Exhibit 4(i)
                           AMENDMENT NO 3 TO
                      LOAN AND SECURITY AGREEMENT
                             (Term Loan)

                      Dated as of July 15, 1996


        STANDARD COMMERCIAL TOBACCO CO., INC., a North Carolina corporation, the
financial  institutions party to this Agreement from time to time,  NATIONSBANK,
N.A.  (SOUTH),  a national  banking  association,  as agent for the  Lenders (as
hereinafter defined),  and FIRST UNION COMMERCIAL  CORPORATION,  as co-agent for
such Lenders, agree as follows:

        ARTICLE 1

        DEFINITIONS

        SECTION 1.1.  Definitions.  For the purpose of this Agreement:

               "Account Debtor" means a Person who is obligated on a
Receivable.

               "Acquire" or  "Acquisition",  as applied to any Business  Unit or
Investment,  means  the  acquiring  or  acquisition  of  such  Business  Unit or
Investment by purchase,  exchange,  issuance of stock or other securities, or by
merger, reorganization or any other method.

               "Affiliate"  means,  with  respect to a Person,  (a) any partner,
officer,  shareholder (if holding more than ten percent (10%) of the outstanding
shares of capital stock of such Person), director, employee or managing agent of
such Person,  (b) any other Person (other than a Subsidiary)  that, (i) directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person,  (ii) directly or indirectly
beneficially  owns or holds  ten  percent  (10%) or more of any  class of voting
stock or partnership  or other voting  interest of such Person or any Subsidiary
of such  Person,  or (iii)  ten  percent  (10%) or more of the  voting  stock or
partnership  or  other  voting  interest  of  which is  directly  or  indirectly
beneficially  owned or held by such Person or a Subsidiary  of such Person.  The
term "control"  means the  possession,  directly or indirectly,  of the power to
direct  or cause the  direction  of the  management  and  policies  of a Person,
whether  through  ownership of voting  securities or partnership or other voting
interest, by contract or otherwise.

               "Agency  Account" means an account of the Borrower  maintained by
it with a Clearing Bank pursuant to an Agency Account Agreement.

               "Agency Account Agreement" means an agreement among the Borrower,
the Agent and a Clearing Bank, in form and substance  satisfactory to the Agent,
concerning  the   collection  of  payments  which   represent  the  proceeds  of
Receivables or of any other Collateral.

               "Agent"  means  NationsBank,  N.A.  (South),  a national  banking
association, and any successor agent appointed pursuant to Section 15.9 hereof.

               "Agents" means the Agent and the Co-Agent.

               "Agent's  Office"  means the office of the Agent  specified in or
determined in accordance with the provisions of Section 16.1.

               "Agreement"  means and includes  this  Agreement,  including  all
Schedules,   Exhibits  and  other  attachments   hereto,   and  all  amendments,
modifications and supplements hereto and thereto.

               "Agreement Date" means the date as of which this Agreement is
dated.

               "Applicable    Law"   means   all   applicable    provisions   of
constitutions,  statutes,  rules,  regulations  and  orders of all  governmental
bodies and of all orders and decrees of all courts and  arbitrators,  including,
without limitation, Environmental Laws.

               "Assignment and Acceptance" means an assignment and acceptance in
the form  attached  hereto as Exhibit A assigning all or a portion of a Lender's
interests, rights and obligations under this Agreement pursuant to Section 14.1.

               "Benefit  Plan"  means  an  "employee  pension  benefit  plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of
which  the  Borrower  or any  Related  Company  is, or  within  the  immediately
preceding  six (6) years was, an "employer" as defined in Section 3(5) of ERISA,
including such plans as may be established after the Agreement Date.

               "Borrower" means Standard  Commercial  Tobacco Co., Inc., a North
Carolina corporation, and its successors and assigns.

               "Borrowing  Base  Certificate"  means a  certificate  in the form
attached as Exhibit B to the Revolving Credit Agreement which has been delivered
by the Borrower pursuant to the terms of the Revolving Credit Agreement.

               "Business Day" means (i) for all purposes other than as set forth
in clause (ii) below, any day other than a Saturday,  Sunday or legal holiday on
which  banks in Atlanta,  Georgia are not open for the conduct of a  substantial
part of their commercial banking business,  and (ii) with respect to all notices
and  determinations  in connection  with, and payments of principal and interest
on,  Eurodollar  Rate Loans,  any day that is a Business Day described in clause
(i) above and is also a day of trading by and  between  banks  dealing in Dollar
deposits in the applicable interbank market.

               "Business Unit" means the assets  constituting  the business or a
division or operating unit thereof of any Person.

               "Capital  Expenditures"  means,  with respect to any Person,  all
expenditures made and liabilities  incurred for the acquisition of assets (other
than assets which  constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for such Person in the year made or incurred as a
prepaid expense applicable to a future year or years.

               "Capitalized  Lease"  means  a  lease  that  is  required  to  be
capitalized for financial reporting purposes in accordance with GAAP.

               "Capitalized Lease Obligation" means Indebtedness  represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the  capitalized  amount of such  obligations  determined in accordance  with
GAAP.

               "Cash Equivalents" means

                      (a)    marketable direct obligations issued or
unconditionally  guaranteed  by the United  States  Government  or issued by any
agency thereof and backed by the full faith and credit of the United States,  in
each case maturing within one year from the date of acquisition thereof;

                      (b)    commercial paper maturing no more than one year
from the date issued and, at the time of acquisition thereof, having a rating of
at least A-1 from  Standard & Poor's  Corporation  or at least P-1 from  Moody's
Investors Service, Inc.;

                      (c)    certificates of deposit or bankers' acceptances
issued in Dollar  denominations  and  maturing  within one year from the date of
issuance  thereof issued by any commercial  bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
a combined capital and surplus of not less than  $100,000,000 and, unless issued
by the Agent or a Lender,  not  subject to set-off or offset  rights in favor of
such bank arising from any banking relationship with such bank; and

                      (d)    repurchase agreements in form and substance and
for amounts satisfactory to the Agent.

               "Clearing  Bank"  means any  banking  institution  with  which an
Agency Account has been established pursuant to an Agency Account Agreement.

               "Co-Agent" means First Union Commercial Corporation.

               "Collateral"  means and  includes  all of the  Borrower's  right,
title and interest in and to each of the following, wherever located and whether
now or hereafter existing or now owned or hereafter acquired or arising:

                      (a)    all Receivables,

                      (b)    all Inventory,

                      (c)    all Equipment,

                      (d)    all Real Estate,

                      (e)    all Contract Rights,

                      (f)    all General Intangibles,

                      (g)    all goods and other property, whether or not
delivered,

                             (i)    the sale or lease of which gives or purports
                                    to give rise to any  Receivable,  including,
                                    but not limited to, all merchandise returned
                                    or   rejected   by   or   repossessed   from
                                    customers, or

                             (ii)   securing any Receivable,

including,  without  limitation,  all  rights  as an  unpaid  vendor  or  lienor
(including,  without limitation,  stoppage in transit, replevin and reclamation)
with respect to such goods and other property,

                      (h)    all  mortgages,  deeds to secure  debt and deeds of
                             trust  on real or  personal  property,  guaranties,
                             leases,  security agreements,  and other agreements
                             and   property   which  secure  or  relate  to  any
                             Receivable or other Collateral, or are acquired for
                             the  purpose of  securing  and  enforcing  any item
                             thereof,

                      (i)    all documents of title,  policies and  certificates
                             of insurance,  securities,  chattel paper and other
                             documents and instruments  evidencing or pertaining
                             to any and all items of Collateral,

                      (j)    all files, correspondence, computer programs,
                             tapes, discs and related data processing
                             software which contain information
                             identifying or pertaining to any of the
                             Receivables or any Account Debtor, or
                             showing the amounts thereof or payments
                             thereon or otherwise necessary or
                             helpful in the realization thereon or the
                             collection thereof,

                      (k)    all cash deposited with the Agent or any
                             Lender or any Affiliate of the Agent or any
                             Lender or which the Agent, for the benefit of
                             the Lenders, or any Lender or such Affiliate
                             is entitled to retain or otherwise possess as
                             collateral pursuant to the provisions of this
                             Agreement or any of the Security Documents or
                             any agreement relating to any Letters of
                             Credit,

                      (l)    any and all products and proceeds of the
                             foregoing (including, but not limited to, any
                             claim to any item referred to in this
                             definition, and any claim against any third
                             party for loss of, damage to or
                             destruction of any or all of, the Collateral
                             or for proceeds payable under, or
                             unearned premiums with respect to, policies
                             of insurance) in whatever form,
                             including, but not limited to, cash,
                             negotiable instruments and other
                             instruments for the payment of money, chattel
                             paper, security agreements and other
                             documents.

               "Commitment"  means,  as to each  Lender,  the  amount  set forth
opposite such Lender's name on the  signature  pages hereof,  representing  such
Lender's  obligation,  upon and  subject  to the  terms and  conditions  of this
Agreement (including the applicable  provisions of Section 14.1), to make a Term
Loan.

               "Commitment  Percentage"  means, as to any Lender, the percentage
of the Total  Commitment  obtained by dividing such  Lender's  Commitment by the
Total Commitment.

               "Consolidated",  when  used with  reference  to  Current  Assets,
Current  Liabilities,   EBITDA,   Interest  Expense,   Indebtedness,   Long-Term
Liabilities, Liabilities, Net Income, Net Loss or Tangible Net Worth, shall mean
the sum of Current  Assets,  Current  Liabilities,  EBITDA,  Interest  Expenses,
Indebtedness,  Long-Term  Liabilities,  Liabilities,  Net Incomes, Net Losses or
Tangible Net Worths,  as the case may be, of the  Borrower and its  Consolidated
Subsidiaries,  as consolidated  after the elimination of intercompany items and,
in the case of Net Income and Tangible Net Worth,  after appropriate  deductions
for any minority interests in any Subsidiaries, and, when used with reference to
such accounts of any other  Person,  shall mean the sum of such accounts of such
Person and its Consolidated Subsidiaries as so modified.

               "Consolidated  Subsidiaries"  means,  as  to  the  Borrower,  the
Subsidiaries  of the Borrower  whose  accounts  are at the time in question,  in
accordance  with  GAAP and  pursuant  to the  written  consent  of the  Required
Lenders,  which consent may be withheld in their absolute discretion conditioned
upon, inter alia, the execution and delivery of guaranties, security agreements,
mortgages and other documents required by the Required Lenders in their absolute
discretion,  consolidated with those of the Borrower;  provided,  however,  CRES
shall not be classified as a "Consolidated  Subsidiary" of Borrower for purposes
of this Agreement.

               "Contaminant" means any waste,  pollutant,  hazardous  substance,
toxic substance,  hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.

               "Contract Rights" means any rights under contracts not yet earned
by performance and not evidenced by an instrument or chattel paper.

               "Controlled  Disbursement  Account"  means  one or more  accounts
maintained  by and in the name of the Borrower  with a  Disbursing  Bank for the
purposes of  disbursing  Revolving  Credit Loan  proceeds and amounts  deposited
thereto.

               "Copyrights" means and includes, in each case whether now
existing or hereafter arising, all of the Borrower's right, title and interest
in and to

                      (a)    all copyrights, rights and interests in
                             copyrights, works protectable by copyright,
                             copyright registrations and copyright
                             applications;

                      (b)    all renewals of any of the foregoing;

                      (c)    all income, royalties,  damages and payments now or
                             hereafter  due  and/or  payable  under  any  of the
                             foregoing,  including, without limitation,  damages
                             or payments for past or future infringements of any
                             of the foregoing;

                      (d)    the right to sue for past, present and future
                   infringements of any of the foregoing; and

                      (e)    all rights corresponding to any of the
                             foregoing throughout the world.

               "CRES" means CRES Tobacco Company, Inc.

               "Current Assets" means, with respect to any Person, the aggregate
amount of assets of such Person which should  properly be  classified as current
assets in accordance with GAAP, after deducting  adequate  reserves in each case
where a reserve is appropriate in accordance with GAAP.

               "Current  Liabilities"  means,  with  respect to any Person,  the
aggregate  amount of all  Liabilities  of such Person which  should  properly be
classified as current liabilities in accordance with GAAP.

               "Current   Maturities"   means,  when  used  in  connection  with
Long-Term Liabilities, as of any date of determination,  the principal amount of
such  Liabilities  coming  due on such date or during  the  twelve-month  period
following such date in accordance  with the terms of any instrument or agreement
evidencing such Liabilities or relating  thereto;  provided that for the purpose
of this definition,  Long-Term  Liabilities shall not include any Liability that
is by the terms of the instrument  evidencing  such Liability or by the terms of
an agreement among the Borrower,  the holder of such Long-Term Liability and the
Agent expressly  subordinate to the Secured Obligations on terms satisfactory to
the Agent.

               "Deeds  of  Trust"  means  the  deeds  of trust  executed  by the
Borrower,  WAA and GPI for the benefit of the Agent granting the Agent a lien on
certain real property owned by the Borrower, WAA and GPI.

               "Default" means any of the events specified in Section 13.1 which
with the passage of time or giving of notice or both would  constitute  an Event
of Default.

               "Default Margin" means 3.0%.

               "Disbursing   Bank"  means  any  commercial  bank  with  which  a
Controlled Disbursement Account is maintained after the Effective Date.

               "Dollar" and "$" means freely transferable United States
dollars.

               "EBITDA"  means  for the  period in  question,  Net  Income  plus
Required Interest Expense, income taxes, depreciation and amortization.

               "ERISA"  means the  Employee  Retirement  Income  Security Act of
1974, as in effect from time to time.

               "Effective Date" means the Agreement Date.

               "Effective  Interest  Rate" means each rate of interest per annum
on the Term Loans in effect  from time to time  pursuant  to the  provisions  of
Sections 5.1(a), (b) and (c).

               "Eligible  Assignee"  means (i) a commercial bank organized under
the laws of the United  States,  or any State  thereof,  having  total assets in
excess of  $1,000,000,000  or any  commercial  finance  or asset  based  lending
affiliate of any such commercial  bank;  (ii) a savings and loan  association or
savings  bank  organized  under  the laws of the  United  States,  or any  State
thereof,  having a net worth of at least  $250,000,000  calculated in accordance
with GAAP;  (iii) any Affiliate of Fleet Capital  Corporation,  Fleet  Financial
Group,  Inc. or any Lender,  and any successor or assign of any of them and (iv)
any Lender listed on the signature page of this Agreement; provided in each case
that  the  representation  contained  in  Section  14.1(c)(i)  hereof  shall  be
applicable with respect to such institution or Lender.

               "Environmental Laws" means all federal,  state, local and foreign
laws now or hereafter  in effect  relating to  pollution  or  protection  of the
environment,  including  laws  relating to  emissions,  discharges,  Releases or
threatened Releases of pollutants, Contaminants, chemicals, or industrial, toxic
or  hazardous  substances  or wastes into the  environment  (including,  without
limitation,  ambient air,  surface water,  ground water,  or land), or otherwise
relating to the manufacture,  processing, distribution, use, treatment, storage,
disposal,   removal,   transport,  or  handling  of  pollutants,   Contaminants,
chemicals,  or industrial,  toxic or hazardous substances or wastes, and any and
all  regulations,  notices or demand  letters  issued,  entered,  promulgated or
approved  thereunder;  such laws and regulations  include but are not limited to
the Resource  Conservation and Recovery Act, 42 U.S.C. Sub Section 6901 et seq.,
as amended; the Comprehensive Environmental Response, Compensation and Liability
Act,  42 U.S.C.  Sub Section  6901 et seq.,  as  amended;  the Toxic  Substances
Control Act, 15 U.S.C. Sub Section 2601 et seq., as amended;  the Clean Air Act,
46 U.S.C.  Sub Section 7401 et seq., as amended;  and state and federal lien and
environmental cleanup programs.

               "Environmental  Lien"  means a Lien in favor of any  governmental
entity for (a) any liability  under  Environmental  Laws or (b) damages  arising
from, or costs incurred by such governmental entity in response to, a Release or
threatened Release of Contaminant into the environment.

               "Equipment"  means  and  includes,   all  machinery,   apparatus,
equipment, motor vehicles, tractors, trailers, rolling stock, fittings, fixtures
and other tangible  personal  property  (other than Inventory) of every kind and
description used in the Borrower's  business operations or owned by the Borrower
or in which the Borrower has an interest, and all parts, accessories and special
tools  and  all  increases  and  accessions   thereto  and   substitutions   and
replacements therefor.

               "Eurodollar  Rate" means, with respect to any Interest Period for
any Eurodollar Rate Loan, a per annum interest rate  determined  pursuant to the
following formula:

               Eurodollar Rate =       Interbank Offered Rate
                                ---------------------------------
                        1 - Eurodollar Reserve Percentage

               The  Eurodollar  Rate shall be adjusted  automatically  as of the
effective date of any change in the Eurodollar Reserve Percentage.

               "Eurodollar  Rate Loan"  means a Loan or a portion of a Loan that
bears interest based upon the Eurodollar Rate.

               "Eurodollar  Reserve  Percentage",   means,  for  any  day,  that
percentage  (expressed as a decimal)  which is in effect from time to time under
Regulation D of the Board of Governors of the Federal  Reserve  System,  as such
regulation may be amended from time to time or any successor regulation,  as the
maximum  reserve  requirement   (including,   without  limitation,   any  basic,
supplemental,  emergency, special, or marginal reserves) applicable with respect
to  "Eurocurrency  liabilities"  as that term is  defined  in  Regulation  D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Rate Loans is determined),  whether or not
a Lender has any Eurocurrency liabilities subject to such reserve requirement at
that  time.  Eurodollar  Loans  shall  be  deemed  to  constitute   Eurocurrency
liabilities and as such shall be deemed subject to reserve  requirements without
benefits of credits for proration, exceptions or offsets.

               "European Debt" means the Indebtedness described on Schedule 1.1A
- European Indebtedness.

               "Event of Default"  means any of the events  specified in Section
13.1,  provided  that any  requirement  for notice or lapse of time or any other
condition has been satisfied.

               "Federal  Funds  Effective  Rate"  means,   for  any  period,   a
fluctuating interest rate per annum equal for each day during such period to the
weighted  average of the rates on  overnight  federal  funds  transactions  with
members of the Federal  Reserve  system  arranged by federal funds  brokers,  as
published  for such day (or,  if such day is not a  Business  Day,  for the next
preceding Business Day) by the Federal Reserve Bank of Atlanta, or, if such rate
is not so  published  for any day which is a Business  Day,  the  average of the
quotations for such day on such transactions  received by NationsBank from three
federal funds brokers of recognized standing selected by NationsBank.

               "Financial  Officer"  means the  chief  financial  officer,  vice
president  -  finance,  treasurer,  assistant  treasurer  or  controller  of the
Borrower.

               "Financing  Statements" means any and all Uniform Commercial Code
financing statements,  in form and substance satisfactory to the Agent, executed
and delivered by the Borrower,  WAA and GPI to the Agent,  naming the Agent, for
the benefit of the  Lenders,  as secured  party and the  Borrower or WAA (as the
case may be) as debtor, in connection with this Agreement.

               "GAAP"   means   generally   accepted    accounting    principles
consistently  applied and maintained  throughout the period  indicated and, when
used with reference to the Borrower or any Subsidiary, consistent with the prior
financial  practice of the Borrower,  as reflected on the  financial  statements
referred  to in  Section  7.1(o);  provided,  however,  that,  in the event that
changes shall be mandated by the  Financial  Accounting  Standards  Board or any
similar accounting authority of comparable standing,  or shall be recommended by
the Borrower's independent public accountants, such changes shall be included in
GAAP as  applicable  to the  Borrower  only  from  and  after  such  date as the
Borrower,  the Required  Lenders and the Agent shall have amended this Agreement
to the extent  necessary to reflect any such changes in the financial  covenants
set forth in Article 12.

               "General  Intangibles"  means all of the  Borrower's now owned or
hereafter  acquired general  intangibles,  choses in action and causes of action
and all other  intangible  personal  property of the  Borrower of every kind and
nature (other than Accounts),  including,  without  limitation,  all Proprietary
Rights, corporate or other business records,  inventions,  designs,  blueprints,
plans,   specifications,    goodwill,   computer   software,   customer   lists,
registrations, licenses, franchises, tax refund claims, reversions or any rights
thereto and any other  amounts  payable to the  Borrower  from any Plan or other
employee benefit plan,  rights and claims against carriers and shippers,  rights
to  indemnification,  business  interruption  insurance  and  proceeds  thereof,
property,  casualty or any similar type of insurance  and any proceeds  thereof,
proceeds of insurance  covering the lives of key employees on which the Borrower
is beneficiary and any letter of credit, guarantee, claims, security interest or
other  security  held by or  granted  to the  Borrower  to secure  payment by an
Account Debtor of any of the Accounts.

               "Governmental  Approvals"  means  all  authorizations,  consents,
approvals,  licenses and  exemptions  of,  registrations  and filings with,  and
reports to, all governmental  bodies,  whether federal,  state, local or foreign
national or provincial and all agencies thereof.

               "GPI" means General Processors, Inc.

               "GPI  Security  Agreement"  means the  Security  Agreement  to be
executed and delivered by GPI in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.

               "Guarantors"   means  a   collective   reference  to  the  Parent
Guarantor,  WAA and the Subsidiary  Guarantors,  and their respective successors
and assigns.

               "Guaranty", "Guaranteed" or to "Guarantee" as applied to any
obligation of another Person shall mean and include

                      (a)    a guaranty (other than by endorsement of negotiable
                             instruments  for collection in the ordinary  course
                             of  business),   directly  or  indirectly,  in  any
                             manner,  of any part or all of such  obligation  of
                             such other Person, and

                      (b)    an agreement, direct or indirect, contingent
                             or otherwise, and whether or not constituting
                             a guaranty, the practical effect of
                             which is to assure the payment or performance
                             (or payment of damages in the
                             event of nonperformance) of any part or all
                             of such obligation of such other
                             Person whether by

                                    (i)     the purchase of securities or
                                  obligations,

                                    (ii)    the purchase, sale or lease (as
                                            lessee or lessor) of property or
                                            the purchase or sale of services
                                            primarily for the purpose of
                                            enabling the obligor with
                                            respect to such obligation to
                                            make any payment or performance
                                            (or payment of damages in the
                                            event of nonperformance) of or
                                            on account of any part or all of
                                            such obligation, or to assure
                                            the owner of such obligation
                                            against loss,

                                    (iii)   the supplying of funds to or in
                                            any other manner investing in
                                            the obligor with respect to such
                                            obligation,

                                    (iv)    repayment of amounts drawn down
                         by beneficiaries of letters of
                                   credit, or

                                    (v)     the supplying of funds to or
                                            investing in a Person on account
                                            of all or any part of such
                                            Person's obligation under a
                                            Guaranty of any obligation or
                                            indemnifying or holding
                                            harmless, in any way, such
                                            Person against any part or all
                                            of such obligation.

               "Guaranty  Agreements" means the guaranty agreements given by the
Guarantors  in favor of the Agent and the  Lenders  in  connection  herewith  to
secure the obligations of the Borrower hereunder.

               "Indebtedness"  of any Person  means,  without  duplication,  all
Liabilities  of  such  Person,  and to the  extent  not  otherwise  included  in
Liabilities, the following:

                      (a)    all obligations for Money Borrowed or for the
                     deferred purchase price of property or
                                    services,

                      (b)    all obligations (including, during the
                             noncancellable term of any lease in the
                             nature of a title retention agreement, all
                             future payment obligations under such lease
                             discounted to their present value in
                             accordance with GAAP) secured by any Lien to
                             which any property or asset owned or held by
                             such Person is subject, whether or not the
                             obligation secured thereby shall have been
                             assumed by such Person,

                      (c)    all  obligations of other Persons which such Person
                             has Guaranteed,  including, but not limited to, all
                             obligations  of such Person  consisting of recourse
                             liability with respect to accounts  receivable sold
                             or otherwise disposed of by such Person,

                      (d)    all obligations of such Person in respect of
                    Interest Rate Protection Agreements, and

                      (e)    in the case of the Borrower  (without  duplication)
                             all  obligations  under the Revolving  Credit Loans
                             and the Term Loans.

               "Interbank  Offered Rate" means,  with respect to any  Eurodollar
Rate Loan for the  Interest  Period  applicable  thereto,  the average  (rounded
upward to the nearest  one-sixteenth  (1/16) of one  percent)  per annum rate of
interest  determined by the Agent (each such  determination to be conclusive and
binding) as of two Business Days prior to the first day of such Interest  Period
from Telerate Page 3750 as the effective  rate at which  deposits in immediately
available  funds in Dollars  are being  offered or quoted to major  banks in the
applicable  interbank  market for Eurodollar  deposits for a term  comparable to
such Interest Period and in the amount of the Loan of which such Eurodollar Rate
Loan is a part. If such rate is unavailable on such service,  then such rate may
be determined by the Agent from any other  interest  rate  reporting  service of
recognized standing that the Agent shall select.

               "Intercreditor  Agreements" means (i) that certain  Intercreditor
and Subordination Agreement, dated as of July 15, 1996 (as amended, supplemented
or otherwise  modified from time to time), by and among the Borrower,  WAA, GPI,
the senior lenders party thereto and the  subordinated  lenders  parties thereto
having  MeesPierson,  N.V.  as their agent and (ii) that  certain  Intercreditor
Agreement,  dated as of July 15, 1996 (as  amended,  supplemented  or  otherwise
modified from time to time),  by and among the Borrower,  WAA, GPI, the Lenders,
the Agents and the lenders parties to the Revolving Credit Agreement.

               "Interest  Period"  means with  respect to each  Eurodollar  Rate
Loan,  the period  commencing  on the date of the making or  continuation  of or
conversion  to such  Eurodollar  Rate Loan and ending one,  two or three  months
thereafter,  as the  Borrower  may elect in the  applicable  notice of borrowing
given to  pursuant  to  Section  2.1 or Notice of  Conversion  or  Continuation;
provided, that:

                             (i)    any Interest Period that would
                                    otherwise end on a day that is not a
                                    Business Day shall, subject to the
                                    provisions of clause (iii) below, be
                                    extended to the next succeeding
                                    Business Day unless such Business Day
                                    falls in the next calendar month, in
                                    which case such Interest Period shall
                                    end on the immediately preceding
                                    Business Day;

                             (ii)   any Interest Period that begins on the
                                    last Business Day of a calendar month
                                    (or on a day for which there is no
                                    numerically corresponding day in the
                                    calendar month at the end of such
                                    Interest Period) shall, subject to
                                    clause (iii) below, end on the last
                                    Business Day of a calendar month;

                      (iii) any Interest Period that would
                      otherwise end after the Maturity Date
                       shall end on the Maturity Date; and

                             (iv)   notwithstanding   clause  (iii)  above,   no
                                    Interest  Period  shall have a  duration  of
                                    less than one  month  and if any  applicable
                                    Interest  Period  would  be  for  a  shorter
                                    period, such Interest Period shall not be
                                    available.

               "Interest Rate Protection  Agreement" shall mean an interest rate
swap, cap or collar  agreement or similar  arrangement  between any Person and a
financial institution providing for the transfer or mitigation of interest risks
either generally or under specific contingencies.

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

               "Inventory" means all inventory as such term is defined in the
Uniform Commercial Code and shall include, without limitation,

                      (a)    all goods intended for sale or lease by the
Borrower,  or for  display  or  demonstration,  including,  without  limitation,
tobacco and other tobacco related products  intended for sale by the Borrower to
its customers,

                      (b)    all work in process,

                      (c)    all raw materials and other  materials and supplies
                             of every nature and description used or which might
                             be  used  in  connection   with  the   manufacture,
                             packing, shipping, advertising, selling, leasing or
                             furnishing  of  such  goods  or  otherwise  used or
                             consumed in the Borrower's business, and

                      (d)    all documents evidencing and general
                             intangibles relating to any of the foregoing.

               "Investment" means, with respect to any Person:

                      (a)    the  acquisition or ownership by such Person of any
                             share of capital stock, evidence of Indebtedness or
                             other security issued by any other Person,

                      (b)    any loan,  advance  or  extension  of credit to, or
                             contribution  to the capital of, any other  Person,
                             excluding  advances to  employees  in the  ordinary
                             course of business for business expenses,

                      (c)    any Guaranty of the obligations of any other
                             Person,

                      (d)    any other investment (other than the
                             Acquisition of a Business Unit) in any other
                             Person, and

                      (e)    any  commitment  or  option  to  make  any  of  the
                             investments listed in clauses (a) through (d) above
                             if,  in the case of an  option,  the  consideration
                             therefor exceeds $25,000.

               "IRS" means the Internal Revenue Service.

               "JTI Letter of Credit  Facility"  shall have the meaning given to
such term in the Revolving Credit Agreement.

               "Lender"  means at any time any  financial  institution  party to
this agreement at such time,  including any such Person  becoming a party hereto
pursuant to the provisions of Article 14, and its  successors  and assigns,  and
"Lenders"  means  at any time all of the  financial  institutions  party to this
Agreement at such time,  including  any such  Persons  becoming  parties  hereto
pursuant to the provisions of Article 14, and their successors and assigns.

               "Liabilities"  of any Person means all items (except for items of
capital stock,  additional paid-in capital or retained  earnings,  or of general
contingency  or deferred tax reserves)  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  Liabilities  are to be
determined.

