lender Party that
     in any manner impairs, reduces, releases or otherwise adversely affects the
     subrogation,  reimbursement,  exoneration,  contribution or indemnification
     rights of the Parent  Guarantor or other rights of the Parent  Guarantor to
     proceed  against any of the Loan Parties,  any other guarantor or any other
     Person or any Collateral and (ii) any defense based on any right of set-off
     or  counterclaim  against or in respect  of the  Obligations  of the Parent
     Guarantor hereunder.

          (d) The Parent Guarantor  acknowledges that the  Administrative  Agent
     may,  without  notice to or demand  upon the Parent  Guarantor  and without
     affecting  the  liability  of the Parent  Guarantor  under  this  Guaranty,
     foreclose under any mortgage by nonjudicial  sale, and the Parent Guarantor
     hereby waives any defense to the recovery by the  Administrative  Agent and
     the other Lender  Parties  against the Parent  Guarantor of any  deficiency
     after  such  nonjudicial  sale  and any  defense  or  benefits  that may be
     afforded by applicable law.

          (e) The Parent Guarantor hereby unconditionally and irrevocably waives
     any duty on the part of the  Administrative  Agent or any  Lender  Party to
     disclose to the Parent Guarantor any matter,  fact or thing relating to the
     business,  condition  (financial or  otherwise),  operations,  performance,
     properties or prospects of any other Loan Party or any of its  Subsidiaries
     now or hereafter known by the Administrative Agent or any Lender Party.

          (f) The Parent Guarantor acknowledges that it will receive substantial
     direct and indirect benefits from the financing  arrangements  contemplated
     by the Loan  Documents  and that the waivers set forth in Section  7.02 and
     this Section 7.03 are knowingly made in contemplation of such benefits.

     SECTION  7.04.  PAYMENTS  FREE AND  CLEAR OF  TAXES,  ETC.  (a) Any and all
payments  made by the Parent  Guarantor  under or in respect of this Guaranty or
any other Loan Document shall be made, in accordance with Section 2.11, free and
clear of and without  deduction for any and all present or future Taxes.  If the
Parent Guarantor shall be required by law to deduct any Taxes from or in respect
of any sum payable  hereunder to any Lender Party or the  Administrative  Agent,
(i) the sum payable by the Parent  Guarantor  by the Parent  Guarantor  shall be
increased  as may be  necessary  so that  after  the  Parent  Guarantor  and the
Administrative  Agent have made all required  deductions  (including  deductions
applicable to additional sums payable under this Section 7.04) such Lender Party
or the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have  received had no such  deductions  been made,  (ii) the Parent
Guarantor  shall make such  deductions and (iii) the Parent  Guarantor shall pay
the full amount deducted to the relevant  taxation  authority or other authority
in accordance with applicable law.
<PAGE>
          (b) In  addition,  the Parent  Guarantor  agrees to pay any present or
     future  Other Taxes that arise from any payment made under or in respect of
     this Guaranty or any other Loan Document or from the execution, delivery or
     registration  of,  performance  under,  or otherwise  with respect to, this
     Guaranty and the other Loan Documents.

          (c) The Parent  Guarantor  will  indemnify  each Lender  Party and the
     Agents for the full  amount of Taxes or Other Taxes and for the full amount
     of taxes of any kind imposed by any  jurisdiction  on amounts payable under
     this Section 7.04, imposed on or paid by such Lender Party or Agent and any
     liability (including,  without limitation, any Taxes or Other Taxes imposed
     by any  jurisdiction  on amounts  payable  under this Section) paid by such
     Lender Party or any Agent (as the case may be) and any liability (including
     penalties,  interest  and  expenses)  arising  therefrom  or  with  respect
     thereto.  This  indemnification  shall be made within 30 days from the date
     such Lender Party or such Agent (as the case may be) makes  written  demand
     therefor.

          (d)  Within 30 days  after the date of any  payment  of Taxes by or on
     behalf of the Parent  Guarantor,  the Parent Guarantor shall furnish to the
     Administrative  Agent,  at its  address  referred to in Section  9.02,  the
     original or a certified copy of a receipt  evidencing such payment.  In the
     case of any  payment  hereunder  by or on  behalf of the  Parent  Guarantor
     through an account or branch  outside the United  States or by or on behalf
     of the Parent  Guarantor by a payor that is not a United States person,  if
     the  Parent  Guarantor  determines  that no Taxes are  payable  in  respect
     thereof,  the Parent Guarantor shall furnish,  or shall cause such payor to
     furnish,  to the  Administrative  Agent,  at such  address,  an  opinion of
     counsel acceptable to the Administrative Agent stating that such payment is
     exempt from Taxes.  For purposes of subsections (d) and (e) of this Section
     5, the terms  "UNITED  STATES" and "UNITED  STATES  PERSON"  shall have the
     meanings specified in Section 7701 of the Internal Revenue Code.

          (e) Without  prejudice to the  survival of any other  agreement of the
     Parent  Guarantor  hereunder,  the agreements and obligations of the Parent
     Guarantor  contained  in  Section  7.01(a)  (with  respect  to  enforcement
     expenses),  the last  sentence of Section  7.02 and this Section 7.04 shall
     survive the  payment in full of the  Guaranteed  Obligations  and all other
     amounts payable under this Guaranty.

     SECTION  7.05.  CONTINUING  GUARANTY;   ASSIGNMENTS.  This  Guaranty  is  a
continuing  guaranty  and shall (a) remain in full  force and  effect  until the
latest of (i) the cash  payment in full of the  Guaranteed  Obligations  and all
other amounts payable under this Guaranty,  (ii) the Termination  Date and (iii)
the latest date of  expiration or  termination  of all Letters of Credit and all
Secured  Hedge  Agreements,  (b) be  binding  upon  the  Parent  Guarantor,  its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Lender Parties, the Administrative  Agent and their successors,  transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Lender
Party may  assign or  otherwise  transfer  all or any  portion of its rights and
obligations hereunder (including,  without limitation, all or any portion of its
Commitment,  the  Advances  owing to it and the Note or Notes held by it) to any
other Person,  and such other Person shall thereupon  become vested with all the
benefits in
<PAGE>
respect  thereof  granted to such Lender  herein or  otherwise,  in each case as
provided  in  Section  9.07.  The Parent  Guarantor  shall not have the right to
assignment  rights  hereunder or any interest  herein  without the prior written
consent of the Administrative Agent.

     SECTION 7.06. SUBROGATION.  The Parent Guarantor hereby unconditionally and
irrevocably  agrees  not to  exercise  any rights  that it may now or  hereafter
acquire against any Borrower, any Loan Party or any other insider guarantor that
arise from the  existence,  payment,  performance  or  enforcement of the Parent
Guarantor's  Obligations  under  this  Agreement  or any  other  Loan  Document,
including,   without  limitation,  any  right  of  subrogation,   reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the  Administrative  Agent or any Lender  Party  against  any
Borrower or any other insider  guarantor or any Collateral,  whether or not such
claim,  remedy or right  arises in equity or under  contract,  statute or common
law,  including,  without  limitation,  the  right to take or  receive  from any
Borrower, any Loan Party or any other insider guarantor, directly or indirectly,
in cash or other  property  or by  set-off  or in any other  manner,  payment or
security on account of such claim,  remedy or right, unless and until all of the
Guaranteed  Obligations  and all other amounts payable under this Guaranty shall
have been paid in full in cash,  all  Letters  of Credit and all  Secured  Hedge
Agreements shall have expired or been terminated and the Commitments  shall have
expired or  terminated.  If any amount shall be paid to the Parent  Guarantor in
violation of the  preceding  sentence at any time prior to the latest of (a) the
payment  in full in cash of the  Guaranteed  Obligations  and all other  amounts
payable under this Guaranty, (b) the Termination Date and (c) the latest date of
expiration  or  termination  of all  Letters  of Credit  and all  Secured  Hedge
Agreements,  such amount  shall be received and held in trust for the benefit of
the Administrative Agent and the Lender Parties,  shall be segregated from other
property and funds of the Parent  Guarantor  and shall  forthwith be paid to the
Administrative  Agent  in the  same  form as so  received  (with  any  necessary
endorsement  or  assignment)  to be  credited  and  applied  to  the  Guaranteed
Obligations and all other amounts  payable under this Guaranty,  whether matured
or unmatured,  in accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty  thereafter  arising. If (i) the Parent Guarantor shall make payment to
the  Administrative  Agent  or any  Lender  Party  of all  or  any  part  of the
Guaranteed  Obligations,  (ii) all of the Guaranteed  Obligations  and all other
amounts  payable  under this Guaranty  shall be paid in full in cash,  (iii) the
Termination  Date shall  have  occurred  and (iv) all  Letters of Credit and all
Secured  Hedge  Agreements  shall  have been  expired  or been  terminated,  the
Administrative  Agent and the Lender  Parties  will,  at the Parent  Guarantor's
request and  expense,  execute and deliver to the Parent  Guarantor  appropriate
documents, without recourse and without representation or warranty, necessary to
evidence the transfer by subrogation  to the Parent  Guarantor of an interest in
the Guaranteed Obligations resulting from such payment by the Parent Guarantor.

