EXHIBIT 10.15


         05/08/96


                           LOAN AND SECURITY AGREEMENT

                               DATED: MAY 10, 1996

                                   $24,500,000

                                 BY AND BETWEEN

                           FLEET CAPITAL CORPORATION,

                                    AS LENDER

                                       AND

                              EAGLE PLASTICS, INC.,


                             PACIFIC PLASTICS, INC.,

                                       AND

                          ARROW PACIFIC PLASTICS, INC.

                                  AS BORROWERS

                                      WITH


                         EAGLE PACIFIC INDUSTRIES, INC.,

                                  AS GUARANTOR



         TABLE OF CONTENTS                                                  PAGE
         -----------------                                                  ----


SECTION 1.  CREDIT FACILITY.................................................. 1

         1.1         Revolving Credit Loans.................................. 1
         1.2         Term Loan............................................... 2

SECTION 2.  INTEREST, FEES AND CHARGES....................................... 2

         2.1         Interest................................................ 2
         2.2         Computation of Interest and Fees........................ 5
         2.3         Closing Fee............................................. 5
         2.4         Unused Line Fee......................................... 5
         2.5         Collection Charges...................................... 5
         2.6         Audit and Appraisal Fees................................ 5
         2.7         Reimbursement of Expenses............................... 5
         2.8         Bank Charges............................................ 6

SECTION 3.  LOAN ADMINISTRATION.............................................. 6

         3.1         Manner of Borrowing Revolving Credit Loans.............. 6
         3.2         Payments................................................ 7
         3.3         Mandatory Prepayments................................... 8
         3.4         Application of Payments and Collections................. 8
         3.5         All Loans to Constitute One Obligation.................. 9
         3.6         Loan Account............................................ 9
         3.7         Statements of Account................................... 9

SECTION 4. TERM AND TERMINATION.............................................. 9

         4.1         Term of Agreement....................................... 9
         4.2         Termination............................................. 9

SECTION 5.  SECURITY INTERESTS...............................................11

         5.1         Security Interest in Collateral.........................11
         5.2         Lien Perfection; Further Assurances.....................11
         5.3         Lien on Realty..........................................12

SECTION 6.  COLLATERAL ADMINISTRATION........................................12

         6.1         General.................................................12
         6.2         Administration of Accounts..............................13
         6.3         Administration of Inventory.............................15
         6.4         Administration of Equipment.............................15
         6.5         Payment of Charges......................................16

SECTION 7.  REPRESENTATIONS AND WARRANTIES...................................16

         7.1         General Representations and Warranties..................16
         7.2         Continuous Nature of Representations and Warranties.....22
         7.3         Survival of Representations and Warranties..............22

SECTION 8.  COVENANTS AND CONTINUING AGREEMENTS..............................22

         8.1         Affirmative Covenants...................................22
         8.2         Negative Covenants......................................24
         8.3         Specific Financial Covenants............................29

SECTION 9.  CONDITIONS PRECEDENT.............................................31

         9.1         Documentation...........................................32
         9.2         No Default..............................................32
         9.3         Other Loan Documents....................................32
         9.4         Equity..................................................32
         9.5         Subordinated Debt.......................................32
         9.6         Availability............................................32
         9.7         No Litigation...........................................32
         9.8         Net Operating Carry Forward.............................32

SECTION 10.  EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT...............33

         10.1        Events of Default.......................................33
         10.2        Acceleration of the Obligations.........................35
         10.3        Other Remedies..........................................35
         10.4        Remedies Cumulative; No Waiver..........................36

SECTION 11.  MISCELLANEOUS...................................................37

         11.1        Power of Attorney.......................................37
         11.2        Indemnity...............................................38
         11.3        Modification of Agreement; Sale of Interest.............38
         11.4        Severability............................................38
         11.5        Successors and Assigns..................................39
         11.6        Cumulative Effect; Conflict of Terms....................39
         11.7        Execution in Counterparts...............................39
         11.8        Notice..................................................39
         11.9        Lender's Consent........................................40
         11.10       Credit Inquiries........................................40
         11.11       Time of Essence.........................................40
         11.12       Entire Agreement........................................40
         11.13       Interpretation..........................................41
         11.14       GOVERNING LAW; CONSENT TO FORUM.........................41
         11.15       WAIVERS BY BORROWER.....................................42
         11.16       Publicity...............................................42
         11.17       Reimbursement...........................................42


         LOAN AND SECURITY AGREEMENT

         THIS LOAN AND SECURITY AGREEMENT is made this 10th day of May 1996, by
         and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island
         corporation with an office at 200 West Madison Street, Chicago,
         Illinois 60606; and EAGLE PLASTICS, INC. ("EPI"), a Nebraska
         corporation with its chief executive office and principal place of
         business at 146 North Maple Street, Hastings, Nebraska 68902 and
         PACIFIC PLASTICS, INC. ("PPI"), an Oregon corporation with its chief
         executive office and principal place of business at 21500 Northwest
         Plastics Drive, Hillsboro, Oregon 97124 and ARROW PACIFIC PLASTICS
         ("APP"), a Utah corporation with its chief executive office and
         principal place of business at 44 East 8th Avenue, Midvale, Utah 84047.
         EPI, PPI and APP are hereinafter sometimes referred to individually as
         "Borrower" and collectively as "Borrowers." Capitalized terms used in
         this Agreement have the meanings assigned to them in Appendix A,
         General Definitions. Accounting terms not otherwise specifically
         defined herein shall be construed in accordance with GAAP consistently
         applied.

SECTION 1.  CREDIT FACILITY

         Subject to the terms and conditions of, and in reliance upon the
         representations and warranties made in, this Agreement and the other
         Loan Documents, Lender agrees to make a Total Credit Facility of up to
         Twenty-Four Million Five Hundred Thousand Dollars ($24,500,000)
         available upon Borrowers' request therefor, as follows:

         1.1      Revolving Credit Loans.

                           1.1.1 Loans and Reserves. Lender agrees, for so long
                  as no Default or Event of Default exists, to make Revolving
                  Credit Loans to EPI from time to time, as requested by EPI in
                  the manner set forth in subsection 3.1.1 hereof, up to a
                  maximum principal amount at any time outstanding equal to the
                  EPI Borrowing Base at such time. Lender agrees, for so long as
                  no Default or Event of Default exists, to make Revolving
                  Credit Loans to PPI from time to time, as requested by PPI in
                  the manner set forth in Section 3.1.1 hereof, up to a maximum
                  principal amount at any time outstanding equal to the PPI
                  Borrowing Base at such time. Lender agrees, for so long as no
                  Default or Event of Default exists, to make Revolving Credit
                  Loans to APP from time to time, as requested by APP in the
                  manner set forth in subsection 3.1.1 hereof up to a maximum
                  principal amount at any time outstanding equal to the APP
                  Borrowing Base at such time. Lender shall have the right to
                  establish reserves in such amounts, and with respect to such
                  matters, as Lender shall deem necessary or appropriate,
                  against the amount of Revolving Credit Loans which Borrowers
                  may otherwise request under this subsection 1.1.1, including,
                  without limitation, with respect to (i) other sums chargeable
                  against Borrowers' Loan Account as Revolving Credit Loans
                  under any section of this Agreement; (ii) amounts owing by any
                  Borrower to any Person to the extent secured by a Lien on, or
                  trust over, any Property of any Borrower and Borrowers have
                  not already established funded reserves over which Lender has
                  a security interest; and (iii) such other matters, events,
                  conditions or contingencies as to which Lender, in its sole
                  credit judgment, determines reserves should be established
                  from time to time hereunder.

                           1.1.2 Use of Proceeds. The Revolving Credit Loans
                  shall be used solely for the satisfaction of existing
                  Indebtedness of EPI to FirsTier Bank, National Association,
                  for the satisfaction of existing Indebtedness of PPI and/or
                  APP to Bank of America Oregon, for the purpose of paying
                  transaction costs related to this transaction in an amount not
                  to exceed $700,000, for the purpose of paying a dividend to
                  Company to permit Company to repay a portion of its
                  Indebtedness for Money Borrowed owed to Blair, to permit
                  Company to purchase shares of stock of EPI and to permit
                  Company to pay professional fees, and for Borrowers' general
                  operating capital needs in a manner consistent with the
                  provisions of this Agreement and all applicable laws.

         1.2      Term Loan.

                           1.2.1 Term Loan. Lender agrees to make (i) a term
                  loan to EPI on the Closing Date in the principal amount of
                  Three Million Two Hundred Seventy-Five Thousand Dollars
                  ($3,275,000) which shall be repayable in accordance with the
                  terms hereof and the terms of the EPI Term Note and shall be
                  secured by all of the Collateral, (ii) a term loan to PPI on
                  the Closing Date in the principal amount of Three Million
                  Seven Hundred Seventy-Five Thousand Dollars ($3,775,000) which
                  shall be repayable in accordance with the terms hereof and the
                  PPI Term Note and shall be secured by all of the Collateral,
                  and (iii) a term loan to APP on the Closing Date in the
                  principal amount of Nine Hundred Fifty Thousand Dollars
                  ($950,000) which shall be repayable in accordance with the
                  terms hereof and the APP Term Note and shall be secured by all
                  of the Collateral. The proceeds of the EPI Term Loan, the PPI
                  Term Loan and the APP Term Loan shall be used solely for
                  purposes for which the proceeds of the Revolving Credit Loans
                  are authorized to be used.

SECTION 2.  INTEREST, FEES AND CHARGES

         2.1      Interest.

                  2.1.1    Rates of Interest.

                           (A) Interest. (i) Interest shall accrue on the Prime
                           Portion outstanding at the end of each day (computed
                           on the basis of a calendar year of 360 days and
                           actual days elapsed) at a fluctuating rate per annum
                           equal to the sum of one-quarter of one percent (1/4%)
                           plus the Base Rate. After the date hereof, the
                           foregoing rate of interest shall be increased or
                           decreased, as the case may be, by an amount equal to
                           any increase or decrease in the Base Rate, with such
                           adjustments to be effective as of the opening of
                           business on the day that any such change in the Base
                           Rate becomes effective. The Base Rate in effect on
                           the date hereof shall be the Base Rate effective on
                           the opening of business on the date hereof, but if
                           this Agreement is executed on a day that is not a
                           Business Day, the Base Rate in effect on the date
                           hereof shall be the Base Rate effective as of the
                           opening of business on the last Business Day
                           immediately preceding the date hereof.

                                    (ii) Interest shall accrue on each LIBOR
                                    Revolving Loan Portion outstanding at the
                                    end of each day (computed on the basis of a
                                    calendar year of 360 days and actual days
                                    elapsed) at rates equal to the sum of the
                                    LIBOR Rate applicable to each such LIBOR
                                    Revolving Loan Portion plus two and one-half
                                    percent (2 1/2%).

                                    (iii) Interest shall accrue on each LIBOR
                                    Term Portion outstanding at the end of each
                                    day (computed on the basis of a calendar
                                    year of 360 days and actual days elapsed) at
                                    rates equal to the sum of the LIBOR Rate
                                    applicable to each such LIBOR Term Portion
                                    plus two and three-quarters percent (2
                                    3/4%).

                           (B)      LIBOR Option.

                                    (i) Conditions for Basing Interest on the
         LIBOR Rate. Upon the condition that:

                                    (a) Lender shall have received a LIBOR
                           Request from EPI (in respect to the Term Loan and
                           Revolving Credit Loan made to EPI) or PPI (in respect
                           to Revolving Credit Loans made to PPI and APP) at
                           least 3 Business Days prior to the first day of the
                           LIBOR Period requested:

                                    (_)(b) There shall have occurred no change
                           in applicable law which would make it unlawful for
                           Lender to obtain deposits of U.S. dollars in the
                           London interbank foreign currency deposits market;

                                    (c) As of the date of the LIBOR Request and
                           the first day of the LIBOR Period, there shall exist
                           no Default or Event of Default which has not been
                           waived by Lender; and

                                    (d) Lender shall have determined in good
                           faith that it is able to determine the LIBOR Rate in
                           respect of the requested LIBOR Period and that Lender
                           is able to obtain deposits of U.S. dollars in the
                           London interbank foreign currency deposits market in
                           the applicable amounts and for the requested LIBOR
                           Period;

         then interest on the LIBOR Portion requested during the LIBOR Period
         requested will be based on the applicable LIBOR Rate. The foregoing
         notwithstanding, Borrowers acknowledge that there may not be more than
         three LIBOR Portions outstanding at any one time.

                           (ii) Indemnification for Funding and Other Losses.
         Each LIBOR Request shall be irrevocable and binding on Borrowers.
         Borrowers shall indemnify Lender against any expense or loss suffered
         by Lender as a result of any failure on the part of Borrowers to
         fulfill, on or before the date specified in any LIBOR Request, the
         applicable conditions set forth in this Agreement or as a result of the
         prepayment of the applicable LIBOR Portion prior to the last day of the
         applicable LIBOR Period, including, without limitation, any loss
         (including loss of anticipated profits) or expense incurred by reason
         of the liquidation or redeployment of deposits or other funds acquired
         by Lender to fund or maintain the requested LIBOR Portion, when, as a
         result of such failure on the part of Borrowers or prepayment by
         Borrowers, interest on such LIBOR Portion is not based on the
         applicable LIBOR Rate for the requested LIBOR Period.

                           (iii) Change in Applicable Laws, Regulations, etc. If
         any Legal Requirement shall make it unlawful for Lender to fund through
         the purchase of U.S. dollar deposits any LIBOR Portion, or otherwise to
         give effect to its obligations as contemplated under this Section
         2.1.1(B), or shall impose on Lender any costs based on or measured by
         the excess above a specified level of the amount of a category of
         deposits or other liabilities of Lender which includes deposits by
         reference to which the LIBOR Rate is determined as provided herein or a
         category of extensions of credit or other assets of Lender which
         includes any LIBOR Portion, or shall impose on Lender any restrictions
         on the amount of such a category of liabilities or assets which Lender
         may hold, (i) Lender may by notice thereof to Borrowers terminate the
         LIBOR Option, with respect to the Term Loan and the Revolving Credit
         Loans made or to be made by Lender, (ii) any LIBOR Portion subject
         thereto shall immediately bear interest thereafter at the rate provided
         for in Section 2.1.1(A) payable on the dates provided for in Section
         3.2.2 and (iii) Borrowers shall indemnify Lender against any
         out-of-pocket loss, penalty or expense incurred by Lender by reason of
         the liquidation or redeployment of deposits or other funds acquired by
         Lender to fund or maintain such LIBOR Portion.

                           (iv) Taxes. It is the understanding of Borrowers and
         Lender that Lender shall receive payments of amounts of principal of
         and interest on the Revolving Credit Loans and the Term Loan with
         respect to the LIBOR Portions from time to time subject to a LIBOR
         Option free and clear of, and without deduction for, any Taxes. If (i)
         Lender shall be subject to any such Tax in respect of any such LIBOR
         Portion or any part thereof or (ii) Borrowers shall be required to
         withhold or deduct any such Tax from any such amount, the LIBOR Rate
         applicable to such LIBOR Portion shall be adjusted by Lender to reflect
         all additional costs incurred by Lender in connection with the payments
         by Lender or the withholding by Borrowers of such Tax and Borrowers
         shall provide Lender with a statement detailing the amount of any such
         Tax actually paid by Borrowers. Determination by Lender of the amount
         of such costs shall, in the absence of manifest error, be conclusive,
         and at Borrowers' request, Lender shall demonstrate the basis of such
         determination. If after any such adjustment, any part of any Tax paid
         by Lender is subsequently recovered by Lender, Lender shall reimburse
         Borrowers to the extent of the amount so recovered. A certificate of an
         officer of Lender setting forth the amount of such recovery and the
         basis therefor shall, in the absence of manifest error, be conclusive.

                           2.1.2 Default Rate of Interest. Upon and during the
                  continuance of an Event of Default, and during the
                  continuation thereof, the principal amount of all Loans shall
                  bear interest at a rate per annum equal to two percent (2%)
                  above the interest rate otherwise applicable thereto (the
                  "Default Rate").

                           2.1.3 Maximum Interest. In no event whatsoever shall
                  the aggregate of all amounts deemed interest hereunder or
                  under the Term Note and charged or collected pursuant to the
                  terms of this Agreement or pursuant to the Term Note exceed
                  the highest rate permissible under any law which a court of
                  competent jurisdiction shall, in a final determination, deem
                  applicable hereto. If any provisions of this Agreement, or the
                  Term Note are in contravention of any such law, such
                  provisions shall be deemed amended to conform thereto.

         2.2      Computation of Interest and Fees. Interest, unused line fees
                  and collection charges hereunder shall be calculated daily and
                  shall be computed on the actual number of days elapsed over a
                  year of 360 days. For the purpose of computing interest
                  hereunder, all items of payment received by Lender shall be
                  deemed applied by Lender on account of the Obligations
                  (subject to final payment of such items) on the first Business
                  Day after receipt by Lender of such items in Lender's account
                  located in Chicago, Illinois.

         2.3      Closing Fee. Borrowers shall pay to Lender a closing fee of
                  One Hundred Twenty-Five Thousand Dollars ($125,000), which
                  shall be fully earned and nonrefundable on the Closing Date
                  and shall be paid concurrently with the initial Loan
                  hereunder.

         2.4      Unused Line Fee. Borrowers shall pay to Lender a fee equal to
                  one-half of one percent (1/2%) per annum of the average
                  monthly amount by which Sixteen Million Five Hundred Thousand
                  Dollars ($16,500,000) exceeds the sum of the outstanding
                  principal balance of the Revolving Credit Loans. The unused
                  line fee shall be payable monthly in arrears on the first day
                  of each calendar month hereafter.

         2.5      Collection Charges. If items of payment are received by Lender
                  at a time when there are no Revolving Credit Loans
                  outstanding, such items of payment shall be subject to a
                  collection charge equal to one days' interest on the amount
                  thereof at the rate then applicable to Revolving Credit Loans,
                  which collection charges shall be payable by Borrowers to
                  Lender on the first Business Day of each month.

         2.6      Audit and Appraisal Fees. Borrowers shall pay to Lender audit
                  and appraisal fees in the amount of $2,500 for each calendar
                  quarter or portion thereof within the Original Term hereof
                  plus all out-of-pocket expenses incurred by Lender in
                  connection with such audits and appraisals. Such fees shall be
                  payable on the first day of the month following the date of
                  issuance by Lender of a request for payment thereof to
                  Borrower which request shall itemize such fees and expenses in
                  reasonable detail.

         2.7      Reimbursement of Expenses. If, at any time or times regardless
                  of whether or not an Event of Default then exists, Lender
                  incurs legal or accounting expenses or any other costs or
                  out-of-pocket expenses in connection with (i) the negotiation
                  and preparation of this Agreement or any of the other Loan
                  Documents, any amendment of or modification of this Agreement
                  or any of the other Loan Documents; (ii) the administration of
                  this Agreement or any of the other Loan Documents and the
                  transactions contemplated hereby and thereby; (iii) any
                  litigation, contest, dispute, suit, proceeding or action
                  (whether instituted by Lender, Borrowers or any other Person)
                  in any way relating to the Collateral, this Agreement or any
                  of the other Loan Documents or Borrowers' affairs; (iv) any
                  attempt to enforce any rights of Lender or any Participating
                  Lender against Borrowers or any other Person which may be
                  obligated to Lender by virtue of this Agreement or any of the
                  other Loan Documents, including, without limitation, the
                  Account Debtors provided that Borrowers shall not be required
                  to reimburse Participating Lenders for the cost of more than
                  one counsel in connection with any such enforcement action; or
                  (v) any attempt to inspect, verify, protect, preserve,
                  restore, collect, sell, liquidate or otherwise dispose of or
                  realize upon the Collateral; then all such reasonable legal
                  and accounting expenses, other costs and out of pocket
                  expenses of Lender shall be charged to Borrowers. All amounts
                  chargeable to Borrowers under this Section 2.7 shall be
                  Obligations secured by all of the Collateral, shall be payable
                  on demand to Lender or to such Participating Lender, as the
                  case may be, and shall bear interest from the date such demand
                  is made until paid in full at the rate applicable to Revolving
                  Credit Loans from time to time. Borrowers shall also reimburse
                  Lender for expenses incurred by Lender in its administration
                  of the Collateral to the extent and in the manner provided in
                  Section 6 hereof. The foregoing notwithstanding, (i) Lender
                  agrees that Borrowers shall not be required to reimburse
                  Lender for legal fees and out-of-pocket expenses incurred in
                  connection with the preparation and negotiation of this Loan
                  Agreement and the other Loan Documents executed on or about
                  the Closing Date in excess of $60,000, and (ii) Borrowers
                  shall not be required to reimburse Lender or any Participating
                  Lender for any costs or expenses incurred in any action in
                  which Borrowers, pursuant to a final non-appealable court
                  order, are the prevailing party. Lender acknowledge prior
                  receipt of Seventy-Five Thousand Dollars ($75,000) from
                  Company or Borrowers. Said amount shall be applied towards
                  expenses owed Lender pursuant to this Section 2.7 and any
                  excess shall be refunded to Borrowers.