               "Lien" as applied to the property of any Person means:

                      (a)    any mortgage, deed to secure debt, deed of
                             trust, lien, pledge, charge, lease
                             constituting a Capitalized Lease Obligation,
                             conditional sale or other title retention
                             agreement, or other security interest,
                             security title or encumbrance of any kind in
                             respect of any property of such Person, or
                             upon the income or profits therefrom,

                      (b)    any arrangement, express or implied, under
                             which any property of such Person is
                             transferred, sequestered or otherwise
                             identified for the purpose of subjecting the
                             same to the payment of Indebtedness or
                             performance of any other obligation in
                             priority to the payment of the general,
                             unsecured creditors of such Person,

                      (c)    any Indebtedness which is unpaid more than 30
                             days after the same shall have become due and
                             payable and which if unpaid might by law
                             (including, but not limited to, bankruptcy
                             and insolvency laws), or otherwise, be given
                             any priority whatsoever over the claims of
                             general unsecured creditors of such Person,
                             and

                      (d)    the  filing  of,  or any  agreement  to  give,  any
                             financing  statement  under the Uniform  Commercial
                             Code  or  its   equivalent  in  any   jurisdiction,
                             excluding    informational   financing   statements
                             relating to property leased by the Borrower.

               "Loan"   means  any  Term  Loan,   as  well  as  all  such  loans
collectively, as the context requires.

               "Loan  Account"  and  "Loan  Accounts"  shall  have the  meanings
ascribed thereto in Section 5.5.

               "Loan Documents" means  collectively  this Agreement,  the Notes,
the Security Documents and each other instrument, agreement or document executed
by the Borrower, any Guarantor or any Affiliate or Subsidiary of the Borrower or
any Guarantor in connection  with this  Agreement  whether prior to, on or after
the Effective Date and each other instrument,  agreement or document referred to
herein or contemplated hereby.

               "Loan Year" means each period of twelve (12)  consecutive  months
commencing on the Effective Date and on each anniversary thereof.

               "Lockbox" means each U.S. Post Office Box specified in a
Lockbox Agreement.

               "Lockbox Agreement" means each agreement between the Borrower and
a Clearing Bank concerning the  establishment of a Lockbox for the collection of
Receivables.

               "Long-Term  Liabilities"  means, with respect to any Person,  the
aggregate   amount  of  all  Liabilities  of  such  Person  other  than  Current
Liabilities.

               "Margin Stock" means margin stock as defined in Section  221.1(h)
of Regulation U, as the same may be amended or supplemented from time to time.

               "Materially  Adverse Effect" means, with respect to any Person, a
materially  adverse  effect upon such Person's  business,  assets,  liabilities,
condition (financial or otherwise), results of operations or business prospects,
and in addition (i) with  respect to the  Borrower,  means a materially  adverse
effect upon the Borrower's ability to perform its obligations hereunder or under
any other Loan  Document  to which it is a party or upon the  enforceability  of
such  obligations  against the Borrower and (ii) with respect to any  Guarantor,
means a materially  adverse effect upon the  Guarantor's  ability to perform its
obligations  under  any  Loan  Document  to  which  it is a party  or  upon  the
enforceability of such obligations against such Guarantor.

               "Maturity Date" means May 2, 1998.

               "Money Borrowed" means, as applied to Indebtedness,

                      (a)    Indebtedness for money borrowed,

                      (b)    Indebtedness, whether or not in any such case
                             the same was for money borrowed,

                             (i)    represented by notes payable, and
                                    drafts accepted, that represent
                                    extensions of credit,

                             (ii)   constituting obligations
                                    evidenced by bonds, debentures, notes
                                    or similar instruments, or

                (iii) upon which interest charges are customarily
                   paid or that was issued or assumed as full
                   or partial payment for property (other than
                      trade credit that is incurred in the
                          ordinary course of business),

                      (c)    Indebtedness that constitutes a Capitalized
                              Lease Obligation, and

                      (d)    Indebtedness  that is such by virtue of clause  (c)
                             of the definition  thereof,  but only to the extent
                             that the  obligations  Guaranteed  are  obligations
                             that  would   constitute   Indebtedness  for  Money
                             Borrowed.

               "Multiemployer  Plan" means a "multiemployer  plan" as defined in
Section  4001(a)(3)  of ERISA to which  the  Borrower  or a Related  Company  is
required to contribute or has contributed  within the immediately  preceding six
(6) years.

               "NationsBank" means NationsBank, N.A. (South), and its
successors and assigns.

               "Net Amount" means,  with respect to any Investments  made by any
Person,  the gross amount of all such Investments  minus the aggregate amount of
all cash received and the fair value, at the time of receipt by such Person,  of
all property received as payments of principal or premiums,  returns of capital,
liquidating  dividends or distributions,  proceeds of sale or other dispositions
with respect to such Investments.

               "Net Income" or "Net Loss" means,  as applied to any Person,  the
net income (or net loss) of such Person for the period in question  after giving
effect  to  deduction  of or  provision  for all  operating  expenses  including
management fees, all taxes and reserves  (including reserves for deferred taxes)
and all other  proper  deductions,  all  determined  in  accordance  with  GAAP,
provided that there shall be excluded:

                      (a)    the net income (or net loss) of any Person  accrued
                             prior to the date it becomes a Subsidiary of, or is
                             merged into or consolidated  with, the Person whose
                             Net Income is being  determined  or a Subsidiary of
                             such Person,

                      (b)    the net income (or net loss) of any Person in
                             which the Person whose Net Income is being
                             determined or any Subsidiary of such Person
                             has an ownership interest, except, in the
                             case of net income, to the extent that any
                             such income has actually been received by
                             such Person or such Subsidiary in the form of
                             cash dividends or similar distributions,

                      (c)    any restoration of any contingency reserve,  except
                             to the extent that  provision  for such reserve was
                             made out of income during such period,

                      (d)    any net  gains  or  losses  on the  sale  or  other
                             disposition,   not  in  the   ordinary   course  of
                             business, of Investments,  Business Units and other
                             capital  assets,  provided that there shall also be
                             excluded any related charges for taxes thereon,

                      (e)    any net gain arising from the collection of
                             the proceeds of any insurance policy,

                      (f)    any write-up of any asset, and

                      (g)    any other extraordinary item.

               "Net Worth"  means,  with  respect to any Person,  such  Person's
total shareholder's equity (including capital stock,  additional paid-in capital
and retained  earnings,  after  deducting  treasury stock) which would appear as
such on a balance sheet of such Person prepared in accordance with GAAP.

               "Note" means any of the term notes referred in Section 2.3 hereof
and "Notes" means more than one such note.

               "Notice of Conversion or Continuation" has the meaning
specified in Section 5.7.

               "Operating   Lease"   means  any  lease   (other   than  a  lease
constituting a Capitalized Lease Obligation) of real or personal property.

               "PBGC" means the Pension Benefit Guaranty Corporation and any
successor agency.

               "Parent Guarantor" means Standard Commercial Corporation, a
North Carolina corporation.

               "Patents" means and includes, in each case whether now existing
or hereafter arising, all of the Borrower's right, title and interest in and to

               (a)    any and all patents and patent applications,

               (b)    inventions and improvements described and claimed
                      therein,

               (c)    reissues, divisions, continuations, renewals,
                      extensions and continuations-in-part thereof,

               (d)    income,  royalties,  damages,  claims and  payments now or
                      hereafter  due  and/or  payable  under  and  with  respect
                      thereto,  including,   without  limitation,   damages  and
                      payments for past and future infringements thereof,

               (e)    rights to sue for past, present and future
                      infringements thereof, and

               (f)    all rights corresponding to any of the foregoing
                      throughout the world.

               "Payment  Date"  means  the  first  day of  each  calendar  month
commencing  on August  1,  1996 and  continuing  thereafter  until  the  Secured
Obligations have been irrevocably paid in full.

               "Permitted Investments" means Investments of the Borrower in:

               (a)    negotiable  certificates  of  deposit  and  time  deposits
                      issued by  NationsBank  or by any  United  States  bank or
                      trust  company  having  capital,   surplus  and  undivided
                      profits in excess of $100,000,000,

               (b)    any direct  obligation  of the United States of America or
                      any  Agency  or   instrumentality   thereof  which  has  a
                      remaining  maturity  at the time of  purchase  of not more
                      than one year and  repurchase  agreements  relating to the
                      same,

               (c)    sales of inventory on credit in the ordinary course
                      of business,

               (d)    shares of capital stock, evidence of Indebtedness or other
                      security  acquired by the Borrower in consideration for or
                      as evidence of past-due or restructured  Receivables in an
                      aggregate face amount of such  Receivables at any time not
                      to exceed $1,000,000,

               (e)    Guaranties permitted pursuant to Section 12.3,

               (f)    those items described on Schedule 1.1B - Permitted
                      Investments, and

               (g)    other Investments not in excess of $10,000 individually or
                      $50,000  in  the  aggregate  in  any  fiscal  year  of the
                      Borrower.

               "Permitted Liens" means:

               (a)    Liens securing taxes, assessments and other
                      governmental charges or levies (excluding any Lien
                      imposed pursuant to any of the provisions of ERISA)
                      or the claims of materialmen, mechanics, carriers,
                      warehousemen or landlords for labor, materials,
                      supplies or rentals incurred in the ordinary course
                      of business, but (i) in all cases only if payment
                      shall not at the time be required to be made in
                      accordance with Section 10.6, and (ii) in the case
                      of warehousemen or landlords, only if such liens are
                      junior to the Security Interest in any of the
                      Collateral,

               (b)    Liens  consisting  of  deposits  or  pledges  made  in the
                      ordinary  course of business  in  connection  with,  or to
                      secure    payment   of,    obligations    under   workers'
                      compensation,    unemployment    insurance    or   similar
                      legislation or under payment or performance bonds,

               (c)    Liens  constituting  encumbrances  in the nature of zoning
                      restrictions,  easements,  and rights or  restrictions  of
                      record  on  the  use  of  real  property,   which  do  not
                      materially  detract  from the  value of such  property  or
                      impair the use thereof in the business of the Borrower,

               (d)    Purchase Money Liens,

               (e)    Liens shown on Schedule 1.1C - Permitted Liens,

               (f)    Liens shown on Schedule 1.1D - Permitted Liens
                      (European Debt), and

               (g)    Liens  of the  Agent,  for  the  benefit  of the  Lenders,
                      arising under this Agreement and the other Loan Documents.

               "Permitted Purchase Money Indebtedness" means Purchase Money
Indebtedness of the Borrower incurred after the Agreement Date

               (a)    which is secured by a Purchase Money Lien,

               (b)    the aggregate principal amount of which does not
                      exceed an amount equal to 100% of the lesser of

                      (i)    the cost  (including  the principal  amount of such
                             Indebtedness,   whether  or  not  assumed)  of  the
                             property  (other  than  Inventory)  subject to such
                             Lien, and

                      (ii)   the fair value of such property (other
                             than Inventory) at the time of its
                             acquisition, and

               (c)    which,  when aggregated  with the principal  amount of all
                      other such  Indebtedness and Capitalized Lease Obligations
                      of the Borrower at the time outstanding, does not exceed
                      $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"   means   an   individual,   corporation,   partnership,
association, trust or unincorporated organization, or a government or any agency
or political subdivision thereof.

               "Plan" means any employee benefit plan as defined in Section 3(3)
of ERISA in respect of which the  Borrower or any Related  Company is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.

               "Prime Rate" means on any day the  interest  rate per annum equal
to the rate of interest  publicly  announced  by the Agent at its head office in
Atlanta,  Georgia as its "prime"  rate, as in effect on the last Business Day of
the calendar month immediately  preceding the month in which such day falls. The
Agent lends at rates above and below the Prime Rate.

               "Prime  Rate Loan"  means a Loan or a portion  of a Loan  bearing
interest at a rate determined with reference to the Prime Rate.

               "Proprietary  Rights" means all of the  Borrower's  now owned and
hereafter  arising or  acquired:  Patents,  Copyrights,  Trademarks,  including,
without  limitation,  those  Proprietary  Rights set forth on  Schedule  7.1(cc)
hereto,  and all  other  rights  under  any of the  foregoing,  all  extensions,
renewals, reissues, divisions,  continuations,  and continuations-in-part of any
of  the  foregoing,  and  all  rights  to  sue  for  past,  present  and  future
infringement of any of the foregoing.

               "Purchase Money Indebtedness" means

               (a)    Indebtedness created to secure the payment of all or
                      any part of the purchase price of any property
                      (other than Inventory),

               (b)    any Indebtedness incurred at the time of or within 30 days
                      prior to or after the  acquisition of any property  (other
                      than  Inventory)  for the purpose of financing  all or any
                      part of the purchase price thereof, and

               (c)    any renewals,  extensions or refinancings thereof, but not
                      any increases in the principal amounts thereof outstanding
                      at the time of any such renewal, extension or refinancing.

               "Purchase  Money Lien"  means any Lien  securing  Purchase  Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
property (other than Inventory) the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.

               "Real Estate" means all of the Borrower's now or hereafter  owned
or leased estates in real property,  including,  without  limitation,  all fees,
leaseholds  and future  interests,  together with all of the  Borrower's  now or
hereafter owned or leased interests in the improvements and emblements  thereon,
the fixtures attached thereto and the easements appurtenant thereto,  including,
without limitation the real property described on Schedule 7.1(x).

               "Receivables" means and includes

               (a)    any and all rights to the payment of money or other
                      forms of consideration of any kind (whether
                      classified under the Uniform Commercial Code as
                      accounts, contract rights, chattel paper, general
                      intangibles, or otherwise) including, but not
                      limited to, accounts receivable, letters of credit
                      and the right to receive payment thereunder, chattel
                      paper, tax refunds, insurance proceeds, Contract
                      Rights, notes, drafts, instruments, documents,
                      acceptances, and all other debts, obligations and
                      liabilities in whatever form from any Person,

               (b)    all guarantees, security and Liens for payment
                      thereof,

               (c)    all goods,  whether now owned or hereafter  acquired,  and
                      whether  sold,  delivered,   undelivered,  in  transit  or
                      returned,  which  may be  represented  by,  or the sale or
                      lease of which may have  given  rise to, any such right to
                      payment or other debt, obligation or liability, and

               (d)    all proceeds of any of the foregoing.

               "Regulation  U" means  Regulation  U of the Board of Governors of
the Federal  Reserve  System (or any  successor),  as the same may be amended or
supplemented from time to time.

               "Related  Company" means any (i) corporation which is a member of
the same controlled group of corporations  (within the meaning of Section 414(b)
of the Internal  Revenue Code) as any Borrower;  (ii) partnership or other trade
or business  (whether or not  incorporated)  under  common  control  (within the
meaning of Section  414(c) of the Internal  Revenue Code) with any Borrower;  or
(iii) member of the same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as any Borrower,  any corporation described
in clause (i) above or any  partnership,  trade or business  described in clause
(ii) above.

               "Release"  means  release,  spill,  emission,  leaking,  pumping,
injection, deposit, disposal,  discharge,  dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property,  including the
movement  of  Contaminants  through  or in  the  air,  soil,  surface  water  or
groundwater.

               "Remedial Action" means actions required to (i) clean up, remove,
treat  or in any  other  way  address  Contaminants  in the  indoor  or  outdoor
environment;  (ii)  prevent  the  Release or threat of Release or  minimize  the
further  Release of  Contaminants so they do not migrate or endanger or threaten
to endanger  public health or welfare or the indoor or outdoor  environment;  or
(iii)  perform   pre-remedial   studies  and  investigations  and  post-remedial
monitoring and care.

               "Reportable  Event" has the meaning set forth in Section  4043(b)
of ERISA, but shall not include a Reportable Event as to which the provision for
30 days' notice to the PBGC is waived under applicable regulations.

               "Required  Interest Expense" means the amount of interest paid or
accrued  according to GAAP by the Borrower (on a  Consolidated  basis) on all of
its Indebtedness during the period in question.

               "Required Lenders" at any date of determination thereof,  Lenders
holding Term Loans  representing  at least 51% of the  aggregate  amount of Term
Loans outstanding at such time.

               "Restricted Dividend Payment" means any dividend, distribution or
payment on or with respect to (a) any shares of a Person's  capital stock (other
than  dividends  payable  solely  in  shares  of its  capital  stock) or (b) any
partnership  interest  in a  Person,  excluding,  however,  any  such  dividend,
distribution or payment to the Borrower by any Subsidiary of the Borrower.

               "Restricted  Payment"  means (a) any  redemption or prepayment or
other retirement,  prior to the stated maturity thereof or prior to the due date
of any regularly  scheduled  installment  or  amortization  payment with respect
thereto,  of any Indebtedness for Borrowed Money or of any Indebtedness  that is
junior and subordinate to the Secured Obligations, (b) the payment by any Person
of the  principal  amount of or interest on any  Indebtedness  (other than trade
debt) owing to a shareholder,  partner or equity holder of such Person or to any
Affiliate of any such shareholder,  partner or equity holder and (c) the payment
of any  management,  consulting or similar fee by any Person to any Affiliate of
such Person.

               "Restricted  Purchase"  means  any  payment  on  account  of  the
purchase,  redemption or other  acquisition or retirement by a Person of any (a)
shares of such Person's  capital stock (except shares acquired on the conversion
thereof into other shares of capital  stock of such Person) or (b) a partnership
interest in such Person, if such Person is a partnership.

               "Revolving   Credit   Agreement"  means  the  Loan  and  Security
Agreement,  dated  as of May 2,  1995 (as  amended,  supplemented  or  otherwise
modified  from time to time),  by and among the  Borrower,  the lenders  parties
thereto and NationsBank, N.A. (South) and First Union Commercial Corporation, as
agent for such lenders,  together with all amendments and modifications  thereto
and all replacements therefor.

               "Revolving  Credit Facility" shall have the meaning given to such
term in the Revolving Credit Agreement.

               "Revolving  Credit  Loans"  means  loans  made  to  the  Borrower
pursuant to Section 2.1 of the Revolving Credit Agreement.

               "Schedule  of  Inventory"  means  a  schedule  delivered  by  the
Borrower to the Agent pursuant to the provisions of Section 9.12(b).

               "Schedule  of  Receivables"  means a  schedule  delivered  by the
Borrower to the Agent pursuant to the provisions of Section 9.12(a).

               "Secured Obligations" means, in each case whether now in
existence or hereafter arising,

               (a)    the  principal  of, and interest and premium,  if any, on,
                      the Loans and any other loans now or hereafter made by the
                      Agent to the  Borrower  in its  capacity  as Agent for the
                      Lenders,

               (b)    all indebtedness, liabilities, obligations,
                      covenants and duties of the Borrower to the Agent or
                      to the Lenders of every kind, nature and description
                      arising under or in respect of this Agreement,
                      the Notes or any of the other Loan Documents,
                      whether direct or indirect, absolute or contingent,
                      due or not due, contractual or tortious, liquidated
                      or unliquidated, and whether or not evidenced by any
                      note, and whether or not for the payment of money,
                      including without limitation, fees required to be
                      paid pursuant to Article 5 and expenses required to
                      be paid or reimbursed pursuant to Section 16.2.

               "Security Documents" means each of the following:

                      (a)    the WAA Security Agreement,

                      (b)    the GPI Security Agreement,

                      (c)    the Financing Statements,

                      (d)    the Guaranty Agreements,

                      (e)    the Deeds of Trust, and

                      (f)    each other  writing  executed and  delivered by the
                             Borrower or any other  Person  securing the Secured
                             Obligations.

               "Security Interest" means the Liens of the Agent, for the benefit
of  the  Lenders,  on and in the  Collateral  effected  hereby  or by any of the
Security Documents or pursuant to the terms hereof or thereof.

               "Special  Receivable"  means the $10,000,000  receivable from the
Parent  Guarantor to the Borrower  generated by the disbursement by the Borrower
to the Parent Guarantor of the proceeds of the Term Loans.

               "Subordinated  Indebtedness"  means Indebtedness of the Borrower,
the  repayment of which has been  subordinated  to the  repayment of the Secured
Obligations   pursuant  to  subordination   agreements  in  form  and  substance
satisfactory to the Lenders.

               "Subordination   Agreement"  means  the  subordination  agreement
executed by the Parent  Guarantor in favor of the Agent and the Lenders  whereby
the Parent  Guarantor  (i)  subordinates  the  repayment of  $15,000,000  of the
obligations  of the  Borrower to the Parent  Guarantor  to the  repayment of the
Secured  Obligations on a permanent basis and (ii) subordinates the repayment of
the  remaining  obligations  of the  Borrower  to the  Parent  Guarantor  to the
repayment of the Secured Obligations upon the occurrence of a Default hereunder.

               "Subsidiary"

               (a)    when used to determine the relationship of a Person
                      to another Person, means a Person of which an
                      aggregate of 50% or more of the stock of any class
                      or classes or 50% or more of other ownership
                      interests is owned of record or beneficially by such
                      other Person, or by one or more Subsidiaries of such
                      other Person, or by such other Person and one or
                      more Subsidiaries of such Person,

                      (i)    if the holders of such stock, or other
                             ownership interests, (A) are ordinarily, in
                             the absence of contingencies, entitled to
                             vote for the election of a majority of the
                             directors (or other individuals performing
                             similar functions) of such Person, even
                             though the right so to vote has been
                             suspended by the happening of such a
                             contingency, or (B) are entitled, as such
                             holders, to vote for the election of a
                             majority of the directors (or individuals
                             performing similar functions) of such Person,
                             whether or not the right so to vote exists by
                             reason of the happening of a contingency, or

                      (ii)   in the case of such other ownership
                             interests, if such ownership interests
                             constitute a majority voting interest, and

               (b)    when used with respect to a Plan, ERISA or a
                      provision of the Internal Revenue Code
                      pertaining to employee benefit plans, also
                      means any corporation, trade or business
                      (whether or not incorporated) which is under common
                      control with the Borrower and is treated as a single
                      employer with the Borrower under Section 414(b) or
                      (c) of the Internal Revenue Code and the regulations
                      thereunder.

               "Tangible Net Worth" means,  as applied to the Borrower,  the Net
Worth of the Borrower and its Consolidated Subsidiaries at the time in question,
after  excluding  therefrom  (i) the amount of all  intangible  items  reflected
therein,  including,  without  limitation,  all  unamortized  debt  discount and
expense,  unamortized  research and development  expense,  unamortized  deferred
charges, goodwill, patents, trademarks,  service marks, trade names, copyrights,
unamortized  excess cost of investment  in  non-Consolidated  Subsidiaries  over
equity at dates of  acquisition  and all similar items which should  properly be
treated as intangibles in accordance with GAAP and (ii) the Special Receivable.

               "Termination Event" means

               (a)    a Reportable Event, or

               (b)    the filing of a notice of intent to terminate a Plan
                      or the treatment of a Plan amendment as a
                      termination under Section 4041 of ERISA, or

               (c)    the  institution of proceedings to terminate a Plan by the
                      PBGC under Section 4042 of ERISA,  or the appointment of a
                      trustee to administer any Plan.

               "Total Commitment" means the sum of the Commitments.

               "Trademarks" means and includes in each case whether now
existing or hereafter arising, all of the Borrower's right, title and interest
in and to

               (a)    trademarks  (including  service  marks),  trade  names and
                      trade styles and the  registrations  and  applications for
                      registration  thereof  and the  goodwill  of the  business
                      symbolized by the trademarks,

               (b)    licenses of the foregoing, whether as licensee or
                      licensor,

               (c)    renewals thereof,

               (d)    income,  royalties,  damages and payments now or hereafter
                      due  and/or  payable  with  respect  thereto,   including,
                      without limitation,  damages, claims and payments for past
                      and future infringements thereof,

               (e)    rights to sue for past,  present and future  infringements
                      thereof,  including  the right to settle  suits  involving
                      claims and demands for royalties owing, and

               (f)    all rights corresponding to any of the foregoing
                      throughout the world.

               "Type"  means with  respect  to any Loan,  a Prime Rate Loan or a
Eurodollar Rate Loan.

               "Unfunded Vested Accrued Benefits" means with respect to any
Plan at any time, the amount (if any) by which

               (a)    the present value of all vested nonforfeitable
                      benefits under such Plan exceeds

               (b)    the fair market value of all Plan assets allocable
                      to such benefits,

        all determined as of the then most recent valuation date for such Plan.

               "Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of North Carolina.

               "WAA" means W.A. Adams Company.

               "WAA  Security  Agreement"  means the  Security  Agreement  to be
executed and delivered by WAA in favor of the Agent, as the same may be amended,
supplemented or otherwise modified from time to time.

               "Wholly-Owned Subsidiary" when used to determine the relationship
of a Subsidiary to a Person means a Subsidiary all of the issued and outstanding
shares (other than directors'  qualifying  shares) of the capital stock of which
shall  at the  time be  owned  by such  Person  or one or more of such  Person's
Wholly-Owned  Subsidiaries  or by such  Person and one or more of such  Person's
Wholly-Owned Subsidiaries.

               SECTION  1.2.  General.  All terms of an  accounting  nature  not
specifically defined herein shall have the meaning ascribed thereto by GAAP. The
terms  accounts,   chattel  paper,   contract  rights,   documents,   equipment,
instruments,  general  intangibles  and  inventory,  as and  when  used  in this
Agreement or the Security  Documents,  shall have the meanings given those terms
in the Uniform Commercial Code. Unless otherwise specified,  a reference in this
Agreement to a particular  section or  subsection is a reference to that section
or subsection of this Agreement,  and the words "hereof," "herein,"  "hereunder"
and  words  of  similar  import,  when  used in this  Agreement,  refer  to this
Agreement as a whole and not to any particular provision,  section or subsection
of this Agreement.  Wherever from the context it appears appropriate,  each term
stated in either the singular or plural  shall  include the singular and plural,
and pronouns  stated in the  masculine,  feminine or neuter gender shall include
the masculine,  the feminine and the neuter.  Words denoting individuals include
corporations  and vice versa.  References to any legislation or statute or code,
or to any provisions of any  legislation  or statute or code,  shall include any
modification or reenactment of, or any legislative,  statutory or code provision
substituted  for,  such  legislation,  statute  or  code or  provision  thereof.
References to any document or agreement (including this Agreement) shall include
references  to such  document or  agreement as amended,  novated,  supplemented,
modified or replaced  from time to time,  so long as and to the extent that such
amendment,  novation,  supplement,  modification  or  replacement  is either not
prohibited  by the terms of this  Agreement  or is  consented to by the Required
Lenders  and the  Agent.  References  to any Person  include  its  successor  or
permitted substitutes and assigns.


                                    ARTICLE 2

                               TERM LOAN FACILITY

               SECTION  2.1.  Term  Loans.  Upon the  terms and  subject  to the
conditions  of, and in reliance upon the  representations  and  warranties  made
under, this Agreement, each Lender agrees, severally, but not jointly, to make a
Term Loan to the  Borrower  on the  Effective  Date in an  amount  equal to such
Lender's Commitment.  If the Term Loans are to consist of Eurodollar Rate Loans,
the  Borrower  shall  notify the Agent before 11:00 a.m. on the date that is two
Business Days prior to the Effective Date, specifying the proposed amount of the
Eurodollar  Rate  Loans  (which  shall be at  least  $1,000,000  or an  integral
multiple of $500,000 in excess  thereof) and the duration of the Interest Period
to be applicable to such Eurodollar Rate Loans. The principal amount of any Term
Loan  which is repaid  pursuant  to  Section  2.2 may not be  reborrowed  by the
Borrower.  The Agent's and each Lender's  books and records  reflecting the date
and the amount of each Term Loan and each  repayment of principal  thereof shall
constitute  prima facie  evidence of the accuracy of the  information  contained
therein, subject to the provisions of Section 5.6.

               SECTION 2.2.  Repayment of Term Loans.  Each Term Loan is due and
payable,  and  shall  be  repaid  in  full  by the  Borrower  in 23  consecutive
installments.  The first 22 of such installments  shall each be in the amount of
1/60th of the original  principal  amount of such Term Loan and shall be due and
payable on  consecutive  Payment Dates  commencing on August 1, 1996 through and
including the Payment Date on April 1, 1998.  The final  installment  payable on
May 2, 1998 shall be in the amount of the then unpaid balance of such Term Loan.

               SECTION  2.3.  Term  Notes.  Each  Lender's  Term  Loan  and  the
obligation  of the Borrower to repay such Term Loan shall also be evidenced by a
term note  payable  to the order of such  Lender.  Each such term note  shall be
dated the Effective  Date and be duly and validly  executed and delivered by the
Borrower.

               SECTION 2.4.  Prepayment of Term Loans.

               (a) Voluntary  Prepayment.  The Borrower  shall have the right at
any time and from time to time,  upon at least 60 days' prior written  notice to
the Agent in the case of a prepayment in full and upon at least five days' prior
written notice to the Agent in the case of a partial  prepayment,  to prepay the
Term  Loans on a pro rata  basis  (based  upon  the then  outstanding  principal
balances  of the  Term  Loans)  in whole or in part on any  Business  Day.  Each
partial  prepayment  of the  Term  Loans  shall  be  applied  to  the  principal
installments of the Term Loans in the inverse order of their maturities.  On the
prepayment date, the Borrower shall pay interest on the amount prepaid,  accrued
to the prepayment  date,  together with any amounts payable under Section 2.4(a)
or Section 5.11 on account of such prepayment. Any notice of prepayment given by
the  Borrower  hereunder  shall be  irrevocable,  and the  amount to be  prepaid
(including accrued interest and any prepayment fees) shall be due and payable on
the date designated in the notice.