     SECTION 7.07.  SUBORDINATION.  The Parent Guarantor hereby subordinates any
and all debts, liabilities and other Obligations owed to the Parent Guarantor by
each Loan Party (the "SUBORDINATED  OBLIGATIONS") to the Guaranteed  Obligations
to the extent and in the manner hereinafter set forth in this Section 7.07:
<PAGE>
          (a)  PROHIBITED  PAYMENTS,  ETC.  Except during the  continuance of an
     Event of  Default  (including  the  commencement  and  continuation  of any
     proceeding under any Bankruptcy Law relating to any Loan Party), the Parent
     Guarantor may receive regularly  scheduled  payments from any Loan Party on
     account of the  Subordinated  Obligations.  After the occurrence and during
     the  continuance of any Event of Default  (including the  commencement  and
     continuation  of any  proceeding  under any  Bankruptcy Law relating to any
     Loan Party), however, unless the Administrative Agent otherwise agrees, the
     Parent Guarantor shall not demand, accept or take any action to collect any
     payment on account of the Subordinated Obligations.

          (b) PRIOR PAYMENT OF GUARANTEED  OBLIGATIONS.  In any proceeding under
     any Bankruptcy Law relating to any Loan Party,  the Parent Guarantor agrees
     that the Secured  Parties  shall be entitled to receive  payment in full in
     cash of all  Guaranteed  Obligations  (including  all interest and expenses
     accruing after the  commencement of a proceeding  under any Bankruptcy Law,
     whether or not  constituting  an allowed  claim in such  proceeding  ("POST
     PETITION  INTEREST"))  before the Parent Guarantor  receives payment of any
     Subordinated Obligations.

          (c) TURN-OVER.  After the occurrence and during the continuance of any
     Event of  Default  (including  the  commencement  and  continuation  of any
     proceeding under any Bankruptcy Law relating to any other Loan Party),  the
     Parent Guarantor shall, if the Administrative  Agent so requests,  collect,
     enforce and receive payments on account of the Subordinated  Obligations as
     trustee  for  the  Lender   Parties  and  deliver  such   payments  to  the
     Administrative  Agent on account of the Guaranteed  Obligations  (including
     all Post Petition  Interest),  together with any necessary  endorsements or
     other  instruments  of transfer,  but without  reducing or affecting in any
     manner the liability of the Parent  Guarantor under the other provisions of
     this Guaranty.

          (d)  ADMINISTRATIVE  AGENT  AUTHORIZATION.  After the  occurrence  and
     during the continuance of any Event of Default  (including the commencement
     and continuation of any proceeding under any Bankruptcy Law relating to any
     other Loan Party),  the  Administrative  Agent is authorized  and empowered
     (but without any obligation to so do), in its  discretion,  (i) in the name
     of the Parent  Guarantor,  to collect and enforce,  and to submit claims in
     respect of,  Subordinated  Obligations  and to apply any  amounts  received
     thereon to the Guaranteed  Obligations (including any and all Post Petition
     Interest),  and (ii) to require  the Parent  Guarantor  (A) to collect  and
     enforce,  and to submit claims in respect of, Subordinated  Obligations and
     (B) to pay any amounts received on such  obligations to the  Administrative
     Agent for application to the Guaranteed  Obligations (including any and all
     Post Petition Interest).
<PAGE>
                                  ARTICLE VIII

                                   THE AGENTS

     SECTION  8.01.   AUTHORIZATION  AND  ACTION.  Each  Lender  Party  (in  its
capacities as a Lender,  the Swing Line Bank (if  applicable),  the Issuing Bank
(if  applicable)  and on behalf of itself and its Affiliates as potential  Hedge
Banks) hereby appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers and  discretion  under this Agreement and
the other Loan  Documents as are delegated to such Agent by the terms hereof and
thereof,  together with such powers and discretion as are reasonably  incidental
thereto.  As to any matters not  expressly  provided  for by the Loan  Documents
(including,  without  limitation,  enforcement  or collection of the Notes),  no
Agent shall be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such  instructions  shall be binding upon all Lender Parties and all holders
of Notes; PROVIDED,  HOWEVER, that no Agent shall be required to take any action
that  exposes  such Agent to  personal  liability  or that is  contrary  to this
Agreement  or  applicable  law.  Each Agent  agrees to give to each Lender Party
prompt notice of each notice given to it by the Parent Guarantor or any Borrower
pursuant to the terms of this Agreement.

     SECTION 8.02.  AGENTS'  RELIANCE,  ETC.  Neither any Agent nor any of their
respective  directors,  officers,  agents or  employees  shall be liable for any
action  taken or omitted to be taken by it or them under or in  connection  with
the Loan  Documents,  except  for its or their own gross  negligence  or willful
misconduct.  Without limitation of the generality of the foregoing,  each Agent:
(a) may treat the payee of any Note as the holder thereof until,  in the case of
the  Administrative  Agent,  the  Administrative  Agent  receives and accepts an
Assumption  Agreement  entered into by an Assuming Lender as provided in Section
2.17 or an  Assignment  and  Acceptance  entered  into by the Lender that is the
payee of such Note, as assignor,  and an Eligible Assignee, as assignee,  or, in
the  case  of  any  other  Agent,  such  Agent  has  received  notice  from  the
Administrative  Agent that it has  received  and accepted  such  Assignment  and
Acceptance, in each case as provided in Section 9.07; (b) may consult with legal
counsel (including  counsel for any Loan Party),  independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted  to be taken in good faith by it in  accordance  with the advice of such
counsel,  accountants or experts; (c) makes no warranty or representation to any
Lender  Party  and  shall  not  be  responsible  to any  Lender  Party  for  any
statements,  warranties or representations  (whether written or oral) made in or
in connection with the Loan Documents;  (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or  conditions  of any Loan Document on the part of any Loan Party or to inspect
the property  (including the books and records) of any Loan Party; (e) shall not
be responsible to any Lender Party for the due  execution,  legality,  validity,
enforceability,  genuineness,  sufficiency  or value  of, or the  perfection  or
priority of any lien or security  interest  created or  purported  to be created
under or in  connection  with,  any Loan  Document  or any other  instrument  or
document furnished  pursuant thereto;  and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent,  certificate
<PAGE>
or other  instrument  or writing  (which may be by telegram,  telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

     SECTION 8.03. CITIBANK AND AFFILIATES. With respect to its Commitments, the
Advances  made by it and the Notes  issued to it,  Citibank  shall have the same
rights and powers  under the Loan  Documents  as any other  Lender Party and may
exercise the same as though it were not an Agent; and the term "Lender Party" or
"Lender Parties" shall, unless otherwise expressly  indicated,  include Citibank
in its individual  capacities.  Citibank and its affiliates may accept  deposits
from,  lend money to, act as trustee  under  indentures  of,  accept  investment
banking  engagements from and generally engage in any kind of business with, any
Loan Party,  any of its  Subsidiaries and any Person who may do business with or
own securities of any Loan Party or any such Subsidiary, all as if Citibank were
not an Agent and without any duty to account therefor to the Lender Parties.

     SECTION 8.04. LENDER PARTY CREDIT DECISION.  Each Lender Party acknowledges
that it has,  independently  and  without  reliance  upon any Agent or any other
Lender Party and based on the financial  statements  referred to in Section 4.01
and such other documents and information as it has deemed appropriate,  made its
own credit analysis and decision to enter into this Agreement. Each Lender Party
also  acknowledges  that it will,  independently  and without  reliance upon any
Agent or any other Lender Party and based on such  documents and  information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.

     SECTION 8.05.  INDEMNIFICATION.  (a) Each Lender Party severally  agrees to
indemnify  each Agent (to the extent not promptly  reimbursed by the  Borrowers)
from and against  such Lender  Party's  ratable  share  (determined  as provided
below) of any and all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature  whatsoever that may be imposed on, incurred by, or asserted against such
Agent in any way relating to or arising out of the Loan  Documents or any action
taken or omitted by such Agent under the Loan Documents; PROVIDED, HOWEVER, that
no  Lender  Party  shall  be  liable  for  any  portion  of  such   liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or  disbursements  resulting  from such  Agent's  gross  negligence  or
willful  misconduct as found in a final,  non-appealable  judgment by a court of
competent jurisdiction.  Without limitation of the foregoing,  each Lender Party
agrees to reimburse each Agent promptly upon demand for its ratable share of any
costs and expenses (including, without limitation, fees and expenses of counsel)
payable by the  Borrowers  under  Section 9.04, to the extent that such Agent is
not promptly reimbursed for such costs and expenses by the Borrowers.