         2.8      Bank Charges. Borrowers shall pay to Lender, on demand, any
                  and all fees, costs or expenses which Lender pays to a bank or
                  other similar institution arising out of or in connection with
                  (i) the forwarding to Borrowers or any other Person on behalf
                  of Borrowers, by Lender, of proceeds of loans made by Lender
                  to Borrowers pursuant to this Agreement and (ii) the
                  depositing for collection, by Lender, of any check or item of
                  payment received or delivered to Lender on account of the
                  Obligations.

SECTION 3.  LOAN ADMINISTRATION.

         3.1      Manner of Borrowing Revolving Credit Loans. Borrowings under
                  the credit facility established pursuant to Section 1 hereof
                  shall be as follows:

                           3.1.1 Loan Requests. A request for a Revolving Credit
                  Loan shall be made, or shall be deemed to be made, in the
                  following manner: (i) EPI on behalf of itself, PPI on behalf
                  of itself or APP on behalf of itself, may give Lender notice
                  of its intention to borrow, in which notice EPI, PPI or APP,
                  as applicable, shall specify the amount of the proposed
                  borrowing and the proposed borrowing date, no later than 11:00
                  a.m. Chicago time on the proposed borrowing date, provided,
                  however, that no such request may be made at a time when there
                  exists a Default or an Event of Default; and (ii) the becoming
                  due of any amount required to be paid under this Agreement or
                  the Term Note, whether as interest or for any other
                  Obligation, shall be deemed irrevocably to be a request for a
                  Revolving Credit Loan on the due date in the amount required
                  to pay such interest or other Obligation. As an accommodation
                  to Borrowers, Lender may permit telephonic requests for loans
                  and electronic transmittal of instructions, authorizations,
                  agreements or reports to Lender by EPI, PPI or APP. Unless
                  EPI, PPI or APP, as applicable, specifically directs Lender in
                  writing not to accept or act upon telephonic or electronic
                  communications from either EPI, PPI or APP, Lender shall have
                  no liability to Borrowers for any loss or damage suffered by
                  any Borrower as a result of Lender's honoring of any requests,
                  execution of any instructions, authorizations or agreements or
                  reliance on any reports communicated to it telephonically or
                  electronically and purporting to have been sent to Lender by
                  Borrowers and Lender shall have no duty to verify the origin
                  of any such communication or the authority of the person
                  sending it.

                           3.1.2 Disbursement. Borrowers hereby irrevocably
                  authorize Lender to disburse the proceeds of each Revolving
                  Credit Loan requested, or deemed to be requested, pursuant to
                  this subsection 3.1.2 as follows: (i) the proceeds of each
                  Revolving Credit Loan requested under subsection 3.1.1(i)
                  shall be disbursed by Lender in lawful money of the United
                  States of America in immediately available funds, in the case
                  of the initial borrowing, in accordance with the terms of the
                  written disbursement letter from Borrowers, and in the case of
                  each subsequent borrowing, by wire transfer to such bank
                  account as may be agreed upon by EPI, PPI or APP, as
                  applicable, and Lender from time to time or elsewhere if
                  pursuant to a written direction from EPI, PPI or APP, as
                  applicable; and (ii) the proceeds of each Revolving Credit
                  Loan requested under subsection 3.1.1(ii) shall be disbursed
                  by Lender by way of direct payment of the relevant interest or
                  other Obligation.

                           3.1.3 Authorization. Borrowers hereby irrevocably
                  authorize Lender, in Lender's sole discretion, to advance to
                  Borrowers, and to charge to Borrowers' Loan Account hereunder
                  as a Revolving Credit Loan, a sum sufficient to pay all
                  interest accrued on the Obligations during the immediately
                  preceding month and to pay all costs, fees and expenses at any
                  time owed by Borrower to Lender hereunder. Lender shall
                  promptly give Borrowers notice of such advance.

         3.2      Payments. Except where evidenced by notes or other instruments
                  issued or made by Borrowers to Lender specifically containing
                  payment provisions which are in conflict with this Section 3.2
                  (in which event the conflicting provisions of said notes or
                  other instruments shall govern and control), the Obligations
                  shall be payable as follows:

                           3.2.1 Principal. Principal payable on account of
                  Revolving Credit Loans shall be payable by Borrowers to Lender
                  immediately upon the earliest of (i) the receipt by Lender or
                  any Borrower of any proceeds of any of the Collateral other
                  than Equipment or real Property, to the extent of said
                  proceeds, (ii) the occurrence of an Event of Default in
                  consequence of which Lender elects to accelerate the maturity
                  and payment of the Obligations, or (iii) termination of this
                  Agreement pursuant to Section 4 hereof; provided, however,
                  that if an Overadvance shall exist at any time, Borrowers
                  shall, on demand, repay the Overadvance. Principal payable on
                  account of the Term Loan shall be payable by Borrowers to
                  Lender in accordance with the terms and conditions of the Term
                  Note and the provisions of this Agreement.

                           3.2.2 Interest. Interest accrued on the Prime Portion
                  and the LIBOR Portions shall be due on the earliest of (i) the
                  first day of each month (for the immediately preceding month),
                  computed through the last calendar day of the preceding month,
                  (ii) the occurrence of an Event of Default in the consequence
                  of which Lender elects to accelerate the maturity and payment
                  of the Obligations or (iii) termination of this Agreement
                  pursuant to Section 4 hereof; provided, however, the Borrowers
                  hereby irrevocably authorize Lender, in Lender's sole
                  discretion, to advance to Borrowers and to charge to
                  Borrowers' Loan Account hereunder as a Revolving Credit Loan,
                  a sum sufficient each month to pay all interest accrued on the
                  Prime Portion and the LIBOR Portions during the immediately
                  preceding month. Lender shall promptly give Borrowers notice
                  of such advance.

                           3.2.3 Costs, Fees and Charges. Costs, fees and
                  charges payable pursuant to this Agreement shall be payable by
                  Borrowers as and when provided in Section 2 hereof, to Lender
                  or to any other Person designated by Lender in writing.

                           3.2.4 Other Obligations. The balance of the
                  Obligations requiring the payment of money, if any, shall be
                  payable by Borrowers to Lender as and when provided in this
                  Agreement, the Other Agreements or the Security Documents, or
                  on demand, whichever is later.

         3.3      Mandatory Prepayments.

                           3.3.1 Proceeds /of Sale, Loss, Destruction or
                  Condemnation of Collateral. Except as provided in subsection
                  6.4.2 hereof, if any Borrower sells any of the Equipment or
                  real Property, or if any of the Collateral is lost or
                  destroyed or taken by condemnation, Borrowers shall pay to
                  Lender, unless otherwise agreed by Lender, as and when
                  received by Borrowers and as a mandatory prepayment of the
                  Term Loan, a sum equal to the proceeds (including insurance
                  payments) received by any Borrower from such sale, loss,
                  destruction or condemnation. Any such mandatory prepayment of
                  the Term Loan shall be applied against regularly scheduled
                  installment payments due under the Term Note in inverse order
                  maturity, and shall be applied, pro rata, to the outstanding
                  principal balance of the EPI Term Note, the PPI Term Note and
                  the PPI Term Note.

         3.4      Application of Payments and Collections. All items of payment
                  received by Lender by 12:00 noon, Chicago time, on any
                  Business Day shall be deemed received on that Business Day.
                  All items of payment received after 12:00 noon, Chicago time,
                  on any Business Day shall be deemed received on the following
                  Business Day. For the purpose of computing interest hereunder,
                  all items of payment received by Lender shall be deemed
                  applied by Lender on account of the Obligations (subject to
                  final payment of such items) on the first Business Day after
                  receipt of such item in immediately good funds. Borrowers
                  irrevocably waive the right to direct the application of any
                  and all payments and collections at any time or times
                  hereafter received by Lender from or on behalf of Borrowers,
                  and after the occurrence and during the continuation of an
                  Event of Default, Borrowers do hereby irrevocably agree that
                  Lender shall have the continuing exclusive right to apply and
                  reapply any and all such payments and collections received at
                  any time or times hereafter by Lender or its agent against the
                  Obligations, in such manner as Lender may deem advisable,
                  notwithstanding any entry by Lender upon any of its books and
                  records. If as the result of collections of Accounts as
                  authorized by subsection 6.2.6 hereof a credit balance exists
                  in the Loan Account, such credit balance shall not accrue
                  interest in favor of Borrowers, but shall be available to
                  Borrowers at any time or times for so long as no Default or
                  Event of Default exists. Such credit balance shall not be
                  applied or be deemed to have been applied as a prepayment of
                  the Term Loan, except that Lender may, at its option, offset
                  such credit balance against any of the Obligations upon and
                  during the continuation of an Event of Default.

         3.5      All Loans to Constitute One Obligation. The Loans shall
                  constitute one general Obligation of Borrowers, and shall be
                  secured by Lender's Lien upon all of the Collateral.

         3.6      Loan Account. Lender shall enter all Loans as debits to the
                  Loan Account and shall also record in the Loan Account all
                  payments made by Borrowers on any Obligations and all proceeds
                  of Collateral which are finally paid to Lender, and may record
                  therein, in accordance with customary accounting practice,
                  other debits and credits, including interest and all charges
                  and expenses properly chargeable to Borrowers.

         3.7      Statements of Account. Lender will account to Borrowers
                  monthly with a statement of Loans, charges and payments made
                  pursuant to this Agreement, and such account rendered by
                  Lender shall be deemed final, binding and conclusive upon
                  Borrowers unless Lender is notified by Borrowers in writing to
                  the contrary within 30 days of the date each accounting is
                  mailed to Borrowers. Such notice shall only be deemed an
                  objection to those items specifically objected to therein.

SECTION 4. TERM AND TERMINATION

         4.1      Term of Agreement. Subject to Lender's right to cease making
                  Loans to Borrowers upon or during the continuation of any
                  Default or Event of Default, this Agreement shall be in effect
                  for a period of three (3) years from the date hereof, through
                  and including May 9, 1999 (the "Original Term"), unless
                  terminated as provided in Section 4.2 hereof.

         4.2      Termination.

                           4.2.1 Termination by Lender. Upon at least 90 days
                  prior written notice to Borrowers, Lender may terminate this
                  Agreement as of the last day of the Original Term and Lender
                  may terminate this Agreement without notice upon or during the
                  continuation of an Event of Default.

                           4.2.2 Termination by Borrower. Upon at least 90 days
                  prior written notice to Lender, Borrowers may, at their
                  option, terminate this Agreement; provided, however, no such
                  termination (either pursuant to Section 4.2.1 above or this
                  Section 4.2.2) shall be effective until Borrowers have paid
                  all of the Obligations in immediately available funds. Any
                  notice of termination given by Borrowers shall be irrevocable
                  unless Lender otherwise agrees in writing, and Lender shall
                  have no obligation to make any Loans on or after the
                  termination date stated in any such termination notice given
                  pursuant to this Section 4.2.2 or pursuant to Section 4.2.1
                  above. Borrowers may elect to terminate this Agreement in its
                  entirety only. No section of this Agreement or type of Loan
                  available hereunder may be terminated singly.

                           4.2.3 Termination Charges. At the effective date of
                  termination of this Agreement for any reason, Borrowers shall
                  pay to Lender (in addition to the then outstanding principal,
                  accrued interest and other charges owing under the terms of
                  this Agreement and any of the other Loan Documents) as
                  liquidated damages for the loss of the bargain and not as a
                  penalty, an amount equal to (i) the sum of one percent of the
                  lesser of the principal balance of the Term Loan or Four
                  Million Dollars ($4,000,000) less the amount of any prior
                  prepayments of the Term Loan plus three percent (3%) of the
                  remaining portion of the Total Credit Facility less the amount
                  of principal paid on the Term Loan as of such date, if
                  termination occurs during the first twelve-month period of the
                  Original Term (May 10, 1996 through May 9, 1997); (ii) the sum
                  of one percent (1%) of the lesser of the principal balance of
                  the Term Loan or Four Million Dollars ($4,000,000) less the
                  amount of any prior prepayments of the Term Loan plus two
                  percent (2%) of the remaining portion of the Total Credit
                  Facility less the amount of principal paid on the Term Loan as
                  of such date, if termination occurs during the second 12-month
                  period of the Original Term (May 10, 1997 through May 9,
                  1998); and one percent (1%) of the Total Credit Facility less
                  the amount of principal paid on the Term Loan as of such date
                  if termination occurs during the third 12-month period of the
                  Original Term (May 10, 1998 through May 8, 1999). If
                  termination occurs on the last day of the Original Term, no
                  termination charge shall be payable. Any other prepayment of
                  the Term Loan shall be subject to a prepayment fee equal to
                  (i) the sum of (x) one percent of the lesser of the amount of
                  the prepayment or Four Million Dollars ($4,000,000) less the
                  amount of any prior prepayments of the Term Loan plus (y)
                  three percent (3%) of the remainder (if any) of the
                  prepayment, if the prepayment occurs during the first
                  twelve-month period of the Original Term; the sum of (x) one
                  percent (1%) of the lesser of the amount of the prepayment or
                  ($4,000,000) less the amount of any prior prepayments of the
                  Term Loan, plus (y) two percent (2%) of the remainder (if any)
                  of the prepayment if the prepayment occurs within the second
                  twelve month period of the Original Term; and one percent of
                  the amount of the prepayment, if the prepayment occurs during
                  the third 12-month period of the Original Term. No prepayment
                  fee shall be due in respect to any prepayment made after May
                  8, 1999.

                           4.2.4 Effect of Termination. All of the Obligations
                  shall be immediately due and payable upon the termination date
                  stated in any notice of termination of this Agreement. All
                  undertakings, agreements, covenants, warranties and
                  representations of Borrowers contained in the Loan Documents
                  shall survive any such termination and Lender shall retain its
                  Liens in the Collateral and all of its rights and remedies
                  under the Loan Documents notwithstanding such termination
                  until Borrowers have paid the Obligations to Lender, in full,
                  in immediately available funds, together with the applicable
                  termination charge, if any. Notwithstanding the payment in
                  full of the Obligations, Lender shall not be required to
                  terminate its security interests in the Collateral unless,
                  with respect to any loss or damage Lender may incur as a
                  result of dishonored checks or other items of payment received
                  by Lender from Borrowers or any Account Debtor and applied to
                  the Obligations, Lender shall, at its option, (i) have
                  received a written agreement, executed by Borrowers and by any
                  Person whose loans or other advances to Borrowers are used in
                  whole or in part to satisfy the Obligations, indemnifying
                  Lender from any such loss or damage; or (ii) have retained
                  such monetary reserves and Liens on the Collateral for such
                  period of time as Lender, in its reasonable discretion, may
                  deem necessary to protect Lender from any such loss or damage.

SECTION 5.  SECURITY INTERESTS

         5.1      Security Interest in Collateral. To secure the prompt payment
                  and performance to Lender of the Obligations, Borrowers hereby
                  grant to Lender a continuing Lien upon all of Borrowers'
                  assets, including all of the following Property and interests
                  in Property of Borrowers, whether now owned or existing or
                  hereafter created, acquired or arising and wheresoever
                  located:

                           (i)      Accounts;

                           (ii)     Inventory;

                           (iii)    Equipment;

                           (iv)     General Intangibles;

                           (v)      Investment Property;

                           (vi)     All monies and other Property of any kind
         now or at any time or times hereafter in the possession or under the
         control of Lender or a bailee or Affiliate of Lender;

                           (vii)    All accessions to, substitutions for and all
         replacements, products and cash and non-cash proceeds of (i) through
         (vi) above, including, without limitation, proceeds of and unearned
         premiums with respect to insurance policies insuring any of the
         Collateral; and

                           (viii) All books and records (including, without
         limitation, customer lists, credit files, computer programs,
         print-outs, and other computer materials and records) of Borrower
         pertaining to any of (i) through (vii) above.

         5.2      Lien Perfection; Further Assurances. Borrowers shall execute
                  such UCC-1 financing statements as are required by the Code
                  and such other instruments, assignments or documents as are
                  necessary to perfect Lender's Lien upon any of the Collateral
                  and shall take such other action as may be required to perfect
                  or to continue the perfection of Lender's Lien upon the
                  Collateral. Unless prohibited by applicable law, Borrowers
                  hereby authorize Lender to execute and file any such financing
                  statement on Borrowers' behalf. The parties agree that a
                  carbon, photographic or other reproduction of this Agreement
                  shall be sufficient as a financing statement and may be filed
                  in any appropriate office in lieu thereof. At Lender's
                  request, Borrowers shall also promptly execute or cause to be
                  executed and shall deliver to Lender any and all documents,
                  instruments and agreements reasonably deemed necessary by
                  Lender to give effect to or carry out the terms or intent of
                  the Loan Documents.

         5.3      Lien on Realty. The due and punctual payment and performance
                  of the Obligations shall also be secured by the Lien created
                  by the Mortgages. If any Borrower shall acquire at any time or
                  times hereafter any interest in other real Property (other
                  than leasehold interests in sales offices), such Borrower
                  agrees promptly to execute and deliver to Lender, as
                  additional security and Collateral for the Obligations, deeds
                  of trust, security deeds, mortgages or other collateral
                  assignments satisfactory in form and substance to Lender and
                  its counsel (herein collectively referred to as "New
                  Mortgages") covering such real Property. The Mortgages and
                  each New Mortgage shall be duly recorded (at Borrowers'
                  expense) in each office where such recording is required to
                  constitute a valid Lien on the real Property covered thereby.
                  In respect to each Mortgage and each New Mortgage, such
                  Borrower shall deliver to Lender, at Borrowers' expense,
                  mortgagee title insurance policies issued by a title insurance
                  company satisfactory to Lender insuring Lender, as mortgagee;
                  such policies shall be in form and substance satisfactory to
                  Lender and shall insure a valid first Lien in favor of Lender
                  on the Property covered thereby, subject only to those
                  exceptions acceptable to Lender and its counsel. Said policies
                  shall be in form and substance satisfactory to Lender. Such
                  Borrower shall also deliver to Lender such other documents,
                  including, without limitation, ALTA Surveys of the real
                  Property, as Lender and its counsel may reasonably request
                  relating to the real Property subject to any such New
                  Mortgage.

SECTION 6.  COLLATERAL ADMINISTRATION

         6.1      General

                           6.1.1 Location of Collateral. All Collateral, other
                  than Inventory in transit and motor vehicles, will at all
                  times be kept by Borrowers and their respective Subsidiaries
                  at one or more of the business locations set forth in Exhibit
                  B hereto and shall not, without the prior written approval of
                  Lender, be moved therefrom except, prior to an Event of
                  Default and Lender's acceleration of the maturity of the
                  Obligations in consequence thereof, for (i) sales of Inventory
                  in the ordinary course of business; and (ii) removals in
                  connection with dispositions of Equipment that are authorized
                  by subsection 6.4.2 hereof.

                           6.1.2 Insurance of Collateral. Borrowers shall
                  maintain and pay for insurance upon all Collateral wherever
                  located and with respect to Borrowers' business, covering
                  casualty, hazard, public liability and such other risks in
                  such amounts and with such insurance companies as are
                  reasonably satisfactory to Lender. Borrowers shall deliver the
                  originals of such policies to Lender with satisfactory
                  lender's loss payable endorsements, naming Lender as sole loss
                  payee, assignee or additional insured, as appropriate. Each
                  policy of insurance or endorsement shall contain a clause
                  requiring the insurer to give not less than 30 days prior
                  written notice to Lender in the event of cancellation of the
                  policy for any reason whatsoever and a clause specifying that
                  the interest of Lender shall not be impaired or invalidated by
                  any act or neglect of Borrowers or the owner of the Property
                  or by the occupation of the premises for purposes more
                  hazardous than are permitted by said policy. If Borrowers fail
                  to provide and pay for such insurance, Lender may, at its
                  option, but shall not be required to, procure the same and
                  charge Borrowers therefor. Borrowers agree to deliver to
                  Lender, promptly as rendered, true copies of all reports made
                  in any reporting forms to insurance companies.

