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                               TWINLAB CORPORATION

                             TWIN LABORATORIES INC.

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

                                   $50,000,000

                    AMENDED AND RESTATED CREDIT AND GUARANTEE
                                    AGREEMENT



                                November 15, 1996

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



                            THE CHASE MANHATTAN BANK,
                             as Administrative Agent

                                       and

                              THE BANK OF NEW YORK,
                                   as Co-Agent



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<PAGE>


                                TABLE OF CONTENTS

                                                                           Page

SECTION 1.  DEFINITIONS......................................................  1
          1.1  Defined Terms.................................................  1
          1.2  Other Definitional Provisions; Financial Calculations......... 23

SECTION 2.  AMOUNT AND TERMS OF REVOLVING CREDIT
          COMMITMENTS........................................................ 24
          2.1  Revolving Credit Commitments.................................. 24
          2.2  Procedure for Revolving Credit Borrowing...................... 24
          2.3  Commitment and Other Fees..................................... 25
          2.4  Termination or Reduction of Commitments....................... 25
          2.5  Repayment of Revolving Credit Loans; Evidence of Debt......... 25
          2.6  Swing Line Commitment......................................... 26
          2.7  Repayment of Swing Line Loans; Evidence of Debt............... 27
          2.8  Procedure for Borrowing Swing Line Loans...................... 28
          2.9  Swing Line Loan Participations................................ 28
          2.10  L/C Commitment............................................... 29
          2.11  Procedure for Issuance of Letters of Credit.................. 30
          2.12  Fees, Commissions and Other Charges.......................... 31
          2.13  L/C Participations........................................... 31
          2.14  Reimbursement Obligation of the Borrower..................... 32
          2.15  Obligations Absolute......................................... 33
          2.16  Letter of Credit Payments.................................... 34
          2.17  Application.................................................. 34
          2.18  Quarterly Reports............................................ 34

SECTION 3.  GENERAL PROVISIONS APPLICABLE TO EXTENSIONS OF
          CREDIT............................................................. 34
          3.1  Optional and Mandatory Prepayments............................ 34
          3.2  Conversion and Continuation Options........................... 36
          3.3  Minimum Amounts and Maximum Number of Tranches................ 37
          3.4  Interest Rates and Payment Dates.............................. 37
          3.5  Computation of Interest and Fees.............................. 37
          3.6  Inability to Determine Interest Rate.......................... 38
          3.7  Pro Rata Treatment and Payments............................... 38
          3.8  Illegality.................................................... 39
          3.9  Requirements of Law........................................... 39
          3.10  Taxes........................................................ 41
          3.11  Indemnity.................................................... 44
          3.12  Change of Lending Office; Filing of Certificates or Documents 44
          3.13  Replacement Lenders.......................................... 45

SECTION 4.  REPRESENTATIONS AND WARRANTIES................................... 45

                                      - i -


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                                                                           Page

          4.1  Financial Condition........................................... 45
          4.2  No Change..................................................... 46
          4.3  Existence; Compliance with Law................................ 46
          4.4  Power; Authorization; Enforceable Obligations................. 46
          4.5  No Legal Bar.................................................. 47
          4.6  No Material Litigation........................................ 47
          4.7  No Default.................................................... 48
          4.8  Ownership of Property; Liens.................................. 48
          4.9  Intellectual Property......................................... 48
          4.10  No Burdensome Restrictions................................... 48
          4.11  Taxes........................................................ 48
          4.12  Federal Regulations.......................................... 48
          4.13  ERISA........................................................ 49
          4.14  Investment Company Act; Other Regulations.................... 49
          4.15  Subsidiaries................................................. 49
          4.16  Purpose of Loans............................................. 49
          4.17  Environmental Matters........................................ 50
          4.18  Regulation H................................................. 51
          4.19  Accuracy of Information...................................... 51
          4.20  Solvency..................................................... 51
          4.21  Stock Purchase Agreement..................................... 51
          4.22  Security Documents........................................... 51

SECTION 5.  CONDITIONS PRECEDENT............................................. 52
          5.1  Conditions to Initial Extension of Credit..................... 52
          5.2  Conditions to Each Extension of Credit........................ 55

SECTION 6.  AFFIRMATIVE COVENANTS............................................ 56
          6.1  Financial Statements.......................................... 56
          6.2  Certificates; Other Information............................... 57
          6.3  Payment of Obligations........................................ 58
          6.4  Conduct of Business; Maintenance of Existence; Compliance 
                   with Laws................................................. 59
          6.5  Maintenance of Property; Insurance; Products Liability 
                   Insurance................................................. 59
          6.6  Inspection of Property; Books and Records; Discussions........ 59
          6.7  Notices....................................................... 60
          6.8  Environmental Laws............................................ 60
          6.9  Maintenance of Liens of the Security Documents................ 61
          6.10  Pledge of After Acquired Property; Additional Guarantors..... 61
          6.11  Interest Rate Protection..................................... 62
          6.12  Exchange Offer............................................... 62
          6.13  Stock Purchase Agreement..................................... 62

SECTION 7.  NEGATIVE COVENANTS............................................... 63
          7.1  Financial Condition Covenants................................. 63

                                     - ii -


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                                                                            Page

          7.2  Limitation on Indebtedness.................................... 63
          7.3  Limitation on Liens........................................... 66
          7.4  Limitation on Guarantee Obligations........................... 67
          7.5  Limitation on Fundamental Changes............................. 68
          7.6  Limitation on Sale of Assets.................................. 68
          7.7  Limitation on Restricted Payments............................. 69
          7.8  Limitation on Capital Expenditures............................ 70
          7.9  Limitation on Investments, Loans and Advances................. 70
          7.10  Limitation on Optional Payments and Modifications of 
                   Debt Instruments and other Obligations.................... 71
          7.11  Limitation on Transactions with Affiliates................... 72
          7.12  Limitation on Changes in Fiscal Year......................... 72
          7.13  Limitation on Lines of Business.............................. 72

SECTION 8.  NEGATIVE COVENANTS OF HOLDINGS................................... 73
          8.1  Limitation on Holdings' Activities............................ 73
          8.2  Restricted Payments........................................... 74
          8.3  Net Proceeds.................................................. 74
          8.4  Dividends..................................................... 74

SECTION 9.  GUARANTEE........................................................ 74
          9.1  Guarantee..................................................... 74
          9.2  No Subrogation, Contribution, Reimbursement or Indemnity...... 75
          9.3  Amendments, etc. with respect to the Obligations; 
                   Waiver of Rights.......................................... 75
          9.4  Guarantee Absolute and Unconditional.......................... 76
          9.5  Reinstatement................................................. 77
          9.6  Payments...................................................... 77

SECTION 10.  EVENTS OF DEFAULT............................................... 77

SECTION 11.  THE ADMINISTRATIVE AGENT........................................ 80
          11.1  Appointment.................................................. 80
          11.2  Delegation of Duties......................................... 81
          11.3  Exculpatory Provisions....................................... 81
          11.4  Reliance by Administrative Agent............................. 81
          11.5  Notice of Default............................................ 82
          11.6  Non-Reliance on Administrative Agent and Other Lenders....... 82
          11.7  Indemnification.............................................. 82
          11.8  Administrative Agent in Its Individual Capacity.............. 83
          11.9  Successor Administrative Agent............................... 83
          11.10  Issuing Bank; Swing Line Lender............................. 83

SECTION 12.  MISCELLANEOUS................................................... 84
          12.1  Amendments and Waivers....................................... 84

                                     - iii -


<PAGE>



          12.2  Notices...................................................... 85
          12.3  No Waiver; Cumulative Remedies............................... 86
          12.4  Survival of Representations and Warranties................... 86
          12.5  Payment of Expenses and Taxes................................ 86
          12.6  Successors and Assigns; Participations and Assignments....... 87
          12.7  Adjustments; Set-off......................................... 89
          12.8  Counterparts................................................. 90
          12.9  Severability................................................. 90
          12.10  Integration................................................. 90
          12.11  GOVERNING LAW............................................... 90
          12.12  Submission To Jurisdiction; Waivers......................... 91
          12.13  Acknowledgements............................................ 91
          12.14  WAIVERS OF JURY TRIAL....................................... 92
          12.15  Confidentiality............................................. 92
          12.16  Collateral Release.......................................... 92
          12.17  Amendment of Certain Cross References....................... 93
          12.18  IPO Termination............................................. 93


ANNEXES:

Annex A   Pricing Grid


SCHEDULES:

1.1        Commitments
4.1        Financial Condition
4.2        Dividends
4.3        Existence; Compliance with Law
4.4        Consents
4.6        Litigation
4.9        Intellectual Property
4.10       Burdensome Restrictions
4.11       Taxes
4.13       ERISA Reportable Events and Accumulated Funding Deficiencies
4.17       Environmental Matters
4.21       Exceptions to Stock Purchase Agreement Representations and Warranties
7.2(j)     Indebtedness Outstanding on the Closing Date
7.3(e)     Easements, Licenses, Etc.
7.3(g)     Existing Liens
7.4(a)     Guarantee Obligations
7.9(e)     Securities Held by Borrower or any Subsidiary
7.11(viii) Affiliate Transactions


                                     - iv -


<PAGE>



EXHIBITS:


A            Form of Borrower Mortgage Amendment
B            Form of Acknowledgement and Consent
C            Form of Swing Line Loan Participation Certificate
D            Form of Revolving Credit Note
E            Form of Swing Line Note
F            Form of Closing Certificate
G            Form of Assignment and Acceptance
H            Form of Opinion of Kramer, Levin, Naftalis & Frankel
I            Form of Opinion of Utah Counsel


                                      - v -


<PAGE>

     AMENDED AND RESTATED CREDIT AND GUARANTEE  AGREEMENT,  dated as of November
15, 1996, among TWINLAB  CORPORATION,  a Delaware  corporation formerly known as
TLG Laboratories  Holding Corp.  ("Holdings"),  TWIN  LABORATORIES  INC., a Utah
corporation (the "Borrower"), the several banks and other financial institutions
from  time to time  parties  to this  Agreement  (collectively,  the  "Lenders";
individually, a "Lender"), THE BANK OF NEW YORK, a New York banking corporation,
as co-agent for the Lenders (the  "Co-Agent"),  and THE CHASE  MANHATTAN BANK, a
New York  banking  corporation,  as  administrative  agent (the  "Administrative
Agent") for the Lenders hereunder.


                              W I T N E S S E T H :


     WHEREAS, pursuant to a series of substantially concurrent transactions (the
"Recapitalization")  the following shall occur:  (i) Holdings will consummate an
initial  public  offering  of not  more  than  35%  (prior  to  exercise  of the
underwriters'  over-allotment  option) of its common stock (the "IPO"), (ii) all
of Holdings'  outstanding  PIK Preferred (as defined  below) will be redeemed in
full, on the terms and subject to the  conditions  set forth  herein,  (iii) the
Term Loans (the "Term  Loans")  and all accrued  and unpaid  interest,  fees and
breakage  costs under the Existing  Credit  Agreement (as defined below) will be
repaid in full and (iv) the Revolving  Credit  Commitments  will be increased to
$50 million;

     WHEREAS, the proceeds of the Loans will be used to provide a portion of the
funds required to consummate the Recapitalization and to provide for the working
capital   requirements   of  the  Borrower  and  its   Subsidiaries   after  the
Recapitalization and for general corporate purposes; and

     WHEREAS,  the parties  hereto  hereby  agree that on the  Closing  Date (as
defined below) the Existing Credit Agreement (as defined below) shall be amended
and restated to read in its entirety as follows:

     NOW,  THEREFORE,  in  consideration  of the premises  and mutual  covenants
contained herein, the parties hereto hereby agree as follows:


                             SECTION 1. DEFINITIONS

     1.1 Defined Terms.  As used in this  Agreement,  the following  terms shall
have the following meanings:

     "ABR": for any day, a rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) equal to the  greatest  of (a) the Prime Rate in effect on such
day,  (b) the Base CD Rate in  effect  on such  day plus 1% and (c) the  Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes  hereof:
"Prime Rate" shall mean the rate of interest per annum  publicly  announced from
time to time by Chase as its prime rate in effect at its principal office in New
York City (the Prime Rate not


<PAGE>


                                                                               2


being intended to be the lowest rate of interest  charged by Chase in connection
with extensions of credit to debtors);  "Base CD Rate" shall mean the sum of (a)
the product of (i) the  Three-Month  Secondary CD Rate and (ii) a fraction,  the
numerator  of which is one and the  denominator  of which is one  minus  the C/D
Reserve  Percentage and (b) the C/D Assessment Rate;  "Three-Month  Secondary CD
Rate"  shall  mean,  for any day,  the  secondary  market  rate for  three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business  Day, the next  preceding  Business Day) by the Board of
Governors through the public  information  telephone line of the Federal Reserve
Bank of New York (which rate will, under the current  practices of the Board, be
published  in Federal  Reserve  Statistical  Release  H.15(519)  during the week
following  such day),  or, if such rate shall not be so  reported on such day or
such next preceding Business Day, the average of the secondary market quotations
for three-month  certificates of deposit of major money center banks in New York
City received at approximately  10:00 A.M., New York City time, on such day (or,
if such day shall not be a Business Day, on the next preceding  Business Day) by
the  Administrative  Agent from three New York City  negotiable  certificate  of
deposit dealers of recognized  standing  selected by it; "C/D  Assessment  Rate"
shall mean, for any day, the annual  assessment rate in effect on such day which
is  payable  by a  member  of the Bank  Insurance  Fund  maintained  by the FDIC
classified  as  well-capitalized  and  within  supervisory  subgroup  "B"  (or a
comparable successor  assessment risk  classification)  within the meaning of 12
C.F.R.  ss.  327.3(4) (or any  successor  provision)  to the FDIC for the FDIC's
insuring time deposits at offices of such institution in the United States; "C/D
Reserve  Percentage"  shall mean, for any day, that  percentage  (expressed as a
decimal)  which  is in  effect  on such  day,  as  prescribed  by the  Board  of
Governors,  for  determining  the maximum  reserve  requirement for a Depositary
Institution (as defined in Regulation D of the Board of Governors) in respect of
new non-personal  time deposits in Dollars having a maturity of 30 days or more;
and "Federal Funds Effective Rate" shall mean, for any day, the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve  System  arranged by federal  funds  brokers,  as  published on the next
succeeding  Business Day by the Federal  Reserve  Bank of New York,  or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three  federal funds  brokers of  recognized  standing  selected by it. Any
change in the ABR due to a change in the Prime Rate, the  Three-Month  Secondary
CD Rate,  the C/D  Assessment  Rate,  the C/D Reserve  Percentage or the Federal
Funds  Effective  Rate shall be  effective  as of the opening of business on the
effective  day of such change in the Prime Rate,  the  Three-Month  Secondary CD
Rate, the C/D Assessment  Rate, the C/D Reserve  Percentage or the Federal Funds
Effective Rate, respectively.

     "ABR Loans":  Loans the rate of interest  applicable to which is based upon
the ABR.

     "Acquisition Documents": collectively, the Stock Purchase Agreement and any
other documents effectuating the Transactions.


<PAGE>

                                                                               3


     "Adjustment  Date":  the Business Day of the receipt by the  Administrative
Agent of both (i) the financial  statements required to be delivered pursuant to
subsection 6.1(a) or 6.1(b), as the case may be, for the most recently completed
fiscal  period and (ii) the  certificate  required to be  delivered  pursuant to
subsection 6.2(b) with respect to such fiscal period.

     "Administrative Agent": Chase, together with its affiliates and successors,
as the  administrative  agent for the Lenders under this Agreement and the other
Loan Documents, and any successor thereto pursuant to subsection 11.9.

     "Affiliate":  as to any Person,  any other Person (other than a 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,  "control" of
a Person  means  the  power,  directly  or  indirectly,  to  direct or cause the
direction of the management and policies of such Person,  whether by contract or
otherwise.

     "After-Acquired  Mortgage  Property":  any parcel (or adjoining parcels) of
real property  (including any  leaseholds)  acquired by any Loan Party after the
Closing Date.

     "Aggregate Revolving Credit Outstandings": as to any Lender at any time, an
amount equal to the sum of (a) the aggregate  principal  amount of all Revolving
Credit  Loans  made by such  Lender  then  outstanding,  plus (b) such  Lender's
Revolving Credit Commitment Percentage of all Swing Line Loans made by the Swing
Line Lender then outstanding, plus (c) such Lender's Revolving Credit Commitment
Percentage of the L/C Obligations then outstanding.

     "Agreement":  this Amended and Restated Credit and Guarantee Agreement,  as
amended, supplemented or otherwise modified from time to time.

     "Applicable  Margin": As to any Loans, 0.0% if such Loans are ABR Loans and
1.25% if such Loans are Eurodollar Loans, provided that, from and after December
31, 1996, the Applicable Margin will be adjusted, on each Adjustment Date, as to
all Loans then  outstanding or made thereafter prior to the next Adjustment Date
based  upon  the  Consolidated   Interest   Coverage  Ratio  and  the  ratio  of
Consolidated Total Debt at the last day of the 12-month period ended on the date
of the financial  statements  relating to such  Adjustment  Date to Consolidated
EBITDA for such period as  determined  from such  financial  statements,  to the
Applicable  Margin set forth on Annex A hereto  opposite the level for which the
Consolidated  Interest Coverage Ratio as so determined satisfies the criteria on
Annex A under the heading  "Consolidated  Interest Coverage Ratio" and for which
the ratio of  Consolidated  Total Debt to  Consolidated  EBITDA as so determined
satisfies  the  corresponding  criteria  set forth under the  heading  "Ratio of
Consolidated Total Debt to Consolidated EBITDA" and provided,  further, that (a)
in the event that the financial  statements required to be delivered pursuant to
subsection 6.1(a) or 6.1(b), as applicable, and the related certificate required
pursuant  to  subsection  6.2(b),  are  not  delivered  when  due,  then if such
financial  statements  are not  delivered  prior  to the  date  upon  which  the
resultant


<PAGE>

                                                                               4

Default  shall  become an Event of Default,  then,  effective  upon such Default
becoming  an Event of  Default,  during the period from the date upon which such
financial  statements  were required to be delivered until the Business Day upon
which they actually are delivered, the Applicable Margin shall be 0.75%, if such
Loans are ABR Loans,  and 2.00%, if such Loans are Eurodollar  Loans, and (b) if
on any Adjustment Date, the Consolidated  Interest  Coverage Ratio and the ratio
of Consolidated Total Debt to Consolidated  EBITDA as so determined would result
in different Applicable Margins, the higher Applicable Margin shall govern.

     "Application": an application, in such form as the Issuing Bank may specify
from time to time, requesting the Issuing Bank to open a Letter of Credit.

     "ARP":  Advanced Research Press,  Inc., a New York corporation and a wholly
owned Subsidiary of the Borrower.

     "ARP Spinoff":  any  distribution  to the  shareholders  of Holdings of the
capital stock of Holdings' indirect wholly-owned Subsidiary ARP.

     "Asset Sale": as to any Person,  any sale or other  disposition  (including
any  Sale/Leaseback  Transaction  and any  mortgage or lease (as lessor) of real
property  other  than any  mortgage  or lease  made by such  Person  in order to
finance  the   acquisition  or  construction  of  additional  real  property  or
improvements  thereon)  subsequent  to the Closing  Date of any property of such
Person (including the issuance or sale of the Capital Stock of any Subsidiary).

     "Assignee": as defined in subsection 12.6(c).

     "Available Excess Equity Proceeds":  at any time, the excess of (a) 100% of
any Net Proceeds of Equity Offerings  received on or after the Closing Date over
(b) (without  duplication) the sum of (i) the aggregate  amounts expended (on or
after  the  Closing  Date)  pursuant  to  subsections   7.2(b)(iv)(y),   7.7(d),
7.9(d)(iv)(y),  7.9(g)(ii),  7.9(j)(ii)  and  7.10(a)(i)  and clause (vi) of the
definition  of  "Capital  Expenditures"  and  (ii) the Net  Proceeds  of the IPO
expended to redeem,  repurchase,  defease or prepay or retire the PIK  Preferred
and to repay the Term Loans.

     "Available  Revolving Credit Commitment":  as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's Revolving
Credit Commitment at such time over (b) such Lender's Aggregate Revolving Credit
Outstandings at such time;  collectively,  as to all the Lenders, the "Available
Revolving Credit Commitments".

     "Benefitted Lender": as defined in subsection 12.7(a).

     "Board of Governors":  the Board of Governors of the Federal Reserve System
and any  Governmental  Authority  which  succeeds  to the powers  and  functions
thereof.


<PAGE>

                                                                               5


     "Borrower": as defined in the Preamble to this Agreement.

     "Borrower Mortgage":  each Mortgage executed and delivered by the Borrower,
substantially  in the form of Exhibit A to the Existing  Credit  Agreement or in
such other form as the  Administrative  Agent  shall  reasonably  require,  with
respect to (i) the  Mortgaged  Property  and (ii) each parcel of  After-Acquired
Mortgage Property for which a mortgage is granted to the  Administrative  Agent,
for the benefit of the Lenders, pursuant to subsection 7.10, in each case as the
same may be amended, supplemented or otherwise modified from time to time.

     "Borrower Security Documents": collectively, the Borrower Mortgages and the
Guarantee and Collateral Agreement.

     "Borrowing  Date":  any  Business  Day  specified  in a notice  pursuant to
subsection  2.2 or 2.8 as a date on which the  Borrower  requests the Lenders to
make Loans hereunder.

     "Business  Day": a day other than a Saturday,  Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.

     "Capital  Expenditures":  as to any Person for any  period,  the  aggregate
amount  incurred by such  Person and its  Subsidiaries  for the  rental,  lease,
purchase  (including  by way of the  acquisition  of  securities  of a  Person),
construction  or use of any property  during such  period,  the value or cost of
which,  in  accordance  with GAAP,  would appear on such  Person's  consolidated
balance sheet in the category of property, plant or equipment at the end of such
period,  excluding (i) any such expenditure made to restore,  replace or rebuild
property to the  condition  of such  property  immediately  prior to any damage,
loss,  destruction  or  condemnation  of  such  property,  to  the  extent  such
expenditure is made with insurance  proceeds or condemnation  awards relating to
any such damage, loss, destruction or condemnation, (ii) any such expenditure to
the extent financed with or constituting Indebtedness permitted hereunder, (iii)
any such  expenditure  made to acquire assets purchased with the Net Proceeds of
Asset Sales permitted to be so expended,  (iv) Permitted  Acquisitions,  (v) any
such  expenditure to acquire capital assets which are Designated  Sale/Leaseback
Financing  Properties and (vi) any  expenditures  not in excess of the Available
Excess Equity Proceeds at the time of such expenditure.

     "Capital Stock":  any and all shares,  interests,  participations  or other
equivalents (however designated) of capital stock of a corporation,  any and all
equivalent  ownership  interests in a Person (other than a corporation)  and any
and all warrants or options to purchase any of the foregoing.

     "Cash Equivalents":  (a) securities issued or directly and fully guaranteed
or insured by the United  States  Government,  or any agency or  instrumentality
thereof,  having  maturities  of not  more  than  one  year  from  the  date  of
acquisition;  (b)  marketable  general  obligations  issued  by any state of the
United States of America or


<PAGE>


                                                                               6


any  political  subdivision  of any  such  state or any  public  instrumentality
thereof  maturing  within one year from the date of acquisition  thereof and, at
the time of  acquisition  thereof,  having a credit rating of "A" or better from
either Standard & Poor's or Moody's Investors Service, Inc.; (c) certificates of
deposit,  time deposits,  eurodollar  time deposits,  overnight bank deposits or
bankers'  acceptances  having maturities of not more than one year from the date
of acquisition  thereof of any Lender,  or of any domestic  commercial  bank the
long-term debt of which is rated at the time of  acquisition  thereof at least A
or the equivalent thereof by Standard & Poor's or A or the equivalent thereof by
Moody's  Investors  Service,  Inc.,  and having capital and surplus in excess of
$500,000,000; (d) repurchase obligations with a term of not more than seven days
for  underlying  securities  of the types  described in clauses (a), (b) and (c)
entered  into with any bank meeting the  qualifications  specified in clause (c)
above;  (e) commercial  paper rated at the time of acquisition  thereof at least
A-2 or the  equivalent  thereof by  Standard  & Poor's or P-2 or the  equivalent
thereof by Moody's Investors Service,  Inc., or carrying an equivalent rating by
a nationally  recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments,  and in either case maturing within 270
days after the date of  acquisition  thereof;  (f)  interests in any  investment
company which invests solely in instruments of the type specified in clauses (a)
through (e) above; and (g) other investment  instruments  approved in writing by
the Required  Lenders and offered by any Lender or by any financial  institution
which has a combined capital and surplus of not less than $500,000,000.

     "Certificate  of Available  Excess Equity  Proceeds":  a certificate  to be
delivered by the  Borrower  pursuant to  subsections  6.1(a) and (b) in form and
substance  satisfactory to the Administrative Agent setting forth (i) the amount
of Available  Excess Equity  Proceeds as of the last day of the fiscal period to
which such certificate relates and (ii) the calculations  reasonably required to
determine  such amount,  certified by a  Responsible  Officer of the Borrower as
being stated fairly in all material respects.

     "Change of Control":  (a) any Person  (other than GEI, the Investors or the
Continuing  Stockholders),  whether  singly or in concert with one or more other
such  Persons,  shall,  directly  or  indirectly,  beneficially  own  a  greater
percentage,  on a fully diluted basis, of the outstanding  Capital Stock (having
ordinary  power in the election of  directors of Holdings) of Holdings  than the
percentage  of such  outstanding  Capital Stock  beneficially  owned by GEI, the
Investors and the Continuing  Stockholders  in the  aggregate,  (b) the Board of
Directors  of the  Borrower  shall  not  consist  of a  majority  of  Continuing
Directors, (c) Holdings shall not directly own, beneficially and of record, 100%
of the issued and outstanding  Capital Stock of the Borrower,  free and clear of
all Liens  other  than the Lien of the  Security  Documents  or (d) a "Change of
Control" (as defined in the Senior Subordinated Note Indenture) shall occur. For
the purposes of this  definition,  GEI and Investors  shall  include  Affiliates
thereof.

     "Chase":  The Chase Manhattan Bank, a New York banking  corporation and its
successors.


<PAGE>


                                                                               7



     "Closing Date": the first date on which the conditions  precedent set forth
in subsections 5.1 and 5.2 shall be satisfied or waived.

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

     "Collateral":  all  assets  of the Loan  Parties,  now  owned or  hereafter
acquired, upon which a Lien is purported to be created by any Security Document.

     "Commercial Letter of Credit": as defined in subsection 2.10(b)(i)(2).

     "Commitment":  with respect to any Lender, the collective reference to such
Lender's Revolving Credit Commitment;  collectively,  as to all the Lenders, the
"Commitments".

     "Commitment Percentage": as to any Lender at any time, the percentage which
(i) the sum of (a) such Lender's then Available Revolving Credit Commitment plus
(b) such Lender's Loans (other than Swing Line Loans) then  outstanding plus (c)
the product of such Lender's  Revolving Credit  Commitment  Percentage times the
sum of (I) the Swing Line Loans then  outstanding  and (II) the L/C  Obligations
then outstanding then constitutes of (ii) the sum of (x) the aggregate Available
Revolving  Credit  Commitments  of the Lenders plus (y) the aggregate  principal
amount of Loans of all the Lenders then  outstanding  plus (z) the aggregate L/C
Obligations of all the Lenders then outstanding.

     "Commonly Controlled Entity": an entity, whether or not incorporated, which
is under common control with the Borrower  within the meaning of Section 4001 of
ERISA or is part of a group which  includes the Borrower and which is treated as
a single  employer  under  Section  414(b)  or (c) of the Code  or,  solely  for
purposes  of  determining  liability  under  Section  412 of the Code,  which is
treated as a single employer under Section 414 (b), (c), (m) or (o) of the Code.

     "Companies":  the Borrower, Old Twin, Alvita Products, Inc., Twinlab Export
Corp.,  Twinlab  Specialty  Corporation,  B. Bros  Realty  Corporation  and ARP,
collectively.

     "Companies EBITDA": for any period, prior to the Original Closing Date, for
the  Companies,  the  combined  net income for such  period,  plus to the extent
deducted in determining  such combined net income,  (i) interest  expense,  (ii)
depreciation, (iii) depletion, (iv) amortization (including amortization of debt
discount and  deferred  financing  costs),  (v) all  Federal,  state,  local and
foreign income and corporate withholding taxes, (vi) all other non-cash expenses
or  non-cash  losses,  (vii) any  extraordinary  and  unusual  losses and (viii)
transaction fees and expenses  associated with the  Transactions  and, minus, to
the extent added in  determining  such net income,  (i) any  non-cash  income or
non-cash gains and (ii) any  extraordinary and unusual gains, all as determined,
to the extent applicable,  on a combined basis in accordance with GAAP. (For the
purposes of this definition, (i) "interest expense" shall mean, for


<PAGE>


                                                                               8



any period,  the net interest expense of the combined  Companies for such period
as determined in accordance  with GAAP and (ii) "net income" shall mean, for any
period,  the net income of the combined  Companies for such period as determined
in accordance with GAAP.)

     "Consolidated Cash Interest Expense": for any period, Consolidated Interest
Expense paid in cash during such period.

     "Consolidated EBITDA": for any period, the Consolidated Net Income for such
period,  plus,  to the extent  deducted in  determining  such  Consolidated  Net
Income, (i) Consolidated Interest Expense,  (ii) depreciation,  (iii) depletion,
(iv)  amortization   (including  amortization  of  debt  discount  and  deferred
financing costs), (v) all Federal, state, local and foreign income and corporate
withholding  taxes, (vi) all other non-cash  expenses or non-cash losses,  (vii)
any  extraordinary  and unusual  losses,  (viii)  transaction  fees and expenses
associated  with the  Transactions,  (ix) fees and expenses  associated with any
acquisition or financing  whether or not  consummated  and (x)  amortization  or
write-off of the  consideration for the non-compete  agreements  entered into in
connection with the Transactions  and, minus, to the extent added in determining
such Consolidated Net Income, (i) any non-cash income or non-cash gains and (ii)
any  extraordinary  and  unusual  gains,  all  as  determined,   to  the  extent
applicable, on a consolidated basis in accordance with GAAP. Notwithstanding the
foregoing,  (i)  Consolidated  EBITDA for the fiscal quarters ended December 31,
1995 and March 31, 1996 shall be $10,400,000 and $10,600,000,  respectively, and
(ii)  for  the  period  from  April  1,  1996  to  the  Original  Closing  Date,
Consolidated EBITDA shall be the Companies EBITDA for such period.

     "Consolidated  Interest Coverage Ratio": for any period of four consecutive
fiscal  quarters  ending during any Test Period,  the ratio of (a)  Consolidated
EBITDA  for such  period to (b)  Consolidated  Cash  Interest  Expense  for such
period.

     "Consolidated  Interest Expense":  for any period, the net interest expense
of the  Borrower  and its  Subsidiaries  for  such  period  as  determined  on a
consolidated basis in accordance with GAAP.

     "Consolidated Net Income":  for any period,  the net income of the Borrower
and its  Subsidiaries  for such period as determined on a consolidated  basis in
accordance with GAAP.

     "Consolidated  Total Debt": at any date of determination,  all Indebtedness
of the Borrower and its Subsidiaries at such date of determination that would be
included in the liabilities on a consolidated  balance sheet of the Borrower and
its Subsidiaries as at such date, prepared in accordance with GAAP.

     "Continuing  Directors":  the directors of Holdings on the Closing Date and
each other  director,  if such other  director's  nomination for election to the
Board  of  Directors  of  Holdings  is  recommended  by a  majority  of the then
Continuing Directors.


<PAGE>


                                                                               9


     "Continuing Stockholders": as defined in the Stock Purchase Agreement.

     "Contractual  Obligation":  as to any Person, any provision of any security
issued  by  such  Person  or of any  material  agreement,  instrument  or  other
undertaking  to  which  such  Person  is a party  or by  which  it or any of its
property is bound.

     "CSI": Chase Securities Inc., a Delaware corporation.

     "Currency  Rate  Protection  Agreements":  as to any  Person,  all  foreign
exchange  contracts,  currency swap  agreements  or other similar  agreements or
arrangements  entered  into in the  ordinary  course of  business by such Person
designed to protect such Person against fluctuations in currency values.

     "Default":  any of the events  specified in Section 10,  whether or not any
requirement  for the giving of notice,  the lapse of time, or both, or any other
condition, has been satisfied.

     "Designated  Sale/Leaseback  Financing  Property":  any  acquisition by the
Borrower and its Subsidiaries of capital assets,  as to which the Borrower shall
notify the  Administrative  Agent by the last Business Day of the fiscal year in
which such capital  asset is acquired  that it intends to sell and  leaseback or
otherwise  finance,  in a transaction  permitted  hereunder,  such capital asset
within a twelve-month period from acquisition,  provided the aggregate amount of
assets so  designated  at any time may not exceed  $3,000,000.  If such sale and
leaseback or other financing shall not have occurred within twelve months of the
acquisition,   such  acquisition   shall  be  deemed  to  constitute  a  Capital
Expenditure at the expiration of such twelve month period.

     "Domestic  Subsidiary":  any Subsidiary of the Borrower organized under the
laws of the United States of America or any political subdivision thereof.

     "Dollars" and "$": lawful currency of the United States of America.

     "Environmental  Laws":  any and  all  foreign,  Federal,  state,  local  or
municipal  laws,  rules,  orders,  regulations,   statutes,  ordinances,  codes,
decrees,  requirements of any Governmental  Authority having the force of law or
other  Requirements  of Law (including  common law)  regulating,  relating to or
imposing  liability or standards of conduct  concerning  the  protection  of the
environment or the protection of human health as it relates to the protection of
the environment, as now or at any time hereafter in effect.

     "Environmental    Permits":   all   permits,    licenses,    registrations,
notifications,  exemptions,  and other  authorizations  required  by or from any
Governmental Authority under Environmental Laws.


<PAGE>


                                                                              10



     "Equity Interest":  Capital Stock and all warrants, options or other rights
to acquire  Capital Stock (but  excluding any debt security that is  convertible
into, or exchangeable for, Capital Stock).

