$50,000,000 REVOLVING CREDIT FACILITY


                                CREDIT AGREEMENT

                                  by and among

                            PRIMESOURCE CORPORATION,

                       DIXIE TYPE & SUPPLY COMPANY, INC.,

                         ONONDAGA LITHO SUPPLY CO., INC.

                                       and

                             THE BANKS PARTY HERETO

                                       and

                    PNC BANK, NATIONAL ASSOCIATION, As Agent












                          Dated as of November 1, 1996






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                                TABLE OF CONTENTS


Section                                                                                                        Page

                                      - v -


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1. CERTAIN DEFINITIONS............................................................................................1

   1.1 Certain Definitions........................................................................................1

   1.2 Construction..............................................................................................19
      1.2.1 Number; Inclusion....................................................................................19
      1.2.2 Determination........................................................................................19
      1.2.3 Agent's Discretion and Consent.......................................................................19
      1.2.4 Documents Taken as a Whole...........................................................................19
      1.2.5 Headings.............................................................................................19
      1.2.6 Implied References to this Agreement.................................................................19
      1.2.7 Persons..............................................................................................20
      1.2.8 Modifications to Documents...........................................................................20
      1.2.9 From, To and Through.................................................................................20
      1.2.10 Shall; Will.........................................................................................20

   1.3 Accounting Principles.....................................................................................20


2. REVOLVING CREDIT FACILITY.....................................................................................21

   2.1 Commitments...............................................................................................21
      2.1.1 Commitment...........................................................................................21
      2.1.2 Voluntary Reduction of Commitment....................................................................21

   2.2 Nature of Banks' Obligations with Respect to Loans........................................................21

   2.3 Commitment Fee............................................................................................21

   2.4 Underwriting Fees.........................................................................................22

   2.5 Loan Requests.............................................................................................22

   2.6 Making Loans..............................................................................................23

   2.7 Notes.....................................................................................................23

   2.8 Use of Proceeds...........................................................................................23

   2.9 Letter of Credit Subfacility..............................................................................24
      2.9.1 Issuance of Letters of Credit........................................................................24
      2.9.2 Letter of Credit Fees................................................................................24
      2.9.3 Disbursements, Reimbursement.........................................................................24
      2.9.4 Repayment of Participation Advances..................................................................25
      2.9.5 Documentation........................................................................................26
      2.9.6 Determinations to Honor Drawing Requests.............................................................26
      2.9.7 Nature of Participation and Reimbursement Obligations................................................26
      2.9.8 Indemnity............................................................................................28
      2.9.9 Liability for Acts and Omissions.....................................................................28


3. [RESERVED]....................................................................................................29

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4. INTEREST RATES................................................................................................29

   4.1 Interest Rate Options.....................................................................................29
      4.1.1 Revolving Credit Interest Rate Options...............................................................29
      4.1.2 RESERVED.............................................................................................30
      4.1.3 Rate Quotations......................................................................................30

   4.2 Interest Periods..........................................................................................30
      4.2.1 Ending Date and Business Day.........................................................................30
      4.2.2 Amount of Borrowing Tranche..........................................................................30
      4.2.3 Termination Before Expiration Date...................................................................31
      4.2.4 Renewals.............................................................................................31

   4.3 Interest After Default....................................................................................31
      4.3.1 Letter of Credit Fees, Interest Rate.................................................................31
      4.3.2 Other Obligations....................................................................................31
      4.3.3 Acknowledgment.......................................................................................31

   4.4 LIBO Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available............................31
      4.4.1 Unascertainable......................................................................................31
      4.4.2 Illegality; Increased Costs; Deposits Not Available..................................................32
      4.4.3 Agent's and Bank's Rights............................................................................32

   4.5 Selection of Interest Rate Options........................................................................33


5. PAYMENTS......................................................................................................33

   5.1 Payments..................................................................................................33

   5.2 Pro Rata Treatment of Banks...............................................................................33

   5.3 Interest Payment Dates....................................................................................34

   5.4 Voluntary Prepayments.....................................................................................34
      5.4.1 Right to Prepay......................................................................................34
      5.4.2 Replacement of a Bank................................................................................35
      5.4.3 Change of Lending Office.............................................................................35

   5.5 Mandatory Prepayments.....................................................................................36

   5.6 Additional Compensation in Certain Circumstances..........................................................36
      5.6.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy Requirements,
      Expenses, Etc..............................................................................................36
      5.6.2 Indemnity............................................................................................37


6. REPRESENTATIONS AND WARRANTIES................................................................................37

   6.1 Representations and Warranties............................................................................37
      6.1.1 Organization and Qualification.......................................................................38
      6.1.2 Capitalization and Ownership.........................................................................38
      6.1.3 Subsidiaries.........................................................................................38
      6.1.4 Power and Authority..................................................................................38
      6.1.5 Validity and Binding Effect..........................................................................39
      6.1.6 No Conflict..........................................................................................39
      6.1.7 Litigation...........................................................................................39
      6.1.8 Title to Properties..................................................................................39
      6.1.9 Financial Statements.................................................................................40
      6.1.10 Use of Proceeds; Margin Stock.......................................................................40
      6.1.11 Full Disclosure.....................................................................................41
      6.1.12 Taxes...............................................................................................41
      6.1.13 Consents and Approvals..............................................................................41
      6.1.14 No Event of Default; Compliance with Instruments....................................................41
      6.1.15 Patents, Trademarks, Copyrights, Licenses, Etc......................................................42
      6.1.16 Status of the Obligations...........................................................................42
      6.1.17 [RESERVED]..........................................................................................42
      6.1.18 [RESERVED]..........................................................................................42
      6.1.19 Insurance...........................................................................................42
      6.1.20 Compliance with Laws................................................................................42
      6.1.21 [RESERVED]..........................................................................................43
      6.1.22 Investment Companies; Regulated Entities............................................................43
      6.1.23 Plans and Benefit Arrangements......................................................................43
      6.1.24 Employment Matters..................................................................................44
      6.1.25 Environmental Matters...............................................................................44

   6.2 Updates to Schedules......................................................................................46
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7. CONDITIONS OF LENDING.........................................................................................46

   7.1 First Loans...............................................................................................46
      7.1.1 Officer's Certificate................................................................................46
      7.1.2 Secretary's Certificate..............................................................................46
      7.1.3 Delivery of Loan Documents...........................................................................47
      7.1.4 Opinion of Counsel...................................................................................47
      7.1.5 Legal Details........................................................................................47
      7.1.6 Payment of Fees......................................................................................47
      7.1.7 Lien Searches........................................................................................48
      7.1.8 Consents.............................................................................................48
      7.1.9 Officer's Certificate Regarding MACs.................................................................48
      7.1.10 No Violation of Laws................................................................................48
      7.1.11 No Actions or Proceedings...........................................................................48
      7.1.12 Insurance Policies..................................................................................48
      7.1.13 Existing Lenders Payoff.............................................................................48

   7.2 Each Additional Loan......................................................................................49


8. COVENANTS.....................................................................................................49

   8.1 Affirmative Covenants.....................................................................................49
      8.1.1 Preservation of Existence, Etc.......................................................................49
      8.1.2 Payment of Liabilities, Including Taxes, Etc.........................................................49
      8.1.3 Maintenance of Insurance.............................................................................50
      8.1.4 Maintenance of Properties and Leases.................................................................50
      8.1.5 Maintenance of Patents, Trademarks, Etc..............................................................50
      8.1.6 Visitation Rights....................................................................................50
      8.1.7 Keeping of Records and Books of Account..............................................................51
      8.1.8 Plans and Benefit Arrangements.......................................................................51
      8.1.9 Compliance with Laws.................................................................................51
      8.1.10 Use of Proceeds.....................................................................................51
      8.1.11 Further Assurances..................................................................................52
      8.1.12 Subordination of Intercompany Loans.................................................................52

   8.2 Negative Covenants........................................................................................52
      8.2.1 Indebtedness.........................................................................................52
      8.2.2 Liens................................................................................................53
      8.2.3 Guaranties...........................................................................................53
      8.2.4 Loans and Investments................................................................................53
      8.2.5 [RESERVED]...........................................................................................54
      8.2.6 Liquidations, Mergers, Consolidations, Acquisitions..................................................54
      8.2.7 Dispositions of Assets or Subsidiaries...............................................................55
      8.2.8 Affiliate Transactions...............................................................................56
      8.2.9 Subsidiaries, Partnerships and Joint Ventures........................................................56
      8.2.10 Continuation of or Change in Business...............................................................56
      8.2.11 Plans and Benefit Arrangements......................................................................56
      8.2.12 Fiscal Year.........................................................................................57
      8.2.13 Issuance of Stock...................................................................................57
      8.2.14 Changes in Organizational Documents.................................................................58
      8.2.15 [RESERVED]..........................................................................................58
      8.2.16 Minimum Fixed Charge Coverage Ratio.................................................................58
      8.2.17 Maximum Leverage Ratio..............................................................................58
      8.2.18 Minimum Tangible Net Worth..........................................................................58

   8.3 Reporting Requirements....................................................................................58
      8.3.1 Quarterly Financial Statements.......................................................................59
      8.3.2 Annual Financial Statements..........................................................................59
      8.3.3 Borrowing Base Certificate...........................................................................59
      8.3.4 Certificate of the Borrowers.........................................................................59
      8.3.5 Notice of Default....................................................................................60
      8.3.6 Notice of Litigation.................................................................................60
      8.3.7 Certain Events.......................................................................................60
      8.3.8 Budgets, Forecasts, Other Reports and Information....................................................60
      8.3.9 Notices Regarding Plans and Benefit Arrangements.....................................................61
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9. DEFAULT.......................................................................................................63

   9.1 Events of Default.........................................................................................63
      9.1.1 Payments Under Loan Documents........................................................................63
      9.1.2 Breach of Warranty...................................................................................63
      9.1.3 Breach of Negative Covenants or Visitation Rights....................................................63
      9.1.4 Breach of Other Covenants............................................................................63
      9.1.5 Defaults in Other Agreements or Indebtedness.........................................................63
      9.1.6 Final Judgments or Orders............................................................................64
      9.1.7 Loan Document Unenforceable..........................................................................64
      9.1.8 Uninsured Losses; Proceedings Against Assets.........................................................64
      9.1.9 Notice of Lien or Assessment.........................................................................64
      9.1.10 Insolvency..........................................................................................64
      9.1.11 Events Relating to Plans and Benefit Arrangements...................................................65
      9.1.12 Cessation of Business...............................................................................65
      9.1.13 Change of Control...................................................................................65
      9.1.14 Involuntary Proceedings.............................................................................66
      9.1.15 Voluntary Proceedings...............................................................................66

   9.2 Consequences of Event of Default..........................................................................66
      9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings....................66
      9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.................................................67
      9.2.3 Set-off..............................................................................................67
      9.2.4 Suits, Actions, Proceedings..........................................................................67
      9.2.5 Application of Proceeds..............................................................................68
      9.2.6 Other Rights and Remedies............................................................................68

   9.3 Notice of Sale............................................................................................68
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10. THE AGENT....................................................................................................69

   10.1 Appointment..............................................................................................69

   10.2 Delegation of Duties.....................................................................................69

   10.3 Nature of Duties; Independent Credit Investigation.......................................................69

   10.4 Actions in Discretion of Agent; Instructions from the Banks..............................................70

   10.5 Reimbursement and Indemnification of Agent by the Borrowers..............................................70

   10.6 Exculpatory Provisions; Limitation of Liability..........................................................71

   10.7 Reimbursement and Indemnification of Agent by Banks......................................................71

   10.8 Reliance by Agent........................................................................................72

   10.9 Notice of Default........................................................................................72

   10.10 Notices.................................................................................................72

   10.11 Banks in Their Individual Capacities....................................................................73

   10.12 Holders of Notes........................................................................................73

   10.13 Equalization of Banks...................................................................................73

   10.14 Successor Agent.........................................................................................74

   10.15 [RESERVED]..............................................................................................74

   10.16 Availability of Funds...................................................................................74

   10.17 Calculations............................................................................................75

   10.18 Beneficiaries...........................................................................................75


11. MISCELLANEOUS................................................................................................75

   11.1 Modifications, Amendments or Waivers.....................................................................75
      11.1.1 Increase of Commitment; Extension or Expiration Date................................................75
      11.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment.....75
      11.1.3 Miscellaneous.......................................................................................76

   11.2 No Implied Waivers; Cumulative Remedies; Writing Required................................................76

   11.3 Reimbursement and Indemnification of Banks by the Borrowers; Taxes.......................................76

   11.4 Holidays.................................................................................................77

   11.5 Funding by Branch, Subsidiary or Affiliate...............................................................77
      11.5.1 Notional Funding....................................................................................77
      11.5.2 Actual Funding......................................................................................78

   11.6 Notices..................................................................................................78

   11.7 Severability.............................................................................................79

   11.8 Governing Law............................................................................................79

   11.9 Prior Understanding......................................................................................79

   11.10 Duration; Survival......................................................................................79

   11.11 Successors and Assigns..................................................................................80
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   11.12 Confidentiality.........................................................................................81

   11.13 Counterparts............................................................................................81

   11.14 Agent's or Bank's Consent...............................................................................81

   11.15 Exceptions..............................................................................................81

   11.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL..................................................................81

   11.17 Tax Withholding Clause..................................................................................82

   11.18 Joinder Of Borrowers....................................................................................83

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                         LIST OF SCHEDULES AND EXHIBITS

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SCHEDULE

<S>                                <C>                                                                      
SCHEDULE 1.1(B)              -      COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P)              -      PERMITTED LIENS
SCHEDULE 6.1.1               -      QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.3               -      CAPITALIZATION/SUBSIDIARIES
SCHEDULE 6.1.23              -      EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.25              -      ENVIRONMENTAL MATTERS
SCHEDULE 8.2.1               -      PERMITTED INDEBTEDNESS
SCHEDULE 8.2.2               -      NEGATIVE PLEDGE EXCEPTION


EXHIBITS

EXHIBIT 1.1(A)               -      ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(B)               -      BORROWER AGENCY AGREEMENT
EXHIBIT 1.1(BB)              -      BORROWING BASE CERTIFICATE
EXHIBIT 1.1(I)(2)            -      INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(J)               -      JOINDER
EXHIBIT 1.1(R)               -      NOTE
EXHIBIT 2.4                  -      LOAN REQUEST
EXHIBIT 8.2.6                -      ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 8.3.3                -      QUARTERLY COMPLIANCE CERTIFICATE

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                                CREDIT AGREEMENT

                  THIS CREDIT  AGREEMENT  is dated as of November 1, 1996 and is
made by and among PRIMESOURCE  CORPORATION,  a Pennsylvania  corporation,  DIXIE
TYPE & SUPPLY  COMPANY,  INC., an Alabama  corporation and ONONDAGA LITHO SUPPLY
CO.,  INC.,  a  New  York  corporation   (each  "Borrower"  and  together,   the
"Borrowers"),  the  BANKS  (as  hereinafter  defined),  and PNC  BANK,  NATIONAL
ASSOCIATION,  in its  capacity  as agent  for the  Banks  under  this  Agreement
(hereinafter referred to in such capacity as the "Agent").

                                   WITNESSETH:

                  WHEREAS,  the Borrowers  have requested the Banks to provide a
revolving credit facility to the Borrowers in an aggregate  principal amount not
to exceed $50,000,000; and

                  WHEREAS,  the  revolving  credit  shall  be used to  refinance
existing indebtedness and for acquisitions and general corporate purposes; and

                  WHEREAS, the Banks are willing to provide such credit upon the
terms and conditions hereinafter set forth;
                  NOW, THEREFORE,  the parties hereto, in consideration of their
mutual  covenants  and  agreements  hereinafter  set forth and  intending  to be
legally bound hereby, covenant and agree as follows:


                             1. CERTAIN DEFINITIONS

                  1.1       Certain Definitions.

                  In  addition  to words and  terms  defined  elsewhere  in this
Agreement,  the  following  words and terms shall have the  following  meanings,
respectively, unless the context hereof clearly requires otherwise:

                           Account  shall  mean  any  account,  contract  right,
general intangible, chattel paper, instrument or document representing any right
to  payment  for goods  sold or  services  rendered,  whether  or not  earned by
performance and whether or not evidenced by a contract,  instrument or document,
which is now owned or hereafter acquired by a Borrower.

                           Account  Debtor  shall  mean any  person  which is or
which may become  obligated to a Borrower under,  with respect to, or on account
of, an Account.
                           Affiliate  as to any  Person  shall  mean  any  other
Person (i) which directly or indirectly controls,  is controlled by, or is under
common  control with such Person,  (ii) which  beneficially  owns or holds 8% or
more of any class of the voting or other equity  interests  of such  Person,  or
(iii) 8% or more of any class of voting  interests or other equity  interests of
which is  beneficially  owned or held,  directly or indirectly,  by such Person.
Control,  as used in this  definition,  shall mean the  possession,  directly or
indirectly,  of the power to direct or cause the direction of the  management or
policies of a Person,  whether  through the ownership of voting  securities,  by
contract or otherwise,  including the power to elect a majority of the directors
or trustees of a corporation or trust, as the case may be.
<PAGE>

                           Agent shall mean PNC Bank, National Association,  and
its successors and assigns.

                           Agent's  Letter  shall  mean the letter  between  the
Company and the Agent dated October 22, 1996.

                           Agreement  shall mean this Credit  Agreement,  as the
same may be supplemented  or amended from time to time,  including all schedules
and exhibits.

                           Annual  Statements shall have the meaning assigned to
that term in Section 6.1.9(i).

                           Applicable  Margin shall have the meaning assigned to
that term in Section 4.1.1.

                           Assignment  and  Assumption  Agreement  shall mean an
Assignment and Assumption Agreement by and among a Purchasing Bank, a Transferor
Bank and the Agent, as Agent and on behalf of the remaining Banks, substantially
in the form of Exhibit 1.1(A).

                           Authorized  Officer  shall  mean  those  individuals,
designated  by written  notice to the Agent from the  Borrowers,  authorized  to
execute  notices,  reports  and other  documents  on behalf of the Loan  Parties
required  hereunder.  The Borrowers may amend such list of individuals from time
to time by giving written notice of such amendment to the Agent.

                           Banks shall mean the financial  institutions named on
Schedule  1.1(B)  and their  respective  successors  and  assigns  as  permitted
hereunder, each of which is referred to herein as a Bank.

                           Base Rate shall mean the greater of (i) the  interest
rate per annum announced from time to time by the Agent at its Principal  Office
as its then prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Agent, or (ii) the Federal Funds Effective Rate plus
1/2% per annum.
               
                           Base  Rate  Option  shall  mean  the  option  of  the
Borrowers  to have  Loans  bear  interest  at the rate and  under  the terms and
conditions set forth in Section 4.1.1(i).
                         
                           Benefit   Arrangement  shall  mean  at  any  time  an
"employee  benefit plan," within the meaning of Section 3(3) of ERISA,  which is
neither a Plan nor a  Multiemployer  Plan and which is maintained,  sponsored or
otherwise contributed to by any member of the ERISA Group.
<PAGE>

                           Borrower shall mean any of PrimeSource Corporation, a
Pennsylvania  corporation,  Dixie  Type  &  Supply  Company,  Inc.,  an  Alabama
corporation  and Onondaga  Litho Supply Co.,  Inc., a New York  corporation  and
Borrowers shall mean all such Persons together.

                           Borrower  Agency  Agreement  shall mean that  certain
agreement  among the  Borrowers,  substantially  in the form of  Exhibit  1.1(B)
hereto, pursuant to which the Borrowers authorize and appoint the PrimeSource to
act on behalf of the  Borrowers to take any and all actions that may be required
to be taken by any  Borrower  or the  Borrowers  hereunder,  including,  without
limitation, making requests for and borrowing any Loan.
                          
 
                           Borrowing  Base shall mean at any time (A) the sum of
(i) eighty percent (80%) of Qualified  Accounts plus (ii) forty percent (40%) of
Qualified  Inventory  (in any event  not to exceed  with  respect  to  Qualified
Inventory the sum of $20,000,000), as any of the foregoing is modified from time
to  time  pursuant  to  Section  2.1  minus  (B)  the  principal  amount  of all
Indebtedness for borrowed money,  Guaranties (except for the Guaranties excluded
by Section 8.2.3 from the prohibition set forth in Section 8.2.3) and letters of
credit (and excluding  capitalized leases and Indebtedness  secured by permitted
Purchase  Money  Security  Interests)  and  excluding,  for all of the foregoing
categories, the Obligations arising under this Agreement. Each such advance rate
is subject to periodic review and analysis by the Banks and is therefore subject
to change from time to time or any time.
                           

                           Borrowing Base  Certificate  shall mean the Borrowing
Base Certificate given by the Borrower to the Banks on the Closing Date and from
time to time pursuant to Section 8.3.3 in the form of Exhibit 1.1(BB).

                           Borrowing Date shall mean,  with respect to any Loan,
the date for the making  thereof or the renewal or  conversion  thereof at or to
the same or a different Interest Rate Option, which shall be a Business Day.

                           Borrowing  Tranche shall mean  specified  portions of
Loans outstanding as follows:
          (i) any Loans to which a LIBO Rate Option applies which become subject
          to the same  Interest  Rate Option  under the same Loan Request by the
          Borrowers and which have the same Interest Period shall constitute one
          Borrowing  Tranche,  and (ii) all  Loans to which a Base  Rate  Option
          applies shall  constitute  one Borrowing  Tranche.  Business Day shall
          mean any day other  than a  Saturday  or Sunday or a legal  holiday on
          which  commercial  banks are  authorized  or required to be closed for
          business in Philadelphia, Pennsylvania.

                           Closing Date shall mean the Business Day on which the
first Loan shall be made, which
shall be the date  hereof.  The  closing  shall take place at 11:00 a.m.  on the
Closing Date at the offices of Buchanan  Ingersoll  Professional  Corporation in
Philadelphia,  Pennsylvania,  or at such  other  time and  place as the  parties
agree.


<PAGE>

                           Commercial  Letter of Credit shall mean any Letter of
Credit which is a commercial  letter of credit issued in respect of the purchase
of goods or services by one or more of the Loan Parties in the  ordinary  course
of their business.

                           Commitment  shall  mean,  as to any Bank at any time,
the amount  initially  set forth  opposite  its name on  Schedule  1.1(B) in the
column labeled "Amount of Commitment for Loans," and thereafter on Schedule I to
the most recent Assignment and Assumption Agreement,  and Commitments shall mean
the aggregate Commitments of all of the Banks.

                           Commitment  Fee shall have the  meaning  assigned  to
that term in Section 2.3.

                           Commitment  Fee  Applicable  Margin  shall  have  the
meaning assigned to that term in Section 2.3.

                           Company  shall  mean   PrimeSource   Corporation,   a
Pennsylvania  corporation  which is one of the Borrowers  hereunder and which is
the agent on behalf of the Borrowers pursuant to the Borrower Agency Agreement.
                         
                           Consideration   shall   mean  with   respect  to  any
Permitted  Acquisition,  the  aggregate  of (i) the cash paid by any of the Loan
Parties, directly or indirectly, to the seller in connection therewith, (ii) the
Indebtedness incurred or assumed by any of the Loan Parties, whether in favor of
the seller or  otherwise  and whether  fixed or  contingent,  (iii) any Guaranty
given or incurred by any Loan Party in connection therewith,  and (iv) any other
consideration  given  or  obligation  incurred  by any of the  Loan  Parties  in
connection therewith.

                           Consolidated  Tangible Net Worth shall mean as of any
date of determination total  stockholders'  equity less intangible assets of the
Borrowers and their  Subsidiaries as of such date determined and consolidated in
accordance with GAAP.

                           Dollar,  Dollars, U.S. Dollars and the symbol $ shall
mean lawful money of the United States of America.

                           Drawing Date shall have the meaning  assigned to that
term in Section 2.9.3.2.

                           EBITDA shall mean net income before  extraordinary or
unusual  items,  depreciation,  amortization,  interest  expense  and income tax
expense  calculated in respect of the prior four (4) consecutive fiscal quarters
in  each  case  of the  Company  on a  consolidated  basis  and  determined  and
consolidated  in accordance with GAAP and (x) shall be calculated to include the
purchase of the VGC Assets and any business acquired in a Permitted  Acquisition
if either (1) the Borrower provide to the Banks audited financial  statements of
such business,  and such business (if it is a legal entity) becomes a Loan Party
contemporaneously  with such  Permitted  Acquisition  or (2) Required Banks have
consented to such  inclusions and (y) shall be calculated to exclude any portion
of the net earnings of any Subsidiary  that is not a Borrower or that, by reason
of any contract or charter  restriction  or  applicable  law or  regulation,  is
unavailable for payment of dividends to any Loan Party.

  
<PAGE>

                        Environmental   Complaint   shall  mean  any  written
complaint  setting  forth a cause of action for  personal or property  damage or
natural  resource  damage or  equitable  relief,  order,  notice  of  violation,
citation,  request for information  issued pursuant to any Environmental Laws by
an Official  Body,  subpoena or other  written  notice of any type  relating to,
arising  out of, or issued  pursuant  to, any of the  Environmental  Laws or any
Environmental Conditions, as the case may be.

                           Environmental Conditions shall mean any conditions of
the  environment,   including  the  workplace,   the  ocean,  natural  resources
(including  flora or fauna),  soil,  surface water,  groundwater,  any actual or
potential drinking water supply sources,  substrata or the ambient air, relating
to or  arising  out of, or caused  by, the use,  handling,  storage,  treatment,
recycling,  generation,  transportation,  release,  spilling,  leaking, pumping,
emptying,   discharging,   injecting,  escaping,  leaching,  disposal,  dumping,
threatened release or other management or mismanagement of Regulated  Substances
resulting from the use of, or operations on, any Property.

                           Environmental  Laws  shall mean all  federal,  state,
local  and  foreign  Laws  and   regulations,   including   permits,   licenses,
authorizations, bonds, orders, judgments, and consent decrees issued, or entered
into,  pursuant thereto,  relating to pollution or protection of human health or
the environment or employee safety in the workplace.

                           ERISA  shall  mean  the  Employee  Retirement  Income
Security Act of 1974,  as the same may be amended or  supplemented  from time to
time, and any successor statute of similar import, and the rules and regulations
thereunder, as from time to time in effect.

                           ERISA Group shall mean,  at any time,  the  Borrowers
and all  members  of a  controlled  group  of  corporations  and all  trades  or
businesses  (whether or not  incorporated)  under  common  control and all other
entities  which,  together with the Borrowers,  are treated as a single employer
under Section 414 of the Internal Revenue Code.
                          
                           Event  of  Default  shall  mean  any  of  the  events
described in Section 9.1 and referred to therein as an "Event of Default."
                          
                           Existing  Lenders shall mean (x) First Union National
Bank, successor to First Fidelity Bank, N.A., (y) Wells Fargo Bank, N.A. and (2)
Bank of America, NW (d/b/a SeaFirst Bank) to which the Borrowers are indebted as
of the Closing Date.
                           Expiration Date shall mean November 1, 1999.


<PAGE>

                           Facility  Usage shall mean at any time the sum of the
Loans outstanding and the Letters of Credit Outstanding.

                           Federal Funds  Effective  Rate for any day shall mean
the rate per annum  (based on a year of 360 days and  actual  days  elapsed  and
rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank
of New York (or any successor) on such day as being the weighted  average of the
rates on overnight federal funds transactions  arranged by federal funds brokers
on the previous  trading day, as computed and announced by such Federal  Reserve
Bank (or any successor) in substantially the same manner as such Federal Reserve
Bank computes and  announces  the weighted  average it refers to as the "Federal
Funds  Effective  Rate"  as of the  date of this  Agreement;  provided,  if such
Federal  Reserve Bank (or its successor) does not announce such rate on any day,
the  "Federal  Funds  Effective  Rate" for such day shall be the  Federal  Funds
Effective Rate for the last day on which such rate was announced.

                           Financial Projections shall have the meaning assigned
to that term in Section 6.1.9(ii).

                           Fixed Charge  Coverage  Ratio shall mean the ratio of
EBITDA to Fixed Charges.

