<PAGE>

                           LOAN AND SECURITY AGREEMENT





                              Dated: June 30, 1997




                                 by and between




                            FIRST UNION NATIONAL BANK



                                       and



                            ALPHANET SOLUTIONS, INC.





O:\SSDATA\HAT\BANK\2137604.6                                              062797

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                                TABLE OF CONTENTS
                                -----------------
                                                                         Page
                                                                         ----


I     DEFINITIONS.......................................................  1

        1.1      "AAA...................................................  1
        1.2      "ACCOUNT" or "ACCOUNTS RECEIVABLE......................  1
        1.3      "ACCOUNT DEBTOR........................................  1
        1.4      "ACQUISITION ADVANCE...................................  1
        1.5      "ADJUSTED LIBO RATE....................................  1
        1.6      "ADJUSTED LIBO RATE ADVANCES...........................  1
        1.7      "ADVANCE(S)............................................  1
        1.8      "AFFILIATE.............................................  2
        1.9      "AGREEMENT.............................................  2
        1.10     "ARBITRATION RULES.....................................  2
        1.11     "BANK..................................................  2
        1.12     "BASE RATE.............................................  2
        1.13     "BASE RATE ADVANCES....................................  2
        1.14     "BORROWER..............................................  2
        1.15     "BORROWING BASE........................................  2
        1.16     "BORROWING BASE CERTIFICATE............................  2
        1.17     "BORROWING DATE........................................  2
        1.18     "BUSINESS DAY..........................................  2
        1.19     "CHATTEL PAPER.........................................  2
        1.20     "CLOSING DATE..........................................  3
        1.21     "COLLATERAL............................................  3
        1.24     "CONTINGENT OBLIGATION(S)".............................  3
        1.25     "CONTRACTUAL OBLIGATIONS...............................  3
        1.26     "DEFAULT...............................................  3
        1.27     "DISPUTES..............................................  4
        1.28     "DOCUMENT(S)...........................................  4
        1.29     "ELIGIBLE ACCOUNT......................................  4
        1.30     "ELIGIBLE LOAN VALUE OF ELIGIBLE ACCOUNTS..............  4
        1.31     "ENVIRONMENTAL LAWS....................................  4
        1.32     "ERISA.................................................  4
        1.33     "EURODOLLAR RATE.......................................  4
        1.34     "EURODOLLAR RESERVE....................................  4
        1.35     "EVENT OF DEFAULT......................................  5
        1.36     "FIXED CHARGE COVERAGE RATIO...........................  5
        1.37     "GAAP..................................................  5
        1.38     "GENERAL INTANGIBLES...................................  5
        1.39     "GOODS.................................................  5
        1.40     "GOVERNMENTAL BODY.....................................  5

                                        i


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                                TABLE OF CONTENTS
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                                   (continued)

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                                                                          ----

        1.41     "GUARANTOR(S)...........................................  5
        1.42     "GUARANTY...............................................  5
        1.43     "INDEBTEDNESS...........................................  5
        1.44     "INDEMNIFIED PARTIES....................................  6
        1.45     "INELIGIBLE ACCOUNTS....................................  6
        1.46     "INSTRUMENT.............................................  7
        1.47     "INTERCREDITOR AGREEMENTS...............................  8
        1.48     "INTEREST PERIOD........................................  8
        1.49     "INVENTORY..............................................  8
        1.50     "INVESTMENT OBLIGATIONS.................................  8
        1.51     "LETTER(S) OF CREDIT....................................  8
        1.52     "LETTER OF CREDIT AGREEMENT.............................  9
        1.53     "LETTER OF CREDIT OBLIGATIONS...........................  9
        1.54     "LIEN...................................................  9
        1.55     "LOAN...................................................  9
        1.56     "LOAN DOCUMENTS.........................................  9
        1.57     "MARKETABLE SECURITIES INVESTMENT PERCENTAGE............  9
        1.58     "MATERIAL ADVERSE CHANGE................................  9
        1.59     "MATERIAL ADVERSE EFFECT................................  9
        1.60     "MATURITY DATE..........................................  9
        1.61     "OBLIGATION" or "OBLIGATIONS............................  9
        1.62     "OBLIGOR................................................ 10
        1.63     "PBGC................................................... 10
        1.64     "PERMITTED ACQUISITION.................................. 10
        1.65     "PERMITTED ENCUMBRANCES................................. 10
        1.66     "PERMITTED INDEBTEDNESS"................................ 10
        1.67     "PERMITTED LEASES"...................................... 10
        1.68     "PERSON................................................. 11
        1.69     "PLAN................................................... 11
        1.70     "REPAYMENT INDEMNITY"................................... 11
        1.71     "REPORTABLE EVENT....................................... 11
        1.72     "REVOLVING NOTE......................................... 12
        1.73     "SUBSIDIARY............................................. 12
        1.74     "TANGIBLE NET WORTH..................................... 12
        1.75     "TELERATE PAGE 3750..................................... 12
        1.76     "TOTAL ASSETS........................................... 12
        1.77     "TOTAL LIABILITIES...................................... 12
        1.78     "UNIFORM COMMERCIAL CODE................................ 12
        1.79     "WORKING DAY............................................ 12

                                       ii


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                                TABLE OF CONTENTS
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                                   (continued)

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                                                                         ----

        1.80     "INTERPRETATION AND CONSTRUCTION........................ 13

II    LOANS.............................................................. 14
        2.1      REVOLVING LOAN AND LETTERS OF CREDIT.................... 14
        2.2      INTEREST................................................ 14
        2.3      REPAYMENT OF ADVANCES................................... 16
        2.4      FEES.................................................... 17
        2.5      PREPAYMENT.............................................. 17
        2.6      PROCEDURES FOR ADVANCES................................. 18
        2.7      PROCEDURES FOR LETTERS OF CREDIT........................ 18
        2.8      USE OF PROCEEDS......................................... 20
        2.9      CONDITIONS TO INITIAL ADVANCE........................... 20
        2.10     CONDITIONS TO ALL ADVANCES.............................. 22
        2.11     REGULATORY CAPITAL REQUIREMENTS......................... 23
        2.12     EXCESS ADVANCES......................................... 24

III  COLLATERAL.......................................................... 26
        3.1      CROSS COLLATERAL........................................ 26
        3.2      ACCOUNTS RECEIVABLE..................................... 26
        3.3      INVENTORY............................................... 26
        3.4      GENERAL INTANGIBLES..................................... 26
        3.5      DEPOSIT ACCOUNTS........................................ 26
        3.6      CHATTEL PAPER........................................... 26
        3.7      INSTRUMENTS............................................. 26
        3.8      DOCUMENTS............................................... 26
        3.9      PROCEEDS AND RECORDS.................................... 27
        3.10     CONTINUING PERFECTION................................... 27

IV   PROCEEDS OF COLLATERAL.............................................. 28
        4.2      APPLICATION OF PAYMENTS/PAYMENTS ON
                  COLLATERAL............................................. 28

V    REPRESENTATIONS AND WARRANTIES...................................... 29
        5.1      GOOD STANDING........................................... 29
        5.2      CORPORATE AUTHORITY..................................... 29
        5.3      COMPLIANCE WITH LAW..................................... 29
        5.4      NO LITIGATION........................................... 30
        5.5      NO FINANCIAL CHANGE..................................... 30
        5.6      TAX COMPLIANCE.......................................... 30

                                       iii


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        5.7      GOOD TITLE AND ABSENCE OF LIENS......................... 30
        5.8      PLACE OF RECORDS, CHIEF EXECUTIVE OFFICE,
                  INVENTORY AND OTHER COLLATERAL......................... 30
        5.9      WARRANTIES AS TO ACCOUNTS............................... 31
        5.10     ERISA................................................... 31
        5.11     LICENSES AND PERMITS AND LAWS........................... 31
        5.12     ENVIRONMENTAL STATUS.................................... 32
        5.13     REAFFIRMATION........................................... 32
        5.14     PROCEEDS OF LOAN........................................ 32
        5.15     BORROWER AND OBLIGOR.................................... 33
        5.16     SOLVENCY................................................ 33
        5.17     NO DEFAULT.............................................. 33
        5.18     FULL DISCLOSURE......................................... 33
        5.19     DOCUMENTARY/STAMP TAXES................................. 33
        5.20     SHAREHOLDERS' AGREEMENTS................................ 34
        5.21     PERFECTION OF SECURITY INTERESTS........................ 34

VI   AFFIRMATIVE COVENANTS OF OBLIGORS................................... 35
        6.1      AUDIT AND OTHER REPORTS................................. 35
        6.2      INSURANCE............................................... 36
        6.3      PAYMENT OF EXPENSES..................................... 37
        6.4      GUARANTY................................................ 37
        6.5      LANDLORD'S WAIVER....................................... 37
        6.6      GOOD WORKING CONDITION.................................. 37
        6.7      OBSERVANCE OF LEGAL REQUIREMENT, LICENSES
                  AND PERMITS AND PROTECTION OF COLLATERAL .............. 37
        6.8      INSPECTION.............................................. 38
        6.9      COLLATERAL REQUIREMENTS................................. 38
        6.10     CONTROL OF ACCOUNTS..................................... 39
        6.11     CHANGE OF LOCATIONS..................................... 39
        6.12     PRIMARY DEMAND DEPOSIT ACCOUNTS......................... 39

VII  NEGATIVE COVENANTS OF OBLIGORS ..................................... 41
        7.1      LOANS AND ADVANCES AND INVESTMENTS...................... 41
        7.2      FINANCIAL COVENANTS..................................... 41
        7.3      LIENS................................................... 41
        7.4      LIMITATION ON INDEBTEDNESS.............................. 41
        7.5      TRANSACTIONS AMONG AFFILIATES........................... 41
        7.6      SPECIAL COVENANTS AS TO ASSETS.......................... 41

                                       iv

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        7.7      PREPAYMENTS OF INDEBTEDNESS............................. 42
        7.8      FISCAL YEAR............................................. 42
        7.9      CHANGE IN CONTROL....................................... 42
        7.10     CHANGE IN ACCOUNTING PRINCIPLES......................... 43
        7.11     SALE AND LEASEBACK...................................... 43
        7.12     MAINTAIN CORPORATE EXISTENCE AND NATURE OF
                  BUSINESS............................................... 43
        7.13     DIVIDENDS; REDEMPTIONS.................................. 43
        7.14     DISCHARGE OF HAZARDOUS WASTE............................ 44
        7.15     LEASES.................................................. 44

VIII EVENTS OF DEFAULT................................................... 45
        8.1      NON-PAYMENT............................................. 45
        8.2      NON-PERFORMANCE......................................... 45
        8.3      MISREPRESENTATION....................................... 45
        8.4      OTHER LIEN.............................................. 45
        8.5      INSOLVENCY.............................................. 45
        8.6      JUDGMENT OR LIEN........................................ 46
        8.7      NON-COMPLIANCE WITH LEASES OR LAWS...................... 46
        8.8      ORGANIZATIONAL CHANGE................................... 46
        8.9      IMPAIRMENT OF RESPONSIBILITY............................ 46
        8.10     ADVERSE CHANGE.......................................... 46
        8.11     MISREPRESENTATION OF FACT............................... 46
        8.12     ERISA................................................... 46
        8.13     DEFAULT IN OBLIGATIONS TO THIRD PARTIES................. 46
        8.14     LICENSES................................................ 47

IX   CONSEQUENCE OF EVENT OF DEFAULT..................................... 48
        9.1      ACCELERATION............................................ 48
        9.2      POSSESSION.............................................. 48
        9.3      METHODS OF SALE......................................... 48
        9.4      RETENTION OF COLLATERAL................................. 49
        9.5      SET-OFF................................................. 49
        9.6      ATTORNEYS' FEES AND EXPENSES............................ 49
        9.7      INCREASE IN INTEREST/LATE CHARGE........................ 49
        9.8      BANK'S PERFORMANCE OF OBLIGORS' OBLIGATION.............. 49
        9.9      OTHER REMEDIES.......................................... 49

X    MISCELLANEOUS....................................................... 50

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                                TABLE OF CONTENTS
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                                   (continued)

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        10.1     NO WAIVER............................................... 50
        10.2     MODIFICATION OR AMENDMENT............................... 50
        10.3     WAIVER OF NOTICE........................................ 50
        10.4     ONE INSTRUMENT.......................................... 50
        10.5     LAW OF NEW JERSEY....................................... 50
        10.6     JURISDICTION............................................ 50
        10.7     SUCCESSORS OR ASSIGNS................................... 50
        10.8     RIGHTS CUMULATIVE....................................... 50
        10.9     LIMITATION OF LIABILITY................................. 51
        10.10    NOTIFICATION OF DISPOSITION OF COLLATERAL............... 51
        10.11    ADDRESSES OF NOTICES.................................... 51
        10.12    TITLES.................................................. 52
        10.13    DISCLOSURE.............................................. 52
        10.14    TERM.................................................... 52
        10.15    INTEREST LIMITATION..................................... 53
        10.16    INDEMNIFICATION......................................... 53
        10.17    WAIVER OF TRIAL BY JURY................................. 54
        10.18    ARBITRATION............................................. 54
        10.19    PRESERVATION AND LIMITATION OF REMEDIES................. 54


                                       vi

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     LOAN AND  SECURITY  AGREEMENT,  dated June 30, 1997,  by and between  FIRST
UNION NATIONAL BANK, a national banking institution, with a place of business at
550 Broad Street,  Newark,  New Jersey 07102,  hereinafter  called  "Bank",  and
ALPHANET  SOLUTIONS,  INC., a New Jersey  corporation,  with its chief executive
office at 7 Ridgedale Avenue, Cedar Knolls, New Jersey 07927, hereinafter called
"Borrower."

     This  Agreement  specifies  the terms of a revolving  loan of up to FIFTEEN
MILLION AND 00/100 DOLLARS ($15,000,000.00),  and further specifies the terms by
which all Obligations, as defined herein, of Borrower and the other Obligors, as
defined  herein,  to Bank are to be  secured by certain  personal  property  and
assets, tangible and intangible, of Borrower and the other Obligors.

     NOW,  THEREFORE,  in  consideration  of these  premises  and other good and
valuable consideration, the parties hereto agree as follows:

                                        I

                                   DEFINITIONS
                                   -----------

     1.1 "AAA" has the meaning set forth in Section 10.18(B) hereof.

     1.2 "ACCOUNT" or "ACCOUNTS RECEIVABLE" means, in addition to the definition
of account as contained in the Uniform Commercial Code, the right of any Obligor
to receive  payment for goods sold or leased or for services  rendered which are
not  evidenced by an  instrument  or chattel  paper,  whether or not it has been
earned by performance.

     1.3 "ACCOUNT DEBTOR" means, in addition to the definition of account debtor
as contained in the Uniform  Commercial Code, the person or persons obligated to
an  Obligor  on an  Account,  or  who  is  represented  by an  Obligor  to be so
obligated.

     1.4 "ACQUISITION  ADVANCE" means an Advance to be used in connection with a
Permitted Acquisition.

     1.5 "ADJUSTED LIBO RATE" means, for each Interest Period,  an interest rate
per annum  equal to the  product of (a) the  Eurodollar  Rate in effect for such
Interest Period and (b) Eurodollar Reserves, if any, imposed upon Bank.

     1.6 "ADJUSTED  LIBO RATE  ADVANCES"  means all Advances which bear interest
based upon the Adjusted LIBO Rate and any relevant margin.

     1.7 "ADVANCE(S)" means an amount loaned by Bank to Borrower under the Loan.


O:\SSDATA\HAT\BANK\2137604.6                                              062797

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     1.8  "AFFILIATE"  means as to any Person,  any other Person  (excluding any
Subsidiary) which directly or indirectly, is in control of, is controlled by, or
is under common  control with such Person.  For purposes of this  definition,  a
Person shall be deemed to be "controlled by" a Person if such Person  possesses,
directly or  indirectly,  power either (a) to vote ten percent  (10%) or more of
the  securities  having  ordinary  voting power for the election of directors of
such  Person  or (b) to  direct or cause the  direction  of the  management  and
policies of such Person  whether by contract or  otherwise.  Stan Gang is hereby
expressly excluded from the definition of "Affiliate".

     1.9  "AGREEMENT"  means  this  Loan and  Security  Agreement,  as  amended,
supplemented or modified from time to time in accordance with its terms.

     1.10  "ARBITRATION  RULES" has the  meaning  set forth in Section  10.18(B)
hereof.

     1.11 "BANK" means the party identified on the first page hereof as Bank.

     1.12 "BASE RATE" means the rate of interest  established  by Bank from time
to time as its reference "prime" rate in making loans but which does not reflect
the rate of interest charged to any particular  class of borrower,  such rate to
change  automatically  and immediately as of the date Bank changes its Base Rate
without  notice to Borrower.  The Base Rate is not tied to any external  rate of
interest or index.

     1.13 "BASE RATE ADVANCES" means all Advances which bear interest based upon
the Base Rate and any relevant margin.

     1.14  "BORROWER"  means the party  identified  on the first page  hereof as
Borrower.

     1.15  "BORROWING  BASE" means the lesser of (A) Fifteen  Million and 00/100
Dollars ($15,000,000.00), or (B) the Eligible Loan Value of Eligible Accounts.

     1.16 "BORROWING BASE CERTIFICATE"  means the certificate,  substantially in
the form of Exhibit A, executed from time to time by Borrower.

     1.17  "BORROWING  DATE" means the  Business  Day or Working Day on which an
Advance is to be made or Letter of Credit is to be issued.

     1.18  "BUSINESS  DAY" means a day other than a Saturday  or Sunday or other
day on which Bank is authorized or required to close under the laws of the State
of New Jersey or applicable Federal Law.

     1.19 "CHATTEL  PAPER" means, in addition to the definition of chattel paper
as  contained  in the  Uniform  Commercial  Code,  a writing or  writings  which
evidence both a


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money obligation and a security interest in, or a lease of, specific Goods. When
a transaction is evidenced  both by such a security  agreement or a lease and by
an Instrument or series of  Instruments,  the group of writings  taken  together
constitutes Chattel Paper.

     1.20 "CLOSING DATE" means the date of this Agreement.

     1.21  "COLLATERAL"  means all of those present or future personal  property
assets of each of the  Obligors  in which a security  interest  in or lien on is
granted to Bank hereunder or contemplated  hereby or in any other Loan Document,
or under any other prior,  present or future agreement by any of the Obligors in
favor of Bank.

     1.22 "COMMITMENT" means Bank's commitment to make the Loan to Borrower.

     1.23  "COMMITMENT  FEE" means the fee  payable by  Borrower  to Bank on the
average daily unused portion of the Commitment.

     1.24 "CONTINGENT  OBLIGATION(S)" means, as to any Person, any obligation of
such Person  guaranteeing or in effect  guaranteeing any  Indebtedness,  leases,
dividends or other obligations ("primary  obligations") of any other Person (the
"primary  obligor") in any manner,  whether  directly or indirectly,  including,
without  limitation,  any obligation of such Person,  whether or not contingent,
(A) to purchase any such primary obligation or any property  constituting direct
or  indirect  security  therefor,  (B) to  advance  or supply  funds (i) for the
purchase or payment of any such primary  obligation or (ii) to maintain  working
capital or equity  capital of the primary  obligor or  otherwise to maintain the
net  worth  or  solvency  of the  primary  obligor,  (C) to  purchase  property,
securities or services  primarily for the purpose of assuring the beneficiary of
any such  primary  obligation  of the  ability  of the  primary  obligor to make
payment of such primary obligation,  (D) for the obligations of a partnership in
which  such  Person is a general  partner,  or (E)  otherwise  to assure or hold
harmless  the  beneficiary  of such primary  obligation  against loss in respect
thereof;  provided,  however,  that the term  Contingent  Obligations  shall not
include the endorsement of instruments for deposit or collection in the ordinary
course of business.  The amount of any Contingent  Obligation shall be deemed to
be an  amount  equal  to the  stated  or  determinable  amount  of  the  primary
obligation  in respect of which such  Contingent  Obligation  is made or, if not
stated or determinable,  the maximum reasonably anticipated liability in respect
thereof as determined by Bank in good faith.