                           6.1.3 Protection of Collateral. All expenses of
                  protecting, storing, warehousing, insuring, handling,
                  maintaining and shipping the Collateral, any and all excise,
                  property, sales, and use taxes imposed by any state, federal,
                  or local authority on any of the Collateral or in respect of
                  the sale thereof shall be borne and paid by Borrowers. If
                  Borrowers fail to promptly pay any portion thereof when due,
                  Lender may, at its option, but shall not be required to, pay
                  the same and charge Borrowers therefor. Lender shall not be
                  liable or responsible in any way for the safekeeping of any of
                  the Collateral or for any loss or damage thereto (except for
                  reasonable care in the custody thereof while any Collateral is
                  in Lender's actual possession) or for any diminution in the
                  value thereof, or for any act or default of any warehouseman,
                  carrier, forwarding agency, or other person whomsoever, but
                  the same shall be at Borrowers' sole risk.

         6.2      Administration of Accounts.

                           6.2.1 Records, Schedules and Assignments of Accounts.
                  EPI shall execute and deliver to Lender a Borrowing Base
                  Certificate in the form attached hereto as Exhibit C on a
                  monthly basis or, if requested by Lender, more frequently. PPI
                  and APP shall execute and deliver to Lender a Borrowing Base
                  Certificate in the form attached hereto as Exhibit C-1 on a
                  monthly basis or, if requested by Lender, more frequently.
                  Each Borrower shall keep accurate and complete records of
                  their Accounts and all payments and collections thereon and
                  shall submit to Lender on such periodic basis as Lender shall
                  request a sales and collections report for the preceding
                  period, in form satisfactory to Lender. On or before the
                  fifteenth day of each month from and after the date hereof,
                  each Borrower shall deliver to Lender, in form acceptable to
                  Lender, a detailed aged trial balance of all of its Accounts
                  existing as of the last day of the preceding month, specifying
                  the names, addresses, face value, dates of invoices and due
                  dates for each Account Debtor obligated on an Account so
                  listed ("Schedule of Accounts"), and, upon Lender's request
                  therefor, copies of proof of delivery and the original copy of
                  all documents, including, without limitation, repayment
                  histories and present status reports relating to the Accounts
                  so scheduled and such other matters and information relating
                  to the status of then existing Accounts as Lender shall
                  reasonably request. If requested by Lender, each Borrower
                  shall execute and deliver to Lender formal written assignments
                  of all of its Accounts weekly or daily, which shall include
                  all Accounts that have been created since the date of the last
                  assignment, together with copies of invoices or invoice
                  registers related thereto.

                           6.2.2 Discounts, Allowances, Disputes. If any
                  Borrower grants any discounts, allowances or credits that are
                  not shown on the face of the invoice for the Account involved,
                  Borrowers shall report such discounts, allowances or credits,
                  as the case may be, to Lender as part of the next required
                  Schedule of Accounts. If any amounts due and owing in excess
                  of $25,000 are in dispute between any Borrower and any Account
                  Debtor, Borrowers shall provide Lender with written notice
                  thereof at the time of submission of the next Schedule of
                  Accounts, explaining in detail the reason for the dispute, all
                  claims related thereto and the amount in controversy. Upon and
                  during the continuation of an Event of Default, Lender shall
                  have the right to settle or adjust all disputes and claims
                  directly with the Account Debtor and to compromise the amount
                  or extend the time for payment of the Accounts upon such terms
                  and conditions as Lender may deem advisable, and to charge the
                  deficiencies, costs and expenses thereof, including reasonable
                  attorney's fees, to Borrowers.

                           6.2.3 Taxes. If an Account includes a charge for any
                  tax payable to any governmental taxing authority, Lender is
                  authorized, in its sole discretion, to pay the amount thereof
                  to the proper taxing authority for the account of Borrowers
                  and to charge Borrowers therefor, provided, however, that
                  Lender shall not be liable for any taxes to any governmental
                  taxing authority that may be due by any Borrower. Borrowers
                  will be given notice of, and will be consulted with respect
                  to, such payment if no Event of Default has occurred and is
                  continuing.

                           6.2.4 Account Verification. Whether or not a Default
                  or an Event of Default has occurred, any of Lender's officers,
                  employees or agents shall have the right, at any time or times
                  hereafter, in the name of Lender, any designee of Lender or
                  Borrowers, to verify the validity, amount or any other matter
                  relating to any Accounts by mail, telephone, telegraph or
                  otherwise. Borrowers shall cooperate fully with Lender in an
                  effort to facilitate and promptly conclude any such
                  verification process. So long as no Event of Default has
                  occurred and is continuing, the Lender will verify accounts
                  using an anonymous name or some third party service.

                           6.2.5 Maintenance of Dominion Account. Borrowers
                  shall maintain a Dominion Account(s) pursuant to a lockbox
                  arrangement acceptable to Lender with such banks as may be
                  selected by Borrowers and be acceptable to Lender. Borrowers
                  shall issue to any such banks an irrevocable letter of
                  instruction directing such banks to deposit all payments or
                  other remittances received in the lockbox to the Dominion
                  Account for application on account of the Obligations. All
                  funds deposited in the Dominion Account shall immediately
                  become the property of Lender and Borrowers shall obtain the
                  agreement by such banks in favor of Lender to waive any offset
                  rights against the funds so deposited. Lender assumes no
                  responsibility for such lockbox arrangement, including,
                  without limitation, any claim of accord and satisfaction or
                  release with respect to deposits accepted by any bank
                  thereunder.

                           6.2.6 Collection of Accounts, Proceeds of Collateral.
                  To expedite collection, Borrowers shall endeavor in the first
                  instance to make collection of their respective Accounts for
                  Lender. All remittances received by such Borrower on account
                  of Accounts, together with the proceeds of any other
                  Collateral, shall be held as Lender's property by Borrowers as
                  trustee of an express trust for Lender's benefit and Borrowers
                  shall immediately deposit same in kind in the Dominion
                  Account. Lender retains the right at all times during the
                  continuance of a Default or an Event of Default to notify
                  Account Debtors that Accounts have been assigned to Lender and
                  to collect Accounts directly in its own name and to charge the
                  collection costs and expenses, including attorneys' fees to
                  Borrowers.

         6.3      Administration of Inventory.

                           6.3.1 Records and Reports of Inventory. Borrowers
                  shall keep accurate and complete records of its Inventory.
                  Each Borrower shall furnish Lender Inventory reports in form
                  and detail satisfactory to Lender at such times as Lender may
                  request, but at least once each month, not later than the
                  fifteen day of such month. Borrowers shall conduct a physical
                  inventory no less frequently than annually and shall provide
                  to Lender a report based on each such physical inventory
                  promptly thereafter, together with such supporting information
                  as Lender shall request.

                           6.3.2 Returns of Inventory. If at any time or times
                  hereafter any Account Debtor returns any Inventory to
                  Borrowers the shipment of which generated an Account on which
                  such Account Debtor is obligated in excess of $35,000,
                  Borrowers shall immediately notify Lender of the same,
                  specifying the reason for such return and the location,
                  condition and intended disposition of the returned Inventory.

         6.4      Administration of Equipment.

                           6.4.1 Records and Schedules of Equipment. Borrowers
                  shall keep accurate records itemizing and describing the kind,
                  type, quality, quantity and value of its Equipment and all
                  dispositions made in accordance with subsection 6.4.2 hereof,
                  and shall furnish Lender with a current schedule containing
                  the foregoing information on at least an annual basis and more
                  often if requested by Lender. Immediately on request therefor
                  by Lender, Borrowers shall deliver to Lender any and all
                  evidence of ownership, if any, of any of the Equipment.

                           6.4.2 Dispositions of Equipment. No Borrower will
                  sell, lease or otherwise dispose of or transfer any of the
                  Equipment or any part thereof without the prior written
                  consent of Lender; provided, however, that the foregoing
                  restriction shall not apply, for so long as no Default or
                  Event of Default exists, to (i) dispositions of Equipment
                  which, in the aggregate during any consecutive twelve-month
                  period, has a fair market value or book value, whichever is
                  less, of $250,000 or less, provided that all proceeds thereof
                  are remitted to Lender for application to the outstanding
                  principal balance of the Term Loan (which proceeds shall be
                  applied to regularly schedule installments of principal in
                  inverse order of maturity), or (ii) replacements of Equipment
                  that is substantially worn, damaged or obsolete with Equipment
                  of like kind, function and value, provided that the
                  replacement Equipment shall be acquired prior to or
                  concurrently with any disposition of the Equipment that is to
                  be replaced, the replacement Equipment shall be free and clear
                  of Liens other than Permitted Liens that are not Purchase
                  Money Liens, and Borrowers shall have given Lender at least 5
                  days prior written notice of such disposition.

         6.5      Payment of Charges. All amounts chargeable to Borrowers under
                  Section 6 hereof shall be Obligations secured by all of the
                  Collateral, shall be payable on demand and shall bear interest
                  from the date such advance was made until paid in full at the
                  rate applicable to Revolving Credit Loans from time to time.

SECTION 7.  REPRESENTATIONS AND WARRANTIES

         7.1      General Representations and Warranties. To induce Lender to
                  enter into this Agreement and to make advances hereunder,
                  Borrowers warrant, represent and covenant to Lender that:

                           7.1.1 Organization and Qualification. Each Borrower
                  and each of their respective Subsidiaries is a corporation
                  duly organized, validly existing and in good standing under
                  the laws of the jurisdiction of its incorporation. Each
                  Borrower and each of their respective Subsidiaries is duly
                  qualified and is authorized to do business and is in good
                  standing as a foreign corporation in each state or
                  jurisdiction listed on Exhibit D hereto and in all other
                  states and jurisdictions in which the failure of such Borrower
                  or such Subsidiaries to be so qualified would have a material
                  adverse effect on the financial condition, business or
                  Properties of such Borrower or such Subsidiaries.

                           7.1.2 Corporate Power and Authority. Each Borrower
                  and each of their respective Subsidiaries is duly authorized
                  and empowered to enter into, execute, deliver and perform this
                  Agreement and each of the other Loan Documents to which it is
                  a party. The execution, delivery and performance of this
                  Agreement and each of the other Loan Documents have been duly
                  authorized by all necessary corporate action and do not and
                  will not (i) require any consent or approval of the
                  shareholders of any Borrower or any of their respective
                  Subsidiaries; (ii) contravene any Borrower's or any of their
                  respective Subsidiaries' charter, articles or certificate of
                  incorporation or by-laws; (iii) violate, or cause any Borrower
                  or any of their respective Subsidiaries to be in default
                  under, any provision of any law, rule, regulation, order,
                  writ, judgment, injunction, decree, determination or award in
                  effect having applicability to any Borrower or any of their
                  respective Subsidiaries; (iv) result in a breach of or
                  constitute a default under any indenture or loan or credit
                  agreement or any other agreement, lease or instrument to which
                  any Borrower or any of their respective Subsidiaries is a
                  party or by which any such Borrower of Subsidiary or its
                  Properties may be bound or affected; or (v) result in, or
                  require, the creation or imposition of any Lien (other than
                  Permitted Liens) upon or with respect to any of the Properties
                  now owned or hereafter acquired by any Borrower or any of
                  their respective Subsidiaries.

                  7.1.3 Legally Enforceable Agreement. This Agreement is, and
                  each of the other Loan Documents when delivered under this
                  Agreement will be, a legal, valid and binding obligation of
                  each Borrower and each of their respective Subsidiaries (to
                  the extent a party thereto) enforceable against each of them
                  in accordance with its respective terms.

                  7.1.4 Capital Structure. Exhibit E hereto states (i) the
                  correct name of each of the Subsidiaries of each Borrower, its
                  jurisdiction of incorporation and the percentage of its Voting
                  Stock owned by each Borrower, (ii) the name of each Borrower's
                  corporate or joint venture Affiliates and the nature of the
                  affiliation, (iii) the number, nature and holder of all
                  outstanding Securities of each Borrower and each Subsidiary of
                  each Borrower and (iv) the number of authorized, issued and
                  treasury shares of each Borrower and each Subsidiary of each
                  Borrower. Each Borrower has good title to all of the shares it
                  purports to own of the stock of each of its Subsidiaries, free
                  and clear in each case of any Lien other than Permitted Liens.
                  All such shares have been duly issued and are fully paid and
                  non-assessable. Except as disclosed on Exhibit E hereto, there
                  are no outstanding options to purchase, or any rights or
                  warrants to subscribe for, or any commitments or agreements to
                  issue or sell, or any Securities or obligations convertible
                  into, or any powers of attorney relating to, shares of the
                  capital stock of any Borrower or any of their respective
                  Subsidiaries. There are no outstanding agreements or
                  instruments binding upon any of Borrower's shareholders
                  relating to the ownership of its shares of capital stock.

                           7.1.5 Corporate Names. No Borrower or any of
                  Borrowers' respective Subsidiaries has been known as or used
                  any corporate, fictitious or trade names except those listed
                  on Exhibit F hereto. Except as set forth on Exhibit F, no
                  Borrower or any of Borrowers' Subsidiaries has been the
                  surviving corporation of a merger or consolidation or acquired
                  all or substantially all of the assets of any Person.

                           7.1.6 Business Locations; Agent for Process. Each
                  Borrower's and each of their respective Subsidiaries' chief
                  executive office and other places of business are as listed on
                  Exhibit B hereto. During the preceding one-year period,
                  neither Borrowers nor any of their respective Subsidiaries has
                  had an office, place of business or agent for service of
                  process other than as listed on Exhibit B. Except as shown on
                  Exhibit B, no inventory is stored with a bailee, warehouseman
                  or similar party, nor is any Inventory consigned to any
                  Person.

                           7.1.7 Title to Properties; Priority of Liens. Each
                  Borrower and each of their respective Subsidiaries has good,
                  indefeasible and marketable title to and fee simple ownership
                  of, or valid and subsisting leasehold interests in, all of its
                  real Property, and good title to all of the Collateral and all
                  of its other Property, in each case, free and clear of all
                  Liens except Permitted Liens. Borrowers have paid or
                  discharged all lawful claims which, if unpaid, might become a
                  Lien against any of Borrower's Properties that is not a
                  Permitted Lien. The Liens granted to Lender under Section 5
                  hereof are first priority Liens, subject only to Permitted
                  Liens.

                           7.1.8 Accounts. Lender may rely, in determining which
                  Accounts are Eligible Accounts, on all statements and
                  representations made by Borrowers with respect to any Account
                  or Accounts. Unless otherwise indicated in writing to Lender,
                  with respect to each Account:

                           (i) It is genuine and in all respects what it
         purports to be, and it is not evidenced by a judgment;

                           (ii) It arises out of a completed, bona fide sale and
         delivery of goods or rendition of services by a Borrower in the
         ordinary course of its business and in accordance with the terms and
         conditions of all purchase orders, contracts or other documents
         relating thereto and forming a part of the contract between such
         Borrower and the Account Debtor;

                           (iii) It is for a liquidated amount maturing as
         stated in the duplicate invoice covering such sale or rendition of
         services, a copy of which has been furnished or is available to Lender;

                           (iv) Such Account, and Lender's security interest
         therein, is not, and will not (by voluntary act or omission of any
         Borrower) be in the future, subject to any offset, Lien, deduction,
         defense, dispute, counterclaim or any other adverse condition except
         for disputes resulting in returned goods where the amount in
         controversy is deemed by Lender to be immaterial, and each such Account
         is absolutely owing to such Borrower and is not contingent in any
         respect or for any reason;

                           (v) Borrowers have made no agreement with any Account
         Debtor thereunder for any extension, compromise, settlement or
         modification of any such Account or any deduction therefrom, except
         discounts or allowances which are granted by a Borrower in the ordinary
         course of its business for prompt payment and which are reflected in
         the calculation of the net amount of each respective invoice related
         thereto and are reflected in the Schedules of Accounts submitted to
         Lender pursuant to subsection 6.2.1 hereof;

                           (vi) There are no facts, events or occurrences which
         in any way impair the validity or enforceability of any Accounts or
         tend to reduce the amount payable thereunder from the face amount of
         the invoice and statements delivered to Lender with respect thereto;

                           (vii) To the best of each Borrower's knowledge, the
         Account Debtor thereunder (1) had the capacity to contract at the time
         any contract or other document giving rise to the Account was executed
         and (2) such Account Debtor is Solvent; and

                           (viii) To the best of each Borrower's knowledge,
         there are no proceedings or actions which are threatened or pending
         against any Account Debtor thereunder which might result in any
         material adverse change in such Account Debtor's financial condition or
         the collectibility of such Account.

                           7.1.9 Equipment. The Equipment is in good operating
                  condition and repair, and all necessary replacements of and
                  repairs thereto shall be made so that the value and operating
                  efficiency of the Equipment shall be maintained and preserved,
                  reasonable wear and tear excepted. Borrowers will not permit
                  any of the Equipment to become affixed to any real Property
                  leased to any Borrower so that an interest arises therein
                  under the real estate laws of the applicable jurisdiction
                  unless the landlord of such real Property has executed a
                  landlord waiver or leasehold mortgage in favor of and in form
                  acceptable to Lender, and no Borrower will permit any of the
                  Equipment to become an accession to any personal Property
                  other than Equipment that is subject to first priority (except
                  for Permitted Liens) Liens in favor of Lender.

                           7.1.10 Financial Statements; Fiscal Year. The
                  Consolidated and consolidating balance sheets of Company and
                  such other Persons described therein (including the accounts
                  of all Subsidiaries of Company for the respective periods
                  during which a Subsidiary relationship existed) as of December
                  31, 1995, and the related statements of income, changes in
                  stockholder's equity, and changes in financial position for
                  the periods ended on such dates, have been prepared in
                  accordance with GAAP, and present fairly the financial
                  positions of Company and such Persons at such dates and the
                  results of Company's operations for such periods. Since
                  December 31, 1995, there has been no material change in the
                  condition, financial or otherwise, of Company and such other
                  Persons as shown on the Consolidated balance sheet as of such
                  date and no change in the aggregate value of Equipment and
                  real Property owned by Borrowers or such other Persons, except
                  changes in the ordinary course of business, none of which
                  individually or in the aggregate has been materially adverse.
                  The fiscal year of Company, Borrowers and each of their
                  respective Subsidiaries ends on December 31st of each year.

                           7.1.11 Full Disclosure. The financial statements
                  referred to in subsection 7.1.10 hereof do not, nor does this
                  Agreement or any other written statement of any Borrower to
                  Lender, contain any untrue statement of a material fact or
                  omit a material fact necessary to make the statements
                  contained therein or herein not misleading. There is no fact
                  which any Borrower has failed to disclose to Lender in writing
                  which materially affects adversely or, so far as any Borrower
                  can now foresee, will materially affect adversely the
                  Properties, business, prospects, profits or condition
                  (financial or otherwise) of any Borrower or any of their
                  respective Subsidiaries or the ability of any Borrower or any
                  of their respective Subsidiaries to perform this Agreement or
                  the other Loan Documents.

                           7.1.12 Solvent Financial Condition. Each Borrower and
                  each of their respective Subsidiaries is now and, after giving
                  effect to the Loans and the provisions of Section 11.17 of
                  this Agreement and the applicable reimbursement provisions of
                  the Subordinated Debt Documents, at all times will be,
                  Solvent.

                           7.1.13 Surety Obligations. No Borrower or any of such
                  Borrower's respective Subsidiaries is obligated as surety or
                  indemnitor under any surety or similar bond or other contract
                  issued or entered into any agreement to assure payment,
                  performance or completion of performance of any undertaking or
                  obligation of any Person.

                           7.1.14 Taxes. Company's federal tax identification
                  number is 41-1642846. EPI's federal tax identification number
                  is 47-0675821. PPI's federal tax identification number is
                  93-0814642. APP's federal tax identification number is
                  87-0463461. The federal tax identification number of each of
                  Borrowers' Subsidiaries is shown on Exhibit G hereto. Company,
                  Borrowers and each of their respective Subsidiaries have filed
                  all federal, state and local tax returns and other reports any
                  of them is required by law to file and has paid, or made
                  provision for the payment of, all taxes, assessments, fees,
                  levies and other governmental charges upon any of them, any of
                  their income and Properties as and when such taxes,
                  assessments, fees, levies and charges that are due and
                  payable, unless and to the extent any thereof are being
                  actively contested in good faith and by appropriate
                  proceedings and Company and Borrowers maintains reasonable
                  reserves on their books therefor. The provision for taxes on
                  the books of Company and Borrowers and their respective
                  Subsidiaries are adequate for all years not closed by
                  applicable statutes, and for its current fiscal year.

                           7.1.15 Brokers. Except for fees payable to BA
                  Securities, Inc. in an amount not to exceed $345,000, there
                  are no claims for brokerage commissions, finder's fees or
                  investment banking fees in connection with the transactions
                  contemplated by this Agreement.