                           Fixed   Charges   shall   mean  for  any   period  of
determination  the  sum  of  interest  expense,  income  taxes  paid,  scheduled
principal   installments  on  Indebtedness  (as  adjusted  for  prepayments  and
excluding  those  in  respect  of  the  Permitted  First  Union  Debt),  capital
expenditures  and  dividends  paid,  in each  case of the  Borrowers  and  their
Subsidiaries  for such period  determined and  consolidated  in accordance  with
GAAP.

                           GAAP  shall  mean   generally   accepted   accounting
principles  as are in effect  from time to time,  subject to the  provisions  of
Section  1.3,  and applied on a consistent  basis both as to  classification  of
items and amounts.

                           Governmental  Acts shall have the meaning assigned to
that term in Section 2.9.8.

                           Guaranty of any Person shall mean any  obligation  of
such Person  guaranteeing or in effect  guaranteeing any liability or obligation
of any other Person in any manner, whether directly or indirectly, including any
agreement to indemnify or hold harmless any other Person,  any performance  bond
or other  suretyship  arrangement and any other form of assurance  against loss,
except  endorsement of negotiable or other instruments for deposit or collection
in the ordinary course of business.

                           Historical Statements shall have the meaning assigned
to that term in Section 6.1.9(i).


<PAGE>

                           Indebtedness  shall  mean,  as to any  Person  at any
time, any and all indebtedness,  obligations or liabilities  (whether matured or
unmatured,   liquidated  or  unliquidated,   direct  or  indirect,  absolute  or
contingent,  or joint or  several)  of such  Person  for or in  respect  of: (i)
borrowed money,  (ii) amounts raised under or liabilities in respect of any note
purchase  or  acceptance  credit  facility,   (iii)  reimbursement   obligations
(contingent or otherwise)  under any letter of credit,  currency swap agreement,
interest  rate swap,  cap,  collar or floor  agreement  or other  interest  rate
management  device,  (iv)  any  other  transaction  (including  forward  sale or
purchase agreements, capitalized leases and conditional sales agreements) having
the  commercial  effect of a borrowing  of money  entered into by such Person to
finance its operations or capital requirements (but not including trade payables
and accrued  expenses  incurred in the ordinary course of business which are not
represented by a promissory note or other evidence of indebtedness and which are
not more than thirty (30) days past due),  or (v) any  Guaranty of  Indebtedness
for borrowed money.
                          
                           Ineligible Security shall mean any security which may
not be  underwritten  or dealt in by member banks of the Federal  Reserve System
under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventy),  as
amended.

                           Insolvency Proceeding shall mean, with respect to any
Person,  (a) case,  action or proceeding  with respect to such Person (i) before
any  court  or  any  other  Official  Body  under  any  bankruptcy,  insolvency,
reorganization  or other similar Law now or hereafter in effect, or (ii) for the
appointment   of  a  receiver,   liquidator,   assignee,   custodian,   trustee,
sequestrator,  conservator (or similar  official) of any Loan Party or otherwise
relating to liquidation,  dissolution,  winding-up or relief of such Person,  or
(b) any general assignment for the benefit of creditors, composition, marshaling
of assets  for  creditors,  or other,  similar  arrangement  in  respect of such
Person's  creditors  generally  or any  substantial  portion  of its  creditors;
undertaken under any Law.

                           Intercompany  Subordination  Agreement  shall  mean a
Subordination  Agreement  among the Loan Parties in the form attached  hereto as
Exhibit 1.1(I)(2).

                           Interest  Period  shall have the meaning  assigned to
such term in Section 4.2.

                           Interest Rate Option shall mean a LIBO Rate Option or
Base Rate Option.

                           Interim Statements shall have the meaning assigned to
that term in Section 6.1.9(i).


<PAGE>

                           Internal Revenue Code shall mean the Internal Revenue
Code of 1986, as the same may be amended or supplemented  from time to time, and
any  successor  statute  of  similar  import,  and  the  rules  and  regulations
thereunder, as from time to time in effect.

                           Inventory  shall mean any and all goods,  merchandise
and other personal property,  including,  without limitation,  goods in transit,
wheresoever  located and whether now owned or  hereafter  acquired by a Borrower
which  are or may at  any  time  be  held  as  raw  materials,  finished  goods,
work-in-process, supplies or materials used or consumed in a Borrower's business
or held for sale or lease, including,  without limitation, (i) all such property
the sale or other  disposition of which has given rise to Accounts and which has
been returned to or  repossessed  or stopped in transit by a Borrower,  and (ii)
all packing,  shipping  and  advertising  materials  relating to all or any such
property.

                           Joinder  shall  mean  a  joinder  by  a  Person  as a
Borrower  under  this  Agreement  and the other  Loan  Documents  in the form of
Exhibit 1.1(J).

                           Labor Contracts shall mean all employment agreements,
employment  contracts,  collective  bargaining  agreements and other  agreements
among any Loan Party or Subsidiary of a Loan Party and its employees.

                           Law  shall  mean  any  law  (including  common  law),
constitution,  statute, treaty, regulation,  rule, ordinance,  opinion, release,
ruling, order, injunction, writ, decree or award of any Official Body.

                           Letter of Credit  shall have the meaning  assigned to
that term in Section 2.9.1.

                           Letter of Credit Borrowing shall mean an extension of
credit  resulting from a drawing under any Letter of Credit which shall not have
been  reimbursed on the date when made and shall not have been  converted into a
Loan under Section 2.9.3.2.

                           Letter of Credit Fee shall have the meaning  assigned
to that term in Section 2.9.2.

                           Letters of Credit  Outstanding shall mean at any time
the sum of (i) the  aggregate  undrawn  face  amount of  outstanding  Letters of
Credit and (ii) the aggregate amount of all unpaid and outstanding Reimbursement
Obligations.

                           Leverage   Ratio   shall   mean  the   ratio  of  (x)
Indebtedness  for borrowed money,  capital leases,  Guaranties of borrowed money
(except for the Guaranties  excluded by Section 8.2.3 from the  prohibition  set
forth in Section 8.2.3) and  reimbursement  obligations in respect of letters of
credit to (y)  EBITDA of the  Company  and its  Subsidiaries,  consolidated  and
calculated in accordance with GAAP.


<PAGE>

                           LIBO  Rate  shall  mean,  with  respect  to the Loans
comprising  any Borrowing  Tranche to which the LIBO Rate Option applies for any
Interest Period, the interest rate per annum determined by the Agent by dividing
(the resulting  quotient  rounded upward to the nearest 1/100th of 1% per annum)
(i) the rate of interest  determined by the Agent in  accordance  with its usual
procedures (which determination shall be conclusive absent manifest error) to be
the London  interbank  offered rate of interest per annum  appearing on Telerate
display  page 3750 or such  other  display  page on the  Telerate  System as may
replace  such  page  (or  appropriate  successor  or,  if the  British  Bankers'
Association  or its  successor  ceases to  provide  such  quotes,  a  comparable
replacement  determined by the Agent) at approximately  11:00 a.m., London time,
two (2)  Business  Days  prior to the first day of such  Interest  Period for an
amount  comparable to such  Borrowing  Tranche and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus
the LIBO Rate  Reserve  Percentage.  The LIBO Rate may also be  expressed by the
following formula:

         LIBO              Rate = Telerate page 3750 quoted by British  Bankers'
                           Association or appropriate successor 1.00 - LIBO Rate
                           Reserve Percentage

The LIBO Rate shall be adjusted with respect to any LIBO Rate Option outstanding
on the  effective  date of any change in the LIBO Rate Reserve  Percentage as of
such effective  date. The Agent shall give prompt notice to the Borrowers of the
LIBO Rate as determined or adjusted in accordance herewith,  which determination
shall be conclusive absent manifest error.

                           LIBO  Rate  Option  shall  mean  the  option  of  the
Borrowers  to have  Loans  bear  interest  at the rate and  under  the terms and
conditions set forth in Section 4.1.1(ii).

                           LIBO Rate Reserve  Percentage  shall mean the maximum
percentage (expressed as a decimal rounded upward to the nearest 1/100 of 1%) as
determined  by the Agent  which is in effect  during  any  relevant  period,  as
prescribed  by the Board of  Governors  of the  Federal  Reserve  System (or any
successor) for determining  the reserve  requirements  (including  supplemental,
marginal  and  emergency  reserve  requirements)  with  respect to  eurocurrency
funding (currently  referred to as "Eurocurrency  Liabilities") of a member bank
in such System.
                           Lien shall mean any mortgage,  deed of trust, pledge,
lien, security interest,  charge or other encumbrance or security arrangement of
any nature whatsoever, whether voluntarily or involuntarily given, including any
conditional  sale or title retention  arrangement,  and any assignment,  deposit
arrangement  or lease  intended  as, or having the effect of,  security  and any
filed  financing  statement or other notice of any of the foregoing  (whether or
not a lien or other encumbrance is created or exists at the time of the filing).

                           LLC  Interests  shall have the meaning  given to such
term in Section 6.1.3.


<PAGE>

                           Loan Documents shall mean this Agreement, the Agent's
Letter,  the  Intercompany  Subordination  Agreement,  the Notes,  and any other
instruments, certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith,  as the same may
be  supplemented  or  amended  from  time  to  time in  accordance  herewith  or
therewith, and Loan Document shall mean any of the Loan Documents.

                           Loan  Parties   shall  mean  the  Borrowers  and  any
guarantor of the Obligations which becomes party to this Agreement.
                           
                           Loan  Request  shall have the  meaning  given to such
term in Section 2.4.

                           Loans  shall  mean  collectively  and Loan shall mean
separately  all  Loans or any Loan  made by the Banks or one of the Banks to the
Borrowers pursuant to Section 2.1 or 2.9.3.

                           Material   Adverse  Change  shall  mean  any  set  of
circumstances  or events which (a) has or could  reasonably  be expected to have
any material adverse effect  whatsoever upon the validity or  enforceability  of
this  Agreement  or any  other  Loan  Document,  (b) is or could  reasonably  be
expected  to be  material  and  adverse  to the  business,  properties,  assets,
financial  condition,  results of  operations  or  prospects of the Loan Parties
taken as a whole,  (c) impairs  materially  or could  reasonably  be expected to
impair  materially  the ability of the Loan Parties taken as a whole to duly and
punctually pay or perform its Indebtedness,  or (d) impairs  materially or could
reasonably be expected to impair  materially  the ability of the Agent or any of
the Banks, to the extent permitted,  to enforce their legal remedies pursuant to
this Agreement or any other Loan Document.

                           Month,  with respect to an Interest  Period under the
LIBO Rate  Option,  shall  mean the  interval  between  the days in  consecutive
calendar  months  numerically  corresponding  to the first day of such  Interest
Period. If any LIBO Rate Interest Period begins on a day of a calendar month for
which  there is no  numerically  corresponding  day in the  month in which  such
Interest  Period is to end,  the final month of such  Interest  Period  shall be
deemed to end on the last Business Day of such final month.

                           Multiemployer  Plan shall mean any  employee  benefit
plan which is a "multiemployer plan" within the meaning of Section 4001(a)(3) of
ERISA and to which the Borrowers or any member of the ERISA Group is then making
or accruing an obligation to make  contributions  or, within the preceding  five
Plan years, has made or had an obligation to make such contributions.

                           Multiple  Employer  Plan  shall mean a Plan which has
two or more contributing  sponsors (including the Borrowers or any member of the
ERISA Group) at least two of whom are not under common  control,  as such a plan
is described in Sections 4063 and 4064 of ERISA.


<PAGE>

                           Notes  shall  mean  collectively  and Note shall mean
separately  all  the  Notes  of the  Borrowers  in the  form of  Exhibit  1.1(R)
evidencing  the  Loans  together  with  all  amendments,  extensions,  renewals,
replacements, refinancings or refundings thereof in whole or in part.

                           Notices shall have the meaning  assigned to that term
in Section 11.6. Obligation shall mean any obligation or liability of any of the
Loan  Parties to the Agent or any of the Banks,  howsoever  created,  arising or
evidenced,  whether direct or indirect, absolute or contingent, now or hereafter
existing,  or due or to become due, under or in connection  with this Agreement,
the Notes, the Letters of Credit, the Agent's Letter or any other Loan Document.

                           Official  Body  shall  mean  any  national,  federal,
state,  local  or other  government  or  political  subdivision  or any  agency,
authority,  bureau, central bank,  commission,  department or instrumentality of
either, or any court, tribunal,  grand jury or arbitrator,  in each case whether
foreign or domestic.

                           Participation Advance shall mean, with respect to any
Bank, such Bank's payment in respect of its  participation in a Letter of Credit
Borrowing according to its Ratable Share pursuant to Section 2.9.4.

                           Partnership Interests shall have the meaning given to
such term in Section 6.1.3.

                           PBGC  shall  mean  the   Pension   Benefit   Guaranty
Corporation  established  pursuant  to  Subtitle  A of  Title IV of ERISA or any
successor.

                           Permitted   Acquisitions   shall  have  the   meaning
assigned to such term in Section 8.2.6.

                           Permitted  First  Union Debt  shall have the  meaning
assigned to such term in Section 7.1.13.
                           Permitted Investments shall mean:

                                    (i) direct  obligations of the United States
of America or any agency or instrumentality thereof or obligations backed by the
full faith and credit of the United  States of America  maturing  in twelve (12)
months or less from the date of acquisition;

                                    (ii)  commercial  paper maturing in 180 days
or less  rated  not lower  than  A-1,  by  Standard  & Poor's or P-1 by  Moody's
Investors Service, Inc. on the date of acquisition;

                                    (iii)  demand  deposits,  time  deposits  or
certificates  of deposit  maturing  within one year in  commercial  banks  whose
obligations are rated A-1, A or the equivalent or better by Standard & Poor's on
the date of acquisition; and


<PAGE>

                                    (iv) common  stock of the Company  purchased
by the Company which purchases do not exceed in the aggregate $1,000,000.
                           Permitted Liens shall mean:

                                    (i) Liens for taxes, assessments, or similar
charges,  incurred in the ordinary  course of business and which are not yet due
and payable;

                                    (ii)   Pledges  or  deposits   made  in  the
ordinary course of business to secure payment of workmen's  compensation,  or to
participate in any fund in connection with workmen's compensation,  unemployment
insurance, old-age pensions or other social security programs;

                                    (iii)  Liens  of   mechanics,   materialmen,
warehousemen,  carriers,  or other like Liens,  securing obligations incurred in
the  ordinary  course of business  that are not yet due and payable and Liens of
landlords  securing  obligations  to pay lease payments that are not yet due and
payable or in default;

                                    (iv) Good-faith  pledges or deposits made in
the  ordinary  course  of  business  to  secure  performance  of bids,  tenders,
contracts  (other than for the  repayment of borrowed  money) or leases,  not in
excess  of  the  aggregate  amount  due  thereunder,   or  to  secure  statutory
obligations,  or surety, appeal,  indemnity,  performance or other similar bonds
required in the ordinary course of business;

                                    (v)   Encumbrances   consisting   of  zoning
restrictions,  easements or other restrictions on the use of real property, none
of which materially  impairs the use of such property or the value thereof,  and
none of which is  violated  in any  material  respect by  existing  or  proposed
structures or land use;
                                    (vi) Liens, security interests and mortgages
in favor of the Agent for the benefit of the Banks;

                                    (vii) Liens on  property  leased by any Loan
Party or Subsidiary of a Loan Party under capital and operating  leases securing
obligations of such Loan Party or Subsidiary to the lessor under such leases;

                                    (viii) Any Lien existing on the date of this
Agreement and described on Schedule  1.1(P),  provided that the principal amount
secured  thereby is not hereafter  increased,  and no  additional  assets become
subject to such Lien;
                                    (ix)  Purchase  Money  Security   Interests,
provided that the  aggregate  amount of loans and deferred  payments  secured by
such Purchase Money Security  Interests shall not exceed  $3,500,000  (excluding
for the purpose of this  computation any loans or deferred  payments  secured by
Liens described on Schedule 1.1(P)); and


<PAGE>

                                    (x) The  following,  (A) if the  validity or
amount  thereof  is being  contested  in good  faith by  appropriate  and lawful
proceedings diligently conducted so long as levy and execution thereon have been
stayed and continue to be stayed or (B) if a final  judgment is entered and such
judgment is discharged  within thirty (30) days of entry, and they do not in the
aggregate  materially  impair  the  ability  of any Loan  Party to  perform  its
Obligations hereunder or under the other Loan Documents:

                     (1) Claims or Liens for taxes,  assessments  or charges due
                  and payable and subject to interest or penalty,  provided that
                  the  applicable  Loan Party  maintains  such reserves or other
                  appropriate  provisions  as shall be required by GAAP and pays
                  all such  taxes,  assessments  or charges  forthwith  upon the
                  commencement of proceedings to foreclose any such Lien;

                     (2)   Claims   or   Liens   of   mechanics,    materialmen,
                  warehousemen,   carriers,  or  other  statutory  nonconsensual
                  Liens; or

                     (3)  Liens   resulting  from  final   judgments  or  orders
                  described in Section 9.1.6.
                                    (xi)  Subleases or assignments of leases for
                  properties no longer needed in the Loan Party's business.

                           Person  shall  mean  any   individual,   corporation,
partnership, limited liability company, association, joint-stock company, trust,
unincorporated organization,  joint venture, government or political subdivision
or agency thereof, or any other entity.

                           Plan  shall  mean  at any  time an  employee  pension
benefit plan (including a Multiple Employer Plan, but not a Multiemployer  Plan)
which is  covered  by Title IV of ERISA or is  subject  to the  minimum  funding
standards  under  Section  412 of the  Internal  Revenue  Code and either (i) is
maintained  by any member of the ERISA Group for  employees of any member of the
ERISA  Group  or (ii) has at any time  within  the  preceding  five  years  been
maintained  by any entity which was at such time a member of the ERISA Group for
employees of any entity which was at such time a member of the ERISA Group.

                           PNC Bank shall mean PNC Bank,  National  Association,
its successors and assigns.

                           Potential  Default  shall mean any event or condition
which  with  notice,  passage  of time or a  determination  by the  Agent or the
Required Banks, or any combination of the foregoing,  would  constitute an Event
of Default.


<PAGE>

                           Principal  Office shall mean the main banking  office
of the Agent in Philadelphia, Pennsylvania.

                           Prohibited  Transaction  shall  mean  any  prohibited
transaction  as defined in Section 4975 of the Internal  Revenue Code or Section
406 of ERISA for which  neither an  individual  nor a class  exemption  has been
issued by the United States Department of Labor.

                           Property shall mean all real property, both owned and
leased, of any Loan Party or Subsidiary of a Loan Party.

                           Purchase  Money  Security  Interest  shall mean Liens
upon tangible  personal  property securing loans to any Loan Party or Subsidiary
of a Loan Party or deferred  payments by such Loan Party or  Subsidiary  for the
purchase of such tangible personal property.

                           Purchasing  Bank shall  mean a Bank  which  becomes a
party to this Agreement by executing an Assignment and Assumption Agreement.

                           Qualified  Account  shall mean any Account  which the
Banks,  in their sole  discretion,  determines  to have met all of the following
minimum requirements:
                           (i) The  Account  represents  a  complete  bona  fide
transaction for goods sold and delivered or services rendered (but excluding any
amount in the nature of a service  charge  added to the amount due on an invoice
because the  invoice  has not been paid when due) which  requires no further act
under  any  circumstances  on the part of the  Borrowers  to make  such  Account
payable by the  Account  Debtor;  and the Account  arises  from an arm's  length
transaction in the ordinary course of the Borrowers' business between a Borrower
and an Account  Debtor  which is not an  Affiliate,  officer,  or  employee of a
Borrower,  or a member of the family of an Affiliate,  officer, or employee of a
Borrower;

                           (ii) The  Account  shall not (a) be  delinquent  more
than  ninety  (90) days,  or (b) be  payable by an Account  Debtor (1) more than
fifty percent (50%) of whose Accounts are delinquent  more than ninety (90) days
and is in excess of $200,000,  or (2) whose Accounts  constitute,  in the Banks'
determination,  an  unduly  high  percentage  of  the  aggregate  amount  of all
outstanding Accounts;

                           (iii) The  goods  the sale of which  gave rise to the
Account  were  shipped or  delivered  or provided  to the  Account  Debtor on an
absolute sale basis and not on a  bill-and-hold  sale basis, a consignment  sale
basis, a guaranteed sale basis, a  sale-or-return  basis, or on the basis of any
other  similar  understanding,  and no part of such goods has been  returned  or
rejected;

                           (iv) The Account is not evidenced by chattel paper or
an instrument of any kind;


<PAGE>

                           (v) The Account  Debtor  with  respect to the Account
(a) is not  insolvent,  (b) is not the subject of any  bankruptcy  or insolvency
proceedings  of any kind or of any other  proceeding  or action,  threatened  or
pending,  which might have a materially adverse effect on its business,  and (c)
is not, in the sole  discretion of the Banks,  deemed  ineligible for credit for
other reasons (including, without limitation,  unsatisfactory past experience of
a Borrower or the Banks with the Account Debtor or unsatisfactory  reputation of
the Account Debtor);

                           (vi) (a) The Account Debtor is not located outside of
the  continental  United  States of  America,  or (b) if the  Account  Debtor is
located  outside of the continental  United States,  the Account is supported by
letters of credit or FCIA insurance deemed adequate and acceptable by the Banks;

                           (vii) The  Account is not in excess of  $200,000  and
(a) the Account Debtor is not the government of the United States of America, or
any department,  agency or instrumentality thereof, or (b) if the Account Debtor
is an entity mentioned in clause (vii)(a),  the Federal Assignment of Claims Act
(or  applicable  similar  legislation)  has been  fully  complied  with so as to
validly perfect the Banks' prior security interest to the Banks' satisfaction;
                          
                           (viii) The  Account is a valid,  legally  enforceable
obligation of the Account Debtor with respect thereto and is not pursuant to any
progress  billing or warranty  billing  arrangement  or subject to any  dispute,
condition,   contingency,  offset,  recoupment,  reduction,  claim  for  credit,
allowance,  adjustment,  counterclaim  or  defense  on the part of such  Account
Debtor, and no facts exist which may provide a basis for any of the foregoing in
the present or future;
                           (ix) The Account is not  subject to any Lien,  claim,
encumbrance or security interest whatsoever other than Permitted Liens;

                           (x) The Account is  evidenced  by an invoice or other
documentation  in form  acceptable to the Banks and arises from a contract which
is in form and substance satisfactory to the Banks;

                           (xi)  Accounts  with  respect  to which  the  Account
Debtor is located  in any state  (including,  without  limitation,  New  Jersey,
Minnesota and Indiana) denying creditor's access to its courts in the absence of
a Notice  of  Business  Activities  Report  or other  similar  filing,  unless a
Borrower has either  qualified as a foreign  corporation  authorized to transact
business  in such state or has filed a Notice of Business  Activities  Report or
similar filing with the applicable state agency for the then current year;

                           (xii) The  Account is not  subject  to any  provision
prohibiting its assignment or requiring notice of or consent to such assignment;


<PAGE>

                           (xiii) The goods giving rise to the Account were not,
at the time of sale  thereof,  subject  to any Lien or  encumbrance  except  the
Banks' prior security interest;

                           (xiv) The  Account is payable in freely  transferable
United States Dollars;  

                           (xv)  The   Account   is  not,   or  should  not  be,
disqualified for any other reason generally  accepted in the commercial  finance
business; and

                           (xvi) The  Account is not owing by an Account  Debtor
to the extent its obligations to a Borrower exceed 20% of all Qualified Accounts
unless such excess is  supported by letters of credit or FCIA  insurance  deemed
adequate and acceptable by the Banks or owing by an Account Debtor  unacceptable
to the Banks in their sole discretion.

In addition to the foregoing requirements,  Accounts of any Account Debtor which
are otherwise  qualified shall be reduced to the extent of any "contra" accounts
or  accounts  payable  (including,  without  limitation,  the Banks'  good faith
estimate of any contingent  liabilities)  by a Borrower to such Account  Debtor,
provided that the Banks,  in their sole  discretion,  may determine that none of
the  Accounts in respect to such Account  Debtor shall be Qualified  Accounts in
the  event  that  such  contra  accounts  or  accounts   payable   represent  an
unreasonably  large amount owing to such Account Debtor. In addition,  the Banks
may in their sole  discretion  exclude  Accounts owing to one or more particular
Account Debtors based on the  creditworthiness or other  characteristics of such
Account Debtor.

                           Qualified  Inventory  shall mean any Inventory  which
the Banks, in their sole discretion, determines to have met all of the following
minimum requirements:
                           (i) the Inventory is either (a) finished  goods,  (b)
completed  components  or (c) raw  materials  other than  shipping  and  packing
supplies  and  racking,  but  excluding in all cases any work in process and any
goods which have been shipped,  delivered,  provided to,  purchased or sold by a
Borrower on a bill-and-hold  sale,  consignment  sale (except to the extent such
Inventory  is the  subject  of an  enforceable  consignment  agreement  with the
consignee  protecting a Loan Party's exclusive rights in such Inventory and with
respect to which there are filed UCC-1 financing  statements providing notice of
such Loan Party's interests therein),  guaranteed sale, or sale-or-return basis,
or any other similar basis or understanding other than an absolute sale;

                           (ii) the Inventory is of new,  good and  merchantable
quality and which is of a type (determined by SKU) which has been purchased by a
Loan Party within the prior twelve (12) months;

                           (iii)  the  Inventory  is not  stored  with a bailee,
warehouseman,  or similar  party unless the Banks has given their prior  written
consent  and a Borrower  has caused  such  bailee,  warehouseman,  consignee  or
similar  party  to  issue  and  deliver  to the  Banks,  in form  and  substance
acceptable  to the Banks,  warehouse  receipts or similar type of  documentation
therefor in the Banks' name;


<PAGE>

                           (iv) The Inventory is intended for sale or lease by a
Borrower in the ordinary course of business at regular prices; and

                           (v) The  Inventory  is  otherwise  acceptable  to the
Banks in their sole discretion.

                           (vi) the Inventory is not subject to any Lien, claim,
encumbrance or security interest whatsoever other than Permitted Liens;

                           (vii)  the  Inventory  has not been  manufactured  in
violation  of any federal  minimum  wage or overtime  laws,  including,  without
limitation, the Fair Labor Standards Act, 29 U.S.C. ss. 215(a)(1).

                           Ratable Share shall mean the proportion that a Bank's
Commitment bears to the Commitments of all of the Banks.

                           Regulated   Substances   shall  mean  any  substance,
including  any  solid,  liquid,  semisolid,   gaseous,  thermal,   thoriated  or
radioactive material,  refuse, garbage, wastes,  chemicals,  petroleum products,
by-products,  coproducts,  impurities,  dust, scrap, heavy metals,  defined as a
"hazardous substance," "pollutant,"  "pollution,"  "contaminant,"  "hazardous or
toxic  substance,"  "extremely  hazardous  substance,"  "toxic chemical," "toxic
waste," "hazardous waste,"  "industrial waste," "residual waste," "solid waste,"
"municipal waste," "mixed waste," "infectious waste,"  "chemotherapeutic waste,"
"medical waste," or "regulated  substance" or any related materials,  substances
or  wastes as now or  hereafter  defined  pursuant  to any  Environmental  Laws,
ordinances,  rules,  regulations  or other  directives of any Official Body, the
generation,  manufacture,  extraction,  processing,   distribution,   treatment,
storage,  disposal,  transport,  recycling,  reclamation,  use, reuse, spilling,
leaking, dumping, injection,  pumping, leaching,  emptying,  discharge,  escape,
release  or other  management  or  mismanagement  of which is  regulated  by the
Environmental Laws.

                           Regulation  U shall mean  Regulation  U, T, G or X as
promulgated by the Board of Governors of the Federal Reserve System,  as amended
from time to time.

                           Reimbursement   Obligation  shall  have  the  meaning
assigned to such term in Section 2.9.3.2.

                           Reportable   Event  shall  mean  a  reportable  event
described in Section 4043 of ERISA and regulations  thereunder with respect to a
Plan or Multiemployer Plan.