     1.25 "CONTRACTUAL  OBLIGATIONS"  means, as to any Person,  any provision of
any  security  issued by such Person or of any  agreement,  instrument  or other
undertaking  to which such Person is a party or by which it or any of its assets
are bound.

     1.26  "DEFAULT"  means an event of the nature  specified  in  Article  VIII
hereof and which,  with the giving of notice or passage of time, or both,  would
become an Event of Default.


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     1.27 "DISPUTES" has the meaning set forth in Section 10.18(A) hereof.

     1.28  "DOCUMENT(S)"  shall  have  the  meaning  set  forth  in the  Uniform
Commercial Code for such term.

     1.29  "ELIGIBLE  ACCOUNT" means an Account of an Obligor which has been due
for less than  ninety (90) days from the date of  issuance  of the  invoice,  is
subject  to a first  priority  perfected  Lien in favor of Bank,  excluding  any
Ineligible Account.

     1.30  "ELIGIBLE  LOAN VALUE OF ELIGIBLE  ACCOUNTS"  means up to eighty-five
percent  (85%) of the  face  amount  of  Eligible  Accounts,  less  returns  and
discounts, offsets, contra balances, credits or allowances of any nature, at any
time issued, owing, granted or outstanding.

     1.31  "ENVIRONMENTAL  LAWS"  means  (A)  the  Comprehensive   Environmental
Response,  Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 et
seq.  ("CERCLA"),  as amended by the Superfund Amendment and Reauthorization Act
of 1986; (B) the Resource  Conservation and Recovery Act of 1976, as amended, 42
U.S.C.  6901 et seq.; (C) the New Jersey Spill  Compensation and Control Act, as
amended,  N.J.S.A.  58:10-23.11b  et seq.;  (D) the New Jersey  Industrial  Site
Recovery Act, formerly known as the Environmental Cleanup Responsibility Act, as
amended,  N.J.S.A.  13:1K-6 et seq.; (E) the New Jersey  Underground  Storage of
Hazardous  Substances Act, N.J.S.A.  58:10A-21 et seq.; (F) the New Jersey Solid
Waste Management Act, as amended,  N.J.S.A.  13:1E-1 et seq.; (G) the New Jersey
Water Pollution Control Act, as amended,  N.J.S.A. 58:10A-1 et seq.; and (H) any
and all laws,  regulations  and  executive  orders,  federal,  state and  local,
pertaining to environmental matters, as same may be amended or supplemented from
time to time.

     1.32 "ERISA" means the Employee  Retirement  Income Security Act of 1974 as
amended from time to time.

     1.33  "EURODOLLAR  RATE" means with  respect to any Advance or  outstanding
portion of the Loan  (should  Borrower  choose  the  Adjusted  LIBO Rate  option
thereto),  the rate of interest (rounded to the next higher 1/100 of one percent
(.01%)) for deposits in U.S. Dollars for a maturity equal to the Interest Period
therefor  which appears on Telerate Page 3750 as of 11:00 a.m.,  London time, on
the day that is two (2) Working Days prior to the  commencement of such Interest
Period.  If such  rate does not  appear  on the  Telerate  Page  3750,  the rate
utilized shall be the rate as determined by Bank from another  recognized source
or interbank quotation.

     1.34 "EURODOLLAR  RESERVE" means a fraction  (expressed as a decimal),  the
numerator of which is the number one and the  denominator of which is the number
one minus the applicable  statutory  reserve  requirements  (rounded to the next
higher 1/100 of one percent (.01%) and expressed as a decimal) for Bank (without
duplication,  but including, without limitation,  basic, supplemental,  marginal
and emergency reserves), from time to time in effect


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<PAGE>

under  Regulation D of the Board of Governors of the Federal  Reserve System (or
any successor) with respect to  eurocurrency  funding  currently  referred to as
"Eurocurrency liabilities" in such Regulation D.

     1.35 "EVENT OF DEFAULT"  means an event of the nature  specified in Article
VIII hereof.

     1.36  "FIXED  CHARGE  COVERAGE  RATIO"  means  (A) the  sum of net  profit,
interest,  taxes,  depreciation and amortization plus lease and rent expense for
the measured period,  divided by (B) the sum of the current portion of long term
debt and capital  leases plus lease and rent expense for the same period and the
total interest expense.

     1.37 "GAAP" means generally  accepted  accounting  principles in the United
States of America consistently applied.

     1.38 "GENERAL  INTANGIBLES" means, in addition to the definition of general
intangibles  as  contained  in the Uniform  Commercial  Code,  all rights of the
Obligors to  property,  choses in action and other  rights of the  Obligors  not
otherwise  specifically included elsewhere in this Agreement,  further including
but not limited to all present and future trademarks, goodwill symbolized by any
trademarks,  trade names, service marks,  copyrights and patents, and all rights
under  license  agreements  for the use of same,  and all rights of the Obligors
under any and all leases of property, both real and personal.

     1.39 "GOODS" means,  in addition to the definition of goods as contained in
the Uniform Commercial Code, all articles of tangible personal  property,  sold,
supplied, leased or otherwise disposed of, represented by an Account.

     1.40 "GOVERNMENTAL BODY" means any nation or government, any state or other
political  subdivision  thereof, any entity exercising  executive,  legislative,
judicial, regulatory or administrative functions of, or pertaining to government
or any court or arbitrator.

     1.41   "GUARANTOR(S)"   means  all  now  existing  and   hereafter   formed
Subsidiaries  of Borrower,  including  without  limitation,  those  Subsidiaries
listed on Schedule 5.1 hereof.

     1.42  "GUARANTY"  means the joint and several,  unconditional,  irrevocable
guaranty  of  payment  of the  Obligations  hereunder  and under the other  Loan
Documents by the Guarantors,  pursuant to the Guaranty and Suretyship  Agreement
from Guarantors to Bank dated the date hereof,  together with any other guaranty
agreements hereafter executed by any parties hereafter becoming a Guarantor.

     1.43  "INDEBTEDNESS"  means,  as to any Person,  at a particular  time, all
items which,  in accordance  with GAAP,  would be classified as liabilities on a
balance  sheet of such  Person  as at such time and  which  constitute,  without
duplication, (A) indebtedness for


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<PAGE>

borrowed  money or the deferred  purchase  price of property  (other than credit
extended to such  Person for the  purchase  of goods in the  ordinary  course of
business to the extent the same would otherwise  constitute  Indebtedness),  (B)
indebtedness evidenced by notes, bonds,  debentures or similar instruments,  (C)
obligations  under leases  which,  in accordance  with GAAP,  are required to be
capitalized on a balance sheet, (D) obligations under conditional sales or other
title retention  agreements,  (E)  indebtedness  arising under letters of credit
(both documentary and standby) and acceptance  facilities and the face amount of
all  letters  of credit  issued  for the  account of such  Person  and,  without
duplication,  all drafts  drawn  thereunder  to the extent such Person shall not
have  reimbursed  the issuer in respect of the issuer's  payment of such drafts,
(F) all  liabilities  secured by any Lien on any  property  owned by such Person
even  though  such Person has not  assumed or  otherwise  become  liable for the
payment thereof (other than carriers',  warehousemen's,  mechanics', repairmen's
or other like nonconsensual  liens arising in the ordinary course of business to
the  extent  such  liens  are  Permitted  Encumbrances)  and  liens  for  taxes,
assessments or similar  charges  incurred in the ordinary  course of business to
the extent such liens are Permitted  Encumbrances,  (G) mandatory obligations of
such  Person to redeem or purchase  stock or to purchase or repay  Indebtedness,
and  (H)  Contingent  Obligations  of  such  Person  in  respect  of  any of the
foregoing.

     1.44  "INDEMNIFIED  PARTIES"  has the  meaning  set forth in Section  10.16
hereof.

     1.45  "INELIGIBLE  ACCOUNTS"  means  those  Accounts as to which any of the
following has occurred:

     (A) a portion  of the Goods or  services  giving  rise to the  Account  are
returned, rejected,  repossessed, lost or damaged, such portion of which Account
shall be deemed ineligible;

     (B) the Account Debtor disputes said Account;

     (C)  the  termination  of  existence,   insolvency,   business  failure  or
suspension of business or appointment of a custodian, receiver or trustee of any
part of the  property  of,  the  making  of an  assignment  for the  benefit  of
creditors of, calling of a meeting of the creditors of, or the  commencement  of
any bankruptcy, liquidation, reorganization or similar proceeding under state or
federal law against the Account Debtor;

     (D) more than twenty-five  percent (25%) of the aggregate Accounts due from
the Account Debtor remains  unpaid past the applicable  eligibility  periods set
forth in the definition of Eligible Account;

     (E)  the  Account  is due  from  an  employee,  stockholder,  Affiliate  or
Subsidiary of an Obligor or Stan Gang;


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<PAGE>

     (F) any of the  representations  set forth in Section  5.9 are untrue  with
respect to said Account;

     (G) the  Obligors  have failed with  respect to said Account to comply with
the requirements of Section 6.10 hereof;

     (H) the Account arises out of a contract with any Governmental Body unless,
solely with  respect to an Account due from the New York MTA,  all filings  have
been made under the  Federal  Assignment  of Claims Act or  comparable  state or
other statute;

     (I) the Goods  giving  rise to said  Account  are  subject to any "bill and
hold" or similar arrangements, have been sold on approval or consignment or sale
or return basis, or under a repurchase or similar agreement;

     (J) the Account Debtor does not meet credit standards acceptable to Bank;

     (K) the  Account is not  payable in United  States  Dollars or the  Account
Debtor is located outside the United States;

     (L) the  Account  Debtor is  located  in  Minnesota  or New Jersey or other
jurisdiction  which requires a Notice of Business  Activities  Report or similar
report to be filed by an  Obligor,  and such  Obligor has not filed for the then
current  year the required  report or is not  otherwise  authorized  to transact
business in said jurisdiction;

     (M) because of the nature of an Obligor's ownership of assets or conduct of
business,  such Obligor is required by  applicable  law to be  authorized  to do
business  in the  jurisdiction  where the  Account  Debtor is  located  and such
Obligor is not so authorized;

     (N) the  Account is subject to any offset,  counterclaim  or other claim or
defense on the part of the Account Debtor;

     (O) the  Account is  subject  to a Lien in favor of any  Person  other than
Bank,  excluding any Liens  described in and permitted  under the  Intercreditor
Agreements;

     (P) the Account is not a good and valid Account, representing an undisputed
bona fide indebtedness incurred by the Account Debtor therein named, for a fixed
sum as set forth in the invoice  relating  thereto  with  respect to an absolute
sale and  delivery,  upon the  stated  terms,  of Goods sold and  delivered,  or
services actually rendered, by an Obligor; or

     (Q) the  Account  arises out of a contract  or  purchase  order for which a
surety bond was issued on behalf of an Obligor.

     1.46  "INSTRUMENT"  means,  in addition to the  definition of instrument as
contained in the Uniform Commercial Code, a negotiable instrument or a security,
or any other


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<PAGE>

writing  which  evidences  a right to the  payment  of money and is not itself a
security  agreement or lease and is of the type which is, in the ordinary course
of  business,   transferred  by  delivery  with  any  necessary  endorsement  or
assignment.

     1.47  "INTERCREDITOR  AGREEMENTS"  means  (i)  that  certain  intercreditor
agreement  between Bank and Finova Capital  Corporation  dated December 20, 1996
and (ii) that certain intercreditor agreement between Bank and IBM Credit Corp.,
each of which shall be substantially similar to the other.

     1.48 "INTEREST  PERIOD" means,  as to all Adjusted LIBO Rate Advances,  the
period   commencing  on  the  Borrowing  Date  and  ending  on  the  numerically
corresponding  day (or if there is no  numerically  corresponding  day, the last
day)  in the  calendar  month  that is one  (1),  three  (3) or six  (6)  months
thereafter,  as selected by Borrower in its notice of borrowing, and thereafter,
the period commencing on the last day of the first preceding Interest Period and
ending  on the  numerically  corresponding  day (or if there  is no  numerically
corresponding  day, the last day) in the calendar  month that is one (1),  three
(3) or six (6) months  thereafter,  as  selected  by  Borrower  in its notice of
continuance  of or  conversion  to an  Adjusted  LIBO  Rate  Advance;  provided,
                                                                       --------
however,  that if any  Interest  Period  would end on a day which shall not be a
-------
Working  Day,  such  Interest  Period  shall be extended to the next  succeeding
Working Day unless such Working Day would fall in the next  succeeding  calendar
month in which case the Interest Period shall end on the first preceding Working
Day and provided, further, that notwithstanding anything to the contrary, (i) no
        --------  -------
Interest  Period shall extend beyond the Maturity Date and (ii) in all cases, no
Interest  Period shall extend  beyond any date on which  principal is to be paid
for that portion of principal being paid on such date.

     1.49  "INVENTORY"  means,  in addition to the  definition  of  inventory as
contained  in the Uniform  Commercial  Code,  all Goods held by the Obligors for
resale or lease or furnished or to be furnished under contracts of service,  and
shall include raw materials,  goods and work in process and finished goods,  and
all goods returned by or reclaimed from customers.

     1.50 "INVESTMENT  OBLIGATIONS" means any of the following:  (A) obligations
of or  guaranteed  by the United States of America;  (B)  obligations  issued or
guaranteed by any instrumentality or agency of the United States of America; (C)
obligations  issued  or  guaranteed  by any  State of the  United  States or the
District of Columbia;  (D) repurchase agreements fully secured by obligations of
a kind  specified in  subsections  (A), (B) or (C) above;  (E) interest  bearing
accounts,  certificates of deposit,  bankers' acceptances or commercial paper of
Bank; and (F)  commercial  paper other than as specified in subsection (E) above
and which is rated at least "P1" by Moody's Investors  Services or at least "A1"
by Standard and Poor's Corporation.

     1.51  "LETTER(S) OF CREDIT" means the one or more standby letters of credit
issued  from time to time by Bank at the request and for the account of Borrower
in accordance with the terms hereof.


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<PAGE>

     1.52 "LETTER OF CREDIT AGREEMENT" means Bank's standard form of Application
and Agreement for Irrevocable  Standby Letter of Credit,  as the same may change
from time to time, the current form of which is annexed hereto as Exhibit B.

     1.53 "LETTER OF CREDIT  OBLIGATIONS"  means the total amount of all Letters
of  Credit  as  outstanding  at any  time and all  obligations  of  Borrower  to
reimburse Bank for any payments by Bank under any Letters of Credit.

     1.54 "LIEN" means any mortgage,  deed of trust, pledge,  security interest,
hypothecation,  assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference,  priority,  or other security agreement,  or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing)  and  the  filing  of  any  financing  statement  under  the  Uniform
Commercial Code (or comparable  law) of any  jurisdiction to evidence any of the
foregoing.

     1.55 "LOAN" means the  revolving  loan and Letters of Credit in the maximum
principal  amount  of  up  to  FIFTEEN  MILLION  DOLLARS  ($15,000,000.00)  made
available by Bank pursuant to Section 2.1 hereof.

     1.56 "LOAN  DOCUMENTS"  means  this  Agreement,  the  Revolving  Note,  the
Guaranty,  the Intercreditor  Agreements,  any Letter of Credit  Agreement,  all
notes or other documents executed and delivered by Borrower or any other Obligor
hereunder, and any amendments,  renewals,  modifications or supplements thereto,
or substitutions therefor.

     1.57  "MARKETABLE  SECURITIES  INVESTMENT  PERCENTAGE"  has the meaning set
forth in Section 2.4(A) hereof.

     1.58 "MATERIAL  ADVERSE CHANGE" means, as to a Person,  a material  adverse
change in the  financial  condition,  operations,  business  or property of such
Person.

     1.59 "MATERIAL  ADVERSE EFFECT" means, as to a Person,  a material  adverse
effect on the  financial  condition,  operations,  business  or property of such
Person.

     1.60 "MATURITY DATE" means June 30, 1998.

     1.61  "OBLIGATION" or "OBLIGATIONS"  means any and all loans,  advances and
other financial  accommodations  made by Bank prior to, on and after the date of
this Agreement to, or on the account of Borrower  including without  limitation,
the  Loan,  and any and all  interest,  commissions,  obligations,  liabilities,
indebtedness,  charges and  expenses  direct or  indirect,  primary,  secondary,
contingent,  joint  or  several  which  are due or to  become  due or  that  may
hereafter be contracted  or acquired of Borrower or the other  Obligors to Bank,
no matter how or when arising and whether under any present or future  agreement
or instrument


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<PAGE>

between Borrower or the other Obligors (including without limitation,  under the
Guaranty) and Bank,  or otherwise,  and the amount due or to become due upon any
notes, reimbursement agreement, swap agreement or other obligations given to, or
received by, Bank or on account of any of the foregoing and the  performance and
fulfillment  by  Borrower or the other  Obligors  of all the terms,  conditions,
promises,  covenants and provisions  contained in the Loan Documents,  or in any
future agreement or instrument between Borrower or the other Obligors and Bank.

     1.62 "OBLIGOR" means Borrower hereunder, Guarantors, all other sureties and
guarantors  and, if any debt due to Bank  hereunder  is  evidenced  by a note or
other instrument, the makers and endorsers thereof.

     1.63 "PBGC" means the Pension Benefit Guaranty Corporation.

     1.64 "PERMITTED  ACQUISITION"  means a merger or  consolidation by Borrower
where Borrower  remains the surviving  entity,  or an acquisition by Borrower of
all or  substantially  all of the assets,  stock or other  equity  interests  of
another entity; provided that in any such merger,  consolidation or acquisition,
(i) any acquired  entity becomes a Guarantor  hereunder and (ii) Bank receives a
valid and perfected lien on any acquired assets.

     1.65  "PERMITTED  ENCUMBRANCES"  means (A) Liens for taxes,  assessments or
governmental  charges or levies on  property of an Obligor if the same shall not
at the time be  delinquent  or thereafter  can be paid without  penalty,  or are
being  diligently  contested in good faith and by  appropriate  proceedings  and
against which such Obligor has established adequate reserves,  (B) Liens imposed
by law, such as carriers,  warehousemen  and mechanics Liens, and Liens incurred
in connection  with  construction or other similar Liens arising in the ordinary
course of business provided same are not at the time due and payable,  (C) Liens
arising out of pledge or deposits under workmen's compensation law, unemployment
insurances,  old age pension or other social  security or retirement  benefit or
similar legislation,  (D) Liens arising from judgments or awards with respect to
which such Obligor shall be diligently  and in good faith  prosecuting an appeal
or  proceedings  for review and shall have secured a stay of  execution  pending
such appeal or review,  (E) Liens in favor of Bank,  (F) Liens  described in and
permitted  under  the  Intercreditor  Agreements,   (G)  Liens  associated  with
permitted  purchase  money  indebtedness  described in Section  1.66(ii) and (H)
Liens set forth on Schedule 1.65 annexed hereto.

     1.66 "PERMITTED INDEBTEDNESS" means (i) Indebtedness to Bank, (ii) purchase
money  indebtedness  with respect to the  purchase by Borrower of new  equipment
and/or machinery to be used in connection with its business,  up to an aggregate
amount of $250,000 per year and (iii) indebtedness as described in and permitted
under the Intercreditor Agreements.

