$75,000,000 REVOLVING CREDIT FACILITY

                                CREDIT AGREEMENT

                                  by and among

                             PRIMESOURCE CORPORATION

                                      -and-

                             THE BANKS PARTY HERETO

                                       and

                    PNC BANK, NATIONAL ASSOCIATION, as Agent

                                       and


                   PNC CAPITAL MARKETS, INC., as Lead Arranger












                                                            Dated March 8, 2001







<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

Section                                                                                                        Page

                                     - vii -

<S>                                                                                                              <C>
1.    CERTAIN DEFINITIONS.........................................................................................1
--    -------------------


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

         1.2      Construction...................................................................................22
         ---      ------------
                  1.2.1    Number; Inclusion.....................................................................22
                  -----    -----------------
                  1.2.2    Determination.........................................................................22
                  -----    -------------
                  1.2.3    Agent's Discretion and Consent........................................................22
                  -----    ------------------------------
                  1.2.4    Documents Taken as a Whole............................................................22
                  -----    --------------------------
                  1.2.5    Headings..............................................................................22
                  -----    --------
                  1.2.6    Implied References to this Agreement..................................................23
                  -----    ------------------------------------
                  1.2.7    Persons...............................................................................23
                  -----    -------
                  1.2.8    Modifications to Documents............................................................23
                  -----    --------------------------
                  1.2.9    From, To and Through..................................................................23
                  -----    --------------------
                  1.2.10   Shall; Will...........................................................................23
                  ------   -----------

         1.3      Accounting Principles..........................................................................23
         ---      ---------------------

         1.4      UCC Terms......................................................................................24
         ---      ---------

         1.5      Concerning Corporate Terms.....................................................................24
         ---      --------------------------


2.    REVOLVING CREDIT FACILITY..................................................................................24
--    -------------------------

         2.1      Commitments....................................................................................24
         ---      -----------
                  2.1.1    Commitment............................................................................24
                  -----    ----------
                  2.1.2    Voluntary Reduction of Commitment.....................................................24
                  -----    ---------------------------------
                  2.1.3    Extension by Banks of the Expiration Date.............................................25
                  -----    -----------------------------------------

         2.2      Nature of Banks' Obligations with Respect to Loans.............................................25
         ---      --------------------------------------------------

         2.3      Commitment Fee.................................................................................25
         ---      --------------

         2.4      Underwriting Fees..............................................................................26
         ---      -----------------

         2.5      Loan Requests..................................................................................26
         ---      -------------

         2.6      Making Loans...................................................................................27
         ---      ------------

         2.7      Notes..........................................................................................27
         ---      -----

         2.8      Use of Proceeds................................................................................27
         ---      ---------------

         2.9      Letter of Credit Subfacility...................................................................27
         ---      ----------------------------
                  2.9.1    Issuance of Letters of Credit.........................................................27
                  -----    -----------------------------
                  2.9.2    Letter of Credit Fees.................................................................28
                  -----    ---------------------
</TABLE>

<PAGE>

<TABLE>
<S>               <C>                                                                                           <C>
                  2.9.3    Disbursements, Reimbursement..........................................................28
                  -----    ----------------------------
                  2.9.4    Repayment of Participation Advances...................................................29
                  -----    -----------------------------------
                  2.9.5    Documentation.........................................................................30
                  -----    -------------
                  2.9.6    Determinations to Honor Drawing Requests..............................................30
                  -----    ----------------------------------------
                  2.9.7    Nature of Participation and Reimbursement Obligations.................................30
                  -----    -----------------------------------------------------
                  2.9.8    Indemnity.............................................................................31
                  -----    ---------
                  2.9.9    Liability for Acts and Omissions......................................................32
                  -----    --------------------------------

         2.10     Borrowings to Repay Swing Line Loans...........................................................32


3.    [RESERVED].................................................................................................33


4.    INTEREST RATES.............................................................................................33
--    --------------

         4.1      Interest Rate Options..........................................................................33
         ---      ---------------------
                  4.1.1    Revolving Credit Interest Rate Options................................................33
                  -----    --------------------------------------
                  4.1.2    Rate Quotations.......................................................................34
                  -----    ---------------

         4.2      Interest Periods...............................................................................34
         ---      ----------------
                  4.2.1    Ending Date and Business Day..........................................................34
                  -----    ----------------------------
                  4.2.2    Amount of Borrowing Tranche...........................................................34
                  -----    ---------------------------
                  4.2.3    Termination Before Expiration Date....................................................34
                  -----    ----------------------------------
                  4.2.4    Renewals..............................................................................34
                  -----    --------

         4.3      Interest After Default.........................................................................35
         ---      ----------------------
                  4.3.1    Letter of Credit Fees, Interest Rate..................................................35
                  -----    ------------------------------------
                  4.3.2    Other Obligations.....................................................................35
                  -----    -----------------
                  4.3.3    Acknowledgment........................................................................35
                  -----    --------------

         4.4      Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.................35
         ---      ------------------------------------------------------------------------------
                  4.4.1    Unascertainable.......................................................................35
                  -----    ---------------
                  4.4.2    Illegality; Increased Costs; Deposits Not Available...................................35
                  -----    ---------------------------------------------------
                  4.4.3    Agent's and Bank's Rights.............................................................36
                  -----    -------------------------

         4.5      Selection of Interest Rate Options.............................................................37
         ---      ----------------------------------


5.    PAYMENTS...................................................................................................37
--    --------

         5.1      Payments.......................................................................................37
         ---      --------

         5.2      Pro Rata Treatment of Banks....................................................................37
         ---      ---------------------------

         5.3      Interest Payment Dates.........................................................................38
         ---      ----------------------

         5.4      Voluntary Prepayments..........................................................................38
         ---      ---------------------
                  5.4.1    Right to Prepay.......................................................................38
                  -----    ---------------
</TABLE>

<PAGE>

<TABLE>
<S>               <C>                                                                                           <C>
                  5.4.2    Replacement of a Bank.................................................................39
                  -----    ---------------------
                  5.4.3    Change of Lending Office..............................................................39
                  -----    ------------------------

         5.5      Mandatory Prepayments..........................................................................39
         ---      ---------------------

         5.6      Additional Compensation in Certain Circumstances...............................................40
         ---      ------------------------------------------------
                  5.6.1    Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy
                  -----    ----------------------------------------------------------------------------------
                           Requirements, Expenses, Etc...........................................................40
                           ---------------------------
                  5.6.2    Indemnity.............................................................................40
                  -----    ---------


6.    REPRESENTATIONS AND WARRANTIES.............................................................................41
--    ------------------------------

         6.1      Representations and Warranties.................................................................41
         ---      ------------------------------
                  6.1.1    Organization and Qualification........................................................41
                  -----    ------------------------------
                  6.1.2    Capitalization and Ownership..........................................................42
                  -----    ----------------------------
                  6.1.3    Subsidiaries..........................................................................42
                  -----    ------------
                  6.1.4    Power and Authority...................................................................42
                  -----    -------------------
                  6.1.5    Validity and Binding Effect...........................................................42
                  -----    ---------------------------
                  6.1.6    No Conflict...........................................................................43
                  -----    -----------
                  6.1.7    Litigation............................................................................43
                  -----    ----------
                  6.1.8    Title to Properties...................................................................43
                  -----    -------------------
                  6.1.9    Financial Statements..................................................................43
                  -----    --------------------
                  6.1.10   Use of Proceeds; Margin Stock.........................................................44
                  ------   -----------------------------
                  6.1.11   Full Disclosure.......................................................................45
                  ------   ---------------
                  6.1.12   Taxes.................................................................................45
                  ------   -----
                  6.1.13   Consents and Approvals; Landlord Waivers..............................................45
                  ------   -----------------------------------------
                  6.1.14   No Event of Default; Compliance with Instruments......................................45
                  ------   ------------------------------------------------
                  6.1.15   Licenses, Etc.........................................................................46
                  ------   -------------
                  6.1.16   Status of the Obligations.............................................................46
                  ------   -------------------------
                  6.1.17   Insurance.............................................................................46
                  ------   ---------
                  6.1.18   Compliance with Laws..................................................................46
                  ------   --------------------
                  6.1.19   Investment Companies; Regulated Entities..............................................46
                  ------   ----------------------------------------
                  6.1.20   Plans and Benefit Arrangements........................................................47
                  ------   ------------------------------
                  6.1.21   Employment Matters....................................................................48
                  ------   ------------------
                  6.1.22   Environmental Matters.................................................................48
                  ------   ---------------------