                           Required Banks shall mean

                           (i) if there are no Loans,  Reimbursement Obligations
or Letter of Credit Borrowings outstanding, Banks whose Commitments aggregate at
least 66 2/3% of the Commitments of all of the Banks, or


<PAGE>

                           (ii) if there are Loans,  Reimbursement  Obligations,
or Letter of Credit  Borrowings  outstanding,  any Bank or group of Banks if the
sum of the Loans,  Reimbursement  Obligations and Letter of Credit Borrowings of
such Banks then  outstanding  aggregates at least 66 2/3% of the total principal
amount  of all of the  Loans,  Reimbursement  Obligations  and  Letter of Credit
Borrowings  then  outstanding.  Reimbursement  Obligations  and Letter of Credit
Borrowings shall be deemed,  for purposes of this definition,  to be in favor of
the  Agent  and  not a  participating  Bank  if  such  Bank  has  not  made  its
Participation  Advance in respect  thereof and shall be deemed to be in favor of
such  Bank  to the  extent  of its  Participation  Advance  if it has  made  its
Participation Advance in respect thereof.

                           Section 20  Subsidiary  shall mean the  Subsidiary of
the bank holding company controlling any Bank, which Subsidiary has been granted
authority  by the  Federal  Reserve  Board to  underwrite  and  deal in  certain
Ineligible Securities.

                           Standard  &  Poor's  shall  mean  Standard  &  Poor's
Ratings Services, a division of The
McGraw-Hill Companies, Inc.

                           Standby  Letter  of  Credit  shall  mean a Letter  of
Credit  issued  to  support  obligations  of one or  more of the  Loan  Parties,
contingent or otherwise, which finance the working capital and business needs of
the Loan Parties incurred in the ordinary course of business.
                           
                           Subsidiary  of any  Person at any time shall mean (i)
any  corporation or trust of which 50% or more (by number of shares or number of
votes)  of the  outstanding  capital  stock or  shares  of  beneficial  interest
normally  entitled to vote for the election of one or more directors or trustees
(regardless  of any  contingency  which does or may suspend or dilute the voting
rights) is at such time owned  directly or  indirectly  by such Person or one or
more of such Person's Subsidiaries, (ii) any partnership of which such Person is
a general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries,  (iii) any  limited  liability  company of which such  Person is a
member or of which 50% or more of the limited  liability company interests is at
the time  directly  or  indirectly  owned by such  Person or one or more of such
Person's  Subsidiaries  or (iv) any  corporation,  trust,  partnership,  limited
liability  company  or other  entity  which is  controlled  or  capable of being
controlled by such Person or one or more of such Person's Subsidiaries.

                           Subsidiary  Shares shall have the meaning assigned to
that term in Section 6.1.3.

                           Syndications Period shall mean the period between the
Closing Date and the earlier of the following  dates:  (a) the date on which the
Commitment of PNC Bank has been reduced to or below $25,000,000, or (b) the date
which is one hundred twenty (120) days after the Closing Date.


<PAGE>

                           Transferor  Bank shall mean the selling Bank pursuant
to an Assignment and Assumption Agreement.

                           VGC shall mean VGC Corp., a Minnesota corporation.

                           VGC Asset  Agreement  shall  mean the Asset  Purchase
Agreement  dated  September 27, 1996, a copy of which has been  delivered to the
Agent, pursuant to which PrimeSource shall purchase the VGC Assets.

                           VGC Assets  shall mean the assets and  operations  of
VGC  located in  Minneapolis,  Milwaukee,  Des Moines and Omaha  which are to be
purchased on or before November 15, 1996 pursuant to the VGC Asset Agreement.
                  1.2       Construction.

                  Unless  the  context  of  this  Agreement   otherwise  clearly
requires,  the following rules of construction shall apply to this Agreement and
each of the other Loan Documents:

                           1.2.1     Number; Inclusion.

                           references to the plural  include the  singular,  the
plural,  the part and the whole; "or" has the inclusive  meaning  represented by
the phrase  "and/or," and "including" has the meaning  represented by the phrase
"including without limitation";
                           1.2.2     Determination.

                           references to  "determination"  of or by the Agent or
the Banks shall be deemed to include  good-faith  estimates  by the Agent or the
Banks (in the case of quantitative determinations) and good-faith beliefs by the
Agent  or the  Banks  (in  the  case of  qualitative  determinations)  and  such
determination shall be conclusive absent manifest error;

                           1.2.3     Agent's Discretion and Consent.

                           whenever the Agent or the Banks are granted the right
herein to act in its or their sole  discretion  or to grant or withhold  consent
such right shall be exercised in good faith;

                           1.2.4     Documents Taken as a Whole.

                           the words "hereof," "herein,"  "hereunder,"  "hereto"
and similar  terms in this  Agreement or any other Loan  Document  refer to this
Agreement  or such  other  Loan  Document  as a whole and not to any  particular
provision of this Agreement or such other Loan Document;


<PAGE>

                          1.2.5     Headings.

                           the  section  and other  headings  contained  in this
Agreement  or such  other  Loan  Document  and the Table of  Contents  (if any),
preceding this Agreement or such other Loan Document are for reference  purposes
only and shall not control or affect the  construction of this Agreement or such
other Loan Document or the interpretation thereof in any respect;

                           1.2.6     Implied References to this Agreement.

                           article,  section,  subsection,  clause, schedule and
exhibit references are to this Agreement or other Loan Document, as the case may
be, unless otherwise specified;
                           1.2.7     Persons.

                           reference  to  any  Person   includes  such  Person's
successors and assigns but, if applicable,  only if such  successors and assigns
are permitted by this Agreement or such other Loan Document, as the case may be,
and reference to a Person in a particular  capacity  excludes such Person in any
other capacity;

                           1.2.8     Modifications to Documents.

                           reference to any agreement  (including this Agreement
and any other Loan Document  together with the schedules and exhibits  hereto or
thereto), document or instrument means such agreement, document or instrument as
amended, modified, replaced, substituted for, superseded or restated;

                           1.2.9     From, To and Through.

                           relative to the  determination of any period of time,
"from" means "from and including,"  "to" means "to but excluding," and "through"
means "through and including"; and
                           1.2.10    Shall; Will.

                           references to "shall" and "will" are intended to have
the same meaning.

                  1.3       Accounting Principles.

                  Except  as   otherwise   provided  in  this   Agreement,   all
computations and  determinations  as to accounting or financial  matters and all
financial  statements to be delivered  pursuant to this Agreement  shall be made
and prepared in accordance  with GAAP  (including  principles  of  consolidation
where  appropriate),  and all  accounting  or  financial  terms  shall  have the
meanings ascribed to such terms by GAAP; provided,  however, that all accounting
terms used in Section 8.2 (and all defined  terms used in the  definition of any
accounting  term used in Section 8.2 shall have the meaning  given to such terms
(and  defined  terms)  under GAAP as in effect on the date  hereof  applied on a

<PAGE>

basis consistent with those used in preparing the Annual Statements  referred to
in Section  6.1.9(i).  In the event of any change after the date hereof in GAAP,
and if such change would result in the  inability to determine  compliance  with
the  financial  covenants  set forth in Section  8.2 based  upon the  Borrowers'
regularly  prepared  financial  statements by reason of the preceding  sentence,
then the parties  hereto  agree to  endeavor,  in good  faith,  to agree upon an
amendment  to this  Agreement  that would adjust such  financial  covenants in a
manner that would not affect the substance  thereof,  but would allow compliance
therewith  to  be  determined  in  accordance  with  the  Borrowers'   financial
statements at that time.


                          2. REVOLVING CREDIT FACILITY

                  2.1       Commitments.

                           2.1.1 Commitment. Subject to the terms and conditions
hereof and relying upon the  representations  and  warranties  herein set forth,
each Bank  severally  agrees to make Loans to the  Borrowers at any time or from
time to time on or after the date hereof to the  Expiration  Date  provided that
after giving  effect to such Loan the  aggregate  amount of Loans from such Bank
shall not  exceed  (x) the  lesser of (i) such  Bank's  Commitment  or (ii) such
Bank's  Ratable Share of the Borrowing  Base minus (y) such Bank's Ratable Share
of the Letters of Credit Outstanding.  Within such limits of time and amount and
subject to the other  provisions  of this  Agreement,  the Borrowers may borrow,
repay and reborrow pursuant to this Section 2.1. Notwithstanding anything to the
contrary herein,  the Banks may, in their sole discretion at any time hereafter,
decrease the ratio of their advances against  Qualified  Inventory and Qualified
Accounts,  or increase  the level of any  reserves,  or create or maintain  such
other reserves, as the Banks may deem necessary or appropriate.  Any such change
shall become  effective  immediately for the purpose of calculating new advances
hereunder.

                           2.1.2   Voluntary   Reduction  of   Commitment.   The
Borrowers  shall  have the right at any time and from time to time upon five (5)
Business  Days' prior written notice to the Agent to  permanently  reduce,  in a
minimum  amount of $1,000,000 and whole  multiples of $100,000 of principal,  or
terminate the  Commitment,  without penalty or premium except as hereinafter set
forth,  provided that any such reduction or termination  shall be accompanied by
prepayment of the Notes,  together  with the full amount of interest  accrued on
the  principal  sum to be prepaid (and all amounts  referred to in Section 5.6.2
hereof),  to the extent  that the  aggregate  amount  thereof  then  outstanding
exceeds the Commitment as so reduced or terminated.

                  2.2       Nature of Banks' Obligations with Respect to Loans.

                  Each Bank shall be  obligated to  participate  in each request
for Loans  pursuant to Section 2.4 in  accordance  with its Ratable  Share.  The
aggregate of each Bank's  Loans  outstanding  hereunder to the  Borrowers at any
time shall never exceed its Commitment  minus its Ratable Share of the Letter of
Credit  Outstandings.  The  obligations of each Bank hereunder are several.  The
failure of any Bank to perform its  obligations  hereunder  shall not affect the

<PAGE>

Obligations  of the  Borrowers  to any other  party nor shall any other party be
liable for the failure of such Bank to perform its  obligations  hereunder.  The
Banks  shall  have no  obligation  to  make  Loans  hereunder  on or  after  the
Expiration Date.

                  2.3       Commitment Fee.

                  Accruing from the date hereof until the  Expiration  Date, the
Borrowers  agree  to  pay to  the  Agent  for  the  account  of  each  Bank,  as
consideration for such Bank's Commitment hereunder,  a nonrefundable  commitment
fee (the  "Commitment  Fee") computed using the rate per annum (the  "Commitment
Fee  Applicable  Margin")  set forth below  measured in respect of the  Leverage
Ratio as of the end of each fiscal quarter:

                  (a) if the Leverage Ratio is less than or equal to 2.0 to 1.0,
then the Commitment Fee Applicable Margin shall be .25%; and

                  (b) if the Leverage  Ratio is greater than 2.0 to 1.0 but less
than or equal to 3.0 to 1.0, then the Commitment Fee Applicable  Margin shall be
 .30%; and

                           (c) if the Leverage Ratio is greater than 3.0 to 1.0,
then the Commitment Fee Applicable Margin shall be .35%.
The  Commitment Fee shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual  days  elapsed on the  average  daily  difference
between the amount of such Bank's Commitment as the same may be constituted from
time to time and the Revolving Facility Usage. Any changes in the Commitment Fee
pursuant to the  provisions of this Section 2.3 shall become  effective from the
fifth day after the Agent shall have received the Certificate delivered pursuant
to Section 8.3.4 in respect of such fiscal quarter; provided, that, in the event
that the Certificate  delivered pursuant to Section 8.3.4 for any fiscal quarter
is not  delivered  within ten (10) days of the date  required by Section 8.3 (no
waiver by the Agent being implied  thereby),  then the  Commitment  Fee shall be
calculated on the basis of the percentage set forth in item (c) above commencing
as of the date such  certificate was required to be delivered until the delivery
of such  certificate.  All  Commitment  Fees  shall be payable in arrears on the
first  Business  Day of each  January,  April,  July and October  after the date
hereof  and  on  the  Expiration  Date  or  upon   acceleration  of  the  Notes.
Notwithstanding  anything herein to the contrary,  the Commitment Fee Applicable
Margin prior to the delivery of the audited  year-end  financial  statements for
fiscal year 1996 shall be .30%.

                  2.4       Underwriting Fees.

                  The Borrowers shall pay the  underwriting  fees as provided in
the Agent's Letter as and when provided for therein.


<PAGE>

                  2.5       Loan Requests.

                  Except as otherwise  provided  herein,  the Borrowers may from
time to time prior to the  Expiration  Date request the Banks to make Loans,  or
renew or convert the Interest Rate Option  applicable to existing Loans pursuant
to  Section  4.2,  by  delivering  to the  Agent,  not later  than  12:00  noon,
Philadelphia  time, (i) three (3) Business Days prior to the proposed  Borrowing
Date with  respect to the making of Loans to which the LIBO Rate Option  applies
or the  conversion  to or the renewal of the LIBO Rate Option for any Loans;  or
(ii) on the  proposed  Borrowing  Date with  respect  to the making of a Loan to
which the Base Rate  Option  applies or the last day of the  preceding  Interest
Period with respect to the conversion to the Base Rate Option for any Loan, of a
duly completed  request  therefor  substantially in the form of Exhibit 2.5 or a
request by telephone  immediately  confirmed in writing by letter,  facsimile or
telex in such form (each, a "Loan Request"),  it being understood that the Agent
may rely on the  authority of any  individual  making such a telephonic  request
without the necessity of receipt of such written confirmation. Each Loan Request
shall be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the
aggregate amount of the proposed Loans comprising each Borrowing Tranche,  which
shall be in integral multiples of $100,000 and not less than $2,000,000 for each
Borrowing  Tranche to which the LIBO Rate  Option  applies and not less than the
lesser of $300,000 (as to any  individual  loan  request) or the maximum  amount
available for Borrowing  Tranches to which the Base Rate Option  applies;  (iii)
whether  the LIBO Rate Option or Base Rate  Option  shall apply to the  proposed
Loans  comprising the applicable  Borrowing  Tranche;  and (iv) in the case of a
Borrowing Tranche to which the LIBO Rate Option applies, an appropriate Interest
Period for the proposed Loans comprising such Borrowing Tranche.

                  2.6       Making Loans.

                  The  Agent  shall,  promptly  after  receipt  by it of a  Loan
Request  pursuant to Section  2.4,  notify the Banks of its receipt of such Loan
Request  specifying:  (i) the proposed Borrowing Date and the time and method of
disbursement  of the Loans requested  thereby;  (ii) the amount and type of each
such  Loan  and  the  applicable   Interest  Period  (if  any);  and  (iii)  the
apportionment  among  the  Banks of such  Loans as  determined  by the  Agent in
accordance with Section 2.3. Each Bank shall remit the principal  amount of each
Loan to the Agent  such that the Agent is able to, and the Agent  shall,  to the
extent the Banks have made funds available to it for such purpose and subject to
Section 7.2,  fund such Loans to the Borrowers in U.S.  Dollars and  immediately
available funds at the Principal Office prior to 2:00 p.m.,  Philadelphia  time,
on the applicable  Borrowing Date, provided that if any Bank fails to remit such
funds  to the  Agent  in a  timely  manner,  the  Agent  may  elect  in its sole
discretion  to fund with its own funds the Loans of such Bank on such  Borrowing
Date,  and such Bank  shall be subject to the  repayment  obligation  in Section
10.15.


                  2.7       Notes.

                  The Obligation of the Borrowers to repay the aggregate  unpaid
principal  amount of the Loans made to it by each Bank,  together  with interest
thereon,  shall be evidenced  by a Revolving  Credit Note dated the Closing Date
payable to the order of such Bank in a face amount  equal to the  Commitment  of
such Bank.


<PAGE>

                  2.8       Use of Proceeds.

                  The proceeds of the Loans shall be used to refinance  existing
indebtedness  owing to  Existing  Lenders,  to finance  the  purchase of the VGC
Assets and for  general  corporate  purposes,  all in  accordance  with  Section
8.1.10.

                  2.9       Letter of Credit Subfacility.

                           2.9.1     Issuance of Letters of Credit.

                           Borrower  may  request  the  issuance  of a letter of
credit  (each a "Letter of Credit") on behalf of itself or another Loan Party by
delivering  to the Agent a completed  application  and  agreement for letters of
credit in such form as the Agent may specify  from time to time by no later than
10:00 a.m., Philadelphia time, at least three (3) Business Days, or such shorter
period as may be agreed to by the  Agent,  in advance  of the  proposed  date of
issuance.  Each Letter of Credit shall be either a Standby Letter of Credit or a
Commercial  Letter of Credit.  Subject to the terms and conditions hereof and in
reliance on the agreements of the other Banks set forth in this Section 2.9, the
Agent will issue a Letter of Credit  provided  that each Letter of Credit  shall
(A) have a maximum maturity of twelve (12) months from the date of issuance, and
(B) in no event expire later than one Business Day prior to the Expiration  Date
and  providing  that in no event  shall (i) the  Letters  of Credit  Outstanding
exceed, at any one time, $1,000,000 or (ii) the Revolving Facility Usage exceed,
at any one time, the Commitments.
                           2.9.2     Letter of Credit Fees.

                           The  Borrowers  shall  pay (i) to the  Agent  for the
ratable  account of the Banks a fee (the  "Letter of Credit  Fee")  equal to the
Applicable  Margin,  and (ii) to the Agent for its own  account a  fronting  fee
equal to 1/8% per  annum,  which  fees shall be  computed  on the daily  average
Letters  of  Credit  Outstanding  and  shall be  payable  quarterly  in  arrears
commencing with the first Business Day of each January,  April, July and October
following  issuance of each  Letter of Credit and on the  Expiration  Date.  The
Borrowers  shall also pay to the Agent for the Agent's  sole account the Agent's
then in effect customary fees and  administrative  expenses payable with respect
to the Letters of Credit as the Agent may generally charge or incur from time to
time in  connection  with the  issuance,  maintenance,  modification  (if  any),
assignment or transfer (if any),  negotiation,  and administration of Letters of
Credit.

                           2.9.3     Disbursements, Reimbursement.

                           2.9.3.1  Immediately upon the Issuance of each Letter
of  Credit,   each  Bank  shall  be  deemed  to,  and  hereby   irrevocably  and
unconditionally  agrees  to,  purchase  from the Agent a  participation  in such
Letter of Credit and each drawing  thereunder  in an amount equal to such Bank's
Ratable Share of the maximum  amount  available to be drawn under such Letter of
Credit and the amount of such drawing, respectively.


<PAGE>

                           2.9.3.2  In the  event of any  request  for a drawing
under a Letter of Credit by the  beneficiary  or transferee  thereof,  the Agent
will promptly  notify the  Borrowers.  Provided that it shall have received such
notice,  the Borrowers shall  reimburse (such  obligation to reimburse the Agent
shall sometimes be referred to as a "Reimbursement  Obligation") the Agent prior
to 12:00  noon,  Philadelphia  time on each  date  that an amount is paid by the
Agent  under any  Letter of Credit  (each such date,  an  "Drawing  Date") in an
amount equal to the amount so paid by the Agent. In the event the Borrowers fail
to  reimburse  the Agent for the full amount of any drawing  under any Letter of
Credit by 11:00 a.m.,  Philadelphia  time, on the Drawing  Date,  the Agent will
promptly  notify each Bank thereof,  and the  Borrowers  shall be deemed to have
requested  that  Loans be made by the Banks  under  the Base  Rate  Option to be
disbursed on the Drawing Date under such Letter of Credit, subject to the amount
of the  unutilized  portion of the  Commitment and subject to the conditions set
forth in Section 7.2 other than any notice requirements. Any notice given by the
Agent pursuant to this Section  2.9.3.2 may be oral if immediately  confirmed in
writing;  provided  that the lack of such an  immediate  confirmation  shall not
affect the conclusiveness or binding effect of such notice.
                                   
                           2.9.3.3  Each Bank shall upon any notice  pursuant to
Section  2.9.3.2 make available to the Agent an amount in immediately  available
funds equal to its Ratable  Share of the amount of the  drawing,  whereupon  the
participating  Banks shall  (subject to Section  2.9.3.4) each be deemed to have
made a Loan under the Base Rate Option to the  Borrowers in that amount.  If any
Bank so  notified  fails to make  available  to the Agent for the account of the
Agent the amount of such  Bank's  Ratable  Share of such amount by no later than
2:00 p.m.,  Philadelphia time on the Drawing Date, then interest shall accrue on
such Bank's  obligation to make such payment,  from the Drawing Date to the date
on which such Bank makes such payment,  at a rate per annum equal to the Federal
Funds  Effective Rate in effect from time to time during such period.  The Agent
will promptly give notice of the  occurrence of the Drawing Date, but failure of
the Agent to give any such notice on the Drawing Date or in  sufficient  time to
enable any Bank to effect such  payment on such date shall not relieve such Bank
from its obligation under this Section 2.9.3.3.

                           2.9.3.4 With respect to any unreimbursed drawing that
is not converted into Loans under the Base Rate Option to the Borrowers in whole
or in part as contemplated by Section 2.9.3.2, because of the Borrowers' failure
to  satisfy  the  conditions  set forth in  Section  7.2 other  than any  notice
requirements  or for any other  reason,  the  Borrowers  shall be deemed to have
incurred  from the  Agent a Letter  of Credit  Borrowing  in the  amount of such
drawing.  Such  Letter of Credit  Borrowing  shall be due and  payable on demand
(together  with  interest)  and  shall  bear  interest  at the  rate  per  annum
applicable to the Loans under the Base Rate Option.  Each Bank's  payment to the
Agent pursuant to Section  2.9.3.3 shall be deemed to be a payment in respect of
its  participation  in such Letter of Credit  Borrowing  and shall  constitute a
Participation  Advance  from  such  Bank in  satisfaction  of its  participation
obligation under this Section 2.9.3.


<PAGE>

                           2.9.4     Repayment of Participation Advances.

                           2.9.4.1 Upon (and only upon) receipt by the Agent for
its  account  of  immediately   available   funds  from  the  Borrowers  (i)  in
reimbursement  of any payment  made by the Agent under the Letter of Credit with
respect to which any Bank has made a Participation Advance to the Agent, or (ii)
in payment of interest  on such a payment  made by the Agent under such a Letter
of Credit,  the Agent will pay to each Bank, in the same funds as those received
by the Agent, the amount of such Bank's Ratable Share of such funds,  except the
Agent  shall  retain the amount of the  Ratable  Share of such funds of any Bank
that did not make a Participation Advance in respect of such payment by Agent.

                           2.9.4.2  If the  Agent  is  required  at any  time to
return to any Loan Party, or to a trustee, receiver,  liquidator,  custodian, or
any official in any Insolvency  Proceeding,  any portion of the payments made by
any Loan Party to the Agent pursuant to Section  2.9.4.1 in  reimbursement  of a
payment  made under the Letter of Credit or interest or fee  thereon,  each Bank
shall, on demand of the Agent,  forthwith  return to the Agent the amount of its
Ratable Share of any amounts so returned by the Agent plus interest thereon from
the date such demand is made to the date such  amounts are returned by such Bank
to the Agent,  at a rate per annum equal to the Federal Funds  Effective Rate in
effect from time to time.
                           2.9.5     Documentation.

                           Each  Loan  Party  agrees to be bound by the terms of
the  Agent's  application  and  agreement  for letters of credit and the Agent's
written  regulations  and  customary  practices  relating  to letters of credit,
though such  interpretation  may be different from the such Loan Party's own. In
the  event  of a  conflict  between  such  application  or  agreement  and  this
Agreement, this Agreement shall govern. It is understood and agreed that, except
in the case of gross  negligence or willful  misconduct,  the Agent shall not be
liable  for any error,  negligence  and/or  mistakes,  whether  of  omission  or
commission, in following any Loan Party's instructions or those contained in the
Letters of Credit or any modifications, amendments or supplements thereto.

                           2.9.6     Determinations to Honor Drawing Requests.

                           In  determining  whether  to honor  any  request  for
drawing under any Letter of Credit by the beneficiary  thereof,  the Agent shall
be responsible only to determine that the documents and certificates required to
be  delivered  under such  Letter of Credit  have been  delivered  and that they
comply on their face with the requirements of such Letter of Credit.

                           2.9.7  Nature  of  Participation   and  Reimbursement
Obligations.
                           Each  Bank's   obligation  in  accordance  with  this
Agreement  to make the  Loans or  Participation  Advances,  as  contemplated  by
Section  2.9.3,  as a result of a  drawing  under a Letter  of  Credit,  and the
Obligations  of the  Borrowers to reimburse the Agent upon a draw under a Letter
of  Credit,  shall be  absolute,  unconditional  and  irrevocable,  and shall be
performed  strictly in  accordance  with the terms of this Section 2.9 under all
circumstances, including the following circumstances:


<PAGE>

                           (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have  against the Agent,  the  Borrowers  or any
other Person for any reason whatsoever;

                           (ii)  the  failure  of any Loan  Party  or any  other
Person to comply,  in  connection  with a Letter of Credit  Borrowing,  with the
conditions  set forth in Section 2.1,  2.4, 2.6 or 7.2 or as otherwise set forth
in this  Agreement  for the making of a Loan,  it being  acknowledged  that such
conditions  are not required for the making of a Letter of Credit  Borrowing and
the obligation of the Banks to make Participation Advances under Section 2.9.3;
                                        
                           (iii) any lack of validity or  enforceability  of any
Letter of Credit;
                           (iv) the existence of any claim, set-off,  defense or
other  right  which  any Loan  Party or any Bank may have at any time  against a
beneficiary  or any  transferee of any Letter of Credit (or any Persons for whom
any such  transferee  may be acting),  the Agent or any Bank or any other Person
or, whether in connection with this  Agreement,  the  transactions  contemplated
herein  or any  unrelated  transaction  (including  any  underlying  transaction
between any Loan Party or  Subsidiaries  of a Loan Party and the beneficiary for
which any Letter of Credit was procured);

                           (v) any draft, demand,  certificate or other document
presented under any Letter of Credit proving to be forged,  fraudulent,  invalid
or  insufficient  in any  respect  or any  statement  therein  being  untrue  or
inaccurate in any respect even if the Agent has been notified thereof;

                           (vi)  payment by the Agent under any Letter of Credit
against  presentation of a demand,  draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
                           (vii) any adverse change in the business, operations,
properties,  assets, condition (financial or otherwise) or prospects of any Loan
Party or Subsidiaries of a Loan Party;
                           (viii) any breach of this Agreement or any other Loan
Document by any party thereto;
                           (ix) the  occurrence or  continuance of an Insolvency
Proceeding with respect to any Loan Party;
                           (x) the fact that an Event of Default or a  Potential
Default shall have occurred and be continuing;


<PAGE>

                           (xi) the fact that the  Expiration  Date  shall  have
passed  or  this  Agreement  or  the  Commitments   hereunder  shall  have  been
terminated; and
                           (xii) any other circumstance or happening whatsoever,
whether  or not  similar  to any of the  foregoing;  provided  that each  Bank's
obligation to make Loans under Section  2.9.3.3 is subject to the conditions set
forth in Section 7.2.

                           2.9.8     Indemnity.

                           In addition to amounts payable as provided in Section
10.5, the Borrowers  hereby agree to protect,  indemnify,  pay and save harmless
the Agent from and against any and all claims,  demands,  liabilities,  damages,
losses,  costs,  charges and expenses  (including  reasonable fees, expenses and
disbursements  of counsel and  allocated  costs of internal  counsel)  which the
Agent may incur or be subject to as a  consequence,  direct or indirect,  of (i)
the  issuance  of any Letter of Credit,  other than as a result of (A) the gross
negligence or willful  misconduct of the Agent as determined by a final judgment
of a court of  competent  jurisdiction  or (B) subject to the  following  clause
(ii),  the  wrongful  dishonor by the Agent of a proper  demand for payment made
under any Letter of Credit,  or (ii) the failure of the Agent to honor a drawing
under any such  Letter of  Credit  as a result of any act or  omission,  whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental  authority (all such acts or omissions herein called  "Governmental
Acts").
                           2.9.9     Liability for Acts and Omissions.