     1.67  "PERMITTED  LEASES"  means,  provided  no Default or Event of Default
exists hereunder, those real property leases entered into in the ordinary course
of business  consistent  with past  practice for which Bank has received (A) ten
(10) Business Days advance


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<PAGE>

notice and (B) landlords'  waivers and any other documents  deemed  necessary or
desirable by Bank.

     1.68  "PERSON"  means any  individual,  sole  proprietorship,  partnership,
limited liability company, joint venture,  trust,  unincorporated  organization,
association,  corporation,  institution,  entity,  party or government  (whether
national,  federal,  state,  county,  city,  municipal or otherwise,  including,
without limitation,  any instrumentality,  division,  agency, body or department
thereof).  Without  limitation,  the term "Person"  shall  include  Borrower and
Guarantors.

     1.69 "PLAN"  means an employee  benefit plan or other plan  maintained  for
employees of an Obligor and covered by Title IV of ERISA.

     1.70 "REPAYMENT  INDEMNITY"  means any amounts  required to compensate Bank
for any losses which it incurs as calculated  below as a result of repayments of
Advances (including  repayments on account of illegality as set forth in Section
2.2(E)  upon  acceleration  or  otherwise)  other than on,  with  respect to the
Adjusted LIBO Rate Advances,  the last day of an Interest Period.  The amount of
such  loss  shall be  calculated  by  multiplying  the  principal  amount of the
repayment or prepayment by the per annum rate  (expressed as a decimal and based
on a 360-day year and actual days elapsed) (the "Indemnity Rate"), determined by
subtracting  (A) the highest  asked yield most  recently  published  in the Wall
                                                                            ----
Street  Journal as of the date of  repayment  or  prepayment  for U.S.  Treasury
---------------
securities having a term approximating the weighted average of the terms of each
Advance or portion  thereof  being repaid or prepaid (the "Average  Term",  said
average  to be  determined  by  reference  to  the  period,  for  each  Advance,
commencing  on the date of the  repayment  or  prepayment  and ending  on,  with
respect to the Adjusted LIBO Rate Advances, the end of the then current Interest
Period) from (B) the rate of interest  applicable to the principal  amount being
repaid or  prepaid,  said  Repayment  Indemnity  to accrue for a period from and
including the date of the repayment or prepayment to, but excluding, the date of
expiration  of the  Average  Term,  as if such  term  commenced  on the  date of
repayment or prepayment;  provided that no Repayment  Indemnity shall be payable
unless the  foregoing  calculation  of the  Indemnity  Rate  produces a positive
number.  Borrower agrees that the Repayment  Indemnity has been freely bargained
between  the  parties  to  provide  Bank  with  compensation  for the  costs  of
reinvesting the Loan proceeds and the loss of the  contracted-for  return on the
Loan and such  Repayment  Indemnity is  reasonable  and  constitutes  a means of
providing Bank with a substitute or alternate source of cash flow if any Advance
is repaid or prepaid as set forth above.  Bank's  determination of the Repayment
Indemnity shall be conclusive and binding in the absence of manifest error.  The
amount payable as determined  above shall be in addition to any amounts  payable
under any other Section or Paragraph of this Agreement.

     1.71  "REPORTABLE  EVENT" has the meaning assigned to such term in Title IV
of ERISA, or regulations  issued  thereunder  other than a Reportable  Event not
subject  to the  provision  for a thirty  (30) day notice to the PBGC under such
regulations.


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<PAGE>

     1.72  "REVOLVING  NOTE" means that  certain  Revolving  Note dated the date
hereof issued by Borrower  evidencing  the Loan and any revolving note replacing
such note.

     1.73  "SUBSIDIARY"  means any entity of which more than fifty percent (50%)
of the  outstanding  capital stock or other  ownership  interest having ordinary
voting power to elect a majority of the board of  directors  or other  governing
body of such  entity  (irrespective  of  whether,  at the  time,  stock or other
ownership  interest of any other  class or classes of such entity  shall have or
might have voting power by reason of the happening of any contingency) is at the
time,  directly or indirectly,  owned by Borrower or any other Obligor or one or
more Subsidiaries.

     1.74 "TANGIBLE NET WORTH" means Total Assets,  less (without limitation and
without  duplication  of  deductions)  the  aggregate  of  the  liabilities  and
Indebtedness  (including  tax and other  proper  accruals)  of a Person  and any
reserves established by a Person for anticipated losses or expenses.

     1.75  "TELERATE  PAGE 3750" means the display  designated as "Page 3750" on
the Dow Jones  Telerate  Service (or such other page as may replace that page on
that service for the purpose of  displaying  London  interbank  offered rates of
major banks).

     1.76 "TOTAL ASSETS"  means,  at any date, the amount shown on the books and
records of a Person,  determined in accordance with GAAP, of all property,  both
real and  personal,  of a  Person,  after  deducting  capitalized  research  and
development costs,  capitalized interest, debt discounts and expense,  marketing
expenses and customer  and/or  mailing lists,  goodwill  (including any amounts,
however designated on the balance sheet, representing the cost of acquisition of
business and  investments  in excess of underlying  tangible  assets),  patents,
trademarks, trade name rights, copyrights,  franchises,  licenses, amounts owing
from  employees,  officers,  directors,   shareholders,   principals,  partners,
Subsidiaries  or  Affiliates of the Person and any  investments  in any entities
owned  or  controlled  by  any  of  the  foregoing  Persons  (including  without
limitation,  any  Affiliates  and  Subsidiaries)  and such  other  assets as are
properly classified as "intangible assets".

     1.77 "TOTAL  LIABILITIES" means, at any date, the amount of all liabilities
which,  in  accordance  with  GAAP  should  be  included  in  determining  total
liabilities  as shown on a liability side of a balance sheet of a Person at such
date, other than capital stock,  capital surplus,  retained  earnings,  property
interests, deferred credit and contingency reserves under GAAP.

     1.78 "UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as adopted
and in effect under the laws of the State of New Jersey.

     1.79  "WORKING  DAY" means any day other than a  Saturday,  Sunday,  public
holiday,  bank  holiday or other day on which  currencies  are not traded in the
London interbank market.


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<PAGE>

     1.80 "INTERPRETATION AND CONSTRUCTION"

     (A) The terms "hereby," "hereof,"  "hereto," "herein,"  "hereunder" and any
similar  terms,  as used in  this  Agreement,  refer  to this  Agreement  in its
entirety and not any particular  Article or paragraph,  and the term "hereafter"
means after,  and the term  "heretofore"  means before,  the date of delivery of
this Agreement;

     (B) Words  importing  a  particular  gender  mean and  include  every other
gender,  and words  importing  the  singular  number mean and include the plural
number and vice versa.

     (C)  References to "the  Obligors",  "each  Obligor",  "any  Obligor",  "an
Obligor"  and the like  shall be deemed to refer in each such case to all or any
one Obligor.


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<PAGE>

                                       II

                                      LOANS
                                      -----

     2.1 REVOLVING  LOAN AND LETTERS OF CREDIT Within the  collateral  limits of
the Borrowing Base,  subject to the terms and conditions  hereinafter set forth,
and  provided  that no Default or Event of Default  shall have  occurred  and be
continuing  or would  result  from the making of any  Advance or issuance of any
Letter of Credit,  from time to time hereafter,  through the Maturity Date, Bank
shall extend credit to Borrower by (i) making  Advances and (ii) the issuance of
Letters of Credit; provided,  however that at no time shall (x) the total amount
                   --------   -------
of Letter of Credit Obligations exceed Two Million Five Hundred Thousand Dollars
($2,500,000), (y) the total principal amount of Acquisition Advances exceed Five
Million  Dollars  ($5,000,000)  and (z) the  total  amount  of  Letter of Credit
Obligations plus the total principal amount of Advances then outstanding  exceed
            ----
the Borrowing Base.  Borrower shall have the right,  upon thirty (30) days prior
written  notice to Bank, to terminate  all or part of the unused  portion of the
Loan, without premium or penalty.

     2.2 INTEREST

     (A) On all Base Rate Advances,  Borrower shall pay to Bank monthly interest
on the first day of each month until all such Advances are paid in full,  and on
all Adjusted LIBO Rate Advances, Borrower shall pay to Bank interest on the last
day of the Interest  Period but in no event less often than  quarterly (in which
case  such  payments  shall be made on the  last  Working  Day of such  calendar
quarter),  until all such  Advances are paid in full,  which  interest  shall be
computed on the basis of a 360 day year,  for the actual number of days elapsed,
on the daily unpaid balance of such  Advances,  at the rate selected by Borrower
by written notice to Bank equal to the following:

          (i)  Working  Capital  Advances.  For  Advances to be used for working
     capital,  (x) one-half of one percent  (.5%) per annum below the Base Rate,
     or (y) the Adjusted  LIBO Rate for such  Interest  Period plus 1.25 percent
                                                               ----
     (1.25%); or

          (ii) Acquisition Advances.  For Acquisition Advances,  (x) one-quarter
     of one  percent  (.25%) per annum  below the Base Rate or (y) the  Adjusted
     LIBO Rate for such Interest Period plus 1.50 percent (1.50%).
                                        ----

Borrower's notice to Bank of the applicable interest rate shall be provided,  as
to Adjusted  LIBO Rate  Advances  which are to be continued as such for the next
Interest  Period  or as to Base  Rate  Advances  which  are to be  converted  to
Adjusted  LIBO  Rate  Advances,  not less than  three  (3) days,  which are both
Working Days and Business  Days,  prior to the end of the then pending  Interest
Period,  such notice to include a requested Interest Period, and, as to Adjusted
LIBO Rate  Advances  which are to be  converted to Base Rate  Advances,  one (1)
Business  Day  prior to the end of the then  pending  Interest  Period  to Bank.
Conversions of Adjusted LIBO Rate


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<PAGE>

Advances  shall  only  be  made  (a) on the  last  day  of the  Interest  Period
applicable  thereto,  (b) on a  Working  Day and (c) if no  Default  or Event of
Default has occurred and is continuing.  If no notice is provided by Borrower as
to any Adjusted LIBO Rate Advance prior to the end of the then pending  Interest
Period,  such Advance shall,  at the end of the Interest  Period,  automatically
become a Base Rate Advance.

     (B)  Subject to Section  2.5,  if, at any time,  the  outstanding  Advances
exceed the Borrowing Base,  Borrower shall pay to Bank monthly interest computed
on the basis of a 360 day year for the actual  number of days  elapsed,  on that
portion of the daily unpaid  balance of such Advances  which is in excess of the
Borrowing Base, at the default rate set forth in Section 9.7.

     (C) In the event  there  should be a change  in the Base Rate  which  would
result in a change in the rate of interest on Base Rate Advances,  then, in that
event,  the rate of  interest  on such  Base  Rate  Advances  shall  be  changed
accordingly  as of the date of the  change in the Base Rate,  without  notice to
Borrower.

     (D) Each month Bank will render to  Borrower a  statement  of the status of
the Advances  provided for herein,  which Borrower hereby agrees shall be deemed
to be an account  stated and correct and  acceptable  to and binding on Borrower
unless Bank shall  receive a corrected  statement of  exceptions  from  Borrower
within  thirty  (30) days after the  monthly  statements  have been  rendered to
Borrower.

     (E)  Notwithstanding  any  other  provision  of  this  Agreement,   if  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation by any central bank or other governmental  authority charged with the
administration or interpretation  thereof shall make it unlawful, or any central
bank or other governmental  authority shall assert that it is unlawful, for Bank
to perform its obligations  hereunder (i) to make Adjusted LIBO Rate Advances or
(ii) to continue  to fund or maintain  Adjusted  LIBO Rate  Advances  hereunder,
then, on notice thereof and demand therefor by Bank to Borrower,  the obligation
of Bank to make any such Adjusted LIBO Rate Advances shall terminate and, if the
foregoing clause (ii) is applicable,  Borrower shall, upon prior notice to Bank,
either (A)  forthwith  repay in full any such  Adjusted  LIBO Rate Advances then
outstanding,  together with interest accrued thereon and the Repayment Indemnity
or (B) forthwith  convert any such Adjusted LIBO Rate Advances then  outstanding
into Base Rate  Advances  and pay to Bank the  Repayment  Indemnity.  If no such
notice is received by Bank within  three (3) Working  Days of the prior  written
demand by Bank (which demand shall include  Bank's  calculation of the Repayment
Indemnity),  Borrower  will be deemed to have made the  election  to convert any
such Adjusted LIBO Rate Advances then  outstanding into Base Rate Advances as of
the fourth day following such demand.

     (F) If, with  respect to any  Interest  Period,  Bank  determines  that (i)
extraordinary  circumstances affecting the relevant market make it impracticable
to ascertain the interest rate  applicable for such Interest  Period or (ii) the
Adjusted  LIBO Rate for such  Interest  Period  will not  adequately  and fairly
reflect the cost to Bank of making or maintaining the Loan


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<PAGE>

during  such  Interest  Period,  Bank shall  promptly  notify  Borrower  of such
determination  and no additional  Adjusted LIBO Rate Advances  shall be made nor
shall there be any  conversions  thereto until such notice is withdrawn.  If any
Adjusted  LIBO Rate Advance is  outstanding  on the date of such notice and such
notice  has not been  withdrawn  on the last  day of the then  current  Interest
Period applicable thereto,  Borrower may on the last day of such Interest Period
either  convert such Adjusted LIBO Rate Advance to a Base Rate Advance or prepay
the outstanding  principal balance thereof and accrued interest thereon in full.
If no such notice is received by Bank at least one (1) Business Day prior to the
last day of such  Interest  Period,  Borrower  will be  deemed  to have made the
election to convert any such Adjusted LIBO Rate Advances then  outstanding  into
Base Rate Advances.

     2.3 REPAYMENT OF ADVANCES

     (A) Borrower may repay an Adjusted LIBO Rate Advance or portion  thereof on
the last day of the relevant Interest Period,  provided, that (i) Borrower shall
provide Bank with one (1) Working Day's prior written notice of its intent to so
repay,  (ii) Borrower shall pay to Bank the amount repaid  together with accrued
interest to the date of such  payment on the amount  repaid,  (iii) each partial
repayment  shall be in a principal  amount of not less than  $100,000.00  or any
multiple thereof.  In the event Borrower for any reason repays any Adjusted LIBO
Rate  Advance on the day which is not the end of an  Interest  Period,  Borrower
shall,  upon written  demand by Bank,  pay to Bank the Repayment  Indemnity with
respect to such repayment.

     (B) As to any Base Rate Advances,  Borrower may, upon not less than one (1)
Business  Day's prior written  notice,  repay such Base Rate  Advances,  without
premium or  penalty,  in whole or in part with  accrued  interest to the date of
such repayment;  provided,  that each partial  repayment shall be in a principal
amount of not less than $100,000.00 or any multiple thereof.

     (C) Provided no prior Event of Default occurs hereunder, all Advances shall
be payable upon the Maturity Date.

     (D)  Whenever  any  payment to be made  hereunder  or under any note issued
hereunder  shall be  stated  to be due on other  than a  Business  Day or, as to
Adjusted LIBO Rate Advances, a Working Day, such payment may be made on the next
succeeding Business Day or Working Day, as applicable,  unless such Business Day
or Working Day, as  applicable,  falls in the next  succeeding  month,  in which
case,  such payment shall be made on the next preceding  Business Day or Working
Day, as applicable. Any such alteration of time shall, in such case, be included
in the computation of payment of interest. All payments (including  prepayments)
made by  Borrower  on  account  of  principal  of or  interest  on the  Advances
hereunder shall be made without set-off or counterclaim  and shall be made prior
to 3:00 p.m.  (New York City time) on the date such payment is due, to Bank,  in
each case in lawful  money of the United  States of America  and in  immediately
available  funds.  The failure of Borrower to make any such payment by 3:00 p.m.
(New York City time) on such due date shall not constitute a Default or Event of
Default hereunder, provided that such payment is made on such due date, but any


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<PAGE>

such payment received by Bank on any Business Day after 3:00 p.m. (New York City
time)  shall be deemed  to have  been  received  on the  immediately  succeeding
Business Day or Working Day, as applicable,  for the purpose of calculating  any
interest payable in respect thereof.

     (E) Bank shall  have the right in its  discretion  to charge any  principal
and/or  interest or other sum due by Borrower or any other  Obligor to Bank,  to
any  checking,  other  deposit or loan account of Borrower or any other  Obligor
with Bank or to apply any proceeds  received by it against  payment of same.  In
the event that the amount so charged  shall  create an  overdraft,  the Obligors
hereby  agree  to pay to Bank the  fees  associated  with  overdraft  until  the
overdraft is satisfied in full. During any time in which an overdraft is created
and  outstanding,  the Loan  shall be deemed to be in  default  (and  shall bear
interest  at the  default  rate set forth in Section  9.7) and Bank shall not be
required to honor any checks drawn on or transfers from such deposit account nor
shall it be  required to notify any Obligor of the  existence  of any  overdraft
before dishonoring any such checks or transfers,  and to the extent permitted by
law,  the  Obligors  waive any rights and claims they may have  against Bank for
wrongful  dishonor,  interference  with contract,  wrongful  interruption of the
Obligors' businesses or similar claim,  counterclaim or causes of action arising
due to Bank's failure to honor such checks. The creation of any overdrafts shall
not be  deemed  to be a  payment  hereunder  or under  any note  evidencing  the
Obligations  or a waiver by Bank of any Event of Default  hereunder  and nothing
herein shall obligate Bank to create any such overdraft.

     2.4 FEES

     (A) Borrower  agrees to pay to Bank on a quarterly basis the Commitment Fee
on the average  daily  unused  portion of the  Commitment  from the Closing Date
until the Maturity  Date, at the rate equal to (i) prior to the event  described
in subsection 2.4(A)(ii) below, one-sixteenth percent (.0625%) per annum or (ii)
from and after  the  consummation  of a  secondary  offering  of  securities  of
Borrower  resulting  in the  availability  of  investible  proceeds,  one-eighth
percent  (.125%) per annum  multiplied by the Marketable  Securities  Investment
Percentage,  such payments commencing on June 30, 1997, and continuing quarterly
thereafter on the last day of  September,  December,  March and June,  with such
payments  terminating  on the Maturity  Date.  As used in this  Section  2.4(A),
"Marketable  Securities Investment Percentage" shall be defined as one (1) minus
a fraction,  the  numerator  of which is  Borrower's  average  total  marketable
securities invested with Bank and the denominator of which is Borrower's average
total marketable securities.

     (B) If from time to time  Bank,  in  accordance  with its right  hereunder,
examines  or inspects  the books and  records of  Borrower or any other  Obligor
and/or  Collateral,  the Obligors  shall upon the demand of Bank pay to Bank any
reasonable  out-of-pocket  expenses  incurred  by Bank in  connection  with such
audit,  including  but  not  limited  to  travel  expenses  incurred  by Bank in
connection therewith.

     2.5 PREPAYMENT If on any day the sum of the aggregate outstanding principal
balance of the Advances under Section 2.1 plus the Letter of Credit  Obligations
hereof


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<PAGE>

shall exceed the then  Borrowing Base on such day or the other  limitations  set
forth in Section 2.1,  Borrower  shall,  on such day, prepay such Advances by an
amount equal to such excess together with the Repayment  Indemnity,  if any. The
failure to make any such payment shall be an Event of Default.