          (b) Each Lender Party  severally  agrees to indemnify the Issuing Bank
     (to the extent not promptly  reimbursed by the Borrowers)  from and against
     such Lender Party's ratable share (determined as provided below) of any and
     all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
     judgments,  suits,  costs,  expenses or disbursements of any kind or nature
     whatsoever  that may be imposed on,  incurred  by, or asserted  against the
     Issuing Bank in any way relating to or arising out of the Loan Documents or
     any action taken or omitted by the Issuing
<PAGE>
     Bank under the Loan  Documents;  PROVIDED,  HOWEVER,  that no Lender  Party
     shall be liable for any portion of such liabilities,  obligations,  losses,
     damages,   penalties,   actions,   judgments,  suits,  costs,  expenses  or
     disbursements resulting from the Issuing Bank's gross negligence or willful
     misconduct  as  found  in a final,  non-appealable  judgment  by a court of
     competent  jurisdiction.  Without limitation of the foregoing,  each Lender
     Party agrees to reimburse  the Issuing  Bank  promptly  upon demand for its
     ratable  share of any costs and expenses  (including,  without  limitation,
     fees and expenses of counsel)  payable by the Borrowers under Section 9.04,
     to the extent that the Issuing  Bank is not  promptly  reimbursed  for such
     costs and expenses by the Borrowers.

          (c) For purposes of this Section 8.05, the Lender Parties'  respective
     ratable shares of any amount shall be determined, at any time, according to
     the sum of (i) the aggregate  principal amount of the Advances  outstanding
     at such  time and  owing  to the  respective  Lender  Parties,  (ii)  their
     respective Pro Rata Shares of the aggregate Available Amount of all Letters
     of  Credit  outstanding  at such  time and (iii)  their  respective  Unused
     Working  Capital  Commitments  at such time;  PROVIDED  that the  aggregate
     principal amount of Swing Line Advances owing to the Swing Line Bank and of
     Letter of Credit  Advances owing to the Issuing Bank shall be considered to
     be owed to the Lenders ratably in accordance with their respective  Working
     Capital Commitments. The failure of any Lender Party to reimburse any Agent
     or the  Issuing  Bank,  as the case may be,  promptly  upon  demand for its
     ratable  share of any amount  required to be paid by the Lender  Parties to
     such Agent or the  Issuing  Bank,  as the case may be, as  provided  herein
     shall not relieve any other  Lender  Party of its  obligation  hereunder to
     reimburse  such  Agent or the  Issuing  Bank,  as the case may be,  for its
     ratable share of such amount,  but no Lender Party shall be responsible for
     the  failure  of any other  Lender  Party to  reimburse  such  Agent or the
     Issuing  Bank,  as the case may be, for such other Lender  Party's  ratable
     share of such  amount.  Without  prejudice  to the  survival  of any  other
     agreement of any Lender Party  hereunder,  the agreement and obligations of
     each Lender Party  contained in this Section 8.05 shall survive the payment
     in full of principal,  interest and all other amounts payable hereunder and
     under the other Loan Documents.

     SECTION 8.06.  SUCCESSOR AGENTS. Any Agent may resign at any time by giving
written  notice  thereof  to the Lender  Parties  and the  Borrowers  and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal,  the Required  Lenders shall have the right to appoint a
successor  Agent.  If no  successor  Agent shall have been so  appointed  by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring  Agent's giving of notice of  resignation or the Required  Lenders'
removal of the retiring  Agent,  then the  retiring  Agent may, on behalf of the
Lender  Parties,  appoint a successor  Agent,  which shall be a commercial  bank
organized under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $250,000,000.  Upon the acceptance of
any  appointment as Agent  hereunder by a successor  Agent and, in the case of a
successor  Collateral  Agent, upon the execution and filing or recording of such
financing  statements,  or amendments  thereto,  and such other  instruments  or
notices,  as may be  necessary  or  desirable,  or as the  Required  Lenders may
request,  in order to continue the  perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Agent shall succeed to
and become vested with all the rights, powers, discretion,
<PAGE>
privileges  and duties of the retiring  Agent,  and the retiring  Agent shall be
discharged from its duties and obligations  under the Loan Documents.  If within
45 days after written  notice is given of the retiring  Agent's  resignation  or
removal under this Section 8.06 no successor Agent shall have been appointed and
shall have  accepted  such  appointment,  then on such 45th day (i) the retiring
Agent's  resignation or removal shall become effective,  (ii) the retiring Agent
shall  thereupon be discharged  from its duties and  obligations  under the Loan
Documents and (iii) the Required Lenders shall thereafter  perform all duties of
the  retiring  Agent under the Loan  Documents  until such time,  if any, as the
Required Lenders appoint a successor Agent as provided above. After any retiring
Agent's  resignation or removal  hereunder as Agent shall have become effective,
the  provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

                  SECTION  8.07.   OTHER   AGENTS.   Each  Lender  Party  hereby
acknowledges  that neither the  Documentation  Agent,  Syndication Agent nor any
other Lender Party  designated as any "Agent" on the signature  pages hereof has
any  responsibilities  or  liability  hereunder  other than in its capacity as a
Lender,  the titles  Documentation  Agent and  Syndication  Agent  being  purely
honorary in nature.
<PAGE>
                                   ARTICLE IX

                                  MISCELLANEOUS

     SECTION 9.01. AMENDMENTS,  ETC. (a) No amendment or waiver of any provision
of this  Agreement or the Notes or any other Loan  Document,  nor consent to any
departure by any Loan Party  therefrom,  shall in any event be effective  unless
the same  shall be in  writing  and signed  (or,  in the case of the  Collateral
Documents,  consented  to) by the  Required  Lenders,  and then  such  waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which given;  PROVIDED,  HOWEVER,  that (i) no amendment,  waiver or
consent  shall,  unless in writing and signed by all of the Lenders  (other than
any Lender  Party that is, at such time,  a  Defaulting  Lender),  do any of the
following at any time: (A) waive any of the conditions specified in Section 3.01
or, in the case of the Initial Extension of Credit, Section 3.02, (B) change the
number of Lenders or the  percentage of (1) the  Commitments,  (2) the aggregate
unpaid principal amount of the Advances or (3) the aggregate Available Amount of
outstanding  Letters of Credit  that,  in each case,  shall be required  for the
Lenders  or any of them to take any  action  hereunder,  (C) reduce or limit the
obligations  of the Parent  Guarantor  under  Section 7.01 or of any  Subsidiary
Guarantor  under Section 1 of the  Subsidiary  Guaranty or otherwise  limit such
Guarantor's  liability with respect to the  Obligations  owing to the Agents and
the Lender Parties,  (D) release all or  substantially  all of the Collateral in
any  transaction  or series of  related  transactions  or permit  the  creation,
incurrence,  assumption or existence of any Lien on all or substantially  all of
the Collateral in any  transaction or series of related  transactions  to secure
any Obligations  other than  Obligations  owing to the Secured Parties under the
Loan  Documents,  (E) amend Section 2.13 or this Section 9.01,  (F) increase the
Commitments  of the Lenders,  (G) reduce the  principal  of, or interest on, the
Notes or any fees or other  amounts  payable  hereunder,  (H)  postpone any date
scheduled for any payment of principal of, or interest on, the Notes pursuant to
Section 2.04 or 2.07 or any date fixed for payment of any fees or other  amounts
payable  hereunder,  (I) limit the  liability of any Loan Party under any of the
Loan Documents or (J) increase the percentages included in clauses (a) or (b) of
the  definition of "Loan Value" and (ii) no amendment,  waiver or consent shall,
unless in writing and signed by Lenders  having 66 2/3% of the  Working  Capital
Commitments  at such time (other than any Lender  Party that is, at such time, a
Defaulting  Lender),  do any of the following at any time: (A) reduce the dollar
amount of the  liquidation  reserve  included in clause (b) of the definition of
"Loan Value", (B) decrease the liquidity reserve set forth on the Borrowing Base
Certificate,  (C) reduce the dollar amount set forth in Section  2.06(b)(ii)  or
3.02(a)(iii)(A)  or (D) waive the condition  specified in Section  3.02(a)(iii);
PROVIDED FURTHER that no amendment,  waiver or consent shall,  unless in writing
and signed by the Swing Line Bank or the  Issuing  Bank,  as the case may be, in
addition to the Lenders required above to take such action, affect the rights or
obligations  of the Swing Line Bank or of the Issuing  Bank, as the case may be,
under this Agreement; and PROVIDED FURTHER that no amendment,  waiver or consent
shall,  unless in writing  and  signed by an Agent in  addition  to the  Lenders
required  above to take such  action,  affect the rights or duties of such Agent
under this Agreement or the other Loan Documents.
<PAGE>
          (b) If, in connection with any proposed  amendment or waiver of any of
     the provisions of this Agreement or any other Loan Document as contemplated
     by clauses (i) through (ix) of Section  9.01(a)  above,  the consent of the
     Required  Lenders is obtained  but the consent of one or more of such other
     Lenders whose consent is not obtained,  then the Administrative Agent shall
     have the right to  purchase  (and such Lender  shall sell) the  interest of
     each such non-consenting Lender, together with accrued and unpaid interest,
     and assume each such Lender's Commitment.

