SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

X        ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
-        EXCHANGE ACT OF 1934 [Fee Required] For the fiscal year ended: June 30,
         1999

         TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
         OF 1934 [No Fee Required]

                          Commission File Number 0-7462

                               CPT HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

               Minnesota                                   41-0972129
        (State of Incorporation)               (IRS Employer identification No.)

      680 Fifth Avenue, 8th floor
           New York, New York                                10019
(Address of principal executive offices)                  (Zip code)

       Registrant's telephone number, including area code: (212) 931-5260


                  1430 Broadway, 13th floor, New York, NY 10018
                                 Former Address

                    Securities registered pursuant to Section
                               12(b) of the Act:
                                      NONE

                    Securities registered pursuant to Section
                               12(g) of the Act:
                                      NONE

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]

As of August 31, 1999,  the aggregate  market value of shares of Common Stock of
the registrant held by non-affiliates was approximately $196,013.

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12, 13, or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
Yes     X      No ___

As of August 31, 1999,  1,510,084 shares of the  registrant's  Common Stock were
outstanding.





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<PAGE>

                                     PART I

ITEM 1.  BUSINESS

General

         CPT Holdings, Inc. ("CPT" or the "Company") is a holding company which,
through its indirect  operating  subsidiary,  J&L  Structural,  Inc., a Delaware
corporation  ("J&L"),  is a  nationwide  independent  producer  of high  quality
lightweight  structural  steel  shapes,  with  a  leading  market  share  in the
Northeast,  Southeast and Mid-Atlantic  regions. The Company's products are used
primarily  in  the  manufactured   housing,   tractor   trailer,   construction,
shipbuilding and the oil field service and petrochemical industries. The Company
operates a uniquely designed mill on 33 acres in Aliquippa,  Pennsylvania  which
is capable of  producing  thin,  lightweight  profile  structural  steel  shapes
(primarily  I-Beams).  The Company,  through the Brighton Electric Steel Casting
Division of J&L  ("Brighton"),  also has a dominant market share in the domestic
small piercer point market.

         CPT,  a  Minnesota  corporation,   was  incorporated  in  1971  as  CPT
Corporation.  Its principal offices are located at 680 Fifth Avenue,  8th floor,
New York, New York and its telephone  number is (212) 931-5260.  CPT adopted its
current  form as a  holding  company  in  accordance  with its  Amended  Plan of
Reorganization (the "Reorganization Plan") approved by the U.S. Bankruptcy Court
for the District of Minnesota.  The  Reorganization  Plan became effective as of
July 23,  1991.  References  to the Company are  intended to include CPT and its
direct and indirect subsidiaries, unless the context provides otherwise.

         On February 8, 1993, Hupp Industries, Inc., now known as H. Industries,
Inc. ("Hupp"), became a majority-owned subsidiary of CPT when CPT acquired 80.1%
of the capital stock of Hupp.  Hupp was a manufacturer  of heating,  ventilating
and air conditioning  equipment used primarily in commercial as well as military
applications.  Through its wholly owned division, DCM Corporation, Hupp was also
a manufacturer of fractional  horsepower  electrical  motors.  Hupp  experienced
operating  difficulties  in  both  its air  conditioning  and  electrical  motor
manufacturing  businesses  and in  February  1994  decided  to  discontinue  the
manufacture  of its air  conditioning  products.  Hupp  continued to  experience
financial  problems that caused  certain  defaults under its Credit and Security
Agreement  with its bank.  Despite  efforts to bring the  operations  of Hupp to
profitability,  Hupp was unable to eliminate its losses.  As a  consequence,  on
October 27, 1994,  Hupp's  senior  lender  exercised  its rights and conducted a
secured  party sale of the  assets of Hupp to an  unrelated  party.  Hupp had no
assets and no employees subsequent to October 1994.

         On April 6, 1995, J&L, a newly incorporated,  indirect,  majority-owned
subsidiary  of the  Company,  acquired  substantially  all of the  assets of J&L
Structural,  Inc. ("JLS") and Trailer  Components,  Inc.  ("TCI"),  Pennsylvania
corporations  based  in  Aliquippa,  Pennsylvania,  for  $50  million  plus  the
assumption  of certain  liabilities  (the  "Acquisition").  JLS was a nationwide
independent  producer of high quality  lightweight  structural steel shapes used
primarily in the manufactured housing,  truck trailer and highway safety systems
industries.  TCI provided secondary services to JLS that are now provided by the
Ambridge division of J&L.

         As part of the  Acquisition,  the  assets of  Brighton  Electric  Steel
Casting Company ("BESCC"),  an existing  subsidiary of CPT and the direct parent
of J&L, were contributed to J&L and BESCC changed its name to J&L Holdings Corp.
("JLH").  Prior to the closing of the Acquisition,  BESCC redeemed its preferred
stock from the holder  thereof in exchange for the issuance by CPT of a Deferred
Purchase  Money Note in the amount of  $475,000,  said amount being equal to the
stated value of the redeemed preferred stock plus the accrued dividends thereon,
bearing interest at 11 percent per annum and due December 15, 2002.

         Also as part of the  Acquisition,  J&L distributed as a dividend to JLH
the  right  (which  J&L  acquired  from  JLS) to  acquire  a  38-acre  parcel of
undeveloped  land adjacent to the JLS rolling mill in  Aliquippa,  Pennsylvania.
JLH, in turn,  contributed the right to acquire the 38-acre parcel to Continuous
Caster  Corporation,  a  newly-incorporated  Delaware  corporation  ("CCC"),  in
exchange for all of the common stock of CCC.  Shortly  thereafter,  CCC acquired
title to the 38-acre parcel,  using funds that JLS had placed in escrow prior to
the Acquisition.

         Further information  regarding the Acquisition is contained in Form 8-K
filed by the Company with the  Securities  and Exchange  Commission on April 21,
1995, which is incorporated by reference herein.

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<PAGE>

J&L Structural, Inc.

         J&L  operates  in  two  distinct   segments,   J&L   Structural   ("J&L
Structural")  and  Brighton,  as a result  of  significant  differences  in both
customers  and  products.  J&L  Structural  further  operates  as  two  separate
divisions  which  include  the  Aliquippa  division  and the  Ambridge  division
(formerly TCI). This  distinction is due mainly to separate labor contracts that
exist among the  employees of J&L  Structural.  The Ambridge  division  provides
finishing  services  required  for certain  J&L  Structural  products  which are
produced by the Aliquippa division. The following narrative on the business will
be segmented on this basis.

J&L Structural Segment

         Products

         J&L  Structural  is a producer of high quality  lightweight  structural
steel shapes  (primarily  I-Beams) which are primarily used in the  manufactured
housing, truck trailer, and highway safety systems industries.

         J&L   Structural's   products  are  monitored,   tested  and  inspected
throughout the manufacturing  process to ensure that all aspects of quality meet
applicable industry or customer specifications.  The products are also inspected
to ensure integrity of surface and dimensions.

         J&L Structural's principal product lines are described below:

         JUNIOR(R) Beams are hot rolled lightweight steel beam sections produced
by rolling heated steel billets through J&L Structural's  fourteen-stand rolling
mill. These sections have been accepted by designers and engineers for over half
a century as the lightest hot-rolled  structurals in their size class. JUNIOR(R)
Beams are available in 3 to 12.5 inch depths, ranging in weight from 2.9 to 12.5
pounds per foot.  A total of fifteen  weights of JUNIOR(R)  Beams are  currently
available.  JUNIOR(R)  Beams are  manufactured  in a wide range of steel  grades
including  conventional and high strength steels.  Strict quality control at J&L
Structural's  mill assures a  homogeneous  product,  uniform in  mechanical  and
chemical  properties and possessing  dimensions  within close rolling  tolerance
limits.  JUNIOR(R)  Beams have the strength,  light weight and versatility to be
used by makers  of  manufactured  housing  and truck  trailers,  industrial  and
commercial  contractors  and machinery  builders.  JUNIOR(R) Beams are primarily
used by the manufactured housing industry as undercarriage structural support.

         Crossmembers  are  fabricated by the Ambridge  division from  JUNIOR(R)
Beams. Crossmembers are used by the truck trailer and truck body industry in the
production of trailer frames.  These  manufacturers space Crossmembers along the
entire  length of the  trailer  to  provide  structural  support to the body and
floor.

         JUNIOR(R)  Channels are  available in seven sizes and varying  weights.
They generally weigh  significantly  less than the lightest standard  structural
steel shape of equal depth,  while  exhibiting the  characteristics  of form and
constancy  of  dimension  offered by a standard  hot-rolled  section.  JUNIOR(R)
Channels are  preferred  over formed plate  channels  since they assure  perfect
fitting square corners and true lines.  These advantages  permit  flexibility of
design  with  minimum  weight  and lower  cost  without  sacrificing  structural
strength.   JUNIOR(R)  Channels  offer  excellent  application   flexibility  in
architecture  and  construction,  particularly in the construction of commercial
and industrial stairways.  Additionally, truck trailer manufacturers are able to
reduce weight in their finished product through the use of JUNIOR(R) Channels as
side rails.

         Wide Flange  Beams offer  durability  and  economical  installation  to
builders  of  highway  safety  systems  as  well  as  for  general  construction
applications.  On a pound-per-foot basis, J&L Structural's Wide Flange Beams are
among the lightest and lowest cost hot-rolled  steel  structurals  available for
highway guardrail posts.

         J&L   Structural's   philosophy   from  its   inception   has  been  to
incrementally  expand its product offerings and capabilities  while, at the same
time, striving to maintain high levels of profitability.  The Company expects to
continue  to add  new  products,  new  sizes  and/or  serve  new  markets  on an
"incremental" basis in the future.

                                       3
<PAGE>

         Suppliers

         Steel billets,  J&L Structural's  primary raw materials,  are purchased
from several  domestic  mini-mills as well as from multiple  foreign sources and
are delivered to J&L Structural's  mill by barge,  rail or truck. J&L Structural
issues  a billet  quality  standard  which  must be met by all  suppliers.  This
standard includes  specifications  for billet  chemistry,  dimension and surface
quality.  Currently,  J&L Structural purchases  semifinished steel from two main
suppliers and several alternate sources.  The loss or reduction in capability of
either of these main billet  suppliers would require J&L Structural to rely more
heavily on their other  current  sources of supply.  Management  maintains  good
relationships  with  all of its  suppliers  and does not  currently  expect  any
significant  supplier-related  impact on its  financial  condition or results of
operations  or its  ability to source an adequate  supply of billets  assuming a
need to change its supplier mix.

         Marketing and Distribution

         J&L Structural  focuses its marketing  efforts directly on end users of
its products.  J&L Structural's primary marketing strategy is to position itself
as a high-quality  niche  manufacturer  of a variety of  lightweight  structural
steel products.  Customer  service and product  quality are pivotal  elements of
that strategy,  and as a result,  J&L Structural  maintains  close ties with its
customers  and  their  markets.  Due to its  unique  mill  design  and  flexible
operating  schedule,  J&L  Structural  is able to change its mill  frequently at
minimal cost.  This allows for quick  response to customer  requirements,  while
maintaining reasonable inventory levels.

         J&L Structural  maintains a sales force of six salaried employees,  two
of whom are  stationed  in the field and four in  Aliquippa.  In  addition,  J&L
engages a commissioned sales agent who handles sales opportunities in Mexico and
the rest of Latin  America,  as well as a  commissioned  sales  agent to  handle
certain domestic sales opportunities.

         Over  75% of J&L  Structural's  shipments  go  directly  to an end user
rather  than a service  center or steel  distributor.  J&L  Structural  ships to
customers from several strategic locations including:  Aliquippa,  Pennsylvania;
Ambridge,  Pennsylvania;  Iuka, Mississippi;  Houston, Texas; Moultrie, Georgia;
and Fayetteville,  North Carolina.  Locations outside of Pennsylvania  represent
down-river  public  warehouses  that charge J&L  Structural a fee for  unloading
barges  and  for  warehousing  beams  prior  to  shipping  to  customers  in the
Southeast.  J&L Structural's  location in the Mid-Atlantic  region on the inland
waterway system provides good proximity to its major markets.  J&L  Structural's
barge  facility  provides  low  cost  transportation  for the bulk  movement  of
JUNIOR(R)  Beams to be sold to the  manufactured  housing  industry  in Alabama,
Mississippi,  Tennessee and other Southeastern states. Moreover,  Indiana, North
Carolina and  Pennsylvania  are leading states in the production of manufactured
homes and all are within  one-day truck  transportation.  Additionally,  Indiana
leads the country in the production of truck trailers.

         Competition

         J&L Structural  competes  effectively in all of its major product areas
on the basis of product quality, customer service and price in a number of niche
markets characterized by few competitors.  Its location on the Ohio River allows
it  to  ship   products  to  customers  and  obtain  raw  materials  on  a  very
cost-effective  basis in  comparison  to its  competitors  and  provides it with
expanded geographic coverage in an industry which is largely regional.

         While J&L Structural has competition in all of its major product lines,
the thin,  lightweight  sections J&L  Structural  manufactures  are difficult to
produce  and  therefore,  the number of  competitors  producing  these  items is
limited.  The unique design and relatively small size of J&L  Structural's  mill
enables it to efficiently produce thin,  lightweight profiles.  J&L Structural's
small  powerful  mill is better  suited to produce the items in its product line
than  larger  mills  operated by  competitors  that  produce a broader  range of
products.

         Three large  steel  minimills  have  recently  commissioned  greenfield
structural  rolling mills that have the ability to produce  bantam beams similar
to J&L  Structural's  products as well as other commodity,  structural  sections
that J&L  Structural  does not produce.  Due to the intensive  level of customer
service  necessary  to satisfy J&L  Structural's  markets,  it is  difficult  to
determine how significant of an impact that these new production facilities will
have on J&L's primary markets.

                                       4
<PAGE>

         J&L Structural's commitment to providing a focused product line that is
keyed off customer needs differentiates it from its competitors.  In particular,
J&L Structural:  (i) provides  superior  service and  consistently  high quality
products to its customers,  many of which purchase all or  substantially  all of
their  requirements  for  lightweight  steel  shapes from J&L  Structural,  (ii)
maintains adequate  inventories and a flexible operating schedule which makes it
more  responsive  to customer  needs and market  conditions,  (iii)  focuses its
marketing  directly on end users, (iv) produces a narrow,  more focused range of
products  relative to its competitors,  and (v) provides  value-added  finishing
services to meet specific customer needs.

         Foreign  manufacturers do not play a significant role in the structural
markets which J&L Structural serves.

         Employees

         As of  August  31,  1999,  J&L  Structural  employed  a  total  of  270
employees.  The United  Steelworkers  of America  represents  approximately  186
employees at J&L  Structural  (excluding  the Ambridge  division)  under a labor
agreement  that  expires  in  September  2000.  The  Ambridge  division  of  J&L
Structural  and its 38 unionized  employees are also  represented  by the United
Steelworkers of America under a five-year labor  agreement,  expiring in October
1999. A new  multi-year  labor  agreement  with  Ambridge  employees is in final
negotiations  and is  expected  to be  ratified  by early  October.  The Company
believes  that it has  excellent  relationships  with  both  union  locals.  J&L
Structural has never experienced a work stoppage,  and has historically had good
experience and relations with its employees.

         Backlog & Seasonality

         The backlog of unfilled  orders for J&L Structural  typically  averages
less than 60 days.  This remains the case even in strong markets due to frequent
product  rollings  and  adequate  finished   inventory  levels  that  allow  J&L
Structural's  customers to work within short lead times.  As of August 31, 1999,
J&L Structural had open orders totaling $3,898,000. This compares with a backlog
of $4,288,000 at the same date in 1998.

         The  winter  months  are  generally  slower  activity  months  for  J&L
Structural  due to  the  seasonality  of the  manufactured  housing  market  and
significant seasonal reductions in highway construction and repair programs.

         Environmental Compliance

         U.S.  steel  producers,   including  J&L  Structural,  are  subject  to
stringent   Federal,   state  and  local   environmental  laws  and  regulations
concerning,  among other things, air emissions, waste water discharge, and solid
and hazardous waste disposal.  Company spending,  in the future,  for compliance
with  these  environmental  laws  and  regulations  is  not  anticipated  to  be
significant.  No significant  environmental  problems have arisen concerning the
use or operation of J&L Structural's  facilities or the conduct of its business.
However,  a change in the law or  regulations  at either the  Federal,  state or
local level could adversely impact the operations of J&L Structural.

Brighton Segment

         Products

         The principal product manufactured by Brighton is piercer points, which
are disposable  tooling used by the steel industry in the production of seamless
steel tubes. Piercer points are bullet-shaped castings which are driven into the
core of heated steel billets and,  therefore,  are central in the  manufacturing
process  of  seamless  steel  tubing  products.  Generally,  seamless  tubes are
required in applications  where welded seamed tubes lack rigidity and structural
strength.  Seamless  tubing has a multitude  of  applications  ranging  from oil
production to bearings used in the automotive industry.

         The Company  believes  that  Brighton is the largest  producer of small
piercer  points (1 to 250 pounds) in the United  States.  Brighton also produces
piercer  points up to 400  pounds.  In  addition  to  piercer  points,  Brighton
supplies  high alloy grate bars used by the steel  industry,  as well as hi-mill
castings and equalizer  plates used in the  suspension  systems of railway cars.
Brighton's manufacturing capabilities provide it with the opportunity to develop
new markets for its molded alloy steel castings.

         The  manufacturing  process at Brighton begins with the production of a
pattern.  Brighton  relies to a great extent on an outside  pattern shop. Once a
pattern is produced,  a mold is  manufactured at Brighton's  facilities.  Molten
metal is then poured into the mold,  allowed to cool and then  "shaken"  free of
the mold to complete the finished product.  From this step Brighton may heat the
molded metal product in one of its annealing ovens after which it is machined to
final tolerances.

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<PAGE>

         The piercer points are usable by customers for only a limited amount of
production before they become too worn for the process.  In some processes,  two
piercer points are used for larger seamless tubes.  Depending on the process and
materials used to manufacture  seamless  tubing, a piercer point generally has a
useful life of between 2 to 750  manufacturing  runs before it must be replaced.
Used  piercer  points are then  returned to Brighton  for  remolding  into other
piercer points.

         Suppliers

         Brighton  purchases a variety of raw materials,  including alloys (such
as  chrome,  nickel,  molybdenum  and  tungsten),   foundry  sand  and  grinding
materials.  Brighton currently has strong and established relationships with all
of its major  suppliers  of raw  materials.  Brighton  has not  experienced  any
problems in obtaining an adequate  supply of raw materials at reasonable  prices
and  it  expects  the   availability   of  future  supplies  to  be  sufficient.
Nevertheless,  limited  supplies of these raw materials  and/or  extraordinarily
high prices for such materials could, among other things, cause Brighton to lose
business by failing to meet demand,  reduce its profit margins and/or  encourage
the use of substitute products.

         Marketing and Distribution

         Brighton  has a  dominant  market  share of the  small  piercer  points
business  in the United  States  and excels in  providing  quality  service  and
products.  However,  Brighton's  customer  base  is  limited.  Essentially,  the
customer base consists of several major accounts that account for  approximately
75% of  Brighton's  revenues.  A major loss of one or more of its  accounts or a
significant  reduction  in demand by the steel  industry  could  have an adverse
impact on Brighton's profitability.

         Competition

         Brighton has limited  competition  in the small piercer point (1 to 250
pounds) market. Its main competition is Columbiana Foundry  ("Columbiana") based
in Columbiana, Ohio which produces a wide variety of castings, including piercer
points.  In the past,  Columbiana  has focused its efforts on  producing  larger
piercer points.

         Employees

         As of August 31, 1999, Brighton employed a total of 19 employees.  Most
of Brighton's  personnel are  represented by the United  Steelworkers of America
under a contract  that  expires in  December  2001.  The Company  considers  its
employee relations at Brighton to be good.

         Backlog & Seasonality

         Brighton  typically  ships  products  within 30 days of  receipt  of an
order. Therefore,  Brighton does not maintain a significant backlog of unshipped
orders. As of August 31, 1999,  Brighton had firm open orders totaling $714,000.
This  compares to a backlog of $567,000 at the same date in 1998.  Brighton does
not consider its business to be seasonal.

         Environmental Compliance

         Brighton  operates  with several  environmental  permits  issued by the
Pennsylvania   Department   of   Environmental    Protection.   No   significant
environmental problems have arisen concerning the use or operation of Brighton's
facilities  or the  conduct  of its  business.  However,  a change in the law or
regulations at either the federal,  state or local level could adversely  impact
the operations of Brighton.

Financial  Information  Regarding  Industry  Segments  and Foreign and  Domestic
Operations

         Financial information about the Company's various industry segments and
its foreign and domestic  operations and export sales is contained in Note 13 of
the Notes to the Consolidated  Financial  Statements of the Company contained in
Item 14 of this Form 10-K. The Company's continuing  operations do not currently
have significant export sales or any foreign operations.

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<PAGE>

ITEM 2.  PROPERTIES

         CPT's principal  executive offices are located at 680 Fifth Avenue, 8th
floor,  New York, New York. The New York offices are occupied under a subleasing
arrangement on a month-to-month lease.

         The  Company's  facilities  include:  (i)  J&L  Structural  - a  reheat
furnace, a unique close-tolerance  fourteen stand continuous rolling mill, a hot
bed,  straighteners,  and sawing,  stacking and bundling  facilities  located on
approximately 33 acres on the Ohio River in Aliquippa,  Pennsylvania,  with over
265,000 square feet under roof and an adjacent barge loading facility;  (ii) J&L
Structural's  Ambridge  division - a  fabricating  facility  located in a leased
facility  in  Ambridge,  Pennsylvania,  approximately  five  miles from the main
facilities;  and (iii) Brighton's headquarters and manufacturing plant, a 25,000
square foot facility,  located in Beaver Falls,  Pennsylvania,  approximately 10
miles from J&L Structural.  J&L Structural's facilities are secured by mortgages
to its senior and subordinated lenders.

         During July 1999,  J&L  Structural  Inc.  commenced a major  upgrade to
their rolling mill  operation in Aliquippa.  New  Universal  mills,  a notch bar
cooling bed,  modifications  to their existing  automatic  stacking and bundling
equipment,  shipping crane magnets,  and a Behringer  bundle saw are included in
the capital project. Installation is scheduled for January 2000.

         CCC  holds  title to 38  acres  of  undeveloped  land  adjacent  to J&L
Structural in Aliquippa,  Pennsylvania.  The property was acquired subject to an
agreed  order  between  CCC and the  Pennsylvania  Department  of  Environmental
Protection.  Under the agreement by which this parcel was  acquired,  the Beaver
County  Corporation  for Economic  Development  has a right of first  refusal to
repurchase  the parcel for an amount  approximating  the purchase price plus all
environmental  testing and remediation  costs incurred by CCC and its affiliates
if CCC or its  affiliates  attempt to sell or transfer  the  property to a third
party  whose  intent  is other  than to  ultimately  construct  a melt  shop and
continuous caster on the property.

ITEM 3.  LEGAL PROCEEDINGS

         The  Industrial  and Allied  Employees  Union Local No. 73 Pension Plan
(the  "Plan")  issued a claim  for  payment  of  withdrawal  liability  totaling
approximately  $870,000  under Section 4219 of ERISA  against Hupp,  CPT and all
"controlled group members",  as a result of Hupp's cessation of contributions to
the Plan  following the  discontinuance  of Hupp's  business in October 1994. On
July 10, 1996, an arbitrator  sustained the Plan's claim of withdrawal liability
against  CPT.  Pursuant to ERISA,  CPT  subsequently  appealed  the  arbitration
decision  to the U.S.  District  Court for the  Northern  District  of Ohio.  On
September 17, 1997, in response to CPT's appeal,  the District  Court vacated in
part,  and  confirmed in part the  arbitrator's  award.  In its  judgement,  the
District  Court  reduced  the  award in favor  of the  Plan  from  approximately
$870,000 to $62,696. The Plan subsequently  appealed the District Court's ruling
to the United  States  Court of Appeals  for the Sixth  Circuit.  On December 8,
1998,  the  Sixth  Circuit  reversed  the  decision  of the  District  Court and
reinstated  the  original  arbitration  award.  On January 21,  1999,  the Sixth
Circuit denied CPT's petition for a rehearing,  rendering the decision final. No
future  appeal  has  been or will be  pursued  by CPT.  CPT  made a  payment  of
approximately  $188,000 in June 1999 to the Plan which reflects the satisfaction
of the arbitration award.

         In 1995,  J&L signed a contract for turnkey  development,  fabrication,
and  installation  of a new reheat  furnace.  Furnace startup took place in July
1996, with the entire project having a total cost of approximately $8.5 million.
Of this amount,  $7.1 million had been disbursed  through June 30, 1998. J&L had
been in the process of arbitration with the furnace builder  regarding the final
payment of $1.4 million as the Company believed  performance testing results did
not meet contract  specifications.  The $1.4 million had been accrued in full by
the Company.  On April 20, 1999,  the  arbitrators  stipulated  that J&L pay the
remaining  project cost,  offset by  approximately  $300,000 of warranty  claims
which had been awarded to J&L as part of the same arbitration  process.  At June
30, 1999. all required payments under the arbitrators decision had been made.

         The Company is involved in various legal actions  arising in the normal
course of business.  While it is not possible to determine  with  certainty  the
outcome of these matters, in the opinion of management,  the eventual resolution
of the claims and actions outstanding will not have a material adverse effect on
the Company's financial position or operating results.

                                       7
<PAGE>

ITEM 4.            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  NONE

                                     PART II

ITEM 5.           MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDERS
                  MATTERS

         The Company's Common Stock trades  over-the-counter with quotations for
the stock  available  in the  "pink  sheets"  or  through  the  over-the-counter
Bulletin Board of the National Association of Securities Dealers, Inc.

         The following table sets forth for each of the periods  indicated,  the
range of the  high and low  closing  prices  for  CPT's  common  stock  based on
quotations   obtained   from  the  NASDAQ  Small  Cap  Market  and  through  the
over-the-counter bulletin board.
                                                  Fiscal 1999
                                                High           Low
First Quarter (7/1-9/30/98)                    $2.06          $1.00
Second Quarter (10/1-12/31/98)                  1.00           0.28
Third Quarter (1/1-3/31/99)                     2.25           0.28
Fourth Quarter (4/1-6/30/99)                    0.51           0.12

                                                  Fiscal 1998
                                                High           Low
First Quarter (7/1-9/30/97)                    $2.25          $1.00
Second Quarter (10/1-12/31/97)                  2.13           1.31
Third Quarter (1/1-3/31/98)                     1.69           1.38
Fourth Quarter (4/1-6/30/98)                    2.56           1.50

         As  of  August  31,  1999,  there  were   approximately   1,922  common
stockholders.

         Dividend Policy

         CPT has not paid any cash dividends on its common stock during the last
three  fiscal  years  and has no plan to pay any  dividends  in the  foreseeable
future.

                                       8
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                               Selected Financial Data as of and for the Years Ended June 30: (1)(2)
                                                  (in 000's except per share data)

Selected Operating Results:                                1999            1998             1997            1996            1995
                                                           ----            ----             ----            ----            ----
<S>                                                      <C>             <C>              <C>             <C>             <C>
Total net revenue                                        $100,385        $110,830         $ 98,199        $101,011        $ 31,208
(Loss) income from continuing operations after
    income taxes                                             (276)            558           (2,654)         (1,909)            410
Loss from operations of discontinued subsidiaries
                                                                -               -                -               -            (553)
Net gain on disposal of discontinued
    subsidiaries                                                 -              -                -           2,220           2,129
(Loss) income before income taxes and extraordinary
    items                                                    (276)            558           (2,654)            311           1,986
Gain (loss) on extraordinary item, net (3)                 (1,532)               -               -              -            3,527
Net income (loss)                                          (1,808)            558           (2,654)            311           5,513

Diluted earnings (loss) per share
From continuing operations                               $  (0.18)       $   0.10         $  (1.76)       $  (1.26)       $   0.27
From discontinued operations                                    -               -                -            1.47            1.04
Extraordinary items (1) (3)                                 (1.02)              -                -               -              2.34
                                                         --------        --------         --------        --------        --------

Net earnings (loss) per share                            $  (1.20)       $   0.10         $  (1.76)       $   0.21        $   3.65
                                                         ========        ========         ========        ========        ========

Fully-diluted common and common equivalent shares
    outstanding                                             1,510           2,243            1,510           1,510           1,510

Selected Balance Sheet Data (2):

Total current assets                                     $ 18,585        $ 21,899         $ 19,756        $ 19,623        $ 19,951
Total assets                                               60,050          66,405           67,170          68,584          61,203
Current liabilities                                        17,354          21,058           18,686          15,709          16,041
Long-term obligations, net of
    current portion                                        52,804          53,571           57,255          59,288          52,339
Common shareholders' deficit                              (12,888)        (11,080)         (11,638)         (8,984)         (9,671)
</TABLE>

         (1) As a result of the final  discontinuance  of operations for Hupp as
of October 27, 1994, the consolidated  statements of operations for fiscal years
ended June 30,  1996 and 1995  reflected  the results of  operations  of Hupp as
discontinued  operations.  In  addition,   certain  outstanding  notes  payable,
unsecured  creditor  obligations and  administrative  claims associated with the
operations of Hupp have been treated as forgiven  resulting in an  extraordinary
gain of  $3,257,000  in the year  ending  June 30,  1995 based on the outcome of
certain bankruptcy proceedings.

         (2) On April 6, 1995,  J&L, an indirect,  majority-owned  subsidiary of
the Company,  acquired the business and  substantially  all of the assets of JLS
and TCI as discussed in Note 1 to the  Consolidated  Financial  Statements.  The
Acquisition  was accounted  for as a purchase and the results of operations  for
the acquired  assets from the date of  acquisition  (April 6, 1995) through June
30, 1995,  were included in the Company's  consolidated  statement of operations
for the fiscal year ended June 30, 1995.

         (3) On June 30, 1999, the Company recognized a $1,532,000 extraordinary
loss as a result of the early  termination  of the FINOVA  senior  term loan and
revolving  loan facility.  The  extraordinary  loss  consisted  primarily of the
write-off of associated deferred financing costs and related  amortization and a
prepayment premium.




                                       9
<PAGE>




ITEM 7.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                 RESULTS OF OPERATIONS

Forward Looking Statements

         This Report contains  forward-looking  statements within the meaning of
the Private  Securities  Litigation Reform Act of 1995.  Investors are cautioned
that any forward-looking statements,  including statements regarding the intent,
belief,  or  current  expectations  of the  Company or its  management,  are not
guarantees of future performance and involve risks and  uncertainties,  and that
actual results may differ materially from those in forward-looking statements as
a result of various  factors  including,  but not limited to: (i) a  significant
downturn  in  manufactured  housing  construction  and sales,  (ii)  significant
negative  pricing  actions by competitors or (iii) billet costs may increase and
J&L may not have the ability to pass such costs to customers

Overview and Significant Events

         During  fiscal 1999,  the steel  industry as a whole had gone through a
very tumultuous  time. A significant  decline in  infrastructure  development in
Asia following a period of economic  turmoil in that geographic  region caused a
tremendous  impact on the worldwide  flow of steel industry goods and materials.
From a domestic  perspective,  steel scrap exports decreased  dramatically which
drove scrap  prices to their  lowest  point in twenty  years.  At the same time,
foreign  exports  of raw and  finished  steel  to the  United  States  increased
dramatically creating a "buyer's" market and sending prices significantly lower.
Management  believes  that  due to the  extreme  competitive  environment  which
currently exists and will continue into fiscal year 2000, significant structural
producers  are  reacting  to lower  volume and heavy  competition  in the larger
structural sections by searching for alternative distribution outlets or markets
to penetrate such as those served by J&L Structural.

         J&L Structural has experienced a very aggressive marketing  environment
over the past several months where pricing has  deteriorated  significantly.  In
many cases,  however,  J&L Structural was successful in maintaining the majority
of its customer volume which is believed by management to have resulted from J&L
Structural's  consistent focus on first-class  customer service.  Unfortunately,
some  customers  place  different  priorities  on their supply  chain,  and as a
result, a certain level of business volume was lost on pricing.

         Over the past couple of years, J&L Structural has contemplated  varying
ways which would allow it to maintain  its  cost-competitive  status in light of
the evolution of its growing niche markets.  During the fourth quarter of fiscal
1999,  management  approved an $11.5 million plant upgrade  project in Aliquippa
which would allow for greater  throughput,  higher  quality,  a broader  product
offering  and process  cost  savings.  The main  features  of the plant  upgrade
include a notch-bar  cooling bed, new universal mills, an automatic stacker line
expansion, shipping magnets, new sawing capability and other plant improvements.
The plant upgrade purchase orders have been issued, and project planning is well
underway with an expected plant shutdown for installation and hot  commissioning
during  January  2000.  The  capital  necessary  for the plant  upgrade is being
furnished  primarily  through a refinancing which closed on June 30, 1999 with a
new senior lender plus additional  support from state and local financing.  This
has been made possible as a result of J&L Structural's  ability to significantly
reduce debt over the past four years.

Results of Operations

         Net Sales

Net sales for the fiscal years ended June 30, were:

                           1999                1998               1997
                           ----                ----               ----
J&L Structural         $ 96,443,000        $104,227,000       $92,144,000
Brighton                  3,942,000           6,603,000         6,055,000
                       ------------        ------------       -----------
Total                  $100,385,000        $110,830,000       $98,199,000
                       ============        ============       ===========

                                       10
<PAGE>

         Net sales at J&L during  fiscal 1999  decreased  in  comparison  to the
prior fiscal year  primarily due to reduced  shipping  volume and  reductions in
average  selling  price  during the second half of the year.  Tonnage  decreased
approximately 3.9% during fiscal 1999 when compared to fiscal 1998 primarily due
to  reductions  in  construction   industry  demand  and  the  loss  of  certain
manufactured  housing  customer  plants.  This is in  contrast to an increase in
tonnage shipped of 13.1% between fiscal 1998 and fiscal 1997 which resulted from
growth in the  manufactured  housing  market and  increased  shipments  to steel
service centers as a result of significant construction industry demand.

         Average  sales price per ton  decreased  by  approximately  3.7% during
fiscal 1999 as compared to fiscal 1998 due to competitive pricing. The reduction
was  primarily  realized  during the six months ended June 30, 1999 when average
sales price per ton  decreased  7.3% from the  comparable  period  during fiscal
1998.

         Brighton's  sales  decrease  for fiscal 1999  reflects a  reduction  in
demand for its core product,  piercer  points.  The piercer points are primarily
used in the  manufacture  of seamless  steel tubing used in the oil drilling and
exploration industry. Activities in the oil and gas industry have been curtailed
due to the current  worldwide  excess oil supply.  These market  conditions  are
expected to continue into the foreseeable future.


Gross Margins

                             1999                   1998                   1997
                             ----                   ----                   ----
J&L Structural               13.8%                  13.7%                  11.2%
Brighton                     23.7%                  29.5%                  27.7%
Overall                      14.2%                  14.4%                  12.2%

         Gross  margins  for  J&L  Structural  improved  during  fiscal  1999 in
comparison  to fiscal 1998 due  primarily  to lower billet  costs.  Billet costs
comprise approximately 69% of plant manufacturing costs. Average billet cost per
ton  decreased by 12.1% during  fiscal 1999 as compared to fiscal 1998.  Average
billet  cost per ton  decreased  steadily  during the first half of fiscal  1999
before  stabilizing  during the third fiscal quarter and finally rising slightly
during the fourth fiscal  quarter.  Gross  margins  during fiscal year 1997 were
adversely  impacted by startup issues associated with the commissioning of a new
reheat  furnace and a charge  totaling  $767,000  representing  engineering  and
feasibility  studies  relating to the intended  construction  of a melt shop and
caster.

         Brighton's  fluctuations  in gross  margins  over the three year period
presented  above  reflect the impact of  significant  volume  fluctuations  on a
largely fixed cost business.

         Selling, General and Administrative Expenses

         Selling,   general  and  administrative  expenses  totaled  $7,341,000,
$7,380,000  and   $6,576,000   for  the  fiscal  years  1999,   1998  and  1997,
respectively.  As a percentage of revenues,  the amounts  represented 7.3%, 6.7%
and 6.7% of net sales,  respectively.  The  increase  in  selling,  general  and
administrative  expenses in fiscal 1999 is  primarily  due to increases in legal
and  professional   fees  totaling   approximately   $900,000  relating  to  the
arbitration proceedings against the reheat furnace builder which was resolved in
April 1999.  During  fiscal  1998,  non-recurring  professional  costs  totaling
approximately $400,000 were expended relating to arbitration proceedings against
the reheat furnace  builder,  a business system  conversion  study and executive
officer recruiting costs. Research and development costs included in general and
administrative expenses totaled approximately $10,000, $219,000 and $230,000 for
fiscal 1999, 1998 and 1997, respectively,  for the purpose of developing new and
innovative product designs.

         Interest Expense

         Interest expense totaled $7,323,000,  $7,624,000 and $7,517,000 for the
fiscal years 1999, 1998 and 1997 respectively.  The decrease in interest expense
during  fiscal  1999 when  compared  to fiscal  1998 was due to a  reduction  in
average  debt level and a decrease  in the  average  prime  lending  rate during
fiscal 1999.  The increase in interest  expense during fiscal 1998 when compared
to fiscal  1997 was due  primarily  to  approximately  $130,000  of  incremental
interest expense being capitalized  during the final  construction  phase of the
new reheat furnace.

                                       11
<PAGE>

         Other Income/Expense

         Expenses  for  fiscal  1998  and  1997  reflect  expenditures  incurred
primarily resulting from professional fees relating to a failed acquisition.  In
April 1997, the Company had announced a proposal to negotiate the acquisition of
Steel of West  Virginia,  Inc.  for  cash,  however,  was  unsuccessful  in this
endeavor.

         Extraordinary Loss

         On June 30, 1999,  the Company  recognized  a $1,532,000  extraordinary
loss as a result of the early  termination  of the FINOVA  senior  term loan and
revolving  loan facility.  The  extraordinary  loss  consisted  primarily of the
write-off of associated deferred financing costs and related  amortization and a
prepayment premium. No tax benefit was recognized for the extraordinary item due
to the valuation  allowance  recorded against the net deferred tax asset at June
30, 1999.

         Liquidity and Capital Resources

         The  Company's  net  cash  flows  from  operating   activities  totaled
$5,618,000, $4,241,000, and $4,646,000 for the fiscal years ended June 30, 1999,
1998,  and 1997,  respectively.  The increase in cash flows from  operations for
fiscal 1999 as compared to fiscal 1998 is primarily due to decreases in accounts
receivable and inventory which reflect the reductions in sales volume, offset to
a great extent by a reduction in trade  payables  resulting  from the settlement
payment to the reheat  furnace  builder  under the  arbitration  decision  and a
reduction in net income.

         The  Company's  net cash outflows  from  investing  activities  totaled
$1,494,000, $1,379,000, and $3,219,000 for the fiscal years ended June 30, 1999,
1998 and 1997  respectively.  Capital  expenditures  during fiscal 1999 and 1998
were  primarily for  maintenance  and  refurbishment.  During  fiscal 1997,  J&L
completed the installation of a new reheat furnace, the total contracted cost of
which was $8.5 million of which $7.1 million was expended  during 1997 and 1996.
The  remaining  $1.4  million  owed to the  contractor  under  the  terms of the
contract  represented a retention  amount which was held back by J&L  Structural
due to numerous technical and operating issues relating to the furnace that were
of debate. The resolution of these issues was decided in arbitration in favor of
the furnace  builder with a net award of $1.1 million  which was paid during the
fourth quarter of fiscal 1999.

         During the fourth quarter of fiscal 1999,  management approved an $11.5
million  plant  upgrade  project in  Aliquippa  which  would  allow for  greater
throughput, higher quality, a broader product offering and process cost savings.
The main  features of the plant  upgrade  include a notch-bar  cooling  bed, new
universal  mills, an automatic  stacker line expansion,  shipping  magnets,  new
sawing  capability  and other plant  improvements.  The plant  upgrade  purchase
orders have been issued,  and project planning is well underway with an expected
plant shutdown for installation and hot  commissioning  during January 2000. The
capital  necessary for the plant upgrade is being furnished  primarily through a
refinancing  described  below  which  closed on June 30,  1999 with a new senior
lender plus additional support from state and local financing.

         The  Company's  net cash outflows  from  financing  activities  totaled
$4,044,000,   $2,886,000,  and  $1,540,000  for  fiscal  1999,  1998  and  1997,
respectively.  Cash flows during 1999 reflect debt  repayments  during the year,
the termination of the existing senior credit agreement,  and the funds provided
under the new senior credit  agreement.  During fiscal 1998 and 1997, the reheat
furnace project was financed  through  borrowings from the senior lender capital
expenditure  facility,  borrowings  from state and county  sources  and from the
excess availability that existed under the revolving credit facility.

