$10,000,000
                                CREDIT AGREEMENT


                                February 26, 1997


                                     between


                               DISC GRAPHICS, INC.

                                       and

                          KEYBANK NATIONAL ASSOCIATION


<PAGE>

     CREDIT  AGREEMENT  (the  "Agreement")  dated February 26, 1997 between Disc
Graphics,  Inc.,  10  Gilpin  Avenue,  Hauppauge,  New York  11788,  a  Delaware
corporation  ("Borrower") and KeyBank National Association,  1377 Motor Parkway,
Islandia, New York 11788, a national banking association (the "Bank").

     Borrower desires that the Bank extend credit to it as provided herein,  and
the Bank is  willing  to do so.  Accordingly,  Borrower  and the  Bank  agree as
follows:

ARTICLE 1.  DEFINITIONS; ACCOUNTING TERMS.

     Section 1.01. Definitions.  As used in this Agreement,  the following terms
have the following meanings:

     "Acquisition"  means any  transaction  pursuant to which Borrower or any of
its Subsidiaries (a) acquires equity  securities (or warrants,  options or other
rights to acquire such  securities)  of any  corporation,  partnership,  limited
liability  company or other  business  organization,  or any entity which is not
then a Subsidiary of Borrower,  pursuant to a solicitation of tenders  therefor,
or in one or more negotiated block, market or other transactions not involving a
tender offer, or a combination of any of the foregoing,  or (b) makes any entity
not then a Subsidiary of Borrower a Subsidiary  of Borrower,  or causes any such
entity to be merged into or purchased by Borrower or any of its Subsidiaries, in
any  case  pursuant  to a  merger,  purchase  of  assets  or any  reorganization
providing  for the  delivery or issuance  to the holders of such  entity's  then
outstanding securities,  in exchange for such securities,  of cash or securities
of  Borrower  or any of  its  Subsidiaries,  or a  combination  thereof,  or (c)
purchases all or substantially all of the business or assets of any entity.

     "Additional  Costs"  shall have the  meaning  given to that term in Section
4.01 hereof.

     "Affiliate" means, with respect to any Person, any Person (a) that directly
or indirectly  controls,  or is controlled  by, or is under common control with,
such Person,  (b) that directly or indirectly  beneficially  owns or holds 5% or
more of any class of voting stock of such  Person,  (c) 5% or more of the voting
stock of which is  directly  or  indirectly  beneficially  owned or held by such
Person,  (d) which is a partnership or limited  liability  company in which such
Person is  respectively  a general  partner  or manager or (e) who is among such
Person's  officers,  directors joint venturers,  managers or partners.  The term
"control" means the possession,  directly or indirectly,  of the power to direct
or cause the  direction  of the  management  and  policies of a Person,  whether
through the ownership of voting securities, by contract, or otherwise.

     "Aggregate  Acquisition  Outstandings"  means,  at a particular  time,  the
aggregate maximum amount then outstanding to be drawn to finance Acquisitions.

<PAGE>
     
     "Aggregate  Outstandings"  means,  at a  particular  time,  the  sum of the
Aggregate  Acquisition  Outstandings at such time plus the aggregate outstanding
principal balance of all other Revolving Credit Loans.

     "Agreement"  means this Credit  Agreement,  as amended or supplemented from
time to time.

     "Amortization" means amortization as determined in accordance with GAAP.

     "Bank" means KeyBank National Association and its successors and assigns.

     "Banking Day" means any day on which commercial banks are not authorized or
required to close in New York State,  and  whenever  such day relates to a LIBOR
Loan or notice with respect to any LIBOR Loan, a day on which dealings in dollar
deposits are also carried out in the London interbank market.

     "Base  Rate" means that rate of interest  from time to time  determined  or
announced  by the Bank at its  Principal  Office  from  time to time as its base
lending  rate.  The Base Rate is not  necessarily  the lowest  rate of  interest
charged by the Bank on loans or other credit relationships.

     "Base Rate Loans" mean any Revolving Credit Loan when and to the extent the
interest  rate for such  Revolving  Credit Loan is determined in relation to the
Base Rate.

     "Borrowing Base" means at any time an amount equal to the sum of (i) 85% of
Borrower's Eligible Receivables and (ii), subject to the limitation described in
the  definition  of  Eligible  Inventory,  up  to  70%  of  Borrower's  Eligible
Inventory.

     "Borrowing Base  Certificate"  means a certificate  signed by an officer of
Borrower  in the form of  Exhibit D annexed  with such  changes  as the Bank may
require from time to time.

     "Capital  Lease" means any lease which is required to be capitalized on the
balance sheet of the lessee in accordance with GAAP.

     "Closing  Date" means the date this Agreement has been executed by Borrower
and the Bank.

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

     "Collateral"  means all personal property of Borrower and its Subsidiaries,
whether now  existing or hereafter  arising,  which is subject or which is to be
subject to the Liens granted by the Security Agreement.

     "Commitment Fee" means the fee described in Section 3.01.

<PAGE>

     "Current  Assets" means, at a particular  date, all amounts which would, in
accordance with GAAP, be included under current assets on a consolidated balance
sheet of Borrower and its Subsidiaries as at such date.

     "Current Liabilities" means, at a particular date, all amounts which would,
in accordance with GAAP, be included under current liabilities on a consolidated
balance  sheet of  Borrower  and its  Subsidiaries  as at such  date  including,
without  limitation,  (a) all  obligations  payable on demand or within one year
after the date in which  the  determination  is made,  and (b)  installment  and
sinking  fund  payments  required  to be made  within one year after the date on
which  determination  is made, but excluding all such liabilities or obligations
which are  renewable or extendable at the option of Borrower to a date more than
one year from the date of determination.

     "Current  Debt"  means,  on the date of  determination  with respect to any
entity,  (a) that portion of such  entity's  long term Debt  (including  Capital
Leases)  that is due and  payable  within  the  next 12  months,  including  the
outstanding  principal balance of all Loans and (b) all Debt of such entity that
is due within 12 months of the date of determination.

     "Current  Ratio" means the ratio of (a) Current  Assets of Borrower and its
Subsidiaries, on a consolidated basis to (b) Current Liabilities of Borrower and
its Subsidiaries on a consolidated basis.

     "Debt" means,  with respect to any Person (a)  indebtedness  of such Person
for borrowed money, (b) indebtedness for the deferred purchase price of property
or services, (c) the face amount of any outstanding letters of credit issued for
the account of such Person, (d) obligations arising under acceptance facilities,
(e) guaranties,  endorsements  (other than for collection in the ordinary course
of business) and other contingent  obligations to purchase, to provide funds for
payment,  to supply  funds to invest in any  Person,  or  otherwise  to assure a
creditor  against loss, (f) obligations  secured by any Lien on property of such
Person,  (g)  obligations  of such Person as lessee under Capital Leases and (h)
indebtedness  of such Person  evidenced  by a note,  bond,  indenture or similar
instrument.

     "Debt Coverage Ratio" means (a) the consolidated EBITDA of Borrower and its
Subsidiaries,  minus  any  cash  Dividends  paid  or  declared  to  be  paid  to
shareholders  of  Borrower  during  such  period,  (b) divided by the sum of the
Current Debt and  Interest  Expense of Borrower  and its  Subsidiaries  all on a
consolidated basis, as determined at the end of each fiscal quarter,  based upon
Borrower's  financial  statements  delivered in accordance with Section 8.08 for
the period of 12 months preceding the date of determination.

     "Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.

     "Default Rate" means, with respect to the principal of any Loan and, to the
extent  permitted  by law,  any other  amount  payable  by  Borrower  under this
Agreement  or the Note a rate per annum  equal to 2% above the rate of  interest
otherwise applicable to such Loan or other amount.

<PAGE>

     "Depreciation" means depreciation as determined in accordance with GAAP.

     "Dividends"  means,  for any  period,  dividends  paid by  Borrower  or any
Subsidiary during such period.

     "EBITDA" means, for any period, the sum of (a) Net Income, (b) income taxes
paid  or  payable  to any  government  or  government  instrumentality,  (c) all
Interest  Expense  paid  or  accrued  on any  Debt,  (d)  Depreciation  and  (e)
Amortization during such period.

     "Eligible  Inventory"  shall mean the gross  amount of  Borrower's  "rolled
inventory"  located in the United  States of  America,  consisting  of  unopened
paper,  card  stock and other  paper  stock,  with all  original  packaging  and
wrappings intact, less any (a) damaged obsolete or unsalable goods, (b) goods to
be returned  to  Borrower's  suppliers,  (c) goods in transit to  Borrower,  (d)
rental or consigned  inventory,  (e) inventory  located at facilities  where the
Bank has not been  granted  a  perfected  security  interest  and (f)  inventory
subject to  Borrower's  obsolescence  reserve in  accordance  with GAAP.  If any
inventory  is moved to a  location  where,  under  applicable  law,  the  Bank's
security interest therein becomes unperfected as a result, provided it meets the
other  requirements  set forth in this  definition,  such inventory shall become
Eligible Inventory 91 days after the date on which the Bank's security interests
are perfected  under  applicable  law. The maximum  value of Eligible  Inventory
included in the Borrowing Base shall be $2,142,850.

     "Eligible  Receivables" shall mean the gross amount of Borrower's  accounts
receivable,  arising out of sales in the ordinary course of Borrower's business,
which are not in  dispute or subject  to  credit,  allowance,  defense,  offset,
counterclaim or adjustment  (other than any discount allowed for prompt payment)
and for which  records  are  maintained  at a location of Borrower in the United
States,  excluding  (a)  intercompany  accounts  or other  amounts  due from any
Affiliate of Borrower,  (b) credit balances over 120 days from invoice date, (c)
notes  receivable,  from customers,  (d) sales tax and any separately  billed or
invoiced freight charges, (e) government accounts,  (f) deposits or prepayments,
(g)  foreign  accounts  and (h)  amounts  billed  for goods not yet  shipped  to
customers.  Any  receivables  shall be ineligible if the account debtor for such
receivables has filed and there is pending a case for bankruptcy, reorganization
or other relief under the federal  bankruptcy code or any similar state or other
laws,  if any such  case has been  filed and is  pending  against  such  account
debtor,  or if such  account  debtor  has made and  there is  pending  a general
assignment  for the benefit of  creditors,  or if the account  debtor  suspended
business operation, becomes insolvent or has suffered or is suffering a receiver
or a trustee to be appointed for all or a  significant  portion of its assets or
affairs.

     "Environmental  Laws" means (i) the Comprehensive  Environmental  Response,
Compensation  and Liability Act ("CERCLA"),  (ii) the Resource  Conservation and
Recovery Act ("RCRA"),  (iii) the Federal Water Pollution  Control Act, (iv) the

<PAGE>

Clean Air Act,  (v) the Toxic  Substances  Control Act,  (vi) the Safe  Drinking
Water Act, (vii) the Occupational  Safety and Health Act of 1970, and (viii) the
New York State  Environmental  Conservation Law ("ECL"),  Articles 1 through 71,
(ix) the Hazardous Material  Transportation  Act, and (x) any so-called federal,
state or local  "Superfund" or "Superlien"  laws and (b) any and all other laws,
rules or  regulations,  relating to or  imposing  liability,  including  without
limitation (i) strict liability,  (ii) standards of conduct concerning hazardous
materials,  (iii) protection of the environment (including,  without limitation,
air, surface water, ground water, or soil), including,  without limitation,  any
of  the  same  relating  to  the  manufacture,  processing,  distribution,  use,
treatment,   storage,   disposal,   transport,   or  handling   of   pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes.

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

     "ERISA  Affiliate"  means any  corporation  or trade or business which is a
member of the same  controlled  group of  corporations  (within  the  meaning of
Section 414(b) of the Code) as Borrower or is under common  control  (within the
meaning of Section 414(c) of the Code) with Borrower.

     "Event of Default" has the meaning given such term in Section 11.01.

     "Facility Fee" means the fee described in Section 2.09 hereof.

     "Forfeiture Proceeding" means the commencement of any prejudgment action or
proceeding  affecting  Borrower  or  any  of its  Subsidiaries  pursuant  to any
statute,   rule  or  regulation  which  permits  any   governmental   agency  or
instrumentality  to obtain a  prejudgment  seizure or forfeiture of any of their
property.

     "GAAP" means generally accepted accounting  principles in the United States
of America as in effect from time to time,  applied on a basis  consistent  with
those used in the preparation of the financial statements referred to in Section
7.05.

     "Guaranty"  means the  Guaranty  in the form of Exhibit B to be executed by
each of the Guarantors, secured by a Security Agreement.

     "Guarantors"  means Four Seasons Litho, Inc. and Disc Graphics Label, Inc.,
both Subsidiaries of Borrower and each a party to the Guaranty. Guarantors shall
include  each  future  Subsidiary  which is  required  to  become a party to the
Guaranty in accordance with Section 9.10 hereof.