     SECTION 9.02. NOTICES,  ETC. All notices and other communications  provided
for  hereunder  shall be in writing  (including  telegraphic,  telecopy or telex
communication) and mailed, telegraphed,  telecopied, telexed or delivered, if to
the Parent  Guarantor,  the Borrowers or any other Loan Party, at the address or
the  Parent  Guarantor  at  2400  South  MicroAge  Way,  Tempe,  Arizona  85282,
Attention:  Chief Financial Officer, with a copy to Corporate Counsel; if to any
Initial  Lender or the Initial  Issuing  Bank,  at its Domestic  Lending  Office
specified  opposite its name on Schedule I hereto; if to any other Lender Party,
at its Domestic  Lending  Office  specified in the  Assumption  Agreement or the
Assignment and Acceptance  pursuant to which it became a Lender Party; if to the
Collateral  Agent, at its address at 399 Park Avenue,  New York, New York 10043,
Attention:  Jeff Nitz; and if to the Administrative Agent, at its address at 399
Park  Avenue,  New York,  New York 10043,  Attention:  Jeff Nitz;  or, as to the
Parent  Guarantor,  any  Borrower  or the  Administrative  Agent,  at such other
address as shall be  designated  by such party in a written  notice to the other
parties  and,  as to each  other  party,  at such  other  address  as  shall  be
designated  by  such  party  in a  written  notice  to  the  Borrowers  and  the
Administrative  Agent. All such notices and  communications  shall, when mailed,
telegraphed,  telecopied or telexed,  be effective  when deposited in the mails,
delivered to the telegraph  company,  transmitted  by telecopier or confirmed by
telex answerback,  respectively,  except that notices and  communications to any
Agent  pursuant to Article II, III or VII shall not be effective  until received
by  such  Agent.  Delivery  by  telecopier  of an  executed  counterpart  of any
amendment or waiver of any  provision  of this  Agreement or the Notes or of any
Exhibit  hereto to be executed  and  delivered  hereunder  shall be effective as
delivery of an original executed counterpart thereof.

     SECTION  9.03.  NO WAIVER;  REMEDIES.  No failure on the part of any Lender
Party or any Agent to exercise, and no delay in exercising,  any right hereunder
or under any Note  shall  operate as a waiver  thereof;  nor shall any single or
partial  exercise  of any such  right  preclude  any other or  further  exercise
thereof or the exercise of any other right.  The  remedies  herein  provided are
cumulative and not exclusive of any remedies provided by law.

     SECTION 9.04. COSTS AND EXPENSES.  (a) The Borrowers  jointly and severally
agree to pay on demand (i) all  reasonable  costs and  expenses of each Agent in
connection   with  the   preparation,   execution,   delivery,   administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all due diligence, collateral review, syndication, transportation, computer,
duplication,   appraisal,  audit,  insurance,  consultant,  search,  filing  and
recording fees and expenses and (B) the reasonable  fees and expenses of counsel
for each Agent with respect  thereto,  with respect to advising such Agent as to
its rights and responsibilities,  or the perfection,  protection or preservation
of rights or interests,  under the Loan Documents,  with
<PAGE>
respect to negotiations  with any Loan Party or with other creditors of any Loan
Party or any of its  Subsidiaries  arising  out of any  Default or any events or
circumstances  that may give rise to a Default  and with  respect to  presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other  similar  proceeding  involving  creditors'  rights  generally  and any
proceeding  ancillary thereto) and (ii) all costs and expenses of each Agent and
each Lender Party in  connection  with the  enforcement  of the Loan  Documents,
whether in any action, suit or litigation,  any bankruptcy,  insolvency or other
similar proceeding  affecting  creditors' rights generally  (including,  without
limitation,  the reasonable fees and expenses of counsel for the  Administrative
Agent and each Lender Party with respect thereto).

          (b) The Borrowers  jointly and  severally  agree to indemnify and hold
     harmless  each Agent,  each Lender Party and each of their  Affiliates  and
     their  officers,  directors,  employees,  agents  and  advisors  (each,  an
     "INDEMNIFIED PARTY") from and against any and all claims, damages,  losses,
     liabilities and expenses  (including,  without limitation,  reasonable fees
     and  expenses  of  counsel)  that may be incurred by or asserted or awarded
     against any Indemnified Party, in each case arising out of or in connection
     with or by reason of (including, without limitation, in connection with any
     investigation,  litigation  or proceeding  or  preparation  of a defense in
     connection therewith) (i) the Facilities, the actual or proposed use of the
     proceeds  of the  Advances  or  the  Letters  of  Credit,  the  Transaction
     Documents  or any of the  transactions  contemplated  thereby  or (ii)  the
     actual or alleged  presence of  Hazardous  Materials on any property of any
     Loan Party or any of its Subsidiaries or any Environmental  Action relating
     in any way to any Loan  Party  or any of its  Subsidiaries,  except  to the
     extent such claim,  damage, loss, liability or expense is found in a final,
     non-appealable  judgment  by a  court  of  competent  jurisdiction  to have
     resulted  from  such  Indemnified   Party's  gross  negligence  or  willful
     misconduct. In the case of an investigation, litigation or other proceeding
     to which the  indemnity in this Section  9.04(b)  applies,  such  indemnity
     shall  be  effective  whether  or not  such  investigation,  litigation  or
     proceeding is brought by any Loan Party,  its  directors,  shareholders  or
     creditors or an Indemnified  Party or any Indemnified  Party is otherwise a
     party  thereto  and  whether or not the  transactions  contemplated  by the
     Transaction  Documents are  consummated.  The Borrowers  also agrees not to
     assert  any claim  against  any  Agent,  any  Lender  Party or any of their
     Affiliates,  or any of their  respective  officers,  directors,  employees,
     attorneys and agents,  on any theory of liability,  for special,  indirect,
     consequential or punitive  damages arising out of or otherwise  relating to
     the Facilities,  the actual or proposed use of the proceeds of the Advances
     or  the  Letters  of  Credit,  the  Transaction  Documents  or  any  of the
     transactions contemplated by the Transaction Documents.

          (c) If any payment of principal of, or Conversion  of, any  Eurodollar
     Rate  Advance is made by the  Borrowers  to or for the  account of a Lender
     Party other than on the last day of the Interest  Period for such  Advance,
     as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i)
     or 2.10(d),  acceleration  of the maturity of the Notes pursuant to Section
     6.01 or for any other reason,  or if the Borrowers fail to make any payment
     or prepayment of an Advance for which a notice of prepayment has been given
     or that is otherwise required to be made, whether pursuant to Section 2.04,
     2.06 or 6.01 or otherwise,  the Borrowers shall, upon demand by such Lender
     Party (with a copy of such demand to the Administrative  Agent), pay to the
     Administrative  Agent for the  account  of such  Lender  Party any  amounts
     required to
<PAGE>
     compensate such Lender Party for any additional  losses,  costs or expenses
     that it may reasonably incur as a result of such payment or such failure to
     pay or prepay, as the case may be, including, without limitation, any loss,
     cost or expense  incurred by reason of the  liquidation or  reemployment of
     deposits  or other funds  acquired by any Lender  Party to fund or maintain
     such Advance.

          (d) If any Loan  Party  fails to pay when due any costs,  expenses  or
     other amounts  payable by it under any Loan  Document,  including,  without
     limitation,  fees and expenses of counsel and indemnities,  such amount may
     be paid on  behalf of such Loan  Party by the  Administrative  Agent or any
     Lender Party, in its sole discretion.

          (e) Without  prejudice to the  survival of any other  agreement of any
     Loan Party  hereunder or under any other Loan Document,  the agreements and
     obligations  of the Borrowers  contained in Sections 2.10 and 2.12 and this
     Section 9.04 shall survive the payment in full of  principal,  interest and
     all other  amounts  payable  hereunder  and  under  any of the  other  Loan
     Documents.  SECTION 9.05.  RIGHT OF SET-OFF.  Upon (a) the  occurrence  and
     during the  continuance  of any Event of Default  and (b) the making of the
     request  or the  granting  of the  consent  specified  by  Section  6.01 to
     authorize  the  Administrative  Agent to declare  the Notes due and payable
     pursuant  to the  provisions  of Section  6.01,  each Agent and each Lender
     Party and each of their respective  Affiliates is hereby  authorized at any
     time and from time to time, to the fullest extent  permitted by law, to set
     off and otherwise apply any and all deposits  (general or special,  time or
     demand,  provisional or final) at any time held and other  indebtedness  at
     any time owing by such Agent, such Lender Party or such Affiliate to or for
     the credit or the account of the Parent  Guarantor or any Borrower  against
     any and all of the Obligations of the Parent Guarantor or the Borrowers now
     or hereafter  existing under the Loan  Documents,  irrespective  of whether
     such Agent or such  Lender  Party  shall  have made any  demand  under this
     Agreement  or such  Note or Notes  and  although  such  obligations  may be
     unmatured.  Each Agent and each Lender Party agrees  promptly to notify the
     Parent  Guarantor  or the  applicable  Borrower  after any such set-off and
     application;  PROVIDED, HOWEVER, that the failure to give such notice shall
     not affect the validity of such set-off and application. The rights of each
     Agent and each  Lender  Party and their  respective  Affiliates  under this
     Section are in addition to other  rights and remedies  (including,  without
     limitation, other rights of set-off) that such Agent, such Lender Party and
     their respective Affiliates may have.