         On June 30, 1999,  J&L entered  into a new loan and security  agreement
with Congress  Financial  Corporation  which  provides for (i) a revolving  loan
facility in an amount up to $16,000,000 (ii) an existing  equipment term loan in
the principal amount of $19,000,000,  and (iii) equipment purchase term loans in
amounts totaling up to $8,000,000. Proceeds from the financing arrangements were
used to repay existing senior term loans and revolving loan facility with FINOVA
Capital  Corporation.  As of June 30,  1999,  no amounts  have been drawn on the
equipment  purchase  term  loan  facility.  As  part of the  refinancing,  J&L's
subordinated  term notes were  amended  on June 30,  1999 to replace  the former
senior  lender  with the new  senior  lender and to revise  certain  performance
covenants.  All fees and costs  incurred  to acquire  the new loan and  security
agreement and to amend the subordinated term notes totalling  $765,000 have been
capitalized and are included in deferred financing costs as of June 30, 1999. In
addition,  fees aggregating $750,000 were paid and charged to expense related to
the termination of the existing credit facility.

                                       12
<PAGE>

         Cash and cash equivalents totaled $117,000,  $37,000, and $61,000 as of
June 30, 1999, 1998 and 1997, respectively.  Although the Company's total equity
represents a deficit of approximately $12,888,000,  this position is due largely
to  the  basis  adjustment  for  the  Company's  leveraged  acquisition  of  J&L
Structural  during  fiscal  1995.   Management  believes  that  cash  flow  from
operations in addition to proceeds provided under the new senior credit facility
and funding under state and local  assistance  programs as described  above will
continue to satisfy the Company's requirements to fund operating expenses,  debt
service and capital expenditures in the future.

         Recent Accounting Standards

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities,"  which
provides  a  comprehensive  and  consistent  standard  for the  recognition  and
measurement of derivatives  and hedging  activities and requires  recognition of
all  derivatives as either assets or liabilities at fair value.  The Company has
not  completed  the  process of  evaluating  the impact  that will  result  from
adopting  SFAS No. 133. The company is  therefore  unable to disclose the impact
that adopting the statement  will have on its financial  position and results of
operations when such statement is adopted.


         Year 2000 Disclosure

         The Year 2000 problem concerns the inability of information  systems to
recognize  properly and process  date-sensitive  information  beyond  January 1,
2000.

         State of Readiness:  During 1998, the Company initiated a comprehensive
enterprise-wide  analysis  exercise to identify and to resolve Year 2000 related
issues.  The scope of the  program  includes  the  investigation  of all Company
functions and products, including embedded systems in what are not traditionally
considered information technology systems. The detection phase of the program is
now complete. The corrective action phase of the program began during the second
quarter  of fiscal  1999,  and was  substantially  completed  during  the fourth
quarter of fiscal 1999. The final updated test file with program changes will be
installed during late September 1999. The Company continues to execute a testing
program to assess its state of readiness.  J&L has assessed the  preparedness of
its critical suppliers for Year 2000 through a thorough inquiry process has been
completed with favorable results.

         Costs To Address  Year 2000  Issues:  Total cost at  completion  of the
program is currently  estimated to approximate  $100,000.  These costs are being
expensed as incurred.

         Risks  Associated  With Year 2000 Issue:  While the Company  expects to
resolve  all Year 2000  risks  without  material  adverse  impact on  results of
operations,  liquidity or financial condition,  there can be no assurances as to
the ultimate  success of the program.  Uncertainties  exist as to the  Company's
ability  to detect  all Year 2000  problems  as well as its  ability  to achieve
successful  and timely  resolution of all Year 2000 issues.  Uncertainties  also
exist concerning the preparedness of the Company's  critical  suppliers in order
to avoid Year 2000 related service and delivery interruptions.

         A  "reasonably  likely  worst  case"  scenario of Year 2000 risks could
include  isolated  performance  problems with  manufacturing  or  administrative
systems at J&L, isolated  interruption of deliveries from critical suppliers and
product liability issues. The consequences of these issues may include increases
in manufacturing and administrative costs until the problems are resolved,  lost
revenues,  and lower cash receipts.  However,  the Company is unable to quantify
the  potential  effect,  which could be  material,  of these items on results of
operations,  liquidity or financial  condition,  should some or a combination of
these events come to pass.




                                       13
<PAGE>




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company's  primary  market risk  exposure is that of interest rate
risk associated with its various debt  instruments.  The Company has not entered
into any derivative  financial  instruments to manage its interest rate risks to
date.

         At June 30, 1999, the Company's total outstanding debt was comprised of
fixed  interest  rate  obligations  of  $31,742,000  and variable  interest rate
obligations of $24,630,000.

         The table below  provides  information  (in thousands of dollars) about
the Company's maturity schedule and fair values of its outstanding debt:
<TABLE>
<CAPTION>

                          Variable Rate Debt                                Fixed Rate Debt

    Year ending        Senior Term    Revolving      Senior       Trinity       Trinity     Ascott Wing     Other
      June 30,             Loan          Loan      Subordinated  Note Payable   Letter of
                                      Facility       Notes                       Credit
<S>                     <C>          <C>         <C>            <C>           <C>           <C>          <C>
2000                    $ 2,488            -              -             -             -             -    $    203
2001                      2,714            -              -             -             -             -         209
2002                     13,798      $ 5,630     $    1,500             -     $       -             -         125
2003                          -            -          6,000     $   6,730         1,000     $     475           -
2004                          -            -          6,000             -             -             -           -
Thereafter                    -            -          9,500             -             -             -           -
                        -------      -------     ----------     ---------     ---------     ---------    --------
Total                   $19,000      $ 5,630     $   23,000     $   6,730     $   1,000     $     475    $    537
                        =======      =======     ==========     =========     =========     =========    ========

Fair Market Value       $19,000      $ 5,630     $   23,000     $   6,730     $   1,000     $     475    $    537
                        =======      =======     ==========     =========     =========     =========    ========
</TABLE>

         Based upon the  Company's  current  level of variable  rate debt,  a 1%
increase  or  decrease  in  interest  rates will cause an  approximate  $246,000
increase or decrease in annual interest expense.  At June 30, 1999, the weighted
average  interest  rate for the variable  rate and fixed rate debt was 8.69% and
11.0%, respectively.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                  Included in Item 14

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

                  None




                                       14
<PAGE>




                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The names,  ages and positions of the directors and executive  officers
of CPT as of August 31, 1999 are as follows:

 Name                Age   Positions
 ------------------  ---   ----------------------------------------------------

 Richard L. Kramer    50   Chairman of the Board, Director and Secretary of CPT

 William L. Remley    48   President, Treasurer and Director of CPT

 Richard C. Hoffman   51   Director of CPT

         Mr.  Kramer  has  served as  Chairman  of the Board,  a  Director,  and
Secretary of the Company since January 3, 1992.  Mr. Kramer is also Chairman and
a director of Mentmore Holdings Corporation ("Mentmore"),  Stellex Technologies,
Inc.,  an  aerospace   machining  and  electronics   company,   Precise  Holding
Corporation,  a full  service,  custom  injection  molder of  precision  plastic
products, and Republic Properties Corporation, a private real estate development
firm. Mr. Kramer is also Chairman of the Board,  a Director,  Vice President and
Secretary for Trinity Investment Corp. ("Trinity"), Ascott Wing, Inc. ("Ascott")
and Halton House Limited ("Halton").

         Mr.  Remley has served as a Director,  President  and  Treasurer of CPT
since January 3, 1992. Mr. Remley is also President, Chief Executive Officer and
a director of Mentmore. Mr. Remley is the Vice Chairman, Chief Executive Officer
and a director of Stellex  Technologies,  Inc. Mr.  Remley is also a director of
Republic  Properties  Corporation,  Precise  Holding  Corporation and Sunderland
Industrial  Holdings  Corporation.  Mr.  Remley is a director  and  President of
Ascott, Trinity, and Halton.

         Mr. Hoffman is a licensed attorney who has served as General Counsel of
the Company from January 1995 to March 1999 and  Assistant  Secretary  from July
1995 to March  1999.  During  September  1999,  Mr.  Hoffman  resigned  from his
position as director of the Company.

ITEM 11. EXECUTIVE COMPENSATION

         The following table sets forth the compensation  paid to Mr. William L.
Remley for the fiscal  years  1999,  1998 and 1997,  as the only paid  executive
officer of the Company.

                                              Annual Compensation
                  --------------------------------------------------------------

     Name and                          Salary      Bonus           Other Annual
Principal Position        Year          ($)         ($)            Compensation
------------------        ----          ----        ---            ------------

William L. Remley         1999           -           -                $12,000
    President (1)
                          1998           -           -                $12,000

                          1997           -           -                $12,000


(1) Mr. Remley is an executive officer and Director of Mentmore,  which pursuant
to a  Management  Agreement,  provides  the  Company and its  subsidiaries  with
general management,  advisory,  consulting and other services in exchange for an
annual management fee. See Part III, Item 13, "Certain Relationships and Related
Transactions."




                                       15
<PAGE>




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  final  distribution  of shares of the  Company's  Common  Stock to
certain  classes of claimants  under the  Reorganization  Plan was  completed in
early 1999,  with an effective  date of June 30, 1998,  according to  procedures
authorized by the United States Bankruptcy Court, District of Minnesota,  Fourth
Division, in an order dated May 13, 1998 (the "Distribution Order"). Pursuant to
the  Distribution  Order,  a portion  of the  378,600  shares  of  Common  Stock
previously held in escrow by Norwest Bank Minnesota for  distribution  under the
Reorganization  Plan were  distributed  to  claimants  entitled to receive  such
shares.  The  remaining  undistributed  Common  Shares  held in escrow were then
distributed,  on a pro-rata basis, to all holders of Common Stock as of June 30,
1998.

         The following  table sets forth certain  information,  as of August 31,
1999,  with respect to the  beneficial  ownership of Common Stock by each person
who is known by the  Company  to own  beneficially  more than 5% of  outstanding
shares of CPT's Common  Stock,  by each director of CPT, and by all officers and
directors as a group:
<TABLE>
<CAPTION>

                                                                          Number of Shares
                                                                             Beneficially       Percent of Common
 Name                                                                         Owned (1)                Stock
 ----                                                                         ---------                -----
<S>                                                                            <C>                      <C>
 Richard L. Kramer (2)                                                                 -                    0%
 William L. Remley (2)                                                                 -                    0%
 Ascott Wing, Inc. (3)                                                           604,586                40.04%
 Trinity Investment Corp. (4)(5)                                               2,421,445                63.55%
 Halton House Limited (3)(5)(6)                                                3,026,031                79.42%
 The Halton Declaration of Trust (3)(5)(6)                                     3,026,031                79.42%
 Bahamas Protectors Ltd., a Bahamian corporation (3)(5)(6)                     3,026,031                79.42%
 Arun K. Dube (8)                                                                 80,542                 5.33%
 All Directors and Officers as a group (3 persons including those
      named above) (4)(5)(6)(7)                                                3,026,031                79.42%
</TABLE>

(1) The Persons  named in the table have sole voting and  investment  power with
respect to all shares of Common  Stock  shown as  beneficially  owned by each of
them, subject to community property laws, where applicable,  and the information
contained in other footnotes to the table.

(2)  Comprised  of  shares  of Common  Stock  held of record by Ascott  Wing and
Trinity,  and  Warrants to  purchase  Common  Stock held by Trinity  (see Note 5
below), as to which Messrs. Kramer and Remley disclaim beneficial ownership.

(3) The principal offices of Ascott Wing are at 680 Fifth Avenue, 8th Floor, New
York,  NY 10019.  Halton House  Limited,  owns all of the  outstanding  stock of
Ascott.  Halton House Limited's  principal offices are located at c/o Coutts and
Company  (Bahamas)  LTD.,  P.O.  Box N7788,  West Bay Street,  Nassau,  Bahamas.
William L. Remley and Richard L. Kramer are directors and executive  officers of
Ascott Wing and Halton House Limited.  The Halton  Declaration of Trust ("Halton
Trust") whose  principal  address is c/o Coutts and Company  (Bahamas) LTD, P.O.
Box N7788,  West Bay Street,  Nassau,  Bahamas,  is the majority owner of Halton
House  Limited.   All  powers  with  respect  to  investment  voting  securities
beneficially owned by Halton Trust are exercisable by Bahamas Protectors Ltd., a
Bahamian corporation, protector under the constituent documents of Halton Trust.
Bahamas Protectors Ltd.'s business address is c/o Private Trust Corp., Charlotte
House, Charlotte Street, Nassau, Bahamas.

(4) The  principal  offices of Trinity are at 680 Fifth Avenue,  8th Floor,  New
York,  NY 10019.  Halton  House  Limited  owns all of the  outstanding  stock of
Trinity  (see Note 2 above).  William  L.  Remley  and  Richard  L.  Kramer  are
directors and executive officers of Trinity.

(5)  Includes  2,300,000  shares  that could be  acquired  upon  exercise of two
separate  Warrants and; one Warrant  representing a right to purchase  2,000,000
shares at an exercise  price of $1.00 per share and one Warrant  representing  a
right to purchase  300,000 shares at an exercise price of $4.00 per share.  (see
Item 13).

(6)      Includes shares owned by Ascott and shares subject to a Warrant owned
by Trinity (see Note 4 above).



                                       16
<PAGE>

(7)       Includes  shares over which Mr. Remley and Mr. Kramer may be deemed to
share voting and investment  power (see Notes 2 and 3 above).

(8)      Comprised of 43,940 shares held  individually and 36,602 shares held in
joint tenancy.  According to the Company's  transfer agent, the address of Mr.
Dube is 7710 Tanglewood Court, Edina, MN 55439-2565

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On February 1, 1996,  Trinity and CPT entered into an unsecured line of
credit  agreement  totaling $1 million and bearing  interest at 13% payable with
interest  only  semi-annually  beginning  April 1, 1996,  until due in December,
2002. This line of credit was established to satisfy debt service at the holding
company level. In conjunction with the execution of the line of credit,  300,000
warrants  for CPT stock have been  issued to  Trinity  for a period of ten years
with an exercise price of $4.00 per warrant.

         On April 1, 1995,  CPT entered  into a Credit  Agreement  and  Security
Agreement with Trinity wherein  Trinity agreed to loan CPT the principal  amount
of $6,730,000  for the purpose of making a required  $5,000,000  equity  capital
infusion to JLH in order to consummate the  Acquisition of the assets of JLS and
TCI, to retire the  existing  Variable  Rate  Debenture of CPT to Trinity in the
amount of $900,000  dated  February  5, 1993 and to satisfy  and retire  certain
other short-term  obligations of CPT plus accrued interest.  Included within the
Credit Agreement was the following:

         1. A fixed rate  Debenture  of CPT dated  April 1, 1995 under which CPT
promises  to pay  Trinity,  or any  subsequent  holder  of  the  Debenture,  the
principal sum of $6,730,000,  plus accrued and unpaid interest at the fixed rate
of 13% per annum and costs provided therein, on or before December 15, 2002.

         2. A Warrant Purchase  Agreement dated April 1, 1995 by and between CPT
and  Trinity,  in which (i) CPT  granted to Trinity  Warrants  to purchase up to
2,000,000  shares of the common stock of CPT at an exercise  price of $ 1.00 per
share,  (ii)  CPT  made  certain   representations   to  Trinity  regarding  its
capitalization, the shares of Common Stock outstanding, the authorization of the
Warrant and the continued  truth and accuracy of  representations  of CPT in the
Credit   Agreement   and  Security   Agreement,   (iii)   Trinity  made  certain
representations  to CPT, including  representations  regarding the status of the
Warrant (and the  underlying  shares of Common Stock,  if issued) as "restricted
securities"  due to the  anticipated  issuance  of such  securities  pursuant to
exemptions from registration  under the Securities Act of 1933, as amended,  and
(iv) CPT granted  Trinity  certain rights to receive  financial  information and
reports of the Company and to inspect the assets, properties,  books and records
of the Company and its subsidiaries.

         3. Security  Agreement dated April 1, 1995,  between CPT and Trinity in
which CPT  pledged  all of its shares of JLH to Trinity  as  collateral  for the
performance of its obligations under the new Credit Agreement.

         Trinity has its principal  business and executive  offices at 680 Fifth
Avenue,  8th Floor,  New York,  NY 10019.  Trinity is engaged in the  investment
business. Richard L. Kramer is Chairman of the Board, a Director, Vice President
and  Secretary of Trinity,  and William L. Remley is a Director,  President  and
Treasurer of Trinity.

         Halton  House  Limited,  a  Bahamian  Corporation,   owns  all  of  the
outstanding  capital stock of Trinity and Ascott Wing. Halton House Limited is a
holding    company   with    interests    in    investment    and    industrial/
manufacturing/technology  companies. Richard L. Kramer is Chairman of the Board,
a Director, Vice President and Secretary of Halton House Limited, and William L.
Remley is a Director,  President and Treasurer of Halton House  Limited.  Halton
House Limited is owned  beneficially by The Halton Declaration of Trust which is
a trust created under the laws of the Bahamas. As of August 31, 1999, all powers
with respect to investment or voting securities beneficially owned by The Halton
Declaration  of Trust are currently  exercisable by Bahamas  Protectors  Ltd., a
Bahamian  corporation,  protector under the constituent  documents of The Halton
Declaration of Trust.

         Ascott Wing has its  principal  business and  executive  offices at 680
Fifth  Avenue,  8th Floor,  New York,  NY 10019.  Ascott  Wing is engaged in the
investment  business.  Richard L. Kramer is  Chairman of the Board,  a Director,
Vice  President  and  Secretary  of Ascott  Wing,  and  William  L.  Remley is a
Director, President and Treasurer of Ascott Wing. The preferred stock redemption
obligation to Ascott Wing including  accrued  dividends  through March 15, 1995,
totaling  $475,204  was  converted  to a deferred  purchase  money note  bearing
interest at a rate of 11% and payable interest only annually beginning March 15,
1996 and due December, 2002.

                                       17
<PAGE>

         A management  agreement  exists  between CPT and J&L whereby CPT or its
designated affiliate provides executive management advisory services to J&L. The
contract term of the agreement is for a period of six years through March,  2001
and is  subject  to being  automatically  renewed  annually  thereafter,  unless
terminated by either party to the agreement.  Annual  compensation  to CPT under
this agreement totals $600,000,  which includes  out-of-pocket expenses incurred
by CPT of up to $150,000  annually.  CPT exercised its right under the agreement
to  designate  Mentmore  Holdings  Corporation  ("Mentmore")  as the  management
advisory  service provider and as a result has assigned all fees to which CPT is
entitled  under this  agreement  to  Mentmore.  Management  fee expense  paid to
Mentmore  for each of the years  ended June 30,  1999,  1998 and 1997 under this
agreement totaled $600,000,  respectively.  Effective July 1, 1999, for a period
of one year, the management  advisory services agreement with J&L was amended to
reduce annual compensation to $528,000.

         During fiscal 1999,  Mentmore provided  investment  banking services in
connection  with J&L's  refinancing of its senior credit  facility  charging J&L
related fees of $200,000.

         Richard L. Kramer is Chairman of the Board, a Director and Secretary of
Mentmore,  and William L.  Remley is a  Director,  President  and  Treasurer  of
Mentmore.



                                       18
<PAGE>



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>

A.        Documents to be filed as part of this Report.

         1. The following financial statements of the Company and the report of its independent auditors are filed herewith:
                                                                                                                 Page of this Report

         <S>                                                                                                                <C>
         Independent Auditors' Report of Deloitte & Touche LLP..............................................................20
         Financial Statements:
         Consolidated Balance Sheets as of June 30, 1999 and 1998...........................................................21
         Consolidated Statements of Operations for the Years Ended
                  June 30, 1999, 1998, 1997 ................................................................................22
         Consolidated Statements of Changes in Shareholders' Deficit
                  for the Years Ended June 30, 1999, 1998, 1997.............................................................23
         Consolidated Statements of Cash Flows for the Years Ended
                  June 30, 1999, 1998, 1997.................................................................................24
         Notes to Consolidated Financial Statements.........................................................................26

         2. The  following  financial  statement  schedules  and exhibits of the
            Company are filed herewith:

                                                                                                                 Page of this Report

                  Financial Statement Schedules
                  I  -     Condensed Financial Information of Registrant....................................................37
                  II -     Valuation and Qualifying Accounts................................................................38

                  Exhibit 10.1 - Loan and Security Agreement by and among J&L Structural, Inc. and..........................40
                                   Congress Financial Corporation dated June 30, 1999
                  Exhibit 10.2 - Third Amendment to Note and Warrant Purchase Agreement.....................................41
                  Exhibit 27.1 - Financial Data Schedule....................................................................42

         Schedules  other than those  listed  above are  omitted  because of the
         absence of the conditions  under which they are required or because the
         information  required is included in the  financial  statements  or the
         notes thereto.

B.       Reports on Form 8-K
</TABLE>

                          None



                                       19
<PAGE>



SIGNATURES

         Pursuant to the  requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: September 28, 1999             CPT HOLDINGS, INC.


                                      By:      /s/   William L. Remley
                                               William L. Remley, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

<S>                                           <C>                                          <C>
Signature                                     Title                                        Date

/s/   Richard L. Kramer                       Chairman of the Board,                       September 28, 1999
-----------------------
Richard L. Kramer                             Secretary and Director

/s/   William L. Remley                       President, Treasurer and Director            September 28, 1999
-----------------------
William L. Remley                             (Principal Executive, Accounting and
                                              Financial Officer)

</TABLE>




                                       20
<PAGE>




INDEPENDENT AUDITORS' REPORT


Board of Directors
CPT Holdings, Inc. and Subsidiaries


We have  audited the  consolidated  balance  sheets of CPT  Holdings,  Inc.  and
Subsidiaries  ("the  Company")  as of June 30,  1999 and 1998,  and the  related
consolidated statements of operations, changes in shareholders' deficit and cash
flows for each of the three years in the period ended June 30, 1999.  Our audits
also included the financial  statement schedules listed in the Index at Item 14.
These  financial  statements  and  the  financial  statement  schedules  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above present
fairly, in all material respects,  the financial position of CPT Holdings,  Inc.
and  Subsidiaries  as of June  30,  1999  and  1998  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
June 30, 1999 in conformity with generally accepted accounting principles. Also,
in our opinion, such financial statement schedules,  when considered in relation
to the basic consolidated  financial statements taken as a whole, present fairly
in all material respects the information set forth therein.



DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
September 24, 19999




                                       21
<PAGE>





                       CPT HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             June 30, 1999 and 1998
                                     (000's)

<TABLE>
<CAPTION>

ASSETS                                                                                1999               1998
------                                                                                ----               ----
<S>                                                                              <C>                <C>
Current assets:

       Cash and cash equivalents                                                 $       117        $         37
       Receivables, net                                                                7,263               8,946
       Inventories                                                                    10,542              12,722
       Receivable from affiliate                                                           -                  26
       Other current assets                                                              663                 168
                                                                                 -----------        ------------

       Total current assets                                                           18,585              21,899

Property, plant and equipment, net                                                    38,865              41,364
Goodwill, net of accumulated amortization of $706 and $612,
           respectively                                                                1,177               1,271
Deferred financing costs, net of accumulated
           amortization of $479 and $1,390, respectively                               1,075               1,522
Other assets                                                                             348                 349
                                                                                 -----------        ------------

       Total assets                                                              $    60,050        $     66,405
                                                                                 ===========        ============

LIABILITIES & SHAREHOLDERS' DEFICIT

Current liabilities:
       Current portion of long-term debt                                         $     2,691        $      4,321
       Accounts payable                                                                7,380              10,507
       Accrued liabilities                                                             7,030               6,230
       Payable to affiliate                                                              253                   -
                                                                                 -----------        ------------

       Total current liabilities                                                      17,354              21,058

Long-term debt, net of current portion                                                52,804              53,371
Other long-term obligations                                                                -                 200

Minority interest in consolidated subsidiaries                                         2,780               2,856

Shareholders' deficit:
       Common stock authorized 30,000,000 shares of $.05 par value each,
           1,510,084  shares issued and outstanding                                       76                  76
       Additional paid in-capital                                                      5,737               5,737
       Accumulated deficit                                                           (18,701)            (16,893)
                                                                                 -----------        ------------

       Total shareholders' deficit                                                   (12,888)            (11,080)
                                                                                 -----------        ------------

       Total liabilities and shareholders' deficit                               $    60,050        $     66,405
                                                                                 ===========        ============

        The accompanying notes are an integral part of these statements.
</TABLE>



                                       22
<PAGE>





                       CPT HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                For the Years Ended June 30, 1999, 1998 and 1997
                   (000's Except Share and Per Share Amounts)


<TABLE>
<CAPTION>

                                                                              1999               1998               1997
                                                                              ----               ----               ----
<S>                                                                      <C>             <C>                <C>
Net sales                                                                $    100,385    $       110,830    $        98,199
Cost of sales                                                                  86,097             94,869             86,247
                                                                         ------------    ---------------    ---------------
      Gross profit                                                             14,288             15,961             11,952

Selling, general and administrative                                             7,341              7,380              6,576
                                                                         ------------    ---------------    ---------------
      Operating income                                                          6,947              8,581              5,376

Other expense (income):
      Interest expense                                                          7,323              7,624              7,517
      Minority interest                                                           (76)               529               (244)
      Other, net                                                                  (24)               207                420
                                                                         -------------   ---------------    ---------------
Income (loss) before income taxes                                                (276)               221             (2,317)
Income tax benefit (provision)                                                      -                337               (337)
                                                                         ------------    ---------------    ---------------
Income (loss) from continuing operations before
      extraordinary loss                                                         (276)               558             (2,654)
Extraordinary loss from early extinguishment of debt                           (1,532)                 -                  -
                                                                         -------------   ---------------    ---------------
Net income (loss)                                                        $     (1,808)   $           558    $        (2,654)
                                                                         ============    ===============    ===============

Basic earnings (loss) per share:
Income (loss) before extraordinary loss                                  $      (0.18)   $          0.37    $         (1.76)
Extraordinary loss                                                              (1.02)                 -                  -
                                                                         ------------    ---------------    ---------------
                                                                                                                          -
                                                                         $      (1.20)   $          0.37    $         (1.76)
                                                                         ============    ===============    ===============

Diluted earnings (loss) per share:
Income (loss) before extraordinary loss                                  $      (0.18)   $          0.10    $         (1.76)
Extraordinary loss                                                              (1.02)                 -                  -
                                                                         ------------    ---------------    ---------------

                                                                         $      (1.20)   $          0.10    $         (1.76)
                                                                         ============    ===============    ===============
</TABLE>


             The accompanying notes are an integral part of these statements.



                                       23
<PAGE>







                       CPT HOLDINGS, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
                For the Years Ended June 30, 1999, 1998 and 1997


<TABLE>
<CAPTION>

                                                         ($000's, Except Share Amounts)


                                                          Common Stock                          Additional
                                                                                                  Paid-In               Accumulated
                                                                                                  Capital                 Deficit

                                                  Shares                 Amount

<S>                                               <C>                 <C>                    <C>                         <C>
Balance at June 30, 1996                           1,510,084          $          76          $        5,737             $  (14,797)

Net loss                                                   -                      -                       -                 (2,654)
                                                  ----------          -------------          --------------             ----------

Balance at June 30, 1997                           1,510,084                     76                   5,737                (17,451)

Net income                                                 -                      -                       -                    558
                                                  ----------          -------------          --------------             ----------

Balance at June 30, 1998                           1,510,084                     76                   5,737                (16,893)

Net loss                                                   -                      -                       -                 (1,808)
                                                  ----------          -------------          --------------             ----------

Balance at June 30, 1999                           1,510,084          $          76          $        5,737             $  (18,701)
                                                  ==========          =============          ==============             ==========
</TABLE>

        The accompanying notes are an integral part of these statements.




                                       24
<PAGE>





                       CPT HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Years Ended June 30, 1999, 1998 and 1997
                                     (000's)


<TABLE>
<CAPTION>

                                                                                                   Years ended June 30,
                                                                                            1999              1998          1997
                                                                                            ----              ----          ----
<S>                                                                                      <C>             <C>           <C>
Cash flows from operating activities:
Net income (loss)                                                                        $ (1,808)       $    558      $   (2,654)
Adjustments to reconcile net income (loss) to net cash
         provided by operating activities:
         Extraordinary loss                                                                 1,532               -               -
         Minority interest in earnings (loss) of subsidiaries                                 (76)            529            (244)
         Depreciation and amortization                                                      4,523           4,431           4,108
         Loss on disposal of assets                                                           127               -               -
         Deferred caster and melt shop charge                                                   -               -             767
         Deferred taxes                                                                         -            (337)            337
         Changes in current assets and liabilities:
               Decrease (increase) in accounts receivable                                   1,683             525            (965)
               Decrease (increase) in inventory                                             2,180          (2,846)            937
               Increase in other current assets                                              (495)            (48)            (16)
               Increase (decrease) in accounts payable and accrued liabilities             (2,048)          1,594           2,211
               Increase (decrease) in other current liabilities                                 -            (165)            165
                                                                                         --------        --------      ----------

                              Net cash provided by operating activities                     5,618           4,241           4,646
                                                                                         --------        --------      ----------

Cash flows from investing activities:
         Decrease (increase) in other non-current assets                                        1              (1)            279
         Capital expenditures                                                              (1,495)         (1,378)         (3,498)
                                                                                         --------        --------      ----------

                              Net cash used in investing activities                        (1,494)         (1,379)         (3,219)
                                                                                         --------        --------      ----------

                                                            (CONTINUED)

</TABLE>





                                       25
<PAGE>








                       CPT HOLDINGS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                For the Years Ended June 30, 1999, 1998 and 1997
                                     (000's)
<TABLE>
<CAPTION>



                                                                                     1999             1998               1997
                                                                                     ----             ----               ----
<S>                                                                                <C>           <C>               <C>
Cash flows from financing activities: (Note 7)
         Borrowings under Congress senior term loan                                $   19,000    $          -      $           -
         Borrowings under Congress revolving credit facility                            5,630               -                  -
         Net borrowings (repayments) under FINOVA revolving credit facility            (9,843)            592               (621)
         Repayments of FINOVA senior term loans                                       (16,920)         (3,188)            (2,775)
         Borrowings under state/local loans                                                 -               -              1,000
         Repayments of state/local loans                                                 (196)           (190)               (78)
         Proceeds from issuance of other long-term debt                                     -               -              1,000
         Borrowings under unsecured line of credit                                          -               -                 34
         Fees paid for termination of FINOVA credit facilities                           (750)              -                  -
         Deferred financing costs                                                        (765)              -                  -
         Other                                                                           (200)           (100)              (100)
                                                                                   ----------    ------------      -------------

Net cash used in financing activities                                                  (4,044)         (2,886)            (1,540)
                                                                                   ----------    ------------      -------------

Net increase (decrease) in cash and cash equivalents                                       80             (24)              (113)

Cash and cash equivalents:
     Beginning of year                                                                     37              61                174
                                                                                   ----------    ------------      -------------
     End of year                                                                   $      117    $         37      $          61
                                                                                   ==========    ============      =============

Supplemental Data - Cash paid during the year for:
      Interest, net of capitalized amounts                                         $    5,736    $      6,036      $       6,268
                                                                                   ==========    ============      =============
      Income taxes                                                                 $        -    $          -      $           -
                                                                                   ==========    ============      =============

</TABLE>


        The accompanying notes are an integral part of these statements.



                                       26
<PAGE>





NOTE 1 - BASIS OF PRESENTATION

Consolidated Accounts

The accompanying  consolidated  financial statements include the accounts of CPT
Holdings,   Inc.,  a  Minnesota   corporation,   and  its  direct  and  indirect
majority-owned  subsidiaries (the "Company"),  J&L Structural,  Inc. ("J&L"),  a
Delaware  Corporation,  J&L  Holdings  Corp.  ("JLH"),  a Delaware  Corporation,
Continuous  Caster  Corporation   ("CCC"),  a  Delaware   Corporation,   and  H.
Industries,  Inc.  ("Hupp"),  an Ohio  Corporation.  All  material  intercompany
transactions have been eliminated in consolidation.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.       The Business

         The Company's  operations include two distinct business segments within
         its single  indirect  operating  subsidiary,  J&L: J&L  Structural  and
         Brighton.  J&L  Structural   manufactures  and  fabricates  lightweight
         structural  steel  shapes  which  are  distributed  principally  to the
         manufactured  housing,  tractor trailer construction and highway safety
         systems  industries.  Brighton  designs,  manufactures  and sells steel
         piercer  points  which  represent   disposable   tooling  used  in  the
         production of seamless steel tubes used in the petrochemical  industry.
         CCC is a  majority-owned,  indirect  subsidiary which holds title to 38
         acres of undeveloped land adjacent to J&L in Aliquippa, Pennsylvania.

b.       Inventories

         The  Company's  inventories  are valued at the lower of cost  (first-in
         first-out basis) or market value.

c.       Cash Equivalents

         For purposes of cash flows  reporting,  all  investments  with original
         maturities of 90 days or less are treated as cash equivalents.

d.       Property and Depreciation

         Property and equipment are stated at cost.  Expenditures for additions,
         renewals and  improvements  of property and equipment are  capitalized,
         and  expenditures  for repairs and  maintenance  and gains or losses on
         disposals  are  included  in results  of  operations.  Depreciation  is
         computed  using the  straight-line  method  over the  estimated  useful
         lives.

e.        Goodwill

         The  goodwill   associated   with   acquisitions   is  amortized  on  a
         straight-line basis over a period of 20 years.

f.       Deferred Financing Costs

         Amortization of deferred financing costs is charged to interest expense
         on a periodic  basis using the effective  interest rate method over the
         term of the Company's  senior and  subordinated  loan  facilities  with
         independent lenders.

g.       Impairment

         On an ongoing  basis,  management  reviews the  valuation  of property,
         plant and equipment and intangible  assets. As part of the review,  the
         Company  estimates  the value,  future  benefits  and future cash flows
         generated by the related  subsidiaries  and assets to determine that no
         impairment has occurred.

h.        Revenue Recognition

         Revenue is recognized when product is shipped to dealers,  distributors
         and direct customers.





                                       27
<PAGE>





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

i.       Research and Development

         All product  development costs are expensed as incurred.  For the years
         ended June 30, 1999,  1998 and 1997,  these amounts were  approximately
         $10,000, $219,000 and $230,000, respectively.

j.       Insurance

         J&L  provides  health   insurance   coverage  to  its  employees  under
         self-insurance  programs  that include  stop-loss  coverage.  Insurance
         expense is  recognized  based on estimated  losses  incurred  under the
         program.  Components of insurance expense include paid claims, incurred
         but not paid claims and estimated incurred but not reported claims.

k.       Income Taxes

         The Company accounts for income taxes utilizing the asset and liability
         method as  prescribed  by Statement of Financial  Accounting  Standards
         ("SFAS") No. 109,  "Accounting for Income Taxes." Deferred income taxes
         are  recognized  for  the tax  consequences  of  temporary  differences
         between the financial  statement  carrying amounts and the tax basis of
         existing assets and liabilities by applying enacted statutory tax rates
         applicable  to future  years.  Deferred  tax  assets  are  reduced by a
         valuation  allowance if management  believes it is more likely than not
         that  some  portion  or all of  the  deferred  tax  asset  will  not be
         realized.

l.       Earnings Per Share

         Earnings  per share are  computed as  provided  for in SFAS No.  128,
         "Earnings  Per Share." Basic  earnings per share  excludes any dilutive
         effects of  options,  warrants,  and  convertible  securities.  Diluted
         earnings per share reflects any dilutive  impact of options,  warrants,
         and convertible securities.

         The  following  table sets forth the  computation  of basic and diluted
         earnings per common share (in 000's, except per share amounts):
<TABLE>
<CAPTION>

                                                                                          Years Ended June 30,
                                                                                          --------------------
                                                                             1999                  1998                 1997
                                                                             -----                 ----                 ----
<S>                                                                        <C>                  <C>                   <C>
           Numerator - Basic
                Income (loss) before extraordinary loss                    $    (276)           $       558           $   (2,654)
                Extraordinary loss                                            (1,532)                     -                    -
                                                                          ----------            -----------           ----------

                Net income (loss) available to common shareholders        $   (1,808)           $       558           $   (2,654)
                                                                          ==========            ===========           ==========

           Numerator - Diluted
                Income (loss) before extraordinary loss                   $     (276)           $       558           $   (2,654)
                Dilution on earnings resulting from subsidiary
                Warrants                                                           -                   (329)                   -
                                                                          ----------            -----------           ----------

                Income (loss) before extraordinary loss                         (276)                   229               (2,654)

                Extraordinary loss                                            (1,532)                     -                    -

                Net income (loss) available to common shareholders        $   (1,808)           $       229           $   (2,654)
                                                                          ==========            ===========           ==========

           Denominator:
                Basic weighted average shares                              1,510,084              1,510,084            1,510,084
                Effect of dilutive securities:
                 Warrants                                                          -                732,573                    -
                                                                          ----------            -----------           ----------

                Diluted weighted-average shares                            1,510,084              2,242,657            1,510,084
                                                                          ==========            ===========           ==========

</TABLE>




                                       28
<PAGE>





NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

l.       Earnings Per Share - Continued
<TABLE>
<CAPTION>

<S>                                                                       <C>                   <C>                  <C>
           Basic earnings (loss) per share:
                Income (loss) before extraordinary item                   $    (0.18)           $      0.37          $    (1.76)
                Extraordinary loss                                             (1.02)                     -                   -
                                                                          -----------           -----------          -----------
                                                                          $    (1.20)           $      0.37          $    (1.76)
                                                                          ===========           ===========          ===========
           Diluted earnings (loss) per share:
                Income (loss) before extraordinary item                   $    (0.18)           $      0.10          $    (1.76)
                Extraordinary loss                                             (1.02)                     -                   -
                                                                          -----------           -----------          -----------
                                                                          $    (1.20)           $      0.10          $    (1.76)
                                                                          ===========           ===========          ===========
</TABLE>

m.       Management Estimates

         The  preparation of financial  statements in conformity  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and disclosure of contingent  assets and liabilities at the
         date of the financial  statements and the reported  amounts of revenues
         and expenses during the reporting  period.  Actual results could differ
         from those estimates.

n.       Comprehensive Income

         During  fiscal  1999,  the Company  adopted  SFAS No.  130,  "Reporting
         Comprehensive  Income."  The  Statement  requires  that all  changes in
         equity  during a period from  transactions  and events  from  non-owner
         sources such as foreign currency items,  unrealized gains and losses on
         investment  securities,  transaction  adjustments,  and minimum pension
         liability  items, be presented in the income  statement or statement of
         stockholders  equity. The Company had no items or comprehensive  income
         for the period.

o.       Accounting for Derivative Instruments and Hedging Activities

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
         133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
         which  provides  a  comprehensive  and  consistent   standard  for  the
         recognition and  measurement of derivatives and hedging  activities and
         requires recognition of all derivatives as either assets or liabilities
         at fair value.  The Company has not completed the process of evaluating
         the impact that will result from  adopting SFAS No. 133. The Company is
         therefore  unable to disclose the impact that  adopting  the  statement
         will have on its financial position and results of operations when such
         statement is adopted.

p.       Reclassification

         Certain items in the financial  statements  have been  reclassified  to
         conform to the current year presentation.

NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following at June 30:
<TABLE>
<CAPTION>
                                                                                                 (000's)
                                                                                       1999                1998
<S>                                                                                    <C>                 <C>
           Trade receivables                                                           $7,487              $9,092
           Other                                                                          231                 205
                                                                                       ------              ------
                                                                                        7,718               9,297
           Less allowance for doubtful accounts                                          (131)               (211)
           Less allowance for discounts and returns                                      (324)               (140)
                                                                                       ------              ------

                    Accounts receivable, net                                           $7,263              $8,946
                                                                                       ======              ======


                                       29
<PAGE>


</TABLE>

NOTE 4 - INVENTORIES

Inventories consisted of the following at June 30:
<TABLE>
<CAPTION>
                                                                                                          (000's)
                                                                                                  1999                 1998
<S>                                                                                            <C>                 <C>
                   Raw materials                                                               $     2,628         $     3,401
                   Finished goods                                                                    7,914               9,321
                                                                                               -----------         -----------

                            Total                                                              $    10,542         $    12,722
                                                                                               ===========         ===========
</TABLE>

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following at June 30:
<TABLE>
<CAPTION>
                                                                         Estimated
                                                                         Useful Life                      (000's)
                                                                         -----------                      -------
                                                                                                  1999                 1998
                                                                                                  ----                 ----
                    <S>                                                    <C>                 <C>                 <C>
                    Land and land improvements                                      -          $       382         $       382
                    Building                                                 30 years                2,200               2,126
                    Machinery and equipment                                7-20 years               46,883              46,751
                    Furniture and fixtures                                  5-7 years                1,066                 767
                    Roll inventory                                            3 years                2,334               1,766
                    Construction-in-process                                         -                  472                 246
                                                                                               -----------         -----------

                                                                                                    53,337              52,038
                    Less accumulated depreciation                                                   14,472              10,674
                                                                                               -----------         -----------
                      Total                                                                    $    38,865         $    41,364
                                                                                               ===========         ===========
</TABLE>

NOTE 6 - ACCRUED LIABILITIES

Accrued liabilities consisted of the following at June 30:
<TABLE>
<CAPTION>
                                                                                                          (000's)
                                                                                                  1999                 1998

           <S>                                                                                 <C>                 <C>
           Salaries                                                                            $     1,965         $     2,043
           Interest                                                                                  4,011               2,845
           Hupp pension liability                                                                        -                 129
           Other liabilities                                                                         1,054               1,213
                                                                                               -----------         -----------

                    Total                                                                      $     7,030         $     6,230
                                                                                               ===========         ===========
</TABLE>

NOTE 7 - LONG-TERM OBLIGATIONS

Long-term obligations consisted of the following at June 30:
<TABLE>
<CAPTION>
                                                                                                          (000's)
                                                                                                  1999                 1998
                                                                                                  ----                 ----
<S>                                                                                            <C>                 <C>
Senior Term Loan, $25,000,000 principal amount,  interest at prime (8.5% at June
30, 1998) plus 2.0%, payable in monthly installments,  beginning August 1, 1995,
with final payment due April 1, 2001, senior position  collateralized by all the
assets, contracts, real property and common stock of J&L.                                                -         $    16,920

Revolving Loan Facility,  $15,000,000 principal amount,  interest at prime (8.5%
at June 30,  1998) plus 1.5%,  payable  April 1, 2000,  with a one-year  renewal
option, senior position  collateralized by all the assets,  contracts,  and real
property and common stock of J&L.                                                                        -               9,843

                                       30
<PAGE>

Senior Term Loan, $19,000,000 principal amount, interest at prime (7.75% at June
30, 1999) plus 1% per annum or at Eurodollar  rate (5.09% at June 30, 1999) plus
3% payable in  monthly  installments  under an  84-month  amortization  schedule
beginning August 1, 1999 with final payment due for the remainder of the balance
on June 30,  2002,  unless  extended for  successive  one year terms at the sole
option of the lender.  Senior lender position is collateralized by all assets of
J&L including accounts receivable,  inventory, contracts and property, plant and
equipment.                                                                                          19,000                   -

Revolving loan facility,  $16,000,000 principal amount, interest at prime (7.75%
at June 30, 1999) rate plus 0.75% per annum or at Eurodollar rate (5.09% at June
30, 1999) plus 2.75% payable June 30, 2002,  with  consecutive one year renewals
at the sole option of the lender.  Senior lender position is  collateralized  by
all  assets of J&L  including  accounts  receivable,  inventory,  contracts  and
property, plant and equipment.                                                                       5,630                   -

Subordinated Term Notes,  $23,000,000  principal  amount,  interest at the fixed
rate of 13%,  payable  interest only  quarterly  beginning June 30, 1995 through
March 31, 2002 and then quarterly principal payments of $1,500,000 plus interest
until due June 30, 2005,  subordinated  position to the senior debt with respect
to  collateralization  by all the assets,  contracts,  real  property and common
stock of J&L.  The notes have been  discounted  $153,000 at the date of issuance
for  financial  statement  reporting  purposes  as a result  of the  fair  value
attributed to their related warrants.                                                               23,000              23,000

Machinery  and  Equipment  Loan Fund (MELF)  loan,  $500,000  principal  amount,
interest a fixed rate of 3%, payable  monthly  beginning  December 1, 1996, with
final  payment  due  November  1,  2001,  subordinated  position  to senior  and
subordinated debt with respect to collateralization by all assets, contracts and
real property of J&L.                                                                                  243                 342

Beaver County  Enterprise Zone and Development  Fund loans,  $250,000  principal
amount each, interest at 3% and 4.125%  respectively,  payable monthly beginning
June 1, 1997, with final payment due May 1, 2001,  subordinated  position to the
senior and subordinated  debt with respect to  collateralization  by all assets,
contracts and real property of J&L.                                                                    294                 391

Fixed rate 13% debenture agreement with a related investment company, $6,730,000
principal amount,  payable semi-annually interest only beginning October 1, 1995
and due December 15, 2002, secured by the Company's stock held in JLH. The debenture
has been  discounted  $840,000 at the date of issuance for  financial  statement
reporting  purposes  as a result of the fair  value  attributed  to the  related
warrants.                                                                                            6,730               6,730

Deferred  purchase  money note payable to a related  holding  company,  interest
fixed at 11%, payable annually interest only beginning March
15, 1996 and due December 15, 2002.                                                                    475                 475

                                       31
<PAGE>

Unsecured  line of  credit to  $1,000,000  with a  related  investment  company,
bearing interest at 13% and payable with interest only  semi-annually  beginning
April 1, 1996 until due in December 15,  2002. The line of credit has been  discounted
$376,000 at the date of issuance for financial statement reporting purposes as a
result of the fair value attributed to the related warrants.
                                                                                                     1,000               1,000
                                                                                               -----------         -----------

         Total                                                                                      56,372              58,701
         Less-current maturities                                                                     2,691               4,321
         Less-discounts on long term obligations                                                       877               1,009
                                                                                               -----------         -----------

         Long-term obligations, net                                                            $    52,804         $    53,371
                                                                                               ===========         ===========
</TABLE>

The following table sets forth the scheduled maturities of the long-term debt of
the Company as of June 30:

                                         (000's)

        2000                            $ 2,691
        2001                              2,923
        2002                             21,053
        2003                             14,205
        2004                              6,000
        Thereafter                        9,500
                                        -------
                                        $56,372

J&L capitalized interest on capital projects during their construction period in
fiscal 1997 totaling approximately $130,000.

On June 30,  1999,  J&L  entered  into a new loan and  security  agreement  with
Congress Financial  Corporation  ("Congress") which provides for (i) a revolving
loan facility in an amount up to  $16,000,000  (ii) an existing  equipment  term
loan in the principal amount of $19,000,000,  and (iii) equipment  purchase term
loans  in  amounts  totaling  up to  $8,000,000.  Proceeds  from  the  financing
arrangements  were used to repay  existing  senior term loans and revolving loan
facility with FINOVA  Capital  Corporation  ("FINOVA").  As of June 30, 1999, no
amounts have been drawn on the equipment purchase term loan facility. As part of
the  refinancing,  J&L's  subordinated  term notes were also amended on June 30,
1999 to  replace  the former  senior  lender  with the new senior  lender and to
revise certain performance covenants. All fees and costs incurred to acquire the
new loan and security  agreement and to amend the  subordinated  term notes have
been  capitalized  and are included in deferred  financing  costs as of June 30,
1999.

On June 30, 1999, the Company  recognized a $1,532,000  extraordinary  loss as a
result of the early  termination  of the FINOVA  senior term loan and  revolving
loan facility.  The extraordinary  loss consisted  primarily of the write-off of
associated  deferred  financing costs and related  amortization and a prepayment
premium.  No tax benefit was  recognized for the  extraordinary  item due to the
valuation  allowance  recorded  against the net  deferred  tax asset at June 30,
1999.

Under the terms of the revolving  loan  facility,  as of June 30, 1999 and 1998,
the  Company  used  $750,000  and  $1,500,000,   respectively,   of  its  credit
availability  to issue letters of credit.  During 1999, a letter had been issued
to an insurance company to collateralize the cost of certain insurance programs.
During 1999,  letters had been issued to the insurance company and to a supplier
for the purchase of raw materials.

The  revolving  loan  facility is subject to a borrowing  base  calculation  for
purposes of collateral that is comprised of 85% of eligible accounts  receivable
less any availability  reserves plus the lesser of 60% of eligible  inventory or
$8,500,000. At June 30, 1999, the borrowing base limit totaled $12,285,500.

                                       32
<PAGE>

The Company  continues  to remain  unable to meet its debt  service  obligations
under various  related  party  obligations  including  its credit  agreement and
unsecured  line of  credit  totaling  $6,730,000  and  $1,000,000  with  accrued
interest  totaling  approximately  $3,407,000  and  $408,000,  respectively,  to
Trinity  Investment  Corp.,  and a deferred  purchase money note to Ascott Wing,
Inc.  totaling $475,000 plus accrued interest  totaling  approximately  $196,000
through June 30, 1999. Both Trinity  Investment Corp. and Ascott Wing, Inc. have
agreed to extend a previously  issued  waiver  deferring  any payments due under
these obligations from July 1, 1999 to July 1, 2000.

The various loan agreements of J&L include certain provisions which, among other
things,  provide that J&L will  maintain  certain  tangible net worth,  maintain
certain financial ratios, limit the amount of annual capital  expenditures,  and
limit the amount of  shareholder  distributions.  At June 30,  1999,  J&L was in
compliance with all provisions of its loan agreements.

The fair  market  value of J&L's  fixed rate  long-term  debt on June 30,  1999,
including   current   maturities,   approximates  its  book  value.  Book  value
approximates  fair value as the interest  rates are  appropriate  based upon the
current market conditions for similar loans based upon current credit worthiness
and other  factors.  The fair market value estimate was based on cash flow yield
to maturity which was compared to market  quotations where possible.  Management
is not aware of any  significant  factors that would alter this  estimate  after
that date.

NOTE 8 - INCOME TAXES

For the years ended June 30, 1999,  1998,  and 1997 the provision  (benefit) for
income taxes consisted of the following:

                                                      (000's)

                                           1999         1998       1997
                                           ----         ----       ----
Federal income tax provision             $      -     $    -     $     -
State deferred tax provision (benefit)          -       (337)        337
                                         --------     ------     -------
                           Total         $      -     $ (337)    $   337
                                         --------     ------     -------


The effective income tax rate on income from continuing  operations differs from
the statutory  federal income tax rate for the fiscal years ended June 30, 1999,
1998, and 1997, as follows:
<TABLE>
<CAPTION>
                                                                                                      (000's)
                                                                                      1999              1998          1997
                                                                                      ----              ----          ----
<S>                                                                             <C>                  <C>            <C>
Income tax (benefit) at U.S. Federal statutory rate of 34%                      $        (94)        $      75      $  (788)
State income taxes                                                                       (37)             (307)         337
Utilization of net operating loss carryforwards, increase in
      valuation allowance and other                                                      131              (105)         788
                                                                                ------------         ---------      -------
Income tax provision (benefit)                                                  $          -         $    (337)     $   337
                                                                                ============         =========      =======
</TABLE>

Management has calculated its federal and state net operating loss  carryforward
at June 30, 1999 to be approximately  $103,731,000 and $11,907,000.  Such losses
can be carried  forward and expire in the tax years ending June 30, 2008 through
2019.

Temporary differences between financial statement carrying amounts and tax bases
of assets and liabilities at June 30, 1999 and 1998 were as follows:

                                                               (000's)
                                                     1999               1998
Current deferred taxes:
Accrued expenses                                 $        572       $       474
Inventory                                                 345               347
Valuation allowance                                      (917)             (821)
                                                 ------------       -----------
Net current deferred tax asset                   $          -       $         -
                                                 ============       ===========

Non-current deferred taxes:
Property, plant and equipment and intangibles    $     (5,922)      $    (4,435)
Net operating losses (federal and state)               36,412            35,111
Other                                                     134                87
Valuation allowance                                   (30,624)          (30,763)
                                                 ------------       -----------
Total non-current deferred tax liability         $          -       $         -
                                                 ============       ===========

                                       33
<PAGE>

The Company reduced valuation  allowances by approximately  $337,000 during 1998
to  reflect  the  effect of  legislation  enacted in 1997,  which  extended  the
carryforward  period  for the state tax net  operating  losses.  Management  has
recorded a valuation  allowance  at June 30, 1999 and 1998  against the deferred
tax assets due to their belief that recovery of these future deductions  against
future taxable income is less than likely.

NOTE 9 - CAPITAL STOCK

Warrants  for 300,000  shares of Company  common stock were issued to Trinity in
conjunction with the unsecured line of credit agreement  executed on February 1,
1996.  The  warrants  are  exercisable  for a period  of ten  years at $4.00 per
warrant.

Warrants for 2,000,000  shares of Company common stock were issued to Trinity in
conjunction  with an amended credit  agreement  executed on April 1, 1995. These
warrants are exercisable for a period of ten years at $1.00 per warrant.

NOTE 10 - BENEFIT PLANS

J&L maintains a defined contribution (money purchase) plan for substantially all
employees whereby J&L makes  contributions,  at designated rates, based on hours
worked.  All  contributions  required under the plan have been funded as of June
30,  1999,  1998 and 1997.  Pension  expense for the years ended June 30,  1999,
1998, and 1997 was approximately $646,000, $584,000 and $582,000, respectively.

J&L  participates  in the  National  Industrial  Group  Pension  Plan which is a
multi-employer defined benefit pension plan covering all employees of Brighton's
collective bargaining unit. All contributions  required under the plan have been
funded as of June 30,  1999,  1998 and 1997.  A  withdrawal  from the plan would
trigger  an  obligation  to the  plan  for a  portion  of the  unfunded  benefit
obligation. Pension expense for the years ended June 30, 1999, 1998 and 1997 was
approximately $27,000, $34,000 and $40,000, respectively.

J&L provides a profit sharing plan for substantially  all employees.  The amount
available for profit sharing is based on a return on sales formula using defined
levels  of  pretax  income.  For  those  employees  compensated  under  terms of
collective  bargaining   agreements,   distributions  are  calculated  and  paid
quarterly. For other eligible employees, calculations and distributions are made
at  J&L's  fiscal  year  end.  Such  amounts  have  been  reflected  as  current
liabilities in the  accompanying  consolidated  balance  sheets.  Profit sharing
expense  for the years  ended  June 30,  1999,  1998 and 1997 was  approximately
$1,038,000, $1,111,000 and $764,000, respectively.

J&L also maintains  separate 401(k) or salary  deferral plans for  substantially
all of its employees. Participation in these plans is based on hours of service.
Both plans  provide for  employee  contributions  up to 20% of wages  subject to
certain  adjustments.   The  plan  associated  with  the  collective  bargaining
agreement provides for discretionary company contributions.  For the years ended
June 30, 1999, 1998 and 1997, no employer contributions were made.

In connection with its collective  bargaining  agreement with the Industrial and
Allied  Employees  Union  Local No. 73 (the  "Union"),  Hupp  participated  in a
multi-employer  defined  benefit  pension  plan.  The plan covered all of Hupp's
employees who were members of the Union.  As a result of the secured party asset
sale on October 27, 1994,  Hupp was deemed to have withdrawn from the plan. This
withdrawal  triggered a demand for payment of withdrawal  liability by the Union
(see Note 11).

NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES

The Industrial and Allied Employees Union Local No. 73 Pension Plan (the "Plan")
issued a claim  for  payment  of  withdrawal  liability  totaling  approximately
$870,000 under Section 4219 of ERISA against Hupp, CPT and all "controlled group
members", as a result of Hupp's cessation of contributions to the Plan following
the  discontinuance  of Hupp's  business in October  1994.  On July 10, 1996, an
arbitrator  sustained  the Plan's  claim of  withdrawal  liability  against CPT.
Pursuant to ERISA,  CPT  subsequently  appealed the arbitration  decision to the
U.S. District Court for the Northern District of Ohio. On September 17, 1997, in
response to CPT's appeal,  the District  Court vacated in part, and confirmed in
part the  arbitrator's  award. In its judgement,  the District Court reduced the
award in favor of the Plan from  approximately  $870,000  to  $62,696.  The Plan
subsequently  appealed the District Court's ruling to the United States Court of
Appeals for the Sixth Circuit.  On December 8, 1998, the Sixth Circuit  reversed
the  decision of the District  Court and  reinstated  the  original  arbitration
award.  On January 21,  1999,  the Sixth  Circuit  denied  CPT's  petition for a
rehearing,  rendering the decision  final.  No future appeal has been or will be
pursued by CPT. CPT made a payment of approximately $188,000 in June 1999 to the
Plan which reflects the satisfaction of the arbitration award.

                                       34
<PAGE>

In 1995,  J&L  signed a  contract  for  turnkey  development,  fabrication,  and
installation of a new reheat  furnace.  Furnace startup took place in July 1996,
with the entire project having a total cost of  approximately  $8.5 million.  Of
this amount, $7.1 million had been disbursed through June 30, 1998. J&L had been
in the process of  arbitration  with the  furnace  builder  regarding  the final
payment of $1.4 million as the Company believed  performance testing results did
not meet contract  specifications.  The $1.4 million had been accrued in full by
the Company.  On April 20, 1999,  the  arbitrators  stipulated  that J&L pay the
remaining  project cost,  offset by  approximately  $300,000 of warranty  claims
which had been awarded to J&L as part of the same arbitration process.
At June 30, 1999, all required payments under the arbitrators  decision had been
made.

During 1999, J&L entered into an agreement to purchase  certain daily quantities
of gas for the period of November 1999 through October 2000.  Total  commitments
remaining under this agreement approximated $1,446,000 as of June 30, 1999.

One June 30, 1999, the Company entered into turnkey engineering, procurement and
construction  agreements  for  upgrades  to the  Aliquippa  mill in the  amounts
totaling $4,850,000 and $2,550,000.

The Company is involved in various legal actions arising in the normal course of
business.  While it is not possible to determine  with  certainty the outcome of
these  matters,  in the opinion of  management,  the eventual  resolution of the
claims and actions  outstanding  will not have a material  adverse effect on the
Company's financial position or operating results.

NOTE 12 - RELATED PARTY TRANSACTIONS

A management agreement exists between the Company and J&L whereby the Company or
its designated affiliate provides executive management advisory services to J&L.
The contract  term of the  agreement is for a period of six years  through March
2001 and is subject to being automatically  renewed annually thereafter,  unless
terminated  by any party to the  agreement.  Annual  amounts  due to the Company
under this  agreement  total  $600,000,  which includes  out-of-pocket  expenses
incurred by the Company of up to $150,000  annually.  The Company  exercised its
right  under  the   agreement  to  designate   Mentmore   Holdings   Corporation
("Mentmore")  as the management  advisory  service  provider and as a result has
assigned  all fees the Company is entitled to under this  agreement to Mentmore.
Management fee expense paid to Mentmore for the years ended June 30, 1999,  1998
and 1997 under this agreement totaled $600,000 per year. Effective July 1, 1999,
for a period of one year, the management  advisory  services  agreement with J&L
was amended to reduce annual compensation to $528,000.

During fiscal 1999,  Mentmore provided investment banking services in connection
with J&L's  refinancing of its senior credit facility  charging J&L related fees
of $200,000.

Richard  L.  Kramer is  Chairman  of the  Board,  a Director  and  Secretary  of
Mentmore.  William L.  Remley is a  director  and  President  of  Mentmore.  The
Chairman  of the Board of the  Company  is also the  Chairman  of the  Board,  a
Director, Vice President and Secretary of Trinity and Ascott Wing. The President
and  Treasurer  of the Company is also a Director,  President  and  Treasurer of
Trinity and Ascott Wing, and a Trustee for The A.J. 1989 Trust.  Various lending
and stock  purchase  warrant  agreements  have been executed by the Company with
Trinity  (see Note 9).  Various  loans to the  Company had been made by The A.J.
1989 Trust, and a Deferred Purchase Money Note exists in consideration for BESCC
preferred stock redeemed on March 15, 1995.

Long-term  employment  contracts  exist with three  executives at J&L,  formerly
owners of JLS.  These  employment  contracts  extend for five-year  periods each
through March, 2000.



                                       35
<PAGE>

NOTE 13 - SEGMENT INFORMATION

The Company's continuing operations include two distinct business segments,  J&L
Structural  and  Brighton,  within its single  operating  subsidiary,  J&L.  The
distinction  between the two segments is primarily  driven by the  difference in
products  manufactured and the markets served.  J&L Structural  manufactures and
fabricates lightweight structural steel shapes which are distributed principally
to the  manufactured  housing,  truck trailer  construction  and highway  safety
system industries. Brighton designs, manufactures and sells steel piercer points
which  represent  disposable  tooling used in the  production of seamless  steel
tubes  which are  primarily  used in the  petrochemical  industry.  There are no
intersegment   sales  between  J&L  and  Brighton.   Interest  expense  and  the
extraordinary item are recorded and evaluated at the corporate level and are not
allocated to the segments.  Financial  information for continuing  operations by
business  segment  for the  fiscal  years  ended  June  30,  is as  follows  (in
thousands):
<TABLE>
<CAPTION>

                                                                           1999                1998                 1997
                                                                           ----                ----                 ----
           <S>                                                      <C>                <C>                   <C>
           Sales to unaffiliated customers:
           Brighton                                                 $         3,942    $          6,603      $         6,055
           J&L Structural                                                    96,443             104,227               92,144
                                                                    ---------------    ----------------      ---------------
           Total                                                    $       100,385    $        110,830      $        98,199
                                                                    ===============    ================      ===============

           Depreciation and amortization:
           Brighton                                                 $           204    $            192      $           162
           J&L Structural                                                     4,200               4,106                3,836
           Corporate and Other                                                  119                 133                  110
                                                                    ---------------    ----------------      ---------------
           Total                                                    $         4,523    $          4,431      $         4,108
                                                                    ===============    ================      ===============

           Operating income (loss):
           Brighton                                                 $           460    $          1,348      $         1,107
           J&L Structural                                                     6,487               7,649                4,764
           Corporate and Other                                                    -               (314)                 (495)
                                                                    ---------------    ----------------      ---------------
           Total                                                    $         6,947    $          8,683      $         5,376
                                                                    ===============    ================      ===============

           Total assets:
           Brighton                                                 $         4,771    $          4,811      $         3,847
           J&L Structural                                                    55,128              61,491               63,147
           Corporate and Other                                                 151                  103                  176
                                                                    ---------------    ----------------      ---------------
           Total                                                    $        60,050    $         66,405      $        67,170
                                                                    ===============    ================      ===============

           Capital expenditures:
           Brighton                                                 $            74    $            211      $            85
           J&L Structural                                                     1,421               1,167                3,413
                                                                    ---------------    ----------------      ---------------
           Total                                                    $         1,495    $          1,378      $         3,498
                                                                    ===============    ================      ===============
</TABLE>

For the year ended June 30, 1999,  one J&L  Structural  customer  accounted  for
approximately  11% of the Company's net sales. For the years ended June 30, 1998
and 1997,  no customer  accounted  for more than 10% of the Company's net sales.
Brighton's  net sales were driven by five  customers that comprised 81%, 84% and
80% of Brighton's total net sales in 1999, 1998 and 1997, respectively.

The Company  primarily  sells to  domestic  customers.  International  customers
comprised 2.7%, 2.1% and 0.9% of total sales for the fiscal years ended June 30,
1999, 1998, and 1997,  respectively.  All of the Company's foreign customers are
located in Canada.



                                       36
<PAGE>






                               CPT HOLDINGS, INC.
           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                    June 30,
                                     (000's)
<TABLE>
<CAPTION>

                                                                               1999              1998               1997
                                                                               ----              ----               ----
     <S>                                                                 <C>              <C>              <C>
     Balance Sheets
     Assets

     Cash and cash equivalents                                           $          52    $           2    $           18
     Prepaid expenses and other                                                      -                -               203
     EITF 88-16 basis adjustment                                                (9,705)          (9,705)           (9,705)
     Investment in subsidiary                                                    9,032            9,529             7,506
                                                                         -------------    -------------    --------------
     Total assets                                                        $        (621)   $        (174)   $       (1,978)
                                                                         =============    =============    ==============

     Liabilities and Shareholders' Deficit
     Accrued liabilities                                                 $       4,529    $       3,185    $        2,079
     Due to subsidiaries                                                            49              152               200
     Long-term obligations                                                       7,441            7,321             7,188

     Common stock: authorized 30,000,000 shares
         at $0.05 par value each, 1,510,084 shares
         issued and outstanding                                                     76               76                76
     Additional paid-in capital                                                  5,737            5,737             5,737
     EITF 88-16 basis adjustment                                                (9,705)          (9,705)           (9,705)
     Accumulated deficit                                                        (8,748)          (6,940)           (7,553)
                                                                         -------------    -------------    --------------
                                                                               (12,640)         (10,832)          (11,445)
                                                                         -------------    -------------    --------------
     Total shareholders' deficit
                                                                         $        (621)   $        (174)   $       (1,978)
                                                                         =============    =============    ==============
     Total liabilities and shareholders' deficit

     Statement of Cash Flows

     Cash flows from operating activities                                $        (139)   $        (140)   $         (370)
     Cash flows from investing activities                                            -                -                 -
     Cash flows from financing activities                                          189              124               297
                                                                         -------------    --------------   --------------

     Increase (decrease) in cash and cash equivalent                                50              (16)              (73)

     Cash and cash equivalents:
     Beginning of year                                                               2               18                91
                                                                         -------------    -------------    --------------
     End of year                                                         $          52    $           2    $           18
                                                                         =============    =============    ==============

     Statements of Earnings (Loss)

     Earnings (loss) in subsidiaries                                     $        (307)   $       2,091    $       (1,185)
     Other income                                                                   25              132                48
     Interest expense                                                           (1,526)          (1,406)           (1,215)
     Operating expenses                                                              -             (259)             (302)
                                                                         --------------   -------------    --------------

     Net income (loss)                                                   $      (1,808)   $         558    $       (2,654)
                                                                         ==============   =============    ==============

</TABLE>



                                       37
<PAGE>







                       CPT HOLDINGS, INC. AND SUBSIDIARIES
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                For the years ended June 30, 1999, 1998 and 1997
                                     (000's)
<TABLE>
<CAPTION>

     Column A                              Column B          Column C          Column D          Column E
     ---------------------------------- ----------------- ----------------- ----------------- -----------------

     Description                          Balance at         Charges to      Retirements 2     Balance at end
                                         beginning of     costs & expenses                       of period
                                            period
     ---------------------------------- ----------------- ----------------- ----------------- -----------------

     <S>                                         <C>              <C>               <C>             <C>
     1999
         Allowance for Doubtful
         Accounts in Accounts
         Receivable                              $ 211            $  75             $ 155           $ 131
                                                 =====            =====             =====           =====

     Allowance for Sales Discounts
         and Claims                              $ 140            $ 231             $  47           $ 324
                                                 =====            =====             =====           =====

     1998
         Allowance for Doubtful
         Accounts in Accounts
         Receivable                              $ 151            $ 158             $  98           $ 211
                                                 =====            =====             =====           =====

     Allowance for Sales Discounts
         and Claims                              $  67            $ 567             $ 494           $ 140
                                                 =====            =====             =====           =====

     1997
         Allowance for Doubtful
         Accounts in Accounts
         Receivable                              $ 206            $  60             $ 115           $ 151
                                                 =====            =====             =====           =====

     Allowance for Sales Discounts
         and Claims                              $ 101            $ 266             $ 300           $  67
                                                 =====            =====             =====           =====

</TABLE>

                                       38
<PAGE>

--------

2 Represents write-offs of uncollectable  accounts or realized sales discounts
and claims.

                                       39
<PAGE>


                          LOAN AND SECURITY AGREEMENT

                                  by and among

                         CONGRESS FINANCIAL CORPORATION
                                    as Lender

                                       and

                              J&L STRUCTURAL, INC.
                                   as Borrower

                               J&L HOLDINGS CORP.
                          CONTINUOUS CASTER CORPORATION
                                  as Guarantors





                              Dated: June 30, 1999

                                     189-5

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>     <C>                                                                                                      <C>
SECTION 1.   DEFINITIONS..........................................................................................1

SECTION 2.   CREDIT FACILITIES...................................................................................19
         2.1  Loans..............................................................................................19
         2.2  Letter of Credit Accommodations....................................................................21
         2.3  Existing Equipment Term Loan.......................................................................23
         2.4  Equipment Purchase Term Loans......................................................................24
         2.5  Availability Reserves..............................................................................26

SECTION 3.   INTEREST AND FEES...................................................................................26
         3.1  Interest...........................................................................................26
         3.2  Closing Fee........................................................................................28
         3.3  Servicing Fee......................................................................................28
         3.4  Unused Line Fee....................................................................................28
         3.5  Changes in Laws and Increased Costs of Loans.......................................................29

SECTION 4.   CONDITIONS PRECEDENT................................................................................30
         4.1  Conditions Precedent to Initial Loans and Letter of Credit Accommodations..........................30
         4.2  Conditions Precedent to All Loans and Letter of Credit Accommodations..............................32

SECTION 5.  GRANT OF SECURITY INTEREST...........................................................................33

SECTION 6.   COLLECTION AND ADMINISTRATION.......................................................................34
         6.1  Borrower's Loan Account............................................................................34
         6.2  Statements.........................................................................................34
         6.3  Collection of Accounts.............................................................................35
         6.4  Payments...........................................................................................36
         6.5  Authorization to Make Loans........................................................................36
         6.6  Use of Proceeds....................................................................................37

SECTION 7.   COLLATERAL REPORTING AND COVENANTS..................................................................37
         7.1  Collateral Reporting...............................................................................37
         7.2  Accounts Covenants.................................................................................38
         7.3  Inventory Covenants................................................................................39
         7.4  Equipment and Real Property Covenants..............................................................40
         7.5  Right to Cure......................................................................................41
         7.6  Power of Attorney..................................................................................41
         7.7  Access to Premises.................................................................................42

SECTION 8.   REPRESENTATIONS AND WARRANTIES......................................................................42
         8.1  Corporate Existence, Power and Authority; Subsidiaries.............................................42

189-5
                                       (i)
<PAGE>

         8.2  Financial Statements; No Material Adverse Change...................................................43
         8.3  Chief Executive Office; Collateral Locations.......................................................43
         8.4  Priority of Liens; Title to Properties.............................................................43
         8.5  Tax Returns........................................................................................44
         8.6  Litigation.........................................................................................44
         8.7  Compliance with Other Agreements and Applicable Laws...............................................44
         8.8  Bank Accounts......................................................................................44
         8.9  Environmental Compliance...........................................................................45
         8.10  Employee Benefits.................................................................................45
         8.11  Accuracy and Completeness of Information..........................................................46
         8.12  Survival of Warranties; Cumulative................................................................47

SECTION 9.   AFFIRMATIVE AND NEGATIVE COVENANTS..................................................................47
         9.1  Maintenance of Existence...........................................................................47
         9.2  New Collateral Locations...........................................................................47
         9.3  Compliance with Laws, Regulations, Etc.............................................................47
         9.4  Payment of Taxes and Claims........................................................................49
         9.5  Insurance..........................................................................................49
         9.6  Financial Statements and Other Information.........................................................50
         9.7  Sale of Assets, Consolidation, Merger, Dissolution, Etc............................................51
         9.8  Encumbrances.......................................................................................53
         9.9  Indebtedness.......................................................................................55
         9.10  Loans, Investments, Guarantees, Etc...............................................................59
         9.11  Dividends and Redemptions.........................................................................61
         9.12  Transactions with Affiliates......................................................................61
         9.13  Additional Bank Accounts..........................................................................62
         9.14  Compliance with ERISA.............................................................................63
         9.15  After Acquired Real Property......................................................................63
         9.16  Adjusted Tangible Net Worth.......................................................................64
         9.17  Year 2000 Compliance..............................................................................64
         9.18 End of Fiscal Years................................................................................64
         9.19  Costs and Expenses................................................................................64
         9.20  Further Assurances................................................................................65

SECTION 10.   EVENTS OF DEFAULT AND REMEDIES.....................................................................65
         10.1  Events of Default.................................................................................65
         10.2  Remedies..........................................................................................67
         10.3 Confession of Judgment.............................................................................69

SECTION 11.   JURY TRIAL WAIVER; OTHER WAIVERS
                   AND CONSENTS; GOVERNING LAW      .............................................................70
         11.1  Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.............................70
         11.2  Waiver of Notices.................................................................................71

189-5
                                      (ii)
<PAGE>

         11.3  Amendments and Waivers............................................................................71
         11.4  Waiver of Counterclaims...........................................................................72
         11.5  Indemnification...................................................................................72

SECTION 12.   TERM OF AGREEMENT; MISCELLANEOUS...................................................................72
         12.1  Term..............................................................................................72
         12.2  Notices...........................................................................................74
         12.3  Partial Invalidity................................................................................74
         12.4  Successors........................................................................................74
         12.5  Entire Agreement..................................................................................75



189-5
</TABLE>
                                      (iii)
<PAGE>


                                    INDEX TO
                             EXHIBITS AND SCHEDULES


Exhibit A                 Information Certificate for Borrowers and Guarantors

Exhibit B                 Form of Equipment Purchase Loan Note

Schedule 1.35             Existing Lenders

Schedule 1.36             Existing Letters of Credit

Schedule 1.53             Municipal Debt Agreements

Schedule 6.5              Authorized Persons to Request Loans and
                          Letter of Credit Accommodations

Schedule 8.4              Existing Liens

Schedule 8.8              Bank Accounts

Schedule 8.9              Environmental Compliance

Schedule 8.10             ERISA Compliance

Schedule 9.10             Loans, Advances and Guarantees


189-5
                                       (i)
<PAGE>

                           LOAN AND SECURITY AGREEMENT


         This Loan and Security Agreement dated June 30, 1999 is entered into by
and among Congress Financial Corporation,  a Delaware corporation ("Lender") and
J&L  Structural,  Inc.,  a Delaware  corporation  ("Borrower")  and J&L Holdings
Corp., a Delaware corporation ("Holdings") and Continuous Caster Corporation,  a
Delaware  corporation ("CCC"; and together with Holdings,  individually,  each a
"Guarantor" and collectively, "Guarantors").


                              W I T N E S S E T H:


         WHEREAS,  Borrower and Guarantors have requested that Lender enter into
certain  financing  arrangements with Borrower pursuant to which Lender may make
loans and provide other financial accommodations to Borrower; and

         WHEREAS,  Lender is willing to make such loans and advances and provide
such financial accommodations on the terms and conditions set forth herein.

         NOW,   THEREFORE,   in  consideration  of  the  mutual  conditions  and
agreements set forth herein, and for other good and valuable consideration,  the
receipt and  sufficiency  of which is hereby  acknowledged,  the parties  hereto
agree as follows:


SECTION 1.   DEFINITIONS

         All terms used  herein  which are  defined in Article 1 or Article 9 of
the  Uniform  Commercial  Code  shall have the  meanings  given  therein  unless
otherwise  defined in this Agreement.  All references to the plural herein shall
also mean the  singular  and to the  singular  shall also mean the  plural.  All
references  to Borrower  pursuant to the  definition  set forth in the  recitals
hereto,  unless the context  otherwise  requires,  shall mean  Borrower  and its
successors and assigns.  All references to Guarantors pursuant to the definition
set forth in the recitals hereto,  unless the context otherwise requires,  shall
mean  each  and  all of  them  and  their  respective  successors  and  assigns,
individually and collectively,  jointly and severally.  All references to Lender
pursuant to the  definitions set forth in the recitals  hereto,  or to any other
person herein, shall include their respective  successors and assigns. The words
"hereof",  "herein",  "hereunder",  "this Agreement" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any
particular  provision of this  Agreement and as this Agreement now exists or may
hereafter be amended,  modified,  supplemented,  extended,  renewed, restated or
replaced.   The  word  "including"  when  used  in  this  Agreement  shall  mean
"including,  without limitation". An Event of Default shall exist or continue or
be

189-5
                                        1
<PAGE>

continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner  satisfactory  to Lender  if such  Event of  Default  is
capable of being cured as determined by Lender.  Any accounting term used herein
unless otherwise  defined in this Agreement shall have the meanings  customarily
given to such term in accordance with GAAP. For purposes of this Agreement,  the
following terms shall have the respective meanings given to them below:

         1.1 "Accounts"  shall mean all present and future rights of Borrower to
payment  for  goods  sold or  leased  or for  services  rendered,  which are not
evidenced  by  instruments  or  chattel  paper,  and  whether  or not  earned by
performance.

         1.2  "Adjusted  Eurodollar  Rate"  shall  mean,  with  respect  to each
Interest  Period  for any  Eurodollar  Rate  Loan,  the rate per annum  (rounded
upwards,  if necessary,  to the next  one-sixteenth  (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof,  "Reserve Percentage" shall mean the reserve percentage,  expressed as a
decimal,  prescribed  by any United  States or  foreign  banking  authority  for
determining the reserve  requirement which is or would be applicable to deposits
of United  States  dollars in a non-United  States or an  international  banking
office of Reference  Bank used to fund a Eurodollar  Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such  deposit,  whether or not the Reference
Bank  actually  holds or has  made any such  deposits  or  loans.  The  Adjusted
Eurodollar  Rate shall be adjusted on and as of the  effective day of any change
in the Reserve Percentage.

         1.3 "Adjusted  Tangible Net Worth" shall mean as to any Person,  at any
time,  in  accordance  with GAAP  (except as  otherwise  specifically  set forth
below),  on a consolidated  basis for such Person and its Subsidiaries (if any),
the amount equal to: (a) the  difference  between:  (i) the  aggregate  net book
value of all assets of such Person and its subsidiaries  (excluding the value of
patents,  trademarks,  tradenames,  copyrights,  licenses,  goodwill  and  other
intangible assets),  calculating the book value of inventory for this purpose on
a   first-in-first-out   basis,  after  deducting  from  such  book  values  all
appropriate  reserves  in  accordance  with GAAP  (including  all  reserves  for
doubtful receivables, obsolescence,  depreciation and amortization) and (ii) the
aggregate amount of the  indebtedness  and other  liabilities of such Person and
its subsidiaries (including tax and other proper accruals) plus (b) indebtedness
of such Person and its subsidiaries which is subordinated in right of payment to
the full and final  payment of all of the  Obligations  on terms and  conditions
acceptable  to Lender  (including,  the  subordinated  indebtedness  of Borrower
permitted under Section 9.9 hereof).

         1.4  "Affiliate"  shall mean,  with  respect to a specified  Person,  a
partnership,  corporation  or any other  person  which  directly or  indirectly,
through one or more  intermediaries,  controls or is  controlled  by or is under
common control with such

189-5
                                        2
<PAGE>

Person,  and without limiting the generality of the foregoing,  includes (a) any
Person which  beneficially  owns or holds five (5%) percent or more of any class
of voting  securities  of such Person or other equity  interests in such Person;
(b) any Person of which such Person beneficially owns or holds five (5%) percent
or more of any class of voting  securities or in which such Person  beneficially
owns or holds five (5%)  percent or more of the  equity  interests;  and (c) any
director,  officer  or  employee  of  such  Person.  For  the  purposes  of this
definition,  the term "control" (including with correlative meanings,  the terms
"controlled  by" and "under common control  with"),  as used with respect to any
Person, means the possession,  directly or indirectly, of the power to direct or
cause the  direction of the  management  and  policies of such  Person,  whether
through the ownership of voting securities or by contract or otherwise.

         1.5   "Availability   Reserves"   shall   mean,   as  of  any  date  of
determination,  such  amounts as  Lender,  may from time to time  establish  and
revise  in good  faith  reducing  the  amount  of Loans  and  Letter  of  Credit
Accommodations  which would otherwise be available to Borrower under the lending
formula(s) provided for herein: (a) to reflect events, conditions, contingencies
or risks which, as determined by Lender in good faith,  adversely affect or have
a reasonable  likelihood of adversely affecting either (i) the Collateral or any
other  property which is security for the  Obligations,  its value or the amount
which may be realized by Lender from the sale or other disposition  thereof,  or
(ii) the assets,  business or financial condition of Borrower or any Obligor, or
(iii)  the  security  interests  and other  rights  of Lender in the  Collateral
(including  the  enforceability,  perfection  and priority  thereof),  or (b) to
reflect  Lender's  good faith  belief that any  collateral  report or  financial
information furnished by or on behalf of Borrower or any Obligor to Lender is or
may have been  incomplete,  inaccurate or misleading in any material  respect or
(c) to  reflect  outstanding  Letter of Credit  Accommodations  as  provided  in
Section  2.2  hereof  or (d) in  respect  of any  state  of facts  which  Lender
determines in good faith  constitutes an Event of Default or may, with notice or
passage of time or both,  constitute  an Event of Default or (e) to reflect  any
rental  payments,  service  charges or other  amounts  due to lessors of real or
personal  property  (other than  amounts due to lessors  who have  executed  and
delivered Collateral Access Agreements) to the extent Inventory is located in or
on such property  (subject to Section 1.19 hereof) or (f) to reflect $268,000 of
real estate taxes currently due and payable but not yet delinquent in respect of
Borrower's Real Property.

         1.6  "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.

         1.7 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which  commercial  banks are  authorized or required to close under
the laws of the State of New York or the Commonwealth of Pennsylvania, and a day
on which the Reference Bank and Lender are open for the transaction of business,
except that if a determination  of a Business Day shall relate to any Eurodollar
Rate Loans,  the term Business Day shall also exclude any day on which banks are
closed for dealings in

189-5
                                        3
<PAGE>

dollar deposits in the London interbank  market or other  applicable  Eurodollar
Rate market.

         1.8 "Capital Leases" shall mean, as applied to any Person, any lease of
(or any  agreement  conveying  the  right to use) any  property  (whether  real,
personal or mixed) by such Person as lessee which in  accordance  with GAAP,  is
required to be reflected as a liability on the balance sheet of such Person.

         1.9 "Capital Stock" shall mean, with respect to any Person, any and all
shares,  interests,  participations or other equivalents (however designated) of
such Person's capital stock,  partnership  interests or interests in any limited
liability company at any time outstanding,  and any and all rights,  warrants or
options  exchangeable  for or  convertible  into  such  capital  stock  or other
interests  (but  excluding  any  debt  security  that  is  exchangeable  for  or
convertible into such capital stock).