     2.6 PROCEDURES  FOR ADVANCES  Borrower shall provide Bank with at least one
(1) Business  Day's oral notice of any requested Base Rate Advance and three (3)
Working  Day's  oral  notice  of  any  requested  Adjusted  LIBO  Rate  Advance,
specifying (A) the Borrowing  Date and amount,  (B) whether the Advance is to be
an Adjusted LIBO Rate Advance or a Base Rate  Advance,  and, if an Adjusted LIBO
Rate  Advance,  the  Interest  Period,  and (C) whether the Advance is to be for
working capital or an Acquisition  Advance,  which oral notice shall be promptly
confirmed in writing by Borrower (provided,  however, Bank may rely and act upon
telephonic  notice  whether  or not  such  written  confirmation  is  ultimately
received).  The notice to Bank requesting an Advance shall also include evidence
that  based  upon the most  recent  Borrowing  Base  Certificate,  there  exists
sufficient  availability  of funds for such Advance.  In the event that the only
interest  rate  available  to  Borrower  shall be the Base Rate (as  provided in
Section  2.2(E)  above),  Borrower  need only give Bank one (1)  Business  Day's
notice to request Advances.  Bank shall, on or after 1:00 P.M. (New Jersey time)
of the Borrowing  Date,  make the amount of the requested  Advance  available to
Borrower,  provided  all  conditions  precedent to such Advance have been met or
satisfied. Each requested Adjusted LIBO Rate Advance hereunder for less than the
full amount  available under the Borrowing Base,  shall be in the minimum amount
of $100,000.00 or any multiple  thereof.  Not more than three (3) Advances based
upon the Adjusted LIBO Rate may be outstanding at any one time.

     2.7 PROCEDURES FOR LETTERS OF CREDIT

     (A)  Issuance  of Letters of Credit.  Within the  collateral  limits of the
Borrowing  Base,  until the Maturity Date, and provided that no Default or Event
of Default  shall have  occurred  and be  continuing  or would  result  from the
issuance of a Letter of Credit and subject to the  limitations  of Section  2.1,
Bank may issue  Letters  of Credit  for the  account  of  Borrower  on the terms
hereinafter set forth. No Letter of Credit shall have a term beyond 180 days and
in any event no Letter of Credit shall extend beyond the Maturity Date.  Each of
the  Letters  of  Credit  shall be  issued  in a form  satisfactory  to Bank and
pursuant to a Letter of Credit  Agreement  duly executed by Borrower.  The terms
and  conditions  of the Letter of Credit  Agreement(s)  are hereby  incorporated
herein by reference as if fully set forth at length.  Borrower shall pay to Bank
any and all fees imposed by Bank in  connection  with the issuance of Letters of
Credit.

     (B) Payments under Letters of Credit and Reimbursement by Borrower.  In the
event of a drawing  under any  Letter of Credit and  payment  by Bank,  Borrower
shall  immediately  reimburse  Bank  therefore  by a charge  against  Borrower's
account(s) maintained at Bank. In the event that Borrower shall not so reimburse
Bank as provided  above,  such failure shall be an Event of Default and Borrower
shall pay to Bank  interest on the amount of such  payment from the date of such
payment by Bank or the failure of Borrower to so reimburse


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<PAGE>

Bank, as  applicable,  through and including the date of such  reimbursement  by
Borrower at the default rate (described in Section 9.7) computed on the basis of
the actual number of days elapsed over a year of 360 days.

     (C) Letter of Credit Obligations Absolute. Unless otherwise required by the
order of a court  of  competent  jurisdiction,  Borrower's  obligations  to make
payments to Bank in order to reimburse  payments by Bank on Letters of Credit as
provided  in  Subsection  2.7(B)  above  shall be  absolute,  unconditional  and
irrevocable,  and shall be performed  strictly in  accordance  with the terms of
this  Agreement  and  the  Letter  of  Credit  Agreement(s),  under  any and all
circumstances whatsoever, and irrespective of:

          (i) any lack of validity or  enforceability of any Letter of Credit or
     any Loan Document, or any term or provision therein;

          (ii) any  amendment or waiver of or any consent to departure  from all
     or any of the  provisions  of any Letter of Credit or any Loan  Document to
     which Bank is not a party;

          (iii) the existence of any claim, setoff,  defense or other right that
     Borrower or any other Obligor,  any other party guaranteeing,  or otherwise
     obligated with, Borrower, any Subsidiary or other Affiliate thereof or Stan
     Gang or any other person may at any time have against the beneficiary under
     any Letter of Credit, Bank or any other Person,  whether in connection with
     this  Agreement,  any other Loan Document or any other related or unrelated
     agreement or transaction;

          (iv) any draft or other  document  presented  under a Letter of Credit
     proving to be forged, fraudulent, invalid or insufficient in any respect or
     any statement therein being untrue or inaccurate in any respect;

          (v) payment by Bank under a Letter of Credit against presentation of a
     draft or other  document that does not comply with the terms of such Letter
     of Credit; and

          (vi) any other act or omission to act or delay of any kind of Bank, or
     any other person or any other event or circumstance whatsoever,  whether or
     not similar to any of the foregoing,  that might, but for the provisions of
     this  section,  constitute  a legal or equitable  discharge  of  Borrower's
     obligations hereunder.

          Notwithstanding the foregoing,  it is expressly  understood and agreed
     that  Borrower  has not  waived any  rights it may have or be  entitled  to
     assert in the event of Bank's gross negligence or wilful  misconduct (other
     than any claim seeking  consequential  damages,  claims in respect of which
     are hereby


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<PAGE>

     waived by Borrower).  It is understood that Bank may accept  documents that
     appear on their face to be in order,  without  responsibility  for  further
     investigation,  regardless  of any notices or  information  to the contrary
     and, in making any payment under any Letter of Credit (i) Bank's  exclusive
     reliance on the documents presented to it under such Letter of Credit as to
     any and all matters set forth therein,  including reliance on the amount of
     any drafts presented under such Letter of Credit, whether or not the amount
     due to the beneficiary  thereunder  equals (but does not exceed) the amount
     of such draft and whether or not any  document  presented  pursuant to such
     Letter of Credit  proves to be forged or invalid or any  statement  therein
     proves to be  inaccurate or untrue in any respect  whatsoever  and (ii) any
     noncompliance  in any immaterial  respect of the documents  presented under
     such Letter of Credit with the terms thereof shall, in each case, be deemed
     not to constitute wilful misconduct or gross negligence of Bank.

     (D) Outstanding Letter of Credit Obligations.  Upon an Event of Default and
subject to the limitations  set forth in Section 2.1 hereof,  the full amount of
all  Letter of Credit  Obligations  shall be deemed to  increase  the  principal
amount deemed outstanding under the Loan (and any unpaid interest thereon and on
unpaid  letter of credit fees shall be deemed  principal on such Loan,  provided
that no interest  shall be charged on the amount of the Letters of Credit unless
and  until  such  Letters  of  Credit  are  drawn  upon)  for  purposes  of  (x)
distribution of payments  hereunder and (y)  application of proceeds;  provided,
however,  if any such Letter of Credit  thereafter  expires  without being drawn
upon,  the amount thereof shall reduce the principal  amount deemed  outstanding
under the Loan (as previously increased pursuant to this subsection (D)) and the
distributions of payments and proceeds to Bank shall be adjusted accordingly.

     2.8 USE OF PROCEEDS  The proceeds of the Loan shall be used by Borrower (i)
for short term working  capital and (ii) for Permitted  Acquisitions  subject to
the terms and conditions hereof.

     2.9  CONDITIONS TO INITIAL  ADVANCE The  obligation of Bank to execute this
Agreement  and to make the  initial  Advance or other  financial  accommodations
hereunder is subject to the satisfaction of the following conditions precedent:

     (A) Documents.  Bank shall have received the duly executed  Revolving Note,
not less than four (4) copies of this Agreement, the Guaranty and all other Loan
Documents,  each executed on behalf of Borrower and the other Obligors and/or by
their duly authorized officers.

     (B)  Deliveries by Borrower.  Borrower shall have delivered or caused to be
delivered to Bank or Bank shall have received,  the following items, which shall
be in form and substance reasonably satisfactory to Bank and its counsel:


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<PAGE>

          (i) Legal  Opinion  of Counsel to the  Obligors.  Opinion of  Buchanan
     Ingersoll,  counsel to the Obligors, dated the date hereof and addressed to
     Bank, substantially in the form of Exhibit C hereto.

          (ii) Corporate  Proceedings.  Resolutions of the Board of Directors of
     Borrower and all other corporate  Obligors  certified on the date hereof by
     the Secretary or an Assistant Secretary of Borrower and such other Obligors
     authorizing (a) the execution,  delivery and performance of this Agreement,
     and all of the  other  Loan  Documents  to  which  it is a  party;  (b) the
     consummation of the transactions  contemplated hereby and thereby;  and (c)
     the borrowings and other matters  contemplated in the Loan Documents.  Such
     certificate  shall state that the  resolutions  set forth  therein have not
     been  amended,  modified,  revoked  or  rescinded  as of the  date  of such
     certificate and are in full force and effect as of the Closing Date.

          (iii)  Incumbency  Certificate.  A certificate  of the Secretary or an
     Assistant Secretary of Borrower and all other corporate Obligors, dated the
     date hereof,  as to the incumbency and signature of the officers  executing
     each of the Loan Documents and any other document to be delivered  pursuant
     to any of such documents,  together with evidence of the incumbency of such
     Secretary or Assistant Secretary.

          (iv)  Officer's  Certificate.  A certificate of Borrower and the other
     corporate  Obligors  signed by its  president  or chief  financial  officer
     stating that to the best of his knowledge after diligent investigation: (a)
     as of the date  hereof and after  giving  effect to any loan  hereunder  no
     Default or Event of Default exists hereunder; and (b) all of Borrower's and
     each other  Obligor's  representations  and  warranties  contained  in this
     Agreement and the other Loan  Documents  are presently  true and correct in
     all material respects.

          (v)  Consents,  Licenses,  Approvals,  etc.  Copies  of all  consents,
     licenses and approvals required in connection with the execution, delivery,
     performance,  validity and enforceability of this Agreement,  the Revolving
     Note  and the  other  Loan  Documents,  and  such  consents,  licenses  and
     approvals shall be in full force and effect and be reasonably  satisfactory
     in form and substance to Bank and its counsel.

          (vi) Searches.  Copies, in form and substance reasonably  satisfactory
     to Bank,  of written or other  advice  relating to such  corporate  status,
     financing statement,  tax lien and judgment searches as Bank may reasonably
     require.

          (vii)   Intercreditor   Agreements.   The  Intercreditor   Agreements,
     substantially in the form of Exhibit D annexed hereto.


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<PAGE>

          (viii) Landlords' Waivers. Landlords' waivers in the form of Exhibit E
     annexed hereto, for each location where any of the Collateral is located.

          (ix)  Borrowing   Base   Certificate.   A  completed   Borrowing  Base
     Certificate.

          (x) Other Documents.  All other documents provided for herein or which
     Bank may request or require.

          (xi) Additional Information. Such additional information and materials
     which Bank shall have reasonably requested.

          (xii) Supporting  Documents.  On or before the date hereof, (a) a copy
     of the  Certificate of  Incorporation  of Borrower and any other  corporate
     Obligors,  certified  by  the  Secretary  of  State  of New  Jersey;  (b) a
     certificate  of such  Secretary of State,  dated as of a recent date, as to
     the good standing of Borrower and any other corporate Obligor and attaching
     the charter  documents of Borrower and any other corporate  Obligor on file
     in the office of such  Secretary  of State;  and (c) a  certificate  of the
     Secretary  or an Assistant  Secretary  of Borrower and any other  corporate
     Obligor dated the Closing Date and certifying  with respect to Borrower and
     any  other  corporate  Obligor  (i)  that  attached  thereto  is a true and
     complete copy of the By-laws of Borrower and any other  corporate  Obligor,
     as in  effect  on the  date  of  such  certification,  and  (ii)  that  the
     Certificate of  Incorporation  of Borrower and any other corporate  Obligor
     has not been amended since the date of the last amendment thereto indicated
     on the certificate of the Secretary of State  furnished  pursuant to clause
     (A) above.

          (xiii)  Fees/Costs/Taxes.  Borrower  shall  have  paid  (i) all of the
     reasonable  fees and expenses of Bank's  counsel  which are  occasioned  in
     connection  with the  preparation  of this  Agreement  and all  other  Loan
     Documents  and the  closing  of the  transactions  contemplated  hereby and
     thereby and (ii) all filing and recording fees and taxes.

          (xiv) Insurance. Evidence of the insurance required to be in effect as
     set forth in this Agreement.

     2.10  CONDITIONS TO ALL ADVANCES The obligation of Bank to make any Advance
or  issue a  Letter  of  Credit  is  subject  to  fulfillment  of the  following
additional  conditions  precedent,  to the reasonable  satisfaction  of Bank and
counsel to Bank:

     (A) Representations and Warranties. The representations and warranties made
by the  Obligors  herein  or in any  other of the Loan  Documents  or which  are
contained in any certificate, document or financial or other statement furnished
at any time under or in connection


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<PAGE>

herewith shall be correct in all material respects on and as of the date of each
Advance or issuance of Letters of Credit, after giving effect to such Advance or
issuance of Letters of Credit, as if made on and as of such date.

     (B) No Default. No Event of Default has occurred, and no Default has arisen
and is  continuing  on the date the Advance is to be made or Letter of Credit is
to be issued, after giving effect to such Advance or Letter of Credit.

     (C) Litigation. No suit, action, investigation, inquiry or other proceeding
by  any   governmental   authority  or  other  Person  or  any  other  legal  or
administrative proceeding shall be pending or threatened which (i) questions the
validity or legality of the transactions contemplated by this Agreement, or (ii)
seeks damages in connection  therewith and which, in the reasonable  judgment of
Bank, (x) involves a significant  risk of a preliminary or permanent  injunction
or other  order by a state or federal  court  which  would  prevent,  or require
rescission of, the  transactions  contemplated by this Agreement,  or (y) in the
case of any  action or  proceeding  which  seeks  monetary  damages  involves  a
significant risk of resulting in substantial  financial liability to any Obligor
and/or Bank.

     (D) Material Adverse Change. No event shall have occurred since the date of
the most  recent  financial  statements  of  Borrower  and/or any other  Obligor
furnished to Bank which resulted in a Material Adverse Change of Borrower or any
other Obligor or had a Material Adverse Effect on Borrower or any other Obligor.

     (E) Legal  Matters.  All legal  matters  incident to the making of the Loan
shall be  satisfactory  to counsel to Bank,  in the  reasonable  exercise of its
judgment.

     2.11  REGULATORY  CAPITAL  REQUIREMENTS  If any  existing  or future law or
regulation  or the  interpretation  thereof  by any court or  administrative  or
governmental authority charged with the administration thereof, or compliance by
Bank with any request or  directive  (whether or not having the force of law) of
any such  authority,  results  in any  increases  after  the date  hereof in any
capital   maintenance,   capital  ratio  or  similar  requirement  against  loan
commitments  made by Bank and the  result  thereof  is to  impose  upon  Bank or
increase any capital requirement applicable to Bank as a result of the making or
maintenance of the credit facilities available hereunder (which imposition of or
increase  in  capital   requirement  may  be  determined  by  Bank's  reasonable
allocation of the aggregate of such capital impositions or increases) then, upon
demand  by Bank,  Borrower  shall  immediately  pay to Bank from time to time as
specified by Bank a fee which shall be sufficient  to  compensate  Bank for such
imposition of or increase in capital requirements together with interest on each
such amount from the date  demanded  until  payment in full  thereof at the rate
provided in this Agreement with respect to fees and charges not paid when due. A
certificate   setting  forth  in  reasonable  detail  the  amount  necessary  to
compensate  Bank  as a  result  of an  imposition  of  or  increase  in  capital
requirements submitted by Bank to Borrower shall be conclusive,  absent manifest
error or bad faith, as to the amount thereof.  For purposes of this Section 2.11
in  calculating  the amount  necessary to  compensate  for any  imposition of or
increase in capital requirements, Bank shall be deemed to


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<PAGE>

be  entitled  to a rate of return on  capital  (after  federal,  state and local
taxes) of fifteen percent per annum.

     2.12 EXCESS  ADVANCES In the event Bank shall  advance an amount or issue a
Letter of Credit in excess of the aggregate amount of all credit  facilities set
forth in this  Agreement or if Borrower  should  directly or  indirectly  become
indebted to Bank in an amount  which,  together with all Advances and Letters of
Credit made pursuant to this Agreement, is in excess of the aggregate amount set
forth  in  this  Agreement,  such  Advances  or such  Letters  of  Credit  shall
nevertheless be covered by the terms of this Agreement.

     2.13  REQUIREMENTS  OF LAW If, after the date  hereof,  the adoption of any
law,  regulation,  treaty,  or  directive  or  any  change  therein  or  in  the
interpretation or application  thereof or compliance by Bank with any request or
directive  (whether  or not  having the force of law) from any  central  bank or
other governmental authority, agency or instrumentality:

     (A)  does or shall  subject  Bank to any tax of any  kind  whatsoever  with
respect to this Agreement,  any Advances or the Letters of Credit, or change the
basis of taxation of payments to Bank of principal,  commitment fee, interest or
any other amount  payable  hereunder  (except for changes in the rate of any tax
presently imposed on Bank);

     (B) does or shall impose,  modify, or hold applicable any reserve,  special
deposit,  compulsory  loan or similar  requirement  against  assets  held by, or
deposits or other liabilities in or for the account of, advances or loans by, or
other credit  extended by, or any other  acquisition  of funds by, any office of
Bank which are not otherwise  included in the determination of the Adjusted LIBO
Rate or any fixed rate hereunder;

     (C) has or would have the effect of  reducing  the rate of return on Bank's
capital as a  consequence  of its  obligations  hereunder  to a level below that
which Bank could  have  achieved  but for such  adoption,  change or  compliance
(taking into consideration Bank's policies with respect to capital adequacy); or

     (D) does or shall impose on Bank any other condition;

and the  result  of any of the  foregoing  is to  increase  the  cost to Bank of
making,  renewing or maintaining advances or extensions of credit to Borrower or
to reduce any amount  receivable from Borrower  thereunder or to reduce the rate
of return on Bank's capital, then, in any such case, Borrower shall promptly pay
to Bank, upon its demand,  any additional  amounts  necessary to compensate Bank
for such additional cost or reduced amount  receivable or reduced rate of return
which Bank deems to be material,  as  determined  by Bank,  with respect to this
Agreement,  any Advances or the Letters of Credit.  If Bank becomes  entitled to
claim any  additional  amounts  pursuant to this Section 2.13, it shall promptly
notify  Borrower  of the event by reason of which it has become so  entitled.  A
certificate setting forth calculations as to any additional


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<PAGE>

amounts payable pursuant to the foregoing sentence submitted by Bank to Borrower
shall be conclusive in the absence of manifest error or bad faith.