                           7.1.16 Patents, Trademarks, Copyrights and Licenses.
                  Each Borrower and each of their respective Subsidiaries owns
                  or possesses all the patents, trademarks, service marks, trade
                  names, copyrights and licenses necessary for the present and
                  planned future conduct of its business without any known
                  conflict with the rights of others. All such patents,
                  trademarks, service marks, tradenames, copyrights, licenses
                  and other similar rights are listed on Exhibit H hereto.

                           7.1.17 Governmental Consents. Each Borrower and each
                  of their respective Subsidiaries has, and is in good standing
                  with respect to, all governmental consents, approvals,
                  licenses, authorizations, permits, certificates, inspections
                  and franchises necessary to continue to conduct its business
                  as heretofore or proposed to be conducted by it and to own or
                  lease and operate its Properties as now owned or leased by it.

                           7.1.18 Compliance with Laws. Each Borrower and each
                  of their respective Subsidiaries has duly complied with, and
                  its Properties, business operations and leaseholds are in
                  compliance in all material respects with, the provisions of
                  all federal, state and local laws, rules and regulations
                  applicable to such Borrower or such Subsidiary, as applicable,
                  its Properties or the conduct of its business and there have
                  been no citations, notices or orders of noncompliance issued
                  to such Borrower or any of their respective Subsidiaries under
                  any such law, rule or regulation. Each Borrower and each of
                  their respective Subsidiaries has established and maintains an
                  adequate monitoring system to insure that it remains in
                  compliance with all federal, state and local laws, rules and
                  regulations applicable to it. No Inventory has been produced
                  in violation of the Fair Labor Standards Act (29 U.S.C.
                  ss 201 et seq.) as amended.

                           7.1.19 Restrictions. No Borrower or any of Borrowers'
                  Subsidiaries are or is a party or subject to any contract,
                  agreement, or charter or other corporate restriction, which
                  materially and adversely affects its business or the use or
                  ownership of any of its Properties. No Borrower or any of
                  their respective Subsidiaries are or is a party or subject to
                  any contract or agreement which restricts its right or ability
                  to incur Indebtedness, other than as set forth on Exhibit I
                  hereto, none of which prohibit the execution of or compliance
                  with this Agreement or the other Loan Documents by Borrowers
                  or any of their respective Subsidiaries, as applicable.

                           7.1.20 Litigation. Except as set forth on Exhibit J
                  hereto, there are no actions, suits, proceedings or
                  investigations pending, or to the knowledge of any Borrower,
                  threatened, against or affecting any Borrower or any of their
                  respective Subsidiaries, or the business, operations,
                  Properties, prospects, profits or condition of any Borrower or
                  any of their respective Subsidiaries. No Borrower or any of
                  Borrowers' respective Subsidiaries are or is in default with
                  respect to any order, writ, injunction, judgment, decree or
                  rule of any court, governmental authority or arbitration board
                  or tribunal.

                           7.1.21 No Defaults. No event has occurred and no
                  condition exists which would, upon or after the execution and
                  delivery of this Agreement or Borrowers' performance
                  hereunder, constitute a Default or an Event of Default. No
                  Borrower or any of Borrowers' respective Subsidiaries are or
                  is in default, and no event has occurred and no condition
                  exists which constitutes, or which with the passage of time or
                  the giving of notice or both would constitute, a default in
                  the payment of any Indebtedness to any Person for Money
                  Borrowed.

                           7.1.22 Leases. Exhibit K hereto is a complete listing
                  of all capitalized leases of Borrowers and their respective
                  Subsidiaries and Exhibit L hereto is a complete listing of all
                  operating leases of Borrowers and their respective
                  Subsidiaries. Each Borrower and each of their respective
                  Subsidiaries is in full compliance with all of the terms of
                  each of its respective capitalized and operating leases.

                           7.1.23 Pension Plans. Except as disclosed on Exhibit
                  M hereto, no Borrower or any of Borrowers' Subsidiaries has
                  any Plan. Each Borrower and each of their respective
                  Subsidiaries is in full compliance with the requirements of
                  ERISA and the regulations promulgated thereunder with respect
                  to each Plan. No fact or situation that could result in a
                  material adverse change in the financial condition of
                  Borrowers or any of their respective Subsidiaries exists in
                  connection with any Plan. No Borrower or any of Borrowers'
                  respective Subsidiaries has any withdrawal liability in
                  connection with a Multiemployer Plan.

                           7.1.24 Trade Relations. There exists no actual or
                  threatened termination, cancellation or limitation of, or any
                  modification or change in, the business relationship between
                  any Borrower or any of their respective Subsidiaries and any
                  customer or any group of customers whose purchases
                  individually or in the aggregate are material to the business
                  of any Borrower or any of their respective Subsidiaries, or
                  with any material supplier, and there exists no present
                  condition or state of facts or circumstances which would
                  materially affect adversely any Borrower or any of their
                  respective Subsidiaries or prevent any Borrower or any of
                  their respective Subsidiaries from conducting such business
                  after the consummation of the transaction contemplated by this
                  Agreement in substantially the same manner in which it has
                  heretofore been conducted.

                           7.1.25 Labor Relations. Except as described on
                  Exhibit N hereto, neither Borrowers nor any of their
                  respective Subsidiaries are or is a party to any collective
                  bargaining agreement. There are no material grievances,
                  disputes or controversies with any union or any other
                  organization of Borrowers' or any of their respective
                  Subsidiaries' employees, or threats of strikes, work stoppages
                  or any asserted pending demands for collective bargaining by
                  any union or organization.

         7.2      Continuous Nature of Representations and Warranties. Each
                  representation and warranty contained in this Agreement and
                  the other Loan Documents shall be continuous in nature and
                  shall remain accurate, complete and not misleading at all
                  times during the term of this Agreement, except for changes in
                  the nature of Borrowers' or their respective Subsidiaries'
                  business or operations that would render the information in
                  any exhibit attached hereto either inaccurate, incomplete or
                  misleading, so long as Lender has consented to such changes or
                  such changes are expressly permitted by this Agreement.

         7.3      Survival of Representations and Warranties. All
                  representations and warranties of Borrowers contained in this
                  Agreement or any of the other Loan Documents shall survive the
                  execution, delivery and acceptance thereof by Lender and the
                  parties thereto and the closing of the transactions described
                  therein or related thereto.

SECTION 8.  COVENANTS AND CONTINUING AGREEMENTS

         8.1      Affirmative Covenants. During the term of this Agreement, and
                  thereafter for so long as there are any Obligations to Lender,
                  Borrowers covenant that, unless otherwise consented to by
                  Lender in writing, they each shall:

                  8.1.1 Visits and Inspections. Permit representatives of
                  Lender, from time to time, as often as may be reasonably
                  requested, but only during normal business hours, to visit and
                  inspect the Properties of Borrowers and each of their
                  respective Subsidiaries, inspect, audit and make extracts from
                  its books and records, and discuss with its officers, its
                  employees and its independent accountants, Borrowers' and each
                  of their respective Subsidiaries' business, assets,
                  liabilities, financial condition, business prospects and
                  results of operations.

                  8.1.2 Notices. Promptly notify Lender in writing of the
                  occurrence of any event or the existence of any fact which
                  renders any representation or warranty in this Agreement or
                  any of the other Loan Documents inaccurate, incomplete or
                  misleading.

                  8.1.3 Financial Statements. Keep, and cause each of their
                  respective Subsidiaries to keep, adequate records and books of
                  account with respect to its business activities in which
                  proper entries are made in accordance with GAAP reflecting all
                  its financial transactions; and cause to be prepared and
                  furnished to Lender the following (all to be prepared in
                  accordance with GAAP applied on a consistent basis, unless
                  Company's or Borrowers' certified public accountants concur in
                  any change therein and such change is disclosed to Lender and
                  is consistent with GAAP):

                           (i) not later than 105 days after the close of each
         fiscal year of Company, unqualified audited (in respect to the
         Consolidated financial statements only) financial statements of Company
         and its Subsidiaries (including, without limitation, EPI PPI and APP)
         as of the end of such year, on a Consolidated and consolidating basis,
         certified (in respect to the Consolidated financial statements only) by
         a firm of independent certified public accountants of recognized
         standing selected by Company but acceptable to Lender (except for a
         qualification for a change in accounting principles with which the
         accountant concurs);

                           (ii) not later than 30 days after the end of each
         month hereafter, including the last month of Company's fiscal year,
         unaudited interim financial statements of Company and its respective
         Subsidiaries (including, without limitation, EPI, PPI and APP) as of
         the end of such month and of the portion of Company's financial year
         then elapsed, on a Consolidated and consolidating basis, certified by
         the principal financial officer of Company as prepared in accordance
         with GAAP and fairly presenting the Consolidated financial position and
         results of operations of Company and its Subsidiaries (including,
         without limitation, EPI, PPI and APP) for such month and period subject
         only to changes from audit and year-end adjustments and except that
         such statements need not contain notes;

                           (iii) promptly after the sending or filing thereof,
         as the case may be, copies of any proxy statements, financial
         statements or reports which Company or Borrowers has or have made
         available to its shareholders and copies of any regular, periodic and
         special reports or registration statements which Company or Borrowers
         files or file with the Securities and Exchange Commission or any
         governmental authority which may be substituted therefor, or any
         national securities exchange;

                           (iv) promptly after the filing thereof, copies of any
         annual report to be filed with ERISA in connection with each Plan; and

                           (v) such other data and information (financial and
         otherwise) as Lender, from time to time, may reasonably request,
         bearing upon or related to the Collateral or Borrowers' and each of
         their respective Subsidiaries' financial condition or results of
         operations.

                  Concurrently with the delivery of the financial statements
                  described in clause (i) of this subsection 8.1.3, Borrowers
                  shall forward to Lender a copy of the accountants' letter to
                  Borrowers' or Company's management that is prepared in
                  connection with such financial statements and also shall cause
                  to be prepared and shall furnish to Lender a certificate of
                  the aforesaid certified public accountants certifying to
                  Lender that, based upon their examination of the financial
                  statements of Company and its Subsidiaries performed in
                  connection with their examination of said financial
                  statements, they are not aware of any Default or Event of
                  Default, or, if they are aware of such Default or Event of
                  Default, specifying the nature thereof, and acknowledging, in
                  a manner satisfactory to Lender, that they are aware that
                  Lender is relying on such financial statements in making its
                  decisions with respect to the Loans. Concurrently with the
                  delivery of the financial statements described in clauses (i)
                  and (ii) of this subsection 8.1.3, or more frequently if
                  requested by Lender, Borrowers shall cause to be prepared and
                  furnished to Lender a Compliance Certificate in the form of
                  Exhibit O hereto executed by the Chief Financial Officer of
                  Company.

                  Borrowers authorize Lender or its designated representatives
                  to communicate directly with their independent certified
                  public accountants and authorize those accountants to disclose
                  to Lender any and all financial statements and other
                  supporting financial documents and schedules. At or before the
                  initial Closing Date, Borrowers' shall cause Company to
                  deliver a letter addressed to such accountants instructing
                  them to comply with the provisions of this Section 8.1.3.
                  Further within five (5) days after the earlier of the last day
                  of each fiscal year of Company and the date Company engaged
                  independent certified public accountants to audit Company's
                  financial statements, Borrowers shall cause Company to deliver
                  to such independent certified public accountants a letter from
                  Company addressed to such independent certified public
                  accountants indicating that it is a primary intention of
                  Company in engaging such accountants that Lender relies upon
                  such financial statements of Company and its Subsidiaries,
                  including without limitation, EPI, PPI and APP.

                           8.1.4 Landlord and Storage Agreements. Provide Lender
                  with copies of all agreements between any Borrower or any of
                  their respective Subsidiaries and any landlord or warehouseman
                  which owns any premises at which any Inventory may, from time
                  to time, be kept.

                           8.1.5 Projections. No later than 30 days prior to the
                  end of each fiscal year of Borrowers, deliver to Lender
                  Projections of Company and each Borrower on a Consolidated and
                  unconsolidated basis for the forthcoming 3 years, year by
                  year, and for the forthcoming fiscal year, month by month.

         8.2      Negative Covenants. During the term of this Agreement, and
                  thereafter for so long as there are any Obligations to Lender,
                  Borrowers covenant that, unless Lender has first consented
                  thereto in writing, they will not:

                           8.2.1 Mergers; Consolidations; Acquisitions. Merge or
                  consolidate, or permit any Subsidiary of any Borrower to merge
                  or consolidate, with any Person; nor acquire, nor permit any
                  of its Subsidiaries to acquire, all or any substantial part of
                  the Properties of any Person, unless prior to the consummation
                  of any such merger, consolidation or acquisition, Lender has
                  consented in writing to such transaction, which consent shall
                  not be unreasonably withheld or delayed.

                           8.2.2 Loans. Except as provided in Section 8.2.7
                  hereof, make, or permit any Subsidiary of any Borrower to
                  make, any loans or other advances of money (other than for
                  salary, travel advances, advances against commissions and
                  other similar advances in the ordinary course of business) to
                  any Person, except that if after giving effect to any such
                  loan or advance, there is no existing and continuing Default
                  or Event of Default and Availability exceeds One Million
                  Dollars ($1,000,000), then EPI may make loans and advances to
                  PPI and/or APP and PPI and/or APP may make loans and advances
                  to EPI.

                           8.2.3 Total Indebtedness. Create, incur, assume, or
                  suffer to exist, or permit any Subsidiary of any Borrower to
                  create, incur or suffer to exist, any Indebtedness, except:

                           (i)     Obligations owing to Lender;

                           (ii)    Subordinated Debt outstanding in respect to
         and the Subordinated Debt Documents;

                           (iii)   Indebtedness of any Subsidiary of any
         Borrower to such Borrower;

                           (iv) accounts payable to trade creditors and current
         operating expenses (other than for Money Borrowed) which are not aged
         more than 30 days from the due date, in each case incurred in the
         ordinary course of business and paid within such time period, unless
         the same are being actively contested in good faith and by appropriate
         and lawful proceedings; and the applicable Borrowers or such Subsidiary
         shall have set aside such reserves, if any, with respect thereto as are
         required by GAAP and deemed adequate by the applicable Borrower or such
         Subsidiary and its independent accountants;

                           (v) Obligations to pay Rentals permitted by
         subsection 8.2.13;

                           (vi) Permitted Purchase Money Indebtedness;

                           (vii) contingent liabilities arising out of
         endorsements of checks and other negotiable  instruments for deposit or
         collection in the ordinary course of business;

                           (viii) Indebtedness of EPI to PPI and/or APP
         or Indebtedness of PPI and/or APP to EPI, to the extent any such
         Borrower was permitted to make such loan or advance pursuant to Section
         8.2.2. above;

                           (ix) Indebtedness outstanding under the Hastings
         Documents;

                           (x) Indebtedness outstanding under the Promissory
         Note and Stock Pledge Agreement;

                           (xi) Indebtedness under Capitalized Leases listed on
         Exhibit K;

                           (xii) Indebtedness incurred in connection with the
         acquisition of approximately 30 acres of vacant land in Hembree,
         Oregon, in a principal amount not to exceed One Hundred Three Thousand
         Dollars ($103,000); and

                           (xiii) Indebtedness not included in paragraphs (i)
         through (xii) above which does not exceed at any time, in the
         aggregate, the sum of $250,000.

                           8.2.4 Affiliate Transactions. Enter into, or be a
                  party to, or permit any Subsidiary of any Borrower to enter
                  into or be a party to, any transaction with any Affiliate of
                  any Borrower or stockholder, except in the ordinary course of
                  and pursuant to the reasonable requirements of such Borrower's
                  or such Subsidiary's business and upon fair and reasonable
                  terms which are fully disclosed to Lender and are no less
                  favorable to such Borrower than what would be obtainable in a
                  comparable arm's length transaction with a Person not an
                  Affiliate or stockholder of any Borrower or such Subsidiary.

                           8.2.5 Limitation on Liens. Create or suffer to exist,
                  or permit any Subsidiary of any Borrower to create or suffer
                  to exist, any Lien upon any of its Property, income or
                  profits, whether now owned or hereafter acquired, except:

                           (i) Liens at any time granted in favor of Lender;

                           (ii) Liens for taxes (excluding any Lien imposed
         pursuant to any of the provisions of ERISA) not yet due, or being
         contested in the manner described in subsection 7.1.14 hereto, but only
         if in Lender's judgment such Lien does not adversely affect Lender's
         rights or the priority of Lender's Lien in the Collateral;

                           (iii) Liens arising in the ordinary course of any
         Borrower's business by operation of law or regulation, but only if
         payment in respect of any such Lien is not at the time required and
         such Liens do not, in the aggregate, materially detract from the value
         of the Property of any Borrower or materially impair the use thereof in
         the operation of any Borrower's business;

                           (iv) Purchase Money Liens securing Permitted Purchase
         Money Indebtedness;

                           (v) Liens securing Indebtedness of one of the
         Borrowers' Subsidiaries to any Borrower or another such Subsidiary;

                           (vi) such other Liens as appear on Exhibit P hereto;

                           (vii) Liens on approximately 30 acres of vacant land
         in Hembree, Oregon, securing the Indebtedness described in Section
         8.2.3(xii);

                           (viii) Liens securing Indebtedness outstanding under
         that certain Redevelopment Contract between the City of Hastings,
         Nebraska and EPI and related notes, documents and agreements; and

                           (ix) such other Liens as Lender may hereafter approve
         in writing.

                           8.2.6 Subordinated Debt and Other Indebtedness. Make,
                  or permit any Subsidiary of any Borrower to make, any payment
                  or repurchase of any part or all of any Subordinated Debt or
                  take any other action or omit to take any other action in
                  respect of any Subordinated Debt, except in accordance with
                  the Intercreditor and Subordination Agreement relative thereto
                  or other subordination agreement relative thereto. Except for
                  regularly scheduled (as of the Closing Date) payments of
                  principal and interest, make or permit any Subsidiary of any
                  Borrower to make any payment or repurchase of any part or all
                  of any of the Indebtedness outstanding under the Hastings
                  Documents or the Promissory Note and Stock Pledge Agreement.
                  Amend or modify any of the Subordinated Debt Documents, the
                  Hastings Documents or the Promissory Note and Stock Pledge
                  Agreement in any manner adverse to Borrower or Lender. The
                  foregoing notwithstanding:

                           (i) Borrower may prepay or repurchase up to Two
         Million Dollars ($2,000,000) of the principal amount of the
         Indebtedness outstanding under the Subordinated Debt Documents if, (x)
         after giving effect to any such prepayment or repurchase, there would
         exist and be continuing no Default or Event of Default, (y) immediately
         prior to such repayment or repurchase and immediately after such
         prepayment or repurchase the outstanding principal balance of the
         Revolving Credit Loan is $0, and (z) the funds used to effect such
         prepayment or repurchase are not the proceeds of Revolving Credit
         Loans; and

                           (ii) after effecting the prepayment or repurchase
         provided for in clause (i) above, Borrowers may prepay or repurchase up
         to an additional One Million Five Hundred Thousand Dollars ($1,500,000)
         of the principal amount of the Indebtedness outstanding under the
         Subordinated Debt Documents if (x) after giving effect to any such
         prepayment or repurchase, there would exist and be continuing no
         Default or Event of Default, (y) immediately prior to such prepayment
         or repurchase the outstanding principal balance of the Revolving Credit
         Loan is $0, (z) the funds used to effect such prepayment or repurchase
         are not the proceeds of Revolving Credit Loans, and (aa) Lender has
         elected in writing not to have the funds to be used to effect such
         prepayment or repurchase applied to a prepayment of the outstanding
         principal balance of the Term Loan. If Lender does elect to have such
         funds be applied to a prepayment of the Term Loan such prepayment shall
         be accompanied by the prepayment fee provided for in Section 4.2.3,
         shall be applied to installments of principal in inverse order of
         maturity, and shall be applied, pro rata, to the outstanding principal
         balance of the EPI Term Note, the PPI Term Note and the APP Term Note.