         1.10 "Cash  Equivalents"  shall mean, at any time,  (a) any evidence of
Indebtedness  with a  maturity  date of one  hundred  eighty  (180) days or less
issued or  directly  and fully  guaranteed  or insured  by the United  States of
America or any agency or instrumentality thereof; provided, that, the full faith
and credit of the United  States of America is pledged in support  thereof;  (b)
certificates of deposit or bankers'  acceptances  with a maturity of one hundred
eighty (180) days or less of any financial  institution  that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than  $250,000,000;  (c) commercial paper  (including  variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued by
a corporation  (except an Affiliate of Borrower) organized under the laws of any
State of the United  States of America or the  District of Columbia and rated at
least A-1 by Standard & Poor's Ratings  Service,  a division of The  McGraw-Hill
Companies,  Inc.  or at  least  P-1 by  Moody's  Investors  Service,  Inc.;  (d)
repurchase  obligations  with a term of not  more  than  thirty  (30)  days  for
underlying  securities  of the types  described in clause (a) above entered into
with any financial institution having combined capital and surplus and undivided
profits of not less than  $250,000,000;  (e)  repurchase  agreements and reverse
repurchase  agreements  relating  to  marketable  direct  obligations  issued or
unconditionally  guaranteed  by the  United  States of  America or issued by any
governmental  agency  thereof  and  backed by the full  faith and  credit to the
United States of America,  in each case maturing within one hundred eighty (180)
days or less from the date of  acquisition;  provided,  that,  the terms of such
agreements  comply  with  the  guidelines  set  forth in the  Federal  Financial
Agreements of Depository  Institutions  with Securities  Dealers and Others,  as
adopted  by the  Comptroller  of the  Currency  on  October  31,  1985;  and (f)
investments  in money market  funds and mutual funds which invest  substantially
all of their assets in securities of the types  described in clauses (a) through
(e) above.


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<PAGE>

         1.11  "Change  of  Control"   shall  mean  (a)  the  transfer  (in  one
transaction  or a series of  transactions)  of all or  substantially  all of the
assets of Borrower or any Guarantor to any Person or group (as such term is used
in Section  13(d)(3) of the Exchange Act); (b) the liquidation or dissolution of
Borrower  or any  Guarantor  or the  adoption of a plan by the  stockholders  of
Borrower or any Guarantor relating to the dissolution or liquidation of Borrower
or any  Guarantor;  (c) the  acquisition by any Person or group (as such term is
used in Section  13(d)(3) of the Exchange Act) except for one or more  Permitted
Holders, of beneficial ownership, directly or indirectly, of fifty (50%) percent
or more of the  voting  power  of the  total  outstanding  Voting  Stock  of any
Guarantor;  (d) the failure of Holdings to own (i) at least eighty (80%) percent
of the voting power of the total  outstanding  Voting Stock of Borrower and (ii)
one hundred (100%) percent of the voting power of the total  outstanding  Voting
Stock of CCC and (e) failure of CPT or any of the other Permitted Holders to own
at least eighty (80%) of Holdings.

         1.12 "Code" shall mean the Internal  Revenue Code of 1986,  as the same
now exists or may from time to time hereafter be amended,  modified,  recodified
or  supplemented,  together  with all  rules,  regulations  and  interpretations
thereunder or related thereto.

         1.13  "Collateral" shall have the meaning set forth in Section 5.1
hereof.

         1.14 "Collateral  Access Agreement" shall mean an agreement in writing,
in form and  substance  satisfactory  to Lender,  from any lessor of premises to
Borrower or any Guarantor, or any other person to whom any Collateral (including
Inventory,  Equipment, bills of lading or other documents of title) is consigned
or who has custody, control or possession of any such Collateral or is otherwise
the  owner or  operator  of any  premises  on which  any of such  Collateral  is
located,  pursuant to which such lessor,  consignee or other person, inter alia,
acknowledges the security interest of Lender in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, have
against such  Collateral,  whether for  processing,  storage or  otherwise,  and
agrees to permit  Lender  access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise the rights and remedies
of Lender and otherwise deal with such Collateral.

         1.15 "CPT" shall mean CPT Holdings, Inc., a Minnesota corporation.

         1.16 "Current  Municipal  Indebtedness"  shall mean the Indebtedness of
Borrower to  Municipalities  arising under the Current Municipal Debt Agreements
in effect on the date hereof.

         1.17 "Current  Portion"  shall mean as at each Payment Date, the amount
of interest and/or regularly scheduled payments of principal that are payable in
cash on the

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<PAGE>

Senior  Subordinated  Notes in respect of the  quarterly  period  ending on such
Payment Date.

          1.18 "Eligible  Accounts" shall mean the Accounts  created by Borrower
which are and  continue to be  acceptable  to Lender  based on the  criteria set
forth below. In general, Accounts shall be Eligible Accounts if:

               (a) such  Accounts  arise  from the actual and bona fide sale and
delivery  of goods by  Borrower  or  rendition  of  services  by Borrower in the
ordinary course of its business which  transactions  are completed in accordance
with the terms and provisions contained in any documents related thereto;

               (b) such  Accounts  are not unpaid  more than the  earlier of (i)
sixty (60) days after the  original  due date for them or (ii)  ninety (90) days
after the date of the original invoice for them;

               (c) such Accounts comply with the terms and conditions  contained
in Section 7.2(c) of this Agreement;

               (d)  such  Accounts  do not  arise  from  sales  on  consignment,
guaranteed sale, sale and return,  sale on approval,  or other terms under which
payment by the account debtor may be conditional or contingent;

               (e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America or Canada (provided,
that, at any time promptly upon  Lender's  request,  Borrower  shall execute and
deliver, or cause to be executed and delivered, such other agreements, documents
and  instruments as may be required by Lender to perfect the security  interests
of Lender in those Accounts of an account debtor with its chief executive office
or principal  place of business in Canada in accordance with the applicable laws
of the  Province  of Canada in which such chief  executive  office or  principal
place of  business  is  located  and take or cause to be taken  such  other  and
further  actions as Lender may  request to enable  Lender as secured  party with
respect  thereto  to  collect  such  Accounts  under the  applicable  Federal or
Provincial laws of Canada) or, at Lender's option, if the chief executive office
and  principal  place of  business of the  account  debtor with  respect to such
Accounts is located other than in the United  States of America or Canada,  then
if either:  (i) the account  debtor has  delivered  to  Borrower an  irrevocable
letter of credit issued or confirmed by a bank  organized and existing under the
laws of the  United  States of  America or any State  thereof,  satisfactory  to
Lender and payable  only in the United  States of America  and in U.S.  dollars,
sufficient to cover such Account,  in form and substance  satisfactory to Lender
and if  required  by  Lender,  the  original  of such  letter of credit has been
delivered  to Lender or the agent of Lender and the issuer  thereof  notified of
the assignment of the proceeds of such letter of credit to Lender,  or (ii) such
Account is subject to credit

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                                        6
<PAGE>

insurance  payable to Lender  issued by an insurer and on terms and in an amount
acceptable  to Lender,  or (iii) such  Account is  otherwise  acceptable  in all
respects to Lender  (subject to lending  formula with respect  thereto as Lender
may determine);

               (f) such Accounts do not consist of progress  billings,  bill and
hold invoices or retainage  invoices,  except as to bill and hold  invoices,  if
Lender shall have received an agreement in writing from the account  debtor,  in
form  and  substance  satisfactory  to  Lender,   confirming  the  unconditional
obligation of the account debtor to take the goods related  thereto and pay such
invoice;

               (g) the account  debtor  with  respect to such  Accounts  has not
asserted a  counterclaim,  defense or  dispute  and does not have,  and does not
engage in transactions  which may give rise to, any right of setoff against such
Accounts  (but the portion of the Accounts of such  account  debtor in excess of
the amount at any time and from time to time owed by  Borrower  to such  account
debtor or claimed owed by such account debtor may be deemed Eligible Accounts);

               (h) there are no facts, events or occurrences which have impaired
the validity,  enforceability  or  collectability of such Account or reduced the
amount payable or delayed payment thereunder;

               (i) such  Accounts are subject to the first  priority,  valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof,  subject to any liens except those
permitted in this Agreement;

               (j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer,  employee,  agent or
other Affiliate of Borrower directly or indirectly;

               (k) the account debtors with respect to such Accounts are not any
foreign  government,   the  United  States  of  America,  any  State,  political
subdivision,  department,  agency or  instrumentality  thereof,  unless,  if the
account  debtor  is  the  United  States  of  America,   any  State,   political
subdivision,  department,  agency  or  instrumentality  thereof,  upon  Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State  or  local  law,  if  applicable,  has  been  complied  with  in a  manner
satisfactory to Lender;

               (l) there are no  proceedings  or actions which are threatened or
pending  against the account  debtors with respect to such Accounts  which might
result in any material  adverse  change in any such account  debtor's  financial
condition;

               (m) such  Accounts  are not  owed by an  account  debtor  who has
Accounts  unpaid more than the earlier of sixty (60) days after the original due
date for such

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<PAGE>

Accounts  or ninety (90) days after the date of the  original  invoice for them,
which  constitute  more than fifty (50%)  percent of the total  Accounts of such
account debtor; and

               (n)  such  Accounts  are  owed by  account  debtors  whose  total
indebtedness  to such  Borrower does not exceed the credit limit with respect to
such account  debtors as determined by Lender from time to time (but the portion
of the  Accounts  not in excess  of such  credit  limit  may be deemed  Eligible
Accounts);

               (o) such Accounts are owed by account debtors deemed creditworthy
at all times by Lender.

General criteria for Eligible  Accounts may be established and revised from time
to time by Lender in good faith.  Any Accounts  which are not Eligible  Accounts
shall  nevertheless  be  part  of the  Collateral.  In the  event  Lender  shall
establish new criteria or revise the existing  criteria for Eligible Accounts in
any respect,  Lender shall notify Borrower and upon Borrower's  request,  Lender
shall inform Borrower of the basis for the establishment of such new criteria or
revision of such criteria, as the case may be.

         1.19  "Eligible   Inventory"  shall  mean  the  Inventory  of  Borrower
consisting  of  finished  goods  held for resale in the  ordinary  course of the
business  of  Borrower  and raw  materials  for such  finished  goods  which are
acceptable to Lender based on the criteria set forth below. In general, Eligible
Inventory shall not include (a)  work-in-process;  (b) components  which are not
part of  finished  goods;  (c) spare  parts for  equipment;  (d)  packaging  and
shipping  materials;  (e) supplies used or consumed in the business of Borrower;
(f)  Inventory at premises  other than those owned and  controlled  by Borrower,
except any  Inventory  which would  otherwise  be deemed  Eligible  Inventory at
locations  which are not owned and  operated by  Borrower  may  nevertheless  be
considered  Eligible  Inventory  if:  (i)  as to  premises  leased  by  Borrower
(including  warehouses  and similar  facilities) if either (A) Lender shall have
received a Collateral  Access Agreement duly authorized,  executed and delivered
by the owner and lessor of such  premises or (B) if Lender has not received such
Collateral Access Agreement,  then Lender shall have established an Availability
Reserve in  respect  of amounts  due or to become due to the owner and lessor of
such  location  (without  limiting any other rights and remedies of Lender under
this  Agreement  or under the other  Financing  Agreements  with  respect to the
establishment of Availability  Reserves or otherwise) and after giving effect to
such Availability Reserves,  there is Excess Availability;  provided,  that, (1)
Borrower  shall use its best efforts to obtain the Collateral  Access  Agreement
with  respect  to each  of such  locations  and  (2) the  Availability  Reserves
established  pursuant to this Section shall not exceed at any time the aggregate
of amounts  payable to such owners and lessors for the next three (3) months and
including amounts,  if any, then outstanding and unpaid owed by Borrower to such
owners  and  lessors,  provided,  that,  such  limitation  on the  amount of the
Availability Reserves pursuant to this Section shall

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                                        8
<PAGE>

only  apply  so long  as:  (aa) no Event of  Default  shall  have  exist or have
occurred and be continuing,  and (bb) Borrower or Lender shall not have received
notice of any default or event of default  under the  agreement  with respect to
such location and (ii) as to premises of third parties  constituting  consignees
and processors and other like owners and operators, Lender shall have received a
Collateral Access Agreement duly authorized, executed and delivered by the owner
and operator of such premises,  and in addition,  if required by Lender: (A) the
owner and operator executes  appropriate UCC- 1 financing statements in favor of
Borrower,  which are duly assigned to Lender and (B) any secured  lender to such
owner and operator is properly  notified of the first priority lien of Lender on
such Inventory of Lender;  (g) Inventory  subject to a security interest or lien
in  favor of any  person  other  than  Lender  except  those  permitted  in this
Agreement;  (h) bill and hold goods; (i) unserviceable,  obsolete or slow moving
Inventory;  (j) Inventory which is not subject to the first priority,  valid and
perfected  security interest of Lender;  (k) returned,  damaged and/or defective
Inventory;  and  (l)  Inventory  purchased  or sold on  consignment  (except  as
otherwise  provided in Section  1.19(f)  above).  General  criteria for Eligible
Inventory  may be  established  and  revised  from time to time by  Lender.  Any
Inventory  which is not Eligible  Inventory  shall  nevertheless  be part of the
Collateral.  In the event  Lender  shall  establish  new  criteria or revise the
existing  criteria  for Eligible  Inventory in any respect,  Lender shall notify
Borrower and upon Borrower's request,  Lender shall inform Borrower of the basis
for the establishment of new criteria or such revision of the existing criteria,
as the case may be.

         1.20  "Eligible New Equipment"  shall mean Equipment  owned by Borrower
acquired  after the date  hereof,  which  Equipment  is in good  order,  repair,
running and marketable condition,  located at Borrower's premises and acceptable
to Lender in all respects. In general, Eligible New Equipment shall not include:
(a)  Equipment at premises  other than those owned or leased and  controlled  by
Borrower,  except as to  premises  that are leased by  Borrower,  only if Lender
shall have received a Collateral  Access Agreement from the person in possession
of such  Equipment  and/or the owner or  operator  of such  premises in form and
substance  satisfactory to Lender;  (b) Equipment subject to a security interest
or lien in favor of any person other than Lender except those  permitted in this
Agreement;  (c) Equipment which is not located in the continental  United States
of America; (d) Equipment which is not subject to the first priority,  valid and
perfected  security  interest  of  Lender;  (e)  worn-out  obsolete,  damaged or
defective  Equipment or Equipment  not used or usable in the ordinary  course of
Borrower's  business as presently  conducted;  or (f) Equipment not used for the
manufacturing  of Inventory in the ordinary course of business of Borrower.  Any
Equipment which is not Eligible New Equipment shall  nevertheless be part of the
Collateral.  In the event  Lender  shall  establish  new  criteria or revise the
existing criteria for Eligible New Equipment in any respect, Lender shall notify
Borrower and upon Borrower's request,  Lender shall inform Borrower of the basis
for the  establishment  of such new  criteria or such  revision of the  existing
criteria, as the case may be.

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                                        9
<PAGE>

         1.21 "Environmental  Laws" shall mean all foreign,  Federal,  State and
local laws (including common law), legislation,  rules, codes, licenses, permits
(including any conditions imposed therein), authorizations,  binding judicial or
administrative  decisions,  injunctions or agreements  between  Borrower and any
governmental   authority,   (a)  relating  to  pollution  and  the   protection,
preservation  or restoration  of the  environment  (including  air, water vapor,
surface water,  ground water,  drinking  water,  drinking water supply,  surface
land, subsurface land, plant and animal life or any other natural resource),  or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling,  treatment,  generation,   manufacture,   processing,   distribution,
transportation,   handling,  labeling,   production,  release  or  disposal,  or
threatened  release,  of Hazardous  Materials,  or (c) relating to all laws with
regard to  recordkeeping,  notification,  disclosure and reporting  requirements
respecting Hazardous  Materials.  The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response,  Compensation and Liability Act of
1980,  the Federal  Superfund  Amendments and  Reauthorization  Act, the Federal
Water  Pollution  Control Act of 1972,  the Federal Clean Water Act, the Federal
Clean Air Act,  the  Federal  Resource  Conservation  and  Recovery  Act of 1976
(including the Hazardous and Solid Waste Amendments thereto),  the Federal Solid
Waste  Disposal  and the  Federal  Toxic  Substances  Control  Act,  the Federal
Insecticide,  Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974,  (ii)  applicable  state  counterparts  to such laws, and (iii) any
common law or equitable  doctrine that may impose  liability or obligations  for
injuries or damages  due to, or  threatened  as a result of, the  presence of or
exposure to any Hazardous Materials.

         1.22  "Equipment"  shall mean all of Borrower's now owned and hereafter
acquired or leased  equipment,  machinery,  computers and computer  hardware and
software (whether owned or licensed),  vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection  therewith,  and  substitutions  and replacements  thereof,  wherever
located.

         1.23 "Equipment Purchase Term Loan Repayment Date" shall mean August 1,
2006.

         1.24 "Equipment  Purchase Term Loans" shall mean the secured term loans
hereafter  made by Lender to Borrower as provided for in Section 2.4,  such term
loans being from time to time referred to herein  individually  as an "Equipment
Purchase Term Loan."

         1.25  "Equipment  Purchase  Term Notes" shall mean,  collectively,  the
Equipment  Purchase  Term  Notes  which may at any time  hereafter  be issued by
Borrower to Lender  pursuant  to Section  2.4 hereof to  evidence  an  Equipment
Purchase  Term Loan,  such  notes  being  from time to time  referred  to herein
individually as an "Equipment Purchase Term Note."

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                                       10
<PAGE>

         1.26 "ERISA" shall mean the United States  Employee  Retirement  Income
Security Act of 1974, as the same now exists or may hereafter  from time to time
be amended,  modified,  recodified  or  supplemented,  together  with all rules,
regulations and interpretations thereunder or related thereto.

         1.27 "ERISA  Affiliate" shall mean any person required to be aggregated
with  Borrower or any  Subsidiary of Borrower  under  Sections  414(b),  414(c),
414(m) or 414(o) of the Code.

         1.28  "Eurodollar  Rate" shall mean with respect to the Interest Period
for a Eurodollar  Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded  upwards,  if necessary,  to
the next  one-sixteenth  (1/16) of one (1%) percent) at which  Reference Bank is
offered  deposits of United States  dollars in the London  interbank  market (or
other  Eurodollar Rate market selected by Borrower and approved by Lender) on or
about  9:00 a.m.  (New  York  City  time)  two (2)  Business  Days  prior to the
commencement  of such  Interest  Period in  amounts  substantially  equal to the
principal  amount of the  Eurodollar  Rate Loans  requested by and  available to
Borrower  in  accordance  with this  Agreement,  with a maturity  of  comparable
duration to the Interest Period selected by Borrower.

         1.29 "Eurodollar Rate Loans" shall mean, individually and collectively,
Eurodollar Rate Revolving Loans and Eurodollar Rate Term Loans.

         1.30  "Eurodollar  Rate Revolving Loans" shall mean any Revolving Loans
or portion thereof on which interest is payable based on the Adjusted Eurodollar
Rate in accordance with the terms hereof.

         1.31  "Eurodollar Rate Term Loans" shall mean any Term Loans or portion
thereof on which  interest is payable based on the Adjusted  Eurodollar  Rate in
accordance with the terms hereof.

         1.32 "Event of Default"  shall mean the  occurrence or existence of any
event or condition described in Section 10.1 hereof.

         1.33 "Excess  Availability"  shall mean the amount,  as  determined  by
Lender,  calculated  at any time,  equal to: (a) the lesser of (i) the amount of
the  Revolving  Loans  available  to  Borrower  as of  such  time  based  on the
applicable  lending formulas  multiplied by the Net Amount of Eligible  Accounts
and the Value of Eligible Inventory, as determined by Lender, and subject to the
sublimits  and  Availability  Reserves from time to time  established  by Lender
hereunder  and (ii) the  Revolving  Loan  Limit,  minus (b) the sum of:  (i) the
amount of all then  outstanding  and unpaid  Obligations  (but not including for
this purpose the then aggregate outstanding principal amount of the Term Loans),
plus (ii) the aggregate amount of all then outstanding and unpaid trade payables

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                                       11
<PAGE>

and other  obligations  of Borrower which are more than sixty (60) days past due
as of such time plus (iii) the amount of any checks  issued by  Borrower  to pay
such trade payables  (which are more than sixty (60) days past due), but not yet
sent.

         1.34 "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
the same now exists or may from time to time  hereafter  be  amended,  modified,
recodified  or   supplemented,   together  with  all  rules,   regulations   and
interpretations thereunder or related thereto.

         1.35 "Existing Equipment Term Loan" shall mean the amortizing term loan
made by Lender to Borrower as provided in Section 2.3 hereof.

         1.36 "Existing  Lenders"  shall mean the lenders to Borrower  listed on
Schedule 1.36 hereto.

         1.37 "Existing Letters of Credit" shall mean, collectively, the letters
of credit  issued for the  account of  Borrower  or any  Guarantor  or for which
Borrower or any Guarantor is otherwise liable listed on Schedule 1.37 hereto, as
the  same  now  exist  or may  hereafter  be  amended,  modified,  supplemented,
extended, renewed, restated or replaced.

         1.38 "Financing  Agreements" shall mean,  collectively,  this Agreement
and all notes, guarantees,  security agreements and other agreements,  documents
and instr  uments now or at any time  hereafter  executed  and/or  delivered  by
Borrower or any Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.

         1.39 "Future  Municipal  Indebtedness"  shall mean the  Indebtedness of
Borrower to  Municipalities  arising  after the date  hereof  pursuant to Future
Municipal Debt Agreements as permitted in accordance with Section 9.9(f) hereof.

         1.40 "GAAP" shall mean generally accepted accounting  principles in the
United  States of  America  as in  effect  from time to time as set forth in the
opinions and pronouncements of the Accounting  Principles Board and the American
Institute of Certified Public  Accountants and the statements and pronouncements
of  the  Financial  Accounting  Standards  Board  which  are  applicable  to the
circumstances as of the date of determination consistently applied.

         1.41 "Governmental Authority" shall mean any nation or government,  any
state,  province,  or other political  subdivision thereof, any central bank (or
similar  monetary  or  regulatory  authority)  thereof,  any  entity  exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining to government, and any

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                                       12
<PAGE>

corporation  or other  entity  owned or  controlled,  through  stock or  capital
ownership or otherwise, by any of the foregoing.

         1.42 "Hard Costs" shall mean,  with respect to the purchase by Borrower
of an item of  Eligible  New  Equipment,  the net cash amount  actually  paid to
acquire title to such item, net of all  incentives,  discounts and rebates,  and
exclusive of freight, delivery charges, installation costs and charges, trade-in
allowances,  software costs, charges and fees, warranty costs, taxes,  insurance
and other incidental costs or expenses and all indirect costs or expenses of any
kind.

         1.43 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances,  materials and wastes,  including hydrocarbons  (including naturally
occurring  or  man-made  petroleum  and  hydrocarbons),   flammable  explosives,
asbestos,  urea  formaldehyde  insulation,   radioactive  materials,  biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or  contaminants  (including  materials  which include
hazardous  constituents),  sewage sludge,  industrial slag,  solvents and/or any
other  similar  substances,   materials,  or  wastes  and  including  any  other
substances,  materials  or  wastes  that  are  or  become  regulated  under  any
Environmental  Law (including any that are or become  classified as hazardous or
toxic under any Environmental Law).

         1.44  "Indebtedness"  shall  mean,  with  respect  to any  Person,  any
liability,  whether or not contingent, (a) in respect of borrowed money (whether
or not the  recourse  of the lender is to the whole of the assets of such Person
or only to a portion hereof) or evidenced by bonds, notes, debentures or similar
instruments;  (b)  representing  the balance deferred and unpaid of the purchase
price of any property or services  (except any such balance that  constitutes an
account  payable to a trade  creditor  (whether  or not an  Affiliate)  created,
incurred,  assumed  or  guaranteed  by such  Person  in the  ordinary  course of
business  of such  Person in  connection  with  obtaining  goods,  materials  or
services  that is not overdue by more than  ninety  (90) days,  unless the trade
payable is being  contested in good faith);  (c) all obligations as lessee under
leases  which  have been,  or should be, in  accordance  with GAAP  recorded  as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition  of  another  Person,   including,   without  limitation,   any  such
indebtedness,  directly or indirectly guaranteed,  or any agreement to purchase,
repurchase,  or otherwise acquire such indebtedness,  obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency,  assets, level of income, or other financial condition;
(e)  all  obligations  with  respect  to  redeemable  stock  and  redemption  or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person; (f) all reimbursement  obligations and other liabilities of such
Person with respect to surety bonds  (whether bid,  performance  or  otherwise),
letters of credit,  banker's  acceptances  or similar  documents or  instruments
issued for such Person's account; and

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<PAGE>

(g) all indebtedness of such Person in respect of indebtedness of another Person
for borrowed money or indebtedness of another Person otherwise described in this
definition  which  is  secured  by  any  consensual  lien,   security  interest,
collateral  assignment,  conditional  sale,  mortgage,  deed of trust,  or other
encumbrance  on any  asset of such  Person,  whether  or not  such  obligations,
liabilities or indebtedness  are assumed by or are a personal  liability of such
Person, all as of such time.

         1.45   "Information   Certificate"   shall  mean,   collectively,   the
Information  Certificates  with respect to Borrower and Guarantors  constituting
Exhibit A hereto  containing  material  information with respect to Borrower and
Guarantors,  their  respective  business and assets  provided by or on behalf of
Borrower and  Guarantors to Lender in connection  with the  preparation  of this
Agreement and the other  Financing  Agreements  and the  financing  arrangements
provided for herein.

         1.46  "Interest  Period"  shall mean for any  Eurodollar  Rate Loan,  a
period of  approximately  one (1),  two (2),  or three (3)  months  duration  as
Borrower may elect,  the exact duration to be determined in accordance  with the
customary  practice in the applicable  Eurodollar Rate market;  provided,  that,
Borrower  may not elect an Interest  Period which will end after the last day of
the then-current term of this Agreement.

         1.47 "Interest Rate" shall mean the following:

               (a)  as  to  Prime  Rate   Revolving   Loans,  a  rate  equal  to
three-quarters  (.75%)  percent per annum in excess of the Prime Rate and, as to
Eurodollar  Rate  Revolving  Loans,  a rate  of two and  three-quarters  (2.75%)
percent  per annum in  excess  of the  Adjusted  Eurodollar  Rate  (based on the
Eurodollar  Rate  applicable for the Interest  Period selected by Borrower as in
effect  three  (3)  Business  Days  after the date of  receipt  by Lender of the
request of Borrower for such  Eurodollar Rate Revolving Loans in accordance with
the terms hereof,  whether such rate is higher or lower than any rate previously
quoted to Borrower);

               (b) as to Prime Rate Term Loans, a rate equal to one (1%) percent
per annum in excess of the Prime Rate and as to  Eurodollar  Rate Term Loans,  a
rate  equal to three  (3%)  percent in excess of the  Adjusted  Eurodollar  Rate
(based on the Eurodollar  Rate  applicable for the Interest  Period  selected by
Borrower  as in effect  three (3)  Business  Days  after the date of  receipt by
Lender of the  request  of  Borrower  for such  Eurodollar  Rate  Term  Loans in
accordance with the terms hereof,  whether such rate is higher or lower than any
Eurodollar Rate previously quoted to Borrower); and

               (c)  notwithstanding  anything to the contrary  contained herein,
the Interest Rate, as to Prime Rate Loans and Eurodollar Rate Loans,  shall mean
the rate of two (2%) percent per annum more than the otherwise  then  applicable
Interest Rate, at Lender's option, without notice, (i) either (A) for the period
on and after the date of

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<PAGE>

termination  or  non-renewal  hereof  until  such  time as all  Obligations  are
indefeasibly  paid in full, or (B) for the period from and after the date of the
occurrence of any Event of Default,  and for so long as such Event of Default is
continuing as determined by Lender and (ii) on the Loans to Borrower at any time
outstanding  in excess of the  amounts  available  to Borrower  under  Section 2
(whether  or not such  excess(es)  arise or are made  with or  without  Lender's
knowledge or consent and whether made before or after an Event of Default).

         1.48  "Inventory"  shall mean all of Borrower's now owned and hereafter
existing or acquired  raw  materials,  work in process,  finished  goods and all
other inventory of whatsoever kind or nature, wherever located.

         1.49  "Letter  of Credit  Accommodations"  shall  mean the  letters  of
credit,  merchandise  purchase or other  guaranties  which are from time to time
either (a) issued or opened by Lender for the account of Borrower or any Obligor
or (b) with  respect  to which  Lender  has  agreed to  indemnify  the issuer or
guaranteed to the issuer the  performance by Borrower of its obligations to such
issuer (including the Existing Letters of Credit).

         1.50 "Loans" shall mean the Revolving Loans and the Term Loans.

         1.51 "Material  Adverse Effect" shall mean a material adverse effect on
(a) the condition (financial or otherwise), business, performance, operations or
properties  of  Borrower  and   Guarantors;   (b)  the  legality,   validity  or
enforceability of this Agreement or any of the other Financing  Agreements;  (c)
the legality, validity,  enforceability,  perfection or priority of the security
interests and liens of Lender upon the Collateral or any other property which is
security for the Obligations;  (d) the Collateral or any other property which is
security  for the  Obligations,  or the value of the  Collateral  or such  other
property; (e) the ability of Borrower to repay the Obligations or of Borrower or
any  Guarantor  to perform its  obligations  under this  Agreement or any of the
other  Financing  Agreements;  or (f) the  ability  of  Lender  to  enforce  the
Obligations  or realize upon the  Collateral  or  otherwise  with respect to the
rights and remedies of Lender under this Agreement or any of the other Financing
Agreements.

         1.52 "Maximum Credit" shall mean $43,000,000.

         1.53 "Mortgages" shall mean,  collectively,  the following (as the same
now  exist  or may  hereafter  be  amended,  modified,  supplemented,  extended,
renewed,  restated or replaced): (a) Open End Mortgage and Security Agreement in
favor of Lender with  respect to Real  Property  and related  assets of Borrower
located in Aliquippa,  Pennsylvania and Beaver Falls,  Pennsylvania and (b) Open
End Leasehold Mortgage and Security Agreement in favor of Lender with respect to
Borrower's  leasehold  interest in Real Property and related  assets of Borrower
located in Ambridge, Pennsylvania.

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<PAGE>

         1.54  "Municipal  Debt  Agreements"  shall  mean,   collectively,   the
following  (as the  same now  exists  or may  hereafter  be  amended,  modified,
supplemented,  extended,  renewed,  restated or replaced):  (a) the  agreements,
documents  and  instruments  listed on  Schedule  1.54  hereto in respect of the
Current Municipal  Indebtedness,  (b) the agreements,  documents and instruments
evidencing all Future Municipal Indebtedness entered into after the date hereof,
and (c) all agreements,  documents and instruments  executed and/or delivered in
connection therewith.

         1.55 "Municipal Indebtedness Subordination and Intercreditor Agreement"
shall mean the Subordination  and Intercreditor  Agreement dated the date hereof
by and among the  appropriate  Municipalities  and  Lender as  acknowledged  and
agreed to by Borrower, providing for, among other things, such parties' relative
rights and priorities  with respect to the assets and properties of Borrower and
the subordination in right of payment of all Current Municipal Indebtedness owed
by  Borrower  or any  Obligor to such  Municipalities  to the right of Lender to
receive the prior and final payment and satisfaction in full of the Obligations,
as the same now exists or may  hereafter  be  amended,  modified,  supplemented,
extended, renewed, restated or replaced.

         1.56  "Municipalities"  shall mean (i) Beaver  County  Corporation  for
Economic Development,  (ii) Commonwealth of Pennsylvania,  acting by and through
the  Department  of  Community  and  Economic  Development  and  (iii) any other
Pennsylvania municipality or state agency.

         1.57 "Net Amount of Eligible  Accounts"  shall mean the gross amount of
the  Eligible  Accounts  of  Borrower  less (a) sales,  excise or similar  taxes
included in the amount thereof and (b) returns,  discounts,  claims, credits and
allowances  of any  nature  at any time  issued,  owing,  granted,  outstanding,
available or claimed with respect thereto.

         1.58 "Net Proceeds" shall mean the aggregate cash proceeds  received by
any of  Borrower  or  Guarantors  in respect of any asset sale  permitted  under
Section  9.7  hereof,  net of the  direct  costs  relating  to such  asset  sale
(including,  without limitation,  legal, accounting and investment banking fees,
and sales commissions),  taxes paid or payable as a result thereof (after taking
into  account  any  available  tax  credits or  deductions  and any tax  sharing
arrangements),  amounts  applied to the repayment of  Indebtedness  secured by a
lien on the  asset or  assets  that are the  subject  of such  asset  sale.  Net
Proceeds shall exclude any non-cash  proceeds  received from any asset sale, but
shall include such proceeds when and as converted by Borrower, or any Guarantor.


         1.59  "Obligations"  shall  mean any and all  Loans,  Letter  of Credit
Accommodations and all other obligations,  liabilities and indebtedness of every
kind,  nature  and  description  owing by  Borrower  to Lender  and/or  Lender's
Affiliates,

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                                       16
<PAGE>

including  principal,  interest,  charges,  fees,  costs and  expenses,  however
evidenced,  whether as  principal,  surety,  endorser,  guarantor or  otherwise,
whether  arising  under this  Agreement  or  otherwise,  whether now existing or
hereafter  arising,  whether arising before,  during or after the initial or any
renewal  term of this  Agreement  or after  the  commencement  of any case  with
respect to  Borrower  under the United  States  Bankruptcy  Code or any  similar
statute  (including,  without  limitation,  the  payment of  interest  and other
amounts  which  would  accrue and become  due but for the  commencement  of such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due,  primary  or  secondary,  liquidated  or  unliquidated,  secured  or
unsecured, and however acquired by Lender.

         1.60 "Obligor" shall mean any guarantor,  endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.

         1.61 "Participant" shall mean any person which at any time participates
with  Lender in  respect of the Loans,  the Letter of Credit  Accommodations  or
other Obligations or any portion thereof.

         1.62  "Payment  Date" shall mean the last Business Day of each calendar
quarter, beginning with the quarter ending June 30, 1995.

         1.63  "Permitted  Holders" shall mean (i) Richard L. Kramer and William
L.  Remley,  (ii) any spouse or immediate  family  member of any Person named in
clause  (i) hereof  and any child or spouse of any  spouse or  immediate  family
member of any such  Person,  (iii) a trust,  corporation,  partnership  or other
entity,   the   beneficiaries,   stockholders,   partners,   owners  or  Persons
beneficially  holding,  directly or indirectly,  a controlling interest of which
consists  of any Person  named in clause (i) hereof  and/or  such other  Persons
referred  to in the  immediately  preceding  clause  (ii)  hereof,  or (iv)  the
trustees of any trust referred to in clause (iii) hereof and (iv) CPT.

         1.64   "Person"   or   "person"   shall  mean  any   individual,   sole
proprietorship,  partnership,  corporation (including,  without limitation,  any
corporation which elects subchapter S status under the Code),  limited liability
company,   limited  liability   partnership,   business  trust,   unincorporated
association,  joint stock  corporation,  trust, joint venture or other entity or
any  government  or any  agency  or  instrumentality  or  political  subdivision
thereof.

         1.65  "Prime  Rate"  shall  mean the rate  from  time to time  publicly
announced by First Union  National  Bank or its  successors,  as its prime rate,
whether or not such announced rate is the best rate available at such bank.


189-5
                                       17
<PAGE>

         1.66 "Prime Rate Loans" shall mean, individually and collectively,  the
Prime Rate Revolving Loans and the Prime Rate Term Loans.

         1.67 "Prime Rate  Revolving  Loans" shall mean any  Revolving  Loans or
portion  thereon  on  which  interest  is  payable  based on the  Prime  Rate in
accordance with the terms hereof.

         1.68  "Prime  Rate Term  Loans"  shall  mean any Term  Loans or portion
thereof on which interest is payable based on the Prime Rate in accordance  with
the terms hereof.

         1.69 "Real  Property"  shall mean all now owned and hereafter  acquired
real property of Borrower and/or any Guarantor,  including leasehold  interests,
together with all buildings,  structures, and other improvements located thereon
and  all  licenses,  easements  and  appurtenances  relating  thereto,  wherever
located,  including the real property and related  assets  located in Aliquippa,
Pennsylvania,   Beaver  Falls,  Pennsylvania  and  Ambridge,  Pennsylvania  more
particularly described in the Mortgages.

         1.70 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements,  invoices, ledger
cards, bills of lading and other shipping evidence, statements,  correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor,  together with the tapes,  disks,  diskettes and other data and software
storage  media and  devices,  file  cabinets  or  containers  in or on which the
foregoing  are stored  (including  any rights of  Borrower  with  respect to the
foregoing maintained with or by any other person).

         1.71  "Reference  Bank" shall mean First Union  National  Bank, or such
other bank as Lender may from time to time designate.

         1.72 "Repurchase  Agreement" shall mean the Repurchase  Agreement dated
as of April 6, 1995 among Borrower, CPT and the Senior Subordinated Noteholders.

         1.73  "Renewal Date" shall have the meaning set forth in Section 12.1
hereof.

         1.74 "Revolving Loan Limit" shall mean the amount of $16,000,000.

         1.75  "Revolving  Loans" shall mean the loans now or hereafter  made by
Lender to or for the  benefit  of  Borrowers  on a  revolving  basis  (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.

         1.76 "Senior  Subordinated Note Agreements"  shall mean,  collectively,
the following (as the same now exists as amended  through the date hereof or may
hereafter be amended,  modified,  supplemented,  extended,  renewed, restated or
replaced): (a) the

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                                       18
<PAGE>

Senior  Subordinated Notes, (b) the Note and Warrant Purchase Agreement dated as
of April 6, 1995 by and among Borrower, the Senior Subordinated  Noteholders and
the Common  Stock  Purchase  Warrants  issued  thereunder,  as amended by: First
Amendment to Note and Warrant Purchase  Agreement,  executed on October 12, 1995
and made  effective  as of June 30, 1995;  Second  Amendment to Note and Warrant
Purchase Agreement,  executed on May 15, 1996 and made effective as of March 31,
1996 and Third Amendment to Note and Warrant Purchase Agreement, executed on the
date hereof,  (c) the Repurchase  Agreement,  (d) the  Management  Subordination
Agreement dated as of April 6, 1995 by and among Borrower, Holdings, CPT and the
Senior Subordinated  Noteholders,  (e) the Pledge Agreement dated as of April 6,
1995 by and between Holdings and the Senior  Subordinated  Noteholders,  (f) the
Collateral Assignments of Trademarks and Security Agreement dated as of April 6,
1995 by and between Borrower and the Senior  Subordinated  Noteholders,  (g) the
Open-End  Mortgage  dated as of April 6, 1995 made by  Borrower  in favor of the
Senior   Subordinated   Noteholders  and  (h)  all  agreements,   documents  and
instruments executed and/or delivered in connection therewith.

         1.77 "Senior Subordinated  Noteholders" shall mean, collectively,  each
and all of the following and their  respective  successors and assigns:  (a) The
Paul  Revere  Life  Insurance  Company,  (b) The Paul  Revere  Variable  Annuity
Insurance Company,  (c) The Paul Revere Protective Life Insurance  Company,  (d)
Investors Bank and Trust, as trustee for the Textron Collective Investment Trust
and (e) any  other  person  that at any  time is a holder  of any of the  Senior
Subordinated Notes.

         1.78  "Senior  Subordinated  Notes"  shall mean,  collectively  the 13%
Senior Subordinated Secured Note due June 30, 2005 dated April 6, 1995 issued by
Borrower pursuant to the Senior Subordinated Note Agreements dated April 6, 1995
by and among Borrower and the Senior Subordinated Noteholders, as such notes now
exist or may hereafter be amended, modified,  supplemented,  extended,  renewed,
restated or replaced.

         1.79  "Subordination  and  Intercreditor   Agreement"  shall  mean  the
Subordination and Intercreditor Agreement dated the date hereof by and among and
the Senior Subordinated  Noteholders and Lender as acknowledged and agreed to by
Borrower,  providing for, among other things,  such parties' relative rights and
priorities  with  respect to the  assets  and  properties  of  Borrower  and the
subordination  in right of payment of all  indebtedness  owed by Borrower or any
Obligor  to the right of  Lender to  receive  the  prior and final  payment  and
satisfaction in full of the Obligations, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.

         1.80  "Subsidiary"  or  "subsidiary"  shall mean,  with  respect to any
Person, any corporation,  limited or general partnership,  trust, association or
other business entity of

189-5
                                       19
<PAGE>

which an aggregate of at least a majority of the  outstanding  Capital  Stock or
other  interests  entitled to vote in the  election of the board of directors of
such  corporation  (irrespective of whether,  at the time,  Capital Stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the  happening  of any  contingency),  managers,  trustees or other
controlling  persons,  or an equivalent  controlling  interest therein,  of such
Person is, at the time, directly or indirectly,  owned by such Person and/or one
or more subsidiaries of such Person.

         1.81 "Term  Loans"  shall  mean,  individually  and  collectively,  the
Existing Equipment Term Loan and the Equipment Purchase Term Loans.

         1.82  "Value"  shall mean,  as  determined  by Lender,  with respect to
Inventory,  the  lower of (a) cost  computed  on a  first-in-first-out  basis in
accordance with GAAP or (b) market value.