         6.2      Updates to Schedules...........................................................................49
         ---      --------------------


7.    CONDITIONS OF LENDING......................................................................................50
--    ---------------------

         7.1      First Loans....................................................................................50
         ---      -----------
                  7.1.1    Officer's Certificate.................................................................50
                  -----    ---------------------
                  7.1.2    Secretary's Certificate...............................................................50
                  -----    -----------------------
                  7.1.3    Delivery of Loan Documents............................................................51
                  -----    --------------------------
                  7.1.4    Opinion of Counsel....................................................................51
                  -----    ------------------
                  7.1.5    Legal Details.........................................................................51
                  -----    -------------
                  7.1.6    Payment of Fees.......................................................................51
                  -----    ---------------
</TABLE>

<PAGE>

<TABLE>
<S>               <C>                                                                                           <C>
                  7.1.7    Lien Searches.........................................................................51
                  -----    -------------
                  7.1.8    Consents and Landlord Waivers.........................................................51
                  -----    -----------------------------
                  7.1.9    Officer's Certificate Regarding MACs and Availability.................................52
                  -----    -----------------------------------------------------
                  7.1.10   No Violation of Laws..................................................................52
                  ------   --------------------
                  7.1.11   No Actions or Proceedings.............................................................52
                  ------   -------------------------
                  7.1.12   Insurance Policies....................................................................52
                  ------   ------------------
                  7.1.13   Existing Lenders Payoff...............................................................52
                  ------   -----------------------
                  7.1.14   Availability..........................................................................52
                  ------   ------------

         7.2      Each Additional Loan...........................................................................53
         ---      --------------------


8.    COVENANTS..................................................................................................53
--    ---------

         8.1      Affirmative Covenants..........................................................................53
         ---      ---------------------
                  8.1.1    Preservation of Existence, Etc........................................................53
                  -----    ------------------------------
                  8.1.2    Payment of Liabilities, Including Taxes, Etc..........................................53
                  -----    --------------------------------------------
                  8.1.3    Maintenance of Insurance..............................................................54
                  -----    ------------------------
                  8.1.4    Maintenance of Properties and Leases..................................................54
                  -----    ------------------------------------
                  8.1.5    Maintenance...........................................................................54
                  -----    -----------
                  8.1.6    Visitation Rights.....................................................................54
                  -----    -----------------
                  8.1.7    Keeping of Records and Books of Account...............................................55
                  -----    ---------------------------------------
                  8.1.8    Plans and Benefit Arrangements........................................................55
                  -----    ------------------------------
                  8.1.9    Compliance with Laws..................................................................55
                  -----    --------------------
                  8.1.10   Use of Proceeds.......................................................................55
                  ------   ---------------
                           8.1.10.1 General......................................................................55
                           ----------------
                           8.1.10.2 Margin Stock.................................................................55
                           ---------------------
                           8.1.10.3 Section 20 Subsidiaries......................................................56
                           --------------------------------
                  8.1.11   Further Assurances....................................................................56
                  ------   ------------------
                  8.1.12   Subordination of Intercompany Loans...................................................56
                  ------   -----------------------------------
                  8.1.13   Landlord Waivers......................................................................56

         8.2      Negative Covenants.............................................................................56
         ---      ------------------
                  8.2.1    Indebtedness..........................................................................56
                  -----    ------------
                  8.2.2    Liens.................................................................................57
                  -----    -----
                  8.2.3    Guaranties............................................................................57
                  -----    ----------
                  8.2.4    Loans and Investments.................................................................57
                  -----    ---------------------
                  8.2.5    Liquidations, Mergers, Consolidations, Acquisitions...................................58
                  -----    ---------------------------------------------------
                  8.2.6    Dispositions of Assets or Subsidiaries................................................59
                  -----    --------------------------------------
                  8.2.7    Affiliate Transactions................................................................60
                  -----    ----------------------
                  8.2.8    Subsidiaries, Partnerships and Joint Ventures.........................................60
                  -----    ---------------------------------------------
                  8.2.9    Continuation of or Change in Business.................................................61
                  -----    -------------------------------------
                  8.2.10   Plans and Benefit Arrangements........................................................61
                  ------   ------------------------------
                  8.2.11   Fiscal Year...........................................................................62
                  ------   -----------
                  8.2.12   Issuance of Stock.....................................................................62
                  ------   -----------------
                  8.2.13   Changes in Organizational Documents...................................................62
                  ------   -----------------------------------
                  8.2.14   Minimum Shareholders' Equity..........................................................62
                  ------   ----------------------------
                  8.2.15   Minimum Fixed Charge Coverage Ratio...................................................62
                  ------   -----------------------------------
</TABLE>

<PAGE>

<TABLE>
<S>               <C>                                                                                           <C>
                  8.2.16   Maximum Leverage Ratio................................................................62
                  ------   ----------------------
                  8.2.17   Regarding Canopy......................................................................63
                  ------   ----------------

         8.3      Reporting Requirements.........................................................................63
         ---      ----------------------
                  8.3.1    Quarterly Financial Statements........................................................63
                  -----    ------------------------------
                  8.3.2    Annual Financial Statements...........................................................63
                  -----    ---------------------------
                  8.3.3    Borrowing Base Certificate............................................................64
                  -----    ---------------------------
                  8.3.4    Certificate of the Borrowers..........................................................64
                  -----    -----------------------------
                  8.3.5    Notice of Default.....................................................................64
                  -----    -----------------
                  8.3.6    Notice of Litigation..................................................................64
                  -----    --------------------
                  8.3.7    Certain Events........................................................................65
                  -----    --------------
                  8.3.8    Budgets, Forecasts, Other Reports and Information.....................................65
                  -----    -------------------------------------------------
                  8.3.9    Notices Regarding Plans and Benefit Arrangements......................................66
                  -----    ------------------------------------------------
                           8.3.9.1 Certain Events................................................................66
                           ----------------------
                           8.3.9.2 Notices of Involuntary Termination and Annual Reports.........................67
                           -------------------------------------------------------------
                           8.3.9.3 Notice of Voluntary Termination...............................................67
                           ---------------------------------------


9.    DEFAULT....................................................................................................67
--    -------

         9.1      Events of Default..............................................................................67
         ---      -----------------
                  9.1.1    Payments Under Loan Documents.........................................................67
                  -----    -----------------------------
                  9.1.2    Breach of Warranty....................................................................67
                  -----    ------------------
                  9.1.3    Breach of Negative Covenants or Visitation Rights.....................................68
                  -----    -------------------------------------------------
                  9.1.4    Breach of Other Covenants.............................................................68
                  -----    -------------------------
                  9.1.5    Defaults in Other Agreements or Indebtedness..........................................68
                  -----    --------------------------------------------
                  9.1.6    Final Judgments or Orders.............................................................68
                  -----    -------------------------
                  9.1.7    Loan Document Unenforceable...........................................................68
                  -----    ---------------------------
                  9.1.8    Uninsured Losses; Proceedings Against Assets..........................................69
                  -----    --------------------------------------------
                  9.1.9    Notice of Lien or Assessment..........................................................69
                  -----    ----------------------------
                  9.1.10   Insolvency............................................................................69
                  ------   ----------
                  9.1.11   Events Relating to Plans and Benefit Arrangements.....................................69
                  ------   -------------------------------------------------
                  9.1.12   Cessation of Business.................................................................70
                  ------   ---------------------
                  9.1.13   Change of Control.....................................................................70
                  ------   -----------------
                  9.1.14   Involuntary Proceedings...............................................................70
                  ------   -----------------------
                  9.1.15   Voluntary Proceedings.................................................................70
                  ------   ---------------------