                           8.2.7 Distributions. Declare or make, or permit any
                  Subsidiary of any Borrower to declare or make, any
                  Distributions; provided, however, that:

                           (a) immediately after the closing of the transactions
         contemplated hereby, Borrowers may make Distributions to Company in an
         amount not to exceed Four Million Twenty Thousand Dollars ($4,020,000)
         in order to permit Company to repay Four Million Twenty Thousand
         Dollars ($4,020,000) of Indebtedness owed under the Subordinated Debt
         Documents;

                           (b) EPI may make distributions to Company to permit
         Company to purchase or redeem shares of EPI's common stock, $0.01, par
         value, if (i) the aggregate purchase price for all such shares of
         common stock does not exceed (x) Five Hundred Seventy-Five Thousand
         Dollars ($575,000) for the period ending December 31, 1996 and (y) the
         lesser of the purchase price per share of such common stock multiplied
         by 157,000 shares of such common stock or $1,000,000 for each of the
         periods ending December 31, 1997 and December 31, 1998; and (ii) after
         giving effect to any such purchase there exists and is continuing no
         Default or Event of Default;

                           (c) Borrowers may make Distributions to the Company
         to allow the Company to pay dividends on the Company's preferred stock
         if after giving effect to any such Distribution there exists and is
         continuing no Default or Event of Default;

                           (d) APP may make Distributions to PPI;

                           (e) Borrowers may make Distributions or loans to the
         Company to (i) pay general operating expenses, provided such
         Distributions do not exceed $300,000 on an annual basis, and (ii) pay
         costs and expenses incurred by Blair in completing the transactions
         contemplated hereunder;

                           (f) If after giving effect to any such Distribution
         there would exist no Default or Event of Default, EPI and PPI may make
         Distributions to Company in amounts sufficient to permit Company to pay
         interest due on Company's Indebtedness outstanding pursuant to the
         Indebtedness outstanding pursuant to the Subordinated Debt Documents;
         and

                           (g) Any Borrower may make Distributions to Company to
         permit Company to prepay or repurchase Indebtedness outstanding under
         the Subordinated Debt Documents if such repurchase or prepayment is
         permitted pursuant to Section 8.2.6 above.

                           8.2.8 Capital Expenditures. Make Capital Expenditures
                  (including, without limitation, by way of capitalized leases)
                  which, in the aggregate, as to Borrowers and their respective
                  Subsidiaries during any fiscal year of Borrowers exceeds the
                  amount set forth opposite such fiscal year in the following
                  schedule:

                  Fiscal Year Ending             Permitted Capital Expenditure
                  ------------------             -----------------------------

                  December 31, 1996                       $2,600,000
                  December 31, 1997                       $1,500,000
                  December 31, 1998 and each              $1,500,000
                  subsequent fiscal year

                           8.2.9 Disposition of Assets. Sell, lease or otherwise
                  dispose of any of, or permit any Subsidiary of any Borrower to
                  sell, lease or otherwise dispose any of, its Properties,
                  including any disposition of Property as part of a sale and
                  leaseback transaction, to or in favor of any Person, except
                  (i) sales of Inventory in the ordinary course of business for
                  so long as no Event of Default exists hereunder, (ii) a
                  transfer of Property to any Borrower by a Subsidiary of such
                  Borrower or (iii) dispositions expressly authorized by this
                  Agreement.

                           8.2.10 Stock of Subsidiaries. Permit any of their
                  respective Subsidiaries to issue any additional shares of its
                  capital stock except director's qualifying shares.

                           8.2.11 Bill-and-Hold Sales, Etc. Make a sale to any
                  customer on a bill-and-hold, guaranteed sale, sale and return,
                  sale on approval or consignment basis, or any sale on a
                  repurchase or return basis.

                           8.2.12 Restricted Investment. Except as otherwise
                  permitted by Section 8.2.2, make or have, or permit any
                  Subsidiary of any Borrower to make or have, any Restricted
                  Investment.

                           8.2.13 Leases. Become, or permit any of their
                  respective Subsidiaries to become, a lessee under any
                  operating lease (other than a lease under which any Borrower
                  or any of their respective Subsidiaries is lessor) of Property
                  if the aggregate Rentals payable during any current or future
                  period of 12 consecutive months under the lease in question
                  and all other leases under which Borrowers or any of their
                  respective Subsidiaries is then lessee would exceed $500,000.
                  The term "Rentals" means, as of the date of determination, all
                  payments which the lessee is required to make by the terms of
                  any lease.

                           8.2.14 Tax Consolidation. File or consent to the
                  filing of any consolidated income tax return with any Person
                  other than a Subsidiary of any Borrower or Company.

         8.3      Specific Financial Covenants. During the term of this
                  Agreement, and thereafter for so long as there are any
                  Obligations to Lender, Borrower covenants that, unless
                  otherwise consented to by Lender in writing, it shall:

                           8.3.1 Minimum Consolidated Adjusted Tangible Net
                  Worth. Maintain at all times within each of the following
                  periods, a Consolidated Adjusted Tangible Net Worth of not
                  less than the amount shown below for the period corresponding
                  thereto:

Period                                               Amount
------                                               ------
June 30, 1996 through and
including September 29, 1996                         ($1,000,000)

September 30, 1996 through and
including December 30, 1996                          ($100,000)

December 31, 1996 through and
including March 30, 1997                             $200,000

March 31, 1997 through and
including June 29, 1997                              $300,000

June 30, 1997 through and
including September 29, 1997                         $1,300,000

September 30, 1997 through and
including December 30, 1997                          $2,200,000

December 31, 1997 through and
including March 30, 1998                             $2,500,000

March 31, 1998 through and
including June 29, 1998                              $2,600,000

June 30, 1998 through and
including September 29, 1998                         $3,600,000

September 30, 1998 through and
including December 30, 1998                          $4,500,000

December 31, 1998 through and
including March 30, 1999                             $4,800,000

March 31, 1999 through and
including each fiscal quarter thereafter             $4,900,000

                           8.3.2 Consolidated Net Cash Flow. Achieve
                  Consolidated Net Cash Flow for each of the periods listed
                  below equal to or greater than the amount set forth opposite
                  such period:

Net Cash Flow                                        Amount
-------------                                        ------
January 1, 1996 through and
including June 30, 1996                              $150,000

January 1, 1996 through and
including September 30, 1996                         $650,000

January 1, 1996 through and
including December 31, 1996                          $500,000

January 1, 1997 through and
including March 31, 1997                             ($500,000)

January 1, 1997 through and
including June 30, 1997                              $150,000

January 1, 1997 through and
including September 30, 1997                         $650,000

January 1, 1997 through and
including December 31, 1997                          $500,000

January 1, 1998 through and
including March 31, 1998                             ($500,000)

January 1, 1998 through and
including June 30, 1998                              $150,000

January 1, 1998 through and
including September 30, 1998                         $650,000

January 1, 1998 through and
including December 31, 1998                          $500,000

January 1, 1999 through and
including March 31, 1999                             ($500,000)

                           8.3.3 Senior Interest Coverage Ratio. Achieve, at the
                  end of each fiscal quarter within the term hereof a Senior
                  Interest Coverage Ratio equal to or greater than the ratio
                  shown below for the quarter corresponding thereto:

Each Fiscal Quarter Ending                            Ratio
--------------------------                            -----
March 31                                              1.65 to 1

June 30                                               3.50 to 1

September 30                                          4.50 to 1

December 31                                           2.40 to 1


SECTION 9.  CONDITIONS PRECEDENT

                  Notwithstanding any other provision of this Agreement or any
                  of the other Loan Documents, and without affecting in any
                  manner the rights of Lender under the other sections of this
                  Agreement, Lender shall not be required to make any Loan under
                  this Agreement unless and until each of the following
                  conditions has been and continues to be satisfied:

         9.1      Documentation. Lender shall have received, in form and
                  substance satisfactory to Lender and its counsel, a duly
                  executed copy of this Agreement and the other Loan Documents,
                  together with such additional documents, instruments and
                  certificates as Lender and its counsel shall require in
                  connection therewith from time to time, including all
                  documents, instruments, agreements and schedules listed in the
                  Schedule of Documents attached hereto and incorporated herein
                  as Exhibit Q, all in form and substance satisfactory to Lender
                  and its counsel.

         9.2      No Default. No Default or Event of Default shall exist.

         9.3      Other Loan Documents. Each of the conditions precedent set
                  forth in the other Loan Documents shall have been satisfied.

         9.4      Equity. Lender shall have received evidence satisfactory to it
                  that not less than One Million Five Hundred Thousand Dollars
                  ($1,500,000) in cash has been contributed as common equity to
                  the capital of Company.

         9.5      Subordinated Debt. Lender shall have received evidence
                  satisfactory to it that Blair, Company and Borrowers have
                  executed and delivered the Amendment Agreement and that the
                  Amendment Agreement will be in full force and effect upon the
                  payment contemplated by Section 8.2.7 hereof. The terms and
                  conditions of the Amendment Agreement shall be acceptable to
                  Lender. Lender shall have received evidence satisfactory to it
                  that, as of the Closing Date, at least Four Million Five
                  Hundred Thousand Dollars ($4,500,000) shall remain outstanding
                  under the Subordinated Debt Documents.

         9.6      Availability. Lender shall have determined that immediately
                  after Lender has made the initial Loans contemplated hereby,
                  and paid all closing costs incurred in connection with the
                  transactions contemplated hereby, Availability shall not be
                  less than Two Million Dollars ($2,000,000).

         9.7      No Litigation. No action, proceeding, investigation,
                  regulation or legislation shall have been instituted,
                  threatened or proposed before any court, governmental agency
                  or legislative body to enjoin, restrain or prohibit, or to
                  obtain damages in respect of, or which is related to or arises
                  out of this Agreement or the consummation of the transactions
                  contemplated hereby.

         9.8      Net Operating Carry Forward. Lender shall have received
                  evidence satisfactory to it from the Company and its counsel
                  that Company's net operating loss carry forward shall be
                  available to be applied against Company's and Borrowers'
                  consolidated taxable income for each tax year within the term
                  hereof in a manner consistent with projections provided to
                  Lender prior to the Closing.

SECTION 10.  EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

         10.1     Events of Default. The occurrence of one or more of the
                  following events shall constitute an "Event of Default":

                           10.1.1 Payment of Interest, Principal and Fees.
                  Borrowers shall fail to pay any interest or principal due in
                  respect to outstanding Revolving Credit Loans, the Term Loan
                  or any fees payable in respect to unused Revolving Credit
                  Loans on the due date thereof (whether due at stated maturity,
                  on demand, upon acceleration or otherwise).

                           10.1.2 Payment of Other Obligations. Borrowers shall
                  fail to pay any of the Obligations (other than interest and
                  principal due in respect to outstanding Revolving Credit
                  Loans, the Term Loan or any fees payable in respect to unused
                  Revolving Credit Loans) on or within five (5) days after the
                  due date for such Obligation (whether due at stated maturity,
                  on demand, upon acceleration or otherwise).

                           10.1.3 Misrepresentations. Any representation,
                  warranty or other statement made or furnished to Lender by or
                  on behalf of Company, Borrowers, any Subsidiary of any
                  Borrower in this Agreement, any of the other Loan Documents or
                  any instrument, certificate or financial statement furnished
                  in compliance with or in reference thereto proves to have been
                  false or misleading in any material respect when made or
                  furnished or when reaffirmed pursuant to Section 7.2 hereof.

                           10.1.4 Breach of Specific Covenants. Borrowers shall
                  fail or neglect to perform, keep or observe any covenant
                  contained in Sections 5.2, 5.3, 6.1.1, 6.2, 8.1.1, 8.1.3, 8.2
                  or 8.3 hereof on the date that Borrowers are required to
                  perform, keep or observe such covenant.

                           10.1.5 Breach of Other Covenants. Borrowers shall
                  fail or neglect to perform, keep or observe any covenant
                  contained in this Agreement (other than a covenant which is
                  dealt with specifically elsewhere in Section 10.1 hereof) and
                  the breach of such other covenant is not cured to Lender's
                  satisfaction within five (5) days after the sooner to occur of
                  any Borrower's receipt of notice of such breach from Lender or
                  the date on which such failure or neglect first becomes known
                  to any officer of any Borrower; provided, however, that if a
                  cure cannot be effected within such five (5) day period,
                  Borrowers shall have ten (10) additional days to effect such
                  cure if during such ten-day period Borrowers are diligent in
                  pursuing such a cure.

                           10.1.6 Default Under Security Documents/Other
                  Agreements. Any event of default shall occur under, or any
                  Borrower shall default in the performance or observance of any
                  term, covenant, condition or agreement contained in, any of
                  the Security Documents or the Other Agreements and such
                  default shall continue beyond any applicable grace period.

                           10.1.7 Other Defaults. There shall occur any default
                  or event of default on the part of any Borrower under any
                  agreement, document or instrument to which any Borrower is a
                  party or by which any Borrower or any of its Property is
                  bound, creating or relating to any Indebtedness (other than
                  the Obligations) if the payment or maturity of such
                  Indebtedness is accelerated in consequence of such event of
                  default or demand for payment of such Indebtedness is made.

                           10.1.8 Uninsured Losses. Any material loss, theft,
                  damage or destruction of any of the Collateral not fully
                  covered (subject to such deductibles as Lender shall have
                  permitted) by insurance.

                           10.1.9  Intentionally Omitted.

                           10.1.10 Insolvency and Related Proceedings. Any
                  Borrower or Company shall cease to be Solvent or shall suffer
                  the appointment of a receiver, trustee, custodian or similar
                  fiduciary, or shall make an assignment for the benefit of
                  creditors, or any petition for an order for relief shall be
                  filed by or against any Borrower or Company under the
                  Bankruptcy Code (if against any Borrower or Company, the
                  continuation of such proceeding for more than 30 days), or any
                  Borrower or Company shall make any offer of settlement,
                  extension or composition to their respective unsecured
                  creditors generally.

                           10.1.11 Business Disruption: Condemnation. There
                  shall occur a cessation of a substantial part of the business
                  of any Borrower, any Subsidiary of any Borrower or Company for
                  a period which significantly affects any Borrower's or
                  Company's capacity to continue its business, on a profitable
                  basis; or any Borrower, any Subsidiary of any Borrower or
                  Company shall suffer the loss or revocation of any license or
                  permit now held or hereafter acquired by any Borrower or
                  Company which is necessary to the continued or lawful
                  operation of its business; or any Borrower or Company shall be
                  enjoined, restrained or in any way prevented by court,
                  governmental or administrative order from conducting all or
                  any material part of its business affairs; or any material
                  lease or agreement pursuant to which any Borrower or Company
                  leases, uses or occupies any Property shall be canceled or
                  terminated prior to the expiration of its stated term; or any
                  part of the Collateral shall be taken through condemnation or
                  the value of such Property shall be impaired through
                  condemnation.

                           10.1.12 Change of Ownership. PPI shall cease to own
                  and control, beneficially and of record, all of the issued and
                  outstanding capital stock of APP; Company shall cease to own
                  and control, beneficially and of record, all of the issued and
                  outstanding capital stock of PPI and at least ninety-two
                  percent (92%) of the issued and common stock of EPI; or The
                  Spell Group shall cease to own and control, beneficially and
                  of record, at least ten percent (10%) of the issued and
                  outstanding capital stock of Company, on a fully diluted basis
                  after giving effect to the exercise of all options and
                  warrants and the conversion of the common stock of EPP and
                  warrants and options for the common stock of EPI into common
                  stock of the Company.

                           10.1.13 ERISA. A Reportable Event shall occur which
                  Lender, in its sole discretion, shall determine in good faith
                  constitutes grounds for the termination by the Pension Benefit
                  Guaranty Corporation of any Plan or for the appointment by the
                  appropriate United States district court of a trustee for any
                  Plan, or if any Plan shall be terminated or any such trustee
                  shall be requested or appointed, or if any Borrower, any
                  Subsidiary of any Borrower or Company is in "default" (as
                  defined in Section 4219(c)(5) of ERISA) with respect to
                  payments to a Multiemployer Plan resulting from any
                  Borrower's, such Subsidiary's or Company complete or partial
                  withdrawal from such Plan.

                           10.1.14 Challenge to Agreement. Any Borrower, any
                  Subsidiary of any Borrower or Company, or any Affiliate of any
                  of them, shall challenge or contest in any action, suit or
                  proceeding the validity or enforceability of this Agreement,
                  or any of the other Loan Documents, the legality or
                  enforceability of any of the Obligations or the perfection or
                  priority of any Lien granted to Lender.

                           10.1.15 Criminal Forfeiture. Any Borrower, any
                  Subsidiary of any Borrower or Company shall be criminally
                  indicted or convicted under any law that could lead to a
                  forfeiture of any Property of any Borrower, any Subsidiary of
                  any Borrower or Company.

                           10.1.16 Judgments. Final judgment or judgments (after
                  the expiration of all times to appeal therefrom) for the
                  payment of money in excess of $50,000 in the aggregate shall
                  be rendered against any Borrower or Company and the same shall
                  not (i) be fully covered by insurance or other comparable
                  bond, or (ii) within thirty days after the entry thereof, have
                  been discharged or execution thereof stayed pending appeal, or
                  shall not have been discharged within five days after the
                  expiration of any such stay.

         10.2     Acceleration of the Obligations. Without in any way limiting
                  the right of Lender to demand payment of any portion of the
                  Obligations payable on demand in accordance with Section 3.2
                  hereof, upon or at any time during the continuance of an Event
                  of Default, all or any portion of the Obligations shall, at
                  the option of Lender and without presentment, demand protest
                  or further notice by Lender, become at once due and payable
                  and Borrowers shall forthwith pay to Lender, the full amount
                  of such Obligations, provided, that upon the occurrence of an
                  Event of Default specified in subsection 10.1.10 hereof, all
                  of the Obligations shall become automatically due and payable
                  without declaration, notice or demand by Lender.

         10.3     Other Remedies. Upon and during the continuance of an Event of
                  Default, Lender shall have and may exercise from time to time
                  the following rights and remedies:

                           10.3.1 All of the rights and remedies of a secured
                  party under the Code or under other applicable law, and all
                  other legal and equitable rights to which Lender may be
                  entitled, all of which rights and remedies shall be cumulative
                  and shall be in addition to any other rights or remedies
                  contained in this Agreement or any of the other Loan
                  Documents, and none of which shall be exclusive.

                           10.3.2 The right to take immediate possession of the
                  Collateral, and to (i) require Borrower to assemble the
                  Collateral, at Borrowers' expense, and make it available to
                  Lender at a place designated by Lender which is reasonably
                  convenient to both parties, and (ii) enter any premises where
                  any of the Collateral shall be located and to keep and store
                  the Collateral on said premises until sold (and if said
                  premises be the Property of any Borrower, Borrowers agree not
                  to charge Lender for storage thereof).

                           10.3.3 The right to sell or otherwise dispose of all
                  or any Collateral in its then condition, or after any further
                  manufacturing or processing thereof, at public or private sale
                  or sales, with such notice as may be required by law, in lots
                  or in bulk, for cash or on credit, all in a commercially
                  reasonable manner. Borrowers agree that 10 days written notice
                  to Borrowers of any public or private sale or other
                  disposition of Collateral shall be reasonable notice thereof,
                  and such sale shall be at such locations as Lender may
                  designate in said notice. Lender shall have the right to
                  conduct such sales on any Borrower's premises, without charge
                  therefor, and such sales may be adjourned from time to time in
                  accordance with applicable law. Lender shall have the right to
                  sell, lease or otherwise dispose of the Collateral, or any
                  part thereof, for cash, credit or any combination thereof, and
                  Lender may purchase all or any part of the Collateral at
                  public or, if permitted by law, private sale and, in lieu of
                  actual payment of such purchase price, may set off the amount
                  of such price against the Obligations. The proceeds realized
                  from the sale of any Collateral may be applied, after allowing
                  2 Business Days for collection, first to the costs, expenses
                  and attorneys' fees incurred by Lender in collecting the
                  Obligations, in enforcing the rights of Lender under the Loan
                  Documents and in collecting, retaking, completing, protecting,
                  removing, storing, advertising for sale, selling and
                  delivering any Collateral, second to the interest due upon any
                  of the Obligations; third, to the principal of the
                  Obligations; and fourth to the Borrowers or as otherwise
                  directed by a court of competent jurisdiction. If any
                  deficiency shall arise, Borrowers shall remain liable to
                  Lender therefor.

                           10.3.4 Lender is hereby granted a license or other
                  right to use, without charge, Borrower's labels, patents,
                  copyrights, rights of use of any name, trade secrets,
                  tradenames, trademarks and advertising matter, or any Property
                  of a similar nature, as it pertains to the Collateral, in
                  advertising for sale and selling any Collateral and Borrower's
                  rights under all licenses and all franchise agreements shall
                  inure to Lender's benefit.