     "Equity  Offering":  any offering of Capital Stock or private  placement of
Capital  Stock of  Holdings  excluding  any  post-closing  payment  received  by
Holdings pursuant to the terms of the Stock Purchase Agreement.

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

     "Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar
Loan, the aggregate  (without  duplication) of the rates (expressed as a decimal
fraction)  of reserve  requirements  in effect on such day  (including,  without
limitation,  basic,  supplemental,  marginal and  emergency  reserves  under any
regulations  of the Board of Governors or other  Governmental  Authority  having
jurisdiction with respect thereto) dealing with reserve requirements  prescribed
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D) maintained by a member bank of the Federal Reserve System.

     "Eurodollar  Base  Rate":  with  respect to each day during  each  Interest
Period  pertaining to a Eurodollar Loan, the rate per annum equal to the rate at
which Chase is offered  Dollar  deposits  at or about 10:00 A.M.,  New York City
time,  two Business Days prior to the  beginning of such Interest  Period in the
interbank  eurodollar  market  where the  eurodollar  and foreign  currency  and
exchange  operations in respect of its Eurodollar Loans are then being conducted
for  delivery  on the first day of such  Interest  Period for the number of days
comprised  therein and in an amount  comparable to the amount of its  Eurodollar
Loan to be outstanding during such Interest Period.

     "Eurodollar Loans": Loans the rate of interest applicable to which is based
upon the Eurodollar Rate.

     "Eurodollar  Rate":  with respect to each day during each  Interest  Period
pertaining  to a Eurodollar  Loan, a rate per annum  determined  for such day in
accordance with the following  formula  (rounded upward to the nearest 1/16th of
1%):

                              Eurodollar Base Rate
                    ---------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

     "Event of Default":  any of the events  specified  in Section 10,  provided
that all requirements for the giving of notice,  the lapse of time, or both, and
any other conditions, have been satisfied.

     "Existing Credit Agreement": the Credit and Guarantee Agreement dated as of
May 7, 1996 among Holdings, the Borrower, the Administrative Agent, The Bank of


<PAGE>


                                                                              11



New York as  documentation  agent and the  several  banks  and  other  financial
institutions from time to time parties thereto,  which Existing Credit Agreement
is amended and restated pursuant to the terms of this Agreement.

     "Extension of Credit": with respect to any Lender, (a) the making of a Loan
by such Lender and (b) the  issuance of a Letter of Credit;  with respect to all
the Lenders, the "Extensions of Credit".

     "FDIC":  the Federal Deposit  Insurance  Corporation  and any  Governmental
Authority which succeeds to the powers and functions thereof.

     "Federal Funds Effective Rate": as defined in the definition of ABR.

     "Final Offering  Memorandum":  the Offering  Memorandum  dated May 1, 1996,
with respect to the issuance of the Senior  Subordinated  Notes, a copy of which
has been furnished to each Lender.

     "Financing Lease": any lease of property, real or personal, the obligations
of the lessee in respect of which are  required  in  accordance  with GAAP to be
capitalized on a balance sheet of the lessee.

     "Financing Lease  Obligations":  as to any Person,  the obligations of such
Person to pay rent or other  amounts under any  Financing  Lease;  the amount of
such  obligations  at any time shall be the  capitalized  amount thereof at such
time determined in accordance with GAAP.

     "Foreign  Subsidiary":  any Subsidiary of the Borrower  organized under the
laws of any jurisdiction outside the United States of America.

     "Funded  Indebtedness":   all  Indebtedness  of  the  Borrower  under  this
Agreement and the Senior Subordinated Note Indenture.

     "GAAP":  generally accepted  accounting  principles in the United States of
America in effect from time to time (subject to subsection 1.2(e)).

     "GEI": Green Equity Investors II, L.P.

     "Governmental  Authority":  any  nation or  government,  any state or other
political subdivision thereof and any entity exercising executive,  legislative,
judicial, regulatory or administrative functions of or pertaining to government.

     "Grantor":  as defined in the  Preamble  to the  Guarantee  and  Collateral
Agreement.

     "Green":  Leonard Green and Partners,  L.P., a Delaware limited partnership
and an affiliate of GEI.


<PAGE>

                                                                              12


     "Guarantee":  the guarantee  contained in Section 9 or in the Guarantee and
Collateral Agreement; collectively, the "Guarantees".

     "Guarantee  and  Collateral   Agreement":   the  Guarantee  and  Collateral
Agreement  dated as of May 7, 1996  executed  and  delivered  by  Holdings,  the
Borrower and each Subsidiary  (other than a Foreign  Subsidiary) in favor of the
Administrative Agent, for the benefit of the Lenders,  substantially in the form
of  Exhibit B to the  Existing  Credit  Agreement,  as the same may be  amended,
supplemented or otherwise modified from time to time.

     "Guarantee  Obligation":  as to any Person (the "Guaranteeing Person"), any
obligation  of (a) the  Guaranteeing  Person or (b) another  Person  (including,
without limitation,  any bank under any letter of credit) to induce the creation
of which the Guaranteeing  Person has issued a reimbursement,  counter indemnity
or similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, lease, dividend or other obligation (the "Primary Obligations") of
any other third Person (the "Primary  Obligor") in any manner,  whether directly
or indirectly, including, without limitation, any obligation of the Guaranteeing
Person,  whether or not contingent,  (i) to purchase any such Primary Obligation
or any  property  constituting  direct or indirect  security  therefor,  (ii) to
advance or supply  funds (1) for the  purchase  or  payment of any such  Primary
Obligation or (2) to maintain  working  capital or equity capital of the Primary
Obligor or  otherwise  to  maintain  the net worth or  solvency  of the  Primary
Obligor,  (iii) to purchase  property,  securities or services primarily for the
purpose of assuring the owner of any such Primary  Obligation  of the ability of
the Primary Obligor to make payment of such Primary Obligation or (iv) otherwise
to assure or hold harmless the owner of any such Primary Obligation against loss
in respect thereof; provided,  however, that the term Guarantee Obligation shall
not  include  endorsements  of  instruments  for  deposit or  collection  in the
ordinary course of business or normal and customary  indemnification pursuant to
the Transactions, or any transaction heretofore or hereafter entered into by the
Companies,  the Borrower, or any of the Borrower's  Subsidiaries in the ordinary
course of business  permitted  hereunder,  or in connection with any purchase or
sale of assets permitted  hereunder.  The amount of any Guarantee  Obligation of
any  Guaranteeing  Person shall be deemed to be the lower of (a) an amount equal
to the stated or  determinable  amount of the Primary  Obligation  in respect of
which such  Guarantee  Obligation  is made and (b) the maximum  amount for which
such  Guaranteeing  Person may be liable pursuant to the terms of the instrument
embodying  such  Guarantee  Obligation,  unless such Primary  Obligation and the
maximum amount for which such  Guaranteeing  Person may be liable are not stated
or determinable,  in which case the amount of such Guarantee Obligation shall be
such Guaranteeing  Person's maximum reasonably  anticipated liability in respect
thereof as determined by the Borrower in good faith.

     "Guarantors":   Holdings   and  each   Subsidiary   (other   than   Foreign
Subsidiaries) of the Borrower.


<PAGE>

                                                                              13


     "Hazardous  Materials":  any petroleum (including crude oil or any fraction
thereof) or petroleum  products,  polychlorinated  biphenyls,  urea-formaldehyde
insulation,    asbestos   and   asbestos-containing    materials,    pollutants,
contaminants,  and all other materials and substances  including but not limited
to radioactive  materials  regulated  pursuant to any Environmental  Laws or the
handling or disposal of which could result in liability under any  Environmental
Law.

     "Holdings": as defined in the Preamble to this Agreement.

     "Indebtedness":  of any Person at any date,  without  duplication,  (a) all
indebtedness  of such Person for  borrowed  money or for the  deferred  purchase
price of property or services (other than current trade liabilities  incurred in
the ordinary course of business  payable in accordance with customary  practices
and not more than 90 days past due,  unless  being  contested  in good  faith by
appropriate  proceedings,  and  compensation,   pension  obligations  and  other
obligations arising from employee benefits and employee  arrangements),  (b) any
other indebtedness of such Person which is evidenced by a note, bond (other than
those of the type  referred  to in  subsection  8.3(d)),  debenture  or  similar
instrument,  (c)  all  Financing  Lease  Obligations  of  such  Person,  (d) all
obligations of such Person under Rate Protection Agreements, (e) all obligations
of such  Person  in  respect  of  letters  of  credit  (whether  or not  drawn),
acceptances  and similar  obligations  issued or created for the account of such
Person, and (f) all indebtedness of others of the types described in (a) through
(e) above  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
(the amount of such  indebtedness with respect to such Person being deemed to be
the  lesser  of the  fair  market  value  of  such  property  or the  amount  of
indebtedness of others so secured).

     "Insolvency":  with respect to any  Multiemployer  Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.

     "Insolvent": pertaining to a condition of Insolvency.

     "Interest  Payment Date":  (a) as to ABR Loans, the last day of each April,
July,  October and  January,  (b) as to any  Eurodollar  Loan having an Interest
Period of three months or less, the last day of such Interest  Period and (c) as
to any Eurodollar Loan having an Interest Period longer than three months,  each
day which is three months, or a whole multiple  thereof,  after the first day of
such Interest Period and the last day of such Interest Period.

     "Interest Period": with respect to any Eurodollar Loan:

          (i)  initially,  the period  commencing on the borrowing or conversion
     date, as the case may be, with respect to such  Eurodollar  Loan and ending
     one, two,  three or six months  thereafter,  as selected by the Borrower in
     its notice of borrowing or notice of conversion,  as the case may be, given
     with respect thereto; and


<PAGE>

                                                                              14


          (ii)  thereafter,  each period  commencing on the last day of the next
     preceding  Interest  Period  applicable to such  Eurodollar Loan and ending
     one, two,  three or six months  thereafter,  as selected by the Borrower by
     irrevocable notice to the Administrative Agent not less than three Business
     Days prior to the last day of the then current Interest Period with respect
     thereto;

     provided that, all of the foregoing provisions relating to Interest Periods
     are subject to the following:

          (1) if any Interest  Period would otherwise end on a day that is not a
     Business Day, such Interest Period shall be extended to the next succeeding
     Business  Day unless the  result of such  extension  would be to carry such
     Interest  Period into another  calendar  month in which event such Interest
     Period shall end on the immediately preceding Business Day;

          (2)  no  Interest  Period  that  would  otherwise  extend  beyond  the
     Termination Date shall be selected by the Borrower;

          (3) any  Interest  Period  that begins on the last  Business  Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest  Period) shall end on
     the last Business Day of a calendar month; and

          (4) the Borrower shall select Interest  Periods so as not to require a
     payment or prepayment of any Eurodollar  Loan during an Interest Period for
     such Eurodollar Loan.

     "Interest Rate Protection Agreements":  as to any Person, all interest rate
swaps,  caps or collar agreements or similar  arrangements  entered into by such
Person  providing for protection  against  fluctuations in interest rates or the
exchange of nominal  interest  obligations,  either  generally or under specific
contingencies.

     "Investment": as defined in subsection 7.9.

     "Investor  Common":  the common  stock of Holdings  acquired by GEI and the
Investors on the Original Closing Date.

     "Investors":  holders, other than GEI and the Continuing  Stockholders,  of
the Investor Common and the PIK Preferred.

     "IPO": as defined in the recitals hereto.

     "Issuing Bank":  Chase or any of its Affiliates,  in its capacity as issuer
of any Letter of Credit.

     "L/C Commitment": $15,000,000.


<PAGE>

                                                                              15


     "L/C Fee  Payment  Date":  the last day of each  April,  July,  October and
January and the Termination Date.

     "L/C  Obligations":  at any  time,  an  amount  equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then  outstanding  Letters of
Credit and (b) the  aggregate  amount of drawings  under Letters of Credit which
have not been reimbursed.

     "L/C  Participants":  collectively,  all the Lenders other than the Issuing
Bank.

     "Lenders": as defined in the Preamble to this Agreement.

     "Letters of Credit": collectively, Commercial Letters of Credit and Standby
Letters of Credit.

     "Lien":  any  mortgage,  pledge,  hypothecation,  assignment  for security,
deposit  arrangement,  encumbrance,  lien (statutory or other),  charge or other
security  interest or any  preference,  priority or other security  agreement or
preferential  arrangement of any kind or nature whatsoever  (including,  without
limitation,  any  conditional  sale or other title  retention  agreement and any
Financing  Lease having  substantially  the same  economic  effect as any of the
foregoing).

     "Loan": any Revolving Credit Loan or Swing Line Loan.

     "Loan  Documents":   this  Agreement,   any  Notes,  the  Guarantees,   the
Applications, and the Security Documents.

     "Loan Participants": as defined in subsection 12.6(b).

     "Loan Parties":  the Borrower,  Holdings,  ARP and each other Subsidiary of
the Borrower which is a party to a Loan Document.

     "Management Services Agreement":  the Management Services Agreement,  dated
as of the Original Closing Date, between the Borrower and Green.

     "Material  Adverse Effect":  a material adverse effect on (a) the business,
operations,  property,  assets, prospects, or condition (financial or otherwise)
of  Holdings  and its  Subsidiaries  taken  as a whole  or (b) the  validity  or
enforceability  of this  Agreement or any of the other Loan  Documents or any of
the  material  rights or  remedies  of the  Administrative  Agent or the Lenders
hereunder or thereunder.

     "Merger Agreement":  the Merger Agreement, dated as of the Original Closing
Date, among the Companies (other than ARP).

     "Mortgaged  Property":  the real property owned by the Loan Parties located
in Utah.


<PAGE>

                                                                              16

     "Mortgages":   collectively,  the  Borrower  Mortgage  and  the  Subsidiary
Mortgage.

     "Multiemployer  Plan": a Plan which is a  multiemployer  plan as defined in
Section 4001(a)(3) of ERISA.

     "Net Proceeds":  with respect to any Person,  (a) with respect to any Asset
Sale by such Person, the cash proceeds  (including any cash payments received by
way  of  deferred  payment  of  principal  pursuant  to a  note  or  installment
receivable or purchase price adjustment receivable or otherwise, but only as and
when received) of such Asset Sale net of (i) attorneys' fees, accountants' fees,
investment  banking fees, survey costs,  title insurance  premiums,  and related
search and recording charges,  transfer taxes, deed or mortgage recording taxes,
required debt payments (other than pursuant hereto),  other customary  expenses,
amounts  required to be applied to the  repayment of  Indebtedness  secured by a
Lien  expressly  permitted  hereunder  on any asset which is the subject of such
Asset Sale  (other  than any Lien in favor of the  Administrative  Agent for the
benefit of the Lenders)  and  brokerage,  consultant  and other  customary  fees
actually  incurred  in  connection  therewith,  (ii)  taxes paid or payable as a
result  thereof,  (iii) all amounts  deemed  appropriate  by the  Borrower to be
provided as a reserve in accordance with GAAP against any liabilities associated
with the assets that are the subject of such Asset Sale,  provided  that, if the
amounts held in reserve are reversed, at such time such reserve amounts shall be
deemed to constitute Net Proceeds after deducting any additional  taxes required
to be paid in  connection  therewith,  and (iv) the portion of any cash payments
attributable  to Persons  holding a minority  interest  in any  Subsidiary,  the
assets of which are the subject of such Asset Sale;  and (b) with respect to any
issuance of equity  securities  or the  incurrence of any  Indebtedness  by such
Person  subsequent  to the Closing Date,  the cash  proceeds  received from such
issuance or incurrence net of investment  banking fees, legal fees,  accountants
fees,  underwriting  discounts  and  commissions  and other  customary  fees and
expenses,  taxes and other  reasonable costs and expenses  actually  incurred in
connection therewith.

     "New Lending Office": as defined in subsection 3.10(c).

     "Non-Excluded Taxes": as defined in subsection 3.10(a).

     "Notes":  collectively,  the Swing Line Note and Revolving Credit Notes, if
any.

     "NYUCC":  the Uniform Commercial Code as from time to time in effect in the
State of New York.

     "Obligations":  the unpaid  principal  of and interest on the Loans and all
other  obligations and liabilities of the Borrower to the  Administrative  Agent
and the Lenders (including,  without  limitation,  interest accruing at the then
applicable  rate provided in this Agreement  after the maturity of the Loans and
interest  accruing at the then  applicable rate provided in this Agreement after
the filing of any petition in


<PAGE>

                                                                              17


bankruptcy,  or the  commencement  of any  insolvency,  reorganization  or  like
proceeding,  relating to the Borrower, whether or not a claim for post-filing or
post-petition  interest  is  allowed  in such  proceeding),  whether  direct  or
indirect,  absolute or  contingent,  due or to become  due,  or now  existing or
hereafter  incurred,  which may arise under, out of, or in connection with, this
Agreement,  the other Loan Documents, any Rate Protection Agreement entered into
by the  Borrower  with any  Lender  or any  Affiliate  of any  Lender,  any cash
management  services  agreement  entered into by the Borrower with any Lender or
any Affiliate of any Lender or any other  document  made,  delivered or given in
connection herewith or therewith,  in each case whether on account of principal,
interest,  reimbursement  obligations,  fees,  indemnities,  costs,  expenses or
otherwise (including,  without limitation, all fees and disbursements of counsel
to the  Administrative  Agent or to the Lenders  that are required to be paid by
the Borrower pursuant to the terms of this Agreement, any other Loan Document or
any such Rate Protection Agreement or cash management services agreement entered
into by the Borrower with any Lender or any Affiliate of any Lender).

     "Obsolete   Property":   any  property  of  the  Borrower  or  any  of  its
Subsidiaries which is obsolete, outdated or worn out or the useful life of which
has ended, in each case in the good faith determination of the Borrower.

     "Old Twin": Twin Laboratories Inc., a New York corporation.

     "Original Closing Date": May 7, 1996.

     "PBGC": the Pension Benefit Guaranty  Corporation  established  pursuant to
Subtitle A of Title IV of ERISA and any Governmental Authority which succeeds to
the powers and functions thereof.

     "Permitted  Acquisition":  any acquisition of all or substantially  all the
assets of, or at least 80% of the shares or other Equity  Interests in, a Person
or division or line of  business  of a Person or other  significant  assets of a
Person if immediately  after giving effect  thereto:  (a) no Default or Event of
Default shall have occurred and be continuing or would result therefrom, (b) all
transactions  related  thereto shall be consummated in all material  respects in
accordance with applicable  laws, (c) all actions  required to be taken, if any,
with respect to any acquired or newly formed  Subsidiary  under  subsection 6.10
shall have been taken and (d)(i) the Borrower shall be in  compliance,  on a pro
forma basis after  giving  effect to such  acquisition  or  formation,  with the
covenants  contained in subsection 7.1 recomputed as at the last day of the most
recently  ended  fiscal  quarter  of the  Borrower  as if such  acquisition  had
occurred on the first day of each relevant  period for testing such  compliance,
and the Borrower shall have delivered to the  Administrative  Agent, with a copy
for each of the Lenders,  a certificate (and the pro forma assumptions  relating
thereto) of a  Responsible  Officer to such effect,  together  with all relevant
financial  information for such  Subsidiary or assets (to the extent  reasonably
available),  and (ii) after giving effect to such  transaction,  any acquired or
newly formed Subsidiary shall not be liable


<PAGE>

                                                                              18


for any Indebtedness  (except for Guarantee  Obligations  permitted  pursuant to
subsection 7.4 and Indebtedness permitted by subsection 7.2(g)).

     "Permitted Acquisition Amount": $35,000,000.

     "Permitted Liens": as defined in subsection 7.3.

     "Person": an individual,  partnership,  corporation,  business trust, joint
stock company,  limited liability company,  trust,  unincorporated  association,
joint venture, Governmental Authority or other entity of whatever nature.

     "PIK  Preferred":  all of the  outstanding  pay-in-kind  preferred stock of
Holdings  which consists of an issue of senior  preferred  stock and an issue of
junior preferred stock.

     "Plan": at a particular time, any employee benefit plan which is covered by
ERISA and in respect of which the  Borrower or a Commonly  Controlled  Entity is
(or, if such plan were  terminated  at such time,  would under  Section  4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

     "Prepayment Account": as defined in subsection 3.1(c).

     "Primary   Obligations":   as  defined  in  the  definition  of  "Guarantee
Obligation" contained in this subsection 1.1.

     "Proceeds": as defined in the NYUCC.

     "Properties": as defined in subsection 4.17.

     "Public Equity Offering": any public offering of Capital Stock of Holdings.

     "Rate Protection  Agreements":  collectively,  any Currency Rate Protection
Agreements and Interest Rate Protection Agreements.

     "Recapitalization": as defined in the recitals hereto.

     "Refinancing Indebtedness": as defined in subsection 7.2(o).

     "Refunded Swing Line Loans": as defined in subsection 2.8(b).

     "Register": as defined in subsection 12.6(d).

     "Registration Rights Agreement": as defined in the Senior Subordinated Note
Indenture.


<PAGE>

                                                                              19


     "Regulation  D":  Regulation  D of the Board of Governors as in effect from
time to time.

     "Regulation  G":  Regulation  G of the Board of Governors as in effect from
time to time.

     "Regulation  H":  Regulation  H of the Board of Governors as in effect from
time to time.

     "Regulation  U":  Regulation  U of the Board of Governors as in effect from
time to time.

     "Regulation  X":  Regulation  X of the Board of Governors as in effect from
time to time.

     "Reimbursement Obligation": the obligation of the Borrower to reimburse the
Issuing Bank pursuant to  subsection  2.14(a) for amounts drawn under Letters of
Credit.

     "Reorganization":  with respect to any  Multiemployer  Plan,  the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

     "Replacement  Asset":  any property  acquired by the Borrower or any of its
Subsidiaries  subsequent to the Closing Date which replaces Obsolete Property or
assets that were disposed of in accordance with subsection 7.6.

     "Reportable  Event":  any of the  events  set forth in  Section  4043(c) of
ERISA,  other  than those  events as to which the  thirty  day notice  period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615.

     "Repurchase Payments": the prepayment, redemption, defeasance or repurchase
of the  Senior  Subordinated  Notes  through  either  the use of Loan  proceeds,
available cash of the Borrower or Available Excess Equity Proceeds.

     "Required  Lenders":  at any time,  Lenders the  Commitment  Percentages of
which aggregate more than 50%.

     "Requirement   of  Law":  as  to  any  Person,   (i)  the   Certificate  of
Incorporation and By-Laws or other organizational or governing documents of such
Person,  and (ii) any law,  treaty,  rule or regulation or  determination  of an
arbitrator or a court or other Governmental  Authority,  in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject;  provided however,  that for purposes of Section
4, Requirement of Law shall mean only clause (ii) of this definition.


<PAGE>

                                                                              20


     "Responsible  Officer":  as to any Person,  the chief executive officer and
the  president of such Person or, with respect to financial  matters,  the chief
financial  officer of such  Person  or, in either  case,  such  other  executive
officers as may be designated from time to time by such Person in writing to the
Administrative Agent.

     "Restricted Payments": as defined in subsection 7.7.

     "Revolving Credit  Commitment":  with respect to any Lender, its obligation
to make Revolving  Credit Loans and/or issue or participate in Letters of Credit
issued on behalf of the Borrower and/or  participate in Swing Line Loans made to
the  Borrower  in an amount not to exceed the  amount  set forth  opposite  such
Lender's name on Schedule 1.1 under the heading  "Revolving Credit  Commitment",
as such amount may be reduced from time to time pursuant to this Agreement or as
such  amount may be adjusted  from time to time  pursuant  to  subsection  12.6;
collectively, as to all such Lenders, the "Revolving Credit Commitments".

     "Revolving Credit Commitment Percentage": as to any Lender at any time, the
percentage  which (i) the sum of (a) such Lender's then unused  Revolving Credit
Commitment plus (b) such Lender's  Revolving  Credit Loans then outstanding plus
(c) the product of the percentage of the Revolving Credit Commitments of all the
Lenders then constituted by such Lender's  Revolving Credit Commitment times the
sum of (I) the Swing Line Loans then  outstanding  and (II) the L/C  Obligations
then  outstanding  then  constitutes  of  (ii)  the  sum  of (w)  the  aggregate
outstanding then unused Revolving Credit Commitments of all the Lenders plus (x)
the aggregate principal amount of Revolving Credit Loans of all the Lenders then
outstanding plus (y) the aggregate L/C Obligations then outstanding plus (z) the
Swing Line Loans then outstanding.

     "Revolving  Credit  Commitment  Period":  the period from and including the
Closing Date to but not including the  Termination  Date or such earlier date on
which the Revolving Credit Commitments shall terminate as provided herein.

     "Revolving Credit Fee Percentage": as defined in subsection 2.12(b).

     "Revolving Credit Loans": as defined in subsection 2.1(a).

     "Revolving Credit Note": as defined in subsection 2.5(e).

     "Sale/Leaseback Transaction": any arrangement with any Person providing for
the leasing by the Borrower or any Subsidiary of real or personal property which
has been or is to be sold or transferred  by the Borrower or such  Subsidiary 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 the
Borrower or such Subsidiary.


<PAGE>

                                                                              21


     "SEC": the Securities and Exchange Commission or any Governmental Authority
which succeeds to the powers and functions thereof.

     "Securities Act": the Securities Act of 1933, as amended.

     "Security Documents": collectively, the Guarantee and Collateral Agreement,
the  Mortgages,  and all other  security  documents  hereafter  delivered to the
Administrative  Agent  granting  a Lien on any asset or assets of any  Person to
secure the Obligations or to secure any guarantee of any such  Obligations  and,
including,   without  limitation,   any  such  document  delivered  pursuant  to
subsection 6.10.

     "Sellers":  the "Stockholder  Indemnitors" as defined in the Stock Purchase
Agreement.

     "Senior  Subordinated  Note Indenture":  the Indenture,  dated as of May 7,
1996, between the Borrower and Fleet National Bank, as trustee,  as the same may
be amended,  supplemented or otherwise  modified from time to time in accordance
with subsection  7.10 or any indenture or other agreement  pursuant to which any
Refinancing  Indebtedness  used to refinance  the Senior  Subordinated  Notes is
issued, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with subsection 7.10.

     "Senior Subordinated Notes": the Borrower's  $100,000,000 of 10 1/4% Senior
Subordinated Notes due 2006, issued under the Senior Subordinated Note Indenture
or any  Refinancing  Indebtedness  issued to refinance  the Senior  Subordinated
Notes.

     "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.

     "Solvent": when used with respect to any Person, means that, as of any date
of  determination,  (a) the amount of the "present fair  saleable  value" of the
assets of such  Person  will,  as of such date,  exceed the amount  that will be
required to pay all "liabilities of such Person, contingent or otherwise", as of
such date (as such quoted terms are  determined  in accordance  with  applicable
Federal and state laws governing determinations of the insolvency of debtors) as
such debts become  absolute and  matured,  (b) such Person will not have,  as of
such date,  an  unreasonably  small  amount of capital with which to conduct its
business,  and (c) such  Person  will be able to pay its  debts as they  mature,
taking  into  account  the timing of and  amounts of cash to be received by such
Person and the  timing of and  amounts of cash to be payable on or in respect of
indebtedness  of such Person;  in each case after giving effect to (A) as of the
Closing  Date the making of the  Extensions  of Credit to be made on the Closing
Date and the application of the proceeds of such Extensions of Credit and (B) on
any date after the Closing  Date,  the making of any  Extension  of Credit to be
made on such date and the  application  of the  proceeds  of such  Extension  of
Credit.  For  purposes  of this  definition,  (i) "debt"  means  liability  on a
"claim",  and (ii)  "claim"  means any right to  payment,  whether or not such a
right is reduced to judgment, liquidated, unliquidated,


<PAGE>

                                                                              22


fixed, contingent,  matured, unmatured,  disputed,  undisputed, legal equitable,
secured or unsecured.

     "Standby Letter of Credit": as defined in subsection 2.10(b)(i)(1).

     "Stock Purchase Agreement":  the Stock Purchase and Sale Agreement dated as
of March 5, 1996 (as amended,  supplemented  or otherwise  modified from time to
time in accordance  with the terms therein) among the  Stockholders  (as defined
therein), Holdings, the Borrower and GEI.

     "Subsidiary": as to any Person, a corporation,  partnership or other entity
of which shares of stock or other  ownership  interests  having  ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled,  directly
or  indirectly  through one or more  intermediaries,  or both,  by such  Person.
Unless   otherwise   qualified,   all  references  to  a   "Subsidiary"   or  to
"Subsidiaries"  in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.

     "Subsidiary  Mortgage":  each  Mortgage to be executed  and  delivered by a
Subsidiary,  substantially  in the  form of  Exhibit  A to the  Existing  Credit
Agreement, with such changes as the Administrative Agent shall deem necessary or
desirable in order (i) to provide that such Subsidiary is the Mortgagor, (ii) to
comply with and/or provide for specific laws of the  jurisdictions  in which the
property  to  be   encumbered   is  located,   and  (iii)  to  assure  that  the
Administrative  Agent,  for the benefit of the Lenders,  has a perfected Lien on
the property to be encumbered thereby securing such Subsidiary's Obligations (as
such term is defined in the  Guarantee  and  Collateral  Agreement),  or in such
other form as the Administrative Agent shall reasonably require, with respect to
each parcel of After-Acquired  Mortgage Property for which a mortgage is granted
to the  Administrative  Agent  pursuant to subsection  6.10, in each case as the
same may be amended, supplemented or otherwise modified from time to time.

     "Swing Line  Commitment":  the  obligation of the Swing Line Lender to make
Swing Line Loans  pursuant to subsection  2.6 in an aggregate  amount at any one
time outstanding not to exceed $5,000,000.

     "Swing Line Lender": as defined in subsection 2.6.

     "Swing Line Loan Participation Certificate": a certificate substantially in
the form of Exhibit C.

     "Swing Line Loans": as defined in subsection 2.6.

     "Swing Line Note": as defined in subsection 2.7(e).


<PAGE>

                                                                              23


     "Swing Line Participation Amount": as defined in subsection 2.9(b).

     "Termination Date": May 7, 2002.

     "Term Loan":  as defined in the recitals  hereto;  collectively,  the "Term
Loans".

     "Test Period": with respect to subsection 7.1(a), as set forth therein.

     "Tranche": collectively, Eurodollar Loans the then current Interest Periods
with  respect  to all of which  begin on the same date and end on the same later
date  (whether  or not such Loans  shall  originally  have been made on the same
day); Tranches may be identified as "Eurodollar Tranches".

     "Transactions":  the transactions  relating to the Stock Purchase Agreement
whereby the Borrower became a wholly-owned subsidiary of Holdings.

     "Transferee": as defined in subsection 12.6(f).

     "Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

     "Uniform Customs": the Uniform Customs and Practice for Documentary Credits
(1993 Revision),  International  Chamber of Commerce Publication No. 500, as the
same may be amended from time to time.

     1.2 Other  Definitional  Provisions;  Financial  Calculations.  (a)  Unless
otherwise specified therein,  all terms defined in this Agreement shall have the
defined  meanings when used in the other Loan  Documents or any  certificate  or
other document made or delivered pursuant hereto or thereto.

     (b) As used herein and in any Notes,  and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to the Borrower and
its  Subsidiaries  not defined in  subsection  1.1 and  accounting  terms partly
defined in subsection 1.1, to the extent not defined,  shall have the respective
meanings given to them under GAAP.

     (c) The words  "hereof",  "herein"  and  "hereunder"  and words of  similar
import when used in this Agreement  shall refer to this Agreement as a whole and
not to any  particular  provision of this  Agreement,  and Section,  subsection,
Schedule  and  Exhibit   references  are  to  this  Agreement  unless  otherwise
specified.

     (d) The meanings given to terms defined herein shall be equally  applicable
to both the singular and plural forms of such terms.

     (e) Notwithstanding anything to the contrary herein, for purposes of making
all  calculations in connection  with the covenants  contained in Section 7, all
accounting   terms  used  herein  shall  be   interpreted   and  all  accounting
determinations  hereunder  shall be made in  accordance  with GAAP  consistently
applied as in effect on the date of this Agreement. In the


<PAGE>

                                                                              24


event of any material  difference at any time between GAAP in effect on the date
of this  Agreement and GAAP from time to time in effect,  the  certificate  of a
Responsible  Officer required pursuant to subsection  6.2(b)(ii) shall include a
reconciliation   of  the  calculations   required  thereby  with  the  financial
statements being delivered with such certificate.


           SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS

     2.1 Revolving Credit  Commitments.  (a) Subject to the terms and conditions
hereof,  each Lender severally agrees to make revolving credit loans ("Revolving
Credit  Loans") to the Borrower  from time to time during the  Revolving  Credit
Commitment  Period in an aggregate  principal amount at any one time outstanding
which, when added to such Lender's Revolving Credit Commitment Percentage of (i)
the then  outstanding  Swing  Line  Loans  and (ii)  the  then  outstanding  L/C
Obligations,  does not  exceed  the  amount of such  Lender's  Revolving  Credit
Commitment.  During the Revolving Credit Commitment Period, the Borrower may use
the Revolving  Credit  Commitments by borrowing,  prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.

     (b) The  Revolving  Credit  Loans may from  time to time be (i)  Eurodollar
Loans,  (ii) ABR Loans or (iii) a  combination  thereof,  as  determined  by the
Borrower and notified to the Administrative Agent in accordance with subsections
2.2  and  3.2,  provided  that  no  Revolving  Credit  Loan  shall  be made as a
Eurodollar Loan after the day that is one month prior to the Termination Date.