         9.2      Consequences of Event of Default...............................................................71
         ---      --------------------------------
                  9.2.1    Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.....71
                  -----    ---------------------------------------------------------------------------------
                  9.2.2    Bankruptcy, Insolvency or Reorganization Proceedings..................................71
                  -----    ----------------------------------------------------
                  9.2.3    Set-off...............................................................................71
                  -----    -------
                  9.2.4    Suits, Actions, Proceedings...........................................................72
                  -----    ---------------------------
                  9.2.5    Application of Proceeds...............................................................72
                  -----    -----------------------
                  9.2.6    Other Rights and Remedies.............................................................73
                  -----    -------------------------

         9.3      Notice of Sale.................................................................................73
         ---      --------------
</TABLE>
<PAGE>
<TABLE>
<S>                                                                                                             <C>


10.   THE AGENT..................................................................................................73
---   ---------

         10.1     Appointment....................................................................................73
         ----     -----------

         10.2     Delegation of Duties...........................................................................73
         ----     --------------------

         10.3     Nature of Duties; Independent Credit Investigation.............................................73
         ----     --------------------------------------------------

         10.4     Actions in Discretion of Agent; Instructions from the Banks....................................74
         ----     -----------------------------------------------------------

         10.5     Reimbursement and Indemnification of Agent by the Borrowers....................................74
         ----     -----------------------------------------------------------

         10.6     Exculpatory Provisions; Limitation of Liability................................................75
         ----     -----------------------------------------------

         10.7     Reimbursement and Indemnification of Agent by Banks............................................76
         ----     ---------------------------------------------------

         10.8     Reliance by Agent..............................................................................76
         ----     -----------------

         10.9     Notice of Default..............................................................................77
         ----     -----------------

         10.10    Notices. 77
         -----    -------

         10.11    Banks in Their Individual Capacities...........................................................77
         -----    ------------------------------------

         10.12    Holders of Notes...............................................................................77
         -----    ----------------

         10.13    Equalization of Banks..........................................................................78
         -----    ---------------------

         10.14    Successor Agent................................................................................78
         -----    ---------------

         10.15    [RESERVED].....................................................................................78

         10.16    Availability of Funds..........................................................................78
         -----    ---------------------

         10.17    Calculations...................................................................................79
         -----    ------------

         10.18    Beneficiaries..................................................................................79
         -----    -------------


11.   MISCELLANEOUS..............................................................................................79
---   -------------

         11.1     Modifications, Amendments or Waivers...........................................................79
         ----     ------------------------------------
                  11.1.1   Increase of Commitment; Extension or Expiration Date..................................80
                  ------   ----------------------------------------------------
                  11.1.2   Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of
                  ------   ---------------------------------------------------------------------------------------
                           Payment...............................................................................80
                           -------
                  11.1.3   Miscellaneous.........................................................................80
                  ------   -------------
                  11.1.4   Letters of Credit.....................................................................80
                  ------   -----------------
                  11.1.5   Releases and Waiver...................................................................80
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                              <C>
                                              -

         11.2     No Implied Waivers; Cumulative Remedies; Writing Required......................................80
         ----     ---------------------------------------------------------

         11.3     Reimbursement and Indemnification of Banks by the Borrowers; Taxes.............................81
         ----     ------------------------------------------------------------------

         11.4     Holidays.......................................................................................81
         ----     --------

         11.5     Funding by Branch, Subsidiary or Affiliate.....................................................82
         ----     ------------------------------------------
                  11.5.1   Notional Funding......................................................................82
                  ------   ----------------
                  11.5.2   Actual Funding........................................................................82
                  ------   --------------

         11.6     Notices. 82
         ----     -------

         11.7     Severability...................................................................................83
         ----     ------------

         11.8     Governing Law..................................................................................83
         ----     -------------

         11.9     Prior Understanding............................................................................83
         ----     -------------------

         11.10    Duration; Survival.............................................................................83
         -----    ------------------

         11.11    Successors and Assigns.........................................................................84
         -----    ----------------------

         11.12    Confidentiality................................................................................85
         -----    ---------------

         11.13    Counterparts...................................................................................85
         -----    ------------

         11.14    Agent's or Bank's Consent......................................................................85
         -----    -------------------------

         11.15    Exceptions.....................................................................................85
         -----    ----------

         11.16    CONSENT TO FORUM; WAIVER OF JURY TRIAL.........................................................86
         -----    --------------------------------------

         11.17    Tax Withholding Clause.........................................................................86
         -----    ----------------------

         11.18    Joinder Of Borrowers...........................................................................87
         -----    --------------------

         11.19    Borrower Agency................................................................................87
         -----    ---------------
</TABLE>








                                    - viii -
<PAGE>


                         LIST OF SCHEDULES AND EXHIBITS

SCHEDULE

SCHEDULE 1.1(B)           -      COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P)           -      PERMITTED LIENS
SCHEDULE 1.1(SC)          -      SELECTED COLLATERAL LOCATIONS
SCHEDULE 6.1.1            -      QUALIFICATIONS TO DO BUSINESS
SCHEDULE 6.1.3            -      CAPITALIZATION/SUBSIDIARIES
SCHEDULE 6.1.8            -      OWNED & LEASED REAL PROPERTY
SCHEDULE 6.1.20           -      EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 6.1.22           -      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(BB)           -      BORROWING BASE CERTIFICATE

EXHIBIT 1.1(J)            -      JOINDER
EXHIBIT 1.1(R)            -      NOTE

EXHIBIT 1.1 (SN)          -      FORM OF SWING LINE LOAN NOTE
EXHIBIT 1.1 (SW)          -      SWING LINE PROVISIONS

EXHIBIT 2.5               -      LOAN REQUEST
EXHIBIT 8.2.6             -      ACQUISITION COMPLIANCE CERTIFICATE
EXHIBIT 8.3.4             -      QUARTERLY COMPLIANCE CERTIFICATE


<PAGE>



                                     - 88 -

                                CREDIT AGREEMENT

                  THIS CREDIT  AGREEMENT is dated  February **, 2001 and is made
by and among PRIMESOURCE CORPORATION, a Pennsylvania corporation ("Borrower" and
together with any Person who hereafter become a "Borrower" under this Agreement,
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 $75,000,000; and

                  WHEREAS, the revolving credit shall be used to refinance
existing indebtedness and for 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,  including  in  Exhibit  1.1(SW)  with  respect  to  the  Swing  Line
Provisions,  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 PNC Bank dated December 6, 2000.


                           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 mean with reference to Loans
to which the Base Rate Option or the Euro-Rate Option


applies,  an amount in excess  of the Base Rate or  Euro-Rate,  as  appropriate,
calculated in respect of the  most-recently  reported  Leverage Ratio commencing
with the fiscal  quarter  ending  September 30, 2000  according to the table set
forth  below.  Applicable  Margin  shall  change  five  (5) days  after  the day
financial  statements  are  due  to be  delivered  pursuant  to  Sections  8.3.1
[Quarterly Financial  Statements] and 8.3.2 [Annual Financial Statements] and if
information  necessary  to  make  such  determination  is not  timely  delivered
pursuant  to such  sections,  Applicable  Margin  shall be at "Level  II" in the
following table until such information is delivered.