         10.4     Remedies Cumulative; No Waiver. All covenants, conditions,
                  provisions, warranties, guaranties, indemnities, and other
                  undertakings of Borrowers contained in this Agreement and the
                  other Loan Documents, or in any document referred to herein or
                  contained in any agreement supplementary hereto or in any
                  schedule or in any Guaranty Agreement given to Lender or
                  contained in any other agreement between Lender and Borrowers,
                  heretofore, concurrently, or hereafter entered into, shall be
                  deemed cumulative to and not in derogation or substitution of
                  any of the terms, covenants, conditions, or agreements of
                  Borrowers herein contained. The failure or delay of Lender to
                  require strict performance by Borrowers of any provision of
                  this Agreement or to exercise or enforce any rights, Liens,
                  powers, or remedies hereunder or under any of the aforesaid
                  agreements or other documents or security or Collateral shall
                  not operate as a waiver of such performance, Liens, rights,
                  powers and remedies, but all such requirements, Liens, rights,
                  powers, and remedies shall continue in full force and effect
                  until all Loans and all other Obligations owing or to become
                  owing from Borrowers to Lender shall have been fully
                  satisfied. None of the undertakings, agreements, warranties,
                  covenants and representations of Borrowers contained in this
                  Agreement or any of the other Loan Documents and no Event of
                  Default by Borrowers under this Agreement or any other Loan
                  Documents shall be deemed to have been suspended or waived by
                  Lender, unless such suspension or waiver is by an instrument
                  in writing specifying such suspension or waiver and is signed
                  by a duly authorized representative of Lender and directed to
                  Borrower.

SECTION 11.  MISCELLANEOUS

         11.1     Power of Attorney. Borrowers hereby irrevocably designate,
                  make, constitute and appoint Lender (and all Persons
                  designated by Lender) as Borrowers' true and lawful attorney
                  (and agent-in-fact) and Lender, or Lender's agent, may,
                  without notice to Borrowers and in any Borrowers' or Lender's
                  name, but at the cost and expense of Borrowers:

                           11.1.1 At such time or times upon or during the
                  continuation of a Default or an Event of Default as Lender or
                  said agent, in its sole discretion, may determine, endorse
                  Borrowers' name on any checks, notes, acceptances, drafts,
                  money orders or any other evidence of payment or proceeds of
                  the Collateral which come into the possession of Lender or
                  under Lender's control; provided that Lender may at any time
                  endorse any Borrower's name on any checks, notes, acceptance,
                  drafts, money orders or other evidence of payment in order to
                  effect the deposit of such items in a Dominion Account.

                           11.1.2 At such time or times upon or during the
                  continuation of an Event of Default as Lender or its agent in
                  its sole discretion may determine: (i) demand payment of the
                  Accounts from the Account Debtors, enforce payment of the
                  Accounts by legal proceedings or otherwise, and generally
                  exercise all of Borrowers' rights and remedies with respect to
                  the collection of the Accounts; (ii) settle, adjust,
                  compromise, discharge or release any of the Accounts or other
                  Collateral or any legal proceedings brought to collect any of
                  the Accounts or other Collateral; (iii) sell or assign any of
                  the Accounts and other Collateral upon such terms, for such
                  amounts and at such time or times as Lender deems advisable;
                  (iv) take control, in any manner, of any item of payment or
                  proceeds relating to any Collateral; (v) prepare, file and
                  sign Borrowers' name to a proof of claim in bankruptcy or
                  similar document against any Account Debtor or to any notice
                  of lien, assignment or satisfaction of lien or similar
                  document in connection with any of the Collateral; (vi)
                  receive, open and deal with all mail addressed to Borrowers
                  and to notify postal authorities to change the address for
                  delivery thereof to such address as Lender may designate;
                  (vii) endorse the name of Borrowers upon any of the items of
                  payment or proceeds relating to any Collateral and deposit the
                  same to the account of Lender on account of the Obligations;
                  (viii) endorse the name of Borrowers upon any chattel paper,
                  document, instrument, invoice, freight bill, bill of lading or
                  similar document or agreement relating to the Accounts,
                  Inventory and any other Collateral; (ix) use any Borrower's
                  stationery and sign the name of any Borrower to verifications
                  of the Accounts and notices thereof to Account Debtors; (x)
                  use the information recorded on or contained in any data
                  processing equipment and computer hardware and software
                  relating to the Accounts, Inventory, Equipment and any other
                  Collateral; (xi) make and adjust claims under policies of
                  insurance; and (xii) do all other acts and things necessary,
                  in Lender's determination, to fulfill Borrowers' obligations
                  under this Agreement.

         11.2     Indemnity. Borrowers hereby agree to indemnify Lender and hold
                  Lender harmless from and against any liability, loss, damage,
                  suit, action or proceeding ever suffered or incurred by Lender
                  (including reasonable attorneys fees and legal expenses) as
                  the result of Borrowers' failure to observe, perform or
                  discharge Borrowers' duties hereunder; provided, however,
                  Borrowers shall have no obligation to indemnify Lender for any
                  losses, costs, damages, penalties, forfeitures, claims or
                  expenses arising from Lender's gross negligence or wilful
                  misconduct. In addition, Borrowers shall defend Lender against
                  and save it harmless from all claims of any Person with
                  respect to the Collateral. Without limiting the generality of
                  the foregoing, these indemnities shall extend to any claims
                  asserted against Lender by any Person under any Environmental
                  Laws or similar laws by reason of Borrowers' or any other
                  Person's failure to comply with laws applicable to solid or
                  hazardous waste materials or other toxic substances.
                  Notwithstanding any contrary provision in this Agreement, the
                  obligation of Borrowers under this Section 11.2 shall survive
                  the payment in full of the Obligations and the termination of
                  this Agreement.

         11.3     Modification of Agreement; Sale of Interest. This Agreement
                  may not be modified, altered or amended, except by an
                  agreement in writing signed by Borrowers and Lender. Borrowers
                  may not sell, assign or transfer any interest in this
                  Agreement, any of the other Loan Documents, or any of the
                  Obligations, or any portion thereof, including, without
                  limitation, Borrowers' rights, title, interests, remedies,
                  powers, and duties hereunder or thereunder. Borrowers hereby
                  consent to Lender's participation, sale, assignment, transfer
                  or other disposition, at any time or times hereafter, of this
                  Agreement and any of the other Loan Documents, or of any
                  portion hereof or thereof, including, without limitation,
                  Lender's rights, title, interests, remedies, powers, and
                  duties hereunder or thereunder [and any such participation,
                  sale, assignment, transfer or other disposition shall be at
                  Lender's sole cost and expense.] In the case of an assignment,
                  the assignee shall have, to the extent of such assignment, the
                  same rights, benefits and obligations as it would if it were
                  "Lender" hereunder and Lender shall be relieved of all
                  obligations hereunder upon any such assignments. Borrowers
                  agree that they will use their best efforts to assist and
                  cooperate with Lender in any manner reasonably requested by
                  Lender to effect the sale of participations in or assignments
                  of any of the Loan Documents or any portion thereof or
                  interest therein, including, without limitation, assisting in
                  the preparation of appropriate disclosure documents at no
                  out-of-pocket cost to Borrowers. Borrowers further agree that
                  Lender may disclose credit information regarding Borrowers and
                  their respective Subsidiaries to any potential participant or
                  assignee.

         11.4     Severability. Wherever possible, each provision of this
                  Agreement shall be interpreted in such manner as to be
                  effective and valid under applicable law, but if any provision
                  of this Agreement shall be prohibited by or invalid under
                  applicable law, such provision shall be ineffective only to
                  the extent of such prohibition or invalidity, without
                  invalidating the remainder of such provision or the remaining
                  provisions of this Agreement.

         11.5     Successors and Assigns. This Agreement, the Other Agreements
                  and the Security Documents shall be binding upon and inure to
                  the benefit of the successors and assigns of Borrowers and
                  Lender permitted under Section 11.3 hereof.

         11.6     Cumulative Effect; Conflict of Terms. The provisions of the
                  Other Agreements and the Security Documents are hereby made
                  cumulative with the provisions of this Agreement. Except as
                  otherwise provided in Section 3.2 hereof and except as
                  otherwise provided in any of the other Loan Documents by
                  specific reference to the applicable provision of this
                  Agreement, if any provision contained in this Agreement is in
                  direct conflict with, or inconsistent with, any provision in
                  any of the other Loan Documents, the provision contained in
                  this Agreement shall govern and control.

         11.7     Execution in Counterparts. This Agreement may be executed in
                  any number of counterparts and by different parties hereto in
                  separate counterparts, each of which when so executed and
                  delivered shall be deemed to be an original and all of which
                  counterparts taken together shall constitute but one and the
                  same instrument.

         11.8     Notice. Except as otherwise provided herein, all notices,
                  requests and demands to or upon a party hereto, to be
                  effective, shall be in writing and shall be sent by certified
                  or registered mail, return receipt requested, by personal
                  delivery against receipt, by overnight courier or by facsimile
                  and, unless otherwise expressly provided herein, shall be
                  deemed to have been validly served, given or delivered
                  immediately when delivered against receipt, one Business Day
                  after deposit in the mail, postage prepaid, or with an
                  overnight courier or, in the case of facsimile notice, when
                  sent, addressed as follows:

         If to Lender:                         Fleet Capital Corporation
                  20800 Swenson Drive
                  Suite 350
                  Waukesha, WI  53186
                  Attention:  Sandra Evans
                  Facsimile No.: (414) 798-4882

         With a copy to:                       Vedder, Price, Kaufman & Kammholz
                  222 North LaSalle Street
                  Suite 2600
                  Chicago, IL  60601
                  Attention:  John T. McEnroe
                  Facsimile No.:  (312) 609-5005

         If to Borrowers:                      Eagle Pacific Industries, Inc.
                  2430 Lincoln Centre
                  333 South Seventh Street
                  Minneapolis, MN  55402
                  Attention:  William Spell, President and COO
                  Facsimile No.:  (612) 371-9651

         With a copies to:                     Eagle Plastics, Inc.
                  146 North Maple
                  Hastings, Nebraska  68902
                  Attention:  Pat Mertens
                  Facsimile No.:  (402) 461-3343

                  and

                  Fredrickson & Byron, P.A.
                                               900 Second Avenue South
                                               1100 International Centre
                                               Minneapolis, MN  55402
                                               Attention:  Dobson West and
                                                Lynn Gardin
                                               Facsimile No.:  (612) 347-7077

or to such other address as each party may designate for itself by notice given
                  in accordance with this Section 11.8; provided, however, that
                  any notice, request or demand to or upon Lender pursuant to
                  subsection 3.1.1 or 4.2.2 hereof shall not be effective until
                  received by Lender.

         11.9     Lender's Consent. Except as may be otherwise expressly
                  provided, whenever Lender's consent is required to be obtained
                  under this Agreement, any of the Other Agreements or any of
                  the Security Documents as a condition to any action, inaction,
                  condition or event, Lender shall be authorized to give or
                  withhold such consent in its sole and absolute discretion and
                  to condition its consent upon the giving of additional
                  collateral security for the Obligations, the payment of money
                  or any other matter.

         11.10    Credit Inquiries. Borrowers hereby authorize and permit Lender
                  to respond to usual and customary credit inquiries from third
                  parties concerning Borrowers or any of its Subsidiaries.

         11.11    Time of Essence. Time is of the essence of this Agreement, the
                  Other Agreements and the Security Documents.

         11.12    Entire Agreement. This Agreement and other Loan Documents,
                  together with all other instruments, agreements and
                  certificates executed by the parties in connection therewith
                  or with reference thereto, embody the entire understanding and
                  agreement between the parties hereto and thereto with respect
                  to the subject matter hereof and thereof and supersede all
                  prior agreements, understandings and inducements, whether
                  express or implied, oral and written.

         11.13    Interpretation. No provision of this Agreement or any of the
                  other Loan Documents shall be construed against or interpreted
                  to the disadvantage of any party hereto by any court or other
                  governmental or judicial authority by reason of such party
                  having or being deemed to have structured or dictated such
                  provision.

         11.14    GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
                  NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO
                  HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE
                  GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
                  STATE OF ILLINOIS: PROVIDED, HOWEVER, THAT IF ANY OF THE
                  COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN
                  ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE
                  METHOD, MANNER AND PROCEDURE AND FORECLOSURE OF LENDER'S LIEN
                  UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
                  REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
                  LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
                  WITH THE LAWS OF ILLINOIS. AS PART OF THE CONSIDERATION FOR
                  NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE
                  DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWERS OR
                  LENDER, BORROWERS HEREBY CONSENT AND AGREE THAT THE CIRCUIT
                  COURT OF COOK COUNTY, ILLINOIS, OR, AT LENDER'S OPTION, THE
                  UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
                  ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION
                  TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS
                  AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
                  ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWERS
                  EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION
                  IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
                  BORROWERS HEREBY WAIVE ANY OBJECTION WHICH BORROWERS MAY HAVE
                  BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
                  FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF
                  SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY
                  SUCH COURT. BORROWERS HEREBY WAIVE PERSONAL SERVICE OF THE
                  SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
                  OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
                  OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
                  ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN THIS
                  AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
                  UPON THE ACTUAL RECEIPT THEREOF. NOTHING IN THIS AGREEMENT
                  SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO
                  SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR
                  TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER
                  OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS
                  AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
                  JURISDICTION.

         11.15    WAIVERS BY BORROWER. BORROWERS WAIVE (i) THE RIGHT TO TRIAL BY
                  JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,
                  PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
                  RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
                  COLLATERAL: (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF
                  PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
                  COMPROMISE SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
                  COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
                  INSTRUMENTS CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY
                  LENDER ON WHICH BORROWERS MAY IN ANY WAY BE LIABLE AND HEREBY
                  RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD
                  (OTHER THAN IN RESPECT OF LENDER'S ACTS OF GROSS NEGLIGENCE OR
                  WILFUL MISCONDUCT); (iii) NOTICE PRIOR TO TAKING POSSESSION OR
                  CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT
                  BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE
                  ANY OF LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
                  APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE
                  HEREOF. BORROWERS ACKNOWLEDGE THAT THE FOREGOING WAIVERS ARE A
                  MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT
                  AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS
                  FUTURE DEALINGS WITH BORROWERS. BORROWERS WARRANT AND
                  REPRESENT THAT THEY HAVE REVIEWED THE FOREGOING WAIVERS WITH
                  THEIR LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED
                  ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
                  COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
                  FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

         11.16    Publicity. Borrowers hereby consent to Lender's use of the
                  name or tradestyle of Borrowers in any announcements or
                  advertisements relating to the completion of the transactions
                  contemplated hereby and the role played by Lender in providing
                  financing to Borrowers hereunder in such media and in such
                  manner as Lender, in its sole discretion, determines.

         11.17    Reimbursement. The undertaking by Borrowers to repay the
                  Obligations and each representation, warranty or covenant of
                  Borrowers are and shall be joint and several. To the extent
                  that any Borrower shall be required to pay a portion of the
                  Obligations which shall exceed the amount of loans, advances
                  or other extensions of credit received by any such Borrower
                  and all interest, costs, fees and expenses attributable to
                  such loans, advances or other extensions of credit, then such
                  Borrower shall be reimbursed by the other Borrower for the
                  amount of such excess pro rata, based on their respective net
                  worths as of the date hereof. This Section 11.17 is intended
                  only to define the relative rights of the Borrowers, and
                  nothing set forth in Section 11.17 is intended or shall impair
                  the obligations of each Borrower, jointly and severally, to
                  pay Lender the Obligations as and when the same shall become
                  due and payable in accordance with the terms hereof.

         IN WITNESS WHEREOF, this Agreement has been duly executed in Chicago,
                  Illinois, on the day and year specified at the beginning of
                  this Agreement.

         EAGLE PLASTICS, INC.


         By:
                                       Name:
                                       Title:



         PACIFIC PLASTICS, INC.


         By:
                                       Name:
                                       Title:



         ARROW PACIFIC PLASTICS, INC.


         By:
                                       Name:
                                       Title:



         ACCEPTED IN CHICAGO, ILLINOIS:

         FLEET CAPITAL CORPORATION
         ("Lender")


         By:
                                       Name:  Brian L. Tornow
                                       Title:  Vice President




         APPENDIX A

         GENERAL DEFINITIONS

         When used in the Loan and Security Agreement dated as of May 10, 1996,
                  by and among Fleet Capital Corporation and Eagle Plastics,
                  Inc., Pacific Plastics, Inc. and Arrow Pacific Plastics, Inc.,
                  the following terms shall have the following meanings (terms
                  defined in the singular to have the same meaning when used in
                  the plural and vice versa):

                  Account Debtor - any Person who is or may become obligated
         under or on account of an Account.

                  Accounts - all accounts, contract rights, chattel paper,
         instruments and documents, whether now owned or hereafter created or
         acquired by any Borrower or in which any Borrower now has or hereafter
         acquired any interest.

                  Affiliate - a Person (other than a Subsidiary): (i) which
         directly or indirectly through one or more intermediaries controls, or
         is controlled by, or is under common control with, a Person; (ii) which
         beneficially owns or holds 5% or more of any class of the Voting Stock
         of a Person; or (iii) 5% or more of the Voting Stock (or in the case of
         a Person which is not a corporation, 5% or more of the equity interest)
         of which is beneficially owned or held by a Person or a Subsidiary of a
         Person.

                  Agreement - the Loan and Security Agreement referred to in the
         first sentence of this Appendix A, all Exhibits thereto and this
         Appendix A.

                  ALTA Survey - a survey prepared in accordance with the
         standards adopted by the American Land Title Association and the
         American Congress on Surveying and Mapping in 1986, known as the
         "Minimum Standard Detail Requirements of Land Title Surveys". The ALTA
         Survey shall be in sufficient form to satisfy the requirements of
         Chicago Title Insurance Company to provide extended coverage over
         survey defects and shall also show the location of all easements,
         utilities, and covenants of record, dimensions of all improvements,
         encroachments from any adjoining property, and certify as to the
         location of any flood plain area affecting the subject real estate. The
         ALTA Survey shall contain the following certification: "To [Name of
         Applicable Borrower], Fleet Capital Corporation and Chicago Title
         Insurance Company. This is to certify that this map of plat and the
         survey on which it is based were made in accordance with the "Minimum
         Standard Detail Requirements for Land Title Surveys" jointly
         established and adopted by ALTA and ACSM in 1986. (signed (SEAL)
         License No. __________".

                  Amendment Agreement - shall have the meaning contained in the
         definition of Subordinated Debt Documents.

                  APP Borrowing Base - as at any date of determination thereof,
         an amount equal to the lesser of:

                           (i) the remainder of Sixteen Million Five Hundred
                  Thousand Dollars ($16,500,000) minus the outstanding principal
                  balance of Revolving Credit Loans made to EPI and PPI; or

                           (ii) an amount equal to:

                                    (a) up to eighty-five percent 85%, of the
                           net amount of Eligible Accounts of APP outstanding at
                           such date;

         PLUS

                                    (b) the lesser of (1) Eight Million Dollars
                           ($8,000,000) minus the outstanding principal amount
                           of Revolving Credit Loans made to EPI and PPI based
                           on EPI's and PPI's Eligible Inventory; or (2) up to
                           fifty-five percent (55%), of the value of Eligible
                           Inventory of APP at such date calculated on the basis
                           of the lower of cost or market with the cost of raw
                           materials and finished goods calculated on a
                           first-in, first-out basis.

                  For purposes hereof, the net amount of Eligible Accounts of
                  APP at any time shall be the face amount of such Eligible
                  Accounts less any and all returns, rebates, discounts (which
                  may, at Lender's option, be calculated on shortest terms),
                  credits, allowances or excise taxes of any nature at any time
                  issued, owing, claimed by Account Debtors, granted,
                  outstanding or payable in connection with such Accounts at
                  such time.

                  APP Term Loan - shall have the meaning contained in Section
         1.2.1 of the Agreement.

                  APP Term Note - the Secured Promissory Note to be executed by
         APP on or about the Closing Date in favor of Lender to evidence the APP
         Term Loan, which shall be in the form of Exhibit A-3 to the Agreement.

                  Availability - the aggregate amount of money which Borrowers
         are entitled to borrow from time to time as Revolving Credit Loans,
         such amount being the difference derived when the sum of the principal
         amount of Revolving Credit Loans then outstanding (including any
         amounts which Lender may have paid for the account of Borrowers
         pursuant to any of the Loan Documents and which have not been
         reimbursed by Borrowers) is subtracted from the sum of (x) the EPI
         Borrowing Base plus (y) and the PPI Borrowing Base plus (z) the APP
         Borrowing Base. If the amount outstanding is equal to or greater than
         the sum of (x) the EPI Borrowing Base plus (y) the PPI Borrowing Base
         plus (z) the APP Borrowing Base, Availability is 0.

                  Bank - Fleet National Bank.

                  Base Rate - the rate of interest announced or quoted by Bank
         from time to time as its prime rate for commercial loans, whether or
         not such rate is the lowest rate charged by Bank to its most preferred
         borrowers; and, if such prime rate for commercial loans is discontinued
         by Bank as a standard, a comparable reference rate designated by Bank
         as a substitute therefor shall be the Base Rate.