        (b) Mandatory  Prepayment.  Any and all amounts received by the Borrower
as  proceeds  from the sale of any  Equipment  or Real Estate to the extent such
proceeds  exceed  (i)  $25,000 in the case of any single  item of  Equipment  or
parcel of Real Estate,  or (ii) $100,000 in the aggregate for all such Equipment
and Real Estate sold during any twelve-month  period shall be paid,  immediately
upon receipt by the Borrower to the Lender and shall be applied to the principal
installments  of the Term Loans in the inverse  order of their  maturities.  The
Borrower  shall also be obligated to prepay the Term Loans in full together with
accrued and unpaid  interest  thereon  upon any  acceleration  of the Term Loans
pursuant to Article 13.


        ARTICLE 3

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        ARTICLE 4

        [intentionally left blank]



        ARTICLE 5

        GENERAL LOAN PROVISIONS

               SECTION 5.1.  Interest.

               (a)    Term Loans.

                      (i)    Prime Rate Loans.  The Borrower will pay
                             interest on the unpaid principal amount of
                             each Prime Rate Loan for each day
                             from the day such Loan was made until such
                             Loan is due (whether at maturity, by reason
                             of acceleration or otherwise) at a rate per
                             annum equal to the Prime Rate, payable
                             monthly in arrears on each Payment Date.

                      (ii)   Eurodollar Rate Loans.  The Borrower will pay
                             interest on the unpaid principal amount of
                             each Eurodollar Rate Loan for each Interest
                             Period applicable thereto at a rate per annum
                             equal to the sum of (A) 2 1/4% and (B) the
                             Eurodollar Rate, payable in arrears on the
                             last day of such Interest Period and when
                             such Eurodollar Rate Loan is due (whether at
                             maturity, by reason of acceleration or
                             otherwise).

               (b) Other Secured Obligations.  The Borrower will pay interest on
the unpaid  principal  amount of each Secured  Obligation  other than a Loan for
each day from the day such Secured Obligation becomes due and payable until such
Secured  Obligation  is paid,  at the rate per annum  applicable  to Prime  Rate
Loans,
                      payable on demand.

               (c) Default Rate. If the Borrower  shall fail to pay when due (at
maturity,  by reason of  acceleration  or  otherwise)  all or any portion of the
principal  amount of any Loan or  interest  thereon or all or any portion of the
Secured  Obligations,  or if there shall occur and be continuing any other Event
of Default, the unpaid principal amount of each Loan or other Secured Obligation
shall no longer bear interest in accordance with the terms of Section 5.1(a) and
(b), as the case may be, but shall bear  interest  for each day from the date it
was so due or the date on which such other Event of Default  occurred until paid
in full (or,  if  earlier,  until  such  Event of  Default is cured or waived in
writing by the Required Lenders) at a rate per annum equal to the Default Margin
plus the rate  otherwise  in effect  under  Section  5.1(a) or (b),  payable  on
demand.  The interest  rate  provided  for in this  Section  5.1(c) shall to the
extent  permitted  by  Applicable  Law apply to and  accrue on the amount of any
judgment  entered with respect to any Secured  Obligation  and shall continue to
accrue at such rate during any proceeding described in Section 13.1(g)
                      or (h).

               (d) The interest rates provided for in Sections  5.1(a),  (b) and
(c) shall be computed  on the basis of a year of 360 days and the actual  number
of days elapsed.  Interest  rates  determined  with  reference to the Prime Rate
shall be adjusted  automatically  as of the opening of business on the effective
date of each change in the Prime Rate.

               (e) It is not intended by the Lenders,  and nothing  contained in
this Agreement or the Notes shall be deemed, to establish or require the payment
of a rate of interest in excess of the maximum rate  permitted by Applicable Law
(the "Maximum Rate"). If, in any month, the Effective Interest Rate, absent such
limitation,  would have exceeded the Maximum Rate,  then the Effective  Interest
Rate for that month shall be the Maximum  Rate,  and, if in future  months,  the
Effective  Interest Rate would otherwise be less than the Maximum Rate, then the
Effective  Interest Rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been  limited by the Maximum  Rate.  In the event,
upon  payment in full of the Secured  Obligations,  the total amount of interest
paid or accrued under the terms of this  Agreement is less than the total amount
of interest which would have been paid or accrued if the Effective Interest Rate
had at all  times  been in  effect,  then  the  Borrower  shall,  to the  extent
permitted by  Applicable  Law, pay to the Lenders an amount equal to the excess,
if any,  of (i) the lesser of (A) the amount of  interest  which would have been
charged if the Maximum Rate had, at all times, been in effect and (B) the amount
of interest  which would have accrued had the  Effective  Interest  Rate, at all
times,  been in effect and (ii) the amount of interest  actually paid or accrued
under this  Agreement.  In the event the  Lenders  receive,  collect or apply as
interest  any sum in excess of the Maximum  Rate,  such excess  amount  shall be
applied to the  reduction of the principal  balance of the Secured  Obligations,
and if no such  principal  is then  outstanding,  such  excess  or part  thereof
remaining, shall be paid to the Borrower.

               SECTION 5.2.  Fees.  The Borrower will pay a of $100,000 fee on
the Effective Date for the ratable benefit of the Lenders (ratable in
proportion to each Lender's Commitment).

               SECTION 5.3.  Manner of Payment.

               (a) Except as  otherwise  expressly  provided in Section  9.1(b),
each payment (including prepayments) by the Borrower on account of the principal
of or interest on the Loans or of any other amounts payable to the Lenders under
this  Agreement  or any Note shall be made not later  than  12:00 noon  (Atlanta
time) on the date specified for payment under this  Agreement to the Agent,  for
the account of the Lenders,  at the Agent's Office,  in Dollars,  in immediately
available funds and shall be made without any setoff,  counterclaim or deduction
whatsoever.  Any payment received after such time but before 1:00 p.m.  (Atlanta
time) on such day  shall be deemed a payment  on such date for the  purposes  of
Section 13.1,  but for all other  purposes  shall be deemed to have been made on
the next succeeding Business Day.

               (b) The Borrower  hereby  irrevocably  authorizes each Lender and
each Affiliate of such Lender and each participant  herein to charge any account
of the Borrower  maintained  with such Lender or such  Affiliate or  participant
with such  amounts  as may be  necessary  from  time to time to pay any  Secured
Obligations (whether or not owed to such Lender, Affiliate or participant) which
are not paid when due.

               SECTION 5.4. General.  If any payment under this Agreement or any
Note shall be  specified  to be made upon a day which is not a Business  Day, it
shall be made on the  next  succeeding  day  which  is a  Business  Day and such
extension of time shall in such case be included in computing interest,  if any,
in accordance with such payment.

               SECTION 5.5.  Loan Accounts; Statements of Account.

               (a) Each  Lender  shall  open and  maintain  on its  books a loan
account in the Borrower's  name (each, a "Loan  Account" and  collectively,  the
"Loan Accounts").  Each such Loan Account shall show as debits thereto each Loan
made under this Agreement by such Lender to the Borrower and as credits  thereto
all payments  received by such Lender and applied to principal of such Loan,  so
that the balance of the loan account at all times reflects the principal  amount
due such Lender from the Borrower.

               (b) The Agent shall  maintain on its books a control  account for
the Borrower in which shall be recorded (i) the amount of each disbursement made
hereunder,  (ii) the amount of any  principal  or interest  due or to become due
from the  Borrower  hereunder,  and (iii) the amount of any sum  received by the
Agent hereunder from the Borrower and each Lender's ratable share therein.

               (c) The entries made in the accounts  pursuant to subsections (a)
and (b) shall be prima facie evidence,  in the absence of manifest error, of the
existence and amounts of the obligations of the Borrower therein recorded and in
case of discrepancy between such accounts, in the absence of manifest error, the
accounts maintained pursuant to subsection (b) shall be controlling.

               (d) The Agent will account  separately  to the  Borrower  monthly
with a statement  of Loans,  charges and  payments  made to and by the  Borrower
pursuant to this  Agreement,  and such  accounts  rendered by the Agent shall be
deemed final, binding and conclusive,  save for manifest error, unless the Agent
is notified by the  Borrower  in writing to the  contrary  within 30 days of the
date the account to the Borrower  was so  rendered.  Such notice by the Borrower
shall be deemed an  objection  to only  those  items  specifically  objected  to
therein.  Failure of the Agent to render such account shall in no way affect the
rights of the Agent or of the Lenders hereunder.

               SECTION 5.6.  Settlement Among Lenders.

               (a) Return of Payments. If any amounts received by NationsBank in
respect of the Secured  Obligations  are later required to be returned or repaid
by  NationsBank  to the  Borrower  or any  other  obligor  or  their  respective
representatives or successors in interest, whether by court order, settlement or
otherwise,  in excess of the  NationsBank's  Commitment  Percentage  of all such
amounts  required to be returned by all Lenders,  each other Lender shall,  upon
demand by NationsBank with notice to the Agent, pay to the Agent for the account
of  NationsBank,  an  amount  equal to the  excess of such  Lender's  Commitment
Percentage  of all such amounts  required to be returned by all Lenders over the
amount, if any, returned directly by such Lender.

               (b) Payments to Agent,  Lenders. (i) Payment by any Lender to the
Agent shall be made not later than 1:00 p.m.  (Atlanta time) on the Business Day
such payment is due,  provided  that if such payment is due on demand by another
Lender,  such  demand is made on the  paying  Lender  not later  than 10:00 a.m.
(Atlanta time) on such Business Day. Payment by the Agent to any Lender shall be
made by wire transfer,  promptly  following the Agent's receipt of funds for the
account of such Lender and in the type of funds received by the Agent,  provided
that if the Agent receives such funds at or prior to 1:00 p.m.  (Atlanta  time),
the Agent  shall pay such funds to such  Lender by 2:00 p.m.  (Atlanta  time) on
such Business Day. If a demand for payment is made after the applicable time set
forth above,  the payment due shall be made by 2:00 p.m.  (Atlanta  time) on the
first Business Day following the date of such demand.

                      (ii) If a  Lender  shall,  at any  time,  fail to make any
               payment to the Agent required hereunder, the Agent may, but shall
               not be required to, retain  payments that would otherwise be made
               to such Lender hereunder and apply such payments to such Lender's
               defaulted obligations hereunder, at such time, and in such order,
               as the Agent may elect in its sole discretion.

                      (iii) With  respect to the payment of any funds under this
               Section  5.6(b),  whether  from the  Agent to a Lender  or from a
               Lender to the Agent,  the party failing to make full payment when
               due pursuant to the terms hereof shall,  upon demand by the other
               party,  pay such amount  together with interest on such amount at
               the Federal Funds Effective Rate.

               (c)  Settlement of Other Secured  Obligations.  All other amounts
received  by the Agent on account of, or applied by the Agent to the payment of,
any Secured Obligation owed to the Lenders (including,  without limitation, fees
payable to the Lenders pursuant to Section 5.2 and proceeds from the sale of, or
other realization upon, all or any part of the Collateral  following an Event of
Default) that are received by the Agent on or prior to 1:00 p.m.  (Atlanta time)
on a Business Day will be paid by the Agent to each Lender on the same  Business
Day,  and any such  amounts  that are  received  by the  Agent  after  1:00 p.m.
(Atlanta  time)  will be paid by the  Agent  to  each  Lender  on the  following
Business Day. Unless  otherwise  stated herein,  the Agent shall distribute fees
payable to the Lenders  pursuant to Section 5.2 ratably to the Lenders  based on
each Lender's Commitment  Percentage and shall distribute proceeds from the sale
of, or other  realization  upon, all or any part of the Collateral  following an
Event of Default  ratably  to the  Lenders  based on the  amount of the  Secured
Obligations then owing to each Lender.

               SECTION  5.7.  Notice of  Conversion  or  Continuation  of Loans.
Whenever the Borrower  desires,  subject to the  provisions  of Sections 5.8 and
5.9, to convert an outstanding  Term Loan consisting of Loans of one Type into a
Term Loan consisting of Loans of a different Type provided for in this Agreement
or to continue an outstanding  Term Loan consisting of Eurodollar Rate Loans for
a subsequent  Interest  Period,  the Borrower  shall notify the Agent in writing
(which notice shall be irrevocable) by telecopy not later than 11:00 a.m. on the
date one  Business Day before the day on which a proposed  conversion  of a Loan
consisting of Eurodollar  Rate Loans into a Loan  consisting of Prime Rate Loans
is to be  effective  and two  Business  Days  before the day on which a proposed
conversion of a Term Loan  consisting of Prime Rate Loans into, or  continuation
of a Term Loan  consisting  of  Eurodollar  Rate Loans as, a Loan  consisting of
Eurodollar  Rate Loans is to be effective  (and if the Loan to be continued is a
Loan consisting of Eurodollar Rate Loans,  such effective date shall be the last
day of the Interest Period for the Loans comprising such Loan). Each such notice
(a "Notice of  Conversion  or  Continuation")  shall (i) identify the Loan to be
converted or continued,  including the Type of Loans  comprising  such Loan, the
aggregate  outstanding  principal  balance  thereof  and,  in the case of a Loan
consisting  of  Eurodollar  Rate  Loans,  the  last day of the  Interest  Period
therefor,  (ii) specify the effective date of such  conversion or  continuation,
(iii) specify the aggregate  principal  amount of the Loans comprising such Loan
to be converted or continued  and, if converted,  the Type or Types of Loan into
which conversion of such principal amount or specified portions thereof is to be
made,  and (iv) in the case of any  conversion  into or  continuation  as a Loan
consisting  of  Eurodollar  Rate Loans,  the  Interest  Period to be  applicable
thereto,  and shall be immediately followed by a written confirmation thereof by
the  Borrower in  substantially  the form of Exhibit B (as such form is modified
from time to time by the  Agent),  properly  completed  or  otherwise  in a form
acceptable to the Agent,  provided that if such written  confirmation differs in
any respect from the action  taken by the Agent,  the records of the Agent shall
control absent manifest error.

               SECTION 5.8. Conversion or Continuation. Provided that no Default
or Event of Default shall have  occurred and be  continuing  (but subject to the
provisions  of Sections  5.7 and 5.9,  the  Borrower may request that all or any
part of any  outstanding  Loans of one  Type  comprising  a  single  Loan (a) be
converted into Loans of any other Type provided for in this Agreement, or (b) be
continued as Loans of the same Type, in the same aggregate  principal amount, on
any Business Day (which,  in the case of a conversion or  continuation of a Loan
comprised of Eurodollar Rate Loans, shall be the last day of the Interest Period
applicable to such Loans), upon notice (which notice shall be irrevocable) given
in accordance with Section 5.7.

               SECTION  5.9.  Duration of Interest  Periods;  Maximum  Number of
Eurodollar  Rate Loans;  Minimum  Increments.  Subject to the  provisions of the
definition of Interest Period,  the duration of each Interest Period  applicable
to a Term Loan  comprised of Eurodollar  Rate Loans shall be as specified in the
applicable  notice of  borrowing  provided  pursuant to Section 2.1 or Notice of
Conversion or Continuation.  The Borrower may elect a subsequent Interest Period
to be  applicable  to the  Eurodollar  Rate Loans  comprising a Loan by giving a
Notice of  Conversion or  Continuation  with respect to such Loans in accordance
with Sections 5.7 and 5.8. If the Agent does not receive a notice of election in
accordance  with Section 5.7 with respect to the  continuation of the Eurodollar
Rate Loans comprising a Loan within the applicable time limits specified in said
Section  5.7,  or if,  when such  notice  must be given,  a Default  or Event of
Default exists or Eurodollar Rate Loans are not available, the Borrower shall be
deemed to have  elected to convert  such  Eurodollar  Rate Loans in whole into a
Prime Rate Loans on the last day of the  then-current  Interest Period therefor.
Notwithstanding  the foregoing,  the Borrower may not select an Interest  Period
that would end, but for the  provisions  of the  definition  "Interest  Period,"
after the Maturity Date. In no event shall the total number of Loans  consisting
of Eurodollar Rate Loans outstanding  hereunder at any one time exceed two. Each
Term  Loan  consisting  of  Eurodollar  Rate  Loans  shall  be in an  amount  of
$1,000,000 or an integral multiple of $500,000 in excess thereof.

               SECTION 5.10. Changed Circumstances.

               (a) Illegality. If the introduction of or any change in or in the
interpretation  of (in each case,  after the date hereof) any law or  regulation
makes it unlawful, or any Governmental Authority asserts, after the date hereof,
that it is  unlawful,  for any Lender to perform its  obligations  hereunder  to
make,  fund or maintain  Eurodollar  Rate Loans  hereunder,  the Agent (upon the
request of such Lender) shall so notify the Borrower of such event and the right
of the Borrower to select  Eurodollar  Rate Loans for any subsequent  Loan or in
connection with any subsequent conversion or continuation of Advances comprising
any Loan shall be suspended  until the Agent shall notify the Borrower  that the
circumstances  causing such  suspension no longer exist,  and the Borrower shall
forthwith  prepay in full all  Eurodollar  Rate  Loans  then  outstanding,  with
interest  accrued  thereon,  unless the Borrower,  within three Business Days of
such notice from the Agent, requests the conversion of all Eurodollar Rate Loans
then  outstanding into Prime Rate Loans in accordance with Sections 5.7 and 5.9;
provided,  that if the date of such repayment or proposed  conversion is not the
last day of the Interest Period  applicable to such  Eurodollar Rate Loans,  the
Borrower shall also pay any amount due pursuant to Section 5.11.

               (b)  Disruption  in  Market.  If the  Agent  shall,  at least one
Business  Day  before  the date of any  requested  borrowing  or the date of any
conversion or continuation of any existing Loans (each such requested  borrowing
or Loans to be converted or continued,  a "Pending  Loan"),  notify the Borrower
that the Eurodollar Rate for Eurodollar Rate Loans  comprising such Pending Loan
will not  adequately  reflect  the cost to the  Required  Lenders  of  making or
funding  their  Eurodollar  Rate Loans for such Pending  Loan,  the right of the
Borrower to select  Eurodollar  Rate Loans for such Pending Loan, any subsequent
Loan or in connection  with any subsequent  conversion or  continuation of Loans
shall  be  suspended  until  the  Agent  shall  notify  the  Borrower  that  the
circumstances causing such suspension no longer exist, and each Loans comprising
each Pending Loan and each such subsequent Loan requested to be made,  continued
or converted  shall be made or continued as or converted into a Prime Rate Loans
or a Loan consisting of Prime Rate Loans.

               (c) Increased Costs;  Capital Adequacy.  The Borrower agrees that
if any  Applicable  Law now or hereafter in effect and whether or not  presently
applicable  to  any  Lender  or  any  request,  guideline  or  directive  of any
Governmental  Authority  (whether  or not having the force of law and whether or
not  failure  to comply  therewith  would be lawful)  or the  interpretation  or
administration thereof by any Governmental Authority charged with administration
thereof,  shall (i)(A) impose,  affect,  modify or deem  applicable any reserve,
special deposit, capital maintenance or similar requirement against anyLoan, (B)
impose on any Lender any other condition regarding any Loan, this Agreement, any
Note  or  the  facilities  provided  hereunder  or  (C)  impose  or  increase  a
requirement  by such  Lender  (or such  Lender's  parent)  to  allocate  capital
resources to such Lender's Commitment to make Loans hereunder which has or would
have the effect of reducing the return on such Lender's capital to a level below
that which such Lender  could have  achieved  (taking  into  consideration  such
Lender's  then existing  policies with respect to capital  adequacy and assuming
full  utilization  of such Lender's  capital) or (ii) subject such Lender to any
taxes or similar  charges  (other  than taxes on or  measured  by income of such
Lender) on the recording,  registration,  notarization or other formalization of
the Loans or the Notes, and the result of any circumstance referred to in clause
(i) or (ii)  above  shall be to  increase  the cost to such  Lender  of  making,
funding or maintaining any Loan or to reduce the amount of any sum receivable by
such Lender or such  Lender's rate of return on capital with respect to any Loan
to a level  below that  which  such  Lender  could  have  achieved  but for such
imposition,  modification  or deemed  applicability  by an amount deemed by such
Lender (in the exercise of its reasonable  judgment) to be material,  then, upon
demand  by such  Lender,  the  Borrower  shall  immediately  pay to such  Lender
additional  amounts which shall be sufficient to compensate such Lender for such
increased  cost,  tax or  reduced  rate of  return.  The  Borrower  shall not be
responsible to any Lender for any such costs incurred by such Lender as a result
of any of the  aforementioned  events  occurring  more than 90 days prior to the
Borrower's receipt of notice of such claim from such Lender.

               (d)  Bank  Certificate  Conclusive.  A  certificate  of a  Lender
claiming  compensation  under Section 5.10(c) shall be conclusive in the absence
of manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such claim for compensation,  the additional amount or amounts to
be paid to it hereunder and the method by which such amounts were determined. In
determining  such  amount,  a  Lender  may  use  any  reasonable  averaging  and
attribution methods, applied on a non-discriminatory basis.

               SECTION 5.11. Payments Not at End of Interest Period;  Failure to
Borrow.  If for  any  reason  any  payment  of  principal  with  respect  to any
Eurodollar  Rate Loan is made on any day other than the last day of the Interest
Period  applicable  to such  Eurodollar  Rate  Advance or,  after having given a
Notice of Conversion or Continuation pursuant to Section 5.7 with respect to any
Loan to  consist  of  Eurodollar  Rate  Loans,  such  Loan is not  converted  or
continued as a Loan consisting of Eurodollar Loans due to the Borrower's failure
to borrow or to fulfill the  applicable  conditions  set forth in Article 6, the
Borrower  shall  pay to the  Agent,  for the  account  of each  Lender an amount
computed pursuant to the following formula:

                               L = (R - T) x P x D
                                ---------------
                                       360

L =     amount payable to the Agent
R =     interest rate on Eurodollar Rate Loan
T = effective  interest rate per annum at which any readily  marketable  bond or
other obligation of the United States,  selected at the Agent's sole discretion,
maturing on or near the last day of the Interest Period applicable to such Loans
and in  approximately  the same amount as such Loan can be purchased by a Lender
on the day of such  payment  of  principal  or  failure  to borrow or convert or
continue P = the amount of principal prepaid or the amount of the requested Loan
D = the number of days  remaining in the  applicable  Interest  Period as of the
date of such payment or the number of days of the requested Interest Period

The  Borrower  shall  pay  such  amounts  upon  presentation  by the  Agent of a
statement setting forth the amount and the Agent's  calculation thereof pursuant
hereto, which statement shall be deemed true and correct absent manifest error.

               SECTION 5.12.  Prepayment Penalty. In addition to the amounts, if
any, payable pursuant to Section 5.11, if the Borrower prepays the Loans in full
prior to May 2, 1998 for any  reason  with  funds  generated  or  received  from
sources other than the internal  generation of cash flow, the Borrower shall pay
to the Agent for the ratable  benefit of the Lenders on such date of  prepayment
(in proportion to each Lender's  Commitment  Percentage),  as liquidated damages
and  compensation  for the costs of making funds available to the Borrower under
this Agreement, and not as a penalty, an amount equal to $100,000.


        ARTICLE 6

        [intentionally left blank]



        ARTICLE 7

        REPRESENTATIONS AND WARRANTIES OF BORROWER

               SECTION 7.1.  Representations and Warranties.  The Borrower
represents and warrants to the Agent and to the Lenders as follows:

               (a) Organization;  Power; Qualification. The Borrower and each of
its Subsidiaries is a corporation,  duly organized, validly existing and in good
standing under the laws of its jurisdiction of  incorporation,  having the power
and  authority to own its  properties  and to carry on its business as now being
and hereafter  proposed to be conducted and is duly  qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature  of its  business  requires  such  qualification  or  authorization.  The
jurisdictions  in which each of the  Borrower  and each of its  Subsidiaries  is
qualified to do business as a foreign corporation are listed on Schedule 7.1(a).

               (b) Capitalization. The outstanding capital stock of the Borrower
has been duly and validly  issued and is fully paid and  nonassessable,  and the
number and owners of such shares of capital  stock of the Borrower are set forth
on Schedule 7.1(b).  The issuance and sale of the Borrower's  capital stock have
been registered or qualified under applicable  federal and state securities laws
or are exempt therefrom.

               (c) Subordinated Indebtedness.  The Borrower has delivered to the
Agent a complete and correct copy of all documents evidencing or relating to the
Subordinated Indebtedness,  and each of the representations and warranties given
by the  Borrower  therein is true and  correct  in all  material  respects.  The
subordination  provisions of the  Subordination  Agreement  will be  enforceable
against each party thereto.  All of the Secured  Obligations  constitute  Senior
Obligations (as defined in the Subordination Agreement) entitled to the benefits
of subordination created under the Subordination Agreement.

               (d)  Subsidiaries.  Schedule 7.1(d) correctly sets forth the name
of each Subsidiary of the Borrower, its jurisdiction of incorporation,  the name
of its  immediate  parent or  parents,  and the  percentage  of its  issued  and
outstanding  securities  owned by the  Borrower or any other  Subsidiary  of the
Borrower and indicating whether such Subsidiary is a Consolidated Subsidiary.
Except as set forth on Schedule 7.1(d),

               (i)    no  Subsidiary  of the Borrower has issued any  securities
                      convertible into shares of such Subsidiary's capital stock
                      or any  options,  warrants or other  rights to acquire any
                      shares or securities convertible into such shares, and

               (ii)   the outstanding stock and securities of each Subsidiary of
                      the Borrower  are owned by the Borrower or a  Wholly-Owned
                      Subsidiary of the Borrower,  or by the Borrower and one or
                      more of its Wholly-Owned  Subsidiaries,  free and clear of
                      all Liens,  warrants,  options and rights of others of any
                      kind whatsoever.

        The  outstanding  capital  stock of each  Subsidiary of the Borrower has
been duly and validly issued and is fully paid and  nonassessable by the issuer,
and the number and owners of the shares of such  capital  stock are set forth on
Schedule 7.1(d).

               (e)  Authorization  of  Agreement,   Notes,  Loan  Documents  and
Borrowing.  The  Borrower has the right and power,  and has taken all  necessary
action to authorize it, to execute,  deliver and perform this Agreement and each
of the Loan Documents in accordance with their respective  terms. This Agreement
and each of the Loan Documents have been duly executed and delivered by the duly
authorized  officers  of the  Borrower  and each is, or each when  executed  and
delivered in accordance with this Agreement will be, a legal,  valid and binding
obligation of the Borrower, enforceable in accordance with its terms.

               (f) Compliance of Agreement,  Notes, Loan Documents and Borrowing
with Laws, Etc. Except as set forth on Schedule 7.1(f), the execution,  delivery
and  performance  of this Agreement and each of the Loan Documents in accordance
with their respective terms and the borrowings hereunder do not and will not, by
the passage of time, the giving of notice or otherwise,

                      (i)    require any Governmental Approval or violate
                             any Applicable Law relating to the Borrower
                             or any of its Subsidiaries,

                      (ii)   conflict with,  result in a breach of or constitute
                             a default  under the  articles  or  certificate  of
                             incorporation  or by-laws of the Borrower or any of
                             its Subsidiaries,

                      (iii)  conflict with, result in a breach of or
                             constitute a default under any material
                             provisions of any indenture, agreement or
                             other instrument to which the Borrower or any
                             of its Subsidiaries is a party or by which
                             the Borrower, any of its Subsidiaries or any
                             of the Borrower's or such Subsidiaries'
                             property may be bound or any Governmental
                             Approval relating to the Borrower or any of
                             its Subsidiaries, or

                      (iv)   result in or require the creation or  imposition of
                             any Lien upon or with  respect to any  property now
                             owned or hereafter  acquired by the Borrower  other
                             than the Security Interest.

               (g)    Business.  The Borrower is engaged principally in the
business of the sale of tobacco and tobacco related products.

               (h)    Compliance with Law; Governmental Approvals.

                      (i)    Except as set forth in Schedule 7.1(h), the
                      Borrower and each of its Subsidiaries

                             (A)    has all Governmental Approvals, including
permits relating to federal,  state and local Environmental Laws, ordinances and
regulations, required by any Applicable Law for it to conduct its business, each
of which is in full  force and  effect,  is final and not  subject  to review on
appeal  and is not the  subject  of any  pending  or,  to the  knowledge  of the
Borrower, threatened attack by direct or collateral proceeding, and

                             (B)    is in compliance with each Governmental
Approval  applicable  to it and in  compliance  with all other  Applicable  Laws
relating to it, including,  without being limited to, all Environmental Laws and
all occupational  health and safety laws applicable to the Borrower,  any of its
Subsidiaries or their respective properties,

               except for instances of noncompliance  which would not, singly or
in the  aggregate,  cause a Default  or Event of  Default  or have a  Materially
Adverse  Effect on the  Borrower  or any of its  Subsidiaries  and in respect of
which  reserves in respect of the  Borrower's  or such  Subsidiary's  reasonably
anticipated  liability  therefor  have  been  established  on the  books  of the
Borrower or such Subsidiary, as applicable.