                           As between  any Loan  Party and the Agent,  such Loan
Party  assumes all risks of the acts and  omissions of, or misuse of the Letters
of Credit by,  the  respective  beneficiaries  of such  Letters  of  Credit.  In
furtherance  and not in  limitation  of the  foregoing,  the Agent  shall not be
responsible for: (i) the form, validity,  sufficiency,  accuracy, genuineness or
legal  effect of any  document  submitted  by any party in  connection  with the
application  for an issuance of any such Letter of Credit,  even if it should in
fact  prove  to be in any or all  respects  invalid,  insufficient,  inaccurate,
fraudulent or forged (even if the Agent shall have been notified thereof);  (ii)
the  validity or  sufficiency  of any  instrument  transferring  or assigning or
purporting  to  transfer  or assign  any such  Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective  for any reason;  (iii) the failure of the beneficiary
of any such Letter of Credit,  or any other party to which such Letter of Credit
may be  transferred,  to comply fully with any  conditions  required in order to
draw upon such Letter of Credit or any other claim of any Loan Party against any
beneficiary  of such Letter of Credit,  or any such  transferee,  or any dispute
between or among any Loan Party and any  beneficiary  of any Letter of Credit or
any  such  transferee;  (iv)  errors,  omissions,  interruptions  or  delays  in
transmission or delivery of any messages,  by mail, cable,  telegraph,  telex or
otherwise,  whether or not they be in cipher;  (v) errors in  interpretation  of
technical terms;  (vi) any loss or delay in the transmission or otherwise of any
document  required in order to make a drawing under any such Letter of Credit or

<PAGE>

of the proceeds thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit;  or
(viii) any  consequences  arising  from causes  beyond the control of the Agent,
including any  Governmental  Acts, and none of the above shall affect or impair,
or prevent the vesting of, any of the Agent's rights or powers hereunder.

                           In furtherance and extension and not in limitation of
the  specific  provisions  set forth  above,  any action taken or omitted by the
Agent  under or in  connection  with the  Letters of Credit  issued by it or any
documents and  certificates  delivered  thereunder,  if taken or omitted in good
faith, shall not put the Agent under any resulting liability to the Borrowers or
any Bank.


                                  3. [RESERVED]


                                4. INTEREST RATES

                  4.1       Interest Rate Options.

                  The Borrowers shall pay interest in respect of the outstanding
unpaid  principal  amount  of the  Loans as  selected  by it from the Base  Rate
Option,  or LIBO Rate Option set forth below  applicable to the Loans,  it being
understood that, subject to the provisions of this Agreement,  the Borrowers may
select different  Interest Rate Options and different  Interest Periods to apply
simultaneously  to the Loans  comprising  different  Borrowing  Tranches and may
convert to or renew one or more Interest Rate Options with respect to all or any
portion of the Loans comprising any Borrowing Tranche, provided that there shall
not be at any one time outstanding more than five (5) Borrowing  Tranches in the
aggregate  among all of the Loans. If at any time the designated rate applicable
to any Loan made by any Bank exceeds such Bank's  highest  lawful rate, the rate
of interest on such Bank's Loan shall be limited to such Bank's  highest  lawful
rate.

                           4.1.1     Revolving Credit Interest Rate Options.

                           The Borrowers shall have the right to select from the
following Interest Rate Options applicable to the Loans:

                           (i) Base Rate Option:  A  fluctuating  rate per annum
(computed  on the  basis of a year of 365 or 366 days,  as the case may be,  and
actual  days  elapsed)  equal to the Base  Rate,  such  interest  rate to change
automatically  from  time to time  effective  as of the  effective  date of each
change in the Base Rate;
                           (ii)  Revolving  Credit LIBO Rate Option:  A rate per
annum  (computed  on the basis of a year of 360 days and  actual  days  elapsed)
equal  to the LIBO  Rate  plus the rate  per  annum  (the  "Applicable  Margin")
described  below measured in respect of the Leverage Ratio as of the end of each
fiscal quarter:
<PAGE>

                           (a) if the  Leverage  Ratio is less  than or equal to
2.0 to 1.0, then the Applicable Margin shall be .75%; and
                           
                           (b) if the Leverage  Ratio is greater than 2.0 to 1.0
but less than or equal to 3.0 to 1.0, then the Applicable Margin shall be 1.00%;
and
                           (c) if the Leverage Ratio is greater than 3.0 to 1.0,
then the Applicable Margin shall be 1.25%.
                                       
                           (iii) Any changes in the Applicable  Margin  pursuant
to the  provisions of this Section  4.1(a)(ii)  shall become  effective from the
fifth day after the Agent shall have received the Certificate delivered pursuant
to Section 8.3.4 in respect of such fiscal quarter; provided, that, in the event
that the Certificate  delivered pursuant to Section 8.3.4 for any fiscal quarter
is not timely  delivered,  then the  Applicable  Margin  shall be the amount set
forth in item (c) above  commencing as of the date such certificate was required
to be delivered until the delivery of such certificate. Notwithstanding anything
herein to the  contrary,  any LIBO Rate Loan made  before the end of the quarter
following the delivery of the audited year-end  financial  statements for fiscal
year 1996 shall have an Applicable Margin of 1.0%.
                           4.1.2     RESERVED.

                           4.1.3     Rate Quotations.

                           The  Borrowers  may call the Agent on or  before  the
date on which a Loan Request is to be delivered to receive an  indication of the
rates then in effect,  but it is acknowledged  that such projection shall not be
binding  on the  Agent  or the  Banks  nor  affect  the rate of  interest  which
thereafter is actually in effect when the election is made.

                  4.2       Interest Periods.

                  At any time when the  Borrowers  shall  select,  convert to or
renew a LIBO Rate Option,  the Borrowers shall notify the Agent thereof at least
three (3) Business Days prior to the effective  date of such LIBO Rate Option by
delivering  a Loan  Request.  The notice shall  specify an interest  period (the
"Interest  Period")  during which such  Interest  Rate Option shall apply,  such
Interest  Period to be (i) one Month if  Borrower  selects  the LIBO Rate Option
during the  Syndications  Period and (ii) one,  two,  three or six Months in the
event Borrower  selects the LIBO Rate Option after the  Syndications  Period has
ended.  Notwithstanding the preceding sentence,  the following  provisions shall
apply to any selection of, renewal of, or conversion to LIBO Rate Option:

                           4.2.1     Ending Date and Business Day.

                           any Interest  Period which would  otherwise  end on a
date  which is not a  Business  Day  shall be  extended  to the next  succeeding
Business Day unless such Business Day falls in the next calendar month, in which
case such Interest Period shall end on the next preceding Business Day;


<PAGE>

                           4.2.2     Amount of Borrowing Tranche.

                           each Borrowing Tranche of LIBO Rate Loans shall be in
integral multiples of $100,000 and not less than $2,000,000;
                           
                           4.2.3     Termination Before Expiration Date.

                           the Borrowers  shall not select,  convert to or renew
an  Interest  Period  for any  portion  of the  Loans  that  would end after the
Expiration Date; and

                           4.2.4     Renewals.

                           in the case of the renewal of LIBO Rate Option at the
end of an Interest Period, the first day of the new Interest Period shall be the
last day of the preceding  Interest  Period,  without  duplication in payment of
interest for such day.
                  4.3       Interest After Default.

                  To the extent  permitted  by Law,  upon the  occurrence  of an
Event of Default and until such time such Event of Default shall have been cured
or waived:

                           4.3.1     Letter of Credit Fees, Interest Rate.

                           the  Letter of Credit  Fees and the rate of  interest
for each Loan  otherwise  applicable  pursuant to Section  2.9.2 or Section 4.1,
respectively, shall be increased by 2.0% per annum; and

                           4.3.2     Other Obligations.

                           each other Obligation  hereunder if not paid when due
shall bear interest at a rate per annum equal to the sum of the rate of interest
applicable  under the Base Rate Option plus an  additional  2.0 % per annum from
the time such Obligation becomes due and payable and until it is paid in full.

                           4.3.3     Acknowledgment.

                           The Borrowers  acknowledge that the increase in rates
referred to in this Section 4.3 reflects, among other things, the fact that such
Loans or other  amounts  have become a  substantially  greater  risk given their
default  status and that the Banks are entitled to additional  compensation  for
such risk;  and all such interest  shall be payable by Borrowers  upon demand by
Agent.

<PAGE>

                           4.4 LIBO Rate Unascertainable;  Illegality; Increased
Costs; Deposits Not Available
                           4.4.1     Unascertainable.

                           If on any date on which a LIBO Rate  would  otherwise
be determined, the Agent shall have determined that:

                           (i)  adequate and  reasonable  means do not exist for
ascertaining such LIBO Rate, or

                           (ii) a contingency has occurred which  materially and
adversely  affects the secondary  market for negotiable  certificates of deposit
maintained by dealers of recognized  standing  relating to the London  interbank
eurodollar  market  relating  to the LIBO Rate,  the Agent shall have the rights
specified in Section 4.4.3.

                           4.4.2  Illegality;   Increased  Costs;  Deposits  Not
Available.
                           If at any time any Bank shall have determined that:

                           (i) the making, maintenance or funding of any Loan to
which a LIBO Rate  Option  applies  has been made  impracticable  or unlawful by
compliance  by such Bank in good  faith  with any Law or any  interpretation  or
application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law), or

                           (ii) such LIBO Rate  Option will not  adequately  and
fairly reflect the cost to such Bank of the  establishment or maintenance of any
such Loan, or

                           (iii) after making all reasonable  efforts,  deposits
of the relevant amount in Dollars for the relevant Interest Period for a Loan to
which a LIBO Rate Option applies,  respectively,  are not available to such Bank
at the effective cost of funding a proposed in the London interbank market,
then the Agent shall have the rights specified in Section 4.4.3.

                           4.4.3     Agent's and Bank's Rights.

                           In the case of any event  specified in Section  4.4.1
above,  the Agent shall promptly so notify the Banks and the Borrowers  thereof,
and in the case of an event  specified in Section  4.4.2 above,  such Bank shall
promptly so notify the Agent and endorse a certificate  to such notice as to the
specific  circumstances of such notice, and the Agent shall promptly send copies
of such notice and  certificate to the other Banks and the Borrowers.  Upon such
date as shall be specified  in such notice  (which shall not be earlier than the
date such notice is given), the obligation of (A) the Banks, in the case of such
notice given by the Agent, or (B) such Bank, in the case of such notice given by

<PAGE>

such Bank,  to allow the  Borrowers  to select,  convert to or renew a LIBO Rate
Option  shall be  suspended  until the  Agent  shall  have  later  notified  the
Borrowers,  or such Bank shall have later notified the Agent,  of the Agent's or
such Bank's, as the case may be,  determination  that the  circumstances  giving
rise to such previous  determination  no longer exist.  If at any time the Agent
makes a  determination  under Section 4.4.1 and the  Borrowers  have  previously
notified the Agent of its selection of,  conversion to or renewal of a LIBO Rate
Option  and such  Interest  Rate  Option  has not yet  gone  into  effect,  such
notification  shall be deemed to provide  for  selection  of,  conversion  to or
renewal of the Base Rate Option otherwise  available with respect to such Loans.
If any Bank  notifies the Agent of a  determination  under  Section  4.4.2,  the
Borrowers shall,  subject to the Borrowers'  indemnification  Obligations  under
Section 5.6.2,  as to any Loan of the Bank to which a LIBO Rate Option  applies,
on the date  specified in such notice either  convert such Loan to the Base Rate
Option  otherwise  available  with  respect to such Loan or prepay  such Loan in
accordance  with Section 5.4. Absent due notice from the Borrowers of conversion
or  prepayment,  such Loan shall  automatically  be  converted  to the Base Rate
Option otherwise available with respect to such Loan upon such specified date.

                  4.5       Selection of Interest Rate Options.

                  If the Borrowers fail to select a new Interest Period to apply
to any Borrowing  Tranche of Loans under the LIBO Rate Option at the  expiration
of  an  existing  Interest  Period  applicable  to  such  Borrowing  Tranche  in
accordance  with the provisions of Section 4.2, the Borrowers shall be deemed to
have converted such Borrowing  Tranche to the Base Rate Option  commencing  upon
the last day of the existing Interest Period.


                                   5. PAYMENTS

                  5.1       Payments.

                  All  payments  and  prepayments  to  be  made  in  respect  of
principal,  interest,  Commitment Fees,  Facility Fees, Letter of Credit Fees or
other fees or amounts due from the Borrowers hereunder shall be payable prior to
12:00 noon, Philadelphia time, on the date when due without presentment, demand,
protest or notice of any kind, all of which are hereby  expressly  waived by the
Borrowers,  and without set-off,  counterclaim or other deduction of any nature,
and an action therefor shall immediately  accrue. Such payments shall be made to
the Agent at the  Principal  Office for the  ratable  accounts of the Banks with
respect to the Loans in U.S. Dollars and in immediately available funds, and the
Agent  shall  promptly  distribute  such  amounts  to the  Banks in  immediately
available funds, provided that in the event payments are received by 12:00 noon,
Philadelphia  time, by the Agent with respect to the Loans and such payments are
not  distributed  to the Banks on the same day received by the Agent,  the Agent
shall pay the Banks the Federal Funds  Effective Rate with respect to the amount
of such  payments  for each day held by the  Agent  and not  distributed  to the
Banks.  The  Agent's  and each  Bank's  statement  of  account,  ledger or other
relevant  record shall,  in the absence of manifest  error, be conclusive as the
statement  of the amount of  principal  of and  interest  on the Loans and other
amounts owing under this Agreement and shall be deemed an "account stated."


<PAGE>

                  5.2       Pro Rata Treatment of Banks.

                  Each  borrowing  shall be allocated to each Bank  according to
its  Ratable  Share,  and each  selection  of,  conversion  to or renewal of any
Interest  Rate  Option and each  payment or  prepayment  by the  Borrowers  with
respect to principal, interest, Commitment Fees, Facility Fees, Letter of Credit
Fees,  or other fees or amounts due from the  Borrowers  hereunder  to the Banks
with  respect to the Loans,  shall  (except as provided in Section  4.4.3 in the
case  of  an  event  specified  in  Section  4.4  [LIBO  Rate   Unascertainable;
Illegality;   Increased   Costs;   Deposits  Not   Available],   5.4  [Voluntary
Prepayments] or 5.6 [Additional  Compensation in Certain Circumstances]) be made
in proportion to the applicable Loans outstanding from each Bank and, if no such
Loans are then outstanding, in proportion to the Ratable Share of each Bank.

                  5.3       Interest Payment Dates.

                  Interest on Loans to which the Base Rate Option  applies shall
be due and payable in arrears on the first Business Day of each January,  April,
July and  October  after  the date  hereof  and on the  Expiration  Date or upon
acceleration  of the  Notes.  Interest  on Loans to which the LIBO  Rate  Option
applies  shall be due and  payable on the last day of each  Interest  Period for
those Loans and, if such Interest  Period is longer than three (3) Months,  also
on the 90th day of such Interest  Period.  Interest on mandatory  prepayments of
principal  under Section 5.5 shall be due on the date such mandatory  prepayment
is due.  Interest  on the  principal  amount  of each  Loan  or  other  monetary
Obligation  shall be due and payable on demand  after such  principal  amount or
other  monetary  Obligation  becomes  due and  payable  (whether  on the  stated
maturity date, upon acceleration or otherwise).

                  5.4       Voluntary Prepayments.

                           5.4.1     Right to Prepay.

                           The Borrowers shall have the right at its option from
time to time to prepay  the Loans in whole or part  without  premium  or penalty
(except as provided in Section 5.4.2 below or in Section 5.6):

                           (i) at any time with respect to any Loan to which the
Base Rate Option applies,

                           (ii)  on the  last  day of  the  applicable  Interest
Period with respect to Loans to which a LIBO Rate Option applies,

                           (iii) on the date  specified  in a notice by any Bank
pursuant to Section 4.4 [LIBO Rate  Unascertainable] with respect to any Loan to
which a LIBO Rate Option applies.

                           Whenever the  Borrowers  desire to prepay any part of
the Loans,  it shall  provide a prepayment  notice to the Agent at least one (1)

<PAGE>

Business  Day  prior to the  date of  prepayment  of Loans to which a  Euro-Rate
Option applies and the date of prepayment of Loans to which the Base Rate Option
applies setting forth the following information:

                           (x) the date, which shall be a Business Day, on which
the proposed prepayment is to be made; and

                           (y) the total  principal  amount of such  prepayment,
which shall not be less than $250,000.

                           All  prepayment  notices  shall be  irrevocable.  The
principal amount of the Loans for which a prepayment  notice is given,  together
with interest on such principal amount except with respect to Loans to which the
Base Rate Option applies, shall be due and payable on the date specified in such
prepayment  notice as the date on which the proposed  prepayment  is to be made.
Except as provided in Section 4.4.3, if the Borrowers prepay a Loan but fails to
specify the applicable Borrowing Tranche which the Borrowers are prepaying,  the
prepayment  shall be  applied  first to Loans  to  which  the Base  Rate  Option
applies, then to Loans to which the LIBO Rate the Option applies. Any prepayment
hereunder  shall be subject to the Borrowers'  Obligation to indemnify the Banks
under Section 5.6.2.
                           5.4.2     Replacement of a Bank.

                           In the event any Bank (i) gives notice under  Section
4.4 or Section 5.6.1, (ii) does
not fund  Loans  because  the  making of such  Loans  would  contravene  any Law
applicable  to such Bank,  (iii) does not approve any action as to which consent
of the Required Banks is requested by the Borrowers and obtained  hereunder,  or
(iv) becomes  subject to the control of an Official  Body (other than normal and
customary  supervision),  then the Borrowers shall have the right at its option,
with the consent of the Agent,  which  shall not be  unreasonably  withheld,  to
prepay  the Loans of such  Bank in whole,  together  with all  interest  accrued
thereon,  and terminate such Bank's Commitment within ninety (90) days after (w)
receipt of such Bank's notice under Section 4.4 or 5.6.1, (x) the date such Bank
has failed to fund Loans because the making of such Loans would  contravene  Law
applicable  to such Bank,  (y) the date of obtaining the consent which such Bank
has not approved,  or (z) the date such Bank became subject to the control of an
Official Body, as applicable; provided that the Borrowers shall also pay to such
Bank at the time of such  prepayment any amounts  required under Section 5.6 and
any accrued interest due on such amount and any related fees; provided, however,
that  the  Commitment  of such  Bank  shall  be  provided  by one or more of the
remaining  Banks  or a  replacement  bank  acceptable  to the  Agent;  provided,
further,  the  remaining  Banks shall have no  obligation  hereunder to increase
their Commitments. Notwithstanding the foregoing, the Agent may only be replaced
subject to the  requirements  of Section  10.14 and provided that all Letters of
Credit have expired or been terminated or replaced.

                           5.4.3     Change of Lending Office.

                           Each  Bank  agrees  that upon the  occurrence  of any
event giving rise to increased  costs or other  special  payments  under Section

<PAGE>

4.4.2  [Illegality,  etc.] or 5.6.1 [Increased Costs, etc.] with respect to such
Bank, it will if requested by the Borrowers,  use reasonable efforts (subject to
overall policy  considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit  affected by such event,  provided  that such
designation  is made on such terms that such Bank and its lending  office suffer
no economic, legal or regulatory  disadvantage,  with the object of avoiding the
consequence  of the event giving rise to the operation of such Section.  Nothing
is this Section  5.4.3 shall affect or postpone  any of the  Obligations  of the
Borrowers  or any  other  Loan  Party  or the  rights  of the  Agent or any Bank
provided in this Agreement.

                  5.5       Mandatory Prepayments.

                           In the event  that the  Facility  Usage  shall at any
time exceed the Borrowing  Base for any reason,  the  Borrower,  within five (5)
Business Days after the date on which excess shall occur, shall pay to the Agent
on behalf of the Banks a  principal  payment  to be  applied  to the Loans in an
aggregate amount sufficient to eliminate such excess, together with any payments
required to be made under Section 5.6.2.

                  5.6       Additional Compensation in Certain Circumstances.

                           5.6.1  Increased  Costs or Reduced  Return  Resulting
From Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc.

                           If any Law, guideline or interpretation or any change
in any Law,  guideline or interpretation or application  thereof by any Official
Body charged with the  interpretation  or  administration  thereof or compliance
with any  request or  directive  (whether or not having the force of Law) of any
central bank or other Official Body:

                           (i) subjects any Bank to any tax or changes the basis
of taxation with respect to this Agreement,  the Notes, the Loans or payments by
the Borrowers of principal, interest, Commitment Fees, or other amounts due from
the Borrowers  hereunder or under the Notes (except for taxes on the overall net
income of such Bank),

                           (ii)  imposes,   modifies  or  deems  applicable  any
reserve,  special deposit or similar  requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with
or for the account of, or other acquisitions of funds by, any Bank, or

                           (iii)  imposes,  modifies  or  deems  applicable  any
capital   adequacy  or  similar   requirement  (A)  against  assets  (funded  or
contingent)  of, or letters of credit,  other credits or  commitments  to extend
credit extended by, any Bank, or (B) otherwise  applicable to the obligations of
any Bank under this  Agreement,  and the  result of any of the  foregoing  is to

<PAGE>

increase  the cost to,  reduce the income  receivable  by, or impose any expense
(including  loss of margin)  upon any Bank with respect to this  Agreement,  the
Notes or the making, maintenance or funding of any part of the Loans (or, in the
case of any  capital  adequacy  or  similar  requirement,  to have the effect of
reducing  the rate of return on any Bank's  capital,  taking into  consideration
such Bank's  customary  policies with respect to capital  adequacy) by an amount
which such Bank in its sole  discretion  deems to be  material,  such Bank shall
from time to time notify the Borrowers and the Agent of the amount determined in
good faith (using any averaging and attribution  methods employed in good faith)
by such Bank to be necessary to compensate  such Bank for such increase in cost,
reduction of income,  additional expense or reduced rate of return.  Such notice
shall set forth in  reasonable  detail  the basis for such  determination.  Such
amount shall be due and payable by the  Borrowers to such Bank ten (10) Business
Days after such notice is given.

                           5.6.2     Indemnity.

                           In addition to the  compensation  required by Section
5.6.1, the Borrowers shall indemnify each Bank against all  liabilities,  losses
or  expenses  (including  loss of  margin,  any  loss  or  expense  incurred  in
liquidating  or employing  deposits  from third  parties and any loss or expense
incurred in connection  with funds  acquired by a Bank to fund or maintain Loans
subject  to a LIBO  Rate  Option)  which  such  Bank  sustains  or  incurs  as a
consequence of any
                           (i) payment, prepayment, conversion or renewal of any
Loan to which a LIBO Rate Option applies on a day other than the last day of the
corresponding  Interest  Period  (whether or not such payment or  prepayment  is
mandatory,  voluntary or automatic and whether or not such payment or prepayment
is then due),

                           (ii) attempt by the  Borrowers to revoke  (expressly,
by later  inconsistent  notices or otherwise) in whole or part any Loan Requests
under Section 2.4 or Section 4.2 or notice relating to prepayments under Section
5.4, or
                           (iii) default by the Borrowers in the  performance or
observance of any covenant or condition contained in this Agreement or any other
Loan  Document,  including  any  failure  of the  Borrowers  to pay when due (by
acceleration or otherwise) any principal,  interest, Commitment Fee or any other
amount due hereunder.

                  If any Bank  sustains or incurs any such loss or  expense,  it
shall from time to time notify the  Borrowers of the amount  determined  in good
faith  by  such  Bank  (which   determination   may  include  such  assumptions,
allocations of costs and expenses and averaging or  attribution  methods as such
Bank shall deem reasonable) to be necessary to indemnify such Bank for such loss
or expense.  Such notice shall set forth in reasonable detail the basis for such
determination.  Such amount  shall be due and payable by the  Borrowers  to such
Bank ten (10) Business Days after such notice is given.



<PAGE>

                        6. REPRESENTATIONS AND WARRANTIES

                  6.1       Representations and Warranties.

                  The Loan Parties, jointly and severally, represent and warrant
to the Agent and each of the Banks as follows:

                           6.1.1     Organization and Qualification.

                           Each  Loan  Party  and each  Subsidiary  of each Loan
Party is a corporation, partnership or limited liability company duly organized,
validly  existing and in good  standing  under the laws of its  jurisdiction  of
organization.  Each Loan  Party and each  Subsidiary  of each Loan Party has the
lawful  power to own or lease its  properties  and to engage in the  business it
presently  conducts or proposes to conduct.  Each Loan Party and each Subsidiary
of each Loan Party is duly  licensed or qualified  and in good  standing in each
jurisdiction  listed on Schedule 6.1.1 and in all other  jurisdictions where the
property owned or leased by it or the nature of the business transacted by it or
both makes such licensing or qualification necessary.

                           6.1.2     Capitalization and Ownership.

                           The authorized  capital stock of the Borrowers  other
than the  Company  (referred  to herein as the  "Shares")  which are  issued and
outstanding and are owned as described on Schedule 6.1.3. All of the Shares have
been validly issued and are fully paid and nonassessable.  There are no options,
warrants  or other  rights  outstanding  to purchase  any such shares  except as
indicated on Schedule 6.1.3.
                           6.1.3     Subsidiaries.

                           Schedule  6.1.3  states  the  name  of  each  of  the
Borrowers'  Subsidiaries,  its  jurisdiction  of  incorporation,  its authorized
capital  stock,  the issued and  outstanding  shares  (referred to herein as the
"Subsidiary  Shares")  and  the  owners  thereof  if  it is a  corporation,  its
outstanding  partnership  interests  (the  "Partnership  Interests")  if it is a
partnership and its outstanding  limited liability company interests,  interests
assigned to managers  thereof and the voting rights  associated  therewith  (the
"LLC Interests") if it is a limited  liability  company.  The Borrowers and each
Subsidiary  of  the  Borrowers  has  good  and  marketable  title  to all of the
Subsidiary Shares,  Partnership  Interests and LLC Interests it purports to own,
free and clear in each  case of any Lien.  All  Subsidiary  Shares,  Partnership
Interests and LLC Interests have been validly issued,  and all Subsidiary Shares
are  fully  paid  and  nonassessable.   All  capital   contributions  and  other
consideration required to be made or paid in connection with the issuance of the
Partnership  Interests and LLC Interests have been made or paid, as the case may
be. There are no options,  warrants or other rights  outstanding to purchase any
such  Subsidiary  Shares,  Partnership  Interests  or LLC  Interests  except  as
indicated on Schedule 6.1.3.


<PAGE>

                           6.1.4     Power and Authority.

                           Each  Loan  Party  has  full  power  to  enter  into,
execute,  deliver and carry out this  Agreement and the other Loan  Documents to
which  it is a  party,  to  incur  the  Indebtedness  contemplated  by the  Loan
Documents and to perform its Obligations under the Loan Documents to which it is
a party,  and all such  actions  have  been  duly  authorized  by all  necessary
proceedings on its part.
                           6.1.5     Validity and Binding Effect.

                           This Agreement has been duly and validly executed and
delivered by each Loan Party,  and each other Loan Document which any Loan Party
is  required  to execute  and deliver on or after the date hereof will have been
duly  executed and delivered by such Loan Party on the required date of delivery
of such Loan Document.  This Agreement and each other Loan Document constitutes,
or will  constitute,  legal,  valid and binding  obligations  of each Loan Party
which is or will be a party  thereto on and after its date of delivery  thereof,
enforceable  against such Loan Party in accordance with its terms, except to the
extent  that  enforceability  of any of such Loan  Document  may be  limited  by
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting  the  enforceability  of creditors'  rights  generally or limiting the
right of specific performance.
                           6.1.6     No Conflict.

                           Neither the execution and delivery of this  Agreement
or the  other  Loan  Documents  by any Loan  Party nor the  consummation  of the
transactions  herein or therein  contemplated  or compliance  with the terms and
provisions  hereof or thereof by any of them will  conflict  with,  constitute a
default  under or result in any  breach of (i) the terms and  conditions  of the
certificate  of  incorporation,  bylaws,  certificate  of  limited  partnership,
partnership  agreement,  certificate  of formation,  limited  liability  company
agreement or other organizational documents of any Loan Party or (ii) any Law or
any material  agreement or instrument or order,  writ,  judgment,  injunction or
decree to which any Loan Party or any of its Subsidiaries is a party or by which
it or any of its  Subsidiaries is bound or to which it is subject,  or result in
the creation or enforcement of any Lien,  charge or encumbrance  whatsoever upon
any  property  (now or  hereafter  acquired)  of any  Loan  Party  or any of its
Subsidiaries (other than Liens granted under the Loan Documents).