     2.2 Procedure for Revolving Credit Borrowing. The Borrower may borrow under
the Revolving Credit  Commitments  during the Revolving Credit Commitment Period
on any Business Day,  provided that the Borrower  shall give the  Administrative
Agent  irrevocable  notice (which notice must be received by the  Administrative
Agent prior to 12:00 Noon,  New York City time, (a) three Business Days prior to
the requested  Borrowing  Date,  if all or any part of the  requested  Revolving
Credit Loans are to be initially Eurodollar Loans, or (b) one Business Day prior
to the requested  Borrowing  Date,  otherwise),  specifying (i) the amount to be
borrowed,  (ii) the requested  Borrowing Date, (iii) whether the borrowing is to
be of  Eurodollar  Loans,  ABR Loans or a  combination  thereof  and (iv) if the
borrowing  is to be  entirely  or partly of  Eurodollar  Loans,  the  respective
amounts  of each  such  Type of Loan and the  lengths  of the  initial  Interest
Periods  therefor.  Revolving  Credit  Loans  made  on the  Closing  Date  shall
initially be ABR Loans.  Each borrowing under the Revolving  Credit  Commitments
shall be in an amount equal to (x) in the case of ABR Loans, $500,000 or a whole
multiple of  $100,000 in excess  thereof  (or, if the then  Available  Revolving
Credit  Commitments  are less than $500,000,  such lesser amount) and (y) in the
case of Eurodollar  Loans,  $1,000,000 or a whole multiple of $500,000 in excess
thereof.  Upon receipt of any such notice from the Borrower,  the Administrative
Agent  shall  promptly  notify each  Lender  thereof.  Each Lender will make the
amount of its pro rata share of each borrowing  available to the  Administrative
Agent for the account of the Borrower at the office of the Administrative  Agent
specified in  subsection  12.2 prior to 12:00 Noon,  New York City time,  on the
Borrowing Date requested by the Borrower in funds immediately available to the


<PAGE>

                                       25


Administrative Agent. Such borrowing will then be made available to the Borrower
by the Administrative  Agent crediting the account of the Borrower designated in
its borrowing  notice prior to 1:00 P.M.,  New York City time, on such Borrowing
Date with the  aggregate  of the amounts made  available  to the  Administrative
Agent by the Lenders and in like funds as received by the Administrative Agent.

     2.3  Commitment  and  Other  Fees.  (a) The  Borrower  agrees to pay to the
Administrative  Agent for the  account of each Lender a  commitment  fee for the
period from and including the Closing Date to the Termination Date,  computed at
the rate shown on the Pricing  Grid set forth on Annex A hereto,  on the average
daily amount of the Available  Revolving Credit Commitment of such Lender during
the period for which payment is made,  payable  quarterly in arrears on the last
day of each April, July, October and January and on the Termination Date or such
earlier date as the Revolving  Credit  Commitments  shall  terminate as provided
herein, commencing on the first of such dates to occur after the date hereof.

     (b) The  Borrower  agrees to pay to Chase the amounts and fees set forth in
the Fee Letter  dated as of July 31, 1996 among  Chase,  CSI and the Borrower in
the amounts and on the dates set forth therein.

     2.4  Termination or Reduction of  Commitments.  The Borrower shall have the
right, upon not less than one Business Day's prior notice to the  Administrative
Agent  (who  shall  notify the  Lenders),  to  terminate  the  Revolving  Credit
Commitments or, from time to time, to reduce the amount of the Revolving  Credit
Commitments,  provided that no such  termination or reduction shall be permitted
if, after giving effect thereto and to any  prepayments of the Revolving  Credit
Loans made on the effective date thereof,  the aggregate principal amount of the
Revolving Credit Loans then outstanding,  when added to the then outstanding L/C
Obligations and Swing Line Loans,  would exceed the Revolving Credit Commitments
then in effect.  Any such reduction shall be in an amount equal to $500,000 or a
whole  multiple of $100,000 in excess thereof and shall reduce  permanently  the
Revolving Credit Commitments then in effect.

     2.5 Repayment of Revolving Credit Loans; Evidence of Debt. (a) The Borrower
hereby  unconditionally  promises  to pay to the  Administrative  Agent  for the
account of each Lender the then unpaid principal amount of each Revolving Credit
Loan of such Lender on the  Termination  Date (or such earlier date on which the
Revolving  Credit  Loans  become due and payable  pursuant to Section  10).  The
Borrower  hereby  further  agrees  to pay to the  Administrative  Agent  for the
account of each Lender interest on the unpaid  principal amount of the Revolving
Credit Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum,  and on the dates,  set forth in subsection
3.4.

     (b) Each Lender shall  maintain in  accordance  with its usual  practice an
account or  accounts  evidencing  indebtedness  of the  Borrower  to such Lender
resulting  from each  Revolving  Credit  Loan of such  Lender from time to time,
including the amounts of


<PAGE>

                                                                              26


principal  and interest  payable and paid to such Lender from time to time under
this Agreement.

     (c) The  Administrative  Agent shall record in the Register,  with separate
subaccount for each Lender,  (i) the amount and Borrowing Date of each Revolving
Credit Loan made hereunder, the Type thereof and each Interest Period applicable
thereto,  (ii) the amount of any  principal  or  interest  due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) both
the amount of any sum received by the  Administrative  Agent  hereunder from the
Borrower and each Lender's share thereof.

     (d) The entries made in the Register  pursuant to subsection  2.5(c) shall,
to the extent  permitted by applicable  law, and absent manifest error, be prima
facie  evidence of the existence and amounts of the  obligations of the Borrower
therein recorded;  provided, however, that the failure of any Lender to maintain
any account pursuant to subsection  2.5(b) or the  Administrative  Agent to make
recordings in the Register pursuant to subsection  2.5(c), or any error therein,
shall not in any manner  affect the  obligation  of the  Borrower to repay (with
applicable  interest) the  Revolving  Credit Loans made to such Borrower by such
Lender in accordance with the terms of this Agreement.

     (e) The Borrower agrees that, upon the request to the Administrative  Agent
by a Lender,  which request is communicated  to the Borrower,  the Borrower will
execute and deliver to such Lender a promissory  note of the Borrower  dated the
Closing Date evidencing the Revolving Credit Loans of such Lender, substantially
in the form of Exhibit D with  appropriate  insertions  as to date and principal
amount (a "Revolving  Credit Note").  Each Lender is hereby authorized to record
the date, Type and amount of each Revolving Credit Loan made by such Lender, the
date and  amount of each  payment  or  prepayment  of  principal  thereof,  each
continuation  thereof,  each  conversion of all or a portion  thereof to another
Type and, in the case of Eurodollar  Loans,  the length of each Interest  Period
and Eurodollar Rate with respect  thereto,  on the schedule (or any continuation
of the schedule)  annexed to and  constituting  a part of its  Revolving  Credit
Note, and any such recordation shall, to the extent permitted by applicable law,
and absent  manifest error,  constitute  prima facie evidence of the accuracy of
the  information  so  recorded,  provided  that  the  failure  to make  any such
recordation  (or any error  therein)  shall not  affect  the  obligation  of the
Borrower to repay (with applicable  interest) the Revolving Credit Loans made to
the Borrower in accordance with the terms of this Agreement.

     2.6 Swing  Line  Commitment.  Subject to the terms and  conditions  hereof,
Chase (in such  capacity,  the "Swing Line Lender")  agrees to make a portion of
the Revolving Credit Commitments  available to the Borrower during the Revolving
Credit  Commitment Period by making swing line loans ("Swing Line Loans") to the
Borrower  in an  aggregate  principal  amount  not to  exceed  at any  one  time
outstanding the Swing Line Commitment then in effect,  notwithstanding  that the
Swing  Line  Loans  outstanding  at  any  time  plus  the  Swing  Line  Lender's
outstanding  Revolving  Loans at that time may exceed  the Swing  Line  Lender's
Revolving Credit  Commitment at such time;  provided that the Borrower shall not
request, and the Swing Line Lender shall not make, any Swing Line Loan if, after
giving  effect to the making of such Swing Line Loan,  the  Aggregate  Revolving
Credit Outstandings of all the


<PAGE>

                                                                              27


Lenders would exceed the Revolving Credit  Commitments at such time.  During the
Revolving  Credit  Commitment  Period,  the  Borrower  may  use the  Swing  Line
Commitment  by  borrowing,  repaying  and  reborrowing  Swing  Line Loans all in
accordance  with the terms and  conditions  hereof.  Swing Line Loans may be ABR
Loans only.

     2.7  Repayment  of Swing Line  Loans;  Evidence of Debt.  (a) The  Borrower
hereby  unconditionally  promises  to pay to the  Administrative  Agent  for the
account of the Swing Line Lender the then unpaid  principal  amount of the Swing
Line Loans on the Termination Date (or such earlier date on which the Swing Line
Loans  become due and  payable  pursuant to Section  10).  The  Borrower  hereby
further agrees to pay to the  Administrative  Agent for the account of the Swing
Line Lender interest on the unpaid principal amount of the Swing Line Loans from
time to time  outstanding  from the date hereof until payment in full thereof at
the rates per annum, and on the dates, set forth in subsection 3.4.

     (b) The Swing Line  Lender  shall  maintain  in  accordance  with its usual
practice an account or accounts  evidencing  indebtedness of the Borrower to the
Swing  Line  Lender  resulting  from the Swing Line Loans made by the Swing Line
Lender  from time to time,  including  the  amounts of  principal  and  interest
payable  and  paid to the  Swing  Line  Lender  from  time to  time  under  this
Agreement.

     (c) The  Administrative  Agent shall  record in the Register (i) the amount
and Borrowing  Date of each Swing Line Loan made  hereunder,  (ii) the amount of
any  principal or interest due and payable or to become due and payable from the
Borrower  to the Swing  Line  Lender  hereunder  and (iii) the amount of any sum
received by the Administrative Agent hereunder in respect of Swing Line Loans.

     (d) The entries made in the Register  pursuant to subsection  2.7(c) shall,
to the extent  permitted by applicable  law, and absent manifest error, be prima
facie  evidence of the existence and amounts of the  obligations of the Borrower
therein recorded;  provided,  however, that the failure of the Swing Line Lender
to maintain  any account  pursuant to  subsection  2.7(b) or the  Administrative
Agent to make recordings in the Register  pursuant to subsection  2.7(c), or any
error therein,  shall not in any manner affect the obligation of the Borrower to
repay (with  applicable  interest)  the Swing Line Loans made to the Borrower by
the Swing Line Lender in accordance with the terms of this Agreement.

     (e) The Borrower agrees that, upon the request to the Administrative  Agent
by the Swing Line Lender,  which request is  communicated  to the Borrower,  the
Borrower will execute and deliver to the Swing Line Lender a promissory  note of
the  Borrower,  dated the Closing Date,  evidencing  the Swing Line Loans of the
Swing  Line  Lender,  substantially  in the form of  Exhibit E with  appropriate
insertions as to date and principal amount (a "Swing Line Note"). The Swing Line
Lender is hereby  authorized  to record  the date and  amount of each Swing Line
Loan made by the Swing Line  Lender  and the date and amount of each  payment or
prepayment of principal  thereof on the schedule  annexed to and  constituting a
part of the Swing  Line  Note,  and any such  recordation  shall,  to the extent
permitted by applicable law, and absent manifest error,  constitute  prima facie
evidence of the accuracy of the


<PAGE>

                                                                              28


information so recorded,  provided that the failure to make any such recordation
(or any error  therein) shall not affect the obligation of the Borrower to repay
(with  applicable  interest)  the Swing Line Loans made to the  Borrower  by the
Swing Line Lender in accordance with the terms of this Agreement.

     2.8  Procedure for  Borrowing  Swing Line Loans.  (a) Whenever the Borrower
desires that the Swing Line Lender make Swing Line Loans under  subsection  2.6,
it shall give the Swing Line  Lender  irrevocable  telephonic  notice  confirmed
promptly in writing (which  telephonic notice must be received by the Swing Line
Lender not later than 11:00 A.M., New York City time, on the proposed  Borrowing
Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing
Date  (which  shall be a Business  Day during the  Revolving  Credit  Commitment
Period).  Each borrowing under the Swing Line  Commitment  shall be in a minimum
amount of $100,000 or a whole multiple of $50,000 in excess  thereof.  Not later
than 2:00 P.M.,  New York City time, on the Borrowing Date specified in a notice
in respect of Swing Line Loans,  the Swing Line Lender  shall make  available to
the  Administrative  Agent for the account of the  Borrower at the office of the
Administrative  Agent  specified  in  subsection  12.2 an amount in  immediately
available  funds  equal to the  amount of the Swing  Line Loan to be made by the
Swing Line  Lender.  The  Administrative  Agent shall make the  proceeds of such
Swing Line Loan  available to the  Borrower  not later than 2:00 P.M.,  New York
City time,  on such  Borrowing  Date by crediting  the account of the  Borrower,
designated in its borrowing notice, with such proceeds in immediately  available
funds.

     (b) The Swing Line Lender, at any time in its sole and absolute  discretion
may, on behalf of the Borrower (which hereby irrevocably  directs the Swing Line
Lender to act on its  behalf)  request  each  Lender  including  the Swing  Line
Lender,  to make a  Revolving  Credit Loan in an amount  equal to such  Lender's
Revolving  Credit  Commitment  Percentage  of the amount of the Swing Line Loans
outstanding on the date such notice is given (the "Refunded  Swing Line Loans").
Unless any of the events described in Section 10(f) with respect to the Borrower
shall have occurred (in which event the  procedures  of subsection  2.9(b) shall
apply)  each  Lender  shall  make the  proceeds  of its  Revolving  Credit  Loan
available to the  Administrative  Agent for the account of the Swing Line Lender
at the office of the Administrative  Agent specified in subsection 12.2 prior to
11:00 A.M., New York City time, in funds  immediately  available on the Business
Day next  succeeding  the date  such  notice  is  given.  The  proceeds  of such
Revolving Credit Loans shall be immediately  applied to repay the Refunded Swing
Line Loans.  Effective  on the day such  Revolving  Credit  Loans are made,  the
portion of the Swing Line Loans so paid shall no longer be  outstanding as Swing
Line  Loans,  shall no longer be due under the Swing  Line Note and shall be due
under the  respective  Revolving  Credit Loans made by the Lenders in accordance
with their respective Revolving Credit Commitment Percentages.

     2.9 Swing Line Loan Participations.  (a) Notwithstanding anything herein to
the  contrary,  the Swing Line Lender  shall not be  obligated to make any Swing
Line Loans if a Default  under  Section  10(a) or an Event of Default shall have
occurred and be  continuing.  The Swing Line Lender shall notify the Borrower of
such election not to make any Swing Line Loans unless the Event of Default is of
the type specified in Section 10(f) with respect to the Borrower.


<PAGE>

                                                                              29


     (b) If prior to the  repayment  of any  Swing  Line  Loan or the  making of
Revolving  Credit  Loans  pursuant  to  subsection  2.8(b),  one of  the  events
described in Section  10(f) with respect to the  Borrower  shall have  occurred,
each Lender shall on the date such  Revolving  Credit Loan was to have been made
pursuant to the notice in subsection 2.8(a) purchase an undivided  participating
interest in the Refunded  Swing Line Loans in an amount  equal to such  Lender's
Revolving  Credit  Commitment  Percentage of the aggregate  principal  amount of
Swing Line Loans then outstanding (the "Swing Line  Participation  Amount").  On
the date of such purchase,  each Lender shall transfer to the Swing Line Lender,
in immediately  available funds, such Lender's Swing Line  Participation  Amount
and upon receipt  thereof the Swing Line Lender  shall  deliver to such Lender a
Swing  Line Loan  Participation  Certificate  dated  the date of the Swing  Line
Lender's  receipt of such funds and in an amount  equal to such  Lender's  Swing
Line Participation Amount.

     (c) Whenever, at any time after the Swing Line Lender has received from any
Lender such  Lender's  Swing Line  Participation  Amount,  the Swing Line Lender
receives  any payment on account of the Swing Line Loans,  the Swing Line Lender
will distribute to such Lender its pro rata share of such payment (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which  such  Lender's   participating  interest  was  outstanding  and  funded);
provided,  however,  that in the event that such  payment  received by the Swing
Line  Lender is required  to be  returned,  such Lender will return to the Swing
Line Lender any portion thereof  previously  distributed to it by the Swing Line
Lender.

     (d) Each Lender's obligation to purchase  participating  interests pursuant
to  subsection  2.9(b)  shall be  absolute  and  unconditional  and shall not be
affected by any circumstance,  including,  without limitation,  (i) any set-off,
counterclaim,  recoupment,  defense  or other  right  which  such  Lender or the
Borrower  may have  against  the Swing Line  Lender,  the  Borrower or any other
Person  for any reason  whatsoever;  (ii) the  occurrence  or  continuance  of a
Default  or an Event of  Default;  (iii) any  adverse  change  in the  condition
(financial or otherwise) of the Borrower;  (iv) any breach of this  Agreement or
any other Loan Document by any of the Loan Parties or any other  Lender;  or (v)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the  foregoing,  provided that, no Lender will be obligated to purchase a
participating  interest in any Swing Line Loan made during the continuance of an
Event of Default if and only if, (x)  subsequent to the occurrence of such Event
of Default such Lender has notified  the  Administrative  Agent that it will not
purchase  participations in Swing Line Loans made during the continuance of such
Event of Default  and (y) such  Swing  Line Loan was made  after  receipt by the
Administrative Agent of such notice while such Event of Default was continuing.

     2.10 L/C Commitment.  (a) Subject to the terms and conditions  hereof,  the
Issuing  Bank,  in reliance on the  agreements of the other Lenders set forth in
subsection  2.13(a),  agrees to issue  Letters of Credit for the  account of the
Borrower on any Business Day during the Revolving  Credit  Commitment  Period in
such form as may be  approved  from time to time by the Issuing  Bank;  provided
that the  Issuing  Bank shall have no  obligation  to, and shall not,  issue any
Letter  of  Credit  if,  after  giving  effect  to  such  issuance,  (i) the L/C
Obligations  would exceed the L/C  Commitment  or (ii) the  Available  Revolving
Credit Commitments would be less than zero.


<PAGE>

                                                                              30


     (b) Each Letter of Credit shall:

          (i) be denominated in Dollars and shall be either (1) a standby letter
     of credit  issued to support  obligations  of the  Borrower,  contingent or
     otherwise,  in connection with the working capital or business needs of the
     Borrower in the ordinary course of business permitted hereunder (a "Standby
     Letter of Credit") or (2) a commercial  letter of credit  issued in respect
     of the purchase of goods or services by the  Borrower and its  Subsidiaries
     in the ordinary course of business (a "Commercial Letter of Credit");

          (ii) expire no later than the earlier of (A) five  Business Days prior
     to the  Termination  Date  and (B) one  year  after  the  date of  issuance
     thereof,  provided  that,  subject to clause (A) above,  any such Letter of
     Credit may, at the request of the  Borrower as set forth in the  applicable
     Application or prior to expiration  thereof,  be  automatically  renewed on
     each  anniversary of the issuance  thereof for an additional  period of one
     year or less unless the Issuing Bank shall have given prior written  notice
     to the Borrower and the  beneficiary of such Letter of Credit (as specified
     therein) that such Letter of Credit will not be renewed;

          (iii) have a face amount equal to at least $100,000; and

          (iv)  if  it  is  outstanding  on  the   Termination   Date,  be  cash
     collateralized.

     (c) Each Letter of Credit  shall be subject to the Uniform  Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.

     (d) The Issuing Bank shall not at any time be obligated to issue any Letter
of Credit  hereunder if such issuance  would conflict with, or cause the Issuing
Bank or any L/C  Participant  to exceed any limits  imposed  by, any  applicable
Requirement of Law.

     2.11  Procedure  for  Issuance of Letters of Credit.  The Borrower may from
time to time  request  that  the  Issuing  Bank  issue a  Letter  of  Credit  by
delivering  to the Issuing Bank at its address for notices  specified  herein an
Application  therefor,  completed to the reasonable  satisfaction of the Issuing
Bank, and such other certificates, documents and other papers and information as
the Issuing  Bank may  reasonably  request.  The Issuing  Bank shall  notify the
Lenders  promptly  of the receipt of any  request  pursuant  to the  immediately
preceding  sentence.  Upon  receipt of any  Application,  the Issuing  Bank will
process such  Application and the  certificates,  documents and other papers and
information  delivered  to it in  connection  therewith in  accordance  with its
customary  procedures and shall  promptly  issue the Letter of Credit  requested
thereby  (but in no event shall the Issuing Bank be required to issue any Letter
of Credit earlier than three Business Days after its receipt of the  Application
therefor  and all such  other  certificates,  documents  and  other  papers  and
information  relating  thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Bank and
the Borrower.  The Issuing Bank shall furnish a copy of such Letter of Credit to
the  Administrative  Agent and the  Borrower  promptly  following  the  issuance
thereof.


<PAGE>

                                                                              31


     2.12 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the
Administrative  Agent,  for the account of the Issuing Bank, a fronting fee with
respect to each  Letter of  Credit,  computed  for the  period  from the date of
issuance of such Letter of Credit or the  immediately  preceding L/C Fee Payment
Date,  as the case may be, to the next L/C Fee Payment Date to occur  thereafter
at a rate per  annum  equal to 1/5 of 1%,  calculated  on the basis of a 360-day
year for actual days elapsed,  of the average daily amount available to be drawn
under such Letter of Credit during the period for which such fee is  calculated.
Such  fronting  fee shall be payable in arrears on each L/C Fee Payment  Date to
occur after the  issuance of such Letter of Credit and on the  Termination  Date
and shall be nonrefundable.

     (b) The Borrower shall pay to the Administrative  Agent, for the account of
the L/C  Participants  and the Issuing Bank, a letter of credit  commission with
respect to each  Letter of  Credit,  computed  for the  period  from the date of
issuance of such Letter of Credit or the  immediately  preceding L/C Fee Payment
Date,  as the case may be, to the next L/C Fee Payment Date to occur  thereafter
at a rate per annum equal to the  Applicable  Margin for Revolving  Credit Loans
that are Eurodollar Loans in effect from time to time (the "Revolving Credit Fee
Percentage"), calculated on the basis of a 360-day year for actual days elapsed,
of the average  daily  amount  available to be drawn under such Letter of Credit
during the period for which such fee is  calculated,  to be shared ratably among
the L/C  Participants  and the Issuing Bank in accordance with their  respective
Revolving Credit  Commitment  Percentages.  Such commissions shall be payable in
arrears on each L/C Fee Payment  Date to occur after the issuance of such Letter
of Credit and on its termination and shall be nonrefundable.

     (c) In addition to the foregoing fees and  commissions,  the Borrower shall
pay or  reimburse  the  Issuing  Bank for such  normal and  customary  costs and
expenses as are  incurred or charged by the Issuing  Bank in issuing,  effecting
payment under, amending or otherwise administering any Letter of Credit.

     (d) The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Bank and the L/C Participants all fees and commissions
received by the Administrative  Agent for their respective  accounts pursuant to
this subsection.

     2.13 L/C  Participations.  (a) The Issuing Bank irrevocably agrees to grant
and hereby grants to each L/C  Participant,  and, in order to induce the Issuing
Bank to issue  Letters of Credit  hereunder,  each L/C  Participant  irrevocably
agrees to accept and purchase and hereby  accepts and purchases from the Issuing
Bank, on the terms and conditions hereinafter stated, for such L/C Participant's
own  account  and risk an  undivided  interest  equal to such L/C  Participant's
Revolving  Credit  Commitment  Percentage in the Issuing Bank's  obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Bank thereunder,  provided that, no Lender will be obligated
to  purchase a  participating  interest  in any Letter of Credit made during the
continuance  of an  Event of  Default  if and only  if,  (x)  subsequent  to the
occurrence of such Event of Default such Lender has notified the  Administrative
Agent that it will not  purchase  participations  in any  Letter of Credit  made
during the  continuance  of such Event of Default  and (y) such Letter of Credit
was made after  receipt by the  Administrative  Agent of such Notice  while such
Event  of  Default  was  continuing,  except  for,  any  automatic  renewals  of
outstanding


<PAGE>

                                                                              32


Letters of Credit.  Each L/C Participant  unconditionally and irrevocably agrees
with the  Issuing  Bank that,  if a draft is paid under any Letter of Credit for
which the Issuing Bank is not  reimbursed  in full by the Borrower in accordance
with the terms of this Agreement,  including by a Revolving  Credit Loan by such
Lender under subsection  2.14(c),  such L/C Participant shall pay to the Issuing
Bank upon demand at the Issuing Bank's address for notices  specified  herein an
amount equal to such L/C Participant's Revolving Credit Commitment Percentage of
the amount of such draft, or any part thereof, which is not so reimbursed.

     (b) If any amount required to be paid by any L/C Participant to the Issuing
Bank pursuant to subsection  2.13(a) in respect of any  unreimbursed  portion of
any payment  made by the Issuing  Bank under any Letter of Credit is paid to the
Issuing Bank within three Business Days after the date such payment is due, such
L/C  Participant  shall pay to the Issuing Bank on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal Funds Effective
Rate,  during the period from and including the date such payment is required to
the date on which such payment is  immediately  available  to the Issuing  Bank,
times (iii) a fraction the  numerator of which is the number of days that elapse
during  such  period and the  denominator  of which is 360.  If any such  amount
required to be paid by any L/C Participant pursuant to subsection 2.13(a) is not
in fact made available to the Issuing Bank by such L/C Participant  within three
Business  Days after the date such  payment is due,  the  Issuing  Bank shall be
entitled  to recover  from such L/C  Participant,  on demand,  such  amount with
interest thereon  calculated from such due date at the rate per annum applicable
to ABR Loans  hereunder.  A certificate of the Issuing Bank submitted to any L/C
Participant  with respect to any amounts  owing under this  subsection  shall be
conclusive in the absence of manifest error.

     (c) Whenever, at any time after the Issuing Bank has made payment under any
Letter of Credit and has received from any L/C Participant its pro rata share of
such payment in accordance  with subsection  2.13(a),  the Issuing Bank receives
any payment related to such Letter of Credit (whether directly from the Borrower
or otherwise,  including  proceeds of collateral  applied thereto by the Issuing
Bank),  or any  payment of interest on account  thereof,  the Issuing  Bank will
distribute  to such  L/C  Participant  its pro  rata  share  thereof;  provided,
however,  that in the event that any such  payment  received by the Issuing Bank
shall be required to be returned by the Issuing Bank, such L/C Participant shall
return to the Issuing Bank the portion  thereof  previously  distributed  by the
Issuing Bank to it.

     2.14 Reimbursement  Obligation of the Borrower.  (a) The Borrower agrees to
reimburse  the Issuing Bank on each date on which the Issuing Bank  notifies the
Borrower of the date and amount of a draft  presented under any Letter of Credit
and paid by the  Issuing  Bank for the amount of (i) such draft so paid and (ii)
any taxes, fees, charges or other costs or expenses incurred by the Issuing Bank
in connection with such payment.  Each such payment shall be made to the Issuing
Bank at its address for notices  specified  herein in lawful money of the United
States of America and in immediately available funds.

     (b) Interest  shall be payable on any and all amounts  remaining  unpaid by
the Borrower under this  subsection 2.14 from the date the draft presented under
the affected


<PAGE>

                                                                              33


Letter of Credit is paid  until  payment  in full,  at the rate  which  would be
payable on any outstanding  Revolving Credit Loans that are ABR Loans which were
then overdue.

     (c) Each drawing  under any Letter of Credit shall  constitute a request by
the Borrower to the Administrative  Agent for a borrowing pursuant to subsection
2.2 of ABR Loans in the amount of such drawing (but without any  requirement for
compliance  with the prior  notice or minimum  borrowing  amount  provisions  of
subsection  2.2 or the  conditions  set forth in subsection  5.2). The Borrowing
Date with respect to such  borrowing  shall be the date of such drawing and each
Lender shall make its Revolving Credit  Commitment  Percentage of such borrowing
available  to the  Administrative  Agent on such  date to be used to  repay  the
Reimbursement  Obligation created by such drawing. The application of such Loans
shall satisfy the Borrower's  obligations under subsection 2.14(a) in the amount
thereof.

     (d) On the  Termination  Date, any  outstanding  Letters of Credit shall be
cash collateralized in amounts satisfactory to the Issuing Bank.

     2.15  Obligations  Absolute.  (a) The  Borrower's  obligations  under  this
Section 2 shall be absolute and  unconditional  under any and all  circumstances
and  irrespective  of any set-off,  counterclaim or defense to payment which the
Borrower  may have or have had  against  the  Issuing  Bank,  any  Lender or any
beneficiary  of a Letter of Credit  (other  than the  defense  of payment to the
Issuing Bank or a defense based on the gross negligence or willful misconduct of
the Issuing Bank).

     (b) The Borrower  also agrees with the Issuing  Bank and the Lenders  that,
subject to subsection 2.15(d),  neither the Issuing Bank nor any Lender shall be
responsible for, and the Borrower's  Reimbursement  Obligations under subsection
2.14(a)  shall not be affected  by,  among  other  things,  (i) the  validity or
genuineness  of  documents  or of any  endorsements  thereon,  even  though such
documents shall in fact prove to be invalid,  fraudulent or forged,  or (ii) any
dispute  between  or among the  Borrower  and any  beneficiary  of any Letter of
Credit or any other party to which such Letter of Credit may be  transferred  or
(iii) any claims  whatsoever  of the Borrower  against any  beneficiary  of such
Letter of Credit or any such transferee.

     (c) The  Issuing  Bank and the  Lenders  shall not be liable for any error,
omission,  interruption  or delay in  transmission,  dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit,
except in the case of the Issuing Bank for errors,  omissions,  interruptions or
delays caused by the Issuing Bank's gross negligence or willful misconduct.

     (d) The  Borrower  agrees  that any action  taken or omitted by the Issuing
Bank under or in connection  with any Letter of Credit or the related  drafts or
documents,  if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform  Customs,  and
to the extent not  inconsistent  therewith,  the Uniform  Commercial Code of the
State of New York,  shall be binding on the Borrower and shall not result in any
liability of the Issuing Bank or any Lender to the Borrower.


<PAGE>

                                                                              34


     2.16 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit,  the Issuing Bank shall,  within a  reasonable  time
after its receipt  thereof,  examine all  documents  purporting  to  represent a
demand for payment under such Letter of Credit to ascertain that the same appear
on their face to be in conformity  with the terms and  conditions of such Letter
of Credit.  The Issuing Bank shall also promptly notify the Borrower of the date
and amount thereof.  The  responsibility  of the Issuing Bank to the Borrower in
connection  with any draft  presented  for  payment  under any  Letter of Credit
shall,  in addition to any payment  obligation  expressly  provided  for in such
Letter of Credit,  be limited to determining that the documents  (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.

     2.17  Application.  To the extent  that any  provision  of any  Application
related  to any Letter of Credit is  inconsistent  with the  provisions  of this
Section 2, the provisions of this Section 2 shall apply.

     2.18  Quarterly  Reports.  The Issuing Bank shall  furnish to each Lender a
quarterly report with respect to Letters of Credit issued or outstanding  during
such quarter and any drawings thereunder.


        SECTION 3. GENERAL PROVISIONS APPLICABLE TO EXTENSIONS OF CREDIT

     3.1 Optional and  Mandatory  Prepayments.  (a) The Borrower may at any time
and from time to time prepay the Loans, in whole or in part,  without premium or
penalty,  upon  irrevocable  notice to the  Administrative  Agent prior to 11:00
A.M., New York City time, one Business Day (or, in the case of Swing Line Loans,
by irrevocable notice to the  Administrative  Agent by 11:00 A.M., New York City
time,  on the same Business  Day) in the case of ABR Loans,  and three  Business
Days'  irrevocable  notice  to  the  Administrative  Agent  in the  case  of the
Eurodollar  Loans,  prior to such prepayment,  specifying the date and amount of
prepayment  and whether the  prepayment is of Eurodollar  Loans,  ABR Loans or a
combination  thereof,  and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Administrative Agent shall notify each
affected  Lender  thereof  on the date of receipt  of such  notice.  If any such
notice is given, the amount specified in such notice shall be due and payable on
the date  specified  therein,  together  with any  amounts  payable  pursuant to
subsection  3.11.  Partial  prepayments  and  accompanying   reductions  in  the
Revolving Credit  Commitments  (except (x) in the case of Swing Line Loans which
shall be in  accordance  with  subsection  2.7 and (y) in the case of  Revolving
Credit Loans under subsection 2.14(c)) shall be in an aggregate principal amount
of at least $500,000.

     (b) Unless the Required  Lenders  otherwise  agree,  the  Revolving  Credit
Commitments  shall be  permanently  reduced with (i) 100% of the Net Proceeds of
any Equity  Offering by Holdings or any incurrence of  Indebtedness  by any Loan
Party on or after  the  Closing  Date  (other  than any  Indebtedness  permitted
pursuant to  subsection  7.2),  provided  however  that, in the case of a Public
Equity  Offering by Holdings,  the Net Proceeds may be used at the discretion of
Holdings  and  the  Borrower,   including  without  limitation  to  (u)  redeem,
repurchase,  defease or prepay or retire the PIK  Preferred  or other  preferred
stock of


<PAGE>

                                                                              35


Holdings or the Senior Subordinated Notes or to permanently reduce the Revolving
Credit Commitments, (v) make investments in foreign subsidiaries as permitted by
subsection 7.9(d), (w) pay dividends as permitted by subsection 7.7(d), (x) make
Permitted  Acquisitions  as  permitted  by  subsection  7.9(g),  (y) make  other
Investments  as  permitted  by  subsection   7.9(j)(ii)  and  (z)  make  capital
expenditures to the extent excluded from the definition of Capital  Expenditures
by clause (vi) thereof;  provided that Net Proceeds of any Equity Offering shall
not be required to be applied to permanently reduce Revolving Credit Commitments
pursuant to this subsection  until such time as the aggregate amount of such Net
Proceeds  not yet applied  exceeds  $250,000 and (ii) 50% of the Net Proceeds of
any  Asset  Sale  by  the  Borrower  or  any of  its  Subsidiaries  pursuant  to
subsections  7.6(a)  (except to the extent  that the assets  disposed of in such
Asset Sale are replaced with  Replacement  Assets within 360 days  following the
date of such Asset Sale) and 7.6(b),  in each case,  to the extent that such Net
Proceeds realized from any such Asset Sale (or series of related Asset Sales) in
any fiscal year are greater than $1,000,000;  provided Net Proceeds of any Asset
Sale shall not be required to be applied to permanently  reduce Revolving Credit
Commitments  pursuant to this subsection until such time as the aggregate amount
of such Net Proceeds above  $1,000,000 not yet applied  exceeds  $250,000.  Each
such  reduction  shall be made on or before the date which is ten Business  Days
after the date any Loan Party receives such Net Proceeds.