     SECTION 9.06. BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrowers,  the Parent  Guarantor and each Agent
and the Administrative Agent shall have been notified by each Initial Lender and
the Initial  Issuing Bank that such Initial Lender and the Initial  Issuing Bank
has executed it and thereafter shall be binding upon and inure to the benefit of
the Borrowers, the Parent Guarantor,  each Agent and each Lender Party and their
respective successors and assigns,  except that no Borrower shall have the right
to assign its rights  hereunder or any interest herein without the prior written
consent of the Lender Parties.
<PAGE>
     SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may assign to
one or more Eligible  Assignees  all or a portion of its rights and  obligations
under this Agreement  (including,  without  limitation,  all or a portion of its
Commitment or  Commitments,  the Advances owing to it and the Note or Notes held
by it); PROVIDED,  HOWEVER, that (i) each such assignment shall be of a uniform,
and not a varying, percentage of all rights and obligations under and in respect
of all of the  Facilities,  (ii) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender or an assignment of all
of a Lender's rights and obligations under this Agreement,  the aggregate amount
of the  Commitments  being assigned to such Eligible  Assignee  pursuant to such
assignment  (determined as of the date of the  Assignment  and  Acceptance  with
respect to such  assignment)  shall in no event be less than  $5,000,000,  (iii)
each such assignment shall be to an Eligible Assignee,  (iv) no such assignments
shall be  permitted  without the consent of the  Administrative  Agent until the
Administrative  Agent shall have notified the Lender Parties that syndication of
the Commitments  hereunder has been completed,  and (v) the parties to each such
assignment  shall  execute  and  deliver to the  Administrative  Agent,  for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with  any  Note  or  Notes  subject  to such  assignment  and a  processing  and
recordation fee of $3,500.

          (b) Upon such execution,  delivery, acceptance and recording, from and
     after the effective date specified in such Assignment and  Acceptance,  (x)
     the  assignee  thereunder  shall be a party  hereto and, to the extent that
     rights and obligations  hereunder have been assigned to it pursuant to such
     Assignment and  Acceptance,  have the rights and obligations of a Lender or
     Issuing Bank,  as the case may be,  hereunder and (y) the Lender or Issuing
     Bank assignor  thereunder  shall, to the extent that rights and obligations
     hereunder  have  been  assigned  by it  pursuant  to  such  Assignment  and
     Acceptance,  relinquish  its rights and be  released  from its  obligations
     under this  Agreement  (and,  in the case of an Assignment  and  Acceptance
     covering all of the remaining  portion of an assigning  Lender's or Issuing
     Bank's rights and obligations under this Agreement,  such Lender or Issuing
     Bank shall cease to be a party hereto).

          (c) By executing and  delivering an Assignment  and  Acceptance,  each
     Lender Party assignor  thereunder and each assignee  thereunder  confirm to
     and agree  with each  other and the other  parties  thereto  and  hereto as
     follows: (i) other than as provided in such Assignment and Acceptance, such
     assigning Lender Party makes no  representation  or warranty and assumes no
     responsibility   with   respect   to   any   statements,    warranties   or
     representations  made in or in  connection  with any Loan  Document  or the
     execution, legality, validity, enforceability,  genuineness, sufficiency or
     value of, or the  perfection  or priority of any lien or security  interest
     created or purported to be created  under or in connection  with,  any Loan
     Document or any other instrument or document  furnished  pursuant  thereto;
     (ii) such assigning  Lender Party makes no  representation  or warranty and
     assumes no  responsibility  with respect to the financial  condition of any
     Loan Party or the performance or observance by any Loan Party of any of its
     obligations  under any Loan  Document or any other  instrument  or document
     furnished  pursuant  thereto;  (iii)  such  assignee  confirms  that it has
     received a copy of this  Agreement,  together  with copies of the financial
     statements  referred  to in  Section  4.01 and  such  other  documents  and
     information as it has deemed  appropriate  to make its own credit  analysis
     and  decision  to enter  into such  Assignment  and  Acceptance;  (iv) such
     assignee  will,  independently  and without  reliance upon
<PAGE>
     any Agent,  such assigning Lender Party or any other Lender Party and based
     on such documents and information as it shall deem appropriate at the time,
     continue to make its own credit  decisions  in taking or not taking  action
     under this  Agreement;  (v) such  assignee  confirms that it is an Eligible
     Assignee;  (vi) such assignee  appoints and  authorizes  each Agent to take
     such  action  as  agent on its  behalf  and to  exercise  such  powers  and
     discretion  under the Loan  Documents as are delegated to such Agent by the
     terms hereof,  together with such powers and  discretion as are  reasonably
     incidental thereto;  and (vii) such assignee agrees that it will perform in
     accordance  with their terms all of the  obligations  which by the terms of
     this  Agreement  are  required to be performed by it as a Lender or Issuing
     Bank, as the case may be.

          (d) The Administrative Agent shall maintain at its address referred to
     in Section 9.02 a copy of each Assumption Agreement and each Assignment and
     Acceptance  delivered  to  and  accepted  by it  and  a  register  for  the
     recordation  of the names  and  addresses  of the  Lender  Parties  and the
     Commitment  under each  Facility of, and  principal  amount of the Advances
     owing under each  Facility  to,  each  Lender  Party from time to time (the
     "REGISTER").  The entries in the Register  shall be conclusive  and binding
     for all purposes,  absent manifest error, and the Borrowers, the Agents and
     the Lender  Parties  may treat each  Person  whose name is  recorded in the
     Register as a Lender Party  hereunder  for all purposes of this  Agreement.
     The  Register  shall be  available  for  inspection  by any Borrower or any
     Lender Party at any reasonable  time and from time to time upon  reasonable
     prior notice.

          (e) Upon its receipt of an Assignment  and  Acceptance  executed by an
     assigning  Lender  Party and an assignee,  together  with any Note or Notes
     subject  to  such  assignment,  the  Administrative  Agent  shall,  if such
     Assignment and Acceptance  has been completed and is in  substantially  the
     form of Exhibit C hereto,  (i) accept such Assignment and Acceptance,  (ii)
     record the  information  contained  therein in the  Register and (iii) give
     prompt notice thereof to the Borrowers and each other Agent. In the case of
     any assignment by a Lender,  within five Business Days after its receipt of
     such notice, the Borrowers, at their own expense, shall execute and deliver
     to the Administrative Agent in exchange for the surrendered Note or Notes a
     new Note to the order of such  Eligible  Assignee in an amount equal to the
     Commitment  assumed by it under each Facility  pursuant to such  Assignment
     and  Acceptance  and, if any  assigning  Lender has  retained a  Commitment
     hereunder  under such  Facility,  a new Note to the order of such assigning
     Lender in an amount equal to the Commitment retained by it hereunder.  Such
     new Note or Notes shall be in an  aggregate  principal  amount equal to the
     aggregate  principal  amount of such  surrendered  Note or Notes,  shall be
     dated  the  effective  date of such  Assignment  and  Acceptance  and shall
     otherwise be in substantially the form of Exhibit A hereto.

          (f) The  Issuing  Bank may assign to an Eligible  Assignee  all of its
     rights and  obligations  under the undrawn  portion of its Letter of Credit
     Commitment at any time;  PROVIDED,  HOWEVER,  that (i) each such assignment
     shall  be to an  Eligible  Assignee  and  (ii)  the  parties  to each  such
     assignment shall execute and deliver to the  Administrative  Agent, for its
     acceptance  and recording in the Register,  an Assignment  and  Acceptance,
     together with a processing and recordation fee of $3,500.
<PAGE>
          (g) Each Lender Party may sell  participations  to one or more Persons
     (other  than any Loan  Party  or any of its  Affiliates)  in or to all or a
     portion of its  rights and  obligations  under this  Agreement  (including,
     without limitation, all or a portion of its Commitments, the Advances owing
     to it and the Note or Notes (if any) held by it); PROVIDED,  HOWEVER,  that
     (i) such  Lender  Party's  obligations  under  this  Agreement  (including,
     without  limitation,  its Commitments)  shall remain  unchanged,  (ii) such
     Lender Party shall remain solely  responsible  to the other parties  hereto
     for the  performance  of such  obligations,  (iii) such Lender  Party shall
     remain the holder of any such Note for all purposes of this Agreement, (iv)
     the  Borrowers,  the Agents and the other Lender  Parties shall continue to
     deal solely and  directly  with such Lender Party in  connection  with such
     Lender  Party's  rights and  obligations  under this  Agreement  and (v) no
     participant  under any such  participation  shall have any right to approve
     any  amendment  or waiver of any  provision  of any Loan  Document,  or any
     consent to any departure by any Loan Party therefrom,  except to the extent
     that such  amendment,  waiver or consent  would reduce the principal of, or
     interest on, the Notes or any fees or other amounts payable  hereunder,  in
     each case to the extent  subject to such  participation,  postpone any date
     fixed for any payment of  principal  of, or  interest  on, the Notes or any
     fees or other amounts payable hereunder, in each case to the extent subject
     to  such  participation,  or  release  all  or  substantially  all  of  the
     Collateral.