     2.14 PARTICIPATIONS Bank may from time to time grant participations in some
or all of the Loan  Documents  and/or the  obligations  evidenced  thereby.  The
holder of any such participation,  if the applicable  agreement between Bank and
such holder so provides, (i) shall be entitled to all of the rights, obligations
and  benefits  of Bank,  and (ii) shall be deemed to hold and may  exercise  the
rights of setoff or banker's  lien with  respect to any and all  obligations  of
such holder to Borrower,  in each case as fully as though Borrower were directly
indebted  to  such   holder.   Bank  shall  give  notice  to  Borrower  of  such
participation;  however, the failure to give such notice shall not affect any of
Bank's or such holder's rights hereunder nor result in any liability to the Bank
or such holder nor otherwise  affect this Agreement or the other Loan Documents.
The Obligors  authorize Bank to provide  information  concerning the Obligors to
any prospective  participant.  The information  provided may include, but is not
limited to, amounts,  terms, balances,  payment history, return item history and
any financial or other  information  about the Obligors.  The Obligors  agree to
indemnify,  defend,  release Bank, and hold Bank harmless, at the Obligors' cost
and  expense,  from  and  against  any  and  all  lawsuits,   claims,   actions,
proceedings,  or suits against Bank or against any Obligor and Bank, arising out
of or relating to Bank's reporting or disclosure of such  information,  provided
that such  information  was furnished by an Obligor in connection with the Loan,
this Agreement or the other Loan Documents. Regardless of the foregoing, upon an
Event of Default  or any form of merger,  consolidation  or  acquisition  by the
Bank, the Bank may, in addition to the granting of  participations  as described
above,  sell or assign,  in whole or in part,  some or all of the Loan Documents
and/or  the  obligations  evidenced  thereby  and have  such  other  rights  and
indemnifications with respect thereto as described in this Section 2.14. Nothing
herein shall  prohibit Bank from pledging or assigning the Revolving Note to any
Federal Reserve Bank in accordance with applicable law.


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<PAGE>

                                       III

                                   COLLATERAL
                                   ----------

     3.1 CROSS COLLATERAL All of the Collateral heretofore,  herein or hereafter
given or assigned to Bank  hereunder or in any other Loan Document  shall secure
payment of (A) all  Obligations  of Borrower  and  Guarantor to Bank and (B) all
Indebtedness  and any and all other  obligations of any of the other Obligors to
Bank.

     3.2 ACCOUNTS  RECEIVABLE  Each Obligor  hereby creates in favor of Bank and
hereby grants to Bank a security  interest in all Accounts,  as defined  herein,
presently owned by such Obligor or hereafter acquired.

     3.3  INVENTORY  Each  Obligor  hereby  creates  in favor of Bank and hereby
grants  to Bank a  security  interest  in all of such  Obligor's  Inventory,  as
defined herein,  whether  presently owned by such Obligor or hereafter  acquired
and wherever located.

     3.4 GENERAL  INTANGIBLES  Each Obligor  hereby creates in favor of Bank and
hereby  grants to Bank a  security  interest  in all of such  Obligor's  General
Intangibles,  as herein  defined,  whether  presently  owned by such  Obligor or
hereafter acquired. In no event shall the foregoing grant of a security interest
in  General   Intangibles  be  construed  as  an  outright   assignment  of  any
intent-to-use trademark or service mark applications.

     3.5 DEPOSIT  ACCOUNTS Each Obligor hereby creates in favor of Bank,  hereby
assigns to Bank and hereby grants to Bank a security  interest in the balance of
every deposit account,  now or hereafter existing,  of such Obligor with Bank or
any  other  institution,  and all  money,  Instruments,  securities,  documents,
Chattel  Paper,  credits,  claims,  and other  property  of such  Obligor now or
hereafter in the possession or custody of Bank or any of its agents or any other
institution.

     3.6 CHATTEL PAPER Each Obligor  hereby  creates in favor of Bank and hereby
grants to Bank a security  interest in all of such Obligor's  Chattel Paper,  as
defined herein,  whether presently owned by such Obligor or hereafter  acquired,
including but not limited to all such Chattel Paper now or hereafter left in the
possession of Bank for any purpose, including but not limited to for collection.

     3.7  INSTRUMENTS  Each Obligor  hereby  creates in favor of Bank and hereby
grants to Bank a security  interest  in all of such  Obligor's  Instruments,  as
defined herein,  whether presently owned by such Obligor or hereafter  acquired,
including but not limited to all such  Instruments  now or hereafter left in the
possession of Bank for any purpose, including but not limited to for collection.

     3.8  DOCUMENTS  Each  Obligor  hereby  creates  in favor of Bank and hereby
grants  to Bank a  security  interest  in all of such  Obligor's  Documents,  as
defined herein, whether


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<PAGE>

presently owned by such Obligor or hereafter acquired, including but not limited
to all such  Documents now or hereafter  left in the  possession of Bank for any
purpose.

     3.9 PROCEEDS AND RECORDS Each Obligor  hereby  creates in favor of Bank and
hereby  grants  to Bank a  security  interest  in (A)  all  books  and  records,
including, without limitation,  customer lists, credit files, computer programs,
print-outs and other computer  materials and records of such Obligor  pertaining
to all of the Collateral; and (B) all of the products and proceeds of all of the
foregoing Collateral  (including all proceeds of insurance policies covering the
Collateral); as well as all accessions, additions,  substitutions,  replacements
and increments as to the assets in (A) and (B).

     3.10  CONTINUING  PERFECTION  Each  Obligor  will perform any and all steps
requested by Bank to create and  maintain in Bank's favor a first and  exclusive
(subject  only to any  Permitted  Encumbrances)  and valid  lien on or  security
interest  in  the  Collateral  or  pledges  of  Collateral,  including,  without
limitation,   the  execution,   delivery,  filing  and  recording  of  financing
statements and continuation statements,  supplemental security agreements, notes
and any other  documents  necessary,  in the  opinion of Bank,  to  protect  its
interest  in  the  Collateral.  Bank  and  its  designated  officer  are  hereby
irrevocably appointed each Obligor's  attorney-in-fact to do all acts and things
which Bank may deem  necessary  to perfect and continue  perfected  the security
interests and Liens provided for in this Agreement and the other Loan Documents,
including,  but not limited to, executing financing statements on behalf of each
Obligor.


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<PAGE>

                                       IV

                             PROCEEDS OF COLLATERAL
                             ----------------------

     4.1 LOCKBOX Each  Obligor  agrees to  establish  and  maintain  with Bank a
lockbox,  in accordance  with Bank's standard  lockbox  agreement in effect from
time to time,  and to direct  all  Account  Debtors to make  remittances  on all
Accounts to said lockbox.  Any and all remittances  received in said lockbox may
be applied as Borrower shall direct, subject to Section 4.2 below.

     4.2  APPLICATION  OF  PAYMENTS/PAYMENTS  ON  COLLATERAL  Upon an  Event  of
Default,  any remittances received in the lockbox described in Section 4.1 above
shall be applied to the  Obligations  of Borrower and the other Obligors to Bank
in accordance with subsection 4.2(A) below.

     (A)  Application of Payments.  All proceeds of any Account(s) and Inventory
and other  Collateral  which are delivered to or otherwise  received by Bank for
application to the Advances  provided for herein shall be deemed  received as of
the date of actual  receipt by Bank,  and shall be applied by Bank on account of
the  Obligations  upon Bank's  receipt of same,  first to Base Rate Advances and
then, to Adjusted LIBO Rate Advances; provided, however, that no checks, drafts,
or other  Instruments  received by Bank shall constitute  payment to Bank unless
and until such item of payment has actually been collected by Bank. For the sole
purpose of calculation of interest due to Bank from Borrower,  all such proceeds
and other  payments on account of the Advances  provided for in this  Agreement,
irrespective  of the type or form of  payment  thereof  shall not be  considered
applied on account of the Obligations until three (3) Business Days after Bank's
application  of same to the  Obligations.  In the event any proceeds are applied
against  Adjusted  LIBO  Rate  Advances  prior to the  last day of the  Interest
Period, Borrower shall pay the Repayment Indemnity, if any.

     (B) Payments on  Collateral.  Upon the occurrence  and  continuation  of an
Event of Default,  if,  notwithstanding  the notices to Account Debtors to remit
payments on Accounts to the lockbox  referred to above, an Obligor  receives any
payments on Accounts or other Collateral, each Obligor agrees to receive any and
all payments and  remittances  on Accounts and Inventory  and other  Collateral,
including cash, checks, drafts, notes,  acceptances or other forms of payment in
trust for Bank and to deliver such payments in the identical  form in which they
were received, together with collection reports in form satisfactory to Bank.


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<PAGE>

                                        V

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     To induce Bank to enter into this  Agreement and to make Advances and other
financial accommodations hereunder, each Obligor represents and warrants to Bank
that:

     5.1 GOOD STANDING Schedule 5.1 sets forth

     (A) the jurisdiction of incorporation of each Obligor and in which it is in
good standing;

     (B) all other jurisdictions in which each Obligor is authorized to transact
business and all of which it is in good standing;

     (C) any prior  changes in the  structure of any  Obligor,  such as mergers,
consolidations and the like;

     (D) any prior name changes of any Obligor;

     (E) all  trade  names or trade  styles  under  which any  Obligor  conducts
business or issue invoices; and

     (F) all  Subsidiaries  and  Affiliates of any Obligor and the percentage of
stock or other ownership interest thereof owned by such Obligor.

     5.2 CORPORATE AUTHORITY The Obligors have the requisite power and authority
to own their property and to carry on their businesses as now conducted, and are
in good standing and authorized to do business in each jurisdiction in which the
failure so to do would  have a  Material  Adverse  Effect on any  Obligor.  Each
corporate Obligor has the corporate power to execute, deliver and carry out this
Agreement and all other Loan Documents to which they are a party and their Board
of Directors  have duly  authorized and approved the terms of the loan described
herein and the taking of any and all action contemplated herein and therein, and
this  Agreement  and all other Loan  Documents  to which any  Obligor is a party
constitutes the valid and binding obligations of them, enforceable in accordance
with their terms. No consent or approval of, or exemption by, shareholders,  any
Governmental Body or any other Person is required to authorize,  or is otherwise
required in connection with the execution, delivery and performance of, the Loan
Documents to which any Obligor is a party,  or is required as a condition to the
validity  or  enforceability  of the Loan  Documents  to which any  Obligor is a
party.

     5.3 COMPLIANCE  WITH LAW (A) The Obligors are in compliance  with all laws,
rules  and  regulations  to which  they  are  subject  and  have  all  licenses,
certificates,  permits  and  franchises  and  other  governmental  authorization
necessary to own their properties


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<PAGE>

and to conduct their businesses.  (B) The execution of this Agreement,  and each
other Loan  Document and the  performance  by the Obligors of their  obligations
hereunder and  thereunder,  do not violate any existing law or regulation or any
writ or decree of any court or  Governmental  Body or the  charter or by-laws of
any corporate  Obligor or any agreement or undertaking to which any Obligor is a
party or by which they are bound.

     5.4 NO LITIGATION There are no judgments against any Obligor as of the date
of this  Agreement  and,  except  as set  forth on  Schedule  5.4,  no  material
litigation  or  administrative   proceeding  before  any  Governmental  Body  is
presently pending, or to the knowledge of the Obligors,  threatened, against any
Obligor or any of their property.

     5.5 NO FINANCIAL  CHANGE There has been no Material  Adverse  Change in the
condition  of the Obligors  since their last  financial  statements  and reports
furnished to Bank and the  information  contained in said statements and reports
is true and correctly reflects the financial condition of the Obligors as of the
dates of the statements and reports,  and such  statements and reports have been
prepared in accordance with GAAP and do not contain any material misstatement of
fact or omit to state  any  facts  necessary  to make the  statements  contained
therein not misleading.

     5.6 TAX COMPLIANCE Each Obligor has filed,  or caused to be filed,  all tax
returns  required to be filed and has paid all taxes shown to be due and payable
on said return or on any assessment made against it.

     5.7 GOOD  TITLE AND  ABSENCE OF LIENS On the date of this  Agreement,  each
Obligor has good and marketable title to all of its properties and assets, real,
personal  and  mixed,  and none of said  properties  or assets is subject to any
Lien, except for Permitted Encumbrances.

     5.8  PLACE  OF  RECORDS,  CHIEF  EXECUTIVE  OFFICE,   INVENTORY  AND  OTHER
COLLATERAL (A) The Obligors' chief executive offices,  and the offices where the
Obligors keep their records concerning any Accounts,  and all locations of their
Inventory, and all other business locations of the Obligors are presently at the
locations  set forth on Schedule  5.8. (B) Except as set forth on Schedule  5.8,
within  four (4)  months of the date of this  Agreement,  none of the  Obligors'
assets have been moved from any jurisdiction or other locations than the present
locations  of assets  set forth on  Schedule  5.8 under item  (A)(v)  except for
Inventory  purchased  by an  Obligor in the  ordinary  course of  business  from
persons or entities customarily selling such Inventory.  (C) That as of the date
hereof no Inventory is now,  except as set forth on Schedule 5.8,  stored with a
bailee, warehouseman or similar party. (D) As of the date of this Agreement, the
Obligors  do not hold any Goods  belonging  to third  parties or in which  other
parties  have an  interest,  including  any Goods sold on a bill and hold basis,
except as set forth on Schedule 5.8. (E) The Obligors do not presently  purchase
or otherwise  hold Goods on a consignment  basis except as set forth on Schedule
5.8. (F) Except as set forth on Schedule 5.8 none of the Obligors'  Inventory is
of a  nature  that  contains  any  labels,  trademarks,  trade  names,  or other
identifying characteristics which are the properties of third


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<PAGE>

parties,  and the use of which by any Obligor is in  violation  of the rights of
such third  parties or under  license,  royalty or similar  agreements  with any
third parties. (G) Except as set forth on Schedule 5.8 no persons hold any Goods
of the Obligors.  (H) Except as set forth on Schedule 5.8, the Obligors have not
purchased any Inventory  except in the ordinary course of business for value and
from persons  customarily in the business of selling such Inventory.  (I) Except
as set forth on Schedule 5.8, the Obligors do not hold any Instrument or Chattel
Paper  connected with any Account.  (J) Except as set forth on Schedule 5.8, the
Obligors do not own any trademarks,  trade names, patents or copyrights.  (K) No
surety  bonds have been  issued on behalf of the  Obligors  with  respect to any
contracts or purchase orders out of which Accounts Receivable have arisen or are
expected to arise.

     5.9  WARRANTIES  AS  TO  ACCOUNTS  Except  as  otherwise  provided  in  the
assignment of Accounts, if any, given to Bank, or invoice or other writing, each
Obligor warrants that as to all Accounts reported to Bank; (A) each Account is a
valid subsisting  Account as defined herein;  (B) each Account represents a bona
fide performed transaction;  (C) the amount shown on such Obligor's books and on
any invoice or  statement  delivered  to Bank is owing to such  Obligor;  (D) no
partial payment has been made which in the aggregate as to all Accounts  exceeds
the sum of  $250,000;  (E) no  set-off  or  counterclaim  exists  as to any such
Account and no agreement  has been made under which any  deductions  or discount
may be claimed  except  regular  discounts in the usual course of business,  but
only if  disclosed on the face of the  invoice;  (F) the Account  Debtor has not
disputed the Account or otherwise asserted any defense, set-off or counterclaim;
(G)  that to the  extent  required  by law the  Obligors  are  authorized  to do
business  and in good  standing in any state in which any such  Account  must be
enforced;  (H) each Eligible Account is a valid  subsisting  Eligible Account as
defined  herein;  (I) all  agings  of  Accounts  submitted  to Bank are true and
accurate;  and (J)  except  as set forth on  Schedule  5.9,  no surety  bond was
required or given on behalf of any Obligor in  connection  with any contracts or
purchase orders under which the Account arose.

     5.10 ERISA (A) No Reportable  Event or unfunded  deficiencies or failure of
compliance  with ERISA or the  Internal  Revenue Code of 1986,  as amended,  has
occurred and is  continuing  with respect to any Plan;  and (B) Each Obligor has
complied with the provisions of ERISA and the Internal  Revenue Code of 1986, as
amended, with respect to each Plan.

     5.11 LICENSES AND PERMITS AND LAWS The Obligors hold all necessary licenses
and  permits  for the  operation  of their  businesses,  including  all  permits
required under  Environmental Laws and the Obligors have complied with all laws,
rules and regulations applicable to their businesses,  including but not limited
to the Fair Labor Standards Act, 29 U.S.C. Section 215(a)(1).  All such licenses
and  permits are in good  standing  and are not under any  outstanding  citation
issued by any governmental authority,  and no litigation has been instituted nor
(to the best  knowledge of the Obligors)  have any claims been made by any third
parties relating to the licenses and permits issued by any Governmental Body for
the operation of their businesses, and no such citation, litigation or claim, to
the best knowledge of the Obligors,  is contemplated by any Governmental Body or
any third persons nor, to the best


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<PAGE>

knowledge  of the  Obligors,  does there exist any basis for any such  citation,
litigation or claim by any of the authorities or any Person.

     5.12 ENVIRONMENTAL STATUS As to all properties owned, leased or operated by
the Obligors and to all operations of the Obligors' businesses:

     (A) there is no pending or threatened proceeding affecting any Obligor with
respect to any Environmental Law;

     (B)  no  Obligor  has  been  identified  as a  responsible  or  potentially
responsible  party under  CERCLA or any other  Environmental  Laws nor  received
notification  that any hazardous  substance or contaminant has been found at any
site;

     (C) none of such  properties  are  listed or  proposed  for  listing on the
National Properties List under CERCLA;

     (D) no Hazardous  Substance or Hazardous  Waste (as such term is defined in
any  Environmental  Laws)  have  been  disposed  of  or  otherwise  released  or
discharged on such properties;

     (E) no underground storage tanks exist on the properties and any removal of
any such  tanks  from the  properties  was  undertaken  in  compliance  with the
Underground Storage Tank Act; and

     (F) no friable asbestos, or any substance containing asbestos or PCB's have
been installed in or exists on such properties.

     5.13 REAFFIRMATION Each and every request for an Advance or the issuance of
a Letter of Credit  hereunder  shall be deemed as an affirmation by each Obligor
that  no  Default  nor  Event  of  Default   exists   hereunder   and  that  the
representations and warranties contained in this Article V are true and accurate
as of the date of each  such  request  (notwithstanding  that  some of the terms
hereof  speak as of the date of this  Agreement)  and that  each  Obligor  is in
compliance with all applicable laws, rules and regulations.

     5.14 PROCEEDS OF LOAN The Obligors are not engaged  principally,  or as one
of their  important  activities,  in the  business of  extending  credit for the
purpose of  purchasing  or  carrying  any  margin  stock  within the  meaning of
Regulation  U of the  Board of  Governors  of the  Federal  Reserve  System,  as
amended.  No  part  of the  proceeds  of the  Loan  will be  used,  directly  or
indirectly,  for a purpose  which  violates any law,  rule or  regulation of any
Governmental Body, including without limitation the provisions of Regulations G,
T, U or X of the Board of Governors of the Federal Reserve  System,  as amended.
Each Obligor  represents  that the  proceeds of the loan(s)  provided for herein
shall be used in the manner set forth in Section 2.8 hereof.  No proceeds of any
loan or other  financial  accommodations  hereunder shall be used to purchase or
carry any margin stock (within the meaning of Regulation U issued by


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<PAGE>

the Board of Governors  of the Federal  Reserve  System) or to extend  credit to
others for the purpose of purchasing or carrying any margin stock.

     5.15  BORROWER  AND  OBLIGOR  The  Obligors  are  operated  as  part of one
consolidated  business entity and are directly dependent upon each other for and
in connection with their  respective  business  activities and their  respective
financial  resources.  Each Obligor will receive a direct economic and financial
benefit from the Obligations incurred under this Agreement by Borrower,  and the
assumption  of such  Obligations  is in the best  interests of Borrower and each
other Obligor.