     "Hazardous  Substance"  means any  substance,  waste or material  regulated
under by any Environmental  Law, and any substance which, due to its toxicity or
reactivity (as determined by any court,  governmental or regulatory authority or
agency having jurisdiction or interpretative  power thereon),  poses a threat to
human health or the environment,  including,  but not limited to, all materials,
wastes,  substances,  pollutants and  contaminants  from time to time defined or
classified as such under any Environmental Law.

<PAGE>

     "Interest  Expense" means interest expense of Borrower and its Subsidiaries
on a  consolidated  basis for a particular  period as reflected in its financial
statements and calculated in accordance with GAAP.

     "Interest  Period" means the period  commencing on the date a LIBOR Loan is
made (or, with respect to a LIBOR Loan that  represents  the  continuation  of a
previous LIBOR Loan, the day immediately  following the last day of the Interest
Period of such previous LIBOR Loan),  and ending,  as Borrower may select on the
30th, 60th or 90th day thereafter, provided that no Interest Period shall extend
beyond the Revolving Credit Termination Date.

     "LIBOR" means,  for any LIBOR Loan, the rate per annum (rounded  upwards if
necessary  to the nearest  1/16 of 1%) quoted by the Bank two Banking Days prior
to the first day of the Interest  Period for such Revolving  Credit Loan for the
offering to leading banks in the London interbank market of U.S. dollar deposits
in immediately  available funds, for a period,  and in an amount,  comparable to
such  Interest  Period and  principal  amount of the LIBOR  Loan which  shall be
outstanding during such Interest Period.

     "LIBOR  Loan"  means any  Revolving  Credit Loan when and to the extent the
interest rate therefor is determined on the basis of LIBOR.

     "Lien"  means  any  lien  (statutory  or  otherwise),   security  interest,
mortgage,  deed of trust,  priority,  pledge,  charge,  conditional  sale, title
retention  agreement,  Capital  Lease or other  encumbrance  or similar right of
others, or any agreement to give any of the foregoing.

     "Loan"  means any loan made by the Bank  pursuant  to Section  2.01 or 3.01
hereof.

     "Loan  Documents"  means this  Agreement,  the  Notes,  the  Guaranty,  the
Security Agreements, the Borrowing Base Certificate, the Notice of Borrowing and
all other documents or instruments executed in connection herewith or therewith.

     "Margin"  means (a) if Borrower's  Debt Coverage  Ratio is equal to or less
than 1.30:1.0, 175 basis points per annum, (b) if Borrower's Debt Coverage Ratio
is greater than  1.30:1.0  but less than or equal to 2.25:1.0,  150 basis points
per annum,  and (c) if Borrower's  Debt Coverage Ratio is greater than 2.25:1.0,
125 basis points per annum.

     "Multiemployer  Plan" means a Plan defined as such in Section 4001(a)(3) of
ERISA to which  contributions  have been made by Borrower or any ERISA affiliate
and which is covered by Title IV of ERISA.

     "Net  Income"  means,  with  respect  to any entity  for any  period,  such
entity's net income  after taxes for such period as  reflected on such  entity's
financial statements.

<PAGE>

     "Notes" mean the Revolving Credit Note and the Term Note.
          
     "Notice of Borrowing"  means the document  signed by an officer of Borrower
in the form annexed as Exhibit F.

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  and any  entity
succeeding to any or all of its functions under ERISA.

     "Person" means an individual,  partnership,  corporation,  business  trust,
joint  stock  company,   trust,   limited  liability   company,   unincorporated
association,  joint venture,  governmental authority or other entity of whatever
nature.

     "Plan" means any employee  benefit or other plan established or maintained,
or to which contributions have been made, by Borrower or any ERISA Affiliate and
which is  covered  by Title  IV of  ERISA  or to which  Section  412 of the Code
applies  provided that such term shall not include plans terminated prior to the
date hereof.

     "Principal  Office"  means the  principal  office  of the  Bank,  presently
located at 66 South Pearl Street, Albany, New York.

     "Regulation D" means  Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.

     "Regulatory  Change"  means any change after the date of this  Agreement in
federal,  state,  municipal or foreign laws or regulations (including Regulation
D) or the adoption or making after such date of any interpretations,  directives
or requests  applying  to a class of banks  including  the Bank of any  federal,
state, municipal or foreign laws or regulations (whether or not having the force
of law) by any court or  governmental  or monetary  authority  charged  with the
interpretation or administration thereof.

     "Reportable  Event" means any of the events set forth in Section 4043(b) of
ERISA as to which events the PBGC by regulation  has not waived the  requirement
of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence
of such event,  provided that a failure to meet the minimum funding  standard of
Section  412 of the Code or Section  302 of ERISA  shall be a  Reportable  Event
regardless of any waivers given under Section 412(d) of the Code.

     "Revolving  Credit  Commitment"  means the obligation of the Bank to extend
revolving  credit  to  Borrower  in  accordance  with the  terms  hereof  in the
aggregate principal amount not to exceed the lesser of (a) $10,000,000,  as such
amount may be reduced or otherwise modified from time to time in accordance with
the terms hereof or (b) the Borrowing Base.

     "Revolving  Credit Facility" means the Revolving  Credit Facility  provided
for in Article II hereof.

<PAGE>

     "Revolving Credit Loans" mean any Loan made by the Bank pursuant to Section
2.01 hereof.

     "Revolving  Credit Note" means a promissory note of Borrower in the form of
Exhibit  A-1  hereto  evidencing  the  Revolving  Credit  Loans made by the Bank
hereunder.

     "Revolving  Credit  Termination  Date" means the earlier of (i) the date on
which  the  Revolving  Credit  Loan is paid in  full  and the  Revolving  Credit
Commitments  shall  terminate  hereunder  and the  obligations  of  Borrower  in
connection  therewith  have been satisfied or (ii) the date three years from the
date hereof  unless  such date is not a Banking  Day,  then the next  succeeding
Banking Day.

     "Security  Agreement"  means,  with  respect  to  Borrower,   the  Security
Agreement  in  substantially  the form of Exhibit  C-I, and with respect to each
Subsidiary,  in the form of Exhibit C-2, to be  delivered by Borrower  under the
terms of this Agreement.
          
     "Solvent" means, when used with respect to any Person on a particular date,
that on such date (a) the fair saleable  value of its assets is in excess of the
total amount of its liabilities,  including,  without limitation, the reasonably
expected  amount  of  such  Person's  obligations  with  respect  to  contingent
liabilities, (b) the present fair saleable 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 that it will incur Debts or  liabilities
beyond such Person's ability to pay as such Debts and liabilities mature and (d)
such Person is not engaged in business or a transaction, for which such Person's
property, would constitute an unreasonably small capital.

     "Subsidiary" means, as to any Person, any corporation, partnership, limited
liability  company or other business  organization or entity of which at least a
majority of the securities or other ownership  interests  having ordinary voting
power  (absolutely  or  contingently)  for the  election of  directors  or other
persons  performing  similar  functions  are  at  the  time  owned  directly  or
indirectly by such Person.

     "Tangible Net Worth" means, at any particular date, the amount of excess of
Total Assets over Total  Liabilities  which would,  in accordance  with GAAP, be
included under shareholders'  equity on a consolidated balance sheet of Borrower
and its Subsidiaries as at such date, excluding, however, from the determination
of  Total  Assets  all  intangible  assets,   including,   without   limitation,
organizational expenses, patents,  trademarks,  copyrights,  goodwill, covenants
not to compete,  research and  developmental  costs,  training  costs,  treasury
stock, deferred charges and any loans receivable from officers or Affiliates.

     "Term Loan" means the Loan to Borrower pursuant to Section 3.01.

     "Term Loan Maturity Date" means February 25, 2004.

<PAGE>

     "Term Loan  Note"  means the  promissory  note of  Borrower  in the form of
Exhibit A-2 hereto evidencing a Term Loan made by the Bank hereunder.

     "Total Assets"  means,  at a particular  date, all amounts which would,  in
accordance  with GAAP, be included under assets on a consolidated  balance sheet
of Borrower and its Subsidiaries as at such date.

     "Total  Liabilities"  means, at a particular date, all amounts which would,
in accordance with GAAP, be included under liabilities on a consolidated balance
sheet of Borrower and its Subsidiaries as at such date.

     "Unfunded Vested  Liabilities"  means, with respect to any Plan, the amount
(if any) by which  the  present  value of all  vested  benefits  under  the Plan
exceeds the fair market value of all Plan assets allocable to such benefits,  as
determined on the most recent  valuation date of the Plan and in accordance with
the provisions of ERISA for calculating  the potential  liability of Borrower or
any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA.

     Section 1.02.  Accounting  Terms.  All  accounting  terms not  specifically
defined  herein shall be construed in  accordance  with GAAP,  and all financial
data required to be delivered  hereunder  shall be prepared in  accordance  with
GAAP.

ARTICLE 2. REVOLVING CREDIT FACILITY

     Section 2.01. Revolving Credit Loans.

     (a) Subject to the terms and conditions of this Agreement,  the Bank agrees
to make Revolving  Credit Loans to Borrower from time to time from and including
the date hereof to but excluding the Revolving Credit Termination Date up to but
not exceeding at any one time  outstanding  the amount of its  Revolving  Credit
Commitment;  provided,  that no  Revolving  Credit Loan shall be made if,  after
giving effect to such Revolving  Credit Loan, the Aggregate  Outstandings at the
time would exceed the Revolving  Credit  Commitment in effect on such date.  The
Revolving Credit Loans may be Base Rate Loans or LIBOR Loans; provided, however,
that during the  occurrence  and  continuance  of an Event of Default,  the Bank
shall have no  obligation to make any  Revolving  Credit  Loans.  Subject to the
foregoing limits,  Borrower may borrow, repay and reborrow, on or after the date
hereof and prior to the Revolving Credit  Termination  Date, all or a portion of
the Revolving Credit Commitment hereunder.

     (b) If at any time for any reason  the  Aggregate  Outstandings  exceed the
amount of the Revolving Credit Commitment, Borrower shall pay the amount of such
excess to the Bank immediately on demand.

     Section 2.02. The Revolving  Credit Note. The Revolving  Credit Loans shall
be  evidenced  by  a  single   Revolving  Credit  Note  in  favor  of  the  Bank
substantially  in the form of  Exhibit  A-1 with  appropriate  insertions,  duly

<PAGE>

executed and  completed by Borrower.  The Bank is authorized to record the date,
type and  amount of each  Revolving  Credit  Loan,  the date and  amount of each
payment or  prepayment  of principal  thereof,  the date of each  interest  rate
conversion pursuant to Section 2.05 and the principal amount subject thereto and
the Interest  Period and interest rate with respect thereto in its records or on
the schedules  annexed to and  constituting a part of the Revolving Credit Note,
and, absent manifest error,  any such recordation  shall  constitute  conclusive
evidence of the  information so recorded;  provided that the failure to make any
such recordation shall not in any way affect Borrower's  obligation to repay the
Revolving  Credit Loans.  The Revolving  Credit Note shall (a) be dated the date
hereof,  (b)  mature  on the  Revolving  Credit  Termination  Date  and (c) bear
interest  from and  including  the date  hereof on the unpaid  principal  amount
thereof from time to time outstanding as provided herein.

     Section 2.03. Use of Proceeds.

     (a) Borrower shall use the proceeds of the Revolving  Credit Loans to repay
existing bank indebtedness, for general working capital purposes, and subject to
the sublimit described in Section 2.08, to finance Acquisitions.  No part of the
proceeds of any of the Loans will be used for any  purpose  which  violates  the
provisions  of  Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System as in effect on the date of making such Loans.

     (b) Borrower shall indemnify the Bank and hold it harmless from and against
any and all liabilities, losses, damages, costs and expenses (including, without
limitation,  the reasonable  fees and  disbursements  of counsel for the Bank in
connection  with  any  investigative,  administrative  or  judicial  proceeding,
whether or not the Bank is designated a party  thereto) which may be incurred by
the Bank, relating to or arising out of this Agreement or any actual or proposed
use of proceeds of Loans hereunder;  provided,  that the Bank shall not have the
right to be  indemnified  hereunder  for its own  gross  negligence  or  willful
misconduct.

     Section 2.04. Borrowing Procedures for Revolving Credit Loans. Borrower may
request a borrowing under the Revolving Credit Commitment as provided in Section
4.01.  Not later than 2:00 p.m. New York City time on the date of such borrowing
as  stated  in the  Notice  of  Borrowing,  subject  to the  conditions  of this
Agreement,  the Bank shall make available to Borrower,  in immediately available
funds,  the amount of such  Revolving  Credit  Loan by  crediting  a  designated
account of Borrower maintained with the Bank.