                      (ii)   Without  limiting  the  generality  of  the  above,
                             except  with  respect  to matters  which  could not
                             reasonably  be expected  to have,  singly or in the
                             aggregate,  a  Materially  Adverse  Effect  on  the
                             Borrower or any of its Subsidiaries:

                             (A)    the operations of the Borrower and each of
its Subsidiaries comply in all material respects with all applicable
environmental, health and safety requirements of Applicable Law;

                             (B)    the Borrower and each of its Subsidiaries
has obtained all  environmental,  health and safety  permits  necessary  for its
operation,  and all such permits are in good  standing and the Borrower and each
of its Subsidiaries is in compliance in all material respects with all terms and
conditions of such permits;

                             (C)    neither the Borrower nor any of its
Subsidiaries nor any of their respective  present or past property or operations
are subject to any order from or agreement with any public  authority or private
party  respecting  (x) any  environmental,  health  or  safety  requirements  of
Applicable  Law,  (y) any  Remedial  Action,  or (z) any  liabilities  and costs
arising  from the  Release  or  threatened  Release  of a  Contaminant  into the
environment;

                             (D)    none of the operations of the Borrower or
of any of its Subsidiaries is subject to any judicial or administrative
proceeding alleging a violation of any environmental, health or safety
requirement of Applicable Law;

                             (E)    none of the present or past operations of
the Borrower or any of its  Subsidiaries is the subject of any  investigation by
any public authority evaluating whether any Remedial Action is needed to respond
to a Release or threatened Release of a Contaminant into the environment;

                             (F)    neither the Borrower nor any of its
Subsidiaries  has filed any  notice  under any  requirement  of  Applicable  Law
indicating past or present treatment,  storage or disposal of a hazardous waste,
as that term is defined under 40 CFR Part 261 or any state equivalent;

                             (G)    neither the Borrower nor any of its
Subsidiaries  has filed any  notice  under any  requirement  of  Applicable  Law
reporting a Release of a Contaminant into the environment;

                             (H)    are in compliance in all material respects
with applicable  Environmental  Laws, during the course of the Borrower's or any
of its Subsidiaries'  ownership of or operations on the Real Estate,  there have
been no (1) generation,  treatment,  recycling, storage or disposal of hazardous
waste,  as that term is defined  under 40 CFR Part 261 or any state  equivalent,
(2)  use of  underground  storage  tanks  or  surface  impoundments,  (3) use of
asbestos-containing  materials,  or (4) use of  polychlorinated  biphenyls (PCB)
used in hydraulic oils, electrical transformers or other equipment;

                             (I)    neither the Borrower nor any of its
Subsidiaries  has entered into any  negotiations  or agreements  with any Person
(including,  without  limitation,  any prior  owner of any of the Real Estate or
other  property  of the  Borrower  or any of its  Subsidiaries)  relating to any
Remedial Action or environmental related claim;

                             (J)    neither the Borrower nor any of its
Subsidiaries has received any notice or claim to the effect that it is or may be
liable to any  Person as a result of the  Release  or  threatened  Release  of a
Contaminant into the environment;

                             (K)    neither the Borrower nor any of its
Subsidiaries  has any  material  contingent  liability  in  connection  with any
Release or threatened Release of any Contaminant into the environment;

                             (L)    no Environmental Lien has attached to any
of the Real Estate or other property of the Borrower or of any of its
Subsidiaries;

                             (M)    the presence and condition of all
asbestos-containing  material  which  is on or part of the  Real  Estate  do not
violate  in  any  material  respect  any  currently  applicable  requirement  of
Applicable Law; and

                             (N)    neither the Borrower nor any of its
Subsidiaries  manufactures,  distributes or sells,  and has never  manufactured,
distributed or sold, products which contain asbestos-containing material.

                      (iii)  the Borrower has notified the Lenders of the
receipt  by it or by  any of  its  Subsidiaries  of  any  notice  of a  material
violation  of any  Environmental  Laws and  occupational  health and safety laws
applicable to the Borrower,  any of its  Subsidiaries or any of their respective
properties.

               (i) Title to Properties.  Except as set forth in Schedule 7.1(i),
the  Borrower  and each of its  Subsidiaries  has valid  and  legal  title to or
leasehold interest in all personal property,  Real Estate owned and other assets
used in its business.

               (j) Liens.  Except as set forth in Schedule  7.1(j),  none of the
properties  and assets of the  Borrower  or any  Subsidiary  of the  Borrower is
subject  to  any  Lien,  except  Permitted  Liens.   Other  than  the  Financing
Statements,  no financing  statement  under the Uniform  Commercial  Code of any
State or other  instrument  evidencing  a Lien which  names the  Borrower or any
Subsidiary  of the  Borrower  as  debtor  has  been  filed  (and  has  not  been
terminated) in any State or other jurisdiction, and neither the Borrower nor any
Subsidiary  of the  Borrower  has signed any such  financing  statement or other
instrument or any security agreement authorizing any secured party thereunder to
file any such financing  statement or instrument,  except to perfect those Liens
listed on Schedule 7.1(j).

               (k)  Indebtedness  and Guaranties.  Schedule 7.1(k) is a complete
and  correct  listing  of all (i)  Indebtedness  for  Money  Borrowed,  and (ii)
Guaranties  of each of the  Borrower and each of its  Subsidiaries.  Each of the
Borrower and its Subsidiaries has performed and is in compliance with all of the
terms of such  Indebtedness  and Guaranties and all  instruments  and agreements
relating  thereto,  and no default or event of  default,  or event or  condition
which with  notice or lapse of time or both would  constitute  such a default or
event of default, exists with respect to any such Indebtedness or Guaranty.

               (l) Litigation. Except as set forth on Schedule 7.1(l), there are
no actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened,  or any reasonable basis
therefor)  against or in any other way relating to or affecting  the Borrower or
such  Subsidiaries  or any of the Borrower's or any of its  Subsidiaries,  other
properties in any court or before any arbitrator of any kind or before or by any
governmental  body,  except  actions,  suits  or  proceedings  of the  character
normally  incident to the kind of business  conducted  by the Borrower or any of
its  Subsidiaries  which,  if adversely  determined,  would not singly or in the
aggregate have a Materially  Adverse Effect on the Borrower or such  Subsidiary,
and there are no strikes  or  walkouts  in  progress,  pending  or  contemplated
relating to any labor contracts to which the Borrower or any of its Subsidiaries
is a party, relating to any labor contracts being negotiated, or otherwise.

               (m) Tax  Returns  and  Payments.  Except as set forth on Schedule
7.1(m), all United States federal,  state and local as well as foreign national,
provincial  and  local and other tax  returns  of the  Borrower  and each of its
Subsidiaries  required by Applicable  Law to be filed have been duly filed,  and
all United States federal, state and local and foreign national,  provincial and
local and other taxes, assessments and other governmental charges or levies upon
the  Borrower and each of its  Subsidiaries  and the  Borrower's  and any of its
Subsidiaries'  property,  income,  profits and assets  which are due and payable
have been paid,  except any such nonpayment which is at the time permitted under
Section  10.6.  The charges,  accruals and reserves on the books of the Borrower
and each of its  Subsidiaries  in respect of United  States  federal,  state and
local and foreign national,  provincial and local taxes for all fiscal years and
portions  thereof since the  organization of the Borrower are in the judgment of
the Borrower  adequate,  and the Borrower  knows of no reason to anticipate  any
additional  assessments for any of such years which, singly or in the aggregate,
might have a Materially Adverse Effect on the Borrower.

               (n)  Burdensome  Provisions.  Neither the Borrower nor any of its
Subsidiaries is a party to any indenture,  agreement, lease or other instrument,
or subject to any charter or  corporate  restriction,  Governmental  Approval or
Applicable  Law  compliance  with the  terms of which  might  have a  Materially
Adverse Effect on the Borrower or any of its Subsidiaries.

               (o) Financial  Condition.  The financial statements and financial
information  provided to the Lenders,  consisting of, among other things, (i) an
audited  consolidated  balance sheet of the Borrower dated as of March 31, 1995,
together with related consolidated  statements of income,  retained earnings and
cash flows,  certified by Deloitte & Touche,  certified public  accountants,  as
true and correct, fairly represent the financial condition of the Borrower as of
such date;  such  financial  statements  were prepared in  accordance  with GAAP
applied on a consistent  basis; and since the date of such financial  statements
there have occurred no changes or circumstances  which have had or are likely to
have a Material  Adverse  Effect on the  Borrower and the  financial  statements
referenced above; and (ii) an internally prepared  consolidated balance sheet of
the  Borrower  and WAA dated as of December  31,  1995,  together  with  related
consolidated  statements  of income,  retained  earnings and cash flows,  fairly
represent the financial  condition of the Borrower and WAA as of such date; such
financial  statements  were  prepared  in  accordance  with  GAAP  applied  on a
consistent  basis;  and since the dates of such financial  statements there have
occurred  no  changes  or  circumstances  which have had or are likely to have a
Material  Adverse  Effect on the  Borrower or WAA and the  financial  statements
referenced above.

               (p)    Adverse Change.  Since the date of the last financial
statements of the Borrower delivered to the Agent pursuant to Section
7.1(o)(i),

                      (i)    no material adverse change has occurred in the
business, assets, liabilities, financial condition, results of operations or
business prospects of the Borrower, and

                      (ii)   no event has occurred or failed to occur which
has had, or may have, singly or in the aggregate, a Materially Adverse Effect
on the Borrower.

               (q)    ERISA.

                      (i)    Neither the Borrower nor any Related Company
maintains or contributes to any Benefit Plan other than those listed on Schedule
7.1(q).

                      (ii)   No Benefit Plan has been terminated or partially
terminated,  and no Multiemployer  Plan is insolvent or in  reorganization,  nor
have any  proceedings  been  instituted  to  terminate  any  Benefit  Plan or to
reorganize any Multiemployer Plan.

                   (iii)  Neither  the  Borrower  nor any  Related  Company  has
withdrawn  from any  Benefit  Plan or  Multiemployer  Plan,  nor has a condition
occurred which if continued would result in a withdrawal.

                      (iv)   Neither the Borrower nor any Related Company has
incurred any withdrawal liability, including contingent withdrawal liability, to
any Multiemployer Plan pursuant to Title IV of ERISA.

                      (v)    Neither the Borrower nor any Related Company has
incurred any  liability to the PBGC other than for required  insurance  premiums
which have been paid when due.

                      (vi)   No Reportable Event has occurred with respect to
a Plan.

                      (vii)  No Benefit Plan has an "accumulated funding
deficiency"  (whether  or not  waived) as defined in Section  302 of ERISA or in
Section 412 of the Internal Revenue Code.

                   (viii) Each Plan is in substantial compliance with ERISA, and
neither the Borrower nor any Related Company has received any communication from
a governmental agency asserting that a Plan is not in compliance with ERISA.

                      (ix)   Each Plan which is intended to be a qualified
Plan has been  determined by the IRS to be qualified under Section 401(a) of the
Internal Revenue Code as currently in effect or will be submitted to the IRS for
such  determination  prior to the end of the  remedial  amendment  period  under
Section  401(b) of the  Internal  Revenue Code and the  regulations  promulgated
thereunder and neither the Borrower nor any Related  Company knows or has reason
to know why each such Plan  should not  continue  to be so  qualified,  and each
trust related to such Plan that has been submitted to the IRS for  determination
of exempt status has been  determined to be exempt from federal income tax under
Section 501(a) of the Internal  Revenue Code or will be submitted to the IRS for
a determination of exempt status.

                      (x)    Except as provided on Schedule 7.1(q), neither
the Borrower nor any Related  Company  maintains or  contributes to any employer
welfare  benefit plan within the meaning of Section 3(1) of ERISA which provides
benefits to employees after  termination of employment other than as required by
Section 601 of ERISA.

                      (xi)   Schedule B to the most recent annual report filed
with the IRS with respect to each  Benefit  Plan and  furnished to the Lender is
complete and accurate. Since the date of each such Schedule B, there has been no
adverse  change in funding  status or  financial  condition  of the Benefit Plan
relating to such Schedule B.

                      (xii)   Neither the Borrower nor any Related Company has
failed to make a required installment under Subsection (m) of Section 412 of the
Internal  Revenue Code or any other  payment  required  under Section 412 of the
Internal  Revenue Code on or before the due date for such  installment  or other
payment.

                      (xiii)  Neither the Borrower nor any Related Company is
required to provide  security to a Benefit Plan under Section  401(a)(29) of the
Internal  Revenue  Code due to a  Benefit  Plan  amendment  that  results  in an
increase in current liability for the plan year.

                      (xiv)  Neither the Borrower, nor any Related Company,
nor any other  "party-in-interest"  or  "disqualified  person"  has engaged in a
nonexempt "prohibited transaction," as such terms are defined in Section 4975 of
the Internal  Revenue Code and Section 406 of ERISA, in connection with any Plan
or has taken or failed to take any action which would  constitute or result in a
Termination Event.

                      (xv)    Neither the Borrower nor any Related Company has
failed to comply  with the health care  continuation  coverage  requirements  of
Section  4980B of the Internal  Revenue Code in respect of employees  and former
employees of such  Borrower or such  Related  Company and their  dependents  and
beneficiaries  which alone or in the  aggregate  would  subject such Borrower or
such Related Company to any material liability.

                      (xvi)  Neither the Borrower nor any Related Company has
(i) failed to make a required contribution or payment to a Multiemployer Plan or
(ii) made a complete or partial  withdrawal under Sections 4203 or 4205 of ERISA
from a Multiemployer  Plan.  Except as provided on Schedule 7.1(q),  to the best
knowledge  of the  Borrower  after due  inquiry,  neither the  Borrower  nor any
Related  Company  shall have any  obligation  to (A) make  contributions  to any
Multiemployer  Plan on or  after  the  Effective  Date,  or (B)  pay  withdrawal
liability  to any  Multiemployer  Plan in an amount  in excess of a "de  minimis
amount" as such term is defined in Section 4209 of ERISA.

               (r)    Absence of Defaults.  Neither the Borrower nor any of
its Subsidiaries is in default under its articles or certificate of
incorporation or by-laws and no event has occurred, which has not been
remedied, cured or waived,

                      (i)    which constitutes a Default or an Event of
Default, or

                      (ii)   which constitutes, or which with the passage of
time or giving of notice or both would constitute, a default or event of default
by the Borrower or any of its Subsidiaries  under any material  agreement (other
than this  Agreement) or judgment,  decree or order to which the Borrower or any
of its Subsidiaries is a party or by which the Borrower, any of its Subsidiaries
or any of the Borrower's or any of its Subsidiaries'  properties may be bound or
which would require the Borrower or any of its  Subsidiaries to make any payment
under any thereof prior to the scheduled maturity date therefor,  except, in the
case only of any such agreement,  for alleged defaults which are being contested
in good faith by appropriate  proceedings  and with respect to which reserves in
respect of the Borrower's or such Subsidiary's  reasonably anticipated liability
have been established on the books of the Borrower or such Subsidiary.

               (s)    Accuracy and Completeness of Information.

                      (i)    All written information, reports and other papers
and data  produced by or on behalf of the Borrower and furnished to the Agent or
any Lender were, at the time the same were so furnished, complete and correct in
all material respects,  to the extent necessary to give the recipient a true and
accurate knowledge of the subject matter. No fact is known to the Borrower which
has had,  or may in the future  have (so far as the  Borrower  can  foresee),  a
Materially Adverse Effect upon the Borrower or any of its Subsidiaries which has
not been set forth in the financial  statements or disclosure delivered prior to
the  Effective  Date,  in each case  referred to in Section  7.1(o),  or in such
written  information,  reports or other papers or data or otherwise disclosed in
writing to the Agent and the Lenders  prior to the  Agreement  Date. No document
furnished or written  statement  made to the Agent or any Lender by the Borrower
in connection with the  negotiation,  preparation or execution of this Agreement
or any of the Loan Documents  contains or will contain any untrue statement of a
fact material to the  creditworthiness  of the Borrower or omits or will omit to
state a  material  fact  necessary  in order to make  the  statements  contained
therein not misleading.

                      (ii)   The Borrower has no reason to believe that any
document  furnished or written  statement made to the Agent or any Lender by any
Person other than the Borrower in connection with the  negotiation,  preparation
or  execution  of this  Agreement  or any of the Loan  Documents  contained  any
incorrect  statement  of a material  fact or  omitted  to state a material  fact
necessary in order to make the  statements  made, in light of the  circumstances
under which they were made, not misleading.

               (t)   Solvency.   In  each  case  after  giving   effect  to  the
Indebtedness  represented  by the  Loans  outstanding  and to be  incurred,  the
transactions  contemplated  by this  Agreement,  the  Borrower  and  each of its
Subsidiaries is solvent, having assets of a fair salable value which exceeds the
amount required to pay its debts as they become absolute and matured  (including
contingent,  subordinated,  unmatured  and  unliquidated  liabilities),  and the
Borrower and each of its Subsidiaries is able to and anticipates that it will be
able to meet its debts as they  mature and has  adequate  capital to conduct the
business in which it is or proposes to be engaged.

               (u)    Receivables.

                      (i)    Status.

                             (A)    Each Receivable reflected in the
computations  included in any  Borrowing  Base  Certificate  meets the  criteria
enumerated in the definition of Eligible  Receivables set forth in the Revolving
Credit  Agreement,  except as disclosed in such Borrowing Base Certificate or as
disclosed  in a timely  manner in a subsequent  Borrowing  Base  Certificate  or
otherwise in writing to the Agent.

                             (B)    The Borrower has no knowledge of any fact
or circumstance  not disclosed to the Lender in a Borrowing Base  Certificate or
otherwise in writing  which would impair the validity or  collectibility  of any
Receivable  of  $5,000  or  more  or of  Receivables  which  (regardless  of the
individual amount thereof) aggregate $50,000 or more.

                      (ii)   Chief Executive Office.  The chief executive
office of the Borrower and the books and records relating to the Receivables are
located at the address or addresses set forth on Schedule  7.1(u);  the Borrower
has not maintained its chief executive  office or books and records  relating to
any  Receivables  at any  other  address  at any  time  during  the  five  years
immediately preceding the Agreement Date except as disclosed on Schedule 7.1(u).

               (v)    Inventory.

                      (i)    Schedule of Inventory.  All Inventory included in
any Schedule of Inventory or Borrowing Base Certificate  delivered to the Lender
pursuant to Section 9.12 meets the criteria  enumerated  in the  definitions  of
Eligible  Committed  Leaf  Inventory,  Eligible Cut Rag  Inventory  and Eligible
Uncommitted  Leaf  Inventory  of  the  Revolving  Credit  Agreement,  except  as
disclosed in such Schedule of Inventory or Borrowing  Base  Certificate  or in a
subsequent Schedule of Inventory or Borrowing Base Certificate,  or as otherwise
specifically disclosed in writing to the Agent.

                      (ii)   Condition. All Inventory is in good condition,
meets all  standards  imposed  by any  governmental  agency,  or  department  or
division  thereof,  having  regulatory  authority over such goods,  their use or
sale,  and is  currently  either  usable or salable in the normal  course of the
Borrower's  business,  except to the extent  reserved  against in the  financial
statements  referred to in Section 7.1(o) or delivered pursuant to Article 11 or
as  disclosed  on a Schedule of  Inventory  delivered  to the Agent  pursuant to
Section 9.12(b).

                      (iii)  Location.  All Inventory is located on the
premises set forth on Schedule  7.1(v) or is Inventory in transit to one of such
locations,  except as otherwise  disclosed in writing to the Agent; the Borrower
has not, in the last year,  located such  Inventory at premises other than those
set forth on Schedule 7.1(v).

               (w)    Equipment. All Equipment is in good order and repair in
all material respects and is located on the premises set forth on Schedule
7.1(w).

               (x) Real Property. The Borrower owns no Real Estate and leases no
Real Estate  other than that  described  on Schedule  7.1(x) and other than Real
Estate  acquired or leased after the  Effective  Date for which the Borrower has
complied with the requirements of Section 9.14.

               (y) Corporate and Fictitious Names. Except as otherwise disclosed
on Schedule  7.1(y),  during the five-year  period preceding the Agreement Date,
neither the Borrower nor any  predecessor  thereof has been known as or used any
corporate or fictitious  name other than the  corporate  name of the Borrower on
the Effective Date.

               (z) Federal Reserve Regulations.  Neither the Borrower nor any of
its  Subsidiaries is engaged and none will engage,  principally or as one of its
important  activities,  in the business of  extending  credit for the purpose of
"purchasing"  or "carrying"  any "margin  stock" (as each of the quoted terms is
defined or used in  Regulations G and U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of any of the Loans will be used for so
purchasing  or carrying  margin  stock or, in any event,  for any purpose  which
violates,  or which would be inconsistent  with, the provisions of Regulation G,
T, U or X of such Board of  Governors.  If requested by the Agent or any Lender,
the Borrower will furnish to the Agent and the Lenders a statement or statements
in  conformity  with the  requirements  of said  Regulation  G, T, U or X to the
foregoing effect.

               (aa)  Investment  Company Act. The Borrower is not an "investment
company" or a company  "controlled"  by an "investment  company" (as each of the
quoted  terms is  defined  or used in the  Investment  Company  Act of 1940,  as
amended).

               (bb)   Employee   Relations.   The   Borrower  and  each  of  its
Subsidiaries has a stable work force in place and is not, except as set forth on
Schedule 7.1(bb), party to any collective bargaining agreement nor has any labor
union been  recognized  as the  representative  of the  Borrower's or any of its
Subsidiaries'  employees,  and the Borrower  knows of no pending,  threatened or
contemplated  strikes,  work  stoppage or other  labor  disputes  involving  the
Borrower's or any of its Subsidiaries' employees.

               (cc)  Proprietary  Rights.  Schedule 7.1(cc) sets forth a correct
and complete  list of all of the  Proprietary  Rights.  None of the  Proprietary
Rights is subject to any licensing  agreement or similar  arrangement  except as
set forth on Schedule  7.1(cc) or as entered into in the sale or distribution of
the Borrower's Inventory in the ordinary course of business.  To the best of the
Borrower's  knowledge,  none of the Proprietary Rights infringes on or conflicts
with any other Person's property, and no other Person's property infringes on or
conflicts with the  Proprietary  Rights.  The  Proprietary  Rights  described on
Schedule  7.1(cc)  constitute  all of the property of such type necessary to the
current and anticipated future conduct of the Borrower's business.

               (dd)  Trade  Names.  All trade  names or styles  under  which the
Borrower  sells  Inventory  or  Equipment  or creates  Receivables,  or to which
instruments in payment of Receivables  are made payable,  are listed on Schedule
7.1(dd).

               SECTION 7.2. Survival of  Representations  and Warran-ties,  Etc.
All  representations  and  warranties  set  forth  in  this  Article  7 and  all
statements  contained  in  any  certificate,   financial  statement,   or  other
instrument,  delivered  by  or on  behalf  of  the  Borrower  pursuant  to or in
connection with this Agreement or any of the Loan Documents (including,  but not
limited  to,  any  such  representation,  warranty  or  statement  made in or in
connection  with any amendment  thereto) shall  constitute  representations  and
warranties made under this Agreement.  All  representations  and warranties made
under  this  Agreement  shall  be  made  or  deemed  to be made at and as of the
Agreement  Date,  at and as of the  Effective  Date and at and as of the date of
each Loan, except that representations' and warranties which, by their terms are
applicable  only to one such  date  shall be deemed to be made only at and as of
such date. All  representations  and warranties  made or deemed to be made under
this Agreement  shall survive and not be waived by the execution and delivery of
this  Agreement,  any  investigation  made by or on behalf of the  Lender or any
borrowing hereunder.


        ARTICLE 8

        SECURITY INTEREST


               SECTION 8.1.  Security Interest.

               (a) To secure the  payment,  observance  and  performance  of the
Secured Obligations,  the Borrower hereby mortgages,  pledges and assigns all of
the Collateral to the Agent,  for the benefit of itself as Agent and for the pro
rata benefit of the Lenders (in  proportion  to each  Lender's  ownership of all
Secured Obligations from time to time), and grants to the Agent, for the benefit
of itself as Agent and for the pro rata  benefit  of the  Lenders  (also in such
proportion),  a continuing security interest in, and a continuing Lien upon, all
of the Collateral.

               (b) As  additional  security for all of the Secured  Obligations,
the  Borrower  grants to the Agent,  for the  benefit of itself as Agent and the
Lenders,  a security  interest in, and assigns to the Agent,  for the benefit of
itself as Agent and the Lenders, all of the Borrower's right, title and interest
in and to, any deposits or other sums,  at any time credited by or due from each
Lender and each  Affiliate  of a Lender to the  Borrower,  or credited by or due
from any participant of any Lender to the Borrower, with the same rights therein
as if the deposits or other sums were  credited by or due from such Lender.  The
Borrower  hereby  authorizes  each Lender and each  Affiliate of such Lender and
each participant to pay or deliver to the Agent, for the account of the Lenders,
without any  necessity  on the Agent's or any  Lender's  part to resort to other
security or sources of reimbursement  for the Secured  Obligations,  at any time
during the  continuation of any Event of Default or in the event that the Agent,
on behalf of the Lenders,  should make demand for payment  hereunder and without
further notice to the Borrower (such notice being expressly waived),  any of the
aforesaid deposits (general or special, time or demand, provisional or final) or
other sums for  application to any Secured  Obligation,  irrespective of whether
any demand has been made or whether such Secured  Obligation is mature,  and the
rights given the Agent, the Lenders, their Affiliates and participants hereunder
are  cumulative  with such Person's other rights and remedies,  including  other
rights of setoff.  The Agent will promptly notify the Borrower of its receipt of
any such funds for application to the Secured Obligations,  but failure to do so
will not affect  the  validity  or  enforceability  thereof.  The Agent may give
notice  of the above  grant of a  security  interest  in and  assignment  of the
aforesaid deposits and other sums, and authorization,  to, and make any suitable
arrangements  with, any Lender,  any such Affiliate of any Lender or participant
for effectuation  thereof, and the Borrower hereby irrevocably appoints Agent as
its  attorney to collect  any and all such  deposits or other sums to the extent
any  such  payment  is not  made to the  Agent  or any  Lender  by such  Lender,
Affiliate or participant.

               (c) As  additional  security for all of the Secured  Obligations,
the Borrower  hereby assigns to the Agent for the ratable benefit of the Lenders
(in proportion to each Lender's  ownership of all Secured  Obligations from time
to time) its rights to proceeds  arising  under any Foreign  Receivable  Support
Letter of Credit now existing or hereafter  arising.  The Borrower shall deliver
to the  Agent  all  original  Foreign  Receivable  Support  Letters  of  Credit.
Immediately upon its receipt of any Foreign Receivable Support Letter of Credit,
and prior to the presentation of any draw thereunder, the Borrower shall provide
to the  issuer of each such  Foreign  Receivable  Support  Letter of Credit  (i)
written notification,  with a conformed copy to the Agent, that the Borrower has
assigned  such  Foreign  Receivable  Support  Letter  of  Credit  to the  Agent,
providing such issuer sufficient  information to identify  reasonably the credit
so assigned,  and (ii)  requesting  and directing the issuer to pay the Agent as
assignee upon any draw under such Foreign  Receivable  Support Letter of Credit.
For the purposes of this Agreement,  the term "Foreign Receivable Support Letter
of Credit"  shall mean any letter of credit  issued in favor of the  Borrower as
beneficiary  to support the payment of any  receivable due from a foreign entity
or person.

               SECTION 8.2.  Continued Priority of Security Interest.

               (a) The Security  Interest  granted by the Borrower  shall at all
times be valid,  perfected  and  enforceable  against the Borrower and all third
parties in  accordance  with the terms of this  Agreement,  as security  for the
Secured Obligations,  and the Collateral shall not at any time be subject to any
Liens that are prior to, on a parity  with or junior to the  Security  Interest,
other than Permitted Liens.

               (b) The Borrower  shall,  at its sole cost and expense,  take all
action that may be  necessary  or  desirable,  or that the Agent may  reasonably
request, so as at all times to maintain the validity, perfection, enforceability
and rank of the  Security  Interest in the  Collateral  in  conformity  with the
requirements  of  Section  8.2(a),  or to enable  the Agent and the  Lenders  to
exercise or enforce their rights hereunder, including, but not limited to:

                      (i)    paying all taxes, assessments and other claims
lawfully levied or assessed on any of the Collateral,  except to the extent that
such taxes, assessments and other claims constitute Permitted Liens,

                      (ii)   obtaining, after the Agreement Date, landlords'
and mortgagees, releases, subordinations or waivers, and using all reasonable
efforts to obtain mechanics' releases, subordinations or waivers,

                      (iii)  delivering to the Agent, for the benefit of the
Lenders,  endorsed or accompanied by such instruments of assignment as the Agent
may specify,  and stamping or marking,  in such manner as the Agent may specify,
any and all chattel  paper,  instruments,  letters  and advices of guaranty  and
documents evidencing or forming a part of the Collateral, and

                      (iv)   executing and delivering financing statements,
pledges, designations,  hypothecations,  notices and assignments in each case in
form and substance satisfactory to the Agent relating to the creation, validity,
perfection,  maintenance  or  continuation  of the Security  Interest  under the
Uniform Commercial Code or other Applicable Law.