     5.16 SOLVENCY The fair value of the business and assets of Borrower and the
other  Obligors will be in excess of the amount that will be required to pay its
liabilities (including, without limitation, contingent,  subordinated, unmatured
and  unliquidated  liabilities on existing debts, as such liabilities may become
absolute  and  matured),  in each case after giving  effect to the  transactions
contemplated  by  this  Agreement  and the use of  proceeds  therefrom.  Neither
Borrower  nor  any  other  Obligor,  after  giving  effect  to the  transactions
contemplated  by  this  Agreement  and the use of  proceeds  therefrom,  will be
engaged in any  business or  transaction,  or about to engage in any business or
transaction, for which such Person has an unreasonably small capital (within the
meaning of the Uniform  Fraudulent  Transfer Act, as adopted in the State of New
Jersey and Section 548 of the Federal Bankruptcy Code), and neither Borrower nor
any other  Obligor has any intent to (A) hinder,  delay or defraud any entity to
which it is, or will become,  on or after the date hereof,  indebted,  or (B) to
incur debts that would be beyond its ability to pay as they mature.

     5.17 NO DEFAULT The  Obligors  are not in default  under or with respect to
any of their Contractual  Obligations in any respect which could have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.

     5.18 FULL DISCLOSURE  Neither this Agreement nor any other Loan Document or
certificate,  written  statement or other document  furnished to Bank, or to any
appraiser  or  engineer  employed  or  engaged  by any of  them,  by or,  to the
knowledge  of the  Obligors,  on behalf of any  Obligor in  connection  with the
transactions  contemplated  by this  Agreement  and the  other  Loan  Documents,
contains any untrue  statement  of a material  fact or omits to state a material
fact necessary in order to make the statements  contained  herein or therein not
misleading under the  circumstances in which they were made. There is no fact or
circumstance  known to the  Obligors  which the Obligors  have not  disclosed in
writing to Bank which  materially  adversely  affects or, so far as the Obligors
can now  reasonably  foresee,  will  materially  adversely  affect  the  assets,
business,  prospects  or  financial  or other  condition  of the Obligors or the
ability  of the  Obligors  to operate  their  businesses  and to  perform  their
obligations hereunder.

     5.19  DOCUMENTARY/STAMP  TAXES  The  filing  and  recording  of any and all
documents  required to perfect Bank's security interests granted herein will not
result in any documentary or stamp taxes.


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<PAGE>

     5.20  SHAREHOLDERS'  AGREEMENTS Except as set forth on Schedule 5.20, there
are no  agreements  or  contracts  among any of the Obligors  including  but not
limited to shareholder/repurchase agreements.

     5.21  PERFECTION OF SECURITY  INTERESTS Upon the filing of UCC-1  Financing
Statements  in (i) the office of the New  Jersey  Secretary  of State,  (ii) the
office of the Secretary of the Commonwealth of Pennsylvania and (iii) the office
of the New York  Secretary  of  State,  Bank will  have a duly  perfected  first
priority  security  interest  in all  Collateral  described  in this  Agreement,
subject only to any Permitted Encumbrances.


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<PAGE>

                                       VI

                        AFFIRMATIVE COVENANTS OF OBLIGORS
                        ---------------------------------

     6.1 AUDIT AND OTHER REPORTS (A) The Obligors  agree that within one hundred
twenty (120) days of the close of each fiscal year,  they will furnish Bank with
a detailed report of audit,  including a balance sheet,  statements of financial
condition,   profit  and  loss  statement,   income  and  cash  flow  statement,
reconciliation  of net worth,  notes to  financial  statements,  certified on an
unqualified basis, by an independent certified public accountant satisfactory to
Bank  along  with a copy of  Borrower's  10K  report  together  with  any  other
information  which  may  assist  Bank  in  assessing  the  Obligors'   financial
condition;  (B) The  Obligors  will also  furnish  within sixty (60) days of the
close of each fiscal quarter, a management  prepared quarterly similar statement
on a compilation  basis, all prepared in a format  acceptable to Bank,  together
with all other information described in subsection (A) above,  including without
limitation,  Borrower's 10Q report;  (C) Simultaneous with the submission of the
statements required under subsections (A) and (B) above, and for each quarter of
each year, each Obligor shall cause to be submitted to Bank a certificate of the
chief  financial  officer of each such  Obligor in the form of Exhibit F annexed
hereto (i) certifying the financial  information as true,  correct and complete,
(ii)  certifying that all  representations  and warranties set forth in the Loan
Documents  are true and correct,  (iii) setting  forth the  calculations  of the
financial  tests  described in Section 7.2 hereof and attesting that none of the
covenants set forth in this  Agreement  have been  breached and (iv)  certifying
that no event has  occurred  which,  with the passage of time  and/or  giving of
notice,  would  constitute  a Default or Event of Default;  (D) In the event any
Advances or Letters of Credit are outstanding at a month's end or if no Advances
or  Letters  of  Credit  are so  outstanding  then at the  end of each  calendar
quarter,  not later  than the 15th day after the end of such  month or  calendar
quarter as applicable,  an accounts receivable aging and corresponding Borrowing
Base  Certificate;  (E) Promptly after the furnishing  thereof to third parties,
the Obligors  shall  furnish to Bank copies of any  statements,  reports,  proxy
material,  registration  statement and prospectus furnished to any holder of any
securities  of any of the  Obligors  or filed  with  any  regulatory  agency  or
agencies;  (F)  Promptly,  but no later than ten (10) days  after a  responsible
officer  of an  Obligor  shall  become  aware  of  (i)  a  Reportable  Event  or
"prohibited  transaction" as such term is defined in ERISA,  (ii) the occurrence
of an event  which,  with the  passage of time  and/or  giving of notice,  would
constitute  a  Default  or Event  of  Default,  (iii)  the  commencement  of any
proceeding or litigation which, if adversely determined,  would adversely affect
an  Obligor's  financial  condition  or its  ability to conduct  business,  (iv)
changes in the  executive  management  of any Obligor,  (v) the  termination  or
threatened  termination  of or claim of breach by any  Obligor  of any  material
contract, agreement or obligation, or of any claim of patent infringement,  (vi)
the  formation of any  Subsidiary  of an Obligor,  together  with duly  executed
originals  of  the  resolutions,   Guaranty  and  security   agreement  required
hereunder,  (vii) modifications to the certificate or articles of incorporation,
bylaws or other  organizational  documents of any Obligor and (viii)  Borrower's
intention to  consummate a Permitted  Acquisition,  together  with copies of all
documents  to  be  executed  in  connection  with  such  contemplated  Permitted
Acquisition;  in each case described in clauses  (i)-(viii),  the Obligors shall
provide  notice  specifying  the  existence  of the event and as to the  matters
described in clauses  (i)-(v),  the action such Obligor is taking or proposes to
take


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<PAGE>

with  respect  thereto;  (G) The Obligors  will  furnish to Bank prompt  written
notice if: (i) any  Indebtedness  of any Obligor is declared or shall become due
and  payable  prior to its stated  maturity,  or called and not paid when due or
(ii) a default  shall  have  occurred  under any note or the  holder of any such
note, or other evidence of Indebtedness,  certificate of security evidencing any
such  Indebtedness or any obligee with respect to any other  Indebtedness of any
Obligor has the right to declare any such  Indebtedness due and payable prior to
its stated  maturity  as a result of such  default;  (H) The  Obligors  agree to
furnish to Bank with  reasonable  promptness  such  other  data and  information
concerning Borrower and any other Obligor as from time to time may be reasonably
requested by Bank; and (I) The Obligors agree to furnish Bank within one hundred
fifty (150) days after the close of each fiscal year a  management  letter by an
independent  accounting firm acceptable to Bank; Bank hereby  acknowledges  that
Price Waterhouse is acceptable as of the date hereof.  All financial  statements
shall be on a consolidated and consolidating basis and in accordance with GAAP.

     6.2 INSURANCE  Each Obligor  agrees to keep all of the tangible  Collateral
assigned hereunder insured and obtain business  interruption  insurance,  at its
own cost and  expense,  for the benefit of Bank,  and in such  amounts,  in such
companies,  and against such risks as may be acceptable to Bank, and deliver the
policies  evidencing  such  insurance to Bank.  If the Obligors fail to take the
action called for herein,  Bank may, in its discretion obtain insurance covering
Bank's  interest  in the  Collateral  and the  amount  of the  premium  for said
insurance shall be added to the Obligations of Borrower to Bank. All policies of
insurance on the  Collateral  shall be in form and with  insurers  recognized as
adequate  by prudent  business  persons and all such  policies  shall be in such
amounts as may be  satisfactory  to Bank. The Obligors shall deliver to Bank the
original (or certified copy) of each policy of insurance and evidence of payment
of  all  premiums  therefor.   Such  policies  of  insurance  shall  contain  an
endorsement,  in form and substance satisfactory to Bank showing loss payable to
Bank. Such  endorsement or an independent  instrument  furnished to Bank,  shall
provide that the  insurance  companies  will give Bank at least thirty (30) days
prior written  notice  before any such policy or policies of insurance  shall be
altered or canceled and that no act or default of an Obligor or any other Person
shall  affect the right of Bank to  recover  under such  policy or  policies  of
insurance  in case of loss or damage.  The Obligors  hereby  direct all insurers
under such policies of insurance to pay all proceeds payable thereunder directly
to Bank.  The Obligors  irrevocably  make,  constitute and appoint Bank (and all
officers,  employees or agents  designated  by Bank) as the  Obligors'  true and
lawful  attorney  (and  agent-in-fact)  for the purpose of making,  settling and
adjusting claims under such policies of insurance  (provided that until an Event
of  Default  exists,  Bank shall  consult  with such  Obligors  prior to finally
making,  settling  or  adjusting  claims  under  such  policies  of  insurance),
endorsing the name of an Obligor on any check,  draft,  instrument or other item
of payment for the  proceeds of such  policies of  insurance  and for making all
determinations and decisions with respect to such policies of insurance.  In the
event an  Obligor,  at any time or times  hereafter,  shall  fail to  obtain  or
maintain any of the policies of insurance  required  above or to pay any premium
in whole or in part relating  thereto,  then Bank,  without waiving or releasing
any obligation or default by the Obligors hereunder,  may (but shall be under no
obligation  to do so) at any time or times  thereafter  obtain and maintain such
policies  of  insurance  and pay such  premium  and take any other  action  with
respect  thereto  which Bank deems  advisable.  All sums so  disbursed  by Bank,
including reasonable attorneys' fees, court costs,


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<PAGE>

expenses and other charges related thereto,  shall be payable, on demand, by the
Obligors to Bank and shall be additional  Obligations  hereunder  secured by the
Collateral.  The Obligors also agree to at all times  maintain  insurance,  both
hazard  and  liability,  against  such risks and in such  amounts as  reasonably
prudent to companies  similarly  situated as such Obligors would maintain and to
furnish to each Bank from time to time evidence  that such  insurance is in full
force and effect.

     6.3  PAYMENT  OF  EXPENSES  The  Obligors  will  pay any and all  expenses,
including  reasonable counsel fees and disbursements,  filing and recording fees
and taxes, and all other charges and expenses incurred or to be incurred by Bank
in connection with the preparation and execution and recording of this Agreement
and all other Loan Documents, and the Advances made under this Agreement and all
amendments and modifications  hereto and in defending or prosecuting any actions
or proceedings  or otherwise  enforcing any rights arising out of or relating to
Bank's transactions with Borrower and/or any other Obligors.

     6.4 GUARANTY The Obligors  will cause all now existing or hereafter  formed
Subsidiaries  to  execute  and  deliver  to Bank,  and  remain in full force and
effect,  (i) guaranty and suretyship  agreements  substantially  in the form set
forth on Exhibit G-1, wherein said parties shall jointly and severally guarantee
the  unconditional  payment and  performance  of all  Obligations of Borrower to
Bank,  (ii) joinder  agreements  substantially  in the form set forth on Exhibit
G-2, wherein said parties shall agree to be an Obligor hereunder and to be bound
by all of the terms and  conditions  hereof and (iii) if  requested by the Bank,
security agreements in form and substance satisfactory to Bank.

     6.5 LANDLORD'S WAIVER The Obligors shall cause the landlord of all premises
where any of the  Collateral  provided  for  herein  may be  located  (including
without  limitation,  any premises  now or  hereafter  leased by Borrower or any
other  Obligor) to execute and deliver to Bank a  landlord's  waiver in the form
set forth on Exhibit E.

     6.6  GOOD  WORKING  CONDITION  The  Obligors  shall  maintain  all of their
property in good working condition, ordinary wear and tear excepted.

     6.7 OBSERVANCE OF LEGAL REQUIREMENT, LICENSES AND PERMITS AND PROTECTION OF
COLLATERAL

     (A) Each Obligor shall comply with any and all laws, legislation, rules and
regulations in effect as of the date hereof and subsequent hereto, including but
not  limited  to all  state,  local and  federal  laws,  legislation,  rules and
regulations  relating to employee  pension  and  benefit  funds,  the payment of
taxes,  assessments,  and  other  governmental  charges,  zoning,  and the  use,
occupancy,  transfer or  encumbrancing  of the Collateral and all  Environmental
Laws,  except  with  respect  to the  payment  of taxes,  assessments  and other
governmental  charges, as such payments thereof shall be contested in good faith
and by appropriate  proceedings  diligently conducted by such Obligor,  provided
that adequate reserves shall have been maintained therefor.  Each Obligor agrees
to comply with all reasonable conditions required by Bank designed to


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<PAGE>

protect Bank and the Collateral from the effect of all Environmental Laws, ERISA
and such other laws,  legislation,  rules and regulations as are in, or may come
into, effect and apply to an Obligor, Bank, the transactions contemplated hereby
or the  Collateral  or any  occupants  or users  thereof,  whether  as  lessees,
tenants,  licensees or otherwise.  Borrower  agrees to pay any costs required to
comply with any of the above conditions.

     (B) Each Obligor shall observe and comply in all material respects with all
laws (including  ERISA),  ordinances,  orders,  judgments,  rules,  regulations,
certifications,  franchises,  permits, licenses,  directions and requirements of
all Governmental Bodies, which now or at any time hereafter may be applicable to
such Obligor and the operation of its business.

     (C) Each Obligor will continue to hold all  necessary  licenses and permits
for the operations of their business.

     (D) Each Obligor  shall,  in the event that any Lien shall be filed against
its  Collateral by any  Governmental  Body in  connection  with the discharge of
hazardous  substances  or  waste,  either  (i) pay  such  amounts  necessary  to
discharge  the  Lien or (ii)  furnish  to such  Governmental  Body a bond,  cash
deposit or security necessary to discharge such Lien.

     (E) Each Obligor shall promptly clean up any hazardous  substances or waste
discharged  without a proper permit  therefor in accordance  with  Environmental
Laws.

     6.8  INSPECTION  Bank (by any of its officers,  employees and agents) shall
have the right,  at any time or times during the Obligors' usual business hours,
to inspect the Collateral,  all records related thereto,  all financial records,
and the premises upon which any of the  Collateral is located,  to make extracts
from and/or audit such records,  to discuss the  Obligors'  affairs and finances
with any Person  (including  without  limitation,  the  Obligors'  officers  and
outside  accountants)  and to verify the amount,  quality,  quantity,  value and
condition of, or any other matter relating to, the Collateral or the Obligors.

     6.9 COLLATERAL  REQUIREMENTS  Unless Bank notifies Borrower in writing that
it dispenses  with any one or more of the following  requirements,  the Obligors
will (A) upon an Event of Default, give Bank assignments,  in form acceptable to
Bank, of all Accounts, as defined herein, and of the monies due or to become due
on specific contracts related to Accounts; (B) upon an Event of Default, furnish
to Bank all original and other documents  evidencing right to payment  including
but not limited to invoices,  original orders,  shipping and delivery  receipts;
(C) upon an Event of  Default,  give Bank such  financial  statements,  reports,
lists of Account Debtors and other data  concerning its Accounts,  contracts and
collections and the other Collateral,  or any other matters which Bank may, from
time to time specify;  (D) inform Bank  immediately of the rejection of Goods or
services, delay in performance,  or claims made, in regard to Eligible Accounts;
(E) make no change  in terms of any  Eligible  Account  against  which  Bank has
advanced any money;  (F) furnish to Bank all information  received by an Obligor
adversely  affecting the financial  standing of any Account  Debtor;  (G) notify
Bank immediately in writing if any of its Accounts arise out of contracts


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<PAGE>

between  an  Obligor  and  the  United  States  or  any  department,  agency  or
instrumentality  thereof,  or any  other  governmental  body and take all  steps
necessary  to protect Bank under the Federal  Assignment  of Claims Act or other
applicable  state  or  local  statutes  or  ordinances;  (H)  deliver  to  Bank,
appropriately  endorsed,  any  Instrument  or Chattel Paper  connected  with any
Account; (I) mark its records of its Accounts in any manner satisfactory to Bank
to indicate  the  interest of Bank;  (J)  collect its  Accounts in the  ordinary
course  of  business  and  prior to a  Default  sell its  Inventory  only in the
ordinary  course of  business  for value to  buyers  in the  ordinary  course of
business;  (K) upon notice by Bank after a Default  with  respect to any payment
Obligations of Borrower  hereunder,  not sell or transfer after a Default any of
its  Inventory;  (L) keep  accurate  and  complete  records of its  Accounts and
Inventory;  and (M)  promptly  notify Bank in writing of any  trademarks,  trade
names,  patents or copyrights  which it may hereafter own or obtain a license to
use or under which it may issue invoices.

     6.10 CONTROL OF ACCOUNTS

     (A) Upon an Event of  Default,  Bank  shall  have the right at any time and
from time to time, without notice, to notify Account Debtors to make payments to
Bank,  to endorse all items of payment  which may come into its hands payable to
an Obligor,  to take control of any cash or non-cash proceeds of Accounts and of
any returned or repossessed goods; to compromise, extend or renew any Account or
deal with it as it may deem advisable,  and to make exchanges,  substitutions or
surrenders of  Collateral  and to notify the postal  authorities  to deliver all
mail,  correspondence or parcels addressed to an Obligor to Bank at such address
as Bank may choose.

     (B) The Obligors herewith appoint Bank or its designee as  Attorney-in-Fact
to endorse the Obligors' names on any checks, notes, acceptances,  drafts or any
other  Instrument  or  document  requiring  said  endorsement  and to  sign  the
Obligors'  names on any invoice or bills of lading  relating to any Account,  or
drafts  against its  customers,  or  schedules  or  confirmatory  assignment  on
Accounts,  or notices of  assignment,  financing  statements  under the  Uniform
Commercial  Code, and other public records,  and in verification of Accounts and
in notices to Account Debtors;  provided,  however, that Bank shall not exercise
any rights  pursuant to its appointment as  Attorney-in-Fact  under this Section
6.10(B)  until  the  occurrence  of an  Event of  Default.  Bank  shall  have no
obligation to preserve any rights  against any Person  obligated on any Account,
Chattel Paper, Instrument or other item of Collateral.

     6.11 CHANGE OF  LOCATIONS  Each Obligor will furnish Bank with at least ten
(10) days prior  written  notice of any change in location of or addition to its
chief  executive  office,  the office where it keeps its records  concerning its
accounts,  its  location  of  Inventory  and other  assets,  and other  business
locations.

     6.12 PRIMARY DEMAND DEPOSIT ACCOUNTS The Obligors agree to maintain at Bank
their primary demand deposit accounts.

     6.13 POST CLOSING REQUIREMENTS. The Obligors agree:


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<PAGE>

                    (i) to use their best efforts to obtain  within  ninety (90)
               days of the Closing Date a landlord's  waiver in form  acceptable
               to Bank duly executed by the landlord of the leased facility at 7
               Ridgedale Avenue, Cedar Knolls, New Jersey;

                    (ii) to use their best efforts to cause  within  ninety (90)
               days of the  Closing  Date,  IBM  Credit  Corporation  and Finova
               Capital  Corporation  to release their liens on the equipment and
               other fixed assets of Borrower;

                    (iii) to cause IBM Credit  Corporation  within  thirty  (30)
               days of the Closing  Date to execute an  intercreditor  agreement
               reasonably acceptable to Bank; and

                    (iv) to cause Microage Computer  Centers,  Inc. within sixty
               (60) days from the Closing  Date to  terminate  all  existing UCC
               financing statements.