<PAGE>



<TABLE>
<CAPTION>
                                                   APPLICABLE MARGIN

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

   Level            Leverage Ratio         Applicable Margin for      Applicable Margin      Commitment Fee
                                           Euro-Rate Loans (%)        for Base Rate Loans    Applicable Margin (%)
                                                                      (%)
------------ ----------------------------- -------------------------- ---------------------- -----------------------
------------ ----------------------------- -------------------------- ---------------------- -----------------------
<S>                                                   <C>                     <C>                     <C>
     I       greater than 3.5.0-to-1.0                2.25                    .75                     .55


------------ ----------------------------- -------------------------- ---------------------- -----------------------
------------ ----------------------------- -------------------------- ---------------------- -----------------------
    II       greater than 3.0-to-1.0 but               2.0                    .50                     .50
             less than or equal to 3.5
             to 1.0
------------ ----------------------------- -------------------------- ---------------------- -----------------------
------------ ----------------------------- -------------------------- ---------------------- -----------------------
    III      greater than 2.5-to-1.0 but              1.75                    .25                     .45
             less than or equal to
             3.0-to-1.0
------------ ----------------------------- -------------------------- ---------------------- -----------------------
------------ ----------------------------- -------------------------- ---------------------- -----------------------
    IV       greater than 2.0-to-1.0 but               1.5                      0                    .375
             less than or equal to
             2.5-to-1.0
------------ ----------------------------- -------------------------- ---------------------- -----------------------
------------ ----------------------------- -------------------------- ---------------------- -----------------------
     V       less than or equal to                    1.25                      0                     .30
             2.0-to-1.0
------------ ----------------------------- -------------------------- ---------------------- -----------------------
</TABLE>



For periods prior to the date in respect of which the Applicable Margin is first
calculated  according to the table set forth above, the Applicable  Margin shall
be at "Level II" shown on the chart above.


                           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  Borrowers  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.
<PAGE>

                           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 (3)
                           -------------------
"employee benefit plan," within the meaning of Section 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.

                           Borrower shall mean PrimeSource Corporation, a
                           --------
Pennsylvania corporation together with any Person who
hereafter  becomes a "Borrower" under this Agreement;  all such Persons shall be
from time to time referred to collectively as the "Borrowers." As of the Closing
Date, the Company is the only Borrower.

                           Borrower Agent shall mean the Company as Borrower
                           --------------
Agent pursuant to the provision of Section 11.19 and anysuccessor Borrower
Agent.

                           Borrowing Base shall mean at any time an amount in
                           --------------
Dollars equal to the sum of (x) fifty percent (50%) of
Qualified Inventory and (y) 80% of Qualified Accounts as any of the foregoing is
modified  from time to time  pursuant to Section 2.1.  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
Euro-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.


                           Canopy  shall mean  Canopy,  LLC a  Delaware  limited
liability company formed by Xeikon as 26% owner and the

<PAGE>

Company as 74% owner, as set out in the Canopy,  LLC Limited  Liability  Company
Agreement dated as of July 1, 2000,  under which Canopy sells Xeikon products in
North America.


                           Canopy Acknowledgment shall mean Acknowledgment dated
                           ---------------------
the Closing Date by and among the Company Canopy and
the Agent in respect of the Company's obligations to the Agent and the Banks and
the restrictions on payments or loans to, or investments in, Canopy.


                           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.

                           Collateral shall mean the property described in the
                           ----------
Security Agreement and the Guaranty Security Agreement
and any other  security  agreement to which Borrower or Guarantor is party which
property is purported  to be subject to a perfected  Lien in favor of the Agent.
"Collateral"  includes,  inter alia, the  "Collateral"  located at the "Selected
Collateral Locations."

                           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  Borrowers
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. With
respect  to PNC  Bank,  Commitment  shall  also  include  its  "Swing  Line Loan
Commitment" referred to on Exhibit 1.1 (SW).

                           Commitment Fee shall mean a non-refundable fee paid
                           --------------
to Agent for the account of each Bank computed in accordance with Section 2.3.

                           Commitment Fee Applicable Margin shall mean the
                           --------------------------------
percentage shown in the column so labeled in the definitionof Applicable Margin.

                           Company shall mean PrimeSource Corporation, a
                           -------
Pennsylvania corporation which is one of the Borrowers hereunder.

                           Consideration shall mean with respect to any
                           -------------
Permitted Acquisition, the aggregate of (i) the cash paid by
any of the  Borrowers,  directly  or  indirectly,  to the  seller in  connection
therewith,  (ii) the Indebtedness incurred or assumed by the Company, whether in
favor of the seller or  otherwise  and whether  fixed or  contingent,  (iii) any
Guaranty given or incurred by the Company in connection therewith,  and (iv) any
other  consideration  given or  obligation  incurred  by any of the  Company  in
connection therewith.
<PAGE>

                           Consignment Inventory shall mean property of the
                           ---------------------
Borrowers (whether Inventory, Equipment, Goods or
otherwise) maintained as inventory to be sold and located at a customer location
in connection  with which the Company retains title to the goods until a sale is
deemed to be made,  all pursuant to the Company's  standard form of  consignment
sale agreement.

                           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  Borrowers  on a  consolidated
basis and determined and  consolidated  in accordance with GAAP and (x) shall be
calculated to include 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  Borrower
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 Borrower.

                           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.


<PAGE>

                           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.

                           Euro-Rate shall mean, with respect to the Loans
                           ---------
comprising any Borrowing Tranche to which the Euro-Rate
Option applies for any Interest  Period,  the interest rate per annum determined
by the Agent by dividing (the resulting quotient rounded upwards,  if necessary,
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  average of the London  interbank
offered rates for U.S. Dollars quoted by the British Bankers' Association as set
forth on Dow Jones Markets Service  (formerly known as Telerate) (or appropriate
successor or, if the British  Bankers'  Association  or its successor  ceases to
provide such quotes, a comparable  replacement  determined by the Agent) display
page 3750 (or such other display page on the Dow Jones Markets Service system as
may replace  display page 3750) 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  Euro-Rate  Reserve  Percentage.  The
Euro-Rate may also be expressed by the following formula:

                           Average of London interbank offered rates quoted
                           by BBA or appropriate successor as shown on
         Euro-Rate =       Dow Jones Markets Service display page 3750
                           -------------------------------------------
                                 1.00 - Euro-Rate Reserve Percentage

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

                           Euro-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).

                           Euro-Rate Reserve Percentage shall mean as of any day
                           ----------------------------
the maximum percentage in effect on such day, 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.

                           Event of Default shall mean any of the events
                           ----------------
described in Section 9.1 and referred to therein as an "Eventof Default."


<PAGE>

                           Existing Facility shall mean, collectively (i) the
                           -----------------
$75,000,000 revolving facility provided to the Company
and certain Subsidiaries pursuant to the Credit Agreement dated November 1, 1996
by and among the Company, such certain  Subsidiaries,  PNC Bank as Agent and the
Banks party  thereto and (ii) the  $5,000,000  unsecured  working  capital  line
evidenced by the  $5,000,000  Committed Line of Credit Note dated August 3, 1999
payable to the order of PNC Bank.

                           Expiration  Date shall mean February **, 2003 as such
date be extended pursuant to Section 2.1.3.

                           Facility  Usage shall mean at any time the sum of the
Loans outstanding and Letter of Credit Outstandings.

                           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).

                           Financing Statements shall mean the UCC-1 financing
                           --------------------
statements executed and delivered by the Borrowers and
filed to perfect the security  interests granted in the Security Agreement or to
provide notice in respect of Consignment Inventory.

                           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),
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.


<PAGE>

                           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).

                          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.

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

                           Interest Rate Option shall mean a Euro-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 written employment
                           ---------------
agreements, employment contracts, collective bargaining
agreements and other agreements among any Borrower or Subsidiary of a Borrower
and its employees.

                           Landlord Waivers shall mean, collectively, the
                           ----------------
waivers, estoppels, consents and acknowledgments delivered
to the Agent in respect of each location  (designated by the Agent) at which any
Collateral (including Consignment Inventory) is located,  including at customer,
warehouse and storage locations.

                           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.

                           Letter of Credit Outstandings 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)
                           --------------
consolidated 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 of Borrowers to (y) EBITDA.


<PAGE>

                           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.


                           Loan Documents shall mean this Agreement, the
                           --------------
Security Agreement, , the Canopy Acknowledgment, , the
Financing  Statements,  the Landlord Waivers, the Agent's Letter, the Notes, the
Swing Line  Agreements,  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 Borrower and, after the
                           ------------
date hereof, any borrower or any guarantor of the
Obligations which becomes party to this Agreement.

                           Loan  Request  shall have the  meaning  given to such
term in Section 2.5.