                           6.1.7     Litigation.

                           There  are  no   actions,   suits,   proceedings   or
investigations  pending  or,  to the  knowledge  of any Loan  Party,  threatened
against  such Loan Party or any  Subsidiary  of such Loan Party at law or equity
before any Official  Body which  individually  or in the  aggregate is likely to
result  in any  Material  Adverse  Change.  None  of  the  Loan  Parties  or any
Subsidiaries of any Loan Party is in violation of any order, writ, injunction or
any decree of any Official Body which may result in any Material Adverse Change.

<PAGE>

                           6.1.8     Title to Properties.

                           The real property  owned or leased by each Loan Party
and each Subsidiary of each Loan
Party is described on Schedule  6.1.8.  Each Loan Party and each  Subsidiary  of
each Loan Party has good and marketable title to or valid leasehold  interest in
all  properties,  assets and other  rights  which it purports to own or lease or
which are reflected as owned or leased on its books and records,  free and clear
of all Liens and  encumbrances  except Permitted Liens, and subject to the terms
and  conditions  of the  applicable  leases.  All leases of property are in full
force and effect  without the necessity for any consent which has not previously
been obtained upon consummation of the transactions contemplated hereby.

                           6.1.9     Financial Statements.

                           (i)   Historical   Statements.   The  Borrowers  have
delivered to the Agent  copies of its audited  consolidated  year-end  financial
statements  for and as of the end of the two (2) fiscal years ended December 31,
1995 (the "Annual Statements"). In addition, the Borrowers have delivered to the
Agent  copies  of  the  Company's  unaudited   consolidated   interim  financial
statements  for the fiscal year to date and as of the end of the fiscal  quarter
ended  June  30,  1996  (the  "Interim  Statements")  (the  Annual  and  Interim
Statements being collectively referred to as the "Historical  Statements").  The
Historical Statements were compiled from the books and records maintained by the
Borrowers'  management,  are  correct  and  complete  and fairly  represent  the
consolidated  financial  condition of the Borrowers and its  Subsidiaries  as of
their dates and the results of operations  for the fiscal periods then ended and
have been prepared in accordance with GAAP consistently applied, subject (in the
case of the Interim Statements) to normal year-end audit adjustments.

                           (ii)  Financial   Projections.   The  Borrowers  have
delivered  to the  Agent  financial  projections  of  the  Borrowers  and  their
Subsidiaries  for the period 1996-2001  derived from various  assumptions of the
Borrowers' management (the "Financial  Projections").  The Financial Projections
represent a reasonable  range of possible results in light of the history of the
business,   present  and  foreseeable  conditions  and  the  intentions  of  the
Borrowers'   management.   The  Financial  Projections  accurately  reflect  the
liabilities of the Borrowers and their  Subsidiaries  upon  consummation  of the
transactions contemplated hereby as of the Closing Date.


<PAGE>

                           (iii) Accuracy of Financial  Statements.  Neither the
Borrowers  nor any  Subsidiary  of any Borrower  has any  material  liabilities,
contingent  or  otherwise,  or forward  or  long-term  commitments  that are not
disclosed in the Historical  Statements or in the notes  thereto,  and except as
disclosed  therein  there  are no  unrealized  or  anticipated  losses  from any
commitments of the Borrowers or any Subsidiary of any Borrower which may cause a
Material Adverse Change. Since December 31, 1995, no Material Adverse Change has
occurred.
                           6.1.10    Use of Proceeds; Margin Stock.

                           The Loan  Parties  intend to use the  proceeds of the
Loans in accordance  with  Sections 2.8 and 8.1.10.  None of the Loan Parties or
any Subsidiaries of any Loan Party engages or intends to engage principally,  or
as one of its important activities,  in the business of extending credit for the
purpose,  immediately,  incidentally  or  ultimately,  of purchasing or carrying
margin stock  (within the meaning of  Regulation  U). No part of the proceeds of
any Loan has been or will be used, immediately,  incidentally or ultimately,  to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or to refund Indebtedness  originally
incurred for such  purpose,  or for any purpose  which entails a violation of or
which is  inconsistent  with the  provisions of the  regulations of the Board of
Governors  of the  Federal  Reserve  System.  None of the  Loan  Parties  or any
Subsidiary  of any Loan  Party  holds or intends  to hold  margin  stock in such
amounts  that more than 25% of the  reasonable  value of the  assets of any Loan
Party or  Subsidiary  of any Loan  Party  are or will be  represented  by margin
stock.
                           6.1.11    Full Disclosure.

                           Neither this  Agreement nor any other Loan  Document,
nor any certificate,  statement,  agreement or other documents  furnished to the
Agent or any Bank in  connection  herewith  or  therewith,  contains  any untrue
statement  of a material  fact or omits to state a material  fact  necessary  in
order to make the  statements  contained  herein  and  therein,  in light of the
circumstances under which they were made, not misleading. There is no fact known
to any Loan Party which  materially  adversely  affects the business,  property,
assets,  financial  condition,  results of  operations  or prospects of any Loan
Party or  Subsidiary  of any Loan  Party  which  has not been set  forth in this
Agreement or in the  certificates,  statements,  agreements  or other  documents
furnished  in writing to the Agent and the Banks  prior to or at the date hereof
in connection with the transactions contemplated hereby.

                           6.1.12    Taxes.

                           All  federal,  state,  local and  other  tax  returns
required to have been filed with respect to each Loan Party and each  Subsidiary
of each Loan Party have been filed,  and payment or adequate  provision has been
made for the  payment of all taxes,  fees,  assessments  and other  governmental
charges which have or may become due pursuant to said returns or to  assessments
received,  except to the extent that such  taxes,  fees,  assessments  and other
charges are being contested in good faith by appropriate  proceedings diligently
conducted and for which such reserves or other appropriate  provisions,  if any,
as shall be required by GAAP shall have been made.  There are no  agreements  or
waivers extending the statutory period of limitations  applicable to any federal
income  tax  return of any Loan  Party or  Subsidiary  of any Loan Party for any
period.

<PAGE>

                           6.1.13    Consents and Approvals.

                           No   consent,    approval,    exemption,   order   or
authorization  of, or a  registration  or filing with,  any Official Body or any
other  Person is required by any Law or any  agreement  in  connection  with the
execution,  delivery  and  carrying  out of this  Agreement  and the other  Loan
Documents  by any Loan Party,  except for the  repayment  on the Closing Date of
obligations to Existing Lenders.
                           6.1.14   No  Event  of   Default;   Compliance   with
Instruments.
                           No  event  has  occurred  and  is  continuing  and no
condition  exists or will exist after giving  effect to the  borrowings or other
extensions  of credit to be made on the  Closing  Date under or  pursuant to the
Loan Documents which constitutes an Event of Default or Potential Default.  None
of the Loan Parties or any Subsidiaries of any Loan Party is in violation of (i)
any term of its  certificate of  incorporation,  bylaws,  certificate of limited
partnership,  partnership agreement, certificate of formation, limited liability
company  agreement  or  other  organizational  documents  or (ii)  any  material
agreement  or  instrument  to  which  it is a party or by which it or any of its
properties  may be subject or bound  where such  violation  would  constitute  a
Material Adverse Change.
                           6.1.15  Patents,  Trademarks,  Copyrights,  Licenses,
Etc.
                           Each  Loan  Party  and each  Subsidiary  of each Loan
Party owns or possesses all the material  patents,  trademarks,  service  marks,
trade names, copyrights, licenses, registrations, franchises, permits and rights
necessary  to own and operate  its  properties  and to carry on its  business as
presently  conducted  and  planned  to  be  conducted  by  such  Loan  Party  or
Subsidiary, without known alleged or actual conflict with the rights of others.

                           6.1.16    Status of the Obligations.

                           The   Obligations  of  each  Loan  Party  under  this
Agreement, the Notes and each of the other Loan Documents to which it is a party
do rank and will rank at least pari passu in priority of payment  with all other
Indebtedness  of such Loan Party except  Indebtedness  of such Loan Party to the
extent secured by Permitted Liens.  There is no Lien upon or with respect to any
of the  properties  or income of any Loan Party or  Subsidiary of any Loan Party
which  secures  indebtedness  or other  obligations  of any  Person  except  for
Permitted Liens.
<PAGE>

                           6.1.17    [RESERVED].

                           6.1.18    [RESERVED].

                           6.1.19    Insurance.

                           No notice has been given or claim made and no grounds
exist to cancel or avoid any material  insurance  policies or bonds or to reduce
the coverage provided thereby. Such policies and bonds provide adequate coverage
from reputable and  financially  sound insurers in amounts  sufficient to insure
the assets and risks of each Loan Party and each  Subsidiary  of each Loan Party
in accordance with prudent business practice in the industry of the Loan Parties
and their Subsidiaries.
                           6.1.20    Compliance with Laws.

                           The  Loan  Parties  and  their  Subsidiaries  are  in
compliance  in all  material  respects  with all  applicable  Laws  (other  than
Environmental  Laws which are  specifically  addressed in Section 6.1.25) in all
jurisdictions  in  which  any  Loan  Party or  Subsidiary  of any Loan  Party is
presently or will be doing business  except where the failure to do so would not
constitute a Material Adverse Change.
                           6.1.21    [RESERVED]

                           6.1.22    Investment Companies; Regulated Entities.

                           None of the Loan Parties or any  Subsidiaries  of any
Loan Party is an  "investment  company"  registered or required to be registered
under  the  Investment  Company  Act  of  1940  or  under  the  "control"  of an
"investment  company" as such terms are defined in the Investment Company Act of
1940 and shall not become such an "investment  company" or under such "control."
None of the Loan Parties or any Subsidiaries of any Loan Party is subject to any
other  Federal  state  statute  or  regulation  limiting  its  ability  to incur
Indebtedness for borrowed money.

                           6.1.23    Plans and Benefit Arrangements.

                           Except as set forth on Schedule 6.1.23:

                           (i) The  Borrowers and each other member of the ERISA
Group are in compliance in all material respects with any applicable  provisions
of ERISA  with  respect to all  Benefit  Arrangements,  Plans and  Multiemployer
Plans.  There has been no  Prohibited  Transaction  with  respect to any Benefit
Arrangement or any Plan or, to the best knowledge of the Borrowers, with respect
to any  Multiemployer  Plan or Multiple Employer Plan, which could result in any
material  liability of the Borrowers or any other member of the ERISA Group. The
Borrowers  and all other  members of the ERISA  Group have made when due any and
all payments required to be made under any agreement relating to a Multiemployer
Plan or a Multiple Employer Plan or any Law pertaining thereto.  With respect to
each Plan and  Multiemployer  Plan,  the  Borrowers and each other member of the

<PAGE>

ERISA Group (i) have fulfilled in all material  respects their obligations under
the minimum funding  standards of ERISA, (ii) have not incurred any liability to
the PBGC,  and (iii) have not had asserted  against them any penalty for failure
to fulfill the minimum funding requirements of ERISA.

                           (ii) To the best of the  Borrowers'  knowledge,  each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder
when due.
                           (iii)  Neither the  Borrowers nor any other member of
the ERISA Group has instituted or intends to institute  proceedings to terminate
any Plan.

                           (iv) No event  requiring  notice  to the  PBGC  under
Section  302(f)(4)(A)  of ERISA has occurred or is reasonably  expected to occur
with  respect to any Plan,  and no amendment  with respect to which  security is
required  under Section 307 of ERISA has been made or is reasonably  expected to
be made to any Plan.
                           (v) The accumulated  benefit obligation for all Plans
taken together shall not exceed the aggregate fair market value of the assets in
such Plans as  disclosed  in, and as of the date of, the most  recent  actuarial
report for such Plans.

                           (vi)  Neither the  Borrowers  nor any other member of
the  ERISA  Group has  incurred  or  reasonably  expects  to incur any  material
withdrawal  liability under ERISA to any Multiemployer Plan or Multiple Employer
Plan.  Neither the  Borrowers  nor any other  member of the ERISA Group has been
notified  by  any  Multiemployer  Plan  or  Multiple  Employer  Plan  that  such
Multiemployer  Plan or Multiple  Employer  Plan has been  terminated  within the
meaning of Title IV of ERISA and, to the best  knowledge  of the  Borrowers,  no
Multiemployer  Plan or  Multiple  Employer  Plan is  reasonably  expected  to be
reorganized or terminated, within the meaning of Title IV of ERISA.

                           (vii) To the extent that any Benefit  Arrangement  is
insured,  the  Borrowers and all other members of the ERISA Group have paid when
due all premiums  required to be paid for all periods  through the Closing Date.
To the extent that any Benefit  Arrangement is funded other than with insurance,
the  Borrowers  and all other  members of the ERISA Group have made when due all
contributions required to be paid for all periods through the Closing Date.

                           (viii)   All   Plans,    Benefit   Arrangements   and
Multiemployer  Plans have been  administered  in accordance with their terms and
applicable Law.

<PAGE>

                           6.1.24    Employment Matters.

                           Each  of  the   Loan   Parties   and  each  of  their
Subsidiaries  is in  compliance  with the  Labor  Contracts  and all  applicable
federal,  state and local labor and employment  Laws including  those related to
equal employment  opportunity and affirmative action,  labor relations,  minimum
wage, overtime,  child labor, medical insurance continuation,  worker adjustment
and  relocation  notices,  immigration  controls  and  worker  and  unemployment
compensation,  where the failure to comply would  constitute a Material  Adverse
Change.  There are no  outstanding  grievances,  arbitration  awards or  appeals
therefrom  arising out of the Labor Contracts or current or threatened  strikes,
picketing, handbilling or other work stoppages or slowdowns at facilities of any
of the Loan  Parties  or any of  their  Subsidiaries  which  in any  case  would
constitute  a  Material  Adverse  Change.   The  Borrowers  have  no  collective
bargaining agreements.

                           6.1.25    Environmental Matters.

                           Except as disclosed on Schedule  6.1.25,  to the best
of the Loan Parties' knowledge:

                           (i) None of the Loan Parties or any  Subsidiaries  of
any Loan Party has received any  Environmental  Complaint from any Official Body
or private  Person  alleging  that such Loan Party or Subsidiary or any prior or
subsequent owner of any of the Property is a potentially responsible party under
the Comprehensive  Environmental Response,  Cleanup and Liability Act, 42 U.S.C.
ss. 9601,  et seq.,  and none of the Loan Parties has any reason to believe that
such an Environmental  Complaint might be received.  There are no pending or, to
any Loan Party's knowledge,  threatened Environmental Complaints relating to any
Loan Party or  Subsidiary  of any Loan Party or, to any Loan Party's  knowledge,
any prior or subsequent  owner of any of the Property  pertaining to, or arising
out of, any Environmental Conditions.

                           (ii) There are no  circumstances  at, on or under any
of the Property that  constitute a breach of or  non-compliance  with any of the
Environmental  Laws, and there are no past or present  Environmental  Conditions
at, on or under any of the Property or, to any Loan Party's knowledge, at, on or
under adjacent property,  that prevent compliance with the Environmental Laws at
any of the Property.
                           (iii) Neither any of the Property nor any structures,
improvements,   equipment,   fixtures,   activities  or  facilities  thereon  or
thereunder  contain  or use  Regulated  Substances  except  in  compliance  with
Environmental  Laws or except  where the  presence of such  materials  would not
constitute  a  Material  Adverse  Change.  There are no  processes,  facilities,
operations,  equipment or other  activities at, on or under any of the Property,
or, to any Loan  Party's  knowledge,  at, on or under  adjacent  property,  that
currently  result in the release or threatened  release of Regulated  Substances
onto any of the Property,  except to the extent that such releases or threatened
releases are not a breach of or otherwise  not a violation of the  Environmental
Laws.


<PAGE>

                           (iv)  There  are  no   aboveground   storage   tanks,
underground storage tanks or underground piping associated with such tanks, used
for the  management of Regulated  Substances at, on or under any of the Property
that (a) do not have,  to the extent  required  by  Environmental  Laws,  a full
operational  secondary containment system in place, and (b) are not otherwise in
compliance  with all  Environmental  Laws.  There are no  abandoned  underground
storage tanks or underground piping associated with such tanks,  previously used
for the  management of Regulated  Substances at, on or under any of the Property
that have not either been closed in place in accordance with  Environmental Laws
or  removed  in  compliance  with  all  applicable  Environmental  Laws  and  no
contamination  associated  with  the  use of  such  tanks  exists  on any of the
Property that is not in compliance with Environmental Laws.

                           (v) Each Loan Party and each  Subsidiary  of any Loan
Party has all material permits,  licenses,  authorizations,  plans and approvals
necessary under the  Environmental  Laws for the conduct of the business of such
Loan  Party or  Subsidiary  as  presently  conducted.  Each Loan  Party and each
Subsidiary  of any Loan Party has submitted  all material  notices,  reports and
other filings required by the Environmental  Laws to be submitted to an Official
Body which pertain to past and current operations on any of the Property

                           (vi)  All  past  and  present   on-site   generation,
storage, processing, treatment, recycling, reclamation, disposal or other use or
management of Regulated  Substances at, on, or under any of the Property and all
off-site transportation, storage, processing, treatment, recycling, reclamation,
disposal or other use or  management of Regulated  Substances  have been done in
accordance  with the  Environmental  Laws or except where failure to do so would
not constitute a Material Adverse Change.

                  6.2       Updates to Schedules.

                           Should any of the information or disclosures provided
on any of the  Schedules  attached  hereto  become  outdated or incorrect in any
material respect, the Borrowers shall promptly provide the Agent in writing with
such revisions or updates to such Schedule as may be necessary or appropriate to
update or correct same; provided,  however,  that no Schedule shall be deemed to
have been amended,  modified or superseded by any such correction or update, nor
shall any breach of warranty or representation  resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Required Banks, in their sole and absolute discretion,  shall have
accepted in writing such revisions or updates to such Schedule.

                            7. CONDITIONS OF LENDING

                  The  obligation of each Bank to make Loans and of the Agent to
issue Letters of Credit  hereunder is subject to the  performance by each of the
Loan Parties of its  Obligations  to be  performed  hereunder at or prior to the
making of any such  Loans or  issuance  of such  Letters  of  Credit  and to the
satisfaction of the following further conditions:


<PAGE>

                  7.1       First Loans.

                  On the Closing Date:

                           7.1.1     Officer's Certificate.

                           The  representations  and  warranties  of each of the
Loan  Parties  contained  in Section 6 and in each of the other  Loan  Documents
shall be true and accurate on and as of the Closing Date with the same effect as
though such  representations and warranties had been made on and as of such date
(except representations and warranties which relate solely to an earlier date or
time, which  representations  and warranties shall be true and correct on and as
of the  specific  dates  or times  referred  to  therein),  and each of the Loan
Parties shall have  performed  and complied  with all  covenants and  conditions
hereof and thereof, no Event of Default or Potential Default shall have occurred
and be continuing or shall exist;  and there shall be delivered to the Agent for
the benefit of each Bank a certificate  of each of the Loan  Parties,  dated the
Closing  Date and  signed by the Chief  Executive  Officer,  President  or Chief
Financial  Officer of the Company and the  President  or Treasurer of each other
Loan Party, to each such effect.

                           7.1.2     Secretary's Certificate.

                           There shall be delivered to the Agent for the benefit
of each Bank a certificate dated the Closing Date and signed by the Secretary or
an Assistant Secretary of each of the Loan Parties, certifying as appropriate as
to:

                           (i) all action taken by each Loan Party in connection
with this Agreement and the other Loan Documents;

                           (ii) the names of the officer or officers  authorized
to sign this Agreement and the other Loan  Documents and the true  signatures of
such officer or officers and specifying the Authorized Officers permitted to act
on  behalf  of each  Loan  Party for  purposes  of this  Agreement  and the true
signatures of such officers,  on which the Agent and each Bank may  conclusively
rely; and

                           (iii)   copies  of  its   organizational   documents,
including its  certificate  of  incorporation,  bylaws,  certificate  of limited
partnership,  partnership  agreement,  certificate  of  formation,  and  limited
liability  company  agreement as in effect on the Closing Date  certified by the
appropriate  state  official  where such  documents  are filed in a state office
together  with  certificates  from the  appropriate  state  officials  as to the
continued  existence  and good  standing  of each Loan Party in each state where
organized or qualified to do business.


<PAGE>

                           7.1.3     Delivery of Loan Documents.

                           The Notes,  Intercompany  Subordination Agreement and
other Loan  Documents  shall have been duly  executed and delivered to the Agent
for the benefit of the Banks.
                           7.1.4     Opinion of Counsel.

                           There shall be delivered to the Agent for the benefit
of each Bank a written opinion of the General Counsel of the Company,  dated the
Closing Date and in form and substance satisfactory to the Agent and its counsel
as to all matters incident to the transactions  contemplated  herein and the VGC
Assets as the Agent may reasonably request.
                           7.1.5     Legal Details.

                           All legal details and  proceedings in connection with
the  transactions  contemplated  by this  Agreement and the other Loan Documents
shall be in form and  substance  satisfactory  to the Agent and  counsel for the
Agent, and the Agent shall have received all such other counterpart originals or
certified or other copies of such documents and  proceedings in connection  with
such  transactions,  in form and  substance  satisfactory  to the Agent and said
counsel, as the Agent or said counsel may reasonably request.

                           7.1.6     Payment of Fees.

                           The Borrowers shall have paid or caused to be paid to
the  Agent  for  itself  and for the  account  of the  Banks to the  extent  not
previously  paid all fees  accrued  through the  Closing  Date and the costs and
expenses for which the Agent and the Banks are entitled to be reimbursed.

                           7.1.7     Lien Searches.

                           The Loan Parties shall have provided to the Agent UCC
lien searches conducted within
thirty (30) days before the Closing  Date  relating to all of the Loan  Parties'
properties  and the VGC  Assets,  including  in respect of any names  under,  or
locations  at,  which any of the  foregoing  has or had since 1993  maintained a
distribution facility.

                           7.1.8     Consents.

                           All  material  consents  required to  effectuate  the
transactions contemplated hereby as set forth on Schedule 6.1.13 shall have been
obtained.

<PAGE>

                           7.1.9     Officer's Certificate Regarding MACs.

                           Since  December 31, 1995, no Material  Adverse Change
shall  have  occurred;  prior to the  Closing  Date,  there  shall  have been no
material  change in the  management  of the  Company;  and there shall have been
delivered  to the Agent for the  benefit  of each Bank a  certificate  dated the
Closing  Date and  signed by the Chief  Executive  Officer,  President  or Chief
Financial Officer of the Company to each such effect.

                           7.1.10    No Violation of Laws.

                           The  making  of the  Loans  and the  issuance  of the
Letters of Credit shall not  contravene  any Law applicable to any Loan Party or
any of the Banks.
                           7.1.11    No Actions or Proceedings.

                           No action, proceeding,  investigation,  regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin,  restrain or prohibit,  or to
obtain  damages in respect of, this  Agreement,  the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in the
Agent's  sole   discretion,   would  make  it   inadvisable  to  consummate  the
transactions contemplated by this Agreement or any of the other Loan Documents.

                           7.1.12    Insurance Policies.

                           All  premiums on the  Borrowers'  insurance  policies
shall have been paid.

                           7.1.13    Existing Lenders Payoff.

                           The Loan  Parties  shall have  delivered to the Agent
such executed payoff letters, termination statements,  satisfactions,  releases,
consents,  cancelled  notes and loan documents as shall be required by the Agent
to evidence the  termination of all  obligations of the Loan Parties  (including
with  respect  to  letters  of  credit)  to  Existing  Lenders  except for up to
$5,000,000  unsecured term loan Indebtedness  owing to First Union National Bank
(the "Permitted First Union Debt") and unsecured reimbursement  Indebtedness for
up to $500,000 face amount letters of credit.

                  7.2       Each Additional Loan.

                  At the time of making  any Loans or  issuing  any  Letters  of
Credit other than Loans made or Letters of Credit issued on the Closing Date and
after giving effect to the proposed  extensions of credit:  the  representations
and warranties of the Loan Parties  contained in Section 6 and in the other Loan
Documents  shall be true on and as of the date of such additional Loan or Letter
of Credit with the same effect as though such representations and warranties had
been made on and as of such date (except  representations  and warranties  which

<PAGE>

expressly  relate solely to an earlier date or time, which  representations  and
warranties  shall be true and correct on and as of the  specific  dates or times
referred to therein) and the Loan Parties shall have performed and complied with
all covenants and conditions  hereof;  no Event of Default or Potential  Default
shall have occurred and be continuing or shall exist; the making of the Loans or
issuance of such Letter of Credit shall not contravene any Law applicable to any
Loan  Party  or  Subsidiary  of any  Loan  Party  or any of the  Banks;  and the
Borrowers  shall have  delivered to the Agent a duly executed and completed Loan
Request or application for a Letter of Credit as the case may be.


                                  8. COVENANTS

                  8.1       Affirmative Covenants.

                  The Loan Parties,  jointly and  severally,  covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit  Borrowings,  and interest  thereon,  expiration  or  termination  of all
Letters of Credit,  satisfaction  of all of the Loan Parties' other  Obligations
under the Loan Documents and  termination of the  Commitments,  the Loan Parties
shall comply at all times with the following affirmative covenants:

                           8.1.1     Preservation of Existence, Etc.

                           Each Loan Party  shall,  and shall  cause each of its
Subsidiaries  to,  maintain  its  legal  existence  as  a  corporation,  limited
partnership or limited  liability  company and its license or qualification  and
good standing in each  jurisdiction  in which its ownership or lease of property
or the nature of its  business  makes such license or  qualification  necessary,
except as otherwise expressly permitted in Section 8.2.6.
                         8.1.2     Payment of Liabilities, Including Taxes, Etc.

                           Each Loan Party  shall,  and shall  cause each of its
Subsidiaries  to, duly pay and discharge all  liabilities to which it is subject
or which are asserted against it, promptly as and when the same shall become due
and payable,  including all taxes,  assessments and governmental charges upon it
or any of its properties,  assets, income or profits, prior to the date on which
penalties attach thereto, except to the extent that such liabilities,  including
taxes,  assessments  or  charges,  are  being  contested  in good  faith  and by
appropriate  and  lawful  proceedings  diligently  conducted  and for which such
reserve or other  appropriate  provisions,  if any, as shall be required by GAAP
shall have been made,  but only to the extent that failure to discharge any such
liabilities  would not result in any additional  liability which would adversely
affect  to a  material  extent  the  financial  condition  of any Loan  Party or
Subsidiary  of any  Loan  Party,  provided  that  the  Loan  Parties  and  their
Subsidiaries  will pay all such  liabilities  forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor.


<PAGE>

                           8.1.3     Maintenance of Insurance.

                           Each Loan Party  shall,  and shall  cause each of its
Subsidiaries to, insure its properties and assets against loss or damage by fire
and such other insurable hazards as such assets are commonly insured  (including
fire,  extended  coverage,  property  damage,  workers'  compensation and public
liability)  and against  other risks  (including  errors and  omissions) in such
amounts as similar  properties  and assets are insured by prudent  companies  in
similar  circumstances  carrying on similar  businesses,  and with reputable and
financially sound insurers, including self-insurance to the extent customary. At
the request of the Agent,  the Loan Parties  shall deliver to the Agent and each
of the Banks from time to time a summary schedule  indicating all insurance then
in force with respect to each of the Loan Parties.

                           8.1.4     Maintenance of Properties and Leases.

                           Each Loan Party  shall,  and shall  cause each of its
Subsidiaries to, maintain in good repair,  working order and condition (ordinary
wear  and tear  excepted)  in  accordance  with the  general  practice  of other
businesses of similar  character  and size,  all of those  properties  useful or
necessary to its business,  and from time to time,  such Loan Party will make or
cause to be made all appropriate repairs, renewals or replacements thereof.

                           8.1.5     Maintenance of Patents, Trademarks, Etc.

                           Each Loan Party  shall,  and shall  cause each of its
Subsidiaries  to,  maintain  in full force and effect all  patents,  trademarks,
service marks, trade names, copyrights,  licenses, franchises, permits and other
authorizations  necessary for the ownership and operation of its  properties and
business  if the  failure so to maintain  the same would  constitute  a Material
Adverse Change.
                           8.1.6     Visitation Rights.