     Section 2.05. Interest on Revolving Credit Loans.

     (a) Base Rate Loans.  Borrower  shall pay interest on the  outstanding  and
unpaid  principal  amount of each Base Rate Loan made under this  Agreement at a
fluctuating  rate per annum  equal to the Base Rate from time to time in effect.
Each  change in the  interest  rate shall take  effect  simultaneously  with the
corresponding  change in the Base Rate. Borrower shall pay interest on Base Rate

<PAGE>

Loans in  arrears  on the first day of each  month and on the  Revolving  Credit
Termination  Date,  calculated on the basis of the actual number of days elapsed
divided by a 360 day year. Any principal  amount not paid when due (at maturity,
on acceleration,  or otherwise) shall bear interest thereafter until paid at the
Default Rate.

     (b) LIBOR Loans.  Borrower shall pay interest on the outstanding  principal
amount of each LIBOR Loan made  under  this  Agreement  at a fixed rate equal to
LIBOR plus the  applicable  Margin.  Borrower  shall pay interest on LIBOR Loans
calculated  on the basis of the actual  number of days elapsed  divided by a 360
day year. Any principal amount not paid when due (at maturity or acceleration or
otherwise)  shall  bear  interest  thereafter  until paid at the  Default  Rate.
Accrued  interest on LIBOR  Loans  shall be due and payable in arrears  upon any
payment of  principal  and on the last day of the  Interest  Period with respect
thereto;  provided that, after an Event of Default, interest shall accrue at the
Default  Rate and  shall be due and  payable  from time to time on demand of the
Bank.  Any principal  amount of LIBOR Loans not paid when due (at  maturity,  on
acceleration,  or otherwise)  shall bear interest  thereafter until paid at such
Default Rate.

     (c) Adjustments to Margin.  The applicable Margin shall be adjusted for all
LIBOR  Loans based upon  Borrower's  Debt  Coverage  Ratio as  reflected  in its
financial  statements  delivered  to the  Bank  from  time to  time as  required
hereunder.  Once  determined,  the Margin shall remain in effect until the fifth
Banking Day after the Bank's receipt on or before the dates set forth in Section
8.08 of the relevant financial  statements,  whereupon if appropriate based upon
the then existing Debt Coverage Ratio, the Margin shall adjust for all new LIBOR
Loans  and for  any  continuation  of an  existing  LIBOR  Loan at the end of an
Interest Period. If Borrower delivers its annual audited statements more than 90
days after the end of its fiscal year and if the Debt Coverage Ratio as reported
in such  financial  statements is lower than the Debt Coverage Ratio as reported
in  Borrower's  quarterly  financial  statements  for the third  quarter of such
fiscal year with the result that a higher Margin would apply, Borrower shall pay
the Bank,  within ten Banking  Days of demand,  an amount equal to the excess of
the  interest  that would have been paid at such higher  rate over the  interest
actually  paid during the relevant  period  between  March 30th and the date the
annual statements are delivered.  In no event shall Borrower receive a refund of
interest paid to the Bank under the provision of this Section.

     (d) Interest Periods for LIBOR Loans. In the case of each LIBOR Loan, Borr-
ower shall  select an Interest  Period of any  duration in  accordance  with the
definition  of  Interest  Period  in  Section  1.01,  subject  to the  following
limitations:  (a) no Interest  Period shall have a duration less than one month,
and if any such  proposed  Interest  Period  would  otherwise  be for a  shorter
period,  such  Interest  Period  shall not be  available  and (b) if an Interest
Period would end on a day which is not a Banking Day, such Interest Period shall
be extended to the next Banking  Day,  unless such Banking Day would fall in the
next  calendar  month in which  event  such  Interest  Period  shall  end on the
immediately  preceding  Banking Day. Any Interest  Period which would  otherwise
extend beyond the Revolving  Credit  Termination Date shall end on the Revolving
Credit Termination Date.

     (e)  Conversions.  Upon the expiration of an Interest  Period for any LIBOR
Loan,  or any  portion  thereof,  such LIBOR Loan or  portion  thereof  shall be


<PAGE>

automatically  converted  to a Base Rate Loan  except  to the  extent  that such
Revolving  Credit Loan shall be repaid hereunder or shall be required to be paid
hereunder  or unless  Borrower  shall have  notified  the Bank,  as  provided in
Section 4.01 hereof, of its intention to continue such LIBOR Loan or any portion
thereof as a LIBOR Loan.  Subject to the following  conditions  and to the terms
and conditions of this Agreement, Borrower may convert any Revolving Credit Loan
or portion thereof to a different type of Revolving Credit Loan:

          (i) if less than all Revolving Credit Loans at the time  outstanding  
shall be converted,  the notice given by Borrower to the Bank shall specify
the aggregate amount of Revolving Credit Loans in each case to be converted;

          (ii) in the case of a  conversion  of less than all  outstanding  
Revolving Credit Loans,  the aggregate  principal  amount of Revolving  Credit 
Loans to be converted  shall not be less than $50,000 (and if greater in 
integral  multiples of $10,000);

          (iii)  no Revolving Credit Loan may be converted to a LIBOR Loan less 
than one month before the Revolving Credit Termination Date;

          (iv)  a LIBOR Loan may be converted to a Base Rate Loan only on the 
last day of an Interest Period; and

          (v)  no Revolving Credit Loan or portion thereof may be converted to 
a LIBOR Loan during the occurrence and continuance of an Event of Default.

     Section 2.06.  Changes of Commitment.  Borrower may reduce or terminate the
amount of unused Revolving Credit Commitment from time to time but not more than
four  times  during  the term of this  Agreement  or more than once  during  any
calendar year by giving notice to the Bank of each such reduction or termination
to the Bank as provided in Section  4.01.  Any partial  reduction  shall be in a
minimum aggregate amount of $1,000,000 or, if greater,  in integral multiples of
$250,000. Once reduced or terminated, the Revolving Credit Commitment may not be
reinstated.

     Section 2.07. Minimum Amounts. Except for borrowings which exhaust the full
remaining  amount of the Revolving  Credit  Commitment,  and prepayments (in the
case of Base Rate Loans only) which result in the prepayment of all Loans,  each
borrowing and each  prepayment of principal  shall be at least  $50,000,  and if
greater, in integral multiples of $10,000.

     Section 2.08. The Sublimit. Subject to the terms and conditions hereof, the
Bank agrees to make one or more  Revolving  Credit  Loans to finance  Borrower's
Acquisitions,  provided that, (a) the Aggregate  Acquisition  Outstandings shall
not exceed at any time the lesser of (i)  $3,000,000  or (ii) 25% of  Borrower's
Tangible Net Worth and (b) no Revolving  Credit Loan for  Acquisitions  shall be
permitted if (i) an Event of Default has occurred which  continues at such time,

<PAGE>

(ii) after giving effect to such Loan, the Aggregate Outstandings at the time of
such  issuance  would exceed the Revolving  Credit  Commitment in effect on such
date or (iii) as a result of such  Acquisition  or the making of such  Loan,  an
Event of Default would occur.

     Section 2.09.  Facility Fee.  Borrower shall pay to the Bank a Facility Fee
equal to $5,000 at the Closing Date and on each  anniversary of the Closing Date
until the Revolving Credit Termination Date.

     Section 2.10.  Conversion to Term Loan. On the Revolving Credit Termination
Date,  provided  there has been no Default  or Event of  Default,  Borrower  may
convert all or a part, but not less than $2,000,000 of the outstanding principal
balance of the  Revolving  Credit  Loans to the Term Loan,  having the terms and
conditions specified in Article 3.

ARTICLE 3. TERM LOAN.

     Section  3.01.  Term Loan. If Borrower  exercises  the option  described in
Section  2.10,  Borrower  shall give the Bank notice three Banking Days prior to
the Revolving Credit  Termination  Date, and together with such notice,  pay the
Bank a Commitment Fee equal to 0.5% of the amount of the Revolving  Credit Loans
to be converted to a Term Loan.  Subject to the terms and conditions hereof, the
Bank shall make a four year Term Loan to Borrower in the amount of the Aggregate
Outstandings or such lesser amount permitted under Section 2.10 at and effective
as of the Revolving Credit Termination Date.

     Section 3.02.  The Term Note.  The Term Loan shall be evidenced by a single
promissory  note of  Borrower  substantially  in the form of Exhibit A-2 hereto,
with appropriate  insertions,  payable to the order of the Bank and representing
the obligation of Borrower to pay the unpaid  principal amount of the Term Loan,
with interest thereon as described herein. The Term Loan Note shall (a) be dated
the Revolving Credit  Termination Date,  mature in 48 equal consecutive  monthly
installments,  be payable on the first day of each month commencing on the first
day of the month following the Revolving  Credit  Termination Date and ending on
the Term Loan  Maturity  Date,  and (c) bear interest for a period from the date
hereof until the Term Maturity Loan Date on the unpaid  principal amount thereof
at the  applicable  rates per annum  specified  herein.  All  accrued and unpaid
interest and fees shall be due and payable on the Term Loan Maturity Date.

     Section 3.03.  Interest on the Term Loans.  Borrower  shall pay interest on
the outstanding and unpaid principal balance of the Term Loan a fluctuating rate
per  annum  equal to the Base Rate  plus a margin  of 0.5%.  Each  change in the
interest rate shall take effect  simultaneously with the corresponding change in
the Base Rate.  Interest on the Term Loan shall be  calculated on the basis of a
360 day year and shall be paid in  arrears on the first day of each month and on
the Term  Loan  Maturity  Date.  Any  principal  amount  not  paid  when due (at
maturity,  on acceleration or otherwise)  shall bear interest  thereafter  until
paid at the  Default  Rate.  At  Borrower's  election  made  during  the  period


<PAGE>

beginning on the Revolving Credit Termination Date through two years thereafter,
provided  no Default  or Event of Default  then  exists,  Borrower  may effect a
change in the interest  rate on the Term Loan to a fixed rate from the Base Rate
by entering into a Swap Agreement between the Borrower and the Bank, at the rate
established by exchange,  through Key Capital  Markets,  Inc., of the obligation
evidenced by the Term Loan Note for an  obligation  bearing  interest at a fixed
rate having a term that is equivalent  to the term of the Term Loan.  The rights
and  obligations of Borrower and the Bank  respecting such exchange shall be set
forth in a Swap Agreement to be executed between them.

ARTICLE 4.  GENERAL CREDIT PROVISIONS; FEES AND PAYMENTS.

     Section 4.01.  Certain Notices.  Borrower shall give Notice of Borrowing to
the Bank of each borrowing pursuant to Section 2.04, each prepayment pursuant to
Section 4.02, each conversion or continuation of LIBOR Loans pursuant to Section
2.05 and each reduction or termination of Revolving Credit  Commitment  pursuant
to Section 2.06. Each such notice shall be  irrevocable,  and shall be effective
on the date of receipt  only if  received by the Bank not later than 11:00 a.m.,
New York City time as follows:

     (a) In the case of borrowings and  prepayments of Base Rate Loans, at least
one Banking Day prior thereto;

     (b) In the case of LIBOR Loans, at least three Banking Days prior thereto;

     (c) In the  case of  reductions  or  termination  of the  Revolving  Credit
Commitment, ten days prior thereto; and

     (d) In the  case of  conversions  or  continuations  of Loans  pursuant  to
Section 2.05, three Banking Days prior thereto.

     Each such notice  relating to the borrowing,  conversion or prepayment of a
Loan shall specify the Loans to be borrowed, converted or prepaid and the amount
and type of the  Loans to be  borrowed  or  prepaid  and the date of  borrowing,
conversion  or prepayment  (which shall be a Banking  Day).  Each such notice of
reduction or termination of the Revolving  Credit  Commitment  shall specify the
amount of the Revolving Credit Commitment to be reduced or terminated.

Section 4.02.  Prepayments.

     (a)  Borrower  shall  have the  right at any time and from  time to time to
prepay any Base Rate Loan, in whole or in part,  upon at least one Banking Day's
prior  written  notice to the Bank;  provided,  however,  that each such partial
prepayment  of Base Rate Loans shall not be less than $50,000 or if greater,  in
amounts which are integral multiples of $10,000. Except as required by paragraph
(b)  below  or on the last  day of an  Interest  Period  with  respect  thereto,
Borrower shall not be permitted to prepay LIBOR Loans.

     (b) On the date of any  reduction of the  Revolving  Credit  Commitment  as
provided in Section 2.06,  Borrower  shall pay or prepay so much of the Loans as
shall be necessary in order that the Aggregate  Outstandings will not exceed the
Revolving  Credit  Commitment  after  giving  effect  to  such  reduction.   All
prepayments of LIBOR Loans due to a reduction of the Revolving Credit Commitment
shall be subject to Section 5.05.