         1.83 "Voting Stock" shall mean with respect to any Person,  (a) one (1)
or more classes of Capital Stock of such Person having  general voting powers to
elect at least a majority  of the board of  directors,  managers  or trustees of
such  Person,  irrespective  of whether at the time  Capital  Stock of any other
class or classes have or might have voting  power by reason of the  happening of
any  contingency,  and (b) any  Capital  Stock  of such  Person  convertible  or
exchangeable  without  restriction  at the  option of the  holder  thereof  into
Capital Stock of such Person described in clause (a) of this definition.


SECTION 2.   CREDIT FACILITIES

         2.1 Loans.

               (a)  Subject  to and  upon the  terms  and  conditions  contained
herein,  Lender  agrees to make Loans to  Borrower  from time to time in amounts
requested by Borrower up to the amount equal to:

                      (i)  eighty-five  (85%)  percent  of  the  Net  Amount  of
Eligible Accounts, plus

                      (ii) the lesser of (A) sixty (60%) percent of the Value of
Eligible Inventory, or (B) $8,500,000, less

                      (iii) any Availability Reserves.

               (b) Lender may, in its  discretion,  from time to time,  upon not
less than five (5) days prior notice to Borrower, (i) reduce the lending formula
with respect to Eligible

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                                       20
<PAGE>

Accounts  to the extent  that  Lender  determines  in good faith  that:  (A) the
dilution  with respect to the Accounts of Borrower for any period  (based on the
ratio of (1) the  aggregate  amount of  reductions  in Accounts  other than as a
result of  payments  in cash to (2) the  aggregate  amount of total  sales)  has
increased or may be reasonably  anticipated to increase above historical levels,
or (B) the general  creditworthiness  of account  debtors  has  declined or (ii)
reduce the lending  formula(s) with respect to Eligible Inventory of Borrower to
the extent that Lender  determines in good faith that: (A) the number of days of
the  turnover  of the  Inventory  for any period has  negatively  changed in any
material respect or (B) the liquidation value of the Eligible Inventory,  or any
category  thereof,  has  decreased,  or (C) the  nature,  quality and mix of the
Inventory has  deteriorated.  The amount of any reduction in any lending formula
by Lender  pursuant to this Section 2.1(b) shall have a reasonable  relationship
to the  matter  which  is the  basis  for  such  reduction  in  the  good  faith
determination of Lender.  To the extent an Availability  Reserve shall have been
established  which is sufficient to address any event,  condition or matter in a
manner satisfactory to Lender in its good faith determination,  Lender shall not
exercise its rights under this Section 2.1(b) to reduce the lending  formulas to
address such event, condition or matter.

               (c) Except in Lender's  discretion,  the aggregate  amount of the
Revolving Loans and the Letter of Credit Accommodations  outstanding at any time
shall not exceed the Revolving  Loan Limit as then in effect.  In the event that
the outstanding amount of any component of the Revolving Loans, or the aggregate
amount of the outstanding  Revolving Loans and Letter of Credit  Accommodations,
exceed the  amounts  available  under the lending  formulas,  the  sublimit  for
Eligible  Inventory  set forth in Section  2.1(a)(ii)  above,  the sublimits for
Letter of Credit  Accommodations  set forth in Section  2.2(d) or the  Revolving
Loan Limit, as applicable, such event shall not limit, waive or otherwise affect
any  rights  of Lender  in that  circumstance  or on any  future  occasions  and
Borrower  shall,  upon  demand by Lender,  which may be made at any time or from
time to  time,  immediately  repay  to  Lender  the  entire  amount  of any such
excess(es) for which payment is demanded.

               (d) For purposes only of applying the sublimit on Revolving Loans
based on Eligible Inventory pursuant to Section 2.1(a)(ii)(B),  Lender may treat
the then undrawn amounts of outstanding Letter of Credit  Accommodations for the
purpose of purchasing Eligible Inventory as Revolving Loans to the extent Lender
is in effect basing the issuance of the Letter of Credit  Accommodations  on the
Value of the  Eligible  Inventory  being  purchased  with such  Letter of Credit
Accommodations.  In  determining  the actual  amounts  of such  Letter of Credit
Accommodations  to be so treated for purposes of the sublimit,  the  outstanding
Revolving  Loans and  Availability  Reserves  shall be  attributed  first to any
components  of the lending  formulas  in Section  2.1(a) that are not subject to
such sublimit, before being attributed to the components of the lending formulas
subject to such sublimit.


189-5
                                       21
<PAGE>

         2.2  Letter of Credit Accommodations.

               (a)  Subject  to and  upon the  terms  and  conditions  contained
herein,  at the  request of  Borrower,  Lender  agrees to provide or arrange for
Letter of Credit Accommodations for the account of Borrower containing terms and
conditions  acceptable  to Lender and the issuer  thereof.  Any payments made by
Lender to any issuer  thereof  and/or  related  parties in  connection  with the
Letter of Credit  Accommodations  shall constitute  additional Loans to Borrower
pursuant to this Section 2.

               (b) In addition to any charges,  fees or expenses  charged by any
bank or issuer in connection with the Letter of Credit Accommodations,  Borrower
shall pay to Lender a letter of credit fee at a rate  equal to one and  one-half
(1 1/2%)  percent  per annum on the daily  outstanding  balance of the Letter of
Credit  Accommodations  for the  immediately  preceding month (or part thereof),
payable in arrears as of the first day of each  succeeding  month,  except  that
Borrower  shall pay to Lender such  letter of credit  fee,  at Lender's  option,
without notice, at a rate equal to three and one-half (3 1/2%) percent per annum
on such daily outstanding balance for: (i) the period from and after the date of
termination  or  non-renewal  hereof until  Lender has  received  full and final
payment  of  all  Obligations  (notwithstanding  entry  of  a  judgment  against
Borrower)  and (ii) the period from and after the date of the  occurrence  of an
Event of Default  and for so long as such Event of Default is  continuing.  Such
letter of credit fee shall be  calculated  on the basis of a three hundred sixty
(360) day year and actual  days  elapsed and the  obligation  of Borrower to pay
such fee shall survive the termination or non-renewal of this Agreement.

               (c) No Letter of Credit  Accommodations shall be available unless
on the date of the proposed issuance of any Letter of Credit Accommodations, the
Loans  available  to the  Borrower  (subject to the  Revolving  Loan Limit,  the
Maximum Credit and any Availability  Reserves) are equal to or greater than: (i)
if the proposed Letter of Credit  Accommodation is for the purpose of purchasing
Eligible  Inventory,  the sum of (A) the percentage  equal to one hundred (100%)
percent minus the then  applicable  percentage  set forth in Section  2.1(a)(ii)
above  multiplied  by the cost of such  Eligible  Inventory,  plus (B)  freight,
taxes,  duty and other amounts that Lender  estimates must be paid in connection
with such Inventory upon arrival and for delivery to one of Borrower's locations
for  Eligible  Inventory  within  the United  States of America  and (ii) if the
proposed  Letter of Credit  Accommodation  is for any other  purpose,  an amount
equal to one hundred  (100%)  percent of the face  amount  thereof and all other
commit ments and  obligations  made or incurred by Lender with respect  thereto.
Effective  on  the  issuance  of  each  Letter  of  Credit   Accommodation,   an
Availability  Reserve shall be established in the applicable amount set forth in
Section 2.2(c)(i) or Section 2.2(c)(ii).


189-5
                                       22
<PAGE>

               (d) Except in Lender's discretion,  the amount of all outstanding
Letter of Credit  Accommodations  and all other commitments and obligations made
or  incurred  by Lender in  connection  therewith  shall not at any time  exceed
$3,500,000.  At any time an Event  of  Default  exists  or has  occurred  and is
continuing,  upon Lender's request, Borrower will either furnish cash collateral
to secure the  reimbursement  obligations  to the issuer in connection  with any
Letter of Credit  Accommodations  or furnish cash  collateral  to Lender for the
Letter  of  Credit  Accommodations,  and in either  case,  the  Loans  otherwise
available to Borrower  shall not be reduced as provided in Section 2.2(c) to the
extent of such cash collateral.

               (e) Borrower  shall  indemnify and hold Lender  harmless from and
against any and all losses,  claims,  damages,  liabilities,  costs and expenses
which  Lender  may  suffer  or incur in  connection  with any  Letter  of Credit
Accommodations  and any  documents,  drafts  or  acceptances  relating  thereto,
including, but not limited to, any losses, claims, damages,  liabilities,  costs
and expenses due to any action taken by any issuer or correspondent with respect
to any Letter of Credit  Accommodation.  Borrower assumes all risks with respect
to the acts or  omissions of the drawer  under or  beneficiary  of any Letter of
Credit  Accommodation  and for such purposes the drawer or beneficiary  shall be
deemed Borrower's agent.  Borrower assumes all risks for, and agrees to pay, all
foreign, Federal, State and local taxes, duties and levies relating to any goods
subject  to any  Letter of Credit  Accommodations  or any  documents,  drafts or
acceptances thereunder.  Borrower hereby releases and holds Lender harmless from
and against any acts, waivers,  errors,  delays or omissions,  whether caused by
Borrower,  by any  issuer or  correspondent  or  otherwise  with  respect  to or
relating to any Letter of Credit  Accommodation  except for  Lender's  own gross
negligence or wilful misconduct as determined pursuant to a final non-appealable
order of a court of  competent  jurisdiction.  The  provisions  of this  Section
2.2(e)  shall  survive  the  payment  of  Obligations  and  the  termination  or
non-renewal of this Agreement.

               (f) Nothing  contained  herein  shall be deemed or  construed  to
grant  Borrower  any right or  authority  to pledge  the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit  Accommodation  provided by an issuer other than Lender unless Lender has
duly  executed and  delivered to such issuer the  application  or a guarantee or
indemnification in writing with respect to such Letter of Credit  Accommodation.
Borrower shall be bound by any  interpretation  made in good faith by Lender, or
any other  issuer or  correspondent  under or in  connection  with any Letter of
Credit  Accommodation  or  any  documents,  drafts  or  acceptances  thereunder,
notwithstanding   that  such   interpretation   may  be  inconsistent  with  any
instructions  of Borrower.  Lender shall have the sole and  exclusive  right and
authority to, and Borrower shall not: (i) at any time an Event of Default exists
or has  occurred  and is  continuing,  (A) approve or resolve any  questions  of
non-compliance  of  documents,  (B) give any  instructions  as to  acceptance or
rejection of any documents or goods or (C) execute any and all  applications for
steamship or airway guaranties,

189-5
                                       23
<PAGE>

indemnities or delivery orders,  and (ii) at all times, (A) grant any extensions
of the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances,   or  documents,  and  (B)  agree  to  any  amendments,   renewals,
extensions,  modifications,  changes  or  cancellations  of any of the  terms or
conditions  of any of the  applications,  Letter  of Credit  Accommodations,  or
documents, drafts or acceptances thereunder or any letters of credit included in
the  Collateral.  Lender  may take  such  actions  either  in its own name or in
Borrower's name.

               (g) Any  rights,  remedies,  duties  or  obligations  granted  or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Lender. Any duties or obligations
undertaken by Lender to any issuer or  correspondent  in any application for any
Letter of Credit Accommodation, or any other agreement by Lender in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed  to have  been  undertaken  by  Borrower  to  Lender  and to apply in all
respects to Borrower.

         2.3  Existing  Equipment  Term  Loan.  Lender  is  making  an  Existing
Equipment Term Loan to Borrower in the original principal amount of $19,000,000.
The Existing  Equipment  Term Loan is (a) evidenced by a Term  Promissory  Note,
dated the date  hereof,  in such  original  principal  amount duly  executed and
delivered  by  Borrower  to  lender  concurrently  herewith;  (b) to be  repaid,
together with interest and other amounts, in accordance with this Agreement, the
Term Promissory Note, and the other Financing Agreements; and (c) secured by all
of the  Collateral.  The Existing  Equipment Term Loan may be prepaid in full by
Borrower  at any time  without  premium or  penalty,  subject  only to the early
termination  fee provided  for in Section 12.1 hereof if it is prepaid  together
with all other  Obligations  as provided  therein.  The principal  amount of the
Existing Equipment Term Loan repaid may not be reborrowed.

         2.4   Equipment Purchase Term Loans.

               (a)  Subject  to and  upon the  terms  and  conditions  contained
herein,  Lender shall make Equipment Purchase Term Loans to Borrower,  from time
to time, at the request of Borrower of up to one hundred  (100%)  percent of the
Hard Costs of Eligible New Equipment to be purchased by Borrower  after the date
hereof with the proceeds of such  Equipment  Purchase Term Loan.  Each Equipment
Purchase  Term Loan  shall be in a  minimum  amount  equal to the  lesser of (i)
$500,000 (and in integral  multiples of $100,000  greater than such amount),  or
(ii) the amount  equal to the  excess,  if any, of (A)  $8,000,000  over (B) the
aggregate  unpaid principal  amount of all outstanding  Equipment  Purchase Term
Loans.  All of the proceeds of each  Equipment  Purchase Term Loan shall be used
solely for the payment of the purchase price of the Eligible

189-5
                                       24
<PAGE>

New  Equipment  specified  in the  notice  required  to be  delivered  to Lender
pursuant to Section 2.4(d)(i) below.

               (b) Except in  Lender's  discretion,  the  outstanding  aggregate
principal amount of the Equipment  Purchase Term Loans shall not exceed,  at any
time, the lower of (i) the aggregate amount of one hundred (100%) percent of the
Hard Costs of all Eligible New Equipment  purchased by Borrower  pursuant hereto
or (ii) $8,000,000  ("Equipment  Purchase Term Loan Limit").  If at any time the
outstanding  aggregate  principal  amount of all  Equipment  Purchase Term Loans
shall  exceed the  Equipment  Purchase  Term Loan Limit,  Borrower  shall remain
liable therefor,  and Lender may, at its option,  create an Availability Reserve
in an amount equal to the entire amount of such  excess(es)  or Borrower  shall,
upon the demand by Lender,  which may be made at any time and from time to time,
repay to Lender the entire amount of such excess(es).  The principal  amounts of
Equipment Purchase Term Loans repaid may not be reborrowed.

               (c) Each  Equipment  Purchase Term Loan shall be (i) evidenced by
an Equipment  Purchase  Term Note  executed and  delivered by Borrower to Lender
concurrently with each Equipment Purchase Term Loan, (ii) repaid,  together with
interest and other amounts payable thereunder, in accordance with the provisions
of the  applicable  Equipment  Purchase Term Note,  this Agreement and the other
Financing Agreements, and (iii) secured by all of the Collateral.

               (d) In addition to the other conditions  precedent to any Loan or
Letter of Credit  Accommodation set forth in this Agreement,  the making of each
Equipment Purchase Term Loan shall be subject to the satisfaction of each of the
following additional conditions precedent, as determined by Lender:

                     (i) Lender shall have  received from Borrower not less than
fifteen  (15)Business  Days  prior  written  notice  of the  proposed  Equipment
Purchase Term Loan,  which notice shall specify the following:  (A) the proposed
date and amount of the Equipment  Purchase Term Loan, (B) a list and description
of the Eligible New Equipment (by model, make,  manufacturer,  serial no. and/or
such other  identifying  information  as may be  appropriate,  as  determined by
Lender),  (C) the Hard Costs and the total  purchase  price for the Eligible New
Equipment to be purchased with the proceeds of such Equipment Purchase Term Loan
(and  the  terms  of  payment  of  such  purchase  price),  and (D)  such  other
information  and  documents  as  Lender  may from time to time  require  related
thereto;

                      (ii)  Lender  shall  have  a  valid  and  perfected  first
security  interest in and lien upon the Eligible  New  Equipment to be purchased
with the  proceeds of the  Equipment  Purchase  Term Loan and the  Eligible  New
Equipment shall be free and clear of all other liens, security interests, claims
or other encumbrances except those liens and

189-5
                                       25
<PAGE>

security interests permitted in accordance with Section 9.8 hereof, and Borrower
shall have delivered to Lender such evidence thereof, as Lender may from time to
time, require;

                      (iii) the amount of the Equipment Purchase Term Loan shall
not exceed one  hundred  (100%)  percent of the Hard Costs of the  Eligible  New
Equipment  to be  purchased  by Borrower  with the  proceeds  of such  Equipment
Purchase Term Loan;

                      (iv) as of the date of such  Equipment  Purchase Term Loan
and after giving effect thereto, the aggregate principal amount of all Equipment
Purchase Term Loans outstanding at such time shall not exceed $8,000,000;

                      (v) Lender shall have  received  copies,  or upon Lender's
request, the originals, of all agreements, documents and instruments relating to
the sale of the  Eligible  New  Equipment to any  Borrower,  including,  without
limitation, any purchase orders, invoices, bills of sale or similar documents;

                      (vi) Borrower shall duly authorize, execute and deliver to
Lender a single original Equipment Purchase Term Note in the form annexed hereto
as Exhibit B, as  completed to reflect the date and amount of each such loan and
with the number of monthly  installments of principal payable thereunder and the
amount of each such monthly  installment  completed in accordance  with Sections
2.4(e) and 2.4(f) below,  as the case may be, which note shall  evidence a valid
and  legally  enforceable  indebtedness  of  Borrower  unconditionally  owing to
Lender,  without  offset,  defense  or  counterclaim  of  any  kind,  nature  or
description whatsoever; and

                      (vii) no  Event of  Default,  or act,  condition  or event
which  with notice or  passage  of time or both  would  constitute  an Event of
Default, shall exist or have occurred and be continuing.

               (e) The  principal  amount of each  Equipment  Purchase Term Loan
requested  hereunder shall be payable  (subject to earlier payment to the extent
required  hereunder or under each Equipment  Purchase Term Note) in, consecutive
monthly  installments  of principal,  each in an amount  calculated as set forth
below, together with interest commencing on the first day of the month after the
date of the making of such loan,  together  with  interest and other  amounts as
provided  herein and in the  Equipment  Purchase  Term Note with respect to such
loan with the last  installment  due and payable on the Equipment  Purchase Term
Loan  Repayment  Date.  The amount of each monthly  installment  of principal in
respect  of each  such  Equipment  Purchase  Term  Loan  (other  than  the  last
installment,  which shall be due and payable on the Equipment Purchase Term Loan
Repayment Date in an amount equal to the entire unpaid balance of such Equipment
Purchase Term Note) shall equal: (i) the principal amount of the proposed

189-5
                                       26
<PAGE>

Equipment  Purchase Term Loan divided by (ii) the number of months in the period
commencing  on the date of the making of such  Equipment  Purchase Term Loan and
ending on the Equipment Purchase Term Loan Repayment Date.

         2.5 Availability  Reserves.  All Loans otherwise  available to Borrower
pursuant to the  lending  formulas  and subject to the Maximum  Credit and other
applicable  limits  hereunder shall be subject to Lender's  continuing  right to
establish and revise Availability Reserves.


SECTION 3.   INTEREST AND FEES

         3.1 Interest.

               (a)  Borrower  shall pay to Lender  interest  on the  outstanding
principal  amount of the  non-contingent  Obligations  at the Interest Rate. All
interest  accruing  hereunder  on and after the date of any Event of  Default or
termination or non-renewal hereof shall be payable on demand.

               (b)  Borrower may from time to time request that Prime Rate Loans
to it be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans to it continue for an additional  Interest Period. Such request from or on
behalf of Borrower  shall  specify the amount of the Prime Rate Loans which will
constitute Eurodollar Rate Loans (subject to the limits set forth below) and the
Interest Period to be applicable to such  Eurodollar Rate Loans.  Subject to the
terms and conditions  contained herein, three (3) Business Days after receipt by
Lender of such a request from or on behalf of a Borrower,  such Prime Rate Loans
shall be converted to Eurodollar  Rate Loans or such Eurodollar Rate Loans shall
continue,  as the case may be, provided,  that, (i) no Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default  shall exist or have  occurred  and be  continuing,  (ii) no
party hereto shall have sent any notice of  termination  or  non-renewal of this
Agreement,  (iii) Borrower shall have complied with such customary procedures as
are  established by Lender and specified by Lender to Borrower from time to time
for requests by Borrower for  Eurodollar  Rate Loans,  (iv) no more than six (6)
Interest  Periods may be in effect at any one time, (v) the aggregate  amount of
the  Eurodollar  Rate Loans must be in an amount not less than  $1,000,000 or an
integral  multiple  of $500,000 in excess  thereof,  (vi) the maximum  amount of
Eurodollar  Rate Loans at any time  requested  by Borrower  shall not exceed the
amount equal to (A) eighty (80%)  percent of the aggregate  principal  amount of
the Term Loans which it is anticipated will be outstanding as of the last day of
the  applicable  Interest  Period  plus (B) eighty  (80%)  percent of the lowest
principal  amount of Revolving Loans which it is anticipated will be outstanding
during the applicable Interest Period, in each case as determined by Lender (but
with no obligations of Lender to make such Revolving Loans) in

189-5
                                       27
<PAGE>

consultation  with  Borrower  and (vii) Lender  shall have  determined  that the
Interest  Period or Adjusted  Eurodollar Rate is available to Lender through the
Reference  Bank and can be readily  determined as of the date of the request for
such Eurodollar Rate Loan by Borrower.  Any request by Borrower to convert Prime
Rate Loans to Eurodollar Rate Loans or to continue any existing  Eurodollar Rate
Loans shall be irrevocable.  Notwithstanding  anything to the contrary contained
herein,  Lender and  Reference  Bank shall not be required  to  purchase  United
States  Dollar  deposits  in the  London  interbank  market or other  applicable
Eurodollar  Rate market to fund any  Eurodollar  Rate Loans,  but the provisions
hereof shall be deemed to apply as if Lender and  Reference  Bank had  purchased
such deposits to fund the Eurodollar Rate Loans.

               (c) Any  Eurodollar  Rate Loans  shall  automatically  convert to
Prime Rate Loans upon the last day of the  applicable  Interest  Period,  unless
Lender has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in  accordance  with the
terms hereof.  Any Eurodollar Rate Loans to Borrower shall, at Lender's  option,
upon notice by Lender to Borrower, convert to Prime Rate Loans in the event that
(i) an Event of Default or act, condition or event which, with notice or passage
of time,  or both,  would  constitute  an Event of Default,  shall exist or have
occurred  and be  continuing,  (ii) this  Agreement  shall  terminate  or not be
renewed,  or (iii) the aggregate  principal amount of the Prime Rate Loans which
have previously  been converted to Eurodollar Rate Loans or existing  Eurodollar
Rate Loans continued, as the case may be, at the beginning of an Interest Period
shall at any time during such  Interest  Period  exceed either (A) the aggregate
principal  amount of the Loans  then  outstanding,  or (B) the then  outstanding
principal  amount of Loans then  available to Borrower  under  Section 2 hereof.
Borrower  shall pay to Lender,  upon  demand by Lender (or  Lender  may,  at its
option,  charge any loan account of Borrower) any amounts required to compensate
Lender,  the  Reference  Bank  or any  participant  with  Lender  for  any  loss
(including  loss of  anticipated  profits),  cost or  expense  incurred  by such
person,  as a result of the  conversion of  Eurodollar  Rate Loans to Prime Rate
Loans pursuant to any of the foregoing.

               (d)  Interest  shall be payable by Borrower to Lender  monthly in
arrears  not  later  than the  first  day of each  calendar  month  and shall be
calculated  on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non- contingent Obligations (other than Eurodollar
Rate Loans) shall  increase or decrease by an amount  equal to each  increase or
decrease  in the Prime Rate  effective  on the first day of the month  after any
change in such Prime Rate is announced  based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrower to Lender exceed the maximum amount or
the rate permitted under any applicable law or regulation,  and if any such part
or  provision  of  this  Agreement  is in  contravention  of  any  such  law  or
regulation, such part or provision shall be deemed amended to conform thereto.


189-5
                                       28
<PAGE>

         3.2  Closing  Fee.  Borrower  shall pay to Lender as a closing  fee the
amount of  $430,000,  which shall be fully  earned and payable by Borrower as of
the date hereof, $150,000 of which was paid to Lender on or about May 19, 1999.

         3.3 Servicing Fee. Borrower shall pay to Lender monthly a servicing fee
in an amount equal to $2,500 in respect of Lender's  services for each month (or
part thereof) while this Agreement  remains in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be fully earned as of
and  payable  in  advance  on the date  hereof and on the first day of each such
month hereafter.

         3.4 Unused  Line Fee.  Borrower  shall pay to Lender  monthly an unused
line fee at a rate equal to  three-eighths  (3/8%) percent per annum  calculated
upon the amount by which $15,000,000 exceeds the average daily principal balance
of the outstanding  Revolving Loans and Letter of Credit  Accommodations  during
the  immediately  preceding  month (or part thereof)  while this Agreement is in
effect and for so long  thereafter as any of the  Obligations  are  outstanding,
which fee shall be payable on the first day of each month in arrears.

         3.5  Changes in Laws and Increased Costs of Loans.

               (a)  Notwithstanding  anything to the contrary  contained herein,
all Eurodollar Rate Loans shall,  upon notice by Lender to Borrower,  convert to
Prime  Rate  Loans  in the  event  that  (i) any  change  in  applicable  law or
regulation (or the  interpretation or  administration  thereof) shall either (A)
make it  unlawful  for  Lender,  Reference  Bank or any  participant  to make or
maintain  Eurodollar Rate Loans or to comply with the terms hereof in connection
with the Eurodollar Rate Loans, or (B) shall result in the increase in the costs
to  Lender,  Reference  Bank or any  participant  of making or  maintaining  any
Eurodollar  Rate  Loans by an amount  deemed by  Lender to be  material,  or (C)
reduce the amounts  received or receivable by Lender in respect  thereof,  by an
amount  deemed by Lender to be  material  or (ii) the cost to Lender,  Reference
Bank or any participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by Lender to be material.  Borrower shall
pay to Lender,  upon demand by Lender (or Lender may, at its option,  charge any
loan  account of  Borrower)  any amounts  required  to  compensate  Lender,  the
Reference Bank or any  participant  with Lender for any loss  (including loss of
anticipated profits), cost or expense incurred by such person as a result of the
foregoing,  including,  without  limitation,  any  such  loss,  cost or  expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired  by such person to make or maintain  the  Eurodollar  Rate Loans or any
portion  thereof.  A  certificate  of  Lender  setting  forth  the basis for the
determination of such amount  necessary to compensate  Lender as aforesaid shall
be delivered to Borrower and shall be conclusive, absent manifest error.


189-5
                                       29
<PAGE>

               (b) If any payments or  prepayments  in respect of the Eurodollar
Rate Loans are received by Lender  other than on the last day of the  applicable
Interest Period (whether pursuant to acceleration,  upon maturity or otherwise),
including any payments  pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of  Collateral,  Borrower shall
pay to Lender upon  demand by Lender (or Lender  may, at its option,  charge any
loan  account of  Borrower)  any amounts  required  to  compensate  Lender,  the
Reference Bank or any participant with Lender for any additional loss (including
loss of  anticipated  profits),  cost or expense  incurred  by such  person as a
result of such prepayment or payment,  including,  without limitation, any loss,
cost or  expense  incurred  by  reason of the  liquidation  or  reemployment  of
deposits  or other  funds  acquired  by such  person  to make or  maintain  such
Eurodollar Rate Loans or any portion thereof.


SECTION 4.   CONDITIONS PRECEDENT

         4.1  Conditions  Precedent  to  Initial  Loans  and  Letter  of  Credit
Accommodations.  Each of the following is a condition precedent to Lender making
the initial  Loans and  providing  the initial  Letter of Credit  Accommodations
hereunder:

               (a)  Lender   shall  have   received,   in  form  and   substance
satisfactory to Lender,  all releases,  terminations and such other documents as
Lender may request to evidence and  effectuate  the  termination by the Existing
Lenders to Borrower of their respective financing arrangements with Borrower and
the  termination  and release by it or them, as the case may be, of any interest
in  and  to any  assets  and  properties  of  Borrower  and  any  Obligor,  duly
authorized,  executed and  delivered by it or each of them,  including,  but not
limited to, (i) UCC  termination  statements  for all UCC  financing  statements
previously  filed by it or any of them or their  predecessors,  as secured party
and Borrower or any Obligor,  as debtor and (ii) satisfactions and discharges of
any mortgages, deeds of trust or deeds to secure debt by Borrower or any Obligor
in favor of such  Existing  Lenders,  in form  acceptable  for  recording in the
appropriate government office;

               (b) Lender shall have  received  evidence,  in form and substance
satisfactory  to Lender,  that  Lender has valid  perfected  and first  priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the  Obligations  or the liability of any Obligor
in respect thereof,  subject only to the security  interests and liens permitted
herein or in the other Financing Agreements;

               (c) all requisite  corporate action and proceedings in connection
with this Agreement and the other Financing  Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents,  including,  without  limitation,  records of requisite
corporate action and

189-5
                                       30
<PAGE>

proceedings  which  Lender may have  requested  in  connection  therewith,  such
documents  where  requested  by  Lender  or  its  counsel  to  be  certified  by
appropriate corporate officers or governmental authorities;

               (d) no material adverse change shall have occurred in the assets,
business or financial  condition of Borrower  since the date of Lender's  latest
field  examination and no change or event shall have occurred which would impair
the ability of Borrower or any Obligor to perform its  obligations  hereunder or
under any of the other Financing  Agreements to which it is a party or of Lender
to enforce the Obligations or realize upon the Collateral;

               (e) Lender shall have completed a field review of the Records and
such other  information  with respect to the Collateral and business of Borrower
as Lender may require to determine the amount of the Loans available to Borrower
(including,  without  limitation,  current  perpetual  inventory  records and/or
roll-forwards  of Accounts  and  Inventory  through the date of closing and test
counts of the Inventory in a manner  satisfactory to Lender,  together with such
supporting documentation as may be necessary or appropriate, and other documents
and  information  that will enable Lender to accurately  identify and verify the
Collateral), the results of which each case shall be satisfactory to Lender, not
more than three (3) Business Days prior to the date hereof;

               (f)  Lender   shall  have   received,   in  form  and   substance
satisfactory  to  Lender,  all  consents,  waivers,  acknowledgments  and  other
agreements  from third persons  which Lender may deem  necessary or desirable in
order to permit,  protect and perfect its  security  interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements;

               (g) the aggregate  amount of the Excess  Availability of Borrower
shall be not less than $3,000,000 as of the date hereof,  after giving effect to
the initial Loans made or to be made and Letter of Credit  Accommodations issued
or to be issued in connection with the initial transactions hereunder;

               (h) Borrower shall have  established a blocked account or lockbox
for its collections and the transfer  thereof to Lender,  which shall be in form
and substance acceptable to Lender;

               (i) Lender shall have received environmental audits of Borrower's
and Guarantors' Real Property  covered by Mortgages  conducted by an independent
environmental  engineering  firm  acceptable to Lender,  and in form,  scope and
methodology satisfactory to Lender confirming (i) Borrower is in compliance with
all  material   Environmental   Laws  and  (ii)  the  absence  of  any  material
environmental problems;

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<PAGE>

               (j)  Lender   shall  have   received,   in  form  and   substance
satisfactory to Lender, valid and effective title insurance policies issued by a
company and agent  acceptable  to Lender (i) insuring the  priority,  amount and
sufficiency  of the  Mortgages,  (ii)  insuring  against  matters  that would be
disclosed by surveys and (iii)  containing any legally  available  endorsements,
assurances or affirmative coverage reasonably requested by Lender for protection
of its interests;

               (k) Lender shall have  received  evidence of  insurance  and loss
payee endorsements  required hereunder and under the other Financing Agreements,
in form and substance  satisfactory  to Lender,  and  certificates  of insurance
policies and/or endorsements naming Lender as loss payee;

               (l)  Lender   shall  have   received,   in  form  and   substance
satisfactory to Lender,  the Subordination  and Intercreditor  Agreement and the
Municipal   Indebtedness   Subordination  and  Intercreditor   Agreement,   duly
authorized,   executed  and  delivered  by  each  of  the  parties  thereto  and
acknowledged  by  Borrower,   as  well  as  any  additional   subordination  and
intercreditor  agreements,  deemed  necessary by Lender with other third parties
providing  for,  inter,   alia,  the   subordination  in  right  of  payment  of
indebtedness  of Borrower to each of the  Subordinated  Noteholders to the prior
indefeasible  payment and  satisfaction  in full of the Obligations and for such
parties'  relative  rights with respect to the assets and properties of Borrower
and Guarantors and related matters;

               (m) to the extent that Borrower  maintains  credit  insurance for
Accounts owing by account debtors to Lender shall have received evidence of such
credit  insurance  and an  endorsement  naming Lender as loss payee with respect
thereto, in each case in form and substance satisfactory to Lender;

               (n) Lender shall have  received  evidence of  insurance  and loss
payee endorsements  required hereunder and under the other Financing Agreements,
in form and substance  reasonably  satisfactory to Lender,  and  certificates of
insurance policies and/or endorsements naming Lender as loss payee;

               (o)  Lender   shall  have   received,   in  form  and   substance
satisfactory  to Lender,  such  opinion  letters of  counsel(s)  to Borrower and
Guarantors with respect to the Financing  Agreements and the security  interests
and liens of Lender with  respect to the  Collateral  and such other  matters as
Lender may request; and

               (p)  the  other  Financing  Agreements  and all  instruments  and
documents  hereunder and thereunder  shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.


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<PAGE>

         4.2   Conditions   Precedent   to  All  Loans  and   Letter  of  Credit
Accommodations.  Each of the following is an additional  condition  precedent to
Lender  making  Loans  and/or  providing  Letter  of  Credit  Accommodations  to
Borrower,  including the initial Loans and Letter of Credit  Accommodations  and
any future Loans and Letter of Credit Accommodations:

               (a) all  representations  and warranties  contained herein and in
the  other  Financing  Agreements  shall be true  and  correct  in all  material
respects with the same effect as though such  representations and warranties had
been made on and as of the date of the  making  of each  such Loan or  providing
each such Letter of Credit Accommodation and after giving effect thereto, except
to the extent  that such  representations  and  warranties  relate  solely to an
earlier date (in which case such  representations and warranties shall have been
true and accurate as of the earlier date);

               (b)  no  law,  regulation,  order,  judgment  or  decree  of  any
Governmental  Authority  shall  exist,  and  no  action,  suit,   investigation,
litigation or  proceeding  shall be pending or threatened in any court or before
any  arbitrator  or  Governmental  Authority,  which  (i)  purports  to  enjoin,
prohibit,  restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated  pursuant to the terms hereof or the other Financing  Agreements or
(ii) has or could  reasonably be expected to have a material  adverse  effect on
the assets,  business or financial condition of Borrower or any Obligor or would
impair the  ability of  Borrower  or any  Obligor  to  perform  its  obligations
hereunder or under any of the other Financing Agreements or of Lender to enforce
any Obligations or realize upon any of the Collateral; and

               (c) no Event of Default  and no act,  condition  or event  which,
with notice or passage of time or both,  would  constitute  an Event of Default,
shall  exist or have  occurred  and be  continuing  on and as of the date of the
making of such Loan or providing  each such Letter of Credit  Accommodation  and
after giving effect thereto.


SECTION 5.  GRANT OF SECURITY INTEREST

         5.1 To secure  payment and  performance  of all  Obligations,  Borrower
hereby grants to Lender, a continuing  security  interest in, a lien upon, and a
right of set off  against,  and  hereby  assigns  to  Lender  as  security,  the
following  property and  interests  of Borrower,  whether now owned or hereafter
acquired or existing,  and wherever located  (together with all other collateral
security  for the  Obligations  at any time  granted to or held or  acquired  by
Lender, collectively, the "Collateral"):

               (a)  Accounts;


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<PAGE>

               (b) all present and future contract rights,  general  intangibles
(including  tax  and  duty  refunds,   registered  and   unregistered   patents,
trademarks,  service  marks,  copyrights,  trade  names,  applications  for  the
foregoing, trade secrets, goodwill, processes,  drawings,  blueprints,  customer
lists,  licenses,  whether as licensor or  licensee,  choses in action and other
claims and existing and future leasehold interests in equipment, real estate and
fixtures), chattel paper, documents,  instruments,  investment property, letters
of credit, bankers' acceptances and guaranties;

               (c)  all  present  and  future   monies,   securities  and  other
investment  property,  credit  balances,  deposits,  deposit  accounts and other
property  of  Borrower  now or  hereafter  held or  received by or in transit to
Lender or its Affiliates or at any other depository or other institution from or
for  the  account  of  Borrower  whether  for  safekeeping,   pledge,   custody,
transmission,  collection  or  otherwise,  and all  present  and  future  liens,
security interests,  rights,  remedies, title and interest in, to and in respect
of Accounts and other  Collateral,  including  (i) rights and remedies  under or
relating to guaranties,  contracts of  suretyship,  letters of credit and credit
and other  insurance  related to the  Collateral,  (ii)  rights of  stoppage  in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid  vendor,  lienor or secured  party,  (iii) goods  described  in invoices,
documents,  contracts or instruments with respect to, or otherwise  representing
or evidencing, Accounts or other Collateral, including returned, repossessed and
reclaimed  goods,  and (iv) deposits by and property of account debtors or other
persons securing the obligations of account debtors;

               (d)  Inventory;

               (e)  Equipment;

               (f)  Records;

               (g) Real Property; and

               (h) all  products  and  proceeds of the  foregoing,  in any form,
including  insurance  proceeds and any claims  against third parties for loss or
damage to or destruction of any or all of the foregoing.


SECTION 6.   COLLECTION AND ADMINISTRATION

         6.1  Borrower's  Loan Account.  Lender shall  maintain one or more loan
account(s)  on its books in which  shall be  recorded  (a) all Loans,  Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on  behalf  of  Borrower  and (c) all other  appropriate  debits  and
credits as provided in this  Agreement,  including,  without  limitation,  fees,
charges, costs, expenses and interest.

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                                       34
<PAGE>

All entries in the loan  account(s)  shall be made in  accordance  with Lender's
customary practices as in effect from time to time.

         6.2 Statements. Lender shall render to Borrower, each month a statement
setting forth the balance in  Borrower's  loan  account(s)  maintained by Lender
pursuant to the provisions of this  Agreement,  including  principal,  interest,
fees,  costs and expenses.  Each such  statement  shall be subject to subsequent
adjustment  by  Lender  but  shall,  absent  manifest  errors or  omissions,  be
considered correct and deemed accepted by Borrower and conclusively binding upon
Borrower  as an account  stated  except to the  extent  that  Lender  receives a
written  notice from  Borrower of any specific  exceptions  of Borrower  thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written statement as
provided above,  the balance in Borrower's loan account(s)  shall be presumptive
evidence of the amounts due and owing to Lender by Borrower.

         6.3  Collection of Accounts.

               (a)  Borrower  shall  establish  and  maintain,  at its  expense,
blocked  accounts or  lockboxes  and related  blocked  accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are acceptable to
Lender into which Borrower shall promptly deposit and direct its account debtors
to  directly  remit all  payments  on  Accounts  and all  payments  constituting
proceeds of Inventory or other  Collateral in the  identical  form in which such
payments are made,  whether by cash,  check or other manner.  The banks at which
the Blocked Accounts are established shall enter into an agreement,  in form and
substance satisfactory to Lender, providing that all items received or deposited
in the Blocked Accounts are the property of Lender, that the depository bank has
no lien  upon,  or right to setoff  against,  the  Blocked  Accounts,  the items
received for deposit therein,  or the funds from time to time on deposit therein
and that the depository  bank will wire, or otherwise  transfer,  in immediately
available  funds,  on a daily basis,  all funds  received or deposited  into the
Blocked  Accounts to such bank account of Lender as Lender may from time to time
designate  for  such  purpose  ("Payment  Account").  Borrower  agrees  that all
payments made to such Blocked  Accounts or other funds received and collected by
Lender,  whether on the Accounts or as proceeds of Inventory or other Collateral
or otherwise shall be the property of Lender.

               (b) For purposes of calculating the amount of the Loans available
to Borrower,  such payments will be applied  (conditional upon final collection)
to the  Obligations  on the  Business  Day of receipt  by Lender of  immediately
available funds in the Payment Account provided such payments and notice thereof
are received in  accordance  with Lender's  usual and customary  practices as in
effect from time to time and within  sufficient  time to credit  Borrower's loan
account on such day, and if not, then on the next Business Day. For the purposes
of calculating interest on the Obligations,

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                                       35

<PAGE>

such payments or other funds  received will be applied  (conditional  upon final
collec  tion) to the  Obligations  one (1) Business  Day  following  the date of
receipt of immediately available funds by Lender in the Payment Account provided
such payments or other funds and notice thereof are received in accordance  with
Lender's usual and customary practices as in effect from time to time and within
sufficient time to credit  Borrower's loan account on such day, and if not, then
on the next Business Day.

               (c)  Borrower  and  all  of  its  directors,  employees,  agents,
Subsidiaries and other Affiliates shall, acting as trustee for Lender,  receive,
as the  property  of Lender,  any  monies,  checks,  notes,  drafts or any other
payment  relating to and/or proceeds of Accounts or other  Collateral which come
into their  possession  or under their  control  and  immediately  upon  receipt
thereof,  shall  deposit  or  cause  the  same to be  deposited  in the  Blocked
Accounts,  or remit  the same or cause  the  same to be  remitted,  in kind,  to
Lender.  In no event shall the same be  commingled  with  Borrower's  own funds.
Borrower  agrees to  reimburse  Lender on demand for any amounts owed or paid to
any bank at which a Blocked  Account is  established or any other bank or person
involved in the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or  indemnification  of such bank or person. The obligation
of Borrower to reimburse  Lender for such  amounts  pursuant to this Section 6.3
shall survive the payment of the  Obligations and the termination or non-renewal
of this Agreement.