                  Blair - William Blair Mezzanine Capital Fund, L.P.

                  Board - the Board of Governors of the Federal Reserve System
         of the United States of America.

                  Borrower Guaranties - The Continuing Guaranty Agreements which
         are to be executed by each Borrower in form and substance satisfactory
         to Lender.

                  Business Day - (i) when used with respect to the LIBOR Option,
         shall mean a day on which dealings may be effected in deposits of
         United States dollars in the London interbank foreign currency deposits
         market and on which the Lender is conducting business and on which
         banks may conduct business in London, England, Chicago, Illinois, and
         New York, New York and (ii) when used with respect to the other
         provisions of this Agreement, shall mean any day that is not a
         Saturday, a Sunday or a day on which banks are required or permitted to
         be closed either in the State of Illinois or in the State of Wisconsin.

                  Capital Expenditures - expenditures made or liabilities
         incurred for the acquisition of any fixed assets or improvements,
         replacements, substitutions or additions thereto which have a useful
         life of more than one year, including the total principal portion of
         Capitalized Lease Obligations.

                  Capitalized Lease Obligation - any Indebtedness represented by
         obligations under a lease that is required to be capitalized for
         financial reporting purposes in accordance with GAAP.

                  Closing Date - the date on which all of the conditions
         precedent in Section 9 of the Agreement are satisfied and the initial
         Loan is made under the Agreement.

                  Code - the Uniform Commercial Code as adopted and in force in
         the State of Illinois, as from time to time in effect.

                  Collateral - all of the Property and interests in Property
         described in Section 5 of the Agreement, and all other Property and
         interests in Property that now or hereafter secure the payment and
         performance of any of the Obligations.

                  Commitment Termination Date - the earliest of (i) May 9, 1999;
         (ii) the date of termination of the Commitment to make further
         Revolving Credit Loan pursuant to Section 4.2.1 or 4.2.2 hereof; and
         (iii) the date of termination of the Commitment to make further
         Revolving Credit Loans pursuant to Section 10.2 hereof.

                  Company - Eagle Pacific Industries, Inc., a Minnesota
         corporation.

                  Consolidated - the consolidation in accordance with GAAP of
         the accounts or other items as to which such term applies.

                  Consolidated Adjusted Net Earnings From Operations - with
         respect to any fiscal period, means the Consolidated net earnings (or
         loss) after provision for income taxes for such fiscal period of
         Company as reflected on the financial statement of Company supplied to
         Lender pursuant to subsection 8.1.3 of the Agreement, but excluding:

                           (i) any gain or loss arising from the sale of capital
         assets;

                           (ii) any gain arising from any write-up of assets;

                           (iii) earnings of any Subsidiary of Company or any
         Borrower accrued prior to the date it became a Subsidiary;

                           (iv) earnings of any corporation, substantially all
         the assets of which have been acquired in any manner by Company or any
         Borrower, realized by such corporation prior to the date of such
         acquisition;

                           (v) net earnings of any business entity (other than a
         Subsidiary of any Borrower) in which Company or any Borrower has an
         ownership interest unless such net earnings shall have actually been
         received by Company or any Borrower in the form of cash distributions;

                           (vi) any portion of the net earnings of any
         Subsidiary of Company or any Borrower which for any reason is
         unavailable for payment of dividends to Company or any Borrower;

                           (vii) the earnings of any Person to which any assets
         of Company or any Borrower shall have been sold, transferred of
         disposed of, or into which any Borrower shall have merged, or been a
         party to any consolidation or other form of reorganization, prior to
         the date of such transaction;

                           (viii) any gain arising from the acquisition or
         disposition of any Securities of Company or any Borrower; and

                           (ix) any gain arising from extraordinary or
         non-recurring items.

                  Consolidated Adjusted Tangible Assets - all Consolidated
         assets of Company except: (i) any surplus resulting from any write-up
         of assets subsequent to December 31, 1995; (ii) deferred assets,
         including all prepaid expenses; (iii) patents, copyrights, trademarks,
         trade names, non-compete agreements, franchises and other similar
         intangibles; (iv) goodwill, including any amounts, however designated
         on a Consolidated balance sheet of a Person or its Subsidiaries,
         representing the excess of the purchase price paid for assets or stock
         over the value assigned thereto on the books of such Person; (v)
         Restricted Investments; (vi) unamortized debt discount and expense;
         (vii) assets located outside the United States of America or Mexico and
         notes and receivables due from obligors outside of the United States of
         America; and (viii) Accounts, notes and other receivables due from
         Affiliates or employees.

                  Consolidated Adjusted Tangible Net Worth - at any date means a
sum equal to:

                           (i) the net book value (after deducting related
         depreciation, obsolescence, amortization, valuation, and other proper
         reserves) at which the Consolidated Adjusted Tangible Assets of Company
         would be shown on a balance sheet at such date in accordance with GAAP,
         minus

                           (ii) the amount at which Company's Consolidated
         liabilities (other than capital stock and surplus) would be shown on
         such balance sheet in accordance with GAAP, and including as
         liabilities all reserves for contingencies and other potential
         liabilities.

                  Current Assets - at any date means the amount at which all of
         the current assets of a Person would be properly classified as current
         assets shown on a balance sheet at such date in accordance with GAAP
         except that amounts due from Affiliates and investments in Affiliates
         shall be excluded therefrom.

                  Current Liabilities - at any date means the amount at which
         all of the current liabilities of a Person would be properly classified
         as current liabilities on a balance sheet at such date in accordance
         with GAAP excluding the Loans and current maturities of any long-term
         Indebtedness.

                  Default - an event or condition the occurrence of which would,
         with the lapse of time or the giving of notice, or both, become an
         Event of Default.

                  Default Rate - as defined in subsection 2.1.2 of the
         Agreement.

                  Distribution - in respect of any corporation means and
         includes: (i) the payment of any dividends or other distributions on
         capital stock of the corporation (except distributions in such stock)
         and (ii) the redemption or acquisition of Securities unless made
         contemporaneously from the net proceeds of the sale of Securities.

                  Dominion Account - a special account of Lender established by
         Borrowers pursuant to the Agreement at a bank selected by Borrowers,
         but acceptable to Lender in its reasonable discretion, and over which
         Lender shall have sole and exclusive access and control for withdrawal
         purposes.

                  EBIT - with respect to any fiscal period, the sum of Company's
         Consolidated net earnings (or loss) before interest expense and taxes
         for said period as determined in accordance with GAAP.

                  Eligible Account - an Account arising in the ordinary course
         of Borrowers' business from the sale of goods or rendition of services
         which Lender, in its reasonable credit judgment, deems to be an
         Eligible Account. Without limiting the generality of the foregoing, no
         Account shall be an Eligible Account if:

                           (i) it arises out of a sale made by a Borrower to a
                  Subsidiary or an Affiliate of Borrower or to a Person
                  controlled by an Affiliate of a Borrower; or

                           (ii) it is unpaid for more than 30 days after the
                  original due date shown on the invoice; or

                           (iii) it is due or unpaid more than 210 days after
                  the original invoice date; or

                           (iv) 25% or more of the Accounts from the Account
                  Debtor are not deemed Eligible Accounts hereunder; or

                           (v) the total unpaid Accounts of the Account Debtor
                  exceed 20% of the net amount of all Eligible Accounts, to the
                  extent of such excess; or

                           (vi) any covenant, representation or warranty
                  contained in the Agreement with respect to such Account has
                  been breached; or

                           (vii) the Account Debtor is also a Borrower's
                  creditor or supplier, or the Account Debtor has disputed
                  liability with respect to such Account, or the Account Debtor
                  has made any claim with respect to any other Account due from
                  such Account Debtor to any Borrower, or the Account otherwise
                  is or may become subject to any right of setoff by the Account
                  Debtor; or

                           (viii) the Account Debtor has commenced a voluntary
                  case under the federal bankruptcy laws, as now constituted or
                  hereafter amended, or made an assignment for the benefit of
                  creditors, or a decree or order for relief has been entered by
                  a court having jurisdiction in the premises in respect of the
                  Account Debtor in an involuntary case under the federal
                  bankruptcy laws, as now constituted or hereafter amended, or
                  any other petition or other application for relief under the
                  federal bankruptcy laws has been filed against the Account
                  Debtor, or if the Account Debtor has failed, suspended
                  business, ceased to be Solvent, or consented to or suffered a
                  receiver, trustee, liquidator or custodian to be appointed for
                  it or for all or a significant portion of its assets or
                  affairs; or

                           (ix) it arises from a sale to an Account Debtor
                  outside the United States or Canada (other than Quebec),
                  unless the sale is on letter of credit, guaranty or acceptance
                  terms in each case acceptable to Lender in its sole
                  discretion; or

                           (x) it arises from a sale to the Account Debtor on a
                  bill-and-hold, guaranteed sale, sale-or-return,
                  sale-on-approval, consignment or any other repurchase or
                  return basis; or

                           (xi) the Account Debtor is the United States of
                  America or any department, agency or instrumentality thereof,
                  unless Borrower assigns its right to payment of such Account
                  to Lender, in a manner satisfactory to Lender so as to comply
                  with the Assignment of Claims Act of 1940 (31 U.S.C. '203 et
                  seq., as amended); or

                           (xii) the Account is subject to a Lien other than a
                  Permitted Lien; or

                           (xiii) the goods giving rise to such Account have not
                  been delivered to and accepted by the Account Debtor or the
                  services giving rise to such Account have not been performed
                  by the applicable Borrower and accepted by the Account Debtor
                  or the Account otherwise does not represent a final sale; or

                           (xiv) the Account is evidenced by chattel paper or an
                  instrument of any kind, or has been reduced to judgment; or

                           (xv) Any Borrower has made any agreement with the
                  Account Debtor for any deduction therefrom, except for
                  discounts or allowances which are made in the ordinary course
                  of business for prompt payment and which discounts or
                  allowances are reflected in the calculation of the face value
                  of each invoice related to such Account; or

                           (xvi) Any Borrower has made an agreement with the
                  Account Debtor to extend the time of payment thereof.

                  Eligible Inventory - such Inventory of Borrowers (other than
         packaging materials and supplies) which Lender, in its reasonable
         credit judgments deems to be Eligible Inventory. Without limiting the
         generality of the foregoing, no Inventory shall be Eligible Inventory
         if:

                           (i) it is not raw materials or finished goods that
                  is, in Lender's opinion, readily marketable in its current
                  form; or

                           (ii) it is not in good, new and saleable condition;
                  or

                           (iii) it is slow-moving, obsolete or unmerchantable;
                  or

                           (iv) it does not meet all standards imposed by any
                  governmental agency or authority; or

                           (v) it does not conform in all respects to the
                  warranties and representations set forth in the Agreement,

                           (vi) it is not at all times subject to Lender's duly
                  perfected, first priority security interest and no other Lien
                  except a Permitted Lien;

                           (vii) it is not situated at a location in compliance
                  with the Agreement or is in transit; or

                           (viii) is not situated at a location in the United
                  States of America.

                  Environmental Laws - all federal, state and local laws, rules,
         regulations, ordinances, programs, permits, guidances, orders and
         consent decrees relating to health, safety and environmental matters.

                  EPI Borrowing Base - as at any date of determination thereof,
         an amount equal to the lesser of:

                           (i) the remainder of Sixteen Million Five Hundred
                  Thousand Dollars ($16,500,000) minus the outstanding principal
                  balance of the Revolving Credit Loans made to PPI and APP; or

                           (ii) an amount equal to:

                                    (a) up to eighty-five percent 85%, of the
                           net amount of Eligible Accounts of EPI outstanding at
                           such date;

         PLUS

                                    (b) the lesser of (1) the remainder of Eight
                           Million Dollars ($8,000,000) minus the outstanding
                           principal of Revolving Credit Loans made to PPI and
                           APP based on PPI's and APP's Eligible Inventory; or
                           (2) up to fifty-five percent (55%), of the value of
                           Eligible Inventory at such date calculated on the
                           basis of the lower of cost or market with the cost of
                           raw materials and finished goods calculated on a
                           first-in, first-out basis.

         For purposes hereof, the net amount of Eligible Accounts of EPI at any
                  time shall be the face amount of such Eligible Accounts less
                  any and all returns, rebates, discounts (which may, at
                  Lender's option, be calculated on shortest terms), credits,
                  allowances or excise taxes of any nature at any time issued,
                  owing, claimed by Account Debtors, granted, outstanding or
                  payable in connection with such Accounts at such time.

                  Equipment - all machinery, apparatus, equipment, fittings,
         furniture, fixtures, motor vehicles and other tangible personal
         Property (other than Inventory) of every kind and description used in
         Borrowers' operations or owned by Borrowers or in which any Borrower
         has an interest, whether now owned or hereafter acquired by any
         Borrower and wherever located, and all parts, accessories and special
         tools and all increases and accessions thereto and substitutions and
         replacements therefor.

                  EPI Term Loan - shall have the meaning contained in Section
         1.2.1 of the Agreement.

                  EPI Term Note - the Secured Promissory Note to be executed by
         EPI on or about the Closing Date in favor of Lender to evidence the EPI
         Term Loan, which shall be in the form of Exhibit A-1 to the Agreement.

                  ERISA - the Employee Retirement Income Security Act of 1974,
         as amended, and all rules and regulations from time to time promulgated
         thereunder.

                  Event of Default - as defined in Section 10.1 of the
         Agreement.

                  GAAP - generally accepted accounting principles in the United
         States of America in effect from time to time.

                  General Intangibles - all general intangibles of Borrowers,
         whether now owned or hereafter created or acquired by Borrowers,
         including, without limitation, all choses in action, causes of action,
         corporate or other business records, deposit accounts, inventions,
         designs, patents, patent applications, trademarks, trade names, trade
         secrets, goodwill, copyrights, registrations, licenses, franchises,
         customer lists, tax refund claims, computer programs, all claims under
         guaranties, security interests or other security held by or granted to
         Borrowers to secure payment of any of the Accounts by an Account
         Debtor, all rights to indemnification and all other intangible property
         of every kind and nature (other than Accounts).

                  Guaranty - the Continuing Guaranty Agreement which is to be
         executed by Company in form and substance satisfactory to Lender.

                  Hastings Documents - that certain Redevelopment Contract
         between the City of Hastings, Nebraska, and EPI and related Promissory
         Notes.

                  Indebtedness - as applied to a Person means, without
         duplication

                           (i) all items which in accordance with GAAP would be
                  included in determining total liabilities as shown on the
                  liability side of a balance sheet of such Person as at the
                  date as of which Indebtedness is to be determined, including,
                  without limitation, Capitalized Lease Obligations,

                           (ii) all obligations of other Persons which such
                  Person has guaranteed,

                           (iii) all reimbursement obligations in connection
                  with letters of credit or letter of credit guaranties issued
                  for the account of such Person, and

                           (iv) in the case of Borrowers (without duplication),
                  the Obligations.

                  Intercreditor and Subordination Agreement - the Intercreditor
         and Subordination Agreement to be dated on or about the Closing Date by
         and between Lender and Blair and acknowledged by Company and Borrowers
         in respect to the Indebtedness evidenced by the Subordinated Debt
         Documents.

                  Inventory - all of Borrowers' inventory, whether now owned or
         hereafter acquired including, but not limited to, all goods intended
         for sale or lease by Borrowers, or for display or demonstration; all
         work in process; all raw materials and other materials and supplies of
         every nature and description used or which might be used in connection
         with the manufacture, printing, packing, shipping, advertising,
         selling, leasing or furnishing of such goods or otherwise used or
         consumed in Borrowers' business; and all documents evidencing and
         General Intangibles relating to any of the foregoing, whether now owned
         or hereafter acquired by Borrowers.

                  Investment Property - all of Borrowers' investment property,
         whether now owned or hereinafter acquired by Borrowers, including,
         without limitation, all securities (certificated or uncertificated),
         securities accounts, securities entitlements, commodity accounts and
         contracts.

                  Legal Requirement - any requirement imposed upon Lender or any
         Participating Lender by any law of the United States of America or the
         United Kingdom or by any regulation, order, interpretation, ruling of
         official directive (whether or not having the force of law) of the
         Board, the bank of England or any other board, central bank or
         governmental or administrative agency, institution or authority of the
         United States of America, the United Kingdom or any political
         subdivision of either thereof.

                  LIBOR Interest Payment Date - with respect to any LIBOR
         Portion, the last day of the applicable LIBOR Period.

                  LIBOR Option - the option granted pursuant to Section 3.1(B)
         to have the interest on all or any portion of the principal amount of
         the Term Loan or Revolving Credit Loans based on a LIBOR Rate.

                  LIBOR Period - any period, selected as provided in Section
         3.1(B) of 1 month, 2 months or 3 months, commencing on any Business
         Day, subject to the provisions of Section 3.1(B); provided, however,
         that no LIBOR Period shall extend beyond the last day of the Original
         Term, unless Borrowers and Lender have agreed to an extension of the
         Original Term beyond the expiration of the LIBOR Period in question. If
         any LIBOR Period so elected shall end on a date that is not a Business
         Day, such LIBOR Period shall instead end on the next preceding or
         succeeding Business Day as determined by Lender in accordance with the
         then current banking practice in London. Each determination by the
         Lender of LIBOR Period shall, in the absence of manifest error, be
         conclusive, and at Borrower's request, Lender shall demonstrate the
         basis for such determination.

                  LIBOR Portion - that portion of the Revolving Credit Loans or
         of the Term Loan specified in a LIBOR Request (including any portion of
         Revolving Credit Loans which is being borrowed by Borrower concurrently
         with such LIBOR Request) which is not less than $1,000,000, which does
         not exceed the outstanding balance of Revolving Credit Loan and/or Term
         Loan not already subject to a LIBOR Option and, which, as of the date
         of the LIBOR Request specifying such LIBOR Portion, has met the
         conditions for basing interest on the LIBOR Rate in Section 2.1.1(B)
         hereof and the LIBOR Period of which was commenced and not terminated.

                  LIBOR Rate - with respect to any LIBOR Portion for the related
         LIBOR Period, an interest rate per annum (rounded upwards, if
         necessary, to the next higher 1/8 of 1%) equal to the product of (a)
         the Base LIBOR Rate ( as hereinafter defined) and (b) Statutory
         Reserves. For purposes of this definition, the term "Base LIBOR Rate"
         shall mean the rate (rounded to the nearest 1/8 of 1% or, if there is
         no nearest 1/8 of 1%, the next higher 1/8 of 1%) at which deposits of
         U.S. dollars approximately equal in principal amount to the LIBOR
         Portion specified in the applicable LIBOR Request are offered to Bank,
         in the London interbank foreign currency deposits market at
         approximately 11:00 a.m., London time, two (2) Business Days prior to
         the commencement of such LIBOR Period, for delivery on the first day of
         such LIBOR Period. Each determination by Lender of any LIBOR Rate shall
         in the absence of manifest error, be conclusive, and at Borrower's
         request, Lender shall demonstrate the basis of such determination.

                  LIBOR Request - a notice in writing (or by telephonic
         communication confirmed by telex, telecopy or other facsimile
         transmission on the same day as the telephone request) from Borrower to
         Lender requesting that interest on all or a portion of the Revolving
         Credit Loan and/or Term Loan be based on the LIBOR Rate, specifying:
         (i) the first day of the LIBOR Period, (ii) the length of the LIBOR
         Period consistent with the definition of that term, and (iii) a dollar
         amount of the LIBOR Portion consistent with the definition of such
         term.

                  LIBOR Revolving Loan Portion - that portion of the Revolving
         Credit Loans specified in a LIBOR Request (including any portion of
         Revolving Credit Loans which is being borrowed by Borrower concurrently
         with such LIBOR Request) which is not less than $1,000,000, which does
         not exceed the outstanding balance of Revolving Credit Loan not already
         subject to a LIBOR Option and, which, as of the date of the LIBOR
         Request specifying such LIBOR Portion, has met the conditions for
         basing interest on the LIBOR Rate in Section 2.1.1(B) hereof and the
         LIBOR Period of which was commenced and not terminated.

                  LIBOR Term Portion - that portion of the Term Loan specified
         in a LIBOR Request which is not less than $1,000,000, which does not
         exceed the outstanding balance of Term Loan not already subject to a
         LIBOR Option and, which, as of the date of the LIBOR Request specifying
         such LIBOR Portion, has met the conditions for basing interest on the
         LIBOR Rate in Section 2.1.1(B) hereof and the LIBOR Period of which was
         commenced and not terminated.