               (c) The Agent is hereby  authorized to file one or more financing
or continuation  statements or amendments thereto without the signature of or in
the name of the Borrower for any purpose described in Section 8.2(b).  The Agent
will  give  the  Borrower  notice  of the  filing  of  any  such  statements  or
amendments,  which notice shall specify the locations  where such  statements or
amendments were filed. A carbon, photographic, xerographic or other reproduction
of  this  Agreement  or of any of the  Security  Documents  or of any  financing
statement filed in connection with this Agreement is insufficient as a financing
statement.

               (d) The Borrower  shall mark its books and records as directed by
the Agent and as may be  necessary  or  appropriate  to  evidence,  protect  and
perfect the  Security  Interest  and shall  cause its  financial  statements  to
reflect the Security Interest.


        ARTICLE 9

        COLLATERAL COVENANTS


               Until all the Secured  Obligations have been paid in full, unless
the Required  Lenders shall otherwise  consent in the manner provided in Section
16.11:

               SECTION 9.1.  Collection of Receivables.

               (a) At the  request of the  Agent,  the  Borrower  will cause all
monies,  checks,  notes,  drafts and other payments  relating to or constituting
proceeds of trade  accounts  receivable to be forwarded to a Lockbox for deposit
in an  Agency  Account  in  accordance  with  the  procedures  set  out  in  the
corresponding  Agency  Account  Agreement.  The Borrower will promptly cause all
monies,  checks,  notes,  drafts and other payments  relating to or constituting
proceeds of other Receivables, of any other Collateral and of any trade accounts
receivable  that  are  not  forwarded  to a  Lockbox,  to be  transferred  to or
deposited in an Agency Account. In particular, the Borrower will:

                      (i)    advise each Account Debtor on trade accounts
receivable to address all remittances with respect to amounts payable on
account thereof to a specified Lockbox,

                      (ii)   advise each other Account Debtor that makes
payment to the Borrower by wire transfer,  automated  clearinghouse  transfer or
similar means to make payment directly to an Agency Account, and

                      (iii)  stamp all invoices relating to trade accounts
receivable with a legend satisfactory to the Agent indicating that payment is to
be made to the Borrower via a specified Lockbox.

               (b) The Borrower and the Agent shall cause all collected balances
in each Agency  Account to be  transmitted  daily by wire  transfer,  depository
transfer check or other means in accordance with the procedures set forth in the
corresponding Agency Account Agreement, to the Agent at the Agent's Office:

                      (i)    for application, on account of the Secured
Obligations,  as provided in Sections 2.3(c), 13.2, and 13.3, such credits to be
entered as of the Business  Day they are received if they are received  prior to
1:30 p.m.  (Atlanta  time) and to be  conditioned  upon final payment in cash or
solvent credits of the items giving rise to them, and

                      (ii)   with respect to the balance, so long as no
Default or Event of Default has occurred and is continuing, for transfer by wire
transfer or depository transfer check to a Controlled Disbursement Account.

               (c) Any monies,  checks, notes, drafts or other payments referred
to in  subsection  (a) of this Section 9.1 which,  notwithstanding  the terms of
such  subsection,  are received by or on behalf of the Borrower  will be held in
trust for the Agent and will be  delivered to the Agent or a Clearing  Bank,  as
promptly as possible,  in the exact form  received,  together with any necessary
endorsements  for  application by the Agent directly to the Secured  Obligations
or, if applicable,  for deposit in the Agency Account maintained with a Clearing
Bank and  processing in accordance  with the terms of the  corresponding  Agency
Account Agreement.

               SECTION 9.2.  Verification and Notification.  The Agent shall
have the right at any time and from time to time,

               (a) in the name of the Agent,  the  Lenders or in the name of the
Borrower,  to verify the  validity,  amount or any other matter  relating to any
Receivables by mail, telephone, telegraph or otherwise,

               (b)    to review, audit and make extracts from all records and
files related to any of the Receivables, and

               (c)  to  notify  the  Account   Debtors  or  obligors  under  any
Receivables of the assignment of such  Receivables to the Agent, for the benefit
of the Lenders, and to direct such Account Debtor or obligors to make payment of
all  amounts  due or to become due  thereunder  directly  to the Agent,  for the
account of the Lenders,  and, upon such  notification  and at the expense of the
Borrower, to enforce collection of any such Receivables and to adjust, settle or
compromise  the amount or payment  thereof,  in the same  manner and to the same
extent as the Borrower might have done.

               SECTION 9.3.  Disputes, Returns and Adjustments.

               (a) In the event any amounts  due and owing under any  Receivable
for an amount in excess of $1,000,000 are in dispute  between the Account Debtor
and the  Borrower,  the  Borrower  shall  provide the Agent with prompt  written
notice thereof.

               (b) The Borrower  shall notify the Agent  promptly of all returns
and  credits in excess of $50,000 in  respect of any  Receivable,  which  notice
shall specify the Receivable affected.

               (c) The Borrower may, in the ordinary course of business unless a
Default  or an Event of  Default  has  occurred  and is  continuing,  grant  any
extension  of time for  payment of any  Receivable  or  compromise,  compound or
settle the same for less than the full  amount  thereof,  or  release  wholly or
partly  any  Person  liable  for the  payment  thereof,  or allow any  credit or
discount  whatsoever  therein;  provided that (i) no such action  results in the
reduction  of more than  $50,000  in the  amount  payable  with  respect  to any
Receivable  or of more than  $250,000  with  respect to all  Receivables  in any
fiscal year of the Borrower (in each case, excluding the allowance of credits or
discounts  generally  available to Account Debtors in the ordinary course of the
Borrower's  business  and  appropriate  adjustments  to the  accounts of Account
Debtors in the  ordinary  course of  business),  and (ii) the Agent is  promptly
notified  of the  amount  of such  adjustments  and the  Receivable(s)  affected
thereby.

               SECTION 9.4.  Invoices.

               (a) The Borrower will not use any invoices other than invoices in
the form  delivered to the Agent prior to the Agreement  Date without giving the
Agent 30 days,  prior notice of the intended use of a different  form of invoice
together with a copy of such different form.

               (b) Upon the request of the Agent,  the Borrower shall deliver to
the Agent,  at the  Borrower's  expense,  copies of  customers,  invoices or the
equivalent,  original shipping and delivery receipts or other proof of delivery,
customers'  statements,  customer  address  lists,  the  original  copy  of  all
documents, including, without limitation, repayment histories and present status
reports,  relating  to  Receivables  and such other  documents  and  information
relating to the Receivables as the Agent shall specify.

               SECTION 9.5. Delivery of Instruments. In the event any Receivable
is at any time  evidenced by a promissory  note,  trade  acceptance or any other
instrument for the payment of money,  the Borrower will  immediately  thereafter
deliver such instrument to the Agent,  appropriately  endorsed to the Agent, for
the benefit of the Lenders.

               SECTION 9.6.  Sales of Inventory.  All sales of Inventory will
be made in compliance with all requirements of Applicable Law.

               SECTION 9.7.  Ownership and Defense of Title.

               (a) Except for Permitted  Liens,  the Borrower shall at all times
be the sole owner or lessee of each and every item of  Collateral  and shall not
create  any lien  on,  or  sell,  lease,  exchange,  assign,  transfer,  pledge,
hypothecate, grant a security interest or security title in or otherwise dispose
of, any of the Collateral or any interest therein, except for sales of Inventory
in the ordinary  course of business,  for cash or on open account or on terms of
payment ordinarily  extended to its customers,  and except for dispositions that
are  otherwise  expressly  permitted  under this  Agreement.  The  inclusion  of
"proceeds" of the Collateral  under the Security  Interest shall not be deemed a
consent by the Agent or the  Lenders to any other sale or other  disposition  of
any part or all of the Collateral.

               (b) The Borrower shall defend its title or leasehold  interest in
and to, and the  Security  Interest  in, the  Collateral  against the claims and
demands of all Persons.

               SECTION 9.8.  Insurance.

               (a) The  Borrower  shall at all times  maintain  insurance on the
Inventory  against loss or damage by fire, theft (excluding theft by employees),
burglary,  pilferage,  loss in transit and such other hazards as the Agent shall
reasonably  specify,  in amounts not to exceed those  obtainable at commercially
reasonable  rates and under policies issued by insurers  acceptable to the Agent
in the exercise of its reasonable judgment. All premiums on such insurance shall
be paid by the Borrower and copies of the policies  delivered to the Agent.  The
Borrower  will  not use or  permit  the  Inventory  to be used in  violation  of
Applicable  Law or in any manner which might render  inapplicable  any insurance
coverage.

               (b) All insurance  policies  required  under Section 9.8(a) shall
name the Agent,  for the benefit of the Lenders,  as an  additional  insured and
shall contain loss payable  clauses in the form submitted to the Borrower by the
Agent, or otherwise in form and substance  satisfactory to the Required Lenders,
naming  the  Agent,  for the  benefit  of the  Lenders,  as loss  payee,  as its
interests may appear, and providing that

                      (i)    all proceeds thereunder shall be payable to the
Agent, for the benefit of the Lenders,

                      (ii)   no such insurance shall be affected by any act or
neglect of the insurer or owner of the property described in such policy, and

                      (iii)  such policy and loss payable clauses may be
canceled,  amended  or  terminated  only upon at least ten days,  prior  written
notice given to the Agent.

               (c) Any  proceeds of  insurance  referred to in this  Section 9.8
which are paid to the Agent,  for the account of the  Lenders,  shall be, at the
option of the Required Lenders in their sole  discretion,  either (i) applied to
replace the damaged or  destroyed  property,  or (ii)  applied to the payment or
prepayment of the Secured Obligations.

               SECTION 9.9.  Location of Offices and Collateral.

               (a) The  Borrower  will not  change  the  location  of its  chief
executive  office or the place where it keeps its books and records  relating to
the Collateral or change its name, its identity or corporate  structure  without
giving the Agent 60 days' prior written notice thereof.

               (b) All  Inventory,  other than  Inventory in transit to any such
location,  will at all times be kept by the Borrower at the  locations set forth
in Schedule  7.1(v),  and shall not,  without the prior  written  consent of the
Agent,  be removed  therefrom  except  pursuant to sales of Inventory  permitted
under Section 9.7(a).

               (c) If any  Inventory is in the  possession  or control of any of
the Borrower's  agents or  processors,  the Borrower shall notify such agents or
processors of the Security  Interest (and shall  promptly  provide copies of any
such notice to the Agent and the Lenders) and,  upon the  occurrence of an Event
of Default, shall instruct them (and cause them to acknowledge such instruction)
to hold all such  Inventory  for the  account  of the  account  of the  Lenders,
subject to the instructions of the Agent.

               SECTION 9.10. Records Relating to Collateral.

               (a)    The Borrower will at all times

                      (i)    keep complete and accurate records of Inventory
on a basis  consistent  with  past  practices  of the  Borrower  so as to permit
comparison of Inventory  records  relating to different time periods,  itemizing
and describing the kind,  type and quantity of Inventory and the Borrower's cost
therefor and a current price list for such Inventory, and

                      (ii)   keep complete and accurate records of all other
Collateral.

               (b)  The  Borrower  will  prepare  a  physical   listing  of  all
Inventory, wherever located, at least annually.

               SECTION 9.11. Inspection.  The Agent and each Lender (by any of
their officers, employees or agents) shall have the right, to the extent that
the exercise of such right shall be within the control of the Borrower, at any
time or times to

               (a) visit the  properties  of the Borrower and its  Subsidiaries,
inspect the Collateral and the other assets of the Borrower and its Subsidiaries
and inspect and make extracts from the books and records of the Borrower and its
Subsidiaries,  including  but not  limited to  management  letters  prepared  by
independent accounts, all during customary business hours at such premises;

               (b)  discuss  the  Borrower's  and  its  Subsidiaries'  business,
assets,  liabilities,  financial  condition,  results of operations and business
prospects, insofar as the same are reasonably related to the rights of the Agent
or the Lenders hereunder or under any of the Loan Documents, with the Borrower's
and its Subsidiaries,  (i) principal officers, (ii) independent accountants, and
(iii) any other Person (except that any such  discussion  with any third parties
shall be conducted only in accordance with the Agent's or such Lender's standard
operating  procedures  relating to the  maintenance  of the  confidentiality  of
confidential information of borrowers);

               (c) verify the amount,  quantity,  value and condition of, or any
other matter relating to, any of the Collateral  (other than Receivables) and in
this  connection  to review,  audit and make extracts from all records and files
related to any of the Collateral.

The  Borrower  will deliver to the Agent,  for the benefit of the  Lenders,  any
instrument   necessary  for  it  to  obtain  records  from  any  service  bureau
maintaining records on behalf of the Borrower.

               SECTION 9.12. Information and Reports.

               (a) Schedule of  Receivables.  The Borrower  shall deliver to the
Agent on or before the  Effective  Date and not later than the 15th Business Day
of each calendar month thereafter a Schedule of Receivables which

                      (i)     shall be as of the last Business Day of the
immediately preceding month,

                      (ii)    shall be reconciled to the Borrowing Base
Certificate as of such last Business Day, and

                   (iii)  shall set forth a detailed  aged trial  balance of all
its then existing Receivables,  specifying the names,  countries and balance due
for each Account Debtor obligated on a Receivable so listed.

               (b)  Schedule of  Inventory.  The Borrower  shall  deliver to the
Agent on or before  the  Effective  Date and not later than the 20th day of each
calendar month thereafter a Schedule of Inventory as of the last Business Day of
the immediately  preceding  month of the Borrower,  itemizing and describing the
kind,  type and  quantity of  Inventory,  the  Borrower's  cost  thereof and the
location thereof.

               (c)    Borrowing Base Certificate.  The Borrower shall deliver
to the Agent a Borrowing Base Certificate at least weekly or less frequently
at the discretion of the Agent.

               (d) Notice of Diminution of Value. The Borrower shall give prompt
notice to the Agent of any matter or event which has  resulted in, or may result
in, the diminution in excess of $200,000 in the value of any of its  Collateral,
except for any such  diminution in the value of any  Receivables or Inventory in
the ordinary course of business which has been  appropriately  reserved against,
as reflected in financial  statements  previously delivered to the Agent and the
Lenders pursuant to Article 11.

               (e) Additional Information.  The Agent may in its discretion from
time to time  request  that the  Borrower  deliver the  schedules,  certificates
described in Sections  9.12(a),  (b) and (c) more or less often and on different
schedules than specified in such Sections and the Borrower will comply with such
requests. The Borrower will also furnish to the Agent and each Lender such other
information  with respect to the Collateral as the Agent or such Lender may from
time to time reasonably request.

               SECTION 9.13. Power of Attorney.  The Borrower hereby
appoints the Agent as its attorney, with power

               (a) to endorse the name of the  Borrower  on any  checks,  notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into the Agent's or any Lender's possession, and

               (b) to sign the name of the  Borrower  on any  invoice or bill of
lading relating to any Receivable,  Inventory or other Collateral, on any drafts
against  customers related to letters of credit, on schedules and assignments of
Receivables  furnished to the Agent or any Lender by the Borrower, on notices of
assignment,  financing  statements  and other  public  records  relating  to the
perfection or priority of the Security  Interest,  verifications  of account and
notices to or from customers.

               SECTION 9.14.  Additional  Real Estate Leases.  Promptly upon the
Borrower's  entry into any lease of Real Estate (other than a lease conveying an
interest in Real Estate,  which shall be subject to the provisions of clause (a)
above), the Borrower shall collaterally  assign to the Agent, for the benefit of
itself and the  Lenders,  the  Borrower's  interest in such  lease,  in form and
substance  satisfactory  to the Agent.  The  Borrower  shall also deliver to the
Agent an executed  landlord's  waiver and consent  with respect to such lease in
form and substance satisfactory to the Agent.

               SECTION  9.15.  Assignment of Claims Act. Upon the request of the
Agent,  the Borrower shall execute any documents or  instruments  and shall take
such steps or actions reasonably required by the Agent so that all monies due or
to become due under any contract with the United States of America, the District
of  Columbia or any state,  county,  municipality  or other  domestic or foreign
governmental entity, or any department,  agency or instrumentality thereof, will
be assigned to the Agent, for the benefit of itself and the Lenders,  and notice
given thereof in accordance  with the  requirements  of the Assignment of Claims
Act of 1940, as amended, or any other laws, rules or regulations relating to the
assignment of any such contract and monies due to or to become due.


        ARTICLE 10

        AFFIRMATIVE COVENANTS


               Until all the Secured  Obligations have been paid in full, unless
the  Required  Lenders  shall  otherwise  consent in the manner  provided for in
Section 16.11, the Borrower will, and will cause each of its Subsidiaries to:

               SECTION  10.1.  Preservation  of Corporate  Existence and Similar
Matters.  Preserve and maintain its  corporate  existence,  rights,  franchises,
licenses and privileges in the jurisdiction of its incorporation and qualify and
remain qualified as a foreign  corporation and authorized to do business in each
jurisdiction  in which the  character  of its  properties  or the  nature of its
business requires such qualification or authorization.

               SECTION 10.2.  Compliance  with  Applicable  Law. Comply with all
Applicable Law relating to the Borrower or such Subsidiary  except to the extent
being contested in good faith by appropriate  proceedings and for which reserves
in  respect  of the  Borrower's  or  such  Subsidiary's  reasonably  anticipated
liability therefor have been appropriately established.

               SECTION 10.3. Maintenance of Property.  In addition to, and not
in derogation of, the requirements of Section 9.7 and of the Security
Documents,

               (a) protect and preserve all properties material to its business,
including copyrights,  patents, trade names and trademarks, and maintain in good
repair,  working order and condition in all material  respects,  with reasonable
allowance for wear and tear, all tangible properties, and

               (b) from  time to time  make or cause to be made all  needed  and
appropriate  repairs,  renewals,  replacements  and additions to such properties
necessary  for the conduct of its business,  so that the business  carried on in
connection therewith may be properly and advantageously conducted at all times.

               SECTION 10.4. Conduct of Business.  At all times carry on its
business in an efficient manner and engage in only the business described in
Section 7.1(g).

               SECTION 10.5.  Insurance.  Maintain,  in addition to the coverage
required by Section 9.8 and the Security  Documents,  insurance with responsible
insurance  companies  against such risks and in such  amounts as is  customarily
maintained by similar  businesses  or as may be required by Applicable  Law, and
from time to time deliver to the Agent or any Lender upon its request a detailed
list of the  insurance  then in  effect,  stating  the  names  of the  insurance
companies,  the amounts and rates of the insurance,  the dates of the expiration
thereof and the properties and risks covered thereby.

               SECTION 10.6. Payment of Taxes and Claims.  Pay or
discharge when due

               (a) all taxes,  assessments  and  governmental  charges or levies
imposed upon it or upon its income or profits or upon any  properties  belonging
to it,  except that real  property ad valorem taxes shall be deemed to have been
so paid or discharged if the same are paid before they become delinquent, and

               (b)  all  lawful  claims  of  materialmen,  mechanics,  carriers,
warehousemen and landlords for labor, materials,  supplies and rentals which, if
unpaid, might become a Lien on any properties of the Borrower;

except that this  Section 10.6 shall not require the payment or discharge of any
such tax,  assessment,  charge,  levy or claim which is being  contested in good
faith by  appropriate  proceedings  and for which  reserves  in  respect  of the
reasonably anticipated liability therefor have been appropriately established.

               SECTION 10.7. Accounting Methods and Financial Records.  Maintain
a system of accounting,  and keep such books,  records and accounts (which shall
be true and  complete),  as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP.

               SECTION 10.8. Use of Proceeds.

               (a)    Use the proceeds of the Term Loans to pay amounts
indicated on Schedule 10.8 to the Persons indicated thereon, and

               (b) not use any part of such proceeds to purchase or, to carry or
reduce or retire or  refinance  any credit  incurred to  purchase or carry,  any
margin stock  (within the meaning of Regulation G or U of the Board of Governors
of the Federal  Reserve  System) or, in any event,  for any purpose  which would
involve a violation of such  Regulation  G or U or of  Regulation T or X of such
Board of  Governors,  or for any purpose  prohibited  by law or by the terms and
conditions of this Agreement.

               SECTION 10.9. Hazardous Waste and Substances; Environmental
Requirements.

               (a) In addition to, and not in derogation of, the requirements of
Section 10.2 and of the Security  Documents,  comply with all Environmental Laws
and all Applicable Laws relating to  occupational  health and safety (except for
instances of noncompliance that are being contested in good faith by appropriate
proceedings  if  reserves  in respect  of the  Borrower's  or such  Subsidiary's
reasonably anticipated liability therefor have been appropriately  established),
promptly  notify the Agent of its  receipt of any notice of a  violation  of any
such Environmental Laws or other such Applicable Laws and indemnify and hold the
Agent and the Lenders harmless from all loss, cost, damage, liability, claim and
expense  incurred  by or imposed  upon the Agent or any Lender on account of the
Borrower's failure to perform its obligations under this Section 10.9.

               (b) Whenever the Borrower  gives notice to the Agent  pursuant to
this Section 10.9 with respect to a matter that reasonably  could be expected to
result in liability to the Borrower in excess of  $50,000.00  in the  aggregate,
the Borrower shall, at the Agent's request and the Borrower's  expense (i) cause
an  independent  environmental  engineer  acceptable  to the Agent to conduct an
assessment, including tests where necessary, of the site where the noncompliance
or alleged  noncompliance  with  Environmental Laws has occurred and prepare and
deliver to the Agent a report  setting forth the results of such  assessment,  a
proposed plan to bring the Borrower into compliance with such Environmental Laws
(if such  assessment  indicates  noncompliance)  and an  estimate  of the  costs
thereof,  and (ii) provide to the Agent a  supplemental  report of such engineer
whenever  the  scope  of the  noncompliance,  or  the  response  thereto  or the
estimated costs thereof, shall materially adversely change.

               SECTION 10.10.  CRES Management Fees. Cause CRES to distribute to
the Borrower,  within forty-five (45) days after the end of each calendar month,
management  fees equal to 90% of CRES's  net  income for such month  (calculated
before the payment or accrual of taxes and management fees).


        ARTICLE 11

        INFORMATION

               Until all the Secured  Obligations have been paid in full, unless
the Required Lenders shall otherwise  consent in the manner set forth in Section
16.11,  the Borrower will furnish to the Agent and to each Lender at the offices
then designated for such notices pursuant to Section 16.1:

               SECTION 11.1. Financial Statements.

               (a) Audited Year-End Statements. As soon as available, but in any
event within 90 days after the end of each fiscal year of the  Borrower,  copies
of the  consolidating  and  Consolidated  balance sheets of the Borrower and its
Consolidated  Subsidiaries  as at the end of such  fiscal  year and the  related
statements  of earnings,  shareholders'  equity and  statement of cash flows for
such fiscal year, in each case setting forth in comparative form the figures for
the previous fiscal year of the Borrower,  reported on, as to such  Consolidated
statements,  without qualification as to the scope of the audit or the status of
the Borrower as a "going concern",  by independent  certified public accountants
of nationally recognized standing; and

               (b) Monthly Financial Statements.  As soon as available after the
end of each month,  but in any event within 45 days after the end of each month,
copies of the  unaudited  consolidated  balance  sheet of the  Borrower  and its
Consolidated  Subsidiaries as at the end of such month and the related unaudited
consolidated  statements  of earnings  and cash flows for the  Borrower  and its
Consolidated  Subsidiaries for such month and for the portion of the fiscal year
of the  Borrower  through such month,  certified  by a Financial  Officer of the
Borrower as presenting fairly the financial  condition and results of operations
of  the  Borrower  (subject  to  normal  year-end  audit  adjustments);all  such
financial  statements  to be complete and correct in all  material  respects and
prepared in  accordance  with GAAP  (except,  with respect to interim  financial
statements,  for the omission of footnotes and for the effect of normal year-end
audit  adjustments)  applied  consistently   throughout  the  periods  reflected
therein.

               SECTION 11.2. Accountants' Certificate.  Together with the
financial statements referred to in Section 11.1(a), the Borrower shall
deliver a certificate of such accountants addressed to the Agent

               (a)  stating  that in making the  examination  necessary  for the
certification of such financial statements,  nothing has come to their attention
to lead them to believe  that any  Default or Event of Default  exists  and,  in
particular,  they have no  knowledge  of any  Default or Event of Default or, if
such is not the  case,  specifying  such  Default  or Event of  Default  and its
nature, and

               (b) having  attached the  calculations,  prepared by the Borrower
and  reviewed  by such  accountants,  required to  establish  whether or not the
Borrower is in compliance with the covenants  contained in Sections 12.1,  12.2,
12.5, 12.10 and 12.11, as at the date of such financial statements.

               SECTION 11.3. Officer's Certificate.  At the time that the
Borrower furnishes the financial statements pursuant to Section 11.1(b) for
any month that is the last month of a fiscal quarter of the Borrower, the
Borrower shall also furnish a certificate of its President or a Financial
Officer

               (a) setting forth as at the end of such fiscal  quarter or fiscal
year, as the case may be, the calculations  required to establish whether or not
the Borrower was in compliance  with the  requirements  of Sections 12.1,  12.2,
12.5, 12.10 and 12.11, as at the end of each respective period,

               (b)  stating  that  the  information  on the  schedules  to  this
Agreement  are complete and accurate as of the date of such  certificate  or, if
such is not the case, attaching to such certificate updated schedules, and

               (c) stating that, based on a reasonably diligent examination,  no
Default or Event of Default exists, or, if such is not the case, specifying such
Default or Event of Default  and its  nature,  when it  occurred,  whether it is
continuing  and the steps  being  taken by the  Borrower  with  respect  to such
Default or Event of Default.

               SECTION 11.4. Copies of Other Reports.

               (a) As soon as available, but no later than June 30 of any fiscal
year, projections on a monthly basis of (i) anticipated financial performance of
the Parent  Guarantor  and the Borrower for such fiscal year and (ii)  projected
Availability for such fiscal year.

               (b) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of  Directors by its  independent  public
accountants, including, without limitation, any management report.

               (c) As soon as  practicable,  copies of all financial  statements
and reports that the Borrower  shall send to its  shareholders  generally and of
all  registration  statements  and all  regular or  periodic  reports  which the
Borrower shall file with the Securities and Exchange Commission or any successor
commission.

               (d)  From  time to time  and as  soon as  reasonably  practicable
following each request, such forecasts, data, certificates, reports, statements,
opinions of counsel,  documents or further  information  regarding the business,
assets,  liabilities,  financial  condition,  results of  operations or business
prospects of the Borrower or any of its  Subsidiaries as the Agent or any Lender
may reasonably request and that the Borrower has or (except in the case of legal
opinions  relating  to the  perfection  or priority  of the  Security  Interest)
without unreasonable  expense can obtain;  provided,  however,  that the Lenders
shall,  to the extent  reasonably  practicable,  coordinate  examinations of the
Borrower's  records by their  respective  internal  auditors.  The rights of the
Agent and the  Lenders  under this  Section  11.4 are in  addition to and not in
derogation of their rights under any other provision of this Agreement or of any
other Loan Document.

               (e) If  requested by the Agent or any Lender,  the Borrower  will
furnish  to the  Agent  and  the  Lenders  statements  in  conformity  with  the
requirements  of Federal Reserve Form G-3 or U-1 referred to in Regulation G and
U, respectively, of the Board of Governors of the Federal Reserve System.

                 SECTION 11.5.  Notice of Litigation and Other Matters.
Prompt notice of:

               (a) the commencement,  to the extent the Borrower is aware of the
same, of all proceedings  and  investigations  by or before any  governmental or
nongovernmental  body and all actions and proceedings in any court or before any
arbitrator  against or in any other way relating to or affecting  the  Borrower,
any of its  Subsidiaries  or any of the  Borrower's or any of its  Subsidiaries,
properties,  assets or  businesses,  which  might,  singly or in the  aggregate,
result  in the  occurrence  of a  Default  or an  Event  of  Default,  or have a
Materially Adverse Effect on the Borrower or any of its Subsidiaries,

               (b)    any amendment of the articles of incorporation or
by-laws of the Borrower or any of its Subsidiaries,

               (c) any change in the business,  assets,  liabilities,  financial
condition, results of operations or business prospects of the Borrower or any of
its  Subsidiaries  which has had or may  have,  singly  or in the  aggregate,  a
Materially  Adverse  Effect on the Borrower or any of its  Subsidiaries  and any
change in the executive officers of the Borrower, and

               (d)  any   Default  or  Event  of  Default  or  any  event  which
constitutes  or which with the passage of time or giving of notice or both would
constitute  a  default  or  event  of  default  by  the  Borrower  or any of its
Subsidiaries  under any material  agreement (other than this Agreement) to which
the Borrower or any of its Subsidiaries is a party or by which the Borrower, any
of  its  Subsidiaries  or  any of  the  Borrower's  or any of its  Subsidiaries'
properties may be bound.