                           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 (including Swing Line Loan
pursuant to Schedule 1.1 (SW)) or Section 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 Borrowers
taken as a whole,  (c) impairs  materially  or could  reasonably  be expected to
impair  materially  the  ability of the  Borrowers  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
Euro-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 Euro-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.
<PAGE>

                           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.

                           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 Borrowers 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,  the Swing Line Loan Note and Swing Line  Agreements,  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 8.2.5.


<PAGE>

                           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

                                    (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 not in excess of $1,000,000 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)   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;

                                    (v)     Liens, security interests and
mortgages in favor of the Agent for the benefit of the
Banks;

                                    (vi)    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;

                                    (vii)   Any Lien existing on the date of
this Agreement and described on Schedule 1.1(P),



<PAGE>

provided that (A) no such Lien  attaches to any  Inventory or Accounts;  (B) the
principal  amount  secured  thereby  is  not  hereafter  increased  and  (C)  no
additional assets become subject to such Lien;


                                    (viii)  Purchase Money Security Interests,
provided that the aggregate amount of loans and
deferred  payments  secured by such Purchase Money Security  Interests shall not
exceed  $2,000,000  (excluding for the purpose of this  computation any loans or
deferred payments secured by Liens described on Schedule 1.1(P)); and

                                    (ix)   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.

 ....................................(x)     Subleases or assignments of leases
for properties no longer needed in the Loan Party's
                  business and which are not material to the financial condition
of Borrower.

                           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.


<PAGE>

                           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.

                           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
Loan Parties 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 Loan
Party's business between such a Loan Party and an Account Debtor which is not an
Affiliate, officer, or employee of a Loan Party, or a member of the family of an
Affiliate, officer, or employee of Loan Party;

                           (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;


<PAGE>

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

                           (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 Loan Party 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 and is subject to a  fully-perfected,  first-priority
Lien in favor of the Agent, subject only to 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)     The Account is not subject to any provision
prohibiting its assignment or requiring notice of or consent to such assignment;

                           (xii)       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;

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


<PAGE>

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

                           (xv)        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 Loan Party on a  bill-and-hold  sale,  consignment  sale,
guaranteed  sale,  or  sale-or-return  basis,  or any  other  similar  basis  or
understanding   other  than  an  absolute  sale  except  that  with  respect  to
consignment sales, Inventory which 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 and, commencing with all
such  financing  statements  filed by or on  behalf  of such  Loan  Party  after
February 1, 2001, also providing  notice of the Agent's  interests (as assignee)
therein  shall  not be  excluded  from  Qualified  Inventory  by  virtue  of the
exclusion in this item (i);

                           (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 Loan Party 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 Loan Party in the ordinary course of business at
regular prices;

                           (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 and is subject to a fully-perfected, first-priority Lien
in favor of the Agent, subject only to Permitted Liens;
and

                           (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.  For purposes of this definition, the undertaking to provide Swing Line
Loans shall not be considered in calculating
Commitments or amounts outstanding.

                           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.


<PAGE>

                           Required Banks shall mean

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

                                    (ii)    if there are Loans, Reimbursement
Obligations, or Letter of Credit Borrowings
outstanding,  any  Bank  or  group  of  Banks  (i)  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  or (ii) if  there  are two (2) or  fewer  Banks,  all  such  Banks.
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.  For
purposes of this  definition,  the undertaking to provide Swing Line Loans shall
not be considered in calculating Commitments or amounts outstanding.

                           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.


                           Security Agreement shall mean the security agreement
                           ------------------
executed and delivered by each of the Borrowers to the
Agent for the benefit of the Banks in respect of all the UCC  Collateral  of all
of the Borrowers.

                           Selected  Collateral  Locations shall mean the twenty
(20) customer locations at which the Company maintains

inventory and which are listed on Schedule 1.1(SC).
                                  ----------------

                           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
Borrowers,  contingent  or  otherwise,  which  finance the  working  capital and
business needs of the Borrowers incurred in the ordinary course of business.


                          Canopy AcknowledgmentCanopy Acknowledgment 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.  Canopy
shall not be considered a "Subsidiary"  hereunder.  Subsidiary Shares shall have
the meaning assigned to that term in Section 6.1.3.



<PAGE>

                           Swing Line shall mean the $5,000,000  Swing Line line
of credit provided on the Closing Date pursuant to

this Agreement by the Agent on behalf of the Banks, the obligations  under which
are Obligations hereunder which are secured by the Collateral.

                           Swing Line Agreements shall mean the following
                           ---------------------
documents executed and delivered in connection with the
Swing Line:  Working Cash Trust Agreement, Working Cash Line of Credit
Investment Sweep Rider and the Swing Line Notes.

                           Swing Line Loans shall mean advances made by PNC Bank
to the Borrower under the Swing Line.

                           Swing  Line  Notes  shall  mean any of the Swing Line
Notes in form of Exhibit 1.1 (SN) evidencing a loan under

the Swing Line.

                           Swing  Line  Provisions  shall  mean  the  provisions
relating to the Swing Line set forth on Exhibit 1.1 (SW).

                           UCC shall mean the Uniform  Commercial Code in effect
in Pennsylvania or other applicable jurisdiction.

                           UCC Collateral shall mean the property of the
                           --------------
Borrowers in which security interests are to be granted under
the Security Agreement.


                           Xeikon shall mean Xeikon America, Inc., a Delaware
                           -------
corporation and a wholly-owned subsidiary of Xeikon NV of Mortsel, Belgium.

                           Canopy Acknowledgment1.2  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";


<PAGE>

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;

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;


<PAGE>

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
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.

1.4      UCC Terms.
------------------

                  All  capitalized  terms used in the  Security  Agreement,  the
Financing Statements,  and this Agreement (and not otherwise defined) shall have
the meaning, if any, provided in the UCC.

1.5      Concerning Corporate Terms.
-----------------------------------

                  When  terms  such  as   "stock",   "shares",   "shareholders",
"corporate",  "company" and similar terms generally associated with corporations
are used  herein,  they  shall be deemed to refer to  limited  liability  member
interests,  owners of those interests and a limited liability company or similar
entity,  as the context may require,  and  references  to  corporate  governance
documents and procedures shall have their  appropriate and correlative  meanings
with respect to limited liability companies, as the context may require.


<PAGE>



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 Letter of Credit  Outstandings;  provided however that advances in respect of
Consignment  Inventory  made  plus  Letters  of  Credit  issued  in  respect  of
Consignment  Inventory  shall at no time  exceed  in the  aggregate  $9,000,000.
Reference  is made to Exhibit  1.1(SW) with regard to PNC Bank's Swing Line Loan
Commitment.  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 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.


<PAGE>

2.1.3    Extension by Banks of the Expiration Date.
--------------------------------------------------

                           On or promptly after the first anniversary of the
Closing Date and annually on each such anniversary
thereafter,   the   Borrowers   may   request  a  one-year   extension   of  the
then-applicable  Expiration  Date by written notice to the Banks,  and the Banks
agree to respond to the  Borrower's  request for an extension by sixty (60) days
following  receipt of the request;  provided,  however,  that the failure of any
Bank to respond  within such time period shall not in any manner  constitute  an
agreement by such Bank to extend the  then-applicable  Expiration  Date.  If all
Banks elect to extend, the then-applicable Expiration Date shall be extended for
a period of one year.  The  failure of any Bank to  respond  to or approve  such
request shall constitute refusal.

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 2.5 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 and the Borrowers'  obligations with respect to such excess
shall be governed by Section 5.5. The  obligations  of each Bank  hereunder  are
several. The failure of any Bank to perform its obligations  hereunder shall not
affect the  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  determined by reference to the "Commitment
Fee  Applicable  Margin"  column  set  forth in the  definition  of  "Applicable
Margin,"  measured in respect of the Leverage Ratio as of the end of each fiscal
quarter.  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  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 2000 shall be .50%.


<PAGE>

                  Agent's Fees.
                  ------------

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


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 Euro-Rate  Option  applies
or the  conversion to or the renewal of the Euro-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 Euro-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  Euro-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 Euro-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  2.5,  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. Provided
that the  conditions  described  in  Section  7.2  [Each  Additional  Loan]  are
satisfied,  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 10.16.