<PAGE>

     (c) All  prepayments of principal  required by paragraph (b) above shall be
applied  first  to  Base  Rate  Loans  outstanding,  and  then  to  LIBOR  Loans
outstanding.

     (d) All prepayments of principal shall be accompanied by the payment of all
accrued  interest on the amount so prepaid and, in the case of LIBOR  Loans,  by
all amounts required to be paid pursuant to Section 5.05.

     Section 4.03. Default Interest. Notwithstanding any other provision of this
Agreement, upon the occurrence and continuance of an Event of Default, each Loan
outstanding  hereunder  shall  bear  interest  at a rate per annum  equal to the
Default Rate.

     Section 4.04. Payments Generally.  All payments under this Agreement or the
Notes shall be made in immediately  available funds not later than 1:00 p.m. New
York City time on the relevant  dates  specified  above at the Bank's  office at
1377 Motor Parkway, Islandia, New York 11788.

     (a) Any  payment  made  after such time on such due date shall be deemed to
have been made on the next succeeding Banking Day.

     (b)  Whenever  a new  Loan  is to be  made on a date  Borrower  repays  any
principal of an outstanding  Loan, the Bank shall apply the proceeds of such new
Loan to the payment of the  principal  to be repaid and only an amount  equal to
the  difference  between the  principal to be borrowed  and the  principal to be
repaid  shall be made  available  by the Bank to Borrower as provided in Section
2.04 or paid by Borrower to the Bank  pursuant to this Section 4.04, as the case
may be.

     (c) The Bank may (but  shall not be  obligated  to) debit the amount of any
such payment which is not made by the time  specified in Section  4.04(a) to any
ordinary deposit account of Borrower with the Bank.  Borrower shall, at the time
of making each payment under this Agreement or the Note, specify to the Bank the
principal or other amount payable by Borrower under this Agreement.  If Borrower
fails to so specify,  the payment will be applied  first to interest and then to
principal,  unless a Default or Event of Default has occurred and is continuing,
in which  case  the Bank may  apply  such  payment  as it may  elect in its sole
discretion.  If the due date of any  payment  under this  Agreement  or the Note
would  otherwise  fall on a day which is not a Banking  Day,  such date shall be
extended to the next  succeeding  Banking Day and interest  shall be payable for
any principal so extended for the period of such extension.

<PAGE>

ARTICLE 5.  YIELD PROTECTION; ETC.

     Section 5.01. Additional Costs.

     (a)  Borrower  shall pay  directly  to the Bank from time to time on demand
such  amounts  as the Bank may  determine  (in the  manner  set forth in Section
5.01(d))  to  be  necessary  to   compensate  it  for  any  increases  in  costs
attributable  to its making or maintaining  any LIBOR Loans under this Agreement
or its Note or its obligation to make any LIBOR Loans hereunder or any reduction
in any amount  receivable by the Bank hereunder in respect of any LIBOR Loans or
such obligation or capital in respect of this Agreement (such increases in costs
and reductions in amounts  receivable being herein called  "Additional  Costs"),
resulting from any Regulatory Change which: (i) changes the basis of taxation of
any amounts  payable to the Bank under this  Agreement or the  Revolving  Credit
Note in respect  of any of such LIBOR  Loans  (other  than taxes  imposed on the
overall net income of the Bank for any LIBOR Loans by the  jurisdiction in which
the Bank has its  principal  office);  or (ii)  imposes or modifies any reserve,
special deposit, deposit insurance or assessment, minimum capital, capital ratio
or similar requirements relating to any extensions of credit or other assets of,
or any deposits  with or other  liabilities  of, the Bank;  or (iii) imposes any
other condition  affecting this Agreement or the Note (or any of such extensions
of credit or liabilities).  The Bank will notify Borrower of any event occurring
after the date of this  Agreement  which will  entitle the Bank to  compensation
pursuant to this Section as promptly as practicable  after it obtains  knowledge
thereof by furnishing  Borrower a written  statement  describing  the Additional
Costs entitling it to compensation hereunder and the Bank's method of allocating
to Borrower  such  Additional  Costs.  If the Bank  requests  compensation  from
Borrower under this Section or under Section  5.01(c),  Borrower may suspend the
obligation  of the Bank to make  Loans of the type with  respect  to which  such
compensation is requested.

     (b) Without limiting the effect of the foregoing provisions of this Section
if by reason of any  Regulatory  Change,  the Bank either (i) incurs  Additional
Costs based on or measured by the excess  above a specified  level of a category
of  deposits  or  other  liabilities  of the Bank  which  includes  deposits  by
reference to which the interest rate on LIBOR Loans is determined as provided in
this Agreement or a category of extensions of credit or other assets of the Bank
which includes LIBOR Loans or (ii) becomes subject to restrictions on the amount
of such a category of liabilities or assets which it may hold, then, if the Bank
so elects by notice to  Borrower,  the  obligation  of the Bank to make Loans of
such type hereunder  shall be suspended  until the date such  Regulatory  Change
ceases to be in effect.

     (c)  Without  limiting  the  effect  of the  foregoing  provisions  of this
Section,  Borrower  shall pay  directly to the Bank from time to time on request
such  amounts  as the Bank may  determine  (in the  manner  set forth in Section
5.01(d)) to be necessary to compensate the Bank for any  Additional  Costs which
are attributable to the maintenance by it or any of its affiliates  (pursuant to
any  Regulatory  Change) of capital  in  respect of its Loans  hereunder  or its
obligation  to make Loans  hereunder  (such  compensation  to  include,  without
limitation,  an amount  equal to any  reduction in return on assets or equity of

<PAGE>

the  Bank to a level  below  that  which  it would  have  achieved  but for such
Regulatory  Change).  The  Bank  will  notify  Borrower  if  it is  entitled  to
compensation  pursuant  to this  Section as  promptly  as  practicable  after it
obtains  knowledge  thereof  by  furnishing  Borrower  with a written  statement
describing the Additional  Costs entitling it to compensation  hereunder and the
Bank's method of allocating to Borrower such Additional Costs.

     (d) Reasonable  determinations  and allocations by the Bank for purposes of
the effect of any Regulatory Change pursuant to Sections 5.01(a),  (b) or (c) on
its costs of making or maintaining  Loans or its obligation to make Loans, or on
amounts  receivable by, or the rate of return to, it in respect of Loans or such
obligation, and of the additional amounts required to compensate the Bank, shall
be conclusive absent demonstrated error.

     (e) Any amounts the Bank receives  pursuant to the foregoing  provisions of
this Section 5.01 shall not be duplicative of  compensation  payable to the Bank
under Section 5.05.

     Section 5.02. Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if:

     (a) the Bank determines  (which  determination  shall be conclusive  absent
demonstrated  error) that quotations of interest rates for the relevant deposits
referred to in the  definition of "LIBOR" in Section 1.01 are not being provided
in  the  relevant  amounts  or for  the  relevant  maturities  for  purposes  of
determining the rate of interest for any type of LIBOR Loans as provided in this
Agreement; or

     (b) the Bank determines  (which  determination  shall be conclusive  absent
demonstrated  error)  that the  relevant  rates of  interest  referred to in the
definition of LIBOR in Section 1.01 upon the basis of which the rate of interest
for any type of LIBOR Loans is to be determined do not adequately cover the cost
to the Bank of  making or  maintaining  such  Loans;  then the Bank  shall  give
Borrower prompt notice thereof, and so long as such condition remains in effect,
the  obligations  of the Bank to make LIBOR Loans shall be  suspended  (in which
case the provisions of Section 5.04 shall be applicable).

     Section  5.03.  Illegality.  Notwithstanding  any other  provision  in this
Agreement,  if it becomes  unlawful for the Bank to honor its obligation to make
or maintain LIBOR Loans  hereunder,  the Bank shall promptly notify Borrower and
the  Bank's  obligation  to make or  maintain  LIBOR  Loans  hereunder  shall be
suspended  until such time as the Bank may again make and maintain such affected
Loans (in which case the provisions of Section 5.04 shall be applicable).

     Section 5.04. Conversion to Base Rate Loans. If the obligations of the Bank
to make LIBOR Loans shall be suspended pursuant to any of the foregoing Sections
all Loans which would otherwise be made by the Bank as LIBOR Loans shall be made
instead as Base Rate Loans and, if an event  referred  to in Section  5.01(b) or
5.03 has  occurred  and the Bank so  requests by notice to  Borrower,  all LIBOR
Loans of the Bank then outstanding  shall be  automatically  converted into Base

<PAGE>

Rate Loans on the date specified by the Bank in such notice,  and, to the extent
that  LIBOR  Loans  are so made as (or  converted  into)  Base Rate  Loans,  all
payments of principal which would otherwise be applied to the Bank's LIBOR Loans
shall be applied  instead to its Base Rate Loans. If any LIBOR Loan is converted
to a Base  Rate  Loan  pursuant  to this  Section  prior  to the last day of the
Interest Period with respect to such LIBOR Loan,  Borrower shall pay to the Bank
all amounts required to be paid pursuant to Section 5.05 hereof.

     Section 5.05. Certain Compensation.

     (a)  Borrower  shall pay to the Bank such  reasonable  amount or amounts as
shall be sufficient (in the reasonable opinion of the Bank) to compensate it for
any loss, cost or expense which the Bank determines is attributable to:

          (i)  Borrower's  prepayment  of a LIBOR  Loan  (whether  by  reason  
of the mandatory or voluntary  prepayment  provisions of this  Agreement or
otherwise) or failure to pay principal or interest on a LIBOR Loan when due; or
     
          (ii) Borrower's failure to borrow, convert into or continue a LIBOR 
Loan on the date specified therefor in the relevant notice given under Section 
4.01; or

          (iii)  Borrower's  failure  to  prepay a LIBOR  Loan on the date  
specified therefor in the relevant notice under Section 4.02.

     (b) A reasonable  determination  by the Bank of amounts payable pursuant to
this  Section  shall  be  conclusive  absent  manifest  error.  In the  case  of
prepayments of LIBOR Loans,  Borrower shall pay to the Bank a prepayment premium
equal to any costs,  loss or expense that it may sustain or incur as a result of
Borrower's  prepaying the LIBOR Loan,  including (but not limited to) the Bank's
loss of anticipated interest on such LIBOR Loan at the applicable interest rate,
or any interest or other charge payable by the Bank to others who provided funds
to the Bank to enable it to make or  maintain  such  LIBOR  Loan.  In  addition,
Borrower shall reimburse the Bank for all  administrative  costs incurred by the
Bank as a result of such prepayment.

ARTICLE 6.  CONDITIONS PRECEDENT.

     Section  6.01.  Conditions  to  the  Initial  Borrowings   Hereunder.   The
obligations  of the Bank to make the Loans  constituting  the initial  borrowing
under 3.01, or the Term Loan under 3.01, are subject to the conditions precedent
that:

     (a) the Bank shall have  received  on or before the date of such Loans each
of the  following,  in form  and  substance  satisfactory  to the  Bank  and its
counsel:

<PAGE>

               (i)  the Revolving Credit Note or the Term Loan Note, as 
applicable, duly executed by Borrower;

               (ii)  a certificate of the Secretary or Assistant Secretary of 
Borrower and of each  Guarantor,  dated the Closing  Date or the  Revolving
Credit Termination Date, as applicable,  attesting to all corporate action taken
by Borrower or such Guarantor,  including  resolutions of its Board of Directors
authorizing  the execution,  delivery and  performance of the Loan Documents and
each other  document to be delivered  pursuant to this  Agreement and certifying
the names and true  signatures  of the  officers of  Borrower or each  Guarantor
executing the Loan Documents and the other documents to be delivered by Borrower
or such Guarantor under this Agreement;

              (iii) certified copies of the certificate or articles of 
incorporation  and the by-laws of Borrower or such  Guarantor,  as the case
may be; and such  certificate  shall state that the  resolutions  and  corporate
documents  thereby  certified  have  not  been  amended,  modified,  revoked  or
rescinded as of the date of such certificate;

              (iv) a  certificate  of a duly  authorized  officer of Borrower,  
dated  the  Closing  Date or the  Revolving  Credit  Termination  Date,  as
applicable,  stating that the  representations  and  warranties in Article 7 are
true and correct on such date as though made on and as of such date (unless made
as of a specific date earlier than the date hereof,  in which case they shall be
true and correct as of such earlier  date) and that no event has occurred and is
continuing which constitutes a Default or Event of Default;

              (v)  the Guaranty duly executed by each of the Guarantors;

              (vi) the Security Agreement, duly executed by Borrower, together 
with such UCC-1 financing statements as are required by the Bank;

              (vii)  such duly executed UCC-3 Revolving Credit Termination 
Statements as are necessary to terminate existing liens on the assets of 
Borrower;

              (viii) a favorable opinion of counsel for Borrower, dated the 
Closing Date or the Revolving Credit  Termination  Date, as applicable,  in 
substantially the form of  Exhibit  E and as to such  other matters as the Bank
may  reasonably request;

              (ix) satisfactory evidence that Borrower and each of the 
Guarantors is duly organized,  validly  existing  and  in  good  standing under
the  laws  of its jurisdiction of incorporation; and

              (x) such other documents, instruments,  approvals, opinions and 
evidence of compliance with the terms hereof as the Bank may require.;

<PAGE>

     (b) Borrower  shall have paid or caused to be paid all fees  required to be
paid  hereunder or in  connection  herewith and all accrued fees and expenses of
the Bank in  connection  with the  preparation,  execution  and delivery of this
Agreement, and the other Loan Documents and the consummation of the transactions
contemplated thereby;

     (c) Borrower and the Guarantors  shall have obtained all consents,  permits
and  approvals   required  in  connection  with  the  execution,   delivery  and
performance  by Borrower  and the  Guarantors  of their  respective  obligations
hereunder  and under the other Loan  Documents  and such  consents,  permits and
approvals shall continue in full force and effect; and

     (d)  all  legal  matters  in  connection   with  this  financing  shall  be
satisfactory to the Bank and its counsel.