               SECTION 11.6. ERISA.  As soon as possible and in any event
within 30 days after the Borrower knows, or has reason to know, that:

               (a)    any Termination Event with respect to a Plan has
occurred or will occur, or

               (b)    the aggregate present value of the Unfunded Vested
Accrued Benefits under all Plans is equal to an amount in excess of $0, or

               (c) the Borrower or any of its  Subsidiaries  is in "default" (as
defined  in  Section  4219(c)(5)  of  ERISA)  with  respect  to  payments  to  a
Multiemployer  Plan required by reason of the  Borrower's  or such  Subsidiary's
complete or partial  withdrawal  (as described in Section 4203 or 4205 of ERISA)
from such  Multiemployer  Plan, a  certificate  of the  President or a Financial
Officer of the Borrower  setting  forth the details of such event and the action
which is proposed to be taken with respect thereto,  together with any notice or
filing  which may be required by the PBGC or other  agency of the United  States
government with respect to such event.

               SECTION 11.7. Accuracy of Information.  All written  information,
reports,  statements  and other  papers and data  furnished  to the Agent or any
Lender,  whether  pursuant  to this  Article 11 or any other  provision  of this
Agreement  or of any other Loan  Document,  shall be, at the time the same is so
furnished, complete and correct in all material respects to the extent necessary
to give the Agent and the Lenders  true and  accurate  knowledge  of the subject
matter.

               SECTION 11.8.  Revisions or Updates to  Schedules.  Should any of
the  information  or  disclosures  provided on any of the  Schedules  originally
attached  hereto  become  outdated or  incorrect in any  material  respect,  the
Borrower  shall  deliver to the Agent and the  Lenders as part of the  officer's
certificate  required  pursuant to Section  11.3(b) such revisions or updates to
such  Schedule(s)  as may be necessary or  appropriate to update or correct such
Schedule(s), provided that no such revisions or updates to any Schedule(s) shall
be deemed to have amended, modified or superseded such Schedule(s) as originally
attached  hereto,  or to have cured any  breach of  warranty  or  representation
resulting from the inaccuracy or incompleteness of any such Schedule(s),  unless
and until the Required Lenders in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule(s).

               SECTION 11.9.  Subordinated  Indebtedness  Certificate.  Not less
than five Business  Days prior to any scheduled  payment of any principal of, or
interest or other amounts on, the Subordinated Indebtedness,  and as a condition
precedent to making such payment,  the Borrower  shall furnish a certificate  of
its President or a Financial Officer stating:

               (a) that no Default or Event of Default is in existence as of the
date of the  certificate or will be in existence as of the date of such payment,
both with and without giving effect to the making of such payment, and

               (b)    the amount of principal and interest to be paid.


        ARTICLE 12

        NEGATIVE COVENANTS

               Until all the Secured  Obligations have been paid in full, unless
the Required Lenders shall otherwise  consent in the manner set forth in Section
16.11, the Borrower will not directly or indirectly and, in the case of Sections
12.2 through 12.16, will not permit its Subsidiaries to:

               SECTION 12.1. Financial Ratios.  Permit:

               (a) Minimum Tangible Net Worth. Tangible Net Worth as of the last
day of any fiscal year  (commencing  with the fiscal year ending March 31, 1996)
to be less than an amount  equal to the sum of (i)  Tangible Net Worth as of the
first day of such  fiscal  year plus (ii) an amount  equal to the greater of (A)
95% of Net Income of the Borrower and its  Subsidiaries  for such fiscal year or
(B) $2,000,000.00.  Notwithstanding  the above, for fiscal year 1996, the amount
in (ii)(A)  above  shall be reduced  by the amount of  intangible  loan costs to
obtain the Revolving Credit Facility and the JTI Letter of Credit Facility.

               (b) Ratio of  Consolidated  Total  Liabilities  to  Tangible  Net
Worth. The ratio of (x) total  Consolidated  Liabilities of the Borrower and its
Consolidated  Subsidiaries minus  Subordinated  Indebtedness to (y) Tangible Net
Worth  of the  Borrower  and its  Consolidated  Subsidiaries  plus  Subordinated
Indebtedness  at any time to be equal  to or  greater  than (i) 2.0 to 1.0 as of
June 30,  1996 or June 30,  1997,  (ii) 4.0 to 1.0 as of  September  30, 1996 or
September  30,  1997,  (iii) 3.25 to 1.0 as of December 31, 1996 or December 31,
1997,  (iv) 2.0 to 1.0 as of March 31,  1997 or March 31, 1998 or (v) 4.0 to 1.0
at any time.

               (c)  Coverage  Ratio.  As  of  the  end  of  any  fiscal  quarter
(commencing  with the fiscal  quarter  ending June 30,  1996),  the ratio of (x)
Consolidated  EBITDA of the Borrower and its  Consolidated  Subsidiaries for the
four fiscal  quarterly  periods  ending on such fiscal quarter end minus Capital
Expenditures  of the Borrower and its  Consolidated  Subsidiaries  for such four
fiscal  quarterly  periods  to (y)  the  sum of the  Current  Maturities  of the
Consolidated   Long-Term  Liabilities  of  the  Borrower  and  its  Consolidated
Subsidiaries plus Required Interest Expense of the Borrower and its Consolidated
Subsidiaries for the four fiscal quarterly periods ending on such fiscal quarter
end to be less than 1.35 to 1, in each case determined in accordance with GAAP.

               (d)    Losses.  Cumulative year-to-date Net Losses in any
fiscal year to exceed $1,750,000.

               SECTION 12.2. Indebtedness for Money Borrowed. Create, assume, or
otherwise become or remain obligated in respect of, or permit or suffer to exist
or to be created,  assumed or incurred or to be outstanding any Indebtedness for
Money Borrowed, except that this Section 12.2 shall not apply to:

               (a)    Indebtedness of the Borrower for Money Borrowed
represented by the Loans and the Notes,

               (b) Indebtedness for Money Borrowed reflected on Schedule 7.1(k),
excluding  any  such  Indebtedness  that is to be paid in full on the  Effective
Date,

               (c)    Permitted Purchase Money Indebtedness, and

               (d)  inter-company Indebtedness among the Borrower and its
Subsidiaries.

               SECTION 12.3. Guaranties. Become or remain liable with respect to
any  Guaranty of any  obligation  of any other  Person  (excluding  specifically
therefrom  (i)  endorsements  in the ordinary  course of business of  negotiable
instruments for deposit or collection, or (ii) guarantees by the Borrower of the
European Debt provided the obligations of the Borrower under such guarantees are
subordinated to the Secured Obligations pursuant to subordination  agreements in
form and substance satisfactory to the Lenders).

               SECTION 12.4. Investments. Acquire, after the Agreement Date, any
Business Unit or Investment or, after such date,  maintain any Investment  other
than Permitted Investments and any of the inter-company  transactions  permitted
by Section 12.18.

               SECTION 12.5. Capital Expenditures.  Make or incur any Capital
Expenditures in the aggregate in excess of $2,500,000.00 during any fiscal
year (computed on a non-cumulative basis).

               SECTION 12.6. Restricted Dividend Payments and Purchases, Etc.
Declare or make any Restricted Dividend Payment, Restricted Payment or
Restricted Purchase.

               SECTION 12.7. Consolidation,  Merger, Sale or Purchase of Assets,
etc.. Dissolve,  liquidate, or wind up its or any Subsidiary's affairs, or enter
into any transaction of merger or  consolidation,  or enter into any receivables
sale program, or sell,  transfer,  lease or otherwise dispose of all or any part
of its or any Subsidiary's property or assets (other than in the ordinary course
of business for fair consideration).

               SECTION   12.8.   Transactions   with   Affiliates.   Effect  any
transaction  with any Affiliate on a basis less favorable to the Borrower or any
of its Subsidiaries than would be the case if such transaction had been effected
with a Person not an Affiliate.

               SECTION 12.9. Liens.  Create, assume or permit or suffer to
exist or to be created or assumed any Lien on any of the Collateral or its
other assets, other than Permitted Liens.

               SECTION  12.10.Capitalized Lease Obligations.  Incur or permit to
exist any Capitalized  Lease  Obligations if such  Capitalized  Lease Obligation
when added to existing  Capitalized  Lease  Obligations  and Permitted  Purchase
Money Indebtedness of the Borrower would exceed $250,000 in the aggregate.

               SECTION 12.11.Operating Leases. Enter into any operating Lease if
the aggregate  annual rental payable under all Operating  Leases of the Borrower
and its Subsidiaries  would exceed $1,000,000 in the aggregate at any time after
the Effective Date.

               SECTION  12.12.Real  Estate Leases.  Enter into any real property
lease, including a lease relating to the Real Estate occupied by the Borrower or
any of its Subsidiaries on the Effective Date, without the prior written consent
of the Agent.

               SECTION 12.13.Plans.  Permit any condition to exist in connection
with  any  Plan  which  might  constitute  grounds  for the  PBGC  to  institute
proceedings  to have such Plan  terminated or a trustee  appointed to administer
such Plan, and any other  condition,  event or  transaction  with respect to any
Plan which  could  result in the  incurrence  by the  Borrower  of any  material
liability, fine or penalty.

               SECTION  12.14.Sales and  Leasebacks.  Enter into any arrangement
with any Person  providing for the Borrower's or any  Subsidiary's  leasing from
such  Person any real or  personal  property  which has been or is to be sold or
transferred,  directly or indirectly, by the Borrower or such Subsidiary to such
Person.

               SECTION 12.15.Subordinated  Indebtedness. (i) Amend or modify (or
permit the amendment or  modification  of) any of the terms of any  Subordinated
Indebtedness to the extent any such amendment or  modification  would be adverse
to the issuer thereof or to the interests of the Lenders, (ii) make (or give any
notice with respect  thereto) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including without limitation,  by way of
depositing  money or securities with the trustee with respect thereto before due
for the purpose of paying when due) or exchange of any Subordinated Indebtedness
or (iii) make any  payment,  prepayment,  redemption,  acquisition  for value of
(including without limitation, by way of depositing money or securities with the
trustee  with  respect  thereto  before due for the purpose of paying when due),
refund,  refinance or exchange of any  Subordinated  Indebtedness  other than in
accordance with the terms of the Subordination Agreement.

        SECTION  12.16.Management  Fees.  Pay  management  fees  to  the  Parent
Guarantor in violation of any of the following terms:

               (i) until such time as the  Borrower  has  delivered to the Agent
its draft unqualified audited financial statements for a fiscal year as prepared
by  independent  certified  public  accountants  selected  by the  Borrower  and
satisfactory  to the Lenders and certified by the Borrower  (the "Draft  Audited
Financial Statements"):

               (A) aggregate  management fees paid by the Borrower for the first
eleven fiscal months of such fiscal year shall not exceed 55% of the  Borrower's
Net Income  before  taxes and before  deductions  for  management  fees for such
eleven  months as  reflected on the  Borrower's  internally  prepared  financial
statements for such months; plus

               (B)  management  fees paid by the  Borrower  for the last  fiscal
month of such fiscal year shall not exceed 55% of the  Borrower's  projected Net
Income  before taxes and before  deductions  for  management  fees for such last
fiscal month as reflected on the  Borrower's  projections  for such month,  with
such projected Net Income for such last fiscal month to be based upon:

                             (1)    actual sales for such last fiscal month
booked through the 25th of such last fiscal month;

                             (2)    sales/shipments reasonably projected to be
made through the last day of such last fiscal month;

                             (3)    all gross margin projections are to be
based on current customer margins experienced by the Borrower;

                             (4)    any other expenses, including operating
expenses, are to be based on current margins experienced by the
Borrower;

               (ii) on and  after the date the  Borrower  has  delivered  to the
Agent the Draft  Audited  Financial  Statements  for any fiscal year,  aggregate
management  fees paid by the  Borrower to the Parent  Guarantor  for such fiscal
year shall not exceed 70% of the  Borrower's  Net Income before taxes and before
deductions for management  fees as reflected on such Draft  Unqualified  Audited
Financial Statements for such fiscal year;

               (iii) the Borrower shall not make any of the foregoing management
fee  payments  unless  prior to the  making of any such  payment,  the  Borrower
delivers to the Agent a certificate (in form satisfactory to the Agent) from its
President or Financial  Officer  certifying  that the Borrower is in  compliance
with all of the terms  and  provisions  of this  Agreement  (including,  without
limitation,  the  foregoing  provisions)  as of the date of the  making  of such
payment; and

               (iv)  Notwithstanding  anything to the contrary  contained in the
foregoing  subsections  (i) and  (ii),  aggregate  management  fees  paid by the
Borrower to the Parent Guarantor for any fiscal year shall not exceed 70% of the
Borrower's Net Income before taxes and before deductions for management fees for
such fiscal year as reflected on the Borrower's  unqualified  audited  financial
statements  for such fiscal year (A) prepared by  independent  certified  public
accountants  selected by the  Borrower and  satisfactory  to the Lenders and (B)
certified by the Borrower.

               SECTION 12.17.Uncommitted Leaf Inventory. Permit Uncommitted Leaf
Inventory to exceed $10,000,000 at any time.

               SECTION 12.18.Intercompany  Transactions. (i) Permit Subordinated
Indebtedness  to the Parent  Guarantor to be less than  $15,000,000  at any time
outstanding,  (ii) make any payments  after the occurrence of a Default or Event
of Default to any Affiliate on account of any trade  payables to such  Affiliate
and (iii) permit receivables from Affiliates  (excluding the Special Receivable)
less  payables  to  Affiliates  to be  greater  than  $11,000,000  at any  time;
provided,  however,  so long as no Default or Event of Default then exists,  the
Agents may in their sole  discretion  approve an  increase  in such  $11,000,000
amount to an amount up to  $18,000,000  on  account  of  prepayments  of tobacco
purchased  from its  Affiliates  and on account of other short term  arms-length
transactions with its Affiliates.

               SECTION 12.19. Loans and Advances to CRES. Permit the outstanding
principal  balance of all loans and advances to CRES to exceed  $1,250,000.00 at
any time.


        ARTICLE 13

        DEFAULT

               SECTION  13.1.  Events of Default.  Each of the  following  shall
constitute  an Event of Default,  whatever the reason for such event and whether
it shall be  voluntary  or  involuntary  or be effected by  operation  of law or
pursuant to any judgment or order of any court or any order,  rule or regulation
of any governmental or nongovernmental body:

               (a) Default in Payment. The Borrower shall default in any payment
of  principal of or interest on any Loan or any Note when and as due (whether at
maturity, by reason of acceleration or otherwise).

               (b)    Other Payment Default.  The Borrower shall default in
the payment, as and when due, of principal of or interest on, any other
Secured Obligation.

               (c)  Misrepresentation.  Any  representation  or warranty made or
deemed to be made by the Borrower under this Agreement or any Loan Document,  or
any amendment hereto or thereto,  shall at any time prove to have been incorrect
or misleading in any material respect when made.

               (d) Default in  Performance.  The Borrower  shall  default in the
performance  or observance of any term,  covenant,  condition or agreement to be
performed  by  the  Borrower,   contained  in  this  Agreement  (other  than  as
specifically provided for otherwise in this Section 13.1).

               (e)    Indebtedness Cross-Default.

                             (i)    The Borrower or any Subsidiary of the
Borrower  shall fail to pay when due and payable the principal of or interest on
any  Indebtedness  for Money  Borrowed  (other than the Loans and the  Revolving
Credit Loans) in an amount in excess of $250,000.00, or

                             (ii)   the maturity of any such Indebtedness
shall  have (A) been  accelerated  in  accordance  with  the  provisions  of any
indenture,  contract or  instrument  providing for the creation of or concerning
such  Indebtedness,  or (B) been  required  to be  prepaid  prior to the  stated
maturity thereof, or

                   (iii) any event shall have occurred and be  continuing  which
would  permit any holder or holders of such  Indebtedness,  any trustee or agent
acting on behalf of such holder or holders or any other Person so to  accelerate
such maturity,  and the Borrower shall have failed to cure such default prior to
the expiration of any applicable cure or grace period.

               (f) Other Cross-Defaults. The Borrower or any of its Subsidiaries
shall default in the payment when due, or in the  performance or observance,  of
any obligation or condition of any agreement, contract or lease (other than this
Agreement,  the  Security  Documents  or any such  agreement,  contract or lease
relating  to  Indebtedness  for Money  Borrowed)  if the  existence  of any such
defaults,  singly or in the  aggregate,  could in the sole judgment of the Agent
(to be exercised in good faith) have a Materially Adverse Effect on the Borrower
or any of its  Subsidiaries;  provided,  however,  that for the purposes of this
provision  where such a default could result only in a monetary loss, a Material
Adverse Effect shall not be deemed to have occurred unless the aggregate of such
losses would exceed $250,000.00.

               (g)    Voluntary Bankruptcy Proceeding.  The Borrower, the
Parent Guarantor or any of their respective Subsidiaries shall

                             (i)    commence a voluntary case under the
federal bankruptcy laws (as now or hereafter in effect),

                             (ii)   file a petition seeking to take advantage
of any other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts,

                             (iii)  consent to or fail to contest in a timely
and appropriate manner any petition filed against it in an involuntary case
under such bankruptcy laws or other laws,

                             (iv)   apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the taking of
possession by, a receiver,  custodian,  trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign,

                             (v)    admit in writing its inability to pay its
debts as they become due,

                             (vi)   make a general assignment for the benefit
of creditors, or

                             (vii)  take any corporate action for the purpose
of authorizing any of the foregoing.

               (h)    Involuntary Bankruptcy Proceeding.  A case or other
proceeding shall be commenced against the Borrower, the Parent Guarantor or
any of their respective Subsidiaries in any court of competent jurisdiction
seeking

                             (i)    relief under the federal bankruptcy laws
(as now or  hereafter  in effect) or under any other laws,  domestic or foreign,
relating to bankruptcy, insolvency,  reorganization, winding up or adjustment of
debts,

                             (ii)   the appointment of a trustee, receiver,
custodian,  liquidator or the like of the Borrower,  the Parent Guarantor or any
of  their  respective  Subsidiaries  or of all or any  substantial  part  of the
assets,  domestic or foreign,  of the Borrower,  the Parent  Guarantor or any of
their  respective  Subsidiaries,  and such  case or  proceeding  shall  continue
undismissed  or unstayed for a period of 60  consecutive  calendar  days,  or an
order  granting  the relief  requested  in such case or  proceeding  against the
Borrower,  the  Parent  Guarantor  or  any  of  their  respective   Subsidiaries
(including,  but not  limited  to,  an  order  for  relief  under  such  federal
bankruptcy laws) shall be entered.

               (i) Failure of  Agreements.  The Borrower or any Guarantor  shall
challenge the validity and binding  effect of any provision of any Loan Document
after  delivery  thereof  hereunder or shall state its  intention to make such a
challenge in writing,  or any Loan Document,  after delivery thereof  hereunder,
shall for any reason (except to the extent permitted by the terms thereof) cease
to create a valid and perfected first priority Lien (except for Permitted Liens)
on, or  security  interest  in, any of the  Collateral  purported  to be covered
thereby.

               (j)  Judgment.  A final,  unappealable  judgment or order for the
payment of money in an amount that exceeds the uncontested  insurance  available
therefor by  $250,000.00  or more shall be entered  against the  Borrower or any
Guarantor by any court and such judgment or order shall continue undischarged or
unstayed for 10 days.

               (k)  Attachment.  A warrant or writ of attachment or execution or
similar  process which exceeds  $250,000.00 in value shall be issued against any
property of the  Borrower or any  Guarantor  and such  warrant or process  shall
continue undischarged or unstayed for 10 days.

               (l) Loan Documents.  Any event of default under any Loan Document
shall occur or the Borrower or any Guarantor shall default in the performance or
observance of any term,  covenant,  condition or agreement  contained in, or the
payment of any other sum  covenanted to be paid by the Borrower or any Guarantor
under, any Loan Document;  provided,  however that no event of default under any
Loan Document shall be deemed to have occurred  until any notice  required under
such Loan  Document has been given and any grace period  granted under such Loan
Document has expired.

               (m)    ERISA.

                             (i)    Any Termination Event with respect to a
Plan shall occur that, after taking into account the excess,  if any, of (A) the
fair  market  value of the  assets of any other  Plan  with  respect  to which a
Termination  Event  occurs  on the same day (but  only to the  extent  that such
excess if the property of the  Borrower)  over (B) the present value on such day
of all vested  nonforfeitable  benefits  under such  other  Plan,  results in an
Unfunded Vested Accrued Benefit in excess of $0, or

                             (ii)   any Plan shall incur an "accumulated
funding  deficiency" (as defined in Section 412 of the Internal  Revenue Code or
Section  302 of ERISA) for which a waiver has not been  obtained  in  accordance
with the applicable provisions of the Internal Revenue Code and ERISA, or

                             (iii)  the Borrower is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan
resulting  from the Borrower's  complete or partial  withdrawal (as described in
Section 4203 or 4205 of ERISA) from such Multiemployer Plan.

               (n) Change in Ownership/Control/Key  Management.  (i) There shall
occur a change of ownership of the Borrower or any Subsidiary  Guarantor or (ii)
any Person  other than Ery W.  Kehaya  (or his estate or heirs)  shall  possess,
directly  or  indirectly,  the  power to (A) vote 25% or more of the  securities
having  ordinary  voting  power for the  election  of  directors  of the  Parent
Guarantor or (B) direct or cause direction of the management and policies of the
Parent  Guarantor,  whether  through  the  ownership  of voting  securities,  by
contract or otherwise.

               (o) General Insecurity.  The occurrence of any event or condition
which, in the discretion of the Required Lenders, constitutes a material adverse
change in the  business,  condition  (financial  or  otherwise)  or  results  of
operation of the Borrower which materially and adversely  affects the ability of
the Borrower to perform its  obligations  to the Lender under this  Agreement or
the Loan Documents.

               (p)    Non-U.S. Credit Facilities.  The failure of the Parent
Guarantor and its Subsidiaries to have credit facilities in place to
adequately finance the non-U.S. tobacco business of the Parent Guarantor and
its Subsidiaries or the wool business of the Parent Guarantor and its
Subsidiaries, in either case as determined by the Agents in their sole
discretion exercised in good faith.

               (q)    Termination of Revolving Credit Facility.  The
termination of the Revolving Credit Facility.

               (r)    Cross-Default to Revolving Credit Agreement.  The
occurrence of a Default or an Event of Default under the Revolving Credit
Agreement.

               SECTION 13.2. Remedies.

               (a) Automatic Acceleration of Facilities.  Upon the occurrence of
an Event of Default  specified in Section  13.1(g) or (h), the  principal of and
the  interest on the Loans and any Note at the time  outstanding,  and all other
amounts owed to the Agent or the Lenders under this Agreement or any of the Loan
Documents  and all other Secured  Obligations,  shall  thereupon  become due and
payable without presentment,  demand,  protest, or other notice of any kind, all
of which are  expressly  waived,  anything in this  Agreement or any of the Loan
Documents to the contrary notwithstanding.

               (b) Other Remedies.  If any Event of Default shall have occurred,
and during the  continuance of any such Event of Default,  the Agent may, and at
the  direction  of the Required  Lenders in their sole and  absolute  discretion
shall, do any of the following:

                             (i)    declare the principal of and interest on
the Loans and any Note at the time  outstanding,  and all other  amounts owed to
the Agent or the Lenders under this  Agreement or any of the Loan  Documents and
all other Secured  Obligations,  to be forthwith due and payable,  whereupon the
same shall  immediately  become due and  payable  without  presentment,  demand,
protest or other notice of any kind, all of which are expressly waived, anything
in this Agreement or the Loan Documents to the contrary notwithstanding;

                             (ii)   notify, or request the Borrower to notify,
in writing or otherwise,  any Account  Debtor or obligor with respect to any one
or more of the Receivables to make payment to the Agent,  for the benefit of the
Lenders,  or any agent or  designee  of the  Agent,  at such  address  as may be
specified  by the Agent and if,  notwithstanding  the giving of any notice,  any
Account  Debtor or other such obligor shall make  payments to the Borrower,  the
Borrower  shall hold all such  payments it receives in trust for the Agent,  for
the account of the  Lenders,  without  commingling  the same with other funds or
property of, or held by, the  Borrower,  and shall deliver the same to the Agent
or any such  agent or  designee  of the Agent  immediately  upon  receipt by the
Borrower  in  the  identical   form   received,   together  with  any  necessary
endorsements;

                   (iii)  settle or adjust  disputes  and claims  directly  with
Account Debtors and other obligors on Receivables for amounts and on terms which
the  Agent  considers  advisable  and in all such  cases  only  the net  amounts
received  by the  Agent,  for the  account  of the  Lenders,  in payment of such
amounts,  after  deductions  of costs  and  attorneys,  fees,  shall  constitute
Collateral  and the  Borrower  shall  have no  further  right  to make  any such
settlements or adjustments or to accept any returns of merchandise;

                             (iv)   enter upon any premises in which Inventory
may be located and,  without  resistance or interference  by the Borrower,  take
physical  possession of any or all thereof and maintain such  possession on such
premises  or move the same or any part  thereof to such other place or places as
the Agent shall  choose,  without being liable to the Borrower on account of any
loss, damage or depreciation that may occur as a result thereof,  so long as the
Agent shall act reasonably and in good faith;

                             (v)    require the Borrower to and the Borrower
shall,  without  charge to the Agent or any Lender,  assemble the  Inventory and
maintain  or  deliver  it into  the  possession  of the  Agent  or any  agent or
representative  of the Agent at such place or places as the Agent may  designate
and as are reasonably convenient to both the Agent and the Borrower;

                             (vi)   at the expense of the Borrower, cause any
of the  Inventory  to be placed in a public  or field  warehouse,  and the Agent
shall  not  be  liable  to the  Borrower  on  account  of any  loss,  damage  or
depreciation that may occur as a result thereof,  so long as the Agent shall act
reasonably and in good faith;

                             (vii)  without notice, demand or other process,
and without payment of any rent or any other charge, enter any of the Borrower's
premises and,  without  breach of the peace,  until the Agent,  on behalf of the
Lenders,  completes  the  enforcement  of its  rights  in the  Collateral,  take
possession of such premises or place  custodians in exclusive  control  thereof,
remain on such  premises and use the same and any of the  Borrower's  Equipment,
for the purpose of (A) completing  any work in process,  preparing any Inventory
for disposition and disposing  thereof,  and (B) collecting any Receivable,  and
the  Agent for the  benefit  of the  Lenders  is  hereby  granted  a license  or
sublicense and all other rights as may be necessary, appropriate or desirable to
use the Proprietary  Rights in connection with the foregoing,  and the rights of
the Borrower  under all licenses,  sublicenses  and franchise  agreements  shall
inure to the Agent for the benefit of the Lenders (provided,  however,  that any
use of any federally  registered  trademarks as to any goods shall be subject to
the control as to the quality of such goods of the owner of such  trademarks and
the goodwill of the business symbolized thereby);

                             (viii) exercise any and all of its rights under
any and all of the Security Documents;

                             (ix)   apply any Collateral consisting of cash to
the  payment of the  Secured  Obligations  in any order in which the  Agent,  on
behalf  of the  Lenders,  may  elect or use  such  cash in  connection  with the
exercise  of any of its other  rights  hereunder  or under  any of the  Security
Documents;

                             (x)    establish or cause to be established one
or  more  Lockboxes  or  other  arrangement  for  the  deposit  of  proceeds  of
Receivables,  and, in such case, the Borrower shall cause to be forwarded to the
Agent at the Agent's  Office,  on a daily basis,  copies of all checks and other
items of payment and deposit slips related thereto  deposited in such Lockboxes,
together  with  collection  reports in form and  substance  satisfactory  to the
Agent; and

                             (xi)   exercise all of the rights and remedies of
a secured party under the Uniform Commercial Code and under any other Applicable
Law,  including,  without  limitation,  the  right,  without  notice  except  as
specified below and with or without taking the possession  thereof,  to sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any location chosen by the Agent, for cash, on credit or for future delivery,
and at such  price or  prices  and upon such  other  terms as the Agent may deem
commercially reasonable.  The Borrower agrees that, to the extent notice of sale
shall be required by law, at least ten days'  notice to the Borrower of the time
and place of any public sale or the time after  which any private  sale is to be
made shall  constitute  reasonable  notification,  but notice given in any other
reasonable  manner or at any other reasonable time shall  constitute  reasonable
notification.  The Agent shall not be obligated  to make any sale of  Collateral
regardless of notice of sale having been given. The Agent may adjourn any public
or private  sale from time to time by  announcement  at the time and place fixed
therefor,  and such sale may,  without further  notice,  be made at the time and
place to which it was so adjourned.

               SECTION 13.3.  Application  of Proceeds.  Subject to the terms of
the  Intercreditor  Agreements,  all  proceeds  from  each  sale  of,  or  other
realization  upon,  all or any  part of the  Collateral  following  an  Event of
Default shall be applied or paid over as follows:

               (a)    First:  to the payment of all costs and expenses
incurred in connection with such sale or other realization, including
reasonable attorneys' fees,

               (b)    Second:  to the payment of the Secured Obligations (with
the Borrower remaining liable for any deficiency) as the Agent may elect,

               (c)    Third:  the balance (if any) of such proceeds shall be
paid to the Borrower, subject to any duty imposed by law, or otherwise to
whomsoever shall be entitled thereto.

The  Borrower  shall  remain  liable  and will pay,  on demand,  any  deficiency
remaining in respect of the Secured Obligations,  together with interest thereon
at a rate per annum equal to the highest  rate then  payable  hereunder  on such
Secured  Obligations,  which  interest  shall  constitute  part  of the  Secured
Obligations.