     (c) If, after giving  effect to any  permanent  reduction in the  Revolving
Credit Commitments pursuant to subsection 2.4 or 3.1(b), the aggregate principal
amount of the Revolving  Credit Loans then  outstanding,  when added to the then
outstanding  L/C  Obligations  and Swing Line Loans,  would exceed the Revolving
Credit Commitments as so reduced, then the Revolving Credit Loans and Swing Line
Loans shall be prepaid and the Letters of Credit shall be cash collateralized or
replaced to the extent of such  excess.  Amounts to be applied  pursuant to this
subsection  3.1(c) to the prepayment of Revolving Credit Loans and/or Swing Line
Loans shall be applied,  as applicable,  first to reduce  outstanding  Revolving
Credit Loans and/or Swing Line Loans which are ABR Loans. Any amounts  remaining
after each such application shall, at the option of the Borrower,  be applied to
prepay  Revolving  Credit Loans which are Eurodollar  Loans  immediately  and/or
shall  be  deposited  in  the  Prepayment   Account  (as  defined  below).   The
Administrative  Agent shall apply any cash deposited in the  Prepayment  Account
allocable to Revolving  Credit Loans to prepay  Revolving Credit Loans which are
Eurodollar  Loans,  in each  case on the  last  day of the  respective  Interest
Periods  therefor (or, at the  direction of the  Borrower,  on any earlier date)
until all  outstanding  Revolving  Credit Loans which are Eurodollar  Loans have
been prepaid or until all cash on deposit in the Prepayment Account  (including,
without limitation, interest earned thereon) with respect to such Loans has been
exhausted.  For purposes of this Agreement,  the term "Prepayment Account" shall
mean an  account  established  by the  Administrative  Agent and over  which the
Administrative  Agent shall have exclusive  dominion and control,  including the
right of withdrawal for application in accordance  with this subsection  3.1(c).
The Administrative Agent will, at the request of the Borrower, invest amounts on
deposit in the Prepayment  Account in Cash  Equivalents that mature prior to the
last  day of the  applicable  Interest  Periods  of the  Eurodollar  Loans to be
prepaid,  provided  that (i) the  Administrative  Agent shall not be required to
make any  investment  that,  in its sole  judgment,  would  require or cause the
Administrative Agent to be in, or would result in any, violation of any


<PAGE>

                                                                              36


Requirement of Law and (ii) the Administrative Agent shall have no obligation to
invest  amounts on deposit  in the  Prepayment  Account if a Default or Event of
Default shall have occurred and be continuing.  The Borrower shall indemnify the
Administrative  Agent for any losses  relating  to the  investments  so that the
amount  available to prepay  Eurodollar  Loans on the last day of the applicable
Interest  Periods  therefor  is not less than the  amount  that  would have been
available had no investments  been made.  Other than any interest earned on such
investments,  the  Prepayment  Account  shall  not bear  interest.  Interest  or
profits,  if any, on such  investments  shall be deposited  and  reinvested  and
disbursed as described  above. If the maturity of the Loans has been accelerated
pursuant to Section 10, the  Administrative  Agent shall first apply all amounts
on deposit in the Prepayment Account to prepay any outstanding  Revolving Credit
Loans and/or Swing Line Loans and, second, to cash collateralize any outstanding
Letters of Credit.  Until  funds in the  Prepayment  Account  are applied to the
prepayment  of any Loans,  such  Loans  shall  continue  to be  outstanding  and
interest shall  continue to accrue  thereon.  The Borrower  hereby grants to the
Administrative Agent, for its benefit and the benefit of the Lenders, a security
interest in the Prepayment Account to secure the Obligations.

     3.2 Conversion and  Continuation  Options.  (a) The Borrower may elect from
time  to  time  to  convert   Eurodollar  Loans  to  ABR  Loans  by  giving  the
Administrative  Agent at least one Business  Day's prior  irrevocable  notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto (or on any other
day if on the date of such  conversion  the Borrower pays to the  Administrative
Agent  for the  account  of the  applicable  Lenders  accrued  interest  on such
Eurodollar  Loans  to the date of such  conversion  together  with  all  amounts
payable  under  subsection  3.11).  The  Borrower may elect from time to time to
convert  ABR Loans to  Eurodollar  Loans by giving the  Administrative  Agent at
least three Business Days' prior irrevocable  notice of such election.  Any such
notice of conversion to Eurodollar Loans shall specify the length of the initial
Interest Period or Interest  Periods  therefor.  Upon receipt of any such notice
the Administrative Agent shall promptly notify each affected Lender thereof. All
or any part of  outstanding  Eurodollar  Loans and ABR Loans may be converted as
provided  herein,  provided that (i) no Loan may be converted  into a Eurodollar
Loan  when  any  Event  of  Default  has  occurred  and is  continuing  and  the
Administrative  Agent has or the Required  Lenders have  determined  that such a
conversion  is  not  appropriate  and  (ii)  no  Loan  may be  converted  into a
Eurodollar Loan after the date that is one month prior to the  Termination  Date
(in the case of conversions of Revolving Credit Loans).

     (b) Any  Eurodollar  Loans may be continued as such upon the  expiration of
the then current  Interest  Period with respect  thereto by the Borrower  giving
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest  Period" set forth in subsection 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar
Loan may be  continued as such (i) when any Event of Default has occurred and is
continuing  and  the  Administrative  Agent  has or the  Required  Lenders  have
determined  that such a continuation  is not  appropriate or (ii) after the date
that is one month prior to the Termination Date (in the case of continuations of
Revolving Credit Loans) and provided,  further,  that if the Borrower shall fail
to give such notice or if such


<PAGE>

                                                                              37


continuation is not permitted such Loans shall be automatically converted to ABR
Loans on the last day of such then expiring Interest Period.

     3.3  Minimum  Amounts  and  Maximum  Number of  Tranches.  All  borrowings,
conversions and  continuations of Loans hereunder and all selections of Interest
Periods  hereunder  shall  be in  such  amounts  and be  made  pursuant  to such
elections so that, after giving effect thereto,  the aggregate  principal amount
of the Loans comprising each Eurodollar  Tranche shall be equal to $1,000,000 or
a whole multiple of $500,000 in excess thereof.  In no event shall there be more
than five Eurodollar Tranches outstanding at any time.

     3.4 Interest Rates and Payment Dates.  (a) Each  Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per  annum  equal  to the  Eurodollar  Rate  determined  for  such  day plus the
Applicable Margin.

     (b) Each ABR Loan shall bear  interest at a rate per annum equal to the ABR
plus the Applicable Margin.

     (c) If all or a portion of (i) the principal  amount of any Loan,  (ii) any
interest  payable  thereon or (iii) any  commitment  fee or other amount payable
hereunder  shall  not be paid  when due  (whether  at the  stated  maturity,  by
acceleration or otherwise,  but taking into account any applicable  grace period
under  Section  10(a)),  such overdue  amount shall bear  interest at a rate per
annum  which is (x) in the  case of  overdue  principal,  the  rate  that  would
otherwise be applicable  thereto  pursuant to the  foregoing  provisions of this
subsection  plus 2% or (y) in the case of overdue  interest,  commitment fees or
other amounts due and payable hereunder, the rate described in subsection 3.4(b)
plus 2%, in each case from the date of such  non-payment  until  such  amount is
paid in full (after as well as before judgment).

     (d) Interest shall be payable in arrears on each Interest  Payment Date and
the Termination  Date,  provided that interest  accruing  pursuant to subsection
3.4(c) shall be payable from time to time on demand.

     3.5  Computation  of Interest and Fees.  (a)  Commitment  fees and interest
shall be  calculated on the basis of a 360-day year for the actual days elapsed,
except  that  whenever  interest is  calculated  on the basis of the Prime Rate,
interest  shall be  calculated  on the basis of a 365- (or 366-, as the case may
be) day year for the actual days elapsed. The Administrative Agent shall as soon
as   practicable   notify  the  Borrower  and  the  affected   Lenders  of  each
determination  of a Eurodollar  Rate.  Any change in the interest rate on a Loan
resulting from a change in the ABR or the Eurocurrency Reserve Requirement shall
become  effective  as of the opening of business on the day on which such change
becomes  effective.  The  Administrative  Agent shall,  as soon as  practicable,
notify the  Borrower  and the  affected  Lenders of the  effective  date and the
amount of each such change in interest rate.

     (b) Each  determination  of an interest  rate by the  Administrative  Agent
pursuant to any provision of this  Agreement  shall be conclusive and binding on
the   Borrower  and  the  Lenders  in  the  absence  of  manifest   error.   The
Administrative Agent shall, at the


<PAGE>

                                                                              38


request  of the  Borrower,  deliver  to the  Borrower a  statement  showing  the
quotations  used by the  Administrative  Agent in determining  any interest rate
pursuant to subsection 3.4(a).

     3.6 Inability to Determine  Interest Rate. If prior to the first day of any
Interest Period:

          (a)  the   Administrative   Agent   shall   have   determined   (which
     determination  shall be conclusive and binding upon the Borrower)  that, by
     reason  of  circumstances  affecting  the  relevant  market,  adequate  and
     reasonable means do not exist for ascertaining the Eurodollar Rate for such
     Interest Period, or

          (b) the  Administrative  Agent  shall have  received  notice  from the
     Required  Lenders that the Eurodollar  Rate  determined or to be determined
     for such Interest Period will not adequately and fairly reflect the cost to
     such  Lenders  (as  conclusively  certified  by such  Lenders) of making or
     maintaining their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the affected  Lenders as soon as  practicable  thereafter.  If such
notice is given (x) any Eurodollar  Loans  requested to be made on the first day
of such Interest  Period shall be made as ABR Loans,  (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar Loans
shall  be  converted  to or  continued  as ABR  Loans  and (z)  any  outstanding
Eurodollar Loans shall be converted, on the last day of such Interest Period, to
ABR Loans. Until such notice has been withdrawn by the Administrative  Agent, no
further  Eurodollar  Loans  shall be made or  continued  as such,  nor shall the
Borrower have the right to convert ABR Loans to Eurodollar Loans.

     3.7  Pro  Rata  Treatment  and  Payments.   (a)  All  payments   (including
prepayments)  to be  made by the  Borrower  hereunder,  whether  on  account  of
principal,  interest,  fees  or  otherwise,  shall  be made  without  set off or
counterclaim  and shall be made prior to 12:00 Noon,  New York City time, on the
due date thereof to the Administrative  Agent, for the account of the Lenders at
the  Administrative  Agent's office specified in subsection 12.2, in Dollars and
in immediately  available funds.  Payments received by the Administrative  Agent
after such time shall be deemed to have been  received on the next Business Day.
The Administrative  Agent shall distribute such payments to the Lenders entitled
to receive the same  promptly  upon  receipt in like funds as  received.  If any
payment  hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business  Day,  such payment  shall be extended to
the next  succeeding  Business  Day, and, with respect to payments of principal,
interest  thereon  shall be  payable at the then  applicable  rate  during  such
extension.  If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business  Day, the maturity  thereof  shall be extended to the next
succeeding  Business Day (and,  with respect to payments of principal,  interest
shall be payable  thereon at the then  applicable  rate during  such  extension)
unless the result of such extension would be to extend such payment into another
calendar  month,  in which event such payment  shall be made on the  immediately
preceding  Business  Day.  If, and to the extent  that,  on any Business Day the
Administrative Agent receives any payment hereunder or under


<PAGE>

                                                                              39


the other Loan Documents  (including any such payment representing a realization
upon the  Collateral),  and such  payment is not  sufficient  to pay in full all
principal,  interest and fees then due and payable hereunder, the Administrative
Agent shall apply such payment ratably to all such amounts then due and payable.

     (b) Unless the Administrative  Agent shall have been notified in writing by
any Lender  prior to a borrowing  that such Lender will not make the amount that
would constitute its portion of such borrowing  available to the  Administrative
Agent,  the  Administrative  Agent may assume  that such  Lender is making  such
amount available to the Administrative  Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative  Agent by the
required  time on the  Borrowing  Date  therefor,  such Lender  shall pay to the
Administrative  Agent,  on demand,  such amount with interest  thereon at a rate
equal to the daily  average  Federal Funds  Effective  Rate for the period until
such Lender makes such amount immediately available to the Administrative Agent.
A certificate of the  Administrative  Agent submitted to any Lender with respect
to any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's portion of such borrowing is not made available
to the  Administrative  Agent by such Lender within three  Business Days of such
Borrowing Date, the Administrative  Agent shall also be entitled to recover such
amount  with  interest  thereon  at the rate per  annum  applicable  to the Loan
resulting from such borrowing hereunder,  on demand, from the Borrower,  without
prejudice to any right or claim the Borrower may have against such Lender.

     (c) Each borrowing by the Borrower of Revolving  Credit Loans shall be made
ratably from  Lenders,  in accordance  with their  Revolving  Credit  Commitment
Percentages.  Any reduction of the Revolving  Credit  Commitments  shall be made
ratably among the Lenders, in accordance with their respective  Revolving Credit
Commitment Percentages.

     3.8 Illegality. Notwithstanding any other provision herein, if the adoption
of or  any  change  in any  Requirement  of  Law  or in  the  interpretation  or
application  thereof  shall make it unlawful  for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement,  then such Lender shall give
notice of such  illegality to the  Administrative  Agent and the Borrower.  Upon
such adoption or change,  (a) the  commitment  of such Lender  hereunder to make
Eurodollar  Loans,  continue  Eurodollar  Loans as such and convert ABR Loans to
Eurodollar  Loans shall  forthwith be  suspended  until such time as it shall no
longer be  unlawful  for such  Lender to make or  maintain  Eurodollar  Loans as
contemplated  by this Agreement and (b) such Lender's Loans then  outstanding as
Eurodollar  Loans, if any, shall be converted  automatically to ABR Loans on the
respective last days of the then current  Interest  Periods with respect to such
Loans or within such earlier period as required by law. Any Lender giving notice
pursuant  to  the  first   sentence  of  this   subsection   shall   notify  the
Administrative  Agent and the Borrower at such time as the circumstances  giving
rise to the initial notice shall cease to exist.

     3.9  Requirements  of Law.  (a) If the  adoption  of or any  change  in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive  (whether or not having the force of
law) from any


<PAGE>

                                                                              40


central bank or other  Governmental  Authority,  in each case made subsequent to
the date hereof or, in the case of a  Transferee,  to the same extent as that of
the transferor prior to the transfer or subsequent to the date of transfer:

          (i) shall  subject any Lender to any tax of any kind  whatsoever  with
     respect to this Agreement,  any Note, any Letter of Credit, any Application
     or any  Eurodollar  Loan  made by it, or change  the basis of  taxation  of
     payments to such Lender in respect thereof (except for Non-Excluded  Taxes,
     changes in the rate of tax on the  overall  net  income of such  Lender and
     taxes  imposed  as a result of any  future,  present  or former  connection
     between  such Lender and the  jurisdiction  of the  Governmental  Authority
     imposing such tax or any political  subdivision or taxing authority thereof
     or therein (other than any such connection  arising solely from such Lender
     having  executed,  delivered or  performed  its  obligations  or received a
     payment under, or enforced, this Agreement or any Note));

          (ii) shall  impose,  modify or hold  applicable  any reserve,  special
     deposit,  compulsory  loan or similar  requirement  against assets held by,
     deposits or other liabilities in or for the account of, advances,  loans or
     other  extensions of credit by, or any other  acquisition  of funds by, any
     office of such Lender which is not otherwise  included in the determination
     of the Eurodollar Rate hereunder; or

          (iii) shall impose on such Lender any other condition;

and the result of any of the  foregoing  is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing  or  maintaining  Eurodollar  Loans or  issuing or  participating  in
Letters  of Credit or to reduce  any  amount  receivable  hereunder  in  respect
thereof,  then, in any such case,  the Borrower  shall,  within 20 Business Days
after  receipt by the Borrower of such Lender's  written  demand (with a copy to
the Administrative  Agent), pay such Lender such additional amount or amounts as
will   compensate  such  Lender  for  such  increased  cost  or  reduced  amount
receivable. If any Lender has demanded compensation under this subsection 3.9(a)
with  respect to any  Eurodollar  Loan,  the  Borrower  shall have the option to
convert   immediately   such   Eurodollar  Loan  into  an  ABR  Loan  until  the
circumstances  giving  rise to such  demand for  compensation  no longer  apply;
provided,  that (i) no such conversion shall affect the Borrower's obligation to
pay  compensation  as provided  herein  which is due with  respect to the period
prior to such  conversion  and (ii) on the date of such  conversion the Borrower
shall pay to the  Administrative  Agent for the benefit of the  relevant  Lender
accrued interest on such Eurodollar Loan to the date of conversion.

     (b) If any Lender shall have  determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation  controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental  Authority, in each case made
subsequent  to the date  hereof,  shall have the effect of reducing  the rate of
return on such Lender's or such  corporation's  capital as a consequence  of its
obligations hereunder or under, or in respect of, any Letter of Credit to a


<PAGE>

                                                                              41


level below that which such Lender or such  corporation  could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such  corporation's  policies with respect to capital  adequacy) by an amount
material to such Lender, or such corporation,  then from time to time, within 10
Business  Days after  receipt by the Borrower of such  Lender's  written  demand
therefor (with a copy to the  Administrative  Agent),  the Borrower shall pay to
such Lender such additional  amount or amounts as will compensate such Lender or
such corporation for such reduction.

     (c) If any Lender becomes entitled to claim any additional amounts pursuant
to  subsection  3.9(a) or (b),  it shall  promptly  give  written  notice to the
Borrower  (with a copy to the  Administrative  Agent)  specifying  in reasonable
detail the event by reason of which it has become so entitled  and the method of
calculating  the amounts to which it claims to be entitled.  A certificate as to
any additional  amounts payable  pursuant to this  subsection  submitted by such
Lender  to the  Borrower  (with a copy to the  Administrative  Agent)  shall  be
conclusive in the absence of manifest error. The Borrower shall not be obligated
to compensate any Lender  pursuant to this  subsection 3.9 for amounts  accruing
prior to the date which is 90 days before such Lender  notifies  the Borrower of
such event.  The agreements in this subsection  shall survive the termination of
this  Agreement  and the  payment  of the Loans and all  other  amounts  payable
hereunder.

     3.10 Taxes.  (a) All payments made by the Borrower under this Agreement and
any Notes shall be made free and clear of, and without  deduction or withholding
for or on  account  of,  any  present or future  income,  stamp or other  taxes,
levies,  imposts,  duties,  charges,  fees,  deductions or withholdings,  now or
hereafter imposed, levied,  collected,  withheld or assessed by any Governmental
Authority, excluding net income taxes, franchise taxes and capital taxes imposed
on the  Administrative  Agent or any Lender (or  Transferee)  as a result of any
future,  present or former connection between the  Administrative  Agent or such
Lender  (or  Transferee)  and the  jurisdiction  of the  Governmental  Authority
imposing such tax or any political  subdivision or taxing  authority  thereof or
therein (other than any such connection  arising solely from the  Administrative
Agent or such Lender (or Transferee) having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any Note
or any other Loan Document).  If any such non-excluded taxes,  levies,  imposts,
duties,  charges,  fees, deductions or withholdings  ("Non-Excluded  Taxes") are
required to be withheld from any amounts payable to the Administrative  Agent or
any Lender (or  Transferee)  hereunder or under any Note, the amounts so payable
to the  Administrative  Agent or such Lender (or Transferee)  shall be increased
("increased amounts") by the amounts necessary so that after making all required
deductions and withholdings (including,  without limitation,  the payment of all
Non-Excluded  Taxes) the  Administrative  Agent or such  Lender (or  Transferee)
receives  the amounts  equal to the interest or any such other  amounts  payable
hereunder at the rates or in the amounts  specified in this Agreement.  Whenever
any Non-Excluded Taxes are payable by the Borrower,  the Borrower shall promptly
send to the Administrative  Agent for its own account or for the account of such
Lender (or  Transferee),  as the case may be, a  certified  copy of an  original
official  receipt  received by the  Borrower  showing  payment  thereof or other
evidence of  remittance  of  Non-Excluded  Taxes  reasonably  acceptable  to the
Administrative  Agent. If the Borrower fails to pay any Non-Excluded  Taxes when
due to the appropriate taxing authority


<PAGE>

                                                                              42


or fails to remit to the  Administrative  Agent the  required  receipts or other
reasonably acceptable evidence,  the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes,  interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of any such
failure.  The  Borrower  will  indemnify  each  Lender (or  Transferee)  and the
Administrative  Agent for the amount of  Non-Excluded  Taxes paid by such Lender
(or  Transferee)  or the  Administrative  Agent,  as the  case  may be,  and any
liability (including penalties, interest and expenses) arising therefrom or with
respect  thereto.  The  agreements  in this  subsection  3.10 shall  survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

     (b) Each Lender (and each Transferee) that is not incorporated or organized
under the laws of the United States of America or a state thereof shall:

          (i) in the case of a Lender  or a  Transferee  that is a "bank"  under
     Section 881(c)(3)(A) of the Code:

               (A) on or before  the date it  becomes a party to this  Agreement
          (or,  in the case of a Loan  Participant,  on or before  the date such
          Loan  Participant  becomes  a Loan  Participant  hereunder)  and on or
          before the date,  if any,  such  Lender (or  Transferee)  changes  its
          applicable lending office by designating a different lending office (a
          "New Lending Office"),  deliver to the Borrower and the Administrative
          Agent (y) two properly  completed and duly  executed  copies of United
          States  Internal  Revenue  Service  Form  1001 or 4224,  or  successor
          applicable  form,  as the case  may be,  and (z) an  Internal  Revenue
          Service Form W-8 or W-9, or successor applicable form, as the case may
          be;

               (B)  deliver to the  Borrower  and the  Administrative  Agent two
          further  properly  completed and duly executed copies of any such form
          or  certification  on or  before  the  date  that  any  such  form  or
          certification  expires or becomes obsolete and after the occurrence of
          any  event  requiring  a change  in the most  recent  form  previously
          delivered by it to the Borrower or upon the request of the Borrower or
          the Administrative Agent; and

               (C) obtain such extensions of time for filing and completing such
          forms  or  certifications  as  may  reasonably  be  requested  by  the
          Borrower;

          (ii) in the  case of a  Lender  or a  Transferee  that is not a "bank"
     under Section 881(c)(3)(A) of the Code:

               (A) on or before  the date it  becomes a party to this  Agreement
          (or,  in the  case of a Loan  Participant,  on or the date  such  Loan
          Participant  becomes  a Loan  Participant  hereunder)  deliver  to the
          Borrower and the Administrative  Agent (I) a statement under penalties
          of  perjury  that  such  Lender  (w) is  not a  "bank"  under  Section
          881(c)(3)(A)  of the Code, is not subject to regulatory or other legal
          requirements as a bank in any  jurisdiction,  and has not been treated
          as a bank for purposes of any tax,  securities  law or other filing or
          submission


<PAGE>

                                                                              43



          made to any Governmental  Authority,  any application made to a rating
          agency or qualification for any exemption from tax,  securities law or
          other legal requirements,  (x) is not a 10-percent  shareholder within
          the  meaning  of  Section  881(c)(3)(B)  of  the  Code,  (y)  is not a
          controlled  foreign  corporation  receiving  interest  from a  related
          person within the meaning of Section  881(c)(3)(C) of the Code and (z)
          is  not a  "conduit  entity"  within  the  meaning  of  U.S.  Treasury
          Regulations  Section  1.881-3 and (II) a properly  completed  and duly
          executed  Internal  Revenue  Service Form W-8 or applicable  successor
          form;

               (B)  deliver to the  Borrower  and the  Administrative  Agent two
          further properly  completed and duly executed copies of said Form W-8,
          or any successor  applicable  form on or before the date that any such
          Form W-8 expires or becomes  obsolete or after the  occurrence  of any
          event requiring a change in the most recent form previously  delivered
          by it to the Borrower or upon the request of the Borrower; and

               (C) obtain such extensions of time for filing and completing such
          forms or certifications as may be reasonably requested by the Borrower
          or the Administrative Agent;

unless in any such case any change in law or regulation has occurred  subsequent
to the date such Lender (or Transferee)  became a party to this Agreement (or in
the case of a Loan  Participant,  the date such Loan  Participant  became a Loan
Participant  hereunder) which renders all such forms inapplicable or which would
prevent such Lender from  properly  completing  and executing any such form with
respect to it and such Lender so advises  the  Borrower  and the  Administrative
Agent in writing no later than 15 calendar days before any payment  hereunder or
under any Note is due. Each such Lender (and each such Transferee) shall certify
(i) in the case of a Form 1001 or 4224, that it is entitled to receive  payments
under this  Agreement  without  deduction or  withholding  of any United  States
federal  income  taxes  and  (ii)  in the  case of a Form  W-8 or W-9  delivered
pursuant to  subsection  3.10(b)(i),  that it is entitled to an  exemption  from
United States backup withholding tax.

     (c) The  Borrower  shall  not be  required  to  indemnify  any  Lender  (or
Transferee),  or to pay any increased  amounts to any Lender (or  Transferee) in
respect of any Non-Excluded  Tax, pursuant to this subsection 3.10 to the extent
that (i) any  obligation  to  withhold  or deduct  amounts  with  respect to tax
existed on the date such Lender (or Transferee) became a party to this Agreement
(or, in the case of a Transferee  that is a Loan  Participant,  on the date such
Loan  Participant  became a Loan  Participant  hereunder)  or,  with  respect to
payments  to a  New  Lending  Office,  the  date  such  Lender  (or  Transferee)
designated  such New Lending Office with respect to a Loan;  provided,  however,
that this clause (i) shall not apply to any  Transferee  or New  Lending  Office
that becomes a Transferee  or New Lending  Office as a result of an  assignment,
participation,  transfer  or  designation  made at the  written  request  of the
Borrower,  or (ii) any Lender (or  Transferee)  fails to comply in full with the
provisions of subsection 3.10(b) hereof.


<PAGE>

                                                                              44


     (d) If a Lender (or  Transferee) or the  Administrative  Agent shall become
aware that it is  entitled to claim a refund from a  Governmental  Authority  in
respect  of  Non-Excluded  Taxes  as to which  it has  been  indemnified  by the
Borrower,  or with  respect to which the Borrower  has paid  increased  amounts,
pursuant to this  subsection  3.10, it shall promptly notify the Borrower of the
availability of such refund claim and shall make the  appropriate  claim to such
Governmental  Authority  for such  refund.  If a Lender (or  Transferee)  or the
Administrative Agent receives a refund (including pursuant to a claim for refund
made pursuant to the preceding  sentence) in respect of any  Non-Excluded Tax as
to which it has been  indemnified by the Borrower,  or with respect to which the
Borrower has paid increased amounts,  pursuant to this subsection 3.10, it shall
within  30 days  from  the date of such  receipt  pay over  such  refund  to the
Borrower,  net of all  out-of-pocket  third-party  expenses  of such  Lender (or
Transferee) or the Administrative Agent.

     3.11  Indemnity.  The Borrower  agrees to indemnify each Lender and to hold
each Lender  harmless  from any loss or expense which such Lender may sustain or
incur as a  direct  consequence  of (a)  default  by the  Borrower  in  making a
borrowing of,  conversion  into or  continuation  of Eurodollar  Loans after the
Borrower  has  given a  notice  requesting  the  same  in  accordance  with  the
provisions  of this  Agreement,  (b)  default  by the  Borrower  in  making  any
prepayment of Eurodollar  Loans after the Borrower has given a notice thereof in
accordance  with  the  provisions  of  this  Agreement  or (c) the  making  of a
prepayment of Eurodollar  Loans or converting any Eurodollar  Loans to ABR Loans
on a day which is not the last day of an Interest  Period with respect  thereto.
Such  indemnification  may include an amount equal to the excess, if any, of (i)
the amount of  interest  which  would  have  accrued on the amount so prepaid or
converted, or not so borrowed,  converted or continued,  for the period from the
date of such  prepayment or conversion or of such failure to borrow,  convert or
continue to the last day of such  Interest  Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such  failure) in each case at the  applicable  rate of interest for
such Loans provided for herein  (excluding the Applicable  Margin) over (ii) the
amount of interest (as  reasonably  determined  by such Lender) which would have
accrued to such  Lender on such  amount by placing  such amount on deposit for a
comparable period with leading banks in the interbank  eurodollar  market.  This
covenant shall survive the  termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.

     3.12 Change of Lending Office;  Filing of  Certificates or Documents.  Each
Lender  agrees that if it makes any demand for payment,  or becomes  entitled to
any increased amounts, under subsection 3.9 or 3.10 or if any adoption or change
of the type  described in subsection 3.8 shall occur with respect to it, it will
use  reasonable  efforts  (consistent  with its  internal  policy  and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, as determined in its sole  discretion)  to designate a different  lending
office or file any  certificate or document  reasonably  requested in writing by
the Borrower if such action would reduce or obviate the need for the Borrower to
make  payments  under  subsection  3.9 or 3.10 or would  eliminate or reduce the
effect of any adoption or change described in subsection 3.8.


<PAGE>

                                                                              45



     3.13  Replacement  Lenders.  In the  event  that (a) the  Borrower  becomes
obligated to pay additional  amounts or increased amounts to, or receives notice
from, any Lender pursuant to subsection 3.8, 3.9 or 3.10 and such Lender has not
theretofore  removed or cured the  conditions  which result in the obligation to
pay  such  additional  amounts  or  increased  amounts,  or (b) any  Lender  has
defaulted in its obligation to make Loans  hereunder,  then the Borrower may, on
ten Business  Days' prior written  notice to the  Administrative  Agent and such
Lender,  cause  such  Lender to (and  such  Lender  shall)  assign  pursuant  to
subsection  12.6(c) all of its rights and  obligations  under this  Agreement to
another bank or financial institution which is willing to become a Lender and is
acceptable  (which  acceptance  shall  not  be  unreasonably  withheld)  to  the
Administrative  Agent,  for a purchase price equal to the outstanding  principal
amount of the Loans payable to such Lender plus any accrued but unpaid  interest
on such  Loans,  any  accrued  but  unpaid  commitment  fees in  respect of such
Lender's  Commitment  and any other  amounts  payable to such Lender  under this
Agreement (including, without limitation, amounts payable under subsections 3.9,
3.10 and 3.11).


                    SECTION 4. REPRESENTATIONS AND WARRANTIES

     To induce  the  Administrative  Agent and the  Lenders  to enter  into this
Agreement  and to make the Loans  and issue or  participate  in the  Letters  of
Credit,   Holdings  and  the  Borrower  hereby  represent  and  warrant  to  the
Administrative Agent and each Lender that:

     4.1  Financial  Condition.  (a) Except as set forth on  Schedule  4.1,  the
combined  audited balance sheet of the Companies as at December 31, 1995 and the
related  consolidated  statements  of income and cash flows for the fiscal  year
ended on such  date,  audited  by  Deloitte  & Touche  LLP,  a copy of which has
heretofore been furnished to each Lender, present fairly in accordance with GAAP
the  combined  financial  condition of the  Companies  as at such date,  and the
combined  results  of their  operations  and their  combined  cash flows for the
fiscal year then ended.  Except as set forth on Schedule 4.1, all such financial
statements  have been  prepared in  accordance  with GAAP  applied  consistently
throughout the periods  involved  (except as approved by such accountants and as
disclosed  therein).  None of the Companies had at the date of the balance sheet
referred to above, any material Guarantee  Obligation,  contingent  liability or
liability  for taxes,  or any  long-term  lease or unusual  forward or long-term
commitment, including, without limitation, any material interest rate or foreign
currency swap or exchange  transaction,  which is not reflected in the foregoing
statements  or in the  notes  thereto  or  expressly  permitted  to be  incurred
hereunder.

     (b) Except as set forth on Schedule  4.1, the  unaudited  combined  balance
sheet of the  Companies,  as at September 30, 1996 and the related  consolidated
statement of income,  certified by a Responsible Officer of the Borrower, a copy
of which has  heretofore  been  furnished  to each  Lender,  presents  fairly in
accordance  with GAAP the combined  financial  condition of the  Companies as at
such date and the combined  results of their  operations  for the fiscal quarter
then ended.  Except as set forth on Schedule 4.1, such balance sheet,  including
the related  schedules and notes thereto,  have been prepared in accordance with
GAAP (except as approved by such  Responsible  Officer and  disclosed  therein).
None of the


<PAGE>

                                                                              46


Companies or ARP had at the date of such balance sheet,  any material  Guarantee
Obligation,  contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment,  including,  without limitation, any
interest rate or foreign currency exchange  transaction,  which is not reflected
in such balance sheet or in the notes thereto or in the  Prospectus  (as defined
in subsection 4.19).

     (c) The unaudited  consolidated pro forma balance sheet of the Borrower and
its  consolidated  Subsidiaries,  as  of  September  30,  1996,  certified  by a
Responsible  Officer of the Borrower (the "Pro Forma Balance Sheet"),  copies of
which have been furnished to each Lender,  is the unaudited balance sheet of the
Borrower and its consolidated Subsidiaries,  adjusted to give effect (as if such
events had  occurred  on such date) to (i) the  incurrence  of the Loans and the
issuance of the Letters of Credit to be incurred or issued,  as the case may be,
on the  Closing  Date and  (ii) the  Recapitalization,  and the  payment  of all
amounts  the  Borrower  and  its  consolidated  Subsidiaries  expect  to  pay in
connection with the Recapitalization. The Pro Forma Balance Sheet, together with
the notes thereto,  were prepared based on good faith  assumptions in accordance
with GAAP and are based on the best information available to the Borrower, as of
the date of delivery  thereof,  and  reflect on a pro forma basis the  financial
position of the Borrower and its consolidated Subsidiaries,  as of September 30,
1996, as adjusted, as described above, assuming that the events specified in the
preceding sentence had actually occurred as of September 30, 1996.

     4.2 No Change. (a) Since December 31, 1995, except as set forth in Schedule
4.6, there has been no development, event or circumstance which has had or could
reasonably  be expected to have a Material  Adverse  Effect,  and (b) during the
period from  December 31, 1995,  to and  including  the date of this  Agreement,
except  in  connection  with the  Transactions  or the  Recapitalization,  or as
otherwise  set forth in Schedule 4.2, no dividends or other  distributions  have
been  declared,  paid or made upon the  Capital  Stock of Holdings or any of the
Companies or any of their  consolidated  Subsidiaries nor has any of the Capital
Stock  of  Holdings  or any  of the  Companies  or  any  of  their  consolidated
Subsidiaries been redeemed,  retired,  purchased or otherwise acquired for value
by any of the Companies or any of their Subsidiaries.