     Section 6.02. Conditions to All Borrowings.  The obligations of the Bank to
make any Loan (including the initial  Revolving  Credit Loan) hereunder shall be
subject to the further conditions precedent that on the date of such Loan:

     (a) the following statements shall be true:

          (i) the representations and warranties  contained in Article 7 are 
true and  correct on and as of the date of such Loan as though  made on and
as of such date (unless such  representations  and  warranties  are made as of a
specific  earlier  date in which case they shall be true and  correct as at such
date);

          (ii) no Default or Event of Default  has  occurred  and is continuing,
or would result from such Loan; and

          (iii) no material  adverse  change  shall have  occurred  in the 
business, financial  condition or operations of Borrower since the date of the 
most recent financial  statements  of  Borrower  delivered  to  the  Bank  
hereunder  or  in connection herewith; and

     (b) the Bank shall have received  such  approvals,  opinions,  documents or
instruments as the Bank may have reasonably requested.

     Section 6.03. Deemed  Representations.  Unless Borrower  otherwise notifies
the Bank prior to any  borrowing  hereunder,  the  acceptance by Borrower of the
proceeds of any Loan shall  constitute a  representation  and warranty  that the
statements  contained in Section  6.02(a) are true and correct as of the date of
such Loan.

<PAGE>

ARTICLE 7.  REPRESENTATIONS AND WARRANTIES.

     Borrower hereby represents and warrants that:

     Section  7.01.   Incorporation,   Good  Standing  and  Due   Qualification;
Compliance  with Law. Each of Borrower and the Guarantors is duly  incorporated,
validly  existing and in good standing under the laws of the jurisdiction of its
incorporation,  has the  corporate  power and authority to own its assets and to
transact the business in which it is now engaged or proposed to be engaged,  and
is duly qualified as a foreign  corporation  and in good standing under the laws
of each other  jurisdiction in which such qualification is required except where
the failure to so qualify and/or be in good standing could not in any case or in
the  aggregate,  have a material  adverse  effect on the  operations,  business,
property or financial  condition  of any of Borrower or any  Guarantor or on its
respective ability to perform its respective obligations hereunder. In addition,
each of Borrower and the  Guarantors is in compliance  with all laws,  treaties,
rules or  regulations,  or  determination  of an arbitration or a court or other
governmental  authority, in each case applicable to or binding upon it or any of
its  property or to which it or any of its  property  is subject,  except to the
extent that the failure to so comply could not, in any case or in the aggregate,
have  a  material  adverse  effect  on the  operations,  business,  property  or
financial  condition of Borrower  and the  Guarantors,  taken as a whole,  or on
their ability to perform their obligations under the Loan Documents.

     Section 7.02. Corporate Power and Authority;  No Conflicts.  The execution,
delivery and  performance  by each of Borrower and each of the Guarantors of the
Loan Documents have been duly authorized by all necessary  corporate  action and
do not and will not (a) require any consent or approval of its stockholders that
has not been obtained,  (b)  contravene its charter or by-laws,  (c) violate any
provision  of, or require any filing  (other than  filings  contemplated  hereby
and/or by the other Loan  Documents),  registration,  consent or approval under,
any law, rule,  regulation  (including,  without  limitation,  the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal  Reserve System
as in effect from time to time),  order,  writ,  judgment,  injunction,  decree,
determination  or award presently in effect having  applicability to Borrower or
such Guarantor, (d) result in a breach of or constitute a default or require any
consent under any indenture or loan or credit  agreement or any other agreement,
lease or instrument to which  Borrower or such  Guarantor is a party or by which
any of its properties may be bound or affected,  (e) result in, or require,  the
creation  or  imposition  of  any  Lien,  upon  or  with  respect  to any of the
properties now owned or hereafter  acquired by Borrower or such Guarantor  other
than Liens created by this  Agreement  and/or the other Loan  Documents,  or (f)
cause  Borrower  or  such  Guarantor  to be in  default  under  any  such  rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
any such indenture, agreement, lease or instrument.

     Section 7.03.  Legally  Enforceable  Agreements.  Each Loan Document is, or
when  delivered  under  this  Agreement  will  be, a legal,  valid  and  binding
obligation of Borrower or each  Guarantor  party  thereto,  enforceable  against
Borrower or such Guarantor in accordance with its terms.

<PAGE>

     Section  7.04.  Litigation.  There  are no  actions,  suits or  proceedings
pending or to Borrower's knowledge,  threatened against or affecting Borrower or
any of the Guarantors or any of their respective  Subsidiaries before any court,
governmental  agency  or  arbitrator,  which  could,  in any one  case or in the
aggregate, adversely affect the financial condition,  operations,  properties or
business of Borrower and the  Guarantors,  taken as a whole, or their ability to
perform their respective obligations under the Loan Documents.

     Section  7.05.  Financial  Statements.  The  consolidated  balance sheet of
Borrower  and  its  Subsidiaries  as  at  December  31,  1995  and  the  related
consolidated  income  statement  and  statement of cash flow of Borrower and its
Subsidiaries  for the  fiscal  year  then  ended,  and the  accompanying  notes,
together  with the  opinion  thereon,  of KPMG  Peat  Marwick  LLP,  independent
certified public  accountants (the  "Auditor"),  and the consolidated  financial
statements for the nine month period ended  September 30, 1996,  copies of which
were delivered to the Bank, fairly present the consolidated  financial condition
of Borrower and its Subsidiaries as at such dates and the  consolidated  results
of the operations of Borrower and its  Subsidiaries  for the periods  covered by
such statements,  all in accordance with GAAP  consistently  applied.  As of the
date hereof, there are no liabilities of Borrower and its Subsidiaries, fixed or
contingent,  which  are  material  but  are  not  reflected  in  such  financial
statements  or in the notes  thereto,  other  than  liabilities  arising  in the
ordinary course of business since September 30, 1996 and the liabilities created
by this  Agreement.  Since  the date of the  most  recent  financial  statements
delivered to the Bank and the Closing Date,  there has been no material  adverse
change in the condition  (financial or otherwise),  business,  operations or, to
the knowledge of Borrower,  prospects of any of Borrower or the Guarantors. With
respect  to any Loans made after the  Closing  Date,  since the date of the most
recent financial statements delivered to the Bank hereunder and the date of such
Loan, there has been no material  adverse change in the condition  (financial or
otherwise),  business, operations or, to the knowledge of Borrower, prospects of
Borrower and the Guarantors, taken as a whole.

     Section 7.06.  Ownership and Liens. Each of Borrower and the Guarantors has
title to, or valid  leasehold  interests in, all of its  properties  and assets,
real and personal,  reflected in the financial statements referred to in Section
7.05 (other  than any  properties  or assets  disposed of since the date of such
financial  statements  as no  longer  used or  useful  in the  conduct  of their
respective  business  or as have  been  disposed  of in the  ordinary  course of
business),  and none of the  properties  and  assets  owned by  Borrower  or the
Guarantors, or any of them, and none of their leasehold interests, is subject to
any Lien, except as disclosed in Schedule I or as may be permitted hereunder.

     Section 7.07.  Taxes. Each of Borrower and the Guarantors has filed all tax
returns (federal, state and local) required to be filed except where the failure
to file could not, in any case or in the aggregate,  have an adverse effect upon
the operations,  business, property or financial condition of any of Borrower or
the Guarantors or on their ability to perform their  obligations  under the Loan
Documents.  Each of  Borrower  and the  Guarantors  has paid when due all taxes,
assessments  and  governmental  charges  and  levies  shown  thereon  to be due,
including interest and penalties, other than taxes, assessments and governmental
charges and levies being contested in good faith by appropriate  proceedings and
with respect to which adequate  reserves in conformity with GAAP shall have been
provided on the books of Borrower or the Guarantors, as the case may be.

<PAGE>

     Section 7.08.  ERISA.  Each of Borrower and the Guarantors is in compliance
in all material respects with all applicable  provisions of ERISA. No Reportable
Event has occurred  with respect to any Plan, no notice of intent to terminate a
Plan has been filed nor has any Plan been  terminated,  no  circumstance  exists
which  constitutes  grounds  under  Section 4042 of ERISA  entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to administer,  a Plan,
nor has the PBGC instituted any such proceedings, none of Borrower nor its ERISA
Affiliates has completely or partially  withdrawn under Sections 4201 or 4204 of
ERISA  from a  Multiemployer  Plan and each of  Borrower  and each of its  ERISA
Affiliates has met its minimum funding  requirements under ERISA with respect to
all of its Plans and there are no Unfunded Vested Liabilities.  None of Borrower
nor its ERISA  Affiliates  has incurred  any  liability to the PBGC under ERISA,
other  than  to  make  contributions  in the  ordinary  course  and  other  than
contingent  liabilities that would arise on the termination of any Plan (no such
termination being reasonably foreseen by Borrower).

     Section  7.09.  Subsidiaries  and  Ownership  of  Stock.  Schedule  II is a
complete  and  accurate  list  of the  Subsidiaries  of  Borrower,  showing  the
jurisdiction  of  incorporation  or  organization  of  each  Subsidiary  and the
percentage of Borrower's ownership of the outstanding stock or other interest of
each such Subsidiary.

     Section 7.10. Credit  Arrangements.  Schedule III is a complete and correct
list of all credit  agreements,  indentures,  purchase  agreements  outside  the
ordinary  course of Borrower's  business,  guaranties,  Capital Leases and other
investments, agreements and arrangements in effect on the date of this Agreement
providing  for or  relating  to  extensions  of  credit  to  Borrower  or to the
Guarantors or to any of them  (including  agreements  and  arrangements  for the
issuance of letters of credit or for  acceptance  financing) in respect of which
Borrower,  the  Guarantors  or  any  of  them  is  in  any  manner  directly  or
contingently obligated. Schedule III shows the maximum principal or face amounts
of the  credit  in  question,  outstanding  and which  can be  outstanding,  are
correctly  stated,  and all Liens of any  nature  given or agreed to be given as
security  therefor are  correctly  described  or indicated in such  Schedule and
Schedule I.

     Section 7.11.  Operation of Business.  Each of Borrower and each  Guarantor
possesses  all material  licenses,  permits,  franchises,  patents,  copyrights,
trademarks and trade names, or rights thereto,  to conduct their business as now
conducted  and as presently  proposed to be  conducted  and to  Borrower's  best
knowledge,  none of Borrower  nor any of the  Guarantors  is in violation of any
valid rights of others with respect to any of the foregoing.

     Section 7.12. Hazardous Substances.  Each of Borrower and the Guarantors is
in  compliance  with all  Environmental  Laws,  and has obtained  all  necessary
licenses and permits  required to be issued pursuant to any  Environmental  Law.
None of Borrower nor any of the  Guarantors  has received any written  notice or
communication  from  any  governmental  agency  with  respect  to any  Hazardous
Substance  relative to its  operations,  property or acts or any  investigation,
demand or request pursuant to or enforcing any  Environmental Law relating to it
or its operations,  and no such investigation is pending or, to the knowledge of
Borrower, threatened.

<PAGE>

     Section  7.13.  Compliance  with  Loans and  Judgments.  Borrower  and each
Subsidiary are in compliance,  in all material  respects,  with all laws, rules,
regulations,  orders  and  decrees  which  are  applicable  to  Borrower  or its
Subsidiaries, or to any of their respective properties. Each of Borrower and the
Guarantors  has  satisfied  all  judgments  and none of Borrower  nor any of the
Guarantors is in default with respect to any judgment, writ, injunction, decree,
rule or regulation  of any court,  arbitrator  or federal,  state,  municipal or
other   governmental   authority,   commission,   board,   bureau,   agency   or
instrumentality, domestic or foreign.