          (h) Any  Lender  Party  may,  in  connection  with any  assignment  or
     participation  or proposed  assignment  or  participation  pursuant to this
     Section 9.07,  disclose to the assignee or participant or proposed assignee
     or  participant,  any information  relating to the Parent  Guarantor or the
     Borrowers  furnished to such Lender Party by or on behalf of the Borrowers;
     PROVIDED,  HOWEVER,  that,  prior to any such  disclosure,  the assignee or
     participant or proposed assignee or participant shall agree to preserve the
     confidentiality  of any Confidential  Information  received by it from such
     Lender Party.

          (i)  Notwithstanding  any other provision set forth in this Agreement,
     any Lender  Party may at any time create a security  interest in all or any
     portion of its rights under this Agreement (including,  without limitation,
     the Advances  owing to it and the Note or Notes held by it) in favor of any
     Federal  Reserve  Bank in  accordance  with  Regulation  A of the  Board of
     Governors of the Federal Reserve System.

     SECTION 9.08. EXECUTION IN COUNTERPARTS.  This Agreement may be executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken  together shall  constitute  one and the same  agreement.
Manual delivery of an executed counterpart of a signature page to this Agreement
by telecopier shall be effective as delivery of an original executed counterpart
of this Agreement.

     SECTION 9.09. NO LIABILITY OF THE ISSUING  BANK.  The Borrowers  assume all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit  with  respect to its use of such  Letter of Credit.  Neither the Issuing
Bank nor any of its officers or directors  shall be liable or  responsible  for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any  beneficiary  or  transferee  in  connection  therewith;  (b) the  validity,
sufficiency or genuineness of documents,  or of any endorsement thereon, even if
such documents should
<PAGE>
prove to be in any or all respects invalid, insufficient,  fraudulent or forged;
(c) payment by the Issuing Bank against  presentation  of documents  that do not
comply with the terms of a Letter of Credit,  including failure of any documents
to bear any reference or adequate  reference to the Letter of Credit; or (d) any
other  circumstances  whatsoever  in making or failing to make payment under any
Letter of Credit,  except  that the  Borrowers  shall have a claim  against  the
Issuing  Bank,  and the Issuing  Bank shall be liable to the  Borrowers,  to the
extent of any direct, but not  consequential,  damages suffered by the Borrowers
that  the  Borrowers  prove  were  caused  by (i)  the  Issuing  Bank's  willful
misconduct or gross negligence as determined in a final, non-appealable judgment
by a court of competent  jurisdiction in determining whether documents presented
under any Letter of Credit comply with the terms of the Letter of Credit or (ii)
the Issuing  Bank's  willful  failure to make lawful  payment  under a Letter of
Credit  after  the  presentation  to it of a  draft  and  certificates  strictly
complying with the terms and conditions of the Letter of Credit.  In furtherance
and not in limitation of the  foregoing,  the Issuing Bank may accept  documents
that  appear on their face to be in order,  without  responsibility  for further
investigation, regardless of any notice or information to the contrary.

     SECTION 9.10.  RELEASE OF  COLLATERAL.  Upon the sale,  lease,  transfer or
other disposition of any item of Collateral of any Loan Party in accordance with
the terms of the Loan  Documents,  the Collateral  Agent will, at the Borrowers'
expense,  execute  and  deliver to such Loan Party such  documents  as such Loan
Party may reasonably  request to evidence the release of such item of Collateral
from the assignment and security interest granted under the Collateral Documents
in accordance with the terms of the Loan Documents.

     SECTION  9.11.  JURISDICTION,  ETC. (a) Each of the parties  hereto  hereby
irrevocably and  unconditionally  submits,  for itself and its property,  to the
nonexclusive  jurisdiction  of any New York State court or federal  court of the
United States of America  sitting in New York City, and any appellate court from
any  thereof,  in any action or  proceeding  arising  out of or relating to this
Agreement  or any of the other  Loan  Documents  to which it is a party,  or for
recognition  or  enforcement  of any  judgment,  and each of the parties  hereto
hereby irrevocably and unconditionally  agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent  permitted  by law, in such federal  court.  Each of the
parties  hereto  agrees that a final  judgment in any such action or  proceeding
shall be conclusive  and may be enforced in other  jurisdictions  by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect  any  right  that any  party may  otherwise  have to bring any  action or
proceeding  relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.

          (b) Each of the parties hereto irrevocably and unconditionally waives,
     to the fullest  extent it may legally and  effectively do so, any objection
     that it may now or  hereafter  have to the  laying  of venue  of any  suit,
     action or proceeding arising out of or relating to this Agreement or any of
     the other  Loan  Documents  to which it is a party in any New York State or
     federal court. Each of the parties hereto hereby irrevocably waives, to the
     fullest extent  permitted by law, the defense of an  inconvenient  forum to
     the maintenance of such action or proceeding in any such court.
<PAGE>
     SECTION 9.12. GOVERNING LAW. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.

     SECTION  9.13.  WAIVER OF JURY  TRIAL.  Each of the Parent  Guarantor,  the
Borrowers,  the Agents and the Lender  Parties  irrevocably  waives all right to
trial  by jury in any  action,  proceeding  or  counterclaim  (whether  based on
contract,  tort or  otherwise)  arising  out of or  relating  to any of the Loan
Documents,  the  Advances or the actions of any Agent or any Lender Party in the
negotiation, administration, performance or enforcement thereof.
<PAGE>
     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

                                        MICROAGE TECHNOLOGY SERVICES, L.L.C.,
                                             as Borrower

                                        By /s/ James R. Daniel
                                           -------------------------------------
                                           Title: Treasurer
                                                  ------------------------------


                                        PINACOR, INC.,
                                             as Borrower


                                        By /s/ James R. Daniel
                                           -------------------------------------
                                           Title: Treasurer
                                                  ------------------------------


                                        MICROAGE, INC.,
                                             as Parent Guarantor


                                        By /s/ James R. Daniel
                                           -------------------------------------
                                           Title: CFO, ExVP & Treasurer
                                                  ------------------------------


                                        CITIBANK, N.A.,
                                             as Administrative Agent


                                        By /s/ Claudia Slacik
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------


                                        CITIBANK, N.A.,
                                             as Collateral Agent


                                        By /s/ Claudia Slacik
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------
<PAGE>
                                        IBM CREDIT CORPORATION,
                                             as Documentation Agent


                                        By /s/ Ronald J. Bachner
                                           -------------------------------------
                                           Title: Manager, Commercial Financing
                                                  Solutions Americas
                                                  ------------------------------


                                        THE CIT GROUP/BUSINESS CREDIT, INC.,
                                             as Syndication Agent

                                        By /s/ J. Lee
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------


                                        INITIAL LENDERS


                                        CITIBANK, N.A.

                                        By /s/ Claudia Slacik
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------


                                        IBM CREDIT CORPORATION


                                        By /s/ Ronald J. Bachner
                                           -------------------------------------
                                           Title: Manager, Commercial Financing
                                                  Solutions Americas
                                                  ------------------------------

                                        THE CIT GROUP/BUSINESS CREDIT, INC.


                                        By /s/ J. Lee
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------


                                        FLEET CAPITAL CORPORATION


                                        By /s/ Peter L. Skavla
                                           -------------------------------------
                                           Title: Senior Vice President
                                                  ------------------------------
<PAGE>
                                        MELLON BANK, N.A.


                                        By /s/ R. Shirinyam
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------


                                        IBJ WHITEHALL BUSINESS
                                        CREDIT CORPORATION


                                        By /s/
                                           -------------------------------------
                                           Title:
                                                  ------------------------------


                                        DEBIS FINANCIAL SERVICES, INC.


                                        By /s/ James M. Vandervark
                                           -------------------------------------
                                           Title: President ABL Division
                                                  ------------------------------


                                        FINOVA CAPITAL CORPORATION


                                        By /s/
                                           -------------------------------------
                                           Title:
                                                  ------------------------------


                                        INITIAL ISSUING BANK


                                        CITIBANK, N.A.


                                        By /s/ Claudia Slacik
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------
<PAGE>
                                        SWING LINE BANK


                                        CITIBANK, N.A.


                                        By /s/ Claudia Slacik
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------
<PAGE>
                                        INITIAL ISSUING BANK


                                        CITIBANK, N.A.