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<PAGE>

                                       VII

                         NEGATIVE COVENANTS OF OBLIGORS
                         ------------------------------

     7.1 LOANS AND ADVANCES AND INVESTMENTS The Obligors will not, without prior
written  consent of Bank,  make any loans or  advances to or  investment  in any
Person except for Investment Obligations.

     7.2 FINANCIAL COVENANTS

     (A) Total  Liabilities/Tangible  Net Worth.  The  Obligors  will not,  on a
consolidated  basis,  allow its ratio of Total Liabilities to Tangible Net Worth
to exceed 2.00:1.00 at any time.

     (B) Fixed Charge  Coverage  Ratio.  The  Obligors  will not allow its Fixed
Charge  Coverage  Ratio,  on a consolidated  basis,  to be less than  3.00:1.00,
measured quarterly.

     7.3 LIENS The Obligors will not allow or suffer any Lien to exist on any of
their assets except for Permitted Encumbrances.

     7.4 LIMITATION ON INDEBTEDNESS The Obligors will not create,  incur, assume
or suffer to exist any Indebtedness except Permitted Indebtedness.

     7.5  TRANSACTIONS  AMONG AFFILIATES The Obligors will not become a party to
any transaction  with an Affiliate of Borrower or Stan Gang unless the terms and
conditions  relating to such  transaction  are as  favorable  to such Obligor as
would be obtainable at the time in a comparable  arms-length  transaction with a
Person other than an Affiliate  or Stan Gang or pay or incur any  obligation  to
pay any management, service, consulting or similar fees to any Affiliate or Stan
Gang,  excluding  salaries,  bonuses  and  benefits  to Stan Gang who is also an
employee of Borrower.

     7.6  SPECIAL  COVENANTS  AS TO ASSETS  The  Obligors  covenant  that  until
satisfaction  in  full  of  all  Obligations  of  Borrower  to  Bank  and  until
termination of this Agreement:

     (A) no  Inventory  shall be stored with a bailee,  warehouseman  or similar
party without Bank's prior written consent and, if Bank gives such consent,  the
appropriate   Obligor  will  concurrently   therewith  cause  any  such  bailee,
warehouseman  or  similar  party  to issue  and  deliver  to  Bank,  in form and
substance acceptable to Bank, warehouse receipts therefor in Bank's name.

     (B) The Obligors  will not hold any Goods  belonging to third parties or in
which other  parties  have an interest,  including  any Goods sold on a bill and
hold basis, except as set forth on Schedule 5.8.


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<PAGE>

     (C) The Obligors will not purchase or otherwise hold Goods on a consignment
basis except as set forth on Schedule 5.8.

     (D) Except as set forth on  Schedule  5.8 none of the  Obligors'  Inventory
will be of a nature that contains any labels, trademarks,  trade names, or other
identifying characteristics which are the property of third parties, and the use
of which by an Obligor is in violation of the rights of such third  parties or a
violation of any license, royalty or similar agreements with any third parties.

     (E) Except as set forth on Schedule  5.8, the  Obligors  will not allow any
Goods of the Obligors to be held by any Person in the future.

     (F) Except upon prior written  notice to Bank, the Obligors will not in the
future  purchase any  Inventory  except in the ordinary  course of business from
Persons customarily in the business of selling such Inventory.

     (G) The Obligors will not,  without prior written  consent of Bank,  remove
the Collateral  from its present  location,  except for the removal of Inventory
upon its sale;

     (H) The Obligors will not sell or transfer any Inventory to any  Affiliate,
Subsidiary or Stan Gang;

     (I) The Obligors will not sell, lease or transfer any of their Inventory or
other assets except for sales of Inventory in the ordinary course of business to
good faith purchasers for value; and

     (J) The  Obligors  will not  cause any  surety  bonds to be issued on their
behalf in connection  with any contracts or purchase orders except upon not less
than ten (10) days prior written notice to Bank.

     7.7  PREPAYMENTS OF  INDEBTEDNESS  The Obligors will not prepay or obligate
themselves  to  prepay in whole or in part,  any  Indebtedness  (other  than any
Indebtedness due hereunder),  excluding ordinary  short-term trade debt owing to
Finova Capital Corporation or IBM Credit Corp.

     7.8 FISCAL YEAR The Obligors will not change their fiscal years.

     7.9  CHANGE IN  CONTROL  The  Obligors  will not make or suffer a change in
control that reduces Stan Gang's ownership in Borrower to an amount that is less
than that of any other  shareholder  and no other Obligor  (other than Borrower)
shall  sell or  transfer  any  stock  or other  equity  interest  or  issue  any
additional stock or other equity interest in such Obligor or options or warrants
for the  issuance of stock or other equity  interest in such Obligor  other than
the issuance of common stock to such Obligor's existing stockholders.


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<PAGE>

     7.10 CHANGE IN ACCOUNTING PRINCIPLES The Obligors will not change or permit
any change in accounting principles applied to the Obligors,  except as required
by GAAP.

     7.11 SALE AND LEASEBACK  The Obligors  will not enter into any  arrangement
with any Person  providing  for the leasing by an Obligor of property  which has
been or is to be sold or  transferred  by an  Obligor  to such  Person or to any
other Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of such Obligor.

     7.12 MAINTAIN CORPORATE EXISTENCE AND NATURE OF BUSINESS

     (A) The Obligors will not allow their corporate  existence to be other than
in good standing and will not dissolve or liquidate (or discontinue their normal
operations  with the  intent  to  liquidate),  or merge or  consolidate  with or
acquire or affiliate  with any other  business  entity or form any Subsidiary or
Affiliate; provided, however, that Borrower shall be permitted (i) to consummate
a Permitted Acquisition using the proceeds of an Acquisition Advance, subject to
the  limitations  set forth in Section 2.1 hereof and  provided  further that no
Default  or Event of Default  shall have  occurred  and be  continuing  or would
result from the making of such  Acquisition  Advance or the consummation of such
Permitted  Acquisition  and (ii) to form a  Subsidiary  which  has  resolved  by
unanimous  resolution  of the  board  of  directors  and  shareholders  of  such
Subsidiary to execute the Guaranty  required  under this  Agreement and has duly
executed such Guaranty and provided  further that no Default or Event of Default
shall have occurred and be continuing or would result from the formation of such
Subsidiary.  Notwithstanding anything in the foregoing to the contrary, Borrower
shall  be  permitted  to  consummate  a  Permitted   Acquisition  in  which  the
consideration  paid consists entirely of cash (other than Acquisition  Advances)
or equity in Borrower and  provided  further that no Default or Event of Default
shall have occurred and be continuing or would result from the  consummation  of
such Permitted Acquisition.

     (B) The Obligors will not change their names without  furnishing to Bank at
least ten (10) days prior written notice thereof.

     (C) The Obligors  will not utilize any trade name not set forth on Schedule
5.8  without  furnishing  to Bank at least ten (10) days  prior  written  notice
thereof.

     (D) The Obligors will not change the general nature of their businesses.

     7.13  DIVIDENDS;  REDEMPTIONS The Obligors will not pay or declare any cash
or property  dividends,  nor  otherwise  make a withdrawal  or  distribution  of
capital or income,  nor redeem,  retire,  repurchase or otherwise acquire or set
aside reserves to acquire any stock,  partnership or other ownership interest of
any Obligor if a Default or Event of Default


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<PAGE>

exists hereunder or any such action would cause a Default or Event of Default to
occur hereunder.

     7.14 DISCHARGE OF HAZARDOUS WASTE The Obligors shall not cause or permit to
exist a  discharge  of  hazardous  substances  or waste  resulting  in damage to
natural resources, unless such discharge is in compliance with the conditions of
a valid permit issued by the appropriate Governmental Body.

     7.15 LEASES The Obligors  shall not enter into any leases of real property,
excluding Permitted Leases.


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<PAGE>

                                      VIII

                                EVENTS OF DEFAULT
                                -----------------

     The  occurrence  of any of the  following  shall  constitute  an  Event  of
Default:

     8.1 NON-PAYMENT Failure on the part of any Obligor to pay any Obligation to
Bank when due.

     8.2 NON-PERFORMANCE Failure on the part of any Obligor to perform when such
performance is due any term,  covenant or condition  contained in this Agreement
or in any other Loan  Document or any other  agreement now existing or hereafter
entered into with Bank, or in any document  executed in connection with any such
agreements.

     8.3 MISREPRESENTATION Any representation,  covenant or warranty made by any
Obligor in this Agreement, or any other Loan Document, or in connection with any
instrument  of guaranty or security  furnished to Bank shall have proved to have
been inaccurate in any  substantial or material  respect as of the date or dates
with respect to which it is made or deemed to have been made.

     8.4 OTHER  LIEN Any  Obligor  shall  have  caused or  permitted  a security
interest or Lien,  perfected or otherwise,  other than the security interest and
Liens specifically provided for or permitted hereunder,  to be created in any of
its assets, or shall have failed to take any action requested by Bank to perfect
or protect the security interests and Liens provided for herein.

     8.5  INSOLVENCY  Any Obligor  shall have  applied for or  consented  to the
appointment  of a  custodian,  receiver,  trustee  or  liquidator  of  all  or a
substantial  part of its assets;  a custodian  shall have been appointed with or
without consent of any Obligor; any Obligor is generally not paying its debts as
they become due; has made a general assignment for the benefit of creditors; has
been adjudicated insolvent; or has filed a voluntary petition in bankruptcy,  or
a petition or an answer seeking  reorganization or an arrangement with creditors
or to take advantage of any insolvency law, or an answer  admitting the material
allegations  of a  petition  in any  bankruptcy,  reorganization  or  insolvency
proceeding;  or taken  corporate  action for the purpose of effecting any of the
foregoing; or an order, judgment or decree shall have been entered,  without the
application,  approval  or  consent  of any  Obligor  by any court of  competent
jurisdiction  approving a petition  seeking  reorganization  of any Obligor,  or
appointing a receiver,  trustee,  custodian or liquidator  of any Obligor,  or a
substantial  part of its assets and such order,  judgment  or decree  shall have
continued  unstayed and in effect for any period of forty-five (45)  consecutive
days; or a petition in bankruptcy  shall have been filed against any Obligor and
shall not have been dismissed for a period of thirty (30)  consecutive  days, or
if an Order for Relief has been entered  under the  Bankruptcy  Code,  or if any
Obligor shall have suspended the transaction of its usual business.


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<PAGE>

     8.6  JUDGMENT  OR LIEN Entry of a judgment,  issuance  of any  garnishment,
attachment  or  distraint,  the  filing  of  any  lien  or of  any  governmental
attachment  against  any  property  of any  Obligor in excess of $250,000 in the
aggregate  which entry,  issuance,  attachment  or filing  shall have  continued
unstayed and in effect for a period of thirty (30) consecutive days.

     8.7  NON-COMPLIANCE  WITH  LEASES OR LAWS  Failure of any Obligor to comply
with the terms and  conditions of any lease  covering the premises  where any of
its assets are located,  including the  Collateral  and any orders,  ordinances,
laws or  statutes of any city,  state or other  governmental  department  having
jurisdiction  with respect to such premises or the conduct of business  thereon,
which such non-compliance has a Material Adverse Effect on such Obligor.

     8.8 ORGANIZATIONAL CHANGE Any change in the existing corporate organization
of any Obligor,  including but not limited to a change to a partnership (general
or limited), limited liability company or the dissolution of any Obligor.

     8.9  IMPAIRMENT OF  RESPONSIBILITY  Occurrence  of any event which,  in the
opinion of Bank, impairs the financial responsibility of any Obligor, which such
impairment has a Material Adverse Effect on such Obligor.

     8.10  ADVERSE  CHANGE The  determination  by Bank that a  Material  Adverse
Change has occurred of any Obligor.

     8.11  MISREPRESENTATION  OF FACT The  determination by Bank that a material
misrepresentation  of  fact  has  been  made  by  any  Obligor  in  any  writing
supplementary or ancillary hereto.

     8.12 ERISA If (A) any  Reportable  Event occurs and shall be continuing for
thirty (30) days after  notice from Bank to  Borrower,  or (B) any Plan shall be
terminated, or (C) the Plan administrator of any Plan shall file with the PBGC a
notice of  intention  to terminate  such Plan,  or (D) the PBGC shall  institute
proceedings  to terminate any Plan or appoint a trustee to administer  any Plan,
and, if in any of the cases set forth in (A) through (D) above,  Bank reasonably
determines in good faith that any Plan will be terminated and that the amount of
the  unfunded  guaranteed  benefits  (within  the  meaning of Title IV of ERISA)
resulting upon  termination of such Plan would have a material adverse effect on
the  financial  condition  and  properties or operation of any Obligor if a lien
against the assets of any Obligor were to result under ERISA.

     8.13  DEFAULT IN  OBLIGATIONS  TO THIRD  PARTIES  Any Obligor is in default
beyond any  applicable  grace or cure period of any material  obligation  to any
third  party  unless  (i) a  bona  fide  dispute  exists  as to  such  Obligor's
compliance with such obligation, (ii) such bona fide dispute is being diligently
resolved and (iii) any monetary amounts potentially


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<PAGE>

owing by such Obligor in connection with such  non-compliance  are being held in
escrow by such Obligor.

     8.14  LICENSES  If any  license  or  permit  necessary  for  the  continued
operation of any Obligor's customary business is revoked, suspended,  terminated
or not renewed.


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<PAGE>

                                       IX

                         CONSEQUENCE OF EVENT OF DEFAULT
                         -------------------------------

     In case any Event of Default  shall have  occurred,  then and in every such
Event of Default, Bank may take any or all of the following actions, at the same
time or at different  times,  provided  that upon the  occurrence of an Event of
Default  under  Section  8.5  hereof  the  Loan  under  this   Agreement   shall
automatically  terminate and all Obligations shall  automatically be immediately
due and payable;

     9.1  ACCELERATION  Declare the Loan, sums and  Obligations  owing Bank from
Borrower  under this  Agreement or any other  agreement or loan between Bank and
Borrower  to be  forthwith  due and  payable,  whereupon  all  such  sums  shall
forthwith become due and payable, without presentment,  demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Obligors and
the Commitment shall be terminated.

     9.2 POSSESSION  Proceed with or without judicial process to take possession
of all or any part of the  Collateral  provided  for herein  not  already in the
possession of Bank and the Obligors  agree that upon receipt of notice of Bank's
intention to take possession of all or any part of said Collateral, the Obligors
will do everything reasonably necessary to assemble the Collateral and make same
available to Bank at a place to be designated by Bank. The Obligors hereby waive
any and all rights  they may have,  by statute,  constitution  or  otherwise  to
notice  or a  hearing  to  determine  the  probable  cause  of  Bank  to  obtain
possession, by Court proceedings or otherwise, of the Collateral provided for in
this or in any other agreement with Bank.

     9.3  METHODS  OF SALE So long  as Bank  acts in a  commercially  reasonable
manner, assign,  transfer and deliver at any time or from time to time the whole
or any portion of the Collateral or any rights or interest therein in accordance
with the  Uniform  Commercial  Code,  and without  limiting  the scope of Bank's
rights thereunder, Bank may sell the Collateral at public or private sale, or in
any other manner,  at such price or prices as Bank may deem best, and either for
cash or credit,  or for future  delivery,  at the option of Bank,  in bulk or in
parcels  and  with or  without  having  the  Collateral  at the  sale  or  other
disposition.  Bank shall have the right to be the  purchaser at any public sale.
Bank  shall  have the right to conduct  such  sales on  Borrower's  or any other
Obligor's  premises or elsewhere  and shall have the right to use  Borrower's or
any other  Obligor's  premises  without  charge  for such sales for such time or
times as Bank may see fit. Bank is hereby granted license or other right to use,
without charge, the Obligors' labels, patents, copyrights,  rights of use of any
name,  trade secrets,  trade names,  trademarks and advertising  matter,  or any
property of a similar nature,  as it pertains to the Collateral,  in advertising
for sale and selling any Collateral and the Obligors'  rights under all licenses
and franchise  agreements shall inure to Bank's benefit. The Obligors agree that
a  reasonable  means of  disposition  of Accounts  shall be for Bank to hold and
liquidate any and all Accounts. In the event of a sale of the Collateral, or any
other disposition thereof,  Bank shall apply all proceeds first to all costs and
expenses of disposition,  including attorneys' fees, and then to the Obligations
of Borrower and the other Obligors to Bank.


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<PAGE>

     9.4  RETENTION OF  COLLATERAL  Elect to retain the  Collateral  or any part
thereof in  satisfaction  of all  Obligations  due from  Borrower  and the other
Obligors to Bank upon notice of such proposed election to Borrower and the other
Obligors and any other party as may be required by the Uniform Commercial Code.

     9.5 SET-OFF Bank shall have the right  immediately,  and without  notice or
other  action to set-off  against any of Obligor's  Obligations  to Bank any sum
owed by Bank in any  capacity to any Obligor  whether due or not, and Bank shall
be deemed to have  exercised  such  right of  set-off  and to have made a charge
against any such sum  immediately  upon the occurrence of such Event of Default,
even though the actual book entries may be made at some time subsequent thereto.

     9.6 ATTORNEYS' FEES AND EXPENSES Add to the Obligations of Borrower, Bank's
reasonable  expenses to obtain or enforce payment of any  Obligations  hereunder
and  the  enforcement  or  liquidation  of  any  debt  hereunder  shall  include
reasonable attorneys' fees plus other legal expenses incurred by Bank.

     9.7 INCREASE IN  INTEREST/LATE  CHARGE  Increase the rate of interest under
any  Obligations  to a rate of four  percent  (4%) in excess of the highest rate
otherwise  being  charged  hereunder.  Unless  otherwise  agreed  by Bank,  this
increase  in  interest  rate  shall  be  retroactive  to the  date of the  first
occurrence of an Event of Default. Add a late charge of five percent (5%) of any
payment of  principal  or  interest  required to be made by Borrower to Bank for
each month or portion thereof such payment remains unpaid,  such period to begin
ten (10) days after such payment is required to be made.

     9.8 BANK'S  PERFORMANCE  OF OBLIGORS'  OBLIGATION  If any Obligor  fails to
comply with any of the  covenants  or perform any of its  obligations  set forth
herein or in any other Loan Document, Bank may, but shall have no obligation to,
perform any such  obligations  or undertake any act to cause such covenant to be
complied with, including,  but not limited to, discharging any Lien on any asset
other than Permitted Encumbrances.  Any and all sums, and all costs and expenses
incurred by Bank in so  performing  or causing  compliance,  shall be payable on
demand  together  with  interest at the default rate provided for in Section 9.7
hereof  from the date of any such  payment  by Bank  until  the date paid by the
Obligors.  Any such  performance  by Bank shall not cure any Default or Event of
Default by the Obligors.

     9.9 OTHER REMEDIES Exercise any other remedies under the Uniform Commercial
Code or other  applicable  law, or any other Loan  Document,  including  but not
limited to (i) enforcing the  obligations of any or all of the Guarantors  under
the  Guaranty  and/or  (ii)  proceeding  to enforce its right by suit in equity,
action  at law or other  appropriate  proceeding,  whether  for  payment  or the
specific  performance of the covenants or agreements contained in this Agreement
or any other Loan Document.