         6.4 Payments. All Obligations shall be payable to Lender as provided in
Section 6.3 to the Payment  Account or to such other  account or place as Lender
may designate from time to time. Lender may apply payments received or collected
from Borrower or for the account of Borrower (including, without limitation, the
monetary  proceeds of collections or of realization upon any Collateral) to such
of the Obligations,  whether or not then due, in such order and manner as Lender
determines,   provided,  that,  (a)  all  such  payments  shall  be  applied  to
Obligations  which are then due and  payable  before  being  applied  to pay any
Obligations which are not then due and payable (and unless and until an Event of
Default  occurs and is  continuing,  such payments  shall not be applied to make
prepayments  of principal  in respect of the Term Loans,  except as Borrower may
request in  writing)  and (b) all such  payments  shall be applied to Prime Rate
Loans before being applied to Eurodollar  Rate Loans.  At Lender's  option,  all
principal,  interest,  fees,  costs,  expenses and other charges provided for in
this Agreement or the other Financing  Agreements may be charged directly to the
loan  account(s) of Borrower.  Borrower shall make all payments to Lender on the
Obligations  free and clear of, and without  deduction or withholding  for or on
account of, any setoff,  counterclaim,  defense, duties, taxes, levies, imposts,
fees, deductions, withholding,  restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral  applied to the payment of,
any of the  Obligations,  Lender is required to surrender or return such payment
or proceeds to any Person for any reason,  then the  Obligations  intended to be
satisfied by such payment or proceeds shall be reinstated and

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                                       36
<PAGE>

continue and this  Agreement  shall continue in full force and effect as if such
payment or proceeds had not been received by Lender. Borrower shall be liable to
pay to Lender,  and do hereby indemnify and hold Lender harmless for, the amount
of any  payments or proceeds  surrendered  or  returned.  This Section 6.4 shall
remain  effective  notwithstanding  any  contrary  action  which may be taken by
Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive
the  payment of the  Obligations  and the  termination  or  non-renewal  of this
Agreement.

         6.5 Authorization to Make Loans. Lender is authorized to make the Loans
and provide the Letter of Credit  Accommodations  based upon telephonic or other
instructions  received  from  anyone  purporting  to be one of the  officers  of
Borrower  listed on  Schedule  6.5  hereof or other  authorized  person,  at the
discretion of Lender,  if such Loans are  necessary to satisfy any  Obligations.
All  requests  for  Loans or Letter of  Credit  Accommodations  hereunder  shall
specify  the date on which  the  requested  advance  is to be made or  Letter of
Credit  Accommodations  established  (which day shall be a Business Day) and the
amount of the requested Loan.  Requests  received after 11:00 a.m. New York City
time on any day shall be deemed to have been made as of the  opening of business
on the  immediately  following  Business  Day.  All Loans  and  Letter of Credit
Accommodations under this Agreement shall be conclusively  presumed to have been
made to, and at the request of and for the benefit of,  Borrower when  deposited
to the credit of Borrower or otherwise  disbursed or  established  in accordance
with the instructions of Borrower or in accordance with the terms and conditions
of this Agreement.

         6.6 Use of  Proceeds.  Borrower  shall use the initial  proceeds of the
Loans provided by Lender to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrower to
Lender  on or  about  the  date  hereof  and (b)  costs,  expenses  and  fees in
connection  with the  preparation,  negotiation,  execution and delivery of this
Agreement and the other Financing Agreements.  All other Loans made or Letter of
Credit Accommodations  provided by Lender to Borrower pursuant to the provisions
hereof shall be used by Borrower only for general operating, working capital and
other  proper  corporate  purposes  of Borrower  and  Guarantors  not  otherwise
prohibited by the terms hereof.  None of the proceeds will be used,  directly or
indirectly, for the purpose of purchasing or carrying any margin security or for
the  purposes  of reducing or retiring  any  indebtedness  which was  originally
incurred to purchase or carry any margin security or for any other purpose which
might  cause any of the Loans to be  considered  a "purpose  credit"  within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
as amended.



189-5
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<PAGE>

SECTION 7.   COLLATERAL REPORTING AND COVENANTS

         7.1  Collateral  Reporting.  Borrower  shall  provide  Lender  with the
following  documents in a form  satisfactory to Lender:  (a) on a daily basis or
more  frequently  as Lender may request,  (i) a schedule of sales made,  credits
issued and cash received and (ii)  perpetual  inventory  reports by category and
location;  (b) on a monthly  basis or more  frequently as Lender may request (i)
agings of accounts  payable and (ii)  agings of  accounts  receivable,  (c) upon
Lender's  request,  provide or make available to Lender:  (i) copies of customer
statements  and credit  memos,  remittance  advices and  reports,  and copies of
deposit  slips  and bank  statements,  (ii)  copies  of  shipping  and  delivery
documents,  and (iii) copies of purchase orders, invoices and delivery documents
for Inventory and Equipment acquired by Borrower;  and (d) such other reports as
to the  Collateral  as  Lender  shall  request  from  time  to  time.  If any of
Borrower's or any Guarantor's  records or reports of the Collateral are prepared
or  maintained  by an accounting  service,  contractor,  shipper or other agent,
Borrower  hereby  irrevocably  authorizes such service,  contractor,  shipper or
agent to deliver such records,  reports,  and related documents to Lender and to
follow Lender's  instructions  with respect to further services at any time that
an Event of Default exists or has occurred and is continuing.

         7.2  Accounts Covenants.

               (a) Borrower  shall notify  Lender  promptly of: (i) any material
delay in Borrower's  performance of any of its obligations to any account debtor
or the assertion of any material claims,  offsets,  defenses or counterclaims by
any account  debtor,  or any  material  disputes  with account  debtors,  or any
settlement,   adjustment  or  compromise  thereof,  (ii)  all  material  adverse
information  relating to the financial condition of any account debtor and (iii)
any event or circumstance  which, to Borrower's  knowledge would cause Lender to
consider any then existing Accounts as no longer constituting Eligible Accounts.
No  credit,  discount,  allowance  or  extension  or  agreement  for  any of the
foregoing  shall be granted to any  account  debtor  without  Lender's  consent,
except  in the  ordinary  course  of  Borrower's  business  in  accordance  with
practices and policies previously  disclosed in writing to Lender. So long as no
Event of  Default  exists or has  occurred  and is  continuing,  Borrower  shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor.  At any time that an Event of Default exists or has occurred and
is continuing,  Lender shall, at its option, have the exclusive right to settle,
adjust or compromise  any claim,  offset,  counterclaim  or dispute with account
debtors or grant any credits, discounts or allowances.

               (b) Without  limiting the  obligation  of Borrower to deliver any
other information to Lender, Borrower shall promptly report to Lender any return
of Inventory by any one account debtor if the Inventory so returned in such case
has a value in  excess of  $150,000.  At any time that  Inventory  is  returned,
reclaimed or repossessed,  the Account (or portion thereof) which arose from the
sale of such

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<PAGE>

returned,  reclaimed or  repossessed  Inventory  shall not be deemed an Eligible
Account.  In the event any account  debtor  returns  Inventory  when an Event of
Default exists or has occurred and is continuing,  Borrower shall, upon Lender's
request, (i) hold the returned Inventory in trust for Lender, (ii) segregate all
returned Inventory from all of its other property, (iii) dispose of the returned
Inventory  solely  according  to Lender's  instructions,  and (iv) not issue any
credits,  discounts or allowances with respect  thereto  without  Lender's prior
written consent.

               (c) With respect to each  Account:  (i) the amounts  shown on any
invoice  delivered  to Lender or schedule  thereof  delivered to Lender shall be
true and  complete,  (ii) no  payments  shall be made  thereon  except  payments
immediately  delivered to Lender pursuant to the terms of this Agreement,  (iii)
no  credit,  discount,  allowance  or  extension  or  agreement  for  any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts,  allowances or
extensions  made or given in the  ordinary  course of  business  of  Borrower in
accordance  with  practices and policies  previously  disclosed to Lender,  (iv)
there shall be no setoffs,  deductions,  contrasts,  defenses,  counterclaims or
disputes  existing or asserted with respect thereto except as reported to Lender
in accordance  with the terms of this  Agreement,  (v) none of the  transactions
giving rise thereto will violate any applicable Federal,  State or local laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.

               (d) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender,  to verify the  validity,  amount or
any  other  matter  relating  to any  Account  or  other  Collateral,  by  mail,
telephone, facsimile transmission or otherwise.

               (e)  Borrower  shall  deliver or cause to be delivered to Lender,
immediately upon Borrower's  receipt thereof,  with appropriate  endorsement and
assignment,  with full recourse to Borrower,  all chattel paper and  instruments
which Borrower now owns or may at any time acquire  immediately  upon Borrower's
receipt thereof, except as Lender may otherwise agree.

               (f)  Lender  may,  at any time or times  that an Event of Default
exists or has occurred and is continuing,  (i) notify any or all account debtors
that the  Accounts  have been  assigned to Lender and that Lender has a security
interest  therein  and  Lender may  direct  any or all  account  debtors to make
payment of  Accounts  directly  to Lender,  (ii)  extend the time of payment of,
compromise,  settle  or adjust  for  cash,  credit,  return  of  merchandise  or
otherwise,  and upon any  terms or  conditions,  any and all  Accounts  or other
obligations  included in the  Collateral  and thereby  discharge  or release the
account  debtor or any other  party or parties  in any way  liable  for  payment
thereof  without  affecting any of the  Obligations,  (iii)  demand,  collect or
enforce payment of any

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<PAGE>

Accounts  or such other  obligations,  but without any duty to do so, and Lender
shall not be liable for its failure to collect or enforce  the  payment  thereof
nor for the negligence of its agents or attorneys with respect  thereto and (iv)
take  whatever  other action  Lender may deem  necessary  or  desirable  for the
protection of its interests.  At any time that an Event of Default exists or has
occurred and is  continuing,  at Lender's  request,  all invoices and statements
sent to any  account  debtor  shall  state  that the  Accounts  and  such  other
obligations  have been  assigned to Lender and are payable  directly and only to
Lender  and  Borrower  shall  deliver  to Lender  such  originals  of  documents
evidencing the sale and delivery of goods or the  performance of services giving
rise to any Accounts as Lender may require.

         7.3 Inventory  Covenants.  With respect to the Inventory:  (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping in all material  respects  correct and accurate  records  itemizing  and
describing the kind, type, quality and quantity of Inventory,  the cost therefor
and daily  withdrawals  therefrom  and  additions  thereto;  (b) Borrower  shall
conduct a physical  count of the  Inventory of Borrower at least once each year,
but at any time or times as Lender may  request on or after an Event of Default,
and promptly following such physical inventory shall supply Lender with a report
in the form and with  such  specificity  as may be  reasonably  satisfactory  to
Lender  concerning  such  physical  count;  (c)  Borrower  shall not  remove any
Inventory  from the locations set forth or permitted  herein,  without the prior
written consent of Lender,  except for sales of Inventory in the ordinary course
of Borrower's  business and except to move Inventory  directly from one location
of Borrower set forth or permitted  herein to another such  location of Borrower
or the other Borrower (including any locations of account debtors, consignees or
processors to the extent permitted hereunder),  so long as a financing statement
between Lender,  as secured party and such other Borrower,  as debtor,  covering
such  Inventory has  previously  been recorded in the  appropriate  governmental
offices  of the  jurisdiction  of such  location);  (d) upon  Lender's  request,
Borrower shall at its expense no more than once in any twelve (12) month period,
but at any time or times as Lender may  request on or after an Event of Default,
deliver or cause to be delivered to Lender  written  reports or appraisals as to
the  Inventory in form,  scope and  methodology  acceptable  to Lender and by an
appraiser  acceptable  to Lender,  addressed  to Lender and upon which Lender is
expressly permitted to rely; (e) Borrower shall produce, use, store and maintain
the  Inventory,  with all  reasonable  care and caution and in  accordance  with
applicable  standards of any insurance and in conformity  with  applicable  laws
(including,  but not limited  to, the  requirements  of the  Federal  Fair Labor
Standards Act of 1938, as amended and all rules,  regulations and orders related
thereto);  (f) Borrower assumes all responsibility and liability arising from or
relating to the production, use, sale or other disposition of the Inventory; (g)
Borrower  shall not sell  Inventory to any  customer on  approval,  or any other
basis  which  entitles  the  customer  to return  or may  obligate  Borrower  to
repurchase  such  Inventory;  (h) Borrower  shall keep the Inventory in good and
marketable

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<PAGE>

condition;  and (i) Borrower shall not,  without prior written notice to Lender,
acquire or accept any Inventory on consignment or approval.

         7.4  Equipment  and  Real  Property  Covenants.  With  respect  to  the
Equipment and Real Property:  (a) upon Lender's request,  Borrower shall, at its
expense,  no more than once in any twelve (12) month period,  but at any time or
times as Lender may  request on or after an Event of Default  and at  Borrower's
expense on and after an Event of Default,  deliver or cause to be  delivered  to
Lender  written  reports or appraisals as to the Equipment and the Real Property
in  form,  scope  and  methodology  acceptable  to  Lender  and by an  appraiser
acceptable  to Lender,  addressed  to Lender and upon which  Lender is expressly
permitted to rely; (b) Borrower shall keep the Equipment in good order,  repair,
running and marketable condition (ordinary wear and tear excepted); (c) Borrower
shall use the Equipment and Real Property with all  reasonable  care and caution
and in accordance with  applicable  standards of any insurance and in conformity
with all  applicable  laws; (d) the Equipment is and shall be used in Borrower's
businesses and not for personal,  family, household or farming use; (e) Borrower
shall not remove any Equipment from the locations set forth or permitted herein,
except to the extent  necessary to have any Equipment  repaired or maintained in
the ordinary  course of the business of Borrower or to move  Equipment  directly
from one  location of Borrower  set forth or  permitted  herein to another  such
location of such or the other Borrower (so long as a financing statement between
Lender,  as secured party,  and such other  Borrower,  as debtor,  covering such
Equipment has previously been recorded in the appropriate  governmental  offices
of the  jurisdiction  of such  location)  and except for the  movement  of motor
vehicles  used by or for the  benefit  of  Borrower  in the  ordinary  course of
business;  (f) the  Equipment  is now and shall  remain  personal  property  and
Borrower  shall not  permit  any of the  Equipment  to be or become a part of or
affixed to real  property;  and (g)  Borrower  assumes  all  responsibility  and
liability arising from the use of the Equipment and Real Property.

         7.5 Right to Cure. Lender may, at its option, (a) after prior notice to
Borrower cure any default by Borrower  under any agreement with a third party or
pay or bond on appeal any  judgment  entered  against  Borrower,  (b)  discharge
taxes, liens,  security interests or other encumbrances at any time levied on or
existing  with  respect  to the  Collateral  and (c) pay any  amount,  incur any
expense  or  perform  any act which,  in  Lender's  judgment,  is  necessary  or
appropriate  to preserve,  protect,  insure or maintain the  Collateral  and the
rights of Lender with respect thereto. Lender may add any amounts so expended to
the  Obligations  and charge  Borrower's  account  therefor,  such amounts to be
repayable by Borrower on demand.  Lender shall be under no  obligation to effect
such  cure,  payment or  bonding  and shall not,  by doing so, be deemed to have
assumed any  obligation  or  liability  of  Borrower.  Any payment made or other
action  taken by Lender  under this  Section  shall be without  prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.


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<PAGE>

         7.6 Power of  Attorney.  Borrower  hereby  irrevocably  designates  and
appoints  Lender (and all persons  designated by Lender) as Borrower's  true and
lawful attorney-in-fact,  and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default or act,  condition  or event  which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing  (i) demand payment on Accounts or other proceeds
of Inventory  or other  Collateral,  (ii)  enforce  payment of Accounts by legal
proceedings or otherwise,  (iii) exercise all of Borrower's  rights and remedies
to collect any Account or other Collateral, (iv) sell or assign any Account upon
such  terms,  for such  amount  and at such  time or times as the  Lender  deems
advisable,  (v) settle,  adjust,  compromise,  extend or renew an Account,  (vi)
discharge and release any Account,  (vii) prepare, file and sign Borrower's name
on any proof of claim in bankruptcy or other similar document against an account
debtor,  (viii)  notify the post  office  authorities  to change the address for
delivery of Borrower's  mail to an address  designated  by Lender,  and open and
dispose of all mail addressed to Borrower, and (ix) do all acts and things which
are necessary,  in Lender's  determination,  to fulfill  Borrower's  obligations
under this Agreement and the other  Financing  Agreements and (b) at any time to
(i) take  control  in any  manner of any item of  payment  or  proceeds  thereof
constituting  Collateral or proceeds  thereof  received in or for deposit in the
Blocked  Accounts  or  otherwise  received  by Lender,  (ii) have  access to any
lockbox or postal box into which remittances from customers or other payments in
respect of Accounts or other Collateral are deposited,  (iii) endorse Borrower's
name upon any items of payment or  proceeds  thereof and deposit the same in the
Lender's  account for application to the  Obligations,  (iv) endorse  Borrower's
name upon any chattel paper, document, instrument,  invoice, or similar document
or  agreement  relating  to any Account or any goods  pertaining  thereto or any
other  Collateral,  (v) sign Borrower's name on any verification of Accounts and
notices  thereof to account debtors and (vi) execute in Borrower's name and file
any UCC financing  statements or amendments  thereto.  Borrower  hereby releases
Lender and its officers,  employees and designees from any  liabilities  arising
from any act or acts under this power of attorney  and in  furtherance  thereof,
whether of omission  or  commission,  except as a result of  Lender's  own gross
negligence or wilful misconduct as determined pursuant to a final non-appealable
order of a court of competent jurisdiction.

         7.7 Access to Premises.  From time to time as  requested by Lender,  at
the cost and expense of Borrower, (a) Lender or its designee shall have complete
access to all premises of Borrower during normal business hours and after notice
to Borrower or at any time and without notice to Borrower if an Event of Default
exists or has  occurred  and is  continuing,  for the  purposes  of  inspecting,
verifying and auditing the Collateral  and all of Borrower's  books and records,
including,  without  limitation,  the Records,  and (b) Borrower  shall promptly
furnish to Lender such copies of such books and records or extracts therefrom as
Lender  may  request,  and (c)  Lender or its  designee  may use  during  normal
business hours such of Borrower's personnel, equipment, supplies and premises as
may be reasonably  necessary for the foregoing and if an Event of Default exists
or

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<PAGE>

has occurred and is continuing for the collection of Accounts and realization of
other Collateral.


SECTION 8.   REPRESENTATIONS AND WARRANTIES

         Borrower and  Guarantors  hereby  jointly and  severally  represent and
warrant to Lender the following  (which shall survive the execution and delivery
of this Agreement),  the truth and accuracy of which are a continuing  condition
of the making of Loans and providing Letter of Credit  Accommodations  by Lender
to Borrower:

         8.1 Corporate Existence,  Power and Authority;  Subsidiaries.  Borrower
and each  Guarantor is a corporation  duly  organized and in good standing under
the laws of its  state  of  incorporation  and is duly  qualified  as a  foreign
corporation and in good standing in all states or other  jurisdictions where the
nature and extent of the business  transacted  by it or the  ownership of assets
makes such  qualification  necessary  and where the failure to so qualify  would
have a  material  adverse  effect on  Borrower's  or any  Guarantor's  financial
condition, results of operation or business or the rights of Lender hereunder or
under any of the other Financing Agreements or the rights of Lender in or to any
of the  Collateral.  The execution,  delivery and performance of this Agreement,
the other Financing Agreements and the transactions  contemplated  hereunder and
thereunder are all within Borrower's and each Guarantor's corporate powers, have
been  duly  authorized  and  are not in  contravention  of law or the  terms  of
Borrower's or any Guarantor's  certificate of incorporation,  by-laws,  or other
organizational  documentation,  or any  indenture,  agreement or  undertaking to
which Borrower or any Guarantor is a party or by which Borrower or any Guarantor
or its property are bound. This Agreement and the other Financing  Agreements to
which Borrower or any Guarantor is a party constitute  legal,  valid and binding
obligations of Borrower and such Guarantor  enforceable in accordance with their
respective terms. Borrower and Guarantors do not have any Subsidiaries except as
set forth on the Information Certificate.

         8.2 Financial  Statements;  No Material  Adverse Change.  All financial
statements  relating to Borrower and Guarantors which have been or may hereafter
be  delivered  by  Borrower  or  Guarantors  to  Lender  have been  prepared  in
accordance  with GAAP  (except as to any interim  financial  statements,  to the
extent such  statements are subject to normal  year-end  adjustments  and do not
include any notes),  and fairly present the financial  condition and the results
of operation of Borrower as at the dates and for the periods set forth  therein.
Except as disclosed in any interim  financial  statements  furnished by Borrower
and Guarantors to Lender prior to the date of this Agreement,  there has been no
material adverse change in the assets,  liabilities and condition,  financial or
otherwise  of  Borrower  or any  Guarantor,  since  the date of the most  recent
audited financial statements furnished by Borrower or Guarantors to Lender prior
to the date of this Agreement.

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<PAGE>

         8.3 Chief Executive Office;  Collateral Locations.  The chief executive
office of Borrower and each  Guarantor and Borrower's  and  Guarantors'  Records
concerning  Accounts are located only at the addresses set forth below and their
only other places of business and the only other  locations  of  Collateral,  if
any, are the addresses set forth in the Information Certificate,  subject to the
right of Borrower and each  Guarantor to establish  new  locations in accordance
with Section 9.2 below. The Information  Certificate correctly identifies any of
such locations  which are not owned by Borrower or Guarantors and sets forth the
owners and/or  operators  thereof and to the best of Borrower's  knowledge,  the
holders of any mortgages on such locations.

         8.4 Priority of Liens; Title to Properties.  The security interests and
liens  granted  to Lender  hereunder  and under the other  Financing  Agreements
constitute  valid and perfected  first priority liens and security  interests in
and upon the  Collateral  subject  only to the liens  indicated  on Schedule 8.4
hereto and the other liens permitted under Section 9.8 hereof. Borrower and each
Guarantor has good and marketable title to all of its respective  properties and
assets subject to no liens, mortgages, pledges, security interests, encumbrances
or charges of any kind,  except  those  granted to Lender and such others as are
specifically  listed on  Schedule  8.4 hereto or  permitted  under  Section  9.8
hereof.

         8.5 Tax Returns. Borrower and each Guarantor has filed, or caused to be
filed, in a timely manner all tax returns,  reports and  declarations  which are
required to be filed by it. All  information  in such tax  returns,  reports and
declarations  is complete and accurate in all  material  respects.  Borrower and
each  Guarantor  has paid or  caused to be paid all  taxes  due and  payable  or
claimed  due and payable in any  assessment  received  by it,  except  taxes the
validity of which are being  contested in good faith by appropriate  proceedings
diligently  pursued and available to Borrower or such Guarantor and with respect
to which adequate reserves have been set aside on its books.  Adequate provision
has been made for the payment of all accrued and unpaid Federal,  State, county,
local, foreign and other taxes whether or not yet due and payable and whether or
not disputed.

         8.6 Litigation.  Except as set forth on the  Information  Certificates,
there is no present  investigation by any Governmental  Authority pending, or to
the  best  of  Borrower's  and  Guarantors'  knowledge  threatened,  against  or
affecting  Borrower or any Guarantor,  their  respective  assets or business and
there is no action,  suit,  proceeding or claim by any Person pending, or to the
best of Borrower's and each Guarantor's knowledge  threatened,  against Borrower
or any  Guarantor  or its  assets or  goodwill,  or  against  or  affecting  any
transactions  contemplated  by this  Agreement,  which if  adversely  determined
against  Borrower or such  Guarantor  would have result in any material  adverse
change in the assets,  businesses  or  financial  condition  of Borrower or such
Guarantor or would  impair the ability of Borrower or such  Guarantor to perform
its  obligations  hereunder or under any of the other  Financing  Agreements  to
which

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<PAGE>

Borrower or such Guarantor is a party or of Lender to enforce any Obligations or
realize upon any Collateral.

         8.7  Compliance  with Other  Agreements and  Applicable  Laws.  Neither
Borrower nor any Guarantor is in default in any respect  under,  or in violation
in any respect of any of the terms of, any material agreement, including without
limitation,  the Subordinated Note Agreements and the Municipal Debt Agreements,
contract,  instrument,  lease or other  commitment  to which it is a party or by
which it or any of its assets  are  bound.  Borrower  and each  Guarantor  is in
compliance  in all material  respects  with all  applicable  provisions of laws,
rules,  regulations,  licenses,  permits,  approvals  and orders of any foreign,
Federal, State or local Governmental Authority.

         8.8 Bank Accounts. All of the deposit accounts,  investment accounts or
other accounts in the name of or used by Borrower or any Guarantor maintained at
any bank or other  financial  institution  are set forth on Schedule 8.8 hereto,
subject to the right of Borrower and each Guarantor to establish new accounts in
accordance with Section 9.13 below.

         8.9  Environmental Compliance.

               (a) Except as set forth on Schedule 8.9 hereto,  neither Borrower
nor any Guarantor,  or any Subsidiary,  has generated,  used,  stored,  treated,
transported,  manufactured,  handled,  produced  or  disposed  of any  Hazardous
Materials,  on or off its premises (whether or not owned by it) in any manner in
material violation of any applicable  Environmental Law or any license,  permit,
certificate,  approval or similar authorization thereunder and the operations of
Borrower  and  each  Guarantor  complies  in  all  material  respects  with  all
Environmental  Laws  and all  licenses,  permits,  certificates,  approvals  and
similar authorizations thereunder.

               (b) Except as set forth on Schedule 8.9 hereto, there has been no
investigation,  proceeding,  complaint,  order,  directive,  claim,  citation or
notice by any  Governmental  Authority or any other person nor is any pending or
to the  best of  Borrower's  and each  Guarantor's  knowledge  threatened,  with
respect to (i) any  non-compliance  with or violation of the requirements of any
Environmental  Law by Borrower or any  Guarantor (or any  Subsidiary),  (ii) the
release, spill or discharge,  threatened or actual, of any Hazardous Material or
(iii) the generation,  use,  storage,  treatment,  transportation,  manufacture,
handling,  production  or  disposal  of any  Hazardous  Materials  or any  other
environmental,  health or safety matter,  which, as to each of clauses (i), (ii)
or (iii) to the best of  Borrower's  or any  Guarantor's  knowledge,  materially
affects Borrower or any Guarantor or their respective businesses,  operations or
assets or any  properties at which  Borrower or any  Guarantor has  transported,
stored or disposed of any Hazardous Materials.


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<PAGE>

               (c) Neither Borrower nor any Guarantor has any material liability
(contingent  or  otherwise) in  connection  with a release,  spill or discharge,
threatened  or  actual,  of any  Hazardous  Materials  or the  generation,  use,
storage,  treatment,   transportation,   manufacture,  handling,  production  or
disposal of any Hazardous Materials.

               (d)  Borrower  and  each  Guarantor  has all  material  licenses,
permits,  certificates,  approvals  or  similar  authorizations  required  to be
obtained  or filed  in  connection  with the  operations  of  Borrower  and each
Guarantor  under  any  Environmental  Law  and all of  such  licenses,  permits,
certificates,  approvals or similar  authorizations  are valid and in full force
and effect.

         8.10  Employee Benefits.

               (a)  Neither  Borrower  nor  any  Guarantor  has  engaged  in any
transaction  in connection  with which  Borrower,  any Guarantor or any of their
respective  ERISA Affiliates could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code
which has or has a reasonable  likelihood of having a Material  Adverse  Effect,
including any accumulated funding deficiency described in Section 8.10(c) hereof
which has or has a reasonable likelihood of having a Material Adverse Effect and
any  deficiency  with respect to vested  accrued  benefits  described in Section
8.10(d)  hereof  which has or has a reasonable  likelihood  of having a Material
Adverse Effect.

               (b) No liability to the Pension Benefit Guaranty  Corporation has
been or is expected by Borrower or any  Guarantor to be incurred with respect to
any employee benefit plan of Borrower or any Guarantor or their respective ERISA
Affiliates which has a or has a reasonable likelihood of having Material Adverse
Effect.  There has been no  reportable  event  (within  the  meaning  of Section
4043(b) of ERISA) or any other event or  condition  with respect to any employee
pension benefit plan of Borrower or any Guarantor or its ERISA  Affiliates which
presents a risk of termination of any such plan by the Pension Benefit  Guaranty
Corporation  which  has or has a  reasonable  likelihood  of  having a  Material
Adverse Effect.

               (c) Full payment has been made of all amounts  which  Borrower or
any Guarantor or its ERISA Affiliates is required under Section 302 of ERISA and
Section  412 of the Code to have paid under the terms of each  employee  benefit
plan as  contributions to such plan as of the last day of the most recent fiscal
year of such plan ended prior to the date  hereof,  and no  accumulated  funding
deficiency  (as  defined in Section  302 of ERISA and  Section 412 of the Code),
whether or not  waived,  exists  with  respect  to any  employee  benefit  plan,
including  any penalty or tax described in Section  8.10(a)  hereof which has or
has a  reasonable  likelihood  of  having  a  Material  Adverse  Effect  and any
deficiency with respect to vested accrued benefits described in Section

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<PAGE>

8.10(d)  hereof  which has or has a reasonable  likelihood  of having a Material
Adverse Effect.

               (d) The current value of all vested  accrued  benefits  under all
employee  benefit  plans  maintained  by Borrower  and each  Guarantor  that are
subject to Title IV of ERISA does not exceed the current  value of the assets of
such plans allocable to such vested accrued  benefits,  including any penalty or
tax described in Section 8.10(a) hereof which has or has a reasonable likelihood
of having a Material  Adverse  Effect  and any  accumulated  funding  deficiency
described in Section 8.10(c) hereof which has or has a reasonable  likelihood of
having a  Material  Adverse  Effect.  The terms  "current  value"  and  "accrued
benefit" have the meanings specified in ERISA.

               (e) Except as set forth on Schedule 8.10 hereof, neither Borrower
nor any Guarantor or any of its ERISA  Affiliates is or has ever been  obligated
to  contribute to any  "multiemployer  plan" (as such term is defined in Section
4001(a)(3) of ERISA) that is subject to Title IV of ERISA.

         8.11  Accuracy  and   Completeness  of  Information.   All  information
furnished  by or on behalf of  Borrower  or  Guarantors  in writing to Lender in
connection with this Agreement or any of the other  Financing  Agreements or any
transaction contemplated hereby or thereby (including,  without limitation,  all
information on the Information  Certificate) is true and correct in all material
respects on the date as of which such information is dated or certified and does
not omit any  material  fact  necessary  in order to make such  information  not
misleading.  No event or circumstance  has occurred and is continuing  which has
had or could  reasonably  be expected to have a material  adverse  affect on the
businesses,  assets or financial  condition of Borrower or any Guarantor,  which
has not been accurately disclosed to Lender in writing.

         8.12  Survival  of  Warranties;  Cumulative.  All  representations  and
warranties  contained in this Agreement or any of the other Financing Agreements
shall survive the  execution and delivery of this  Agreement and shall be deemed
to have been made again to Lender on the date of each  additional  borrowing  or
other  credit   accommodation   hereunder,   except  to  the  extent  that  such
representations  and warranties  expressly  relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date), and shall be conclusively presumed to have been
relied  on by  Lender  regardless  of  any  investigation  made  or  information
possessed by Lender. The  representations  and warranties set forth herein shall
be cumulative and in addition to any other  representations  or warranties which
Borrower and Guarantors  shall now or hereafter  give, or cause to be given,  to
Lender.



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<PAGE>

SECTION 9.   AFFIRMATIVE AND NEGATIVE COVENANTS

         9.1 Maintenance of Existence.  Borrower and each Guarantor shall at all
times preserve,  renew and keep in full force and effect its corporate existence
and rights and  franchises  with respect  thereto and maintain in full force and
effect  all  material  permits,  licenses,  trademarks,  tradenames,  approvals,
authorizations,  leases and  contracts  necessary  to carry on its  business  as
presently or proposed to be conducted.  Borrower and each  Guarantor  shall give
Lender  thirty  (30) days prior  written  notice of any  proposed  change in its
corporate  name,  which notice shall set forth the new name and Borrower or such
Guarantor  shall deliver to Lender a copy of the amendment to the Certificate of
Incorporation  of  Borrower  or such  Guarantor  providing  for the name  change
certified by the  Secretary of State of the  jurisdiction  of  incorporation  of
Borrower or such Guarantor as soon as it is available.

         9.2 New Collateral Locations.  Borrower and each Guarantor may open any
new location  within the  continental  United States  provided  Borrower or such
Guarantor (a) gives Lender thirty (30) days prior written notice of the intended
opening of any such new location, and (b) executes and delivers, or causes to be
executed and delivered, to Lender such agreements, documents, and instruments as
Lender may deem  reasonably  necessary or desirable to protect its  interests in
the Collateral at such location, including UCC financing statements.

         9.3  Compliance with Laws, Regulations, Etc.

               (a)  Borrower  and each  Guarantor  shall,  and  shall  cause any
Subsidiary  to, at all times,  comply in all  material  respects  with all laws,
rules, regulations, licenses, permits, approvals and orders applicable to it and
duly  observe  all  requirements  of any  Federal,  State or local  Governmental
Authority,  including ERISA, the Code, the Occupational Safety and Health Act of
1970, as amended,  the Fair Labor  Standards  Act of 1938,  as amended,  and all
statutes,  rules,  regulations,  orders,  permits and  stipulations  relating to
environmental  pollution  and employee  health and safety,  including all of the
Environmental Laws.

               (b) Borrower and each Guarantor shall establish and maintain,  at
its expense,  a system to assure and monitor its continued  compliance  with all
Environmental  Laws in all of its  operations  which system shall include annual
reviews of such compliance by employees or agents of Borrower and Guarantors who
are familiar with the  requirements  of the  Environmental  Laws.  Copies of all
environmental surveys, audits,  assessments,  feasibility studies and results of
remedial  investigations shall be promptly furnished, or caused to be furnished,
by Borrower and each Guarantor to Lender.  Borrower and  Guarantors  shall take,
and shall cause any Subsidiary to take, prompt and appropriate action to respond
to any  non-compliance  with any of the  Environmental  Laws and shall report to
Lender on such response.

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<PAGE>

               (c)  Borrower  and  Guarantors  shall give both oral and  written
notice to Lender immediately upon Borrower's or such Guarantor's  receipt of any
notice of, or Borrower's or such Guarantor's  otherwise  obtaining  knowledge of
any of the  following  that  could  reasonably  be  expected  to have a Material
Adverse Effect, (i) the occurrence of any event involving the release,  spill or
discharge,  threatened  or  actual,  of  any  Hazardous  Material  or  (ii)  any
investigation,  proceeding,  complaint,  order,  directive,  claims, citation or
notice  with  respect  to:  (A)  any  non-compliance  with or  violation  of any
Environmental  Law by Borrower or any  Guarantor  or (B) the  release,  spill or
discharge,  threatened  or  actual,  of any  Hazardous  Material  other  than as
permitted by or in accordance with any applicable  Environmental Laws or (C) the
generation,  use, storage,  treatment,  transportation,  manufacture,  handling,
production or disposal of any Hazardous  Materials other than as permitted by or
in  accordance  with  any  applicable   Environmental  Laws  or  (D)  any  other
environmental,  health or safety matter, which affects Borrower or any Guarantor
or their  respective  business,  operations or assets or any properties at which
Borrower or any  Guarantor  transported,  stored or  disposed  of any  Hazardous
Materials.

               (d) Without  limiting the generality of the  foregoing,  whenever
Lender  reasonably  determines  that there is  non-compliance,  or any condition
which  requires any action by or on behalf of Borrower or any Guarantor in order
to avoid any material  non-compliance,  with any Environmental  Law, Borrower or
such Guarantor shall, at Lender's request and the expense of Borrower: (i) cause
an independent environmental engineer acceptable to Lender to conduct such tests
of the site  where  Borrower's  or such  Guarantor's  non-compliance  or alleged
non-compliance   with  such   Environmental   Laws  has   occurred  as  to  such
non-compliance   and  prepare  and  deliver  to  Lender  a  report  as  to  such
non-compliance  setting  forth the  results of such tests,  a proposed  plan for
responding to any environmental  problems described therein,  and an estimate of
the costs  thereof  and (ii)  provide  to Lender a  supplemental  report of such
engineer  whenever  the  scope of such  non-compliance,  or  Borrower's  or such
Guarantor's response thereto or the estimated costs thereof, shall change in any
material respect.

               (e) Borrower and each Guarantor shall indemnify and hold harmless
Lender, its directors,  officers, employees, agents, invitees,  representatives,
successors and assigns,  from and against any and all losses,  claims,  damages,
liabilities,  costs, and expenses (including attorneys' fees and legal expenses)
directly or indirectly  arising out of or attributable  to the use,  generation,
manufacture,   reproduction,   storage,  release,   threatened  release,  spill,
discharge,  disposal or presence of a Hazardous Material, including the costs of
any required or necessary repair, cleanup or other remedial work with respect to
any property of Borrower or any Guarantor and the preparation and implementation
of  any  closure,   remedial  or  other  required  plans.  All  representations,
warranties, covenants and indemnifications in this Section 9.3 shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.


189-5
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<PAGE>

         9.4 Payment of Taxes and Claims. Borrower and each Guarantor shall, and
shall cause any  Subsidiary  to, duly pay and discharge all taxes,  assessments,
contributions  and governmental  charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good faith
by  appropriate  proceedings  diligently  pursued  and  available  to  Borrower,
Guarantor or Subsidiary  and with respect to which  adequate  reserves have been
set  aside on its  books.  Borrower  shall be  liable  for any tax or  penalties
imposed on Lender as a result of the financing  arrangements provided for herein
and Borrower and each  Guarantor  agrees to indemnify  and hold Lender  harmless
with  respect  to the  foregoing,  and to repay to Lender on demand  the  amount
thereof,  and until paid by Borrower  such amount shall be added and deemed part
of the Loans,  provided,  that,  nothing  contained herein shall be construed to
require Borrower or Guarantors to pay any income or franchise taxes attributable
to the income of Lender from any amounts  charged or paid  hereunder  to Lender.
The foregoing  indemnity  shall survive the payment of the  Obligations  and the
termination or non-renewal of this Agreement.

         9.5  Insurance.

               (a)  Borrower  and each  Guarantor  shall,  and  shall  cause any
Subsidiary  to, at all times,  maintain  with  financially  sound and  reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts  customarily  insured against or
carried by corporations of established reputation engaged in the same or similar
businesses  and  similarly  situated.   Said  policies  of  insurance  shall  be
satisfactory  to  Lender  as to form,  amount  and  insurer.  Borrower  and each
Guarantor  shall furnish  certificates,  policies or  endorsements  to Lender as
Lender  shall  require  as proof of such  insurance,  and,  if  Borrower  or any
Guarantor fails to do so, Lender is authorized, but not required, to obtain such
insurance at the expense of Borrower.  All policies  shall  provide for at least
thirty (30) days prior written notice to Lender of any cancellation or reduction
of coverage and that Lender may act as attorney for Borrower or any Guarantor in
obtaining,  and at any time an Event of Default  exists or has  occurred  and is
continuing, adjusting, settling, amending and canceling such insurance. Borrower
and each  Guarantor  shall  cause  Lender  to be named  as a loss  payee  and an
additional  insured  (but without any  liability  for any  premiums)  under such
insurance policies and Borrower and each Guarantor shall obtain non-contributory
lender's  loss  payable  endorsements  to all  insurance  policies  in form  and
substance  satisfactory to Lender. Such lender's loss payable endorsements shall
specify  that the proceeds of such  insurance  shall be payable to Lender as its
interests may appear and further specify that Lender shall be paid regardless of
any act or omission by Borrower or any of their Affiliates.

               (b) At its  option,  Lender  may  apply  any  insurance  proceeds
received  by  Lender  at any  time to the  cost of  repairs  or  replacement  of
Collateral and/or to payment

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                                       50

<PAGE>



of the Obligations,  whether or not then due, in any order and in such manner as
Lender  may  determine  or  hold  such  proceeds  as  cash  collateral  for  the
Obligations.