                           Each Loan Party  shall,  and shall  cause each of its
Subsidiaries  to,  permit  any  of  the  officers  or  authorized  employees  or
representatives of the Agent or any of the Banks to visit and inspect any of its
properties  and to examine  and make  excerpts  from its books and  records  and
discuss its business  affairs,  finances and accounts with its officers,  all in
such  detail and at such  times and as often as any of the Banks may  reasonably
request,  provided that each Bank shall provide the Borrowers and the Agent with
reasonable  notice  prior to any  visit or  inspection.  In the  event  any Bank
desires to conduct an audit of any Loan Party, such Bank shall make a reasonable
effort to conduct such audit contemporaneously with any audit to be performed by
the Agent.
                           8.1.7     Keeping of Records and Books of Account.

                           The Borrowers  shall, and shall cause each Subsidiary
of the Borrowers to,  maintain and keep proper books of record and account which

<PAGE>

enable the Borrowers and their  Subsidiaries  to issue  financial  statements in
accordance  with  GAAP  and as  otherwise  required  by  applicable  Laws of any
Official Body having  jurisdiction  over the Borrowers or any  Subsidiary of the
Borrowers,  and in which  full,  true and correct  entries  shall be made in all
material respects of all its dealings and business and financial affairs.

                           8.1.8     Plans and Benefit Arrangements.

                           The  Borrowers  shall,  and shall  cause  each  other
member of the ERISA Group to, comply with ERISA,  the Internal  Revenue Code and
other applicable Laws applicable to Plans and Benefit  Arrangements except where
such failure,  alone or in conjunction with any other failure,  would not result
in a Material Adverse Change.  Without limiting the generality of the foregoing,
the  Borrowers  shall cause all of their Plans and all Plans  maintained  by any
member of the ERISA Group to be funded in  accordance  with the minimum  funding
requirements  of ERISA and shall make,  and cause each member of the ERISA Group
to  make,  in  a  timely  manner,  all  contributions  due  to  Plans,   Benefit
Arrangements and Multiemployer Plans.

                           8.1.9     Compliance with Laws.

                           Each Loan Party  shall,  and shall  cause each of its
Subsidiaries  to, comply with all applicable Laws,  including all  Environmental
Laws, in all respects, provided that it shall not be deemed to be a violation of
this  Section  8.1.9 if any  failure to comply  with any Law would not result in
fines,  penalties,  remediation costs,  other similar  liabilities or injunctive
relief which in the aggregate would constitute a Material Adverse Change.

                           8.1.10    Use of Proceeds.

                                    8.1.10.1 General.

                           The Loan  Parties  will use the Letters of Credit and
the  proceeds  of the Loans  only for (i)  general  corporate  purposes  and for
working capital, (ii) to finance Permitted  Acquisitions  including the purchase
of the VGC Assets,  and (iii) to repay and terminate all  Indebtedness  owing to
Existing  Lenders.  The Loan  Parties'  use of the  Letters  of  Credit  and the
proceeds of the Loans for any purposes which  contravenes  any applicable Law or
any provision hereof.

                                    8.1.10.2 Margin Stock.

                           The Loan  Parties  shall not use the  proceeds of the
Loans to purchase margin stock as more fully provided in Section 6.1.10.

                                    8.1.10.3 Section 20 Subsidiaries.

                           The Loan  Parties will not,  directly or  indirectly,
use any portion of the  proceeds  of the Loans (i)  knowingly  to  purchase  any
Ineligible  Securities  from a Section 20 Subsidiary  during any period in which
such Section 20 Subsidiary  makes a market in such Ineligible  Securities,  (ii)

<PAGE>

knowingly to purchase  during the  underwriting or placement  period  Ineligible
Securities being underwritten or privately placed by a Section 20 Subsidiary, or
(iii) to make  payments  of  principal  or  interest  on  Ineligible  Securities
underwritten  or privately  placed by as Section 20 Subsidiary  and issued by or
for the benefit of any Loan Party or any Affiliate of any Loan Party.

                           8.1.11    Further Assurances.

                           Each Loan  Party  shall,  from  time to time,  at its
expense,  faithfully  preserve  and protect  the  Agent's and the Banks'  rights
hereunder and under the Loan Documents.

                           8.1.12    Subordination of Intercompany Loans.

                           Each  Loan  Party   shall   cause  any   intercompany
Indebtedness,  loans or advances  owed by any Loan Party to any other Loan Party
to be  subordinated  pursuant  to the  terms of the  Intercompany  Subordination
Agreement.
                  8.2       Negative Covenants.

                  The Loan Parties,  jointly and  severally,  covenant and agree
that until payment in full of the Loans, Reimbursement Obligations and Letter of
Credit Borrowings and interest thereon, expiration or termination of all Letters
of Credit,  satisfaction of all of the Loan Parties' other Obligations hereunder
and  termination  of the  Commitments,  the Loan  Parties  shall comply with the
following negative covenants:

                           8.2.1     Indebtedness.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its Subsidiaries to, at any time create,  incur,  assume or suffer
to exist any Indebtedness, except:

                           (i) Indebtedness under the Loan Documents;

                           (ii) Existing  Indebtedness  as set forth on Schedule
8.2.1  (including  any  extensions  or renewals  thereof,  provided  there is no
increase in the amount thereof or other significant  change in the terms thereof
unless otherwise specified on Schedule 8.2.1;

                           (iii) Capitalized and operating leases;

                           (iv) Indebtedness  secured by Purchase Money Security
Interests not exceeding $3,500,000;

                           (v)  Indebtedness  of a Loan  Party to  another  Loan
Party which is subordinated in accordance with the provisions of Section 8.1.12;


<PAGE>

                           (vi)  other  unsecured   Indebtedness  not  exceeding
$10,000,000 principal amount; and

                           (vii) the Permitted First Union Debt.

                           8.2.2     Liens.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its Subsidiaries to, at any time create,  incur,  assume or suffer
to exist any Lien on any of its property or assets, tangible or intangible,  now
owned or  hereafter  acquired,  or  agree  or  become  liable  to do so,  except
Permitted Liens and no Loan Party shall consent or agree to, permit or suffer to
exist any agreement  with, or assurance to, any Person  prohibiting the creation
of a Lien in favor of the Agent or the Banks, except as shown on Schedule 8.2.2.

                           8.2.3     Guaranties.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its Subsidiaries to, at any time,  directly or indirectly,  become
or be liable in respect of any  Guaranty,  or assume,  guarantee,  become surety
for,  endorse or  otherwise  agree,  become or remain  directly or  contingently
liable upon or with respect to any  obligation or liability of any other Person,
except for Guaranties of Indebtedness of the Loan Parties  permitted  hereunder,
Guaranties by endorsement of negotiable instruments for deposit or collection or
similar  transactions  in  the  ordinary  course  of  business,   Guaranties  of
obligations  or Borrowers'  customers less than $100,000 in the aggregate or the
Guaranty  of  VWR  Corporation's  obligation  to  make  supplemental  retirement
payments to Richard E. Engebrecht.

                           8.2.4     Loans and Investments.

                           Each of the Loan  Parties  shall  not,  and shall not
permit  any of its  Subsidiaries  to,  at any  time  make or  suffer  to  remain
outstanding  any loan or  advance  to, or  purchase,  acquire  or own any stock,
bonds,  notes or securities of, or any partnership  interest (whether general or
limited) or limited  liability  company  interest in, or any other investment or
interest in, or make any capital  contribution  to, any other Person,  or agree,
become or remain liable to do any of the foregoing, except:

                           (i) trade  credit  extended  on usual  and  customary
terms in the ordinary course of business;

                           (ii) advances to employees to meet expenses  incurred
by such employees in the ordinary course of business;

                           (iii) Permitted Investments;

                           (iv) loans,  advances and  investments  in other Loan
Parties; and


<PAGE>

                           (v)  acceptance of capital stock of another Person as
payment of, or to secure payment of,  obligations not exceeding in the aggregate
$100,000 owing to a Loan Party;

                           (vi)  relocation  expenses  and  loans  not to exceed
$500,000 to employees; and

                           (vii)  other  loans  and  investments  not  exceeding
$1,000,000.

                           8.2.5     [RESERVED]

                           8.2.6    Liquidations,    Mergers,    Consolidations,
Acquisitions.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its Subsidiaries  to, dissolve,  liquidate or wind-up its affairs,
or become a party to any merger or consolidation,  or acquire by purchase, lease
or  otherwise  all or  substantially  all of the assets or capital  stock of any
other Person, provided that

                           (1) any Loan  Party  may  consolidate  or merge  into
another Loan Party,

                           (2) any Loan Party may  acquire,  whether by purchase
or by  merger,  (A) all of the  ownership  interests  of  another  Person or (B)
substantially  all of assets of another  Person or of a business  or division of
another  Person (each an  "Permitted  Acquisition"),  provided  that each of the
following requirements is met:

                           (ii) if the Loan Parties are  acquiring the ownership
interests  in such  Person,  such Person  shall  execute a Joinder and join this
Agreement  as a Borrower  pursuant  to Section  11.18 and such Person and comply
with Section 11.18 on or before the date of such Permitted Acquisition.

                           (iii)  the  board of  directors  or other  equivalent
governing body of such Person shall have approved such Permitted Acquisition and
the Loan  Parties  shall have  delivered to the Banks  written  evidence of such
approval prior to such Permitted Acquisition,

                           (iv) the business acquired, or the business conducted
by the Person whose ownership interests are being acquired, as applicable, shall
be substantially the same as one or more line or lines of business  conducted by
the Loan Parties and shall comply with Section 8.2.10,

                           (v) no  Potential  Default or Event of Default  shall
exist   immediately   prior  to  and  after  giving  effect  to  such  Permitted
Acquisition,

                           (vi) the Borrowers shall demonstrate that it shall be
in compliance with the covenants contained in Sections 8.2.16, 8.2.17 and 8.2.18
after giving effect to such Permitted  Acquisition by delivering at least twenty
(20) calendar days prior to such Permitted Acquisition a certificate in the form
of Exhibit 8.2.6 evidencing such compliance, and


<PAGE>

                           (vii)  excluding the purchase of the VGC Assets,  the
Consideration  paid by the Loan  Parties for such  Acquisition  shall not exceed
$12,500,000  and  after  giving  effect  to  such  Permitted  Acquisition,   the
Consideration paid by the Loan Parties for all Permitted Acquisitions (excluding
the  purchase  of the VGC Assets)  made since the Closing  Date shall not exceed
$20,000,000;

provided however, that notwithstanding the foregoing, the timely purchase of the
VGC  Assets  by the  Company  pursuant  to the VGC  Asset  Agreement  shall be a
"Permitted Acquisition".

                           8.2.7     Dispositions of Assets or Subsidiaries.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its  Subsidiaries  to, sell,  convey,  assign,  lease,  abandon or
otherwise  transfer  or dispose of,  voluntarily  or  involuntarily,  any of its
properties  or assets,  tangible  or  intangible  (including  sale,  assignment,
discount or other  disposition  of accounts,  contract  rights,  chattel  paper,
equipment or general  intangibles  with or without recourse or of capital stock,
shares of  beneficial  interest,  partnership  interests  or  limited  liability
company interests of a Subsidiary of such Loan Party), except:

                           (i)  transactions  involving the sale of inventory in
the ordinary course of business;

                           (ii) any  sale,  transfer  or lease of  assets in the
ordinary  course of business  which are no longer  necessary  or required in the
conduct of such Loan Party's or such Subsidiary's business;

                           (iii)  any sale,  transfer  or lease of assets by any
wholly owned Subsidiary of such Loan Party to another Loan Party;

                           (iv) any  sale,  transfer  or lease of  assets in the
ordinary course of business which are replaced by substitute  assets acquired or
leased;

                           (v) any  other  sale,  transfer  or lease  of  assets
having an  aggregate  value not greater  than 5% of the  Company's  consolidated
assets; or

                           (vi) any sale,  transfer  or lease of  assets,  other
than those  specifically  excepted  pursuant  to clauses  (i) through (v) above,
which is approved by the Required Banks.

                           8.2.8     Affiliate Transactions.

                           Each of the Loan  Parties  shall  not,  and shall not
permit  any of its  Subsidiaries  to,  enter  into or carry out any  transaction

<PAGE>

(including  purchasing property or services from or selling property or services
to any Affiliate of any Loan Party or other Person)  unless such  transaction is
not  otherwise  prohibited  by this  Agreement,  is entered into in the ordinary
course of business upon fair and  reasonable  arm's-length  terms and conditions
which are fully  disclosed to the Agent and is in accordance with all applicable
Law.

                           8.2.9 Subsidiaries, Partnerships and Joint Ventures.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its  Subsidiaries  to, own or create  directly or  indirectly  any
Subsidiaries  other than (i) any Subsidiary which has joined this Agreement as a
Borrower on the Closing Date; and (ii) any  Subsidiary  formed after the Closing
Date  which  joins  this  Agreement  as a Borrower  pursuant  to Section  11.18,
provided  that the Required  Banks shall have  consented to such  formation  and
joinder.  Except for (or in connection  with)  investments  permitted by Section
8.2.4(v),  each of the Loan  Parties  shall not  become or agree to (1) become a
general or limited  partner in any general or limited  partnership,  except that
the Loan Parties may be general or limited  partners in other Loan Parties,  (2)
become a member or manager of, or hold a limited  liability company interest in,
a limited  liability  company,  except  that the Loan  Parties may be members or
managers of, or hold limited liability company interests in, other Loan Parties,
or (3) become a joint  venturer  or hold a joint  venture  interest in any joint
venture.

                           8.2.10    Continuation of or Change in Business.

                           Each of the Loan  Parties  shall  not,  and shall not
permit  any of its  Subsidiaries  to,  engage  in any  business  other  than the
distribution  and sale of imaging,  publishing  and printing  products,  systems
integration and related services substantially as conducted and operated by such
Loan Party or Subsidiary  during the present fiscal year, and such Loan Party or
Subsidiary shall not permit any material change in such business.

                           8.2.11    Plans and Benefit Arrangements.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its Subsidiaries to:

                           (i) fail to satisfy the minimum funding  requirements
of ERISA and the Internal Revenue Code with respect to any Plan;

                           (ii)  request  a  minimum  funding  waiver  from  the
Internal Revenue Service with respect to any Plan;


<PAGE>

                           (iii)  engage in a  Prohibited  Transaction  with any
Plan,  Benefit  Arrangement or Multiemployer Plan which, alone or in conjunction
with any other  circumstances  or set of  circumstances  resulting  in liability
under ERISA, would constitute a Material Adverse Change;

                           (iv) permit the accumulated  benefit  obligations for
all Plans taken together to exceed the aggregate fair market value of the assets
in such Plans;

                           (v)  fail to make  when due any  contribution  to any
Multiemployer  Plan that the  Borrowers  or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan, or any
Law pertaining thereto;

                           (vi)  withdraw  (completely  or  partially)  from any
Multiemployer  Plan or withdraw (or be deemed under Section  4062(e) of ERISA to
withdraw) from any Multiple  Employer Plan,  where any such withdrawal is likely
to result in a material  liability  of the  Borrowers or any member of the ERISA
Group;

                           (vii)   terminate,   or  institute   proceedings   to
terminate,  any Plan,  where such  termination is likely to result in a material
liability to the Borrowers or any member of the ERISA Group;

                           (viii) make any amendment to any Plan with respect to
which security is required under Section 307 of ERISA; or

                           (ix)  fail to give any and all  notices  and make all
disclosures  and  governmental  filings  required  under  ERISA or the  Internal
Revenue  Code,  where such  failure  is likely to result in a  Material  Adverse
Change.

                           8.2.12    Fiscal Year.

                           The  Borrowers  shall  not,  and shall not permit any
Subsidiary of the  Borrowers  to,  change its fiscal year from the  twelve-month
period beginning January 1 and ending December 31.

                           8.2.13    Issuance of Stock.

                           The Company shall not permit any of its  Subsidiaries
to, issue any additional shares of its capital stock or any options, warrants or
other rights in respect thereof other than to the Company.

                           8.2.14    Changes in Organizational Documents.

                           Each of the Loan  Parties  shall  not,  and shall not
permit any of its  Subsidiaries  to,  amend in any  respect its  certificate  of
incorporation  (including  any  provisions  or  resolutions  relating to capital

<PAGE>

stock), certificate of limited partnership,  partnership agreement,  certificate
of  formation,  limited  liability  company  agreement  or other  organizational
documents  without  providing at least thirty (30) calendar  days' prior written
notice to the Agent and the Banks and, in the event such change would be adverse
to the Banks as  determined by the Agent in its sole  discretion,  obtaining the
prior  written   consent  of  the  Required  Banks  except  in  connection  with
transactions permitted by Section 8.2.6(1).

                           8.2.15    [RESERVED]

                           8.2.16    Minimum Fixed Charge Coverage Ratio.

                           The Loan  Parties  shall not permit the Fixed  Charge
Coverage Ratio, calculated as of the end of each fiscal quarter for the four (4)
fiscal quarters then ended, to be less than 1.25 to 1.0.

                           8.2.17    Maximum Leverage Ratio.

                           The Loan  Parties  shall not at any time  permit  the
Leverage  Ratio to exceed the ratios set forth below for the  periods  specified
below:

                                    Period                       Ratio

                           12/31/96 through 9/30/97           4.25-to-1.0
                           12/31/97 through 3/31/98           3.75-to-1.0
                           6/30/98 and thereafter             3.50-to-1.0


                           8.2.18    Minimum Tangible Net Worth.

                           The   Borrowers   shall   not  at  any  time   permit
Consolidated  Tangible  Net  Worth  to be  less  than  $37,900,000  plus  50% of
consolidated  net income of the  Company  and its  Subsidiaries  for each fiscal
quarter  in which net income is earned  (as  opposed  to a net loss)  during the
period from June 30, 1996 to the date of determination.

                  8.3       Reporting Requirements.

                           The Loan Parties, jointly and severally, covenant and
agree that until  payment in full of the Loans,  Reimbursement  Obligations  and
Letter of Credit Borrowings and interest  thereon,  expiration or termination of
all  Letters  of  Credit,  satisfaction  of  all  of  the  Loan  Parties'  other
Obligations  hereunder and under the other Loan Documents and termination of the
Commitments, the Loan Parties will furnish or cause to be furnished to the Agent
and each of the Banks:


<PAGE>

                           8.3.1     Quarterly Financial Statements.
                           As  soon  as  available   and  in  any  event  within
forty-five  (45)  calendar  days after the end of each of the first three fiscal
quarters in each fiscal year, financial statements of the Company, consisting of
a  consolidated  balance sheet as of the end of such fiscal  quarter and related
consolidated  statements  of income  for the fiscal  quarter  then ended and the
fiscal year  through  that date and cash flows for the fiscal year  through that
date, all in reasonable  detail and certified  (subject to normal year-end audit
adjustments)  by the  Chief  Executive  Officer,  President  or Chief  Financial
Officer  of the  Company  as having  been  prepared  in  accordance  with  GAAP,
consistently  applied,  and setting  forth in  comparative  form the  respective
financial  statements  for the  corresponding  date and  period in the  previous
fiscal year.

                           8.3.2     Annual Financial Statements.

                           As soon as available  and in any event within  ninety
(90) days after the end of each fiscal year of the Company, financial statements
of the Company consisting of a consolidated  balance sheet as of the end of such
fiscal year, and related consolidated statements of income, stockholders' equity
and cash flows for the fiscal  year then  ended,  all in  reasonable  detail and
setting forth in comparative form the financial  statements as of the end of and
for the preceding  fiscal year,  and certified by independent  certified  public
accountants of nationally  recognized  standing  satisfactory to the Agent.  The
certificate or report of accountants shall be free of qualifications (other than
any consistency  qualification  that may result from a change in the method used
to prepare the  financial  statements as to which such  accountants  concur) and
shall not  indicate  the  occurrence  or  existence  of any event,  condition or
contingency which would materially impair the prospect of payment or performance
of any  covenant,  agreement  or duty of any Loan  Party  under  any of the Loan
Documents.

                           8.3.3     Borrowing Base Certificate.

                           On or before the  fifteenth  (15th)  calendar  day of
each calendar  month,  the Borrower  shall deliver to the Bank a Borrowing  Base
Certificate. The Borrowing Base Certificate shall reflect Borrower's calculation
of the Borrowing Base as of the last day of the preceding  calendar month, and a
comparison  of such number to the  Commitment  and to the amount of  outstanding
Obligations.

                         
<PAGE>

                           8.3.4 Certificate of the Borrowers.

                           Concurrently  with the  financial  statements  of the
Borrowers furnished to the Agent and to the Banks pursuant to Sections 8.3.1 and
8.3.2, a certificate  of the Borrowers  signed by the Chief  Executive  Officer,
President  or Chief  Financial  Officer  of the  Company  and the  President  or
Treasurer of the other Loan Parties, in the form of Exhibit 8.3.4, to the effect
that, except as described pursuant to Section 8.3.5, (i) the representations and
warranties  of the  Borrowers  contained  in  Section  6 and in the  other  Loan
Documents  are  true on and as of the  date of such  certificate  with  the same
effect as though such  representations and warranties had been made on and as of
such date (except  representations  and warranties which expressly relate solely
to an earlier  date or time) and the Loan Parties  have  performed  and complied
with all covenants and conditions hereof,  (ii) no Event of Default or Potential
Default  exists  and is  continuing  on the date of such  certificate  and (iii)
containing calculations in sufficient detail to demonstrate compliance as of the
date of such  financial  statements  with all financial  covenants  contained in
Section 8.2.

                           8.3.5     Notice of Default.

                           Promptly  after  any  officer  of any Loan  Party has
learned  of the  occurrence  of an Event of  Default  or  Potential  Default,  a
certificate signed by the Chief Executive Officer,  President or Chief Financial
Officer of such Loan Party setting forth the details of such Event of Default or
Potential Default and the action which the such Loan Party proposes to take with
respect thereto. 8.3.6 Notice of Litigation.

                           Promptly after the  commencement  thereof,  notice of
all actions, suits, proceedings or investigations before or by any Official Body
or any other  Person  against  any Loan  Party or  Subsidiary  of any Loan Party
involve  a claim or  series  of  claims  in  excess  of  $1,000,000  or which if
adversely determined would constitute a Material Adverse Change.

                           8.3.7     Certain Events.

                           Written notice to the Agent:

                           (i) at least thirty (30) calendar days prior thereto,
with  respect to any  proposed  sale or transfer  of assets  pursuant to Section
8.2.7(iv) or (vi); and

                           (ii)  within  the time  limits  set forth in  Section
8.2.14, any amendment to the organizational documents of any Loan Party.


<PAGE>

                           8.3.8   Budgets,   Forecasts,   Other   Reports   and
Information.

                           Promptly  upon  their   becoming   available  to  the
Borrowers:

                           (i)  the  annual  forecasts  or  projections  of  the
Borrowers,  to be supplied not later than thirty (30) days prior to commencement
of the fiscal year to which any of the foregoing  may be  applicable  (the Agent
having received prior to the Closing Date the 1997 forecasts and projections),

                           (ii)  any  reports   including   management   letters
submitted to the Borrowers by  independent  accountants  in connection  with any
annual, interim or special audit,

                           (iii)  any  reports,   notices  or  proxy  statements
generally distributed by the Company to its stockholders on a date no later than
the date supplied to such stockholders,

                           (iv)  regular or periodic  reports,  including  Forms
10-K,  10-Q and 8-K,  registration  statements  and  prospectuses,  filed by the
Company with the Securities and Exchange Commission,

                           (v) a copy of any material order in any proceeding to
which  the  Borrowers  or any of their  Subsidiaries  is a party  issued  by any
Official Body,

                           (vi) notices of any amendments or changes of any Loan
Party's bylaws or other governing documents or charters, and

                           (vii) such other  reports and  information  as any of
the Banks may from time to time  reasonably  request.  The Borrowers  shall also
notify the Banks  promptly of the  enactment or adoption of any Law of which any
Loan Party becomes aware which may result in a Material Adverse Change.

                           8.3.9   Notices    Regarding    Plans   and   Benefit
Arrangements.

                           8.3.9.1 Certain Events.

                           Promptly  upon  becoming   aware  of  the  occurrence
thereof,  notice  (including the nature of the event and, when known, any action
taken or  threatened  by the Internal  Revenue  Service or the PBGC with respect
thereto) of:

                           (i)  any   Reportable   Event  with  respect  to  the
Borrowers  or any other  member of the ERISA  Group  (regardless  of whether the
obligation to report said Reportable Event to the PBGC has been waived),

                           (ii) any Prohibited  Transaction  which could subject
the Borrowers or any other member of the ERISA Group to a civil penalty assessed
pursuant  to Section  502(i) of ERISA or a tax  imposed  by Section  4975 of the
Internal  Revenue Code in connection  with any Plan, any Benefit  Arrangement or
any trust created thereunder,


<PAGE>

                           (iii) any assertion of material withdrawal  liability
with respect to any Multiemployer Plan,

                           (iv)  any  partial  or  complete  withdrawal  from  a
Multiemployer Plan by the Borrowers or any other member of the ERISA Group under
Title IV of ERISA (or  assertion  thereof),  where such  withdrawal is likely to
result in material withdrawal liability,

                           (v) any cessation of operations  (by the Borrowers or
any  other  member  of the  ERISA  Group)  at a  facility  in the  circumstances
described in Section 4062(e) of ERISA,

                           (vi)  withdrawal by the Borrowers or any other member
of the ERISA Group from a Multiple Employer Plan,

                           (vii) a failure by the  Borrowers or any other member
of the ERISA Group to make a payment to a Plan required to avoid imposition of a
Lien under Section 302(f) of ERISA,

                           (viii)  the  adoption  of  an  amendment  to  a  Plan
requiring  the  provision  of security  to such Plan  pursuant to Section 307 of
ERISA, or

                           (ix)  any  change  in the  actuarial  assumptions  or
funding  methods  used for any  Plan,  where  the  effect  of such  change is to
materially  increase or  materially  reduce the  unfunded  benefit  liability or
obligation to make periodic contributions.

                           8.3.9.2 Notices of Involuntary Termination and Annual
Reports.

                           Promptly  after  receipt  thereof,  copies of (a) all
notices  received by the Borrowers or any other member of the ERISA Group of the
PBGC's intent to terminate any Plan  administered or maintained by the Borrowers
or any member of the ERISA Group,  or to have a trustee  appointed to administer
any such  Plan;  and (b) at the  request  of the Agent or any Bank  each  annual
report (IRS Form 5500 series) and all  accompanying  schedules,  the most recent
actuarial  reports,  the  most  recent  financial  information   concerning  the
financial status of each Plan administered or maintained by the Borrowers or any
other member of the ERISA Group, and schedules  showing the amounts  contributed
to each such Plan by or on behalf of the  Borrowers  or any other  member of the
ERISA  Group in which any of their  personnel  participate  or from  which  such
personnel may derive a benefit,  and each Schedule B (Actuarial  Information) to
the annual  report filed by the Borrowers or any other member of the ERISA Group
with the Internal Revenue Service with respect to each such Plan.


<PAGE>

                    8.3.9.3 Notice of Voluntary Termination.

                           Promptly upon the filing thereof,  copies of any Form
5310, or any successor or equivalent  form to Form 5310,  filed with the PBGC in
connection with the termination of any Plan.