     Section  7.14.  No Defaults on Other  Agreements.  Except as  disclosed  on
Schedule  IV,  none of  Borrower  nor any of the  Guarantors  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 which would in any
case or in the aggregate  have an adverse effect on its ability to carry out its
obligations under the Loan Documents. None of Borrower nor any of the Guarantors
is in default in any respect in the  performance,  observance or  fulfillment of
any of the  obligations,  covenants or conditions  contained in any agreement or
instrument  material to its  business to which it is a party  except  where such
default would not, in any case or in the aggregate,  have a material and adverse
effect on the business,  properties,  assets, operations or condition, financial
or  otherwise,  of Borrower and the  Guarantors,  taken as a whole,  or on their
ability to perform their obligations under the Loan Documents.

     Section 7.15. Labor Disputes and Force Majure. Neither the business nor the
properties  of  Borrower  or any of the  Guarantors  is  affected  by any  fire,
explosion,  accident,  strike, lockout or other labor dispute,  drought,  storm,
hail, earthquake, embargo, force majure or of the public enemy or other casualty
(whether or not covered by insurance),  materially and adversely  affecting such
business or properties or the operations of Borrower and the  Guarantors,  taken
as a whole,  or their  ability  to  perform  their  obligations  under  the Loan
Documents.

     Section 7.16. Governmental  Regulation.  None of Borrower or the Guarantors
is subject to regulation  under the Public Utility  Holding Company Act of 1935,
the Investment  Company Act of 1940 or any other statute or regulation  limiting
its ability to incur indebtedness for money borrowed as contemplated hereby.

     Section 7.17. Partnerships. None of Borrower or the Guarantors is a partner
in any  partnership  or a member  of any  joint  venture  or  limited  liability
company.

     Section 7.18. No Forfeiture.  None of Borrower nor any of the Guarantors is
engaged  in or  proposes  to be  engaged  in  any  unlawful  activity  which  is
reasonably  likely  to  result  in a  Forfeiture  Proceeding  and no  Forfeiture
Proceeding  against  any of them  is  pending  or,  to the  best  of  Borrower's
knowledge, threatened.

<PAGE>

     Section 7.19. Security Agreement. The provisions of the Security Agreements
are  effective  to create  in favor of the Bank  legal,  valid  and  enforceable
security  interests  in all right,  title and  interest  of  Borrower in all the
Collateral  described  therein,  assuming the same has been duly executed by the
Bank and the Bank has filed the forms UCC-1 referred to therein.

     Section 7.20. Disclosure. This Agreement, each Loan Document and, except as
set forth in Section 7.21, each other document, certificate,  exhibit, report or
written  statement  furnished to the Bank by or on behalf of Borrower or for use
in connection  with the Loans,  do not contain any untrue  statement of material
fact or omit to state a material fact necessary to make the statement  contained
herein or therein  not  misleading  under the  circumstances  in which they were
made.

     Section  7.21.  Projections  and  Forecasts.  Any  financial  projection or
forecast  furnished by Borrower or any Guarantor shall be prepared in accordance
with  GAAP to the  extent  applicable,  based  on the  good  faith  judgment  of
Borrower's management of present circumstances, expected conditions and expected
courses of action,  and with respect to projections,  based on the occurrence of
the hypothetical  events described therein.  The underlying  assumptions in such
forecasts  and  projections  shall  be  appropriate  and  reasonable  under  the
circumstances  and, if the forecast or projection  presents a range,  such range
shall not be selected in a misleading manner.

ARTICLE 8. AFFIRMATIVE COVENANTS.

     So long as the  Note  shall  remain  unpaid  or the  Bank  shall  have  any
obligations under this Agreement,  Borrower shall and shall cause the Guarantors
to:

     Section 8.01.  Maintenance  of Existence.  Except as otherwise  provided in
this Agreement,  preserve and maintain its corporate existence and good standing
in the jurisdiction of its incorporation,  and qualify and remain qualified as a
foreign  corporation  in  each  jurisdiction  in  which  such  qualification  is
required.

     Section  8.02.  Conduct  of  Business.  Continue  to engage in its  current
business or related businesses.

     Section 8.03. Maintenance of Properties. Maintain, keep and preserve all of
its  properties  (tangible  and  intangible)  necessary  to the  conduct  of its
business in good working order and condition, ordinary wear and tear excepted.

     Section 8.04. Maintenance of Records. Keep records and books of account, in
which complete entries will be made in accordance with GAAP.

<PAGE>

     Section 8.05. Maintenance of Insurance. Maintain insurance with financially
sound and  reputable  insurance  companies or  associations  in such amounts and
covering such risks as are usually carried by companies engaged in the same or a
similar business and similarly situated.

     Section  8.06.  Compliance  with  Laws.  Comply  in all  respects  with all
applicable laws, rules, regulations and orders.

     Section 8.07. Right of Inspection.  At any reasonable time and from time to
time,  upon reasonable  notice during normal business hours,  permit the Bank or
any agent or  representative  thereof,  to examine and make copies and abstracts
from the  records  and books of account  of, and visit the  properties  of, such
entity, to discuss the affairs, finances and accounts of such entity with any of
their   respective   officers  and  directors  and  such  entity's   independent
accountants,  and  from  time to time at  Borrower's  expense  to  conduct  such
collateral and other audits as the Bank deems necessary.

     Section 8.08. Reporting Requirements. Furnish directly to each of the Bank:

     (a) as soon as available  and in any event within 120 days after the end of
each fiscal year of Borrower,  consolidated financial statements of Borrower and
its Consolidated  Subsidiaries which shall include a consolidated  balance sheet
of  Borrower  and  its  Subsidiaries  as of the end of such  fiscal  year  and a
consolidated  income  statement and statement of cash flows of such entities for
such  fiscal  year,  stating in  comparative  form the  respective  consolidated
figures for the  corresponding  date and period in the prior fiscal year and all
prepared in accordance with GAAP,  accompanied by an opinion thereon  acceptable
to the Bank by the Auditor,  which opinion  neither  includes an exception as to
adherence with GAAP nor contains a disclaimer;

     (b) 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 of Borrower, a consolidated
balance sheet of Borrower and its Subsidiaries as of the end of such quarter and
a  consolidated  income  statement and statements of cash flows of such entities
for the period commencing at the end of the previous fiscal year and ending with
the end of such  quarter,  all in reasonable  detail and stating in  comparative
form the respective  consolidated  figures for the corresponding date and period
in the  previous  fiscal  year and all  prepared  in  accordance  with  GAAP and
attested to by the president or chief financial  officer of Borrower (subject to
year-end adjustments);

     (c) simultaneously  with the delivery of the financial  statements referred
to in (a) and (b) above,  a  certificate  of the  president  or chief  financial
officer of Borrower (i) certifying  that to the best of his knowledge no Default
or Event of Default has occurred and is continuing  or, if a Default or Event of
Default has occurred and is continuing, a statement as to the nature thereof and
the action  which is proposed to be taken with  respect  thereto,  and (ii) with
computations  demonstrating  compliance with the covenants  contained in Article
10;

<PAGE>

     (d) within 30 days after the delivery of the financial  statements referred
to in (a) above,  annual forecasts and Borrower's budget for the upcoming fiscal
year,  with a  comparison  of actual  results to budget for the fiscal year then
ended;

     (e) promptly upon receipt thereof, a copy of the management letter, if any,
prepared by the Auditor;

     (f) on or prior to the fifteenth day of each calendar  month, a schedule of
accounts  receivable  of the  Company  and  its  Subsidiaries  certified  by the
President or Chief  Financial  Officer and current as of the last Banking Day of
the preceding month, which shall include accounts receivable summary agings, all
in form and in such detail satisfactory to the Bank;

     (g) on or prior to the fifteenth day of each calendar  month, a schedule of
inventory  of the Company and its  Subsidiaries  certified  by the  President or
Chief Financial  Officer and current as of the last Banking Day of the preceding
month,  which shall  contain a breakdown of the  inventory  by type,  amount and
location and such other information reasonably requested by the Bank;

     (h) on or prior to the fifteenth day of each  calendar  month,  a Borrowing
Base  Certificate  in the form  annexed  as  Exhibit  D,  current as of the last
Banking Day of the preceding month;

     (i) promptly  after  Borrower  becomes aware of the  commencement  thereof,
notice of all actions,  suits, and proceedings  before any court or governmental
department,  commission,  board, bureau, agency or instrumentality,  domestic or
foreign,  involving claims of $25,000 or more affecting Borrower,  or any of its
Subsidiaries, including, without limitation, any such proceeding relating to any
alleged violation of any Environmental Law;

     (j) as soon as  possible  and in any  event  within  five  days  after  the
occurrence of each Default or Event of Default,  a written notice specifying and
describing in reasonable  detail such Default or Event of Default and describing
in  reasonable  detail the action which is proposed to be taken by Borrower with
respect thereto;

     (k) promptly  after the  commencement  thereof or promptly  after  Borrower
knows  of  the  commencement  or  threat  thereof,   notice  of  any  Forfeiture
Proceeding;

     (l) promptly after submission to any government or regulatory  agency,  all
documents and  information  furnished to such  government  or regulatory  agency
other than such  documents  and  information  prepared  in the normal  course of
business  and which would not result in any  adverse  action to be taken by such
agency;

     (m) as soon as possible  and in any event  within five  Banking  Days after
Borrower knows that any of the events or conditions specified below with respect
to any Plan or Multiemployer  Plan have occurred or exist, a statement signed by
a chief  financial  officer of Borrower  setting forth details  respecting  such
event or condition and the action, if any, which Borrower or the ERISA Affiliate
propose  to take  with  respect  thereto  (and a copy of any  report  or  notice
required  to be filed with or given to PBGC by  Borrower  or an ERISA  Affiliate
with respect to such event or condition):

<PAGE>

     (i) any reportable  event,  as defined in Section  4043(b) of ERISA and the
regulations issued thereunder,  with respect to a Plan, as to which PBGC has not
by  regulation  waived the  requirement  of Section  4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event (provided that a failure
to meet the minimum  funding  standard of Section 412 of the Code or Section 302
of ERISA shall be a reportable  event  regardless of the issuance of any waivers
in accordance with Section 412(d) of the Code);

     (ii) the  filing  under  Section  4041 of ERISA of a notice  of  intent  to
terminate any Plan or the termination of any Plan;

     (iii) the  institution by PBGC of  proceedings  under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan,
or  the  receipt  by  Borrower  or  any  ERISA  Affiliate,  of a  notice  from a
Multiemployer  Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;

     (iv) the complete or partial  withdrawal by Borrower or any ERISA Affiliate
under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by
Borrower, or any ERISA Affiliate, of notice from a Multiemployer Plan that it is
in  reorganization  or  insolvency  pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under Section 4041A of ERISA; and

     (v) the  institution  of a proceeding  by a fiduciary or any  Multiemployer
Plan against  Borrower or any ERISA  Affiliate to enforce  Section 515 of ERISA,
which proceeding is not dismissed within 30 days;

     (n) promptly,  and in any event within five business days after the sending
or filing thereof,  copies of all proxy statements,  financial  statements,  and
reports which  Borrower  sends to its  stockholders,  and copies of all regular,
periodic and special  reports and all  registration  statements  which  Borrower
files with the  Securities  and Exchange  Commission  or any other  governmental
authority, or with any national securities exchange;

     (o)  such  other  information   respecting  the  condition  or  operations,
financial or otherwise, of Borrower, or any Guarantor, as the Bank may from time
to time reasonably request.

     Section 8.09.  Payment of Obligations.  Pay, discharge or otherwise satisfy
at or before maturity or before they become delinquent,  as the case may be, all
material  Debt  except for any Debt which is being  contested  in good faith and
with respect to which, on a consolidated basis, adequate reserves are maintained
in conformity with GAAP.

<PAGE>

     Section  8.10.  Payment of Taxes.  Pay and  discharge  promptly  all taxes,
assessments and government  charges or levies imposed upon it or upon its income
and profits,  or upon any of its property,  real, personal or mixed, or upon any
part thereof,  before the same shall become in default,  and all other  material
obligations (including lawful claims for labor, materials and supplies which, if
unpaid,  might become a Lien) except that neither the Company nor any  Guarantor
shall be required to pay any such tax, assessment, charge, levy or claim so long
as the  validity  thereof  shall  be  contested  in good  faith  by  appropriate
proceedings  and there shall have been set aside on its books adequate  reserves
determined  in  accordance  with GAAP with respect to any such tax,  assessment,
charge, levy or claim so contested, provided that, except as provided in Section
9.02,  the Company  and each  Guarantor  shall pay all such taxes,  assessments,
charges,  levies  or  claims  promptly  if any Lien  has  attached  as  security
therefor.