     4.3  Existence;  Compliance  with Law.  Except as set forth in Schedule 4.3
each Loan Party (a) is duly  organized,  validly  existing and in good  standing
under the laws of the  jurisdiction of its  organization,  (b) has the power and
authority to own and operate its property,  to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified  or licensed to do business as a foreign  entity and in good  standing
under the laws of each jurisdiction  where its ownership,  lease or operation of
property or the conduct of its business requires such qualification except where
the failure to be so qualified  and/or in good standing,  in the aggregate could
not  reasonably  be  expected  to have a Material  Adverse  Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply  therewith could not, in the aggregate,  reasonably be expected to have a
Material Adverse Effect.

     4.4 Power; Authorization;  Enforceable Obligations. Each Loan Party has the
power and authority,  and the legal right, to make, deliver and perform the Loan
Documents to


<PAGE>

                                                                              47


which it is a party and, in the case of the  Borrower,  to borrow and obtain the
Extensions of Credit  hereunder.  Each Loan Party has taken all necessary action
to  authorize  the  Extensions  of Credit on the  terms and  conditions  of this
Agreement and any Notes and to authorize the execution, delivery and performance
by it of the Loan Documents to which it is a party. No consent or  authorization
of,  filing with,  notice to or other act by or in respect of, any  Governmental
Authority  or any other  Person is  required  to be obtained or made by any Loan
Party  in  connection  with  the  Recapitalization,  the  Extensions  of  Credit
hereunder, the execution,  delivery or performance by each applicable Loan Party
or the validity or  enforceability  with respect to or against any Loan Party of
the Loan Documents to which it is a party or with the  continuing  operations of
the Borrower and its Subsidiaries  other than (i) consents,  authorizations  and
filings in  connection  with the  Recapitalization  (x) which are required to be
obtained  or made and are in full force and effect  (each of which are listed on
Schedule  4.4) or (y) which are not  required  to be  obtained  or made prior to
consummation  of the  Recapitalization  and are  listed on  Schedule  4.4 or (z)
which,  if not  obtained  or made,  could not  reasonably  be expected to have a
Material  Adverse Effect,  (ii) the filing of Uniform  Commercial Code financing
statements  and filings with the United States  Patent and Trademark  Office and
the United  States  Copyright  Office to perfect the  security  interests of the
Administrative Agent, for the benefit of the Lenders, in the Collateral that can
be  perfected by such  filings,  (iii)  recordation  of the  Mortgages  and (iv)
consents,  authorizations and filings in connection with enforcement of the Loan
Documents.  This  Agreement has been, and each other Loan Document will be, duly
executed  and  delivered  on behalf of each Loan Party that is a party hereto or
thereto. This Agreement constitutes,  and each other Loan Document when executed
and delivered will  constitute,  a legal,  valid and binding  obligation of each
Loan Party that is a party hereto or thereto enforceable against such Loan Party
in  accordance  with its  terms,  except as  enforceability  may be  limited  by
applicable bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  by  general
equitable  principles (whether enforcement is sought by proceedings in equity or
at law).

     4.5 No Legal Bar.  The  execution,  delivery  and  performance  of the Loan
Documents,  the  Extensions  of  Credit  hereunder  and the use of the  proceeds
thereof by each applicable Loan Party will not violate any Requirement of Law or
Contractual  Obligation of any Loan Party which could  reasonably be expected to
have a Material Adverse Effect and will not result in, or require,  the creation
or  imposition  of any  Lien on any of its or  their  respective  properties  or
revenues pursuant to any such Requirement of Law or Contractual Obligation other
than as contemplated in or permitted by the Loan Documents.

     4.6 No  Material  Litigation.  Except  as set  forth in  Schedule  4.6,  no
litigation,  investigation  (of which the  Borrower  or  Holdings  has been made
aware) or proceeding of or before any  arbitrator or  Governmental  Authority is
pending or, to the  knowledge  of the  Borrower or  Holdings,  threatened  by or
against any Loan Party or against any of their respective properties or revenues
(a)  with  respect  to any  of the  Loan  Documents  or any of the  transactions
contemplated  hereby or thereby or (b) which has a reasonable  likelihood  of an
adverse determination, and if adversely determined, could reasonably be expected
to have a Material Adverse Effect.


<PAGE>

                                                                              48


     4.7 No Default. No Loan Party is in default under or with respect to any of
its Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect.  No Default or Event of Default has occurred and
is continuing.

     4.8  Ownership  of  Property;  Liens.  To the  best  of each  Loan  Party's
knowledge,  after giving effect to the Recapitalization,  each Loan Party has or
will  have  good  record  and  marketable  title in fee  simple  to,  or a valid
leasehold  interest in, all its real property  except for such matters as do not
materially  adversely  affect  the use of such  property  in the  conduct of the
business as currently conducted, and own, or hold a valid leasehold interest in,
all its other  material  property,  and none of such  property is subject to any
Lien except as permitted by subsection 7.3.

     4.9 Intellectual Property.  Schedule 4.9 sets forth as of the Closing Date,
a  true  and  complete   list  of  all  material   trademarks   (registered   or
unregistered),  trade  names,  service  marks and  copyrights  and  applications
therefor  owned,  used  or  filed  by  or  licensed  to  the  Borrower  and  its
Subsidiaries in the United States (after giving effect to the  Recapitalization)
and,  with respect to  registered  trademarks  (if any),  contains a list of all
registration and application  numbers.  Except as disclosed on Schedule 4.9, the
Borrower or a Subsidiary (after giving effect to the  Recapitalization)  owns or
has the  right to use,  without  payment  to any  other  party,  the  trademarks
(registered  or  unregistered),  trade  names,  service  marks,  copyrights  and
applications  therefor  referred  to in such  Schedule.  Except  as set forth on
Schedule 4.9, to the best  knowledge of the  Borrower,  no claims are pending by
any  Person  with  respect to the  ownership,  validity,  enforceability  or the
Borrower's  or any  Subsidiary's  use  of any  such  trademarks  (registered  or
unregistered),  trade names, service marks, copyrights, or applications therefor
or  challenging  or  questioning  the  validity or  effectiveness  of any of the
foregoing, in the United States.

     4.10 No Burdensome Restrictions. Except as set forth on Schedule 4.10 or as
disclosed in the  Prospectus,  no Requirement  of Law or Contractual  Obligation
applicable  to any Loan Party  could  reasonably  be expected to have a Material
Adverse Effect.

     4.11 Taxes.  Except as set forth in Schedule 4.11 Holdings and the Borrower
and its Subsidiaries  have filed or caused to be filed all tax returns which, to
the knowledge of Holdings or the Borrower and its Subsidiaries,  are required to
be filed and have paid all taxes shown to be due and payable on said  returns or
on any  assessments  made  against it or any of its  property in respect of such
periods and all other material taxes imposed on it or any of its property by any
Governmental Authority (other than any taxes the amount or validity of which are
being  contested in good faith by  appropriate  proceedings  and with respect to
which  reserves in  conformity  with GAAP have been provided on the books of the
applicable  Loan Party and other than any taxes which in the aggregate would not
have a Material Adverse Effect), in respect of such periods.

     4.12 Federal  Regulations.  No Letter of Credit and no part of the proceeds
of any Loans will be used for "buying" or "carrying"  any "margin  stock" within
the  respective  meanings  of each of the quoted  terms  under  Regulation  G or
Regulation U as now and from time to time  hereafter in effect.  If requested by
any Lender or the Administrative Agent, the


<PAGE>

                                                                              49


Borrower will furnish to the Administrative Agent and each Lender a statement to
the foregoing  effect in conformity  with the  requirements of FR Form G-1 or FR
Form U-1 referred to in Regulation G or Regulation U, as the case may be.

     4.13 ERISA.  Except as set forth in  Schedule  4.13,  neither a  Reportable
Event nor an "accumulated funding deficiency" (within the meaning of Section 412
of the Code or Section 302 of ERISA) has occurred  during the  five-year  period
prior to the date on which  this  representation  is made or  deemed  made  with
respect to any Plan,  and each Plan has complied in all material  respects  with
the  applicable  provisions of ERISA and the Code,  except where,  in connection
with any such event or  noncompliance,  the  liability  which would be likely to
result could not be reasonably  expected to have a Material  Adverse Effect.  No
termination of a Single  Employer Plan has occurred  except where, in connection
with any such  termination,  the liability which would be likely to result could
not be reasonably  expected to have a Material Adverse Effect, and no Lien which
remains  unsatisfied  in favor of the PBGC or a Plan  has  arisen,  during  such
five-year  period.  The present value of all accrued  benefits under each Single
Employer Plan (based on those  assumptions  used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by an amount in excess of $1,000,000. Neither the Borrower
nor any Commonly Controlled Entity has had a complete or partial withdrawal from
any Multiemployer  Plan; neither the Borrower nor any Commonly Controlled Entity
would become  subject to any  liability  under ERISA if the Borrower or any such
Commonly  Controlled  Entity were to withdraw  completely from all Multiemployer
Plans as of the  valuation  date most closely  preceding  the date on which this
representation  is made or deemed  made;  and no such  Multiemployer  Plan is in
Reorganization or Insolvent, except where, in any such case, the liability which
would be likely to result  could not be  reasonably  expected to have a Material
Adverse Effect.

     4.14  Investment  Company  Act;  Other  Regulations.  No Loan  Party  is an
"investment  company" within the meaning of the Investment  Company Act of 1940,
as amended. The Borrower is not subject to regulation under any Federal or State
statute or  regulation  (other than  Regulation  X) which  limits its ability to
incur Indebtedness as contemplated herein.

     4.15  Subsidiaries.  As of the Closing Date and after giving  effect to the
Recapitalization,  Holdings has no direct  Subsidiaries other than the Borrower,
and the Borrower has no Subsidiaries other than ARP.

     4.16 Purpose of Loans.  The proceeds of the  Revolving  Credit Loans and/or
Swing Line Loans shall be used to provide for the working  capital  requirements
of the  Borrower  and its  Subsidiaries  on or after  the  Closing  Date and for
general corporate purposes,  which include:  (i) up to $35,000,000 for Permitted
Acquisitions in the aggregate subject to reduction as provided below; (ii) up to
$20,000,000  ("Recapitalization  Loans") to enable the  Borrower  on the Closing
Date to repay  outstanding Term Loans under the Existing Credit Agreement if the
net proceeds of the IPO and available cash of the Borrower are  insufficient for
such  purpose;  (iii)  amounts  used to make  Repurchase  Payments  and (iv) the
payment of a


<PAGE>

                                                                              50


tax adjustment  relating to the Stock Purchase  Agreement.  The availability for
Permitted   Acquisitions   will  be  reduced   by  the  amount  of   outstanding
Recapitalization Loans and any Repurchase Payments that are Loans (assuming that
Recapitalization  Loans and Loans used to make Repurchase  Payments are the last
Loans  repaid).  The  proceeds of the Letters of Credit shall be used to provide
for the working capital  requirements of the Borrower and its  Subsidiaries  and
for any general corporate purpose.

     4.17 Environmental Matters. Except as set forth in Schedule 4.17 and except
to the extent that the inaccuracy of any of the following (or the  circumstances
giving rise to such  inaccuracy),  individually  or in the aggregate,  could not
reasonably be expected to have a Material Adverse Effect:

          (a) The  facilities and  properties  owned,  leased or operated by the
     Borrower or any of its Subsidiaries  (the  "Properties") do not contain any
     Hazardous  Materials in amounts or  concentrations  which (i)  constitute a
     violation  of,  or  (ii)  could  give  rise  to any  liability  under,  any
     Environmental  Law or could  interfere with the continued  operation of the
     Properties  or could  reasonably  be expected  to impair the fair  saleable
     value thereof.

          (b) The  Borrower  and its  Subsidiaries  and  the  Properties  are in
     compliance  with, and to the knowledge of the Borrower and its Subsidiaries
     have in the last  three  years  been in  compliance  with,  all  applicable
     Environmental Laws and applicable  Environmental  Permits, and the Borrower
     and its  Subsidiaries  reasonably  believe that they will be able to comply
     with all  applicable  Environmental  Laws in the future and renew or obtain
     all Environmental Permits necessary for their operations in the future.

          (c) Neither the Borrower nor any of its  Subsidiaries has received any
     written notice of violation, alleged violation,  non-compliance,  liability
     or potential liability regarding  environmental  matters or compliance with
     Environmental  Laws with regard to any of the  Properties or the Companies,
     nor to the  knowledge  of the Borrower or any of its  Subsidiaries  is such
     notice being threatened.

          (d)  Hazardous  Materials  have not  been  transported,  disposed  of,
     emitted,  discharged,  or otherwise  released or threatened to be released,
     nor has their disposal been arranged for, (i) by the Borrower or any of its
     Subsidiaries  in violation  of, or (ii) in a manner or to a location  which
     could  reasonably  be  expected  to  give  rise  to  liability  under,  any
     applicable  Environmental  Law;  nor  have  any  Hazardous  Materials  been
     generated,  treated,  stored, emitted,  discharged or otherwise released or
     threatened  to be  released  or  disposed  of at,  on or  under  any of the
     Properties  in  violation  of,  or in a manner  that  could  reasonably  be
     expected to give rise to liability under, any applicable Environmental Law.

          (e) No judicial proceeding or governmental or administrative action is
     pending or, to the  knowledge of the  Borrower or any of its  Subsidiaries,
     threatened  under  any  Environmental  Law to  which  the  Borrower  or any
     Subsidiary  is  or  to  the  knowledge  of  the  Borrower  or  any  of  its
     Subsidiaries will be named as a party, nor are there any


<PAGE>

                                                                              51


          consent  decrees  or other  decrees,  consent  orders,  administrative
          orders  or  other  orders,   or  other   administrative   or  judicial
          requirements  outstanding  under any Environmental Law with respect to
          the  Borrower or any of its  Subsidiaries,  or the  Properties  or the
          Companies.

     4.18 Regulation H. To the extent  available,  the Borrower has obtained for
all  Mortgaged  Properties  which  are  located  in a "flood  hazard  area",  as
designated in any Flood  Insurance  Rate Map published by the Federal  Emergency
Management  Agency,  flood insurance in such total amount as the  Administrative
Agent has from time to time reasonably required.

     4.19  Accuracy of  Information.  The  factual  statements  and  information
contained in the  Prospectus  dated as of November 15, 1996 (the  "Prospectus"),
when  taken as a whole,  were,  as of the date of such  Prospectus  or the dates
otherwise  specified  therein or written  supplements  thereto,  accurate in all
material respects and did not contain any untrue statement of a material fact or
omit to state any material  fact  necessary to make the  statements  therein not
misleading,  provided that (a) the statements therein  describing  documents and
agreements  are  summary  only and as such are  qualified  in their  entirety by
reference  to  such  documents  and  agreements,  (b) to  the  extent  any  such
information  therein was based upon or  constitutes  a forecast or projection or
pro forma financial  information,  Holdings and the Borrower represent only that
such forecasts or projections or pro forma financial information were based upon
good faith estimates and  assumptions  believed by management of the Borrower to
be reasonable at the time made and (c) as to the information  which is specified
as having been supplied by third  parties,  Holdings and the Borrower  represent
only that they are not aware of any material misstatement or omission therein.

     4.20  Solvency.  As of  the  Closing  Date,  after  giving  effect  to  the
Transactions  and  the  Recapitalization,   the  initial  Extensions  of  Credit
hereunder and the other  transactions  contemplated to occur on the Closing Date
each Loan Party is Solvent.

     4.21 Stock  Purchase  Agreement.  The  Administrative  Agent has received a
complete copy of each of the Stock Purchase  Agreement  (including all exhibits,
schedules  and  disclosure  letters  referred to therein or  delivered  pursuant
thereto) and all amendments and waivers  relating thereto and other side letters
or agreements  affecting the terms thereof. As of the Closing Date, none of such
documents and agreements has been amended or  supplemented,  nor have any of the
provisions  thereof been waived, in any material  respect,  except pursuant to a
written  agreement or  instrument  which has  heretofore  been  delivered to the
Administrative  Agent.  As of the Original  Closing  Date,  to the  knowledge of
Holdings and the Borrower,  the representations and warranties  contained in the
Stock Purchase  Agreement were true and correct in all material  respects on the
Original  Closing Date as if made on and as of the Original Closing Date (except
as  contemplated  by the  Stock  Purchase  Agreement  or the  other  Acquisition
Documents or as set forth on Schedule 4.21).

     4.22 Security Documents.  (a) Except to the extent that Collateral has been
released (and not re-pledged) as provided in subsection 12.16, the Guarantee and
Collateral  Agreement  is  effective  to create  in favor of the  Administrative
Agent, for the ratable benefit


<PAGE>

                                                                              52


of the Lenders,  a legal,  valid and  enforceable  security  interest in all the
Collateral  described  therein and Proceeds  thereof and, upon completion of the
filings  and  other  actions  specified  on  Schedule  3 to  the  Guarantee  and
Collateral  Agreement,  the Guarantee and Collateral  Agreement shall constitute
fully perfected,  first priority Liens on, and security interests in, all right,
title and  interest  of  Holdings,  the  Borrower  and its  Subsidiaries  in the
Collateral  described  therein and in Proceeds  thereof superior in right to any
other Person other than Permitted Liens.

     (b) Except to the extent that real property  subject to a Mortgage has been
released (and not re-pledged) as provided in subsection  12.16, the Mortgages on
the  Mortgaged   Property  are  each   effective  to  create  in  favor  of  the
Administrative Agent, for the ratable benefit of the Lenders, a legal, valid and
enforceable  Lien on the  properties  described  therein and  proceeds  thereof,
subject to obtaining  necessary consents (which consents shall be obtained on or
prior  to the  Closing  Date)  and when  the  Mortgages  are  filed  they  shall
constitute a fully perfected,  first priority Lien on, and security interest in,
all right,  title and interest of the Loan Parties in the  properties  described
therein and the  proceeds  thereof,  superior in right to any other Person other
than Permitted Liens.


                         SECTION 5. CONDITIONS PRECEDENT

     5.1 Conditions to Initial  Extension of Credit.  The  effectiveness  of the
amendment and restatement of the Existing Credit  Agreement and the agreement of
each Lender to make the initial  Extension of Credit  requested to be made by it
is subject to the  satisfaction,  immediately  prior to or concurrently with the
making of such  Extension  of  Credit  on the  Closing  Date,  of the  following
conditions precedent:

          (a) Loan Documents.  The Administrative  Agent shall have received (i)
     this  Agreement,  executed and  delivered by a duly  authorized  officer of
     Holdings and the Borrower with a counterpart for each Lender,  (ii) for the
     account of each  Lender  which  requests  a  Revolving  Credit  Note on the
     Closing Date, a Revolving Credit Note conforming to the requirements hereof
     and executed by a duly  authorized  officer of the  Borrower,  and (iii) if
     requested by the Swing Line Lender on the Closing Date,  for the account of
     the Swing Line Lender,  a Swing Line Note  conforming  to the  requirements
     hereof and executed by a duly authorized officer of the Borrower;

          (b) (i) The IPO shall have been consummated and (ii) as of the Closing
     Date,  the  Administrative  Agent shall have received  evidence  reasonably
     satisfactory  to it that Holdings shall have received at least  $90,000,000
     in gross cash  proceeds  from the  issuance of its common stock in the IPO.
     After giving effect to the Recapitalization,  Holdings and its Subsidiaries
     shall have  outstanding no  Indebtedness  or preferred stock other than (A)
     under this Agreement, (B) pursuant to the Senior Subordinated Notes, (C) as
     permitted  under  subsection  7.2 or (E) as  otherwise  consented to by the
     Lenders;

          (c) Closing Certificate. The Administrative Agent shall have received,
     with a copy for each  Lender,  a  certificate  of the  Borrower,  dated the
     Closing Date,


<PAGE>

                                                                              53


     substantially  in the form of Exhibit F, with  appropriate  insertions  and
     attachments,   reasonably   satisfactory  in  form  and  substance  to  the
     Administrative  Agent,  executed by the President or any Vice President and
     the Secretary or any Assistant Secretary of the Borrower;

          (d) Corporate  Proceedings of the Borrower.  The Administrative  Agent
     shall  have  received,  with  a  copy  for  each  Lender,  a  copy  of  the
     resolutions,   in  form  and  substance  reasonably   satisfactory  to  the
     Administrative Agent, of the Board of Directors of the Borrower authorizing
     (i) the execution, delivery and performance of this Agreement and the other
     Loan  Documents  to which it is a party and (ii) the  Extensions  of Credit
     contemplated hereunder certified by the Secretary or an Assistant Secretary
     of the Borrower as of the Closing Date, which  certificate shall be in form
     and substance reasonably satisfactory to the Administrative Agent and shall
     state  that the  resolutions  thereby  certified  have  not  been  amended,
     modified, revoked or rescinded and are in full force and effect;

          (e) Borrower Incumbency  Certificate.  The Administrative  Agent shall
     have received,  with a copy for each Lender, a certificate of the Borrower,
     dated the Closing Date, as to the  incumbency and signature of the officers
     of the Borrower executing any Loan Document reasonably satisfactory in form
     and substance to the Administrative Agent, executed by the President or any
     Vice  President  and  the  Secretary  or  any  Assistant  Secretary  of the
     Borrower;

          (f) Corporate Proceedings of Holdings.  The Administrative Agent shall
     have received,  with a copy for each Lender, a copy of the resolutions,  in
     form and substance reasonably  satisfactory to the Administrative Agent, of
     the Board of Directors of Holdings authorizing the execution,  delivery and
     performance  of this  Agreement  and the  other  Loan  Documents  to  which
     Holdings is a party and copies of the constituent documents of Holdings, in
     each case certified by the Secretary or an Assistant  Secretary of Holdings
     as of the Closing Date,  which  certificate  shall be in form and substance
     reasonably  satisfactory to the  Administrative  Agent and shall state that
     the resolutions thereby certified have not been amended,  modified, revoked
     or rescinded and are in full force and effect;

          (g) Holdings Incumbency  Certificate.  The Administrative  Agent shall
     have  received,  with a copy for each Lender,  a  certificate  of Holdings,
     dated the Closing Date, as to the  incumbency and signature of the officers
     of Holdings executing any Loan Document reasonably satisfactory in form and
     substance to the  Administrative  Agent,  executed by the  President or any
     Vice President and the Secretary or any Assistant Secretary of Holdings;

          (h) Consents,  Licenses and Approvals.  The Administrative Agent shall
     have received,  with a copy for each Lender, a certificate of a Responsible
     Officer  of  the  Borrower  (i)  attaching   copies  of  all  consents  and
     authorizations of and filings with any Governmental  Authority or any other
     Person  that are  required  to be  obtained  or made by any  Loan  Party in
     connection with the Recapitalization, the Extensions of Credit


<PAGE>

                                                                              54


     hereunder,  the execution,  delivery or performance by each applicable Loan
     Party or the validity or enforceability with respect to or against any Loan
     Party of the Loan  Documents to which it is a party or with the  continuing
     operations of the Borrower and its Subsidiaries (other than those set forth
     in clauses (i)(y),  (i)(z),  (ii),  (iii) or (iv) of subsection 4.4) as are
     reasonably  requested by the  Administrative  Agent,  and (ii) stating that
     such consents,  authorizations and filings are in full force and effect and
     that all applicable waiting periods under any Requirement of Law shall have
     expired  without any action  being  taken or  threatened  by any  competent
     Governmental  Authority which would restrain,  prevent or otherwise  impose
     material  adverse  conditions  on the  Recapitalization  or  the  financing
     thereof,  and each such consent,  authorization and filing shall be in form
     and substance reasonably satisfactory to the Administrative Agent;

          (i) Fees. The Administrative  Agent shall have received the fees to be
     received on the Closing Date referred to in the Fee Letter dated as of July
     31, 1996, from Chase and CSI to the Borrower;

          (j) Aggregate Expenses.  The Administrative  Agent shall have received
     satisfactory  evidence  that  the  fees  and  expenses  to be  incurred  in
     connection with the  Recapitalization and the financing thereof shall be in
     an amount customary for transactions of this type;

          (k) Legal Opinions. The Administrative Agent shall have received, with
     a counterpart for each Lender,  the following executed legal opinions dated
     the Closing Date and addressed to the Administrative Agent and each Lender:

               (i) the  executed  legal  opinion  of Kramer,  Levin,  Naftalis &
          Frankel,  special  counsel to the Loan Parties,  in form and substance
          satisfactory to the Administrative Agent and in substantially the form
          of Exhibit H;

               (ii) the executed legal opinion of Ray,  Quinney & Nebeker,  Utah
          local counsel to the Loan Parties, in form and substance  satisfactory
          to the  Administrative  Agent and in substantially the form of Exhibit
          I;

               (iii) executed legal opinion of Philip M. Kazin and Gibson,  Dunn
          & Crutcher LLP in form and substance  reasonably  satisfactory  to the
          Administrative Agent;

     (l) Financial  Statements.  The  Administrative  Agent shall have received,
with a copy for each Lender,  (i) the audited combined  financial  statements of
each of the  Companies for the three most recent fiscal years ended prior to the
Closing Date and (ii) the unaudited interim combined and consolidating financial
statements of each of the Companies for each quarterly  period ended  subsequent
to the date of the latest financial  statements delivered pursuant to clause (i)
of this paragraph as to which such financial statements are available;


<PAGE>

                                                                              55


     (m) Pro Forma Balance Sheet. The Administrative  Agent shall have received,
with a copy  for each  Lender,  a pro  forma  consolidated  balance  sheet as at
September  30, 1996 of the  Borrower at the Closing  Date,  satisfactory  to it,
after  giving   effect  to  the   consummation   on  the  Closing  Date  of  the
Recapitalization and the financings contemplated thereby;

     (n) Utah Amendment.  The Administrative  Agent shall have received,  with a
copy  for  each  Lender,  (i) an  amended  Borrower  Mortgage  and  (ii) a title
endorsement,  each in form and  substance  reasonably  satisfactory  to it on or
before the Closing Date;

     (o) Acknowledgment  and Consent to the Guarantee and Collateral  Agreement.
The  Administrative  Agent shall have received,  with a copy for each Lender, an
Acknowledgment   and  Consent  to  the  Guarantee  and   Collateral   Agreement,
substantially  in the form of Exhibit B executed  by each Loan  Party,  attached
hereto; and

     (p) Repayment of Existing Credit Agreement.  The Borrower shall have repaid
in full any outstanding Term Loans and any accrued and unpaid interest,  fees or
breakage costs relating thereto under the Existing Credit Agreement.

     5.2 Conditions to Each Extension of Credit. The agreement of each Lender to
make any Extension of Credit  requested to be made by it on any date (including,
without limitation,  its initial Extension of Credit),  and the agreement of the
Issuing  Bank to  issue  any  Letter  of  Credit  for  which an  Application  is
presented, is subject to the satisfaction of the following conditions precedent:

     (a)  Representations  and  Warranties.  Each  of  the  representations  and
warranties made by the Borrower and the other Loan Parties in or pursuant to the
Loan Documents  shall be true and correct in all material  respects on and as of
such date (and, in the case of the  representations  and warranties  made on the
Closing Date, after giving effect to the  Recapitalization) as if made on and as
of such date, except to the extent such representations and warranties expressly
relate to an earlier  date in which  case such  representations  and  warranties
shall be true and correct in all material respects as of such earlier date;

     (b) No Default.  No Default or Event of Default  shall have occurred and be
continuing  on such  date or after  giving  effect  to the  Extension  of Credit
requested to be made on such date;

     (c) Borrowing  Requests and Applications.  The  Administrative  Agent shall
have received a request or Application  for such Loan or Letter of Credit if and
as required by subsection 2.2, 2.8, 2.11 or 2.14, as applicable; and

     (d) Acquisition Conditions.  The obligation of the Lenders to make any Loan
to be used  to make a  Permitted  Acquisition  shall  be  conditioned  upon  the
following:


<PAGE>

                                                                              56


          (i) the Borrower's pro forma  compliance with the financial  covenants
     set  forth  in  subsection  7.1  after  giving  effect  to  such  Permitted
     Acquisition;

          (ii)  subject  to  subsection  12.16,  the  grant  or  pledge  to  the
     Administrative  Agent for the  ratable  benefit  of the  Lenders of a first
     priority Lien subject to Permitted  Liens on the  property,  stock or other
     assets  being  acquired,  as  requested  by the  Administrative  Agent,  as
     collateral  security pursuant to documentation  reasonably  satisfactory in
     form and substance to the Administrative Agent;

          (iii) the receipt by the Administrative  Agent, with a counterpart for
     each  Lender,  of such legal  opinions,  officers'  certificates  and other
     documents as reasonably  requested by the Administrative Agent with respect
     to the relevant  Permitted  Acquisition  to be financed in whole or in part
     with the proceeds of such Loan; and

          (iv) the Permitted Acquisition to be funded, in whole or in part, with
     the proceeds of such Loan shall only be of a business  which is  reasonably
     related to those  businesses in which the Borrower and its Subsidiaries are
     engaged on the date of this  Agreement or  extensions  thereof,  including,
     without  limitation,  any business involving the manufacturing or marketing
     of  products  sold in  health  food  stores or  stores  that  sell  similar
     products.

Each  borrowing  by and  Letter  of Credit  issued  on  behalf  of the  Borrower
hereunder shall constitute a  representation  and warranty by the Borrower as of
the date  thereof that the  conditions  contained in clauses (a) and (b) and, if
applicable, (d)(i) and (d)(iv) of this subsection have been satisfied.


                        SECTION 6. AFFIRMATIVE COVENANTS

     The Borrower  hereby  agrees  that,  from and after the Closing Date and so
long as the Commitments remain in effect or any amount is owing to any Lender or
the  Administrative  Agent  hereunder  or under any other Loan  Document  or any
Letter of  Credit  remains  outstanding,  it shall  and  (except  in the case of
delivery of financial  information,  reports and notices and subsections 6.1 and
6.2  which  shall  be  performed  by  the  Borrower)  shall  cause  each  of its
Subsidiaries to, unless the Required Lenders shall otherwise consent in writing:

     6.1 Financial Statements. Furnish to each Lender:

     (a) as soon as available,  but in any event within 90 days after the end of
each fiscal year of the Borrower, (i) a copy of the audited consolidated balance
sheet of the Borrower and its  consolidated  Subsidiaries  as at the end of such
year and the related  audited  consolidated  statements  of income and  retained
earnings and of cash flows for


<PAGE>

                                                                              57


such  year,  setting  forth in each  case,  except in the first  year  after the
Original  Closing Date, in comparative form the figures as of the end of and for
the previous year,  reported on without a "going concern" or like  qualification
or  exception,  or a  qualification  arising  out of the scope of the audit,  by
Deloitte & Touche  LLP or other  independent  certified  public  accountants  of
nationally  recognized standing,  (ii) a copy of the consolidating balance sheet
of the Borrower and its consolidated Subsidiaries as at the end of such year and
the related consolidating statements of income and retained earnings and of cash
flows for such year,  setting forth in each case, except in the first year after
the Closing  Date in  comparative  form the figures as of the end of and for the
previous year and (iii) a Certificate of Available Excess Equity Proceeds;

     (b) as soon as available, but in any event not later than 45 days after the
end of each of the first  three  quarterly  periods of each  fiscal  year of the
Borrower,  (i) the unaudited consolidated and consolidating balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter and the
related  unaudited  consolidated  and  consolidating  statements  of income  and
retained  earnings  and of cash  flows  of the  Borrower  and  its  consolidated
Subsidiaries for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case, except for the first year after the
Original  Closing Date, in comparative form the figures as of the end of and for
the  corresponding  period in the  previous  year,  certified  by a  Responsible
Officer of the Borrower as being fairly stated in all material respects (subject
to normal year-end audit adjustments) and (ii) a Certificate of Available Excess
Equity Proceeds; and

     (c) as soon as available, but in any event not later than 30 days after the
end of each  month  (other  than  September,  December,  March and June) of each
fiscal  year of the  Borrower,  the  unaudited  consolidated  and  consolidating
statement of income (through the "Earnings Before Tax" line) of the Borrower and
its consolidated  Subsidiaries for such month and the portion of the fiscal year
through the end of such month,  setting forth in each case, except for the first
year after the Original  Closing Date, in comparative form the figures as of the
end of and for the  corresponding  period in the previous  year,  certified by a
Responsible  Officer of the  Borrower  as being  fairly  stated in all  material
respects (subject to normal year-end audit adjustments);

all such  financial  statements  shall be complete  and correct in all  material
respects and shall be prepared in reasonable  detail,  in  accordance  with GAAP
(subject to the addition, in the case of clauses (b) and (c) of this subsection,
of year end notes) applied consistently throughout the periods reflected therein
and with prior periods  (except as approved by such  accountants  or Responsible
Officer, as the case may be, and disclosed therein).

     6.2 Certificates; Other Information. Furnish to each Lender:

     (a) concurrently with the delivery of the financial  statements referred to
in  subsection  6.1(a),  a  certificate  of  the  independent  certified  public
accountants  reporting on such financial  statements  stating that in making the
examination necessary therefor


<PAGE>

                                                                              58


no knowledge was obtained of any Default or Event of Default having  occurred as
of the end of the fiscal year covered by such  financial  statements,  except as
specified in such certificate;

     (b) concurrently with the delivery of the financial  statements referred to
in  subsections  6.1(a) and (b), a certificate  of a Responsible  Officer of the
Borrower (i) stating that, to the best of such Responsible  Officer's knowledge,
the  Borrower  during such  period has  observed or  performed  in all  material
respects  all of  its  covenants  and  other  agreements,  and  satisfied  every
condition in all material  respects,  contained in this  Agreement and the other
Loan Documents to be observed,  performed or satisfied by it during such period,
and that such  Responsible  Officer has  obtained no knowledge of any Default or
Event of Default except as specified in such  certificate and (ii) setting forth
in reasonable  detail the  calculations  required to determine  compliance  with
subsections 7.1 and 7.8;

     (c) not later  than sixty  days  after the end of each  fiscal  year of the
Borrower, commencing with the fiscal year ending in December 1996, a copy of the
board-approved projections by the Borrower of the operating budget and cash flow
budget of the Borrower and its Subsidiaries for the succeeding fiscal year, such
projections to be  accompanied by a certificate of a Responsible  Officer of the
Borrower  to  the  effect  that  such   projections  have  been  prepared  using
assumptions  believed  in  good  faith  by  management  of  the  Borrower  to be
reasonable at the time made and that such  Responsible  Officer has no reason to
believe  that such  projections  are  incorrect  or  misleading  in any material
respect;

     (d)  within  five  Business  Days  after the same are  sent,  copies of all
financial  statements  and reports which  Holdings or the Borrower  sends to the
holders of the Senior  Subordinated Notes or to the holders of any securities of
the Loan Parties  registered  with the SEC, and within five  Business Days after
the same are  filed,  copies  of all  financial  statements  and  reports  which
Holdings or the Borrower may make to, or file with,  the SEC or any successor or
analogous federal Governmental Authority;

     (e) promptly upon receipt thereof,  copies of all reports  submitted to the
Borrower by independent  certified  public  accountants in connection  with each
annual,  interim or  special  audit of the books of the  Borrower  or any of its
Subsidiaries  made by  such  accountants,  including,  without  limitation,  any
management  letter commenting on the Borrower's  internal controls  submitted by
such accountants to management in connection with their annual audit; and

     (f) promptly,  such additional  financial and other information  within the
possession  of the  Borrower or any of its  Subsidiaries  as any Lender may from
time to time reasonably request through the Administrative Agent.