                                   9. DEFAULT

                  9.1       Events of Default.

                  An Event of Default shall mean the  occurrence or existence of
any one or more of the  following  events or  conditions  (whatever  the  reason
therefor and whether voluntary, involuntary or effected by operation of Law):

                           9.1.1     Payments Under Loan Documents.

                           The Borrowers  shall fail to pay any principal of any
Loan (including scheduled installments, mandatory prepayments or the payment due
at maturity),  Reimbursement  Obligation or Letter of Credit  Borrowing or shall
fail to pay any  interest on any Loan ,  Reimbursement  Obligation  or Letter of
Credit  Borrowing or any other  amount  owing  hereunder or under the other Loan
Documents  after  such  principal,  interest  or  other  amount  becomes  due in
accordance with the terms hereof or thereof;

                           9.1.2     Breach of Warranty.

                           Any  representation  or warranty  made at any time by
any of the Loan  Parties  herein or by any of the Loan Parties in any other Loan
Document,  or in  any  certificate,  other  instrument  or  statement  furnished
pursuant to the provisions hereof or thereof,  shall prove to have been false or
misleading in any material respect as of the time it was made or furnished;

                           9.1.3  Breach of  Negative  Covenants  or  Visitation
Rights.

                           Any  of  the  Loan  Parties   shall  default  in  the
observance or performance of any covenant  contained in Section 8.1.6 or Section
8.2;

                           9.1.4     Breach of Other Covenants.

                           Any  of  the  Loan  Parties   shall  default  in  the
observance or performance of any other covenant,  condition or provision  hereof
or of any other Loan Document and such default shall  continue  unremedied for a
period of ten (10)  Business  Days after any  officer of any Loan Party  becomes
aware of the occurrence  thereof (such grace period to be applicable only in the
event such default can be remedied by  corrective  action of the Loan Parties as
determined by the Agent in its sole discretion);


<PAGE>

                           9.1.5 Defaults in Other Agreements or Indebtedness.

                           A default or event of default shall occur at any time
under the terms of any other agreement involving borrowed money or the extension
of credit or any other  Indebtedness under which any Loan Party or Subsidiary of
any Loan  Party  may be  obligated  as a  borrower  or  guarantor  in  excess of
$1,000,000  in the  aggregate,  and such  breach,  default  or event of  default
consists  of the  failure  to pay  (beyond  any period of grace  permitted  with
respect thereto,  whether waived or not) any  indebtedness  when due (whether at
stated  maturity,  by  acceleration  or  otherwise) or if such breach or default
permits or causes the  acceleration  of any  indebtedness  (whether  or not such
right shall have been waived) or the termination of any commitment to lend;

                           9.1.6     Final Judgments or Orders.

                           Any final  judgments  or orders  for the  payment  of
money in excess of $250,000 in the aggregate  shall be entered  against any Loan
Party by a court having  jurisdiction  in the  premises,  which  judgment is not
discharged,  vacated,  bonded or stayed pending appeal within a period of thirty
(30) days from the date of entry;

                           9.1.7     Loan Document Unenforceable.

                           Any of the Loan  Documents  shall  cease to be legal,
valid and binding agreements enforceable against the party executing the same or
such party's  successors and assigns (as permitted  under the Loan Documents) in
accordance  with the respective  terms thereof or shall in any way be terminated
(except in accordance  with its terms) or become or be declared  ineffective  or
inoperative  or shall in any way be  challenged  or contested by any of the Loan
Parties or cease to give or provide the respective  Liens,  security  interests,
rights, titles, interests, remedies, powers or privileges intended to be created
thereby;

                           9.1.8 Uninsured Losses; Proceedings Against Assets.

                           There shall occur any material uninsured damage to or
loss,  theft or destruction of any of the property of the Borrowers in excess of
$500,000 or the property of the  Borrowers or any other of the Loan  Parties' or
any of their Subsidiaries' assets are attached, seized, levied upon or subjected
to a writ or  distress  warrant;  or such  come  within  the  possession  of any
receiver,  trustee,  custodian or assignee for the benefit of creditors  and the
same is not cured within thirty (30) days thereafter;

                           9.1.9     Notice of Lien or Assessment.

                           A notice of Lien or  assessment in excess of $500,000
which is not a Permitted Lien is filed of record with respect to all or any part
of any of the Loan Parties' or any of their  Subsidiaries'  assets by the United
States, or any department,  agency or instrumentality  thereof, or by any state,
county, municipal or other governmental agency, including the PBGC, or any taxes
or  debts  owing  at any time or  times  hereafter  to any one of these  becomes
payable and the same is not paid within  thirty (30) days after the same becomes
payable;


<PAGE>

                           9.1.10    Insolvency.

                           Any Loan  Party  or any  Subsidiary  of a Loan  Party
ceases to be solvent or admits in writing its inability to pay its debts as they
mature;

                           9.1.11   Events   Relating   to  Plans  and   Benefit
Arrangements.

                           Any of  the  following  occurs:  (i)  any  Reportable
Event,  which the Agent  determines  in good faith  constitutes  grounds for the
termination  of any  Plan  by  the  PBGC  or the  appointment  of a  trustee  to
administer or liquidate any Plan,  shall have occurred and be  continuing;  (ii)
proceedings  shall have been  instituted  or other action taken to terminate any
Plan,  or a  termination  notice shall have been filed with respect to any Plan;
(iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) the
PBGC shall give notice of its intent to institute  proceedings  to terminate any
Plan or Plans or to appoint a trustee to administer or liquidate any Plan;  and,
in the case of the  occurrence  of (i),  (ii),  (iii) or (iv)  above,  the Agent
determines in good faith that the amount of the  Borrowers'  liability is likely
to exceed 10% of its  Consolidated  Tangible Net Worth; (v) the Borrowers or any
member of the ERISA  Group  shall fail to make any  contributions  when due to a
Plan or a  Multiemployer  Plan;  (vi) the  Borrowers  or any other member of the
ERISA Group shall make any amendment to a Plan with respect to which security is
required under Section 307 of ERISA;  (vii) the Borrowers or any other member of
the ERISA Group shall  withdraw  completely  or partially  from a  Multiemployer
Plan; (viii) the Borrowers or any other member of the ERISA Group shall withdraw
(or shall be deemed under Section  4062(e) of ERISA to withdraw) from a Multiple
Employer Plan; or (ix) any applicable Law is adopted,  changed or interpreted by
any  Official  Body with respect to or  otherwise  affecting  one or more Plans,
Multiemployer  Plans or Benefit  Arrangements  and,  with  respect to any of the
events  specified in (v), (vi),  (vii),  (viii) or (ix), the Agent determines in
good faith that any such occurrence would be reasonably likely to materially and
adversely affect the total enterprise represented by the Borrowers and the other
members of the ERISA Group;

                           9.1.12    Cessation of Business.

                           Any Loan Party or  Subsidiary  of a Loan Party ceases
to conduct its business as  contemplated,  except as expressly  permitted  under
Section  8.2.6 or 8.2.7,  or any Loan  Party or  Subsidiary  of a Loan  Party is
enjoined,  restrained or in any way prevented by court order from conducting all
or any material  part of its business  and such  injunction,  restraint or other
preventive  order is not  dismissed  within  thirty  (30)  days  after the entry
thereof;

                           9.1.13    Change of Control.

                           (i) Any  person  or  group  of  persons  (within  the
meaning of Sections  13(a) or 14(a) of the  Securities  Exchange Act of 1934, as
amended) shall have acquired beneficial ownership of (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange  Commission under said Act) 30%
or more of the voting  capital stock of the Company;  or (ii) within a period of
twelve (12) consecutive  calendar months,  individuals who were directors of the
Company on the first day of such period shall cease to  constitute a majority of
the board of directors of the Company;


<PAGE>

                           9.1.14    Involuntary Proceedings.

                           A proceeding  shall have been  instituted  in a court
having  jurisdiction  in the  premises  seeking a decree or order for  relief in
respect of any Loan Party or Subsidiary of a Loan Party in an  involuntary  case
under any applicable bankruptcy, insolvency, reorganization or other similar law
now or hereafter in effect,  or for the  appointment of a receiver,  liquidator,
assignee, custodian, trustee, sequestrator, conservator (or similar official) of
any Loan Party or  Subsidiary  of a Loan Party for any  substantial  part of its
property,  or for  the  winding-up  or  liquidation  of its  affairs,  and  such
proceeding  shall remain  undismissed  or unstayed and in effect for a period of
thirty  (30)  consecutive  days or such  court  shall  enter a  decree  or order
granting any of the relief sought in such proceeding; or

                           9.1.15    Voluntary Proceedings.

                           Any Loan Party or  Subsidiary  of a Loan Party  shall
commence a voluntary case under any
applicable  bankruptcy,  insolvency,  reorganization or other similar law now or
hereafter  in  effect,  shall  consent to the entry of an order for relief in an
involuntary  case under any such law,  or shall  consent to the  appointment  or
taking  possession  by a receiver,  liquidator,  assignee,  custodian,  trustee,
sequestrator,  conservator  (or  other  similar  official)  of itself or for any
substantial  part of its  property  or shall make a general  assignment  for the
benefit of  creditors,  or shall fail  generally to pay its debts as they become
due, or shall take any action in furtherance of any of the foregoing.

                  9.2       Consequences of Event of Default.

                           9.2.1  Events  of  Default  Other  Than   Bankruptcy,
Insolvency or Reorganization Proceedings.

                           If an Event of Default specified under Sections 9.1.1
through 9.1.13 shall occur and be  continuing,  the Banks and the Agent shall be
under no further  obligation  to make Loans or issue  Letters of Credit,  as the
case may be, and the Agent may,  and upon the  request  of the  Required  Banks,
shall (i) by written  notice to the  Borrowers,  declare  the  unpaid  principal
amount of the Notes then  outstanding  and all  interest  accrued  thereon,  any
unpaid fees and all other  Indebtedness  of the Borrowers to the Banks hereunder
and  thereunder  to be forthwith due and payable,  and the same shall  thereupon
become and be  immediately  due and payable to the Agent for the benefit of each
Bank without presentment,  demand,  protest or any other notice of any kind, all
of which are hereby expressly waived, and (ii) require the Borrowers to, and the
Borrowers shall  thereupon,  deposit in a non-interest  bearing account with the
Agent,  as cash  collateral for its  Obligations  under the Loan  Documents,  an
amount equal to the maximum amount currently or at any time thereafter available
to be drawn on all  outstanding  Letters of  Credit,  and the  Borrowers  hereby
pledge  to the  Agent  and the  Banks,  and  grants to the Agent and the Banks a
security interest in, all such cash as security for such  Obligations.  Upon the
curing of all  existing  Events of Default to the  satisfaction  of the Required
Banks, the Agent shall return such cash collateral to the Borrowers; and

                          
<PAGE>

                           9.2.2   Bankruptcy,   Insolvency  or   Reorganization
Proceedings.

                           If an Event of Default specified under Section 9.1.14
or 9.1.15 shall occur,  the Banks shall be under no further  obligations to make
Loans hereunder and the unpaid  principal  amount of the Notes then  outstanding
and all interest accrued thereon,  any unpaid fees and all other Indebtedness of
the Borrowers to the Banks hereunder and thereunder shall be immediately due and
payable,  without  presentment,  demand,  protest or notice of any kind,  all of
which are hereby expressly waived; and

                           9.2.3     Set-off.

                           If an Event of Default shall occur and be continuing,
any Bank to whom any Obligation is owed by any Loan Party hereunder or under any
other Loan Document or any  participant of such Bank which has agreed in writing
to be bound by the  provisions  of Section  10.13 and any branch,  Subsidiary or
Affiliate  of such Bank or  participant  anywhere  in the world  shall  have the
right,  in addition to all other  rights and remedies  available to it,  without
notice to such Loan  Party,  to  set-off  against  and apply to the then  unpaid
balance  of all the Loans and all other  Obligations  of the  Borrowers  and the
other Loan Parties hereunder or under any other Loan Document any debt owing to,
and any other funds held in any manner for the account of, the Borrowers or such
other Loan Party by such Bank or  participant  or by such branch,  Subsidiary or
Affiliate,  including all funds in all deposit accounts (whether time or demand,
general or special,  provisionally  credited or finally credited,  or otherwise)
now or hereafter  maintained  by the  Borrowers or such other Loan Party for its
own account (but not including  funds held in custodian or trust  accounts) with
such Bank or  participant  or such branch,  Subsidiary or Affiliate.  Such right
shall  exist  whether  or not any Bank or the Agent  shall  have made any demand
under this Agreement or any other Loan Document,  whether or not such debt owing
to or funds held for the account of the Borrowers or such other Loan Party is or
are matured or  unmatured  and  regardless  of the  existence or adequacy of any
Guaranty or any other  security,  right or remedy  available  to any Bank or the
Agent; and

                           9.2.4     Suits, Actions, Proceedings.

                           If an Event of Default shall occur and be continuing,
and  whether  or not the Agent  shall have  accelerated  the  maturity  of Loans
pursuant to any of the  foregoing  provisions  of this Section 9.2, the Agent or
any Bank,  if owed any amount with respect to the Notes,  may proceed to protect
and enforce its rights by suit in equity, action at law and/or other appropriate
proceeding,  whether for the specific  performance  of any covenant or agreement
contained in this  Agreement or the Notes,  including as permitted by applicable
Law the obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become  due,  by  declaration  or  otherwise,  proceed to enforce the
payment thereof or any other legal or equitable right of the Agent or such Bank;
and


<PAGE>

                           9.2.5     Application of Proceeds.

                           From and  after the date on which the Agent has taken
any action  pursuant to this Section 9.2 and until all  Obligations  of the Loan
Parties have been paid in full, any and all proceeds  received by the Agent from
any sale or other  disposition  of any  property of the  Borrowers,  or any part
thereof,  or the exercise of any other remedy by the Agent,  shall be applied as
follows:

                           (i) first,  to reimburse  the Agent and the Banks for
out-of-pocket costs, expenses and disbursements, including reasonable attorneys'
and paralegals'  fees and legal expenses,  incurred by the Agent or the Banks in
connection  with  collection of any Obligations of any of the Loan Parties under
any of the Loan  Documents,  including  advances made by the Banks or any one of
them or the Agent for the reasonable  maintenance,  preservation,  protection or
enforcement  of, or realization  upon, the  Collateral,  including  advances for
taxes, insurance,  repairs and the like and reasonable expenses incurred to sell
or otherwise realize on, or prepare for sale or other realization on, any of the
property of the Borrowers;

                           (ii) second,  to the  repayment  of all  Indebtedness
then due and  unpaid  of the Loan  Parties  to the  Banks  incurred  under  this
Agreement or any of the other Loan  Documents,  whether of principal,  interest,
fees,  expenses or  otherwise,  in such manner as the Agent may determine in its
discretion; and

                           (iii) the balance, if any, as required by Law.

                           9.2.6     Other Rights and Remedies.

                           In  addition  to  all  of  the  rights  and  remedies
contained in this Agreement or in any of the other Loan Documents (including the
Mortgage),  the Agent  shall have all of the rights  and  remedies  of a secured
party under the Uniform  Commercial  Code or other  applicable Law, all of which
rights  and  remedies  shall be  cumulative  and  non-exclusive,  to the  extent
permitted  by Law.  The Agent may,  and upon the request of the  Required  Banks
shall, exercise all post-default rights granted to the Agent and the Banks under
the Loan Documents or applicable Law.

                  9.3       Notice of Sale.

                  Any notice required to be given by the Agent of a sale, lease,
or other  disposition  of the property of the  Borrowers  or any other  intended
action by the Agent, if given ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to the Borrowers.



<PAGE>

                                  10. THE AGENT

                  10.1      Appointment.

                  Each  Bank  hereby   irrevocably   designates,   appoints  and
authorizes  PNC Bank to act as Agent for such Bank under this  Agreement  and to
execute  and  deliver  or accept  on behalf of each of the Banks the other  Loan
Documents. Each Bank hereby irrevocably authorizes,  and each holder of any Note
by the acceptance of a Note shall be deemed irrevocably to authorize,  the Agent
to take such action on its behalf under the provisions of this Agreement and the
other Loan  Documents  and any other  instruments  and  agreements  referred  to
herein,  and to exercise such powers and to perform such duties hereunder as are
specifically delegated to or required of the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. PNC Bank agrees to act as
the Agent on behalf of the Banks to the extent provided in this Agreement.

                  10.2      Delegation of Duties.

                  The  Agent  may  perform  any of its  duties  hereunder  by or
through  agents or employees  (provided  such  delegation  does not constitute a
relinquishment  of its duties as Agent) and,  subject to Sections 10.5 and 10.6,
shall be entitled to engage and pay for the advice or services of any attorneys,
accountants  or other experts  concerning  all matters  pertaining to its duties
hereunder and to rely upon any advice so obtained.

                  10.3      Nature of Duties; Independent Credit Investigation.

                  The Agent  shall  have no duties  or  responsibilities  except
those expressly set forth in this Agreement and no implied covenants, functions,
responsibilities,  duties,  obligations,  or liabilities shall be read into this
Agreement or otherwise  exist.  The duties of the Agent shall be mechanical  and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary  or trust  relationship  in respect of any Bank;  and  nothing in this
Agreement,  expressed or implied,  is intended to or shall be so construed as to
impose upon the Agent any  obligations  in respect of this  Agreement  except as
expressly set forth herein.  Without  limiting the  generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the Agent is not
intended to connote any  fiduciary  or other  implied (or  express)  obligations
arising under agency doctrine of any applicable Law. Instead,  such term is used
merely as a matter of market  custom,  and is intended to create or reflect only
an administrative  relationship between independent  contracting  parties.  Each
Bank expressly  acknowledges (i) that the Agent has not made any representations
or warranties to it and that no act by the Agent hereafter taken,  including any
review of the affairs of any of the Loan Parties,  shall be deemed to constitute
any  representation  or warranty by the Agent to any Bank; (ii) that it has made
and will continue to make,  without reliance upon the Agent, its own independent
investigation  of the  financial  condition and affairs and its own appraisal of
the  creditworthiness  of each of the  Loan  Parties  in  connection  with  this
Agreement  and the  making and  continuance  of the Loans  hereunder;  and (iii)
except  as  expressly  provided  herein,  that the Agent  shall  have no duty or
responsibility,  either initially or on a continuing  basis, to provide any Bank
with any credit or other  information with respect thereto,  whether coming into
its possession before the making of any Loan or at any time or times thereafter.


<PAGE>

                           10.4  Actions in  Discretion  of Agent;  Instructions
from the Banks.

                  The Agent  agrees,  upon the written  request of the  Required
Banks,  to take or refrain from taking any action of the type specified as being
within the Agent's rights, powers or discretion herein,  provided that the Agent
shall not be  required  to take any action  which  exposes the Agent to personal
liability or which is contrary to this  Agreement or any other Loan  Document or
applicable  Law. In the absence of a request by the  Required  Banks,  the Agent
shall have authority,  in its sole  discretion,  to take or not to take any such
action, unless this Agreement  specifically requires the consent of the Required
Banks or all of the Banks.  Any action  taken or failure to act pursuant to such
instructions  or  discretion  shall be binding on the Banks,  subject to Section
10.6. Subject to the provisions of Section 10.6, no Bank shall have any right of
action  whatsoever  against  the  Agent  as a  result  of the  Agent  acting  or
refraining  from acting  hereunder in accordance  with the  instructions  of the
Required  Banks,  or in the  absence  of  such  instructions,  in  the  absolute
discretion of the Agent.

                           10.5  Reimbursement and  Indemnification  of Agent by
the Borrowers.

                  The  Borrowers  unconditionally  agree to pay or reimburse the
Agent and hold the Agent  harmless  against (a) liability for the payment of all
reasonable  out-of-pocket costs, expenses and disbursements,  including fees and
expenses of counsel (including the allocated costs of staff counsel), appraisers
and environmental consultants, incurred by the Agent (i) subject to the terms of
the  Agent's   Letter,   in  connection  with  the   development,   negotiation,
preparation, printing, execution,  administration,  syndication,  interpretation
and performance of this Agreement and the other Loan Documents, (ii) relating to
any requested amendments, waivers or consents pursuant to the provisions hereof,
(iii) in connection  with the  enforcement  of this  Agreement or any other Loan
Document or  collection  of amounts due hereunder or thereunder or the proof and
allowability  of any claim  arising  under  this  Agreement  or any  other  Loan
Document,  whether in bankruptcy or receivership  proceedings or otherwise,  and
(iv) in any  workout or  restructuring  or in  connection  with the  protection,
preservation,  exercise  or  enforcement  of any of the  terms  hereof or of any
rights  hereunder  or under any other Loan  Document or in  connection  with any
foreclosure,  collection or  bankruptcy  proceedings,  and (b) all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements of any kind or nature  whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such,  arising
out of this Agreement or any other Loan Documents or any action taken or omitted
by the Agent  hereunder or thereunder,  provided that the Borrowers shall not be
liable  for any  portion  of such  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements if the
same results from the Agent's gross negligence or willful misconduct,  or if the
Borrowers  were not given  notice of the subject  claim and the  opportunity  to
participate in the defense  thereof,  at its expense  (except that the Borrowers
shall remain liable to the extent such failure to give notice does not result in
a loss to the Borrowers), or if the same results from a compromise or settlement
agreement entered into without the consent of the Borrowers,  which shall not be
unreasonably withheld. In addition, the Borrowers agree to reimburse and pay all
reasonable  out-of-pocket  expenses of the Agent's regular  employees and agents
engaged  periodically to perform audits of the Loan Parties' books,  records and
business properties.


<PAGE>

                  10.6      Exculpatory Provisions; Limitation of Liability.

                  Neither  the  Agent  nor  any  of  its  directors,   officers,
employees,  agents,  attorneys or Affiliates shall (a) be liable to any Bank for
any  action  taken  or  omitted  to be  taken  by it or  them  hereunder,  or in
connection  herewith including  pursuant to any Loan Document,  unless caused by
its or their own gross negligence or willful  misconduct,  (b) be responsible in
any  manner  to  any  of  the  Banks  for  the  effectiveness,   enforceability,
genuineness,  validity or the due execution of this  Agreement or any other Loan
Documents or for any recital,  representation,  warranty, document, certificate,
report or statement herein or made or furnished under or in connection with this
Agreement or any other Loan Documents,  or (c) be under any obligation to any of
the Banks to ascertain or to inquire as to the  performance or observance of any
of the terms,  covenants or conditions hereof or thereof on the part of the Loan
Parties,  or the financial  condition of the Loan  Parties,  or the existence or
possible existence of any Event of Default or Potential Default. No claim may be
made by any of the Loan Parties,  any Bank, the Agent or any of their respective
Subsidiaries  against the Agent, any Bank or any of their respective  directors,
officers,  employees,  agents, attorneys or Affiliates,  or any of them, for any
special,  indirect or consequential  damages or, to the fullest extent permitted
by Law,  for any  punitive  damages  in  respect of any claim or cause of action
(whether  based on contract,  tort,  statutory  liability,  or any other ground)
based on,  arising out of or related to any Loan  Document  or the  transactions
contemplated  hereby  or any act,  omission  or event  occurring  in  connection
therewith,   including  the  negotiation,   documentation,   administration   or
collection of the Loans, and each of the Loan Parties, (for itself and on behalf
of each of its Subsidiaries), the Agent and each Bank hereby waive, releases and
agree never to sue upon any claim for any such  damages,  whether such claim now
exists or  hereafter  arises and whether or not it is now known or  suspected to
exist in its favor. Each Bank agrees that, except for notices, reports and other
documents expressly required to be furnished to the Banks by the Agent hereunder
or given to the Agent for the account of or with copies for the Banks, the Agent
and each of its directors,  officers, employees, agents, attorneys or Affiliates
shall not have any duty or  responsibility to provide any Bank with an credit or
other  information  concerning  the business,  operations,  property,  condition
(financial  or  otherwise),  prospects or  creditworthiness  of the Loan Parties
which  may  come  into the  possession  of the  Agent  or any of its  directors,
officers, employees, agents, attorneys or Affiliates.

                  10.7      Reimbursement and Indemnification of Agent by Banks.

                  Each Bank agrees to reimburse  and indemnify the Agent (to the
extent not  reimbursed by the Borrowers and without  limiting the  Obligation of
the  Borrowers to do so) in proportion to its Ratable Share from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,

<PAGE>

costs,  expenses or disbursements,  including  attorneys' fees and disbursements
(including the allocated  costs of staff  counsel),  and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may be imposed
on,  incurred by or asserted  against the Agent, in its capacity as such, in any
way relating to or arising out of this  Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder,  provided that
no Bank  shall be  liable  for any  portion  of such  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements  (a) if the same  results  from the Agent's  gross  negligence  or
willful  misconduct,  or (b) if such  Bank was not given  notice of the  subject
claim and the opportunity to participate in the defense thereof,  at its expense
(except  that such Bank shall  remain  liable to the extent such failure to give
notice does not result in a loss to the Bank), or (c) if the same results from a
compromise  and  settlement  agreement  entered into without the consent of such
Bank, which shall not be unreasonably  withheld.  In addition,  each Bank agrees
promptly upon demand to reimburse the Agent (to the extent not reimbursed by the
Borrowers  and without  limiting the  Obligation  of the  Borrowers to do so) in
proportion to its Ratable Share for all amounts due and payable by the Borrowers
to the Agent in connection with the Agent's  periodic audit of the Loan Parties'
books, records and business properties.

                  10.8      Reliance by Agent.

                  The  Agent  shall  be  entitled  to  rely  upon  any  writing,
telegram, telex or teletype message, resolution,  notice, consent,  certificate,
letter,  cablegram,  statement,  order  or other  document  or  conversation  by
telephone or otherwise believed by it to be genuine and correct and to have been
signed,  sent or made by the proper  Person or Persons,  and upon the advice and
opinions of counsel and other  professional  advisers selected by the Agent. The
Agent  shall be fully  justified  in  failing  or  refusing  to take any  action
hereunder  unless it shall first be indemnified to its satisfaction by the Banks
against any and all  liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.

                  10.9      Notice of Default.

                  The Agent shall not be deemed to have  knowledge  or notice of
the occurrence of any Potential Default or Event of Default unless the Agent has
received  written  notice  from  a Bank  or  the  Borrowers  referring  to  this
Agreement,  describing  such  Potential  Default or Event of Default and stating
that such notice is a "notice of default."

                  10.10     Notices.

                  The  Agent  shall  promptly  send to  each  Bank a copy of all
notices received from the Borrowers pursuant to the provisions of this Agreement
or the other Loan  Documents  promptly  upon  receipt  thereof.  The Agent shall
promptly  notify the  Borrowers  and the other  Banks of each change in the Base
Rate and the effective date thereof.


<PAGE>

                  10.11     Banks in Their Individual Capacities.

                  With  respect  to its  Commitment,  the  Loans,  and any other
rights and powers given to it as a Bank hereunder or under any of the other Loan
Documents,  the Agent  shall have the same  rights and powers  hereunder  as any
other Bank and may  exercise  the same as though it were not the Agent,  and the
term "Banks" shall, unless the context otherwise indicates, include the Agent in
its individual  capacity.  PNC Bank and its Affiliates and each of the Banks and
their  respective  Affiliates  may,  without  liability  to  account,  except as
prohibited herein, make loans to, accept deposits from, discount drafts for, act
as trustee under  indentures of, and generally  engage in any kind of banking or
trust business with, the Loan Parties and their  Affiliates,  in the case of the
Agent,  as though it were not acting as Agent  hereunder and in the case of each
Bank, as though such Bank were not a Bank hereunder. The Banks acknowledge that,
pursuant  to such  activities,  the  Agent  or its  Affiliates  may (i)  receive
information  regarding  the  Loan  Parties  (including  information  that may be
subject  to  confidentiality  obligations  in  favor of the  Loan  Parties)  and
acknowledge  that  the  Agent  shall  be under no  obligation  to  provide  such
information to them, and (ii) accept fees and other  consideration from the Loan
Parties for services in connection  with this  Agreement  and otherwise  without
having to account for the same to the Banks.

                  10.12     Holders of Notes.

                  The  Agent  may deem and  treat  any  payee of any Note as the
owner thereof for all purposes  hereof  unless and until  written  notice of the
assignment  or  transfer  thereof  shall have been  filed  with the  Agent.  Any
request,  authority  or consent  of any  Person  who at the time of making  such
request or giving such  authority  or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder,  transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.

                  10.13     Equalization of Banks.

                  The Banks and the holders of any  participations  in any Notes
agree among themselves that, with respect to all amounts received by any Bank or
any such holder for application on any Obligation hereunder or under any Note or
under  any  such  participation,  whether  received  by  voluntary  payment,  by
realization  upon security,  by the exercise of the right of set-off or banker's
lien, by counterclaim or by any other non-pro rata source,  equitable adjustment
will be made in the manner stated in the following  sentence so that, in effect,
all such excess  amounts will be shared ratably among the Banks and such holders
in  proportion  to their  interests  in  payments  under  the  Notes,  except as
otherwise  provided in Section 4.4.3, 5.4.2 or 5.6. The Banks or any such holder
receiving  any such amount shall  purchase for cash from each of the other Banks
an  interest in such  Bank's  Loans in such amount as shall  result in a ratable
participation  by the Banks and each such holder in the aggregate  unpaid amount
under the Notes,  provided  that if all or any portion of such excess  amount is
thereafter  recovered  from the Bank or the holder  making such  purchase,  such
purchase  shall be rescinded  and the purchase  price  restored to the extent of
such recovery,  together with interest or other amounts, if any, required by law
(including  court  order)  to be paid  by the  Bank or the  holder  making  such
purchase.