                                        By /s/ Claudia Slacik
                                           -------------------------------------
                                           Title: Vice President
                                                  ------------------------------

<PAGE>
                                   SCHEDULE I

                   COMMITMENTS AND APPLICABLE LENDING OFFICES

================================================================================
                            Working       Letter of      Domestic     Eurodollar
                            Capital         Credit       Lending       Lending
Name of Initial Lender     Commitment     Commitment      Office        Office
================================================================================

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<PAGE>
                                                                       EXHIBIT A

                                                                         FORM OF
                                                                 PROMISSORY NOTE


$_______________  Dated:  _________ __, ____


     FOR VALUE RECEIVED, the undersigned,  MicroAge Technology Services, L.L.C.,
a Delaware limited liability company, and Pinacor,  Inc., a Delaware corporation
(collectively, the "BORROWERS"),  jointly and severally HEREBY PROMISE TO PAY to
the order of  _________________________  (the  "LENDER")  for the account of its
Applicable Lending Office (as defined in the Credit Agreement referred to below)
the  aggregate  principal  amount of the Working  Capital  Advances  (as defined
below)  owing to the Lender by the  Borrowers  pursuant to the Credit  Agreement
dated as of October 28, 1999 (as amended,  supplemented  or  otherwise  modified
from time to time,  the "CREDIT  AGREEMENT";  terms  defined  therein being used
herein as therein defined) among the Borrowers,  MicroAge,  Inc., the Lender and
certain other lender parties party thereto, Citibank, N.A., as Collateral Agent,
IBM Credit Corporation,  as Documentation Agent, The CIT Group/Business  Credit,
Inc., as Syndication Agent, and Citibank,  N.A., as Administrative Agent and for
the Lender and such other lender parties, on the Termination Date.

     The Borrowers  jointly and severally  promise to pay interest on the unpaid
principal  amount of each Working  Capital Advance from the date of such Working
Capital  Advance until such  principal  amount is paid in full, at such interest
rates, and payable at such times, as are specified in the Credit Agreement.

     Both  principal  and  interest  are  payable in lawful  money of the United
States  of   America  to   Citibank,   N.A.,   as   Administrative   Agent,   at
_______________,  _______________  __________  in same day funds.  Each  Working
Capital  Advance owing to the Lender by the Borrowers and the maturity  thereof,
and all payments made on account of principal thereof,  shall be recorded by the
Lender and, prior to any transfer hereof,  endorsed on the grid attached hereto,
which is part of this Promissory Note;  PROVIDED,  HOWEVER,  that the failure of
the  Lender to make any such  recordation  or  endorsement  shall not affect the
Obligations of the Borrowers under this Promissory Note.

     This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the "WORKING CAPITAL  ADVANCES") by the
Lender to the Borrowers  from time to time in an aggregate  amount not to exceed
at any time  outstanding  the U.S.  dollar  amount  first above  mentioned,  the
indebtedness  of the Borrowers  resulting from each such Working Capital Advance
being  evidenced by this  Promissory  Note,  and (ii)  contains  provisions  for
acceleration  of the maturity hereof upon the happening of certain stated events
and also for  prepayments  on account of principal  hereof prior to the maturity
hereof upon the terms and conditions therein  specified.  The obligations of the
Borrowers  under  this  Promissory  Note and
<PAGE>
the other Loan  Documents,  and the  obligations of the other Loan Parties under
the Loan  Documents,  are  secured by the  Collateral  as  provided  in the Loan
Documents.

                                        MICROAGE TECHNOLOGY SERVICES, L.L.C.,
                                             as Borrower

                                        By /s/ James R. Daniel
                                           -------------------------------------
                                           Title: Treasurer
                                                  ------------------------------


                                        PINACOR, INC.,
                                             as Borrower


                                        By /s/ James R. Daniel
                                           -------------------------------------
                                           Title: Treasurer
                                                  ------------------------------

<PAGE>
                       ADVANCES AND PAYMENTS OF PRINCIPAL

================================================================================
                                  Amount of           Unpaid
              Amount of        Principal Paid        Principal       Notation
 Date          Advance           or Prepaid           Balance        Made By
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<PAGE>
                                                                       EXHIBIT B

                                                                         FORM OF
                                                             NOTICE OF BORROWING

Citibank, N.A.,
  as Administrative Agent
  under the Credit Agreement
  referred to below

____________________

____________________                                 [Date]


                     Attention: ____________________________


Ladies and Gentlemen:

     The undersigned,  MicroAge Technology Services,  L.L.C. and Pinacor,  Inc.,
refer  to the  Credit  Agreement  dated as of  October  28,  1999  (as  amended,
supplemented  or otherwise  modified from time to time, the "CREDIT  AGREEMENT";
the terms  defined  therein  being used  herein as therein  defined),  among the
undersigned,,  MicroAge, Inc., the Lender Parties party thereto, Citibank, N.A.,
as Collateral Agent, IBM Credit Corporation, as Documentation Agent, and The CIT
Group/Business  Credit,  Inc., as  Syndication  Agent,  and  Citibank,  N.A., as
Administrative  Agent and for the Lender  Parties,  and hereby jointly gives you
notice,  irrevocably,  pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement,  and in that
connection  sets forth below the  information  relating to such  Borrowing  (the
"PROPOSED BORROWING") as required by Section 2.02(a) of the Credit Agreement:

     (i) The Business Day of the Proposed Borrowing is _________ __, ____.

     (ii) The Facility  under which the  Proposed  Borrowing is requested is the
_______________ Facility.

     (iii) The Type of Advances  comprising the Proposed Borrowing is [Base Rate
Advances] [Eurodollar Rate Advances].

     (iv) The aggregate amount of the Proposed Borrowing is $__________.

     [(v) The initial  Interest  Period for each Eurodollar Rate Advance made as
part of the Proposed Borrowing is __________ month[s].]
<PAGE>
     The undersigned hereby certifies that the following  statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:

          (A) the representations and warranties contained in each Loan Document
     are  correct on and as of the date of the  Proposed  Borrowing,  before and
     after giving effect to the Proposed Borrowing and to the application of the
     proceeds  therefrom,  as though  made on and as of such date other than any
     such  representations  or  warranties  that,  by  their  terms,  refer to a
     specific date other than the date of the Proposed Borrowing, in which case,
     as of such specific date;

          (B) no event has occurred and is continuing, or would result from such
     Proposed Borrowing or from the application of the proceeds therefrom,  that
     constitutes a Default; and

          (C)  the sum of the  Loan  Values  of the  Eligible  Collateral  MINUS
     $20,000,000  exceeds the aggregate  principal amount of the Working Capital
     Advances  PLUS Swing Line  Advances  PLUS  Letter of Credit  Advances to be
     outstanding  PLUS the  Available  Amount  of all  Letters  of  Credit  then
     outstanding after giving effect to the Proposed Borrowing.

     Manual  delivery of an executed  counterpart of this Notice of Borrowing by
telecopier shall be effective as delivery of an original executed counterpart of
this Notice of Borrowing.


                                   Very truly yours,

                                   MICROAGE TECHNOLOGY SERVICES, L.L.C.


                                   By: /s/ James R. Daniel
                                      ------------------------------------------
                                     Title: Treasurer
                                           -------------------------------------


                                   PINACOR, INC.


                                   By: /s/ James R. Daniel
                                      ------------------------------------------
                                     Title: Treasurer
                                           -------------------------------------
<PAGE>
                                                                       EXHIBIT C

                                                                         FORM OF
                                                       ASSIGNMENT AND ACCEPTANCE



     Reference is made to the Credit  Agreement dated as of October 28, 1999 (as
amended,  supplemented  or  otherwise  modified  from time to time,  the "CREDIT
AGREEMENT";  the terms defined therein,  unless otherwise defined herein,  being
used herein as therein defined) among,  MicroAge Technology Services,  L.L.C., a
Delaware  limited   liability  company  ("MTS"),   Pinacor,   Inc.,  a  Delaware
corporation ("PINACOR", and together with MTS, the "BORROWERS"), MicroAge, Inc.,
a Delaware  corporation  (the  "PARENT  GUARANTOR"),  the Lender  Parties  party
thereto,  Citibank,  N.A.,  as  Collateral  Agent,  IBM Credit  Corporation,  as
Documentation Agent, The CIT Group/Business  Credit, Inc., as Syndication Agent,
and Citibank, N.A., as Administrative Agent and for the Lender Parties.

     Each "Assignor"  referred to on Schedule 1 hereto (each, an "ASSIGNOR") and
each "Assignee"  referred to on Schedule 1 hereto (each,  an "ASSIGNEE")  agrees
severally  with  respect to all  information  relating to it and its  assignment
hereunder and on Schedule 1 hereto as follows:

     1. Such Assignor  hereby sells and assigns,  without  recourse except as to
the representations and warranties made by it herein, to such Assignee, and such
Assignee hereby purchases and assumes from such Assignor,  an interest in and to
such Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to the  percentage  interest  specified on Schedule 1 hereto of all
outstanding  rights and  obligations  under the Credit  Agreement.  After giving
effect to such sale and assignment,  such Assignee's  Commitments and the amount
of the  Advances  owing to such  Assignee  will be as set  forth on  Schedule  1
hereto.