     6.3 Payment of  Obligations.  Pay,  discharge  or  otherwise  satisfy at or
before  maturity or before they become  delinquent,  as the case may be, all its
material  obligations of whatever nature including taxes, except as contemplated
by this Agreement or where the


<PAGE>

                                                                              59


amount or  validity  thereof  is  currently  being  contested  in good  faith by
appropriate  proceedings  and  reserves  in  conformity  with GAAP with  respect
thereto  have  been  provided  on  the  books  of  the  Borrower  or  any of its
Subsidiaries  or the  failure  to pay the  same  could  not,  in the  aggregate,
reasonably be expected to have a Material Adverse Effect, as the case may be.

     6.4 Conduct of Business;  Maintenance of Existence;  Compliance  with Laws.
Continue to engage in business of the same general type as now  conducted by the
Borrower and its  Subsidiaries  and  preserve,  renew and keep in full force and
effect its corporate  existence and take all  reasonable  action to maintain all
rights,  privileges  and  franchises  necessary  or  desirable,  in any material
respect in the normal  conduct of its  business  except as  otherwise  permitted
pursuant to subsection 7.5; comply in all material respects with all Contractual
Obligations and Requirements of Law (excluding,  for purposes of this subsection
6.4,  Requirements of Law and  Contractual  Obligations  specifically  addressed
elsewhere in this Section 6) except where (a) any such Contractual Obligation is
being  contested in good faith,  a bona fide dispute  exists with respect to any
such  Contractual  Obligation or failure to comply  therewith  could not, in the
aggregate,  reasonably be expected to have a Material Adverse Effect and (b) the
failure to comply with any such  Requirement of Law could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

     6.5 Maintenance of Property;  Insurance;  Products Liability Insurance. (i)
Keep all property  material to the conduct of its business  (including,  without
limitation,  the Mortgaged Property) in good working order and condition (normal
wear and tear excepted); maintain insurance with financially sound and reputable
insurance  companies with an A.M. Best rating of A- or better (or, to the extent
consistent with prudent business practice,  a program of self-insurance) on such
of its  property and in at least such amounts and against at least such risks as
are usually insured against in the same general area by companies engaged in the
same  or a  similar  business  (including,  without  limitation,  the  insurance
required pursuant to the Security Documents);  (ii) maintain sufficient products
liability  insurance,  in amounts according with standard industry practice,  to
cover the various products produced, marketed and/or sold by the Borrower or any
of its Subsidiaries and (iii) furnish to the Administrative  Agent, upon written
request, full information as to the insurance carried.

     6.6  Inspection of Property;  Books and Records;  Discussions.  Keep proper
financial records in conformity with GAAP and, except where the failure to do so
could  not  reasonably  be  expected  to have a  Material  Adverse  Effect,  all
Requirements of Law; and permit (a) representatives of the Administrative  Agent
or any Lender to visit and  inspect any of its  properties  and examine and make
abstracts from any of its books and records at any reasonable time during normal
business  hours,  upon  reasonable  notice,  and as often as may  reasonably  be
desired,   and  (b)  upon  reasonable   notice  during  normal  business  hours,
representatives  of the  Administrative  Agent  or any  Lender  to  discuss  the
business,  operations,  properties  and  financial  and other  condition  of the
Borrower and its  Subsidiaries  with  officers and employees of the Borrower and
its Subsidiaries and with its independent  certified public accountants (subject
to reasonable  requirements of  confidentiality,  including without  limitation,
requirements imposed by law or contract).


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                                                                              60


     6.7  Notices.  Promptly  give notice to the  Administrative  Agent and each
Lender of:

          (a) the occurrence of any Default or Event of Default;

          (b) any (i) default or event of default by the  Borrower or any of its
     Subsidiaries under any Contractual Obligation of the Borrower or any of its
     Subsidiaries  of which  any Loan  Party  has  knowledge  or  notice or (ii)
     litigation, investigation or proceeding which may exist at any time between
     the Borrower or any of its Subsidiaries  and any Governmental  Authority of
     which any Loan Party has knowledge or notice,  which in either case, if not
     cured or resolved or if  adversely  determined,  as the case may be,  could
     reasonably be expected to have a Material Adverse Effect;

          (c)  any  pending  or  threatened  claim,   litigation  or  proceeding
     affecting the Borrower or any of its Subsidiaries,  of which any Loan Party
     has  knowledge  or notice,  in which the amount  involved is not covered by
     insurance or in which  injunctive or similar relief is sought and which, in
     either case, if adversely determined,  could reasonably be expected to have
     a Material Adverse Effect;

          (d) the following  events, as soon as possible and in any event within
     30 days after the  Borrower  knows or has reason to know  thereof:  (i) the
     occurrence or expected  occurrence of any Reportable  Event with respect to
     any Plan,  a  failure  to make any  required  contribution  to a Plan,  the
     creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
     or the termination, Reorganization or Insolvency of, any Multiemployer Plan
     or (ii) the institution of proceedings or the taking of any other action by
     the  PBGC  or  the  Borrower  or  any  Commonly  Controlled  Entity  or any
     Multiemployer Plan with respect to the withdrawal from, or the termination,
     Reorganization  or Insolvency  of, any Plan, in each of cases (i) and (ii),
     where such event could  reasonably  be expected to have a Material  Adverse
     Effect; and

          (e) any  other  development  or  event of which  any  Loan  Party  has
     knowledge or notice which could  reasonably  be expected to have a Material
     Adverse Effect.

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible  Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.

     6.8  Environmental  Laws. (a) Comply with,  and use  reasonable  efforts to
ensure  compliance by all tenants and  subtenants,  if any, with, all applicable
Environmental  Laws and obtain and comply with and maintain,  and use reasonable
efforts to ensure  that all tenants  and  subtenants  obtain and comply with and
maintain, any and all Environmental Permits required by applicable Environmental
Laws,  except  where the failure to so comply or obtain such  permits  could not
reasonably be expected to have a Material Adverse Effect.


<PAGE>

                                                                              61


     (b) Conduct and complete all investigations, studies, sampling and testing,
and all  remedial,  removal  and  other  actions  required  by any  Governmental
Authority  under  Environmental  Laws and promptly comply with all lawful orders
and directives of all Governmental  Authorities  regarding  Environmental  Laws,
except to the  extent  that the  failure  to do any of the  foregoing  could not
reasonably be expected to have a Material Adverse Effect.

     6.9 Maintenance of Liens of the Security  Documents.  Unless the conditions
to release of Collateral in subsection  12.16(a) are satisfied,  promptly,  upon
the reasonable request of the Administrative  Agent, at the Borrower's  expense,
execute,  acknowledge and deliver,  or cause the execution,  acknowledgement and
delivery of, and thereafter register, file or record, or cause to be registered,
filed or  recorded,  in an  appropriate  governmental  office,  any  document or
instrument  supplemental  to  or  confirmatory  of  the  Security  Documents  or
otherwise  reasonably deemed by the Administrative  Agent necessary or desirable
for  the  continued  validity,  perfection  and  priority  of the  Liens  on the
Collateral covered thereby. The foregoing  notwithstanding,  no Mortgage on real
property at any time owned by the Borrower or any  Subsidiary of the Borrower in
New York State  shall be executed  in favor of the  Administrative  Agent if the
conditions set forth in subsection 12.16(b) do not occur.

     6.10 Pledge of After Acquired Property;  Additional Guarantors.  (a) Unless
the conditions to release of Collateral in subsection 12.16(a) are satisfied, if
at any time  following the Closing Date the Borrower or any of its  Subsidiaries
(other  than  a  Foreign  Subsidiary)  shall  acquire  property  of  any  nature
whatsoever  having a value in excess of $250,000  which is intended by the terms
of the  applicable  Security  Document  to be, but is not,  subject to the Liens
created by the  Security  Documents,  the  Borrower  shall,  or shall  cause the
relevant Subsidiaries to, as soon as possible and in no event later than 30 days
after the relevant  acquisition  date and, to the extent permitted by applicable
law, except in the case of (i) property  subject to a permitted  Financing Lease
or (ii) purchase money Indebtedness,  grant to the Administrative  Agent for the
ratable  benefit of the Lenders a first priority Lien subject to Permitted Liens
on such  property  as  collateral  security  for  the  Obligations  pursuant  to
documentation   reasonably   satisfactory   in  form   and   substance   to  the
Administrative  Agent.  The  Borrower,  at  its  own  expense,   shall  execute,
acknowledge and deliver,  or cause the execution,  acknowledgement  and delivery
of,  and  thereafter  register,  file or record in an  appropriate  governmental
office, any document or instrument  (including legal opinions,  title insurance,
consents and corporate documents) and take all such actions reasonably deemed by
the  Administrative  Agent to be necessary or desirable to ensure the  creation,
priority and perfection of such Lien. The foregoing notwithstanding, no Mortgage
on real  property  at any time owned by the  Borrower or any  Subsidiary  of the
Borrower  in New York State  shall be  executed  in favor of the  Administrative
Agent if the conditions set forth in subsection 12.16(b) do not occur.

     (b) (i) The Borrower shall cause each new Subsidiary  (other than a Foreign
Subsidiary) of the Borrower created or acquired after the date hereof,  promptly
upon  such  creation  or  acquisition,  to  execute  an  instrument  in form and
substance  reasonably   satisfactory  to  the  Administrative  Agent  (it  being
acknowledged and agreed that an instrument in the form attached to the Guarantee
and Collateral Agreement as Exhibit A thereto shall satisfy this


<PAGE>

                                                                              62


requirement)  pursuant to which such new Subsidiary  shall become a party to the
Guarantee  and  Collateral  Agreement  as a grantor  (unless the  conditions  in
subsection 12.16(a) are satisfied) and a guarantor  thereunder,  and (ii) unless
the  conditions to release of Collateral in subsection  12.16(a) are  satisfied,
the Borrower  shall, or shall cause the Subsidiary of the Borrower (other than a
Foreign  Subsidiary)  which holds the Capital Stock of such new  Subsidiary  to,
execute and deliver an instrument in form and substance reasonably  satisfactory
to the Administrative Agent (it being acknowledged and agreed that an instrument
in the form  attached to the  Guarantee  and  Collateral  Agreement as Exhibit B
thereto shall satisfy this requirement)  providing for the pledge of 100% of the
issued and outstanding Capital Stock of each new Subsidiary (including a Foreign
Subsidiary) of the Borrower  created or acquired after the date hereof and owned
by the  Borrower or one of its  Subsidiaries  (provided,  that in no event shall
Capital  Stock  representing  more than 65% of the voting  power of the  Capital
Stock of any such new Subsidiary which is a Foreign Subsidiary be so pledged) to
the Administrative  Agent for the benefit of the Lenders, and the Borrower shall
deliver  to the  Administrative  Agent the stock  certificates  evidencing  such
Capital Stock together with undated stock powers for each such certificate, duly
executed in blank. The foregoing  notwithstanding,  no Mortgage on real property
at any time owned by the Borrower or any  Subsidiary of the Borrower in New York
State shall be executed in favor of the  Administrative  Agent if the conditions
set forth in subsection 12.16(b) do not occur.

     6.11  Interest  Rate  Protection.  Within 90 days  following  the  Original
Closing  Date,  enter  into  Interest  Rate  Protection  Agreements  in form and
substance reasonably  satisfactory to the Administrative Agent which, considered
together  with  the  terms of the  Borrower's  outstanding  Funded  Indebtedness
bearing a fixed rate of interest,  provide to the Borrower  fixed interest rates
with respect to not less than  one-half of the aggregate  outstanding  principal
amount of the  Borrower's  outstanding  Funded  Indebtedness  as of the Original
Closing Date (as the same may be reduced from time to time pursuant to regularly
scheduled  amortization payments) for a period of at least three years after the
Original  Closing Date, and the Borrower  agrees and confirms that the Guarantee
and Collateral Agreement grants to the Administrative  Agent, for the benefit of
the  Lenders,  a first  priority  (subject  to any Liens  permitted  pursuant to
subsection  7.3)  perfected  security  interest  in its  rights  under  any such
Interest Rate Protection  Agreements.  The Borrower covenants and agrees that it
will not (and it will not permit its Subsidiaries to) enter into Rate Protection
Agreements for the purpose of (i) reducing the amount of Indebtedness  bearing a
fixed rate of  interest  or swapped or capped  into a fixed rate of  interest as
required  by this  subsection  6.11 or (ii)  speculating  on  interest  rates or
currency movements.  It is understood and agreed that the foregoing  prohibition
is not  intended  to  restrict  the use of  Rate  Protection  Agreements  in the
ordinary  course of business to match assets and liabilities of the Borrower and
its Subsidiaries.

     6.12 Exchange Offer.  Comply with the provisions of the Registration Rights
Agreement (as defined in the Final Offering Memorandum).

     6.13 Stock Purchase  Agreement.  Not amend,  modify or otherwise change the
Stock Purchase  Agreement in any way  materially  adverse to the Loan Parties or
the Lenders without the express written approval of the Administrative Agent and
the Required Lenders.


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                                                                              63


                          SECTION 7. NEGATIVE COVENANTS

     The Borrower  hereby  agrees  that,  from and after the Closing Date and so
long as the Commitments remain in effect or any amount is owing to any Lender or
the  Administrative  Agent  hereunder  or under any other Loan  Document  or any
Letter of Credit remains  outstanding,  the Borrower shall not, nor (except with
respect to subsection 7.1) shall the Borrower permit any of its Subsidiaries to,
directly or indirectly,  unless the Required  Lenders shall  otherwise  agree in
writing:

     7.1 Financial Condition Covenants.

     (a) Leverage Ratio.  Permit the ratio of (i) Consolidated Total Debt at the
last day of any fiscal  quarter  ending during any "Test Period" set forth below
to (ii) Consolidated  EBITDA for the period of four consecutive  fiscal quarters
ending on such date to be greater than the amount set forth opposite such period
below:

                  Test Period Ending                   Leverage Ratio
                  ------------------                   --------------

                  12/31/96                             4.25 to 1.00
                  12/31/97                             4.00 to 1.00
                  12/31/98                             3.75 to 1.00
                  12/31/99                             3.40 to 1.00
                  12/31/00                             3.20 to 1.00
                  12/31/01 and thereafter              3.00 to 1.00

     (b)  Interest  Coverage  Ratio.  Permit for any period of four  consecutive
fiscal  quarters  ending  on the last day of any  fiscal  year the  ratio of (i)
Consolidated  EBITDA for such period to (ii)  Consolidated Cash Interest Expense
for such period to be less than the amount set forth opposite such period below:

                  Test Period Ending                    Interest Coverage Ratio
                  ------------------                    -----------------------

                  12/31/96                              1.75 to 1.00
                  12/31/97                              2.20 to 1.00
                  12/31/98                              2.60 to 1.00
                  12/31/99                              2.90 to 1.00
                  12/31/00                              3.00 to 1.00
                  12/31/01 and thereafter               3.00 to 1.00

     7.2 Limitation on Indebtedness.  Create,  incur,  assume or suffer to exist
any  Indebtedness  or  issue  or  sell  any  preferred  stock,  except  (without
duplication):

     (a) Indebtedness in respect of the Loans,  any Notes,  the Guarantees,  the
Letters  of Credit  and the other  obligations  of the Loan  Parties  under this
Agreement and the other Loan Documents;


<PAGE>

                                                                              64


     (b)  Indebtedness  of (i)  the  Borrower  to any  Subsidiary,  (ii)  of any
Domestic  Subsidiary to the Borrower or any other Subsidiary,  (iii) any Foreign
Subsidiary to any other Foreign Subsidiary or (iv) any Foreign Subsidiary to the
Borrower or any Domestic  Subsidiary  in an amount for this clause (iv) together
with any Investments pursuant to subsection 7.9(d)(iv) (other than loans to such
Foreign  Subsidiary)  not to exceed at any one time  outstanding  (x) $2,000,000
plus (y) at the  time  advanced  any  Available  Excess  Equity  Proceeds  in an
aggregate amount not to exceed $10,000,000;

     (c) Indebtedness in respect of Sale/Leaseback  Transactions in an aggregate
principal  amount  incurred  subsequent  to the  Closing  Date,  not  to  exceed
$5,000,000 at any time outstanding;

     (d)  Indebtedness  of the  Borrower in an  aggregate  principal  amount not
exceeding  $100,000,000  (except as provided in subsection 7.2(o)) in respect of
the Senior Subordinated Notes;

     (e)  Indebtedness not exceeding  $5,000,000  pursuant to this clause (e) in
aggregate  principal  amount  at any one time  outstanding,  provided  that such
Indebtedness is not secured by a Lien on any assets of the Loan Parties;

     (f) Indebtedness  consisting of Guarantee  Obligations  expressly permitted
pursuant to subsection 7.4;

     (g) (i) Indebtedness of the  Subsidiaries,  not to exceed $1,000,000 in the
aggregate,  which  represents the assumption of  Indebtedness by a Subsidiary in
connection  with the merger of such  Subsidiary with or into the acquired Person
or the purchase of all or  substantially  all the assets of such acquired Person
or (ii)  Indebtedness  of a  Subsidiary  acquired  after the date hereof or of a
Person  merged with or into the Borrower or a Subsidiary  after the date hereof,
which Indebtedness  exists at the time of such acquisition or merger, and is not
created in  contemplation  of such event, in each case pursuant to a transaction
permitted under  subsection  7.9(g);  provided that the principal amount of such
Indebtedness  is  not  increased,  the  maturity  of  such  Indebtedness  is not
shortened,  and no Guarantee  Obligations of such  Indebtedness  are incurred in
connection  therewith  and  such  Indebtedness  is not  secured  by any  Lien on
property other than that which secured it before such event;

     (h)  Indebtedness  arising from the  honoring by a bank or other  financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight  overdrafts) drawn against  insufficient  funds in the ordinary
course of business,  provided that such Indebtedness is extinguished within five
Business Days of notice to the Borrower of its incurrence;

     (i) Indebtedness in respect of Rate Protection  Agreements  permitted under
subsection 6.11;

     (j)  Indebtedness  outstanding  on the Closing  Date and listed on Schedule
7.2(j);


<PAGE>

                                                                              65


     (k) Financing Lease  Obligations and Indebtedness for the deferred purchase
price of newly acquired property or to finance  equipment  (pursuant to purchase
money mortgages or otherwise) used in the ordinary course of business  (provided
such  financing  is  entered  into  within one year of the  acquisition  of such
property) in an amount not exceeding an aggregate principal amount of $2,000,000
per annum,  provided  however,  that for any  fiscal  year,  such  amount may be
increased by carrying over to such fiscal year any  permitted  amounts not spent
in the preceding fiscal year;

     (l) so long as no Default or Event of  Default  is  continuing  at the time
thereof,  or would occur as a result  thereof,  the  incurrence of  Indebtedness
(including  without   limitation   Indebtedness  in  respect  of  Sale/Leaseback
Transactions or Financing Lease  Obligations) in an aggregate  principal  amount
not to exceed  $10,000,000  at any time  outstanding to finance (or to reimburse
the Borrower or its  Subsidiaries  for amounts  expended to  finance),  on terms
reasonably  satisfactory to the Required Lenders, the expansion or relocation of
their  manufacturing,  warehouse or office facilities provided that, at the time
of incurrence of such Indebtedness, the Borrower shall have provided projections
to the Lenders showing that after giving effect thereto it will be in compliance
with all  covenants  set forth in  subsection  8.1 on a pro forma basis for each
future year during the remaining term of this Agreement;

     (m)  indorsement  of  negotiable  instruments  for deposit or collection or
similar transactions in the ordinary course of business;

     (n)  Indebtedness  in respect of trade letters of credit (or  reimbursement
obligations  arising  therefrom) secured by Liens permitted by subsection 7.3(k)
in an  aggregate  principal  amount  not to  exceed  $2,500,000  at any one time
outstanding;

     (o) Indebtedness (the "Refinancing  Indebtedness") renewing,  extending the
maturity  of,  or  refunding  or  refinancing,  in whole or in part,  any of the
Indebtedness  pursuant  to  clauses  (d) and (l) of  this  subsection  or of any
Refinancing  Indebtedness,  provided that,  (1) the material  terms  (including,
without  limitation,  principal  amount (subject to clause (2) below),  interest
rate,  events of default,  weighted  average  life to maturity,  payment  terms,
covenants,  collateral,  if any, and  subordination  terms,  if any) of any such
Refinancing Debt, and of any agreement entered into and of any instrument issued
in  connection  therewith,  are no  less  favorable  to  the  Borrower  and  its
Subsidiaries  and the Lenders in any material  respect than the terms  governing
the  Indebtedness  so  renewed,  extended,  refunded or  refinanced  and are not
inconsistent with the terms of the Loan Documents and are permitted  thereunder,
(2) the principal amount of the Indebtedness to be renewed,  extended,  refunded
or refinanced may be increased  above the principal  amount thereof  outstanding
immediately prior to such renewal,  extension,  refunding or refinancing,  in an
amount up to $3,000,000  pursuant to this clause (o) in the  aggregate  (for all
such  Indebtedness)  from and  after the  Closing  Date for  purposes  of paying
prepayment  premiums  and  penalties,  consent  payments  and fees  and  similar
expenses in respect of the refinancing of such Indebtedness,  (3) the direct and
contingent  obligors  therefor  shall  not  be  changed,  as a  result  of or in
connection with such extension, refunding or refinancing, and (4) in the


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                                                                              66



case of any renewal,  extension,  refunding or  refinancing of any of the Senior
Subordinated  Notes or Indebtedness  incurred pursuant to subsection 7.2(l), the
covenants, events of default,  subordination terms (if any) and other provisions
thereof,  and all agreements and  instruments  executed in connection  with such
renewal,  extension,  refunding or  refinancing,  shall be in form and substance
reasonably satisfactory to the Administrative Agent; and

     (p)  unsecured  Indebtedness  owing to a seller in an amount  not to exceed
$5,000,000,  at any one  time  outstanding,  incurred  to  finance  a  Permitted
Acquisition.

     7.3 Limitation on Liens. Create,  incur, assume or suffer to exist any Lien
upon any of its  property,  assets or  revenues,  whether now owned or hereafter
acquired, except for the following:

     (a) Liens for taxes not yet due or which are being  contested in good faith
by appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;

     (b) statutory landlords' liens and carriers',  warehousemen's,  mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business  for sums  which are not  overdue  for a period of more than 90 days or
which are being contested in good faith by appropriate proceedings;

     (c)  pledges  or  deposits  in  connection   with  workers'   compensation,
unemployment  insurance  and other  social  security  legislation  and  deposits
securing  liability  to insurance  carriers  under  insurance or  self-insurance
arrangements;

     (d) deposits to secure the performance of bids, trade contracts (other than
for borrowed money),  leases,  statutory  obligations,  surety and appeal bonds,
performance  bonds  and  other  obligations  of a like  nature  incurred  in the
ordinary course of business;

     (e) all easements,  zoning  restrictions,  flowage  rights,  rights-of-way,
covenants,  conditions,  restrictions,  reservations,  licenses,  agreements and
other similar matters, including the unrecorded easements and similar agreements
set forth in Schedule  7.3(e),  which, in the aggregate,  are not substantial in
amount  and  which do not in any  case  materially  detract  from the use of the
property  subject thereto or materially  interfere with the ordinary  conduct of
the business of the Borrower or such Subsidiary;

     (f) (A) Liens securing  Indebtedness  permitted by subsections  7.2(c), (k)
and (l) incurred to finance (or reimburse the Borrower or its  Subsidiaries  for
amounts  expended to finance) the  acquisition,  construction  or improvement of
fixed or capital  assets,  or (B) Liens existing on any such fixed capital asset
at the time of such  acquisition,  provided  that (i) in the case of clause (A),
such Liens shall be created


<PAGE>

                                                                              67


within 360 days after the acquisition, construction or improvement of such fixed
or capital  assets,  (ii) such Liens do not at any time  encumber  any  property
other than the property  acquired,  constructed or improved with the proceeds of
such  Indebtedness,  (iii) the amount of Indebtedness  secured thereby shall not
subsequently be increased and (iv) the principal amount of Indebtedness  secured
by any such Lien shall at no time exceed 100% of the original  purchase price of
such asset or the amount  expended to construct  or improve  such asset,  as the
case may be.

     (g)  Liens in  existence  on the date  hereof  listed on  Schedule  7.3(g),
provided that no such Lien is spread to cover any additional  property after the
Closing  Date and that the  amount of  Indebtedness  secured  thereby  shall not
subsequently be increased;

     (h) all building codes and zoning  ordinances  and other laws,  ordinances,
regulations,  rules,  orders or  determinations of any Federal,  state,  county,
municipal or other governmental authority now or hereafter enacted;

     (i) Liens created pursuant to the Security Documents;

     (j) judgment  Liens  created by or resulting  from any  litigation or legal
proceeding  if  released,  stayed or bonded  (or the  judgment  which it secures
discharged) within 60 days of the date of creation thereof;

     (k) Liens  arising in  connection  with trade letters of credit (other than
Commercial  Letters of Credit) issued to secure the purchase of inventory in the
ordinary course of business of the Borrower and its Subsidiaries permitted under
subsection  7.2(n);  provided  that such Liens shall cover only the documents in
respect of which such letters of credit were issued,  the goods covered  thereby
and the insurance proceeds of such goods;

     (l) Liens on  property  of a Person  existing  at the time  such  Person is
merged into or  consolidated  with the Borrower or becomes a  Subsidiary  of the
Borrower or any Subsidiary of the Borrower in accordance with subsection 7.9(g);
provided  that such Liens were not  created in  contemplation  of such merger or
consolidation  and do not  extend to any  assets  other than those of the Person
merged into or consolidated with or acquired by the Borrower or such Subsidiary;
and

     (m) the replacement,  extension or renewal of any Lien permitted by clauses
(f), (g), (j), and (l) above upon or in the same  property  theretofore  subject
thereto  as  security  for the  same  Indebtedness  or any  renewal,  extension,
refunding or refinancing thereof permitted hereunder.

     7.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer to
exist any Guarantee Obligation except:

     (a)  Guarantee  Obligations  in  existence on the date hereof and listed on
Schedule 7.4(a);


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                                                                              68


     (b) the Guarantees and Letters of Credit; and

     (c) guarantees by the Borrower of obligations of any Subsidiary,  or by any
Subsidiary of the  obligations of any other  Subsidiary or the Borrower,  to the
extent such guaranteed obligations are otherwise permitted under this Agreement.

     7.5 Limitation on Fundamental Changes. Enter into any merger, consolidation
or  amalgamation,  or  liquidate,  wind up or  dissolve  itself  (or  suffer any
liquidation  or  dissolution),  or convey,  sell,  lease,  assign,  transfer  or
otherwise  dispose of, all or  substantially  all of its  property,  business or
assets, except:

          (a) any Subsidiary of the Borrower may be merged or consolidated  with
     or into the Borrower (provided that the Borrower shall be the continuing or
     surviving  corporation)  or  with or  into  any  one or  more  wholly-owned
     Subsidiaries of the Borrower (provided that the wholly-owned  Subsidiary or
     Subsidiaries shall be the continuing or surviving corporation);

          (b) any wholly-owned Subsidiary may sell, lease, transfer or otherwise
     dispose  of  any  or  all of its  assets  (upon  voluntary  liquidation  or
     otherwise)  to the  Borrower or any other  wholly-owned  Subsidiary  of the
     Borrower;

          (c) pursuant to any sale of assets  expressly  permitted by subsection
     7.6; and

          (d)  pursuant  to any  Permitted  Acquisition  in which the  surviving
     entity is the Borrower or (after giving effect to the  acquisition)  any of
     its Subsidiaries.

     7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,  transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired,  or, in the case of any  Subsidiary,  issue or sell any shares of such
Subsidiary's  Capital  Stock  to any  Person  other  than  the  Borrower  or any
Subsidiary, except (without duplication):

          (a)  the  conveyance,  sale,  lease,  assignment,  transfer  or  other
     disposition of Obsolete  Property or surplus property for fair value in the
     ordinary course of business;

          (b) Asset Sales (other than as otherwise  permitted by this subsection
     7.6),  provided that the Net Proceeds of any such Asset Sale are applied to
     the  extent  required  by  subsection   3.1(b)(ii)  and  shall  not  exceed
     $10,000,000 in the aggregate;

          (c)  any  Asset  Sale  pursuant  to  any  Sale/Leaseback  Transaction,
     provided that the  provisions of subsection  7.2(c) or (l), as the case may
     be, are not violated;

          (d) the sale of inventory in the ordinary course of business;


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                                                                              69


          (e) the sale or discount for fair value  without  recourse of accounts
     receivable  arising in the ordinary  course of business in connection  with
     the compromise or collection thereof;

          (f) as permitted by subsection 7.5(b);

          (g) the license of  intellectual  property in the  ordinary  course of
     business; and

          (h) leases or subleases not materially  interfering  with the ordinary
     course of conduct of the business of the Borrower and its Subsidiaries;

          (i) the sale or liquidation of Cash Equivalents in the ordinary course
     of business;

          (j) the  transfer  of  properties  in tax free  exchanges  pursuant to
     Section 1031 of the Code for properties for use consistent with the ongoing
     trade or business of the Borrower and its Subsidiaries, for equivalent fair
     market value (after  giving effect to the payment or receipt of any cash in
     connection with any such exchange);

          (k)  distribution of inventory,  in amounts not to exceed $750,000 per
     year, to third parties for charitable purposes; and

          (l) any ARP Spinoff.

     7.7 Limitation on Restricted  Payments.  Declare or pay any dividend (other
than  dividends  payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption,  defeasance,  retirement or other acquisition of,
any shares of any class of Capital  Stock of the  Borrower  or any  warrants  or
options to purchase  any such Stock,  whether now or hereafter  outstanding,  or
make any other  distribution in respect thereof,  either directly or indirectly,
whether in cash or property or in  obligations of the Borrower or any Subsidiary
(such   declarations,   payments,   setting   apart,   purchases,   redemptions,
defeasances,  retirements,  acquisitions and  distributions  being herein called
"Restricted Payments"), except that (without duplication),

     (a) the  Borrower  may pay cash  dividends  to  Holdings  to pay any  taxes
required  to be paid by  Holdings in the  ordinary  course of business  provided
that, in each case, any such taxes are paid no later than fifteen  Business Days
after the date on which the relevant dividend is made;

     (b) the Borrower may pay cash dividends to Holdings to the extent necessary
to enable  Holdings  to pay fees,  expenses  and other  obligations  incurred or
required  in  connection  with the  Transactions,  the  Recapitalization  and in
connection  with the other matters  permitted in subsection  8.1,  provided that
Holdings shall pay each  obligation in respect of which such dividend is made no
later than fifteen  Business Days after the date on which the relevant  dividend
is made, provided further that the Borrower may


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                                                                              70


not pay  dividends  under this clause (b)  subsequent  to the Closing Date to be
applied to the repurchase,  redemption, or other acquisition of Capital Stock of
Holdings owned by GEI, any Investor,  or any Continuing  Stockholder (as defined
in the Stock Purchase  Agreement) or their  Affiliates and the aggregate  amount
applied for the  repurchase,  redemption or other  acquisition  of Capital Stock
from other Persons may not exceed $500,000 per annum, provided however, that (i)
for any fiscal  year,  such amount may be  increased  by  carrying  over to such
fiscal year any permitted  amounts not spent in the  preceding  fiscal years and
(ii) if the Borrower  receives through Holdings proceeds from the sale of equity
securities purchased by any employee,  officer or director,  such proceeds shall
increase the $500,000 amount in the year of receipt.

     (c) the  Borrower  may pay cash  dividends  to Holdings in an amount not to
exceed  $400,000 in the aggregate in any fiscal year to the extent  necessary to
enable  Holdings to pay  reasonable and necessary  operating  expenses and other
general   corporate   expenses   (including   reasonable   attorneys  and  other
professional fees);

     (d) the Borrower may pay cash dividends to Holdings out of Available Excess
Equity  Proceeds to the extent  received by the  Borrower and to the extent that
Holdings  is  permitted  to use such  proceeds to  repurchase,  redeem or retire
preferred stock pursuant to subsection  3.1(b);  provided that Holdings shall so
use such proceeds  within 60 days after the date the relevant  dividend is made;
and

     (e) the Borrower may pay dividends contemplated by subsection 7.6(l).

     7.8  Limitation  on Capital  Expenditures.  Make or commit to make  Capital
Expenditures  in  excess  of  $6,000,000  per  annum  for the  Borrower  and its
Subsidiaries during any fiscal year of the Borrower;  provided, that (i) Capital
Expenditures not in excess of $2,000,000  permitted to be made during any fiscal
year (and not carried  over from a prior  fiscal  year) and not made during such
fiscal year may be carried over and expended during the next  succeeding  fiscal
year,  (ii)  Capital  Expenditures  made  during any fiscal  year shall be first
deemed made in respect of amounts  carried  over from the prior  fiscal year and
then deemed made in respects of amounts permitted for such fiscal year and (iii)
the  Borrower  and its  Subsidiaries  may make,  or  commit to make,  additional
Capital Expenditures in the amount of up to $12,500,000 in the aggregate,  to be
used to finance the expansion or relocation of their manufacturing, warehouse or
office facilities.