<PAGE>

                  10.14     Successor Agent.

                  The Agent (i) may resign as Agent or (ii) shall resign if such
resignation  is  required  by Section  5.4.2,  in either  case of (i) or (ii) by
giving not less than thirty (30) days' prior written notice to the Borrowers. If
the Agent shall resign under this Agreement,  then either (a) the Required Banks
shall appoint from among the Banks a successor  agent for the Banks,  subject to
the consent of the Borrowers,  such consent not to be unreasonably  withheld, or
(b) if a  successor  agent shall not be so  appointed  and  approved  within the
thirty  (30)  day  period  following  the  Agent's  notice  to the  Banks of its
resignation,  then the Agent shall  appoint,  with the consent of the Borrowers,
such consent not to be unreasonably  withheld, a successor agent who shall serve
as Agent until such time as the Required Banks appoint and the Borrowers consent
to the appointment of a successor agent. Upon its appointment pursuant to either
clause (a) or (b) above,  such  successor  agent  shall  succeed to the  rights,
powers and duties of the Agent,  and the term "Agent" shall mean such  successor
agent, effective upon its appointment, and the former Agent's rights, powers and
duties as Agent shall be terminated  without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement. After the
resignation  of any Agent  hereunder,  the  provisions  of this Section 10 shall
inure to the  benefit of such former  Agent and such  former  Agent shall not by
reason of such  resignation  be deemed to be  released  from  liability  for any
actions taken or not taken by it while it was an Agent under this Agreement.

                  10.15     [RESERVED]

                  10.16     Availability of Funds.

                  The Agent may assume  that each Bank has made or will make the
proceeds  of a Loan  available  to the Agent  unless  the Agent  shall have been
notified  by such Bank on or before the close of Business  on the  Business  Day
preceding  the Borrowing  Date with respect to such Loan (whether  using its own
funds pursuant to this Section 10.15 or using proceeds  deposited with the Agent
by the Banks and whether such funding  occurs  before or after the time on which
Banks are  required  to deposit the  proceeds of such Loan with the Agent).  The
Agent may, in reliance upon such assumption (but shall not be required to), make
available to the Borrowers a corresponding  amount. If such corresponding amount
is not in fact made  available  to the Agent by such  Bank,  the Agent  shall be
entitled to recover such amount on demand from such Bank (or, if such Bank fails
to pay such amount forthwith upon such demand from the Borrowers)  together with
interest  thereon,  in respect of each day during the period  commencing  on the
date such amount was made  available to the Borrowers and ending on the date the
Agent recovers such amount, at a rate per annum equal to the applicable interest
rate in respect of the Loan.


<PAGE>

                  10.17     Calculations.

                  In the absence of gross negligence or willful misconduct,  the
Agent shall not be liable for any error in computing  the amount  payable to any
Bank whether in respect of the Loans, fees or any other amounts due to the Banks
under this  Agreement.  In the event an error in computing any amount payable to
any Bank is made,  the  Agent,  the  Borrowers  and each  affected  Bank  shall,
forthwith  upon  discovery  of such  error,  make such  adjustments  as shall be
required to correct such error, and any compensation therefor will be calculated
at the Federal Funds Effective Rate.

                  10.18     Beneficiaries.

                  Except as expressly  provided  herein,  the provisions of this
Section 10 are solely for the  benefit of the Agent and the Banks,  and the Loan
Parties  shall not have any rights to rely on or enforce  any of the  provisions
hereof.  In performing its functions and duties under this Agreement,  the Agent
shall act  solely as agent of the  Banks  and does not  assume  and shall not be
deemed to have assumed any obligation  toward or relationship of agency or trust
with or for any of the Loan Parties.


                                11. MISCELLANEOUS

                  11.1      Modifications, Amendments or Waivers.

                  With the written  consent of the  Required  Banks,  the Agent,
acting on  behalf of all the  Banks,  and the  Borrowers,  on behalf of the Loan
Parties,  may from  time to time  enter  into  written  agreements  amending  or
changing  any  provision  of this  Agreement  or any other Loan  Document or the
rights of the Banks or the Loan Parties  hereunder or  thereunder,  or may grant
written  waivers or  consents  to a departure  from the due  performance  of the
Obligations  of the Loan Parties  hereunder or thereunder.  Any such  agreement,
waiver or consent made with such written  consent shall be effective to bind all
the Banks and the Loan Parties;  provided,  that, without the written consent of
all the Banks, no such agreement, waiver or consent may be made which will:

                           11.1.1   Increase   of   Commitment;   Extension   or
Expiration Date.

                           Increase  the  amount of the  Commitment  of any Bank
hereunder or extend the Expiration Date;

                           11.1.2  Extension of Payment;  Reduction of Principal
Interest or Fees; Modification
of Terms of Payment.

                           Whether or not any Loans are outstanding,  extend the
time for payment of principal or interest of any Loan (excluding the due date of
any  mandatory  prepayment of a Loan or any  mandatory  Commitment  reduction in

<PAGE>

connection  with such a  mandatory  prepayment  hereunder  except for  mandatory
reductions of the Commitments on the Expiration Date), the Commitment Fee or any
other fee payable to any Bank, or reduce the principal  amount of or the rate of
interest borne by any Loan or reduce the Commitment Fee or any other fee payable
to any Bank,  or  otherwise  affect the terms of payment of the  principal of or
interest of any Loan, the Commitment Fee or any other fee payable to any Bank;

                           11.1.3    Miscellaneous

                           Amend Section 5.2 [Pro Rata Treatment of Banks], 10.6
[Exculpatory Provisions,  etc.] or 10.13 [Equalization of Banks] or this Section
11.1, alter any provision  regarding the pro rata treatment of the Banks, change
the definition of Required Banks,  or change any  requirement  providing for the
Banks or the Required Banks to authorize the taking of any action hereunder;

provided,  further, that no agreement,  waiver or consent which would modify the
interests, rights or obligations of the Agent in its capacity as Agent or as the
issuer of Letters of Credit  shall be effective  without the written  consent of
the Agent

                           11.2 No Implied Waivers; Cumulative Remedies; Writing
Required.

                  No course of  dealing  and no delay or failure of the Agent or
any Bank in  exercising  any  right,  power,  remedy  or  privilege  under  this
Agreement or any other Loan Document  shall affect any other or future  exercise
thereof or operate as a waiver thereof, nor shall any single or partial exercise
thereof or any abandonment or  discontinuance  of steps to enforce such a right,
power, remedy or privilege preclude any further exercise thereof or of any other
right, power, remedy or privilege.  The rights and remedies of the Agent and the
Banks under this  Agreement and any other Loan  Documents are cumulative and not
exclusive of any rights or remedies which they would otherwise have. Any waiver,
permit,  consent or approval of any kind or character on the part of any Bank of
any breach or default  under this  Agreement or any such waiver of any provision
or condition of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing.

                           11.3  Reimbursement and  Indemnification  of Banks by
the Borrowers; Taxes.

                  The  Borrowers  agree  unconditionally  upon  demand to pay or
reimburse  to each  Bank  (other  than the  Agent,  as to which  the  Borrowers'
Obligations  are set forth in  Section  10.5)  and to save  such  Bank  harmless
against (i) liability  for the payment of all  reasonable  out-of-pocket  costs,
expenses and  disbursements  (including fees and expenses of counsel  (including
allocated  costs of staff  counsel) for each Bank except with respect to (a) and
(b) below),  incurred by such Bank (a) in connection with the administration and
interpretation  of this  Agreement,  and other  instruments  and documents to be
delivered  hereunder,  (b)  relating  to any  amendments,  waivers  or  consents
pursuant to the provisions  hereof,  (c) in connection  with the  enforcement of
this  Agreement  or any other  Loan  Document,  or  collection  of  amounts  due
hereunder or thereunder or the proof and allowability of any claim arising under
this Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings  or  otherwise,  and  (d)  in any  workout  or  restructuring  or in

<PAGE>

connection with the protection,  preservation, exercise or enforcement of any of
the terms hereof or of any rights  hereunder or under any other Loan Document or
in connection with any  foreclosure,  collection or bankruptcy  proceedings,  or
(ii)  all  liabilities,   obligations,   losses,  damages,  penalties,  actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any  kind or  nature
whatsoever  which may be imposed on, incurred by or asserted  against such Bank,
in its  capacity  as such,  arising  out of this  Agreement  or any  other  Loan
Documents or any action taken or omitted by such Bank  hereunder or  thereunder,
provided  that  the  Borrowers  shall  not be  liable  for any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements (A) if the same results from such Bank's gross
negligence or willful misconduct,  or (B) if the Borrowers were not given notice
of the subject claim and the opportunity to participate in the defense  thereof,
at its expense (except that the Borrowers shall remain liable to the extent such
failure to give  notice does not result in a loss to the  Borrowers),  or (C) if
the same results from a compromise or settlement  agreement entered into without
the consent of the  Borrowers,  which shall not be  unreasonably  withheld.  The
Banks will attempt to minimize  the fees and  expenses of legal  counsel for the
Banks  which  are  subject  to  reimbursement  by  the  Borrowers  hereunder  by
considering  the usage of one law firm to  represent  the Banks and the Agent if
appropriate under the circumstances.  The Borrowers agree unconditionally to pay
all stamp,  document,  transfer,  recording  or filing taxes or fees and similar
impositions  now or hereafter  determined by the Agent or any Bank to be payable
in connection with this Agreement or any other Loan Document,  and the Borrowers
agree  unconditionally to save the Agent and the Banks harmless from and against
any and all present or future  claims,  liabilities or losses with respect to or
resulting  from any  omission to pay or delay in paying any such taxes,  fees or
impositions.

                  11.4      Holidays.

                  Whenever payment of a Loan to be made or taken hereunder shall
be due on a day which is not a  Business  Day such  payment  shall be due on the
next  Business  Day and such  extension  of time shall be included in  computing
interest  and fee,  except  that the  Loans  shall  be due on the  Business  Day
preceding  the  Expiration  Date if the  Expiration  Date is not a Business Day.
Whenever any payment or action to be made or taken hereunder (other than payment
of the Loans)  shall be stated to be due on a day which is not a  business  Day,
such payment or action shall be made or taken on the next following Business Day
(except as provided in Section 4.2 with  respect to Interest  Periods  under the
LIBO Rate Option), and such extension of time shall not be included in computing
interest or fees, if any, in connection with such payment or action.

                  11.5      Funding by Branch, Subsidiary or Affiliate.

                           11.5.1    Notional Funding.

                           Each Bank  shall  have the  right  from time to time,
without  notice to the  Borrowers,  to deem any branch,  Subsidiary or Affiliate
(which for the  purposes  of this  Section  11.5 shall mean any  corporation  or
association which is directly or indirectly  controlled by or is under direct or

<PAGE>

indirect  common control with any  corporation or association  which directly or
indirectly  controls such Bank) of such Bank to have made,  maintained or funded
any Loan to which the LIBO  Rate  Option  applies  at any  time,  provided  that
immediately  following (on the assumption  that a payment were then due from the
Borrowers to such other office),  and as a result of such change,  the Borrowers
would not be under any greater financial obligation pursuant to Section 5.6 than
it would have been in the absence of such change.  Notional  funding offices may
be selected by each Bank without regard to such Bank's actual methods of making,
maintaining  or funding the Loans or any sources of funding  actually used by or
available to such Bank.

                           11.5.2    Actual Funding.

                           Each Bank  shall  have the right from time to time to
make or maintain any Loan by arranging for a branch,  Subsidiary or Affiliate of
such Bank to make or  maintain  such Loan  subject to the last  sentence of this
Section 11.5.2. If any Bank causes a branch,  Subsidiary or Affiliate to make or
maintain  any part of the Loans  hereunder,  all terms  and  conditions  of this
Agreement  shall,  except  where the  context  clearly  requires  otherwise,  be
applicable  to such part of the Loans to the same  extent as if such  Loans were
made or maintained by such Bank,  but in no event shall any Bank's use of such a
branch,  Subsidiary  or  Affiliate  to make or  maintain  any part of the  Loans
hereunder  cause such Bank or such branch,  Subsidiary or Affiliate to incur any
cost or expenses payable by the Borrowers  hereunder or require the Borrowers to
pay any other  compensation  to any Bank  (including  any  expenses  incurred or
payable pursuant to Section 5.6) which would otherwise not be incurred.

                  11.6      Notices.

                  All  notices,   requests,   demands,   directions   and  other
communications  (as  used in this  Section  11.6,  collectively  referred  to as
"notices")  given to or made upon any party hereto under the  provisions of this
Agreement  shall be by  telephone  or in writing  (including  telex or facsimile
communication)  unless  otherwise  expressly  permitted  hereunder  and shall be
delivered  or sent by  telex  or  facsimile  to the  respective  parties  at the
addresses and numbers set forth under their  respective names on Schedule 1.1(B)
hereof or in accordance with any subsequent unrevoked written direction from any
party to the others.  All notices shall,  except as otherwise  expressly  herein
provided, be effective (a) in the case of telex or facsimile, when received, (b)
in the case of hand-delivered  notice, when  hand-delivered,  (c) in the case of
telephone,  when telephoned,  provided,  however, that in order to be effective,
telephonic  notices  must be  confirmed in writing no later than the next day by
letter  or  facsimile,   (d)  if  given  by  mail,  four  (4)  days  after  such
communication is deposited in the mail with first-class postage prepaid,  return
receipt  requested,  and (e) if  given  by any  other  means  (including  by air
courier),  when  delivered;  provided,  that  notices to the Agent  shall not be
effective  until  received.  Any Bank  giving any notice to any Loan Party shall
simultaneously  send a copy thereof to the Agent,  and the Agent shall  promptly
notify the other Banks of the receipt by it of any such notice.


<PAGE>

                  11.7      Severability.

                  The provisions of this Agreement are intended to be severable.
If 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.

                  11.8      Governing Law.

                  Each  Letter of Credit and Section 2.9 shall be subject to the
Uniform   Customs  and  Practice  for  Documentary   Credits  (1993   Revision),
International  Chamber  of  Commerce  Publication  No.  500,  as the same may be
revised  or  amended  from  time to time,  and to the  extent  not  inconsistent
therewith,  the internal laws of the Commonwealth of Pennsylvania without regard
to its conflict of laws  principles and the balance of this  Agreement  shall be
deemed to be a contract under the Laws of the  Commonwealth of Pennsylvania  and
for all purposes  shall be governed by and  construed and enforced in accordance
with the internal laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles.

                  11.9      Prior Understanding.

                  This  Agreement  and the other Loan  Documents  supersede  all
prior  understandings  and  agreements,  whether  written or oral,  between  the
parties hereto and thereto relating to the transactions  provided for herein and
therein, including any prior confidentiality agreements and commitments.

                  11.10     Duration; Survival.

                  All   representations  and  warranties  of  the  Loan  Parties
contained  herein or made in  connection  herewith  shall  survive the making of
Loans and issuance of Letters of Credit and shall not be waived by the execution
and delivery of this Agreement, any investigation by the Agent or the Banks, the
making of Loans, issuance of Letters of Credit, or payment in full of the Loans.
All covenants and agreements of the Loan Parties  contained in Sections 8.1, 8.2
and 8.3 herein  shall  continue in full force and effect from and after the date
hereof  so long as the  Borrowers  may  borrow  or  request  Letters  of  Credit
hereunder and until  termination of the  Commitments  and payment in full of the
Loans and expiration or termination of all Letters of Credit.  All covenants and
agreements  of  the  Borrowers  contained  herein  relating  to the  payment  of
principal,   interest,   premiums,   additional  compensation  or  expenses  and
indemnification,  including those set forth in the Notes, Section 5 and Sections
10.5, 10.7 and 11.3,  shall survive payment in full of the Loans,  expiration or
termination of the Letters of Credit and termination of the Commitments.


<PAGE>

                  11.11     Successors and Assigns.

                           (i) This  Agreement  shall be binding  upon and shall
inure to the  benefit  of the  Banks,  the  Agent,  the Loan  Parties  and their
respective  successors  and  assigns,  except that none of the Loan  Parties may
assign or transfer any of its rights and  Obligations  hereunder or any interest
herein.   Each  Bank  may,  at  its  own  cost,  make  assignments  of  or  sell
participations  in all or any part of its Commitment and the Loans made by it to
one or more banks or other entities, subject to the consent of the Borrowers and
the Agent with  respect to any  assignee,  such  consent not to be  unreasonably
withheld, provided that (1) no consent of the Borrowers shall be required in the
case  of an  assignment  by a  Bank  to an  Affiliate  of  such  Bank,  and  (2)
assignments may not be made in amounts less than  $5,000,000.  In the case of an
assignment,  upon  receipt  by  the  Agent  of  the  Assignment  and  Assumption
Agreement,  the assignee  shall have, to the extent of such  assignment  (unless
otherwise  provided  therein),  the same rights,  benefits and obligations as it
would have if it had been a signatory Bank hereunder,  the Commitments  shall be
adjusted accordingly, and upon surrender of any Note subject to such assignment,
the Borrowers  shall execute and deliver a new Note to the assignee in an amount
equal  to the  amount  of the  Commitment  assumed  by it and a new  Note to the
assigning  Bank in an amount equal to the  Commitment  retained by it hereunder.
The assigning  Bank shall pay to the Agent a service fee in the amount of $3,500
for each assignment. In the case of a participation,  the participant shall only
have the rights  specified in Section 9.2.3 (the  participant's  rights  against
such  Bank in  respect  of such  participation  to be  those  set  forth  in the
agreement executed by such Bank in favor of the participant relating thereto and
not to include  any voting  rights  except  with  respect to changes of the type
referenced in Sections 11.1.1,  11.1.2, or 11.1.3 all of such Bank's obligations
under this Agreement or any other Loan Document shall remain unchanged,  and all
amounts payable by any Loan Party hereunder or thereunder shall be determined as
if such Bank had not sold such participation.

                           (ii)  Any  assignee  or  participant   which  is  not
incorporated  under the Laws of the United  States of America or a state thereof
shall deliver to the Borrowers and the Agent the form of  certificate  described
in Section  11.17  relating  to federal  income tax  withholding.  Each Bank may
furnish any  publicly  available  information  concerning  any Loan Party or its
Subsidiaries  and  any  other  information  concerning  any  Loan  Party  or its
Subsidiaries  in the  possession of such Bank from time to time to assignees and
participants  (including  prospective assignees or participants),  provided that
such assignees and  participants  agree to be bound by the provisions of Section
11.12.

                           (iii)  Notwithstanding  any other  provision  in this
Agreement,  any Bank may at any time pledge or grant a security  interest in all
or any portion of its rights under this  Agreement,  its Note and the other Loan
Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S.  Treasury  Regulation 31 CFR Section 203.14 without notice to or consent
of the  Borrowers or the Agent.  No such pledge or grant of a security  interest
shall  release the  transferor  Bank of its  obligations  hereunder or under any
other Loan Document.


<PAGE>

                  11.12     Confidentiality.

                  The Agent and the Banks  each agree to keep  confidential  all
information  obtained from any Loan Party or its Subsidiaries which is nonpublic
and  confidential  or  proprietary  in nature  (including  any  information  the
Borrowers specifically designate as confidential), except as provided below, and
to use such  information  only in connection  with their  respective  capacities
under this Agreement and for the purposes contemplated hereby. The Agent and the
Banks shall be  permitted  to disclose  such  information  (i) to outside  legal
counsel,  accountants  and  other  professional  advisors  who need to know such
information  in  connection  with the  administration  and  enforcement  of this
Agreement, subject to agreement of such Persons to maintain the confidentiality,
(ii) to assignees and  participants as  contemplated by Section 11.11,  (iii) to
the extent  requested by any bank  regulatory  authority  or, with notice to the
Borrowers, as otherwise required by applicable Law or by any subpoena or similar
legal process, or in connection with any investigation or proceeding arising out
of the transactions  contemplated by this Agreement, (iv) if it becomes publicly
available  other  than as a result  of a breach  of this  Agreement  or  becomes
available from a source not known to be subject to confidentiality restrictions,
or (v) if the Borrowers shall have consented to such disclosure.

                  11.13     Counterparts.

                  This Agreement may be executed by different  parties hereto on
any  number of  separate  counterparts,  each of  which,  when so  executed  and
delivered,  shall be an  original,  and all  such  counterparts  shall  together
constitute one and the same instrument.

                  11.14     Agent's or Bank's Consent.

                  Whenever  the Agent's or any Bank's  consent is required to be
obtained  under this Agreement or any of the other Loan Documents as a condition
to any action,  inaction,  condition or event,  the Agent and each Bank shall be
authorized to give or withhold such consent in its sole and absolute  discretion
and to  condition  its consent  upon the giving of  additional  collateral,  the
payment of money or any other matter.

                  11.15     Exceptions.

                  The representations, warranties and covenants contained herein
shall be  independent  of each other,  and no exception  to any  representation,
warranty  or  covenant  shall  be  deemed  to  be  an  exception  to  any  other
representation, warranty or covenant contained herein unless expressly provided,
nor shall any such  exceptions  be deemed to permit any action or omission  that
would be in contravention of applicable Law.


<PAGE>

                  11.16     CONSENT TO FORUM; WAIVER OF JURY TRIAL.

                  EACH  LOAN   PARTY   HEREBY   IRREVOCABLY   CONSENTS   TO  THE
NONEXCLUSIVE  JURISDICTION OF THE COURT OF COMMON PLEAS OF  PHILADELPHIA  COUNTY
AND THE UNITED STATES DISTRICT COURT FOR THE EASTERN  DISTRICT OF  PENNSYLVANIA,
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH
LOAN PARTY AT THE  ADDRESSES  PROVIDED  FOR IN SECTION  11.6 AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED  UPON ACTUAL  RECEIPT  THEREOF.  EACH LOAN PARTY
WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED  AGAINST
IT AS  PROVIDED  HEREIN AND AGREES  NOT TO ASSERT ANY  DEFENSE  BASED ON LACK OF
JURISDICTION  OR VENUE.  EACH LOAN PARTY,  THE AGENT AND THE BANKS  HEREBY WAIVE
TRIAL  BY JURY IN ANY  ACTION,  SUIT,  PROCEEDING  OR  COUNTERCLAIM  OF ANY KIND
ARISING  OUT OF OR RELATED TO THIS  AGREEMENT,  ANY OTHER LOAN  DOCUMENT  OR THE
COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

                  11.17     Tax Withholding Clause.

                  Each Bank or  assignee  or  participant  of a Bank that is not
incorporated  under the Laws of the United  States of America or a state thereof
agrees that it will deliver to each of the  Borrowers and the Agent two (2) duly
completed  copies of the following:  (i) Internal Revenue Service Form W-9, 4224
or 1001, or other  applicable form prescribed by the Internal  Revenue  Service,
certifying  that such Bank,  assignee  or  participant  is  entitled  to receive
payments under this Agreement and the other Loan Documents  without deduction or
withholding of any United States federal income taxes, or is subject to such tax
at a reduced  rate under an  applicable  tax treaty,  or (ii)  Internal  Revenue
Service  Form  W-8 or  other  applicable  form or a  certificate  of such  Bank,
assignee or  participant  indicating  that no such  exemption or reduced rate is
allowable  with respect to such  payments.  Each Bank,  assignee or  participant
required  to  deliver  to the  Borrowers  and the  Agent  a form or  certificate
pursuant to the preceding  sentence  shall deliver such form or  certificate  as
follows: (A) each Bank which is a party hereto on the Closing Date shall deliver
such form or certificate at least five (5) Business Days prior to the first date
on which any  interest or fees are payable by the  Borrowers  hereunder  for the
account of such Bank; (B) each assignee or  participant  shall deliver such form
or certificate at least five (5) Business Days before the effective date of such
assignment  or  participation  (unless  the Agent in its sole  discretion  shall
permit such assignee or  participant  to deliver such form or  certificate  less
than five (5)  Business  Days  before such date in which case it shall be due on
the date specified by the Agent).  Each Bank,  assignee or participant  which so
delivers a Form W-8, W-9, 4224 or 1001 further  undertakes to deliver to each of
the  Borrowers  and the  Agent  two (2)  additional  copies  of such  form (or a
successor form) on or before the date that such form expires or becomes obsolete
or after the occurrence of any event  requiring a change in the most recent form
so  delivered  by it, and such  amendments  thereto or  extensions  or  renewals
thereof as may be  reasonably  requested by the  Borrowers or the Agent,  either
certifying  that such Bank,  assignee  or  participant  is  entitled  to receive
payments under this Agreement and the other Loan Documents  without deduction or
withholding  of any United States federal income taxes or is subject to such tax
at a  reduced  rate  under an  applicable  tax  treaty or  stating  that no such
exemption or reduced rate is allowable.  The Agent shall be entitled to withhold
United States federal income taxes at the full withholding rate unless the Bank,
assignee or  participant  establishes  an  exemption  or that it is subject to a
reduced rate as established pursuant to the above provisions.


<PAGE>

                  11.18     Joinder Of Borrowers.

                  Any  Subsidiary of a Loan Party which is required to join this
Agreement as a Borrower  pursuant to Section  8.2.9 shall execute and deliver to
the Agent (i) a Joinder in  substantially  the form  attached  hereto as Exhibit
1.1(J)  pursuant to which it shall join  (subject to Section  5.7) as a Borrower
each of the documents to which the Borrowers are parties;  and (ii) documents in
the forms  described  in Section 7.1 modified as  appropriate  to relate to such
Subsidiary.  The Company shall deliver such Joinder and related documents to the
Agent  within  five (5)  Business  Days  after  the date of the  filing  of such
Subsidiary's  articles of incorporation if the Subsidiary is a corporation,  the
date of the filing of its certificate of limited  partnership if it is a limited
partnership,  the  date of its  organization  if it is an  entity  other  than a
limited  partnership or corporation or the date of its  acquisitions by any Loan
Party, as applicable.


<PAGE>

                  IN WITNESS  WHEREOF,  the parties  hereto,  by their  officers
thereunto duly  authorized,  have executed this Agreement as of the day and year
first above written.



ATTEST:                                        PRIMESOURCE CORPORATION



                                                By:
                                                Title:
[Seal]



ATTEST:                                         DIXIE TYPE & SUPPLY COMPANY,
INC.



                                                 By:
                                                 Title:
[Seal]

ATTEST:                                         ONONDAGA LITHO SUPPLY CO., INC.



                                                 By:
                                                 Title:
[Seal]

                        PNC BANK, NATIONAL ASSOCIATION, individually and as
                        Agent


                                                  By:
                                                  Title:





<PAGE>






          SCHEDULE 1.1(B)COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES

                                   Page 1 of 2
Part 1--Commitments of Banks and Addresses for Notices to Banks


Bank                                   Amount of Commitment      Ratable Share


PNC Bank, N.A.
1600 Market Street
21st Floor
Philadelphia, PA  19103
Attention: Robert Q. Reilly
Telephone: (215) 585-7484              $50,000,000                  100%
Telecopy: (215) 585-7669




         Total                         $50,000,000                  100%
                                                 



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                                 SCHEDULE 1.1(B)

                 COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES

                                   Page 2 of 2


Part 2--Addresses for Notices to Borrower


AGENT

PNC Bank, N.A.
1600 Market Street, 21st Floor
Philadelphia, PA  19103
Attention: Robert Q. Reilly
Telephone:      (215) 585-7484
Telecopy:       (215) 585-7669

BORROWER:

PrimeSource Corporation
Fairway Corporate Center
4350 Haddonfield Road, Suite 222
Pennsauken, NJ  08109
Attention: Chief Financial Officer
Telephone: (609) 486-2985
Telecopy: (609) 486-2999

with a copy to:

PrimeSource Corporation
355 Treck Drive
Seattle, Washington  98188
Attention: General Counsel
Telephone: (206) 394-5582
Telecopy: (206) 394-5587