<PAGE>

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.

2.8      Use of Proceeds.
------------------------

                  The proceeds of the Loans shall be used to refinance  existing
indebtedness  owing  under  the  Existing  Facility  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  Borrower  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 Facility Usage exceed, at any one time, the lesser of (i) the Borrowing
Base and (ii) 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 for Loans under the  Euro-Rate  Option as
calculated under Section 4.1.1(ii),  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  based on a year of 360 days 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.



<PAGE>


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.

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. 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 (other than interest during the period it was not aware of
such drawing).

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 or, if  applicable,  the Default  Rate.  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 Borrower,  or to a
trustee,  receiver,  liquidator,  custodian,  or any official in any  Insolvency
Proceeding,  any  portion  of the  payments  made by any  Borrower  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 Borrower 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
Borrower'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  Borrower'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.


<PAGE>

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:

(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  Borrower or any other Person to comply,  in  connection
with a Letter of Credit Borrowing, with the conditions set forth in Section 2.1,
2.5, 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
Borrower  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 Borrower
or Subsidiaries of a Borrower 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 Borrower or Subsidiaries
of a Borrower;


<PAGE>

(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 Borrower;

(x)      the fact that an Event of Default or a Potential Default shall have
occurred and be continuing;

(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 and the Banks 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 or the Banks 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  (except upon the request of the  Borrowers),  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 Borrower and the Agent, such Borrower
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
Borrower  against  any  beneficiary  of  such  Letter  of  Credit,  or any  such
transferee,  or any dispute between or among any Borrower and any beneficiary of

<PAGE>

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 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.

2.10     Borrowings to Repay Swing Line Loans.

                  Any  aggregate  positive  balance  of cash  over the  targeted
amount of cash in the  applicable  accounts  under the Swing Line shall,  to the
extent available at the end of a Business Day, be  automatically  applied to the
repayment of the outstanding balance of the Swing Line Loans. In addition to the
repayments referred to in the preceding sentence,  PNC Bank may at its option at
any time demand repayment of the Swing Line Loans and upon any such demand,  the
Borrower  shall pay, and if the Borrower  does not provide  ready funds by 11:00
a.m. on the date of such demand, each Bank shall make a Revolving Credit Loan in
an amount equal to such Bank's Ratable Share of the aggregate  principal  amount
of such  outstanding  Swing Line Loan,  plus,  if PNC Bank so requests,  accrued
interest thereon,  provided that no Bank shall be obligated in any event to make
Revolving  Credit  Loans in excess of its  Revolving  Credit  Commitment  or its
Ratable Share of the Borrowing Base,  whichever is less.  Revolving Credit Loans
made  pursuant to the  preceding  sentence  shall bear interest at the Revolving
Credit  Interest Rate specified in Section  4.1.1(i) and shall be deemed to have
been properly  requested in accordance with Section 2.5 without regard to any of
the  requirements  of that provision or other  provisions of the Agreement.  PNC
Bank  shall  provide  notice to the Banks  (which may be  telephonic  or written
notice by letter,  facsimile or telephone) that such Revolving  Credit Loans are
to be made under this Section 2.10 and of the apportionment among the Banks, and
the Banks shall be unconditionally obligated to fund such Revolving Credit Loans
(whether or not the conditions specified in Section 7 are then satisfied) by the
time PNC Bank so  requests,  which  may be on the  Business  Day that the  Banks
receive such notice from PNC Bank.


<PAGE>

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 Euro-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  plus  the  Applicable  Margin,  such  interest  rate to  change
automatically  from  time to time  effective  as of the  effective  date of each
change in the Base Rate or the Applicable Margin as the case may be;

(ii) Revolving Credit Euro-Rate  Option: A rate per annum (computed on the basis
of a year of 360 days and actual days elapsed)  equal to the Euro-Rate  plus the
Applicable Margin, such interest rate to change  automatically from time to time
effective as of the effective date of each change in the Applicable Margin.

4.1.2    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 Euro-Rate Option,  the Borrowers shall notify the Agent thereof at least
three (3) Business Days prior to the effective date of such Euro-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 one,  two,  three or six  Months in the event  Borrower .
Notwithstanding the preceding sentence,  the following provisions shall apply to
any selection of, renewal of, or conversion to Euro-Rate Option:


<PAGE>

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;

4.2.2    Amount of Borrowing Tranche.
------------------------------------

                           each Borrowing Tranche of Euro-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 Euro-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.


<PAGE>

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.

4.4      Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available

4.4.1    Unascertainable.
------------------------

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

(i)      adequate and reasonable means do not exist for ascertaining such Euro-
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 Euro-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 Euro-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 Euro-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 Euro-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.


<PAGE>

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 such Bank, to allow the Borrowers to select,  convert to or
renew a Euro-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
Euro-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 Euro-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 Euro-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 (or for the Account of PNC Bank with  respect to Swing Line
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

<PAGE>

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."




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  [Euro-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  Euro-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):

<PAGE>

(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 Euro-Rate Option applies,

(iii) on the date  specified  in a notice by any Bank  pursuant  to Section  4.4
[Euro-Rate Unascertainable] with respect to any Loan to which a Euro-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) 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 $1,000,000  (with no
                  minimum in the case of Swing Line Loans).

                           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 fail 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
Euro-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

<PAGE>

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 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


<PAGE>

(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 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 Euro-Rate Option, (irrespective of where and how the
actual  funding  occurs) which such Bank sustains or incurs as a consequence  of
any

(i) payment, prepayment,  conversion or renewal of any Loan to which a Euro-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 2.5 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.


<PAGE>

                  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.

                       6. REPRESENTATIONS AND WARRANTIES

6.1      Representations and Warranties.
---------------------------------------

                  The Borrowers and, to extent provided  herein,  the Guarantor,
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.  Without  limiting the foregoing,
Schedule 6.1.3 also describes the ownership of Canopy.

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

<PAGE>

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.

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).


<PAGE>

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 Borrowers 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.

6.1.8    Title to Properties.
----------------------------

                           The real property  owned or leased by each Loan Party
and each Subsidiary of each Loan Party and the

location of all Consignment  Inventory 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,  including  the  Collateral,  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.  Schedule  6.1.8
describes  the  nature  of  the  Collateral  and  Consignment  Inventory  at all
locations  where  such  property  is located  and the nature of each  Borrower's
occupancy rights thereat.

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, 1999 [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  September 30, 2000 (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  through 2003 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
September 30, 2000, no Material Adverse Change has occurred.]

6.1.10   Use of Proceeds; Margin Stock.
--------------------------------------

                           The Borrowers intend to use the proceeds of the Loans
in accordance with Sections 2.8 and 8.1.10.  None of
the Borrowers 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
Borrowers  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

<PAGE>

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.

6.1.13   Consents and Approvals; Landlord Waivers.

                           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 Borrowers 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   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. Each item of such property which is Collateral is subject to a
perfected Lien in favor of the Agent, subject only to Permitted Liens.

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   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 Borrowers and their Subsidiaries.

6.1.18   Compliance with Laws.
-----------------------------

                           The Borrowers and their Subsidiaries are in
compliance in all material respects with all applicable Laws
(other  than  Environmental  Laws which are  specifically  addressed  in Section
6.1.22) 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.

6.1.19   Investment Companies; Regulated Entities.
-------------------------------------------------

                           None of the Borrowers 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 Borrowers 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.

6.1.20   Plans and Benefit Arrangements.
---------------------------------------

                           Except as set forth on Schedule 6.1.20:

(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 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.


<PAGE>

(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.

6.1.21   Employment Matters.
---------------------------

                           Each of the Borrowers 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  Borrowers or any of their  Subsidiaries  which in any
case  would  constitute  a  Material  Adverse  Change.  The  Borrowers  have  no
collective bargaining agreements.


<PAGE>

6.1.22   Environmental Matters.
------------------------------

                           Except as disclosed on Schedule  6.1.22,  to the best
of the Loan Parties' knowledge:

(i) None of the Borrowers 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 Borrowers  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.