         9.6  Financial Statements and Other Information.

               (a)  Borrower  and each  Guarantor  shall keep  proper  books and
records in which true and  complete  entries  shall be made of all  dealings  or
transactions of or in relation to the Collateral and the businesses of Borrower,
Guarantors and their  Subsidiaries (if any) in accordance with GAAP and Borrower
and  Guarantors  shall  furnish or cause to be furnished  to Lender:  (i) within
forty-five  (45) days  after the end of each  fiscal  month,  monthly  unaudited
consolidated   financial  statements  and  unaudited   consolidating   financial
statements  (including  in each case balance  sheets,  statements  of income and
loss,  statements of cash flow, and statements of shareholders'  equity), all in
reasonable  detail,  fairly presenting the financial position and the results of
the  operations  of Borrower and its  Subsidiaries  as of the end of and through
such fiscal month and (ii) within  ninety (90) days after the end of each fiscal
year,  audited  consolidated  financial  statements and unaudited  consolidating
financial  statements of Borrower and its  Subsidiaries  (including in each case
balance  sheets,  statements  of income  and loss,  statements  of cash flow and
statements of shareholders'  equity), and the accompanying notes thereto, all in
reasonable  detail,  fairly presenting the financial position and the results of
the  operations of Borrower and its  Subsidiaries  as of the end of and for such
fiscal year,  together with the  unqualified  opinion of  independent  certified
public  accountants,  which accountants shall be an independent  accounting firm
selected by Borrower and  reasonably  acceptable to Lender,  that such financial
statements  have been prepared in accordance  with GAAP,  and present fairly the
results of operations and financial  condition of Borrower and its  Subsidiaries
as of the end of and for the fiscal year then ended.

               (b) Borrower  and  Guarantors  shall  promptly  notify  Lender in
writing of the details of (i) any material loss, damage, investigation,  action,
suit, proceeding or claim relating to the Collateral or any other property which
is security for the  Obligations  or which would result in any material  adverse
change in Borrower's or any Guarantor's business,  properties,  assets, goodwill
or  condition,  financial or otherwise  and (ii) the  occurrence of any Event of
Default or act,  condition or event which, with the passage of time or giving of
notice or both,  would  constitute  an Event of Default.  In addition,  Borrower
shall  provide  Lender  monthly  with a report of all  locations of Inventory at
consignees,  processors,  warehouses,  bailees or other third parties indicating
the name and address of such person and the approximate  amount of the Inventory
at such location.

               (c)  Borrower  and  Guarantors  shall  furnish  or  cause  to  be
furnished to Lender such budgets,  forecasts,  projections and other information
respecting  the Collateral  and the  businesses of Borrower and  Guarantors,  as
Lender may, from time to

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<PAGE>



time,  reasonably request.  Lender is hereby authorized to deliver a copy of any
financial  statement  or any  other  information  relating  to the  business  of
Borrower or any Guarantor to any court or other Governmental Authority or to any
participant  or assignee or prospective  participant  or assignee.  Borrower and
each Guarantor  hereby  irrevocably  authorizes  and directs all  accountants or
auditors to deliver to Lender,  at Borrower's  expense,  copies of the financial
statements  of Borrower and  Guarantors  and any reports or  management  letters
prepared by such  accountants  or auditors on behalf of Borrower and  Guarantors
and to  disclose  to Lender  such  information  as they may have  regarding  the
businesses of Borrower and  Guarantors.  Any documents,  schedules,  invoices or
other papers  delivered  to Lender may be destroyed or otherwise  disposed of by
Lender one (1) year after the same are delivered to Lender,  except as otherwise
designated by Borrower to Lender in writing.

          9.7 Sale of Assets, Consolidation,  Merger, Dissolution, Etc. Borrower
and each Guarantor  shall not, and shall not permit any Subsidiary to,  directly
or indirectly,

               (a) merge into or with or  consolidate  with any other  Person or
permit any other Person to merge into or with or consolidate with it; or

               (b) sell, assign, lease,  transfer,  abandon or otherwise dispose
of any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person except, for,

                     (i) sales of Inventory in the ordinary course of business,
or

                      (ii)(A) the disposition of worn-out or obsolete  Equipment
or  Equipment  no longer used in the  business so long as (1) Lender  shall have
received at least five (5) days prior written  notice of such  disposition,  (2)
such sales shall be at commercially reasonable prices and on terms with a Person
who is not an Affiliate,  (3) at least eighty (80%) percent of the consideration
received from any such sale or other  disposition is in the form of cash or Cash
Equivalents,  (4) such  sales  price is equal to or in excess  of the  appraised
value of the Equipment subject to such sale or other disposition (in addition to
any other rights of Lender under Section 7.4 hereof or otherwise,  Lender may at
its option require Borrower,  at Borrower's  expense,  to deliver or cause to be
delivered to Lender an updated  appraisal as to the Equipment in form, scope and
methodology acceptable to Lender and upon which Lender is expressly permitted to
rely) may rely, (5) the Net Proceeds of any such disposition are paid to Lender,
and (6) no Event of Default or act or condition which with notice, lapse of time
or both would constitute an Event of Default shall exist or have occurred and be
continuing, or

                           (B) in addition to the transfers and  dispositions of
Equipment permitted pursuant to Section 9.7(b) (ii)(A) above, Borrower may sell,
transfer or

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                                       52

<PAGE>



dispose of other Equipment,  provided,  that, (1) prior to the first anniversary
of the date of this Agreement,  any such sales,  transfers or other dispositions
do not involve  Equipment  having an  aggregate  fair market  value in excess of
$100,000 and at all times thereafter such sales transfers or other  dispositions
do not involve  Equipment  having an  aggregate  fair market  value in excess of
$300,000 for all such Equipment disposed of in any fiscal year of Borrower,  (2)
the conditions set forth in Section  9.7(b)(ii)(A)(1) through (4) are satisfied,
(3) as of the date of any such sale or other disposition and after giving effect
thereto,  the daily  average  of the  Excess  Availability  for the  immediately
preceding  fifteen (15) consecutive day period shall be not less than $1,000,000
and as of the date of any such disposition and after giving effect thereto,  the
Excess Availability shall be not less than $1,000,000, and (4) as of the date of
any such sale or other disposition and after giving effect thereto,  no Event of
Default, or act, condition or event which with notice or passage of time or both
would  constitute  an Event of  Default,  shall  exist or have  occurred  and be
continuing,

Notwithstanding the provisions of this Section  9.7(b)(ii),  Borrower shall have
the ability to retain the Net Proceeds of any permitted disposition of Equipment
so long as the Net Proceeds of any such  disposition  are used within sixty (60)
days of such  disposition to acquire other Equipment of equal or greater utility
and  value  than the  Equipment  disposed  of prior to such  Equipment  becoming
worn-out or obsolete and the following additional conditions are satisfied:  (x)
Borrower  notifies  Lender of its  intention  to  replace  the  Equipment  to be
disposed of at least ten (10) days prior to its disposition,  (y) as of the date
of any such sale, transfer or other disposition and after giving effect thereto,
no Event of Default or act or condition which with notice, lapse of time or both
would  constitute  an Event of  Default  shall  exist  or have  occurred  and be
continuing  and  (z)  such  replacement  Equipment,   is  immediately  upon  its
acquisition,  subject to a first priority  security interest in favor of Lender;
or

                      (iii) the sale of not more than  four and  one-half  (4.5)
acres of the  thirty-eight  (38) acres real property owned by CCC and located in
Aliquippa,  Pennsylvania  as such sale is provided for in a contract of sale, in
form and substance reasonably satisfactory to Lender, provided, that, as to such
sale,  it shall  occur (A) prior to December  31,  1999,  (B) Lender  shall have
received not less than ten (10) days prior  written  notice of such sale,  which
notice shall set forth in reasonable detail  satisfactory to Lender, the parties
to such sale,  the Real  Property  and related  assets to be sold,  the purchase
price and the manner of payment thereof and such other  information with respect
thereto as Lender may request, (C) such sale shall be on commercially reasonable
terms in a bona fide arm's-length  transaction with a non-affiliated Person, and
(D) all of the Net  Proceeds of any such sale shall be paid either (1)  directly
to Lender or (2) to Borrower to pay down the  Indebtedness  of CCC to  Borrower,
provided,  that,  neither Borrower nor any Guarantor shall incur any liabilities
in connection with such sale except as permitted  herein,  and as of the date of
such  sale and  after  giving  effect  thereto,  no Event  of  Default,  or act,
condition or event which with notice or

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<PAGE>



passage of time or both would constitute an Event of Default shall exist or have
occurred and be continuing; or

               (c)  wind up, liquidate or dissolve; or

               (d) agree to do any of the foregoing.

         9.8 Encumbrances.  Borrower and each Guarantor shall not, and shall not
permit any Subsidiary to, create,  incur, assume or suffer to exist any security
interest,  mortgage,  pledge,  lien,  charge or other  encumbrance of any nature
whatsoever on any of its assets or properties,  including,  without  limitation,
the Collateral, except:

               (a)  liens and security interests of Lender;

               (b) liens  securing the payment of taxes,  either not yet overdue
or the  validity  of which  are being  contested  in good  faith by  appropriate
proceedings  diligently  pursued and available to Borrower or such Guarantor and
with  respect to which  adequate  reserves  have been set aside on its books and
which have not yet become enforceable against such Person;

               (c) non-consensual statutory liens (other than liens securing the
payment  of  taxes)  arising  in the  ordinary  course  of  Borrower's  or  such
Guarantor's  business  to the  extent:  (i) such liens  secure  Indebtedness  or
obligations  which  are not  overdue  or (ii)  such  liens  secure  Indebtedness
relating to claims or liabilities  which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested
in good faith by  appropriate  proceedings  diligently  pursued and available to
Borrower  or  such  Guarantor,  in  each  case  prior  to  the  commencement  of
foreclosure  or other  similar  proceedings  and with respect to which  adequate
reserves have been set aside on its books;

               (d)  pledges and  deposits  of cash by Borrower or any  Guarantor
after the date hereof in the ordinary  course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social security
benefits  consistent with the current practices of Borrower and Guarantors as of
the date hereof,  (ii) in  connection  with  casualty  insurance  maintained  in
accordance  with the  provisions  of any  Financing  Agreement,  (iii) to secure
surety or appeal bonds  (exclusive  of  obligations  for the payment of borrowed
money)  or  (iv)  to  secure  indemnity,  performance  or  other  similar  bonds
(exclusive  of  obligations  for the payment of borrowed  money) in the ordinary
course of business; provided, that, provisions for the payment of such liens has
been made on the books of such Person in accordance  with GAAP and the aggregate
amount of all deposits or pledges at any time pursuant to the foregoing  clauses
(i) through (iv) shall not exceed  $1,500,000  in the aggregate for Borrower and
Guarantors, taken as a whole.

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                                       54

<PAGE>



               (e) liens arising from (i) operating leases and the precautionary
UCC financing  statement  filings in respect thereof and (ii) equipment or other
materials  which are not owned by Borrower  located on the  premises of Borrower
(but not in connection with, or as part of, the financing  thereof) from time to
time in the ordinary course of business and consistent with current practices of
Borrower  and the  precautionary  UCC  financing  statement  filings  in respect
thereof,  provided,  that,  Lender shall have  received  written  notice of such
equipment or other  materials and such  equipment and other  materials  shall be
separately  identified  to Lender in any report with  respect to  Equipment  and
Inventory provided to Lender in a manner satisfactory to Lender;

               (f) zoning restrictions, easements, licenses, covenants and other
restrictions  affecting the use of Real  Property  which do not interfere in any
material  respect with the use of such real property or ordinary  conduct of the
businesses of Borrower as presently  conducted  thereon or materially impair the
value of the Real Property which may be subject thereto;

               (g) security  interests and liens upon the Collateral  granted by
Borrower to the Senior Subordinated  Noteholders and the Municipalities pursuant
to the  terms  of the  Senior  Subordinated  Note  Agreements  and  the  Current
Municipal Debt Agreements (each as in effect on the date hereof),  respectively,
to secure the  Indebtedness of Borrower to Senior  Subordinated  Noteholders and
Municipalities,  respectively,  as  permitted  under  Section 9.9 hereof,  which
security interests and liens on the Collateral are, in all respects, subject and
subordinated  in priority to the security  interests  and liens of Lender as set
forth  in the  Subordination  and  Intercreditor  Agreement  and  the  Municipal
Subordination and Intercreditor Agreement respectively;

               (h) security  interests and liens upon the Collateral  granted by
Borrower to the Senior Subordinated  Noteholders and the Municipalities pursuant
to the  terms  of the  Senior  Subordinated  Note  Agreements  and  the  Current
Municipal Debt Agreements (each as in effect on the date hereof),  respectively,
to secure the Indebtedness of Borrower to Municipalities, to secure Indebtedness
under Future  Municipal Debt Agreements  permitted under Section 9.9 (f) hereof,
which security  interests and liens on the Collateral shall be, in all respects,
subject and  subordinated  in priority to the  security  interests  and liens of
Lender as set forth in the Subordination and  Intercreditor  Agreement,  in form
and substance satisfactory to Lender;

               (i) purchase  money  security  interests in Equipment  (including
Capital  Leases)  arising  after the date hereof in the  aggregate not to exceed
$2,000,000  at any time  outstanding,  so long as (A) the Borrower may no longer
obtain Equipment  Purchase Term Loans hereunder,  (B) such security interests do
not apply to any property of Borrower  other than the  Equipment so acquired and
(C) the  Indebtedness  secured thereby does not exceed the cost of the Equipment
acquired; and

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                                       55

<PAGE>




               (j)  security  interests  and  liens set  forth on  Schedule  8.4
hereto.

         9.9 Indebtedness.  Borrower and each Guarantor shall not, and shall not
permit any  Subsidiary  to, incur,  create,  assume,  become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, except:

               (a)  the Obligations;

               (b)  unsecured  Indebtedness  of Borrower to any Guarantor or any
Guarantor to Borrower,  as the case may be, arising  pursuant to loans permitted
under Section 9.10 below; and

               (c) Indebtedness of Borrower under interest rate swap agreements,
interest rate cap  agreements,  interest rate collar  agreements,  interest rate
exchange  agreements and similar contractual  arrangements  entered into for the
purpose of protecting a Person against fluctuations in interest rates; provided,
that, such arrangements are with banks or other financial institutions that have
combined capital and surplus and undivided profits of not less than $100,000,000
and are not for speculative purposes and such Indebtedness shall be unsecured;

               (d)  Indebtedness  arising under the Senior  Subordinated  Notes,
provided, that:

                      (i) the aggregate  principal  amount of such  Indebtedness
shall not  exceed  $23,000,000  less the  aggregate  amount  of all  repayments,
repurchases or redemptions,  whether  optional or mandatory in respect  thereof,
plus interest thereon at the rate provided for in the Senior  Subordinated Notes
as in effect on the date hereof,

                      (ii) Borrower shall not,  directly or indirectly  make any
payments  in respect  of such  Indebtedness,  except,  that,  Borrower  may make
regularly  scheduled payments of principal and interest in respect of the Senior
Subordinated Notes (each a "Subordinated Note Payment") as follows: each Current
Portion  on the Senior  Subordinated  Notes may be paid on the  Payment  Date on
which it is due under  the terms of the  Senior  Subordinated  Note  Agreements,
together  with any Current  Portion  which became due and owing on any preceding
Payment Date (including  amounts which were not previously  permitted to be paid
in full  pursuant  to the  provisions  of the  Subordination  and  Intercreditor
Agreement),  only if and to the extent that as of the date of such  Subordinated
Note Payment and after giving effect thereto,  each of the following  conditions
is satisfied:  (1) as of the date of any such Subordinated Note Payment,  Excess
Availability  immediately  prior to the making of such Subordinated Note Payment
and after giving effect thereto, shall be not less than $1,000,000, and (2)

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                                       56

<PAGE>



as of the date of any such  Subordinated  Note Payment and after  giving  effect
thereto, no Event of Default, shall exist or have occurred; and

                      (iii)  Borrower  shall not,  directly or  indirectly,  (A)
amend,  modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto,  except, that, Borrower may, after prior
written notice to Lender, amend, modify, alter or change the terms thereof so as
to extend the maturity  thereof,  or defer the timing of any payments in respect
thereof,  or to forgive or cancel any portion of such  Indebtedness  (other than
pursuant to payments  thereof),  or to reduce the  interest  rate or any fees in
connection therewith,  or (B) make any principal payments in respect of, redeem,
retire,  defease,  purchase  or  otherwise  acquire  such  Indebtedness  (except
pursuant to regularly  scheduled payments of principal and interest permitted in
Section 9.9(d)(ii) hereof), or set aside or otherwise deposit or invest any sums
for such purpose, and

                      (iv)  Borrower  shall  furnish  to Lender  all  notices or
demands in connection with such  Indebtedness  either received by Borrower or on
its behalf  promptly  after the receipt  thereof,  or sent by Borrower or on its
behalf concurrently with the sending thereof, as the case may be;

               (e) Current Municipal Indebtedness, provided, that:

                      (i) the aggregate  principal  amount of such  Indebtedness
outstanding at any time shall not exceed  $600,000 less the aggregate  amount of
all  repayments,  repurchases or redemptions,  whether  optional or mandatory in
respect  thereof,  plus interest thereon at the rate provided for in the Current
Municipal Debt Agreements as in effect on the date hereof,

                      (ii) Borrower shall not,  directly or indirectly  make any
payments  in respect  of such  Indebtedness,  except,  that,  Borrower  may make
regularly scheduled payments of principal and interest in respect of the Current
Municipal  Debt  Agreements  as  provided  for in  the  Current  Municipal  Debt
Agreements,  provided,  that,  on the date of any such  payment and after giving
effect  thereto,  no Event of  Default,  or act,  condition  or event which with
notice or passage of time or both would  constitute  an Event of Default,  shall
exist or have occurred and be continuing,

                      (iii)  Borrower  shall not,  directly or  indirectly,  (A)
amend,  modify, alter or change the terms of such Indebtedness or any agreement,
document or instrument related thereto,  except, that, Borrower may, after prior
written notice to Lender, amend, modify, alter or change the terms thereof so as
to extend the maturity  thereof,  or defer the timing of any payments in respect
thereof,  or to forgive or cancel any portion of such  Indebtedness  (other than
pursuant to payments  thereof),  or to reduce the  interest  rate or any fees in
connection therewith, or (B) make any principal payments in respect

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                                       57

<PAGE>



of, redeem,  retire,  defease,  purchase or otherwise  acquire such Indebtedness
(except  pursuant to  regularly  scheduled  payments of  principal  and interest
permitted herein), or set aside or otherwise deposit or invest any sums for such
purpose, and

                      (iv)  Borrower  shall  furnish  to Lender  all  notices or
demands in connection with such  Indebtedness  either received by Borrower or on
its behalf  promptly  after the receipt  thereof,  or sent by Borrower or on its
behalf concurrently with the sending thereof, as the case may be;

               (f) Future Municipal Indebtedness, provided, that:

                      (i) as of the date any such Future Municipal  Indebtedness
is incurred  and after  giving  effect  thereto,  no Event of  Default,  or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default, shall exist or have occurred,

                      (ii) the aggregate  principal amount of such  Indebtedness
at any one time  outstanding  shall not  exceed  $2,400,000  less the  aggregate
amount of all  repayments,  repurchases  or  redemptions,  whether  optional  or
mandatory in respect thereof,  plus interest thereon at the rate provided for in
the Future Municipal Debt Agreements,

                      (iii)  Prior to the  incurrence  of any  Future  Municipal
Indebtedness,  (A)Lender  shall have  received  at least  thirty (30) days prior
written  notice  of  Borrower's   intention  to  incur  such  Future   Municipal
Indebtedness,  and (B) Lender shall have received,  (1) true and complete copies
of all of the documents evidencing the applicable Future Municipal Indebtedness,
each in form and substance  satisfactory to Lender and (2) in form and substance
satisfactory  to Lender,  a  subordination  and  intercreditor  agreement,  duly
authorized,  executed and delivered by the applicable  Municipality  and each of
the other parties thereto and acknowledged by Borrower (each a "Future Municipal
Intercreditor Agreement"), providing for, inter, alia, the subordination (aa) of
the right of payment of such Future  Municipal  Indebtedness of Borrower to each
such Municipality to the prior indefeasible  payment and satisfaction in full of
the Obligations and (bb) of the security interests of such Municipality to those
of Lender with respect to the assets and properties of Borrower and Guarantors,

                      (iv) Borrower shall not,  directly or indirectly  make any
payments  in respect  of such  indebtedness,  except,  that,  Borrower  may make
regularly  scheduled payments of principal and interest in respect of the Future
Municipal  Debt  Agreements  as  provided  for  in  the  Future  Municipal  Debt
Agreements,  provided,  that,  on the date of any such  payment and after giving
effect  thereto,  no Event of  Default,  or act,  condition  or event which with
notice or passage of time or both would  constitute  an Event of Default,  shall
exist or have occurred and be continuing,

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                      (v) Borrower shall not, directly or indirectly, (A) amend,
modify,  alter or change the terms of such Future Municipal  Indebtedness or any
agreement, document or instrument related thereto once executed and delivered by
the parties thereof,  except,  that, Borrower may, after prior written notice to
Lender,  amend,  modify,  alter or change the terms  thereof so as to extend the
maturity thereof,  or defer the timing of any payments in respect thereof, or to
forgive or cancel any  portion of such  Indebtedness  (other  than  pursuant  to
payments  thereof),  or to reduce the  interest  rate or any fees in  connection
therewith,  or (B) make any principal  payments in respect of,  redeem,  retire,
defease,  purchase or otherwise  acquire such  Indebtedness  (except pursuant to
regularly scheduled payments of principal and interest permitted herein), or set
aside or otherwise deposit or invest any sums for such purpose and

                      (vi)  Borrower  shall  furnish  to Lender  all  notices or
demands in connection with such  Indebtedness  either received by Borrower or on
its behalf  promptly  after the receipt  thereof,  or sent by Borrower or on its
behalf concurrently with the sending thereof, as the case may be; and

               (g) purchase money indebtedness (including Capital Leases) to the
extent not incurred or secured by liens (including  Capital Leases) in violation
of Section 9.8(i) or any other provision of this Agreement.

         9.10 Loans, Investments,  Guarantees,  Etc. Borrower and each Guarantor
shall not, and shall not permit any Subsidiary to, directly or indirectly,  make
any loans or advance  money or property to any Person,  or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock
or  Indebtedness  or all or a substantial  part of the assets or property of any
person,  or guarantee,  assume,  endorse,  or otherwise  become  responsible for
(directly or indirectly) the Indebtedness, performance, obligations or dividends
of any  Person or form or  acquire  any  Subsidiaries  or agree to do any of the
foregoing, except:

                (a) the  endorsement of instruments for collection or deposit in
the ordinary course of business;

               (b) investments in cash or Cash Equivalents,  provided, that, (i)
no Revolving  Loans are then  outstanding  and (ii) as to any of the  foregoing,
unless waived in writing by Lender,  Borrower and each Guarantor shall take such
actions as are deemed  necessary by Lender to perfect the  security  interest of
Lender in such investments;

               (c)  the  guarantee  by  each  Guarantor  of the  Obligations  of
Borrower in favor of Lender;


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               (d) the existing  equity  investments of Holdings in Borrower and
CCC and any equity investments after the date hereof by Holdings in Borrower;

               (e) loans by any  Guarantor  to Borrower  or any other  Guarantor
after  the  date  hereof,  provided,  that,  as to each  such  loan  each of the
following  conditions is  satisfied:  (i) each month  Borrower  shall provide to
Lender a report in form and  substance  satisfactory  to Lender  indicating  the
amount of such loans made in the immediately  preceding month and any repayments
in connection  therewith,  (ii) the  Indebtedness  arising pursuant to such loan
shall not be  evidenced  by a promissory  note or other  instrument,  unless the
single original of such note or other  instrument is delivered to Lender to hold
as part of the Collateral,  with such endorsement and/or assignment by the payee
of such note or other instrument as Lender may require, and (iii) as of the date
of each such loan and after giving effect thereto,  no Event of Default, or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default shall exist or have occurred;

               (f) loans and other  payments by Borrower  to  Guarantors  to the
extent  permitted  under Section 9.12 hereof and any other loans or  investments
permitted under Sections 9.11 and 9.12 hereof;

               (g) stock or  obligations  issued to Borrower or any Guarantor by
any Person (or the  representative of such Person) in respect of Indebtedness or
other  obligations  of such  Person  owing  to  Borrower  or such  Guarantor  in
connection with the insolvency,  bankruptcy,  receivership or  reorganization of
such  Person or a  composition  or  readjustment  of the debts of such Person or
settlement or compromise of past due Accounts;  provided,  that, the original of
any such stock or  instrument  evidencing  such  obligations  shall be  promptly
delivered to Lender,  upon  Lender's  request,  together  with such stock power,
assignment or endorsement by Borrower or such Guarantor as Lender may request;

               (h)  obligations  of account  debtors to  Borrower  arising  from
Accounts which are past due evidenced by a promissory  note made by such account
debtor  payable to Borrower;  provided,  that,  promptly upon the receipt of the
original of any such promissory note by Borrower,  such promissory note shall be
endorsed to the order of Lender, by Borrower and promptly delivered to Lender as
so endorsed;

               (i) the  existing  loans,  advances and  guarantees  set forth on
Schedule 9.10 hereto, provided, that, as to such loans, advances and guarantees,
(i)  Borrower  and  Guarantors  shall not,  directly or  indirectly,  (A) amend,
modify,  alter or change the terms of such loans,  advances or guarantees or any
agreement, document or instrument related thereto, or (B) as to such guarantees,
redeem,  retire,  defease,  purchase or otherwise  acquire such guarantee or set
aside or otherwise deposit or invest any sums for such purpose and (ii) Borrower
and Guarantors shall furnish to Lender all notices, demands

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or other materials in connection with such loans,  advances or guarantees either
received by  Borrower or any  Guarantor  or on its  behalf,  promptly  after the
receipt  thereof,  or  sent  by  Borrower  or any  Guarantor  or on its  behalf,
concurrently with the sending thereof, as the case may be.

         9.11 Dividends and Redemptions.  Borrower and each Guarantor shall not,
and shall not permit any Subsidiary to,  directly or indirectly,  declare or pay
any  dividends on account of any shares of class of Capital Stock of Borrower or
such Guarantor now or hereafter  outstanding,  or set aside or otherwise deposit
or invest any sums for such purpose,  or redeem,  retire,  defease,  purchase or
otherwise  acquire any shares of any class of Capital Stock,  including  without
limitation,  any Capital Stock of Borrower pursuant to the Repurchase Agreement,
(or set aside or otherwise  deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or make any
other distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing, except, that,

                (a) any  Subsidiary  of Borrower may pay  dividends to Borrower;
and

               (b)  Borrower  and CCC may pay  dividends  or  other  amounts  to
Holdings and Holdings may pay dividends or other amounts to CPT, in each case to
the extent permitted under Section 9.12 below.

         9.12  Transactions  with Affiliates.  Borrower and each Guarantor shall
not, and shall not permit any Subsidiary to, directly or indirectly,

               (a)  purchase,  acquire  or lease  any  property  from,  or sell,
transfer  or lease  any  property  to,  any  officer,  director,  agent or other
Affiliate of Borrower or any  Guarantor,  except in the  ordinary  course of and
pursuant  to the  reasonable  requirements  of  Borrower's  or such  Guarantor's
business  and upon fair and  reasonable  terms no less  favorable to Borrower or
Guarantor  than Borrower or such  Guarantor  would obtain in a comparable  arm's
length transaction with a person who is not an Affiliate, or

               (b) make any payments of management, consulting or other fees for
management or similar  services,  or of any  Indebtedness  owing to any officer,
employee, shareholder, director or other Affiliate of Borrower or any Guarantor,
except:

                      (i)  reasonable  compensation  to officers,  employees and
directors  of Borrower  and  Guarantors  for  services  rendered to Borrower and
Guarantors in the ordinary course of business,

                      (ii) payments of fees by Borrower in  accordance  with the
terms of the Management Advisory Services Agreement,  dated as of April 6, 1995,
by and among Borrower,  CPT and Holdings,  provided,  that, (A) the aggregate of
all such fee payments

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in any  fiscal  year  shall not  exceed  $750,000  and (B) as of the date of any
payment of such fees and after giving effect  thereto,  no Event of Default,  or
act,  condition  or event  which  with  notice or  passage of time or both would
constitute an Event of Default shall exist or have occurred,

                      (iii)  payments  by a  Guarantor  to  Borrower  or another
Guarantor in respect of Indebtedness  arising pursuant to loans made by Borrower
or such Guarantor to the extent permitted under Section 9.10 hereof, and

                      (iv)  payments by Borrower and  Guarantors to CPT pursuant
to the Tax Sharing  Agreement dated March 31, 1995 among Borrower and Guarantors
(as in effect on the date hereof); provided, that, (A) Borrower (or Holdings, as
the case may be),  is  included in the  consolidated  Federal  income tax return
filed by CPT as to which  Borrower or Holdings is making such  payment,  (B) the
payments  in any year shall not exceed the  Federal  income tax  liability  that
Borrower or Holdings would have been liable for if Borrower or Holdings were not
part of such  consolidated  federal  income  tax return  filed by CPT,  (C) such
payments  shall be made by Borrower  or  Holdings no earlier  then ten (10) days
prior to the date on which CPT is required to make its  payments to the Internal
Revenue Service,  and (D) in the event that Borrower or Holdings also joins with
CPT in filing any combined or  consolidated  (or similar)  State or local income
tax returns,  then the making of payments to CPT shall be allowed in a manner as
similar as  possible to that  provided  herein  with  respect to Federal  income
taxes.

         9.13 Additional  Bank Accounts.  Borrower and each Guarantor shall not,
and shall not permit any Subsidiary to, directly or indirectly,  open, establish
or maintain any deposit  account,  investment  account or any other account with
any bank or other financial institution, other than the Blocked Accounts and the
accounts  set  forth  in  Schedule  8.8  hereto,  except:  (a) as to any  new or
additional  Blocked  Accounts and other such new or  additional  accounts  which
contain any Collateral or proceeds  thereof,  with the prior written  consent of
Lender and subject to such conditions thereto as Lender may establish and (b) as
to any accounts used by Borrower or such  Guarantor to make payments of payroll,
taxes or other  obligations  to third  parties,  after prior  written  notice to
Lender.

         9.14  Compliance with ERISA.

               (a) Except as set forth in Schedule  8.10,  neither  Borrower nor
any  Guarantor  shall,  or shall permit any  Subsidiary  to, with respect to any
"employee  benefit plans" maintained by Borrower or such Guarantor or any of its
ERISA  Affiliates:  (i) terminate  any of such  employee  benefit plans so as to
incur any  liability to the Pension  Benefit  Guaranty  Corporation  established
pursuant  to ERISA,  (ii)  allow or suffer to exist any  prohibited  transaction
involving any of such employee benefit plans or any

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trust created thereunder which would subject Borrower or such ERISA Affiliate to
a tax or penalty or other  liability on  prohibited  transactions  imposed under
Section  4975 of the  Code or  ERISA,  (iii)  fail to pay to any  such  employee
benefit plan any contribution  which it is obligated to pay under Section 302 of
ERISA,  Section 412 of the Code or the terms of such plan,  (iv) allow or suffer
to exist any accumulated funding deficiency, whether or not waived, with respect
to any such employee  benefit plan,  (v) allow or suffer to exist any occurrence
of a reportable  event or any other event or condition which presents a material
risk of  termination  by the Pension  Benefit  Guaranty  Corporation of any such
employee  benefit plan that is a single employer plan, which  termination  could
result in any  liability to the Pension  Benefit  Guaranty  Corporation  or (vi)
incur any withdrawal  liability with respect to any  multiemployer  pension plan
except,  in each case, where the failure to prohibit such actions would not have
a Material Adverse Effect.

               (b) As used in this Section  9.14,  the terms  "employee  benefit
plans",  "accumulated  funding deficiency" and "reportable event" shall have the
respective  meanings  assigned  to  them in  ERISA,  and  the  term  "prohibited
transaction"  shall have the meaning  assigned to it in Section 4975 of the Code
and ERISA.

         9.15 After Acquired Real Property.  If Borrower  hereafter acquires any
Real  Property,  fixtures  or any other  property  that is of the kind or nature
described in the Mortgages and such Real Property,  fixtures or other  property,
as the case may be, is adjacent or contiguous to, or located on, any of the Real
Property of Borrower, or is at any other location (or if an Event of Default, or
act,  condition  or event  which  with  notice or  passage of time or both would
constitute an Event of Default exists,  then regardless of the fair market value
of such assets or Real Property),  without  limiting any other rights of Lender,
or duties or obligations  of Borrower,  Borrower shall notify Lender twenty (20)
days prior to any such acquisition and contemporaneously  with such acquisition,
execute and deliver to Lender a mortgage,  deed of trust or deed to secure debt,
as Lender may  determine,  in form and  substance  substantially  similar to the
Mortgages and as to any provisions  relating to specific state laws satisfactory
to Lender and in form  appropriate  for recording in the real estate  records of
the  jurisdiction  in which  such Real  Property  or other  property  is located
granting  to Lender a lien and  mortgage on and  security  interest in such Real
Property,  fixtures or other  property  (except as Borrower  would  otherwise be
permitted to incur hereunder or under the Mortgage or as otherwise  consented to
in writing by Lender) and such other  agreements,  documents and  instruments as
Lender may require in connection therewith.

         9.16 Adjusted  Tangible Net Worth.  Borrower shall maintain an Adjusted
Tangible Net Worth of not less than $20,000,000 at all times.

         9.17 Year 2000 Compliance.  Borrower and each Guarantor shall take, and
shall cause any Subsidiary to take, all action which may be required so that its
computer-based  information systems,  including,  without limitation, all of its
proprietary  computer  hardware  and  software  and all  computer  hardware  and
software  leased or licensed from third parties (and whether  supplied by others
or with which  Borrower's,  Guarantor's or Subsidiary's  systems  interface) are
able to operate  effectively and correctly  process data using dates on or after
January 1, 2000.  Compliance with the foregoing shall mean that the systems will
operate and  correctly  process data without  human  intervention  such that (a)
there is correct century recognition, (b) calculations properly accommodate same
century and multi-century  formulas and date values, (c) all leap years shall be
calculated correctly and (d) the information systems shall otherwise comply with
applicable industry standards and regulatory  guidelines regarding the change of
the century and year 2000 compliance. Borrower and Guarantors shall, by no later
than  September  30,  1999,  certify to Lender in writing  that its  information
systems have been modified,  updated and programmed as required by this Section.
On and after  September  30, 1999,  the  computer-based  information  systems of
Borrower  shall be, and with ordinary  course  upgrading and  maintenance,  will
continue to be sufficient to permit Borrower to conduct its business without any
adverse effect as a result of the year 2000.

         9.18 End of  Fiscal  Years.  Borrower  and each  Guarantor  shall,  for
financial  reporting  purposes,  cause its,  and each of its  Subsidiaries'  (a)
fiscal  years to end on June 30 of each year and (b) fiscal  quarters  to end on
September 30, December 31, March 31 and June 30 of each year.

         9.19  Costs and  Expenses.  Borrower  shall pay to Lender on demand all
costs,  expenses,  filing fees and taxes paid or payable in connection  with the
preparation,   negotiation,  execution,  delivery,  recording,   administration,
collection,  liquidation,  enforcement and defense of the Obligations,  Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents  which may  hereafter be  contemplated  (whether or not executed) or
entered into in respect hereof and thereof,  including,  but not limited to: (a)
all costs and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes,  intangibles taxes
and mortgage  recording taxes and fees, if  applicable);  (b) costs and expenses
and fees for insurance premiums,  environmental  audits,  surveys,  assessments,
engineering  reports and  inspections,  appraisal  fees and search fees; (c) all
title  insurance and other insurance  premiums,  appraisal fees and search fees;
(d) costs and expenses of remitting loan proceeds,  collecting  checks and other
items of  payment,  and  establishing  and  maintaining  the  Blocked  Accounts,
together  with Lender's  customary  charges and fees with respect  thereto;  (e)
charges,  fees or expenses  charged by any bank or issuer in connection with the
Letter  of Credit  Accommodations;  (f) costs and  expenses  of  preserving  and
protecting the Collateral; (g) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations,  enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and

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otherwise  enforcing the  provisions of this  Agreement and the other  Financing
Agreements or defending any claims made or threatened against Lender arising out
of  the  transactions  contemplated  hereby  and  thereby  (including,   without
limitation, preparations for and consultations concerning any such matters); (h)
all out-of-pocket  expenses and costs heretofore and from time to time hereafter
incurred  by Lender  during the course of  periodic  field  examinations  of the
Collateral and Borrower's operations, plus a per diem charge at the rate of $650
per person per day for Lender's  examiners in the field and office;  and (i) the
reasonable fees and  disbursements of counsel  (including  legal  assistants) to
Lender in connection with any of the foregoing.

         9.20 Further Assurances.  At the request of Lender at any time and from
time to time, each Borrower shall, at its expense,  duly execute and deliver, or
cause to be duly executed and delivered, such further agreements,  documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements.  Lender may
at any time and from  time to time  request a  certificate  from an  officer  of
Borrower  representing that all conditions  precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such  request by Lender,  Lender may, at its option,  cease to make any
further  Loans or provide  any  further  Letter of Credit  Accommodations  until
Lender has received such  certificate  and, in addition,  Lender has  determined
that such  conditions are satisfied.  Where  permitted by law,  Borrower  hereby
authorizes  Lender  to  execute  and file one or more UCC  financing  statements
signed only by Lender.


SECTION 10.   EVENTS OF DEFAULT AND REMEDIES

         10.1 Events of Default.  The occurrence or existence of any one or more
of the  following  events are  referred to herein  individually  as an "Event of
Default", and collectively as "Events of Default":

               (a)  (i)  Borrower  or any  Guarantor  fails  to  pay  any of the
Obligations within three (3) days after the same becomes due and payable or (ii)
Borrower or any  Guarantor  fails to perform any of the  covenants  contained in
Sections 9.1, 9.2, 9.3, 9.4, 9.5(a),  9.6, 9.14, 9.15, 9.16, 9.17, 9.19 and 9.20
of this Agreement and such failure shall  continue for ten (10) days;  provided,
that,  such ten (10) day period  shall not apply in the case of: (A) any failure
to observe  any such  covenant  which is not  capable  of being  cured at all or
within such ten (10) day period or which has been the subject of a prior failure
within a six (6) month  period or (B) an  intentional  breach of Borrower or any
Guarantor  of any such  covenant  or (iii)  Borrower or any  Guarantor  fails to
perform any of the terms, covenants,  conditions or provisions contained in this
Agreement or any of

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the other Financing Agreements other than those described in Sections 10.1(a)(i)
and 10.1(a)(ii) above;

               (b) any  representation,  warranty or  statement  of fact made by
Borrower  or any  Obligor  to Lender  in this  Agreement,  the  other  Financing
Agreements  or  any  other  agreement,  schedule,   confirmatory  assignment  or
otherwise  shall when made or deemed made be false or misleading in any material
respect;

               (c) any Obligor  revokes,  terminates  or fails to perform any of
the material  terms,  covenants,  conditions  or  provisions  of any  guarantee,
endorsement or other agreement of such party in favor of Lender;

               (d) any  judgment  for the payment of money is  rendered  against
Borrower  or any  Obligor in excess of  $500,000 in any one case or in excess of
$1,000,000  in the aggregate  and shall remain  undischarged  or unvacated for a
period  in excess of  thirty  (30)  days or  execution  shall at any time not be
effectively  stayed,  or any  judgment  other than for the payment of money,  or
injunction, attachment, garnishment or execution is rendered against Borrower or
any Obligor or any of its assets;

               (e) Borrower or any Obligor dissolves or suspends or discontinues
doing business;

               (f) Borrower or any Obligor becomes insolvent (however defined or
evidenced),  makes an assignment  for the benefit of  creditors,  makes or sends
notice of a bulk  transfer  or calls a meeting  of its  creditors  or  principal
creditors;

               (g) a case or proceeding  under the bankruptcy laws of the United
States  of  America  now  or  hereafter  in  effect  or  under  any  insolvency,
reorganization,  receivership,  readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed  against  Borrower  or any Obligor or all or any part of its
properties and such petition or application is not dismissed  within thirty (30)
days  after the date of its filing or  Borrower  or any  Obligor  shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;

               (h) a case or proceeding  under the bankruptcy laws of the United
States  of  America  now  or  hereafter  in  effect  or  under  any  insolvency,
reorganization,  receivership,  readjustment of debt, dissolution or liquidation
law or statute of any  jurisdiction now or hereafter in effect (whether at a law
or equity)  is filed by  Borrower  or any  Obligor or for all or any part of its
property; or


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               (i)  (A)  any  default  by  Borrower  or any  Obligor  under  any
agreement,  document or  instrument  relating to any  Indebtedness  for borrowed
money  owing  to  any  person  other  than  Lender,  or  any  capitalized  lease
obligations, contingent Indebtedness in connection with any guarantee, letter of
credit,  indemnity  or similar type of  instrument  in favor of any person other
than  Lender,  in any case in an amount in excess  of  $500,000,  which  default
continues  for more  than the  applicable  cure  period,  if any,  with  respect
thereto,  or (B) any  default by  Borrower  or any  Obligor  under any  material
contract to any Person other than Lender,  which default continues for more than
the applicable  cure period,  if any, with respect thereto and which default has
or is reasonably likely to have a Material Adverse Effect;

               (j)  any Change of Control;

               (k) the  indictment or  threatened  indictment of Borrower or any
Obligor  under any  criminal  felony  statute,  or  commencement  or  threatened
commencement  of any felony  criminal or civil  proceedings by any  governmental
unit or agency  against  Borrower or any Obligor,  pursuant to which  statute or
proceedings by any governmental  unit or agency the penalties or remedies sought
or available include forfeiture of any of the property of Borrower or Obligor;

               (l) there shall be a material  adverse  change in the business or
assets of Borrower or any Obligor after the date hereof; or

               (m)  there  shall be an event of  default  under any of the other
Financing Agreements.