     Section  8.11.  Acquisitions.  Prior to entering into any letter of intent,
agreement  or  other   commitment  or  proposed   commitment   relating  to  any
Acquisition,  furnish  the Bank with  notice  of same and with such  information
relating to the Acquisition as Borrower possesses at the time it provides notice
to the Bank and which the Bank may reasonably request.

     Section  8.12.  Management.  Use its best efforts to cause  Donald  Sinkin,
Stephen Frey,  Margaret  Krumholz and John Rebecchi to continue in the employ of
the  Borrower  in their  present  positions  with their  existing  authority  as
executive  officers  of  Borrower,  and  consult  with  the Bank  regarding  the
replacement of any of them.

ARTICLE 9. NEGATIVE COVENANTS.

     So long as the  Note  shall  remain  unpaid  or the  Bank  shall  have  any
obligations under this Agreement, Borrower shall not:

     Section 9.01. Debt and Guaranties.

     (a) Create,  incur,  assume or suffer to exist, or permit any Guarantors to
create, incur, assume or suffer to exist any Debt, except:

               (i) Debt arising under this Agreement or the Note;

               (ii) Debt  described  in Schedule  III,  and any  renewals,  
extensions or refinancings thereof, provided that such renewals, extensions
or refinancing  are on terms no less favorable to Borrower or the Guarantor than
the  original  terms of such Debt (except for  increases  in interest  rates not
inconsistent with increases in prevailing interest rates);

               (iii)  Debt incurred in connection with operating leases entered 
into by Borrower, the Guarantors, or any of them, consistent with past practices
or in the ordinary course of business; and

<PAGE>

               (iv)  Debt of Borrower, or the Guarantors, or any of them, 
secured by purchase money Liens permitted by Section 9.02.

     (b) Guaranty,  endorse, become surety for or otherwise in any way become or
be responsible  for the Debt or obligations of any Person,  whether by agreement
to maintain capital,  equity,  net worth or solvency of any Person, by agreement
to  purchase  or  discharge  the Debt of any Person,  or  agreement  to purchase
merchandise,  materials,  supplies or other property, if such agreement provides
that  payment  shall  be made  whether  or not  delivery  of  such  merchandise,
materials, supplies or other property is ever made or tendered except:

               (i) guarantees executed prior to the date hereof as described on 
Schedule V attached hereto;

               (ii)  endorsements  of negotiable  instruments for collection or 
deposit in the ordinary course of business; and

               (iii)  guarantees under this Agreement or of Debt of Borrower or 
any Guarantor owing to the Bank.

     Section 9.02. Liens.  Create,  incur,  assume or suffer to exist, or permit
any of the  Guarantors to create,  incur,  assume or suffer to exist,  any Lien,
upon or with respect to any of its properties,  now owned or hereafter acquired,
except:

     (a) Liens in favor of the Bank securing the Loans hereunder;

     (b) Liens for taxes or assessments or other government charges or levies if
not yet due and  payable or if due and  payable if they are being  contested  in
good faith by appropriate  proceedings  and for which  appropriate  reserves are
maintained in conformity with GAAP;

     (c)  Liens  (i)   imposed   by  law,   such  as   mechanic's,   supplier's,
materialmen's, landlord's, warehousemen's and carrier's Liens, and other similar
Liens,  securing  obligations  incurred in the ordinary course of business which
are not past due for more than 30 days or (ii) which are being contested in good
faith by appropriate  proceedings and for which  appropriate  reserves have been
established  which,  when aggregated with all  indebtedness  secured by all such
other Liens,  secure  indebtedness  having an aggregate principal balance not in
excess of $50,000;

     (d)  Liens  under  workers'  compensation  unemployment  insurance,  social
security or similar legislation (other than ERISA);

     (e) judgment  and other  similar  Liens  arising in  connection  with court
proceedings  that have been in  existence  for fewer than 30 days after entry of
the  judgment or the  execution  or other  enforcement  of which is  effectively
stayed,  and the  claims  secured  thereby  are  being  actively  contested,  in
Borrower's reasonable judgment, in good faith and by appropriate proceedings, or
which  relate to  judgments  which,  when  aggregated  with all other  judgments
secured by such Liens, total less than $50,000; and

<PAGE>

     (f) purchase money Liens on any property  heretofore or hereafter  acquired
or the  assumption  of any  Lien  on  property  existing  at the  time  of  such
acquisition, or a Lien incurred in connection with any conditional sale or other
title  retention  agreement or a Capital Lease;  provided that such liens attach
only to the property as acquired and do not extend to any additional property of
Borrower.

     Section 9.03.  Investments  and Advances.  Make or permit any Subsidiary to
make any loan or  advance  to any  Person,  or  purchase,  redeem  or  otherwise
acquire, or permit any such Subsidiary to purchase,  redeem or otherwise acquire
any capital stock, assets,  obligations or other securities, or make any capital
contribution  to  otherwise  invest in or  acquire  any  interest  in any Person
(including,  without limitation,  any Borrower or any Subsidiary or Affiliate of
any Borrower), except:

     (a) obligations issued or guaranteed by states or municipalities within the
United States of American and rated at least A-1 by Standard & Poor's;

     (b) obligations issued or guaranteed by the United States of America or any
agency or subdivision  thereof,  the payment or guarantee of which constitutes a
full faith and credit obligation of the United States of America;
          
     (c)  certificates  of deposit,  time deposits,  Eurodollar  certificates of
deposit,  bankers  acceptances and other money market  instruments issued by any
bank,  trust company or financial  institution  organized  under the laws of the
United States of America or any state (or in the case of Eurodollar certificates
of deposit,  a branch of any such bank, trust company or financial  institution)
having capital and surplus in an aggregate amount not less than $200,000,000 and
with such instrument rated at least A-1 by Standard & Poor's;

     (d) commercial paper rated at least Prime-1 by Moody's Investor Services or
A-1 by Standard & Poor's;

     (e)  repurchase  agreements  entered into with any bank,  trust  company or
other  financial  institution  organized  under the laws of the United States of
America or any state having capital and surplus in an aggregate  amount not less
than  $200,000,000  and which  are  fully  secured  by  obligations  of the type
described in Section 9.03(b);

     (f) Acquisitions permitted pursuant to Section 9.07 hereof; and

     (g)  Investments  of  Borrower  in  any  Subsidiary  or  investment  of any
Subsidiary in any other Subsidiary.

<PAGE>

     Section 9.04. Sale of Assets.  Sell, lease,  assign,  transfer or otherwise
dispose of, or permit any of the Guarantors to sell, lease, assign,  transfer or
otherwise  dispose  of,  any of its  now  owned  or  hereafter  acquired  assets
(including,  without  limitation,  shares  of  stock  and  indebtedness  of such
Subsidiaries,  receivables  and  leasehold  interests)  except  for  (i)  assets
disposed  of as no  longer  used or useful in the  conduct  of their  respective
business  or as  have  been  disposed  of in the  ordinary  course  of  business
consistent  with Borrower's past practice or (ii) transfers of assets between or
among Borrower and Subsidiaries of Borrower,  provided all such Subsidiaries are
Guarantors which have executed Security Agreements.

     Section 9.05.  Transactions  with  Affiliates.  Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service,  with any Affiliate or permit any of the Guarantors to
enter into any transaction, including, without limitation, the purchase, sale or
exchange of property or the rendering of any service, with any Affiliate, except
in the  ordinary  course  of and  pursuant  to the  reasonable  requirements  of
Borrower's or such  Guarantors  business and upon fair and reasonable  terms not
materially  less  favorable to Borrower or such Guarantor than would be obtained
in a comparable arm's length transaction with a Person not an Affiliate.

     Section 9.06. Mergers.  Except as permitted in Section 9.07, and except for
mergers of any Subsidiary with and into either Borrower or any Subsidiary  which
is at such time a Guarantor,  merge or consolidate with, or sell, assign,  lease
or  otherwise  dispose  of  (whether  in  one  transaction  or  in a  series  of
transactions)  all or  substantially  all of its  assets  (whether  now owned or
hereafter  acquired) to any Person,  or acquire all or substantially  all of the
assets or the  business of any Person (or enter into any  agreement to do any of
the foregoing), or permit any of the Guarantors to do so.

     Section 9.07. Acquisitions.  Make any Acquisition,  unless the entity to be
acquired is primarily in the business of manufacturing and printing of specialty
packaging  and the Bank  has been  furnished  with  (a)  such  documents  as are
necessary  in the Bank's  discretion  to provide the Bank with a Guaranty of the
entity  to be  acquired  (if it is to be a  Subsidiary)  and to grant the Bank a
perfected lien upon the assets so acquired,  (b) satisfactory  evidence that the
total cash  consideration  paid or to be paid by the Borrower in connection with
such Acquisition, when aggregated with the cash consideration paid or to be paid
in connection  with all other  Acquisitions  during the period  beginning on the
Closing  Date,  does not  exceed  the  lesser of (i)  $3,000,000  or (ii) 25% of
Tangible  Net Worth,  (c) a  certificate  of the  president  or chief  financial
officer of Borrower  certifying that no Default or Event of Default has occurred
and is  continuing  and that no  Default or Event of  Default  would  occur as a
result  of  Borrower's  making  such  Acquisition  and  (d)  within  15  days of
completing  such  Acquisition,  a  balance  sheet of the  Borrower  prepared  by
Borrower's management demonstrating  compliance,  on a pro forma basis, with the
covenants contained in Article 10 immediately after the Acquisition.

     Section 9.08. No Activities Leading to Forfeiture Proceeding.  Engage in or
permit any Guarantor to engage in any unlawful  activity which could  reasonably
be expected to result in a Forfeiture Proceeding.

<PAGE>

     Section 9.09. Corporate Documents;  Fiscal Year. Change its fiscal year, or
amend,  modify or supplement  its  certificate or articles of  incorporation  or
by-laws in any way with the result  that any of the  individuals  identified  in
Section  8.12 have  diminished  responsibilities  or  operating  and  management
authority over Borrower and its Subsidiaries.

     Section 9.10. New Subsidiaries.  Form, or permit any Guarantor to form, any
Subsidiary unless such Subsidiary shall become a party to the Guaranty.

ARTICLE 10.  FINANCIAL COVENANTS.

     So long  as any of the  Notes  shall  remain  unpaid  or the  Bank  has any
obligations under this Agreement:
                                 
     Section 10.01. Net Income.  Borrower shall maintain at all times a positive
Net Income on a fiscal year basis.

     Section  10.02.  Current  Ratio.  Borrower  shall  maintain  at all times a
Current Ratio of not less than 1.25:1.00.

     Section 10.03. Maximum Liabilities to Worth Ratio.  Borrower shall maintain
on a  consolidated  basis at all times a ratio of Total  Liabilities to Tangible
Net Worth of not more than 2.75:1.0.

     Section  10.04.   Debt  Coverage  Ratio.   Borrower  shall  maintain  on  a
consolidated basis at all times a Debt Coverage Ratio of not less than 1.25:1.0.

     Section 10.05. Determination of Compliance. Compliance with these financial
covenants  shall  be  determined  by  reference  to the  consolidated  financial
statements of Borrower and its Subsidiaries  delivered to the Bank in accordance
with Section 8.08.  Except as set forth in 10.01, all financial  covenants shall
be applicable at all times and shall be tested at the end of each fiscal quarter
based upon the balance sheet  information  and the results of operations for the
period  of 12  months  preceding  the date of  determination.  For  purposes  of
calculating  compliance  with  Sections  10.02,  10.03 and 10.04,  the principal
portion of all  Revolving  Credit Loans and the  Revolving  Credit Note shall be
deemed to be a current liability and not long-term indebtedness.

ARTICLE 11.  EVENTS OF DEFAULT.

     Section  11.01.  Events of Default.  The occurrence of any of the following
events shall be an "Event of Default":

     (a) Borrower  shall fail to pay within five days of due date (i)  principal
of the Note,  (ii)  interest  on the Note or (iii) any fee or other  amount  due
hereunder as and when due and payable.