(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.
<PAGE>

(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
Borrowers  of their  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:


7.1      First Loans.
--------------------

                  On the Closing Date:

7.1.1    Officer's Certificate.
------------------------------

7.1.2 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

<PAGE>

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. 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 Borrowers,
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 the  states  where the  Selected  Collateral  Locations  are
situated.

7.1.3    Delivery of Loan Documents.
-----------------------------------


                           The Notes, the Security Agreement, , the Canopy
Acknowledgment, , the Financing Statements, the Landlord

Waivers, the Swing Line Agreements (including a duly completed Swing Line Note),
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 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

<PAGE>

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  Borrowers  shall have  provided to the Agent UCC
lien searches conducted within fifteen (15) days before

the Closing  Date  relating to all of the Loan  Parties'  properties  and,  each
Location at which Collateral or Consignment  Inventory is located,  including in
respect of any names under,  or locations  at, which any of the foregoing has or
had since 1996 maintained a distribution facility.

7.1.8    Consents and Landlord Waivers.
--------------------------------------

                           All consents and Landlord Waivers required to
effectuate the transactions contemplated hereby shall have
been obtained.

7.1.9    Officer's Certificate Regarding MACs and Availability.
--------------------------------------------------------------

                           Since September 30, 2000, 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.


<PAGE>

7.1.12   Insurance Policies.
---------------------------

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

7.1.13   Existing Lenders Payoff.
--------------------------------

                           The Borrowers  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
Borrowers  (including  with  respect to letters  of credit)  under the  Existing
Facility.

7.1.14   Availability.
---------------------

                           The   Company   shall   have   demonstrated   to  the
satisfaction of the Agent that there exists not less than

$5,000,000  availability  for  borrowing  as Loans  after  giving  effect to the
repayment of the Existing Facility.

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  Borrowers  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
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 each Loan  Request  shall be deemed to  constitute  a
representation  and  warranty to the Agent and the Banks to that effect and that
all of the  condition  to funding  have been met) and the  Borrowers  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 Borrowers, 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 Borrowers' other Obligations under
the Loan  Documents and  termination  of the  Commitments,  the Borrowers  shall
comply at all times with the following affirmative covenants:


<PAGE>

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
8.2.5.

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
Borrowers 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.

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
Borrowers  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 Borrowers.

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.


<PAGE>

8.1.5    Maintenance.
--------------------

                           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 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.


<PAGE>

8.1.10   Use of Proceeds.
------------------------

8.1.10.1 General.
----------------

                           The Borrowers will use the Letters of Credit and the
proceeds of the Loans only for (i) general corporate

purposes  and for working  capital  and  permitted  advances to Canopy,  (ii) to
finance Permitted Acquisitions and (iii) to repay and terminate all Indebtedness
owing to Existing  Lenders.  The Borrowers' 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 Borrowers 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 Borrowers 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)  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.


                           Canopy Acknowledgment.
                           ---------------------


                           Each Loan Party shall cause any  Indebtedness,  loans
or advances owed by any Loan Party to any other Loan


Party,  and  Xeikon,  to be  subordinated  pursuant  to the terms of the  Canopy
Acknowledgment.


8.1.13   Landlord Waivers.
-------------------------


                           Borrowers shall make their best efforts to obtain and
deliver to the Banks on or before March 30, 2001
landlord waivers reasonably acceptable to the Agent in respect of the Selected
 Collateral Locations.


<PAGE>

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 and obligations under the
liquidity facility under the Receivable Purchase Facility;

(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
$2,000,000;

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

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

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

<PAGE>

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, to
the extent not prohibited by Section 8.2.17 [Regarding Canopy]:

(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)     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 Borrower;

(v)      other loans and investments not exceeding $1,500,000; and


(vi) Loans to Canopy not exceeding in the aggregate  $7,000,000  outstanding  at
any one time and, with respect to any such loan made after the Closing Date:

(a)      such loans are not evidenced by any note, instrument or other evidence
of indebtedness unless endorsed over or pledged to
                                                 the Agent;


                                                 (b) at the time  any such  loan
                                                 is made,  there exists no Event
                                                 of   Default    or    Potential
                                                 Default.

8.2.5    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


<PAGE>

                           (1)......any Borrower may consolidate or merge into
another Borrower,

                           (2)......any  Borrower 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 Borrowers 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 Borrowers  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 Borrowers and shall comply with
Section 8.2.9,

                                    (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  8.2.14 and 8.2.15 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 8.2.5 evidencing such
compliance, and

 ....................................(vii)   the Consideration paid by the
Borrowers for such Acquisition shall not exceed $10,000,000
and after giving effect to such Permitted Acquisition, the Consideration
paid by the Borrowers for all Permitted Acquisitions made
since the Closing Date shall not exceed $20,000,000;


8.2.6    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 Borrower), except:


<PAGE>


(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  Borrower's or
such Subsidiary's business;

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

(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;

(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; or


(vii)    the transfer as a contribution of capital of up to $11,100,000 in net
assets to Canopy effected as of July 1, 2000.


8.2.7    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  (including  purchasing property or services from or selling
property or services to any  Affiliate of any Borrower 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.

8.2.8    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) Canopy,  (ii) any Subsidiary which
has joined  this  Agreement  as a Borrower on the  Closing  Date;  and (iii) 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.


<PAGE>

8.2.9    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.

8.2.10   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;

(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.


<PAGE>

8.2.11   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.

8.2.12   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.

8.2.13   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  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(i).

8.2.14   Minimum Shareholders' Equity.
-------------------------------------


                           The Borrowers shall not permit the Company's
Shareholders' Equity to be less than the sum of $55,436,000
plus 50% of consolidated  net income for each fiscal quarter in which net income
is earned (as opposed to a net loss)  during the period from  October 1, 2000 to
the date of determination.


8.2.15   Minimum Fixed Charge Coverage Ratio.
--------------------------------------------

                           The Borrowers 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
1.15-to-1.0.

8.2.16   Maximum Leverage Ratio.
-------------------------------

                           The Borrowers shall not permit the Leverage Ratio,
calculated as of the end of each fiscal quarter for the
four (4) fiscal  quarters then ended, to be more than the amount set forth below
for the period of determination:

<PAGE>

<TABLE>
<CAPTION>

                      --------------------------------------- -----------------------------------------------
                      Period                                                  Maximum Ratio
                      --------------------------------------- -----------------------------------------------
                      --------------------------------------- -----------------------------------------------
<S>                                                                            <C>     <C>
                      for quarters ending on or before                         3.75-to-1.0
                      September 30, 2001
                      --------------------------------------- -----------------------------------------------
                      --------------------------------------- -----------------------------------------------
                      for quarters ending on or after                           3.5-to-1.0
                      December 31, 2001 through March 31,
                      2002

                      --------------------------------------- -----------------------------------------------
                      --------------------------------------- -----------------------------------------------
                      for quarters ending on or after June                     3.25-to-1.0
                      30, 2002

                      --------------------------------------- -----------------------------------------------
</TABLE>

8.2.17   Regarding Canopy.
-------------------------

                           The Borrowers shall not suffer or cause the Company's
ownership (beneficial and of record) to be less than

70% of all equity interests of Canopy, measured on a fully diluted basis.


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:

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 and consolidating balance sheet as of the
end of such fiscal quarter and related consolidated and consolidating statements
of income and statements of retained  earnings 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 and
consolidating  balance  sheet as of the end of such  fiscal  year,  and  related
consolidated and consolidating  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.


<PAGE>

8.3.3    Borrowing Base Certificate.


                           On or before the fifteenth (15th) calendar day of
each calendar month, the Borrowers shall deliver to the
Bank a Borrowing Base Certificate.  The Borrowing Base Certificate shall reflect
the  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.


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:


<PAGE>

(i)      at least thirty (30) calendar days prior thereto, with respect to any
proposed sale or transfer of assets pursuant to
Section 8.2.6((iv)) or ((vi)); and

(ii)     within the time limits set forth in Section 8.2.13, any amendment to
the organizational documents of any Loan Party.