     2. Such  Assignor  (i)  represents  and  warrants  that it is the legal and
beneficial owner of the interest or interests being assigned by it hereunder and
that such  interest or interests are free and clear of any adverse  claim;  (ii)
makes no representation  or warranty and assumes no responsibility  with respect
to any statements,  warranties or representations  made in or in connection with
any  Loan  Document  or  the  execution,  legality,  validity,   enforceability,
genuineness,  sufficiency or value of, or the perfection or priority of any lien
or security  interest  created or purported to be created under or in connection
with, any Loan Document or any other instrument or document  furnished  pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial  condition of any Loan Party or the performance or
observance by any Loan Party of any of its  obligations  under any Loan Document
or any  other  instrument  or  document  furnished  pursuant  thereto;  and (iv)
attaches  the  Note or  Notes  held by  such  Assignor  and  requests  that  the
Administrative Agent exchange such Note or Notes for a new Note or Notes payable
to the order of such Assignee in an amount equal to the  Commitments  assumed by
such Assignee pursuant hereto or new Notes payable to the order of such Assignee
in an amount equal to the Commitments assumed by such Assignee pursuant
<PAGE>
hereto and such Assignor in an amount equal to the Commitments  retained by such
Assignor under the Credit  Agreement,  respectively,  as specified on Schedule 1
hereto.

     3. Such  Assignee  (i)  confirms  that it has received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 4.01 thereof and such other  documents and  information as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (ii) agrees that it will,  independently and without
reliance  upon any Agent,  any  Assignor or any other  Lender Party and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit  decisions in taking or not taking  action under
the Credit  Agreement;  (iii)  confirms  that it is an Eligible  Assignee;  (iv)
appoints  and  authorizes  each Agent to take such action as agent on its behalf
and to  exercise  such powers and  discretion  under the Loan  Documents  as are
delegated  to such Agent by the terms  thereof,  together  with such  powers and
discretion as are reasonably incidental thereto; (v) agrees that it will perform
in accordance with their terms all of the  obligations  that by the terms of the
Credit  Agreement are required to be performed by it as a Lender Party; and (vi)
attaches any U.S.  Internal Revenue Service forms required under Section 2.12 of
the Credit Agreement.

     4. Following the execution of this  Assignment and  Acceptance,  it will be
delivered  to the  Administrative  Agent for  acceptance  and  recording  by the
Administrative Agent. The effective date for this Assignment and Acceptance (the
"EFFECTIVE Date") shall be the date of acceptance  hereof by the  Administrative
Agent, unless otherwise specified on Schedule 1 hereto.

     5. Upon such  acceptance and recording by the  Administrative  Agent, as of
the Effective  Date, (i) such Assignee shall be a party to the Credit  Agreement
and, to the extent provided in this  Assignment and Acceptance,  have the rights
and  obligations of a Lender Party  thereunder and (ii) such Assignor  shall, to
the extent provided in this Assignment and Acceptance, relinquish its rights and
be released  from its  obligations  under the Credit  Agreement  (other than its
rights and  obligations  under the Loan Documents  that are specified  under the
terms of such Loan  Documents to survive the payment in full of the  Obligations
of the Loan Parties under the Loan Documents to the extent any claim  thereunder
relates to an event arising prior to the Effective  Date of this  Assignment and
Acceptance)  and, if this Assignment and Acceptance  covers all of the remaining
portion  of the  rights  and  obligations  of such  Assignor  under  the  Credit
Agreement, such Assignor shall cease to be a party thereto.

     6. Upon such acceptance and recording by the Administrative Agent, from and
after the Effective Date, the Administrative Agent shall make all payments under
the Credit  Agreement and the Notes in respect of the interest  assigned  hereby
(including,   without  limitation,  all  payments  of  principal,  interest  and
commitment fees with respect  thereto) to such Assignee.  Such Assignor and such
Assignee  shall make all  appropriate  adjustments  in payments under the Credit
Agreement and the Notes for periods prior to the Effective Date directly between
themselves.

     7. This  Assignment and  Acceptance  shall be governed by, and construed in
accordance with, the laws of the State of New York.
<PAGE>
     8.  This  Assignment  and  Acceptance  may be  executed  in any  number  of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall  constitute  one and the same  agreement.  Manual  delivery of an
executed  counterpart  of  Schedule  1 to  this  Assignment  and  Acceptance  by
telecopier shall be effective as delivery of an original executed counterpart of
this Assignment and Acceptance.

     IN WITNESS WHEREOF,  each Assignor and each Assignee have caused Schedule 1
to this  Assignment and  Acceptance to be executed by their  officers  thereunto
duly authorized as of the date specified thereon.
<PAGE>
                                   SCHEDULE 1
                                       TO
                            ASSIGNMENT AND ACCEPTANCE

<TABLE>
<CAPTION>
ASSIGNOR
WORKING CAPITAL FACILITY
<S>                                          <C>         <C>       <C>         <C>        <C>
  Percentage interest assigned                     %         %           %          %           %
  Working Capital Commitment assigned        $           $         $           $          $
  Aggregate outstanding principal amount of
    Working Capital Advances assigned        $           $         $           $          $
  Principal amount of Note
    payable to ASSIGNOR                      $           $         $           $          $

LETTER OF CREDIT FACILITY
  Letter of Credit Commitment assigned       $           $         $           $          $
  Letter of Credit Commitment retained       $           $         $           $          $
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ASSIGNEE
WORKING CAPITAL FACILITY
<S>                                           <C>         <C>       <C>         <C>        <C>
  Percentage interest assigned                      %         %           %          %           %
  Working Capital Commitment assigned         $           $         $           $          $
  Aggregate outstanding principal amount of
    Working Capital Advances assigned         $           $         $           $          $
  Principal amount of Note
    payable to ASSIGNEE                       $           $         $           $          $

LETTER OF CREDIT FACILITY
  Letter of Credit Commitment assumed         $           $         $           $          $
</TABLE>
<PAGE>
Effective Date (if other than date of acceptance by Administrative Agent):
(1) _________ __, ____


                                    ASSIGNORS


                                                              , as Assignor
                                    --------------------------

                                    By
                                        ----------------------------------------
                                     Title:
                                            ------------------------------------

                                    Dated: _________ __, ____



                                                              , as Assignor
                                    --------------------------

                                    By
                                        ----------------------------------------
                                     Title:
                                            ------------------------------------

                                    Dated: _________ __, ____



                                                              , as Assignor
                                    --------------------------

                                    By
                                        ----------------------------------------
                                     Title:
                                            ------------------------------------

                                    Dated: _________ __, ____



                                                              , as Assignor
                                    --------------------------

                                    By
                                        ----------------------------------------
                                     Title:
                                            ------------------------------------

                                    Dated: _________ __, ____



                                                              , as Assignor
                                    --------------------------

                                    By
                                        ----------------------------------------
                                     Title:
                                            ------------------------------------

                                    Dated: _________ __, ____

----------
(1)  This date should be no earlier than five  Business  Days after the delivery
     of this Assignment and Acceptance to the Administrative Agent.
<PAGE>

                                    ASSIGNEES


                                                              , as Assignee
                                    --------------------------

                                    By
                                       -----------------------------------------
                                       Title:
                                              ----------------------------------

                                    Dated:  _________ __, ____

                                    Domestic Lending Office:


                                    Eurodollar Lending Office:




                                                              , as Assignee
                                    --------------------------

                                    By
                                       -----------------------------------------
                                       Title:
                                              ----------------------------------

                                    Dated:  _________ __, ____

                                    Domestic Lending Office:


                                    Eurodollar Lending Office:



                                                              , as Assignee
                                    --------------------------

                                    By
                                       -----------------------------------------
                                       Title:
                                              ----------------------------------

                                    Dated:  _________ __, ____

                                    Domestic Lending Office:


                                    Eurodollar Lending Office:



                                                              , as Assignee
                                    --------------------------

                                    By
                                       -----------------------------------------
                                       Title:
                                              ----------------------------------

                                    Dated:  _________ __, ____

                                    Domestic Lending Office:


                                    Eurodollar Lending Office:



                                                              , as Assignee
                                    --------------------------

                                    By
                                       -----------------------------------------
                                       Title:
                                              ----------------------------------

                                    Dated:  _________ __, ____

                                    Domestic Lending Office:


                                    Eurodollar Lending Office:


Accepted (2)[and Approved] this ____
day of ___________, ____

CITIBANK, N.A.,
     as Administrative Agent


By /s/ Claudia Slacik
------------------------------
Title: Vice President
------------------------------

(3)[Approved this ____ day
of _____________, ____

MICROAGE, INC.


By /s/ James R. Daniel
------------------------------
Title: CFO, ExVP & Treasurer
------------------------------
----------
(2)  Required if the Assignee is an Eligible Assignee solely by reason of clause
     (a)(viii) or (b) of the definition of "Eligible Assignee".

(3)  See footnote 2.