<PAGE>

     (b) Any  representation or warranty made or deemed made by Borrower in this
Agreement, or by Borrower or any Guarantor in any certificate delivered pursuant
to this  Agreement  or any other Loan  Document,  or which is  contained  in any
certificate,  document,  opinion,  financial or other statement furnished to the
Bank at any  time  pursuant  to any Loan  Document,  shall  prove  to have  been
incorrect in any material respect on or as of the date made or deemed made;

     (c)  Borrower  shall  fail to  perform or  observe  any term,  covenant  or
agreement contained in Section 2.03 or Articles 8, 9 or 10;

     (d)  Borrower or any  Guarantor  shall fail to perform or observe any term,
covenant  or  agreement  on its part to be  performed  or  observed  in any Loan
Document and such failure shall continue for 15 consecutive days;

     (e)  Borrower  or any  Guarantor  shall  (i) fail to pay any  amounts  with
respect  to any  Debt  in  favor  of the  Bank,  including  but not  limited  to
indebtedness for borrowed money (other than the payment obligations described in
(a) above) of Borrower or such Guarantor, as the case may be, or any interest or
premium  thereon,  when due  (giving  effect to any  applicable  grace  period),
whether by scheduled  maturity,  required  prepayment,  acceleration,  demand or
otherwise,  (ii) fail to pay any  amounts in excess of $50,000 in the  aggregate
with respect to any other Debt,  including but not limited to  indebtedness  for
borrowed  money of  Borrower  or such  Guarantor,  as the  case  may be,  or any
interest or premium  thereon,  when due (giving effect to any  applicable  grace
period),  whether by  scheduled  maturity,  required  prepayment,  acceleration,
demand or  otherwise,  (iii) fail to perform or observe  any term,  covenant  or
condition  on its part to be  performed  or  observed  under  any  agreement  or
instrument  relating to any Debt when  required to be performed or observed,  if
the effect of such failure to perform or observe is to accelerate,  or to permit
the  acceleration of, after the giving of notice or passage of time or both, the
maturity of such Debt,  whether or not such failure to perform or observe  shall
be waived by the  holder of such Debt or (iv) any Debt shall be  declared  to be
due and payable,  or required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof;

     (f)  Borrower or any  Guarantor  shall (i)  generally  not, be unable to or
admit in writing its or their inability to, pay its or their debts as such debts
become due; or (ii) make an assignment for the benefit of creditors, petition or
apply to any court or otherwise for the appointment of a custodian,  receiver or
trustee for it or a substantial  part of its or their  assets,  (iii) as debtor,
commence  any  proceeding  under any  bankruptcy,  reorganization,  arrangement,
readjustment  of  debt,  dissolution  or  liquidation  law  or  statute  of  any
jurisdiction,  whether  now or  hereafter  in  effect,  (iv)  have  had any such
petition or application  filed or any such proceeding shall have been commenced,
against it or them, in which an adjudication or appointment is made or order for
relief is  entered,  and  which  petition,  application  or  proceeding  remains
undismissed for a period of 30 days or more, or (v) by any act or omission shall
indicate  its or their  consent  to,  approval  of or  acquiescence  in any such
petition,  application or proceeding or order for relief or the appointment of a
custodian,  receiver or trustee for all or any substantial  part of its or their
property,  (vi) suffer any such  custodianship,  receivership  or trusteeship to
continue  undischarged  for a  period  of 30 days or more or  (vii)  cease to be
Solvent;

<PAGE>

     (g) one or more  judgments,  decrees or orders for the  payment of money in
excess of $50,000 in the  aggregate in respect of  uninsured or unbonded  claims
shall be rendered  against  Borrower  or any of  Guarantor  and such  judgments,
decrees or orders shall  continue  unsatisfied  and in effect for a period of 30
consecutive  days  without  being  vacated,  discharged,  satisfied or stayed or
bonded pending appeal;

     (h) An event or condition  specified in Section  8.08(m) hereof shall occur
or exist with respect to any Plan or Multiemployer Plan and, as a result of such
event or condition, together with all other such events or conditions,  Borrower
or any  ERISA  Affiliate  shall  incur or in the  opinion  of the Bank  shall be
reasonably  likely to incur a liability to a Plan, a Multiemployer  Plan or PBGC
(or any  combination of the  foregoing)  which is, in the  determination  of the
Bank, material in relation to the financial condition,  operations,  business or
prospects of Borrower or the Guarantors;
          
     (i) Any Forfeiture Proceeding shall have been commenced; or

     (j) The  Security  Agreement  shall at any time  after  its  execution  and
delivery and for any reason cease to create a valid and perfected first security
interest  in the  Collateral  or to be in full  force  and  effect,  or shall be
declared  null and void,  or the  validity or  enforceability  thereof  shall be
contested by Borrower,  or Borrower shall deny that it has any further liability
or  obligation  under a Security  Agreement to which it is a party,  or Borrower
shall  fail to  perform  any of its  material  obligations  under  any  Security
Agreement.

     Section  11.02.  Remedies.  If any Event of Default  shall occur,  the Bank
shall (a) declare the Revolving  Credit  Commitment to be terminated,  whereupon
the same shall forthwith terminate, and (b) declare the outstanding principal of
the  Notes,  all  interest  thereon  and all other  amounts  payable  under this
Agreement  and the Notes 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 Borrower;  provided that, in the case of
an Event of Default  referred to in Section  11.01(e) or Section 11.01(h) above,
the  Commitments  shall be  immediately  terminated,  and the Note, all interest
thereon and all other amounts payable under this Agreement and the Note shall be
immediately  due and payable  without notice,  presentment,  demand,  protest or
other  formalities  of any kind,  all of which are  hereby  expressly  waived by
Borrower.

ARTICLE 12.  MISCELLANEOUS.
 
     Section  12.01.  Amendments  and  Waivers.  Except as  otherwise  expressly
provided in this  Agreement,  any provision of this  Agreement may be amended or
modified only by an instrument in writing  signed by Borrower and the Bank,  and
any  provision  of this  Agreement  may be  waived by  Borrower  or by the Bank;
provided that no amendment, modification or waiver shall be effective, unless by

<PAGE>

an  instrument  signed  by the  Bank.  No  failure  on the  part of the  Bank to
exercise,  and no delay in exercising,  any right  hereunder  shall operate as a
waiver thereof or 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 12.02. Usury. Anything herein to the contrary notwithstanding,  the
obligations  of Borrower  under this Agreement and the Notes shall be subject to
the  limitation  that  payments of interest  shall not be required to the extent
that receipt  thereof would be contrary to  provisions of law  applicable to the
Bank limiting rates of interest which may be charged or collected by the Bank.

     Section 12.03.  Expenses.  Borrower shall  reimburse the Bank on demand for
all reasonable costs,  expenses,  and charges  (including,  without  limitation,
reasonable  fees and charges of external legal counsel for the Bank) incurred by
the Bank in connection with the preparation or performance of this Agreement and
the Loan  Documents.  In addition,  Borrower shall reimburse the Bank for all of
its  reasonable  costs  and  expenses  in  connection  with the  enforcement  or
preservation  of any  rights  under this  Agreement,  the Note or the other Loan
Documents.  Borrower  agrees to indemnify the Bank and its directors,  officers,
employees and agents from, and hold each of them harmless  against,  any and all
losses, liabilities, claims, damages or expenses incurred by any of them arising
out of or by reason of any  investigation  or  litigation  or other  proceedings
(including  any  threatened  investigation  or litigation or other  proceedings)
relating  to any actual or  proposed  use by  Borrower,  of the  proceeds of the
Loans, including,  without limitation,  the reasonable fees and disbursements of
counsel  incurred in  connection  with any such  investigation  or litigation or
other proceedings (but excluding any such losses,  liabilities,  claims, damages
or expenses incurred by reason of the gross negligence or willful  misconduct of
the Person to be indemnified).

     Section 12.04. Survival. The obligations of Borrower under Section 2.03(b),
Article 5 and Section  12.03  shall  survive  the  repayment  of the Loans for a
period  corresponding to the maximum applicable statute of limitations in effect
in the State of New York from time to time.

     Section 12.05. Assignment.  This Agreement shall be binding upon, and shall
inure to the benefit of, Borrower and the Bank and their  respective  successors
and  assigns,  except that  Borrower  may not assign or  transfer  its rights or
obligations hereunder.

     Section  12.06.  Notices.  All  notices,  consents,   approvals  and  other
communications required or permitted to be given to a party under this Agreement
shall be in writing and shall be delivered  personally to the party, sent by any
national  overnight courier or mailed first class certified mail, return receipt
requested,  to the party at the address  indicated on page one, to the attention
of Joseph  Burns for the Bank and to the  attention  of  Margaret  Krumholz  for
Borrower.  Any item delivered in accordance  with the provisions of this Section
shall be deemed to have been  delivered  (i) on the date of  personal  delivery,
(ii) on the business day following the date sent by overnight courier or (ii) on
the fifth day following the date on which it was so mailed, as the case may be.

<PAGE>

     Section 12.07.  Setoff.  Borrower  agrees that, in addition to (and without
limitation of) any right of setoff,  banker's lien or counterclaim  the Bank may
otherwise  have,  the Bank shall be  entitled,  at its option  without any prior
notice to Borrower  (any such notice being  expressly  waived by Borrower to the
extent  permitted by applicable  law), to offset  balances  (general or special,
time or demand,  provisional or final) held by it for the account of Borrower at
any of the Bank's offices against any amount then due and payable by Borrower to
the Bank under this Agreement or the Note which is not paid when due (regardless
of  whether  such  balances  are then due to  Borrower),  in which case it shall
promptly notify Borrower thereof,  provided that the Bank's failure to give such
notice shall not affect the  validity  thereof.  Payments by Borrower  hereunder
shall be made without setoff or counterclaim.

          Section 12.08.  Jurisdiction; Immunities.

         (a) Borrowers  hereby  irrevocably  submits to the  jurisdiction of any
New York State or United States  Federal court sitting in Suffolk or Nassau
County  over  any  action  or  proceeding  arising  out of or  relating  to this
Agreement or the Note, and Borrower hereby irrevocably agrees that all claims in
respect of such action or  proceeding  may be heard and  determined  in such New
York State or Federal court. To the extent permitted by applicable law, Borrower
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing (by  certified or  registered  mail) of copies of such
process to it.  Borrower  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.  To the extent
permitted by applicable law,  Borrower  further waives any objection to venue in
such State or Federal Court and any objection to an action or proceeding in such
State or Federal Court on the basis of forum non  conveniens.  Borrower  further
agrees that any action or proceeding  brought  against the Bank shall be brought
only in New York  State or United  States  Federal  court  sitting in Suffolk or
Nassau County.

          (b)  THE PARTIES WAIVE ANY RIGHT TO A JURY TRIAL.

          (c)  Nothing in this  Section  shall  affect the right of the Bank to 
serve  legal  process in any other  manner  permitted  by law or affect the
right of the Bank to bring any  action or  proceeding  against  Borrower  or its
property in the courts of any other jurisdictions.

          (d) To the extent that  Borrower has or hereafter  may acquire any 
immunity from  jurisdiction of any court or from any legal process (whether
from  service or notice,  attachment  prior to  judgment,  attachment  in aid of
execution,  execution  or  otherwise)  with  respect to itself or its  property,
Borrower hereby  irrevocably  waives, to the extent permitted by applicable law,
such immunity in respect of its obligations under this Agreement and the Note.

<PAGE>

          Section 12.09. Severability.  The provisions of this Agreement are 
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any  jurisdiction,
such provision shall, as to such  jurisdiction,  be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability  thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

         Section  12.10.  Integration.  The Loan  Documents  set  forth  the  
entire agreement  among the parties hereto  relating to the  transactions  
contemplated thereby and  supersede any prior oral or written  statements or 
agreements  with respect to such transactions.

        Section  12.11.  Governing  Law. This  Agreement  shall be governed by, 
and interpreted  and construed in accordance  with, the law of the State of New 
York applicable to agreements made and to be performed wholly within the State 
of New York.

       IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to
be duly executed as of the day and year first above written.

DISC GRAPHICS, INC.                     KEYBANK NATIONAL ASSOCIATION
                                   

By: /s/ Donald Sinkin                   By:    /s/ Joseph Burns 
    Name:   Donald Sinkin               Name:  Joseph Burns
    Title:  President and                      Title:   Vice President
            Chief Executive Officer 
<PAGE>

                         List of Schedules and Exhibits



Schedule I        Description of Liens

Schedule II       List of subsidiaries of Borrower

Schedule III      List of Credit Agreements (including indentures, purchase
                  agreements, guaranties, Capital Leases, etc.)

Schedule IV       Agreements effecting Loan Documents

Schedule V        List of Guaranties



                          *     *     *     *     *



Exhibit A-1      Form of Revolving Credit Note

Exhibit A-2      Form of Term Note

Exhibit B        Form of Guaranty

Exhibit C-1      Security Agreement of Borrower

Exhibit C-2      Security Agreement of Guarantors

Exhibit D        Form of Borrowing Base Certificate

Exhibit E        Form of Opinion of Counsel

Exhibit F        Form of Notice of Borrowing

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