8.3.8    Budgets, Forecasts, Other Reports and Information.
----------------------------------------------------------

                           Promptly  upon  their   becoming   available  to  the
Borrowers:

(i) as and when prepared,  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,

(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,  including,  without  limitation,  reports or financial
statements  regarding Canopy. 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:


<PAGE>

(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,

(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

<PAGE>

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.

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  8.2.5  or  8.2.6,  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

<PAGE>

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;

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 or  participate in new Letters of Credit and
PNC Bank or the Agent shall be under no further  obligations to issue Letters of
Credit or make Swing Line 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 the Banks and hold them 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 or any Bank (i)
subject to the terms of the  Agent's  Letter,  in  connection  with the  Agent's
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 or
any Bank,  in its capacity as such,  arising out of this  Agreement or any other
Loan Documents or any action taken or omitted by the Agent or any Bank hereunder
or thereunder, provided that the Borrowers shall not be liable to any person for
any  portion  of such  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments, suits, costs, expenses or disbursements if the same results
from the  such  person'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

<PAGE>

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.

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,
costs,  expenses or disbursements,  including  attorneys' fees and disbursements
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,

<PAGE>

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.  In
the event both the Borrowers and the Banks make a required indemnity payment for
the same obligation,  a proportionate portion of the excess shall be returned to
the Banks.

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 or  reports  referred  to in Section  8.3  received  from the  Borrowers
pursuant  to the  provisions  of this  Agreement  or the  other  Loan  Documents
promptly upon receipt thereof not otherwise delivered by Borrowers to such Bank.
The Agent shall promptly notify the Borrowers and the other Banks of each change
in the Base Rate and the effective date thereof.

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

<PAGE>

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 and no such consent being required
if there exists an Event of Default), 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 10.16 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.

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,  subject to the following sentence.  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.


<PAGE>

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 Borrower Agent, 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
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;


<PAGE>

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;

11.1.4   Letters of Credit.
--------------------------

                           Waive the precondition to the issuance of Letters of
Credit or the making of any Swing Line Loan; or

11.1.5   Releases and Waiver.
                            -

                           Release   any   guarantor,   any   Borrower   or  any
Collateral.

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

<PAGE>

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
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
Euro-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,
<PAGE>

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 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 Euro-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 by means of electronic  transmission  (i.e.,
"e-mail") or facsimile transmission or by setting forth such notice on a site on
the World Wide Web (a  "website  posting")  if notice of such  website  posting,
including the information  necessary to access such website, has previously been
delivered to the applicable parties hereto by another method of notice permitted
hereunder) unless otherwise expressly permitted hereunder and shall be delivered
or sent by 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. No
notices to a Borrower of Potential  Defaults or Events of Default  shall be made
solely by a website  posting  or by  e-mail,  or any  combination  thereof.  All
notices shall, except as otherwise  expressly herein provided,  be effective (a)
in the case of  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

<PAGE>

with first-class postage prepaid, return receipt requested, (e) if by electronic
transmission,  when actually received,  (f) if by website posting, upon delivery
of a notice  (including  the  information  necessary to access such  website) by
another means permitted hereunder and (g) 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 Borrower 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.


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

<PAGE>

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.

11.18    Joinder Of Borrowers.
-----------------------------

                  Any  Subsidiary  of a Borrower  which is required to join this
Agreement as a Borrower  pursuant to Section  8.2.8 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 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 Borrower, as applicable.

11.19    Borrower Agency.
------------------------

                           Each Borrower hereby  unconditionally and irrevocably
agrees that the Company shall have the right to take

any and all  actions  required  to be taken by the  Company  on  behalf  of such
Borrower  under the this Agreement and each of the other Loan Documents and such
Borrower hereby irrevocably makes, constitutes and appoints the Company (and any
of the Company's officers, employees or agents, as designated by the Company) as
its true and lawful attorney with power to execute such  documents,  instruments
and  certificates  and to take any and all  actions  required to be taken by the
Company on behalf of such  Borrower  under the this  Agreement or any other Loan
Document.  Such power, being coupled with an interest,  is irrevocable until all
of the Obligations have been fully paid and performed,  and the commitments have
terminated,  all in  accordance  with  the this  Agreement  and the  other  Loan
Documents.  Without  limiting the  generality  of the  foregoing,  each Borrower
hereby agrees that on behalf of such Borrower, the Company shall:

                  (a)      Deliver certificates and make certifications required
                           to be delivered  by or on behalf of the  Borrowers to
                           the Administrative Agent including without limitation
                           financial certificates,  compliance certificates, and
                           such  other  certificates,  information  and  notices
                           required to be delivered to the Administrative  Agent
                           under the this  Agreement or the Loan  Documents  and
                           otherwise  provide   information  on  behalf  of  the
                           Borrowers;

                  (b)      Receive notices and communications from the
Administrative Agent  (it being agreed that notice to the
                           Company shall be deemed to be notice to all
Borrowers); and


<PAGE>

                  (c)      Take such other actions as any Borrower may request
on behalf of such Borrower under this Agreement.

Although the Company is authorized and directed to take the foregoing actions on
behalf of each Borrower, notwithstanding the foregoing, nothing contained herein
shall in any way release any Borrower from the  performance  of its  obligations
under the this Agreement or under any other Loan Document, it being acknowledged
and agreed that the actions  authorized to be taken by the Company hereunder are
solely for the purpose of administrative  ease.  Without limiting the foregoing,
nothing   herein  shall   vitiate  or  be  held   contrary  to  any   Borrower's
representations,   express  or  implied,  or  covenants  or  undertakings.   The
Administrative  Agent shall be entitled to rely exclusively (but is not required
to rely exclusively) on the Company's  authority to act in each instance without
inquiry or investigation and each of the Company and Subsidiary hereby agrees to
indemnify  and hold  harmless the  Administrative  Agent for any losses,  costs,
delays,  errors,  claims,  penalties  or  charges  arising  from  or  out of the
Company's  actions  pursuant to this Section  11.19.  The  Company,  in the role
described in this Section 11.19, is sometimes referred to as "Borrower Agent."


<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 for itself and as Borrower Agent



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

[Seal]

                       PNC BANK, NATIONAL ASSOCIATION, as Agent and as a Bank



                                                              By:
                                     Title:

                                                FLEET NATIONAL BANK, as a Bank



                                                              By:
                                     Title:

                                                MELLON BANK, N.A., as a Bank



                                                              By:
                                     Title:
                                         FIRST UNION NATIONAL BANK, as a Bank



                                                              By:
                                     Title:
                                               NATIONAL CITY BANK, as a Bank



                                                              By:
                                     Title:


ACCEPTED AND AGREED and intending to be legally  bound,  including in respect of
 the within provisions to the extent they related to Guarantor:


<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.                              $20,000,000              26.67%
1600 Market Street
22nd Floor
Philadelphia, PA  19103

Attention: Forrest B. Patterson, Jr.
Telephone: (215) 585-5235


Fleet National Bank                         $15,000,000              20.0%

250 Moore Street

Hackensack, New Jersey 07602
Telephone:  (201) 646-5704
Telecopy:  (201) 488-6185
Attention:  Joseph A. Nalbach


First Union National Bank                   $15,000,000               20%
600 Cuthbert Boulevard
Haddon Township, NJ  07602
phone (856)858-7687
fax (856)858-7698
Attention: Dante Bucci


Mellon Bank, N.A.                           $15,000,000               20%
610 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
phone (610)941-4155
fax (610)941-4136
Attention: Devon Starks

National City Bank                          $10,000,000               13.33%
One South Broad Street
18th Floor
Philadelphia, PA  19107
Phone (267)256-4043
fax (267)256-4001
Attention: Melissa Landay



         Total                             $75,000,000                 100%




<PAGE>


                                 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, 22nd Floor
Philadelphia, PA  19103
Attention:  Forrest B. Patterson, Jr.
Telephone:      (215) 585-5235
Telecopy:       (215) 585-6987

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) 394-5579