     7.9 Limitation on Investments,  Loans and Advances. Make any advance, loan,
extension of credit or capital  contribution  to, or purchase any stock,  bonds,
notes,  debentures or other securities of, or any assets constituting a business
unit of, or make any other investment in, any Person (an  "Investment"),  except
(without duplication):

          (a)  extensions  of  trade  credit  and   endorsements  of  negotiable
     instruments  and  other  negotiable  documents  in the  ordinary  course of
     business;

          (b) Investments in Cash Equivalents;


<PAGE>

                                                                              71


          (c) loans and advances to  employees  and  directors of Holdings,  the
     Borrower  or  any  of  its  Subsidiaries  for  travel,   entertainment  and
     relocation  expenses in the  ordinary  course of  business in an  aggregate
     amount  for  Holdings,  the  Borrower  and its  Subsidiaries  not to exceed
     $500,000 at any time outstanding;

          (d) Investments by (i) the Borrower in its Domestic Subsidiaries, (ii)
     any  Domestic  Subsidiaries  in  the  Borrower  or in  any  other  Domestic
     Subsidiary, (iii) any Foreign Subsidiary in any other Foreign Subsidiary or
     (iv)  the  Borrower  or  any  of  its  Domestic   Subsidiaries  in  Foreign
     Subsidiaries  in an amount  for this  clause  (iv) not to exceed at any one
     time  outstanding  (x)  $2,000,000  plus (y) at the time made any Available
     Excess Equity Proceeds in an aggregate amount not to exceed $10,000,000;

          (e)  securities and other  Investments  held by the Borrower or any of
     its Subsidiaries prior to the Closing Date and listed on Schedule 7.9(e);

          (f) advances by the  Borrower to  Holdings,  in lieu of the payment of
     cash  dividends,  to enable  Holdings to make the payments  contemplated by
     subsection  7.7,  provided  that, if such advances are made with respect to
     the payments contemplated by subsection 7.7(a) or 7.7(b), such advances are
     used to make such payments within fifteen Business Days after such advances
     are made;

          (g) Permitted  Acquisitions  in an aggregate  amount not to exceed (i)
     the Permitted  Acquisition Amount plus (ii) at the time made, any Available
     Excess  Equity  Proceeds  plus  (iii)  any  consideration  paid  in  equity
     securities of Holdings;

          (h) repurchases of Senior  Subordinated  Notes to the extent permitted
     under subsection 7.10;

          (i) Rate Protection Agreements; and

          (j) other Investments not to exceed $1,000,000 plus (i) any returns of
     or on such Investments and (ii) any Available Excess Equity Proceeds.

     7.10 Limitation on Optional  Payments and Modifications of Debt Instruments
and  other  Obligations.  (a) Make any  optional  payment  or  prepayment  on or
redemption,  defeasance or purchase of any Senior  Subordinated Notes except (i)
in accordance  with the  provisions of  subsection  3.1(b)(i)(u),  (ii) with the
proceeds of Indebtedness  permitted under subsections 7.2(e) (in connection with
the incurrence of Refinancing  Indebtedness  under subsection 7.2(o)) and 7.2(o)
and  (iii) as long as no  Default  or  Event  of  Default  has  occurred  and is
continuing,  in an aggregate  cash amount not to exceed  $15,000,000  unless the
ratio of Consolidated Total Debt to Consolidated EBITDA (calculated on the terms
set forth in  subsection  7.1(a))  for the most  recent  completed  four  fiscal
quarters prior to any such optional payment, prepayment,  redemption, defeasance
or  purchase is less than or equal to 2.0 to 1.0 and then in an  aggregate  cash
amount not to exceed  $30,000,000,  (b) amend,  modify or change,  or consent or
agree to any amendment, modification or change to any of the terms of the Senior
Subordinated Note Indenture (other than any such amendment, modification or


<PAGE>

                                                                              72


change  which (i) would  extend the maturity or reduce the amount of any payment
of principal  thereof or would reduce the rate or extend the date for payment of
interest  thereon or (ii) does not in any way adversely  affect the interests of
the Administrative Agent or the Lenders hereunder, thereunder or under the other
Loan Documents or (iii) is of a technical or clarifying  nature),  (c) designate
any  Indebtedness  having a principal amount in excess of $20,000,000 as "Senior
Debt" under and as defined in the Senior Subordinated Note Indenture without the
consent of the Administrative  Agent, or (d) amend, modify or change, or consent
or  agree  to  any  amendment,   modification  or  change  to  the  articles  of
incorporation  (or  such  similar  charter  documents)  of the  Borrower  or any
Subsidiary in any material respect.

     7.11  Limitation  on   Transactions   with   Affiliates.   Enter  into  any
transaction,  including,  without  limitation,  any  purchase,  sale,  lease  or
exchange of property or the rendering of any service,  with any Affiliate unless
such  transaction is (a) otherwise  permitted under this  Agreement,  (b) in the
ordinary  course of the  Borrower's or such  Subsidiary's  business and (c) upon
fair and reasonable  terms no less favorable to the Borrower or such Subsidiary,
as the  case  may  be,  than  it  would  obtain  in a  comparable  arm's  length
transaction  with a  Person  which  is  not an  Affiliate,  provided,  that  the
foregoing  restriction  shall not  prohibit  (i)  payment  of  reasonable  fees,
expenses  and other  benefits to  directors  of  Holdings,  the Borrower and its
Subsidiaries not in excess of $250,000 per fiscal year, (ii) consummation of the
Transactions  contemplated by the Acquisition Documents or the Recapitalization,
(iii) any payment or other  transaction  pursuant to any tax sharing  agreement,
(iv)  payments  permitted  under  subsection  7.7 or  Investments  permitted  by
subsection 7.9, (v) the Indebtedness  permitted  pursuant to subsection  7.2(b),
(vi) any employment or consulting  agreement or arrangement  entered into by the
Borrower or any of its Subsidiaries  pursuant to the  Transactions  contemplated
herein or in the ordinary  course of business,  (vii)  transactions  between the
Borrower and any Subsidiary and between  Subsidiaries,  (viii) the  transactions
contemplated   by  the   agreements   listed  on   Schedule   7.11(viii),   (ix)
indemnification  payments to officers and directors of Holdings, the Borrower or
its Subsidiaries,  (x) payments to Green for management,  financial advisory and
investment  banking services pursuant to the Management  Services  Agreement and
(xi)  transactions  with any Person on an arms length basis if such Person is an
Affiliate solely by reason of being controlled by Green or its Affiliates.

     7.12  Limitation  on Changes in Fiscal Year.  Permit the fiscal year of the
Borrower to end on a day other than December 31.

     7.13  Limitation  on Lines of  Business.  Enter into any  business,  either
directly  or  through  any  Subsidiary,  except for those  businesses  which are
reasonably related to those businesses in which the Companies are engaged on the
date of this Agreement or extensions thereof, including, without limitation, any
business  involving  the  manufacturing  or marketing of products sold in health
food stores or stores that sell similar products.


<PAGE>

                                                                              73


                    SECTION 8. NEGATIVE COVENANTS OF HOLDINGS

     Holdings  agrees  that,  from and after the Closing Date and so long as the
Commitments  remain  in  effect  or any  amount  is owing to any  Lender  or the
Administrative Agent hereunder or under any other Loan Document or any Letter of
Credit  remains  outstanding,  Holdings shall not,  unless the Required  Lenders
shall otherwise agree in writing:

     8.1 Limitation on Holdings'  Activities.  Incur any  Indebtedness or create
any Guarantee  Obligations,  or make any  investments,  loans or advances to any
Person,  or purchase  any  material  assets,  or conduct,  transact or otherwise
engage,  or commit to transact,  conduct or otherwise engage, in any business or
operations  other than (i)  transactions  contemplated  in  connection  with the
consummation of the Transactions or the Recapitalization,  (ii) the ownership of
the Capital Stock of the Borrower, and the exercise of rights and performance of
obligations  in  connection  therewith,  (iii) the entry into,  and  exercise of
rights and  performance of obligations in respect of, (A) this Agreement and the
Guarantee and Collateral  Agreement and the Senior  Subordinated  Note Indenture
(including Notes exchanged thereunder), (B) contracts and agreements with or for
the benefit of officers, directors, employees and consultants of Holdings or any
Subsidiary thereof relating to their employment or directorships or consultancy,
(C)  insurance  policies and related  contracts and  agreements,  and (D) equity
subscription agreements,  registration rights agreements, warrant agreements and
voting  and  other  stockholder  agreements,  engagement  letters,  underwriting
agreements,  stock option plans and agreements and other agreements  (including,
without limitation,  acquisition agreements) in respect of its equity securities
or any  offering,  issuance  or sale  thereof,  including,  without  limitation,
listing agreements with securities exchanges and acquisition agreements pursuant
to which equity  securities of Holdings will be issued and (E) the PIK Preferred
or other  preferred  stock  of  Holdings  (including,  without  limitation,  the
repurchase, redemption or retirement thereof to the extent permitted hereunder),
(iv) the  offering,  issuance  and  sale of its  equity  securities  (including,
without  limitation,  in  connection  with an  acquisition)  to the extent  such
offering,  issuance  or sale does not  constitute  a Default or Event of Default
under Section 10(k), (v) the filing of registration  statements,  and compliance
with applicable  reporting and other  obligations,  under and in compliance with
its Federal,  state or other securities laws or applicable  securities  exchange
requirements,  (vi) the performance of obligations  under and in compliance with
its certificate of incorporation and by-laws,  or any applicable law, ordinance,
regulation,   rule,  order,  judgment,  decree  or  permit,  including,  without
limitation,  as a  result  of  or in  connection  with  the  activities  of  its
Subsidiaries,  (vii) the performance of contractual  obligations in existence on
the date hereof or otherwise permitted hereunder, including, without limitation,
the  Management  Services  Agreement,  (viii) the  incurrence and payment of its
business expenses and any taxes for which it may be liable,  (ix) the incurrence
and  exercise  of rights  and  performance  of  obligations  in  respect  of any
Refinancing  Indebtedness  pursuant to subsection 7.2(o), (x) the incurrence and
exercise of rights and  performance of  obligations  in respect of  Indebtedness
permitted by subsection 7.9(f) or (xi) other activities reasonably incidental or
related to the foregoing.


<PAGE>

                                                                              74


     8.2  Restricted  Payments.  Use  any  amount  received  by it  pursuant  to
subsection  7.7 or 7.9(f) from the Borrower or any of its  Subsidiaries  for any
purpose other than as set forth in such subsections.

     8.3  Net  Proceeds.  Fail to  contribute  the Net  Proceeds  of any  Equity
Offering on or after the Closing Date to the Borrower  within two Business  Days
after Holdings receives such Net Proceeds,  except that Holdings may retain such
Net Proceeds to  repurchase,  redeem or retire PIK Preferred or other  preferred
stock in connection  with the  Recapitalization  or as contemplated or otherwise
permitted by subsection 3.1(b).

     8.4 Dividends.  Except as contemplated by subsection  3.1(b), 7.7 or 7.9(f)
or in connection with the  Recapitalization,  declare or pay any dividend (other
than  dividends  payable  solely in Capital  Stock of Holdings)  on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for the purchase,  redemption,  defeasance,  retirement or other  acquisition of
Capital  Stock of  Holdings,  or any  warrants or options to  purchase  any such
Capital  Stock,  whether  now  or  hereafter  outstanding,  or  make  any  other
distribution in respect thereof, either directly or indirectly,  whether in cash
or property or in obligations of Holdings or any of its Subsidiaries.

                              SECTION 9. GUARANTEE

     9.1 Guarantee.  (a) To induce the  Administrative  Agent and the Lenders to
execute and deliver this Agreement and to make the Extensions of Credit provided
for herein to the Borrower,  Holdings  hereby  absolutely,  unconditionally  and
irrevocably  guarantees to the Administrative Agent, the Documentation Agent and
the Lenders and their respective successors, permitted transferees and permitted
assigns,  the prompt and complete  payment and  performance by the Borrower when
due  (whether at the stated  maturity,  by  acceleration  or  otherwise)  of the
Obligations.  Holdings  further  agrees to pay any and all  reasonable  expenses
(limited in the case of counsel to all reasonable fees and  disbursements of one
counsel) which may be paid or incurred by the Administrative Agent or any Lender
in enforcing,  or obtaining advice of one counsel in respect of, any rights with
respect to, or collecting,  any or all of the Obligations  and/or  enforcing any
rights with respect to, or collecting  against,  Holdings  under this Section 9.
Subject to subsection  9.5, this Guarantee shall remain in full force and effect
until the Obligations are indefeasibly paid in full, no Letter of Credit remains
outstanding and the Commitments are terminated,  notwithstanding  that from time
to time prior thereto the Borrower may be free from any Obligations.

     (b) No payment or  payments  made by the  Borrower  or any other  Person or
received  or  collected  by the  Administrative  Agent  or any  Lender  from the
Borrower  or any  other  Person by virtue  of any  action or  proceeding  or any
set-off or  appropriation  or application,  at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of Holdings under this Section 9 which
shall, notwithstanding any such payment or payments (other than payments made by
Holdings in respect of the  Obligations  or payments  received or collected from
Holdings in respect of the Obligations),  remain in full force and effect until,
subject to subsection  9.5, the Obligations  are  indefeasibly  paid in full, no
Letter of Credit remains


<PAGE>

                                                                              75


outstanding and the  Commitments are terminated.  Holdings agrees that whenever,
at  any  time,  or  from  time  to  time,  it  shall  make  any  payment  to the
Administrative  Agent or any  Lender on  account  of its  liability  under  this
Section 9, it will  notify the  Administrative  Agent and such Lender in writing
that such payment is made under this Section 9 for such purpose.

     9.2   No   Subrogation,    Contribution,    Reimbursement   or   Indemnity.
Notwithstanding  anything to the contrary in this Section 9, Holdings  shall not
be entitled to be subrogated to any of the rights of the Administrative Agent or
any  Lender  against  the  Borrower  or any other  Guarantor  or any  collateral
security or guarantee or right of offset held by the Administrative Agent or any
Lender  for the  payment  of the  Obligations,  nor  shall  Holdings  seek or be
entitled to seek any  contribution  or  reimbursement  from the  Borrower or any
other  Guarantor in respect of payments  made by Holdings  hereunder,  until all
amounts  owing to the  Administrative  Agent and the Lenders by the  Borrower on
account of the  Obligations are paid in full, the Commitments are terminated and
no Letter of Credit remains outstanding. If any amount shall be paid to Holdings
on account of such  subrogation  rights at any time when all of the  Obligations
shall not have been paid in full, the Commitments shall not have been terminated
or a Letter of Credit remains outstanding, such amount shall be held by Holdings
in trust for the  Administrative  Agent and the Lenders,  segregated  from other
funds of Holdings, and shall, forthwith upon receipt by Holdings, be turned over
to the  Administrative  Agent in the  exact  form  received  by  Holdings  (duly
indorsed by Holdings to the  Administrative  Agent, if required),  to be applied
against the  Obligations,  whether  matured or  unmatured,  in such order as the
Administrative  Agent may  determine.  The  provisions of this  paragraph  shall
survive the  termination  of the  guarantee  contained in this Section 9 and the
payment in full of the  Obligations,  the termination of the Commitments and the
cancellation, revocation or termination of all outstanding Letters of Credit.

     9.3  Amendments,  etc. with respect to the  Obligations;  Waiver of Rights.
Holdings shall remain  obligated  hereunder  notwithstanding  that,  without any
reservation of rights against Holdings,  and without notice to or further assent
by  Holdings,  any demand  for  payment  of any of the  Obligations  made by the
Administrative  Agent or any Lender may be rescinded by the Administrative Agent
or such Lender, and any of the Obligations  continued,  and the Obligations,  or
the liability of any other party upon or for any part thereof, or any collateral
security or  guarantee  therefor or right of offset with respect  thereto,  may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated,  compromised, waived, surrendered or released by the Administrative
Agent or any Lender, and this Agreement,  the other Loan Documents, any Interest
Rate  Protection  Agreement  entered into by the Borrower with any Lender or any
Affiliate  of any Lender  and any other  documents  executed  and  delivered  in
connection  herewith or  therewith  may be amended,  modified,  supplemented  or
terminated,  in whole or in part, as the  Administrative  Agent (or the Required
Lenders, as the case may be) or such Lender or Affiliate may deem advisable from
time to time, and any collateral  security,  guarantee or right of offset at any
time held by the  Administrative  Agent or any  Lender  for the  payment  of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative  Agent nor any Lender or its Affiliates shall have any obligation
to  protect,  secure,  perfect  or  insure  any Lien at any  time  held by it as
security for the Obligations or for the guarantee contained in this Section 9 or
any property subject thereto. When making any demand hereunder against


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                                                                              76


Holdings,  the  Administrative  Agent or any Lender  may,  but shall be under no
obligation to, make a similar demand on the Borrower or any other guarantor, and
any failure by the Administrative Agent or any Lender to make any such demand or
to collect any  payments  from the  Borrower or any such other  guarantor or any
release of the Borrower or such other  guarantor  shall not relieve  Holdings of
its  obligations  or  liabilities  under this Section 9, and shall not impair or
affect the rights and  remedies,  express or implied,  or as a matter of law, of
the Administrative Agent or any Lender against Holdings. For the purposes hereof
"demand"  shall  include  the   commencement   and   continuance  of  any  legal
proceedings.

     9.4 Guarantee Absolute and  Unconditional.  Holdings waives, to the fullest
extent permitted by applicable law, any and all notice of the creation, renewal,
extension  or  accrual  of any of the  Obligations  and  notice  of or  proof of
reliance by the Administrative  Agent or any Lender upon the guarantee contained
in this Section 9 or acceptance  of the  guarantee  contained in this Section 9;
the  Obligations,  and any of them,  shall  conclusively  be deemed to have been
created,  contracted or incurred,  or renewed,  extended,  amended or waived, in
reliance  upon the  guarantee  contained  in this  Section  9; and all  dealings
between the Borrower or Holdings,  on the one hand, and the Administrative Agent
and the Lenders,  on the other, shall likewise be conclusively  presumed to have
been had or consummated in reliance upon the guarantee contained in this Section
9.  Holdings  waives,  to  the  fullest  extent  permitted  by  applicable  law,
diligence,  presentment,  protest,  demand for  payment and notice of default or
nonpayment to or upon the Borrower or Holdings with respect to the  Obligations.
This Guarantee  shall be construed as a continuing,  absolute,  irrevocable  and
unconditional   guarantee  of  payment  without  regard  to  (a)  the  validity,
regularity  or  enforceability  of this  Agreement,  any Note,  any  other  Loan
Document or any Interest Rate Protection  Agreement entered into by the Borrower
with any Lender or any Affiliate of any Lender,  any of the  Obligations  or any
other collateral  security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
Lender,  (b) any  defense,  set-off  or  counterclaim  (other  than a defense of
payment or performance)  which may at any time be available to or be asserted by
the Borrower,  Holdings or any other Person against the Administrative  Agent or
any Lender or (c) any other  circumstance  whatsoever (with or without notice to
or  knowledge  of the  Borrower  or  Holdings)  which  constitutes,  or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Obligations,  or of Holdings under the guarantee contained in this Section 9, in
bankruptcy  or in any other  instance.  When  pursuing  its rights and  remedies
hereunder against  Holdings,  the  Administrative  Agent and any Lender may, but
shall be under no obligation  to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any  collateral  security or
guarantee for the Obligations or any right of offset with respect  thereto,  and
any  failure  by the  Administrative  Agent or any  Lender to pursue  such other
rights or  remedies  or to collect any  payments  from the  Borrower or any such
other Person or to realize upon any such collateral  security or guarantee or to
exercise  any such right of offset,  or any release of the  Borrower or any such
other Person or of any such collateral  security,  guarantee or right of offset,
shall not relieve Holdings of any liability  hereunder,  and shall not impair or
affect the rights and  remedies,  whether  express,  implied or  available  as a
matter of law, of the Administrative  Agent or any Lender against Holdings.  For
the purposes hereof,  "demand" shall include the commencement and continuance of
any legal proceedings. The guarantee contained in this


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                                                                              77


Section 9 shall  remain in full force and  effect  and be binding in  accordance
with and to the extent of its terms upon Holdings and its successors,  and shall
inure to the  benefit of the  Administrative  Agent and the  Lenders,  and their
respective  successors,  permitted  transferees  and permitted  assigns,  until,
subject to subsection  9.5, all the  Obligations and the obligations of Holdings
under this Guarantee shall have been indefeasibly  satisfied by payment in full,
no Letter of Credit remains outstanding and the Commitments shall be terminated,
notwithstanding  that from time to time  during the term of this  Agreement  the
Borrower may be free from any Obligations.

     9.5 Reinstatement. The guarantee contained in this Section 9 shall continue
to be effective,  or be reinstated,  as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must otherwise be
restored  or  returned  by the  Administrative  Agent  or any  Lender  upon  the
insolvency,  bankruptcy,  dissolution,  liquidation  or  reorganization  of  the
Borrower  or any other  Person or upon or as a result  of the  appointment  of a
receiver,  intervenor or conservator  of, or trustee or similar officer for, the
Borrower  or any  other  Person  or any  substantial  part of its  property,  or
otherwise, all as though such payments had not been made.

     9.6 Payments.  Holdings hereby agrees that the Obligations  will be paid to
the  Administrative  Agent  without  set-off or  counterclaim  in Dollars at the
office of the  Administrative  Agent located at 270 Park Avenue,  New York,  New
York 10017.


                          SECTION 10. EVENTS OF DEFAULT

     If any of the following events shall occur and be continuing:

          (a) The  Borrower  shall fail to pay any  principal of any Loan or any
     Reimbursement  Obligation  when due in accordance with the terms thereof or
     hereof;  or the Borrower shall fail to pay any interest on any Loan, or any
     other amount  payable  hereunder,  within five Business Days after any such
     interest or other amount  becomes due in accordance  with the terms thereof
     or hereof; or

          (b) Any representation or warranty made or deemed made by the Borrower
     or any other Loan Party  herein or in any other Loan  Document  or which is
     contained in any  certificate,  document or  financial  or other  statement
     furnished by it at any time under or in connection  with this  Agreement or
     any such other Loan  Document  shall  prove to have been  incorrect  in any
     material respect on or as of the date made or deemed made or furnished; or

          (c)  The  Borrower  or any  other  Loan  Party  shall  default  in the
     observance  or  performance  of any  agreement  contained  in  Section 7 or
     Section  8,  or  subsection  5.5 or 5.9 of  the  Guarantee  and  Collateral
     Agreement; or

          (d)  The  Borrower  or any  other  Loan  Party  shall  default  in the
     observance  or  performance  of  any  other  agreement  contained  in  this
     Agreement or any other Loan


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                                                                              78


     Document  (other  than as provided  in  paragraphs  (a) through (c) of this
     Section),  and such default shall  continue  unremedied  for a period of 30
     days; or

          (e) The  Borrower  or any other  Loan Party  shall (i)  default in any
     payment of  principal  of or interest of any  Indebtedness  (other than the
     Loans) or in the payment of any Guarantee Obligation,  beyond the period of
     grace  (not to exceed 30  days),  if any,  provided  in the  instrument  or
     agreement  under  which  such  Indebtedness  or  Guarantee  Obligation  was
     created;  or (ii) default in the  observance  or  performance  of any other
     agreement  or  condition  relating to any such  Indebtedness  or  Guarantee
     Obligation or contained in any instrument or agreement evidencing, securing
     or relating thereto, or any other event shall occur or condition exist, the
     effect of which  default or other  event or  condition  is to cause,  or to
     permit  the  holder or  holders  of such  Indebtedness  or  beneficiary  or
     beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf
     of such holder or holders or beneficiary or  beneficiaries)  to cause, with
     the giving of notice if required,  such Indebtedness to become due prior to
     its  stated  maturity  or such  Guarantee  Obligation  to  become  payable;
     provided,  however,  that no Default or Event of Default  shall exist under
     this paragraph unless the aggregate amount of Indebtedness and/or Guarantee
     Obligations  in respect of which any  default or other  event or  condition
     referred  to in this  paragraph  shall have  occurred  shall be equal to at
     least $2,000,000; or

          (f) (i) The Borrower or any other Loan Party shall  commence any case,
     proceeding  or other  action  (A) under any  existing  or future law of any
     jurisdiction,  domestic or foreign,  relating  to  bankruptcy,  insolvency,
     reorganization  or relief of  debtors,  seeking to have an order for relief
     entered  with  respect  to it, or seeking to  adjudicate  it a bankrupt  or
     insolvent, or seeking reorganization,  arrangement, adjustment, winding-up,
     liquidation, dissolution, composition or other relief with respect to it or
     its debts, or (B) seeking  appointment of a receiver,  trustee,  custodian,
     conservator or other similar  official for it or for all or any substantial
     part of its  assets,  or the  Borrower or any other Loan Party shall make a
     general assignment for the benefit of its creditors; or (ii) there shall be
     commenced against the Borrower or any other Loan Party any case, proceeding
     or other  action  of a nature  referred  to in clause  (i) above  which (A)
     results  in the entry of an order for  relief or any such  adjudication  or
     appointment  or (B) remains  undismissed,  undischarged  or unbonded  for a
     period  of 60 days;  or (iii)  there  shall be  entered  any  order for the
     issuance  of a warrant  of  attachment,  execution,  distraint  or  similar
     process against all or any  substantial  part of the assets of the Borrower
     or any other Loan Party which shall not have been vacated,  discharged,  or
     stayed or bonded pending  appeal within 60 days from the entry thereof;  or
     (iv) the  Borrower  or any  other  Loan  Party  shall  take any  action  in
     furtherance  of, or indicating its consent to, approval of, or acquiescence
     in, any of the acts set forth in clause (i),  (ii), or (iii) above;  or (v)
     the  Borrower  or any other Loan Party  shall  generally  not,  or shall be
     unable to, or shall  admit in writing  its  inability  to, pay its debts as
     they become due; or

          (g) (i) Any Person shall engage in any  "prohibited  transaction"  (as
     defined in Section 406 of ERISA or Section 4975 of the Code)  involving any
     Plan, (ii) any


<PAGE>

                                                                              79


     "accumulated  funding  deficiency"  (as  defined in Section  302 of ERISA),
     whether or not waived,  shall exist with respect to any Plan or any Lien in
     favor of the PBGC or a Plan shall  arise on the assets of the  Borrower  or
     any Commonly  Controlled Entity,  (iii) a Reportable Event shall occur with
     respect to, or proceedings shall commence to have a trustee appointed (or a
     trustee  shall be  appointed) to  administer,  or to terminate,  any Single
     Employer Plan,  which  Reportable  Event or  commencement of proceedings or
     appointment  of a trustee  is, in the  reasonable  opinion of the  Required
     Lenders,  likely to result in the  termination of such Plan for purposes of
     Title IV of ERISA,  (iv) any  Single  Employer  Plan  shall  terminate  for
     purposes of Title IV of ERISA, (v) the Borrower or any Commonly  Controlled
     Entity  shall,  or in the  reasonable  opinion of the  Required  Lenders is
     likely to, incur any liability in connection with a withdrawal from, or the
     Insolvency or  Reorganization  of, a Multiemployer  Plan, or (vi) any other
     similar event or condition shall occur or exist with respect to a Plan that
     could  result in a liability  (other than in the ordinary  course),  and in
     each case in clauses  (i)  through  (vi)  above,  such event or  condition,
     together with all other such events or conditions, if any, could reasonably
     be expected to have a Material Adverse Effect; or

     (h) One or more judgments or decrees shall be entered  against the Borrower
     or any of its Subsidiaries involving individually a liability of $1,500,000
     (not paid or fully  covered by insurance or with respect to which  coverage
     has been  denied by the  insurers or not  covered by the  indemnity  of the
     Sellers under the Stock Purchase Agreement) or in the aggregate a liability
     of  $3,000,000  or more,  and all such  judgments or decrees shall not have
     been vacated,  discharged,  stayed or bonded  pending appeal within 60 days
     from the entry thereof; or

     (i) (i)  Except  as  provided  in  subsection  12.16,  any of the  Security
     Documents shall cease, for any reason,  to be in full force and effect,  or
     the  Borrower  or any  other  Loan  Party  which  is a party  to any of the
     Security  Documents  shall so assert in writing or (ii) any Lien created by
     any of the Security  Documents  shall,  by reason of any breach by any Loan
     Party  thereto of any of its  covenants or other  obligations  contained in
     such Security Documents, cease to be enforceable and of the same effect and
     priority, purported to be created thereby; or

     (j) Any  Guarantee  shall  cease,  for any reason other than release by the
     Lenders,  to be in full force and effect or any Guarantor  shall so assert;
     or

          (k) A Change of Control shall occur; or

          (l) The subordination  provisions  contained in Article XII (or in the
     case of any Senior  Subordinated  Note  Indenture  relating to  Refinancing
     Indebtedness,  the corresponding  article) of the Senior  Subordinated Note
     Indenture shall cease to be enforceable in accordance with their terms;

then, and in any such event, (A) if such event is an Event of Default  specified
in clause (i),  (ii) or (iii) of  paragraph  (f) of this Section with respect to
the  Borrower,   automatically   the  Commitments   (including  the  Swing  Line
Commitment) shall immediately terminate and the


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                                                                              80


Loans  hereunder  (with  accrued  interest  thereon) and all other amounts owing
under  this  Agreement  (including,  without  limitation,  all  amounts  of  L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and  payable,  and (B) if such event is any other  Event of  Default,
either or both of the  following  actions may be taken:  (i) with the consent of
the Required Lenders,  the Administrative  Agent may, or upon the request of the
Required  Lenders,  the  Administrative  Agent shall,  by notice to the Borrower
declare the Commitments  (including the Swing Line  Commitment) to be terminated
forthwith,  whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders,  the Administrative  Agent may, or upon the
request of the Required Lenders,  the  Administrative  Agent shall, by notice to
the Borrower,  declare the Loans hereunder (with accrued  interest  thereon) and
all  other  amounts  (including,   without   limitation,   all  amounts  of  L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required  thereunder) owing under this
Agreement to be due and payable forthwith,  whereupon the same shall immediately
become due and payable.  Except as  expressly  provided  above in this  Section,
presentment,  demand,  protest  and all  other  notices  of any kind are  hereby
expressly waived.

     With respect to all Letters of Credit with respect to which presentment for
honor  shall not have  occurred at the time of an  acceleration  pursuant to the
preceding  paragraph,  the  Borrower  shall  at  such  time  deposit  in a  cash
collateral  account  opened by the  Administrative  Agent an amount equal to the
aggregate  then  undrawn and  unexpired  amount of such  Letters of Credit.  The
Borrower  hereby  grants to the  Administrative  Agent,  for the  benefit of the
Issuing Bank and the L/C Participants and the other Lenders, a security interest
in such cash  collateral to secure all  obligations  of the Borrower  under this
Agreement  and the other Loan  Documents.  Amounts held in such cash  collateral
account  shall be applied by the  Administrative  Agent to the payment of drafts
drawn under such Letters of Credit,  and the unused  portion  thereof  after all
such  Letters of Credit  shall have  expired or been fully drawn  upon,  if any,
shall be applied to repay other  Obligations.  After all such  Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other  Obligations shall have been paid in full, the
balance,  if any,  in such cash  collateral  account  shall be  returned  to the
Borrower.  The Borrower shall execute and deliver to the  Administrative  Agent,
for the  account of the  Issuing  Bank and the L/C  Participants,  such  further
documents and  instruments as the  Administrative  Agent may request to evidence
the creation and  perfection  of the security  interest in such cash  collateral
account.


                      SECTION 11. THE ADMINISTRATIVE AGENT

     11.1 Appointment.  Each Lender hereby  irrevocably  designates and appoints
the  Administrative  Agent as the agent of such Lender under this  Agreement and
the  other  Loan  Documents,   and  each  Lender   irrevocably   authorizes  the
Administrative  Agent, in such capacity, to take such action on its behalf under
the  provisions of this  Agreement and the other Loan  Documents and to exercise
such  powers  and  perform  such  duties  as  are  expressly  delegated  to  the
Administrative  Agent  by the  terms  of  this  Agreement  and  the  other  Loan
Documents, together with such other powers as are reasonably incidental thereto.


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                                                                              81


Notwithstanding  any provision to the contrary elsewhere in this Agreement,  the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary  relationship with any Lender,  and
no  implied  covenants,  functions,  responsibilities,  duties,  obligations  or
liabilities  shall be read into this  Agreement  or any other Loan  Document  or
otherwise exist against the Administrative Agent.

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

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

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


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                                                                              82


may be, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders and all future holders of the Loans.

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

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

     11.7  Indemnification.  The Lenders agree to indemnify  the  Administrative
Agent in its capacity as such (to the extent not  reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably  according to
their  respective  Commitment  Percentages  in  effect  on  the  date  on  which
indemnification is sought (or, if


<PAGE>

                                                                              83


indemnification  is sought after the date upon which the Commitments  shall have
terminated  and the Loans  shall have been paid in full,  ratably in  accordance
with their  Commitment  Percentages  immediately  prior to such date),  from and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits,  costs,  expenses  or  disbursements  of  any  kind
whatsoever which may at any time  (including,  without  limitation,  at any time
following  the  payment of the Loans) be imposed  on,  incurred  by or  asserted
against the  Administrative  Agent in any way relating to or arising out of, the
Commitments,  this  Agreement,  any of the other Loan Documents or any documents
contemplated   by  or  referred  to  herein  or  therein  or  the   transactions
contemplated   hereby  or  thereby  or  any  action  taken  or  omitted  by  the
Administrative Agent under or in connection with any of the foregoing;  provided
that  no  Lender  shall  be  liable  for  the  payment  of any  portion  of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence  or willful  misconduct.  The  agreements  in this  subsection  shall
survive the payment of the Loans and all other amounts payable hereunder.

     11.8  Administrative  Agent  in Its  Individual  Capacity.  Chase  and  its
Affiliates may make loans to, accept  deposits from and generally  engage in any
kind of business  with the Borrower as though Chase were not the  Administrative
Agent  hereunder and under the other Loan  Documents.  With respect to the Loans
made by it and with respect to any Letter of Credit issued or participated in by
it,  Chase shall have the same rights and powers  under this  Agreement  and the
other Loan  Documents  as any Lender and may exercise the same as though it were
not the Administrative Agent, and the terms "Lender" and "Lenders" shall include
Chase in its individual capacity.