               SECTION   13.4.   Power  of   Attorney.   In   addition   to  the
authorizations  granted  to the  Agent  under  Section  9.13 or under  any other
provision  of  this  Agreement  or  of  any  other  Loan  Document,  during  the
continuance of an Event of Default, the Borrower hereby irrevocably  designates,
makes,  constitutes  and appoints the Agent (and all Persons  designated  by the
Agent from time to time) as the Borrower's true and lawful  attorney,  and agent
in fact, and the Agent,  or any agent of the Agent,  may,  without notice to the
Borrower,  and at such time or times as the Agent or any such  agent in its sole
discretion may determine, in the name of the Borrower, the Agent or the Lenders,

                             (i)    demand payment of the Receivables,

                             (ii)   enforce payment of the Receivables by
legal proceedings or otherwise,

                             (iii)  exercise all of the Borrower's rights and
remedies with respect to the collection of Receivables,

                             (iv)   settle, adjust, compromise, extend or
renew any or all of the Receivables,

                             (v)    settle, adjust or compromise any legal
proceedings brought to collect the Receivables,

                             (vi)   discharge and release the Receivables or
any of them,

                             (vii)  prepare, file and sign the name of the
Borrower on any proof of claim in bankruptcy or any similar document
against any Account Debtor,

                             (viii) prepare, file and sign the name of the
Borrower on any notice of Lien, assignment or satisfaction of Lien, or similar
document in connection with any of the Collateral,

                             (ix)   endorse the name of the Borrower upon any
chattel paper,  document,  instrument,  notice,  freight bill, bill of lading or
similar document or agreement relating to the Receivables,  the Inventory or any
other Collateral,

                             (x)    use the stationery of the Borrower and
sign the name of the Borrower to verifications of the Receivables and on any
notice to the Account Debtors,

                             (xi)   open the Borrower's mail,

                   (xii) notify the post office authorities to
change the address for delivery of the Borrower's mail to an address
designated by the Agent, and

                    (xiii) use the  information  recorded on or contained in any
data  processing  equipment and computer  hardware and software  relating to the
Receivables, Inventory or other Collateral to which the Borrower has access.

               SECTION 13.5. Miscellaneous Provisions Concerning Remedies.

               (a) Rights  Cumulative.  The rights and remedies of the Agent and
the Lenders under this Agreement, the Notes and each of the Loan Documents shall
be cumulative and not exclusive of any rights or remedies which it or they would
otherwise have. In exercising such rights and remedies the Agent and the Lenders
may be  selective  and no  failure  or  delay  by the  Agent  or any  Lender  in
exercising  any right  shall  operate as a waiver of it, nor shall any single or
partial exercise of any power or right preclude its other or further exercise or
the exercise of any other power or right.

               (b)    Waiver of Marshalling.  The Borrower hereby waives any
right to require any marshalling of assets and any similar right.

               (c) Limitation of Liability. Nothing contained in this Article 13
or  elsewhere  in  this  Agreement  or in any of the  Loan  Documents  shall  be
construed  as  requiring  or  obligating  the Agent,  any Lender or any agent or
designee of the Agent or any Lender to make any  demand,  or to make any inquiry
as to the nature or sufficiency of any payment  received by it, or to present or
file any claim or notice or take any action,  with respect to any  Receivable or
any other  Collateral  or the  monies  due or to  become  due  thereunder  or in
connection  therewith,  or to take any steps  necessary  to preserve  any rights
against prior parties,  and the Agent, the Lenders and their agents or designees
shall have no  liability  to the  Borrower  for actions  taken  pursuant to this
Article 13, any other  provision of this  Agreement or any of the Loan Documents
so long as the Agent or such Lender shall act reasonably and in good faith.

               (d) Appointment of Receiver. In any action under this Article 13,
the Agent shall be entitled during the continuance of an Event of Default to the
appointment  of a  receiver,  without  notice  of any kind  whatsoever,  to take
possession of all or any portion of the Collateral and to exercise such power as
the court shall confer upon such receiver.


        ARTICLE 14

        ASSIGNMENTS

               SECTION 14.1. Successors and Assigns; Participations.

               (a) This Agreement shall be binding upon and inure to the benefit
of the Borrower,  the Lenders,  the Agent,  all future holders of the Notes, and
their respective successors and assigns, except that the Borrower may not assign
or transfer any of its rights or obligations  under this  Agreement  without the
prior written consent of each Lender.

               (b) Each Lender may assign to one or more Eligible  Assignees all
or a portion of its  interests,  rights  and  obligations  under this  Agreement
(including,  without limitation, all or a portion of the Loans at the time owing
to it and the Notes held by it); provided,  however, that (i) the Agents consent
to each such  assignment  (such consent not to be unreasonably  withheld),  (ii)
each such assignment  shall be of a constant,  and not a varying,  percentage of
all the assigning  Lender's rights and obligations  under this Agreement,  (iii)
the parties to each such assignment  shall execute and deliver to the Agent, for
its  acceptance  and  recording  in the  Register  (as  hereinafter  defined) an
Assignment  and  Acceptance,  together  with any Note or Notes  subject  to such
assignment  and such  assignee's  pro  rata  share  of the  Agent's  syndication
expenses  (pro  rata in  proportion  to the  share  purchased  by such  assignee
relative to all assigned  shares),  (iv) such assignment  shall not, without the
consent of the Borrower,  require the Borrower to file a registration  statement
with the Securities and Exchange  Commission or apply to or qualify the Loans or
the  Notes  under  the blue sky laws of any  state,  and (v) the  representation
contained in Section 14.2 hereof shall be true with respect to any such proposed
assignee.  Upon such  execution,  delivery,  acceptance and recording,  from and
after the effective date specified in each  Assignment and  Acceptance,  (x) the
assignee  thereunder shall be a party hereto and, to the extent provided in such
Assignment  and  Acceptance,  have  the  rights  and  obligations  of  a  Lender
hereunder,  and (y) the Lender assignor thereunder shall, to the extent provided
in such assignment, be released from its obligations under this Agreement.

               (c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each  other  and the  other  parties  hereto  as  follows:  (i)  other  than the
representation  and warranty  that it is the legal and  beneficial  owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility  with
respect  to  any  statements,  warranties  or  representations  made  in  or  in
connection   with  this   Agreement  or  the  execution,   legality,   validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document  furnished  pursuant  hereto;  (ii) such Lender  assignor
makes no representation  or warranty and assumes no responsibility  with respect
to the financial  condition of the Borrower or the  performance or observance by
the  Borrower  of any of its  obligations  under  this  Agreement  or any  other
instrument or document furnished  pursuant hereto;  (iii) such assignee confirms
that it has  received  a copy of this  Agreement,  together  with  copies of the
financial  statements referred to in Section 7.1(o) and such other documents and
information  as it has deemed  appropriate  to make its own credit  analysis and
decision to enter into such Assignment and Acceptance;  (iv) such assignee will,
independently  and without reliance upon the Agent,  such Lender assignor or any
other  Lender,  and based on such  documents  and  information  as it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee;  (vi) such assignee appoints and authorizes the Agent to take
such  action as agent on its  behalf  and to  exercise  such  powers  under this
Agreement  and the other Loan  Documents  as are  delegated  to the Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto;  and (vii) such assignee agrees that it will perform in accordance with
their  terms all of the  obligations  which by the terms of this  Agreement  are
required to be performed by it as a Lender.

               (d) The  Agent  shall  maintain  a copy of  each  Assignment  and
Acceptance  delivered to it and a register for the  recordation of the names and
addresses of the Lenders and the Commitment  Percentage of, and principal amount
of the Loans  owing to,  each  Lender  from time to time (the  "Register").  The
entries in the Register shall be conclusive,  in the absence of manifest  error,
and the Borrower,  the Agent and the Lenders may treat each person whose name is
recorded  in the  Register  as a  Lender  hereunder  for  all  purposes  of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

               (e) Upon its receipt of an Assignment and Acceptance  executed by
an assigning  Lender and an Eligible  Assignee  together  with any Note or Notes
subject to such assignment and the written consent to such assignment, the Agent
shall,  if such  Assignment and Acceptance has been completed and is in the form
of  Exhibit  A, (i) accept  such  Assignment  and  Acceptance,  (ii)  record the
information contained therein in the Register,  (iii) give prompt notice thereof
to the  Lenders  and the  Borrower,  and (iv)  promptly  deliver  a copy of such
Acceptance  and  Assignment  to the  Borrower.  Within five  Business Days after
receipt  of notice,  the  Borrower  shall  execute  and  deliver to the Agent in
exchange for the  surrendered  Note or Notes a new Note or Notes to the order of
such Eligible Assignee in amounts equal to the Commitment  Percentage assumed by
such Eligible Assignee pursuant to such Assignment and Acceptance and a new Note
or  Notes  to the  order  of the  assigning  Lender  in an  amount  equal to the
Commitment  retained  by it  hereunder.  Such new  Note or Notes  shall be in an
aggregate  principal  amount  equal to the  aggregate  principal  amount of such
surrendered Note or Notes,  shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially  the form of the assigned
Notes delivered to the assignor Lender.  Each surrendered Note or Notes shall be
cancelled and returned to the Borrower.

               (f) The Lenders may not sell  participations to one or more banks
or other entities in all or a portion of its rights and  obligations  under this
Agreement.

               (g) Any Lender may, in connection with any assignment or proposed
assignment  pursuant to this Section 14.1,  disclose to the assignee or proposed
assignee any information relating to the Borrower furnished to such Lender by or
on behalf of the Borrower;  provided that,  prior to any such  disclosure,  each
such assignee or proposed  assignee shall agree with the Borrower or such Lender
(which in the case of an agreement with only such Lender,  the Borrower shall be
recognized as a third party beneficiary thereof) to preserve the confidentiality
of any  confidential  information  relating to the Borrower  received  from such
Lender.

               SECTION  14.2.  Representation  of Lenders.  Each  Lender  hereby
represents  that it will make each Loan  hereunder as a commercial  loan for its
own account in the ordinary  course of its  business;  provided,  however,  that
subject to Section 13.1 hereof,  the  disposition of the Notes or other evidence
of the Secured  Obligations  held by any Lender shall at all times be within its
exclusive control.


        ARTICLE 15

        AGENT

               SECTION 15.1.  Appointment  of Agent.  Each of the Lenders hereby
irrevocably  designates and appoints  NationsBank,  N.A. (South) as the Agent of
such Lender under this  Agreement  and the other Loan  Documents,  and each such
Lender  irrevocably  authorizes Agent, as the Agent for such Lender to take such
action on its behalf under the  provisions of this  Agreement and the other Loan
Documents  and to exercise  such powers and perform such duties as are expressly
delegated  to the  Agent by the  terms of this  Agreement  and such  other  Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding  any  provision to the contrary  elsewhere in this  Agreement or
such  other   Loan   Documents,   the  Agent   shall  not  have  any  duties  or
responsibilities,  except those  expressly set forth herein and therein,  or any
fiduciary  relationship with any Lender,  and no implied  covenants,  functions,
responsibilities,  duties,  obligations or  liabilities  shall be read into this
Agreement or the other Loan Documents or otherwise exist against the Agent.

               SECTION 15.2.  Delegation of Duties. The Agent may execute any of
its duties  under this  Agreement  and the other  Loan  Documents  by or through
agents  or  attorneys-in-fact  and  shall  be  entitled  to  advice  of  counsel
concerning  all  matters  pertaining  to such  duties.  The  Agent  shall not be
responsible for the negligence or misconduct of any agents or  attorneys-in-fact
selected by it with reasonable care.

               SECTION 15.3. Exculpatory  Provisions.  Neither the Agent nor any
of its trustees, officers,  directors,  employees, agents,  attorneys-in-fact or
Affiliates shall be (i) liable to any Lender (or any Lender's  participants) for
any action  lawfully  taken or omitted to be taken by it or such Person under or
in connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful  misconduct),  or (ii) responsible
in any manner to any Lender (or any  Lender's  participants)  for any  recitals,
statements,  representations  or warranties  made by the Borrower or any officer
thereof  contained  in this  Agreement  or the other  Loan  Documents  or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in  connection  with,  this  Agreement  or the
other Loan  Documents or for the value,  validity,  effectiveness,  genuineness,
enforceability  or  sufficiency of this Agreement or the other Loan Documents or
for any  failure  of the  Borrower  to  perform  its  obligations  hereunder  or
thereunder.  The  Agent  shall  not be  under an  obligation  to any  Lender  to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements  contained in, or conditions  of, this  Agreement,  or to inspect the
properties, books or records of the Borrower.

               SECTION 15.4.  Reliance by Agent.  The Agent shall be entitled to
rely,  and  shall  be fully  protected  in  relying,  upon  any  Note,  writing,
resolution,   notice,  consent,   certificate,   affidavit,  letter,  cablegram,
telegram,  telecopy,  telex  or  teletype  message,  statement,  order  or other
document  or  conversation  believed by it to be genuine and correct and to have
been  signed,  sent or made by the proper  Person or Persons and upon advice and
statements  of legal  counsel  (including,  without  limitation,  counsel to the
Borrower),  independent accountants and other experts selected by the Agent. The
Agent may deem and treat  the  payee of any Note as the  owner  thereof  for all
purposes unless such Note shall have been transferred in accordance with Section
14.1.  The Agent  shall be fully  justified  in failing or  refusing to take any
action under this Agreement and the other Loan  Documents  unless it shall first
receive  such  advice  or  concurrence  of  the  Required  Lenders  as it  deems
appropriate or it shall first be indemnified to its  satisfaction by the Lenders
against any and all  liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting,  or in refraining  from acting,  under this Agreement
and the Notes in  accordance  with a request of the Required  Lenders,  and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Notes.

               SECTION 15.5. Notice of Default. The Agent shall not be deemed to
have  knowledge or notice of the  occurrence  of any Default or Event of Default
hereunder  unless the Agent has  received  notice from a Lender or the  Borrower
referring  to this  Agreement,  describing  such Default or Event of Default and
stating that such notice is a "notice of  default".  In the event that the Agent
receives  such a notice,  the Agent shall  promptly  give notice  thereof to the
Lenders.  The Agent shall take such action with respect to such Default or Event
of Default as shall be  reasonably  directed by the Required  Lenders;  provided
that unless and until the Agent shall have received such  directions,  the Agent
may (but shall not be  obligated  to) take such  action,  or refrain from taking
such  action,  with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.

               SECTION  15.6.  Non-Reliance  on Agent  and Other  Lenders.  Each
Lender  expressly  acknowledges  that neither the Agent nor any of its officers,
directors,  employees,  agents,  attorneys-in-fact  or  Affiliates  has made any
representations  or  warranties  to it and that no act by the Agent  hereinafter
taken,  including any review of the affairs of the Borrower,  shall be deemed to
constitute  any  representation  or warranty  by the Agent to any  Lender.  Each
Lender  represents to the Agent that it has,  independently and without reliance
upon the Agent or any other Lender,  and based on such documents and information
as it has deemed  appropriate,  made its own appraisal of and investigation into
the  business,   operations,   property,   financial  and  other  condition  and
creditworthiness  of the  Borrower  and made its own  decision to make its Loans
hereunder and enter into this  Agreement.  Each Lender also  represents  that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  continue to make its own credit  analysis,  appraisals  and  decisions in
taking or not taking action under this  Agreement and the other Loan  Documents,
and to make such  investigation as it deems necessary to inform itself as to the
business,   operations,    property,   financial   and   other   condition   and
creditworthiness  of  the  Borrower.  Except  for  notices,  reports  and  other
documents  expressly  required  to be  furnished  to the  Lenders  by the  Agent
hereunder or by the other Loan  Documents,  the Agent shall not have any duty or
responsibility  to  provide  any  Lender  with any  credit or other  information
concerning the business, operations,  property, financial and other condition or
creditworthiness of the Borrower which may come into the possession of the Agent
or any of its  officers,  directors,  employees,  agents,  attorneys-in-fact  or
Affiliates.

               SECTION 15.7. Indemnification. The Lenders agree to indemnify the
Agent in its capacity as such (to the extent not  reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably  according to
their  respective  Commitment   Percentages,   from  and  against  any  and  all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements  of any kind whatsoever which may at any time
(including,  without limitation, at any time following the payment of the Notes)
be imposed on,  reasonably  incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents  contemplated by or referred to herein or therein or the  transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in  connection  with any of the  foregoing;  provided that no Lender shall be
liable for the payment of any portion of such liabilities,  obligations, losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
(i) resulting solely from the Agent's gross negligence or willful  misconduct or
resulting  solely from  transactions  or occurrences  that occur at a time after
such Lender has assigned all of its interests, rights and obligations under this
Agreement  pursuant  to  Section  14.1 or,  in the case of a Lender  to which an
assignment  is made  hereunder  pursuant to Section  14.1, at a time before such
assignment;  or (ii) constituting  ordinary overhead costs and expenses incurred
by the Agent in the administration of the Loans under the Loan Documents, all of
which  shall be borne by the  Agent;  but this  shall  not  include  any  costs,
expenses,  fees or  disbursements  (A) which are incurred by outside agencies or
attorneys retained by the Agent to effect collection of the Secured  Obligations
or any Collateral, (B) which are incurred by the Agent on account of the Agent's
employees  reasonably  assigned  to  conduct  field  examinations  or to  effect
collection of the Secured  Obligations  or any Collateral or (C) which the Agent
may reasonably  incur in enforcing any right or remedy under the Loan Documents,
in collecting any of the Secured  Obligations,  or in  maintaining,  preserving,
protecting or realizing upon any Collateral, all of which shall be shared by the
Agent and each Lender pro rata in accordance with their  respective  Commitments
at the date such  costs,  expenses,  fees or  disbursements  are  incurred.  The
agreements  in this  subsection  shall  survive  the  payment of the Notes,  the
Secured  Obligations and all other amounts payable hereunder and the termination
of this Agreement.

               SECTION 15.8. Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept  deposits from and generally  engage in any
kind of  business  with the  Borrower  and any  Guarantor  and their  respective
Subsidiaries as if the Agent were not the Agent  hereunder.  With respect to its
Commitment,  the Loans made or  renewed by it and any Note  issued to it and any
Letter of Credit  issued by it, the Agent shall have and may  exercise  the same
rights  and powers  under this  Agreement  and the other Loan  Documents  and is
subject to the same  obligations  and liabilities as and to the extent set forth
herein and in the other Loan Documents for any other Lender. The terms "Lenders"
or  "Required  Lenders"  or any other term  shall,  unless the  context  clearly
otherwise indicates, include the Agent in its individual capacity as a Lender or
one of the Required Lenders.

               SECTION 15.9. Successor Agent. The Agent may resign as Agent upon
thirty  days'  notice to the  Lenders.  If the Agent shall resign as Agent under
this Agreement, then the Required Lenders shall appoint from among the Lenders a
successor  agent for the Lenders which  successor agent shall be approved by the
Borrower  (which approval shall not be  unreasonably  withheld),  whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent, and
the term "Agent" shall mean such successor agent effective upon its appointment,
and the former Agent's  rights,  powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Notes. The effective date
of the Agent's  resignation  shall in all cases be  postponed  until a successor
agent has been appointed.  After any retiring Agent's  resignation  hereunder as
Agent,  the  provisions  of Section  15.7 shall  inure to its  benefit as to any
actions  taken or  omitted  to be taken by it  while  it was  Agent  under  this
Agreement.

               SECTION  15.10.Notices  from Agent to  Lenders.  The Agent  shall
promptly,  upon receipt  thereof,  forward to each Lender  copies of any written
notices,  reports or other information supplied to it by the Borrower (but which
the Borrower is not required to supply directly to the Lenders).


        ARTICLE 15-A

        Co-Agent

               SECTION  15-A.1.  Appointment  of  Co-Agent.  Each of the Lenders
hereby irrevocably designates and appoints First Union Commercial Corporation as
the Co-Agent of such Lender under this  Agreement and the other Loan  Documents,
and each such Lender irrevocably  authorizes Co-Agent,  as the Co-Agent for such
Lender to take such action on its behalf under the  provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are  expressly  delegated to the Co-Agent by the terms of this  Agreement and
such other Loan  Documents,  together  with such other powers as are  reasonably
incidental  thereto.  Notwithstanding any provision to the contrary elsewhere in
this  Agreement or such other Loan  Documents,  the Co-Agent  shall not have any
duties or responsibilities, except those expressly set forth herein and therein,
or any  fiduciary  relationship  with  any  Lender,  and no  implied  covenants,
functions,  responsibilities,  duties,  obligations or liabilities shall be read
into this Agreement or the other Loan  Documents or otherwise  exist against the
Co-Agent.

               SECTION  15-A.2.  Delegation of Duties.  The Co-Agent may execute
any of its  duties  under this  Agreement  and the other  Loan  Documents  by or
through agents or  attorneys-in-fact  and shall be entitled to advice of counsel
concerning  all matters  pertaining  to such duties.  The Co-Agent  shall not be
responsible for the negligence or misconduct of any agents or  attorneys-in-fact
selected by it with reasonable care.

               SECTION 15-A.3. Exculpatory Provisions.  Neither the Co-Agent nor
any of its trustees, officers, directors,  employees, agents,  attorneys-in-fact
or Affiliates  shall be (i) liable to any Lender (or any Lender's  participants)
for any action  lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or the other Loan Documents (except for its
or  such  Person's  own  gross  negligence  or  willful  misconduct),   or  (ii)
responsible in any manner to any Lender (or any Lender's  participants)  for any
recitals, statements,  representations or warranties made by the Borrower or any
officer  thereof  contained in this  Agreement or the other Loan Documents or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Co-Agent under or in connection  with,  this Agreement or
the other Loan Documents or for the value, validity, effectiveness, genuineness,
enforceability  or  sufficiency of this Agreement or the other Loan Documents or
for any  failure  of the  Borrower  to  perform  its  obligations  hereunder  or
thereunder.  The  Co-Agent  shall not be under an  obligation  to any  Lender to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements  contained in, or conditions  of, this  Agreement,  or to inspect the
properties, books or records of the Borrower.

               SECTION  15-A.4.  Reliance by  Co-Agent.  The  Co-Agent  shall be
entitled  to rely,  and  shall be fully  protected  in  relying,  upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram,  telecopy,  telex  or  teletype  message,  statement,  order  or other
document  or  conversation  believed by it to be genuine and correct and to have
been  signed,  sent or made by the proper  Person or Persons and upon advice and
statements  of legal  counsel  (including,  without  limitation,  counsel to the
Borrower),  independent  accountants and other experts selected by the Co-Agent.
The Co-Agent  may deem and treat the payee of any Note as the owner  thereof for
all purposes  unless such Note shall have been  transferred  in accordance  with
Section 14.1.  The Co-Agent  shall be fully  justified in failing or refusing to
take any action  under this  Agreement  and the other Loan  Documents  unless it
shall first  receive such advice or  concurrence  of the Required  Lenders as it
deems  appropriate or it shall first be indemnified to its  satisfaction  by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or  continuing to take any such action.  The Co-Agent  shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement  and the Notes in accordance  with a request of the Required  Lenders,
and such request and any action taken or failure to act pursuant  thereto  shall
be binding upon all the Lenders and all future holders of the Notes.

               SECTION 15-A.5.  Non-Reliance on Co-Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Co-Agent nor any of its officers,
directors,  employees,  agents,  attorneys-in-fact  or  Affiliates  has made any
representations or warranties to it and that no act by the Co-Agent  hereinafter
taken,  including any review of the affairs of the Borrower,  shall be deemed to
constitute any  representation  or warranty by the Co-Agent to any Lender.  Each
Lender  represents  to the  Co-Agent  that it  has,  independently  and  without
reliance upon the Co-Agent or any other Lender,  and based on such documents and
information  as it  has  deemed  appropriate,  made  its  own  appraisal  of and
investigation  into the  business,  operations,  property,  financial  and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this  Agreement.  Each Lender also represents
that it will,  independently and without reliance upon the Co-Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis,  appraisals and decisions
in  taking  or not  taking  action  under  this  Agreement  and the  other  Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business,  operations,  property,  financial  and other  condition and
creditworthiness  of the  Borrower.  The  Co-Agent  shall  not  have any duty or
responsibility  to  provide  any  Lender  with any  credit or other  information
concerning the business, operations,  property, financial and other condition or
creditworthiness  of the  Borrower  which  may come into the  possession  of the
Co-Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates.

               SECTION 15-A.6.  Indemnification.  The Lenders agree to indemnify
the  Co-Agent  in its  capacity  as such (to the  extent not  reimbursed  by the
Borrower and without  limiting the obligation of the Borrower to do so), ratably
according to their respective Commitment  Percentages,  from and against any and
all liabilities,  obligations,  losses, damages, penalties,  actions, judgments,
suits, costs,  expenses or disbursements of any kind whatsoever which may at any
time (including,  without  limitation,  at any time following the payment of the
Notes) be imposed on, reasonably incurred by or asserted against the Co-Agent in
any  way  relating  to or  arising  out of  this  Agreement  or the  other  Loan
Documents,  or any documents contemplated by or referred to herein or therein or
the transactions  contemplated  hereby or thereby or any action taken or omitted
by the Co-Agent under or in connection with any of the foregoing;  provided that
no Lender  shall be liable for the payment of any  portion of such  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  or  disbursements  (i)  resulting  solely  from the  Co-Agent's  gross
negligence  or willful  misconduct  or  resulting  solely from  transactions  or
occurrences  that  occur at a time after such  Lender  has  assigned  all of its
interests,  rights and obligations under this Agreement pursuant to Section 14.1
or, in the case of a Lender to which an assignment is made hereunder pursuant to
Section 14.1, at a time before such assignment;  or (ii)  constituting  ordinary
overhead costs and expenses  incurred by the Agent in the  administration of the
Loans under the Loan Documents, all of which shall be borne by the Co-Agent; but
this shall not include any costs, expenses,  fees or disbursements (A) which are
incurred by outside  agencies or  attorneys  retained by the  Co-Agent to effect
collection of the Secured Obligations or any Collateral,  (B) which are incurred
by the  Co-Agent  on account of the  Agent's  employees  reasonably  assigned to
conduct field examinations or to effect collection of the Secured Obligations or
any Collateral or (C) which the Co-Agent may  reasonably  incur in enforcing any
right or remedy  under the Loan  Documents,  in  collecting  any of the  Secured
Obligations,  or in  maintaining,  preserving,  protecting or realizing upon any
Collateral,  all of which  shall be shared by the  Co-Agent  and each Lender pro
rata in accordance  with their  respective  Commitments  at the date such costs,
expenses,  fees or disbursements are incurred. The agreements in this subsection
shall survive the payment of the Notes,  the Secured  Obligations  and all other
amounts payable hereunder and the termination of this Agreement.

               SECTION 15-A.7. Co-Agent in Its Individual Capacity. The Co-Agent
and its Affiliates may make loans to, accept deposits from and generally  engage
in any kind of business with the Borrower and any Guarantor and their respective
Subsidiaries as if the Co-Agent were not the Co-Agent hereunder. With respect to
its  Commitment,  the Loans made or renewed by it and any Note  issued to it and
any Letter of Credit issued by it, the Co-Agent  shall have and may exercise the
same rights and powers under this  Agreement and the other Loan Documents and is
subject to the same  obligations  and liabilities as and to the extent set forth
herein and in the other Loan Documents for any other Lender. The terms "Lenders"
or  "Required  Lenders"  or any other term  shall,  unless the  context  clearly
otherwise indicates, include the Co-Agent in its individual capacity as a Lender
or one of the Required Lenders.

               SECTION 15-A.8.  Successor  Co-Agent.  The Co-Agent may resign as
Co-Agent upon thirty days' notice to the Lenders.  If the Co-Agent  shall resign
as Co-Agent under this Agreement,  then the Required  Lenders shall appoint from
among the Lenders a successor  co-agent for the Lenders which successor co-agent
shall be approved by the  Borrower  (which  approval  shall not be  unreasonably
withheld), whereupon such successor co-agent shall succeed to the rights, powers
and duties of the Co-Agent,  and the term  "Co-Agent"  shall mean such successor
agent effective upon its appointment,  and the former Co-Agent's rights,  powers
and duties as Co-Agent shall be terminated,  without any other or further act or
deed on the part of such former Co-Agent or any of the parties to this Agreement
or any holders of the Notes.  The effective date of the  Co-Agent's  resignation
shall in all cases be postponed  until a successor  co-agent has been appointed.
After any retiring Co-Agent's  resignation hereunder as Co-Agent, the provisions
of Section  15-A.6 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Co-Agent under this Agreement.


        ARTICLE 16

        MISCELLANEOUS


               SECTION 16.1. Notices.

               (a) Method of Communication.  Except as specifically  provided in
this  Agreement  or  in  any  of  the  Loan  Documents,   all  notices  and  the
communications  hereunder  and  thereunder  shall be in writing or by telephone,
subsequently  confirmed  in  writing.  Notices  in  writing  shall be  delivered
personally  or sent by certified or registered  mail,  postage  pre-paid,  or by
overnight courier,  telex or facsimile transmission and shall be deemed received
in the case of personal delivery,  when delivered,  in the case of mailing, when
receipted for, in the case of overnight delivery, on the next Business Day after
delivery to the courier,  and in the case of telex and  facsimile  transmission,
upon  transmittal,  provided  that in the case of notices  to the Agent,  notice
shall be deemed to have been given only when such notice is actually received by
the Agent. A telephonic notice to the Agent, as understood by the Agent, will be
deemed to be the  controlling  and proper  notice in the event of a  discrepancy
with or failure to receive a confirming written notice.