         10.2  Remedies.

               (a) At any time an Event of Default exists or has occurred and is
continuing,  Lender  shall  have  all  rights  and  remedies  provided  in  this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by  Borrower or any  Obligor,  except as such notice or consent is
expressly  provided  for  hereunder or required by  applicable  law. All rights,
remedies  and  powers  granted  to  Lender  hereunder,  under  any of the  other
Financing  Agreements,  the Uniform Commercial Code or other applicable law, are
cumulative,   not   exclusive   and   enforceable,   in   Lender's   discretion,
alternatively,  successively,  or concurrently on any one or more occasions, and
shall include,  without limitation,  the right to apply to a court of equity for
an  injunction  to  restrain a breach or  threatened  breach by Borrower of this
Agreement or any of the other Financing  Agreements.  Lender may, at any time or
times,  proceed  directly  against  Borrower  or  any  Obligor  to  collect  the
Obligations without prior recourse to the Collateral.


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<PAGE>



               (b)  Without  limiting  the  foregoing,  at any  time an Event of
Default exists or has occurred and is continuing,  Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided,  that, upon the occurrence of any
Event of Default  described  in Sections  10.1(g) and 10.1(h),  all  Obligations
shall  automatically  become immediately due and payable),  (ii) with or without
judicial process or the aid or assistance of others,  enter upon any premises on
or in which any of the  Collateral  may be located  and take  possession  of the
Collateral  or  complete  processing,  manufacturing  and  repair  of all or any
portion of the Collateral,  (iii) require Borrower,  at Borrower's  expense,  to
assemble and make  available to Lender any part or all of the  Collateral at any
place  and  time  designated  by  Lender,  (iv)  collect,  foreclose,   receive,
appropriate,  setoff and realize upon any and all Collateral,  (v) remove any or
all of the  Collateral  from any premises on or in which the same may be located
for the purpose of effecting the sale,  foreclosure or other disposition thereof
or for any other  purpose,  (vi)  sell,  lease,  transfer,  assign,  deliver  or
otherwise  dispose of any and all  Collateral  (including,  without  limitation,
entering into  contracts  with respect  thereto,  public or private sales at any
exchange,  broker's  board, at any office of Lender or elsewhere) at such prices
or terms as Lender  may deem  reasonable,  for cash,  upon  credit or for future
delivery,  with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption  of Borrower,  which right or equity of redemption
is hereby  expressly waived and released by Borrower and/or (vii) terminate this
Agreement.  If any of the  Collateral  is sold or leased by Lender  upon  credit
terms or for future delivery,  the Obligations  shall not be reduced as a result
thereof  until  payment  therefor is finally  collected by Lender.  If notice of
disposition  of  Collateral  is required by law,  five (5) days prior  notice by
Lender to Borrower designating the time and place of any public sale or the time
after which any private sale or other  intended  disposition of Collateral is to
be made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks  recovery of any  Collateral  by way of  prejudgment  remedy,  Borrower
waives the posting of any bond which might otherwise be required.

               (c) Lender may apply the cash  proceeds  of  Collateral  actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations,  in whole or in part and in such order
as Lender may elect,  whether or not then due.  Borrower  shall remain liable to
Lender for the payment of any  deficiency  with  interest  at the  highest  rate
provided for herein and all costs and  expenses of  collection  or  enforcement,
including attorneys' fees and legal expenses.

               (d) Without  limiting the  foregoing,  upon the  occurrence of an
Event of Default or an event  which with notice or passage of time or both would
constitute an Event of Default,  Lender may, at its option,  without notice, (i)
cease making Loans or arranging  for Letter of Credit  Accommodations  or reduce
the lending formulas or

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<PAGE>



amounts  of Loans and  Letter of Credit  Accommodations  available  to  Borrower
and/or (ii) terminate any provision of this  Agreement  providing for any future
Loans or Letter of Credit Accommodations to be made by Lender to Borrower.

         10.3 Confession of Judgment.

               (a)  Borrower,  to the extent  permitted  by law, and without the
further consent of or notice to Borrower, hereby irrevocably and unconditionally
authorizes  the  Prothonotary,  Clerk of Court,  or any attorney of any court of
record  in the  Commonwealth  of  Pennsylvania,  or any other  jurisdiction,  as
attorney for Borrower to appear for Borrower in such court and confess  judgment
against  Borrower  and in favor of  Lender,  at any time on or after an Event of
Default exists or has occurred and in continuing,  for all or any portion of the
Obligations (including,  but not limited to, principal interest, fees, costs and
expenses  and  including  attorneys'  fees and legal  expenses not to exceed ten
(10%)  percent  of the  outstanding  and  unpaid  Obligations),  for which  this
Agreement or a verified copy hereof shall be sufficient  warrant.  The authority
to enter  judgment  shall not be exhausted by one exercise  hereof,  but, to the
extent  permitted by law,  shall  continue from time to time until final payment
and  satisfaction  in full of all of the  Obligations.  The foregoing  right and
remedy is in addition to and not in lieu of any other right or remedy  available
to Lender under this Agreement,  the other Financing Agreements,  applicable law
or otherwise.

               (b)  Borrower,  being  fully  aware of its right to notice  and a
hearing  concerning  the  validity  of any and all claims  that may be  asserted
against Borrower by Lender before a judgment can be entered against any Borrower
by Lender before a judgment can be entered  hereunder or before execution may be
levied on such judgment against any and all property of Borrower,  hereby waives
each of these  rights and agrees  and  consents  to  judgment  being  entered by
confession  in accordance  with the terms hereof and  execution  being levied on
such  judgment  against any and all property of  Borrower,  in each case without
first giving notice and the opportunity to be heard on the validity of the claim
or claims upon which such judgment is entered.



SECTION 11.   JURY TRIAL WAIVER; OTHER WAIVERS
                      AND CONSENTS; GOVERNING LAW

         11.1 Governing  Law;  Choice of Forum;  Service of Process;  Jury Trial
Waiver.

               (a)  The  validity,   interpretation   and  enforcement  of  this
Agreement and the other Financing  Agreements and any dispute arising out of the
relationship  between the parties hereto,  whether in contract,  tort, equity or
otherwise, shall be governed by the

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<PAGE>



internal laws of the State of New York  (without  giving effect to principles of
conflicts of law).

               (b)  Borrower,  Guarantors  and Lender  irrevocably  consent  and
submit to the  non-exclusive  jurisdiction  of the Supreme Court of the State of
New York in New  York  County  and the  United  States  District  Court  for the
Southern  District of New York and waive any  objection  based on venue or forum
non conveniens with respect to any action instituted  therein arising under this
Agreement or any of the other Financing  Agreements or in any way connected with
or related or  incidental  to the  dealings of the parties  hereto in respect of
this  Agreement or any of the other  Financing  Agreements  or the  transactions
related  hereto or  thereto,  in each case  whether now  existing  or  hereafter
arising, and whether in contract,  tort, equity or otherwise, and agree that any
dispute  with  respect  to any such  matters  shall be heard  only in the courts
described  above (except that Lender shall have the right to bring any action or
proceeding  against  Borrower or any  Guarantor or its property in the courts of
any other  jurisdiction  which Lender deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against Borrower or
its property).

               (c) Borrower and each Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may be
made by certified mail (return  receipt  requested)  directed to its address set
forth on the  signature  pages  hereof and service so made shall be deemed to be
completed  five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Lender's option,  by service upon Borrower or any Guarantor in any
other manner  provided  under the rules of any such courts.  Within  thirty (30)
days after such service,  Borrower or such  Guarantor  shall appear in answer to
such process, failing which Borrower shall be deemed in default and judgment may
be  entered  by Lender  against  Borrower  for the amount of the claim and other
relief requested.

               (d) BORROWER,  GUARANTORS AND LENDER EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION  (i)  ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT  OF THIS  AGREEMENT  OR ANY OF THE  OTHER  FINANCING  AGREEMENTS  OR THE
TRANSACTIONS  RELATED  HERETO OR THERETO IN EACH CASE  WHETHER  NOW  EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
GUARANTORS  AND LENDER  EACH  HEREBY  AGREES AND  CONSENTS  THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY
AND THAT BORROWER OR LENDER MAY FILE AN ORIGINAL  COUNTERPART  OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE

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<PAGE>



OF THE  CONSENT OF THE  PARTIES  HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.

               (e) Lender shall not have any liability to Borrower or Guarantors
(whether in tort, contract, equity or otherwise) for losses suffered by Borrower
or Guarantors in connection  with,  arising out of, or in any way related to the
transactions  or  relationships  contemplated  by this  Agreement,  or any  act,
omission or event occurring in connection herewith, unless it is determined by a
final and  non-appealable  judgment or court order  binding on Lender,  that the
losses were the result of acts or omissions  constituting  gross  negligence  or
willful  misconduct.  In any such  litigation,  Lender  shall be entitled to the
benefit of the rebuttable  presumption  that it acted in good faith and with the
exercise  of  ordinary  care  in the  performance  by it of the  terms  of  this
Agreement.

         11.2 Waiver of Notices.  Borrower and each Guarantor  hereby  expressly
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all  instruments  and commercial  paper,  included in or
evidencing  any of the  Obligations  or the  Collateral,  and any and all  other
demands  and  notices,  of any kind or nature  whatsoever  with  respect  to the
Obligations,  the  Collateral and this  Agreement,  except such as are expressly
provided for herein.  No notice to or demand on Borrower or any Guarantor  which
Lender may elect to give shall  entitle  Borrower or  Guarantors to any other or
further notice or demand in the same, similar or other circumstances.

         11.3  Amendments and Waivers.  Neither this Agreement nor any provision
hereof shall be amended,  modified,  waived or discharged orally or by course of
conduct,  but only by a written  agreement  signed by an  authorized  officer of
Lender,  and as to  amendments,  as also  signed  by an  authorized  officer  of
Borrower.  Lender shall not, by any act, delay,  omission or otherwise be deemed
to have expressly or impliedly waived any of its rights,  powers and/or remedies
unless such waiver  shall be in writing and signed by an  authorized  officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein.  A waiver by Lender of any right,  power and/or remedy on any one
occasion  shall not be construed as a bar to or waiver of any such right,  power
and/or remedy which Lender would otherwise have on any future occasion,  whether
similar in kind or otherwise.

         11.4 Waiver of  Counterclaims.  Borrower and each Guarantor  waives all
rights to interpose  any claims,  deductions,  setoffs or  counterclaims  of any
nature (other than  compulsory  counterclaims)  in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.

         11.5 Indemnification.  Borrower and Guarantors shall indemnify and hold
Lender,  and its  directors,  agents,  employees and counsel,  harmless from and
against  any and all losses,  claims,  damages,  liabilities,  costs or expenses
imposed on, incurred by or

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<PAGE>



asserted  against any of them in connection with any litigation,  investigation,
claim  or  proceeding  commenced  or  threatened  related  to  the  negotiation,
preparation, execution, delivery, enforcement,  performance or administration of
this Agreement, any other Financing Agreements, or any undertaking or proceeding
related to any of the  transactions  contemplated  hereby or any act,  omission,
event  or  transaction   related  or  attendant  thereto,   including,   without
limitation,  amounts paid in settlement,  court costs, and the fees and expenses
of  counsel.  To the extent  that the  undertaking  to  indemnify,  pay and hold
harmless set forth in this Section may be unenforceable  because it violates any
law or public  policy,  Borrower and  Guarantors  shall pay the maximum  portion
which it is permitted to pay under  applicable law to Lender in  satisfaction of
indemnified  matters under this Section.  The foregoing  indemnity shall survive
the  payment of the  Obligations  and the  termination  or  non-renewal  of this
Agreement.


SECTION 12.   TERM OF AGREEMENT; MISCELLANEOUS

         12.1 Term.

               (a) This  Agreement  and the  other  Financing  Agreements  shall
become  effective  as of the date set forth on the first  page  hereof and shall
continue  in full force and effect for a term ending on the date three (3) years
from the date hereof (the  "Renewal  Date"),  and from year to year  thereafter,
unless sooner terminated pursuant to the terms hereof.

               (b) Lender or Borrower may terminate this Agreement and the other
Financing  Agreements effective on the Renewal Date or on the anniversary of the
Renewal  Date in any year by giving to the other  party at least sixty (60) days
prior written  notice;  provided,  that,  this Agreement and all other Financing
Agreements must be terminated simultaneously.

               (c) Upon the effective  date of termination or non-renewal of the
Financing Agreements, Borrower shall pay to Lender, in full, all outstanding and
unpaid  Obligations  and shall furnish cash collateral to Lender in such amounts
as Lender determines are reasonably  necessary to secure Lender from loss, cost,
damage or expense,  including attorneys' fees and legal expenses,  in connection
with any contingent  Obligations,  including  issued and  outstanding  Letter of
Credit Accommodations and checks or other payments provisionally credited to the
Obligations   and/or  as  to  which  Lender  has  not  yet  received  final  and
indefeasible  payment.  Such  payments  in respect of the  Obligations  and cash
collateral  shall be  remitted by wire  transfer  in Federal  funds to such bank
account of Lender,  as Lender may, in its discretion,  designate to Borrower for
such purpose.  Interest  shall be due until and including the next Business Day,
if the amounts so paid by Borrower to the bank account  designated by Lender are
received in such bank account later than 12:00 noon, New York City time.

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<PAGE>



               (d) No  termination  of this  Agreement  or the  other  Financing
Agreements  shall  relieve  or  discharge  Borrower  of its  respective  duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all  Obligations  have been fully and  finally  discharged  and paid,  and
Lender's  continuing  security  interest  in the  Collateral  and the rights and
remedies  of  Lender  hereunder,   under  the  other  Financing  Agreements  and
applicable  law,  shall  remain in effect until all such  Obligations  have been
fully and finally discharged and paid.

               (e) If for any reason this  Agreement is terminated  prior to the
end of the then current term or renewal term of this  Agreement,  in view of the
impracticality  and extreme  difficulty of  ascertaining  actual  damages and by
mutual agreement of the parties as to a reasonable  calculation of Lender's lost
profits  as a  result  thereof,  Borrower  agrees  to pay to  Lender,  upon  the
effective date of such  termination,  an early termination fee in the amount set
forth below if such termination is effective in the period indicated:

                 Amount                                  Period
                 ------                                  ------
   (i)   3% of Maximum Credit                   From the date hereof to and
                                                including June 30, 2000
  (ii)   2% of Maximum Credit                   From July 1, 2000 to and
                                                including June 30, 2001
 (iii)   1% of Maximum Credit                   From July 1, 2001 to and
                                                including March 30, 2002 and
                                                if the term of this Agreement
                                                is extended for any one year
                                                period as provided above,
                                                then at any time prior to
                                                ninetieth (90th) day before the
                                                end of the then current term.

Such  early  termination  fee shall be  presumed  to be the  amount  of  damages
sustained by Lender as a result of such early  termination  and Borrower  agrees
that it is reasonable under the circumstances  currently existing.  In addition,
Lender shall be entitled to such early  termination  fee upon the  occurrence of
any Event of Default  described in Sections 10.1(g) and 10.1(h) hereof,  even if
Lender does not exercise its right to terminate this Agreement,  but elects,  at
its  option,  to  provide  financing  to  Borrower  or  permit  the  use of cash
collateral under the United States  Bankruptcy  Code. The early  termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.

               (f) Notwithstanding anything to the contrary contained in Section
12.1(e) above,  in the event of the termination of this Agreement at the request
of Borrower or any Guarantor  prior to the end of the term of this Agreement and
the full and final

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<PAGE>



repayment of all Obligations and the receipt by Lender of cash collateral all as
provided  in Section  12.1(c)  above,  Borrower  shall not be required to pay to
Lender an early  termination  fee if such  payments  are made to Lender with the
initial  proceeds of a financing  transaction  provided or underwritten by First
Union National Bank and/or one of its Affiliates to Borrower.

         12.2 Notices.  All notices,  requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Borrower at
its chief  executive  office set forth below, or to such other address as either
party may  designate  by  written  notice to the other in  accordance  with this
provision,  and (b) deemed to have been given or made:  if  delivered in person,
immediately  upon  delivery;  if by telex,  telegram or facsimile  transmission,
immediately  upon sending and upon  confirmation  of receipt;  if by  nationally
recognized  overnight  courier  service  with  instructions  to deliver the next
Business  Day,  one (1) Business Day after  sending;  and if by certified  mail,
return receipt requested, five (5) days after mailing.

         12.3 Partial Invalidity.  If any provision of this Agreement is held to
be invalid or  unenforceable,  such  invalidity  or  unenforceability  shall not
invalidate  this Agreement as a whole,  but this Agreement shall be construed as
though  it did not  contain  the  particular  provision  held to be  invalid  or
unenforceable  and the rights and  obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

         12.4 Successors. This Agreement, the other Financing Agreements and any
other document  referred to herein or therein shall be binding upon and inure to
the benefit of and be  enforceable  by Lender,  Borrower,  Guarantors  and their
respective  successors  and assigns,  except that  Borrower may not assign their
rights  under  this  Agreement,  the other  Financing  Agreements  and any other
document  referred  to herein or therein  without the prior  written  consent of
Lender. Lender may, after notice to Borrower, assign its rights and delegate its
obligations under this Agreement and the other Financing  Agreements and further
may assign, or sell  participations in, all or any part of the Loans, the Letter
of Credit  Accommodations  or any other  interest  herein to  another  financial
institution or other person,  in which event, the assignee or participant  shall
have,  to the extent of such  assignment or  participation,  the same rights and
benefits as it would have if it were the Lender  hereunder,  except as otherwise
provided by the terms of such assignment or participation.

         12.5 Entire Agreement.  This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be  delivered  in  connection  herewith or  therewith  represents  the entire
agreement and  understanding  concerning  the subject  matter hereof and thereof
between  the  parties  hereto,   and  supersede  all  other  prior   agreements,
understandings,  negotiations  and  discussions,  representations,   warranties,
commitments, proposals, offers and contracts

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<PAGE>



concerning the subject matter thereof,  whether oral or written. In the event of
any  inconsistency  between  the terms of this  Agreement  and any  schedule  or
exhibit hereto, the terms of this Agreement shall govern.

                  [REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]


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<PAGE>


         IN WITNESS WHEREOF,  Lender,  Borrower and Guarantors have caused these
presents to be duly executed as of the day and year first above written.


LENDER                                             BORROWER

CONGRESS FINANCIAL CORPORATION                     J&L STRUCTURAL, INC.

By: /s/ Stephen A. Altneu                          By: /s/ William L. Remley
Title: Vice President                              Title:  Vice Chairman

Address:                                           Chief Executive Office:

1133 Avenue of the Americas                        111 Station Street
New York, New York 10036                           Aliquippa, Pennsylvania 15001

                                                   GUARANTORS

                                                   J&L HOLDINGS CORP.

                                                   By: /s/ William L. Remley

                                                   Title:  President

                                                   Chief Executive Office:

                                                   680 Fifth Avenue
                                                   New York, New York 10019

                                                   CONTINUOUS CASTER
                                                   CORPORATION

                                                   By: /s/ William L. Remley

                                                   Title:  Vice Chairman

                                                   Chief Executive Office:

                                                   680 Fifth Avenue
                                                   New York, New York 10019







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                                       75

<PAGE>

                               THIRD AMENDMENT TO
                       NOTE AND WARRANT PURCHASE AGREEMENT

                  THIRD  AMENDMENT,  dated  as of  June  30,  1999  (the  "Third
Amendment"),  to the NOTE AND WARRANT  PURCHASE  AGREEMENT  dated as of April 6,
1995, as amended by the First Amendment thereto dated as of October 12, 1995 and
the  Second  Amendment  thereto  dated as of May 15,  1996 (as so  amended,  the
"Original  Agreement"),  by and among J&L Structural,  Inc., (the "Company") and
Provident Investment  Management,  LLC, as agent (the "Agent"),  The Paul Revere
Life Insurance  Company  ("PRLIC"),  The Paul Revere Variable Annuity  Insurance
Company ("PRV"),  The Paul Revere  Protective Life Insurance Company ("PRP; PRP,
PRLIC and PRV being  hereinafter  collectively  referred to as the "Paul  Revere
Purchasers")  and  Investors  Bank & Trust  Company,  as trustee for The Textron
Collective Investment Trust (the "Textron Purchaser";  the Textron Purchaser and
the Paul Revere  Purchasers being hereinafter  collectively  referred to as (the
"Purchasers").

                  WHEREAS,   the  parties  hereto,  or  their   predecessors  in
interest, entered into the Original Agreement;

                  WHEREAS,  concurrently herewith the Company is entering into a
new senior credit facility (the "New Credit  Facility") with Congress  Financial
Corporation  ("Congress")  to replace the senior credit  facility held by FINOVA
Capital Corporation ("FINOVA") pursuant to a Loan and Security Agreement between
the Company and FINOVA dated as of March 31, 1995; and

                  WHEREAS,  the Purchasers  are entering into the  Subordination
and  Intercreditor  Agreement  dated as of June 30,  1999,  with the Company and
Congress; and

                  WHEREAS,  the parties  desire to amend the Original  Agreement
and certain  related  documents in order to permit the Company to enter into the
New Credit Facility and as otherwise set forth below.

                  NOW,  THEREFORE,  in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
hereby agree as follows:

SECTION 1. Amendments to Original Agreement.  Effective as of the Effective Date
(as hereinafter defined), the Original Agreement is hereby amended as follows:

     1.1  Amendment  to Section 3 of the  Original  Agreement:  Section 3 of the
Original  Agreement is hereby  amended by inserting at the end of the definition
of "Consolidated Cash Flow" the following:





                                       1
<PAGE>



         "and (vii)  during the  Company's  fiscal  year  2000,  profit  sharing
         deferrals,  to the extent unpaid, but during the Company's fiscal years
         2001, 2002 and 2003, such profit sharing deferrals  originating  during
         the  Company's  fiscal year 2000, to the extent paid,  shall  represent
         deductions  from  Consolidated  Net Income for purposes of  determining
         Consolidated  Cash Flow;  provided,  however,  that,  for the Company's
         fiscal  year  1999,  the  amount  of any  prepayment  premium  or early
         termination  fee incurred in  connection  with the  replacement  of the
         FINOVA senior credit  facilities shall not be taken into account in the
         determination  of the Consolidated Net Income component of Consolidated
         Cash Flow for such fiscal year."

     1.2  Amendment  to Section 3 of the  Original  Agreement:  Section 3 of the
Original  Agreement is hereby  amended by inserting at the end of the definition
of "Contractual Senior Debt Service" the following:

         "; provided,  however,  that,  for the Company's  fiscal year 1999, the
         amount of any prepayment  premium or early  termination fee incurred in
         connection with the replacement of the FINOVA senior credit  facilities
         shall not be taken into account in the determination of the Contractual
         Senior Debt Service."

     1.3  Amendment  to Section 3 of the  Original  Agreement:  Section 3 of the
Original  Agreement is hereby  amended by inserting at the end of the definition
of "Contractual Total Debt Service" the following:

         "; provided,  however,  that,  for the Company's  fiscal year 1999, the
         amount of any prepayment  premium or early  termination fee incurred in
         connection with the replacement of the FINOVA senior credit  facilities
         shall not be taken into account in the determination of the Contractual
         Total Debt Service."

     1.4  Amendment  to  Section  3 of  the  Amendment.  Section  3 of  Original
Agreement  is hereby  amended by  deleting  the words  "Section  2.2.1" from the
definition of "Excess  Availability"  therein,  and inserting the words "Section
2.1(a)" in lieu thereof.

     1.5  Amendment  to Section 3 of the  Original  Agreement.  Section 3 of the
Original  Agreement is hereby  amended by inserting the following  definition in
its proper alphabetical place:

                  " "Financing  Agreements"  shall have the meaning specified in
     the Loan and Security Agreement."

     1.6  Amendment  to Section 3 of the  Original  Agreement.  Section 3 of the
Original  Agreement is hereby  amended by deleting the words  "Section 2.3" from
the definition of "L/C's" therein, and inserting the words "Section 2.2" in lieu
thereof.





                                       2
<PAGE>




     1.7  Amendment  to Section 3 of the  Original  Agreement.  Section 3 of the
Original  Agreement is hereby amended by deleting in its entirety the definition
of "Loan and Security Agreement" and inserting in lieu thereof the following:

                  " "Loan and  Security  Agreement"  means the Loan and Security
         Agreement  dated as of June 30,  1999,  by and among the  Company,  the
         Senior Lender and certain Guarantors."

     1.8  Amendment  to Section 3 of the  Original  Agreement.  Section 3 of the
Original  Agreement is hereby  amended by deleting the words  "Section 2.2" from
the  definition of "Revolving  Loan"  therein,  and inserting the words "Section
2.1" in lieu thereof.

     1.9  Amendment  to Section 3 of the  Original  Agreement.  Section 3 of the
Original  Agreement is hereby amended by deleting in its entirety the definition
of "Senior Indebtedness" and inserting in lieu thereof:

                  " "Senior Indebtedness" shall mean "Senior Debt" as defined in
     the Subordination and Intercreditor Agreement."

     1.10  Amendment  to Section 3 of the Original  Agreement:  Section 3 of the
Original  Agreement is hereby amended by deleting in its entirety the definition
of "Senior Lender" and inserting in lieu thereof the following:

                  " "Senior  Lender" means  Congress  Financial  Corporation,  a
     Delaware corporation, and its successors and assigns."

     1.11  Amendment  to Section 3 of the Original  Agreement:  Section 3 of the
Original  Agreement is hereby amended by deleting in its entirety the definition
of "Senior Security Interests" and inserting in lieu thereof the following:

                  " "Senior  Security  Interests"  means:  Liens  granted to the
         Senior Lenders pursuant to the Loan and Security Agreement, and certain
         Financing  Agreements,  as in effect on the date  hereof or  amended as
         permitted by the Subordination and Intercreditor  Agreement so that the
         obligations thereunder constitute Senior Indebtedness."

     1.12  Amendment  to Section 3 of the Original  Agreement:  Section 3 of the
Original  Agreement is hereby amended by deleting in its entirety the definition
of "Subordination and Intercreditor Agreement" and inserting in lieu thereof the
following:





                                       3
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                  "  "Subordination  and  Intercreditor  Agreement"  means  that
         certain Subordination and Intercreditor Agreement, dated June 30, 1999,
         by and among the Senior  Lender,  the  Company,  The Paul  Revere  Life
         Insurance Company,  The Paul Revere Variable Annuity Insurance Company,
         The Paul Revere  Protective Life Insurance Company and Investors Bank &
         Trust Company,  as trustee for Textron Collective  Investment Trust, as
         amended or modified pursuant to the terms hereof."

     1.13  Amendment  to Section 3 of the Original  Agreement.  Section 3 of the
Original  Agreement  is hereby  amended by deleting the  "$25,000,000"  from the
definition of "Term Note" therein, and replacing it with the word $19,000,000 in
lieu thereof.

     1.14 Amendment to Section 8.5 of the Original Agreement. Section 8.5 of the
Original Agreement is hereby amended by deleting the words "the L/C Obligations"
in clause (ii) thereof and inserting in lieu thereof the following: "the L/C's".

     1.15  Amendment  to Section  8.10(a)  of the  Original  Agreement.  Section
8.10(a)  of the  Original  Agreement  is hereby  amended by  deleting  it in its
entirety and inserting in lieu thereof the following:

                  "(a) Make any payment on the Notes, except as permitted by the
         Subordination and Intercreditor Agreement and if after giving effect to
         such payment,  the Company would have Excess  Availability  of at least
         $1,000,000  assuming the  Revolving  Loan Limit (as defined in the Loan
         and  Security   Agreement)   equals   $16,000,000,   the  standards  of
         eligibility  set  forth in the  definition  of  Eligible  Accounts  and
         Eligible Inventory (as defined in the Loan and Security Agreement) have
         not been modified or revised,  no reserves are deemed  necessary by the
         Senior Lender as provided in the  definition of  Availability  Reserves
         (as defined in the Loan and Security  Agreement)  and Senior Lender has
         not reduced the advance  rates  pursuant to Section  2.1(b) of the Loan
         and Security Agreement."

     1.16  Amendment  to Section  8.10(c)  of the  Original  Agreement.  Section
8.10(c)  of the  Original  Agreement  is hereby  amended by  deleting  it in its
entirety and inserting the following in lieu thereof:

                  "(c)   Subject  to  the  terms  of  the  State   Subordination
         Agreement(s)  then in effect,  make any payment of State  Debt,  except
         payments of principal and interest due on the State Debt may be made to
         the  holder  thereof  provided  (i) no Event of  Default  or  Potential
         Default  then  exists,  or would exist as a result of giving  effect to
         such  payment,  (ii) after  giving  effect to such  payment the Company
         would have Excess  Availability of at least  $1,000,000,  and (iii) the
         ratio of the Company's Consolidated Cash Flow to Contractual Total Debt
         Service  the  twelve-month  period  ending  on (w) the last day of each
         calendar  quarter during calendar year 1999 is not less than 1.00:1.00,
         (x) the last day of each calendar  quarter during calendar year 2000 is
         not less  than  1.05:1.00,  (y) the last day of each  calendar  quarter
         during calendar year 2001 is not less than 1.10:1.00,  and (z) the last
         day of each calendar quarter thereafter is not less than 1.15:1.00."





                                       4
<PAGE>




     1.17 Amendment to Section 8.14 of the Original  Agreement.  Section 8.14 of
the Original  Agreement is hereby amended by deleting the first sentence thereof
in its entirety and inserting in lieu thereof the following:

                  "Make  Capital  Expenditures  in any  Loan  Year in an  amount
         exceeding $2,500,000  ("Maintenance Capital  Expenditures");  provided,
         however,  that in addition to  Maintenance  Capital  Expenditures,  the
         Company may make Capital  Expenditures (i) during the period commencing
         on the  Closing  and ending  June 30,  2002,  to fund a proposed  plant
         upgrade project (including the installation of a notch-bar cooling bed,
         two  universal  mills,  a second  tie-in  to the  stacker  and  related
         ancillary  equipment) in an aggregate amount not to exceed  $12,000,000
         and (ii) out of Excess Cash Flow for additional projects subject to the
         Majority Noteholders' consent."

     1.18 Amendment to Section 14(a) of the Original  Agreement:  Section 14 (a)
of the  Original  Agreement  is hereby  amended by  inserting at the end of such
Section 14(a) the following clause (xiv):

         ";  or  (xiv)  a  default  by  CPT  in  the  performance  of any of its
         obligations under that certain Letter  Agreement,  dated June 30, 1999,
         from CPT to the Purchasers."

     1.19 Insertion of Section 7.22. The Original Agreement is hereby amended by
inserting Section 7.22 to read in its entirety as follows:

                  "7.22.  Real  Property.  Within 60 days after the execution of
         the  Subordination  and  Intercreditor  Agreement  (time  being  of the
         essence), the Company will take such actions and execute such documents
         as the Agent and the Textron  Purchaser shall require to create a valid
         mortgage  lien in favor of the  Agent  (on  behalf  of the Paul  Revere
         Purchasers) and the Textron Purchaser with respect to the real property
         described  on  Exhibit  A  attached   hereto  (the   "Additional   Real
         Property"),  including, without limitation, the following documents and
         instruments:

                           (a)  a  mortgage   encumbering  the  Additional  Real
         Property  (the   "Mortgage"),   together  with  such  UCC-1   financing
         statements  as are  contemplated  by the counsel  opinion  described in
         Section  3.1(d)  below,  all of which  shall  be in form and  substance
         reasonably  satisfactory to the Agent and the Textron Purchaser,  which
         Mortgage and financing  statements  shall be effective to create a lien
         on the Additional Real Property  subject to no liens other than (i) the
         lien of that certain  Open-End  Mortgage and  Security  Agreement  (the
         "Congress Mortgage"), dated on or about the date hereof, by the Company
         in favor of Congress,  and (ii) those matters set forth in the Congress
         Policies (as defined  below)  (collectively,  the  "Permitted  Congress
         Liens");





                                       5
<PAGE>




                           (b) a policy of title  insurance  from Lawyers  Title
         Insurance  Corporation (the "Title  Company")  insuring the lien of the
         Mortgage as a valid mortgage lien on the Additional Real Property in an
         amount equal to the title  insurance  policy (or policies) being issued
         by the Title  Company to Congress with respect to the  Additional  Real
         Property  (the  "Congress  Policies"),  which policy shall  contain (i)
         endorsements  substantially  similar to those contained in the Congress
         Policies and such other endorsements as shall be reasonably required by
         the Agent,  (ii) only such  exceptions  to title as shall be  Permitted
         Congress Liens, and (iii) other terms and conditions  acceptable to the
         Agent and the Textron Purchaser;

                           (c) a survey  (or  surveys)  of the  Additional  Real
         Property reasonably  acceptable to the Agent and the Textron Purchaser;
         and

                           (d) in  respect  of the  Mortgage,  a  legal  opinion
         addressed to each of the Purchasers and the Agent and dated the date of
         execution  of  the   Mortgage,   in  form  and   substance   reasonably
         satisfactory to the Agent and the Textron Purchaser, from legal counsel
         to the  Company in the state  where the  Additional  Real  Property  is
         located.

         The  Company  shall  perform any and all other acts and execute any and
         all  other  documents  which  are  necessary  in order to  fulfill  the
         obligations set forth in this Section 7.22."

SECTION 2.  Amendments to Other  Documents.  Effective as of the Effective Date,
each Loan Document other than the Original Agreement  (collectively,  the "Other
Loan Documents) is hereby amended as follows:

     2.1 Amendments to Loan Documents. Each reference in any Other Loan Document
to  "FINOVA  Capital  Corporation"  shall be  deemed  and is hereby  amended  to
constitute a reference to "Congress Financial Corporation".

     2.2 Amendments to Loan Documents. Each reference in any Other Loan Document
to  "Subordination  and  Intercreditor  Agreement" shall be deemed and is hereby
amended to mean the Subordination and Intercreditor Agreement, as defined in the
Original Agreement as amended by this Third Amendment.

     2.3 Amendments to Loan Documents. Each reference in any Other Loan Document
to "Loan and Security  Agreement"  shall be deemed and is hereby amended to mean
the Loan and Security Agreement, as defined in the Original Agreement as amended
by this Third Amendment.

SECTION 3.  Conditions to Effectiveness.





                                       7
<PAGE>




     3.1 This Amendment  shall become  effective only upon the  satisfaction  in
full (or waiver by the Purchasers) of each of the conditions precedent set forth
in this  Section 3 (the  first  date on which all such  conditions  have been so
satisfied or waived being herein called the "Effective Date"):

         (a) the execution and delivery of the Loan and Security  Agreement with
respect to the New Credit Facility and all agreements contemplated thereby; and

         (b) the execution and delivery of the  Subordination  and Intercreditor
Agreement  referred  to in the  recitals  hereto by the  Senior  Lender  and the
Purchasers; and

         (c) the  execution  and  delivery of a  Subordination  Agreement by the
Senior Lender,  the  Purchasers and the  Commonwealth  of  Pennsylvania,  acting
through The Department of Community and Economic Development; and

         (d) the  execution  and  delivery of a  Subordination  Agreement by the
Senior Lender,  the Purchasers  and the Beaver County  Corporation  for Economic
Development; and

         (e) the  execution  and  delivery of the Bring Along  Agreement  by the
Senior Lender and the Purchasers; and

         (f) the Purchasers  shall have received  payment  (allocated  among the
Purchasers  on a pro rata basis in  accordance  with the  outstanding  principal
amount of the Notes held by them) of a fee of $115,000 (corresponding to 0.5% of
the aggregate outstanding principal amount of the Notes); and

         (g) Morgan, Lewis & Bockius LLP shall have received payment of all fees
and  expenses   incurred  in  connection  with  this  Third  Amendment  and  the
transactions contemplated thereby; and

         (h) the  execution of that  certain  Letter  Agreement,  dated June 30,
1999, from CPT to the Purchasers; and

         (i) the Purchasers shall have received  opinions of the Company's legal
counsel in connection with the New Credit Facility,  addressed to the Purchasers
(or expressly stating that the Purchasers are entitled to rely thereon),  and in
form and substance reasonably satisfactory to the Purchasers; and

         (j) the Purchasers  shall have received  documentation  relating to the
release  of the  indebtedness  owed to FINOVA in form and  substance  reasonably
satisfactory to the Purchasers; and

         (k) the Agent shall have received  from the Title Company  modification
endorsements to title policy numbers 135-00-774881 and 135-00-774879 in form and
substance reasonably satisfactory to the Purchasers.




                                       8
<PAGE>




SECTION 4.  General Provisions

     4.1 Reaffirmation. Nothing in this amendment shall affect the terms of that
certain Letter Agreement, dated May 26, 1996, by and among CPT, J&L Holdings and
the Purchasers.

     4.2 Representations  and Warranties of the Company.  Upon the effectiveness
of  this  Third   Amendment,   the  Company  hereby   reaffirms  all  covenants,
representations  and warranties made in the Original Agreement to the extent the
same  are not  amended  hereby  and  represents  and  warrants  that,  as of the
Effective  Date and after giving  effect to this Third  Amendment,  no Potential
Default or Event of Default has occurred and is continuing.

     4.3 Agreement;  Terms.  Except as expressly  amended  hereby,  the Original
Agreement and the Other Loan  Documents  shall continue in full force and effect
in accordance  with the  provisions  thereof on the date hereof,  and this Third
Amendment  shall not be deemed to waive or amend any  provision  of the Original
Agreement or any Other Loan Document  except as expressly  set forth herein.  As
used in the  Original  Agreement  or any Other Loan  Document,  the terms  "this
Agreement," "herein," "hereinafter,"  "hereunder," "hereto" and words of similar
import  shall  mean  from and after  the  Effective  Date,  unless  the  context
otherwise  specifically  requires,  the  Original  Agreement  or such Other Loan
Document  as  amended by this Third  Amendment.  Capitalized  terms used and not
defined  herein shall have the  meanings  assigned to such terms in the Original
Agreement.

     4.4  Counterparts.  This Third  Amendment  may be  executed  by the parties
hereto in separate  counterparts,  each of which when so executed and  delivered
shall be an original,  but all such counterparts  shall together  constitute one
and  the  same  instrument,  and  all  signatures  need  not  appear  on any one
counterpart.

     4.5  Expenses.  The  Company  agrees  to pay all  reasonable  out-of-pocket
expenses  incurred by the Purchasers in connection  with the preparation of this
Third Amendment, including, but not limited to, the reasonable fees, charges and
disbursements of counsel for the Purchasers.

     4.6 No Course of  Dealing.  The  Purchasers  have  entered  into this Third
Amendment on the express  understanding  with the Company that, in entering into
this Third Amendment,  the Purchasers are not establishing any course of dealing
with the Company.  The Purchasers'  rights to require strict compliance with all
the terms and  conditions  of the Original  Agreement  (as amended by this Third
Amendment) and the Other Loan Documents  shall not in any way be impaired by the
execution of this Third Amendment. No Purchaser shall be obligated in any manner
to execute any further  amendments  or waivers to any Loan  Document and, if any
such waiver or  amendment  is  requested  in the future,  assuming the terms and
conditions  thereof  are  acceptable  to them,  the  Purchasers  may require the
payment of fees in connection therewith.





                                       9
<PAGE>




     4.7  Headings.  The headings and captions in this Third  Amendment  are for
convenience  of reference only and shall not define,  limit or otherwise  affect
any of the terms or provisions hereof.

     4.8 Governing Law. This Third Amendment shall be governed by, and construed
in accordance with, the law of the Commonwealth of Pennsylvania  (other than any
conflict of laws rule which might result in the  application  of the laws of any
other jurisdiction).

[Remainder of page intentionally left blank]




                                       10
<PAGE>




IN WITNESS WHEREOF, this Third Amendment has been duly executed and delivered by
duly authorized  officers of the parties hereto by a duly authorized  officer of
each such party as of the date first set forth above.

                              J&L STRUCTURAL, INC.


                              By: /s/ William L. Remley

                              THE PAUL REVERE LIFE INSURANCE COMPANY
                              By:  PROVIDENT INVESTMENT MANAGEMENT, LLC
                              Its:   Agent

                              By: /s/ Ben S. Miller

                              THE PAUL REVERE PROTECTIVE LIFE INSURANCE COMPANY
                              By:  PROVIDENT INVESTMENT MANAGEMENT, LLC
                              Its:   Agent

                              By: /s/ Ben S. Miller

                              THE PAUL REVERE VARIABLE ANNUITY INSURANCE COMPANY
                              By:  PROVIDENT INVESTMENT MANAGEMENT, LLC
                              Its:   Agent

                              By: /s/ Ben S. Miller

                              INVESTORS   BANK  &   TRUST
                              COMPANY    (successor    in
                              interest  to  Rhode  Island
                              Hospital   Trust   National
                              Bank),  as Trustee  for THE
                              TEXTRON          COLLECTIVE
                              INVESTMENT TRUST

                              By: /s/ William H. Brophy




                                       11
<PAGE>




Acknowledged and agreed for purposes of Section 4.1 only:

CPT HOLDINGS, INC.

By: /s/ William L. Remley

J&L HOLDINGS CORP.

By: /s/ William L. Remley


                                       12
<PAGE>