     11.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative  Agent upon 10 days' notice to the Lenders and the  Borrower.  If
the  Administrative  Agent  shall  resign as  Administrative  Agent  under  this
Agreement and the other Loan Documents,  then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders,  which successor agent
shall be  subject  to the  approval  of the  Borrower  if no Default or Event of
Default  shall have  occurred and be  continuing  (which  approval  shall not be
unreasonably  withheld),  whereupon  such  successor  agent shall succeed to the
rights,   powers  and  duties  of  the   Administrative   Agent,  and  the  term
"Administrative  Agent"  shall mean such  successor  agent  effective  upon such
appointment and approval,  and the former Administrative  Agent's rights, powers
and duties as  Administrative  Agent shall be  terminated,  without any other or
further  act or deed on the part of such former  Administrative  Agent or any of
the parties to this  Agreement  or any holders of the Loans.  After any retiring
Administrative  Agent's  resignation as Administrative  Agent, the provisions of
this Section 11 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was  Administrative  Agent under this  Agreement and the
other Loan Documents.

     11.10 Issuing Bank;  Swing Line Lender.  The  provisions of this Section 11
(other than subsection  11.9) shall apply to the Issuing Bank and the Swing Line
Lender  mutatis  mutandis  to the same  extent as such  provisions  apply to the
Administrative Agent.


<PAGE>

                                                                              84



                            SECTION 12. MISCELLANEOUS

     12.1  Amendments  and Waivers.  Neither this  Agreement  nor any other Loan
Document,  nor any terms  hereof or  thereof  may be  amended,  supplemented  or
modified  except in  accordance  with the  provisions  of this  subsection.  The
Required Lenders may, or, with the written consent of the Required Lenders,  the
Administrative  Agent may,  from time to time,  (a) enter into with the Borrower
and each  other  Loan  Party  which is a party to the  relevant  Loan  Documents
written  amendments,  supplements or modifications  hereto and to the other Loan
Documents  for the purpose of adding any  provisions  to this  Agreement  or the
other Loan  Documents  or changing in any manner the rights of the Lenders or of
the Borrower  hereunder or thereunder,  (b) release  collateral  (except that no
consent of any Lender or the Required  Lenders is required to permit the release
of a Lien or Guarantee in connection with any Asset Sale permitted under Section
7 of this Agreement or any other  transaction  permitted  under such Section) or
(c)  waive,  on  such  terms  and  conditions  as the  Required  Lenders  or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences;  provided,  however,  that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the  scheduled  date of maturity of any Loan made by any Lender or of any
installment thereof, or any Reimbursement  Obligation, or reduce the stated rate
of any  interest  thereon or reduce the fee payable  hereunder  to any Lender or
extend the  scheduled  date of any  payment  thereof or increase  the  aggregate
amount or extend the expiration date of any Lender's  Commitments,  in each case
without  the written  consent of each Lender  directly  affected  thereby,  (ii)
amend, modify or waive any provision of this subsection or reduce the percentage
specified in the definition of Required  Lenders or consent to the assignment or
transfer  by the  Borrower  of any of its  rights  and  obligations  under  this
Agreement and the other Loan  Documents or release all or  substantially  all of
the Collateral or release any Guarantee (other than as provided above),  in each
case  without the written  consent of all the Lenders,  (iii)  amend,  modify or
waive any provision of subsections 2.10 through 2.18 without the written consent
of the Issuing Bank,  (iv) amend,  modify or waive any provision of  subsections
2.6 through 2.9 without  the written  consent of the Swing Line  Lender,  or (v)
amend,  modify or waive any provision of Section 11 without the written  consent
of the then Administrative  Agent and Issuing Bank. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Borrower,  the Lenders,  the Administrative  Agent
and all future  holders of the Loans.  In the case of any waiver,  the Borrower,
the Lenders  and the  Administrative  Agent  shall be  restored to their  former
positions  and  rights  hereunder  and under the other Loan  Documents,  and any
Default  or  Event  of  Default  waived  shall be  deemed  to be  cured  and not
continuing;  no such waiver shall extend to any  subsequent  or other Default or
Event of  Default  or  impair  any  right  consequent  thereon.  Notwithstanding
anything to the contrary in this subsection 12.1, no consent of any Lender or of
the  Required  Lenders  shall be  required  to permit  the  release of a Lien in
connection  with any Asset Sale or other  transaction  permitted by Section 7 of
this  Agreement;  the  Administrative  Agent  shall  execute  such  release  and
termination as may be required by this Agreement.


<PAGE>

                                                                              85



     12.2 Notices.  All notices,  requests and demands to or upon the respective
parties  hereto to be  effective  shall be in writing  (including  by  facsimile
transmission followed by hand-delivery) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered, or three
days after being  deposited  in the mail,  postage  prepaid,  or, in the case of
telecopy notice, when received, addressed as follows in the case of the Borrower
and the  Administrative  Agent by messenger or by mail,  and as set forth on its
signature page hereto in the case of the other parties hereto,  or to such other
address as may be hereafter notified by the respective parties hereto:

                  Holdings:             Twinlab Corporation
                                        c/o Twin Laboratories Inc.
                                        2120 Smithtown Avenue
                                        Ronkonkoma, New York 11779
                                        Attention: Ross Blechman
                                        Telecopy: (516) 471-2395

                  The Borrower:         Twin Laboratories Inc.
                                        2120 Smithtown Avenue
                                        Ronkonkoma, New York 11779
                                        Attention: Ross Blechman
                                        Telecopy: (516) 471-2395

                  with copies to:       Leonard Green & Partners
                                        333 South Grand Avenue
                                        Suite 5400
                                        Los Angeles, California 90071
                                        Attention: Jennifer Holden Dunbar
                                        Telecopy:  (213) 625-2043

                                        Kramer, Levin, Naftalis & Frankel
                                        919 Third Avenue
                                        New York, New York 10022
                                        Attention: Paul S. Pearlman
                                        Telecopy:  (212) 715-8000

                  The Administrative    The Chase Manhattan Bank
                  Agent:                270 Park Avenue
                                        New York, New York 10017
                                        Attention: Peter Hurd
                                        Telecopy:  212-270-3279

                  with a copy to:       Chase Agent Bank Services
                                        1 Chase Manhattan Plaza, 8th Floor
                                        New York, New York  10081
                                        Attention:  Janet Belden
                                        Telecopy:   212-552-5658


<PAGE>

                                                                              86


provided that any notice,  request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 2.8, 2.11, 3.1, 3.2 or 3.7 shall
not be effective until received.

     12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising,  on the part of the  Administrative  Agent or any Lender, any right,
remedy,  power or privilege  hereunder or under the other Loan  Documents  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of any
right,  remedy,  power or  privilege  hereunder  preclude  any other or  further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights,  remedies,  powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.

     12.4 Survival of Representations  and Warranties.  All  representations and
warranties  made  hereunder,  in the other Loan  Documents  and in any document,
certificate or statement  delivered  pursuant  hereto or in connection  herewith
shall survive the execution and delivery of this Agreement and the Extensions of
Credit hereunder.

     12.5  Payment of  Expenses  and Taxes.  The  Borrower  agrees (a) to pay or
reimburse the Administrative  Agent for all its reasonable  out-of-pocket  costs
and expenses  incurred in connection  with the  syndication of the Loans and the
Commitments  under, and the  development,  preparation and execution of, and any
amendment,  supplement  or  modification  to, this  Agreement and the other Loan
Documents and any other documents prepared in connection  herewith or therewith,
and the consummation and administration of the transactions  contemplated hereby
and  thereby,   including,   without   limitation,   the  reasonable   fees  and
disbursements  of counsel to the  Administrative  Agent, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
in connection  with the  enforcement  or  preservation  of any rights under this
Agreement,  the other Loan  Documents and any such other  documents  prepared in
connection herewith or therewith,  including,  without limitation,  the fees and
disbursements of one counsel to the Lenders and the Administrative Agent, (c) to
pay, and indemnify and hold  harmless each Lender and the  Administrative  Agent
from,  any and all  recording and filing fees and any and all  liabilities  with
respect  to, or  resulting  from any delay in paying,  stamp,  excise,  mortgage
recording and other similar taxes, if any, which are payable or determined to be
payable in connection with the execution and delivery of, or  administration  of
any  of the  transactions  contemplated  by,  or any  amendment,  supplement  or
modification  of,  or any  waiver  or  consent  under  or in  respect  of,  this
Agreement,  the other Loan  Documents and any such other  documents,  and (d) to
pay, and indemnify and hold  harmless each Lender and the  Administrative  Agent
from and  against,  any and all  other  liabilities  (excluding  income  taxes),
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements  of any kind or nature  whatsoever with respect to the
execution,  delivery,  enforcement,   performance  and  administration  of  this
Agreement,   the  other  Loan  Documents,  the  Stock  Purchase  Agreement,  the
Transactions,  the Recapitalization or the use of the proceeds of the Extensions
of Credit in connection with the Transactions or the  Recapitalization,  and any
such  other  documents,  including,  without  limitation,  any of the  foregoing
relating  to the  violation  of,  noncompliance  with  or  liability  under  any
Environmental  Law  applicable to the  operations  of the  Borrower,  any of its
Subsidiaries  or any of the  Properties  (all the  foregoing in this clause (d),
collectively, the


<PAGE>

                                                                              87


"indemnified liabilities"), provided, that the Borrower shall have no obligation
hereunder to the Administrative  Agent or any Lender with respect to indemnified
liabilities  arising from (i) the gross negligence or willful  misconduct of the
Administrative  Agent or any such  Lender or (ii)  legal  proceedings  commenced
against the  Administrative  Agent or any such Lender by any security  holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or  creditor  solely in its  capacity  as such.  The  agreements  in this
subsection  shall survive  repayment of the Loans and all other amounts  payable
hereunder.

     12.6  Successors  and Assigns;  Participations  and  Assignments.  (a) This
Agreement  shall be  binding  upon and  inure to the  benefit  of the  Borrower,
Holdings,  the Lenders, the Administrative Agent and their respective successors
and  assigns,  except  that  neither the  Borrower  nor  Holdings  may assign or
transfer any of its rights or obligations under this Agreement without the prior
written  consent of each Lender and any  assignment or transfer by any Lender of
its rights or obligations under this Agreement or any Loan Document must be made
in  compliance  with this  subsection  12.6  (and any  purported  assignment  in
violation of this subsection shall be null and void).

     (b) Any Lender may,  in the  ordinary  course of its lending or  investment
business and in accordance  with applicable law, at any time sell to one or more
financial  institutions  or other entities ("Loan  Participants")  participating
interests in any Loan owing to such Lender, any Commitment of such Lender or any
other interest of such Lender  hereunder and under the other Loan Documents.  In
the  event of any such sale by a Lender of a  participating  interest  to a Loan
Participant,  (i) such Lender's  obligations  under this  Agreement to the other
parties to this Agreement shall remain unchanged,  (ii) such Lender shall remain
solely responsible for the performance  thereof,  (iii) such Lender shall remain
the  holder of any such  Loan or other  interest  for all  purposes  under  this
Agreement and the other Loan Documents, (iv) the Borrower and the Administrative
Agent shall  continue to deal solely and directly with such Lender in connection
with such Lender's  rights and  obligations  under this  Agreement and the other
Loan Documents,  and (v) no Loan Participant under any participation  shall have
any right to  approve  any  amendment  or waiver  of any  provision  of any Loan
Document,  or any consent to any departure by any Loan Party  therefrom,  except
with respect to the matters  described in clauses (i) and (ii) of the proviso to
the second sentence of subsection 12.1. The Borrower agrees that, while an Event
of Default shall have occurred and be  continuing if amounts  outstanding  under
this  Agreement  are due or unpaid,  or shall have been  declared  or shall have
become due and payable  upon the  occurrence  of an Event of Default,  each Loan
Participant  shall, to the maximum extent permitted by applicable law, be deemed
to have the right of set off in respect of its participating interest in amounts
owing  under  this  Agreement  to  the  same  extent  as if  the  amount  of its
participating  interest  were  owing  directly  to it  as a  Lender  under  this
Agreement,  provided  that,  in purchasing  such  participating  interest,  such
Participant  shall be  deemed  to have  agreed  to share  with the  Lenders  the
proceeds  thereof as  provided  in  subsection  12.7(a) as fully as if it were a
Lender  hereunder.  The Borrower also agrees that each Loan Participant shall be
entitled to the benefits of  subsections  3.9, 3.10 and 3.11 with respect to its
participation  in the Commitments and the Extensions of Credit  outstanding from
time to time as if it were a Lender;  provided  that,  in the case of subsection
3.10 such Loan  Participant  shall have complied with the  requirements  of said
subsection and provided, further, that no Loan Participant shall be


<PAGE>

                                                                              88


entitled to receive any greater amount  pursuant to any such subsection than the
transferor  Lender would have been  entitled to receive in  connection  with the
same  event or  circumstance  in  respect  of the  amount  of the  participation
transferred  by such  transferor  Lender  to such Loan  Participant  had no such
transfer occurred.

     (c) Any Lender may,  in the  ordinary  course of its lending or  investment
business and in  accordance  with  applicable  law, at any time and from time to
time assign, with the consent of the Borrower (so long as no Default or Event of
Default shall have occurred and be continuing) and the  Administrative  Agent in
the case of an assignment  other than to another Lender or an affiliate  thereof
(which in each case shall not be unreasonably  withheld), to any other Lender or
any affiliate  thereof or to an  additional  bank or financial  institution  (an
"Assignee") all or any part of its rights and  obligations  under this Agreement
and the other Loan  Documents in an amount at least equal to $5,000,000  divided
by  $50,000,000  and  multiplied  by the  aggregate  Commitments  at the time of
assignment  pursuant to an Assignment and Acceptance,  substantially in the form
of Exhibit G, executed by such Assignee, such assigning Lender (and, in the case
of an  Assignee  that is not  then a  Lender  or an  affiliate  thereof,  by the
Borrower (so long as no Default or Event of Default  shall have  occurred and be
continuing) and the  Administrative  Agent (which consent shall not unreasonably
be withheld)) and delivered to the  Administrative  Agent for its acceptance and
recording in the Register, provided that, (i) in the case of any such assignment
to an Assignee that is an affiliate of the assigning Lender,  the consent of the
Borrower  shall  only be  required  if,  at the  time of such  assignment,  such
Assignee would be entitled to require the Borrower to pay, or the Borrower would
be required to pay, greater amounts under subsection 3.9 or 3.10 than if no such
assignment  had  occurred  and  (ii) in the case of any  such  assignment  to an
additional bank or financial institution, if such assignment is of less than all
of the rights and obligations of the assigning Lender,  the sum of the aggregate
principal  amount of the Loans,  the aggregate amount of the L/C Obligations and
the  aggregate  amount of the  unused  Commitments  (A) being  assigned  to such
additional  bank or financial  institution  and (B) remaining with the assigning
Lender are not, in each case, less than $5,000,000 (or such lesser amount as may
be  agreed  to  by  the  Borrower  and  the  Administrative  Agent)  divided  by
$50,000,000  and  multiplied  by  the  aggregate  Commitments  at  the  time  of
assignment.  Upon such execution,  delivery,  acceptance and recording, from and
after the effective date determined  pursuant to such Assignment and Acceptance,
(x) the Assignee  thereunder shall be a party hereto and, to the extent provided
in such Assignment and  Acceptance,  have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein,  and (y) the assigning  Lender
thereunder  shall, to the extent provided in such Assignment and Acceptance,  be
released  from its  obligations  under this  Agreement  (and,  in the case of an
Assignment and Acceptance  covering all or the remaining portion of an assigning
Lender's rights and  obligations  under this  Agreement,  such assigning  Lender
shall cease to be a party hereto  except as to  subsections  3.9, 3.10 and 9.5).
Notwithstanding  any  provision of this  paragraph (c) and paragraph (e) of this
subsection,  the consent of the  Borrower  shall not be  required,  and,  unless
requested by the Assignee  and/or the assigning  Lender,  new Notes shall not be
required to be executed and delivered by the Borrower,  for any assignment which
occurs when any of the events described in Section 10(f) shall have occurred and
be continuing.


<PAGE>

                                                                              89


     (d) The Administrative Agent, on behalf of the Borrower,  shall maintain at
the address of the Administrative Agent referred to in subsection 12.2 a copy of
each Assignment and Acceptance  delivered to it and a register (the  "Register")
for  the  recordation  of the  names  and  addresses  of  the  Lenders  and  the
Commitments  of, and  principal  amounts of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Administrative Agent and the Lenders shall
treat each Person  whose name is recorded in the Register as the owner of a Loan
or other  obligation  hereunder  as the owner  thereof for all  purposes of this
Agreement  and the  other  Loan  Documents,  notwithstanding  any  notice to the
contrary.  Any assignment of any Loan or other obligation  hereunder (whether or
not evidenced by a Note) shall be effective only upon  appropriate  entries with
respect thereto being made in the Register.  The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

     (e) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning  Lender and an Assignee  (and,  in the case of an Assignee that is not
then a Lender or an affiliate  thereof,  by the Borrower and the  Administrative
Agent) together with, except in the case of an assignment pursuant to subsection
3.13, payment to the  Administrative  Agent of a registration and processing fee
of $3,500,  the  Administrative  Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto record
the  information  contained  therein  in the  Register  and give  notice of such
acceptance and recordation to the Lenders and the Borrower.

     (f) The Borrower authorizes each Lender to disclose to any Loan Participant
or Assignee (each, a "Transferee")  and any prospective  Transferee,  subject to
the provisions of subsection  12.15,  any and all financial  information in such
Lender's  possession  concerning the Borrower and its Affiliates  which has been
delivered  to such  Lender  by or on  behalf of the  Borrower  pursuant  to this
Agreement  or which  has been  delivered  to such  Lender by or on behalf of the
Borrower in connection with such Lender's credit  evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.

     (g) For avoidance of doubt, the parties to this Agreement  acknowledge that
the  provisions of this  subsection  concerning  assignments  of Loans and Notes
relate only to absolute  assignments  and that such  provisions  do not prohibit
assignments  creating security interests,  including,  without  limitation,  any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law, provided that no such assignment,  whether to
a Federal  Reserve Bank or other entity,  shall release a Lender from any of its
obligations  hereunder  or  substitute  any such  Federal  Reserve Bank or other
entity for such  Lender as a party  hereto or permit an absolute  assignment  to
occur other than in accordance with such provisions of this subsection.

     12.7 Adjustments;  Set-off. (a) If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Loans or the Reimbursement
Obligations  owing to it, or  interest  thereon,  or receive any  collateral  in
respect thereof (whether voluntarily or involuntarily,  by set-off,  pursuant to
events or proceedings of the nature  referred to in Section 10(f),  or otherwise
except as to subsections 3.13 and 12.6), in a greater


<PAGE>

                                                                              90


proportion than any such payment to or collateral  received by any other Lender,
if any, in respect of such other Lender's Loans or the Reimbursement Obligations
owing to it, or interest thereon, such Benefitted Lender shall purchase for cash
from the other  Lenders a  participating  interest in such  portion of each such
other  Lender's  Loan or the  Reimbursement  Obligations  owing to it,  or shall
provide  such other  Lenders with the  benefits of any such  collateral,  or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to share
the excess payment or benefits of such collateral or proceeds  ratably with each
of the  Lenders;  provided,  however,  that if all or any portion of such excess
payment or benefits is thereafter  recovered from such Benefitted  Lender,  such
purchase shall be rescinded,  and the purchase price and benefits  returned,  to
the extent of such recovery, but without interest.

     (b) In addition to any rights and remedies of the Lenders  provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice  being  expressly  waived by the  Borrower  to the  extent  permitted  by
applicable  law,  upon any  amount  becoming  due and  payable  by the  Borrower
hereunder (whether at the stated maturity,  by acceleration or otherwise) to set
off and appropriate and apply against such amount any and all deposits  (general
or special,  time or demand,  provisional  or final),  in any currency,  and any
other credits,  indebtedness  or claims,  in any currency,  in each case whether
direct or indirect,  absolute or contingent,  matured or unmatured,  at any time
held or owing by such  Lender  or any  branch or  agency  thereof  to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the  Administrative  Agent after any such  set-off and  application
made by such  Lender,  provided  that the failure to give such notice  shall not
affect the validity of such set-off and application.

     12.8  Counterparts.  This  Agreement  may be executed by one or more of the
parties to this Agreement on any number of separate  counterparts  (including by
facsimile  transmission),  and all of said counterparts  taken together shall be
deemed to constitute  one and the same  instrument.  A set of the copies of this
Agreement  signed by all the parties  shall be lodged with the  Borrower and the
Administrative Agent.

     12.9  Severability.  Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such  prohibition or  unenforceability  without,  to the extent
permitted by law,  invalidating the remaining  provisions  hereof,  and any such
prohibition or  unenforceability  in any  jurisdiction  shall not, to the extent
permitted by law, invalidate or render unenforceable such provision in any other
jurisdiction.

     12.10  Integration.  This Agreement and the other Loan Documents  represent
the entire agreement of the Borrower,  the Administrative  Agent and the Lenders
with  respect  to the  subject  matter  hereof  and  thereof,  and  there are no
promises,  undertakings,  representations  or warranties  by the  Administrative
Agent or any  Lender  relative  to the  subject  matter  hereof or  thereof  not
expressly set forth or referred to herein or in the other Loan Documents.

     12.11  GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND  OBLIGATIONS OF THE
PARTIES  HEREUNDER  SHALL BE  GOVERNED  BY, AND  CONSTRUED  AND  INTERPRETED  IN
ACCORDANCE  WITH,  THE  LAW OF THE  STATE  OF NEW  YORK  WITHOUT  REGARD  TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.


<PAGE>

                                                                              91


     12.12  Submission  To  Jurisdiction;  Waivers.  Each  of the  Borrower  and
Holdings hereby irrevocably and unconditionally:

          (a)  submits  for  itself  and its  property  in any  legal  action or
     proceeding relating to this Agreement and the other Loan Documents to which
     it is a party,  or for  recognition  and  enforcement  of any  judgment  in
     respect thereof, to the non-exclusive general jurisdiction of the courts of
     the State of New York,  the courts of the United  States of America for the
     Southern District of New York, and appellate courts from any thereof;

          (b) consents that any such action or proceeding may be brought in such
     courts and waives any  objection  that it may now or hereafter  have to the
     venue of any such  action  or  proceeding  in any such  court or that  such
     action or proceeding was brought in an inconvenient court and agrees not to
     plead or claim the same;

          (c) agrees that  service of process in any such  action or  proceeding
     may be effected by mailing a copy thereof by registered  or certified  mail
     (or any  substantially  similar  form of  mail),  postage  prepaid,  to the
     Borrower or Holdings at its address set forth in subsection 12.2 or at such
     other  address of which the  Administrative  Agent shall have been notified
     pursuant thereto;

          (d)  agrees  that  nothing  herein  shall  affect  the right to effect
     service of process in any other manner  permitted by law or shall limit the
     right to sue in any other jurisdiction; and

          (e) waives,  to the maximum extent not prohibited by law, any right it
     may have to claim or recover in any legal action or proceeding  referred to
     in this  subsection  any  special,  exemplary,  punitive  or  consequential
     damages.

     12.13   Acknowledgements.   Each  of  the  Borrower  and  Holdings   hereby
acknowledges that:

          (a) it has been advised by counsel in the  negotiation,  execution and
     delivery of this Agreement and the other Loan Documents;

          (b) neither the Administrative  Agent nor any Lender has any fiduciary
     relationship  with or duty to the Borrower or Holdings arising out of or in
     connection with this Agreement or any of the other Loan Documents,  and the
     relationship between Administrative Agent and Lenders, on one hand, and the
     Borrower  and  Holdings,  on the other  hand,  in  connection  herewith  or
     therewith is solely that of creditor and debtor; and


<PAGE>

                                                                              92


          (c) no joint venture is created  hereby or by the other Loan Documents
     or otherwise exists by virtue of the transactions contemplated hereby among
     the Lenders or among the Borrower, Holdings and the Lenders.

     12.14 WAIVERS OF JURY TRIAL.  THE BORROWER,  HOLDINGS,  THE  ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING  RELATING TO THIS  AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

     12.15  Confidentiality.  Each of the  Administrative  Agent and each Lender
agrees to keep confidential all non-public  information  provided to it by or on
behalf of the Borrower,  Holdings,  or any Subsidiary  that is designated by the
Borrower,  Holdings or any  Subsidiary  as  confidential;  provided that nothing
herein shall prevent the Administrative  Agent or any Lender from disclosing any
such information (a) to the Administrative Agent or any other Lender, (b) to any
Transferee or prospective  Transferee which agrees to comply with the provisions
of this subsection 12.15, (c) to the employees,  directors,  agents,  attorneys,
accountants and other professional  advisors of such Lender for purposes related
to the transactions  contemplated by the Loan Documents, (d) upon the request or
demand of any Governmental Authority having jurisdiction over the Administrative
Agent  or such  Lender,  (e) in  response  to any  order  of any  court or other
Governmental  Authority or as may  otherwise be required  pursuant to applicable
law or regulation, (f) which has been publicly disclosed other than in breach of
this  subsection  12.15,  or (g) in  connection  with the exercise of any remedy
hereunder or under any other Loan Document.

     12.16 Collateral  Release.  (a) The obligations arising under the Guarantee
and Collateral  Agreement shall be unconditional and binding on each of Holdings
and the Borrower  pursuant to the terms therein;  provided that if either (i) on
the last day of any period of four  fiscal  quarters  the ratio of  Consolidated
Total Debt to consolidated EBITDA (as calculated  according to the provisions of
subsection  7.1(a)) is less than 1.5 to 1.0 or (ii)  ratings of BBB- and Baa3 or
above are attained by the Borrower or Holdings  from  Standard & Poor's  Ratings
Group and Moody's Investors Services,  respectively, the Collateral pledged (but
not the Guarantee contained) in such Guarantee and Collateral Agreement shall be
released;  and provided  further that if such  performance  criteria at any time
thereafter is not maintained, such Collateral shall again be pledged in favor of
the  Administrative  Agent, for the ratable benefit of the Lenders,  pursuant to
the Guarantee and Collateral Agreement.

     (b) On the  Closing  Date,  the  Administrative  Agent  shall  release  the
Mortgage on the real  property  owned by the Borrower in New York State that was
granted pursuant to the Existing Credit Agreement. After the Closing Date, if at
any  time  the  average  outstanding  Extensions  of  Credit  are in  excess  of
$30,000,000  for more than 30 days or an Event of Default  has  occurred  and is
continuing,  upon the  request of the  Administrative  Agent (and  provided  the
conditions  to  release  of  Collateral  in  subsection  12.16(a)  have not been
satisfied),  the  Borrower  and each  Subsidiary  shall  execute a  Mortgage  or
Mortgages in favor of the  Administrative  Agent, for the ratable benefit of the
Lenders, on its real property located


<PAGE>

                                                                              93


in New York State upon such terms and  conditions  as the  Administrative  Agent
shall reasonably request.

     12.17 Amendment of Certain Cross References. Cross references in any of the
Loan  Documents to "Sections"  and/or  "subsections"  and/or  "Exhibits"  and/or
"Schedules"  in the  Existing  Credit  Agreement  shall  be  deemed  to be cross
references  to  the  corresponding   "Sections"  and/or   "subsections"   and/or
"Exhibits" and/or "Schedules" in this Agreement.

     12.18 IPO  Termination.  This  amendment  and  restatement  of the Existing
Credit Agreement (as evidenced by this Agreement) shall only become effective on
the  consummation  of the IPO. In the event that the IPO fails to be consummated
on or before  November 30, 1996, the Commitments  hereunder shall  automatically
terminate and this amendment and  restatement of the Existing  Credit  Agreement
shall be null and void.


<PAGE>

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



                               TWINLAB CORPORATION



                               By: /s/ BRIAN BLEEKMAN
                                  --------------------------
                                  Name:  Brian Bleekman
                                  Title: Executive Vice President



                               TWIN LABORATORIES INC.



                               By: /s/ BRIAN BLEEKMAN
                                  --------------------------
                                  Name:  Brian Bleekman
                                  Title: Executive Vice President



                               THE CHASE MANHATTAN BANK as
                               Administrative Agent, Issuing Bank, Swing Line
                               Lender and as a Lender



                               By: /s/ DAWN LEE LUM
                                  --------------------------
                                  Name:  Dawn Lee Lum
                                  Title: Vice President

                               Commitment Amount: $8,000,000.00


<PAGE>

                               THE BANK OF NEW YORK, as Co-Agent and
                               as a Lender



                               By: /s/ ADAM OSTRACH
                                 --------------------------
                                 Name:  Adam Ostrach
                                 Title: Vice President



                               Address for Notices:
                               THE BANK OF NEW YORK
                               1401 Franklin Avenue
                               Garden City, NY 11530
                               Attention: Adam Ostrach
                               Telecopy: 516-294-2055
                               
                               Commitment Amount: $6,000,000.00


<PAGE>

                               THE FIRST NATIONAL BANK OF BOSTON, as
                               a Lender
                               
                               
                               
                               By: /s/ ROBERT F. DUGGEN
                                  --------------------------
                                  Name:  Robert F. Duggen
                                  Title: Managing Director
                               


                               Address for Notices:
                               THE FIRST NATIONAL BANK OF BOSTON
                               100 Federal Street
                               Boston, MA  02110
                               Attention: Clifford Gaysunas
                               Telecopy: 617-434-4929
                               
                               Commitment Amount: $4,500,000.00
                               


<PAGE>

                               DRESDNER BANK A.G. NEW YORK BRANCH
                               AND GRAND CAYMAN BRANCH, as a Lender
                               
                               
                               
                               By: /s/ THOMAS J. NADRAMIA
                                  --------------------------
                                  Name:  Thomas J. Nadramia
                                  Title: V.P.
                               
                               
                               
                               By: /s/ JOHN W. SWEENEY
                                  --------------------------
                                  Name:  John W. Sweeney
                                  Title: VP
                               
                               
                               
                               Address for Notices:
                               DRESDNER BANK A.G.
                               75 Wall Street
                               New York, New York 10005
                               Attention: Kavish Bhatnagar
                               Telecopy: 212-429-2130
                               
                               Commitment Amount: $6,000,000.00
                               


<PAGE>

                               FIRST BANK NATIONAL ASSOCIATION, as a
                               Lender
                               
                               
                               
                               By: /s/ BRADLEY R. SPRANG
                                  --------------------------
                                  Name:  Bradley R. Sprang
                                  Title: Commercial banking Officer
                               


                               Address for Notices:
                               FIRST BANK NATIONAL ASSOCIATION
                               First Bank Place
                               601 Second Avenue South
                               Minneapolis, MN  55402
                               Attention: Bradley Sprang
                               Telecopy: 612-973-0824
                               
                               Commitment Amount: $6,000,000.00



<PAGE>

                               EUROPEAN AMERICAN BANK, as a Lender
                               
                               
                               
                               By: /s/ STUART N. BERMAN
                                  --------------------------
                                  Name:  Stuart N. Berman
                                  Title: Vice President
                               
                               
                               
                               Address for Notices:
                               EUROPEAN AMERICAN BANK
                               730 Veterans Memorial Highway
                               Hauppauge, NY  11788
                               Attention: Stuart N. Berman
                               Telecopy: 516-360-7112
                               
                               Commitment Amount: $4,500,000.00
                               
                               

<PAGE>

                               GIROCREDIT BANK AKTIENGESELLSCHAFT
                               DER SPARKASSEN, GRAND CAYMAN
                               ISLAND BRANCH, as a Lender
                               
                               
                               
                               By:  G. Klein
                                  --------------------------
                                  Name:
                                  Title:
                               
                               
                               
                               Address for Notices:
                               GIROCREDIT BANK
                               65 East 55th Street, 29th Floor
                               New York, NY  10022
                               Attention: John Redding
                               Telecopy: 212-644-0644
                               
                               Commitment Amount: $4,500,000.00



<PAGE>






                               THE NIPPON CREDIT BANK, LTD., as a
                               Lender
                               
                               
                               
                               By: /s/ CLIFFORD ABRAMSKY
                                  --------------------------
                                  Name:  Clifferd Abramsky
                                  Title: Senior Manager
                               
                               
                               
                               Address for Notices:
                               THE NIPPON CREDIT BANK, LTD.
                               245 Park Avenue, 30th floor
                               New York, NY  10167
                               Attention: Mun Kim
                               Telecopy: 212-490-3895
                               
                               Commitment Amount: $6,000,000.00
                               


<PAGE>

                               ZIONS FIRST NATIONAL BANK, as a Lender
                               
                               
                               
                               By: /s/ P. Boyd Hales
                                  --------------------------
                                  Name:  P. Boyd Hales
                                  Title: Vice President
                               
                               
                               
                               Address for Notices:
                               ZIONS FIRST NATIONAL BANK
                               111 North 200 West
                               Provo, UT  84601
                               Attention: P. Boyd Hales
                               Telecopy: 801-370-4148
                               
                               Commitment Amount: $4,500,000.00
                               
                               


<PAGE>


                                                                      ANNEX A TO
                             AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT
                             ---------------------------------------------------



                                                            PRICING GRID
<TABLE>
<CAPTION>



                                                                                    Applicable Margin    Applicable
                                             Ratio of Consolidated Total Debt to      for Eurodollar     Margin for      Commitment
Consolidated Interest Coverage Ratio                 Consolidated EBITDA                  Loans           ABR Loans       Fee Rate
------------------------------------         -----------------------------------          -----          ----------      ---------

<S>                                          <C>                                           <C>             <C>             <C>
Less than 2.00 to 1.00 or                    Greater than 4.00 to 1.00                     2.00%            .75%           .375%

Greater than or equal to 2.00 to 1.00 and    Less than or equal to 4.00 to 1.00            1.75%            .50%           .375%

Greater than or equal to 2.50 to 1.00 and    Less than or equal to 3.50 to 1.00            1.50%            .25%           .375%

Greater than or equal to 3.00 to 1.00 and    Less than or equal to 3.00 to 1.00            1.25%             .0%           .375%

Greater than or equal to 3.50 to 1.00 and    Less than or equal to 2.50 to 1.00            1.00%             .0%           .300%

Greater than or equal to 4.00 to 1.00 and    Less than or equal to 2.00 to 1.00             .75            % .0%           .250%
</TABLE>