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<PAGE>

                                        X

                                  MISCELLANEOUS
                                  -------------

     10.1 NO  WAIVER  The  Obligors  agree  that no delay on the part of Bank in
exercising any power or right hereunder or any other Loan Document shall operate
as a waiver of any such power or right, nor act as a consent to any departure by
any Obligor  from any of the terms or  conditions  hereof or  thereof,  preclude
other or further exercise thereof,  or the exercise of any other power or right.
No waiver  whatsoever  shall be valid unless in writing  signed by Bank and then
only to the extent set forth therein.

     10.2 MODIFICATION OR AMENDMENT This Agreement and every other Loan Document
cannot be changed orally and cannot be changed by an executory  agreement unless
such  agreement  is in writing  and signed by all  parties  hereto by their duly
authorized officers.

     10.3 WAIVER OF NOTICE The Obligors waive  presentment,  dishonor and notice
of dishonor,  protest and notice of protest of all commercial papers at any time
held by Bank on which any Obligor is in any way liable.

     10.4 ONE INSTRUMENT  The provisions of this Agreement  shall be in addition
to those of any notes or other evidence of the Obligations held by Bank relating
to  this  particular  transaction,  all  of  which  shall  be  construed  as one
instrument.

     10.5 LAW OF NEW JERSEY This  Agreement and all other Loan Documents and the
rights of the parties  hereto and thereto shall be governed by the internal laws
of the State of New Jersey without regard to conflict of laws.

     10.6   JURISDICTION  The  Obligors  hereby   irrevocably   consent  to  the
jurisdiction  of the Courts of the State of New Jersey or any  Federal  Court in
such State in connection with any action or proceeding arising out of or related
to this  Agreement  or any other  Loan  Document.  In any such  litigation,  the
Obligors waive personal  service of any summons,  complaint or other process and
agree that service may be made by certified or  registered  mail to them, at the
address provided herein.

     10.7  SUCCESSORS  OR ASSIGNS This  Agreement  and all other Loan  Documents
shall be binding  upon and shall  inure to the  benefit of the  parties  hereto,
their respective successors and assigns, provided,  however, that Borrower shall
not have any right to assign any of its rights hereunder.

     10.8 RIGHTS  CUMULATIVE The rights and remedies herein  expressed or in any
other Loan  Document to be vested in or conferred  upon Bank shall be cumulative
and shall be in addition to and not in substitution  for or in derogation of the
rights and remedies  conferred upon secured creditors by the Uniform  Commercial
Code or any other applicable law.


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<PAGE>

     10.9  LIMITATION  OF  LIABILITY No claim may be made by the Obligors or any
other  Person  against  Bank  or,  as the  case  may  be,  directors,  officers,
employees,  attorneys or agents of Bank for any special,  punitive,  indirect or
consequential damages in respect of any claim for breach of contract arising out
of or related to the  transactions  contemplated by this Agreement,  or any act,
omission or event  occurring in connection  therewith;  and the Obligors  hereby
waive, release and agree not to sue upon any claim for any such damages, whether
or not accrued and whether or not known or suspected to exist in its favor.

     10.10  NOTIFICATION OF DISPOSITION OF COLLATERAL Any notification of a sale
or other disposition of the Collateral will be sufficient if given in the manner
set forth in Section  10.11  hereof not less than five (5) days prior to the day
on which such sales or other  disposition  will be made,  and such  notification
shall be deemed reasonable notice.

     10.11  ADDRESSES OF NOTICES Any written notice  required or permitted to be
given by this Agreement and the other Loan  Documents  shall be given or made in
writing,  including telecopy,  and shall be, as elected by the party giving such
notice, served personally by messenger or courier service,  telecopied (followed
up by a  mailing),  or mailed in the United  States by  prepaid,  registered  or
certified mail, return receipt requested, to the following:

If to any Obligor:

                  ALPHANET SOLUTIONS, INC.
                  7 Ridgedale Avenue
                  Cedar Knolls, New Jersey 07927
                  Attn: Gary Finkel, Chief Financial Officer
                  Fax #: (201) 207-8675

with a copy (except
for routine notices with
respect to borrowings
hereunder and the like)
to:

                  BUCHANAN INGERSOLL
                  College Centre
                  500 College Road East
                  Princeton, New Jersey 08540
                  Attn: David J. Sorin, Esq.
                  Fax #: (609) 520-0360


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If to Bank:

                  FIRST UNION NATIONAL BANK
                  550 Broad Street
                  Newark, New Jersey  07102
                  Attn: Peter Mace, Senior Vice President, Portfolio Management
                  Fax #: (201) 565-3908

with a copy (except
for routine notices with
respect to borrowings
hereunder and the like)
to:

                  RIKER, DANZIG, SCHERER, HYLAND & PERRETTI LLP
                  Headquarters Plaza
                  One Speedwell Avenue
                  Morristown, New Jersey  07962-1981
                  Attn: Mark S. Rattner, Esq.
                  Fax #: (201) 538-1984

Any notice given in  accordance  with the  provisions  of this section  shall be
deemed  effective,  if hand delivered,  on the date of such delivery,  or on the
date  telecommunicated  if telecopied,  or if mailed, on the date upon which the
return receipt is signed or delivery  refused or the notice is designated by the
postal  authorities as not deliverable,  as the case may be. Each party may give
notice to each of the other  parties of a change of its  address for the purpose
of giving  notice under this section  which,  thereafter  until  changed by like
notice,  shall be the address of such party for purposes of this Agreement.  Any
failure  to  provide  notice to the  parties'  attorneys  shall not  affect  the
validity of any otherwise proper notice.

     10.12  TITLES  The titles and  headings  indicated  herein and any table of
contents are inserted for convenience only and shall not be considered a part of
this Agreement or in any way limit the  construction or  interpretation  of this
Agreement.

     10.13  DISCLOSURE  Bank is hereby  authorized  to disclose any financial or
other  information  it may have  about the  Obligors  to any  present  or future
participant or  prospective  participant,  any regulatory  body or agency having
jurisdiction  over Bank,  or to any Person which  succeeds to all or any part of
Bank's interest herein.

     10.14 TERM This  Agreement  shall with respect to Section 2.1 hereof have a
term  through  the  Maturity  Date or such  later  date as Bank may  agree to in
writing in its sole discretion.  The Advances provided for in Section 2.1 hereof
shall be due and payable in full upon expiration of the term as set forth herein
or as otherwise set forth in this Agreement.  Notwithstanding  the expiration of
the term, the rights of Bank hereunder and the obligations of


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<PAGE>

the  Obligors  hereunder,  including  but not  limited to the grant of  security
interests  in and Liens on the  Collateral  as set forth in Article  III hereof,
shall  remain  in  full  force  and  effect  until  all of the  Obligations  are
indefeasibly paid in full.

     10.15  INTEREST  LIMITATION It is the intention of Bank and the Obligors to
conform  strictly  to the laws of the  State of New  Jersey  or the laws of such
other  jurisdiction  which  may be found to  apply  to the  subject  transaction
relating to the maximum rate of interest which may be lawfully contracted for or
charged. Nothing contained in this Agreement or any other Loan Document shall be
construed to mean that Borrower has contracted to pay or is obligated to pay any
sum or sums to Bank in  excess  of  those  which  may  lawfully  be  charged  or
contracted  for  under  applicable  law of the  State  of New  Jersey  or  other
applicable  law. If any  provision  of this  Agreement  or any of the other Loan
Documents  shall require payment of any sum or sums of interest in excess of the
maximum  permitted rate which may be lawfully  contracted  for or charged,  then
Borrower  and  Bank  agree  that  such  result  is  as a  consequence  of  their
inadvertence  and/or  mistake,  and the  interest  charge for which  Borrower is
liable  under  this  instrument  shall be  recomputed  for the sole and  limited
purpose of determining the extent of the obligations and liabilities of Borrower
to Bank so that the  interest  charges for which  Borrower  is liable  shall not
exceed  the  maximum  permitted  rate  which  is  determined  to be  applicable.
Additionally,  any sums of interest which are collected by Bank from Borrower or
any other Obligor or other source in connection  with the Loan evidenced  hereby
which  are in excess  of the  maximum  permitted  rate  shall,  for the sole and
limited  purpose of determining the extent of the obligations and liabilities of
Borrower to Bank, be credited against the amount of principal for which Borrower
is liable  to Bank  after  giving  effect to any  recomputation  and  adjustment
required  pursuant  to the  foregoing  provisions  of this  section,  or if such
outstanding  principal  balance and interest  are paid in full,  any such excess
shall be remitted by Bank to Borrower.

     10.16 INDEMNIFICATION The Obligors hereby agree to and do hereby indemnify,
protect,  defend  and save  harmless  Bank and any  member,  officer,  director,
official,  agent,  employee  and  attorney of Bank,  and its  respective  heirs,
successors  and assigns  (collectively,  the  "Indemnified  Parties"),  from and
against any and all losses,  damages,  expenses  or  liabilities  of any kind or
nature and from any suits, claims or demands,  including reasonable counsel fees
incurred in investigating  or defending such claim,  suffered by any of them and
caused by, relating to, arising out of,  resulting from, or in any way connected
with  the  Loan  Documents  and the  transactions  contemplated  therein  or the
Collateral  (unless caused by the gross negligence or willful  misconduct of the
Indemnified  Parties)  including,   without  limitation:  (i)  losses,  damages,
expenses or liabilities  sustained by Bank in connection with any  environmental
cleanup or other remedy required or mandated by any Environmental Laws; (ii) any
untrue  statement of a material fact contained in information  submitted to Bank
by  Borrower  and/or any other  Obligor or the  omission  of any  material  fact
necessary to be stated therein in order to make such statement not misleading or
incomplete;  (iii) the failure of Borrower  and/or any other  Obligor to perform
any  obligations  herein  required to be performed by Borrower  and/or any other
Obligor; and (iv) the ownership, construction, occupancy, operations, use and


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<PAGE>

maintenance  of any of Borrower's  and/or any other  Obligor's  properties.  The
provisions of this Section 10.16 shall survive termination of this Agreement and
the other Loan Documents.

     10.17  WAIVER  OF  TRIAL BY JURY THE  OBLIGORS  WAIVE  TRIAL BY JURY IN ANY
LITIGATION  ARISING  OUT OF OR  RELATED  TO THIS  AGREEMENT  OR ANY  OTHER  LOAN
DOCUMENT.

     10.18 ARBITRATION

     (A)  Upon  demand  of any  party  hereto,  whether  made  before  or  after
institution  of any  judicial  proceeding,  any  dispute,  claim or  controversy
arising out of,  connected with or relating to this Agreement and the other Loan
Documents  ("Disputes")  between  or among  parties to this  Agreement  shall be
resolved by binding  arbitration as provided  herein.  Institution of a judicial
proceeding  by a party  does  not  waive  the  right  of that  party  to  demand
arbitration hereunder.  Disputes may include,  without limitation,  tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions,  claims  arising from Loan  Documents  executed in the
future, or claims arising out of or connected with the transaction  reflected by
this Agreement

     (B)  Arbitration  shall be conducted  under and governed by the  Commercial
Financial Disputes  Arbitration Rules (the "Arbitration  Rules") of the American
Arbitration  Association  (the  "AAA")  and  Title  9  of  the  U.S.  Code.  All
arbitration  hearings shall be conducted in the city in which the office of Bank
first stated above is located.  The expedited procedures set forth in Rule 51 et
seq.  of the  Arbitration  Rules  shall be  applicable  to  claims  of less than
$1,000,000.  All applicable statutes of limitation shall apply to any Dispute. A
judgment  upon the award may be entered in any court  having  jurisdiction.  The
panel from which all  arbitrators  are  selected  shall be comprised of licensed
attorneys.  The single  arbitrator  selected for expedited  procedure shall be a
retired judge from the highest court of general jurisdiction,  state or federal,
of the state  where  the  hearing  will be  conducted  or if such  person is not
available  to  serve,  the  single  arbitrator  may  be  a  licensed   attorney.
Notwithstanding  the  foregoing,  this  arbitration  provision does not apply to
disputes under or related to swap agreements.

     10.19 PRESERVATION AND LIMITATION OF REMEDIES

     (A)  Notwithstanding the preceding binding  arbitration  provisions,  Bank,
Borrower and the other Obligors agree to preserve,  without diminution,  certain
remedies that any party hereto may employ or exercise  freely,  independently or
in connection with an arbitration  proceeding or after an arbitration  action is
brought.  Bank,  Borrower and the other Obligors shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable:  (i) all rights to foreclose against any real
or personal  property or other  security by  exercising  a power of sale granted
under the Loan Documents or under applicable law or by judicial  foreclosure and
sale,  including a proceeding to confirm the sale;  (ii) all rights of self-help
including peaceful occupation of real


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<PAGE>

property and collection of rents,  set-off,  and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including injunctive
relief,  sequestration,  garnishment,  attachment,  appointment  of receiver and
filing  an  involuntary  bankruptcy  proceeding;  and (iv)  when  applicable,  a
judgment by  confession  of judgment.  Preservation  of these  remedies does not
limit the power of an arbitrator to grant similar remedies that may be requested
by a party in a Dispute.

     (B) Bank,  Borrower and the other Obligors agree that they shall not have a
remedy of punitive  or  exemplary  damages  against the other in any Dispute and
hereby waive any right or claim to punitive or  exemplary  damages they have now
or which may arise in the future in  connection  with any  Dispute  whether  the
Dispute is resolved by arbitration or judicially.


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<PAGE>

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

                                         FIRST UNION NATIONAL BANK



                                         By: /s/John P. Longhine
                                            --------------------
                                         Name:  Senior Vice President
                                         Title: John Longhine


ATTEST:                                  ALPHANET SOLUTIONS, INC.



By: /s/Michael Gang                      By: /s/Gary Finkel
-------------------                          --------------
Name:  Michael Gang                      Name:  Gary Finkel
Title: Secretary                         Title: Vice President



Agreeing to the terms hereof:

ATTEST:                                  NETTEMPS, INC.



By: /s/Andrew P. Gilbert                 By: /s/Gary Finkel
    --------------------                    --------------
Name:  Andrew P. Gilbert                 Name:  Gary Finkel
Title:                                   Title: Vice President




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<PAGE>

                                  SCHEDULE 1.65

                             Permitted Encumbrances
                             ----------------------

Existing UCC-1 filings in favor of MicroAge  Computer  Centers,  Inc., and First
Fidelity Leasing Group, Inc.


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<PAGE>

                                  SCHEDULE 5.1

     (A)  Jurisdiction  of  incorporation  of Obligors  and in which they are in
          good standing:

          Both Obligors incorporated in New Jersey.




     (B)  Jurisdiction(s)  Obligors are authorized to transact  business and are
          in good standing:

          Borrower   qualified   as   foreign   corporation   in  New  York  and
          Pennsylvania.




     (C)  Prior changes in structure (mergers, consolidations, etc.):

          None.




     (D)  Prior changes in name of Obligors:

          Prior corporate names of Borrower were Alphatronics Associates,  Inc.,
          and Alphatronics,  Inc. Borrower also previously  transacted  business
          under  tradenames  of  Microage  of  Parsippany  Computer  Stores  and
          Microage Parsippany.  Borrower no longer uses those or any other trade
          names.




     (E)  Trade names used by Obligors or under which invoices are issued:

          None


     (F)  Subsidiaries and Affiliates

              Name                      % of Outstanding Stock Owned
              ----                      ----------------------------
            Nettemps, Inc.                           100%


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<PAGE>

                                  SCHEDULE 5.4

                                   Litigation


                                      NONE


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<PAGE>

                                  SCHEDULE 5.8

     (A)  (i) Obligors' chief executive office:

              7 Ridgedale Avenue
              Cedar Knolls, New Jersey 07927




          (ii) Change in location of foregoing within past four (4) months:

               None




          (iii) Location of Books and Records of Obligors:

                7 Ridgedale Avenue 
                Cedar Knolls, New Jersey 07927



          (iv) Change in location of foregoing within past four (4) months:

               None





          (v)  Present location(s) of Inventory and other assets:

               7 Ridgedale Avenue
               Cedar Knolls, New Jersey 07927
               See Attachments "A" and "B"


     (B)  Location from which assets have been moved or other location of assets
          within past four (4) months:

          See Attachments "A" and "B"


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<PAGE>

Schedule 5.8 continued

     (C)  (i) Name and address of warehouses,  bailees or similar  parties where
          any Inventory of Obligors is located:

          See Attachment "B"




          (ii) if any: warehouse receipts are/are not issued:

               None Issued




          (iii)if   warehouse   receipts   issued:   they   are   negotiable/non
               negotiable:

               N/A




     (D)  Goods held by  Obligors  in which other  parties  have any  interests,
          including Goods sold on a bill and hold basis:

          None





     (E)  Goods held by Obligors on a consignment basis:

          None




     (F)  Inventory  with  trademarks,  trade names,  and the like which are the
          property of others.

          None


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<PAGE>

Schedule 5.8 continued

     (G)  Names and addresses of persons holding Goods belonging to Obligors and
          location of Goods:

          See Attachment "B"






     (H)  Purchases of  Inventory or other assets not in the ordinary  course of
          business or from  persons not  customarily  in the business of selling
          such Goods:

          None






     (I)  Instruments or Chattel Paper held by Obligors relating to Accounts:

          None






     (J)  Trademark, trade names, patents or copyrights.

          AlphaNet  Solutions  (not  registered  with U.S.  Patent and Trademark
          Office).


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<PAGE>

                                  SCHEDULE 5.9

                                  Surety Bonds
                                  ------------

                                      NONE


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<PAGE>

                                  SCHEDULE 5.20

                        Shareholder/Repurchase Agreements
                        ---------------------------------

                                      NONE


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<PAGE>

                                 Attachment "A"

                            Alphanet Solutions, Inc.
                               Location Addresses
--------------------------------------------------------------------------------

       Location                                   Landlord

  7 Ridgedale Avenue                         Sutman Associates
  Cedar Knolls, NJ  07927                    1373 Broad Street

                                             Clifton, NJ  07054
  Service Department                         NJT Holding Inc.
  600 Parsippany Road                        600 Parsippany Road
  Parsippany, Morris County, NJ              Parsippany, NJ  07054
  07054

  Learning Center                            Metro Park Associates
  Sutton Metro Park                          80 Main Street
  33 Wood Avenue South                       West Orange, NJ  07052
  Iselin, Middlesex County, NJ

  Learning Center                            Park 80 Associates
  Park 80 West                               Park 80 West Plaza 1
  Saddle Brook, NJ  07662                    Saddle Brook, NJ  07662

  Learning Center                            Victoria Plaza
  615 Hope Road                              1325 Morris Avenue
  Building #1                                Union, NJ  07083
  Eatontown, NJ

  1120 6th Avenue                            HQ Business Centers
  New York, NY                               1120 6th Avenue
                                             New York, NY

  170 S. Warner Road                         Liberty Property Ltd.
  Section 2, Suite 106                       Partnership
  King of Prussia, PA                        65 Valley Stream Parkway
                                             Malvern, PA  19355


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<PAGE>

                                 ATTACHMENT "B"

                            ALPHANET SOLUTIONS, INC.
                           OTHER INVENTORY LOCATIONS
--------------------------------------------------------------------------------
                                                                                

MicroAge
2400 South MicroAge Way
Tempe, AZ  85282-1896

Ingram Micro "D"
1759 Webrle Drive
Williamsville, NY  14221-7887

Logicare
85A Marcus Drive
Melville, NY  11747

PSE&G
Desantis
River Terminal
Building 9E
6 Hackensack Avenue
South Kearny, NJ  07032


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