                  Lien - any interest in Property securing an obligation owed
         to, or a claim by, a Person other than the owner of the Property,
         whether such interest is based on common law, statute or contract. The
         term "Lien" shall also include reservations, exceptions, encroachments,
         easements, rights-of-way, covenants, conditions, restrictions, leases
         and other title exceptions and encumbrances affecting Property. For the
         purpose of the Agreement, Borrower shall be deemed to be the owner of
         any Property which it has acquired or holds subject to a conditional
         sale agreement or other arrangement pursuant to which title to the
         Property has been retained by or vested in some other Person for
         security purposes.

                  Loan Account - the loan account established on the books of
         Lender pursuant to Section 3.6 of the Agreement.

                  Loan Documents - the Agreement, the Other Agreements and the
         Security Documents.

                  Loans - all loans and advances of any kind made by Lender
         pursuant to the Agreement.

                  Money Borrowed - means (i) Indebtedness arising from the
         lending of money by any Person to Borrowers or any one of them; (ii)
         Indebtedness, whether or not in any such case arising from the lending
         by any Person of money to Borrowers or any one of them, (A) which is
         represented by notes payable or drafts accepted that evidence
         extensions of credit, (B) which constitutes obligations evidenced by
         bonds, debentures, notes or similar instruments, or (C) upon which
         interest charges are customarily paid (other than accounts payable) or
         that was issued or assumed as full or partial payment for Property;
         (iii) Indebtedness that constitutes a Capitalized Lease Obligation;
         (iv) reimbursement obligations with respect to letters of credit or
         guaranties of letters of credit and (v) Indebtedness of Borrowers under
         any guaranty of obligations that would constitute Indebtedness for
         Money Borrowed under clauses (i) through (iii) hereof, if owed directly
         by Borrowers.

                  Mortgages - the mortgages, deeds of trust, security deeds
         and/or leasehold mortgages to be executed by a Borrower on or about the
         Closing Date in favor of Lender and by which a Borrower shall grant and
         convey to Lender, as security for the Obligations, a Lien upon the real
         Property of Borrowers located in or at (i) Hastings, Nebraska and (ii)
         21500 Northwest Plastics Drive, Hillsboro, Oregon.

                  Multiemployer Plan - has the meaning set forth in Section
         4001(a)(3) of ERISA.

                  Net Cash Flow - for any period, means Company's (i)
         Consolidated Adjusted Net Earnings from Operations for such period,
         plus (ii) Consolidated depreciation and amortization expenses for such
         period, plus (iii) Consolidated deferred taxes for such period, all as
         determined in accordance with GAAP minus (iv) Consolidated Capital
         Expenditure minus (v) all principal payments (other than principal
         payments made in respect to the Revolving Credit Loans and in respect
         to Indebtedness for Money Borrowed owed to FirsTier Bank, National
         Association, Bank of America, Oregon or payments made in respect to
         outstanding Indebtedness under the Subordinated Loan Debt Documents on
         the Closing Date to the extent permitted by Section 8.2.7(a) of the
         Agreement) made within such period in respect of Indebtedness for Money
         Borrowed.

                  New Mortgages - as defined in Section 5.3 of the Agreement.

                  Obligations - all Loans and all other advances, debts,
         liabilities, obligations, covenants and duties, together with all
         interest, fees and other charges thereon, owing, arising, due or
         payable from Borrowers to Lender of any kind or nature, present or
         future, whether or not evidenced by any note, guaranty or other
         instrument, whether arising under the Agreement or any of the other
         Loan Documents or otherwise whether direct or indirect (including those
         acquired by assignment), absolute or contingent, primary or secondary,
         due or to become due, now existing or hereafter arising and however
         acquired.

                  Original Term - as defined in Section 4.1 of the Agreement.

                  Other Agreements - any and all agreements, instruments and
         documents (other than the Agreement and the Security Documents),
         heretofore, now or hereafter executed by any Borrower, any Subsidiary
         of any Borrower or any other third party and delivered to Lender in
         respect of the transactions contemplated by the Agreement.

                  Overadvance - the amount, if any, by which the outstanding
         principal amount of Revolving Credit Loans exceeds the sum of the EPI
         Borrowing Base, the PPI Borrowing Base and the APP Borrowing Base.

                  Participating Lender - each Person who shall be granted the
         right by Lender to participate in any of the Loans described in the
         Agreement and who shall have entered into a participation agreement in
         form and substance satisfactory to Lender.

                  Permitted Liens - any Lien of a kind specified in subsection
         8.2.5 of the Agreement.

                  Permitted Purchase Money Indebtedness - Purchase Money
         Indebtedness of any Borrower incurred after the date hereof which is
         secured by a Purchase Money Lien and which, when aggregated with the
         principal amount of all other such Indebtedness and Capitalized Lease
         Obligations of Borrower at the time outstanding, does not exceed One
         Million Two Hundred Fifty Thousand Dollars ($1,250,000). For the
         purposes of this definition, the principal amount of any Purchase Money
         Indebtedness consisting of capitalized leases shall be computed as a
         Capitalized Lease Obligation.

                  Person - an individual, partnership, corporation, limited
         liability company, joint stock company, land trust, business trust, or
         unincorporated organization, or a government or agency or political
         subdivision thereof.

                  Plan - an employee benefit plan now or hereafter maintained
         for employees of Borrower that is covered by Title IV of ERISA.

                  PPI Borrowing Base - as at any date of determination thereof,
         an amount equal to the lesser of:

                           (i) the remainder of Sixteen Million Five Hundred
                  Thousand Dollars ($16,500,000) minus the outstanding principal
                  balance of Revolving Credit Loans made to EPI and APP; or

                           (ii) an amount equal to:

                                    (a) up to eighty-five percent 85%, of the
                           net amount of Eligible Accounts of PPI outstanding at
                           such date;

         PLUS

                                    (b) the lesser of (1) Eight Million Dollars
                           ($8,000,000) minus the outstanding principal amount
                           of Revolving Credit Loans made to EPI and APP based
                           on EPI's and APP's Eligible Inventory; or (2) up to
                           fifty-five percent (55%), of the value of Eligible
                           Inventory of PPI at such date calculated on the basis
                           of the lower of cost or market with the cost of raw
                           materials and finished goods calculated on a
                           first-in, first-out basis.

         For purposes hereof, the net amount of Eligible Accounts of PPI at any
                  time shall be the face amount of such Eligible Accounts less
                  any and all returns, rebates, discounts (which may, at
                  Lender's option, be calculated on shortest terms), credits,
                  allowances or excise taxes of any nature at any time issued,
                  owing, claimed by Account Debtors, granted, outstanding or
                  payable in connection with such Accounts at such time.

                  PPI Term Loan - shall have the meaning contained in Section
         1.2.1 of the Agreement.

                  PPI Term Note - the Secured Promissory Note to be executed by
         PPI on or about the Closing Date in favor of Lender to evidence the PPI
         Term Loan, which shall be in the form of Exhibit A-2 to the Agreement.

                  Prime Portion - that portion of the Revolving Credit Loans and
         the Term Loan not subject to a LIBOR Option.

                  Projections - Company's forecasted Consolidated and
         consolidating (a) balance sheets, (b) profit and loss statements, (c)
         cash flow statements, and (d) capitalization statements, all prepared
         on a consistent basis with Company's historical financial statements,
         together with appropriate supporting details and a statement of
         underlying assumptions.

                  Promissory Note and Stock Pledge Agreement - that certain
         Promissory Note and Stock Pledge Agreement dated as of July 10, 1995
         between Company, Pacific Acquisition Corp., PPI and the selling
         shareholder signatories thereto, as in effect on the Closing Date.

                  Property - any interest in any kind of property or asset,
         whether real, personal or mixed, or tangible or intangible.

                  Purchase Money Indebtedness - means and includes (i)
         Indebtedness (other than the Obligations) for the payment of all or any
         part of the purchase price of any fixed assets, (ii) any Indebtedness
         (other than the Obligations) incurred at the time of or within 10 days
         prior to or after the acquisition of any fixed assets for the purpose
         of financing all or any part of the purchase price thereof, and (iii)
         any renewals, extensions or refinancings thereof, but not any increases
         in the principal amounts thereof outstanding at the time.

                  Purchase Money Lien - a Lien upon fixed assets which secures
         Purchase Money Indebtedness, but only if such Lien shall at all times
         be confined solely to the fixed assets the purchase price of which was
         financed through the incurrence of the Purchase Money Indebtedness
         secured by such Lien.

                  Rentals - as defined in subsection 8.2.12 of the Agreement.

                  Reportable Event - any of the events set forth in Section
         4043(b) of ERISA.

                  Restricted Investment - any investment made in cash or by
         delivery of Property to any Person, whether by acquisition of stock,
         Indebtedness or other obligation or Security, or by loan, advance or
         capital contribution, or otherwise, or in any Property except the
         following:

                           (i) investments in one or more Subsidiaries of
                  Borrowers to the extent existing on the Closing Date;

                           (ii) Property to be used in the ordinary course of
                  business;

                           (iii) Current Assets arising from the sale of goods
                  and services in the ordinary course of business of Borrowers
                  and their respective Subsidiaries;

                           (iv) investments in direct obligations of the United
                  States of America, or any agency thereof or obligations
                  guaranteed by the United States of America, provided that such
                  obligations mature within one year from the date of
                  acquisition thereof;

                           (v) investments in certificates of deposit maturing
                  within one year from the date of acquisition issued by a bank
                  or trust company organized under the laws of the United States
                  or any state thereof having capital surplus and undivided
                  profits aggregating at least $100,000,000; and

                           (vi) investments in commercial paper given the
                  highest rating by a national credit rating agency and maturing
                  not more than 270 days from the date of creation thereof.

                  Revolving Credit Loan - a Loan made by Lender as provided in
         Section 2.1 of the Agreement.

                  Schedule of Accounts - as defined in subsection 6.4.1 of the
         Agreement.

                  Security - shall have the same meaning as in Section 2(1) of
         the Securities Act of 1933, as amended.

                  Security Documents - the Mortgages, any New Mortgage, the
         Patent Assignment, the Trademark Assignments and all other instruments
         and agreements now or at any time hereafter securing the whole or any
         part of the Obligations.

                  Senior Interest Coverage Ratio - with respect to any period of
         determination, the ratio of Consolidated (i) EBIT for such period to
         (ii) Senior Interest Expense for such period, all as determined in
         accordance with GAAP.

                  Senior Interest Expense - with respect to any fiscal period,
         the interest expense incurred by Borrowers for such period in respect
         to all Indebtedness for Money Borrowed (other than Indebtedness
         outstanding pursuant to the Subordinated Debt Documents) as determined
         in accordance with GAAP owing by Borrowers to Lender for such period.

                  Solvent - as to any Person, such Person (i) owns Property
         whose fair saleable value is greater than the amount required to pay
         all of such Person's Indebtedness (including contingent debts), (ii) is
         able to pay all of its Indebtedness as such Indebtedness matures and
         (iii) has capital sufficient to carry on its business and transactions
         and all business and transactions in which it is about to engage.

                  Spell Group - shall mean collectively William H. Spell, Harry
         W. Spell, Richard W. Perkins, Bruce A. Richard, any of their spouses or
         any family trust which is controlled by any of the foregoing.

                  Statutory Reserves - a fraction (expressed as a decimal), the
         numerator of which is the number one and the denominator of which is
         the number one minus the aggregate of the maximum reserve percentages
         (including, without limitation, any marginal, special, emergency or
         supplemental reserves), expressed as a decimal, established by the
         Board and any other banking authority to which Bank or Lender is
         subject for Eurocurrency Liabilities (as defined in Regulation D of the
         Board or any successor thereto). Such reserve percentages shall
         include, without limitation, those imposed under such Regulation D.
         LIBOR Portions shall be deemed to constitute Eurocurrency Liabilities
         and as such shall be deemed to be subject to such reserve requirements
         without benefit of or credit for proration, exceptions or offsets which
         may be available from time to time to bank or Lender under such
         Regulation D. Statutory Reserves shall be adjusted automatically on and
         as of the effective date of any change in any reserve percentage,
         provided that no adjustment shall reduce Statutory Reserves below the
         amount in effect on the Closing Date. At the Borrower's request, the
         Lender shall provide Borrowers with Lender's calculations of Statutory
         Reserves.

                  Subordinated Loan Agreement - shall mean the Debenture
         Acquisition Agreement (as defined in the definition of Subordinated
         Debt Documents) together with all amendments and modifications thereto,
         including without limitation, the Amendment Agreement.

                  Subordinated Debt Documents - that certain Debenture
         Acquisition Agreement ("Debenture Acquisition Agreement") dated as of
         March 16, 1995 by and among Blair, EPI and Company with any notes,
         documents, instruments, agreements, guaranties, exhibits or schedules
         executed and/or delivered in connection therewith, and all amendments
         and modifications thereto, including without, limitation, that certain
         Amendment Agreement ("Amendment Agreement") of even date herewith by
         and among Blair, EPI, PPI, APP and Company.

                  Subordinated Debt - Indebtedness of Borrowers that is
         subordinated to the Obligations in a manner satisfactory to Lender,
         including, without limitation, Indebtedness outstanding pursuant to the
         Subordinated Debt Documents.

                  Subsidiary - any corporation of which a Person owns, directly
         or indirectly through one or more intermediaries, more than 50% of the
         Voting Stock at the time of determination.

                  Tax - in relation to any LIBOR Portion and the applicable
         LIBOR Rate, any tax, levy, impost, duty, deduction, withholding or
         charges of whatever nature required by any Legal Requirement (i) to be
         paid by Lender and/or (ii) to be withheld or deducted from any payment
         otherwise required hereby to be made by Borrowers to Lender; provided,
         that the term "Tax" shall not include any taxes imposed upon the net
         income of Lender.

                  Term Loan - collectively, the EPI Term Loan, the PPI Term Loan
         and the APP Term Loan.

                  Term Note - collectively, the EPI Term Note, the PPI Term Note
         and the APP Term Note.

                  Trademark Assignment - the Trademark Security Agreement to be
         executed by Borrowers on or about the Closing Date in favor of Lender
         and by which Borrowers shall assign to Lender, and grant to Lender a
         security interest in, as security for the Obligations all of Borrowers'
         right, title and interest in and to all of its trademarks.

                  Total Credit Facility - Twenty-Four Million Five Hundred
         Thousand Dollars ($24,500,000).

                  Voting Stock - Securities of any class or classes of a
         corporation the holders of which are ordinarily, in the absence of
         contingencies, entitled to elect a majority of the corporate directors
         (or Persons performing similar functions).

                  Warrants - shall have the meaning contained in the Amendment
         Agreement.

                  OTHER TERMS. All other terms contained in the Agreement shall
                  have, when the context so indicates, the meanings provided for
                  by the Code to the extent the same are used or defined
                  therein.

                  CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof"
                  and "hereunder" and other words of similar import refer to the
                  Agreement as a whole and not to any particular section,
                  paragraph or subdivision. Any pronoun used shall be deemed to
                  cover all genders. The section titles, table of contents and
                  list of exhibits appear as a matter of convenience only and
                  shall not affect the interpretation of the Agreement. All
                  references to statutes and related regulations shall include
                  any amendments of same and any successor statutes and
                  regulations. All references to any of the Loan Documents shall
                  include any and all modifications thereto and any and all
                  extensions or renewals thereof.

                  Any accounting term used in this Agreement shall have, unless
                  otherwise specifically provided herein, the meaning
                  customarily given such term in accordance with GAAP, and all
                  financial computations hereunder shall be computed, unless
                  otherwise specifically provided herein, in accordance with
                  GAAP consistently applied. That certain terms or computations
                  are explicitly modified by the phrase "in accordance with
                  GAAP" shall in no way be construed to limit the foregoing.





         EXHIBIT A-1

         SECURED PROMISSORY NOTE


$3,275,000                                                          May 10, 1996
         Chicago, Illinois


         FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of Three Million Two Hundred
Seventy-Five Thousand Dollars ($3,275,000), together with interest from and
after the date hereof on the unpaid principal balance outstanding from time to
time.

         This Secured Promissory Note (the "Note") is the EPI Term Note referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
between Borrower, Pacific Plastics, Inc. ("PPI") and Arrow Pacific Plastics,
Inc. ("APP") and Lender dated the date hereof (hereinafter, as amended from time
to time, the "Loan Agreement"), and is entitled to all of the benefits and
security of the Loan Agreement. All of the terms, covenants and conditions of
the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Loan Agreement.

         For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:

                  (a) Interest on the unpaid principal balance outstanding from
         time to time shall be paid at such interest rates and at such times as
         are specified in the Loan Agreement;

                  (b) Principal shall be due and payable monthly commencing on
         June 1, 1996, and continuing on the first day of each month thereafter
         to and including the first day of the month in which the Commitment
         Termination occurs, in installments of Thirty-Nine Thousand Dollars
         ($39,000) each; and

                  (c) The entire remaining principal amount then outstanding,
         together with any and all other amounts due hereunder, shall be due and
         payable on the Commitment Termination Date.

Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.

         This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower, PPI and APP may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.

         Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies set forth in Section 10 of the Loan Agreement.

         Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waive presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.

         Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.

         This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.

         IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
                  and delivered in Chicago, Illinois, on the date first above
                  written.

         EAGLE PLASTICS, INC.,
         a Nebraska corporation ("Borrower")


         By:
              Name:
              Title:




EXHIBIT A-2

         SECURED PROMISSORY NOTE


$3,775,000                                                          May 10, 1996
         Chicago, Illinois


         FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of Three Million Seven
Hundred Seventy-Five Thousand Dollars ($3,775,000), together with interest from
and after the date hereof on the unpaid principal balance outstanding from time
to time.

         This Secured Promissory Note (the "Note") is the PPI Term Note referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
between Borrower, Eagle Plastics, Inc. ("EPI") and Arrow Pacific Plastics, Inc.
("APP") and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.

         For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:

         (a) Interest on the unpaid principal balance outstanding from time to
time shall be paid at such interest rates and at such times as are specified in
the Loan Agreement;

         (b) Principal shall be due and payable monthly commencing on June 1,
1996, and continuing on the first day of each month thereafter to and including
the first day of the month in which the Commitment Termination occurs, in
installments of Forty-Five Thousand Dollars ($45,000) each; and

         (c) The entire remaining principal amount then outstanding, together
with any and all other amounts due hereunder, shall be due and payable on the
Commitment Termination Date.

Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.

         This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower, EPI and APP may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.

         Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies set forth in Section 10 of the Loan Agreement.

         Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waive presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.

         Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.

         This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.

         IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
                  and delivered in Chicago, Illinois, on the date first above
                  written.

         PACIFIC PLASTICS, INC.,
         an Oregon corporation ("Borrower")


         By:
              Name:
              Title:




EXHIBIT A-3

         SECURED PROMISSORY NOTE


$950,000                                                            May 10, 1996
         Chicago, Illinois


         FOR VALUE RECEIVED, the undersigned (hereinafter "Borrower"), hereby
promises to pay to the order of FLEET CAPITAL CORPORATION, a Connecticut
corporation (hereinafter "Lender"), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of Nine Hundred Fifty
Thousand Dollars ($950,000), together with interest from and after the date
hereof on the unpaid principal balance outstanding from time to time.

         This Secured Promissory Note (the "Note") is the APP Term Note referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
between Borrower, Eagle Plastics, Inc. ("EPI") and Pacific Plastics, Inc.
("PPI") and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.

         For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:

         (a)      Interest on the unpaid principal balance outstanding from time
                  to time shall be paid at such interest rates and at such times
                  as are specified in the Loan Agreement;

         (b)      Principal shall be due and payable monthly commencing on June
                  1, 1996, and continuing on the first day of each month
                  thereafter to and including the first day of the month in
                  which the Commitment Termination occurs, in installments of
                  Eleven Thousand Three Hundred Dollars ($11,300) each; and

         (c)      The entire remaining principal amount then outstanding,
                  together with any and all other amounts due hereunder, shall
                  be due and payable on the Commitment Termination Date.

         Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon any
termination of the Loan Agreement pursuant to Section 4 thereof.

         This Note shall be subject to mandatory prepayment in accordance with
the provisions of Section 3.3 of the Loan Agreement. Borrower, EPI and PPI may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.

         Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies set forth in Section 10 of the Loan Agreement.

         Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrower, for itself and its legal representatives, successors
and assigns, expressly waive presentment, demand, protest, notice of dishonor,
notice of non-payment, notice of maturity, notice of protest, presentment for
the purpose of accelerating maturity, diligence in collection, and the benefit
of any exemption or insolvency laws.

         Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrower, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.

         This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois.

         IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
                  and delivered in Chicago, Illinois, on the date first above
                  written.

         ARROW PACIFIC PLASTICS, INC.,
         a Utah corporation ("Borrower")


         By:
              Name:
              Title: