CFP GROUP, INC.
                               CFP HOLDINGS, INC.

                      AMENDED AND RESTATED CREDIT AGREEMENT



         This AMENDED AND RESTATED CREDIT  AGREEMENT is dated as of May 15, 1997
and  entered  into by and among  CFP  HOLDINGS,  INC.,  a  Delaware  corporation
("Borrower"),  CFP GROUP, INC., a Delaware corporation ("Parent"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"),  NATIONSBANK OF TEXAS, N.A.
("NATIONSBANK"),   as  administrative  agent  for  Lenders  (in  such  capacity,
"Administrative   Agent"),   NATIONSBANC  CAPITAL  MARKETS,  INC.  ("NCMI"),  as
arranging agent (in such capacity,  "Arranging  Agent") and as syndication agent
(in  such  capacity,   "Syndication   Agent"),   and  FLEET  NATIONAL  BANK,  as
Documentation Agent (in such capacity, "Documentation Agent").


                                 R E C I T A L S

         WHEREAS, Borrower, Parent, the Lenders identified therein,  NationsBank
of Texas, N.A., as Administrative Agent,  NationsBanc Capital Markets,  Inc., as
Arranging Agent and Syndication Agent, and Fleet National Bank, as Documentation
Agent have entered into that certain Credit  Agreement  dated as of December 31,
1996 (the "Existing Agreement");


         WHEREAS,  on the Closing  Date (this and other  capitalized  terms used
herein  without  definition  shall have the meanings  assigned to those terms in
subsection 1.1),  Lenders  extended certain credit  facilities to Borrower under
the Existing  Agreement,  the proceeds of which were used (i) together  with the
proceeds of the Bridge  Financing,  to fund (1) the  purchase  price  payable in
connection with the  Acquisition,  (2) the refinancing of certain  indebtedness,
(3) the repurchase of certain preferred stock of Parent,  and (4) the payment of
the  Transaction  Costs,  and (ii) to provide  financing  for general  corporate
purposes of Borrower and its Subsidiaries;


         WHEREAS,  a number of events  contemplated under the Existing Agreement
have  occurred,   including,   without   limitation,   (x)  Borrower   purchased
substantially all of the outstanding  limited  partnership  interests in Quality
Foods, L.P. and all of the outstanding shares of capital stock of QF Acquisition
and QF  Management  pursuant to the  Acquisition  Agreement,  (y) the  remaining
limited partnership  interests in Quality Foods, L.P. were exchanged for capital
stock of Parent and all limited

<PAGE>

partnership  interests of Quality Foods, L.P. were contributed to QF Acquisition
and (z) immediately upon the consummation of the Acquisition,  (i) QF Management
was merged with and into QF Acquisition with QF Acquisition  being the surviving
corporationin  such merger,  (ii) Quality  Foods,  L.P.  transferred  all of its
assets and  liabilities  to QF  Acquisition  and (iii) Quality  Foods,  L.P. was
liquidated and dissolved;

         WHEREAS,  on January 28, 1997,  Senior  Guaranteed Notes were issued as
contemplated by the Existing Agreement;

         WHEREAS, Borrower applied the Net Securities Proceeds from the issuance
of the Senior  Guaranteed  Notes to (i) repay all  obligations of Borrower under
the  Bridge  Notes,  (ii) fund the  Distribution  Transaction  in an amount  not
exceeding  $16,000,000,  (iii) prepay those  certain  "Tranche A Term Loans" and
"Tranche B Term Loans" made on the Closing Date under the Existing Agreement and
(iv) to the extent of any remaining proceeds, prepay Revolving Loans to the full
extent thereof;

         WHEREAS,  the  parties to the  Existing  Agreement  desire to amend and
restate the Existing Agreement in order to delete certain provisions relating to
events which have occurred,  modify certain  provisions to reflect changed facts
and to make certain other amendments to the Existing Agreement;

         WHEREAS,  Borrower  desires to secure all of the Obligations  hereunder
and under the other Loan  Documents  by granting  to  Administrative  Agent,  on
behalf of  Lenders,  a first  priority  Lien on  substantially  all of its real,
personal and mixed property, including without limitation a pledge of all of the
capital stock of each of its Subsidiaries;

         WHEREAS,  Parent and all of the Subsidiaries of Borrower have agreed to
guarantee the  Obligations  hereunder and under the other Loan  Documents and to
secure  their  guaranties  by granting  to  Administrative  Agent,  on behalf of
Lenders,  a first priority Lien on  substantially  all of their respective real,
personal and mixed property, including without limitation a pledge of all of the
capital stock of each of their respective Subsidiaries; and

         NOW,  THEREFORE,  in  consideration of the premises and the agreements,
provisions  and  covenants  herein   contained,   Borrower,   Parent,   Lenders,
Administrative  Agent,  Arranging Agent and Syndication Agent, and Documentation
Agent agree to amend and restate the Existing Agreement as follows:

                                       2
<PAGE>

Section 1.        DEFINITIONS

1.1      Certain Defined Terms.

         The  following  terms used in this  Agreement  shall have the following
meanings:

         "Accounts  Receivable"  means,  as at any  date of  determination,  the
unpaid portion of the obligations  (which, if an invoice has been issued,  shall
be as stated on the respective invoice issued to a customer) with respect to (a)
Inventory  sold and shipped in the ordinary  course of business by any Operating
Subsidiary and (b) services  provided in the ordinary  course of business by any
Operating Subsidiary.

         "Acquisition"   means  the  acquisition  by  Borrower  of  all  of  the
outstanding limited partnership  interests in Quality Foods, L.P. and all of the
outstanding shares of capital stock of QF Acquisition and QF Management, and the
other transactions contemplated by the Acquisition Agreement.

         "Acquisition   Agreement"  means  that  certain   Securities   Purchase
Agreement by and among Quality Foods, L.P., the partners of Quality Foods, L.P.,
the  stockholders  of QF Acquisition  and QF Management and Borrower dated as of
December 31, 1996,  in the form  delivered to  Administrative  Agent and Lenders
prior to the Closing Date and as such agreement may be amended from time to time
thereafter to the extent permitted under subsection 7.13A.

         "Acquisition   Documents"  means  the  Acquisition  Agreement  and  all
material   agreements  and  documents   entered  into  in  connection  with  the
Acquisition  (including the Assignment and Assumption  Agreement between Quality
Foods,  L.P.  and QF  Acquisition),  in each  case,  in the  form  delivered  to
Administrative  Agent  and  Lenders  prior  to the  Closing  Date  as  any  such
Acquisition  Document may be amended from time to time  thereafter to the extent
permitted under subsection 7.13A.

         "Adjusted  Eurodollar Rate" means, for any Interest Rate  Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum  obtained by dividing  (i) the offered  quotation  (rounded  upward to the
nearest 1/16 of one percent) to first class banks in the London interbank market
by NationsBank for U.S. dollar deposits of amounts in same day funds  comparable
to the principal amount of the Eurodollar Rate Loan of NationsBank for which the
Adjusted  Eurodollar Rate is then being determined (which principal amount shall
be deemed to be $1,000,000 in the event NationsBank is not making, converting to
or continuing such a Eurodollar  Rate Loan) with  maturities  comparable to such
Interest Period as of  approximately  11:00 a.m.  (London time) on such Interest
Rate  Determination  Date by (ii) a  percentage  equal to 100%  minus the stated
maximum rate of all reserve  requirements  (including,  without limitation,  any
marginal, emergency, supplemental, special or other reserves) applicable on such
Interest  Rate  Determination  Date to any member  bank of the  Federal

                                       3
<PAGE>

Reserve System in respect of "Eurocurrency liabilities" as defined in Regulation
D (or any successor category of liabilities under Regulation D).

         "Administrative  Agent" has the  meaning  assigned  to that term in the
introduction  to this  Agreement  and also  means  and  includes  any  successor
Administrative Agent appointed pursuant to subsection 9.5A.

         "Affected  Lender" has the meaning  assigned to that term in subsection
2.6C.

         "Affected  Loan" has the meaning  assigned  to that term in  subsection
2.6C.

         "Affiliate"  means, with respect to any specified Person, (a) any other
Person  directly or indirectly  controlling  or controlled by or under direct or
indirect common control with such specified Person or (b) any executive  officer
or director of any such specified Person or other Person or, with respect to any
natural  Person,  any Person  having a  relationship  with such Person by blood,
marriage or adoption not more remote than first cousin. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the management and policies of such Person, directly or indirectly,
whether  through the ownership of voting  securities,  by contract or otherwise;
and the terms  "controlling",  "controlled"  and  "under  common  control"  have
meanings correlative to the foregoing.

         "Agreement"  means this Amended and Restated Credit  Agreement dated as
of May 15, 1997, as it may be amended,  supplemented or otherwise  modified from
time to time.

         "Applicable Margin" means the following:

                  (i) for Term Loans (1) from the date hereof until  delivery of
         financial  statements  for  the  period  ending  December  31,  1997 as
         required  pursuant to subsec tion  6.1(ii),  2% per annum for Base Rate
         Loans and 3% per annum for Eurodollar  Rate Loans,  and (2) thereafter,
         the  percentage  per annum  determined  by reference to the  applicable
         Level set forth below:


                            Eurodollar                    Base
       Level                Rate Loans                 Rate Loans
====================  =======================  ==========================
Level I                       3.00%                    2.00%
--------------------  -----------------------  --------------------------
Level II                      2.75%                    1.75%
--------------------  -----------------------  --------------------------
Level III                     2.50%                    1.50%
--------------------  -----------------------  --------------------------
Level IV                      2.25%                    1.25%
====================  =======================  ==========================

                                       4
<PAGE>

                  (ii) for  Revolving  Loans  (1) from the  Closing  Date  until
         delivery of financial  statements  for the period  ending  December 31,
         1997 as required  pursuant to subsection  6.1(ii),  1.25% per annum for
         Base Rate Loans and 2.5% per annum for Eurodollar  Rate Loans,  and (2)
         thereafter,  the  percentage  per annum  determined by reference to the
         applicable Level set forth below:

                            Eurodollar                    Base
       Level                Rate Loans                 Rate Loans
====================  =======================  ==========================
Level I                       2.50%                    1.25%
--------------------  -----------------------  --------------------------
Level II                      2.25%                    1.25%
--------------------  -----------------------  --------------------------
Level III                     2.00%                    1.00%
--------------------  -----------------------  --------------------------
Level IV                      1.75%                    0.75%
====================  =======================  ==========================

                  The Level  with  respect  to the  Applicable  Margin  shall be
         determined  as of each  Measurement  Date and  shall be the  basis  for
         determining the Applicable Margin until the next succeeding Measurement
         Date; provided, however, that the Applicable Margin for each Loan shall
         be the percentage per annum determined by reference to Level I for such
         Loan,  for so long as Borrower has not submitted to the  Administrative
         Agent the information necessary for determining the applicable Level as
         and when required under subsection 6.1(ii) and 6.1(iv).

         "Applied  Amount" has the meaning  assigned to that term in  subsection
2.4B(iv)(b).

         "Asset Sale" means the sale by Parent or any of its Subsidiaries to any
Person other than Borrower or any of its Subsidiaries of (i) any of the stock of
Borrower or any of Borrower's Subsidiaries, (ii) all or substantially all of the
assets of any division or line of business of Parent or any of its Subsidiaries,
or (iii) any other assets  (whether  tangible or intangible) of Parent or any of
its  Subsidiaries  outside of the  ordinary  course of business  (other than (a)
inventory sold in the ordinary  course of business and (b) any such other assets
to the  extent  that the  aggregate  value  of such  assets  sold in any  single
transaction or related series of  transactions  does not exceed  $250,000 and in
all transactions during any twelve month period does not exceed $1,000,000).

         "Assignment  Agreement" means an Assignment  Agreement in substantially
the form of Exhibit XII annexed hereto.

         "Bankruptcy  Code"  means Title 11 of the United  States Code  entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.

                                       5
<PAGE>

         "Base Rate" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.

         "Base Rate Loans" means Loans bearing  interest at rates  determined by
reference to the Base Rate as provided in subsection 2.2A.

         "Borrower" means CFP Holdings, Inc., a Delaware corporation.

         "Borrower  Pledge   Agreement"  means  the  Borrower  Pledge  Agreement
executed and  delivered by Borrower on the Closing  Date,  substantially  in the
form of Exhibit XVII annexed  hereto,  as such  Borrower  Pledge  Agreement  may
thereafter be amended, supplemented or otherwise modified from time to time.

         "Borrower  Security  Agreement" means the Borrower  Security  Agreement
executed and  delivered by Borrower on the Closing  Date,  substantially  in the
form of Exhibit XVIII annexed hereto,  as such Borrower  Security  Agreement may
thereafter be amended, supplemented or otherwise modified from time to time.

         "Borrowing Base" means, as of any date of determination, the sum of 85%
of  Eligible  Accounts  Receivable  plus  60% of  Eligible  Inventory  in  which
Administrative  Agent,  for the  benefit  of itself and  Lenders,  holds a fully
perfected First Priority  security  interest,  plus, from the Closing Date until
the second anniversary of the Closing Date, an amount equal to $750,000 less any
proceeds  of PIDC  Loans  (up to  $750,000)  received  after  the  Closing  Date
(provided that such amount shall not exceed $375,000 from the first  anniversary
of the  Closing  Date  to  the  second  anniversary  of the  Closing  Date),  as
calculated  pursuant to the most recent Borrowing Base Certificate and otherwise
in accordance with the provisions of subsection 6.12.

         "Borrowing Base Certificate"  means a certificate  substantially in the
form  annexed  hereto as  Exhibit  XXVIII  delivered  by  Borrower  pursuant  to
subsection 6.1(xviii).

         "Bridge  Financing"  means  the loans  obtained  from the  issuance  by
Borrower of the Bridge Notes.

         "Bridge  Financing  Documents"  means all of the Bridge Notes, the note
purchase   agreements  and  related   agreements  and  documents   delivered  to
Administrative  Agent and  Lenders on the  Closing  Date  pursuant  to which the
Bridge Financing was made.

         "Bridge  Notes" means the  promissory  notes of Borrower in the initial
principal amount of $25,000,000 issued on the Closing Date.

         "Business  Day"  means (i) for all  purposes  other  than as covered by
clause (ii) below,  any day  excluding  Saturday,  Sunday and any day which is a
legal  holiday  under

                                       6
<PAGE>

the laws of the  State of New  York or is a day on  which  banking  institutions
located in such state are  authorized  or required by law or other  governmental
action to close, and (ii) with respect to all notices, determinations,  fundings
and payments in connection  with the Adjusted  Eurodollar Rate or any Eurodollar
Rate Loans,  any day that is a Business  Day  described  in clause (i) above and
that is also a day for  trading by and between  banks in Dollar  deposits in the
London interbank market.

         "Capital  Lease",  as  applied  to any  Person,  means any lease of any
property  (whether  real,  personal or mixed) by that Person as lessee that,  in
conformity  with GAAP,  is accounted for as a capital lease on the balance sheet
of that Person.

         "Cash" means money,  currency or a credit balance in a Deposit  Account
of Parent or any of its Subsidiaries.

         "Cash  Equivalents"  means,  as  at  any  date  of  determination,  (i)
marketable  securities (a) issued or directly and unconditionally  guaranteed as
to interest and principal by the United  States  Government or (b) issued by any
agency of the  United  States  the  obligations  of which are backed by the full
faith and credit of the United  States,  in each case  maturing  within one year
after such date; (ii) marketable direct  obligations  issued by any state of the
United States of America or any political  subdivision  of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having,  at the time of the  acquisition  thereof,  the highest  rating
obtainable  from  either  Standard  & Poor's  Ratings  Group  ("S&P") or Moody's
Investors  Service,  Inc.  ("Moody's");  (iii) commercial paper maturing no more
than one year from the date of creation  thereof and having,  at the time of the
acquisition  thereof,  a rating  of at least  A-1 from S&P or at least  P-1 from
Moody's;  (iv) certificates of deposit or bankers'  acceptances  maturing within
one year  after  such  date and  issued  or  accepted  by any  Lender  or by any
commercial  bank organized under the laws of the United States of America or any
state  thereof or the  District  of  Columbia  that (a) is at least  "adequately
capitalized"  (as  defined in the  regulations  of its primary  Federal  banking
regulator)  and (b) has Tier 1 capital (as defined in such  regulations)  of not
less than $100,000,000;  and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses  (i) and (ii) above,  (b) has net assets of not less than
$500,000,000,  and (c) has the  highest  rating  obtainable  from  either S&P or
Moody's.

         "Certificate re Non-Bank  Status" means a certificate  substantially in
the form of Exhibit XIV annexed hereto  delivered by a Lender to  Administrative
Agent pursuant to subsection 2.7B(iii).

         "Change  of  Control"  means  the  occurrence  of any of the  following
events:

                                       7
<PAGE>

                  (i)  prior to an  Initial  Public  Offering,  Atlantic  Equity
         Partners,  L.P. and/or its Affiliates  shall cease to beneficially  own
         and  control  (x) at least  66-2/3%  of the  number of shares of equity
         Securities  (excluding  the Series A Preferred  Stock owned by Atlantic
         Equity Partners,  L.P. and its Affiliates) of Parent (as such number of
         shares may be adjusted to take into account stock splits, reverse stock
         splits,  dividends  payable  in  share of  capital  stock  and  similar
         transactions)  beneficially  owned and controlled by such Persons as of
         the  Closing  Date and (y) a majority  of the  issued  and  outstanding
         Voting Stock of Parent;

                  (ii)  any  "person"  or  "group"  (as such  terms  are used in
         Sections  13(d) and 14(d) of the  Exchange  Act),  other than  Atlantic
         Equity Partners,  L.P., its Affiliates and/or  management  employees of
         Parent or any of its Subsidiaries is or becomes the "beneficial  owner"
         (as  defined  in Rule  13d-3  under  the  Exchange  Act),  directly  or
         indirectly,  of more than 50% of voting  power of all classes of Voting
         Stock of Parent;

                  (iii) Parent,  either  individually or in conjunction with one
         or more Subsidiar ies, sells, assigns,  conveys,  transfers,  leases or
         otherwise  disposes  of,  or the  Subsidiaries  sell,  assign,  convey,
         transfer,  lease or otherwise  dispose of, all or substantially  all of
         the properties of Parent and the Subsidiaries, taken as a whole (either
         in one  transaction  or a series of  related  transactions),  including
         capital stock of the  Subsidiaries,  to any person (other than Borrower
         or a Subsidiary);

                  (iv) during any consecutive  two-year period,  individuals who
         at the beginning of such period  constituted  the Board of Directors of
         Parent (together with any new directors whose election by such Board of
         Directors  or whose  nomination  for  election by the  stockholders  of
         Parent was approved by a vote of a majority of the directors then still
         in office who were either  directors at the beginning of such period or
         whose  election or nomination  for election was previously so approved)
         cease for any reason to constitute a majority of the Board of Directors
         of Parent then in office; or

                  (v) Parent or Borrower is  liquidated or dissolved or adopts a
         plan of liquidation or dissolution (other than as a result of a merger,
         liquidation  or  dissolution  of  Borrower  into  Parent or Parent into
         Borrower).

         "Closing  Date" means  December 31, 1996, the date on which the initial
Loans were made and that certain Acquisition Letter of Credit was issued.

         "Collateral" means,  collectively,  all of the real, personal and mixed
property  (including  capital  stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.

                                       8
<PAGE>

         "Collateral  Account"  has the  meaning  assigned  to that  term in the
Collateral Account Agreement.

         "Collateral  Account  Agreement" means the Collateral Account Agreement
executed and delivered by Borrower and Administrative Agent on the Closing Date,
substantially  in the form of Exhibit XVI  annexed  hereto,  as such  Collateral
Account Agreement may hereafter be amended,  supplemented or otherwise  modified
from time to time.

         "Collateral Documents" means the Parent Pledge Agreement,  the Borrower
Pledge  Agreement,   the  Parent  Security  Agreement,   the  Borrower  Security
Agreement,  the Collateral Account Agreement,  the Subsidiary Pledge Agreements,
the Subsidiary Security  Agreements,  the Subsidiary Patent Security Agreements,
the  Subsidiary   Trademark  Security  Agreements,   the  Mortgages,   the  MELF
Intercreditor  Agreement and all other instruments or documents delivered by any
Loan Party  pursuant to the  Existing  Agreement,  this  Agreement or any of the
other Loan  Documents in order to grant to  Administrative  Agent,  on behalf of
Lenders,  a Lien on any real,  personal or mixed  property of that Loan Party as
security for the Obligations.

         "Commitments"  means the  commitments  of  Lenders to make Loans as set
forth in subsection 2.1A.

         "Compliance Certificate" means a certificate  substantially in the form
of Exhibit IX annexed hereto  delivered to  Administrative  Agent and Lenders by
Borrower pursuant to subsection 6.1(iv).

         "Conforming  Leasehold  Interest" means any Recorded Leasehold Interest
as to which the lessor has agreed in writing for the  benefit of  Administrative
Agent (which writing has been delivered to Administrative  Agent), whether under
the terms of the  applicable  lease,  under the terms of a Landlord  Consent and
Estoppel, or otherwise,  to the matters described in the definition of "Landlord
Consent and Estoppel",  which interest,  if a subleasehold  or  sub-subleasehold
interest,  is not subject to any contrary  restrictions  contained in a superior
lease or sublease.

         "Consolidated  Adjusted EBITDA" means,  for any period,  the sum of the
amounts  for such  period of (i)  Consolidated  Net  Income,  (ii)  Consolidated
Interest  Expense,  (iii)  provi  sions for taxes  based on  income,  (iv) total
depreciation  expense,  (v) total amortization  expense,  (vi) total Transaction
Costs (to the extent  deducted in arriving at  Consolidated  Net Income),  (vii)
non-recurring   non-operating  costs  and  non-recurring   adjustments  reducing
Consolidated  Net Income,  in each case, as mutually  acceptable to Borrower and
Administrative  Agent  (after  consultation  with  Lenders),  and  (viii)  other
non-cash  items  reducing  Consolidated  Net Income  less other  non-cash  items
increasing  Consolidated  Net Income,  all of the  foregoing as  determined on a
consolidated basis for Parent and its Subsidiaries in conformity with GAAP.

                                       9
<PAGE>

         "Consolidated Adjusted Net Income" means Consolidated Net Income in any
Fiscal period adjusted for the after-tax  effect, on a cumulative basis from the
Closing Date, of (i) purchase accounting adjustments including,  but not limited
to,  amortization  of acquired  intangibles and step-up  depreciation,  (ii) the
amount of all fees and expenses incurred, expensed, written off, or amortized in
conjunction  with  the   Acquisition,   the   Restructuring,   the  Distribution
Transaction  and  subsequent  refinancings,  and (iii) other  non-cash  expenses
incurred  including  accretion of warrant value and compensation costs resulting
from  exercise  and  disposition  of, or  accretion  in value of employee  stock
options.

         "Consolidated  Adjusted Net Worth" means  Consolidated Net Worth at the
time of determination,  adjusted for the after-tax effect, on a cumulative basis
from the Closing Date, of (i) purchase accounting adjustments including, but not
limited to,  amortization  of acquired  intangibles,  step-up  depreciation  and
write-up and/or write-down of inventory and accounts receivable, (ii) the amount
of all fees and  expenses  incurred,  expensed,  written-off,  or  amortized  in
conjunction  with  the   Acquisition,   the   Restructuring,   the  Distribution
Transaction  and  subsequent  refinancings,  and (iii) other  non-cash  expenses
incurred  including  accretion of warrant value and compensation costs resulting
from  exercise  and  disposition  of, or  accretion  in value of employee  stock
options.

         "Consolidated  Capital  Expenditures" means, for any period, the sum of
(i)  the  aggregate  of  all  expenditures   (whether  paid  in  cash  or  other
consideration  or accrued as a liability and  including  that portion of Capital
Leases which is capitalized on the consolidated  balance sheet of Parent and its
Subsidiaries)  by Parent  and its  Subsidiaries  during  such  period  that,  in
conformity  with  GAAP,  are  included  in  "additions  to  property,  plant  or
equipment" or comparable items reflected in the  consolidated  statement of cash
flows of Parent and its  Subsidiaries  plus (ii) to the  extent  not  covered by
clause (i) of this  definition,  the aggregate of all expenditures by Parent and
its  Subsidiaries  during that period to acquire (by purchase or otherwise)  the
business, property or fixed assets of any Person, or the stock or other evidence
of  beneficial  ownership of any Person that,  as a result of such  acquisition,
becomes a Subsidiary  of Parent minus the sum of all Net Asset Sale Proceeds and
proceeds of sales of assets  pursuant to clause (b) of the  definition of "Asset
Sale";  provided  that  expenditures  made in order to  consummate  acquisitions
pursuant  to  subsection  7.7(vi)  shall not be  included  in the  defined  term
Consolidated Capital Expenditures.

         "Consolidated   Cash   Interest   Expense"   means,   for  any  period,
Consolidated  Interest Expense for such period excluding,  however, any interest
expense not payable in Cash (including amortization of discount, amortization of
debt issuance costs and accretion of value of warrants or non-cash  charges with
respect to warrants).

         "Consolidated  Current Assets" means, as at any date of  determination,
the total assets of Parent and its  Subsidiaries  on a consolidated  basis which
may properly

                                       10
<PAGE>

be classified as current assets in conformity with GAAP, excluding Cash and Cash
Equivalents.

         "Consolidated   Current   Liabilities"   means,   as  at  any  date  of
determination,  the  total  liabilities  of  Parent  and its  Subsidiaries  on a
consolidated  basis which may properly be classified as current  liabilities  in
conformity with GAAP, excluding any current portion of any long term liabilities
and any other  liabilities  for borrowed  money payable in one year or less from
the date of incurrence.

         "Consolidated  Excess Cash Flow" means,  for any period,  an amount (if
positive)  equal to (i) the sum,  without  duplication,  of the amounts for such
period of (a)  Consolidated  Adjusted  EBITDA and (b) the  Consolidated  Working
Capital Adjustment minus (ii) the sum, without  duplication,  of the amounts for
such period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently  reduced in connection  with such  repayments),  (b)
Consolidated   Capital   Expenditures  and   expenditures   made  to  consummate
acquisitions in accordance with the provisions of subsection 7.7(vi) (net of any
proceeds of any  related  financings  with  respect to such  expenditures),  (c)
Consolidated Cash Interest Expense, (d) the provision for current taxes based on
income of Parent and its  Subsidiaries  and payable in cash with respect to such
period and (e) non-recurring and non operating costs referred to in clause (vii)
of the definition of Consolidated Adjusted EBITDA with respect to such period.

         "Consolidated  Fixed Charges" means,  for any period,  the sum (without
duplication)  of the  amounts  for  such  period  of (i)  Consolidated  Interest
Expense,  (ii) all  scheduled  principal  payments  on  Consolidated  Total Debt
(including the principal portion of Capitalized  Leases),  (iii) actual payments
of taxes,  and (iv) to the extent not included in Consolidated  Adjusted EBITDA,
all Restricted  Junior Payments  (excluding the Distribution  Transactions,  the
Preferred Stock Redemption and any payments made to First Atlantic,  Ltd. or any
of its  Affiliates  in respect of  management  consulting  or other  services to
Parent  and/or  its  Subsidiaries),  all of the  foregoing  as  determined  on a
consolidated basis for Parent and its Subsidiaries in conformity with GAAP.

         "Consolidated  Interest Expense" means, for any period,  total interest
expense  (including  that portion  attributable  to Capital Leases in accordance
with GAAP and  capitalized  interest and Operating  Lease payments to the extent
not  deducted  in  calculating  Consolidated  Net  Income)  of  Parent  and  its
Subsidiaries   on  a  consolidated   basis  with  respect  to  all   outstanding
Indebtedness of Parent and its Subsidiaries,  including, without limitation, all
commissions,  discounts  and other fees and charges owed with respect to letters
of credit and bankers'  acceptance  financing and net costs under  Interest Rate
Agreements,  but excluding,  however,  any amounts referred to in subsection 2.3
payable to Administrative Agent and Lenders on or before the Closing Date.

                                       11
<PAGE>

         "Consolidated  Net Income"  means,  for any period,  the net income (or
loss) of Parent and its  Subsidiaries  on a  consolidated  basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
that there shall be excluded (i) the income (or loss) of any Person  (other than
a Subsidiary  of Parent) in which any other Person  (other than Parent or any of
its  Subsidiaries)  has a joint interest,  except to the extent of the amount of
dividends  or  other  distributions  actually  paid  to  Parent  or  any  of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person  accrued prior to the date it becomes a Subsidiary of Parent or is merged
into or  consolidated  with Parent or any of its  Subsidiaries  or that Person's
assets are  acquired by Parent or any of its  Subsidiaries,  (iii) the income of
any  Subsidiary  of Parent to the  extent  that the  declaration  or  payment of
dividends or similar  distributions  by that Subsidiary of that income is not at
the time  permitted by  operation of the terms of its charter or any  agreement,
instrument,  judgment,  decree, order, statute, rule or governmental  regulation
applicable to that Subsidiary,  (iv) any after-tax gains or losses  attributable
to Asset  Sales or returned  surplus  assets of any  Pension  Plan,  (v) (to the
extent not  included in clauses (i)  through  (iv) above) any net  extraordinary
gains or net  non-cash  extraordinary  losses and (vi) the  after-tax  effect of
purchase  accounting  adjustments  related to the write-up and/or  write-down of
inventory and accounts receivable.

         "Consolidated  Net Worth" means, as at any date of  determination,  the
sum of the capital stock and additional  paid-in capital plus retained  earnings
(or minus accumulated deficits) of Parent and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.

         "Consolidated  Rental Payments"  means,  for any period,  the aggregate
amount  of all  rents  paid or  payable  by  Parent  and its  Subsidiaries  on a
consolidated basis during that period under all Operating Leases to which Parent
or any of its Subsidiaries is a party as lessee (net of sublease income).

         "Consolidated  Total Debt" means, as at any date of determination,  the
aggregate  stated  balance  sheet amount of all  Indebtedness  of Parent and its
Subsidiaries less Cash and Cash Equivalents,  determined on a consolidated basis
in accordance with GAAP.

         "Consolidated  Working Capital" means, as at any date of determination,
the excess of Consolidated Current Assets over Consolidated Current Liabilities.

         "Consolidated  Working Capital  Adjustment"  means, for any period on a
consolidated  basis,  the  amount  (which  may be a  negative  number)  by which
Consolidated  Working  Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period,  excluding
the effect of

                                       12
<PAGE>

purchase  accounting  adjustments  related to the write-up and/or  write-down of
inventory and accounts receivable.

         "Contingent Obligation",  as applied to any Person, means any direct or
indirect liability,  contingent or otherwise, of that Person (i) with respect to
any Indebtedness,  lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person  incurring the Contingent  Obligation is
to provide  assurance  to the obligee of such  obligation  of another  that such
obligation  of  another  will be  paid or  discharged,  or that  any  agreements
relating  thereto will be complied with, or that the holders of such  obligation
will be protected  (in whole or in part) against loss in respect  thereof,  (ii)
with  respect to any letter of credit  issued for the  account of that Person or
under  acceptance or similar  facilities or as to which that Person is otherwise
liable  for  reimbursement  of  drawings,   or  (iii)  under  Hedge  Agreements.
Contingent  Obligations  shall include,  without  limitation,  (a) the direct or
indirect guaranty,  endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making,  discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase,  repurchase  or  otherwise  acquire  such  obligation  or any security
therefor,  or to provide  funds for the payment or discharge of such  obligation
(whether in the form of loans, advances, stock purchases,  capital contributions
or otherwise)  or (Y) to maintain the solvency or any balance sheet item,  level
of income or  financial  condition  of another if, in the case of any  agreement
described under  subclauses (X) or (Y) of this sentence,  the primary purpose or
intent  thereof is as described  in the  preceding  sentence.  The amount of any
Contingent  Obligation  shall  be  equal  to the  amount  of the  obligation  so
guaranteed  or  otherwise  supported  or,  if less,  the  amount  to which  such
Contingent Obligation is specifically limited.

         "Contractual Obligation", as applied to any Person, means any provision
of any Security  issued by that Person or of any  indenture,  mortgage,  deed of
trust,  contract,  undertaking,  agreement or other  instrument  relating to the
issuance of such  Security to which that Person is a party or by which it or any
of its properties is bound or to which it or any of its properties is subject.

         "Currency Agreement" means any foreign exchange contract, currency swap
agreement,  futures  contract,  option contract,  synthetic cap or other similar
agreement or arrangement to which Parent or any of its Subsidiaries is a party.

         "Custom  Foods"  means  Custom  Food   Products,   Inc.,  a  California
corporation.

         "Deposit  Account"  means a demand,  time,  savings,  passbook  or like
account  with a  bank,  savings  and  loan  association,  credit  union  or like
organization,  other than an account  evidenced by a negotiable  certificate  of
deposit.

                                       13
<PAGE>

         "Distribution   Transaction"  means  the  declaration  and  payment  by
Borrower of a distribution to Parent and the subsequent  declaration and payment
of a distribution by Parent,  in an aggregate amount not exceeding  $16,000,000,
on and with respect to Parent's Class A (Voting and Nonvoting) Common Stock.

         "Dollars"  and the sign "$" mean the lawful money of the United  States
of America.

         "Eligible  Accounts  Receivable"  means, at any date of  determination,
except  as  hereinafter  provided  in this  definition,  the face  amount of all
Accounts  Receivable of any  Operating  Subsidiary  payable in Dollars,  reduced
(without  duplication  for the amounts  referred to in clauses (i) through  (xv)
below) by the amount of all  returns,  discounts,  claims,  credits,  charges or
other allowances. Unless otherwise approved in writing by Administra tive Agent,
no Account Receivable shall be deemed to be an Eligible Account Receivable if:

                  (i) it arises out of a sale made by any  Operating  Subsidiary
         to an Affiliate (other than a Subsidiary of Borrower) unless made on an
         arms length basis in accordance with past practice; or

                  (ii) the Account  Receivable is unpaid more than 75 days after
         its due  date or more  than  105 days  after  the date of the  original
         invoice with respect thereto; or

                  (iii) it is from the same  account  debtor  (or any  Affiliate
         thereof) and 50% or more,  in face amount,  of all Accounts  Receivable
         from such account  debtor (or any  Affiliate  thereof)  are  ineligible
         pursuant to clause (ii) above; or

                  (iv) it is from  (a) an  account  debtor  (other  than a Major
         Customer) the aggregate  Accounts  Receivable of which,  at the date of
         determination,  exceed  10% of the  aggregate  amount  of all  Accounts
         Receivable at such date of  determination  or (b) any Major Customer or
         any Affiliate thereof the aggregate Accounts
         Receivable of which,  at the date of  determination,  exceed 40% of the
         aggregate   amount  of  all  Accounts   Receivable   at  such  date  of
         determination,  but in each case under (a) or (b) only to the extent of
         such excess; or

                  (v) the account  debtor has disputed in writing its  liability
         on, or the  account  debtor has made any claim with  respect  to,  such
         Account  Receivable  or any  other  Account  Receivable  due from  such
         account debtor to the applicable  Operating  Subsidiary,  which has not
         been  resolved  within 90 days,  to the  extent  of the  amount of such
         dispute or claim; or

                  (vi) the account  debtor has commenced a voluntary  case under
         the federal  bankruptcy laws, as now constituted or hereafter  amended,
         or made an

                                       14
<PAGE>

         assignment  for the benefit of  creditors,  or if a decree or order for
         relief has been entered by a court having jurisdiction over the account
         debtor in an involuntary case under the federal bankruptcy laws, as now
         constituted  or hereafter  amended,  or if any other  petition or other
         application for relief under the federal bankruptcy laws has been filed
         by or against the account debtor,  or if the account debtor has filed a
         certificate of dissolution under applicable law or shall be liquidated,
         dissolved  or  wound-up,  or shall  authorize or commence any action or
         proceeding  for  dissolution,  winding-up  or  liquidation,  or if  the
         account debtor has failed,  suspended  business,  declared itself to be
         insolvent,  is generally not paying its debts as they become due or has
         consented to or suffered a receiver,  trustee,  liquidator or custodian
         to be  appointed  for it or for  all or a  significant  portion  of its
         assets or affairs;  unless (a) the payment of Accounts  Receivable from
         such account debtor is secured in a manner  reasonably  satisfactory to
         Administrative  Agent and Administrative Agent does not notify Borrower
         in writing  within 10 days of receipt of notice  with  respect  thereto
         that such security is not  reasonably  satisfactory  or (b) the Account
         Receivable  from such account  debtor arises  subsequent to a decree or
         order for relief with respect to such account  debtor under the federal
         bankruptcy  laws as now or  hereafter  in  effect  and  Agent  notifies
         Borrower in writing that it has determined  that the timely payment and
         collection of such Account Receivable will not be impaired; or

                  (vii)  the  sale  is to  an  account  debtor  outside  of  the
         continental  United  States or Canada,  unless (a) the  account  debtor
         thereon has supplied  Borrower or the applicable  Operating  Subsidiary
         with an irrevocable  letter of credit in form and substance  reasonably
         satisfactory to Administrative Agent, issued by a financial institution
         reasonably satisfactory to Administrative Agent and which has been duly
         transferred  to   Administrative   Agent   (together  with   sufficient
         documentation  to permit  direct  draws by  Administrative  Agent)  and
         Administrative Agent does not notify Borrower in writing within 10 days
         of receipt that such  security is not  reasonably  satisfactory  or (b)
         payment of the Accounts Receivable is unconditionally  guarantied by an
         Affiliate of such account debtor located in the United States or Canada
         (and, at  Administrative  Agent's  reasonable  request,  Administrative
         Agent shall have received reasonable assurance of the enforceability of
         such  guaranty)  or secured by a letter of credit or other  arrangement
         that  is,  in  each  case,   upon  terms  and   conditions   reasonably
         satisfactory to Administrative Agent; or

                  (viii)  Administrative  Agent  determines  in  its  reasonable
         discretion  based  upon  standard  practices  in the  banking  industry
         consistent  with  past  determinations  made  by  Administrative  Agent
         pursuant to this Agreement that  collection of such Account  Receivable
         is unlikely or that such Account  Receivable  may not be paid by reason
         of  the  account  debtor's  financial  inability  to pay  and  notifies
         Borrower in writing to such effect; or

                                       15
<PAGE>

                  (ix) the account debtor is the United States of America or any
         department,  agency or instrumentality  thereof,  unless the applicable
         Operating Subsidiary duly assigns its rights to payment of such Account
         Receivable to Agent  pursuant to the  Assignment of Claims Act of 1940,
         as amended (31 U.S.C. ss.3727 et seq.); or

                  (x) the goods giving rise to such Account  Receivable have not
         been shipped to the account debtor or the services  giving rise to such
         Account Receivable have not been performed by the applicable  Operating
         Subsidiary and accepted by the account debtor or the Account Receivable
         otherwise  does not represent a final sale or is on a guarantied  sale,
         sale-and-return, sale on approval or consignment basis or made pursuant
         to any other written agreement providing for repurchase or return; or

                  (xi) Administrative  Agent does not have a valid and perfected
         First  Priority  security  interest in such Account  Receivable  or the
         Account  Receivable  does  not  otherwise  materially  conform  to  the
         representations and warranties contained in this Agreement or the other
         Loan Documents; or

                  (xii) the Accounts Receivable arises out of a service contract
         or other  contract  other  than with  respect to  Inventory  sold to an
         account debtor or pursuant to co-packing or other commodity  processing
         arrangements; or

                  (xiii)  any  Accounts  Receivable  against  which the  account
         debtor or any  Person  obligated  to make  payment  thereon  asserts in
         writing any defense, offset,  counterclaim,  or other right to avoid or
         reduce the liability  represented  by such Accounts  Receivable,  other
         than  discounts  in the  ordinary  course of business  (but only to the
         extent thereof); or

                  (xiv) the Account  Receivable  is not based upon an actual and
         bona fide sale and shipment or delivery of goods to customers,  or upon
         the  provision  of  services to  customers,  in either case made by the
         Operating Subsidiaries in the ordinary course of business; or

                  (xv) the  Account  Receivable  does not meet  such  additional
         standards of eligibility for Eligible  Accounts  Receivable as shall be
         imposed by Administrative Agent in its reasonable discretion based upon
         standard  practices  in  the  banking  industry  consistent  with  past
         determinations made by Administrative  Agent pursuant to this Agreement
         and of  which  Borrower  has  been  notified  in  advance  in  writing.

         "Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the  United  States  or any  state  thereof;  (ii) a  savings  and  loan
association or savings bank organized under the laws of the United States or any
state thereof;  (iii) a commercial  bank  organized  under the laws of any other
country  or a  political 

                                       16
<PAGE>

subdivision  thereof;  provided that (x) such bank is acting through a branch or
agency located in the United States or (y) such bank is organized under the laws
of a country that is a member of the Organization  for Economic  Cooperation and
Development  or a  political  subdivision  of such  country;  and (iv) any other
entity which is an  "accredited  investor" (as defined in Regulation D under the
Securities  Act) which  extends  credit or buys  loans as one of its  businesses
including,  but not  limited to,  insurance  companies,  mutual  funds and lease
financing  companies;  and  (B) any  Lender  and any  Affiliate  of any  Lender;
provided that no Affiliate of Borrower shall be an Eligible Assignee.

         "Eligible Inventory" means, as at any date of determination, the Dollar
value  valued  at the  lower of cost or  market  value of all of each  Operating
Subsidiary's Inventory, excluding the following:

                  (a) any  Inventory  which is not owned  solely by an Operating
         Subsidiary  free and clear of all Liens except the  security  interests
         granted pursuant to the Collateral Documents;

                  (b) any  Inventory  which is (i) not  located on an  Operating
         Subsidiary's  owned premises or (ii) not located on premises  leased by
         an Operating  Subsidiary with respect to which a Landlord's Consent and
         Estoppel has been obtained,  or (iii) is in transit to a location other
         than an Operating  Subsidiary's owned premises or premises leased by an
         Operating  Subsidiary  with respect to which a  Landlord's  Consent and
         Estoppel  has been  obtained,  or (iv) in any case,  not located in the
         United States of America or other locations  approved by Administrative
         Agent;

                  (c) any Inventory  which is on lease or  consignment  from any
         Person to an Operating Subsidiary;

                  (d) any Inventory which is packaging material or supplies;

                  (e) any  Inventory  which is obsolete,  damaged,  unsalable or
         otherwise unfit for its intended use or sale; and

                  (f) to the extent not already  excluded  from or  reflected in
         the  value  of  Eligible  Inventory,   any  reserves  required  by  the
         Administrative  Agent in its discretion for special order goods, market
         value  declines  and   bill-and-hold   (deferred   shipment)  sales  in
         accordance with standard practices in the banking industry  consistent,
         as applicable,  with past determinations  made by Administrative  Agent
         pursuant to this Agreement for the evaluation of Inventory.

                                       17
<PAGE>


         "Employee Benefit Plan" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was  maintained or contributed to by Borrower,
any of its Subsidiaries or any of their respective ERISA Affiliates.

         "Environmental  Claim"  means  any  investigation,  notice,  notice  of
violation,  claim, action, suit,  proceeding,  demand,  abatement order or other
order or directive (conditional or otherwise),  by any governmental authority or
any other Person,  arising (i) pursuant to or in  connection  with any actual or
alleged  violation  of any  Environmental  Law,  (ii)  in  connection  with  any
Hazardous Materials or any actual or alleged Hazardous  Materials  Activity,  or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.

         "Environmental  Laws"  means any and all  current  or future  statutes,
ordinances,   orders,  rules,   regulations,   guidance  documents,   judgments,
Governmental   Authorizations,   or  any  other   requirements  of  governmental
authorities relating to (i) environmental  matters,  including those relating to
any  Hazardous   Materials   Activity,   (ii)  the  generation,   use,  storage,
transportation or disposal of Hazardous Materials,  or (iii) occupational safety
and health,  industrial  hygiene,  land use or the protection of human, plant or
animal  health or  welfare,  in any  manner  applicable  to Parent or any of its
Subsidiaries  or  any  Facility,   including  the  Comprehensive   Environmental
Response,  Compensation,  and  Liability Act (42 U.S.C.  ss. 9601 et seq.),  the
Hazardous  Materials  Transportation  Act (49  U.S.C.  ss.  1801 et  seq.),  the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal
Water Pollution  Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.),  the Toxic Substances  Control Act (15 U.S.C. ss. 2601
et seq.),  the Federal Insec ticide,  Fungicide  and  Rodenticide  Act (7 U.S.C.
ss.136 et seq.),  the  Occupational  Safety and Health Act (29 U.S.C. ss. 651 et
seq.),  the Oil  Pollution  Act (33 U.S.C.  ss.  2701 et seq) and the  Emergency
Planning and Community  Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time, the rules and regulations promulgated thereunder from
time to time in effect, and any successor thereto.

         "ERISA Affiliate" means, as applied to any Person,  (i) any corporation
which is a member of a controlled  group of  corporations  within the meaning of
Section  414(b) of the  Internal  Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated)  which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member;  and (iii)
any member of an affiliated  service group within the meaning of Section  414(m)
or (o) of the  Internal  Revenue  Code of which  that  Person,  any  corporation
described in clause (i) above or any trade or business  described in clause (ii)
above  is a  member.  Any  former  ERISA  Affiliate  of 

                                       18
<PAGE>

Parent or any of its  Subsidiaries  shall  continue  to be  considered  an ERISA
Affiliate  of Parent or such  Subsidiary  within the meaning of this  definition
with respect to the period such entity was an ERISA  Affiliate of Parent or such
Subsidiary and with respect to  liabilities  arising after such period for which
Parent or such  Subsidiary  could be liable under the  Internal  Revenue Code or
ERISA.

         "ERISA  Event"  means (i) a  "reportable  event"  within the meaning of
Section 4043 of ERISA and the regulations  issued thereunder with respect to any
Pension Plan  (excluding  those for which the provision for 30-day notice to the
PBGC has been  waived  by  regulation);  (ii) the  failure  to meet the  minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan  (whether or not waived in  accordance  with Section  412(d) of the
Internal  Revenue  Code)  or the  failure  to make by its  due  date a  required
installment  under Section  412(m) of the Internal  Revenue Code with respect to
any  Pension  Plan  or the  failure  to  make  any  required  contribution  to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section  4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress  termination  described in Section 4041(c) of ERISA; (iv) the
withdrawal by Parent,  any of its  Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more  contributing  sponsors or the
termination of any such Pension Plan resulting in liability  pursuant to Section
4063  or 4064 of  ERISA;  (v) the  institution  by the  PBGC of  proceedings  to
terminate any Pension Plan,  or the  occurrence of any event or condition  which
might constitute  grounds under ERISA for the termination of, or the appointment
of a trustee to administer,  any Pension Plan;  (vi) the imposition of liability
on Parent,  any of its  Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section  4062(e) or 4069 of ERISA or by reason of the application of
Section  4212(c)  of  ERISA;   (vii)  the  withdrawal  of  Parent,  any  of  its
Subsidiaries  or any of their  respective  ERISA  Affiliates  in a  complete  or
partial  withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multi  employer Plan if there is any potential  liability  therefor,  or the
receipt by Parent,  any of its  Subsidiaries  or any of their  respective  ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency  pursuant  to  Section  4241 or 4245 of ERISA,  or that it intends to
terminate or has  terminated  under Section  4041A or 4042 of ERISA;  (viii) the
occurrence  of an act or  omission  which could give rise to the  imposition  on
Parent,  any of its  Subsidiaries or any of their respective ERISA Affiliates of
fines,  penalties,  taxes or related  charges  under  Chapter 43 of the Internal
Revenue Code or under Section 409,  Section 502(c),  (i) or (l), or Section 4071
of ERISA in  respect of any  Employee  Benefit  Plan;  (ix) the  assertion  of a
material  claim (other than routine  claims for  benefits)  against any Employee
Benefit Plan other than a Multiemployer  Plan or the assets thereof,  or against
Parent,  any of its  Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the  failure  of any  Pension  Plan (or any other  Employee
Benefit  Plan  intended to be  qualified  under  Section  401(a) of the Internal
Revenue Code) to qualify under Section  401(a) of the Internal  Revenue Code, or
the  failure  of any trust  forming  part of any  Pension  Plan to  qualify  for
exemption from taxation  under Section

                                       19
<PAGE>

501(a) of the Internal  Revenue Code; or (xi) the  imposition of a Lien pursuant
to Section  401(a)(29)  or 412(n) of the  Internal  Revenue  Code or pursuant to
ERISA with respect to any Pension Plan.

         "Escrow  Funds"  shall mean any and all Cash held in escrow as provided
in the Acquisition Agreement.

         "Eurodollar   Rate  Loans"  means  Loans  bearing   interest  at  rates
determined  by  reference  to  the  Adjusted  Eurodollar  Rate  as  provided  in
subsection 2.2A.

         "Event of Default" means each of the events set forth in Section 8.

         "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended
from time to time, and any successor statute.

         "Existing  Agreement"  has the  meaning  assigned  to that  term in the
Recitals hereto.

         "Facilities"  means  any  and all  real  property  (including,  without
limitation, all buildings,  fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased,  operated or used by Parent or any of its
Subsidiaries or any of their respective predecessors.

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

         "Financial  Plan" has the meaning  assigned to that term in  subsection
6.1(xiii).

         "First  Priority"  means,  with  respect  to any Lien  purported  to be
created in any Collateral pursuant to any Collateral Document, that such Lien is
the most senior Lien (other than Permitted  Liens to the extent not perfected by
filing of any UCC financing statements) to which such Collateral is subject.

         "Fiscal Quarter" means a fiscal quarter of any Fiscal Year.

                                       20
<PAGE>

         "Fiscal  Year"  means the fiscal  year of Parent  and its  Subsidiaries
ending on September 30 (provided that at Borrower's  election the Fiscal Year of
Parent and its  Subsidiaries may be changed on or prior to September 30, 1997 to
any date from December 31 through  March 31 of each calendar  year) except that,
in the case of Quality Foods,  L.P., QF Management  and QF  Acquisition  for any
period prior to the Closing  Date,  "Fiscal  Year" means the fiscal year of such
Persons  ending on  December  31 of each  calendar  year.  For  purposes of this
Agreement,  any  particular  Fiscal Year shall be designated by reference to the
calendar year in which such Fiscal Year ends.

         "Flood  Hazard  Property"  means a Mortgaged  Property or an Additional
Mortgaged  Property  located  in an area  designated  by the  Federal  Emergency
Management Agency as having special flood or mud slide hazards.

         "Funding  and Payment  Office"  means (i) the office of  Administrative
Agent and Swing Line Lender located at 901 Main Street,  Dallas,  Texas 75202 or
(ii) such other office of Administrative Agent and Swing Line Lender as may from
time to time  hereafter be designated as such in a written  notice  delivered by
Administrative Agent and Swing Line Lender to Borrower and each Lender.

         "Funding Date" means the date of the funding of a Loan.

         "GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted  accounting  principles set forth in
opinions and pro nouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  entity as may be  approved  by a  significant  segment of the  accounting
profession,  in each case as the same are applicable to the  circumstances as of
the date of determination.

         "Governmental Acts" has the meaning assigned to that term in subsection
3.5A.

         "Governmental Authorization" means any permit, license,  authorization,
plan, directive,  consent order or consent decree of or from any federal,  state
or local governmen tal authority, agency or court.

         "Guaranties" means the Parent Guaranty and the Subsidiary Guaranty.

         "Hazardous Materials" means (i) any chemical,  material or substance at
any time defined as or included in the  definition  of  "hazardous  substances",
"hazardous wastes", "hazardous materials",  "extremely hazardous waste", acutely
hazardous waste, "radioactive waste", "biohazardous waste", "pollutant",  "toxic
pollutant",  "contaminant",  "restricted  hazardous waste",  "infectious waste",
"toxic substances",  or any other term or expression intended to define, list or
classify  substances  by reason of properties  harmful to

                                       21
<PAGE>

health,  safety  or  the  indoor  or  outdoor  environment   (including  harmful
properties  such  as  ignitability,  corrosivity,  reactivity,  carcinogenicity,
toxicity,  reproductive  toxicity,  "TCLP toxicity" or "EP toxicity" or words of
similar  import  under  any  applicable   Environmental  Laws);  (ii)  any  oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids,  produced  waters  and other  wastes  associated  with the  exploration,
development  or  production of crude oil,  natural gas or geothermal  resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-  containing  materials;  (vii) urea  formaldehyde foam insulation;
(viii)  electrical   equipment  which  contains  any  oil  or  dielectric  fluid
containing  polychlorinated  biphenyls;  (ix)  pesticides;  and  (x)  any  other
chemical,  material or substance,  exposure to which is  prohibited,  limited or
regulated by any  governmental  authority or which may or could pose a hazard to
the health and safety of the owners, occupants or any Persons in the vicinity of
any Facility or to the indoor or outdoor environment.

         "Hazardous  Materials  Activity" means any past,  current,  proposed or
threatened  activity,  event or occurrence  involving  any Hazardous  Materials,
including  the  use,  manufacture,   possession,   storage,  holding,  presence,
existence,   location,  Release,   threatened  Release,  discharge,   placement,
generation,  transportation,  processing,  construction,  treatment,  abatement,
removal,  remediation,  disposal,  disposition  or  handling  of  any  Hazardous
Materials,  and any corrective  action or response action with respect to any of
the foregoing.

         "Hedge  Agreement"  means an  Interest  Rate  Agreement  or a  Currency
Agreement  designed to hedge against  fluctuations in interest rates or currency
values, respectively.

         "Indebtedness",  as applied to any Person,  means (i) all  indebtedness
for borrowed  money,  (ii) that portion of  obligations of such Person as lessee
under  Capital  Leases that is properly  classified  as a liability on a balance
sheet  in  conformity  with  GAAP,  (iii)  notes  payable  and  drafts  accepted
representing  extensions of credit whether or not  representing  obligations for
borrowed  money,  (iv) any  obligation  owed for all or any part of the deferred
purchase price of property or services (excluding any such obligations  incurred
under ERISA), which purchase price is (a) due more than six months from the date
of incurrence of the obligation in respect thereof or (b) evidenced by a note or
similar written instrument,  and (v) all indebtedness secured by any Lien on any
property  or asset  owned  or held by that  Person  regardless  of  whether  the
indebtedness  secured  thereby  shall  have been  assumed  by that  Person or is
nonrecourse  to the  credit of that  Person.  Obligations  under  Interest  Rate
Agreements  and Currency  Agreements  shall  constitute (X) in the case of Hedge
Agreements,  Contingent Obligations and (Y) in all other cases, Investments, and
in neither case constitute Indebtedness.

         "Indemnitee" has the meaning assigned to that term in subsection 10.3.

                                       22
<PAGE>

         "Initial Public  Offering" means a public offering of the capital stock
of Parent that first results in the capital stock of Parent  becoming listed for
trading on the New York Stock  Exchange,  the  American  Stock  Exchange  or the
NASDAQ National Market.

         "Intellectual  Property"  means all  patents,  trademarks,  tradenames,
copyrights,  technology,  know-how and  processes  used in or necessary  for the
conduct of the business of Borrower and its Subsidiaries as currently  conducted
that are  material  to the  condition  (financial  or  otherwise),  business  or
operations of Borrower and its Subsidiaries, taken as a whole.

         "Interest  Payment  Date" means (i) with respect to any Base Rate Loan,
each March 31, June 30, September 30 and December 31 of each year, commencing on
March 31, 1997, and (ii) with respect to any Eurodollar  Rate Loan, the last day
of each Interest  Period  applicable to such Loan;  provided that in the case of
each Interest Period of longer than three months  "Interest  Payment Date" shall
also include each date that is three months,  or an integral  multiple  thereof,
after the commencement of such Interest Period.

         "Interest  Period" has the meaning  assigned to that term in subsection
2.2B.

         "Interest  Rate  Agreement"  means any  interest  rate swap  agreement,
interest rate cap  agreement,  interest  rate collar  agreement or other similar
agreement  or  arrangement  to which  Borrower or any of its  Subsidiaries  is a
party.

         "Interest Rate Determination  Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.

         "Internal  Revenue  Code" means the Internal  Revenue Code of 1986,  as
amended to the date hereof and from time to time  hereafter,  and any  successor
statute.

         "Inventory"  means,  with  respect  to any  Person  as of any  date  of
determination, all goods, merchandise and other personal property which are then
held by such  Person  for sale or lease,  including  raw  materials  and work in
process.

         "Investment"  means  (i) any  direct  or  indirect  purchase  or  other
acquisition  by  Parent or any  Subsidiary  of  Parent  of,  or of a  beneficial
interest in, any  Securities of any other Person  (including  any  Subsidiary of
Parent), (ii) any direct or indirect redemption,  retirement,  purchase or other
acquisition  for value,  by Parent or any  Subsidiary  of Parent from any Person
other than Parent or any of its  Subsidiaries,  of any equity Securities of such
Loan Party,  (iii) any direct or indirect loan,  advance (other than advances to
employees for moving,  entertainment  and travel expenses,  drawing accounts and
similar expenditures in the ordinary course of business) or capital contribution
by Parent or any of its  Subsidiaries  to, or any

                                       23
<PAGE>

other  investment  by Parent or any of its  Subsidiaries  in, any other  Person,
including all indebtedness  and accounts  receivable from that other Person that
are not current  assets or did not arise from sales to that other  Person in the
ordinary  course of business,  or  (iv)  Interest  Rate  Agreements  or Currency
Agreements not constituting Hedge Agreements. The amount of any Investment shall
be the original cost of such Investment plus the cost of all additions  thereto,
without any  adjustments  for  increases or decreases  in value,  or  write-ups,
write-downs or write-offs with respect to such Investment.

         "IP  Collateral"   means,   collectively,   the  Collateral  under  the
Subsidiary  Trademark  Security  Agreements and the Subsidiary  Patent  Security
Agreements.

         "IRB Debt" means the Indebtedness  evidenced by the Taxable Development
Revenue  Bonds,  1995  Series D issued  by PEDFA  on  December  27,  1995 in the
original aggregate principal amount of $4,400,000.

         "IRB Letter of Credit" means the PNC Letter of Credit  attached  hereto
as  Schedule  9.2 and any  replacement  letter of credit  issued by the  Issuing
Lender as set forth in subsection 9.2A.

         "IRB  Reimbursement  Advance"  means any amounts paid or payable by the
Issuing Lender under the IRB Reimbursement Agreement.

         "IRB Reimbursement Agreement" means the Participation and Reimbursement
Agreement and the Pledge, Security and Indemnification  Agreement, in each case,
dated as of  December  30,  1996  between  NationsBank  and PNC  Bank,  National
Association,  substantially in the form of Exhibit XXIX annexed hereto,  as such
Participation   and   Reimbursement    Agreement   or   Pledge,   Security   and
Indemnification  Agreement may be amended,  supplemented  or otherwise  modified
from  time  to  time,  together  with  the  any  replacement  agreements  having
substantially the same terms.

         "IRB Trust  Indenture"  means that certain Trust  Indenture dated as of
December  1, 1995  between  PEDFA and  Mellon  Bank,  N.A.,  as in effect on the
Closing Date.

         "Issuing  Lender" means  NationsBank in its capacity as the issuer of a
Letter of Credit or in its  capacity as the  "Participation  Bank" under the IRB
Reimbursement Agreement, as applicable.

         "Joint  Venture"  means a joint  venture,  partnership or other similar
arrangement,  whether in corporate,  partnership  or other legal form;  provided
that in no event shall any  corporate  Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.

                                       24
<PAGE>

         "Landlord  Consent and Estoppel"  means,  with respect to any Leasehold
Property,  a letter,  certificate or other instrument in writing from the lessor
under the related lease,  substantially  in the form of either Exhibit XXIIIA or
Exhibit XXIIIB.

         "Leasehold  Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property,  other than any such leasehold interest
designated from time to time by  Administrative  Agent in its sole discretion as
not being required to be included in the Collateral.

         "Lender" and  "Lenders"  means the persons  identified as "Lenders" and
listed on the signature pages of this Agreement,  together with their successors
and permitted  assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise  requires;  provided that
the term "Lenders",  when used in the context of a particular Commitment,  shall
mean Lenders having that Commitment.

         "Letter of Credit" or "Letters of Credit" means the  Revolving  Letters
of Credit.

         "Level" means Level I, Level II or Level III, as applicable.

         "Level  I"  means  the  existence,  as of any  Measurement  Date,  of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the period covered by the financial statements relating to such Measurement Date
of  greater  than or equal  to 3.70 to  1.00;  provided  that  for  purposes  of
determining the Applicable Margin for Term Loans, Level I means the existence of
a Leverage Ratio of greater than or equal to 4.40 to 1.00.

         "Level  II" means  the  existence,  as of any  Measurement  Date,  of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the period covered by the financial statements relating to such Measurement Date
of less than 3.70 to 1.00 but  greater  than or equal to 3.00 to 1.00;  provided
that for purposes of determining the Applicable Margin for Term Loans,  Level II
means the  existence  of a Leverage  Ratio of less than 4.40 to 1.00 but greater
than or equal to 3.80 to 1.00.

         "Level  III" means the  existence,  as of any  Measurement  Date,  of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the period covered by the financial statements relating to such Measurement Date
of less than 3.00 to 1.00 but  greater  than or equal to 2.30 to 1.00;  provided
that for purposes of determining the Applicable Margin for Term Loans, Level III
means the  existence  of a Leverage  Ratio of less than 3.80 to 1.00 but greater
than or equal to 3.00 to 1.00.

                                       25
<PAGE>

         "Level  IV" means  the  existence,  as of any  Measurement  Date,  of a
Leverage Ratio for the twelve consecutive month period ending on the last day of
the twelve consecutive month period ending on the last day of the period covered
by the financial  statements relating to such measurement Date of less than 2.30
to 1.00;  provided that for purposes of determining  the  Applicable  Margin for
Term Loans,  Level IV means the existence of a Leverage  Ratio of less than 3.00
to 1.00.

         "Leverage Ratio" has the meaning set forth in subsection 7.6C.

         "Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement,  any lease in the nature thereof, and any agreement to give
any security interest) and any option,  trust or other preferential  arrangement
having the practical effect of any of the foregoing.

         "Loan" or "Loans" means one or more of the Term Loans,  Revolving Loans
or Swing Line Loans or any combination thereof.

         "Loan  Documents"  means this  Agreement,  the Notes and the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates  executed by Borrower in favor of Issuing Lender relating to the
Letters  of  Credit),  the  Guaranties,  IRB  Reimbursement  Agreement  and  the
Collateral Documents.

         "Loan  Party"  means each of  Parent,  Borrower  and any of  Borrower's
Subsidiaries  from time to time  executing a Loan  Document,  and "Loan Parties"
means all such Persons, collectively.

         "Major Customer" means any of (i) Chef America, Inc., (ii) Sysco Corp.,
(iii)  Arby's,  together  with  all of  its  distributors,  franchisees,  buying
cooperatives and company-owned stores, and (iv) Subway, together with all of its
distributors, franchisees, buying cooperatives and company-owned stores.

         "Management   Consulting   Agreement"  means  that  certain  Management
Consulting  Agreement  dated as of  December  30,  1996,  by and  between  First
Atlantic Capital, Ltd. and Parent.

         "Margin Stock" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal  Reserve  System as in effect from time to
time.

         "Material  Adverse  Effect"  means any change or changes,  or effect or
effects,  that have occurred or are threatened,  and that individually or in the
aggregate  could  be  reasonably  likely  to be  materially  adverse  to (a) the
business, operations, assets, prospects or condition (financial or otherwise) of
Borrower individually or

                                       26
<PAGE>

Parent  together with its  Subsidiaries  taken as a whole,  or (b) the legality,
validity, binding nature or enforceability against Borrower of any Loan Document
or any Material  Contract to which it is a party or pursuant to which it has any
obligation.

         "Material  Contract"  means any contract or other  arrangement to which
Parent or any of its  Subsidiaries is a party (other than the Loan Documents and
the  Related  Agreements),  or by which any of their  assets or  properties  are
bound, for which breach, nonperformance,  cancellation or failure to renew would
have a Material Adverse Effect.

         "Material  Leasehold  Property" means a Leasehold  Property  reasonably
determined by  Administrative  Agent to be of material value as Collateral or of
material  importance to the  operations of Borrower or any of its  Subsidiaries;
provided,  however that a Leasehold Property with respect to which the aggregate
amount of all rents payable during any one Fiscal Year does not exceed  $350,000
shall not be a "Material Leasehold Property".

         "Material  Subsidiary"  means Custom  Foods,  QF  Acquisition  and each
Subsidiary of Borrower or Parent now existing or hereafter acquired or formed by
Borrower   which,   on  a  consolidated   basis  for  such  Subsidiary  and  its
Subsidiaries,  (i) for the most recent Fiscal Year  accounted for more than 7.5%
of the consolidated  revenues of Borrower and its Subsidiaries or (ii) as at the
end of such  Fiscal  Year,  was the owner of more than 7.5% of the  consolidated
assets of Borrower and its Subsidiaries.

         "Maximum Exposure Under IRB  Reimbursement  Agreement" means, as of the
date of  determination,  the maximum  exposure of Issuing  Lender  under the IRB
Reimbursement Agreement, including possible exposure for reimbursement payments,
interest,  fees,  expenses,  increased costs and indemnification  claims, all as
determined in good faith by Issuing Lender.

         "Measurement  Date" means the third  Business Day following  receipt by
Lenders  of the  financial  statements  required  to be  delivered  pursuant  to
subsection  6.1(ii) and the Compliance  Certificate  required to be delivered by
subsection  6.1(iv)(b)  with respect to the  accounting  period  covered by such
financial statements.

         "MELF"  means the  Commonwealth  of  Pennsylvania,  acting  through the
Department of Commerce Machinery and Equipment Loan Fund.

         "MELF  Intercreditor   Agreement"  means  the  Intercreditor  Agreement
executed and  delivered by  Administrative  Agent and MELF on the Closing  Date,
substantially in the form of Exhibit XXX annexed hereto,  as such  Intercreditor
Agreement may be amended, supplemented or otherwise modified from time to time.

                                       27
<PAGE>

         "Mortgage"  means (i) a security  instrument  (whether  designated as a
deed of trust or a mortgage or by any similar  title)  executed and delivered by
any Loan Party,  substantially in the form of Exhibit XXVII annexed hereto or in
such  other  form  as  may be  approved  by  Administrative  Agent  in its  sole
discretion,  in each case with such  changes  thereto as may be  recommended  by
Administrative  Agent's  local  counsel  based on local laws or customary  local
mortgage or deed of trust practices,  or (ii) at Administrative  Agent's option,
in the case of an Additional  Mortgaged Property (as defined in subsection 6.9),
an amendment to an existing  Mortgage,  in form  satisfactory to  Administrative
Agent,  adding such  Additional  Mortgaged  Property to the Real Property Assets
encumbered by such existing Mortgage, in either case as such security instrument
or amendment  may be amended,  supplemented  or otherwise  modified from time to
time.  "Mortgages" means all such instruments,  including the fully executed and
notarized Mortgages and any Additional Mortgages (as defined in subsection 6.9),
collectively.

         "Mortgaged  Property"  means the  property  located at 5501 Tabor Road,
Philadelphia, Pennsylvania 13120 or an Additional Mortgaged Property (as defined
in subsection 6.9).

         "Multiemployer  Plan"  means  any  Employee  Benefit  Plan  which  is a
"multiemployer plan" as defined in Section 3(37) of ERISA.

         "NationsBank" has the meaning assigned to that term in the introduction
to this Agreement.

         "Net Asset Sale Proceeds"  means,  with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by  monetization  of, a note  receivable or  otherwise,  but only as and when so
received)  received by Parent or any of its  Subsidiaries  from such Asset Sale,
net of any bona fide direct costs  incurred in connection  with such Asset Sale,
including  without  limitation  (i) taxes  reasonably  estimated  to be actually
payable in connection with such Asset Sale, (ii) payment of liabilities relating
to assets  sold at the time of, or within 30 days  after the date of such  Asset
Sale, (iii) pay ment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness  (other than the Loans) that is secured
by a Lien on the stock or assets in  question  and that is required to be repaid
under the terms thereof as a result of such Asset Sale and (iv)  reasonable  and
customary fees,  commissions and expenses,  other costs paid by Parent or any of
its Subsidiaries to any Person (other than an Affiliate of Parent) in connection
with such Asset Sale.

         "Net  Insurance/Condemnation  Proceeds"  means  any  Cash  payments  or
proceeds  received by Parent or any of its  Subsidiaries  (i) under any business
interruption  or  casualty  insurance  policy  in  respect  of  a  covered  loss
thereunder  or (ii) as a result of the  taking of any assets of Parent or any of
its  Subsidiaries  by any  Person  pursuant

                                       28
<PAGE>

to the power of eminent domain, condemnation or otherwise, or pursuant to a sale
of any such assets to a purchaser with such power under threat of such a taking,
in each case net of any actual  and  reasonable  documented  costs  incurred  by
Parent  or any  of  its  Subsidiaries  in  connection  with  the  adjustment  or
settlement of any claims of Parent or such Subsidiary in respect thereof.

         "Net  Pension  Proceeds"  has the  meaning  assigned  to  that  term in
subsection 2.4B(iii)(c).

         "Net Securities  Proceeds" means,  with respect to any sale or issuance
of any Indebtedness or capital stock or other ownership or profit interest,  any
securities convertible into or exchangeable for capital stock or other ownership
or profit  interest or any  warrants,  rights,  options or other  securities  to
acquire  capital  stock or other  ownership  or  profit  interest  or any  other
Securities  by any Person,  the  aggregate  amount of Cash received from time to
time (whether as initial  consideration  or through  payment or  disposition  of
deferred  consideration)  by or on behalf of such Person in connection with such
transaction after deducting therefrom only (without  duplication) (a) reasonable
and customary  brokerage  commissions,  underwriting  fees and discounts,  legal
fees, finder's fees and other similar fees and commissions and (b) the amount of
taxes payable in  connection  with or as a result of such  transaction,  in each
case to the extent, but only to the extent, that the fees, commissions and other
amounts so deducted are, at the time of receipt of such Cash, actually paid to a
Person pursuant to an arm's-length  transaction on commercially reasonable terms
to  Parent  and/or  its  Subsidiaries  and  are  properly  attributable  to such
transaction or to the asset that is the subject thereof.

         "Notes" means one or more of the Term Notes,  Revolving  Notes or Swing
Line Note or any combination thereof.

         "Notice  of  Borrowing"  means a  notice  substantially  in the form of
Exhibit I annexed hereto delivered by Borrower to Administrative  Agent pursuant
to subsection 2.1B with respect to a proposed borrowing.

         "Notice of Conversion/Continuation" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Borrower to Administrative  Agent
pursuant  to  subsection   2.2D  with  respect  to  a  proposed   conversion  or
continuation  of the  applicable  basis for  determining  the interest rate with
respect to the Loans specified therein.

         "Notice of Issuance of Letter of Credit"  means a notice  substantially
in  the  form  of  Exhibit  III  annexed   hereto   delivered   by  Borrower  to
Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed
issuance of a Letter of Credit.

                                       29
<PAGE>

         "Obligations"  means all obligations of every nature of each Loan Party
from time to time owed to Administrative Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest,  reimbursement of amounts drawn
under  Letters of Credit or the IRB  Reimbursement  Agreement,  fees,  expenses,
indemnification or otherwise.

         "Officers'  Certificate"  means,  as  applied  to  any  corporation,  a
certificate  executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice  presidents and by its chief
financial  officer or its treasurer;  provided that every Officers'  Certificate
with respect to the compliance  with a condition  precedent to the making of any
Loans  hereunder  shall  include  (i) a  statement  that the officer or officers
making or giving such  Officers'  Certificate  have read such  condition and any
definitions or other provisions  contained in this Agreement  relating  thereto,
(ii) a statement  that,  in the opinion of the  signers,  they have made or have
caused to be made such  examination or  investigation  as is necessary to enable
them to express an informed opinion as to whether or not such condition has been
complied  with,  and (iii) a  statement  as to  whether,  in the  opinion of the
signers, such condition has been complied with; provided further that no officer
of any Loan Party  executing  and  delivering an Officer's  Certificate  in good
faith shall be personally liable under such Officer's Certificate, except to the
extent of fraud, gross negligence or willful misconduct.

         "Operating   Lease"  means,  as  applied  to  any  Person,   any  lease
(including,  without limitation,  leases that may be terminated by the lessee at
any time) of any  property  (whether  real,  personal  or  mixed)  that is not a
Capital Lease other than any such lease under which that Person is the lessor.

         "Operating  Subsidiary"  means  each  Subsidiary  of Parent  other than
Borrower, and "Operating Subsidiaries" means all such Subsidiaries collectively.

         "Parent" means CFP Group, Inc., a Delaware corporation.

         "Parent  Guaranty" means the Parent Guaranty  executed and delivered by
Parent on the Closing  Date,  substantially  in the form of Exhibit XXIV annexed
hereto,  as such Parent  Guaranty may  thereafter  be amended,  supplemented  or
otherwise modified from time to time.

         "Parent Pledge  Agreement" means the Parent Pledge  Agreement  executed
and  delivered  by  Parent on the  Closing  Date,  substantially  in the form of
Exhibit XXV annexed  hereto,  as such Parent Pledge  Agreement may thereafter be
amended, supplemented or otherwise modified from time to time.

         "Parent  Security   Agreement"  means  the  Parent  Security  Agreement
executed and delivered by Parent on the Closing Date,  substantially in the form
of Exhibit XXVI

                                       30
<PAGE>

annexed  hereto,  as such Parent  Security  Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.

         "PBGC" means the Pension Benefit Guaranty  Corporation or any successor
thereto.

         "PEDFA"  means  the   Pennsylvania   Economic   Development   Financing
Authority,  a public  instrumentality  and body  corporate  and  politic  of the
Commonwealth of Pennsylvania.

         "Pension  Plan"  means  any  Employee   Benefit  Plan,   other  than  a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.

         "Permitted  Encumbrances" means the following types of Liens (excluding
any such Lien imposed  pursuant to Section  401(a)(29) or 412(n) of the Internal
Revenue  Code or by ERISA,  any such Lien  relating to or imposed in  connection
with any  Environmental  Claim,  and any such Lien  expressly  prohibited by any
applicable terms of any of the Collateral Documents):

                  (i) Liens for taxes,  assessments or  governmental  charges or
         claims the payment of which is not, at the time, required by subsection
         6.3;

                  (ii) statutory  Liens of landlords,  statutory  Liens of banks
         and  rights of  set-off,  statutory  Liens of  carriers,  warehousemen,
         mechanics,  repairmen, workmen and materialmen, and other Liens imposed
         by law, in each case  incurred in the  ordinary  course of business (a)
         for amounts  not yet  overdue or (b) for  amounts  that are overdue and
         that (in the case of any such amounts overdue for a period in excess of
         5 days) are being  contested in good faith by appropriate  proceedings,
         so long as (1) such reserves or other appropriate  provisions,  if any,
         as  shall  be  required  by GAAP  shall  have  been  made  for any such
         contested  amounts,  and (2) in the case of a Lien with  respect to any
         portion  of  the  Collateral,  such  contest  proceedings  conclusively
         operate to stay the sale of any portion of the Collateral on account of
         such Lien;

                  (iii) Liens  incurred or deposits made in the ordinary  course
         of business in  connection  with  workers'  compensation,  unemployment
         insurance  and  other  types  of  social  security,  or to  secure  the
         performance of tenders, statutory obligations, surety and appeal bonds,
         bids, leases,  government contracts,  trade contracts,  performance and
         return-of-money  bonds  and other  similar  obligations  (exclusive  of
         obligations  for  the  payment  of  borrowed  money),  so  long  as  no
         foreclosure,  sale or  similar  proceedings  have been  commenced  with
         respect to any portion of the Collateral on account thereof;

                                       31
<PAGE>

                  (iv) any attachment or judgment Lien not constituting an Event
         of Default under subsection 8.8;

                  (v) leases or subleases granted to third parties in accordance
         with  any  applicable  terms  of  the  Collateral   Documents  and  not
         interfering  in any material  respect with the ordinary  conduct of the
         business  of Borrower or any of its  Subsidi  aries or  resulting  in a
         material  diminution in the value of any Collateral as security for the
         Obligations;

                  (vi) easements,  rights-of-way,  restrictions,  encroachments,
         and other minor defects or  irregularities in title, in each case which
         do not and will not interfere in any material respect with the ordinary
         conduct of the  business  of  Borrower  or any of its  Subsidiaries  or
         result  in a  material  diminution  in the value of any  Collateral  as
         security for the Obligations and exceptions to title set forth on title
         reports delivered to Administrative Agent on the Closing Date;

                  (vii) any (a) interest or title of a lessor or sublessor under
         any lease, (b) restriction or encumbrance that the interest or title of
         such lessor or sublessor may be subject to, or (c) subordination of the
         interest of the lessee or sublessee under such lease to any restriction
         or encumbrance  referred to in the preceding clause (b), so long as the
         holder of such  restriction  or  encumbrance  agrees to  recognize  the
         rights of such lessee or sublessee under such lease;

                  (viii)  Liens  arising  from filing UCC  financing  statements
         relating solely to leases permitted by this Agreement;

                  (ix) Liens in favor of customs and revenue authorities arising
         as a matter of law to secure  payment of customs  duties in  connection
         with the importation of goods;

                  (x) any zoning or similar  law or right  reserved to or vested
         in any governmental  office or agency to control or regulate the use of
         any real property;

                  (xi)  Liens  securing   obligations  (other  than  obligations
         representing   Indebtedness   for  borrowed  money)  under   operating,
         reciprocal  easement or similar agreements entered into in the ordinary
         course of business of Borrower and its Subsidiaries; and

                  (xii) licenses of patents,  trademarks and other  intellectual
         property  rights granted by Borrower or any of its  Subsidiaries in the
         ordinary course of business and not interfering in any material respect
         with  the  ordinary  conduct  of  the  business  of  Borrower  or  such
         Subsidiary.

                                       32
<PAGE>

         "Permitted  Liens"  means the Liens  permitted  pursuant to  subsection
7.2A.

         "Person"  means and includes  natural  persons,  corporations,  limited
partnerships,   general  partnerships,   limited  liability  companies,  limited
liability  partnerships,  joint stock companies,  Joint Ventures,  associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations,  whether or not legal entities, and governments (whether federal,
state or local,  domestic  or  foreign,  and  including  political  subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.

         "PIDA  Loan"  means  the  loans in the  aggregate  principal  amount of
$1,750,000 to be made by the Pennsylvania Industrial Development Authority after
the  Closing   Date,   in  form  and  substance   reasonably   satisfactory   to
Administrative Agent and the Requisite Lenders.

         "PIDC Loan"  means the loans in the  aggregate  principal  amount of at
least $750,000 to be made by the Pennsylvania Industrial Development Corporation
after  the  Closing  Date,  in form and  substance  reasonably  satisfactory  to
Administrative Agent and the Requisite Lenders.

         "Pledged Collateral" means,  collectively,  the "Pledged Collateral" as
defined  in the Parent  Pledge  Agreement,  Borrower  Pledge  Agreement  and the
Subsidiary Pledge
Agreements.

         "Potential  Event of Default"  means a condition  or event that,  after
notice or lapse of time or both, would constitute an Event of Default.

         "Preferred  Stock  Redemption"  means the  redemption  or repurchase by
Parent of up to 3,528  shares of the  Series A  Preferred  Stock of  Parent,  in
accordance with Parent's  Certificate of  Incorporation  on or prior to June 30,
1997 for an aggregate amount not to exceed $1,225,000.

         "Prepayment  Date" has the meaning  assigned to that term in subsection
2.4B(iv)(c).

         "Prepayment Notice" has the meaning assigned to that term in subsection
2.4B(iv)(c).

         "Prime  Rate" means the rate that  NationsBank  announces  from time to
time as its prime lending  rate, as in effect from time to time.  The Prime Rate
is a reference rate and does not  necessarily  represent the lowest or best rate
actually  charged  to any  customer.  NationsBank  or any other  Lender may make
commercial  loans or other  loans at rates of  interest  at,  above or below the
Prime Rate.

                                       33
<PAGE>

         "Pro Rata Share" means (i) with respect to all  payments,  computations
and other  matters  relating to the Term Loans  Commitment  or Term Loans of any
Lender, the percentage obtained by dividing (x) the outstanding principal amount
of the Term Loans of that Lender by (y) the  aggregate  principal  amount of all
Term Loans of all Lenders,  (ii) with respect to all payments,  computations and
other matters  relating to the Revolving Loan  Commitment or the Revolving Loans
of any  Lender  or any  Letters  of  Credit  issued  or  participations  therein
purchased by any Lender or the IRB Reimbursement Agreement or any participations
in any Swing Line Loans  purchased  by any Lender,  the  percentage  obtained by
dividing (x) the  Revolving  Loan  Exposure of that Lender by (y) the  aggregate
Revolving  Loan Exposure of all Lenders,  and (iii) for all other  purposes with
respect to each Lender,  the percentage  obtained by dividing (x) the sum of the
Term Loans of that Lender plus the Revolving Loan Exposure of that Lender by (y)
the sum of the aggregate Term Loans of all Lenders plus the aggregate  Revolving
Loan Exposure of all Lenders, in any such case as the applicable  percentage may
be adjusted as a result of assignments  permitted  pursuant to subsection  10.1.
The initial Pro Rata Share of each Lender for  purposes of each of clauses  (i),
(ii) and (iii) of the preceding  sentence is set forth opposite the name of that
Lender in Schedule 2.1 annexed hereto.

         "PTO"  means the  United  States  Patent  and  Trademark  Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Administrative Agent, desirable in order to create or perfect Liens on any IP
Collateral.

         "Purchase Price Adjustment Payments" means any and all Cash received by
Borrower  or any other Loan Party  pursuant  to the  purchase  price  adjustment
provisions of the Acquisition Agreement.

         "QF Acquisition" means QF Acquisition Corp., a Delaware corporation.

         "QF Management" means QF Management Corp., a Delaware corporation.

         "Quality  Foods,  L.P." means Quality Foods,  L.P., a Delaware  limited
partnership.

         "Real Property Asset" means, at any time of determination, any interest
then owned by any Loan Party in any real property.

         "Recorded  Leasehold  Interest" means a Leasehold Property with respect
to which a Record  Document (as  hereinafter  defined) has been  recorded in all
places necessary or desirable, in Administrative Agent's reasonable judgment, to
give constructive  notice of such Leasehold  Property to third-party  purchasers
and  encumbrancers  of  the  affected  real  property.   For  purposes  of  this
definition,  the term "Record  Document"  means,  with respect to any  Leasehold
Property,  (a) the lease  evidencing  such  Leasehold  Property or a  memorandum
thereof,  executed and

                                       34
<PAGE>

acknowledged  by the owner of the affected real property,  as lessor,  or (b) if
such Leasehold  Property was acquired or subleased from the holder of a Recorded
Leasehold Interest, the applicable assignment or sublease document, executed and
acknowledged  by such  holder,  in each  case in form  sufficient  to give  such
constructive   notice  upon   recordation   and  otherwise  in  form  reasonably
satisfactory to Administrative Agent.

         "Refunded  Swing Line Loans" has the  meaning  assigned to that term in
subsection 2.1A(v).

         "Register" has the meaning assigned to that term in subsection 2.1D.

         "Regulation  D" means  Regulation  D of the Board of  Governors  of the
Federal Reserve System, as in effect from time to time.

         "Reimbursement   Date"  has  the  meaning  assigned  to  that  term  in
subsection 3.3B.

         "Related Agreements" means,  collectively,  the Acquisition  Documents,
the Senior  Guaranteed  Note Documents,  the  Subordinated  Note Documents,  the
Stockholders  Agreement and all material  agreements  entered into in connection
with the IRB Debt,
PIDA Loan, PIDC Loan or any loan from MELF to any Loan Party.

         "Release"  means  any  release,  spill,  emission,   leaking,  pumping,
pouring, injection, escaping, deposit, disposal, discharge,  dispersal, dumping,
leaching  or  migration  of  Hazardous  Materials  into the  indoor  or  outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed  receptacles  containing  any Hazardous  Materials),  including the
movement of any  Hazardous  Materials  through the air,  soil,  surface water or
groundwater.

         "Requisite Class Lenders" means, at any time of  determination  for the
Class of Lenders having  outstanding  Term Loans and/or Revolving Loan Exposure,
Lenders having or holding more than 50% of the sum of the aggregate  outstanding
Term Loans of all Lenders  plus the  aggregate  Revolving  Loan  Exposure of all
Lenders.

         "Requisite  Lenders"  means Lenders having or holding more than 66 2/3%
of the sum of the aggregate principal amount of outstanding Term Loans, plus the
aggregate Revolving Loan Exposure of all Lenders.

         "Responsible  Officer" means any senior financial officer and any other
officer of Parent, Borrower or any of their Subsidiaries with responsibility for
the administration of the relevant portion of this Agreement.

         "Restricted   Junior   Payment"   means  (i)  any   dividend  or  other
distribution, direct or indirect, on account of any shares of any class of stock
of Borrower or

                                       35
<PAGE>

Parent now or hereafter outstanding,  except a dividend payable solely in shares
of that  class of stock  to the  holders  of that  class,  (ii) any  redemption,
retirement,  sinking fund or similar payment,  purchase or other acquisition for
value,  direct or  indirect,  of any shares of any class of stock of Borrower or
Parent now or hereafter  outstanding,  (iii) any payment  made to retire,  or to
obtain the surrender of, any  outstanding  warrants,  options or other rights to
acquire  shares of any class of stock of  Borrower  or Parent  now or  hereafter
outstanding, (iv) any payment or prepayment of principal of, premium, if any, or
interest  on,  or  redemption,   purchase,  retirement,   defeasance  (including
in-substance or legal defeasance),  sinking fund or similar payment with respect
to, any Senior  Guaranteed Notes and any Subordinated  Notes and (v) any payment
made to First  Atlantic  Capital,  Ltd. or any of its  Affiliates  in respect of
management   consulting  or  other  services   provided  to  Parent  and/or  its
Subsidiaries.

         "Restructuring" means the following transactions,  as a result of which
substantially  all of the assets and  liabilities  of Quality  Foods,  L.P. were
transferred  to and assumed by QF  Acquisition:  (i) the merger of QF Management
with  and  into  QF  Acquisition   with  QF  Acquisition   being  the  surviving
corporation;  (ii) the  contribution  by  Parent  and  Borrower  of all  limited
partnership  interests of Quality Foods, L.P. to QF Acquisition,  as a result of
which QF Acquisition holds all of the limited  partnership  interests of Quality
Foods,  L.P.; (iii) the transfer of all assets and liabilities of Quality Foods,
L.P. to QF  Acquisitions;  and (iv) the  liquidation  and dissolution of Quality
Foods,   L.P.,  all  on  terms  and  conditions   reasonably   satisfactory   to
Administrative Agent and Requisite Lenders.

         "Revolving Letter of Credit" or "Revolving Letters of Credit" means the
Letters of Credit  issued or to be issued by Issuing  Lender for the  account of
Borrower   pursuant  to  subsection   3.1A(1)  for  the  purpose  of  supporting
obligations of Borrower and or any of its Subsidiaries in the ordinary course of
business of Borrower or such Subsidiary.

         "Revolving   Letter  of  Credit  Usage"  means,   as  at  any  date  of
determination,  the sum of (i) the maximum  aggregate  amount which is or at any
time thereafter may become available for drawing under all Revolving  Letters of
Credit then  outstanding  plus (ii) the aggregate  amount of all drawings  under
Revolving  Letters  of Credit  honored by  Issuing  Lender  and not  theretofore
reimbursed by Borrower  (including any such reimbursement out of the proceeds of
Revolving  Loans  pursuant to subsection  3.3B) plus (iii) the Maximum  Exposure
Under IRB Reimbursement Agreement.

         "Revolving  Loan  Commitment"  means the commitment of a Lender to make
Revolving Loans to Borrower pursuant to subsection 2.1A(iv), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.

         "Revolving Loan Commitment Termination Date" means June 30, 2002.

                                       36
<PAGE>

         "Revolving Loan Exposure"  means,  with respect to any Lender as of any
date of  determination  (i)  prior  to the  termination  of the  Revolving  Loan
Commitments,  that  Lender's  Revolving  Loan  Commitment  and  (ii)  after  the
termination  of the  Revolving  Loan  Commitments,  the sum of (a) the aggregate
outstanding  principal  amount of the Revolving Loans of that Lender plus (b) in
the case of Issuing Lender, the aggregate  Revolving Letter of Credit Usage (net
of any  participations  purchased by other Lenders in any Letter of Credit,  the
IRB  Reimbursement  Agreement or any unreimbursed  drawings under such Letter of
Credit  or IRB  Reimbursement  Advance)  plus (c) the  aggregate  amount  of all
participations  purchased by that Lender in any  outstanding  Letters of Credit,
the IRB Reimbursement  Agreement or any unreimbursed  drawings under any Letters
of  Credit  or IRB  Reimbursement  Advance  plus (d) in the  case of Swing  Line
Lender, the aggregate  outstanding principal amount of all Swing Line Loans (net
of any participations therein purchased by other Lenders) plus (e) the aggregate
amount of all  participations  purchased by that Lender in any outstanding Swing
Line Loans.

         "Revolving  Loans" means the Loans made by Lenders to Borrower pursuant
to subsection 2.1A(iv).

         "Revolving  Notes" means (i) the  promissory  notes of Borrower  issued
pursuant to subsection  2.1E(i)(c)  on the Closing Date and (ii) any  promissory
notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection  with  assignments  of the Revolving Loan  Commitments  and Revolving
Loans of any  Lenders,  in each case  substantially  in the form of Exhibit  VII
annexed hereto, as they may be amended,  supplemented or otherwise modified from
time to time.

         "Securities" means any stock,  shares,  partnership  interests,  voting
trust   certificates,   certificates  of  interest  or   participation   in  any
profit-sharing agreement or arrangement,  options,  warrants, bonds, debentures,
notes, or other evidences of  indebtedness,  secured or unsecured,  convertible,
subordinated  or  otherwise,  or in general any  instruments  commonly  known as
"securities"  or any  certificates  of  interest,  shares or  participations  in
temporary or interim  certificates  for the purchase or  acquisition  of, or any
right to subscribe to, purchase or acquire, any of the foregoing.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.

         "Senior  Guaranteed Note Documents" means the Senior  Guaranteed Notes,
the indenture pursuant to which the Senior Guaranteed Notes were issued, and all
other material  agreements entered into in connection with the Senior Guaranteed
Notes, as any of such Senior  Guaranteed Note Documents may be amended from time
to time to the extent permitted under subsection 7.13B.

                                       37
<PAGE>

         "Senior Guaranteed Notes" means the Senior Guaranteed Notes of Borrower
in an aggregate  amount of  $115,000,000  issued on January 28, 1997 pursuant to
the Senior  Guaranteed Note Documents,  as such Senior  Guaranteed  Notes may be
amended from time to time to the extent permitted under subsection 7.13B.

         "Solvent"  and  "Solvency"  mean,  with  respect  to  any  Person  on a
particular  date,  that on such date (a) the fair value of the  property of such
Person is  greater  than the total  amount of  liabilities,  including,  without
limitation,  contingent  liabilities,  of  such  Person,  (b) the  present  fair
saleable  value of the assets of such  Person is not less than the  amount  that
will be required to pay the  probable  liability  of such Person on its debts as
they become  absolute  or matured,  (c) such Person does not intend to, and does
not believe  that it will,  incur  debts and  liabilities  beyond such  Person's
ability to pay as such debts and  liabilities  mature and (d) such Person is not
engaged in a business or a transaction, and is not about to engage in a business
or  a  transaction,  for  which  such  Person's  property  would  constitute  an
unreasonably small capital.

         "Stockholders  Agreement" means the Stockholders Agreement executed and
delivered  by Parent  and  certain  of its  stockholders  on the  Closing  Date,
delivered  to  Administrative  Agent and  Lenders on the Closing  Date,  as such
Stockholders  Agreement  may  thereafter be amended,  supplemented  or otherwise
modified from time to time to the extent permitted under subsection 7.13B.

         "Subordinated Note Documents" the Subordinated Notes and all material
agreements  entered into in connection with the Subordinated  Notes in such form
and substance  reasonably  satisfactory  to  Administrative  Agent and Requisite
Lenders,  as any of such Subordinated Note Documents may be amended from time to
time to the extent permitted under subsection 7.13A.

         "Subordinated  Notes"  means the  promissory  notes of  Borrower or its
Subsidiaries  issued  after the Closing Date in an  aggregate  principal  amount
permitted  under  subsection   7.1(xi)  pursuant  to  documentation   containing
maturities, amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms which taken as a whole are no less favorable
to Lenders or Borrower and its Subsidiaries than the corresponding  terms in the
Bridge Financing  Documents;  provided that in no event shall such  Subordinated
Notes contain any provision  granting holders thereof the rights with respect to
amendments  to the Loan  Documents  set  forth in  Section  9.16(a)  of the note
purchase  agreement  relating  to the Bridge  Notes as in effect on the  Closing
Date.

         "Subsidiary" of any Person at any time shall mean (i) any  corporation,
joint venture, limited liability company, trust, estate or other entity of which
50% or more (by number of shares or number of votes) of the  outstanding  Voting
Stock is at such time owned directly or indirectly by such Person or one or more
of such  Person's  Subsidiaries,  or any  partnership  of which such Person is a
general partner or of which

                                       38
<PAGE>

50% or more of the  partnership  interests is at the time directly or indirectly
owned by such Person or one or more of such Person's  Subsidiaries,  or (ii) any
corporation,  trust,  partnership or other entity which is controlled or capable
of  being  controlled  by such  Person  and/or  one or  more  of  such  Person's
Subsidiaries.

         "Subsidiary  Guarantor"  means any Subsidiary of Borrower that executes
and delivers a  counterpart  of the  Subsidiary  Guaranty on the Closing Date or
from time to time thereafter pursuant to subsection 6.8.

         "Subsidiary  Guaranty"  means  the  Subsidiary  Guaranty  executed  and
delivered  by existing  Subsidiaries  of Borrower on the Closing  Date and to be
executed and delivered by additional  Subsidiaries of Borrower from time to time
thereafter in  accordance  with  subsection  6.8,  substantially  in the form of
Exhibit XIX  annexed  hereto,  as such  Subsidiary  Guaranty  may  hereafter  be
amended, supplemented or otherwise modified from time to time.

         "Subsidiary  Patent Security  Agreement"  means each Subsidiary  Patent
Security Agreement executed and delivered by an existing Subsidiary Guarantor on
the  Closing  Date  or  executed  and  delivered  by any  additional  Subsidiary
Guarantor from time to time  thereafter in accordance  with  subsection  6.8, in
each case  substantially  in the form of Exhibit  XXII annexed  hereto,  as such
Subsidiary Patent Security  Agreement may be amended,  supplemented or otherwise
modified from time to time, and "Subsidiary  Patent Security  Agreements"  means
all such Subsidiary Patent Security Agreements, collectively.

         "Subsidiary  Pledge  Agreement" means each Subsidiary  Pledge Agreement
executed and delivered by an existing  Subsidiary  Guarantor on the Closing Date
(if any) or executed and delivered by any additional  Subsidiary  Guarantor from
time  to time  thereafter  in  accordance  with  subsection  6.8,  in each  case
substantially  in the form of  Exhibit  XX annexed  hereto,  as such  Subsidiary
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time,  and  "Subsidiary  Pledge  Agreements"  means all such  Subsidiary  Pledge
Agreements, collectively.

         "Subsidiary   Security   Agreement"  means  each  Subsidiary   Security
Agreement  executed  and  delivered by an existing  Subsidiary  Guarantor on the
Closing Date or executed and delivered by any  additional  Subsidiary  Guarantor
from time to time  thereafter in accordance  with  subsection  6.8, in each case
substantially  in the form of Exhibit XXI  annexed  hereto,  as such  Subsidiary
Security Agreement may be amended,  supplemented or otherwise modified from time
to time, and "Subsidiary Security Agreements" means all such Subsidiary Security
Agreements, collectively.

         "Subsidiary   Trademark  Security   Agreement"  means  each  Subsidiary
Trademark Security  Agreement  executed and delivered by an existing  Subsidiary
Guarantor  on the  Closing  Date or  executed  and  delivered  by an  additional
Subsidiary  Guarantor from

                                       39
<PAGE>

time  to time  thereafter  in  accordance  with  subsection  6.8,  in each  case
substantially  in the form of Exhibit XXIII annexed  hereto,  as such Subsidiary
Trademark Security Agreement amy be amended,  supplemented or otherwise modified
from time to time, and "Subsidiary Trademark Security Agreements" means all such
Subsidiary Trademark Security Agreements, collectively.

         "Supplemental  Collateral  Agent" has the meaning assigned to that term
in subsection 9.1B.

         "Swing  Line  Lender"  means  NationsBank,  or any Person  serving as a
successor  Administrative Agent hereunder,  in its capacity as Swing Line Lender
hereunder.

         "Swing Line Loan Commitment"  means the commitment of Swing Line Lender
to make Swing Line Loans to Borrower pursuant to subsection 2.1A(iii).

         "Swing  Line  Loans"  means  the  Loans  made by Swing  Line  Lender to
Borrower pursuant to subsection 2.1A(iii).

         "Swing Line Note"  means (i) the  promissory  note of  Borrower  issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note
issued by Borrower to any successor  Administrative  Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case  substantially in
the form of Exhibit VIII annexed hereto,  as it may be amended,  supplemented or
otherwise modified from time to time.

         "Tax" or "Taxes" means any present or future tax, levy,  impost,  duty,
charge,  fee,  deduction or  withholding of any nature and whatever  called,  by
whomsoever, on whomsoever and wherever imposed, levied,  collected,  withheld or
assessed;  provided  that "Tax on the overall  net income" of a Person  shall be
construed  as a  reference  to a tax imposed by the  jurisdiction  in which that
Person is organized or in which that Person's  principal office (and/or,  in the
case of a Lender,  its  lending  office)  is  located  or in which  that  Person
(and/or,  in the case of a Lender,  its  lending  office)  is deemed to be doing
business on all or part of the net income,  profits or gains (whether worldwide,
or only insofar as such income,  profits or gains are  considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender,  its lending  office),  including a franchise  tax that is
measured by net income.

         "Term Loan  Commitment"  means the  commitment of a Lender to make Term
Loans to Borrower pursuant to subsection  2.1A(i),  and "Term Loans Commitments"
means such commitments of all Lenders in the aggregate.

         "Term  Loans"  means the Loans made by Lenders to Borrower  pursuant to
subsection 2.1A(i).

                                       40
<PAGE>

         "Term Notes" means (i) the promissory notes of Borrower issued pursuant
to  subsection  2.1E(i)(a)  on the Closing  Date and (ii) any  promissory  notes
issued by Borrower  pursuant  to the last  sentence  of  subsection  10.1B(i) in
connection  with  assignments of the Term Loan  Commitments or Term Loans of any
Lenders,  in each case  substantially in the form of Exhibit V-A annexed hereto,
as they may be amended, supplemented or otherwise modified from time to time.

         "Title  Company"  means,  collectively,  First American Title Insurance
Company  and/or  one  or  more  other  title  insurance   companies   reasonably
satisfactory to Administra tive Agent.

         "Total Utilization of Revolving Loan Commitments" means, as at any date
of  determination,  the  sum  of  (i)  the  aggregate  principal  amount  of all
outstanding  Revolving Loans (other than Revolving Loans made for the purpose of
repaying any Refunded  Swing Line Loans or  reimbursing  Issuing  Lender for any
amount drawn under any  Revolving  Letter of Credit but not yet so applied) plus
(ii) the aggregate  principal  amount of all  outstanding  Swing Line Loans plus
(iii) the Revolving Letter of Credit Usage.

         "Transaction  Costs"  means the fees,  costs and  expenses  payable  by
Borrower  or  Parent  on or  before  the  Closing  Date in  connection  with the
transactions contemplated by the Loan Documents and the Related Agreements.

         "UCC" means the Uniform  Commercial  Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.

         "Voting  Stock" means capital stock issued by, or equivalent  interests
in, any  Person,  the  holders of which are  ordinarily,  in the  absence of any
contingency,  entitled  to vote  for  the  election  of  directors  (or  persons
performing similar  functions) of such Person,  even though the right so to vote
has been suspended by the happening of such a contingency.

         "Withdrawal  Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.

1.2      Accounting  Terms;  Utilization  of GAAP for  Purposes of  Calculations
         Under Agreement.

         Except  as  otherwise   expressly  provided  in  this  Agreement,   all
accounting terms not otherwise  defined herein shall have the meanings  assigned
to them in conformity  with GAAP.  Financial  statements  and other  information
required to be delivered by Borrower to Lenders  pursuant to clauses (i),  (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance  with GAAP as
in effect  at the time of such  preparation  (and  delivered  together  with the
reconciliation  statements provided for in

                                       41
<PAGE>

subsection 6.1(v)).  Calculations in connection with the definitions,  covenants
and other provisions of this Agreement shall utilize  accounting  principles and
policies  in  conformity  with those used to prepare  the  financial  statements
referred to in subsection 5.3.

1.3      Other Definitional Provisions and Rules of Construction.

         A. Any of the terms defined  herein may,  unless the context  otherwise
requires, be used in the singular or the plural, depending on the reference.

         B. References to "Sections" and "subsections"  shall be to Sections and
subsections,  respectively,  of this  Agreement  unless  otherwise  specifically
provided.

         C. The use herein of the word "include" or "including",  when following
any general  statement,  term or matter,  shall not be  construed  to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters,  whether or not  nonlimiting
language  (such as  "without  limitation"  or "but not  limited  to" or words of
similar  import) is used with reference  thereto,  but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.


Section 2.         AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

2.1      Commitments; Making of Loans; the Register; Notes.

         A.  Commitments.  Subject to the terms and conditions of this Agreement
and in reliance upon the  representations  and warranties of Parent and Borrower
herein set forth, each Lender (i) made the Loans described in subsection 2.1A(i)
on the Closing Date and (ii) hereby severally agrees to make the Loans described
in  subsections  2.1A(ii) and Swing Line Lender  hereby agrees to make the Loans
described in subsection 2.1A(iii).

                  (i)  Term  Loans.  Term  Loans  were  made  in  the  aggregate
         principal amount of $10,000,000 on December 31, 1996 under the Existing
         Agreement. The amount of each Lender's Term Loans is set forth opposite
         its name on Schedule 2.1 annexed  hereto.  Amounts  borrowed under this
         subsection  2.1A(i)  and  subsequently  repaid  or  prepaid  may not be
         reborrowed.

                  (ii) Revolving Loans. Each Lender severally agrees, subject to
         the  limitations  set forth below with respect to the maximum amount of
         Revolving Loans permitted to be outstanding  from time to time, to lend
         to Borrower  from time to time during the period from the Closing  Date
         to but excluding  the

                                       42
<PAGE>

         Revolving  Loan  Commitment  Termination  Date an aggregate  amount not
         exceeding its Pro Rata Share of the  aggregate  amount of the Revolving
         Loan  Commitments to be used for the purposes  identified in subsection
         2.5B. The original amount of each Lender's Revolving Loan Commitment is
         set forth  opposite  its name on Schedule  2.1  annexed  hereto and the
         aggregate   original  amount  of  the  Revolving  Loan  Commitments  is
         $20,000,000;  provided that the Revolving  Loan  Commitments of Lenders
         shall be adjusted to give effect to any  assignments  of the  Revolving
         Loan Commitments  pursuant to subsection  10.1B; and provided,  further
         that the amount of the Revolving Loan Commitments shall be reduced from
         time to time by the amount of any  reductions  thereto made pursuant to
         subsection  2.4B(ii).  Each Lender's  Revolving Loan  Commitment  shall
         expire  on the  Revolving  Loan  Commitment  Termination  Date  and all
         Revolving  Loans and all other amounts owed  hereunder  with respect to
         the Revolving Loans and the Revolving Loan Commitments shall be paid in
         full no later than that date.  Amounts  borrowed under this  subsection
         2.1A(iv) may be repaid and  reborrowed  to but  excluding the Revolving
         Loan Commitment Termination Date.

                  Anything   contained   in  this   Agreement  to  the  contrary
         notwithstanding, the Revolving Loans and the Revolving Loan Commitments
         shall be subject  to the  limitation  that in no event  shall the Total
         Utilization  of  Revolving  Loan  Commit  ments at any time  exceed the
         lesser of (1) the Revolving Loan Commitments then in effect and (2) the
         Borrowing Base then in effect.

                  (iii)  Swing Line  Loans.  Swing Line  Lender  hereby  agrees,
         subject to the  limitations set forth below with respect to the maximum
         amount of Swing Line Loans  permitted  to be  outstanding  from time to
         time, to make a portion of the Revolving Loan Commitments  available to
         Borrower  from time to time during the period from the Closing  Date to
         but excluding the Revolving Loan Commitment  Termination Date by making
         Swing Line Loans to Borrower in an aggregate  amount not  exceeding the
         amount of the Swing Line Loan  Commitment  to be used for the  purposes
         identified in subsection 2.5B, notwithstanding the fact that such Swing
         Line  Loans,  when  aggregated  with  Swing Line  Lender's  outstanding
         Revolving Loans and Swing Line Lender's Pro Rata Share of the Revolving
         Letter of Credit Usage then in effect,  may exceed Swing Line  Lender's
         Revolving Loan  Commitment.  The original amount of the Swing Line Loan
         Commitment is $5,000,000;  provided that any reduction of the Revolving
         Loan Commitments made pursuant to subsection 2.4B(ii) which reduces the
         aggregate  Revolving  Loan  Commitments to an amount less than the then
         current  amount of the Swing Line Loan  Commitment  shall  result in an
         automatic  corresponding reduction of the Swing Line Loan Commitment to
         the amount of the Revolving Loan  Commitments,  as so reduced,  without
         any further  action on the part of  Borrower,  Administrative  Agent or
         Swing Line Lender.  The Swing Line Loan Commitment  shall expire on the
         Revolving Loan Commitment Termination Date and all Swing Line Loans and
         all other amounts owed  hereunder  with respect to the Swing Line Loans
         shall be paid in full no later than that date.  Amounts  borrowed under
         this subsection

                                       43
<PAGE>

         2.1A(iii)  may be repaid and  reborrowed to but excluding the Revolving
         Loan Commitment Termination Date.

                  Anything   contained   in  this   Agreement  to  the  contrary
         notwithstanding,   the  Swing  Line  Loans  and  the  Swing  Line  Loan
         Commitment  shall be subject to the  limitation  that in no event shall
         the Total Utilization of Revolving Loan Commit ments at any time exceed
         the Revolving Loan Commitments then in effect.

                  With  respect  to any Swing  Line  Loans  which  have not been
         voluntarily prepaid by Borrower pursuant to subsection  2.4B(i),  Swing
         Line  Lender  may,  at any time in its sole  and  absolute  discretion,
         deliver to  Administrative  Agent (with a copy to  Borrower),  no later
         than 11:00  A.M.  (Dallas,  Texas  time) on the first  Business  Day in
         advance of the proposed  Funding  Date, a notice (which shall be deemed
         to be a Notice of Borrowing  given by Borrower)  requesting  Lenders to
         make  Revolving  Loans that are Base Rate Loans on such Funding Date in
         an amount  equal to the amount of such Swing Line Loans (the  "Refunded
         Swing Line Loans")  outstanding  on the date such notice is given which
         Swing Line Lender  requests  Lenders to prepay.  Anything  contained in
         this  Agreement  to the contrary  notwithstanding,  (i) the proceeds of
         such Revolving Loans made by Lenders other than Swing Line Lender shall
         be immediately  delivered by Administrative  Agent to Swing Line Lender
         (and not to Borrower) and applied to repay a  corresponding  portion of
         the Refunded Swing Line Loans and (ii) on the day such Revolving  Loans
         are made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line
         Loans shall be deemed to be paid with the proceeds of a Revolving  Loan
         made by Swing  Line  Lender,  and such  portion of the Swing Line Loans
         deemed to be so paid shall no longer be outstanding as Swing Line Loans
         and shall no longer  be due  under  the Swing  Line Note of Swing  Line
         Lender  but  shall  instead  constitute  part of  Swing  Line  Lender's
         outstanding  Revolving  Loans and shall be due under the Revolving Note
         of Swing Line Lender.  Borrower hereby authorizes  Administrative Agent
         and Swing Line Lender to charge Borrower's accounts with Administrative
         Agent and Swing Line  Lender (up to the amount  available  in each such
         account)  in order to  immediately  pay Swing Line Lender the amount of
         the  Refunded  Swing  Line Loans to the  extent  the  proceeds  of such
         Revolving Loans made by Lenders, including the Revolving Loan deemed to
         be made by Swing Line Lender,  are not  sufficient to repay in full the
         Refunded  Swing Line Loans.  If any portion of any such amount paid (or
         deemed to be paid) to Swing Line Lender should be recovered by or on
         behalf of Borrower from Swing Line Lender in bankruptcy,  by assignment
         for the benefit of  creditors or  otherwise,  the loss of the amount so
         recovered  shall be  ratably  shared  among all  Lenders  in the manner
         contemplated by subsection 10.5.

                  If for any  reason (a)  Revolving  Loans are not made upon the
         request of Swing Line Lender as provided in the  immediately  preceding
         paragraph  in an amount  sufficient  to repay any amounts owed to Swing
         Line Lender in respect of any  outstanding  Swing Line Loans or (b) the
         Revolving Loan Commitments are

                                       44
<PAGE>

         terminated  at a time when any Swing Line Loans are  outstanding,  each
         Lender  shall be deemed to, and hereby  agrees  to,  have  purchased  a
         participation in such  outstanding  Swing Line Loans in an amount equal
         to its Pro Rata Share (calculated,  in the case of the foregoing clause
         (b),  immediately  prior  to such  termination  of the  Revolving  Loan
         Commitments)  of the unpaid  amount of such  Swing Line Loans  together
         with accrued  interest  thereon.  Upon one  Business  Day's notice from
         Swing Line Lender,  each Lender  shall  deliver to Swing Line Lender an
         amount equal to its respective  participation  in same day funds at the
         Funding  and  Payment  Office.   In  order  to  further  evidence  such
         participation  (and  without  prejudice  to the  effective  ness of the
         participation  provisions set forth above), each Lender agrees to enter
         into a separate  participation  agreement  at the request of Swing Line
         Lender in form and  substance  reasonably  satisfactory  to Swing  Line
         Lender.  In the event any Lender fails to make  available to Swing Line
         Lender the amount of such Lender's  participa  tion as provided in this
         paragraph,  Swing Line Lender  shall be entitled to recover such amount
         on demand from such Lender  together with interest  thereon at the rate
         customarily  used by Swing  Line  Lender for the  correction  of errors
         among banks for three Business Days and thereafter at the Base Rate. In
         the event Swing Line  Lender  receives a payment of any amount in which
         other  Lenders  have  purchased  participations  as  provided  in  this
         paragraph,  Swing Line Lender shall  promptly  distribute  to each such
         other Lender its Pro Rata Share of such payment.

                  Anything  contained  herein to the  contrary  notwithstanding,
         each  Lender's  obligation to make  Revolving  Loans for the purpose of
         repaying any Refunded Swing Line Loans pursuant to the second preceding
         paragraph and each Lender's  obligation to purchase a participation  in
         any unpaid  Swing  Line Loans  pursuant  to the  immediately  preceding
         paragraph shall be absolute and unconditional and shall not be affected
         by any  circumstance,  including  without  limitation  (a) any set-off,
         counter claim, recoupment, defense or other right which such Lender may
         have against  Swing Line  Lender,  Borrower or any other Person for any
         reason  whatsoever;  (b) the occurrence or  continuation of an Event of
         Default or a Potential Event of Default;  (c) any adverse change in the
         business,  operations,  properties,  assets,  condition  (financial  or
         otherwise) or prospects of Borrower or any of its Subsidiaries; (d) any
         breach  of this  Agreement  or any  other  Loan  Document  by any party
         thereto; or (e) any other circumstance,  happening or event whatsoever,
         whether or not  similar  to any of the  foregoing;  provided  that such
         obligations  of each Lender are subject to the condition that (X) Swing
         Line Lender believed in good faith that all conditions  under Section 4
         to the  making of the  applicable  Refunded  Swing  Line Loans or other
         unpaid Swing Line Loans, as the case may be, were satisfied at the time
         such Refunded  Swing Line Loans or unpaid Swing Line Loans were made or
         (Y) the sat  isfaction of any such  condition  not  satisfied  had been
         waived in accordance  with subsection 10.6 prior to or at the time such
         Refunded Swing Line Loans or other unpaid Swing Line Loans were made.

                                       45
<PAGE>

         B. Borrowing Mechanics. Revolving Loans made on any Funding Date (other
than Revolving Loans made pursuant to a request by Swing Line Lender pursuant to
subsection  2.1A(iii) for the purpose of repaying any Refunded Swing Line Loans,
or  Revolving  Loans  made  pursuant  to  subsection  3.3B  for the  purpose  of
reimbursing  Issuing Lender for the amount of a drawing under a Letter of Credit
or an IRB  Reimbursement  Advance)  shall be in an aggregate  minimum  amount of
$2,000,000 and integral multiples of $500,000 in excess of that amount; provided
that  Revolving  Loans made on any Funding Date as Eurodollar  Rate Loans with a
particular Interest Period shall be in an aggregate minimum amount of $2,000,000
and integral  multiples  of $500,000 in excess of that amount.  Swing Line Loans
made on any Funding Date shall be in an aggregate minimum amount of $500,000 and
integral  multiples  of $500,000  in excess of that  amount.  Whenever  Borrower
desires that Lenders make  Revolving  Loans it shall  deliver to  Administrative
Agent a Notice of  Borrowing  no later than 11:00 A.M.  (Dallas,  Texas time) at
least three  Business Days in advance of the proposed  Funding Date (in the case
of a  Eurodollar  Rate  Loan) or at least one  Business  Day in  advance  of the
proposed  Funding  Date (in the case of a Base  Rate  Loan).  Whenever  Borrower
desires  that Swing Line  Lender  make a Swing  Line Loan,  it shall  deliver to
Administrative  Agent a Notice of  Borrowing  no later than 11:00 A.M.  (Dallas,
Texas time) on the proposed  Funding Date. The Notice of Borrowing shall specify
(i) the proposed  Funding Date (which shall be a Business Day),  (ii) the amount
and type of Loans requested,  (iii) in the case of Revolving Loans, whether such
Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (iv) in the case of
any Loans  requested to be made as Eurodollar Rate Loans,  the initial  Interest
Period requested therefor. Term Loans and Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar  Rate Loans in the manner provided
in  subsection  2.2D.  In lieu  of  delivering  the  above-described  Notice  of
Borrowing,  Borrower  may give  Administrative  Agent  telephonic  notice by the
required time of any proposed  borrowing  under this subsection  2.1B;  provided
that such notice shall be promptly  confirmed in writing by delivery of a Notice
of Borrowing to Administrative Agent on or before the applicable Funding Date.

         Neither  Administrative  Agent nor any Lender shall incur any liability
to  Borrower  in  acting  upon any  telephonic  notice  referred  to above  that
Administrative  Agent  believes  in good  faith  to have  been  given  by a duly
authorized officer or other person authorized to borrow on behalf of Borrower or
for otherwise  acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders  in  accordance  with this  Agreement  pursuant  to any such
telephonic notice Borrower shall have effected Loans hereunder.

         Borrower shall notify  Administrative Agent prior to the funding of any
Loans in the event that any of the  matters to which  Borrower  is  required  to
certify in the  applicable  Notice of Borrowing is no longer true and correct as
of the  applicable  Funding Date, and the acceptance by Borrower of the proceeds
of  any  Loans  shall  constitute  a  re-certification  by  Borrower,  as of the
applicable  Funding  Date,  as to

                                       46
<PAGE>

the matters to which Borrower is required to certify in the applicable Notice of
Borrowing.

         Except as  otherwise  provided in  subsections  2.6B,  2.6C and 2.6G, a
Notice of Borrowing  for a Eurodollar  Rate Loan (or  telephonic  notice in lieu
thereof)  shall  be   irrevocable  on  and  after  the  related   Interest  Rate
Determination  Date,  and  Borrower  shall  be  bound  to  make a  borrowing  in
accordance therewith.

         C.  Disbursement  of Funds.  All Revolving  Loans under this  Agreement
shall be made by Lenders  simultaneously and proportionately to their respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
default by any other  Lender in that other  Lender's  obligation  to make a Loan
requested  hereunder  nor  shall  the  Commitment  of any  Lender  to  make  the
particular  type of Loan  requested  be  increased or decreased as a result of a
default by any other  Lender in that other  Lender's  obligation  to make a Loan
requested hereunder.  Promptly after receipt by Administrative Agent of a Notice
of Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Administrative  Agent shall notify each Lender or Swing Line Lender, as the case
may be, of the proposed borrowing. Each Lender shall make the amount of its Loan
available to Administrative Agent not later than 2:00 P.M. (Dallas,  Texas time)
on the  applicable  Funding Date, and Swing Line Lender shall make the amount of
its Swing Line Loan available to  Administrative  Agent not later than 2:00 P.M.
(Dallas,  Texas time) on the  applicable  Funding Date, in each case in same day
funds in  Dollars,  at the Funding  and  Payment  Office.  Except as provided in
subsection  2.1A(iii)  with  respect to Revolving  Loans used to repay  Refunded
Swing Line Loans,  or  subsection  3.3B with respect to Revolving  Loans used to
reimburse Issuing Lender for the amount of a drawing under a Letter of Credit or
an IRB  Reimbursement  Advance,  upon  satisfaction  or waiver of the conditions
precedent  specified  in  subsection  4.2,  Administrative  Agent shall make the
proceeds of such Loans  available to Borrower on the applicable  Funding Date by
causing an amount of same day funds in Dollars equal to the proceeds of all such
Loans received by Administrative Agent from Lenders or Swing Line Lender, as the
case may be, to be  credited  to the  account of  Borrower  at the  Funding  and
Payment Office.

         Unless  Administrative  Agent  shall have been  notified  by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative  Agent the amount of such Lender's Loan requested on
such  Funding  Date,  Administrative  Agent may assume that such Lender has made
such  amount  available  to  Administrative  Agent  on  such  Funding  Date  and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Borrower a corresponding  amount on such Funding Date. If such
corresponding  amount is not in fact made available to  Administrative  Agent by
such   Lender,   Administrative   Agent  shall  be  entitled  to  recover   such
corresponding  amount on demand from such Lender together with interest thereon,
for each day from  such  Funding  Date  until  the date  such  amount is paid to
Administrative  Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three  Business Days and  thereafter at the

                                       47
<PAGE>

Base Rate. If such Lender does not pay such corresponding  amount forthwith upon
Administrative  Agent's  demand  therefor,  Administrative  Agent shall promptly
notify Borrower and Borrower shall immediately pay such corresponding  amount to
Administrative  Agent  together  with interest  thereon,  for each day from such
Funding Date until the date such amount is paid to Administrative  Agent, at the
rate  payable  under  this  Agreement  for  Base  Rate  Loans.  Nothing  in this
subsection  2.1C shall be deemed to relieve  any Lender from its  obligation  to
fulfill its  Commitments  hereunder or to prejudice any rights that Borrower may
have against any Lender as a result of any default by such Lender hereunder.

         D.       The Register.

                  (i)  Agent  shall  maintain,  at its  address  referred  to in
         subsection  10.8,  a  register  for the  recordation  of the  names and
         addresses of Lenders and the  Commitments and Loans of each Lender from
         time to time (the  "Register").  The Register  shall be  available  for
         inspection  by Borrower or any Lender at any  reasonable  time and from
         time to time upon reasonable prior notice.

                  (ii)  Agent  shall  record  in  the  Register  the  Term  Loan
         Commitment  and  Revolving  Loan  Commitment  and the Term  Loans,  and
         Revolving  Loans from time to time of each Lender,  the Swing Line Loan
         Commitment  and the Swing  Line  Loans  from time to time of Swing Line
         Lender,  and each  repayment or  prepayment in respect of the principal
         amount of the Term Loans or Revolving Loans of each Lender or the Swing
         Line  Loans  of  Swing  Line  Lender.  Any  such  recordation  shall be
         conclusive  and binding on Borrower  and each Lender,  absent  manifest
         error; provided that failure to make any such recordation, or any error
         in such  recordation,  shall not affect  any  Lender's  Commitments  or
         Borrower's Obligations in respect of any applicable Loans.

                  (iii)  Each  Lender  shall  record  on  its  internal  records
         (including,  without  limitation,  the Notes held by such  Lender)  the
         amount of the Term  Loans and each  Revolving  Loan made by it and each
         payment in respect thereof.  Any such  recordation  shall be conclusive
         and binding on Borrower,  absent manifest error;  provided that failure
         to make any such recordation,  or any error in such recordation,  shall
         not  affect any  Lender's  Commitments  or  Borrower's  Obligations  in
         respect of any  applicable  Loans;  and  provided,  further that in the
         event  of any  inconsistency  between  the  Register  and any  Lender's
         records, the recordations in the Register shall govern.

                  (iv) Borrower, Administrative Agent and Lenders shall deem and
         treat the Persons  listed as Lenders in the Register as the holders and
         owners of the  corresponding  Commitments  and Loans listed therein for
         all  purposes  hereof,  and no  assignment  or  transfer  of  any  such
         Commitment or Loan shall be effective, in each case unless and until an
         Assignment Agreement effecting the assignment or transfer thereof shall
         have been accepted by Administrative

                                       48
<PAGE>

         Agent and recorded in the Register as provided in subsection 10.1B(ii).
         Prior  to such  recordation,  all  amounts  owed  with  respect  to the
         applicable Commitment or Loan shall be owed to the Lender listed in the
         Register as the owner thereof, and any request, authority or consent of
         any Person  who,  at the time of making  such  request  or giving  such
         authority  or consent,  is listed in the  Register as a Lender shall be
         conclusive and binding on any subsequent holder, assignee or transferee
         of the corresponding Commitments or Loans.

                  (v)  Borrower  hereby  designates   NationsBank  to  serve  as
         Borrower's  agent  solely for purposes of  maintaining  the Register as
         provided in this  subsection  2.1D, and Borrower hereby agrees that, to
         the extent  NationsBank  serves in such capacity,  NationsBank  and its
         officers, directors,  employees, agents and affiliates shall constitute
         Indemnitees for all purposes under subsection 10.3.

         E. Notes.  Borrower  executed and  delivered on the Closing Date (i) to
each  Lender  (or to  Administrative  Agent  for that  Lender)  (a) a Term  Note
substantially  in the form of Exhibit V annexed hereto to evidence that Lender's
Term Loans and with  other  appropriate  insertions,  and (b) a  Revolving  Note
substantially  in the form of  Exhibit  VII  annexed  hereto  to  evidence  that
Lender's  Revolving  Loans, in the principal  amount of that Lender's  Revolving
Loan Commitment and with other  appropriate  insertions,  and (ii) to Swing Line
Lender  (or to  Administrative  Agent for Swing  Line  Lender) a Swing Line Note
substantially  in the form of Exhibit VIII annexed hereto to evidence Swing Line
Lender's  Swing  Line  Loans,  in the  principal  amount of the Swing  Line Loan
Commitment and with other appropriate  insertions.  Agent may deem and treat the
payee of any Note as the owner thereof for all purposes  hereof unless and until
an Assignment  Agreement effecting the assignment or transfer thereof shall have
been accepted by Administrative Agent as provided in subsection  10.1B(ii).  Any
request, authority or consent of any person or entity who, at the time of making
such  request or giving such  authority  or  consent,  is the holder of any Note
shall be conclusive and binding on any subsequent holder, assignee or transferee
of that Note or of any Note or Notes issued in exchange therefor.

2.2      Interest on the Loans.

         A. Rate of Interest.  Subject to the provisions of subsections  2.6 and
2.7,  each Term Loan and each  Revolving  Loan shall bear interest on the unpaid
principal  amount  thereof  from the date  made  through  maturity  (whether  by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted  Eurodollar Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid  principal amount thereof from
the date made through maturity  (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable  basis for  determining
the rate of interest with respect to any Term Loan or any  Revolving  Loan shall
be selected by Borrower  initially  at the time a Notice of  Borrowing  is given
with  respect  to such  Loan  pursuant  to  subsection

                                       49
<PAGE>

2.1B, and the basis for  determining  the interest rate with respect to any Term
Loan or any  Revolving  Loan  may be  changed  from  time to  time  pursuant  to
subsection 2.2D. If on any day a Term Loan or Revolving Loan is outstanding with
respect  to which  notice  has not been  delivered  to  Administrative  Agent in
accordance with the terms of this Agreement  specifying the applicable basis for
determining  the rate of  interest,  then for that  day  that  Loan  shall  bear
interest determined by reference to the Base Rate.

                  (i) Subject to the provisions of subsections 2.2E and 2.7, the
         Term Loans shall bear interest through maturity as follows:

                           (a) if a Base Rate Loan,  then at the sum of the Base
                  Rate plus the Applicable Margin; or

                           (b) if a Eurodollar Rate Loan, then at the sum of the
                  Adjusted Eurodollar Rate plus the Applicable Margin.

                  (ii) Subject to the  provisions of  subsections  2.2E and 2.7,
         the Revolving Loans shall bear interest through maturity as follows:

                           (a) if a Base Rate Loan,  then at the sum of the Base
                  Rate plus the Applicable Margin; or

                           (b) if a Eurodollar Rate Loan, then at the sum of the
                  Adjusted Eurodollar Rate plus the Applicable Margin.

                  (iii) Subject to the provisions of  subsections  2.2E and 2.7,
         the Swing Line Loans shall bear interest through maturity at the sum of
         the Base Rate plus 0.75% per annum.

         B. Interest  Periods.  In connection  with each  Eurodollar  Rate Loan,
Borrower  may,  pursuant  to the  applicable  Notice of  Borrowing  or Notice of
Conversion/Continuation,  as the case may be, select an interest period (each an
"Interest  Period") to be applicable to such Loan,  which Interest  Period shall
be, at Borrower's option, either a one, two, three or six month period; provided
that:

                  (i) the initial  Interest  Period for any Eurodollar Rate Loan
         shall commence on the Funding Date in respect of such Loan, in the case
         of a Loan  initially  made as a  Eurodollar  Rate Loan,  or on the date
         specified in the applicable Notice of  Conversion/Continuation,  in the
         case of a Loan converted to a Eurodollar Rate Loan;

                  (ii) in the case of immediately  successive  Interest  Periods
         applicable  to a Eurodollar  Rate Loan  continued as such pursuant to a
         Notice of Conver  sion/Continuation,  each  successive  Interest Period
         shall commence on the day on which the next preceding  Interest  Period
         expires;

                                       50
<PAGE>

                  (iii) if an Interest  Period would  otherwise  expire on a day
         that is not a Business Day,  such  Interest  Period shall expire on the
         next  succeeding  Business Day;  provided that, if any Interest  Period
         would otherwise expire on a day that is not a Business Day but is a day
         of the month after which no further  Business Day occurs in such month,
         such Interest Period shall expire on the next preceding Business Day;

                  (iv) any Interest  Period that begins on the last Business Day
         of a  calendar  month  (or on a day for which  there is no  numerically
         corresponding  day in the  calendar  month at the end of such  Interest
         Period) shall,  subject to clause (v) of this  subsection  2.2B, end on
         the last Business Day of a calendar month;

                  (v) no Interest Period with respect to any portion of the Term
         Loans shall  extend  beyond  June 30, 2002 and no Interest  Period with
         respect to any portion of the  Revolving  Loans shall extend beyond the
         Revolving Loan Commitment Termination Date;

                  (vi) no  Interest  Period  with  respect to any portion of the
         Term Loans shall extend beyond a date on which  Borrower is required to
         make a scheduled payment of principal of the Term Loans, unless the sum
         of (a) the aggregate  principal amount of Term Loans that are Base Rate
         Loans plus (b) the  aggregate  principal  amount of Term Loans that are
         Eurodollar Rate Loans with Interest  Periods expiring on or before such
         date equals or exceeds the principal  amount required to be paid on the
         Term Loans, on such date;

                  (vii)  there  shall  be no more  than  five  Interest  Periods
         outstanding at any time; and

                  (viii) in the event  Borrower  fails to  specify  an  Interest
         Period  for any  Eurodollar  Rate  Loan  in the  applicable  Notice  of
         Borrowing  or  Notice  of  Conversion/Continuation,  Borrower  shall be
         deemed to have selected an Interest Period of one month.

         C. Interest  Payments.  Subject to the  provisions of subsection  2.2E,
interest  on each Loan  shall be  payable  in  arrears  on and to each  Interest
Payment Date  applicable to that Loan,  upon any prepayment of that Loan (to the
extent  accrued on the amount being  prepaid) and at maturity  (including  final
maturity);  provided  that in the event any Swing  Line  Loans or any  Revolving
Loans that are Base Rate  Loans are  prepaid  pursuant  to  subsection  2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment  shall be payable on the next succeeding  Interest  Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity).

                                       51
<PAGE>

         D. Conversion or Continuation.  Subject to the provisions of subsection
2.6,  Borrower  shall have the option (i) to convert at any time all or any part
of its  outstanding  Term  Loans or  Revolving  Loans  equal to  $2,000,000  and
integral  multiples  of $500,000  in excess of that  amount  from Loans  bearing
interest  at a rate  determined  by  reference  to one  basis to  Loans  bearing
interest at a rate determined by reference to an alternative  basis or (ii) upon
the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to
continue  all or any  portion  of such Loan  equal to  $2,000,000  and  integral
multiples  of  $500,000  in excess of that  amount as a  Eurodollar  Rate  Loan;
provided, however, that a Eurodollar Rate Loan may only be converted into a Base
Rate Loan on the expiration date of an Interest Period applicable thereto.

         Borrower   shall  deliver  a  Notice  of   Conversion/Continuation   to
Administrative Agent no later than 11:00 A.M. (Dallas,  Texas time) at least one
Business  Day in  advance  of the  proposed  conversion  date  (in the case of a
conversion  to a Base Rate Loan) and at least three  Business Days in advance of
the proposed  conversion/continuation date (in the case of a conversion to, or a
continuation  of, a Eurodollar Rate Loan). A Notice of   Conversion/Continuation
shall  specify (i) the proposed  conversion/continuation  date (which shall be a
Business Day),  (ii) the amount and type of the Loan to be  converted/continued,
(iii) the nature of the proposed conversion/continuation,  (iv) in the case of a
conversion  to, or a  continuation  of, a Eurodollar  Rate Loan,  the  requested
Interest Period, and (v) in the case of a conversion to, or a continuation of, a
Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has
occurred and is continuing.  In lieu of delivering the above-described Notice of
Conversion/Continuation,  Borrower  may  give  Administrative  Agent  telephonic
notice by the required time of any proposed  conversion/continuation  under this
subsection  2.2D;  provided  that such  notice  shall be promptly  confirmed  in
writing by delivery  of a Notice of  Conversion/Continuation  to  Administrative
Agent on or before the proposed  conversion/continuation  date.  Upon receipt of
written or telephonic notice of any proposed  conversion/continuation under this
subsection  2.2D,  Administrative  Agent shall promptly  transmit such notice by
telefacsimile or telephone to each Lender.

         Neither  Administrative  Agent nor any Lender shall incur any liability
to  Borrower  in  acting  upon any  telephonic  notice  referred  to above  that
Administrative  Agent  believes  in good  faith  to have  been  given  by a duly
authorized  officer or other person  authorized  to act on behalf of Borrower or
for  otherwise  acting  in good  faith  under  this  subsection  2.2D,  and upon
conversion or continuation of the applicable  basis for determining the interest
rate with respect to any Loans in accordance with this Agreement pursuant to any
such   telephonic   notice   Borrower   shall  have  effected  a  conversion  or
continuation, as the case may be, hereunder.

         Except as  otherwise  provided in  subsections  2.6B,  2.6C and 2.6G, a
Notice  of  Conversion/Continuation  for  conversion to, or  continuation  of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the

                                       52
<PAGE>

related Interest Rate Determination  Date, and Borrower shall be bound to effect
a conversion or continuation in accordance therewith.

         E. Post-Maturity Interest. Any principal payments on the Loans not paid
when due and, to the extent  permitted by applicable law, any interest  payments
on the Loans or any fees or other  amounts owed  hereunder not paid when due, in
each case whether at stated maturity,  by notice of prepayment,  by acceleration
or otherwise,  shall thereafter bear interest (including  post-petition interest
in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate which is 2% per annum in excess of the interest rate
otherwise payable under this Agreement with respect to the applicable Loans (or,
in the case of any such fees and other amounts,  at a rate which is 2% per annum
in excess of the interest rate  otherwise  payable under this Agreement for Base
Rate Loans);  provided  that,  in the case of  Eurodollar  Rate Loans,  upon the
expiration  of the  Interest  Period in effect at the time any such  increase in
interest rate is effective such  Eurodollar  Rate Loans shall  thereupon  become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2% per annum in excess of the interest  rate  otherwise  payable  under
this Agreement for Base Rate Loans. Payment or acceptance of the increased rates
of interest provided for in this subsection 2.2E is not a permitted  alternative
to timely  payment and shall not  constitute a waiver of any Event of Default or
otherwise  prejudice or limit any rights or remedies of Administrative  Agent or
any Lender.

         F. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate  Loans,  on the basis of a 365-day or 366 day year,  as
the case may be, and (ii) in the case of Eurodollar  Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during  which it accrues.  In  computing  interest on any Loan,  the date of the
making of such Loan or the first day of an Interest  Period  applicable  to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan,  the date of  conversion  of such  Eurodollar  Rate Loan to such Base Rate
Loan,  as the case may be,  shall be  included,  and the date of payment of such
Loan or the expiration  date of an Interest  Period  applicable to such Loan or,
with respect to a Base Rate Loan being  converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such  Eurodollar  Rate Loan, as the
case may be,  shall be excluded;  provided  that if a Loan is repaid on the same
day on which it is made, one day's interest shall be paid on that Loan.

2.3      Fees.

         A. Commitment Fees. Borrower agrees to pay to Administrative Agent, for
distribution  to each  Lender in  proportion  to that  Lender's  Pro Rata Share,
commitment  fees for the  period  from and  including  the  Closing  Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the  daily  excess of the  Revolving  Loan  Commitments  over the sum of (i) the
aggregate  principal  amount  of  outstanding   Revolving  Loans  (but  not  any
outstanding  Swing Line Loans) plus (ii) the

                                       53
<PAGE>

Revolving  Letter  of  Credit  Usage  multiplied  by 1/2 of 1% per  annum,  such
commitment  fees to be  calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable  quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on March 31, 1997, and
on the Revolving Loan Commitment Termination Date.

         B. Annual  Administrative Fee. Borrower agrees to pay to Administrative
Agent an annual  administrative  fee payable in advance on February 15, 1997 and
on each  anniversary  thereof,  in an amount  equal to the  greater  of (x) 0.1%
multiplied  by the sum of (i) the  Revolving  Loan  Commitments  and,  (ii)  the
outstanding principal amount of Term Loans, and (y) $50,000.

         C. Other  Fees.  Borrower  agrees to pay to  Administrative  Agent such
other  fees in the  amounts  and at the times  separately  agreed  upon  between
Borrower or Parent and Administrative Agent.

2.4      Repayments,  Prepayments and Reductions in Revolving Loan  Commitments;
         General  Provisions  Regarding  Payments;  Application  of  Proceeds of
         Collateral and Payments Under Subsidiary Guaranty.

         A. Scheduled Payments of Term Loans.

                           Borrower  shall make  principal  payments on the Term
                  Loans in  install  ments on the dates and in the  amounts  set
                  forth below until such time the Term Loans are repaid in full:



                                                   Scheduled Repayment
                   Date                               of Term Loans
              ================================ ================================
              June 30, 1997                             $333,333
              -------------------------------- --------------------------------
              September 30, 1997                        $333,333
              -------------------------------- --------------------------------
              December 31, 1997                         $333,334
              -------------------------------- --------------------------------
              March 31, 1998                            $375,000
              -------------------------------- --------------------------------
              June 30, 1998                             $375,000
              -------------------------------- --------------------------------
              September 30, 1998                        $375,000
              -------------------------------- --------------------------------
              December 31, 1998                         $375,000
              -------------------------------- --------------------------------
              March 31, 1999                            $500,000
              -------------------------------- --------------------------------
              June 30, 1999                             $500,000
              -------------------------------- --------------------------------
              September 30, 1999                        $500,000
              -------------------------------- --------------------------------
              December 31, 1999                         $500,000
              -------------------------------- --------------------------------
              March 31, 2000                            $525,000
              -------------------------------- --------------------------------
              June 30, 2000                             $525,000
              -------------------------------- --------------------------------
              September 30, 2000                        $525,000
              -------------------------------- --------------------------------
              
                                       54
<PAGE>

                                                   Scheduled Repayment
                   Date                               of Term Loans
              ================================ ================================
              December 31, 2000                         $525,000
              -------------------------------- --------------------------------
              March 31, 2001                            $550,000
              -------------------------------- --------------------------------
              June 30, 2001                             $550,000
              -------------------------------- --------------------------------
              September 30, 2001                        $550,000
              -------------------------------- --------------------------------
              December 31, 2001                         $550,000
              -------------------------------- --------------------------------
              March 31, 2002                            $600,000
              -------------------------------- --------------------------------
              June 30, 2002                             $600,000
              ================================ ================================

                  ; provided that the scheduled installments of principal of the
                  Term Loans set forth above shall be reduced in connection with
                  any  voluntary or mandatory  prepayments  of the Term Loans in
                  accordance with  subsection  2.4B(iv);  and provided,  further
                  that the Term Loans and all other amounts owed  hereunder with
                  respect to the Term Loans  shall be paid in full no later than
                  June 30, 2002, and the final  installment  payable by Borrower
                  in  respect  of the  Term  Loans on such  date  shall be in an
                  amount, if such amount is different from that specified above,
                  sufficient to repay all amounts  owing by Borrower  under this
                  Agreement with respect to the Term Loans.


         B. Prepayments and Reductions in Revolving Loan Commitments.

                  (i)  Voluntary  Prepayments.  Borrower  may,  upon  written or
         telephonic  notice to  Administrative  Agent on or prior to 11:00  A.M.
         (Dallas,  Texas  time)  on the date of  prepayment,  which  notice,  if
         telephonic,  shall be promptly  confirmed  in writing,  at any time and
         from time to time  prepay  any Swing Line Loan on any  Business  Day in
         whole  or in  part in an  aggregate  minimum  amount  of  $500,000  and
         integral multiples of $500,000 in excess of that amount.  Borrower may,
         upon not less than one  Business  Day's  prior  written  or  telephonic
         notice,  in the case of Base Rate Loans, and three Business Days' prior
         written or telephonic  notice, in the case of Eurodollar Rate Loans, in
         each case given to

                                       55
<PAGE>

         Administrative  Agent by 11:00 A.M.  (Dallas,  Texas  time) on the date
         required and, if given by telephone,  promptly  confirmed in writing to
         Administrative  Agent  (which  original  written or  telephonic  notice
         Administrative   Agent  will  promptly  transmit  by  telefacsimile  or
         telephone to each Lender), at any time and from time to time prepay any
         Term Loans or  Revolving  Loans on any Business Day in whole or in part
         in an aggregate minimum amount of $2,000,000 and integral  multiples of
         $500,000 in excess of that amount; provided, however, that a Eurodollar
         Rate Loan may only be prepaid on the expiration of the Interest  Period
         applicable   thereto.   Notice  of  prepayment  having  been  given  as
         aforesaid,  the principal  amount of the Loans specified in such notice
         shall become due and payable on the prepayment date specified  therein.
         Any  such  voluntary  prepayment  shall  be  applied  as  specified  in
         subsection 2.4B(iv).

                  (ii)  Voluntary  Reductions  of  Revolving  Loan  Commitments.
         Borrower may, upon not less than three  Business Days' prior written or
         telephonic notice confirmed in writing to  Administrative  Agent (which
         original  written  or  telephonic  notice   Administrative  Agent  will
         promptly transmit by telefacsimile or telephone to each Lender), at any
         time and from time to time terminate in whole or permanently  reduce in
         part, without premium or penalty,  the Revolving Loan Commitments in an
         amount up to the amount by which the Revolving Loan Commitments  exceed
         the Total Utilization of Revolving Loan Commitments at the time of such
         proposed  termination  or  reduction;  provided  that any such  partial
         reduction of the Revolving  Loan  Commitments  shall be in an aggregate
         minimum  amount of  $2,000,000  and  integral  multiples of $500,000 in
         excess of that amount.  Borrower's notice to Administrative Agent shall
         designate the date (which shall be a Business Day) of such  termination
         or  reduction  and  the  amount  of any  partial  reduction,  and  such
         termination  or reduction of the Revolving  Loan  Commitments  shall be
         effective on the date  specified in Borrower's  notice and shall reduce
         the Revolving Loan Commitment of each Lender proportionately to its Pro
         Rata Share.

                  (iii)  Mandatory  Prepayments  of Loans.  The  Loans  shall be
         prepaid in the amounts and under the circumstances set forth below, all
         such  prepayments  to  be  applied  as  set  forth  below  or  as  more
         specifically provided in subsection 2.4B(iv):

                           (a)  Prepayments  From Net Asset  Sale  Proceeds.  No
                  later  than  the  first  Business  Day  following  the date of
                  receipt  by  Borrower  or any of its  Subsidiaries  of any Net
                  Asset Sale  Proceeds  in respect of any Asset  Sale,  Borrower
                  shall  prepay the Loans in an  aggregate  amount equal to such
                  Net Asset Sale Proceeds; provided that, except with respect to
                  an Asset Sale involving a sale and leaseback  transaction,  to
                  the extent  such Net Asset Sale  Proceeds  will be used within
                  180 days of such Asset Sale to purchase replacement assets (as
                  certified by Borrower to Administrative  Agent in an Officer's
                  Certificate)  no such payment or

                                       56
<PAGE>

         reduction  shall be required unless any of such Net Asset Sale Proceeds
         are not so used within 180 days, in which case,  Borrower shall, at the
         end of  such  180th  day,  deliver  to the  Administra  tive  Agent  an
         Officer's Certificate  specifying the amount of Net Asset Sale Proceeds
         not so used and  shall  prepay  the  Loans in such  amount on the first
         Business Day after the end of such period.

                           (b)  Prepayments  From  Net  Insurance/  Condemnation
                  Proceeds.  No later than the first  Business Day following the
                  date of receipt by Administra tive Agent or by Borrower or any
                  of  its  Subsidiaries  of  any  Net  Insur   ance/Condemnation
                  Proceeds  that are  required to be applied to prepay the Loans
                  pursuant to the provisions of subsection 6.4C,  Borrower shall
                  prepay the Loans in an aggregate amount equal to the amount of
                  such Net Insur ance/Condemnation Proceeds.

                           (c) Prepayments Due to Reversion of Surplus Assets of
                  Pension Plans. On the date of return to Borrower or any of its
                  Subsidiaries  of any  surplus  assets of any  pension  plan of
                  Borrower or any of its Subsidiaries, Borrower shall prepay the
                  Loans in an  aggregate  amount  (such  amount  being  the "Net
                  Pension  Proceeds")  equal  to 100% of such  returned  surplus
                  assets,  net of  transaction  costs and  expenses  incurred in
                  obtaining such return,  including incremental taxes payable as
                  a result thereof.

                           (d)  Prepayments  Upon  Issuance  of Debt  or  Equity
                  Securities.  On the date of  receipt  by  Borrower  of the Net
                  Securities  Proceeds  from the  issuance of any debt or equity
                  Securities of Borrower after the Closing Date,  Borrower shall
                  prepay  the  Loans in an  aggregate  amount  equal to such Net
                  Securities   Proceeds.   In  the  event  the  Preferred  Stock
                  Redemption  is not  consummated  by June 30, 1997 and the PIDA
                  Loan is funded,  Borrower shall on such date prepay Term Loans
                  in an  amount  equal to the  gross  proceeds  of the PIDA Loan
                  minus  the face  amount  of any  Letter  of  Credit  issued to
                  support the PIDA Loan as  contemplated  by the PIDA Commitment
                  Letter annexed hereto as Schedule 7.2(vii).

                           (e)      [Reserved]

                           (f) Prepayments From  Consolidated  Excess Cash Flow.
                  In the event that there shall be Consolidated Excess Cash Flow
                  for any Fiscal  Year  (commencing  with the first  Fiscal Year
                  ending after the Closing Date),  Borrower shall, no later than
                  90 days after the end of such Fiscal Year, prepay the Loans in
                  an aggregate  amount  equal to (i) 75% of such  Consoli  dated
                  Excess Cash Flow if the  Leverage  Ratio at such time (as most
                  recently  calculated  prior to making any prepayment  required
                  hereunder) is equal to or greater than 3:1 or (ii) 50% of such
                  Consolidated  Excess

                                       57
<PAGE>

                  Cash Flow if the Leverage Ratio at such time (as most recently
                  calculated prior to making any prepayment  required hereunder)
                  is less than 3:1.

                           (g) Prepayments Due to Purchase Price  Adjustment and
                  Escrow  Funds.  On the  date of  receipt  by  Borrower  of any
                  Purchase Price Adjustment Payments pursuant to the Acquisition
                  Documents,  to the extent such funds in the  aggregate  exceed
                  $2,000,000, Borrower shall apply such funds to the full extent
                  thereof to repay  Revolving  Loans.  On the date of receipt by
                  Borrower  of any  Escrow  Funds  pursuant  to the  Acquisition
                  Documents, Borrower shall apply such funds, to the extent such
                  funds are not owed to third  party  claimants,  to repay  Term
                  Loans.

                           (h) Calculations of Net Proceeds Amounts;  Additional
                  Prepayments and Reductions  Based on Subsequent  Calculations.
                  Concurrently  with any  prepayment  of the Loans  pursuant  to
                  subsections   2.4B(iii)(a)-(g),   Borrower  shall  deliver  to
                  Administrative  Agent an Officers'  Certificate  demonstrating
                  the  calculation of the amount (the "Net Proceeds  Amount") of
                  the    applicable    Net    Asset    Sale    Proceeds,     Net
                  Insurance/Condemnation  Proceeds,  the  applicable Net Pension
                  Proceeds  or  Net  Securities  Proceeds,   or  the  applicable
                  Consolidated  Excess Cash Flow,  as the case may be, that gave
                  rise to such prepayment  and/or  reduction.  In the event that
                  Borrower  shall  subsequently  determine  that the  actual Net
                  Proceeds  Amount was greater than the amount set forth in such
                  Officers'   Certificate,   Borrower  shall  promptly  make  an
                  additional  prepayment  of the Loans in an amount equal to the
                  amount  of  such  excess,   and  Borrower  shall  concurrently
                  therewith  deliver  to  Administra  tive  Agent  an  Officers'
                  Certificate demonstrating the derivation of the additional Net
                  Proceeds Amount resulting in such excess.

                           (i)  Prepayments Due to Reductions or Restrictions of
                  Revolving Loan  Commitments.  Borrower shall from time to time
                  prepay  first the Swing Line  Loans and  second the  Revolving
                  Loans to the extent necessary so that the Total Utilization of
                  Revolving  Loan  Commitments  shall not at any time exceed the
                  lesser of (x) the Revolving  Loan  Commitments  then in effect
                  and (y) the Borrowing Base then in effect.

        (iv)      Application  of  Prepayments  and Reductions of Revolving Loan
                  Commitments.

                           (a)  Application of Voluntary  Prepayments by Type of
                  Loans  and  Order  of  Maturity.   Any  voluntary  prepayments
                  pursuant to  subsection  2.4B(i) shall be applied as specified
                  by Borrower in the applicable  notice of prepayment;  provided
                  that in the event Borrower fails to specify the Loans to which
                  any such prepayment shall be applied, such prepayment shall be
                  applied  first to repay  outstanding  Swing  Line Loans

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<PAGE>

                  to the  full  extent  thereof,  second  to  repay  outstanding
                  Revolving Loans to the full extent thereof, and third to repay
                  outstanding  Term  Loans  to  the  full  extent  thereof.  Any
                  voluntary prepayments of the Term Loans pursuant to subsection
                  2.4B(i)  shall be applied  to prepay  Term Loans and to reduce
                  the  scheduled   installments  of  Term  Loans  set  forth  in
                  subsection 2.4A(i) in inverse order of maturity.

                           (b)  Application of Mandatory  Prepayments by Type of
                  Loans.   Except  as   otherwise   set   forth  in   subsection
                  2.4B(iii)(h), any amount (the "Applied Amount") required to be
                  applied as a  mandatory  prepayment  of the Loans  pursuant to
                  subsections  2.4B(iii)(a)-(g) shall be applied first to prepay
                  Term Loans to the full extent thereof,  second,  to the extent
                  of any remaining  portion of the Applied Amount, to prepay the
                  Swing Line Loans to the full extent thereof and to permanently
                  reduce the Revolving  Loan  Commitments  by the amount of such
                  prepayment and third,  to the extent of any remaining  portion
                  of the Applied  Amount,  to prepay the Revolving  Loans to the
                  full extent thereof.

                           (c)  Application  of  Mandatory  Prepayments  of Term
                  Loans and the Scheduled Installments of Principal Thereof. Any
                  mandatory prepayments of the Term Loans pursuant to subsection
                  2.4B(iii)  shall be applied to prepay Term Loans and to reduce
                  scheduled installments of principal on Term Loans set forth in
                  subsection 2.4A(i) on a pro rata basis.

                           (d) Application of Prepayments to Base Rate Loans and
                  Eurodollar  Rate Loans.  Considering  Term Loans and Revolving
                  Loans being prepaid  separately,  any prepayment thereof shall
                  be applied first to Base Rate Loans to the full extent thereof
                  before application to Eurodollar Rate Loans, in each case in a
                  manner which minimizes the amount of any payments  required to
                  be made by Borrower pursuant to subsection 2.6D.

         C.       General Provisions Regarding Payments.

                  (i) Manner and Time of  Payment.  All  payments by Borrower of
         principal, interest, fees and other Obligations hereunder and under the
         Notes  shall be made in  Dollars in same day  funds,  without  defense,
         setoff or  counterclaim,  free of any  restriction  or  condition,  and
         delivered to  Administrative  Agent not later than 11:00 A.M.  (Dallas,
         Texas time) on the date due at the  Funding and Payment  Office for the
         account of Lenders;  funds received by Administrative  Agent after that
         time on such due date shall be deemed to have been paid by  Borrower on
         the  next  succeeding   Business   Day.   Borrower  hereby   authorizes
         Administrative  Agent to charge its accounts with Administrative  Agent
         in order to cause timely payment to be made to Administrative  Agent of
         all

                                       59
<PAGE>

         principal,  interest,  fees and  expenses  due  hereunder  (subject  to
         sufficient funds being available in its accounts for that purpose).

                  (ii) Application of Payments to Principal and Interest. Except
         as  provided  in  subsection  2.2C,  all  payments  in  respect  of the
         principal  amount of any Loan shall include payment of accrued interest
         on the principal amount being repaid or prepaid,  and all such payments
         (and, in any event,  any payments in respect of any Loan on a date when
         interest is due and payable with respect to such Loan) shall be applied
         to the payment of interest before application to principal.

                  (iii)  Apportionment  of  Payments.  Except  as  permitted  in
         subsection  2.4B(iv)(c),  aggregate  principal and interest payments in
         respect of Term Loans and Revolving  Loans shall be  apportioned  among
         all  outstanding  Loans to which  such  payments  relate,  in each case
         proportionately to Lenders' respective Pro Rata Shares.  Administrative
         Agent shall promptly  distribute to each Lender, at its primary address
         set forth below its name on the appropriate signature page hereof or at
         such other  address as such Lender may  request,  its Pro Rata Share of
         all such payments received by  Administrative  Agent and the commitment
         fees of such Lender when received by  Administrative  Agent pursuant to
         subsection  2.3.  Notwithstanding  the  foregoing  provisions  of  this
         subsection  2.4C(iii),  if,  pursuant to the  provisions  of subsection
         2.6C,  any Notice of  Conversion/Continuation  is  withdrawn  as to any
         Affected Lender or if any Affected Lender makes Base Rate Loans in lieu
         of its Pro Rata  Share of any  Eurodollar  Rate  Loans,  Administrative
         Agent  shall give  effect  thereto in  apportioning  payments  received
         thereafter.

                  (iv)  Payments on Business  Days.  Whenever  any payment to be
         made  hereunder  shall  be  stated  to be  due on a day  that  is not a
         Business  Day,  such  payment  shall  be  made on the  next  succeeding
         Business  Day and  such  extension  of time  shall be  included  in the
         computation  of the payment of interest  hereunder or of the commitment
         fees hereunder, as the case may be.

                  (v)  Notation  of  Payment.  Each  Lender  agrees  that before
         disposing  of any Note held by it, or any part  thereof  (other than by
         granting  participations  therein),  that  Lender  will make a notation
         thereon of all Loans evidenced by that Note and all principal  payments
         previously  made thereon and of the date to which interest  thereon has
         been  paid;  provided  that the  failure  to make (or any  error in the
         making of) a notation  of any Loan made under such Note shall not limit
         or otherwise affect the obligations of Borrower hereunder or under such
         Note with  respect to any Loan or any payments of principal or interest
         on such Note.

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<PAGE>

         D.       Application  of  Proceeds of  Collateral  and  Payments  Under
         Subsidiary Guaranty.

                  (i) Application of Proceeds of Collateral. Except as otherwise
         provided   in   subsection   2.4B(iii),   all   proceeds   received  by
         Administrative  Agent in respect of any sale of,  collection  from,  or
         other  realization  upon all or any part of the  Collateral  under  any
         Collateral Document may, in the discretion of Administrative  Agent, be
         held by Administrative  Agent as Collateral for, and/or (then or at any
         time  thereafter)  applied in full or in part by  Administrative  Agent
         against,  the  applicable  Secured  Obligations  (as  defined  in  such
         Collateral Document) in the following order of priority:

                           (a) To the payment of all costs and  expenses of such
                  sale,  collection or other realization,  including  reasonable
                  compensation  to  Administrative  Agent  and  its  agents  and
                  counsel, and all other expenses, liabilities and advances made
                  or incurred by Administrative  Agent in connection  therewith,
                  and all amounts for which  Administrative Agent is entitled to
                  indemnification   under  such  Collateral   Document  and  all
                  advances  made  by  Administrative  Agent  thereunder  for the
                  account of the  applicable  Loan Party,  and to the payment of
                  all costs and  expenses  paid or  incurred  by  Administrative
                  Agent in  connection  with the exercise of any right or remedy
                  under such  Collateral  Document,  all in accordance  with the
                  terms of this Agreement and such Collateral Document;

                           (b)  thereafter,  to the  extent of any  excess  such
                  proceeds, to the payment of all other such Secured Obligations
                  for the ratable benefit of the holders thereof; and

                           (c)  thereafter,  to the  extent of any  excess  such
                  proceeds,  to the  payment  to or upon the  order of such Loan
                  Party or to whosoever may be lawfully  entitled to receive the
                  same or as a court of competent jurisdiction may direct.

                  (ii)  Application of Payments Under  Guaranties.  All payments
         received by Administrative Agent under either Guaranty shall be applied
         promptly  from time to time by  Administrative  Agent in the  following
         order of priority:

                           (a)  To  the  payment  of the  reasonable  costs  and
                  expenses of any  collection  or other  realization  under such
                  Guaranty,  including reasonable compensation to Administrative
                  Agent and its agents and counsel, and all reasonable expenses,
                  liabilities  and advances made or incurred by Administra  tive
                  Agent in  connection  therewith,  all in  accordance  with the
                  terms of this Agreement and such Guaranty;

                                       61
<PAGE>

                           (b)  thereafter,  to the  extent of any  excess  such
                  payments,  to the payment of all other Guarantied  Obligations
                  (as defined in such  Guaranty) for the ratable  benefit of the
                  holders thereof; and

                           (c)  thereafter,  to the  extent of any  excess  such
                  payments,   to  the  payment  to  Parent  or  the   applicable
                  Subsidiary  Guarantor or to whosoever may be lawfully entitled
                  to receive  the same or as a court of  competent  jurisdiction
                  may direct.

2.5      Use of Proceeds.

         A. Term  Loans.  On the Closing  Date,  the  proceeds of those  certain
"Tranche  A Term  Loans"  and  "Tranche B Term  Loans"  made under the  Existing
Agreement,  together with the proceeds of the Term Loans and up to $4,000,000 in
proceeds of the initial Revolving Loans (the "Acquisition  Revolving Loans") and
the  proceeds of the Bridge  Financing,  were applied by Borrower to (i) finance
the purchase price of the Acquisition, (ii) refinance the indebtedness set forth
on Schedule 4.1E and (iii) to pay Transaction Costs.

         B. Revolving  Loans;  Swing Line Loans. The proceeds of the Acquisition
Revolving Loans shall be applied by Borrower as provided in subsection 2.5A. The
proceeds of any other  Revolving Loans and any Swing Line Loans shall be applied
by Borrower  for  general  corporate  purposes,  which may include the making of
intercompany  loans  to any  of  Borrower's  Subsidiaries,  in  accordance  with
subsection   7.1(iv)  and  to  consummate  the  Preferred  Stock  Redemption  in
accordance with subsection 7.5.

         C. Margin  Regulations.  No portion of the  proceeds  of any  borrowing
under this Agreement shall be used by Borrower or any of its Subsidiaries in any
manner that might cause the  borrowing or the  application  of such  proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the  Exchange  Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.

2.6      Special Provisions Governing Eurodollar Rate Loans.

         Notwithstanding  any other provision of this Agreement to the contrary,
the following  provisions  shall govern with respect to Eurodollar Rate Loans as
to the matters covered:

         A.  Determination  of Applicable  Interest Rate. As soon as practicable
after 12:00 Noon (Dallas,  Texas time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall  apply to the  Eurodollar  Rate Loans for which an  interest  rate is then
being  determined

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<PAGE>

for the  applicable  Interest  Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Borrower and each Lender.

         B. Inability to Determine  Applicable  Interest Rate. In the event that
Administra tive Agent shall have determined (which  determination shall be final
and  conclusive  and binding  upon all parties  hereto),  on any  Interest  Rate
Determination  Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances  affecting the London  interbank market adequate and fair means do
not exist for  ascertaining  the interest  rate  applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Administrative
Agent shall on such date give notice (by telefacsimile or by telephone confirmed
in writing) to Borrower and each Lender of such determination,  whereupon (i) no
Loans may be made as, or converted to,  Eurodollar Rate Loans until such time as
Administrative Agent notifies Borrower and Lenders that the circumstances giving
rise to such notice no longer  exist and (ii) any Notice of  Borrowing or Notice
of Conversion/Continuation  given   by  Borrower  with  respect  to the Loans in
respect of which such  determination was made shall be deemed to be rescinded by
Borrower.

         C.  Illegality or  Impracticability  of Eurodollar  Rate Loans.  In the
event that on any date any Lender  shall have  determined  (which  determination
shall be final and  conclusive  and binding upon all parties hereto but shall be
made only after  consultation with Borrower and  Administrative  Agent) that the
making,  maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful  as a result of  compliance  by such Lender in good faith with any law,
treaty,  governmental  rule,  regulation,  guideline or order (or would conflict
with any such  treaty,  governmental  rule,  regulation,  guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable,  or would cause such Lender material
hardship, as a result of contingencies  occurring,  in each case, after the date
of this Agreement  which  materially and adversely  affect the London  interbank
market or the  position of such  Lender in that  market,  then,  and in any such
event,  such Lender shall be an "Affected  Lender" and it shall on that day give
notice (by  telefacsimile or by telephone  confirmed in writing) to Borrower and
Administrative  Agent of such determination  (which notice  Administrative Agent
shall promptly transmit to each other Lender).  Thereafter (a) the obligation of
the Affected  Lender to make Loans as, or to convert Loans to,  Eurodollar  Rate
Loans shall be  suspended  until such notice  shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar  Rate Loan then being  requested by Borrower  pursuant to a Notice of
Borrowing or a Notice of   Conversion/Continuation,  the  Affected  Lender shall
make  such  Loan as (or  convert  such  Loan to, as the case may be) a Base Rate
Loan,  (c)  the  Affected  Lender's   obligation  to  maintain  its  outstanding
Eurodollar Rate Loans (the "Affected  Loans") shall be terminated at the earlier
to occur of the expiration of the Interest Period then in effect with respect to
the Affected  Loans or when  required by law,  and (d) the Affected  Loans shall
automatically  convert  into  Base Rate  Loans on the date of such  termination.
Notwithstanding  the  foregoing,  to the extent a  determination  by an

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<PAGE>

Affected  Lender as described above relates to a Eurodollar Rate Loan then being
requested  by  Borrower  pursuant  to a  Notice  of  Borrowing  or a  Notice  of
Conversion/Continuation,   Borrower  shall  have  the  option,  subject  to  the
provisions of subsection  2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation  as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the  Affected  Lender  gives  notice of its  determination  as
described above (which notice of rescission  Administrative Agent shall promptly
transmit to each other Lender).  Except as provided in the immediately preceding
sentence,  nothing in this  subsection  2.6C shall affect the  obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.

         D. Compensation For Breakage or  Non-Commencement  of Interest Periods.
Borrower  shall  compensate  each Lender,  upon  written  request by that Lender
(which request shall set forth the basis for requesting  such amounts),  for all
reasonable losses, expenses and liabilities (including,  without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its Eurodollar Rate Loans and any loss,  expense or liability  sustained by that
Lender in connection  with the  liquidation or  re-employment  of such funds but
excluding,  in any case,  loss of  anticipated  profits)  which that  Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any  Eurodollar  Rate Loan does not occur on a date  specified  therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation  of any  Eurodollar  Rate Loan  does not occur on a date  specified
therefor  in a Notice of  Conversion/Continuation  or a  telephonic  request for
conversion or continuation, (ii) if any prepayment (including without limitation
any prepayment pursuant to subsection 2.4B(i)) or other principal payment or any
conversion  of any of its  Eurodollar  Rate Loans  occurs on a date prior to the
last day of an Interest Period  applicable to that Loan, (iii) if any prepayment
of any of its  Eurodollar  Rate  Loans is not made on any  date  specified  in a
notice of  prepayment  given by  Borrower,  (iv) as a  consequence  of any other
default by Borrower in the repayment of its Eurodollar  Rate Loans when required
by the terms of this Agreement, or (v) as a consequence of any assignment of the
Commitments,  Loans,  Letters  of Credit,  the IRB  Reimbursement  Agreement  or
participations  therein by  NationsBank at any time during the first ninety (90)
days after the Closing Date.

         E.  Booking of  Eurodollar  Rate Loans.  Any Lender may make,  carry or
transfer  Eurodollar  Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.

         F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation
of all  amounts  payable  to a  Lender  under  this  subsection  2.6  and  under
subsection  2.7A shall be made as though that Lender had actually funded each of
its relevant  Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing  interest at the rate obtained  pursuant to clause (i) of the definition
of Adjusted  Eurodollar

                                       64
<PAGE>

Rate in an amount equal to the amount of such  Eurodollar Rate Loan and having a
maturity and a principal amount  comparable to the relevant  Interest Period and
through the transfer of such Eurodollar  deposit from an offshore office of that
Lender to a  domestic  office of that  Lender in the United  States of  America;
provided,  however,  that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing  assumptions  shall be utilized only
for the purposes of calculating  amounts  payable under this  subsection 2.6 and
under subsection 2.7A.

         G.  Eurodollar  Rate Loans After  Default.  After the occurrence of and
during the  continuation of a Potential Event of Default or an Event of Default,
(i) Borrower may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar  Rate Loan after the expiration of any Interest  Period then in
effect for that Loan and (ii) subject to the provisions of subsection  2.6D, any
Notice of Borrowing or Notice of Conver sion/Continuation given by Borrower with
respect to a requested  borrowing or conver  sion/continuation  that has not yet
occurred shall be deemed to be rescinded by Borrower.

2.7      Increased Costs; Taxes; Capital Adequacy.

         A.  Compensation  for  Increased  Costs  and  Taxes.   Subject  to  the
provisions of subsection  2.7B (which shall be  controlling  with respect to the
matters covered  thereby),  in the event that any Lender shall determine  (which
determination  shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or govern mental rule,  regulation
or order,  or any change therein or in the  interpretation,  administration   or
application thereof (including the introduction of any new law, treaty or govern
mental  rule,  regulation  or  order),  or  any  determination  of  a  court  or
governmental  authority,  in each case  that  becomes  effective  after the date
hereof,  or compliance by such Lender with any  guideline,  request or directive
issued or made after the date hereof by any central  bank or other  governmental
or quasi-governmental authority (whether or not having the force of law):

                  (i) subjects such Lender (or its applicable lending office) to
         any  additional  Tax (other  than any Tax on the  overall net income of
         such Lender) with respect to this  Agreement or any of its  obligations
         hereunder  or any  payments to such Lender (or its  applicable  lending
         office)  of  principal,  interest,  fees or any  other  amount  payable
         hereunder;

                  (ii)  imposes,   modifies  or  holds  applicable  any  reserve
         (including  without limitation any marginal,  emergency,  supplemental,
         special or other  reserve),  special  deposit,  compulsory  loan,  FDIC
         insurance or similar requirement against assets held by, or deposits or
         other liabilities in or for the account of, or advances or loans by, or
         other  credit  extended by, or any other  acquisition  of funds by, any
         office  of  such  Lender   (other  than  any  such

                                       65
<PAGE>

         reserve or other  requirements  with respect to  Eurodollar  Rate Loans
         that are reflected in the definition of Adjusted Eurodollar Rate); or

                  (iii) imposes any other condition  (other than with respect to
         a Tax matter) on or affecting  such Lender (or its  applicable  lending
         office)  causing  it to have  increased  costs in  connection  with its
         participation in the London interbank market;

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make,  making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its  applicable  lending  office) with
respect  thereto;  then, in any such case,  Borrower  shall promptly pay to such
Lender,  upon receipt of the statement  referred to in the next  sentence,  such
additional  amount  or  amounts  (in the  form of an  increased  rate  of,  or a
different  method of  calculating,  interest or  otherwise as such Lender in its
sole discretion  shall  determine) as may be necessary to compensate such Lender
for any such  increased  cost or  reduction  in amounts  received or  receivable
hereunder.  Such Lender shall deliver to Borrower (with a copy to Administrative
Agent) a written  statement,  setting forth in  reasonable  detail the basis for
calculating  the  additional  amounts owed to such Lender under this  subsection
2.7A,  which  statement  shall be conclusive and binding upon all parties hereto
absent manifest error.

         B.       Withholding of Taxes.

                  (i) Payments to Be Free and Clear.  Subject to the  provisions
         of the following  clause (ii),  all sums payable by Borrower under this
         Agreement  and the other  Loan  Documents  shall  (except to the extent
         required by law) be paid free and clear of, and  without any  deduction
         or  withholding on account of, any Tax (other than a Tax on the overall
         net income of any  Lender)  imposed,  levied,  collected,  withheld  or
         assessed  by or within  the United  States of America or any  political
         subdivision  in or of  the  United  States  of  America  or  any  other
         jurisdiction  from or to which a  payment  is made by or on  behalf  of
         Borrower  or by any  federation  or  organization  of which the  United
         States of America or any such  jurisdiction  is a member at the time of
         payment.

                  (ii) Grossing-up of Payments.  If Borrower or any other Person
         is required by law to make any deduction or  withholding  on account of
         any such Tax from any sum paid or payable by Borrower to Administrative
         Agent or any Lender under any of the Loan Documents:

                           (a) Borrower shall notify Administrative Agent of any
                  such  require  ment or any change in any such  requirement  as
                  soon as Borrower becomes aware of it;

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<PAGE>

                           (b)  Borrower  shall pay any such Tax before the date
                  on which penalties attach thereto, such payment to be made (if
                  the  liability  to pay is  imposed  on  Borrower)  for its own
                  account or (if that  liability  is  imposed on  Administrative
                  Agent or such Lender,  as the case may be) on behalf of and in
                  the name of Administrative Agent or such Lender;

                           (c) the sum  payable by  Borrower in respect of which
                  the  relevant  deduction,  withholding  or payment is required
                  shall be  increased  to the extent  necessary  to ensure that,
                  after the making of that  deduction,  withholding  or payment,
                  Administrative  Agent  or such  Lender,  as the  case  may be,
                  receives on the due date a net sum equal to what it would have
                  received had no such  deduction,  withholding  or payment been
                  required or made; and

                           (d) within 30 days after paying any sum from which it
                  is required by law to make any deduction or  withholding,  and
                  within 30 days  after the due date of payment of any Tax which
                  it is  required  by clause  (b) above to pay,  Borrower  shall
                  deliver to Administrative  Agent evidence  satisfactory to the
                  other  affected  parties  of such  deduction,  withholding  or
                  payment and of the remittance  thereof to the relevant  taxing
                  or other authority;

         provided that no such additional amount shall be required to be paid to
         or on behalf of any Lender  under clause (b) or (c) above except to the
         extent  that any  change  after  the date  hereof  (in the case of each
         Lender listed on the  signature  pages hereof) or after the date of the
         Assignment  Agreement pursuant to which such Lender became a Lender (in
         the case of each other Lender) in any such requirement for a deduction,
         withholding  or  payment as is  mentioned  therein  shall  result in an
         increase in the rate of such  deduction,  withholding  or payment  from
         that in  effect  at the date of this  Agreement  or at the date of such
         Assignment  Agreement,  as the case may be, in respect of  payments  to
         such Lender.

                  (iii)    Evidence of Exemption from U.S. Withholding Tax.

                           (a) Each Lender that is  organized  under the laws of
                  any jurisdiction  other than the United States or any state or
                  other  political  subdivision  thereof  (for  purposes of this
                  subsection  2.7B(iii),  a "Non-US  Lender")  shall  deliver to
                  Administrative Agent for transmission to Borrower, on or prior
                  to the Closing Date (in the case of each Lender  listed on the
                  signature  pages  hereof)  or on or  prior  to the date of the
                  Assignment Agreement pursuant to which it becomes a Lender (in
                  the case of each other Lender), and at such other times as may
                  be   necessary   in   the   determination   of   Borrower   or
                  Administrative  Agent (each in the reasonable  exercise of its
                  discretion), (1) two original

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                  copies of Internal  Revenue  Service Form 1001 or 4224 (or any
                  successor forms), properly completed and duly executed by such
                  Lender,  together with any other  certificate  or statement of
                  exemption  required  under the  Internal  Revenue  Code or the
                  regulations issued thereunder to establish that such Lender is
                  not  subject to  deduction  or  withholding  of United  States
                  federal income tax with respect to any payments to such Lender
                  of principal,  interest,  fees or other amounts  payable under
                  any of the  Loan  Documents  or (2) if  such  Lender  is not a
                  "bank" or other Person  described in Section  881(c)(3) of the
                  Internal  Revenue  Code and  cannot  deliver  either  Internal
                  Revenue  Service  Form 1001 or 4224  pursuant  to  clause  (1)
                  above,  a  Certificate  re Non- Bank Status  together with two
                  original  copies of Internal  Revenue Service Form W-8 (or any
                  successor form),  properly completed and duly executed by such
                  Lender,  together with any other  certificate  or statement of
                  exemption  required  under the  Internal  Revenue  Code or the
                  regulations issued thereunder to establish that such Lender is
                  not  subject to  deduction  or  withholding  of United  States
                  federal income tax with respect to any payments to such Lender
                  of interest payable under any of the Loan Documents.

                           (b)  Each  Lender  required  to  deliver  any  forms,
                  certificates  or other  evidence with respect to United States
                  federal income tax withholding  matters pursuant to subsection
                  2.7B(iii)(a)  hereby  agrees,  from  time  to time  after  the
                  initial delivery by such Lender of such forms, certificates or
                  other  evidence,  whenever  a  lapse  in  time  or  change  in
                  circumstances  renders  such  forms,   certificates  or  other
                  evidence obsolete or inaccurate in any material respect,  that
                  such Lender shall promptly (1) deliver to Administrative Agent
                  for  transmission  to  Borrower  two new  original  copies  of
                  Internal  Revenue  Service Form 1001 or 4224, or a Certificate
                  re Non-Bank Status and two original copies of Internal Revenue
                  Service Form W-8, as the case may be,  properly  completed and
                  duly  executed  by  such  Lender,   together  with  any  other
                  certificate  or statement  of  exemption  required in order to
                  confirm  or  establish  that  such  Lender is not  subject  to
                  deduction or  withholding  of United States federal income tax
                  with  respect  to  payments  to such  Lender  under  the  Loan
                  Documents or (2) notify  Administrative  Agent and Borrower of
                  its inability to deliver any such forms, certificates or other
                  evidence.

                           (c)  Borrower  shall  not  be  required  to  pay  any
                  additional  amount to or on behalf of any Non-US  Lender under
                  clause (b) or (c) of subsection  2.7B(ii) if such Lender shall
                  have  failed to  satisfy  the  requirements  of clause  (a) or
                  (b)(1) of this subsection  2.7B(iii) or if the representations
                  set forth in clauses (a) or (b) of this  subsection  2.7B(iii)
                  made by any Lender are not true;  provided that if such Lender
                  shall  have   satisfied   the   requirements of subsection 

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                  2.7B(iii)(a)  on the Closing  Date (in the case of each Lender
                  listed on the  signature  pages  hereof) or on the date of the
                  Assignment  Agreement pursuant to which it became a Lender (in
                  the case of each other  Lender),  nothing  in this  subsection
                  2.7B(iii)(c)  shall relieve  Borrower of its obligation to pay
                  any  additional  amounts  pursuant to clause (c) of subsection
                  2.7B(ii) in the event  that,  as a result of any change in any
                  applicable  law, treaty or  governmental  rule,  regulation or
                  order, or any change in the interpretation,  administration or
                  application  thereof,   such  Lender  is  no  longer  properly
                  entitled to deliver forms, certificates or other evidence at a
                  subsequent date  establishing the fact that such Lender is not
                  subject   to    withholding   as   described   in   subsection
                  2.7B(iii)(a).

                           (d) If any  Lender  shall  become  aware  that  it is
                  entitled  to  receive  a refund in  respect  of Taxes or other
                  taxes  as to  which  it has  been  indemni  fied  by  Borrower
                  pursuant to this Section 2.7 (including  any Taxes  applicable
                  to any  additional  amounts  payable under this  Section),  it
                  shall promptly  notify  Borrower of the  availability  of such
                  refund and shall, within 30 days after receipt of a request by
                  Borrower, apply for such refund at the expense of Borrower. If
                  any Lender  receives a refund in respect of any Taxes or other
                  taxes as to which it has been indemnified by Borrower pursuant
                  to  this  Section  (including  any  Taxes  applicable  to  any
                  additional  amounts  payable  under  this  Section),  it shall
                  promptly notify  Borrower of such refund and shall,  within 30
                  days after  receipt of a request by Borrower (or promptly upon
                  receipt, if Borrower has requested application for such refund
                  pursuant  hereto),  repay such refund  (including any interest
                  actually  received  from the  taxing  authority  with  respect
                  thereto) to Borrower  (to the extent of amounts that have been
                  paid by Borrower  under this  subsection  2.7B with respect to
                  such refund), net of all out-of-pocket expenses of such Lender
                  and taxes  imposed with respect to such refund;  provided that
                  Borrower,  upon the request of such  Lender,  agrees to return
                  such refund  (plus  penalties,  interest or other  charges) to
                  such Lender in the event such Lender is required to repay such
                  refund. Nothing contained in this subsection (e) shall require
                  any Lender to make  available  any tax  returns  (or any other
                  information relating to its taxes that it deems confidential).

                           (e)  Any  Lender  claiming  any  additional   amounts
                  payable  pursuant to this  Section 2.7,  shall use  reasonable
                  efforts (consistent with legal and regulatory restrictions) to
                  file any certificate or document  requested by the Borrower if
                  the making of such a filing or change would avoid the need for
                  or reduce the amount of any such  additional  amounts that may
                  thereafter accrue and would not, in the sole  determination of

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<PAGE>

                  such Lender, be otherwise  disadvantageous to such Lender, and
                  Borrower shall pay all reasonable costs associated therewith.

         C. Capital  Adequacy  Adjustment.  If any Lender shall have  determined
that the  adoption,  effectiveness,  phase-in  or  applicability  after the date
hereof of any law,  rule or  regulation  (or any  provision  thereof)  regarding
capital   adequacy,   or  any  change  therein  or  in  the   interpretation  or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration  thereof, or compliance
by any Lender (or its applicable lending office) with any guideline,  request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing  the rate of return on the capital of such Lender or
any corporation  controlling  such Lender as a consequence of, or with reference
to,  such  Lender's  Loans or  Commit  ments or  Letters  of  Credit  or the IRB
Reimbursement Agreement or participations therein or other obligations hereunder
with  respect  to the Loans or the  Letters  of Credit or the IRB  Reimbursement
Agreement  to  a  level  below  that  which  such  Lender  or  such  controlling
corporation could have achieved but for such adoption, effectiveness,  phase-in,
applicability,  change or compliance  (taking into consideration the policies of
such Lender or such controlling  corporation  with regard to capital  adequacy),
then from time to time, within five Business Days after receipt by Borrower from
such Lender of the statement  referred to in the next  sentence,  Borrower shall
pay to such Lender such  additional  amount or amounts as will  compensate  such
Lender or such controlling corporation on an after-tax basis for such reduction.
Such Lender shall deliver to Borrower  (with a copy to  Administrative  Agent) a
written  statement,  setting  forth  in  reasonable  detail  the  basis  of  the
calculation of such additional amounts,  which statement shall be conclusive and
binding upon all parties hereto absent manifest error.

2.8      Obligation of Lenders and Issuing Lender to Mitigate.

         Each Lender and Issuing  Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be,  becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected  Lender or that would entitle
such  Lender or  Issuing  Lender to receive  payments  under  subsection  2.7 or
subsection  3.6,  it will,  to the extent  not  inconsistent  with the  internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions,  use reasonable  efforts (i) to make,  issue, fund or maintain the
Commitments  of such Lender or the  affected  Loans or Letters of Credit of such
Lender or Issuing Lender through  another  lending or letter of credit office of
such Lender or Issuing  Lender,  or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable,  if as a result thereof the circumstances
which would cause such Lender to be an Affected  Lender  would cease to exist or
the  additional  amounts  which would  otherwise  be required to be paid to such
Lender or Issuing  Lender  pursuant to subsection 2.7 or subsection 3.6 would be

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materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitments
or Loans or Letters  of Credit  through  such other  lending or letter of credit
office or in accordance with such other measures,  as the case may be, would not
otherwise  materially  adversely  affect such Commitments or Loans or Letters of
Credit or the  interests of such Lender or Issuing  Lender;  provided  that such
Lender or Issuing  Lender will not be obligated to utilize such other lending or
letter of credit office  pursuant to this  subsection 2.8 unless Borrower agrees
to pay all incremental  expenses  incurred by such Lender or Issuing Lender as a
result of utilizing  such other  lending or letter of credit office as described
in clause (i) above. A certificate as to the amount of any such expenses payable
by Borrower  pursuant to this subsection 2.8 (setting forth in reasonable detail
the basis for requesting such amount) submitted by such Lender or Issuing Lender
to Borrower  (with a copy to  Administrative  Agent) shall be conclusive  absent
manifest error.


Section 3.        LETTERS OF CREDIT; IRB REIMBURSEMENT AGREEMENT

3.1      Issuance of Letters of Credit, Execution of IRB Reimbursement Agreement
         and Lenders' Purchase of Participations Therein.

         A.       Revolving Letters of Credit; and IRB Reimbursement Agreement.

                  1.  Revolving  Letters  of Credit.  In  addition  to  Borrower
         requesting  that  Lenders  make  Loans  pursuant  to  subsection  2.1A,
         Borrower  may  request,  in  accordance  with  the  provisions  of this
         subsection  3.1,  from time to time  during the period from the Closing
         Date to but excluding the Revolving Loan Commitment  Termination  Date,
         that Issuing Lender issue  Revolving  Letters of Credit for the account
         of Borrower for the purposes  specified in the  definition of Revolving
         Letter of Credit. Subject to the terms and conditions of this Agreement
         and in reliance  upon the  representations  and  warranties of Borrower
         herein set forth,  Issuing  Lender  shall  issue  Revolving  Letters of
         Credit  in  accordance  with the  provisions  of this  subsection  3.1;
         provided that Borrower  shall not request that Issuing Lender issue and
         Issuing Lender shall not issue:

                           (i) any  Revolving  Letter of Credit if, after giving
                  effect to such  issuance,  the Total  Utilization of Revolving
                  Loan  Commitments  (including  the Maximum  Exposure Under IRB
                  Reimbursement  Agreement),  would exceed the lesser of (1) the
                  Revolving  Loan   Commitments  then  in  effect  and  (2)  the
                  Borrowing Base then in effect;

                           (ii) any Revolving  Letter of Credit if, after giving
                  effect to such issuance,  the Revolving Letter of Credit Usage
                  would exceed $3,000,000;

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<PAGE>

                           (iii)  any  Revolving  Letter  of  Credit  having  an
                  expiration  date  (a)  later  than  the  earlier  of  (x)  the
                  Revolving Loan  Commitment  Termination  Date and (y) the date
                  which is one year from the date of issuance of such  Revolving
                  Letter of  Credit;  provided  that the  immediately  preceding
                  clause (y) shall not prevent Issuing Lender from agreeing that
                  a Revolving  Letter of Credit will  automatically  be extended
                  for one or more successive periods not to exceed one year each
                  unless  Issuing  Lender  elects  not to  extend  for any  such
                  additional period;  and provided,  further that Issuing Lender
                  shall elect not to extend such  Revolving  Letter of Credit if
                  it has knowledge  that an Event of Default has occurred and is
                  continuing  (and  has  not  been  waived  in  accordance  with
                  subsection 10.6) at the time Issuing Lender must elect whether
                  or not to  allow  such  extension  or (b)  that  is  otherwise
                  unacceptable  to Issuing Lender in its reasonable  discretion;
                  or

                           (iv) any Revolving Letter of Credit  denominated in a
                  currency other than Dollars.

                  2. IRB  Reimbursement  Agreement.  Borrower  may  request,  in
         accordance with the provisions of this subsection 3.1A.2,  that Issuing
         Lender enter into the IRB  Reimbursement  Agreement  for the account of
         Borrower and its  Subsidiaries.  Subject to the terms and conditions of
         this Agreement and in reliance upon the representa tions and warranties
         of  Borrower  set  forth   herein,   Issuing   Lender  shall  make  IRB
         Reimbursement  Advances in  accordance  with the  provisions of the IRB
         Reimbursement Agreement.

         B.       Mechanics of Issuance.

                  (i) Notice of Issuance. Whenever Borrower desires the issuance
         of a Letter of  Credit,  it shall  deliver  to  Administrative  Agent a
         Notice of  Issuance  of Letter of Credit  substantially  in the form of
         Exhibit  III  annexed  hereto no later than 11:00 A.M.  (Dallas,  Texas
         time) at least  five  Business  Days or such  shorter  period as may be
         agreed to by Issuing Lender in any particular  instance,  in advance of
         the  proposed  date of  issuance.  The Notice of  Issuance of Letter of
         Credit shall specify (a) the proposed date of issuance  (which shall be
         a Business Day),  (b) the face amount of the Letter of Credit,  (c) the
         expiration  date of the Letter of Credit,  (d) the name and  address of
         the  beneficiary,  and (e) either  the  verbatim  text of the  proposed
         Revolving  Letter  of  Credit  or the  proposed  terms  and  conditions
         thereof,  including  a  precise  description  of  any  documents  to be
         presented by the  beneficiary  which,  if presented by the  beneficiary
         prior to the expiration date of the Revolving  Letter of Credit,  would
         require  Issuing  Lender to make payment under the Revolving  Letter of
         Credit; provided that Issuing Lender, in its reasonable discretion, may
         require changes in the text of the proposed  Revolving Letter of Credit
         or any such documents;  and provided,  further that no Revolving Letter

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         of Credit shall require payment  against a conforming  draft to be made
         thereunder on the same business day (under the laws of the jurisdiction
         in which the office of Issuing  Lender to which such draft is  required
         to be  presented  is  located)  that such  draft is  presented  if such
         presentation  is made after 10:00 A.M. (in the time zone of such office
         of Issuing Lender) on such business day.

                  Borrower  shall notify Issuing Lender prior to the issuance of
         any  Letter of Credit in the  event  that any of the  matters  to which
         Borrower is required to certify in the applicable Notice of Issuance of
         Letter of Credit is no longer true and correct as of the proposed  date
         of  issuance  of such  Letter of Credit,  and upon the  issuance of any
         Letter of Credit, Borrower shall be deemed to have re-certified,  as of
         the date of such  issuance,  as to the  matters  to which  Borrower  is
         required to certify in the  applicable  Notice of Issuance of Letter of
         Credit.

                  (ii) Issuance of Letter of Credit. Upon satisfaction or waiver
         (in  accordance  with  subsection  10.6) of the conditions set forth in
         subsection  4.3,  Issuing  Lender shall issue the  requested  Letter of
         Credit  in  accordance  with  Issuing   Lender's   standard   operating
         procedures.

                  (iii) Execution of IRB Reimbursement Agreement. On the Closing
         Date, Issuing Lender entered into IRB Reimbursement Agreement.

                  (iv) Notification to Lenders.  Upon the issuance of any Letter
         of Credit Issuing Lender shall promptly notify Administrative Agent and
         each other Lender of such  issuance,  which notice shall be accompanied
         by a copy of such  Letter of Credit  and  identify  the  amount of such
         Lender's respective participation in such Letter of Credit,  determined
         in accordance with subsection 3.1C.

         C.       Lenders' Purchase of Participations.

                  (i) Letters of Credit.  Immediately  upon the issuance of each
         Letter of Credit, each Lender shall be deemed to, and hereby agrees to,
         have irrevocably  purchased from Issuing Lender a participation in such
         Letter of Credit and any drawings honored thereunder in an amount equal
         to such  Lender's  Pro Rata Share of the maximum  amount which is or at
         any time may become available to be drawn thereunder.

                  (ii)  IRB  Reimbursement   Agreement.   Immediately  upon  the
         execution of the IRB Reimbursement  Agreement,  each Lender irrevocably
         purchased from Issuing Lender a participation in the IRB  Reimbursement
         Agreement  (including any IRB Reimbursement  Advances thereunder) in an
         amount equal to such  Lender's  Pro Rata Share of the Maximum  Exposure
         Under IRB Reimbursement Agreement

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<PAGE>

3.2      Letter of Credit Fees; IRB Reimbursement Account Fees.

         A. Letter of Credit Fees.  Borrower agrees to pay the following amounts
with respect to Letters of Credit issued hereunder:

                  (i) with respect to each Letter of Credit, (a) a fronting fee,
         payable directly to Issuing Lender for its own account,  equal to 0.25%
         per annum of the daily  amount  available to be drawn under such Letter
         of Credit and (b) a letter of credit  fee,  payable  to  Administrative
         Agent for the  account  of  Lenders,  equal to the  product  of (x) the
         Applicable Margin for Revolving Loans made as Eurodollar Rate Loans and
         (y) the  available  amount to be drawn  under any  Revolving  Letter of
         Credit, each such fronting fee or letter of credit fee to be payable in
         arrears on and to (but excluding) each March 31, June 30,  September 30
         and December 31 of each year  commencing on March 31, 1997 and computed
         on the basis of a 360-day year for the actual  number of days  elapsed;
         and

                  (ii) with  respect to the  issuance,  amendment or transfer of
         each  Letter of Credit and each  payment of a drawing  made  thereunder
         (without  duplication  of the fees  payable  under  clauses (i) above),
         documentary and processing  charges payable  directly to Issuing Lender
         for its own  account  in  accordance  with  Issuing  Lender's  standard
         schedule  for such  charges  in  effect  at the time of such  issuance,
         amendment, transfer or payment, as the case may be.

For purposes of calculating  any fees payable under clauses (i) and (ii) of this
subsec tion 3.2A,  the daily  amount  available  to be drawn under any Letter of
Credit  shall  be  determined  as of  the  close  of  business  on any  date  of
determination.  Promptly  upon  receipt  by  Administrative  Agent of any amount
described in clause (i)(b) of this subsection 3.2A,  Administrative  Agent shall
distribute to each Lender its Pro Rata Share of such amount.

         B.  IRB  Reimbursement  Agreement  Fees.  Borrower  agrees  to pay  the
following amounts with respect to the IRB Reimbursement Agreement:

                  (i) with  respect to the IRB  Reimbursement  Agreement,  (a) a
         fronting fee,  payable  directly to Issuing Lender for its own account,
         equal  to  0.25%  per  annum  of  the   Maximum   Exposure   Under  IRB
         Reimbursement  Agreement  and  (b) an IRB  Reimbursement  Advance  fee,
         payable to  Administrative  Agent for the account of Lenders,  equal to
         the product of (x) the  Applicable  Margin for Revolving  Loans made as
         Eurodollar   Rate  Loans  and  (y)  the  Maximum   Exposure  Under  IRB
         Reimbursement  Agreement,  each such fronting fee or IRB  Reimbursement
         Advance  fee to be payable in  arrears on and to (but  excluding)  each
         March 31, June 30, September 30 and December 31 of each year commencing
         on March 31, 1997 and, in each case, computed on the basis of a 360-day
         year for the actual number of days elapsed; and

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<PAGE>

                  (ii) with respect to the IRB Reimbursement  Agreement and each
         IRB  Reimbursement  Advance  (without  duplication  of the fees payable
         under clause (i) above),  documentary  and processing  charges  payable
         directly  to Issuing  Lender for its own  account  in  accordance  with
         Issuing  Lender's  standard  schedule for such charges in effect at the
         time of such payment  (treating,  for these purposes,  the execution of
         the IRB  Reimbursement  Agreement as the issuance of a Letter of Credit
         and each IRB Reimbursement Advance as a draw under a Letter of Credit).

For purposes of calculating  any fees payable under clauses (i) and (ii) of this
subsection  3.2B, the daily Maximum Exposure Under IRB  Reimbursement  Agreement
shall be  determined  as of the close of business on any date of  determination.
Promptly upon receipt by Administrative  Agent of any amount described in clause
(i) of this  subsection  3.2B,  Administrative  Agent shall  distribute  to each
Lender its Pro Rata Share of such amount.

3.3      Drawings and  Reimbursement of Amounts Paid Under Letters of Credit and
         the IRB Reimbursement Agreement.

         A.  Responsibility  of Issuing  Lender  With  Respect to  Drawings.  In
determining  whether  to honor any  drawing  under  any  Letter of Credit by the
beneficiary  thereof,  Issuing Lender shall be  responsible  only to examine the
documents  delivered  under such Letter of Credit with  reasonable care so as to
ascertain  whether they appear on their face to be in accordance  with the terms
and conditions of such Letter of Credit.

         B.  Reimbursement  by Borrower of Amounts Paid Under  Letters of Credit
and the IRB Reimbursement Agreement. In the event that either (x) Issuing Lender
has  determined  to honor a drawing under a Letter of Credit issued by it or (y)
Issuing Lender makes any IRB  Reimbursement  Advance under the IRB Reimbursement
Agreement,  Issuing Lender shall immediately notify Borrower, and Borrower shall
reimburse Issuing Lender on or before the Business Day immediately following the
date on which such drawing is honored or such IRB Reimbursement Advance is made,
as applicable (the  "Reimbursement  Date"),  in an amount in Dollars and in same
day funds equal to the amount of such honored drawing or such IRB  Reimbursement
Advance;  provided  that,  anything  contained in this Agreement to the contrary
notwithstanding,  (i) unless Borrower shall have notified  Administrative  Agent
and Issuing  Lender  prior to 10:00 A.M.  (Dallas,  Texas time) on the date such
drawing is honored or IRB Reimbursement Advance is made that Borrower intends to
reimburse  Issuing  Lender  for  the  amount  of  such  honored  drawing  or IRB
Reimbursement  Advance with funds other than the  proceeds of  Revolving  Loans,
Borrower  shall  be  deemed  to have  given a  timely  Notice  of  Borrowing  to
Administrative  Agent  requesting  Lenders to make Revolving Loans that are Base
Rate  Loans on the  Reimburse  ment Date in an amount  in  Dollars  equal to the
amount of such honored drawing or IRB Reimbursement  Advance and (ii) subject to
satisfaction or waiver of the conditions  specified in subsection 4.3B,  Lenders
shall, on the

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Reimbursement  Date, make Revolving Loans that are Base Rate Loans in the amount
of such  honored  drawing or IRB  Reimbursement  Advance,  the proceeds of which
shall be applied directly by  Administrative  Agent to reimburse  Issuing Lender
for the  amount  of such  honored  drawing  or IRB  Reimbursement  Advance;  and
provided,  further that if for any reason  proceeds of  Revolving  Loans are not
received by Issuing Lender on the  Reimbursement  Date in an amount equal to the
amount of such honored  drawing or IRB  Reimbursement  Advance,  Borrower  shall
reimburse Issuing Lender, on demand, in an amount in same day funds equal to the
excess of the amount of such honored drawing or IRB  Reimbursement  Advance over
the aggregate  amount of such Loans,  if any, which are so received.  Nothing in
this  subsection  3.3B shall be deemed to relieve any Lender from its obligation
to make  Loans on the terms and  conditions  set  forth in this  Agreement,  and
Borrower  shall  retain  any and all  rights  it may  have  against  any  Lender
resulting  from the  failure  of such  Lender  to make  such  Loans  under  this
subsection 3.3B.

         C. Payment by Lenders of  Unreimbursed  Amounts  Paid Under  Letters of
Credit or the IRB Reimbursement Agreement.

                  (i) Payment by Lenders.  In the event that Borrower shall fail
         for any reason to reimburse  Issuing  Lender as provided in  subsection
         3.3B in an amount equal to the amount of any drawing honored by Issuing
         Lender  under  a  Letter  of  Credit  issued  by it or  under  the  IRB
         Reimbursement  Agreement, as applicable,  Issuing Lender shall promptly
         notify each other  Lender of the  unreimbursed  amount of such  honored
         drawing  or IRB  Reimbursement  Advance  and  of  such  other  Lender's
         respective participation therein based on such Lender's Pro Rata Share.
         Each Lender shall make  available to Issuing  Lender an amount equal to
         its respective participation,  in Dollars and in same day funds, at the
         office of Issuing Lender specified in such notice,  not later than 2:00
         P.M. (Dallas,  Texas time) on the first business day (under the laws of
         the  jurisdiction  in which such  office of Issuing  Lender is located)
         after the date notified by Issuing Lender. In the event that any Lender
         fails to make  available  to Issuing  Lender on such  business  day the
         amount of such Lender's  participation  in such Letter of Credit or the
         IRB  Reimbursement  Agreement,  as  applicable,  as  provided  in  this
         subsection  3.3C,  Issuing  Lender  shall be entitled  to recover  such
         amount on demand from such Lender together with interest thereon at the
         rate  customarily  used by Issuing  Lender for the correction of errors
         among banks for three  Business  Days and  thereafter at the Base Rate.
         Nothing in this  subsection 3.3C shall be deemed to prejudice the right
         of any Lender to recover from Issuing Lender any amounts made available
         by such Lender to Issuing Lender  pursuant to this  subsection  3.3C in
         the event that it is  determined  by the final  judgment  of a court of
         competent  jurisdiction  that the payment  with  respect to a Letter of
         Credit or the IRB Reimbursement  Agreement by Issuing Lender in respect
         of which payment was made by such Lender  constituted  gross negligence
         or willful misconduct on the part of Issuing Lender.

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<PAGE>

                  (ii) Distribution to Lenders of  Reimbursements  Received From
         Borrower.  In the event  Issuing  Lender shall have been  reimbursed by
         other Lenders pursuant to subsection  3.3C(i) for all or any portion of
         any drawing  honored by Issuing  Lender under a Letter of Credit issued
         by it, or under the IRB Reimbursement Agreement, as applicable, Issuing
         Lender shall distribute to each other Lender which has paid all amounts
         payable by it under  subsection  3.3C(i)  with  respect to such honored
         drawing such other Lender's Pro Rata Share of all payments subsequently
         received by Issuing  Lender  from  Borrower  in  reimbursement  of such
         honored  drawing or IRB  Reimbursement  Advance when such  payments are
         received.  Any  such  distribution  shall  be made to a  Lender  at its
         primary address set forth below its name on the  appropriate  signature
         page hereof or at such other address as such Lender may request.

         D.  Interest  on  Amounts  Paid  Under  Letters  of Credit  and the IRB
Reimbursement Agreement.

                  (i) Payment of Interest by Borrower. Borrower agrees to pay to
         Issuing Lender,  with respect to drawings  honored under any Letters of
         Credit  issued by it, and with respect to IRB  Reimbursement  Advances,
         interest on the amount  paid by Issuing  Lender in respect of each such
         honored drawing or IRB Reimbursement Advance from the date such drawing
         is honored or IRB  Reimbursement  Advance is made to but  excluding the
         date  such  amount  is  reimbursed  by  Borrower  (including  any  such
         reimbursement  out of the  proceeds  of  Revolving  Loans  pursuant  to
         subsection  3.3B) at a rate equal to (a) for the  period  from the date
         such  drawing is honored  or IRB  Reimbursement  Advance is made to but
         excluding the Reimburse  ment Date,  the rate then in effect under this
         Agreement with respect to Revolving  Loans that are Base Rate Loans and
         (b)  thereafter,  a rate which is 2% per annum in excess of the rate of
         interest  otherwise  payable  under  this  Agreement  with  respect  to
         Revolving Loans that are Base Rate Loans.  Interest payable pursuant to
         this  subsection  3.3D(i)  shall be  computed on the basis of a 365-day
         year for the actual  number of days elapsed in the period  during which
         it accrues and shall be payable on demand or, if no demand is made,  on
         the date on which the related  drawing  under a Letter of Credit or IRB
         Reimbursement Advance is reimbursed in full.

                  (ii)  Distribution  of Interest  Payments  by Issuing  Lender.
         Promptly  upon  receipt by Issuing  Lender of any  payment of  interest
         pursuant to subsection  3.3D(i) with respect to a drawing honored under
         a  Letter  of  Credit   issued  by  it,  or  with  respect  to  an  IRB
         Reimbursement  Advance,  (a) Issuing  Lender shall  distribute  to each
         other Lender, out of the interest received by Issuing Lender in respect
         of the  period  from the  date  such  drawing  is  honored  or such IRB
         Reimbursement is made to but excluding the date on which Issuing Lender
         is  reimbursed  for the  amount of such  drawing  or IRB  Reimbursement
         Advance  (including  any  such  reimbursement  out of the  proceeds  of
         Revolving  Loans,  the amount  that such other  Lender  would have been
         entitled  to receive

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<PAGE>

         either  (x) in respect of the letter of credit fee that would have been
         payable in respect of such Letter of Credit for such period pursuant to
         subsection  3.2 if no drawing  had been  honored  under such  Letter of
         Credit, or (y) in respect of the IRB  Reimbursement  Agreement fee that
         would have been payable for such period  pursuant to subsection  3.2 if
         no IRB Reimbursement  Advance had been made, as applicable,  and (b) in
         the event  Issuing  Lender shall have been  reimbursed by other Lenders
         pursuant to  subsection  3.3C(i) for all or any portion of such honored
         drawing, or IRB Reimbursement Advance,  Issuing Lender shall distribute
         to each other  Lender  which has paid all  amounts  payable by it under
         subsection  3.3C(i)  with  respect  to  such  honored  drawing  or  IRB
         Reimbursement  Advance  such  other  Lender's  Pro  Rata  Share  of any
         interest  received by Issuing Lender in respect of that portion of such
         honored  drawing or IRB  Reimbursement  Advance so  reimbursed by other
         Lenders  for the period  from the date on which  Issuing  Lender was so
         reimbursed  by other  Lenders to but  excluding  the date on which such
         portion  of  such  honored  drawing  or IRB  Reimbursement  Advance  is
         reimbursed by Borrower. Any such distribution shall be made to a Lender
         at its  primary  address  set forth  below its name on the  appropriate
         signature  page  hereof or at such  other  address  as such  Lender may
         request.

3.4      Obligations Absolute.

         The  obligation  of Borrower to reimburse  Issuing  Lender for drawings
honored under Letters of Credit and IRB Reimbursement  Advances and to repay any
Revolving Loans made by Lenders  pursuant to subsection 3.3B and the obligations
of Lenders under subsection  3.3C(i) shall be unconditional  and irrevocable and
shall be paid strictly in accordance  with the terms of this Agreement under all
circumstances including, without limitation, any of the following circumstances:

                  (i) any lack of  validity or  enforceability  of any Letter of
         Credit or the IRB Reimbursement Agreement;

                  (ii) the  existence  of any claim,  set-off,  defense or other
         right  which  Borrower  or any  Lender  may have at any time  against a
         beneficiary  or any  transferee of any Letter of Credit (or any Persons
         for whom any such  transferee may be acting) or any  beneficiary of the
         IRB  Reimbursement  Agreement,  Issuing  Lender or other  Lender or any
         other Person or, in the case of a Lender, against Borrower,  whether in
         connection with this Agreement, the transactions contemplated herein or
         any unrelated transaction (including any underlying transaction between
         Borrower or one of its  Subsidiaries  and the beneficiary for which any
         Letter of Credit was procured);

                  (iii) any draft or other document  presented  under any Letter
         of Credit or with respect to the IRB Reimbursement Agreement proving to
         be forged,

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<PAGE>

         fraudulent,  invalid or  insufficient  in any respect or any  statement
         therein being untrue or inaccurate in any respect;

                  (iv)  payment  by  Issuing  Lender  under any Letter of Credit
         against presentation of a draft or other document which does not comply
         with the terms of such Letter of Credit;

                  (v)  any   adverse   change  in  the   business,   operations,
         properties,  assets, condition (financial or otherwise) or prospects of
         Borrower or any of its Subsidiaries;

                  (vi) any breach of this  Agreement or any other Loan  Document
         by any party thereto;

                  (vii) any other circumstance or happening whatsoever,  whether
         or not similar to any of the foregoing; or

                  (viii) the fact that an Event of Default or a Potential  Event
         of Default shall have  occurred and be  continuing;  provided,  in each
         case,  that payment by Issuing  Lender under the  applicable  Letter of
         Credit or with  respect to the IRB  Reimbursement  Agreement  shall not
         have  constituted  gross  negligence  or willful  misconduct of Issuing
         Lender under the circumstances in question.

3.5      Indemnification; Nature of Issuing Lender's Duties.

         A.  Indemnification.  In  addition  to amounts  payable as  provided in
subsection  3.6,  Borrower  hereby  agrees to protect,  indemnify,  pay and save
harmless  Issuing  Lender  from  and  against  any  and  all  claims,   demands,
liabilities,  damages, losses, costs, charges and expenses (including reasonable
fees,  expenses and  disbursements  of counsel and  allocated  costs of internal
counsel)  which  Issuing  Lender may incur or be  subject  to as a  consequence,
direct or  indirect,  of (i) the  issuance  of any  Letter of Credit by  Issuing
Lender,  other than, subject to the following clause (ii), the wrongful dishonor
by Issuing Lender of a proper demand for payment made under any Letter of Credit
issued by it,  (ii) the failure of Issuing  Lender to honor a drawing  under any
such Letter of Credit as a result of any act or  omission,  whether  rightful or
wrongful,  of  any  present  or  future  de  jure  or  de  facto  government  or
governmental  authority (all such acts or omissions herein called "Govern mental
Acts") or (iii) the execution, delivery and performance of the IRB Reimbursement
Agreement,  in any  case,  other  than as a result of the  gross  negligence  or
willful misconduct of Issuing Lender.

         B. Nature of Issuing Lender's  Duties.  As between Borrower and Issuing
Lender,  Borrower  assumes all risks of the acts and  omissions of, or misuse of
the

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<PAGE>

Letters of Credit issued by Issuing Lender by, the respective  beneficiaries  of
such Letters of Credit.  In furtherance  and not in limitation of the foregoing,
Issuing  Lender  shall  not  be  responsible   for:  (i)  the  form,   validity,
sufficiency,  accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any such Letter
of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument  transferring or assigning or purporting to transfer or assign
any such  Letter of Credit or the  rights or  benefits  thereunder  or  proceeds
thereof,  in whole or in part,  which may prove to be invalid or ineffective for
any reason;  (iii)  failure of the  beneficiary  of any such Letter of Credit to
comply fully with any  conditions  required in order to draw upon such Letter of
Credit;  (iv) errors,  omissions,  interruptions  or delays in  transmission  or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher;  (v) errors in interpretation of technical terms; (vi)
any loss or delay in the  transmission or otherwise of any document  required in
order to make a  drawing  under any such  Letter  of  Credit or of the  proceeds
thereof;  (vii) the  misapplication  by the  beneficiary  of any such  Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
consequences arising from causes beyond the control of Issuing Lender, including
without  limitation any Governmental Acts, and none of the above shall affect or
impair,  or prevent  the vesting  of, any of Issuing  Lender's  rights or powers
hereunder,  except,  in any case, as a result of the gross negligence or willful
misconduct  of the Issuing  Lender.  As between  Borrower  and  Issuing  Lender,
Borrower assumes all risks of the acts and omissions of the beneficiaries of the
IRB Reimbursement  Agreement. 

         In  furtherance  and  extension  and not in  limitation of the specific
provisions set forth in the first paragraph of this subsection  3.5B, any action
taken or omitted by Issuing  Lender under or in  connection  with the Letters of
Credit  issued by it,  the IRB  Reimbursement  Agreement  or any  documents  and
certificates delivered thereunder, if taken or omitted in good faith and without
gross negligence or willful  misconduct,  shall not put Issuing Lender under any
resulting liability to Borrower.

         Notwithstanding  anything to the contrary  contained in this subsection
3.5, Borrower shall retain any and all rights it may have against Issuing Lender
for  any  liability  arising  solely  out of the  gross  negligence  or  willful
misconduct of Issuing  Lender,  as determined by a final  judgment of a court of
competent jurisdiction.

3.6      Increased Costs and Taxes Relating to Letters of Credit.

         Subject  to  the   provisions  of  subsection   2.7B  (which  shall  be
controlling  with  respect to the matters  covered  thereby),  in the event that
Issuing Lender or Lender shall  determine  (which  determination  shall,  absent
manifest  error,  be final and conclusive  and binding upon all parties  hereto)
that any law,  treaty or governmental  rule,  regulation or order, or any change
therein  or  in  the  interpretation,   administration  or  application  thereof
(including  the  introduction  of any new  law,

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<PAGE>

treaty or governmental  rule,  regulation or order),  or any  determination of a
court or governmental  authority,  in each case that becomes effective after the
date  hereof,  or  compliance  by Issuing  Lender or Lender with any  guideline,
request or directive issued or made after the date hereof by any central bank or
other  governmental or  quasi-governmental  authority (whether or not having the
force of law):

                  (i)  subjects  Issuing  Lender  or Lender  (or its  applicable
         lending or letter of credit  office) to any  additional Tax (other than
         any Tax on the  overall  net income of Issuing  Lender or Lender)  with
         respect to the issuing or  maintaining  of any Letters of Credit or the
         purchasing or  maintaining of any  participations  therein or any other
         obligations  under this  Section 3,  whether  directly or by such being
         imposed on or suffered by any particular Issuing Lender;

                  (ii)  imposes,   modifies  or  holds  applicable  any  reserve
         (including  without limitation any marginal,  emergency,  supplemental,
         special or other  reserve),  special  deposit,  compulsory  loan,  FDIC
         insurance  or similar  requirement  in respect of any Letters of Credit
         issued by Issuing  Lender or  participations  therein  purchased by any
         Lender; or

                  (iii) imposes any other condition  (other than with respect to
         a Tax  matter)  on or  affecting  Issuing  Lender  or  Lender  (or  its
         applicable  lending or letter of credit office)  regarding this Section
         3,  any  Letter  of  Credit  or any  participation  therein  or the IRB
         Reimbursement Agreement;

and the result of any of the  foregoing  is (x) to increase  the cost to Issuing
Lender or Lender of  agreeing  to issue,  issuing or  maintaining  any Letter of
Credit or agreeing to purchase,  purchasing  or  maintaining  any  participation
therein or purchasing its obligations under the IRB  Reimbursement  Agreement or
(y) to reduce any amount  received or receivable by Issuing Lender or Lender (or
its applicable  lending or letter of credit office) with respect thereto;  then,
in any case,  Borrower  shall  promptly  pay to Issuing  Lender or Lender,  upon
receipt of the  statement  referred  to in the next  sentence,  such  additional
amount or amounts as may be necessary to compensate Issuing Lender or Lender for
any  such  increased  cost  or  reduction  in  amounts  received  or  receivable
hereunder.  Issuing  Lender or  Lender,  as the case may be,  shall  deliver  to
Borrower a written  statement,  setting forth in reasonable detail the basis for
calculating  the additional  amounts owed to Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.


Section 4.        CONDITIONS TO EFFECTIVENESS TO LOANS AND LETTERS OF CREDIT

4.1      Conditions to Effectiveness.

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<PAGE>

         The  effectiveness  of this Agreement is subject to the satisfaction of
all of the following conditions:

         (i) each of the  parties  hereto  shall  have  executed  and  delivered
counterparts of this Agreement to Administrative Agent; and

         (ii) Borrower and Parent shall have taken such actions and delivered to
Administrative  Agent such  documents  as  Administrative  Agent may  reasonably
request and all such documents  shall be in form and substance  satisfactory  to
Administrative Agent.

4.2      Conditions to All Loans.

         The  obligations  of  Lenders to make  Loans on each  Funding  Date are
subject to the following further conditions precedent:

         A. Agent shall have  received  before that Funding  Date, in accordance
with the  provisions  of  subsection  2.1B,  an  originally  executed  Notice of
Borrowing,  in each  case  signed  by the  chief  executive  officer,  the chief
financial  officer or the treasurer of Borrower or by any  executive  officer of
Borrower designated by any of the above-described officers on behalf of Borrower
in a writing delivered to Administrative Agent.

         B.       As of that Funding Date:

                  (i) The representations and warranties contained herein and in
         the other Loan  Documents  shall be true,  correct and  complete in all
         material  respects on and as of that Funding Date to the same extent as
         though  made  on  and as of  that  date,  except  to  the  extent  such
         representations and warranties  specifically relate to an earlier date,
         in which case such representations and warranties shall have been true,
         correct and complete in all material respects on and as of such earlier
         date;

                  (ii) No event shall have  occurred and be  continuing or would
         result from the  consummation  of the  borrowing  contemplated  by such
         Notice of  Borrowing  that  would  constitute  an Event of Default or a
         Potential Event of Default;

                  (iii) No order, judgment or decree of any court, arbitrator or
         governmental  authority  shall purport to enjoin or restrain any Lender
         from making the Loans to be made by it on that Funding Date; and

                  (iv) The making of the Loans  requested  on such  Funding Date
         shall not violate any law including, without limitation,  Regulation G,
         Regulation  T, Regulation  U or  Regulation X of the Board of Governors
         of the Federal Reserve System.

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<PAGE>

4.3      Conditions to Letters of Credit.

         The  issuance  of any  Letter of Credit  hereunder  is  subject  to the
following conditions precedent:

         A. On or before the date of issuance of the initial Revolving Letter of
Credit pursuant to this Agreement, the initial Loans shall have been made.

         B.  On or  before  the  date of  issuance  of such  Letter  of  Credit,
Administrative  Agent shall have received,  in accordance with the provisions of
subsection  3.1B(i),  an  originally  executed  Notice of  Issuance of Letter of
Credit, in each case signed by the chief executive officer,  the chief financial
officer or the  treasurer  of Borrower or by any  executive  officer of Borrower
designated  by any of the  above-described  officers  on behalf of Borrower in a
writing delivered to Administrative  Agent,  together with all other information
specified  in  subsection  3.1B(i) and such other  documents or  information  as
Issuing  Lender may reasonably  require in connection  with the issuance of such
Letter of Credit.


Section 5.        BORROWER'S REPRESENTATIONS AND WARRANTIES

         In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lender to issue Letters of Credit and to enter into the
IRB   Reimbursement   Agreement,   and  to  induce  other  Lenders  to  purchase
participations  in the  Letters of Credit and the IRB  Reimbursement  Agreement,
each of Parent and Borrower,  jointly and severally,  represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date and on the date
of issuance of each Letter of Credit,  that the following  statements  are true,
correct and complete:

5.1      Organization,   Powers,   Qualification,   Good   Standing,   Business,
         Subsidiaries and Restructuring.

         A.  Organization  and  Powers.  Each Loan Party is a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto.  Each
Loan Party has all  requisite  corporate  power and authority to own and operate
its properties,  to carry on its business as now conducted and as proposed to be
conducted,  to enter into the Loan Documents and Related  Agreements to which it
is a party and to carry out the transactions contemplated thereby.

         B. Qualification and Good Standing.  Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and  wherever  necessary to carry out its  business  and  operations,  except in
jurisdictions  where the failure to be so qualified or in good  standing has not
had and will not have a Material Adverse Effect.

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<PAGE>

         C. Conduct of Business. Parent and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.12.

         D.  Subsidiaries.  All of the Subsidiaries of Borrower are wholly owned
and  identified  in Schedule  5.1 annexed  hereto,  as said  Schedule 5.1 may be
supplemented  from  time  to  time  pursuant  to the  provisions  of  subsection
6.1(xvi).  The capital stock of each of the Subsidiaries of Borrower  identified
in Schedule 5.1 annexed hereto (as so supplemented) is duly authorized,  validly
issued,  fully paid and nonassessable and none of such capital stock constitutes
Margin Stock.  Each of the  Subsidiaries of Borrower  identified in Schedule 5.1
annexed hereto (as so  supplemented)  is a corporation  duly organized,  validly
existing and in good standing under the laws of its respective  jurisdiction  of
incorporation  set forth  therein  (which  jurisdiction  shall be in the  United
States),  has all requisite corporate power and authority to own and operate its
properties  and to carry on its business as now  conducted and as proposed to be
conducted,  and is  qualified  to do  business  and in good  standing  in  every
jurisdiction  where its assets are located and  wherever  necessary to carry out
its  business  and  operations,  in each  case  except  where  failure  to be so
qualified or in good  standing or a lack of such  corporate  power and authority
has not had and will not have a Material  Adverse  Effect.  Schedule 5.1 annexed
hereto (as so  supplemented)  correctly  sets forth the  ownership  interest  of
Borrower and each of its  Subsidiaries  in each of the  Subsidiaries of Borrower
identified therein.

         E.  Restructuring.  The  Restructuring  has been  consummated as of the
Closing Date in accordance with the terms thereof.

5.2      Authorization of Borrowing, etc.

         A. Authorization of Borrowing. The execution,  delivery and performance
of the Loan Documents and the Related  Agreements  have been duly  authorized by
all  necessary  corporate  action on the part of each Loan Party that is a party
thereto.

         B. No Conflict. The execution, delivery and performance by Loan Parties
of the Loan  Documents and the Related  Agreements to which they are parties and
the consummation of the transactions contemplated by the Loan Documents and such
Related  Agreements  do not and will not (i) violate any provision of any law or
any  governmental  rule  or  regulation  applicable  to  Parent  or  any  of its
Subsidiaries,  the Certificate or Articles of  Incorporation or Bylaws of Parent
or any of its  Subsidiaries  or any  order,  judgment  or decree of any court or
other agency of government  binding on Parent or any of its  Subsidiaries,  (ii)
conflict with,  result in a breach of or constitute (with due notice or lapse of
time or both) a default under any material  Contractual  Obligation of Parent or
any of its  Subsidiaries,  (iii) result in or require the creation or imposition
of any  Lien  upon any of the  properties  or  assets  of  Parent  or any of its
Subsidiaries  (other than any Liens created  under any of the Loan  Documents in
favor of  Administrative  Agent on  behalf  of  Lenders),  or (iv)  require  any
approval of  stockholders  or any  approval  or consent of any Person  under any
material

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<PAGE>

Contractual  Obligation  of Parent or any of its  Subsidiaries,  except for such
approvals or consents that are (i) listed on Schedule 5.2B and (ii) that will be
obtained  on or before the  Closing  Date or where the  failure  to obtain  such
approvals or consents has not had and would not be  reasonably  likely to have a
Material Adverse Effect.

         C. Governmental  Consents.  The execution,  delivery and performance by
Loan Parties of the Loan Documents and the Related  Agreements to which they are
parties  and the  consummation  of the  transactions  contemplated  by the  Loan
Documents  and  such  Related  Agreements  do  not  and  will  not  require  any
registration  with,  consent or approval  of, or notice to, or other  action to,
with or by, any federal,  state or other  governmental  authority or  regulatory
body,  except for such  registrations,  consents,  approvals,  notices and other
actions that are (i) listed on Schedule 5.2C, all of which have been obtained or
made on or prior to the  Closing  Date and are in full  force and effect or (ii)
are  required   exclusively  in  connection   with  the   Acquisition   and  the
Restructuring,  the  failure to obtain of which has not and had and would not be
reasonably likely to have a Material Adverse Effect.

         D.  Binding  Obligation.   Each  of  the  Loan  Documents  and  Related
Agreements  has been duly  executed  and  delivered by each Loan Party that is a
party  thereto and is the  legally  valid and  binding  obligation  of such Loan
Party,  enforceable  against such Loan Party in accordance  with its  respective
terms,  except as may be  limited  by  bankruptcy,  insolvency,  reorganization,
moratorium or similar laws relating to or limiting  creditors'  rights generally
or by equitable principles relating to enforceability.

         E.  Valid  Issuance  of  Senior  Guaranteed  Notes.  Borrower  has  the
corporate power and authority to issue the Senior  Guaranteed  Notes. The Senior
Guaranteed  Notes are the legally  valid and binding  obligations  of  Borrower,
enforceable  against Borrower in accordance with their respective terms,  except
as may be limited  by  bankruptcy,  insolvency,  reorganization,  moratorium  or
similar laws relating to or limiting creditors' rights generally or by equitable
principles  relating to enforceability.  The Senior Guaranteed Notes have either
(a) have  been  registered  or  qualified  under  applicable  federal  and state
securities laws or (b) be exempt therefrom.

 5.3 Financial Condition.

         Borrower has heretofore  delivered to Lenders, at Lenders' request, the
following Financial Statements:

                  (i)  the  consolidated  balance  sheets  of  Borrower  and its
         Subsidiaries  as at September 30, 1994,  1995 and 1996, and the related
         consolidated  statements  of income and cash flows of Borrower  and its
         Subsidiaries for the fiscal years then ended, accompanied,  in the case
         of the financial  statements

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<PAGE>

         for the fiscal years ended  September  30, 1994 and September 30, 1995,
         by an opinion of Borrower's accoun tants, and accompanied,  in the case
         of the  financial  statements  for the fiscal year ended  September 30,
         1996, by a form of opinion of Borrower's  accountants,  together with a
         letter  from  Borrower's  accountants  with  respect  thereto,  and the
         consolidated  and  consolidating  balance  sheets of  Borrower  and its
         Subsidiaries   as  at  October  31,  1996,   together   with   selected
         consolidated  statements of income,  stockholders' equity and cash flow
         for the one  month  period  then  ended,  duly  certified  by the chief
         financial  officer of Borrower that such  financial  statements  fairly
         present  (subject,  in the case of such balance sheet as at October 31,
         1996 and such  statements  of income  and cash  flows for the one month
         then ended,  to normal  year-end audit  adjustments)  the  consolidated
         financial  condition of Borrower and its  Subsidiaries as at such dates
         and the  consolidated  results of the  operation  of  Borrower  and its
         Subsidiaries  for the  periods  ended on such  dates  and that all such
         financial  statements,   including  the  related  schedules  and  notes
         thereto,   have  been   prepared  in   accordance   with  GAAP  applied
         consistently throughout the periods involved;

                  (ii) the  consolidated  balance sheets of Quality Foods,  L.P.
         and its  Subsidiaries  as at December 31, 1993,  1994 and 1995, and the
         related  statements of income and cash flows of Quality Foods, L.P. and
         its  Subsidiaries  for the fiscal years then ended,  accompanied  by an
         opinion of Quality Foods, L.P.'s accountants;  the consolidated balance
         sheet of Quality Foods,  L.P. and its  Subsidiaries as at September 30,
         1995 and 1996,  and the related  consolidated  statements of income and
         cash flows of Quality  Foods,  L.P. and its  Subsidiaries  for the nine
         months then ended,  duly  certified by the chief  financial  officer of
         Quality  Foods,  L.P. that such  financial  statements  fairly  present
         (subject,  in the case of such balance  sheet as at September  30, 1996
         and such  statements  of income and cash flows for the nine months then
         ended, to normal year-end audit adjustments) the consolidated financial
         condition of Quality Foods,  L.P. and its Subsidiaries as at such dates
         and the consolidated  results of the operations of Quality Foods,  L.P.
         and its  Subsidiaries  for the periods ended on such dates and that all
         such financial  statements,  including the related  schedules and notes
         thereto,   have  been   prepared  in   accordance   with  GAAP  applied
         consistently throughout the periods involved;

                  (iii) pro  forma  financial  statements  of  Borrower  and its
         Subsidiaries   as  of  September   30,  1996,   giving  effect  to  the
         Acquisition,  the Restructuring and the other transactions contemplated
         hereby and reflecting estimated purchase price accounting  adjustments,
         prepared by Borrower,  and  substantially in compliance with Article 11
         of Regulation S-X of the Securities and Exchange  Commission  (assuming
         such pro forma financial statements were furnished in connection with a
         public  offering),  which  pro  forma  financial  statements  shall  be
         accompanied by a certificate of the chief financial officer of Borrower
         to  the  effect  that,   based  on  his  discussion   with

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<PAGE>

         Borrower's  accountants,   such  pro  forma  financial  statements  are
         substantially in compliance with such Article 11; and

                  (iv)  together with each of the interim  financial  statements
         referred to in  subdivision  (ii) above,  an  independent  accountant's
         review report signed by Quality Foods, L.P.'s accountants to the effect
         that they have  conducted a limited review with respect to such interim
         financial statements in accordance with Statement on Auditing Standards
         No. 71.


         The Financial  Statements  (other than pro forma financial  statements)
were  prepared  in  conformity  with GAAP and fairly  present,  in all  material
respects,  the financial  position (on a  consolidated  and,  where  applicable,
consolidating  basis) of the entities described in such Financial  Statements as
at the respective dates thereof and the results of operations and cash flows (on
a  consolidated  and,  where  applicable,  consolidating  basis) of the entities
described  therein for each of the periods then ended,  subject,  in the case of
any unaudited Financial  Statements,  to changes resulting from audit and normal
year-end  adjustments.  The  pro  forma  financial  statements  included  in the
Financial  Statements  present fairly the information  shown therein,  have been
properly  compiled on the pro forma basis described  therein,  and in Borrower's
opinion,  the assumptions used in the preparation thereof are reasonable and the
adjustments  used therein are appropriate to give effect to the  transactions or
circumstances  referred to herein.  Parent and its Subsidiaries do not (and will
not following the funding of the initial Loans) have any Contingent  Obligation,
contingent liability or liability for taxes,  long-term lease or unusual forward
or  long-term  commitment  that  is not  reflected  in the  foregoing  financial
statements  or the  notes  thereto  and which in any such  case is  material  in
relation to the business,  operations,  properties, assets, condition (financial
or otherwise) or prospects of Parent or any of its Subsidiaries.

5.4      No Material Adverse Change; No Restricted Junior Payments.

         Since  September  30, 1995,  no event or change has  occurred  that has
caused or evidences,  either in any case or in the aggregate, a Material Adverse
Effect.  Neither Parent nor any of its  Subsidiaries  has directly or indirectly
declared,  ordered,  paid or made,  or set apart any sum or  property  for,  any
Restricted  Junior  Payment or agreed to do so except as permitted by subsection
7.5 and as set forth in Schedule 5.4.

5.5      Title to Properties; Liens; Real Property.

         A. Title to Properties;  Liens.  Subject to Permitted Liens, Parent and
its  Subsidiaries  have (i) good,  sufficient and legal title to (in the case of
fee interests in real property),  (ii) valid leasehold interests in (in the case
of leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets

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<PAGE>

reflected in the financial  statements  referred to in subsection  5.3 or in the
most recent financial  statements  delivered pursuant to subsection 6.1, in each
case except for assets  disposed of since the date of such financial  statements
in the ordinary course of business or as otherwise  permitted  under  subsection
7.7. Except as permitted by this  Agreement,  all such properties and assets are
free and clear of Liens.

         B. Real Property.  As of the Closing Date,  Schedule 5.5 annexed hereto
contains a true,  accurate  and  complete  list of (i) all owned  Real  Property
Assets and (ii) all leases,  subleases or assignments  of leases  (together with
all  amendments,  modifications,  supplements,  renewals  or  extensions  of any
thereof)  affecting  each Real Property  Asset of any Loan Party,  regardless of
whether  such Loan Party is the  landlord or tenant  (whether  directly or as an
assignee or  successor in interest)  under such lease,  sublease or  assignment.
Except as specified in Schedule 5.5 annexed  hereto,  each  agreement  listed in
clause (ii) of the  immediately  preceding  sentence is in full force and effect
and neither  Parent nor  Borrower  has any  knowledge  of any  default  that has
occurred and is continuing  thereunder,  and each such agreement constitutes the
legally valid and binding obligation of each applicable Loan Party,  enforceable
against such Loan Party in accordance with its terms,  except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles.

5.6      Litigation; Adverse Facts.

         Except  as set  forth in  Schedule  5.6  annexed  hereto,  there are no
actions, suits, proceedings,  arbitrations or governmental investigations at law
or  in  equity,  or  before  or  by  any  federal,  state,  municipal  or  other
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Borrower or Parent,  threatened  against or affecting Parent or
any of its Subsidiaries or any property of Parent or any of its Subsidiaries and
that,  individually or in the aggregate,  could reasonably be expected to result
in a Material Adverse Effect.  Neither Parent nor any of its Subsidiaries (i) is
in  violation  of any  applicable  laws  (including  Environmental  Laws)  that,
individually  or in the aggregate,  could  reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions,  decrees, rules or regulations of any court
or any federal, state, municipal or other governmental  department,  commission,
board,   bureau,   agency  or  instrumentality,   domestic  or  foreign,   that,
individually  or in the aggregate,  could  reasonably be expected to result in a
Material Adverse Effect.

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<PAGE>

5.7      Payment of Taxes.

         Except to the extent  permitted by subsection  6.3, all tax returns and
reports of Parent and its Subsidiaries  required to be filed by any of them have
been timely filed, and all taxes due and payable and all  assessments,  fees and
other  governmental  charges  upon  Parent and its  Subsidiaries  and upon their
respective properties,  assets, income,  businesses and franchises which are due
and payable  have been paid when due and  payable.  Neither  Parent nor Borrower
knows of any proposed tax assessment  against Parent or any of its  Subsidiaries
which is not being actively contested by Parent or such Subsidiary in good faith
and by appropriate proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.

5.8      Performance  of Agreements;  Materially  Adverse  Agreements;  Material
Contracts.

         A.  Neither  Parent  nor any of its  Subsidiaries  is in default in the
performance,  observance or fulfillment of any of the obligations,  covenants or
conditions  contained in any of its  Contractual  Obligations,  and no condition
exists  that,  with the  giving of  notice  or the lapse of time or both,  would
constitute  such a default,  except  where the  consequences  of such default or
defaults, if any, would not have a Material Adverse Effect.

         B.  Schedule 5.8 contains a true,  correct and complete list of all the
Material  Contracts in effect on the Closing Date.  All such Material  Contracts
are  in  full  force  and  effect  and  no  material  defaults  currently  exist
thereunder,  and except where the consequenc es of such default or defaults,  if
any, would not reasonably be likely to have a Material Adverse Effect.

5.9      Governmental Regulation.

         Neither  Parent nor any of its  Subsidiaries  is subject to  regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state  statute  or  regulation  which may limit its  ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.

5.10     Securities Activities.

         A. Neither Parent nor any of its  Subsidiaries is engaged  principally,
or as one of its important  activities,  in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.

         B.  Following  application  of the proceeds of each Loan, not more than
25% of the value of the assets  (either of Borrower  only or of Borrower and its
Subsidiaries  on a  consolidated  basis) subject to the provisions of subsection
7.2  or  7.7 or  subject

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<PAGE>

to any restriction  contained in any agreement or instrument,  between  Borrower
and any Lender or any  Affiliate  of any Lender,  relating to  Indebtedness  and
within the scope of subsection 8.2, will be Margin Stock.

5.11     Employee Benefit Plans.

         A. Parent,  each of its Subsidiaries and each of their respective ERISA
Affiliates  are in  material  compliance  with  all  applicable  provisions  and
requirements  of  ERISA  and  the  regulations  and  published   interpretations
thereunder  with respect to each Employee  Benefit Plan,  and have performed all
their  material  obligations  under each Employee  Benefit  Plan.  Each Employee
Benefit Plan which is intended to qualify under  Section  401(a) of the Internal
Revenue Code is so qualified.

         B. No ERISA Event has occurred or is reasonably expected to occur.

         C. Except to the extent  required  under  Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee
Benefit  Plan  provides  health or welfare  benefits  (through  the  purchase of
insurance or otherwise) for any retired or former employee of Parent, any of its
Subsidiaries or any of their respective ERISA Affiliates.

         D. As of the most  recent  valuation  date for any  Pension  Plan,  the
amount of unfunded  benefit  liabilities  (as defined in Section  4001(a)(18) of
ERISA),  individually  or in the aggregate for all Pension Plans  (excluding for
purposes of such  computation  any Pension  Plans with  respect to which  assets
exceed benefit liabilities), does not exceed $500,000.

         E. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available,  the potential liability of Parent, its
Subsidiaries and their  respective  ERISA  Affiliates for a complete  withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated  with such  potential  liability for a complete  withdrawal  from all
Multiemployer Plans, based on information  available pursuant to Section 4221(e)
of ERISA, does not exceed $500,000.

5.12     Certain Fees.

         No broker's or finder's fee or commission  will be payable with respect
to this  Agreement,  and Parent and  Borrower  hereby,  jointly  and  severally,
indemnify  Lenders against,  and agrees that it will hold Lenders harmless from,
any claim, demand or liability for any such broker's or finder's fees alleged to
have  been  incurred  in  connection  herewith  or  therewith  and any  expenses
(including  reasonable fees,  expenses and  disbursements of counsel) arising in
connection with any such claim, demand or liability.

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<PAGE>

5.13     Environmental Protection.

         Except as set forth in Schedule 5.13 annexed hereto:

                  (i)  neither  Parent  nor any of its  Subsidiaries  nor any of
         their   respective   Facilities  or  operations   are  subject  to  any
         outstanding written order,  consent decree or settlement agreement with
         any Person relating to (a) any Environmental Law, (b) any Environmental
         Claim, or (c) any Hazardous Materials Activity;

                  (ii) neither Parent nor any of its  Subsidiaries  has received
         any  letter  or  request  for  information  under  Section  104  of the
         Comprehensive Environmental Response,  Compensation,  and Liability Act
         (42 U.S.C. ss. 9604) or any comparable state law;

                  (iii)  there are and, to Parent's  and  Borrower's  knowledge,
         have been no conditions, occurrences, or Hazardous Materials Activities
         which   could   reasonably   be  expected  to  form  the  basis  of  an
         Environmental Claim against Parent or any of its Subsidiaries;

                  (iv) for at least three years prior to the Closing Date,  each
         of  Borrower  and its  Subsidiaries  has  maintained  an  environmental
         management  system for its operations that demonstrates a commitment to
         environmental  compliance and includes procedures for (a) preparing and
         updating  appropriate  written  compliance  manuals covering  pertinent
         regulatory areas, (b) tracking changes in applicable Environmental Laws
         and modifying operations to comply with new requirements thereunder and
         (c)  training   employees  to  comply  with  applicable   environmental
         requirements and updating such training as necessary; and

                  (v)  compliance  with all  current or  reasonably  foreseeable
         future require ments pursuant to or under  Environmental Laws will not,
         individually  or in the  aggregate,  have a reasonable  possibility  of
         giving rise to a Material Adverse Effect.

Notwithstanding  anything in this subsection  5.13 to the contrary,  no event or
condition  has  occurred or is  occurring  with  respect to Parent or any of its
Subsidiaries  relating  to any  Environmental  Law,  any  Release  of  Hazardous
Materials,  or any Hazardous  Materials  Activity  (including those set forth in
Schedule 5.13 annexed hereto) which  individually or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.

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<PAGE>

5.14     Employee Matters.

         There  is no  strike  or  work  stoppage  in  existence  or  threatened
involving Parent or any of its Subsidiaries that could reasonably be expected to
have a Material Adverse Effect.

5.15     Solvency.

         Each Loan Party is, and the Loan Parties taken as a whole are, and upon
the  incurrence  of any  Loans by such  Loan  Party  on any  date on which  this
representation  is made each Loan  Party and the Loan  Parties  taken as a whole
will be, Solvent.  Without limiting the foregoing,  each Loan Party and the Loan
Parties taken as a whole will be Solvent on the Closing Date after giving effect
to the  Acquisition,  the  Restructuring  and the borrowings  made in connection
therewith.

5.16     Matters Relating to Collateral.

         A.  Creation,  Perfection  and  Priority of Liens.  The  execution  and
delivery of the  Collateral  Documents by Loan  Parties,  together  with (i) the
actions  taken on or prior to the Closing Date pursuant to  subsections  6.8 and
6.9 and (ii) the delivery to Administrative  Agent of any Pledged Collateral not
delivered to  Administrative  Agent at the time of execution and delivery of the
applicable  Collateral  Document  (all of which Pledged  Collateral  has been so
delivered)  are  effective  to create in favor of  Administrative  Agent for the
benefit of Lenders,  as security  for the  respective  Secured  Obligations  (as
defined in the applicable  Collateral Document in respect of any Collateral),  a
valid  and  perfected  First  Priority  Lien on all of the  Collateral,  and all
filings and other  actions  necessary  or  desirable to perfect and maintain the
perfection and First Priority  status of such Liens have been duly made or taken
and remain in full force and effect,  other than the filing of any UCC financing
statements  delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC  continuation  statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.

         B. Governmental  Authorizations.  No  authorization,  approval or other
action  by,  and no notice to or filing  with,  any  governmental  authority  or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of  Administrative  Agent pursuant
to any of the Collateral  Documents or (ii) the exercise by Administrative Agent
of any rights or remedies  in respect of any  Collateral  (whether  specifically
granted or created  pursuant to any of the  Collateral  Documents  or created or
provided for by applicable law),  except for filings or recordings  contemplated
by  subsection  5.16A and  except as may be  required,  in  connection  with the
disposition of any Pledged Collateral,  by laws generally affecting the offering
and sale of securities.

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<PAGE>

         C. Absence of Third-Party  Filings.  Except such as may have been filed
in favor of Administrative  Agent as contemplated by subsection 5.16A and except
as set forth in  Schedule  5.16C,  (i) no  effective  UCC  financing  statement,
fixture filing or other instrument similar in effect covering all or any part of
the  Collateral  is on file in any filing or recording  office  (other than with
respect to  Permitted  Liens) and (ii) no effective  filing  covering all or any
part of the IP Collateral is on file in the PTO.

         D. Margin Regulations. The pledge of the Pledged Collateral pursuant to
the Collateral  Documents does not violate  Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.

         E.  Information  Regarding  Collateral.  All  information  supplied  to
Administrative  Agent by or on behalf of any Loan Party  with  respect to any of
the  Collateral  (in each case taken as a whole with  respect to any  particular
Collateral) is accurate and complete in all material respects.

5.17     Related Agreements.

         A.  Delivery of Related  Agreements.  Borrower has delivered to Lenders
complete  and correct  copies of each  effective  Related  Agreement  and of all
exhibits and schedules thereto.

         B.  Warranties  of Borrower.  Subject to the  qualifications  set forth
therein,  each of the representations and warranties given by Borrower to all of
the  stockholders  of QF  Acquisition  and QF Management  and all of the limited
partners of Quality Foods, L.P. in the Acquisition Agreement is true and correct
in all  material  respects as of the date hereof and will be true and correct in
all material respects as of the Closing Date.

         C. Survival.  Notwithstanding  anything in the Acquisition Agreement to
the  contrary,  the  representations  and  warranties  of Borrower  set forth in
subsections  5.17B  shall,  solely for purposes of this  Agreement,  survive the
Closing Date for the benefit of Lenders.

5.18     Disclosure.

         No  representation  or  warranty  of Parent or any of its  Subsidiaries
contained in any Loan  Document or Related  Agreement or in any other  document,
certificate or written statement  furnished to Lenders by or on behalf of Parent
or  any  of  its  Subsidiaries  for  use in  connection  with  the  transactions
contemplated by this Agreement  contains any untrue statement of a material fact
or omits to state a material  fact (known to Parent or Borrower,  in the case of
any document  not  furnished  by it)  necessary in order to make the  statements
contained  herein or therein not  misleading  in light of the  circumstances  in
which  the same  were  made  and that

                                       93
<PAGE>

individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Any projections and pro forma financial information contained in
such materials are based upon good faith estimates and  assumptions  believed by
Parent  and its  Subsidiaries  to be  reasonable  at the  time  made,  it  being
recognized  by Lenders that such  projections  as to future events are not to be
viewed as facts and that actual results during the period or periods  covered by
any such projections may materially differ from the projected results.


Section 6.        PARENT'S AND BORROWER'S AFFIRMATIVE COVENANTS

         Parent and Borrower, jointly and severally, covenant and agree that, so
long as any of the  Commitments  hereunder  shall  remain  in  effect  and until
payment in full of all of the Loans and other  Obligations and the  cancellation
or  expiration  of all  Letters  of  Credit  and  the  termination  of  the  IRB
Reimbursement  Agreement,  unless  Requisite  Lenders shall otherwise give prior
written consent,  Parent shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.

6.1      Financial Statements and Other Reports.

         Parent will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting  established  and  administered  in  accordance  with sound
business practices to permit  preparation of financial  statements in conformity
with GAAP. Borrower will deliver to Administrative Agent and Lenders:

                  (i) Monthly Financials:  as soon as available and in any event
         within 30 days after the end of each  month  ending  after the  Closing
         Date, (a) the consolidated and  consolidating  balance sheets of Parent
         and  its  Subsidiaries  as at the  end of such  month  and the  related
         consolidated  and  consolidating  statements  of income,  stockholders'
         equity and cash flows of Parent and its Subsidiaries for such month and
         for the period from the  beginning of the then  current  Fiscal Year to
         the end of such month,  setting forth in each case in comparative  form
         the corresponding figures for the corresponding periods of the previous
         Fiscal Year and the  corresponding  figures from the Financial Plan for
         the current Fiscal Year, to the extent prepared on a monthly basis, all
         in reasonable  detail and certified by the chief  financial  officer of
         Parent and Borrower that they fairly present, in all material respects,
         the financial  condition of Parent and its Subsidiaries as at the dates
         indicated and the results of their  operations and their cash flows for
         the  periods  indicated,  subject to changes  resulting  from audit and
         normal  year-end  adjustments,  (b) a narrative  report  describing the
         operations  of Parent and its  Subsidiaries  in the form  prepared  for
         presentation  to senior  management  for such  month and for the period
         from the  beginning of the then current  Fiscal Year to the end of such
         month and (c) reports on the meat spread and  production  quantity  for
         such month for each of the Operating Subsidiaries;

                                       94
<PAGE>

                  (ii)  Quarterly  Financials:  as soon as available  and in any
         event  within 45 days  after the end of each  Fiscal  Quarter,  (a) the
         consolidated  and  consolidating  balance  sheets  of  Parent  and  its
         Subsidiaries  as at the  end of such  Fiscal  Quarter  and the  related
         consolidated  and  consolidating  statements  of income,  stockholders'
         equity and cash flows of Parent and its  Subsidiaries  for such  Fiscal
         Quarter  and for the  period  from the  beginning  of the then  current
         Fiscal Year to the end of such Fiscal  Quarter,  setting  forth in each
         case  in   comparative   form  the   corresponding   figures   for  the
         corresponding periods of the previous Fiscal Year and the corresponding
         figures from the  Financial  Plan for the current  Fiscal Year,  all in
         reasonable  detail  and  certified  by the chief  financial  officer of
         Parent and Borrower that they fairly present, in all material respects,
         the financial  condition of Parent and its Subsidiaries as at the dates
         indicated and the results of their  operations and their cash flows for
         the  periods  indicated,  subject to changes  resulting  from audit and
         normal year-end adjustments,  and (b) a narrative report describing the
         operations  of Parent and its  Subsidiaries  in the form  prepared  for
         presentation  to senior  management for such Fiscal Quarter and for the
         period from the beginning of the then current Fiscal Year to the end of
         such Fiscal Quarter;

                  (iii)  Year-End  Financials:  as soon as available  and in any
         event  within  90  days  after  the end of each  Fiscal  Year,  (a) the
         consolidated  and  consolidating  balance  sheets  of  Parent  and  its
         Subsidiaries  as at  the  end of  such  Fiscal  Year  and  the  related
         consolidated  and  consolidating  statements  of income,  stockholders'
         equity and cash flows of Parent and its  Subsidiaries  for such  Fiscal
         Year,  setting forth in each case in comparative form the corresponding
         figures for the previous Fiscal Year and the corresponding figures from
         the  Financial  Plan for the  Fiscal  Year  covered  by such  financial
         statements,  all in  reasonable  detail  and  certified  by  the  chief
         financial  officer of Parent and Borrower that they fairly present,  in
         all  material  respects,  the  financial  condition  of Parent  and its
         Subsidiaries  as at the  dates  indi  cated  and the  results  of their
         operations  and their  cash  flows  for the  periods  indicated,  (b) a
         narrative   report   describing   the  operations  of  Parent  and  its
         Subsidiaries in the form prepared for presentation to senior management
         for  such  Fiscal  Year,  and  (c) in the  case  of  such  consolidated
         financial  statements,  a report  thereon  of  Deloitte & Touche LLP or
         other independent  certified public accountants of recognized  national
         standing selected by Parent and satisfactory to  Administrative  Agent,
         which report shall be  unqualified,  shall  express no doubts about the
         ability of Parent and its  Subsidiaries to continue as a going concern,
         and shall  state that such  consolidated  financial  statements  fairly
         present, in all material respects,  the consolidated financial position
         of  Parent  and its  Subsidiaries  as at the  dates  indicated  and the
         results  of their  operations  and their  cash  flows  for the  periods
         indicated in conformity  with GAAP applied on a basis  consistent  with
         prior  years   (except  as  otherwise   disclosed  in  such   financial
         statements)

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         and that the  examination by such  accountants in connection  with such
         consolidated  financial  statements  has been made in  accordance  with
         generally accepted auditing standards;

                  (iv) Officers' and Compliance Certificates: together with each
         delivery  of  financial  statements  of  Parent  and  its  Subsidiaries
         pursuant to  subdivisions  (i), (ii) and (iii) above,  (a) an Officers'
         Certificate  of Parent  and  Borrower  stating  that the  signers  have
         reviewed  the terms of this  Agreement  and have made,  or caused to be
         made under  their  supervision,  a review in  reasonable  detail of the
         transactions  and condition of Parent and its  Subsidiaries  during the
         accounting  period covered by such  financial  statements and that such
         review has not  disclosed  the  existence  during or at the end of such
         accounting  period,  and that the signers do not have  knowledge of the
         existence  as at  the  date  of  such  Officers'  Certificate,  of  any
         condition  or event that  constitutes  an Event of Default or Potential
         Event of Default, or, if any such condition or event existed or exists,
         specifying  the nature and period of existence  thereof and what action
         each of Parent and Borrower  has taken,  is taking and proposes to take
         with respect thereto; and (b) a Compliance  Certificate  demonstrat ing
         in reasonable detail compliance during and at the end of the applicable
         accounting  periods  with the  restrictions  contained in Section 7, in
         each case to the extent  compliance with such  restrictions is required
         to be tested at the end of the applicable accounting period;

                  (v) Reconciliation  Statements:  if, as a result of any change
         in  accounting   principles   and  policies  from  those  used  in  the
         preparation  of  the  audited  financial   statements  referred  to  in
         subsection 5.3, the consolidated financial statements of Parent and its
         Subsidiaries  delivered  pursuant to subdivisions  (i), (ii),  (iii) or
         (xiii) of this subsection 6.1 will differ in any material  respect from
         the  consolidated  financial  statements that would have been delivered
         pursuant  to  such  subdivisions  had  no  such  change  in  accounting
         principles  and policies  been made,  then (a) together  with the first
         delivery of financial  statements  pursuant to  subdivision  (i), (ii),
         (iii)  or  (xiii)  of  this   subsection  6.1  following  such  change,
         consolidated  financial  statements of Parent and its  Subsidiaries for
         (y) the current  Fiscal Year to the  effective  date of such change and
         (z) the two full Fiscal Years immediately  preceding the Fiscal Year in
         which such change is made,  in each case  prepared on a pro forma basis
         as if such  change  had been in effect  during  such  periods,  and (b)
         together  with  each  delivery  of  financial  statements  pursuant  to
         subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following
         such change,  a written  statement of the chief  accounting  officer or
         chief  financial  officer  of Parent  and  Borrower  setting  forth the
         differences  (including  without  limitation any differences that would
         affect any calculations  relating to the financial  covenants set forth
         in  subsection  7.6)  which  would

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<PAGE>

         have resulted if such financial  statements  had been prepared  without
         giving effect to such change;

                  (vi) Accountants'  Certification:  together with each delivery
         of  consolidated  financial  statements of Parent and its  Subsidiaries
         pursuant  to  subdivision  (iii)  above,  a  written  statement  by the
         independent  certified public accountants giving the report thereon (a)
         stating  that  their  audit  examination  has  included a review of the
         relevant  terms of this  Agreement and the other Loan Documents as they
         relate to  accounting  matters and (b) stating  whether,  in connection
         with their audit  examination,  anything came to their  attention  that
         caused them to believe  that  Parent of Borrower  failed to comply with
         the  terms,  covenants,  provisions  or  conditions  of this  Agreement
         insofar as they relate to financial and  accounting  matters,  although
         their audit was not directed  primarily toward  obtaining  knowledge of
         such noncompliance;  provided that such accountants shall not be liable
         by reason of any failure to obtain  knowledge  of any failure to comply
         that would not be disclosed in the course of their audit examination;

                  (vii)  Accountants'  Reports:  promptly  upon receipt  thereof
         (unless restricted by applicable professional standards), copies of all
         reports submitted to Parent or Borrower by independent certified public
         accountants in connection with each annual, interim or special audit of
         the financial  statements of Parent and its  Subsidiaries  made by such
         accountants,   including,   without  limitation,   any  comment  letter
         submitted by such  accountants  to management in connection  with their
         annual audit;

                  (viii) SEC Filings  and Press  Releases:  promptly  upon their
         becoming available,  copies of (a) all financial  statements,  reports,
         notices and proxy statements sent or made available generally by Parent
         to its security  holders or by any Subsidiary of Parent to its security
         holders  other than  Parent or another  Subsidiary  of Parent,  (b) all
         regular and periodic  reports and all  registration  statements  (other
         than on Form S-8 or a similar form) and prospectuses,  if any, filed by
         Parent or any of its Subsidiaries with any securities  exchange or with
         the Securities and Exchange  Commission or any  governmental or private
         regulatory  authority,  and (c) all press releases and other statements
         made available  generally by Parent or any of its  Subsidiaries  to the
         public  concerning  material  developments in the business of Parent or
         any of its Subsidiaries;

                  (ix) Events of Default,  etc.: promptly upon, and in any event
         two days after, any officer of Parent or Borrower  obtaining  knowledge
         (a) of any condition or event that  constitutes  an Event of Default or
         Potential Event of Default, or becoming aware that any Lender has given
         any  notice  (other  than to  Administrative  Agent) or taken any other
         action with respect to a claimed Event of Default or Potential Event of
         Default,  (b) that any  Person has given any

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<PAGE>

         notice to Parent or any of its  Subsidiaries  or taken any other action
         with  respect to a claimed  default or event or  condition  of the type
         referred to in subsection 8.2, (c) of any condition or event that would
         be  required to be  disclosed  in a current  report  filed by Parent or
         Borrower with the Securities and Exchange Commission on Form 8-K (Items
         1, 2, 4, 5 and 6 of such  Form as in  effect  on the  date  hereof)  if
         Parent  or  Borrower  were  required  to file  such  reports  under the
         Exchange Act, or (d) of the  occurrence of any event or change that has
         caused or evidences, either in any case or in the aggregate, a Material
         Adverse  Effect,  an Officers'  Certificate  specifying  the nature and
         period of existence of such condition,  event or change,  or specifying
         the notice  given or action  taken by any such Person and the nature of
         such claimed  Event of Default,  Potential  Event of Default,  default,
         event or  condition,  and what action each of Parent and  Borrower  has
         taken, is taking and proposes to take with respect thereto;

                  (x) Litigation or Other Proceedings: promptly upon, and in any
         event  within  two days  after,  any  officer  of  Parent  or  Borrower
         obtaining  knowledge  of  (X)  the  institution  of any  action,  suit,
         proceeding   (whether    administrative,    judicial   or   otherwise),
         governmental  investigation or arbitration  against or affecting Parent
         or any of its  Subsidiaries  or any  property  of  Parent or any of its
         Subsidiaries (collective ly, "Proceedings") not previously disclosed in
         writing  by  Parent  or  Borrower  to  Lenders  or  (Y)  any   material
         development in any Proceeding that, in any case:

                           (1)  if  adversely   determined,   has  a  reasonable
                  possibility of giving rise to a Material Adverse Effect; or

                           (2)  seeks  to  enjoin  or   otherwise   prevent  the
                  consummation of, or to recover any damages or obtain relief as
                  a result of, the transactions contemplated hereby;

         written notice thereof  together with such other  information as may be
         reasonably  available to Parent or Borrower to enable Lenders and their
         counsel to evaluate such matters;

                  (xi)  ERISA  Events:  promptly  upon  becoming  aware  of  the
         occurrence of or  forthcoming  occurrence of any ERISA Event, a written
         notice  specifying the nature thereof,  what action Parent,  any of its
         Subsidiaries or any of their  respective ERISA Affiliates has taken, is
         taking or proposes to take with respect  thereto and,  when known,  any
         action  taken  or  threatened  by the  Internal  Revenue  Service,  the
         Department of Labor or the PBGC with respect thereto,  and, on the date
         any records,  documents or other  information  must be furnished to the
         PBGC with  respect to any  Pension  Plan  pursuant  to Section  4010 of
         ERISA, a copy of such records, documents and information;

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<PAGE>

                  (xii)  ERISA  Notices:  promptly  and in any event  within two
         Business Days after receipt  thereof by Parent or any ERISA  Affiliate,
         copies of each notice from the PBGC stating its  intention to terminate
         any  Pension  Plan or to have a trustee  appointed  to  administer  any
         Pension  Plan;  promptly  upon  receipt  thereof by Parent or any ERISA
         Affiliate,  a copy of the annual  actuarial  valuation  report for each
         Plan the funded  current  liability  percentage  (as defined in Section
         302(d)(8) of ERISA) of which is less than 90% or the  unfunded  current
         liability of which exceeds  $250,000;  promptly and in any event within
         five  Business  Days  after  receipt  thereof  by  Parent  or any ERISA
         Affiliate  from the  sponsor of a  Multiemployer  Plan,  copies of each
         notice  concerning  (1) the  imposition of Withdrawal  Liability by any
         such Multi employer Plan, (2) the reorganization or termination, within
         the meaning of Title IV of ERISA, of any such Multiemployer Plan or (3)
         the amount of liability incurred, or that may be incurred, by Parent or
         any ERISA  Affiliate in connection  with any event  described in clause
         (1) or (2);

                  (xiii)  Financial  Plans:  as soon as  practicable  and in any
         event no later than 45 days after the  beginning of each Fiscal Year, a
         consolidated  and  consolidating  plan and financial  forecast for such
         Fiscal Year and the next two Fiscal Years  thereafter  (the  "Financial
         Plan"  for  such  Fiscal  Years),   including  without  limitation  (a)
         forecasted consolidated and consolidating balance sheets and forecasted
         consolidated and  consolidating  statements of income and cash flows of
         Parent and its  Subsidiaries  for each such Fiscal Year,  together with
         pro forma  Compliance  Certificates  for each such  Fiscal  Year and an
         explanation of the  assumptions on which such forecasts are based,  (b)
         forecasted consolidated and consolidating statements of income and cash
         flows of Parent and its  Subsidiaries  for each month of the first such
         Fiscal Year,  together with an explanation of the  assumptions on which
         such  forecasts  are based,  (c) the amount of  forecasted  unallocated
         overhead for each such Fiscal Year, and (d) such other  information and
         projections as any Lender may reasonably request;

                  (xiv)  Insurance:  as soon as practicable  and in any event by
         the last  day of each  Fiscal  Year,  a  report  in form and  substance
         satisfactory to Administrative  Agent outlining all material  insurance
         coverage  maintained  as of the date of such  report by Parent  and its
         Subsidiaries  and all material  insurance  coverage  planned to be main
         tained by Parent and its  Subsidiaries  in the  immediately  succeeding
         Fiscal Year;

                  (xv) Board of Directors:  with reasonable promptness,  written
         notice of any change in the Board of Directors of Parent;

                  (xvi) New  Subsidiaries:  promptly upon any Person  becoming a
         Subsidiary of Parent,  a written  notice  setting forth with respect to
         such Person (a) the date on which such Person  became a  Subsidiary  of
         Parent and (b) all of the data

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<PAGE>

         required to be set forth in Schedule 5.1 annexed hereto with respect to
         all  Subsidiaries  of Parent  (it being  understood  that such  written
         notice shall be deemed to  supplement  Schedule 5.1 annexed  hereto for
         all purposes of this Agreement;

                  (xvii) UCC Search Report: As promptly as practicable after the
         date of delivery to Administrative Agent of any UCC financing statement
         executed  by any Loan Party  pursuant  to  subsection  6.8A,  copies of
         completed  UCC searches  evidencing  the proper  filing,  recording and
         indexing  of all such UCC  financing  statement  and  listing all other
         effective  financing  statements  that name such Loan  Party as debtor,
         together  with  copies  of all  such  other  financing  statements  not
         previously  delivered to Administrative Agent by or on behalf of Parent
         or such Loan Party;

                  (xviii)  Borrowing Base  Certificate:  (a) within fifteen days
         after the last day of any fiscal  month and, in  addition,  as often as
         Parent  may elect,  a  Borrowing  Base  Certificate  demonstrating  the
         Borrowing Base as of the last day of such fiscal month and certified by
         the chief financial officer of Borrower and (b) upon written reasonable
         request  of  Administrative  Agent  or at the  option  of  Borrower,  a
         Borrowing Base Certificate  certified by the chief financial officer or
         controller  of Borrower  and  calculated  as of the date  requested  by
         Administrative  Agent in such request or selected by  Borrower,  as the
         case may be;

                  (xix) Creditor Reports: promptly after the furnishing thereof,
         copies of any statement or report  furnished to any other holder of the
         Securities  of Parent  or of any of its  Subsidiaries  pursuant  to the
         terms of any  indenture,  loan or credit or similar  agreement  and not
         otherwise required to be furnished to the Lenders pursuant to any other
         clause of this subsection 6.1;

                  (xx) Agreement Notices:  promptly upon receipt thereof, copies
         of all notices,  requests and other documents received by Parent or any
         of its Subsidiaries  under or pursuant to any Related  Agreement or any
         notice of a breach,  default or termination  of a Material  Contract or
         indenture,  loan or credit or similar  agreement and, from time to time
         upon request by  Administrative  Agent,  such  information  and reports
         regarding  the  Related   Documents  and  the  Material   Contracts  as
         Administra tive Agent may reasonably request;

                  (xxi) Revenue  Agent  Reports:  within 10 days after  receipt,
         copies of all Revenue  Agent  Reports  (Internal  Revenue  Service Form
         886), or other written proposals of the Internal Revenue Service,  that
         propose,  determine or otherwise set forth positive  adjustments to the
         federal  income tax  liability  of the  affiliated  group  (within  the
         meaning of Section  1504(a)(1)  of the

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         Internal  Revenue  Code)  of  which  Parent  or  Borrower  is a  member
         aggregating $500,000 or more;

                  (xxii) Environmental Conditions:  promptly after the assertion
         or occurrence thereof,  notice of any Environmental Claim against or of
         any  noncompliance  by  Parent  or  any of its  Subsidiaries  with  any
         Environmental  Law that could reasonably be expected to have a Material
         Adverse Effect; and

                  (xxiii) Other Information:  with reasonable  promptness,  such
         other  informa  tion and data  with  respect  to  Parent  or any of its
         Subsidiaries  as from time to time may be  reasonably  requested by any
         Lender.

6.2      Corporate Existence, etc.

         Parent will, and will cause each of its  Subsidiaries  to, at all times
preserve  and keep in full  force and  effect its  corporate  existence  and all
rights, permits, licenses, approvals,  privileges and franchises material to its
business;  provided,  however  that neither  Parent nor any of its  Subsidiaries
shall be  required  to  preserve  any such  right,  permit,  license,  approval,
privilege or  franchise  if the Board of Directors of Parent or such  Subsidiary
shall  determine  that the  preservation  thereof is no longer  desirable in the
conduct of the  business of Parent or such  Subsidiary,  as the case may be, and
that the loss thereof is not  disadvantageous in any material respect to Parent,
such Subsidiary or Lenders;  provided further,  that Parent and its Subsidiaries
may consummate any merger of consolidation permitted under subsection 7.7.

6.3      Payment of Taxes and Claims; Tax Consolidation.

         A. Parent  will,  and will cause each of its  Subsidiaries  to, pay all
taxes,  assessments and other governmental charges imposed upon it or any of its
properties  or  assets  or in  respect  of  any  of its  income,  businesses  or
franchises  before any  penalty  accrues  thereon,  and all  claims  (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have  become due and payable and that by law have or may become a Lien upon
any of its  properties  or  assets,  prior to the time when any  penalty or fine
shall be incurred  with respect  thereto;  provided that no such charge or claim
need be paid if it is being  contested in good faith by appropriate  proceedings
promptly  instituted  and diligently  conducted,  so long as (1) such reserve or
other  appropriate  provision,  if any, as shall be required in conformity  with
GAAP  shall  have  been made  therefor  and (2) in the case of a charge or claim
which has or may  become a Lien  against  any of the  Collateral,  such  contest
proceedings  conclusively  operate  to  stay  the  sale  of any  portion  of the
Collateral to satisfy such charge or claim.

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         B. Parent will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any  consolidated  income tax return with any Person
(other than Parent or any of its Subsidiaries).

6.4      Maintenance  of  Properties;  Insurance;  Application of Net Insurance/
         Condemnation Proceeds.

         A.  Maintenance of Properties.  Parent will, and will cause each of its
Subsidiaries  to,  maintain or cause to be  maintained  in good repair,  working
order and condition,  ordinary wear and tear excepted,  all material  properties
used or  useful  in the  business  of Parent  and its  Subsidiaries  (including,
without limitation,  all Intellectual  Property) and from time to time will make
or cause to be made all appropriate repairs, renewals and replacements thereof.

         B.  Insurance.  Borrower will maintain or cause to be maintained,  with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance,  business  interruption  insurance and casualty
insurance  with  respect  to  liabilities,  losses or damage in  respect  of the
assets, properties and businesses of Borrower and its Subsidiaries in accordance
with past practices, with such deductibles, covering such risks and otherwise on
such terms and  conditions  as shall be  customary  for  corporations  similarly
situated in the industry.  Without  limiting the  generality  of the  foregoing,
Borrower  will  maintain  or cause to be  maintained  (i) flood  insurance  with
respect to each Flood  Hazard  Property  that is  located  in a  community  that
participates in the National Flood Insurance Program, in each case in compliance
with any applicable regulations of the Board of Governors of the Federal Reserve
System,  and (ii) replacement  value casualty  insurance on the Collateral under
such policies of insurance,  and (iii) key man life insurance covering,  Richard
Griffith  and,  within 60 days  after the  Closing  Date key man life  insurance
covering  Robert  Gioia and  David  Cohen,  in each  case  with  such  insurance
companies,  in such amounts, with such deductibles,  and covering such terms and
risks  as  are  at  all  times  satisfactory  to  Administrative  Agent  in  its
commercially  reasonable judgment.  Each such policy of insurance shall (a) name
Administrative  Agent  for the  benefit  of  Lenders  as an  additional  insured
thereunder  as its  interests  may appear  and (b) in the case of each  business
interruption  and casualty  insurance  policy,  contain a loss payable clause or
endorsement,  satisfactory in form and substance to  Administrative  Agent, that
names  Administrative  Agent  for the  benefit  of  Lenders  as the  loss  payee
thereunder  for any covered  loss in excess of $50,000 and provides for at least
30 days prior written  notice to  Administrative  Agent of any  modification  or
cancellation of such policy.

         C.       Application of Net Insurance/Condemnation Proceeds.

                  (i) Business Interruption Insurance.  Upon receipt by Borrower
         or any of its  Subsidiaries  of  any  business  interruption  insurance
         proceeds constituting Net Insurance/Condemnation  Proceeds, (a) so long
         as no  Event of

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         Default or  Potential  Event of  Default  shall  have  occurred  and be
         continuing,  Borrower or such  Subsidiary may retain and apply such Net
         Insurance/Condemnation  Proceeds for working capital purposes,  and (b)
         if an  Event of  Default  or  Potential  Event of  Default  shall  have
         occurred  and be  continuing,  Borrower  shall apply an amount equal to
         such  Net  Insurance/Condemnation  Proceeds  to  prepay  the  Loans  as
         provided     in     subsection     2.4B(iii)(b);

                  (ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
         Borrower or any of its  Subsidiaries of any Net  Insurance/Condemnation
         Proceeds other than from business interruption  insurance,  (a) so long
         as no  Event of  Default  or  Potential  Event of  Default  shall  have
         occurred and be continuing,  Borrower shall, or shall cause one or more
         of  its  Subsidiaries  to,  promptly  and  diligently  apply  such  Net
         Insurance/Condemnation  Proceeds  to  pay or  reimburse  the  costs  of
         repairing,  restoring or replacing  the assets in respect of which such
         Net   Insurance/Condemnation  Proceeds  were received or, to the extent
         not so  applied,  to  prepay  the  Loans  (and/or  the  Revolving  Loan
         Commitments  shall be reduced) as provided in subsection  2.4B(iii)(b),
         and (b) if an Event of Default or Potential Event of Default shall have
         occurred  and be  continuing,  Borrower  shall apply an amount equal to
         such  Net  Insurance/Condemnation  Proceeds  to  prepay  the  Loans  as
         provided in subsection 2.4B(iii)(b).

                  (iii)  Net   Insurance/Condemnation   Proceeds   Received   by
         Administrative  Agent. Upon receipt by Administrative  Agent of any Net
         Insurance/Condemnation  Proceeds  as loss payee,  (a) if the  aggregate
         amount of Net Insurance/Condemnation  Proceeds received (and reasonably
         expected  to be  received)  by  Administrative  Agent in respect of any
         covered loss exceeds $1,500,000, or if and to the extent Borrower would
         have been  required to apply such Net  Insurance/Condemnation  Proceeds
         (if it had received  them  directly) to prepay the Loans and/or  reduce
         the  Revolving  Loan  Commitments,   Administrative  Agent  shall,  and
         Borrower  hereby  authorizes  Administrative  Agent to,  apply such Net
         Insurance/Condemnation  Proceeds  to prepay  the Loans as  provided  in
         subsection 2.4B(iii)(b), and (b) to the extent the foregoing clause (a)
         does   not   apply   and  (1)  the   aggregate   amount   of  such  Net
         Insurance/Condemnation Proceeds received (and reasonably expected to be
         received) by  Administrative  Agent in respect of any covered loss does
         not  exceed  $500,000,  Administrative  Agent  shall  deliver  such Net
         Insurance/Condemnation  Proceeds to Borrower,  and Borrower  shall,  or
         shall cause one or more of its Subsidiaries to, promptly apply such Net
         Insurance/Condemnation  Proceeds to the costs of repairing,  restoring,
         or   replacing    the   assets   in   respect   of   which   such   Net
         Insurance/Condemnation Proceeds were received, and (2) if the aggregate
         amount of Net Insurance/Condemnation  Proceeds received (and reasonably
         expected  to be  received)  by  Administrative  Agent in respect of any
         covered loss exceeds $500,000, Administrative Agent shall hold such Net
         Insurance/Condemnation Proceeds pursuant to the terms of

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         the Collateral Account Agreement and, so long as Borrower or any of its
         Subsidiaries  proceeds  diligently  to repair,  restore or replace  the
         assets of  Borrower  or such  Subsidiary  in  respect of which such Net
         Insur  ance/Condemnation  Proceeds were received,  Administrative Agent
         shall from time to time  disburse to Borrower or such  Subsidiary  from
         the   Collateral   Account,   to   the   extent   of   any   such   Net
         Insurance/Condemnation  Proceeds  remaining  therein  in respect of the
         applicable  covered  loss,  amounts  necessary  to pay the cost of such
         repair,  restoration or replacement after the receipt by Administrative
         Agent of invoices or other  documentation  reasonably  satisfactory  to
         Administrative  Agent  relating to the amount of costs so incurred  and
         the work performed  (including,  if required by  Administrative  Agent,
         lien releases and architects' certificates);  provided, however that if
         at  any  time  Administrative  Agent  reasonably  determines  (A)  that
         Borrower or such  Subsidiary  is not  proceeding  diligently  with such
         repair, restoration or replacement or (B) that such repair, restoration
         or replacement cannot be completed with the Net  Insurance/Condemnation
         Proceeds then held by Administra tive Agent for such purpose,  together
         with  funds   otherwise   available  to  Borrower  for  such   purpose,
         Administrative    Agent   shall,   and   Borrower   hereby   authorizes
         Administrative  Agent  to,  apply  such    Net   Insurance/Condemnation
         Proceeds to prepay the Loans as provided in subsection 2.4B(iii)(b).

6.5      Inspection Rights; Audits of Inventory and Accounts Receivable;  Lender
         Meeting.

         A.  Inspection  Rights.  Parent  shall,  and  shall  cause  each of its
Subsidiaries to, permit any authorized  representatives designated by any Lender
to  visit  and  inspect  any  of  the  properties  of  Parent  or of  any of its
Subsidiaries,  to inspect,  copy and take extracts from its and their  financial
and accounting books and records, and to discuss its and their affairs, finances
and accounts  with its and their  officers and  independent  public  accountants
(provided that Parent may, if it so chooses, be present at or participate in any
such discussion), all upon reasonable notice and at such reasonable times during
normal business hours and as often as may reasonably be requested.

         B. Audits of Inventory and Accounts Receivable. Parent shall, and shall
cause  each  of its  Subsidiaries  to,  permit  any  authorized  representatives
designated  by  Administrative   Agent to conduct one audit of all Inventory and
Accounts  Receivable of Loan Parties during each  twelve-month  period after the
Closing Date and such  additional  audits as  Administrative  Agent or Requisite
Lenders may reasonably request,  each such audit to be substantially  similar in
scope and substance to the audit of Inventory and accounts  receivable  referred
to in subsection  6.16, all upon reasonable  notice and at such reasonable times
during normal business hours as may reasonably be requested.

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         C. Lender Meeting.  Borrower will,  upon the request of  Administrative
Agent or Requisite Lenders, participate in a meeting of Administrative Agent and
Lenders once during each Fiscal Year to be held at Borrower's  corporate offices
(or at such other  location as may be agreed to by Borrower  and  Administrative
Agent) at such time as may be agreed to by Borrower and Administrative Agent.

6.6      Compliance with Laws, etc.

         Parent shall comply,  and shall cause each of its  Subsidiaries and all
other  Persons  on or  occupying  any  Facilities  to  comply,  in all  material
respects,  with the requirements of all applicable laws, rules,  regulations and
orders of any  governmental  authority  (including  all ERISA and  Environmental
Laws).

6.7      Environmental Review and Investigation,  Disclosure, Etc.; Parent's and
         Borrower's   Actions   Regarding   Hazardous   Materials    Activities,
         Environmental Claims and Violations of Environmental Laws.

         A.  Environmental  Review and  Investigation.  Parent and Borrower each
agrees that  Administrative  Agent may, from time to time and in its  reasonable
discretion,  (i) retain,  at Borrower's  expense,  an  independent  professional
consultant  to review any  environmental  audits,  investigations,  analyses and
reports relating to Hazardous  Materials prepared by or for Borrower and (ii) in
the event (a) Administrative  Agent reasonably  believes that Parent or Borrower
has breached any  representation,  warranty or covenant  contained in subsection
5.6,  5.13,  6.6 or  6.7  or  that  there  has  been  a  material  violation  of
Environmental  Laws at any Facility or by Parent or any of its  Subsidiaries  at
any other  location or (b) an Event of Default has occurred  and is  continuing,
conduct its own investigation of any Facility. For purposes of conducting such a
review  and/or  investigation,  each of Parent  and  Borrower  hereby  grants to
Administrative Agent and its agents, employees,  consultants and contractors the
right to enter into or onto any Facilities currently owned, leased,  operated or
used by Parent or any of its  Subsidiaries  and to  perform  such  tests on such
property   (including   taking  samples  of  soil,   groundwater  and  suspected
asbestos-containing   materials)  as  are  reasonably  necessary  in  connection
therewith.  Any such  investigation  of any Facility shall be conducted,  unless
otherwise agreed to by Borrower and Administrative Agent, during normal business
hours and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at such Facility or to cause any damage or
loss to any property at such Facility. Parent, Borrower and Administrative Agent
hereby  acknowledge and agree that any report of any investigation  conducted at
the request of  Administrative  Agent pursuant to this  subsection  6.7A will be
obtained and shall be used by Administrative  Agent and Lenders for the purposes
of Lenders'  internal credit  decisions,  to monitor and police the Loans and to
protect  Lenders'  security  interests,  if any,  created by the Loan Documents.
Administrative  Agent  agrees to deliver a copy of any such  report to  Borrower
with the understanding that each of Parent and Borrower  acknowledges and agrees
that neither  Administrative  Agent nor any Lender makes any  representation  or

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warranty with respect to such report and by delivering  such report to Borrower,
neither  Administrative  Agent nor any Lender is requiring or  recommending  the
implementation of any suggestions or recommendations contained in such report.

         B.  Environmental  Disclosure.  Borrower will deliver to Administrative
Agent and Lenders:

                  (i) Environmental  Audits and Reports.  As soon as practicable
         following  receipt  thereof,   copies  of  all  environmental   audits,
         investigations,  analyses and reports of any kind or character, whether
         prepared  by  personnel  of  Parent  or any of its  Subsidiaries  or by
         independent consultants, governmental authorities or any other Persons,
         with  respect to  significant  environmental  matters  at any  Facility
         which,  individually or in the aggregate,  could reasonably be expected
         to  result  in a  Material  Adverse  Effect  or  with  respect  to  any
         Environmental  Claims which,  individually  or in the aggregate,  could
         reasonably be expected to result in a Material Adverse Effect;

                  (ii)  Notice  of  Certain  Releases,  Remedial  Actions,  Etc.
         Promptly upon the  occurrence  thereof,  written  notice  describing in
         reasonable  detail  (a) any  Release  required  to be  reported  to any
         federal,  state or local  governmental  or regulatory  agency under any
         applicable  Environmental  Laws,  (b)  any  remedial  action  taken  by
         Borrower or any other Person in response to (1) any Hazardous Materials
         Activities  the  existence  of which has a  reasonable  possibility  of
         resulting in one or more Environmental  Claims having,  individually or
         in the aggregate,  a Material Adverse Effect,  or (2) any Environmental
         Claims  that,  individually  or in the  aggregate,  have  a  reasonable
         possibility of resulting in a Material Adverse Effect, and (c) Parent's
         discovery of any occurrence or condition on any real property adjoining
         or in the  vicinity of any Facility  that could cause such  Facility or
         any part  thereof  to be subject to any  material  restrictions  on the
         ownership,   occupancy,   transferability  or  use  thereof  under  any
         Environmental Laws.

                  (iii) Written Communications  Regarding  Environmental Claims,
         Releases,  Etc. As soon as practicable following the sending or receipt
         thereof  by  Parent or any of its  Subsidiaries,  a copy of any and all
         written  communications  with respect to (a) any  Environmental  Claims
         that,  individually or in the aggregate,  have a reasonable possibility
         of giving rise to a Material  Adverse Effect,  (b) any Release required
         to  be  reported  to  any  federal,  state  or  local  governmental  or
         regulatory  agency,  and (c)  any  request  for  information  from  any
         governmental agency that suggests such agency is investigating  whether
         Parent or any of its  Subsidiaries  may be potentially  responsible for
         any Hazardous Materials Activity.

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                  (iv) Notice of Certain Proposed  Actions Having  Environmental
         Impact.  Prompt written notice  describing in reasonable detail (a) any
         proposed  acquisition of stock, assets, or property by Parent or any of
         its Subsidiaries that could reasonably be expected to (1) expose Parent
         or any of its Subsidiaries to, or result in, Environ mental Claims that
         could reasonably be expected to have, individually or in the aggregate,
         a Material Adverse Effect or (2) affect the ability of Parent or any of
         its  Subsidiaries  to  maintain  in full force and effect all  material
         Governmental  Authorizations  required under any Environmental Laws for
         their respective  operations and (b) any proposed action to be taken by
         Parent or any of its  Subsidiaries  to modify  current  operations in a
         manner that could  reasonably  be expected to subject  Parent or any of
         its  Subsidiaries to any additional  obligations or requirements  under
         any  Environmental  Laws that could  reasonably  be  expected  to have,
         individually or in the aggregate, a Material Adverse Effect.

                  (v) Other Information.  With reasonable promptness, such other
         documents  and  information  as from  time to  time  may be  reasonably
         requested by Administrative  Agent in relation to any matters disclosed
         pursuant to this subsection 6.7.

         C.  Parent's  and  Borrower's  Actions  Regarding  Hazardous  Materials
Activities, Environmental Claims and Violations of Environmental Laws.

                  (i)  Remedial   Actions   Relating  to   Hazardous   Materials
         Activities.  Parent shall promptly  undertake,  and shall cause each of
         its  Subsidiaries  promptly to undertake,  any and all  investigations,
         studies, sampling, testing, abatement, cleanup, removal, remediation or
         other  response  actions  necessary to remove,  remediate,  clean up or
         abate any Hazardous  Materials Activity on, under or about any Facility
         that is in  violation  of any  Environmental  Laws or that  presents  a
         material risk of giving rise to an  Environmental  Claim.  In the event
         Parent  or any of its  Subsidiaries  undertakes  any such  action  with
         respect to any Hazardous  Materials,  Parent or such  Subsidiary  shall
         conduct and  complete  such action in  compliance  with all  applicable
         Environmental  Laws and in  accordance  with the  policies,  orders and
         directives  of all federal,  state and local  governmental  authorities
         except when, and only to the extent that, Parent's or such Subsidiary's
         liability  with respect to such Hazardous  Materials  Activity is being
         contested in good faith by Parent or such Subsidiary.

                  (ii)  Actions  with  Respect  to   Environmental   Claims  and
         Violations of Environmental Laws. Parent shall promptly take, and shall
         cause each of its  Subsidiaries  promptly to take,  any and all actions
         necessary to (i) cure any violation of applicable Environmental Laws by
         Parent or its Subsidiaries and (ii) make an appropriate response to any
         Environmental  Claim  against  Parent  or

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         any of its  Subsidiaries  and discharge any  obligations it may have to
         any Person thereunder.

6.8      Execution  of  Subsidiary  Guaranty and  Personal  Property  Collateral
         Documents by Certain Subsidiaries and Future Subsidiaries.

         A. Execution of Subsidiary  Guaranty and Personal  Property  Collateral
Documents.  In the event that any Person  becomes a Subsidiary of Borrower after
the date hereof, Borrower will promptly notify Administrative Agent of that fact
and cause such  Subsidiary  to execute  and  deliver to  Administrative  Agent a
counterpart  of the Subsidiary  Guaranty and a Subsidiary  Pledge  Agreement,  a
Subsidiary Security Agreement,  a Subsidiary  Trademark Security Agreement and a
Subsidiary  Patent  Security  Agreement and to take all such further actions and
execute all such further  documents and  instruments  as may be necessary or, in
the  opinion  of  Administrative   Agent,   desirable  to  create  in  favor  of
Administrative  Agent,  for the benefit of Lenders,  a valid and perfected First
Priority  Lien  on all  of the  personal  and  mixed  property  assets  of  such
Subsidiary  described in the  applicable  forms of  Collateral  Documents.  Such
actions shall include, without limitation, the following:

                  (i)   Schedules   to   Collateral   Documents.   Delivery   to
         Administrative  Agent of accurate and complete  schedules to all of the
         applicable Collateral Documents.

                  (ii)  Stock   Certificates   and   Instruments.   Delivery  to
         Administrative  Agent of (a) certificates  (which certificates shall be
         accompanied by irrevocable undated stock powers, duly endorsed in blank
         and  otherwise  satisfactory  in form and  substance to  Administrative
         Agent)  representing  all capital stock pledged  pursuant to the Parent
         Pledge  Agreement,  Borrower Pledge Agreement and the Subsidiary Pledge
         Agreements  and (b) all  promissory  notes or other  instruments  (duly
         endorsed, where appropriate, in a manner satisfactory to Administrative
         Agent) evidencing any Collateral;

                  (iii) Lien Searches and UCC Termination  Statements.  Delivery
         to  Administrative  Agent of (a) the results of a recent  search,  by a
         Person  satisfactory  to  Administrative  Agent,  of all  effective UCC
         financing  statements and fixture filings and all judgment and tax lien
         filings  which may have been made with respect to any personal or mixed
         property of any Loan Party,  together  with copies of all such  filings
         disclosed  by such  search,  and (b) UCC  termination  statements  duly
         executed  by all  applicable  Persons  for  filing  in  all  applicable
         jurisdictions  as may be  necessary  to  terminate  any  effective  UCC
         financing statements or fixture filings disclosed in such search (other
         than any such  financing  statements  or fixture  filings in respect of
         Liens  permitted  to remain  outstanding  pursuant to the terms of this
         Agreement);

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                  (iv) UCC Financing Statements and Fixture Filings. Delivery to
         Adminis   trative  Agent  of  UCC  financing   statements   and,  where
         appropriate,  fixture  filings,  duly executed by each  applicable Loan
         Party with  respect to all personal and mixed  property  Collateral  of
         such Loan Party,  for filing in all  jurisdictions  as may be necessary
         or, in the opinion of  Administrative  Agent,  desirable to perfect the
         security   interests  created  in  such  Collateral   pursuant  to  the
         Collateral Documents;

                  (v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of
         all cover sheets or other documents or instruments required to be filed
         with the PTO in order to create or  perfect  Liens in respect of any IP
         Collateral; and

                  (vi)  Opinions of Local  Counsel.  Delivery to  Administrative
         Agent of an opinion  of  counsel  (which  counsel  shall be  reasonably
         satisfactory   to   Administrative   Agent)  under  the  laws  of  each
         jurisdiction  in which any Loan Party or any personal or mixed property
         Collateral  is located with respect to the creation and  perfection  of
         the  security  interests  in  favor  of  Administrative  Agent  in such
         Collateral  and  such  other  matters  governed  by the  laws  of  such
         jurisdiction  regarding such security interests as Administrative Agent
         may reasonably request,  in each case in form and substance  reasonably
         satisfactory to Administrative Agent.

         B. Subsidiary  Charter Documents,  Legal Opinions,  Etc. Borrower shall
deliver  to  Administrative  Agent,  together  with  such  Loan  Documents,  (i)
certified copies of such Subsidiary's  Certificate or Articles of Incorporation,
together  with a good  standing  certificate  from the Secretary of State of the
jurisdiction of its  incorporation  and each other state in which such Person is
qualified as a foreign  corporation to do business and, to the extent  generally
available, a certificate or other evidence of good standing as to payment of any
applicable  franchise or similar taxes from the appropriate  taxing authority of
each of such  jurisdictions,  each to be  dated a  recent  date  prior  to their
delivery  to  Administrative  Agent,  (ii) a copy of such  Subsidiary's  Bylaws,
certified by its  corporate  secretary or an assistant  secretary as of a recent
date  prior to their  delivery  to  Administrative  Agent,  (iii) a  certificate
executed by the secretary or an assistant secretary of such Subsidiary as to (a)
the fact  that the  attached  resolutions  of the  Board  of  Directors  of such
Subsidiary approving and authorizing the execution,  delivery and performance of
such Loan  Documents  are in full force and effect and have not been modified or
amended and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents,  and (iv) a favorable  opinion of counsel to such
Subsidiary,  in form and substance  satisfactory to Administrative Agent and its
counsel,  as to (a) the due  organization  and good standing of such Subsidiary,
(b) the due  authorization,  execution  and delivery by such  Subsidiary of such
Loan  Documents,  (c) the  enforceability  of such Loan  Documents  against such
Subsidiary,  (d) such other matters  (including matters relating to the creation
and  perfection of Liens in any Collateral  pursuant to such Loan  Documents) as
Administrative  Agent  may  reasonably  request,  all

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of the  foregoing to be  satisfactory  in form and  substance to  Administrative
Agent and its counsel.

6.9      Conforming  Leasehold  Interests;  Matters  Relating to Additional Real
         Property Collateral.

         A.  Conforming  Leasehold   Interests.   If  Borrower  or  any  of  its
Subsidiaries  acquires any Leasehold  Property,  Borrower  shall, or shall cause
such  Subsidiary to, use its best efforts  (without  requiring  Borrower or such
Subsidiary to relinquish any material  rights or incur any material  obligations
or  to  expend  more  than  a  nominal  amount  of  money  over  and  above  the
reimbursement,  if required,  of the landlord's  out-of-pocket costs,  including
attorneys  fees) to cause such Leasehold  Property to be a Conforming  Leasehold
Interest.

         B. Additional  Mortgages,  Etc. From and after the Closing Date, in the
event that (i) Borrower or any Subsidiary Guarantor acquires any fee interest in
real  property or any  Material  Leasehold  Property,  or  Administrative  Agent
determines in its sole discretion to place a Mortgage on any Real Property Asset
owned on the Closing Date by Parent or any of its Subsidiaries if a Mortgage was
not placed in any such Real  Property  Asset as of the Closing  Date, or (ii) at
the time any Person  becomes a Subsidiary  Guarantor,  such Person owns or holds
any fee interest in real property or any Material Leasehold Property,  in either
case excluding any such Real Property Asset the  encumbrancing of which requires
the  consent  of any  applicable  lessor or (in the case of clause  (ii)  above)
then-existing senior lienholder,  where Borrower and its Subsidiaries are unable
to obtain such lessor's or senior  lienholder's  consent (any such  non-excluded
Real  Property  Asset  described  in the  foregoing  clause (i) or (ii) being an
"Additional  Mortgaged  Property"),  Borrower or such Subsidiary Guarantor shall
deliver to  Administrative  Agent,  as soon as  practicable  after  such  Person
acquires such Additional Mortgaged Property the following:

                  (i)  Additional  Mortgage.  A  fully  executed  and  notarized
         Mortgage (an  "Additional  Mortgage"),  in proper form for recording in
         all appropriate places in all applicable jurisdictions, encumbering the
         interest of such Loan Party in such Additional Mortgaged Property;

                  (ii) Opinions of Counsel.  (a) A favorable  opinion of counsel
         to  such  Loan   Party,   in  form  and   substance   satisfactory   to
         Administrative  Agent  and its  counsel,  as to the due  authorization,
         execution and delivery by such Loan Party of such  Additional  Mortgage
         and such other matters as Administrative  Agent may reasonably request,
         and (b) if  required  by  Administrative  Agent,  an opinion of counsel
         (which  counsel  shall be  reasonably  satisfactory  to  Administrative
         Agent) in the state in which  such  Additional  Mortgaged  Property  is
         located with respect to the  enforceability  of the form of  Additional
         Mortgage to be recorded in such state and such other matters (including
         without  limitation  any  matters  governed  by the laws of such  state
         regarding  personal  property  security

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         interests in respect of any  Collateral)  as  Administrative  Agent may
         reasonably  request,  in each  case in form  and  substance  reasonably
         satisfactory to Administrative Agent;

                  (iii)  Landlord  Consent  and  Estoppel;   Recorded  Leasehold
         Interest.  In the case of any Additional  Mortgaged Property consisting
         of a Leasehold  Property,  (a) a Landlord  Consent and Estoppel and (b)
         evidence that such Leasehold Property is a Recorded Leasehold Interest;

                  (iv) Title Insurance. (a) If required by Administrative Agent,
         an ALTA mortgagee title insurance policy or an unconditional commitment
         therefor (an "Additional  Mortgage Policy") issued by the Title Company
         with  respect  to such  Additional  Mortgaged  Property,  in an  amount
         satisfactory to Administrative  Agent, insuring fee simple title to, or
         a valid  leasehold  interest  in, such  Additional  Mortgaged  Property
         vested in such Loan Party and assuring  Administrative  Agent that such
         Additional  Mortgage  creates a valid and  enforceable  First  Priority
         mortgage Lien on such Additional Mortgaged Property,  subject only to a
         standard survey exception,  which Additional  Mortgage Policy (1) shall
         include an endorsement for mechanics'  liens, for future advances under
         this  Agreement  and for any  other  matters  reasonably  requested  by
         Administrative  Agent and (2) shall provide for  affirmative  insurance
         and such reinsurance as  Administrative  Agent may reasonably  request,
         all of the foregoing in form and substance  reasonably  satisfactory to
         Administrative  Agent; and (b) evidence  satisfactory to Administrative
         Agent that such Loan Party has (i)  delivered to the Title  Company all
         certificates and affidavits required by the Title Company in connection
         with the issuance of the  Additional  Mortgage  Policy and (ii) paid to
         the Title Company or to the  appropriate  governmental  authorities all
         expenses  and  premiums  of the Title  Company in  connection  with the
         issuance of the Additional  Mortgage Policy and all recording and stamp
         taxes (including  mortgage  recording and intangible  taxes) payable in
         connection  with recording the Additional  Mortgage in the  appropriate
         real estate records;

                  (v) Title Report. If no Additional Mortgage Policy is required
         with  respect to such  Additional  Mortgaged  Property,  a title report
         issued by the Title Company with respect  thereto,  dated not more than
         30 days prior to the date such  Additional  Mortgage  is to be recorded
         and satisfactory in form and substance to Administrative Agent;

                  (vi) Copies of Documents Relating to Title Exceptions.  Copies
         of all recorded  documents  listed as  exceptions to title or otherwise
         referred to in the Additional Mortgage Policy or title report delivered
         pursuant to clause (v) or (vi) above;

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                  (vii)  Matters  Relating  to  Flood  Hazard  Properties.   (a)
         Evidence, which may be in the form of a letter from an insurance broker
         or a municipal  engineer,  as to (1) whether such Additional  Mortgaged
         Property  is a  Flood  Hazard  Property  and  (2)  if so,  whether  the
         community   in  which  such  Flood   Hazard   Property  is  located  is
         participating  in the National  Flood  Insurance  Program,  (b) if such
         Additional  Mortgaged  Property is a Flood Hazard  Property,  such Loan
         Party's written acknowledgement of receipt of written notification from
         Administrative  Agent (1) that such Additional  Mortgaged Property is a
         Flood Hazard Property and (2) as to whether the community in which such
         Flood Hazard Property is located is participating in the National Flood
         Insurance  Program,  and (c) in the  event  such  Additional  Mortgaged
         Property is a Flood Hazard Property that is located in a community that
         participates  in the National Flood  Insurance  Program,  evidence that
         Borrower has obtained  flood  insurance in respect of such Flood Hazard
         Property to the extent required under the applicable regulations of the
         Board of Governors of the Federal Reserve System; and

                  (viii)  Environmental  Audit.  If required  by  Administrative
         Agent,  reports and other  information,  in form,  scope and  substance
         satisfactory  to  Administrative  Agent and  prepared by  environmental
         consultants   satisfactory  to  Administrative  Agent,  concerning  any
         environmental  hazards  or  liabilities  to which  Parent or any of its
         Subsidiaries  may be subject with respect to such Additional  Mortgaged
         Property.

         C. Real Estate  Appraisals.  Parent shall,  and shall cause each of its
Subsidiaries  to, permit an independent  real estate  appraiser  satisfactory to
Administrative   Agent,  upon  reasonable  notice,  to  visit  and  inspect  any
Additional  Mortgaged Property for the purpose of preparing an appraisal of such
Additional Mortgaged Property satisfying the requirements of any applicable laws
and  regulations  (in each  case to the  extent  required  under  such  laws and
regulations as determined by Administrative Agent in its discretion).

6.10     Deposit Accounts.

         At any time there are  Revolving  Loans  outstanding,  Parent shall not
permit the aggregate amount on deposit in all Deposit Accounts of Parent and its
Subsidiaries (other than Deposit Accounts maintained with Administrative  Agent)
at any time to exceed $3,000,000.

6.11     Determination of Borrowing Base.

         A.   Borrower   shall   deliver  a  Borrowing   Base   Certificate   to
Administrative  Agent  sufficiently  in  advance of the  Closing  Date to permit
Administrative  Agent to  determine  the  Borrowing  Base to be in effect on the
Closing Date and  thereafter,  shall deliver  Borrowing Base  Certificates  on a
monthly  basis  pursuant to

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subsection  6.1(xviii);  each such Borrowing Base  Certificate to be dated as of
the last day of the applicable reporting period.  Promptly following its receipt
of each such Borrowing Base Certificate,  Administrative  Agent shall determine,
or, as the case may be,  redetermine  the Borrowing Base in accordance  with the
definition  thereof,  using the  information  contained in such  Borrowing  Base
Certificate, and shall notify Borrower of the Borrowing Base so determined or so
redetermined.  Each  such  Borrowing  Base  so  determined  or  redetermined  by
Administrative  Agent  shall  remain in effect  until  notice of a  redetermined
Borrowing Base shall have been given by Administra tive Agent in accordance with
the provisions of this subsection 6.11.

         B.  Each  of the  Accounts  Receivable  shown  on each  Borrowing  Base
Certificate  shall conform to the  requirements  set forth in the  definition of
Eligible Receivables.

         C. All Inventory shown on each Borrowing Base Certificate shall conform
to the  requirements  of the  definition  of  Eligible  Inventory,  shall be the
Operating  Subsidiaries'  exclusive property and shall be valued at the lower of
cost or market value.

         D. Borrower agrees to furnish to  Administrative  Agent any information
which it may reasonably  request  regarding the determination and calculation of
the Borrowing Base including, without limitation, correct and complete copies of
any material invoices, underlying agreements, instruments or other documents and
the identity of all obligors.

         E. The  Administrative  Agent  may,  at any time that it in good  faith
believes that the Total  Utilization of the Revolving Loan  Commitments  exceeds
the  Borrowing  Base  reflected in the most recent  Borrowing  Base  Certificate
delivered by Borrower,  require  Borrower to, and Borrower may at any time elect
to, submit an updated Borrowing Base Certificate  and/or reevaluate the value of
any item included in the Borrowing  Base in  accordance  with the  definition of
such item as set forth in subsection 1.1,  including,  without  limitation,  the
creditworthiness  of any obligor  relating to any item included in the Borrowing
Base.  The  Administrative  Agent  may  determine,  as  a  result  of  any  such
reevaluation,  to reduce the amount which such item contributes to the Borrowing
Base or exclude such item from the Borrowing Base,  which  determination  shall,
absent manifest error, be final, binding and conclusive upon all parties hereto.
If the Administrative  Agent determines that the Borrowing Base shall be reduced
pursuant to this subsection  6.11, the  Administrative  Agent shall give written
notice to Borrower and Lenders which states the amount of such reduction and the
nature of the action taken by the Administrative Agent, which reduction shall be
effective  on the  third  Business  Day  following  receipt  of such  notice  by
Borrower.

         F. Borrower shall promptly notify the  Administrative  Agent in writing
of any material  information which Borrower receives or otherwise gain knowledge
of relating to any item  included in the  Borrowing  Base which  materially  and
adversely

                                      113
<PAGE>

affects  the value of such item or would cause such item to be excluded in whole
or in part from the Borrowing Base.

6.12     Keeping of Books.

         Parent shall keep, and cause each of its  Subsidiaries to keep,  proper
books of record and account,  in which full and correct entries shall be made of
all financial  transactions  and the assets and business of Parent and each such
Subsidiary in accordance with GAAP in effect from time to time.

6.13     Compliance with Terms of Leaseholds.

         Borrower shall make all payments and otherwise  perform all obligations
in  respect  of all  leases of real  property  to which  Borrower  or any of its
Subsidiaries is a party, keep such leases in full force and effect and not allow
such leases to lapse or be  terminated  or any rights to renew such leases to be
forfeited or cancelled,  notify Administrative Agent of any default by any party
with  respect to such  leases and  cooperate  with  Administrative  Agent in all
respects to cure any such default,  and cause each of its  Subsidiaries to do so
except,  in any case, where the failure to do so, either  individually or in the
aggregate, could not be reasonably likely to have a Material Adverse Effect.

6.14     Performance of Related Agreements.

         Borrower  shall  perform  and  observe  all of the  material  terms and
provisions of each Related Agreement to be performed or observed by it, maintain
each such  Related  Agreement  in full force and effect,  enforce  such  Related
Agreement in accordance with its terms,  take all such action to such end as may
be from time to time reasonably requested by Requisite Lenders and, upon request
of Requisite  Lenders,  make to each other party to each such Related  Agreement
such demands and requests for  information and reports or for action as Borrower
is  entitled  to make  under  such  Related  Agreement,  and  cause  each of its
Subsidiaries to do so.

6.15     Performance of Material Contracts.

         Borrower   shall  perform  and  observe  all  the  material  terms  and
provisions of each Material Contract to be performed or observed by it, maintain
each such Material Contract in full force and effect, enforce each such Material
Contract in accordance  with its terms,  take all such action to such end as may
be from time to time reasonably requested by Requisite Lenders and, upon request
of Requisite  Lenders,  make to each other party to each such Material  Contract
such demands and requests for  information and reports or for action as Borrower
is  entitled  to make  under  such  Material  Contract,  and  cause  each of its
Subsidiaries  to do so except,  in any case,  where the failure to do so, either
individually  or in the  aggregate,  could  not be  reasonably  likely to have a
Material Adverse Effect.

                                      114
<PAGE>

6.16     Audit of Inventory and Accounts Receivable.

         Borrower shall assist  Administrative  Agent (or an independent auditor
satisfactory  to  Administrative  Agent) in completing  audits of the Inventory,
accounts  receivable  and payables of Borrower and its  Subsidiaries  during the
30-day  period  after the Closing  Date,  which  audits will be provided to each
Lender.  Borrower will  negotiate in good faith with  Administrative  Agent (and
Administrative  Agent shall consult with Lenders with respect thereto) to revise
the definitions of "Eligible  Accounts  Receivable" and "Eligible  Inventory" to
reflect the results of such audits.


Section 7.        NEGATIVE COVENANTS

         Parent and Borrower, jointly and severally, covenant and agree that, so
long as any of the  Commitments  hereunder  shall  remain  in  effect  and until
payment in full of all of the Loans and other  Obligations and the  cancellation
or  expiration  of all  Letters  of  Credit  and  the  termination  of  the  IRB
Reimbursement  Agreement,  unless  Requisite  Lenders shall otherwise give prior
written consent, each of Parent and Borrower shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 7.

7.1      Indebtedness.

         Parent  shall not,  and shall not permit  any of its  Subsidiaries  to,
directly or indirectly,  create, incur, assume,  guaranty, or suffer to exist or
otherwise  become or remain  directly or indirectly  liable with respect to, any
Indebtedness, except:

                  (i) Borrower may become and remain  liable with respect to the
         Obliga tions;

                  (ii)  Borrower  and its  Subsidiaries  may  become  and remain
         liable with respect to Contingent  Obligations  permitted by subsection
         7.4  and,  upon  any  matured  obligations  actually  arising  pursuant
         thereto, the Indebtedness  corresponding to the Contingent  Obligations
         so extinguished;

                  (iii)  Borrower  and its  Subsidiaries  may  become and remain
         liable with respect to  Indebtedness in respect of Capital Leases in an
         aggregate principal amount not to exceed $2,000,000;

                  (iv)  Borrower  may become and remain  liable with  respect to
         Indebtedness to any of its Subsidiaries, and any Subsidiary of Borrower
         may become and remain liable with respect to  Indebtedness  to Borrower
         or any  other  Subsidiary  of  Borrower;  provided  that  (a) all  such
         intercompany  Indebtedness  shall be evidenced by promissory  notes and
         pledged  to  Administrative  Agent  pursuant  to

                                      115
<PAGE>

         the Borrower  Pledge  Agreement  or the  applicable  Subsidiary  Pledge
         Agreement,  as the case may be, (b) all such intercompany  Indebtedness
         owed by Borrower to any of its  Subsidiaries  shall be  subordinated on
         terms  acceptable  to  Requisite  Lenders  in right of  payment  to the
         payment  in  full  of the  Obligations  pursuant  to the  terms  of the
         applicable promissory notes or an intercompany subordination agreement,
         and (c) any payment by any Subsidiary of Borrower under any guaranty of
         the Obligations  shall result in a pro tanto reduction of the amount of
         any intercompany Indebtedness owed by such Subsidiary to Borrower or to
         any of its Subsidiaries for whose benefit such payment is made;

                  (v) Borrower and its Subsidiaries,  as applicable,  may remain
         liable  with  respect to  Indebtedness  existing on the date hereof and
         described in Schedule 7.1 annexed hereto;

                  (vi)  Borrower  and its  Subsidiaries  may remain  liable with
         respect  to the IRB Debt  pursuant  to the IRB  Trust  Indenture  in an
         aggregate principal amount not to exceed $4,400,000;

                  (vii)  Borrower  may become and remain  liable with respect to
         the Senior  Guaranteed  Notes in an aggregate  principal  amount not to
         exceed $115,000,000;

                  (viii)  Borrower  and its  Subsidiaries  may become and remain
         liable with  respect to other  unsecured  Indebtedness  in an aggregate
         principal amount not to exceed $2,000,000 at any time outstanding;

                  (ix) QF Acquisition  may become and remain liable with respect
         to the PIDA Loan and PIDC Loan in an aggregate  principal amount not to
         exceed, in each case, $1,750,000 at any time outstanding;

                  (x) Borrower and its Subsidiaries may become and remain liable
         with respect to secured purchase money or other similar Indebtedness in
         an aggregate amount not to exceed $2,000,000 at any time; provided that
         at least 80% of the  purchase  price of such assets was provided by the
         proceeds of such purchase money Indebtedness;

                  (xi)  Borrower  and its  Subsidiaries  may  become  and remain
         liable with respect to  Subordinated  Notes in an  aggregate  principal
         amount not to exceed $10,000,000.

7.2      Liens and Related Matters.

         A. Prohibition on Liens.  Parent shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly,  create, incur, assume or permit to
exist  any  Lien on or  with  respect  to any  property  or  asset  of any  kind
(including   any  document  or  instrument  in  respect  of  goods  or  accounts
receivable) of Parent or any of its

                                      116
<PAGE>

Subsidiaries,  whether now owned or hereafter acquired, or any income or profits
therefrom,  or sign or file or  permit  the  filing  of,  or permit to remain in
effect, any financing statement or other similar notice of any Lien with respect
to any such property, asset, income or profits under the Uniform Commercial Code
of any State or under any similar recording or notice statute, or sign or permit
to exist any security agreement authorizing any secured party thereunder to file
such financing statement or similar notice, except:

                  (i) Permitted Encumbrances;

                  (ii) Liens granted pursuant to the Collateral Documents;

                  (iii) Liens existing on the date hereof  described in Schedule
         7.2 annexed hereto; and

                  (iv)  purchase  money  Liens  upon  or  in  real  property  or
         equipment  acquired or held by Borrower or any of its  Subsidiaries  in
         the ordinary  course of business to secure the  purchase  price of such
         property or equipment or to secure Indebtedness incurred solely for the
         purpose of financing the  acquisition,  construction  or improvement of
         any such  property or equipment  to be subject to such Liens,  or Liens
         existing on any such  property or equipment at the time of  acquisition
         (other than any such Liens created in contemplation of such acquisition
         that do not secure the  purchase  price),  or  extensions,  renewals or
         replacements  of any of the foregoing for the same or a lesser  amount;
         provided,  however,  that no such  Lien  shall  extend  to or cover any
         property  other  than  the  property  or  equipment   being   acquired,
         constructed or improved, and no such extension,  renewal or replacement
         shall extend to or cover any property  not  theretofore  subject to the
         Lien being extended, renewed or replaced; and provided further that the
         aggregate  principal  amount  of  the  Indebtedness  secured  by  Liens
         permitted  by this  clause  (iv) shall not exceed the amount  permitted
         under subsection 7.1(x) at any time outstanding;

                  (v)  Liens  arising  in  connection  with  Capitalized  Leases
         permitted under subsection  7.1(iii),  provided that no such Lien shall
         extend to or cover any assets  other  than the  assets  subject to such
         Capitalized Leases;

                  (vi)  the  replacement,  extension  or  renewal  of  any  Lien
         permitted  by  clauses  (i),  (iii),  (v),  (vii)  and  (viii)  of this
         subsection 7.2 upon or in the same property theretofore subject thereto
         or the  replacement,  extension  or renewal  (without  increase  in the
         amount  or  change  in  any  direct  or  contingent   obligor)  of  the
         Indebtedness secured thereby; and

                  (vii) Liens  arising in connection  with PIDA Loans  permitted
         under  subsection  7.1(ix),  provided  that  such  Liens  shall  be (1)
         subordinated  to all  Obligations  hereunder  in  respect  of  any  IRB
         Reimbursement  Advance, (2) limited

                                      117
<PAGE>

         to the extent set forth in the PIDA Commitment Letter annexed hereto as
         Schedule  7.2(vii),   and  (3)  otherwise  be  in  form  and  substance
         reasonably satisfactory to Requisite Lenders.

         B.  Equitable  Lien  in  Favor  of  Lenders.  If  Parent  or any of its
Subsidiaries  shall  create or assume  any Lien  upon any of its  properties  or
assets,  whether now owned or here after acquired,  other than Liens excepted by
the  provisions of subsection  7.2A, it shall make or cause to be made effective
provision  whereby  the  Obligations  will be secured by such Lien  equally  and
ratably with any and all other Indebtedness  secured thereby as long as any such
Indebtedness shall be so secured; provided that,  notwithstanding the foregoing,
this  covenant  shall not be construed as a consent by Requisite  Lenders to the
creation or  assumption  of any such Lien not  permitted  by the  provisions  of
subsection 7.2A.

         C. No  Further  Negative  Pledges.  Except  with  respect  to  specific
property encum bered to secure payment of particular  Indebtedness or to be sold
pursuant to an executed  agreement with respect to an Asset Sale, neither Parent
nor any of its  Subsidiaries  shall  enter into any  agreement  (other  than the
Senior Guaranteed Note Documents)  prohibiting the creation or assumption of any
Lien upon any of its  properties  or  assets,  whether  now  owned or  hereafter
acquired.

         D. No  Restrictions  on Subsidiary  Distributions  to Borrower or Other
Subsidiar  ies.  Except as provided  herein,  or in any Senior  Guaranteed  Note
Document,  Parent  will not,  and will not  permit any of its  Subsidiaries  to,
create or otherwise cause or suffer to exist or become  effective any consensual
encumbrance  or  restriction  of any kind on the  ability of any  Subsidiary  of
Borrower to (i) pay  dividends  or make any other  distributions  on any of such
Subsidiary's  capital  stock  owned  by  Borrower  or any  other  Subsidiary  of
Borrower,  (ii)  repay or prepay any  Indebtedness  owed by such  Subsidiary  to
Borrower or any other  Subsidiary  of Borrower,  (iii) make loans or advances to
Borrower  or any other  Subsidiary  of  Borrower,  or (iv)  transfer  any of its
property or assets to Borrower or any other  Subsidiary of Borrower,  other than
encumbrances and  restrictions  arising under (i) applicable law, (ii) customary
provisions  restricting  subletting  or  assignment  of any  lease  governing  a
leasehold  interest of Borrower or any of its Subsidiaries,  and (iii) customary
restrictions  on  dispositions  of real property  interests  found in reciprocal
easement agreements of Borrower or any of its Subsidiaries.

7.3      Investments; Joint Ventures.

         Parent  shall not,  and shall not permit  any of its  Subsidiaries  to,
directly or indirectly,  make or own any Investment in any Person, including any
Joint Venture, except:

                  (i) Subject to subsection  8.15,  Parent and its  Subsidiaries
         may make and own Investments in Cash Equivalents;

                                      118
<PAGE>

                  (ii)  Borrower  and its  Subsidiaries  may own and make equity
         Investments in any Subsidiary of Borrower;

                  (iii)  Borrower  and its  Subsidiaries  may make  intercompany
         loans to the extent permitted under subsection 7.1(iv);

                  (iv)  Borrower  and its  Subsidiaries  may  make  Consolidated
         Capital Expenditures permitted by subsection 7.8;

                  (v)  Borrower  and its  Subsidiaries  may  continue to own the
         Investments  owned  by them as of the  Closing  Date and  described  in
         Schedule 7.3 annexed hereto;

                  (vi) Borrower may continue to own Investments  with respect to
         the Acquisition;

                  (vii) Parent and its  Subsidiaries may make loans and advances
         to employees  in the ordinary  course of the business of Parent and its
         Subsidiaries as presently  conducted in an aggregate  principal  amount
         not to exceed $500,000 at any time outstanding;  provided that any such
         loans  shall  be  evidenced  by  a  promissory   note  and  pledged  to
         Administrative  Agent  pursuant  to the Parent  Pledge  Agreement,  the
         Borrower Pledge Agreement or applicable Subsidiary Pledge Agreement, as
         the case may be;

                  (viii) Parent and its Subsidiaries may make loans to employees
         for  the  purpose  of  selling  equity  securities  of  Parent  to such
         employees in an aggregate  principal  amount not to exceed  $500,000 at
         anytime  outstanding;  provided that such loans shall be evidenced by a
         promissory  note and pledged to  Administrative  Agent  pursuant to the
         Parent Pledge  Agreement,  the Borrower Pledge  Agreement or applicable
         Subsidiary Pledge Agreement, as the case may be;

                  (ix)  Borrower  and  its  Subsidiaries  may  make  Investments
         consisting  of Contingent  Obligations  to the extent  permitted  under
         subsection 7.4;

                  (x)  Borrower  and its  Subsidiaries  may make  and own  other
         Investments to the extent permitted under subsection 7.7; and

                  (xi) Parent may make Investments  consisting of repurchases of
         equity  Securities of Parent to the extent  permitted under  subsection
         7.5.

7.4      Contingent Obligations.

                                      119
<PAGE>

         Parent  shall not,  and shall not permit  any of its  Subsidiaries  to,
directly or  indirectly,  create or become or remain  liable with respect to any
Contingent Obligation, except:

                  (i) Borrower's  Subsidiaries may become and remain liable with
         respect  to  Contingent   Obligations  in  respect  of  the  Subsidiary
         Guaranty;

                  (ii)  Borrower  may become and remain  liable with  respect to
         Contingent  Obligations in respect of the IRB Reimbursement  Agreement,
         and Borrower  and its  Subsidiaries  may become and remain  liable with
         respect to Contingent  Obligations  in respect of Revolving  Letters of
         Credit in an aggregate amount not to exceed at any time $3,000,000;

                  (iii)  Borrower  may become and remain  liable with respect to
         Contingent Obligations under Hedge Agreements required under subsection
         6.10;

                  (iv)  Borrower  and its  Subsidiaries  may  become  and remain
         liable with respect to Contingent  Obligations  in respect of customary
         indemnification  and purchase  price  adjustment  obligations  incurred
         pursuant to the Acquisition Agreement or in connection with Asset Sales
         or other sales of assets;

                  (v)  Borrower  may become and remain  liable  with  respect to
         Contingent  Obligations  under  guarantees  in the  ordinary  course of
         business of the  obligations of suppliers,  customers,  franchisees and
         licensees of Borrower and its Subsidiaries;

                  (vi) Borrower and its Subsidiaries,  as applicable, may remain
         liable with respect to Contingent  Obligations  existing on the Closing
         Date and described in Schedule 7.4 annexed hereto;

                  (vii) Subsidiary  Guarantors may become and remain liable with
         respect to Contingent  Obligations  arising under (a) guaranties of the
         Senior  Guaranteed  Notes as set forth in the  Senior  Guaranteed  Note
         Documents and (b) subordinated  guaranties of any Subordinated Notes as
         set forth in any Subordinated Note Documents; and

                  (viii)  Borrower  and its  Subsidiaries  may become and remain
         liable with respect to other Contingent  Obligations that are expressly
         subordinated  by their  terms  to the  Obligations;  provided  that the
         maximum aggregate  liability,  contingent or otherwise,  of Borrower in
         respect  of all such  Contingent  Obligations  shall at no time  exceed
         $2,000,000.

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<PAGE>

7.5      Restricted Junior Payments.

         Parent  shall not,  and shall not permit  Borrower  or any of its other
Subsidiaries to, directly or indirectly,  declare, order, pay, make or set apart
any sum for any Restricted  Junior Payment;  provided that (i) Borrower may make
Restricted  Junior Payments to make cash interest payments to the holders of the
Senior Guaranteed Notes, in accordance with the terms of, and only to the extent
required by, the Senior Guaranteed Note Documents,  (ii) if proceeds of the PIDA
Loan are actually received by Borrower,  Borrower may at any time on or prior to
June 30, 1997 consummate the Preferred Stock  Redemption for an aggregate amount
not to exceed the lesser of (x)  $1,225,000  and (y) the gross  proceeds  of the
PIDA Loan plus $225,000 less the face amount of any Letter of Credit  supporting
the  PIDA  Loan,  (iii) so long as no Event of  Default  or  Potential  Event of
Default  shall  have  occurred  and be  continuing  or shall be caused  thereby,
Borrower may make Restricted  Junior Payments to Parent to enable Parent to make
Restricted Junior Payments to First Atlantic Capital, Ltd. pursuant to the terms
of the  Management  Consulting  Agreement  in effect on the  Closing  Date in an
aggregate  amount not to exceed  $600,000 plus reasonable out of pocket expenses
in any  Fiscal  Year,  provided  that  notwithstanding  any Event of  Default or
Potential  Event  of  Default,  fees  otherwise  payable  under  the  Management
Consulting Agreement may accrue but shall not be payable until such time as such
Potential  Event of Default or Event of Default is cured or is waived,  at which
time all such  accrued  fees shall be  payable,  and (iv) so long as no Event of
Default or Potential Event of Default has occurred and is continuing or shall be
caused thereby, Borrower may make Restricted Junior Payments to Parent to enable
Parent to repurchase equity investments of management  investors pursuant to the
Stockholders  Agreement;  provided that the amount of Restricted Junior Payments
pursuant to this clause (iv) shall not  exceed,  in any Fiscal  Year,  an amount
equal to that  portion  of  Consolidated  Excess  Cash Flow for the  immediately
preceding  Fiscal  Year not  required  to prepay  Loans  pursuant to  subsection
2.4B(iii)(f) so long as,  immediately after giving effect to any such Restricted
Junior  Payment,  Borrower shall have not less than  $5,000,000 of  availability
under the Revolving Loan Commitments  (giving effect to the Borrowing Base as of
the date of determination).

7.6      Financial Covenants.

         A. Minimum Interest  Coverage Ratio.  Parent shall not permit the ratio
of (i) Consolidated  Adjusted EBITDA to (ii)  Consolidated  Interest Expense for
any  four-Fiscal  Quarter  period  ending on or about any of the dates set forth
below (or in the case of any period prior to December 31, 1997,  the period from
January  1,  1997  through  such  date) to be less  than the  correlative  ratio
indicated:

                                      121
<PAGE>

                                             Minimum Interest
       Approximate Date                      Coverage Ratio
      ================================  ===============================
      March 31, 1997                           1.15:1.00
      -------------------------------   -------------------------------
      June 30, 1997                            1.40:1.00
      -------------------------------   -------------------------------
      September 30, 1997                       1.55:1.00
      -------------------------------   -------------------------------
      December 31, 1997                        1.55:1.00
      -------------------------------   -------------------------------
      March 31, 1998                           1.55:1.00
      -------------------------------   -------------------------------
      June 30, 1998                            1.55:1.00
      -------------------------------   -------------------------------
      September 30, 1998                       1.55:1.00
      -------------------------------   -------------------------------
      December 31, 1998                        1.70:1.00
      -------------------------------   -------------------------------
      March 31, 1999                           1.70:1.00
      -------------------------------   -------------------------------
      June 30, 1999                            1.70:1.00
      -------------------------------   -------------------------------
      September 30, 1999                       1.70:1.00
      -------------------------------   -------------------------------
      December 31, 1999                        1.90:1.00
      -------------------------------   -------------------------------
      March 31, 2000                           1.90:1.00
      -------------------------------   -------------------------------
      June 30, 2000                            1.90:1.00
      -------------------------------   -------------------------------
      September 30, 2000                       1.90:1.00
      -------------------------------   -------------------------------
      December 31, 2000                        2.00:1.00
      -------------------------------   -------------------------------
      March 31, 2001                           2.00:1.00
      -------------------------------   -------------------------------
      June 30, 2001                            2.00:1.00
      -------------------------------   -------------------------------
      September 30, 2001                       2.00:1.00
      -------------------------------   -------------------------------
      December 31, 2001                        
      and each Fiscal Quarter's                2.00:1.00
      end thereafter                     
      ================================  ===============================
              
         B. Minimum  Fixed Charge  Coverage  Ratio.  Parent shall not permit the
ratio  of  (i)   Consolidated   Adjusted  EBITDA  minus   Consolidated   Capital
Expenditures  to (ii)  Consolidated  Fixed Charges for any  four-Fiscal  Quarter
period  ending on or about any of the dates set forth  below (or, in the case of
any period  ending prior to December  31, 1997,  the period from January 1, 1997
through such date) to be less than the correlative ratio indicated:

                                      122
<PAGE>

                                              Minimum Fixed
                                             Charge Coverage
        Approximate Date                         Ratio
      ================================  ==============================
      March 31, 1997                             N/A
      -------------------------------   -------------------------------
      June 30, 1997                            1.00:1.00
      -------------------------------   -------------------------------
      September 30, 1997                       1.05:1.00
      -------------------------------   -------------------------------
      December 31, 1997                        1.10:1.00
      -------------------------------   -------------------------------
      March 31, 1998                           1.10:1.00
      -------------------------------   -------------------------------
      June 30, 1998                            1.10:1.00
      -------------------------------   -------------------------------
      September 30, 1998                       1.10:1.00
      -------------------------------   -------------------------------
      December 31, 1998                        1.20:1.00
      -------------------------------   -------------------------------
      March 31, 1999                           1.20:1.00
      -------------------------------   -------------------------------
      June 30, 1999                            1.20:1.00
      -------------------------------   -------------------------------
      September 30, 1999                       1.20:1.00
      -------------------------------   -------------------------------
      December 31, 1999                        1.30:1.00
      -------------------------------   -------------------------------
      March 31, 2000                           1.30:1.00
      -------------------------------   -------------------------------
      June 30, 2000                            1.30:1.00
      -------------------------------   -------------------------------
      September 30, 2000                       1.30:1.00
      -------------------------------   -------------------------------
      December 31, 2000                        1.40:1.00
      -------------------------------   -------------------------------
      March 31, 2001                           1.40:1.00
      -------------------------------   -------------------------------
      June 30, 2001                            1.40:1.00
      -------------------------------   -------------------------------
      September 30, 2001                       1.40:1.00
      -------------------------------   -------------------------------
      December 31, 2001                        
      and each Fiscal Quarter's                1.40:1.00
      end thereafter                     
      ===============================   ===============================
                                                 
         C.  Maximum  Leverage  Ratio.  Parent shall not permit the ratio of (i)
Consoli dated Total Debt as of the last day of any Fiscal  Quarter  ending on or
about any of the dates set forth below to (ii) Consolidated  Adjusted EBITDA for
the four Fiscal  Quarter  period ending on such date (the  "Leverage  Ratio") to
exceed the correlative ratio indicated:

                                      123
<PAGE>

                                                   Maximum Leverage        
                   Approximate Date                     Ratio
           ================================ ==============================
           December 31, 1997                        5.75:1.00
           -------------------------------  ------------------------------
           March 31, 1998                           5.75:1.00
           -------------------------------  ------------------------------
           June 30, 1998                            5.75:1.00
           -------------------------------  ------------------------------
           September 30, 1998                       5.75:1.00
           -------------------------------  ------------------------------
           December 31, 1998                        5.00:1.00
           -------------------------------  ------------------------------
           March 31, 1999                           5.00:1.00
           -------------------------------  ------------------------------
           June 30, 1999                            5.00:1.00
           -------------------------------  ------------------------------
           September 30, 1999                       5.00:1.00
           -------------------------------  ------------------------------
           December 31, 1999                        4.25:1.00
           -------------------------------  ------------------------------
           March 31, 2000                           4.25:1.00
           -------------------------------  ------------------------------
           June 30, 2000                            4.25:1.00
           -------------------------------  ------------------------------
           September 30, 2000                       4.25:1.00
           -------------------------------  ------------------------------
           December 31, 2000                        3.50:1.00
           -------------------------------  ------------------------------
           March 31, 2001                           3.50:1.00
           -------------------------------  ------------------------------
           June 30, 2001                            3.50:1.00
           -------------------------------  ------------------------------
           September 30, 2001                       3.50:1.00
           -------------------------------  ------------------------------
           December 31, 2001                        
           and each Fiscal Quarter's                3.00:1.00
           end thereafter                     
           ================================ ==============================

         D.  Minimum  Consolidated  Adjusted  EBITDA.  Parent  shall not  permit
Consolidated  Adjusted  EBITDA for any period  commencing on January 1, 1997 and
ending at the end of the  Fiscal  Quarter  ending on or about the date set forth
below to be less than the correlative amount indicated:

                                      124
<PAGE>

                                                   Minimum Consolidated     
                Approximate Date                     Adjusted EBITDA
       ===================================  ===============================
       March 31, 1997                                 $ 4,300,000
       -----------------------------------  -------------------------------
       June 30, 1997                                  $10,000,000
       -----------------------------------  -------------------------------
       September 30, 1997                             $18,600,000
       ===================================  ===============================
       
         E. Minimum  Consolidated  Adjusted  Net Worth.  Parent shall not permit
Consolidated Adjusted Net Worth at the end of any Fiscal Quarter to be less than
the sum of (x) the  Consolidated  Net Worth at the Closing  Date plus (y) 50% of
the  Consolidated  Adjusted Net Income for the period  commencing on the Closing
Date and ending on the last day of such Fiscal  Quarter  minus (z) the aggregate
amount of  Restricted  Junior  Payments  actually  made pursuant to clause (ii),
(iii),  and (vi) of  subsection  7.5. 

For purposes of this  subsection  7.6 the covenant  measurement  dates have been
determined  based on the assumption  that the Borrower's  Fiscal Quarters end on
March 31, June 30,  September 30 and December 31 of each year. In the event that
the Fiscal Quarters end on other dates, the foregoing covenant measurement dates
shall be  adjusted,  so that any change in the ratios shall occur as of the last
day of the applicable Fiscal Quarter.

7.7      Restriction on Fundamental Changes; Asset Sales and Acquisitions.

         Parent  shall not,  and shall not permit  any of its  Subsidiaries  to,
alter  the  corporate,  capital  or  legal  structure  of  Parent  or any of its
Subsidiaries,  or enter  into any  transaction  of merger or  consolidation,  or
liquidate,   wind-up  or  dissolve   itself  (or  suffer  any   liquidation   or
dissolution),  or convey,  sell,  lease or sub-lease  (as lessor or  sublessor),
transfer  or  otherwise   dispose  of,  in  one   transaction  or  a  series  of
transactions,  all or any part of its business,  property or assets, whether now
owned or  hereafter  acquired,  or  acquire  by  purchase  or  otherwise  all or
substantially  all the business,  property or fixed assets of, or stock or other
evidence  of  beneficial  ownership  of, any Person or any  division  or line of
business of any Person, except:

                  (i) Borrower may be merged into Parent and any  Subsidiary  of
         Borrower  may be merged with or into any  Subsidiary  Guarantor,  or be
         liquidated,  wound up or dissolved, or all or any part of its business,
         property  or assets  may be  conveyed,  sold,  leased,  transferred  or
         otherwise  disposed of, in one transaction or a series of transactions,
         to any  Subsidiary  Guarantor;  provided  that,  in the  case of such a
         merger, such Subsidiary  Guarantor shall be the continuing or surviving
         corporation;

                                      125
<PAGE>

                  (ii)  Borrower  and its  Subsidiaries  may  make  Consolidated
         Capital Expenditures permitted under subsection 7.8;

                  (iii) Borrower and its  Subsidiaries  may dispose of obsolete,
         worn out or surplus property in the ordinary course of business;

                  (iv)  Borrower  and its  Subsidiaries  may  sell or  otherwise
         dispose of assets for cash in transactions that do not constitute Asset
         Sales;  provided that the consideration  received for such assets shall
         be in an amount at least equal to the fair market value thereof;

                  (v) subject to subsection  7.11 Borrower and its  Subsidiaries
         may make Asset Sales of assets having a fair market value not in excess
         of $2,000,000;  provided that (x) the  consideration  received for such
         assets  shall be in an amount at least equal to the fair  market  value
         thereof; (y) the sole consideration received shall be cash; and (z) the
         proceeds  of such Asset  Sales  shall be applied as  required by subsec
         tion 2.4B(iii)(a);

                  (vi) Borrower and its Subsidiaries may make acquisitions in an
         aggregate  amount not to exceed (x) $25,000,000 in the aggregate if the
         aggregate  principal amount of Term Loans outstanding equals or exceeds
         $5,000,000 but equals or is less than  $10,000,000  and (y) $35,000,000
         in the  aggregate  if the  aggregate  principal  amount  of Term  Loans
         outstanding  is, less than  $5,000,000;  provided  that with respect to
         acquisitions  made pursuant to this subsection  7.7(vi):  (a) any newly
         acquired or created  Subsidiary of Borrower or any of its  Subsidiaries
         shall be a wholly owned Subsidiary thereof;  (b) immediately before and
         after giving effect thereto,  no Potential Event of Default or Event of
         Default   shall  have  occurred  and  be  continuing  or  would  result
         therefrom;  (c) any  business  acquired or invested in pursuant to this
         subsection  7.7(vi)  shall  be in the  same  line  of  business  as the
         business of Borrower or any of its  Subsidiaries;  (d)  Borrower  shall
         comply with the requirements of subsection 6.8; (e) after giving effect
         to such  acquisition,  Borrower  shall be in  compliance on a pro forma
         basis with all of the covenants set forth in subsection  7.6; (e) after
         giving effect to such  acquisition,  Borrower  shall have not less than
         $5,000,000 of availability  under the Revolving Loan  Commitments;  and
         (f) no default shall be caused by such  acquisition  under any Material
         Contract of Parent or any of its Subsidiaries.

7.8      Consolidated Capital Expenditures.

         Parent shall not permit its Subsidiaries to, make or incur Consolidated
Capital  Expenditures  in any Fiscal  Year in an  aggregate  amount in excess of
$5,000,000;  provided that the maximum Consolidated Capital Expenditures for any
Fiscal Year shall be  increased  by the lesser of (i) an amount equal to 100% of
the excess,  if any, of the maximum  Consolidated  Capital  Expenditures for the
previous Fiscal Year (without 

                                      126
<PAGE>

giving effect to any adjustments  pursuant to with this proviso) over the actual
amount of Consolidated  Capital  Expenditures  for such previous Fiscal Year and
(ii) for Fiscal Year 1998,  $1,500,000  and,  for each  Fiscal Year  thereafter,
$1,000,000.

7.9      Sale or Discount of Receivables.

         Parent  shall not,  and shall not permit  any of its  Subsidiaries  to,
directly or indirectly,  sell with  recourse,  or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.

7.10     Transactions with Shareholders and Affiliates.

         Parent  shall not,  and shall not permit  any of its  Subsidiaries  to,
directly  or  indirectly,   enter  into  or  permit  to  exist  any  transaction
(including,  without  limitation,  the purchase,  sale, lease or exchange of any
property or the  rendering of any service) with any holder of 10% or more of any
class of equity  Securities  of Parent or with any Affiliate of Parent or of any
such holder,  on terms that are less favorable to Parent or that Subsidiary,  as
the case may be, than those that would be obtained at that time from Persons who
are not such a holder or  Affiliate;  provided  that the  foregoing  restriction
shall  not  apply  to  (i)  any  transaction  between  Borrower  and  any of its
Subsidiaries  or among any of its  Subsidiaries,  (ii) reason able and customary
fees paid to members of the Boards of Directors  of Parent and its  Subsidiaries
or (iii) fees and expenses payable to First Atlantic  Capital,  Ltd. pursuant to
the Management  Consulting  Agreement to the extent  permitted under  subsection
7.5.

7.11     Disposal of Subsidiary Stock.

         Parent shall not (except with respect to Liens granted  pursuant to the
Loan Documents):

                  (i) directly or indirectly sell,  assign,  pledge or otherwise
         encumber  or dispose of any  shares of  capital  stock or other  equity
         Securities  of  any  of  its  Subsidi  aries,  or  permit  any  of  its
         Subsidiaries  to issue any  shares  of  capital  stock or other  equity
         Securities,  except sales or issuances to qualify directors if and only
         to the extent required by applicable law; or

                  (ii) permit any of its Subsidiaries  directly or indirectly to
         sell, assign,  pledge or otherwise encumber or dispose of any shares of
         capital  stock or other equity  Securities  of any of its  Subsidiaries
         (including such Subsidiary),  except to Parent,  another  Subsidiary of
         Parent, or to qualify directors if required by applicable law.

                                      127
<PAGE>

7.12     Conduct of Business.

         From and after the Closing Date, Parent shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than (i) the businesses
engaged in by Parent and its  Subsidiaries  on the  Closing  Date and similar or
related  businesses and (ii) such other lines of business as may be consented to
by Requisite Lenders.

7.13     Amendments  or Waivers of Certain  Related  Agreements;  Amendments  of
         Senior Guaranteed Note Documents; and Designation of "Designated Senior
         Indebtedness".

         A. Amendments or Waivers of Certain Related Agreements.  Neither Parent
nor any of its  Subsidiaries  will agree to any material  amendment to, or waive
any of its material  rights  under,  any Related  Agreement  which  amendment or
waiver  could be  materially  adverse  to the  Lenders  (other  than any  Senior
Guaranteed Note Documents, which shall be subject to subsection 7.13B) after the
Closing  Date  without  in each case  obtaining  the prior  written  consent  of
Requisite Lenders to such amendment or waiver.

         B. Amendments of Senior  Guaranteed  Note Documents.  Parent shall not,
and shall not permit any of its  Subsidiaries  to, amend or otherwise change the
terms of any Senior Guaranteed Note Documents in any material  respect,  or make
any payment consistent with any material amendment thereof or change thereto, if
the effect of such  amendment or change is to increase the interest  rate on the
Indebtedness  evidenced thereby,  change (to earlier dates) any dates upon which
payments  of  principal  or interest  are due  thereon,  change in any  material
respect any event of default or  condition  to an event of default  with respect
thereto (other than to eliminate any such event of default or increase any grace
period  related  thereto),  change  the  redemption,  prepayment  or  defeasance
provisions  thereof,  change the  subordination  provisions  thereof  (or of any
guaranty thereof), or change any collateral therefor (other than to release such
collateral),  or if the effect of such  amendment or change,  together  with all
other  amendments or changes made, is to increase  materially the obligations of
the obligor  thereunder or to confer any additional rights on the holders of the
Senior  Guaranteed Notes (or a trustee or other  representative on their behalf)
which  could  reasonably  be  expected  to be adverse to Parent,  Borrower,  any
Lenders or Issuing Lender.

         C. Designation of "Designated Senior Indebtedness".  Neither Parent nor
any Subsidiary  thereof shall designate any  Indebtedness as "Designated  Senior
Indebtedness" (as defined in the Senior  Guaranteed Note Documents)  without the
prior written consent of Requisite Lenders.

                                      128
<PAGE>

7.14     Fiscal Year

         Parent and Borrower shall not change its Fiscal  Year-end from the date
determined by Borrower as set forth in the definition of Fiscal Year.

7.15     Charter Amendments.

         Parent shall not amend,  nor permit any of its  Subsidiaries  to amend,
its certificate of incorporation or bylaws in a manner adverse to the Lenders.

7.16     Amendment, Etc. of Material Contracts.

         Parent shall not cancel or terminate  any Material  Contract or consent
to or accept any cancellation or termination thereof,  amend or otherwise modify
any Material Contract or give any consent, waiver or approval thereunder,  waive
any default under or breach of any Material Contract, agree in any manner to any
other amendment, modification or change of any term or condition of any Material
Contract without the prior written consent of Administrative Agent.

7.17     Partnerships, Etc.

         Parent  shall not become a general  partner  in any  general or limited
partnership or joint venture, or permit any of its Subsidiaries to do so.

7.18     Speculative Transactions.

         Parent shall not engage,  or permit any of its  Subsidiaries to engage,
in any  transaction  involving  commodity  options or futures  contracts  or any
similar  speculative  transactions  except for Hedge Agreements  permitted under
Section 7.4(iii).


Section 8.        EVENTS OF DEFAULT

         If any of the  following  conditions  or events  ("Events of  Default")
shall occur:

8.1      Failure to Make Payments When Due.

         Failure by Borrower to pay any  installment  of  principal  of any Loan
when due,  whether at stated maturity,  by acceleration,  by notice of voluntary
prepayment,  by mandatory  prepayment or  otherwise;  failure by Borrower to pay
when due any amount  payable to Issuing Lender in  reimbursement  of any drawing
under a Letter  of  Credit  or any IRB  Reimbursement  Advance;  or  failure  by
Borrower  to pay any  interest  on any Loan

                                      129
<PAGE>

or any fee or any other amount due under this  Agreement  within three  Business
Days after the date due; or

8.2      Default in Other Agreements.

         (i)  Failure of Parent or any of its  Subsidiaries  to pay when due any
principal  of or  interest on or any other  amount  payable in respect of one or
more items of Indebtedness  (other than  Indebtedness  referred to in subsection
8.1) or Contingent  Obligations in an individual principal amount of $500,000 or
more or with an aggregate  principal  amount of $1,000,000 or more, in each case
beyond the end of any grace period provided therefor;  or (ii) breach or default
by Parent or any of its Subsidiaries  with respect to any other material term of
(a)  one  or  more  items  of  Indebtedness  or  Contingent  Obligations  in the
individual or aggregate principal amounts referred to in clause (i) above or (b)
any loan  agreement,  mortgage,  indenture or other  agreement  relating to such
item(s)  of  Indebtedness  or  Contingent  Obligation(s),  if the effect of such
breach or  default  is to cause,  or to permit  the  holder or  holders  of that
Indebtedness or Contingent  Obligation(s) (or a trustee on behalf of such holder
or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or
be declared due and payable prior to its stated  maturity or the stated maturity
of any underlying  obligation,  as the case may be (upon the giving or receiving
of notice, lapse of time, both, or otherwise); or

8.3      Breach of Certain Covenants.

         Failure of Parent or  Borrower  to  perform or comply  with any term or
condition  contained in subsection 2.5 or 6.1(ix)(a) or 6.2 or Section 7 of this
Agreement; or

8.4      Breach of Warranty.

         Any representation,  warranty, certification or other statement made by
Parent or any of its  Subsidiaries  in any Loan  Document or in any statement or
certificate  at any time given by Parent or any of its  Subsidiaries  in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made or deemed made; or

8.5      Other Defaults Under Loan Documents.

         Any Loan Party shall default in the  performance of or compliance  with
any term contained in this Agreement or any of the other Loan  Documents,  other
than any such term  referred to in any other  subsection  of this Section 8, and
such  default  shall not have been  remedied or waived  within 30 days after the
earlier of (i) a  Responsible  Officer  becomes  aware of such  default and (ii)
receipt by Borrower and such Loan Party of notice from  Administrative  Agent or
any Lender of such default; or

                                      130
<PAGE>

8.6      Involuntary Bankruptcy; Appointment of Receiver, etc.

         (i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Parent or any of its Material  Subsidiaries in an
involuntary  case  under  the  Bankruptcy  Code or under  any  other  applicable
bankruptcy,  insolvency or similar law now or hereafter in effect,  which decree
or order is not stayed;  or any other similar  relief shall be granted under any
applicable  federal or state law; or (ii) an involuntary case shall be commenced
against Parent or any of its Material  Subsidiaries under the Bankruptcy Code or
under  any  other  applicable  bankruptcy,  insolvency  or  similar  law  now or
hereafter in effect; or a decree or order of a court having  jurisdiction in the
premises for the appointment of a receiver, liquidator,  sequestrator,  trustee,
custodian  or other  officer  having  similar  powers  over Parent or any of its
Material Subsidiaries,  or over all or substantially all of its property,  shall
have been entered;  or there shall have occurred the involuntary  appointment of
an interim receiver, trustee or other custodian of Parent or any of its Material
Subsidiaries  for all or  substantially  all of its  property;  or a warrant  of
attachment,  execution  or similar  process  shall have been issued  against any
substantial part of the property of Parent or any of its Material  Subsidiaries,
and any such event  described  in this  clause (ii) shall  continue  for 60 days
unless dismissed, bonded or discharged; or

8.7      Voluntary Bankruptcy; Appointment of Receiver, etc.

         (i) Parent or any of its Material  Subsidiaries shall have an order for
relief  entered  with  respect  to it or  commence  a  voluntary  case under the
Bankruptcy Code or under any other applicable bankruptcy,  insolvency or similar
law now or  hereafter in effect,  or shall  consent to the entry of an order for
relief in an involuntary  case, or to the conversion of an involuntary case to a
voluntary  case,  under any such law, or shall consent to the  appointment of or
taking  possession  by a  receiver,  trustee  or  other  custodian  for  all  or
substantially  of its  property;  or Parent or any of its Material  Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) Parent or any of
its Material  Subsidiaries  shall be unable,  or shall fail generally,  or shall
admit in writing its  inability,  to pay its debts as such debts  become due; or
the Board of  Directors of Parent or any of its  Material  Subsidiaries  (or any
committee thereof) shall adopt any resolution or otherwise  authorize any action
to approve  any of the  actions  referred  to in clause (i) above or this clause
(ii); or

8.8      Judgments, Attachments, etc.

         Any money  judgment,  writ or warrant of attachment or similar  process
involving (i) in any individual  case an amount in excess of $500,000 or (ii) in
the aggregate at any time an amount in excess of $1,000,000  (in either case not
adequately covered by insurance as to which a solvent and unaffiliated insurance
company has  acknowledged  coverage) shall be entered or filed against Parent or
any of its  Subsidiaries  or any of their  respective  assets  and shall  remain
undischarged, unvacated, unbonded or 

                                      131
<PAGE>

unstayed  for a period of 60 days (or in any event later than five days prior to
the date of any proposed sale thereunder); or any non-monetary judgment or order
shall be  rendered  against  Parent  or any of its  Subsidiaries  that  could be
reasonably  likely to have a Material  Adverse  Effect,  and there  shall be any
period  of 10  consecutive  days  during  which  a stay of  enforcement  of such
judgment or order,  by reason of a pending appeal or otherwise,  shall not be in
effect; or

8.9      Dissolution.

         Any order, judgment or decree shall be entered against Parent or any of
its  Subsidi  aries  decreeing  the  dissolution  or split up of  Parent or that
Subsidiary and such order shall remain  undischarged or unstayed for a period in
excess of 30 days; or

8.10     Employee Benefit Plans.

         There shall occur one or more ERISA Events which individually or in the
aggregate  results in or might  reasonably be expected to result in liability of
Parent,  any of its  Subsidiaries or any of their respective ERISA Affiliates in
excess of $100,000  during the term of this  Agreement;  or there shall exist an
amount of unfunded  benefit  liabilities  (as defined in Section  4001(a)(18) of
ERISA),  individually  or in the aggregate for all Pension Plans  (excluding for
purposes of such  computation  any Pension  Plans with  respect to which  assets
exceed benefit liabilities), which exceeds $100,000; or

8.11     Material Adverse Effect.

         Any event or change shall occur that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect; or

8.12     Change in Control.

         There shall occur a Change of Control; or

8.13     Invalidity  of   Guarantees;   Failure  of  Security;   Repudiation  of
         Obligations.

         At any time after the execution and delivery thereof,  (i) any Guaranty
for any reason,  other than the satisfaction in full of all  Obligations,  shall
cease to be in full force and effect (other than in  accordance  with its terms)
or shall be declared to be null and void,  (ii) any  Collateral  Document  shall
cease to be in full  force and  effect  (other  than by  reason of a release  of
Collateral  thereunder  in  accordance  with the terms  hereof or  thereof,  the
satisfaction  in  full  of the  Obligations  or any  other  termination  of such
Collateral  Document in accordance with the terms hereof or thereof) or shall be
declared null and void, or Administrative Agent shall not have or shall cease to
have a valid and perfected First Priority Lien (subject only to Permitted Liens)
in any material Collateral purported to be covered thereby, in each

                                      132
<PAGE>

case for any reason other than the failure of Administrative Agent or any Lender
to take any action within its control, or (iii) any Loan Party shall contest the
validity or  enforceability  of any Loan  Document in writing or deny in writing
that it has any further liability,  including without limitation with respect to
future advances by Lenders, under any Loan Document to which it is a party; or

8.14     Action Relating to Certain Indebtedness.

         Any event shall  occur  which under the terms of the Senior  Guaranteed
Note Documents  shall require  Borrower or any of its  Subsidiaries to purchase,
redeem or otherwise acquire, or offer to purchase,  redeem or otherwise acquire,
all or any  portion  of the  Senior  Guaranteed  Notes,  or Parent or any of its
Subsidiaries  shall for any other reason purchase,  redeem or otherwise acquire,
or offer to purchase, redeem or otherwise acquire, or make any other payments in
respect of, all or any  portion of the Senior  Guaranteed  Notes,  except to the
extent expressly permitted by subsection 7.5; or

8.15     Conduct of Business By Parent and Borrower.

         Parent or  Borrower  shall (i)  engage in any  business  other than (x)
entering into and performing its  obligations  under and in accordance  with the
Loan Documents and Related  Agreements to which it is a party or (y) as required
by law,  or (ii)  own any  assets  other  than  (a)  the  capital  stock  of its
Subsidiaries  and (b) in the case of Parent only,  Cash and Cash  Equivalents as
may be  reasonably  necessary  for the purpose of paying its  general  operating
expenses;  or  Parent  shall  cease  to own  100% of the  outstanding  stock  of
Borrower;  or Borrower shall cease to own 100% of the  outstanding  stock of its
Subsidiaries.

THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid  principal  amount of and accrued interest on the
Loans,  (b) an amount equal to the maximum  amount that may at any time be drawn
under all Letters of Credit  then  outstanding  (whether or not any  beneficiary
under any such Letter of Credit  shall have  presented,  or shall be entitled at
such time to present, the drafts or other documents or certificates  required to
draw  under  such  Letter  of  Credit),  (c)  the  Maximum  Exposure  Under  IRB
Reimbursement Agreement and (d) all other Obligations shall automatically become
immediately  due and  payable,  without  presentment,  demand,  protest or other
requirements of any kind, all of which are hereby  expressly waived by Borrower,
and the  obligation of each Lender to make any Loan,  the  obligation of Issuing
Lender to issue any Letter of Credit  hereunder shall thereupon  terminate,  and
(ii) upon the  occurrence  and during  the  continuation  of any other  Event of
Default,  Administrative  Agent  shall,  upon the  written  request  or with the
written consent of Requisite Lenders, by written notice to Borrower, declare all
or any portion of the amounts  described in clauses (a) through (d) above to be,
and the same  shall  forthwith  become,  immediately  due and  payable,  and the
obligation of each Lender to make any Loan,  the obligation of Issuing Lender to
issue any Letter of Credit  

                                      133
<PAGE>

hereunder  shall  thereupon  terminate;  provided that the  foregoing  shall not
affect in any way the  obligations  of Lenders under  subsection  3.3C(i) or the
obligations of Lenders to purchase participations in any unpaid Swing Line Loans
as provided in subsection 2.1A(iii).

         Any  amounts   described  in  clause  (b)  above,   when   received  by
Administrative  Agent,  shall be held by  Administrative  Agent  pursuant to the
terms of the  Collateral  Account  Agreement  and shall be  applied  as  therein
provided.

         Notwithstanding  anything contained in the second preceding  paragraph,
if at any time  within 60 days after an  acceleration  of the Loans  pursuant to
clause (ii) of such paragraph Borrower shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such  acceleration  (with  interest  on  principal  and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and  all  Events  of  Default  and  Potential  Events  of  Default  (other  than
non-payment of the principal of and accrued  interest on the Loans, in each case
which is due and payable solely by virtue of acceleration)  shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Borrower,  may at their  option  rescind  and annul  such  acceleration  and its
consequences;  but such action shall not affect any subsequent  Event of Default
or  Potential  Event of  Default  or impair any right  consequent  thereon.  The
provisions of this  paragraph are intended  merely to bind Lenders to a decision
which may be made at the  election of  Requisite  Lenders and are not  intended,
directly or indirectly,  to benefit  Borrower,  and such provisions shall not at
any time be  construed so as to grant  Borrower the right to require  Lenders to
rescind or annul any acceleration hereunder or to preclude  Administrative Agent
or Lenders from exercising any of the rights or remedies available to them under
any of the Loan  Documents,  even if the  conditions set forth in this paragraph
are met.


Section 9.        ADMINISTRATIVE AGENT

9.1      Appointment.

         A. Appointment of Administrative Agent. NationsBank is hereby appointed
Administrative  Agent  hereunder  and under the other  Loan  Documents  and each
Lender hereby authorizes  Administrative Agent to act as its agent in accordance
with the terms of this  Agreement and the other Loan  Documents.  Administrative
Agent agrees to act upon the express conditions  contained in this Agreement and
the other Loan  Documents,  as applicable.  The provisions of this Section 9 are
solely for the benefit of  Administrative  Agent and Lenders and neither  Parent
nor Borrower  shall have any rights as a third party  beneficiary  of any of the
provisions thereof. In performing its functions and duties under this Agreement,
Administrative Agent shall act solely as an agent of Lenders and does not assume
and shall not be deemed to have assumed any 

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obligation  towards or relationship of agency or trust with or for Parent or any
of its Subsidiaries.

         B. Appointment of Supplemental Collateral  Administrative Agents. It is
the purpose of this  Agreement and the other Loan  Documents that there shall be
no violation of any law of any jurisdiction  denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such  jurisdiction.  It is  recognized  that in case of  litigation  under  this
Agreement or any of the other Loan  Documents,  and in particular in case of the
enforcement of any of the Loan Documents, or in case Administra tive Agent deems
that by  reason of any  present  or future  law of any  jurisdiction  it may not
exercise any of the rights,  powers or remedies  granted herein or in any of the
other  Loan  Documents  or take any  other  action  which  may be  desirable  or
necessary in connection therewith, it may be necessary that Administrative Agent
appoint  an  additional   individual  or  institution  as  a  separate  trustee,
co-trustee,  collateral  agent  or  collateral  co-agent  (any  such  additional
individual  or  institution   being  referred  to  herein   individually   as  a
"Supplemental  Collateral  Agent" and collectively as  "Supplemental  Collateral
Agents").

         In  the  event  that  Administrative   Agent  appoints  a  Supplemental
Collateral  Agent with  respect  to any  Collateral,  (i) each and every  right,
power,  privilege or duty  expressed or intended by this Agreement or any of the
other  Loan   Documents  to  be  exercised  by  or  vested  in  or  conveyed  to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such  Supplemental  Collateral  Agent  to the  extent,  and  only to the
extent,  necessary to enable such Supplemental Collateral Agent to exercise such
rights,  powers and  privileges  with respect to such  Collateral and to perform
such duties with respect to such  Collateral,  and every covenant and obligation
contained in the Loan  Documents  and  necessary to the exercise or  performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental  Collateral Agent, and (ii) the
provisions  of this  Section 9 and of  subsections  10.2 and 10.3 that  refer to
Administrative Agent shall inure to the benefit of such Supplemental  Collateral
Agent and all references  therein to Administrative  Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.

         Should any instrument in writing from Parent or any other Loan Party be
required by any  Supplemental  Collateral  Agent so appointed by  Administrative
Agent for more fully and certainly  vesting in and  confirming to him or it such
rights,  powers,  privileges and duties,  Parent shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor  thereto,  shall die,  become  incapable of acting,  resign or be
removed,  all the rights,  powers,  privileges  and duties of such  Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative  Agent until the appointment of a new Supplemental  Collateral
Agent.

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9.2      Powers and Duties; General Immunity.

         A.  Powers;  Duties  Specified.   Each  Lender  irrevocably  authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are  specifically  delegated  or  granted to  Administrative  Agent by the terms
hereof and  thereof,  together  with such  powers,  rights and  remedies  as are
reasonably  incidental  thereto.  Without  limiting the  foregoing,  each Lender
hereby authorizes  Administrative Agent to (i) enter into the IRB Reimburse ment
Agreement  on the  Closing  Date and (ii) upon  expiration  of the PNC Letter of
Credit,  to issue  one or more  replacement  letters  of credit  with  terms and
conditions  substantially  similar  to the  terms of the PNC  Letter  of  Credit
(annexed hereto as Schedule 9.2), so long as such  replacement  letter of credit
does not have terms that extend beyond the Revolving Loan Commitment Termination
Date.  Administrative  Agent shall have only those  duties and  responsibilities
that are expressly  specified in this  Agreement  and the other Loan  Documents.
Administrative  Agent may exercise such powers,  rights and remedies and perform
such duties by or through its agents or  employees.  Administrative  Agent shall
not have,  by reason of this  Agreement  or any of the other Loan  Documents,  a
fiduciary  relationship in respect of any Lender;  and nothing in this Agreement
or any of the other Loan  Documents,  expressed  or  implied,  is intended to or
shall be so construed as to impose upon Administrative  Agent any obligations in
respect of this Agreement or any of the other Loan Documents except as expressly
set forth herein or therein.

         B. No Responsibility  for Certain Matters.  Administrative  Agent shall
not be responsible to any Lender for the execution, effectiveness,  genuineness,
validity,  enforceabili ty,  collectibility  or sufficiency of this Agreement or
any other Loan  Document  or for any  representations,  warranties,  recitals or
statements  made herein or therein or made in any written or oral  statements or
in any financial or other  statements,  instruments,  reports or certificates or
any other documents  furnished or made by Administrative  Agent to Lenders or by
or on behalf of Parent or  Borrower  to  Administrative  Agent or any  Lender in
connection with the Loan Documents and the transactions  contemplated thereby or
for the financial  condition or business affairs of Borrower or any other Person
liable for the payment of any  Obligations,  nor shall  Administrative  Agent be
required to ascertain or inquire as to the  performance  or observance of any of
the terms, conditions,  provisions,  covenants or agreements contained in any of
the Loan  Documents  or as to the use of the proceeds of the Loans or the use of
the Letters of Credit or as to the existence or possible  existence of any Event
of Default or Potential Event of Default.  Anything  contained in this Agreement
to the  contrary  notwithstanding,  Administrative  Agent  shall  not  have  any
liability  arising from  confirmations of the amount of outstanding Loans or the
Revolving Letter of Credit Usage or the component amounts thereof.

         C. Exculpatory Provisions.  Neither Administrative Agent nor any of its
officers,  directors,  employees  or agents  shall be liable to Lenders  for any
action taken or omitted by Administrative  Agent under or in connection with any
of the Loan 

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Documents except to the extent caused by Administrative Agent's gross negligence
or willful  misconduct.  Administra tive Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection  with this  Agreement or any of the other Loan  Documents or from the
exercise  of any  power,  discretion  or  authority  vested in it  hereunder  or
thereunder   unless  and  until   Administrative   Agent  shall  have   received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required  to give such  instructions  under  subsection  10.6) and,  upon
receipt of such instructions  from Requisite Lenders (or such other Lenders,  as
the case may be),  Administrative  Agent  shall be  entitled to act or (where so
instructed)  refrain  from  acting,  or to exercise  such power,  discretion  or
authority,  in  accordance  with such  instructions.  Without  prejudice  to the
generality of the foregoing, (i) Administrative Agent shall be entitled to rely,
and shall be fully protected in relying,  upon any communication,  instrument or
document  believed  by it to be genuine  and  correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected  in  relying  on  opinions  and  judgments  of  attorneys  (who may be
attorneys  for  Parent and its  Subsidiaries),  accountants,  experts  and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action  whatsoever  against  Administrative  Agent as a result of Administrative
Agent  acting  or  (where so  instructed)  refraining  from  acting  under  this
Agreement or any of the other Loan Documents in accordance with the instructions
of  Requisite  Lenders  (or such other  Lenders as may be  required to give such
instructions under subsection 10.6).

         D. Agent Entitled to Act as Lender.  The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon,  Administrative  Agent in its individual  capacity as a Lender
hereunder.  With  respect to its  participation  in the Loans and the Letters of
Credit and the IRB Reimbursement Agreement,  Administrative Agent shall have the
same rights and powers  hereunder  as any other Lender and may exercise the same
as though it were not  performing  the  duties  and  functions  delegated  to it
hereunder,  and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise  indicates,  include  Administrative  Agent in its
individual capacity. Administrative Agent and its Affiliates may accept deposits
from,  lend  money  to and  generally  engage  in any  kind of  banking,  trust,
financial  advisory or other  business with Borrower or any of its Affiliates as
if it were not performing the duties specified  herein,  and may accept fees and
other consideration from Borrower for services in connection with this Agreement
and otherwise without having to account for the same to Lenders.

9.3      Representations  and  Warranties;  No  Responsibility  For Appraisal of
         Creditworthiness.

         Each  Lender   represents  and  warrants  that  it  has  made  its  own
independent  investigation of the financial  condition and affairs of Parent and
its  Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit 

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hereunder and the execution of the IRB  Reimbursement  Agreement and that it has
made and shall  continue to make its own  appraisal of the  creditworthiness  of
Parent and its  Subsidiaries.  Administrative  Agent  shall not have any duty or
responsibility,  either  initially  or on a continuing  basis,  to make any such
investigation  or any such  appraisal  on behalf of Lenders  or to  provide  any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times there
after, and Administrative  Agent shall not have any responsibility  with respect
to the accuracy of or the completeness of any information provided to Lenders.

9.4      Right to Indemnity.

         Each Lender,  in proportion to its Pro Rata Share,  severally agrees to
indemnify  Administrative  Agent, to the extent that Administrative  Agent shall
not have been  reimbursed  by  Borrower  or Parent,  for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses  (including counsel fees and disbursements) or disbursements of
any kind or nature  whatsoever  which may be imposed on, incurred by or asserted
against  Administrative  Agent in exercising its powers,  rights and remedies or
performing  its duties  hereunder or under the other Loan Documents or otherwise
in its capacity as Administrative Agent in any way relating to or arising out of
this  Agreement or the other Loan  Documents;  provided  that no Lender shall be
liable  for any  portion  of such  liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from  Administrative  Agent's  gross  negligence or willful  misconduct.  If any
indemnity  furnished  to  Administrative  Agent for any  purpose  shall,  in the
opinion  of   Administrative   Agent,  be   insufficient  or  become   impaired,
Administrative  Agent  may call  for  additional  indemnity  and  cease,  or not
commence,  to do the acts indemnified against until such additional indemnity is
furnished.

9.5      Successor Agent and Swing Line Lender.

         A.  Successor  Agent.  Administrative  Agent may  resign at any time by
giving 30 days'  prior  written  notice  thereof to Lenders  and  Borrower,  and
Administrative  Agent may be  removed  at any time with or  without  cause by an
instrument  or  concurrent  instruments  in writing  delivered  to Borrower  and
Administrative  Agent and signed by Requisite  Lenders.  Upon any such notice of
resignation or any such removal,  Requisite  Lenders shall have the right,  upon
five Business  Days' notice to Borrower,  to appoint a successor  Administrative
Agent. Upon the acceptance of any appointment as Administrative  Agent hereunder
by a successor  Administrative Agent, that successor  Administrative Agent shall
thereupon succeed to and become vested with all the rights,  powers,  privileges
and duties of the retiring or removed  Administrative  Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this  Agreement.  After any  retiring  or removed  Administrative  Agent's
resignation or removal hereunder as Administrative Agent, the provisions of 

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this Section 9 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.

         B.  Successor  Swing  Line  Lender.   Any  resignation  or  removal  of
Administrative  Agent  pursuant to  subsection  9.5A shall also  constitute  the
resignation or removal of NationsBank or its successor as Swing Line Lender, and
any successor  Administrative Agent appointed pursuant to subsection 9.5A shall,
upon its acceptance of such appointment,  become the successor Swing Line Lender
for all  purposes  hereunder.  In such  event  (i)  Borrower  shall  prepay  any
outstanding  Swing  Line Loans made by the  retiring  or removed  Administrative
Agent in its  capacity  as Swing Line  Lender,  (ii) upon such  prepayment,  the
retiring or removed  Administrative  Agent and Swing Line Lender shall surrender
the Swing Line Note held by it to Borrower for cancellation,  and (iii) Borrower
shall  issue a new Swing  Line Note to the  successor  Administrative  Agent and
Swing Line Lender  substantially in the form of Exhibit VIII annexed hereto,  in
the principal  amount of the Swing Line Loan  Commitment then in effect and with
other appropriate insertions.

9.6      Collateral Documents and Guaranties.

         Each Lender hereby further authorizes  Administrative  Agent, on behalf
of and for the  benefit  of  Lenders,  to enter  into each  Collateral  Document
(including,  without  limitation,  the MELF Intercreditor  Agreement) as secured
party and to be the agent for and representative of Lenders under each Guaranty,
and each Lender agrees to be bound by the terms of each Collateral  Document and
Guaranty; provided that Administrative Agent shall not (i) enter into or consent
to any material amendment, modification,  termination or waiver of any provision
contained in any Collateral  Document or Guaranty or (ii) release any Collateral
(except as otherwise  expressly  permitted or required  pursuant to the terms of
this Agreement or the applicable Collateral Document),  in each case without the
prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6,
all Lenders);  provided further,  however, that, without further written consent
or authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other  disposition of assets  permitted by this
Agreement or to which Requisite Lenders have otherwise  consented or (b) release
any  Subsidiary  Guarantor  from the  Subsidiary  Guaranty if all of the capital
stock  of  such  Subsidiary  Guarantor  is  sold to any  Person  (other  than an
Affiliate  of  Borrower)  pursuant  to a sale  or  other  disposition  permitted
hereunder or to which  Requisite  Lenders  have  otherwise  consented.  Anything
contained in any of the Loan Documents to the contrary notwithstanding,  Parent,
Borrower,  Administrative  Agent and each Lender hereby agree that (X) no Lender
shall have any right  individually  to realize upon any of the Collateral  under
any  Collateral  Document or to enforce any Guaranty,  it being  understood  and
agreed that all powers,  rights and remedies under the Collateral  Documents and
the Guaranties may be exercised solely by  Administrative  Agent for the benefit
of  Lenders  in  accordance  with the terms  thereof,  and (Y) in the event of a

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foreclosure  by  Administrative  Agent on any of the  Collateral  pursuant  to a
public or private sale,  Administrative Agent or any Lender may be the purchaser
of any or all of such Collateral at any such sale and  Administrative  Agent, as
agent for and representative of Lenders (but not any Lender or Lenders in its or
their respective  individual capacities unless Requisite Lenders shall otherwise
agree in  writing)  shall be  entitled,  for the  purpose of bidding  and making
settlement  or  payment  of the  purchase  price for all or any  portion  of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on  account  of the  purchase  price for any  collateral  payable by
Administrative Agent at such sale.

9.7      Arranging Agent, Syndication Agent and Documentation Agent.

         The rights, privileges and benefits of the foregoing provisions of this
Section  9  shall  extend  to  NCMI  in its  capacity  as  Arranging  Agent  and
Syndication  Agent and Fleet National Bank, as  Documentation  Agent.  After the
Closing Date, none of Arranging Agent,  Syndication Agent or Documentation Agent
shall have any obligations or duties to any Loan Party,  Administrative Agent or
any Lender.


Section 10.       MISCELLANEOUS

10.1     Assignments  and  Participations  in Loans,  Letters  of Credit and IRB
         Reimbursement Agreement.

         A.  General.  Subject to subsection  10.1B,  each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible  Assignee,  or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its  Letters of Credit or the IRB  Reimbursement
Agreement,  or  participations  therein or any other  interest  herein or in any
other Obligations owed to it; provided that no such sale,  assignment,  transfer
or  participation  shall,  without the consent of Borrower,  require Borrower to
file a registration  statement  with the  Securities and Exchange  Commission or
apply to qualify  such sale,  assignment,  transfer or  participation  under the
securities laws of any state; provided, further that no such sale, assignment or
transfer  described in clause (i) above shall be  effective  unless and until an
Assignment Agreement effecting such sale, assignment or transfer shall have been
accepted by  Administrative  Agent and  recorded in the  Register as provided in
subsection 10.1B(ii); provided, further that no such sale, assignment,  transfer
or participation of any Letter of Credit, the IRB Reimbursement Agreement or any
participation therein may be made separately from a sale,  assignment,  transfer
or  participation  of a corresponding  interest in the Revolving Loan Commitment
and the Revolving Loans of the Lender effecting such sale, assignment,  transfer
or participation;  and provided,  further that, anything contained herein to the
contrary  notwithstanding,  the Swing  Line Loan  Commitment  and the Swing Line
Loans of Swing Line Lender may not be sold, assigned or transferred as described
in clause (i) above to any Person  other than a successor  Administrative

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Agent and Swing Line Lender to the extent contemplated by subsection 9.5. Except
as otherwise  provided in this  subsection  10.1,  no Lender  shall,  as between
Borrower and such Lender,  be relieved of any of its obligations  hereunder as a
result of any sale, assignment or transfer of, or any granting of participations
in, all or any part of its  Commitments or the Loans or the Letters of Credit or
the  IRB  Reimbursement  Agreement  or  participations  therein,  or  the  other
Obligations owed to such Lender.

         B.       Assignments.

                  (i) Amounts and Terms of Assignments.  Each Commitment,  Loan,
         Letter of Credit,  the IRB  Reimbursement  Agreement  or  participation
         therein,  or other  Obligation  may (a) be  assigned  in any  amount to
         another Lender,  or to an Affiliate of the assigning  Lender or another
         Lender, with the giving of notice to Borrower and Administrative  Agent
         or (b) be assigned in an aggregate  amount of not less than  $5,000,000
         (or such lesser amount as shall  constitute the aggregate amount of the
         Commitments,  Loans,  the  Letters  of  Credit,  the IRB  Reimbursement
         Agreement and  participations  therein,  and other  Obligations  of the
         assigning  Lender) to any other  Eligible  Assignee with the consent of
         Borrower  and  Administrative  Agent  (which  consent of  Borrower  and
         Administrative Agent shall not be unreasonably  withheld or delayed and
         which  consent of  Borrower  shall not be  required at any time that an
         Event of Default has occurred  and is  continuing);  provided  that any
         such assignment in accordance with either clause (a) or (b) above shall
         effect a pro rata assignment (based on the respective principal amounts
         thereof  then  outstanding  or in  effect) of each of (1) the Term Loan
         Commitment  and/or the Term Loans of the  assigning  Lender and (2) the
         Revolving  Loan  Commitment  and the  Revolving  Loans of the assigning
         Lender.  To the extent of any such assignment in accordance with either
         clause (a) or (b) above,  the assigning Lender shall be relieved of its
         obligations with respect to its Commitments,  Loans, Letters of Credit,
         the IRB  Reimbursement  Agreement or participations  therein,  or other
         Obligations  or the portion  thereof so  assigned.  The parties to each
         such assignment shall execute and deliver to Administrative  Agent, for
         its acceptance and recording in the Register,  an Assignment Agreement,
         together  with a  processing  and  recordation  fee of $3,500  and such
         forms,  certificates or other evidence,  if any, with respect to United
         States  federal  income tax  withholding  matters as the assignee under
         such Assignment  Agreement may be required to deliver to Administrative
         Agent  pursuant  to  subsection  2.7B(iii)(a).   Upon  such  execution,
         delivery, acceptance and recordation, from and after the effective date
         specified in such  Assignment  Agreement,  (y) the assignee  thereunder
         shall be a party hereto and, to the extent that rights and  obligations
         hereunder  have  been  assigned  to  it  pursuant  to  such  Assignment
         Agreement,  shall have the rights and obligations of a Lender hereunder
         and (z) the  assigning  Lender  thereunder  shall,  to the extent  that
         rights and  obligations  hereunder have been assigned by it pursuant to
         such Assignment Agreement, relinquish its rights (other than any rights
         which 

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         survive the termination of this Agreement under  subsection  10.9B) and
         be released from its obligations under this Agreement (and, in the case
         of an Assignment  Agreement covering all or the remaining portion of an
         assigning  Lender's rights and obligations  under this Agreement,  such
         Lender  shall  cease  to be a party  hereto;  provided  that,  anything
         contained in any of the Loan Documents to the contrary notwithstanding,
         with  respect  to  any  outstanding  Letters  of  Credit  and  the  IRB
         Reimbursement  Agreement,  Issuing  Lender  shall  continue to have all
         rights  and  obligations  of an  Issuing  Lender  thereunder  until the
         cancellation   or   expiration  of  such  Letters  of  Credit  and  the
         reimbursement  of any amounts drawn  thereunder) and the termination of
         the  IRB  Reimbursement  Agreement  and  the  reimbursement  of any IRB
         Reimbursement  Advances. The Commitments hereunder shall be modified to
         reflect the Commitment of such assignee and any remaining Commitment of
         such  assigning  Lender and, if any such  assignment  occurs  after the
         issuance of the Notes hereunder,  the assigning Lender shall,  upon the
         effectiveness   of  such  assignment  or  as  promptly   thereafter  as
         practicable, surrender its applicable Notes to Administrative Agent for
         cancellation,  and  thereupon new Notes shall be issued to the assignee
         and to the assigning  Lender,  substantially  in the form of Exhibit V,
         Exhibit VI or Exhibit  VII  annexed  hereto,  as the case may be,  with
         appropriate   insertions,   to  reflect  the  new  Commitments   and/or
         outstanding Term Loans of the assignee and the assigning Lender.

                  (ii)  Acceptance  by  Administrative  Agent;   Recordation  in
         Register.  Upon its receipt of an Assignment  Agreement  executed by an
         assigning  Lender and an assignee  representing  that it is an Eligible
         Assignee,  together with the processing and recordation fee referred to
         in subsection  10.1B(i) and any forms,  certificates  or other evidence
         with respect to United States  federal income tax  withholding  matters
         that such assignee may be required to deliver to  Administrative  Agent
         pursuant to subsection  2.7B(iii)(a),  Administrative  Agent shall,  if
         Administrative  Agent and Borrower  have  consented  to the  assignment
         evidenced  thereby (in each case to the extent such consent is required
         pursuant to subsection 10.1B(i)),  (a) accept such Assignment Agreement
         by  executing  a  counterpart   thereof  as  provided   therein  (which
         acceptance shall evidence any required consent of Administrative  Agent
         to such  assignment),  (b) record the information  contained therein in
         the  Register,   and  (c)  give  prompt  notice  thereof  to  Borrower.
         Administrative Agent shall maintain a copy of each Assignment Agreement
         delivered  to  and  accepted  by  it as  provided  in  this  subsection
         10.1B(ii).

         C.  Participations.  The  holder of any  participation,  other  than an
Affiliate of the Lender  granting such  participation,  shall not be entitled to
require such Lender to take or omit to take any action  hereunder  except action
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such  participation,
and all amounts  payable 

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by Borrower  hereunder  (including  without  limitation  amounts payable to such
Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender  had not  sold  such  participation.  Borrower  and  each  Lender  hereby
acknowledge  and agree that,  solely for purposes of subsections  10.4 and 10.5,
(a) any  participation  will give rise to a direct obligation of Borrower to the
participant and (b) the participant shall be considered to be a "Lender".

         D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations  permitted under the foregoing  provisions of this subsection
10.1,  any Lender may  assign  and pledge all or any  portion of its Loans,  the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Borrower and such Lender, be
relieved of any of its obligations  hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning  Lender to take or omit to
take any action hereunder.

         E.  Information.  Each Lender may furnish  any  information  concerning
Parent and its  Subsidiaries  in the possession of that Lender from time to time
to   assignees   and   participants   (including   prospective   assignees   and
participants), subject to subsection 10.19.

         F.  Representations  of Lenders.  Each Lender  listed on the  signature
pages hereof hereby  represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition  thereof;  (ii) that it has experience
and  expertise in the making of loans such as the Loans;  and (iii) that it will
make its Loans for its own account in the  ordinary  course of its  business and
without  a view  to  distribution  of  such  Loans  within  the  meaning  of the
Securities  Act or the Exchange Act or other federal  securities  laws (it being
understood  that,  subject  to the  provisions  of  this  subsection  10.1,  the
disposition  of such Loans or any  interests  therein  shall at all times remain
within its exclusive control).  Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.

10.2     Expenses.

         Whether  or  not  the   transactions   contemplated   hereby  shall  be
consummated,  Parent and Borrower,  jointly and severally, agree to pay promptly
(i) all the actual and reasonable  costs and expenses of preparation of the Loan
Documents and any consents,  amendments, waivers or other modifications thereto;
(ii) all the costs of furnishing all opinions by counsel for Parent and Borrower
(including  without limitation any opinions requested by Lenders as to any legal
matters  arising  hereunder)  and Parent's  and  Borrower's  performance  of and
compliance  with all

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agreements  and  conditions  on its part to be performed or complied  with under
this Agreement and the other Loan Documents including,  without limitation, with
respect to  confirming  compliance  with  environmental,  insurance and solvency
requirements;  (iii) the reasonable fees,  expenses and disbursements of counsel
to  Administrative  Agent  (including  allocated  costs of internal  counsel) in
connection with the negotiation,  preparation,  execution and  administration of
the Loan Documents and any consents,  amendments, waivers or other modifications
thereto and any other documents or matters requested by Parent or Borrower; (iv)
all the actual costs and reasonable expenses of creating and perfecting Liens in
favor of  Administrative  Agent on behalf of Lenders  pursuant to any Collateral
Document,  including without limitation filing and recording fees,  expenses and
taxes, stamp or documentary taxes,  search fees, title insurance  premiums,  and
reasonable fees,  expenses and disbursements of counsel to Administrative  Agent
and of counsel  providing  any opinions that  Administrative  Agent or Requisite
Lenders may request in respect of the Collateral  Documents or the Liens created
pursuant thereto;  (v) all the actual costs and reasonable  expenses  (including
without  limitation  the  reasonable  fees,  expenses and  disbursements  of any
auditors, accountants or appraisers and any environmen tal or other consultants,
advisors and agents employed or retained by Administrative Agent or its counsel)
of obtaining and reviewing any appraisals  provided for under  subsection  6.9C,
any environmental  audits or reports provided for under subsection  6.9B(ix) and
any audits or reports provided for under subsection 6.5B or 6.16 with respect to
Inventory  and  Accounts  Receivable  of the  Operating  Subsidiaries;  (vi) the
custody or  preservation  of any of the  Collateral;  (vii) all other actual and
reasonable  costs and expenses  incurred by  Administrative  Agent in connection
with the  syndication of the Commitments  and the  negotiation,  preparation and
execution of the Loan Documents and any consents,  amendments,  waivers or other
modifications  thereto and the  transactions  contemplated  thereby;  and (viii)
after the occurrence of an Event of Default,  all costs and expenses,  including
reasonable  attorneys' fees (including  allocated costs of internal counsel) and
costs of settlement,  incurred by Administrative  Agent and Lenders in enforcing
any  Obligations  of or in  collecting  any  payments  due from  any Loan  Party
hereunder  or under the other Loan  Documents by reason of such Event of Default
(including, without limitation, in connection with the sale of, collection from,
or  other  realization  upon any of the  Collateral  or the  enforcement  of any
Guaranty) or in connection with any refinancing or  restructuring  of the credit
arrangements  provided  under this  Agreement in the nature of a  "work-out"  or
pursuant to any insolvency or bankruptcy proceedings.

10.3     Indemnity.

         In addition to the payment of  expenses  pursuant to  subsection  10.2,
whether or not the transactions contemplated hereby shall be consummated, Parent
and Borrower,  jointly and severally,  agree to defend  (subject to Indemnitees'
selection of counsel), indemnify, pay and hold harmless Administrative Agent and
Lenders,  and the  officers,  directors,  employees,  agents and  affiliates  of
Administrative Agent and Lenders  (collectively called the "Indemnitees"),  from
and  against  any and all

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Indemnified  Liabilities (as hereinafter defined);  provided that neither Parent
nor Borrower shall have any obligation to any Indemnitee  hereunder with respect
to any Indemnified  Liabilities to the extent such Indemnified Liabilities arise
solely from the gross  negligence or willful  misconduct  of that  Indemnitee as
determined by a final judgment of a court of competent jurisdiction.

         As used herein, "Indemnified Liabilities" means, collectively,  any and
all  liabilities,  obligations,  losses,  damages  (including  natural  resource
damages),  penalties, actions, judgments, suits, claims (including Environmental
Claims),  costs  (including  the costs of any  investigation,  study,  sampling,
testing,  abatement,  cleanup,  removal,  remediation or other  response  action
necessary  to  remove,  remediate,  clean up or abate  any  Hazardous  Materials
Activity),   expenses  and  disbursements  of  any  kind  or  nature  whatsoever
(including the reasonable fees and  disbursements  of counsel for Indemnitees in
connection  with  any  investigative,   administrative  or  judicial  proceeding
commenced or threatened by any Person,  whether or not any such Indemnitee shall
be designated as a party or a potential party thereto,  and any fees or expenses
incurred by Indemnitees in enforcing this indemnity),  whether direct,  indirect
or  consequential  and  whether  based on any  federal,  state or foreign  laws,
statutes,  rules or  regulations  (including  securities  and  commercial  laws,
statutes,  rules or  regulations  and  Environmental  Laws),  on  common  law or
equitable  cause or on contract or otherwise,  that may be imposed on,  incurred
by, or  asserted  against  any such  Indemnitee,  in any manner  relating  to or
arising out of (i) this  Agreement  or the other Loan  Documents  or the Related
Agreements  or  the  transactions  contemplated  hereby  or  thereby  (including
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds  thereof or the  issuance of Letters of Credit  hereunder or the use or
intended use of any thereof, or the execution of the IRB Reimbursement Agreement
or the use thereof,  or any enforcement of any of the Loan Documents  (including
any sale of, collection from, or other realization upon any of the Collateral or
the  enforcement  of  any  Guaranty),  (ii)  the  statements  contained  in  the
commitment  letter delivered by any Lender to Borrower with respect thereto,  or
(iii) any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly,  any past or present activity,  operation,
land ownership, or practice of Parent or any of its Subsidiaries.

         To the extent that the undertakings to defend,  indemnify, pay and hold
harmless set forth in this subsection 10.3 may be  unenforceable  in whole or in
part because they are violative of any law or public policy, Parent and Borrower
shall  contribute  the maximum  portion  that it is permitted to pay and satisfy
under  applicable  law to the  payment  and  satis  faction  of all  Indemnified
Liabilities incurred by Indemnitees or any of them.

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10.4     Set-Off; Security Interest in Deposit Accounts.

         In addition to any rights now or hereafter granted under applicable law
and not by way of  limitation  of any such rights,  upon the  occurrence  of any
Event of Default  each  Lender is hereby  authorized  by Borrower at any time or
from time to time,  without notice to Borrower or to any other Person,  any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all  deposits  (general  or  special,  including,  but not  limited  to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Borrower against and
on account of the  obligations  and liabilities of Borrower to that Lender under
this Agreement,  the Letters of Credit and participations  therein and the other
Loan  Documents,  including,  but not  limited  to,  all claims of any nature or
description  arising out of or  connected  with this  Agreement,  the Letters of
Credit and  participations  therein or any other Loan Document,  irrespective of
whether or not (i) that Lender shall have made any demand  hereunder or (ii) the
principal  of or the  interest  on the Loans or any  amounts  in  respect of the
Letters of Credit or any other amounts due  hereunder  shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities,  or
any of them, may be contingent or unmatured.  Borrower  hereby further grants to
Administrative  Agent and each Lender a security  interest in all  deposits  and
accounts maintained with Administrative Agent or such Lender as security for the
Obligations.

10.5     Ratable Sharing.

         Lenders  hereby  agree  among  themselves  that if any of  them  shall,
whether by voluntary  payment  (other than a voluntary  prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security,  through the  exercise of any right of set-off or  banker's  lien,  by
counterclaim  or cross action or by the  enforcement of any right under the Loan
Documents or otherwise,  or as adequate  protection of a deposit treated as cash
collateral  under  the  Bankruptcy  Code,  receive  payment  or  reduction  of a
proportion of the aggregate  amount of principal,  interest,  amounts payable in
respect of the Letters of Credit and the IRB Reimbursement  Agreement,  fees and
other  amounts  then due and owing to that Lender  hereunder  or under the other
Loan Documents (collectively,  the "Aggregate Amounts Due" to such Lender) which
is greater  than the  proportion  received by any other Lender in respect of the
Aggregate  Amounts  Due to such other  Lender,  then the Lender  receiving  such
proportionately  greater payment shall (i) notify  Administrative Agent and each
other  Lender of the  receipt of such  payment  and (ii) apply a portion of such
payment to purchase  participations  (which it shall be deemed to have purchased
from each  seller of a  participation  simultaneously  upon the  receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the other
Lenders so that all such recoveries of Aggregate  Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them; provided that if
all or part of such proportionately  greater payment received by such purchasing
Lender  is  thereafter  

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<PAGE>

recovered from such Lender upon the bankruptcy or  reorganization of Borrower or
otherwise,  those  purchases shall be rescinded and the purchase prices paid for
such  participations  shall be returned to such purchasing Lender ratably to the
extent of such recovery,  but without interest.  Borrower  expressly consents to
the  foregoing  arrangement  and agrees  that any holder of a  participation  so
purchased  may  exercise  any  and all  rights  of  banker's  lien,  set-off  or
counterclaim with respect to any and all monies owing by Borrower to that holder
with  respect  thereto  as fully as if that  holder  were owed the amount of the
partic ipation held by that holder.

10.6     Amendments and Waivers.

         No amendment,  modification,  termination or waiver of any provision of
this  Agreement  or of the Notes,  and no consent to any  departure by Parent or
Borrower  therefrom,  shall  in any  event  be  effective  without  the  written
concurrence   of  Requisite   Lenders;   provided   that  any  such   amendment,
modification,  termination, waiver or consent which: increases the amount of any
of the  Commitments  or  reduces  the  principal  amount  of  any of the  Loans;
increases  the  maximum  amount of  Letters  of Credit;  increases  the  Maximum
Exposure Under IRB Reimbursement Agreement; changes in any manner the definition
of "Pro Rata  Share" or the  definition  of  "Requisite  Class  Lenders"  or the
definition of "Requisite  Lenders";  changes in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of
all Lenders;  postpones the date or reduces the amount of any scheduled  payment
(but not  prepayment)  of principal of any of the Loans;  postpones  the date on
which any interest or any fees are payable; decreases the interest rate borne by
any of the Loans  (other than any waiver of any  increase in the  interest  rate
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any
fees  payable  hereunder;  increases  the maximum  duration of Interest  Periods
permitted hereunder;  reduces the amount or postpones the due date of any amount
payable in respect of, or extends the required  expiration date of any Letter of
Credit;  changes in any  manner  the  obligations  of  Lenders  relating  to the
purchase  of  participations  in Letters  of  Credit;  changes in any manner the
obligations of Lenders  relating to the IRB Reimburse ment  Agreement;  releases
any Lien  granted  in favor  of  Administrative  Agent  with  respect  to all or
substantially all of the Collateral;  releases Parent from its obligations under
the Parent  Guaranty  or releases  all or  substantially  all of the  Subsidiary
Guarantors from their  obligations  under the Subsidiary  Guaranty other than in
accordance  with the terms of the Loan  Documents;  or changes in any manner the
provisions  contained  in  subsection  8.1 or  this  subsection  10.6  shall  be
effective  only if evidenced by a writing signed by or on behalf of all Lenders.
In addition,  (i) any amendment,  modification,  termination or waiver of any of
the provisions  contained in Section 4 shall be effective only if evidenced by a
writing signed by or on behalf of  Administrative  Agent and Requisite  Lenders,
(ii) no amendment,  modification,  termination or waiver of any provision of any
Note shall be effective  without the written  concurrence of the Lender which is
the holder of that Note, (iii) no amendment, modification, termination or waiver
of any  provision  of  subsection  2.1A(iii)  or of any other  provision of this
Agreement  relating  to the Swing Line Loan 

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<PAGE>

Commitment  or the Swing Line  Loans  shall be  effective  without  the  written
concurrence  of  Swing  Line  Lender,  and  (iv)  no  amendment,   modification,
termination or waiver of any provision of Section 9 or of any other provision of
this  Agreement  which,  by  its  terms,  expressly  requires  the  approval  or
concurrence  of  Administrative  Agent  shall be  effective  without the written
concurrence of Administrative Agent. Administrative Agent may, but shall have no
obligation  to,  with  the  concurrence  of  any  Lender,   execute  amendments,
modifications,  waivers  or  consents  on behalf of that  Lender.  Any waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which it was given.  No notice to or demand on Parent or Borrower in
any case shall  entitle  Parent or  Borrower  to any other or further  notice or
demand  in  similar  or  other  circumstances.   Any  amendment,   modification,
termination,  waiver or consent effected in accordance with this subsection 10.6
shall be binding upon each Lender at the time  outstanding,  each future  Lender
and, if signed by Parent, on Parent and, if signed by Borrower, on Borrower.

         If  any  changes  in  accounting  principles  from  those  used  in the
preparation of the Financial Statements referred to in subsection 5.3 occasioned
by the  promulgation of rules,  regulations,  pronouncements  and opinions by or
required  by  the  Financial   Accounting  Standards  Board  or  the  Accounting
Principles Board of the American  Institute of Certified Public  Accountants (or
successors thereto or agencies with similar functions) result in a change in the
method of  calculation  of  financial  covenants,  standards  or terms  found in
Sections 1, 6 and 7 hereof,  the parties hereto agree to enter into negotiations
in order to amend such  provisions so as to equitably  reflect such changes with
the desired result that the criteria for evaluating Parent and its Subsidiaries'
financial  condition shall be the same after such changes as if such changes had
not been made.

10.7     Independence of Covenants.

         All covenants  hereunder shall be given independent effect so that if a
particular  action or condition is not permitted by any of such  covenants,  the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another  covenant shall not avoid the occurrence of an Event
of Default or  Potential  Event of Default if such action is taken or  condition
exists.

10.8     Notices.

         Unless  otherwise  specifically  provided  herein,  any notice or other
communication  herein  required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier  service  and shall be deemed to have been given  when  delivered  in
person or by courier  service,  upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed;  provided that notices to Administrative Agent shall not
be effective until received.  For the purposes hereof, the address of each party
hereto  shall be as set forth under such  party's  name

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on the signature pages hereof or (i) as to Parent,  Borrower and  Administrative
Agent,  such other  address as shall be  designated  by such Person in a written
notice  delivered to the other  parties  hereto and (ii) as to each other party,
such other  address  as shall be  designated  by such party in a written  notice
delivered to Administrative Agent.

10.9     Survival of Representations, Warranties and Agreements.

         A. All  representations,  warranties and  agreements  made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder and the execution of the IRB
Reimbursement Agreement.

         B. Notwithstanding  anything in this Agreement or implied by law to the
contrary,  the agreements of Parent and Borrower,  as  applicable,  set forth in
subsections  2.6D,  2.7, 3.5A,  3.6,  10.2,  10.3 and 10.4 and the agreements of
Lenders set forth in subsections 9.2C, 9.4 and 10.5 shall survive the payment of
the Loans,  the  cancellation  or  expiration  of the  Letters of Credit and the
reimbursement  of any  amounts  drawn  thereunder,  the  termination  of the IRB
Reimbursement  Agreement and the reimbursement of any IRB Reimbursement  Amount,
and the termination of this Agreement.

10.10    Failure or Indulgence Not Waiver; Remedies Cumulative.

         No failure or delay on the part of  Administrative  Agent or any Lender
in the exercise of any power,  right or  privilege  hereunder or under any other
Loan Document shall impair such power,  right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise  of any  such  power,  right or  privilege  preclude  other or  further
exercise  thereof  or of any other  power,  right or  privilege.  All rights and
remedies  existing  under  this  Agreement  and the  other  Loan  Documents  are
cumulative to, and not exclusive of, any rights or remedies otherwise available.

10.11    Marshalling; Payments Set Aside.

         Neither  Administrative  Agent  nor  any  Lender  shall  be  under  any
obligation  to marshal  any assets in favor of  Borrower  or any other  party or
against  or in  payment of any or all of the  Obligations.  To the  extent  that
Borrower makes a payment or payments to  Administrative  Agent or Lenders (or to
Administrative  Agent for the benefit of Lenders),  or  Administrative  Agent or
Lenders enforce any security  interests or exercise their rights of setoff,  and
such  payment or payments or the proceeds of such  enforcement  or setoff or any
part  thereof  are  subsequently  invalidated,  declared  to  be  fraudulent  or
preferential,  set aside and/or required to be repaid to a trustee,  receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally  intended to be satisfied,  and all Liens, rights

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and remedies therefor or related thereto, shall be revived and continued in full
force  and  effect  as if such  payment  or  payments  had not been made or such
enforcement or setoff had not occurred.

10.12    Severability.

         In case any  provision  in or  obligation  under this  Agreement or the
Notes  shall be  invalid,  illegal or  unenforceable  in any  jurisdiction,  the
validity,   legality  and   enforceability   of  the  remaining   provisions  or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

10.13    Obligations Several; Independent Nature of Lenders' Rights.

         The obligations of Lenders hereunder are several and no Lender shall be
responsible  for the  obligations or Commitments of any other Lender  hereunder.
Nothing  contained herein or in any other Loan Document,  and no action taken by
Lenders pursuant hereto or thereto,  shall be deemed to constitute  Lenders as a
partnership,  an association,  a joint venture or any other kind of entity.  The
amounts  payable at any time  hereunder  to each Lender  shall be a separate and
independent  debt,  and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.

10.14    Headings.

         Section and subsection  headings in this Agreement are included  herein
for  convenience  of  reference  only and  shall not  constitute  a part of this
Agreement for any other purpose or be given any substantive effect.

10.15    Applicable Law.

         THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES  HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED  AND ENFORCED IN  ACCORDANCE  WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),  WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.

10.16    Successors and Assigns.

         This  Agreement  shall be  binding  upon the  parties  hereto and their
respective  successors and assigns and shall inure to the benefit of the parties
hereto and the  successors  and  assigns of Lenders  (it being  understood  that
Lenders' rights of assignment are subject to subsection 10.1).  Neither Parent's
nor Borrower's  rights

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or obligations  hereunder nor any interest  therein may be assigned or delegated
by Parent or Borrower without the prior written consent of all Lenders.

10.17    Consent to Jurisdiction and Service of Process.

         ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PARENT OR BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,  OR ANY OBLIGATIONS
THEREUNDER,  MAY  BE  BROUGHT  IN  ANY  STATE  OR  FEDERAL  COURT  OF  COMPETENT
JURISDICTION  IN THE  STATE,  COUNTY  AND CITY OF NEW  YORK.  BY  EXECUTING  AND
DELIVERING  THIS  AGREEMENT,  EACH OF PARENT  AND  BORROWER,  FOR  ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY

                  (I) ACCEPTS  GENERALLY AND  UNCONDITIONALLY  THE  NONEXCLUSIVE
         JURISDICTION AND VENUE OF SUCH COURTS;

                  (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

                  (III)   AGREES  THAT  SERVICE  OF  ALL  PROCESS  IN  ANY  SUCH
         PROCEEDING  IN ANY SUCH COURT MAY BE MADE BY  REGISTERED  OR  CERTIFIED
         MAIL,  RETURN RECEIPT  REQUESTED,  TO PARENT OR BORROWER AT ITS ADDRESS
         PROVIDED IN ACCORDANCE WITH SUBSEC TION 10.8;

                  (IV) AGREES THAT  SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
         SUFFICIENT TO CONFER PERSONAL  JURISDICTION OVER PARENT AND BORROWER IN
         ANY  SUCH  PROCEEDING  IN ANY SUCH  COURT,  AND  OTHERWISE  CONSTITUTES
         EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;

                  (V) AGREES THAT LENDERS  RETAIN THE RIGHT TO SERVE  PROCESS IN
         ANY  OTHER  MANNER  PERMITTED  BY LAW OR TO BRING  PROCEEDINGS  AGAINST
         PARENT AND BORROWER IN THE COURTS OF ANY OTHER JURISDICTION; AND

                  (VI)  AGREES  THAT THE  PROVISIONS  OF THIS  SUBSECTION  10.17
         RELATING TO JURISDICTION  AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
         THE FULLEST EXTENT  PERMISSIBLE UNDER NEW YORK GENERAL  OBLIGATIONS LAW
         SECTION 5-1402 OR OTHERWISE. 

10.18 Waiver of Jury Trial.

         EACH OF THE  PARTIES  TO THIS  AGREEMENT  HEREBY  AGREES  TO WAIVE  ITS
RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN  THEM  RELATING TO THE SUBJECT  MATTER OF THIS LOAN  TRANSACTION  OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be  all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this  transaction,  including
without limitation contract claims,  tort claims,  breach of duty claims and all
other common law and statutory claims.  Each

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<PAGE>

party hereto  acknowledges  that this waiver is a material  inducement  to enter
into a business  relationship,  that each has  already  relied on this waiver in
entering into this Agreement, and that each will continue to rely on this waiver
in their  related  future  dealings.  Each party  hereto  further  warrants  and
represents  that it has reviewed  this waiver with its legal counsel and that it
knowingly and voluntarily  waives its jury trial rights  following  consultation
with legal  counsel.  THIS  WAIVER IS  IRREVOCABLE,  MEANING  THAT IT MAY NOT BE
MODIFIED  EITHER  ORALLY OR IN WRITING  (OTHER THAN BY A MUTUAL  WRITTEN  WAIVER
SPECIFICALLY  REFERRING  TO THIS  SUBSECTION  10.18 AND  EXECUTED BY EACH OF THE
PARTIES  HERETO),  AND THIS  WAIVER  SHALL APPLY TO ANY  SUBSEQUENT  AMENDMENTS,
RENEWALS,  SUPPLEMENTS  OR  MODIFICATIONS  TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY  OTHER  DOCUMENTS OR  AGREEMENTS  RELATING TO THE LOANS
MADE  HEREUNDER.  In the event of  litigation,  this Agreement may be filed as a
written consent to a trial by the court.

10.19    Confidentiality.

         Each Lender shall hold all non-public  information obtained pursuant to
the  requirements of this Agreement which has been identified as confidential by
Borrower in accordance  with such  Lender's  customary  procedures  for handling
confidential  information  of this nature and in accordance  with safe and sound
banking practices,  it being understood and agreed by Borrower that in any event
a Lender  may make  disclosures  to  Affiliates  of such  Lender or  disclosures
reasonably  required by any bona fide  assignee,  transferee or  participant  in
connection  with the  contemplated  assignment or transfer by such Lender of any
Loans or any participations  therein or disclosures required or requested by any
govern mental  agency or  representative  thereof or pursuant to legal  process;
provided that, unless specifically  prohibited by applicable law or court order,
each Lender shall notify Borrower of any request by any  governmental  agency or
representative  thereof  (other  than any such  request in  connection  with any
examination  of the  financial  condition  of such  Lender by such  governmental
agency) for disclosure of any such non-public information prior to disclosure of
such  information;  and  provided,  further that in no event shall any Lender be
obligated or required to return any materials  furnished by Parent,  Borrower or
any of its Subsidiaries.

10.20    Counterparts; Effectiveness.

         This  Agreement and any  amendments,  waivers,  consents or supplements
hereto or in connection  herewith may be executed in any number of  counterparts
and by different parties hereto in separate counterparts,  each of which when so
executed and delivered  shall be deemed an original,  but all such  counterparts
together shall constitute but one and the same  instrument;  signature pages may
be  detached  from  multiple  separate  counterparts  and  attached  to a single
counterpart  so that all  signature  pages are  physically  attached to the same
document.  This  Agreement  shall  become  effective  upon  the  execution  of a
counterpart  hereof by each of the parties  hereto and  receipt by

                                      152
<PAGE>

Borrower and Administrative  Agent of written or telephonic notification of such
execution and authorization of delivery thereof.

10.21    Maximum Amount.

         A. It is the intention of Loan Parties and Lenders to conform  strictly
to the usury and similar laws  relating to interest  from time to time in force,
and all  agreements  between Loan  Parties and Lenders,  whether now existing or
hereafter  arising and whether oral or written,  are hereby expressly limited so
that in no contingency or event whatsoever,  whether by acceleration of maturity
hereof or otherwise, shall the amount paid or agreed to be paid in the aggregate
to Lenders or to Administrative Agent on behalf of Lenders as interest hereunder
or under the other Loan  Documents or in any other security  agreement  given to
secure  the  Obligations,  or in any  other  document  evidencing,  securing  or
pertaining to the indebtedness  evidenced hereby or thereby,  exceed the maximum
amount  permissible  under  applicable  usury or such other  laws (the  "Maximum
Amount").  If under any  circumstances  whatsoever  fulfillment of any provision
hereof,  or any of the other Loan  Documents,  at the time  performance  of such
provision shall be due, shall involve  exceeding the Maximum Amount,  then, ipso
facto,  the obligation to be fulfilled  shall be reduced to the Maximum  Amount.
For the  purposes  of  calculating  the actual  amount of  interest  paid and/or
payable  hereunder,  in respect of laws  pertaining to usury or such other laws,
all sums paid or agreed to be paid to the holder hereof for the use, forbearance
or detention of the indebtedness of Borrower evidenced hereby,  outstanding from
time to time shall,  to the extent  permitted by  applicable  law, be amortized,
pro-rated, allocated and spread from the date of disbursement of the proceeds of
the Loans until payment in full of all of such indebtedness,  so that the actual
rate of interest  on account of such  indebtedness  is uniform  through the term
hereof.  The terms and provisions of this subsection shall control and supersede
every other provision of all agreements between Borrower,  Administrative  Agent
and the Lenders.

         B. If under any  circumstances  Lenders  shall  ever  receive an amount
which would exceed the Maximum Amount,  such amount shall be deemed a payment in
reduction  of the  principal  amount  of the Loans  and  shall be  treated  as a
voluntary  prepayment  under  subsection  2.4B(i),  and shall be so  applied  in
accordance  with  subsection  2.4B(iv)  hereof,  or if such  excessive  interest
exceeds the unpaid balance of the Loans and any other  indebtedness  of Borrower
in favor of Lenders,  the excess  shall be deemed to have been a payment made by
mistake and shall be refunded to Borrower.

                  [Remainder of page intentionally left blank]

                                      153
<PAGE>


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

                  BORROWER:

                                            CFP HOLDINGS, INC.


                                            By: ________________________________
                                                     Eric W. Ek
                                                     Vice President and
                                                     Chief Financial Officer


                                            Notice Address:

                                            CFP Holdings, Inc.
                                            1117 West Olympic Boulevard
                                            Montebello, California 90640
                                            Attention: Eric Ek
                                            Fax No.:  213-727-0412


                  PARENT:

                                            CFP GROUP, INC.


                                            By: ________________________________
                                                     Eric W. Ek
                                                     Vice President and
                                                     Chief Financial Officer

                                            Notice Address:

                                            CFP Group, Inc.
                                            1117 West Olympic Boulevard
                                            Montebello, California 90640
                                            Attention: Eric Ek
                                            Fax No.:  213-727-0412


                                      S-1
<PAGE>

                  LENDERS:

                                     NATIONSBANK OF TEXAS, N.A.,
                                     individually and as Administrative Agent


                                     By: ______________________________________
                                              Barry Bobrow
                                              Authorized Signatory


                                     Notice Address:

                                     NationsBank of Texas, N.A.
                                     13th Floor
                                     901 Main Street
                                     Dallas, Texas  75201
                                     Attention:  Joyce Gilbert
                                     Fax No.:  214-508-2118

                                     and to:

                                     NationsBank, N.A.
                                     Suite 4100
                                     444 South Flower Street
                                     Los Angeles, California 90071
                                     Attention: Charles McDonell
                                     Fax No.: 213-624-5812

                                      S-2
<PAGE>


                                     NATIONSBANC CAPITAL MARKETS, INC.,
                                     as Arranging Agent and Syndication Agent


                                     By: ______________________________________
                                              Barry Bobrow
                                              Director


                                     Notice Address:

                                     NationsBanc Capital Markets, Inc.
                                     NationsBank Corporate Center
                                     100 North Tryon Street
                                     Charlotte, North Carolina 28255
                                     Attention: Barry Bobrow
                                     Fax No: 704-388-0612


                                      S-3
<PAGE>



                                 FLEET NATIONAL BANK,
                                 individually and as Documentation Agent


                                 By: __________________________________________
                                          Andy Sassine
                                          Vice President


                                 Notice Address:

                                 Fleet National Bank
                                 One Federal Street
                                 Mail Code:  MA OF DO3C
                                 Boston, Massachusetts  02110
                                 Attention:  Andy Sassine
                                 Fax No.:  617-346-4806


                                      S-4
<PAGE>


                                                               EXECUTION VERSION

================================================================================




                      AMENDED AND RESTATED CREDIT AGREEMENT


                            DATED AS OF MAY 15, 1997


                                      AMONG


                               CFP HOLDINGS, INC.,
                                  as Borrower,

                                CFP GROUP, INC.,
                                   as Parent,

                           THE LENDERS LISTED HEREIN,
                                   as Lenders,

                                       and

                           NATIONSBANK OF TEXAS, N.A.,
                            as Administrative Agent,

                                       and

                       NATIONSBANC CAPITAL MARKETS, INC.,
                               as Arranging Agent
                                       and
                               Syndication Agent,

                                       and

                              FLEET NATIONAL BANK,
                             as Documentation Agent



================================================================================

<PAGE>

<TABLE>

                                                  CFP GROUP, INC.
                                                CFP HOLDINGS, INC.

                                                 CREDIT AGREEMENT

                                                 TABLE OF CONTENTS

<CAPTION>
                                                                                                               Page
                                                                                                               ----

<S>               <C>                                                                                            <C>
Section 1.        DEFINITIONS...................................................................................  2
         1.1      Certain Defined Terms.........................................................................  2
         1.2      Accounting Terms; Utilization of GAAP for Purposes of 
                  Calculations Under Agreement.................................................................. 39
         1.3      Other Definitional Provisions and Rules of Construction....................................... 39

Section 2.         AMOUNTS AND TERMS OF COMMITMENTS AND LOANS................................................... 39
         2.1      Commitments; Making of Loans; the Register; Notes............................................. 39
         2.2      Interest on the Loans......................................................................... 46
         2.3      Fees.......................................................................................... 50
         2.4      Repayments, Prepayments and Reductions in Revolving Loan
                  Commitments; General Provisions Regarding Payments; Application
                  of Proceeds of Collateral and Payments Under Subsidiary Guaranty.............................. 51
         2.5      Use of Proceeds............................................................................... 58
         2.6      Special Provisions Governing Eurodollar Rate Loans............................................ 59
         2.7      Increased Costs; Taxes; Capital Adequacy...................................................... 61
         2.8      Obligation of Lenders and Issuing Lender to Mitigate.......................................... 66

Section 3.        LETTERS OF CREDIT; IRB REIMBURSEMENT AGREEMENT................................................ 67
         3.1      Issuance of Letters of Credit, Execution of IRB Reimbursement
                  Agreement and Lenders' Purchase of Participations Therein..................................... 67
         3.2      Letter of Credit Fees......................................................................... 69
         3.3      Drawings and Reimbursement of Amounts Paid Under Letters of
                  Credit and the IRB Reimbursement Agreement.................................................... 70
         3.4      Obligations Absolute.......................................................................... 73
         3.5      Indemnification; Nature of Issuing Lender's Duties............................................ 74
         3.6      Increased Costs and Taxes Relating to Letters of Credit....................................... 76

Section 4.        CONDITIONS TO EFFECTIVENESS AND TO LOANS AND LETTERS OF CREDIT................................ 77
         4.1      Conditions to Effectiveness................................................................... 77
         4.2      Conditions to All Loans....................................................................... 77
         4.3      Conditions to Letters of Credit............................................................... 78

                                      (i)
<PAGE>
                                                                                                               Page
                                                                                                               ----

Section 5.        BORROWER'S REPRESENTATIONS AND WARRANTIES..................................................... 78
         5.1      Organization, Powers, Qualification, Good Standing, Business,
                  Subsidiaries and Restructuring................................................................ 78
         5.2      Authorization of Borrowing, etc............................................................... 79
         5.3      Financial Condition........................................................................... 80
         5.4      No Material Adverse Change; No Restricted Junior Payments..................................... 82
         5.5      Title to Properties; Liens; Real Property..................................................... 82
         5.6      Litigation; Adverse Facts..................................................................... 83
         5.7      Payment of Taxes.............................................................................. 83
         5.8      Performance of Agreements; Materially Adverse Agreements;
                  Material Contracts............................................................................ 84
         5.9      Governmental Regulation....................................................................... 84
         5.10     Securities Activities......................................................................... 84
         5.11     Employee Benefit Plans........................................................................ 84
         5.12     Certain Fees.................................................................................. 85
         5.13     Environmental Protection...................................................................... 85
         5.14     Employee Matters.............................................................................. 86
         5.15     Solvency...................................................................................... 86
         5.16     Matters Relating to Collateral................................................................ 86
         5.17     Related Agreements............................................................................ 87
         5.18     Disclosure.................................................................................... 88

Section 6.        PARENT'S AND BORROWER'S AFFIRMATIVE COVENANTS................................................. 88
         6.1      Financial Statements and Other Reports........................................................ 88
         6.2      Corporate Existence, etc...................................................................... 95
         6.3      Payment of Taxes and Claims; Tax Consolidation................................................ 95
         6.4      Maintenance of Properties; Insurance; Application of Net 
                  Insurance/Condemnation Proceeds............................................................... 95
         6.5      Inspection Rights; Audits of Inventory and Accounts Receivable;
                  Lender Meeting................................................................................ 98
         6.6      Compliance with Laws, etc..................................................................... 98
         6.7      Environmental Review and Investigation, Disclosure, Etc.; Parent's
                  and Borrower's Actions Regarding Hazardous Materials Activities,
                  Environmental Claims and Violations of Environmental Laws..................................... 98
         6.8      Execution of Subsidiary Guaranty and Personal Property Collateral
                  Documents by Certain Subsidiaries and Future Subsidiaries.....................................101
         6.9      Conforming Leasehold Interests; Matters Relating to Additional
                  Real Property Collateral......................................................................103
         6.10     Deposit Accounts..............................................................................105
         6.11     Determination of Borrowing Base...............................................................105
         6.12     Keeping of Books..............................................................................106

                                      (ii)
<PAGE>
                                                                                                               Page
                                                                                                               ----

         6.13     Compliance with Terms of Leaseholds...........................................................107
         6.14     Performance of Related Agreements.............................................................107
         6.15     Performance of Material Contracts.............................................................107
         6.16     Audit of Inventory and Accounts Receivable....................................................107

Section 7.        NEGATIVE COVENANTS............................................................................108
         7.1      Indebtedness..................................................................................108
         7.2      Liens and Related Matters.....................................................................109
         7.3      Investments; Joint Ventures...................................................................111
         7.4      Contingent Obligations........................................................................112
         7.5      Restricted Junior Payments....................................................................113
         7.6      Financial Covenants...........................................................................114
         7.7      Restriction on Fundamental Changes; Asset Sales and Acquisitions..............................117
         7.8      Consolidated Capital Expenditures.............................................................119
         7.9      Sale or Discount of Receivables...............................................................119
         7.10     Transactions with Shareholders and Affiliates.................................................119
         7.11     Disposal of Subsidiary Stock..................................................................119
         7.12     Conduct of Business...........................................................................120
         7.13     Amendments or Waivers of Certain Related Agreements; 
                  Amendments of Senior Guaranteed Note Documents; and Designation of
                   "Designated Senior Indebtedness".. ...........................................................120
         7.14     Fiscal Year...................................................................................121
         7.15     Charter Amendments............................................................................121
         7.16     Amendment, Etc. of Material Contracts.........................................................121
         7.17     Partnerships, Etc.............................................................................121
         7.18     Speculative Transactions......................................................................121

Section 8.        EVENTS OF DEFAULT.............................................................................121
         8.1      Failure to Make Payments When Due.............................................................121
         8.2      Default in Other Agreements...................................................................122
         8.3      Breach of Certain Covenants...................................................................122
         8.4      Breach of Warranty............................................................................122
         8.5      Other Defaults Under Loan Documents...........................................................122
         8.6      Involuntary Bankruptcy; Appointment of Receiver, etc..........................................123
         8.7      Voluntary Bankruptcy; Appointment of Receiver, etc............................................123
         8.8      Judgments, Attachments, etc...................................................................123
         8.9      Dissolution...................................................................................124
         8.10     Employee Benefit Plans........................................................................124
         8.11     Material Adverse Effect.......................................................................124
         8.12     Change in Control.............................................................................124
         8.13     Invalidity of Guarantees; Failure of Security; Repudiation of Obligations.....................124

                                     (iii)
<PAGE>
                                                                                                               Page
                                                                                                               ----

         8.14     Action Relating to Certain Indebtedness.......................................................125
         8.15     Conduct of Business By Parent and Borrower....................................................125

Section 9.        ADMINISTRATIVE AGENT..........................................................................126
         9.1      Appointment...................................................................................126
         9.2      Powers and Duties; General Immunity...........................................................127
         9.3      Representations and Warranties; No Responsibility For Appraisal of
                  Creditworthiness..............................................................................129
         9.4      Right to Indemnity............................................................................129
         9.5      Successor Agent and Swing Line Lender.........................................................130
         9.6      Collateral Documents and Guaranties...........................................................130
         9.7      Arranging Agent, Syndication Agent and Documentation Agent....................................131

Section 10.       MISCELLANEOUS.................................................................................131
         10.1     Assignments and Participations in Loans, Letters of Credit and IRB
                  Reimbursement Agreement.......................................................................131
         10.2     Expenses......................................................................................135
         10.3     Indemnity.....................................................................................136
         10.4     Set-Off; Security Interest in Deposit Accounts................................................137
         10.5     Ratable Sharing...............................................................................137
         10.6     Amendments and Waivers........................................................................138
         10.7     Independence of Covenants.....................................................................139
         10.8     Notices.......................................................................................139
         10.9     Survival of Representations, Warranties and Agreements........................................140
         10.10    Failure or Indulgence Not Waiver; Remedies Cumulative.........................................140
         10.11    Marshalling; Payments Set Aside...............................................................140
         10.12    Severability..................................................................................140
         10.13    Obligations Several; Independent Nature of Lenders' Rights....................................141
         10.14    Headings......................................................................................141
         10.15    Applicable Law................................................................................141
         10.16    Successors and Assigns........................................................................141
         10.17    Consent to Jurisdiction and Service of Process................................................141
         10.18    Waiver of Jury Trial..........................................................................142
         10.19    Confidentiality...............................................................................143
         10.20    Counterparts; Effectiveness...................................................................143
         10.21    Maximum Amount................................................................................144

Signature pages                                                                                                 S-1
</TABLE>

                                      (iv)
<PAGE>


                                    EXHIBITS


I                 FORM OF NOTICE OF BORROWING
II                FORM OF NOTICE OF CONVERSION/CONTINUATION
III               FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV                RESERVED
V                 FORM OF TERM LOAN NOTE
VI                RESERVED
VII               FORM OF REVOLVING NOTE
VIII              FORM OF SWING LINE NOTE
IX                FORM OF COMPLIANCE CERTIFICATE
X-A               FORM OF OPINION OF O'SULLIVAN GRAEV & KARABELL, LLP
X-B               FORM OF OPINION OF FALK & SHARP
XI                FORM OF OPINION OF O'MELVENY & MYERS LLP
XII               FORM OF ASSIGNMENT AGREEMENT
XIII-A            FORM OF LANDLORD CONSENT AND ESTOPPEL (CALIFORNIA
                  AND KENTUCKY)
XIII-B            FORM OF LANDLORD CONSENT AND ESTOPPEL (WAREHOUSE)
XIV               FORM OF CERTIFICATE RE NON-BANK STATUS
XV                FORM OF FINANCIAL CONDITION CERTIFICATE
XVI               FORM OF COLLATERAL ACCOUNT AGREEMENT
XVII              FORM OF BORROWER PLEDGE AGREEMENT
XVIII             FORM OF BORROWER SECURITY AGREEMENT
XIX               FORM OF SUBSIDIARY GUARANTY
XX                FORM OF SUBSIDIARY PLEDGE AGREEMENT
XXI               FORM OF SUBSIDIARY SECURITY AGREEMENT
XXII              FORM OF SUBSIDIARY PATENT SECURITY AGREEMENT
XXIII             FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXIV              FORM OF PARENT GUARANTY
XXV               FORM OF PARENT PLEDGE AGREEMENT
XXVI              FORM OF PARENT SECURITY AGREEMENT
XXVII             FORM OF MORTGAGE
XXVIII            FORM OF BORROWING BASE CERTIFICATE
XXIX              FORM OF IRB REIMBURSEMENT AGREEMENT
XXX               FORM OF MELF INTERCREDITOR AGREEMENT

                                      (v)
<PAGE>


                                    SCHEDULES



2.1      LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1      SUBSIDIARIES OF BORROWER
5.2B     THIRD PARTY CONSENTS
5.2C     GOVERNMENTAL CONSENTS
5.4      CERTAIN RESTRICTED JUNIOR PAYMENTS
5.5      REAL PROPERTY
5.6      LITIGATION
5.8      MATERIAL CONTRACTS
5.11     CERTAIN EMPLOYEE BENEFIT PLANS
5.13     ENVIRONMENTAL MATTERS
5.16C    PERMITTED UCC FILINGS
7.1      CERTAIN EXISTING INDEBTEDNESS
7.2      CERTAIN EXISTING LIENS
7.2(vii) PIDA COMMITMENT LETTER
7.3      CERTAIN EXISTING INVESTMENTS
7.4      CERTAIN EXISTING CONTINGENT OBLIGATIONS
9.2      TERMS OF PNC BANK LETTER OF CREDIT


                                      (vi)