               (b)    Addresses for Notices.  Notices to any party shall be
sent to it at the following addresses, or any other address of which all the
other parties are notified in writing

        If to the Borrower:  Standard Commercial Tobacco Co., Inc.
                                            2201 Miller Road
                          Wilson, North Carolina 27893
                                            Attn: Rick Hardy
                           Facsimile No.: 919-291-7660

        If to the Agent:            NationsBank, N.A. (South)
                                            Business Credit Division
                                            600 Peachtree Street
                                            13 Plaza
                                            Atlanta, Georgia 30308
                                            Attn: Brian O'Fallon
                                            Facsimile No.: 404-607-6439

        If to a Lender:             At the address of such Lender set forth on
the signature page hereof.

               (c)  Agent's  Office.  The Agent  hereby  designates  its  office
located at 600 Peachtree  Street,  Atlanta,  Georgia  30308,  or any  subsequent
office which shall have been specified for such purpose by written notice to the
Borrower,  as the office to which payments due are to be made and at which Loans
will be disbursed.

               SECTION 16.2. Expenses.  The Borrower agrees to pay or
reimburse on demand all costs and expenses incurred by the Agent or any
Lender, including, without limitation, the reasonable fees and disbursements
of counsel, in connection with

               (a)   the   negotiation,    preparation,   execution,   delivery,
administration,  enforcement  and  termination of this Agreement and each of the
other  Loan  Documents,  whenever  the same  shall be  executed  and  delivered,
including, without limitation

                             (i)    the out-of-pocket costs and expenses
incurred in connection with the administration and interpretation of this
Agreement and the other Loan Documents;

                             (ii)   the costs and expenses of appraisals of
the Collateral;

                             (iii)  the costs and expenses of lien and title
searches and title insurance;

                             (iv)   the costs and expenses of environmental
reports with respect to the Real Estate;

                             (v)    taxes, fees and other charges for filing
the Financing Statements and continuations and the costs and expenses of
taking other actions to perfect, protect, and continue the Security Interests;

        provided,  however,  that the Borrower  shall not be required to pay the
expenses of any Person  which  becomes a Lender more than ninety (90) days after
the  Effective  Date  incurred in  connection  with such  Person's so becoming a
Lender;

               (b)  the  preparation,  execution  and  delivery  of any  waiver,
amendment,  supplement or consent by the Agent and the Lenders  relating to this
Agreement or any of the Loan Documents;

               (c) sums paid or  incurred  to pay any  amount or take any action
required of the Borrower under the Loan Documents that the Borrower fails to pay
or take;

               (d) costs of inspections and verifications of the Collateral, the
Borrower's  operations  and the books and  records of the  Borrower by the Agent
and/or the Lenders or their respective  agents,  such costs to include,  without
limitation, standard per diem fees charged by the Agent or the Lenders and costs
for travel, lodging, and meals;

               (e) costs and expenses of forwarding  loan  proceeds,  collecting
checks  and other  items of  payment,  and  establishing  and  maintaining  each
Controlled Disbursement Account, Agency Account and Lockbox;

               (f)    costs and expenses of preserving and protecting the
Collateral;
               (g)  consulting,  after the occurrence of a Default,  with one or
more Persons,  including  appraisers,  accountants  and lawyers,  concerning the
value of any  Collateral  for the Secured  Obligations or related to the nature,
scope or value of any right or remedy of the Agent or any  Lender  hereunder  or
under any of the Loan  Documents,  including  any review of  factual  matters in
connection therewith, which expenses shall include the fees and disbursements of
such Persons;

               (h)  reasonable  costs and  expenses  paid or  incurred to obtain
payment of the Secured  Obligations,  enforce the  Security  Interests,  sell or
otherwise  realize upon the Collateral,  and otherwise enforce the provisions of
the Loan  Documents,  or to prosecute or defend any claim in any way arising out
of, related to or connected  with,  this Agreement or any of the Loan Documents,
which expenses shall include the reasonable  fees and  disbursements  of counsel
and of experts and other consultants retained by the Agent or any Lender.

The foregoing  shall not be construed to limit any other  provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrower.  The Borrower
hereby  authorizes  the  Agent and the  Lenders  to debit  the  Borrower's  Loan
Accounts (by increasing the principal amount of the Term Loans) in the amount of
any such costs and expenses owed by the Borrower when due.

               SECTION  16.3.  Stamp and Other Taxes.  The Borrower will pay any
and all stamp, registration,  recordation and similar taxes, fees or charges and
shall indemnify the Agent and the Lenders  against any and all liabilities  with
respect to or  resulting  from any delay in the  payment or  omission to pay any
such taxes, fees or charges, which may be payable or determined to be payable in
connection  with the  execution,  delivery,  performance  or enforcement of this
Agreement  and any of the Loan  Documents  or the  perfection  of any  rights or
security  interest  thereunder,  including,  without  limitation,  the  Security
Interest.

               SECTION 16.4.  Setoff. In addition to any rights now or hereafter
granted  under  Applicable  Law and not by way of limitation of any such rights,
during the  continuance of any Event of Default,  each Lender,  any  participant
with such  Lender in the Loans and each  Affiliate  of each  Lender  are  hereby
authorized by the Borrower at any time or from time to time,  without  notice to
the Borrower or to any other  Person,  any such notice  being  hereby  expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or  special,   including,   but  not  limited  to,  indebtedness   evidenced  by
certificates   of  deposit,   whether   matured  or  unmatured)  and  any  other
indebtedness  at any time held or owing by any  Lender or any  Affiliate  of any
Lender or any  participant  to or for the credit or the account of the  Borrower
against and on account of the Secured Obligations irrespective or whether or not

               (a)    Agent or such Lender shall have made any demand under
this Agreement or any of the Loan Documents, or

               (b) the Agent or such Lender  shall have  declared  any or all of
the Secured  Obligations  to be due and payable as permitted by Section 13.2 and
although such Secured Obligations shall be contingent or unmatured.

        Notwithstanding the foregoing,  (i) each Lender (other than NationsBank)
agrees that it shall not,  without the express consent of the Required  Lenders,
exercise  its setoff  rights  hereunder  against any accounts of Borrower now or
hereafter  maintained  with such Lender or any Affiliate of such Lender and (ii)
the Agent and the  Lenders  agree  that the  Agent or any  Lender  shall (to the
extent that it is lawfully  entitled to do so) upon the request of the  Required
Lenders, exercise its respective setoff rights hereunder against any accounts of
Borrower  now or  hereafter  maintained  with  the  Agent,  such  Lender  or any
Affiliate of any of them. If any party (or its Affiliate) exercises the right of
setoff  provided for hereunder,  such party shall be obligated to share any such
setoff in the manner and to the extent required by Section 16.24.

               SECTION 16.5. Litigation. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY AGREE THAT THE FEDERAL  COURT OF THE WESTERN  DISTRICT OF NORTH  CAROLINA
OR, AT THE  OPTION OF THE AGENT OR ANY  LENDER,  ANY COURT IN WHICH THE AGENT OR
SUCH LENDER SHALL INITIATE LEGAL OR EQUITABLE  PROCEEDINGS AND WHICH HAS SUBJECT
MATTER  JURISDICTION  OVER THE MATTER IN  CONTROVERSY,  SHALL HAVE  NONEXCLUSIVE
JURISDICTION  TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES  BETWEEN THE BORROWER
AND  THE  AGENT  OR SUCH  LENDER,  PERTAINING  DIRECTLY  OR  INDIRECTLY  TO THIS
AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING THEREFROM. THE BORROWER
EXPRESSLY  SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
PROCEEDING  COMMENCED IN SUCH COURTS,  HEREBY  WAIVING  PERSONAL  SERVICE OF THE
SUMMONS AND  COMPLAINT,  OR OTHER PROCESS OR PAPERS ISSUED  THEREIN AND AGREEING
THAT  SERVICE OF SUCH SUMMONS AND  COMPLAINT  OR OTHER  PROCESS OR PAPERS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT THE ADDRESS OF
THE BORROWER SET FORTH IN SECTION  16.1.  SHOULD THE BORROWER  FAIL TO APPEAR OR
ANSWER ANY SUMMONS,  COMPLAINT,  PROCESS OR PAPERS SO SERVED  WITHIN THIRTY (30)
DAYS  AFTER THE  MAILING  THEREOF,  IT SHALL BE DEEMED IN  DEFAULT  AND AN ORDER
AND/OR  JUDGMENT  MAY BE ENTERED  AGAINST IT AS  DEMANDED  OR PRAYED FOR IN SUCH
SUMMONS,  COMPLAINT,  PROCESS OR PAPERS.  THE  NONEXCLUSIVE  CHOICE OF FORUM SET
FORTH IN THIS  SECTION  SHALL NOT BE DEEMED TO PRECLUDE THE  ENFORCEMENT  OF ANY
JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT
TO ENFORCE SAME IN ANY APPROPRIATE JURISDICTION.

               SECTION 16.6.  Waiver of Rights.  THE BORROWER HEREBY  KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVES ALL RIGHTS WHICH BORROWER HAS UNDER CHAPTER
14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR UNDER ANY SIMILAR PROVISION OF
APPLICABLE  LAW TO NOTICE AND TO A JUDICIAL  HEARING  PRIOR TO THE ISSUANCE OF A
WRIT OF POSSESSION  ENTITLING  THE AGENT OR ANY LENDER,  OR THE  SUCCESSORS  AND
ASSIGNS OF THE AGENT OR SUCH LENDER TO POSSESSION OF THE  COLLATERAL  UPON EVENT
OF  DEFAULT.  WITHOUT  LIMITING  THE  GENERALITY  OF THE  FOREGOING  AND WITHOUT
LIMITING  ANY OTHER RIGHT WHICH THE AGENT OR THE LENDERS MAY HAVE,  THE BORROWER
CONSENTS THAT IF LENDER FILES A PETITION FOR AN IMMEDIATE  WRIT OF POSSESSION IN
COMPLIANCE WITH SECTIONS 44-14-261 AND 44-14-262 OF THE OFFICIAL CODE OF GEORGIA
OR UNDER ANY SIMILAR  PROVISION  OF  APPLICABLE  LAW,  AND THIS WAIVER OR A COPY
HEREOF IS ALLEGED IN SUCH PETITION AND ATTACHED THERETO,  THE COURT BEFORE WHICH
SUCH PETITION IS FILED MAY DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED
AND MAY ISSUE  FORTHWITH AN IMMEDIATE  WRIT OF  POSSESSION  IN  ACCORDANCE  WITH
CHAPTER 14 OF TITLE 44 OF THE OFFICIAL CODE OF GEORGIA OR IN ACCORDANCE WITH ANY
SIMILAR  PROVISION OF APPLICABLE  LAW,  WITHOUT THE NECESSITY OF AN ACCOMPANYING
BOND AS OTHERWISE  REQUIRED BY SECTION 44-14-263 OF THE OFFICIAL CODE OF GEORGIA
OR  BY  ANY  SIMILAR   PROVISION  UNDER  APPLICABLE  LAW.  THE  BORROWER  HEREBY
ACKNOWLEDGES THAT IT HAS READ AND FULLY UNDERSTANDS THE TERMS OF THIS WAIVER AND
THE EFFECT HEREOF.

               SECTION 16.7.  Consent to  Advertising  and  Publicity.  With the
prior written  consent of the Borrower,  which consent shall not be unreasonably
withheld,  the Agent, on behalf of the Lenders, may issue and disseminate to the
public information  describing the credit accommodation entered into pursuant to
this  Agreement,  including  the name and address of the  Borrower,  the amount,
interest rate, maturity,  collateral and a general description of the Borrower's
business.

               SECTION  16.8.  Reversal of  Payments.  The Agent and each Lender
shall have the continuing and exclusive right to apply, reverse and re-apply any
and  all  payments  to  any  portion  of the  Secured  Obligations  in a  manner
consistent with the terms of this Agreement.  To the extent the Borrower makes a
payment or payments to the Agent, for the account of the Lenders,  or any Lender
receives any payment or proceeds of the Collateral  for the Borrower's  benefit,
which payment(s) or proceeds or any part thereof are  subsequently  invalidated,
declared to be  fraudulent  or  preferential,  set aside  and/or  required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal  law,  common law or  equitable  cause,  then,  to the extent of such
payment or proceeds received,  the Secured  Obligations or part thereof intended
to be satisfied  shall be revived and continued in full force and effect,  as if
such payment or proceeds had not been received by the Agent or such Lender.

               SECTION 16.9. Injunctive Relief. The Borrower recognizes that, in
the event  the  Borrower  fails to  perform,  observe  or  discharge  any of its
obligations or liabilities under this Agreement,  any remedy at law may prove to
be  inadequate  relief to the Agent and the  Lenders;  therefore,  the  Borrower
agrees that if any Event of Default shall have occurred and be  continuing,  the
Agent and the Lenders, if the Agent or any Lender so requests, shall be entitled
to temporary and permanent  injunctive  relief  without the necessity of proving
actual damages.

               SECTION  16.10.Accounting  Matters.  All financial and accounting
calculations,  measurements  and  computations  made for any purpose relating to
this Agreement,  including, without limitation, all computations utilized by the
Borrower to determine  whether it is in compliance  with any covenant  contained
herein,  shall,  unless this  Agreement  otherwise  provides or unless  Required
Lenders shall  otherwise  consent in writing,  be performed in  accordance  with
GAAP.

               SECTION 16.11.Amendments.

               (a)  Except  as set  forth in  subsection  (b)  below,  any term,
covenant,  agreement or condition of this Agreement or any of the Loan Documents
may be amended or waived, and any departure therefrom may be consented to by the
Required  Lenders,  if,  but only if,  such  amendment,  waiver or consent is in
writing signed by the Required  Lenders and, in the case of an amendment  (other
than an amendment  described in Section 16.11(d)),  by the Borrower,  and in any
such  event,  the  failure  to  observe,  perform  or  discharge  any such term,
covenant,  agreement or condition  (whether  such  amendment is executed or such
waiver or consent is given before or after such, failure) shall not be construed
as a breach of such term, covenant, agreement or condition or as a Default or an
Event of Default. Unless otherwise specified in such waiver or consent, a waiver
or consent given hereunder shall be effective only in the specific  instance and
for the specific  purpose for which given.  In the event that any such waiver or
amendment is requested  by the  Borrower,  the Agent and the Lenders may require
and  charge a fee in  connection  therewith  and  consideration  thereof in such
amount as shall be  determined  by the Agent and the  Required  Lenders in their
discretion.

               (b)    Except as otherwise set forth in this Agreement, without
the prior unanimous written consent of the Lenders,

                      (i)    no amendment, consent or waiver shall affect the
amount or extend  the time of the  obligation  of the  Lenders  to make Loans or
extend the originally scheduled time or times of payment of the principal of any
Loan or alter the time or times of payment of interest on any Loan or the amount
of the  principal  thereof or the rate of interest  thereon or the amount of any
commitment or termination fee payable  hereunder or permit any  subordination of
the principal or interest on such Loan, permit the subordination of the Security
Interests in any material Collateral, amend any provision requiring the Agent to
act at the request of the Required Lenders, amend the definitions of "Commitment
Percentage,"  "Eligible Assignee," "Required Lenders" or "Secured  Obligations,"
amend the definitions used in Section 5.1 relating to interest rates,  amend any
provision  relating to the ratable rights or obligations of the Lenders or amend
the provisions of Section 5.12, Article 13, Section 14.1(b), Article 15, Section
16.11(b), Section 16.23 or Section 16.24,

                      (ii)   no material collateral under this Agreement or
any Security  Document shall be released by the Agent other than as specifically
permitted  in this  Agreement  and no  Guarantor  shall  be  released  from  its
obligations under any Guaranty Agreement,

                      (iii)  neither the Agent nor any Lender shall consent to
any amendment to or waiver of the provisions of the  Subordinated  Agreements or
any other  instrument or agreement  evidencing or relating to obligations of the
Borrower that are expressly  subordinate  to any of the Secured  Obligations  if
such amendment or waiver would be adverse to the Lenders in their  capacities as
Lenders hereunder, and

                      (iv)   neither the Agent nor any Lender shall consent to
any amendment to or waiver of the provisions to either  Intercreditor  Agreement
if such amendment or waiver would be adverse to the Lenders in their  capacities
as Lenders hereunder;

        provided, however, that anything herein to the contrary notwithstanding,
Required  Lenders  shall have the right to waive any Default or Event of Default
and the  consequences  hereunder  of such  Default or Event of Default and shall
have the right to enter into an  agreement  with the  Borrower or any  Guarantor
providing  for the  forbearance  from  the  exercise  of any  remedies  provided
hereunder or under the other Loan Documents without waiving any Default or Event
of Default.

               (c) The  making of Loans  hereunder  by the  Lenders  during  the
existence of a Default or Event of Default  shall not be deemed to  constitute a
waiver of such Default or Event of Default.

               (d)  Notwithstanding any provision of this Agreement or the other
loan  documents  to the  contrary,  no  consent,  written or  otherwise,  of the
Borrower  shall be necessary  or required in  connection  with any  amendment to
Article  15 or  Section  5.7,  and any  amendment  to such  provisions  shall be
effected  solely by and among the Agent and the Lenders,  provided  that no such
amendment shall impose any obligation on the Borrower.

               SECTION  16.12.Assignment.  All the  provisions of this Agreement
shall be binding  upon and inure to the benefit of the parties  hereto and their
respective  successors  and assigns,  except that the Borrower may not assign or
transfer any of its rights under this Agreement.

               SECTION 16.13.Performance of Borrower's Duties.

               (a) The Borrower's  obligations  under this Agreement and each of
the Loan  Documents  shall be  performed  by the  Borrower  at its sole cost and
expense.

               (b) If the  Borrower  shall fail to do any act or thing  which it
has  covenanted  to do under this  Agreement or any of the Loan  Documents,  the
Agent, on behalf of the Lenders, may (but shall not be obligated to) do the same
or cause it to be done  either in the name of the Agent or the Lenders or in the
name  and on  behalf  of the  Borrower,  and  the  Borrower  hereby  irrevocably
authorizes the Agent so to act.

               SECTION  16.14.Indemnification.  The Borrower agrees to reimburse
the Agent and the  Lenders  for all costs and  expenses,  including,  reasonable
counsel fees and  disbursements,  incurred,  and to indemnify and hold the Agent
and the Lenders  harmless from and against all losses  suffered by, the Agent or
any Lender in connection with

                      (i)    the exercise by the Agent or any Lender of any
right or remedy granted to it under this Agreement or any of the Loan
Documents,

                      (ii)   any claim, and the prosecution or defense
thereof, arising out of or in any way connected with this Agreement or any of
the Loan Documents, and

                   (iii)  the   collection   or   enforcement   of  the  Secured
Obligations  or any of them,  other than such costs,  expenses  and  liabilities
arising  out  of the  Agent's  or  any  Lender's  gross  negligence  or  willful
misconduct.

               SECTION  16.15.All  Powers Coupled with  Interest.  All powers of
attorney and other  authorizations  granted to the Agent and the Lenders and any
Persons  designated  by the Agent or the Lenders  pursuant to any  provisions of
this  Agreement  or any of the Loan  Documents  shall be deemed  coupled with an
interest  and shall be  irrevocable  so long as any of the  Secured  Obligations
remain unpaid or unsatisfied.

               SECTION 16.16.Survival.  Notwithstanding any termination of
this Agreement,

               (a) until all Secured  Obligations  have been irrevocably paid in
full or otherwise  satisfied,  the Agent, for the benefit of the Lenders,  shall
retain its Security  Interest  and shall retain all rights under this  Agreement
and each of the Security  Documents with respect to such  Collateral as fully as
though this Agreement had not been terminated,

               (b) the  indemnities  to which  the  Agent  and the  Lenders  are
entitled under the provisions of this Article 16 and any other provision of this
Agreement  and the Loan  Documents  shall  continue in full force and effect and
shall  protect  the Agent and the  Lenders  against  events  arising  after such
termination as well as before, and

               (c) in connection  with the termination of this Agreement and the
release and  termination  of the  Security  Interests,  the Agent,  on behalf of
itself as agent and the Lenders,  may require such assurances and indemnities as
it shall  reasonably  deem necessary or appropriate to protect the Agent and the
Lenders  against  loss on account of such  release and  termination,  including,
without  limitation,  with respect to credits  previously applied to the Secured
Obligations that may subsequently be reversed or revoked.

               SECTION  16.17.Titles  and  Captions.   Titles  and  captions  of
Articles,  Sections and subsections in this Agreement are for convenience  only,
and neither limit nor amplify the provisions of this Agreement.

               SECTION  16.18.Severability of Provisions.  Any provision of this
Agreement or any Loan  Document  which is  prohibited  or  unenforceable  in any
jurisdiction  shall, as to such jurisdiction,  be ineffective only to the extent
of such prohibition or  unenforceability  without  invalidating the remainder of
such  provision or the remaining  provisions  hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

               SECTION  16.19.Governing  Law. This Agreement and the Notes shall
be  construed in  accordance  with and governed by the law of the State of North
Carolina.

               SECTION 16.20.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  shall be deemed to be an  original  and shall be
binding upon all parties,  their successors and assigns,  and all of which taken
together shall constitute one and the same agreement.

               SECTION  16.21.Reproduction of Documents. This Agreement, each of
the Loan  Documents  and all  documents  relating  thereto,  including,  without
limitation,  (a)  consents,  waivers and  modifications  that may  hereafter  be
executed,  (b) documents  received by the Agent or any Lender, and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Agent or any Lender, may be reproduced by the Agent or such Lender by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar  process and such Person may destroy any original  document so produced.
Each party hereto  stipulates  that, to the extent  permitted by Applicable Law,
any such reproduction  shall be as admissible in evidence as the original itself
in any judicial or administrative  proceeding (whether or not the original shall
be in existence  and whether or not such  reproduction  was made by the Agent or
such Lender in the regular course of business),  and any enlargement,  facsimile
or further  reproduction  of such  reproduction  shall likewise be admissible in
evidence.

               SECTION  16.22.Term of Agreement.  This Agreement shall remain in
effect from the  Agreement  Date and  thereafter  until all Secured  Obligations
shall have been  irrevocably  paid and satisfied in full. No termination of this
Agreement  shall affect the rights and obligations of the parties hereto arising
prior to such termination.

               SECTION  16.23.Increased   Capital.  If  any  Lender  shall  have
determined that the adoption of any applicable law, rule, regulation, guideline,
directive  or request  (whether or not having  force of law)  regarding  capital
requirements  for banks or bank holding  companies,  or any change therein or in
the  interpretation  or  administration  thereof by any governmental  authority,
central  bank  or  comparable   agency  charged  with  the   interpretation   or
administration  thereof,  or compliance by such Lender with any of the foregoing
imposes or increases a requirement by such Lender to allocate capital  resources
to such Lender's  Commitment to make Loans hereunder which has or would have the
effect of  reducing  the return on such  Lender's  capital to a level below that
which such Lender could have achieved (taking into  consideration  such Lender's
then  existing  policies  with respect to capital  adequacy  and  assuming  full
utilization  of  such  Lender's  capital)  but  for  such  adoption,  change  or
compliance by any amount  deemed by such Lender to be material:  (i) such Lender
shall promptly after its determination of such occurrence give notice thereof to
the  Borrower;  and (ii) the Borrower  shall pay to such Lender as an additional
fee from time to time on demand such amount as such Lender  certifies  to be the
amount that will compensate it for such reduction.  A certificate of such Lender
claiming  compensation  under this  Section  16.23  shall be  conclusive  in the
absence of manifest error.  Such  certificate  shall set forth the nature of the
occurrence giving rise to such compensation, the additional amount or amounts to
be paid to it hereunder and the method by which such amounts were determined. In
determining  such  amount,  such  Lender may use any  reasonable  averaging  and
attribution methods.

               SECTION 16.24. Pro-Rata Participation.

               (a)  If  any  Lender   shall  obtain  any  payment  or  reduction
(including any amounts  received as adequate  protection of a deposit treated as
cash collateral under any federal bankruptcy laws or any other laws, domestic or
foreign,  relating  to  bankruptcy,  insolvency,  reorganization,  winding up or
composition  for  adjustment  of debts) of any  Secured  Obligation  of Borrower
hereunder (whether voluntary,  involuntary, through the exercise of any right of
set-off,  or  otherwise)  in excess of its pro rata share (in  proportion to all
Secured  Obligations)  of  payments  or  reductions  on account of such  Secured
Obligations  obtained by all of the  Lenders,  such Lender shall  forthwith  (i)
notify the other Lenders and the Agent of such  receipt,  and (ii) purchase from
the other Lenders such  participations  in the affected  Secured  Obligations as
shall be necessary to cause such  purchasing  Lender to share the excess payment
or reduction, net of costs incurred in connection therewith, on a pro rata basis
(in proportion to all Secured Obligations); provided, that if all or any portion
of such excess payment or reduction is thereafter recovered from such purchasing
Lender or additional costs are incurred, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery or such additional costs,
but  without  interest.  The  Borrower  agrees that any Lender so  purchasing  a
participation  from another  Lender  pursuant to this Section  16.24 may, to the
fullest  extent  permitted  by  Applicable  Law,  exercise  all of its rights of
payment  (including the right of set-off) with respect to such  participation as
fully as if such Lender were the direct  creditor of the  Borrower in the amount
of such participation.

               (b)  Each  Lender  which  receives  a  secured  claim  under  any
applicable bankruptcy, insolvency or other similar law the security for which is
a debt owed by it to the  Borrower,  such Lender  shall  exercise  its rights in
respect  of such  secured  claim in a manner  consistent  with the rights of the
Lenders  entitled  under  this  Section  16.24 to share in the  benefits  of any
recovery on such secured claim.

               (c)  The Borrower expressly consents to the foregoing
arrangements.

               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers in several  counterparts all as
of the day and year first written above.


                                    BORROWER:


[Corporate Seal]                    STANDARD COMMERCIAL TOBACCO CO.,
                                      INC.

Attest:               By:
                                ---------------------------
                                Name:
                                     ----------------------

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


                                    LENDERS:

Commitment:                  NATIONSBANK, N.A. (SOUTH)
$2,272,720.00
                                       By:
                                       ---------------------------
                                      Name:
                                             ----------------------
                                     Title:
                                              ---------------------
                             Address:       600 Peachtree Street
                                    13 Plaza
                             Atlanta, Georgia 30308
                              Attn: Business Credit
                             Facsimile No.: 404-607-
6437


Commitment:                         FIRST UNION COMMERCIAL CORPORATION
$2,272,720.00
                                       By:
                                       ----------------------------
                                      Name:
                                             -----------------------
                                     Title:
                                             -----------------------

                             Address:       One First Union Center
                            Charlotte, North Carolina
                                   28288-0737
                                            Attn: Bernard Banks
                           Facsimile No.: 704-374-2703


Commitment:                         MELLON BANK, N.A.
$1,454,550.00

                                       By
                                      ------------------------------
                                      Title
                                          --------------------------

                             Address:       Mellon Business Credit
                                            Mellon Bank Center
                                            1735 Market Street, 6th Floor
                                            Philadelphia, PA  19103
                                            Attn:  Roger D. Attix
                                            Facsimile No.: 215-553-0201


Commitment:                         BANK OF BOSTON
$1,454,550.00

                                       By
                                      ------------------------------
                                      Title
                                         ---------------------------
                             Address:       Bank of Boston
                                            100 Federal Street
                                            01-09-06
                                            Boston, MA  02110
                                            Attn: William Purinton
                                            Facsimile No.: 617-434-2309


Commitment:                         FLEET CAPITAL CORPORATION
$1,454,550.00

                                       By
                                       -----------------------------
                                      Title
                                         ---------------------------

                             Address:       Fleet Capital Corporation
                                            6060 JA Jones Drive
                                            Suite 200
                                            Charlotte, NC  28287
                                            Attn: Rodney G. McSwain
                                            Facsimile No.: 704-553-6738


Commitment:                         THE CIT GROUP/BUSINESS CREDIT
$1,090,920.00

                                       By
                                      ------------------------------
                                      Title
                                         ---------------------------
                             Address:       The CIT Group/Business Credit
                                            900 Ashwood Parkway
                                            Suite 600
                                            Atlanta, GA  30338
                                            Attn:  Robert Bernier
                                            Facsimile No.: 770-551-7899

                                     AGENT:

                            NATIONSBANK, N.A. (SOUTH)


                                       By:
                                       ----------------------------
                                      Name:
                                             -----------------------
                                     Title:
                                              ----------------------
                             Address:       600 Peachtree Street
                                    13 Plaza
                             Atlanta, Georgia 30308
                              Attn: Business Credit
                           Facsimile No.: 404-607-6437


                                    CO-AGENT:

                                    FIRST UNION COMMERCIAL CORPORATION


                                       By:
                                       ----------------------------
                                      Name:
                                             -----------------------
                                     Title:
                                              ----------------------
                             Address:       One First Union Center
                            Charlotte, North Carolina
                                   28288-0737
                                            Attn: Bernard Banks
                           Facsimile No.: 704-374-2703